The role of World Trade organisation
The World Trade Organization (WTO) is an intergovernmental organization that regulates and facilitates international trade between nations. Governments use the organization to establish, revise, and enforce the rules that govern international trade. It officially commenced operations on 1 January 1995, pursuant to the 1994 Marrakesh Agreement, thus replacing the General Agreement on Tariffs and Trade (GATT) that had been established in 1948.
The WTO is the world's largest international economic organization, with 164 member states representing over 96% of global trade and global GDP. The WTO facilitates trade in goods, services and intellectual property among participating countries by providing a framework for negotiating trade agreements, which usually aim to reduce or eliminate tariffs, quotas, and other restrictions; these agreements are signed by representatives of member governments and ratified by their legislatures. The WTO also administers independent dispute resolution for enforcing participants' adherence to trade agreements and resolving trade-related disputes.
The organization prohibits discrimination between trading partners, but provides exceptions for environmental protection, national security, and other important goals. The WTO is headquartered in Geneva, Switzerland. Its top decision making body is the Ministerial Conference, which is composed of all member states and usually convenes biannually; consensus is emphasized in all decisions. Day-to-day functions are handled by the General Council, made up of representatives from all members. A Secretariat of over 600 personnel, led by the Director-General and four deputies, provides administrative, professional, and technical services. The WTO's annual budget is roughly 220 million USD, which is contributed by members based on their proportion of international trade.
Global trade rules
Global rules of trade provide assurance and stability.
Consumers and producers know they can enjoy secure supplies and greater choice
of the finished products, components, raw materials and services they use.
Producers and exporters know foreign markets will remain open to them.
This leads to a more prosperous, peaceful and accountable
economic world. Decisions in the WTO are typically taken by consensus among all
members and they are ratified by members’ parliaments. Trade frictions are
channelled into the WTO’s dispute settlement process, where the focus is on
interpreting agreements and commitments and how to ensure that members’ trade
policies conform with them. That way, the risk of disputes spilling over into
political or military conflict is reduced.
By lowering trade barriers through negotiations among member
governments, the WTO’s system also breaks down other barriers between peoples
and trading economies.
At the heart of the system – known as the multilateral
trading system – are the WTO’s agreements, negotiated and signed by a large
majority of the world’s trading economies, and ratified in their parliaments.
These agreements are the legal foundations for global trade.
Essentially, they are contracts, guaranteeing WTO members important trade
rights. They also bind governments to keep their trade policies transparent and
predictable which is to everybody’s benefit.
The agreements provide a stable and transparent framework to
help producers of goods and services, exporters and importers conduct their
business.
Trade negotiations
The World Trade Organization came into being in 1995. One of
the youngest of the international organizations, the WTO is the successor to
the General Agreement on Tariffs and Trade (GATT) established in the wake of
the Second World War.
So while the WTO is relatively young, the multilateral
trading system that was originally set up under the GATT is over 70 years old.
The past 70 years have seen an exceptional growth in world
trade. Merchandise exports have grown on average by 6% annually. This growth in
trade has been a powerful engine for overall economic expansion and on average
trade has grown by 1.5 times more than the global economy each year. Total
exports in 2019 were 250 times the level of 1948. The GATT and the WTO have
helped to create a strong and prosperous trading system contributing to
unprecedented growth.
The system was developed through a series of trade
negotiations, or rounds, held under the GATT. The first rounds dealt mainly
with tariff reductions but later negotiations included other areas such as
anti-dumping and non-tariff measures. The 1986-94 round – the Uruguay Round –
led to the WTO’s creation.
The negotiations did not end there. In 1997, an agreement
was reached on telecommunications services, with 69 governments agreeing to
wide-ranging liberalization measures that went beyond those agreed in the
Uruguay Round.
In the same year, 40 governments successfully concluded
negotiations for tariff-free trade in information technology products, and 70
members concluded a financial services deal covering more than 95% of trade in
banking, insurance, securities and financial information.
In 2000, new talks started on agriculture and services.
These were incorporated into a broader work programme, the Doha Development
Agenda, launched at the fourth WTO Ministerial Conference in Doha, Qatar, in
November 2001.
The new work programme included negotiations and other work
on non- agricultural tariffs, trade and the environment, WTO rules on
anti-dumping and subsidies, trade facilitation, transparency in government
procurement, intellectual property and a range of issues raised by developing
economies as difficulties they face in implementing WTO agreements.
Negotiations on these and other topics have resulted in
major updates to the WTO rulebook in recent years. A revised Government
Procurement Agreement – adopted at the WTO’s 8th Ministerial Conference in 2011
– expanded the coverage of the original agreement by an estimated US$ 100
billion a year.
At the 9th Ministerial Conference in Bali in 2013, WTO
members struck the Agreement on Trade Facilitation, which aims to reduce border
delays by slashing red tape.
When fully implemented, this Agreement – the first multilateral accord reached at the WTO – will cut trade costs by more than 14% and will lift global exports by as much as US$ 1 trillion per year.
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