- For other uses of the initials WTO, see WTO (disambiguation).
The World Trade Organization (WTO) is an international organization which oversees a large number of agreements defining the "rules of trade" between its member states (WTO, 2004a). The WTO is the successor to the General Agreement on Tariffs and Trade, and operates with the broad goal of reducing or abolishing international trade barriers.
WTO headquarters are located in Geneva, Switzerland. Its current Director-General is Supachai Panitchpakdi. As of 12 December 2004, there are 148 members in the organization (WTO, 2004a). All WTO members are required to grant one another most favoured nation status, such that (with some exceptions) trade concessions granted by a WTO member to another country must be granted to all WTO members (WTO, 2004c).
In the late 1990s, the WTO became a major target of protests by the anti-globalization movement. See critique.
The WTO was created on 1 January 1995 to replace the General Agreement on Tariffs and Trade (GATT), a series of post-war trade treaties intended facilitate free trade. The GATT principles and agreements were adopted by the WTO, which was charged with administering and extending them. Unlike the GATT, the WTO has a substantial institutional structure.
The WTO is effectively the long-delayed successor to the anticipated International Trade Organization , which was originally intended to follow the GATT. The International Trade Organization charter was agreed at the UN Conference on Trade and Employment in Havana in March 1948, but was blocked by the U.S. Senate (WTO, 2004b). Some historians have argued that that failure may have resulted from fears within the American business community that the ITO could be used to regulate, rather than liberate, big business (Wilkins, 1997).
The WTO has two basic functions: as a negotiating forum for discussions of new and existing trade rules, and as a trade dispute settlement body.
Where most international organizations operate on a one country, one vote or even a weighted voting basis, many WTO decisions, such as adopting agreements (and revisions to them) are determined by consensus. This does not necessarily mean that unanimity is found: only that no Member finds a decision so unacceptable that they must insist on their objection. Voting is only employed as a fall-back mechanism or in special cases.
The advantage of consensus is that it encourages efforts to find the most widely acceptable decision. Main disadvantages include large time requirements and many rounds of negotiation to develop a consensus decision, and the tendency for final agreements to use ambiguous language on contentious points that makes future interpretation of treaties difficult. Richard Steinberg (2002) argues that although the WTO's consensus governance model provides law-based initial bargaining, trading rounds close through power-based bargaining favouring Europe and the United States, and may not lead to Pareto improvement. The most notable recent failures of consensus, at the Ministerial meetings at Seattle (1999) and Cancún (2003), were due to the refusal of some developing countries to accept proposed decisions.
The WTO agreed to begin the current round of negotiations, the "Doha Development Agenda", at the Fourth Ministerial Conference in Doha, Qatar in November 2001 (WTO, 2004d).
Unlike many other international organizations, the WTO has significant power to enforce its decisions, through the operation of its Dispute Settlement Body, an international trade court with the power to authorize sanctions against states which do not comply with its rulings.
The WTO had 76 members at its creation. A further 72 members joined over the following ten years, the latest (as of 12 December 2004) being Cambodia on 13 October 2004. A current list of members can be found here.
A number of non-members have observers at the WTO: Algeria, Andorra, Azerbaijan, Bahamas, Belarus, Bhutan, Bosnia and Herzegovina, Cape Verde, Equatorial Guinea, Ethiopia, Holy See (Vatican), Iraq, Kazakhstan, Lao People's Democratic Republic, Lebanese Republic, Libya, Russian Federation, Samoa, Sao Tome and Principe, Saudi Arabia, Serbia and Montenegro (each republic is applying for separate membership), Seychelles, Sudan, Tajikistan, Tonga, Ukraine, Uzbekistan, Vanuatu, Vietnam and Yemen. Many of these countries are seeking membership.
Iran, which first asked to join the WTO in 1996, has seen its request repeatedly blocked by the United States, which lists Iran as a state sponsor of terrorism. Russia is also not yet a member, having first applied to join GATT in 1993.
- 1986-1994 - Uruguay Round of GATT negotiations culminating in the Marrakech Agreement that established the WTO.
January 1, 1995 - The WTO came into existence.
May 1, 1995 - Renato Ruggiero became director-general for a 4-year term.
December 9 - December 13, 1996 - The inaugural ministerial conference in Singapore. Disagreements between largely developed and developing economies emerged during this conference over four issues initiated by this conference, which led to them being collectively referred to as the "Singapore issues".
May 18 - May 20, 1998 - 2nd ministerial conference in Geneva, Switzerland.
September 1, 1999 - Mike Moore became director-general. The post had been fiercely contested; eventually a compromise was reached with Mike Moore and Supachai Panitchpakdi taking half each of a six-year term.
November 30 - December 3, 1999 - 3rd ministerial conference in Seattle, Washington, USA. The conference itself ended in failure, with massive demonstrations and riots drawing worldwide attention.
November 9 - November 13, 2001 - 4th ministerial conference in Doha, Qatar. Issuance of the Doha Declaration.
December 11, 2001 - The People's Republic of China joined the WTO after 15 years of negotiations (the longest in GATT history).
September 1, 2002 - Supachai Panitchpakdi became director-general.
September 10 - September 14, 2003 - 5th ministerial conference in Cancún, Mexico. An alliance of 22 southern states, the G20 (led by India, China and Brazil), resisted demands from the North for agreements on the so-called "Singapore issues" and called for an end to agricultural subsidies within the EU and the US. The talks broke down without progress.
The WTO promotes economic globalization and free trade, which some consider problematic. WTO treaties have been accused of a partial and unfair bias toward multinational corporations and wealthy nations. While membership is voluntary, not joining practically places the recalcitrant nation under embargo. The WTO therefore creates an international system of forced economic rules which discourage change and experimentation.
Decision making in and related to the organization has faced much criticism as well. The "big three" members - the United States, the European Union, and Japan - have been accused of using the WTO to exert undue influence over less powerful member states. In addition, some believe that member states have adopted WTO treaties undemocratically or to the detriment of their citizens.
References & Further Reading
- Braithwaite, John & Peter Drahos (2000), Global Business Regulation, Cambridge University Press.
- Dunkley, Graham (2000)The Free Trade Adventure, Zed Books.
- Steinberg, Richard H. (2002). In the shadow of law or power? Consensus-based bargaining and outcomes in the GATT/WTO. International Organization 56 (2), 339–374.
- World Trade Organization. (2004b). Understanding the WTO - The GATT years: From Havana to Marrakesh. Retrieved Dec. 11, 2004
- World Trade Organization. (2004c). Understanding the WTO - Principles of the trading system. Retrieved Dec. 11, 2004.
- World Trade Organization. (2004d). Understanding the WTO - The Doha agenda. Retrieved Dec 11, 2004.
- World Trade Organization. (2004e). Understanding the WTO - members. Retrieved Dec 12, 2004.
- Wilkins, Mira (1997, Nov. 20) Review of Susan Ariel Aaronson, "Trade and the American Dream: A Social History of Postwar Trade Policy" Economic History Services.
Last updated: 08-07-2005 22:26:29