world trade org

1. WTO: STRUCTURE AND AGREEMENTS
INTRODUCTION
The General Agreement on Tariffs and Trade (GATT) was an international
organization created in 1947 to reduce trade barriers through multilateral
negotiations. In January 1995, the GATT was replaced by a stronger World
Trade Organization (WTO), the result of eight years of GATT negotiations.
Today, as on May 2012 there were 155 member countries in WTO. WTO rules
apply to over 90 per cent of international trade.
The WTO has become increasingly controversial as it has expanded the scope
of its work from its original narrow GATT focus on reducing tariffs on
manufactured goods to agriculture and services. The WTO now also works to
eliminate non-tariff barriers, and can be used to challenge environmental,
health, and other regulations that may serve legitimate social goals but may be
regarded as impediments to international trade. The 1995 replacement of GATT
by the WTO heightened concern among critics because its stronger enforcement
powers represent a further shift in power from citizens and national
governments and national governments to a global authority.
The GATT’s (and now the WTO’s) approach to reducing trade barriers was
based on the “most – favoured nation” principle, which requires that when a
nation grants a trade privilege to one country, it must grant the same privilege to

2. all GATT members. Another guiding principle is that of “national treatment,”
which requires nations to give equal treatment to foreign imports of goods or
services as to domestic goods or services.
The most controversial outcome of the Uruguay Round was the establishment
of much stronger enforcement mechanisms in the WTO. Although GATT
always had a dispute resolution process, member nations often ignored its
rulings since they lacked serious enforcement power. Unlike GATT, WTO
panel decisions are binding. If one nation makes a complaint to the WTO that
another nation’s law or regulation is protectionist and in violation of WTO
rules, the WTO can make that nation bring the law into compliance with the
WTO standard (with minor exceptions). If the country fails to comply, the WTO
can authorize the complainant nation to impose trade sanctions.
The WTO’s work is not confined to specific agreement with specific
obligations. Member countries also discuss a range of other issues to Ministerial
Conferences, committees or working groups. Some are old and some are new to
the GATT – WTO system. The issues become contentions due to disagreement
between, mainly, developed and developing countries. They cover a wide range
of subjects including trade and investment, competitionpolicy, transparency in
government procurement, trade facilitation, trade and labour standards, trade
and environment, and electronic commerce.

3. THE EVOLUTION OF THE WORLD TRADE ORDER
The experience of the Great Depression of the 1930s played an important role in
formation of the international economic order after the Second World War. The
United Nations Organization (UNO), founded in 1945, pays tribute to this
experience through the Council (ECOSOC). In addition, Art. 55 of the Charter
of the United Nations commits the Member States to far reaching cooperation
on economic and social issues. It thus accommodates the notion that peace
cannot be understood to mean merely the absence of violence, but can also
include economic and social aspects that are essential for the effective
preservation of peace.
Still during World War II, at the Bretton Woods Conference in 1944, a new
order for the coordination of international financial relations had been set up in
the form of the world trade , the ECOSOC was intended to create a similar
system that would - under its surveillance as a United Nations specialized
agency – regulate cooperation between States with regard to world trade. The
United Nations Conference on Trade and Employment that had been convened
for this purpose in 1947 adopted the HAVANA CHARTER (named after the
conference location) establishing the International Trade Organization (ITO). In
addition to the formation of such an organization, the ITO Charter contained
comprehensive and far reaching international trade regulations. For example, it
made provisions for commitments regarding economic development, the labour

4. market, and trade in natural resources, and even included a special chapter on
the regulation of competition. These regulations, which in different respects
went far beyond a mere free trade concept, encountered firm rejection by the US
Senate when it was called upon to ratify the Charter. In consequence, the
originally US-led initiative eventually failed through lack of US support.
As a preparatory effort, the States participating at the conference, with the
support of an interim commission, had negotiated separately about the
reciprocal reduction of tariffs. In the course of these negotiations the States
agreed several general rules that were meant later to become part of the Havana
Charter. There was considerable interest in bringing these agreements into force
quickly as a means of overcoming the economic crisis in the U.S., and
achieving the war economies’ transition into a free market. So, the Protocol of
October 30, 1947 provided for the preliminary application of the rules from
January 1, 1948. Since, according to the Protocol, conflicting national law was
to remain unaltered (so –called “grandfather clause”), and since there was
therefore no need for ratification by Congress, the US government was able to
conclude the agreement by itself in exercise of its temporary negotiation
authority with respect to tariff reductions. The General Agreement on Tariffs
and Trade (GATT), having become effective on this basis, was administered
by the Interim Commission whose term of office was prolonged especially for
this purpose. Later on the commission was appointed the Secretariat of the

5. GATT. Following the unsuccessful attempt to establish the ITO, the GATT,
which had originally been set up as a merely interim arrangement, became a
permanent institution. During the course of several decade, due to the needs of
the CONTRATCTING PARTIES for coordination, cooperation and dispute
settlement in the context of the agreement, the GATT evolved more and more
into a de facto organisation.
During six more rounds of negotiations – the so-called GATT Rounds – the
parties progressively agreed upon more and more far ranging tariff concessions,
which formed the core of separate agreements with open membership. It was
supplemented by additional regulations on subsidies and countervailing duties,
technical barriers to trade, import licence procedures, public procurement and
anti-dumping.
The eighth GATT Round started with a Ministerial Conference in Punta
del Este, Uruguay, in 1986, in the middle of a crisis for the GATT: its
regulations wereno longer in tune with the realities of world trade,
especially the increasing role of trade in services; furthermore, the
GATT’s authority was challenged by the emergence of dissenting silent
or explicit agreements between individual Member States, by its
inefficient consensus-based dispute settlement mechanism, and by
unilateral trade sanctions. In the course of the eight-year-long
negotiations in the Uruguay Round which ended in 1994, basically a

6. new, consolidated and essentially enlarged system for the world trade
order was finally set up on the basis of the (old) GATT.
In contrast to the GATT Rounds until then, a “single undertaking
approach” prevailed in the Uruguay Round, according to which the
traditional structuring of the legal order into separate agreements was
maintained, while the regulations and negotiation results contained
therein could, however, be accepted or rejected by the States only in their
entirety as a package. The final act of the Uruguay Round, negotiations
on which began in Marrakesh in December 1993 and which was signed
on April 15, 1994, therefore contains no less than 46 agreements and 25
resolutions. Of fundamental importance in this context is the Agreement
Establishing the World Trade Organisation (WTO Agreement), to
which the other agreements are attached in groups. It entered into force
on January 1, 1995, following 76 ratifications.
The fourth Ministerial Conference at Doha/Quatar adopted a mandate to
start a new round of trade negotiations that become known as the “Doha
Round”. An extensive work programme, including tariff negotiations,
implementation issues, as well as the reform of WTO law on anti-
dumping, subsidies, regional trade agreements and dispute settlement,
was started. However, the deadline of January 1, 2005 has expired
without the finalization of the agenda.

7. The objectives of the world trade order, section one of the Preamble to
the WTO Agreement mentions:
STRUCTURE OF THE WORLD TRADE ORGANISATION
The World Trade Organization came into force on January 1, 1995, fully
replacing the previous GATT Secretariat as the organization responsible for
administering the international trade regime. The basic structure of the WTO
includes the following bodies:
All WTO members may participate in all councils, committees, etc., except
Appellate Body, Dispute Settlement panels, and plurilateral committees.

9. The Ministerial Conference, which is composed of international trade
ministers from all member countries. This is the governing body of the
WTO, responsible for setting the strategic direction of the organization
and making all final decisions on agreements under its wings. The
Ministerial Conference meets at least once every two years. Although
voting can take place, decisions are generally taken by consensus, a
process that can at times be difficult, particularly in a body composed of
136 very different members.
The General Council, composed of senior representatives (usually
ambassador level) of all members. It is responsible for overseeing the
day-to-day business and management of the WTO, and is based at the
WTO headquarters in Geneva. In practice, this is the key decision-making
arm of the WTO for most issues. Several of the bodies described below
report directly to the General Council.
The Trade Policy Review Body is also composed of all the WTO
members, and oversees the Trade Policy Review Mechanism, a product
of the Uruguay Round. It periodically reviews the trade policies and
practices of all member states. These reviews are intended to provide a
general indication of how states are implementing their obligations, and
to contribute to improved adherence by the WTO parties to their
obligations.
The Dispute Settlement Body is also composed of all the WTO members.
It oversees the implementation and effectiveness of the dispute resolution
process for all WTO agreements, and the implementation of the decisions
on WTO disputes. Disputes are heard and ruled on by dispute resolution
panels chosen individually for each case, and the permanent Appellate
Body that was established in 1994. Dispute resolution is mandatory and
binding on all members. A final decision of the Appellate Body can only
be reversed by a full consensus of the Dispute Settlement Body.
The Councils on Trade in Goods and Trade in Services operate under
the mandate of the General Council and are composed of all members.
They provide a mechanism to oversee the details of the general and

10. specific agreements on trade in goods (such as those on textiles and
agriculture) and trade in services. There is also a Council for the
Agreement on Trade-Related Aspects of Intellectual Property Rights,
dealing with just that agreement and subject area.
The Secretariat and Director General of the WTO reside in Geneva, in
the old home of GATT. The Secretariat now numbers just under 550
people, and undertakes the administrative functions of running all aspects
of the organization. The Secretariat has no legal decision-making powers
but provides vital services, and often advice, to those who do. The
Secretariat is headed by the Director General, who is elected by the
members.
The Committee on Trade and Development and Committee on Trade
and Environment are two of the several committees continued or
established under the Marrakech Agreement in 1994. They have specific
mandates to focus on these relationships, which are especially relevant to
how the WTO deals with sustainable development issues. The Committee
on Trade and Development was established in 1965. The forerunner to
the Committee on Trade and Environment (the Group on Environmental
Measures and International Trade) was established in 1971, but did not
meet until 1992. Both Committees are now active as discussion grounds
but do not actually negotiate trade rules.
The Committee on Trade and Environment