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World Trade Organization

From Academic Kids

For other uses of the initials WTO, see WTO (disambiguation).
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Logo WTO

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. As of 26 May 2005, Pascal Lamy has been elected as the Director-General. He will take over from 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.

Contents

Origins

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 to 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).

Functions

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.

Negotiations

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 Cancn (2003), were due to the refusal of some developing countries to accept proposed decisions.

The WTO began the current round of negotiations, the Doha round, at the Fourth Ministerial Conference in Doha, Qatar in November 2001 (WTO, 2004d). The talks have been highly contentious and agreement has not been reached, despite continuing talks in Cancun, Geneva, and Paris.

Dispute resolution

Like most other international organizations, the WTO has no significant power to enforce the decisions it makes when a member brings a complaint against another. If decisions of its Dispute Settlement Body are not complied with, it may authorise "retaliatory measures" on the part of the complaining member, but no other enforcement action is available. This means that economically powerful states like the United States can essentially ignore rulings against them from complaints brought by the economically weak, as the latter states simply do not have the power to hurt US trade enough to force the US to change its position. This has been the case, for example, with the WTO ruling declaring US cotton subsidies illegal.

Membership

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dark green - members
bright green-yellow-orange-red - negotiations activity in decreasing order
pink - no official relations with the WTO

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 (http://www.wto.int/english/thewto_e/whatis_e/tif_e/org6_e.htm).

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), Iran, 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 first applied to join the WTO in 1996, but the United States, accusing Tehran of supporting international terrorism, blocked its application 22 times. The U.S. said in March it would drop its veto on a start to Iran's accession negotiations. The U.S. has chosen not to block Iran's latest application for membership as part of a nuclear related deal. Russia, having first applied to join GATT in 1993, is not yet a member either.

Chronology

Critique

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 non-participating nation under embargo. The WTO therefore creates an international system of forced economic rules which are perceived by some as discouraging change and experimentation.

The decision making process in and related to the organization has also come under fire. 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 or ecologies.

See also: The Yes Men

See also

External links

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Anti-WTO links

References & Further Reading

  • Martin Khor et al (2005), WTO and the Global Trading System: Development Impacts and Reform Proposals, Zed Books
  • Fatoumata Jawara and Aileen Kwa (2004), Behind the Scenes at the WTO: The Real World of International Trade Negotiations/Lessons of Cancun, Zed Books
  • 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 (http://www.wto.org/english/thewto_e/whatis_e/tif_e/fact4_e.htm). Retrieved Dec. 11, 2004
  • World Trade Organization. (2004c). Understanding the WTO - Principles of the trading system (http://www.wto.org/english/thewto_e/whatis_e/tif_e/fact2_e.htm). Retrieved Dec. 11, 2004.
  • World Trade Organization. (2004d). Understanding the WTO - The Doha agenda (http://www.wto.org/english/thewto_e/whatis_e/tif_e/doha1_e.htm). Retrieved Dec 11, 2004.
  • World Trade Organization. (2004e). Understanding the WTO - members (http://www.wto.org/english/thewto_e/whatis_e/tif_e/org6_e.htm). 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" (http://www.eh.net/bookreviews/library/0046.shtml) Economic History Services.

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