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WORLD TRADE ORGANIZATION
Arabi Moorthy and Prachi Vyas
What is the WTO?
 Only global international organization that deals with
the rules of trade between nations
 Goal is to help producers of goods and services,
exporters, and importers conduct their business
Important Documents
 Final Act: signed in Marrakesh in 1994; functions as a “a cover note” to
which everything else is attached
 Agreement Establishing the WTO (the WTO Agreement): an
umbrella agreement; founding charter of the organization and the
basis for everything the WTO does
 Agreements
 Manages about 60 different “agreements”, which have the status of
international legal texts
 Member countries must sign and ratify all WTO agreements on
accession
 Examples: Agreement on Agriculture
Agreement on Tariffs and Trade
Age and Changes
 Created in January 1, 1995 in order to replace
GATT, under the Marrakech Agreement
 Whereas GATT regulated trade in merchandise
goods, WTO also covers trade in services:
 Telecommunications, banking, and issues such as
intellectual property rights
Members in the WTO
 153 Members as of 2/10/11
 China formally joined the body in December 2001 after
a 15-year battle
 Russia joined only after convincing the EU and US that
it had reformed business practices
Membership
 First: Government applying for membership must describe all aspects
of its trade and economic policies that have a bearing on WTO
agreements
 Second: Cover tariff rates and specific market access commitments,
and other policies in goods and services; talks determine the benefits
(in the form of export opportunities and guarantees) other WTO
members can expect when the new member joins
 Third: Draft membership treaty with protocol of accession and list of
commitments
 Fourth: Final package presented to the WTO General Council or the
Ministerial Conference; needs a two-thirds majority vote in favor of the
applicant
Membership Cont.
 Non-member governments may become WTO observers before
they make an application to accede
 Status is granted initially for five years; observer governments are
then expected to take a stance on accession within that period of
time
 Iran
- Observer government
- General Council established a Working Party to examine the
application of the Islamic Republic of Iran on 26 May 2005
- Submitted its Memorandum on the Foreign Trade Regime in
November 2009
- The Working Party has not yet met.
Leadership in the WTO
 Highest body: Ministerial Conference
- Meets every two years
- Elects the organization's chief executive (the director-general)
- Oversees the work of the General Council.
- Setting for negotiating global trade deals, known as "trade
rounds" which are aimed at reducing barriers to free trade
 General Council
- In charge of the day-to-day running of the WTO
- Made up of ambassadors from member states who also serve on
various subsidiary and specialist committees.
- Among these are the Dispute Settlement Panels which rule on
individual country-against-country trade disputes
Leadership Cont.
 Director-General: Pascal Lamy
- Supervises the administrative functions of WTO
- Little power over matters of policy; role is primarily
advisory and managerial
- Appoints the members of the staff of the
Secretariat
- Determines staff duties and conditions of service
- Appointed by WTO members for a four-year term
Advantages of Membership
1. Peace
2. Disputes: fair outlet for dealing with disputes over trade issues, international confidence
3. Rules: agreed rules give governments a clearer view of which trade policies are acceptable.
4. Cost of living
5. Choice: more options, broader range of qualities
6. Incomes
7. Growth and jobs
8. Efficiency: trade allows a division of labor between countries. It allows resources to be ]
used more appropriately and effectively for production.
9. Lobbying: governments need to be armed against pressure from narrow interest groups,
and the WTO system can help.
10. Good government: Remove the use of quotas and reduces corruption because it places
constraints on member countries
Disadvantages of WTO
 Too powerful: it can compel sovereign states to change laws and
regulations by declaring them to be in violation of free trade rules.
 Run by the rich, for the rich: does not give significant weight to the
problems of developing countries
 For example, rich countries have not fully opened their markets to
products from poor countries.
 Indifferent: in regards to impact of free trade on workers' rights, child
labor, the environment and health
 Lack democratic accountability: its hearings on trade disputes are
closed to the public and the media
International Impact
 China:
- Opened up China’s market for more international trade and
investment, and opens up the world economy for China’s exports.
 Russia:
- Diminished the monopoly that Russia’s banks and insurance
companies enjoyed.
- Boost key segments of Russia’s economy as foreign markets are
opened to Russian products like grain, transport, tourism,
construction and engineering
 Nigeria:
- Helped increase accountability and transparency in the
government to combat corruption
International Impact
 Mexico:
- Weakened local laws
- U.S. filed a WTO challenge against Mexico for violating rules on
anti-dumping measures
- Deepened land privatization in Mexico by banning communal
ownership as “discriminatory” and removing restrictions on who
could buy land
 UK:
- Prevents trade-distorting behavior by multinational corporations.
- Created broader market with more transparency
Works Cited
1. http://econ.economicshelp.org/2007/06/advantages-and-disadvantages-of-wto.html
2. http://www.wto.org/english/thewto_e/whatis_e/tif_e/org3_e.htm
3. http://www.cepr.org/meets/wkcn/2/2363/papers/Tang.pdf
4. http://www.wto.org/english/tratop_e/tpr_e/tp75_e.htm