The World Trade Organization (WTO): A Comprehensive Overview

The World Trade Organization (WTO)

Introduction

The establishment of the World Trade Organization (WTO) in 1995, following the Uruguay Round of negotiations under the General Agreement on Tariffs and Trade (GATT), represents a pivotal moment in the history of international trade. GATT, the precursor to the WTO, was founded in 1948 by 23 countries. It liberalized trade and fostered an environment that paved the way for the WTO's evolution. The WTO's scope is significantly broader than that of GATT, encompassing areas such as textiles, agriculture, services, and intellectual property, which were previously excluded under GATT.

Guiding Principles of the WTO

The core guiding principles of the WTO are:

• Non-discrimination among members in granting favors related to market access and tariff reductions.
• National treatment for foreign investors, imported goods, and services.
• Stability and predictability of international trade patterns to foster investor and business confidence by binding tariffs and market access for services.
• Promotion of economic development by encouraging reforms in less developed and transition economies.

WTO Agreements

To ensure fair and practical trade, the WTO has numerous agreements resulting from negotiations among member states. The current agreements stem from the 1986-94 Uruguay Round negotiations. Through these agreements, WTO members operate a non-discriminatory trading system that outlines their rights and obligations. Key agreements cover goods, agriculture, textiles and clothing, subsidies and countervailing measures, anti-dumping, safeguard measures, TRIMs, customs valuation, dispute settlement, technical barriers to trade, sanitary and phytosanitary measures, GATS, and TRIPs.

These agreements have led to substantial tariff reductions in member countries and increased market access for both developing and developed nations.

WTO Agreements: Salient Features

1. Trade in Services

Trade in Services is governed by the General Agreement on Trade in Services (GATS), which outlines fundamental obligations applicable to all members. Its second part addresses national schedules of commitments, containing specific assurances subject to ongoing liberalization. The third part deals with annexes addressing specific situations within individual service sectors, which are not binding on all members.

2. Agreement on Textiles and Clothing

The Agreement on Textiles and Clothing stipulates the phasing out of the Multifibre Arrangement and the integration of the textiles and clothing sector into the WTO in four stages over 10 years. The majority (49%) was integrated in the final stage, concluding on January 1, 2005.

3. Agreement on Subsidies and Countervailing Measures

The Agreement on Subsidies and Countervailing Measures establishes rules for subsidies on industrial products and countervailing duties to offset the effects of subsidies. Subsidies are categorized as prohibited, actionable, and non-actionable. Export subsidies and those contingent on using domestic over imported products are examples.