International Resources: The World Trade Organization

The World Trade Organization (WTO), formed in 1995, is the successor to the General Agreement on Tariffs and Trade (GATT) established after World War II. The WTO’s main function is to help trade flow smoothly, fairly, freely, and predictably. The WTO is the only organization in the world dealing with rules of trade between nations.

The WTO performs its function by administering trade agreements (the rules of the WTO, reached by agreement of the members), acting as a forum for trade negotiations, settling trade disputes, reviewing national trade policies, assisting developing countries in trade policy issues through technical assistance and training programs, and cooperating with other international organizations.

The WTO is based in Geneva, Switzerland. It comprises 149 countries (with some 30 countries currently negotiating membership) representing 97% of world trade. Of the 149 members, more than three-quarters are developing or least-developed countries. All WTO agreements make special provisions for these countries including longer time periods to implement agreements, measures to increase their trading opportunities, and support to help them build the infrastructure for their WTO work.

The trade agreements themselves cover goods, services, and intellectual property, and they spell out the members’ commitments to reduce tariffs and trade barriers and to keep open services markets. WTO agreements reflect a certain shape. They include the broad principles of the agreement, then annexes and extra agreements are added dealing with specific sectors or issues. They also contain detailed and lengthy schedules/lists of commitments made by individual countries allowing foreign products or service providers access to their markets.

Agriculture Agreement

The agriculture agreement’s objective is to reform trade in the sector and make policies more market-oriented. The agriculture agreement consists of four main portions: the agreement itself, the concessions and commitments members are to undertake on market access, the agreement on sanitary and phytosanitary measures, and the ministerial decisions concerning least developed and net-food-importing countries. The agricultural agreement also addresses many other issues of vital economic and political importance to many members. These include provisions that encourage the use of less trade-distorting domestic support policies to maintain the rural economy, that allow actions to be taken to ease any adjustment burden, and that include the introduction of tightly prescribed provisions that allow some flexibility in the implementation of commitments. Specific concerns of developing countries have been addressed including the concerns of net-food-importing countries and least-developed countries.

For the full agreement on agriculture (or any other agreement) please see: http://www.wto.org/english/docs_e/legal_e/legal_e.htm#ag

Disputes

The WTO also settles disputes arising from the agreements between members. Settling disputes is the responsibility of the Dispute Settlement Body (the General Council in another guise), which consists of all WTO members. The Dispute Settlement Body has the sole authority to establish panels of experts to consider the case and to accept or reject the panels’ findings or the results of an appeal. It monitors the implementation of the rulings and recommendations, and has the power to authorize retaliation when a country does not comply with a ruling.

First stage: consultation (up to 60 days). Before taking any other actions the countries in dispute have to talk to each other to see whether they can settle their differences by themselves. If that fails, they can also ask the WTO director-general to mediate or try to help in any other way.
Second stage: the panel (up to 45 days for a panel to be appointed, plus 6 months for the panel to conclude). If consultations fail, the complaining country can ask for a panel to be appointed. The country “in the dock” can block the creation of a panel once, but when the Dispute Settlement Body meets for a second time, the appointment can no longer be blocked (unless there is a consensus against appointing the panel).

Officially, the panel is helping the Dispute Settlement Body make rulings or recommendations. But because the panel’s report can only be rejected by consensus in the Dispute Settlement Body, its conclusions are difficult to overturn. The panel’s findings have to be based on the agreements cited.

The panel’s final report should normally be given to the parties to the dispute within six months. In cases of urgency, including those concerning perishable goods, the deadline is shortened to three months.

The agreement describes in some detail how the panels are to work. The main stages are:

Before the first hearing: Each side in the dispute presents its case in writing to the panel.
First hearing: The case for the complaining country and defense: the complaining country (or countries), the responding country, and those that have announced they have an interest in the dispute, make their case at the panel’s first hearing.
Rebuttals: The countries involved submit written rebuttals and present oral arguments at the panel’s second meeting.
Experts: If one side raises scientific or other technical matters, the panel may consult experts or appoint an expert review group to prepare an advisory report.
First draft: The panel submits the descriptive (factual and argument) sections of its report to the two sides, giving them two weeks to comment. This report does not include findings and conclusions.
Interim report: The panel then submits an interim report, including its findings and conclusions, to the two sides, giving them one week to ask for a review.
Review: The period of review must not exceed two weeks. During that time, the panel may hold additional meetings with the two sides.
Final report: A final report is submitted to the two sides and three weeks later, it is circulated to all WTO members. If the panel decides that the disputed trade measure does break a WTO agreement or an obligation, it recommends that the measure be made to conform to WTO rules. The panel may suggest how this could be done.
The report becomes a ruling: The report becomes the Dispute Settlement Body’s ruling or recommendation within 60 days unless a consensus rejects it. Both sides can appeal the report (and in some cases both sides do).

A member may appeal any ruling regarding a trade dispute. When the member has exhausted its appellate options (or did not appeal at all) it must swiftly correct its fault. The member must follow the recommendations of the panel report or the appeals panel report. If the member does not correct is policy or practice the panel may seek to impose trade sanctions.