WTO AND GATT by ankush.jakka666


									Introduction to the WTO


1.   From GATT to WTO

2.   The WTO Agreements: an overview

3.   Principles of the multilateral trading system

4.   The WTO, its structure and functions

5.   The Doha Development Agenda

1.     From GATT to WTO

        The end of the Great Depression of the 1930s which was basically triggered as a result of
countries’ recourse to excessive trade protectionism and mercantilism (maximize your exports,
minimize your imports) and World War II brought fundamental changes in the architecture of global
economic management with the establishment of the “Bretton Woods Institutions”: the World Bank
and the International Monetary Fund. As these institutions dealt with global finance, countries agreed
that a case could be made for a third institution, an International Trade Organization (ITO), which
would a specialized agency of the United Nations. The draft ITO Charter was ambitious and included
rules on employment, commodity agreements, restrictive business practices, international investment,
and services. Over 50 countries participated in the negotiations and 23 participants started negotiations
in 1946 to reduce and bind customs tariffs.

        The first round of negotiations resulted in 45,000 tariff concessions affecting US$10 billion of
trade, about one fifth of the world’s total and an average reduction of tariffs on industrial goods by 19
per cent. The 23 economies also agreed on some of the draft ITO Charter. The combined package of
trade rules and tariff concessions became knows as the General Agreement on Tariffs and Trade
(GATT) 1947. The 23 participants became founding GATT members and were referred to in the
GATT text as “Contracting Parties”.

       The ITO Charter was agreed at a United Nations Conference on Trade and Employment in
Havana in March 1948 but failed to obtain the necessary ratification, especially in the United States
which, ironically, had been the main driving force behind the ITO. The “Havana Charter” and with it,
the ITO, never became a reality, although it was agreed that a secretariat would be established to
administer the GATT as the only multilateral organization governing international trade. The GATT
Secretariat, also referred to effectively as the GATT, was located in Geneva, until it was replaced by
the WTO in 1995.

        The founding of the GATT heralded the birth of a multilateral trading system. The central
principle of the GATT is non-discrimination which is embodied in two concepts:

         Most-Favoured Nation Treatment (MFN): treat each country as your most-favoured trading
partner, i.e. do not discriminate among your trading partner with regard to border measures such as
tariffs and NTBs.

       National Treatment: treat imported foreign goods and services the same as locally- produced
goods and services (after foreign goods have entered the market)

        During the GATT years, several rounds of multilateral trade negotiations were held, each
resulting in deeper tariff concessions (table 1). A section on development was added in the 1960s and
some “plurilateral agreements” (i.e. agreements with voluntary membership) were added in the 1970s.
The first few rounds all concentrated on reductions of tariffs on industrial goods. After the first round
in Geneva establishing the GATT, the next four rounds only resulted in minor tariff rate reductions.
The “Dillon Round”, named after Douglas C. Dillon, the then US Under-Secretary of State, only
managed an average reduction of 7 per cent and took two years, 1960-1961.

       The “Kennedy Round”, named after US President John F. Kennedy in recognition of his
support for the reformulation of the United States trade agenda which gave him the widest-ever
negotiating authority, had more substantial results. It was held in Geneva from 1964 to 1967 and
resulted in an average reduction of industrial tariffs by 35 per cent (except for textiles, chemicals, steel
and other sensitive products), plus a 15 to 18 per cent reduction in tariffs for agricultural and food
products. The Round was participated by 62 “contracting parties”. The biggest challenge faced by the
Kennedy Round was the rapid growth of Japan and the formation of the European Economic
Community (EEC, currently the European Union or EU), the European Free Trade Association
(EFTA), and the convening of the United Nations Conference on Trade and Development (UNCTAD)
in 1964. Minor progress was made in agriculture with the adoption of basic principles on grains which
were finally merged into an International Grains Arrangement. The main achievements of the Kennedy
Round for developing countries were the adoption of Part IV of the GATT on development (see below),
and the adoption of an Anti-Dumping Code, which gave more guidance on the implementation of
Article VI of the GATT.

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        The seventh round of multilateral trade negotiations, the “Tokyo Round”, was much more
substantive. Launched in Tokyo, the negotiations took place in Geneva among 102 participating
countries from 1973 to 1979. The results included an average one-third cut in customs duties in the
world’s nine major industrial markets, bringing the average tariff on industrial goods down to 4.7 per
cent. For the first time, a so-called “harmonization” approach was used (the “Swiss Formula”): the
higher the tariff, the larger the cut, proportionally. The Round faced challenges in the form of EEC
preoccupation with its recent expansion, and the absence of the US President’s trade negotiation
authority until January 1975, as well as the US presidential elections in 1976 and preparations for the
“New International Economic Order” 1 initiative. The results of the Tokyo Round were therefore
relatively modest compared with expectations: there were no breakthroughs on trade in agricultural
products and failed to adopt a modified agreement on “safeguards”. Nevertheless, nine agreements on
non-tariff barriers (NTBs) emerged, so-called “framework agreements”, in some cases interpreting
existing GATT rules, in other breaking entirely new ground. Six of these agreements were called
“codes” as they were not accepted by the full GATT membership, the other three were sectoral

        A major result of the Tokyo Round for developing countries was the adoption of the “Enabling
Clause”. This Clause allowed developed countries to accord differential treatment to developing
countries in the form of preferential access and accorded special treatment for least developed
countries (LDCs). It also allowed developing countries to form free trade agreements and customs
unions without fulfilling all the conditions of Article XXIV of GATT on such agreements. It
introduced for the first time a concept which would later be known formally as “special and
differential treatment”.

        Although often lengthy, trade rounds offer a package approach to trade negotiations; an
approach with a number of advantages over issue-by-issue negotiations. For a start, a trade round
allows participants to seek and secure advantages across a wide range of issues. Second, concessions
which are necessary but would otherwise be difficult to defend in domestic political terms, can be
made more easily in the context of a package which also contains politically and economically
attractive benefits. Third, developing countries and other less powerful participants have a greater
chance of influencing the multilateral system in the context of a round than if bilateral relationships
between major trading nations are allowed to dominate. Finally, overall reform in politically-sensitive
sectors of world trade can be more feasible in the context of a global package.

        While the GATT managed to bring some discipline to world trade, it proved severely wanting
in the area of agriculture and industrial goods of importance to developing countries. In the area of
textiles and clothing, for instance, a separate regime was negotiated in the 1960s and 1970s resulting in
the “Multifibre Arrangement”(MFA). Its effectiveness was also undermined by recessions and crises
in the 1970s and the ever rising complexities of world trade, including the rapid rise of trade in
services, which was not covered by GATT rules. However, it must be noted that thanks to GATT (and
the WTO today) average tariffs have been reduced from 43 per cent in the late 1940s to less than 5 per
cent today and that world trade has risen 15-fold representing the biggest boost to economic welfare in
the history of the world. Nevertheless, GATT members realized that a new effort to reinforce the
multilateral trading system (i.e. the non-discriminatory trading system launched with the
establishment of GATT) should be attempted. This resulted in the launch of the “Uruguay Round” in
1986 and finally the establishment of the “World Trade Organization” (WTO) in 1995. WTO
Members agreed at the Fourth WTO Ministerial Conference in Doha in 2001 to launch the next round,
formally known as Doha Development Agenda. The negotiations under the DDA are meant to be
completed by the end of 2006.

  The New International Economic Order : A campaign launched in the early 1970s by developing countries to bring about
radical changes in the international economic order, including an improved terms of trade and access to unconditional
financial aid.
  The Tokyo Round “Codes” were the following: (i) Subsidies and countervailing measures-interpreting Articles 6, 16 and
23 of GATT; (ii) Technical barriers to trade – sometimes called the Standards Code; (iii) Import licensing procedures; (iv)
Government procurement; (v) Customs valuation – interpreting Article 7 of GATT; (vi) Anti-dumping – interpreting
Article 6, replacing the Kennedy Round Code. The three sectoral agreements were on: (i) Bovine Meat Arrangement; (ii)
International Dairy Arrangement; and (iii) Trade in Civil Aircraft.

2.     The WTO Agreements: an overview

        The Uruguay Round was launched in Punta des Este, Uruguay, on 20 September 1986 and was
completed with the adoption of the “Final Act Embodying the Results of the Uruguay Round of
Multilateral Trade Negotiations” at the Ministerial Conference in Marrakesh, Morocco, from 12 to 15
April 1994. The main results are the establishment of the WTO with its Dispute Settlement mechanism
and Trade Policy Review Mechanism, a trade-weighted average tariff cut of 40 per cent on industrial
goods from an average of 6.3 per cent to 3.8 per cent, the conclusion of an Agreement on Agriculture
which brought agricultural trade for the first time under full GATT disciplines, and adoption of
multilateral agreements on trade in services and intellectual property rights. The Results of the
Uruguay Round consist of the “Marrakesh Agreement Establishing the World Trade Organization”
along with about 60 agreements, annexes, decisions and understandings. The basic structure of the
Uruguay Round results is illustrated in table 2.

Table 2         The basic structure of the WTO agreements

Umbrella                       AGREEMENT ESTABLISHING WTO
                         Goods            Services        Intellectual property
Basic principles         GATT              GATS                   TRIPS
                       (Annex 1A)        (Annex 1B)            (Annex 1C)
Additional details   Other goods       Services annexes
                     agreements and
Market access        Countries’        Countries’
commitments          schedules of      schedules of
                     commitments       commitments
                                       (and MFN

Dispute settlement                    DISPUTE SETTLEMENT
                                            (Annex 2)

Transparency                          TRADE POLICY REVIEWS
                                             (Annex 3)

       The Agreement Establishing the WTO outlines the scope, functions, structure, status, budget,
decision-making processes of WTO as well as accession to WTO and is further analysed in section 5
below. It forms the umbrella agreement to which all other agreements are annexed.

        Annex 1 deals with the multilateral agreements on trade in goods of which the most important
one is the GATT 1947 updated to GATT 1994. Since 1995, GATT really denotes the agreement on
trade in goods only and no longer means the organization which is replaced by WTO. The GATT
contains the basic principles and rules for trade in goods which are elaborated and further refined in a
set of understandings and complementary agreements. The complementary agreements are as follows:

       Table 3: The multilateral agreements on trade in goods

          The General Agreement on Tariffs and Trade 1994 and its Understandings

Agreement on Agriculture (AoA)

Agreement on the Application of Sanitary and Phytosanitary Measures (SPS)

Agreement on Textiles and Clothing (expired 1 January 2005)

Agreement on Technical Barriers to Trade (TBT)

Agreement on Trade-Related Investment Measures (TRIMS)

Agreement on the Implementation of Article VI of the GATT 1994 (Anti-dumping)

Agreement on the Implementation of Article VII of the GATT 1994 (Customs Valuation)

Agreement on Preshipment Inspection

Agreement on Rules of Origin (ROO)

Agreement on Import Licensing Procedures

Agreement on Subsidies and Countervailing Measures (ASCM)

Agreement on Safeguards

                       Schedules of concessions for each WTO Member

        The GATT remains the principal body of rules and principles for trade in goods. It contains 4
parts. Part I deals with the general principle of MFN (Article I) and the Schedules of Concessions.

      Schedule of Concessions: a list of bound tariff rates negotiated under WTO auspices (Walter
Goode: Dictionary of Trade Policy Terms).

       Bound tariff rates: agreed ceiling levels of tariffs; actually applied rates are usually much
lower than the bound rates and can be raised without repercussions from other WTO Members up to
the maximum (bound) rate. If the applied rate exceeds the bound rate, consultations are required and
compensation may be paid to affected parties.

        Part II of the GATT deals with the principles of national treatment (Article III), freedom of
transit (Article V, of importance to landlocked countries), anti-dumping and countervailing duties
(Article VI), customs valuation (Article VII), marks of origin (Article IX), publication and
administration of trade regulations (Article X, part of notification obligations and important for
transparency), general elimination of quantitative restrictions (Article XI), restrictions to safeguard the
balance of payments (Article XII), subsidies (Article XVI), state trading enterprises (Article XVII),
governmental assistance to economic development (Article XVIII, important for developing countries
and complemented by Part IV of the GATT), emergency action on imports of particular products
(Article XIX, known as safeguards), general exceptions (Article XX), security exceptions (Article
XXI), and nullification and impairment (Article XXIII).

       Some of the articles are subject to elaboration in separate agreements, such as Article VI in the
Antidumping Agreement, Article VII in the Customs Valuation Agreement and Article XIX in the
Agreement on Safeguards. The GATT provides for flexibility by listing various situations where
exceptions of the rules (especially MFN) are possible: for security reasons, balance of payments,
development etc. Article XX lists general exceptions.

        The principle of nullification and impairment is an important GATT and WTO principle. It
basically states that damage to a country’s benefits and expectations from its WTO membership can
result from changes in another WTO member’s trade regime of failure to carry out its WTO
obligations. In case of non-violation, such damage may be possible even when WTO rules were not
violated. In such cases, consultation is called for, and if consultation cannot resolve the matter,
recourse to the dispute settlement mechanism is open.

        Part III of the GATT deals with regional trade agreements (Article XXIV, essentially: free
trade agreements and customs unions), entry into force, withdrawal, modification of schedules,
amendments, and non-application of the Agreement between particular Contracting Parties (Article
XXXV), which states that the Agreement does not apply if either of the contracting parties, at the time
either becomes a contracting party, does not consent to such application.

       Part IV of the GATT deals comprehensively with trade and development.

       Among the other multilateral agreements on trade in non-agricultural goods, the Agreement on
Textiles and Clothing was important as it phased out the quotas which existed on imports of textiles
and clothing under the MFA. Such quotas were an exception to the rule as quantitative restrictions had
been banned by the GATT but textiles and clothing were considered sensitive. From 1 January 2005,
the ATC has ceased to exist and textiles and clothing are fully integrated into the GATT.

         The Agreement on Agriculture for the first time brought disciplines on trade in agriculture
while little liberalization in this sector actually took place. The AoA allows export subsidies and quotas
in agriculture which are banned by GATT for non-agricultural products. The SPS and TBT
agreements regulate standards for public health and safety reasons to make sure they do not unduly
restrict and distort trade. The TRIMS agreement prohibits certain trade-related investment measures
which are considered to unduly restrict and distort trade, in particular local content requirements
(requiring foreign investors to use domestic suppliers) and trade balancing requirements (requiring
foreign investors to limit their imports or to meet minimum export targets).

        The Anti-Dumping Agreement regulates how governments can act on the dumping practices of
enterprises: the sale of a product in an export market at lower price than the price charged in the home
market. The Agreement on Subsidies and Countervailing Measures regulates which subsidies are
allowed and under what circumstances. Most importantly, it prohibits export subsidies on non-
agricultural goods. The Agreement on Safeguards regulates government action to temporarily restrict
imports of a product. Anti-dumping, subsidies, countervailing measures and safeguards are part of the
negotiations on rules.

        The agreements on import licensing, customs valuation, preshipment inspection, and rules of
origin deal with various bureaucratic or legal issues that could potentially unduly obstruct trade and
are meant to establish transparent and uniform rules and principles. Rules of origin determine the
origin of a product which can involve more than one country. Such rules are still subject to negotiation
as no multilateral system for non-preferential rules of origin as yet exists. Preferential rules of origin
exist in the context of regional trade agreements and are only applicable to the parties of such

       Finally, there are four plurilateral agreements which were not signed by all WTO Members.
They include the Agreements on trade in civil aircraft, government procurement, dairy products and
bovine meat. The last two agreements were terminated in 1997.

        Following the adoption of the WTO agreements, 40 countries, accounting for over 90 per cent
of world trade in information technology products, concluded the Agreement on Information
Technology Products on 26 March 1997 and agreed to eliminate import duties and other charges on
these products by 2000.

        Annex 1B lists the General Agreement on Trade in Services (GATS), the second main
agreement of the WTO, while Annex 1C lists the Agreement on Trade-Related Aspects of Intellectual
Property Rights, the third main agreement of the WTO. Both GATS and TRIPS embody the non-
discriminatory principles of MFN and national treatment but allow exceptions. The GATS is the first
and only set of multilateral rules governing international trade in services. All services are covered by
GATS. GATS mandated further negotiations in services to start in 2000. They are now integrated in
the Doha negotiations. The TRIPS for the first time introduced intellectual property rules into the
multilateral trading system in recognition of the importance of ideas and knowledge (intellectual
property) for international trade. It establishes the ground-rules for the protection of intellectual

3.     Principles of the multilateral trading system

       The multilateral trading system (MTS) embodies the following main principles:

               Universal, rule-based and open
               Freer trade
               Fair trade and competition
               Encouraging development and economic reform
        Universal, rule-based and open

        The MTS is universal, i.e. it applies to all Members, world-wide. It is rule-based. Before the
WTO, only the GATT regulated international trade but was flawed. Without rules, international trade
would proceed according to the laws of the jungle. Weaker countries have access to rules which apply
to all Members, big and small, and can sue other Members in case of violation of the rules. The
establishment of rules for international trade is the principal function of WTO (i.e. its Members
through negotiation) rather than trade liberalization per se. Trade liberalization deals with the reduction
and simplification of international trade rules. Rules are required for stability, while liberalization
ensures the efficiency of international trade. The challenge is to find a suitable balance between those
two concepts. The dispute settlement mechanism ensures that the rules are enforced and therefore have
credibility and are taken seriously. The MTS is open, i.e. each economy identified as customs territory,
can join.


       The principle of non-discrimination is embodied in the principles of MFN and national
treatment and can be found in all three main agreements.

       Freer trade

         As long as there are nation-states with their own sovereignty there will probably never be truly
free trade. However, the WTO strives towards freer trade in order to ensure efficiency gains which
translate in a rise in global welfare. The WTO is less concerned with the distribution of those gains as
it is not a development agency but a body concerned with the establishment of international trade rules
through negotiation by its Members. A major achievement is the abolition of quantitative restrictions
and the application of more transparent tariffs as the only form of protection in most cases (many
exceptions apply, however).


        The MTS has greatly improved predictability through the binding of tariffs. While countries
can still raise tariffs they cannot go beyond a certain ceiling without offering compensation to their
trading partners.


        Through a system of notification obligations for WTO Members on changes in their trade
regime, the transparency of the MTS is greatly enhanced. In addition, through the WTO website and
other modalities, the public at large has access to most matters related to WTO (exceptions being the
closed-door stages of the negotiation process at the request of WTO Members). In addition, the Trade
Policy Review Mechanism provides for regular review by the WTO of individual countries’ trade
policies. The objectives of this process are as follows:

               To increase the transparency and understanding of countries’ trade policies and
               practices, through regular monitoring
               Improve the quality of public and intergovernmental debate on the issues
               To enable a multilateral assessment of the effects of policies on the world trading
       Fair trade and competition

        WTO Members strive towards establishing a level playing field in international trade
transactions but recognizes that some countries are more powerful than others (i.e. the playing field is
not level) and could therefore benefit more than other countries. Hence, the concept of special and
differential treatment. While it is recognized that the concept of “fair” is relative and not subject to a
generally accepted interpretation, the MTS has made great progress compared to the situation before
the establishment of the WTO. The establishment of common rules and principles of non-
discrimination have contributed to make trade at least more fair than before.

       Encouraging development and economic reform

       Through WTO membership and obligations to implement WTO agreements, many countries
have received a major boost and more legitimacy to their reform process. In recognition of the
problems and disadvantages of developing countries and LDCs, special and differential treatment
provisions exist for especially and exclusively for these countries while the GATT has a large part
devoted to development concerns. Indeed, there are many exceptions for developing countries in the
WTO, in particular for LDCs which routinely are exempt from reduction commitments. Through the
WTO, technical assistance schemes exist for these countries, while the Doha Round is meant to pay
special heed to the concerns of developing countries and is therefore formally known as Doha
Development Agenda.

4.     The WTO: its structure and functions

       The establishment of the WTO is probably the most tangible outcome of the Uruguay Round
negotiations. Its structure, functions, etc. are regulated by the Marrakesh Agreement Establishing the
World Trade Organization”. The WTO has the following functions:

              Administering the WTO trade agreements
              Forum for trade negotiations
              Handling trade disputes
              Monitoring national trade policies
              Technical assistance and training for developing countries
              Cooperation with other international organizations.

       The WTO is run by its member governments. The chief administrator is the Director-General.
Figure 1 shows the organizational chart of the WTO.

       The highest decision-making body of the WTO is the Ministerial Conference. So far six
Ministerial Conferences have been held:

       The First Ministerial Conference in Singapore, 9-13 December 1996
       The Second Ministerial Conference in Geneva, 18-20 May 1998
       The Third Ministerial Conference in Seattle, 30 November – 3 December 1999
       The Fourth Ministerial Conference in Doha, 9-13 November 2001
       The Fifth Ministerial Conference in Cancún, 10-14 September 2003
       The Sixth Ministerial Conference in Hong Kong, China; 13-18 December 2005
        The Second Ministerial Conference for the first time introduced new issues which could be
included in future negotiations. These issues included: trade and investment, trade and competition
policy, transparency in government procurement, and trade facilitation. These issues are collectively
known as the “Singapore Issues”. Currently, only trade facilitation has been included in the Doha
negotiations. The Third Ministerial Conference in Seattle tried to launch the next Round of multilateral
trade negotiations but failed. However, the Fourth Ministerial Conference in Doha finally managed to
launch the Doha Round, or Doha Development Agenda which is scheduled to be completed by the end
of 2006. The Doha Round had a mid-term review at the Fifth Ministerial Conference in Cancún,
Mexico, which ended in discord and led to a delay of the negotiations. The Sixth Ministerial
Conference in Hong Kong, China in 2005 gave new impetus to the negotiations.

        The General Council consists of representatives of the member governments and is in charge
of the day-to-day management and work in between the ministerial conferences. It also acts as Dispute
Settlement Body and Trade Policy Review Body and the main Trade Negotiations Committee in the
Doha negotiations. Under the General Council are the three Councils monitoring the three main
agreements: the Council for Trade in Goods (Goods Council), the Council for Trade in Services
(Services Council), and the Council for Trade-Related Aspects of Intellectual Property (TRIPS
Council). Special sessions of the Services Council conduct the Doha negotiations in services while
special sessions of the TRIPS Council conduct the negotiations on issues related to intellectual
property rights.

        Under the Councils, there are a variety of committees where most of the work is done. Under
the Goods Council there are committees on market access (dealing with market access of non-
agricultural products), agriculture (overseeing the Agreement on Agriculture as well as conducting the
Doha negotiations on agriculture in special sessions), and committees on each of the WTO agreements
on goods. The negotiations on non-agricultural market access are not conducted in the Committeee on
Market Access but in a special Negotiating Group on Market Access. There is also a plurilateral
committee on the Information Technology Agreement and a Working Party on State-Trading
Enterprises. The TRIPS Council has no subsidiary bodies but the Services Council has committees on
trade in financial services and on specific commitments as well as working parties on domestic
regulation and GATS rules. The Doha negotiations on anti-dumping, subsidies and countervailing
duties and regional trade agreements are conducted in the Negotiating Group on Rules.

        Directly under the General Council there are a number of committees dealing with trade and
environment, trade and development (with its sub-committee on least developed countries), regional
trade agreements, balance of payment restrictions, and on budget, finance and administration. For the
accession of each new prospective member, special working parties are formed which last as long as
the accession of that particular economy lasts. Finally, there are working parties which do not conduct
negotiations but study certain trade-related aspects such as debt and finance, technology transfer and
those that dealt with “Singapore Issues” but are no longer active.

       All decisions made in WTO bodies are by consensus, a practice continued from the GATT days.
Where consensus is not possible, voting is possible in specific situations on the basis of “one country,
one vote”. For instance, accession of new members requires a two-third majority in the General
Council or Ministerial Conference, while a waiver of a certain obligation for a member can be made by
three-quarters majority.
       Figure 1              Organizational chart of the World Trade Organization

                       General Council meeting as                                           General Council meeting as
                      Dispute Settlement                     General Council
                  Appellate Body
                  Dispute Settlement panels

 Committees on
    Trade and Environment
                                                 Council for                          Council for                              Council for
    Trade and Development                      Trade in Goods                    Trade-Related Aspects                       Trade in Services
      Subcommittee on Least-                                                         of Intellectual
      Developed Countries                                                           Property Rights
    Regional Trade Agreements
    Balance of Payments Restrictions
    Budget, Finance and Administration     Committees on                                                             Committees on
                                             Market Access                                                             Trade in Financial Services
 Working parties on                          Agriculture                                                               Specific Commitments
    Accession                                Sanitary and Phytosanitary
                                               Measures                                                              Working parties on
 Working groups on                           Technical Barriers to Trade                                               Domestic Regulation
    Trade, debt and finance                  Subsidies and Countervailing                                              GATS Rules
    Trade and technology transfer              Measures
    (Inactive:                               Anti-Dumping Practices
    (Relationship between                                                                                      Plurilaterals
                                             Customs Valuation                                                    Trade in Civil Aircraft Committee
       Trade and Investment                  Rules of Origin
    (Interaction between                                                                                          Government Procurement Committee
                                             Import Licensing
       Trade and Competition Policy          Trade-Related Investment Measures
    (Transparency in                         Safeguards
       Government Procurement)
                                           Working party on                            Doha Development Agenda:
                                             State-Trading Enterprises                 TNC and its bodies

                                           Textiles Monitoring Body                         Trade Negotiations

                                                                                       Special Sessions of
                                                                                         Services Council / TRIPS Council / Dispute Settlement Body /
                                                                                           Agriculture Committee / Trade and Development Committee /
                                                                                           Trade and Environment Committee

                                                                                       Negotiating groups on
Plurilateral                                                                             Market Access / Rules / Trade Facilitation
  Information Technology Agreement

                   Reporting to General Council (or a subsidiary)
                   Reporting to Dispute Settlement Body
                   Plurilateral committees inform the General Council or Goods Council of their activities, although these agreements are not signed by all WTO
                   Trade Negotiations Committee reports to General Council
The General Council also meets as the Trade Policy Review Body and Dispute Settlement Body
         There are no formal procedures for accession to WTO. However, there are certain steps new
applicants have to follow. They have to submit a detailed memorandum on their trade and economic
policies which is examined by their working party. Working party members then submit questions
which must be satisfactorily answered. Subsequently, the applicant country must enter into bilateral
negotiations with each working party member. The results of these negotiations will be multilateralized
upon accession. Upon finalization of all bilateral negotiations, the membership terms are drafted which
appear in a report which outlines the draft membership treaty (“protocol of accession”) and
“schedules” outlining the applicant’s commitments. The decision to allow the applicant to become a
Member rests with the General Council or Ministerial Conference. When the decision is favourable,
the accession treaty needs ratification by the applicant’s own legislature or parliament. After
ratification, the applicant is formally a new Member of the WTO. Currently, there are 150 Members
(upon Tonga’s ratification).

5.     The Doha Development Agenda

       At the Fourth Ministerial Conference of the WTO in Doha, Members launched the new round
of multilateral trade negotiations, formally known as the Doha Development Agenda (DDA). The
mandate of the negotiations is contained in the Doha Declaration. The negotiations are conducted in
the Trade Negotiations Committee and its subsidiaries, which are usually either regular councils or
committees meeting in “special sessions” or specially-created negotiating groups. Due to discord
among the Members, the official deadline of 1 January 2005 to end the negotiations was missed. The
negotiations are now scheduled to be completed by the end of 2006. Briefly, the Doha mandate
contains the following:

       Implementation-related issues and concerns

       Many developing countries face problems implementing their obligations under the Uruguay
Round agreements. A separate Ministerial Decision on implementation issues adopted at the Doha
Ministerial Conference mandates negotiations on the clarification of these issues.

       Market access for non-agricultural products

       These negotiations are known as the non-agricultural market access (“NAMA”) negotiations
aiming at cutting tariffs on all non-agricultural products, while addressing issues such as tariff peaks
(higher than average tariffs, usually understood as over 15 per cent), tariff escalation (the practice
where higher-value added products face higher tariffs). Members have agreed to adopt the so-called
“Swiss Formula” for the tariff-cutting exercise. The challenge was to agree on a methodology to
convert the rather non-transparent “specific” duties into equivalent and more transparent “ad-
valorem” duties. Specific duties express the duty as an amount per quantity imported while ad-
valorem expresses the duty as a percentage of the price of the imported product. Conversion is
necessary to apply the reduction formula. The negotiations are conducted in the Negotiating Group on
Market Access.


      The negotiations already ongoing before the Doha Ministerial Conference are integrated in the
Doha negotiations committing the Members to achieve substantial reductions in market access barriers,
reductions of export subsidies (with a view to phasing them out) and substantial reductions in levels of
domestic support. Members have already agreed on a methodology to convert specific duties into
equivalent ad-valorem duties. The negotiations are conducted in special sessions of the Committee on


        The negotiations already ongoing before the Doha Ministerial Conference are integrated in the
Doha negotiations and take place on the basis of “requests and offers”: a negotiating method where
Members negotiate on a bilateral basis submitting “requests” to their principal trading partners which
replies with “offers”. Since the Hong Kong, China Ministerial Conference, plurilateral request-offer
negotiations are also allowed. The negotiations take place in the special sessions of the Services

       Trade-related aspects of intellectual property rights (TRIPS)

       Members adopted a Declaration on TRIPS and Public Health at the Doha Ministerial
Conference which stresses that the TRIPS Agreement should be implemented and interpreted in such a
way that it support public health, by promoting access to existing medicines and the creation of new
medicines. Members have now agreed that developing countries can import generic copies of patented
medicines without consent of the patent holder.

        Other issues under negotiation include geographical indications (geographical place names
identified with the quality or other characteristics of a particular product), biodiversity, traditional
knowledge and reviews of the TRIPS provisions. The negotiations take place in special sessions of the
TRIPS Council.

       “Singapore” issues

        The Doha Declaration mandates negotiations upon explicit consensus of the all Members on
the following areas: trade and investment, trade and competition policy, transparency in government
procurement, and trade facilitation. These issues were first raised at the Second WTO Ministerial
Conference in Singapore. Members have now agreed to negotiate on trade facilitation only. The
negotiations are conducted in the Negotiating Group on Trade Facilitation.

       Rules and regional trade agreements

        The Doha Declaration mandates negotiations on clarification and improvement of the so-called
“rules”, i.e. anti-dumping and subsidies. Negotiations are also mandated on clarifying and improving
disciplines on regional trade agreements. The negotiations in these areas are conducted in the
Negotiating Group on Rules.

       Dispute settlement understanding

        Negotiations are mandated to improve the Dispute Settlement Understanding. The negotiations
take place in special sessions of the Dispute Settlement Body (i.e. the General Council)
       Trade and environment

         Negotiations are mandated on (a) the relationship between existing WTO rules and specific
trade obligations set out in multilateral environmental agreements (MEAs); (b) procedures for
information exchange between secretariats of MEAs and the WTO secretariat; (c) develop criteria for
observership of other international governmental organizations in WTO; (d) reduction or elimination
of tariff and NTBs to environmental goods and services; and (e) clarify and improve WTO rules that
apply to fisheries subsidies.

       The negotiations on these issues take place in special sessions of the Committee on Trade and
Environment, with the exception of market access for environmental goods and services negotiations
which take place in special sessions of the Negotiating Group on Market Access and the Services

       Other issues

       Other issues which are part of the Doha mandate include:

               Electronic commerce (General Council)
               Small economies (General Council)
               Trade, debt and finance (Working Group)
               Trade and technology transfer (Working Group)
               Technical cooperation and capacity building (General Council)
               Least-developed countries (Sub-committee on LDCs)
               Special and differential treatment (Committee on Trade and Development)

       The various deadlines imposed by the Doha Declaration for the negotiations were mostly
missed and the Fifth Ministerial Conference at Cancún ended in disarray over agricultural subsidies
and the Singapore issues. Progress was finally made with the adoption of the 1 August 2004 Decision,
also known as the July 2004 Framework Agreement which outlined the framework of the new
agreement. This framework agreement was further refined at the Sixth Ministerial Conference in Hong
Kong, China in December 2005. All negotiations, except those on dispute settlement, are part of the
“single undertaking”, i.e. they must be concluded as a package and members must accept the package
as a whole. The negotiations also maintain the principle of “reciprocity” under which a country
seeking improved access to an overseas market (e.g. through tariff reductions) must be ready to make
concessions (e.g. in tariffs) that its trading partners consider to be advantageous and of reciprocal or
equivalent value to the concessions they are seeking (exceptions for developing countries as part of

       The Sixth Ministerial Conference basically reiterated the commitments made at earlier
conferences and fine-tuned the July 2004 Framework Agreement. However, it revived the Doha
negotiations and had three outstanding outcomes:
               Elimination of all export subsidies by 2013 and for cotton by 2006.
               Elimination of all duties and quotas on at least 97 per cent of exports from LDCs by
               developed countries and developing countries in a position to do so by 2008 or no later
               than the start of the implementation period.
               Introducing “Aid-for-Trade”, in particular for purposes of building supply-side

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