WTO AGREEMENT

The World Trade Organization (WTO) is an intergovernmental organization that is concerned with the regulation of international trade between nations. The WTO officially commenced on 1 January 1995 under the Marrakesh Agreement, signed by 124 nations on 15 April 1994, replacing the General Agreement on Tariffs and Trade (GATT), which commenced in 1948. It is the largest international economic organization in the world.

The WTO deals with regulation of trade in goods, services and intellectual property between participating countries by providing a framework for negotiating trade agreements and a dispute resolution process aimed at enforcing participants’ adherence to WTO agreements, which are signed by representatives of member governments and ratified by their parliaments. The WTO prohibits discrimination between trading partners, but provides exceptions for environmental protection, national security, and other important goals. Trade-related disputes are resolved by independent judges at the WTO through a dispute resolution process.

The WTO’s current Director-General is Roberto Azevêdo, who leads a staff of over 600 people in Geneva, Switzerland. A trade facilitation agreement, part of the Bali Package of decisions, was agreed by all members on 7 December 2013, the first comprehensive agreement in the organization’s history. On 23 January 2017, the amendment to the WTO Trade Related Aspects of Intellectual Property Rights (TRIPS) Agreement marks the first time since the organization opened in 1995 that WTO accords have been amended, and this change should secure for developing countries a legal pathway to access affordable remedies under WTO rules.

Studies show that the WTO boosted trade, and that barriers to trade would be higher in the absence of the WTO. The WTO has highly influenced the text of trade agreements, as “nearly all recent [preferential trade agreements (PTAs)] reference the WTO explicitly, often dozens of times across multiple chapters… in many of these same PTAs we find that substantial portions of treaty language—sometime the majority of a chapter—is copied verbatim from a WTO agreement.”

The Agreement Establishing the World Trade Organisation 1995 (“WTO Agreement”) is a short agreement setting out the role, structure and powers of the World Trade Organisation (“WTO”). It was signed in Marrakesh on 15 April 1994 at the end of the Uruguay Round of the Multilateral Trade Negotiations.

The WTO Agreement was part of the treaty that established the WTO. Prior to the WTO’s establishment, the General Agreement on Tariffs and Trade (GATT) governed the rights and obligations for trade in goods between its signatories. However, the GATT had a weak institutional basis, and was not meeting evolving needs. Further, the agreements governing GATT were only signed by some signatories, and therefore had little or no impact. Therefore, at the Uruguay Round negotiations, the WTO was established out of a need for a better institution to govern international trade. In particular, there was an emphasis on efforts to improve the coherence of global economic policy-making. The WTO superseded the GATT as the umbrella organisation for international trade.

The WTO Agreement creates an entirely new international organisation (the WTO) to administer “an integrated, more viable and durable multilateral trading system”. The key aim of the WTO is “raising standards of living, ensuring full employment, expanding production and trade, and allowing optimal use of the world’s resources”[8]. In order to facilitate this, the WTO Agreement provides the new organisation with a clear structure, political guidance, a proper staff, and appropriate financial arrangements.

There are some main changes in the WTO Agreement compared to the GATT. First, the WTO Agreement relates to the production and trade of goods and services, while the GATT only related to goods. Second, the WTO Agreement recognizes the need for positive efforts to ensure that developing countries “secure a share in the growth in international trade” commensurate with the needs of their economic development”. Third, it states an objective relating to sustainable development, in particular, to “protect and preserve the environment”. Another key change from the GATT relates to dispute settlement arrangements that had evolved on a largely ad-hoc basis, with separate agreements to resolve disputes depending on where they arose. Now, the WTO Agreement provides clearly that the WTO are to administer the settlement of disputes that may arise between members for the review of trade policies.

Broadly, the WTO Agreement defines the functions of the organisation, its structure, the qualifications for membership, and decision-making procedures and requirements, as well as calls for efforts for improve the coherence of global economy policy-making. In particular, Article III, defines clear functions of the WTO, including implementing agreements, acting as a negotiation forum, and administering the settlement of disputes. Article V provides for the WTO to establish cooperative arrangements with other intergovernmental organisations, and non-governmental organisations with related responsibilities and interests to the WTO. In particular, the WTO Agreement specifically calls on a cooperation with the International Monetary Fund and the World Bank.

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