WTO

Before WTO

Golden era of international trade ended by 1880s

During war and pre war period marred with
mistrust
Smoot-Hawley Act 1930 raised tariff tremendously
in the U.S. It quadrupled tariff on more than 3200
items
Other nations retaliated
Group of allies of 23 countries negotiated General
Agreements on Tariff and Trade (GATT).
The proposed International Trade Organization
(ITO) never came into existence as opposed by US

Before WTO

GATT contained principles of MFN and

National Treatment.
It devised rules to deal with dumping.
But has a very weak dispute settlement
mechanism
Survived for 48 years

Before WTO

Tasks of WTO

Administering trade agreements

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
programmes
Cooperating with other international
organizations

Principles

Most-favoured-nation (MFN):
FTA
Special access to developing countries
In case of unfair trade e.g. anti-dumping duties etc.

National treatment
Freer trade: gradually, through negotiation
Predictability
Promoting fair competition

The basic structure of the WTO agreements:

Rule based Multilateral Trading System
The umbrella WTO Agreement, goods, services, intellectual property, disputes and
trade policy reviews.
Umbrella

AGREEMENT ESTABLISHING WTO

Goods

Services

Intellectual property

Basicprinciples

GATT

GATS

TRIPS

Additionaldetails

Other goods
agreements and
annexes

Services annexes

Marketaccess
commitments

Countries
schedules of
commitments

Countries
schedules of
commitments(and
MFN exemptions)

Disputesettlement
Transparency

DISPUTE SETTLEMENT
TRADE POLICY REVIEWS

WTO

Legal Texts is a daunting list of about 60 agreements,

annexes, decisions and understandings.
In fact, the agreements fall into a simple structure with
six main parts: an umbrella agreement (the Agreement
Establishing the WTO); agreements for each of the
three broad areas of trade that the WTO covers (goods,
services and intellectual property); dispute settlement;
and reviews of governments trade policies.
There are the detailed and lengthy schedules (or
lists) of commitments made by individual countries
allowing specific foreign products or service-providers
access to their markets

GATT

For GATT, these take the form of binding commitments

on tariffs for goods in general, and combinations of
tariffs and quotas for some agricultural goods.
Promising not to raise a trade barrier can be as
important as lowering one, because the promise gives
businesses a clearer view of their future opportunities.
Percentage of tariff bound after the UR developed
countries 99% and developing 73%.

GATS
Trade in services is defined as the supply of a service:
from the territory of one Member into the territory of
any other Member; (Mode 1); cross-border supply
in the territory of one Member to the service consumer
of any other Member; (Mode 2); consumption abroad
by a service supplier of one Member, through
commercial presence in the territory of any other
Member; (Mode 3); commercial presence
by a service supplier of one Member, through presence
of natural persons of a Member in the territory of any
other Member. (Mode 4); presence of natural person

Internationalization of
IPRs
The need for international protection of IP
became evident when foreign exhibitors
refused to attend the International Exhibition
of Inventions in Vienna in 1873 because they
were afraid that their ideas would be stolen
and exploited commercially in other countries.
1883 marked the birth of the Paris Convention for
the Protection of Industrial Property.
1886 Berne Convention for the Protection of
Literary and Artistic Works came in to force.

National Treatment

Internationalization of
IPRs
Changes in the 20th Century

International Trade
Increase in the Trade of Knowledge Goods.
Share of knowledge-intensive or high technology products in
total world goods trade has doubled between 1980 and 1994
from 12 to 24 percent.
Increase in the Trade of Counterfeited Good.
Trade in counterfeit goods is now worth more than 5 per
cent of world trade. This increase is due to:

Advances in Technology
Increased International Trade
Emerging Markets
Emerging Products that are attractive to copy such as
Branded clothing and Software

Strategic Development of NICs

TRIPs Agreement
Seven IPs: Copyrights, trademarks, industrial
designs, patents, geographical indications,
trade secrets, and integrated circuits.
Minimum Standard of Protection
Definitions
Scope/Coverage
Duration
Exclusions
Other Provisions

Enforcement Issues

Organization of WTO

The WTO has nearly 159 members, accounting

for over 97% of world trade. Around 30 others are
negotiating membership.

Decisions are made by the entire membership.

This is typically by consensus. A majority vote is
also possible but it has never been used in the
WTO, and was extremely rare under the WTOs
predecessor, GATT. The WTOs agreements have
been ratified in all members parliaments.

Organization of WTO

The WTOs top level decision-making body is the Ministerial

Conference which meets at least once every two years.

Below this is the General Council (normally ambassadors and heads

of delegation in Geneva, but sometimes officials sent from members
capitals) which meets several times a year in the Geneva headquarters.
The General Council also meets as the Trade Policy Review Body and
the Dispute Settlement Body.

At the next level, the Goods Council, Services Council and

Intellectual Property (TRIPS) Council report to the General Council.

Numerous specialized committees, working groups and working

parties deal with the individual agreements and other areas such as
the environment, development, membership applications and regional
trade agreements.

DSM
The system is based on clearly-defined
rules, with timetables for completing a case.
First rulings are made by a panel and
endorsed (or rejected) by the WTOs full
membership. Appeals based on points of
law are possible.

How long to settle a dispute?

These approximate periods for each stage of a dispute settlement
procedure are target figures the agreement is flexible. In addition,
the countries can settle their dispute themselves at any stage.
60 days

Consultations, mediation, etc

45 days

Panel set up and panellists appointed

6 months

Final panel report to parties

3 weeks

Final panel report to WTO members

60 days

Dispute Settlement Body adopts report (if no

appeal)

Total = 1 year

(without appeal)

60-90 days

Appeals report

30 days

Dispute Settlement Body adopts appeals report

Total = 1y 3m

(with appeal)
Source: WTO