world trade organization

Learning objectives

By the end of this lesson, you should be able to:

• Describe World Trade Organization.
• Describe the history and structure of the World Trade Organization.
• Describe the functions of the World Trade Organization.
• Describe principles of trade policies in the World Trade Organization.

World Trade Organization (WTO) is a global organization made up of governments around the world. More than 160 governments have joined the world trade organization to become members and solve international trade disputes among them. The world trade organization is run by its member governments.

History of World Trade Organization

World Trade Organization was formed on January 1st, 1995. Its formation marked the biggest advancement in the global trade of goods, services, and Intellectual properties. Intellectual Property is a category of property that includes intangible creations of the human intellect. The best-known types are copyrights, patents, and trademarks.

World trade organization was formed to replace the General Agreement on Tariffs and Trade which had 23 member countries and had been formed in 1947 after the Second World War. The world trade organization's headquarters are in Geneva, Switzerland.

The structure of the World trade organization

World trade organization structure is run by its highest authority, the Ministerial Conference. The Ministerial Conference is made up of representatives of all world trade organization members. It meets at least once every two years and makes decisions on all matters under any of the multilateral trade agreements. Multilateral trade agreements are agreements made between two or more countries to strengthen the economy of member countries by supervised and controlled exchanging of goods and services among them.

The day-to-day work of the world trade organization is done by the General Council, headed by the Director General. The General Council is also composed of all world trade organization members and reports to the Ministerial Conference. The General council delegates its duties to other bodies within the world trade organization. They include;

Council for Trade in Goods

The council for trade in goods is concerned with textiles and other groups of goods related to textiles. Textile is an umbrella term that includes various fiber-based materials, including fibers, yarns, filaments, threads, different fabric types, etc. It comprises a chairperson and other 10 members.

Council for Trade-Related Aspects of Intellectual Property Rights

Council for Trade-Related Aspects of Intellectual Property Rights sets minimum standards of protection for copyrights and related rights, trademarks, geographical indications, industrial designs, patents, integrated circuit layout designs, and undisclosed information.

Trade Negotiations Committee

A trade negotiations committee was set up by the Doha Declaration. It is tasked with creating subsidiary negotiating bodies to handle individual negotiating subjects that arise among the World trade organization members.

Council for Trade in Services

The Council for Trade in Services is responsible for facilitating the operation of the General Agreement on Trade in Services and for furthering its objectives. The general agreement of trade services is a treaty of the World Trade Organization that entered into force in 1995. The Council for Trade in Services is open to all world trade organization members and can establish subsidiary bodies as it sees necessary.

Functions of the World Trade Organization

The main function of the world trade organization is to promote growth by facilitating trade among its member governments. To carry out its main function, the world trade organization undertakes other secondary functions. They are;

• Overseeing the implementation, administration, and operation of covered agreements by member governments.
• World trade organization also provides a forum for negotiations and settling disputes that affect trade operations among its member governments.
• World trade organization reviews and facilitates the implementation of national trade policies and ensures transparency of the trade policies. A policy is a law, regulation, procedure, administrative action, incentive, or voluntary practice of governments and other institutions frequently reflected in resource allocations, health, trade, and many different sectors.
• World trade organization also assists developing, least-developed countries, and low-income countries to adjust and follow world trade organization rules through technical training and cooperation.

Principles for trade policies by world trade organization

Policies developed, promoted, and implemented by the World Trade Organization are guided by five main principles.

Non-discrimination

This principle ensures no member involved in a policy is favored over the other in areas such as imports and exports of goods, and many other areas.

Reciprocity

Reciprocity means members of the world trade organization gain more than they lose by participating in the policies of the world trade organization.

Binding and enforceable commitments

This principle is concerned with ensuring members come through in the policies they agree to take part in and there are consequences to face if they do not.

Transparency

Transparency allows all members of the world trade organization taking part in a policy to have the same knowledge of the treaty as other members and ensure that they are all equal.

Safety values

The safety principle ensures all policies promoted and implemented by the world trade organization members are safe for the environment, plants, and animals, and are not harmful to any member government.

Membership of the world trade organization

All members of the world trade organization joined as a result of the negotiation. Therefore, becoming a member of the world trade organization is a matter of balancing rights and obligations. All members enjoy the security of trading rules and the privileges of other member countries. In return, member countries make a commitment to abide by the rules of the world trade organization and open their markets. Countries that negotiate membership are called observers.

The accession process of joining the world trade organization

• The first step involves the country applying for membership by describing its economy and trade policies. This is submitted in a memorandum to the world trade organization.
• The second step involves applying country detailing what they have to offer individually. These talks cover specific market commitments and tariff rates. This is done because different member states have different trading interests.
• The third step is the drafting of membership terms. It is a draft that lists the trade commitments of the member-to-be country.
• The last step is the decision. If a two-thirds majority of the members of the world trade organization vote in favor, the applicant can sign the protocol and accede to the organization.

The world trade organization currently has a membership of 164.

Summary

We have learned that;

• World Trade Organization is a global organization made up of governments around the world that provides a forum for negotiation and solving trade disputes among its members.
• World Trade Organization was formed on January 1st, 1995, and its headquarters are in Geneva, Switzerland.
• World Trade Organization is run by Ministerial Conference that convenes at least once in two years.
• The main function of the world trade organization is to promote the growth of its members by facilitating trade.
• The main principles for policies by the world trade organization are; non-discrimination, reciprocity, binding and enforceable commitments, transparency, and safety values.