One of the GATT's chief purposes was the reduction of barriers to trade. With this goal in mind, GATT contracting parties met periodically to negotiate further reduction of tariffs and other trade barriers and changes to GATT rules.
These negotiations were called "rounds. The most recent round, the Uruguay Round, lasted from to and included the most encompassing set of negotiations in the history of the GATT. On the agenda was reform of the existing GATT system, as well as expansion of rules to cover new areas such as services trade and the trade aspects of intellectual property rights copyrights, trademarks, and patents. The agreements that resulted from the Uruguay Round also contained a built-in agenda requiring that further negotiations on agriculture, services, intellectual property rights, and government procurement begin by the year One of the most important changes that came about from the Uruguay Round was the establishment of a new trade structure, the World Trade Organization WTO , which incorporated the many changes reached during the Uruguay Round: the former GATT with its newly negotiated reforms, bodies to oversee the new trade agreements, a stronger dispute resolution procedure, a regular review of members' trade policies, and many other committees and councils.
Members and observers are listed in Appendix A. All decisions are made by member countries, and decisions are usually by consensus. The WTO Secretariat assists member countries and numbered in The WTO budget for the year is Decisions within the WTO are made by members, not staff, and they are made by consensus, not by formal vote. The highest level body in the WTO is the Ministerial Conference , which is the body of political representatives trade ministers from each member country.
The Ministerial Conference examines current programs and sets the agenda for future work. It must meet at least every two years. The first meeting of the Ministerial Conference was held in Singapore on December , At that meeting, trade ministers reviewed the work of the WTO, since its establishment and agreed on a work schedule for the next few years.
They also approved an action plan for least-developed countries, and many members entered into an agreement to eliminate tariffs on information technology products by the year The second meeting of the Ministerial Conference was held in Geneva on May 18 and 20, Again, it reviewed the work of the WTO and approved a future work program.
It called for an examination of issues related to global electronic commerce and started preparations for the next meeting. That meeting was intended to review an agenda for a new round of trade negotiations, but trade ministers could not reach agreement and suspended their work.
The WTO Director-General was directed to consult with delegations and discuss ways in which countries might bridge remaining differences. Known as the "Battle at Seattle," the Ministerial was characterized by street violence and anti-globalization protesters. At that meeting, trade ministers agreed to launch a new round of multilateral trade negotiations, called the Doha Development Agenda, and set a deadline for final agreements of January 1, They established a work program for the new round and agreed to consider numerous developing-country issues.
According to the Ministerial Declaration released two years earlier in Doha, Qatar, the fifth Ministerial Conference was intended to " Although an original goal of the Ministerial was to agree on a package of modalities for the ongoing Doha Development Agenda DDA round of trade negotiations, this aim was dropped and members agreed to some modest advancements in agriculture, industrial tariffs, and duty and quota-free access for least developed countries.
The body that oversees the day-to-day operations of the WTO is the General Council , which consists of a representative from each member country. The Council generally meets monthly and provides a forum for countries to discuss a range of trade matters. The U. Trade Representative in Geneva. The General Council also meets in two other, unique capacities.
The TPRM was established under the Uruguay Round agreements to allow closer monitoring of national trade policies of member countries. The four countries with the largest shares of world trade are reviewed every two years, the next 16 largest traders are reviewed every four years, and other countries are reviewed every six years, although least-developed countries might be reviewed less frequently. The trade reviews provide information on a country's trade policies and comment on whether a country is pursuing market-opening or market-restrictive policies.
This public examination is a mild form of pressure for a country to avoid practices that discourage trade. The Uruguay Round agreements greatly strengthened the process for settlement of disputes. The first stage of the process is consultation between the governments involved. If consultation is not successful, the complainant may ask the DSB to establish a dispute panel. The dispute panel hears the case and reports back to the DSB.
If the complaint is upheld, the respondent must either change its practice or negotiate an agreeable resolution. Otherwise, the complainant may request that the DSB authorize suspension of obligations, thereby giving permission for the complainant to retaliate.
For example, a complainant may receive permission to increase tariffs against a respondent country that disregards a decision by the DSB. Permission is automatic unless unanimously disapproved. Procedures are clearly set out with specific timetables at each stage. More specialized work is done in three major bodies under the General Council. One of these is the Council for Trade in Goods , under which committees work on a number of trade areas.
One committee works on trade in agriculture. Another committee oversees the related topic of sanitary and phytosanitary measures, which are measures that pertain respectively to animal and plant health and safety.
Some committees monitor practices that are considered "unfair" if not implemented in accordance with WTO rules antidumping, subsidies and countervailing measures. Other committees examine practices that are not necessarily "unfair" but could be trade-distorting nonetheless rules of origin, safeguards, technical barriers, customs valuation, and import licensing.
One committee works on the relatively new area of trade-related investment measures, and another addresses market access issues tariffs and nontariff measures.
A second major body under the General Council is the Council for Trade in Services , which oversees the Uruguay Round agreement on trade in services. The Uruguay Round services agreement has three parts. The first part lists basic principles that countries agree to observe, including national treatment, most-favored-nation treatment, and transparency open information about relevant laws and regulations.
The second part contains four annexes with rules on: 1 the movement of persons who provide services, 2 financial services, 3 telecommunications, and 4 air transport services. The third part is a schedule of country commitments. These commitments are bound and cannot be reduced in scope, much like the tariff levels on goods, which cannot be increased once they are bound. The service commitments may include exceptions to the national treatment and most-favored-nation principles, if countries included these exceptions when they originally negotiated the commitments.
The first part outlines basic principles that countries must observe, including national treatment and most-favored-nation treatment. Location: Geneva. Website: World Trade Organization.
Issues: E-commerce , Economic - other issues , Taxation , Trademarks. Free trade fosters investment into other countries, which can help boost the economy and eventually the standard of living of all countries involved.
As most investment flows from the developed and economically powerful countries into the developing and less-influential economies, there is, however, a tendency for the system to give the investor an advantage. Regulations that facilitate the investment process are in the investor's interest because these regulations help foreign investors maintain an edge over local competition.
As several countries, including the United States, strengthen their protectionist stance on trade, the future of the World Trade Organization remains complex and unclear. World Trade Organization. The White House. Congressional Research Service. Accessed May 2, Seattle Municipal Archives. International Centre for Trade and Sustainable Development. World Trade Observer. Criticism, Yes…Misinformation, No! World Health Organization.
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Your Money. Personal Finance. Your Practice. Popular Courses. Table of Contents Expand. Understanding the WTO. How the WTO Functions.
Free Trade, but at What Cost? The Bottom Line. Key Takeaways The World Trade Organization is a global organization made up of member countries that deals with the rules of trade between nations. The goal of the WTO is to ensure that trade flows as smoothly and predictably as possible. Article Sources. Investopedia requires writers to use primary sources to support their work.
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