A Project On

HISTORICAL BACKGROUND AND ORGANIZATIONAL STRUCTURE OF

WTO

SUBMITTED TO
MS. ANKIT AWASTHI

(FACULTY Trade And Investment)

SUBMITTED BY
VIVEK KUMAR SAI
SEMESTER-X
ROLL NO. 146
B.A. L.L.B. (HONS)

HIDAYATULLAH NATIONAL LAW UNIVERSITY

ACKNOWLEDGEMENT

I would like to express my gratitude to Mr. Ankit Awasthi for granting me such an interesting and unconventional
topic and expect his leniency in judging the same.
Words fail to express my deep sense of glee to my teacher Mr. Ankit Awasthi, who enlightened me with his
beautiful work on this topic. I would like to thank him for guiding me in doing all sorts of researches, suggestions
and having discussions regarding my project topic by devoting her precious time. I thank to the H.N.L.U for
providing Library, Computer and Internet facilities. And lastly I thank my friends and all those persons who have
helped me in the completion of this project.

VIVEK KUMAR SAI

RESEARCH METHODOLOGY
This is a descriptive and analytical research paper. My research paper is largely based on secondary and electronic
sources of information.

Table of Contents
Introduction.....................................................................................................................................................................5
Historical Background....................................................................................................................................................7
GATT Rounds...............................................................................................................................................................10
Objectives......................................................................................................................................................................11
Functions.......................................................................................................................................................................11
Organizational Structure...............................................................................................................................................12
Ministerial Conferences................................................................................................................................................13
Conclusion....................................................................................................................................................................15

Introduction
The World Trade Organization (WTO) is the only global international organization dealing with
the rules of trade between nations. At its heart are the WTO agreements, negotiated and signed
by the bulk of the worlds trading nations and ratified in their parliaments. 1
The goal is to help producers of goods and services, exporters, and importers conduct their
business. The WTO was born out of negotiations, and everything the WTO does is the result of
negotiations. The bulk of the WTOs current work comes from the 198694 negotiations called
the Uruguay Round and earlier negotiations under the General Agreement on Tariffs and Trade
(GATT). The WTO is currently the host to new negotiations, under the Doha Development
Agenda launched in 2001. 2
Where countries have faced trade barriers and wanted them lowered, the negotiations have
helped to open markets for trade. But the WTO is not just about opening markets, and in some
circumstances its rules support maintaining trade barriers for example, to protect consumers
or prevent the spread of disease.
The systems overriding purpose is to help trade flow as freely as possible so long as there are
no undesirable side effects because this is important for economic development and wellbeing. That partly means removing obstacles. It also means ensuring that individuals, companies
and governments know what the trade rules are around the world, and giving them the
confidence that there will be no sudden changes of policy. In other words, the rules have to be
transparent and predictable.
Trade relations often involve conflicting interests. Agreements, including those painstakingly
negotiated in the WTO system, often need interpreting. The most harmonious way to settle these
differences is through some neutral procedure based on an agreed legal foundation. That is the
purpose behind the dispute settlement process written into the WTO agreements.
1 https://www.wto.org/english/res_e/booksp_e/anrep_e/wtr11-2b_e.pdf
2 https://www.wto.org/english/thewto_e/cwr_e/cwr_history_e.html
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The WTO is run by its member governments.3 All major decisions are made by the membership
as a whole, either by ministers (who usually meet at least once every two years) or by their
ambassadors or delegates (who meet regularly in Geneva). While the WTO is driven by its
member states, it could not function without its Secretariat to coordinate the activities. The
Secretariat employs over 600 staff, and its experts lawyers, economists, statisticians and
communications experts assist WTO members on a daily basis to ensure, among other things,
that negotiations progress smoothly, and that the rules of international trade are correctly applied
and enforced.4

3 https://www.wto.org/english/thewto_e/whatis_e/tif_e/org6_e.htm

4 https://www.wto.org/english/thewto_e/countries_e/org6_map_e.htm
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Historical Background
Following World War II, nations throughout the world, led by the United States and several other
developed countries, sought to establish an open and nondiscriminatory trading system with the
goal of raising the economic well-being of all countries.
Aware of the role of trade barriers in contributing to the economic depression in the 1930s, and
the military aggression that rose following the depression, the countries that met to discuss the
new trading system saw open trade as essential for economic stability and peace.
The intent of these negotiators was to establish an International Trade Organization (ITO), which
would address not only trade barriers but other issues indirectly related to trade, including
employment, investment, restrictive business practices, and commodity agreements. The ITO
was to be a United Nations specialized agency, but the ITO treaty was not approved by the
United States and a few other signatories and never went into effect.
Instead, a provisional agreement on tariffs and trade rules, called the General Agreement on
Tariffs and Trade (GATT) was reached and went into effect in 1948. This provisional GATT
became the principal set of rules governing international trade for the next 47 years.
The WTO is a relatively powerful international organisation. Its dispute settlement body can
impose sanctions to enforce decisions on member countries disagreements over what WTO
rules mean in practice.
The WTO was preceded by the General Agreement on Tariffs and Trade (GATT), which was
concluded in 1947. Back then, the original idea was to start an International Trade Organisation,
but that did not materialise. In the GATT context, there were eight rounds of trade liberalisation
talks. Initially, their topics were the reduction of tariffs and the phasing out of quotas, but later
other trade barriers were tackled to.

The Uruguay Round was the final GATT Round. It was started at a summit in Punta del Este in
1986 and concluded in Marrakesh in 1994. It capped agriculture subsidies and established the
WTO. 5
Other important results included:

the end of textiles quotas at the beginning of 2005,

the Agreement on Trade Related Intellectual Property Rights (TRIPS)6 and
the General Agreement on Trades in Services (GATS).

The WTO is meant to continue liberalising trade through negotiation rounds. For many years,
however, members did not agree on an agenda for a new round. At the Ministerial Conference 7
in Singapore in 1996, the rich nations insisted it should include investors rights,
competition/anti-trust policy, trade facilitation and government procurement. Developing
countries disagreed, fearing that binding rules on these Singapore issues would restrict their
policy space and limit their scope for growth.
The next summits in Geneva in 1998 and Seattle in 1999 similarly failed. Protests, which are
now considered the beginning of the movement of globalisation sceptics, overshadowed the
meeting in Seattle. Civil society organisations argued that the WTO served the interests of rich
nations in exploiting the Third World.
Such criticism was misleading. The WTO only passes rules when all members agree. Every
member has the right of veto. Since many developing countries are WTO members, their
bargaining power is stronger in this context than when they negotiate on their own with the great
economic powers.

5 en.wikipedia.org/wiki/Uruguay_Round

6 en.wikipedia.org/wiki/TRIPS_Agreement

7 https://www.wto.org/english/thewto_e/minist_e/minist_e.htm

Nonetheless, there was reason to protest. Many developing countries felt cheated by the Uruguay
Round because it did not allow them to increase their exports as fast as they had been made
believe. One reason for such frustration was that trade policy is very complex, and the details
may fast overburden countries with weak governmental capacities. The EU and US delegations
arrive at Ministerial Conferences with armies of legal advisers, but small and poor countries are
typically only represented by a handful of diplomats.
At the turn of the Millennium, moreover, a global dispute erupted over pharma patents, which,
according to TRIPS, are protected all over the world. Brazil, Thailand, South Africa and other
nations, however, urgently needed low cost HIV/AIDS medication. The Ministerial Conference
in Doha in 2001 dealt with this matter by allowing members to break patents if doing so is
necessary to protect public health because those who own intellectual property rights do not
make essential medication available at acceptable prices.
The summit in Doha also started a new round of negotiations. Among other things, it is supposed
to further reduce agricultural subsidies and phase out export subsidies for agricultural products.
These issues matter very much to developing countries that depend on agriculture. Subsidies in
richer nations thwart their farmers competitiveness.
In Doha, moreover, the rich nations put the Singapore issues on the agenda, even though the
developing countries, led by India, made it clear they would not accept rules on these matters. So
far, trade facilitation is the only Singapore issue on which talks have made reasonable progress.
All in all, however, the Doha Round looks stuck. The USA and the EU are pursuing bilateral
strategies and so are emerging giants like China and India.

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GATT Rounds8
Year

Round

Action

1947

Geneva

45,000 reductions in bilateral tariffs covering

20% of world trade.

1949

Annency,
France

5,000 reductions in bilateral tariffs.

1951

Torquay,
England

8,700 reductions in bilateral tariffs covering a

new range of goods.

1955Geneva
56

Reductions in bilateral tariffs.

1960- Dillon
62
Round

Reductions in bilateral tariffs. EEC talks begin.

1964- Kennedy
67
Round

Reductions in bilateral tariffs. Negotiation rules

established.

1973- Tokyo
79
Round

Reductions in bilateral tariffs. Procedures on

dispute resolution, dumping and licensing.

1986- Uruguay
93
Round

Additional tariff reductions. Stalemate for

agricultural tariffs.

1995

WTO
WTO replaces the GATT.
established

Doha
2001Round

Divergences between developing and

developed countries. Issues over agricultural
subsidies.

8Source: adapted from W.J. Bernstein (2008) A Splendid Exchange: How Trade Shaped the World, New York:
Atlantic Monthly Press, p. 358.
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Objectives
The important objectives of WTO are:
1. To improve the standard of living of people in the member countries.
2. To ensure full employment and broad increase in effective demand.
3. To enlarge production and trade of goods.
4. To increase the trade of services.
5. To ensure optimum utilization of world resources.
6. To protect the environment.
7. To accept the concept of sustainable development.

Functions
The main functions of WTO are discussed below:
1. To implement rules and provisions related to trade policy review mechanism.
2. To provide a platform to member countries to decide future strategies related to trade and
tariff.
3. To provide facilities for implementation, administration and operation of multilateral and
bilateral agreements of the world trade.
4. To administer the rules and processes related to dispute settlement.
5. To ensure the optimum use of world resources.
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6. To assist international organizations such as, IMF and IBRD for establishing coherence in
Universal Economic Policy determination.

Organizational Structure

13

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Ministerial Conferences
The topmost decision-making body of the WTO is the Ministerial Conference, which usually
meets every two years. It brings together all members of the WTO, all of which are countries or
customs unions. The Ministerial Conference can take decisions on all matters under any of the
multilateral trade agreements.
The Trade Policy Review Body (TPRB)
The WTO General Council meets as the Trade Policy Review Body to undertake trade policy
reviews of Members under the TPRM and to consider the Director-General's regular reports on
trade policy developement. The TPRB is thus open to all WTO Members. The current chair
is Ambassador Atanas Atanassov PAPARIZOV (Bulgaria).
The WTO General Council9
The General Council is the WTOs highest-level decision-making body in Geneva, meeting
regularly to carry out the functions of the WTO. It has representatives (usually ambassadors or
equivalent) from all member governments and has the authority to act on behalf of the
ministerial conference which only meets about every two years. The current chairperson is H.E.
Mr. Jonathan FRIED (Canada).
The General Council also meets, under different rules, as the Dispute Settlement Body and as
the Trade Policy Review Body.
GATT and the Goods Council 10
The General Agreement on Tariffs and Trade (GATT) covers international trade in goods. The
workings of the GATT agreement are the responsibility of the Council for Trade in Goods
(Goods Council) which is made up of representatives from all WTO member countries. The
current chairperson is Amb. Dacio CASTILLO (Honduras).
9 https://www.wto.org/english/thewto_e/gcounc_e/gcounc_e.htm
10 https://www.wto.org/english/tratop_e/gatt_e/gatt_e.htm
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The Goods Council has 10 committees dealing with specific subjects (such as agriculture,
market access, subsidies, anti-dumping measures and so on). Again, these committees consist of
all member countries.
Also reporting to the Goods Council are a working party on state trading enterprises, and the
Information Technology Agreement (ITA) Committee.

The Services Council, its Committees and other subsidiary bodies11

The Council for Trade in Services operates under the guidance of the General Council and is
responsible for overseeing the functioning of the General Agreement on Trade in Services
(GATS). Its open to all WTO members, and can create subsidiary bodies as required.
Plurilateral agreement on trade in civil aircraft
This agreement entered into force on 1 January 1980. It now has 32 signatories ( Albania;
Austria; Belgium; Bulgaria; Canada; Chinese Taipei; Denmark; Egypt; Estonia; European Union
(formerly EC); France; Georgia; Germany; Greece; Ireland; Italy; Japan; Latvia; Lithuania;
Luxembourg; Macao, China; Malta; Montenegro; Netherlands; Norway; Portugal; Romania;
Spain; Sweden; Switzerland; United Kingdom; United States). Most WTO agreements are
multilateral since they are signed by all WTO members. The agreement on trade in civil aircraft
is one of two plurilateral agreements (with the agreement on government procurement) signed
by a smaller number of WTO members. It eliminates import duties on all aircraft, other than
military aircraft, as well as on all other products covered by the agreement civil aircraft
engines and their parts and components, all components and sub-assemblies of civil aircraft, and
flight simulators and their parts and components.12

11 https://www.wto.org/english/tratop_e/serv_e/s_coun_e.htm
12 https://www.wto.org/english/tratop_e/civair_e/civair_e.htm
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Conclusion
The goal is to help producers of goods and services, exporters, and importers conduct their
business. The WTO was born out of negotiations, and everything the WTO does is the result of
negotiations. The bulk of the WTOs current work comes from the 198694 negotiations called
the Uruguay Round and earlier negotiations under the General Agreement on Tariffs and Trade
(GATT). The WTO is currently the host to new negotiations, under the Doha Development
Agenda launched in 2001
The WTO describes itself as "a rules-based, member-driven organization all decisions are
made by the member governments, and the rules are the outcome of negotiations among
members".The WTO Agreement foresees votes where consensus cannot be reached, but the
practice of consensus dominates the process of decision-making.
Richard Harold Steinberg (2002) argues that although the WTO's consensus governance model
provides law-based initial bargaining, trading rounds close through power-based bargaining
favouring Europe and the U.S., and may not lead to Pareto improvement.

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