The World Trade Organization (WTO): Rules and Regulations

Introduction

The WTO generally exists to ensure that there is free trade between nations within a stipulated set of global rules and agreements. The body also ensures that there is as free trade as possible among organizations. The countries which are members to this body benefit by having an organized global market with predetermined conditions in a way that it is possible to predict moves. Part of the goal is to ensure that barriers in trade are minimized or eliminated. Countries are able to have forums through which they can forward complain against unfavorable market trends from member countries (WTO, 2008). The organization has 153 members with 30 others negotiating membership. Although consensus has been the main method of making decisions, a majority vote which has never been used is also a possibility. The General Council serves as a Dispute Settlement Body and the Trade Policy Review Body and is the second to rank from the Ministerial Conference. The working parties & groups as well as specialized committees dealing with individual agreements are all below the General Council level. The following are the special functions of the World Trade Organizations; to administer trade agreements and policies including the reviewing of these policies, providing a forum for trade negotiations, working together with other trade organizations, settling trade disputes, helping the developing countries in trade aspects and training programs as well as providing them with technical support. The aforementioned councils and body are established in article II.

Membership

Membership of the WTO comprise of the contracting parties to the GATT 1947 as of the date of entry of the WTO Agreement and the members of European communities accepting the Agreement and the Multilateral Agreements and consenting and agreeing to various annexed commitments to GATTS.

Countries are first allowed to first become observers in order to familiarize with membership requirements and then accessions process. Governments then submit a communication to the director and are distributed to the members, and the application is reviewed by a Working Party upon approval of the request at the next General council. Typically the Working Party comprises governments with interest in accessing a certain government even though participation is open to any of the WTO members. Information gathering then starts where the applicants will provide its foreign trade regime on aspects of trade policies as relates to the WTO (WTO). WTO deals with a variety of issues including rights of intellectual property, goods and services. The applicant avails answers for the questions and comments submitted by other organization members in written form after the circulation of the memorandum. The country applicant can then engage in negotiations (parallel multilateral talks) with the members of the working party. In this stage, some countries may request for lower tariffs, removal of certain sectoral market access commitments and removal of barriers through the negotiators after inquiry or investigations. The Working Party could engage with further negotiations with the applicant or make necessary it that necessary changes have been made to ensure there is compliance of its foreign trade with the WTO. As observers, countries cannot make any trade commitments but can revie3w and familiarize with the WTO documents and procedures. In fact, this initiation stage is set for the purposes of making sure that the observers get familiar with the processes. The Working Party prepares a report in which the applicant’s bilateral commitments are equally applied to the rest of the other members. A Draft report accompanied by the Draft Protocol are submitted to the General Council by the Working Party. A majority of two-thirds must vote to adopt these documents. The progress of the accession is to be monitored by the applicants. Countries may need to formulate new rules and regulations which require difficult decisions in order to be able to qualify and others may try to hide or gloss uncomfortable features of their trade regime which may lead to process being delayed (Kim, 1996). The Secretariat will support the applicants in the application process as the process is demanding. Countries may be scrutinized for anti-dumping strategy through the lowering of the export prices. The process makes the country be assessed whether it is a market economy. This means that the organization can provide a framework where countries can be legally protected from dumping cases. The countries are required to eliminate trade barriers which are inconsistent with the WTO measures as well as institutional and regulatory requirements (Office of the U.S. Trade Representative). The accession also depends on the political status because consensus also involves political matters. The members may still be assessed by the WTO in order to check the transparency and equitability of the country’s trading system through the Trade Policy Review Mechanism (TPRM).

The article 1 which deals with the organization establishes that the Multilateral Trade Agreements binds all the members while the Plurilateral Trade Agreements binds those members agreeing on them and not those that haven’t agreed on or accepted them. The article 2 of the agreement provides that the trade body is charged with the operation, implementation and administration of the Plurilateral Trade Agreements as well as the Multilateral Trade Agreements including the furthering of the objectives of the latter. The same article establishes that the organization shall administer dispute settlements through the Dispute Settlement Understanding (DSU), administer the Trade Policy Review Mechanism as well as well as cooperating with the International Bank for Reconstruction and Development and its affiliated agencies. Although voting is a possibility to decide on particular matters, the rule of the game is that one man shall have one vote and where the International Communities have interest, the total votes they can manage equals to the total number of votes members to them are present.

The agreement of the organizations presents the Committee on Budget and Administration with a mandate to propose to the General Council on matters of financial contributions as apportioned to members to cover the expenses of WTO and what is to be done incases of arrears. The budget estimates (recommendations on which the Committee on Budget, Finance and Administration has made to the General Council) and the financial regulations are supposed to be adopted by a two-thirds majority of the General Council.

Article III establishes that the organization can collaborate with intergovernmental and non-governmental organizations with similar responsibilities as those of the WTO.

Through this organization, members are able to acquire benefits of diversified commodities from various suppliers, raw materials, and services. Countries rely on exports to be able to earn foreign exchange and improve their economy as well as maintain employment among other sectors of the same economy. The beneficiaries include the public and the private sector. One of the important benefits in the current economy is the availability of market for commodities produced in different countries. The decision-making process is provided in the article IX where consensus is to be used unless where it fails (where voting can proceed). The number of votes can also determine the decisions of the Ministerial Conference and the General Council unless otherwise. Adopting of the interpretations on specific matters submitted to the Ministerial Conference and the General Council as relates to the Agreement and the Multilateral Trade Agreements is possible through a vote of three-fourths majority of the members. Three-fourth majority of member nations can grant a waiver on an obligation if the Ministerial Conference fails to reach a consensus to grant the waiver after 90 days. The waiver can also be granted by the Ministerial Conference by a three-fourth majority of its members.

Economic barriers not only eliminate economic but also political and social connections. Member countries also benefit from the likelihood of establishing political connections and settling political scores. This is possible through the linkage of members trying to solve economic and trade difficulties, where countries may be bonded more. Unification of trade also comes with unified benefits of regional peace and mutual contact where the societies so bonding, achieve social benefits and freedom like trading and moving freely in the region established by the connection.

Because the trade organization is an organized body, decisions taken on consensus work on common good and therefore integrates the community further. Countries are able to resolve and push for what is beneficial to them and make it be understood, as compared to a system where the market depends on the smartest guy in the field (WTO, 2008).

The least-developed nations received a boost of more preferential treatments at the market and improved ability to trade at the negotiations held by a high level meeting in 1997 to discus trade initiatives and technical assistances for them. The World Trade Organization has a Subcommittee on Least Developed Countries which co-works with the Committee on Trade and Development to look into the trade affairs of the developing nations.

Working and operation

The WTO avails a necessary framework on which individual countries submit to the procedures of settling disputes in addition to making commitments to lower tariffs and remove or reduce barriers of trade in order to facilitate the trading between the countries. The present WTO was the result of the Uruguay Round agreements. These agreements become trade rules. Although countries are able to withdraw from the commitments through provisions of the same agreements, they are bound to these agreements. Today, the world trade on the international perspective has experienced growth over the years, and the need to develop necessary systems and procedures have become necessary. According to the World Trade Organization, the total trade level was 22-times that in 1950, while merchandize exports grew in the last 50 years on an average of 6%. The World Trade Organization arose as a result of trade negotiations, anti-dumping and the non-tariff measures with the negotiations in Uruguay led to its creation. The negotiations did not end there but exists today. The areas covered include telecommunications services, information technology products, financial services, agricultural services, environmental issues, information and insurance.

The framework in which countries operate has established set of anti-dumping rules and regulations, policy, investment, transparency in government, intellectual property and trade facilitation. The forum has helped the developing countries to achieve fairer trade agreements and developments as relates to relation with the developed nations.

The top-most organ of the WTO is called the Ministerial Conference and meet at least twice a year to make decisions. The second in rank is the General Council which sometimes consists of officials sent by the member countries, ambassadors of these countries and heads of delegation.

The WTO operates in the strengths of agreements as the legal grounds for international commerce. In simple terms, the organization does not exist to force members to adhere to previously established rules unless if they made consent commitment through signing the agreements. Because trade is complex and involves benefits and disadvantages, there are limits and extent for individual benefits as well as disadvantages. The greatest force behind the World Trade Organization is the assurance of the rights for trade and freedom for everyone’s benefit. The fact in existence is that states and governments fight for the business institutes in their countries, i.e. the exporters, importers, and business institutions. The final beneficiaries may be seen as the members of the public.

The rules of the WTO emanates from agreements that results from the negotiations. The rules are also bound to further negotiations. The rules ensure freedom and non-discriminatory trade, and a flexible system for developing countries to implements their commitments. The first area to be covered was trade for goods, then services and other areas. The service industries include hotels, telecommunications, insurance and banks. Members have provided the service sectors which they would not want to be exposed to foreign competition. Protection for intellectual property ensures that members do not get infringed in matters of rights to invention, copyrights, patents, trademarks, and designs (WTO, 2008).

The Dispute Settlement Understanding provides the procedure for resolving quarrels and disputes through the enforcement of the rules and regulation. If countries feel that rules and regulations are being infringed they channel their disputes to the WTO, and experts make judgment depending on individual commitment and interpretations of the agreements. These members can appeal on legal grounds. The policies involved are also reviewed to improve transparency and understanding (WTO, 2008).

Forming over three-quarters of WTO members, the developing countries are attached to some special provisions which includes technical standards implementation, assisting them in coming up with well built infrastructures for the WTO undertakings, boosting their trade opportunities and lengthening periods for agreements implementation and commitments, and also ensuring that their interests are safeguarded. The special needs of the developing nations are considered and looked into by a WTO Committee on Trade and Development assisted by a Sub-Committee on Least-Developed Countries. The committee involves itself with participation of developing countries in the global trading system among other issues (WTO, 2008).

The agreement provides for a member’s withdrawal from the privileges or obligations of the WTO. The WTO has some of the provisions that favor the developing countries.

In conclusion, the WTO has availed an important avenue for countries to work together, build consensus on particular issues on which their rules and regulations are based, and more importantly integrate themselves into a community that does not only look into the good of each other as separate entity based on what they can offer for trade, but also push for common good.

References

  1. Blustein Paul. (1997). U.S. Says China Isn’t Close to WTO Accord. Washington Post
  2. Eglin Michaela. (1997). China’s Entry into the WTO with a Little Help from the EU. International Affairs, Vol. 73, No. 3
  3. Haass Richard N. and Nicholas Lardy. (1997). The United State and China: A New Framework, Brookings Institute Policy Brief
  4. Kim, Chulsu. Process of Accession to the World Trade Organization. Journal of Northeast Asian Studies. 1996: p. 7
  5. Mastel Greg. (1997). Is the WTO Ready for China? Far Eastern Economic Review
  6. Organization for Economic Cooperation and Development. (1996). Trade Policy and the Transition Process, Paris: p. 31
  7. Office of the U.S. Trade Representative. 1998 trade policy agenda & 1997 annual report. p. 88
  8. Renato Ruggiero. From vision to reality: the multilateral trading system at fifty.
  9. Sasser James R. (1997). Engaging China, Address to the Asia Society, Washington, D.C.
  10. Victoria Curzon Price, “GATT’s New Trade Policy Review Mechanism,” The World Economy, 1991
  11. WTO. (2008). World Trade Organization. Web.
  12. WTO Documents WT/ACC/1, WT/ACC/4 and WT/ACC/5 Web.