WTO - World Trade Organisation
The World Trade Organisation (WTO) was established in 1995. It serves as an umbrella organisation combining the General Agreement on Tariffs and Trade (GATT 1994) and the more recent agreements on services (GATS) and intellectual property (TRIPS). The WTO’s 153 member states, approximately a third of which are developing countries, generate more than 90% of world trade. Of the 33 countries with observer status, 26 are candidate countries negotiating for membership to the WTO. Austria joined GATT 1947 back on 19 October 1951.
The objectives of the agreements are the fight against protectionism (closing off markets by introduction of protective tariffs and measures of similar effect) and the promotion of free trade ("liberalisation of trade") by progressive elimination of customs tariffs and other trade barriers. The rule on equal treatment (non-discrimination) forms the basis for the two guiding principles of the WTO: most-favoured-nation treatment (the best terms granted to one trading partner must also be granted to all other WTO members) and national treatment (after crossing customs borders, foreign goods may only be subject to national regulations). Exceptions are made, for example for free trade agreements, for protecting the balance of payments, for averting the risk of "flooding" domestic markets, for safeguarding moral decency and health and for reasons of national security. Anti-dumping measures and subsidies are tolerated under certain conditions.
Between 1947 and 1994, average customs tariffs were reduced from 40% to less than 4%, that is to a tenth, in 8 rounds of negotiations. The latest and longest round (1986-1993) to date, known as the "Uruguay Round" after the country where it was initiated, succeeded in incorporating non-tariff trade barriers (TBT), cross-border investments (TRIMs) and trade in services (GATS) into the system. The highly regulated areas of trade in textiles and agricultural produce, which for decades were de facto excluded from the GATT, were re-integrated. Furthermore, the effectiveness of the dispute settlement procedure was significantly increased.
The Agreement Establishing the WTO, which is independent of the United Nations, entered into force on 1 January 1995 after ratification by 121 countries, including all the major trading nations with the exception of Russia and China. On the one hand, the WTO is a permanent trade policy forum set up to create rules for world trade which are binding under international law; on the other hand it acts as the guardian of the agreements. In addition to the multilateral agreements GATT, GATS, TRIPS and TRIMS (legally binding on all Member States), it administrates three other agreements on government procurement (GPA), civil aircraft (TCA) and information technology equipment (ITA), which are of a plurilateral nature, i.e. for those 20 to 40 WTO members that have adhered to them to date.
The supreme body of the Geneva-based WTO is the Ministerial Conference, which in general convenes once every two years and is the final arbiter on all matters relating to the agreements. So far it has met seven times, in December 1996 in Singapore, in May 1998 in Geneva, in November 1999 in Seattle and in November 2001 in Doha (Qatar). The fifth Ministerial Conference was be held in Cancún (Mexico) in September 2003, followed by Hong Kong (December 2005) and Geneva (December 2009). The WTO’s day-to-day work is handled by the permanent bodies at the second level, i.e. the General Council, which reports to the Ministerial Conference and consists of all WTO members. Voting is on the basis of one country, one vote. The General Council has three subsidiary bodies, the Goods Council, the Services Council and the TRIPS Council, with numerous committees, working and negotiating groups attached to them. In dispute settlement procedures, the General Council acts as the dispute settlement body, whose decisions may be appealed against by recourse to a seven-member appellate body.
The administrative work is carried out by the WTO Secretariat, which has 629 staff members headed by a Director-General who is appointed for four years. Succeeding Peter Sutherland (Ireland), Renato Ruggiero (Italy) and Michael Moore (New Zealand), Supachai Panichpakdi from Thailand took over this function on 1 September 2002. As of 1 December, 2005 Pascal Lamy (France) succeded into this function.
With its simultaneous accession to the WTO and the EU on January 1, 1995, Austria took two steps towards liberalisation at the same time. Both the European Community and its Member States are members of the WTO. In the bodies of the WTO, the EU's interests are represented by the European Commission, after prior consultation with the Member States in the so called Trade Policy Committee pursuant to Article 207 TFEU. At the national level, WTO affairs are mainly co-ordinated by the Federal Ministry of Economic Affairs and Labour.
The final document of the Uruguay Round provided for a follow-up to the negotiations being laid down in the relevant agreements for those spheres where a broad liberalisation could not be achieved at that time (so-called "built-in agenda"). In the meantime, considerable progress has been made in some of these areas. The agreements on basic telecommunications and financial services, which became effective on 5 February 1998 and on 1 March 1999 respectively, cover about 90% of the market. Under the plurilateral agreements, ITA it was agreed as early as 1997 to gradually reduce customs tariffs for 85% of information technology equipment by the year 2000; discussions on increasing this percentage are underway.
Back in 1998, in order to counter a new wave of protectionism emerging as a consequence of the financial crisis in Asia, many WTO members, among them the EU and Japan, advocated a comprehensive liberalisation round in which no sector should be excluded a priori. The goal in this Millennium Round was to address not only the reduction of tariffs on industrial goods, the reduction of agricultural subsidies and improved market access for services, but also the new areas known as the Singapore Issues (i.e. investment, competition, environment and working conditions). Other items on the agenda for the negotiations were increasing the developing countries' share in the achievements of the world economic order and creating a higher degree of transparency. Non-government organisations also demanded the inclusion of consumer protection and animal welfare in the negotiations. The unsuccessful end of the Ministerial Conference in Seattle, which was overshadowed by violent demonstrations, meant that this comprehensive approach has failed for the time being, mainly because of the opposition of the USA, but also due to the resistance of numerous developing countries, which pointed to implementation difficulties and rejected an integration of "new issues" because they were afraid to lose comparative advantages.
Only at the WTO Ministerial Conference in Doha did the participants succeed in reaching agreement on the launch of a new, broad-based multi-lateral round of negotiations, the Doha Development Round, to be completed by 1 January 2005. Apart from the sector-related negotiations on agriculture and services which started back in 2000, negotiations on industrial tariffs, rules of origin for alcoholic beverages, electronic commerce, trade facilitation, WTO regulations (antidumping, subsidies and regional trade agreements), open implementation issues and the improvement of the dispute settlement mechanism are currently underway. Discussion of the Singapore Issues was postponed after the Ministerial Conference in Cancún. New working groups on issues of indebtedness and technology transfer were set up to take better and greater account of matters of importance to developing countries. In addition, the WTO Doha Global Trust Fund was established with the aim of giving improved technical assistance to developing countries in dealing with WTO agreements.
Until recently, the Doha Round has become bogged down in the preliminary issues. In the field of agriculture, for instance, it has so far been impossible to reach agreement on either the type and scope of the subsidies to be cut or on the inclusion of non-trade concerns (such as environmental protection, food security, rural development, etc.). The inclusion of these issues has been advocated particularly by the European Communities, which are defending their principles of plurality of tasks (multi-functionality) and sustainability in agriculture within the WTO against the champions of a full liberalisation in the field of agriculture (represented by the Cairns Group). What is more, little progress has been made with respect to the General Agreement on Trade and Services (GATS), which has additionally developed into the focus of globalisation fears voiced by various groups of the civil society. Efforts aimed at calming these fears by excluding particularly sensitive sectors like health care, education, audiovisual services, water supply and local public transport from the negotiations have so far failed - much to the regret of the European Communities, which as one of the world’s largest providers of services with a share of approximately 25% (USA 19%, Japan 5%) in the international trade in services would be very interested in the opening of new target markets. Moreover, a solution in connection with the facilitated access to affordable medicines pledged to the developing countries in Doha is also still outstanding. In securing the so called July Package of 2008, about 80 % of the work on the new Round is completed. Against the background of the International economic and financial crisis it appears of utmost importance to successfully conclude the DDA.
For further information on the World Trade Organisation, please refer to the WTO homepage (Quicklink).