Geoffrey Hale
Political Science 3170
The University of Lethbridge
October 12, 2010
Outline
 What is the WTO?
 Short History
 Purposes
 Organizational Structure and Governance
 Facts, myths, and theoretical insights.
What is the World Trade Organization?
 A multilateral organization, successor to the General
Agreement on Trade and Tariffs (GATT) – an
intergovernmental treaty (not formal organization)
 “Single institutional framework for world trade”, including:
 “modified GATT”
 “General Agreement on Trade in Services” (GATS)
 Agreement on “Trade-Related Aspects of Intellectual Property
Rights” (TRIPS)
 “Rules and Procedures Governing the Settlement of Disputes”
 “Trade Policy Review Mechanism” (surveillance process)
 assorted Plurilateral Trade Agreements
WTO – A Short History
 Post-Second World War predecessor – the GATT
 1947 -- 23 countries conclude first agreement (effective 1/48)
 Successive trade “rounds”: Torquay (1951), Geneva (1956),
Dillon (1960-61), Kennedy (1964-67), Tokyo (1973-79)
 Negotiation of Multi-fibre Agreement (MFA) on textiles as
“managed trade agreement” within GATT.
 Uruguay Round (1986-93)  leads to creation of WTO (1995)
 WTO Sub-Agreements
 Information Technology Agreement (1997) – 40 countries
 Accession of China to WTO (2001); Doha Round launched.
 Textiles and Clothing Agreement replaces MFA (2005)
Purposes of WTO
 Oversee ongoing development of “rules-based” (vs. “outcomes” or
“results-based”) trading system  technically, a “trade policy exchange
market”
 Engage and attempt to coordinate domestic (non-tariff) policies that
have impact on trade.
 Key principles
 Non-discrimination among signatory nations
 Most-Favoured Nation (MFN) – “a product made in one member country should
be treated no less favourably than a “like” good that originates in any other
country (limited exceptions for regional agreements, Article XIII exemptions)
 “Once negotiations concluded with one country, the results extend to all”
countries within the relevant categories.
 National Treatment – “foreign goods should be treated no less favourably, once
having passed national borders, should be treated no less favourably than
domestic goods with regard to domestic taxes and regulations”
Purposes of WTO
 Key principles (continued)
 Transparency – information sharing among member countries


Applies to WTO and national trade regulations, administrative rulings
Supplemented by multilateral “surveillance” – published reports on
trade policies of individual countries (through Trade Policy Review
Mechanism).
 Accountability – enforceable commitments

Carried out through terms of tariff “bindings”, intergovernmental
consultations, and dispute resolution processes among governments
(not private entities)
 Flexibility

Safeguards (against “trade injury”), National Security rules, noneconomic objectives (e.g. health, environmental policies), trade remedy
measures (e.g. anti-dumping; countervailing duties against subsidies)
WTO Governance Structures
 Headed by ministerial conference of all 153 members
 H&K notes limited utility of committee of 153 in negotiations when most issues
determined by bargaining among larger powers or coalitions of nations
 Key (informal) steering group in negotiations: the G-6



Australia (for Cairns Group - 19) * Brazil
* European Union
Japan (for self, G-10 ag importers)* India
* United States
plus other regional coalitions that emerge over time.
 Major non-members
 Russia; Iran; Iraq; several ‘post-Soviet’ countries; Serbia; several Arab, African
countries; a few smaller, land-locked Asian countries;
 General council – composed of WTO staff, headed by Director General,
delegations from member countries
 Subordinate councils (GATT, GATS, TRIPS) + specialized sector and topical
committees (Figure 2.1 in H&K)


H&K – “very large, dispersed network comprising official representatives of members”
and their home country counterparts in central agencies and relevant line departments
(e.g. trade, agriculture, environment)
Overlap with UNCTAD, WIPO, ILO etc.
Role of WTO Secretariat (professional staff)
 Secretariat
 Provision of technical, logistical support to members
 Preparation of research reports, background documentation.
 Minimal power to take policy initiatives.
 Support work of dispute resolution panels and related appellate body –
which function independently from WTO.
 Director General
 Limited direct authority, but serves as broker among national interests
 “guardian” of WTO processes.

Senior trade officials (1948-95); typically political officials since 1995.

Pascal Lamy (since 2005) – former EU Trade Commissioner (1999-04), Chief of
Staff to EU Commission President Jacques Delors (1985-94)


Deputies from Chile, U.S., Rwanda, and India.
Previous DGs from Thailand (2002-05); New Zealand (1999-02); Italy (1995-99);
Ireland (1993-95); Switzerland (1968-80, 1980-93); UK (1948-68).
Other major governance issues
 Budget – distributed in proportion to member countries’ share of
global trade – EU > 40%; US: 13.5%; China: 5.9%; Canada 3.36%
 Total Budget - 189 MM CHF  $C 180 MM.
 Decision-making
 By consensus – not unanimity (except for changes to general
principles guiding WTO), but not against opposition of major
trading power.
 Usually requires “log rolling” among major nations, coalitions
 ¾ vote on interpretations of WTO rules, waiving disciplines against
members.
 Tw0-thirds vote for technical rule changes, approving “accession” of
new members.
WTO Accession Process
 Applicants must agree to WTO processes, make binding
undertakings re: own trade and related policies.
 Must negotiate entry with existing WTO members who may
negotiate specific terms in return for approving accession.
 Negotiations typically “asymmetric”
 Negotiations have become more demanding with growth,
diversity of existing WTO membership.
WTO Facts and Myths
 WTO is intergovernmental
organization
 Members determine start (and
terms) of new negotiating rounds
 WTO is not international
trade constitution –
precluded by detailed
negotiations on rules.
 National governments broker
 Still major power asymmetries.
level and terms of autonomy
on specific rule clusters
 Medium-sized and smaller
countries benefit from “club
rules” capacity to cooperate
in rule enforcement
 Rule commitments are
cumulative.
 Medium-sized, smaller
countries cannot compel
compliance of large countries,
although international
coalitions help.
Other useful policy insights (per Froese)
 Political institutions still matter as much as economic ones in
trade policies
 National / regional decision-making structures determine terms
and context of participation, negotiating positions, especially of
larger, medium-sized trading countries.
 National sovereignty not incompatible with global governance
 Governments still retain capacity for policy discretion within
boundaries of international, regional agreements.
 Policy “realism” heavily circumscribed by realities of
interdependence for large, small countries alike.
 WTO embedded within complex networks of international,
regional and sectoral agreements with interconnected implications.