World Trade Organization

The World Trade Organization (WTO) is the only international organization that deals with the rules that govern trade between countries. The pillars on which it rests are the WTO Agreements, which have been negotiated and signed by the vast majority of countries participating in world trade and ratified by their respective parliaments. The objective is to help producers of goods and services, exporters and importers to carry out their activities. The World Trade Organization (WTO) was established in 1995. It is headquartered in Geneva, Switzerland, and its official languages are English, French, and Spanish. The WTO is not part of the United Nations system, nor is it part of the Bretton Woods organizations such as the World Bank or the IMF.

History

The General Agreement on Customs Tariffs and Trade, better known by its acronym in English, GATT, was an international treaty signed on October 30, 1947. Despite the fact that its text did not provide for the establishment of any organization or institutional structure, in fact some legal fictions were used to establish an organization installed in Geneva in which the Parties to the GATT held meetings, established permanent bodies and formed an administrative structure headed by a director general.

In 1986, a very important meeting convened by the GATT in Punta del Este (Uruguay) approved a declaration in which it was ordered the initiation of a round of multilateral trade negotiations, which would come to be known as the "Uruguay Round& #34;, intended to replace and expand the set of agreements, then in force, on various issues of international trade. The Round lasted until 1993 and culminated in a meeting held in April 1994 in Marrakech, Morocco. There the "Final Act" of the Round and the set of agreements on various topics were signed, as well as the "Agreement establishing the World Trade Organization". Thereafter it was agreed that the original GATT provisions would be called "GATT 1947" while those resulting from their agreed modifications would be the "GATT of 1994". The Uruguay Round incorporated for the first time in the "multilateral trading system" several topics that until then had been excluded from it. The main ones were trade in services, agriculture, textiles and intellectual property.

In 2001 the Doha Round began, whose official name is the “Doha Development Agenda”. It begins at the fourth ministerial meeting held in Doha, the capital of Qatar, in November 2001, with the objective of achieving the full incorporation of developing countries to the benefits of the liberalization of world trade, as well as the expansion of this liberalization.

Indeed, disputes over agricultural subsidies, as well as failure to meet Uruguay Round objectives and intellectual property issues, remained a dividing issue among WTO members at the start of the round; however, they wanted to send a message of calm to the international community after the attacks of September 11, 2001 in the United States.

In 2005, in Hong Kong, minimum commitments were reached regarding the elimination of support for the export of agricultural products by developed countries. There was also progress on the issue of dumping for which a base document has been achieved, although there are still certain significant differences.

The Agreement on Trade Facilitation is the first significant agreement reached in the Doha Round. In this agreement, the Preparatory Committee on Trade Facilitation is created, which will report to the General Council of the WTO, in order to ensure its rapid entry into force and its efficient operation. A provision of this agreement makes it clear that developing countries will not be obliged to assume their commitments before they have acquired the necessary capacity to do so. This progress in trade facilitation is relevant given that, currently, trade facilitation is a fundamental element to promote the role of global value chains, mostly coordinated and organized by networks of transnational companies, through which It carries out about 80% of world trade. It is also a key aspect of the export competitiveness of countries.

The Doha Round negotiations were to conclude on January 1, 2005, with the exception of those relating to the understanding on dispute settlement, which was to end in May 2003; however, after the deadline for the end of the negotiations, this has not happened nor does it seem that it will happen soon.

Agriculture is probably the main reason for the deadlock in the Doha Round; On the one hand, the European Union and the United States defend their policy of support for local agricultural production and restrictions on the importation of such products. The two have positioned themselves in the sense that they have already conceded everything that is feasible for them. On the other hand, the negotiating countries, many of them developing, as the agricultural sector is a sensitive issue, have formed a significant number of different groups that have conflicting interests, so that not only is there no agreement on the agricultural issue between developed and developing countries, but the conflict exists between the latter as well, so one cannot be optimistic about the success of these negotiations, at least in the near future.

After the Uruguay Round, tariffs on industrial products applied by developed countries went from 6.3% on average to 3.8%. Despite the previous averages, it must be taken into account that the norm on tariff issues in the countries continues to be the escalation of tariffs according to the production of the product, which significantly hinders the negotiation regarding access to non-product markets. agriculture for developing economies. Currently, there seem to be clear political divergences that make it unlikely that an agreement will be reached on this issue, as well as on the agricultural issue mentioned above, and given the importance of these two issues, it is clear that the Doha Round cannot be concluded without resolving these disagreements.

Another significant result that took twelve years to achieve were the Bali agreements of December 2013.

Organization

Members and Observers

Following Afghanistan's accession on July 29, 2016, the WTO currently has 164 members, as well as 20 observer nations.

The European Union (EU) has member status and counts as one.

Headquarters

The headquarters of the WTO is located in the Center William Rappard, Geneva, Switzerland. The highest body is the Ministerial Conference, which meets regularly. The main permanent body is the General Council, in which all members are represented; Numerous Councils and Committees depend on it. The Secretariat has about 640 staff, headed by the Director General. The current incumbent of this post is as of March 1, 2021 Ngozi Okonjo-Iweala. The WTO has a budget of 197 million Swiss francs (in 2020).

Agreements: the “single undertaking”

The WTO administers 60 agreements.

Within the WTO, the system requires all its members to adhere to all of its Agreements, and countries cannot choose to accept only some. This explains the enormous complexity of the negotiations on their modification, because they involve necessarily to all members. The advantages that each country obtains, or the damages that it suffers, can be offset on different issues, and the negotiation has to seek a general consensus with balances of extreme complexity.

Criticism

The WTO and developing countries

Originally, the GATT was a treaty promoted by the main developed countries, and the regime it established responded to their interests. In the rounds of multilateral trade negotiations prior to the Uruguay Round, it was always notorious that discrepancies and discussions were settled once an agreement was reached between the United States and the European Community.

This led to a multilateral system that imposed the objective of general trade liberalization (primarily through the reduction of customs duties, subsidies and other "trade distorting" measures) in all countries. sectors that were of interest to developed countries, but exempted from the regime those sectors in which those countries wanted to maintain their protectionist measures (agriculture and textiles).

The protests of developing countries against this situation were systematically ignored and only began to obtain concrete results in the Uruguay Round. Their main demand, that agriculture not be exempted from trade liberalization, gave rise to the "Agreement on Agriculture". But the liberalization measures that this agreement established, labeled by its critics as extremely timid and insufficient, were obtained with the compensation that, at the same time, issues that were of interest to developed countries and that had never been part of it were incorporated into the system. Thus, the General Agreement on Trade in Services and, by special requirement of the United States, the one referring to intellectual property (the "TRIPS Agreement") were also approved.

The WTO, since the Uruguay Round, insists on the usefulness of its regime for developing countries and the importance of its activities especially dedicated to them. The principle of "special and differential treatment for developing countries" as a general norm of the Organization, and was specified in numerous provisions of the Agreements that give those countries special facilities (for example, longer terms to fulfill the obligations assumed by all). The WTO also has technical cooperation and "capacity building" intended for developing countries; participates (with other organizations) in the "Integrated Framework", which "helps least developed countries (LDCs) to play a more active role in the world trading system", and established an "Aid for Trade Program".

However, the disadvantage that the system still places developing countries in was implicitly recognized when it was decided in 2001 to hold a new general round of negotiations (the "Doha Round"), after which gave itself the specific objective of improving the situation of those countries. The Round was dubbed the "Doha Development Round" and a "Doha Development Agenda" was approved. But all these purposes, declared since 2001, that did not reach a conclusion in the Round, went virtually into obscurity when the 2008 crisis broke out, which led the developed countries, affected by it, to distance themselves completely from the objective of making concessions to developing countries.

Criticism of the systemic functioning of the WTO

Some countries have denounced irregularities in the negotiation processes within the WTO, such as maintaining extreme positions until the last moment to reach intermediate agreements, negotiating in small groups of countries, marginalizing less important countries ("Green Room"), etc.

It has also been criticized that no developing country has the capacity to unilaterally deal with a deadlock in negotiations.

According to economist Ha-Joon Chang, the "ostensibly “democratic” WTO is actually run by an oligarchy of rich countries. Not only because the latter have the implicit power to treat or threaten the weakest, something common in a democracy made up of actors of different weights: the problem is that the members of the aforementioned oligarchy do not even care about appearances, as can be seen in the so-called “green room” meetings, where representatives of developing countries are not even invited, and to which access is prohibited. This allows the adoption of political priorities openly favorable to the most powerful economies".

Lack of transparency: the “Green Room”

One of the most criticized aspects, in terms of the transparency of the WTO, are the so-called «Green Room» negotiations (Green Room): a system of informal meetings established during the Round of from Uruguay, named for the color of the room where they were held. In these meetings, a reduced number of countries, with an interest in the issue to be negotiated, meet to reach an agreement that must later be ratified, by consensus, by all the member countries (among which there are many who have not been invited to the meetings). This mechanism was repeated in Seattle, and was one of the most important reasons for the failure of the conference, since the African countries and others from the periphery stood up to this situation and refused to ratify the final declaration (in whose negotiation they had not participated, as they had been sidelined in the "Green Room" negotiations throughout the conference). The processes in the Green Room were criticized during the 1990s, especially by developing countries and NGOs concerned about the lack of transparency, for both being excluded from such processes.

There have been various proposals over the decades to formalize the "Green Room" negotiations by creating an executive committee to manage the WTO agenda, with a permanent core of members based on agreed criteria; such as the proportion of world trade handled by each country, along with a rotating group of smaller countries. To date, no progress has been made in this direction. Certain authors consider that the abuse of negotiations in the "Green Room" by the members of the WTO is unnecessary. In any case, and despite the fact that greater transparency is undoubtedly necessary and always advisable for the organization, other authors consider that a mechanism similar to the negotiations in the "Green Room" (where certain members meet to discuss trade policies that solely or mainly affect them without the participation of other members) seems inevitable in an organization with such a large number of members.

Another frequent criticism leveled at the WTO is that there is not free access to all the data generated by the WTO. For example, there is no free access to the WTO's integrated database, which contains data on the tariff limits to which members have committed. Despite the fact that customs tariff limits are at the heart of the WTO, they are very difficult to analyze by any outside researcher since they would require the analysis of an extraordinary amount of data. However, the WTO Secretariat organizes and collects in a more comprehensible way all this data but only the governments of the member states have access to it.

The paradox of criticism of the WTO and the universality of participation in it

The WTO has 164 members and 20 applications for membership in process despite the particular complexity of the accession process. Before an application for membership, a "Working Group" commissioned to examine it. There, the trade regime of the interested country is analyzed and the particular conditions of its accession are negotiated with it. In addition, it follows a process of bilateral negotiations between the aspiring country and each of the WTO members that request it, and that present their own demands. The result is that accession is conditional on a consensus that satisfies all members and members of the Organization, and it is common for countries to adhere under more onerous conditions than those applied to others. The "Protocol of Accession of China", which stipulates the obligations China undertook to join the WTO, is a 112-page document. This represents the vast majority of the world's countries, whatever their economic status, and includes the vast majority of the poorest countries (the 'least developed countries').

There is a singular contrast between the very sharp and widespread criticism that the Organization is subjected to and the virtual unanimity in participation in it or the desire to join.

This is because, regardless of the validity of those objections to the 'multilateral trading system', being outside causes more harm than harm. The country that is not part of the WTO does not have any other defense in its foreign trade relations than those provided by the agreements it has entered into. It does not enjoy, like any member of the WTO, the clause of the most favored nation, stipulated in the GATT.

Importance in the international trade regime

The weight of the WTO as the governing institution of commercial exchanges has been permanently eroded by the increasing proliferation of bilateral and regional free trade agreements. The "most favored nation regime" It has been losing importance, because an export covered only by this regime is in inferior conditions compared to those that are carried out with the advantages of free trade agreements.

This circumstance, together with the very remote prospects of reaching a new general multilateral agreement (the one envisaged in the "Doha Round"), has led to the institution itself losing much of its prestige that he came to have.