WORLD TRADE ORGANISATION

This article is written by Ashwitha. T of 4^th Semester of ICFAI Law School, Hyderabad

ABSTRACT

The World Trade Organisation is the only worldwide international organisation that deals with international trade rules. At its centre are the WTO accords, which have been drafted, signed, and accepted by the majority of the world’s trading states. The purpose is to assist manufacturers of goods as well as services, exporters, as well as importers with their operations.

This paper defines World Trade Organisation as well as explore principles of World Trade Organisation. It also analyses the objectives and also emphasizes about its operations. It throws some light on WTO leadership. Then it describes about the Doha Development Agenda. The criticisms of WTO are also discussed.

Key words: World Trade organisation, Doha Development, Trade-related intellectual property rights.

INTRODUCTION

The “World Trade Organisation (WTO)” is the principal organisation in charge of creating rules for international trade.  Its supporters believe that in its almost 20 years of existence, it has helped to lower barriers to trade for both goods and services and provided a structure for solving disputes that has decreased the possibility of trade wars. The institution is under a lot of stress, though. Conflicts over “agricultural subsidies” and “intellectual property rights” have slowed discussions on a comprehensive development agenda, as members increasingly turn to specific bilateral and local free trade agreement to further their economic interests. The more recent COVID-19 epidemic caused a sharp decline in international trade and raised concerns about the future of global supply chains. The “WTO” is responsible for overseeing international trade laws. The “WTO” also promotes global standards and seeks to make trade-related regulations clear and foreseeable in order to give stability to citizens, businesses, and investors. Additionally, the agency is firmly dedicated to giving less developed countries additional leeway and exemptions to help them comply with new rules.[1].

“WORLD TRADE ORGANISATION”

• It is a global institution established to control and promote international trade. The “World Trade Organisation (WTO)” has succeeded the “General Agreement on Tariffs and Trade (GATT),” which was founded in 1947 with the expectation that it would soon be succeeded by a specialist agency of the United Nations (UN) to be called as the “International Trade Organisation (ITO)”. Despite the absence of the “ITO”, the “GATT” was remarkably successful in liberalising international commerce during the subsequent 50 years. By the late 1980s, there were calls for a more potent multilateral institution to regulate trade and resolve trade conflicts. Following the conclusion of the “Uruguay Round” (1986–1994) of negotiations on international trade, the “WTO” was formally established on January 1, 1995[2].
• The WTO effectively serves as a different dispute resolution or mediation organisation that upholds international trade agreements. The organisation provides a venue for governments of its members to debate and resolve trade issues with other members. The creation of commercial communication channels between the “WTO”’s members is one of its main objectives. Trade between members of the “WTO” has risen and trade barriers have been removed. Trade between “WTO” members has increased, and trade restrictions have been lifted. It has also kept trade restrictions in place when doing so makes sense from a global viewpoint. The “WTO” attempts to resolve conflicts between states in order to benefit the global economy. Once negotiations are concluded and a contract is in place, the “WTO” consents to implement the agreement in the case of a future dispute. Every “WTO” agreement features a dispute resolution process that makes it possible to resolve disputes in an unbiased manner.[3].

PRINCIPLES OF WORLD TRADE ORGANISATION

• “Non-Discrimination”:

Treating other nations equally: Governments are typically forbidden from establishing disparities between their trading partners, according to the “WTO” treaties. If they do one country a special favour (such giving a cheaper customs tax for any of their products), they must also do the same for all other “WTO” members.[4].

• “Freer Trade”:

Lowering trade barriers is one of the simplest strategies to encourage business. The list of barriers also includes customs levies (or tariffs) and limitations on certain quantities, including import bans or quotas. Occasionally, other subjects like “red tape and exchange rate” regulations have also been taken into consideration.[5].

• “Predictability”:

Jobs are created, investments are promoted, and people may fully take advantage of the benefits of competition choice and lower price with predictability and stability. Under the multilateral trade system, governments are making an attempt to provide a predictable and secure economic environment. [6].

• “Promoting fair competition”:

The claim that the “WTO” is a “free trade” institution is not entirely accurate. Under the system, certain restrictions apply to the use of tariffs and other forms of protection. It is really a system of rules meant to encourage fair, open, and undistorted competition.[7].

• “Encouraging Development and Economic Reforms”

 The “WTO” framework promotes growth. On the other side, developing nations need flexibility in how long it takes them to implement the system’s agreements. The agreements maintain the former “GATT” articles that provided specific aid and commercial advantages for developing countries. The majority of “WTO” members are developing countries or those making the transition to market economy. During the seven and a half-year duration of the “Uruguay Round”, 60 of these countries individually pursued trade liberalisation proposals. Compared to any previous round, the “Uruguay Round” debates witnessed a marked rise in the involvement and impact of developing countries and economies in transition; this pattern has continued with the “Doha Development Agenda.”[8]

OBJECTIVES AND OPERATION OF WORLD TRADE ORGANISATION

The six objectives of “World Trade Organisation (WTO)” are:

1. Establishing and enforcing the laws and norms governing international trade.
2. A forum for debating and regulating increased trade liberalisation.
3. To find solutions to trade-related issues.
4. To increase the transparency of the decision-making process.
5. Work together with other significant international institutions to govern the world economy.
6. To ensure that developing countries benefit fully from the system of international trade

• Although the “GATT” agreed to these goals, the “WTO” has actually worked more to achieve them. As an illustration, the “WTO” deals with all items, services, intellectual properties, and some investment procedures, whereas the “GATT” mostly focused on goods (albeit a sizable percentage of agricultural products and textiles were excluded). Additionally, the permanent “WTO” Secretariat, which replaced the interim “GATT” Secretariat, has improved and standardised the procedures for reviewing trade policies and resolving disputes. Public accessibility to markets has greatly grown as a result of the continually growing membership and breadth of participation. Compared to the GATT, the “WTO” includes a significantly larger range of goods, and its membership currently accounts for more than 90% of global commerce.
• The “GATT” and “WTO” regulations serve at least three purposes. First, they try to protect the interests of tiny, defenceless states contrary to the unfair trade practises of strong, large nations. According to the “WTO”’s most-favourable-nation and national-treatment rules, each “WTO” member is expected to offer fair treatment to both domestic and foreign suppliers in addition to providing all other members with equal access to the market. Secondly, members must limit trade entirely through tariffs and offer access to markets that is not less beneficial than that promised in their time periods (i.e., the commitments they made before they were granted “WTO” membership or afterwards). Third, the rules are intended to make it simpler for governments to reject requests for special treatment from domestic interest groups. Although there have been significant exceptions to the rules, the major “WTO” accords’ inclusion and repetition were supposed to ensure that the worst abuses would not take place. It was anticipated that the “WTO” would increase market stability and predictability, so enhancing economic prosperity and reducing political conflicts.[9]

WTO Leadership

Former Nigerian finance minister “Ngozi Okonjo-Iweala” was appointed by the “WTO” General Council to take over as director-general on the 15th of February 2021. She was the first female and African person to be given the position. She officially started her four-year term in office on March 1st, 2021. There couldn’t be discussions, mediation, or settlement without the foundational “WTO” agreements. These agreements create the rules of international commerce, which the “WTO” regulates. They place demands on a country’s government that it must uphold while deciding on future trade policies. The accords force other countries to follow a set of social and environmental principles in addition to protecting producers, importers, and exporters.[10]

DOHA DEVELOPMENT AGENDA

• During the WTO ministerial conference held in Doha, Qatar, which took place in 2001, participants agreed to a new round of negotiations that would pledge to put developing countries at the core. This was referred to as “The Doha Development Agenda” or “The Doha Round”. The plan’s main component was the liberalisation of global trade in agricultural products. Despite the fact that many of the world’s poorest nations rely on exporting basic agricultural products, they struggle to compete with wealthier nations that provide their farmers subsidies. The “Organisation for Economic Cooperation and Development (OECD)” estimates that the annual value of these subsidies exceeds $300 billion.  “Additionally, “the Doha agenda” sought to further reduce trade barriers for goods and services that are not agricultural, such as business and finance. By 2008, negotiations had broken down due to disagreements over agricultural subsidies and a proposed “special safeguard mechanism,” which would have allowed underdeveloped countries to temporarily raise tariffs to protect their farmers.
• Status of “DOHA”

The 2008 global financial crisis left negotiators with low expectations as they continued. However, the 2013 Bali Minister achieved a historic feat: the first global accord since the WTO was established. The goal of “The Commerce Facilitation Agreement (TFA)” is to speed up customs procedures and make trade more straightforward, rapid, and affordable. Following to a 2015 “WTO” study, this might lead to a rise in global trade of over $1 trillion. The talks also produced a short-term agreement on “public stockholding,” which maintains the exceptions that let underdeveloped countries to stockpile agricultural products in preparation of food shortages. Roberto Azevedo, the former director general, said that the “WTO” was “back in business,” even though the TFA was only a small part of the larger Doha agenda. Members made progress on a number of issues in Nairobi in 2015, including the gradual eradication of agricultural export subsidies and a decision by certain nations to decrease tariffs on “information technology (IT)” exports.

However, a lot of onlookers thought Nairobi was the culmination of the “Doha” talks; this perception only intensified after Donald Trump won in the presidential election of 2016. India obstructed attempts to reduce the subsidies that support overfishing in the globe’s waters, preventing participants in the 2017 ministerial in “Buenos Aires “from reaching a consensus. Since the conference’s attendees couldn’t agree on a conclusion statement, “EU Trade Commissioner Cecilia Malmstrom” termed it a failure, while Lighthizer called for a “fresh start.”[11]

Criticisms of the WTO

Variables have criticised the organisation. Scientists worry about deregulation, farmers and labour organisations claim the “WTO” focuses too narrowly on business interests, and U.S. lawmakers claim the organisation hasn’t dealt with Chinese abuses. The main issues are:

• “Trade- related aspects of Intellectual Property Rights (TRIPS)”, the intellectual property agreement that governs the World Trade Organisation, has come under fire from “intellectual property” specialists who claim that “WTO” laws on medical patents have restricted access to medicines in impoverished countries. The “WTO” claims that enforcing intellectual rights is crucial for fostering global commerce. A group of poor countries led by “India” and “South Africa” has proposed a “TRIPS” waiver for “COVID-19” vaccinations and treatments. However, the notion is rejected by a number of affluent countries. [12].
• Government control and authority Other critics claim that “WTO” restrictions undermine “labour and environmental laws” and supplant national sovereignty. Environmental organisations have condemned earlier “WTO” rulings against environmental labels they perceive as discriminatory, such as the United States’ dolphin-safe labelling and rulings against genetically modified goods. American labour unions contend that the provisions of the “WTO” is insufficient to prevent unfair labour. According to American labour organisations, the “WTO”’s safeguards are insufficient to stop unfair labour practises abroad from undercut American wages. For instance, they assert that China violates basic worker rights to drive down the cost of its goods. Developing nations claim that the “WTO”’s measures to improve employment standards are really a veiled form of protectionism.[13].
• “competitiveness in imports”: According to some economists, WTO-driven tariff reductions reduce American jobs and wages by encouraging corporate relocations overseas and increasing imports. As a result of American companies being forced to compete with China’s much cheaper imports, “Robert E. Scott and Will Kimball” of the “Economic Policy Institute” predicted in 2014 that China’s accession into the “WTO” in 2001 lead to the loss of more than three million American jobs. Some estimates put the employment losses at two million, that is still a significant number. Other observers, however, contend that technological developments, not China, are responsible for these job losses.[14].

Conclusion:

Global economic integration has progressed more slowly and unevenly than some nations would have desired as a result of multilateral trade negotiations under the “GATT” and “WTO” Some have claimed that subgroup of economies that are members, which are typically neighbours, should be better integrated for military, political, or other reasons. The “European Union,” “the North American Free Trade Agreement” (replaced by the “United States-Mexico-Canada Agreement”, inked in 2018), and the “Asia-Pacific Economic Cooperation” are among examples. Despite the most-favoured-nation clauses in the agreements that established the WTO, the organisation does authorise such favoured integration in some situations. Despite the fact that many such integration agreements might not include “substantially all trade”—the “WTO’s” fundamental requirement—there hasn’t been much controversy regarding the establishment of free-trade areas and customs unions. Agriculture and other politically sensitive sectors are usually excluded from such arrangements. Since the late 1990s, the WTO has been under intense criticism. Opponents of “economic globalisation,” who are particularly compared to the growing power of multinational corporations, claim that the “WTO” violates national sovereignty and furthers the objectives of large corporations at the expense of smaller local businesses that are already battling to compete with imports. Despite these criticisms, as seen by the increase in membership after 1995, the WTO’s entry nevertheless appealed to non-members. Most significantly, China joined the “WTO” in 2001 after extensive accession negotiations. Some “WTO” members were concerned that the entry of such a huge economy—which is still partially planned—might have a negative effect on free trade generally, which is why the qualifications for membership for China were stricter than those for developing countries.[15]

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[1] What’s Next for the WTO? available at: https://www.cfr.org/backgrounder/whats-next-wto(last visited on June 20,2023)

[2] World Trade Organisation, available at: https://www.britannica.com/topic/World-Trade-Organization(last visited on June 20,2023)

[3] World Trade Organization (WTO): What It Is and What It Does, available at: https://www.investopedia.com/terms/w/wto.asp(last visited on June 20,2023)

[4] India and WTO, available at: https://www.insightsonindia.com/2016/01/20/india-and-wto-detailed-analysis-of-all-related-issues-and-concepts/(last visited on June 20,2023)

[5] Ibid

[6] India and WTO, available at: https://www.insightsonindia.com/2016/01/20/india-and-wto-detailed-analysis-of-all-related-issues-and-concepts/(last visited on June 20,2023)

[7] Ibid

[8] Ibid

[9] World Trade Organisation, available at: https://www.britannica.com/topic/World-Trade-Organization(last visited on June 20,2023)

[10] World Trade Organization (WTO): What It Is and What It Does, available at: https://www.investopedia.com/terms/w/wto.asp(last visited on June 20,2023)

[11] What’s Next for the WTO? available at: https://www.cfr.org/backgrounder/whats-next-wto(last visited on June 20,2023)

[12] Ibid

[13] What’s Next for the WTO? Available at: https://www.cfr.org/backgrounder/whats-next-wto(last visited on June 20,2023)

[14] Ibid

[15] World Trade Organisation, available at: https://www.britannica.com/topic/World-Trade-Organization(last visited on June 20,2023)