Crash Course: So, how does the WTO work?

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For such an austere exterior, the World Trade Organization (WTO) is one of the more beautiful buildings I’ve been in here.

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Not a bad place to spend the work day!

The Anatomy of the WTO (Fast Facts)

  • the World Trade Organization of today is mostly the product of negotiations called the “Uruguay Round” that took place from 1986-94 and earlier negotiations under the General Agreement on Tariffs and Trade (GATT). When the Uruguay Round ended, the WTO was created in 1995.
  • unlike the WHO, the WTO isn’t a specialized agency of the UN. Instead, we classify it formally as a “related organization,” (yes, I know, very formal indeed). The International Atomic Energy Agency (IAEA) and the Organisation for the Prohibition of Chemical Weapons (OPCW) are also members of that family.

Who makes up the WTO?

The WTO has 159 member states.

While no country is compelled to be a member, abiding by the international standards of the WTO decreases the chance that trade disputes with other countries will arise. Thus, it’s both a safety mechanism of sorts and a place where countries can bring up complaints against trade partners.

What does the WTO actually do?

Officially, the WTO is an international forum for trade negotiations. It’s an organization that has both the opening of markets and the imposition of trade barriers on its résumé. It’s main goal is to ensure that technical and standard regulations for trade are reasonable without being arbitrary or an excuse for protectionism.

Much like the WHO, the WTO’s power is surprisingly limited. Let’s start with what the WTO can’t do: it can’t enforce international trade-related policies and it can’t give advice to member states on how they should behave. It can only “assist” member states in following the rules that they themselves have negotiated. That means that if Brazil wants to impose a trade barrier that complies with international rules but that development economists think will seriously hurt its economy, the WTO can only help that ship along. The countries make the rules, and the WTO is as bound by them as they are.

So if the countries make the rules…what are they?

The WTO has to walk a fine line between ensuring that products that are imported/exported are “safe” by agreed-upon standards, but that regulations are not so stringent that they are actually being used by countries to block trade in order to protect domestic markets.

Enter, the Sanitary and Phytosanitary measures or SPS. This agreement essentially establishes the 3 main international standards for food safety, and animal and plant health with regard to market products, as well as sets the basic rules of the WTO. But, remember, the WTO has no powers of enforcement. Countries can still set their own standards, even though they are encouraged to use international standards where they exist (so as to lessen the possibility of being challenged legally in a WTO dispute).

The other main player is the Agreement on Technical Barriers to Trade or TBT. Like SPS, it recognizes countries’ rights to set their own standards, but it goes one step further. Because there are so many different country standards and regulations around trade, TBT essentially provides an open list of these in an effort to ensure transparency.

What if the countries don’t agree?

Well, I suppose every forum has a space for disagreement. There are 2 main forms here: disputes and complaints. Let’s take disputes first. In this case, the WTO can hear disputes that countries bring up against one another. A few things to know here: usually these disputes have to do with SPS (food safety and animal and plant health measures), countries bringing the dispute have to provide scientific evidence, and the disputes are handled behind closed doors (unless a request that the consultation with the dispute panel be publicized is made). For example, China has a current dispute on the table against the U.S. over poultry health standards.

Complaints: this is much rarer than disputes. But the same rules apply in that the WTO can’t intervene until a member state brings the issue forward. For example, the only complaints that are currently on the table are against Korea & India. On the other hand, New Zealand has never had a complaint lodged against it–ever. Smaller markets like this one usually ruffle fewer feathers (they have less buying power). Then you have Iceland, a country with extremely restrictive requirements for food imports (understandably), but you don’t see anyone lodging a complaint against them either. As always, context & politics take the cake.

What are some major accomplishments to which the WTO has contributed?

  • Putting intellectual property rights and TRIPS on the international agenda. In 1996, intellectual property made its first appearance at the WHO, just one year after the Uruguay Round and the creation of the WTO. Enter, TRIPS. The Trade-related Aspects of Intellectual Property RIghts (TRIPS) is a behemoth of an agreement that was made by the WTO and subsequently sent shockwaves (if not slightly delayed) through the public health world when this sector realized the possible effects of the agreement on access to medicines in particular

 

 

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2 thoughts on “Crash Course: So, how does the WTO work?”

  1. Hello! I’m wondering if you would be kind enough to let us use this photo of the WTO in a slideshow ? we’re putting it together now for doctors without borders, and need to have an image of the WTO right away!!! do let me know!! bw and thanks, Laura

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