World Trade Organization (WTO)

The World Trade Organization (WTO) is a mul-tistate organization formed to administer a set of interlocking international agreements, which are concerned primarily with trade regulation. It also functions as a forum to negotiate changes and additions to these agreements. It officially came into existence on January 1, 1995. As of July 2008, there were 153 members, including most but not all of the world's sovereign governments. The WTO is explicitly committed to lowering trade barriers and to general economic liberalization. It plays a key role in international political economy and in contemporary geopolitics.

Most of the constituent agreements of the WTO took their present form during a series of multilateral negotiations known as the Uruguay Round, taking place from 1986 to 1994. These built on and incorporated an older set of international agreements known as GATT (General Agreement on Tariffs and Trade), dating from 1947. The Uruguay Round agreements regulate a vast sweep of international economic policy, including tariff levels, the use of nontariff trade barriers, subsidies, copyright law, trade in services, and foreign investment. In addition, trade in agriculture and textiles were deemed exceptional and were subject to separate agreements. The foundational WTO agreements also included provisions for their own alteration and augmentation in expected future negotiations. Ministerial meetings of the WTO are held about once every 2 years in different locations around the world to conduct these negotiations, the most recent being held in Hong Kong in 2005. Thus far, few changes have been made to the original agreement other than time-dependent clauses from the Uruguay [Page 3136]Round kicking in (e.g., the expiration of the Agreement on Textiles and Clothing in 2005).

In addition to the biannual ministerial meetings, most WTO members maintain permanent missions in Geneva, where they meet as the General Council of the WTO and staff various subcommittees. WTO headquarters in Geneva also house a permanent bureaucracy known as the Secretariat, which arranges meeting logistics, handles the circulation of documents, and dispenses implementation advice to developing country members. The highest office in the WTO is that of director general, a post currently held by Pascal Lamy, a French citizen.

In the event of a formal trade dispute between members, the General Assembly meets as the Dispute Settlement Body (DSB). The dispute settlement procedure involves an expert panel constituted specifically to evaluate and issue recommendations on each case and a permanent standing seven-member Appellate Body to hear appeals. The DSB itself has the final say as to whether or not to adopt the recommendations of the panel and the Appellate Body. In the case of a guilty verdict, the county at fault must render compensation to the winning country; if no compensation can be agreed to, then the winner of the dispute is authorized to level limited trade sanctions against the offending country. The General Assembly also meets as the Trade Review Body to conduct periodic evaluations of each member country's current economic policies.

Members of the WTO incorporate most of the world's population and economic wealth. About 40 of the world's recognized countries are not members of the WTO, notably Russia. The accession of China to the WTO in 2001 was considered a pivotal event in the growth of the WTO. Members of the WTO generally constitute sovereign states. The major exception is the European Union (EU), which is recognized as a member in itself, separate from its own member states, which also hold individual membership in the WTO. For most purposes, the 27 members of the EU choose to negotiate as a bloc. Other informal groupings of countries exist within the WTO, which often meet among themselves prior to Ministerial Meetings to hammer out a common position on specific issues. Some of the most important of these blocs include the Quad, consisting of the most powerful economies: the EU, the United States, Japan, and Canada; the G20, consisting of about 20 (membership tends to fluctuate) of the larger developing economies, formed mainly to advocate for stronger rules against agricultural subsidies; and the G33, another coalition of developing countries formed to advocate for special and differential treatment for developing economies in the application of WTO rules.

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