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November 1999
WTO 101: The World Trade Organization for Beginners

By Samantha Knowlden

Click Here for a WTO Glossary

The World Trade Organization (WTO) is a group of nations and “customs territories” (i.e., the European Union or EU) that have agreed to conduct their trade according to WTO trade agreements. These agreements are negotiated and ratified by each country, making them legally binding and multilateral. The organization is run by the membership and supported by an administration called the Secretariat. The WTO currently has 134 members which account for over 90 percent of world trade, and 36 observer countries who are negotiating membership (including China).

The purpose of the WTO is to enable trade to flow freely and predictably by removing trade barriers through negotiation, and making all trade agreements and members’ policies known to individuals, governments, and corporations. It acts to enforce a set of trade agreements among its members. The WTO also serves as a forum for trade negotiation and dispute settlement.

WTO decisions are usually made by consensus of the entire membership through various councils and committees. The ministerial conference, like the one coming up in Seattle, is the highest authority where decisions related to the multilateral trade agreements are made. More routine work is accomplished by the General Council, which has three component parts: the General Council itself (reports to and acts on behalf of the ministerial conference); the Dispute Settlement Body (administers the system for settling disputes between members); and the Trade Policy Review Body (TPRB, reviews members’ trade policies).

In addition, three councils report to the General Council, each responsible for the operations of the WTO trade agreements: the Goods Council, the Services Council, and the TRIPS (Trade-Related Aspects of Intellectual Property Rights) Council. Each of these councils has many subsidiary committees that work on issues specific to the three areas of trade. Other committees that report to the General Council work on concerns such as trade and its effects on development and the environment, plurilateral and regional trade agreements, and administrative issues. Every council and committee is composed of representatives and experts from each member country so that decisions are multilateral. Finally, informal groups from every member country meet with each other to consult and bargain in order to make consensus possible in the decisions of the formal councils and committees.

The Evolution of the WTO
In 1944, 44 nations met in the U.S. at Bretton Woods, New Hampshire, for the United Nations Monetary and Financial Conference. The conference resulted in the creation of the International Monetary Fund (IMF) and the World Bank, along with a charter for the International Trade Organization (ITO). The ITO was intended to be a specialized agency of the United Nations governing world trade, employment, international investment, services, commodity agreements, and other business practices. In 1946, while the ITO was being finalized, 23 of the participants began working together to liberalize trade by negotiating tariffs and by adopting some of the trade rules of the draft ITO charter. This combination of trade rules and tariff compromises became known as the General Agreement on Tariffs and Trade (GATT) and was enacted in January 1948. A secretariat was created to handle the administrative needs of the GATT members, thus making it into both a provisional organization and a trade agreement. Meanwhile, the UN ITO Charter was completed in March 1948, but many governments, including the U.S., opposed its ratification, and by 1950 it was defunct.

The GATT evolved through a series of eight major trade negotiations or “rounds,” mostly focusing on further reducing tariffs (import taxes). The Kennedy Round (1964-1967) increased the GATT’s scope with an Anti-Dumping Agreement; with the Tokyo Round (1973-1979) negotiations expanded into some non-tariff trade barrier concessions along with system improvements.

1986-1994 The Uruguay Round
By the beginning of the Uruguay Round in 1986, the GATT had grown to 123 members. Its narrow focus on trade in goods no longer provided adequate coverage for new globalized trade industries, and loopholes in its various policies made it inefficient. Members began a seven and a half year process of intense negotiations that ended on January 1, 1995 with the Marrakesh Agreement Establishing the World Trade Organization. This agreement expanded and improved the GATT (e.g., in the field of agriculture) and created new multilateral agreements regarding trade in intellectual property (TRIPS—Agreement on Trade-Related Aspects of Intellectual Property Rights) and services (GATS—General Agreement on Trade in Services). It established a more efficient Dispute Settlement Body and the Trade Policy Review Mechanism (TPRM). Further individual commitments were made to lower tariffs and liberalize trade, and many members signed on to plurilateral trade agreements involving government procurement (how the government spends tax money), civil aircraft, dairy products, and beef.

The WTO Since 1995
Since 1995, WTO members have proceeded with negotiations regarding telecommunications, information technology, financial services, and other traded goods. The Dispute Settlement Body has been busy with over 167 cases. The Trade Policy Review Board has begun conducting regular reviews of members’ trade policies and how each country is implementing the WTO agreements. The WTO agreements themselves are also under examination. At the 1998 Geneva ministerial conference, members decided to study trade issues involved in international electronic commerce. The WTO has also been collaborating with other international organizations including the UN, the World Bank, and the IMF, to assist developing countries and work on other issues.

For more information, visit the WTO web site at, Public Citizen’s section about the WTO at, the web site of the International Forum on Globalization at, and the web site of the Third World Network, at: www.south

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