Formation of WTO

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Formation of WTO

URUGUAY ROUND

The Uruguay Round commenced in November 1982 at a ministerial meeting of GATT members in Geneva. Although the ministers intended to launch a major new negotiation, the conference on the issue of agriculture and was widely regarded as a failure. In fact, the work program that the ministers agreed formed the basis for what was to become the Uruguay Round negotiating agenda. GATT helped establish a strong and prosperous multilateral trading system that became more and more liberal through rounds of trade negotiations. But by the 1980s the system needed a thorough overhaul. This led to the Uruguay Round, and ultimately to the WTO[1].

The main achievements of the Uruguay Round included[2]:

  • A trade-weighted average tariff cut of 38%;
  • Conclusion of the Agreement on Agriculture which brought agricultural trade for the first time under full GATT disciplines;
  • Adoption of the General Agreement of trade-in Services (GATS);
  • The Agreement on Trade-Related Aspects of Intellectual Property Rights  (TRIPS);
  • The Agreement on Trade-Related Investment Measures (TRIMS);
  • The creation of a unified and predictable dispute settlement mechanism (Dispute Settlement Body-DSB);
  • Confirmation of the Trade Policy Review Mechanism (TPRM);
  • The establishment of the WTO, which administers 15 multilateral, and four plurilateral trade agreements;

The Uruguay Round had extended considerably the realm of world trade rules with agreements on intellectual property and trade in services in exchange for finally tackling agricultural protectionism on a broader scale and getting rid of the textile and clothing quotas.

MARRAKESH AGREEMENT

The Agreement Establishing the World Trade Organization commonly referred to as the “Marrakesh Agreement”, was signed in Marrakesh, Morocco, on April 15, 1994, at the conclusion of the Uruguay Round of Multilateral Trade Negotiations.

This Agreement defines the scope, functions, and structure of the World Trade Organization (WTO). The agreements antecedently negotiated under the General Agreement on Tariffs and Trade (GATT), along with agreements concluded during the Uruguay Round, was incorporated as an integral element of the Marrakesh Agreement and is enclosed in its Annexes. These agreements are now considered to be WTO agreements.

All WTO members are parties to the Marrakesh Agreement, including countries that have joined the WTO since it was signed[3].

This Agreement entered into force on January 1, 1995. It has no expiration date.

The Marrakesh Declaration delegates responsibility to the Director-General to carry out work on coherence from the WTO perspective. The role of the Director-General is central to achieving the objectives of the WTO Coherence Mandate. While recognizing the contribution of trade liberalization to more coherent and complementary international economic policies, the Marrakesh Declaration also acknowledges that difficulties whose origins are outside the trade field cannot be redressed through measures taken in the trade field alone.

To this effect, it emphasizes the importance of international institutions with responsibilities in each of these policy areas (financial policies, macroeconomic policies, development policies) following consistent and mutually supportive policies, and instructs the WTO to pursue and develop cooperation with the IMF and the World Bank[4], while respecting the mandate, the confidentiality requirements and the necessary autonomy in decision-making procedures of each institution, and avoiding the imposition on governments of cross-conditionality or additional conditions

HIGHLIGHTS OF THE AGREEMENT

The objective of the countries that signed the Marrakesh Agreement was to create an integrated multilateral trading system encompassing the General Agreement on Tariffs and Trade (GATT) and the results of all the trade rounds (including the Uruguay Round) that had been conducted since the GATT was signed in 1947.

The Marrakesh Agreement[5] established the WTO and states that it will serve as the basic framework for trade relations among all WTO member countries on matters covered by the WTO agreements; defines the functions of the WTO, which include:

  • reviewing the operation and implementation of all WTO agreements;
  • administering the WTO’s dispute settlement process;
  • providing a forum for further trade negotiations; and
  • working with other international organizations (such as the World Bank and the International Monetary Fund) to achieve greater coherence in global economic policy-making;
  • provides for the organizational and administrative structure of the WTO;
  • requires the WTO to hold a Ministerial Conference at least once every two years, where trade ministers from WTO member countries meet to assess the implementation of the WTO agreements and decide on future WTO initiatives; established the WTO General Council, which oversees WTO operations between meetings of the Ministerial Conference;
  • provides that decisions in the WTO are to be made as a general rule by consensus, although voting is allowed in certain circumstances where a decision cannot be reached by consensus; gives the Ministerial Conference and the General Council the exclusive authority to adopt interpretations of this Agreement and all WTO agreements, and also grants the Ministerial Conference the authority to amend all WTO agreements; states that any country may join the WTO on terms that are agreed upon between the country applying for membership and the WTO;
  • maintains that WTO members may choose not to apply the WTO Agreements to a country that is joining the WTO as long as the Ministerial Conference is notified before approving that country’s accession terms, and permits any WTO member to withdraw from the WTO after giving six months advance notice to the WTO’s Director-General.

CONCLUSION

Over the past 20 years, WTO members have agreed to major updates to the WTO rulebook to boost the flow of global trade. The WTO’s membership has expanded to 164 members, representing over 98% of international trade. In 2015, the WTO reached a significant milestone with the receipt of its 500th trade dispute for settlement. Thus, the birth of WTO after the Uruguay round was a much desirable step which has only led to better and effective trade for the coming centuries.

 

[1] https://www.wto.org/english/thewto_e/whatis_e/tif_e/fact4_e.htm#top

[2]The GATT Uruguay Round: Effects on Developing Countries, Sheila Page with Michael Davenport Adrian Hewitt Overseas Development Institute, ISBN 0 85003 165 6.

[3] The European Journal of International Law Vol. 17 no.5 © EJIL 2007; all rights reserved EJIL (2006), Vol. 17 No. 5, 969–984, The Place of the WTO and its Law in the International Legal Order, Pascal Lamy.

[4] Auboin, Marc (2007) : Fulfilling the Marrakesh Mandate on Coherence: Ten years of cooperation between the WTO, IMF and World Bank, WTO Discussion Paper, No. 13, ISBN 978-92-870-3443-4, World Trade Organization (WTO), Geneva.

[5] Marrakesh Agreement Establishing the World Trade Organization, Apr. 15, 1994, 1867 U.N.T.S. 154.

Author: Akanksha Anand,
Vivekananda Institute of Professional Studies, 4th year/ Student

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