Present the Objectives, Functions, and Organizational Structure of the WTO

MODULE 1

Introduction to the WTO

ESTIMATED TIME: 3 hours

OBJECTIVES OF MODULE 1

. Present the objectives, functions, and organizational structure of the WTO

. Present an overview of the covered agreements and the principle of non-discrimination

. Present the negotiations launched in the Doha Development Agenda

1 Overview

I. INTRODUCTION TO THE WTO...... 3

I.A. What is the WTO?...... 3

I.B. Objectives of the WTO...... 3

I.C. Functions of the WTO...... 4

I.D. WTO Organizational Structure...... 6

I.E. Decision-making in the WTO...... 10

II. THE WTO AGREEMENTS...... 11

II.A. Introduction...... 11

II.B. Non-Discrimination...... 14

II.C. Schedules of Commitments and Rules of General Application...... 16

II.D. General Exceptions & Waivers...... 17

II.E. Regional Integration...... 18

II.F. Special and Differential Treatment...... 19

II.G. On-going Negotiations: the Doha Development Agenda...... 21

III. DISPUTE SETTLEMENT AT THE WTO...... 22

IV. SUMMARY...... 23

2 I. INTRODUCTION TO THE WTO

I.A. WHAT IS THE WTO?

The WTO is the only international organization dealing with multilateral rules of trade between nations. At its heart are the Uruguay Round agreements, which were negotiated and signed by governments and ratified in their respective parliaments.

GATT AND WTO

"GATT" is the acronym of General Agreement on Tariffs and Trade. The GATT is an international agreement concluded in 1947. It contains the rules and obligations that governed trade in goods for almost fifty years between the nations, which signed and ratified it and which were normally called "the Contracting Parties". Until the creation of the WTO in 1995, the GATT provided the legal framework for the bulk of world trade.

From 1947 to 1994, Contracting Parties organized eight rounds of negotiations. The longest (1986-1994) and most comprehensive of them was the Uruguay Round, which incorporated negotiations on services and intellectual property. The Contracting Parties concluded the Round by adopting the "Final Act Embodying the Results of the Uruguay Round of Multilateral Trade Negotiations". The Final Act includes the "Marrakesh Agreement Establishing the World Trade Organization" (the WTO Agreement) and its four Annexes (Annexes 1 (1A, 1B, 1C); 2; 3 and 4).

The WTO Agreement is the constitutive agreement which established a new organizational body, the World Trade Organization. Therefore, the WTO came into being in 1995, and though legally distinct from the "GATT", both are interrelated. The WTO is in charge of administering the Uruguay Round Agreements.

I.B. OBJECTIVES OF THE WTO

In the Preamble to the Marrakesh Agreement establishing the WTO ("the WTO Agreement"), the parties to the Agreement recognize certain objectives they wish to attain through the multilateral trading system:

 raise living standards;

 ensure full employment;

 ensure a large and steadily growing volume of real income and effective demand; and

 expand the production of and trade in, goods and services, while allowing for the optimal use of the world's resources in accordance with the objective of sustainable development.

The Preamble of the Agreement also recognizes the need for "positive efforts to ensure that developing countries, and especially the least-developed among them, secure a share in the growth in international trade commensurate with … their economic development".

3 I.C. FUNCTIONS OF THE WTO

IN BRIEF

The main functions of the WTO are to:

 administer trade agreements;

 serve as a forum for trade negotiations;

 settle trade disputes;

 review Member's trade policies;

 assist developing countries with trade policy issues, through technical assistance and training programmes; and

 cooperate with other international organizations.

Article III of the WTO Agreement contains the functions of the WTO. Paragraphs 1 to 3 refer to the role of the WTO of providing a permanent institutional forum for trade negotiations among its Members. These negotiations may be on subjects already covered under the various WTO agreements or in respect of "new issues" to be disciplined by those agreements.

Paragraph 3 of Article III of the WTO Agreement obliges the WTO to administer the Understanding on Rules and Procedures Governing the Settlement of Disputes ("DSU") in Annex 2 of the WTO Agreement. It refers to the role of the WTO as a forum for the settlement of disputes between its Members in accordance with the disciplines and procedures elaborated in the DSU.

Paragraph 4 of Article III of the WTO Agreement obliges the WTO to administer the Trade Policy Review Mechanism ("TPRM") contained in Annex 3 to the WTO Agreement. This function underscores the role of the WTO in the transparency mechanism designed by Members during the Uruguay Round. The TPRM was one of the few elements of the WTO Agreement that formed part of the "Early Harvest" realized before the Uruguay Round ended. Early Harvest is an expression which was used in the Uruguay Round negotiations when at the "Mid-Term Review" Ministerial Meeting, held in Montreal in 1988, GATT Contracting Parties agreed that certain results of the negotiations, on which a clear consensus already existed, would enter into force immediately, although on a provisional basis. In other words, some fruits (of the negotiations) would be "harvested early".

The final paragraph of Article III of the WTO Agreement, Paragraph 5 contains the "coherence mandate", which states that the WTO should cooperate with other multilateral agencies (World Bank, International Monetary Fund, etc.).

The WTO rights and obligations constitute one part of the Multilateral Trading System (also referred to as "MTS") which regulates and affects most international trade transactions.

Other organizations and agreements may also affect trade. For example, regulations of the International Monetary Fund ("IMF") influence how countries trade.

4 EXERCISES:

1. What are the objectives of the WTO?

2. What are some of the achievements of the Uruguay Round?

3. What is the Final Act?

5 I.D. WTO ORGANIZATIONAL STRUCTURE

Figure 1: WTO organizational structure

6 I.D.1. THE MINISTERIAL CONFERENCE

The Ministerial Conference is the highest decision-making body in the WTO. Its sessions must take place at least once every two years and deals with all matters under the WTO agreements.

I.D.2. THE GENERAL COUNCIL

The General Council constitutes the second tier in the WTO Structure. It comprises representatives from all Member countries, usually Ambassadors/Permanent Representatives based in Geneva. It meets regularly (approximately once a month) to adopt decisions, mostly on behalf of the Ministerial Conference when the Conference is not in session.

The General Council has authority over the Trade Negotiations Committee ("TNC"), which is in charge of the negotiations mandated by the Doha Development Agenda. The General Council also meets as:

 The Trade Policy Review Body ("TPRB"), with its own Chairperson, to carry out trade policy reviews as mandated by the Trade Policy Review Mechanism (Annex 3 of the WTO Agreement).

 The Dispute Settlement Body ("DSB"), with its own Chairperson to administer the rules in the Understanding on Rules and Procedures Governing the Settlement of Disputes ("DSU"). The DSB has the authority to establish panels, adopt Panel and Appellate Body Reports, oversee the implementation of rulings and recommendations, and authorize the suspension of concessions and other obligations under the agreements for which disputes can be settled by the DSU - the "covered agreements".

I.D.3. THE TRADE NEGOTIATIONS COMMITTEE

The Trade Negotiations Committee (TNC) was set up by the Doha Ministerial Declaration, which in turn assigned it to create subsidiary negotiating bodies to handle negotiations for different topics, among them the Special Sessions of various Committees that have a mandate to negotiate (such as Agriculture, Trade and Environment, Subsidies, etc). At present, its chairperson is Mr. Pascal Lamy, the Director General of the WTO. The TNC reports directly to the General Council.

7 I.D.4. THE COUNCILS & SUBSIDIARY BODIES

The Councils can be described as subsidiary bodies to the General Council. They are composed of all Members. There are three:

 The Council for Trade in Goods (the "Goods Council") oversees all the issues related to the Agreements on trade in goods.

 The Council for Trade in Services (the "GATS Council") oversees all issues related to the GATS Agreement.

 The Council for Trade-Related Aspects of Intellectual Property Rights (the "TRIPS Council") administers the TRIPS Agreement.

The Goods and Services Councils have subsidiary bodies.

The Goods Council has 11 committees working on specific subjects (such as agriculture, market access, subsidies, anti-dumping measures, etc.). All of these committees are composed of all Members.

Subsidiary bodies of the Services Council's deal with financial services, domestic regulations, GATS rules, and specific commitments. This Council does not have a permanently fixed number of subsidiary bodies. For example, the Negotiating Group on Basic Telecommunications was dissolved in February 1997 when its work ended.

Several other bodies, which focus on specific issues, report to the General Council. They are usually called Committees, Working Groups or Working Parties. They are:

 Committee on Trade and Development ("CTD");

 Committee on Trade and Environment ("CTE");

 Committee on Regional Trade Agreements ("CRTA");

 Committee on Balance-of-Payment Restrictions ("BOP Committee"); and

 Committee on Budget, Finance and Administration ("CBFA").

 Working Parties on Accession

 Working Group on Trade, Debt and Finance

 Working Group on Trade and Technology Transfer

8 EXERCISES:

4. Please arrange the following WTO bodies in hierarchical order:

(a) General Council

(b) Committee on Technical Barriers to Trade

(c) Council for Trade in Goods

(d) Ministerial Conference

5. Please state the function of the following WTO bodies:

(a) Ministerial Conference

(b) General Council

(c) Council for Trade in Goods

(d) Committee on Technical Barriers to Trade

9 I.E. DECISION-MAKING IN THE WTO

CONSENSUS VERSUS...

The WTO is a Member-driven, consensus-based organization. Consensus is defined in footnote 1 to Article IX of the WTO Agreement, which states:

"The Body concerned shall be deemed to have decided by consensus on a matter submitted for its consideration, if no Member present at the meeting when the decision is taken, formally objects to the proposed decision."

VOTING

Where consensus is not possible, the WTO Agreement permits voting — a vote being won by a tally of the majority of votes cast, and based on "one country, one vote". The WTO Agreement envisages voting in four specific situations:

 a three-quarters majority of Members can adopt an interpretation of any of a multilateral trade agreements;

 the Ministerial Conference, by a three-quarters majority, can waive an obligation imposed on a Member by a multilateral agreement;

 all Members or a two-thirds majority (depending on the provision of the agreement) can take a decision to amend provisions of the multilateral agreements. However, the amendments only apply to Members that accept them;

 a two-thirds majority in the Ministerial Conference or the General Council in between conferences can take a decision to admit a new Member.

10 II. THE WTO AGREEMENTS

II.A. INTRODUCTION

IN BRIEF

The WTO agreements are the result of the 1986–1994 Uruguay Round negotiations, signed at the Marrakesh Ministerial Meeting in April 1994. There are about 60 agreements and Decisions totalling 550 pages. It also included a major revision of the original GATT text. Negotiations since 1994 have produced additional legal texts such as the Information Technology Agreement, Services and Accession Protocols.

IN DETAIL

The Final Act of the Uruguay Round was signed in Marrakesh in 1994. It works like a cover note to all WTO Agreements, which are subsequently attached.

Next, is the Marrakesh Agreement establishing the World Trade Organization ("the WTO Agreement"), it serves as an umbrella agreement. The WTO Agreement includes provisions on establishment, scope, functions and structure of the WTO. It defines the WTO relationship with other organizations, its secretariat, budget and contributions, legal status, and decision-making and amendment procedures (including special voting procedures). Additionally, it presents information on the definition of original Members, accession, non-application, acceptance, entry into force and deposit, denunciation and final provisions.

The WTO Agreement has four Annexes. Annexes 1, 2, and 3 are termed "Multilateral Trade Agreements" and Annex 4 is termed "Plurilateral Trade Agreements".

Annex 1 is divided into three sections:

 Annex 1A (The Multilateral Agreements on Trade in Goods);

 Annex 1B (General Agreement on Trade in Services); and

 Annex 1C (Agreement on Trade-related Aspects of Intellectual Property Rights).

Annex 2 governs the Understanding on Rules and Procedures Governing the Settlement of Disputes.

Annex 3 is entitled Trade Policy Review Mechanism.

Annex 4 contains the Plurilateral trade agreements.

The schedules of commitments also form part of the Uruguay Round agreements.

The Multilateral Trade Agreements (Annex 1, 2, 3) are applicable to all Members and as such are deemed a "single undertaking". This is a departure from GATT practice.

11 WHAT IS THE "SINGLE UNDERTAKING"?

Agreements related to GATT 1947 were negotiated during negotiating rounds prior to the Uruguay Round. In particular, some agreements on non-tariff barriers were negotiated during the Tokyo Round. However, these agreements were not adopted by all GATT Contracting Parties; they applied only to those countries who agreed to be bound by them.

In the Uruguay Round, a different approach was adopted, it was decided that the multilateral agreements negotiated were to be accepted as a whole. The GATT, the Agreement on Agriculture, the Agreement on Trade-Related Aspects of Intellectual Property Rights, the General Agreement on Trade in Services, as well as most of the other agreements negotiated during the Uruguay Round are part of this "single undertaking".

However, there are four plurilateral trade agreements (Uruguay Round Agreements) that bind only those Members who negotiated them. These are the Agreement on Trade in Civil Aircraft, the Agreement on Government Procurement, the International Dairy Agreement and the International Bovine Meat Agreement. The latter two were terminated at the end of 1997.

In a nutshell: The basic structure of the WTO agreements.

Umbrella AGREEMENT ESTABLISHING WTO

Goods (Annex 1A) Services (Annex 1B) Intellectual property (Annex 1C)

Basic Rules GATT GATS TRIPS

Additional details Other goods agreements Services annexes (2) and annexes (1)

Market access Countries' schedules of Countries' schedules of commitments commitments commitments(and MFN exemptions)

Dispute settlement DISPUTE SETTLEMENT UNDERSTANDING ( Annex 2)

Transparency TRADE POLICY REVIEW MECHANISM (Annex 3)

Plurilateral commitments Plurilateral Agreements (Annex 4)

Table 1: The basic structure of the WTO Agreements

IF YOU WANT TO KNOW MORE...

For more information on the GATS, there is a self-training module on the WTO site at the following address: http://www.wto.org/english/tratop_e/serv_e/cbt_course_e/signin_e.htm

For more information on the DSU, there is a self-training module available on the WTO site at the following address: http://www.wto.org/english/tratop_e/dispu_e/disp_settlement_cbt_e/signin_e.htm

EXERCISES:

6. What is the WTO Agreement and what do its annexes cover?

12 II.B. NON-DISCRIMINATION

As you know, non-discrimination is a key concept of the multilateral trading system. It is based on the most-favoured-nation clause and national treatment.

II.B.1. MOST-FAVOURED NATION PRINCIPLE (MFN)

IN BRIEF

Pursuant to the WTO Agreements, countries cannot normally discriminate between their trading partners. If a Member grants a country a special favour (such as a lower customs duty on one of its products), the Member must grant the favour to all Members.

IN DETAIL

Members of the WTO can be seen as members of a club. One of the rules of the club is that each member will grant any other member the best possible treatment it grants to any other country. Hence, each member of the club is guaranteed to receive the best possible treatment from each of his or her fellow-members.

For example, let us assume that Alba's MFN duty (duty applicable to all Members) for tomatoes is 10%. Medatia is a big tomato producer interested in increasing its exports of tomatoes to Alba.

If, during a WTO negotiating round, the Government of Medatia initiate tariff negotiations on tomatoes with Alba and, after long and difficult bilateral negotiations, Alba agrees to give Medatia a duty free access (0%) for tomatoes according to the MFN principle, Alba should extend the 0% duty on tomatoes to all Members. This is because all Members should enjoy the most favourable treatment for tomatoes granted by Alba.

THE MFN PRINCIPLE IN DIFFERENT WTO AGREEMENTS

The MFN principle applies to trade in goods, trade in services, and trade related aspects of Intellectual Property. For trade in goods, any advantage, favour, privilege or immunity granted by any Member to any product originated or destined for any other country shall be accorded immediately and unconditionally to the like product originating in or destined for the territories of all other Members.

In the case of trade in services, the MFN principle requires each Member to accord treatment no less favourable than that accorded to like services and services suppliers of any other country to any "like" services and service providers of all WTO Members.

With regard to the protection of intellectual property, any advantage, favour, privilege or immunity granted by a Member to the nationals of any other country shall be accorded immediately and unconditionally to the nationals of all other Members (you will study these provisions in more detail in Module 2).

13 The Most Favoured Nation principle is regulated for trade in goods, by GATT Article I; for trade in services, by GATS Article II; and for trade-related aspects of intellectual property rights, by Article 4 of the TRIPS Agreement.

EXERCISES:

7. GATT Art. I.1 says: "With respect to customs duties … any advantage … granted by any Member to any product originating in or destined for any other COUNTRY shall be accorded immediately and unconditionally … etc…"

Why did the drafters of Article I.1 of the GATT refer to "any other COUNTRY" and not "any other MEMBER"?

14 II.B.2. NATIONAL TREATMENT (ARTICLE III)

The National Treatment principle constitutes the second component of the non-discrimination pillar, the first being the MFN principle already discussed.

IN BRIEF

What does National Treatment mean?

In the area of goods, National Treatment means that imported and locally-produced should be treated equally in a Member's territory.

THE NATIONAL TREATMENT PRINCIPLE IN DIFFERENT WTO AGREEMENTS

Whilst the MFN principle seeks to ensure that a Member does not discriminate between like products originating in or destined for other Members, the National Treatment principle is inward looking in that it addresses the treatment to be applied to imported like products once they are in a Member's territory. The National Treatment principle prohibits a Member from favouring its domestic products over the imported products of other Member countries.

In the area of services, the National Treatment principle refers to non-discrimination between domestically produced services or domestic service providers, and imported services or foreign service providers. Under TRIPS, the object of the National Treatment obligation are nationals of Members, i.e. that in regard to the protection of intellectual property rights a Member must treat nationals of other Members no less favourably than its own.

National Treatment principle is regulated for trade in goods, by GATT Article III; for trade in services, by GATS Article XVII; and for trade-related aspects of intellectual property rights, by Article 3 of the TRIPS Agreement.

We have examined the non-discrimination principles (MFN and National Treatment - the first basic market access disciplines).

II.C. SCHEDULES OF COMMITMENTS AND RULES OF GENERAL APPLICATION

The commitments made by each Member in the areas of trade in goods and trade in services are set out in Schedules of Concessions attached to the GATT and the GATS. These list product-by-product the maximum tariff rate that each Member will charge on imports from other Members (known as GATT tariff bindings) and service-by-service the extent to which the country has made commitments under each of the modes of supply covered by the GATS.

The WTO also contains detailed rules of general application governing trade in goods and services, one of the main purposes of which is to safeguard the value of the market access concessions contained in the Schedules.

15 For example, in the area of trade in goods, many of the rules aim to ensure that tariff concessions are not undermined by non-tariff barriers to trade, for example quantitative restrictions on technical standards. The rules also provide for important exceptions, for example, in the area of goods, safeguard measures that can be applied in the event of serious injury or risk of serious injury to a domestic industry and anti-dumping and countervailing duties to address unfairly low-priced imports. Most of the subsidiary agreements in the area of trade in goods are designed to elaborate the rules regarding the use of non-tariff measures, including these exceptions, to ensure that they don't give rise to unwarranted obstacles to trade.

In the area of trade-related aspects of intellectual property rights, the WTO does not provide for schedules of concessions but only contains rules of general application.

II.D. GENERAL EXCEPTIONS & WAIVERS

In certain circumstances, Members have the right to derogate from obligations under the covered agreements. Some have already been mentioned and some others are referred to below in II.E. and II.F. on Regional Integration and Special and Differential Treatment. In addition, some general exceptions and a possibility for obligations to be waived are provided for.

II.D.1. GENERAL EXCEPTIONS

In the area of trade in goods, GATT Article XX has governed the use of the general exception since 1947. It recognizes that, despite their commitments under the GATT, Members may need to apply and enforce measures for purposes such as the protection of public morals; human animal or plant life and health; and the protection of national treasures. However, these measures must not constitute a means of arbitrary or unjustifiable discrimination nor should they be disguised restrictions on international trade.

The provisions in GATT Article XX attempt to strike a balance between the market access rights of Members and the need to ensure that other Members' rights to invoke these exceptions are not rendered illusory.

In the area of trade in services, GATS Article XIV allows Members to maintain restrictions on services and service suppliers, if the measure satisfies policy purposes similar to those contained in GATT Article XX, mentioned above.

All covered agreements contain a so-called security exception clause which allows Members to take actions they consider necessary for the protection of their essential security interests in regard to certain specified issues or in pursuance of their obligations under the United Nations Charter for the maintenance of international peace and security. The security exception is provided for in GATT Article XXI for the area of goods, in GATS Article XIV bis in the area of services, and in Article 73 of the TRIPS Agreement.

The numerous other exceptions provided for under the TRIPS Agreement are described in the modules of this course.

16 II.D.2. WAIVERS

A waiver is a permission, granted by Members, not to comply with certain commitments. Waivers are time- bound. They have time limits and extensions have to be justified.

Waivers are governed by Article IX of the Marrakesh Agreement and are applicable to trade in goods, trade in services and TRIPS. Waivers are used when there are no other provisions which would allow a Member to derogate from a WTO principle or a specific provision. They are normally temporary, if granted for more than a one-year period, a waiver must be reviewed annually.

II.E. REGIONAL INTEGRATION

When a Member joins a regional trade agreement (RTA), it normally grants more favourable conditions to trade from other parties to that arrangement than to trade from other Members, and it therefore departs from the guiding principle of non-discrimination.

The WTO does not proscribe RTAs, but Members have to comply with the following rules and conditions:

 GATT Article XXIV, complemented by the Understanding on the Interpretation of Article XXIV of the GATT 1994;

 1979 GATT Decision on Differential and More Favourable Treatment, Reciprocity and Fuller Participation of Developing Countries (the Enabling Clause); and

 GATS Article V, governing economic integration agreements liberalizing trade in services for both developed and developing countries.

Other non-generalized preferential schemes require a waiver from WTO rules.

EXERCISES:

8. Can Alba, Medatia and Vanin enter into an RTA whereby they reduce the tariff rate applicable to all the trade between them, from 10% to 5%?

17 II.F. SPECIAL AND DIFFERENTIAL TREATMENT

The majority of Members are developing countries. In the WTO, each Member decides itself whether it is a developed or developing countries (principle of "self-election"). However, with regard to least-developed countries (LDCs) the WTO refers to the list of least-developed countries maintained by the United Nations Economic and Social Council.

II.F.1. GATT PART IV

The original GATT did not recognize differences among Contracting Parties. However, issues relating to economic development were taken up in the negotiations that took place in Havana from November 1947 to March 1948. The result was Article XVIII "Government Assistance to Economic Development and Reconstruction".

II.F.2. 1971 WAIVER

In 1971, the GATT Contracting Parties adopted a waiver for the Generalized System of Preferences (GSP). This waiver authorized developed Contracting Parties to accord preferential tariff treatment to products originating in developing countries.

II.F.3. THE ENABLING CLAUSE

The "Decision on Differential and More Favourable Treatment, Reciprocity and Fuller Participation of Developing Countries" (normally referred to as "the Enabling Clause") was adopted in 1979 and made the right of developed countries to provide preferences to imports from developing countries permanent.

Unlike the Waiver in the 1971 Decision, the Enabling Clause is permanent provision and constitutes a concrete contribution to the emergence of special and differential treatment for developing countries.

II.F.4. THE OUTCOME OF THE URUGUAY ROUND

The WTO Agreements reflect an increased recognition of the need to integrate developing countries into the trading system. Special and differential treatment of developing countries has been a cornerstone of the multilateral trading system. It now encompasses non-reciprocity, longer implementation periods, preferences and technical assistance. The Uruguay Round marked a new approach to the "development dimension".

18 EXERCISES:

9. How is a country classified as "developing" or "least developed"?

19 II.G. ON-GOING NEGOTIATIONS: THE DOHA DEVELOPMENT AGENDA

At the Ministerial Conference in Doha, Qatar in November 2001, Members decided to launch a new round of negotiations, and pursuant to their decision, adopted the Doha Development Agenda and its accompanying work programme.

The Doha Ministerial Declaration, which sets the negotiating mandate, required WTO Members to set up a Trade Negotiations Committee (TNC). The TNC then established negotiating mechanisms and is supervising the current negotiations under the authority of the General Council.

Negotiations are taking place:

 In new negotiating groups, on:

 Market access

 WTO rules (anti-dumping, subsidies, regional trade agreements)

 Trade Facilitation

 In existing bodies, on:

 agriculture: in special sessions of the Agriculture Committee;

 services: in special sessions of the Services Council;

 geographical indications (a multilateral registration system): in special sessions of the Council for Trade-Related Aspects of Intellectual Property Rights (TRIPS). Other TRIPS issues are addressed in regular TRIPS Council meetings;

 Dispute Settlement Understanding: in special sessions of the Dispute Settlement Body;

 Environment: in special sessions of the Trade and Environment Committee; and

 Negotiations on outstanding implementation issues: in relevant bodies according to paragraph 12 of the Doha Ministerial Declaration.

Considerable emphasis is placed on special and differential treatment for developing countries (S&D). S&D is an integral part of the WTO Agreements. All negotiations and other aspects of the Doha Agenda's work programme are to fully incorporate this principle. According to the Doha Development Declaration (paragraph 44) and the Decision on Implementation-Related Issues and Concerns, all S&D provisions are to be reviewed to make them more precise, effective and operational. These reviews are carried out in special sessions of the Trade and Development Committee.

20 III. DISPUTE SETTLEMENT AT THE WTO

The main function of the Dispute Settlement Understanding (DSU) is to preserve the rights and obligations of Members under the covered agreements GATT, GATS and TRIPS. Only Member governments (states or custom's territories) can be party to disputes in the WTO.

Once a complaint has been filed under the DSU, there are two main ways to settle a dispute:

 the parties find a mutually agreed solution, particularly during the phase of bilateral consultations; or

 through adjudication, including the subsequent implementation of the Panel and Appellate Body Reports, which are binding upon the parties once adopted by the DSB.

There are three main stages to the WTO dispute settlement process:

 consultations between the parties;

 adjudication by panels and, if applicable, by the Appellate Body; and

 the implementation of the ruling, which includes the possibility of countermeasures in the event of failure by the losing party to implement the ruling.

You will study dispute settlement in the TRIPS area in more detail in Module 10.

21 IV. SUMMARY

THE WTO

The objective of the WTO is to improve the welfare of the peoples of its Member countries (standard of living, employment, income, etc.) by expanding the production and trade in goods and services.

The functions of the WTO are to:

 Facilitate the implementation, administration and operation, and furthering of the objectives of the WTO Agreements (including the Plurilateral Agreements);

 Serve as a forum for trade negotiations;

 Administer the Dispute Settlement Understanding (DSU);

 Administer the Trade Policy Review Mechanism (TPRM); and

 Cooperate inter alia with the IMF and the IBRD (World Bank) to achieve coherence in global economic policy making.

The WTO Agreement serves as an "umbrella agreement" and has 4 Annexes. Annex 1 is divided into three sections:

 Annex 1B (Agreement on Trade in services); and

Annex 2 covers the Dispute Settlement Understanding and Annex 3 contains the Trade Policy Review Mechanism. Annex 4 is termed "Plurilateral Trade Agreements". These are bind only Members that have accepted them.

The Ministerial Conference is the highest decision-making body in the WTO above the General Council (which also meets as the Dispute Settlement Body and the Trade Policies Review Body). Below the General Council, the Councils for Goods, Services and TRIPS oversee the implementation of the relevant agreements, assisted by committees and sub-committees dealing with specific issues.

NON-DISCRIMINATION

Non-Discrimination is a governing principle of the WTO and the Multilateral Trading System. This key concept has two pillars: the Most Favoured Nation (MFN) and the National Treatment principles. The MFN principle prohibits treatment discriminating between different countries and Members, and the National Treatment principle prohibits discrimination between national and foreign products, services or nationals (with regard to their intellectual property rights). Under GATT, the subject of MFN treatment is goods and under GATS the subjects are services or service providers. In the TRIPS Agreement, the subject of MFN treatment is "nationals".

22 EXEMPTIONS AND WAIVERS

There are certain exceptions from the MFN, National Treatment and other obligations under the covered agreements, most notably the general exception under GATT Article XX for trade in goods and the GATS Article XIV for trade in services. This exception recognizes that Members may need to apply and enforce measures for purposes such as the protection of public morals; human animal or plant life and health; and the protection of national treasures. There is no general exception of this sort in the TRIPS Agreement. A waiver is a permission to derogate from a WTO principle or a specific provision. Waivers are granted by the Membership and are time-bound.

REGIONAL TRADE AGREEMENTS

Members are permitted to depart from the non-discrimination rules when joining Regional Trade Agreements (RTAs) if certain specific conditions are met.

DEVELOPING COUNTRIES

The majority of Members are developing countries. Each Member decides if it is a developed or developing countries (principle of "self-election"). Least-developed countries (LDCs) are designated by the United Nations Economic and Social Council. Special and differential treatment of developing countries has been a cornerstone of the multilateral trading system. It encompasses provisions on non-reciprocity, longer implementation periods, preferences and technical assistance.

DISPUTE SETTLEMENT

The Dispute Settlement Understanding (DSU) provides a mechanism for Members to settle disputes arising from their obligations under the WTO Agreements. Its function is to preserve the rights and obligations of Members under the covered agreements GATT, GATS and TRIPS. Only Member governments (states or custom's territories) can be party to disputes in the WTO.

23 PROPOSED ANSWERS:

10. The increase of standards of living.

The attainment of full employment.

The growth of real income and effective demand.

The expansion of production of, and trade in goods and services.

11. Some of the achievements of the Uruguay Round are:

(i) creation of the WTO;

(ii) transformation of the plurilateral codes (agreements) from the Tokyo Round into multilateral agreements;

(iii) strengthened dispute settlement system; and

(iv) incorporation of the new agreements on trade in services and trade-related aspects of intellectual property rights.

12. The Final Act (Final Act Embodying the Results of the Uruguay Round of Multilateral Trade Negotiations) is like a cover note. It was signed in 1994, it is the Agreement which the participants in the Uruguay Round of Multilateral Trade Negotiations adopted to conclude the Round. The Final Act includes the "Marrakesh Agreement Establishing the World Trade Organization" ("the WTO Agreement") and its Annexes.

13. (a) Ministerial Conference;

(b) General Council;

(c) Council for Trade in Goods;

(d) Committee on Technical Barriers to Trade.

14. The Ministerial Conference is the highest authority of the WTO. It can take decisions on all matters under all multilateral trade agreements. It meets at least once every two years.

Below the Ministerial Conference in rank is the General Council. It takes all decisions on behalf of the Ministerial Conference when the Ministerial Conference is not in session. The General Council meets regularly (in principle, monthly), usually at the Geneva Headquarters. The General Council reports to the Ministerial Conference.

Below the General Council is the Council for Trade in Goods ("CTG"). It oversees the implementation of the multilateral agreements on trade in goods (Annex 1A of the Marrakesh Agreement), and it reports to the General Council.

The Committee on Agriculture is one of several subsidiary bodies of the CTG. It is responsible for the implementation of specific provisions and agreements, such as the Agreement on Agriculture.

All Members participate in the work of all WTO Bodies.

15. The WTO Agreement is the 1994 Marrakesh Agreement Establishing the WTO. It has four Annexes.

24 Annex 1 includes the Multilateral Agreements on Trade. It is divided into three sections:

 Annex 1B (Agreement on Trade in Services); and

Annex 2 contains the Understanding on Rules and Procedures Governing the Settlement of Disputes (DSU). It is dedicated to rules governing the dispute settlement system in the WTO.

Annex 3 is dedicated to rules governing the Trade Policy Review Mechanism (TPRM) in the WTO.

Annex 4 governs the Plurilateral Trade Agreements.

16. If the text referred to any other MEMBER, this would mean that Members need only ensure that the best treatment, given to products originating in one of the Members, be extended to the other Members.

This could therefore mean that a Member (A) could grant an advantage to products originating in a country which is not a Member (Country M) without having to extend this "Most-Favoured" treatment to the other Members. In other words, Alba would need to apply "Most Favoured Member" treatment but not as it is stipulated in GATT Art. I.1.

The advantages given to products from non-Members must also be extended to products from all Members. Consequently, Members get the best treatment except for derogations permitted by the WTO agreements.

17. Yes.

The WTO does not proscribe regional integration as long as certain rules are followed. In a GATT compatible RTA, duties (and other regulations restricting trade) must be eliminated on substantially all the trade between members of the RTA. During the transition 10 years period (the interim agreement phase), duties should be phased out and brought to zero.

However, the Enabling Clause allows developing countries to enter into RTAs among themselves with less stringent rules.

18. There are no WTO definitions of "developing" or "developed countries". Members "self-elect" their status.

The Members recognized as least-developed countries (LDCs), those countries that have been designated as such by the United Nations.