Chapter 1 Objectives and Organisation

of the WTO
After reading this chapter you will be able to:
• Understand the objectives and structures of the WTO
• Explain the main features of the Dispute Settlement Mechanism
• Describe how one NGO has used the Trade Policy Review Mechanism to raise its concerns
• Evaluate the human rights risks for a small country applying to join the WTO
• Explain why it is important to distinguish between the WTO Secretariat and its Members

1.1 What is the World Trade Organization?

The World Trade Organization (WTO) is the only body making global trade rules with binding The list of WTO members
effects on its Members. It is not only an institution, but also a set of agreements. The WTO is given at Annex II
regime is known as the rules-based multilateral trading system.
The history of the Organization dates back to 1947, when the General Agreement on Tariffs
and Trade (GATT), was set up to reduce tariffs, remove trade barriers and facilitate trade in
goods. Over the years, GATT evolved through eight rounds of multilateral trade negotiations, the
last and most extensive being the Uruguay Round (1986-1994). The WTO came into being at
Marrakesh on 1 January 1995, following the conclusion of the Uruguay Round. GATT then
ceased to exist, and its legal texts were incorporated into the WTO as GATT 1994.

1.2 The objectives of the WTO

The preamble to the WTO Agreement (Box 1.1) describes its objectives as including:
• raising standards of living
• ensuring full employment

Box 1.1 Agreement Establishing the WTO (Marrakesh Agreement)

Preamble (extracts)

The Parties to this Agreement,

Recognizing that their relations in the field of trade and economic endeavour should
be conducted with a view to raising standards of living, ensuring full employment
and a large and steadily growing volume of real income and effective demand, and
expanding 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 sus-
tainable development, seeking both to protect and preserve the environment and
to enhance the means for doing so in a manner consistent with their respective
needs and concerns at different levels of economic development,

Recognizing further that there is need for positive efforts designed to ensure that
developing countries, and especially the least developed among them, secure a
share in the growth in international trade commensurate with the needs of their
economic development.

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• realizing these aims consistently with sustainable development and environmental protec-
tion
• ensuring that developing countries, especially the least developed countries (LDCs), se-
cure a proper share in the growth of international trade.

However, since its creation the WTO’s emphasis has slipped from concentrating on these
public interest goals to seeing itself primarily as ‘an organization for liberalizing trade,’ and
declaring that ‘the system’s overriding purpose is to help trade flow as freely as possible.’1
This has been the source of one of the fundamental tensions surrounding the mandate and
activities of the organization. Some (such as developing countries and non-governmental organi-
zations) would like to see added emphasis on the public interest goals, whilst others (private
companies and some industrialized countries, for instance) favour faster removal of obstacles to
free trade.
Today, an increasing number of voices are being raised to underline that free trade should not
be an end in itself, but rather a tool to achieve equitable development and a better world. That the
WTO’s public interest objectives remain out of reach of many has drawn criticism that the or-
ganization is dominated by rich countries, functions in a secretive manner, and helps feed the
greed of the rich in the name of trade liberalization.

1.3 The WTO agreements

The Marrakesh Agreement Establishing the WTO incorporated several new substantive agree-
ments, which gave the WTO a much broader mandate than GATT or any other trade agreement:
• The WTO introduced new rules on agriculture and textiles.
• Most significantly, and unlike GATT, the WTO encompasses areas beyond trade in goods.
1
WTO, Understanding the WTO, • Three new subjects were brought into the multilateral trading system: trade in services
3rd edition, 2003. through the General Agreement on Trade in Services (GATS); intellectual property rights

Higher objectives for the WTO

Certain principles other than just fair market access must also be respected in order to make the global trading
system fully fair to all. One such principle is that trade liberalization should not be enthroned as an end in itself.
It is but a means for achieving ultimate objectives such as high and sustainable growth, full employment and the
reduction of poverty. As such, trade policies should be framed with these ends in mind and be evaluated accord-
ingly.
World Commission on the Social Dimension of Globalization, A Fair Globalization: Creating Opportunities for All, 2003.

That the purpose of the world trade regime is to raise living standards all around the world – rather than to
maximize trade per se – has never been controversial. In practice, however, these two goals – promoting devel-
opment and maximizing trade – have come to be increasingly viewed as synonymous by the WTO and multilateral
lending agencies, to the point where the latter easily substitutes for the former … the net result is a confounding
of ends and means.
Dani Rodrik, The Global Governance of Trade as if Development Really Mattered, 2001.

Asia’s experience [of gradual liberalization only after an initial period of high growth] highlights a deeper point. A
sound overall development strategy that produces high economic growth is far more effective in achieving inte-
gration with the world economy than a purely integrationist strategy that relies on openness to work its magic. A
relatively protected economy like Vietnam is integrating with the world economy much more rapidly than an
open economy like Haiti because Vietnam, unlike Haiti, has a reasonably functional economy and polity.
Dani Rodrik, “Trading in Illusions,” Foreign Policy, March/April 2001.

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 Chapter 1 – Objectives and Organisation

Box 1.2 The WTO’s major legal texts

– Marrakesh Agreement Establishing the World Trade Organization (The WTO

Agreement)
– Multilateral Agreements on Trade in Goods (GATT 1994 + related agreements)
General Agreement on Tariffs and Trade 1994 (GATT 1994)
Agreement on Agriculture
Agreement on the Application of Sanitary and Phytosanitary Measures
Agreement on Textiles and Clothing
Agreement on Technical Barriers to Trade
Agreement on Trade-Related Investment Measures
Agreement on Preshipment Inspection
Agreement on Rules of Origin
Agreement on Import Licensing Procedures
Agreement on Subsidies and Countervailing Measures
Agreement on Safeguards
– General Agreement on Trade in Services (GATS)
– Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS)
– Dispute Settlement Understanding (Understanding on Rules and Procedures
Governing the Settlement of Disputes – DSU)
– Trade Policy Review Mechanism (TPRM)
– Plurilateral Trade Agreements (Optional)
Agreement on Trade in Civil Aircraft
Agreement on Government Procurement

through the agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS);

and the question of textiles was addressed for the first time in a meaningful way.
• The Uruguay Round transformed the GATT’s dispute settlement system, giving the WTO
serious teeth with which to enforce its rules.
• WTO Members also agreed on a Trade Policy Review Mechanism.

All the WTO’s legal texts are part and parcel of the so-called ‘single undertaking’ of the WTO Words in bold in the text
agreements: Members cannot pick and choose among the agreements but are bound by the pack- refer to terms explained
age as a whole, with the exception of the two plurilateral agreements (see Box 1.2). in the glossary (Annex I)

1.4 Functions and structure of the WTO

The major functions of the WTO include:
• administering the WTO agreements
• handling trade disputes
• monitoring national trade policies
• serving as a forum for trade negotiations
• cooperating with other international organizations

Box 1.3 indicates the bodies responsible for carrying out the above functions. All Members
may participate in all councils, committees, etc, except the Appellate Body, the Dispute Settle-
ment panels, Textiles Monitoring Body, and plurilateral committees.

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Box 1.3 Organizational chart of the WTO

Source: WTO website www.wto.org/english/thewto_e/whatis_e/tif_e/org2_e.htm

1.5 The Ministerial Conference

The Ministerial Conference is the governing body of the WTO. It has the authority to adopt final
decisions on all WTO matters. It meets at least once every two years for about four days, and is
composed of trade ministers of all Members. Any Member can offer to host the Ministerial
Conference, and Members decide on the venue by consensus. The next Conference is scheduled
to take place in December 2005 in Hong Kong (see Box 1.4).
The trade minister of the host country usually chairs the Ministerial Conference and can play
a significant role. For example, after the collapse of the Conference in Cancún in 2003, some
participants pointed the finger at the Mexican trade minister (and conference chair) Luis Ernesto
Derbez, saying that he had decided to end the meeting prematurely although there was still a
chance of reaching agreement.
Ministerial Conferences are where final decisions, such as whether to launch new negotia-
tions, are taken. Members begin preparing for Ministerials months in advance. This often in-
volves intense negotiations in Geneva where delegates discuss numerous draft Ministerial texts

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 Chapter 1 – Objectives and Organisation

Box 1.4 WTO Ministerial Conferences

1st: Singapore, December 1996

2nd: Geneva, May 1998
3rd: Seattle, November-December 1999
4th: Doha, Qatar, November 2001
5th: Cancun, Mexico, September 2003
6th: Hong Kong, December 2005

for ministers to decide upon during the Conference, usually leaving the most contentious issues Groups wishing to influ-
to be determined at the ministerial level. ence the content of
In practice, only issues concerning the strategic directions of the WTO are decided there, the Ministerials’ documents
bulk of the WTO’s work being carried out by councils and committees that meet throughout the must start their work
year in Geneva. many months before the
NGOs who can demonstrate genuine interest in trade are eligible for accreditation to Ministerial Conference.
Ministerials, which is not the case for other WTO bodies. Almost 800 NGOs – including busi- See Chapter 7.3 for
ness groups – were accredited to participate in the Cancún Ministerial Conference. However, considerations as to
unlike the UN, where the Credentials Committee of ECOSOC has clear procedures for granting whether it is worth while
NGOs consultative status, the WTO’s selection criteria are not clearly defined, and remain ad for your NGO to apply to
hoc. Since the Seattle Ministerial Conference in 1999, which saw unprecedented street protests, attend a Ministerial.
the WTO Secretariat has placed increasingly strict controls on the number of accredited NGO
personnel that may attend. In Doha in 2001, each accredited NGO was allowed only two passes
to enter the Conference site; in Cancún, NGOs were only allowed one.

1.6 The General Council

The General Council is the highest ruling body of the WTO when the Ministerial Conference is NGOs cannot attend or
not in session, and the only one which can make binding decisions outside the Ministerial Con- participate in any meet-
ference. For instance, in July 2004 the General Council adopted a package of agreements, re- ings of the General
ferred to as the July Framework, which effectively broke months of deadlock following the Council.
collapse of minister-level talks in Cancún in September 2003.
The General Council can meet whenever Members want. In practice its meetings usually take
place every two months, and are attended by the highest rank of trade diplomats in Geneva,
mostly ambassadors. It is common practice for the General Council to elect its chairperson and
those of other WTO bodies during its first meeting of the calendar year. The Council’s meetings
are often preceded by informal sessions that are not announced publicly.
The functions of the General Council are wide-ranging:
• it follows up on issues arising from Ministerials
• it oversees the operation of WTO agreements, and shares with the Ministerial Council the
responsibility of adopting interpretations of the WTO Agreement. An example is its 2003
decisions on TRIPS and public health (discussed in Chapter 4).
• it grants and extends waivers from WTO rules, on behalf of the Ministerial Conference.
An example is the ‘Kimberley Process’ waiver, to prevent trade in ‘blood diamonds’ (dis- Reports of General
cussed in Chapter 7.8). Council meetings are a
• it meets as the Trade Policy Review Body (TPRB) and the Dispute Settlement Body (DSB); good source of informa-
the two bodies and the General Council are considered as ‘second level’ bodies after the tion on the progress of the
Ministerial Conference, as indicated by the organizational chart in Box 1.3. current negotiations. For
• it deals with accession-related matters (see Chapter 2.2), including authorizing the acces- how to find minutes and
sion of new Members when the Ministerial Conference is not in session. For accession Annual Reports of Gen-
matters, the General Council decides on the establishment of working parties on accession, eral Council meetings,
and endorses accession packages upon completion of negotiations. see Chapter 8.3.

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Chairpersons of negotiat-
ing groups (names avail-
able at www.wto.org)
under the Doha Work
Programme, for instance,
can be influential in
organizing the negotia-
tions, setting interim
deadlines, and producing
draft texts which can
frame further discus-
sions.
2
Lori Wallach and Patrick Woodall,
Whose Trade Organization – The
Comprehensive Guide to the WTO,
2004.
14
• it supervises the overall conduct of negotiations such as the Doha Work Programme (see
Chapter 3.5). Since the Trade Negotiations Committee (TNC) was set up to carry out the
Doha negotiations, the General Council has regularly reviewed its work under a standing
agenda item. The TNC reports to each regular meeting of the General Council on the ac-
tivities of its negotiating groups.
• The General Council also deals with systemic issues (such as selection of Directors-Gen-
eral and external transparency), and performs specific tasks assigned to it by the Minis-
terial Conference.
1.7 The Dispute Settlement Mechanism
The Dispute Settlement Mechanism (DSM) is a quasi-judicial system for resolving trade dis-
putes. The Dispute Settlement Body (DSB) can authorize trade retaliation measures, or ‘suspen-
sion of concessions’ in WTO jargon if Members do not comply with DSM panel or Appellate
Body rulings. This particular enforcement mechanism of the WTO regime, though a last resort,
remains unique among international tribunals.
The DSB is composed of all WTO Members. Its functions are:
• to establish panels which examine the case in dispute
• to appoint the members of the standing Appellate Body
• to adopt reports of panels and the Appellate Body (the body which deals with appeals)
• to monitor implementation of rulings and recommendations
• to authorize sanctions or retaliation measures under the WTO agreements
• to adjudicate cases on textiles and clothing if they are not resolved by the Textiles Monitor-
ing Body (TMB), the only other WTO body dealing with disputes
The WTO dispute settlement mechanism is arguably more efficient and effective than almost
any other international tribunal dealing with non-criminal matters. The DSM sets clear time-
frames for different stages in resolving trade disputes among Members, which avoids cases drag-
ging on for a long time. It usually takes between 12 to 18 months to settle a dispute, but the
application of rulings often takes longer.
The system nevertheless seems slow to traders, especially when the disputed measures are
temporary in nature. For example, the US decision to impose temporary (for three years) higher
tariffs on certain steel products triggered a dispute case in March 2002. By the time the DSB
made a final decision in December 2003 that the measures were illegal, the higher tariffs had
been in place for 19 months, long enough for significant harm to have been caused to countries
and companies exporting steel to the US.
It is also worth noting that dispute complaints are typically filed at the request of business
interests, who usually seek their own – expensive – legal advice before turning to their govern-
ment to request it to take up their case.2
The mechanism applies to all WTO agreements, and can cover plurilateral agreements as
well, should parties to these agreements so decide. It applies only to WTO agreements: a Mem-
ber can only turn to the DSM for resolution of a dispute concerning a WTO rule. The DSM will
Box 1.5 The Shrimp-Turtle case
The US banned imports of shrimp from four Asian countries – India, Malaysia,
Pakistan and Thailand – claiming that the way they caught shrimp harmed endan-
gered species of sea turtles. The four Asian countries above complained about the
ban to the WTO. In their rulings, the panel and Appellate Body took international
environmental law into account in determining that a ban such as the US had im-
posed, could be legitimate under WTO law.
 Chapter 1 – Objectives and Organisation

Box 1.6 The dispute settlement process

Request for Consultations


Panel Established


Panel Hearings and Examination
(Non-parties could potentially submit amicus briefs)


Panel Report  Appeal



Appellate Body Review
(Non-parties could potentially submit amicus briefs)


DSB adopts panel/appeal report


Implementation


Retaliation in cases of non-implementation

therefore only rule on other matters, such as environmental policy, human rights or social ques- To track WTO disputes
tions, if these arise in a dispute concerning a WTO rule, as was the case in the Shrimp-Turtle chronologically, by subject
dispute (Box 1.5). or by country, refer to the
Nevertheless, the concern remains that the broad reach of WTO rules and their implications Frequently Asked Ques-
for a wide array of domestic policies makes the DSM a particular threat because it ensures strong tions in Chapter 8.3.
enforcement of rules designed to favour trade liberalization, rather than to promote well-being or
respect for human rights.

Panels
A panel is a quasi-judicial body which examines the evidence and decides on the merits of the
case, according to the Dispute Settlement Understanding (DSU):
• A panel usually consists of three (but sometimes five) experts from different countries.
Panellists for each case are chosen from a roster of qualified professionals3 or from else-
where, in consultation with Members involved in the dispute. The Director-General can
also appoint panellists if the parties cannot agree on the panel.
• In a dispute between a developed country and a developing country, the latter can request
that at least one of the panellists be from a developing country.
• Panellists serve in their individual capacity and do not receive instructions from any gov-
ernment. In general, panellists are considered to be impartial and competent.
• Panels have the right to seek information and technical advice from any individual or body
which they deem appropriate. In many disputes the panel has consulted scientific experts
or appointed an expert review group to prepare an advisory report. However, the question
of uninvited, non-governmental input into the dispute settlement process is a contentious
issue (see amicus curiae briefs below).

Appellate Body
Either party to a dispute may appeal to the standing Appellate Body against a panel’s ruling on 3
WTO, Indicative List of
points of law and legal interpretation of WTO agreements. The Appellate Body can uphold, Governmental and Non-
modify or reverse the legal findings of a panel and its conclusion, but cannot re-examine existing Governmental Panelists, WT/DSB/
33, 6 March 2003.
evidence or examine new issues.

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Different views about opening the Dispute Settlement Process to Outsiders

In favour of openness
In dispute settlement, panels and the Appellate Body must continue to accept amicus curiae briefs… and they
must, in my view, make greater use of such briefs in dispute settlement. The opportunity to submit amicus briefs
can give those from the wider world the chance to have their say – without in any way undermining the essential
intergovernmental nature of such proceedings.
Speech by James Bacchus, former Chairman of the WTO Appellate Body, to the US National Foreign Trade Council, 29 January 2004.

In favour of keeping the process closed

The deliberative process is secret for several sound reasons, one of which is to shield the adjudicator from
outside pressures and from the passions of the day that do not relate to the merits of the legal issues pending
before the court. [Should a national court be] open to lobbying by majority-race groups in cases affecting the civil
rights of racial or ethnic minorities? Anyone can obtain a copy of a WTO panel or Appellate Body report and follow
what are generally carefully reasoned opinions. Any more transparency than what already exists in the delibera-
tive process of these bodies would threaten the integrity of the WTO dispute settlement process.
Kevin C. Kennedy in “Book Review: A Review Of Globalization And Its Discontents (2002). Joseph E. Stiglitz,” 35 George Washington Interna-
tional Law Review 251, 2003.

If an NGO wishes to
submit an amicus brief,
the best time to do so is
before the first panel
hearing. Since the dates
of panel hearings are not
announced publicly, the
best way to follow this
process is through the
WTO External Relations
Division directly or by
contacting a Geneva-
based NGO that follows
such issues (see
Chapter 8).
Another strategy is to ask
a government involved in
a particular dispute to
submit an amicus brief on
the interested party’s
behalf – although some
NGOs do not do this
because they do not
necessarily agree with
that government’s
position.
• The Appellate Body consists of seven permanent members, and three of them hear each
appeal case.
• Members of the Appellate Body are individuals recognized in the field of law and interna-
tional trade, and not affiliated to any government.
• Members are appointed for a four-year term by the DSB, renewable once.
Box 1.7 Why submit an amicus brief?
First it could be that, for their own reasons, the lawyers representing the govern-
ment parties to the dispute are not making appropriate arguments that reflect the
kind of interests and values the submitting NGO is concerned with. Second, to
signal publicly that a great deal is at stake in the dispute, i.e. that it is not a techni-
cal matter but something that deserves widespread pubic attention. Third, to give
the adjudicator the benefit of a general perspective on the case to which they oth-
erwise might not be sensitized. This is similar to the first reason but not the same;
a general perspective is different from having a set of legal arguments unlikely to
be raised by the parties, and might go to ways of looking at the facts more than the
law...
...The success of amicus intervention should not be measured by whether the
adjudicator says explicitly that they relied upon or followed the brief. That’s not
going to happen very often; it doesn’t happen domestically either very often. But
the existence of such briefs, if there are serious and reputable groups behind them,
adds gravitas to the position being advocated that, psychologically, adjudicators
are unlikely to ignore. They and their clerks will read the arguments, and sublimi-
nal influence is going to be often the key. That’s important also in thinking about
how to draft such briefs.
Robert Howse, personal communication, 20 August 2004.

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 Chapter 1 – Objectives and Organisation

Implementation of dispute findings

According to the DSU, panel or Appellate Body decisions must be implemented within ‘a rea-
sonable period of time,’ usually defined as 15 months, although the parties to a dispute may
agree to extend this period. The winning party can request the DSB to authorize trade sanctions
if no remedial action has been taken upon the completion of the implementation period. If the
parties cannot agree on the level of sanctions, a WTO arbitrator will set the level.

Amicus curiae briefs

Known informally as amicus briefs, these are submissions from non-parties to a dispute as ‘friends
of the court.’ In November 2000, the issue sparked controversy among Members when the Ap-
pellate Body decided to adopt procedures for dealing with them. The Body decided, ‘in the
interests of fairness and orderly procedure,’ to establish an additional procedure for receiving
submissions by persons other than a party or a third party to the case. The decision drew criti-
cism from a number of – mainly developing country – Members, who claimed that the Appellate
Body’s action was beyond its jurisdiction and departed from the intergovernmental nature of the
WTO.

Case study of a dispute: India versus the EU

The EU-India GSP dispute looked at whether industrialized country Members of the WTO could grant different
tariff rates to products originating in different developing countries under so-called Generalized System of Pref-
erences (GSP) schemes. In particular, the dispute addressed whether countries granting trade preferences could
condition access to their markets on labour and environmental standards, or efforts to combat illegal drugs.
India brought the complaint to the WTO in 2002, arguing that anti-drug arrangements included in the EU’s GSP
were discriminatory, as the benefits the EU granted were available only to certain specified developing countries.
In particular, India pointed out that Pakistan’s entry to the scheme – and benefits under the GSP anti-drug
arrangements – had affected EUR 205 million of Indian exports, which faced higher tariffs than their Pakistani
equivalents on the EU market.
On 7 April 2004, the WTO Appellate Body released its report, where it ruled that WTO provisions did not prevent
developed countries from differentiating among products originating in different developing countries under the
GSP, provided that such differential treatment meets certain conditions (set out in the so-called Enabling Clause).
In so doing, it overturned the earlier panel decision in the case, which had originally ruled in favour of India.
However, the Appellate Body decision was not a clear-cut victory for the EU. The conditions included ensuring
that identical treatment is available to all “similarly-situated” GSP beneficiaries that have the “development,
financial and trade needs” that the treatment in question is intended to respond to. Looking at the EU’s special
arrangement for combating the production and trafficking of illegal drugs, the Appellate Body found that as the
preferences granted under the drug arrangements were not available to all GSP beneficiaries similarly affected
by the drug problem, they were not justified under the Enabling Clause. It therefore urged the EU to bring its GSP
scheme into conformity with the Enabling Clause conditions.
By contrast, the Appellate Body noted that the EU’s GSP incentive arrangements for the protection of labour
rights and the environment, which were not at issue in this case, included detailed provisions setting out the
procedure and substantive criteria that apply to a request by a country to become a beneficiary. This would seem
to imply that these arrangements are WTO-compatible, provided they meet the relevant conditions.
The process from notification of consultations to the release of the Appellate Body report took just under two
years. But it is not over yet. On 10 August 2004, following a request by India, the WTO appointed an arbitrator to
determine the reasonable period of time required for the EU to bring its measures into conformity with WTO
rules. As such, it could be another year and a half before the EU either changes its GSP legislation or faces the
threat of sanctions.
International Centre for Trade and Sustainable Development (ICTSD), “WTO Appellate Body: Differentiation Possible Under Preference
Schemes,” in BRIDGES Weekly Trade News Digest, 22 April 2004.

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Box 1.8 Figures on the use of the Dispute Settlement Mechanism

More cases have been launched in the WTO’s 10-year history than under the GATT
from 1947 to 1994, indicating a significant ‘buy-in’ to the dispute settlement proc-
ess on the part of Member States. Since the establishment of the WTO until June
2004:
• 312 disputes have been brought to the DSM, with 92 panel and Appellate Body
reports adopted.
• The US and the EC are by far the most frequent users of the WTO dispute
settlement mechanism, both as complainants (139) and as respondents (128).
• Developing countries have brought 113 cases to the dispute settlement mecha-
nism – 65 against developed countries and 48 against other developing coun-
tries.
• The DSB has authorized trade sanctions in just seven cases, where Members
had failed to bring their legislation in line with WTO rules.
WTO, Update of WTO Dispute Settlement Cases, WT/DS/OV/21, 30 June 2004.

To find out how to read the
full text of the decision on
the India-EU dispute, see
Chapter 8.3.
To date, NGOs continue to submit amicus briefs by sending them to the WTO Secretariat,
though no specific guidelines exist for admitting or refusing them, either at the panel or the
Appellate Body level. This means that in practice it is still up to the individual panels and/or
Appellate Body members to decide on acceptance or refusal. In the absence of rules, no record is
kept of which dispute panels or Appellate Bodies actually received, accepted or used amicus
briefs. Hence the process remains case-by-case.

1.8 The Trade Policy Review Mechanism

The WTO agreements stipulate that each Member shall ensure that its laws, regulations and
administrative procedures conform to its WTO obligations. The Trade Policy Review Body
(TPRB), through regular reviews of individual Members’ trade policies and practices, seeks to
improve adherence by Members to the commitments made under the WTO agreements, and to
facilitate the smooth functioning of the multilateral trading system by enhancing the transpar-
ency of Members’ trade policies.
• The frequency of reviews depends on a Member’s share of world trade. The Quad coun-
tries – the EU, the US, Japan and Canada – are examined once every two years. The next 16
Members, ranked according to their share of world trade, are reviewed every four years.
The remaining Members are reviewed every six years, with the possibility of longer in-
terim periods for the least-developed countries.
• Two reports are prepared for each review:
1. a government report or a policy statement by the Member under review. Members are
required to report on changes in their trade policies and provide updated economic and

Reviews of trade in China

Following China’s accession to the WTO in December 2001, the General Council began conducting an annual
transitional review of China’s implementation of its WTO commitments. Members insisted on putting this unique
process in place due to the significant amount of change required in bringing such a large, centrally-planned
economy into conformity with WTO rules. This annual review exercise is scheduled to end by 2010.
It is a case in point where additional requirements, not applicable to existing members, are sometimes im-
posed on acceding members.

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 Chapter 1 – Objectives and Organisation

The fiction of free trade, as seen through the TPRM lens

I am not very hopeful that a TPR in a country like Madagascar would bring much to Madagascar. Or to anyone.
Trade policy in Madagascar is set by the IMF and the World Bank, and as a result Madagascar has become, under
most indicators, one of the most open economies in the world, as regards trade, certainly more open than South
Africa and Mauritius, let alone the EU, Switzerland and Japan! Even non-WTO members have goods entering
here very freely. So I have no doubt that the OECD trade people who attend WTO meetings will give a favourable
response to the TPR of Madagascar.
Source: Interview with a former UN official.

trade statistics. There is no agreed format or standard guidelines on what elements should There is no official proce-
be included, and Members are free to submit whatever information they deem appropri- dure in place for NGOs to
ate. The 2004 US report mentioned labour standards but in general, reports tend to focus submit information or
on narrowly-defined trade issues, usually ignoring the broader economic or social ef- alternative reports to the
fects of a country’s trade liberalization. TPRB. The only NGO to
2. a detailed report prepared independently by economists in the Secretariat’s Trade Policy provide alternative re-
Review Division. So far, the reports prepared by the Secretariat have not explicitly in- ports* on a regular basis
cluded issues related to human rights or to labour standards, even though there has been is the International
discussion in the TPRB of the latter. Confederation of Free
• The reports, together with the TPRB chairperson’s concluding remarks, are made public Trade Unions (ICFTU).
and available to the press after the review process. Minutes of the TPRB meetings are These are given to its
published four weeks later. national affiliates and
• The review process allows other Members to submit written questions in advance of the faxed to selected WTO
TPRB meeting and to raise oral questions at the meeting. A discussant is chosen among missions in Geneva (those
representatives of Members to stimulate the debate. they consider most likely
to raise labour issues at
In 2000, Canada proposed making the TPRM more transparent by opening it up to accredited the TPRB, such as the US
observers from the public and webcasting its own trade policy review, declaring that live web and the EU) prior to TPRB
feeds of the meeting would enhance the quality of discussions between Members and provide a meetings. As NGO docu-
progressive example of the WTO’s openness to public. The proposal was resisted by a number of ments have no official
developing countries, including India, Pakistan, Argentina and Mexico, who argued that opening status in the TPRM, it is
up the process could threaten the intergovernmental character of the WTO and set a precedent up to individual Members
for other committees that they were not prepared to consider. Without agreement on the matter, whether to bring up
the TPRB remains closed to outsiders. issues raised in these
reports during the review
process.
1.9 The WTO Secretariat * available at www.icftu.org

The WTO is located in Geneva, Switzerland. Its official languages are English, French and Spanish.
The Secretariat, with over 500 staff headed by the WTO Director-General, services the daily
activities of different WTO bodies. Although the Secretariat is officially neutral, many observers
criticize it for being too pro-trade liberalization, regardless of the benefits or otherwise for indi-
vidual WTO Members. Other critics claim that the Secretariat defends the interests of the power-
ful WTO Members rather than being neutral or defending developing countries.4
The Director-General is chosen by Members through consensus. The office term of Supachai
Panitchpakdi as Director-General comes to an end in August 2005. Given that Members them-
selves make all decisions concerning the organization, the position of Director-General has little
formal authority, but does play an important informal role of facilitator among Member govern-
4
ments. This is particularly so during sensitive negotiations, such as those at Ministerial Confer- Fatoumata Jawara and Aileen Kwa,
Behind the Scenes at the WTO – the
ences and under the current Doha negotiations: the Director-General chairs ex officio, the Trade real world of international trade
Negotiating Committee (TNC). negotiations, 2003.

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1.10 The budget of the WTO

In 2004, the WTO budget amounted to CHF 162 million (EUR 103 million). The budget is
financed by membership fees determined according to each Member’s share of total world trade
in the previous three years, including trade in goods, services and intellectual property rights. A
minimum contribution of 0.015% applies to Members whose share in world trade is less than
this percentage. While over two-thirds of WTO Members are developing countries, contribu-
tions from the Quad countries – the US, the EU, Japan and Canada – finance over half of the
total budget.

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