The WTO - The World Trade Organization

1. The WTO -The World Trade Organization

2. What is the WTO? Definition • Organization to supervise and liberalize international trade -> forum for governments to negotiate trade agreements -> place for governments to settle trade disputes -> WTO operates a system of trade rules

3. What is the WTO? • International organization • Headquarters: Geneva, Switzerland • Membership: 153 Members • Staff: 625 • Official languages: English, French, Spanish • Director-General: Pascal Lamy • Governed by Ministerial Conference (meets every two years) • General Council; implements conference‘s policy decisions, responisble for day-to-day administration

4. History of the WTO • Since 1948: The General Agreement of Tariffs and Trade (GATT) -> led to birth of unofficial international organization: GATT • Last and largest GATT round: Uruguay Round (1986 – 1994) -> led to creation of WTO • Came into being: 1.January 1995

5. 3 Main WTO Agreements • Cover all three main areas of trade handled by the WTO • General Agreement on Tariffs and Trade (GATT) • General Agreement on Trade in Services (GATS) • Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS)

6. Principles of WTO trading system • Most-favoured nation (MFN): countries cannot normally discriminate between trading partners • National treatment: countries should not discriminate between its own and foreign products or services

7. Principles of WTO trading system • Freer – Barriers coming down through negotiation • Predictable – foreign companies, investors and governments should be confident that trade barriers should not be raised arbitrarily

8. Principles of WTO trading system • More competitive – discouraging „unfair“ pratices f.ex.: export subsidies • More beneficial for less developed countries – give them more time to adjust, greater flexibility , and special privileges

9. Advantages of WTO • Helps promote peace between nations • Disputes are handled constructively • Rules make it easier for all – WTO based on rules not on power • Free trade cuts the cost of living, provides more choice of products and quality • Trade stimulates economic growth • Trade raises income of country and it‘s people • Basic principles make life more efficent • Governments shielded from lobbying • System encourages good governance

10. Criticism of the WTO • ..is fundamentally undemocratic • ..tramples labor and human rights • ..would privatize essential services • ..is destroying the environment • ..is endangering human lives • ..is increasing inequality • ..hurts poor countries in favor of rich powerful nations • ..undermines local level decision-making and national sovereignty

11. Case Study The Banana Case (1997) • EU preferred treatment for bananas produced by former colonies in the Caribbean. • The United States, which does not produce any bananas, brought this case against the EU on behalf of the U.S.-based Chiquita corporation. • Chiquita produces bananas in Latin America on huge plantations that are notorious for exploiting cheap farm labor and using environmentally damaging techniques. • In the Caribbean, which Europe is favoring, banana producers tend to be small-scale farmers who own and work their own land (an average of three acres). Should WTO consider social and environmental issues when making its trade rules?