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1.1 What is the World Trade Organization?

The World Trade Organization (WTO) is the only body making global trade rules with bindingeffects on its Members. It is not only an institution, but also a set of agreements. The WTOregime is known as the rules-based multilateral trading system.

The history of the Organization dates back to 1947, when the General Agreement on Tariffsand Trade (GATT), was set up to reduce tariffs, remove trade barriers and facilitate trade ingoods. Over the years, GATT evolved through eight rounds of multilateral trade negotiations, thelast and most extensive being the Uruguay Round (1986-1994). The WTO came into being atMarrakesh on 1 January 1995, following the conclusion of the Uruguay Round. GATT thenceased 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

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

Chapter 1 Objectives and Organisationof the WTO

The list of WTO membersis given at Annex II

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 shouldbe conducted with a view to raising standards of living, ensuring full employmentand a large and steadily growing volume of real income and effective demand, andexpanding the production of and trade in goods and services, while allowing forthe optimal use of the world’s resources in accordance with the objective of sus-tainable development, seeking both to protect and preserve the environment andto enhance the means for doing so in a manner consistent with their respectiveneeds and concerns at different levels of economic development,

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

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1 WTO, Understanding the WTO,3rd edition, 2003.

Higher objectives for the WTO

Certain principles other than just fair market access must also be respected in order to make the global tradingsystem 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 thereduction 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 tomaximize 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 multilaterallending agencies, to the point where the latter easily substitutes for the former … the net result is a confoundingof 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. Asound 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. Arelatively protected economy like Vietnam is integrating with the world economy much more rapidly than anopen economy like Haiti because Vietnam, unlike Haiti, has a reasonably functional economy and polity.

Dani Rodrik, “Trading in Illusions,” Foreign Policy, March/April 2001.

• 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 thesepublic interest goals to seeing itself primarily as ‘an organization for liberalizing trade,’ anddeclaring 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 andactivities 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 (privatecompanies and some industrialized countries, for instance) favour faster removal of obstacles tofree trade.

Today, an increasing number of voices are being raised to underline that free trade should notbe an end in itself, but rather a tool to achieve equitable development and a better world. That theWTO’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 thegreed 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.• Three new subjects were brought into the multilateral trading system: trade in services

through the General Agreement on Trade in Services (GATS); intellectual property rights

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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 WTOserious 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 WTOagreements: Members cannot pick and choose among the agreements but are bound by the pack-age as a whole, with the exception of the two plurilateral agreements (see Box 1.2).

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 Membersmay participate in all councils, committees, etc, except the Appellate Body, the Dispute Settle-ment panels, Textiles Monitoring Body, and plurilateral committees.

Box 1.2 The WTO’s major legal texts

– Marrakesh Agreement Establishing the World Trade Organization (The WTOAgreement)

– Multilateral Agreements on Trade in Goods (GATT 1994 + related agreements)General Agreement on Tariffs and Trade 1994 (GATT 1994)Agreement on AgricultureAgreement on the Application of Sanitary and Phytosanitary MeasuresAgreement on Textiles and ClothingAgreement on Technical Barriers to TradeAgreement on Trade-Related Investment MeasuresAgreement on Preshipment InspectionAgreement on Rules of OriginAgreement on Import Licensing ProceduresAgreement on Subsidies and Countervailing MeasuresAgreement 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 AircraftAgreement on Government Procurement

Chapter 1 – Objectives and Organisation

Words in bold in the textrefer to terms explainedin the glossary (Annex I)

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Box 1.3 Organizational chart of the WTO

1.5 The Ministerial Conference

The Ministerial Conference is the governing body of the WTO. It has the authority to adopt finaldecisions on all WTO matters. It meets at least once every two years for about four days, and iscomposed of trade ministers of all Members. Any Member can offer to host the MinisterialConference, and Members decide on the venue by consensus. The next Conference is scheduledto 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 playa significant role. For example, after the collapse of the Conference in Cancún in 2003, someparticipants pointed the finger at the Mexican trade minister (and conference chair) Luis ErnestoDerbez, saying that he had decided to end the meeting prematurely although there was still achance 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

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

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Box 1.4 WTO Ministerial Conferences

1st: Singapore, December 19962nd: Geneva, May 19983rd: Seattle, November-December 19994th: Doha, Qatar, November 20015th: Cancun, Mexico, September 20036th: Hong Kong, December 2005

for ministers to decide upon during the Conference, usually leaving the most contentious issuesto be determined at the ministerial level.

In practice, only issues concerning the strategic directions of the WTO are decided there, thebulk of the WTO’s work being carried out by councils and committees that meet throughout theyear in Geneva.

NGOs who can demonstrate genuine interest in trade are eligible for accreditation toMinisterials, which is not the case for other WTO bodies. Almost 800 NGOs – including busi-ness groups – were accredited to participate in the Cancún Ministerial Conference. However,unlike the UN, where the Credentials Committee of ECOSOC has clear procedures for grantingNGOs consultative status, the WTO’s selection criteria are not clearly defined, and remain adhoc. Since the Seattle Ministerial Conference in 1999, which saw unprecedented street protests,the WTO Secretariat has placed increasingly strict controls on the number of accredited NGOpersonnel that may attend. In Doha in 2001, each accredited NGO was allowed only two passesto 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 isnot in session, and the only one which can make binding decisions outside the Ministerial Con-ference. For instance, in July 2004 the General Council adopted a package of agreements, re-ferred to as the July Framework, which effectively broke months of deadlock following thecollapse of minister-level talks in Cancún in September 2003.

The General Council can meet whenever Members want. In practice its meetings usually takeplace 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 andthose of other WTO bodies during its first meeting of the calendar year. The Council’s meetingsare 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 2003decisions 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-cussed in Chapter 7.8).

• it meets as the Trade Policy Review Body (TPRB) and the Dispute Settlement Body (DSB);the two bodies and the General Council are considered as ‘second level’ bodies after theMinisterial Conference, as indicated by the organizational chart in Box 1.3.

• it deals with accession-related matters (see Chapter 2.2), including authorizing the acces-sion of new Members when the Ministerial Conference is not in session. For accessionmatters, the General Council decides on the establishment of working parties on accession,and endorses accession packages upon completion of negotiations.

Groups wishing to influ-ence the content of

Ministerials’ documentsmust start their work

many months before theMinisterial Conference.

See Chapter 7.3 forconsiderations as to

whether it is worth whilefor your NGO to apply to

attend a Ministerial.

NGOs cannot attend orparticipate in any meet-

ings of the GeneralCouncil.

Chapter 1 – Objectives and Organisation

Reports of GeneralCouncil meetings are a

good source of informa-tion on the progress of the

current negotiations. Forhow to find minutes andAnnual Reports of Gen-eral Council meetings,

see Chapter 8.3.

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• it supervises the overall conduct of negotiations such as the Doha Work Programme (seeChapter 3.5). Since the Trade Negotiations Committee (TNC) was set up to carry out theDoha negotiations, the General Council has regularly reviewed its work under a standingagenda 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 AppellateBody 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 almostany 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 theapplication of rulings often takes longer.

The system nevertheless seems slow to traders, especially when the disputed measures aretemporary in nature. For example, the US decision to impose temporary (for three years) highertariffs on certain steel products triggered a dispute case in March 2002. By the time the DSBmade a final decision in December 2003 that the measures were illegal, the higher tariffs hadbeen in place for 19 months, long enough for significant harm to have been caused to countriesand companies exporting steel to the US.

It is also worth noting that dispute complaints are typically filed at the request of businessinterests, 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 aswell, 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

Chairpersons of negotiat-ing groups (names avail-able at www.wto.org)under the Doha WorkProgramme, for instance,can be influential inorganizing the negotia-tions, setting interimdeadlines, and producingdraft texts which canframe further discus-sions.

2 Lori Wallach and Patrick Woodall,Whose Trade Organization – TheComprehensive Guide to the WTO,2004.

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 theban to the WTO. In their rulings, the panel and Appellate Body took internationalenvironmental law into account in determining that a ban such as the US had im-posed, could be legitimate under WTO law.

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To track WTO disputeschronologically, by subjector by country, refer to the

Frequently Asked Ques-tions in Chapter 8.3.

therefore only rule on other matters, such as environmental policy, human rights or social ques-tions, if these arise in a dispute concerning a WTO rule, as was the case in the Shrimp-Turtledispute (Box 1.5).

Nevertheless, the concern remains that the broad reach of WTO rules and their implicationsfor a wide array of domestic policies makes the DSM a particular threat because it ensures strongenforcement of rules designed to favour trade liberalization, rather than to promote well-being orrespect for human rights.

Panels

A panel is a quasi-judicial body which examines the evidence and decides on the merits of thecase, 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 canalso appoint panellists if the parties cannot agree on the panel.

• In a dispute between a developed country and a developing country, the latter can requestthat 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 bodywhich they deem appropriate. In many disputes the panel has consulted scientific expertsor appointed an expert review group to prepare an advisory report. However, the questionof uninvited, non-governmental input into the dispute settlement process is a contentiousissue (see amicus curiae briefs below).

Appellate Body

Either party to a dispute may appeal to the standing Appellate Body against a panel’s ruling onpoints of law and legal interpretation of WTO agreements. The Appellate Body can uphold,modify or reverse the legal findings of a panel and its conclusion, but cannot re-examine existingevidence or examine new issues.

3 WTO, Indicative List ofGovernmental and Non-Governmental Panelists, WT/DSB/33, 6 March 2003.

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

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• The Appellate Body consists of seven permanent members, and three of them hear eachappeal 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.

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 theymust, in my view, make greater use of such briefs in dispute settlement. The opportunity to submit amicus briefscan give those from the wider world the chance to have their say – without in any way undermining the essentialintergovernmental 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 fromoutside pressures and from the passions of the day that do not relate to the merits of the legal issues pendingbefore the court. [Should a national court be] open to lobbying by majority-race groups in cases affecting the civilrights of racial or ethnic minorities? Anyone can obtain a copy of a WTO panel or Appellate Body report and followwhat 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 tosubmit an amicus brief,the best time to do so is

before the first panelhearing. Since the dates

of panel hearings are notannounced publicly, the

best way to follow thisprocess is through the

WTO External RelationsDivision directly or bycontacting a Geneva-

based NGO that followssuch issues (see

Chapter 8).

Another strategy is to aska government involved in

a particular dispute tosubmit an amicus brief on

the interested party’sbehalf – although some

NGOs do not do thisbecause they do not

necessarily agree withthat government’s

position.

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 thekind of interests and values the submitting NGO is concerned with. Second, tosignal 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 givethe 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 tobe raised by the parties, and might go to ways of looking at the facts more than thelaw...

...The success of amicus intervention should not be measured by whether theadjudicator says explicitly that they relied upon or followed the brief. That’s notgoing to happen very often; it doesn’t happen domestically either very often. Butthe existence of such briefs, if there are serious and reputable groups behind them,adds gravitas to the position being advocated that, psychologically, adjudicatorsare 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 abouthow to draft such briefs.

Robert Howse, personal communication, 20 August 2004.

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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 differenttariff 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 couldcondition 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 GSPwere 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-drugarrangements – had affected EUR 205 million of Indian exports, which faced higher tariffs than their Pakistaniequivalents on the EU market.

On 7 April 2004, the WTO Appellate Body released its report, where it ruled that WTO provisions did not preventdeveloped countries from differentiating among products originating in different developing countries under theGSP, 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 ensuringthat 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 specialarrangement for combating the production and trafficking of illegal drugs, the Appellate Body found that as thepreferences granted under the drug arrangements were not available to all GSP beneficiaries similarly affectedby the drug problem, they were not justified under the Enabling Clause. It therefore urged the EU to bring its GSPscheme into conformity with the Enabling Clause conditions.

By contrast, the Appellate Body noted that the EU’s GSP incentive arrangements for the protection of labourrights and the environment, which were not at issue in this case, included detailed provisions setting out theprocedure and substantive criteria that apply to a request by a country to become a beneficiary. This would seemto 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 twoyears. But it is not over yet. On 10 August 2004, following a request by India, the WTO appointed an arbitrator todetermine the reasonable period of time required for the EU to bring its measures into conformity with WTOrules. As such, it could be another year and a half before the EU either changes its GSP legislation or faces thethreat of sanctions.

International Centre for Trade and Sustainable Development (ICTSD), “WTO Appellate Body: Differentiation Possible Under PreferenceSchemes,” in BRIDGES Weekly Trade News Digest, 22 April 2004.

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 mayagree to extend this period. The winning party can request the DSB to authorize trade sanctionsif no remedial action has been taken upon the completion of the implementation period. If theparties 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 ‘friendsof 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 theinterests of fairness and orderly procedure,’ to establish an additional procedure for receivingsubmissions 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 AppellateBody’s action was beyond its jurisdiction and departed from the intergovernmental nature of theWTO.

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To find out how to read thefull text of the decision onthe India-EU dispute, seeChapter 8.3.

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 GATTfrom 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 June2004:

• 312 disputes have been brought to the DSM, with 92 panel and Appellate Bodyreports adopted.

• The US and the EC are by far the most frequent users of the WTO disputesettlement 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 Membershad 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 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 theAppellate Body level. This means that in practice it is still up to the individual panels and/orAppellate Body members to decide on acceptance or refusal. In the absence of rules, no record iskept of which dispute panels or Appellate Bodies actually received, accepted or used amicusbriefs. 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 andadministrative procedures conform to its WTO obligations. The Trade Policy Review Body(TPRB), through regular reviews of individual Members’ trade policies and practices, seeks toimprove adherence by Members to the commitments made under the WTO agreements, and tofacilitate 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 16Members, 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 annualtransitional review of China’s implementation of its WTO commitments. Members insisted on putting this uniqueprocess in place due to the significant amount of change required in bringing such a large, centrally-plannedeconomy 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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trade statistics. There is no agreed format or standard guidelines on what elements shouldbe included, and Members are free to submit whatever information they deem appropri-ate. The 2004 US report mentioned labour standards but in general, reports tend to focuson narrowly-defined trade issues, usually ignoring the broader economic or social ef-fects of a country’s trade liberalization.

2. a detailed report prepared independently by economists in the Secretariat’s Trade PolicyReview Division. So far, the reports prepared by the Secretariat have not explicitly in-cluded issues related to human rights or to labour standards, even though there has beendiscussion in the TPRB of the latter.

• The reports, together with the TPRB chairperson’s concluding remarks, are made publicand available to the press after the review process. Minutes of the TPRB meetings arepublished four weeks later.

• The review process allows other Members to submit written questions in advance of theTPRB meeting and to raise oral questions at the meeting. A discussant is chosen amongrepresentatives of Members to stimulate the debate.

In 2000, Canada proposed making the TPRM more transparent by opening it up to accreditedobservers from the public and webcasting its own trade policy review, declaring that live webfeeds of the meeting would enhance the quality of discussions between Members and provide aprogressive example of the WTO’s openness to public. The proposal was resisted by a number ofdeveloping countries, including India, Pakistan, Argentina and Mexico, who argued that openingup the process could threaten the intergovernmental character of the WTO and set a precedentfor other committees that they were not prepared to consider. Without agreement on the matter,the TPRB remains closed to outsiders.

1.9 The WTO Secretariat

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 dailyactivities of different WTO bodies. Although the Secretariat is officially neutral, many observerscriticize 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 SupachaiPanitchpakdi 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 littleformal authority, but does play an important informal role of facilitator among Member govern-ments. This is particularly so during sensitive negotiations, such as those at Ministerial Confer-ences and under the current Doha negotiations: the Director-General chairs ex officio, the TradeNegotiating Committee (TNC).

There is no official proce-dure in place for NGOs to

submit information oralternative reports to the

TPRB. The only NGO toprovide alternative re-

ports* on a regular basisis the International

Confederation of FreeTrade Unions (ICFTU).These are given to itsnational affiliates andfaxed to selected WTO

missions in Geneva (thosethey consider most likelyto raise labour issues at

the TPRB, such as the USand the EU) prior to TPRB

meetings. As NGO docu-ments have no official

status in the TPRM, it isup to individual Members

whether to bring upissues raised in these

reports during the reviewprocess.

* available at www.icftu.org

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, undermost indicators, one of the most open economies in the world, as regards trade, certainly more open than SouthAfrica and Mauritius, let alone the EU, Switzerland and Japan! Even non-WTO members have goods enteringhere very freely. So I have no doubt that the OECD trade people who attend WTO meetings will give a favourableresponse to the TPR of Madagascar.

Source: Interview with a former UN official.

4 Fatoumata Jawara and Aileen Kwa,Behind the Scenes at the WTO – thereal world of international tradenegotiations, 2003.

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3D / FORUM-ASIA

1.10 The budget of the WTO

In 2004, the WTO budget amounted to CHF 162 million (EUR 103 million). The budget isfinanced by membership fees determined according to each Member’s share of total world tradein the previous three years, including trade in goods, services and intellectual property rights. Aminimum contribution of 0.015% applies to Members whose share in world trade is less thanthis 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 thetotal budget.