The World Trade Organization (WTO) emerged in 1995 following the establishment of the General Agreement on Tariffs and Trade (GATT) in 1947. The GATT was born out of the Bretton Woods Agreement in 1944, which served to ensure economic stability for major economies and promote international trade after World War II. The GATT was the most comprehensive multilateral trade agreement at the time whose aims were to assure action for the reduction of tariff and to give Member States a right to tariff concession on particular products that might be impossible under bilateral agreements. As a result of the Uruguay Round negotiations, in 1995, the WTO was established to replace the outdated GATT, which was no longer relevant in the complex world trade of globalization era and the problematic dispute settlement system. The WTO now not only deals with trade in goods but also with trade in services and trade in intellectual property.
Up until 2016, the WTO has 164 members and 23 observer governments, accounting for 98% of international trade.
The WTO is responsible for the regulation of international trade through a global system of trade rules. The main goal of this intergovernmental organization is to “ensure that trade flows as smoothly, predictably and freely as possible.”
The WTO acts as a forum for governments to negotiate trade agreements and settle trade disputes. Essentially, when governments believe that their trade rights under WTO agreements are being infringed, they bring their dispute to the WTO and follow a natural procedure based on an agreed legal foundation to settle their differences. Since 1995, over 500 disputes have been filed to the WTO and more than 300 rulings have been issued. The WTO trade agreements cover trade in goods, services, and intellectual property.
In addition, the WTO’s operations include reviewing national trade policies to ensure transparency in governments’ trade policies. The WTO also cooperates with other international organizations and assists developing countries in trade policy issues, through technical assistance and training programmes.
Dispute Settlement Process
As WTO Members file a complaint to the WTO, dispute parties enter the first stage, also known as consultations, in which dispute parties attempt to settle their disputes and differences by themselves through a mutually agreed solution.
If consultations fail, parties in disputes enter the second stage of settling disputes through adjudication, leading to the establishment of the Panel by the Dispute Settlement Body (DSB), which includes WTO members. After discussing the issue, the Panel will send a final report to the parties in dispute. The Panel recommends measures to be made to conform with WTO rules if it decides that the disputed trade measure goes against the WTO agreements or obligations. The report then becomes the DSB’s ruling or recommendation. Either or both sides can appeal the Panel’s rulings.
*Note: In the MUN@TIU conference, we presuppose that both the US and China file their own complaints to the WTO regarding the current trade war and consultations have failed, which means adjudication is the agenda and all member states make up the DSB. The final report will adopt UN Resolution format. Delegates can submit multiple draft resolutions but only one will be adopted as the final report of the committee.