World Trade Organization
The World Trade Organization (WTO) was established in 1995. At a meeting in Punta del Este, Uruguay, from 15 to 20 September 1986 the Contracting Parties of the General Agreement On Tariffs And Trade (GATT) signed a Declaration instituting the most comprehensive round of multilateral trade negotiations ever undertaken - to be known as the Uruguay Round. These negotiations, which commenced in October 1986, were concluded at the end of 1993, and were followed by a Ministerial Meeting in Marrakesh in April 1994, at which time the Final Act of the Uruguay Round and the Marrakesh Agreement Establishing the World Trade Organization were signed. The provisions of the Final Act and the WTO came into effect at the beginning of January 1995.
The WTO replaces or subsumes GATT as the single institutional framework governing world international trade. It includes the General Agreement on Tariffs and Trade 1994, which involves some new rules on the application of various GATT articles, as well as all the other pathbreaking agreements negotiated during the Uruguay Round. For new nations to be members of the WTO they must accept all the provisions of the Uruguay Round - the "single undertaking approach." As of January 1997, 128 nations were members of the WTO.
Under the auspices of the WTO, the tariff reductions agreed to by the members on a wide range of industrial and resource products are to be reduced in five equal, annual stages commencing on 1 January 1995. If members wish, they can lower their tariffs more rapidly. For the first time, agricultural products and policies are included. Members have agreed to convert all quantitative restrictions on such products to tariffs (tariffication), which are then to be lowered by 36% over 6 years by developed nations and by 24% by developing countries. (Least developed countries will not have to lower theirs at all.) Members must also reduce export subsidies by the same percentages and the volume of subsidized exports by 21%. New provisions have been made to ensure plant, animal and food safety as well. Follow-up meetings to improve market access and further reduce trade-distorting subsidies in agriculture are scheduled for 1999.
The WTO will also oversee the Multifibre Arrangement (MFA) on clothing and textiles being phased out by 1 January 2005, so that these product lines can be fully integrated into the general rules governing all other products. New rules have also been agreed on to reduce technical barriers to trade as well as trade-related investment measures (TRIMS). Procedures on anti dumping, customs valuation, preshipment inspection, rules of origin determination, import licensing and safeguards have all been strengthened too. For the first time subsidies have been clearly defined and categorized as to which ones countries can impose countervailing duties against and which ones they cannot.
In addition, trade in services has now been brought under international regulation as have trade-related aspects of intellectual property rights such as patents, copyrights and trademarks. Finally, the dispute settlement mechanism has been strengthened so that WTO panel decisions will have to be implemented by members found to be violating WTO regulations.
At the first ever WTO ministerial conference in December 1996 the International Technology Agreement (ITA) was signed. It provides for tariffs to be eliminated by 2000 on about $600 billion of trade in information technology products. Twenty-eight nations accounting for 84% of world trade are party to this agreement. It demonstrates that the WTO is capable of keeping the world moving forward toward greater trade liberalization.