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Trade |
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What is the WTO?
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The World Trade Organization (WTO) is located in Geneva, Switzerland and was established on January 1, 1995,
following the completion of the Uruguay Round (1986-1994) of the General Agreement on Tariffs and Trade (GATT).
It is an organization comprised of 148 member nations and is the only international organization that deals with rules of trade between countries.
The main function of the WTO is to ensure that trade flows smoothly and predictably. It does this through:
- The administration of trade agreements;
- The operation of a forum for negotiations;
- The monitoring of national trade policies; and
- The handling of trade disputes.
The WTO is run by its member governments, with the highest authority being
the Ministerial Conference, which meets at least once every two years to
discuss current issues and future directions. Day-to-day work is completed
by the secretariat staff of about 500 and is supervised by the General Council, as well as numerous committees, sub-committees, working parties, and negotiating groups.
One very important aspect of the WTO is the numerous agreements, which outline
the legal ground rules of trade and are negotiated and signed by WTO member
country governments, and then ratified by their respective parliaments.
Decisions at the WTO are typically made by consensus. However, in the past,
much of the decision-making authority rested with the countries with the
most economic and political power. This is beginning to change. Developing
countries now make up almost 80% of the WTO membership, and in addition to making
concessions, they have the right to make demands.
This changing climate can be noted by the developing countries'
insistence on being full participants in ongoing negotiations (such as agriculture).
The increasingly important role of developing countries in international
trade negotiations is not the only aspect that is undergoing change.
Historically, most, if not all, trade agreements were negotiated behind
doors. However, widespread public international interest in such agreements
and their potential impacts has led to recognition by governments that
the trade negotiation process must become more transparent (eg. the release
of the draft Free Trade Area of the Americas text).
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The Uruguay Round |
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The Uruguay Round of
negotiations was the largest and most ambitious round of trade negotiations in the WTO's history.
The negotiating
agenda was comprehensive and included tariffs, non-tariff barriers, anti-dumping rules, subsidies, dispute
settlement, as well as textiles, agriculture, services, and intellectual property. Initiated under
the auspices of the General Agreement on Tariffs and Trade (GATT), the round
resulted in the formation of the World Trade Organization (WTO) and a new process for
dispute settlement.
After a tumultuous four years of drafting the negotiating agenda, the Uruguay Round was launched;
and the "Punta del Este Declaration" outlined general objectives to be pursued by negotiating countries.
However, because of the broad agenda, which covered areas never before addressed by the multilateral
process, the negotiations were not always a smooth process. Sharp differences sometimes emerged among
parties. Efforts to reconcile these differences obviously contributed to the eight years required to
conclude negotiations and finalize the agreements that resulted from the Uruguay Round of negotiations.
The importance of agricultural trade and agricultural trade reform in the context of the negotiations
became clear when certain countries threatened not to support progress made in other negotiating areas
unless progress could be made in moving agricultural negotiations forward. In early 1987, the negotiating
group on agriculture developed a two-phase plan designed to ensure success in achieving the agricultural
objectives as outlined in the "Punta del Este Declaration." Phase one dealt with identifying major
problems in world agricultural trade such as direct and indirect subsidies, and non-tariff barriers
impacting trade. Additionally, the goal for this phase was to agree upon a set of basic principles that
would rule international agricultural trade by considering proposals submitted. Phase two consisted of
in-depth negotiations of the actual text of the Agreement on Agriculture.
In December 1991, Ministers agreed on a draft package based on the Dunkel Text (see following paragraph), which reflected the negotiating mandate but did not include specific commitments. This draft became the heart of the final agreement.
 On February 21, 1992,
40,000 farmers and supporters from all over Canada rallied on Parliament Hill. The cause was the clarification
and strengthening of Article XI of the GATT. The sense of urgency was borne from the 1991 Dunkel Text, named after
GATT's Director General Arthur Dunkel. While the text contained some positive elements for Canadian agriculture, it
was believed that its implementation would (and eventually did) result in negative effects for Canadian supply managed
commodities. Farmers had been fortunate in that the Canadian government had always supported a balanced position at
the GATT. One of the elements it called for was clarification and strengthening of Article XI.
However, farmers were concerned that the government would be pressured by international interest to accept the
Dunkel Text and its proposal for comprehensive tariffication (versus Article XI). As a result, Egg Farmers of
Canada, together with the other supply managed commodities developed a detailed strategy to ensure that the
federal government's support would continue. Elements of this strategy included a letter-writing campaign to
Members of Parliament, meetings with federal and provincial politicians, an official request that the Prime
Minister enter into bilateral discussions with the United States and the European Community, a national farm
leaders' meeting in Ottawa, and the aforementioned rally on Parliament Hill.
Regarding market access, comprehensive tariffication provided for the tariffication of all
non-tariff barriers, which included all "quantitative import restrictions
(whether or not provided for under GATT 1947, such as Article XI:2(c)(i))."
In accepting the text and the resulting Uruguay Round Agreement on Agriculture (URAA),
Canada was forced to abandon its position to clarify and strengthen Article XI and convert all of its import controls to tariff equivalents.
Additionally, the URAA ensured that quantities imported prior to the URAA
could still be imported, and in some cases, guaranteed that some additional
quantities were charged non-prohibitive duty rates. Essentially, this meant
that for specified quantities a lower tariff rate would apply (non-prohibitive),
and for additional quantities higher rates would apply. This is known as a
system of tariff rate quotas, or TRQs. For tariffied products, import access opportunities had to be maintained at levels corresponding to the base period (1986-1988). Where this access had been less than 5% of domestic consumption, a minimum access opportunity had to be opened. For the Canadian egg industry, this meant that 21,370,000 dozen eggs would have to be imported every year. These imports replace domestic production.
In December 1993, a tentative agreement was reached among member countries. Countries then had until February 1994 to submit their commitment schedules and to question those submitted by other countries. The final agreement, known as the Agreement on Agriculture, was signed in April 1994.
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The Uruguay Round Agreement on Agriculture |
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While the original GATT did not apply to agricultural trade, it allowed countries to implement a number of non-tariff measures (such as import quotas and export subsidies) that were not allowed for industrial products, which resulted in significant distortion of the international agricultural sector. The use of export subsidies in particular exacerbated this distortion and led to difficulty in ensuring a level international playing field in agricultural trade.
The WTO URAA resulted from negotiations during the Uruguay Round. It addresses the distortions mentioned above and is considered by many to be an important step towards fairer competition and less distorted trade in agricultural goods. While this reform aims at agricultural trade liberalization, it also aims to strike a balance between this liberalization and governments' desire to pursue legitimate agricultural policy goals.
The Agreement includes specific commitments by WTO member governments to reduce support and protection in the areas of export subsidies, market access, and domestic support, which are reflected in the schedules of legal commitments for individual WTO members. The Agreement also addresses non-trade concerns, including food security and the need to protect the environment, and provides special and differential treatment for developing countries (DCs). Moreover, WTO members have bound themselves to maximum tariffs on nearly all agricultural products, while many industrial tariffs remain unbound. The implementation period for the country-specific commitments is the 10-year period beginning in 1995. However, for DCs, the reduction and other commitments could be implemented over a
ten-year period.
A Committee on Agriculture (COA) was also established as part of the Agreement. This Committee is responsible for overseeing the implementation of the Agreement, as well as future negotiations.
Additionally, the Agreement provided for guidelines (Article 20 of the Agriculture Agreement) that ensured that new negotiations would begin by the year 2000 to continue the process of reform and agricultural trade liberalization. These negotiations are now underway.
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Current Agricultural Negotiations |
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The Uruguay Round Agreement on Agriculture (URAA) provided for guidelines (Article 20 of the URAA) that ensured that new negotiations would begin by the year 2000 to continue the process of reform and agricultural trade liberalization. These negotiations are now underway and are currently in phase three, and are carried out in Special Sessions of the WTO Committee on Agriculture (COA), which reports to the General Council.
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Phase One
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Discussions in phase one (March 2000-2001) were based on negotiating proposals submitted to the WTO by member countries. Phase one was concluded through an exercise known as the "stock-taking exercise," which served review the first phase of the negotiations and determine the workplan for phase two of the negotiations.
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Phase Two
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The scope of the work plan for phase two was to delve more deeply into issues touched on in the various proposals submitted by member countries. All issues raised in the proposals were discussed in phase two, was carried out via informal and formal meetings of the COA. There were two formal Special Sessions, which were held back to back with the regular meetings of the COA (September and December 2001). In addition, there were five informal Special Sessions in May 2001 and July 2001, September 2001, December 2001 and February 2002. One additional formal Special Session was scheduled in March 2002, where the ‘Modalities 2002-2003’ was officially launched.
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Modalities 2002-2003
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This phase of the talks represents one of the most crucial areas of the negotiations. This 12-month period was established to set specific targets and formulas that would achieve the objectives set out in the Doha Ministerial Declaration: "Substantial improvements in market access; reductions of, with a view to phasing out, all forms of export subsidies; and substantial reductions in trade-distorting domestic support."
This phase began with technical work on detailed possibilities for each of the three main areas of the Agriculture Agreement: export competition, market access, and domestic support. Special and differential treatment for developing countries was an integral part of all of three areas. It should also be noted that non-trade concerns were discussed.
In December 2002, after nine months of negotiations, Chairperson Stuart Harbinson was able to meet pre-determined deadlines and release an overview paper summarizing negotiations to that date. In February 2003, the second deadline was not met and the first draft of the "Modalities" text was released. Finally, in mid-March a revised draft of the "Modalities" draft was released. The Chairperson, Stuart Harbinson, was unable to release a second draft of the "Modalities" text due to widely differing positions of WTO members.
Because of these divergent positions, the March 31st deadline was unable to be met.
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Launch of a New Round of WTO Negotiations
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Ministers from the 145 member countries of the World Trade Organization (WTO) agreed to launch a broad round of negotiations on November 14, 2001, at the Fourth WTO Ministerial Meeting in Doha, Qatar. Despite the fact that WTO agricultural negotiations have been ongoing since March 2000, agriculture was a key issue on the agenda in Qatar. One of the most significant results of the launch of the broader round is that there is now a definite deadline to finish agricultural negotiations. This deadline is in line with the conclusion of the broader round of negotiations, which began January 31, 2002 and are scheduled to conclude no later than January 1, 2005. It is interesting to note that the last round of negotiations lasted seven years, much longer than the three scheduled for this round of negotiations.
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WTO's Ministerial Conferences |
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The WTO is run by its member governments with the highest authority being the Ministerial Conference. The Ministerial Conference is required to meet every two years to discuss current issues and future directions. Although member countries make their decisions through the various councils and committees, the Ministerial Conference has the authority to make decisions on all matters relating to multilateral trade agreements.
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Since the creation of the WTO, the Ministerial Conference has met five times:
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Cancún, Mexico: September 10 to 14, 2003
Doba, Qatar: November 9 to 14, 2001
Seattle, USA: November 30 to December 3, 1999
Geneva, Switzerland: May 18 to 20, 1998
Singapore, Singapore: December 9 to 13, 1996
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Ministers from the 148 member countries of the World Trade Organization (WTO) agreed to launch a broad round of negotiations on November 14, 2001 in Doha, Qatar. The main question in the months leading up to the Ministerial Meeting was whether or not member countries would be able to reach a consensus on deeply entrenched positions, and agree on the wording of the declaration that would set the negotiating agenda. The answer to this question did not become clear until the eleventh hour when both the European Union (EU) and India agreed to compromise the wording that had blocked the possibility of consensus, which would have in turn blocked the launch of a broad round. Although a number of concessions were made on contentious issues, many victories were also achieved.
The Ministerial Declaration approved by all WTO Member countries after the conference, which was extended for an additional day, outlines the work program and timeline of negotiations over the next three years. The negotiations are to begin no later than January 31, 2002, and end no later than January 1, 2005. The declaration provides for the continuation of ongoing negotiations in agriculture and services, as well as the initiation of negotiations on implementation issues, industrial tariffs, WTO rules, dispute settlement, and the environment.
Four "new issues," which include government procurement, trade facilitation, investment, and competition policy, will be studied by existing WTO bodies in preparation for a possible launch of negotiations on these issues after the next WTO Ministerial Meeting in 2003.
Finally, the declaration calls for preliminary talks on protecting bio-diversity and traditional knowledge, updating the Trade Related Intellectual Property rights, trade technology transfers, and trade, debt and finance.
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WTO's Fifth Ministerial Conference |
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The Fifth WTO Ministerial Conference will be held in Cancún, Mexico from September 10 to 14, 2003. The mandate of this conference will be to assess the progress made to-date concerning the WTO negotiations, as well as review other existing work listed under the Doha Development Agenda.
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