World Trade Organization

Table of Contents

From GATT to WTO…………………………………………………………………………….…..3
GATT trade rounds…………………………………………………………………………………..4
Creation of the World Trade Organization (WTO) ……………………………………………...….5
WTO structure………………………………………………………………………………………..6
Members, observers, and the case of Mexico as member of the WTO………………………………7
10 benefits of the WTO trading system ……………………………………………………………...9
10common misunderstandings about the WTO …………………………………………………...11
Conclusion…………………………………………………………………………………………..14
References…………………………………………………………………………………………..15

As of January the 1st of 1995, the World Trade Organization (WTO) entered into force by replacing the General Agreement on Tariffs and Trade (GATT), which used to regulate world trade since 1948. According to the WTO’s officialwebsite, its objective is to help producers of goods and services, exporters, and importers, conduct their business through the design of rules governing trade between countries while monitoring compliance. The role of the WTO is vital, since it is the only organization that deals with the rules governing trade between countries.
From GATT to WTO
In his book “Derecho del comercio exterior” (“ForeignTrade Law” in English), Jorge Witker explains that the GATT, WTO’s predecessor, was established after World War II in order to avoid the risk of aggrieving the economic situation through strategic efforts in order to restore as soon as possible the multilateral trading system that linked the various nations before the economic depression. Among the basic principles of GATT were the following:A. Nondiscrimation
It refers to the fact od not dividing countries among friends and/or enemies, and which all of them are governed by the same trading parameter, not taking into account the country’s economic or political system. It also prohibits the use of retaliation or punishment between countries due to racial, political, or religious concerns.

B. Reciprocity
Reciprocity is afundamental element of the negotiating process. It reflects both a desire to limit the scope for free-riding that may arise because of the MFN (Most Favored Nation) rule and a desire to obtain “payment” for trade liberalization in the form of better access to foreign markets (Hoekman). In short, nothing is free or unilateral, but the opposite, where everything is distributed so that there are no winnersor losers.
C. Equality of States
It means that all GATT members are subject to the same rights and obligations, as others, assuming they have the same status regardless of its economic and commercial power.
D. Reduction and eliminations of tariffs
After the establishment of GATT, tariffs were the main form of trade protection, and in the early negotiations were mainly focused on theconsolidation and reduction of customs duties. Once a country becomes member of GATT, tariffs and taxes should be negotiated and reduced gradually, declining any government intervention through quantitative restrictions on market exchanges (Witker).
GATT trade rounds
There were several rounds in different countries and years in which specific GATT-related topics were discussed, depending on theirimportance and priority. Furthermore, it was during one of these rounds where the WTO was created. Below is a table showing the different rounds, the length, the subject or subjects covered, and the results.
GATT & WTO trade rounds |
Name | Start | Duration | Countries | Subjects covered | Achievements |
Geneva | April 1946 | 7 months | 23 | Tariffs | Signing of GATT, 45,000 tariffconcessions affecting $10 billion of trade |
Annecy | April 1949 | 5 months | 13 | Tariffs | Countries exchanged some 5,000 tariff concessions |
Torquay | September 1950 | 8 months | 38 | Tariffs | Countries exchanged some 8,700 tariff concessions, cutting the 1948 tariff levels by 25% |
Geneva II | January 1956 | 5 months | 26 | Tariffs, admission of Japan | $2.5 billion in tariff reductions |...