The History, Achievements, And Challenges Of WTO

History of WTO

This research paper discusses the history of WTO, achievement of its objectives if at all, and its challenges. It ends with a conclusion.  

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History

The horrors of World War II provided the impetus for pursuance of world peace via political, social and economic spheres.[1] The economic sphere provided the ground for the development of what has grown to be WTO.

The initial steps were kick-started within the framework and avenues offered by the United Nations systems.[2]The conceived plan was to lead to a merger of the International Monetary Fund and the World Bank; consequently International Trade Organization (hereinafter, ITO) was to be formed.[3]

Concomitantly, 15 states that were part of the negotiations for the establishment of ITO began talks to remove custom tariffs. By the time the arrangement had attracted 23 nations, the group opted for a protocol dubbed Protocol for Provisional Application hence the birth of General Agreement on Tariffs and Trade (hereinafter, GATT) at Geneva.[4]

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GATT had a number of achievements, important of all was its contribution towards a twenty fivefold increase in terms of trade volumes among GATT members.[5] On the negative side, glaring challenges were: it fell short of regulations on trade on textile, intellectual property, dispute resolution and services, hence the call for its review through negotiation. Consequently, rounds in the names of: Kennedy Rounds; Tokyo Rounds and lately Uruguay round were introduced.[6]

Uruguay round which introduced the new dawn was initiated in 1986.[7] It was formally concluded in Morocco in 1994 during a ministerial conference which came to be known as Marrakesh declaration. It marked the opening of WTO agreement for signature. In addition to earlier provisions of GATT, WTO then a formal body composed of members contained in its agreement inter alia: regulations on services, intellectual property, and dispute resolution.[8] The main purposes of WTO as captured by the preamble of its establishing Charter are as hereunder:

  • Improving the standards of living;
  • Creating job opportunities;
  • Improve wages and demand for goods and services;
  • Boosting productivity and at the same time taking into account the needs of the future generations; and
  • Granting poor states an appropriate grounding for trade and leveling the field for all international trade stakeholders.[9]

WTO has achieved in the following areas:

It has a revamped its dispute resolution mechanisms. According to WTO 2016 annual report, whereas its predecessor handled 300 disputes in a span of 52 years, it hit a mark of 500 cases by 2016. Disputes among members of WTO are mediated by a panel of three persons. The dissatisfied party can appeal failure of which it has to review its laws to comply with WTO regulations or face a harsh treatment of the affected states having to retaliate.[10]

Achievements of WTO

It has supported development and built capacity for trade among Least Developed Countries (LDC). It has done so by introducing a number of programmes aimed at giving LDC an opportunity to compete at an equal footing with the developed states. For instance, according to WTO 2016 annual report, a waiver to ease trade among states rules of origin have been relaxed in favor of poor nations.

Additionally, a recent launch of sustainable development goals geared towards alleviation of poverty, boosting trade and promoting sustainable development is good deal and opportunity for least developed nations. For example, developing countries now contribute 48% of the world trade as compared to 33% in 2000; the number of persons living below poverty line has also reduced to half since 1990.[11]

WTO has worked to smoothen international trade. In so doing, it has not only facilitated entry into bilateral and multilateral agreements among states, but also negotiated formation of global alliance for trade facilitation.[12] These have worked to ensure smooth movement of goods and services across the borders of states. Moreover, elimination of trade barriers achieved through the above agreements have increased the volumes of trade among states. China for example has had a consistent increase in trade since it joined WTO to date.[13]

WTO has amended intellectual property agreement (TRIPS) in favor of least developed states. TRIPS agreement at its enactment under compulsory licensing granted poor states a leeway to produce generic medicine without the consent of patent owners albeit for domestic use. Importing such medicines was however hence was however an arduous affair hence a temporary waiver in 2003, which was converted in a permanent in 2005 and renewed in 2017.[14] Access to drugs for deceases such as HIV/AIDS has been facilitated.     

Lately, under a programme dubbed Nairobi Packages, efforts were made to eliminate subsidies on the exports. This was aimed at improving profitability for the exporting nations and striking a balance in that the importing nations are also not disadvantaged.            

The challenges are

Its dispute resolution system has a number of flaws. First, the process is slow. For instance, even though alternative disputes resolution mechanism such as good offices, mediation and negotiations are employed,[15] empanelling persons charged with assisting parties to resolve their disputes takes unnecessarily long time. A case in point is a consultation request lodged in January 2018 as regards United States Anti-Dumping Measures on Fish Fillets from Vietnam whose panel has not been composed.[16] Also in DS 483, a case that was on China anti-dumping measures against imports from Canada, the proceedings by the panel took two years, and a further 4 months for translation of the report.[17] This is unprecedented delay which denies justice to the parties

Second, the decisions and the participation in the process is voluntary. This grants the parties to the disputes an unacceptable leeway to drag and unreasonably frustrate the process. Even after going through traumatizing and elongated process, the implementation of the outcome of the dispute resolution process is dependent on exercise of good faith by parties.

The mechanism for review of WTO Charter is slow. Amendments do not take effect until 2/3 of the members have ratified them, this unnecessarily elongates the whole process. For instance, it took 7 years for introduction of Uruguay round after Tokyo round, and another 8 years for Doha amendments to be effected.[18] Such a long time may mean that an amendment may materialize after its whole essence has been extinguished.

Conclusion

From the above discussion it is clear that WTO has not veered off the path heralded under its establishing Charter. It has realized a number of successes which have gone a long way in cementing its role within the global plane. It is however not bereft of challenges; though the challenges are not quite pronounced, they still take aback the steps so far realized by WTO. Programmes must therefore be initiated to curb the challenges otherwise they may grow into strong walls permeation of which will require massive efforts. 

Bhatia Singh, ‘the problems of plenty: challenging times for the WTO’s dispute settlement system’, (2017), release of the appellate body annual report 2016.

Bodin Saskia, ‘WTO membership and trade: a study of the Effect of China’s WTO Accession on Chinese Trade’, (2017), School of Social Sciences Master’s Thesis, 30 credits Economics Spring.

Dona Das, Islam Sharmin, and Ahmed Emram, ‘The effectiveness of the GATT through its major achievements and failures as well as the performance of the creation of WTO’ (2015), 5 International Journal of Economics, Commerce and Management United Kigndom, 3.

Meredith Crowley, ‘An introduction to the WTO and GATT’, (2003), Economic perspective

Miles Tom, ‘poor countries allowed to import generic drugs –WTO’, (2017), Reuters.

Moore Mike, ‘Ten Years of the WTO: A Success Story of Global Governance’ (2005) IPG 2

Sek Lerone, ‘the world trade organization: background and issues’, (2001), Congressional research Service, report for the congress.

Shed Daniel, Murill Brandon, and Smith Jane, ‘Dispute Settlement in the World Trade Organization (WTO): An Overview’, (2012), Congressional research service.

World Trade Organization, ‘understanding WTO’, (2015) Information and External Relations Division.