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International Journal of Scientific Research and Innovative Technology ISSN: 2313-3759 Vol. 3 No. 10; October 2016

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THE BIRTH OF WORLD TRADE ORGANIZATION

M C GETANDA: LLM, LLB, CPS (K), CPM (MTI)

Lecturer; Egerton University School of Law

Before we embark on a detailed discussion concerning the birth of the World Trade Organization herein after

WTO, let us first of all understand what the WTO is. To simply state, the WTO is an International

Organization that is concerned with dealings of rules of trade between nations at a global level. (1)

WTO can also be viewed as an organization geared towards liberalizing trade in that governments use the

WTO as a forum to negotiate trade agreements. (2)

It is to be noted that the negotiations have helped in liberalizing trade, and at times the WTO has supported or

rather its rules support maintaining trade barriers e.g. to protect consumers or prevent the spread of diseases.(3)

Apart from being a negotiating forum, the WTO is also a set of rules in that at its very heart are the

agreements which were negotiated and signed by a majority of the world’s trading nations. The signed

agreements provide the legal basic ground rules for International trade. Like all contracts, they are binding to

the governments to keep their trade policies within agreed limits. It is noteworthy, that the goal of WTO is to

aid producers of goods and services, exporters , and importers to carry out their business, while at the same

time allowing governments to achieve social and environmental objectives.(4)

WTO as a system has a fundamental purpose of ensuring that trade flows as freely as possible. (5)

The WTO was born or rather began life on 1st January, 1995. It may appear young but it is to be noted that its

trading system is half a century older. Since the year 1948, the General Agreement on Trade and Tariffs

hereinafter GATT had aided in the provision of rules that govern the system of trade amongst governments.

After a short while, the General Agreement(6)

gave birth to an unofficial, defacto international organization

known as the GATT which has over the years evolved through several rounds of negotiations the last and

largest round being the Uruguay Round (7)

which led to WTO’s creation.(8)

WTO thus shifted dealings from

only trade in goods ( as was the case by GATT) and the agreements now cover a wide area including trade in

services, and in traded interventions, creations and designs i.e. intellectual property.(9)

1. World Trade Organization; “Understanding the WTO”, 3

rd edition, previously published as “Trading into the future,”

September 2003, revised October, 2005 at pg 9.

2. Everything concerning the WTO is a result of negotiations between governments since the WTO itself was born out of

negotiations

3. See Supra note 1

4. Ibid

5. Provided there are no undesirable side effects the WTO can also remove trade obstacles

6. Second ministerial meeting held in Geneva in May 1998

7. The Uruguay round lasted from 1986 to 1994. It was a round to end all rounds

8. See Supra note 1 at Pg 10

9. Ibid


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Of importance to note is that after signing the Uruguay Round trade agreement, the WTO was formed as an

institution and not as an agreement as was the case with GATT.(10)

This is to mean that unlike its predecessor,

the GATT, WTO issues binding decisions and so it can be argued that the origin of the WTO lies in the

fundamental shortcomings of GATT as a system.(11)

G. Kitenga in his book, “Introduction to Tax Law,” at page 95 and 96, enumerated the key weaknesses of

GATT as follows;

1. Absence of a legal framework establishing GATT: The original aim in 1947 was to establish the

International Trade Organization herein after ITO and its failure led to GATT coming into existence

without the establishment by any treaty.(12)

Some scholars have put forward vehement arguments that

GATT had a birth defect and thus the WTO came to rectify this defect.(13)

2. Absence of clear rights and obligations: The rights and obligations of contracting parties to GATT

were unclear since GATT lacked a legal framework to monitor /govern the rights and obligations of

contracting parties. This is to say that there were no clear procedures and rules of joining GATT and in

the event a government joined GATT, the parties were not aware of their rights and obligations. This

brought uncertainty and provided a lee-way where powerful and strong countries could get their will

and bulldoze the weaker nations.(14) (15)

3. Lack of a dispute settlement mechanism: This was a fundamental tenet that was lacking in GATT and

became a ripe ground for the stronger economies to have their way in international trade. WTO was

thus established and a provision for a centralized dispute settlement system established.

4. GATT agreement was made up of several disjointed codes and agreements: It is noteworthy, that the

various negotiation rounds from the Geneva round to the Tokyo round each produced various codes

and agreements for instance, the Tokyo round produced inter alia the valuation code, the Anti-dumping

code and the subsidies code. Each of the GATT rounds of trade also produced their own stand – alone

agreements with no clear relationships between them and added to the uncertainty of the international

economic order.(16)

WTO was thus established to aid in providing a clear system of hierarchy as

between these agreements.(17)

10

G. Kitenga “ Introduction to Tax Law: The World Trade Organization” Law Africa 2010 Pg 95

11Ibid

12See supra note 10

13 WTO was established through a treaty which came to be known as the Marrakech agreement of 1994

14 See Supra note 10

15. Weaker nations/economies felt they were right to address this concern so as to restore sovereign equality amongst nations thus

the need to have a treaty that clearly outlined the rights and obligations of countries

16 See Supra note 10 at Pg 96

17. Ibid


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5. Absence of a clear relationship between GATT and the National Legal regimes: As earlier posited,

scholars have put forth arguments that GATT had a birth defect i.e. it was established by way of

accident and thus the question of which took precedence between GATT and the National Laws. This

uncertainty made many countries apply their national laws as superior to the GATT system thus

plunging the whole international economic order into a Miasma of disarray (18)

.

Under the ambits of international law, multilateral agreements should take precedence over national

laws and that breach of the multilateral obligations should give rise to state responsibility. This thus

necessitated the establishment of WTO by way of treaty in order to clearly give precedence to WTO

rules and obligations. (19)

Further to understand the establishment of the GATT system and WTO, the increasing role of global

trade forced the industrialized countries already in the 21st century to support international limited

cooperation on custom duties. The global economic crisis that erupted in 1929 and the attempts to

overcome it in some industrialized nations, through protecting the domestic markets directly from high

tariffs on foreign imports have shown that in order to increase the quantity of foreign trade, there is

need to institutionalize and supranationalize regulation in the recognized international legal

framework. (20)

The initial idea of establishing an international organization to regulate trade internationally came even

before the end of the Second World War. The new economic order thus anticipated the creation of the

ITO. This was done by convening an International Conference (21)

in Havana in 1946 which was aimed

at developing a substantive framework for international agreement on reducing tariffs and invite

interested countries to the constitution of the organization. In October 1947, the GATT was signed and

was originally considered only as part of a comprehensive agreement under the new ITO.(22) (23)

In subsequent years, GATT, albeit in a limited form proved to be quite an effective system. The GATT

rounds of negotiations sought to reduce the direct duties and hidden so-called non-tariff restrictions on

imports of products from abroad. (24)

The Uruguay round of negotiations was the most successful and

as a result the Marrakesh Agreement establishing the WTO was signed, which came into force on 1st

January, 1995.

18 Ibid

19 Ibid

20 http://rigin.info/historywto.html Retrieved on 9/07/2013

21 International Conference on Trade and Development


23 The agreement, seen as temporary, came into force on 1st January, 1948



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In conclusion, the origin of the WTO can be traced back beyond GATT, to the United Nations (UN)

charter (25)

and specifically the objectives enshrined in that Charter. (26)

The WTO’s creation on 1st January, 1995 arguably marked the biggest reform of international trade

since the second world war.(27)

Geneva is where much of the history of those 47 long years was

written, but the journey spanned the continents from Havana (Cuba), where it all started, via Annecy (

France), Torquay (UK), Tokyo ( Japan) Punta del Este (Uruguay), Montreal (Canada), Brussels

(Belgium) and finally to Marrakesh (Morocco).(28)

GATT was not infective in toto since it assisted in the establishment of a strong and prosperous

multilateral trading system that became more liberal through the various rounds of trade negotiations.

Thus, after almost half a century after unsuccessful attempts to establish an international organization

and the existence of a temporary shelter of the GATT to govern the international economic order

among governments, in 1st January1995, the WTO was born and commenced work.

THE OBJECTIVES & PRINCIPLES OF WTO

In understanding the principles of the WTO trading system, it is noteworthy that the WTO agreements are

very lengthy and complex. (30)

These agreements deal with inter alia; agriculture, textiles and clothing,

banking, telecommunications, government purchases, industrial standards and product safety, food sanitation

regulations and intellectual property. (31)

There is however a thread or threads of a number of simple, fundamental principles that cut across all these

documents and these are the foundation of the multilateral trading system.

It is noteworthy, that under the WTO trading system, the trade should operate without discrimination. This is

to say that a member country should not discriminate between its trading partners.

1. Most Favoured–Nation (MFN)

This principle can be summarized as treating other people equally. All trading partners are all to be treated on

an equal platform on a most favoured-nation (MFN) and National treatment(32)

basis i.e. grant someone a

certain special favour ( such as lower customs duty for one of their products) and you have to do the same for

all other WTO members. (33)

Suffice to say that each exporting member countries should face the lowest (most

favoured) tariff on a good applied by the improving country.

____________________________________ 25 The character established the United Nations and was signed on June 26, 1945 in San Francisco. It replaced League of Nations

26See article 13 of the United Nations Charter

27 It also brought to reality the failed attempt in 1948 to create an ITO

28 See supra note 1 at pg 16

29 See supra note 20

30 This is because the agreements are legal texts covering a wide array of activities


32 National treatment means each country agrees to treat foreign and domestic products and producers equally inside the country

33 Supra note 1 pg 11


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The principle of MFN treatment is thus so important that it is the first article of GATT. To most lay-men, the

principle of MFN treatment sounds like a contradiction but rather it suggests special treatment, but in the

WTO it actually means non-discrimination – treating virtually everyone equally.

It is important to note that there are some exceptions to this principle, for instance, countries can set up a free

trade agreements that applies only to goods traded within the group. (34) (35)

Alternatively, developing countries can be accorded special access to their markets, or a country can raise

barriers against products that are considered to be unfairly traded from specific countries.

Generally thus, MFN means that every time a member country opens a market or lowers a trade barrier, it has

to do so for the same goods and/or services from all its trading partners. (36) (37)

2. National Treatment (38)

The principle of National Treatment under the WTO trading system posits that imported and locally

manufactured goods should be treated equally. (39)

This principle is also extended to domestic and foreign

services and to foreign and local trademarks, copyrights and patents. (40)

It is noteworthy that this principle

shall only apply once a product, service or item of intellectual property has entered the market. This principle

of National Treatment is to be found in Article 3 of GATT, Article 17 of the General Agreement on Trade in

services (GATs) and Article 3 of Trade Related Intellectual Property Rights (TRIPS). (41)

Thus National

Treatment in WTO trading system can be summarized as giving others the same treatment as one’s own

nationals.

3) Freer Trade

This is the 3rd

principle of WTO. It is to be noted, that on the International Trading Platform, lowering trade

barriers is one of the most obvious means of encouraging trade and by barrier to trade we mean custom duties

or tariffs, and measures such as import bans that restrict quantities selectively etc.

This principle obligates member countries to ensure that the trading system should become freer over time

with tariff and non-tariff barriers coming down through successive rounds of negotiations.(42)

Since GATTS

creation, there have been 8 rounds of trade negotiations which at first focused on lowering tariffs (custom

duties) on imported goods and this resulted in tariff rates on industrial goods falling substantially to less than

4% in the mid 1990s. (43) (44)

______________________________________________________

34 See supra note 31 35 Discriminating against goods from outside 36 Whether rich or poor, weak or strong 37 See supra note 31 38 Means treating foreigners and locals equally 39 At least after the foreign goods have entered the market 40 See supra note 31 41 These 3 agreements are the main WTO agreements and the principle of National Treatment is handled slightly differently in each of these 42 This has been achieved in large measure by lowering tariffs on goods 43 See supra note 1 pg 12 44 By 1980s, the negotiations had expanded to cover non-tariff barriers on goods, services and intellectual property


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A fundamental tenet to note is that opening markets though beneficial requires adjustments. WTO agreements

allow countries to introduce changes gradually through ‘progressive liberalization.’ Finally, developing

countries are usually given longer time frames to fulfill their obligations under this principle. (45)

4) Predictability

This principle of WTO refers to the need to assure foreign companies, investors and governments that trade

barriers will not be raised arbitrarily, and that all trade related policies are transparent and binding to

foreigners. It is important to have stability and predictability because investment is encouraged, jobs are

created and customers can fully enjoy the benefits of competition i.e. choice and lower prices. (46)

Suffice to note that in WTO, when member states agree to open their markets for goods or services, they

‘bind’ their agreements. The binding applies on goods through ceilings on custom tariff rates. A country thus

can alter its bindings but only after holding negotiations with its trading partners. (47) (48)

This principle of predictability tries to improve stability and predictability in the WTO trading system by

discouraging the use of quotas and other measures used to set limits on qualities of imports and to make

countries’ trade rules as transparent as necessary. (49)

Majority of WTO agreements obliges governments to

disclose their policies and practices publicly within the country or by a notice to the WTO. (50)

5. Promoting fair competition

Some scholars inaccurately describe WTO as a free-trade institution. I say inaccurately since the system does

allow tariffs and, in limited circumstances other forms of protection. The principle of promoting fair

competition in the WTO trading system entails making the system more competitive by discouraging unfair

practices. (51)

It is to be noted that alongside the rules on non-discrimination, MFN and National treatment, the principle of

promoting fair competition is designed to secure fair conditions of trade, determine what is fair and unfair and

how governments can respond, in particular by charging additional import duties calculated to compensate for

damage caused by unfair treatment. (52)

____________________________________________________



47 Ibid

48 This negotiations can include consensus to compensate affected trading partners for loss of trade


50 Ibid

51 Unfair practices include subsidizing exports and dumping products in foreign markets

52 See supra note 1 pg 13


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6. Encouraging development and economic forum

As has been earlier posited, WTO system contributes to development thus it is recognized that not all

countries are equal and less developed countries may require special treatment. (53)

It is noteworthy, that over three quarters of WTO members are developing countries and countries in transition

to market economies and thus the need to accord them longer periods to adjust to the lowering of tariffs as

well as other trade agreements.

OBJECTIVES OF THE WTO

The objectives of the WTO are embodied in the Marrakech Agreement, (54)

and they include:

i) To raise the standards of living of its members

ii) Generate employment amongst its members

iii) To increase trade amongst WTO members states

iv) To increase productivity amongst WTO member states

v) To reduce trade barriers amongst WTO member states

vi) To implement the new world trade system as visualized in the Agreement

vii) To ensure that developing countries secure a better balance in the sharing of advantages resulting

from the expansion of international trade corresponding to their developmental needs.

viii) Enhance competitiveness among all trading partners so as to benefit consumers and help in global

integration

ix) To improve the level of living for the global population and speed up economic development of the

member nations.

53 For example longer periods for their industries to adjust to the lowering of tariffs

54 See preamble to the Marrakech agreement


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ESTABLISHING OF WTO

First and foremost it is noteworthy that the biggest influences on world trade over the past 3 centuries have

been the work of the WTO and its predecessor GATT. (55)

These two have opened up trade markets and

removed barriers thus creating the global market place we live in today. (56)

In order to understand how the WTO was established its important to note that the first international trade

agreement was signed by 23 of the original 50 UN member countries and this formed the constitution of

the International Trade Organization (ITO) whose primary objective was to seek to reduce trade barriers

and protectionist tariffs that had been implemented by various countries. (57)

(58)

The ITO charter was signed in Havana on 24th

March, 1948; however conditions necessary for its

inception were not fulfilled within the prescribed time limit as set out in article 103 of the agreement. (59)

This resulted to the agreement being nullified, leaving only the basic GATT. (60)

Further negotiations were progressed over the past years through the mechanism of individual trade rounds

of negotiations between the GATT member countries. In total, 8 GATT rounds have been completed since

the inception of the 1947 Agreement.

In discussing the establishment of the WTO, we shall focus on 2 most important rounds i.e. the Tokyo

round and the Uruguay round though it is to be noted that of the eight rounds61

completed to date, the first

six were focused solely on the reduction of tariffs, usually on a commodity–by-commodity basis.(62)

The

focus on reduction of tariffs solely was deviated from by the Kennedy Round which took a far broader and

liberal approach to reduction of tariffs on a percentage basis aiming to reducing and liberalizing whole

commodity sectors.(63)

The biggest leaps forward in international trade liberalization have come through these rounds of

negotiations which were undertaken under the auspices of GATT.

THE TOKYO ROUND

This was the 7th

Round of negotiations and was a first try to reform the system. The Tokyo Round lasted

from 1973 to 1979, with 102 countries participating. (64)

The Tokyo round backed–up GATT’s efforts to reduce tariffs progressively and the results included on

average one–third cut in customs duties in the World’s nine major industrial markets.(65)

____________________________________________ 55 Murray C Holloway and Daren D, “The Law and Practice of International Trade,” 12th Ed Sweet & Maxwell, 2012 at pg 943 56 Ibid 57 Ibid 58 See the preface to the GATT 59 See supra note 55 at pg 944; ratification in some national legislatures proved impossible 60. Ibid 61 Geneva Round, Annecy France Round, Torquay England Round, Geneva Round, Geneva “ Dillon” Round, Geneva “Kennedy” Round, Tokyo Round, Uruguay Round 62 See supra note 55 pg 945 63 Ibid 64 See supra note 1 pg 17 65 This brought the average tariff on industrial products down to 4.7% phased in over a period of 8 years and involved an element harmonization i.e. the higher the tariff, the larger the cut proportionally


27

The Tokyo round however had a number of shortcomings inter alia; it failed to tackle fundamental

problems affecting farm trade and also stopped short of providing a modified agreement on emergency

import measures. (66)

Under this round of negotiations, a series of agreements on non-tariff barriers

emerged and in some cases interpreting existing GATT rules and in others breaking away from the GATT

rules; thus only a relatively small number of mainly industrialized GATT members subscribed to these

agreements.(67) (68)

Under the Tokyo Round, significant agreements were drawn up on non-tariff barrier

measures, including inter alia; customs – valuation,(69)

import licensing, government procurement and

technical requirements.(70)

THE URUGUAY ROUND

The Uruguay Round took seven and a half years and by its end, 123 countries were taking part in the

negotiations. It covered almost all areas of trade and was quite simply the largest ever trade negotiations

and arguably the largest negotiation in history. (71)

Some scholars of international trade law regard this round as a round to end all rounds. The Uruguay

Round officially commenced in September 1986, in Punta del Este, Uruguay and the ministers accepted a

negotiating agenda that covered virtually every outstanding trade policy issue and extended to the trading

system into areas such as trade in services and intellectual property. Under this round, all the original

GATT articles were up for review. (72)

Some achievements of the Uruguay round include inter alia, concessions on market access for tropical

products aimed at assisting developing countries, streamlined dispute settlement system and the Trade

Policy Review Mediation which provided for the first comprehensive, systematic and regular reviews of

National Trade Policies and practices of GATT members.(73)

The Uruguay round was perhaps the most publicized of all the negotiating rounds. Formal negotiations

lasted for up to 8 years primarily because of the diverse interests of trading countries and reluctance to go

further in removing protectionist measures. (74) (75)

It is noteworthy that a ninth round, the Dohar Round which commenced in 2001 has currently been

suspended since it was agreed that most of its objectives were to be completed by March, 2003;

nevertheless, negotiations hit a stop at the end of July, 2006 and a recommendation from the WTO

Director- General ensured the round was suspended by the General Council on July 28, 2006. (76)

___________________________________________________________________


67 Ibid

68 Since the agreements were not accepted by the full GATT membership, they were informally called ‘codes’

69 See GATT art. VII (Valuation for customs purposes)



72 Ibid

73 Ibid


75 The main stumbling block to these negotiations was lack of agreement on agriculture with the divide between developed and less developed nations being particularly marked in this sector



28

In conclusion, in town of establishing the WTO, an important question comes to mind; “Did GATT

succeed?” To answer the above, GATT was provisional with a limited field of play but over the 47 years

of promoting and securing the liberalization of much of World Trade, GATT’s success is incontestable.

Just to point our one of its success, the continual reductions in tariffs alone helped to steer very high rates

of world trade growth during the 1950s and 1960s. (77) (78)

Another success of GATT was the enabling of trade liberalization that ensured trade growth consistently

out paced production growth and a measure of countries’ increasing ability to trade with other member

countries and to benefit from the trade there from. (79)

GATT however faced various shortcomings for instance; by the early 1980s, the General Agreement was

overtaken by time since World Trade had become far more complex and important than 40 years before,

the globalization of the World economy was underway, trade in services (not covered by GATT rules) was

of deep interest to many countries and international investment had expanded. (80)

This is to say that in

other aspects and respects, GATT was found wanting e.g. in agriculture where the loopholes in the

multilateral system were heavily exploited and thus efforts at liberalizing agricultural trade was met with

meager success. It is noteworthy that even GATT’s institutional structure and dispute settlement system

were lacking and thus these factors convinced GATT members to reinforce and extend the multilateral

system and their efforts resulted in the Uruguay Round, the Marrakesh Declaration, and the creation of the

WTO. (81)

THE STRUCTURE OF WTO

It is important to note that when it comes to the structure of WTO, all member states may participate in all

councils, committees etc except Appellate Body, Dispute Settlement Panels, Textiles Monitoring Body

and Plurilateral committees.(82)

The WTO has a governing Structure as follows;

1) The Ministerial Conference;

The Ministerial conference is the top most or rather the highest decision making organ of the WTO.(83)

In

accordance to the terms of the Marrakesh Agreement, the Ministerial Conference meets at least once every

two years. The first ever Ministerial Conference was held in 1996 at Singapore.

_______________________________________________


78 Around 8% a years on average


80 Ibid

81 Ibid




29

Being the highest decision making organ of WTO, the Ministerial conference has been mandated to make

several important decisions that affect the WTO inter alia; admission to the WTO can only be done by the

ministerial conference, amendment to any WTO agreements requires a decision of the Ministerial Conference,

imposition of sanctions and withdrawal of concessions to a member is by decision of the Ministerial

Conference, introducing any new issue for negotiation at the WTO requires the nod of the Ministerial

Conference, commencement and termination of any round of trade negotiations also requires the green light of

the Ministerial Conference. As the name suggests, the Ministerial Conference is made up of Ministers, for the

time being of Trade of the member countries.84

2) The General Council

This is the second highest ranking organ of the WTO. Its membership entails Ambassadors or representative

of the member states at Geneva.85 86

The General Council’s primary function is to carry out the decision of the Ministerial Conference. The

General Council also meets as the Trade Policy Review Body and can also sit as a court and is known as the

Dispute Settlement Body (DSB).87

It is noteworthy, that all other councils of the WTO report to the General Council as well as Plurilateral

Committees e.g. Information Technology Agreement Committee also report to the General Council.88

3) The Councils;

In addition to the General Council, there are four other councils established under the Marrakesh Agreement

and they are;

(a) Council for Trade in Goods.

This council oversees the implementation of the GATT 1947 and GATT 1994 Agreements.89

There are a

number of committees under this head and they include, Committees on Market Access, Agriculture, Sanitary

and Phytosanitary measures, Technical barriers to trade, Subsidies and Countervailing measures, Anti-

dumping practices, Customs valuations, Rules of origin, Import Licensing, Trade – Related Investment

measures etc.90

(b) Council for Trade in Services

This council’s mandate is to oversee the implementation of the General Agreement for trade in services and

has committees such as the committee on the Trade in Financial Services, and committee on specific

commitments.91

_________________________________________________________________

84 Ibid

85 Ibid

86 The General Council sits in a continuous session in Geneva


88 Ibid



91 Ibid


30

(c) Council for Trade Related Aspects of Intellectual property.

This is also known as the TRIPS council. It was charged with the responsibility of implementing the TRIPS

Agreement.92

It is noteworthy, that the TRIPS was a new area for the GATT. It is a minimalist agreement since it enables

member countries to go further in national legislation on condition that any additional protection does not

contravene other parts of the agreement and is consistent with it. (93)

TRIPS agreement covers all forms of intellectual property (94)

and requires member states to provide

intellectual property to nationals of other member countries. (95)

(d) Council for Dispute Settlement

This council is otherwise known as the Dispute Settlement Body (DSB). As the name pre-empts, it was

established to implement and supervise the dispute settlement procedure of WTO. (96)

As earlier noted, the

General Council is authorized to perform the functions of the DSB. The DSB is however established under the

Dispute Settlement Understanding (DSU), which also establishes the Trade Policy Review Mechanism

(TPRM) whose function is to review the Trade Policy of WTO member states with the aim of determining if

such trade policies conflict with the WTO. (97)

(e) The Secretariat

WTO’s secretariat is made up of international civil servants, who provide secretariat services to the

organization. The Ministerial Conference appoints the Director General who heads the secretariat and is

assisted by two Deputy Director Generals. The fundamental purpose of the secretariat is to implement

decisions of the Ministerial conference and the General council. It is noteworthy, that the secretariat does not

make decisions since it is not the WTO and that decisions are made by WTO members. (98) (99)

It is of fundamental importance to note that the council for Trade in Goods (Goods Council), the council for

Trade in Services (Services Council) and the TRIPS council all report to the General Council. These 3

councils are responsible for the workings of WTO agreements and as their names suggest, each deals with

their respective trade areas (100)

____________________________________________________________

92 TRIPS agreement is Annex 1C of the Marrakech Agreement


94 Article 1(2) of TRPS Agreement


96 Ibid at pg 98


98 Ibid

99 The secretariat is purely a civil service system



31

As already pointed out, each council has subsidiary bodies for instance the Goods Council has 11 committees

each dealing with specific subjects of trade, the services council’s subsidiary bodies deal with financial

services, domestic regulations, GATS rules specific commitments and at the General Council level, the

Dispute Settlement Body Has two subsidiaries i.e. the Dispute Settlement “panels” of experts who are

appointed to adjudicate on unresolved trade disputes and the Appellate Body that deals with appeals for

emanating from the dispute settlement system.(101)

The conclusion, it is noteworthy, that formally, all of these councils and committees consist of full

membership of the WTO. However, this does not mean that they are similar, or that their distinctions are

purely bureaucratic. Practically, the participating people in the various councils and committees are different

simply because of the different levels of seniority and expertise, some committees can be highly specialized

and thus governments may be required to send expert officials to participate in these meetings. Even at the

level of goods, services and TRIPS council, many delegations assign different officials to different meetings.

(102)

____________________________________

101 Ibid

102 Ibid


32

THE SECRETARIAT OF THE WTO & BUDGETARY MATTERS OF WTO

Unlike the World Bank and IMF, (103)

the WTO does not have an executive body or a board comprising a

subset of members. Such executive boards facilitate decision–making by concentrating discussions within a

smaller but representative group of members.

The WTO secretariat is based in Geneva and has 639 staff on the regular budget and is headed by Director –

General Pascal Lamy, whose office term ends on 31st August, 2013. It is noteworthy that the secretariat has no

decision–making powers as all WTO decisions are taken by members. (104)

The secretariat however has a number of functions (105)

i.e.

i) to supply technical and professional support for various councils and committees

ii) to provide technical assistance for developing countries

iii) to monitor and analyze developments in world trade

iv) to provide information to the public and the media and to organize the ministerial conferences

v) to provide some forms of legal assistance in the dispute settlement process

vi) to advise governments wishing to become members of WTO

It is noteworthy, that the secretariat staff on the regular budget includes people from 77 WTO members whilst

the professional staff is made up of mostly lawyers, economists and others with a specialization of

International Trade Policy. (106)

The WTO secretariat is organized into divisions which are normally headed by a director who reports to the

Deputy–Director–General or directly to the Director–General. (107)

The Appellant Body (108)

has its own

secretariat which was established by the understanding on Rules and Procedures Governing the Settlement of

Disputes. It was established to consider appeals against decisions by dispute settlement panels. (109)

The WTO secretariat is organized into divisions and they are inter alia; 110

a) Accessions divisions – this facilitates negotiations between WTO members and states through

encouraging their integration into multilateral trading system through effective liberalization of their

trade regimes.

b) Administration and General Services Division - responsible for providing administrative and general

services geared to meet the needs of the secretariat and WTO members.

c) Agriculture and commodities division – handles all matters related to the ongoing negotiations an

agriculture.

d) Council and Trade Negotiations Committee Division – provides support to the Ministerial Conference,

the General Council, the Trade Negotiations Committee and the Dispute Settlement Body.

__________________________________________________

103 International Monetary Fund 104 World Trade Organization, Annual Report, 2013 105 Ibid 106Ibid 107 http//www.wto.org/english/thewto_e/secre_e/div_e.html last visited 23/07/2013 108 Appellate body members are individuals with recognized standing in the fields of Law and International Trade. They are appointed to a four year term and may be reappointed once 109 www.wto.org/secretariat; see supra note 104 110 See supra note 107


33

e) Development Division – this is the focal point for all policy issues related to trade and development.

This division monitors and provides input to senior management and WTO secretariat as a whole on

issues pertaining trade and development.

f) Economic Research and statistics Division- provides economic analysis and research in support of

WTO’s operational activities, including monitoring and reporting on current economic news and

developments.

g) Human Resources Division – responsible for the human resource management of over 700 WTO staff

members ( regular and temporary)

h) Intellectual Property Division – responsible for the WTO’s work in trade-related intellectual property

rights (TRIPS), and government procurement and competition policy.

i) Legal affairs Division – its fundamental mission is to provide legal advice and information to WTO

dispute settlement panels, other WTO bodies, WTO members and WTO secretariat.

j) Appellate Body Secretariat – provides legal and administrative support to the Appellate Body. The

secretariat is located within the Headquarters of WTO. Secretariat staff are not only bound by the

Rules of conduct of the Dispute Settlement Understanding, they also participate in technical

cooperation activities carried out by WTO secretariat, especially those related to dispute settlement.

BUDGETARY MATTERS OF WTO

The committee on Budget, Finance and Administration monitors the WTO’s budgetary and financial situation

including matters relating to the receipt of contributions and undertakes any function assigned to it by the

WTO members. It considers issues concerning human resources management, hears progress reports on the

WTO pension plan and deals with financial and administrative matters concerning the WTO secretariat. Lastly

the committee reports to the General Council.

The committee made recommendations to the General Council that a revised set of administrative measures be

implemented and observers with arrears in contributions as from 1st January, 2013.

111

The WTO mainly derives its income from annual contributions from its members as well as miscellaneous

income.(112)

The contributions are however based on a plat form that takes into consideration each member’s

share of international trade. The miscellaneous income primarily comprises contributions from observer

countries and income from sale of publications. (113)

The WTO budget is our 160 Million Swiss Francs with individual contributions calculated on the basis of

shares in the total trade that has been conducted by WTO members. Further, it is to be noted that part of the

WTO budget also goes to the International Trade Centre. (114)

______________________________________________________

111 World Trade Organization, Annual Report, 2013

112 Ibid

113 Ibid



34

FUNCTIONS OF THE WTO

It is worth noting that on one hand GATT was not really an organization rather a legal arrangement, whilst on

the other hand the WTO is a new international organization set up as a permanent body, designed to play the

role of a watchdog in terms of trade related practices. (115)

Article III has set out five functions of the WTO,

but before we discuss these functions it is to be noted that WTO’s main functions are to do with trade

negotiations and the enforcement of negotiated multilateral trade rules. Special focus is accorded to four

particular policies supporting these functions; (116)

(i) Assisting developing and transition economies

WTO membership is comprised of three–quarters, developing countries. Developing countries in collaboration

with countries that are currently undergoing transition in their economies play an increasingly important role

in WTO.(117)

This has led to much attention being awarded to the special needs and problems of developing

and transition economies. In assisting developing and transition economies, a number of programmes have

been organized by WTO jointly with other international organizations, for instance, the least develop countries

are helped with trade and tariff data relating to their own export interests and to their participation in WTO

bodies.

(ii) Specialized help for export promotion;

Developing countries requested for help to promote their exports and thus the International Trade Centre with

established by GATT in 1964. The centre responds to requests from developing countries for assistance in

formulating and full implementation of export promotion programmes as well as import operations and import

techniques.(118)

The centre further advises on export markets and marketing techniques, establish export

promotion and marketing services and trains personnel required for these services. It is noteworthy that the

Centre’s help is freely availed to the least- developed countries. (119)

(iii) Cooperation in global economic policy-making

Cooperation with the IMF and the World Bank and other multilateral institutions to achieve greater coherence

in global economic policy–making is an important aspect of the WTO’s mandate (120)

The separate ministerial

declaration calls on the WTO to develop its cooperation with international organizations responsible for

monetary and financial matters i.e. the Bretton Wood institutions.

_____________________________________________________________________________ 115 http://www.preservearticles.com/201012291900/functions-and-objectives-of-wto.html last visited 23-Jul-13


117 Ibid

118 Ibid

119 Ibid

120 Ibid,,,,; see A separate Ministerial Declaration adopted at the Marrakesh Ministerial meeting in 1994 to underscore this objective


35

(iv) Routine notification when members introduce new trade measures or alter old ones.

Many WTO agreements imposes an obligation to member states to notify WTO secretariat of new or

modified trade measures e.g. new technical standards affecting trade, changes to regulations affecting

trade in services etc. Special groups are also established to examine new free trade arrangements and

policies of countries joining as new members. (121)

The WTO must also keep the public informed of the new changes in trade. WTO’s main public access

point is the website www.wto.org.

Briefly Article III has set out the functions of WTO as;

i) Facilitate the implementation, administration and operation and further the objectives of this

agreement and of the multilateral Trade agreements. This function is extended to the provision of

the framework for the implementation, administration and operation of the Plurilateral Trade

Agreements.

ii) Provide the forum for negotiations among its members concerning their multilateral trade

relations.

iii) Administer the understanding on rules and procedures governing the settlement of Disputes.

iv) Administer Trade Policy Review mechanism.

v) Cooperate as appropriate with the Breton Woods institutions (122)

and with the International Bank

for Reconstruction and Development (IBRD) with a view to advising greater coherence in global

economic policy.

LEGAL MATTERS AND LEGAL STATUS OF WTO

Dr. Omo-Eboh holds that WTO Agreement falls within that group of International public law called “treaties.”

The WTO agreement can be described as an International Treaty from two perspectives, first, from the

perspective of definition given to international agreements (123)

and second the text of the Agreement expressly

incorporates the canon of international treaty interpretation. (124) (125)

It is noteworthy, that the Dispute Settlement Body and the Appellant Body regularly look at the Vienna

Convention for accurate interpretation and application of WTO obligations between member states. (126)

A question that needs to be answered under the head of legal status and legal matters of WTO is whether the

WTO Agreement as a treaty is self executory or has direct applicability in jurisdictions of member states. A

self–executing obligation in a treaty is one which out rightly expressly implies that the treaty will become

operative immediately and directly upon signing or accession. If some domestic law- making will be required

to make the treaty operative then the obligation in the treaty

____________________________________________________________________


122 IMF & World Bank

123 see Article 2(1) of the Vienna convention on the Law of Treaties 1969.

124 For instance Article III (2) of the Understanding on Rules and Procedures governing the settlement of Disputes

125 Commentary on the paper entitled, “The legal status of WTO and the new maritime legal Regime” delivered at The Maritime Seminar for judges, organized by Nigerian shippers’ council/National Judiciary commission, Abuja, June 08 pg 7

126 Ibid… at pg 8


36

is ‘non-self- executing.’ The text of the WTO Agreement expressly requires competent authorities (generally

the parliament or the cabinet) to approve the Agreement in accordance with the procedure of the respective

member countries. (127)

In terms of Dispute Resolution System, the argument that the signatories to WTO Agreement had no

intentions that have direct applicability is buttressed by some of the measures and procedures embedded in the

Agreement. (128) (129)

In WTO, binding decisions are practically taken unanimously in that such decisions are

arrived at with the assent of all parties after necessary negotiators. WTO Dispute Settlement procedure is

considered to be adverse to the direct applicability of WTO rules by the courts since the WTO procedures are

geared to obtaining consensus rater than judgment.(130)

It is to be noted that a signatory to the WTO Agreement assumed binding obligations imposed by the

Agreement notwithstanding the fact that it does not have the force of law in any member state. Dr. Omo-Eboh

puts it that “…states have a duty to bring their domestic law into conformity with their international

obligations.” From the moment of signature, member countries are under a duty to ensure the conformity of its

laws, regulations and administrative procedures with its obligations as provided in the Agreement. (131) (132)

Of significance to note is that some constitutions of WTO member states empowers the executive arm of

government to negotiate and execute international agreements (executive agreements). Suffice to say that the

WTO Agreement is a voluntary contract of governments and not private individuals. (133) (134)

The enforcement of compliance with WTO rules is thus substantially placed under the responsibility of the

political institutions.

The legal framework of WTO is based on a number of principles;

1. Protection of domestic trade through tariffs

Member states are urged to liberalize trade but at the same time prohibited from imposing quantitative

restrictions and instead clarify all protective measures. (135)

2. Tariff binding

Member states should reduce tariffs to a minimum measure that protects the domestic industry. These can be

done through trade negotiations if necessary. __________________________________________________________________________

127 Ibid pg 9

128 Ibid… pg 10

129 The Dispute settlement provisions is a good example


131 Article XVI (4) Marrakesh Agreement establishing the World Trade Agreement, 1994

132 see supra note 128 pg 14

133 Ibid…pg 16

134 See Article I (1) of the Dispute Settlement Understanding

135 See Article XII of GATT 1994


37

3. Most Favoured Nation

Trade between member states should not be discriminative thus if a member grants a tariff concession to

another member, the same should be extended to all other members. (136)

4. Free Trade Area

Under this head, member states agreed to lower barriers as a means of encouraging trade. The barriers include

custom duties and measures such as import bans.

5. National Treatment

This postulates that once goods are imported into a country, they should not suffer any other duties,

procedures, charges or treatment that is less favourable than that of similar products produced locally.

In conclusion, the legal matters of the WTO are handled by the General Council/Dispute Settlement Board;

the procedure for handling trade disputes in the DSB shall be discussed later on herein. The WTO Agreement

is thus binding to all signatories and each member state is bound by the obligations contained in the WTO

Agreement. Under the WTO system, prominence is given to the role of diplomacy in interpreting the WTO in

cases of dispute between trading partners. This is so because any ruling or decision requires extensive

consultation and consensus to accommodate the divergent interests of members’ diplomacy rather than the

legal logical system is the power house behind the formal development of the WTO system and not an

independent intellectual judiciary. (138)

____________________________________________________

136 See Article I of GATT 1994




38

PROCEDURE OF DISPUTE SETTLEMENT AT WTO (DISPUTE SETTLEMENT BODY – DSB)

It is suffice to note that WTO’s procedure for resolving trade quarrels under the Dispute Settlement

Understanding (DSU) is vital for enforcing the rules and therefore for ensuring that trade flows smoothly. A

dispute arises when a member government believes another member government is in violation of an

agreement or commitment that it has made in the WTO. (139) (140)

Ultimate responsibility thus vests with the

member governments through the DSB. Like the bulk of WTO Agreements, the DSU was one of the outcomes

of the Uruguay Round negotiations.

It is noteworthy, that Dispute Settlement is the corner stone of the multilateral trading system and WTO’s

unique contribution to the stability of the global economy. (141)

WTO’s procedure takes into account the rule of law and thus makes the trading system more secure. The main

purpose of the DSU is to strengthen the existing system significantly and extending the greater automaticity

agreed in the mid-term review to the adoption of the panels’ and a new appellate Body’s findings. DSU further

permits WTO members to base their claims on any of the multilateral trade agreement contained in the

Annexes to the Agreement establishing the WTO and thus a DSB will exercise the General Councils authority

and the councils and committees of various councils.

The system thus bases its operations on clearly defined rules, with timetable for completing cases.(142)

Rulings

are first of all made by a panel and endorsed or rejected by WTO’s full memberships. Further, appeals based

on points of law are practically possible.(143)

WTO disputes are mostly about broken promises and WTO members resolved to use the multilateral system

of setting disputes rather than taking action unilaterally. (144)

A dispute between member states rises when one country adopts or undertakes a trade policy measure or takes

some action that one or more WTO fellow countries consider to be breaking the Agreements or even failure to

live up its obligations.

A procedure for dispute settlement existed under the GATT but had numerous shortcomings for instance, it

had no fixed timetable, rulings were easier to block and many cases dragged for a long time without

conclusion and thus the Uruguay Round introduced a more structured process with clearly defined stages. (145)

The WTO Agreement on Dispute Settlement lays vehement emphasis that prompt settlement of disputes is

paramount if the WTO is to effectively function. The Uruguay Round thus corrected the shortcomings of

GATT as far as dispute settlement is concerned.

_____________________________________________________________ 139 http://www.wto.org/english/traptop-e/dispute.htm/ last visited 16/7/13 140 Agreements are the outcome of negotiations among members 141 see supra note 1 pg 59 142 Ibid 143 Ibid 144 That means abiding by the agreed procedures and respecting judgments 145 See supra note 1 pg 59


39

Setting disputes is the responsibility of the DSB which is the General council in another guise, and consists of

all WTO members. The DSB has the authority to establish panels of experts to consider the case, and to accept

or reject the panels’ findings or results of an appeal. (146)

The DSB further monitors the implementation of

ruling and recommendations and has the jurisdiction to authorize retaliation when a country does not comply

with a ruling.

The first stage of Dispute Settlement in the WTO is;

a) Consultation stage;

This stage lasts up to 60 days. It is to be noted that before taking any action, the disputing nations have to

engage each other in talks to see if they can settle the dispute by themselves, failure to which they can request

the WTO director-general to mediate. (147)

DSU emphasizes the importance of consultations in securing

dispute resolution. If after 60 days from the request for consultations there is no settlement, the complaining

party may move directly to request a panel. This can be at the meeting of the DSB at the latest, following that

at which the request was made, unless the DSB decides by consensus against the panel’s establishment. The

Director General can decide after the lapse of 20 days the composition of the panel only if the parties do not

agree on the composition of the panel within the same 20 days and the standard terms of reference will also

apply where parties have also failed to agree on such terms. Panels usually consist of 3 persons, of appropriate

background and experience from countries not party to the dispute.

b) The panel stage

It takes up to 45 days for a panel to be appointed, plus 6 months for the panel to conclude operations.(149)

The

procedures for this stage are envisaged in the DSU and a panel will normally complete its task within 6 moths,

or in urgent situations, 3 months. Panel reports may be considered by the DSB for adoption 20 days after they

are issued to members. Within 60 days of issuance, the panel reports will be adopted unless by consensus the

DSB decides otherwise or one of the parties notifies DSB of its intention to appeal.

The panel officially helps the DSB to make rulings and/or recommendations. It is noteworthy, that because the

panel’s report can only be rejected by consensus in the DSB, its conclusions are thus difficult to overturn and

the panel’s findings have to be based on the agreements cited. (150)

The panel’s final report is given to the disputing parties within 6 months or 3 months in particularly urgent

cases.

The main stages that the panel works in are; (151)

i) Before the first hearing, each disputing party presents its case in writing to the panel.

_____________________________________________________________ 146 Ibid 147 Ibid 149 Supra note 1 pg 60 150 Ibid 151 Ibid


40

ii) First hearing – the complaining country or countries, the responding country and those that

have announced interest in the dispute make their case.

iii) Rebuttals – involved countries submit written rebuttals and present oral arguments. This is

the panel’s second meeting.

iv) Experts – if one side raises technical or scientific matters, the panel may consult or appoint

experts to prepare an advisory report.

v) First draft – the panel submits the descriptive sections of its reports to the parties and gives

them a fortnight to comment. The report however, doesn’t include findings and

conclusions.

vi) Interim report – panel submits an interim report including findings and conclusions to the

parties and accords them a week to ask for a review.

vii) Review- review period must not exceed 2 weeks during which time the panel may hold

additional meetings with the parties.

viii) Final report – A final report is submitted to the parties and 21 days later, it is circulated to

all WTO members.

ix) The report becomes a ruling – the report becomes the DSB’s ruling or recommendation

within 60 days unless a consensus rejects it. Both sides, it is noteworthy, can appeal the

reports.

It is to be noted that at all stages, countries in dispute are encouraged to consult each other in order to settle

“out of court” and at all these stages, the WTO director – general is available to offer his services to mediate

or help in conciliation.(152)

c) Appeals Stage

It is to be noted that either side can appeal a ruling and at times both parties do. Appeals have to be based on

points of law for instance legal interpretation. New evidence or new issues cannot be re-examined at this

stage. Each appeal is heard by 3 members of a permanent seven-member Appellate Body set up by DSB and

broadly represents the array of WTO membership. (153)

Appellate Body members have four year terms and have to be individuals with recognized standing in the field

of law and international trade and should not be affiliated with any government.

The appeal can operate in the following ways i.e. uphold a ruling, modify or reverse the panel’s legal finding

and conclusions. Appeals as per the timetable should not last more than 60 days, with an absolute maximum of

90 days. DSB has to accept or reject the appeals report within 30 days through consensus. (154)

______________________________________________

152 Ibid… pg 63

153 Ibid…pg 61

154 Ibid…


41

Once the panel report or Appellate Body report is adopted, the concerned party will have to notify its

intentions with respect to implementation of adopted recommendations. The DSB will however keep the

implementation under regular surveillance until it is resolved.

d) Compensation and Relationship Stage

After the case has been decided what next? If a country has done something contrary to the WTO Agreement

it should swiftly correct its faults, failure to which it should offer compensation or suffer a suitable penalty. (155)

After a case has been decided, there is much to be done before trade sanctions are imposed. The main priority

at this stage is for the losing party to bring its policy into line with the ruling or recommendation. Prompt

compliance with the recommendations or rulings of the DSB is fundamental in order to achieve resolution of

disputes to the parties’ benefits. (156)

The losing country thus has to abide by the recommendation of the panel report or appeals report and must

state its intention to do so at a DSB meeting held within 30 days of the report’s adoption.(157)

The member is

however given reasonable time to comply and if it fails to act within this period, it has to enter negotiations

with the complaining party/parties in order to determine mutually acceptable compensation.

If after 20 days no satisfactory compensation is agreed, the complaining side may ask the DSB for permission

to impose limited trade sanctions for instance suspend concessions or obligations against the other side. (158)

The DSB must grant this authorization within 30 days of the expiry of the ‘reasonable period of time’ unless

there is consensus against such request.

In principle, concessions should be suspended in the same sector as that in issue in the panel case and only if

this is not practicable or effective, the suspension can be made in a different sector of the same agreement and

if this still is not effective or practicable, the suspension of concessions may be made under another

agreement.(159)

The Dispute Settlement Understanding, however, in conclusion faces a few shortcomings. In the consultation

phase for instance, it is not easy to come to an agreement i.e. between the parties since the municipal laws of

the various member states varies.

In many other ways, the WTO remains as distant from the public as the GATT was. In the panel stage for

instance, the Dispute settlement panels contribute to hold sessions and some scholars have argued that this

amounts to breach of GATT rules. The closed sessions moreover raise the question as to whether the WTO

system of settling disputes is truly transparent.

_____________________________________________ 155 Ibid…pg 62

156 Ibid

157 Ibid

158 Ibid

159 Ibid


42

Another shortcoming encountered in the operation of DSU is that WTO will not release basic biographical

information about panelists that would be useful in assessing qualifications or potential conflicts of interest

and thus this leads to a risk of bias on the part of the panelists thus raising issues of concern as to the

composition, and selection of the panel.

Lastly, the WTO will not release panel reports to the public until after a report is adopted. This is evidenced

from the January 29th

, 1996 WTO panel ruling on the “ United States Standards for Reformulated and

Conventional Gasoline” case where a number of WTO members again blocked U.S. demands for the early

release of dispute settlement panel reports.

The panel selection though posited that covers the entire array of WTO membership, does not clearly stipulate

how/the procedure for selection and the composition and thus raises eye brows concerning the Dispute

Settlement system of the WTO.

ROLES OF NGO AT WTO

Although NGO’s have been interested in GATT once its inception in 1947, the period since the creation of

WTO has clearly depicted that the multilateral trading system is being scrutinized by public opinion like never

before. When ministers adopted the Marrakesh agreement they also decided to include a specific reference to

NON- Governmental Organizations. (160)

On July 1996, the General Council further clarified the framework for relations with NGO’s and posited that it

recognizes the role NGO’s can play to increase the awareness of the public in respect of WTO activities. (161)

Since then arrangements for NGOs have been essentially focused on attendance at ministerial conferences,

participation in issue-specific symposia, (162)

and day-to-day contact between the WTO secretariat and NGOs.

It is however suffice to note that although NGO’s should be given opportunity to participate in WTO’s work,

the opportunities need to be unbounded and they can be structured carefully to maximize the benefits of NGO

participation. (163)

Eliminating the most resilient and restrictive trade barriers will require popularity and thus NGOs come in

handy. NGOs argued to be allowed to participate in WTO by saying that in transparency was an appropriate

norm at the national level, then it was also appropriate at the International arena. This led to drastic changes

since the secretariat staff holds informal consultations with NGOs. The new WTO dispute settlement rules

permits governments to publicly disclose a statement of the positions it is taking in a pending dispute.(164)

It is to be noted however, that most other international organizations have done far more than the WTO to

involve NGOs in their work e.g. the Organization for Economic Cooperation and Development (OECD) has

active advisory groups drawn from business and trade unions. (165)

______________________________________________________________________ 160 See article v:2 of the Marrakesh Agreement 161 See the set of guidelines WT/L/162adopted by the General Council on 18th July, 1996 162 Since 1996, a number of symposia have been arranged by the Secretariat for NGOs on specific issues i.e. 3 on trade and the environment 163 James Cameron & Ross Ramsay, ‘Participation by NGOs in the WTO,’ 1995 pg 29-37 164 See Article 18(2) of the Understanding on Rules and Procedures governing the settlement of Disputes, Final Act 165 OECD’s foundational document provides the authority for these active advisory groups


43

There are two major issues relating to NGO participation in WTO. First, is NGO participation in the policy

work of WTO? and second, is NGO participation in the WTO dispute resolution process as Plaintiffs, amici

curiae, witnesses, or observers? (166)

The WTO could involve NGOs in policy committees but not in dispute resolution on the grounds that public

disclosure would either harden positions, chill negotiations, or even hinder settlements. To the contrary, WTO

could open up dispute resolution but not the policy committees on the grounds that fact collection and

adjudication should be insulated from interest group pressure.

Let us now discuss the roles of NGOs in WTO.

1. Facilitate Negotiations

NGOs can facilitate negotiations in several ways by providing expert information, serving as a sounding board

for possible compromises, injecting new ideas into a substantive debate, securing public support necessary for

parliamentary approval, and serving as monitors to enforce governmental commitments. (167)

The major concern about NGO involvement is that it would slow down WTO policy making which would be

an undesirable effect. Some scholars however argue that NGO participation in the GATT Uruguay Round,

which took over seven years to negotiate, might have expedited the negotiating process. (168)

2. Public Awareness

Given the heightened public attention to trade, it is unlikely that the WTO will be able to maintain the

anonymity of the GATT. WTO should actively engage NGOs in educating the public about the dangers of

protectionist trade policies. The notion that the international trade regime should be a buffer between the

makers of trade policy and the public is an elitist view that should not find refuge in liberal governance and

this can effectively be achieved through NGO participation in WTO.

3. Decision Making

Ultimately, individuals and NGOs will need to become more deeply involved in the legislative process by

which the World Trade Community creates rules and standards and not just the adjudicative process by which

these rules are applied. Further, the trading regime must be more inclusive in order to integrate both trade and

non-trade values. It is noteworthy, that if the WTO is going to expand its work into new areas such as

investment, competition policy, environment, labor standards and corrupt practices, it will need a broader base

of participation than just national trade ministers and thus NGO participation in WTO can aid in this

achievement. (169)

___________________________________________________

166 These general issues are separable

167 Lawrence & Susskind, “Environmental Diplomacy: Negotiating more effective Global Agreements,” 1994, pg 130-131

168 See generally The GATT Uruguay Round: A Negotiating History 1-6 (Terence P. Steward ed., 1993)

169 Renato Ruggiero, “The Global challenge: Opportunities and choices in the Multilateral Trading system (WTO Press Release, October 16, 1995).


44

4. NGO participation in WTO Dispute Resolution

As far as Dispute Resolution is concerned, no government or major NGO argues that NGOs ought to have a

“standing” as a Plaintiff to invoke WTO dispute resolution. The contemporary debate however is whether an

NGO ought to be able to submit an amicus brief or testify before a dispute panel in a public hearing. (170)

The most serious concern is that letting NGOs participate in WTO dispute resolution might cause the WTO to

move away from or be unable to pursue its goal of dispute resolution. However, on the other positive side of it

WTO involving NGOs in dispute resolution may help the WTO in collecting ground facts as regards the

dispute and the adjudication process will be insulated from interest group pressure.

In conclusion, it is sometimes suggested that NGO in WTO would contradict the principles upon which the

global organization was established. Some scholars of international trade law argue that it is unlikely that

member countries would be willing to entrust negotiations involving sovereignty to any entity (NGOs) other

than themselves.

It should be noted however that the WTO Agreement provides that, “the General Council may make

appropriate arrangements for consultation and cooperation with non-governmental organizations concerned

with matters related to those of the WTO. (171)

_____________________________________________________________________________ 170 Robert F. Housman, “Democratizing International Trade Decision – making” 1994 pg 744 – 46

171 According to the Marrakech Agreement Establishing the WTO, the General Council of WTO “may make appropriate arrangements for consultation and

cooperation with NGOs….” GATT Secretariat, Final Act embodying the Results of the Uruguay Round of Trade Negotiations, Article V(2) April, 15, 1994 Reprinted

in 33 I.L.M. 1125, 1146 ( 1994)

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