What is WTO?
The World Trade Organization (WTO) is the international organization in charge of regulating trading among countries. The fundaments underlying it are the WTO agreements, negotiated and signed by most countries involved in international trading.
The WTO arises on January 1st, 1995, after the end of the Uruguay Round negotiations. Nowadays it comprises 160 members, representing nearly 98% of the world trade flux.
This Organization is the successor of the General Agreement on Tariffs and Trade (GATT) which regulated international trade from its subscription in 1947 and its validity in 1948, Chile being one of the 23 founding members.
While the GATT was an agreement applicable for merchandise trading, WTO is a global Organization founded on the GATT but expanded to another 13 agreements comprising different spheres of trade in goods. Plus, it incorporates the General Agreements on Trade in Services (GATS) and the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS). Also, WTO has an enhanced dispute settlement mechanism and a Trade Policy Review Mechanism (“TPRM”).
From September 1st, 2013, WTO Director General is Brazilian experienced diplomat Roberto Azevêdo whose career holds over 24 years of experience in international relations. Before being elected as Director General he worked as the Brazilian Ambassador in Geneva for international organizations of the United Nations and as permanent Representative of Brazil for WTO. His predecessor was French Pascal Lamy, who performed as Director General for eight years.
Objectives and Functions
WTO Framework:The WTO framework is varied and includes all issues concerning international trade all around the world. Some of them are:
- Trade and Environment
- Trade Asistanship
- Access to markets
- Sanitary and phytosanitary measures
- Technical obstacles of trading
- Subsidies and countervailing measures
- Antidumping measures
- Custom valuation
- Technical obstacles for trade
- Investment measures
- Intellectual property
- Trade in Services
- Electronic trade
- Rules of origin
- Public recruitment
- Solution for trade differences
- Trade Facilitation
WTO main achievements
To help the producers of goods and services, exporters and importers to execute their work successfully under regulations that control trading among countries and thus enhancing the predictability, liberty and ease of trading.
Another beneficial outcome arisen from the work of WTO is that the global economic context is more prosper and reliable. Decisions at WTO usually are made under agreement of all members. Commercial friction are channeled through the dispute settlement mechanism, focused on interpreting agreements and compromises aimed at guaranteeing business policies from all countries to obey such regulations. Also, through the reduction of obstacles to trading, the WTO system also helps eliminating another kind of barriers among members.
For further information regarding WTO, please visit www.wto.org
WTO operation method
WTO is composed by 160 countries representing over 98% of the global trading. The adhesion of the Republic of Yemen to the WTO was approved in the IX Ministerial Conference sustained in Bali-Indonesia between December 3rd and 7th, 2013.Thus, Yemen became the member number 160 and number 35 of the Least Developed Countries (LDCs).There are currently 23 countries negotiating their adhesion to WTO.
Decisions are made by the group of member countries usually by consensus. However, it is also possible to have a majority vote. Agreements come into at WTO must be confirmed by the parliament of all members.
Chile and the WTO
Why is it so important for Chile to be a member of the WTO?
Chile is a member of the WTO from its foundation on January 1st, 1995. Previously, it was a founding member of the General Agreement on Tariffs and Trade of 1947 (GATT 1947).
- For Chile, whose development strategy is based on international trade through a unilateral, bilateral and multilateral path, the trade system ruled by the WTO is highly relevant due to different reasons:
- It establishes a system with regulations and discipline mandatory for all members, thus providing stability and predictability to trading and limiting the secrecy on the exercise of commercial policies.
- Also, when applying consensus for most WTO decisions, all members have negotiation power and a space for their vote, which for a small country such as ours would not be as important outside the organization.
- A third reason is the dispute settlement mechanism of the WTO, which acts as a commercial court accessible for any member so as to claim any situation against WTO agreements that may be affecting their trade.
- This mechanism guarantees an expedite discussion and allows to persuade countries to respect the WTO agreements.
Chilean compromises regarding Goods and Merchandise
Fee reduction and consolidation from a level of 35% ad valorem (agreed in the Tokyo Round of GATT) at 25% in the Uruguay Round which produces WTO (and at 31.5% for a reduced number of farming products, such as those covered by the system of price bands, wheat, wheat flour and 98% for sugar). The Chilean tariff is 6% ad valorem (except for those countries we have subscribed a free trade agreement with) and its consolidation in WTO means that Chile cannot surpass such level without authorization of the other members of the WTO.
Respecting discipline and compromises in Goods, Services and Intellectual Property
Finally, Chile as well as all members of the WTO, are periodically submitted to a commercial policy review.For this exercise, the WTO secretary elaborates a report on the commercial policy of the country under revision. The last exam of the Chilean commercial policy was performed in 2009 and the report is available here.
Chilean participation in Disputes
A dispute is presented when a member government deems another member government to be violating an agreement or compromise agreed under the WTO.
Within this context, the procedure established by the WTO in order to solve commercial disagreements under the Dispute settlement mechanism is key to guarantee the compliance of the regulations and ensure commercial fluency.
Chile has been present in different ways of participation: as claimant in ten cases, sued in 13 cases and as third party in 34 cases.
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