WORLD TRADE ORGANISATION

INTRODUCTION
World Trade Organization (WTO), is an international body created to regulate and liberalise
international trade. The General Agreement on Tariffs and Trade (GATT), which was established
in 1947 with the idea that it would soon be replaced by a specialised agency of the United
Nations (UN) to be known as the International Trade Organization, has been superseded by the
World Trade Organization (WTO). Despite the ITO's nonexistence, the GATT was exceptionally
effective in liberalising global trade over the ensuing 50 years. There were demands for a more
powerful multilateral agency to oversee trade and settle trade disputes by the late 1980s. On
January 1, 1995, the WTO officially launched after the Uruguay Round (1986–1994) of global
trade discussions came to an end.

By deciding and governing trade within their borders, states enjoy economic sovereignty. The
kind of commodities that enter and leave a state's territory are decided by the state. To stop any
commodities from entering or leaving its jurisdiction, a state may elect to lock its borders. This
had been the economic posture of China and many other communist countries, who saw the
importation of foreign commodities into their countries as an invasion by aliens, an infiltration,
and a tampering with their distinctiveness. The barrier to trade between countries was the
outcome. This has the drawback of preventing states from utilising their comparative advantage.
In the market of states, several commodities were scarce and unavailable.

The elimination of trade barriers between nations was necessary to address these issues. States
have initially signed bilateral trade agreements with one another. As a result of the development
of international trade, the situation was somewhat improved. But, the creation of a worldwide
organisation through multilateral and plurilateral treaties was necessary for the expansion of
international trade on a large scale. After the Second World War, attempts in this direction failed
due to state disagreement over the terms for the creation of the International Trade Organization
(ITO). Despite this, a collection of nations managed to agree on the General Agreement on Trade
and Tariffs (GATT) in 1947. Until the World Trade Organization (WTO) was established in
19941 during the Uruguay Rounds to take the role of GATT, it served as a placeholder and a
model for regulating international trade among signatory nations. According to the 2004

1
The organisation went into effect on January 1st, 1995.
Sutherland Report, which was commissioned by the WTO, states who adhere to the WTO's rules
and regulations are regaining some of the "sovereignty" that has been lost as a result of
globalisation. Governments are regaining some control over their economic futures at the
multilateral level even while they are losing the ability to truly regulate at the domestic level2.

FORMATION OF WTO

The World Bank and the International Monetary Fund (IMF) were established as global financial
institutions following World War II. The commerce component of international economic
cooperation between nations was to be governed by a third entity. The International Trade
Organization (ITO), a specialised body of the United Nations, was created after discussions
involving more than fifty nations. The draught ITO Charter's purview included rules on
employment, commodities agreements, restrictive trade practises, foreign investment, and
services. The goal was to establish the ITO during the 1947 3 UN Conference on Trade and
Employment in Havana, Cuba. But it never materialised.

In Geneva, trade talks had begun in 1947 with the participation of 23 nations. The General
Agreements on Trade and Tariffs (GATT) was supposed to go into effect on January 1st, 1948.
The deal intends to do away with import quotas and lower tariffs on merchandise. GATT was
never meant to be a long-term arrangement. Yet, it held power as the principal multilateral pact
regulating international trade for more than 45 years prior to the creation of WTO. Also, it wasn't
a global trade organisation. Nevertheless, it attracted about 130 signatories to the scheme.
Through numerous rounds of negotiation, supplemental codes and agreements, interpretations,
waivers, reports from dispute-settlement panels, and council judgements, GATT was able to
continue.4

It was a long journey for GATT signatories to establish the WTO. This occurred during the
1986–1994 Uruguay Round of discussions. On April 15, 1994, the Round came to an end when
111 of the 125 participating governments signed the final agreement. On January 1st, 1995, it
entered into force for 81 members, representing more than 90% of global commerce, after being
2
International Institutional Law, 5th Revised Edition, H. G. Schermers and N. M. Blokker, Leiden: Martinus Nijhoff
Publishers, 2011, pp. 4-5.
3
Globalization and the WTO's Role in Supporting Free Trade, G. A. Solanki, 3(1) Journal of Humanities and Social
Science (2012), 13.
4
World Trade Organization (WTO), by K. Anderson, in Encyclopaedia Britannica Student and Home Edition, 2010.
Encyclopaedia Britannica, Chicago.
ratified by 104 states. Together with successfully establishing the WTO, the round expanded the
scope of multilateral trade agreements and made sure that institutional reform.

In place of GATT, the WTO seeks to establish fair trade policies and an environment that is
more conducive to the free flow of goods and services. It acknowledges the significance of
adjusting the structurally unbalanced economic circumstances. The WTO was created to
guarantee a significant reduction in tariffs and other trade obstacles as well as the abolition of
discrimination in global trade relations.5

ORGAN AND STRUCTURE OF WTO

The initial members of the WTO are the states that were party to the GATT in 1947, the
European Communities, and those MTAs (Multilateral Trade Agreements) and Schedules of
Special Commitments (SSCs) that were annexed to the GATT in 1994. Member states may be
admitted by other states. The WTO is the world's biggest trading organisation. It had 160
countries as members as of June 2014. Even previously conservative nations like China and
Russia are now WTO members. Russia joined the WTO in 2012 after several years of being
closely watched by the WTO to determine if it would change its trade and tariff policies to
conform to WTO principles. China joined the WTO in 2001.

A Director-General is in charge of the WTO Secretariat. The Ministerial Conference, which is

made up of representatives of the WTO's member states, is the organization's highest authority.
At least once every two years, the Ministerial Conference gets together. It serves as the
institution's main decision-making body. According to GATT 1947, a decision must be reached
by consensus. Decisions reached by the General Council and the Ministerial Conference under
WTO rules are unanimous.

Nonetheless, in cases where consensus could not be established, member States could vote in a
majority to decide.6

The executive body is the General Council. Below the General Council, there are further special
councils. The Council for Trade in Goods, the Council for Trade in Services, the Council for
TRIPS, and more subsidiary organisations are some examples. There are also numerous
5
The WTO's Role in Aiding Developing Countries, Especially the BRICS: An Study of Doha and Bali, T. B. Ayres, 3 Law
School International Immersion Program Papers, 2015, p. 1. See the WTO Establishing Agreement's Preamble.
6
Article IX WTO Establishment Agreement.
committees, including the Committee on Budget and Finance, the Committee on Balance-of-
Payments Limitations, and the Committee on Trade and Development. WTO has international
legal identity, unlike GATT.

WTO AND INTERNATIONAL TRADE AND INVESTMENT DISPUTES

SETTLEMENT MECHANISM

There will inevitably be disagreements and points of contention in the course of states' dealings
with one another. The WTO is fully aware of this reality. As a result, the WTO has also given
mechanisms for state parties to settle trade and investment disputes. This system also takes into
account the application and interpretation of the different agreements made between the parties
using its platform.

The introduction of a mandatory third-party, two-instance system of adjudication dramatically

distinguished and improved the GATT system to the WTO. Parties with trade disputes must first
request that the subject be decided by an ad hoc panel made up of impartial panellists. Although
slightly different from a typical tribunal, panels are similar to tribunals. The disputing nations
choose the panellists as a group. In cases where they are unable to agree, the panellist will be
chosen by the WTO Director-General. A minimum of three and occasionally five specialists
from various nations make up panels, which must maintain their independence from all parties.
They must consider the available evidence and come to a conclusion regarding it. The panel's
report is presented to the Dispute Resolution Body, which may only reject it by unanimous vote.7

Parties that are offended by a decision may appeal it to the Appellate Body. The panel's decision
is subject to judicial review by the appellate body. Any party may challenge a panel's decision.
Both sides do it occasionally. Appeals are not a place to go back and review the facts or the
evidence. It must be founded on legal principles, such as legal interpretation. Three members of
the permanent seven-member Appellate Body, which was established by the Dispute Settlement
Body and largely represents the range of WTO membership, hear each appeal. Appellate Body
members serve four-year terms. They must be independent persons without ties to any
governments and have established reputations in the fields of law and international business. The
7
J. Langille, "Neither Constitution nor Contract: Understanding the WTO by Analyzing the Legal Limitations on
Contracting out through Regional Trade Agreements," 86 New York University Law Review (2011), p. 1507.
Understanding the World Trade Organization 5th ed. (2015) (2015) WTO: Geneva,
https://www.wto.org/english/thewto e/whatis e/tif e/understanding e.pdf> viewed on February 21, 2018.
panel's legal judgements and findings may be upheld, changed, or overturned on appeal.
Typically, appeals shouldn't exceed 60 days and should never exceed 90 days. Within 30 days,
the Dispute Resolution Committee must accept or reject the appeal's report, and only unanimous
rejection is permissible.

Both the Panels and the Appellate Body have the authority to order a member state to take action
in order to comply with their order. In the event that a party disobeys the order, it may use the
compliance panel adjudication's powers to apply countermeasures on the offending party. "A
countermeasure is a measure adopted against the infringing party that is permissible against a
nation determined to be in violation of the Agreement but that would otherwise violate WTO
rules (for example, hiking tariffs above MFN levels)," according to the WTO. The WTO's
dispute resolution process is regarded as the most advanced and formalised in international law.
Its global hard law paradigm has built a strong dispute-resolution mechanism that enforces legal
obligations. It has taken a tremendous amount of disputes into account already in its first ten
years of operation. Quantitative Limitations on Imports of Agricultural, Textile, and Industrial
Goods from India is one such instance (India-QRs) 8. With the exception of members of their
main regional trade bloc, MERCOSUR, Argentina had applied safeguard measures in the
Footwear Case9. According to the MFN MFN principles, the Appellate Board determined that
Argentina was required to apply safeguard measures to all nations. Brazil had also placed import
restrictions in the Brazil—Tires Case10 on all nations aside from their MERCOSUR counterparts.
The appellate panel decided that members of MERCOSUR were not allowed to change their
WTO import limitation commitments in light of their regional trade organisation. Furthermore, it
said that all WTO members must adhere to regional regulations equally.

ROLE OF WTO IN PROMOTING INTERNATIONAL TRADE AND INVESTMENT

The World Trade Organization (WTO), a multinational organisation controls international trade.
It serves a special tripod function. It first aims to promote progressive trade liberalisation and the
removal of restrictive trade restrictions that states impose on the importation and exportation of
8
Constitutional Conceits: The World Trade Organization's "Constitution" and the Discipline of International Law, L.
Dunoff, 2006, p. (3) Page 657 of The European Journal of International Law.
9
Argentina's Safeguard Controls on Footwear Imports: Panel and Appellate Body Reports; Dispute Settlement Body
Decision WT/DS121/9 (2 March 2000).
10
Brazil- Measures Affecting Imports of Retreaded Tyres- Status Report by Brazil- Addendum
WT/DS332/19/Add.6 (15 September 2009).
goods and services, causing trade flows to be distorted and lowering overall economic
development and well-being. Second, it is a platform for negotiations known as "rounds," where
member nations get together to discuss the parameters of trade liberalisation treaties that become
enforceable across all parties. Last but not least, the WTO aims to establish defined rules of
engagement to guarantee more predictable and transparent global commerce. The guiding
principles of the WTO define and govern its agreements and practises. The MFN and national
treatment principles are the two that stand out the most. The MFN clause, which compels
members to treat all other members of the Agreement same regarding any tariff or concession in
respect of a particular product, as they would have done to any other country, is the cornerstone
of the WTO and ensures that states are not treated differently. Also under the national treatment
principle, once goods pass through the borders of member states, members are obliged to treat
those goods equally as though they are of their national origin. This is a measure to prevent
states’ use of internal regulations to discriminate against imported goods which will negatively
affect tariffs reduction and other means of trade liberalization. The WTO's six main goals are to:
I establish and uphold international trade regulations; (ii) offer a forum for negotiations and
monitoring of further trade liberalisation; (iii) settle trade disputes; (iv) increase decision-making
process transparency; (v) enable cooperation with other major international economic institutions
involved in global economic management; and (vi) assist developing nations in maximising the
benefits of the global economy. 20 The WTO has been successful in reaching various trade
accords that have loosened trade between nations. 21 The volume of global trade has increased
as a result of this success. This growth has been estimated to have increased by up to 25% in the
eight years prior.11

With further rounds of negotiations ongoing in other trade and service sectors, there is potential
for future growth. Members of the state have kept their economies open. For instance, China's
simple average tariff has decreased from around 40% in 1985 to under 10% at present since
China's entry to the WTO in 2001. Large developing markets are becoming more open, creating
space for new export potential for nations. 23 This is a sign of growth, which is encouraging. The
WTO regime, which has supported open or less limited trading in commodities, services,
technology, and capital transfer among different countries, has been credited for helping
globalisation arise and continue to grow. Due to diverse trade laws and a lack of reciprocity, a
11
E E Ekanem, ‘Globalisation: The Consumer’s Albatross?’ (2014) 1 (1) Juris Insight, p. 16.
number of issues, such as trade barriers, financial assistance, piracy, and—most significantly—
violations of intellectual property rights, which once hampered the expansion of international
trade, have mostly been resolved. The WTO offers a forum for international cooperation among
governments to discuss these problems and devise strategies for a seamless transition to more
expansive free trade regimes.12

Although the WTO has been successful in promoting free trade, it has been argued that this
mainly benefits industrialised nations that have the resources, materials, and technological
capacity to compete in a global economy. It is disheartening to see that the developed and
developing member states do not equally profit from the aforementioned 25% rise in global
commerce. Despite having a larger population, developing nations only contribute 0.03 percent
of global trade flows. 25 Developing nations favour, promote, and lobby for a "free and fair"
trade among states as opposed to the "free" trade that the WTO promotes. Although it is assumed
that emerging nations will lower trade barriers and open their markets to developed nations, rich
nations have gradually blocked developing nations' access to their markets through the use of
tariff and non-tariff obstacles. For instance, the US government has kept subsidising its
agricultural sector extensively. The inference is that agricultural products from emerging nations
would struggle to compete with the heavily subsidised American agricultural products as they do
not receive such backing from their governments.

CHALLENGES OF THE WTO

Although though the WTO has been praised for its contribution to global trade, it has not always
been without problems. This is especially true given that it exists primarily for economic reasons.
Every country has severe concerns about economic challenges. As a result, whenever a matter is
brought before the WTO for examination, there will inevitably be differing viewpoints and
opinions. This section will look at a few of the issues that, unsurprisingly, lead stakeholders to
expect more from the WTO. The prolonged time needed to end a negotiating round is one of the
problems with the WTO. It is not the length of the negotiation round that is the problem. States'
inability to set aside their economic differences and come to an agreement or compromise on a
matter is a common challenge. The interests of industrialised and developing countries

12
GATS Art. XVI.
frequently conflict. For instance, no agreement could be reached during the Uruguay round of
negotiations, which lasted from 1986 to 1994.

The Doha Rounds were put on hold for several years due to developing country protests over
developed country dominance of the international trade sector. The ministerial conference in
2001 marked the beginning of the Doha Rounds. As a result of member states' inability to reach
consensus on issues relating to free trade and the flow of agricultural products from developing
to industrialised nations, the round has been at a standstill. As the USA refused to withdraw its
agriculture subsidies in 2006, the deal came to a standstill. This suggests that there would be an
imbalance in global trade and a lack of economic advancement in that area since the products of
developing nations would not be able to fairly compete with those of rich nations.13

However, the Bali Round negotiations by the WTO were only successful in December 2013.
Since the WTO's founding in 1995, its first multilateral agreement was signed in Bali. Developed
nations ultimately came to an agreement to eliminate agricultural subsidies in that round. When
the required 2/3 majority of members ratified the agreement, the agreement entered into force in
2017. 28 In order to assist developing nations in achieving their economic objectives, the
agreement also recognised certain of their unique characteristics. Balkanization of trade blocs
within the WTO is another difficulty. 29 Trade blocs, which take the shape of regional
agreements or mutually beneficial alliances between some WTO members and exploit their
combined economic and negotiating weight, have continued to stymie negotiations. Member
states now favour entering negotiations in order to favour other parties to their regional trade
bloc. In the Mexico-Soft Drinks Case14, the Appellate Body argued that it was within its
authority to decide legal disputes between parties even if a Regional Trade Agreement (RTA)
dispute resolution system was in operation. In that instance, Mexico requested arbitration under
Chapter 20 of the North American Free Trade Agreement in order to levy duties on soft drinks
made with maize syrup rather than cane sugar (NAFTA). The US refused to participate in the
13
Doha: India Accuses US of Sacrificing World's Poor at Trade Negotiations, H. Stewart, The Guardian, July 1, 2008,
available at: http://www.theguardian.com/world/2008/jul/1/wto.india. viewed on December 17, 2017. 28
http://www.wto.org/english/news e/news13 e/mc9sum 07dec13 e.htm> World Trade Organization, "Day 3, 4 and
5: Round the Clock Consultations Create "Bali Package"". viewed on December 17, 2017. 29 Several trade blocs,
including the European Union, NAFTA, BRICS, and others, have remained influential and are working harder to
further their own development goals.
14
Appellate Body Report, Mexico-Tax Measures on Soft Drinks and Other Beverages, 51, WT/DS308/AB/R (Mar.
6, 2006).
NAFTA body. Instead, it appealed the case to the WTO. The Appellate Body had jurisdiction
over the RTA and had power over it.

Without a question, the WTO has accelerated economic globalisation by promoting free trade.
Some globalists, however, have persisted in finding fault with globalisation itself and,
consequently, WTO policies. Dumping is one of the negative effects mentioned thus far, and it
has been said that as international trade grows, it will become more evident. For instance,
Nigeria's economy's cigarette and pharmaceutical sectors provide opportunities for dumping.
Developed nations have persisted in using our market's broad access as ready outlets for
dumping subpar and counterfeit pharmaceutical and textile products into the nation. Trade
accords have also not made a difference15. The GATS is a prime example. According to Article 1
of GATS, the provision of a service in the territory of one Member to the service consumer of
any other Member, from the territory of one Member into the territory of any other Member,
through commercial presence in the territory of any other Member, or through the presence of
natural persons of a Member in the territory of any other Member is included in the provision of
a service.

CONCLUSION

The World Trade Organization's (WTO) role in fostering global trade and investment is
examined in this essay. It provides a quick historical overview of the restrictions on international
trade that existed before the WTO was created. With the creation of the WTO, the world saw the
emergence of a multilateral international organisation. International commerce and investment
have become more liberalised as a result of the WTO's establishment. In order to ensure
economic globalisation and the enforcement of trade regulations among member nations, the
WTO also includes well-structured institutions.

Trade negotiations have slowed down due to mistrust and governments' inability to set aside
their economic differences. The disagreements between established and developing member
states have sparked the growth of other regional economic organisations, some of whose goals
conflict with those of the WTO. This might reduce the effectiveness of the WTO. So, it is argued
that the WTO must continue to persuade its member nations, particularly the developing ones,

15
E E Ekanem, ‘Globalisation: The Consumer’s Albatross?’ (2014) 1 (1) Juris Insight, p. 16.
that it has their best interests in mind by making sure that it not only promotes free but fair trade
in order to be effective and maintain its relevance.

The WTO's role in boosting global trade and investment was examined in this study. It is
discovered that this was accomplished after painful rounds of negotiations that acknowledged
and advocated free trade between nations. Global economic globalisation has advanced thanks to
WTO trade policies. In order to resolve trade disputes between member nations, it has also
developed a binding dispute settlement process. Notwithstanding the WTO system's
accomplishments, numerous problems have also been noted.

It is now recommended that the WTO focus on promoting fair trade as well as free trade. The
idiosyncrasies of developing countries must be taken into account during negotiation rounds
before agreements are reached in order for the developing countries to survive the fiercely
competitive global market.