This article on ‘World Trade Organization: Law and Practice’ was written by Rakhi, an intern at Legal Upanishad.
The World Trade Organization is a worldwide organization that controls, manages, and aids international trade. It helps in the smooth flow of trade between the nations. This article will give you an insight into the World Trade Organization, its sources of law, the dispute settlement mechanisms, and how the World Trade Organization obligations are enforced: its remedies and compliance.
What is World Trade Organization?
The WTO is an intergovernmental organization to manages and aids trade internationally. It was established on January 1st, 1995 as per the Marrakesh Agreement, which is an agreement signed by 123 countries at Marrakesh on April 15th, 1994, which replaced GATT ( General Agreement on Tariffs and Trade).
The World Trade Organization works by furnishing a structure of regulation for controlling and managing the trade between the countries that are signatories to the agreement and also by setting up a dispute resolution process that will make the participating countries adhere to the World Trade Organization agreements. The General Agreement on Tariffs and Trade of 1947 was replaced by the General Agreement on Tariffs and Trade of the World Trade Organization.
Functions and Structure of World Trade Organization
The World Trade Organization’s main function is to enable the execution, management, and control of the world trade organization agreement and also to help in aiding the administration of the agreement. Apart from this, the WTO also has some specific objectives. They are:
- It provides a framework and forum for the member nations to negotiate the present agreements and also about future agreements.
- It regulates the dispute settlement system.
- It regulates the review mechanism of trade policy.
- It aids in cooperation with the World Bank and the International Monetary Fund as and when required. The WTO is equipped as an international organization with a separate legal existence and personality and is also provided with special privileges in accordance with its functions.
There are two governing and decision-making bodies for the World Trade Organization, they are the Ministerial Conference and the General Council. The Ministerial Conference is the highest-ranking decision-making body, which consists of all the members of the World Trade Organization. The trade ministers of respective member nations represent their nations at the ministerial conference.
The ministerial council convenes at the minimum once every two years and makes decisions on any of the matters concerning the world trade organization’s multilateral agreements. The General Council also consists of all the WTO member nations. Its main responsibility includes the day-to-day decision-making in-between the Managerial Conferences.
An ambassador or a permanent representative is usually appointed by the member nations in the general council. The responsibilities of the General Council can be summarized under three heads, they are as a dispute settlement body, a trade policy review body, and as a general body that deals with all matters other than dispute settlement and trade policy. Different subordinate councils work under the general council. They are the service council, goods council, and TRIPS Council.
The secretariat of the World Trade Organization is located in Geneva and is headed by Director-General. The Director-General is appointed by Ministerial Conference. The powers and tenure of the director-general are fixed by the Ministerial Conference. Director-General is vested with the power to appoint the staff and to manage the responsibilities of the World Trade Organization secretariat. Both the director-general and the members of the secretariat should act as international officers.
Sources of law
The World Trade Organization is formed by international agreements, and these agreements form the basis of World Trade Organization law. The world trade organization’s legal system is mainly self-sufficient but is not completely self-sufficient. International law has been the main contributor to world trade organization law. The reports of the world trade organization’s dispute settlement, the actions of world trade organization bodies, the WTO members’ practices, and the teachings of highly qualified publicists constitute the source of the World Trade Organization’s law.
Dispute Resolution Mechanism
There are the following steps for dispute resolution in the World Trade Organization; they are
- The parties consult each other.
- A Panel is established.
- Selection of the panel members
- Proceedings of the panel
- draft report,
- Acceptance of the report by the dispute settlement body
The countries should try to resolve the dispute between themselves by discussing it with each other before sending it for mediation. If a member country asks another country for consultation, the country should accept the offer within 10 days of receiving it and should start the consultation within 30 days. If even after 60 days, the consultation did not bring an adequate result, the member country can ask for the appointment of a panel. Such a request should be given in writing to the dispute settlement body.
The dispute settlement body appoints the panel, and the main function of this panel is to assist in resolving the dispute. It should give the report to the members within 6 months after the panel has started its procedure.
The next step is the selection of the panel members. The panel members are selected by the World Trade Organization Secretariat. The panel usually consists of three members and can be extended to five members if the members find it necessary. The panel members should be selected within 20 days. The panel should, within 1 week, fix the timetable for the procedures and ask the disputing members to submit their written submissions within the specified date. If after examination, a solution is reached, then the panel submits its report to the dispute settlement body.
The report should be sent within 6 months of the appointment of the panel. After hearing both the parties, a draft report is given to the parties by the panel. If both parties are satisfied with the interim report, then the panel shall give a final report to the members. The dispute settlement body adopts the final report within 60 days. The members, if not satisfied with the final report, can appeal to the standing appellate body. The appellate body’s report is either accepted or rejected by the dispute settlement body within 30 days of getting the report.
The WTO was established as a result of international agreements and acts as a medium or an authority for managing and controlling international trade. It is a body that aids in global trade, and if any dispute arises between the members, it works as a dispute settlement mechanism for resolving the disputes amicably.
- Kym Anderson, “World Trade Organization”, Britannica, available at: https://www.britannica.com/topic/World-Trade-Organization
- “What is WTO”, World Trade Organization, available at: https://www.wto.org