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World Trade Organisation-what it is, what it does

The World Trade Organisation holds its fourth Ministerial Meeting in Doha, Qatar, from November 9-13 to decide how far and how fast to push on with liberalisation of global commerce.

The following is a look at what the WTO is and what it does.

HISTORY

Establishment of the WTO was agreed at the end of the 1986-93 Uruguay Round of international trade negotiations, and its creation was approved by trade ministers in Marrakesh, Morocco, in April 1994.

Launched on January 1, 1995, it replaced the old General Agreement on Tariffs and Trade, which had acted as an 'interim' world trade watchdog and negotiating forum since 1948.

Up to Doha, there have been three Ministerials, which are the WTO's highest decision-making body.

The first was in Singapore in December 1996, the second in Geneva in May 1998, and the third in Seattle in December 1999.

STATUS

Headquartered in Geneva, the WTO is defined officially as 'the legal and institutional foundation of the multilateral trading system' -- a term that encompasses its role as a forum for negotiations and the settlement of disputes and the guardian of trade rules.

Unlike the GATT, it is a permanent organisation created by international treaty ratified by the governments and legislatures of member states.

It has a similar global status to that of the Washington-based International Monetary Fund and the World Bank, but unlike them it is not a United Nations agency. Its staff and budget are tiny compared to theirs.

Its two underlying documents are the General Agreement, a 38-article code aimed at ensuring open, non-discriminatory trade in goods, services, agricultural produce and textiles, and 500 pages of specific accords shaped in the Uruguay Round.

BASIC PRINCIPLE

Most-favoured-nation -- Article 1 of the General Agreement, which binds all members to give equal treatment to the products and services of other WTO members.

But there are let-outs allowing members to suspend this obligation in defence of national security or public health. An example of this is the US trade boycott of Cuba, a founding member of the GATT, on the grounds that trade with the Communist-ruled island would put US security in danger.

DECISION-MAKING

It is a member-driven organisation and all decisions on any subject have to be taken by consensus, i.e. without objection from any member. Voting can in principle take place but there would have to be a consensus to allow it.

The WTO Secretariat, often portrayed by the organisation's critics as a cabal of faceless bureaucrats dictating trade policy to the world, is an administrative and research structure with no decision-making role on policy.

It has a staff of around 500 people.

LEADERSHIP STRUCTURE

The Secretariat is headed by a Director-General -- currently former New Zealand prime minister Mike Moore -- who has four deputies, at present from the United States, France, Burkina Fasso and Venezuela.

The director-generalship has developed a political as well as administrative dimension under its three incumbents so far, all of them former politicians in their home countries unlike their predecessors in the GATT. The incumbent can still be called to order by the General Council.

The Council is the WTO's main standing decision-making body, and meets on average once a month. Each member country sends representatives, normally led by the head of its permanent mission in Geneva.

The Council appoints the Director-General after consultations among member countries. Originally this was a four-year post but in 1999, during a heated battle between the supporters of the two leading candidates it was decided that they would each serve three years each.

The General Council also appoints a Chairman from among the ambassadors and he serves for one year. As representative of the members, he is the de facto leader of the organisation and outranks the Director-General.

The current Chairman is Stuart Harbinson, long-serving ambassador of Hong Kong, who compiled the controversial draft declaration on a new Work Programme for the WTO to be considered by ministers in Doha.

MEMBERSHIP

Currently, 142 countries or customs territories. The admission of three more -- China, Taiwan and Vanuatu -- is due to be approved in Doha.

Members range from the top four trading powers known as the "Quad" -- the European Union, the United States, Japan and Canada -- through major emerging economies like Brazil, South Africa and India -- to some of the world's poorest countries like Bangladesh, Guinea and the Solomon Islands.

Applications from 29 others are being studied. Among these are Russia, Ukraine and Saudi Arabia. Iran wants to join but so far consideration of its application has been blocked by the United States.

WTO BODIES

Three key units are the Dispute Settlement Body, the Appellate Body and the Trade Policy Review Body.

The DSB, effectively a special session of the General Council, meets on average twice a month to hear complaints from member countries of violations of WTO rules and agreements. It sets up panels of independent experts to look at the arguments of both sides and to rule whether rules have been broken.

The Appellate Body is called in to hear appeals against panel findings. Its rulings are passed back to the DSB, which takes a consensus decision to adopt them. This cannot be blocked -- as it could in an earlier dispute body under the GATT.

The TPRB is a forum for the entire membership to review, praise or criticise (normally both) each other's policies. Major trading powers are reviewed every two years, others every four.

Other major WTO bodies are the Council for Trade in Goods, the Council for Trade in Services, and the Council for Trade-Related Aspects of Intellectual Property Rights.

SUCCESSES SO FAR

In the nearly six years of its existence, the DSB has had close to 250 disputes brought to it -- four times more than the GATT would have had over a similar period. Many of these disputes have been resolved by the countries involved through bilateral negotiations under the pressure of the panel investigation -- an outcome WTO officials say they prefer.

Developing countries regard the DSB as a shield against more powerful economies -- its very first ruling in 1995 was for Venezuela in a case against the United States over a gasoline tax. Rich powers -- especially the United States and the EU -- have fought their disputes through the DSB rather than by simply imposing unilateral sanctions, or declaring trade wars, on each other.

FAILURES SO FAR

The collapse of the Third Ministerial -- and an earlier project pushed by the EU and the United States to launch a round -- in Seattle in December 1999. This was due to strong disagreements over the negotiating agenda between the United States and the EU and to anger among developing countries at what they saw as cavalier treatment of their problems.

Another blow to the body was the long battle during 1999 over the appointment of a new director-general to replace the departing Renato Ruggiero, now Italy's Foreign Minister. The row left a legacy of bitterness, which contributed to the Seattle fiasco. The decision to give the two leading candidates -- Moore and then Thai deputy prime minister Supachai Panitchpakdi -- three-year consecutive terms was also seen by many diplomats as an unsatisfactory compromise.

DANGERS AHEAD

With the global economy in a parlous state and a slowdown exacerbated by the impact of the September 11 attacks in the United States, many diplomats fear that countries or blocs will prefer to make trading deals among themselves rather than through the WTO, if there is no new round. Some analysts feel that the already rapid growth of regional trade pacts -- like the North American Free Trade Agreement, the European Economic Area, and the South American MERCOSUR -- could result in the emergence of Orwellian economic and political blocs battling for markets and access to resources.

The WTO also faces the challenge posed by a growing but disparate anti-globalisation movement which has fed on public concern about the impact of trade liberalisation on jobs, living standards and the environment. This movement has focussed much of its ire on the WTO and has had a noticeable impact on public perceptions of the body.

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