Business implications
Q. How do I find out which WTO Agreements concern my
business?
A. Practically all products and markets are affected by one or
several of the WTO Agreements, at least for WTO member countries.
Progressive liberalization of trade through successive negotiations
has led to lower (or zero) import duties, and thus increased export
opportunities, especially in developed country markets. It has also
created greater predictability of market access by "binding"
reduced (or zero) tariff rates.
Most governments impose technical regulations or standards on
(domestic and imported) products to protect human, animal or plant
life or health, as well as the environment. The Agreements on
Technical Barriers to Trade and on Sanitary and Phytosanitary
Measures ensure that such requirements do not create unnecessary
obstacles to international trade and provide certain rights to
exporters. It is up to each exporter to find out about such
requirements in the relevant foreign markets.
National enquiry points, which WTO members are required to set
up in their countries under certain WTO Agreements, can provide
information on national laws and regulations that affect your
business. Enquiry points are usually ministries of trade,
agriculture or national standardization institutes.
Business role
Q. Private-sector participation in multilateral
trade negotiations is essential to safeguard its interests. What
can business communities do?
A. In a number of WTO member countries, mechanisms exist for
business and industry associations to be regularly consulted and
put their point of view to the governmental policy-makers and
negotiators during multilateral trade rounds. In other countries,
contact points have been established to which enquiries relating to
trade policy matters can be addressed. Experience has shown that
the establishment of such links has been most beneficial to both
the private sector and the governments of the respective countries.
Similar mechanisms could be put into place in other countries where
they do not yet exist.
WTO membership
Q. What are the advantages and disadvantages for my
country to join the World Trade Organization?
A. WTO membership gives a country the legal right not to be
discriminated against in its trade with the other members of the
organization. The principle of non-discrimination, which is
especially important for a country's exports, is laid down in the
most favoured nation (MFN) clause and the national treatment
clause. In addition, every WTO member is entitled to seek redress
against any impairment of its rights by another country through the
dispute settlement mechanism. Another important element of WTO
membership is the right to take part in the decision-making process
of the organization and in the conduct of future multilateral trade
negotiations.
On the other hand, WTO members must respect the general rules
and obligations contained in the various WTO Agreements, in
particular the GATT 1994 (goods), the GATS (services) and the TRIPs
(intellectual property) Agreements. A flexible application is
foreseen in many of these Agreements for developing and least
developed countries, as well as for countries moving from a
centrally-planned to a market, free-enterprise economy. Each WTO
country must make binding commitments on market access for goods
and services. The degree of access for developing countries depends
on their development, financial and trade needs.
Settling disputes
Q. How does WTO ensure that its members respect
their commitments and obligations? How does the WTO dispute
settlement system work?
A. Each member country has the right of redress in cases where
its trading interests are nullified or impaired, for example by an
illegal measure taken by another country. This right is guaranteed
through the WTO dispute settlement system, which was considerably
improved in the Uruguay Round. Only WTO member governments have
access to this system; private companies (exporters, importers or
other persons) cannot directly approach the WTO. Complaints must be
channelled through governments; each government examines the facts
and evidence put forward by private parties before deciding whether
to bring the case to the WTO.
The different phases of the dispute settlement process are as
follows:
• Initially, the complaining country requests and holds
bilateral consultations with the country concerning the measure in
question. These consultations are aimed at finding a mutually
acceptable solution to the problem.
• If consultations fail, the WTO Dispute Settlement Body (DSB)
will, upon request, establish a panel of (normally three)
independent experts whose task it is to examine the case and hear
the arguments of the two sides. The panel then presents a report to
the DSB stating whether any rights of the complaining country have
been violated or impaired.
• The DSB will normally adopt the report, including
recommendations for action, unless one (or both) parties to the
dispute appeals to the WTO Appellate Body. The Appellate Body
examines any issue of law in the panel report and submits its own
report to the DSB.
• After the DSB adopts the report of the panel or the Appellate
Body, it monitors implementation of recommendations, such as to
withdraw the measure which has been found to be violating the
rights of the complaining country.
• If corrective action is not taken within a reasonable period
of time, the violating country is obliged to provide compensation
to the affected country, for example through tariff reductions in
areas of interest to the complainant.
• If no satisfactory compensation is agreed, the complaining
country can request retaliatory action from the DSB authorization
by suspending concessions or obligations against the other
party.
Q. Can WTO members take their case to the
International Court of Justice in the Hague?
A. No. The WTO dispute settlement system is a coherent and
self-contained legal framework to which all member countries have
agreed, thereby excluding any further legal action in a context
outside WTO.
Q. Do developing countries get fair treatment in
cases of disputes with larger trading nations?
A. Developing countries have, in the context of the WTO dispute
settlement mechanism, the same rights as other countries.
Developing countries are bringing a growing number of complaints
against developed and developing countries, demonstrating their
faith in the system.
The dispute settlement mechanism facilitates the task of
developing countries as follows:
• In cases between a developing and a developed country, the
panel - upon request by the former - includes at least one panelist
from another developing country.
• Panel reports explicitly indicate how provisions on
differential and more favourable treatment for the developing party
in the dispute have been taken into account.
• Upon request, the WTO secretariat can make a qualified legal
expert available to any developing country to provide legal advice
and assistance.
• Other countries are expected to exercise due restraint in
bringing complaints against least developed countries. At the stage
of bilateral consultations, the WTO Director-General or the DSB
Chairman can, upon request, offer their good offices, conciliation
or mediation with a view to settling the dispute.
Klaus Kautzor Schröder, ITC consultant and a former Director
of GATT, developed the answers for these and other frequently asked
questions about the world trading system, available on the World
Tr@de Net web site.