Updated March 7, 2019
The World Trade Organization
Overview
investment facilitation, and micro, and small and medium-
The World Trade Organization (WTO) was established on
sized enterprises. The United States signed on to the
January 1, 1995, following the ratification of the Uruguay
declaration in support of e-commerce and the U.S. Trade
Round Agreements and today includes 164 members. It
Representative (USTR) noted that “MC11 will be
succeeded the General Agreement on Tariffs and Trade
remembered as the moment when the impasse at the WTO
(GATT), which was created in 1947 as part of the post-
was broken... like-minded WTO Members and their
WWII effort to build a stable, open international economic
constituents are not held back by the few Members that are
framework. The WTO has three basic functions: (1)
not ready to act.”
administers existing agreements; (2) serves as a negotiating
forum for new trade liberalization; and (3) provides a
Table 1. GATT/WTO Rounds
mechanism to settle trade disputes among the parties. The
Year
Name
Subjects covered
Countries
multiple WTO Agreements: cover trade in goods, services
and agriculture; remove tariff and nontariff barriers; and
Geneva,
establish rules on government practices that directly relate
Annecy,
to trade—for example, trade remedies, technical barriers to
1947-
23 (1947); 26
Torquay,
5 Rounds of tariff reductions
trade, customs valuation, intellectual property rights, and
1961
(1961)
Geneva II,
government procurement. The Agreements are based on the
Dil on
principles of nondiscrimination among countries, national
treatment, and transparency of trade rules and regulations.
1964-
Tariffs and anti-dumping
Some exceptions, however, such as preferential treatment
Kennedy
62
1967
measures
for developing countries and regional and bilateral free
trade agreements, are allowed.
Tariffs, anti-dumping,
The Doha Round
1973-
subsidies, technical barriers
Tokyo
102
1979
to trade, government
The Doha Development Agenda “round” of multilateral
procurement
trade negotiations was launched in November 2001. The
negotiations were characterized by persistent differences
among the United States, the European Union (EU), and
Tariffs, nontariff measures,
developing countries on major issues, such as agriculture,
rules, services, intellectual
1986-
industrial tariffs and nontariff barriers, services, and trade
Uruguay
property, dispute
123
1994
remedies. For example, developing countries (including
settlement, textiles,
emerging economic powerhouses such as China, Brazil, and
agriculture, WTO institution
India) sought the reduction of agriculture tariffs and
subsidies among developed countries, nonreciprocal market
Tariffs, nontariff measures,
Doha
access for manufacturing sectors, and protection for their
2001-
agriculture, services, trade
142 (2001); 162
Development
services industries. In contrast, the United States, the EU,
2015
facilitation, trade remedies,
(current)
Agenda
and other developed countries sought reciprocal trade
and development
liberalization, especially commercially meaningful access
Source: WTO.
to advanced developing countries’ industrial and services
sectors, while retaining some measure of protection for
Agriculture and Development
their agricultural sectors.
While no breakthroughs were reached at the 2017
The Trade Facilitation Agreement (TFA) entered into force
Ministerial, members committed to continue negotiations
on February 22, 2017, and may be the lasting legacy of the
on fisheries subsidies. In the 2015 Ministerial, members
Doha Round. The TFA aims to remove customs obstacles at
agreed a number of agriculture initiatives, including new
the border through commitments to facilitate and expedite
disciplines on export financing and export state trading
the movement, release, and clearance of goods, including
enterprises; to phase out export subsidies; and to minimize
goods in transit.
or eliminate the impacts of food aid on local commercial
WTO members were unable to announce major deliverables
markets. None of the agriculture commitments are legally
or multilateral negotiated outcomes at the 11th Ministerial
binding nor are they subject to dispute settlement. Members
Conference in Buenos Aires, Argentina, in December 2017,
also reached agreement on several measures for least
and continue to work toward consensus on future work
developed countries (LDCs), encompassing various special
plans. However, separate groups of WTO members
and differential treatment initiatives in the areas of
announced multiple initiatives and committed to new work
preferential rules of origin; duty-free quota-free access for
programs or open-ended plurilateral talks on e-commerce,
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The World Trade Organization
cotton; and exemptions from intellectual property rights
challenging recent U.S. unilateral enforcement actions
(IPR) commitments for medicines until 2033.
through the WTO DS system, but some observers express
concern that U.S. tariffs imposed under Section 232 and
Current Challenges
Section 301 of U.S. law may undermine the credibility of
After 14 years of largely fruitless Doha negotiations, many
the WTO system and its agreed upon rules and could lead
intractable issues remain unresolved in the trading system.
to tit-for-tat retaliation and/or trade war.
While developing countries remain focused squarely on
Bilateral, Regional and Plurilateral Agreements. Outside
agriculture, developed countries have linked ambition in
the WTO, some members likely will continue to pursue
agriculture to reciprocal ambition in industrial tariffs and
sector-specific plurilateral deals or bilateral and regional
services liberalization, especially for advanced emerging
trade agreements where progress can be made more readily
market economies. With the Doha Round over, some
by assembling coalitions of interested parties rather than in
issues, ideally negotiated multilaterally, remain contentious.
the consensus-driven WTO forum. However, countries or
For example, new attempts to limit or discipline agricultural
regions that do not participate may be marginalized from
subsidies, address the special safeguard mechanism or
the trading system and face heightened trade restrictions
resolve concerns on public stockholding programs for food
from those within these agreements.
security may founder for want of a negotiating venue.
Other Initiatives
In addition, in the two decades since the WTO’s
Aside from the agreements reached at ministerial meetings,
establishment, new barriers and other issues not considered
several other initiatives are underway within and around the
in earlier rounds have emerged. Developed economies seek
WTO. These include multiple plurilateral negotiations.
to incorporate new issues, such as digital trade (cross-
border data flows, cybertheft, and trade secrets), state-
As noted above, some WTO members agreed to
owned enterprises, new nontariff barriers, global supply
establish n on e-commerce at the 11th Ministerial. These
chains, and the relationship between trade and environment
talks among 76 countries representing 90% of global e-
rules that pose challenges to the trading system. The USTR
commerce trade are due to be launched in March 2019.
has commented that the WTO is not designed to deal with
The United States seeks a high ambition for these
the mercantilist and industrial policies of China.
negotiations, including commitments on cross-border
data flows, a ban on data localization, and disciplines
With clear disagreements at the conclusion of the 2017
against forced technology transfer. However, China is
Ministerial, there is debate about the future of the WTO as a
oppose to these ambitions.
viable and effective multilateral trade negotiating
organization.
The revised plurilateral Government Procurement
Agreement (GPA) provides market access for various
Dispute Settlement. To supporters, the dispute settlement
non-defense government projects to its signatories. It
(DS) system is considered one of the successes of the
entered into force in April 2014 and currently has 45
existing WTO system. However, some are concerned about
members, including the United States and EU.
the continued legitimacy of the DS system if no further
A subset of members agreed in 2015 to expand product
WTO agreements are reached, thus preventing new trade
coverage for tariff-free treatment in the 1996
issues from being adjudicated in the DS system.
Information Technology Agreement (ITA). The
Table 2. WTO Dispute Settlement: March 2019
updated ITA will eliminate tariffs over seven years on
201 additional goods. The tariff reductions or
Total cases filed- al parties
580
elimination are applied on a most-favored-nation (MFN)
basis to all WTO members. Countries began
U.S. as Complainant
123
implementing tariff reductions per country-specific
schedules in July 2016.
U.S. as Respondent
153
The Environmental Goods Agreement (EGA)
negotiations, initiated by 14 members in July 2014,
U.S. as Third Party
148
include the United States and China, representing 86%
Source: WTO.
of global trade in such goods. Like ITA, it would apply
on an MFN basis to all WTO members. Despite 18
The Trump Administration has highlighted perceived
rounds of negotiations, the agreement is not concluded.
problems with DS system. It has raised issues with what it
Most parties blamed China for the stalemate as it
considers overreach in WTO DS decisions, which may
rejected the list of products to be included and requested
create new obligations not specifically negotiated in the
several lengthy tariff phase-out periods which other
Uruguay Rounds, especially in the area of trade remedies.
countries refused to accept. The EGA’s future remains
Perhaps to encourage DS reform, the United States has
uncertain.
blocked the appointment of new Appellate Body (AB)
jurists, which has hampered the ability of the system to hear
cases. The AB currently has 3 jurists (the minimum number
Ian F. Fergusson,
to hear a case) out of seven positions. In December 2019,
Rachel F. Fefer, Analyst in International Trade and
the terms of two of the three will expire, leaving the AB
Finance
unable to function if no new jurists are appointed.
Unilateral Enforcement Action. Some members are
IF10002
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The World Trade Organization
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