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Updated December 6, 2019
The World Trade Organization
Overview
(including emerging economic powerhouses, China, Brazil,
The World Trade Organization (WTO) was established on
and India) sought the reduction of agriculture tariffs and
January 1, 1995, following the ratification of the Uruguay
subsidies among developed countries, nonreciprocal market
Round Agreements, and today includes 164 members. It
access for manufacturing sectors, and protection for their
succeeded the 1947 General Agreement on Tariffs and
services industries. In contrast, developed countries sought
Trade (GATT), created as part of the post-WWII effort to
reciprocal trade liberalization, especially commercially
build a stable, open international trading system. The WTO
meaningful access to advanced developing countries’
has three basic functions: (1) administers existing
industrial and services sectors, while retaining some
agreements; (2) serves as a negotiating forum for new trade
measure of protection for their own agricultural sectors.
liberalization and rules; and (3) provides a mechanism to
The lasting legacy of Doha may be the successful
settle disputes. The multiple WTO agreements cover trade
negotiation of the Trade Facilitation Agreement (TFA),
in goods, services, and agriculture; remove tariff and
which entered into force in early 2017 and aims to remove
nontariff barriers; and establish rules on government
customs obstacles and inefficiencies at the border.
practices that directly relate to trade—for example, trade
remedies, technical barriers to trade (TBT), intellectual
At the latest Ministerial Conference in December 2017,
property rights (IPR), and government procurement (Table
WTO members were unable to announce major deliverables
1). The agreements are based on the principles of
or negotiated outcomes. However, separate groups of
nondiscrimination among countries—most-favored nation
members announced initiatives, work programs or
(MFN) treatment, national treatment, fair competition, and
plurilateral talks in areas including e-commerce and
transparency of trade rules and regulations. Some
investment facilitation. The United States signed on in
exceptions, however, such as preferential treatment for
support of e-commerce talks. While many members were
developing countries and regional and bilateral trade
disappointed by the limited progress, in the view of the U.S.
agreements outside the WTO, are allowed.
Trade Representative (USTR), the Ministerial “will be
remembered as the moment when the impasse at the WTO
The GATT/WTO system over time has led to a significant
was broken...like-minded WTO Members...are not held
reduction of trade barriers, supported trade expansion and
back by the few Members that are not ready to act.”
economic growth, and helped manage trade frictions. At the
same time, the WTO has faced serious challenges, some
Table 1. GATT/WTO Rounds
longstanding and some emerging more recently. One
fundamental concern is that the WTO could lose relevance
Year Name Subjects covered
Countries
due to its inability to adapt to the modern global economy
1947- Geneva, 5 rounds of tariff reductions
23 (1947);
and the lack of a successful round of major trade
1961 Annecy,
26 (1961)
liberalization since 1994. These and other concerns have
Torquay,
led several members to propose reforms to the institution in
Geneva
attempts to safeguard and improve it.
II, Dil on
1964- Kennedy Tariffs and antidumping measures
62
Congress has recognized the WTO as the “foundation of the
1967
global trading system” within U.S. trade statutes and plays
a direct legislative and oversight role over WTO
1973- Tokyo
Tariffs, antidumping, subsidies, TBT,
102
1979
government procurement
agreements. As debates over the WTO’s future intensify, a
number of issues may be of interest to Congress, including
1986- Uruguay Tariffs, nontariff measures, rules,
123
how WTO agreements affect the U.S. economy, the
1994
services, IPR, dispute settlement,
outcomes of ongoing reform and negotiation efforts, and
textiles, agriculture, WTO institution
the value of U.S. membership and leadership in the WTO.
2001- Doha
Tariffs, nontariff measures, agriculture, 142 (2001);
The Doha Round
2015*
services, trade facilitation, trade
164
remedies, and development
(current)
The Doha Development Agenda, the latest “round” of
Source: WTO.
multilateral trade negotiations, was launched in 2001 but
Notes: *At the 2015 Ministerial, WTO members acknowledged
ended in stalemate, with no clear path forward. The WTO’s
divisions over reaffirming Doha’s mandates. As a result, many
large and diverse membership and the “single undertaking”
observers considered the round to be effectively over.
approach made consensus on the broad Doha mandate
difficult. The negotiations were characterized by persistent
Agriculture and Development
differences among the United States, European Union (EU),
Agriculture is one of the thorniest issues on the WTO’s
and developing countries on major issues, such as
agenda. While no breakthroughs were reached at the 2017
agriculture, industrial tariffs and nontariff barriers, services,
Ministerial, members committed to continue negotiations
and trade remedies. For example, developing countries
on fisheries subsidies, now with a goal of completion by the
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next Ministerial in June 2020. In 2015, members agreed to a
fully-fledged market economies. To this end, the U.S., EU,
number of agriculture initiatives, including new disciplines
and Japan are engaged in discussions to establish
on export financing and export state trading enterprises; to
strengthened rules on subsidies and other issues raised by
phase out export subsidies; and to minimize or eliminate the
non-market economies where the state plays a major role.
impacts of food aid on local markets. None of the
WTO reform. USTR has indicated interest in institutional
commitments, however, are legally binding or subject to
reform of the WTO in major areas: (1) addressing
dispute settlement. Members also reached agreement on
“unanticipated challenges of non-market economies”; (2)
several measures for least developed countries (LDCs),
ensuring respect in dispute settlement rulings for members’
encompassing various special and differential treatment.
“sovereign policy choices”; (3) compelling members to
Plurilateral Initiatives
adhere to WTO notification obligations, such as for
subsidies; and (4) reassessing the treatment of “developing
While multilateral efforts have progressed slowly, several
country status” that grants some members flexibilities in
other initiatives, including plurilateral negotiations, are
WTO commitments. Some U.S. frustrations with the WTO
underway within and around the WTO. Past plurilateral
are not new and are shared by other members, but
agreements with U.S. membership cover key sectors and
approaches to solutions differ. Several members, including
are viewed by some as successful models for other efforts.
the U.S., EU, and Canada, have submitted various
Government Procurement Agreement (GPA). The
proposals on these issues, now under debate at the WTO.
GPA provides market access for various nondefense
Dispute Settlement. A major area of ongoing reform
government projects to its signatories. In force since
efforts involves the WTO dispute settlement (DS) system.
April 2014, the revised GPA expanded market access
To supporters, the DS system is considered one of the
and covered entities, and currently has 48 members.
successes of the WTO. The United States has been an
Information Technology Agreement (ITA). A subset
active user of the system (Table 2). However, some are
of members agreed in 2015 to expand product coverage
concerned about the continued legitimacy of the DS system
for tariff-free treatment in the 1996 ITA. The updated
if no further WTO agreements are reached, thus preventing
ITA is to eliminate tariffs over seven years on 201
new trade issues from being adjudicated.
additional goods. Tariff reductions or elimination are
Table 2. WTO Dispute Settlement: December 2019
applied on a MFN basis to all WTO members.
Total cases filed—all parties
592
New plurilateral initiatives underway include:
U.S. as Complainant
124
E-commerce. As noted, over 75 WTO members,
U.S. as Respondent
155
including the U.S., EU, and China agreed to new e-
commerce negotiations, which launched in March 2019.
U.S. as Third Party
156
The United States seeks a high ambition for these talks,
Source: WTO.
including commitments on cross-border data flows and
The Trump Administration has further highlighted several
bans on data localization and forced technology transfer.
issues with WTO DS. One of its major concerns involves
Other plurilateral talks are currently stalled, related to
what it considers “judicial overreach” in panel decisions,
services and environmental goods. Some raise concerns that
which, in effect, may create new obligations not specifically
plurilateral approaches, while useful, could potentially
negotiated, especially in the area of trade remedies. To spur
marginalize other non-participating countries or allow for
reform, the United States has blocked appointment of new
free riders who benefit from others’ commitments.
jurists to the seven-member Appellate Body (AB), which
reviews appeals of dispute cases. On December 10, 2019,
Ongoing Challenges
the terms of two of the three remaining members are set to
Since the Doha Round, intractable issues and active debate
expire, leaving the AB unable to function. While the EU
confront the WTO. Many members and observers concur
and others have proposed reforms to address U.S. concerns,
that the WTO must adopt reforms to remain an effective
thus far, they have been rejected by the United States. A
institution, in terms of its negotiating, monitoring, and
key question is the impact of the absence of an AB on the
dispute settlement functions.
effective enforcement of WTO rules moving forward.
Negotiating Agenda. Some issues on the Doha agenda,
Unilateral Enforcement Actions. Many observers are also
ideally negotiated multilaterally, remain contentious and
concerned that recent U.S. tariffs and counter-tariffs by
may founder for want of a negotiating venue: for example,
other countries, as well as escalating trade disputes are
attempts to discipline agricultural subsidies or resolve
further straining the WTO. In response, some members
concerns on public stockholding programs. In addition,
have brought dispute cases against the U.S., as has the U.S.,
since 1995, new trade barriers, technology advances, and
in turn. Observers express concern that unilateral tariffs
other issues have emerged. Developed countries have
may undermine the credibility of the WTO system and its
sought to incorporate issues on the agenda, such as digital
key rules and principles, and lead to ongoing new trade
trade and state-owned enterprises that pose challenges to
restrictions, without due consideration of the multilateral
the trading system. Some, including the United States, point
trading rules which aim to deter such action.
to plurilaterals as the way forward to address new issues.
Cathleen D. Cimino-Isaacs, Analyst in International Trade
More broadly, the United States contends that WTO rules
and Finance
were not designed to effectively handle the challenges of
Rachel F. Fefer, Analyst in International Trade and
emerging markets like China that many experts view as not
Finance
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The World Trade Organization
IF10002
Ian F. Fergusson, Specialist in International Trade and
Finance
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