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WTO agreement

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WTO agreement

 

SUMMARY OF:

Council Decision 94/800/EC on the conclusion on behalf of the EU of the agreements reached in the Uruguay Round of multilateral negotiations (1986-1994) — aspects related to trade in goods

Uruguay Round of multilateral trade negotiations (1986-1994) — Agreement establishing the World Trade Organisation

Notice on the entry into force of the protocol amending the Marrakesh Agreement establishing the World Trade Organisation

WHAT IS THE AIM OF THE DECISION AND OF THE AGREEMENT?

On behalf of the European Community (today the European Union), the decision approves the agreement that established the World Trade Organization (WTO).

KEY POINTS

Final act embodying the results of the Uruguay Round of multilateral trade negotiations

Agreement establishing the WTO

  • This agreement creates a permanent institutional framework for the specific agreements listed above.
  • The WTO is a permanent organisation that benefits from a legal personality. All members of the GATT became funding members of the WTO on 1 January 1995. Since then, applicants wishing to join have had to follow the accession procedure set out in the agreement establishing the WTO.
  • The WTO members have set the following objectives for the organisation:
    • raising standards of living;
    • ensuring full employment and a growing volume of real income and effective demand;
    • expanding the production of and trade in goods and services;
    • sustainable development and protection of the environment;
    • taking account of the needs of developing countries.
  • The functions of the WTO are to:
    • facilitate the implementation, administration and operation of the various trade agreements;
    • provide a forum for multilateral trade negotiations;
    • resolve trade disputes through the Dispute Settlement Body (DSB);
    • review the national trade policies of its members;
    • cooperate with other international organisations in order to ensure greater coherence in global economic policymaking.

Structure

  • The Ministerial Conference, is the highest decision-making body of the WTO. It is composed of representatives of all the member countries and meets at least once every 2 years. Between these meetings, the General Council, made up of representatives of all the members, takes decisions related to the functioning of the WTO and supervises the agreements and ministerial decisions. The General Council also meets to discharge the responsibilities of the DSB and the Trade Policy Review Body (TPRB) provided for in the TPRM (see below).
  • The General Council has 3 subsidiary bodies: the Council for Trade in Goods, the Council for Trade in Services and the Council for Trade-Related Aspects of Intellectual Property Rights. In addition, there are several committees directly attached to the General Council. These include the Committees on Trade and Development, on Trade and Environment and Regional Trade Agreements. Lastly, 2 committees are responsible for managing the 2 plurilateral agreements on trade in civil aircraft and on government procurement.
  • The General Council appoints a director-general who is responsible for heading the Secretariat of the WTO.
  • In principle, the WTO takes its decisions by consensus. When a decision cannot be reached, decisions are taken by a majority of votes, each WTO member having one vote. The EU, which is a full member of the WTO, has a number of votes equal to the number of EU countries that are members of the WTO.
  • Each member of the WTO may submit proposals to the Ministerial Conference to amend provisions of the WTO’s various multilateral trade agreements.

Understanding on rules and procedures governing the settlement of disputes

  • The WTO’s dispute settlement system is an important element of the multilateral trading order. It is based on Articles XXII and XXIII of the GATT 1994 and on the rules and procedures subsequently drawn up and set out in the understanding on rules and procedures governing the settlement of disputes incorporated into the agreement establishing the WTO.
  • The dispute settlement system covers all of the multilateral trade agreements. In fact, it applies to trade in goods, trade in services and intellectual property issues covered by the TRIPS agreement. It also applies to disputes under the plurilateral Agreement on Government Procurement. Some of these agreements contain rules concerning the settlement of disputes that only apply to disputes under the agreement in question and that may supplement or modify the rules of the understanding.
  • The dispute settlement system is administered by the DSB, set up by the understanding. All WTO members may attend the DSB’s meetings. However, where the DSB regulates the rules that relate to the settlement of disputes concerning a plurilateral trade agreement, only the members that are party to the agreement will be able to participate in decisions or actions taken by the DSB with respect to disputes under that agreement.
  • The dispute settlement process is launched when one member submits to another a request for consultations on a specific issue. These consultations must begin within 30 days of the request. If the consultations fail to settle a dispute, a member may call on the DSB to set up a panel, usually consisting of three independent experts, in order to deal with the issue. In addition, the parties may voluntarily agree to make use of other dispute settlement methods, including good offices, conciliation and mediation.
  • After listening to the parties, the panel submits a report to the DSB. The panel must complete its work within 6 months or, in cases of urgency, within 3 months. The report is considered for adoption by the DSB 20 days after it has been circulated to members. It is adopted within 60 days of the date of circulation unless the DSB decides by consensus not to adopt the report (opposite or negative consensus) or if one of the parties notifies its decision to appeal.
  • Indeed, the WTO’s dispute settlement procedure enables all parties to a panel case to appeal. The appeal is, however, limited to issues of law covered in the panel report and legal interpretations developed by the panel. The appeal is examined by a standing Appellate Body composed of 7 members appointed by the DSB for a 4-year term. Three of the members serve on any one case. The Appellate Body’s report must be accepted unconditionally by the parties of the dispute and adopted by the DSB unless there is a negative consensus. In other words, a decision by consensus not to adopt the report.
  • The DSB keeps the implementation of adopted recommendations or decisions under surveillance, and all pending matters remain on the agenda of its meetings until they are resolved. Deadlines are also set for the implementation of recommendations set out in panel reports. When a party is unable to implement these recommendations within a reasonable period of time, it must enter into negotiations with the complaining party with a view to developing mutually acceptable compensation. If these negotiations are unsuccessful, the DSB may authorise the complaining party to suspend the application of concessions or obligations to the member concerned. Compensation and the suspension of concessions are, however, only temporary measures that may be applied until the DSB’s recommendations are implemented by the member concerned.
  • In all cases, WTO members agree that they will not themselves determine whether there has been a violation of the obligations laid down within the framework of the WTO, nor suspend concessions. They must apply the rules and procedures for the settlement of disputes set out in the understanding.
  • Furthermore, the understanding on rules and procedures governing the settlement of disputes recognises the special situation of the WTO’s developing country members and least-developed country members. Developing countries may opt for an accelerated procedure, request extended deadlines or request additional legal aid. WTO members are encouraged to give particular consideration to the situation of developing country members.

Trade Policy Review Mechanism

  • The TPRM was set up as a temporary measure under the GATT in 1989 following the mid-term review of the Uruguay Round. This mechanism is now an integral part of the WTO system and encompasses all the fields covered by the WTO agreements (goods, services and intellectual property questions).
  • The TPRM in particular aims to achieve greater transparency in, and an understanding of, the trade policies and practices of WTO members, to encourage members to adhere to the rules in force in the multilateral trading system and, thus, to promote the smooth functioning of the system.
  • Within the framework of the TPRM, all WTO members are subject to review. This review is held every 2 years for the members with the greatest share of world trade (currently China, the EU, Japan and the United States), every 4 years for the next 16 members and every 6 years for the other members. A longer period may be set for least developed countries. In practice, a certain degree of flexibility has been introduced to the rate of reviews (up to a 6-month interval). In 1996, it was agreed that every other review of each of the first four trading powers would be an interim review.
  • The review is carried out by the TPRB on the basis of a general policy declaration submitted by the member concerned and on a report drawn up by the WTO Secretariat. In drawing up its report, the Secretariat seeks the support of the member concerned but retains full responsibility for the facts presented and views expressed. The Secretariat’s report and the member’s declaration are published following the review meeting, together with the minutes of the meeting and the text of the final comments made by the chairman of the TPRB at the end of the meeting.

FROM WHEN DO THE DECISION AND THE AGREEMENT APPLY?

  • The decision has applied since 22 December 1994.
  • The agreement has applied since 1 January 1995.

BACKGROUND

For more information, see the other summaries on the same decision and agreement on EUR-Lex:

MAIN DOCUMENT

Council Decision 94/800/EC of 22 December 1994 concerning the conclusion on behalf of the European Community, as regard matters within its competence, of the agreements reached in the Uruguay Round of multilateral negotiations (1986-1994) (OJ L 336, 23.12.1994, pp. 1-2)

Uruguay Round of Multilateral Trade Negotiations (1986-1994) — Agreement establishing the World Trade Organization (WTO)(OJ L 336, 23.12.1994, pp. 3-10)

Notice concerning the entry into force of the Protocol amending the Marrakesh Agreement establishing the World Trade Organization (OJ L 54, 1.3.2017, p. 1)

last update 15.05.2017

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