The World Trade Organization (WTO) recently made headlines with the appointment of Nigeria’s Ngozi Okonjo-Iweala as Director-General. This appointment marks a significant milestone, as Okonjo-Iweala is the first African official and woman to hold this position. This article will dive into the details about WTO, its origin, structure, objectives, achievements, and challenges.
The Origin and Purpose of WTO
The WTO was established on January 1, 1995, following the Uruguay Round (1986-94) of the General Agreement on Tariffs and Trade (GATT). This Marrakesh Agreement, named after the city in Morocco where it was signed, transformed GATT into an international organization responsible for enforcing trade rules among nations.
Unlike GATT, which primarily focused on goods, the WTO expanded its reach to include trade in services and intellectual properties such as designs and inventions.
WTO’s Governance Structure
The WTO is headquartered in Geneva, Switzerland, and has 164 member states, including the European Union, and 23 observer governments, with India being a founder member.
The WTO’s decision-making process is dominated by its highest authority, the Ministerial Conference, made up of representatives from all its members. Other important bodies within the WTO include the General Council, Dispute Settlement Body, and the Trade Policy Review Body.
Objectives of WTO
The WTO aims to set and enforce rules for international trade, provide a forum for negotiating and monitoring further trade liberalization, resolve trade disputes, increase transparency in decision-making processes, and cooperate with other major international economic institutions. It also strives to help developing countries benefit from the global trading system.
Achievements of WTO
Due to the binding rules for global trade set by WTO, cross-border business activities have soared. The value and volume of world trade have almost quadrupled since 1995. It has fostered predictable market conditions, which in combination with improved communications, led to the rise of global value chains. Least developed countries are given special attention in WTO agreements, which helps uplift them economically.
Challenges Facing the WTO
However, the WTO is not without its challenges. China’s state capitalism presents a significant problem for the free-market global trading system, leading to disputes such as the ongoing USA-China trade war.
The organization also faces institutional issues, with the Appellate Body’s operations suspended since December 2019 due to the USA’s blocking of appointments. A lack of definition around what constitutes a developed or developing country also adds to the difficulties within WTO negotiations.
The WTO’s rules have not kept pace with the rapidly changing global trade landscape, particularly in areas of e-commerce and digital trade. There are also problems with the Agreement on Agriculture due to food security and development concerns from developing countries.
The Way Forward
To modernize, the WTO needs to develop new rules for dealing with digital trade and e-commerce. It must handle China’s trade policies more effectively and navigate issues like state-owned enterprises and industrial subsidies. With the escalating concern around climate change, aligning trade and environmental sustainability could help to rejuvenate the WTO.