The WTO is an inter-governmental organization for progressively liberalizing trade. Trade liberalization is the main approach that WTO Member governments have adopted to promote economic growth and development. The WTO has almost a global Membership. 164 governments are Members of the WTO.
There are a number of ways of looking at the WTO. It is an organization for governments to negotiate global trade agreements. The WTO operates a system of trade rules that apply to all its members. The WTO is also a place for Member governments to settle their trade disputes.
In the preamble to the WTO Agreement, the parties to the Agreement recognize the objectives they wish to attain through the multilateral trading system:
The Agreement also recognizes the need for “positive efforts to ensure that developing countries, and especially the least-developed among them, secure a share in the growth in international trade commensurate with … their economic development”.
Most-Favored-Nation (MFN) Principle:
Treating foreigners equally Under the WTO Agreements, a country should not discriminate between its trading parties. According to the MFN principle, any advantage, favor, privilege or immunity granted by a Member to any product originating in or destined for any other country shall be accorded immediately and unconditionally to the like product of all Members. The MFN principle is one of the cornerstones of the WTO.
National Treatment Principle: treating foreigners and locals equally
Within national territory, WTO Members cannot favor domestic products over imported products. The principle also applies to all WTO covered agreement.
General Prohibition of Quantitative Restrictions (qrs)
WTO Members cannot prohibit, restrict or limit the quantity of products authorized for importation or exportation, subject to limited exceptions
Observance of Binding levels of Tariff Concessions (goods) and of Specific Commitments (services)
Minimum market access conditions are guaranteed by commitments undertaken by Members regarding customs duties and market access for the supply of services.
Transparency
It is fundamentally important that regulations and policies are transparent WTO Members are required to inform the WTO and fellow-Members of specific measures, policies or laws through regular “notifications”. In addition, the WTO conducts periodic reviews of individual Members’ trade policies through the trade policy review mechanism.
The multilateral rules governing world trade are contained in the WTO Agreements. They are the result of negotiations among WTO Member governments and are the basis of the present WTO system. The WTO Agreements cover trade in goods, trade in services and trade-related aspects of intellectual property rights.
These Agreements set forth the basic principles of the multilateral trading system (MTS) and the permitted exceptions. They include Members’ specific commitments (e.g. tariff bindings) and set forth disciplines on other trade barriers. They also set procedures for settling trade disputes among the Members.
The Agreement Establishing the WTO contains all WTO Agreements in its Annexes. Annexes 1,
2 and 3 contain the “Multilateral Trade Agreements”, which apply to all WTO Members (most WTO Agreements). Annex 4 contains the “Plurilateral Trade Agreements”, which have a limited Membership.
