THE WORLD TRADE ORGANISATION (WTO) SYSTEMS OF LAWS ON INTERNATIONAL TRADE (ARTICLE SERIES ALSA NG JUNE NEWSFILE)

THE WORLD TRADE ORGANISATION (WTO) SYSTEMS OF LAWS ON INTERNATIONAL TRADE

Written By: Uket Franca O.¹

It is indeed a well settled truth that the trading system of the World Trade Organization (WTO) is “Rules based”. These rules however emanate from international trade negotiations and agreement between member nations which form the sturdy pillars of international trade. However, before delving into the knowledge of these rules - now regarded as systems of laws in this context, it is pertinent to give a brief run-down on the etymology, administration, objectives and functions of WTO.

WTO is the World’s Largest International Economic Organization with a total of 164 members, representing over 98% of global trade. It is responsible for creating a convenient global space for international trade, negotiations and agreement, through the instrumentality of a trade system characterized by laws binding on all its members, all geared towards reducing international trade obstacles. The World Trade Organization officially commenced its operation on 1^st January 1995, pursuant to the 1995 Marrakesh agreement², thus replacing the General Agreement on Tariffs and Trade (GATT). It has its head-quarters at Geneva, Switzerland and is shepherded by the Director-General, Ngozi Okonji-Iweala. It comprises of three bodies; The General Council, The Dispute Settlement Body and Trade Policy Review Body. Most importantly, the primary objective and function of the WTO is creating a trade barrier free international trading system which would in turn enhance a convenient international space for countries.

However, having stated earlier that the rules of the WTO emanates from Trade Negotiations And Agreement, the quintessential multilateral agreements that form the systems of laws of WTO are as follows;

Firstly, the General Agreement on Tariffs and Trade (GATT) which is the predecessor of WTO. It was first signed in 1947 with 27 signatory countries and later expanded in 1995. GATT, according to its preamble was created for the primary purpose of “substantial reduction of tariffs and other trade barriers and the elimination of preferences, on a reciprocal and mutually advantageous basis”. A key achievement of the GATT was that of trade without discrimination. This principle is characterized by two major components, the Most Favoured Nation (MFN) rule³, which is a status or level of treatment accorded by one state to another in international trade requiring that a member of WTO must apply same conditions on all trade to every other member of the organization. The latter component which is the National Treatment⁴, requires the equal treatment of foreign goods and local goods and also that a state that grants rights and privileges to its own citizens must also grant those privileges to the citizens of other states while they are in that country. However, these principles in GATT were incorporated into the system of WTO rules to tackle the problem of discrimination in international trade.

Secondly, the General Agreement on Trade in Services (GATS). GATS, an outcome of the Uruguay round of 1995 was created to extend the multilateral trading system to the service sector. The main objectives and purpose of GATS is to create a reliable and predictable system of international rules for trade in services and to facilitate the progressive liberalization of service markets and to ensure that the laws and regulations that WTO member states apply to service trade are transparent and fair. The core principles of GATS are synonymous with that of GATT, they include the Most Favoured Nation rule and the National Treatment Policy. GATS is binding on all members of WTO but there are exception to its service trade principles. They are thus; services supplied in the exercise of governmental authority on a non-commercial basis and services related to air transport.

Thirdly, the agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS). It is an international legal agreement between all member nations of the WTO which establishes a minimum standard for the regulation by national government or different forms of intellectual property. Intellectual property rights are the rights given to persons over the creations of their minds. The areas of intellectual property TRIPS covers are; copyright and related right; trademarks including service marks; geographical indications including appellations of origin; industrial designs; patents including the protection of new varieties of plants; the layout-designs of integrated circuits; and undisclosed information. The WTO’s TRIPS in a bid to narrow the gaps in the way these rights are protected and enforced around the world brings them under common international rules and standards, providing members states with necessary procedures to seek remedies and effectively enforce their rights and settle their disputes as it concerns TRIPS through the laid down settlements procedures of WTO.

Lastly, the Trade Policy Review Mechanism (TPRM) and Rules and Procedures Governing the Settlement of Disputes. TPRM in conformity with other WTO rules of 1995, was set up for the primary purpose of contributing to adherence by all members to rules, disciplines and other commitments made under the multilateral trade agreements, and where applicable, the plurilateral trade agreements and hence to the smoother running of the multilateral trading system and achieving transparency in and understanding of trade policies and practices of members. As it concerns the latter, where non- compliance has been alleged by a WTO member, the dispute settlement system provides for a relatively rapid resolution of the matter through an independent ruling that must be implemented promptly, or the non- implementing member will face possibly trade sanctions.

Ultimately, the positive impacts of the various agreement or systems of laws of the WTO have proven to a large extent the impeccability of its existence in global trade. Through the instrumentality of this “rules based” trading system, the WTO has achieved a huge progress in eliminating trade barriers and obstacles, extending the multilateral trading system to the service sector and other important sectors of trade like intellectual property. Lastly, with the help of the trade policy review mechanism and the dispute settlement system, WTO has enhanced a transparent and convenient environment for participation in international trade.

 

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¹  Uket Franca Ofem, a 200 level law student of University of Calabar, Cross River State Nigeria.

²  Article 1 of the Marrakesh Agreement

³  Article 1 of the GATT

⁴  Article 2 of the GATT