The World Trade Organization (WTO) was formed on 1 January 1995 as a continuation of the General Agreement on Tariffs and Trade (GATT). WTO is a forum for nations to negotiate trade agreements and settle trade disputes. WTO has 164 members, representing 84% of the 196 countries in the world. Many nations joined the WTO because they wanted to enjoy the benefits of being a member of WTO.
According to Johns & Pelc (2016), WTO smoothens trade agreements between member states. WTO has created rules and policies to guide trade agreements to create a safer trading arena for member states. WTO also provides a fair method for solving trade disputes without resolving threats and violence that could harm global peace. WTO grants each member state Most Favored Nation status, meaning all WTO members should treat each other equally and it should not accord preferential treatment to others. Lastly, WTO members have lower trade barriers with each other.
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Being a member of WTO comes at a cost. Members have to agree to get rid of trade barriers and operate according to WTO rules. The members also rely on WTO for conflict resolution. Johns & Pelc (2016) note that the WTO has been accused of representing the interests of dominant actors, mainly the US and Great Britain. Developing nations have a comparative disadvantage in comparison to developed nations; hence their issues are not even brought to the WTO table.
WTO settles disputes by following the procedures established for resolving disputes. The WTO dispute settlement mechanism (DSM) resembles a court or a tribunal, and it involves many stages. The first stage is a consultation between the disputing governments. When the consultations and mediations fail, a panel is set at the WTO to look into the issue and come up with a report. The panel will report to the parties first before reporting to the WTO whereby the Dispute Settlement Body (DSB) will adopt the report if there are no appeals.
The WTO has many ongoing cases, some of them are yet to be resolved after two years because the panel takes time to come up with a comprehensive report. For example, the dispute between the United States and European Union on conditional tax incentives for large civil aircraft titled DS487 was filed at WTO on 19 December 2014 and the DSB adopted the Appellate Body report and panel report on 22 September 2017.
Reference
Johns, L., & Pelc, K. J. (2016). Fear of Crowds in World Trade Organization Disputes: Why Don’t More Countries Participate? The Journal of Politics , 78 (1), 88-104.
