The United States and the World Trade Organization
This week, Ambassador Ron Kirk and other senior staff from the Office of the United States Trade Representative (USTR) will participate in the eighth World Trade Organization (WTO) Ministerial Conference in Geneva, Switzerland. The Ministerial Conference, which is the chief decision-making body of the WTO, brings together all of the organization’s members to discuss pressing agenda items concerning the multilateral trading system. This post will briefly describe the WTO’s background, its main functions and principles, and the benefits of U.S. participation in the organization.
The WTO, located in Geneva, Switzerland, is an international organization responsible for managing and enforcing the rules of international trade. Stemming from an agreement during the Uruguay Round of trade negotiations (1986-1994), the WTO was officially established on January 1, 1995. The WTO expanded upon the previous trade regime, the General Agreement on Tariffs and Trade (GATT), by creating a permanent organization relevant to the new realities of globalization and the increasing complexities of international trade.
There are currently 153 member states represented in the WTO, with a number of other countries seeking membership. At the organization’s core are agreements that are negotiated by the member states. One main function of the WTO is to serve as a negotiating forum where member states can discuss trade problems. Through various negotiations, member states have created, and continue to build, a set of rules for international trade, particularly focusing on the reduction of trade barriers. These agreements cover a wide range of activities and issues, including agriculture, textiles and clothing, banking, telecommunications, industrial standards and product safety, intellectual property, and much more. The WTO also importantly serves as an enforcement mechanism, allowing member states to settle disputes by bringing forward complaints if they believe other countries are not following the rules set forth in these agreements.
The WTO operates based on five key principles that are the foundation of the multilateral trading system. First, the WTO does not allow countries to discriminate between its trading partners or between domestic and foreign products. The second foundational principle is the promotion of freer trade through the reduction of trade barriers by negotiation. Third, the WTO maintains predictability and stability in the multilateral trading system by creating binding commitments, which increase business investment and competition. Fourth, the WTO supports fair competition by creating a level playing field for all of its members. Last but not least, the WTO also encourages development and economic reform for “least-developed” countries (LDCs).
The United States is an original member of the WTO and a steadfast supporter of the rules-based multilateral trading system that it governs. Working through the WTO, the United States is able to protect and advance the economic interests of American businesses and workers while opening foreign markets. These actions protect and create jobs and support economic growth here at home. The United States is also a world leader in securing the reduction of trade barriers to expand global economic opportunity, to raise standards of living, and to reduce poverty. The WTO agreements also provide a foundation for U.S. bilateral and regional agreements, like those recently signed with Korea, Colombia and Panama.