Background of WTO

What is the World Trade Organization (WTO)

The World Trade Organization (WTO) was established on 1 January 1995, as a result of the Uruguay Round of Multilateral Trade Negotiations concluded in 1994. The predecessor of the WTO is the General Agreement on Tariffs and Trade (GATT).

The WTO is the only international body dealing with the rules of trade among states and separate customs territories. The WTO agreements provide the legal ground-rules for international commerce. They are essentially contracts, binding governments to conduct their trade and trade policies according to principles and rules. Although negotiated and signed by governments, the goal is to help producers of goods and services, exporters, and importers conduct their business.

The WTO's main objective is to help trade flow smoothly, freely, fairly and predictably. To this end, the WTO:

• rejects all forms of protectionism
  
• removes trade barriers and eliminates discriminatory treatment in international trade through successive multilateral trade negotiations
  
• provides a fair, predictable and open rule-based trading system through overseeing the implementation of multilateral trade rules and enforcing legally binding obligations
  
• provides a mechanism for settling trade disputes
  
• integrates developing and least developed economies into the world trading system
  

Membership

The WTO currently has 153 members (including Cape Verde, the latest acceded Member), accounting for over 90% of world trade.

WTO Structure

The WTO is run by its member governments. Decisions are normally taken by consensus among the entire membership.

The WTO's structure:

• The WTO's highest decision-making body is the Ministerial Conference which meets at least once every two years.
• Below this is the General Council (normally represented by ambassadors and heads of delegation in Geneva, but sometimes officials sent from members' capitals) which meets several times a year in Geneva. The General Council also meets as the Trade Policy Review Body and the Dispute Settlement Body.
• At the next level below are the three Councils each handling a different broad area of trade - the Council for Trade in Goods (Goods Council), the Council for Trade in Services (Services Council), and the Council for Trade-Related Aspects of Intellectual Property Rights (TRIPS Council).

There are also specialized committees, working groups and working parties dealing with the individual agreements and other areas such as the environment, development, membership applications and regional trade agreements. They regularly report to the General Council, Goods Council and Services Council as appropriate.

The WTO Secretariat in Geneva has around 600 staff and is headed by a Director-General. The WTO Secretariat's main duties are to provide administrative support for the running of the system.

The WTO's Agreements

The WTO's rules - the agreements - are the result of negotiations between members. The latest set reflects the outcome of the 1986-94 Uruguay Round negotiations.

The WTO agreements cover goods, services and intellectual property. They spell out the principles of liberalization, and the permitted exceptions. They include individual members' commitments to lower customs tariffs and other trade barriers, to open and keep open services markets, and to protect intellectual property. In addition, they set procedures for settling disputes. They prescribe special treatment for developing economies. They require governments to make their trade policies transparent by notifying the WTO about laws in force and measures adopted, and through regular reports by the secretariat on members' trade policies.

The WTO's rules - "The Results of the Uruguay Round of Multilateral Trade Negotiations: The Legal Texts" comprises about 60 agreements, annexes, decisions and understandings.

Importance of the WTO to Hong Kong

The WTO is the cornerstone of Hong Kong's external trade policy.

The WTO embodies a set of legally binding rules to ensure that international trade is conducted on a fair and equitable basis. It helps guard against arbitrary and discriminatory trade actions. Its includes an effective mechanism to settle trade disputes between its members. The periodic negotiations help sustain global trade liberalisation and economic growth.

For a small and externally oriented economy such as Hong Kong, a strong and credible multilateral trading system is of great importance. Hong Kong is a founding member of the WTO. Our separate membership continues after reunification with the Mainland of China on 1 July 1997, under the name of "Hong Kong, China".