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From Bretton Woods to the WTO

The world's trade organization must withstand much criticism. But what is the WTO?


Before World War II, there was no organization or agreement that provided rules and cooperation arrangements for international economics and trade. There were a large number of bilateral agreements, and the individual countries' authorities could themselves introduce measures they deemed necessary to safeguard their financial interests. This was often used to protect the country's own production against competition from outside – in the form of import-restrictive measures, ongoing write-downs of currencies and the like. Very short-term considerations for individual industries were often the basis. The result was a vicious circle that most people lost, with economic downturns and mass unemployment as a result.

These experiences led a number of countries to meet in 1944 in Bretton Woods, New Hampshire, USA – the so-called Bretton Woods negotiations – which aimed to establish rules of the game for both trade and economic policy. The negotiations led, among other things, to the establishment of the World Bank and the International Monetary Fund (IMF). In the area of ​​trade, negotiations stalled in opposition in the US Congress. It therefore ended up with the General Agreement on Tariffs and Trade (GATT) instead of an International Trade Organization (ITO). GATT was first and foremost a formally binding framework in which the parties agreed on mutual obligations regarding tariff reductions for goods together with basic trading principles. GATT was signed on 30 October 1947, and entered into force on 1 January 1948. Norway was involved from the start.

The multilateral trading system has evolved through eight so-called "rounds." The early rounds concentrated on tariff reductions for industrial goods. From the Tokyo Round in the 1970s, the agreement gradually developed to also include rules in areas such as technical barriers to trade, import licensing, subsidies, anti-dumping and more. The Uruguay Round in the 80s and 90s was a milestone in the development of the multilateral trading system. The WTO was established on 1 January 1995. A set of rules for trade in services was developed based on the same principles as for trade in goods. A separate agricultural agreement was also negotiated. A regulatory framework for the protection of intellectual property rights related to trade (TRIPS) was drawn up, and the dispute resolution system was significantly strengthened. The establishment of the WTO also marked the end of the Uruguay Round. Today, the WTO is the only global organization that regulates trade between states. With the establishment of the WTO, the members undertook to negotiate further liberalization and rules for this, primarily in the service sector and agriculture. However, agriculture in particular has proved to be a problem.

Conflict Resolution Body

The WTO's dispute resolution procedures place great emphasis on consultation between the parties. In a number of cases, the parties find amicable solutions within the framework of WTO regulations. If a member does not respect the rules, other members can bring the specific case before the WTO's Dispute Settlement Body. The WTO Dispute Settlement System covers all three main pillars of goods, services and TRIPS. The process can take place in several stages, from informal consultations to decisions in a "panel" or possibly to a special appeal body. Both the panel and the appeal body consist of independent experts. The WTO is much more effective in relation to its predecessor GATT, as GATT had a requirement for unanimity to adopt a report from panels / appeals bodies. In the WTO, the report is now automatically adopted by the Dispute Settlement Body if there is no agreement to the contrary.

Clear deadlines have been set for national monitoring of such reports, for example in the form of repeal of measures that have been found to be in violation of the regulations. A Member State that fails to live up to the conclusions of such treatment, or fails to provide compensation, may be legally subject to penalties. All members use the dispute resolution system. This system is itself subject to change as the organization develops.

A guiding principle is to ensure predictable framework conditions and that no trading partners should be discriminated against. Two concepts are basic:

Most Favored Nation Treatment (Most Favored Nation Treatment – MFN): benefits granted to a member (eg reduction of or exemption from customs duties or taxes) shall apply to all other WTO members.

National treatment: imported goods and services shall not be treated less favorably by national laws and regulations than those provided by similar domestic goods and services.

Exemptions from the principle of equal treatment are allowed when members individually or in groups go further to liberalize their economic relations by entering into regional or bilateral free trade agreements such as Norway and the EU have done in the EEA Agreement. Another exception is positive discrimination in favor of developing countries.

Sixth in the series

The WTO's supreme body is the Ministerial Conference, which is held every two years. The first took place in Singapore in 1996, the next was combined with the celebration of the 50th anniversary in 1998 and took place in Geneva. Third ministerial conference was held in Seattle in 1999. Fourth ministerial conference took place in Doha, Qatar in late 2001. The fifth ministerial conference was held in Cancùn, Mexico, in 2003. The sixth is to be held in Hong Kong now. The day-to-day activities are run by the member states' representatives on the main council and its underlying bodies. Members are assisted by the WTO Secretariat headed by a Director General. WTO's current Director General is Frenchman Pascal Lamy, and he is the fifth Director General in the line.

33 will join

The expansion of the WTO reflects the global development that has led a majority of the world's countries to join the open and rule-based international trade system. The WTO currently has 148 members. In the search list we find 33 countries. These currently only meet with observer status. These include Bosnia, Russia, Saudi Arabia, Iran, Iraq, Sudan, Ukraine, Vietnam and Yemen.

The increase in the number of members in the WTO has led to the majority of members now being developing countries. Their share of world trade is still small, but its members work together to become more integrated in international trade. Among other things, this is done by developing countries benefiting from transitional arrangements to allow more time to carry out their obligations nationally, while retaining all rights. The industrialized countries are committed to providing technical and technical assistance to developing countries.

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