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U.S. Department of State
95/06/07 Fact Sheet: World Trade Organization
Bureau of Public Affairs
Fact Sheet: The World Trade Organization
As a result of the Uruguay Round of multilateral trade negotiations,
global rules for international trade have been improved and extended to
most trading nations on an equivalent basis. Responsibility for
enforcement of these rules has been entrusted to a new World Trade
Organization (WTO). The WTO also will provide procedures for
negotiating additional reductions of trade barriers and for the prompt
and effective settlement of disputes in all the policy areas covered by
the new world trade agreement.
The principal trade negotiating objectives of the United States
regarding the improvement of the General Agreement on Tariffs and Trade
(GATT) and multilateral trade negotiation agreements were:
-- To enhance the status of the GATT;
-- To improve the operation and extend the coverage of the GATT and
such agreements and arrangements to products, sectors, and conditions of
trade not adequately covered; and
-- To expand country participation in particular agreements or
arrangements, where appropriate.
The agreement establishing the WTO facilitates the implementation of
trade agreements in the diverse areas of trade in goods, trade in
services, and the protection of trade-related intellectual property
rights. The WTO encom-passes the former GATT structure and extends it
to new disciplines that have not been adequately covered in the past.
By bringing together disciplines on government practices affecting trade
in goods and services and the protection of intellectual property rights
under one institutional umbrella, the WTO agreement also facilitates the
"cross-retaliation" mechanism of the integrated dispute settlement
In addition, the WTO resolves the "free rider" problem in the world
trading system. WTO benefits only extend to its members who have agreed
to adhere to all of the Uruguay Round agreements; and that submit
schedules of market access commitments for industrial goods,
agricultural goods, and services. This eliminates the shortcomings of
the former GATT system in which, for example, only a handful of
countries voluntarily adhered to disciplines on subsidies under the 1979
Tokyo Round agreement.
The WTO agreement establishes a number of institutional rules (described
below) that are applied to all Uruguay Round agreements. It establishes
an international organization with a stature commensurate with that of
the World Bank and International Monetary Fund. The organization is
similar to that of the existing GATT Secretariat.
Trade and Environment. The WTO agreement recognizes the importance of
environmental concerns. This addresses a key interest among U.S.
environmental and conservation groups, which have often expressed
concern that international trade agreements have failed to take
environmental issues into account. A WTO committee on trade and
environment aims to ensure the responsiveness of the multilateral
trading system to environmental objectives.
Decision-making. The U.S. has successfully retained the practice of
general decision-making by consensus followed under the GATT since 1947.
Consensus is achieved "if no member, present at the meeting where the
decision is taken, formally objects to the proposed decision." This
continues to enable the U.S. to prevent a decision that it perceives to
be contrary to its interest.
Amendments. The agreement permits amendments but ensures that an
amendment of the substantive rights and obligations not be binding on
the U.S. without acceptance of the amendment. In contrast, amendments
to pure procedural provisions of the Uruguay Round agreements will be
binding on all members in order to avoid the destabilizing effect that
would result if different members were subject to different procedural
Waivers. The agreement allows members to grant waivers of substantive
provisions in the various Uruguay Round agreements, but only in
exceptional circumstances. In the case of an obligation subject to
phased-in implementation, such as those in the agreement on trade-
related intellectual property issues (TRIPs), that has not yet been
fulfilled by the requesting member, members may grant a waiver only by
consensus. Also, the waiver provision substantially increases the
threshold for obtaining waivers from two-thirds of members present to
three-quarters of all members. Any waivers granted are subject to
specific conditions, including a date on which the waiver will
Interpretations. Under the WTO, reports of dispute settlement panels do
not constitute "authoritative" interpretations of the relevant
agreements. Only the members themselves--acting through the Ministerial
Conference or General Council--can adopt such an interpretation. The
agreement also states that interpretations not be used in a manner that
undermine amendment provisions.
Non-application. The agreement does not permit sector non-application.
Thus, for example, India is precluded from not applying the TRIPs
agreement to the U.S. With respect to WTO members that accede to the
WTO but are not "original members" (generally, are not GATT contracting
parties), a member can invoke "global" non-application. Thus, with
respect to the People's Republic of China and possibly other acceding
members, the U.S. can choose not to apply the GATT and the Uruguay Round
agreements to that country as a whole.
Definitive Application. In joining the WTO agreement, members agree to
the definitive application of the obligations of the Uruguay Round
multilateral trade agreements. (Accession to the multilateral trade
agreements, such as the agreement on government procurement, is limited
to those members that affirmatively accept these agreements.) Annex 1
to the WTO agreement eliminates the protocol of provisional application
and corresponding provisions in protocols of accession to the GATT that
had the effect of allowing certain existing legislation of contracting
parties that are inconsistent with the GATT. However, Annex 1 includes
a clause that protects from GATT challenge U.S. maritime laws relating
to cabotage ("Jones Act").
June 7, 1995
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