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World Trade Organization (WTO): Q & A

Q. What is the World Trade Organization?

A. The WTO is the sole world body responsible for overseeing multilateral agreements to reduce trade barriers among nations.

Q. More specifically, what does it do?

A. The WTO has three main purposes: help trade flow as freely as possible; serve as a forum for trade negotiations; and resolve disputes. The heart of its system is a rules-based structure and the principle of non-discrimination. The WTO has three main purposes: help trade flow as freely as possible; serve as a forum for trade negotiations; and resolve disputes. The heart of its system is a rules-based structure and the principle of non-discrimination, or equity, among trading partners.

Q. Isn't the General Agreement on Tariffs and Trade (GATT) the world trade group?

A. Not now, but it used to be. GATT was an international contract created in 1948. In a reaction to the protectionism that contributed to the Great Depression and the Second World War, GATT established some limits on how countries could protect their own markets. Over the years, GATT was revised through a series of trade negotiations called "Rounds." The first Round resulted in 45,000 tariff cuts affecting 1/5 of the world's total trade. At the end of the "Uruguay Round" in 1995, GATT members agreed to establish the WTO, a full time organization charged with implementing and enforcing the Agreement. Not now, but it used to be. GATT was an international contract created in 1948. In a reaction to the protectionism that contributed to the Great Depression and the Second World War, GATT established some limits on how countries could protect their own markets. Over the years, GATT was revised through a series of trade negotiations called "Rounds." The first Round resulted in 45,000 tariff cuts affecting 1/5 of the world's total trade. At the end of the "Uruguay Round" in 1995, GATT members agreed to establish the WTO, a full time organization charged with implementing and administering the Agreement.

Q. How is WTO different from GATT?

A. GATT was an international contract, dependent upon the contracting parties for enforcement. WTO has a permanent forum for trade consultations and negotiations. It has a unified dispute-settlement system. Members must agree to adhere to all of WTO's multilateral trade agreements. Its overall mandate remains the harmonization of trade policies to reduce barriers. GATT was an international contract, dependent upon the contracting parties for enforcement. WTO has a permanent forum for trade consultations and negotiations. It has a unified dispute-settlement system. Its overall mandate remains the harmonization of trade policies to reduce barriers. Decisions are made by consensus.

Q. Doesn't the U.S. already have low barriers?

A. Yes, ours are among the world's most open markets, which is why the WTO is especially good for our country. Lowering barriers in other countries helps level the field by opening foreign markets to our products on more reciprocal terms.

Q. How is that going to help me?

A. A tariff is a tax. The dollar result of lowering barriers throughout the world is that the price of business inputs for U.S. companies goes down. The practical impact is lower prices and greater choices. The American consumer feels this directly in increased savings and greater variety of consumer goods.

Q. You're saying we save money because of the WTO. Can you back that up?

A. In 1990, prior to the WTO, private sector studies estimated that trade protectionism carried a cost to U.S. consumers of about $70 billion per year. When current WTO agreements reach full implementation in 2005, the effect on a family of four is projected as an increase in purchasing power, or a saving of $1,500 - $3,000 annually.

Q. Is it true that the WTO meets in secret?

A. No, that's not true. Proceedings and decisions usually are made public, and often are available on the WTO website. Like many diplomatic negotiations, the sessions themselves are often limited to the ambassadors and negotiators of the countries involved in a particular dispute. The U.S. and some WTO staff are working to make more of the proceedings open, but a majority of member countries would need to agree before internal operating rules could be changed.

Q. Some criticisms have been made concerning the WTO and labor and environment. What are they?

A. The WTO has been criticized because trade agreements do not include environmental and labor protections. These groups would prefer if the Agreement set core labor standards and minimum environmental standards as well as trade rules.

Q. Should there be such all-encompassing agreements?

A. That is up to the 133 WTO members to decide. So far, even though the WTO has a trade and environment committee looking into these issues, the majority of countries maintain that international environmental issues are best addressed through specific international environmental treaties, and that international labor standards are best set by the International Labor Organization. That is up to the 134 WTO members to decide. So far, even though the WTO has a trade and environment committee looking into these issues, the majority of countries maintain that international environmental issues are best addressed through specific international environmental treaties, and that international labor standards are best set by the International Labor Organization.

Q.What about the issue of transparency?

A. The concern is that diplomats and technical experts conduct WTO negotiations and dispute settlement behind closed doors. There is an increasing understanding that some of the proceedings should be made more public, and the U.S. is one of the countries in the forefront of that discussion. While conducting international economic negotiations in an open forum is not always feasible, decisions on policy are made in public by the WTO membership.

Q. What is the Seattle-WTO Ministerial about?

A. Trade Ministers from 133 countries will meet in Seattle from Nov. 30 to Dec. 3, 1999. This is an historic opportunity for the U.S. to exercise leadership in setting the trade agenda for the next century. Discussions will be launched on the WTO's built-in agenda to reduce trade barriers in agriculture and services, and to expand the range of its work to address emerging trade issues.

Q. What's the buzz about a "Seattle Round"?

A. In his recent State of the Union address, President Clinton called for a new negotiating Round. It would last for three years and cover a broad range of initiatives and improvements. Some of those include an accelerated negotiating framework on agriculture, goods and services; key institutional reforms in transparency and accountability; broadening WTO participation; methods of capacity-building for LDC's; and environmental and labor matters.