Understanding the WTO: Trade Rules and Agreements (3)

This is the last of our initial series of articles on the WTO. Our previous two articles discussed the nature, concept and principles of the WTO. Below is a summary of the major agreements (also known as trade rules), which have been acceded to by member countries under the WTO framework.

Main Areas of Agreement. It has often been said that WTO trading system is rule-based, trading rules that have been negotiated and agreed upon by member-countries. The formal establishment of the WTO itself resulted from the “Uruguay Round of Multilateral Agreements”, which is composed of at least 60 agreements, annexes, decisions and understanding. In general, these various agreements and documents can be categorized into the following main areas:

1. umbrella agreement creating the WTO;
2. agreements on 3 broad areas of trade (goods, services and intellectual property)
3. agreement on dispute settlement; and
4. agreement on trade policy review.

Agreements on Trade Areas. As mentioned above, the WTO framework covers three broad areas of trade involving goods, services and intellectual property. The main agreement governing trade in goods is covered by the General Agreement on Tariffs and Trade (GATT). The main agreement for trade in services is the General Agreement on Trade in Services (GATS) while that for intellectual property is the agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS).

Trade in Goods / GATT. The specific trade sectors or issues covered by GATT are as follows:

1. Agriculture
2. Product Standards and Safety (Health Regulations on Farm Products / Sanitary and Pytosanitary Measures and Technical Barriers to Trade)
3. Textiles and Clothing
4. Investment Measures
5. Trade Remedy Measures (Anti-dumping, Safeguards and, Subsidies)
6. Customs Valuation, Import Licensing, Pre-shipment Inspection and Rules of Origin

While the GATT contains the broad principles governing trade in goods, there are extra agreements and annexes governing specific sectors and issues. In addition, there are detailed and lengthy schedules of commitments of individual countries on each specific product. Under the GATT, these commitments take the form of commitments on tariffs and are binding on the individual countries. Trade in Services / GATS. The GATS contains the broad principles governing trade services in the following sectors:

1. Movement of Natural Persons
2. Air Transport and Shipping
3. Financial Services
4. Telecommunication

In addition to the general agreement, there are additional extra agreements and annexes together with list of commitments of individual countries. The commitments made by individual countries under GATS state how much access can foreign service providers have for specific services and which sectors are disallowed to foreigners or are not given the “most favored-nation” principle of non-discrimination.

Intellectual Property / TRIPS Agreement. The general agreement governing the protection and enforcement of intellectual property is the Trade-Relates Aspects of Intellectual Property Rights (TRIPS) Agreement. This agreement does not have additional agreements or annexes at present. The areas covered under this agreement are as follows:

1. Copyrights and related rights
2. Trademarks and Service Marks
3. Patents and Industrial Designs (including layout designs of integrated circuits)
4. Geographical Indications
5. Undisclosed Information (including trade secrets)

Dispute Settlement and Trade Policy Review. The agreements on dispute settlement and trade policy reviews governs the agreements on trade in goods, services and intellectual property (GATT, GATS and TRIPS) including all the extra agreements, annexes and individual country commitments.

The Dispute Settlement process provides the legal procedure for resolving trade disputes and difference among trading countries within the WTO framework. The disputes normally raised by countries involve the interpretation and application of the various agreements resulting from conflicting interests.

To ensure transparency and predictability in the trade laws of individual countries, the Trade Policy Review mechanism requires that each country “notify” the WTO of its trade measures, policies and laws. The WTO then reviews these trade policies and practices to ensure that each country comply with the WTO rules and disciplines and with individual country commitments.

The author is an international trade, indirect tax (customs) and supply chain expert. He is the Editorial Board Chairman of Asia Customs & Trade, an online portal on customs and trade developments affecting global trade and customs compliance in Asia. He was also Bureau of Customs Deputy Commissioner for Assessment and Operations Coordinating Group (2013-2016). For questions, please email at agatonuvero@yahoo.com and agatonuvero@customstrade.asia