Trade policy review mechanism (TPRM) of the WTO

 

TPRM was introduced into GATT in 1989 following the Mid-term Review of the Uruguay. The review covers the full range of individual Members’ trade policies and practices and their impact on the functioning of the multilateral trading system in order to encourage governments to follow closely the WTO rules and disciplines and to fulfill their commitments.

The TPRB is formally the General Council. The frequency of reviews of a Member is related to its weight in the multilateral trading system, as defined by the Member’s share of world trade in goods and services. On this principle, the frequency of review for individual Members, based on trade flows in October 1995, is as follows:

· every four years for the four largest trading entities, counting the European Communities (as one trading entity), the US, Japan and Canada;

· every four years for the next sixteen Members;

· every six years for other Members, with provision for a longer interval for least-developed countries.

Variations in trade in goods and services flows may alter the ranking of Members and thus their review cycles. The accession of new Members to the WTO could also affect the position of existing Members in all the three review cycles.

Procedures for Review:

A TPRM review consists of several steps whose timing is agreed between the Secretariat and the country under review.

Collection of information: The Secretariat prepares and sends a detailed country questionnaire to the Member under review and the Member has four weeks to prepare and provide replies.

Visit to the capital: A Secretariat team consisting of 2 or 3 staff members of the Trade Policy Review Division undertakes a visit of one week or ten days to the country under review for discussion with government ministers and agencies, as well as private enterprise (Chamber of Commerce) and research institutes.

The TPRB meeting: Preparation and publication of documents. For each review, two documents are prepared: a detailed report written independently by the WTO Secretariat and a policy statement by the government under review. The Secretariat report focuses on the trade policies and practices of the Member under review in the context of the evolution of overall macro-economic and structural policies in a representative period up to the present date. The government’s policy statement by Members aims to outline the objectives and main directions of trade policies, as well as a succinct presentation of recent trends and problems, including those encountered in foreign markets.

 

Plurilateral trade agreements of the WTO

 

For the most part, all WTO members subscribe to all WTO agreements. There remain, however, two agreements, originally negotiated in the Tokyo Round, which have a narrower group of signatories and are known as “plurilateral agreements”. All other Tokyo Round agreements became multilateral obligations when the WTO was established in 1995. The two are:

1) Agreement on Trade in Civil Aircraft

2) Agreement on Government Procurement

The other two plurilateral agreements, namely, International Dairy Agreement and International Bovine Meat Agreement, were scrapped at the end of 1997 and incorporated into the Agriculture and Sanitary and Phytosanitary agreements.

Main difference between the WTO and GATT

 

Nature: The GATT was ad hoc and provisional. The WTO and its agreements are permanent. The WTO has a legal man status.

Scope: The GATT rules applied to trade in goods. The WTO Agreement covers trade in goods, trade in services and trade-related aspects of intellectual property rights.

Approach: Though the GATT was a multilateral instrument, a series of new agreements were adopted during the Tokyo Round on a plurilateral - that is, selective-basis, causing a fragmentation of the multilateral trading system. The WTO has been adopted and accepted by its members, as a single undertaking: the agreements are all multilateral.

Dispute Settlement: The WTO dispute settlement procedure reversed the unanimity principle which had hindered acceptance of reports. The WTO dispute settlement mechanism has specific time limits and is therefore faster than the GATT system; it operates more automatically, thus ensuring less blockages than in the GATT; for example, panel reports are now automatically adopted sixty days after being issued unless there is a consensus that it be rejected (Since the side benefiting from the report would be unlikely to agree to reject, it seems most probable that a consensus to reject would very rarely be achieved.); and it has a permanent appellate body to review findings by dispute settlement panels. There are also more detailed rules on the process of the implementation of findings.

 

Questions

 

1. Describe the basic structure and tasks of the WTO.

2. Discuss the major principles of the WTO.

3. Who may become a member of GATT/WTO?

4. What are the main differences of WTO from the GATT system?

5. Explain decision-making rules of the WTO.

 

References

1. John H. Jackson, The World Trading System: Law and Policy of International Economic Relations (2nd ed., Cambridge, MA: MIT Press, 1997). P. 31-78.

2. Petersmann, World Trade Principles, IV EPIL (2000), 1529-1542.

3. Trading into the Future – WTO, 3rd edition, Revised August 2003. p. 100-112

 

Lecture 3. Regulation of Trade in Goods (GATT system)

 

The WTO agreement contains some 29 individual legal texts covering everything from agriculture to textiles and clothing, and from services to government procurement, rules of origin and intellectual property. Added to these are more than 25 additional Ministerial declarations, decisions and understandings which spell out further obligations and commitments for WTO members. However, a number of simple and fundamental principles run throughout all of these instruments which, together, make up the multilateral trading system.