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Unit 8: World Trade Organization

The WTO operates on a one country, one vote system, but actual votes have never been taken. notes
Decision-making is generally by consensus, and relative market size is the primary source of
bargaining power. The advantage of consensus decision-making is that it encourages efforts to
find the most widely acceptable decision. Main disadvantages include large time requirements
and many rounds of negotiation to develop a consensus decision, and the tendency for final
agreements to use ambiguous language on contentious points that makes future interpretation
of treaties difficult.
In reality, WTO negotiations proceed not by consensus of all members, but by a process of
informal negotiations between small groups of countries. Such negotiations are often called
“Green Room” negotiations (after the colour of the WTO Director-General’s Office in Geneva), or
“Mini-Ministerials”, when they occur in other countries. These processes have been regularly
criticized by many of the WTO’s developing country members which are often totally excluded
from the negotiations. Richard Steinberg (2002) argues that although the WTO’s consensus

governance model provides law-based initial bargaining, trading rounds close through
power-based bargaining favouring Europe and the United States, and may not lead to Pareto
improvement.

self assessment

Fill in the blanks:
1. The ................. operates on a one country, one vote system, but actual votes have never been
taken.
2. The Councils for ................. under the General Council.
3. The WTO system tries also to improve ................. and stability, discouraging the use of
quotas and other measures used to set limits on quantities of imports.
4. The World Trade Organization deals with the rules of trade between ................. at a near-
global level.
5. The WTO’s stated goal is to improve the ................. of the peoples of its member countries,
specifically by lowering trade barriers and providing a platform for negotiation of trade.

8.1.3 Dispute settlement

Prompt compliance with recommendations or rulings of the DSB is essential in order to ensure effective
resolution of disputes to the benefit of all Members.

— World trade organization, article 21.1 of the Dsu
In 1994, the WTO members agreed on the Understanding on Rules and Procedures Governing the
Settlement of Disputes (DSU) annexed to the “Final Act” signed in Marrakesh in 1994. Dispute
settlement is regarded by the WTO as the central pillar of the multilateral trading system, and as
a “unique contribution to the stability of the global economy”. WTO members have agreed that,
if they believe fellow-members are violating trade rules, they will use the multilateral system of
settling disputes instead of taking action unilaterally.

Duration of a Dispute settlement Procedure

These approximate periods for each stage of a dispute settlement procedure are target figures.
The agreement is flexible. In addition, the countries can settle their dispute themselves at any
stage.

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