Page 173 - DMGT545_INTERNATIONAL_BUSINESS

International Business

notes Gatt and the World trade organization

In 1994 the GATT was updated (GATT 1994) to include new obligations upon its signatories. One
of the most significant changes was the creation of the World Trade Organization (WTO). The 75
existing GATT members and the European Communities became the founding members of the
WTO on January 1, 1995. The other 52 GATT members rejoined the WTO in the following two
years (the last being Congo in 1997). Since the founding of the WTO, 21 new non-GATT members
have joined and 28 are currently negotiating membership.
Of the original GATT members, only the SFR Yugoslavia has not rejoined the WTO. Since FR
Yugoslavia, (renamed to Serbia and Montenegro and with membership negotiations later split in
two), is not recognised as a direct SFRY successor state; therefore, its application is considered a
new (non-GATT) one. The contracting parties who founded the WTO ended official agreement
of the “GATT 1947” terms on December 31, 1995.
Whereas GATT was a set of rules agreed upon by nations, the WTO is an institutional body. The
WTO expanded its scope from traded goods to trade within the service sector and intellectual
property rights. Although it was designed to serve multilateral agreements, during several
rounds of GATT negotiations (particularly the Tokyo Round) plurilateral agreements created
selective trading and caused fragmentation among members. WTO arrangements are generally a
multilateral agreement settlement mechanism of GATT.

8.3 establishment of World trade organization

The administrative framework of WTO is shown in the given chart:

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