By Peter Ungphakorn
POSTED AUGUST 17, 2018 | UPDATED MAY 16, 2020
It all began when hard-Brexiters started to claim that if the UK and EU fail to reach agreement, this wouldn’t be “no deal”. It would be a World Trade Deal — the new term they now use to describe operating on WTO terms, which some also claim would be the best outcome.
The response from some Remainers is to criticise the WTO. If their enemies like it, it must be bad.
One repeated claim is that the WTO is undemocratic.
BRIEFLY● The WTO is 164 member governments who operate an international trading system based on agreed rules
● Is it democratic? Yes and no
“When did you last vote for your representative in the WTO?” and “How can I find my WTO MP?” were among the questions.
There’s a lot wrong with the WTO, and a lot right, but these new attacks miss the point completely.
We might as well demand direct elections to the United Nations, World Health Organization, International Labour Organization and the rest.
We’d then be talking about world government.
To see why they miss the point, we first need to look at what the WTO really is.
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What is the WTO? | What about the Secretariat? | It’s member-driven | Is the WTO democratic? | Don’t compare the WTO and EU | Find out more
What is the WTO?
The simple answer is: “The WTO is 164 member governments who operate an international trading system based on agreed rules.”
Let’s look more closely.
- The WTO is a meeting place. It’s where governments go to sort out trade problems they face with each other internationally.
They meet to negotiate. They reach agreement (yes they do, from time to time). And then they continue meeting to monitor how well they are a sticking to those agreements.
LEGAL BASIS
Agreement Establishing the World Trade Organization (WTO Agreement)
And they also meet as a kind of court to pass legal rulings on whether governments are indeed abiding by those agreements — keeping their promises.
Yes, although that legal process, officially known as dispute settlement, is handled by small groups called panels, and another small group, which hears appeals, the whole process is managed by the WTO’s full membership.
And that means the WTO is two other things.
- It’s a system of trade agreements, which discipline governments’ trade policies so that international trade is not a free-for-all — the rule of law rather than the law of the jungle.
— - It’s 164 member governments (the present total). When I worked in the WTO we were often asked “What does the WTO think about [something or other].” The answer? “It has 164 views” — because the WTO is its 164 members and they may well have different opinions about that something-or-other. In fact each country may have more than one opinion on a particular issue, but let’s not get into that.
Decisions among those 164 member governments are by consensus, if any one among them, big or small, cannot accept a decision, there’s no deal.
What about the Secretariat?
LEGAL BASIS
WTO Agreement● Art.6 (Secretariat)
Some people think the WTO Secretariat is the WTO, but strictly speaking that’s not correct. The Secretariat is a bureaucracy set up to help member governments operate the trading system.
It’s true that the head of the Secretariat is called the Director-General of the WTO, because the WTO is also an international organisation, like the United Nations, UN Environment Programme or the World Bank. But the WTO DGs are still the servants of the members, a cause of frustration for some of them.
It’s member-driven
The best way to appreciate just how much the WTO is an organisation of its members is to look at its organigram.
LEGAL BASIS
WTO Agreement● Art.4 (structure)
This consists entirely of meetings of members: a ministerial conference and various councils, committees, working parties, working groups and so on.
Each of these comprises the full membership — all 164 member governments. It even includes (bottom right) negotiations meetings.
All of them are chaired by ambassadors or other delegates from the members.
One exception is the “Trade Negotiations Committee”, whose chair is traditionally the WTO director-general.
164 MEMBERSThe WTO currently has 164 members. All but four are countries, including the EU’s member states. One additional member is the European Union itself. Three are officially not countries but “separate customs territories”. They are Hong Kong China, Macao China and Chinese Taipei
However, “countries” can be used to mean “members”. An explanatory note in the WTO Agreement says: “The terms ‘country’ or ‘countries’ as used in this Agreement and the Multilateral Trade Agreements are to be understood to include any separate customs territory Member of the WTO.”
But when the negotiators get down to specific subjects such as agriculture or fishing subsidies, those sessions are also chaired by ambassadors or other delegates.
The members are determined to keep control.
There are three exceptions to this. Two committees deal with “plurilateral” agreements, meaning only some members have signed them. Here, the principle is still the same. The committees comprise all the countries that have signed these agreements.
The third is the Appellate Body. This consists of seven specialist judges supported by a separate, small secretariat, who hear appeals in legal disputes. Even then, its work is controlled by the full WTO membership in the Dispute Settlement Body.
Is the WTO democratic?
This is a difficult one. The short answer is yes and no.
The WTO is definitely democratic among its governments. The consensus rule means all members have equal say. Voting is available as a fallback, but so far members have rejected that option.
But does it represent the people? At least as much as any other international organisation. Some governments are democratic; some are not.
The top decision-making body is the ministerial conference which meets about every two years.
So if our country’s trade minister (or its economic or foreign affairs minister) is elected or appointed by an elected government, then we have an elected representative running the WTO.
For example, Canada’s trade minister is an elected member of its parliament. The US minister responsible for the WTO is the US Trade Representative, appointed by the president and confirmed by Congress.
The ambassadors and delegates representing our country would also be under instructions from an elected or democratically appointed minister.
If our country is a dictatorship, then I’m afraid our representative is probably not elected (allowing for multiple shades of grey over what those words actually mean). But no one wants the WTO to interfere in that, so it just accepts whatever each country’s domestic system produces.
Don’t compare the WTO and EU
One of the problems is that in the Brexit debate people are comparing the WTO with the European Union, which has an elected parliament as well as a council of member states meeting regularly at ministerial or head-of-government level.
The comparison is false. The EU has a bureaucracy with executive power and a legislature which handles laws. The WTO’s bureaucracy — the Secretariat — has no executive power. The closest equivalent to legislation in the WTO is its trade agreements and they are negotiated by all the governments together.
Is it a good idea for the WTO to be run by directly elected representatives? Only if you believe that directly elected politicians are better at negotiating some pretty technical and complicated trade agreements than our trade ministers and their officials. Or if you believe in world government.
The 1999 Ministerial Conference in Seattle saw the largest civil society protests in the WTO’s history. What happened outside the conference even become a movie.
One of my lasting memories from Seattle was protestors simultaneously complaining that the WTO had too much power (they over-estimated it), and demanding direct elections to the WTO, which would have made the WTO an organ of world government and in theory much more powerful.
Find out more
On the WTO website:
- Understanding the WTO
- Key facts
- Members and observers
- The agreements explained
- The agreements legal texts
- WTO glossary: a guide to WTO-speak
- History of the multilateral trading system
On this blog
Updates:
May 16, 2020 — adding graphic on “How the WTO works”
August 19, 2018 — adding two more links to the “Find out more” section
August 29, 2018 — adding links referencing the legal basis in the WTO Agreement
July 18, 2019 — adding link to “History of the multilateral trading system”
Photocredits:
WTO meeting: the Trade Negotiations Committee, November 28, 2017 | © WTO
WTO building main entrance with statue of “Justice” by Luc Jagi (1925) | © WTO
WTO protesters on 7th Avenue, 1999 | Fleets and Facilities Department Imagebank Collection, Seattle Municipal Archives CC BY 2.0
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