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The World Trade Organisation (WTO) is the international organisation of countries that deals with global rules of trade - it determines and oversees the multilateral trade rules that underpin New Zealand's trading relationships with the 152 other member countries.
The main function of the WTO is to ensure that international trade flows as smoothly, freely and predictably as possible. An underlying aim of the WTO is to raise standards of living and ensure full employment in countries that are members by enabling the expansion of trade in goods and services in a sustainable manner.
When making decisions, WTO members are guided by the fundamental principles that international trade should be:
New Zealand became a founding member of the GATT on 30 July 1948 and became a WTO member when it was created on 1 January 1995. We have a Permanent Mission in Geneva representing New Zealand on WTO issues.
As a country dependant on trade and with a longstanding commitment to multilateralism, New Zealand benefits from clear trade rules that are applicable to all. Without the multilateral forum of the WTO, New Zealand would have to negotiate separate trade agreements with every country we wanted to trade with, resulting in different agreements with each country (which would impose extra costs on our exporters complying with these).
Our exporters would then have a huge and expensive task keeping up to date with any trading regime changes each country makes. In the WTO, New Zealand is kept informed via trade policy reviews and transparency requirements regarding the notification of new trade regulations of each member country.
Without the WTO, New Zealand would be disadvantaged making deals with larger economies. With the weight of other member countries behind us, New Zealand can make more ambitious demands of larger countries. The binding nature of the WTO commitments (enforced through an effective WTO Disputes Settlement system) is also valuable to a small country such as New Zealand. WTO decisions are by consensus which means that all members have an equal say.
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The WTO evolved from the trading system set up by the General Agreement on Tariffs and Trade (GATT). The GATT came into being in 1948 after World War II and was made up of 23 countries. The GATT architects believed 1930s protectionism had been a disaster for the world economy and that freer trade (initially based on liberalisation of industrial goods’ tariffs) was essential.
The Uruguay Round negotiations from 1986 to 1994 saw a breakthrough in approach and led to a number of agreements, including a revision of the General Agreement on Tariffs and Trade (GATT) in 1994, and the General Agreement on Trade in Services (GATS) in 1995. These agreements are the basis of the rules-based WTO system which aims to increase economic growth and raise standards of living by making trade as free as possible and more predictable. The WTO, formed 1 January 1995, has a much broader scope than GATT which dealt with trade in goods. The WTO agreements also covered trade in agriculture, services and intellectual property for the first time and brought into being a robust dispute settlement system.
The WTO has four management tiers. The Ministerial Conference is the highest decision-making authority. The conference is held in various locations around the world at least once every two years, and is attended by government ministers responsible for international trade from each member and observer country.
Decisions about the WTO's daily work are made by its General Council, which is made up of senior representatives from each member and observer country. The General Council also meets as the Dispute Settlement Body and the Trade Policy Review Body, which respectively oversee trade dispute settlement procedures and examine each member's trade policies.
Councils - the Council for Trade in Goods (CTG), the Council for Trade in Services (CTS) and the Council for Trade-Related Aspects of Intellectual Property (TRIPS) report to the General Council on the WTO agreements dealing with their respective areas of trade.
Each of these councils has subsidiary bodies dealing with specific subjects. For example, the Council for Trade and Goods has committees and working groups reporting to it on agriculture, market access, subsidies and anti-dumping, among others. The Council for Trade in Services has committees and working groups on professional services, the General Agreement on Trade in Services (GATS) rules and GATS specific commitments.
All WTO members can participate in these subsidiary bodies and the councils they report to.
The General Council, councils for each broad area of trade and their subsidiary bodies meet at the WTO headquarters in Geneva, Switzerland, where its secretariat is also located.
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With a staff of more than 600, the secretariat provides:
Surveillance of national trade policies is an important WTO activity and all WTO members are subject to trade policy reviews. The objectives of the WTO Trade Policy Review Mechanism (TPRM) are to contribute to improved adherence by all WTO members to WTO rules, disciplines and commitments, and hence to the smoother functioning of the multilateral trading system, by achieving greater transparency in, and understanding of the trade practices and policies of members.
New Zealand’s fourth Trade Policy Review (TPR) was held at the WTO in Geneva on 10 and 12 June 2009. As noted above, TPRs are a useful transparency mechanism by which WTO members’ trade and trade-related policies are examined and evaluated at regular intervals. New Zealand’s last TPR was in 2003.
New Zealand received over 300 questions from a variety of WTO members*. This reflects the attention paid to trade and economic policies of fellow members, particularly during the current economic downturn. Areas of interest included New Zealand’s FTA agenda, sanitary and phytosanitary requirements for imports, inward investment rules and government assistance to industry.
Several members described New Zealand as a “model” WTO member, acknowledging our open trade policy regime, New Zealand’s commitment to strengthening the multilateral trading system, and to achieving a conclusion to the WTO Doha Round – including through the provision of three successive Chairs for the Agriculture negotiations, were widely welcomed.
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Negotiations with the WTO are undertaken on behalf of the government primarily by the Trade Negotiations Division of the Ministry of Foreign Affairs and Trade, in conjunction with our Permanent Mission to the WTO, based in Geneva. Input from businesses and individuals is welcomed.
