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Background

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The World Trade Organisation (WTO) is the international organisation that monitors, enforces and organises negotiations on the rules governing trade between nations. These rules are not decided by the WTO as the organisation plays no part in the negotiations themselves. Instead, the rules are the result of negotiated agreements between representatives of the governments of the member countries.

Functions

The WTO has 3 main functions:

To organise and facilitate multilateral trade negotiations  - This involves everything from booking hotels for member representatives and providing negotiating rooms, for example.

To provide technical assistance to help implement and agree on trade rules  - This mainly involves advising countries on the nature of the rules, the structure of negotiations and on WTO law.

To monitor and enforce the trade agreements - The Trade Policy Review Mechanism (TPRM) reviews the trade performance of each member country over a period of time. This allows other members to highlight areas in which the member may be violating agreements. The Dispute Settlement Understanding (DSU) has the final say over whether an agreement has been infringed. The DSU also has a limited ability to punish members if they are ruled against. Note that with the expiry of the Peace Clause in 2004, countries that disobey agricultural trade rules can be bought before the DSU.

Structure

The structure of the WTO overlaps with its functions. There are three negotiation levels and an administrative level.

The Ministerial Conference - The most extensive level of negotiations. All trade agreements are made in the "rounds" that the Ministerial Conference attends. These conferences attract considerable media attention.

The General Conference/Council - This council meets every few months in Geneva. It discusses all issues that have been raised since the last council or ministerial conference meeting. The primary aim of the council is to ensure members are prepared for forthcoming ministerial conferences.

Specific Councils/Working Groups  - Smaller discussion groups that meet regularly to discuss specific issues and report their conclusions to the General Council. The Agricultural working group is called the Committee on Agriculture.

The WTO secretariat  - The part of the WTO that coordinates and provides technical assistance to all 3 levels of negotiation. This involves anything from hiring expert data analysers to providing stationary.

Principles   

Negotiations themselves operate around a core principle of Non-Discrimination, meaning that no member can be treated worse than another in any part of the trade process. This principle is split into 2 smaller notions:

Most Favoured Nation (MFN) - This notion implies that non-discrimination exists in the treatment of imports and exports. Specifically, MFN stipulates that each member should treat each other member at least as well as member "most favoured" by it. Applied to imports, for example, a member first declares who its MFN is and the tariff level this country faces. The member is then restricted to charging tariffs on the other members that do not exceed that what the MFN is subject to.

National Treatment (NT) - This notion stipulates that products from other members should be treated in the same way as products produced domestically. Hence, this idea implies non-discrimination against imports once they have passed through a countries border. For example, a country may require that products meet certain public health standards and NT ensures that the same standards are applied to both foreign and domestic products.

The Agreement on Agriculture (AoA)

The AoA is one of the largest WTO trade agreements. Four issues are core to the agreement:

Market Access  - Concerns the amount domestic markets are protected from foreign imports. Some suggest that developing countries should have unrestricted access to foreign markets to aid their economic development. However, slightly paradoxically, there have been discussions over whether developing countries should be able to restrict the access of foreign imports into their domestic markets in order to protect their infant industries.

Domestic Support  - Domestic support is trade distorting if it alters the amount a country produces from what it would do otherwise. The AoA categorises various forms of support to show how distorting the measures are. The aim is to minimise the most distorting support forms.

Export Subsidies / Refunds  - Domestic support raises the price of domestic products. Many areas place subsidies on their products such that the price can be reduced to world price levels and thus the products are competitive on international markets. Some exporters tend to object to this for two reasons. Firstly, these products are viewed to have been given "artificial" competitive power. Secondly, the "dumping" of these products, which would not otherwise have been exported, onto world markets may reduce the price that other exporters receive for their products.

Non-Trade Concerns - Agriculture is viewed to be "multi-functional" such that it provides benefits to society above and beyond the goods it produces. Many of these benefits are free (or only partially paid for) because they are by-products of the agricultural production process. An example of these benefits is maintenance of the environment. It is believed that if appropriate agricultural production methods are used, the countryside will benefit. The AoA is committed to ensuring such benefits are maximised.