Businesses engaged in international commerce must be able to navigate the rules promulgated by the World Trade Organization (WTO). The best way to understand how the WTO’s agreements governing free trade can impact your business is to consult with an experienced international trade law attorney. In the meantime, this article is a brief overview of the WTO rules of global trade.
WTO Rules: GATT, GATS, and TRIPS
World Trade Organization rules on free trade are set forth in three main agreements:
- The General Agreement on Tariffs and Trade (GATT), covering international trade in goods;
- The General Agreement on Trade in Services (GATS), covering international trade in the services sector; and
- The Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), covering copyrights, patents, and trademarks.
In short, these three agreements are designed to foster free trade by controlling anti-import tariffs, simplifying customs procedures, discouraging protectionist domestic laws and taxes, and reducing quotas and subsidies. In addition, there are also agreements and annexes dealing with particular sectors or issues, and individual countries’ commitments set forth in schedules or lists. Let’s take a further look at the main governing trade agreements.
The General Agreement on Tariffs and Trade
The GATT was established after World War II to establish rules for the international trade of goods. The GATT has evolved considerably since it came into force, both in terms of membership and scope.
The Uruguay Round of multilateral negotiations from 1986 to 1994 led to the formation of the WTO and the organization’s current rules emerged from these negotiations. In sum, the updated rules of international trade are designed to reduce trade barriers for goods and establish more timely, efficient, and flexible mechanisms for resolving disputes. Despite the fact that GATT has been in place for decades and the promise of greater free trade under WTO rules, significant tariff and non-tariff barriers persist.
The General Agreement on Trade in Services
The WTO’s General Agreement on Trade in Services (GATS) was established in 1995, one of the main achievements of the Uruguay Round. The main purpose of the GATS was to establish a reliable system of international trade rules for services and promote trade and development through progressive liberalization.
The services sector has grown exponentially in the ensuing years, however, market access for sectors including delivery services, e-commerce, energy services, finance, telecommunications, and other services remains a point of contention among the participating nations. While developed economies of the U.S., EU, and Australia have been pursuing negotiations to further liberalize trade in these sectors, including the proposed Trade in Services Agreement (TiSA), little progress has been made at this juncture.
The Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS)
TRIPS was another landmark achievement of the Uruguay Round, however, more work is needed in the area of intellectual property rights. And the “theft” of intellectual property has become a hot-button issue in the U.S.
While TRIPS covers some aspects of trademarks (including service marks), patents, and copyrights, digital IP and other aspects of the global digital economy are not covered. In fact, the digitization of the global economy has created new barriers to international trade in the services sector.
Why WTO Rules Matter
Given the complexity of international trade and WTO rules, disputes are inevitable. While the WTO is tasked with resolving disputes among member nations, the organization’s decisions can have a direct impact on your business. In the long run, the best way to protect your interests in the global markets is to work with an attorney who is well-versed in the rules governing international trade.