THE WORLD TRADE ORGANIZATION (WTO)

History

After the Second World War, an intense effort was made to establish a strong international economic cooperation system in order to maintain peace and stability in the world, especially the North American countries and European countries, which were the victors of the war. In this framework, new institutions have been established in order to assist the development efforts of countries, to meet the needs such as international liquidity and financial confidence, and to liberalize and increase international trade. The establishment of the International Monetary Fund (IMF) and the World Bank (WB), known as "Bretton Woods" institutions, emerged as a result of these efforts. Thus, an institutional infrastructure was created for international cooperation in the financial field.

In addition to the cooperation provided in the international financial field, as a result of the need for similar cooperation in the liberalization of international trade, it was aimed to establish an international organization called "International Trade Organization-ITO" by the representatives of about 50 countries. On the other hand, while negotiations for the establishment of the ITO continued, in order to introduce tariff reductions on certain goods and to apply these reductions until the approval of the ITO by the countries, General Agreement on Tariffs and Trade (GATT) was signed by 23 countries as a temporary agreement in Geneva in October 1947. Upon failure to establish the ITO, despite its "temporary" feature, the GATT was implemented between 1948 and 1994 as the main discipline regulating international goods trade, and although it lacked an institutional identity, it created a generally accepted framework in this field.

The World Trade Organization (WTO) was established in 1995 as a result of the Uruguay Round (1986-1995), which was the last multilateral trade negotiation round conducted in accordance with the GATT. Türkiye became a party to GATT during the Torquay Tour in 1951 and took part among the founding members of the WTO.

Goals and Principles

1-Most Favoured Nation Clause (MFN)

This principle obliges member states not to discriminate between their trading partners. In other words, a member state unconditionally has to apply to all member states a favourable regime it provides to any country (GATT Article 1, GATS Article 2, and TRIPS Article 4). There are a few exceptions to this rule. These include discriminatory practices set out in Article 24 of the GATT, such as customs unions, regional trade agreements, free trade agreements and the Generalized System of Preferences (GSP), which ensures low or no customs duties in favour of developing countries, as well as some other implementations such as anti-dumping and countervailing taxes stipulated in the Agreement.

2- National Treatment

The principle of "national treatment" means making no distinction between imported and domestic goods in terms of regulations and practices regarding the domestic market. The National Treatment Principle is applied only after a good, service and intellectual property has entered the market. Therefore, although there is no tax equivalent to the customs duty on domestic production, customs duty on imported goods does not contradict the principle of national treatment.

3- Consolidating Customs Duties through Reduction

Until the 1960s, following the entry into force of the GATT, multilateral trade negotiations concentrated on reducing tariffs, which was the most basic protective instrument applied in international trade.
The tariff rates included in the WTO consolidated list of concessions by WTO member countries are called “bound rates”. These tariff rates represent the maximum tax level that can be applied on imports. Additionally, these tariff rates shown by the member countries on the basis of the Harmonized System (HS) Codes in the list of concessions are also the basis for the gradual tariff liberalization undertaken with the motive of opening up new markets in each negotiation round. One of the most important results of the Uruguay Round is that countries improved their concession lists and increased trade within the framework of bound rates. As a matter of fact, while the ratio of bound tariff lines for developed countries were 78% before the Uruguay Round, it increased to 99% after the Uruguay Round; for developing countries, it increased from 21% to 73%.

4-Protection through Tariffs

The most effective way to ensure transparency in trade is to make protection through tariffs. GATT foresees that non-tariff barriers will be banned completely, with some exceptions, and tariffs will be gradually reduced. Import restrictions and some other non-tariff practices applied in the trade of agricultural products have been largely converted into tariffs. In addition, 100% consolidation is aimed, although there are some exceptions on a country basis. In other words, with the Uruguay Round, it is possible to say that a very important step has been taken towards establishing a predictable market structure by subjecting the world trade in agricultural products to bound rates, which is referred to as “tariffication”.

Institutional Structure and Operation

The WTO's main decision-making body is the Ministerial Conference. In periods when the Ministerial Conference is not organized, which should meet every two years according to the WTO Founding Agreement, the General Council has the authority to take all kinds of decisions regarding the daily functioning of the WTO. The General Council can also convene as the Trade Policy Review Body (TPRB) and the Dispute Settlement Body (DSB) when it is necessary. There are three main Councils under the General Council. These Councils are Trade in Goods, Trade Related Aspects of Intellectual Property Rights, Trade in Services. Various Committees serve under these Councils.

When necessary, there is always the possibility to create sub-working groups under Working Groups. On the other hand, individual Accession Working Groups are established for acceding countries, which are not WTO members yet, but are still negotiating membership.
 
Trade Policy Review Mechanism (TPRM)

The Memorandum of Understanding regarding Trade Policy Review Mechanism is enclosed in Annex 4 of the World Trade Organization Establishment Agreement.

With a view to n the framework of the Memorandum of Understanding, aiming to increase the adherence of the member countries to the rules, regulations and commitments affirmed by the Multilateral Trade Agreements and thus to achieve a smoothly functioning multilateral trade system by providing greater transparency and comprehensibility in the commercial legislation and practices of the WTO member countries, four countries with the largest share of world trade every two years, 16 countries including Türkiye every four years and remaining members of WTO every six years were subject to review mechanism meetings. By an amendment made in July 2017 it has been decided to alter these periods to three, five and seven years, respectively, starting from 2019.

Türkiye has been subjected to six trade reviews so far, the latest held on 15 and 17 March 2016.

The reviews made within the framework of a Government Report prepared by the country under examination and the Secretariat Report prepared by the WTO Secretariat helps to enhance the principle of “transparency”, which is one of the basic principles of the WTO.

Further comprehensive information regarding the functioning of the above-mentioned mechanism is available at http://www.wto.org/english/tratop_e/tpr_e/tpr_e.htm. 

Accession to the WTO

The WTO currently has 164 members.

The accession process of any state or separate customs territory possessing full autonomy in the conduct of its external commercial relations commences by submitting its request for accession to the Secretariat of the WTO. The acceding Party’s legislation and practices are reviewed with a view to ensure their compliance with the WTO rules within the Accession Working Party established following the request for accession. Membership of the Working Party is open to all members and its mandate is open-ended.

How long an accession process lasts depends on a set of factors like the acceding party’s economic size and its effort displayed in complying with the WTO rules.

Another determining factor in concluding the accession process is the bilateral negotiations on concessions in goods and services trade conducted in parallel to the activities carried out by the Working Party.  (Technical details of accession process is available at:  http://www.wto.org/english/thewto_e/acc_e/acc_e.htm)

CURRENT STATUS OF MULTILATERAL TRADE NEGOTIATIONS
 
General Information

The ninth round of multilateral trade negotiations, which is referred as "Doha Development Agenda Negotiations" due to the "development" aspect attributed to it, started with the decision taken at the fourth World Trade Organization (WTO) Ministerial Conference held in Doha in 2001, have not been completed yet. Doha Development Round negotiations were initiated at the 4th WTO Ministerial Conference held in Doha, Qatar on 9-14 November 2001 with the aim of increasing liberalization in international trade achieved in the Uruguay Round, strengthening existing trade rules, establishing new commercial rules and keeping the issue of development at focus. However, for many reasons, including the change in international conjuncture and the increase in the number of WTO members to include countries such as China and Russia, there has been little significant progress in these negotiations so far.

The most important development that can be recorded in this framework was the adoption of the Trade Facilitation Agreement at the 9th WTO Ministerial Conference held in Bali on 3-7 December 2013. The Agreement entered into force on February 22, 2017 after a sufficient number of WTO members informed the WTO that they had completed the internal approval process, and this Agreement was added to the founding agreement of the WTO as a goods agreement. It was possible to take some decisions under the title of agriculture at the conference in question; however, progress has not been made in many important areas.

At the 10th WTO Ministerial Conference held in Nairobi on December 15-19, 2015, some important decisions were taken regarding export competition in the field of agriculture. However, no progress has been made to meet the expectations for the overall negotiations.

Finally, at the 11th WTO Ministerial Conference held in Buenos Aires on 10-13 December 2017, new issues such as e-commerce, Micro, Small and Medium Sized Enterprises and investment facilitation were also discussed; however, it was only possible to make a concrete decision regarding the completion of the negotiations on Fisheries Subsidies by the end of 2019.

Although the 12th WTO Ministerial Conference was envisaged to be held in Nur Sultan, Kazakhstan in 2020, the Conference has been postponed to 2021 due to the COVID-19 outbreak. The 12th WTO Ministerial Conference, which was decided to be held in Geneva at the end of November 2021, could not be held due to the omicron variant and was postponed to a future date that is not yet known. Some developing countries do not agree to negotiate new issues (such as e-commerce, Micro SMEs, investments) without finalizing the current ongoing negotiations. Developed countries, on the other hand, argue that new issues should be negotiated, taking into account the changing international trade and economic structure.

I- Agriculture Negotiations

Negotiations ongoing since 2000 aim to maintain world agricultural trade on a fair, transparent and predictable basis. In the negotiations, the rules and disciplines which will lead world agriculture trade in the coming years are tried to be determined on the basis of WTO Agreement on Agriculture, which came into force in 1995.

The main objectives of the negotiations are improving market access conditions in agricultural trade, ameliorating export competition disciplines and reducing significantly market distorting domestic support. In this regard, negotiations are conducted on three pillars (market access, domestic support and export competition) 

Discussions on market access focus on improving transparency.  Particularly increasing transparency on applied tariffs and practices regarding products en route are on the agenda of market access pillar.

Special Safeguard Mechanism (SSM) which is a topic of market access pillar is prioritized by Developing Countries. G-33 Group, to which our country is a member, is the main supporter of this issue. G-33 Group is a negotiation group  pressing for flexibility for developing countries to undertake limited market opening in agriculture.

G-33 Group is of the view that SSM should be provided as an element of Special and Differential Treatment for Developing Countries. The objective of the negotiations is designing this mechanism as an instrument, which will protect Developing Countries’ agriculture sectors and especially small scale farmers from import surges and price falls.

SSM is opposed by exporter countries of agricultural products, which express that Developing Countries can only be entitled to this mechanism on the condition that comprehensive market access reforms are adopted. From these countries’ point of view, SSM is an obstacle for the liberalization of agricultural trade.

The linkage between market access and SSM is the biggest challenge  in the negotiations. Failure to overcome this challenge precludes making progress in the negotiations in spite of various Ministerial Decisions and negotiation mandates on SSM.

Domestic Support is the priority  for  most of the members in WTO agriculture negotiations. All WTO members agree that trade distorting domestic support should be subject to a “cap” and be limited. However, there are still divergences among members regarding the scope of domestic support, which will be subject to the limitation and its method.

Public Stockholding Programmes for Food Security Purposes remain a significant issue, particularly for Developing Countries. These countries state that public stockholding programmes for food security purposes are critical for food and livelihood security, rural development and concrete steps should be taken on this topic.

Export subsidies, export credits, export credit guarantees or insurance programmes, agricultural exporting State Trading Enterprises and international food aid are the components of Export Competition pillar.

Export subsidies- topic of Export Competition pillar- is the sole agriculture negotiation area upon which concrete results were achieved. Export subsidies were abolished with the Ministerial Decision on Export Competition adopted at the 10th WTO Ministerial Conference held in Nairobi between December 15-19th, 2015. Developed Countries eliminated their export subsidy entitlements as of the date of adoption of this Decision, with the exception of some products. Under this Decision, Developing Countries eliminated their export subsidy entitlements by the end of 2018 for agricultural products. Due to the flexibilities provided by the Decision, Developing Countries will eliminate their export subsidy entitlements by the end of 2022 for some products. Türkiye is among the 16 countries, which have export subsidy entitlements. Under Nairobi Ministerial Decision on Export Competition, Türkiye eliminated export subsidy entitlements by the end of 2018 for a number of agricultural products. Türkiye, as a Developing Country benefitting from the flexibility of the Decision, has the right to apply export subsidies for some other agricultural products until the end of 2022.

In the negotiations of export competition pillar, the objective is improving transparency, increasing members’ information sharing rates on export competition topics under current WTO mechanisms and ensuring complete information sharing.

During COVID-19 pandemic process, enhancing transparency on export restrictions and notifying these restrictions to the WTO have been essential agenda items. Within the framework of WTO agriculture negotiations, export restrictions introduced by members in response to the COVID-19 and some members’ failure to notify their restrictions to the WTO are widely discussed. In addition, food security of net-food importing countries endangered by export restrictions imposed on agricultural products is highlighted in the negotiations. 

The proposal on not imposing export prohibitions or restrictions on foodstuffs purchased for non-commercial humanitarian purposes by the United Nations World Food Programme has been the most important issue on this area.
 
Türkiye’s Position in the WTO Agriculture Negotiations
 
In the WTO agriculture negotiations, Türkiye aims to overcome current inequalities in the WTO Agreement on Agriculture for a more balanced and fair agricultural trade. Domestic support is a priority for us as well as the majority of the WTO members.  In the negotiations, efforts are made to address domestic support without prejudice to the rights of Developing Countries.

Türkiye liaises with G-33 Group in the negotiations. In this regard, our country is supportive of the outcomes on public stockholding programmes for food security purposes and SSM, which have critical importance for food and livelihood security of Developing Countries. Türkiye supports that a practicable and efficient SSM based on the previous WTO Ministerial Conference Decisions should be designated for Developing Countries in response to the increased uncertainties in the agricultural markets.

Türkiye is of the view that meaningful, efficient and functional outcome on public stockholding programmes for food security purposes on the basis of the previous WTO Ministerial Conference Decisions should be taken.  

II. Non-agricultural Market Access Negotiations

The aim of the  Non-Agricultural Market Access (NAMA) negotiations is to liberalize the world goods trade comprehensively by systematically reducing the tariffs applied in the trade of non-agricultural products, which correspond to approximately 90% of the global trade in goods. Negotiations in this field are carried out on three main topics: determination of tariff reduction commitments, sectoral initiatives and non-tariff barriers.

For the tariff reductions to be made, a non-linear formula has been studied in order to provide more reduction for higher tariffs and less for lower tariffs. In addition, it is aimed that the formula to be determined will allow developing countries to reduce tariffs at a lower rate compared to developed countries. However, no results have been obtained from these initiatives and negotiations so far.

In the sectoral initiatives within the scope of the negotiations, liberalization beyond the general formula reduction in the targeted sectors were aimed. These initiatives consist of proposals participation is not compulsory. The only area where results have been achieved so far has been the Information Technology Agreement.

III - Trade Facilitation Agreement

The Trade Facilitation Agreement was adopted by the Ministerial Declaration of the 9th WTO Ministerial Conference.

At the WTO General Council meeting held on 27 November 2014, the Protocol on the inclusion of the Trade Facilitation Agreement as goods trade agreement into the WTO Agreement Annex 1A was adopted. The agreement entered into force on February 22, 2017.

IV-Rules Negotiations

Rules negotiations that constitute a part of the Doha Development Agenda aim to clarify and improve disciplines in the following areas:

1. GATT Article VI Agreement (Anti-Damping Agreement) and Agreement on Subsidies and Countervailing Measures (SCM)
2. Fisheries Subsidies
3. Regional Trade Agreements

Paragraph 28 of the Doha Ministerial Declaration instructs the improvement and clarification of disciplines in these areas, taking into consideration the needs of the developing and least developed countries, while keeping the main principles and concepts of the agreements intact. Ministers attributed special importance on fisheries subsidies negotiations, especially since it speaks to the needs of the developing and least developed countries.
Other than the fisheries subsidies negotiations, as a result of the deep divergences among the members’ positions, no meaningful progress could be made in rules negotiations.

Fisheries Subsidies Negotiations

Via the WTO Fisheries Subsidies Negotiations, it is aimed to set the disciplines for the subsidies given to the fisheries activities, and make these disciplines better and clearer. In this vein, the negotiations continue in order to introduce disciplines to the subsidies given to illegal, unreported, and unregulated-IUU fishing, subsidies given to the fishing activities towards the overfished stocks, and subsidies that cause overfishing and overcapacity.

The negotiations regarding fisheries subsidies started in 2002 within the context of the Negotiations of Rules, which is one of the topics of the Doha Development Agenda. The targeted regulations foreseen by the Agreement are also reflected in the “Sustainable Development Goals 2030 Agenda”, which was approved by the 193 members of the UN in 2015. In this perspective, the 14th Goal “Conserve and Sustainably Use the Oceans and Marine Resources” aims at ending the subsidies that lead to overcapacity, overfishing, and IUU, until 2020.

The WTO Fisheries Subsidies Negotiations gained momentum since 2017. It was aimed that the negotiations would be concluded until the 12th WTO Ministerial Conference that was planned to be gathered in 2020, and the Agreement will be approved in this conference, and put in practice as soon as possible by the members. Unfortunately, the negotiations could not be concluded within this targeted timeline, because of the effects of the COVID-19 pandemic, and the strong differences among the positions of the member countries. Nevertheless, by considering the fact that the WTO 12th Ministerial Conference was postponed to the end of 2021, negotiations continued intensively in order to conclude it as soon as possible.The 12th WTO Ministerial Conference, which was decided to be held in Geneva at the end of November 2021, could not be held due to the omicron variant. These negotiations are currently ongoing.

V-Current Discussions on Trade and Environment

Sustainable development and environmental protection are among the main objectives of the WTO. These goals are also included in the founding agreement of the WTO and complement the WTO's goal of reducing barriers to trade and eliminating discriminatory treatment in international trade relations. With the Trade and Environment Ministerial Decision of 1994, the WTO Trade and Environment Committee, in which some international organizations participated as observers, was established. The mandate of the Committee is broad and contributes to the definition and understanding of the relationship between trade and the environment to promote sustainable development.

Within the framework of the agenda of the Committee Meetings, discussions continue on the need for countries to put sustainable development and green economy at the center of their policies, especially in the economic recovery process after the COVID-19 outbreak. In addition, initiatives are being made by some countries to establish working groups on specific issues. In this direction, “The Structured Discussions on Trade and Environmental Sustainability” and “The Informal Dialogue on Plastics Pollution and Environmentally Sustainable Plastics Trade” were established under the leadership of some member countries. In addition, a declaration on "Fossil Fuel Subsidies Reform" was signed by a group of countries at the 11th WTO Ministerial Conference. The group, which provides updates on its work in the agenda of the Committee meetings, has an anticipation that it will be able to establish an unofficial dialogue in the future within the framework of the declaration.

The current agenda of the Committee meetings also includes issues related to Border Carbon Adjustment (BCA), which is planned to be implemented within the framework of the European Green Deal put forward by the EU. The EU presents the European Green Deal as a decisive action necessary for a sustainable future and transforming the EU economy without leaving anyone behind. The EU has announced that it plans to implement the BCA mechanism to manage the risk of "carbon leakage" in cases where climate action targets are not shared globally,  and published the details of its plan for the implementation of the BCA mechanism.It is stated by the WTO member countries on the subject in general that the EU should ensure that the policies to be implemented within the scope of the Green Deal are compatible with its international obligations and that these policies should not create unnecessary obstacles to trade. In addition, it is advocated by developing countries including Türkiye that the principle of “Common but Differentiated Responsibilities and Respective Capabilities” enshrined in the United Nations Framework Convention on Climate Change (UNFCCC) should be kept in mind and the situation of developing countries should be evaluated separately during the design process of mechanisms such as border carbon regulation.

VI-New Topics

Although it is declared in the 34th paragraph of the 10th Ministerial Conference Declaration that non-finalized topics of the Doha Development Agenda will be prioritized in the negotiations, some member countries request of other topics discussions was also noted. In this context, after the 10th Ministerial Conference, consultations among member countries about bringing the Micro, Small and Medium Sized Enterprises (MSMEs), women’s economic empowerment, entitled as “new topics”, into negotiation agenda have been accelerated. Discussions on these negotiation agendas are still carried out at multilateral levels.

Micro, Small and Medium Sized Enterprises-MSMEs

In the consultations under this topic, by emphasizing the important role of MSMEs with respect to global trade, growth and employment, steps that WTO can take have been addressed in order to increase the participation of MSMEs in global trade and to make WTO’s rules and disciplines also applicable to MSMEs. In this respect, a group of countries has established an Informal Working Group on MSMEs within the WTO.  

Trade and Women’s Economic Empowerment

With the joint initiative of Iceland and Sierra Leone, it has been aimed to bring the topic of women’s economic empowerment in the WTO platform. In this respect, “Trade and Women’s Empowerment Joint Declaration” was presented at the WTO’s 11th Ministerial Conference. Based on this declaration, a Trade and Gender Informal Working Group was established within the WTO.  

TÜRKİYE, TRADE IN SERVICES AND GATS
 
Uruguay Round of trade negotiations resulted in the establishment of the World Trade Organization (WTO). As member countries, including Türkiye recognized the need to develop a set of comprehensive rules to govern trade in services, these principles were embodied in the General Agreement on Trade in Services. The General Agreement on Trade in Services (GATS) is the first multilateral agreement covering trade in services and it came into force in 1995. The GATS provides a framework of rules governing services trade, establishes a mechanism for countries to make commitments to liberalize trade in services and provides a mechanism for resolving disputes between countries.
 
Türkiye signed the Final Act on 1st of January 1995 and became an official founding member of WTO on 26th March 1995, and therefore a party to the GATS. As a result of the Uruguay Round negotiations, Türkiye has submitted its Uruguay Round services commitments in 1994, 1997 and 1998. WTO Members agreed at the end of the Uruguay Round to conduct subsequent rounds of negotiations aimed at progressive liberalization of trade in services. As a result, the current GATS negotiations began in January 2000 and it still continues. The mandate set by the November 2001 Ministerial Conference in agreed that the “participants shall submit initial requests for specific commitments by June 30, 2002 and initial offers by March 31, 2003.” Subsequent to the exchange of initial requests and initial offers, WTO Members agreed to submit revised market access offers by May 31, 2005. In accordance with this declaration, Türkiye submitted its initial offer on September 3, 2003 (TN/S/O/TUR) and it submitted its revised offer in September 29, 2005 (TN/S/O/TUR/Rev.1)
 
Türkiye has undertaken a range of specific commitments under the GATS, as set out in its Schedule of Specific Commitments. Sectors covered include:

• Business Services
• Communication
• Construction    
• Education
• Environmental Services
• Financial Services
• Health Related Services
• Tourism
• Transport  

Services sector is an important part of Turkish economy and Türkiye is rated as the 17th in total world services exports in 2012, having a share of 1.3% with a total of 42 billion US$ worth of exports. In 2012, the services imports of Türkiye amounted to 19 billion US $ with a share of 0,6% total world services imports.  On the other hand, Türkiye ranks as the 28th country in total world services exports and 38th in total world services imports when EU countries are counted separately.

TÜRKİYE AND THE DISPUTE SETTLEMENT MECHANISM

The Dispute Settlement Mechanism (DSM) of the WTO constitutes the guarantee of the legal structure arising from the WTO Agreements. This mechanism is only applied to trade disputes between WTO Member states and arising from government policies but the disputes between person and firms are out of the scope of DSM. The main purpose of the mechanism is to ensure that WTO Members act in accordance with the WTO Agreements, to protect the rights and obligations of the Members under the WTO Agreements and to ensure reliability and predictability of the multilateral trading system. DSM can only be applied to the disputes stemming from the Agreements listed in Appendix 1 to the Understanding on Rules and Procedures Governing the Settlement of Disputes. The mechanism which is automatic, obligatory and has appeal; compensation and retaliation mechanisms functions quite effectively.

DSM is made up of five stages which are; consultations between the parties, adjudication by panels and, if applicable, by the Appellate Body, the adoption of the reports by the Dispute Settlement Body and the implementation of the ruling.

Türkiye has been a WTO Member since 26 March 1995. As of 29 September 2023, Türkiye has taken place in the DSM eighteen times. In this regard, Türkiye was the complainant in six of these disputes and the respondent in twelve of them. Seven out of these eighteen disputes were resolved during the consultations stage while eleven of them were taken to the Panel.