The Marrakesh Agreement, established in 1994 and coming into effect on January 1, 1995, marked a significant evolution in global trade structures. It’s been 30 years since the agreement gave birth to WTO. Read here to learn more about the agreement.
The Marrakesh Agreement establishing the World Trade Organization was signed by 123 countries on 15 April 1994, leading to the birth of the WTO on 1 January 1995.
Over the past 30 years, the WTO has helped to bring about a major expansion in global trade, raising living standards, increasing employment and promoting sustainable development.
From the early days of the Silk Road to the creation of the General Agreement on Tariffs and Trade (GATT) and the birth of the WTO, trade has played an important role in supporting economic development and promoting peaceful relations among nations.
Marrakesh Agreement
It is the founding treaty of the World Trade Organization (WTO), which was created during the Uruguay Round of the General Agreement on Tariffs and Trade (GATT) negotiations.
The agreement fundamentally reshaped the international trading system by introducing a more robust and comprehensive structure for trade relations.
Here’s an in-depth analysis of its components, objectives, and impact:
Objectives of the Marrakesh Agreement
The primary goal of the Marrakesh Agreement is to reduce trade barriers and ensure a smoother flow of trade between countries, ultimately promoting economic growth and development. Its objectives include:
- Promoting Fair Competition: The agreement aims to level the playing field by setting commonly agreed standards for international trade.
- Ensuring Full Employment and Broad Increase in Effective Demand: It links trade with employment and demand expansion.
- Expanding Production and Trade: Particularly of goods and services.
- Ensuring Optimal Use of World Resources: Promoting sustainable development through optimal trade practices.
- Protecting and Preserving the Environment: The preamble of the agreement acknowledges the need to protect the environment while promoting economic development.
Key Features of the Marrakesh Agreement
Establishment of the WTO
- The Marrakesh Agreement established the WTO as the global international organization dealing with the rules of trade between nations.
- The WTO encompasses a larger set of previous agreements under GATT, expanding the scope from just trade in goods to include trade in services (General Agreement on Trade in Services, or GATS) and intellectual property (Agreement on Trade-Related Aspects of Intellectual Property Rights, or TRIPS).
Dispute Settlement
- One of the groundbreaking features of the WTO under the Marrakesh Agreement is its mechanism for dispute resolution.
- The Dispute Settlement Understanding (DSU) provides a detailed process for resolving trade disagreements between countries, which is legally binding and enforceable.
Trade Policy Review Mechanism
- This mechanism was institutionalized under the WTO to ensure transparency of trade policies across countries.
- It involves a periodic review of national trade policies to ensure compliance with WTO rules and norms.
Impact of the Marrakesh Agreement
Trade Liberalization
- Since its inception, the Marrakesh Agreement has contributed to a significant reduction in tariffs and other trade barriers.
- This has facilitated increased trade flows, integration into the global economy, and economic growth, particularly for developing countries willing to open their markets.
Economic Development
- By providing more predictable trading terms, the agreement has helped countries attract investment and improve their economic standing globally.
- The rules-based trading system helps to reduce the risk associated with international trade.
Criticism and Challenges
- The WTO and the Marrakesh Agreement have faced criticism for favouring wealthier nations due to their greater negotiating power and for promoting policies that sometimes conflict with the economic interests and developmental needs of poorer countries.
- Issues such as agricultural subsidies remain highly contentious.
Environmental and Social Concerns
- There are ongoing debates about the impact of liberalized trade on the environment and social structures.
- Critics argue that trade liberalization can lead to environmental degradation and worsen working conditions in industries moved to countries with less stringent regulations.
30 years of WTO: A timeline
April 1994: The Marrakesh Agreement establishing the WTO is signed.
January 1995: The WTO is born on 1 January.
May 1995: Renato Ruggiero (Italy) takes office as WTO Director-General.
December 1996: WTO holds its first ministerial conference in Singapore.
December 1997: The Information Technology Agreement (ITA) enters into force, slashing tariffs on IT goods.
May 1998: The Second Ministerial Conference in Geneva marks 50 years of the GATT.
November 2001: The 4th Ministerial Conference in Doha, Qatar, sees the launch of a new round of trade negotiations, known as the Doha Development Agenda.
- China becomes the WTO’s 143rd member.
September 2003: The 5th Ministerial Conference in Cancún, Mexico, welcomes Cambodia and Nepal as the first least-developed countries to join the WTO since its establishment.
December 2005: 6th Ministerial Conference in Hong Kong, China, sees the launch of Aid for Trade initiative.
January 2010: “WTO Chairs Programme” launched to support trade-related work of universities in developing economies.
November 2012: Historic signing ends 20 years of EU-Latin American banana dispute, the longest-running dispute in WTO history.
December 2013: The 9th Ministerial Conference in Bali, Indonesia, sees the conclusion of negotiations on the landmark Trade Facilitation Agreement.
December 2015: 10th Ministerial Conference results in “Nairobi Package”, including the abolition of agricultural export subsidies and expansion of ITA.
January 2017: Amendment to the TRIPS Agreement enters into force, easing access to medicines.
February 2021: Dr Ngozi Okonjo-Iweala becomes the first African and first woman to become WTO Director-General.
Conclusion
The Marrakesh Agreement represents a landmark in the evolution of the global trade system, establishing a framework that supports international trade while attempting to address economic disparities.
However, the dynamics of global trade continue to evolve, and the WTO faces ongoing challenges, including disputes over its rules, the rise of trade protectionism, and the need to adapt to new economic realities such as digital trade and sustainability concerns.
The future of the Marrakesh Agreement and the WTO will likely involve navigating these complex issues while striving to maintain a balance between free trade and fair-trade practices.
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-Article by Swathi Satish
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