Consider the following: ‘The WTO has a surprisingly complex institutional structure, no doubt influenced by the

structure which was used for the negotiation of the Uruguay Round, but also responding to perceived problems of
GATT, including its “birth defects”.’ (J. Jackson, Sovereignty, the WTO, and Changing Fundamentals of
International Law, 104) Discuss the institutional structure of the WTO, taking into account the extent to which it is
based on GATT 1947. Do you believe that the “birth defects” of GATT have been fully cured?

Three decades of troubled trade and monetary relations marked by a syndrome of "beggar-thy-neighbor" policies and the
onset of a great depression formed the background to GATT. The outbreak of the Second World War gave the decisive push
to the efforts of the architects of the postwar trade and monetary policies. The interplay of interests and concerns of the UK
and the USA, the two initiators of this endeavor, shaped its outcome. The more powerful of the two countries had, for almost
a decade, tested and tried the reciprocal trade agreements 'many of which had clauses that foreshadowed those that are
currently in GATT (Jackson 1992:31). In other words "GATT was constructed ‘out of old trade agreement lumber at hand'
(Snape). Naturally, the results were not quite like the neat models of trade theory based on the comparative advantage
principle: nor were they in accordance with the political rhetoric of free trade. The GATT had a "de facto" role as an
international organization and was to disappear with the treaty creating the International Trade Organization (ITO), which
would have been under the aegis of the UN, would have had a broad regulatory mandate, covering trade, employment rules,
and business practices. Since that treaty never entered into force, the GATT remained an agreement in simplified form. The
unusual birth of GATT shaped its history, the decade of 1970s and 1980s saw increasing strains in the GATT system.
Attempts were made to reform these institutions. In this regard John H. Jackson had long written on what he termed the
GATT’s “birth defects”, urging that these be corrected through the creation of a new institutional structure. The Uruguay
Round (1986-94) created the WTO.

Unlike the old GATT, the WTO Agreement represents a profound transformation of the legal landscape of the world trading
system. The WTO Agreement has four annexes. Annex 1 consists of Annex 1A containing the multilateral agreements on
trade in goods. Annex 1B contains the General Agreement on Trade in Services (GATS).Annex 1C contains the Agreement
on Trade-Related Aspects of Intellectual Property Rights (TRIPS). Annex 2 contains the Understanding on Rules and
Procedures Governing the Settlement of Dispute (‘Dispute Settlement Understanding’).Annex 3 contains The Trade Policy
Review Mechanism and Annex 4 contains plurilateral trade agreements.

The governing structure of the WTO follows some of GATT 1947 model and Article IV sets forth the detailed rules but it
departs from it substantially. The WTO gives the trade rules both a permanent organizational structure (powers that GATT
did not have) and the kind of "legal personality" enjoyed by the U.N., the World Bank, and the I.M.F. GATT was a trade
record serviced by a professional secretariat: the WTO is a membership organization hence the WTO provides greater
coherence among its wide-ranging rights and obligations, including a unified disputes procedure and it establishes a
permanent forum for consultations and negotiations on an ever-broadening agenda affecting global trade and investments in
goods and services.The highest institutional body is the Ministerial Conference, which meets roughly every two years. It
brings together all members of the WTO, all of which are countries or customs unions. Next to it is General Council which
conducts the organization's business in the intervals between Ministerial Conferences. The General Council delegates
responsibility to three other major bodies namely the Councils for Trade in Goods, Trade in Services and Trade-Related
Aspects of Intellectual Property Rights. Both of these bodies comprise all members.The General Council also acts in the
capacity of the Dispute Settlement Body and the Trade Policy Review Body. Three other bodies are established by the
Ministerial Conference and report to the General Council: the Committee on Trade and Development, the Committee on
Balance of Payments and the Committee on Budget, Finance and Administration. Each of the plurilateral agreements of the
WTO have their own management bodies which report to the General Council.

While, “The GATT was established in the wake of the International Trade Organizations’ failure and contained a more limited
array of measures derived from the Havana charter for the settlement of disputes between its contracting parties [Read R].
This is because the GATT came to the life with its birth defects. The most important shortcoming of the system was the fact
that panel reports, to become legally binding, had to be adopted in the GATT Council by consensus. A Contracting Party that
was found to have acted inconsistently with its GATT obligations could block the adoption of the ‘unfavorable’ panel report
and frustrate the operation of the dispute settlement system. Whereas, The WTO Agreement created a highly legalistic and
judicial-like system of dispute settlement, which, as Andreas Lowenfeld [1995] puts it, is “…more far-reaching than any
multilateral arrangements for resolution of disputes among states in history”. The principle of consensus is cured by the
introduction of the ‘reverse consensus’ requirement for the adoption of panel reports. For a panel report to become legally
binding, it no longer has to be adopted by consensus; adoption by ‘reverse consensus’ suffices. A panel report is adopted by
‘reverse consensus’ unless there is a consensus not to adopt the report.

While WTO is colossal step towards global trading compared to GATT, it is difficult to say that the “birth defects” of GATT
have been fully cured. This is because the decision-making process in the WTO remains largely unchanged from that of its
GATT predecessor. The WTO consensus-rule requires that a decision be taken only if no member actively objects. Article IX
of the WTO agreement states that “the WTO shall continue the practice of decision-making by consensus followed by the
GATT 1947”. Neither the GATT nor the WTO defines consensus explicitly. The critics argue the WTO's consensus
governance model provides law-based initial bargaining; trading rounds close through power-based bargaining favoring
Europe and the U.S. This problem was evident at the birth of the WTO (Schott 1994). It has two main causes: First, WTO
membership has greatly membership has greatly expanded, encompassing many developing countries. As of march 2013 it
has 159 members. As a result of domestic economic reforms, including trade liberalization undertaken unilaterally and
pursuant to GATT negotiations, developing countries now have a greater stake in the world trading system and a greater
claim in participation in the WTO's decision making process and secondly , WTO members can no longer "free ride" on
negotiations agreements. Starting with the Uruguay round accords, countries have had to participate in all of the negotiated
agreements as part of a "single undertaking". This process has fallen victim to the GATT's success in integrating developing
countries more fully into the trading system. (Schott). Another issue is the institutional balance in WTO between the
legislative, executive and judicial organs. By vesting in the Ministerial Conference and the General Council the exclusive
power to adopt interpretations of the WTO Agreement and the MTAs, these two bodies wield the to override interpretations of
the said Agreements that proceed from Panel or Appellate Body decisions. This issue came up first in India - Quantitative
Restrictions and Turkey - Textiles cases where Mr.Frieder Roessler said that the competence of panels and the Appellate
Body could not be determined by themselves exclusively on an interpretation of the DSU, but in the context of the complex
institutional structure of the WTO and the division of decision-making among different organs, set out in the Marrakesh treaty
and which reflect legitimate, negotiated policy objectives.

However, The WTO infrastructure is so vast that it can easily support not only further expansion, but also many duplications
of the architectural wonders already set up. No wonder that the prospective beneficiaries of the ‘magnificent’ structure
express their gratification through the famous remark of régie that its completion marked a ‘defining moment in history.’ The
WTO improves upon the GATT in terms of the rights and obligations conferred on member countries, the number of
countries participating and its ability to promote trade negotiations and to process dispute amongst members. As a result
WTO provides greater discipline over trillions in annual trade, goods and services