Trade Policy Review Mechanism

The WTO’s Trade Policy Review Mechanism (TPRM) was a result of the Uruguay Round. With the creation of the WTO in 1995, it was made permanent and broadened to cover also trade in services and trade- related aspects of intellectual property rights. The reviews focus on Members’ domestic trade policies and practices taking into account Members’ wider economic and developmental needs their policies and objectives, and the external economic environment that they face.

All WTO Members are subject to review under the TPRM. The frequency of each Member’s review varies according to its share of world trade. The reviews have two broad results: they enable outsiders to understand a Member’s trade policies and practices and they provide feedback to the reviewed Member.

The reviews take place in the Trade Policy Review Body (TPRB), which is the General Council operating under special rules and procedures, and comprises all WTO Members. The reviews are not intended to serve as a basis for the enforcement of specific obligations under the WTO Agreements, for dispute settlement procedures or to impose new commitments on Members.

Objectives

The main objectives of the TPRM are as follows:

• The smoother functioning of the MTS by achieving greater transparency and understanding of Members’ trade policies and practices
• Enable the collective appreciation and evaluation of the full range of individual Members’ trade policies and practices and their impact on the MTS
• Contribute to improved adherence by all Members to rules, disciplines and commitments made under the WTO Agreements

What is reviewed?

• Extent to which individual trading entities follow basic WTO principles concerning transparency of trade policies, non-discrimination in treatment of trading partners, the pattern of protection and the extent to which tariffs only are used as measures of protection in trade in goods.
• Restrictions used in trade in services, the record of adherence to the MTS and participation in dispute settlement.

TRPM for developing countries

The TPRM is a valuable tool for the development of trade policies in developing and LDC Members. Given the fact that these Members may confront with particular difficulties in adjusting their domestic policies in compliance with the WTO Agreements, a trade policy review would assist them to undertake a process of self assessment, including an examination of their participation in the WTO. Preparation for and participation in a trade policy review can be onerous for small developing countries. The WTO Secretariat may assist the Member concerned during the review process.

WTO and Regional Trade Agreements

WTO Members have the right to grant preferential treatment to their trading partners within a customs unions or a free trade area, without having to extend such better treatment to all WTO Members, subject to certain conditions. Thus, we note that this is contrary to the WTO’s basic principle of non-discrimination among trading partners (MFN principle).

Enabling Clause

In 1979, as part of the Tokyo Round of the General Agreement on Tariffs and Trade (GATT), the enabling clause was adopted in order to permit trading preferences targeted at developing and least developed countries which would otherwise violate Article I of the GATT.  The enabling clause permits developed countries to discriminate between different categories of trading partners (in particular, between developed, developing and least developed countries) which would otherwise violate Article I of the GATT which stipulates that no GATT contracting party must be treated worse than any other (this is known as most favoured nation treatment). In effect, this allows developed countries to give preferential treatment to poorer countries, particularly to least developed countries.

WTO rules and Balance of Payments

WTO Members retain the right to apply import restrictions to safeguard their external financial position and their balance of payments (BOPs), subject to certain conditions. These provisions require Members to progressively relax the restrictions as conditions improve and eliminate them when conditions no longer justify such maintenance.