The 109 th Congress may consider issues related to the World Trade Organization (WTO). Under the Uruguay Round Agreements Act ( P.L. 103-465 ), which is the law that implemented the agreements reached during the Uruguay Round of multilateral trade negotiations (1986-1994), the U.S. Trade Representative (USTR) must submit to the Congress every five years a report that analyzes the costs and benefits of continued U.S. participation in the WTO. Once Congress receives this comprehensive report, any Member of Congress may introduce a joint resolution withdrawing congressional approval of the Agreement establishing the WTO. On March 2, 2005, the Administration submitted the report on U.S. participation in the WTO, and on the same day, Representative Bernard Sanders introduced withdrawal resolution H.J.Res. 27 . H.J.Res. 27 was privileged and was considered under expedited legislative procedures. On May 26, 2005, the House Ways and Means Committee reported the resolution adversely ( H.Rept. 109-100 ). On June 9, 2005, the House defeated H.J.Res. 27 by a vote of 338-86. A similar withdrawal resolution was introduced five years ago ( H.J.Res. 90 ; H.Rept. 106-672 ) and was voted down in the House by a 363-56 vote and not introduced in the Senate. The withdrawal resolution offered the opportunity for Members to examine the costs and benefits of WTO participation, express the degree of satisfaction with WTO dispute decisions, or debate other aspects of WTO membership. In addition to considering the withdrawal resolution, the 109 th Congress will monitor WTO disputes involving U.S. interests and U.S. laws. Congress might also consider whether or not to change U.S. laws where WTO panels have decided against the United States. Members of Congress may debate whether the WTO dispute process and individual decisions support U.S. interests. At the same time, the United States and the other members of the WTO are participating in a multilateral round of trade negotiations. The talks began in November 2001 in Doha, Qatar, and are called the Doha Development Agenda, or Doha Round. The purpose of this report is to analyze the main issues in the debate on U.S. participation in the WTO. To put the issue in perspective, the report begins with a brief history of the WTO, including its purpose and functions, followed by an examination of the economic benefits and costs of the WTO. The main body of the report addresses selected issues for the United States: the economic costs and benefits to the United States, decisionmaking in the WTO and national sovereignty; the WTO dispute process; arguments on whether or not to include labor, environmental, and food safety standards in the WTO; and the WTO and developing countries. It ends with a brief discussion of alternatives to participation in the WTO. Following World War II, nations throughout the world, led by the United States and several other developed countries, sought to establish an open and nondiscriminatory trading system with the goal of raising the economic well-being of all countries. Aware of the role of trade barriers in contributing to the economic depression in the 1930s, the countries that met to discuss the new trading system considered open trade as essential for economic stability and peace. The intent of these negotiators was to establish an International Trade Organization, which would address not only trade barriers but other issues indirectly related to trade, including employment, investment, restrictive business practices, and commodity agreements. Unable to secure approval of such a comprehensive agreement, however, they reached a provisional agreement on tariffs and trade rules, called the General Agreement on Tariffs and Trade (GATT). The GATT went into effect in 1948. This provisional GATT became the principal set of rules governing international trade for the next 47 years. The World Trade Organization (WTO) succeeded the GATT in 1995. It was established as a result of the Uruguay Round of multilateral trade negotiations that were held under GATT auspices. The WTO encompassed the former GATT agreements with newly negotiated reforms, new trade issues such as services and trade-related intellectual property, a stronger dispute resolution procedure, a mechanism to review members' trade policies regularly, and other duties. In contrast to the GATT, the WTO was created as a permanent structure. The WTO has three broad functions. First, the governments of the member countries agree on a set of multilateral rules and principles for trade, which provide a stable and predictable basis for trade. The economic effects of agreed-on rules and principles are difficult to quantify precisely, but are likely substantial and attractive to countries, since membership in the GATT/WTO has grown from 23 countries in 1948 to 148 countries at present (with about 30 more countries waiting to join). Also, world trade over the past half century, by growing more rapidly than world production, has served as an engine of economic growth for many countries. The second function of the WTO is to provide a mechanism to enforce the rules. The dispute settlement procedure provides a way in which disagreements among countries over the interpretation of the rules can be resolved. Broadly, a country with a complaint requests a consultation and, if the dispute is not resolved during the consultation, the complaining country may request establishment of a panel. After the panel issues its decision, both disputing parties have the right to appeal. After the conclusion of all such proceedings, the Dispute Settlement Body (representatives of all the WTO members) adopts the report or reports, unless it decides by consensus to reject them. Third, the WTO provides a forum for negotiations to reduce trade barriers. Countries meet periodically in "rounds" to consider changes in rules on trade barriers. In the first five rounds (late 1940s to early 1960s), negotiations focused on reducing tariffs, which are now low. As tariffs were reduced, countries sometimes turned to non-tariff barriers (for example, subsidies, government procurement regulations, antidumping procedures) to restrict imports. Negotiations since the mid-1960s have covered non-tariff barriers as well. Today, negotiations might extend to measures that involve what once were exclusively domestic policy issues, such as health, safety, or environmental standards. Some WTO rules have been agreed on to prevent countries from using such standards as disguised protectionism, although each country retains the right to set its own standards. Decisions within the WTO are made by member countries, not by WTO staff, and they are made by consensus, not by formal vote. The highest level body in the WTO is the Ministerial Conference, which is the body of political representatives (trade ministers) from each member country. The body that oversees the day-to-day operations of the WTO is the General Council, which consists of a representative from each member country. Many other councils and committees deal with particular issues, and members of these bodies are also national representatives. One question that Congress may consider as it debates continued participation in the WTO is its effect on the economy and prosperity of the United States. In one sense, this is a difficult question to answer as the prosperity of the 10 years of WTO existence occurred along with the information technology boom in the United States in the 1990s, the rise of China as an economic power, and macroeconomic and other factors. U.S. involvement in the WTO did not happen in a vacuum. Much of the increased trade may have occurred anyhow, or in the case of our two largest partners, Canada and Mexico, may have occurred as a consequence, in part, of the implementation of the North American Free Trade Agreement (NAFTA), which was approved by Congress in 1993, more than because of the WTO. Many economists believe that, over the past 50 years, the more predictable environment for trade as well as the reduction in trade barriers, which were a result of multilateral trade rules, have contributed to unprecedented economic prosperity for the majority of countries. For example, the WTO reports that world exports in 2003 were 126 times those in 1948, while world gross domestic product (GDP) in 2003 was 7 times that of world GDP in 1950. Looked at another way, the average annual rate of growth in the volume of world exports was higher than growth in GDP during the period. Such rapid growth in world exports has been attributed to the progressive reduction of trade barriers caused by successive rounds of GATT/WTO trade liberalization, and may have contributed to the growth in world GDP. In the report that the President submitted to Congress on March 2, 2005, on the costs and benefits of U.S. participation in the WTO, the Administration has equated U.S. economic success with WTO membership through a variety of trade and non-trade statistics. For example, the report notes that during the 1994-2004 period (the WTO was established in 1995): U.S. GDP rose 38%, industrial production rose 35%, productivity rose at an annual rate of 2.9%, (compared with 1.8% in the 1984-1994 period), business investment rose 78% (compared with a 38% increase in the 10 years before the WTO was established), real compensation doubled to 1.8% per year, and 17.2 million new jobs were created. The President's report also cites trade statistics. For example, bound tariff rates were lowered an average of 40% for developed countries and 25% for developing countries by the Uruguay Round. U.S. exports of goods and services increased 63% from 1994-2004, from $703 billion to $1.1 trillion. U.S. exports increased 76% to developing countries and 48% to developed countries. Imports of goods and services increased 120%, from $801 billion to $1.764 trillion during the WTO period.