History
After World War II Create institutions that would eliminate the
causes of war. Through UN and eliminating the economic causes of
war
Bretton Woods Conference of 1944 Three institutions formed:
The International Monetary Fund (IMF) The World Bank The International Trade Organization (ITO)
General Agreement on Tariffs and Trade (GATT)
Congress refused to agree to the ITO Cede too much sovereignty to an international
body.General Agreement on Tariffs and Trade
—1947 Provisional agreement for the ITO Became the agreement and the organization for
establishing and enforcing, through dispute settlement, the international trade rules.
The World Trade Organization
The Uruguay Round (8th)—1984-1995 established the World Trade Organization amended GATT 1947 which became GATT
1994
Became the World Trade Organization (WTO) on January 1, 1995
Mission
Increase international trade by promoting lower trade barriers providing a platform for the negotiation of trade
“...In brief, the World Trade Organization (WTO) is the only international organization dealing with the global rules of trade between nations. Its main function is to ensure that trade flows as smoothly, predictably and freely as possible.”
Structure
Highest level: Ministerial Conference Meets at least every two years Comprised of countries or customs unions Makes decisions on all matters under any of the
multilateral trade agreements
Structure (cont.)
Second level: General Council Handles the daily work of the ministerial
conference along with the Dispute Settlement Body and the Trade Policy Review Body
Consists of representatives of all WTO member states
Structure (cont.)
Third level: Councils for Trade Work under the General Council
Three parts• Council for Trade in Goods• Council for Trade-Related Aspects of Intellectual
Property Rights• Council for Trade in Services
Six other bodies report to the General Council• trade and development• the environment• regional trading arrangements• administrative issues.
Structure (cont.)
Fourth level: Subsidiary Bodies Three bodies
The Goods Council—11 committees• agriculture, market access, subsidies, anti-dumping
measures, etc. The Services Council
• financial services, domestic regulations and other specific commitments
Dispute Settlement panels and Appellate Body• resolve disputes• Appellate Body deals with appeals
Principles of Trading
1. Free of discrimination Cannot privilege a particular trading partner above others within
the system Cannot discriminate against foreign products and services.
2. Tend toward more freedom fewer trade barriers (tariffs and non-tariff barriers)
3. Predictable trade barriers will not be raised arbitrarily markets will remain open.
4. Tend toward greater competition5. More accommodating for less developed countries
Give them more time to adjust, greater flexibility, and more privileges.
Agreements
Approximately 30 agreements exist
Agreements are (officially) made by consensus of all member countries Finds the most widely acceptable decision Time consuming
In reality, agreements are often made in informal “Green Room” or “Mini-ministerial” meetings with some nations not being present
Agreement on Agriculture (AoA) Domestic support
Green box- fixed payments for environmental programs Amber box- general subsidies Blue box- production-limiting subsidies
Market access Developed countries- reduce tariffs by 36% Developing countries- reduce tariffs by 24%
Export subsidies Reduce tariffs by 35%
General Agreement on Trade in Services (GATS)
Prior to the GATS there was no agreement with regard to trade in services
Historically many services (e.g. health, education) have been considered the responsibility of government
With GATS many services have opened up to international trade that were previously monopolized by governments
Trade-related Aspects of Intellectual Property Rights (TRIPs)
Sets forth minimum intellectual property standards for member countries
Protected items include copyrights, geographical indications, industrial designs, chip designs, patents, trademarks, trade dress, and confidential information
Sanitary and Phyto-Sanitary Agreement (SPS)
Sets food safety standards Bacterial contaminants Pesticides Inspection and labeling
Animal and plant health Imported pets Diseases
Agreement on Technical Barriers to Trade (TBT)
Ensures “that technical negotiations and standards, as well as testing and certification procedures, do not create unnecessary obstacles to trade”
Challenges of Uruguay
1. Protection remains high
2. Troublesome domestic policies (subsidies, IPRs, labor conditions)
3. Disadvantaged developing countries- particularly in agriculture (Development Agenda)
Doha Collapses
Europe blames US inflexibility regarding farm subsidies
Others blame EU for their own farm subsidies
EU wants to focus on manufacturing, not agriculture
Developing nations are appalled, combine to oppose rich nations
Cancun
The ministerial conference was held in Cancún, Mexico, aiming at forging agreement on the Doha round. An alliance of 22 southern states, the G20 (led by India, China and Brazil), resisted demands from the North for agreements on the so-called "Singapore issues" and called for an end to agricultural subsidies within the EU and the US. The talks broke down without progress.
Hong Kong
Billed as a “Development Round”Agreement to phase out all agricultural
export subsidies by 2014Terminate cotton subsidies by 2007Developing nations again see this round
as a loss.
Recent Sept. 28 Meeting
At its meeting on 28 September 2006, the Dispute Settlement Body established a compliance panel under DSU Article 21.5 at the second-time request by Brazil to review US' implementation of the DSB rulings in the “Cotton” case. At the same meeting, China blocked the first-time requests by the EC, US and Canada for panels to examine China's measures on imports of auto parts; and the US blocked Thailand's first-time request for a panel to examine US measures on shrimp from Thailand.
WTO Advantages
Helps trade to flow smoothly. Deals with disputes over trade. Decisions in the WTO are made by consensus
and the agreements apply to everyone. All countries can appeal against decisions which
they feel are unfair. This system has the potential to protect developing countries from harsh measures and unfair rules.
That’s dynamite
Jerry…Dy-no-mite
Well Philip, how do
you feel.
WTO Criticisms
1. The WTO only serves the interests of multinational corporations and wealthy nations.2. Fundamental principals and aims of the WTO are not beneficial for all parties involved. 3. The WTO tramples over labor and human rights4. The WTO is destroying the environment.5. Fundamental principals and aims of the WTO are not beneficial for all parties involved. 6. The US adoption of the WTO undemocratic.7. The WTO undermines local development and penalizes poor countries.8. The WTO is increasing inequality.
“Some examples of this bias are: (1) rich
countries are able to maintain high import duties and quotas in certain products, blocking imports from developing countries (2) the increase in non-tariff barriers such as anti-dumping measures allowed against developing countries; (3) many developing countries do not have the capacity to follow the negotiations and participate actively in the Uruguay Round; and (4) the TRIPS agreement which limits developing countries from utilizing some technology that originates from abroad in their local systems.”
- Martin Khor
WTO Criticisms
Fundamental principals and aims of the WTO are not beneficial for all parties involved. Free trade and deregulation may not be good
for developing countries Negative environmental, health, and safety
issues may be neglected
Dispute Settlement
Dispute Settlement Body (WTO General Council Dispute Settlement Panel (3 trade officials) Appeals must be made on points of law Panel meets in secret, not required to alert
nations that their laws have been challenged WTO can authorize trade sanctions as
punishment (often ignored by powerful nations)