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Formation
• WTO replaced GATT in 1995
- one nation, one vote (like GATT)
• GATT-General Agreement on Tariffs and Trade– Formed in 1947– Came out of the Bretton Woods conference– Part of three organizations that became part of
framework to help manage the postwar global economy (along with IMF, World Bank)
– An informal trade organization
GATTA. Principles
1. Trade Liberalization• Liberalization 1. liberal view
- free market- limited government - more optimistic about state cooperation- trade is a positive sum game
• Increase trade- reduce tariffs
2. Nondiscrimination• Most Favored Nation
- A trade advantage given to one GATT member must be extended to every other GATT member
• National Treatment- A member must treat foreign products at least as favorably as domestic products (i.e. taxes, regulations)
3. Reciprocity• A state benefiting from another state’s trade concessions should provide roughly
equal benefits in return4. Safeguards and Contingent Measures
• Limit of imports that may cause harm to a state’s industry or economy
Safeguards and Contingent Trade Measures
Safeguards
Temporary
Import Surges
BOP problems
Infant Industries
Permanent
General Exceptions
National Security
Tariff Renegotiations
Contingent Trade Measures
Anti-dumping duties (ADDs)
Countervailing duties (CVDs)
Rounds of GATT and WTO Negotiations
Name Years Subjects Covered Countries Participating
Geneva 1947 Tariffs 23
Annecy 1949 Tariffs 13
Torquay 1951 Tariffs 38
Geneva 1956 Tariffs 26
Dillon 1960-1961 Tariffs 26
Kennedy 1964-1967 Tariffs and antidumping measures 62
Tokyo 1973-1979 Tariffs, nontariff measures, plurilateral agreements
102
Uruguay 1986-1993 Tariffs, nontariff measures, rules, services, intellectual property, dispute settlement, trade-related investment, textiles, agriculture, creation of WTO
123
Doha (WTO) 1999- Agriculture, services, tariffs, nontariff measures, intellectual property, dispute settlement
149
GATT in Jeopardy
• Non-Tariff Barriers-not covered in GATT rules
• Agriculture had been an exception to restrictions on import quotas and export subsidies
• Agriculture and Textiles mostly excluded from regulations
• Easy to circumvent regulations (VER)• Dispute Settlement procedures weak• U.S. and other Developed Countries (DCs) wanted
scope to go beyond trade in goods to trade in services, intellectual property and investment
• Most Less Developed Countries (LDCs) did not agree to negotiations in the Tokyo Round
WTO Replaces GATT• Formal, legally constituted organization• Oversees trade treaties negotiated in the Uruguay
Round: GATS, TRIPS, TRIMS along with GATT• Meets at least every 2 years• Dispute settlements (DS) more binding and timely:
member states use DS process more then with GATT• Greater effort to integrate LDCs and transition
economies• More involvement with Non governmental Organizations
and civil society groups
1995
Disputes
• What causes a dispute?– When a member country of the WTO believes another
member country is violating an agreement or a commitment that has been set within the WTO.
• Agreements are those negotiated under the Rounds of GATT/ WTO
• How is it resolved?– The Dispute Settlement Body composed of member
governments (all WTO members) work together to set an agreement.
Steps (& Lengths) of Settlement
1. Consultation (60 days)2. The Panel (45 days / 6 months)3. Final Report (3 weeks)4. Report becomes a Ruling (60 days)Either side can appeal a panel’s ruling.5. Appeals Report (60-90 days)6. Appeals Report becomes a Ruling (30
days)
Disputes (Examples)
• Valenzuela – Import Licensing Measures on Certain Agricultural Products– Complainant: United States– Respondent: Valenzuela
• Mexico – Tax Measures on Soft Drinks and Other Beverages– Complainant: United States– Respondent: Mexico
Disputes (cont…)
• The dispute settlement agreement stresses that “prompt compliance with recommendations or rulings of the Dispute Settlement Body is essential in order to ensure effective resolution of disputes to the benefit of all Members”.
• Outstanding cases: Some cases have remained in the consultation phase since 1995.
Doha Round UnResolved• LDCs:
- want Special and Differentiated Treatment monitored and enforced
- G-20 of LDCs (Brazil, China, India) call for end of EU and U.S. agricultural export subsidies- North promised technical assistance not enough
• DCs: - want LDCs reduce barriers to nonagricultural imports- strengthen and extend agreements for services trade and intellectual property trade-Major DCs ( ex.EU and Japan) want to expand WTO to new areas: government procurement, trade facilitation, competition policy
• Fast Track Authority expired 2007
WTOs Future
• G-7: even with one nation one vote system LDcs have less influence
• Increase in Regional Trade Agreements
• Doha Round unresolved
• Global Recession and Protectionism
References• www.wto.org• Cohn, A. (2008). Global Political Economy. (pp.
195-227). Pearson Education, Inc.
• http://www.wto.org/english/thewto_e/whatis_e/whatis_e.htm
• http://www.wto.org/english/tratop_e/dispu_e/dispu_e.htm
• http://events.streamlogics.com/wto/2004/html/001.html
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