The World Trade Organization: Evolution, Structure and Agreements Dr. Wybe Th. Douma TMC Asser Instituut The Hague, The Netherlands

The World Trade Organization:

Evolution, Structure and Agreements

Dr. Wybe Th. Douma

TMC Asser Instituut

The Hague, The Netherlands

WTO: Evolution, Structure and Agreements

2

The WTO: Its evolution

The ITO and GATT 1947 Filling the gap left by still born ITO De facto international trade organisation Success and failure

Uruguay Round (1986-1993): the longest round ever Punta del Este Declaration Proposals for a MTO (1990) Marrakesh Agreement (1994) WTO since 1.1.1995

Differences between GATT’47 and WTO


3

Economic Globalisation and WTO Law

Economic Globalisation and International Trade What is meant by economic globalisation?

Gradual integration of national economies into a global borderless economy

Influenced by (and their democratisation) forces of technology of finance of information


4


Why is it under critique? Reasons and reactions Globaphiles v.globaphobes Expansion of cross-border economic interaction: more

trade, more welfare Erosion of local control, autonomy and identity

WTO as vehicle of freer and open trade? Balancing of interests necessary Global economic governance


5


Figures on trade (last 50 years) show changes in trade developments General increase of world trade Increase of share of services in relations to goods Raise of trade in Europe Decline in Latin-America, Africa and Asia 48 ldc account to only 0.5 percent of world trade China, India and Mexico major suppliers of cutting/-

edge technologies and labour-intensive goods Increased trade with companies and foreign direct

investment


6


International trade rules: reasons Restraining protectionism More security and predictability Governance in globalised economy


7


Basic Rules and Principles of WTO Law WTO Agreement regulating institutional, decision-

making and procedural rules Multilateral agreements GATT, GATS, TRIPS contain

Principle of non-discrimination Principle of freer and fair trade Rules on conflicts between trade liberalization and other

societal values and interests Special rules and differential treatment for developing

countries


8


Sources of WTO Law: see WTO Legislation Agreement establishing the WTO Multilateral agreement on trade in goods

GATT 1994 Agreement on Agriculture Agreement on the Application of Sanitary and Phytosanitay

Measures Agreement on Textiles and Clothing

GATS TRIPS Dispute Settlement Understanding


9


Sources of WTO Law: see WTO Legislation Ministerial Decisions and Declarations: not enforcable

through DS WTO dispute settlement reports Acts of WTO bodies: authoritative interpretaitons and

waivers Customary international law General principles of law Other international agreements (WIPO agreements)


10


Sources of WTO Law: conflicts and effect Relationship: II WTO Agreement

Difference multilateral - plurilateral agreements Cases of conflict XVI:3 WTO Agreement Conflict between GATT’94 and other multilateral

agreements on goods? Other multilateral agreement prevails

Adopted panel and AB reports only binding on the parties but nonbinding precedent


11


Sources of WTO Law: conflicts and effect Customary international law: 3.2 DSU

Especially in procedural law used General principles of law Other international agreements

reference: 2 TRIPs Agreement WIPO ip agreements

No reference: dispute whether evocable Subsequent practice, Art.31(3) (b) Vienna

Convention


12

The WTO organisation: Mandate of the WTO

Objectives (preamble WTO) Increase of standard of living Attainment of full employment Allowing optimal use of the world’s resources,

objective sustainable development Protect and preserve environment Share of growth for developing and least

developed countries Through reduction of trade barriers and

elimination of discrimination


13

The WTO organisation: Mandate of the WTO

Functions (III WTO) Facilitate implementation of WTO agreements Forum for negotiations: Ministerial Conferences Settlement of trade disputes Review trade policies (TPRM): periodic reviews Cooperate with IOs and NGOs: IOs, working

arrangements (III:5, V WTO), ngos: V:2, guidelines

Give technical assistance developing countries: bilateral or multilateral


14

WTO Membership Current membership

Quasi-universal: Dec.2005 149 members States and autonomous customs territories (Hong

Kong) European Communities and EU MS, IX, XI, XIV WTO Developing country Members (DCMs): ¾ , ldc:

designated as such by the UN Groupings and alliances: rta (ASEAN, NAFTA), Cairns

group (agriculture), G-20 (China, India, Brazil, Egypt, Argentina, South Africa), Quad (EC, Japan, USA)

Observers (Afghanistan, Laos), start accession n. within five years, ios


15

WTO Membership

Membership obligations (XVI:4 WTO) Waivers (IX:3-4 WTO) Non-application (XIII WTO): when joining

Accession Original membership (XI WTO) until 1997 Accession (XII WTO)

Withdrawal and expulsion (XV WTO)


16

WTO Membership

Accession: XII WTO: long and cumbersome Accept WTO Agreements and multilateral agreements Negotiating market access commitment and concessions Stages WTO working party on accession

Tell us about yourself Work out with us individually what you have to offer

(bilateral) Draft membership terms (protocol of accession and lists Decision phase Minsterial Conference or General Council

decides by consensus/two-thirds majority of WTO members Example China, 15 years of accession


17

WTO Institutional Structure: member-driven

Ministerial Conference (IV:1 WTO) General Council, DSB, TPRB (IV:2-4 WTO) Specialized Councils (IV:5 WTO) Committees and working parties (IV:6 WTO) Quasi-judicial bodies (DSB) WTO Secretariat (VI WTO) Organs absent in the WTO


18

WTO Institutional Structure

Ministerial Conferences Minister-level representatives Supreme decision-making functions

Adopt authoritative interpretations of the WTO agreements

Granting waivers Adopt amendments Decide accessions Appoint DG and staff regulations

Meets at least once every two years


19

Ministerial Conferences and built-in agenda

Commitment in the Uruguay Round, negotiations in agriculture, services

Singapore 1996: new working groups (trade and investment, trade and competition policy)

Geneva, 1998: Millennium Round 2000? Seattle, 1999: the road to debacle, working

groups established agriculture


20

Ministerial Conferences and Doha Development Round

Doha, 2001: Doha Development Round or Agenda (DDA) single undertaking approach (except DS and

geographical indications ) deadline 1.1.2005, then end of 2006

Cancun, 2003 Hong Kong, 2005 July 2006: negotiations suspended


21

Areas of concern

Implementation-related issues and concerns Agriculture Services TRIPS and issues

And public health And geographical indications And biodiversity Protection of traditional knowledge and folkore


22


General Council, DSB, TPRB (IV:2-4 WTO) Ambassador-level diplomats Meets once every two months Day-to-day management

adopting annual budget, financial regulations Arrangements cooperations IOs and NGOs DSB (Dispute Settlement Body) and TPRB (Trade

Policy Review Body)


23


Specialized Councils (IV:5 WTO) Council for Trade in Goods Council for Trade in Services Council for TRIPS Tasks

delegated from the General Council Recommendations for authoritative interpretations Under TRIPS extend ten-year transition period for ldc


24


Committees and working parties (IV:6, 7 WTO) Committee on Trade and Development Committee on Regional Trade Agreements Working parties (temporary subsidiary bodies)

New institutions Trade Negotiations Committee (TNC)

Established by Doha Development Round


25


Quasi-judicial bodies (DSU) Dispute settlement bodies: ad hoc established

Panels, standing Appellate Bodies Textile Monitoring Body (TMB) 8:1 Agreement on

Textiles and Clothing


26


WTO Secretariat (VI WTO) headed by the Director-General (appointed by

MC) Renato Ruggiero Mike Moore Supachai Panitchpakdi Pascal Lamy


27


No decision-making powers of its own, member driven

Provide technical and professional support for WTO bodies

Provide technical assistance dc Provide information for media and public WTO Sekretariat organised in divisions


28

WTO Decision-making

Normal procedure (IX:1 WTO) Decision-making by consensus; explicit objection Decision-making by majority voting EC special provision IX:1 WTO

Special procedures Dispute settlement (DSU) Authoritative interpretations (IX:2 WTO) Waivers (IX:3-4 WTO), practise by consensus Amendments (X WTO)


29

WTO Decision-making

WTO decision-making in practice; consensus over voting Reasons for and against consensus Efficiency v. legitimacy


30

Disputed matters: Decision-making

Involvement of Developing countries Involvement and role of NGOs in decision-

making and WTO Reforming and improving WTO structure

Enhance transparency of WTO decision-making Contribute to the democratic accountability WTO

Problem of secondary law and soft law and its inconsistencies


31

Disputed matters - DC and LDC

Marginalisation? Internal transparency Decision-making with 149? Green Room meetings; major trading nations and

select group of developing countries


32

Disputed Matters - Involvement of NGOs

Involvement of NGOs? V:2 WTO + guidelines As watchdog? Arguments for and against

NGOs with specialised knowledge enhance decision-making capacity

Increase legitimacy of WTO Special interest groups Lack of legitimacy Developing countries suspicious of NGOs


33

WTO Status and Budget

Status (VIII WTO) International legal personality WTO and the UN: independent from UN

Budget (VII WTO) Increased budget for technical assistance and capacity-

building Contributions of members on the basis of share of

international trade services, goods last three years Management of trust funds Doha development Agenda

Global Trust Fund


34

The WTO Agreements: An overview

Multilateral Agreement Trade in Goods: GATT’94

GATS (services) Agreement TRIPS (IP rights) Agreement Multilateral agreements

Agreement on Textiles and Clothing Agreement on Subsidies

See list P.van den Bossche, p.45.


35

The WTO Agreements

Plurilateral Agreements Agreement on the Trade in civil aircrafts Agreement on Government Procurement

Dispute Settlement Understanding and WTO Dispute settlement reports


36

GATT/GATS/TRIPS

Similarities and Differences Multilateral GATT and GATS: General principles – general

and specific obligations (list of annexes) TRIPS: transitional arrangements dc, ldc


37

Fundamental Principles of the WTO Agreements

Principle of non-discrimination Mfn under GATT/GATS/TRIPS National treatment under GATT/GATS/TRIPS

Principle of freer and fair trade Rules on market access Rules on unfair trade

Exemptions to rules and principles


38


Principle of non-discrimination Mfn under GATT/GATS/TRIPS

Art.I GATTArt.II GATSArt.4 TRIPS


39


Principle of non-discrimination Mfn under GATT

Other provisions MFN: GATT III:7, V, IX:1, XIII, XVII

Prohibition of discrimination between like products originating in different countries

De jure and de facto discrimination covered


40

MFN Treatment under GATT 1994

Nature of the MFN obligationAny advantage granted

Customs dutiesInternal tax Internal regulations affecting the sale,

distribution, use of the products


41

MFN Treatment under GATT 1994

Test of consistency Measure confers a trade ‘advantage’ Products are ‘like’:

Similar or identical characteristics, indicators such as characteristics of the products, end-use and tariff regimes

Advantage granted ‘immediately and unconditionally’


42

National Treatment under GATT 1994

Article III GATT 1994 Nature of the obligation

Purpose of Article III imported products treated alike to national products

Avoid protectionismRequire equality of competitive conditions


43


Internal measures versus border measuresInternal measures onlyArt.II and XI to border measures

Structure of Article IIIIII:1, general principle III:2, internal taxationIII:4 internal regulation:


44


III:2, internal taxation two non-discrimination principles1. Internal taxation of like products

Imported and domestic products like products Imported products are taxed in excess of the

domestic products2. Internal taxation of directly competitive or substitutable

products Consistency test:

imported and domestic p. directly competitive or substitutable

products not similarly taxed dissimilar taxation applied so as to afford

protection to domestic production


45

Internal Regulations

Article III:4 GATT 1994 Test of consistency

Measure is ‘internal law, regulation or requirement affecting …’

Products are ‘like’ Imported products treated ‘no less favourable’


46

Rules on market access: Barriers to Trade

Tariff barriers to trade in goods Customs duties, II Other duties and charges

Non-tariff barriers to trade in goods Quantitative restrictions, XI Other non-tariff barriers


47

Customs Duties

Customs duties or tariffs Definition and types: financial charge imposed at the time

of importation Based on weight, volume, quantity value (ad valorem) mixed

Purpose: revenue for government, protect domestic industry

National tariffs such EC Common Customs Tariff EU Market Access Database mkaccdb.eu.int


48

GATT‘1994

Negotiations on tariff reductions Tariffs as a lawful instrument of protection Call for and success of tariff negotiations, Art.XXVIIIbis High customs duties by developing countries Principles of tariff negotiations

Reciprocity and mutual advantage Mfn clause Except.: for developing countries


49

Tariff Concessions

Results of tariff negotiations, Art.II Tariff concessions or tariff bindings Schedules of concessions

Protection of tariff concessions Art. II:1(a) GATT 1994 Art. II:1(b), first sentence, GATT 1994

Modification or withdrawal of tariff concessions


50

Imposition of Customs Duties

Customs classification HS Convention classification rules

Customs valuation Art. VII GATT 1994 and WTO Customs Valuation

Agreement Determination of origin

WTO Agreement on Rules of Origin


51

Other Duties and Charges

Definition and types: security deposit, statistical tax

GATT rule Art. II:1(b), second sentence, GATT 1994 and

WTO Understanding on Art. II:1(b) GATT 1994 Exceptions

Art. II:2 GATT 1994


52

Quantitative Restrictions

Quantitative restrictionsDefinition and types: limits the quantity

ProhibitionBan QuotaLicensingVoluntary export restraint


53

Quantitative Restrictions

QR versus CD (customs duties) preference for cds

Tariff quotas Prohibition of QRs

Art. XI GATT 1994 Administration of QRs

Art. XIII GATT 1994 and import licences


54

Other Non-Tariff Barriers: National Treatment or discrimination

Technical barriers to trade (other non-tariff barriers) TBT Agreement (Technical Barriers to Trade) SPS Agreement (sanitary or phytosanitary measures)

Lack of transparency Publication, notification & enquiry points

Unfair and arbitrary application of trade rules Uniform, impartial and reasonable application Procedures for the objective and impartial review

Customs formalities


55

Rules on unfair trade

Dumping, basic framework VI GATT, GATT Antidumping Agreement

not prohibited but condemned Main users: India, US and EC Biggest target: China, Korea, Malaysia,

Russia and Thailand


56


Definition of dumping: international price discrimination

Definition of injury of importing industry Causal link between dumping and injury Procedural structure of antidumping

measures: framework set by WTO, detailed provisions by members in Anti-dumping laws


57


Response to injurious dumping Definitive antidumping duties Provisional measures


58


Subsidies, XVI Financial contribution by government conferring a

benefit Countervailing measures (VI), reaction to

prohibited subsidies Agreement on Subsidies and Countervailing

Measures


59

System of exceptions

General exception, XX Escape clause Art.XIX Security exceptions Art.XXI Regional trade arrangement exception,

Art.XXIV Waiver Art.XXV:5


60

Exceptions/preferential treatment for and against developing countries, Exceptions/preferential treatment developing

countries Since 1955 Art.XVIII (for) Waiver Art.XXV:5 (for) Introduced during Tokyo Round Enabling clause,

Part IV Trade and Development, Art.XXXVI (4) (5), Article XXXVII (for)


61

Exceptions/preferential treatment for and against developing countries,

Voluntary restraint agreements (against them) under the old GATT system, now prohibited under WTO Agreement on Safeguards

Agriculture: US/EC „chicken war“Textiles and Clothing: Multifiber Arrangement

(MFA) under old GATT – bilateral restraint agreements


62

The GATS Agreement

Now 60 percent of world GDP Global cross-border trade 20 % services General Principles

MFN – Art.II Transparency Art.III Proportionality, Art.VI

Specific obligations Market access regulation, Art.XVI National Treatment, Art.XVII


63

MFN Treatment under GATS

Article II:1 GATS Nature of the obligation: prohibition of discrimination

between services and services suppliers from different countries Covers de jure and de facto discrimination

Test of consistency Measure covered by GATS Services & service suppliers are ‘like’ No less favourable treatment


64


Test of consistency Measure covered by GATS

By MS (local authorities etc.)Affecting services

Except. Services supplied in the exercise of governmental authority: health care, police protection

Definition of supply of services (I:2) modes of supply Cross-border Consumption abroad Commercial presence Presence of natural persons


65


Services & service suppliers are ‘like’ Characteristics of the service Classification and description of the service in the

UN Central Product Classification (CPC) system Consumer habits, preferences reg. services

No less favourable treatment Discrimination


66


Exemptions (II:2) MS could list until 1.1.1995 MFN exemptions

Transport Communications (audiovisual) Financial and business services

Should not exceed ten years


67

National Treatment under GATS

Article XVII GATS Nature of the obligations: Explicit commitment by

member in specific sector Listed in Schedule of Specific commitments

Such in regard to certain modes of supply Requirement to invest a certain amount of assets in local

currency


68

National Treatment under GATS

Test of consistency Measure affects services Services and service suppliers are ‘like’ No less favourable treatment


69

Barriers to Market Access for Services and Service Suppliers

GATS rules on market access barriers GATS rules on other barriers to trade in

services


70


Definition and types: market access Exhaustive list of Art. XVI:2 GATS

Four types of quantitative restrictionsLimitations on forms of legal entityLimitations on foreign equity participation

Discriminatory and non-discriminatory Not related to quality or qualifications


71


Negotiations on market access Market access commitments

Art. XIX GATS Art. XIX:2 GATS

Schedules of specific commitments, annexed to GATS Horizontal commitments: All sectors Sectoral commitments


72

Progressive Liberalisation

Modification or withdrawal of commitments, Art.XXI GATS

Market access commitments agreed so far Modest and slowly Maritime transport Professional services Financial services


73

Other Barriers to Trade in Services

Domestic regulation Disciplines on licensing, qualification requirements and

technical standards

Lack of transparency Publication, notification and enquiry points

Unfair and arbitrary application of trade rules Reasonable, objective and impartial application


74

The TRIPS Agreement

Background of the agreement: WIPO (1967), no dispute settlement system

Importance of IP rights for developed countries Other international agreements on IP rights

Paris Convention Industrial Property (1967) Berne Convention Artists work (1971)


75

TRIPS and its aims

Aims (preamble) Effective and adequate protection of ip rights Not become barriers to legitimate trade Ip as private rights Developmental and technological objectives Ldc members and flexibility


76

The TRIPS Agreement Intellectual property

Owner principle Country principle

Incorporation of IP conventions Minimum standards of IP rights Objectives, Art.7 TRIPS Basic Principles

National Treatment, Art.3 MFN clause, Art.4 Basic Principles


77

The TRIPS Agreement

Structure of the Agreement minimum standards IP rights incorporations of IP conventions, Art.2

Compliance with 1 to 12, 19 Paris Convention individuals holders of IP rights discretion and flexibility: certain exceptions

apply Example: patents Art.30, 31


78

The TRIPS Agreement

Basic Principles National Treatment, Art.3 MFN clause, Art.4

Protection standards for IP


79

The TRIPS Agreement

Protection standards for IP Exhaustion of rights, Art.6? Copyrights and related rights Trademark Geographical Indications Industrial Designs Patent Layout Design of Integrated circuits Undisclosed Information


80

The TRIPS Agreement

National Treatment, Art.3 Not less favourable than IP conventions

MFN clause, Art.4 Any advantage, favour, privilege or immunity

granted Immediately and unconditionally to all other

members Exceptions


81

The TRIPS Agreement

Enforcement of IP rights, Art.41-61 Members ensure effective remedies Fair equitable procedures, 42 Provisional measures, 50


82

The TRIPS Agreement: dc and ldc Transitional Arrangements, 65, 66

Entry into force: one year Developing country: four years Centrally-planned economy: four years Ldc: ten years, 1.1.2006 Extra extension for ldc until 1.7.2013, until 2016 for

pharmaceutical patents First waiver, now proposal for amendment for TRIPS

agreement, 2/3 majority needed Doha declaration: public health and TRIPS


83

WTO Law in the Context of International and national Law

WTO as International Law Overcame problems of the old GATT

(provisional and not ratified agreement) Not a closed and self-contained system Conflicts between WTO agreements and MEA

General principle of in conformity interpretation


84

WTO Law in the Context of International and national Law

WTO and national Law XVI:4 WTO Agreement general rule of

international law No interpretation of national law Effect in national law

Treaty-consistent interpretation Collission between national and WTO law

Direct effect of WTO provisions in national law? Right of consumer to free trade?


85

Conclusion: Balancing Interests

WTO Most effective global trade organisation “Secretive and medieval organisation”


86

Conclusion: Balancing Interests

Sutherland Report 2005 on the Future of the WTO Restrain on preferential trade agreements Clear objectives for the WTO’s relation with civil

society Appropiate technical assistance and capacity

building for ldc Role of Director-General strengthened

Documents

The World Trade Organization: Evolution, Structure and Agreements Dr. Wybe Th. Douma TMC Asser Instituut The Hague, The Netherlands