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Misconceptions
• The WTO replaced the General Agreement on Tariffs and Trade (GATT).
• The WTO creates the rules that govern international trade.
• WTO-member countries cannot deviate from the trade standards set by the organization.
• WTO negotiations only take place during ministerial meetings and summits.
What is the WTO?
• The World Trade Organization (WTO) is responsible for providing the common institutional framework for the conduct of trade relations among its members.
• It represents a rules-based approach to multilateral cooperation.
• Trade in Goods (GATT)
• Trade Services (GATS)
• Trade Related Intellectual Property (TRIPs)
• Dispute Settlement and Trade Policy Review
Functions of the WTO
• Facilitate the implementation of multilateral trade agreements.
• Provide a forum for negotiations on trade-related issues.
• Administer the Understanding among members on Dispute Settlement and Trade Policy Review.
• Enhance coherence in global economic policy-making.
Perspectives on the WTO
• A code of conduct among members.
• The WTO can be seen as a club of countries with respect to trade.
• Member countries must abide by the club’s rules or receive sanctions accordingly.
• A market for members.
• The WTO can be understood as a market where countries exchange trade policies.
• The objective of such exchange is to secure the maximum benefit for the countries concerned.
Non-discrimination
Reciprocity
Market Access
Fair Trade
CORNERSTONES OF THE
WORLD TRADE ORGANIZATION
• Two underlying principles:
• Most Favored Nation (MFN)
• Products from member countries must be treated no less favorably than coming from any other country.
• Precedent: Cobden-Chevalier Treaty (1860).
• National Treatment
• Foreign goods must be treated no less favorably than domestic goods.
• Equivalence of treatment is what matters.
Non-Discrimination
Reciprocity
• Within the WTO, countries engage in reciprocal exchange of market-access commitments.
• The exchange of trade concessions occurs on a quid pro quo basis.
• Countries are willing to lower trade restrictions only if their counterparts are willing to do the same.
• This also means that WTO stipulations (privileges and obligations) apply equally to new and old members alike.
Access and Competition
• These principles are often at odds with one another.
• The principle of market access means that countries have the right to seek redress should contracting parties renege on their trade concessions.
• The principle of fair competition in the WTO context means that member countries have the right to make erect trade barriers if competition from imports becomes injurious to domestic industries.
ROUND AGENDA OUTCOMES
Geneva (1947: 23)
• Tariff reductions on specific items. • Concessions on 45,000 tariff lines.
Annecy(1949: 29)
• Tariff reductions on specific items.• Accession negotiations.
• Modest tariff reductions.
Torquay(1950-51: 32)
• Tariff reductions on specific items.• Accession negotiations.
•8,700 tariff concessions.
Geneva(1955-56: 33)
• Tariff reductions on specific items. • Modest tariff reductions.
Dillon(1960-61: 39)
• Tariff reductions on specific items.• Tariff implications of the formation of the EEC.
• Tariff adjustments and 4,400 tariff concessions.
Kennedy(1963-67: 74)
• Across-the-board formula approach to tariff reductions for industrial products.• Preferential treatment for developing countries.• Non-tariff measures (1).
• 35% average tariff reductions by developed countries.• Binding of tariff lines.• Anti-dumping and customs valuation agreements.
Tokyo(1973-79: 99)
• Across-the-board formula approach to tariff reductions for industrial products.• Preferential treatment for developing countries.• Non-tariff measures (2).
• 1/3 reduction in average tariffs by developed countries.• Adoption of the Enabling Clause.• Establishment of codes of conduct on other non-tariff measures.
Uruguay(1986-94: 128)
• Tariff reductions: item negotiations and formula approach.• Non-tariff measures (3).• Agriculture, textiles, trade in services, intellectual property rights, dispute settlement, trade policy transparency and surveillance.
• 1/3 average reduction in tariffs by developed countries.• Agreements on services and intellectual property.• Creation of the WTO
Doha(2000-05: 148)
• Tariff reductions: item negotiations and formula approach.• Developing countries: implementation issues, market access, trade and the environment. ?
“New” Issues Addressed
• Agriculture and Textiles
• Trade Facilitation
• Elimination of Non-Tariff Barriers
• Trade Remedies
• Anti-dumping agreement
• Agreement on subsidies and countervailing measures
• Agreement on safeguards
Trade in Goods
• Customs tariff: in principle, the only instrument of protection allowed under the GATT.
• Non-discriminatory application of tariffs.
• Binding of tariff rates.
• Prohibition against quantitative restrictions (except for agricultural commodities under certain conditions).
• Trade in goods in the WTO can be described as a form of “shallow integration”.
• i.e. Cooperative agreements not to do certain things.
Trade in Services
• General Agreement on Trade in Services (GATS)
• Application of the MFN principle and national treatment to the service sector.
• Applies to the following types of services:
• Cross-border
• Movement of consumer abroad
• Movement of supplier abroad
• Temporary movement of people
TRIMs and TRIPs
• Trade-Related Investment Measures (TRIMs) pertain to government policies that impose performance standards on foreign investors.
• Examples: local content requirements, export obligations, trade balancing requirements, etc.
• The Agreement on Trade Related Intellectual Property Rights (TRIPs) imposes member governments to adopt specific, similar policies.
• Minimum standards of protection as outlined by existing IPR conventions and eventual harmonization with standards of industrialized countries.
Dispute Settlement
• Monitoring: Trade Policy Review Mechanism
• The General Council can sit as a Dispute Settlement Body (DSB) to resolve trade conflicts among members.
• Concerned parties must attempt to resolve their dispute bi-laterally.
• Failing that, the DSB creates a panel to investigate the matter at hand.
• Findings accepted by the DSB may be appealed.
• The implementation of panel decisions allows cross-compensation and retaliatory measures.
Singapore Issues:
• Labor Standards
• Trade and the Environment
• Investments
• Competition Policy
• E-commerce
Concerns over the equity of the system (particularly with respect to developing and least-developed countries).
Institutional and programmatic adjustments.
LOOKING FORWARD:
ISSUES FACING THE WTO