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The World Trade Organization (WTO) Linda Young POLS 400 International Political Economy Wilson Hall – Room 1122 Fall 2005.

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Presentation on theme: "The World Trade Organization (WTO) Linda Young POLS 400 International Political Economy Wilson Hall – Room 1122 Fall 2005."— Presentation transcript:

1 The World Trade Organization (WTO) Linda Young POLS 400 International Political Economy Wilson Hall – Room 1122 Fall 2005

2 Linda Young, POLS 400, International Political Economy Impact of trade on the environment Seattle 2000: What Were They Protesting About? A perception of increasing income inequality, both within nations and between nations poor nations becoming more impoverished Labor: both domestic concerns and broader concerns – MNCs: their influence over WTO, over national governments, market power, labor exploitation Food security by some countries

3 Linda Young, POLS 400, International Political Economy A secretariat in Geneva having a relatively small staff/budget compared with many multilateral institutions World Trade Organization (WTO) A multilateral (many nations) institution that negotiates, implements and governs various agreements between nations to abide by a common set of rules governing trade

4 Linda Young, POLS 400, International Political Economy History of the WTO In the 1930s there was a wave of protectionism High tariffs were enacted: in the United States, the Smoot-Hawley tariffs (depression) After WWII, governments looked for ways for international cooperation that would reduce the threat of war Settled on Bretton Woods Institutions World Bank International Monetary Fund (IMF) In 1948, General Agreement on Tariffs and Trade (GATT)

5 Linda Young, POLS 400, International Political Economy ITO/GATT ITO: Not adopted – U.S. Congress in opposition However, maintained as a secretariat for nearly 50 years ( ) Twenty-three of the founding members decided to reduce tariffs: Australia, Belgium, Brazil, Burma, Ceylon, Chile, China, Cuba, Czechoslovakia, France, India, Lebanon, Luxembourg, Netherlands, New Zealand, Norway, Pakistan, Southern Rhodesia, Syria, South Africa, United Kingdom, and the United States Eight rounds completed, now Doha

6 Linda Young, POLS 400, International Political Economy World Trade Organization In 1994, after seven years of negotiations, the Uruguay Round Agreement (URA) was signed This formalized the WTO Functions: Provides rules to govern trade Removes obstacles through negotiations Provides stability Resolves disputes

7 Linda Young, POLS 400, International Political Economy WTO Members 147 members 75% are developing countries more countries in accession WTO run by member governments Decisions by consensus Ministerial conferences held every 2 years 25% 75% Developing countries All others WTO Countries

8 Linda Young, POLS 400, International Political Economy What Are the Principles of the Multilateral Trading Agreement? Most Favored Nation (MFN) Status Applies to goods, services, and trade-related aspects of intellectual property rights (TRIPs) Cannot discriminate between trading partners Lower a tariff for one trading partner, lower it for all Before China became a WTO member, yearly debate on whether or not to give China MFN status Exception regional trade agreements

9 Linda Young, POLS 400, International Political Economy The EU has favorable trade rules for ex- colonies in Africa, Caribbean, Pacific (ACP) Continuation of the Lome Convention Banana Dispute 1993 Two-tier tariffs based on country of origin ACP duty free up to 857,000 mt (quotas) – over this amount, a duty of 750 European Currency Units (ECU) Non-ACP imports 100 ECU duty per mt up to 2 mmt – over this amount, a 850 ECU duty

10 Linda Young, POLS 400, International Political Economy Challenges to the EU Regime United States requested authorization for retaliation EU to adjust regime WTO decision on several grounds including discrimination WTO challenge by United States, Mexico, Guatemala and Honduras violated non-discrimination U.S. challenge even though workers and product not from the United States

11 Linda Young, POLS 400, International Political Economy More Principles National treatment treating foreign goods the same as domestic Dispute: Venezuelan reformulated gasoline higher standards for imports Predictability bindings transparency obligations to report No quantitative restrictions Quotas more trade-distorting than tariffs Exception: agriculture

12 Linda Young, POLS 400, International Political Economy What Are the Elements of the Multilateral Trading System? Trade-Related Aspects of Intellectual Property Rights (TRIPS) General Agreement on Tariffs and Trade (GATT) General Agreement on Trade in Services (GATS)

13 Linda Young, POLS 400, International Political Economy Basic Structure of the WTO Agreements: How the Six Main Areas Fit Together Source

14 Linda Young, POLS 400, International Political Economy Source: World Trade Organization Understanding the WTO. Geneva, Switzerland, p. 24. Available at

15 Linda Young, POLS 400, International Political Economy General Agreement on Tariffs and Trade (GATT) Multilateral Agreement on Trade in Goods Agriculture new in 1994 Uruguay Round Agreements Act (URAA) Sanitary and Phytosanitary Agreement Agreement on Textiles and Clothing (ATC) Product standards Technical Barriers to Trade (TBT) Anti-dumping duties, countervailing duties and safeguards Customs valuation, pre-shipment inspection, rules of origin Various agreements cover:

16 Linda Young, POLS 400, International Political Economy General Agreement on Trade in Services (GATS) Cross border supply Consumption abroad Commercial presence Presence of natural persons

17 Linda Young, POLS 400, International Political Economy Trade-Related Aspects of Intellectual Property Rights (TRIPS) Also technology transfer balance between protection and transfer Covers copyrights and trademarks, geographical indicators, patents, patents, layouts of integrated circuits, other Principles: Most Favored Nation (MFN) and national treatment

18 Linda Young, POLS 400, International Political Economy TRIPS (cont) Incorporated previous agreements Paris Convention for Protection of Industrial Property, Berne Convention for Protection of Literary and Artistic Works for some items Agreement specifies how it is to be enforced with domestic laws Implemented in transition periods

19 Linda Young, POLS 400, International Political Economy Back to the Protests in Seattle Ag negotiations began anyway, as scheduled in URA Council of Ministers agreed to launch a general round of negotiations in Doha, Qatar, November 2001 Negotiations are most successful if trade-offs can be made between countries

20 Linda Young, POLS 400, International Political Economy The Development Round African countries 1/3 of WTO membership 140 countries, roughly 100 developing economies and many economies in transition Few developing countries played a significant role in the Uruguay Round Agreements (URA) Changing composition of the membership of the WTO

21 Linda Young, POLS 400, International Political Economy Decision-Making in the WTO Not like the International Monetary Fund (IMF) and the World Bank Voting is tied to quota shares in the Bank (although moderated by other features) Decision-making by consensus!!!! 147 members, diverse, new Council of Ministers (every other year)

22 Linda Young, POLS 400, International Political Economy Decision-Making (cont) Day to Day General Council also Dispute Settlement and Trade Policy Review all countries are members of each Outcomes are through negotiations Decisions mostly by consensus when voting, one country, one vote No sanctions from the organization again, different than the IMF/World Bank

23 Linda Young, POLS 400, International Political Economy One View: Institute for International Economics Before: Few players and not a single undertaking (which means a country has to sign on to the whole thing) Then: Decision-making through consensus, developed by self-selected players, worked reasonably well Seattle: No longer worked

24 Linda Young, POLS 400, International Political Economy WTO Processes Have Responded More transparency: information available More participants Decisions only after extensive informal consultations open to all Lesson from Seattle: avoid last minute proposals from exclusive groups

25 Linda Young, POLS 400, International Political Economy Leadership Selection in the WTO Few restrictions on choice of candidates – so much active competition led to difficulty Unlike conventions in the IMF (European) and the World Bank (United States) WTO: part 50 years old, part 5 years old – had only three Director-Generals from , then things changed

26 Linda Young, POLS 400, International Political Economy Leadership in the WTO Mike Moore 1999–2002 New Zealand Renato Ruggiero 1995–1999 Italy Supachai Panitchpakdi Thailand Peter Sutherland 1993–1995 Ireland

27 Linda Young, POLS 400, International Political Economy Old Understanding Faded Membership much larger Developing countries wanted a voice Factors: regionalism, favoritism, other leadership posts i.e., Organisation for Economic Co-operation and Development (OECD) Gridlock led to split terms (difficult during Seattle) Moore – Supachai –

28 Linda Young, POLS 400, International Political Economy Trade Promotion Authority (formerly called fast-track) Means that Congress gives the President the authority to negotiate, to accept or reject a deal Lapsed with the Clinton administration Restored by Congress in August 2002 Is essential to U.S. credibility in negotiations

29 Linda Young, POLS 400, International Political Economy Dillon GATT-WTO Negotiating Rounds and Number of Members Source: WTO and the Institute for International Trade Negotiations (ICONE)

30 Linda Young, POLS 400, International Political Economy WTO Membership: Increased Number of Developing Countries Source: WTO and the Institute for International Trade Negotiations (ICONE) Elaboration: ABARE-Australia

31 Linda Young, POLS 400, International Political Economy Notes: Data for GDP (2001) population (2001) and trade (2003). EU excludes intra-trade. Source: FAO, Worldbank, and Institute for International Trade Negotiations (ICONE) Elaboration: ICONE Agricultural Negotiations in the Doha Round: Main Coalitions

32 Linda Young, POLS 400, International Political Economy Legitimacy Geographic distribution: Asia, Africa, LAC Most dynamic exporters and markets with the highest rates of growth Traditional Coalitions x New Forms of Pressure Cairns: old coalition based on common interests. G-20: heterogeneous pressure group based on technical and political capacity: fast response, measurable results G-20 as an Effective Pressure Group? Source: Institute for International Trade Negotiations (ICONE)

33 Linda Young, POLS 400, International Political Economy = Offensive position= Defensive position Doha Interest Groups Source: Institute for International Trade Negotiations (ICONE)

34 Linda Young, POLS 400, International Political Economy G-20 as an Effective Pressure Group? G-20 Main Positive Results Pragmatism: oriented towards consensus building Pressure to speed up the full integration of agriculture in the WTO: avoiding the traps of a new EC-US Blair House Agreement Defensive positions from China, India…but new offensive interests in industrial goods (China) and services (India) G-20 Contradictions Market access beyond tariff overhangs (ex. India) Too many new exceptions -Newly acceded members (China), Special Products, SSMs Source: Institute for International Trade Negotiations (ICONE)


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