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The World Trade Organization: Evolution, Structure and Agreements

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Presentation on theme: "The World Trade Organization: Evolution, Structure and Agreements"— Presentation transcript:

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

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 ( ): the longest round ever Punta del Este Declaration Proposals for a MTO (1990) Marrakesh Agreement (1994) WTO since Differences between GATT’47 and WTO WTO: Evolution, Structure and Agreements

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 WTO: Evolution, Structure and Agreements

4 Economic Globalisation and WTO Law
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 WTO: Evolution, Structure and Agreements

5 Economic Globalisation and WTO Law
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 WTO: Evolution, Structure and Agreements

6 Economic Globalisation and WTO Law
International trade rules: reasons Restraining protectionism More security and predictability Governance in globalised economy WTO: Evolution, Structure and Agreements

7 Economic Globalisation and WTO Law
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 WTO: Evolution, Structure and Agreements

8 Economic Globalisation and WTO Law
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 WTO: Evolution, Structure and Agreements

9 Economic Globalisation and WTO Law
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) WTO: Evolution, Structure and Agreements

10 Economic Globalisation and WTO Law
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 WTO: Evolution, Structure and Agreements

11 Economic Globalisation and WTO Law
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 WTO: Evolution, Structure and Agreements

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 WTO: Evolution, Structure and Agreements

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 WTO: Evolution, Structure and Agreements

14 WTO Membership Current membership
Quasi-universal: Dec 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 WTO: Evolution, Structure and Agreements

15 WTO Membership Membership obligations (XVI:4 WTO) Accession
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) WTO: Evolution, Structure and Agreements

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 WTO: Evolution, Structure and Agreements

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 WTO: Evolution, Structure and Agreements

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 WTO: Evolution, Structure and Agreements

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 WTO: Evolution, Structure and Agreements

20 Ministerial Conferences and Doha Development Round
Doha, 2001: Doha Development Round or Agenda (DDA) single undertaking approach (except DS and geographical indications ) deadline , then end of 2006 Cancun, 2003 Hong Kong, 2005 July 2006: negotiations suspended WTO: Evolution, Structure and Agreements

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 WTO: Evolution, Structure and Agreements

22 WTO Institutional Structure
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) WTO: Evolution, Structure and Agreements

23 WTO Institutional Structure
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 WTO: Evolution, Structure and Agreements

24 WTO Institutional Structure
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 WTO: Evolution, Structure and Agreements

25 WTO Institutional Structure
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 WTO: Evolution, Structure and Agreements

26 WTO Institutional Structure
WTO Secretariat (VI WTO) headed by the Director-General (appointed by MC) Renato Ruggiero Mike Moore Supachai Panitchpakdi Pascal Lamy WTO: Evolution, Structure and Agreements

27 WTO Institutional Structure
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 WTO: Evolution, Structure and Agreements

28 WTO Decision-making Normal procedure (IX:1 WTO) Special procedures
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) WTO: Evolution, Structure and Agreements

29 WTO Decision-making WTO decision-making in practice; consensus over voting Reasons for and against consensus Efficiency v. legitimacy WTO: Evolution, Structure and Agreements

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 WTO: Evolution, Structure and Agreements

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 WTO: Evolution, Structure and Agreements

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 WTO: Evolution, Structure and Agreements

33 WTO Status and Budget Status (VIII WTO) Budget (VII 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 WTO: Evolution, Structure and Agreements

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. WTO: Evolution, Structure and Agreements

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 WTO: Evolution, Structure and Agreements

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 WTO: Evolution, Structure and Agreements

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 WTO: Evolution, Structure and Agreements

38 Fundamental Principles of the WTO Agreements
Principle of non-discrimination Mfn under GATT/GATS/TRIPS Art.I GATT Art.II GATS Art.4 TRIPS WTO: Evolution, Structure and Agreements

39 Fundamental Principles of the WTO Agreements
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 WTO: Evolution, Structure and Agreements

40 MFN Treatment under GATT 1994
Nature of the MFN obligation Any advantage granted Customs duties Internal tax Internal regulations affecting the sale, distribution, use of the products WTO: Evolution, Structure and Agreements

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’ WTO: Evolution, Structure and Agreements

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 protectionism Require equality of competitive conditions WTO: Evolution, Structure and Agreements

43 National Treatment under GATT 1994
Internal measures versus border measures Internal measures only Art.II and XI to border measures Structure of Article III III:1, general principle III:2, internal taxation III:4 internal regulation: WTO: Evolution, Structure and Agreements

44 National Treatment under GATT 1994
III:2, internal taxation two non-discrimination principles 1. Internal taxation of like products Imported and domestic products like products Imported products are taxed in excess of the domestic products 2. 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 WTO: Evolution, Structure and Agreements

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’ WTO: Evolution, Structure and Agreements

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 WTO: Evolution, Structure and Agreements

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 WTO: Evolution, Structure and Agreements

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 WTO: Evolution, Structure and Agreements

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 WTO: Evolution, Structure and Agreements

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 WTO: Evolution, Structure and Agreements

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 WTO: Evolution, Structure and Agreements

52 Quantitative Restrictions
Definition and types: limits the quantity Prohibition Ban Quota Licensing Voluntary export restraint WTO: Evolution, Structure and Agreements

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 WTO: Evolution, Structure and Agreements

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 WTO: Evolution, Structure and Agreements

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 WTO: Evolution, Structure and Agreements

56 Rules on unfair trade 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 WTO: Evolution, Structure and Agreements

57 Rules on unfair trade Response to injurious dumping
Definitive antidumping duties Provisional measures WTO: Evolution, Structure and Agreements

58 Rules on unfair trade Subsidies, XVI
Financial contribution by government conferring a benefit Countervailing measures (VI), reaction to prohibited subsidies Agreement on Subsidies and Countervailing Measures WTO: Evolution, Structure and Agreements

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 WTO: Evolution, Structure and Agreements

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) WTO: Evolution, Structure and Agreements

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 WTO: Evolution, Structure and 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 WTO: Evolution, Structure and Agreements

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 WTO: Evolution, Structure and Agreements

64 MFN Treatment under GATS
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 WTO: Evolution, Structure and Agreements

65 MFN Treatment under GATS
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 WTO: Evolution, Structure and Agreements

66 MFN Treatment under GATS
Exemptions (II:2) MS could list until MFN exemptions Transport Communications (audiovisual) Financial and business services Should not exceed ten years WTO: Evolution, Structure and Agreements

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 WTO: Evolution, Structure and Agreements

68 National Treatment under GATS
Test of consistency Measure affects services Services and service suppliers are ‘like’ No less favourable treatment WTO: Evolution, Structure and Agreements

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 WTO: Evolution, Structure and Agreements

70 Barriers to Market Access for Services and Service Suppliers
Definition and types: market access Exhaustive list of Art. XVI:2 GATS Four types of quantitative restrictions Limitations on forms of legal entity Limitations on foreign equity participation Discriminatory and non-discriminatory Not related to quality or qualifications WTO: Evolution, Structure and Agreements

71 Barriers to Market Access for Services and Service Suppliers
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 WTO: Evolution, Structure and Agreements

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 WTO: Evolution, Structure and Agreements

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 WTO: Evolution, Structure and Agreements

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) WTO: Evolution, Structure and Agreements

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 WTO: Evolution, Structure and Agreements

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 WTO: Evolution, Structure and Agreements

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 WTO: Evolution, Structure and Agreements

78 The TRIPS Agreement Basic Principles Protection standards for IP
National Treatment, Art.3 MFN clause, Art.4 Protection standards for IP WTO: Evolution, Structure and Agreements

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 WTO: Evolution, Structure and Agreements

80 The TRIPS Agreement National Treatment, Art.3 MFN clause, Art.4
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 WTO: Evolution, Structure and Agreements

81 The TRIPS Agreement Enforcement of IP rights, Art.41-61
Members ensure effective remedies Fair equitable procedures, 42 Provisional measures, 50 WTO: Evolution, Structure and Agreements

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, Extra extension for ldc until , until 2016 for pharmaceutical patents First waiver, now proposal for amendment for TRIPS agreement, 2/3 majority needed Doha declaration: public health and TRIPS WTO: Evolution, Structure and Agreements

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 WTO: Evolution, Structure and Agreements

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? WTO: Evolution, Structure and Agreements

85 Conclusion: Balancing Interests
WTO Most effective global trade organisation “Secretive and medieval organisation” WTO: Evolution, Structure and Agreements

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 WTO: Evolution, Structure and Agreements


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