1. International Organizations Trade & Economic Interdependence -- The WTO, NAFTA & EU Jan. 20th, 2003

2. Arrangements for Economic/Political Integration range of options for integration  trade (WTO & GATT)  trade plus (NAFTA)  political and economic integration (EU)

3. Bretton Woods (1944) history  era of freer trade prior to WW1  economic stagnation, collapse of world trade, Great Depression  end of WW2 – Bretton Woods central premise -- expanding international trade held the key to stable economic reconstruction  trade based on openness and currency stability

4. Bretton Woods (1944) fixed-exchange rate  world trade conducted in US dollars  based on US dollar backed by gold (1 oz gold=$35 US)  countries declared a fixed exchange rate (i.e. value of domestic currency in US$  collapsed in 1971  US suspension of the gold standard moved the international market to a system of floating exchange rates (value of domestic currency determined by international supply and demand)  Burgernomics Burgernomics

5. Bretton Woods (1944) what’s left?  central premise (importance of trade) and institutional infrastructure remains institutional infrastructure  World Bank  provides access to international capital markets by guaranteeing loans  International Monetary Fund (IMF)  oversee fixed (but adjustable) exchange rate system  General Agreement on Trade and Tariffs (GATT)  facilitate freer trade on a multilateral basis  GATT rounds (multi-year periods of negotiations)  Uruguay Round, 1993 created the WTO (1995)

6. The World Trade Organization (WTO) function – enhance trade  builds on GATT framework  covers all of trade including manufactured goods, services, and intellectual property  designed to promote international trade and adjudicate trade disputes

7. The WTO – Organizational Structure organization of governments  member-driven  various interest groups can only influence the WTO through their own government membership is voluntary  145 member countries China – December 2001  accession – must ask to join decisions generally decided by consensus  one member, one vote  agreements must be ratified in national parliaments adjudicating disputes  country expected to implement ruling with reasonable time period  failure to implement within reasonable time period – must enter negotiations with complaining country to determine mutually-acceptable trade-related compensation  no agreement on compensation – WTO authorizes retaliation  WTO does not impose penalties above and beyond retaliatory actions that would be available to a country in the absence of WTO adjudication

8. The World Trade Organization principles (self-declared)  trade without discrimination  most-favoured nation (non-discrimination)  national treatment  freer trade  predictability  more stable business environment  fair competition  anti-dumping & subsidies  encouraging development and economic reform  progressive/flexible liberalization  special assistance and trade concessions for developing countries

9. The World Trade Organization Canada and the WTO  as complainant  US Dumping and Subsidies Offset Act  softwood lumber  asbestos  as respondent  Canadian Wheat Board WTO – ongoing negotiations

10. NAFTA – Trade Plus Free Trade Agreement (FTA), 1989  Canada and US  removal of almost all barriers to flow of goods and services between the two countries  reduction of tarrif and non-tariff barriers (e.g. subsidies)  national treatment

11. NAFTA – Trade Plus North American Free Trade Agreement (NAFTA), 1994  extended FTA to Mexico  limited differences between FTA and NAFTA  expanded to include intellectual property, medical services, etc.  border crossing for business people  side agreements environment labour standards  Chpt.11 on investment expropriation and compensation provides rights to foreign investors that are not constitutionally guaranteed to domestic investors in Canada

12. NAFTA – Trade Plus similar to principles enshrined under WTO plus...  investor protection  cross-border mobility  environment and labour side agreements

13. European Union (EU) – Economic & Political Integration expansion – deepening and broadening integration  European Coal and Steel Community, 1951  six countries (Belgium, France, Germany, Italy, Luxembourg, the Netherlands)  European Economic Community (EEC), 1957  negative integration – absence of restrictions on movement of workers, goods, services  Denmark, Ireland and UK admitted, 1972  European Union, 1993  positive integration – actively fostering integration Maastricht Treaty, 1992 Amsterdam Treaty, 1997  15 members currently Greece (1986), Spain (1986), Portugal (1986), Austria (1995), Finland (1995), Sweden (1995) 10 candidate countries (Bulgaria, Czech Republic, Estonia, Cyprus, Latvia, Lithuania, Hungary, Malta, Poland, Romania, Slovenia, Slovakia, Turkey)

14. European Union (EU) – Institutions legislative – shared legislative powers  Council of the European Union ministers and heads of state of member countries  European Parliament direct election executive – European Commission  President and commissioners appointed by member states  confirmed by European Parliament judiciary – Court of Justice

15. European Union (EU) – Economic Integration single market  free movement of people, capital (investment), goods and services monetary union  the Euro comes into existence January, 1999 banknotes and coins in circulation, January 2002 national banknotes and coins withdrawn from use (February 2002) common labour market  Schengen Agreement, 1985

16. European Union (EU) – Political Integration political integration  common political institutions  e.g. European Parliament  common European citizenship  freedom of movements  fundamental rights  civil and political rights  common social citizenship (limited)  access to social programs in other countries  common currency  money traditionally symbol of sovereignty  requires integrated monetary policy

17. Implications for Domestic Democratic Systems increasingly limits domestic policy latitude  to what degree do democratically elected governments have the right to cede sovereignty in international agreements  to what degree can they make decisions that are binding on future governments? questions regarding citizen control and involvement in discussion over terms of trade  e.g. WTO and the “Battle in Seattle”  what is the required level of citizen engagement?  is involvement of democratically elected governments enough?

18. Main Points! range of options for integration  range of options for economic integration  negative integration removing barriers –trade (WTO & GATT) –trade plus (NAFTA)  positive integration actively fostering integration –common market (EU)  political integration  economic integration combined with political integration EU each set of options raises important questions about democracy