World Trading System: Rules and Commitments

The Effect of Protectionism on World Trade: January February March April May June July August September October November December $3.0bn $0.9bn Trade figures: per month

1947: Geneva (UN)  Draft a Charter for an International Trade Organization (OIT)  Draft common rules to govern international trade  Start Tariff Negotiations  Negotiations start

: Havana UN Conference on Trade and Employment –ITO Charter  never entered into force  US never ratified

1948: GATT at Work –Set of common rules (GATT)  “provisional application” since  23 Signatories of the Protocol  Tariff Negotiations completed –in force (through GATT)

:“Uruguay Round”

8th Round of negotiations –123 Contracting Parties –New Tariff concessions –Non-tariff negotiations  strengthened disciplines for trade in goods –New sectors covered  Agriculture  Trade in Services  Trade-related Intellectual Property Rights –WTO (Organization)

UR Main Agreements General Agreement on Tariffs and Trade General Agreement on Trade in Services Agreement on Trade-Related Aspects of Intellectual Property Rights Agreement on Agriculture Agreement on Trade-Related Investment Measures Agreement on Textile and Clothing

1994: Marrakech 123 Signatories of the Marrakech Agreement establishing the WTO (23’000 pages) WTO will enter into force on1 Jan GATT (1947) disappear

The main difference between GATT and WTO GATT was ad hoc and provisional. The General Agreement was never ratified in members’ parliaments, and it contained no provisions for the creation of an organization The WTO and its agreements are permanent. As an International organization, the WTO has a sound legal basis because members have ratified the WTO agreements, and the agreements themselves describe how the WTO is to function. The WTO has “members”. GATT had “contracting parties”, underscoring the fact that officially GATT was a legal text. GATT dealt with trade in goods. The WTO covers services and intellectual property as well. The WTO dispute settlement system is faster, more automatic than the old GATT system. Its rulings cannot be blocked.

agreed rules and commitments …with basic principles for trade …and dispute settlement member- driven NEGOTIATIONS Foremost: The WTO is a forum for negotiations forum for negotiations Separate negotiations (by subject) ‘Rounds’ = many subjects negotiated at the same time 2 types of negotiation

agreed rules and commitments …with basic principles for trade …and dispute settlement member- driven Foremost: The WTO is a forum for negotiations forum for negotiations Uruguay Round 1986–1994 Eighth ‘round’ under GATT, since 1948 Result: In Rules expanded: goods (GATT) + services (GATS) + intellectual property (TRIPS) WTO formed, replacing GATT NEGOTIATIONS

agreed rules and commitments …with basic principles for trade …and dispute settlement member- driven Foremost: The WTO is a forum for negotiations Current Round: Doha Round Launched at Doha Ministerial Conference November forum for negotiations negotiations: existing + new problems with ‘implementation’ of existing agreements NEGOTIATIONS see ‘Understanding the WTO’ page 77

agreed rules and commitments …with basic principles for trade …and dispute settlement member- driven Foremost: The WTO is a forum for negotiations forum for negotiations NEGOTIATIONS Agreement only by consensus Everyone has to be persuaded No one forced by a majority Everything else follows from negotiations...

forum for negotiations …with basic principles for trade …and dispute settlement member- driven RULES, COMMITMENTS ‘Rules-based’ 500 pages of rules.23,000 pages of commitments agreed rules and commitments Three Main Agreements: (1)General Agreement on Tariffs and Trade (2)General Agreement on Trade in Services (3)Agreement on Trade-Related Aspects of Intellectual Property

forum for negotiations agreed rules and commitments …with basic principles for trade …and dispute settlement member- driven ‘Rules-based’... negotiated agreements and commitments  written by members and agreed by consensus 500 pages of rules. 23,000 pages of commitments RULES, COMMITMENTS  signed by members...

forum for negotiations agreed rules and commitments …with basic principles for trade …and dispute settlement member- driven ‘Rules-based’ 500 pages of rules. 23,000 pages of commitments  signed by members...  … and ratified in parliaments RULES, COMMITMENTS... negotiated agreements and commitments  written by members and agreed by consensus

forum for negotiations agreed rules and commitments …and dispute settlement member- driven PRINCIPLES Non-discrimination 1. Treating other countries equally. ‘Most-favoured-nation’ treatment (MFN) 2. Treating foreign, domestic equally ‘National treatment’ …with basic principles for trade ‘Fair’ and efficient (single set of rules, duty rates) Exceptions free trade agreements preference for developing countries see ‘Understanding the WTO’ page 10

forum for negotiations agreed rules and commitments …and dispute settlement member- driven Non-discrimination 1. Treating other countries equally. ‘Most-favoured-nation’ treatment (MFN) 2. Treating foreign, domestic equally ‘National treatment’ …with basic principles for trade Stability, predictability 1. Commitments are ‘bound’ 2. System builds confidence PRINCIPLES see ‘Understanding the WTO’ page 10

forum for negotiations agreed rules and commitments …and dispute settlement member- driven Non-discrimination 1. Treating other countries equally. ‘Most-favoured-nation’ treatment (MFN) 2. Treating foreign, domestic equally ‘National treatment’ …with basic principles for trade Stability, predictability 1. Commitments are ‘bound’ 2. System builds confidence Transparency 1. National trade policies reviewed 2. Specific measures and laws notified ‘Notification and review’ PRINCIPLES see ‘Understanding the WTO’ page 10

forum for negotiations agreed rules and commitments …with basic principles for trade member- driven DISPUTE SETTLEMENT The WTO is not a policeman Cases are brought by governments... i.e. agreements or commitments violated...based on ‘broken promises’ …and dispute settlement Dispute starts with ‘request for consultations’ Aim: consult, settle ‘out of court’ Disputes: handled by members in...Dispute Settlement Body see ‘Understanding the WTO’ page 59

forum for negotiations agreed rules and commitments …with basic principles for trade member- driven DISPUTE SETTLEMENT Rulings: by ‘panels’ of 3 experts About 1yr 3mths with appeal About 15 months ‘Reasonable period’ to implement ruling …and dispute settlement … sanctions or compensation If failure to implement … Appeal: permanent Appellate Body see ‘Understanding the WTO’ page 59

forum for negotiations agreed rules and commitments …with basic principles for trade …and dispute settlement DECISION MAKING Ministerial Conference In charge between ministerials. General Council Cover all WTO agreements and related issues Councils and committees … comprise all members Topmost, political.... At least once every 2 years … decisions by consensus member- driven Meets in Geneva see ‘Understanding the WTO’ page 103