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The World Trade Organization (WTO)

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Presentation on theme: "The World Trade Organization (WTO)"— Presentation transcript:

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

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

3 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 A secretariat in Geneva having a relatively small staff/budget compared with many multilateral institutions

4 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 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 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 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% All others 75% Developing countries WTO Countries

8 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 Banana Dispute The EU has favorable trade rules for ex-colonies in Africa, Caribbean, Pacific (ACP) Continuation of the Lome Convention 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 Challenges to the EU Regime
U.S. challenge — even though workers and product not from the United States WTO challenge by United States, Mexico, Guatemala and Honduras — violated non-discrimination WTO decision on several grounds — including discrimination EU to adjust regime United States requested authorization for retaliation

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

12 What Are the Elements of the Multilateral Trading System?
General Agreement on Tariffs and Trade (GATT) General Agreement on Trade in Services (GATS) Trade-Related Aspects of Intellectual Property Rights (TRIPS)

13 Basic Structure of the WTO Agreements: How the Six Main Areas Fit Together

14 Source: World Trade Organization. 2003. “Understanding the WTO
Source: World Trade Organization “Understanding the WTO.” Geneva, Switzerland, p Available at

15 General Agreement on Tariffs and Trade (GATT)
Various agreements cover: 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

16 General Agreement on Trade in Services (GATS)
Cross border supply Consumption abroad Commercial presence Presence of natural persons

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

18 Implemented in transition periods
TRIPS (con’t) 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 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 “The Development Round”
Changing composition of the membership of the WTO 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)

21 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 Decision-Making (con’t)
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 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 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 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 Leadership in the WTO Peter Sutherland 1993–1995 Ireland
Renato Ruggiero 1995–1999 Italy Mike Moore 1999–2002  New Zealand Supachai Panitchpakdi Thailand

27 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 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 Negotiating Rounds and Number of Members
GATT-WTO Negotiating Rounds and Number of Members 10 20 30 40 50 60 70 80 90 100 110 120 130 140 150 1947 1950 1953 1956 1959 1962 1965 1968 1971 1974 1977 1980 1983 1986 1989 1992 1995 1998 2001 2004 2007 Geneva Annecy Torquay Kennedy Tokyo Uruguay Doha No. Members Rounds Dillon Source: WTO and the Institute for International Trade Negotiations (ICONE)

30 WTO Membership: Increased Number of Developing Countries
Source: WTO and the Institute for International Trade Negotiations (ICONE) Elaboration: ABARE-Australia

31 Agricultural Negotiations in the Doha Round: Main Coalitions
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

32 G-20 as an Effective Pressure Group?
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 Source: Institute for International Trade Negotiations (ICONE)

33 Doha Interest Groups = Offensive position = Defensive position
Source: Institute for International Trade Negotiations (ICONE)

34 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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