The World Trade Organization: A Progress Report

1
The World Trade Organization A Progress Report

• Tim Josling
• Stanford Institute for International Studies

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Theme

• What is the WTO?
• What is the agenda of the WTO and how is
  progress defined?
  
• What are the links with developmental and
  environmental agendas?

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Outline

• Origins of the GATT/WTO trade system
• Negotiating Rounds in the GATT
• Uruguay Round Achievements
• The Ministerials Singapore, Geneva, Seattle,
  Doha and Cancun
  
• August Framework Agreement
• Short term Challenges
• Longer Term Options

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Origins of the WTO

• GATT was component of the rebuilt International
  Economic System in the Post-War Period
  
• Bretton Woods (1944) and the IBRD, IMF
• Havana Charter (1948) and the ITO
• Ratification Problems in the US (1950)
• GATT rescued as it did not have to be ratified
• GATT as a Commercial Code of Conduct
• GATT as a Trade Negotiation Framework

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Tariff-cutting Negotiations

• Four Early Rounds (1947-56)
• Dillon Round (1960-61) response to EEC
• Kennedy Round (1964-67) major tariff cuts
• Tokyo Round (1973-79) addressed non-tariff
  measures
  
• Uruguay Round (1986-94) set up WTO
• Post-UR agreements (1995-97) IT, BT, FS
• Doha Round (2001-2005?) - underway

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The GATT Runs into Problems

• Limited scope of rules
• limited to goods
• Sensitive sectors treated differently
• weak on agricultural subsidies
• textiles limited by quotas
• Ineffective dispute settlement process
• Membership incomplete few developing countries
• Temporary secretariat
• GATT A la Carte
• Codes not universally accepted

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Uruguay Round Solutions

• Expanded scope of rules
• Intellectual property (TRIPS)
• Services (GATS)
• Investment Policies (TRIMS)
• Stronger rules for
• Textiles and Clothing (ATC)
• Agriculture (URAA and SPS Agreement)
• DSU strengthens legal system
• Membership expands (now 148)
• WTO Established as Successor to GATT
• Single Undertaking

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The Price of Success

• Increased visibility
• Trade issues begin to make headlines
• Increased ambition
• Trade rules go behind the border and involve
  domestic regulations
  
• Expanded membership
• Developing countries want access to decision
  making
  
• Opposition from Civil Society groups
• Dispute rulings appear to put trade interests
  before environmental and health policy
  

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Response to Crises at Singapore Ministerial
(Dec 1996)

• Trade and Environment Committee endorsed
• But Core Labor Standards deemed responsibility
  of ILO
  
• WTO continues to expand its scope
• Additional subjects added to agenda in Singapore
• Working Party on Trade and Investment
• Working Party on Trade and Competition
• Transparency in Government Procurement
• Trade Facilitation (customs procedures)

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Geneva Ministerial (May 1998)

• 50th Anniversary of GATT Lovefest
• Basic Telecoms Agreement
• Information Technology Agreement
• Financial Services Agreement
• High point of WTO?
• Clouded by Asian Financial crisis

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The Battle in Seattle the third Ministerial (Dec
1999)

• Aim was to launch another round, but no agreed
  text before Ministerial
  
• Disagreement among members on scope of New Round
• Developing Countries unconvinced on need for new
  Round
  
• US wanted limited agenda, but including labor
• EU wanted broad agenda to include competition
• Union marches made developing countries wary
• Anti-Globalization protests in the Streets
  heightened tensions
  
• Ministerial ends in failure

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Picking up the Pieces after Seattle (2000-2001)

• Attempts to address Developing Country concerns
  about implementation of UR
  
• Attempts to gain support for new round among
  developing countries
  
• Attempts to mend relations with NGOs, start
  dialog
  
• Start of talks on agriculture and services
  (Built-in Agenda)

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Developing Countries Respond

• More active participation in Committees
• More use of dispute settlement mechanisms
• Leadership by India, Brazil, Egypt, RSA
• Developed Positive Agenda for new round (with
  help of UNCTAD)
  
• Request for Technical Assistance for Standard
  Setting, Trade Negotiations, Disputes, etc.

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Successful Doha Ministerial (Nov 2001)

• Challenges from Civil Society more Restrained and
  Focused
  
• Doha less accessible than Seattle
• NGOs team up with (smaller) developing countries
• Focus on TRIPS and access to pharmaceuticals
• Doha judged a success
• New Round launched
• Truce between developed and developing countries

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Outcomes of Doha

• Ministerial Declaration starts a new round, to be
  called Doha Development Agenda (DDA)
  
• Ministerial Declaration on TRIPS and Public
  Health
  
• Implementation Decision helps developing
  countries adjust to changes mandated by Uruguay
  Round Agreements
  
• China (re)joins WTO at Doha
• Taiwan joins a few minutes later

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What went wrong at Cancun?

• Limited Progress in run up to Ministerial (Sept
  2003)
  
• Agriculture slipped behind schedule
• Services, NAMA waiting for progress in
  agriculture
  
• Emerging Coalitions disturbed Quad hegemony
• US and EU joint paper on agriculture led to G-20
• Political will in major countries for trade
  liberalization weak (and trust rather low)
  
• May have needed a failure to concentrate the
  political mind

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Prospects for this year

• Framework for talks agreed August 2004
• Next Ministerial in Hong Kong in December 2005
• Non-agricultural topics now lagging behind
• Little political engagement likely before
  mid-year
  
• Disputes could slow down negotiations

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But what can be achieved in 2005?

• US has fast track authority but still weak
  Congressional support
  
• EU preoccupied with Enlargement process
• Zoellick leaving USTR new EU Trade Commissioner
  in Brussels
  
• New government in India
• No guarantee that developing countries will show
  urgency

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What is at stake in Doha Round?

• Fear that with no progress in the Round
• WTO would become ineffectual (as did GATT in
  early-1980s)
  
• resurgence of bilaterals, regionals, unilateral
  action (Asia and US are becoming more active in
  this area already)
  
• disillusion of developing countries in Asia and
  Latin America with trade reform process
  
• Increased use of Dispute Settlement panels and of
  trade-remedy laws

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What is still missing?

• No resolution to the asymmetry problem in
  negotiations and litigation
  
• No discussion of GMOs and Precautionary
  Principles (agreement not to open SPS Agreement)
  
• No agreement on whether to expand agenda in the
  future to other Singapore issues
  
• No talks scheduled about Trade and Labor,
  Environment

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Membership still not universal

• Russia and other FSU countries on the wait list
• Legal structure
• Governance
• Membership made easier for least developed
  countries
  
• Oil states less than enthusiastic

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Longer Run Issues

• Need to respond to developing country requests
  for a seat at the table
  
• But have to avoid UN type decision making
• Need to improve access by developing countries to
  Dispute Settlement process
  
• But need to maintain domestic political support
  for legal process
  
• Need to increase small country involvement in
  Geneva process
  
• But also need some kind of Executive Body to
  speed negotiations

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Longer Run Issues, contd.

• Need to integrate with regional and bilateral
  pacts
  
• But avoid them taking over the main negotiating
  role
  
• Need to build coalitions for political support
  including traditional trade opponents
  
• But keep principles in sight and avoid
  multi-level system
  

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Longer Run Issues, concl.

• Need to integrate with other aspects of
  international policy
  
• Relationship with MEAs needs to be clarified
• Relationship with ILO and Core Labor Standards
  needs to be enhanced
  
• Relationship with WB and development agencies
  needs to be strengthened
  
• Relationship with IMF needs to be explored