World Trade Organization

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World Trade Organization
Econ 490 Flora Lugo Carlos Rivas
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Formation

• WTO replaced GATT in 1995
• - one nation, one vote (like GATT)
• GATT-General Agreement on Tariffs and Trade
• Formed in 1947
• Came out of the Bretton Woods conference
• Part of three organizations that became part of
  framework to help manage the postwar global
  economy (along with IMF, World Bank)
• An informal trade organization

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GATT

• A. Principles
• Trade Liberalization
• Liberalization
• 1. liberal view
• - free market
• - limited government
• - more optimistic about state cooperation
• - trade is a positive sum game
• Increase trade
• - reduce tariffs
• Nondiscrimination
• Most Favored Nation
• - A trade advantage given to one GATT member
  must be extended to every other GATT member
• National Treatment
• - A member must treat foreign products at least
  as favorably as domestic products (i.e. taxes,
  regulations)
• Reciprocity
• A state benefiting from another states trade
  concessions should provide roughly equal benefits
  in return
• Safeguards and Contingent Measures
• Limit of imports that may cause harm to a states
  industry or economy

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Safeguards and Contingent Trade Measures
Safeguards
Temporary Import Surges BOP problems Infant Industries Permanent General Exceptions National Security Tariff Renegotiations Contingent Trade Measures Anti-dumping duties (ADDs) Countervailing duties (CVDs)

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Rounds of GATT and WTO Negotiations
Name Years Subjects Covered Countries Participating
Geneva 1947 Tariffs 23
Annecy 1949 Tariffs 13
Torquay 1951 Tariffs 38
Geneva 1956 Tariffs 26
Dillon 1960-1961 Tariffs 26
Kennedy 1964-1967 Tariffs and antidumping measures 62
Tokyo 1973-1979 Tariffs, nontariff measures, plurilateral agreements 102
Uruguay 1986-1993 Tariffs, nontariff measures, rules, services, intellectual property, dispute settlement, trade-related investment, textiles, agriculture, creation of WTO 123
Doha (WTO) 1999- Agriculture, services, tariffs, nontariff measures, intellectual property, dispute settlement 149
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GATT in Jeopardy

• Non-Tariff Barriers
• -not covered in GATT rules
• Agriculture had been an exception to restrictions
  on import quotas and export subsidies
• Agriculture and Textiles mostly excluded from
  regulations
• Easy to circumvent regulations (VER)
• Dispute Settlement procedures weak
• U.S. and other Developed Countries (DCs) wanted
  scope to go beyond trade in goods to trade in
  services, intellectual property and investment
• Most Less Developed Countries (LDCs) did not
  agree to negotiations in the Tokyo Round

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WTO Replaces GATT

• Formal, legally constituted organization
• Oversees trade treaties negotiated in the Uruguay
  Round GATS, TRIPS, TRIMS along with GATT
• Meets at least every 2 years
• Dispute settlements (DS) more binding and timely
  member states use DS process more then with GATT
• Greater effort to integrate LDCs and transition
  economies
• More involvement with Non governmental
  Organizations and civil society groups

1995
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Disputes

• What causes a dispute?
• When a member country of the WTO believes another
  member country is violating an agreement or a
  commitment that has been set within the WTO.
• Agreements are those negotiated under the Rounds
  of GATT/ WTO
• How is it resolved?
• The Dispute Settlement Body composed of member
  governments (all WTO members) work together to
  set an agreement.

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Dispute Settlement Process
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Steps ( Lengths) of Settlement

• Consultation (60 days)
• The Panel (45 days / 6 months)
• Final Report (3 weeks)
• Report becomes a Ruling (60 days)
• Either side can appeal a panels ruling.
• 5. Appeals Report (60-90 days)
• 6. Appeals Report becomes a Ruling (30 days)

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Disputes (Examples)

• Valenzuela Import Licensing Measures on Certain
  Agricultural Products
• Complainant United States
• Respondent Valenzuela
• Mexico Tax Measures on Soft Drinks and Other
  Beverages
• Complainant United States
• Respondent Mexico

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Disputes (cont)

• The dispute settlement agreement stresses that
  prompt compliance with recommendations or
  rulings of the Dispute Settlement Body is
  essential in order to ensure effective resolution
  of disputes to the benefit of all Members.
• Outstanding cases Some cases have remained in
  the consultation phase since 1995.

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Doha Round UnResolved

• LDCs
• - want Special and Differentiated Treatment
  monitored and enforced
• - G-20 of LDCs (Brazil, China, India) call for
  end of EU and U.S. agricultural export subsidies
• - North promised technical assistance not
  enough
• DCs
• - want LDCs reduce barriers to nonagricultural
  imports
• - strengthen and extend agreements for services
  trade and intellectual property trade
• -Major DCs ( ex.EU and Japan) want to expand WTO
  to new areas government procurement, trade
  facilitation, competition policy
• Fast Track Authority expired 2007

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WTOs Future

• G-7 even with one nation one vote system LDcs
  have less influence
• Increase in Regional Trade Agreements
• Doha Round unresolved
  
  
• Global Recession and Protectionism

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References

• www.wto.org
• Cohn, A. (2008). Global Political Economy. (pp.
  195-227). Pearson Education, Inc.
• http//www.wto.org/english/thewto_e/whatis_e/whati
  s_e.htm
• http//www.wto.org/english/tratop_e/dispu_e/dispu_
  e.htm
• http//events.streamlogics.com/wto/2004/html/001.h
  tml