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Global Telecommunications Regulation

TCOM 5173

The World Trade Organization (WTO)

7 April 2004

Charles G. Gray

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WTO Charter

The World Trade Organization (WTO) is the only international entity dealing with the global rules of trade between nations.

Its main function is to ensure that trade flows as smoothly, predictably and as freely as possible.

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WTO Precursors• 1934 – US Reciprocal Trade Agreements Act• 1944 – Bretton Woods Agreement

– IMF, World Bank, GATT, IBRD– Fixed-rate foreign currency exchange system

• 1947 – Geneva, GATT adopted by 23 nations– 122 mutual tariff reductions on goods

• 1949 – Annecy Round– Ten new countries added– 5,000 tariff reductions

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More WTO Precursors

• 1951 – Torquay Round– 8,700 tariff reductions– Three new members

• 1956 – Geneva Round– Additional 8,700 tariff reductions– Tariffs reduced affecting US$2,500 million

• 1960-62 Dillon Round (Geneva)– 4,400 tariff reductions– Affected US$4,900 million in trade

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More WTO Precursors• 1964-67 – Kennedy Round (Geneva)

– 70 member countries– Anti-dumping agreement– Tariffs reduced 35-40%

• 1973-79 – Tokyo Round– Preferential treatment to LDCs– Addressed non-tariff barriers for the first time

• Subsidies and licensing

– 99 countries now members– Additional significant tariff reductions

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The Uruguay Round• 1986-94 – Puenta del Este, Uruguay

– 125 countries– Expanded agenda

• Agriculture

• Services

• Restricting subsidies

• Protecting intellectual property

• Established the WTO and GATS

• Final Act signed in Marrakesh, Morocco

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The WTO Today• 148 Member countries

– China (PRC) and Taiwan (ROC) added 2001/2– FYROM – April 2003– Nepal – August 2003– 25+ countries awaiting membership– “Observers” can watch, but not vote

• Covers over 90% of world trade• Completely absorbed the GATT

– GATT was only a set of rules– WTO is a firmly established legal institution

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Broad WTO Policies

• Assist developing and transition economies

• Provide specialized help for export promotion

• Promote regional trading arrangements

• Encourage cooperation in global economic policy making

• Publish reviews of members’ trade policies

• Provide routine notification when members introduce new or change trade measures

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Fundamental Principles• Trade without discrimination

– Most favored nation (MFN) clause

• Predictable and growing access to markets– Quotas outlawed, tariffs allowed

• Promote fair competition– Dumping and subsidies better defined

• Encourage development and economic reform– Favors LDCs, provides extended transition time

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WTO Functions• Administering trade agreements

• Acting as a forum for trade negotiations

• Settling trade disputes

• Reviewing national trade policies

• Assisting developing countries in trade policy issues, through technical assistance and training programmes

• Cooperating with other international organizations

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WTO Organization• Ministerial Conference

– Required to meet at least every two years– Cancun – September 2003

• General Council– Goods Council– Services Council– Intellectual Property Council

• Specialized committees, working groups and working parties

• Secretariat

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The WTO Secretariat• Supports WTO delegate bodies

• Technical support to LDCs

• Provides economists and statisticians

• Provides legal staff – trade disputes

• Assists new members with accession negotiations

• Provides advice to governments considering membership

• Staff of 500 - budget about SFr134M

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WTO Benefits

• Peace• Dispute resolution• Rules• Cost of living• Choice

• Higher incomes• Economic growth and

jobs• Efficiency• Lobbying• Good government

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WTO Risks• “Services” are not defined

– Virtually endless list – some not even defined yet

• Lack of effective leadership– Seattle focused on negative aspects– DG divided into two sub-terms

• Mike Moore (1999-2002)

• Dr. Supachai Panitchpadki (2002-2005)

• Non-government Organizations (NGOs)

• Horse trading

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The Big Issues• Unforeseen consequences

• Lack of public scrutiny

• Government services vulnerable

• Trade dominates all other issues

• Telecommunications changes everything

• “Cream skimming”

• Skills drain

• Labor standards

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The “Doha Round” (Nov 2001)• TRIPS and public health• Agriculture• Market access• Services commitments• Subsidies and anti-dumping• Environment• Dispute settlement• Investment• Government procurement

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The “Doha Round”–Cancun (Oct 03)

• Suicide over farm policy (Korean farmer)• Conflicting priorities

– Richer countries – foreign investment– Poor countries – farm subsidies– Activist protesters

• Disease, famine, poverty, environmental damage

• Talks collapsed – no agreement on anything• Feb 04 – USTR trying to restart talks

– Agriculture is still the major hurdle

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The Future of Telecommunications and the

WTO?• Second in size only to the financial services

market• An industry in its own right• Essential infrastructure for nearly all other

economic and social activities• Moving from local to global systems and

services• WTO rules will be the principal guide