World Trade Organization

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

GATTA. Principles

1. 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

2. 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)

3. Reciprocity• A state benefiting from another state’s trade concessions should provide roughly

equal benefits in return4. Safeguards and Contingent Measures

• Limit of imports that may cause harm to a state’s industry or economy

Safeguards and Contingent Trade Measures

Safeguards

TemporaryImport SurgesBOP problemsInfant Industries

PermanentGeneral ExceptionsNational SecurityTariff Renegotiations

Contingent Trade MeasuresAnti-dumping duties (ADDs)Countervailing duties (CVDs)

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

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

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

http://en.wikipedia.org/wiki/File:WTOmap_currentmember2008.png

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.

Dispute Settlement

Process

Steps (& Lengths) of Settlement

1. Consultation (60 days)2. The Panel (45 days / 6 months)3. Final Report (3 weeks)4. Report becomes a Ruling (60 days)Either side can appeal a panel’s ruling.5. Appeals Report (60-90 days)6. Appeals Report becomes a Ruling (30

days)

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

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.

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

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

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/whatis_e.htm• http://www.wto.org/english/tratop_e/

dispu_e/dispu_e.htm• http://events.streamlogics.com/wto/

2004/html/001.html