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MODULE IIIINTERNATIONAL LAW
AND WTOThe WTO was established on 1st January 1995. The governments had concluded the Uruguay round negotiations on 15th December 1993 and the ministers gave their final approval in Marrakesh, Morocco in April 1994
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The WTO is the embodiment of the Uruguay round results and the successor to the General Agreement on Tariffs and Trade . (GATT)
The WTO administers the trade agreements negotiated by its members , in particular the GATT , the GATS (General Agreement on Trade in Services ) and the TRIPS ( Trade Related Aspects of Intellectual Property Rights).
The WTO builds on the organizational structure that had developed under GATT auspices of the early 1990’s.
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The WTO has larger membership than GATT , the number of members stands at 150.India is one of the founder members of the WTO.
It is based in Geneva , Switzerland.
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WTO: What is it?
An international Organization:
◦Organization created by the Marrakesh Agreement
◦Sui generis organisation (independent from the United Nation system)
◦Replaces the GATT (created in 1947)
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WTO Objectives:
◦Raising standards of living◦Ensuring full employment◦Ensuring growth of real income and
demand◦Expanding production and trade◦Sustainable development◦Protection of the environment
WTO: What is its purpose?
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Set of rulesThe negotiated legal rules included in the various WTO agreements cover the following topics:
Trade in Goods Trade in Services Trade-related aspects of intellectual
property rights Dispute Settlement Trade Policy Reviews
WTO: How does it work?
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The fundamental principles are1. Non Discrimination 2. Transparency3. Binding Commitments4. Reciprocity5. Safety Valves
BASIC PRINCIPLES OF WTO
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It is based on the concept of normal trade relations – previously called the Most Favored Nation (MFN) rule. This rule requires that the WTO members extend the same favorable terms to all members that they extend to any single member.
The normal trade relations principle applies unconditionally.
Non Discrimination
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Although exceptions are made for the formation of trading blocs and for preferential treatment of developing countries, the non discrimination principle is basic pillar of the WTO. Because of this principle , importers and consumers will have the benefit of using low cost goods , irrespective of whichever country they are being produced.
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The principle of Non Discrimination has one more dimension : national treatment . National treatment enjoins all member countries to treat imported and locally produced goods equally .
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Transparency is a basic pillar of the WTO . WTO members are required to publish their trade regulations , to establish and maintain institutions allowing for review of administrative decisions affecting trade to respond to request for information by other members and to notify changes in trade policies to the WTO.
TRANSPARENCY
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The regular surveillance of national trade policies through the trade policy review mechanism provides the means of encouraging transparency both domestically and at multilateral level.
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In the WTO , when countries agree to open their markets for goods and services , they bind their commitments. Often countries , particularly the developing ones , tax imports at rates . But in developed , the rates actually charged and bound rates tend to the same.
A country can change its bindings , but only after negotiating with its trading partners, which can mean compensating them for loss of trade.
BINDING AND ENFORCEABLE COMMITMENTS
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It operates during negotiations among countries when governments negotiate in WTO rounds , they do so with the objective of obtaining mutually beneficial arrangements through reciprocal reductions in tariff bindings In particular governments approach negotiators seeking a “balance of concessions” whereby the tariff reductions by one country is balanced against an equivalent concession from its trading partners.
RECIPROCITY
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In certain circumstances government should be able to restrict trade. Four types of provisions exist in this connection.
1. Goods and services meant for non economic objectives such as public health and national security.
2. Industries likely to be injured by competition from imports.
SAFETY VALVES
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3. Articles aimed at ensuring fair competition. Measures in this situation include the right to impose countervailing duties on imports that have been subsidized and anti dumping duties on imports that have been dumped.
4. Provisions permitting intervention in trade for economic reasons . Economic reasons include measures to correct a serious unfavorable balance of trade or the desire to protect an infant industry.
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Administering and implementing the multilateral and plurilateral trade agreements which together make up the WTO.
Acting as a forum for multilateral trade negotiations.
Overseeing national trade policies. Cooperating with other international
institutions involved in global economic policies.
FUNCTIONS
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The WTO is a member driven organization, with decisions being made by consensus among all member governments. All decisions are made by the membership as a whole, either by ministers ( who meet once in two years ) or by their ambassadors or delegates ( who meet regularly in Geneva).
In this respect , the WTO is different from other international organizations such as the world Bank and International Monetary Fund . In the WTO, power is not delegated to a board of directors or to a chief executive officer
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The WTO had its origin in Bretton woods conference after the end of second world war. It was founded in 1948 with 23 members by the name of GATT[General Agreement on Tariffs and Trade]. But in 1995,GATT was rechristined as WTO.
DIFFERENCES BETWEEN GATT AND THE WTO
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1.GATT was a provisional legal agreement whereas WTO is an organization with permanent agreements.2.WTO has members while GATT had only contracting parties.
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3.GATT dealt only with trade in goods while WTO covers services and intellectual property rights as well.4.The real critical distinction between GATT and WTO is creation of a binding dispute settlement system . Under GATT contracting parties could bring cases before international body but there was no effective enforcement mechanism. But in WTO an effective enforcement mechanism exists.
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WTO Structure
WTO: How does it work?
Ministerial Conference
Secretariat
Appellate Body
Dispute Settlement
Panels
Committees Committees
Goods Council Services Council
TRIPS Council
CTD (Development)CTE (Environment)CRTA (Regionalism)
BOPBudget
WG (Accessions, Investment, competition,
Government Procurement)
General CouncilTPRB DSB
Director-General
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Secretariat
◦About 750 staff
◦Headed by a Director-General (DG)
◦Budget 2009: 190 millions Swiss francs + extra-budgetary funds (about 24 millions Swiss francs)
WTO: How does it work?
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Decision making
◦Member-driven organisation
◦Consensus (GATT practice), even if voting procedures exist
◦Consensus when no Member formally object to a decision
◦“Negative” consensus
WTO: How does it work?
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Meetings
◦Type of meetings (formal, informal, special sessions, consultations, multi- /pluri- /bilateral)
◦All WTO Bodies open to all Members (specificities for panels and Appellate Body)
WTO: How does it work?
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Decisions and Declarations (few examples)
◦ 1996 Singapore ministerial conference Singapore Topics
Trade Facilitation, Investments, Competition, Transparency in Government Procurement
« Information Technology » Initiative
◦ 1998 Geneva ministerial conference Electronic Commerce
◦ 1999 Seattle ministerial conference◦ 2001 Doha ministerial conference
Doha Development Agenda
Evolution of WTO framework
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March 2010: “We are not where we wanted to be by now”
Informal consultations (regional groups, small groups in variable geometry and with individual Members)
Members committed to the mandate of the Round and to its successful conclusion.
◦Value of the system (e.g. global economic crisis- MTS has prevented a descent into full scale protectionism.
Sense of frustration at the slow pace of the negotiations, but there is a clear catalogue of gaps
◦Picture is more blurred is regarding the size of some of these gaps (Blue Box in agriculture or in Trade Facilitation). Size of gaps much less clear in NAMA or Fishery Subsidies.
Doha Development Agenda
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Next steps: mix of technical and political preparations to start devising the contours of a package
◦Need to build on what is already on the table (Chairs' texts), avoid backtracking, and maintaining the development dimension of the Round.
A "cocktail" approach: Chair-led processes within
the Negotiating Groups, maintaining an overview of the entire negotiating landscape (transparency and inclusiveness), and smaller groups in variable geometry and bilateral contacts remain necessary and essential –moving towards a more horizontal view of the issues (negotiating groups and the TNC remaining the anchor of the negotiating process)
Ministerial involvement: make productive use of up-coming gatherings (e.g. Cairns Group, APEC and OECD) , possible Ministerial engagement if needed
