Project on WTO

7/29/2019 Project on WTO

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PROJECT REPORT ON WTO AND INTERNATIONAL TRADE

INTRODUCTION

WTO is an organization for trade opening. It is a forum for governments to negotiate trade

agreements. It is a place for them to settle trade disputes. It operates a system of trade rules.

Essentially, the WTO is a place where member governments try to sort out the trade problems they

face with each other.The WTO was born out of negotiations, and everything the WTO does is the

result of negotiations. The bulk of the WTOs current work comes from the 198694 negotiations

called the Uruguay Round and earlier negotiations under the General Agreement on Tariffs and

Trade (GATT). The WTO is currently the host to new negotiations, under the Doha Development

Agenda launched in 2001.

Where countries have faced trade barriers and wanted them lowered, the negotiations have helped

to open markets for trade. But the WTO is not just about opening markets, and in some

circumstances its rules support maintaining trade barriers for example, to protect consumers or

prevent the spread of disease.

At its heart are the WTO agreements, negotiated and signed by the bulk of the worlds trading

nations. These documents provide the legal ground rules for international commerce. They areessentially contracts, binding governments to keep their trade policies within agreed limits.

Although negotiated and signed by governments, the goal is to help producers of goods and

services, exporters, and importers conduct their business, while allowing governments to meet

social and environmental objectives.

The systems overriding purpose is to help trade flow as freely as possible so long as there are

no undesirable side effects because this is important for economic development and well-being.

That partly means removing obstacles. It also means ensuring that individuals, companies and

governments know what the trade rules are around the world, and giving them the confidence that

there will be no sudden changes of policy. In other words, the rules have to be transparent and

predictable.

Trade relations often involve conflicting interests. Agreements, including those painstakingly

negotiated in the WTO system, often need interpreting. The most harmonious way to settle these

differences is through some neutral procedure based on an agreed legal foundation. That is the

purpose behind the dispute settlement process written into the WTO agreements.


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ROLE OF WTO

While the WTO is driven by its member states, it could not function without its Secretariat tocoordinate the activities. The Secretariat employs over 600 staff, and its experts lawyers,

economists, statisticians and communications experts assist WTO members on a daily basis to

ensure, among other things, that negotiations progress smoothly, and that the rules of international

trade are correctly applied and enforced.

Trade negotiations

The WTO agreements cover goods, services and intellectual property. They spell out the principles

of liberalization, and the permitted exceptions. They include individual countries commitments to

lower customs tariffs and other trade barriers, and to open and keep open services markets. They setprocedures for settling disputes. These agreements are not static; they are renegotiated from time to

time and new agreements can be added to the package. Many are now being negotiated under the

Doha Development Agenda, launched by WTO trade ministers in Doha, Qatar, in November 2001.

Implementation and monitoring

WTO agreements require governments to make their trade policies transparent by notifying the

WTO about laws in force and measures adopted. Various WTO councils and committees seek to

ensure that these requirements are being followed and that WTO agreements are being properly

implemented. All WTO members must undergo periodic scrutiny of their trade policies and

practices, each review containing reports by the country concerned and the WTO Secretariat.

Dispute settlement

The WTOs procedure for resolving trade quarrels under the Dispute Settlement Understanding is

vital for enforcing the rules and therefore for ensuring that trade flows smoothly. Countries bring

disputes to the WTO if they think their rights under the agreements are being infringed. Judgements

by specially appointed independent experts are based on interpretations of the agreements and

individual countries commitments.

Building trade capacity

WTO agreements contain special provision for developing countries, including longer time periods

to implement agreements and commitments, measures to increase their trading opportunities, and

support to help them build their trade capacity, to handle disputes and to implement technical

standards. The WTO organizes hundreds of technical cooperation missions to developing countries

annually. It also holds numerous courses each year in Geneva for government officials. Aid for

Trade aims to help developing countries develop the skills and infrastructure needed to expand their

trade.


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Outreach

The WTO maintains regular dialogue with non-governmental organizations, parliamentarians, other

international organizations, the media and the general public on various aspects of the WTO and the

ongoing Doha negotiations, with the aim of enhancing cooperation and increasing awareness of

WTO activities.


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FUNCTIONS OF WTO

The WTO agreements are lengthy and complex because they are legal texts covering a wide range

of activities. But a number of simple, fundamental principles run throughout all of these documents.

These principles are the foundation of the multilateral trading system.

Non-discrimination

A country should not discriminate between its trading partners and it should not discriminate

between its own and foreign products, services or nationals.

More open

Lowering trade barriers is one of the most obvious ways of encouraging trade; these barriers

include customs duties (or tariffs) and measures such as import bans or quotas that restrict

quantities selectively.

Predictable and transparent

Foreign companies, investors and governments should be confident that trade barriers should not be

raised arbitrarily. With stability and predictability, investment is encouraged, jobs are created and

consumers can fully enjoy the benefits of competition choice and lower prices.

More competitive

Discouraging unfair practices, such as export subsidies and dumping products at below cost to

gain market share; the issues are complex, and the rules try to establish what is fair or unfair, and

how governments can respond, in particular by charging additional import duties calculated to

compensate for damage caused by unfair trade.

More beneficial for less developed countries

Giving them more time to adjust, greater flexibility and special privileges; over three-quarters ofWTO members are developing countries and countries in transition to market economies. The

WTO agreements give them transition periods to adjust to the more unfamiliar and, perhaps,

difficult WTO provisions.

Protect the environment

The WTOs agreements permit members to take measures to protect not only the environment but

also public health, animal health and plant health. However, these measures must be applied in the

same way to both national and foreign businesses. In other words, members must not use

environmental protection measures as a means of disguising protectionist policies.


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WTO MISSION

The WTO provides a forum for negotiating agreements aimed at reducing obstacles to international

trade and ensuring a level playing field for all, thus contributing to economic growth and

development. The WTO also provides a legal and institutional framework for the implementation

and monitoring of these agreements, as well as for settling disputes arising from their interpretation

and application. The current body of trade agreements comprising the WTO consists of 16 different

multilateral agreements (to which all WTO members are parties) and two different plurilateral

agreements (to which only some WTO members are parties).

Over the past 60 years, the WTO, which was established in 1995, and its predecessor organization

the GATT have helped to create a strong and prosperous international trading system, thereby

contributing to unprecedented global economic growth. The WTO currently has 157 members, ofwhich 117 are developing countries or separate customs territories. WTO activities are supported

by a Secretariat of some 700 staff, led by the WTO Director-General. The Secretariat is located in

Geneva, Switzerland, and has an annual budget of approximately CHF 200 million ($180 million,

130 million). The three official languages of the WTO are English, French and Spanish.

Decisions in the WTO are generally taken by consensus of the entire membership. The highest

institutional body is the Ministerial Conference, which meets roughly every two years. A General

Council conducts the organization's business in the intervals between Ministerial Conferences. Both

of these bodies comprise all members. Specialised subsidiary bodies (Councils, Committees, Sub-

committees), also comprising all members, administer and monitor the implementation by members

of the various WTO agreements.

More specifically, the WTO's main activities are:

negotiating the reduction or elimination of obstacles to trade (import tariffs, other barriers to

trade) and agreeing on rules governing the conduct of international trade (e.g. antidumping,

subsidies, product standards, etc.)

administering and monitoring the application of the WTO's agreed rules for trade in goods,

trade in services, and trade-related intellectual property rights monitoring and reviewing the trade policies of our members, as well as ensuring

transparency of regional and bilateral trade agreements

settling disputes among our members regarding the interpretation and application of the

agreements

building capacity of developing country government officials in international trade matters

assisting the process of accession of some 30 countries who are not yet members of the

organization

conducting economic research and collecting and disseminating trade data in support of the

WTO's other main activities explaining to and educating the public about the WTO, its mission and its activities.
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The WTO's founding and guiding principles remain the pursuit of open borders, the guarantee of

most-favoured-nation principle and non-discriminatory treatment by and among members, and a

commitment to transparency in the conduct of its activities. The opening of national markets to

international trade, with justifiable exceptions or with adequate flexibilities, will encourage and

contribute to sustainable development, raise people's welfare, reduce poverty, and foster peace andstability. At the same time, such market opening must be accompanied by sound domestic and

international policies that contribute to economic growth and development according to each

member's needs and aspirations


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CHAPTERISATION

I have divided this project into four chapters mainly

1. HISTORY

2. ORGANISATION

3. AGREEMENTS

4. DEVELOPING COUNTRIES

HISTORY

So while the WTO is still young, the multilateral trading system that was originally set up under

GATT is well over 50 years old.

The past 50 years have seen an exceptional growth in

world trade. Merchandise exports grew on average by 6%

annually. Total trade in 2000 was 22-times the level of

1950. GATT and the WTO have helped to create a strong

and prosperous trading system contributing to

unprecedented growth.

The system was developed through a series of trade

negotiations, or rounds, held under GATT. The first

rounds dealt mainly with tariff reductions but later

negotiations included other areas such as anti-dumping and non-tariff measures. The last round

the 1986-94 Uruguay Round led to the WTOs creation.

The negotiations did not end there. Some continued after the end of the Uruguay Round. In

February 1997 agreement was reached on telecommunications services, with 69 governmentsagreeing to wide-ranging liberalization measures that went beyond those agreed in the Uruguay

Round.

In the same year 40 governments successfully concluded negotiations for tariff-free trade in

information technology products, and 70 members concluded a financial services deal covering

more than 95% of trade in banking, insurance, securities and financial information.

In 2000, new talks started on agriculture and services. These have now been incorporated into a

broader agenda launched at the fourth WTO Ministerial Conference in Doha, Qatar, in

November 2001.


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The work programme, the Doha Development Agenda (DDA), adds negotiations and other work on

non-agricultural tariffs, trade and environment, WTO rules such as anti-dumping and subsidies,

investment, competition policy, trade facilitation, transparency in government procurement,

intellectual property, and a range of issues raised by developing countries as difficulties they face in

implementing the present WTO agreements.

The deadline for the negotiations is 1 January 2005.

THE ORGANISATION

It does this by:

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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Structure

The WTO has about 150 members, accounting for about 95% of world trade. Around 30 others are

negotiating membership.

Decisions are made by the entire membership. This is typically by consensus. A majority vote is

also possible but it has never been used in the WTO, and was extremely rare under the WTOs

predecessor, GATT. The WTOs agreements have been ratified in all members parliaments.

The WTOs top level decision-making body is the Ministerial Conferencewhich meets at least

once every two years.

Below this is the General Council (normally ambassadors and heads of delegation in Geneva, but

sometimes officials sent from members capitals) which meets several times a year in the Geneva

headquarters. The General Council also meets as the Trade Policy Review Body and the Dispute

Settlement Body.

At the next level, the Goods Council, Services Council and Intellectual Property (TRIPS)

Council report to the General Council.

Numerous specialized committees, working groups and working partiesdeal with the individual

agreements and other areas such as the environment, development, membership applications andregional trade agreements.


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THE ORGANISATIONAL CHART


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SCOPE OF WTO IN INTERNATIONAL TRADE

Membership, alliances and bureaucracy

All members have joined the system as a result of negotiation and therefore membership means a

balance of rights and obligations. They enjoy the privileges that other member-countries give to

them and the security that the trading rules provide. In return, they had to make commitments toopen their markets and to abide by the rules those commitments were the result of the


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membership (or accession) negotiations. Countries negotiating membership are WTO

observers.

How to join the WTO: the accession process

Any state or customs territory having full autonomy in the conduct of its trade policies may join

(accede to) the WTO, but WTO members must agree on the terms. Broadly speaking the

application goes through four stages:

First, tell us about yourself. The government applying for membership has to describe all

aspects of its trade and economic policies that have a bearing on WTO agreements. This is

submitted to the WTO in a memorandum which is examined by the working party dealing with the

countrys application. These working parties are open to all WTO members.

Second, work out with us individually what you have to offer.When the working party hasmade sufficient progress on principles and policies, parallel bilateral talks begin between the

prospective new member and individual countries. They are bilateral because different countries

have different trading interests. These talks cover tariff rates and specific market access

commitments, and other policies in goods and services. The new members commitments are to

apply equally to all WTO members under normal non-discrimination rules, even though they are

negotiated bilaterally. In other words, the talks determine the benefits (in the form of export

opportunities and guarantees) other WTO members can expect when the new member joins. (The

talks can be highly complicated. It has been said that in some cases the negotiations are almost as

large as an entire round of multilateral trade negotiations.)

Third, lets draft membership terms. Once the working party has completed its examination

of the applicants trade regime, and the parallel bilateral market access negotiations are complete,

the working party finalizes the terms of accession. These appear in a report, a draft membership

treaty (protocol of accession) and lists (schedules) of the member-to-bes commitments.

Finally, the decision. The final package, consisting of the report, protocol and lists of

commitments, is presented to the WTO General Council or the Ministerial Conference. If a two-

thirds majority of WTO members vote in favour, the applicant is free to sign the protocol and to

accede to the organization. In many cases, the countrys own parliament or legislature has to ratifythe agreement before membership is complete.

The work of the WTO is undertaken by representatives of member governments but its roots lie in

the everyday activity of industry and commerce. Trade policies and negotiating positions are

prepared in capitals, usually taking into account advice from private firms, business organizations,

farmers, consumers and other interest groups.

Most countries have a diplomatic mission in Geneva, sometimes headed by a special ambassador tothe WTO. Officials from the missions attend meetings of the many councils, committees, working
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parties and negotiating groups at WTO headquarters. Sometimes expert representatives are sent

directly from capitals to put forward their governments views on specific questions.

Representing groups of countries ...

Increasingly, countries are getting together to form groups and alliances in the WTO. In many cases

they even speak with one voice using a single spokesman or negotiating team. In the agriculture

negotiations, well over 20 coalitions have submitted proposals or negotiated with a common

position, most of them still active. The increasing number of coalitions involving developing

countries reflects the broader spread of bargaining power in the WTO. One group is seen as

politically symbolic of this change, the G-20, which includes Argentina, Brazil, China, Egypt,

India, South Africa, Thailand and many others, but there are other, overlapping Gs too, and one

C the Cotton Four (C-4), an alliance of sub-Saharan countries lobbying for trade reform in thesector.

Coalition-building is partly the natural result of economic integration more customs unions, free

trade areas and common markets are being set up around the world. It is also seen as a means for

smaller countries to increase their bargaining power in negotiations with their larger trading

partners and to ensure they are represented when consultations are held among smaller groups of

members. Sometimes when groups of countries adopt common positions consensus can be reached

more easily. Sometimes the groups are specifically created to compromise and break a deadlock

rather than to stick to a common position. But there are no hard and fast rules about the impact of

groupings in the WTO.

The largest and most comprehensive group is the European Union and its 27 member states. The

EU is a customs union with a single external trade policy and tariff. While the member states

coordinate their position in Brussels and Geneva, the European Commission alone speaks for the

EU at almost all WTO meetings. The EU is a WTO member in its own right as are each of its

member states.

A lesser degree of economic integration has so far been achieved by WTO members in

the Association of South East Asian Nations (ASEAN) Brunei Darussalam, Cambodia,Indonesia, Malaysia, Myanmar, Philippines, Thailand, Singapore and Viet Nam. (The remaining

member Laos is applying to join the WTO.) Nevertheless, they have many common trade interests

and are frequently able to coordinate positions and to speak with a single voice. The role of

spokesman rotates among ASEAN members and can be shared out according to

topic. MERCOSUR, the Southern Common Market(Argentina, Brazil, Paraguay, Uruguay and

Venezuela, with Bolivia, Chile, Colombia, Ecuador and Peru as associate members), has a similar

set-up.

More recent efforts at regional economic integration have not yet reached the point where their

constituents frequently have a single spokesman on WTO issues. An examples is the North


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American Free Trade Agreement: NAFTA (Canada, US and Mexico). Among other groupings

which occasionally present unified statements are the African Group, the least-developed

countries, the African, Caribbean and Pacific Group (ACP) and the Latin American Economic

System (SELA).

A well-known alliance of a different kind is the Cairns Group. It was set up just before the

Uruguay Round began in 1986 to argue for agricultural trade liberalization. The group became an

important third force in the farm talks and remains in operation. Its members are diverse, but

sharing a common objective that agriculture has to be liberalized and the common view that

they lack the resources to compete with larger countries in domestic and export subsidies.

The WTO Secretariat and budget

The WTO Secretariat is located in Geneva. It has around 630 staff and is headed by a director-

general. Its responsibilities include:

Administrative and technical support for WTO delegate bodies (councils, committees, working

parties, negotiating groups) for negotiations and the implementation of agreements.

Technical support for developing countries, and especially the least-developed.
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Trade performance and trade policy analysis by WTO economists and statisticians.

Assistance from legal staff in the resolution of trade disputes involving the interpretation of

WTO rules and precedents.

Dealing with accession negotiations for new members and providing advice to governments

considering membership.

Some of the WTOs divisionsare responsible for supporting particular committees: the Agriculture

Division assists the committees on agriculture and on sanitary and phytosanitary measures, for

example. Other divisions provide broader support for WTO activities: technical cooperation,

economic analysis, and information, for example.

The WTO budget is over 160 million Swiss francs with individual contributions calculated on the

basis of shares in the total trade conducted by WTO members. Part of the WTO budget also goes tothe International Trade Centre.

UNDERSTANDING THE WTO AGREEMENT

The WTO agreements cover goods, services and intellectual property. They spell out the principles

of liberalization, and the permitted exceptions. They include individual countries commitments to

lower customs tariffs and other trade barriers, and to open and keep open services markets. They set

procedures for settling disputes. They prescribe special treatment for developing countries. Theyrequire governments to make their trade policies transparent by notifying the WTO about laws in
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force and measures adopted, and through regular reports by the secretariat on countries trade

policies.

These agreements are often called the WTOs trade rules, and the WTO is often described as rules-

based, a system based on rules. But its important to remember that the rules are actually

agreements that governments negotiated.

This chapter focuses on the Uruguay Round agreements, which are the basis of the present WTO

system. Additional work is also now underway in the WTO. This is the result of decisions taken at

Ministerial Conferences, in particular the meeting in Doha, November 2001, when new negotiations

and other work were launched. (More on the Doha Agenda, later.)

Six-part broad outlineback to top

The table of contents of The Results of the Uruguay Round of Multilateral Trade Negotiations:The Legal Texts is a daunting list of about 60 agreements, annexes, decisions and understandings.

In fact, the agreements fall into a simple structure with six main parts: an umbrella agreement (the

Agreement Establishing the WTO); agreements for each of the three broad areas of trade that the

WTO covers (goods, services and intellectual property); dispute settlement; and reviews of

governments trade policies.

The agreements for the two largest areas goods and services share a common three-part

outline, even though the detail is sometimes quite different.

They start with broad principles: theGeneral Agreement on Tariffs and Trade (GATT) (for

goods), and the General Agreement on Trade in Services(GATS). (The third area,Trade-Related

Aspects of Intellectual Property Rights (TRIPS), also falls into this category although at present it

has no additional parts.)

Then come extra agreements and annexes dealing with the special requirements of specific

sectors or issues.

Finally, there are the detailed and lengthy schedules (or lists) of commitments made by

individual countries allowing specific foreign products or service-providers access to their markets.

For GATT, these take the form ofbinding commitmentson tariffs for goods in general, and

combinations of tariffs and quotas for some agricultural goods. For GATS, the commitments state

how much access foreign service providers are allowed for specific sectors, and they include lists of

types of services where individual countries say they are not applying the most-favoured-nation

principle of non-discrimination.

Underpinning these are dispute settlement, which is based on the agreements and commitments, and

trade policy reviews, an exercise in transparency.

Much of the Uruguay Round dealt with the first two parts: general principles and principles forspecific sectors. At the same time, market access negotiations were possible for industrial goods.
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Once the principles had been worked out, negotiations could proceed on the commitments for

sectors such as agriculture and services.

In a nutshell

The basic structure of the WTO agreements: how the six main areas fit together the umbrella

WTO Agreement, goods, services, intellectual property, disputes and trade policy reviews.

Umbrella AGREEMENT ESTABLISHING WTO

Goods Services Intellectual property

Basic principles GATT GATS TRIPS

Additional details Other goods

agreements and

annexes

Services annexes

Market access

commitments

Countries schedules

of commitments

Countries schedules

of commitments(and

MFN exemptions)

Dispute settlement DISPUTE SETTLEMENT

Transparency TRADE POLICY REVIEWS

Additional agreements

Another group of agreements not included in the diagram is also important: the two plurilateral

agreements not signed by all members: civil aircraft and government procurement.

Further changes on the horizon, the Doha Agenda

These agreements are not static; they are renegotiated from time to time and new agreements can be

added to the package. Many are now being negotiated under the Doha Development Agenda,

launched by WTO trade ministers in Doha, Qatar, in November 2001.
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Tariffs: more bindings and closer to zero

The bulkiest results of Uruguay Round are the 22,500 pages listing individual countries

commitments on specific categories of goods and services. These include commitments to cut and

bind their customs duty rates on imports of goods. In some cases, tariffs are being cut to zero.

There is also a significant increase in the number of bound tariffs duty rates that are

committed in the WTO and are difficult to raise.

GOODS SCHEDULES

Members commitments

WTO negotiations produce general rules that apply to all Members, and specific commitments

made by individual Member governments. The specific commitments are listed in documents called

schedules of concessions, which reflect specific tariff concessions and other commitments that

they have given in the context of trade negotiations, such as the Uruguay Round. For trade in goods

in general, these usually consist of maximum tariff levels which are often referred to as bound

tariffs or bindings (GATT Article II). In the case of agricultural products, these concessions and

commitments also relate to tariff rate quotas, limits on export subsidies, and some kinds of

domestic support. All WTO Members have a schedule of concessions which is either annexed to

the Marrakesh Protocol to the GATT 1994 or to a Protocol of Accession. The content of the

schedules change over time to take account of different modifications, such as GATT Article

XXVIII negotiations or rectification procedures. This is the reason why determining a Member'sconcession for a specific tariff line could involve, in some cases, examining several different legal

instruments.

The WTOs rules the agreements are the result of negotiations between the members. The

current set were the outcome of the 198694 Uruguay Round negotiations which included a major

revision of the original General Agreement on Tariffs and Trade (GATT).

GATT is now the WTOs principal rule-book for trade in

goods. The Uruguay Round also created new rules for dealing

with trade in services, relevant aspects of intellectual

property, dispute settlement, and trade policy reviews. The

complete set runs to some 30,000 pages consisting of about

30 agreements and separate commitments (called schedules)

made by individual members in specific areas such as lower

customs duty rates and services market-opening.

Through these agreements, WTO members operate a non-

discriminatory trading system that spells out their rights and their obligations. Each country

receives guarantees that its exports will be treated fairly and consistently in other countries


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markets. Each promises to do the same for imports into its own market. The system also gives

developing countries some flexibility in implementing their commitments.

Goods

It all began with trade in goods. From 1947 to 1994, GATT was the forum for negotiating lower

customs duty rates and other trade barriers; the text of the General Agreement spelt out important

rules, particularly non-discrimination.

Since 1995, the updated GATT has become the WTOs umbrella agreement for trade in goods. It

has annexes dealing with specific sectors such as agriculture and textiles, and with specific issues

such as state trading, product standards, subsidies and actions taken against dumping.

Services

Banks, insurance firms, telecommunications companies, tour operators,

hotel chains and transport companies looking to do business abroad can

now enjoy the same principles of freer and fairer trade that originally only

applied to trade in goods.

These principles appear in the new General Agreement on Trade in

Services (GATS). WTO members have also made individual commitments

under GATS stating which of their services sectors they are willing to open

to foreign competition, and how open those markets are.

Intellectual property

The WTOs intellectual property agreement amounts to rules

for trade and investment in ideas and creativity. The rules state

how copyrights, patents, trademarks, geographical names used

to identify products, industrial designs, integrated circuit

layout-designs and undisclosed information such as trade

secrets intellectual property should be protected when

trade is involved.

Dispute settlement


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The WTOs procedure for resolving trade quarrels under the Dispute Settlement Understanding is

vital for enforcing the rules and therefore for ensuring that trade flows smoothly. Countries bring

disputes to the WTO if they think their rights under the agreements are being infringed. Judgements

by specially-appointed independent experts are based on interpretations of the agreements and

individual countries commitments.

The system encourages countries to settle their differences

through consultation. Failing that, they can follow a carefully

mapped out, stage-by-stage procedure that includes the

possibility of a ruling by a panel of experts, and the chance to

appeal the ruling on legal grounds. Confidence in the system

is borne out by the number of cases brought to the WTO

around 300 cases in eight years compared to the 300 disputes

dealt with during the entire life of GATT (194794).

DEVELOPING OUNTRIES

Development and trade

Over three quarters of WTO members are developing or least-developed countries. All WTO

agreements contain special provision for them, including longer time periods to implement

agreements and commitments, measures to increase their trading opportunities and support to help

them build the infrastructure for WTO work, handle disputes, and implement technical standards.

The 2001 Ministerial Conference in Doha set out tasks, including negotiations, for a wide range of

issues concerning developing countries. Some people call the new negotiations the Doha

Development Round.

Before that, in 1997, a high-level meeting on trade initiatives and technical assistance for least-developed countries resulted in an integrated framework involving six intergovernmental


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agencies, to help least-developed countries increase their ability to trade, and some additional

preferential market access agreements.

A WTO committee on trade and development, assisted by a sub-committee on least-developed

countries, looks at developing countries special needs. Its responsibility includes implementation

of the agreements, technical cooperation, and the increased participation of developing countries in

the global trading system

Technical assistance and training

The WTO organizes around 100 technical cooperation missions to developing countries annually. It

holds on average three trade policy courses each year in Geneva for government officials. Regional

seminars are held regularly in all regions of the world with a special emphasis on African countries.

Training courses are also organized in Geneva for officials from countries in transition from centralplanning to market economies.

The WTO set up reference centres in over 100 trade ministries and regional organizations in

capitals of developing and least-developed countries, providing computers and internet access to

enable ministry officials to keep abreast of events in the WTO in Geneva through online access to

the WTOs immense database of official documents and other material. Efforts are also being

made to help countries that do not have permanent representatives in Geneva

Trade and development

The WTO Agreements recognize the link between trade and development. More than two thirds of

WTO Members are developing countries.

At the Doha Ministerial Conference, in November 2001, Trade Ministers launched the Doha

Development Agenda. With this Agenda, WTO Members have placed development issues and the

interests of developing countries at the heart of the WTOs work.

In the Hong Kong Ministerial Declaration the central importance of the development dimension of

the Doha Work Programme was emphasized and there was a recommitment to making it a

meaningful reality. At the same time, the Aid for Trade Initiative was launched, designed to help

developing countries build supply-side capacity in order to expand trade.

Building trade capacity

Developing countries face special difficulties in benefiting as they should from the multilateral

trading system. This page describes the efforts made by WTO to meet their special needs by

building trade capacity to enable them to trade more effectively.

Introduction
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Helping developing countries participate more fully in the global trading system is one of the

WTO's most important activities. Those developing countries which trade successfully tend to be

those which have made the most progress in alleviating poverty and raising living standards. But

there are countries, including a large number of least-developed countries (LDCs) where trade is

failing to make the contribution that it should be making to economic growth and povertyreduction.

The main thrust of WTO work to redress this is the Doha Development Agenda, but Members have

recognized that building trade capacity is anessential complement to the DDA.

There are a variety of ways in which the WTO provides assistance to build trade capacity in

developing countries, but instructing developing country delegates on how their countries can gain

through the trading system is the central focus of the organization's efforts. The vast bulk of WTO

technical assistance spending is dedicated towards helping officials better understand complex

WTO rules and disciplines so that they can implement WTO agreements in ways which will bolstertheir trading regimes and negotiate more effectively with their trading partners. Broader and more

effective dissemination of such knowledge has facilitated the participation of developing country

trade officials in the Doha round and in other WTO activities.

Enhancing trade capacity involves other forms of assistance too, including building more efficient

ports and road networks, providing customs officials with automated equipment and teaching

entrepreneurs how to take advantage of business opportunities in the global marketplace. Work of

this nature is largely the responsibility of other international organizations like the United Nations

and the World Bank. Some programmes, particularly those involving infrastructure, require

significant funding not only from international organizations but also direct contributions from

national governments. To be truly effective, any programme of trade capacity building requires all

these elements to come together in a co-ordinated fashion. For this reason many WTO activities in

this area involve close co-operation with other international organizations.

Assistance to developing countries has always been on WTO's work schedule, but the scale and

scope have become much broader with the Aid for Trade initiative.

Why is building trade capacity important?

Because many countries simply don't have the human, institutional and infrastructural capacity to

participate effectively in international trade. Without that, these countries won't be able to expand

the quantity and quality of goods and services they can supply to world markets at competitive

prices.

human capacity refers to the professionals governments rely on for advice on WTO

matters: trade lawyers, economists, skilled negotiators. A country that lacks these

professionals is clearly at a disadvantage when implementing existing trade agreements,

when negotiating new ones, and when handling trade disputes.
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institutional capacity refers to the institutions businesses and governments rely upon for

trade, such as customs, national standards authorities, and the delegation representing the

country at the WTO. Trade ultimately suffers if these institutions are inadequate.

infrastructure refers to the physical setup required for trade to happen: roads, ports,

telecommunications. Again, countries lacking infrastructure will find it difficult to developtrade.

The WTO's trade rules, negotiating forum and dispute settlement system are not goals in

themselves. They are necessary preconditions for free and predictable trade, but are not

always sufficient to create results. WTO Members have recognized that the multilateral system

needs to be accompanied by improvements in trade capacity.

10 things the WTO can do

The world is complex. The World Trade Organization is complex. This booklet is brief, but it triesto reflect the complex and dynamic nature of trade and the WTOs trade rules. It highlights benefits

of the trading system, but it doesnt claim that everything is perfect. Were it a perfect system, there

would be no need for further negotiations and for the system to evolve and reform continually.

Nor does this booklet claim that everyone agrees about everything in the WTO. Thats one of the

most important reasons for having the system: its a forum for countries to thrash out their

differences on trade issues.

That said, there are a number of reasons why were better off with the system than without it.

The WTO can ...

WTO cancut living costs and raise living standards

WTO cansettle disputes and reduce trade tensions

WTO canstimulate economic growth and employment

WTO cancut the cost of doing business internationally

WTO canencourage good governance

WTO canhelp countries develop

WTO cangive the weak a stronger voice

WTO cansupport the environment and health

WTO cancontribute to peace and stability

WTO canbe effective without hitting the headlines

Aid for Trade
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Aid for Trade aims to help developing countries, particularly least-developed countries, develop the

trade-related skills and infrastructure that is needed to implement and benefit from WTO

agreements and to expand their trade.

The success of the initiative depends on creating closer cooperation in national capitals between

trade, finance and development officials of WTO member governments. This needs to be matched

by close cooperation at the international and regional level among intergovernmental organisations

with core responsibilities in these areas and their member governments.

Aid-for-Trade Work Programme 2012-2013

The Aid-for-Trade Work Programme 2012-2013, issued on 15 November 2011, is based on the

theme deepening coherence and focuses on five key areas: resource mobilization, mainstreaming

of trade into development plans and programmes, regional trade integration, private sector

development, and monitoring and evaluation of Aid for Trade. The Work Programme aims topromote deeper coherence and an on-going focus on Aid for Trade among the trade and

development community, notably on showing results, which will generate continued impetus to the

implementation process. It includes a calendar of meetings, culminating in a Fourth Global Review

of Aid for Trade envisaged for 2013. This calendar will be regularly updated to provide information

on progress achieved in the various areas of the Aid for Trade Initiative.

Role of the WTO in Trade Practises

The role of the WTO is to:

encourage additional flows of Aid for Trade from bilateral, regional and multilateral donors

to support requests fortrade-related capacity building from beneficiary countries

support improved ways of monitoring and evaluating the initiative.

encourage mainstreaming of trade into national development strategies by partner

countries.

The Enhanced Integrated Frameworkis the main mechanism through which least-developed

countries access Aid for Trade.
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The Standards and Trade Development Facility maintains close contacts with the Aid for Trade

initiative. It complements this global scheme through projects and monitoring of aid flows at an

operational, issue-specific level.

> Fact sheet on Aid for Trade

> Presentation Aid for Trade: why, what and how?

Background

The Aid for Trade initiative was launched at the Hong Kong Ministerial Conference in December

2005. In February 2006 the WTO established aTask Force, with the aim of operationalizing Aid

for Trade.

The Task Force recommended in July 2006 that Aid for Trade should focus on identifying the

needs within recipient countries, responding to donors and acting as a bridge between donors and

developing countries. It also recommended the establishment of a monitoring body in the WTO,

which would undertake a periodic global review based on reports from a variety of stakeholders

Working in cooperation

The WTO works in cooperation with an Advisory Group that the Director-General established in

2007 following the recommendations of the 2006 Aid-for-Trade Task Force. The main objective of

the Advisory Group is to take forward the Task Force recommendations by encouragingcoordination among the key players in the Aid for Trade initiative. The Advisory Group members

are: the African Development Bank,Asian Development Bank,European Bank for Reconstruction

and Development, IMF,Inter-American Development Bank,Islamic Development

Bank, ITC, OECD, UNCTAD, UNDP,UNECA, UNIDO, World Bankand the World Customs

Organization.

Implementation/monitoring

In 2007 the WTO's Aid for Trade initiative moved into its first stage of implementing the 2006

recommendations of the Aid for Trade Task Force.

The WTO started by establishing a system of monitoring Aid for Trade at three levels:

global monitoring of overall Aid for Trade flows, based on work carried out by the OECD

monitoring the commitment of individual donors to provide additional Aid for Trade

monitoring how the needs of developing countries for additional Aid for Trade are being

presented to, and met by, the international donor community, including the developmentbanks.
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A Symposium Identifying Indicators for Monitoring Aid for Trade was held on 15-16 September

2008.

Regional reviews

Working with its partner agencies, the WTO is also encouraging the holding of a limited number of

national and sub-regional Aid-for-Trade reviews which will road-test current Aid-for-Trade

plans, identify priorities, and agree on how these plans and priorities should be implemented. The

aim of these reviews initially was to raise awareness of Aid-for-Trade. More recently, the Regional

Reviews showcase real-world examples of Aid-for-Trade strategies in progress and create

incentives for other countries and sub-regions to follow. The results of these regional reviews are

profiled in the Global Reviews on Aid-for-Trade.

Global review

One of the recommendations of the Aid-for-Trade task force was that a Global Periodic Review be

convened yearly by the Monitoring Body in the WTO. The purpose of the Global Review is to

strengthen the Monitoring and Evaluation of Aid-for-Trade to provide strong incentive to both

donors and recipients in advancing the Aid-for-Trade agenda.

Trade facilitation

Trade facilitation has become an important subject in the Doha Round negotiations. The saving

from streamlining procedures could be 2%15% of the value of the goods traded, according to

estimates by the Organisation for Economic Cooperation and Development (OECD). The World

Bank says that for every dollar of assistance provided to support trade facilitation reform in

developing countries, there is a return of up to US$ 70 in economic benefits. Currently, there are

high levels of bureaucracy and unnecessary costs, due to:

vast amounts of red tape

document requirements that lack transparency and involve duplication

lack of cooperation between traders and customs agencies

lack of automatic data submission.

At some border crossings, cargo can take up to 30 days to be cleared. The introduction of simpler

procedures and greater transparency could help to significantly improve trade flows.

According to some estimates, the average customs transaction involves 20-30 parties, 40

documents, 200 data elements (30 of which are repeated at least 30 times) and the re-keying of 60-

70 per cent of all data at least once. With the lowering of tariffs, the cost of complying withcustoms formalities exceeds in many instances the cost of duties to be paid.
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The OECD estimates that up to 7 per cent of the US$ 12,000 billion value of international trade

each year is swallowed up by the cost of documentation.

The objective of the WTO's trade facilitation negotiations is to clarify and improve three articles of

the General Agreement on Tariffs and Trade (GATT) concerning:

the transit of goods

fees and formalities (documentation and procedures)

the transparency of laws and regulations.

The aim is to ease border procedures and to facilitate the movement, release and clearance of

goods.

A successful conclusion to the negotiations would:

allow governments to apply and conduct border controls more efficiently

allow traders to move their goods across borders more quickly and easily

reduce transaction costs and hence reduce prices for consumers and producers

reduce transit costs in landlocked countries

reduce bureaucracy and corruption

facilitate trade for small and medium-sized businesses burdened with excessive bureaucracy

and red tape

add to members' GDP by making trade less costly.

An APEC (Asia-Pacific Economic Co-operation) study estimated that trade facilitation programmes

would generate gains of about 0.26 per cent of GDP for the 21 APEC countries. Savings in import

costs would be between 1-2 per cent of such costs for developing countries in the APEC region.

According to the World Bank, increased efficiency at ports and airports could increase global trade

in manufacturing by up to US$ 377 billion a year and triple the benefits for consumers from tariff

reductions. The gains would be from streamlining customs, reducing bribery and corruption, better

infrastructure and more efficient cross-border services, and speeding up business through use of the

Internet.

Doha Round negotiations

WTO members have made proposals on how to clarify and improve the three GATT articles.

These proposals have been negotiated and refined over the past few years.

The proposals include:

use of the Internet for publishing information that is useful to traders and in general

improving the availability of information - according to the OECD, improvements in

information availability would save 1.8 per cent of transaction costs


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establishing advance rulings on tariff classification and applicable duties to expedite

customs clearance - according to a study by the OECD, advance rulings would achieve the

single biggest reductions in trade costs (up to 3.7 per cent)

introducing pre-arrival clearance - to allow goods to be released immediately upon arrival

expediting and simplifying the release and clearance of goods

enhancing transparency in customs rulings and administrative procedures

developing a uniform administration of trade regulations

streamlining fees and charges and establishing more discipline in their application - for

example, prohibition of the collection of unpublished fees and charges,

reduction/minimization of the number and diversity of fees and charges, and prohibition ofconsular fees - according to the OECD, this could cut 1.7 per cent of total costs

improving coordination among border agencies - according to the OECD, this cooperation

would have a significant cost reduction potential, of up to 2.4 per cent

creating a single window to submit data only once to one agency

establishing discipline for transit formalities and documentation requirements.

To assist developing country members to implement the results of the negotiations, the draft text fora new trade facilitation agreement contains provisions for special and differential treatment.

These provisions would allow developing countries to delay the implementation of each provision

of the text according to their needs.

The current draft text reflects the views of all WTO members, incorporating their ideas for

improving the situation. It is called the draft consolidated negotiating text (TN/TF/W/165)

(currently in its 12th revision). Since this text was first drafted, members have been working to

refine the text and reduce the number of brackets (indicating areas where members are not in

agreement).

All WTO members have been actively involved in the negotiations since everybody is aware of the

importance of trade facilitation in light of the increase in trade around the world.

Several coalitions have been formed by members that have common goals. These coalitions are

particularly useful for countries that have a small presence at the WTO. The most active coalitions

are the African group, least-developed countries (LDCs) and the Africa, Caribbean and Pacific

(ACP) group.

In order to help developing countries negotiate more effectively, the WTO Secretariat conducted atechnical assistance programme that helped each participating country to identify its particular


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needs and priorities in the trade facilitation negotiations. This programme was implemented in

cooperation with the International Monetary Fund, OECD, the United Nations Conference on Trade

and Development, the World Customs Organization and the World Bank, as well as the national

governments of many WTO members.

The WTO Secretariat also oversees a technical assistance programme that brings technical experts

from the capitals of African and LDC countries to participate in some of the trade facilitation

negotiation meetings. Once the trade facilitation negotiations have been concluded, the WTO

Secretariat will implement technical assistance programmes to help members understand and meet

their obligations under this new agreement:

RIVALRY AMONG THE EXISTINGFIRMS

The strongest of the five competitive forces is usually the jockeying for position and buyers

favorthat goes among rival firms. In case of textile industry there is intense rivalry among thefirmsdue to the following factors:

a) Diverse competitors

Attempts by cross-border competitors to gain stronger footholds in each others domestic

marketboost the intensity of rivalry, especially when foreign rivals have lower costs or very

attractiveproducts. In case of Pakistani textile sector, so far Indian, Korean, and Chinese companies

areonly close rivals. No doubt, that competition between all the countries is quite intense. All

areengaged in consistent homework, just to break and attract each other customers

towardthemselves. Elimination of quota system in 2007 will further boost up this rivalry amongfirms indifferent countries.

b) Customers switching cost

The lower the cost of switching, the easier it is for rival sellers to raid one anothers customer.

If any company not gives the quality and price buyers want, they would definitely go for

othertextile companies.

c) High exit barriers

Huge investments of financial, human and marketing resources are required to enter in thisbusiness

because of need for plants which can produce quality with consistency and need forprocurement athigh level. After obtaining such plants it takes years to recover the fixed costsand to breakeven so

rivalry tends to be more vigorous when it costs more to get out of abusiness than to stay in and

compete. Thus, rivalry is strong, as the firm has to stay andcompete with existing rivals.

d) Competitors cost saving

Cost saving is the key to survival in this sector. The companies having cost advantages over

theircompetitors are doing well in this industry. Currently many organizations are introducing the

costsystems to be more cost efficient and to take edge on competitors


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POTENTIAL ENTRY OF NEW COMPETITORS

New Entrants to market bring new production capacity. Garment is the commodity that is

usedthroughout the year. Moreover the industry is attractive, so there are threats of potential

newentrants. But on the other side these threats are not intense due to high entrybarriers andexisting condition of the economy.

a) Huge investment is required

The larger the total rupees investment and other resources needed to enter the marketsuccessfully,

the more limited the pool of potential entrants. Production of branded garmentsrequires huge

investment of financial, human, technical and marketing resources. At themoment, the threat of new

entrants is low but in the future foreign firms can be a big threat.

b) Economy of scale

Scale economies deter entry because they force potential competitors either to enter on a large-scale

basis (a costly and perhaps risky move) or to accept a cost disadvantage (and lower profitability).

Without achieving the economy of scale it is difficult to compete in the market.More over new

entrants in the textile business may encounter scale-related barriers not just inthe production, but

also in advertising, marketing, distribution, financing, and raw material availability.

c) Cost disadvantages

Existing firms may have cost advantages not available to potentials entrants. In the industry

of branded garments these advantages include access to good supply sources and the benefits

of learning and experience curves etc.

d) Brand preference

Once the brand image is formed, than it is difficult for any other firm to introduce its products

intothe market so unless and until it has low price and superior quality. As inExport of garments

only few quality textile companies exist in Pakistan, so buyers will preferthese companies on the

other newly introduced firms.

e) Government regulatory policies

It is an entry barrier because different licenses and permits are required from those

registeredcompanies, which want to deal in manufacturing business and especially on international

level.

Trade Raises Incomes

Lowering trade barriers allows trade to increase, which adds to incomes national incomes and

personal incomes. But some adjustment is necessary


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The WTOs own estimates for the impact of the 1994 Uruguay Round trade deal were between

$109 billion and $510 billion added to world income (depending on the assumptions of the

calculations and allowing for margins of error). Other economists have produced similar figures.

In Europe, The EU Commission calculates that over 198993 EU incomes increased by 1.11.5%

more than they would have done without the Single Market. So trade clearly boosts incomes.

Trade also poses challenges as domestic producers face competition from imports. But the fact that

there is additional income means that resources are available for governments to redistribute the

benefits from those who gain the most for example to help companies and workers adapt by

becoming more productive and competitive in what they were already doing, or by switching to

new activities.

Trade stimulates economic growth, and that can be good news for employment.

This is a difficult subject to tackle in simple terms. There is strong evidence

that trade boosts economic growth, and that economic growth means more jobs.

It is also true that some jobs are lost even when trade is expanding.

But a reliable analysis of this poses at least two problems:

First, there are other factors at play. For example, technological advance has

also had a strong impact on employment and productivity, benefiting some

jobs, hurting others.

Second, while trade clearly boosts national income (and prosperity), this is not

always translated into new employment for workers who lost their jobs as aresult of competition from imports.

The picture is not the same all over the world. The average length of time a

worker takes to find a new job can be much longer in one country than for a

similar worker in another country experiencing similar conditions.

In other words, some countries are better at making the adjustment than others.

This is partly because some countries have more effective adjustment policies.Those without effective policies are missing an opportunity.


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There are many instances where the facts show that the opportunity has been

grasped where freer trade has been healthy for employment.

The EU Commission calculates that the creation of its Single Market means

that there are somewhere in the range of 300,000900,000 more jobs than there

would be without the Single Market.

Often, job prospects are better in companies involved in trade.

In the United States, 12 million people owe their jobs to exports; 2 million of

those jobs were created between 1993 and 1997. And those jobs tend to be

better-paid with better security. Between 1987 and 1992, employment growth

in companies involved in exporting was around 18% higher than in other

comparable companies.

The facts also show how protectionism hurts employment. The example of

the US car industry has already been mentioned: trade barriers designed to

protect US jobs by restricting imports from Japan ended up making cars more

expensive in the US, so fewer cars were sold and jobs were lost.

In other words, an attempt to tackle a problem in the short term by restrictingtrade turned into a bigger problem in the longer term.

Even when a country has difficulty making adjustments, the alternative of

protectionism would simply make matters worse.

The system shields governments from narrow interests.

The GATT-WTO system which evolved in the second half of the 20th Century

helps governments take a more balanced view of trade policy. Governments are

better-placed to defend themselves against lobbying from narrow interest

groups by focusing on trade-offs that are made in the interests of everyone in

the economy.


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One of the lessons of the protectionism that dominated the early decades of the

20th Century was the damage that can be caused if narrow sectoral interests

gain an unbalanced share of political influence.

The result was increasingly restrictive policy which turned into a trade war that

no one won and everyone lost.

Superficially, restricting imports looks like an effective way of supporting an

economic sector. But it biases the economy against other sectors which

shouldnt be penalized if you protect your clothing industry, everyone else

has to pay for more expensive clothes, which puts pressure on wages in all

sectors, for example.

Protectionism can also escalate as other countries retaliate by raising their own

trade barriers.

Thats exactly what happened in the 1920s and 30s with disastrous effects.

Even the sectors demanding protection ended up losing.

Governments need to be armed against pressure from narrow interest groups,

and the WTO system can help.

The GATT-WTO system covers a wide range of sectors.

So, if during a GATT-WTO trade negotiation one pressure group lobbies its

government to be considered as a special case in need of protection, the

government can reject the protectionist pressure by arguing that it needs a

broad-ranging agreement that will benefit all sectors of the economy.

Governments do just that, regularly.

The system encourages good government.

Under WTO rules, once a commitment has been made to liberalize a sector of

trade, it is difficult to reverse. The rules also discourage a range of unwise

policies. For businesses, that means greater certainty and clarity about tradingconditions. For governments it can often mean good discipline.


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The rules include commitments not to backslide into unwise policies.

Protectionism in general is unwise because of the damage it causes

domestically and internationally, as we have already seen.

Particular types of trade barriers cause additional damage because they provide

opportunities for corruption and other forms of bad government.

One kind of trade barrier that the WTOs rules try to tackle is the quota, for

example restricting imports or exports to no more than a specific amount each

year.

Because quotas limit supply, they artificially raise prices, creating abnormally

large profits (economists talk about quota rent). That profit can be used to

influence policies because more money is available for lobbying.

It can also provide opportunities for corruption, for example in the allocation of

quotas among traders. There are plenty of cases where that has happened

around the world.

In other words, quotas are a particularly bad way of restricting trade.

Governments have agreed through the WTOs rules that their use should bediscouraged.

Nevertheless, quotas of various types remain in use in most countries, and

governments argue strongly that they are needed. But they are controlled by

WTO agreements and there are commitments to reduce or eliminate many of

them, particularly in textiles.

Many other areas of the WTOs agreements can also help reduce corruption andbad government.

Transparency (such as making available to the public all information on trade

regulations), other aspects of trade facilitation, clearer criteria for regulations

dealing with the safety and standards of products, and non-discrimination also

help by reducing the scope for arbitrary decision-making and cheating.

Quite often, governments use the WTO as a welcome external constraint ontheir policies: we cant do this because it would violate the WTO agreements.


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GLOBALIZATION AND THE WTO

The WTO has become the most prominent symbol of globalization and the

complex changes that are driving the world economy. As such it has become

the target for all opponents of globalization as events in Seattle in December

1999 showed clearly. Despite the criticism, the WTO is a powerful example of

a rules-based international system to promote more open trade and investment

worldwide.

On the one hand, the WTO is a magnet for countries seeking to participate inthe benefits of the globalization process. More that 40 emerging and developing

countries have joined in the past five years and a further 30 are currently

waiting to get in. On the other hand, the WTO is regarded by the opponents of

globalization as the focal point for their concerns.

It may be that the WTO has become a victim of its own success. Along with its

predecessor, the General Agreement on Tariffs and Trade (GATT), it has been

a key instrument in opening markets and boosting prosperity through


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successive rounds of multilateral trade liberalization. It is also a powerful

example of a rules-based international system, run by its member governments

via a consensus-based system of decision-taking involving all its members.

Far from favouring the rich and powerful countries, international trade rules

and WTO disciplines give the poorer countries the chance to defend themselves

against pressures from powerful trading partners. The WTO is based on non-

discrimination. Rich and poor countries alike can be challenged if they violate

an agreement, and they have an equal right to challenge others through the

WTO's dispute settlement procedures.

The second half of the 20th century saw an unprecedented expansion of world

trade, which has also brought unprecedented economic growth. Since 1948,

annual economic statistics have invariably shown growth in world trade

outstripping economic growth. In other words, trade has been the engine of

economic growth. This means that economic activity is more and more

dependent upon trade as the years go by. The World Bank has estimated that a

40 percent cut in trade protection by 2005, through the reduction of tariffs in

manufacturing and of other trade barriers in agriculture and services, would

boost global output by about 500 billion dollars.

In 1998, world merchandise exports were worth over five trillion dollars, and in

volume terms that represents an 18-fold increase over 1948. Although the

world's population has more than doubled, to reach six billion this year, exports

per capita are eight times as high in real terms as in 1948. The figures are so

huge that it is difficult to take them in. Behind them is the reality that trade has

contributed enormously to world growth and prosperity over the half century,

bringing better jobs and more resources for education, health and other social

spending. Despite the poverty that still exists in too many countries, the fact is

that the world is far more prosperous now than it has ever been.


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TENTATIVE CONCLUSIONS

Mode IV affects both the international politics of trade and migration. It therefore falls under

the broad category of trade and issues.

In order to understand the impact on the multilateral level, it is necessary to look at how

Mode IV is mediated by domestic and bureaucratic politics.

The degree to which Mode IV mobilises new actors will depend partly upon certain domestic

thresholds of tolerance through which the social impacts of market liberalisation are

mediated.

Mode IV affects the politics of trade by drawing in a range of interests groups and

government departments with interests in migration. This leads to the emergence of new veto


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players at the multilateral level.

Mode IV affects the politics of migration because its social consequences draw in different

government ministries. This leads different ministries to engage in different strategies of

ministerial forum-shopping and institutional choice at the multilateral level.

Because of its domestic and bureaucratic implications the migration-trade linkage inherent to

Mode IV appears to be cooperation-diminishing rather than cooperation-enhancing for both

issue-areas.

On a theoretical level, the analysis highlights interesting elements of the relationship

between regime complexity and domestic politics:

1) Whether or not complexity is cooperation-enhancing or cooperation-diminishing will

be mediated by conditions at the domestic level.

2) In the context of complexity, it is not only unitary states that engage in forum

shopping and cross-institutional strategies but also different government ministries

pursuing specific agendas and normative goals.

So the analytical challenge before us is to assess how the different veto players at the

domestic and multilateral level will interact with trade circles and what factors will affect

outcomes at different moments in time to

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