World Trade Organization (WTO)

World Trade Organization World Trade Organization (WTO)(WTO)

Original source from

Kimburley Choi

Oct 19, 2005

World Trade OrganizationWorld Trade Organization (WTO)(WTO)

• Established in 1995 as an international organization

• oversees a large number of agreements defining the

"rules of trade" between its member states (WTO,

2004a).

• Successor: General Agreement on Tariffs and Trade

(GATT)

• Goal: reduce or abolish international trade barriers.

• As of Jan 11, 2007, there are 150 members in WTO.

http://www.wto.int/english/thewto_e/whatis_e/tif_e/org6_e.htm

WTO functionsWTO functions

1. as a negotiating forum for discussions of new and

existing trade rules; and

2. as a trade dispute settlement body.

Free TradeFree Trade

1. International trade of goods without tarriffs

2. International trade in services

3. Free movement of labour between countries

4. Free movement of capital between countries

5. Absence of trade distortion policies, e.g. subsidies to d

omestic industries

NegotiationsNegotiations

• One country one vote

• But many WTO agreements such as adopting

agreements (and revisions to them) are determined by

consensus.

• Consensus: NOT mean unanimity – complete agreement

of everyone; because no rejection means agreement

Country member must insist on its rejection

• Many negotiations are closed-door meetings without

inviting poor countries’ negotiators.

Dispute resolutionsDispute resolutions

• Like other international organizations, WTO has no

power to enforce decisions when a member complains

another.

Discipline & PunishDiscipline & Punish

• When WTO rules impose disciplines on countries’ policies,

the outcome of negotiations among WTO members. The

rules are enforced by the members themselves under

agreed procedures that they negotiated, including the

possibility of sanctions. But those sanctions are imposed

by member countries, and authorized by the membership

as a whole. This is quite different from other agencies

whose bureaucracies can, for example, influence a

country’s policy by threatening to withhold credit.

Economically powerful states such as United States can

simply ignore ruling against them brought by the econom

ically weak states since they don’t have enough power to

hurt US trade and to force US to change it position.

Who decide who can be the Who decide who can be the member?member?

• Iran first applied to join the WTO in 1996, but the US

blocked its application 22 times accusing Tehran

supporting international terrorism.

• Russia first applied to join GATT in 1993, and is still not

the WTO member either.

• The “big three” members – the US, the European Union,

and Japan

Who decide who can be the Who decide who can be the member?member?

• Hong Kong (1 Jan 1995)

• China (11 Dec 2001)

• Taiwan (1 Jan 2002)

Why countries want to be WTO Why countries want to be WTO members?members?

• Membership is voluntary, but not joining places the non-

participating nation under embargo.

• That means, weak countries have to join WTO or under

embargo, but joining WTO may mean accepting

disagreeable trade rules.

WTO main principlesWTO main principles

• Most-favored-nation (MFN): treating other people

equally.

• Under the WTO multi-lateral trade agreements, countries

cannot normally discriminate between their trading

partners. Grant someone a special favor (such as a

lower customs duty rate for one of their products) and

you have to do the same for all other WTO members.

Multilateral vs. Bilateral Multilateral vs. Bilateral trade agreementstrade agreements

• The US is using one-on-one agreements with small

countries as models for other multilateral trade

agreements, hawking them around the world as the ideal

way to further trade liberalization.

Bilateral deals fragment the coalitions of developing

countries.

Multilateral trade agreementsMultilateral trade agreementsGATS General Agreement on TradeGATS General Agreement on Trade

• GATS & privatization: December 2005 HK conference

main issue – expansion of GATS.

• National policies must be made with greater flexibility so

that more markets are open to global trade (not only

manufactured goods but services as well).

• E.g. Water services are pushed for the inclusion in the

coverage of GATS.


4 modes of supply to deliver cross-border services

• Cross border supply

• Consumption aboard

• Foreign commerce

• Presence of natural person


Mode 1

Service provider from one country delivers service in another country

without the presence of the supplier in that country.


Mode 2

Service delivered to consumers of another member countries.


Mode 3

Service provided by another country through the commercial presence

of the supplier.


Mode 4

Service provider as person delivers service in another country.


What are the services?

1. Business services

2. Communication services

3. Construction and related engineering services

4. Distribution services

5. Educational services

6. Environmental services

7. Financial services

8. Health related and social services

9. Tourism and travel related services

10. Recreational, cultural and sporting services

11. Transport services


• GATS proponents deceitfully argue that governments

can choose to keep certain sectors closed and that

privatization of basic social services is not a GATS

requirement. But GATS has very clear bias for private

business and non-transparent WTO mechanisms favor

developed nations, and processes allow them to apply

intense pressure on developing countries.

The Yes MenThe Yes Men

Andy Bichlbaum

Mike Bonanno

A duo of downwardly-mobile middle-class?


Identity Correction


In 1993, Mike performed microsurgery on talking GI Joe

and Barbie dolls, switching their voice chips so that GI Joe

would say “Math is too hard”, while Barbie would bark

“Dead men tell no lies.”

The Barbie Liberation Organization (BLO)


In 1996, Andy was hired to program the little people in an a

ction game, SimCopter. He secretly created an army of me

n wearing swimsuits, showered each other and the player

with kisses. He was fired and formed RTMark.com


In 1999, they created the GWBush.com which looked exact

ly like the real GeorgeWBush.com, but with corrected identi

ty.


“There ought to be limits – there ought to be limits

– there ought to be limits – to, uh, to freedom. But,

uh. And we’re aware of the site, and this guy’s just

a garbage man, that’s all he is. And of course I

don’t appreciate it, and you wouldn’t either.”

Replied by Bush.


More in the film. Enjoy.

End

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World Trade Organization (WTO)