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World Trading System: Rules and Commitments
The Effect of Protectionism on World Trade: 1929-33
January
February
March
April
May
June
July
August
September
October
November
December 1929
1930
1931
1932
1933
$3.0bn
$0.9bn
Trade figures: per month
1947: Geneva (UN) Draft a Charter for an
International Trade Organization (OIT)
Draft common rules to govern international trade
Start Tariff Negotiations
Negotiations start
1947-48: Havana• UN Conference
on Trade and Employment– ITO Charter
never entered into force
US never ratified
1948: GATT at Work– Set of common
rules (GATT) “provisional
application” since 1.1.1948
23 Signatories of the Protocol
Tariff Negotiations completed
– in force (through GATT)
1986-93:“Uruguay Round”
1986-93:“Uruguay Round”
• 8th Round of negotiations– 123 Contracting Parties – New Tariff concessions– Non-tariff negotiations
strengthened disciplines for trade in goods
– New sectors covered Agriculture Trade in Services Trade-related Intellectual Property Rights
– WTO (Organization)
UR Main Agreements
• General Agreement on Tariffs and Trade• General Agreement on Trade in Services• Agreement on Trade-Related Aspects of
Intellectual Property Rights• Agreement on Agriculture• Agreement on Trade-Related Investment
Measures• Agreement on Textile and Clothing
1994: Marrakech
• 123 Signatories of the Marrakech Agreement establishing the WTO (23’000 pages)
• WTO will enter into force on1 Jan. 1995
• GATT (1947) disappear
The main difference between GATT and WTO
GATT was ad hoc and provisional. The General Agreement was never ratified in members’ parliaments, and it
contained no provisions for the creation of an organization
The WTO and its agreements are permanent. As anInternational organization, the WTO has a sound legal
basis because members have ratified the WTO agreements, and the agreements themselves describe how the WTO is to function.
The WTO has “members”. GATT had “contracting parties”,
underscoring the fact that officially GATT was a legal text.GATT dealt with trade in goods. The WTO covers servicesand intellectual property as well.
The WTO dispute settlement system is faster, more automatic than the old GATT system. Its rulings cannot be blocked.
• agreed rules and
commitments
• …with basic principles for
trade
• …and dispute
settlement
• member-driven
NEGOTIATIONS
Foremost: The WTO is a forum for negotiations
• forum fornegotiations
• Separate negotiations (by subject)
• ‘Rounds’ = many subjects negotiated at the same time
2 types of negotiation
• agreed rules and
commitments
• …with basic principles for
trade
• …and dispute
settlement
• member-driven
Foremost: The WTO is a forum for negotiations
• forum fornegotiations
Uruguay Round 1986–1994Eighth ‘round’ under GATT, since 1948
Result: In 1995 ...• Rules expanded: goods (GATT) + services (GATS) + intellectual property (TRIPS)
• WTO formed, replacing GATT
NEGOTIATIONS
• agreed rules and
commitments
• …with basic principles for
trade
• …and dispute
settlement
• member-driven
Foremost: The WTO is a forum for negotiations
Current Round: Doha RoundLaunched at Doha Ministerial ConferenceNovember 2001.
• forum fornegotiations
• negotiations: existing + new• problems with ‘implementation’ of existing agreements
NEGOTIATIONS
see ‘Understanding the WTO’ page 77
• agreed rules and
commitments
• …with basic principles for
trade
• …and dispute
settlement
• member-driven
Foremost: The WTO is a forum for negotiations
• forum fornegotiations
NEGOTIATIONS
Agreement only by consensusEveryone has to be persuadedNo one forced by a majority
Everything else follows from negotiations ...
• forum fornegotiations
• …with basic principles for
trade
• …and dispute
settlement
• member-driven
RULES, COMMITMENTS
‘Rules-based’500 pages of rules. 23,000 pages of commitments
• agreed rules and
commitments
Three Main Agreements:
(1) General Agreement on Tariffs and Trade
(2) General Agreement on Trade in Services
(3) Agreement on Trade-Related Aspects of Intellectual Property
• forum fornegotiations
• agreed rules and
commitments
• …with basic principles for
trade
• …and dispute
settlement
• member-driven
‘Rules-based’
... negotiated agreements and commitments written by members and agreed by consensus
500 pages of rules. 23,000 pages of commitments
RULES, COMMITMENTS
signed by members ...
• forum fornegotiations
• agreed rules and
commitments
• …with basic principles for
trade
• …and dispute
settlement
• member-driven
‘Rules-based’500 pages of rules. 23,000 pages of commitments
signed by members ... … and ratified in parliaments
RULES, COMMITMENTS
... negotiated agreements and commitments written by members and agreed by consensus
• forum fornegotiations
• agreed rules and
commitments
• …and dispute
settlement
• member-driven
PRINCIPLES
Non-discrimination1. Treating other countries equally. ‘Most-favoured-nation’ treatment (MFN)
2. Treating foreign, domestic equally ‘National treatment’
• …with basic principles for
trade
• ‘Fair’ and efficient (single set of rules, duty rates)
• Exceptions • free trade agreements• preference for developing countries
see ‘Understanding the WTO’ page 10
• forum fornegotiations
• agreed rules and
commitments
• …and dispute
settlement
• member-driven
Non-discrimination1. Treating other countries equally. ‘Most-favoured-nation’ treatment (MFN)
2. Treating foreign, domestic equally ‘National treatment’
• …with basic principles for
trade
Stability, predictability1. Commitments are ‘bound’2. System builds confidence
PRINCIPLES
see ‘Understanding the WTO’ page 10
• forum fornegotiations
• agreed rules and
commitments
• …and dispute
settlement
• member-driven
Non-discrimination1. Treating other countries equally. ‘Most-favoured-nation’ treatment (MFN)
2. Treating foreign, domestic equally ‘National treatment’
• …with basic principles for
trade
Stability, predictability1. Commitments are ‘bound’2. System builds confidence
Transparency1. National trade policies reviewed2. Specific measures and laws notified
• ‘Notification and review’
PRINCIPLES
see ‘Understanding the WTO’ page 10
• forum fornegotiations
• agreed rules and
commitments
• …with basic principles for
trade
• member-driven
DISPUTE SETTLEMENT
The WTO is not a policeman
Cases are brought by governments ...
i.e. agreements or commitments violated
...based on ‘broken promises’ • …and dispute
settlement
Dispute starts with ‘request for consultations’
Aim: consult, settle ‘out of court’
Disputes: handled by members in
...Dispute Settlement Body
see ‘Understanding the WTO’ page 59
• forum fornegotiations
• agreed rules and
commitments
• …with basic principles for
trade
• member-driven
DISPUTE SETTLEMENT
Rulings: by ‘panels’ of 3 experts
About 1yr 3mths with appeal
About 15 months
‘Reasonable period’to implement ruling
• …and dispute
settlement
… sanctions or compensation
If failure to implement …
Appeal:permanent Appellate Body
see ‘Understanding the WTO’ page 59
• forum fornegotiations
• agreed rules and
commitments
• …with basic principles for
trade
• …and dispute
settlement
DECISION MAKING
Ministerial Conference
In charge between ministerials.
General Council
Cover all WTO agreements and related issues
Councils and committees
… comprise all members
Topmost, political. ... At least once every 2 years
… decisions by consensus• member-
driven
Meets in Geneva
see ‘Understanding the WTO’ page 103