World Trading System: Rules and Commitments

1. World Trading System: Rules and Commitments

2. January December February November March October April September May August June July $3.0bn 1929 1930 1931 1932 1933 The Effect of Protectionism on World Trade: 1929-33 $0.9bn Trade figures: per month

3. 1947: Geneva (UN) • Draft a Charter for an International Trade Organization (OIT) • Draft common rules to govern international trade • Start Tariff Negotiations • Negotiations start

4. 1947-48: Havana • UN Conference on Trade and Employment • ITO Charter • never entered into force • US never ratified

5. 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)

6. 1986-93:“Uruguay Round”

7. 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)

8. 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

9. 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

10. 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 an International 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 services and intellectual property as well. The WTO dispute settlement system is faster, more automatic than the old GATT system. Its rulings cannot be blocked.

11. Foremost: The WTO is a forum for negotiations NEGOTIATIONS • agreed rules and commitments • …with basic principles for trade • forum fornegotiations 2 types of negotiation • …and dispute settlement • Separate negotiations (by subject) • ‘Rounds’ = many subjects negotiated at the same time • member-driven

12. Foremost: The WTO is a forum for negotiations NEGOTIATIONS • agreed rules and commitments • …with basic principles for trade Uruguay Round 1986–1994Eighth ‘round’ under GATT, since 1948 • forum fornegotiations • …and dispute settlement Result: In 1995 ... • Rules expanded: goods (GATT) + services (GATS) + intellectual property (TRIPS) • member-driven • WTO formed, replacing GATT

13. Foremost: The WTO is a forum for negotiations NEGOTIATIONS • agreed rules and commitments • …with basic principles for trade • forum fornegotiations • …and dispute settlement Current Round: Doha RoundLaunched at Doha Ministerial ConferenceNovember 2001. • member-driven • negotiations: existing + new • problems with ‘implementation’ of existing agreements see ‘Understanding the WTO’ page 77

14. Foremost: The WTO is a forum for negotiations Agreement only by consensus NEGOTIATIONS • agreed rules and commitments Everyone has to be persuaded No one forced by a majority Everything else follows from negotiations ... • …with basic principles for trade • forum fornegotiations • …and dispute settlement • member-driven

15. ‘Rules-based’ 500 pages of rules. 23,000 pages of commitments RULES, COMMITMENTS • agreed rules and commitments • …with basic principles for trade • forum fornegotiations • …and dispute settlement • Three Main Agreements: • General Agreement on Tariffs and Trade • General Agreement on Trade in Services • Agreement on Trade-Related Aspects of Intellectual Property • member-driven

16. ‘Rules-based’ 500 pages of rules. 23,000 pages of commitments RULES, COMMITMENTS • agreed rules and commitments • …with basic principles for trade • forum fornegotiations ... negotiated agreements and commitments written by members and agreed by consensus • …and dispute settlement • signed by members ... • member-driven

17. ‘Rules-based’ 500 pages of rules. 23,000 pages of commitments RULES, COMMITMENTS • agreed rules and commitments • …with basic principles for trade • forum fornegotiations ... negotiated agreements and commitments written by members and agreed by consensus • …and dispute settlement • signed by members ... • member-driven  … and ratified in parliaments

18. Non-discrimination 1. Treating other countries equally. ‘Most-favoured-nation’ treatment (MFN) PRINCIPLES • agreed rules and commitments • ‘Fair’ and efficient (single set of rules, duty rates) • Exceptions • free trade agreements • preference for developing countries • …with basic principles for trade 2. Treating foreign, domestic equally ‘National treatment’ • forum fornegotiations • …and dispute settlement • member-driven see ‘Understanding the WTO’ page 10

19. Non-discrimination 1. Treating other countries equally. ‘Most-favoured-nation’ treatment (MFN) PRINCIPLES • agreed rules and commitments 2. Treating foreign, domestic equally ‘National treatment’ Stability, predictability • …with basic principles for trade 1. Commitments are ‘bound’ 2. System builds confidence • forum fornegotiations • …and dispute settlement • member-driven see ‘Understanding the WTO’ page 10

20. Non-discrimination 1. Treating other countries equally. ‘Most-favoured-nation’ treatment (MFN) PRINCIPLES • agreed rules and commitments 2. Treating foreign, domestic equally ‘National treatment’ Stability, predictability • …with basic principles for trade 1. Commitments are ‘bound’ 2. System builds confidence • forum fornegotiations • …and dispute settlement Transparency 1. National trade policies reviewed 2. Specific measures and laws notified • member-driven • ‘Notification and review’ see ‘Understanding the WTO’ page 10

21. The WTO is not a policeman Disputes: handled by members in DISPUTE SETTLEMENT • agreed rules and commitments ...Dispute Settlement Body Cases are brought by governments ... • …with basic principles for trade • forum fornegotiations ...based on ‘broken promises’ • …and dispute settlement i.e. agreements or commitments violated Aim: consult, settle ‘out of court’ • member-driven Dispute starts with ‘request for consultations’ see ‘Understanding the WTO’ page 59

22. Rulings: by ‘panels’ of 3 experts Appeal:permanent Appellate Body DISPUTE SETTLEMENT • agreed rules and commitments About 1yr 3mths with appeal • …with basic principles for trade ‘Reasonable period’to implement ruling • forum fornegotiations • …and dispute settlement About 15 months If failure to implement … … sanctions or compensation • member-driven see ‘Understanding the WTO’ page 59

23. Ministerial Conference Topmost, political. ... At least once every 2 years DECISION MAKING • agreed rules and commitments General Council In charge between ministerials. • …with basic principles for trade Meets in Geneva • forum fornegotiations Councils and committees • …and dispute settlement Cover all WTO agreements and related issues … comprise all members • member-driven … decisions by consensus see ‘Understanding the WTO’ page 103