amit
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The Role of WTO in the Current Crisis
AMIT KUMAR
10310900706 Nov 2012
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OUTLINE
• Present situation
• Importance of the present WTO regime
• Recent steps taken by WTO
• Way Ahead for the Recovery
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Present situation
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• World economy - severe battering, worst in last 70 years.
• In 2009, Volume of Output:– Global Output fell -2.3 % – Developed Countries output fell – 3.3 %
– Developing Countries output was + 1.2 %– Colombia’s output increased by + 0.4 %
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• In 2009:
• Global Trade volume declined -12 %• Developed Countries trade volume
declined by – 15.3%• Developing Countries trade volume
declined by – 8%
• Colombia’s volume of exports of goods and services decreased by about – 8.2 %
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• Forecast for 2010:– World output volume rise +2.7 %– World trade volume growth nearly +10 %
• Exports (developed countries) +7 %• Exports (developing countries) +11 %
– Colombia’s Output volume to rise +2.5%– Colombia’s volume of exports of goods and
services to increase +6.1 %
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• Fast speed of the turnaround compared to historical experience
• In 1930s, protectionism prolonged and deepened the recession
• Did not happen this time
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• Some instances of protectionism– These affected below 1 % of world
trade
• A vital factor was existence of international trade rules (WTO).
• But risks remain as long as unemployment remains high
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• We can not go back to business as usual
• We need to be vigilant about the risk of back-tracking
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Importance of the present WTO regime
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Presence of WTO disciplines meant that:
• Countries are aware of actions that would be questioned
• WTO disciplines provide reference or a standard for reasonable behaviour
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• WTO Disciplines help countries to monitor and assess actions based on them
• WTO gives a platform for interaction, sharing common concerns and taking common initiatives
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• If trade restrictive measure is adopted then:– WTO provides processes and mechanisms
for dealing with them
• WTO system has been tested
• Credible dispute settlement mechanism. Allows to settle disputes peacefully.
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• Reduces tensions and pressures from disputes and disagreements
• Promotes orderly and non-disruptive behaviour – Columbia has been:
• Complainant in 5 cases• Respondent in 3 cases• Third Party in 17 cases
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• WTO’s Technical Assistance Programme helps improve use of the system:– Since 2008, Columbia has had:
• 3 National activities (services, agriculture, trade and environment)
• Seminar on trade facilitation• Several training activities covering
academics and officials
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Recent steps taken by WTO
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• During the crisis, WTO also has taken pro-active steps
• Several initiatives of the WTO Director General to:
• Stem protectionism, keep markets open • Focus on key trade policy initiatives• Reduce tensions and disputes • Contribute to exit from the crisis
• Important role of monitoring and transparency for these objectives
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WTO DG prepared detailed monitoring reports with information :– on policy measures by individual Members
during the crisis
– in consultation with and using data inputs from WTO Members, as well as information from other sources
– discussed by the whole Membership at special meetings
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• Monitoring report discussion:
– provides peer review
– opportunity to raise and clarify concerns, including specific policies
– Gives voice to large number of smaller countries
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• Monitoring Reports showed that countries also adopted:
• trade opening or trade facilitating measures
• Terminated previously adopted trade restrictive measures
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• Discussion gave basis to WTO DG to carry the voice and concerns of all the Membership (153 WTO Members) to world fora
• Such reports give stronger voice to developing countries:– These nations have more difficulty to obtain
comprehensive information
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• Monitoring reports provide basis to better deal with political protectionist pressures
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• Another initiative of WTO DG was to emphasise importance of trade finance in facilitating trade:
– particularly for smaller businesses and poorer economies
– especially if countries not able to raise such finance
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• WTO DG highlighted: – need for treating trade finance different from
other types of finance • Trade finance repayment period shorter and
repayment more certain
– need for international support to assist with trade finance and thus facilitate trade
• He worked with other major international institutions on the issue of trade finance
• G20 has put aside $250 billion trade finance support to help poorer countries.
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• Evidence was highlighted to show that countries better withstand adverse effects if they have:
• adequate safety nets
• adequate regulatory frameworks
• open trade policy complemented with appropriate domestic policies
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• Emphasised the need for meeting aid commitments for developing countries
• Aid for Trade is important part of stimulus in less developed countries
• Inter-connected world and common interests
• Crucial to keep in mind both present situation and medium term effects of actions
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• Evidence to show that while:– trade decline can cause economic
effects
– trade links help more rapid recovery
• Evidence shows that countries with more open markets and trade links generally able to respond quicker
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Way Ahead In Recovery
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• We need to:– ensure that stability due to
multilateral rules is maintained, i.e. keep markets open
– work co-operatively, emphasising interests of all countries, small, medium and large
– improve the system to increase opportunities, reduce distortions, and address any unfairness in the system:
• keep opening markets and opportunities
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DDA negotiations
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• Several areas covered, offering many positive opportunities and more level playing field
• E.g., agriculture, industry, services, Anti-dumping, Fisheries subsidies, environmental goods and services, certain TRIPS related issues, development concerns, trade facilitation
• Columbia is a very active participant
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AGRICULTURE
• More level playing field by reducing trade-distorting subsidies:– major reductions in domestic
subsidies in developed countries– elimination of export subsidies
• These are important objectives of Columbia
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• Enhanced market access opportunities for primary and processed products:
– reduction of tariffs, tariff peaks and tariff escalation• Will encourage processing activities under
Columbia’s Productive Transformation Programme
– Liberalisation of Tropical Products markets – Tariff-quotas providing market access for
sensitive products
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NAMA
• Improved access to markets for industrial products through reduction of:– tariff peaks ; tariff escalation; non-tariff barriers
• Strong tariff peak reduction in all developed country markets
• Greater market access and greater certainty in major developing country markets
• Concerns on Non Tariff Barriers addressed (Colombia should be active in these negotiations)
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Services
• Improved access for services trade– More market opening for most services emphasised by
Colombia – (signalling conference and plurilateral negotiations)
• Greater transparency and certainty with regulatory regime
• More growth and development opportunities:– Services are large part of economy– Services trade is more dynamic and resilient– Service growth has widespread positive effects for
economic and social achievements
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Examples from Other Areas
• Improved disciplines on trade-remedies (e.g., anti-dumping)
• Greater disciplines for fisheries subsidies
• Increased markets for environmental goods and services
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• Increase in markets and decrease in costs due to better trade facilitation – World Bank Report “Doing Business”
shows Colombia one of top ten reformers in 2008/2009
– Colombia improved to 37th rank in 2010 from 49th rank in 2009 for ease of doing business
– Columbia’s improved custom administration reduced time to prepare documentation by:
• 60% for exports • 40% for imports
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• Fairer trading system, and greater participation of small and medium sized developing countries in the international system
• These are all important objectives of Colombia, which is both:– A friend of the existing system– Significant contributor to improving the
system further through negotiations
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Thank You