BYBASREEN AHMAD

ENGKU AHMAD FAIZMARWAN HADIID

World Trade Organization (WTO)/GATT

HISTORY OF WORLD TRADE ORGANIZATION (WTO) & GATT

General Agreement on Tariff and Trade (GATT) Created in 1947 in Geneva Switzerland, consist of 23 members Part of Bretton Woods system To ensure a stable trade and economic world environment

International Trade Organization (ITO) It was thought that GATT would become part of ITO Charter was negotiated in Havana, 1948 Set out the basic rules for international trade and other international

economic matters However, the ITO charter submitted was never approved by the US congress Any problem on international trade handled by GATT on that time

World Trade Organization (WTO) Created in 1 June 1995, replacing GATT Established by the final act of the Uruguay Round of negotiation

OBJECTIVE OF THE STUDIES

To identify World Trade Organization (WTO) main

objective and achievementTo examine briefly all round talk based on Uruguay,

Cancun and Doha round To identify trade disputes and settlement in World

Trade Organization (WTO)

WORLD TRADE ORGANIZATION (WTO)

• Replacement of GATT• Consist of 160 members, 117 developing countries• Open trade for benefit of all• The only global international organization dealing with the

rules of trade between nations• Trade in industrial products, agricultural and services• Run by government of it members or Minister of each

country• Meet al least once every two years in Geneva, Switzerland

WTO OBJECTIVETrade negotiation• Provide a forum for negotiating agreements• Aimed at reducing obstacles to international trade• Helps trading industry to become smooth, fair, free and

predictable• Trade agreement are not rigid

Implementation and monitoring• Provide a legal and institutional framework• Government of each country make their trade policies

transparent by informing the WTO• All members in WTO must be reviewed on their trade policies

THE IMPORTANT OBJECTIVES OF WTO

WTO OBJECTIVE (cont.)Dispute settlement• Administer the rules and processes related to dispute• Countries bring disputes to the WTO if getting their rights

under the agreements are being violated• Settled by vote of 2/3 or ¾ of the nations• Promote peace among members

To improve the standard of living of people in the member countries To protect the environment Help promoting peace To ensure full employment Trade stimulates economic growth

Uruguay RoundCovered wide range of issue but the main was agriculture subsidies

Disagreement between U.S and E.U

“Blair house accord”The birth of WTOEffective 1 July 1995

Some of the provisions Antidumping Disputes resulting from the use of antidumping laws will be resolved with

tougher and quicker action. Subsidies Over a six year period, 21 percent of the volume of subsidized agricultural

export was to be reduced Safeguards Tariffs and other restrictions on import surge that harmed the domestic

industry can be raised temporarily. Administering health and safety standards were barred unless it's based on solid evidence.

Tariffs The industrial products’ tariffs were reduced by 1.7 percent from an average

of 4.7 percent to 3 percent. World Trade Organization (WTO) The General Agreement on Tariffs and Trade (GATT) were replaced by the

World Trade Organization (WTO)

Doha Round

launched in Doha, Qatar in 14 November 2001

should be completed by the 1st January 2005

collapsed in 2008The main reason of the

collapsed over the special safeguard mechanism (SSM)

Ministerial meeting, Cancun

September 2003, the fifth WTO ministerial conference

issue of the reduction of the United States and the European Union farm subsidies.

Formation of G21

TRADE DISPUTE & SETTLEMENT IN WTO

A dispute arises when a member government believes another member government is violating an agreement or a commitment that it has made under WTO trade agreement.

DISPUTE SETTLEMENT BODY

DISPUTE SETTLEMENT UNDERSTANDING

PANEL EXAMINE CONSULTATION

Consultation 60 days

Panel Report 45 days

Final Panel Report to Parties 6 months

Final Panel Report to WTO Members 3 weeks

Dispute Settlement Body Adopts Report 60 days

Without Appeal 1 year

Appeals Report 60 – 90 days

Dispute Settlement Body Adopts Appeal Reports 30 days

Total 1 year 3 months

Sources: www.wto.org

These approximate periods for each stage of a dispute settlement procedure are target figures the agreement is flexible. In addition,

the countries can settle their dispute themselves at any stage. Totals are also approximate:

CASES IN WTO

DS55/54 Indonesia — Certain Measures Affecting the Automobile Industry

Complaint by European Communities, Japan & United StateCase chronology• On 3 October 1996 the EC, Japan on 4 October 1996, while US on 8 October

1996 requested consultations with Indonesia concerning Indonesia’s National Car Programme

• On 17 April 1997, Japan requested the establishment of a panel with respect to complaints, while the EC on 12 May 1997

• On 17 April 1997 Japan requested the establishment of a panel, following by the EC on 12 May 1992 (but both request has been deferred)

• On 12 June 1997 the DSB establish a panel (due to second request from the EC and Japan

• On 12 June 1997, the US requested the establishment of a panel but its been deferred on 25 June 1997

• On 30 July DSB establish the panel (due to second request from the US)• On July 1998 the panel found Indonesia was in violation on TRIM’s

agreement, SCM’s agreement under article I & II of GATT 1994

CASES IN WTO

DS114 Canada — Patent Protection of Pharmaceutical Products

Complaint by the European Communities and their member StatesCase chronology• On 19 December 1997, the EC requested consultations with Canada due to

lack of protection of invention by Canada in the area of pharmaceuticals• On 11 November 1998 the EC requested the establishment of a panel but

have been deferred on 25 November 1998• On 1 February 1999 the DSB establish a panel (due to second request from

the EC)• On 17 March 1999 the panel found that:a) potential competitors of a patent owner are permitted to use the patented

invention, without the authorization of the patent owner during the term of the patent, for the purposes of obtaining government marketing approval

b) competitors are allowed to manufacture and stockpile patented goods during a certain period before the patent expires, but the goods cannot be sold until after the patent expires.

CASES IN WTODS114 Canada — Patent Protection of Pharmaceutical Products

• On 25 April 2000 Canada informed DSB it would require reasonable time to implement the recommendation

• At the DSB meeting of 23 October 2000 Canada informed member that from 7 October 2000 the recommendation will be implement.

CONCLUSION

• World Trade Organization (WTO) is the first global, constantly operating organization responsible for the promotion of trade and the settlement of possible trade dispute

• Law of comparative advantage states that free trade will enable an increase in economic welfare

• Free trade encourages greater competitiveness for the firm• This enables more economies of scale, this is important for industries with high fixed

costs, such as car manufactures• Free trade can help increase global economic growth• The WTO has often been criticized for ignoring the problems of the developing world

such as tariff and subsidies

PAST YEAR QUESTION

1. JUNE 2014, QUESTION 4 (b)

2. JAN 2013, QUESTION 7 (c)

3. JUNE 2012, QUESTION 6 (b)

4. JAN 2012, QUESTION 7 (c)

5. APRIL 2010, QUESTION 6 (a)