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