Transcript Document

The Development of Free Trade
as a Goal
• General Agreement on Tariffs and Trade (GATT)
began in 1947 with 23 nations
• Multilateral trade agreements, negotiated in
rounds (usually 3-5 years)—eighth round was the
Uruguay Round (1986-1994) and included 123
nations
• Purpose of GATT to reduce trade barriers
• Traditionally GATT (and trade in general) has
focused on Goods
Early developments
• Early plan for an ITO (international trade
organization as part of UN) blocked by US
• 23 nations decided to start negotiations anyway—
first GATT
– A trade agreement and then an organization
• 8 rounds: first 6 rounds mostly dealt with tariff
reduction; Tokyo round began to look at other
barriers to trade; Uruguay round most effective—
created GATS and WTO
GATT Principles
• Market principle: free market should rule
• Reciprocity principle: benefits on both sides
• MFN: non-discrimination (leads to problem of free
riders)—there are a few limited exceptions
• National treatment: foreign entities treated same as
domestic entities
• Transparency principle: tariffs and prices available to all
• Consultation principle: open discussions for conflict
resolution
• Dispute settlement: arbitration
GATT principles that provide “an
out”
• Legitimacy of domestic regulation principle
• Orderly adjustment principle
– Mostly for lesser developed nations
World Trade Organization
• Established 1/1/95—legal and institutional
foundation of multilateral trading system
• Embodies results of Uruguay Round and successor
to GATT
– Replaces the organizational part of the GATT; the
GATT agreement still exists
• Headquartered in Geneva
• 153 nations are members (EU counts as one;
Tonga joined July 2007)
DOHA Round (current round)
• Began in 2001
• Suspended and then reinstated, broke down
in 2008; efforts still ongoing
• Issues of concern
– Agriculture
– Challenges for developing nations when it
comes to participating in trade
WTO Structure
• Ministerial conference—every 2 years
• General Council (also meets as dispute settlement
body and trade policy review body)—made up of
ambassadors and heads of delegations
• Councils for Trade in Goods, Trade in Services,
and trade-related aspects of intellectual property
• Specialized committees and working groups
• Secretariat: located in Geneva, headed by director
general and four deputies
WTO voting
• One country, one vote
• Interpretation of trade agreements, ¾
majority required
• Waiver of an obligation on a particular
country, ¾ majority
• Amend provisions of the agreements, all
members in most cases
• Admit new member, 2/3 majority
WTO functions
•
•
•
•
•
Administer trade agreements
Forum for trade negotiations
Settle trade dispute
Review national trade policies
Assist developing nations in trade policy issues
through technical assistance and training
• Cooperate with other international organizations
WTO dispute settlement
• The whole process can take 1 year and 3 months if
there is an appeal
• Preliminary step: preparation of materials by both
sides
• First stage: consultation (60 days); countries talk
to one another first to try to settle dispute
More on WTO dispute process
• Second stage: panel (up to 45 days to be appointed and 6
months to meet)
–
–
–
–
–
–
First hearing; the cases are made
Rebuttal at second meeting (may include expert witnesses)
First draft report to the two sides
Interim report
Review
Final report to the two sides and then to WTO—determine how to
conform with WTO rules
– Report becomes a ruling by the Dispute Settlement Body
• Appeal to the Appellate Body
– Compensation or trade sanctions for the loser
General Agreement on Trade in
Services
• Framework agreement (29 articles and 8
annexes) and schedules of specific
commitments and lists of exemptions to
MFN treatment
– Telecom one of the annexes
• Broadly follows tradition of the GATT by
emphasizing nondiscrimination
More on GATS
• Covers four modes of international delivery
of services
– Cross border (telephone calls for example)
– Consumption abroad (tourism)
– Commercial presence (through bank or
subsidiary)
– Presence of natural persons (entry and
temporary stay of individuals in order to
provide a service)
More on GATS
• Allows exemptions to MFN (time-bound)
• Adopts a “positive list” approach—only the
industries and activities scheduled in the
commitments are subject to GATS
obligations
• Obligations include transparency, market
access, national treatment
Telecom Annex
• Section 1 objective
• Section 2 scope—does not apply to broadcast or cable
• Section 3 definitions—telecommunications means telephone,
telegraphy, telex, and data transmission involved in real time
transmission of customer provided information with no change
in form or content
• Section 4 transparency
• Section 5 access to and use of public telecom (includes
safeguard language)
• Section 6 technical cooperation with developing nations
• Section 7 relations to international organizations and
agreements
Section 5 of Telecom Annex
• Access to and use of Public
Telecommunications
– 5.1: access on reasonable and nondiscriminatory manner
– 5.2: pricing should be cost-based
– 5.3 allow purchase of leased lines and
connection to the PSTN
– 5.4: allow use of public transport networks to
move information within and across borders
More on section 5
– 5.5: may take measures to ensure security and confidentiality of
messages, but cannot apply such measures in any way that would
impede trade in services
– 5.6: no conditions imposed other than to safeguard the network
and to assure network use only by those parties permitted by trade
commitment to do so
– 5.7: pursuant to 5.6 above, can restrict resale, require use of
specific protocols, require interoperability, require type approval of
CPE, restrict interconnection of private lines, require notification
and licensing
– 5.8: developing nation may place conditions on access in order to
strengthen its domestic infrastructure and increase its participation
in international trade in services
Progress
• By end of Uruguay Round (April 1994) only
concessions in value-added services
• Creation of Negotiating Group on Basic
Telecommunications (NGBT), deadline of April
1996
• Creation of Group on Basic Telecommunications
(GBT), deadline of February 1997—69 WTO
members tabled commitments—formally binding
on February 6, 1998
Areas covered by the
negotiations
•
•
•
•
•
•
Voice telephony
Packet-switched data
Circuit-switched data
Telex and telegraph and facsimile
Private leased circuit services
Other
–
–
–
–
–
–
Analog and digital cellular
Mobile data and Paging
PCS
VSAT services
Teleconferencing
Gateway earthstation services
GBT Reference Paper
• Competitive safeguards
– Prevent anti-competitive activities like cross
subsidization, using information from competitors for
anti-competitive means, withholding technical
information from other service suppliers
• Interconnection
– To be provided under non-discriminatory terms, in a
timely fashion, on reasonable terms, upon request, at
various points in the network
– Procedures for negotiations should be available,
interconnection arrangements should be transparent,
dispute resolution by independent body.
More on the GBT Reference
Paper Provisions
• Universal service obligations
– Not anti-competitive per se, but should be
competitively neutral and not burdensome
• Transparency of licensing criteria
– Licensing criteria and terms of individual licenses,
should be made public; reasons for denial should be
provided
• Independent regulator
• Allocation and use of scarce resources
– Should be carried out in an objective, timely, nondiscriminatory manner.