Transcript CHAPTER I INTRODUCTION Classical Theories of International

CHAPTER XXV
INTERNATIONAL ORGANIZATIONS
 General Agreement on Tariffs and Trade
(GATT)
 World Trade Organization (WTO)
 International Chamber of Commerce (ICC)
 Organization for Economic Cooperation
and Development (OECD)
 Wassenaar Arrangement on Export
Controls
 G-7
 G-20
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General Agreement on Tariffs &
Trade (GATT)
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Signed by 23 nations after World War II on
October 30, 1947 and took effect on June 30,1948
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An interim measure to form Int’l Trade
Organization (ITO)
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Final leg of a triad after IMF & IBRD (World Bank)
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U.S. failed to ratify in 1950 & effectively killed ITO
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To promote economic growth and development
by liberalizing world trade through elimination or
reduction of import tariffs and non-tariff barriers
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General Agreement on Tariffs &
Trade (GATT)
 In order to belong to GATT
(1) Members were required to reduce tariffs and
drop barriers
(2) Had to adhere to Most Favored Nation (MFN)
clause:
• If a country gives a tariff reduction to
another country, it should grant the same
concession to all other member nations on
a non-discriminatory basis
 Provided basic set of rules by which trade
negotiations took place and a mechanism for
monitoring the implementation of these rules
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General Agreement on Tariffs &
Trade (GATT)
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GATT-sponsored trade rounds (or simply
rounds): Multilateral Trade Negotiations
 1st , 1947, Tariffs, 23 countries
 2nd, 1949, Tariffs, 13 countries
 3rd, 1951, Tariffs, 38 countries
 4th, 1956, Tariffs, 26 countries
 5th, 1960-61, Dillon Round, Tariffs, 26
countries. First time used ‘Round”
 6th, 1964-67, Kennedy Round, Tariffs &
Anti-dumping measures, 62 countries
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General Agreement on Tariffs &
Trade (GATT)
 7th, 1973-1977, Tokyo Round, Tariffs &
Non-tariffs measures, 102 countries
• Reduced the average tariff on industrial
products by one-third to 4.7%
• 8th, 1986-1994, Uruguay Round, 123
countries
• Launched in September 1986, in Punta del Este,
Uruguay & concluded on Dec.15,1993. But a
few more weeks for final touches on market
access. Took 7 and a half years
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General Agreement on Tariffs &
Trade (GATT)
 Uruguay Round (continued):
• Signed by 123 nations on April 15, 1994 in
Marrakesh, Morocco
• Created Word Trade Organization (WTO)
• Key new areas of agreement
a. Services
b.Government procurement policies
c. Intellectual property rights-Patents,
Trademarks, Copyrights
d.Textiles
e. Agriculture
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World Trade Organization
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WTO began its operation on January 1, 1995 as a
result of the Uruguay Round and replaced the old
GATT (GATT 1947).
GATT became one of many WTO Agreements
(GATT 1994)
China joined WTO on 12/11/2001 and Taiwan
(Chinese Taipei) on 1/1/2002.
Russia joined on Aug. 22, 2012
159 members as of Mar. 2, 2013 with Tajikistan
Governing body of multilateral trading system
Platform for trade dispute settlements
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World Trade Organization
 Objectives
 To help world trade flow as smoothly, freely,
fairly, and predictably as possible by
• Reduction of tariffs
• Reduction of non-tariff barriers
• Elimination of discriminatory treatment
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WTO Agreements
Final Act of the 1986-1994 Uruguay Round of
trade negotiations
 Agreement on Goods: General
Agreement on Tariffs and Trade (GATT)
 Agreement on Services: General
Agreement on Trade in Services (GATS)
 Agreement on Intellectual Property:
Agreement on Trade-Related Aspects of
Intellectual Property Rights (TRIPS)
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WTO Agreements
 Agreement on Investment: Agreement on
Trade-Related Investment Measures
(TRIMS)
 Agreement on Textiles and Clothing
 Agreement on Agriculture
 Agreement on Government Procurement
 Agreement on Trade Policy Review
Mechanism
 Agreement on Dispute Settlement
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Agreement on Goods
 GATT (GA on Tariffs & Trade)
 WTO’s principal rule-book for trade in goods
 Council for Trade in Goods (Goods Council):
• Consists of all member countries
• Committees on
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Agriculture
Market Access for Goods
Sanitary and Phytosanitary Measures
Subsidies & Countervailing Measures
Anti-Dumping Practices
Customs Valuation
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Agreement on Goods
 GATT (GA on Tariffs & Trade) (cont.)
• Committees on (continued)
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Rules of Origin
Import Licensing
Investment
Safeguards
Information Technology Agreement
• Working Group (Party) on
– State-Trading Enterprises
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General Agreement on Services
 GATS (GA on Trade in Services)
• Banking, Insurance, Telecommunications,
Tourism, Hotel, Car Rental, Transportation, Etc.
• Principles of freer and fairer trade in services
• Members made individual commitments
(schedules) for market opening for service
sectors
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General Agreement on Services
 GATS (GA on Trade in Services) (cont.)
 Council for Trade in Services (Services
Council)
• Committees on
• Trade in Financial Services
• Specific Commitments
• Working Groups (Parties)
• Domestic Regulations
• GATS Rules
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Agreement on Intellectual Property
 TRIPs (Trade-Related Intellectual Property Rights)
 Rules for trade in ideas & creativity
 Applies to only trade-related intellectual
properties
 Protection of Intellectual Properties:
• Copyrights, Trademarks, Geographical
names used to identify products, Industrial
designs, integrated circuit layout designs,
trade secrets
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Agreement on Investment
 TRIMs (Trade-Related Investment Measures)
 Applies only to investment measures that
affect trade in goods.
 No discrimination against foreigners or foreign
products (violates “national treatment”
principles of GATT).
 No restrictions in quantities (violates
“prohibition of quantitative restrictions” of the
GATT)
 No requirement for particular levels of local
procurement by an enterprise (“local content
requirements”).
 No measures which limit a company’s imports
or set targets for the company to export
(“trade balancing requirements”)
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Agreement on Textiles & Clothing
(ATC)
 From 1974 to 1994: Under Multifiber
Agreement (MFA). Textile quota
 From 1995, Fully integrated into normal GATT
rules of WTO in 10 years
 January 1, 2005, ATC no longer exists. No
quota.
 Only WTO agreement that has self-destruction
built-in
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Agreement on Agriculture
 New Rules and Commitments: Requires
members to make more market-oriented
policies
 Market Access: Tariffs only or Tariffication
which is converting quota & other restrictions
to tariff
 Domestic Support: Domestic support that has
a direct effect on production and trade must be
cut back.
 Export Subsidies: Prohibits export subsidies
unless specified in a member’s lists of
commitment. Must cut both the amount of
subsidies and quantities that receive subsidies.
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Agreement on Agriculture
 Regulations for Animal and Plant Products:
• A separate agreement on food safety and
animal & plant health standards
• Allows countries to set their own standards
• Must be based on science (scientific
justification)
• Should not arbitrarily or unjustifiably
discriminate between countries
• Encouraged to use international standards,
guidelines and recommendations.
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Agreement on Government
Procurement
 To open up government procurements to
international competition.
– A "plurilateral" agreement, which applies only
WTO Members who have acceded to the
Agreement, but not all Members.
– Currently 40 WTO Members
 Members make laws, regulations, procedures
and practices regarding government
procurement more transparent
 Members do not protect domestic products or
suppliers, or discriminate against foreign
products or suppliers.
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Agreement on Government
Procurement
 Extends international competition to
procurement of national and local government
entities.
 Extends coverage to services (including
construction services), procurement at the
sub-central level (for example, states,
provinces, departments and prefectures), and
procurement by public utilities.
 Members required to put in place domestic
procedures by which aggrieved private bidders
can challenge procurement decisions and
obtain redress
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Agreement on Government
Procurement
 Applies to contracts worth more than specified
threshold values. In the USA,
• Central (Federal) government: 130,000 SDRs
for supplies & services
• Sub-central government (State): 355,000
SDRs for supplies & services
• All other entities: 400,000 SDRs for supplies
& services
• For construction contracts: 5 million SDRs
• Some services excluded: Transportation,
dredging, R & D, military support, etc.
• 1 SDR=US$1.58 as of May 23, 2011
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Agreement on Trade Policy Review
Mechanism (TPRM)
 To improve transparency
 To create a greater understanding
members’ trade policies
 To asses their impact
 Members must undergo periodic
scrutiny & review of their trade policy
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Agreement on Dispute Settlement
 Procedures for resolving trade disputes
 To enforce rules and ensure that trade flows
smoothly
 Dispute settlement is the central pillar of the
multilateral trading system.
 Based on clearly-defined rules with timetables
for completing a case
 Priority is to settle disputes through
consultations, if possible. About one-third of
cases have been settled at consultation stage
or still in consultations
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Agreement on Dispute Settlement
 Understanding on Rules and Procedures
Governing on the Settlement of Disputes
 Called Dispute Settlement Understanding (DSU)
 Member should not take unilateral action
against perceived violations of trade rules, but
seek resolution thru Multilateral dispute
settlement system, and abide by its rulings
and findings
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Agreement on Dispute Settlement
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Timetable: Target figures. Flexible
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60 days
45 days
6 mos.
3 weeks
60 days
Consultations, mediations
Panel setup and panelists appointed
Final panel report to dispute parties
Final panel report to WTO members
Dispute Settlement Body adopts report (if not
appealed)
Total 1 year without appeal
60-90 days Appeals report
30 days
Dispute Settlement Body adopts appeals
report
Total 1 year 3 months with appeals
In case of urgency like perishable goods, the panel
report deadline is shortened to 3 months from 6 months.
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Agreement on Dispute Settlement
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Dispute Settlement Body (DSB)
 General Council consisting of all WTO
members
 Settling disputes is the responsibility of the
DSB.
 If consultations among parties in dispute by
WTO Director-General fails, complaining
country can ask for a panel to be appointed.
 Panel is composed of 3 panelists unless
parties specially agree to have 5 panelists.
 Director-General suggests potential panelists
to disputing parties
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Agreement on Dispute Settlement
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Dispute Settlement Body
 If parties do not agree on panelists, DirectorGeneral appoints panelists.
 Panel’s final report can only be rejected by
consensus in the Dispute Settlement Body
(DSB). Almost always adopted unless
appealed.
 Therefore, panel’s final report becomes the
DSB’s ruling and recommendation unless
consensus rejects it.
 Both sides can appeal the panel’s final report.
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Agreement on Dispute Settlement
 Appeals
– Any appeal must be limited to issues of law
covered in the panel report and the legal
interpretation by the panel
– Each appeal is heard by 3 members of a
permanent 7-member Appellate Body set up by
the DSB. Members have 4-year terms.
– Appellate Body’s appeal reports are
unconditionally accepted by DSB unless
rejected with consensus including the
complainant country
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Agreement on Dispute Settlement
 Implementation of Rulings &
Recommendations of DSB
 Losing country is required to
– bring its policy into line with the rulings and
recommendations.
– enter into negotiations with complaining
country to determine mutually acceptable
compensation such as tariff reduction
 If not agreed, DSB must grant winning country
permission to apply limited trade sanctions such
as suspending concessions or imposing punitive
high tariffs
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Agreement on Dispute Settlement
 Filings of Dispute Settlements
– From Jan 1995 to June 2011: 424 cases
– 1st filing by Singapore against Malaysia on
Prohibition of Imports of Polyethylene and
Polypropylene on January 10, 1995 (Case
DS1).
– 25 cases in 1995
– Highest 50 cases in 1997
– Lowest 12 cases in 2005
– Trend is the less dispute filings as years pass,
thanks to better compliance by the WTO
member countries.
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Agreement on Dispute Settlement
 Filings of Dispute Settlements (Cont.)
 The United States was involved in 210 cases: 50%
disputes; 97 cases as Complainant and 113 cases
as Respondent (Defendant).
 The 1st complaint filed by the United States was
against South Korea’s Measures Concerning the
Testing and Inspection of Agricultural Products
on April 4, 1995 (Case No. DS3).
 The 1st complaint filed against the United States
was by Venezuela on Standards for Reformulated
and Conventional Gasoline on January 24, 1995
(Case No. DS2).
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WTO Key Principles
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Trade without discrimination:
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Predictable and growing access to
markets
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Most Favored Nation (MFN)
National treatment
Tariff reductions on goods
Binding national schedule for opening
services
Promotion of fair competition
 Sets rules on compensating duties against
dumping and foreign government subsidies
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WTO Key Principles
 Encouraging development & economic
reform of developing countries
 Industrial countries assist trade of developing
countries by conferring tariff preference
programs such as GSP
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WTO Main Functions
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Administering and implementing
multilateral trade agreements
Forum for multilateral trade negotiations
Resolving trade disputes
Monitoring national trade policies of
members
Providing technical assistance and
training to developing countries
Cooperating with other international
institutes
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WTO Structure
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Ministerial Conference: Highest authority. Meet
every two years
General Council: Ambassadors or heads of
delegation in Geneva. Meets as
 Trade Policy Review Body
 Dispute Settlement Body
Goods Council, Service Council and Intellectual
Property Council, and so on
Numerous specialized committees and working
groups
Secretariat: Day-to-day operations by DirectorGeneral, Four Deputy D.G.s, and 500 staff
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International Chamber of
Commerce (ICC)
 Over 120 member nations
 International Trade Rules issued by ICC
 Incoterms 2010
 Uniform Customs and Practices (UCP) for
Documentary Credit (2007 Revision), ICC
Publication No. 600
 Uniform Rules for Collections (ICC Publication
No. 522)
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Organization for Economic
Cooperation & Development (OECD)
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Most members are developed
countries: 34 Nations
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OECD’s member countries share a
commitment to the democratic
government and the market economy
Best known for its publications and its
statistics.
OECD’s work covers economic and social
issues from macroeconomics to trade,
education, development, science, and
innovation.
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Wassenaar Arrangement on Export
Controls for Conventional Arms and
Dual-Use Goods and Technology
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Adopted by 33 countries in 1996.
Replaced the Coordinating Committee on
Multilateral Export Control (COCOM)
which was suspended March 31, 1994
To restrict the export of conventional
weapons and sensitive dual-use goods
and technology to hostile nations
Current membership: 40 countries
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G-7/G-8
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Not an international organization, but a gathering
or a forum of the most developed countries
In 1975: G-6 consisting of France, Germany
(West) , Italy, Japan, the U.K. and the U.S.A. after
oil crisis in 1970s
In 1976, Canada joined & made it G-7
Finance ministers meet two or three times a year
Summit meeting of heads of government: Once a
year
Also called G-8 by adding Russia
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G-20 (Group of 20)
 Group of 20 Finance Ministers & Central
Bank Governors. Established in 1999 in the
wake of 1997 Asian Financial crisis
 Recently summit meetings of heads of states
have been introduced.
 90% of world GDP, 80% of world trade, and
two-thirds of the world population
 No secretariat or staff. Chair rotates annually,
2010 Korea, 2011 France
 Agreed to replace the G-8 at the 2009
summits meeting in Pittsburg
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G-20
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Argentina
Australia
Brazil
Canada
China
France
Germany
India
Indonesia
Italy
(Group of 20)
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Japan
Mexico
Russia
Saudi Arabia
South Africa
South Korea
Turkey
United Kingdom
United States
European Union
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