The WTO: Opportunities and Challenges

Dr. Abid Qaiyum Suleri

Outline

Brief Introduction to GATT/WTO Decision Making Process and Structure of WTO Developing Countries Experience with WTO Trading into Future

WTO Challenges and opportunities WTO Organization WTO Agreements IFIs Bilateral Agreements

Life is never Easy What to do if we are both?

Sometimes we are

Exporters

: look for reduced tariffs Sometimes we are

Net Importers

: We look for cheap prices

The interest and expectation level of 146 member states vary a lot and there is never a win-win situation for all

WTO Historical Context

•Post World War II era and need for economic revival •Bretton Woods Institutes (WB, IMF) •International Trade Organization •GATT

The World bank

•The World Bank was formed at the UN Monetary and Financial Conference held in Bretton Woods, N.H., in 1944. •Function: Lending money and funding projects in needy countries to alleviate poverty. Loans are conditioned on fundamental changes to the recipient country's economic and social policies. •World Bank President: American ) James Wolfensohn ( Always an

The World Bank

•The Bank's

five largest shareholders - Germany, Japan, UK & USA France, -- each appoint an executive director. The remaining represented by 19 175 member countries are executive directors. USA by virtue of its shares can veto any policy.

•The seven richest countries (Canada, France, Germany, Italy,

Japan, UK & USA), have 45 percent of the voting power .

The IMF

•

Established

1945 at Bretton Woods.

•The IMF was designed to stabilize international exchange rates and promote foreign exchange cooperation at a time when the gold standard was beginning to fail as a means of stabilizing currency values. •Eight executive directors China, France, Germany, Japan, Russia, Saudi Arabia, UK & USA.

The remaining 16 represent individual countries: executive directors represent groupings of the other 174 countries. Chairman always from EC

Asian Development Bank (nbw)

•

Total 61 members (43 regional, 19 non regional).

•

Japan and United States have 15.89 % shares, each. Both of them can block any initiative .

International Trade Organization

50 Countries floated the idea.

Among them 23 decided in 1946 to negotiate to reduce and bind customs tariffs. The first round of negotiation resulted in 45,000 tariff concessions affecting $10 billion of trade. The 23 also agreed to “provisionally” accept some of the trade rules of the draft ITO charter. The combined package of trade rules and tariff concessions was known as the General Agreement on Tariffs and Trade (GATT). GATT entered into force in January 1948.

US Congress refused to ratify ITO in 1950 ITO: Charter was agreed in Havana March 1948

ITO was effectively dead in 1950

What Next?

The GATT Trade Rounds

1947 1949 1951 1956

Geneva Annecy Torquay Geneva

Tariffs Tariffs Tariffs Tariffs 23 13 38 26 1960-61

Dillon Round

Tariffs

1964-67 Kennedy Round Tariffs and AD measures

26

62

1973-79

Tokyo Round

Tariffs, NT Measures, framework agreements 102 1986-94

Uruguay Round

Tfs, NTM, rules, services, IP, DS, textile, agriculture, creation of WTO 123

How WTO is different from GATT

GATT

•

Ad hoc/ provisional

with no provision for creation of Org. •Had

contracting parties

•Dealt with

trade in Goods

•GATT DSD

WTO

Agreements as well as organization are

Permanent.

has

members.

covers

services

and

IP

as well.

The

WTO dispute settlement system is faster, more automatic

than the old GATT system. Its rulings cannot be blocked.

WTO is an organization

Established : 1 January 1995 Membership : 146 countries (as of July 2003), 3/4 th membership comprises Developing countries (self elected) Functions countries : • Administering WTO trade agreements • Forum for trade negotiations • Handling trade disputes • Monitoring national trade policies • Technical assistance and training for developing • Cooperation with other international organizations

WTO principles

The WTO trading system would be without discrimination –

(MFN and National treatment to all);

freer –

with barriers coming down through negotiation;

predictable

– bound tariffs

more competitive

– by discouraging “unfair” practices such as export subsidies and dumping products at below cost to gain market share;

more beneficial for less developed countries

– by giving them more time to adjust, greater flexibility, and special privileges

In a nut shell

Three part broad outline of WTO Agreements

Goods------- GATT

Agriculture Industrial

Services---- GATS

 Movement of natural persons  Air transport  Financial services  Shipping  Telecommunications

IPRs------- Trade related Intellectual Property Rights

 Sanitary and Phytosanitary Measures (Health regulations for farm products)  Textile and clothing  Technical Barriers to Trade (Product Standards)  Investment measures (TRIMs)  Anti-dumping measures  Customs valuation methods  Pre-shipment inspection  Rules of origin  Import licensing  Subsidies and counter measures  Safeguards

Schedules of Commitments.

Disputes----- Dispute Settlement Basic Principle

Additional Annex Commitments

Goods Services IPRS Dispute Trade & Environment GATT GATS TRIPS

Industrial Agriculture SPS Textile and clothing TBT Anti Dumping

SINGAPORE ISSUES

Voting Principles in WTO

Voting Principle Primary aim No consensus Interpretation of agreements Amendment to agreements Propose amendments One member, one vote Consensus Majority vote ¾ in favor 2/3 in favor Countries and Councils

WTO Decision Making Process

•

Some members are more equal than others.

•

Lack of transparency in the multitude of talks held in small groups.

•

Being Present is important but not easy for all.

•

Alliance building.

•

Role of IFIs

WTO is run by member states: One Country one vote

WB IMF ADB

Rest of the World EC JAPAN Germany France USA

In WTO decisions are taken through consensus: USA, UK, Germany, France, and Japan know how to achieve it.

Development Box UPOV and Bangladesh Nepal’s Accession to WTO

Main Objections

WTO

•

Dictates Policies

•

For free trade at any cost?

•

Destroy jobs and worsen poverty

•

Small countries are powerless

•

Tool of powerful lobbies.

Developed countries are not fulfilling their commitments

WTO experience for developing countries

•Tariff Peaks (high import duties on certain products) remain •No gains yet from the supposed phasing-out of textiles quotas.

•Increase in non-tariff barriers (AD, SPS, TBT) •Continued high protection in Agriculture (USA- Sugar 244%, Peanuts 174%; Japan- Wheat 353%) up to 36% reduction? •Implementation Problems faced by developing countries.

WTO Ministerial Conferences

1 st Ministerial conference

Singapore 1996

2 nd 3 rd Ministerial conference

Geneva 1998

Ministerial conference

Seattle 1999

4 th 5 th Ministerial conference Ministerial conference

Doha 2001 Cancun 2003

WTO for Developing Countries

• Why developing countries such as Pakistan should be members of WTO?

– Alternative?

– Possible gains through theoretical principle of non discrimination – Member based, rule based organization.

• Developing countries role in WTO?

– More active involvement – Giving tough time to USA and EU – More cases in Dispute Settlement Body

Developing countries in DSB

Out of 22 Disputes, brought forward in year 2003 so far 7 against USA.

7 against EC & 1 against Australia 7 cases were brought forwarded by developing countries i.e., Argentina 1 Antigua Thailand Mexico 1 2 3 One case against Mexico was brought forwarded by USA .

Doha Agenda

Implementation

Negotiations on outstanding implementation issues shall be an integral part of the Work Program.

Deadline: by 1 January 2005, part of single undertaking.

Agriculture Services Market Access (Non-Agriculture) Anti-Dumping Subsidies Regional Agreements Environment Investment Competition Transparency in government procurement Trade Facilitation

Negotiations: after

5th Ministerial Conference, 2003

Mexico) “on the basis of a (in decision to be taken, by explicit consensus.

What does it entail for Pakistan after 2005?

•

WTO would not start implementing in 2005. It is already functional.

•

AOA

•

Agreement on Textiles and Clothing

•

Singapore Issues

•

Trade and Environment

What are the risk and opportunities at Cancun

Agriculture TRIPS GATS (Movement of natural person) Singapore Issues Trade and environment

Role of Legislatures in WTO Negotiations

1950 US Congress and ITO

•

We should debate our positions on various issues in parliament.

•

To avoid what happened after Doha, there must be standing committee on WTO, constituting all relevant ministers.

•

Official delegation to Cancun should include elected representatives as well.

•

Commerce Minister should brief NA about Pakistan’s position in Cancun after the Ministerial Conference

Let us start it from today

Please discuss our position for Cancun in the coming session of NA.