Transcript World Trade Organization Econ 490 Flora Lugo & Carlos Rivas

World Trade Organization
Econ 490
Flora Lugo & Carlos Rivas
Formation
• WTO replaced GATT in 1995
- one nation, one vote (like GATT)
• GATT-General Agreement on Tariffs and Trade
– Formed in 1947
– Came out of the Bretton Woods conference
– Part of three organizations that became part of
framework to help manage the postwar global
economy (along with IMF, World Bank)
– An informal trade organization
GATT
A.
Principles
1.
2.
3.
4.
Trade Liberalization
•
Liberalization
1. liberal view
- free market
- limited government
- more optimistic about state cooperation
- trade is a positive sum game
•
Increase trade
- reduce tariffs
Nondiscrimination
•
Most Favored Nation
- A trade advantage given to one GATT member must be extended to every other
GATT member
•
National Treatment
- A member must treat foreign products at least as favorably as domestic
products (i.e. taxes, regulations)
Reciprocity
•
A state benefiting from another state’s trade concessions should provide roughly
equal benefits in return
Safeguards and Contingent Measures
•
Limit of imports that may cause harm to a state’s industry or economy
Safeguards and Contingent Trade Measures
Safeguards
Temporary
Import Surges
BOP problems
Infant Industries
Permanent
General Exceptions
National Security
Tariff Renegotiations
Contingent Trade
Measures
Anti-dumping duties
(ADDs)
Countervailing duties
(CVDs)
Rounds of GATT and WTO Negotiations
Name
Years
Subjects Covered
Geneva
1947
Tariffs
Countries
Participating
23
Annecy
1949
Tariffs
13
Torquay
1951
Tariffs
38
Geneva
1956
Tariffs
26
Dillon
1960-1961
Tariffs
26
Kennedy
1964-1967
Tariffs and antidumping measures
62
Tokyo
1973-1979
Tariffs, nontariff measures, plurilateral
agreements
102
Uruguay
1986-1993
Tariffs, nontariff measures, rules,
services, intellectual property, dispute
settlement, trade-related investment,
textiles, agriculture, creation of WTO
123
Doha (WTO)
1999-
Agriculture, services, tariffs, nontariff
measures, intellectual property, dispute
settlement
149
GATT in Jeopardy
• Non-Tariff Barriers
-not covered in GATT rules
• Agriculture had been an exception to restrictions on
import quotas and export subsidies
• Agriculture and Textiles mostly excluded from regulations
• Easy to circumvent regulations (VER)
• Dispute Settlement procedures weak
• U.S. and other Developed Countries (DCs) wanted
scope to go beyond trade in goods to trade in services,
intellectual property and investment
• Most Less Developed Countries (LDCs) did not agree to
negotiations in the Tokyo Round
WTO Replaces GATT
• Formal, legally constituted organization
• Oversees trade treaties negotiated in the Uruguay
Round: GATS, TRIPS, TRIMS along with GATT
• Meets at least every 2 years
• Dispute settlements (DS) more binding and timely:
member states use DS process more then with GATT
• Greater effort to integrate LDCs and transition
economies
• More involvement with Non governmental Organizations
and civil society groups
1995
Disputes
• What causes a dispute?
– When a member country of the WTO believes another
member country is violating an agreement or a
commitment that has been set within the WTO.
• Agreements are those negotiated under the Rounds of
GATT/ WTO
• How is it resolved?
– The Dispute Settlement Body composed of member
governments (all WTO members) work together to set
an agreement.
Dispute Settlement Process
Steps (& Lengths) of Settlement
1. Consultation (60 days)
2. The Panel (45 days / 6 months)
3. Final Report (3 weeks)
4. Report becomes a Ruling (60 days)
Either side can appeal a panel’s ruling.
5. Appeals Report (60-90 days)
6. Appeals Report becomes a Ruling (30
days)
Disputes (Examples)
• Valenzuela – Import Licensing Measures
on Certain Agricultural Products
– Complainant: United States
– Respondent: Valenzuela
• Mexico – Tax Measures on Soft Drinks
and Other Beverages
– Complainant: United States
– Respondent: Mexico
Disputes (cont…)
• The dispute settlement agreement
stresses that “prompt compliance with
recommendations or rulings of the Dispute
Settlement Body is essential in order to
ensure effective resolution of disputes to
the benefit of all Members”.
• Outstanding cases: Some cases have
remained in the consultation phase since
1995.
Doha Round UnResolved
• LDCs:
- want Special and Differentiated Treatment monitored and
enforced
- G-20 of LDCs (Brazil, China, India) call for end of EU and U.S.
agricultural export subsidies
- North promised technical assistance not enough
• DCs:
- want LDCs reduce barriers to nonagricultural imports
- strengthen and extend agreements for services trade and
intellectual property trade
-Major DCs ( ex.EU and Japan) want to expand WTO to new
areas: government procurement, trade facilitation, competition
policy
• Fast Track Authority expired 2007
WTOs Future
• G-7: even with one nation one vote system
LDcs have less influence
• Increase in Regional Trade Agreements
• Doha Round unresolved
• Global Recession and Protectionism
References
• www.wto.org
• Cohn, A. (2008). Global Political Economy. (pp.
195-227). Pearson Education, Inc.
• http://www.wto.org/english/thewto_e/what
is_e/whatis_e.htm
• http://www.wto.org/english/tratop_e/dispu
_e/dispu_e.htm
• http://events.streamlogics.com/wto/2004/
html/001.html