WTO

If you order your custom term paper from our custom writing service you will receive a perfectly written assignment on WTO. What we need from you is to provide us with your detailed paper instructions for our experienced writers to follow all of your specific writing requirements. Specify your order details, state the exact number of pages required and our custom writing professionals will deliver the best quality WTO paper right on time.

Out staff of freelance writers includes over 120 experts proficient in WTO, therefore you can rest assured that your assignment will be handled by only top rated specialists. Order your WTO paper at affordable prices with cheap essay writing service!



The WTO


Location Geneva, Switzerland


Established 1 January 15


Created by Uruguay Round negotiations (186�4)


Cheap Custom Essays on WTO




Membership 146 countries (as of April 00)


Budget 155 million Swiss francs for 00


Secretariat staff 560


Head Director-General, Supachai Panitchpakdi


Functions


• Administering WTO trade agreements


• Forum for trade negotiations


• Handling trade disputes


• Monitoring national trade policies


• Technical assistance and training for developing countries


• Cooperation with other international organizations























Understanding


the WTO




















rd edition


Previously published as “Trading into the Future”


August 00




















Fact file


The WTO





Location Geneva, Switzerland


Established 1 January 15


Created by Uruguay Round negotiations (186�4)


Membership 146 countries (on 4 April 00)


Budget 154 million Swiss francs for 00


Secretariat staff 550


Head Supachai Panitchpakdi (director-general)





Functions


• Administering WTO trade agreements


• Forum for trade negotiations


• Handling trade disputes


• Monitoring national trade policies


• Technical assistance and training for developing


countries


• Cooperation with other international organizations





















































Third edition


Previously published as “Trading into the Future”





Written and published by the


World Trade Organization


Information and Media Relations Division


� WTO 15, 000, 001, 00





An up-to-date version of this text also appears on the WTO website


(http//www.wto.org, click on “the WTO”), where it is


regularly updated to reflect developments in the WTO.





Contact the WTO Information Division


rue de Lausanne 154, CH�111 Genève 1, Switzerland


Tel (41�) 7 5007/510 Fax (41�) 7 5458


e-mail enquiries@wto.org





Contact WTO Publications


rue de Lausanne 154, CH�111 Genève 1, Switzerland


Tel (41�) 7 508/508 Fax (41�) 7 57


e-mail publications@wto.org





August 00 � 10 000 copies











Abbreviations


Some of the abbreviations and acronyms used in the WTO


ACP African, Caribbean and Pacific Group (Lom� Convention)


AD, A-D Anti-dumping measures


AFTA ASEAN Free Trade Area


AMS Aggregate measurement of support (agriculture)


APEC Asia-Pacific Economic Cooperation


ASEAN Association of Southeast Asian Nations


ATC Agreement on Textiles and Clothing


CBD Convention on Biological Diversity


CCC (former) Customs Co-operation Council (now WCO)


CER [Australia New Zealand] Closer Economic Relations


[Trade Agreement] (also ANCERTA)


COMESA Common Market for Eastern and Southern Africa


CTD Committee on Trade and Development


CTE Committee on Trade and Environment


CVD Countervailing duty (subsidies)


DDA Doha Development Agenda


DSB Dispute Settlement Body


DSU Dispute Settlement Understanding


EC European Communities


EFTA European Free Trade Association


EU European Union (officially European Communities in


WTO)


FAO Food and Agriculture Organization


GATS General Agreement on Trade in Services


GATT General Agreement on Tariffs and Trade


GSP Generalized System of Preferences


HS Harmonized Commodity Description and Coding System


ICITO Interim Commission for the International Trade


Organization


ILO International Labour Organization


IMF International Monetary Fund


ITC International Trade Centre


ITO International Trade Organization


MEA Multilateral environmental agreement


MERCOSUR Southern Common Market


MFA Multifibre Arrangement (replaced by ATC)


MFN Most-favoured-nation


MTN Multilateral trade negotiations


NAFTA North American Free Trade Agreement


PSE Producer subsidy equivalent (agriculture)


PSI Pre-shipment inspection


S&D Special and differential treatment ( for developing


countries)


SAARC South Asian Association for Regional Cooperation


SDR Special Drawing Rights (IMF)


SELA Latin American Economic System


SPS Sanitary and phytosanitary measures


TBT Technical barriers to trade


TMB Textiles Monitoring Body


TNC Trade Negotiations Committee


TPRB Trade Policy Review Body


TPRM Trade Policy Review Mechanism


TRIMs Trade-related investment measures


TRIPS Trade-related aspects of intellectual property rights


UN United Nations





4





UNCTAD UN Conference on Trade and Development


UNDP UN Development Programme


UNEP UN Environment Programme


UPOV International Union for the Protection of New Varieties of


Plants


UR Uruguay Round


VER Voluntary export restraint


VRA Voluntary restraint agreement


WCO World Customs Organization


WIPO World Intellectual Property Organization


WTO World Trade Organization


For a comprehensive list of abbreviations and glossary of terms used in international trade, see, for example


Walter Goode, Dictionary of Trade Policy Terms, 4th Edition, Cambridge University Press, 00.





This and many other publications on the WTO and trade are available from


WTO Publications, World Trade Organization, Centre William Rappard, Rue de Lausanne 154, CH�111 Geneva,


Switzerland.


Tel (+41�) 7 508 / 7 508. Fax (+41�) 7 57


e-mail publications@wto.org





ON THE WEBSITE


You can find more information on WTO activities and issues on the WTO website. The site is created around


“gateways” leading to various subjects � for example, the “trade topics” gateway or the “Doha Development


Agenda” gateway. Each gateway provides links to all material on its subject.


References in this text show you where to find the material. This is in the form of a path through gateways, starting


with one of the navigation links in the top right of the homepage or any other page on the site. For example, to find


material on the agriculture negotiations, you go through this series of gateways and links


www.wto.org trade topics goods agriculture agriculture negotiations


You can follow this path, either by clicking directly on the links, or via drop-down menus that will appear in most


browsers when you place your cursor over the “trade topics” link at the top of any web page on the site.








A word of caution the fine print


While every effort has been made to ensure the accuracy of the text in this booklet, it cannot be taken as an official legal


interpretation of the agreements.


In addition, some simplifications are used in order to keep the text simple and clear.


In particular, the words “country” and “nation” are frequently used to describe WTO members, whereas a few members are


officially “customs territories”, and not necessarily countries in the usual sense of the word (see list of members). The same


applies when participants in trade negotiations are called “countries” or “nations”.


Where there is little risk of misunderstanding, the word “member” is dropped from “member countries (nations,


governments)”, for example in the descriptions of the WTO agreements. Naturally, the agreements and commitments do not


apply to non-members.


In some parts of the text, GATT is described as an “international organization”. The phrase reflects GATT’s de facto role


before the WTO was created, and it is used simplistically here to help readers understand that role. As the text points out,


this role was always ad hoc, without a proper legal foundation. International law did not recognize GATT as an organization.


For simplicity, the text uses the term “GATT members”. Officially, since GATT was a treaty and not a legally-established


organization, GATT signatories were “contracting parties”.


And, for easier reading, article numbers in GATT and GATS have been translated from Roman numbers into European digits.








5





Contents





Chapter 1 .................................................................................. 7


Basics ....................................................................................... 7


1. What is the World Trade Organization? ..................................... 7


Is it a bird, is it a plane? .............................................................7


Born in 15, but not so young ....................................................8


. Principles of the trading system ...............................................


Trade without discrimination........................................................


Freer trade gradually, through negotiation ................................. 10


Predictability through binding and transparency .......................... 10


Promoting fair competition ........................................................ 11


Encouraging development and economic reform ........................... 11


. The case for open trade ........................................................ 1


4. The GATT years from Havana to Marrakesh............................ 14


GATT ‘provisional’ for almost half a century ................................ 14


The Tokyo Round a first try to reform the system........................ 15


Did GATT succeed?................................................................... 16


5. The Uruguay Round .............................................................. 18


A round to end all rounds?......................................................... 18


What happened to GATT? .......................................................... 1


The post-Uruguay Round built-in agenda..................................... 0


Chapter ................................................................................ 1


The agreements ...................................................................... 1


1. Overview a navigational guide .............................................. 1


Six-part broad outline............................................................... 1


Additional agreements ..............................................................


Further changes on the horizon, the Doha Agenda ........................


. Tariffs more bindings and closer to zero.................................


Tariff cuts ...............................................................................


More bindings..........................................................................


And agriculture ... .................................................................... 4


. Agriculture fairer markets for farmers.................................... 5


The Agriculture Agreement new rules and commitments .............. 5


The least-developed and those depending on food imports............. 8


4. Standards and safety ............................................................


Food, animal and plant products how safe is safe?.......................


Technical regulations and standards ........................................... 0


5. Textiles back in the mainstream............................................ 1


Integration returning products gradually to GATT rules ................ 1


6. Services rules for growth and investment...............................


GATS explained .......................................................................


Current work ........................................................................... 6


7. Intellectual property protection and enforcement ....................


Origins into the rule-based trade system....................................


Basic principles national treatment, MFN, and balanced protection. 40


How to protect intellectual property common ground-rules ........... 40


Enforcement tough but fair....................................................... 4


Technology transfer.................................................................. 4


Transition arrangements 1, 5 or 11 years or more ....................... 44


8. Anti-dumping, subsidies, safeguards contingencies, etc ........... 45


Anti-dumping actions................................................................ 45


Subsidies and countervailing measures ....................................... 46


Safeguards emergency protection from imports .......................... 48


. Non-tariff barriers red tape, etc ............................................ 50


Import licensing keeping procedures clear.................................. 50


Rules for the valuation of goods at customs ................................. 50


Preshipment inspection a further check on imports ...................... 51


Rules of origin made in ... where? ............................................. 51


Investment measures reducing trade distortions ......................... 5


10. Plurilaterals of minority interest .......................................... 5


Fair trade in civil aircraft ........................................................... 5


Government procurement opening up for competition .................. 5


Dairy and bovine meat agreements ended in 17 ...................... 54


11. Trade policy reviews ensuring transparency.......................... 55


Chapter ................................................................................ 56


Settling disputes ..................................................................... 56


1. A unique contribution............................................................ 56


Principles equitable, fast, effective, mutually acceptable............... 56


How are disputes settled? ......................................................... 57


Appeals .................................................................................. 58


The case has been decided what next? ...................................... 58


. The panel process ................................................................ 60


. Case study the timetable in practice ...................................... 61


Chapter 4 ................................................................................ 6


Cross-cutting and new issues.................................................. 6


1. Regionalism friends or rivals? ............................................... 64


Regional trading arrangements .................................................. 64


. The environment a new high profile....................................... 66


The committee broad-based responsibility.................................. 66





6





WTO and environmental agreements how are they related?.......... 66


Disputes where should they be handled?.................................... 67


A WTO dispute The ‘shrimp-turtle’ case...................................... 68


A GATT dispute The tuna-dolphin dispute ................................... 70


Eco-labelling good, if it doesn’t discriminate ............................... 71


Transparency information without too much paperwork................ 71


Domestically prohibited goods dangerous chemicals, etc .............. 7


Liberalization and sustainable development good for each other .... 7


Intellectual property, services some scope for study .................... 7


. Investment, competition, procurement, simpler procedures....... 7


Investment and competition what role for the WTO?.................... 7


Transparency in government purchases towards multilateral rules. 74


Trade facilitation a new high profile ........................................... 74


4. Electronic commerce............................................................. 75


5. Labour standards highly controversial.................................... 76


Trade and labour rights deferred to the ILO................................ 76


Chapter 5 ................................................................................ 77


The Doha agenda .................................................................... 77


Implementation-related issues and concerns (par 1) ................... 77


Agriculture (par 1, 14) ........................................................... 80


Services (par 15) ..................................................................... 81


Market access for non-agricultural products (par 16)..................... 8


Trade-related aspects of intellectual property rights (TRIPS)


(pars 17�1) ........................................................................... 8


Relationship between trade and investment (pars 0�).............. 84


Interaction between trade and competition policy (pars �5)...... 85


Transparency in government procurement (par 6) ...................... 85


Trade facilitation (par 7) ......................................................... 86


WTO rules anti-dumping and subsidies (par 8) .......................... 86


WTO rules regional trade agreements (par ) ........................... 87


Dispute Settlement Understanding (par 0) ................................. 87


Trade and environment (pars 1�).......................................... 88


Electronic commerce (par 4) .................................................... 8


Small economies (par 5) ......................................................... 0


Trade, debt and finance (par 6)................................................ 0


Trade and technology transfer (par 7) ....................................... 0


Technical cooperation and capacity building (pars 8�41).............. 0


Least-developed countries (pars 4, 4) ..................................... 1


Special and differential treatment (par 44) ..................................


Chapter 6 ................................................................................


Developing countries ..............................................................


1. Overview.............................................................................


In the agreements more time, better terms................................


Legal assistance a Secretariat service........................................ 4


Least-developed countries special focus ..................................... 4


A ‘maison’ in Geneva being present is important,


but not easy for all ................................................................... 4


. Committees ......................................................................... 6


Trade and Development Committee............................................ 6


Subcommittee on Least-Developed Countries............................... 6


The Doha agenda committees.................................................... 6


. WTO technical cooperation .................................................... 7


Training, seminars and workshops.............................................. 7


4. Some issues raised............................................................... 8


Participation in the system opportunities and concerns................. 8


Erosion of preferences ..............................................................


The ability to adapt the supply-side...........................................


Chapter 7 .............................................................................. 100


The Organization................................................................... 100


1. Whose WTO is it anyway?.................................................... 100


Highest authority the Ministerial Conference............................. 100


Second level General Council in three guises ............................ 101


Third level councils for each broad area of trade, and more ........ 10


Fourth level down to the nitty-gritty ........................................ 10


‘HODs’ and other bods the need for informality ......................... 10


. Membership, alliances and bureaucracy................................. 105


How to join the WTO the accession process .............................. 105


Representing us ... ................................................................. 106


Representing groups of countries ... ......................................... 106


The WTO Secretariat and budget.............................................. 107


. The Secretariat .................................................................. 108


4. Special policies................................................................... 10


Assisting developing and transition economies ........................... 10


Specialized help for exporting the International Trade Centre...... 10


The WTO in global economic policy-making................................ 110


Transparency (1) keeping the WTO informed ............................ 110


Transparency () keeping the public informed .......................... 110


List of Members ..................................................................... 11











7


Chapter 1


Basics


The WTO was born out of negotiations;


everything the WTO does is the result of


negotiations





1. What is the World Trade Organization?


Simply put the World Trade Organization (WTO) deals with the


rules of trade between nations at a global or near-global level. But


there is more to it than that.


Is it a bird, is it a plane?


There are a number of ways of looking at the WTO. It’s an


organization for liberalizing trade. It’s a forum for governments to


negotiate trade agreements. It’s a place for them to settle trade


disputes. It operates a system of trade rules. (But it’s not


Superman, just in case anyone thought it could solve � or cause �


all the world’s problems!)


Above all, it’s a negotiating forum … Essentially, the WTO is


a place where member governments go, to try to sort out the trade


problems they face with each other. The first step is to talk. The


WTO was born out of negotiations, and everything the WTO does is


the result of negotiations. The bulk of the WTO’s current work


comes from the 186�4 negotiations called the Uruguay Round


and earlier negotiations under the General Agreement on Tariffs and


Trade (GATT). The WTO is currently the host to new negotiations,


under the “Doha Development Agenda” launched in 001.


Where countries have faced trade barriers and wanted them


lowered, the negotiations have helped to liberalize trade. But the


WTO is not just about liberalizing trade, and in some circumstances


its rules support maintaining trade barriers � for example to protect


consumers or prevent the spread of disease.


It’s a set of rules … At its heart are the WTO agreements,


negotiated and signed by the bulk of the world’s trading nations.


These documents provide the legal ground-rules for international


commerce. They are essentially contracts, binding governments to


keep their trade policies within agreed limits. Although negotiated


and signed by governments, the goal is to help producers of goods


and services, exporters, and importers conduct their business, while


allowing governments to meet social and environmental objectives.


The system’s overriding purpose is to help trade flow as freely as


possible � so long as there are no undesirable side-effects. That


partly means removing obstacles. It also means ensuring that


individuals, companies and governments know what the trade rules


are around the world, and giving them the confidence that there will


be no sudden changes of policy. In other words, the rules have to


be “transparent” and predictable.


‘Multilateral’ trading system ...


... i.e. the system operated by the WTO.


Most nations � including almost all the


main trading nations � are members of


the system. But some are not, so


“multilateral” is used to describe the


system instead of “global” or “world”.


In WTO affairs, “multilateral” also


contrasts with actions taken regionally or


by other smaller groups of countries.


(This is different from the word’s use in


other areas of international relations


where, for example, a “multilateral”


security arrangement can be regional.)


... OR IS IT A TABLE?


Participants in a recent radio


discussion on the WTO were full of


ideas. The WTO should do this, the


WTO should do that, they said.


One of them finally interjected


“Wait a minute. The WTO is a table.


People sit round the table and


negotiate. What do you expect the


table to do?”





8


And it helps to settle disputes … This is a third important side


to the WTO’s work. Trade relations often involve conflicting


interests. Agreements, including those painstakingly negotiated in


the WTO system, often need interpreting. The most harmonious way


to settle these differences is through some neutral procedure based


on an agreed legal foundation. That is the purpose behind the


dispute settlement process written into the WTO agreements.


Born in 15, but not so young


The WTO began life on 1 January 15, but its trading system is


half a century older. Since 148, the General Agreement on Tariffs


and Trade (GATT) had provided the rules for the system. (The


second WTO ministerial meeting, held in Geneva in May 18,


included a celebration of the 50th anniversary of the system.)


It did not take long for the General Agreement to give birth to an


unofficial, de facto international organization, also known informally


as GATT. Over the years GATT evolved through several rounds of


negotiations.


The last and largest GATT round, was the Uruguay Round which


lasted from 186 to 14 and led to the WTO’s creation. Whereas


GATT had mainly dealt with trade in goods, the WTO and its


agreements now cover trade in services, and in traded inventions,


creations and designs (intellectual property).











. Principles of the trading system


The WTO agreements are lengthy and complex because they are


legal texts covering a wide range of activities. They deal with


agriculture, textiles and clothing, banking, telecommunications,


government purchases, industrial standards and product safety,


food sanitation regulations, intellectual property, and much more.


But a number of simple, fundamental principles run throughout all


of these documents. These principles are the foundation of the


multilateral trading system.


A closer look at these principles


Trade without discrimination


1. Most-favoured-nation (MFN) treating other people


equally Under the WTO agreements, countries cannot normally


discriminate between their trading partners. Grant someone a


special favour (such as a lower customs duty rate for one of their


products) and you have to do the same for all other WTO members.


This principle is known as most-favoured-nation (MFN) treatment


(see box). It is so important that it is the first article of the General


Agreement on Tariffs and Trade (GATT), which governs trade in


goods. MFN is also a priority in the General Agreement on Trade in


Services (GATS) (Article ) and the Agreement on Trade-Related


Aspects of Intellectual Property Rights (TRIPS) (Article 4), although


in each agreement the principle is handled slightly differently.


Together, those three agreements cover all three main areas of


trade handled by the WTO.


Some exceptions are allowed. For example, countries can set up a


free trade agreement that applies only to goods traded within the


group �discriminating against goods from outside. Or they can give


developing countries special access to their markets. Or a country


can raise barriers against products that are considered to be traded


unfairly from specific countries. And in services, countries are


allowed, in limited circumstances, to discriminate. But the


agreements only permit these exceptions under strict conditions. In


general, MFN means that every time a country lowers a trade barrier or


opens up a market, it has to do so for the same goods or services from


all its trading partners � whether rich or poor, weak or strong.





. National treatment Treating foreigners and locals


equally Imported and locally-produced goods should be treated


equally � at least after the foreign goods have entered the market.


The same should apply to foreign and domestic services, and to


foreign and local trademarks, copyrights and patents. This principle


of “national treatment” (giving others the same treatment as one’s


own nationals) is also found in all the three main WTO agreements


(Article of GATT, Article 17 of GATS and Article of TRIPS),


although once again the principle is handled slightly differently in


each of these.


National treatment only applies once a product, service or item of


intellectual property has entered the market. Therefore, charging


customs duty on an import is not a violation of national treatment


even if locally-produced products are not charged an equivalent tax.


Why ‘most-favoured’?


This sounds like a contradiction. It


suggests special treatment, but in the


WTO it actually means non-discrimination


� treating virtually everyone equally.


This is what happens. Each member


treats all the other members equally as


“most-favoured” trading partners. If a


country improves the benefits that it


gives to one trading partner, it has to


give the same “best” treatment to all the


other WTO members so that they all


remain “most-favoured”.


Most-favoured nation (MFN) status did


not always mean equal treatment. The


first bilateral MFN treaties set up


exclusive clubs among a country’s “most-


favoured” trading partners. Under GATT


and now the WTO, the MFN club is no


longer exclusive. The MFN principle


ensures that each country treats its over-


140 fellow-members equally.


But there are some exceptions ...


The principles


The trading system should be ...


• without discrimination � a country


should not discriminate between its


trading partners (giving them equally


“most-favoured-nation” or MFN status);


and it should not discriminate between its


own and foreign products, services or


nationals (giving them “national


treatment”);


• freer � barriers coming down through


negotiation;


• predictable � foreign companies,


investors and governments should be


confident that trade barriers (including


tariffs and non-tariff barriers) should not


be raised arbitrarily; tariff rates and


market-opening commitments are


“bound” in the WTO;


• more competitive � discouraging


“unfair” practices such as export


subsidies and dumping products at below


cost to gain market share;


• more beneficial for less developed


countries � giving them more time to


adjust, greater flexibility, and special


privileges.





10


Freer trade gradually, through negotiation


Lowering trade barriers is one of the most obvious means of


encouraging trade. The barriers concerned include customs duties


(or tariffs) and measures such as import bans or quotas that restrict


quantities selectively. From time to time other issues such as red


tape and exchange rate policies have also been discussed.


Since GATT’s creation in 147�48 there have been eight rounds of


trade negotiations. A ninth round, under the Doha Development


Agenda, is now underway. At first these focused on lowering tariffs


(customs duties) on imported goods. As a result of the negotiations,


by the mid-10s industrial countries’ tariff rates on industrial goods


had fallen steadily to less than 4%.


But by the 180s, the negotiations had expanded to cover non-tariff


barriers on goods, and to the new areas such as services and


intellectual property.


Opening markets can be beneficial, but it also requires adjustment.


The WTO agreements allow countries to introduce changes


gradually, through “progressive liberalization”. Developing countries


are usually given longer to fulfil their obligations.


Predictability through binding and transparency


Sometimes, promising not to raise a trade barrier can be as


important as lowering one, because the promise gives businesses a


clearer view of their future opportunities. With stability and


predictability, investment is encouraged, jobs are created and


consumers can fully enjoy the benefits of competition � choice and


lower prices. The multilateral trading system is an attempt by


governments to make the business environment stable and


predictable.


In the WTO, when countries agree to open their markets for goods


or services, they “bind” their commitments. For goods, these


bindings amount to ceilings on customs tariff rates. Sometimes


countries tax imports at rates that are lower than the bound rates.


Frequently this is the case in developing countries. In developed


countries the rates actually charged and the bound rates tend to be


the same.


A country can change its bindings, but only after negotiating with its


trading partners, which could mean compensating them for loss of


trade. One of the achievements of the Uruguay Round of


multilateral trade talks was to increase the amount of trade under


binding commitments (see table). In agriculture, 100% of products


now have bound tariffs. The result of all this a substantially higher


degree of market security for traders and investors.


The system tries to improve predictability and stability in other ways


as well. One way is to discourage the use of quotas and other


measures used to set limits on quantities of imports �


administering quotas can lead to more red-tape and accusations of


unfair play. Another is to make countries’ trade rules as clear and


public (“transparent”) as possible. Many WTO agreements require


governments to disclose their policies and practices publicly within


the country or by notifying the WTO. The regular surveillance of





11


national trade policies through the Trade Policy Review Mechanism


provides a further means of encouraging transparency both


domestically and at the multilateral level.


Promoting fair competition


The WTO is sometimes described as a “free trade” institution, but


that is not entirely accurate. The system does allow tariffs and, in


limited circumstances, other forms of protection. More accurately, it


is a system of rules dedicated to open, fair and undistorted


competition.


The rules on non-discrimination � MFN and national treatment �


are designed to secure fair conditions of trade. So too are those on


dumping (exporting at below cost to gain market share) and


subsidies. The issues are complex, and the rules try to establish


what is fair or unfair, and how governments can respond, in


particular by charging additional import duties calculated to


compensate for damage caused by unfair trade.


Many of the other WTO agreements aim to support fair competition


in agriculture, intellectual property, services, for example. The


agreement on government procurement (a “plurilateral” agreement


because it is signed by only a few WTO members) extends


competition rules to purchases by thousands of government entities


in many countries. And so on.


Encouraging development and economic reform


The WTO system contributes to development. On the other hand,


developing countries need flexibility in the time they take to


implement the system’s agreements. And the agreements


themselves inherit the earlier provisions of GATT that allow for


special assistance and trade concessions for developing countries.


Over three quarters of WTO members are developing countries and


countries in transition to market economies. During the seven and a


half years of the Uruguay Round, over 60 of these countries


implemented trade liberalization programmes autonomously. At the


same time, developing countries and transition economies were


much more active and influential in the Uruguay Round negotiations


than in any previous round, and they are even more so in the


current Doha Development Agenda.


At the end of the Uruguay Round, developing countries were


prepared to take on most of the obligations that are required of


developed countries. But the agreements did give them transition


periods to adjust to the more unfamiliar and, perhaps, difficult WTO


provisions � particularly so for the poorest, “least-developed”


countries. A ministerial decision adopted at the end of the round


says better-off countries should accelerate implementing market


access commitments on goods exported by the least-developed


countries, and it seeks increased technical assistance for them.


More recently, developed countries have started to allow duty-free


and quota-free imports for almost all products from least-developed


countries. On all of this, the WTO and its members are still going


through a learning process. The current Doha Development Agenda


includes developing countries’ concerns about the difficulties they


face in implementing the Uruguay Round agreements.


The Uruguay Round


increased bindings


Percentages of tariffs bound before and


after the 186�4 talks


Before After


Developed countries 78


Developing countries 1 7


Transition economies 7 8


(These are tariff lines, so percentages are


not weighted according to trade volume


or value)





1


. The case for open trade


The economic case for an open trading system based on


multilaterally agreed rules is simple enough and rests largely on


commercial common sense. But it is also supported by evidence


the experience of world trade and economic growth since the


Second World War. Tariffs on industrial products have fallen steeply


and now average less than 5% in industrial countries. During the


first 5 years after the war, world economic growth averaged about


5% per year, a high rate that was partly the result of lower trade


barriers. World trade grew even faster, averaging about 8% during


the period.


The data show a definite statistical link between freer trade and


economic growth. Economic theory points to strong reasons for the


link. All countries, including the poorest, have assets � human,


industrial, natural, financial � which they can employ to produce


goods and services for their domestic markets or to compete


overseas. Economics tells us that we can benefit when these goods


and services are traded. Simply put, the principle of “comparative


advantage” says that countries prosper first by taking advantage of


their assets in order to concentrate on what they can produce best,


and then by trading these products for products that other countries


produce best.


In other words, liberal trade policies � policies that allow the


unrestricted flow of goods and services � sharpen competition,


motivate innovation and breed success. They multiply the rewards


that result from producing the best products, with the best design,


at the best price.


But success in trade is not static. The ability to compete well in


particular products can shift from company to company when the


market changes or new technologies make cheaper and better


products possible. Producers are encouraged to adapt gradually and


in a relatively painless way. They can focus on new products, find a


new “niche” in their current area or expand into new areas.


Experience shows that competitiveness can also shift between whole


countries. A country that may have enjoyed an advantage because


of lower labour costs or because it had good supplies of some


natural resources, could also become uncompetitive in some goods


or services as its economy develops. However, with the stimulus of


an open economy, the country can move on to become competitive


in some other goods or services. This is normally a gradual process.


Nevertheless, the temptation to ward off the challenge of


competitive imports is always present. And richer governments are


more likely to yield to the siren call of protectionism, for short term


political gain � through subsidies, complicated red tape, and hiding


behind legitimate policy objectives such as environmental


preservation or consumer protection as an excuse to protect


producers.


Protection ultimately leads to bloated, inefficient producers


supplying consumers with outdated, unattractive products. In the


end, factories close and jobs are lost despite the protection and


subsidies. If other governments around the world pursue the same


policies, markets contract and world economic activity is reduced.


One of the objectives that governments bring to WTO negotiations


is to prevent such a self-defeating and destructive drift into


protectionism.


MORE ON THE WEBSITE


www.wto.org resources WTO research and analysis


TRUE AND NON-TRIVIAL?


Nobel laureate Paul Samuelson was


once challenged by the


mathematician Stanislaw Ulam to


“name me one proposition in all of


the social sciences which is both true


and non-trivial.”


It took Samuelson several years to


find the answer � comparative


advantage.


“That it is logically true need not be


argued before a mathematician; that


it is not trivial is attested by the


thousands of important and


intelligent men who have never been


able to grasp the doctrine for


themselves or to believe it after it


was explained to them.”


World trade and production have


accelerated


Both trade and GDP fell in the late 10s,


before bottoming out in 1. After


World War II, both have risen


exponentially, most of the time with


trade outpacing GDP.


(150 = 100. Trade and GDP log scale)


000


1000


00


100


1/ 8 48 60 70 80 0 15


50


GATT


created


WTO


created


GDP


Merchandise trade





1





Comparative advantage


This is arguably the single most


powerful insight into economics.


Suppose country A is better than


country B at making automobiles,


and country B is better than


country A at making bread. It is


obvious (the academics would say


“trivial”) that both would benefit if


A specialized in automobiles, B


specialized in bread and they


traded their products. That is a


case of absolute advantage.


But what if a country is bad at


making everything? Will trade


drive all producers out of business?


The answer, according to Ricardo,


is no. The reason is the principle of


comparative advantage.


It says, countries A and B still


stand to benefit from trading with


each other even if A is better than


B at making everything. If A is


much more superior at making


automobiles and only slightly





superior at making bread, then A


should still invest resources in


what it does best � producing


automobiles � and export the


product to B. B should still invest


in what it does best � making


bread � and export that product


to A, even if it is not as efficient


as A. Both would still benefit from


the trade. A country does not


have to be best at anything to


gain from trade. That is


comparative advantage.


The theory dates back to classical


economist David Ricardo. It is


one of the most widely accepted


among economists. It is also one


of the most misunderstood


among non-economists because it


is confused with absolute


advantage.


It is often claimed, for example,


that some countries have no


comparative advantage in


anything. That is virtually


impossible.


Think about it ...








14


4. The GATT years from Havana to Marrakesh


The WTO’s creation on 1 January 15 marked the biggest reform


of international trade since after the Second World War. It also


brought to reality � in an updated form � the failed attempt in


148 to create an International Trade Organization.


Much of the history of those 47 years was written in Geneva. But it


also traces a journey that spanned the continents, from that


hesitant start in 148 in Havana (Cuba), via Annecy (France),


Torquay (UK), Tokyo (Japan), Punta del Este (Uruguay), Montreal


(Canada), Brussels (Belgium) and finally to Marrakesh (Morocco) in


14. During that period, the trading system came under GATT,


salvaged from the aborted attempt to create the ITO. GATT helped


establish a strong and prosperous multilateral trading system that


became more and more liberal through rounds of trade negotiations.


But by the 180s the system needed a thorough overhaul. This led


to the Uruguay Round, and ultimately to the WTO.


GATT ‘provisional’ for almost half a century


From 148 to 14, the General Agreement on Tariffs and Trade


(GATT) provided the rules for much of world trade and presided


over periods that saw some of the highest growth rates in


international commerce. It seemed well-established, but throughout


those 47 years, it was a provisional agreement and organization.


The original intention was to create a third institution to handle the


trade side of international economic co-operation, joining the two


“Bretton Woods” institutions, the World Bank and the International


Monetary Fund. Over 50 countries participated in negotiations to


create an International Trade Organization (ITO) as a specialized


agency of the United Nations. The draft ITO Charter was ambitious.


It extended beyond world trade disciplines, to include rules on


employment, commodity agreements, restrictive business practices,


international investment, and services.


Even before the talks concluded, of the 50 participants decided in


146 to negotiate to reduce and bind customs tariffs. With the


Second World War only recently ended, they wanted to give an early


boost to trade liberalization, and to begin to correct the legacy of


protectionist measures which remained in place from the early


10s.


This first round of negotiations resulted in 45,000 tariff concessions


affecting $10 billion of trade, about one fifth of the world’s total. The


also agreed that they should accept some of the trade rules of


the draft ITO Charter. This, they believed, should be done swiftly


and “provisionally” in order to protect the value of the tariff


concessions they had negotiated. The combined package of trade


rules and tariff concessions became known as the General


Agreement on Tariffs and Trade. It entered into force in January


148, while the ITO Charter was still being negotiated. The


became founding GATT members (officially, “contracting parties”).


Although the ITO Charter was finally agreed at a UN Conference on


Trade and Employment in Havana in March 148, ratification in


some national legislatures proved impossible. The most serious


opposition was in the US Congress, even though the US government


The trade chiefs


The directors-general of GATT and WTO


• Sir Eric Wyndham White (UK) 148�68


• Olivier Long (Switzerland) 168�80


• Arthur Dunkel (Switzerland) 180�


• Peter Sutherland (Ireland)


GATT 1�4; WTO 15


• Renato Ruggiero (Italy) 15�1


• Mike Moore (New Zealand) 1�00


• Supachai Panitchpakdi (Thailand)


00�





15


had been one of the driving forces. In 150, the United States


government announced that it would not seek Congressional


ratification of the Havana Charter, and the ITO was effectively dead.


Even though it was provisional, the GATT remained the only


multilateral instrument governing international trade from 148 until


the WTO was established in 15.


For almost half a century, the GATT’s basic legal principles remained


much as they were in 148. There were additions in the form of a


section on development added in the 160s and “plurilateral”


agreements (i.e. with voluntary membership) in the 170s, and


efforts to reduce tariffs further continued. Much of this was achieved


through a series of multilateral negotiations known as “trade


rounds” � the biggest leaps forward in international trade


liberalization have come through these rounds which were held


under GATT’s auspices.


In the early years, the GATT trade rounds concentrated on further


reducing tariffs. Then, the Kennedy Round in the mid-sixties


brought about a GATT Anti-Dumping Agreement and a section on


development. The Tokyo Round during the seventies was the first


major attempt to tackle trade barriers that do not take the form of


tariffs, and to improve the system. The eighth, the Uruguay Round


of 186�4, was the last and most extensive of all. It led to the


WTO and a new set of agreements.


The GATT trade rounds


Year Place/ name Subjects covered Countries


147 Geneva Tariffs


14 Annecy Tariffs 1


151 Torquay Tariffs 8


156 Geneva Tariffs 6


160�161 Geneva (Dillon Round) Tariffs 6


164�167 Geneva (Kennedy Round) Tariffs and anti-dumping measures 6


17�17 Geneva (Tokyo Round) Tariffs, non-tariff measures, “framework” agreements 10


186�14 Geneva (Uruguay Round) Tariffs, non-tariff measures, rules, services, intellectual


property, dispute settlement, textiles, agriculture, creation of


WTO, etc


1





The Tokyo Round a first try to reform the system


The Tokyo Round lasted from 17 to 17, with 10 countries


participating. It continued GATT’s efforts to progressively reduce


tariffs. The results included an average one-third cut in customs


duties in the world’s nine major industrial markets, bringing the


average tariff on industrial products down to 4.7%. The tariff


reductions, phased in over a period of eight years, involved an


element of “harmonization” � the higher the tariff, the larger the


cut, proportionally.


In other issues, the Tokyo Round had mixed results. It failed to


come to grips with the fundamental problems affecting farm trade


and also stopped short of providing a modified agreement on


“safeguards” (emergency import measures). Nevertheless, a series


of agreements on non-tariff barriers did emerge from the


negotiations, in some cases interpreting existing GATT rules, in


others breaking entirely new ground. In most cases, only a


relatively small number of (mainly industrialized) GATT members


subscribed to these agreements and arrangements. Because they


The Tokyo Round ‘codes’


• Subsidies and countervailing measures


� interpreting Articles 6, 16 and of


GATT


• Technical barriers to trade �


sometimes called the Standards Code


• Import licensing procedures


• Government procurement


• Customs valuation � interpreting


Article 7


• Anti-dumping � interpreting Article 6,


replacing the Kennedy Round code


• Bovine Meat Arrangement


• International Dairy Arrangement


• Trade in Civil Aircraft





16


were not accepted by the full GATT membership, they were often


informally called “codes”.


They were not multilateral, but they were a beginning. Several


codes were eventually amended in the Uruguay Round and turned


into multilateral commitments accepted by all WTO members. Only


four remained “plurilateral” � those on government procurement,


bovine meat, civil aircraft and dairy products. In 17 WTO


members agreed to terminate the bovine meat and dairy


agreements, leaving only two.


Did GATT succeed?


GATT was provisional with a limited field of action, but its success


over 47 years in promoting and securing the liberalization of much


of world trade is incontestable. Continual reductions in tariffs alone


helped spur very high rates of world trade growth during the 150s


and 160s � around 8% a year on average. And the momentum of


trade liberalization helped ensure that trade growth consistently


out-paced production growth throughout the GATT era, a measure


of countries’ increasing ability to trade with each other and to reap


the benefits of trade. The rush of new members during the Uruguay


Round demonstrated that the multilateral trading system was


recognized as an anchor for development and an instrument of


economic and trade reform.


But all was not well. As time passed new problems arose. The Tokyo


Round in the 170s was an attempt to tackle some of these but its


achievements were limited. This was a sign of difficult times to


come.


GATT’s success in reducing tariffs to such a low level, combined with


a series of economic recessions in the 170s and early 180s, drove


governments to devise other forms of protection for sectors facing


increased foreign competition. High rates of unemployment and


constant factory closures led governments in Western Europe and


North America to seek bilateral market-sharing arrangements with


competitors and to embark on a subsidies race to maintain their


holds on agricultural trade. Both these changes undermined GATT’s


credibility and effectiveness.


The problem was not just a deteriorating trade policy environment.


By the early 180s the General Agreement was clearly no longer as


relevant to the realities of world trade as it had been in the 140s.


For a start, world trade had become far more complex and


important than 40 years before the globalization of the world


economy was underway, trade in services � not covered by GATT


rules � was of major interest to more and more countries, and


international investment had expanded. The expansion of services


trade was also closely tied to further increases in world merchandise


trade. In other respects, GATT had been found wanting. For


instance, in agriculture, loopholes in the multilateral system were


heavily exploited, and efforts at liberalizing agricultural trade met


with little success. In the textiles and clothing sector, an exception


to GATT’s normal disciplines was negotiated in the 160s and early


170s, leading to the Multifibre Arrangement. Even GATT’s


institutional structure and its dispute settlement system were


causing concern.





17


These and other factors convinced GATT members that a new effort


to reinforce and extend the multilateral system should be


attempted. That effort resulted in the Uruguay Round, the


Marrakesh Declaration, and the creation of the WTO.





Trade rounds progress by package


They are often lengthy � the Uruguay Round took seven and a half years � but trade


rounds can have an advantage. They offer a package approach to trade negotiations that


can sometimes be more fruitful than negotiations on a single issue.


• The size of the package can mean more benefits because participants can seek and


secure advantages across a wide range of issues.


• Agreement can be easier to reach, through trade-offs � somewhere in the package


there should be something for everyone.





This has political as well as economic implications. A government may want to make a


concession, perhaps in one sector, because of the economic benefits. But politically, it


could find the concession difficult to defend. A package would contain politically and


economically attractive benefits in other sectors that could be used as compensation.





So, reform in politically-sensitive sectors of world trade can be more feasible as part of


a global package � a good example is the agreement to reform agricultural trade in


the Uruguay Round.


• Developing countries and other less powerful participants have a greater chance of


influencing the multilateral system in a trade round than in bilateral relationships with


major trading nations.


But the size of a trade round can be both a strength and a weakness. From time to time,


the question is asked wouldn’t it be simpler to concentrate negotiations on a single sector?


Recent history is inconclusive. At some stages, the Uruguay Round seemed so cumbersome


that it seemed impossible that all participants could agree on every subject. Then the round


did end successfully in 1�4. This was followed by two years of failure to reach


agreement in the single-sector talks on maritime transport.


Did this mean that trade rounds were the only route to success? No. In 17, single-sector


talks were concluded successfully in basic telecommunications, information technology


equipment and financial services.


The debate continues. Whatever the answer, the reasons are not straightforward. Perhaps


success depends on using the right type of negotiation for the particular time and context.





18


5. The Uruguay Round


It took seven and a half years, almost twice the original schedule.


By the end, 1 countries were taking part. It covered almost all


trade, from toothbrushes to pleasure boats, from banking to


telecommunications, from the genes of wild rice to AIDS


treatments. It was quite simply the largest trade negotiation ever,


and most probably the largest negotiation of any kind in history.


At times it seemed doomed to fail. But in the end, the Uruguay


Round brought about the biggest reform of the world’s trading


system since GATT was created at the end of the Second World


War. And yet, despite its troubled progress, the Uruguay Round did


see some early results. Within only two years, participants had


agreed on a package of cuts in import duties on tropical products �


which are mainly exported by developing countries. They had also


revised the rules for settling disputes, with some measures


implemented on the spot. And they called for regular reports on


GATT members’ trade policies, a move considered important for


making trade regimes transparent around the world.


A round to end all rounds?


The seeds of the Uruguay Round were sown in November 18 at a


ministerial meeting of GATT members in Geneva. Although the


ministers intended to launch a major new negotiation, the


conference stalled on agriculture and was widely regarded as a


failure. In fact, the work programme that the ministers agreed


formed the basis for what was to become the Uruguay Round


negotiating agenda.


Nevertheless, it took four more years of exploring, clarifying issues


and painstaking consensus-building, before ministers agreed to


launch the new round. They did so in September 186, in Punta del


Este, Uruguay. They eventually accepted a negotiating agenda that


covered virtually every outstanding trade policy issue. The talks


were going to extend the trading system into several new areas,


notably trade in services and intellectual property, and to reform


trade in the sensitive sectors of agriculture and textiles. All the


original GATT articles were up for review. It was the biggest


negotiating mandate on trade ever agreed, and the ministers gave


themselves four years to complete it.


Two years later, in December 188, ministers met again in


Montreal, Canada, for what was supposed to be an assessment of


progress at the round’s half-way point. The purpose was to clarify


the agenda for the remaining two years, but the talks ended in a


deadlock that was not resolved until officials met more quietly in


Geneva the following April.


Despite the difficulty, during the Montreal meeting, ministers did


agree a package of early results. These included some concessions


on market access for tropical products � aimed at assisting


developing countries � as well as a streamlined dispute settlement


system, and the Trade Policy Review Mechanism which provided for


the first comprehensive, systematic and regular reviews of national


trade policies and practices of GATT members. The round was


supposed to end when ministers met once more in Brussels, in


December 10. But they disagreed on how to reform agricultural


The 186 agenda


The 15 original Uruguay Round


subjects


Tariffs


Non-tariff barriers


Natural resource products


Textiles and clothing


Agriculture


Tropical products


GATT articles


Tokyo Round codes


Anti-dumping


Subsidies


Intellectual property


Investment measures


Dispute settlement


The GATT system


Services


The Uruguay Round � Key dates


Sep 86 Punta del Este launch


Dec 88 Montreal ministerial mid-term


review


Apr 8 Geneva mid-term review


completed


Dec 0 Brussels “closing” ministerial


meeting ends in deadlock


Dec 1 Geneva first draft of Final Act


completed


Nov Washington US and EC achieve


“Blair House” breakthrough on agriculture


Jul Tokyo Quad achieve market


access breakthrough at G7 summit


Dec Geneva most negotiations end


(some market access talks remain)


Apr 4 Marrakesh agreements signed


Jan 5 Geneva WTO created,


agreements take effect





1


trade and decided to extend the talks. The Uruguay Round entered


its bleakest period.


Despite the poor political outlook, a considerable amount of


technical work continued, leading to the first draft of a final legal


agreement. This draft “Final Act” was compiled by the then GATT


director-general, Arthur Dunkel, who chaired the negotiations at


officials’ level. It was put on the table in Geneva in December 11.


The text fulfilled every part of the Punta del Este mandate, with one


exception � it did not contain the participating countries’ lists of


commitments for cutting import duties and opening their services


markets. The draft became the basis for the final agreement.


Over the following two years, the negotiations lurched between


impending failure, to predictions of imminent success. Several


deadlines came and went. New points of major conflict emerged to


join agriculture services, market access, anti-dumping rules, and


the proposed creation of a new institution. Differences between the


United States and European Union became central to hopes for a


final, successful conclusion.


In November 1, the US and EU settled most of their differences


on agriculture in a deal known informally as the “Blair House


accord”. By July 1 the “Quad” (US, EU, Japan and Canada)


announced significant progress in negotiations on tariffs and related


subjects (“market access”). It took until 15 December 1 for


every issue to be finally resolved and for negotiations on market


access for goods and services to be concluded (although some final


touches were completed in talks on market access a few weeks


later). On 15 April 14, the deal was signed by ministers from


most of the 1 participating governments at a meeting in


Marrakesh, Morocco.


The delay had some merits. It allowed some negotiations to


progress further than would have been possible in 10 for


example some aspects of services and intellectual property, and the


creation of the WTO itself. But the task had been immense, and


negotiation-fatigue was felt in trade bureaucracies around the world.


The difficulty of reaching agreement on a complete package


containing almost the entire range of current trade issues led some


to conclude that a negotiation on this scale would never again be


possible. Yet, the Uruguay Round agreements contain timetables for


new negotiations on a number of topics. And by 16, some


countries were openly calling for a new round early in the next


century. The response was mixed; but the Marrakesh agreement did


already include commitments to reopen negotiations on agriculture


and services at the turn of the century. These began in early 000


and were incorporated into the Doha Development Agenda in late


001.


What happened to GATT?


The WTO replaced GATT as an international organization, but the


General Agreement still exists as the WTO’s umbrella treaty for


trade in goods, updated as a result of the Uruguay Round


negotiations. Trade lawyers distinguish between GATT 14, the


updated parts of GATT, and GATT 147, the original agreement


which is still the heart of GATT 14. Confusing? For most of us, it’s


enough to refer simply to “GATT”.





0


The post-Uruguay Round built-in agenda


Many of the Uruguay Round agreements set timetables for future


work. Part of this “built-in agenda” started almost immediately. In


some areas, it included new or further negotiations. In other areas,


it included assessments or reviews of the situation at specified


times. Some negotiations were quickly completed, notably in basic


telecommunications, financial services. (Member governments also


swiftly agreed a deal for freer trade in information technology


products, an issue outside the “built-in agenda”.)


The agenda originally built into the Uruguay Round agreements has


seen additions and modifications. A number of items are now part of


the Doha Agenda, some of them updated.


There were well over 0 items in the original built-in agenda. This is


a selection of highlights


16


• Maritime services market access negotiations to end (0 June 16,


suspended to 000, now part of Doha Development Agenda)


• Services and environment deadline for working party report


(ministeriPlease note that this sample paper on WTO is for your review only. In order to eliminate any of the plagiarism issues, it is highly recommended that you do not use it for you own writing purposes. In case you experience difficulties with writing a well structured and accurately composed paper on WTO, we are here to assist you. Your cheap custom college paper on WTO will be written from scratch, so you do not have to worry about its originality.

Order your authentic assignment from cheap essay writing service and you will be amazed at how easy it is to complete a quality custom paper within the shortest time possible!



Leave a Reply

Note: Only a member of this blog may post a comment.