WTO_GATT

WTO_GATT - THE WTO AND THE GATT 1 Agenda • How did we get...

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Unformatted text preview: THE WTO AND THE GATT 1 Agenda • How did we get here? A short background review • • • • Why a new world organization? The WTO The structure and role of the WTO GATT, GATS, TRIPS and other acronyms Challenges: the future The Doha round 2 Background (cnt) cnt) • The “Golden Age” of internationalization followed the Great Corn Laws debate, the mutual reduction of tariffs between Britain and France and later other advanced countries • After 1870 tariffs begin to increase around the world • Turn of the century seems a high mark for internationalization, particularly for Britain 3 •1 Background (cnt) cnt) • Things go downhill from there Pre WWI militarization Arms race Regional conflicts (the Balkans & others) WWI Recovery The Great Depression Totalitarianism and WWII The Cold War 4 Background (cnt) cnt) • Strong feeling that the post-WWI reparations and other predatory economic actions led to Hitler, Mussolini, and Togo, and that this shouldn’t be allowed to happen again This explains the position of the U.S. after WWII The relatively benign occupation of Germany and Japan The United Nation The Marshall Plan The European Common Market 5 Background (cnt) cnt) • A multi-party agreement among the Allies in Bretton Woods (NH), created the IMF World Bank International Trade Organization U.S. ratifies the IMF & WB but kills the ITO (in 1950) • Prior to the ITO, there had been a GATT agreement among 22 countries (1947) Never formally ratified by its members 6 •2 Background (cnt) cnt) • An organization, also called GATT, was created to administer the agreement No enforcement power • The GATT survived for 47 years, and produced many rounds of multilateral agreements to multilateral reduce tariffs In spite of limitation or Because of limitations 7 Background (cnt)) cnt • GATT principles MFN principle (?) National treatment (?) Binding tariff rates (?) Subsidies to exports (?) prohibited If they are linked indirectly they are “actionable” Some are “non-actionable”, like Assistance to disadvantaged regions Assistance to meet environmental regulations 8 Background (concl)) concl • GATT principles Actively discourage quotas (transparency) “Tariffication” of quotas Some “sensitive” industries excluded OK to form regional trading alliances Any new or increased tariff must be offset but reductions elsewhere No unilateral quotas except for “market disruption” cases No export subsidies, safe for agricultural goods 9 •3 U.S. Tariff Rates 70 60 50 40 Smoot-Hawley (1930) % of dutiable 30 20 10 Kennedy Round Tokyo Round % of total import 85 78 19 71 19 64 19 19 50 57 19 43 19 36 19 29 19 22 19 19 07 15 19 19 19 00 0 10 GATT Negotiations • Kennedy Round: • Tokyo Round: • Uruguay Round: Years Nations 62-67 48 73-79 99 86-93 108 12 GATT Negotiations • GATT Rounds resulted in tariff reductions • But % of nations’ trade subject to non-tariff barriers increased 1986 1966 • US 36% 45% • EU 21% 54% • Japan 31% 43% • All DC 25% 48% • Laird & Yeats, Weltwirtschaftliches Archiv, 1990, 126, 2:299-326 13 13 •4 What Was Missing? • Why wasn’t GATT enough? • What happened at Punte Del Este (Uruguay)? • What is GATS? General Agreement on Trade in Services • What is TRIPS? Agreement on Trade-Related Intellectual Property Rights 14 World Trade Organization (WTO) • The WTO was established in 1995 • Succeeds and subsumes the GATT organization The principles of the agreement as well • It has more than 140 member countries 15 The WTO • Oversees the global rules for government policies toward international trade, based on the GATT principles Organizational Structure (Exhibit 11) Ministerial Conference General Council (reps from every member country) Dispute Settlement Body (from the same people) DSB Trade Policy Review Body (same people) TPRB One country-one ballot 16 •5 17 The WTO (cnt) cnt) • Dispute resolution (?) Consultation no more than 60 days Refer the matter to the DSB (within 45 days) Dispute Settlement Body Written arguments Interim report Comments from parties Final report within 6 months (3 if perishables involved) 18 The WTO (cnt) cnt) After the report is issued, any of the involved parties can appeal to an Appellate Body (?) Three-person tribunal Decisions based on interpretation of Law No new evidence can be admitted 90 days maximum DSB could reject decision but only unanimously Total elapsed time no more than 15 months 19 •6 The WTO (cnt) cnt) If the ruling is against the “responding” country (?) Country against which the complaint was filed The country must comply within a “reasonable period of time” If it does not Respondent is required to negotiate with the complainant If no agreement within a month DSB may authorize retaliatory trade sanctions 20 The WTO (concl) concl) In about ½ century there were 300 complaints lodged with GATT Through 2002, 242 separate cases were adjudicated by the WTO Very few cases result in non-compliance and retaliation (5) 21 The GATS • Services are 60-65 % of global production but only 10% of trade Much more important than they were in 1947! • Three GATS-related protocols Telecommunications 69 members with varying commitment levels Financial services 70 members with varying commitment levels 100% foreign ownership in: Banking: 59 countries Securities firms: 44 countries Insurance: 55 countries 22 •7 The GATS • Three GATS-related protocols (continued) Movement of natural persons (4th mode) Modes: Cross-border supply Consumption abroad Commercial presence Presence of natural persons Currently only “essential personnel” “business visitors” are covered and short-term 6 countries signed up 23 U.S.’s “Section 301” • Trade Act of 1974 provision President can negotiate to eliminate “unfair trade practices” of foreign governments that limit U.S. exports Can enact new barriers to their imports unilaterally Requires an annual report on countries with inadequate protection of intellectual property ~ 100 “301” cases since 1974 More such cases now end up at the WTO Example: Kodak Fuji films dispute 24 Unresolved Issues (?) • Substantial trade barriers remain in some sectors Financial, entertainment, publishing • Environmental concerns • Worker’s rights • Foreign Direct Investment Local content requirement, local ownership rules, outright prohibition • Abusive use of antidumping Rules permit countries to retaliate with antidumping duties 25 •8 Challenges What is some of the unfinished business of the WTO? 26 Challenges • Foreign investment rules MFN or National treatment (harder) • Protective measures Anti-dumping Countervailing duties Emergency safeguards Sudden surge of imports! Regional trade agreements Complements or substitutes? 27 27 Challenges (cnt) cnt) • Rich vs Poor or North vs. South Camps, joint interests Who benefits more? • Textiles and agriculture Outside of GATT! Subsidies, tariffs & quotas • Intellectual property Medication Patents 28 •9 Challenges (cnt) cnt) • Rising resistance to “globalization” Labor standards Child and forced labor Right to organize Safety Environmental issues Turtles, tuna, shrimp, whales, and others Beef hormones (unacceptable to the EU) GM products 29 Challenges (concl.) concl.) What happens when international agreements clash with national sovereignty? 30 Summary: The WTO • The WTO adds an adjudication and enforcement mechanism to the GATT agreements • The push is to further open trade in goods The low-hanging fruits are already picked • Open trade to services • Reduce export and export-related subsidies • Movement of people? 31 •10 THE END 32 •11 ...
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This note was uploaded on 02/15/2011 for the course FBE 462 at USC.

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