The document provides background information on the history and establishment of the World Trade Organization (WTO). It discusses how the WTO was created in 1995 as the successor to the General Agreement on Tariffs and Trade (GATT) established in the 1940s. It outlines the principles and functions of the WTO, including promoting free trade through negotiations, providing predictability through binding commitments, and encouraging fair competition and development.
The document provides background information on the history and establishment of the World Trade Organization (WTO). It discusses how the WTO was created in 1995 as the successor to the General Agreement on Tariffs and Trade (GATT) established in the 1940s. It outlines the principles and functions of the WTO, including promoting free trade through negotiations, providing predictability through binding commitments, and encouraging fair competition and development.
The document provides background information on the history and establishment of the World Trade Organization (WTO). It discusses how the WTO was created in 1995 as the successor to the General Agreement on Tariffs and Trade (GATT) established in the 1940s. It outlines the principles and functions of the WTO, including promoting free trade through negotiations, providing predictability through binding commitments, and encouraging fair competition and development.
The document provides background information on the history and establishment of the World Trade Organization (WTO). It discusses how the WTO was created in 1995 as the successor to the General Agreement on Tariffs and Trade (GATT) established in the 1940s. It outlines the principles and functions of the WTO, including promoting free trade through negotiations, providing predictability through binding commitments, and encouraging fair competition and development.
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SOUTH EAST ASIA
TRADE POLICY TRAINING NETWORK
WORLD TRADE ORGANIZATION
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1 SOUTH EAST ASIA TRADE POLICY TRAINING NETWORK
CONTENT
1. History 2. Principles 3. Structure 4. Agreement
2 SOUTH EAST ASIA TRADE POLICY TRAINING NETWORK
1. History of WTO • Created only on 1 January, 1995 by the Marrakesh Declaration • The youngest international organization • Successor to the General Agreement on Tariffs and Trade
3 SOUTH EAST ASIA TRADE POLICY TRAINING NETWORK
• At end of World War II, internationalism
was pursued to support peace • To avoid conflicts based on nationalism • Succeeded in creating: – United Nations – Bretton Woods Institutions • International Monetary Fund (IMF) • World Bank
4 SOUTH EAST ASIA TRADE POLICY TRAINING NETWORK
Background Cont • Third institution was to be International Trade Organization (ITO) • Objective: avoid conflicts over trade and protectionism • Havana Charter to create ITO concluded in March,1948 • Was never ratified because of US Congress
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Background Cont • While negotiations underway, 23 participants negotiated to reduce and bind tariffs starting in 1946 • To give early boost to liberalizing trade and end protectionism of the 1930’s • Was agreed to liberalize one fifth (1/5 th) of world trade and adopt some trade rules in draft ITO Charter
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Background Cont • Package called the General Agreement on Tariffs and Trade (GATT) • Entered into effect “provisionally” on 1 January, 1948 • “Provisionally” because Havana Charter was still being negotiated. Those applying GATT became known as Contracting Parties • Remained in force until WTO created 7 SOUTH EAST ASIA TRADE POLICY TRAINING NETWORK
Background Cont • When Havana Charter failed, GATT became only multilateral instrument governing international trade • Numerous negotiations were conducted under GATT to liberalize trade • Eight in total up to Uruguay Round which created WTO
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Background Cont • GATT continues to exist today as a part of the WTO • Basic principles of GATT also form basis for WTO
9 The General Agreement on SOUTH EAST ASIA TRADE POLICY TRAINING NETWORK
Tariffs and Trade (GATT)
• Multilateral trading system created under GATT
is over 50 years old • GATT’s basic pursuit of trade liberalization achieved through “rounds” of trade negotiations • Early “rounds” dealt mainly with tariff reductions • Later rounds added areas such as non-tariff measures, antidumping, etc
10 SOUTH EAST ASIA TRADE POLICY TRAINING NETWORK
Results of GATT
• Exceptional growth of world trade
• Merchandize exports grew on average 6% annually. • Total trade in 1997 was 14 times that of 1950. • Last round (Uruguay Round) added new areas of services and intellectual property and created the WTO.
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Results Of GATT Cont
• Tariffs were reduced to such low levels that in recessions, countries turned to other forms of protectionism. • Market-sharing agreements (voluntary export restraint agreements) were used. • Subsidies were used to encourage exports (particularly with agriculture exports). • Technical barriers were used for trade protection. 12 SOUTH EAST ASIA TRADE POLICY TRAINING NETWORK
Results of GATT Cont
• Realities of world trade also were changing. • Trade was more complex and important. • Services trade and international investment had expanded greatly. • Vastly increased membership with new and different interest. • Led to agreement to create a new expanded agreement to encompass all these matters. 13 SOUTH EAST ASIA TRADE POLICY TRAINING NETWORK
Result of GATT Cont
• Uruguay Round concluded at Marrakesh brought WTO into existence • Also created General Agreement on Trade in Services (GATS) • Created Trade Related Intellectual Property Agreement (TRIPs) • And much more
14 Multilateral and SOUTH EAST ASIA TRADE POLICY TRAINING NETWORK
Regional Approaches • In recent years a variety of bilateral and regional trading arrangements have emerged in addition to multilateral efforts at trade liberalization. • The GATT provides specific rules regarding such arrangements. Similar rules exist for services. • But in practice these have not constrained the growth of preferential arrangements. 15 SOUTH EAST ASIA TRADE POLICY TRAINING NETWORK
Functions of the WTO
• Administers trade agreements • Acts as a forum for negotiations • Works to settle trade disputes • Reviews national trade policies • Assists developing countries with trade policy • Cooperates on subjects of mutual interest with other organizations
16 SOUTH EAST ASIA
Membership and Decision-making
TRADE POLICY TRAINING NETWORK
in the WTO
• Some 150 member countries, accounting
for over 97% of world trade • Some 30 other countries are negotiating membership. • Decisions are made by entire membership. • While a majority vote is possible, decisions are usually by consensus.
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WTO Mission Statement
• The World Trade Organization is the only international organization dealing with the global rules of trade between nations. Its main function is to ensure that trade flows as smoothly, predictably and freely as possible.
18 2. WTO’s Fundamental SOUTH EAST ASIA TRADE POLICY TRAINING NETWORK
Principles • Complicated legal agreement guiding the international trading system • Based on five, easy to understand, principles: – Trade without discrimination – Freer trade, gradually, through negotiation – Predictability, through binding and transparency – Promoting fair competition – Encouraging development and economic reform 19 SOUTH EAST ASIA TRADE POLICY TRAINING NETWORK
Trade without discrimination
• This means treating all member countries equally. • It is formally known as the Most- Favoured-nation (MFN) Principle. • For example, if a WTO member lowers its customs duty for a product imported from one country, it must also give the same concession to all other members.
20 SOUTH EAST ASIA TRADE POLICY TRAINING NETWORK Trade without discrimination
• Members must also not discriminate
between domestic and foreign goods, services or nationals once they have entered the market. • This is known as National Treatment.
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Trade without Discrimination
TRAINING NETWORK
• A few exceptions are permitted:
– For partners in a free trade agreement – For extending better access to developing countries – General waivers – To protect morals, human and animal health and National Security – To counteract unfairly traded products 22 SOUTH EAST ASIA TRADE POLICY TRAINING NETWORK Vietnam’s anti-dumping tax on Chinese steel
• After an anti-dumping investigation that
started in September 2019, Vietnam’s ministry of industry and trade (MOIT) concluded that Chinese steel producers are dumping their products • Consequently, an anti-dumping tax ranging from 4.43% to 25.22% has been imposed on some coil or sheet cold-rolled steel products from China for five years, starting Dec. 28
23 Free Trade Gradually, SOUTH EAST ASIA TRADE POLICY TRAINING NETWORK
through negotiation • The WTO encourages fair trade by disciplining barriers related to: – Tariffs – Import bans or quotas – Other issues • Now into 9th round of liberalizing negotiations (8 under GATT)
24 Predictability through Binding SOUTH EAST ASIA TRADE POLICY TRAINING NETWORK
and Transparency • “Binding” means setting a fixed upper limit on tariffs and other commitments – Provides stability and predictability – Can be changed only after negotiations with trading partners – NOTE: 100% of agriculture products of developed countries have bound tariff rates.
25 Binding and SOUTH EAST ASIA TRADE POLICY TRAINING NETWORK
Transparency • The WTO discourages the use of less visible and less predictable barriers (e.g. Quotas) • It encourages transparency through requirements to disclose policies and practices and notify WTO of changes. • Conducts trade policy reviews
26 Promoting Fair SOUTH EAST ASIA TRADE POLICY TRAINING NETWORK
Competition • Rules to establish what is considered fair and unfair competition (e.g. Dumping and subsidies are considered unfair competition.) • Rules to establish how governments can respond to trade disputes. • Specific agreements, such as that on agriculture, aim to support fair competition. 27 SOUTH EAST ASIA TRADE POLICY TRAINING NETWORK Encourage Development and Economic Reform • Fully three quarters of WTO members are developing or transition economies. • WTO rules and mechanisms provide – more time for developing countries to implement undertakings. – special assistance (training, legal advice). – trade concessions (generalized system of tariff preferences). – extend Special and Differential Treatment. 28 SOUTH EAST ASIA TRADE POLICY TRAINING NETWORK
Case: Spain – Tariff treatment of unroasted coffee –
BISD 28S/102 (1982)
Prior to 1975, imports of unroasted coffee to Spain were
subject to a customs duty of 22.5%. In 1975, Spain exempted import of, inter alia, unroasted coffee under its state-trading system from customs duties. In 1979, Spanish authorities enacted Royal Decree No.1764/79 which subdivided imports of unroasted coffee into the categories “Columbian mild” and “other mild” on which no tariff was levied, and the categories “unwashed Arabica”, “Robusta” and “other” which were liable to a 7% of tariff
30 3. Structure of the SOUTH EAST ASIA TRADE POLICY TRAINING NETWORK
WTO • A Ministerial Conference meets every two years. • General Council meets regularly at level of Ambassadors. • Goods Council administers GATT (including agriculture). • Services Council administers GATS. • Intellectual Property Council administers TRIPS.
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Organs of the WTO
MINISTERIAL CONFERENCE • TNC DSB General Council • Trade & TPRM Environment Committee
• Trade & Council for Council for • Council Developmen Trade in Goods Trade in Services for t Committee • TRIPS • BOP Goods Committees Services Committee Annex 1A, Committees • Budget, WTO Agreement Finance & Administrati on Committee 32 SOUTH EAST ASIA TRADE POLICY TRAINING NETWORK
Secretariat of the WTO
• Director General and Deputy positions selected by members (usually political and term limited) • Staff of over 500; all in Geneva • Secretariat has no decision-making powers. • Provides technical and legal support to councils, committees, working parties and to developing countries 33 SOUTH EAST ASIA TRADE POLICY TRAINING NETWORK
(Secretariat of the WTO)
General Director of WTO • Ngozi Okonjo-Iweala • A Nigerian-American economist and international development expert • The seventh Director- General of the WTO • Her term starts on 1 March 2021 The first woman and the first African to hold the office
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4. WTO Agreements • Cover goods, services and intellectual property • Include individual countries’ commitments to lower customs tariffs and other trade barriers, and to open and keep open services markets • Set procedures for settling disputes • prescribe special treatment for developing countries • Require governments to make their trade policies transparent by notifying the WTO
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WTO Agreements TRADE POLICY TRAINING NETWORK
• General Agreement on Trade and tariff (GATT)
• General Agreement on Trade in Services (GATS) • Trade Related Intellectual Property Agreement (TRIPs) • Agreement on Trade related investment measures (TRIMs) • Agreement on Subsidy and countervailing measures (SCM) • Agreement on Agriculture (AoA) • Agreement on Textiles and Clothing (ATC) • Agreement on Anti-dumping (AAD) • Agreement on Technical Barriers to Trade (TBT) • Agreement on Sanitary and Phytosanitary Measures (SPS) • Agreement on Custom Valuation (ACV) • Agreement on Rules of Origin (ROO) • More readings: https://www.wto.org/english/thewto_e/whatis_e/tif_e/agrm1_ e.htm
