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World Trade Organization:
Brief History
The World Trade Organization came into being in
1995 originating from the General Agreement on
Tariffs and Trade (GATT), a provisional agreement
by 23 contracting parties signed on 30 October 1947
at the Palais des Nations in Geneva and eventually
became an ad hoc international organization created
to support the agreement. From 1948 to 1994, the
provisional GATT provided the rules for much of
world trade and presided over periods that saw some
of the highest growth rates in international
commerce. The Agreement contained tariff
concessions agreed to during the first multilateral
trade negotiations and a set of rules designed to
prevent these concessions from being frustrated by
restrictive trade measures. Eventually, there were
123 participants and the final agreements covered
almost all trade.
Today, the WTO is the only international organization
dealing with the global rules of trade between
nations. WTO agreements, negotiated and signed by
the bulk of the world’s trading nations, bind
governments to keep their trade policies within
agreed limits. Whereas GATT had mainly dealt with
trade in goods, the WTO and its agreements also
cover trade in services, and in traded inventions,
creations and designs (intellectual property).
The WTO’s main objective is to help trade flow
smoothly, freely, fairly and predictably by
administering WTO trade agreements, acting as a
forum for trade negotiations, settling trade disputes,
reviewing national trade policies, assisting developing
countries in trade policy issues, through technical
assistance/training, and cooperating with other
international organizations.
World Trade Organization: A Preview
The WTO has 148 Members, accounting for 90% of
world trade. Three-quarters of the Members are
developing countries, least developed countries and
customs territories. A quarter is composed of
developed countries. At the present time, nearly 30
applicants are negotiating to become members of the
WTO. Notable of these 30 ‘observer-applicants’ are
the Russian Federation, Ukraine, Saudi Arabia, and
Vietnam. (WTO, 2005)
In the intervals between sessions of the Ministerial
Conference, the next highest-level decision-making
body is the General Council where Members are
usually represented by ambassadors or heads of
delegation. The General Council acts on behalf of the
Ministerial Conference and oversees the work and
management of the WTO. The General Council also
meets as the Trade Policy Review Body and Dispute
Settlement Body. At the next level, the Council for
Trade in Goods, Council for Trade in Services and
TRIPS Council all report to the General Council.
Basic Principles
The WTO agreements are lengthy and complex.
There are, however, a number of simple and
fundamental principles that run throughout all the
documents, as follow:
Non-discrimination - Two WTO key principles are involved
here: Most-favored-nation treatment. Countries cannot
normally discriminate between their trading partners. Grant
one country a special favor, and the Member is obliged to do
the same for all other WTO Members. National Treatment.
Imported and locally-produced goods are treated equally at
least after the foreign goods have entered the market.
Freer trade - Lowering trade barriers is one of the most
obvious means of encouraging trade. The barriers concerned
include both tariff barriers and non-tariff barriers.
Predictability - When countries agree to open their markets
for goods or services, they bind their commitments.
Promoting fair competition - Tariffs and, in limited
circumstances, other forms of protection are allowed but
dedicated to open, fair and undistorted competition.
Special Provisions for Developing Countries - Flexible
implementation of the various WTO agreements, special
assistance and trade concessions are afforded to developing
countries.
Multilateral Trade Negotiations
Much of the growth was achieved through a series of
eight multilateral trade negotiations known as ’trade
rounds’. In all trade rounds, the concentration was on
reducing tariffs. In the latter rounds, however, other
elements were also addressed or introduced. The
Kennedy Round in the mid-1960s brought about a
GATT Anti-Dumping Agreement and a section on
development; the Tokyo Round saw the first major
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attempt to tackle trade barriers that do not take the Fourth Round
form of tariffs, and to improve the system. The Geneva, Switzerland May 1956.
Uruguay Round in the 1980s led a systemic overhaul This Round produced some $2.5Bn worth of tariff
under the GATT. reductions. At the beginning of the year, the GATT
Entry into Force, 01 January 1948. commercial policy course for officials of developing
The 23 members of countries was inaugurated.
the Preparatory
The Short-Term Arrangement covering cotton textiles was
Committee established agreed in 1961 as an exception to the GATT rules. It permitted
by the United Nations the negotiation of quota restrictions affecting the exports of
Economic and Social cotton-producing countries. In 1962 the "Short-term"
Council in 1946 Arrangement became the "Long-term" Arrangement, lasting
until 1974 when the Multifibre Arrangement entered into force.
drafted the charter of
the International Fifth Round: The Dillon Round
Trade Organization September 1960 – July 1962
(ITO). The ITO was In honor of US Undersecretary of State Douglas
envisaged as the final leg of a triad of post-War Dillon who proposed the negotiations, this Round
economic agencies (the other two were the resulted in about 4,400 tariff concessions covering
International Monetary Fund and the International $4.9B of trade. The Round was divided into two
Bank for Reconstruction - later the World Bank). phases: the first was concerned with negotiations
From April to October 1947, Members completed with EEC member states for the creation of a single
some 123 negotiations and established 20 schedules schedule of concessions for the Community based on
containing the tariff reductions and bindings which its Common External Tariff; and the second was a
became an integral part of GATT. The first Round further general round of tariff negotiations.
covered some 45,000 tariff concessions and about Sixth Round: The Kennedy Round
$10B in trade. On 1 January 1948, GATT entered May 1964 – June 1967.
into force. The first Session was held from February
to March in Havana, Cuba. After long and difficult In June 1967, the Round's Final Act was signed by
negotiations, some 53 countries signed the Final Act some 50 participating countries which together
authenticating the Havana Charter in March accounted for 75% of world trade. For the first time,
1948.The Contracting Parties held their second negotiations departed from the product-by-product
session in Geneva from August to September. to an across-the-board or linear method of cutting
Second Round tariffs for industrial goods. The working hypothesis of
Annecy, France April – August 1949 a 50% target cut in tariff levels was achieved in many
areas. Concessions covered an estimated total value
The contracting parties exchanged some 5,000tariff of trade of about $40B. Separate agreements were
concessions. At their third Session, they also dealt reached on grains, chemical products and a Code on
with the accession of ten more countries. Anti-Dumping.
Third Round
Torquay, England September 1950 – April 1951 The early 1960s marked the accession to the General
Agreement of many newly-independent developing countries.
The contracting parties exchanged some 8,700tariff In February, the Contracting Parties adopted the text of Part IV
concessions in the English town, yielding tariff on Trade and Development. The additional chapter to the
reductions of about 25% in relation to the 1948 GATT required developed countries to accord high priority to
level. Four more countries acceded to GATT. During the reduction of trade barriers to products of developing
countries. A Committee on Trade and Development was
the fifth Session of the Contracting Parties, the established to oversee the functioning of the new GATT
United States indicated that the ITO Charter would provisions. In 1968, GATT had established the International
not be re-submitted to the US Congress; this, in Trade Centre (ITC) to help developing countries in trade
effect, meant that ITO would not come into operation. promotion and identification of potential markets.

The Haberler Report: In honor of Professor Gottfried Seventh Round: The Tokyo Round
Haberler, the chairman of the panel of eminent economists, Tokyo, Japan, September 1973 – November 1979
GATT published in October 1958 the Trends in International
Trade, which provided initial guidelines for the work of GATT. Some 99 countries exchanged tariff reductions and
The Contracting Parties at their 13th Sessions, attended by bindings which covered more than $300B of trade. As
Ministers, subsequently established three committees in a result of these cuts, the weighted average tariff on
GATT: Committee I to convene a further tariff negotiating manufactured goods in the world's nine major
conference; Committee II to review the agricultural policies of
member governments and Committee III to tackle the industrial markets declined from 7.0 to 4.7%.
problems facing developing countries in their trade. Agreements were reached in the following areas:
subsidies and countervailing measures, technical

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barriers to trade, import licensing procedures, Agreement on Trade Related Aspects of Intellectual
government procurement, customs valuation, a Property Rights, Including Trade in Counterfeit Goods
(TRIPS) addresses the applicability of basic GATT principles
revised anti-dumping code, trade in bovine meat, and those of relevant international intellectual property
trade in dairy products and trade in civil aircraft. This agreements; the provision of adequate intellectual property
round reduced import duties and other trade barriers rights; the provision of effective enforcement measures for
by industrial countries on tropical products exported those rights; multilateral dispute settlement; and transitional
arrangements.
by developing countries.
On 1 January 1974, the Arrangement Regarding International The schedules of commitments also form part of the
Trade in Textiles, known as the Multifibre Arrangement Uruguay Round agreements.
(MFA), entered into force. It superseded the arrangements that
had been governing trade in cotton textiles since 1961. The
MFA was extended in 1978, 1982, 1986, 1991 and 1992.
WTO Ministerial Conferences
The WTO is a member-driven organization and
GATT (Article 6) allows countries to take action against decisions are taken by the entire membership,
dumping. The Anti-Dumping Agreement clarifies and typically by consensus. The WTO’s top level
expands Article 6, allowing countries to act in a way that would decision-making body is the Ministerial
normally break the GATT principles of binding a tariff and not
discriminating between trading partners. The agreement is the Conference which meets at least once every two
successor to the Tokyo Round Anti-dumping Code which, years. WTO Ministerial Conferences have been held
itself, was the successor to the original Anti-dumping Code in Singapore in 1996, Geneva in 1998, Seattle in
concluded during the Kennedy Round. 1999, Doha in 2001, and Cancún in 2003.
Eighth Round: The Uruguay Round First WTO Conference
Punta del Este, 20 Sep 1986–15 Dec 1993 Singapore, 9 - 13 December 1996
The Punta del Este Declaration was divided into two The first regular biennial meeting of
sections: the first covered negotiations on trade in the WTO at Ministerial level aimed to
goods, and the second initiated negotiations on trade further strengthen the WTO as a
in services. The Round was quite simply the largest forum for negotiation, the continuing
trade negotiation ever, and most probably the largest liberalization of trade within a rule-
negotiation of any kind in history. It brought about based system, and the multilateral
the biggest reform of the world’s trading system review and assessment of trade policies. The
and led to the creation of the WTO. following were tackled during this meeting: assess
the implementation of commitments under the WTO
GATT 1994 is the updated version of GATT 1947 and takes Agreements and decisions; review the ongoing
into account the substantive changes negotiated in the negotiations and Work Programme; examine
Uruguay Round. GATT 1994 is an integral part of the World
Trade Organization established on 1 January 1995. It was developments in world trade; and address the
agreed that there be a one-year transition period during which challenges of an evolving world economy.
certain GATT 1947 bodies and commitments would co-exist
with those of the World Trade Organization. (WTO, 1994) Agreement on Trade-related Aspects of Intellectual
Property Rights (TRIPS) entered into force for developed
Most of the WTO agreements are the result this countries on 01 January 1996.
Basic Telecommunications negotiations are suspended in
Round, signed as the “Final Act” at the Marrakesh May 1996 until 1997 in spite of substantial offers.
ministerial meeting in April 1994. There are about 60
agreements. Foremost is the Agreement Establishing Second WTO Conference
the WTO, which serves as an umbrella agreement. Geneva, Switzerland, 18 – 20 May 1998
Annexed are the agreements on goods (GATT 1994, The Conference coincided with the 50th
Annex 1A), services (GATS, Annex 1B) and Anniversary Commemoration, thus it paid
intellectual property (TRIPS, Annex 1C), dispute tribute to the system's important
settlement (Annex 2), trade policy review mechanism contribution over the past half-century to
(Annex 3) and the plurilateral agreements (Annex 4). growth, employment and stability by promoting the
The Services Agreement (GATS) which forms part of the liberalization and expansion of trade and providing a
Final Act rests on three pillars. The first is a Framework framework for the conduct of international trade
Agreement containing basic obligations which apply to all relations. New WTO Members who have joined since
member countries. The second concerns national schedules of the Singapore meeting: Congo, Democratic Republic
commitments containing specific further national commitments
which will be the subject of a continuing process of of Congo, Mongolia, Niger and Panama.
liberalization. The third is a number of annexes addressing the
Adopted the Declaration on Global Electronic Commerce
special situations of individual services sectors.
on 20 May 1998. It urged Members to continue their current
practice of not imposing customs duties on electronic
transmissions.

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Third WTO Conference The Decision on Implementation-Related Issues and

Seattle, USA, 30 November – 03 December 1999 Concerns was also adopted urging to take immediate action
on a number of problems faced by developing country
The Seattle Conference attracted Members with regard to implementation of WTO Agreements.
wide attention because of proposals Adopted the Declaration on the TRIPS Agreement and
by some countries to press for the Public Health in response to concerns expressed about the
possible implications of the TRIPS Agreement for access to
launching of a comprehensive round drugs. The Declaration affirmed that the TRIPS Agreement
of negotiations covering subjects as can and should be interpreted and implemented in a manner
wide ranging as labor issues, supportive of WTO Members’ right to protect public health and,
coherence in global economic architecture, in particular, to promote access to medicines for all.
agriculture etc. The inaugural session which was to
The initial deadline for agreement on all the issues
be held in the forenoon of 30th November, 1999 had
was January 2005. However, none of the Doha
to be abandoned because of disturbances.
deadlines has been kept and 2007 is now the
suggested likely date for completion. The Doha
Susan Westin, an Associate Director, International
Agenda included a provision that the negotiations
Relations and Trade Issues of the National Security
lead to a “single undertaking” meaning that the series
and International Affairs Division later reported to the
of agreements on various issues (agriculture,
US General Accounting Office, “the conference was
services, industrial products, etc.) will be signed as
suspended without initiating a new round or issuing a
one. Countries must accept or refuse them all.
ministerial declaration. No one factor, but a
The Doha Round, launched in Qatar in 2001, is in
combination of circumstances, led to the impasse.”
deadlock largely because of problems in farm-trade
Disagreements between and among countries on
talks, hampering preparations for the WTO’s 13-18
many issues: the scope of the round, the sensitivity
Dec 2005 conference in Hong Kong. (AFP, 2005)
and complexity of the issues being addressed; as
Fifth WTO Ministerial Conference
well as the basis for negotiations as a poor starting
Cancún, Mexico – 10 – 14 September 2003
point for reaching consensus, in addition to the
newness of the WTO leadership team proved The key objectives at this session
unfortunate circumstances leading to the failure of were to take stock of progress in the
achieving the conference objectives. (Westin, 2000) negotiations, provide any necessary
Fourth WTO Conference political guidance, and take
Doha, Qatar, 09 – 13 November 2001 decisions as necessary.
Ministers adopted a Ministerial Financial Services Accord: Of some 76 WTO Members with
Declaration and other decisions commitments in the financial services sector, around 30
offered improvements in the negotiations which led up to this
setting out a work programme for the agreement. United States did not sign.
WTO for the coming years. The
topics listed in the Ministerial Sixth WTO Ministerial Conference
Declaration are: Implementation- Hongkong, 13 – 18 December 2005
Related Issues and Concerns; Agriculture; Services; Agriculture negotiations will take
Market Access for Non-Agricultural Products; Trade- center stage. The Institute for
Related Aspects of Intellectual Property Rights; Agriculture and Trade Policy (IATP,
Relationship between Trade and Investment; 2005) outlined the key issues facing
Interaction between Trade and Competition Policy; WTO negotiators, such as the US
Transparency in Government Procurement; Trade WTO agriculture proposal on 10 October 2005, the
Facilitation; WTO Rules; Dispute Settlement new Blue Box, NAMA negotiations, the impact of
Understanding; Trade and Environment; Electronic GATS on agriculture, US dumping on world markets.
Commerce; Small Economies; Trade, Debt and
Finance; Trade and Transfer of Technology; Non-Agricultural Market Access [NAMA] negotiations are
mandated under the Doha Ministerial Declaration, which WTO
Technical Cooperation and Capacity Building; Least- members agreed to in November 2001. The aim is to reduce
Developed Countries; Special and Differential border measures to trade, especially tariffs, and other barriers
Treatment. to market access for industrial exports. The negotiations cover
all goods not covered under the Agreement on Agriculture.
The Doha Development Agenda, also known as the work The products are essentially industrial but WTO members are
programme, includes specific negotiations in a range of areas also negotiating on natural resources, including fisheries,
including agriculture, services, market access for non- forests, gems and minerals.
agricultural products, aspects of intellectual property, rules
(covering antidumping, subsidies and countervailing European Union Trade Commissioner Peter
measures, and regional trade agreements), dispute settlement, Mandelson said there would be no deal at the Hong
and aspects of trade and environment.

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Kong ministerial conference in December after 100% of products now have bound tariffs. The result
complaining that EU offers had been rebuffed by of all this: a substantially higher degree of market
"very aggressive" farming countries such as Brazil, security for traders and investors. (WTO, 1995)
Australia, New Zealand and the USA.(AU-AFP, 2005)
Developing countries would be much better off with
WTO & the Developing World the tariff and subsidy cuts already tabled in global
About two thirds of the WTO’s around 150 members trade talks, WTO Director General Pascal Lamy said
are developing countries. They play an increasingly 29 November 2005 (AFP, 2005). But he said that
important and active role in the WTO because of their they could face “disastrous” consequences if the
numbers, because they are becoming more important faltering talks on the Doha round fail to make
in the global economy, and because they increasingly progress. From 1995 to 2003, developing
look to trade as a vital tool in their development countries increased farm exports by 24% raising
efforts. Developing countries are a highly diverse their share of global agricultural exports from
group often with very different views and concerns. 40% to 42%. Trade growth was especially strong
among developing countries, growing by 32% over
Both GATT and GATS allow developing countries the same period, and Lamy insisted the Doha round
some preferential treatment. Other measures must accelerate that progress.
concerning developing countries in the WTO
agreements include: Last 28 November 2005 (AFP,2005) nine developing
• extra time for developing countries to fulfill their countries accused rich nations of sidelining the
commitments (in many of the WTO agreements) interests of the poor in the talks aimed at bringing
• increase developing countries’ trading opportunities
through greater market access (e.g. in textiles, services,
down more trade barriers.
technical barriers to trade)
• safeguard the interests of developing countries when WTO & the ASEAN :
adopting some domestic or international measures (e.g. The Association of Southeast Asian Nations
in anti-dumping, safeguards, technical barriers to trade)
• various means of helping developing countries (e.g. to
[ASEAN] through the APEC Ministerial Meeting in
deal with commitments on animal and plant health Busan on 18-19 November 2005, reaffirmed its
standards, technical standards, and in strengthening their belief that the engine of this region's economic
domestic telecommunications sectors). growth is a strengthened multilateral trading
Furthermore, developed countries’ tariff cuts were for system (APEC, 2005). The APEC Economic
the most part phased in over five years from 01 Leaders, stated the Busan Declaration, have
January 1995. The result is a 40% cut in their supported the WTO since the inception of the
tariffs on industrial products, from an average of Leaders' Meeting. Furthermore, ASEAN hoped that
6.3% to 3.8%. The value of imported industrial the WTO Doha Development Agenda negotiations to
products that receive duty-free treatment in proceed expeditiously so as to achieve an ambitious
developed countries jump from 20% to 44%. and overall balanced outcome at the end of the
Round and emphatically lent its support for the
Specific commitments are made by individual accession of Russia and Viet Nam to the WTO.
member governments and called “schedules of
concessions”. For trade in goods in general, these As early as 2002, many analysts predicted that the
consist of maximum tariff levels. For agriculture they accession of China to the WTO would spell doom for
also include tariff quotas, limits on export subsidies, ASEAN economies. McKibbin and Woo (2003)
and some kinds of domestic support. The goods argued, however, that China’s WTO accession would
schedules are annexed to GATT and are “bound” benefit China but create significant welfare losses in
(GATT Article II). the ASEAN-4 only if foreign-direct investment (FDI)
is significantly redirected away from the latter to the
One of the achievements of the Uruguay Round of former. Alas the ‘only-if’ statement did not happen.
multilateral trade talks was to increase the amount of
trade under binding commitments (see table). Pangestu (2002) noted that with a shallow integration
Percentages of in AFTA, the strategic option for ASEAN after China’s
tariffs bound WTO Accession would be regionalism, thus on
before and after November 2001, negotiations between China and
the 1986-94 talks ASEAN, through the Early Harvest Agreement,
In agriculture, surprised everyone.

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On 18 November 2005, Malaysia, Indonesia, the

Philippines, Thailand and Brunei presented two
joint statements to defend their right to regulate
foreign firms in the services sector and opposed the
WTO’s Hong Kong Ministerial draft declaration that
would erode the present right of countries to choose
which sectors to liberalize, to what extent and when.

ASEAN aimed at promoting economic, social, cultural

and scientific ties, as well as trade and monetary
policies. Other areas of cooperation among ASEAN
members, include harmonization of standards,
reciprocal recognition of tests and certification of
products. In 1992, members called for the
formation of an ASEAN Free Trade Area. In this
regard, the Philippines, Brunei, Indonesia, As for Cambodia, Myanmar, Lao People's
Malaysia, Singapore and Thailand, began Democratic Republic and Vietnam, the four ASEAN's
implementing the ASEAN Free Trade Area on 1 of latecomers, will introduce the 5% tariff cap only in
January 2002, bringing a reduction in tariff rates 2010. With the ASEAN Industrial Cooperation
to 5% or less on all goods made at least with 40% Scheme, AICO, a final maximum 5% tariff rate is set
of ASEAN goods, which tariff rates will be on automotive products. In addition, unlike the
reduced to 0% by 2010, and quantitative Common Effective Preferential Tariff (CEPT) which
restrictions and other non tariff barriers removed. allows a 0-5% tariff rate on all products traded by
2004, the AICO grants an immediate tariff of between
By showing 40% cost projection from our SLAB 0-5% on products enrolled under the program.
- to - CRCA, we can get Form D, which will help
us sell at premium in all these countries. At the 8th ASEAN summit held in Phnom Penh,
Cambodia, from 4 to 6 Nov 2002, several free trade
As for the latecomers, Vietnam joined ASEAN in plans were developed involving 14 Asian countries,
1995, and began implementing AFTA on 1 of January i.e. the 10 ASEAN members (the Philippines,
2003, Burma and Laos joined the group in 1997 and Brunei, Cambodia, Indonesia, Lao PDR, Malaysia,
will complete tariff reduction by 2005, whereas Myanmar, Singapore, Thailand, and Vietnam),
Cambodia which joined in 1999, will complete the China, India, Japan and the Republic of Korea. The
tariff reduction by 2007; in the year 2015, final objectives of these free trade plans are to
reductions will be achieved by these 4 countries. No quicken the pace of trade liberalization and foster
common external tariff is planned; tariff rates on multilateralism in the region. In addition to intra-
imports from non-ASEAN countries will continue ASEAN trade and ties, ASEAN aims at strengthening
to be determined individually. links with other preferential trade regimes in the
region, for example, the high-level task force between
Since 1 of January 2003, the ASEAN countries have the AFTA and the Closer Economic Relations
announced the abolishment of tariffs on 60% of (CER), i.e. a trade agreement between Australia and
traded goods and the introduction of a 5% on import New Zealand) established to study the feasibility of
tariffs within its six original members, i.e. the settling and AFTA-CER free-trade agreement by
Philippines, Brunei, Indonesia, Malaysia, 2010. ASEAN is pursuing similar agreements with
Singapore, and Thailand. Products affected other regional grouping such as the Southern
essentially by this measure are electronic products, Common Market (Mercosur), and the Southern
machinery items and petrochemicals. And goods African Development Community (SADC).
excluded from the tariff-reduction agreement are
goods of key industries in some of the member ASEAN maintains a commercial and economic
countries, for example, the Philippines and Indonesia cooperation agreement with the European Union.
will delay the 5% cap on sugar and petroleum, and The agreement provides for most favored-nation
Malaysia will shelve the cap on car imports, until treatment and studies to remove trade barriers,
2005. create new trade patterns, and recommend trade
promotion measures.

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A new trade initiative between the ASEAN and the of laboratory equipment, apparatus and equipment
U.S.A. has been set up as the Enterprise for ASEAN for photography, instruments and appliances used in
Initiative (EAI), which objectives aim at developing medical, surgical and veterinary sciences. The
the Southeast Asian Region, and enhance close largest part of tariff lines bearing the following rates of
U.S. ties with ASEAN. The EAI offers bilateral free 3%, 5%, 7%, 10%, 20%, 25% and 30% are set on
trade agreements (FTAs) between the United States basic products, agricultural goods, fish and
and individual ASEAN countries, by determining crustaceans, raw materials, and manufacturing
jointly the launching of FTA negotiations. ASEAN activities of intermediate and finished goods. A
members and China leaders decided in Brunei on limited number of tariff items subject to rates starting
November 2001 to work on creating a free trade area from 35, to 80% include sensitive agricultural
within the next ten years. (UNCTAD, 2005) products, maize, rice, sugar, meat and meat
products, food preparations, beverages & spirits.
WTO & the Philippines
The Philippines joined the WTO in 1995. From 1995, Effective December 2000 the Philippine government
the Philippines have been involved with 4 cases as had agreed to maintain tariffs of petrochemicals and
complainant, 4 as respondent, and 5 cases as third automotive parts at current levels up to year 2004.
party. Most of these cases are agricultural in nature. This policy covers most MFN tariff rates levied on
goods coming from countries outside ASEAN. The
As Complainant:
DS22: Desiccated Coconut; Respondent: Brazil tariff freeze would cover all agricultural commodities,
DS61: Shrimp Products; Respondent: USA industrial goods, and locally finished produced goods
DS270: Fresh Fruit and Vegetables; Respondent: Australia in low quantity.
DS271: Fresh Pineapple; Respondent: Australia
As Respondent:
DS74: Pork and Poultry; Complainant: USA Bound Rates are set on selected agricultural,
DS102: Pork and Poultry; Complainant: USA chemical and industrial products, certain machinery
DS195: Motor Vehicle Sector; Complainant: USA and electrical equipment and measuring instruments.
DS215: Polypropylene Resins; Complainant: Korea These rates apply to WTO members, and to non-
Walden Bello (2003) argued that the Philippine WTO WTO countries if they have an agreement in force
membership can be appropriately called “multilateral with the Philippines providing for a most-favoured
disaster”. Since 1995, the country derived no benefits nation (MFN) treatment on tariffs, i.e., Bulgaria, Iraq,
from membership but incurred tremendous costs. Vietnam and the Russian Federation. As a result of
the Uruguay Round, almost all agricultural goods
In 2002, (Canuday, 2002) the Philippines was (except rice) and about half of the manufacturing tariff
rethinking its involvement in the WTO and other lines have been bound.
international alliances promoting trade liberalization. Philippines (Casiño, 2003) is one of the most open
Moves by the United States to impose tariff on economy in the ASEAN region and maybe the world.
steel and the EU's continued refusal to grant the The Import Liberalization Program (ILP) and Tariff
Philippines’ demands for zero tariffs on tuna "make Reform Program (TRP) was so drastic that 90% of
countries such as ours and other small developing its tariff lines have already fallen under the 0-5%
poor countries, question the entire fairness of the rate, way ahead its Southeast Asian neighbors. In
WTO principle," said Trade Secretary Mar Roxas. 2004, 97% are in below 5% rate. All these are way
"They preach one thing, they practice another thing," ahead of our commitments under the WTO and
he added. Roxas noted that the European Union has the ASEAN Free Trade Agreement (AFTA).
continued imposing a 24% tariff on canned tuna from
the Philippines, even as it granted zero tariffs on the Tariff quota rates With the Uruguay Round
same products from its former colonies in the implementation, quantitative restrictions on
Caribbean and Africa. (Bridges, 2002) agricultural goods have been converted into tariff
quotas set mainly on live animals, meat,; potatoes;
MFN The Philippines grants at least most-favored coffee; maize and sugar. In addition, under the Tariff
nations treatment to all trading partners. With the and Customs Code of the Philippines, some (25)
MFN tariff schedule in force as of 1 of January 1999 agricultural products are subject to both in-and out-
through Executive Order 63 effective 21 Jan 1999, quota tariff rates, i.e. no tariff quotas or minimum
176 tariff lines are duty free, essentially, goods access volumes have been defined for some items.
such as compound chemicals, rubber and articles (UNCTAD, 2005) Out of 5,639 tariff lines, 3,664 were
thereof, wood, textile yarns, laboratory and hygienic bound, or around 65%. 2,859 tariff lines or 51% were
glassware, ferrous waste and scrap, machinery, plant bound for industrial products. 805 tariff lines, or 14%
were bound for agricultural products. (Ray, 2005)

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Preferential duties under trade agreements. The dependence on foreign capital, debt and
Philippines participates in the Global System of speculation”.
Trade Preferences among Developing Countries
(GSTP), which provides for the exchange of trade In 1995, the proponents in the Philippine Senate of
concessions among developing countries. The tariff the ratification of the country’s commitment to the
concessions granted by the Philippines consist of GATT boasted that WTO membership would
four products under HS 7308.30.00, HS 7308.90.00, transform the Philippines into a newly industrialized
HS 8213.00.00, and 8301.10.00, each of which gets country: 500,000 new agricultural jobs a year;
a 10% margin preference from its base. The 587,000 new industrial jobs a year; an additional
Philippines is member of the Bangkok Agreement gross value added of P60B (US$1.1B) a year;
for liberalized trade among the less developed economic growth of at least 6% per year; and a
member countries of the Economic and Social significant improvement in poverty rates brought
Commission for Asia and the Pacific together with about by the booming economy. (Casiño, 2003)
India, Korea, Laos, Sri Lanka, and Thailand. The
agreement provides for tariff concessions on some Ten years after WTO accession, the Philippines
agricultural items, manufactured goods, chemicals faced the following harsh realities: Over a million
and minerals. agricultural jobs lost, with 690,000 families thrown
into poverty since 1994; all-time high unemployment
Aside from ASEAN, the Philippines is also a member with 4.9M Filipinos jobless and 8.3M going overseas
of the Asian Pacific Economic Cooperation just to earn a living. From being a relatively self-
(APEC) along with Australia, Brunei, Canada, reliant agricultural producer, it became a net food
Chile, China, Chinese Taipei, Hong Kong, Japan, importer. A $1.3B agricultural trade surplus in 1990-
Rep. of Korea, Malaysia, Mexico, New Zealand, 1994 was wiped out and replaced by an accumulated
Papua New Guinea, Peru, Russia, Singapore, trade deficit of $3.5B from 1995-1999. Rice imports
Thailand, the United States and Vietnam. APEC is increased by 540% and corn by 520%. The country’s
a multilateral forum formed in 1989 so that Asian and balance of payments deficit has worsened, resulting
Pacific economies can promote economic in the 72% fall in the value of the peso against the
cooperation and mutual assistance in developing key dollar from 1995-2000, and an increase in foreign
economic sectors, including trade and investment. debt from 52% to 66% of the GNP.

On 15 of November 1994, member countries The promised growth was nowhere, as the GDP
agreed to implement Open and Free trade among annual growth from 1996-2000 remains little changed
themselves by 2020, with advanced industrialized compared with those of the previous years prior to
nations realizing the trade liberalization goal by 2010. WTO membership. As expected, poverty worsened.
At their 1997 meeting in Vancouver, APEC leaders The official poverty rate is 40%, but independent
agreed on Voluntary Sectoral Liberalization estimates peg it as high as 86%. As if that wasn’t bad
(EVSL) to take place in 15 sectors, and the tariff enough, the income of the top 10% of the population
elements of nine sectors were identified under the increased by over 23 times that of the poorest 10% in
"accelerated tariff liberalization" (ATL) package i.e. 2000 compared to 19 times in 1994. (Casiño, 2003)
chemicals, energy, environment, fish and fish The Philippines is aiming for 5.0% GDP growth rate
products, forest products, gems and jewelry, medical this year. 2004-2010 Medium-Term Philippine
equipment and instruments, and toys, as well as a Development Plan (MTPDP) targetted 7.0-8.0 for
mutual recognition agreement concerning both 2005 and 2006. The latter targets were revised
telecommunications. The ATL initiative aims at to 5.3-6.3% for the current due to the slow growth
achieving a zero target for almost all sectors by until November this year.
2008. (UNCTAD, 2005)
Until now, overall Philippines has not been
able to strategically benefit and grow well from
Teddy Casiño, secretary-general of Bagong
the time it entered WTO despite having
Alyansang Makabayan (BAYAN, New Patriotic
complied with most of WTO Guidelines.
Alliance), said 28 February 2003 at the Conference
on WTO, Globalization and War, that the Philippine Although there were several other Socio-
“entry into the WTO has resulted in more poverty Economic, Political / Policy Related Issues like
and greater inequality brought about by the lack of local industry’s development, leading
destruction of local agriculture and industry, the to high dependence on imports, etc. which
stagnation of the economy and its increased also contributed to this situation.

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WTO & the SAARC: bound-rate duty was fixed either 10% or 20%.
Prior to the Seattle Conference, the South Asian (WTO, 1995).
Association for Regional Cooperation (SAARC)
states agreed on common strategy for WTO. (EPB, A new Philippine tariff schedule committed in 2000
2001) A paper presented by Bangladesh on about 160 steel products, HS 7201-29, bound from
"problems of least developed countries (LDCs) in the 0%, 3%, 7%, 10% tariffs (APEC, 2000). These same
multilateral trading system" highlighted the need for rates are extended to MFN, e.g. WTO, trading
increased market access opportunities on preferential partners of the Philippines. (WCO, 2005)
teams for the LDCs. SAARC recognized that full
participation by LDCs in the WTO would be On 22 October 2004, Pres. Gloria Macapagal-Arroyo
facilitated through the setting of a special cell on issued Executive Order 375, which notes MFN-
technical division within WTO. import duty currently 3% for selected HS 7208, 7209,
7211 steel products, be increased to 7% once
India suggested last March 2005, a three-point Global Steelworks, now Global Steel Philippines
agenda to SAARC member nations for dealing with (GSPI), is in commercial operation as determined
instruments such as Trade Defense Measures, by the NEDA Tariff and Related Matters (TRM)
Implementation issues and Special and Differential Committee. (OPS, 2004)
Treatment regimes under the WTO framework. Indian
Commerce Secretary, S. N. Menon, advised SAARC It will be a TURNING POINT for us the moment
to closely look at Trade Defense Measures like the this duty gets increased from 3% to 7%. It will
Agreement on Anti-Dumping and the Agreement immensely speed-up our Market Share locally
on Subsidies and Countervailing Measures and and will add premiums on our sales.
called for transparent anti-dumping rules. (Central
Chronicle, 2005)
WTO’s Impact to Trade:
WTO & the Steel Industry
WTO published a 10th anniversary booklet (WTO,
The most prominent issue concerning the WTO and 2003) which highlighted the ten benefits among many
the steel industry began on March 20, 2002 when US over-riding reasons why the world is better off with
President G.W. Bush imposed a 8-30% tariff on all the system than without it.
steel imports (US Gov, 2002). The European Union
(Guardian, 2002) lodged a complaint in the WTO
questioning the legality of the US actions. Other
countries followed: Brazil, China, Japan, Korea,
Norway, Switzerland, and New Zealand.
Furthermore, the EU issued Regulation 1031/2002 in
retaliation to the US actions. By June 2002, (CNN,
2002) the WTO agreed to investigate whether U.S.
steel tariffs violate international trade agreements,
and ruled in favor of the EU. By November 2003, the
EU, after WTO upheld its decision versus a US
appeal, threathened to retaliate up to $2.2B on
tariffs to include Harley Davidson motorcycles,
Carolinian textiles, among others. (Economist, 2003) There will also be fewer products charged high duty
All ASEAN-5 countries are members of WTO, thus rates. The proportion of imports into developed
any concession given by any ASEAN country, countries from all sources facing tariffs rates of more
automatically apply to all WTO members. than 15% will decline from 7% to 5%. Where as the
proportion of developing country’s exports facing
The Philippines committed to WTO in 1995 that the tariffs above 15% in industrial countries will fall from
reduction in tariffs and any expansion of tariff quotas 9% to 5%.
provided for goods schedules shall be implemented On 26 March 1997, 40 countries accounting for more
in equal annual installments beginning on 1995 and than 92% of world trade in information technology
ending on 2000. On 23 selected steel products, HS products, agreed to eliminate import duties and other
7201-7214, base-rate duty was fixed at 10%, while charges on these products by 2000 (by 2005 in a
handful of cases). As with other tariff commitments,
each participating country is applying its

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commitments equally to exports from all WTO 78% of product lines to 99%. For developing
members (i.e. on a most-favored-nation basis), even countries, the increase was considerable: from
from members that did not make commitments. 21% to 73%. Economies in transition from central
planning increased their bindings from 73% to 98%.
Developed countries increased the number of This all means a substantially higher degree of
import items whose tariff rates are “bound” (i.e. market security for traders and investors.
committed and difficult to be increased further) from

Postscript
1st : There are two schools of thoughts facing the world this December 2005: is the WTO helping the world as a
whole to liberalized global trade or it is only a vehicle for the developed world to impose rules on the developing
world to open which sector, to what extent and when; and further exploit the natural resources of the least-
developed countries?
2nd : A perception in Asia is shared that multilateral global free trade i. e. WTO, is beginning to be replaced by
regional trading blocs, e.g. AFTA, APEC, that favor their own members over the rest of the world.

References:
Books, PDFs, Working Papers, Databases:
World Trade Organization (WTO), 1994-95, 2003-05, “Understanding the WTO” (October: World Trade Organization)
World Customs Organization (WCO), 2005, “Harmonized Commodity Description and Coding System”
[http://www.wcoomd.org/]
Institute of Agriculture and Trade Policy (IATP), 2005, “Sailing Close to the Wind” (Institute of Agriculture and Trade Policy: Nov)
McKibbin, Warwick J. and Wing Thye Woo, 2003, “The Consequences of China’s WTO Ascension on its Neighbors”,
th
Pangestu, Mari, 2002, “China and WTO: challenges and options for ASEAN”, (Nov: 4 Asia Development Forum, South Korea, 04-05).
Westin, Susan S. 2000, Seattle Ministerial: Outcomes and Lessons Learned, (US General Accounting Office, GAO/T-NSIAD-00-86)
Bello, Walden, 2003, Multilateral Punishment : The Philippines in the WTO, 1995 – 2003, Focus on the Global South (FOCUS)
Asian-Pacific Economic Cooperation (APEC), 2000, Tariff Database
[http://www.apectariff.org/ ]

News, Articles:
ASEAN, 1999, ASEAN: WTO Round Should Consider the Interests of Southeast Asia, [http://www.aseansec.org/10857.htm]
Asia-Pacific Economic Cooperation (APEC), 2005, Busan Declaration
[http://www.apecsec.org.sg/]
Guardian, 2002. Europe complains to WTO over steel tariffs, (07 Mar),
[http://www.guardian.co.uk/print/0,3858,4369956-107226,00.html]
South Asian Association for Regional Cooperation (SAARC), 2001, SAARC Forges Common Front on WTO issues, Joint
Statement by Commerce Ministers on Doha Ministerial conference,
[http://commin.nic.in/doc/wtoaug01.htm]
Export Promotion Bureau (EPB), 2001, SAARC states agree on common strategy for WTO,
[http://www.epbbd.com/]
AFP Business News, 2005, No deal at Hong Kong WTO meeting in December: Mandelson,
[http://au.biz.yahoo.com/051111/33/d0wx.html]
Cable News Network (CNN), 2002, WTO launches steel tariffs inquiry
[http://archives.cnn.com/2002/WORLD/europe/06/03/wto.eu/]
Central Chronicle, 2005, India Suggests SAARC Agenda on WTO, (31 Mar)
[http://www.centralchronicle.com/20050331/3103163.htm]
Alex Frew McMillan, CNN, 2002, Frustrated Japan Threatens WTO Steel Action, (15 Mar)
US Gov, 2002, White House Says Steel Tariff Decision Consistent With WTO Rules,
[http://www.usembassy.it/file2002_03/alia/a2030513.htm]
The Economist, 2003, Global Agenda: Cold Steel (13 Nov)
[http://www.economist.com/agenda/displayStory.cfm?story_id=2206255]
UNCTAD, 2003, TRAINS: Philippines. (May 2003)
[http://r0.unctad.org/trains/2003%20Philippines.htm]
Agence France Presse (AFP) (Dec 2005). Poor told to accept WTO offers, cited in The Manila Times (01 Dec 2005 issue)
[http://www.manilatimes.net/national/2005/dec/01/yehey/business/20051201bus2.html]
Canuday, Jowel F. (2002). Roxas on WTO: 'They preach one thing, practice another'
http://www.cyberdyaryo.com/features/f2002_0311_02.htm
Casiño, Teddy (2003). WTO and the Philippines, (23 April) Conference on WTO, Globalization and War, Quezon City, Feb 28, 2003.
[http://www.yonip.com/View%20Point/Board06/messages/368.html].
Go, Marianne V. (2005), Global Steel’s hot, cold rolled coil lines start commercial operation The Philippine Star (15 Oct 2005 issue)
[http://www.philstar.com/philstar/NEWS200510150705.htm]
Bridges, (2002) Philippines Mulls Withdrawal From WTO, Cairns (Vol. 6 no.10, 19 March)
[http://www.hartford-hwp.com/archives/54a/129.html]

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