D.

Scott Wiley
&
Yan Jin

What is the WTO?

Wellwhat is it???
A place?
Today at the WTO

A law?
Based on the WTO Regulation

A group of people?
Members of the WTO agreed

A meeting?
The WTO meeting was held in

The idea of the WTO can seem a bit abstract

What is the WTO?

The WTO is an organization that deals with
rules of trade between nations
Functions include acting as:
An organization for liberalizing trade
A forum for trade negotiations
A set of rules
A system to settle disputes

An Organization for Liberalizing Trade

Liberalism in economics refers to an ideology
that supports the individual rights of property
and free contract
In the context of the WTO it means the removal
of trade barriers
Goes with the idea that the hands-off approach to
markets is the most efficient in the long-run

WTOs Stated Aim:

Promote Free Trade
Stimulate Economic Growth

A Forum for Trade Negotiations

A place where member governments go to
try to sort out trade problems
Members start by talking it out
WTO acts as a mediating body

The WTO as a Set of Rules

WTO Agreements
Signed by most of the worlds trading nations
The legal framework for international commerce
Contracts for governments to maintain certain
trading policies

Purpose is to help exporters and importers,

while making sure governments meet social
objectives
The WTO oversees the implementation,
administration and operation of the covered
agreements

A System to Settle Disputes

Conflict of interests exists in trade relations
Trade agreements need interpreting

WTO is meant to be a neutral party to help

settle trade disputes

History
After World War II many nations had adopted
a protectionist stance on trade
Many felt closed-protectionist positions was a
cause of WWII
Victor nations set up economic institutions to
prevent this from happening again

History
Bretton Woods System of 1946
International Monetary Fund (IMF)
World Bank
International Trade Organization (ITO)

The General Agreement on Trade and Tariffs

(GATT) was signed into place in 1947
The ITO did not fly
The US said it was unfair

GATT took the place of the ITO

History

GATT: main purpose was to reduce barriers

to international trade
GATT was an agreement, not an organization
Became the de facto organization for
international trade

History - GATT
Trade Rounds negotiation meetings
First 6 rounds reduced tariffs from ~50% to
~12%
7th, the Tokyo Round of the early 70s was first
major effort at trade reform
Mainly about non-tariff barriers to trade, such as:

Subsidies
Quotas
Foreign exchange controls
Import bans
Restrictive licensing

History GATT
The 1986 Uruguay Rounds of trade
negotiations covered new trade topics
Trade in services and intellectual property
Sensitive subjects, like textiles and agriculture

GATT was expanded by adding:

General Agreement on Trade in Services
(GATS)
Agreement on Trade Related Aspects of
Intellectual Property (TRIPS)

Complexities of globalization strained the

effectiveness of GATT

History WTO
Uruguay Round ended in 1994 with the
formation of the World Trade Organization
Jan. 1, 1995 WTO was born
GATT, GATS and TRIPS still exist as the
framework for the WTOs operations

History
Current Round Doha
Began November 2001

Ambitious agenda to make globalization

more inclusive of the worlds poor
Talks have been contentious
No agreements have been reached
July 2006 talks were suspended by Director
General, Pacel Lamy, but may go forward at
anytime

Principles of the Trading System

1. Nondiscrimination
2. Reciprocity

Meant to prevent Free-riders

3. Binding and Enforceable Commitments

Ensures predictability

4. Transparency

Member nations are required to publish trade

regulations and report changes

5. Safety Valves

Governments can prevent trade for, say, health

reasons

Formal Structure Highest Level

-Ministerial Conference
Meets at least every two years
Brings together all members of WTO
Can make decisions on all matters under any
multilateral trade agreement

Formal Structure Second Level

-General Council

Meets regularly
Made up of representatives from all member
nations
Has the authority to act on behalf of the
Ministerial Conference
Also acts as:
Dispute Settlement Body
Trade Policy Review Body

Formal Structure Third Level

-Councils for Trade

Works under the General Council

Made up of three councils

1. GATT Council
2. TRIPS Council
3. GATS Council

These councils are charged with

overseeing the functioning of their various
trade agreements

Formal Structure Fourth Level

-Subsidiary Bodies

These are sub-councils under the three

councils for trade
Examples include:
Textiles Monitoring Body, under the GATT
Council
Information Technology Agreement Committee,
under the TRIPS Council
The Services Council, under the GATS Council

Benefits from the WTO

1.
2.
3.
4.
5.
6.
7.
8.
9.
10.

The system promotes peace

Disputes are handled constructively
Rules make life easier for all
Freer trade cuts the costs of living
It provides more choices of products
Trade raises incomes
Trade stimulates economic growth
The basic principals make life more efficient
Governments are shielded from lobbying
The system encourages good government
Source: www.wto.org

Dispute Settlement
- A Unique Contribution
It is the central pillar of the multilateral
trading system
It is a unique contribution to the stability of
the global economy
It makes the trading system more secure and
predictable

Principle of Dispute Settlement

Equitable
Fast
Effective
Mutually acceptable

Stages of Dispute Settlement

Consultation- talk to each other

Panel- If consultations fail, the
complaining country can ask for a panel
to be appointed.
Appeal-Each side can appeal.

Case Decided, then?

If a country has done something wrong, It has to swiftly
correct its fault.
if it continues to break an agreement, It must offer
compensation or suffer a suitable penalty.
It must follow the recommendations of the panel report or
the appeals report.
It must state its intention to do so at a Dispute Settlement
Body meeting held within 30 days of the reports adoption.
If after 20 days, no satisfactory compensation is agreed,
the complaining side may ask the Dispute Settlement
Body for permission to impose limited trade sanctions
against the other side.
In any case, the Dispute Settlement Body monitors how
adopted rulings are implemented.

How Long to Settle a Dispute?

60 days-Consultations, mediation, etc
45 days-Panel set up and panelists appointed
6 months-Final panel report to parties
3 weeks-Final panel report to WTO members
60 days-Dispute Settlement Body adopts report
(if no appeal)
Total = 1 year (without appeal)
60-90 days-Appeals report
30 days-Dispute Settlement Body adopts
appeals report
Total = 1y 3m(with appeal)

Case of Venezuela
On 23 January 1995, Venezuela complained to the Dispute
Settlement Body that the United States was applying rules
that discriminated against gasoline imports, and formally
requested consultations with the United States.
Just over a year later the dispute panel completed its final
report.
The United States appealed. The Appellate Body completed
its report, and the Dispute Settlement Body adopted the
report on 20 May 1996, one year and four months after the
complaint was first lodged.
The United States agreed with Venezuela that it would
amend its regulations within 15 months and on 26 August
1997 it reported to the Dispute Settlement Body that a new
regulation had been signed on 19 August.

Effectiveness of Dispute Settlement

By July 2005, only about 130 of the nearly

332 cases had reached the full panel
process. Most of the rest have either been
notified as settled out of court or remain in
a prolonged consultation phase some
since 1995.

The Complaint of U.S.A. against China

On 10 April 2007, the United States

requested consultations with China
concerning certain measures pertaining to
the protection and enforcement of
intellectual property rights in China.

The Four Matters on which the United States

Requests Consultations
The thresholds that must be met in order for certain acts of
trademark counterfeiting and copyright piracy to be subject to
criminal procedures and penalties;
Goods that infringe intellectual property rights that are confiscated
by Chinese customs authorities, in particular the disposal of such
goods following removal of their infringing features;
The scope of coverage of criminal procedures and penalties for
unauthorized reproduction or unauthorized distribution of
copyrighted works;
The denial of copyright and related rights protection and
enforcement to creative works of authorship, sound recordings
and performances that have not been authorized for publication
or distribution within China.

Summary of Chinese intellectual property

violations
Nearly 90 percent of all American software is
pirated at an annual cost of more than $2 billion to
the US economy.
Total copyright losses reach nearly $3 billion per
year.
The U.S. automobile industry loses $12 billion each
year due to counterfeit automotive parts production,
of which China is a leading violator.

Response from China

"The United States Trade Representative, the USTR, has
totally ignored the massive strides China has made,"
Premier Wu told an intellectual property forum in Beijing.
"The Chinese government is extremely dissatisfied about
this, but we will proactively respond according to the
related WTO rules and see it through to the end, Wu
added.

Source: www.reuters.com

Reasons to Oppose the WTO

1. The WTO Is fundamentally undemocratic
2. The WTO will not make us safer
3. The WTO tramples labor and human rights
4. The WTO would privatize essential services
5. The WTO is destroying the environment
6. The WTO is killing people

Source: www.globalexchange.org

Reasons to Oppose the WTO

7. The WTO is increasing inequality
8. The WTO is increasing hunger
9. The WTO hurts poor, small countries in favor of rich
powerful nations
10. The WTO undermines local level decision-making and
national sovereignty
11. There are alternatives to the WTO
12. The tide is turning against free trade and the WTO!
Source: www.globalexchange.org

Q & A?