2. Contents
1. The formation and functions of the WTO
2. Important WTO negotiations and agreements
3. South Korea agriculture case-study
4. The WTO as a liberal institution
3. What is the WTO?
• An international trade body that regulates
import/export barriers, trade conduct, etc
• Members account for around 90% of world trade
(Balaam & Veseth, 2008, p.111)
• Holds negotiations between member states in
order to formulate wide-ranging trade
agreements
• A powerful and vital international institution
4. Pretext to the World Trade Organzation
• General Agreement on Tariffs and Trade (1948)
provided a trade framework but not a formal
institution
• GATT’s enlarged role arose out of the failure to
create the International Trade Organization
(ITO)
• A recognised need for an international body to
regulate trade between states and a recognition
that the GATT could not fulfil the role
5. Establishment and growth of the WTO
• Formed in 1995 as a result of the Uruguay
Round of negotiations between 1986-1994
• GATT reverted back to its original role
• Originally consisted of 146 members; many of
whom were GATT signatories
• As of 2010, membership had increased to 153
states, with others still awaiting accession
6. Functions of the WTO
• Negotiating the reduction/elimination of trade barriers
• Agreeing and enforcing rules that govern international
trade
• Ensuring transparency in trade agreements between
states
• Settling disputes between member states
• Assisting less developed countries (LDCs) to become
more active in international trade
• Conducting economic research and collecting trade data
‘to open trade for the benefit of all’
8. GATT negotiation rounds
• Kennedy Round (1963-1967)
▫ Political tensions between the US and EEC
▫ LDCs dissatisfied with processes and outcomes
• Tokyo Round (1973-1979)
▫ Focused on areas of concern for large states
▫ EEC and US clashes until the Swiss Formula
(1977)
▫ Limited success in reducing non-tariff measures
9. GATT negotiation rounds (cont’d)
• Uruguay Round (1986-1994)
▫ Exclusion of areas such as agriculture and textiles
hampered ability to reach meaningful agreements
▫ ‘Tariffication’ process – non-tariff barriers
converted as a step towards free trade
▫ Blair House Accord (1992) enabled 123 states to
sign a wide-reaching trade agreement in 1994
▫ Following the conclusion of the Uruguay Round
the WTO was formally created in 1995
10. WTO negotiation rounds
• Initial WTO negotiations were troublesome, with
the US walking out in 1995
• First ministerial meeting of WTO in December
1996
• A number of problems
▫ The ‘battle’ of Seattle (1999)
▫ ‘Crisis’ in Cancun (2003)
• Despite these issues, the Doha
Round was launched in 2001 with a focus on
assisting LDCs
12. Background
• The South Korean economy has traditionally
been reliant on the agricultural sector, with the
rice market having strong cultural importance
• Due to the rice market’s importance, the state
had used tariffs to limit foreign competition
• Reform to Asian agriculture has long been a
priority for both GATT and the WTO
13. Korean opposition
• During the Doha Round
negotiations of 2005 in Hong
Kong, Korean farmers protested
against reform to domestic rice
markets proposed by the WTO
• Many Korean rice farmers believe that further
reduction of trade barriers would bankrupt them
• European nations argue that they have been
lenient, and that LDCs need to do more to open
their markets to foreign competition
14. Consequences of the Uruguay Round
• Following the Uruguay Round of negotiations
South Korea was committed to increasing its rice
imports to 4% of domestic use
• In 2004 this target was doubled to 8% of
domestic use by 2014
• Whilst this demonstrates the WTO’s
commitment to free trade, it leaves Korea’s
agricultural sector in steady decline
16. Conclusions & consequences
• Despite Korea’s best efforts to protect its rice
market, the WTO has succeeded in forcing the
state to gradually liberalise its economy
• Increased agricultural imports is leaving Korean
farmers with declining incomes and few
prospects for development
18. Background
• Thailand is the 3rd largest producer of tinned
tuna and the largest exporter in the world
• Main customers include the USA, Canada and
the EU (formerly EC)
• The Thai government argued that African,
Caribbean and Pacific (ACP) states were given
preferential tariffs by the EC
19. WTO involvement
• Thailand complained to the WTO which
investigated the claims
• The EC claimed that the agreement with ACP
states was historical and helped LDCs to export
their goods
• However, the WTO saw the disparity as being
too high
20. Introduction of quotas
• A quota system was introduced in June 2003
whereby the EC could import up to 25,000
tonnes of tuna with a universal tariff of 12%
• The 25,000 tonne limit was to be negotiable to
allow increases if consumer demand fluctuated
• The tariff quota system enabled Thailand to
provide the EC with up to 52% of its annual
volume of tuna
• Indonesia also benefited from the solution
21. Conclusions & consequences
• A strong example of how developing states can
use the WTO to further their economic interests
• Demonstrates the strength of the WTO’s dispute
settlement mechanism
• Encouraged other LDCs to pursue cases at the
WTO level, with bigger cases being brought
forward against the EU (e.g. sugar)
▫ WTO rules against the EU again
23. Liberalism
• Based on a ‘laissez faire’ attitude – i.e. ‘let it be’
• Opposes state intervention in the economy;
instead favouring free-trade and open markets
• Three forms of Liberalism
▫ Classical (Locke, Smith)
▫ Social (J.S. Mill, Keynes)
▫ Neo-Liberalism (Hayek, Friedman)
24. WTO as a Liberal institution
• The WTO exists to break down trade barriers
and encourage free trade between its members
• It can intervene in the affairs of member states
when it feels that they are unfairly maintaining
trade barriers (e.g. South Korea)
• With the creation of the WTO in 1995, Liberal
economics and norms were clearly entrenched in
international politics
25. Economics and interdependence
• Liberalism’s focus on trade encourages more
friendly relations between states
• Trade also makes states interdependent
• The WTO’s role in dispute settlement provides a
diplomatic means of settling differences
• Keohane and Nye (1977): Economic
interdependence limits conflict between states
27. The complexity of trade
• Several nations have threatened to withdraw
from the WTO as a result of the increasing
complexity of trade
▫ Other states have been reluctant to join and/or
actively participate (e.g. China)
• Although states have thus far accepted the
WTO’s judgements on disputes, it increasingly
seems that sovereignty is being compromised
28. Is the WTO too powerful?
• The theory of mercantilism would argue that the
WTO is too powerful; taking away the state’s
power to determine its own trade policies
• South Korea could be viewed as a mercantilist
economy as a result of high its high tariffs
▫ WTO intervention therefore undermines the
state’s ability to protect the rice market
▫ Whilst other states may benefit from free-trade, it
puts Korean farmers in danger of bankruptcy
29. Interdependence and peace
• Whilst some Liberal scholars claim that
economic interdependence promotes lasting
peace, mercantilism holds that developed states
would invest in security
• This links closely with Realist IR thought
whereby states are self-interested and seek to
protect their own interests
31. Conclusions
• The WTO has shown consistency in pressuring
member states to apply the principles of free
trade
• Some LDCs have benefited from WTO
intervention (e.g. Thailand), whereas others
have been disadvantaged (e.g. Korea)
• The WTO fulfils many of its functions, however
it is arguable that it is becoming too powerful
