International Business Law Chapter 9


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International Business Law Chapter 9

  1. 1. Basics of GATT Law and the WTO Chapter 9
  2. 2. 1 9 4 7 <ul><li>The Truman Doctrine : In a meeting between Congressmen and State Department officials, Undersecretary of State Dean Acheson articulated what would later become known as the domino theory. He stated that more was at stake than Greece and Turkey, for if those two key states should fall, communism would likely spread south to Iran and as far east as India. Acheson concluded that not since the days of Rome and Carthage had such a polarization of power existed. The stunned legislators agreed to endorse the program on the condition that President Truman stress the severity of the crisis in an address to Congress and in a radio broadcast to the American people. </li></ul><ul><li> </li></ul>
  3. 3. 1 9 4 7 <ul><li>The “do nothing” Republicans controlled the Congress. </li></ul><ul><li>The Taft-Hartley Act was passed – to the chagrin of labor unions. </li></ul><ul><li>The Portal-to-Portal Act was passed – to the delight of employers. </li></ul>
  4. 4. 1 9 4 7 <ul><li>The year that saw the passage of the General Agreement on Tariffs and Trade. </li></ul><ul><li>The modern global trading system begins. </li></ul><ul><li>In 1994 another agreement emerges from the Uruguay Round and results in the WTO. </li></ul>
  5. 5. Barriers to Trade Tariffs & Non-Tariff Barriers, which can be direct, such as embargoes, quotas, auctioned quotas, tariff-rate quotas, or indirect, such as the Japanese Large-Scale Retail Stores Law (now repealed), import licensing schemes, and highly bureaucratic customs procedures.
  6. 6. The GATT (1947) Framework <ul><li>GATT only applies to nations, not individual grievants. </li></ul><ul><li>It applied only to trade in goods, not services, not intellectual property, not even textiles and apparel, and not foreign investment. </li></ul><ul><li>It had a very weak conflict resolution mechanism. </li></ul>
  7. 7. GATT and U.S. Law <ul><li>GATT rules are adopted by consensus. </li></ul><ul><li>Nothing in GATT supersedes U.S. law. </li></ul><ul><li>U.S. Courts do not have to follow GATT. </li></ul><ul><li>If a company feels another GATT country is violating GATT it has few good options, other than to complain to the U.S. government. </li></ul>
  8. 8. From <ul><li>The WTO… In brief the World Trade Organization (WTO) 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. </li></ul>
  9. 9. WTO HQ Geneva, Switzerland ‘ The goal is to improve the welfare of the peoples of the member countries.’
  10. 10. From <ul><li>At the heart of the system — known as the multilateral trading system — are the WTO’s agreements, negotiated and signed by a large majority of the world’s trading nations, and ratified in their parliaments. These agreements are the legal ground-rules for international commerce. Essentially, they are contracts, guaranteeing member countries important trade rights. They also bind governments to keep their trade policies within agreed limits to everybody’s benefit. </li></ul><ul><li>The agreements were negotiated and signed by governments. But their purpose is to help producers of goods and services, exporters, and importers conduct their business. </li></ul>
  11. 11. WTO Structure <ul><li>From </li></ul><ul><li>The WTO has 153 members (as of 7/23/08), accounting for over 97% of world trade. Around 30 others are negotiating membership. </li></ul><ul><li>Decisions are made by the entire membership. This is typically by consensus. A majority vote is also possible but it has never been used in the WTO, and was extremely rare under the WTO’s predecessor, GATT. The WTO’s agreements have been ratified in all members’ parliaments. </li></ul><ul><li>The WTO’s top level decision-making body is the Ministerial Conference which meets at least once every two years. </li></ul>
  12. 12. Structure, Continued <ul><li>Below the Ministerial Conference is the General Council (normally ambassadors and heads of delegation in Geneva, but sometimes officials sent from members’ capitals) which meets several times a year in the Geneva headquarters. The General Council also meets as the Trade Policy Review Body and the Dispute Settlement Body. </li></ul><ul><li>At the next level, the Goods Council, Services Council and Intellectual Property (TRIPS) Council report to the General Council. </li></ul><ul><li>Numerous specialized committees, working groups and working parties deal with the individual agreements and other areas such as the environment, development, membership applications and regional trade agreements. </li></ul><ul><li> </li></ul>
  13. 13. WTO Members <ul><li> </li></ul><ul><li>Which of the world’s leading nations is not on that list? </li></ul><ul><li>What are accessions? See the video, Accessions at </li></ul>
  14. 14. WTO Streaming Videos (Free) <ul><li> </li></ul><ul><li>A virtual tour of the WTO </li></ul><ul><li>From GATT to WTO </li></ul><ul><li>Case studies of WTO dispute settlement </li></ul><ul><li> </li></ul><ul><li>What role for the multilateral trade negotiations in global governance? </li></ul>
  15. 15. Your Topic Goes Here <ul><li>Your subtopics go here </li></ul>
  16. 16. Key WTO Concepts <ul><li>Nondiscrimination </li></ul><ul><li>Most Favored Nation /Normal Trade Relations </li></ul><ul><li>How do trade blocs such as NAFTA, CAFTA, and the EU fit into this picture? </li></ul>
  17. 17. WTO Dispute Settlement <ul><li>Headed by the General Council, which oversees the Dispute Settlement Body. </li></ul><ul><li>Dispute resolution starts with consultations between the parties. </li></ul><ul><li>A panel of 3 – 5 people comes next. </li></ul><ul><li>An appellate body of 3 people can then be appointed. </li></ul><ul><li>This is final unless the DSB rejects it within 30 days. </li></ul>
  18. 18. Elements