The world trade organization (WTO)


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The world trade organization (WTO)

  1. 1. In the name of Allah The World Trade Organization Prepared for Dr Abla Abdel-lateif Prepared and Presented by International Economic Organizations Mohamed Ismael Elshiekh Benha University Commerce Faculty Economics Major Fourth Year, nov.2005 World Trade Organization
  2. 2. World Trade Organization 2
  3. 3. The WTO Location: Geneva, Switzerland Established: 1 January 1995 Created by: Uruguay Round negotiations (1986–94) Membership: 148 countries (since 13 October 2004) Budget: 169 million Swiss francs for 2005 Secretariat staff: 630 Head: Pascal Lamy (director-general) Functions: • Administering WTO trade agreements • Forum for trade negotiations • Handling trade disputes • Monitoring national trade policies • Technical assistance and training for developing countries • Cooperation with other international organizations World Trade Organization 3
  4. 4. ______ Contents         1) The objectives 2) The Evolution of the WTO 3) The Structure of the WTO A- The main activities ( Agreements ) B- The Body of the WTO C- Members 4) Benefits of the WTO trading system 5) The conclusion World Trade Organization 4
  5. 5. 1) The objectives The umbrella of Objectives WTO WB World Trade Organization IMF 5
  6. 6. The umbrella of Objectives 1- Increasing World welfare 2- Decreasing the Unemployment 3- Encouraging development in the developing countries 4- Increasing world welfare How to achieve them WTO WB World Trade Organization IMF 6
  7. 7. Objectives of WTO 1- World Trade Liberalization Through eliminating the trade obstacles by __ Decreasing Tariffs __ Equal opportunity for all countries ___ Settling the disputes concerned with trade 2- Encouraging the faire competition __(e.g., Anti-dumping actions ) __(Most-Favored-Nation Principle) 3- Encouraging development in the developing countries Through giving them extra period for implementing the agreements 4- Increasing world welfare __Through giving equal opportunities for all countries in the international market Principles of Trade World Trade Organization 7
  8. 8. 2) Evolution of the WTO 1995 GATT years 1947 1960 1973 GATT 1964 1986 Dillon Round Kennedy Round Tokyo Round Uruguay Round 26 26 62 102 WTO 123 Transitional Stage Tariffs Tariffs & Anti-dumping measures Tariffs & Non-Tariffs measures Tariffs , Non-Tariffs Measures , services , intellectual property, dispute settlement , creation of WTO World Trade Organization 8
  9. 9. GATT 1947 WTO 1) Establishment 2) Main Issues 3) Kind Of Agreements 4) The Structure 5) Members 6) Dispute Settlements 7) Decision Making process World Trade Organization 9
  10. 10. GATT 1947 WTO 1) Establishment The GATT was conducted ,after Geneva Round In 1947 after the second World War, as a temporary framework governing the conduct of the international trade The WTO was held ,after Marrakech Ministerial meeting on 15 April , 1994 . The deal signed by 117 ministers , It started working on the first of December , 1994 to displace the GATT World Trade Organization 10
  11. 11. WTO GATT 1947 2) Main Issues The GATT Trade of goods The WTO Trade of Services GATS Intellectual property Rights (TRIPS) World Trade Organization 11
  12. 12. WTO GATT1947 3) Kind Of Agreements The GATT’s Agreements __ are conditional __ admitted wo the parliament voting __ No effective executive mechanism The WTO’s Agreements __ are obligatory __ admitted first by the parliament voting The effective executive mechanism is represented in the three main councils ( structure) World Trade Organization 12
  13. 13. WTO GATT1947 Did GATT succeed ?? Temporary stage Yes Trade liberalization Tariffs reduction No Globalization No effective executive structure World Trade Organization 13
  14. 14. 3) The Structure of the WTO The organization’s Body Membership Agreements World Trade Organization 14
  15. 15. 2) The main activities ( Agreements ) Trade Trade policies Goods Services Intellectual property Settling disputes World Trade Organization 15
  16. 16. 2) The main activities ( Agreements ) WTO’sTrade Agreements 4) Trade policy review Body Trade policies 1) GATT Goods 2) GATS Services Intellectual 3) TRIPs property 5) Disputes’ settlement Body Settling disputes World Trade Organization 16
  17. 17. GATT 2) Agriculture 1) Tariffs 3) Standards and Safety 4) Textiles 6) Anti-dumping , Subsidies,  Safeguards 5) Non-Tariffs 7) Plurilaterals World Trade Organization
  18. 18. GATT 1995 GATT 1947 An Original agreement An Updated agreement Independent agreement A part of the WTO 1960 Dillon Round 1964 Kennedy Round 1973 Tokyo Round World Trade Organization 1986 Uruguay Round 18
  19. 19. 1.1) Tariffs a- Historical View Protectionism Liberalization ____ increasing tariffs To protect the domestic production As a tool to reduce the imports And encourage the domestic producers ___ decreasing tariffs To have faire competition By applying the principle of MFN Not to distort the international market World Trade Organization 19
  20. 20. 1.1) Tariffs price D S After Trade Before Trade BeforeTariffs After Tariffs E p P2 P1 b- Theoretical View C D WP +T A B WP Quantity Q1 Q3 Q Q4 Q2 World Trade Organization 20
  21. 21. 1.1) Tariffs C- Tariffs Cuts A) Developed countries __ The result is a 40% cut in their tariffs on industrial products, from an average of 6.3% to 3.8%. __ The proportion of imports into developed countries from all sources facing tariffs rates of more than 15% will decline from 7% to 5%. B) Developing countries __ Developing countries do not have to cut their subsidies or lower their tariffs soon as much as developed countries, and they are given extra time to complete their obligations World Trade Organization 21
  22. 22. 1.2- Agriculture The objective of the Agriculture Agreement is to reform trade in the sector and to make policies more market-oriented ___ The new rules and commitments apply to 1- market access various trade restrictions confronting imports ‗ Tariffs only ‗ please •2- domestic support subsidies and other programmes, including those that raise guarantee farm gate prices and farmers‘ incomes Some you can , some you can‘t • 3- export subsidies and other methods used to make exports artificially competitive. Limits on spending and quantities Numerical targets for agriculture World Trade Organization 22
  23. 23. Developed countries Developing countries average cut for all agricultural products –36% –24% minimum cut per product –15% –10% –20% –13% –36% subsidized quantities –21% World (base period: 1986–90) Trade Organization –24% –14% 1.2- Agriculture 6 years: 1995–2000 10 years: 1995–2004 Tariffs Domestic support total cuts for sector (base period: 1986–88) Exports value of subsidies
  24. 24. 3- Standards and Safety a-Safety Food, animal and plant products: how safe is safe? ___ A separate agreement on food safety and animal and plant health standards (the Sanitary and Phytosanitary Measures Agreement or SPS) sets out the basic rules.. b-Standards Technical regulations and standards ___ The Technical Barriers to Trade Agreement (TBT) tries to ensure that regulations, standards, testing and certification procedures do not create unnecessary obstacles. World Trade Organization 23
  25. 25. 1.4- Textiles ___ Textiles, like agriculture, was one of the hardest-fought issues in the WTO, as it was in the former GATT system ___From 1974 until the end of the Uruguay Round, the trade was governed by the Multifibre Arrangement (MFA). ___ Since 1995, the WTO‘s Agreement on Textiles and Clothing (ATC) took over . ___ A Textiles Monitoring Body (TMB) 1-supervised the agreement‘s implementation. 2-It consisted of a chairman and 10 members 3-It monitored actions taken under the agreement to ensure that they were consistent, and 4-it reported to the Goods Council The Textiles Monitoring Body 5-dealt with disputes under the Agreement on Textiles and Clothing. Four steps over 10 years World Trade Organization 24
  26. 26. Textiles Step Step 1: 1 Jan 1995 (to 31 Dec 1997) Percentage of products to be brought under GATT (including removal of any quotas) How fast remaining quotas should open up, if 1994 rate was 6% 16% 6.96% (minimum, taking 1990 imports as base) Step 2: 1 Jan 1998 (to 31 Dec 2001) Step 3: 1 Jan 2002 (to 31 Dec 2004) Step 4: 1 Jan 2005 Full integration into GATT (and final elimination of quotas). Agreement on Textiles and Clothing terminates. per year 17% 8.7% 18% 11.05% 49% (maximum) World Trade Organization per year per year No quotas left
  27. 27. 1.5) Non-Tariff barriers __A number of agreements deal with various bureaucratic or legal issues that could involve hindrances to trade. 1-Import licensing The Agreement on Import Licensing Procedures says import Licensing should be simple, transparent and predictable •2- Rules for the valuation of goods at customs The WTO agreement on customs valuation aims for a fair, uniform and neutral system for the valuation of goods for customs purposes • 3-Preshipment inspection: further checks on imports The obligations of Preshipment Inspection Agreement placed on governments which use preshipment inspections include non-discrimination, transparency, protection of confidential business information, avoiding unreasonable delay, the use of specific guidelines for conducting price verification and avoiding conflicts of interest by the inspection agencies • 4- Investment measures The Trade-Related Investment Measures (TRIMs) Agreement applies only to measures that affect trade in goods. It recognizes that certain measures can restrict and distort trade, and states that no member shall apply any measure that discriminates against foreigners or foreign products World Trade Organization 25
  28. 28.  1.6) Anti-dumping , Subsidies, Safeguards  6) Anti-dumping , Subsidies, Safeguards ___ Binding tariffs, and applying them equally to all trading partners (most-favoured-nation treatment, or MFN) are key to the smooth flow of trade in goods. The WTO agreements uphold the principles, but they also allow exceptions — in some circumstances. Three of these issues are: • actions taken against dumping (selling at an unfairly low price) • subsidies and special ―countervailing‖ duties to offset the subsidies • emergency measures to limit imports temporarily, designed to ―safeguard‖ domestic industries. World Trade Organization 26
  29. 29. 1.6-A) Anti-dumping Actions A- Theoretical View 1)Definition : If a company exports a product at a price lower than the price it normally charges on its own home market, it is said to be ―dumping‖ the product 2) Bad effects _____ Economically 1- Locally in the importing country, dumping kills the domestic industry 2- Internationally in the world mkt ,dumping causes distortion in the world mkt 3) Reasons for dumping 1-Mass production → Lower prices 2-Low costs of production ( labor , Technology ) World Trade Organization 27
  30. 30. 1.6-A) Anti-dumping Actions B- Anti-Dumping Agreement How to measure There are many different ways of calculating whether a particular product is being dumped heavily or only lightly.. It provides three methods to calculate a product‘s ―normal value‖. 1-The main one is based on the price in the import duty on the particular product anti-dumping action means charging extra exporter‘s domestic market. -Whenthe particular used, two alternatives are available from this cannot be exporting country in order 2-the priceits price closer to the ―normal value‖ 1-to bring charged by the exporter in another country, 3-or a calculation based on the combination of in the importing country. costs, 2-or to remove the injury to domestic industry the exporter‘s production other expensescustoms andprofit margins. Through extra and normal safeguards actions Anti-dumping actions World Trade Organization 28
  31. 31. 1.6-b) Subsidies This agreement does two things: 1-It disciplines the use of subsidies, 2- It regulates the actions countries can take to counter the effects of subsidies The agreement defines two categories of subsidies 1)Prohibited subsidies: ___Subsidies that require recipients to meet certain export targets, or to use domestic goods instead of imported goods. ___They are prohibited because they are specifically designed to distort international trade, and are therefore likely to hurt other countries‘ trade 2) Actionable subsidies: in this category the complaining country has to show that the subsidy has an Adverse effect on its interests. Otherwise the subsidy is permitted The agreement defines three types of damage they can cause. 1-One country’s subsidies can hurt a domestic industry in an importing country. 2- hurt rival exporters from another country when the two compete in third markets. 3- domestic subsidies in one country can hurt exporters trying to compete in the subsidizing country’s domestic market World Trade Organization 29
  32. 32. 1.7) Plurilaterals •1) trade in civil aircraft ___ After the Uruguay Round, however, there remained four agreements, originally negotiated in the Tokyo Round, Civil Aircraft The Agreement on Trade in which had a narrower group of signatories and are__entered into force on •4) government procurement known as ―plurilateral agreements‖. It now has 30 signatories. 1 January 1980. ___ All other Tokyo eliminates import duties on all aircraft, obligations __The agreement Round agreements became multilateral An Agreement on Government Procurement (i.e. obligations for allaircraft, other than military WTO members) when the WTO was established in 1995. was first negotiated during the Tokyo Round and as well as on all other products covered by the agreement — civil aircraftentered and their parts and January 1981. engines into force on 1 components, Its purpose is to open up as much all components and sub-assemblies of civil aircraft, of this business and flight simulators and theirinternational competition as possible to parts and components •1) trade in civil aircraft •2) dairy products •3) bovine meat.. World Trade Organization •4) government procurement 30
  33. 33. 2) GATS __ The General Agreement on Trade in Services has three elements: 1- General obligations and disciplines 2- Annexes dealing with rules for specific sectors 1)General obligations and 3- Individual countries’ specific commitments disciplines ___The agreement covers all internationally-traded services . ___It also defines four ways (or “modes”) of trading services: 1- “cross-border supply” ; services supplied from one country to another (e.g. international telephone calls) 2- “consumption abroad” ; consumers or firms making use of a service in another country (e.g. tourism) 3- “commercial presence”; a foreign company setting up subsidiaries or branches to provide services in another country (e.g. foreign banks setting up operations in a country), 4- “presence of natural persons” individuals travelling from their own country to supply services in another (e.g. fashion models or consultants), World Trade Organization 31
  34. 34. 3) TRIPS ____The WTO’s Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), negotiated in the 1986–94 Uruguay Round, ____The Uruguay Round achieved five The WTO‘s TRIPS Agreement ____ The agreement covers that. broad issues: is an attempt to narrow the gaps in the way these rights are protected, 1-Basic principles: and to bring them under common international rules. It establishes national treatment, each government has to give to the minimum levels of protection thatMFN, and balanced protection Types propertyprotect intellectual property: 2-How to of fellow WTO members. intellectual of intellectual property Thethe starting point is the obligations of the main international areas covered by the TRIPS Agreement 1-Copyright and related rights agreements of the World Intellectual Property Organization 2-Trademarks, includingexisted before the WTO was created (WIPO) that already service marks 3-Geographical indications enforce those rights adequately 3- how countries should 4-Industrialown territories in their designs 5-Patents to settle disputes of intellectual property 3- how 4- special transitional arrangements World Trade Organization 32
  35. 35. 4) Settling disputes ___ Settling disputes is the responsibility of the Dispute Settlement Body DSB ___ Importance → the disputes has decreased from 300 to 167 in the first year of WTO’s birth because of the effective mechanism of settling the disputes ___ Disputes’ settlement passes three main stages 1- Consultation 2- The Panel World Trade Organization 3- Arbitration 33
  36. 36. 60 days by 2nd DSB meeting 0–20 days Consultations (Art. 4) Panel established by Dispute Settlement Body (DSB) (Art. 6) Terms of reference (Art. 7) Composition (Art. 8) Panel examination Normally 2 meetings with parties (Art. 12), 1 meeting with third parties (Art. 10) Expert review group (Art. 13; Appendix 4) Interim review stage Descriptive part of report sent to parties for comment (Art. 15.1) Interim report sent to parties for comment (Art 15.2) 20 days (+10 if Director-General asked to pick panel) Review meeting with panel upon request (Art. 15.2) 6 months from panel’s composition, 3 months if urgent Panel report issued to parties (Art. 12.8; Appendix 3 par 12(j)) up to 9 months from panel’s establishment Panel report issued to DSB (Art. 12.9; Appendix 3 par 12(k)) 60 days for panel report unless appealed … DSB adopts panel/appellate report(s) including any changes to panel report made by appellate report (Art. 16.1, 16.4 and 17.14) Implementation report by losing party of proposed implementation within ‘reasonable period of time’ (Art. 21.3) In cases of non-implementation parties negotiate compensation pending full implementation (Art. 22.2) 30 days after ‘reasonable period’ expires Retaliation If no agreement on compensation, DSB authorizes retaliation pending full implementation Cross-retaliation: same sector, other sectors, other agreements World Trade Organization Appellate review (Art. 16.4 and 17) … 30 days for appellate report Dispute over implementation: Proceedings possible, including referral to initial panel on implementation (Art. 21.5) max 90 days TOTAL FOR REPORT ADOPTION: Usually up to 9 months (no appeal), or 12 months (with appeal) from establishment of panel to adoption of report (Art.20) Possibility of arbitration on level of suspension procedures and principles of retaliation (Art. 22.6 and 22.7) 34
  37. 37. 5) Trade policy review The objectives 1-To encourage the development in the developing countries 2- To increase the transparency and understanding of countries‘ trade policies and practices, through regular monitoring 3-To improve the quality of public and intergovernmental debate on the issues 4- To enable a multilateral assessment of the effects of policies on the world The frequency of the reviews depends on the country’s size • The four biggest traders — the European Union, the United States, Japan and Canada (the ―Quad‖) — are examined approximately once every two years. • The next 16 countries (in terms of their share of world trade) are reviewed every four years. • The remaining countries are reviewed every six years, with the possibility of a longer interim period for the least-developed countries. World Trade Organization 35
  38. 38. For each review, two documents are prepared: 1- a policy statement by the government under review, 2- and a detailed report written independently by the WTO Secretariat. These two reports, together with the proceedings of the Trade Policy Review Body’s meetings are published shortly afterwards Developing Countries Both GATT and the General Agreement on Trade in Services (GATS) allow developing countries some preferential treatment. Other measures concerning developing countries in the WTO agreements include: 1- extra time for developing countries to fulfil their commitments (in many of the WTO agreements) 2- provisions designed to increase developing countries‘ trading opportunities through greater market access (e.g. in textiles, services, technical barriers to trade) 3- provisions requiring WTO members to safeguard the interests of developing countries when adopting some domestic or international measures (e.g. in anti-dumping, safeguards, technical barriers to trade) 4- provisions for various means of helping developing countries (e.g. to deal with commitments on animal and plant health standards, technical standards, and in strengthening their domestic telecommunications sectors). World Trade Organization 36
  39. 39. B) The body of the WTO The WTO works at three main levels 1-Highest authority: the Ministerial Conference 2-Second level: General Council in three guises 3- Third level: councils for each broad area of trade 4-Fourth level: down to the nitty-gritty World Trade Organization 37
  40. 40. Ministerial conference General Council meeting as Dispute Settlement Body General Council General Council meeting as Trade Policy Review Body Appellate Body Dispute Settlement panels Committees on Trade and Environment Trade and Development Subcommittee on LeastDeveloped Countries Regional Trade Agreements Balance of Payments Restrictions Budget, Finance and Administration Working parties on Accession Working groups on Trade, debt and finance Trade and technology transfer (Inactive: (Relationship between Trade and Investment (Interaction between Trade and Competition Policy (Transparency in Government Procurement) Plurilateral Information Technology Agreement Committee Council for Trade in Goods ( GATT ) Council for Trade in Services ( GATS ) Council for Trade-Related Aspects of Intellectual Property Rights Committees on Market Access Agriculture Sanitary and Phytosanitary Measures Technical Barriers to Trade Subsidies and Countervailing Measures Anti-Dumping Practices Customs Valuation Rules of Origin Import Licensing Trade-Related Investment Measures Safeguards Working party on State-Trading Enterprises Committees on Trade in Financial Services Specific Commitments Working parties on Domestic Regulation GATS Rules Plurilaterals Trade in Civil Aircraft Committee Government Procurement Committee Special Sessions of Services Council / TRIPS Council / Dispute Settlement Body / Agriculture Committee / Trade and Development Committee / Trade and Environment Committee Negotiating groups on Market Access / Rules / Trade Facilitation World Trade Organization 38
  41. 41. 1-Highest authority: the Ministerial Conference The Ministerial Conference can take decisions on all matters under any of the multilateral trade agreements 2-Second level: General Council in three guises Day-to-day work in between the ministerial conferences is handled by three bodies: • The General Council • The Dispute Settlement Body • The Trade Policy Review Body 3- Third level: councils for each broad area of trade Three more councils, each handling a different broad area of trade, report to the General Council: • The Council for Trade in Goods (Goods Council) • The Council for Trade in Services (Services Council) • The Council for Trade-Related Aspects of Intellectual Property Rights (TRIPS Council) 4-Fourth level: down to the nitty-gritty Each of the higher level councils has subsidiary bodies World Trade Organization 39
  42. 42. C) Members  148 countries (since 13 oct.,2004 ) The accession process 1- Tell us about yourself 2- Work out with us individually what you have to offer 3 - Let’s draft membership terms 4 - The decision The Decision making process __ Each country has only one voting right with an equal chance . But the problem ____ _ Two ways for taking decisions: 1- Ministerial conference 2- Two-Third voting system World Trade Organization 40
  43. 43. The 10 benefits of the WTO trading system World Trade Organization 41
  44. 44. World Trade Organization 42
  45. 45. 5) Recommendations World Trade Organization 43
  46. 46. Boss Developed Countries Developing countries World Trade Organization 44
  47. 47. World Trade Organization 45
  48. 48. World Trade Organization
  49. 49. Mohamed Ismael Elshiekh 19 Nov,2005 World Trade Organization 47