The document provides an introduction to key international trade institutions and the World Trade Organization (WTO). It outlines the WTO's role in administering trade agreements, facilitating negotiations, settling disputes, and reviewing trade policies. The summary explains that the WTO aims to facilitate predictable and free international trade. It establishes rules like Most Favored Nation status and manages tariff-rate quotas and tariffs. The document also describes the WTO dispute settlement process and provides an example dispute between New Zealand and Indonesia.

1. Topic 2) Introduction to the institutions
and the formal policy environment and
systems that underpin international
trade today – Part 1 of 2
Contemporary Issues in International Trade BX3138
院校制度
巩固 ⽀持

2. Learning outcomes
This is a big topic.
After this week, you should be able to:
• Identify the key organisations that are involved in international trade
oversight.
• Understand what the WTO (World Trade Organization) and what it does.
• Explain the basic concepts of the WTO and its rules and why it is deemed
important to global trade and the economy.
• Discuss why the WTO is under criticism from people like President Trump.
• Be able to describe how trade disputes would be resolved under the WTO
processes.

3. What organisations are involved
in international trade oversight?
监管

4. Today’s global financial and trade related institutions
• International Monetary Fund (IMF), formed in 1944 as an agency of
the United Nations;
• World Bank Group, formed between 1944 and 1988, as an agency of
the United Nations;
• Organisation for Economic Co-operation and Development (OECD)
formed as intergovernmental economic organisation in 1961.
• Not a UN body and its membership comprise 36 countries, all having
advanced economic development status. Membership still growing with the
latest being Latvia (2016) and Lithania (2018).
• World Trade Organization (WTO), created by the GATT (General
Agreement on Tariffs and Trade) agreement in 1995.
• World Intellectual Property Organization (WIPO), formed in 1967 as
an agency of the United Nations.

5. The WTO and what it does

6. • It is:
• Not a UN body.
• An inter-governmental organisation
controlled by its members through a
consensus driven decision-making
process. All members have an equal
voice in decision-making.
• The only global international
organisation dealing with the rules of
trade between nations.
• Its website: www.wto.org

7. https://youtu.be/VnHtAvMLPLo

8. Members and observers of the WTO
Source: WTO
https://www.wto.org/english/thewto_e/countries_e/org6_map_e.htm

9. Who established the WTO in 1995?
• 123 members, together with the EU (then known as the European Community)
• But did not include:
• The countries that were run by Communist / Socialist regimes
• The People’s Republic of China / PR China (joined in 2001).
• Russia, then USSR (joined in 2012).
• Vietnam (joined in 2007).
• Taiwan, known as Chinese Taipei (joined in 2002 as a result of macro-political issues
arising from PRC stand towards Taiwan as a separate economic entity).
• The agreement was principally negotiated by economies that were dominated by the
private sector. This is reflected in the form and contents of all aspects of the:
• WTO’s foundational agreements; and,
• WTO’s rules and standards / best practices / precedents.
• New members are expected to fall into line with the provisions of the agreements and
WTO rules.
• This included the PR China (PRC) when it entered in 2001.
• However, today, there are many questions over:
• whether or not the PRC can comply with WTO rules; and
• whether the current PRC Government really wants to comply with WTO rules.
遵守

10. The functions of the WTO
The WTO’s overriding objective is to help trade flow smoothly, freely
and predictably. It does this by:
• administering trade agreements;
• acting as a forum for trade negotiations;
• settling trade disputes;
• reviewing national trade policies;
• building the trade capacity of developing economies; and,
• cooperating with other international organizations.
Source: WTO
https://www.wto.org/english/thewto_e/whatis_e/inbrief_e/inbr_e.htm

11. The WTO is not without its critics .....

12. It, however, clearly works both ways .....

13. Basic WTO Concept: Most Favoured Nation
(MFN)
https://www.youtube.com/watch?v=lZZxArfeol8

14. What are tariffs?
https://www.youtube.com/watch?v=HF7wbKXCyxM

15. The reason for President Trump’s stance on
tariffs
Does he
have a point
based on
WTO goals?

16. How do tariffs work?
https://www.youtube.com/watch?v=LKCMnCZyxiQ
trade
deficit
贸易
逆差

17. WTO
organisation
chart
Source: WTO
(https://www.wto.org/english/thewto_e/whatis_e/tif_e/org2_
e.htm)

18. The WTO and Trade in Goods

19. Key focus for this
course (1 of 2)
WTO treats the following as separate
focuses for global trade administration:
• Trade in goods (generic products);
• Agriculture and products derived
from agriculture; and,
• Commercial goods (not
agriculture);
• IPR (intellectual Property Rights),
which covers all goods in 2019; and,
• Trade in services (Note: Not a key
focus of this course).
Source: WTO extract

20. WTO Council for Trade in
Goods (“Goods Council”)
• Comprises representatives from all WTO member countries.
• The current chair (Nov 2019) is Ambassador José Luís CANCELA GÓMEZ
(Uruguay).
• The Goods Council has 10 committees dealing with specific subjects
(such as agriculture, market access, subsidies, anti-dumping measures
and so on).
• These committees consist of representatives from all member countries.
• Also reporting to the Goods Council are:
• A Working Party on State Trading Enterprises; and
• The Information Technology Agreement (ITA) Committee.
补雎

21. Key focus on this
course (2 of 2)
The WTO:
• acts as a forum for trade negotiations; and,
• assists in settling trade disputes between
member.
When trade disputes arise between members,
the members in question can refer their
dispute (compliant) to the:
• Dispute Settlement Body; and, then
• an Appellate Body (for appeals).
It also periodically reviews national trade
policies through its Trade Review Body.
Source: WTO extract

22. How WTO dispute settlement works
https://www.cnbc.com/video/2019/10/10/the-wto-is-not-a-soccer-referee-
director-general-says.html
裁判员

23. The WTO formal trade
dispute panel process
Source: WTO
https://www.wto.org/english/thewto_e/whatis_e/tif_e/disp2_e.htm
WTO Consultation
Panel Formed / Terms
of Reference Set
Panel Review
Interim Report
Released for Comments
Final Panel Report
Appeal to Appellate
Body
Final Decision
Implementation or
Retaliation

24. Do you think the WTO should be
a soccer referee?
Is it a “paper tiger”?

25. The latest request to WTO dispute settlement
Source: https://www.bbc.com/news/business-50419130
Fifteen countries, including the US, India and New Zealand, have been setting out Brexit concerns at a World Trade
Organization (WTO) meeting in Geneva. Australian officials said their beef and lamb exporters had already been hit
after several Brexit delays. Brazil said Brexit plans for Northern Ireland could breach WTO rules. The main issue for
the fifteen countries is a system which allows them easier access to the EU's large market for limited quantities of
some of their goods, mainly farm produce. It's a system known as "tariff rate quotas".

26. Tariff rate quotas explained
https://www.youtube.com/watch?v=tWq2WmEcVGo
Kilograms
关税配额

27. An example: Indonesia — Importation of Horticultural
Products, Animals and Animal Products
(WTO Ref: DS477 brought by New Zealand)
• https://www.wto.org/english/tratop_e/dispu_e/cases_e/ds477_e.htm
• https://www.wto.org/english/tratop_e/dispu_e/cases_e/1pagesum_e/ds477sum_e.pdf
Image source: Newshub NZ/Getty Images and Beef &
Lamb NZ

28. Summary
What we have explored:
• What the World Trade Organization (WTO) and its structure.
• What the WTO does and what concepts underpin its rules and activities:
• Most favoured nation.
• Tariffs, bound and applied; and,
• Tariff rate quotas.
• Why the WTO is important to global trade and the economy
• Why WTO is under criticism, e.g. from President Trump.
• Its WTO dispute settlement mechanism and an overview of how it works.

29. Next week
• Tutorial for: Introduction to the institutions and the formal policy
environment and systems that underpin international trade today –
Part 1 of 2:
o Case study based discussions: Protection of Indonesia’s farmers versus WTO
non-compliance.
• Lecture topic:
o Introduction to the institutions and the formal policy environment and
systems that underpin international trade today – Part 2 of 2

30. Suggested reading
• The WTO in brief
o www.wto.org/english/thewto_e/whatis_e/inbrief_e/inbr_e.htm
• Trade wars, Trump tariffs and protectionism explained
o https://www.bbc.com/news/world-43512098
o Australia and others ask for Brexit trade compensation
o https://www.bbc.com/news/business-50419130