WTO: World Trade Organization

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

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


3

______ 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


4

1) The objectives
The umbrella of Objectives

WTO

WB

IMF
5

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

IMF
6

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

7

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


8

GATT 1947

WTO

1) Establishment
2) Main Issues
3) Kind Of Agreements
4) The Structure
5) Members

6) Dispute Settlements
7) Decision Making process

9

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


10

WTO

GATT 1947
2) Main Issues
The GATT

Trade of goods

The WTO

Trade of Services
GATS

Intellectual property
Rights (TRIPS)


11

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)


12

WTO

GATT1947

Did GATT succeed ??
Temporary stage

Yes

Trade liberalization
Tariffs reduction

No

Globalization
No effective executive structure

13

3) The Structure of the WTO
The organization’s Body

Membership

Agreements

14

2) The main activities ( Agreements )
Trade
Trade policies
Goods

Services

Intellectual
property

Settling disputes

15

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

16

GATT
2) Agriculture

1) Tariffs

3) Standards and Safety

4) Textiles
6) Anti-dumping ,
Subsidies,
 Safeguards

5) Non-Tariffs

7) Plurilaterals

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


1986
Uruguay
Round

18

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


19

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


20

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

21

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

22

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

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.


23

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

24

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)


per year

per year
No quotas left

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

25

 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.


26

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 )

27

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

28

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

29

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..

•4) government
procurement
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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),

31

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

32

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


3- Arbitration

33

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


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

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.

35

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).

36

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


37

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


38

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

39

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


40

The 10 benefits of the WTO trading system


41

5) Recommendations


43

Boss
Developed Countries

Developing countries


44

Mohamed Ismael Elshiekh
19 Nov,2005


47

WTO: World Trade Organization

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