trade liberalization meaning and development of world trade organization

1. The World Trading System:
Trade Liberalization between the
Multilateral System and the Regional Trade
Agreements
Ahmed F. Ghoneim
Cairo University

2. What is meant by Trade
Liberalization?
Trade liberalization is not any more confined
only to reduction of tariffs, but has now
been extended to dealing with domestic
rules and regulations, standards, services,
intellectual property rights, labor and
environmental issues.

3. The World Trading System:
1) World Trade Organization (GATT, GATS,
TRIPS)
2) Regional Trade Agreements
3) Other systems

4. The World Trading System
Other
Systems
RTAs
GATT and
WTO

5. World Trade Organization
• Bretton Wood’s Institutions in 1947: (World Bank,
International Monetary Fund, and International
Trade Organization)
• US Failed to ratify the Havana Charter to create ITO
• Protocol of Provisional Application of GATT instead of
ITO
• Eight Successful Rounds of Multilateral Negotiations
for Trade Liberalization under GATT

6. • Original 23 Contracting Parties included 11
Developing Countries (DCs)
• Many DCs did not join
• No effective participation of DCs until the
Tokyo Round, 1974-1979
• Import substitution the dominant dogma

7. The Uruguay Round – 1986-1994
• Torturous Negotiations Over 7 Years
• Single Undertaking
• Establishment of the WTO
• Agreement on Agriculture and GATS
• TRIMS and TRIPS
• Dispute Settlement System

8. • GATT aims at liberalization of trade through
reduction of tariffs and elimination of non-tariff
barriers. Its two main principles are Most Favored
Nation (MFN) and National Treatment.
• WTO is based on the same rules of GATT but is
extended as well to services and intellectual
property rights.
• There are 164 members of the WTO.

9. What is the World
Trade Organization (WTO)?
• Institutional framework for
– Negotiation of global trade agreements
– Implementing global trade agreements
– Settling disputes under the global trade
agreements
– Reviewing trade policies
– Admitting new members

10. Who Governs the WTO?
• The Member Countries (one country one
vote rule). There are 164 member
countries
• Decision is based on consensus
• Contrast to World Bank and IMF
(controlling their boards by U.S. and EU)

11. Ministerial Conference
General Council
Council for Trade
in Services
Council for
TRIPS
Council for Trade
in Goods
DSB
Trade Policy
Review
Mechanism

12. Who Manages the WTO?
 The WTO Secretariat
 Headed by a Director General

13. Legal Components of WTO
• GATT (Agreement on Trade in Goods), now
called WTO agreements
• GATS (Agreement on Trade in Services)
• TRIPS (Intellectual Property Agreement)
• WTO Institutional Arrangement (Dispute
Settlement Mechanism and Trade Policy
Review)
• Plurilateral Agreements

14. Fundamental WTO Principles
• Transparency
• MFN
• National treatment
• Due process
• Reciprocity
– balance of concessions
– balance of rights and obligations
• Least trade distorting standard

15. Basic GATT Framework
• Barriers should be at the border
• Barriers should be in the form of tariffs
• No internal barriers in domestic laws
• No discrimination among members
• Legal binding of maximum tariffs in national
schedules
• Certain enumerated exceptions permitted

16. GATS
• Trade defined in different modes of supply including 1)
cross-border movement, 2) consumption abroad, 3)
commercial presence, 4) temporary movement of natural
persons GATS contains
• Rules
– Rules that apply to all services - transparency of laws, regulations,
decisions, and MFN
– Rules covering sectors in which products are listed in national
schedules schedules
– Rules covering products listed in schedules
• National commitments on
– National treatment
– Market access (government regulations that limit decisions by
producers and suppliers of services.)

17. Intellectual Property - TRIPS
● General Provisions & Principles
● Standards of Protection
– copyrights, patents
– trade marks, trade secrets, industrial design
– marks of geographic origin
● Enforcement

18. Dispute Settlement Process
●Country must first seek to resolve dispute
through bilateral consultations
● For unresolved disputes, DSB establishes
panel, terms of reference
● Meetings with parties, third parties, experts
● DSB adopts Panel Report
● Request for review by Appellate Body
● Compliance, compensation or retaliation

19. How Are Negotiations
Organized in the WTO?
● National commitments on trade measures
– Request & offer procedures
– Use of formulas, agreed targets, objectives
● Agreements on trade rules
– Issue studied by Study and/or Working Group
– Creation of negotiation committee
It is the ministers who decide to launch a new
round in their ministerial meetings

20. Current Status of Doha Round
● Negotiations are at an impasse, largely as a result of a
disagreement over agriculture
● Disputes over agriculture have hampered negotiations
over tariffs and services
● There is also a major disagreement over what makes the
Doha Round a Development Round
● U.S. needs an extension of congressional authority to
negotiate
● Delays in the conclusion of multilateral trade rounds are
quite common, and do not signify end of WTO

21. Scheme Free
intra-
scheme
trade
Common
Commerci
al Policy
Free
Factor
Mobility
Common
monetary
policy
One
government
Free Trade
Areas
Yes No No No No
Customs
Union
Yes Yes No No No
Common
Market
Yes Yes Yes No No
Monetary
Union
Yes Yes Yes Yes No

22. Reasons for Increased Number of
RTAs:
 US Policy towards signing more RTAs
 Slowness in WTO negotiations
 Domino effect.

23. • 380 RTAs have been notified to the GATT/WTO
up to July 2007 and increased to 550 by July 2014
and further to 625 as of February 2016 (As of
January 2017 303 were in force and 483 actively
notified out of a total of 698). This number has
increased six times since the beginning of the
1990s.

24. Thank you