The World Trade Organisation

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The World Trade Organisation

• GATT

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The WTO

• The World Trade Organisation is the only
  international organisation dealing with the
  global rules of trade between nations. Its main
  function is to ensure that trade flows as
  smoothly and as predictably as possible

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WTO to help trade flow smoothly, freely, fairly
and predictably

• Administering trade agreements
• Acting as a forum for trade negotiations
• Settling trade disputes
• Reviewing trade policies
• Assisting developing countries
• Cooperation with other international organisations

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WTO Agreements

• These provide the legal framework for
  international trade and trade policy
• These are complex documents the legal texts
  covering a wide range of activities
• General Agreement on Tariffs and Trade
• General Agreement on Trade in Services
• Trade Related Intellectual Property

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Objectives of the Agreements

• To help trade flow as freely as possible
• -confidence building
• -rules have to be transparent and predictable
• To achieve further liberalisation on a gradual
  basis through negotiation
• -one of the most important functions of the
  WTO
• -to serve as a forum for negotiation

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Objectives

• To set up an impartial means of settling disputes
• -interpretation of rules
• -settling of differences through neutral
  procedure

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Principles Multilateral Trade System

• Non-discrimination
• Freer trade
• Predictable policies
• Encouraging competition
• Extra provisions for developing countries

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Non- discrimination

• Most-Favoured-Nation (MFN) when a country opens
  its market or reduces a barrier, it must do so
  for the same goods or services from all trading
  partners
• Exceptions RTA, Unfair trading,
• National Treatment- treat foreign goods and
  services equally with locally produced goods and
  services applies once a product has entered a
  market.

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Freer trade through negotiation

• Lowering trade barriers to encourage trade
• Since the formation of GATT, there have been
  eight rounds of negotiations
• -focus initially was on tariff reductions
• - by mid 1980s negotiations had expanded to
  include NTBs on goods, services and intellectual
  property
• Opening markets gt adjustment, so the WTO allows
  for the gradual implementation of rules

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Predictability

• Through binding
• Agreeing not to raise a barrier is as important
  as lowering one gt gives a clearer indication to
  businesses about opportunities
• Uruguay increased bindings ie the amount of
  trade under binding commitments
• Trade Policy Review Mechanism
• -surveillance of trade policies of members
• -increases transparency

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Competition

• WTO a free trade organisation?
• Does allow barriers, but is a system of rules
  designed to open, fair and undistorted
  competition
• MFN, Rules on dumping and subsidies etc gt
  designed to secure fair conditions for trade

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Less Developed Countries

• 75 of WTO membership ( LDCs and countries in
  transition)
• During Uruguay many of these countries began to
  implement trade liberalisation programmes
  autonomously
• Most prepared to adhere to the obligations of
  Uruguay round
• Require extra time and greater flexibility
• Developed countries are required to increase
  market access and increase technical assistance

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WTO

• Assurance
• Decisions are taken by consensus and ratified by
  member parliaments
• Dispute settlement procedure
• Trade agreements to improve the welfare of
  member countries

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WTO

• The WTO came into being in 1995. One of the
  youngest of the international organisations, the
  WTO is the successor to the GATT established in
  the wake of the Second World War
• Is it the same as GATT?
• WTO GATT plus much more

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WTO

• GATT was not recognised in law as an
  international organisation
• GATT only covered trade in goods
• WTO covers sevices GATS Intellectual Property
  TRIPs
• Dispute Settlement Proceduregt consultation
• Trade Policy Review Mechanism

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10 Benefits

• Helps to promote peace
• Disputes are handled constructively
• Rules make life easier for all
• Freer trade cuts the cost of living
• Trade provides more choice of products and
  qualities
• Trade raises incomes
• Trade stimulates economic growth

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Benefits

• Basic principles make life more efficient
• Governments are shielded from lobbying
• The system encourages good government

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Common Criticisms

• WTO dictates policy
• WTO is for free trade at any cost
• Commercial interests take priority over
  development
• over the environment
• over health and safety
• WTO destroys jobs and worsens poverty
• Small countries are powerless in WTO

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Criticisms

• WTO is the tool of powerful lobbies
• Weaker countries are forced to join WTO
• WTO is undemocratic