ROLE OF GATT & WTO:
The World
Trade Organization (WTO) is an organization that intends to supervise and
liberalize international trade. The organization officially commenced on 1
January 1995 under the Marrakech Agreement, replacing the General Agreement on
Tariffs and Trade (GATT), which commenced in 1948. The organization deals with
regulation of trade between participating countries by providing a framework
for negotiating and formalizing trade agreements and a dispute resolution
process aimed at enforcing participants' adherence to WTO agreements, which are
signed by representatives of member governments and ratified by their
parliaments. Most of the issues that the WTO focuses on derive from previous
trade negotiations, especially from the Uruguay Round (1986–1994).
The organization
is attempting to complete negotiations on the Doha Development Round, which was
launched in 2001 with an explicit focus on addressing the needs of developing
countries. As of June 2012, the future of the Doha Round remained uncertain:
the work program lists 21 subjects in which the original deadline of 1 January
2005 was missed, and the round is still incomplete. The conflict between free
trade on industrial goods and services but retention of protectionism on farm
subsidies to domestic agricultural sector (requested by developed countries)
and the substantiation of the international liberalization of fair trade on
agricultural products (requested by developing countries) remain the major
obstacles.
These
points of contention have hindered any progress to launch new WTO negotiations
beyond the Doha Development Round. As a result of this impasse, there have been
an increasing number of bilateral free trade agreements signed. As of July
2012, there were various negotiation groups in the WTO system for the current
agricultural trade negotiation which is in the condition of stalemate.
WTO's
current Director-General is Roberto Azevêdo, who leads a staff of over 600
people in Geneva, Switzerland. A trade facilitation agreement known as the Bali
Package was reached by all members on 7 December 2013, the first comprehensive
agreement in the organization's history
History
The
economists Harry White (left) and John Maynard Keynes at the Bretton Woods
Conference. Both had been strong advocates of a central-controlled
international trade environment and recommended the establishment of three
institutions: the IMF (for fiscal and monetary issues); the World Bank (for
financial and structural issues); and the ITO (for international economic
cooperation).
The WTO's
predecessor, the General Agreement on Tariffs and Trade (GATT), was established
after World War II in the wake of other new multilateral institutions dedicated
to international economic cooperation – notably the Bretton Woods institutions
known as the World Bank and the International Monetary Fund. A comparable
international institution for trade, named the International Trade Organization
was successfully negotiated. The ITO was to be a United Nations specialized agency and would
address not only trade barriers but other issues indirectly related to trade,
including employment, investment, restrictive business practices, and commodity
agreements. But the ITO treaty was not approved by the U.S. and a few other
signatories and never went into effect.
In the
absence of an international organization for trade, the GATT would over the
years "transform itself" into a de facto international organization.
GATT ROUNDS OF NEGOTIATIONS
The GATT
was the only multilateral instrument governing international trade from 1946
until the WTO was established on 1 January 1995. Despite attempts in the
mid-1950s and 1960s to create some form of institutional mechanism for
international trade, the GATT continued to operate for almost half a century as
a semi-institutionalized multilateral treaty regime on a provisional basis.
FROM GENEVA TO TOKYO
Seven
rounds of negotiations occurred under GATT. The first real GATT trade rounds
concentrated on further reducing tariffs. Then, the Kennedy Round in the
mid-sixties brought about a GATT anti-dumping Agreement and a section on
development. The Tokyo Round during the seventies was the first major attempt
to tackle trade barriers that do not take the form of tariffs, and to improve
the system, adopting a series of agreements on non-tariff barriers, which in
some cases interpreted existing GATT rules, and in others broke entirely new
ground.
Because
these plurilateral agreements were not accepted by the full GATT membership,
they were often informally called "codes". Several of these codes
were amended in the Uruguay Round, and turned into multilateral commitments
accepted by all WTO members. Only four remained plurilateral (those on
government procurement, bovine meat, civil aircraft and dairy products), but in
1997 WTO members agreed to terminate the bovine meat and dairy agreements,
leaving only two.
URUGUAY ROUND
During
the Doha Round, the US government blamed Brazil and India for being inflexible
and the EU for impeding agricultural imports. The then-President of Brazil,
Luiz Inácio Lula da Silva (above right), responded to the criticisms by arguing
that progress would only be achieved if the richest countries (especially the
US and countries in the EU) made deeper cuts in agricultural subsidies and
further opened their markets for agricultural goods.
Well
before GATT's 40th anniversary, its members concluded that the GATT system was
straining to adapt to a new globalizing world economy. In response to the
problems identified in the 1982 Ministerial Declaration (structural
deficiencies, spill-over impacts of certain countries' policies on world trade
GATT could not manage etc.), the eighth GATT round – known as the Uruguay Round
– was launched in September 1986, in Punta del Este, Uruguay. It was the
biggest negotiating mandate on trade ever agreed: the talks were going to
extend the trading system into several new areas, notably trade in services and
intellectual property, and to reform trade in the sensitive sectors of
agriculture and textiles; all the original GATT articles were up for review.
The Final Act concluding the Uruguay Round and officially establishing the WTO
regime was signed 15 April 1994, during the ministerial meeting at Marrakesh,
Morocco, and hence is known as the Marrakesh Agreement.
The GATT
still exists as the WTO's umbrella treaty for trade in goods, updated as a
result of the Uruguay Round negotiations (a distinction is made between GATT
1994, the updated parts of GATT, and GATT 1947, the original agreement which is
still the heart of GATT 1994). GATT 1994 is not however the only legally
binding agreement included via the Final Act at Marrakesh; a long list of about
60 agreements, annexes, decisions and understandings was adopted. The
agreements fall into a structure with six main parts:
The
Agreement Establishing the WTO
Goods and
investment – the Multilateral Agreements on Trade in Goods including the GATT
1994 and the Trade Related Investment Measures (TRIMS)
Services
- the General Agreement on Trade in Services
Intellectual
property – the Agreement on Trade-Related Aspects of Intellectual Property
Rights (TRIPS)
Dispute
settlement (DSU)
Reviews
of governments' trade policies (TPRM)
In terms
of the WTO's principle relating to tariff "ceiling-binding" (No. 3),
the Uruguay Round has been successful in increasing binding commitments by both
developed and developing countries, as may be seen in the percentages of
tariffs bound before and after the 1986–1994 talks.
Ministerial conferences
The World
Trade Organization Ministerial Conference of 1998, in the Palace of Nations
(Geneva, Switzerland).
The
highest decision-making body of the WTO is the Ministerial Conference, which
usually meets every two years. It brings together all members of the WTO, all
of which are countries or customs unions. The Ministerial Conference can take
decisions on all matters under any of the multilateral trade agreements. The
inaugural ministerial conference was held in Singapore in 1996. Disagreements
between largely developed and developing economies emerged during this
conference over four issues initiated by this conference, which led to them
being collectively referred to as the "Singapore issues". The second
ministerial conference was held in Geneva in Switzerland.
The third
conference in Seattle, Washington ended in failure, with massive demonstrations
and police and National Guard crowd-control efforts drawing worldwide
attention. The fourth ministerial conference was held in Doha in the Persian
Gulf nation of Qatar. The Doha Development Round was launched at the
conference. The conference also approved the joining of China, which became the
143rd member to join.
The fifth
ministerial conference was held in Cancún, Mexico, aiming at forging agreement
on the Doha round. An alliance of 22 southern states, the G20 developing
nations (led by India, China, Brazil, ASEAN led by the Philippines), resisted
demands from the North for agreements on the so-called "Singapore
issues" and called for an end to agricultural subsidies within the EU and
the US. The talks broke down without progress.
The sixth
WTO ministerial conference was held in Hong Kong from 13-18 December 2005. It
was considered vital if the four-year-old Doha Development Round negotiations
were to move forward sufficiently to conclude the round in 2006. In this
meeting, countries agreed to phase out all their agricultural export subsidies
by the end of 2013, and terminate any cotton export subsidies by the end of
2006.
Further
concessions to developing countries included an agreement to introduce
duty-free, tariff-free access for goods from the Least Developed Countries,
following the Everything but Arms initiative of the European Union - but with
up to 3% of tariff lines exempted. Other major issues were left for further
negotiation to be completed by the end of 2010. The WTO General Council, on 26
May 2009, agreed to hold a seventh WTO ministerial conference session in Geneva
from 30 November-3 December 2009.
A
statement by chairman Amb. Mario Matus acknowledged that the prime purpose was
to remedy a breach of protocol requiring two-yearly "regular"
meetings, which had lapsed with the Doha Round failure in 2005, and that the
"scaled-down" meeting would not be a negotiating session, but
"emphasis will be on transparency and open discussion rather than on small
group processes and informal negotiating structures". The general theme
for discussion was "The WTO, the Multilateral Trading System and the
Current Global Economic Environment"
DOHA ROUND (DOHA AGENDA)
The Doha
Development Round started in 2001 is at an impasse. The WTO launched the
current round of negotiations, the Doha Development Round, at the fourth
ministerial conference in Doha, Qatar in November 2001. This was to be an
ambitious effort to make globalization more inclusive and help the world's
poor, particularly by slashing barriers and subsidies in farming. The initial
agenda comprised both further trade liberalization and new rule-making,
underpinned by commitments to strengthen substantial assistance to developing
countries.
The
negotiations have been highly contentious. Disagreements still continue over
several key areas including agriculture subsidies, which emerged as critical in
July 2006. According to a European Union statement, "The 2008 Ministerial
meeting broke down over a disagreement between exporters of agricultural bulk
commodities and countries with large numbers of subsistence farmers on the
precise terms of a 'special safeguard measure' to protect farmers from surges
in imports."
The
position of the European Commission is that "The successful conclusion of
the Doha negotiations would confirm the central role of multilateral
liberalization and rule-making. It would confirm the WTO as a powerful shield
against protectionist backsliding."An impasse remains and, as of August
2013, agreement has not been reached, despite intense negotiations at several
ministerial conferences and at other sessions. On 27 March 2013, the chairman
of agriculture talks announced "a proposal to loosen price support
disciplines for developing countries’ public stocks and domestic food
aid." He added: “we are not yet close to agreement - in fact, the
substantive discussion of the proposal is only beginning.”
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