EDITED BY Rasih Mert KOZAKÇI Cemal DARICI

ABOUT WTO

Location: Geneva, Switzerland Established: 1 January 1995 Created by: Uruguay Round negotiations (1986–94) Membership: 159 countries Budget: 196 million Swiss francs Secretariat staff: 640 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

The WTO’s work comes from the 1986–94 negotiations called the Uruguay Round and earlier negotiations under the General Agreement on Tariffs and Trade (GATT).

The WTO holds new negotiations, under the “Doha Development Agenda” launched in 2001.

The rules must be “transparent” and “ predictable ”.

THE GOALS

to help exporters and importers, while allowing governments to meet social and environmental

objectives. 

to promote free trade while minimizing undesirable side-effects.

The rules must be “transparent” and “ predictable’’

THE AGREEMENTS explain the principles of liberalization and exceptions.

include commitments to lower trade barriers

set procedures for settling disputes.

prescribe special treatment for LDCs.

require transparency in trade policies.

AGREEMENTS’ SUBJECTS

Tariffs (more bindings and closer to zero)Agriculture (fairer markets for farmers)Standards and SafetyGeneral Agreement on Trade in Services (GATS)Agreements on Trade Related Aspects of Intellectual Property Rights (TRIPS)Anti-Dumping,Subsidies,SafeguardsTrade Policy Reviews

SETTLING DISPUTES

Disputes in the WTO are about broken promises.

The rules must be enforced.

Rulings are made by a panel and endorsed by the WTO’s full membership.

Appeals are possible.

The priority is to settle disputes through consultations. 

By January 2008, only about 136 of the 369 cases had reached the full panel process.

Most of the rest have either been notified as settled “out of court” or remain in a prolonged consultation phase

MISSUNDERSTANDING ABOUT WTO The WTO does NOT tell governments what to do

The WTO is NOT for free trade at any cost

The WTO is NOT only concerned about commercial interests.This does NOT take priority over development

In the WTO commercial interests do NOT take priority over environmental protection

The WTO does NOT dictate to governments on issues such as food safety and human health and safety

The WTO does NOT destroy jobs or widen the gap between rich and poor

Small countries are NOT powerless in the WTO

The WTO is NOT the tool of powerful lobbies

Weaker countries do have a choice they are NOT forced to join the WTO

The WTO is NOT undemocratic

ORGANIZATION STRUCTURE

DEMOCRACY IN WTO1. Most LDCs dependent on DCs in terms of imports, exports, aid,

security, etc.

2. LDCs have fewer human and technical resources.

3. The dispute settlement system is costly and requires a level of legal expertise that LDCs may not have.

4. The dispute settlement process is lacking of transparency.

5. The binding rules of the WTO may effectively remove democracy even when all the rules of the WTO are democratically and unanimously agreed by all the members

INDUSTRIAL POLICYIndustrial policy is a contentious issue. Opponents have argued

that it is unnecessary, due to

the inherent efficiency of markets

difficult to implement effectively

unviable, due to LDCs‟ low capabilities

prohibited by the international institutions such as the WTO

HOW DOES THE WTO IMPACTS UPON INDUSTRIAL POLICY ? Non – tariffs barriers

Tariffs barriers

Trade Related Investment Measures (TRIMs)

The Agreement on Subsidies and Countervailing Measures

General Agreement on Trade in Services (GATS)

Trade Related Aspects of Intellectual Property (TRIPs)

THE REMAINING POLICY SPACE Non – tariffs barriers

Tariffs barriers

Trade Related Investment Measures (TRIMs)

The Agreement on Subsidies and Countervailing Measures

General Agreement on Trade in Services (GATS)

Trade Related Aspects of Intellectual Property (TRIPs)

Special and Differential Treatment

State-owned enterprises

Currency manipulation

Non-tradables

WHY DOES THE WTO UNDERMINE INDUSTRIAL POLICIES?

The real problem with the WTO policies is their irreversible nature.

LDCs still have some space to implement industrial policies but as WTO negotiations progress this space will narrow down.

The WTO agreements often favor rich countries and their MNCs.

While the TRIMs and GATS still allow room for LDCs to control over FDI and MNCs, Multilateral Agreement on Investment (MAI) which was proposed in 1997 and subsequently rejected due to worldwide mass protests around the globe made the intention of the rich WTO members clear.

While there is room for states to implement industrial policies, we need to consider if these rules allow for strategic sequencing of trade protection.

The Special and Differential Treatment hardly constitute ‘preferential’ treatment when one considers that DCs were already operating relatively liberal trade policies before the negotiations.

The non-notification of actionable subsidies may not be used as a permanent strategy, since the enforcement measures will be strengthened.

The TRIPS agreement hardly benefits the LDCs and in fact may significantly harm their development

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