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The WTO and the Doha Development Round Erik van der Marel Groupe - - PowerPoint PPT Presentation
The WTO and the Doha Development Round Erik van der Marel Groupe - - PowerPoint PPT Presentation
The WTO and the Doha Development Round Erik van der Marel Groupe dEconomie Mondiale European Centre for International Political Economy History 19 th century marked by Pax Britannica Unilateral liberalisation / Repeal of Corn Laws 1848
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The WTO
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The WTO
Introduction
Post‐war idea was to set up International Trade Organisation (ITO) as part of Bretton Woods The so‐called Havana Charter in 1948 American Congress did not ratify ‐‐> domestic economic interference or involvement GATT advanced and was signed. Developed as a de facto international organisation Now WTO since 1995 WTO is relatively small
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The WTO
Introduction
Successor of GATT in 1995 (No UN body) Enlarged scope: from tariffs to regulation etc. Seven Rounds of negotiation (Tokyo, Kennedy..) All agreements fall under six main parts:
‐ Agreement establishing WTO ‐ Goods (GATT ‘94) and Investment (Trade Related Investment Measures) ‐ Services (GATS) ‐ Intellectual Property Rights (TRIPS) ‐ Dispute Settlement Unit (working reasonably well) ‐ Reviews of Governments’ Trade Policy (TPRM)
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WTO Organisation
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GATT Agreement
Principles
1) Non‐discrimination
(i) Most Favoured Nation (MFN) (ii) National Treatment
Two main exemptions to Non‐discrimination:
‐ Free Trade Areas and Customs Unions ‐ Developing countries (1965) (GSP)
2) Reciprocity (equivalent concession) 3) Prohibitation on trade restrictions other than tariffs
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MFN Principle
(Art. I) This Article requires GATT signatories to extend the benefits of an agreement reached with any other country (the ‘most‐favored‐ nation’) to all other GATT contracting parties. The MFN principle was a major step towards the elimination of discriminatory tariff rates and hence towards a unified multilateral trading system.
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National Treatment Principle
(Art. III) MFN principle ensures non‐discrimination at the border level, GATT Article III ensures non‐discrimination at the domestic level. Article III, known as ‘national treatment’, requires contracting partners to treat foreign products, once imported, no differently than similar domestic products. A government cannot charge additional taxes, administrative burdens or specific requirements on foreign products that have been imported according to the prevailing tariff and non‐tariff border conditions.
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Trade Rounds
Remaining tariff as % of 1930 tariff
10 20 30 40 50 60
1945 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995
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Trade Rounds
GATT/ WTO Trade Rounds
20 40 60 80 100 120 140 160 Geneva (1947) Annecy (1949) Torquay (1951) Geneva (1956) Dillon Round (1960) Kennedy Round (1964) Tokyo Round (1973) Uruguay Round (1986) Doha Round (2001) No of months No of Countries
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Trade Rounds
Round What’s at stake? Geneva (1947) Tariffs Annecy (1949) Tariffs Torquay (1951) Tariffs Geneva (1956) Tariffs Dillon Round (1960) Tariffs Kennedy Round (1964) Tariffs and anti‐dumping measures (EU) Tokyo Round (1973) Tariffs, NTB’s, “framework agreements” Uruguay Round (1986) Tariffs, NTB’s, Services, TRIPS, DSU, textiles, agriculture, creation of WTO etc. / Single Und.
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WTO in perspective
Underlying problems
WTO has moved to law‐governed system over the years; GATT more power (diplomacy)‐governed But more complex underlying trends visible:
Standard harm. ‐ TRIPS/ Labour/ Food safetey/ etc. Legislation ‐ DSU, but “constructive ambiguity” Politicisation ‐ Cross cutting issues and UN‐isation Regionalisation ‐ Discriminatory RTA/ Spaghetti bowl
Not necessarily back to yesterday as these are reality
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WTO in perspective
It’s raison d’être
No real consensus among members Possible scenarios based on above (Sally, 2008):
1) Traditionalist removal of barriers, but covers wider issues that goes deeper into domestic regulation (Market Access) 2) EU‐style future with “new issues”: labour / environment standards and Singapore issues (Regulatory agency) 3) UN‐style future with one‐member‐one‐vote, STD, TRIPS, public health, technical assistance and capacity building
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Share of total tariff reduction, by type of liberalization (1983–2003)
Source: World Bank: http://siteresources.worldbank.org/INTGEP2005/Resources/GEP107053_Ch02.pdf
Share of Total Tariff Reduction, by Type of Liberalisation (1983-2003) Autonomous Liberalisation; 66% Multilateral Agreements; 25% Regional Agreements; 10%
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Doha
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Doha Development Round
Short history
Started in November 2001 in Doha, Quatar / March 2009 False start Seattle US – Millennium Round (never started) Before Doha ongoing negotiations on Agri and Services Some wanted to expand to allow trade‐offs and greater liberalisation Singapore issues: EU, Japan, Korea vs. developing countries No agreement in Cancun and collapse followed, but other issues such as agri showed large disagreements too. Since then Round has not move on any further
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DDA Failure
Generally Member cannot agree on broad headline cuts in Agriculture and industrial goods
EU – Not further on Agri unless others (developing) move on services Japan – Not agree on Agri unless anti‐dumping rules are strengthened Services Developing countries – Ask for Mode 4 Services opening vs. Mode 3 Agricultures US/ EU – Market access vs. disciplines on domestic support and food aid NAMA Coefficients disagreements between developed and developing countries in the so‐called new Swiss formula
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Swiss Formula
In Kennedy round linear tariff reductions Target was to achieve 50 % reduction Achievement was a 35 % reduction Why? Primary because countries with already low tariff in absolute terms were not willing to apply the same percentage reduction as countries with high tariff in absolute terms Therefore Swiss formula introduced: NT= A*Old tariff / A+Old tariff
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Swiss Formula
Swiss formula for tariff reduction
5 10 15 20 25 25 50 75 100
Old tariff
New tariff
A=14 A=25 A=10
Emerging countries NAMA
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DDA Failure
21‐30 July 2008
From stand‐offs to negative trade‐offs This was still OK for broad modalities Exceptions and special treatments diminished liberalising potential in Agriculture and NAMA
Agriculture Sensitive products, special products, special safeguards NAMA Limited flexibilities with tariff coefficients, weakened commitments to sectoral liberalisation, long transition in textiles and clothing etc.
Although positive signals from services sectors, it was not touched
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DDA Failure
Underlying issues
Doha Collapse ’08 reflect perhaps deeper malaise Not only about market access anymore Membership hugely increased But also other specific interest groups raised along Relative decrease of economic influence US Moderated multilateral commitment from US Political leadership problem? Political will? Ever‐thinner majorities / short political cycles Meanwhile PTA have increased rapidly
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Regional Trade Agreements Notified to the GATT/WTO and in Force
10 20 30 40 50 60 70 80 90 100 1948 1951 1954 1957 1960 1963 1966 1969 1972 1975 1978 1981 1984 1987 1990 1993 1996 1999 2002 2005 2008 No of RTAs 50 100 150 200 250 300 350 400 Notiefied RTAs (goods, services and accessions) Inactive RTA Cummulative active RTA Cummulative RTA notifications
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No of RTAs 2001
Geographical Distribution
No of RTA 2001 ‐ Geographical Distribution
20 40 60 80 100 120
Cross‐Regional Sub‐Saharan Euro‐Mediterranean Eastern Europe & central Asia Asia Pacific Americas
FTAs Under Negotiation Cus Under Negotiation FTAs in Force Cus in Force
Source: WTO * Free trade areas ** Customs unions
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Regional Trade Agreements
RTAs Signed, Under Negotiation & Proposed by Type as of 2006 in %
RTAs Signed, Under Negotiation & Proposed by Type of Agreement ‐ as of 2005 in %
FTA 92% Partial Scope 7% Custom Union 1%
Source: Fiorentino, Verdeja and Toqueboeuf (2005) The Changing Landscape or Regional Trade Agreements: Updata 2006, WTO Discussion Paper No 12
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