GROUP :08
WTO : CURRENT ISSUES
Agriculture &
Dispute settlement Mechanism
•
•
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N-31: Mustakeem Khan
N-10: Bajrang Bali Goel
N-56: Sunil Kumar
N-71: Manik Garg
JBML - Gurgaon
UIIC - Delhi
C-DAC - New Delhi
BHEL - New Delhi
•
•
•
•
S-18: Dean Mendonca
S-23: Hemant Rohilla
S-40: Poonam Mann
S-72: Anjali Monga Taneja
Indian Navy - Delhi
C.DOT. - New Delhi
Teradata Corp - Gurgaon
Self-Employed - Delhi
WTO : CURRENT ISSUES
AGENDA
Section I
Section II
Section III
Section IV
: Introduction & Background
: Agriculture Issues
: Dispute Settlement
: Current Issues & Future Path
Case Studies
• Case 1
:
• Case 2
:
Argentina- Chile
US-Brazil Cotton
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WTO : Section-I
Introduction & Background
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GLOBAL TRADE : BREAKING BORDERS…
Need for International Trade Organizations
To Reduce trade barriers after World War –II
Raising standards of living
Ensuring full employment
A large and steadily growing volume of real income and
effective demand
 Developing the full use of the resources of the world
 Expanding the production and exchange of goods.
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International Trade Organisations
•
1948, Havana: ITO
•
1955, GATT (Bretton Woods Conference) review session: OTC
•
1963: UN EcoSoC ideas for a UN agency regulating international trade =>
GATT to become this agency’s Committee on Tariffs to implement decisions
by UNCTAD and other relevant UN policy decisions
•
1990: Canada’s proposal for an MTO came as a surprise (not envisaged in
Punta del Este, 1986)
•
Motivated by a wish to create a single institutional framework for world
trade
•
Subsequently supported by EU
•
Initially opposed by US, then agreed upon (including the name change)
•
1994: Marrakesh Agreement
•
1 January 1995, Geneva: WTO’s foundation
•
Established following decisions embodied in the Final Act of the
Uruguay Round signed on 15 April 1994 in Marrakech
WTO : CURRENT ISSUES
WTO : FACTS
Location
:
Geneva, Switzerland
Established
:
1 January 1995
Created by
:
Uruguay Round negotiations (1986-94)
Membership
:
153 countries
Budget
:
154m Swiss francs, 2003
Secretariat staff:
629
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
Source: wto.org
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WTO : A Brief History
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What does WTO stand for?
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WTO: The Structure
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WTO: Guiding Principles
Most Favored Nation
National treatment
Single undertaking
Dispute settlement
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WTO: Guiding Principles
Most favoured nation: A commitment that a country will extend to
another country the lowest tariff rates it applies to any other
country. Also called non-discrimination.
National treatment: commitment to treat foreign producers and
sellers the same as domestic firms.
Single undertaking: provision that requires countries to accept all the
agreements reached during the Uruguay Round negotiations as a
single package, rather than on a case by case basis. This same
rule applies to the Doha Round.
Disputes Settlement Body: The General Council of the WTO,
composed of representatives of all member countries, convenes as
the Dispute Settlement Body to administer rules and procedures
established in various agreements. It has the authority to establish
panels, oversee implementation of rulings and recommendations
and authorise suspension of concessions or other obligations under
various agreements.
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WTO: Decision Making
Decision-making in WTO follows GATT practices and is based on
Negotiation
bargaining,
consultation and consensus
Consensus is the modus operandi. Does not mean unanimity; is, in
fact weaker than unanimity
No fundamental objection on an issue by all parties present at
negotiations
Those not present or abstaining (from a vote) do not count
Imposes conservative tendencies
Proposals for change adopted only if not opposed
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WTO: Decision Making-Formal
Consensus
No
Consensus
• No Problem
• Voting
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WTO :Decision Making-Formal
•
VOTING RULES
•
“one member – one vote” system (IMF, WB: weighted voting)
•
Unanimity
•
Amendments on general principles (i.e. Non Discrimination)
•
Three-quarters majority
•
Interpretations of WTO provisions
•
Waivers of WTO disciplines (for a member)
•
Two-thirds majority
•
Amendments related to issues other than general principles
•
Accession
•
Simple majority
•
no other rules specified and consensus cannot be reached
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WTO :Decision Making-Informal
•
The Green Room
Informal decision making is the norm in the WTO. The so-called
“green room process” is when a limited number of (often selfselected) countries work out an agreement amongst themselves.
This process is named after the colour of the room of the GATT
director where many such meetings took place during the Uruguay
round.
•
In the WTO era the “green room process” continues, and is a
key element during the negotiations leading up to and during WTO
ministerials. The countries excluded from the exclusive meetings
complain but nothing has been done to make the negotiating
process more inclusive.
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WTO : Subjects
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Agriculture
Services
Non-agriculture
Intellectual Property Rights
Trade investment, competition, policy, government
procurement and trade facilities
Trade rules
Dispute settlements
Trade and environment
Trade, finance and debt
Trade and technology transfer
Electronic commerce
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WTO : MAIN AGREEMENTS
1.General Agreement on Tariffs and Trade (GATT)
covering trade in goods such as agriculture,
textiles, and industrial products
2. General Agreement on Trade in Services (GATS)
covering services from finance to water
3.Trade Related aspects of Intellectual Property Rights (TRIPS)



Establishing the WTO
Dispute settlements
Review of government trade policies
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WTO: GATS : Four Modes of Supply
Mode
Criteria
Supplier Presence
Mode 1:
Cross-border
supply
Service delivered within the
territory of the Member, from
the territory of another
Member
Service delivered outside the
territory of the Member, in
the territory of another
Member, to a service
consumer of the Member
Service delivered within the
territory of the Member,
through the commercial
presence of the supplier
Service delivered within the
territory of the Member, with
supplier present as a natural
person
Service supplier not
present within the
territory of the member
Mode 2:
Consumption
abroad
Mode 3:
Commercial
presence
Mode 4:
Presence of a
natural person
Service supplier present
within the territory of the
Member
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Agriculture
issues
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WTO: AGRICULTURE AGREEMENT
‘The inadequacy of the rules legitimizes and institutionalizes
dumping’
[of subsidized low-priced exports on to world markets]
3D/IATP report on human rights, agricultural trade and the WTO
• The WTO did not invent subsidies
• Governments came to GATT/WTO to try to change things
Before the
WTO: the sky’s
the limit
Under the WTO:
limits and reductions
agreed, first step,
phased for
adjustment
After ‘Doha’
negotiations
(2001
onwards):
more cuts +
export subsidies
to be scrapped
Issues
WTO : CURRENT ISSUES
Indian Agricultural Resources- a glance
•India has 6 percent of the world’s human population,
2 percent of the world’s geographical area,
•1 percent of world’s rainwater, 1 percent of forest, and 0.5
% of pastureland.
•The country has over 7500 km of coastline and about 2.1
million sq km of exclusive economic zone in the oceans.
•Around 60 percent of the geographical area suffers
from soil erosion, water logging, and salinity.
•15 percent of the world’s livestock,
•Two-thirds of the total 450 million heads of
livestock struggle for survival in crowded rain fed
regions.
•Nearly 70 percent of the population in India depends
on agriculture.
•Consequently, the stress on the population-supporting
capacity of natural ecosystems is immense.
WTO : CURRENT ISSUES
WTO and Indian Agriculture – In the Beginning
•-Indian
agriculture was perceived as badly hit
•-In compliance with its obligations under WTO on April 1,
2000, the Government of India eliminated all import
restrictions from more than 700 items, a large portion of
which were agricultural commodities.
•-The remaining 700 or so items were freed from import
restrictions in 2001.
•-The result of this liberalization is that many agricultural
commodities and processed foods have entered the
Indian market from different countries and are seen on
supermarket shelves.
•-The political economy of agriculture, as a result, is at a
crossroads where liberalization, globalization and world
trade have caused some concern in the Indian farming
community.
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WTO : Implications on Indian Agriculture
• Agriculture in India has a long history dating back
to ten thousand years.
• Today, India ranks second worldwide in farm
output.
• Agriculture accounted for 16.6% of the GDP in 2007
employed 60% of the total workforce and despite
a steady decline of its share in the GDP, is still the
largest economic contributor
WTO : CURRENT ISSUES
WTO :agreements relevant to agriculture
•There
are four sets of WTO agreements that are
relevant to agriculture.
•First, there is the agriculture text proper.
•Second, there is the sanitary and phytosanitary
measures (SPS) agreement.
•Third, the agreement on intellectual property
rights, specifically on microorganisms and plant and
seed varieties. (eg. Patent of basmati)
•Fourth, the agreements on industrial tariffs,
especially after the phase-out of the quantitative
restrictions (QRs), which have implications for
fertilizers and the fertilizers policy.
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WTO: Challenge after Removal of Quantity
Restrictions
•Where
the Government could fail - as it did in the case of
edible oil imports - is by moving slowly on increasing tariffs
whenever global or domestic prices fall (and results into
dumping).
•However,
the fairly high levels of tariff protection that
India can now invoke could be under threat when the
next phase of multilateral negotiations on agriculture begins
at the WTO.
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WTO: Deal on Agriculture
(Flawed functioning of 1994)
The next issue is the functioning of the 1994 WTO
deal on agriculture,
It has been far from boosting trade, used by the rich
countries to increase farm subsidies.
-Experts in the country have demanded a review of this
agreement.
-India has officially already made proposals to address the
“implementation problems” in the farm pact.
-Going further may force
concessions on imports.
India
to
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offer
more
WTO : Indian Govt. Approach
In its first set of proposals, the Government appears to
have chosen to place greater importance on protecting
agriculture than on liberalizing farm exports.
This is apparent from the demand for constituting a
“Food Security Box” that will facilitate higher levels of
protection and codify provisions that already exist in the
WTO agreements.
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WTO: Understanding AoA
1.
AoA and the Agreement on Application on
Sanitary & Phytosanitary Measures were
negotiated in parallel
2.
Decisions on measures concerning the possible
negative effects of the reform programme on
least developed and net food importing
developing countries also part of the
package. (32 least developed countries e.g.
Bangladesh, Haiti)
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WTO: Understanding AoA
AoA :Three Elements
1.
Market Access
2.
Domestic Subsidies
3.
Export Subsidies
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WTO: Understanding AoA
1. Market Access
•
Tariffication of Non Tariff Barriers (NTB’s)
•
Reduction of Tariffs
•
•
•
By a simple average of 36% over 6 years for
developed countries
By a simple average of 24% over 10 years for
developing countries
Minimum Access
•
Not less than 3%, rising to 5% by 2004 for
developing countries
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WTO: Understanding AoA
2. Domestic Support
•
Aggregate Measurement of Support
(AMS)
• Product Specific
• Non-Product Specific -De Minimis
Provisions
•
Three Categories of Domestic Support
• “Green Box” Measures
• “Blue Box” Measures
• “Amber Box” Measures
WTO : CURRENT ISSUES
WTO: Understanding AoA
Domestic Support: Exemption
Investment subsidies in the Agriculture sector, Input
support to low income/resource poor farmers, Support for
diversification from illicit narcotic crops
Export Subsidy
1.
Prohibited
1.
2.
Otherwise subject to reduction commitments
Value of Subsidy
By 36% over 6 years for developed
countries
2. By 24% over 10 years for developing
countries
3. No reduction for least developed countries
1.
4.
Quantity of Export
By 21% over 6 years for developed countries
by 14% over 10 years for developing countries
7. No reduction for least developed countries
5.
6.
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WTO: Understanding AoA
Domestic Support: Notification Obligations
•
Members bound to notify changes in Market Access,
Export Subsidies and Domestic Support
•
India notifies
•
AMS (Aggregate Measurement of Support)
•
Product Specific for 19 crops
•
Non product specific: Fertilizer, Irrigation
Electricity and seeds
•
Green Box
•
Special & differential , provisions for low
income/ resource poor farmers
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AOA: Three categories of domestic support
Agreement on Agriculture domestic support measures
divided into Three Categories of Domestic Support
•
•“Green
•“Blue
Box” Measures
Box” Measures
•“Amber
Box” Measures
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WTO: Green Box Measures
“Green-box” measures were those having no major
effect on production and trade and were considered
completely non-violative of the AoA and not subjected
to any reduction commitments.
-They included a variety of “direct payments” to farmers,
which were seen as augmenting their incomes
without influencing production decisions.
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WTO: Green Box Measures- examples
Some of Green Box Measures were:
•
•
•
•
Producer retirement programmes,
Resource retirement programmes,
Environmental protection programmes,
Regional assistance programmes
• Public stockholding for food security reasons,
• Agricultural input subsidies for low-income,
resource-poor families,
• Domestic food aid,
• Certain types of investment aid,
• General services that provide among other things:
WTO : CURRENT ISSUES
WTO: Amber box measures
“Amber box” measures, were seen as “those
policies, which do have a substantial
impact on the patterns and flow of trade”.
All such domestic support measures were to be
taken into account while computing the AMS
level, and countries had to commit themselves
to reduce in the aftermath of the agreement.
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WTO: Blue Box Measures
“Blue-box” measures, were additional exemptions
arrived at through the Blair House accord and were
introduced to allow the US and the EC to continue to
support agriculture, while meeting AMS provisions.
-They were exempt from inclusion in the AMS subject to
reduction commitments, but were conditionally actionable.
-These included notably compensatory payments and land
programmes of the EU’s Common Agricultural Policy, aimed
at compensating producers for limiting production, and the
US government’s deficiency payments scheme, aimed at
compensating producers facing market prices that are below
a targeted level.
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WTO: Export Subsidies
Agreement on Agriculture, in its bid to make agricultural
trade freer, required nations to reduce the subsidies they
offered to exporters of agricultural products, as these were
considered an unfair practice.
Signatories to the AoA committed themselves to reduce the
expenditure they incurred on such subsidies to levels that
were 36 percent lower than their 1986-90 average values in
the case of the developed countries and 24 percent lower
relative to the same figure in the case of developing
countries.
In comparison to market access and domestic support,
disciplines on export competition were considered the most
binding of all AOA commitments. 25 percent of the members
of WTO have maintained the right to subsidize exports.
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WTO: Sanitary and Phytosanitary
Agreement & Allied Measures
Any discussion on the effects of the WTO agreements on
Indian agriculture will be incomplete without a discussion
on SPS and TBT agreements.
Article 14 of the AOA clearly states:
“Members agree to give effect to the Agreement on the
Application of Sanitary and Phytosanitary Measures.”
-The Agreement on SPS allows members to adopt and
enforce measures necessary to protect human, animal or
plant life or health, subject to the requirement that these
measures are not applied in a manner which would
constitute a means of arbitrary or unjustifiable
discrimination
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WTO: Agreement on Technical Barriers to Trade
Agreement on Technical Barriers to Trade (TBT) sets
standards for labeling and packaging of agricultural products
as recommended by CAC.
-Unless India keeps itself abreast of the emerging guidelines
of CAC, it may face non-tariff-barriers in future.
-WTO does encourage developing countries to take active
part in the CAC activities to decide on various SPS and TBTrelated standards.
-Among developing countries, India has been active in its
Participation.
-This practice needs to be pursued on a continued basis to
protect interests of Indian agriculture, without jeopardising
the spirit of achieving uniform international standards.
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WTO: India’s Commitments
1.Market Access
-No tariffication; ceiling bindings off
-100% for primary commodities
-150% for processed agricultural products
-300% for edible oils
2.Domestic Support
-Price Support for 19 products
3. Export subsidy
-India does not have these.
-No commitments
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WTO : The Uruguay Round
Because of differences among the 115 member countries, these
negotiations could not be finished within 4 years. The main
areas of dispute were agriculture, textiles and technology
agreement.
In the government procurement negotiations, India is an
observer, but not a signatory.
In the final Uruguay Round package, such GATT-plus, agreements
are called Plurilateral trade agreements.
This is in contrast to multilateral trade agreements, which are
GATT/WTO agreements-proper and have universal application.
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WTO: Uruguay round- afterward
The Uruguay Round (1986-94) is considered by both its
defenders and its critics as a major landmark in international
trade negotiations.
It has changed the terms of the world trade regime in many
significant ways.
In this round, besides negotiation areas of tariff and non-tariff
measures,
New areas
1. Trade in services,
2. Trade related investment measures (TRIMS),
3. Trade related intellectual property rights (TRIPS)
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Intellectual Property Protection
A next issue is intellectual property protection.
-India was compelled in 1994 to agree to provide sui
generis protection to plant varieties. However, it had the
choice of drafting its own legislation. This could have
contained innovative provisions to protect traditional rights.
-Yet, years of procrastination and inter-Ministry squabbling
have meant that no legislation has been enacted, opening
the door to disputes at the WTO from other countries.
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WTO : Benefits for Indian Agriculture
• Reduction in export subsidies on farm products in
developed countries will make Indian agricultural
exports more competitive.
• Fruits, oil seeds, cotton, and milk products will be
benefited due to subsidy reductions.
• There will be higher price realizations, which will help
in improving the standard of living of farmers.
• Countries will be forced to produce only what they
are best at. This will mean increased efficiency and
higher productivity throughout India.
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WTO :Benefits for Indian Agriculture
• Environmental programmes are exempt from cuts
in subsidies so that the environment protection
programmes continue unabated.
• India does not have to cut subsidies or lower tariffs as
much as developed countries and it has been given
enough time to complete its obligations.
• Distortions in the market place would reduce,
which would benefit the end consumer.
WTO : CURRENT ISSUES
WTO: Agriculture Proposals
-As a S&D measure, developing countries to be allowed to
maintain appropriate levels of tariffs.
-Developing countries to retain flexibility for public stock
holding and public distribution of food grains
-Use of special safeguard in the event of a surge in
imports or a decline in prices
-Measures for poverty alleviation, rural development and
employment to be exempt from AMS.
-Primary agricultural commodities like jute, rubber, coir and
primary forest produce which provide employment and
livelihood to many to be covered by AOA.
-Exemption to developing countries from any obligations
to provide minimum market access.
-Historical low tariff bindings to be rationalised
commensurate with bindings on similar category of products
under the Uruguay Round.
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WTO: Agriculture Proposals
Negative product specific support to be allowed to be adjusted
against positive non-product specific support.
To achieve meaningful market access it is proposed to seek:
-Substantial reduction in tariffs, tariff peaks and tariff escalation
by developed countries
-Elimination of all forms of export subsidies including export
credits, guarantees, insurance etc. by developed countries.
-Flexibility available to developing countries under ASCM to be
preserved in AOA
-Peace clause not to be extended for developed countries
-Down payment by way of 50% reduction in trade distortion and
tariffs by developed countries by the end of 2001
-Retaining and strengthening the existing S&D provisions
WTO : CURRENT ISSUES
WTO: Agriculture Issues -Conclusion
•Inadequate
Infrastructure in relation to post-harvest
technology, including rural communication, godowns,
refrigerated storage, and transportation arrangements for
perishable commodities.
•The World Trade Agreement stringent requirements of
sanitary and phytosanitary measures are yet to be
understood.
•There is an urgent need to improve yield per drop of
water.
•During the last few decades, farmers in various countries
have shifted from flow irrigation to sprinkler, drip, and
now membrane irrigation.
•Indian farmers need adequate information. Computerized
systems of information need to be developed and the
benefits of cyberspace should be extended to poor farm
families.
WTO : CURRENT ISSUES
WTO : Agriculture -Future Strategy For Developing Countries
•Ensure
reduction of AMS and duties in letter and spirit...
•The implementation issues
•Forge a common platform to change the rules of the
game: special and differential treatment, AMS, reduction of
duties.
•Proactive preparations for penetrating the markets
when the duties and the subsidies come down.
•Are we prepared?
•Active participation in Codex meetings.
•Forging common platform for SPS related barriers.
WTO : CURRENT ISSUES
WTO : Agriculture -Future Strategy For Developing Countries…
Emphasis on quality within the country……… the “Quality”
culture has to be developed
Identify subsidies which are WTO compatible………
Agri Export Zones are a move in this direction.
Take a fresh look at agricultural commodities which are
being supported and move towards such commodities
which are market driven rather than State driven
Wheat
Durum Wheat
Rice
Basmati Rice
Sugar
Potatoes
Onion
Eggs
WTO : CURRENT ISSUES
WTO :Agriculture Dispute
Case: DS207
Dispute Settlement Between
Developing Countries
Chilean Price Bands
WTO : CURRENT ISSUES
WTO :Agriculture Dispute
Argentina-Chile Relations
Share
the world's third-longest international border
(5,300 km long)
Disputes over Patagonia region
Chile is the 3rd export trading partner for Argentina
Chile imports products including cereals and meat
from Argentina
Chile has recently invested heavily in retail markets
of Argentina
Signed a Mining Integration Agreement in 1997
Gave go-ahead for the $3-billion Pascua Lama
project (an open pit mining project) in 2009
WTO : CURRENT ISSUES
WTO :Agriculture Dispute
Flagship sector:
Argentina is one of the top vegetable oil producers in the
world.
Total production (2001)= ~ 5,283 thousand tons
(includes soy, sunflower, peanut, olive, cotton, linseed, corn, turnip,
edible mixes and tung oils)
80-90% domestic production is exported
Low

domestic consumption + high productivity
Makes Argentina one of the leading world exporter of
sunflower and soy oil (followed by Brazil and the United
States)
Exports


of vegetable oil & fats represent
~ 28% of the value of total food exports
~ 10% of the value of total exports.
WTO : CURRENT ISSUES
WTO :Agriculture Dispute
Issue:
Erratic global demand & supply during 1997-2001
Low demand (economic turmoil- SE Asia/Russia etc) + High
production (esp Argentina & Brazil)
Result: Drop in prices – Affect on Chile’s PBS
 Collection of ad valorem customs duties of ~64.5% for oils
& 60.25% on wheat flour (2000)
 A violation of ceiling set by Uruguay Round (31.5%)
PBS (Price band System):
Applicable to agricultural products
When a product subject to the PBS arrives in Chile, the customs
official will impose the ad valorem duty (8%) only when the
reference price (RP) falls between the lower and upper thresholds
of the PBS.
RP- determined each Friday using the lowest free on board
(FOB) price in so-called markets of interest
PBS- determined annually on the basis of FOB prices observed
on particular international markets over the preceding 5 yrs
WTO : CURRENT ISSUES
WTO :Agriculture Dispute
Dispute Settlement Process:
After failure of regional level talks
Argentina submitted dispute to Administration
Commission of the Mercosur-Chile Agreement (ECA 35)
After Chile’s reluctance to comply- submitted complaint to
WTO – Oct’2000
Step 1: Consultation & Mediation
Argentina’s
Argument- PBS violated Article II (b) of GATT 1994
 i.e by virtue of its structure, design and mode of
application it potentially led to the application of specific
duties in violation of the Chilean bound tariff. In practice
the PBS resulted in the collection of ad valorem customs
duties exceeding the bound ceiling tariff of 31.5%.
Chile’s argument- PBS duties are ordinary customs duties and
therefore not subject to tariffication
WTO : CURRENT ISSUES
WTO :Agriculture Dispute
Dispute Settlement Process: (contd)
Failure of Step 1
Step 2: Constitution of Panel
Report:
Step
The Chilean PBS is inconsistent with Article 4.2
3: Appeal by Chile to Appellate Body
 The Appellate Body recommended that the DSB request Chile
to bring its price band system, as found, in its and in the Panel
Report as modified by its Report, to be inconsistent with the
Agreement on Agriculture, into conformity with its obligations
under that Agreement.
Step
4: Award & Implementation
On 17 March 2003, the arbitrator circulated its award
the “reasonable period of time” that should be extended
to Chile
to implement the recommendations and rulings of the DSB in this
dispute was 14 months (23 December 2003).
Chile stated that a new price band system Law would come into
force on 16 December 2003
WTO : CURRENT ISSUES
Dispute
Settlement
WTO : CURRENT ISSUES
DISPUTE SETTLEMENT
Dispute settlement is regarded by the World Trade
Organization (WTO) as the central pillar of the multilateral
trading system, and as the organization's "unique
contribution to the stability of the global economy“.

A DISPUTE arises when one member country adopts a
trade policy measure or takes some action that one or more
fellow members considers to a breach of WTO agreements or
to be a failure to live up to obligations.

WTO : CURRENT ISSUES
DISPUTE SETTLEMENT – Aims of the DSU (Article 3)
 To provide security and predictability to the multilateral trading system.
 That a prompt settlement of disputes is essential.
 To secure a positive solution to a dispute. (Negotiated solution is
preferable to litigated decisions.)
 Once a violation is determined the aim is to secure the withdrawal of the
offending measure.
 Compensation is to be resorted to only if the withdrawal of the measure
is impracticable.
 As a last resort, have suspension of concessions or other obligations
(“Retaliation”).
WTO : CURRENT ISSUES
DISPUTE SETTLEMENT – VIOLATION COMPLAINTS
The Banana Case

EU had long tradition of granting preferential access for bananas
produced in African, Caribbean and Pacific (ACP) countries to the
detriment of Central and South American countries

1993: As part of the Single Market, EU adopted a complex import
licensing system, favouring ACP suppliers (‘dual tariff-quotas’)

Latin American countries and U.S. repeatedly brought the matter to
GATT/WTO and won each time






1994: Banana Framework Agreement with Costa Rica, Colombia, Nicaragua
and Venezuela, allocation of quotas to these countries
1996: Ecuador, Guatemala, Honduras, Mexico and US contested EU banana
regime as discriminating against their producers
1997: WTO panel report found EU regime in violation of WTO
nondiscrimination rules
1998: EU revised the regime, but kept the dual tariff rate quotas
1999: US ($191 mill.), Ecuador ($200 mill.) authorised to retaliate
2001: Compromise, EU agrees to replace quotas by simple tariffs in the
medium-run and to change quota allocation in the short-run
WTO : CURRENT ISSUES
DISPUTE SETTLEMENT – NON-VIOLATION
COMPLAINTS : Kodak - Fuji

U.S. had since long argued that presence of Japanese corporate groups
(Keiretsu) undermines market access for U.S. firms

1996: U.S. brings Fuji-Kodak conflict to the WTO




Fuji’s control of film wholesalers in Japan asserted to prevent Kodak sales in
Japan
No direct violation of GATT/WTO principles but effect similar to a violation of
the national treatment principle
Crucially, assertion that Japanese government (through its competition
policy) was partly responsible for the situation
1998: Panel report does not support U.S. demands


No evidence of impact of government measures on U.S. market access
In addition, single-brand wholesale distribution common in national film
markets
WTO : CURRENT ISSUES
DISPUTE SETTLEMENT –DSU Articles
 Article 19 -- (Panel & AB Recommendations)
 Article 21 -- (Surveillance of Implementation)
 Article 22 -- (Suspension of Concessions)
 Article 19 --- Recommendation is to “bring the measure into conformity”
with the WTO agreement.
 Article 21 --- Prompt compliance is essential. The panel reviews a
disagreement over consistency of compliance measures taken and keeps
under surveillance implementing actions.
• Parties need to inform of intentions to comply with DSB.
• Arbitration as to “reasonable period.” Art. 21(3).
• “Consistency of compliance” – original panel. Art. 21(5).
 Article 22 --- Full implementation is preferred. Sanctions (withdrawal of
concessions) may be authorized.
• Authorization for sanctions to DSB.
• Arbitration (by panel) for amount of sanctions. Art. 22(6).
WTO : CURRENT ISSUES
DISPUTE SETTLEMENT – STAGES
Consultations
Panel
Appeal
Adoption
Implementation
WTO : CURRENT ISSUES
DISPUTE SETTLEMENT – Basic Procedures
 First stage is consultations.
 Upon failure of consultations panels are established by the Dispute
Settlement Body (DSB) (General Council).
 Panels have detailed rules of procedures providing for “descriptive
sections,” interim reports, and final reports.
 If appealed the Appellate Body (AB) reviews the panel report.
 Issues of law covered by the panel
 Legal interpretations developed by the panel.
 The DSB automatically adopts the reports of the panels and the
Appellate Body unless there is a “consensus” (unanimity) against its
adoption. (Concept of automaticity.)
 DSB keeps surveillance of implementation.
WTO : CURRENT ISSUES
DISPUTE SETTLEMENT – IMPLEMENTATION
Sanctions & Compliance
Authorization of Sanctions
WTO authorizes winning
party to impose sanctions
when have noncompliance – WTO
determines compliance
Removal of Sanction
Winning state to remove
sanctions when it
determines
implementation is
sufficient
But if winning states fails
to remove sanctions,
losing state to return to
WTO and ask for
compliance determination
WTO : CURRENT ISSUES
DISPUTE SETTLEMENT – IMPLEMENTATION
Compensation & Retaliation
If all else fails, two more possibilities are set out in the DSU:
i.If
a member fails within the "reasonable period" to carry out the
recommendations and rulings, it may negotiate with the complaining state
for a mutually acceptable compensation. Compensation is not defined, but
may be expected to consist of the grant of a concession by the respondent
state on a product or service of interest to the complainant state.
WTO : CURRENT ISSUES
DISPUTE SETTLEMENT – Compensation & Retaliation
ii.
If no agreement on compensation is reached within twenty days of the
expiry of the "reasonable period", the prevailing state may request
authorization from the DSB to suspend application to the member
concerned of concessions or other obligations under the covered
agreements. The DSU makes clear that retaliation is not favored, and
sets the criteria for retaliation. In contrast to prior GATT practice,
authorization to suspend concessions in this context is semi-automatic,
in that the DSB "shall grant the authorization [...] within thirty days of
the expiry of the reasonable period", unless it decides by consensus to
reject the request. Any suspension or concession or other obligation is
to be temporary. If the respondent state objects to the level of
suspension proposed or to the consistency of the proposed suspension
with the DSU principles, still another arbitration is provided for, if
possible by the original panel members or by an arbitrator or
arbitrators appointed by the Director-General, to be completed within
sixty days from expiration of the reasonable period.
WTO : CURRENT ISSUES
DISPUTE SETTLEMENT – IMPLEMENTATION
Compensation & Retaliation
While such "retaliatory measures" are a strong mechanism when applied by
economically powerful countries like the United States or the European
Union, when applied by economically weak countries against stronger ones,
they can often be ignored. This has been the case, for example, with the
March 2005 Appellate Body ruling in case DS 267, which declared US cotton
subsidies illegal. Whether or not the complainant has taken a measure of
retaliation, surveillance by the DSB is to continue, to see whether the
recommendations of the panel or the Appellate Body have been
implemented.
WTO : CURRENT ISSUES
DISPUTE SETTLEMENT - Duration
Duration of a Dispute Settlement procedure
60 days
Consultations, mediation, etc
45 days
Panel set up and panellists appointed
6 months
Final panel report to parties
3 weeks
Final panel report to WTO members
60 days
Dispute Settlement Body adopts report (if no appeal)
Total = 1 year (without appeal)
60-90 days
Appeals report
30 days
Dispute Settlement Body adopts appeals report
Total = 1 year 3 months (with appeal)
^ These approximate periods for each stage of a dispute settlement procedure are target figures. The agreement is flexible.
In addition, the countries can settle their dispute themselves at any stage.
Totals are also approximate.
WTO : CURRENT ISSUES
DISPUTE SETTLEMENT – IMPLEMENTATION
Case DS 267 : US Cotton Subsidies
Case DS 267
US Cotton
Subsidies
WTO : CURRENT ISSUES
DISPUTE SETTLEMENT – IMPLEMENTATION
Case DS 267 : US Cotton Subsidies
CASE FACTS
Complainant: Brazil
Defendant: United States
Third Parties: Argentina; Australia; Benin; Canada; Chad; China; Chinese
Taipei; European Communities; India; New Zealand; Pakistan; Paraguay;
Venezuela; Japan; Thailand
WTO : CURRENT ISSUES
DISPUTE SETTLEMENT – IMPLEMENTATION
Case DS 267 : US Cotton Subsidies
MAIN ISSUES
#1 ISSUE US Domestic and Export subsidies for Upland Cotton
Producers specifically the:
Farm
Security and Rural Investment Act of 2002
Did
US Farm Bills in 1999 and the subsequent farm bills that targeted
funds to support US prices for domestic cotton production and exports break
WTO agreements on Subsidies or did Article 13 of the GATT 1994 preclude
rules on subsidies?
#2 ISSUE Compliance
Once
WTO ruled US cotton subsidies broke WTO rules Brazil requested
another panel to ensure that US had complied with the ruling.
WTO : CURRENT ISSUES
DISPUTE SETTLEMENT – IMPLEMENTATION
Case DS 267 : US Cotton Subsidies
SPECIFIC US BILLS CONTESTED BY BRAZIL
Step
2 payments - subsidies designed to enhance competitiveness of US
cotton exports, by providing payments to buyers of US-grown cotton when
its price exceeds a European benchmark price.
Export
credit guarantees - government guarantees for short-term export
financing for cotton and other agricultural commodities.
Marketing
loan payments -a loan program that allows farmers to use
cotton crops as collateral for a non-recourse government loan and to repay
the loan at a lower rate when the world price for cotton falls below a certain
threshold.
Counter-cyclical
payments - payments proportional to a farmer's cotton
production on "base acres" during a past period, triggered when the market
price for cotton falls below a target price.
WTO : CURRENT ISSUES
DISPUTE SETTLEMENT – IMPLEMENTATION
Case DS 267 : US Cotton Subsidies
CONTEXT OF THE CASE : BRAZIL POSITION
Brazil claims the United States Farm Bill of 1999-2000 and 2002 contravene
WTO rules on Subsidies and Countervailing Measures and the Agreement on
Agriculture.
Brazil argued that the US was responsible for driving down world cotton
prices, consequently causing harm to Brazilian farmers while increasing the
US share of the global cotton market.
“Brazil requests consultations with the Government of the United States
regarding prohibited and actionable subsidies provided to US producers,
users and/or exporters of upland cotton.” - From Brazil’s letter of
consultation March 10, 2002
WTO : CURRENT ISSUES
DISPUTE SETTLEMENT – IMPLEMENTATION
Case DS 267 : US Cotton Subsidies
CONTEXT OF THE CASE : US POSITION
US
argues that Brazil claims are warrantless because US subsidies are
within their rights pursuant to Article 13 of the Agreement on Agriculture
that exempts certain subsidies for nine years after GATT 1994. These
exemptions in Article 13 insure against complaints and are known as “peace”
provisions, also know as Green Box exemptions.
Article
13 Agreement on Agriculture
“Peace”
provisions within the agreement include: an understanding that
certain actions available under the Subsidies Agreement will not be applied
with respect to green box policies and domestic support and export subsidies
maintained in conformity with commitments; an understanding that “due
restraint” will be used in the application of countervailing duty rights under
the General Agreement; and setting out limits in terms of the applicability of
nullification or impairment actions. These peace provisions will apply for a
period of 9 years.
WTO : CURRENT ISSUES
DISPUTE SETTLEMENT – IMPLEMENTATION
Case DS 267 : US Cotton Subsidies
CONTEXT OF THE CASE : US POSITION
Initial Brief of the US on questions posed by the panel. June 5, 2003
“…Article 13 (the “peace clause”) precludes the Panel from considering
Brazil’s claims under Article XVI of the GATT 1994 and the (ASCM) since the
US support measures at issue conform with the Peace Clause.”
Comments of the US on comments by Brazil on questions posed by
the Panel. – June 13, 2003
…” the interpretation of Article 13 advanced by Brazil is deeply flawed…Brazil
fails to read the Peace Clause according to the customary rules of
interpretation of public international law….It’s interpretation… would lead to
an absurd result…”
WTO : CURRENT ISSUES
DISPUTE SETTLEMENT – IMPLEMENTATION
Case DS 267 : US Cotton Subsidies
LEGAL BASIS FOR BRAZIL CASE:
Brazil complained that United States Violated the following WTO
Agreements:
1.Articles 4.1, 7.1 and 30, of ASCM
2.Article 19 of the AA
3.Article 22 of GATT 1994
4.Article 4 of DSU
In short this is violation of subsidies agreements
WTO : CURRENT ISSUES
DISPUTE SETTLEMENT – IMPLEMENTATION
Case DS 267 : US Cotton Subsidies
WTO ARTICLES INVOLVING THE CASE
AA 3.3- No subsidies above the scheduled level of specified goods
(scheduled goods) in article 9 of AA

Export
Subsidy Commitments 1.
The following export subsidies are subject to reduction
commitments under this Agreement:

“the sale or disposal for export by governments or their agencies of
non-commercial stocks of agricultural products at a price lower than the
comparable price charged for the like product to buyers in the domestic
market”(AA9(b))
AA
8- No export subsidies for unscheduled products
AA
9.1-supposed to reduce the level of direct subsidies payment.
WTO : CURRENT ISSUES
DISPUTE SETTLEMENT – IMPLEMENTATION
Case DS 267 : US Cotton Subsidies
WTO ARTICLES INVOLVING THE CASE
AA
10-Prevention of Circumvention of Export Subsidy
Commitments
ASCM
Art. 3 - no subsidies based on export performance- In case of U.S
export credit guarantees
ASCM
Arts 5(C)-Serious prejudice to the interests of another Member
ASCM
Arts 6.3 (C)- Subsidy which cause the market price to be
suppressed causing serious prejudice to Brazil’s interest within meaning of
article 5 (C)
WTO : CURRENT ISSUES
DISPUTE SETTLEMENT – IMPLEMENTATION
Case DS 267 : US Cotton Subsidies
TIMELINE OF THE CASE
Consultations
Request: September 27, 2002
Consultations
held: December 3, 2002 & January 17,
2003- Failed.
Brazil
requested Panel February 6, 2003
March
18, 2003 Established of a panel
Panel Report : September 8, 2004 Circulation of the
Panel Report- both countries appealed ruling

AB
report: March 3, 2005- Upheld panel ruling.
WTO : CURRENT ISSUES
DISPUTE SETTLEMENT – IMPLEMENTATION
Case DS 267 : US Cotton Subsidies
TIMELINE COMPLIANCE
August
panel
21, 2006 Brazil requested WTO compliance
December
February
June
18, 2007- Panel- U.S did not comply
2008- U.S appealed compliance panel ruling
2008- AB upheld the panel ruling
WTO : CURRENT ISSUES
DISPUTE SETTLEMENT – IMPLEMENTATION
Case DS 267 : US Cotton Subsidies
PANELS AND AB FINDINGS: IN FAVOR OF BRAZIL
Two
U.S programs were found to operate as prohibited
The
two step payment and export credit guarantees
Further
more the Panel found that the export-subsidies
aspect does not just apply to cotton but also other
commodities that benefit.
Panel
recommended the United states remove all
subsidies.
WTO : CURRENT ISSUES
DISPUTE SETTLEMENT – IMPLEMENTATION
Case DS 267 : US Cotton Subsidies
U.S. RESPONSE TO PANEL AND AB RULLING
After
losing, U.S announced it intended to
fully comply with recommendation
In
July 2005 U.S instituted a risk based
export credit guarantee
WTO : CURRENT ISSUES
DISPUTE SETTLEMENT – IMPLEMENTATION
Case DS 267 : US Cotton Subsidies
BRAZIL RESPONSE TO PANEL AND AB RULLING
Brazil
charged the United States had neither take nor
announced any specific initiative for price-contingent
programs deemed to cause prejudicial impact to brazil
trade interest
Brazil
requested to impose $ 1 billion retaliation against
the united states
The
United states requested WTO arbitration of the level
of proposed sanction
Brazil
has not made a prima facie case that the effect of
marketing loan and counter-cyclical payments provided to
US upland cotton producers pursuant.
WTO : CURRENT ISSUES
DISPUTE SETTLEMENT – IMPLEMENTATION
Case DS 267 : US Cotton Subsidies
BRAZIL REQUEST FOR COMPLIANCE TO PANEL
On
August 21, 2006 Brazil requested the
establishment of WTO compliance panel to
review weather the United States had not fully
complied with panel and AB report
December
18, 2007 the compliance panel
released the final report ruling the united
states had not fully complied
WTO : CURRENT ISSUES
DISPUTE SETTLEMENT – IMPLEMENTATION
Case DS 267 : US Cotton Subsidies
U.S. RESPONSE TO COMPLIANCE PANEL
In
February 2008 the United states
appealed the compliance panel ruling
In
June 2008 the TWO Appellate Body
upheld the compliance panel ruling.
WTO : CURRENT ISSUES
THE WTO AS A NEGOTIATION FORUM

As the GATT, the WTO provides a forum for exchanging market access
commitments

Technically speaking, WTO sets rules for the non-cooperative game of
international trade negotiations




‘Non-cooperative’: can gain at the expense of other countries (or at least interest
groups within countries); overall outcome could make everyone worse of
Actions can impose ‘externalities’ on other countries
Externalities usually addressed through actions by central authority (e.g. pollution
taxes)
Not possible in international trade negotiations; alternative is to enable negotiations
between countries

Negotiations difficult since MTNs are a form of barter (no ‘money’
available)

Two kinds of sources of inefficiencies arise


Need ‘double coincidence of wants’: need to find good (= trade barrier concessions)
I’m interested in and whose owner is interested in my counter-offer
In addition, might be impossible to equate trader’s valuations of not easily divisible
goods such as market access (would be no problem if money existed)
WTO : CURRENT ISSUES
THE WTO AS A NEGOTIATION FORUM
Negotiation Stages


WTO negotiations (‘rounds’) can be divided into several
stages

Catalyst stage: a policy vision of a government or interest group

Pre-negotiation stage: discussion of a possible negotiating agenda

Negotiation stage: formal government-level bargaining

Post-negotiation stage: implementation of agreements
Important elements of negotiations

Issue linkage

Coalitions

Lobbying

Principal supplier approach
WTO : CURRENT ISSUES
THE WTO AS A NEGOTIATION FORUM
Important Negotiation Elements


Issue linkage

Linking issues (e.g. IPR protection and agricultural market access during Uruguay
round) often necessary to break negotiation deadlocks

Allows to achieve reciprocity (details on some formulas later but generally quite
subjective)
Coalition formation, two purposes

Achieve agreement between subgroups which couldn’t be achieved in fully multilateral
negotiations (e.g. codes of practice on NTBs during Tokyo Round)

Increase bargaining power (Cairns group during Uruguay Round, developing countries
during Tokyo Round)
WTO : CURRENT ISSUES
THE WTO AS A NEGOTIATION FORUM
Important Negotiation Elements

Lobbying by domestic groups

Only governments or equivalent authorities in trade matters (e.g. EU
Commission) can participate in the WTO negotiation process

‘Governments’ are not monolithic but represent multiple, often
conflicting interests: member states (EU), industry associations, trade
unions, NGOs …

Lobbying generally seen as part of the democratic process and
encouraged by most OECD countries. For example, in the EU:
o
Hundreds of international federations and multinational firms have
representations in Brussels
o
All in all ca. 13,000 professional lobbyists (one per Commission staff member!)
WTO : CURRENT ISSUES
THE WTO AS A NEGOTIATION FORUM
Important Negotiation Elements

Principal supplier approach

MFN clause creates potential for free-riding, possible conflict
between MFN and reciprocity principle

One solution is that requests for market access concessions are only
requested by the largest (principal) supplier who then offers
something in exchange

Easiest case: country A is principal supplier of good I and country B
principal supplier of good II

Many countries: A makes concessions to B, B to C and C again to A

Often concessions made contingent on final-round concessions by
smaller suppliers (sometimes leads to late breakdown of
negotiations, ‘nothing is agreed upon until everything is agreed
upon’)
WTO : CURRENT ISSUES
THE WTO AS A NEGOTIATION FORUM
Negotiation Formulas
How are reciprocal concessions negotiated?


Specific (item-by-item)

Specify conditions for individual items (e.g. tariffs in particular sectors)

Used for first five GATT rounds (before Kennedy round)

Again used in Uruguay round
General (across-the-board): apply same tariff-cutting formula to many
sectors

Linear cut in tariffs (e.g. Kennedy round): identical percentage reduction,
i.e. tnew = told * r (r is b/w 0 and 1)

Harmonization cuts: reduce higher tariffs by more, example: tnew = (r*
told) /(r+ told) where r = 14 or 16 (‘Swiss formula’, used in Tokyo round)

Usually many sectors exempted (which are then negotiated item-byitem)
WTO : CURRENT ISSUES
THE WTO AS A NEGOTIATION FORUM
Negotiation Formulas
How are market access offers evaluated?

‘Trade coverage’: tariff reduction multiplied with original volume of
imports of a product (example)

‘50%-equivalent’


50% tariff cut on US$1 million imports = equivalent to 25% tariff cut
on US$2 million import good etc.

Generally: E = (M * dT)/50
‘Average cut’: (weighted) average reductions should match up. Example:

15% tariff cut on two US$1m-import goods = 10% cut on US$3mimport good plus 30% cut on US$1m-import good

Average cut is 15% in both cases
WTO : CURRENT ISSUES
THE WTO AS A NEGOTIATION FORUM
Negotiation Formulas

Two (unused) superior measures would be

Net welfare gains of trading partners

Effective protection

Calculation of net welfare gains generally not feasible

Effective protection vs. nominal protection

Nominal rate of protection: increase in price as compared to free
trade (usually done as comparison domestic vs. world market price:
NRP = (P- PW)/PW)

Effective rate of protection: increase in value added as compared to
free trade/world market conditions: ERP = (V-VW)/VW

Differences arise if goods use imported inputs

Generally ERP > NRP since governments protect high-value added
sectors
WTO : CURRENT ISSUES
Present Agenda
&
The Road ahead…
WTO : CURRENT ISSUES
Cross-cutting and Current Issues

Regional economic groupings

Trade and the environment

Trade and investment

Competition policy

Transparency in government procurement

Trade facilitation

Electronic commerce
WTO : CURRENT ISSUES
Regional Trading Arrangements




RTAs allow groups of countries to negotiate rules and
commitments that go beyond what is possible
multilaterally.
Seem contradictory, but often actually support the WTO’s
multilateral trading system.
GATT’s Article 24 allows RTAs to be set up as a special
exception, provided certain strict criteria are met.
Examples: The European Union, the North American Free
Trade Agreement, the Association of Southeast Asian
Nations and so on.
WTO : CURRENT ISSUES
The Environment : A Specific Concern



Though the WTO is not an environmental agency and
its members do not want it to intervene in national or
international
environmental
policies
or
to
set
environmental standards.
However, the WTO agreements confirm governments’
right to protect the environment, provided certain
conditions are met, and a number of them include
provisions dealing with environmental concerns.
Trade and Environment Committee : Created at the end of
the Uruguay Round in 1994
WTO : CURRENT ISSUES
Trade and Environment Committee

Primary Duty


To study the relationship between trade and the
environment, and to make recommendations about any
changes that might be needed in the trade
agreements.
Committee’s work is based on two important principles.


The WTO is only competent to deal with trade.
Other agencies that specialize in environmental issues
are better qualified to undertake those tasks.
If the committee does identify problems, its solutions
must continue to uphold the principles of the WTO
trading system.
WTO : CURRENT ISSUES
Investment, Competition, Procurement, Simpler
Procedures

The “Singapore issues” : New working groups
on

Trade and investment,

Competition policy,

Transparency in government procurement, and

Trade facilitation.
WTO : CURRENT ISSUES
Investment and Competition : Role of WTO?



Earlier work in the WTO on investment and competition
policy issues originally took the form of specific
responses to specific trade policy issues.
At the 1996 Ministerial Conference in Singapore, two
working groups were set-up to look more generally at
how trade relates to investment and competition
policies.
The working groups’ tasks were analytical and exploratory.
They would not negotiate new rules or commitments
without a clear consensus decision.
WTO : CURRENT ISSUES
Investment and Competition

GATT and GATS contain rules on



monopolies and exclusive service suppliers.
The principles have been elaborated considerably in the
rules and commitments on telecommunications.
The agreements on intellectual property and services both
recognize governments’ rights to act against anticompetitive practices, and their rights to work together
to limit these practices.
WTO : CURRENT ISSUES
Transparency in Government Purchases : Towards
Multilateral Rules



The agreement covers such issues as transparency and
non-discrimination.
Multilateral working group - including all WTO members –
setup after the 1996 Singapore conference.
2 phases of the group’s work


To study transparency in government procurement practices,
taking into account national policies.
To work on developments for inclusion in an agreement.
WTO : CURRENT ISSUES
Trade Facilitation : A New High Profile

Two ways of “facilitating” trade



Cutting red-tape at the point where goods enter a
country and
Providing easier access to information
The 1996 Singapore ministerial conference
instructed the WTO Goods Council to start
exploratory and analytical work “on the
simplification of trade procedures in order to
assess the scope for WTO rules in this area”.
WTO : CURRENT ISSUES
Electronic Commerce



The declaration on global electronic commerce adopted by
the Second (Geneva) Ministerial Conference on 20
May 1998 urged the WTO General Council to establish a
comprehensive work programme to examine all traderelated issues arising from global electronic commerce.
Discussions initiated on issues of electronic commerce and
trade by the Goods, Services and TRIPS (intellectual
property) Councils and the Trade and Development
Committee.
WTO members also agreed to continue their current
practice of not imposing customs duties on electronic
transmissions.
WTO : CURRENT ISSUES
Labour Standards : Consensus, Coherence and
Controversy


Labour standards are those that are applied to the way
workers are treated.
The term covers a wide range of things:


From use of child labour and forced labour, to the right
to organize trade unions and to strike, minimum
wages, health and safety conditions, and working
hours.
Clear consensus:

All WTO member governments are committed to a
narrower set of internationally recognized “core”
standards — freedom of association, no forced labour,
no child labour, and no discrimination at work
(including gender discrimination).
WTO : CURRENT ISSUES
Labour Standards : Consensus, Coherence and
Controversy

1996 Singapore Ministerial Conference



WTO’s role defined and the International Labour
Organization (ILO) identified as the competent body to
negotiate labour standards.
There is no work on this subject in the WTO’s Councils
and Committees.
However the secretariats of the two organizations work
together on technical issues under the banner of
“coherence” in global economic policy-making.
WTO : CURRENT ISSUES
WTO: Achievements


Enhanced the value and quantity of trade.
Emerged as a greater institution than GATT.






Broadened the trade governance scope to trade in
investment, services and intellectual property.
Expanded the WTO agenda by including developmental
policies.
Eradicated trade and non trade barriers.
Eased settlement of disputes by enforcing improved
rules.
Improved monitoring by introducing the Trade Policy
Review and the World Trade Report
Increased transparency by removing green room
negotiations
Encouraged sustainable trade development !
WTO : CURRENT ISSUES
WTO: Criticism – Developing Countries
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Systematic bias toward rich countries and multinational
corporations
Rich countries are able to maintain high import duties
and quotas in certain products, blocking imports from
developing countries (e.g. clothing);
The increase in non-tariff barriers such as anti-dumping
measures allowed against developing countries;
The maintenance of high protection of agriculture in
developed countries while developing ones are pressed
to open their markets;
WTO wields little influence
Failed to manage the global economy impartially !
WTO : CURRENT ISSUES
WTO: Criticism…

The TRIPs agreement limits developing countries
from utilizing some technology that originates from
abroad in their local systems (including medicines
and agricultural products).

According to Martin Khor, Director (Third World
Network)

Doha Round negotiations "have veered from their
proclaimed direction oriented to a development-friendly
outcome, towards a 'market access' direction in which
developing countries are pressurized to open up their
agricultural, industrial and services sectors.“
WTO : CURRENT ISSUES
WTO: Criticism – Labour & Environment

Steve Charnovitz, former Director of the Global
Environment and Trade Study (GETS) says

In the absence of proper environmental regulation and
resource management, increased trade might cause so
much adverse damage that the gains from trade would
be less than the environmental costs.

Labour Unions condemn the labor rights record of
developing countries, arguing that to the extent
the WTO succeeds at promoting globalization, then in
equal measure do the environment and labor rights
suffer.

Rich-country lobbies seek on imposing their
unrelated agendas on trade agreements – TRIPs.
WTO : CURRENT ISSUES
WTO: Criticism – Decision Making
Decision
Making
:
complicated,
ineffective,
unrepresentative and non-inclusive
Process of “consensus-building” has broken down
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The vast majority of developing countries have very little real
say
Problem of "informal meetings”
De facto inequality between countries with regards to an
effective and efficient participation to all activities within all
WTO bodies
Does not rectify the multiple violations of the general
principles of law which affect the dispute settlement
mechanism.
Lack of transparency is often seen as a problem for
democracy.
Policy Laundering
WTO : CURRENT ISSUES
Changing and Difficult Times for WTO
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Trade in goods and services : Not the prime engine of
growth.
Technology, knowledge and information : New engines of
growth and development.
Trade protectionism is on the rise but the institutional
foundations of international trade deals have been shaky
for several years.
Integration of the financial markets and liberalization of
trade and services.
Volatile capital flows, absence of discipline in the
exchange rate behavior, lack of coordination in the macroeconomic policies of major players
The Doha round of trade negotiations, commenced in
2001, has repeatedly stalled as states have failed to reach
a consensus on key issues.
WTO : CURRENT ISSUES
Why have Multi-lateral Trade Deals been so difficult
to conclude in the past years?

Fundamental shift in the balance of economic power that
underlies international trade negotiations :
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The age of “multipolarity” or “non-polarity”.
At the end of the Uruguay Round in 1995, the United
States and the European Union were in the position to
dictate the negotiation agenda, facing few constraints from
the other contracting parties.
Now, in contrast, the talks are frequently brought to a halt
by developing countries that vocally resist the imposition
of US and EU’s trade preferences on them.
WTO : CURRENT ISSUES
IBSAC (India, Brazil, South Africa, China) : A Potential
Developing Country Coalition in WTO Negotiations

Primary reasons of coming into being
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Need for building sustainable alliances for multilateral
trade negotiations in the WTO.
Increasing convergence on issues like trade in services,
agriculture, non-tariff barriers (NTBs) to trade and
intellectual property rights (IPR).
Need to develop alternative sources of technology and
increase business-to-business contacts.
Coming together as a pressure group to enhance
energy security.
WTO : CURRENT ISSUES
IBSAC as Emerging Powers

Global Trade Scenario of select countries (2003)

GDP - Purchasing Power Parity Scenario
WTO : CURRENT ISSUES
IBSAC Countries : Primary Drivers of Global Growth

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High rates of economic growth especially in China and
India as these countries mature into industrial economies
Large investment into higher education (especially in China
and India) in previous decades bear fruit to create a huge
critical mass of highly developed human resources
Demographic shift in IBSA (not China however) towards a
relatively more ‘young’ society, while the opposite happens
in the EU, US and Japan.
WTO : CURRENT ISSUES
WTO: Challenges Ahead

Integrated evolution of trading system and financial
architecture.

Reflections on the social impacts of trade decisions.

Broadened scope to allow for trade-offs across
sectors and issues : agriculture, labour intensive
manufacturers and services.

Clarify and strengthen trade rules, particularly in
areas susceptible to capture by protectionist
interests.

Streamline reforms related to its dispute settlement
system.
WTO : CURRENT ISSUES
WTO: Challenges Ahead

Implement development-oriented
effective manner.
policies

Facilitate global trade liberalization in agriculture and
textiles.

Encourage Non Governmental Organizations or NGOs
to become an important part of world trade
governance.

Devise ways to increase staff and resources to ensure
effective regulation.
WTO : CURRENT ISSUES
in
an
WTO : The Way Forward
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The poorest countries, which lost ground under the last
trade round, insist that they must do better this time.
In the wealthy world deep unease has emerged over the
impact of trade policy on employment.
The common concern, cutting across all countries, is the
question of employment and livelihoods.
Opening an economy more deeply to trade will cause some
sectors to expand and create jobs, while others contract
and destroy jobs.
WTO : CURRENT ISSUES
WTO : The Way Forward
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The Doha Round can lead to a new set of trade rules that
more accurately reflects the new global distribution of
economic power and interests.
It can and should realign rules to tilt less in favor of wealthy
countries and instead offer opportunities to countries at all
levels of development.
It should recognize and accommodate the economic anxiety
that has arisen in response to the relocation of production
across the world since the end of the Cold War.
Finding an appropriate mix of policies to accomplish these
objectives will take time, effort and good faith but in the end
will produce a more robust and resilient global trading system
based on reasonable rules that all countries can embrace.
Artificial deadlines and self-created crises contribute nothing
to this enterprise and should be abandoned by those who
truly believe in the potential of trade.
WTO : CURRENT ISSUES
WTO
THANKS!!!
WTO : CURRENT ISSUES