Forex Project On Gatt And Wto

RESEARCH REPORT ON GATT: -

a) Uruguay Round b) Market Access Aspect c) Doha Round of Negotiations - Current Status

WTO: -

a) History – Functions – Structure b) TRIPS Agreement c) TRIMS Agreement d) GATS Agreement

Presented By:

T anay Sinha

Eighth Round Uruguay Round 1986-1993 The Uruguay Round began in 1986. It was the most ambitious round to date, hoping to expand the competence of the GATT to important new areas such as services, capital, intellectual property, textiles, and agriculture. 123 countries took part in the round. Agriculture was essentially exempted from previous agreements as it was given special status in the areas of import quotas and export subsidies, with only mild caveats. However, by the time of the Uruguay round, many countries considered the exception of agriculture to be sufficiently glaring that they refused to sign a new deal without some movement on agricultural products. These fourteen countries came to be known as the "Cairns Group", and included mostly small and medium sized agricultural exporters such as Australia, Brazil, Canada, Indonesia, and New Zealand. The Agreement on Agriculture of the Uruguay Round continues to be the most substantial trade liberalization agreement in agricultural products in the history of trade negotiations. The goals of the agreement were to improve market access for agricultural products, reduce domestic support of agriculture in the form of price-distorting subsidies and quotas, and eliminate over time export subsidies on agricultural products and to harmonize to the extent possible sanitary and phystosanitary measures between member countries.

Achievements: 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). The GATT 1994 is not however the only legally binding agreement included in the Final Act; a long list of about 60 agreements, annexes, decisions and understandings was adopted. In fact, the agreements fall into a simple structure with six main parts: ➢ an umbrella agreement (the Agreement Establishing the WTO); ➢ agreements for each of the three broad areas of trade that the WTO covers: goods and investment (the Multilateral Agreements on Trade in Goods including the GATT 1994 and the Trade Related Investment Measures (TRIMS), General Agreement on Trade in Services (GATS), and Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS); ➢ dispute settlement (DSU); and ➢ Reviews of governments' trade policies (TPRM).

Criticism:-Groups such as Oxfam have criticized the Uruguay Round for paying insufficient attention to the special needs of developing countries. One aspect of this criticism is that figures very close to rich country industries — such as former Cargill executive Dan Amstutz — had a major role in the drafting of Uruguay Round language on agriculture and other matters. As with the WTO in general, Non-governmental organizations (NGOs) such as Health Gap and Global Trade Watch also criticize what was negotiated in the Round on intellectual property and industrial tariffs as setting up too many constraints on policy-making and human needs.

MARKET ACCESS General Agreement on Tariffs and Trade (GATT 1994) This is the basic text containing the general rules governing trade in goods, the specific rules being laid down in the sectoral agreements established in the Final Act. GATT 1994 encompassed GATT 1947 and all of the legal instruments adopted before the Agreement establishing the World Trade Organization (WTO). The General Agreement lays down a number of fundamental principles based on GATT 1947, in particular: ➢ The general principle of most favored nation treatment: according to this principle, each WTO member accords to products of any other member treatment no less favorable than that it accords to like products of any other country (concept of non-discrimination). ➢ The principle of national treatment with regard to taxation and internal regulations: according to this principle, each WTO member accords products of another member regulatory and fiscal treatment no less favorable than that accorded to products of national origin. The Agreement also provides for the reduction and binding of customs duties, the elimination of quantitative restrictions on imports and exports and the notification requirement for State trading enterprises. The Agreement covers anti-dumping duties and regulates subsidies and safeguard measures. The provisions concerning consultations and dispute settlement are dealt with in the WTO rules on dispute settlement. In addition, it sets out a number of criteria concerning free trade areas and customs unions as well as requirements for the members of these areas and unions. Provisions added in 1965 lay down special rules and privileges for developing countries.

DOHA ROUND, 2001

The Doha Declaration was approved by 142 countries at the fourth Ministerial meeting of the World Trade Organization, it ended on a consensus note because all the countries, especially the leaders the USA, EU and Japan, did not want a collapse of the multilateral global trading system as it happened in Seattle in 1999. The agreement states that if a country is not in full agreement with the proposed WTO declaration, it can be put out of discussions. The Indian team was led by the feisty Mr. Murasoli Maran, was commended wholeheartedly by the trade ministers of the developing countries for sticking to the implementation issues of the Uruguay Round resulting in an extra day of negotiations. It was held at Sheraton Doha Hotel from November 9-13, 2001. At this conference, ministers from all WTO members made a 10 page declaration and launched the Doha Development Agenda. Its objective is to lower trade barriers around the world, which allows countries to increase trade globally. As of 2008, talks have stalled over a divide on major issues, such as agriculture, industrial tariffs and non-tariff barriers, services, and trade remedies. The most significant differences are between developed nations led by the European Union (EU), the United States (USA) and Japan and the major developing countries led and represented mainly by India, Brazil, China and South Africa. There is also considerable contention against and between the EU and the U.S. over their maintenance of agricultural subsidies—seen to operate effectively as trade barriers

The Doha Declaration: The declaration comprise of several declaration such as declaration on TRIPS Agreement and Public Health and a decision on implementation-related issues and concerns-launches a future work programme of the WTO and includes elaboration and timetables for the current negotiations in a range of other issues. The different issues are discussed below: ➢

Implementation issues: A number of implementation issues have been addressed in the decision on implementation-related issues and concerns including longer time frame (of six months) for compliance with new SPS and TBT measures, moratorium of two years on nonviolation complaints under the TRIPS Agreement, need for special care for initiation of back-to back anti-dumping investigations within a year and co-operation and assistance by member in investigations relating to declared values. The declaration agrees that negotiations on all other outstanding implementation issues shall be an integral part of the work programme. Where specific negotiations are mandated, relevant implementation issues shall be addressed under that mandate and other outstanding implementation issues shall be addressed as a matter of priority by the relevant WTO bodies, which shall report to the Trade Negotiating Committee by the end of 2002 for appropriate action.

➢

Agriculture: This Declaration commits to comprehensive negotiations aimed at substantial improvements in market access for developing countries; reducing of, with a view to phasing out, all forms of export subsidies; and substantial reduction in trade distorting domestic support being given by the developed countries.

➢

Services: The negotiating guidelines and Procedures adopted by the Council for Trade in Services would form the basis for continuing negotiations in services with a view to achieving the objectives of GATS. The declaration recognizes the large number of proposals submitted by the members on various sector including on movement of natural persons.

➢

Industrial Tariffs: The negotiations under industrial tariffs would aim at reducing or as appropriate eliminating tariffs, including the reduction of tariff peaks, high tariffs escalations, as well as non-tariff barriers, in particular on product export interest to developing countries.

➢

TRIPS: The issues related to extension of the higher level of protection of geographical indications to products other than wines and spirits, examination of relationship between the TRIPS Agreement and the Convention on Biological Diversity (CBD), the protection of traditional knowledge and folklore and other relevant new developments would be addressed by the TRIPS as a part of the implementation issues.

➢

Environment: Negotiations on limited aspects of trade and environment has been mandated, along with instructions to the Committee on Trade and Environment to pursue its work on all items on its agenda, giving particular attention of the issues of the market access, the relevant provision of the TRIPS Agreement and labeling.

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Labor: The declaration recognizes that ILO is the appropriate forum to address the issue of core labor standards.

GATT and WTO trade rounds Countrie Subjects covered s

Name

Start

Duration

Achievements

Geneva

April 1947

7 months

23

Tariffs

Signing of GATT, 45,000 tariff concessions affecting $10 billion of trade

Annecy

April 1949

5 months

13

Tariffs

Countries exchanged some 5,000 tariff concessions

Torquay

September 1950

8 months

38

Tariffs

Countries exchanged some 8,700 tariff concessions, cutting

the 1948 tariff levels by 25% Geneva II

January 1956

5 months

26

Tariffs, admission of Japan

$2.5 billion in tariff reductions

Dillon

September 1960

11 months

26

Tariffs

Tariff concessions worth $4.9 billion of world trade

Kennedy

May 1964

37 months

62

Tariffs, Anti Dumping

Tariff concessions worth $40 billion of world trade

Tokyo

September 1973

102

Tariffs, non-tariff measures, "framework" agreements

Tariff reductions worth more than $300 billion dollars achieved

123

The round led to the creation of WTO, and extended the range of Tariffs, non-tariff trade negotiations, leading to measures, rules, major reductions in tariffs services, intellectual (about 40%) and agricultural property, dispute subsidies, an agreement to allow settlement, textiles, full access for textiles and agriculture, creation clothing from developing of WTO, etc countries, and an extension of intellectual property rights.

141

Tariffs, non-tariff measures, agriculture, labor standards, environment, competition, investment, transparency, patents etc

Uruguay

Doha

September 1986

November 2001

74 months

87 months

?

The round is not yet concluded.

The Outcome of the Fourth Ministerial Conference in Doha The Doha negotiations were no easy task. The outcome remained pending till the final hours of the Ministerial Conference. This forced the head of the conference, Qatari Trade Minister, to

extend the work of the conference for 24 hours. In what follows, I will try to explain the results of the Doha negotiations wherein the international community acknowledged the developmental needs of the developing as well as the least developed countries:

The relationship between the Trade-Related Intellectual Property Rights Agreement and Public Health: African countries were finally triumphant over the developed countries—in particular over the US—having succeeded to negotiate sufficient flexibility enabling them to obtain medicine at lower prices from other producing developing countries, such as Brazil and India, which the American drug companies had so far fiercely rejected. The United States had shown a great deal of flexibility during the Doha conference when it agreed on a compromise language, which favored to a large extent developing countries’ positions and interpretations.

Implementation Issues:

Since the first ministerial conference held in Singapore in 1999, developing countries called for an overall assessment of the extent countries had implemented their commitments and the difficulties they had encountered in the framework of the Uruguay Round before resuming any negotiations inflicting additional commitments upon them. Developing countries insisted on dedicating a separate Ministerial Declaration to the implementation issues, thus confirming their importance for them. Developing countries summed up the implementation issues into the following four categories: ➢ The slow pace of developed countries in liberalizing certain sectors, which are of export importance to the developing countries; ➢ The imbalance between the rights and obligations; ➢ Failure to achieve the expected benefits of the Uruguay Round agreements and increase the rate of trade of the developing countries.1 ➢ Failure to implement the principle of special and differential treatment.2

The Doha Ministerial Declaration:

In its introduction, the Declaration emphasizes the importance of paying greater attention to the needs and interests of developing countries and places them at the heart of the future work program of the organization. The Declaration then presents the work program of the organization in 40 paragraphs, dealing with the various topics starting from the implementation issues to which the conference dedicated a separate ministerial declaration, as previously mentioned, to issues of agriculture, services, investment and competition, environment, and e-commerce. It also includes other issues proposed by the developing countries, which they succeeded 1

2

to incorporate in the work program of the organization, such as the external debt crisis and transfer of advanced technology, in addition to the technical assistance program of developing countries and least developed countries.

Conclusion:The key question at this point is what are the consequences for Egypt after the suspension of the Doha Round negotiations? Some would argue that there is no real interest for Egypt in the multilateral trade negotiations. Egypt is liberalizing irrespective of the outcome of the Doha Round. Moreover, Egypt is actively engaged in alternative forums embodied in bilateral and regional trade agreements with parties of considerable trading weight, such as the EU, Turkey, and Russia etc. with which Egypt is able to negotiate special preferential treatment. However, this should not undermine the WTO negotiations and their effects on its member states in general and Egypt in particular. No doubt, Egypt would benefit from multilateral trade negotiations regarding the reduction of agricultural subsidies along with the reduction of tariffs from the EU. This would strengthen Egypt’s bargaining position in its negotiations with the EU, especially in light of the fact that it is more difficult to negotiate reduction of domestic subsidies bilaterally with the EU. The same applies to the negotiations on services where the best outcomes could be reached in a multilateral setting, which would encourage the EU to take a more flexible positioning granting more access to Egypt’s workforce. And finally, it is important to recognize the collective force of developing countries in reaching more positive results through the possibility of exerting unified pressure as opposed to bilateral negotiations with the EU. In conclusion, it is difficult to suggest which path is best for Egypt, whether it be the multilateral, bilateral, or regional. Egypt is trying to obtain as many concessions as possible from developed countries on the multilateral level, while making the least compromises on its part. As for bilateral and regional trade agreements, it is incumbent upon Egypt to give more concessions in return for what it might gain in terms of special and preferential treatment. Consequently, it could be best for Egypt to opt for a blend of multilateral, regional and bilateral commitments. Overall, the failure of the Doha round will not be in Egypt’s interest. This is due to the fact that any failure that may occur on the multilateral level would directly reflect on Egypt’s negotiations on the bilateral and regional levels.

World Trade Organization The World Trade Organization (WTO) is an international organization designed to supervise and liberalize international trade. The WTO came into being on 1 January 1995, and is the successor to the General Agreement on Tariffs and Trade (GATT), which was created in 1947, and continued to operate for almost five decades. The World Trade Organization deals with the rules of trade between nations at a near-global level; it is responsible for negotiating and implementing new trade agreements, and is in charge of policing

member countries' adherence to all the WTO agreements, signed by the majority of the world's trading nations and ratified in their parliaments. Most of the issues that the WTO focuses on derive from previous trade negotiations, especially from the Uruguay Round. The organization is currently working with its members on a new trade negotiation called the Doha Development Agenda (Doha round), launched in 2001. The WTO has 153 members, which represents more than 95% of total world trade. The WTO is governed by a Ministerial Conference, which meets every two years; a General Council, which implements the conference's policy decisions and is responsible for day-to-day administration; and a director-general, who is appointed by the Ministerial Conference. The WTO's headquarters is in Geneva, Switzerland. The WTO's stated goal is to improve the welfare of the people of its member countries, specifically by lowering trade barriers and providing a platform for negotiation of trade. Its main mission is "to ensure that trade flows as smoothly, predictably and freely as possible". This main mission is further specified in certain core functions serving and safeguarding five fundamental principles, which are the foundation of the multilateral trading system. The WTO/GATT system is founded on nondiscrimination, with its twin faces of Most Favored Nation and National Treatment principles.

Functions Among the various functions of the WTO, these are regarded by analysts as the most important: • It oversees the implementation, administration and operation of the covered agreements. • It provides a forum for negotiations and for settling disputes. Additionally, it is the WTO's duty to review the national trade policies, and to ensure the coherence and transparency of trade policies through surveillance in global economic policy-making. Another priority of the WTO is the assistance of developing, least-developed and low-income countries in transition to adjust to WTO rules and disciplines through technical cooperation and training. The WTO is also a center of economic research and analysis: regular assessments of the global trade picture in its annual publications and research reports on specific topics are produced by the organization. Finally, the WTO cooperates closely with the two other components of the Bretton Woods system, the IMF and the World Bank.

TRIPS: TRIPS was negotiated at the end of the Uruguay Round of the General Agreement on Tariffs and Trade (GATT) in 1994. Its inclusion was the culmination of a program of intense lobbying by the United States, supported by the European Union, Japan and other developed nations. Campaigns of unilateral economic encouragement under the Generalized System of Preferences and coercion under Section 301 of the Trade Act played an important role in defeating competing policy positions that were favored by developing countries, most notably Korea and Brazil, but also including Thailand, India and Caribbean Basin states. In turn, the United States strategy of linking trade policy to intellectual property standards can be traced back to the entrepreneurship of senior management at Pfizer in the early 1980s, who mobilized corporations in the United States and made maximizing intellectual property privileges the number one priority of trade policy in the United States (Braithwaite and Drahos, 2000, Chapter 7). After the Uruguay round, the GATT became the basis for the establishment of the World Trade Organization. Because ratification of TRIPS is a compulsory requirement of World Trade Organization membership, any country seeking to obtain easy access to the numerous international markets opened by the World Trade Organization must enact the strict intellectual property laws

mandated by TRIPS. For this reason, TRIPS is the most important multilateral instrument for the globalization of intellectual property laws. States like Russia and China that were very unlikely to join the Berne Convention have found the prospect of WTO membership a powerful enticement. Furthermore, unlike other agreements on intellectual property, TRIPS has a powerful enforcement mechanism. States can be disciplined through the WTO's dispute settlement mechanism.

ITO and GATT 1947 Harry Dexter White and John Maynard Keynes at the Bretton Woods Conference – Both economists had been strong advocates of a liberal international trade environment, and recommended the establishment of three institutions: the IMF (fiscal and monetary issues), the World Bank (financial and structural issues), and the ITO (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 Institution 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 United States and a few other signatories and never went into effect.

TRIMS: The Trade Related Investment Measures Agreement came into effect on 1 January 1995 as part of the Uruguay Round negotiations. It addressed investment measures that were trade related and which violated Article III (National Treatment) or Article XI (general elimination of quantitative restrictions). Basically it prohibited member countries making the approval of investment conditional on compliance with laws, Policies or administrative regulations that favored domestic products. The Agreement did not define TRIMs, but provided an illustrative list (Annex 1). Examples of TRIMs are; ➢ Local content requirements where governments require enterprises to use or purchase domestic products. ➢ Trade balancing measures where governments impose restrictions on imports by an enterprise or link the amount of imports to the level of its exports ➢ Foreign exchange balancing requirements where an enterprise has the level of imports linked to the value of its exports in order to maintain a net foreign exchange earnings. The lack of a precise definition means that the issue is not always clear cut and there has been considerable disagreement as to whether or not certain measures are covered by the Agreement.

Present Status The transition period allowed to developing countries ended on 31st December, 1999. However, Art. 5.3 provides for extension of such transition periods in the case of individual members, based on specific requests. In such cases individual Members have to approach the Council for Trade in Goods with justification based on their specific trade, financial and development needs. Accordingly 9 developing countries (Malaysia, Pakistan, Philippines, Mexico, Chile, Colombia, Argentina, Romania and Thailand) have applied for extension of transition period in respect of certain TRIMs which had

been notified by them. Examination of their requests is underway in the Council for Trade in Goods of WTO. India had proposed during the Seattle Ministerial Conference that: Extension of transition period for developing countries should be on a multilateral basis and not on an individual basis; Another opportunity should be provided to developing countries to notify un-notified TRIMs and maintain them for an extended transition period; The Seattle Ministerial Conference was inconclusive and no decision could be taken on the proposals. However, during the General Council meeting of 8th May, 2000, the following decisions, inter-alia, were taken: "…… ..Members agree to direct the Council for Trade in Goods to give positive consideration to individual requests presented in accordance with Article 5.3 by developing countries for extension of transition periods for implementation of the TRIMs Agreement". "Members have noted the concerns of those Members who have not notified TRIMs or have not yet requested an extension. Consultations on the means to address these cases should also be pursued as a matter of priority, under the aegis of the General Council, by the Chairman of the Council for Trade in Goods".

GATT Rounds of Negotiations The GATT was the only multilateral instrument governing international trade from 1948 until the WTO was established in 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 the GATT. The first GATT trade rounds concentrated on further reducing tariffs then, the Kennedy Round in the mid-sixties brought about a GATT antidumping. 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.