International and Regional Agreements Affecting Trade

Principal objectives of the GATT/WTO: Nondiscrimination: Members must be treated in the same

way with respect to import-export duties and charges. Trade liberalization: Sponsorship of periodic conferences

to reduce trade barriers Settlement of trade disputes Trade in goods and services: The WTO rules were

originally intended to govern trade in merchandise (primarily imports). The rules have, however, been extended to include trade in services and trade-related intellectual property.

The GATT and the WTOThe GATT and the WTO

The scope of coverage for NAFTA includes: Market access for goods: No discrimination

in favor of domestic goods. Application of national treatment standard. Provides for gradual elimination of tariffs over fifteen years (except for certain agriculture products). Goods must be wholly or substantially made within member countries to qualify for preferential market access.

The North American The North American Free Trade Agreement (NAFTA)Free Trade Agreement (NAFTA)

Market access to services: Application of national treatment standard. Provides for gradual elimination of restriction on services trade during the transitional period.

Investment: Application of national treatment standard, prohibition on the imposition of performance requirements. Exceptions made in the case of certain strategic industries such as energy (Mexico), cultural industries (Canada), nuclear energy and broadcasting (all three countries).

The North American The North American Free Trade Agreement (NAFTA) (cont.)Free Trade Agreement (NAFTA) (cont.)

Protection of intellectual property rights such as patents, trademarks, copyrights, trade secrets, etc.

Government procurement: Equal treatment to all member country providers for all goods and services procured by federal government entities (some exceptions apply).

Safeguards: Emergency actions (temporary) to protect domestic industry if a surge in imports causes serious injury to domestic industry.

Standards: No use of standards as a disguised restriction to trade.

Dispute settlement: Consultations, mediation, conciliation, etc.

The North American The North American Free Trade Agreement (NAFTA) (cont.)Free Trade Agreement (NAFTA) (cont.)

Overall increase in trade between members: Intra-NAFTA trade jumped from $304 billion in 1993 to $626 billion in 2002 compared to NAFTA’s trade with the rest of the world, which increased by only 42 percent (from $536 billion to $762 billion) during the same period.

Increase in the U.S. trade deficit: The U.S. merchandise trade deficit with Canada and Mexico has quadrupled since NAFTA.

Preliminary Assessment of NAFTAPreliminary Assessment of NAFTA

NAFTA’s impact on jobs is uncertainSubstantial increase in foreign

investment in all countries

Preliminary Assessment of NAFTA Preliminary Assessment of NAFTA (cont.)(cont.)

Major objectives of the European Union:To create free trade and a common

external tariff among membersTo abolish restrictions on the free

movement of all factors of productionTo establish common policies in the

areas of transport, agriculture, competition, etc.

The European UnionThe European Union