WTO short introduction

TURIN 16 July 2007

ITUC

WTO

The WTO: Founded in 1995 after 50 years of the

General Agreement on Tariffs and Trade – GATT

Headquarters in Geneva with about 400 staff Supervises a large number of global trade

treaties/agreements Has the power to enforce the rules of all of

its agreements with financial and regulatory clout

Can over-rule and/or undermine core labour standards and legislation in member states

WTO commitments

Commitments cannot be changed over time

Negotiations are not transparent, especially in services negotiations based on request-offer (and in bilaterals)

WTO agreements

Multiple agreements: The WTO supervises three main agreements:

1.Industrial goods (GATT), (which includes agriculture (AoA), plant and animal health and safety (SPS), Product standards (TBT), anti-dumping, subsidies and countervailing measures, investment rules (TRIMS), etc), 2. Services (GATS) and 3.Intellectual property (TRIPS)

No picking and choosing – when you join the WTO, you sign up to all of its agreements/treaties. With the exception of the plurilateral agreement on government procurement

WTO principles

Most Favoured Nation (MFN) In general, any agreement or deal that gives rights to

one WTO member state must be given to all other member states

A country cannot discriminate amongst WTO member states

National Treatment (NT) In general, if your country has committed itself to

some trade liberalisation, it must, in that area, treat foreign suppliers/investors ‘no less favourably than domestic supliers/investors are treated’

That does not mean ‘equal treatment for all’: you can treat foreign MNEs better than the way you treat your domestic firms

Disputes

Dispute Panels Country A (and B, C, ….) can complain that country X

is breaching its obligations under one or more WTO agreements

If Country X disagrees, the WTO can set up a mutually agreed (or imposed) panel – a ‘jury’

The panel hears evidence from all formal parties (and may allow external party evidence)

The verdict may tell Country X to change its behaviour (if ‘guilty’) or face punitive financial action from the complainants until it complies

An Appellate Body can rule on disputed verdicts

Decision making

Ministerial Conferences, Geneva negotiations and work in capitals

In theory, all new agreements and the conclusion of all trade Rounds are agreed at two-yearly Ministerial Conferences

In between ‘ministerials’, most real negotiations on details are done by resident Mission delegates in Geneva. They ‘prepare’ material for ministerials

When Geneva ‘problems’ arise, powerful Missions will pressure national capitals of less powerful members to ‘be more reasonable’ in Geneva

Some countries – about 30 – have no permanent Mission delegation in Geneva and so miss meetings. Silence, including absence, is ‘consent’.

Trade Policy Reviews

- Trade policies of all members are reviewed on a regular basis

- With aim to increase transparency, improve debate and enable assessment of the effects of policies on trade

- These reviews are used to highlight areas that need reform

- Many of these reviews recommend privatization.

ITUC country reports

Consensus and power

Members all officially have a veto power on any decison or agreement. No ‘consensus’ means no agreement

In practice, powerful members will threaten the loss of IMF/World Bank loans/projects or foreign aid if weaker countries block consensus

Many decisions are taken in secret/semi-secret, unofficial, exclusionary ‘Green Room’ meetings

Informal meeting ‘agreements’ are often presented as ‘general agreements based on wide consultation

Safeguards

There are safeguards in the WTO in case of market disruption

antidumping and countervailing measures.

Countries should make more strategic use of these.

Long and costly processes. The US does not take disputes seriously.

Bilateral versus multilateral agreements Same objectives of liberalization and

opening up of markets for multinationals Commitments in Bilaterals go further than in

multilateral agreements Commitments in Bilaterals go beyond goods

and services and include intellectual property, investment, competition policy and government procurement