Transcript from the GATT to the WTO - Universidad Autónoma de Madrid

International trade: from
the GATT to the WTO
Federico Steinberg
Universidad Autónoma de Madrid
Outline
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From GATT to WTO
GATT Principles
 GATT Rounds and results
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The Doha Round
The new north – south conflict
 Does it matter that Doha fails?
 The WTO’s role in the globalization governance
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The GATT
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Founded in 1947 as a piece of “embedded liberalism”
(23 countries)
Goal: regulate international trade (not liberalize it)
Principles:
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Most-favored-nation clause
No discrimination
Reciprocity/Exchange of concessions
Flexibility: exceptions and “GATT a la carte”
“Special and differentiated” treat for the Developing
Countries
The Rounds generated…
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Important liberalization in manufactures
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Until the Uruguay Round:
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Close to zero tariffs in advanced countries
Higher tariffs in developing countries
Agriculture and services excluded
Tariffs on textiles (multi-fibers agreement)
In practice, the GATT was a club of rich countries who
liberalized trade among themselves:
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They set rules on the issues they were more interested in
They did not listen to the demands of developing countries
Role of the developing countries
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Isolated until the Uruguay Round
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Demanded special and differentiated treatment and preferences
Passive attitude towards negotiations
Uruguay Round  Radical Change
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Some emerging countries with large domestic markets take up
a pro-active position and start exchanging concession
Least Developed Countries remain on the sidelines: lack of
resources
The Uruguay Round  WTO
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The most comprehensive and ambitious: fully global
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Creation of the WTO: an authentic International Organization
Single undertaking (“everyone must comply everything”)
Content:
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Dispute settlement mechanism– “good for everyone”
GATT 1994
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Agriculture
Textiles liberalization: in 2005 – success of the developing countries
GATS: services modalities – favors the rich countries
TRIPS: Intellectual Property. In Favor of MNCs
Other agreements: TRIMS, plurilateral agreements, working groups
But the WTO reproduces the power asymmetries international system
The WTO
Main interests of …
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Developed countries
More liberalization in services
and manufactures in
developing countries
Defensive interests in
agriculture (EU)
Broaden the agenda over the
New Issues:
The Singapore Issues (1996):
competition, investments,
government procurement,
trade facilitation
Labor and environmental
Standards
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Emerging economies
Keep a limited agenda
Increase market access to
advanced countries (textiles,
Agriculture,…)
Receive support for the
implementation of RU
agreements
Modify TRIPS to gain flexibility
Reduce peak and progressive
tariffs
Liberalize GATS Mode IV
The biggest conflict is in the “new issues”
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They are trade-related.
They imply regulatory harmonization.
Opposition from developing countries:
 Undermine sovereignty
 Reduce “development space”
 Have high implementation costs
 Could be used as a protectionist excuse
Support of the developed countries (mostly the EU) to
“ensure” fair trade.
The “new issues”
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The Singapore issues
Trade and investments
 Trade and policy competition
 Trade and government procurement
 Trade Facilitation (it is being negotiated)
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Other new issues:
Labor Standards
 Environmental Standards
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After Uruguay: The WTO
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Imbalances of the Uruguay Round
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Liberalization favored disproportionately developed
countries (+/- 70%)
The north-south conflict grows, mainly around
the new issues
Unsuccessful attempts to launch a New Round:
1999 – Failure of the Seattle Ministerial Conference:
disagreement over the Agenda, specially over the
new issues
 Birth of the anti-globalization movement?
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What’s at stake?
Who wins?
Who loses?
Impact over the
income of a full
merchandise trade
liberalization (NOT
SERVICES) by
country and region in
2015 (compared with
2001)
The Doha negotiations(I)
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Stagnation and conflict
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Cancun Summit 2003: Another failure
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Minimal progress in all subjects
2003: TRIPS bashful reform
The agricultural supply of the rich is considered insufficient
by the developing countries, who reject to talk about the
Singapore issues
Consolidation of solid coalitions in developing
countries, especially G-20
The Doha negotiations (II)
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The Hong Kong agreement (2005):
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Elimination of agricultural export subsidies by 2013
Aid for the Most Developed Countries:
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Access to the market in rich countries, (as an EBA initiative)
Aid for trade: What does it mean?
All the Singapore issues are excluded except trade facilitation (the
only one that is not problematic)
It is still pending to close the NAMA “package”, services
and set the details in agriculture
Stagnated Negotiations since then (several failed re-launch
attempts), the last one in July 2007
Negotiations collapse
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Pro-liberalization lobbies, comfortable
with current regulation
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The WTO is not useful to liberalize
services
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Tariffs below max 
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Increase in the price of commodities
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US’s TPA
Stagnated Negotiations: structural causes
Change in the equilibrium of power in the global economy
 The emerging powers gain importance
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2/3 of the WTO members
are developing countries
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The G-20: joint group
with offensive interests
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GATT Institutional inertia  governance problems
High Expectations: Development Round and UR background
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If Doha fails?
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World Trade keeps on growing: 1990-2005, almost doubled the
GDP and investment is five times the GDP  Weight of the MNEs
13 billions of US dollars yearly (76% merchandise and 24% services),
such as the USA economy
IMF, WEO April 2009
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Causes: high growth, previous liberalization in developing countries,
fragmentation of the chain value, new technologies, etc.
Long run costs
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Important, but difficult to quantify
Weakening of the legitimacy of the multilateral trade
system
GLOBAL PUBLIC GOOD
Rejection of the emerging to the current regime 
search for de alternatives
More commercial pleadings
Boom of preferential agreements
Problems of the bilateral agreeements
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Discriminatory and inefficient ( it erodes the
multilateral system)
It consumes diplomatic resources for the
multilateral negotiations
More geopolitical than economical motivation
They usually benefit the relatively richest
countries, that includes the “new issues”
The most recent ones
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USA: “competitive liberalization” (Colombia, Korea,
CAFTA, LA, Maghreb and Middle East) Trans Pacific
Partnership (2012)
EU: new impulse to regionalism since 2006
(enlargement, Mediterranean, Korea, LA)
Transatlantic Economic Area (just launched)
Strong integration in Southeast Asia
India and China
Expansion of MERCOSUR
Even thought, there are more confrontations in Doha
Ex. EU-MERCOSUR