Chapter 3 Flashcards
(42 cards)
What are collective disciplines?
Collective disciplines refer to the set of rules, norms, and institutions that govern international trade and investment. These collective disciplines provide a framework for countries to engage in trade and investment with each other in a way that is fair, transparent, and mutually beneficial.
Examples of collective disciplines include the World Trade Organization (WTO) and its various agreements, such as the General Agreement on Tariffs and Trade (GATT) and the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS).
Why are collective disciplines important?
While advocates of free trade argue that it maximizes gains and benefits, in practice, states often employ various protections for their industries. The combination of market forces and state interventions highlights the need for collective rules and institutions to regulate trade. Without these collective disciplines, certain actors may be tempted to unfairly benefit from trade.
Explain the Bretton Woods conference
The Bretton Woods Conference, officially known as the United Nations Monetary and Financial Conference, was a meeting of delegates from 44 countries held in July 1944 at the Mount Washington Hotel in Bretton Woods, New Hampshire, USA. The conference was held to establish a new global economic order after the devastation of World War II.
The delegates agreed on a set of rules and institutions to govern international economic relations, including the creation of the International Monetary Fund (IMF) and the International Bank for Reconstruction and Development (IBRD), which later became part of the World Bank. The conference also established the US dollar as the world’s reserve currency and fixed exchange rates to the US dollar.
OIC
The OIC is the French acronym for the International Trade Organization (ITO) which was proposed to be established as part of the Bretton Woods system of international economic governance in 1944, but it never came into existence.
What happened, or what was the story, of the OIC?
The OIC (International Trade Organization in English) was an organization that was supposed to be created after the Bretton Woods conference in 1944, but it was never formed. The United States led negotiations for the establishment of the OIC in 1947-1948, resulting in the adoption of the Havana Charter by 56 participating countries. The OIC was tasked with promoting economic growth, facilitating trade, and stimulating economic development.
However, the US Congress ultimately refused to ratify the Havana Charter, despite being the main initiator of the OIC project, due to fears that the treaty would constrain US trade policy. There were also tensions between the US and Europe over the OIC’s perceived pro-European bias. In addition, domestic politics played a role, with opposition from the Republican-controlled Congress to the Democratic President Truman’s agenda. As a result, the OIC was stillborn and never came into existence.
GATT
the General Agreement on Tariffs and Trade
Explain how the GATT came about
The creation of the General Agreement on Tariffs and Trade (GATT) was an unexpected outcome of a parallel negotiation initiated by 23 countries in April-October 1947.
Afrique du Sud, Australie, Belgique, Birmanie, Brésil, Canada, Ceylan, Chili, Chine, Cuba, Etats Unis, France, Inde, Liban, Luxembourg, Norvège, Nouvelle Zélande, Pakistan, Pays Bas, Rhodésie du Sud, Royaume Uni, Syrie et Tchécoslovaquie
The GATT was created to establish a set of rules to promote the liberalization of trade, including non-discrimination, reciprocity, the abolition of quantitative restrictions, and the principle of loyalty in trade. The GATT organized a series of international negotiations called “rounds,” which significantly reduced global tariff levels. The GATT became the primary international organization for regulating international trade until its replacement by the World Trade Organization (WTO) in 1995
What were the GATT negotiation rounds?
he GATT negotiation rounds were a series of international trade talks that aimed to reduce trade barriers and liberalize global trade. There were eight rounds of negotiations that took place between 1947 and 1994, with each round lasting several years
The Torquay Round
1950-51 in response to Germany’s request for a 25% reduction in tariffs
The Dillon Round
961-62 was initiated by the creation of the European Economic Community (EEC) and resulted in a 6.5% reduction in EEC tariffs
The Kennedy Round
(1963-67) was initiated by the United States and led to an average reduction of 35% in tariffs
The Tokyo Round
1973-79, was initiated by the United States and focused on reducing tariffs between the US, Japan, and the EEC.
The Uruguay Round
held from 1986-1994, was the longest and most comprehensive round of negotiations and led to the establishment of the World Trade Organization (WTO)
What were some of the problems of the GATT?
The GATT was a simple trade agreement managed by a permanent secretariat in Geneva, and it had no independent powers of decision or sanction apart from the states participating in the agreement. Decisions were taken by consensus, resulting in inevitable inertia.
Le principe n 1 de l’OMC
la non discrimination
- Règle n 1 la réciprocité
Chaque partie s’engage à réduire ses barrières dans une proportion égale aux avantages accordés par les autres - Règle n 2 la Clause de la nation la plus favorisée
Les avantages que s’accordent mutuellement deux pays sont étendus à tous. C’est la règle de la consolidation
Under this principle, a country should extend the same treatment to all its trading partners as it extends to its most-favored trading partner. This means that if a country lowers tariffs or other trade barriers for one of its trading partners, it must extend the same treatment to all its other trading partners.
- Règle n 3 la règle du traitement national
Les conditions d’accès au marché doivent être identiques pour tous
La concurrence ne doit pas être altérée par des mesures discriminatoires producteurs domestiques et importateurs doivent être traités de façon identique
This principle requires that foreign goods and services should be treated no less favorably than domestic goods and services. This means that imported goods should be subject to the same laws, regulations, and taxes as domestic goods
Why was the reduction of Customs Duties a major priority for the GATT?
Firstly, customs duties were a visible and easily measurable tool for intervention in international trade.
Secondly, significant progress had been made in reducing average customs duties on manufactured products to a negligible level of 3% worldwide.
To achieve these reductions, the GATT organized negotiation sessions called “Rounds.” However, a problem arose with the substitution of tariff barriers with non-tariff barriers (NTBs) such as safety and health regulations, administrative regulations, and other forms of neo-protectionism. The fight against this type of protectionism was challenging.
What is the difference between tariff barriers and non-tariff barriers?
Tariff barriers refer to taxes or fees imposed on imported goods by a government. These barriers are designed to make foreign products more expensive, thereby protecting domestic industries and encouraging consumers to buy locally produced goods. Tariff barriers can take various forms, such as specific tariffs, which are fixed amounts of tax per unit of imported goods, or ad valorem tariffs, which are calculated as a percentage of the value of imported goods.
Non-tariff barriers, on the other hand, are a type of trade barrier that involves using regulations, standards, or other administrative procedures to restrict imports or favor domestic producers. These barriers are more difficult to identify and quantify than tariff barriers, but they can have a significant impact on trade flows. Non-tariff barriers can include a variety of measures, such as technical standards, licensing requirements, quotas, subsidies, and customs procedures.
While tariff barriers are more visible and can be easily quantified, non-tariff barriers are often more insidious and can be used to circumvent tariff reductions. The fight against non-tariff barriers has become increasingly important in recent years, as governments have turned to these measures to protect their domestic industries while still complying with international trade agreements.
Principe n 2 de l’OMC
l’élimination des restrictions quantitatives aux échanges
This principle aims to remove various types of restrictions such as blockades, prohibitions, and quotas, among others. The goal is to eliminate these restrictions entirely rather than just reducing them, as stated in Article 11. However, there are exceptions to this principle. One exception is when a country is suffering from a significant productivity gap, which results in a recession and/or an increase in unemployment. Another exception is when a country is experiencing a severe balance-of-payments crisis that threatens its foreign exchange reserves.
Explain the two exceptions to principle number 2 of the OMC
(Productivity Gap) The first exception is related to situations where a country experiences a significant productivity gap that leads to economic recession and/or unemployment. In such cases, the country is allowed to implement temporary measures such as import restrictions or export subsidies to protect its domestic industries and promote employment. This exception is based on the idea that a temporary protectionist policy can help a country to overcome the initial difficulties and eventually become competitive in the global market.
(Balance of Payment Crisis) The second exception is related to situations where a country experiences a balance-of-payment crisis that threatens its foreign exchange reserves. In such cases, the country is allowed to implement temporary measures to restrict imports and/or promote exports in order to restore its balance-of-payment position. This exception is based on the idea that a temporary restriction on imports can help a country to reduce its outflows of foreign exchange and promote its export earnings, thus restoring its balance-of-payment position.
Principe n 3 de l’OMC
l’intervention contre les pratiques commerciales déloyales
(1) Dumping is the practice of exporting goods at a price lower than the cost of production or lower than the price charged in the domestic market. The WTO prohibits dumping and allows countries that are victims of dumping to defend themselves by applying anti-dumping duties on those goods. The WTO’s Anti-Dumping Agreement prohibits selling goods at below domestic prices in normal course of business, and sets out the methodology for calculating the extent of the dumping margin.
(2) Regarding subsidies, the WTO’s Subsidies and Countervailing Measures Agreement regulates the use of subsidies by governments. Subsidies that reduce production costs and distort competition are prohibited or subject to limitations. Internal subsidies that may reduce imports must be notified to the WTO, and other member countries have the right to request consultations with the subsidizing member country. External subsidies that support exports of manufactured goods are generally prohibited, but subsidies for primary products are allowed, subject to certain conditions, unless the subsidizing member country holds a dominant market position. The WTO’s dispute settlement mechanism can be used to settle disputes related to dumping or subsidies.
Les exceptions aux principes canoniques du GATT
- L’article XII (équilibre de la balance des paiements)
- L’article XIX (clause de sauvegarde)
- L’article XX (protection de la moralité, de la santé et de l’environnement)
- L’article XXIV (Union douanières ou Zones de libre échange)
L’article XII (équilibre de la balance des paiements)
Article XII, which allows a WTO member to apply restrictions to protect its balance of payments in order to safeguard its external financial position, provided that these restrictions are not excessive.
L’article XIX (clause de sauvegarde)
Article XIX, which allows a WTO member to take “safeguard” measures to protect a domestic industry against an unforeseen increase in imports of any product that causes or threatens to cause “serious injury” to that industry.
L’article XX (protection de la moralité, de la santé et de l’environnement)
Article XX, which allows a WTO member to take measures necessary to protect public morals, health and safety, or related to the conservation of exhaustible natural resources, or to protect patents, trademarks and copyrights.
