Formation of WTO since WWII Flashcards
(13 cards)
why has there been increasing trade since WWII?
During war – breakdown of international trade and it was thought that by promoting economic integration, economies more dependent and less likely for conflict as it might destroy your own economy.
- Lead to the formation of international trade rules.
- Bigger labour pool (women).
- Increasing importance of the state – welfare state and state could maintain employment through intervening in the economy.
describe the development of MTS
Multi-lateral Trade system – MTS
A set of norms, principles, rules and institutions which manage international trade.
o Embedded in the GATT and WTO.
Key Functions
o Negotiation forum for states
o Implementing agreements
o Dispute resolution.
Overall the new international order should be built on an legal system to enhance predictability and stability.
What is the GATT?
non-discriminatory - reduced tariffs from 40% to 4%. Europe & US dominated. Developing countries largely excluded.
What is the WTO?
Institutionalised, administrative body with 164 members
Developed out of the GATT with Stronger enforcement mechanisms, including Dispute Settlement Body and Trade Policy Review Body.
The WTO – sets norms and rules aimed at the realisation of liberal trade relations.
Strive for liberal trade relations but same time protect domestic economies from the global market.
The heart is NON-DISCRIMINATION
Policy harmonisation.
GATT is main component, along with issue-specific agreements and they provide the basis of rule.
Doha development rounds 2001
Emphasis on the needs of the least developed countries
o Enhanced market access, flexibility in adjustment schedules, technical assistance.
- By 2011 – declared dead and a shift to single-issues.
An end to multilateralism? A proliferation of bilateral and regional agreements
- Bilateral agreements – 2 parties
- Regional agreements – multiple parties within the same geographical area,
Joining the WTO
No member country can join without agreeing to meet its obligations.
Recognise that not all countries come to trade on the same footing and developing countries traditionally have been given some leeway in terms of their commitments. Often have longer to adjust.
o Allows people to shift from sector to sector
o Move more resources to their comparative advantage
Expressions of power dynamics in the WTO
There’s inherent power in the process, e.g. if you were a founding member you had a say in the development of those rules.
Another way to flex muscles is to build alliances.
WTO makes decisions based on consensus
Rarely will demand 2/3 majority
Within each committee, policy proposals are analysed
Information is important: If you have the capacity to develop convincing proposals and you can come together with resources and alliances then you are more likely to achieve your demands.
Bargaining power = the bigger the alliance the bigger the vote and the easier to convince.
Quality of human resource important in understanding how to develop convincing policy brief.
Power dynamics in dispute settlement
- overview
- Realist perspective
Dispute Settlement
Must prove how you are negatively affected by violations.
Trade violations: not always an incentive to report wrongdoing as politics can influence. If you rely on a country for trade this may inhibit your willingness to report.
States have incentives to ‘cheat’ – they can maintain policy for as long as the dispute remains unresolved
Realist perspective
Power dynamics will entail who is capable of retaliating against who.
o US will impact many countries
o East Timor would not have big impact
US Dolphin Safe Tuna Label
January 2014 Mexico challenged US ‘dolphin-safe’ labelling requirement
Dispute panel found requirement constituted technical barrier to trade adversely impacted competitiveness of Mexico tuna & was more trade restrictive than necessary to fulfill legitimate US policy objectives
- Appellate body reversed decision
What is the economic dilemma? The importance of the institution.
Economic dilemma – where states may raise tariffs, impose restrictions to maximise trade at the expense of others can lead to the economic dilemma if all other countries follow. Puts all countries in a worse situation.
Lead to undesirable results at the expense of others. To counter Mercantilist trade policies – states can benefit from cooperation.
There is a need for strong international treaties and organisations which can be a solution to the security dilemma.
Allow states to commit to trade
Monitor the implementation of trade agreements and adjudicate in disputes
Increases the chances of compliance and reduces risk of cheating. IO’s give development assistance to poorer countries.
Examples of Waivers
Example – Waivers
- allows states to temporality protect one of their industries if they find them exposed to a large increase in foegin importy.
- developing countries – preferential treatment, by allowing them to susupend or reduce obligations.
- Doha rounds have stalled due to member states no longer being able to reconcile their conflicts shows the limits to cooperation
- Developing want to peruse their interests more assertively while developed countries no longer want to allow developing countries to free ride trade polices.
- Has limited the ability of the WTO.
Violations of trade rules.
States may be often tempted to ignore agreed rules in order to obtain an advantage for themselves.
- monitoring - adjudicating - sanctioning important acitivies of the WTO. Large trading blocs must submit to regular superviosn of their trade polkices.
- reports submitted to Trade Policy Review Body – reviews are compared.
dispute settlement procedures.
-Dispute settlement Understanding (DSU) – adjudicates disputes, can be requested to investigate cases, draws up report which can become automatically binding unless rejected by consensus of the DSU.
Appellate body – seven independent experts who produce a report which cannot be blocked by any member state.
The US has rejected the appointment of new judges and claims that the Appellate Body, through its rulings, adds or diminishes to the rights of WTO members by reinterpreting WTO agreements.
Norms and rules are therefore subject to judicialized procedures, produce more reliable decisions that what was the case of the diplomatic dispute settlement procedure of the GATT.
NGO’s can participate in dispute settlement – forward information which can affect the outcome.
effectiveness
Effectiveness - good
- sustainably increased trade among member states, developing and developed countries.
- served to reduce volatility in trade policy and trade flows.
- Provides a strong norm
Bad
- negotiations over new norms get stuck in deadlock due to national protectionist pressure or conflict over the ditsrtibution of gains. (As seen in the Doha round).
- comparative advantage.
- bilateral trade deals have signaled the failure of the Doha Round.
- poorer countries cannot afford to involve in trade disputes.
