International trade: International trade: from the GATT to from the GATT to
the WTOthe WTOFederico SteinbergFederico Steinberg
Universidad Autónoma de Universidad Autónoma de MadridMadrid
OutlineOutline
From GATT to WTOFrom GATT to WTO GATT PrinciplesGATT Principles GATT Rounds and resultsGATT Rounds and results
The Doha RoundThe Doha Round The new north – south conflictThe new north – south conflict Does it matter that Doha fails?Does it matter that Doha fails? The WTO’s role in the globalization The WTO’s role in the globalization
governancegovernance
The GATTThe GATT Founded in 1947 as a piece of “embedded Founded in 1947 as a piece of “embedded
liberalism” (23 countries)liberalism” (23 countries) Goal: regulate international trade (not Goal: regulate international trade (not
liberalize it)liberalize it) Principles:Principles:
Most-favored-nation clauseMost-favored-nation clause No discriminationNo discrimination Reciprocity/Exchange of concessionsReciprocity/Exchange of concessions Flexibility: exceptions and “GATT a la carte”Flexibility: exceptions and “GATT a la carte” ““Special and differentiated” treat for the Special and differentiated” treat for the
Developing CountriesDeveloping Countries
The Rounds generated…The Rounds generated… Important liberalization in manufacturesImportant liberalization in manufactures
Close to zero tariffs in advanced countriesClose to zero tariffs in advanced countries Higher tariffs in developing countriesHigher tariffs in developing countries
Until the Uruguay Round:Until the Uruguay Round: Agriculture and services excludedAgriculture and services excluded Tariffs on textiles (multi-fibers agreement)Tariffs on textiles (multi-fibers agreement)
In practice, the GATT was a club of rich countries In practice, the GATT was a club of rich countries who liberalized trade among themselves:who liberalized trade among themselves: They set rules on the issues they were more interested They set rules on the issues they were more interested
inin They did not listen to the demands of developing They did not listen to the demands of developing
countriescountries
Role of the developing Role of the developing countriescountries
Isolated until the Uruguay RoundIsolated until the Uruguay Round Demanded special and differentiated treatment Demanded special and differentiated treatment
and preferencesand preferences Passive attitude towards negotiationsPassive attitude towards negotiations
Uruguay Round Uruguay Round Radical Change Radical Change Some emerging countries with large domestic Some emerging countries with large domestic
markets take up a pro-active position and start markets take up a pro-active position and start exchanging concessionexchanging concession
Least Developed Countries remain on the Least Developed Countries remain on the sidelines: lack of resourcessidelines: lack of resources
The Uruguay Round The Uruguay Round WTOWTO
The most comprehensive and ambitious: fully globalThe most comprehensive and ambitious: fully global Creation of the WTO: an authentic International Creation of the WTO: an authentic International
OrganizationOrganization Single undertaking Single undertaking (“everyone must comply everything”)(“everyone must comply everything”)
Content:Content: Dispute settlement mechanism– “good for everyone”Dispute settlement mechanism– “good for everyone” GATT 1994GATT 1994
AgricultureAgriculture Textiles liberalization: in 2005 – success of the developing Textiles liberalization: in 2005 – success of the developing
countriescountries GATS: services modalities – favors the rich countriesGATS: services modalities – favors the rich countries TRIPS: Intellectual Property. In Favor of MNCsTRIPS: Intellectual Property. In Favor of MNCs Other agreements: TRIMS, plurilateral agreements, Other agreements: TRIMS, plurilateral agreements,
working groupsworking groups
But the WTO reproduces the power asymmetries But the WTO reproduces the power asymmetries international systeminternational system
The WTO
Main interests of …Main interests of …Developed countriesDeveloped countries
More liberalization in More liberalization in services and manufactures services and manufactures in developing countriesin developing countries
Defensive interests in Defensive interests in agriculture (EU)agriculture (EU)
Broaden the agenda over Broaden the agenda over the New Issues:the New Issues:
The Singapore Issues The Singapore Issues (1996): competition, (1996): competition, investments, government investments, government procurement, trade procurement, trade facilitationfacilitation
Labor and environmental Labor and environmental Standards Standards
Emerging economiesEmerging economies Keep a limited agenda Keep a limited agenda Increase market access to advanced Increase market access to advanced
countries (textiles, Agriculture,…)countries (textiles, Agriculture,…) Receive support for the Receive support for the
implementation of RU agreementsimplementation of RU agreements Modify TRIPS to gain flexibilityModify TRIPS to gain flexibility Reduce peak and progressive tariffs Reduce peak and progressive tariffs Liberalize GATS Mode IVLiberalize GATS Mode IV
The biggest conflict is in the “new The biggest conflict is in the “new issues”issues”
They are trade-related.They are trade-related. They imply regulatory harmonization.They imply regulatory harmonization. Opposition from developing countries:Opposition from developing countries:
Undermine sovereigntyUndermine sovereignty Reduce “development space”Reduce “development space” Have high implementation costsHave high implementation costs Could be used as a protectionist excuseCould be used as a protectionist excuse
Support of the developed countries Support of the developed countries (mostly the EU) to “ensure” fair trade.(mostly the EU) to “ensure” fair trade.
The “new issues” The “new issues”
The Singapore issuesThe Singapore issues Trade and investmentsTrade and investments Trade and policy competitionTrade and policy competition Trade and government procurementTrade and government procurement Trade Facilitation (it is being Trade Facilitation (it is being
negotiated)negotiated) Other new issues:Other new issues:
Labor StandardsLabor Standards Environmental StandardsEnvironmental Standards
After Uruguay: The WTOAfter Uruguay: The WTO Imbalances of the Uruguay RoundImbalances of the Uruguay Round
Liberalization favored disproportionately Liberalization favored disproportionately developed countries (+/- 70%)developed countries (+/- 70%)
The north-south conflict grows, mainly The north-south conflict grows, mainly around the new issuesaround the new issues
Unsuccessful attempts to launch a New Unsuccessful attempts to launch a New Round:Round: 1999 – Failure of the Seattle Ministerial 1999 – Failure of the Seattle Ministerial
Conference: disagreement over the Conference: disagreement over the Agenda, specially over the new issuesAgenda, specially over the new issues
Birth of the anti-globalization movement?Birth of the anti-globalization movement?
Impact over the income of a full merchandise trade liberalization (NOT SERVICES) by country and region in 2015 (compared with 2001)
What’s at stake? Who wins?Who loses?
The Doha negotiations(I)The Doha negotiations(I)
Stagnation and conflictStagnation and conflict Minimal progress in all subjectsMinimal progress in all subjects 2003: TRIPS bashful reform2003: TRIPS bashful reform
Cancun Summit 2003: Another failureCancun Summit 2003: Another failure The agricultural supply of the rich is considered The agricultural supply of the rich is considered
insufficient by the developing countries, who insufficient by the developing countries, who reject to talk about the Singapore issuesreject to talk about the Singapore issues
Consolidation of solid coalitions in Consolidation of solid coalitions in developing countries, especially G-20developing countries, especially G-20
The Doha negotiations The Doha negotiations (II)(II)
The Hong Kong agreement (2005):The Hong Kong agreement (2005): Elimination of agricultural export subsidies by 2013Elimination of agricultural export subsidies by 2013 Aid for the Most Developed Countries:Aid for the Most Developed Countries:
Access to the market in rich countries, (as an EBA initiative)Access to the market in rich countries, (as an EBA initiative) Aid for trade: What does it mean?Aid for trade: What does it mean?
All the Singapore issues are excluded except trade All the Singapore issues are excluded except trade facilitation (the only one that is not problematic)facilitation (the only one that is not problematic)
It is still pending to close the NAMA “package”, It is still pending to close the NAMA “package”, services and set the details in agricultureservices and set the details in agriculture
Stagnated Negotiations since then (several Stagnated Negotiations since then (several failed re-launch attempts), the last one in July failed re-launch attempts), the last one in July 20072007
Negotiations collapseNegotiations collapse
Pro-liberalization lobbies, Pro-liberalization lobbies, comfortable with current comfortable with current regulationregulation
The WTO is not useful to The WTO is not useful to liberalize servicesliberalize services
Tariffs below max Tariffs below max
Increase in the price of Increase in the price of commoditiescommodities
US’s TPAUS’s TPA
Stagnated Negotiations: structural Stagnated Negotiations: structural causescauses
Change in the equilibrium of power in the global Change in the equilibrium of power in the global economyeconomy
The emerging powers gain importanceThe emerging powers gain importance
GATT Institutional inertia GATT Institutional inertia governance problems governance problems High Expectations: Development Round and UR High Expectations: Development Round and UR
backgroundbackground
2/3 of the WTO 2/3 of the WTO members are members are developing developing countriescountries
The G-20: joint The G-20: joint group with offensive group with offensive interestsinterests
World Trade keeps on growing: 1990-2005, almost World Trade keeps on growing: 1990-2005, almost doubled the GDP and investment is five times the doubled the GDP and investment is five times the GDP GDP Weight of the MNEs Weight of the MNEs
13 billions of US dollars yearly (76% merchandise 13 billions of US dollars yearly (76% merchandise and 24% services), such as the USA economy and 24% services), such as the USA economy
IMF, WEO April 2009
Causes: high growth, previous liberalization in Causes: high growth, previous liberalization in developing countries, fragmentation of the chain developing countries, fragmentation of the chain value, new technologies, etc. value, new technologies, etc.
If Doha fails?If Doha fails?
Long run costs
Important, but difficult to quantifyImportant, but difficult to quantify Weakening of the legitimacy of the Weakening of the legitimacy of the
multilateral trade systemmultilateral trade system
GLOBAL PUBLIC GOODGLOBAL PUBLIC GOOD Rejection of the emerging to the current Rejection of the emerging to the current
regime regime search for de alternatives search for de alternatives More commercial pleadingsMore commercial pleadings Boom of preferential agreementsBoom of preferential agreements
Problems of the bilateral Problems of the bilateral agreeementsagreeements
Discriminatory and inefficient ( it erodes Discriminatory and inefficient ( it erodes the multilateral system)the multilateral system)
It consumes diplomatic resources for the It consumes diplomatic resources for the multilateral negotiationsmultilateral negotiations
More geopolitical than economical More geopolitical than economical motivationmotivation
They usually benefit the relatively richest They usually benefit the relatively richest countries, that includes the “new issues”countries, that includes the “new issues”
The most recent onesThe most recent ones USA: “competitive liberalization” (Colombia, USA: “competitive liberalization” (Colombia,
Korea, CAFTA, LA, Maghreb and Middle East) Korea, CAFTA, LA, Maghreb and Middle East) Trans Pacific Partnership (2012)Trans Pacific Partnership (2012)
EU: new impulse to regionalism since 2006 EU: new impulse to regionalism since 2006 (enlargement, Mediterranean, Korea, LA)(enlargement, Mediterranean, Korea, LA)
Transatlantic Economic Area (just launched)Transatlantic Economic Area (just launched) Strong integration in Southeast AsiaStrong integration in Southeast Asia
India and ChinaIndia and China Expansion of MERCOSURExpansion of MERCOSUR Even thought, there are more confrontations Even thought, there are more confrontations
in Doha Ex. EU-MERCOSURin Doha Ex. EU-MERCOSUR
