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Slide 2 Originally set up in 1947 as the General Agreement on Tariffs and Trade (GATT) GATT was replaced by the WTO in 1995 128 signing members Governed 90% of world trade Currently, there are 153 member countries in the WTO Slide 3 Set of multilateral trade agreements aimed at the abolition of quotas and the reduction of tariffs among member countries. Established after WWII to promote world trade. Created as an interim agency that would be replaced by a specialized agency of the United Nations to be called the International Trade Organization (ITO) ITO was never created because the U.S. did not ratify the agreement Slide 4 Signed on October 30, 1947, by 23 countries in Geneva (to take effect on January 1, 1948) Consisted of 8 Rounds rounds of trade negotiations Slide 5 1 st - Geneva Tariff Conference, 1947 2 nd - Annecy Tariff Conference, 1949 3 rd - Torquay Tariff Conference, 1950-1951 4 th - Geneva Tariff Conference, 1955-1956 5 th - Dillon Round, 1960-1961 6 th - Kennedy Round, 1963-1967 7 th - Tokyo Round, 1973-1979 8 th - Uruguay Round, 1986-1994 Slide 6 Rounds 1-6 Reducing tariffs Anti-dumping legislation Round 7: Tokyo Round (1973-1979) 1 st major attempt to tackle trade barriers that did not take the form of tariffs 1 st attempt to reform the system 102 participating countries Resulted in an average 1/3 cut in custom duties in the worlds 9 major industrial markets Slide 7 Round 8: Uruguay Round (1986-1994) 123 participating countries Extended trading system to new areas services and intellectual property, agriculture, and textiles Established the WTO to replace GATT GATT still exists as the WTOs umbrella treaty for trade in goods Slide 8 Trade Negotiations Cover goods, services, and intellectual property Set procedures for settling disputes Several trade agreements are currently being negotiated under the Daha Development Agenda Slide 9 Implementation and Monitoring Require governments to make their trade policies transparent by notifying the WTO WTO councils and committees ensure policies are being followed WTO members are periodically scrutinized on their trade policies and practices Slide 10 Dispute Settlement Resolves trade quarrels under the Dispute Settlement Understanding to ensure trading runs smoothly Countries petition the WTO if they believe they believe their rights are being infringed Slide 11 Building Trade Capacity WTO specifically tries to aid developing countries to build their trading capacity and try to help establish trading standards Organizes technical cooperation missions, numerous courses for government officials, and the Aid for Trade tries to help develop a countrys skills and infrastructure to expand their trade capacity Slide 12 Outreach WTO maintains dialogue with various organizations non-government related to enhance cooperation and increase awareness of WTO activities around the world Slide 13 1. Without Discrimination: A country should not discriminate between its trading partners Most-Favoured-Nation/MFN Status: The contracting nations binds itself to grant to the other in certain stipulated matters the same terms as are then, or may be thereafter, granted to the nation which receives from it the most favorable terms in respect of those matters National Treatment: Treating foreigners and locals equally. 2. Freer: Barriers coming down through negotiation Progressive Liberalization Slide 14 3. Predictable: Foreign companies, investors, and governments should be confident that trade barriers (including tariffs and non-tariff barriers) should not be raised arbitrarily; tariff rates and market-opening commitments are bound in the WTO 4. More Competitive: Discouraging unfair practices such as export subsidies and dumping products at below cost to gain market share 5. More Beneficial for Less Developed Countries: Giving them more time to adjust, greater flexibility, and special privileges. Ex: Uruguay Round Slide 15 Council for Trade in Goods All members of the WTO participate in the committees The body has its own chairman and only 10 members. Council for Trade-Related Aspects of Intellectual Property Rights Information on intellectual property in the WTO Slide 16 Council for Trade in Services operates under the guidance of the General Council responsible for overseeing the functioning of GATS Trade Negotiations Committee deals with the current trade talks The chair is WTOs director-general Doha Development Round Slide 17 One Country One Vote Decision making is generally by consensus WTO Agreement Four Specific Situations An interpretation of any of the multilateral trade agreements can be adopted by a majority of three quarters of WTO members. The Ministerial Conference can waive an obligation imposed on a particular member by a multilateral agreement, also through a three-quarters majority. Decisions to amend provisions of the multilateral agreements can be adopted through approval either by all members or by a two-thirds majority depending on the nature of the provision concerned. But the amendments only take effect for those WTO members which accept them. A decision to admit a new member is taken by a two-thirds majority in the Ministerial Conference, or the General Council in between conferences. Slide 18 Any state or customs territory having full autonomy in the conduct of its trade policies may become a member (accede to) the WTO, but all WTO members must agree on the terms. This is done through the establishment of a working party of WTO members and through a process of negotiations. Slide 19 First, a country wishing to accede to the WTO submits an application to the General Council, and has to describe all aspects of its trade and economic policies that have a bearing on WTO agreements. The application is submitted to the WTO in a memorandum which is examined by a working party open to all interested WTO Members. Slide 20 Second, after all necessary background information has been acquired, the working party focuses on issues of discrepancy between the WTO rules and the applicant's international and domestic trade policies and laws. The working party determines the terms and conditions of entry into the WTO for the applicant nation, and may consider transitional periods to allow countries some leeway in complying with the WTO rules Slide 21 The final phase of accession involves bilateral negotiations between the applicant nation and other working party members regarding the concessions and commitments on tariff levels and market access for goods and services. The new member's commitments are to apply equally to all WTO members under normal non-discrimination rules, even though they are negotiated bilaterally. Slide 22 When the bilateral talks conclude, the working party sends to the general council or ministerial conference an accession package, which includes a summary of all the working party meetings, the Protocol of Accession (a draft membership treaty), and lists ("schedules") of the member-to-be's commitments. Once the general council or ministerial conference approves of the terms of accession, the applicant's parliament must ratify the Protocol of Accession before it can become a member. Slide 23 The World Trade Organization is composed of 153 countries Of these, 123 were signed during the Uruguay round WTO members do not have to be full-sovereign nation members Instead, they must be a custom territory with full autonomy in their external relations Example: Hong Kong, China is considered a member Slide 24 United States United Kingdom France Italy China Brazil Germany Japan Canada Mexico Slide 25 There are 30 countries that are not members known as observers These countries are currently negotiating membership The biggest of these non-members is currently Russia, however, they are in the process of accession Accession negotiations must begin within 5 years of becoming an observer Slide 26 Algeria, Andorra Armenia Azerbaijan Bahamas Belarus Bhutan Bosnia and Herzegovina Cambodia Cape Verde People's Republic of China Croatia Ethiopia Former Yugoslav Tonga Ukraine Uzbekistan Vanuatu Vatican (Holy See) Vietnam Yemen Republic of Macedonia Kazakstan Lao Lebanon Lithuania Moldova Nepal Russian Federation Samoa Saudi Arabia Seychelles Sudan Taiwan (known as "Chinese Taipei") Slide 27 Slide 28 PASCAL LAMY French political advisor, a businessman, and a former European Commissioner for Trade. Lamy is Honorary President of Paris-based think tank Notre Europe Slide 29 Currently the WTO is under criticism Commonly viewed as irrelevant Lack of Transparency WTO is sometimes viewed as a rushed reaction to international trade due to WWII drastic wealth inequalities between members Trying to make the developing countries catch up to the developed Slide 30 Globalization!! The alternative would be chaos For the most part the WTO is unbiased The power of Sanctions Slide 31 The financial services sector plays a critical role in any modern economy. The bundle of institutions that make up an economys financial system can be seen as the brain of the economy, providing the bulk of the economys need for many functions -WTO website Slide 32 The WTO defines a financial service as: any service of a financial nature offered by a financial service supplier of a Member Examples: banks, trust and loan companies, credit unions, life and health insurance companies, property and casualty insurance companies, securities traders and exchanges, investment fund companies, pension funds, finance and leasing companies, insurance agents and brokers, and a myriad of auxiliary service providers, such as independent financial advisors, actuaries, and intermediaries. Apart from its participation in GDP, the financial services sector is usually a significant contributor to employment. Slide 33 1. Facilitating transactions (exchange of goods and services) in the economy. 2. Mobilizing savings (for which the outlets would otherwise be much more limited). 3. Allocating capital funds (notably to finance productive investment). 4.Monitoring managers (so that the funds allocated will be spent as envisaged). 5.Transforming risk (reducing it through aggregation and enabling it to be carried by those more willing to bear it). Slide 34