World Trade Organisation

HQ

📍Geneva

2 focuses

1. Trade liberalisation

2. Frictionless trade

Trajectory of GATT → WTO

• 1947

  • GATT signed by 23

  • Aim: agree international trade rules like low tariffs

• 1995

  • 100 states signed GATT

  • Lowered tarrifs on $300bn worth of goods

2 features of WTO

1. Specific and permanent

2. Dispute resolution forums

Aim of WTO

• Reduce barriers on trade in goods and services

  • I.e. reduction of tariffs imposed by states, on states, to agreed levels

    • 10% tariff on imported 🚗

  • Quotas placed on imports of goods to make trade equitable for all member states

2 ways states can reduce tariffs

1. Default: trade under WTO rules (like 🇦🇺 and 🇪🇺)

2. Agree w/other states

Example of states agreeing with other states rather than going through WTO

• 🇬🇧 and 🇪🇺 have their own free-trade agreement

  • December 2020 — 🇬🇧-🇪🇺 TCA

4 WTO functions

1. Creation of comprehensive trade agreements

2. Check states are following trade agreements

3. Resolution of trade disputes to prevent trade wars

4. Research global trade and economic policy

Number of WTO member states

164

% of world trade made up of by WTO member states

97%

Most recent WTO member

• 2016

• 🇦🇫

🇪🇺 and WTO

• 🇪🇺 is WTO member

  • 🇪🇺 member states have to act as a unified block

Becoming a member

• Can take years

  • 🇩🇿 applied in 1987, still not a full member

4 countries that have applied to join WTO

1. 🇸🇴

2. 🇮🇶

3. 🇱🇾

4. 🇸🇩

2 conditions of WTO membership

1. Rights to export w/security of WTO rules

2. Obligations to limit import tariffs and follow other rules (state subsidies, dumping, intellectual property rights)

WTO structure

• Highest decision-making body = Ministerial Conference

  • Meets every 2 years

WTO decisions

• All members have to agree or there’s no deal

• Decisions are binding

6 🔑 principles of WTO

1. Non-discrimination

2. More open

3. Predictable and transparent

4. More competitive

5. More benefits for LICs

6. Envinronmental protection

Non-discrimination (2)

1. All states should treat each other equally

2. No discrimination between own and foreign goods once tariffs have been paid

More open (2)

1. Free trade

2. Low barriers (tariffs) where possible

Predictable and transparent (1)

1. No raising of barriers w/out warning

• Allows for stability, competition and lower prices (and thus job creation)

More competitive (1)

1. States shouldn’t intervene — no subsidising or dumping

More benefits for LICs (1)

1. Allow LICs to catch up with international trade

Rules — 1947 GATT — number of tarrifs removed, $ worth of trade

• 45,000 tarrifs removed

• $10bn worth of trade

Rules — 1962-7 Kennedy Round — 1 action, $ worth of trade

• Disallowed dumping

• Increased tarrif barriers to be worth $40bn

Rules — 1986-94 Uruguay Round — focus and 2 actions (3)

• Officially established WTO

• Largest agreement

• Focus: reducing agricultural subsidies (CAP unaffected)

Rules — 2001-present Doha Development Round — 1 aim

1. Increase free trade w/LICs

Rules — Doha Round — 2015 action

• Agrred to cut export subsidies

  • Only came into agreement in 2023

Rules — Doha Round — agricultural subsidies aim

• Decrease by up to 75% 🇪🇺 and 66% 🇺🇸

Rules — Doha Round — issue

• Gridlocked due to disagreements over agricultural subsidies

• OECD: agricultural subsides are expected to give 🇺🇸 unfair advantage of $300bn/year

4 criticisms of WTO (mainly from Doha)

1. Gridlock — powerful nations want to preserve status quo so block LICs

2. Post-1994 only 1 major international trade deal agreed

3. WTO effectively stopped since 2015 so states have to agree amongst themselves (TPP better meets states interests)

4. SOOO slow due to infrequency of minsterial conferences and need for consensus

3 ways WTO judges can solve a dispute between 2 countries

1. Change law to conform to WTO law

2. Pay permanent compensation

3. Face non-negotiable trade sanctions

Impact of WTO membership on 🇨🇳

• Had to do some reforms before joining

Impact of WTO on environment

• Can ensure environmental clauses are written into trade negotiations

  • Not actually considered

  • E.g. 🇻🇪 challenged 🇺🇸 over Clear Air Act which demands clean petrol, WTO forced 🇺🇸 gov’t to rewrite anti-pollution measures

WTO accountability

• Hearings on trade disputes closed to public and media

• Judges unelected

Susan George’s view on WTO

• ‘Privatising and commodifying every human action’

• Acts as a dispute resolution body to authorise sanctions, by only in the interests of rich states

  • E.g. there are tariffs on Europe as they don’t want to buy shitty meat from USA

Guatemala v USA

• Won WTO case

  • BUT despite Guatemala putting 100% tariffs on USA, their economy came out more damaged than 🇺🇸 economy

Virign Islands

• Tax haven

  • USA can get away with this despite WTO ruling due to its power

‘Most favoured nation status’

• If nation reduces tariffs on one commodity with one country, they have to do this for all

  • Exemptions for bi/multilateral trade agreements, regional trade blocs, developing countries and protection of health/environment

% of global trade covered by WTO

98%

Current WTO director-general

Ngozi Okonjo-Iweala

Cancun 2003

• WTO meeting targeted by South Korean farmer Lee Kyung-Hae, who stabbed himself to death on live TV to protest WTO destruction of South Korean fisherman and farmers

WTO resolution of Banana Wars

• USA accused EU of unlawfully placing tariffs on US fruit corps in C.America and favouring banana producers in former African colonies

WTO resolution of aircraft subsides

• USA and EU argued over aircraft subsidies to Boeing and Arbus respectively

  • WTO ruled both were illegal

Mercantilism

• Focus on relative gains