Chapter 3

Question 1

What are collective disciplines?

Answer 1

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).

Question 2

Why are collective disciplines important?

Answer 2

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.

Question 3

Explain the Bretton Woods conference

Answer 3

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.

Question 4

OIC

Answer 4

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.

Question 5

What happened, or what was the story, of the OIC?

Answer 5

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.

Question 6

GATT

Answer 6

the General Agreement on Tariffs and Trade

Question 7

Explain how the GATT came about

Answer 7

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

Question 8

What were the GATT negotiation rounds?

Answer 8

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

Question 9

The Torquay Round

Answer 9

1950-51 in response to Germany’s request for a 25% reduction in tariffs

Question 10

The Dillon Round

Answer 10

961-62 was initiated by the creation of the European Economic Community (EEC) and resulted in a 6.5% reduction in EEC tariffs

Question 11

The Kennedy Round

Answer 11

(1963-67) was initiated by the United States and led to an average reduction of 35% in tariffs

Question 12

The Tokyo Round

Answer 12

1973-79, was initiated by the United States and focused on reducing tariffs between the US, Japan, and the EEC.

Question 13

The Uruguay Round

Answer 13

held from 1986-1994, was the longest and most comprehensive round of negotiations and led to the establishment of the World Trade Organization (WTO)

Question 14

What were some of the problems of the GATT?

Answer 14

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.

Question 15

Le principe n 1 de l’OMC

Answer 15

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

Question 16

Why was the reduction of Customs Duties a major priority for the GATT?

Answer 16

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.

Question 17

What is the difference between tariff barriers and non-tariff barriers?

Answer 17

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.

Question 18

Principe n 2 de l’OMC

Answer 18

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.

Question 19

Explain the two exceptions to principle number 2 of the OMC

Answer 19

(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.

Question 20

Principe n 3 de l’OMC

Answer 20

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.

Question 21

Les exceptions aux principes canoniques du GATT

Answer 21

• 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)

Question 22

L’article XII (équilibre de la balance des paiements)

Answer 22

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.

Question 23

L’article XIX (clause de sauvegarde)

Answer 23

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.

Question 24

L’article XX (protection de la moralité, de la santé et de l’environnement)

Answer 24

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.

Question 25

L’article XXIV (Union douanières ou Zones de libre échange)

Answer 25

Article XXIV, which is the legal basis for regional trade agreements. It permits WTO members to establish customs unions or free trade areas under certain conditions, such as not becoming fortresses that prevent the entry of products from third countries and having a common external tariff.

Question 26

Les Directeurs généraux du GATT (1965-94)

Answer 26

Eric Wyndham-White (GB)1965-1968
Olivier Long (Suisse) 1968-1980
Arthur Dunkel (Suisse) 1980-1993
Peter Sutherland (Irlande) 1993-1994

Question 27

How did the GATT become the WTO

Answer 27

The WTO emerged from the Marrakech Conference in April 1994 and officially came into existence on January 1, 1995. The conference marked the conclusion of the Uruguay Round and established the WTO, which was immediately tasked with upholding the rules of GATT and ensuring their implementation. The WTO’s new mission was to pursue and expand the liberalization of trade, including in new areas such as agriculture and services (AGCS or GATS). The liberalization also aimed to protect intellectual property rights through the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) or ADPIC.

Question 28

In what ways did the WTO continue the doctrine of the GATT

Answer 28

The WTO continues the doctrine and action of the GATT, which means that the global trading system should be:
free from discrimination,
more competitive,
more liberal,
predictable, and
more favorable to least-developed countries.

Question 29

The main differences between the GATT and the WTO

Answer 29

Scope and Powers: The WTO has broader jurisdiction and more powers than the GATT. It covers a wider range of trade issues, including services, intellectual property rights, and investment measures. It has also established a dispute settlement mechanism, which is more effective than the GATT’s.

Institutionalization: The GATT was a mere agreement between nations, whereas the WTO is a fully-fledged international organization with its own secretariat, budget, and formal decision-making procedures.

Decision-making process: Unlike the GATT, which operated by consensus, the WTO operates on the principle of “one member, one vote.” However, in practice, the WTO operates on a consensus basis as well.

Special and Differential Treatment: The WTO has introduced several provisions to provide special and differential treatment to developing countries. These provisions aim to assist developing countries in their efforts to participate more effectively in the multilateral trading system.

Dispute Settlement: The WTO has a more effective dispute settlement mechanism than the GATT. The WTO’s dispute settlement system is more structured, legally binding, and has more teeth than the GATT’s.

Question 30

Explain the conférence ministérielle of the WTO

Answer 30

The World Trade Organization (WTO) holds a periodic ministerial conference every two years to review progress and discuss issues. The conferences work to develop the WTO’s doctrine and engage with civil society. The decisions made at the conferences are implemented by the General Council, which is composed of representatives from WTO member countries.

Question 31

ORD

Answer 31

ORD stands for “Organe de Règlement des Différends” in French, which translates to “Dispute Settlement Body” in English.

Question 32

Explain why the ORD (or DSB in English) is important

Answer 32

Before the creation of the WTO’s Dispute Settlement Body (DSB), resolving disputes required a consensus that was often difficult to reach and often led to trade wars. With the DSB, the WTO can now decide on trade disputes brought by countries claiming to be victims of unfair practices. The DSB establishes a “Panel” that can decide, after a maximum period of 12 or 15 months, to allow retaliatory measures if the offending countries do not correct their practices. The aim of the DSB is to limit unilateralism in the resolution of international economic disputes, and its creation has helped to contain the “law of the jungle” by creating a specialized jurisdiction in which parties involved cannot refuse or delay the procedure.

Question 33

Has the OMC been successful?

Answer 33

The provisional assessment of the WTO is that it has been a success as it is a central institution of international economic life. The number of members has increased from 123 in 1994 to 164 in July 2016. The WTO covers an essential part of world trade, and liberalization agreements have been reached in new areas such as financial services and telecommunications. Conflicts are resolved through the dispute settlement body. The specificities of the least developed countries are recognized as requiring specific advantages in their favor. The WTO has formed necessary alliances to carry out its actions, and it has a connection to a network of 28,000 NGOs. The dialogue with civil society is leading to “a liberalization more mindful of the well-being of people.”

Question 34

Why is the WTO better than the GATT?

Answer 34

Firstly, the WTO operates on a one country-one vote basis, making it a more democratic organization.

Additionally, the WTO is a permanent institution that provides a forum for ongoing negotiations.

The WTO also addresses new concerns such as environmental and developmental issues.

The WTO’s mission includes promoting trade that benefits developing countries, and it offers preferential treatment for the exports of developing countries. This includes reducing trade barriers for rich countries without requiring immediate reciprocity.

Question 35

What is one of the biggest challenges faced by the WTO?

Answer 35

The WTO is facing challenges due to tensions among its member countries. As an intergovernmental organization, the WTO is directly impacted by the power dynamics among its member countries. For example, wealthier countries may push for greater market liberalization while simultaneously increasing preferential trade agreements, which can be detrimental to smaller countries. Additionally, the WTO’s emphasis on consensus can undermine its effectiveness, with ministerial conferences often becoming mired in debates without reaching concrete outcomes. While decisions can be made by a majority vote, some countries, such as the United States, may be dissuaded from doing so for fear of creating further hostility among member countries. Overall, the WTO’s ability to function effectively is contingent on the ability of its member countries to work together and resolve their differences.

Question 36

How is the legitimacy of the WTO being challenged?

Answer 36

Firstly, some argue that the WTO is an instrument of rich countries, and that the weight of developed countries has been sustained over time. The critics argue that the WTO is anti-democratic, and that it favors wealthy countries that can manage dozens of simultaneous negotiations. Meanwhile, smaller countries are often left with no other choice but to accept decisions that they may not fully agree with.

Secondly, there is a growing criticism from alter-globalization and environmental groups. They argue that the WTO is overly focused on the liberalization of trade, to the detriment of integrating civil society or effectively taking into account the impacts of trade on health and the environment. Alter-globalization activists argue that the WTO should put trade “in its rightful place” by ensuring that its decisions are better adjusted to international law through its affiliation with the United Nations.

Question 37

L’OMC contre l’environnement ?

Answer 37

The WTO mainly serves as the “policeman” of international trade. It is not required to take into account the domestic economic and social context of member countries unless there is a violation of trade rules. The WTO cannot retaliate against a country under the pretext that its activity affects the environment. While a country can impose product standards, it cannot impose process or emission standards on other countries’ productions. The WTO operates independently, and it is not bound by the decisions of other international organizations. The UN’s work on human development or the International Labor Organization’s work on “decent work” and remuneration conditions cannot be applied directly to the WTO (as per the social clause). A country can impose regulations on imports provided that its own products are subject to the same regulations. This severely limits the ability of states to impose emission or pollution standards on imported products as their own industries would also be penalized.

Question 38

What are some conflicts that have been brought before GATT arbitration

Answer 38

Ban on importing Canadian tuna to the US
The US decision to ban imports of Canadian tuna on the pretext of conserving the species was rejected by the GATT Council, which noted that “the US had not imposed any restrictions on their own fishermen for the same tuna species.”

Ban on Canadian exports of unprepared herring and salmon to the US
Canada banned the export of unprepared herring and salmon, citing species protection. As this country had not taken any internal measures to limit consumption of these species, its argument was rejected by the arbitration panel… (1988).

Ban on importing Mexican tuna to the US
The US banned the import of albacore tuna from Mexico because its fishermen used nets that also caught dolphins. The ban was extended to countries suspected of “laundering” Mexican tuna. Following a complaint by Mexico, the panel ruled in favor of this country, as the US was not entitled to impose fishing methods outside its territory (1991).

Ban on importing Thai shrimp to the US
This conflict is similar to that of tuna and dolphins. The US decided to ban the production and import of shrimp caught using techniques that did not spare sea turtles. Several countries (India, Pakistan, Malaysia, and Thailand) brought the matter before the WTO. The panel ruled that the US was not entitled to impose fishing methods outside its territory (1988).

Ban on importing seal skins and derivatives into Europe
Europe decided to ban imports of seal skins and derivatives to protest against the hunting methods used. Two exceptions are provided: traditional hunting practices by Inuits and small-scale hunting practices by some European countries (Sweden, Finland, and the UK) to regulate the seal population and allow for better management of fish stocks. Canada, the main exporter of these products, contested this decision before the WTO, demanding that its practice of “humane and sustainable” seal hunting be recognized (2009).

Ban on importing “hormone-treated” beef into Europe
This conflict dates back to 1988 when the US and Canada filed a complaint against the EU because it had decided to ban imports of meat containing growth hormones for health reasons. The WTO ruled against Europe, which could not prove the negative effects of hormones on health. Europe’s refusal to lift its restrictions led to threats of retaliation (including tripling the duties on Roquefort cheese). This conflict found a first solution on May 6, 2009, just before the retaliation measures were to be implemented on May 9. In exchange for abandoning these sanctions, the US obtained new quotas for its superior-quality hormone-free beef. The EU wished to start discussions with the US to see “if a new quota for high-quality beef can be allocated to the US without reversing the EU’s ban on hormone-treated beef” (Phil Hogan, September 2018).

Question 39

What are some of the dangers that come with specialisation?

Answer 39

Specialization can be harmful to the environment and lead to systematic exploitation of natural resources in countries. It can also encourage the migration of environmentally harmful industries to countries with weaker protections. The case of Indonesia and its tropical forests, which are in danger of disappearing due to the exploitation of primary wood and palm oil, poses a significant ecological disaster with severe impacts on wildlife, including tigers, rhinos, orangutans, and Asian elephants. Reports from organizations such as UNESCO and the UNEP have highlighted the issue.

Question 40

Les Directeurs Généraux de l’OMC (1995 - 2021)

Answer 40

Renato Ruggiero (Italie) 1995-1999
Mike Moore (Nouvelle-Zelande) 1999-2002
Supachai Panitychpakdi (Thailande) 2002-2005
Pascal Lamy (France) 2005-2013
Roberto Azevedo (Bresil) 2013-2021

Question 41

Les succès de L’OMC

Answer 41

Depuis 1995 l’OMC a endossé l’héritage du GATT avec la mission de préserver ses acquis et d’en élargir les domaines d’application
L’OMC s’est imposée comme une institution centrale de la vie économique
Audience élargie l’OMC couvre une partie essentielle du commerce mondial
Accords dans des domaines neufs services financiers, télécommunications, propriété intellectuelle, etc
Enfin, l’OMC a su se donner des alliances utiles à son action (ONG)

Question 42

Limites et problèmes de l’OMC

Answer 42

L’OMC est confrontée à la sophistication croissante des échanges commerciaux
Le nombre des accords bilatéraux et régionaux ne cesse d’augmenter
L’OMC est aussi dépassée par le contenu de ces accords faits sans elle
Enfin, l’OMC s’est mise au service d’une ouverture accrue des économies. Or, des travaux neufs montrent que l’ouverture accroît la volatilité de la croissance et ses effets sur le bien être n’est pas toujours prouvée (vérifiée)