CM 3

Question 1

collective disciplines - pure free trade to state practices

Answer 1

“optimal trade regime”

optimises gains from exchange

maximises population’s well-being

“pure” free trade is nonexistence

states moderate market by providing industries with protections in visible/tolerated manner

Question 2

need for collective disciplines - institutions & rules to regulate exchanges

Answer 2

combination of market action & public interventions justifies existence of collective disciplines

in their absence - certain actors tempted to divert gains to sole advantage

Question 3

rules guaranteeing freedom

Answer 3

Henri Lacordaire, Dominican - “between strong & weak, rich & poor, master & servant, freedom oppresses & law liberates

Question 4

Bretton Woods doctrine

Answer 4

before end of war : allies agreed on principles of cooperation to govern monetary, financial, & commercial relations

several international organisations planned : IMF, IBRD, ICO

goal : rules to discipline state behaviours

establishment of international commercial order harder than that of collective disciplines

Question 5

International Trade Organisation

Answer 5

US lead negotiation that led to Havana Charter

56 countries agreed on principles of future OIC

would promote economic growth, production increase & stimulate economic development

US congress hostile, fearing it would limit commercial policy

considered too American by Europe & visa versa

opposition between democratic president & republican majority

Question 6

Birth of GATT

Answer 6

2nd negotiation in parallel with 23 states

established set of rules to liberalise trade

non-discrimination, reciprocity, abolition of quantitative restrictions & fairness in trade

organised negotiations which lowered level of global customs protection

Question 7

principle 1 of WTO : non-discrimination

Answer 7

reciprocity : each party reduces barriers in equal proportion to advantages granted by others

most favoured nation clause (CNPF) : advantages that 2 countries mutually grant each other extended to all (consolidation)

rule of national treatment : market access conditions identical for all, producers & importers treated same

Question 8

GATT : reduction of customs duties

Answer 8

transparency of customs duties make them a favoured intervention tool

GATT organised negotiations (Rounds) to obtain the reductions in custom duties on manufactured products

substitution of tariff barriers by non-tariff barriers

neo-protectionism : sneaky protections (difficult to fight)

Question 9

GATT rounds

Answer 9

Torquay (1950/51 in UK) - sparked by application of FRG

Dillon (1961/62) - sparked creation of EEC

Kennedy (1963/67 in Geneva) - prompted by JFK

Tokyo (1973/79) - instigated by US

Uruguay (1986/94) - longest & most important, covered many domains, led to WTO

Question 10

principle 2 of WTO : elimination of quantitative trade restrictions

Answer 10

through blockades, prohibitions, quotas

eliminate not just reduce restrictions

exceptions allowed when country suffers from :

1. productivity delay (recession/unemployment)
2. serious disproportion in payment balance (threat to foreign exchange reserves)

Question 11

principle 3 of WTO : intervention against unfair trade practices

Answer 11

ban on dumping - allows country accused of dumping to defend itself by applying anti-dumping laws

prohibits selling abroad below domestic rates in normal business operations

subsidies reduce produce production costs, distorting competition

internal subsidies that reduce imports must be notified to GATT

external subsidies that support exports are prohibited for manufactured goods & tolerated for basic products

Question 12

fight against dumping

Answer 12

2 complementary meanings

against price predation

against price discrimination

Question 13

dumping - against price predation

Answer 13

selling product at lower than cost price to eliminate competition

“predatory pricing”

abuse of dominant position - company occupies large market share

Question 14

dumping - against price discrimination

Answer 14

selling in another country at price lower that one charged in origin country

results from subsidies granted by good’s state of origin

consumer state has right to apply countervailing anti-dumping customs duty to defend domestic producers

Question 15

notions of ‘dumping’ & ‘anti-dumping’ - history

Answer 15

Brussels Commission (1998) : imports of tv receivers from Asia were being dumped, causing a serious prejudice

EEC must establish anti-dumping measures

1991: imposed on exports from Hong Kong & China to Europe

Question 16

exceptions to WTO regime - Article XII

Answer 16

equilibrium of balance of payments

allows WTO member to apply restrictions to safeguard external financial position

Question 17

exceptions to WTO regime - Article XIX

Answer 17

safeguard clause

allows WTO member to take ‘safeguarding’ measures to protect domestic industry against unforeseen increase in imports of ‘serious injury’ causing (préjudice grave) products

Question 18

préjudice grave - seroius injury

Answer 18

significant general impairment in position of national industry

factors examined : domestic market share taken by increased imports, changes in sale levels, production, productivity, use of production capacities, loss, profit, employment

agreement between Europe & Japan to limit damage by Japanese competition by limiting exports of their automobiles to EEC

major arguments over ‘transplants’

Question 19

exceptions to WTO regime - article XX

Answer 19

protections of morals, health, environment

allows member to take measures to protect public morals, health, life, patents, trademarks, copyrights, conservation of exhaustible natural resources

Question 20

exceptions to WTO regime - article XXIV

Answer 20

customs union or free trade areas

major exception to multilateralism doctrine

constitutes legal basis for regional integrations

authorises ‘contracting parties’ to establish customs union or free trade areas

must not become fortresses preventing third world product entry

countries in same union must behave as if they were ‘one state’

Question 21

exceptions to the advantage of rich countries

Answer 21

Multi-Fiber Arrangement (AMF) in set export quotas by country & product (1974 - 2005)

aims to protect rich countries’ textiles from ‘low salary’ countries’ competition

agricultural product markets (PAC)

negotiations stalled by subsidies that Europe & US pay to producers

WTO have procedures to fortify commitments to reduce export subsidies & internal support

Question 22

exceptions to advantage of developing countries

Answer 22

Article XIX : 80% WTO members in development or transition to market economy

need flexible conditions to implement system’s agreements: possibility to increase customs duties to protect ‘infant industries’

DDA sees developing countries’ difficulty to implement Uruguay Round agreements

provide special assistance & commercial benefits

Question 23

GATT review - successes

Answer 23

23 members in 1947 to 123 countries in 1994

11947/62 : first 5 negotiations produced customs duty reduction agreements

1964/94 : increase in members & expanding scope of negotiations

Question 24

GATT review - realism

Answer 24

remained a ‘political system’ not true international organisation

few structures, no international legal personality, too many exemptions

‘à la carte GATT’ - regional trade agreements according to national politics & commercial needs

Question 25

Directors General of GATT (1965/94)

Answer 25

1965/68 : Eric Wyndham White (UK)

1968/80 : Olivier Long (Swiss)

1980/93 : Arthur Dunkel (Swiss)

1993/94 : Peter Sutherland (Ireland)

1995/99 : Renato Ruggiero (Italy)

1999/2002 : Mike Moore (NZ)

2002/05 : Supachai Panitchpakdi (Thailand)

2005/13 : Pascal Lamy (France)

2013/21 : Roberto Azevedo (Brazil)

Question 26

Marrakech conference

Answer 26

closed cycle of Uruguay Round : April 1994

established WTO (Jan. 1 ‘95) responsible for ensuring renewal & application of GATT rules

WTO mandate deepens trade liberalisation & extends to agriculture

targets trade in services (AGCS)

Agreement on Trade-Related Intellectual Property Rights (TRIPS) : protection of intellectual property rights

Question 27

WTO renews GATT doctrine on trading

Answer 27

free from discrimination : between its trading partners or its own & foreign products & nationals

more competitive : discourage unfair practices (‘dumping)

more free : remove obstacles through negotiation

predictable : rights & commitments on market opening consolidated at WTO

more favourable to LDCs : longer adaptation period, flexibility, privileges

Question 28

differences between GATT & WTO

Answer 28

areas of competence & powers of WTO reinforced

1995 : 47 years to create real international institution governing world trade

WTO took over GATT legacy : same rules, negotiations, policy monitoring, conflict solving

areas of competence of WTO expanded

DDA considers progressive & asymmetric liberalisation for young southern economies

Question 29

new institutions & rules

Answer 29

ministerial conference at least every 2 years : take stock of progress of discussion

successive conference worked o expand WTO doctrine & open it to global civil society

General Council (CG) : member countries’ representatives who apply conference decisions

Question 30

Dispute Settlement Body (ORD)

Answer 30

before : conflict resolution involved difficult to achieve consensus, transformation into trade wars

after : WTO can rule on trade conflicts

complaints of unfair practices

‘Panal’ can authorise retaliatory measures against countries who do not change protectionist position

aim to limit unilateralism in disputes

‘law of the strongest’ is contained & members can not refuse or delay procedure

Question 31

ORD procedure

Answer 31

1. Consultation
2. Establishment of Panel
3. Panel investigation
4. Appeal
5. Adoption
6. Enforcement

Total time : 1 year (no appeal) + 3 months (with appeal)

Question 32

WTO - successes

Answer 32

created institution of international economic life

123 members in 1994 & 164 in 2016

covers 98% of world trade

liberalisation agreements in new agree

mediate disputes (ORD)

special benefits recognised for developing counties

created alliances necessary for actions - connected to 28,000 NGOs

dialogue with civil society prompts liberalisation focused on the well-being

Question 33

WTO better than GATT ?

Answer 33

originality of WTO : democratic, consensual organisation

WTO forum for all negotiations that become permanent

WTO an ecological organisation

Doha conference puts development at centre of debates

WTO responsible for ensuring that trade benefits most deprived

favours exports from developing countries through reduction in customs barriers for rich countries without immediate reciprocity

Question 34

WTO weakness

Answer 34

intergovernmental institution : bears brunt of balance in power between small & big countries

rich subject poorer to openness while increasing preferential agreements

ministerial conferences seek consensus - debates risk stalemate

can apply decision by majority, but risk animosity from US

Question 35

uncertain effects of trade opening

Answer 35

reason to believe that trade relationship depends on internal & external characteristics

reduction/increase is welfare not always dependent on rate of economic growth

Question 36

WTO legitimacy questioned

Answer 36

WTO an instrument of rich countries - from beginning to now

antidemocratic: favours rich countries capable of facing many issues simultaneously

small countries often give in, even if not advantageous for themselves

523 preferential agreements at end of 2020 (à la carte free trade)

liberalisation to detriment of civil society’s integration

neglect effects on health & environment

anti-mondialisation activists wish to force WTO to adjust decisions to international law via attachment to UN

Question 37

WTO against environment ?

Answer 37

not required to consider states’ internal economics & social contexts in no violation of trade rules

cannot take retaliatory measures if states’ activity affects environment

solitary organisation : not bound to decisions of other major international organisations

limited capacity of states wishing to impose emission standards on imported products as own industries risk being penalised

Question 38

disputes brought before GATT

Answer 38

1982 : ban on importing Canadian tuna into USA

1988 : ban on Canadian exports of unprepared herring & salmon to US

Question 39

disputes brought before ORD

Answer 39

1991 : ban on importing Mexican tuna into the USA

1998 : ban on importing Thai shrimp into USA

2001 : ban on importing Canadian products based on asbestos in Europe

2003 : moratorium on importation of GMOs into Europe

2009 : ban on importing skins & products derived form seals in Europe

1988 - 2018 : ban on importing ‘hormonated’ beef into Europe

Question 40

dangers of international specialisation

Answer 40

can be ruinous for environment

systematic plundering of natural resources

encourage migration for ‘dirty’ industries to least environmentally protective countries

Indonesia : wood & palm oil endangering wild life & overexploitation of timber