The World Trade Organisation Flashcards
When did it start?
1995, but was successor to GATT.
What is the WTO?
Only international organisation to deal with global rules of trade between nations and settle disputes; WTO agreements cover goods, services and intellectual property.
How many members?
164
How much of world trade does the WTO account for?
98%
What are the WTO’s main aims?
*Ensure trade runs smoothly, predictably and freely.
*Help members use trade to raise QOL.
What is the multilateral trading system?
The WTO’s agreements, negotiated and signed by a large majority of the world’s trading nations. These agreements are legal ground-rules for international trade, acting as contracts.
What are the foundations of the multilateral trading system?
1) NON-DISCRIMINATION - a country shouldn’t discriminate between it’s trading partners, including it’s own and foreign products/services. MFN (most-favoured-nation) principle states when a member grants a country a favourable trade term, it must grant this to all other members.
^ trade blocs and free trade agreements exempt. Obvious contradiction to MFN principle.
2) MORE OPEN - Lowering trade barriers. WTO’s promotion of this has seen average tariffs fall to about 4%.
^ still by-passed, EU average tariff of about 4%, but huge variation on what has been lowered. Manufactured goods=2%, agricultural=22%.
3) STABLE, PREDICTABLE, TRANSPARENT - no drastic or random changing of trade barriers. This encourages investment and creates jobs. Provides more consumer choice.
4) COMPETITIVE - competition lowers price of products, but WTO discourages unfair practices, such as dumping.
5) LIC BENEFITS - giving them more time to adjust, flexibility and special privileges to develop their trade.
How much do some HICs contribute to the WTO budget as opposed to typical LICs?
USA - 12%
China - 10%
Germany - 7%
LICs - 0.015%
How many disputes were referred to the WTO’s dispute settlement system, and how many required formal rulings?
615 as of start of 2023, 350 needed formal rulings.
How does the WTO dispute settlement system work?
A member of WTO adopts a trade policy other member/members think breaks rules. If parties involved cannot reach a mutually agreed solution, an independent body will examine the claims in a rules-based procedure. If found ‘guilty’, the unfair measure must be removed.
Weaknesses of the dispute settlement system?
- Takes a long time, typically years.
- A successful complaint will receive no compensation afterwards for harm suffered.
- Only members can use, not private individuals or companies.
- Can argue HICs have more power as provide more WTO funds.
Strengths of the dispute settlement system?
+ Provides a mechanism through which members can ensure their rights are being enforced.
+ Provides a forum for accused country to defend itself if needed.
+ Most cases don’t go through all stages, resolved earlier.
Give two examples of trade disputes.
1) TRUMP X STEEL - US tariffs on steel and aluminium violated trade rules. Trump claimed this was due to “national security concerns”, which the WTO rebuffed. The USA strongly rejected this ruling. Cases brought by China, Norway, Turkey etc.
2) BANANA WARS - Latin American countries argued EU was showing bias towards more local, smaller Portuguese and Caribbean banana producers and set tariffs too high. WTO ruled EU to reduce tariffs. Smaller country win? Not really, TNCs from USA in Latin American countries, so HICs still winning.
How many dispute cases has USA won over China since 2004?
20
