WTO unit (finished) Flashcards
5 key features of the WTO
- Unlike its predecessor, the WTO is a legal entity
- It is independent of the UN – unlike the IMF and WB
- All WTO members have equal rights, there is no weighted voting
- WTO agreements are permanent and binding GATT was not
- The dispute system is not based on a dilatory like it was in GATT, but an automatic mechanism – which makes it faster and more consistent.
How does WTO decision making work?
Decisions within the WTO are all majority decisions – can derive from the member countries as a whole, the ministers or their ambassadors/delegates. Decisions are taken by consensus.
All WTO members have equal rights, there is no weighted voting
What are the three main areas that the WTO supervises?
- Industrial goods (includes agriculture, animal and plant, ect.)
- Services
- Intellectual property
Where is the WTO headquatered?
Geneva
What is the role of the WTO?
Administering WTO trade agreements
Forum for trade negotiations
Handle trade disputes
Monitoring national trade policies
Technical assistance and training for developing countries
Cooperation with other international organisations
Main differences between the WTO and GATT
WTO is a independent legal entity with a permanent institutional structure. GATT was a set of rules and trade agreements but lacked any institutional existence.
WTO have legally binding effect, commitments to GATT was only provisional
WTO’s scope concern trade, services and intellectual property - GATT only focused on trade of goods.
WTO’s dispute settlement system is effective, GATT’s was slow and ineffective
5 basic principles of the WTO
- Trade without discrimination
- Freer trade, gradually through negotiation
- Predictability
- Promoting fair competition
- Encouraging development and economic reform on national level
Explain the principle of trade without discrimination:
MFN and National treatment
Most favoured nation (MFN): treating other people equally under the WTO agreements, countries cannot normally discriminate between their trading partners. Grant someone a
special favour (such as a lower customs duty rate for one of their products) and you have to do the same for ALL WTO members.
National treatment treating foreigners and locals
equally imported and locally produced goods should be treated equally at least after the foreign goods have entered the market. The same should apply to foreign and domestic services, and to foreign and local trademarks, copyrights and patents
What is and how does the Trade Dispute Settlement Body (DSB) work?
The WTO resolves all quarrels among member nations under the DSB. It consists of the General Council. The DSB ensures smooth functioning of multilateral trade agreements and enforcement of rules and principles of the WTO.
What is the role of the Director General?
Head of the Director General for 4 year periods. Has no decision-making power.
What is the Trade Policy Review Body?
TPRB is a subsidiary body to the General Council. All WTO members are a part of the body.
The main function is to investigate the trade policy review mechanism. It regularly reviews trade policies and the behaviour of the members, this is to ensure proper transparency and understanding
Why is predictability important for the WTO?
Sometimes, promising not to raise a trade barrier can be just as important as lowering one, because the promise gives businesses a clearer view of their future opportunities. With stability and predictability, investment is encouraged, jobs are created and consumers can fully enjoy the benefits of competition –> choice and lower prices. Therefore, to ensure this, the multilateral trading system is an attempt to make the environment for trade and business more stable.
What does the WTO mean with promoting fair competition when it is also promoting free trade?
The WTO sometimes is described as a “free trade” institution, but this is not accurate. The system does allow for tariffs - and other means of protection.
Although the WTO does promote free trade, they believe there must be a compromise there to ensure equal trading opportunities.
Advantages of WTO
- Promotes free trade and peace
- Trade disputes are handled effectively
- Trade stimulates economic growth
- Trade raises the income and cuts the costs of living
-Governments are shielded from lobbying - Freedom of choice for the consumer
Disadvantages of WTO
- Undermines national sovereignty
- WTO destroys jobs and worsens poverty, rise in inequality
- Favours developed countries with MNCs, penalizes the poorer countries
- Very exposed to the lobbying of MNCs
- Destroys local development
- Terrible for environment and HR
