Introduction and Outline of the WTO Mechanism Prof. Yang Kee Lee

Introduction International Law Viewpoint 1. ▪ Public hemisphere ▪ Private hemisphere Public; when it works to define rights between nations. Private; when it tries to sort out rights between persons separated by a border. Viewpoint 2. ▪ Public international Law (international public law) ▪ Conflict of laws (private international Law) ▪ Supranational Law

Introduction International Law 1. Concerns the relationships between nations Custom (customary international law) Globally accepted standards of behavior Treaty 2. ▪ Questions of which jurisdiction should be permitted to hear a legal dispute between private parties. ▪ Questions of which jurisdiction’s law should be applied. 3. ▪ The European Union ▪ East Africa Community ▪ Union of South American Nations ▪ Andean community of Nations

or between private companies across border. Introduction International Trade Law Appropriate rules and customs to regulate trade between nations or between private companies across border. ▪ WTO law ▪ Plurilateral or Bilateral Trade Agreement ▪ Domestic Law International Economic Law ▪ WTO Law ▪ Law to Regulate International Monetary System and Currency Regulation ▪ Law of International Development

Introduction Development of WTO System Towards the end of World War II ► Several attempts to treat with international economy. One of them is U.N. Conference on Trade & Employment held in Havana. Havana charter was adopted in 1947. Failed to ratified in the United States and Other nation. Pending the entry into force of the Havana Charter, Chapter on Commercial Policy of the Havana Charter was taken and converted into GATT. To bring the GATT into force quickly, Protocol of Provisional Application was developed. ► GATT was born as a provisional agreement until such time as the Havana Charter would be ratified.

Introduction Limitation Part I and III apply to all Members, however Part II (mostly on non-tariff barriers) apply only to the extent “not inconsistent with existing legislation.” Throughout its about 50-years history, GATT implemented steady trade liberalization through “8 rounds” of multilateral trade negotiations. The process of trade liberalization achieved ① the reduction of tariff rates on industrial products, from an average of around 40 percent to less than 4 percent; ② drastic elimination of quantitative restrictions; ③ development and strengthening of clear rules to treat with trade measures (such as safeguards, subsidies, anti-dumping duties, technical barriers to trade); ④ development of procedures to resolve disputes.

Introduction UR Agreement At the 8th rounds, Uruguay Rounds the WTO system was established and developed through Singapore Ministerial Conference in 1996, Geneva Ministerial Conference in 1998, Doha Ministerial Conference in 2000, Seattle Ministerial Conference in 2002, Cancun Ministerial Conference in 2003, Hong Kong Ministerial Conference in 2003, Geneva Ministerial Conference in 2009. New Coverage ► Agriculture ► Textiles/ Clothing ► GATS ► TRIPs ► Other Issues

Introduction New Round under the WTO Market access focused under the WTO Domestic system and practice: new area to be regulated by the multilateral standards. ex) environment, labor, direct/indirect investment, competition policy, electronic commerce, prevention of corruption ◦ Ministerial conference for the establishment of new rounds 1st (Singapore, 1996) → began to discuss for the establishment 2nd (Geneva, 1998) → failed 3rd (Seattle, 1999) → failed 4th (Doha, Qatar, 2001) → established new rounds 5th (Cancun, Mexico, 2003) → discussed 6th (Hong Kong, 2005) → discussed 7th (Geneva, 2009) → discussed

Introduction 4th (2001) : New Round → Development agenda (particularly focusing on consideration of developing countries development) ◦ Characteristics : technical transfer, technical cooperation, capability development, clause of the favorable treatment of developing countries ◦ Characterized as the 1st multilateral negotiations under the WTO ◦ In case of successful negotiation of DDA : environment, investment, competition policy → regulated by the WTO ◦ Adopted single undertaking like in Uruguay Rounds

I. Outline of the WTO Structure of UR Agreement 1) Final Act legal instrument to clarify that annexed agreements, including the legal texts, the schedules of concessions and commitments in trade in goods, and schedules of specific commitments in trade in services, are the result of UR negotiations. 2) WTO Agreement legal instrument through which all member countries decided to create the WTO. ► WTO Agreement provides an establishment, scope, functions and structure, relations with other organizations, secretariat, budget and contributions, legal status, decision-making procedures, accession, non-application, acceptance, entry into force and deposit, denunciation and final provisions: ► Since all other agreements are annexed to the Agreement (establishing the WTO), the expression "the WTO Agreement" is understood to cover the totality of all of the agreements.

I. Outline of the WTO 3) Annexes ► Annex 1 A: Agreements on Trade in Goods: GATT 1994, Agriculture, Sanitory and Phytosanitory Measures, Textile and Clothing, Technical Barriers to Trade, Trade-Related Investment Measures, Anti-dumping, Customs Valuation, Pre-shipment Inspection, Rules of Origin, Import Licensing Procedures, Subsidies and Countervailing Measures, Safeguards. ► Annex 1 B: General Agreement on Trade in Services. ► Annex 1 C: Trade-Related Aspects of Intellectual Property Rights. ► Annex 2: Rules and Procedures for the Settlements of Disputes. ► Annex 3: Trade Policy Review Mechanism. ► Annex4: Plurilateral Trade Agreements: Civil Aircrafts; Government Procurement. 4) Ministerial Declarations and Decisions Other technical and political issues are covered through ministerial declarations and decisions.

2. Operation of WTO System Outline of WTO 2. Operation of WTO System 1. Highest authority : Ministerial Conference ► Ministerial Conference can take decisions on all matters under the multilateral trade agreements. ► Meet at least once every two years. 2. Second level : General Council in three parts ► Day-to-day work in between the ministerial conferences is handled by three bodies. ► General Council acts on behalf of the ministerial conference on all WTO affairs. It meets as Dispute Settlement Body and the Trade Policy Review Body to oversee procedures for settling disputes between members and to analyze members' trade policies.

3. Third level : Councils for each trade area ► Council for Trade in Goods ► Council for Trade in Services ► Council for Trade-related Aspects of Intellectual Property 4. Fourth level : down to the nitty-gritty ►  Councils have their subsidiary bodies. At the General Council level, the Dispute Settlement Body has 2 subsidiaries: dispute settlement “Panels” and “Appellate Body” to deal with appeals. 5. Heads of Delegations (HOD) and other Informal Bodies ► with consensus and without voting, informal consultations within WTO play a vital role to bring the complicate affairs to an agreement.

3. Nature and Function 1. Nature ► Contractual nature The Contractual nature of WTO Agreement is reflected in its structure of rights and obligations. ▪ Commitment adopted by a WTO member constitutes a right for its trading partners. ▪ Rights and obligations of the WTO Members are enforced through the dispute settlement mechanism.

☞ Main difference from the GATT ■ Nature a set of rules, with no institutional foundation, applied on a provisional basis. permanent institution with a permanent framework and its own secretariat. ■ Scope GATT was a multilateral instrument, but, Tokyo Round Agreement was plurilateral, that is, selective-basis agreement ⇒ Dual system. WTO has been adopted as a single undertaking ⇒ WTO Agreements are all multilateral. ■ Dispute Settlement i. specific time limits. → faster than GATT system           ii. operates more automatically → reverse consensus      iii. permanent appellate body to review finding by dispute settlement panels.           iv. more detailed rules on the process of the implementation of findings. GATT WTO GATT WTO WTO

2. Function ► Objectives ▪ To raise standards of living ▪ To ensure full employment ▪ Growing volume of real income and effective demand ▪ Expanding the production of and trade in goods and services ▪ Sustainable development and environmental protection ► Main Functions ▪ Doing implementation, administration and operation of the covered agreements ▪ Providing forum for negotiation ▪ Operating dispute settlement procedures ▪ Administrating the review of national trade policy ▪ Achieving coherence in global economic policy-making

4. Principles 1) General Principles ► Non-Discrimination: Trade without discrimination is one of the basic principles, guaranteed through the operation of various clauses included in the multilateral agreements in trade in goods, in the GATS, and in the TRIPs Agreement. ■ Most-favored-nation treatment · Most-favored-nation clause has been the pillar of the system since the inception of GATT in 1947.    · Grant the product of other members the treatment no less favorable than  that accorded to products of any other members.

■ National treatment · Imported goods, once duties have been paid, must be given the same treatment as like domestic products, in relation to other charges, taxes, or administrative or other regulation (GATT). · Under TRIPs, members of WTO are committed to grant to nationals of other members treatment no less favorable than that accorded to their own nationals. · Under GATS, national treatment becomes a negotiated concession and may be subject to conditions or qualifications that members have inscribed in their schedules on specific commitments in trade in services. ▶ Transparency: · Provisions on notification requirements and the Trade Policy Review Mechanism are set out in the WTO Agreements to guarantee the fullest transparency. · GATT : deals with publication and administration of the trade regulations. · GATS : treats the transparency as one of the general obligations and disciplines under the agreement. · TRIPs : establishes transparency rules for the TRIPs Agreement.

2) Market Access ■ Predictable and growing access to markets This principle is fulfilled through various provisions so as to guarantee security, predictability and continued liberalization of trade. ■ Binding of tariffs A legal commitment not to raise it beyond the bound level. ■ Tariff Negotiations Progressive reduction in protection. In the past, tariff negotiations were launched periodically under the auspices of the GATT. Tariff negotiations will remain important in the future, particularly in relation to agricultural products. ■ Tariff renegotiations Compensation. The contractual nature of a bound tariff rate can not be increased beyond the bound level. ⇒The GATT 1994 allows for the possibility of renegotiation : A member desiring to withdraw or modify tariff bindings has to renegotiate them with other interested Members and provide compensation, that is, substantially equivalent tariff concessions on other products.

■ Prohibition of quantitative restrictions As a general rule, quantitative restrictions are prohibited under the GATT 1994, except in the case of safeguards action. ■ Emergency Import Measures: Safeguards A safeguard measure is an import restriction which can be adopted in emergency circumstances, when imports have increased in such conditions and quantities that they are the cause of serious injury or threat of such injury to a domestic industry producing a like or directly competing products. 5. Consideration of Developing Countries

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