WTO

Objectives WTO – Liberalise world trade – Promote economic stability – Lay down the rules for world trade 148 Members, most non-members are seeking to join.

What do they do? Trade talks Negotiate trade barriers Interpret trade agreements – These are complex. One example is four paragraphs of a 12,000 page document which discusses the exportation and importation of ‘soft round cheese’.

Trade Disputes WTO has a ‘disputes resolution panel’. 3 judges that deal with accusations of one state of another of violations of trade. Can impose sanctions. What they want is that states see no advantage to violating WTO rules.

Sanctions Penalty, or ban Can involve tariffs – Tax levied on imported goods

Key WTO trade rulings: 2005 Dispute between EU and US over subsidies of aircraft manufacturing. Both filed disputes against each other. Decided to settle dispute outside the WTO.

2005 Brazil lodged a complaint against US cotton farmers WTO ruled against the US Congress pressure, but Bush complied with WTO ruling.

Why not withdraw? Disastrous: no benefits when selling goods to other economies. Estimated in US trade added to average income $9,000 per person in the US. If they remain members but refuse to comply, then this is an incentive for states to ignore WTO rulings. If the US can do it, so can we. Lead to collapse of international trading system. No one wants this.

Antigua, Barbuda Banning US residence from gambling online was a move to protect US gambling institutions. US citizens could place bets with agencies located outside the US on the internet. WTO upheld this complaint. US forced to remove restrictions placed on citizens.

Is this fair? Impact on state sovereignty. In order to comply with both the cotton and gambling cases, the US was compelled to change US domestic policy. This is usually an exclusive right of the government. Even more problematic with internet gambling. Laws had to be changed.

Impact on Sovereignty When a new state becomes a member, they must change their existing policies and domestic laws in order to comply with WTO agreements. Challenges the concept of sovereignty in a very real sense.

Criticisms of the WTO? Uruguay round, started in 1986, no agreement until Takes time for states to agree. Doha round began in 2001, nowhere near concluding. All states within negotiations are trying to look out for themselves.

Criticisms of the WTO? No positive discrimination allowed in trading rules. Cannot impose barriers against states whose goods may involve Human Rights violations or Environmental destruction Mexico – Tuna – Dolphins case: US tried to reform Mexican tuna production, but WTO ruled against the US.

Extended response This is one way can draw in a key global institution into arguments. Environment – WTO Human Rights – WTO, etc

EU and US Protect their own economies in the form of subsidies. Developing states find it hard to compete. Weakness of internationalism (not just WTO), states have to be willing to make sacrifices in their interests. Danger that Doha will collapse because of this. Return to protectionism.