NS3040 Fall Term 2015 World Trade Organization (WTO)

WTO I The Bretton Woods conference (1944) established the financial architecture for the world economy. Three new international organizations were formed: The General Agreement on Tariffs and Trade Prevent trade wars, dismantle 1930s protectionism The International Monetary Fund Help maintain exchange rates, prevent currency wars The World Bank Help countries that were locked out of capital markets borrow at reasonable rates of interest At the time fears that the Western economies would slip back into economic depression once war expenditure fell off. The new organizations were designed to prevent this through providing global governance and country assistance to facilitate world trade and finance 2

WTO II The GATT and later WTO are the bodies responsible for overseeing the rules of international trade. Duties include: Monitoring trade agreements Settling disputes Facilitating trade talks The original GATT had 23 members. Now there are over 150 countries or 97 percent of world trade Original GATT dealt mainly with manufacturing With the development of trade in services as well as other non-manufacturing categories, the GATT evolved into the WTO – broader mandate 3

WTO III In addition to services such as banking and telecommunications The WTO sets rules for protecting intellectual property rights and Settles international trade disputes which the GATT did not cover Decisions in the WTO are binding and made by consensus Member nations enforce WTO rules by imposing sanctions on states that break them. Organization is located in Geneva Has various rounds of trade liberalization. The current Doha round was started in 2001 with an original deadline of January 1,

WTO IV There a number of distinct benefits to belonging to the WTO The system helps promote peace Disputes are handled constructively Rules make it easier for all Freer trade cuts the cost of living It provides more choice of products and quantities Trade raises incomes Trade stimulates economic growth The basic principles make life more efficient Governments are shielded from lobbying The system encourages good governance. 5

WTO V Over the years a number of misunderstands have surrounded the WTO – mainly conspiracy theories The WTO dictates policy The WTO is for free trade at any cost Commercial interests take priority over development … over the environment... over health and safety The WTO destroys jobs, worsens poverty Small countries are powerless in the WTO The WTO is the tool of powerful lobbies Weaker countries are forced to join the WTO The WTO is undemocratic. 6