O Sistema Multilateral de Comércio e a Organização Mundial do Comércio

O Sistema Multilateral de Comércio e a Organização Mundial do Comércio Ricardo Camargo Mendes rmendes@prospectivaconsultoria.com.br São Paulo, 10 de janeiro 2010

Introduction • Economic theory – free trade (comparative advantage) • In practice – state intervention (protectionism): • Source of income (important for small countries) • Mercantilist reasons (surplus) • Agriculture and industrial development • Influence of pressure groups – lobbies • Trade agreements – trade-offs

Introduction End of WWII • Motivation to create a system different from the end of WWI • Need to establish mechanisms to avoid devaluation of productivity and trade barriers • Support from the US to create an International Trade Organization the GATT (General Agreement on Trade and Tariff) • Stable economy with market access, non-discrimination (suppliers and investors)  avoid new wars

Introduction History • GATT – results from negotiations to create an International Trade Organization (Bretton Woods) • Bretton Woods Institutions – World Bank (BIRD) and International Monetary Fund (IMF) • Havana Chart – not ratified by the US Congress • GATT 1947 – negotiated among 23 countries (12 developed and 11 developing – Brazil was one of them) • Meant to be temporary (no institutional structure) • Expansion of the number of countries through the years (Rounds) • System well “lubricated” when the WTO was created (1994)

Basic Principles and Functioning Functions of the multilateral trading system 1. Negotiation forum • Bargain and negotiation – main instruments to reduce trade barriers and establish rules of behavior (market of concessions) • Condition liberalization to more market access in foreign markets – more politically viable • Problem of political economy – losers of free trade are more organized than the beneficiaries

Basic Principles and Functioning Functions of the multilateral trading system 1. Negotiation forum (cont.) Results • Complex net of interests – losers and beneficiaries confronted (lobby x lobby) • Reciprocal liberalization – end of prisoner's dilemma

Basic Principles and Functioning Functions of the multilateral trading system 2. Code of conduct • WTO – rules for the countries’ trade policies • Restricts the freedom of countries to adopt protectionist policies • More difficult for protectionist lobbies to act with countries

Basic Principles and Functioning Five principles (before and after the creation of the WTO) 1. Non-discrimination • Most Favorite Nation • National Treatment 2. Reciprocity • Important negotiating instrument (Brazil’s agriculture offer has to match its demands in the area) 3. Enforcement of commitments • Bound tariffs cannot be nullified by other forms of protectionism (non-tariff barriers)

Basic Principles and Functioning Five principles (before and after the creation of the WTO) 4. Transparency • Access to information about the trade regimes • Countries obliged to publish information • Trade policy reviews 5. Security clauses • Governments can restrict free trade in some cases: a) Non-trade objectives (public health, national security, protection of sectors highly damaged by imports) – CFIUS (growing restrictions to FDI in critical sectors for national security) b) Subsidies and dumping c) Balance of payments problems

Basic Principles and Functioning Differences and similarities between GATT (1947) and the WTO Similarities Basic principles still the same: • Consensus • Member driven Changes • More member countries (148 in 2005) • Single undertaking • More transparency • Negative consensus for the Dispute Settlement Unit

Basic Principles and Functioning WTO Institutional Framework – 4 Annexes 1. GATT 1994, GATS, TRIPS 2. Dispute Settlement Unit (DSU) 3. Trade Policy Review Mechanism (TPRM) 4. Plurilateral Agreements • Agreement on Government Procurement • Agreement on Trade in Civil Aviation (aircrafts and parts)

Basic Principles and Functioning Two Aspects of the WTO Political • Formulation of rules and commitments • Negotiations (trade-offs) • Rounds Legal • Enforcement of rules and commitments previously agreed • Rules (International Economic Law) • Dispute Settlement Unit

Basic Principles and Functioning Dispute Settlement Unit (DSU) • DSU can be initiated whenever a member country feels that: • There is a violation of rules or commitments by another member country • Another member country is enforcing measures that nullify the commitments bound in the WTO • Other types of complaints against unfair trade practices • Four phases: consultations, panels, appeal and enforcement • Brazil: important user of DSU (technical qualification)

Topics of Negotiation • Non-agriculture manufactures (NAMA) – trade facilitation • Agriculture • Services • Intellectual Property • Antidumping and Safeguards • Investments • Government Procurement • Competition Policy • Environment and labor standards • Subsidies and countervailing measures • Regional Trade Agreements

Topics of Negotiation - NAMA International Trade of Goods by Region (2008) Source: WTO – World Trade Report 2009

Topics of Negotiation - NAMA Tariffs • Tax charged when a merchandise crosses a national border • Different types: 1. Ad valorem – percentage of the value of the merchandise 2. Specific – amount of money per unit (ex. US$ 1.5 per liter of wine) 3. Combination of both • GATT does not establish which one should be adopted (advantages and disadvantages)

Topics of Negotiation - NAMA Tariffs • In theory the only types of protectionism allowed • Reduced after several rounds • Kennedy Round (1964-1967) – first time that a general reduction for industrial goods was attempted through the adoption of a formula • Most Favorite Nation Principle (except in cases of regional integration) • Countries cannot raise bound tariffs

Topics of Negotiation - NAMA Difference between applied and bound tariffs • Especially in developing countries • Two reasons: 1. Bargain token 2. Possibility of increasing applied tariffs (protection against exchange rate variations)

Topics of Negotiation - NAMA Profile of Tariffs Source: WTO – World Tariff Profiles 2008

Topics of Negotiation - NAMA Profile of Tariffs (cont.) Source: WTO – World Tariffs Profile 2008

Topics of Negotiation - NAMA How to reduce tariffs? • Application of a non-linear formula and applied to each position • Linear – reduce all tariffs in an equivalent manner (Kennedy Round) - Significant reduction of high tariffs, but does nit ensure reduction or elimination of tariff peaks and tariff escalation • Non-linear – reduce proportionally highest tariffs than lower ones • Harmonization between tariffs of a single country, and among countries (as long as a similar coefficient is used for the countries involved)

Topics of Negotiation - NAMA “Harmonizing” effect of the non-linear formula Source: Thorstensen, V. e Jank, M. (2005)

Topics of Negotiation - NAMA Trade Facilitation • Issues discussed in the Market Access Group • Still on the agenda for the revised Doha Round • Additional element to the trade-offs

Topics of Negotiation - Agriculture Historical background • GATT (1947) – several exceptions left agriculture on side of multilateral rules • Uruguay Round – beginning of discussions about effective inclusion of more strict rules for agriculture • January 1995 – Agriculture Agreement entered into force 8 years to be concluded! Peace Clause Until end of 2003 Source: OMC – World Trade Report 2004

Topics of Negotiation - Agriculture The Agriculture Agreement: Main Aspects • Definition of what is an “agriculture product” – chapters 1 to 24 of the Harmonized System (excluding fishery) • Consolidation and later reduction of export subsidies and domestic support to the producers • Tariffication • Binding and average reduction of tariffs • Minimum access to highly protected products (tariff quotas)

Topics of Negotiation - Agriculture Main issues affecting multilateral trade of agriculture products • Tariff and non-tariff barriers • Domestic subsidies (domestic support) • Export subsidies and credits • Geographic indicators Three pilars of agriculture negotiations

Topics of Negotiation - Agriculture Market Access: Agriculture Tariff in Sellected Markets Source: Ícone

Topics of Negotiation - Agriculture Domestic support: classified in three “boxes”, according to distortion potential • Yellow – most distortion (minimum pricing policies, subsidized credits, fiscal exemptions, complementary payments, etc.) • Blue – direct payments and distortion programs conditioned to mechanisms for limiting production • Green – minimum distortion programs (infra-structure, research, sanitary and phitossanitary services, agriculture reform, direct payments not linked to production, among others) Source: Thorstensen, V. e Jank, M. (2005)

Topics of Negotiation - Agriculture Export subsidies • All types of governmental support directly linked to exports • Commitments for reduction • EU – Responsible for nearly the totality of export subsidies

Topics of Negotiation - Agriculture Main coalitions in agriculture negotiations • Cairns Group • Members – Argentina, Australia, Bolivia, Brazil, Canada, Chile, Colombia, Costa Rica, Philippines, Guatemala, Indonesia, Malaysia, New Zealand, Paraguay, South Africa, Thailand and Uruguay • Goal – Real and effective liberalization of agriculture in world trade. Defend the elimination of protections and subsidies given to the sector

Topics of Negotiation - Agriculture Main coalitions in agriculture negotiations 2. G-20 • Members –Argentina, Australia, Bolivia, Brazil, Chile, China, Cuba, Egypt, Philippines, Guatemala, India, Indonesia, Mexico, Nigeria, Pakistan, Paraguay, South Africa, Thailand, Tanzania, Venezuela and Zimbabwe • Goal – Liberalization of agriculture trade in the developed countries, with the reduction of subsidies and creation of rules that increase market access to products from developing countries. Reluctance to accept real increase of market access in developing countries.

Topics of Negotiation - Agriculture Main coalitions in agriculture negotiations 3. The USA • Goal – Creation of rules for liberalization on trade in agriculture goods. However, contradiction as it maintains protectionist policies (tariff peaks and quotas, farm bill, etc.) 4. Europe-Korea-Japan • Goal – Agriculture a political sensitive sector, protected by tariff peaks and selective quotas, as well as non tariff barriers

Topics of Negotiation - Agriculture Main coalitions in agriculture negotiations 5. Demandeurs of preferential treatment • Members – Least developed countries, especially from Africa and the Pacific • Goal – Rely on preferential treatment for trade (GSP) for their main exported commodities, therefore aligning with developed countries 6. Large developing countries • Members – China, India, Pakistan, Bangladesh, etc. • Goal – Refuse liberalization of market access through high tariffs, quotas, sanitary barriers, among other measures

Topics of Negotiation - IP TRIPS Agreement • Intellectual property became a multilateral trade topic after the Uruguay Round • Agreement imposes to governments several obligations in the domestic legislation • Tough negotiations during the Uruguay Round: strong opposition from India, Brazil, Egypt, Argentina and Yugoslavia • Agreement covers copy rights, design of integrated circuits, geographic indication, trademark, industrial design and patents

Topics of Negotiation - IP Sensitive issues • TRIPS + Agreement • Ambiguous interpretation of the agreement • Compulsory licensing (patent breach in cases of epidemic) • Harmonization of TRIPS with other agreements and conventions on IP (WIPO and CBD) – access to biogenetic resources and traditional knowledge • Brazil: one of the main players in the negotiations

Topics of Negotiation - Investments Topic covered by three areas of the WTO • Work group: created in 1996 to analyze the relation between trade and investment • TRIMS Agreement: part of the NAMA Agreement, prohibits measures that condition FDI to trade performance • GATS (Mode 3)

Topics of Negotiation - Services The General Agreement on Trade in Services (GATS) • Entered into force in Jan 1995 with the creation of the WTO • All member countries are part of the agreement • Demand of developed countries (Agriculture x New Topics) • Developing countries afraid of reduction of sovereignty of countries (policies and regulation restrictions) • Barriers to trade in services are not tariffs, but legislation • Developing countries started to be interested in the agreement at the beginning of the decade (outsourcing)

O Sistema Multilateral de Comércio e a Organização Mundial do Comércio

O Sistema Multilateral de Comércio e a Organização Mundial do Comércio

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Constraining the Helium Abundance in Globular Clusters