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WTO Governance Challenges and Innovations in Trade

This article explores the evolution of trade governance from GATT to WTO and the future challenges it faces. It discusses the policymaking processes, implementation, and compliance mechanisms of the WTO, as well as the unfinished nature of NAFTA and the innovative features of U.S. FTAs. The author also compares different trade governance models.

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WTO Governance Challenges and Innovations in Trade

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  1. “NAFTA and the Future of Trade Governance” “Innovations and Innovating Processes in Trade Governance” Mark D. Nguyen Woodrow Wilson Center, Washington D.C. March 13, 2006

  2. GATT to WTO: Weak Framework to an “Innovative Institution” • GATT 1947-1993: A framework agreement facilitating market access for agriculture and goods, with limited enforcement. • WTO 1994-2000: Conclusion of Uruguay Round in 1993 created a rules-based institution with new disciplines on services and IPR rights, and stronger dispute settlement. • WTO 2001-present: Launch of “Doha Round” negotiations in 2001 aims to strengthen rules and expand liberalization; possible reform to governance mechanisms and other “innovations.”

  3. WTO Policymaking: Negotiations • Market Access: Improve liberalization commitments on wider range of cross-border and internal measures. • Rules: New rules to address “incompleteness” for disciplines on subsidies, services, dispute settlement, trade remedies, trade facilitation, development flexibilities, etc. • Decision-making: 149 Members (and 30 accession candidates) with equal decision-making power, though not influence, in the Ministerial Conference, General Council and subsidiary bodies.

  4. WTO Policymaking: Implementation • Review bodies: Council on Goods, Services and TRIPs and their subsidiary bodies routinely review Members’ implementation of market access commitments and consistency with WTO rules. • Granting flexibility: Ministerial or General Council can extend flexibility or exemptions from rules (e.g., transition periods for subsidies, IPR protection for developing countries). • Secretariat/technical assistance: Staff and other bodies offer resources to assist with implementation of commitments.

  5. WTO Policymaking: Compliance • Trade Policy Review Mechanism: Periodic review of Members’ trade regimes conducted by other Members and the WTO Secretariat (innovation: China Transitional Review Mechanism). • Dispute Settlement Mechanism: Binding Dispute Settlement Understanding (DSU); nearly 350 complaints since 1994; more than triple the number during the 1947-1993 GATT era. • Bilateral efforts: Members can opt to settle disputes bilaterally and outside the WTO mechanism; also, refrain from challenges due to preferential agreements like NAFTA.

  6. WTO: Strengthening Governance * See: “The Future of the WTO: Addressing Institutional Challenges in the New Millennium.” 2005

  7. Other Agreements: NAFTA • NAFTA “unfinished”: A model trade agreement in 1994, but little reform has taken place since and thus it is “unfinished business” compared to more recent U.S. FTAs • Problem of governance: (i) difficult to amend; (ii) and lack of institutions to expand on framework agreements. • Lack of political will: Little political will among countries to “deepen” NAFTA; benefits eroded by other preferential FTAs

  8. Other Agreements: U.S. FTAs • Proliferation: Since NAFTA, new U.S. FTAs with Jordan (2001), Singapore and Chile (2003), Australia (2004), Morocco (2004), DR-CAFTA (2005), Andean (2006) and other partners. • Comprehensive:US FTAs are more comprehensive and “innovative” including on TRIPS/SPS/TBT-plus provisions, investor-state rights, competition policy, transparency, labor and environment provisions, etc. • Innovative?:U.S. FTAs have annual FTA Review Councils to assist on implementation; and envisions a framework for further cooperation and expansion of benefits

  9. Comparison of Trade Governance Models

  10. Thank You Mark D. Nguyen Senior Policy Adviser, International Trade Bryan Cave, LLP 120 Broadway, Suite 300 Santa Monica, CA 90401 Tel: (310) 576-2382; DC: (202) 257-4259 mark.nguyen@bryancave.com

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