The WTO: Opportunities and Challenges

1. The WTO: Opportunities and Challenges Dr. Abid Qaiyum Suleri

2. Outline Brief Introduction to GATT/WTO Decision Making Process and Structure of WTO Developing Countries Experience with WTO Trading into Future

3. WTO Organization IFIs WTO Agreements Bilateral Agreements WTO Challenges and opportunities

4. What to do if we are both? Sometimes we are Exporters: look for reduced tariffs Sometimes we are Net Importers: We look for cheap prices Life is never Easy

5. The interest and expectation level of 146 member states vary a lot and there is never a win-win situation for all

6. WTO Historical Context • Post World War II era and need for economic revival • Bretton Woods Institutes (WB, IMF) • International Trade Organization • GATT

7. The World Bank was formed at the UN Monetary and Financial Conference held in Bretton Woods, N.H., in 1944. • Function:Lending money and funding projects in needy countries to alleviate poverty. Loans are conditioned on fundamental changes to the recipient country's economic and social policies. • World Bank President: James Wolfensohn (Always an American) The World bank

8. The Bank's five largest shareholders -- France, Germany, Japan, UK & USA -- each appoint an executive director. The remaining 175 member countries are represented by 19 executive directors. • USA by virtue of its shares can veto any policy. • The seven richest countries (Canada, France, Germany, Italy, Japan, UK & USA), have 45 percent of the voting power. The World Bank

9. The IMF • Established 1945 at Bretton Woods. • The IMF was designed to stabilize international exchange rates and promote foreign exchange cooperation at a time when the gold standard was beginning to fail as a means of stabilizing currency values. • Eight executive directors represent individual countries: China, France, Germany, Japan, Russia, Saudi Arabia, UK & USA. The remaining 16 executive directors represent groupings of the other 174 countries. Chairman always from EC

10. Asian Development Bank (nbw) • Total 61 members (43 regional, 19 non regional). • Japan and United States have 15.89 % shares, each. Both of them can block any initiative.

11. International Trade Organization 50 Countries floated the idea. Among them 23 decided in 1946 to negotiate to reduce and bind customs tariffs. The first round of negotiation resulted in 45,000 tariff concessions affecting $10 billion of trade. The 23 also agreed to “provisionally” accept some of the trade rules of the draft ITO charter. The combined package of trade rules and tariff concessions was known as the General Agreement on Tariffs and Trade (GATT). GATT entered into force in January 1948.

12. US Congress refused to ratify ITO in 1950 ITO: Charter was agreed in Havana March 1948

13. ITO was effectively dead in 1950 What Next?

14. The GATT Trade Rounds • Geneva Tariffs 23 • Annecy Tariffs 13 • Torquay Tariffs 38 • Geneva Tariffs 26 • 1960-61 Dillon Round Tariffs 26 • 1964-67 Kennedy Round Tariffs and AD measures 62 • 1973-79 Tokyo Round Tariffs, NT Measures, framework agreements 102 • 1986-94 Uruguay Round Tfs, NTM, rules, services, IP, DS, textile, agriculture, creation of WTO 123

15. How WTO is different from GATT • GATT WTO • Ad hoc/ provisional with no Agreements as well as provision for creation of Org. organization are Permanent. • Had contracting parties has members. • Dealt with trade in Goods covers services and IP as well. • GATT DSD The WTO dispute settlementsystem is faster, more automatic than the old GATT system. Its rulings cannot be blocked.

16. Established: 1 January 1995Membership: 146 countries (as of July 2003), 3/4th membership comprises Developing countries (self elected) Functions:• Administering WTO trade agreements• Forum for trade negotiations• Handling trade disputes• Monitoring national trade policies• Technical assistance and training for developing countries• Cooperation with other international organizations  WTO is an organization

17. WTO principles The WTO trading system would be without discrimination – (MFN and National treatment to all); freer – with barriers coming down through negotiation; predictable – bound tariffs more competitive – by discouraging “unfair” practices such as export subsidies and dumping products at below cost to gain market share; more beneficial for less developed countries – by giving them more time to adjust, greater flexibility, and special privileges

18. In a nut shell Three part broad outline of WTO Agreements Additional Annex Basic Principle Commitments • Sanitary and Phytosanitary Measures (Health regulations for farm products) • Textile and clothing • Technical Barriers to Trade (Product Standards) • Investment measures (TRIMs) • Anti-dumping measures • Customs valuation methods • Pre-shipment inspection • Rules of origin • Import licensing • Subsidies and counter measures • Safeguards Agriculture Goods--------GATT Industrial Services-----GATS • Movement of natural persons • Air transport • Financial services • Shipping • Telecommunications IPRs--------Trade related Intellectual Property Rights Disputes------Dispute Settlement Schedules of Commitments.

19. Industrial GATT Goods Services GATS IPRS TRIPS Dispute Trade Facilitation Competition Govt. Procur. Trade & Environment SPS Textile and clothing TBT Anti Dumping Agriculture SINGAPORE ISSUES Investment

21. Voting Principles in WTO Voting Principle One member, one vote Primary aim Consensus No consensus Majority vote Interpretation of agreements ¾ in favor Amendment to agreements 2/3 in favor Propose amendments Countries and Councils

22. WTO Decision Making Process • Some members are more equal than others. • Lack of transparency in the multitude of talks held in small groups. • Being Present is important but not easy for all. • Alliance building. • Role of IFIs

23. WTO is run by member states: One Country one vote

24. ADB IMF WB WTO Rest of the World France USA Germany EC JAPAN

25. In WTO decisions are taken through consensus: USA, UK, Germany, France, and Japan know how to achieve it. Development Box UPOV and Bangladesh Nepal’s Accession to WTO

26. Main Objections WTO • Dictates Policies • For free trade at any cost? • Destroy jobs and worsen poverty • Small countries are powerless • Tool of powerful lobbies. • Developed countries are not fulfilling their commitments

27. WTO experience for developing countries • Tariff Peaks (high import duties on certain products) remain • No gains yet from the supposed phasing-out of textiles quotas. • Increase in non-tariff barriers (AD, SPS, TBT) • Continued high protection in Agriculture (USA- Sugar 244%, Peanuts 174%; Japan- Wheat 353%) up to 36% reduction? • Implementation Problems faced by developing countries.

28. WTO Ministerial Conferences 1st Ministerial conference Singapore 1996 2nd Ministerial conference Geneva 1998 3rd Ministerial conference Seattle 1999 4th Ministerial conference Doha 2001 5th Ministerial conference Cancun 2003

29. WTO for Developing Countries • Why developing countries such as Pakistan should be members of WTO? • Alternative? • Possible gains through theoretical principle of non-discrimination • Member based, rule based organization. • Developing countries role in WTO? • More active involvement • Giving tough time to USA and EU • More cases in Dispute Settlement Body

30. Developing countries in DSB Out of 22 Disputes, brought forward in year 2003 so far 7 cases were brought forwarded by developing countries i.e., Argentina 1 Antigua 1 Thailand 2 Mexico 3 7 against USA. 7 against EC & 1 against Australia One case against Mexico was brought forwarded by USA.

31. Doha Agenda Implementation Negotiations on outstanding implementation issues shall be an integral part of the Work Program. Deadline: by 1 January 2005, part of single undertaking.Agriculture Services Market Access (Non-Agriculture) Anti-Dumping Subsidies Regional Agreements Environment Investment Competition Transparency in government procurementTrade Facilitation Negotiations: after 5th Ministerial Conference, 2003 (in Mexico) “on the basis of a decision to be taken, by explicit consensus.

32. What does it entail for Pakistan after 2005? • WTO would not start implementing in 2005. It is already functional. • AOA • Agreement on Textiles and Clothing • Singapore Issues • Trade and Environment

33. What are the risk and opportunities at Cancun Agriculture TRIPS GATS (Movement of natural person) Singapore Issues Trade and environment

34. Role of Legislatures in WTO Negotiations 1950 US Congress and ITO • We should debate our positions on various issues in parliament. • To avoid what happened after Doha, there must be standing committee on WTO, constituting all relevant ministers. • Official delegation to Cancun should include elected representatives as well. • Commerce Minister should brief NA about Pakistan’s position in Cancun after the Ministerial Conference

35. Let us start it from today Please discuss our position for Cancun in the coming session of NA.