Art 11 From GATT to WTO

1. Art 11 From GATT to WTO By: Grace Xia Postdoctoral of Fudan University Associate Prof. of Shandong University E-mail: grace.xia@sdu.edu.cn

2. Part I A Brief History of Trade I. Comparative advantage theory by David Ricardo Absolute advantage theory by Adam Smith II. Bretton Woods System (Jul. 1944) It erected a new economic world order from the ravages of the World War II. IMF (in 1945) Established World Bank (in 1944) GATT (in 1947)

3. I) Bretton Woods System The Bretton Woods System of international economic management established the rules for the commercial and financial relations among the major industrial states. The Bretton Woods System was the first example of a fully negot- iated monetary order in world history intended to govern monetary relations among independent nation states. It created on Jul. 1944 and eventually collapsed in 1975 following the United State’s suspension of convertibility from U.S. Dollar to gold. Its major features was an obligation for each country to maintain the exchange rate of its currency within a fixed value —— plus or minus one percent —— in terms of gold.

4. II) IMF (International Monetary Fund, www.imf.org) Founded: in 1945 Location: Washington D.C. Current Membership: 185 countries Staff: approximately 2,635 from 143 countries Total Quotas: US$338 billion (as of 9/30/07) Loans outstanding: US$17 billion to 68 countries, of which $6 billion to 57 on concessional terms (as of 9/30/07) Technical Assistance provided: 438.4 person years during FY2007 Surveillance consultations concluded: 134 countries during FY2007, of which 125 voluntarily published information on their consultation.

5. Functions: a. To promote international monetary cooperation, exchange stability and orderly exchange arrangements; b. To foster economic growth and high levels of employment; c. To provide temporary financial assistance to countries to help ease balance of payments adjustment. III) World Bank (www.worldbank.org) Founded: on Jul.1,1944 Incorporation into the UN System: in 1947 Location: Washington D.C. Current Membership: 185 countries Staff: Approximately 10,000 employees in more than 100 offices around the world

6. Mission: To fight poverty and improve the living standards of people in the developing world. ※ TheWorld Bank is not a “bank” in the common senses. It’s made up of two unique development institutions —the International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA). ※ The World Bank is a development bank which provides loans, policy advice, technical assistance and knowledge sharing services to low and middle income countries to reduce poverty. The Bank promotes growth to create jobs and to empower poor people to take advantage of these opportunities.

7. ※ It provides low-interest loans, interest-free credit and grants to developing countries for education, health, infrastructure, communications and many other purposes. III. GATT (General Agreement on Tariffs and Trade) Established: by 23 countries on Oct.30,1947 Took effective: on Jan.1,1948 Succeeded: by WTO on Jan.1,1995 ※ GATT was only an interim body without a fully defined institutional structure and with little legal enforcement power. ( a loose and informal structure)

8. IV. Increasing popular way of doing business in an extra-GATT environment a. Regional trade blocs: e.g. EU (European Union), NAFTA (North American Free Trade Agreement), ASEAN( Association of Southeast Asian Nations) b. Non-tariff trade barriers (NTBs) c. Origin stipulation: raising the requirement of local content value V. Uruguay Round (1986-1994) attending parties: 117 achievements:

9. Part II The Foundation of the New Order I. What’s the foundation of the WTO? II. Tasks of the WTO a. whether it should extend the rules in international trade to cover national competition policies b. to preside over the economic and political integration of the former socialist economies c. effectively coordinate regional free trade agreements d. acknowledge and deal with some of the local pains that uncompetitive industries in member nations will feel.

10. III. WTO (World Trade Organization, www.wto.org) The WTO is the only global international organization dealing with the rules of trade between nations. It is a rules- based, member-driven organization — all decisions are made by the member governments, and the rules are the outcome of negotiations among members At its heart are the WTO agreements, negotiated and signed by the bulk of the world’s trading nations and ratified in their parliaments. The goal is to help producers of goods and services, exporters, and importers conduct their business.

11. IV. Facts of the WTO Established: on Jan. 1, 1995 Created by: Uruguay Round Negotiations (1986-1994) Location: Geneva, Switzerland Current Membership: 152 countries on May 16,2008 Budget: 182 million Swiss francs for 2007 Secretariat staff: 625 Head: Pascal Lamy (director-general)

12. Functions: a. Administering WTO trade agreements b. Forum for trade negotiations c. Handling trade disputes d. Monitoring national trade policies e. Technical assistance and training for developing countries f. Cooperation with other international organizations

13. Part III Positive Sums from cooperation I. The bottom line of the WTO II. Economic effect of the GATT Uruguay Round and the creation of the WTO ● increase world income and goods volume in trade ● increase welfare of the total world III. The importance of cooperation