Professional Documents
Culture Documents
The World Trade Organization and Trade
The World Trade Organization and Trade
Lecture 2
Outline
Historical background Overview The Basic Principles
Trade without discrimination Predictable, growing access to market Undistorted, fair competition Transparency
Interest groups and protection-Political Economy arguments Those who benefit from trade most (consumers) are poorly organised, but those who loose are efficiently organised and lobby harder for protection (Olson). However, exporters can lobby too! (Rodrik)
Multilateral agreements
Multilateralism GATT WTO Coordination mechanism for achieving mutually beneficial trade outcomes (response to a coordination failure, ie. to successive retaliations).
History
1947 GATT is drawn to record the results of trade negotiations between 23 countries. Enters (provisionally) in force on January 1 1948 1950 US administration abandons efforts to seek congressional support for the International Trade Organization 1949-1956 First four rounds of tariff negotiations 1957 Creation of the EEC 1962 Derogations to the GATT rules in the areas of cotton and fibers were negotiated. Later to evolve in to the Multifibre agreements 1964-67 Kennedy Round. UNCTAD is created to press for trade measures to favor the developing countries
History cont.
1973-1979 The Tokyo round. Multifibre agreement negotiated in1974 to restrict export growth, and extended several times thereafter 1986-1994 Uruguay Round of negotiations. April 15 1994: The Marrakech protocol signed, establishing the creation of the World Trade Organization 2001- Doha Round of negotiations, TRIPS and Agriculture
The World Trade Organization (WTO/GATT) Duration of GATT rounds and number of countries involved.
120
40 20
Fourth
60
Second Third
Kennedy
First
Dillon
0 1945
1955
1965
1975 year
1985
1995
Overview
International Organization begins to operate on January 1, 1995 Membership: approx 140 countries Secretariat: 550 staff members, headed by a Director General, based in Geneva Budget (2002): 140 million Swiss francs More infos: www.wto.org
Overview
The Mission of the WTO
Raise standards of living Ensure full employment Growing volume of real income and effective demand through trade Seeking to protect and preserve the environment Secure for developing countries (especially LDCs) a share in the growth of international trade that is commensurate with the needs of their development
Functions
Administring and implementing the multilateral and plurilateral trade agreements Forum for multilateral trade negotiations Dispute settlement Overseeing national trade policy Cooperation with IMF and World Bank
Both measures are intended to be temporary, and are supposed to promote trade liberalization in developing countries
More generally: Change of focus on the issue after the Uruguay Round of negotiations, reflecting broader change of view on the role of trade in promoting development and growth
Outline
An economic evaluation of the GATTWTO
Rose AER (2004) Rose JIE (2004)
GATT-WTO Evaluation
Rose (AER 2004): We dont really know that the WTO increases (or the GATT increased) trade Rose (JIE 2004): There is no evidence that GATT/WTO members actually have more liberal trade policies
Data
WTO website for GATT/WTO accession Began in 1948 (covered 32 entities)
1960: 50 contracting parties 1970: 90c 1990: 112 Now: 158 with 29 observers
GSP bilateral preferences from UNs Operation and Effects of the Generalized System of Preferences
Interpolate from 1974, 1979, 1984 (data imperfect)