The General Agreements on Tariffs and Trade and the World Trade Organization (Part 4)

Other Regional Trading Blocs

Regional trade blocs are intergovernmental associations that manage and promote trade activities for specific regions of the world.

The EU (European Union) to create a common market known as the European Economic Area, which promotes the free movement of goods, services,  and capital among its member.

The North American Free Trade Agreement

The North American Free Trade Agreement implement in 1994 to reduce barriers to trade and investment among Canada and Mexico, and the United States, NAFTA builds on the 1988 Canadian – U.S . Free Trade Agreement.

NAFTA promises an increasing integration of the North American economics and investment opportunities increased for firms located in the three countries.

Negotiators from all three countries basically recognized the political sensitivity of certain issues and industries and chose to compromise on their treatment within NAFTA to ensure the agreements ratification. 

US and Canadian negotiators also was concerned that firm from non member countries might locate and very little transformation of product is undertaken. (Screwdriver plant)

NAFTA has benefited all three countries, although the gains have been more modest in Canada and the United States than most NAFTA advocates expected.

Other Free Trade Agreements in the Americas

Many other countries are negotiating or implement fee trade agreements on a bilateral or multilateral basis.

The Caribbean Basin Initiative

In 1983 the Unites States established the Caribbean Basin Initiative to facilitate the economic development of the countries of Central America and the Caribbean Sea. The Caribbean Basin Initiative (CBI), which acts as a unidirectional free trade agreement, permits duty free import into the United States of a wide range of goods that originate in Caribbean Basin countries, or that have been assembled there from U.S – produced parts.

The Central America-Dominican Republic Free Trade Agreement (CAFTA-DR).

The CAFTA-DR calls for the reduction of tariffs, nontariff barriers, and investment barriers in commerce among its members. Approximately 80 percent of U.S exports to and imports from these countries will immediately be duty-free as a result of CAFTA-DR or other existing trade treaties.

Free Trade Agreements In Centraland South America And The Caribbean

The Mercosur Accord

The Mercosur trade bloc's purpose, as stated in the 1991 Treaty of Asunción, is to allow for free trade between member states, with the ultimate goal of full South American economic integration. The trade bloc's "grand aspiration is to unify the Southern Cone and then all of South America in an economic bloc," says Katherine Hancy Wheeler, a research associate with the Council on Hemispheric Affairs. "It gives them more trading security." Brazil is the region's largest economy with a gross domestic product (GDP) of more than $2.2 trillion in 2012.

The population of Mercosur's full membership totaled more than 260 million people in 2011; including Venezuela, it has a collective GDP of $2.9 trillion and is the world's fourth-largest trading bloc after the European Union (EU), North American Free Trade Agreement (NAFTA), and the Association of South East Asian Nations (ASEAN). Whether any reduction in poverty can be linked directly to Mercosur trade policies is unclear.

Andean Community

The Andean Community is a trade bloc of five countries - Bolivia, Chile, Colombia,

Ecuador and Peru.

To make them more competitive with the continent's larger countries. But, after first 20 years, the agreement was not succesful and the feography played a role in this failure.

In 1991, the Andean Community members agreed to reinvigorate their agreement and a year later, the members established a customs union that provided for phased elimination of tariffs among themselves on most good, acommon external tariffs, and harmonized regulations on capital movements, immigration and agriculture.

In 2005, Argentina, Brazil, Paraguay and Uruguay joined Andean Community as associate members.

In 2006, Venezuala withdrew from Andean Community.

Trade Arragements in the Asia Pasific Region

One of the longest standing is governed by the Closer Economic Relations Trade Agreement between Australia and New Zealand ( The Australia - New Zealand Agreement)

Have been trade rivals because they are both commodities producers and both enjoyed preferental access to the UK market.

After UK joined the EU, both countries lost their privileged status in the British market.

On January 1, 1983 after Trade Arragements in the Asia Pasific Region closed, ANZCERTA or more simply CER took it to eliminated tariffs and NTBs between two countries.

CER strenghts and fotered,links and cooperation in fields as diverse as investment,marketing the movement of people , tourism, and transport.

Association of Southeast Asian Nation  established in August 1967 to promote regional political and economic cooperation.

Its members were Brunei,Indonesia, Malaysia, Philipinnes, Singapore, Thailand, Cambodia, Laos, Myammar and Vietnam.

To Promote intra ASEAN trade, members established the ASEAN Free Trade Area (AFTA) effective January 1, 1993. AFTA members promised to slash their tariffs to 5 percent or lesson most manufactured goods by 2003 and on all goods by 2010.

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Posted in: AFTA,ANZCERTA,CADTA-DR,NAFTA,Regional agreement,Regional Trading Blocs

The General Agreements on Tariffs and Trade and the World Trade Organization (Part 3)

Regional Economic Integration

Definition :

“Agreement between groups of countries in geographic region to reduce and ultimately remove tariff and non-tariff barriers t the free flow of goods, services and factors of production between each other.”

The European Union  

                                                     

European Union Institutions Chart

The Council Of The European Union Chart

The Co-Decision Procedure

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Posted in: Co-Decision Procedure,Council of Europe,Definition of regional economic intergration,Regional Economic Integration

The General Agreements on Tariffs and Trade and the World Trade Organization (Part 2)

What is the WTO?

The World Trade Organization (WTO) is the only global international organization dealing with the rules of trade between nations. 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.

Fact File: Location                      : Geneva, Switzerland Established                  : 1 January 1995 Created by                  : Uruguay Round negotiations (1986-94) Membership                : 159 countries on 2 March 2013 Budget                                    : 196 million Swiss francs for 2011 Secretariat staff           : 640 Head                           : Roberto Azevêdo (Director-General) 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

Who we are

There are a number of ways of looking at the World Trade Organization. It is an organization for trade opening. It is a forum for governments to negotiate trade agreements. It is a place for them to settle trade disputes. It operates a system of trade rules. Essentially, the WTO is a place where member governments try to sort out the trade problems they face with each other.

The WTO was born out of negotiations, and everything the WTO does is the result of negotiations. The bulk of the WTO’s current work comes from the 1986–94 negotiations called the Uruguay Round and earlier negotiations under the General Agreement on Tariffs and Trade (GATT). The WTO is currently the host to new negotiations, under the ‘Doha Development Agenda’ launched in 2001.

Where countries have faced trade barriers and wanted them lowered, the negotiations have helped to open markets for trade. But the WTO is not just about opening markets, and in some circumstances its rules support maintaining trade barriers for example, to protect consumers or prevent the spread of disease.

At its heart are the WTO agreements, negotiated and signed by the bulk of the world’s trading nations. These documents provide the legal ground rules for international commerce. They are essentially contracts, binding governments to keep their trade policies within agreed limits. Although negotiated and signed by governments, the goal is to help producers of goods and services, exporters, and importers conduct their business, while allowing governments to meet social and environmental objectives.

The system’s overriding purpose is to help trade flow as freely as possible so long as there are no undesirable side effects because this is important for economic development and well-being. That partly means removing obstacles. It also means ensuring that individuals, companies and governments know what the trade rules are around the world, and giving them the confidence that there will be no sudden changes of policy. In other words, the rules have to be ‘transparent’ and predictable.

Trade relations often involve conflicting interests. Agreements, including those painstakingly negotiated in the WTO system, often need interpreting. The most harmonious way to settle these differences is through some neutral procedure based on an agreed legal foundation. That is the purpose behind the dispute settlement process written into the WTO agreements.

What we do

The WTO is run by its member governments. All major decisions are made by the membership as a whole, either by ministers (who usually meet at least once every two years) or by their ambassadors or delegates (who meet regularly in Geneva).

While the WTO is driven by its member states, it could not function without its Secretariat to coordinate the activities. The Secretariat employs over 600 staff and its experts lawyers, economists, statisticians and communications experts — assist WTO members on a daily basis to ensure, among other things, that negotiations progress smoothly, and that the rules of international trade are correctly applied and enforced.

Trade negotiations

The WTO agreements cover goods, services and intellectual property. They spell out the principles of liberalization, and the permitted exceptions. They include individual countries’ commitments to lower customs tariffs and other trade barriers, and to open and keep open services markets. They set procedures for settling disputes. These agreements are not static; they are renegotiated from time to time and new agreements can be added to the package. Many are now being negotiated under the Doha Development Agenda, launched by WTO trade ministers in Doha, Qatar, in November 2001.

Implementation and monitoring

WTO agreements require governments to make their trade policies transparent by notifying the WTO about laws in force and measures adopted. Various WTO councils and committees seek to ensure that these requirements are being followed and that WTO agreements are being properly implemented. All WTO members must undergo periodic scrutiny of their trade policies and practices, each review containing reports by the country concerned and the WTO Secretariat.

Dispute settlement

The WTO’s procedure for resolving trade quarrels under the Dispute Settlement Understanding is vital for enforcing the rules and therefore for ensuring that trade flows smoothly. Countries bring disputes to the WTO if they think their rights under the agreements are being infringed. Judgements by specially appointed independent experts are based on interpretations of the agreements and individual countries’ commitments.

Building trade capacity

WTO agreements contain special provision for developing countries, including longer time periods to implement agreements and commitments, measures to increase their trading opportunities, and support to help them build their trade capacity, to handle disputes and to implement technical standards. The WTO organizes hundreds of technical cooperation missions to developing countries annually. It also holds numerous courses each year in Geneva for government officials. Aid for Trade aims to help developing countries develop the skills and infrastructure needed to expand their trade.

Outreach

The WTO maintains regular dialogue with non-governmental organizations, parliamentarians, other international organizations, the media and the general public on various aspects of the WTO and the ongoing Doha negotiations, with the aim of enhancing cooperation and increasing awareness of WTO activities.

What we stand for

The WTO agreements are lengthy and complex because they are legal texts covering a wide range of activities. But a number of simple, fundamental principles run throughout all of these documents. These principles are the foundation of the multilateral trading system.

Non-discrimination

A country should not discriminate between its trading partners and it should not discriminate between its own and foreign products, services or nationals.

More open

Lowering trade barriers is one of the most obvious ways of encouraging trade; these barriers include customs duties (or tariffs) and measures such as import bans or quotas that restrict quantities selectively.

Predictable and transparent

Foreign companies, investors and governments should be confident that trade barriers should not be raised arbitrarily. With stability and predictability, investment is encouraged, jobs are created and consumers can fully enjoy the benefits of competition — choice and lower prices.

More competitive

Discouraging ‘unfair’ practices, such as export subsidies and dumping products at below cost to gain market share; the issues are complex, and the rules try to establish what is fair or unfair, and how governments can respond, in particular by charging additional import duties calculated to compensate for damage caused by unfair trade.

More beneficial for less developed countries

Giving them more time to adjust, greater flexibility and special privileges; over three-quarters of WTO members are developing countries and countries in transition to market economies. The WTO agreements give them transition periods to adjust to the more unfamiliar and, perhaps, difficult WTO provisions.

Protect the environment

The WTO’s agreements permit members to take measures to protect not only the environment but also public health, animal health and plant health. However, these measures must be applied in the same way to both national and foreign businesses. In other words, members must not use environmental protection measures as a means of disguising protectionist policies.

WTO's Trading System Principles

The trading system should be

 Without Discrimination

A country should not discriminate between its trading partners (giving them equally “most-favoured-nation” or MFN status); and it should not discriminate between its own and foreign products, services or nationals (giving them “national treatment”);

 Freer

Barriers coming down through negotiation;

 Predictable

Foreign companies, investors and governments should be confident that trade barriers (including tariffs and non-tariff barriers) should not be raised arbitrarily; tariff rates and market-opening commitments are “bound” in the WTO;

 More Competitive

Discouraging “unfair” practices such as export subsidies and dumping products at below cost to gain market share;

 More Beneficial for Less Developed Countries

Giving them more time to adjust, greater flexibility, and special privileges.

Source : “About the WTO”, www.wto.org

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Posted in: Dispute settlement,Implementation and monitoring,World Trade Organization,WTO

The General Agreements on Tariffs and Trade and the World Trade Organization (Part 1)

A treaty created following the conclusion of World War II. The General Agreement on Tariffs and Trade (GATT) was implemented to further regulate world trade to aide in the economic recovery following the war. GATT's main objective was to reduce the barriers of international trade through the reduction of tariffs, quotas and subsidies.

Formed in 1947 and signed into international law on January 1, 1948, GATT remained one of the focal features of international trade agreements until it was replaced by the creation of the World Trade Organization on January 1, 1995. The foundation for GATT was laid by the proposal of the International Trade Organization in 1945, however the ITO was never completed.

GATT’s most important principle was that of trade without discrimination, in which each member nation opened its markets equally to every other. As embodied in unconditional most-favoured nation clauses, this meant that once a country and its largest trading partners had agreed to reduce a tariff, that tariff cut was automatically extended to every other GATT member. GATT included a long schedule of specific tariff concessions for each contracting nation, representing tariff rates that each country had agreed to extend to others. Another fundamental principle was that of protection through tariffs rather than through import quotas or other quantitative trade restrictions; GATT systematically sought to eliminate the latter. Other general rules included uniform customs regulations and the obligation of each contracting nation to negotiate for tariff cuts upon the request of another. An escape clause allowed contracting countries to alter agreements if their domestic producers suffered excessive losses as a result of trade concessions.

Trade experts consider MFN clauses to have the following benefits:

 A country that grants MFN on imports will have its imports provided by the most efficient supplier. This may not be the case if tariffs differ by country.

·        MFN allows smaller countries, in particular, to participate in the advantages that larger countries often grant to each other, whereas on their own, smaller countries would often not be powerful enough to negotiate such advantages by themselves.

·        Granting MFN has domestic benefits: having one set of tariffs for all countries simplifies the rules and makes them more transparent. It also lessens the frustrating problem of having to establish rules of origin to determine which country a product (that may contain parts from all over the world) must be attributed to for customs purposes.

·        MFN restrains domestic special interests from obtaining protectionist measures. For example, butter producers in country A may not be able to lobby for high tariffs on butter to prevent cheap imports from developing country B, because, as the higher tariffs would apply to every country, the interests of A's principal ally C might get impaired

Exceptions

GATT members recognized in principle that the "most favored nation" rule should be relaxed to accommodate the needs of developing countries, and the UN Conference on Trade and Development (established in 1964) has sought to extend preferential treatment to the exports of the developing countries.

Another challenge to the "most favoured nation" principle has been posed by regional trade blocs such as the European Union and the North American Free Trade Agreement (NAFTA), which have lowered or eliminated tariffs among the members while maintaining tariff walls between member nations and the rest of the world. Trade agreements usually allow for exceptions to allow for regional economic integration.

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Posted in: Business,GATT,MFN,NAFTA,tariffs