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Friday, January 31, 2014
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.
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
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
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”);
Barriers
coming down through negotiation;
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;
Discouraging
“unfair” practices such as export subsidies and dumping products at below cost
to gain market share;
Giving
them more time to adjust, greater flexibility, and special privileges.
Source
: “About the WTO”, www.wto.org
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.