Trade Diplomacy Dr Geoff Pigman Multilateralism the GATT

Trade Diplomacy Dr. Geoff Pigman Multilateralism, the GATT, and the World Trade Organization

The post-World War II international economy: the Bretton Woods principles • Currency convertibility • Economic reconstruction and development • Liberal trade and open markets The Bretton Woods triad: IMF, IBRD, ITO TD Topic 5 2

Basic GATT 1947 principles: an Anglo-American compromise at Bretton Woods • Non-discrimination - general Most Favoured Nation treatment • National treatment for imported goods • Tariff reductions TD Topic 5 3

The GATT: a rulebook for an organization that wasn’t • The Havana Charter - non-ratification of the ITO • General Agreement on Tariffs and Trade 1947: the rulebook • 23 industrial country signatories - 75% of world trade • A system of principles and rules TD Topic 5 4

Why reform GATT in the 1980 s? US domestic trade policy problems • Lax first Reagan Admin (‘ 81 -’ 85) trade policy • Industry seeks remedies through domestic trade law: AD, CVD – lobbies Congress for tougher trade laws - less Presidential discretion • Reagan monetary policy: US dollar rollercoaster • Stronger second Reagan Admin (’ 85 -9) trade policy – More negotiations on trade conflicts – More aggressive use of administered trade remedies – Negotiated bilateral and multilateral trade agreements TD Topic 5 5

Too little, too late? The Omnibus Trade Act of 1988 • Shifted presidential discretion on retaliation under several existing remedies to USTR • Super 301 - Market Access – President to list offending countries, practices – Mandatory bilateral market opening negotiations – Insufficient progress in 6 months => mandatory retaliation • 1989 list: Japan, Brazil, India • 1990 list: India TD Topic 5 6

International trading system issues in the 1980 s and the Uruguay Round • Growth of trade in services • Rise of new competitor countries – Taiwan, Hong Kong, Singapore, South Korea • Tensions over trade dispute resolution • NTBs an increasing problem • Developing countries acquired increased political clout • Agricultural trade barriers TD Topic 5 7

‘Trade’ in services – new ground for the GATT: GATS • Crucial for export politics – concessions sought from developing countries • Reconceptualizing cross-border sales of services as ‘trade’ • Four modes of supply 1. cross-border supply 2. consumption abroad 3. commercial presence 4. movement of ‘natural persons’ TD Topic 5 8

1993: why a WTO now? • GATT (1947) as rulebook for failed ITO – ad hoc GATT secretariat (Geneva) – contractual negotiating forum – voting by consensus – negotiations: principal supplier rule • Need for coherence and integration of Tokyo Round agreements, more effective dispute settlement – John Jackson proposes WTO – Sylvia Ostry: ‘Grand Bargain’ TD Topic 5 9

Concluding the Uruguay Round: the Treaty of Marrakech 1994 • GATT 1994 • General Agreement on Trade in Services (GATS) • Trade-related Investment Measures (TRIMS) • Trade-related Intellectual Property agreement (TRIPs) • Dispute Settlement Mechanism (DSM) • World Trade Organization (WTO) TD Topic 5 10

The WTO ‘Grand Bargain’ What they gave up What they got INDUSTRIAL COUNTRIES textile import quotas DEVELOPING tariff bindings - goods COUNTRIES costly to implement SPS, TBT, customs valuation, TRIMs, services opening TD Topic 5 kept tariff peaks, most ag protection; TRIPs, SPS, TBT, customs valuation, TRIMs tariff cuts on goods? textile markets (late) AD duties Services export markets 11

What makes the WTO different from the GATT? -1 • A full-blown international organization – membership structure and obligations – more powerful secretariat – Trade Policy Review Mechanism (TPRM) • benchmarking, or ‘name and shame’ – An end to grandfathering of domestic law TD Topic 5 12

What makes the WTO different from the GATT? -2 • Accession: the ‘Single Undertaking’ – goods, services, TRIMs, TRIPs, DSU • More intrusive mandate: services, TRIPs, TRIMS, SPS and TBT in goods • Stepped up, faster dispute settlement – from positive to ‘negative consensus’ TD Topic 5 13

The WTO’s ‘new’ home – Centre William Rappard, Geneva: plus ça change? The building had been home to the GATT since the 1950 s. TD Topic 5 14

WTO Diplomacy • Member governments send permanent representatives to the WTO • Members set agendas, schedules for meetings of councils, committees, etc. • Informal meetings common: Green Rooms etc • NGOs, interest groups have no formal standing but increasing influence – consultation – limited accreditation to meetings – amicus curiae briefs to Appellate Body TD Topic 5 15

The politics of WTO decisionmaking: two paradoxes • Rule making: – very improvised rule-making procedure; but – highly legalistic rule enforcement (DSM) – reflects, constitutes power imbalance between industrial and developing countries • Voting: formally one country, one vote – mostly simple majorities required – but GATT norm of consensus persists – nemini contestavit (nem con) TD Topic 5 16

Do negotiating approaches disadvantage developing countries? • Principal supplier principle (request-offer) • Choosing tariff cutting formulas – linear vs. harmonizing • Multilateral issue linkage • WTO accession negotiations • Organizational culture and negotiating strategy – pie-splitting vs. pie-creating TD Topic 5 17

After Marrakech: different priorities from the start Developing countries: • implementation – getting industrial countries to meet Uruguay Round obligations • S&DT • Market access Industrialized countries: • 1996 Singapore Ministerial Conference – ‘Singapore issues’ • investment • competition • trade facilitation • govt. procurement TD Topic 5 18

Launching the first ‘WTO’ round • The unfinished agenda • Rolling out the bicycle theory again • A ‘Millennium Round’ – resistance amongst WTO members – Battle of Seattle – civil society • 9/11 changes the context – global recession = al-Qa’eda wins – ‘on yer bike’: Doha Round launched 11/2001 TD Topic 5 19

The ‘Battle of Seattle’ 1999: what changed? DIFFERENT SAME • Mobilization of global • ‘Green Room’ style civil society negotiation – neoliberal globalization • US-EU agriculture contested dispute • US sought a narrow • Approach to agenda: agenda breadth vs. achievability – no asymmetric benefits • Emerging North-South polarization TD Topic 5 20

Doha negotiating objectives INDUSTRIAL POWERS • Negotiations as usual • Conservative strategy: ‘avoid disaster’ • Singapore issues: • US: end agricultural export subsidies DEVELOPING COUNTRIES • Economic development through trade – agriculture • Complete/roll back goals of earlier rounds • Alter-globalization • ‘Special & differential treatment’ (S&DT) TD Topic 5 21

Doha Round deadlock: rise of developing country power • ‘Doha Development Agenda’ (DDA) • Special and Differential Treatment (S&DT) • Developing country coalitions: Like Minded Group (LMG), WTO G-20, NAMA-11, Cotton Four, G-33 • BRICS break up the Old Quad: G 5, G 6, G 7 TD Topic 5 22

Coalitions in the Doha Round • ‘Decision-making groups’ vs. coalitions – Quad, G 4, New Quad, WTO G 7 • Bargaining coalition types – issue-based: single issue, limited duration – bloc-type: multiple issue, enduring • Coalitions are particularly important to developing countries – technical limitations – small size TD Topic 5 23

Why should developing countries join coalitions? (Narlikar) • Defection hypothesis – ready to defect in return for industrial country concessions on a particular issue • Collective gains hypothesis – set collective demands higher than potential individual gains from defection – large members offer smaller members side payments (market access) TD Topic 5 24

The coalitions of Cancun 2003 • Going in: the WTO ‘G-20’ • The ‘Core Group’ – explicit consensus necessary to negotiate • Alliance on Strategic Products and Special Safeguard Mechanism • G-90 – broad group of developing countries – resist Singapore Issues – Special & differential treatment – erosion of developing country preferences – rapid liberalization of NAMA TD Topic 5 25

Civil society at Cancun TD Topic 5 26

Doha coalitions after Cancun • G 4/G 6 – US, EU, Brazil, India (plus Japan, Australia) – G 7: G 6 plus China • ‘G-20’: advocated more S&DT • NAMA-11: sought flexibility to safeguard against import surges in manufactured goods • Ismail: developing countries move from welfare interests to agency interests TD Topic 5 27

Proposed ‘fixes’ for the WTO • Decision-making: consultative board – negotiating efficiency vs. transparency/ equality/participation • Process: rule-driven vs. improvised diplomacy • Mandate: include new issues? – agenda too wide or narrow: trade vs. other values – national vs. supranational powers • ‘Democratic deficit’? TD Topic 5 28

WTO Bali Ministerial, Dec. 2013 • Doha Round: ‘I’m not dead yet…’ • Picking a few low-hanging fruit – – Trade facilitation (Singapore) Agriculture: food safety, etc. Cotton Development/S&DT/LDC market access • DG Azevedo used open consultative process from Geneva to Bali – did away with Green Rooms • Developing countries: leadership & learning TD Topic 5 29