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1

Issues Regarding the WTO

1. Labor and environmental regulations
2. WTO does not preclude national lawmaking; only the use of trade restrictions to enforce them
3. Race to the bottom argument
4. Dispute Resolution - Very long formal process
5. WTO does not allow countries to enforce laws through trade restrictions, but does not preclude governments from sovereign lawmaking
6. Objective of panels is to assure that governments don't pass laws that violate international agreements with which they already agreed

2

Race to the bottom argument

To maintain competitiveness in a global trading environment, firm cut costs, including violating labor and environmental regulations

3

What are the counterarguments for race to the bottom argument?

1. Economic growth promotes conservation ethic
2. Most governments over time develop stronger regulations
3. In most industries, savings from pollution abatement are a small % of total production costs
4. Importance of all countries "buying in" to multilateral reforms

4

What are the principal objectives of Doha Round of WTO Negotiations?

1. Continue tariff reductions, especially in developing countries
2. Reduce tariff escalation
3. Clarify/strengthen trade rules in anti-dumping, safeguard provisions, intellectual property rights, investment and competition policy
4. Reduce trade barriers

5

Concerns of Developing Countries in "Doha Development Round"

1. Market access and industrial tariffs in industrialized countries
2. Tariff escalation
3. Industrial country (U.S, EU) agricultural subsidies, which keep world prices low
4. Favorable trade in pharmaceuticals
5. Special and differential (S&D) treatment

6

Nairobi Package

December 2015 agreement, abolishing agr'l export subsidies, expanding market access for developing cos., etc.

7

Bali Package

Dec. 2013 agreement to reduce some tariffs and trade costs, reduce "hard quotas" on ag; could decrease costs of trade by 10% and increase global income $400+ billion

8

What is the general agreement on tariffs and trade? 1947

Multilateral agreement to decrease trade barriers and assure equal treatment among member countries

* 8 negotiating rounds between 1947 and 1994

9

What are the key principles of GATT:

1. Non-discrimination
2. Elimination of non-tariff trade barriers
3. Encourage resolution of trade disputes

10

What are the major accomplishments of Uruguay Round of the GATT?

1. Tariff reductions, averaging 40% for industrial countries, spread over 5-10 years
2. Decreasing/eliminating some non-tariff trade barriers and replacing them with tariffs (tariffication)
3. Extension of trade disciplines in services, intellectual property, and agriculture

11

What are the effects of an import quota?

1. Price in importing country increases
2. Price in the (exporter) decreases
3. Quantity of trade decreases

12

Is extension of trade rules to intellectual property, services and agriculture good or bad for United States?

Good! U.S. has comparative advantage in all these sectors

13

Other outcomes -- of Uruguay Round of the GATT

4. Elimination of Multi-Fiber Agreement
5. Creation of World Trade Organization 1995

14

What are the principal objectives of the Doha Round of WTO? (5)

1. Continue tariff reductions
2. Reduce tariff escalation
3. Reduce trade barriers
4. Clarify/strengthen trade rules
5. Clarify and make consistent trade and environment regulations and policies

15

What are the concerns of developing countries in Doha Development Round? (5)

1. Market access and industrial tariffs in industrialized countries
2. Tariff escalation
3. Industrial country subsidies keep prices low
4. Favorable trade in pharmaceuticals
5. Special and differential treatment

16

What is the current status of Doha Round?

- Suspended in 2006, in 2009 pledged to complete
- Financial and economic crisis of late 2000's contributed to difficulties in negotiating regarding countries' protectionism
- Bali Package
- Nairobi Package
- Uncertain future

17

Current Status of Doha Round - Pascal Lemy, Director-General of WTO

- 80% of trade issues already resolved
- major unresolved issues: agricultural subsidies of industrialized countries, anti-dumping policies, industrial subsidies