The WTO
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Gateway to the World
Trade Organization
Serafino Marchese, Susan Hainsworth, Samer Seif El Yazal
WTO Institute for Training and Technical Cooperation
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Content of the Presentation
Introduction to the WTO
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Overview of the Basic Principles of the WTO
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Transparency / Notification Obligations
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WTO: What is it? (1)
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www.wto.org
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International organization embodied in the
results of the Uruguay Round
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Established: 1 January 1995
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Membership: 157 ---> all countries ?
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The Secretariat: around 700 staff, headed
by a Director-General, based in Geneva
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Budget (2012): 200+ million Swiss francs
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WTO: What is it? (2)
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Cornerstone of the multilateral trading system
• Trade in goods: GATT
• Trade in services: GATS
• Protection of intellectual property rights: TRIPS
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The WTO contract
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• Rights and obligations
• Dispute settlement
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Successor to GATT
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WTO vs GATT: Main differences
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Nature
• GATT: applied on a provisional basis with no institutional framework
• WTO: permanent framework with a permanent organization
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Scope
• GATT: trade in goods
• WTO: trade in goods and services and TRIPS
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Approach
• GATT: à la carte (many agreements selective)
• WTO: single undertaking
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Dispute settlement
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WTO: Objectives
Preamble
WTO Agr.
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to raise standards of living
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seeking both to protect and preserve the environment
to ensure full employment
growing volume of real income and effective demand
expanding the production of and trade in goods and
services
to secure for developing countries, and especially for
LDCs, a share in the growth in international trade
commensurate with the needs of their economic
development
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WTO: Main functions
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Art. III
WTO Agr.
Administering and implementing the multilateral
and plurilateral trade agreements
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Forum for multilateral trade negotiations
Dispute settlement
Overseeing national trade policy
Co-operation with the IMF and the World Bank
(coherence in global economic policy-making)
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WTO: Structure
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Ministerial Conference
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General Council
Art. IV
WTO Agr.
• Dispute Settlement Body
• Trade Policy Review Body
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Councils
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• Council for Trade in Goods
• Council for Trade in Services
• Council for TRIPS
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Committees and other subsidiary bodies
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WTO: How are decisions taken?
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As far as possible, by consensus ….
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Otherwise, decisions are taken by a majority of the
Art. IX
WTO Agr.
votes cast and on the basis of “one Member, one vote”,
but …
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amendments to the provisions of the agreements only
take effect for those Members who accept them.
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WTO: Dispute Settlement
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Coverage: goods, services and intellectual property rights
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Procedures: strict time-limits
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Panel reports automatically adopted …
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unless consensus against adoption
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Parties can appeal to the Appellate Body
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In case of non application of recommendations
• compensation negotiated
• obligations suspended
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WTO: Developing Countries
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Part IV
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“Enabling” Clause
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S&DT
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Technical Cooperation and Training
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UNCTAD/WTO International Trade Center (ITC)
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Least Developed Countries (Ministerial Decision)
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WTO: Other provisions
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Original Membership (Art. XI)
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Accession (Art. XII)
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Non-application (Art. XIII)
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Withdrawal (Art. XV)
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Miscellaneous Provisions (Art. XVI)
• ensure conformity of national laws, regulations and
administrative procedures
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WTO: First years
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Ministerial Conferences
• Singapore (1996)
• Geneva (1998)
• Seattle (1999)
• Doha, Qatar (2001)
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Other developments
• Post-Uruguay Round agreements: ITA, basic telecoms,
financial services
• Accessions
• Dispute settlement
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DDA: Doha Ministerial Declaration
• Adopted by all WTO Members
• Overview of the MTS (Preamble, paras 1 - 11)
• “Broad and balanced” Work Programme
launched (paras 12 - 44)
• Implementation issues and concerns
• Negotiations
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• Singapore issues
• Establishment of Working Groups
• Development dimension
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Issue
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Agriculture
Market Access (non-Ag)
Services
TRIPS
Rules (AD, SCM, fisheries, RTAs)
DSU
Trade & Environment
S&D
Trade Facilitation
Negotiating Body
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Special Sessions of CoA
Neg. Group on MA
Special Sessions of CTS
Special Sessions of TRIPS Council
TRIPS Council
Neg. Group on Rules
Special Sessions of DSB
Special Sessions of CTE
Special Sessions of CTD
Neg. Group on Trade Facilitation
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DDA: Recent developments
• Cancun (Sept. 2003)
• July Package (WT/L/579)
• Hong Kong (WT/MIN(05)/DEC)
• Least Developed Countries (LDCs)
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• Aid for Trade
• MC8, Geneva, 15-17 December 2011
• MC9, Bali, December 2013
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WTO/DDA: A Summary
Multilateral Framework of Rules
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Rules negotiated and accepted by all Members under the
consensus decision-making process
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Maintaining a basic balance/equilibrium, between
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• open and expanding markets; and
• needs and requirements of domestic economic policy: making domestic
industries more competitive; protecting environment and consumers;
operating an efficient economy; contribute to economic development and
growth
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Overview of Basic Principles
1. Non-discrimination
2. Trade Liberalization
3. Specific Disciplines
4. “Horizontal” Exceptions
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5. Transparency
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1. Non-discrimination
Most-Favoured-Nation (MFN)
GATT Art. I:1
Principle
A country may not discriminate between like
products originating in or destined for different
countries.
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Each WTO Member gets immediately and
unconditionally the best treatment given to
any other trading partner.
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1. Non-discrimination
Most-Favoured-Nation (MFN)
GATT Art. I:1
Coverage
Customs Duties and charges of any kind
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imposed in connection with importation or exportation
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imposed on the international transfer of payments for
imports or exports;
The method of levying such duties and charges; and
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Matters referred to in paragraphs 2 and 4 of Article III
(National Treatment)
Very wide coverage: fiscal and regulatory measures; internal and applied at the
border; bound and unbound tariffs, etc.
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1. Non-discrimination
Most-Favoured-Nation (MFN)
GATT Article I:1
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Obligation
“… any advantage, favour, privilege or immunity
granted by any Member to any product originating
in or destined for any other country shall be
accorded immediately and unconditionally to the
like product originating in or destined for the
territories of all other Member.”
•Like Product: defined in jurisprudence
- physical characteristics of product
- end use of product
- consumer preferences
- tariff classification
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Exercises: MFN
Exercise I
Alba, Vanin, and Tristat are WTO Members, but
Ruritania is not.
► Can Alba impose a tariff of 5% on watches imported
from Ruritania, and 10% on watches imported from
Vanin, and Tristat?
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Exercise II
Vanin has an import tariff for cattle of 20 per cent. Following
trade negotiations with Tristat (a European country in the
Alpine region), Vanin introduces an import tariff of 5 per cent
for "cattle reared at a spot at least 300 metres above sea
level and having at least one month's grazing each year at a
spot at least 800 metres above sea level".
► Is this tariff WTO-consistent?
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Exceptions to MFN - “Enabling Clause”
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“Enabling Clause” (1979 Decision) – now part of GATT 1994
~ Tariff Preferences from developed to developing countries
(Generalised System of Preferences)
~ More favourable treatment with respect to Non Tariff
Measures (NTMs)
~ Regional or global arrangements between “less-developed
countries” (reduction / elimination of tariffs and NTMs)
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~ Special treatment for Least developed countries (LDCs)
Certain conditions must be fulfilled in order to grant
preferences –
e.g., non-discriminatory.
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1. Non-discrimination
National Treatment
GATT Article III
Principle
A country may not apply less favourable treatment to
“like products” of foreign origin once they have
entered its territory.
GATT Art. III:1, 2, 4
Article III:1 – General Principle
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Article III:2 – Internal Taxation
Article III:4 – Internal Regulation
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1. Non-discrimination
National Treatment
GATT Art. III:1
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General Rule
“Members recognize that internal taxes and other internal
charges, and laws, regulations and requirements affecting
the internal sale, offering for sale, purchase, transportation,
distribution or use of Products, and internal quantitative
regulations requiring the mixture, processing or use of
products in specified amounts or proportions, should not be
applied to imported or domestic products so as to afford
protection to domestic production.”
No discrimination against imports in the internal market.
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1. Non-discrimination
National Treatment
GATT Ad. Art. III
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“Any internal tax or other internal charge, or any law,
regulation or requirement of the kind referred to in
paragraph 1 which applies to an imported product and to
the like domestic product and is collected or enforced in
the case of the imported product at the time or point of
importation, is nevertheless to be regarded as an internal
tax or other internal charge, or a law, regulation or
requirement of the kind referred to in paragraph 1, and is
accordingly subject to the provisions of Article III.”
Taxes or charges collected at the border
may be covered by Article III
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1. Non-discrimination
National Treatment
GATT Art. III:2 - Tax discrimination
First sentence:
No taxation of imported products in excess of taxation applied,
directly or indirectly, to like domestic products.
- no amount “in excess” is allowed
- 4 characteristics of likeness
Second sentence and Ad Article III:2:
Taxation of imported products must not be dissimilar to taxation of
domestic directly competitive or substitutable products so as to
afford protection.
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- 4 characteristics of likeness plus competitive conditions
Domestic taxation must not discriminate against foreign products
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1. Non-discrimination
National Treatment
GATT Art. III:4 - Other measures
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“The products of the territory of any Member imported
into the territory of any other Member shall be accorded
treatment no less favourable than that accorded to like
products of national origin in respect of all laws,
regulations, and requirements affecting their internal
sale, offering for sale, purchase, transportation,
distribution or use. …”
Domestic regulation must not discriminate against foreign like products
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Exercises: National Treatment
Exercise I
Alba, Vanin, and Tristat are WTO Members.
► Can Alba apply a 5% sales tax on locally produced watches and
a 6% sales tax on watches imported from Vanin and Tristat?
Exercise II
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Exercise III
If Alba only produces pocket watches and not wrist watches:
► can it apply a 5% tax on pocket watches and
a 6% tax on wrist watches?
Alba requires that imported watches be sold at certain
department stores.
► Is such a requirement consistent with the GATT1994?
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Overview of Basic Principles
1. Non-discrimination
2. Trade Liberalization
3. Specific Disciplines
4. “Horizontal” Exceptions
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5. Transparency
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2. Trade Liberalization
Bindings of concessions and commitments
Principle
Goods
A country commits itself to ensure an agreed level
of access to its market, on an MFN basis, for
supplying countries.
GATT Art. II
Schedules of concessions containing maximum
tariff levels
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For imported products identified in the Schedule of a Member, that Member can not
apply a tariff rate higher than the “Bound Rate” indicated in the Schedule.
Renegotiation
Possible
• GATT Art. XXVIII (Modifications of Concessions)
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2. Trade Liberalization
Bindings of concessions and commitments
• GATT Art. II:1(b): existing “other duties and charges”
•E.g., statistical taxes; foreign exchange fee
•Recorded in the schedule at the end of Uruguay Round
(Understanding on Article II:1(b))
• GATT Art. II:2
•Equivalence of Internal Tax (i.e., border tax adjustment)
•Anti-Dumping or Countervailing Duties
•Fees “Commensurate” with the Costs of Services Rendered
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Certain
taxes and
charges
may be
applied in
addition to
ordinary
customs
duties
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Exercises: Trade Liberalization
Exercise
Tristat, a WTO Member, has bound all its tariffs at the
rate of 20 per cent. Although it does not produce cars,
Tristat decides to levy a value-added tax of 33 per cent
on cars and instructs its customs services to collect the
tax.
► Is the tax consistent with the GATT1994?
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► Would your response differ if Tristat also produces
cars and imposes an internal value-added tax on cars?
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2. Trade Liberalization
General Prohibition of Quantitative Restrictions (QR)
Principle
The use of QRs (Quantitative Restrictions) is prohibited
GATT Art. XI:1 provides:
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“No prohibitions or restrictions other than duties, taxes or
other charges, whether made effective through quotas,
import or export licences or other measures, shall be
instituted or maintained by any Member on the importation
of any product of the territory of any other Member or on the
exportation or sale for export of any product destined for the
territory of any other Member.”
•Wide scope – could cover measures other than quotas
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2. Trade Liberalization
General Prohibition of Quantitative Restrictions (QR)
Exceptions
Specific to
Prohibition
on QRs
• GATT Art. XI:2(a) (Critical Shortage of Foodstuffs or Other
Essential Products)
• GATT Art. XI:2(c) (Agricultural Products and Fish)
- Agreement on Agriculture (Tariffication)
• GATT Art. XII (BOP Measures)
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• Agreement on Textiles and Clothing (Progressive Integration)
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Overview of Basic Principles
1. Non-discrimination
2. Trade Liberalization
3. Specific Disciplines
4. “Horizontal” Exceptions
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5. Transparency
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3. Specific Disciplines
Examples
GATT Art. XVI (Subsidies)
Agreement on Subsidies (Countervailing Measures)
Uruguay
Round
GATT Arts. XI, XVI
Agreement on Agriculture
GATT Art. XX
Agreement on Sanitary and Phytosanitary Measures
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GATT Art. XIX (Safeguards)
Agreement on Safeguards
GATT Art. VI (Anti-Dumping)
Agreement on GATT Art. VI
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Overview of Basic Principles
1. Non-discrimination
2. Trade Liberalization
3. Specific Disciplines
4. “Horizontal” Exceptions
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5. Transparency
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4. “Horizontal” Exceptions
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GATT Art. XX: General Exceptions
“Subject to the requirement that such measures are not
applied in a manner which would constitute a means of
arbitrary or unjustifiable discrimination between countries
where the same conditions prevail, or a disguised restriction
on international trade, nothing in this Agreement shall be
construed to prevent the adoption or enforcement by any
Member of measures:”
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“Chapeau”
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4. “Horizontal” Exceptions
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GATT Art. XX
Sample
Exceptions
(a) necessary to protect public morals
(b) necessary to protect human, animal or plant life or health
(d) necessary to secure compliance with laws or regulations
which are not inconsistent with the provisions of this
Agreement ...
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(f) imposed for the protection of national treasures or artistic,
historic or archaeological value
(g) relating to the conservation of exhaustible natural
resources (if such measures are made effective in conjunction
with restrictions on domestic production or consumption)
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4. “Horizontal” Exceptions
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GATT Art. XX
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Does the measure fall within one of the exceptions listed in
Article XX?
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E.g. XX(b) – measures “necessary to protect human and animal life”:
several elements to be examined:
 importance of the societal value pursued
 the measure’s contribution to achieving the value
 trade-restrictive impact of the measure, and
 reasonably-available alternatives
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If yes, does it satisfy the “chapeau”?
=> arbitrary discrimination?
=> unjustifiable discrimination?
=> disguised restriction on trade?
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Two-tier
Analysis
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4. “Horizontal” Exceptions
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GATT Art. XXI
Nothing in this Agreement shall be construed
Security
Exception
(a)
to require any Member to furnish any information the disclosure
of which it considers contrary to its essential security interests;
or
(b) to prevent any Member from taking any action which it
considers necessary for the protection of its essential security
interests…
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(c) to prevent any contracting party from taking any action in
pursuance of its obligations under the United Nations Charter
for the maintenance of international peace and security.
GATT/WTO “judicial review” of a measure taken for security
reasons – so far, none. e.g., US – Helms-Burton
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“Horizontal” Exceptions
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GATT Art. XXIV: Regional Integration
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Principle
The rules and obligations shall not prevent
Members from taking certain measures which
would otherwise be illegal, in order to enter into
certain forms of economic integration compatible
with the WTO “regional trade” provisions.
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“Horizontal” Exceptions
Types
Conditions
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GATT Art. XXIV – Regional Integration
Free-Trade Areas / Customs Unions
1. “Substantially all trade” among partners (internal)
2. Not on the whole more trade-restrictive (external)
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3. Limited transition period
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Overview of Basic Principles
1. Non-discrimination
2. Trade Liberalization
3. Specific Disciplines
4. “Horizontal” Exceptions
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5. Transparency
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5. Transparency
Information
Trade Policy Review Mechanism (TPRM)
Commercial legislation / Measures (Laws, Regulations, etc.)
Publication of commercial legislation (GATT Art. X)
Notification Obligations
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Inquiry / Information Points
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NOTIF:Why?
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Advantages
• Transparency
• Collective surveillance
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Disadvantages
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• Should Members notify everything?
• Costs: production, circulation, analysis
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The outcome
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tailor-made
reverse notifications
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NOT: Where?
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Final Act
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Old obligations …. actual
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New decisions
• Quantitative restrictions (QRs)
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• Non-tariff measures (NTMs)
• Integrated Data Base (IDB)
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NOTIF: What?
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Legislation
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Changes in legislation
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Stock: measures in place
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Changes: Measures taken in a given period
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Step by step: individual actions
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NOTIF: When?
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Ad-hoc: if … then notify
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One-off: “snap-shot”
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Regular
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• every 6 months: semi-annual
• annual
• other periodicities
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NOTIF: How? (1)
Guidelines
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Formats
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Samples (notifications already submitted)
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NOTIF: How? (2)
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What needs to be done?
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National coordination
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Data preparation
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Presentation
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Review: oral and written questions
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NOTIF: The other side
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What do we do with other countries’ notifications?
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Circulation
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Analysis
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Questions
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Dissemination
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NOTIF: Secretariat Assistance
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Workshops: Geneva, regional/national
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Module on notifications in every “general” seminar
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Focal points with e-mail addresses (www.wto.org
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Button: Technical Cooperation)
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DVDs of the 3rd Workshop (1997)
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NOTIF: Documentation
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Technical Cooperation Handbook on Notification
Requirements : WT/TC/NOTIF
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List of all notification requirements in
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Annex 1A: G/NOP/W/2/Rev.1
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Timing: G/NOP/W/5
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Compliance: G/L/223
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NOTIF: Ministerial Decision
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General obligation to notify
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Central Registry of Notifications (CRN)
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Working Group on Notification Obligations and Procedures
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(G/NOP series)
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NOTIF: Central Registry of Notifications (CRN)
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Data base: element definition
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Access: Official Documents -> C.R.N.
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A call every year for each Member “tailor-made” listing of regular notifications
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Reminders - “tailor-made” list of unfulfilled regular notifications
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NOTIF:Working Group on NOP
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Annex 1A: goods (doc. G/L/112)
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to simplify, standardize and consolidate notification
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obligations
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assistance to some developing Members
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to improve compliance
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NOTIF: Compliance (1)
How many notification obligations?
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Annex 1A: 175 requirements in 1995
• 106 ad-hoc
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43 one-off
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26 regular (17 annual, 3 semi-annual, 3 biannual and 3
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triennial)
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Annexes 1B + 1C: around 40 requirements
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NOTIF: Compliance (2)
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Compliance with notification requirements has not been
fully satisfactory (WT/MIN(96)/DEC para. 11)
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Why?
• Substantial difficulties
• to modify legislation, etc.
• to implement reductions agreed in the schedules
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• Other difficulties
• human resources
• lack of experience
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