subsection 4 is developing country participation in participation country 4isdeveloping subsection andpe has developed focusing onhowthesystem WTO, theevolution intheGATT/ of 3analyses dispute of settlement trade. Subsection andthegrowth tariffs As in the case of the other Bretton Woods institutions, the first negotiations between theUnited States negotiations of institutions, between Woods theother thefirst Bretton inthecase As of World Warthe aftermath States wasnow ItheUnited The United an StatesThe astheleadingpolitical emerged emergence The of an Organization: TheGATT 1947-1963 between (a) continueDoha which Round andthenegotiations today. bythelaunchof the marked life far theWTO, with inparticular so deals under period fourth The WTO. 1963 and1979. between period from 1980 thirdperiod, to The 1995, to wasdominated by efforts countries.of developing We howthe shall examine measures andtheconcerns non-tariff –howto with deal challenges facedspecific the trading system aswellesta to theyhadrules which committed the with were gainingexperience 1947Parties and1963 isbetween Contracting the when period first into roughly The four timeperiods. divided be can and 2007. of theGATT/WTO decades six The conditioned factors of economicA mix andpolitical later. taken upinmoredetail be will period FROM including to asitmovedfrom theWTO, theGATT of thetrading system thehistory weexamine Here GATT1. TO WTO: THEBUILDINGOFANORGANIZATION impl thathavefar-reaching systemic issues procedural two with 6deals Subsection tendencies. policy trade andbilateral regional burgeoning toaddress attempted Subsection thephenomenonof regionalism5 addresses andhowthemultilateral has trading system membersh by aheterogeneous challenges posed systemic haveincreasingly issues country howdeveloping on therelationshipbetwee about said be can what briefly to reduce tariff overtheyears of governments efforts to of th theGATT journeyfrom thebirth historical abrief with faces begins today. that thesystem of andissues thecore Section challenges some The explore and of multilateral nowfocuswill onthemainachievements decades six overthelast trade cooperation to andhowsuch make co to governments seems sense THE MULTILATERAL SYSTEM: TRADING tounder havesought inthisReport OF Sections Earlier YEARS SIXTY D (Atlantic the whereas Charter). emerged.First, major negotiations During disagreements these two in1941 begun had already trade system of apost-war and theBritishgovernment overthedesign Trade plan. Woods component of theBretton wasanessential B.1). inthe1930s ashappened wanted battle, to Section avoid atany protectionist arenewed cost (see Concin buildinganewinternational economic system. meaningful sense in which limits may be set set may be limits inwhich meaningful sense a there exists andwhether isshaped agenda WTO howthe about said of be what can complex question athand aredecisi subjects confronting The theWTO. launch anewtrade negotiation, thenby theUruguay rounds of priortothe seven trade negotiations theUr between the WTO and the outside world – specifically, non-state actors. Finally, subsection 7 explores the Finally, 7explores actors. subsection world–specifically, non-state andtheoutside theWTO between (i) A difficult birth birth difficult A (i) CIVMNSADCHALLENGES AND ACHIEVEMENTS to subject areas for cooperation under theWTO. areasfor under cooperation to subject e establishment of the WTO. Subsection 2 records the 2records Subsection of theWTO. e establishment the multilateral trading system. The subsection focuses the multilateral subsection The trading system. found theirway onto andthe the multilateral agenda stand why international cooperation in trade matters matters intrade why internationalcooperation stand on-making processes in the WTO andtherelationship WTO inthe processes on-making blishing procedures for negotiations. By 1963, for By negotiations. blishing procedures two n the GATT/WTO’s role in reducing and consolidating andconsolidating inreducing role n theGATT/WTO’s GATT responded to challenges inthesecond these responded GATT d economic power after World War II. In contrast World In to War after d economic power II. ications andgoto thehear the evolution of the trading system between 1947 between the evolution of thetrading system s and address non-tariff measures. It also discusses discusses also It measures. non-tariff s andaddress uguay Round. Some ofuguay thekeyRound. Some themesduringthis erning international States tradepolicy, theUnited operation translatesoperation into institutions andrules.We 179 Round negotiations, and finally the birth of the andfinally thebirth Round negotiations, rformed during the last six decades. The themeof The decades. six duringthelast rformed willing to take over a large share of responsibility shareofresponsibility alarge to take over willing ip with divergent needs, interests andpriorities. divergent interests ip with needs, t of legitimacy questions t of legitimacy

II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING WORLD TRADE REPORT 2007 SYSTEM: ACHIEVEMENTS AND CHALLENGES WORLD TRADE REPORT 2007 II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING SYSTEM: ACHIEVEMENTS AND CHALLENGES Organisation” at inexistence that preference systems Articles and16Articles annexes covering not onlytrade wassign for anInternational Trade (ITO) Organization The GATT emerged as a by-product of thenegotiations Charter. around theITO asaby-product emerged GATT The Originally, itwasintended system. this approval. Even wasastillbirth, thoughtheITO were concerned th Others antitrust). States on judged theCharter topics with overloaded th States Congress opposed United inthe A majority andinter-governmental agreements. practices business commodity restrictive activity, Americans advocated non-discrimination without except without non-discrimination advocated Americans 1948. The last meeting took place from November 1947 place took from meeting November last 1948. The until March 1948 inHavana 1946 to March Charter from October that theITO heldfour to draft meetings committee preparatory theEconomic proposal, onthisAmerican-English Based difficulties. of balance-of-payment inthecase imposed could be that trade restrictions ult the negotiation, through them but toreduce pl organisation of theforthcoming but that members of preferentialsystem treatment of Commonwealth countries 1993). (Low, incontrast Second, to the have come into existence, GATT would automatically expire. The provisional character of GATT wasalso of GATT provisional character have The expire. come into wouldautomatically existence, GATT agreement until theratificat asatemporary to serve 1997).(Ostry, At theendof 1950, Truman President not to for submit theITO congressional decided cuts could only be achieved if certain exceptions we ifcertain achieved be could only cuts such asquotas. trade barriers, of certain limit theuse adjustments. The overall objective of the GATT wasto re of theGATT overall objective The adjustments. of thecommercial mainly consisted policy GATT The and entered into 1, force onJanuary 1948. for aconference theInternational Trade to establish “Charter inthesuggested agreed for theInternational parties Trade theend, thetwo In barriers. import theBritishwanted theinclusion of toAmericans see 2 1 2.(a).(i)). subsection cent per of worldtrade (see 40 about covering around items, 15,000 affecting tariff andTorquay Annecy, Geneva, the Rounds beginning: Ahopeful pr leadingto negotiation thecreation ofThe theGATT (ii) ratification of GATT. much narrower.topics However, andamore concentrated flexibility focus facilitated and theadoption October 30, 1947,October heldinGeneva, for theITO committee of duringoneof thepreparatory themeetings that aninternational organizationest had been In this first round of multilateral this first In trade negotiations concluded 123 theContractingParties agreements Compared to Charter, theITO binding were less of andthecoverage the commitments theGATT of Europe andacontinuation preference systems. of existing of postwar tomainly facilitate reconstruction principle. Again, seve the most-favoured nation (MFN) import surges (Article XIX). A cornerstone of the GATT balance-of-payme VI), dumping andsubsidies (Article andcontin clauses therefore escape several contains reflected in the fact that thesignatories inthefact werecalled reflected Australia, Belgium, Brazil, Burma, Canada, Ceylon, Chile, Ceylon, Canada, Burma, Brazil, Belgium, Australia, For this reason the ITO Charter later became known as Havana Charter. Havana as known became later Charter ITO the reason this For Luxembourg, Zealand, Netherlands, New Norway, Pakistan, Rhodesia, Southern Syria, Africa, South the United Kingdom and the United States. at foreign investment was inadequately protected under theCharterat foreign under investment wasinadequately protected 180 imate aim being total elimination (Kock 1969:44) and 1969:44) (Kock elimination total imate aimbeing policy, but agreements on employment andeconomic onemployment policy, butagreements ablished. The GATT was signed by23countries wassigned GATT The ablished. re included in the structure of trade rules. The GATT The of trade rules. inthestructure re included “Contracting any to inorder dispel concern Parties” gent provisions. Among these are remedies against areremedies these Among gent provisions. rules that would have allowed the use of temporary thatrules of wouldhave temporary theuse allowed The negotiating parties agreed that substantial tariff tariff that substantial agreed parties negotiating The did not man the demise of themultilateral tradingdid not manthedemise ly indirectly related to trade (e.g.ly indirectly and employment ovided the first major toward reductions. step ovided thefirst tariff nt exceptions (Article XII), and safeguards against andsafeguards XII), nt exceptions (Article Organization (ITO). Eighteen countries joinedthe Organization (ITO). ion of the ITO Charter.ion of theITO theCharter Once wasto a specific date be excepted from excepted rule, thegeneral datebe a specific edge themselves not to increase existing margins existing nottoincrease themselves edge ed by 53 nations. The ITO Charter 106 contained by53 ITO ed nations. The system was the principle of non-discrimination or wastheprincipleof non-discrimination system ral exceptions from this principle were permitted, permitted, were principle this from ral exceptions provisions of the ITO Charter,provisions of theITO minorformal with e Charter. groups intheUnited business Several China, Cuba, Czechoslovakia, France, India, Lebanon, Lebanon, France, India, China, Cuba, Czechoslovakia, and Social Council andSocial ofth duce barriers to trade, especially tariffs, andto toduce trade, barriers tariffs, especially ion, theBritishwanted to continue their with e United Nations called 1 andtheCharter 2 on The participating governments conducted a thorough review of theGATT’s athorough review upwith andcame provision conducted governments participating The theOTCrefused to ratify charter, had and the Contracting ambitiousreforms. to onless agree Parties for Trade theOrganization called time to be Cooper as part of GATT policy and not from derogation of Articl introduction exceptions. The infant-industry of 1987). itwasag First, three basicchanges (Hudec, again of theGATT.a review wasto try proposal One the GATT. therefore They convened anextraordinary Germany. outcome The of the Torquay to leave agreed Contracting Parties The Roundwasimpressive. acceding andsix coun theContracting Parties between the elimination in1949-50 of to quotas led astrong movetowards Europe, first within The trade barriers such aslicenses, andexchange quotas, restrictions. World thesecond War.after to launchaprogramme to eliminate progressively decided OEEC members administer tohelp in1948 mainly founded had been for from of theOrganization European worldtrade came which Economic growth Cooperation (OEEC), inov reduction amodest items, delivering only 5000 We to thepr gauge data lackappropriate other parties. 3 countries wasre affected of exceptions bycertain Sessio Review the issues, Development future of thelong-term in1954 to discuss theContracting dead, Parties definitely decided theITO With (iii) basis. negotiations tariff the that note to interesting is It Finally, President Truman’s not to submit decision rounds andwere unable to offer more in order to concessions obtain further from other countries. levelsfeltcountries they relatively with lowtariff they accorded oneanother. levelsconstituted another problem. Anumber Disparitiesintariff of European were hesitant to grant substantial tariff cuts b negotiatio thisDespite success, incertain progress itemsto to 1952). addanother theagreement 8700 (ICITO, tariff duringthe ofmade commitments majority the vast negotiatio The for another three years. extended be atTorquay. consolidated should be sc newtariff The that any1950. of renegotiations decided first They by expire to supposed were and Annecy Geneva in upon agreed bindings and reductions tariff All 1994). to cleartheway for thecreationof aCommon later(Irwin, Market years some theacceding aconsequence,only with countries. on commitments As thenegotiations tariff delivered inOc conference tariff washeldinAnnecy second The goods. UScapital andinreturnbuy countries theirexports to expand Improved protection. highlevelof tariff relatively economic situation strong and its concessions reflecting the United States tariff generous themost made States is a detailed analysis available D.2.(a) Section (see However, below). it is generally recognized that negotiation onetrading with partner, redu thetariff ina to agreed reduce atariff acountry If to match andattempt offers. themwith requests these concessions on various products from eachtrading pa concessions onvarious products Torquay negotiations. 1,January 1951. light deadli of In thisapproaching countries. didnot original 23Contracting The Parties The same principle The was applied during subsequent rounds of multilateral trade negotiations. 3 This meantThis that priorto thenegotiations countrie ecause theywouldhave thepreference reduced marginsecause had exhausted their bargaining power in the last two two inthelast theirbargainingpower had exhausted had taken place on a bilateral and product-by-product had taken place onabilateral andproduct-by-product access to theUSmarket European Western allowed ns was disappointing. The CommonwealthThe ns wasdisappointing. countries Geneva and Annecy Rounds intact, and even decided andevendecided Roundsintact, Geneva andAnnecy ns took place among existing Contracting Parties and ContractingParties placens took amongexisting ction would automatically be extended via MFN to all MFN via extended be wouldautomatically ction moved and rules regarding the use ofquantitative theuse regarding and rules moved it. The provision that provision granted theuse avetoit. The against ne, the Contracting Parties metagaininthefallne, of theContractingParties e XVIII was rephrased to wasrephrased theexceptions characterize e XVIII hedules resulting from thenegotiations shouldthen tariff concessions made during the previous rounds duringtheprevious made concessions tariff the ITO to Congress also cast ashadow to overthethe ITO Congress cast also ation (OTC). However,ation (OTC). once againtheUSCongress recovery of intra-European trade volumes, helping of intra-European recovery session, the so-called Review Session, to undertake Session, Review theso-called session, reed to rewrite Article XVIII which contained which the XVIII toreed rewrite Article rtner. The negotiating parties wouldthenexchange rtner. parties negotiating The the Marshall Plan for the reconstruction of Planthe Marshall Europe for thereconstruction erall tariff levels (ICITO, 1952). levels(ICITO, forerall tariff boost Another tober 1949tober intheaccession andresulted of eleven to createaformal international this organization, 181 n, and the Geneva andDillon Geneva Rounds andthe n, negotiate tariff concessions eachother,negotiate with tariff but ecise extent of the tariff cuts. Only for theUnitedOnly cuts. of thetariff extent ecise tries, – most importantly the Federal Republicof theFederal importantly –most tries, s would establish lists of “requests” lists for tariff s wouldestablish

II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING WORLD TRADE REPORT 2007 SYSTEM: ACHIEVEMENTS AND CHALLENGES WORLD TRADE REPORT 2007 II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING SYSTEM: ACHIEVEMENTS AND CHALLENGES about the position of developing countries of developing theposition inthes about incr tariff international against trade wasnowbound this rule, concessions theyhad onother to items negotiations ascompensation. tariff offer The made of wanted countries. theEEC thesix to Whenever members than deviate from theseparate tariffs (ICITO, themultilateral adjustment wouldundermine trading system fear wasthat anunsatisfactory of this cus upcoming themembers relations between countries had bound their tariffs in previous negoti inprevious countries theirtariffs had bound a failure of the GATT in this regard. The Soviet Un Soviet The regard. inthis a failure GATT ofthe to take into capacity account onits andconcerns theneeds depended countries.of of GATT developing recognized obligations, theyalso of asanabsence of real that what theysaw GATT theoverall success trade negotiations. Further progress was made in reducing and binding tariffs. About two-fifths of two-fifths tradeAbout negotiations. was progress made in reducing Further andbinding tariffs. thisbackground,Against 22of the Contracting Partie organization theUnited within Nations asanalternative to theGATT. commercial policies are relatively unfavourable to them”. arerelatively commercial policies coun producing the feeling of disquietamongprimary Besides the difficult question of how better to in of how better question thedifficult Besides countries by developing of quantitative restrictions majorchange concerned theuse second The wererelaxed. purposes for infant-industry restrictions 5 4 except inthefieldof agriculture. progress, satisfactory average on higher no be could tariff external common new GATT, of the XXIV Article with accordance In into of EEC thesix acommon members schedule tariffs then proposed Douglas Dillonwho negotiationsThe were named theDillon Roundinhonourof United States Under-Secretary of State, forcesdriving round of multilateral behind thefifth 1960. trade negotiations in September opened which movement of emergence towards astrong anin The 1957). France, Luxembourg, Repub countries Federal (Belgium, faced another theGATT mounting challenge. system, restrictions. They were also able to raise many tariffs without violating theGATT, violating without few ableto were developing also raise many They since tariffs very restrictions. Tables countries Developing Appendix 4and5). (see themoreDespite favourable treatment accorded developi countries. protection.”. of tariff use meant This that theprinci to take into countries reciprocity accountcalculating for amoreflexible developed “the of less needs established theEuropeanestablished Economic Community. For to balance-of-payment promotion. increasingly resorted substitution and, They later on, export import integrating into the world trading system. The expert expert integrating The into theworldtrading system. countries facing in thechallenges developing to analyse to apanelof commission experts decided Haberler Report. Haberler “Trends inInternational Trade”, waspublished which Against thebackdropAgainst of theColdWar, to wereeager avoid Contracting Parties country thedeveloped common market in1951, for coal andsteel theTreaty countries thesix adopted of Romein1957 which XXVIII( countries.developing AnewArticle wasafurt thirdmodification crisis.The payments provis onmoreContracting agreed flexible Parties made considerable efforts to achieve deeper economic to achievedeeper considerablemade efforts GATT (1958:11) Trends in International Trade. A Report by a Panel of Experts. This feeling was one of the major forces major ofthe one was feeling This ofExperts. byaPanel Report (1958:11)GATT Trade. Trends A inInternational Economists. ofEminent Panel Chairman ofthe the Haberler, Gottfried ofProfessor honour In behind the creation of the United Nations Conference on Trade in 1964. and Development (UNCTAD) 4 Among its conclusions, the Report states “We think states in that substance there issome conclusions, theReport its Among egotiations. The main objective of thisround wasto transform the mainobjective The egotiations. bis ) was introduced which requested Contracting Parties when Contracting Parties ) wasintroduced requested which 182 ystem. Ministers of GATT Co tegrate developing countriestegrate developing into theworld trading ations. While many develope While ations. her attempt to of accommodateher attempt needs thespecial ions for developing countrions for developing ion waspushingfor trade thecreationof aglobal group summarized their findings in a report entitledgroup summarized theirfindingsinareport ple of full reciprocity didnot to apply developing ple of fullreciprocity the GATT the question washowto manage thequestion tradethe GATT toms union and the other Contracting Parties. The toms unionandtheother ContractingParties. in October 1958 asthe known andlaterbecame inOctober in times of balance-of-payments difficulties. The difficulties. in timesof balance-of-payments s met in Geneva for a fourth round of multilaterals metinGenevafor afourth tries that the present rules andconventions that rules tries thepresent about applied by all six towards non-member countries. towards byallsix non-member applied tegrated European market European main ofthe wasone tegrated Since of the1950s, thebeginning European six tried to curbthis trend by of applyingpolicies eases. Despite thissuccess,Despite concernseases. persisted lic of Germany, Italy and the Netherlands,) hadlic of Germany, andtheNetherlands,) Italy integration. After the su the After integration. 5 ng countries, their share inworldtrade declined ntracting Parties therefore Parties ntracting ies facing abalance-of- d countries were critical ccessful creationofaccessful trade between Western Europe States andtheUnited trade between which was agreed upon asanexception to upon theGATT wasagreed which as an important step in promoting the strength an strength the inpromoting step animportant as this economic reason for promoting newmultilatera France andGermany, between amongEuropean countries, andespecially cooperation and political F. Kennedy enumerated obsolete. fivechallenges that had United previous States made trade policy from th launching anewround came force second forThe them. behind opportunities upnewexport inaway that wouldopen trading system of quota restrictions with cotton exporting countries. cotton with exporting of restrictions quota outcomeof of trade. thenego important Another n traditional included Dillon Roundalso tariff The interests. integrationthe further of theEuropean US agricultural market export over certain shouldtake priority broughton thisissue to thenegotiations thebrinkof political interests, and thus also help combat the expansion of communism. helpcombat andthus theexpansion also interests, political inEurope anddidnot want on the wr to be interests expansion. communist against bulwark was aneffective would minimize theriskofwar. theUSgove Second, forcontrary, majorreasons States had theUnited two and the expansion States wasnot United against The the Common Market. Canada. market Moreover, after itwas export largest the Common Market amounted to $3.55 billion, abou developing countriesdeveloping into theworldtrade system. flavour that of wouldmarkthefuture thechallenges buttheDillonRoundbro objective, apriority shouldbe for countries products tropical accepted entry developed that theidea duty-free 7 6 After therelatively outcome modest of theDillon Ro 1964-67 Kennedy The Round: sides. pushfor anewround of 1960sThe multilateral from intheearly two trade negotiations came Consolidating the GATT:(i) 1963-86 (b) or evenzero dutiesfor agricultural these products 1971). concerned United th States The about wasvery acommon exte upon amongthemselves not yetagreed of Because (CAP). Policy Commonfuture Agricultural that they andargued agriculturalseveral products negotiations Round Dillon the In market mechanisms. sincein thenegotiations, theiragri intheGATT,economic powers States namely theUnited Until theDillon Round, trade negotiations almo dealt biggest threat to United States trade interests. The total volume of US exports to threat theEEC tobiggest that United constituted total States volume The of trade US interests. exports integration of andsteady theEuropeanof Common thefive, thegrowth Market asthe wasperceived July 1962, about 4000 tariff concession had been made by the Contracting Parties covering billion $4.9 bytheContracting Parties made had concession been tariff 1962,July 4000 about This arrangement lasted until 1974 th when and trade offensive, and v) the need for new markets for Japan and developing nations. anddeveloping Japan for markets new for need the andv) offensive, and trade aid communist the iv) growth; USeconomic toaccelerate need the iii) position; ofpayments balance the on pressure 68-77. (reproduced in Preeg (1970)) .The five factors were: i) the growth of the European Common Market; ii) growing growing ii) Common Market; European of the growth the i) were: (1970)) .The factors 68-77. inPreeg five (reproduced Presidents,1962,pp ofthe 25, Papers 1962. Trade January Public Policy, Foreign on Congress tothe Message Special cultural policies were designed to detach domestic prices fromglobal prices domestic to detach weredesigned cultural policies ught onlymeagre advances inthis regard. theRoundgave Overall a e United States. In a Special Message to Congress, John President Message aSpecial States.In e United e Multifibre Arrangement entered into force. egotiations. thetimeth By . Differences between theEE . Differences between needed underdetermined rates for the design ofthe rates for thedesign underdetermined needed d the unity of the Atlantic Community. ofthe Liberalizing unity d the l negotiations, President Kennedy saw anewround Kennedy saw President l negotiations, und, developing countries tound, the wereeager shape developing the sensitivity of theissue, had EEC thesix the sensitivity members tiations was the Arrangement onCottonArrangement tiations wasthe Textiles rnmentWestern that European believed unification , theEEC didnot want to to agree newbindingson rules. The Arrangement permitted thenegotiation Arrangement permitted rules.The further integration of theCommonfurther Market. theOn rounds, namely agricultureandtheintegration of expected that other European countries wouldjoin expected supporting this process. supporting failure, but finally the United States decided that failure, States decided theUnited butfinally would result inagreater sharing and ofeconomic would result st exclusively with industrial products. The majorThe products. industrial with exclusively st ong side of a European tariff wall. In additionto wall. In of aEuropeanong side tariff 183 t 17 per cent of total US exports andthesecondt 17 cent per of total USexports is decision since they had previously enjoyed low enjoyed since they had previously is decision andtheEEC, agriculture to include werehesitant rnal tariff for these products (Curtis andVastine, (Curtis products for these rnal tariff 6 However, theUnited States alsohad economic A success countries for developing wasthat e Round was concluded inRound wasconcluded e First, enhancing economicFirst, C and the United StatesC andtheUnited 7 Out

II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING WORLD TRADE REPORT 2007 SYSTEM: ACHIEVEMENTS AND CHALLENGES WORLD TRADE REPORT 2007 II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING SYSTEM: ACHIEVEMENTS AND CHALLENGES bargaining, it granted the President a variety of tech avariety bargaining, itgranted thePresident measures. From thenegotiating thebeginning partie from any tariff concessions. Evenfrom any thoughtheTrade tariff remained silent of onthemethod Act Expansion co or countries communist All exclusions. specific product- cent by certain 50per with authorized tariffs thePresident to decrease Act agreement. The into account the special interests of developing countr of developing into account interests thespecial developing countries. thedevelope From theoutset, trade negoti GATT Kennedy Roundwasthefirst The negotiations measures. wasaseparate protocol several non-tariff agreement embodying rather novelfield” table, onthenegotiating includ newtopics several the necessity to start a new round of trade negotiations. The corresponding authority wascontained in anewround of corresponding authority trade negotiations.The to start the necessity President Kennedy arguments, wasabletoInvoking economic both andpolitical convince Congress of 10 9 8 Minister ataGATT Roundwaslaunched Kennedy The approach. anitem-by-item requiring that incontrast rounds, to bargainingco previous trade agreements with numerous countries. with trade developing agreements former with arrangements colonies. of thebeginning By the1960s theEEC had entered into preferential were thatEuropean complicated preferential several by thefact countries andexpanded maintained trade The Kennedy Round was the first round that went be Roundwasthefirst Kennedy The of cereals. to came nothing, theoneexception with agricultural products, for certain agreements world commodity to conclude proposal butits and theEEC. intact, largely theend, theEEC In to CAP managed keep its intention theUnitedThe States to this wasfrustrated by address issue fundamental differences between policies. interventionist byhighly distorted was inagriculture that trade acknowledged had governments negotiations was meagre (Kock 1969; UNCTAD, wasmeagre(Kock negotiations 1968). theoutcome of the internal taxes), quantitative restrictions, (e.g. andissues agricultural products, sectors of other respect In however, products. for industrial theaverage cuts products, muchbelow remained for textiles reductions tariff billion.The $40 some worth countries’ industrial imports, tariff-bound amounting weresubstantial, toachieved anaverage KennedyThe Round endedin 1967. theresults onindustrial goods reductions thefieldof In tariff 1970:262; Round(Preeg Kennedy Curtis andVastine, 1971). by the1950s, perceived by theUnited States asaba forEEC that thenegotiations the aprominent had become countries. economic player wasimportant It individual with andnolonger tariff commonwas that theEECexternal countries with bargained onits tr andthespecial measures, inclusion of non-tariff the 1962 Trade gave thePresident It al Act. Expansion be keptbe to to abareminimumand“be consultation andjustification”. subject butconfirmed that exceptions cent to the50per Such cutwerepossible. exceptions shouldthe-board, namely the 1967 Code, International Anti-Dumping provided a valuable model for future negotiation on for negotiation future model avaluable provided officially only one year later. The negotiating parties agre oneyearlater. only officially parties negotiating The negotiating topic. Previous rounds away had from shied topic. Previous negotiating on agreed time, parties thenegotiating thefirst For As a consequence of this policy, by 1970 the EEC had potential association agreements with six country groups groups country six with agreements by1970 association policy, ofthis potential EEChad the a consequence As making up half of the countries of the no GATT, TN. 64/28, 21 1964. May 64/28, GATT, TN. 21 1964. May 64/28, GATT, TN. 9 and as a consequence the results were rather modest. Only one basic code resulted, onebasiccode Only wererather modest. theresults andasaconsequence n-Communist world (Curtis andVastine, 1971). (Curtis world n-Communist 184 uld encompass broad categories of goods rather than ing the liberalization of ag ing theliberalization which tackled the complex problem of thecomplex problem dumpingand tackled which untries under communist influence wereexcluded communist under untries cut of 38 per cent covering two-thirds of developed of developed cent per coveringcut of 38 two-thirds rgaining partner of comparable strength duringthe ofcomparable strength rgaining partner eatment co of developing d countries had expressed their willingness to take theirwillingness d countries had expressed ies in the negotiations. Ho inthenegotiations. ies similar problem areas. Another outcome areas.Another similarproblem of these the inclusion of agricultural products asamajor theinclusionof agricultural products niques to negotiate tariff reductions. This meant, This reductions. tariff tonegotiate niques ial meeting inMay 1963,ial meeting started butnegotiations agriculture. At thelaunch s showed some reluctance to “plunge reluctance into some thiss showed most five years, until 1, July years, five most 1967, to achievean ation that explicitly addressed theconcerns addressed ation that explicitly of ed to aim at a 50 per cent linear tariff cutacross- cent toed aimata50per lineartariff 10 yond tariffs and dealt with certain non-tariff non-tariff certain with anddealt yond tariffs Typically, theEEC former with arrangements ricultural commodities, the ricultural commodities, 8 wever, these negotiations untries. novelty Another The Kennedy RoundputThe of the Kennedy Round, Kennedy the of quarters of total US investment in the EEC, was perceived asathreat. EEC, inthe wasperceived USinvestment oftotal quarters of particular, agricultural In goods. themembership timingwasnot were right asgovernments The for intrade liberalization newsteps Members. the GATT conclusionthe successful of theKennedy Roundan 1962 Trade Act obliged them to obtain reciprocity from all parties. Leading economists pointed outthe pointed economists Leading 1962 from allparties. Trade reciprocity themto obtain obliged Act was voiced of theadoption against offered very few tariffs cuts and left the vast majority of tariffs unbound. of tariffs majority thevast andleft cuts few tariffs very offered the GATT. of theprin application The an adopted wasnevertheless principle of non-reciprocity common market However, and theinclusion of newmembers. Woods thebreak upof theBretton ofEuro focus The negotiations. trade of multilateral instance, enthusiastic, EEC inthefirst The wasless down. came prominent tariffs asindustrial GATT Contracting Parties, was the growing importance of non-tariff measures, which became more 13 12 11 intheth of theCommon (CAP) Agricultural Policy andinvest UStrade on impact haveanegative would to reduce Furthermore, thetrade theUS deficit. administration feared that theenlargement ofEEC the multilateralUnited this States perceived imbalance to trade negotiations and start to wasthewish rectify (Low exports to morethaneconomies theirown expand thatemerged theUnited States had paidtoohigh a surcharge of 10 cent Congress, per USmerchandise to In thegrowing aview moderate tradedeficit. import pressure, atemporary protectionist Administration, imposed exchange under rates. Nixon The eventu which challenges significant inthelate1960s. Atthe mood of thebeginning the1970s faced system theinternational monetary of theUnited States Selling to theAmerican abolish unwillingness andthe restraints export tovoluntary Recourse demands. protectionist off fighting tohold Tokyo 1973-79 The Round: of GATT, bytheDirector-General Pleas made Sir (ii) selected products. theGSP, Under Delhi. inNew II lateratUNCTAD four years andwasadopted ofSystem Preferences (GSP) countriesdeveloping preferential astheGeneralized known market became suggestion access. This conference UNCTAD in andatthefirst this idea of UNCTAD, followed avoided. shouldbe Secretary-General that Raul Prebisch, asymmetries thefirst of theidea preferentialWhile countries, market theyargued by developed access wasnot opposed for equal treatment.association and 18 francophone African triggere countries. This prominent wastheYaoundémost example ConventionEEC the in1963 wassigned which between colonies not granted only pr possible distortionary effects of non-reciprocal market access concessions of non-reciprocal (e.g. Johnson, 1967). effects distortionary possible for the first timeintheMinisteria for thefirst countrie of developed those with fullybe reciprocal countries for by developing wasthat themwere made not commitments required toA majorobjective developing countriesdeveloping received preferential treatment (r On 1 January, 1973 Denmark and Ireland joined the EEC along with the United Kingdom. United the with EECalong the 1973 1 January, joined On andIreland Denmark Subsequent empirical studies found evidence for this scepticism (Cooper 1972; and Murray 1973; Murray (Cooper Baldwin scepticism this for evidence found studies empirical Subsequent 1977). for a period of 10 years. UNCTAD became the focal point within the UN system for monitoring and assessing the GSP. in1971 principle, MFN the the violated GSPschemes Since 11 eferential market financial aid.The guaranteed substantial butalso access, l Resolutions of GATT Contracting Parties inMay, Contracting of GATT Parties l Resolutions 1963. criticism Some the principle of non-reciprocity. The United States The the principleof non-reciprocity. argued that the ally led to the break-up of the Bretton-Woods system offixed system to led thebreak-upally oftheBretton-Woods ciple was reflected in the fact that developing countries that generally developing inthefact ciple wasreflected Eric Wyndham White to themomentum White buildupon ofEric Wyndham ree new member countries would hamper US exports countries newmember ree wouldhamper US exports than the United States about starting another roundthan theUnited States starting about of the United Kingdom, which accounted which Kingdom, of for theUnited three- 1964 proposed that developed countries grant that developed all1964 proposed d launch a new negotiation were not supported by werenotd launchanewnegotiation supported Price (ASP) system in US customs valuation reflected reflected valuation inUScustoms system (ASP) Price s. The idea of non-reciprocity had been formulated had been of non-reciprocity idea s. The d demands from developing countries this outside pean concern theintegrationpean wasprimarily of the price trade in thepast negotiations, helping other ment. It was believed that the possible application that thepossible ment. wasbelieved It educed or zero tariff rates over the MFN rates) for rateseduced overtheMFN orzero tariff 185 Contracting Parties approved a waiver to Article IofGATT toArticle awaiver approved Parties Contracting , 1993; 1997). Ostry, Amajormotivation for the d found its final formal expression in part IV of IV inpart final formald found expression its 13 Another concernAnother shared by other 12 The

II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING WORLD TRADE REPORT 2007 SYSTEM: ACHIEVEMENTS AND CHALLENGES WORLD TRADE REPORT 2007 II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING SYSTEM: ACHIEVEMENTS AND CHALLENGES ranging of allrounds since theinception of GATT. to asthelocation Tokyo strategically waschosen Declaration of September 12, of September Declaration 1973 theContracting the Tokyo sector, thepa given asapriority Declaration singledoutin weremoresuccessful.Tropical had been products products negotiations ontropical The products from 6.3 to 4.3 per cent, andtheEEC to per from 6.3 4.3 Table from 6.5to cent 4.6 to per (see order products In 7). When theTokyoWhen in1973, Roundwaslaunched it brought negotiations to almost anumber thelaunchof thenegotiations after Soon countries increasing upthis took the invitation developing thirty Nearly negotiations. inthe to participate wereinvited ofGATT Parties Contracting EEC andJapan. However, incl also since theagenda develope again were round the of protagonists main economic development”. countries.The of theleast-developed needs of wasmade Mention thespecial countries thedeveloping intheirefforts to assist trade”. recognized Declaration “the The measures for to need taken special be inthenegotiations to trade andtheimprovementof of obstacles the The negotiations on agriculture presented the greatest difficulty from the beginning. Attempts to reconcile toreconcile Attempts beginning. the from difficulty greatest the presented agriculture on negotiations The greater needed measures. disciplinethe trading in theapplication system of non-tariff only were thattariffs recognized was It negotiations. making worldtrade fairer rather than freer, measures in thespotlight of the non-tariff thus putting (Commonwealth 1978). Secretariat, aconsequence, As countries thedeveloped to agreed focus on andgreaterliberalization tendencies protectionist weregaini economies other andseveral Asian exporters initiate anewmultilateral round of negoti trade System and the subsequent weakening andthesubsequent System oftheUS 15 14 on many of those products without seeking reciprocity from developing countries. from developing reciprocity seeking without on many products of those in countries. developed of coun developed Amajority negotiations, countries developing theremova requested framework. Agriculture had, once again, proved amultilateral agricultural to establish andaproposal intractable. products) meatanddairy (bovine agreements (UNCTAD, 1982; Ostry, 1997). them, dividing suchquestions as market access and other areaof thenego every almost which would cut high tariffs to a greater extent than to agreaterextent wouldcuthightariffs which formula a mathematical Switzerland suggested (non-linear) reduction, calculate theamount of tariff of Commerce,Department 1982). United States The onindustrial to average agreed reduce its tariff covered $126 reductions about the tariff cent per of billion 90 industrial trade orsome in 1976 (US cent werefar However, per average from the60 originally cuts envisaged. fieldtheagreed thetariff In degree. a lesser sugar, to products, andtobacco wereopened coffee, for markets tea,andcocoa, while fishery affected to At goforward. theendof theround, thenegotiations intheGroup onAgriculture resulted intwo measures wereacombinationmeasures ofpr and increasing difficulties with theirbalanceof with and increasingdifficulties the positions ofthe positions theUnited States abolition of the ASP inUS valuation. customs ofabolition theASP EEC to introduce waslooking rate exchange discussi Only the United States asked for (Kemper, some reciprocity 1980). A comprehensive account of the preparation for and conduct of the Tokyo Round negotiations, together with an with together Tokyo negotiations, Round ofthe andconduct for preparation of the account Acomprehensive evaluation is found results, of in its Winham, 1986. a standstill. Developed countries experienced an economic downturn andtheEEC failed during1975 and1976 in andheldupprogress eferences and MFN tariff reductio tariff eferences and MFN tiations. In July 1977 both parties agreed to drop most substantive 14 186 number of participants to over100 countries.number of participants payments. Rising unemploymentpayments. andinflation fuelled ations. Japanhad world oneof become thebiggest was regarded as the most comprehensive andwide- asthemost was regarded uded a variety of development issues, countries of not issues, development avariety uded to increase their export earningsandto promote theirexport to increase dollar put the EEC mounting The putthe pressure. under dollar one factor influencing international trade, international influencing andthat factor one international framework of world for theconduct ons into thedefinitive andsought thenegotiation Parties committed to the“progressive dismantling committed Parties lower tariffs andtherebycontribute to agreater lowertariffs suddenly seemed an insurmountable challenge aninsurmountable seemed suddenly of political and economic factors emerged that andeconomic factors of political tries acceded to this request and liberalized trade andliberalized to acceded thisrequest tries subsidies. This at least allowedthenegotiationssubsidies. atleast This d countries, in particular theUnited States,d countries, inparticular the ng expanding shares ofworldtrade. theTokyo In ng expanding rticular interest of developing countries. In the l of all trade barriers faced by tropical products faced products l of alltrade barriers bytropical ns. The most significant measures significant most The ns. 15 The liberalization liberalization The as the“Enabling Clause”. Enabling The Clause constituted and of acomprehensive special specification the EEC, Japan, andtheUnited States from beneficiari preference reduced generally marginsthat developing (1) Customs The Valuation grea Agreement provided as“codes”. known measures, covered thefollowing : codes The from 17.4 decreased products onnon-GSP tariff MFN to 13.5 cutonly cent per andthus thetariff to avoid theerosion of preferences (Commonwealth1978). Secretariat, However, theTokyo Round made had been outthat efforts pointed of theirbindingandunconditional nature. further because They countries that argued MF or evenimproved. Developed of developing countries.expectations Developing licensing and to prevent licensing from becoming an import barrier in its own right; own barrierinits licensing andto prevent animport licensing from becoming was Procedures Licensing onImport Agreement (2) The trade; restricted inmany which cases goods imported onwhich value of goods A majoraccomplishment of theTokyo Roundwasthein (UNCTAD, 1982). countries to discriminate by developed used could be “graduationcalled provision” feared that this graduation entered thefinal observers agreement. Some of countriesneeds developing changed. Despite strong anddifferentialspecial treatment wastomor become GA under accept greaterobligations countriesprecisely, wanted indica language developed countries that insisted the EnablingDeveloped Clause clause. waiver from theMFN differential treatment for andleast-de developing provisions of Ar theMFN countries, notwithstanding and more favourable treatment countr to developing onaclause agreed parties negotiating countries. The ofhowto framework createalegal forquestion th inprogress thenegotiations”. item in theprogramme first of The theGroup “Framework” was the the international framework of for worl theconduct Paragraph that 9of “c theTokyo stated Declaration (Kemper, interest larger countries for cuts developing 1980). experienced of potential export products for alarge number of countries, this noted criticism fromDespite developing that itshouldbe tariffs amounted to cent about22 per compared to theroughly 33 cent per overall (UNCTAD, 1982). reduction average countries. The of developing interest export covered bytheGSP were of and which particular not than average6.7 werecutbyless onproducts cent per (UNCTAD, 1982). tariffs addition, In MFN amounted to $19.4 billionin1976, thetrade-weighte 16 range of to products. andapplied awide bythemajorparticipants used harmonization schedule. of This formula, thetariff Despite these substantial cuts, the outcome of the Tokyo Round with respect to tariffs fell short of the fell short theoutcome to substantial of cuts, these tariffs theTokyoDespite respect Roundwith countriesfrom least-developed in on1January, onestep 1980. on tariffs example, States its theUnited lowered For cuts were to be implemented in based tariff reductions. tariff based item-by-item offered and approach formula the follow not did Zealand New and Iceland as such countries Other formula. modified 16. aslightly used used Canada countries Scandinavian EECandthe 14, Australia, used whereas mayIt noted be that differed the used from to coefficient country country. Japan, Switzerland and the United States ad valorem eight equal annual instalments. Several exceptions were agreed upon. exceptions wereagreed Several eight equal annual instalments. TT astheireconomicsituation improved. Moreover, of theextent TT duties were based. It therefore It dutieswere valuation based. limited of thearbitrary countries had requested that maintained the GSP be countries had requested which later became known as the Swiss formula, astheSwiss was known laterbecame which veloped countries anditamountedveloped to apermanent among developing countries in an arbitrary manner countries amongdeveloping inanarbitrary e special anddifferentiale special treatment for developing ies without accordingies without treatment thesame to other imports (except for textile and clothing products) andclothing products) for textile (except imports ticle Iof theGATT. known became provision This d average from 9.2 preference to margindeclined that allows GATT Members to accord Members differential GATT that allows d trade which might be desirable inthelight desirable might ofd trade which be ter uniformity in the methods of calculating the of calculating inthemethods ter uniformity e limited as the development, financial asthedevelopment, and tradee limited countries enjoyed under GSP. countries under enjoyed of theimports On es of their respective preferentiales of which theirrespective schemes, 187 was linked to the question of reciprocity. More More ofreciprocity. question linked was tothe onsideration shall be given to improvements in to improvements given shallonsideration be ting that developing countries were expected to countriesting that developing were expected designed to simplify the administration of import ofimport theadministration to simplify designed N tariff cuts also benefited developing benefited countries also cuts N tariff resistance from countries, developing resistance theso- troduction of several agreements on non-tariff onnon-tariff of several agreements troduction 16 The vast majority of the tariff of thetariff majority vast The

II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING WORLD TRADE REPORT 2007 SYSTEM: ACHIEVEMENTS AND CHALLENGES WORLD TRADE REPORT 2007 II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING SYSTEM: ACHIEVEMENTS AND CHALLENGES the negotiations that agree Tokyo the Roundmarked andStern,1982; 1982) Deardorff to came theconc differed for all the codes leading to a patchy coverage in terms of legal disciplines. The codes were codes leadingtoThe for apatchy allthecodes differed coverage disciplines. intermsof legal of the codes reduced the opportunity to participate to participate theopportunity reduced of thecodes co of intheinterest developing it wouldhave been In theevent, ahandfulIn only of develo of theTokyo Round(UNCTAD,1982). considered thelack ofshould apply. agreement onsafeguards asamajorshortcoming observers Some place inrelation to theconcept Sa of selectivity. TokyoThe Rounddidnot produce anagreement onsafeguard had measures taken althoughdiscussions their than less at sold were exports value. normal where situations in duties such impose to decided governments when Agreement Antidumping of regulated theuse The (6) national and applying standards; countries internationa were encouraged existing to use (5) The Agreement onTechnical The to(5) Trade Barriers way; in anunjustifiable ensure theywere not of anunwarranted trade. Countervailing distortion trade dutiesshouldnot impede to sought Agreement control andCountervailing onSubsidies of Measures and subsidies The theuse (4) government procurement market itupto foreign byopening firms; Agreement The onGovernment Procurement(3) ai 17 Finally, theTokyo non-tari some Rounddidnot tackle had who signed.those treatment fromthesignatories thesame as received that generally had not thecodes signed Members abide by However, theirprovisions. abide obliga since GATT countries those that only had andratified themto signed that obliged agreements asstand-alone drafted GATT where increased imports threatened or caused se orcaused threatened imports increased where GATT unnecessary that created standards from establishing aspirations as expressed in theTokyoaspirations asexpressed Declaration” of (GATT, 1979). observers misgivings, these Despite in the negotiations, were obtained didnot sincewhat correspond additional theresults to benefits their 1979 that “it this frustration, stating wa expressed theeffects disappointing, was theoutcome onNTMs The overall results of the negotiations did not meet the expectations of developing countries. Not only atthetime. tendencies fed protectionist andtoeliminat provisions safeguard were emerging especially economiesThe in Asia countries andimpeded of developed in themajority at the thirty-fifth session of the Contracting Parties heldattheendof theTokyo of theContracting Parties session RoundinNovember at thethirty-fifth andStern, (Deardorff were considered also asmodest of theGATT. thescope broaden andto provided anextent negotiations togovernments deepen The thenego limitations, these Despite countries. tosignificance developing an important impetus for y theUruguay impetus Roundsome an important sought therightsought to discrimina apply products, iron and steel products, consumer electronic products, iron andsteel products, countries. It left intact the NTMs on imports of ag See Table 13 in subsection 2.(c). e quantitative restrictions, such as voluntary export restraints (VERs), (VERs), restraints export such asvoluntary e quantitative restrictions, tory safeguard measures whereas others argued that the MFN rule safeguard measures argued that others whereas theMFN tory tiations on non-tariff measures tiations onnon-tariff ping countries to subscribed thecodes. 188 feguard measures could be taken under Article XIX of XIX feguard taken Article could measures under be hurt by these measures. Several observers (UNCTAD, observers Several measures. bythese hurt ricultural goods and foodstuffs, textiles andclothing textiles andfoodstuffs, ricultural goods untries to subscribe to these agreements. Opting outOpting untries to to agreements. subscribe these s difficult for the developing countries for to thedeveloping determines difficult (Product Standards) aimed to aimed Standards) prevent governments (Product 1982). spokesman countries The for thedeveloping tions basis,GATT were generally applied onaMFN effectively in shaping them. The list ofsignatories list inshapingThe them. effectively lusion that the Tokyolusion that the of limited Roundwasonly s, and shipbuilding. These barriers weresubstantial barriers s, andshipbuilding.These considerably the exports of developing countries. of developing considerably theexports an important change in the structure of thetrade inthestructure change an important rious injury to a domestic injury. Certain countries countries injury. Certain toadomestic injury rious med atpromotingmed inthe greatercompetition l standards and to be transparent in establishing transparent andto be inestablishing l standards of the tariff reductions forcountries developing reductions of thetariff anti-dumping duties and associated procedures dutiesandassociated anti-dumping ff measures in areas of interest to developing ears later.ears However, thefailure to reform the obstacles to internationalobstacles trade. Furthermore, demonstrated the willingness of thewillingness demonstrated 17 Some authors argued that authors Some 1997). andthat EEC theUnited wascompatible theGATT States The with argued that theCAP itself econ The negotiations. onGATT a significant impact of the solution to the existing difficulties. difficulties. of to thesolution theexisting bu ofsecuring interms particularly strategy, appropriate most the as regarded was to policy approach multi-track A process. multilateral the 1997). (Ostry, asymmetries Furthermore, the US govern these toredress relations totrade approaches andmultilateral bilateral require would It Japan. notably US economy wasFundamentall wereseveral. inapproach for thisshift the most open1982 andoneyearlatertheUnited in the world,Regional Trade ReaganinFebruary President Agreement, by theCaribbean BasinInitiative, wasproposed many States United first The totrade. others approaches ofregional use active making andstarted multilateralism were imposing thelightIn theUS rather of these results, mixed obstacles on trade, for themainparameters andthus thesubsequent round.other set issues, most achi Declaration final Ministerial The States. bytheUnited putforward been coas anewtopic forDeveloping trade negotiations. agricultural market. ar inits Another heavily intervened European of (Ostry, subsidies massive markets because to theEuropean market, third-country butalso Stat ofUnited thecomplaints Zealand,voiced and New wasnot asuccess meeting andbroughtThe theGATT had to putbackontrack Cont again. be The system andthat theworldtrade addressed to be needed divide North-South andagrowing protectionism into andwerepushed adebt obligations their debt develo several surged, rates USinterest As system. had which severe policy monetary introduced astrict inflation theChairman to order fightIn double-digit launched numerous antidumping investigations. EU, invoked byCanada “unfair The andAustralia, followed remedies. of trade and trade” arguments cent States’ ofper ma theUnited Republic of Korea. Reaganannounced President anego andantidumping against petitions duty countervailing 1981. brought successful agroup of largely theUnited States’ industry thefollowing years, In steel in onautomobiles (VERs) restraints export Japanto voluntary apply pressure, persuaded protectionist asharply risingfederalin 1980 budget andrecorded consequences for theentire international 1981, In economic system. thenewUnited States’President post-Tokyo The Roundperiod had which far-reaching policy inUSeconomic swing aradical of with the1980s began decade The (iii) y infollowing increase further would economy theRound’sand large countries pa developing agenda, 1986negotiations 1997). Ostry, (Winham, and1990; countries Even dominated thoughdeveloped by “a system”. oftheGATT insupport consensus renewed meagreoutcome This wasaclearsignal that a in particular, of amajorsource confli to proved be in1982, meeting Ministerial since the19 thefirst to stimul cuts tax drastic Reaganannounced Ronald 1993; Croome, 1995). The GATT started to work on agriculture, services, trade in counterfeit goods and goods trade incounterfeit 1993; to workonagriculture, services, Croome, started GATT 1995). The guidelin important provided meeting by theMinisterial round of multilateral negoti andwide-ranging fresh rket. The United States was not the only one to make extensive userket. States oneto wasnot United theonly make The extensive y-in from others to multilateral negotiations, which were seen as part part as seen were which negotiations, tomultilateral others from y-in States started negotiating a free trade area with Israel. The reasons negotiating trade Israel.The a free area with States started eved barely morethaneved barely anexpression ears, and hence also theirrole andhenceintheGATT. also ears, government abandoned its overridingcommitment government to abandonedits 73 that theTokyo had meeting launched Round. ct. The United States’ delegation, backed States’ United delegation, byAustralia The ct. ations was needed. The work programme established workprogramme established The ations wasneeded. ate the United States’ ec ate theUnited ping countries unable found to themselves finance deficit. The Reagan administration, under increasing Reaganadministration, under The deficit. repercussions for thein repercussions y, intheUnited theview States wasthat the while omic weight of developing countriesomic weight intheworld ofdeveloping crisis. In 1981 In crisis. that evident increased itbecame close to abreakdownclose (Croome, 1995). Agriculture, of the US Federal Reserve System, PaulVolcker, Reserve Federal of theUS es fores thepreparation of untries strongly opposed this project, which had which thisproject, opposed untries strongly 189 suppliers from Brazil,suppliers EEC, the and Japan, Mexico es’ farmers that theywere not onlydenied access racting Parties, therefore, Parties, racting to agreed holdafirst ment had increasing doubts about the viability of theviability about ment had increasingdoubts ea of concerned conflict theinclusion of services tiating programme to limit steel imports to 18.5 imports tiating programme to limitsteel rticipated actively and, for the first time, and, for made thefirst actively rticipated of the determination tocreate determination ofthe onomy had which stagnated ternational macroeconomic macroeconomic ternational future negotiations (Low, (Low, negotiations future

II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING WORLD TRADE REPORT 2007 SYSTEM: ACHIEVEMENTS AND CHALLENGES WORLD TRADE REPORT 2007 II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING SYSTEM: ACHIEVEMENTS AND CHALLENGES back and joined the group only in the last stages. At stages. thegroup inthelast back andjoined only thenewround launched toeager see to jointhem decided to form an informal working group. They invited 20 developing (EFT countries ofdeveloped asmallgroup achieved, countries who were supposedly Committee for bythePreparatory recommendations of the GATT system and trade in services. The wide range of topics made theUruguay made Round the most range of topics wide The andtrade inservices. system of theGATT investment measures, thefunctioning trade-related rights, property of intellectual aspects trade-related of theTokyosafeguards, thecodes Round, subsidie held inSeptember, 1986. to reachagre the newroundimpossible anditproved Agreement andanagreement conditions onsafeguards. were of These unacceptable to thesupporters to take place. thenumerous Among conditions were th of co alist prominently established Brazil andIndia, for meeting to thedatefororder set apreparatory 1985, April In attention. of OECD thetradeministers for them, were which vital such astext trade topics countries.developed contrast, In developing countrie countries opposed the inclusion of new subjects, such theinclusionof newsubjects, countries opposed for thenewroundthe list of without negotiations on alltopics discussed to 1986, Committee July from January Preparatory ninemeetings, the round. In 1986-94 Uruguay RoundNegotiations: The out turned preparations for Meeting The theMinisterial From the GATT to the WTO (i) (c) Me theMinisterial following meetings high-level In 18 14On Uruguay. Este, del September, inPunta opened 1986 Meeting theMinisterial negotiation. for theMinist declaration Colombia, adraft presented They measures. investment trade-related and rights, negotiations, the Punta del Este meeting wasconclude meeting Este del thePunta negotiations, objectives. thetwo into accountEC. of abalance sought the negotiations between theposition The requested by developing countries, by ti developing requested andatthesame threat to the ability of governments to intervene in the economy (Ostry, 1997). deadline theJuly intheeconomy (Ostry, of to As threat governments intervene to theability were sufficiently separatedfromwere thetraditional sufficiently area butinaway such that they to cover eventually aspects, agreed allthree participants The investment. thenewis wasabout source of conflict second The still had to be settled. First, onthetopic of agricultu First, had settled. tostill be tropical products, natural resource-based products, textiles and clothing, agriculture, GATT Articles, Articles, andclothing, agriculture, textiles GATT products, natural resource-based products, tropical GATT body did not have to be taken by consensus, but could also be approved by a two-thirds majority majority didnot have byatwo-thirds approved taken to be byconsensus, be body butcould also GATT of wasto organizeway outof asession thisimpasse Agency, 1986). News (European in thepreparations stressed take also place to launchanewround. They decided that a Preparatory Committee should start organizing a ministerial meeting, which was tobe was which meeting, aministerial organizing start should Committee that aPreparatory decided agreement reached that “a session of newround of votes. The ontheproposed process preparatory The Punta del Este Declaration contained mandates fo mandates contained Declaration Este del Punta The launched. andtheUruguay Roundhad finally been was adopted multilateral trade negotiations initiated has nowbeen A developing country venue had been chosen to underscore the development aspect of the Round. ofthe aspect development the tounderscore chosen been had venue country Adeveloping 190 making significant progress. Several majordeveloping Several progress. making significant nditions which had to be fulfilled for had fulfilled nditions which to thenegotiations be eting of 1982, for anewround grewamong support iles and agriculture, would not receive the necessary andagriculture,iles thenecessary wouldnot receive re the final text called for “greater called liberalization”, text final re the as countries agreed that a preparatory meeting should meeting that countries apreparatory agreed the importance of developing country participation participation country ofdeveloping theimportance s and countervailing measures, dispute settlement, disputesettlement, measures, s andcountervailing . The EC,. The stood Japan andtheUnited States first theendof July, thegroup, and bySwitzerland led s of GATT negotiations. After a week of intensive aweek After negotiations. s of GATT s showedconsiderable fearing reluctance, that the A GATT Council meeting was held in July 1985 inJuly Council washeld A GATT in meeting A countries, Australia, Canada and New Zealand) Zealand) Canada andNew Australia, A countries, regarded the inclusion of these new issues asa newissues theinclusionof these regarded a newround. Several developing countries, most ement. The Unitedement. States The considered that theonly me for “more andpredictability,” discipline taking ”. theContracting Parties afterwards, shortly And d on20 Declaration September. Este del Punta The e recognition of the undesirability of theMultifibree recognition of theundesirability approached and no substantive results had been results andnosubstantive approached erial Meeting, which was to become thebasisfor wasto which become erial Meeting, sues – services, intellectual property rights, and rights, property intellectual –services, sues the Contracting Parties. Decisions in this highest inthishighest Decisions Parties. Contracting the as services, trade aspects of intellectual property property of intellectual trade aspects as services, to be as painful as the decision to launch a new r negotiations on tariffs, non-tariff measures, non-tariff ontariffs, r negotiations 18 Two majorissues The Ministerial Meeting in Montreal in December 1988 was supposed to serve as a mid-term review of review asamid-term 1988 to serve inDecember wassupposed inMontreal Meeting Ministerial The 1987.their workin February With theagricultural theyfeared solved, With blockage that to express began themeantime,In other participants text. to of theDraft changes onaset and agreed brokenfar wasonly enough. deadlock one This nearly byarange for States, supported theUnited whereas the EC thecompromise onagriculture wasnot acceptab theEC andth wasagainbetween disagreement it. The Final Act, of theDraft aversion issued Secretariat andanewmultilateral mechanism trade or settlement ofthe shape afinal to agreement emerge. began inagriculture deal of thenegotiations an impending the hope considerable made andsoon progress negotiationsThe received fresh impetus with the deci the negotiations could continue inthesummer year. of thesame that so ofwas successful his years, for inlobbying fast-track anextension by two negotiating authority was failure Meeting The of thisMinisterial fruitless. far remained apa of parties both thepositions meeting 1990, inDecember butdidnot bringth in Brussels 18 inthe debate the month dominated Agriculture negotiations. the continue to agreed governments of four anewdeadline 19 months, set untilApril They attheendof theMont decided theMinisters issues, or In subjects. ontheothernegotiations unresolved the EC. United States The insisted ontheabolition group onagriculture negotiating wasdominated The installed. werebeing commissioners Th amongparticipants. interests blocked bythediverse the negotiations. negotiating Six groups were ableto ambitious tradeOveral negotiation everundertaken. participants the necessary push to go forward with thenegotiations. with pushto forward go thenecessary participants concerns complicated andtherefore by the further situation presented additional became The demands. that theoverall for deadline 1June1991, wouldno ofand gradual agricultural onagriculture reductions blockage subsidies. brought The to ahalt the proposed an agreement onshort-term reform meas on account that of had anewPresident thefact been andclot andtextiles agriculture,be TRIPS, safeguards, At this critical moment, the climatefor the Round the At moment, thiscritical that theRoundwouldcontinue concluded to 1994 andbeyond. observers 1992 inDecember signing ofNAFTA andtheinauguration ofBillClinton inJanuary asnewUSPresident authority wasto onJune1, expire authority 1993. Ur The USadministration’s asthe 1993. track andshorter fast grewshorter agreement afinal tofind Time and developing countries sent a letter to countries theGove and developing sent aletter required thecompletion of negotiations substantive by 15 December, 1993. deadline This gave the Clinton’s President fast-track extended US Congress inCroome,(cited 1995). April, the United In States for heavy electrical equipment and settled a bilatera equipment andsettled electrical for heavy them “to timeandto at this critical display leadership uguay Roundhad againreached andsome alowpoint but once to werenot again, ready adopt governments The draft agreement contemplated draft The aunified dispute andtheEC reached anagreement onmarket access rnments ofrnments theUnited Stat their fatigue theUruguay with Round. andfrustration s between April 1989 April Meeting andtheMinisterial s between t be met. Fortunately, met. inMay 1991,t be Bush President a severe blow to the GATT’s credibility andimplied blowto theGATT’sa severe credibility e EC and the United Statese EC andtheUnited real meeting toreal agreement. meeting givemore timeto seek negotiating until 15 authority April, 1994, which l dispute ongovernment procurement.Finally, the of all trade-distorting subsidies inagriculture and of alltrade-distorting began toimprove. March 1993, In began 37 developed hing. negotiations The additional were under strain report substantial progress, but all the others were butalltheothers progress, substantial report l, 15 negotiating groups were formed andbegan ures. The EC was only prepared tomake limited prepared ECwasonly The ures. der to avoid the loss of progress made onother to made der avoid of progress theloss ganization to replace GATT. 1991 December In the theEC andtheUnited States their wouldoverlook give the Round the priority it so clearly deserves” clearly itso Round thepriority the give of agricultural exporting economies, itdidnot goof agricultural exporting sion of the EC Commission to reform the CAP. In by disagreements between the United States and theUnited between by disagreements 191 elected in the United States and in the ECnew States andinthe United inthe elected year later,Washington metin parties both when 89. Little progress was made in this interval and inthisinterval wasmade progress 89. Little rt and all efforts to remained findacompromise andallefforts rt e most contentious issues in Montreal proved to proved Montreal in issues contentious most e le since itthreatened thefoundation of theCAP, e United States on the issue of agriculture. States ontheissue e United For es, EC,es, andJapanasking any closer. Duringthe

II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING WORLD TRADE REPORT 2007 SYSTEM: ACHIEVEMENTS AND CHALLENGES WORLD TRADE REPORT 2007 II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING SYSTEM: ACHIEVEMENTS AND CHALLENGES Members. Annex 1 contains the three major agreements, namely on goods (GATT 1994 andeighteen (GATT namely ongoods 1contains majoragreements, thethree Annex Members. of the Round. Annex 1 to Annex 3 are part of a“sin 3are 1to part of Annex theRound.Annex an ithas four Furthermore, important and structure. as theWTO establishes It that embraces allparts. related agreements), services (GATS and Annex 1 B), and trade-related aspects of intellectual property property ofintellectual aspects andtrade-related 1B), andAnnex (GATS services agreements), related retrospect, many commentators have that whiletheUruguay suggested retrospect, RoundAgreement onAgriculture rights. Annex 2 covers the Dispute Settlement Unde the DisputeSettlement 2covers Annex rights. of of theAgreement. legalstructure The all aspects General, Peter Sutherland, announced theendof su negotiations continued until themorning of 15Dec sector remained well above the average tariff on theaverage remained wellabove tariff sector inthis theother hand, noted that On many itshouldbe tariffs intheirmerchandise exports. products the developing countries andclothing astextiles acco tr multilateral into the integrated fully become would andh of tenyears outover aperiod phased would be Another successAnother of theUruguay RoundwastheAgreem for liberalization. future scene the andset rules trade multilateral may not have much occasioned trade liberalization, of ithad incorporating thevirtue agriculture into the most massive reform massive ofmost themultilateral since theinception of GATT. trading system of multilateral trade longyears Seven participants. an endtheexceptional treatment of this sector. The indicated, already As subsidies. export and support –market into measures access, domestic wasto categories approach three divide andthepolicy years manner.agricultural trade inasubstantive prog The timethat themult Uruguay Roundwasthefirst The andpredictable. morestable theworldtrading system rendered tariffs ofpercentage bound measure that dueto wasinsome al increase thefact economies in transition from 73 cent, to per anddeveloping 98 countries from 21 to 73 cent. per This from theirpercentage 78 cent, countries per increased to 99 developed lines, product number of bound the Round. The WTO Charter, WTO long, the Round.The ameretenpages 1995. from 1January, starting years inoverfive phased to be of tothecuts of cent, most 3.8 6.3 with per countries developed thefieldof agreedIn to tariffs, them. signed who to Members apply those since idea it from thesingle-package 4departs Annex (ii) The outcome of outcome Uruguay Round the The amount of groundThe covered bytheUruguay Round (ii) the Unitedbetween States and EC was needed. The However, asettlement issues sensitive thataccess, onthemost obvious institutions, andservices. itbecame thesummer andfallIn of 1993 consid theRoundmade 19 falling into began Uruguay place. la Roundpuzzle The before thefinalleft deadline, theyreturned to thenegotiating table. andmore More pieces of the guard against legal action that might otherwise have be that might otherwise action legal guard against A“peace commitments. reduction clause” specific wasintended to undertook Members three pillars, was measured eachof the as acomposite In of theAggregate interventions called Measure of Support. the beginning of December.the beginning butsince few were reluctance, days countries some showed Developing at to theother partners theirresults inWashington theypresented meetings several andBrussels after GATT, The Results of the Multilateral Uruguay Round Negotiations, Geneva, November 1994. November Geneva, Negotiations, Round Uruguay Multilateral ofthe GATT, Results The 19 Another majorachievement inbind Another wastheincrease 192 industrial products in countries. developed industrial products all agricultural tariffs were bound. Domestic support support Domestic were bound. all agricultural tariffs nexes which contain all of the other negotiated texts texts contain allof which the other negotiated nexes negotiations had finally succeeded andbrought had finallynegotiations succeeded the ember. The same day in the afternoon theDirector-ember. day intheafternoon same The rstanding and Annex 3theTrade andAnnex Mechanism. rstanding Policy international organization and defines its functions functions international its anddefines organization parties agreed that agreed allquantitative trade restrictions parties cut their tariffs on industrial goods from anaverage goods onindustrial cut theirtariffs l tariffs on agricultural goods were bound. The high The were bound. onagricultural goods l tariffs was impressive: twenty-five thousand pages detailed detailed pages thousand twenty-five was impressive: gle-undertaking” approach andthus bindingonall approach gle-undertaking” the Agreement reflects themaincontributions of theAgreement reflects bstantive negotiations andaconsensus amongall negotiations bstantive precedes the whole document andistheumbrella document thewhole precedes ramme for liberalizing agriculture was set forramme ten for agriculturewasset liberalizing ading system. This was a major positive result for wasamajorpositive This ading system. st days were marked by frenzied activity and the ence, andclothing sector intheend, thetextiles en feasible under WTO provisions onsubsidies. In en feasible WTO under unted for asimilarshare to that of agricultural two parties started to negotiate bilaterally and bilaterally to negotiate started parties two contains four plurilateral agreements that only only that agreements four plurilateral contains erable progress, especially intheareaofmarket especially erable progress, ilateral trading system succeeded incovering succeeded ilateral trading system ent of Textiles andClothing brought which to ings of tariffs by all parties. Measured bythe Measured byallparties. ings of tariffs The GATS directions. innewandsignificant have taken thesystem Agreements both ofthes onthesignificance andnot aview limitations Trade in fully in1995 with dealt Organization havebeen Neither of these additions of to these Neither themultilateral trading policies and practices of WTO Members andtherebyto Members of WTO andpractices policies on Trade andtheAgreement (GATS) onTr inServices no more than 20 per cent of total trade (measured on a BOP basis). cent onaBOP of total trade (measured per no morethan 20 cent per account for transactions over60 Services independently by the WTO Secretariat. by theWTO independently bythegove prepared statement –apolicy documents onaMember’s share of of review inworldtrade. depends two but thefrequency consists Eachreview through onaregular greater basis, transparency. conducted wouldbe that wasagreed thereviews It Annex 3introducedAnnex theTrade ReviewMecha Policy of themultilateral trading system. andefficiency predictability that discipline thestrengthened ruling. washoped It for addition, codisputes. In itwasmadeimpossible de stricter with process introduced amorestructured were to handled by be theDispute Se Members between amajorov System underwent DisputeSettlement The investigation anti-dumping initiating andconducting dumping andinjury. Furthermore, theAgreement elab onthedetermination ofthe rules dumping,theuse andprocedures clearerrules subsidies anddeveloped onsubs provisions The restraints. export as voluntary “grey-area” addition, In iteliminated issues. compensation of so-called with theuse measures, such onthetemporar rules stricter on Safeguards provided 22 21 20 of theUruguay Round results Two important very AgreementThe onTrade (GATS) in Services Uruguay RoundintroducedThe di strengthened and services directly related to the exercise ofsuchrights. to theexercise related directly and services exempts Further, Transport onAir theAnnex Services conditions. such non-market and any ashealthoreducation, that under other isprovided public service, schemes on acommercial security other are Cases inpoint suppliers. with social basisnorincompetition w sectors, GATSThe inprinciple to applies allservice have enhanced and, the“tradability” of services Combined changingas transport. with consumer preferences, innovations such andregulatory technical andregulatory (e.g. services), voice telephony andpostal upinmany theopening monopolies countries of long-entrenched services), ortele-education tele-health is likely to continue, of banking, (e.g. to newtransmission technologies owing theintroduction electronic been considered genuine domestic activities, have considered in been activities, genuine domestic on dispute settlement had no fixed timetables and had timetables nofixed on dispute settlement “services supplied intheexercise of governmental authority”. that are supplied neither are services These This material is largely taken from http://www.wto.org/english/tratop_e/serv_e/serv_e.htm. from taken islargely material This See the discussion in subsection 2. the definition of services under the GATS, would certainly amount to more than 20 per cent of world trade. ofworld cent 20 than per tomore amount certainly would GATS, the under ofservices definition the are onStatistics trade highly incomplete. in services A reckoning proper in international of services trade, on based 21 was inspired by essentially the same objectives as its counterpart inmerchandise counterpart trade. asits objectives the same wasinspired by essentially sciplines inthefieldof trade remedies. sciplines thus, created a need for multilateral disciplines. disciplines. for multilateral aneed created thus, of global production and employment, butrepresent andemployment, of production global rulings could easily be blocked. The newAgreement blocked. The be rulings could easily were of theestablishment theGeneralAgreement ith two exceptions. Article I(3) of theGATS excludes I(3) exceptions. Article ith two creasingly become internationally mobile. This trend This mobile. internationally become creasingly s, and in implementing anti-dumping measures.s, andinimplementing anti-dumping rules atthetimeofWorld of theestablishment the e additions to the trading system. On thecontrary,On e additionsto thetrading system. rnment under review, and a detailed report written written rnment review, under report andadetailed s would limit trade frictions andcontribute to thes wouldlimittrade frictions of anti-dumping measures and causality between between measures andcausality of anti-dumping from coverage measures affecting air traffic rights airtraffic affecting measures coverage from . The new rules onanti-d newrules . The untries losing a case to block the adoption of to theadoption untries a block losingacase idies established for thefi established idies 193 ttlement Body (Annex 2). The previous agreements agreements previous The 2). (Annex Body ttlement nism (TPRM) asaninstrument to review tradenism (TPRM) adlines in order to ensure prompt settlement of to ensure inorder adlines prompt settlement erhaul intheUruguay trade Round. disputes All contribute to improved adherence to WTO rules contribute to adherence improved to WTO ade-Related Intellectual Property Rights (TRIPS). (TRIPS). Rights Property Intellectual ade-Related this Report. This omission is a reflection of space This is omission areflection this Report. y use of safeguard measures aswelldealing of measures safeguard y use reforms in hitherto tightly regulated sectors such tightly reforms regulated sectors in hitherto orated theprocedures upon to befollowed in 22 Many services, which have Many services, long umping further clarifiedumping further rst time a definition of timeadefinition rst 20 The AgreementThe

II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING WORLD TRADE REPORT 2007 SYSTEM: ACHIEVEMENTS AND CHALLENGES WORLD TRADE REPORT 2007 II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING SYSTEM: ACHIEVEMENTS AND CHALLENGES trade and not negotiable theGATS. asunder Obligations contained intheGATS contained Obligations reasons that account sectors. of for many therelative service regulation-intensity ar similarmany services orevenidentical seemingly that consum thefact of services, the intangibility to with do isalso It of delivery. to not to inregard only thevariousoptions relates modes This goods. concerns regulation – andtrade inservices in goods trade to trade. barriers A majordifference between manner anddonot constitute unnecessary impartial regula a framework of rulesto ensure that services of their inpursuit to of thesupply regulate services theright recognizes of Members GATSThe expressly ofuse different options by suppliers. the to inorder capture of supply, amongmodes of theGATSchoose taxonomy themodal isnecessary movement amarket, within presence orthetemporary movements to cross-border extend must commitments and consumer. are thus There many commercially inwhich, to inorder be instances meaningful, trade supplied may presence physical of be onlythrough both producer thesimultaneous that many services employment marketemployment basis onapermanent however, to remain measures free operate regarding citizenship, that Members oraccess residence to the specifies, on Movement of Annex Natural Persons The orteachers). (e.g. accountants, doctors a service to of entering anothersupply of Member theterritory oneMember ofnatural persons consists persons of subsidiaries foreign (e.g. of insurance Presence domestic companies orhotel chains). aservice provide to inanother Member’sterritorial territory of premises, presence, orlease includingthrough ownership Commercial th aservice. implies to presence obtain consumer (e.g.situations orpatient) aservice where tourist movesinto another Member’s territory to refers abroad Consumption mail). or telecommunications via transmitted services architectural or (e.g. into of another of Member oneMember banking theterritory from theterritory flows services abroad, commercial presence, andpresence of natural supply to Cross-border isdefined cover persons. trade, consumption cross-border of services: supplying four modes GATS between The distinguishes identical to those used intheGATT. to used identical those example, national For treatment isageneral ingoods obligation relevant The amongMembers. widely may vary scope are Suchcommitments sectors. designated specifically relating commitments to byare specific market obligations triggered access andnational treatment in obligations, applydirectly which fit. The commitments of Members thus tend to reflect thus tend to reflect of commitments Members fit. The coverage content and substantive are to free thesector of tailor such astheysee commitments Members and qualifications. of nationalAgain, theextension treatment inany modify, industry. theconditions inlaw of infavour orinfact, competition of service theMember’s own services discriminatory measures domestic benefiting foreign National treatment capital. im commitments fo thelegal in thesector, thevalueof transactions, operationsoremployees service suppliers, onthenumber ofexample, services limitations imposed may be For of limitations. to varioustypes Market subject made may access commitments be sectors. in specified market include commitments specific access andnational treatment, are which negotiated commitments andexclusive suppliers. ofmonopolies ontheoperation and disciplines contingentObligations on obligations, theestablishmen transparency permitted), Among the general obligations are MFN treatmen thegeneral obligationsAmong are MFN The reason for this seemingly complicated set of distin set complicated for thisseemingly reason The own policy objectives, and does not seek to influence these objectives. Rather, to influence objectives. not theAgreement seek establishes these anddoes objectives, policy own and automatically to all Members and services sectors. Second, there Second, sectors. andservices to allMembers and automatically may be categorized into two broad broad into two categorized may be . 194 ption and production may be simultaneous, andthat simultaneous, may be ption andproduction e highly Th heterogeneous. tions are administered and inareasonable, objective particular sector may be made subject to conditions subject made may be sector particular services are typically more intensively regulated than regulated moreintensively aretypically services at a service supplier of one Member establishes a establishes supplier of oneMember at aservice ply that the Member concerned notply that operate does theMember rm of the service supplier,rm of of theservice ortheparticipation t (although certain time-bound exemptions are time-bound certain t (although or service suppliers. The key The suppliers. requirement isnot to or service of theconsumer, of acommercial theestablishment terms and concepts aresimilar,terms andconcepts butnot necessarily t of administrative review and appeals procedures, andappeals review t of administrative ctions regarding modes of supply reflects the fact fact the reflects supply of modes regarding ctions national policy objectives laid down in individual country schedules whose schedules country inindividual laid down of a service provider. of aservice can Even suppliers where groups. First, there are generalgroups. First, ese factors areamongthe factors ese and constraints, overall andconstraints, the Protection of Industrial Property (Paris Convention) (Paris andtheBerneConvention of Property for of theProtection Industrial the Protection that thesubstantive obligationsfirst, of themain conventions theParis ConventionWIPO, of the for 23 Agreement TRIPS The AgreementThe onTrade-Related Rights (TRIPS) Intellectual Property “Sector-Specific contain Sections” entries service. that applyonlyto theparticular ofsupply, commercial mode notably to aparticular subsequently list entries that allsectors applyacross “HorizontalThe Section” contains andhorizontal sections. of sectoral both consist schedules Most supply. to of eachof service thefour modes different respect orregula standards the implementation of specified to as used be may also Schedule The attached. be guaranteesfor theMember market which access andnational treatment andany limitations that may of tohaveaSchedule isrequired Member WTO Each international andtransfers. payments that ofnewmeasures havenotification asignificant im obligations concerning, further triggers commitments of existence specific The services. have assumed market access andnational treatment di others than ahandful less of have services, scheduled Members some While sectors. and inindividual implementing theprovisions of th are wish. Members iftheyso property intellectual Me allows which agreement, is aminimumstandards Agreement that shouldflowfrom theAgreement. TRIPS The benefits thesubstantive donot nullify IPRs nation treatment, general rulesto andsome ensure that ba additiontheAgreementIn for provides certain procedures.dispute settlement therespec about Members WTO makes disputes between Agreement’s enforce provisionsThe dispute settlement theirrights. effectively can thatso right holders the specify which andcriminalmeasures procedures, proceduresadministrative andremedies, provisional enforcement to applicable allIPR principles procedures rights for theenforcement property of intellectual enforcement Agreement The provisions of theTRIPS Agreement. TRIPS conventions ofprovisions these by areincorporated Convention) recent complied (Berne be must intheirmost with. versions, Works andArtistic Literary andtheminimumduration of rights, protection those therigh protected, to be namely thesubject-matter Each arespecified. ofprotection minimum standards In respect of each of the enforcement domestic main anddispute settlement. provisions, standards, three Agreement comprises The data. andtest secrets ofintegrated thelayout-designs ofplants, varieties includingappell indications geographical marks, including trademarks recordings service sound organizations), andbroadcasting With theexception of ofWith theprovisions the Berne Convention allthemainsubstantive onmoral rights, This material is taken from http://www.wto.org/english/tratop_e/trips_e/intel2_e.htm. See this site for further details. further for site this See http://www.wto.org/english/tratop_e/trips_e/intel2_e.htm. from istaken material This 23 covers copyright and related rights (i.e rights andrelated copyright covers ations of origin, industrial designs, pa designs, ations oforigin, industrial areas of intellectual property covered by the TRIPS Agreement, the Agreement, TRIPS by the covered property ofintellectual areas e Agreement within their own legal system andpractice. Finally, system legal theirown e Agreement within sume additional regarding, commitments for example, circuits, and undisclosed information includingtrade andundisclosed circuits, presence and the presence of natural persons. The of natural andthepresence presence persons. sic principles,such asnational andmost-favoured- ed in the schedule. Horizontal limitations often refer often limitations intheschedule. Horizontal ed reference the obligations under andthus become Specific Commitments Specific identifies which theservices (IPR). The Agreement lays down certain general certain down lays Agreement The (IPR). tory principles. Commitments are undertaken with principles.Commitments are undertaken tory left free to determine the appropriate method of to method theappropriate determine free left . The Agreement sets these standards byrequiring, standards these Agreement sets The . ts to be conferred and permissible exceptions to exceptions permissible and conferred be to ts measures, special requirements related to requirements border measures, special pact on trade and the avoidance of restrictions on ontrade andtheavoidance ofrestrictions pact 195 sciplines inover120sciplines outof atotal 160 of roughly procedures and remedies that must be available be that must andremedies procedures procedural difficulties in acquiring or maintaining or inacquiring difficulties procedural main features – substantive intellectual property property intellectual –substantive main features mbers to provide more extensive protection of protection moreextensive to provide mbers of the main elements of protection is defined, isdefined, ofprotection mainelements of the . In addition, and itcontains. In oncivil provisions deal with procedures domestic and remedies t of the TRIPS obligations subject to theWTO’s subject obligations t ofTRIPS the . the rights of performers, producers of producers of performers, . therights tents including the protection ofnew includingtheprotection tents inter alia , the

II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING WORLD TRADE REPORT 2007 SYSTEM: ACHIEVEMENTS AND CHALLENGES WORLD TRADE REPORT 2007 II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING SYSTEM: ACHIEVEMENTS AND CHALLENGES issue and it was carried forward into theDoha forward negotiat anditwascarried issue whether they are consistent with WTO rules. The CRTA The rules. WTO theyareconsistent with whether andassessing agreements these Trade Regional on ofexamining (CRTA) task the with Agreements were made on how to eliminate GATT procedures wh procedures GATT howtoeliminate on were made asanintern concerned of theWTO thetransparency that to issue wasbrought accommodate One society that upby civil newissues emerged. Members thebuilt-in additionto Uruguay pursuing In Ro turmoil. byfinancial posed contributed thechallenges commitments, to established themaintenance trade notwithstanding of open marketdifficult conditions note may also One that spiritof thisinternational same on cooperation, based financial thedetermination crisisdemonstrated Asian the telecommunications sector. negotiations completion of of the inthemidst The thefinancial services industry. of thefinancial services parts as to large are which abusiveandanti-competitive. rights property intellectual ofprovisions theAgreement, to measures appropriate thetransfer of technology anddissemination impede ontrade andmay effects may competition have restrain which adverse rights property to intellectual liberalization involving more than 95 per cent gl ofthe than95per more involving liberalization of Uruguay Round the aftermath The Despite theconsiderable success of theUruguay Ro (iii) that recognizes Agreement TRIPS ofthe 40 Article commitments ofcommitments GATS more than consolidat didlittle negotiations. Negotiations took the most on services Agreement of Textiles andClothing. other areas, In orreview theassessments detailed the timetable for future wasestablished an ambitioustimetable nego thatit wasevident inmany fieldsmoreworkwas Another concern taken up by the WTO wasregional concernAnother taken upbytheWTO discussion). taken to werealso improve transp initiatives Other that in1996 establishing and2002 access document The WTO Agreement required that Ministerial meet that Ministerial required Agreement WTO The regionalism). in particular, for pushed more. 1996 In and1997, GATS Singapore Ministerial Meeting in December 1996 inDecember prov Meeting Ministerial Singapore discrimination onworldtrade. andtheir impact around of thewo continued such agreements growth had members allWTO of theUruguayRoundalmost complementedregional agreements rather than multilateral undermined trade liberalization. theend By had been taken to de-restrict the access. Following Following theaccess. takenhad to been de-restrict trade facilitation. Clinton The administration triedto of negotiations ingovernment ontransparency procurement,EU while the pushed for theinclusion of to of Uniteditems round. theupcoming the agenda added that States thelaunch The would be proposed negotiations Canadaand opened with were which succ Ministerial Meeting in November 1982, inNovember Ministerial Meeting theUnited St influence agrowing oninternat regionalism had exerted also concluded a free trade agreement earlier with Israel. The view wasincreasingly gaining view ground that trade Israel. agreement The afree concluded earlier with also agreements aswell, implicated much smallershares butthese agreements of trade. thefailure After of theGATT ininternationalarrangements trade were largely concentrated were other There ontheEC andEFTA. 196 und agenda, further efforts were promoted by some efforts further und agenda, In February 1996, the WTO established aCommittee established 1996, theWTO February In Important regulatory innovations were also secured in secured also were innovations regulatory Important arency. (See subsection 6 below for 6below amoredetailed subsection arency. (See needed. As part of theUruguay Roundagreements part As needed. ates abandoned its long-standing opposition toPTAs opposition long-standing ates abandonedits this initiative, the WTO adopted newprocedures adopted this initiative, on theWTO prominent place intheschedule. Many of themarket s of certain commitments, most importantly the importantly most commitments, s of certain some licensing practices or conditions pertaining pertaining conditions or practices licensing some e the status quo in some sectors. The United States, United The sectors. quoinsome e thestatus include talks on trade and labour rights, butwas rights, andlabour ontrade talks include ich denied public access to documents, until action publicaccess toich denied documents, of WTO members to anagreement close inspite of members of WTO . Members may consistently adopt, theother with . Members und in reforming the multilateral trading system, system, trading multilateral und inreforming the all WTO documents are in principle unrestricted. areinprincipleunrestricted. documents WTO all it included the time and date for new or further thetimeanddatefor neworfurther it included negotiations were successfully extended to include ings be organized at least every two years. The years. two every organized atleast ings be obal market aswell in telecommunication services ational organization. Starting in1995, Starting organization. proposals ational ided an opportunity to start discussions overthe discussions to start anopportunity ided ism. During, and following the Uruguay Round, Uruguay the following and During, ism. essfully concluded in 1989. United The States had had limited success in focusing attention on this infocusing success attention had limited signed one or several regional agreements. The regional oneorseveral agreements. signed prevent inthelicensing orcontrol of practices ions (see subsection 5 for a further discussion of discussion 5for afurther subsection ions (see ional trade relations. to Prior the1980s, regional rld ledto theirinherent increasing about fears tiations areas, onmore than some items. In 30 24 50 kn areasbecame trade facilitation, thefour subject and investment, ingovernment trade andcompetition, andtransparency procurement.Together with to upthree workinggroups set ontrade decided Members theend, WTO In scepticism topics. onboth trade andinvestment aswelltrade andcompetition not ableto overcome thefierce of developi resistance analysis in the present context. inthepresent analysis of writing (early 2007), the Doha Round is still in pr for negotiations, of andsome themhave droppe been differential treatment, were andconcerns. issues issues slated allthese andimplementation-related Not commerce,electronic small economies, trade, debt trade andinvestment, trade andcompetition, transparency TRIPS, trade inservices, manufactured goods, andaworkprog issues of range negotiating a wide inDo launched eventually were negotiations New environment. to needed system trading afailure. multilateral as The for nonewschedule negotiations was As agenda. inlate 1999 Meeting Ministerial aconsequence, wasnot ableto theSeattle onan As agree issues. inGenevadidnot bringthen of discussion weeks Japan, with together for negotiations ontrade andinvestment aswelltrade andcompetition. Several to EC fora precondition refused anewround. The insist Cairns group the Tensions when heightened were that argued theywereunable to meet round. They countries of areview developing theou requested negotiations metconsiderable from anumb opposition The next Ministerial Meeting took place took inGenevaMay 1998 to Meeting markingthe devoted Ministerial andwasmainly next The taken up again in the context oftaken theDoha upagaininthecontext negotiations agenda. One majorachievement of One agenda. and government procurement, trade facilitation,WTO on IT products and was signed by all major traders in byallmajortraders andwassigned products on IT cuts tariff ITA promoted for States. The by theUnited further hadprovided which been Agreement (ITA), yet a WTO Member.yet aWTO th anniversary of notion multilateral that itwastimeto The launch anewround of trading system. anniversary China joined the ITA when it became a Member WTO in 2001. 24 the Singapore Ministerial Meeting Meeting Ministerial the Singapore ha in November 2001.ha inNovember Doha Roundencompassed The tcome of theUruguay launchinganew Roundbefore agree to any agree such commitment upfront andpushed, accepted, the Seattle Meeting was largely perceived waslargely Meeting accepted, theSeattle ogress and it will not therefore be subject to further to further not anditwill therefore subject be ogress egotiating parties closer on a range of outstanding onarange of outstanding closer parties egotiating the obligations undertaken intheUruguayRound. theobligations undertaken thissector, includingChinese Taipei, wasnot which own as the “Singapore issues.” These issues were asthe“Singapore issues.”own issues These take abreathandawaitmore favourable political ramme, including market access in agriculture andramme, inagriculture includingmarket access on the agenda, althoughtheUnited ontheagenda, States voiced and finance, and transfer oftechnology, special d asthenegotiations have At proceeded. thetime ng countries. EU of wanted The thetopics to see 197 rules, dispute settlement, trade andenvironment,rules, dispute settlement, ed ontheelimination of agricultural subsidies as andonlytrade facilitati er of developing countries. Led by countries. India,er of severalLed developing was theInformationTechnology on survives onon the survives Doha

II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING WORLD TRADE REPORT 2007 SYSTEM: ACHIEVEMENTS AND CHALLENGES WORLD TRADE REPORT 2007 II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING SYSTEM: ACHIEVEMENTS AND CHALLENGES Doha Round Torquay Source: Round Uruguay 1956 Geneva 1947 Geneva meeting or round Name of 1947-2007 Rounds, Trade GATT/WTO Table 4 Round Tokyo Round Kennedy Round Dillon Annecy Hoekman and Kostecki Hoekman (2001) and authors’ extensions. beginning 2007 beginning of as 150 countries 2001-? end-1993 1986 117 as of in103 countries 1986-1994 99 countries 1973-1979 48 countries 1963-1967 countries 45 1960-1 22 countries 34 countries 1950 countries 33 1949 23 countries parties number of Period and facilitation, environment, rules, services, measures: tradenegotiations. Non-tariff policies. oftrade surveillance and transparency settlement, dispute measures, investment trade-related origin, of rules inspection, preshipment property, intellectual services, plus Tokyo issues, all measures:item negotiations. Non-tariff developing countries andspecial differential treatment of safeguards, standards, licensing, product government procurement, import countervail, and subsidies valuation, antidumping measures: customs Non-tariff antidumping, customs valuation measures: Non-tariff talks. item-by-item EEC of the creation following concessions rebalance to byneed inpart motivated negotiations, negotiations negotiations Outcome negotiations negotiations and modalities Subjects Tariffs: formula approach and item-by-item Tariffs: formula approach and item-by- Tariffs: formula approach with exceptions. Tariffs: formula approach (linear cut) and Tariffs: offer- item-by-item request Tariffs: offer- item-by-item request Tariffs: offer- item-by-item request Tariffs: offer- item-by-item request Tariffs: offer- item-by-item request 198 all WTO Members. all WTO to extended codes ofTokyo Round majority andnew TRIPs; agreements on services ofWTO; creation torules; subjected clothing and andtextiles Agriculture average. on byone-third reduced again tariffs Average imports; manufactures OECD for percent tosix byone-third reduced tariffs Average some by35 percent; reduced tariffs Average accessions 8,700 concessions; tariff 4 accessions concessions; tariff 5,000 9 Modest reductions Modest Concessions on 15,000 lines tariff non-tariff issues except safeguards. guards. safeguards. except issues non-tariff all for agreed ofconduct codes voluntary antidumping and valuation customs on agreements lines bound; tariff 33,000 tariffs rejected inmanufactures cut linear a20 percent for 4,400 concessions exchanged; EEC proposal EECproposal exchanged; concessions 4,400 Africa North America North Asia World World Memorandum items: e d c b a regio(Billion dollars and percentage) by exports merchandise World Appendix Table 4 Source: developments. Note: included. isalways trade ot n eta mrc 1...... 3.5 3.0 3.0 4.4 4.3 6.4 9.7 11.3 America Central and South Commonwealth of Independent States (CIS) -----1.52.63.3 Middle East uoe3. 944. 094. 544. 43.0 46.0 45.4 43.5 50.9 47.8 39.4 35.1 Europe Comprising Hong Kong, China; Malaysia; Republic of Korea; Singapore; Taipei, Chinese and Thailand. Taipei, and Chinese Singapore; ofKorea; Republic Malaysia; China; Kong, Hong Comprising Membership as of the Membership year stated. Union. Customs African Southern tothe longer no and only Africa toSouth refer figures 1998, with Beginning Figures refer to the EEC(6) in 1963, EEC(9) in 1973, EU(10) in 1983, EU(12) in 1993, EU(15) in 2003 and EU(25) in 2005. Intra- in2005. EU(25) in1983, in1973, and in1993, EU(12) in2003 in1963, EU(15) EEC(9) EU(10) EEC(6) tothe refer Figures Figures refer to the Fed. Rep. of Germany from 1948 through 1983. through 1948 from ofGermany Rep. Fed. tothe refer Figures Developed countries Developing countries ni ...... 0.9 5.9 7.5 0.8 6.4 5.9 0.6 9.9 2.5 0.5 8.0 1.2 0.5 6.4 1.0 1.0 3.5 1.3 1.3 1.5 1.2 India 2.2 0.4 Japan 0.9 China ntdSae 2. 881. 231. 26988.9 9.8 1.2 12.6 1.0 11.2 2.1 1.1 3.5 12.3 2.2 14.9 1.2 3.7 1.4 18.8 1.1 4.0 1.4 21.7 4.2 0.9 0.4 Germany 4.6 1.8 0.6 4.3 2.0 Brazil 0.7 5.2 0.9 Mexico Canada 5.5 United States tl ...... 3.6 4.1 4.6 4.0 3.8 3.2 1.8 1.8 Italy European Union Members GATT/WTO South Africa Africa South United Kingdom USSR, former USSR, Six East Asian traders Six Asian East Zealand andAustralia New Argentina France Between 1973 Between and 1993 1983 an and between and 2003 export WTO, International Trade Statistics Trade Statistics International WTO, a b e c d n eetdeooy 1948-2005 economy, selected and n 0. 0. 0. 0. 0. 0. 0. 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 9815 9317 9319 032005 2003 1993 1983 1973 1963 1953 1948 646. 297. 827. 7162.6 67.1 73.3 68.2 76.3 72.9 68.2 66.4 812. 991. 681. 5814.5 15.8 18.0 16.8 17.3 19.9 24.8 28.1 346. 288. 658. 4394.4 94.3 89.5 76.5 81.8 72.8 68.7 63.4 401. 261. 912. 6127.4 26.1 26.1 19.1 15.2 12.6 13.4 14.0 142. 262. 682. 0334.1 30.3 25.2 26.8 20.2 22.6 28.3 31.4 139078515049413.8 4.1 4.9 5.0 5.1 7.8 9.0 11.3 98 5 7 8837 3910159 7369 3675 1838 579 157 84 59 ...... 9.7 9.6 9.7 5.8 3.4 2.4 3.0 3.4 ...... 1.3 1.2 1.5 1.4 2.1 2.4 3.2 3.7 ...... 4.5 5.3 6.0 5.2 6.3 5.2 4.8 3.4 . . . . . - - - 5.0 3.7 4.6 3.5 2.2 ...... 5.3 4.1 3.5 6.8 4.1 3.2 2.7 2.0 ...... 0.5 0.5 0.7 1.0 1.1 1.5 1.6 2.0 ...... 0.4 0.4 0.4 0.4 0.6 0.9 1.3 2.8 . . . 17921. 029.5 10.2 10.3 9.2 11.7 9.3 5.3 1.4 ...... 2.9 2.4 2.5 4.5 4.8 5.7 6.5 7.3 753. 043. 2439.4 42.4 36.1 30.4 38.6 27.5 - - 199 d import shares were influenced significantly byd oil import price Share Value EU

II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING WORLD TRADE REPORT 2007 SYSTEM: ACHIEVEMENTS AND CHALLENGES WORLD TRADE REPORT 2007 II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING SYSTEM: ACHIEVEMENTS AND CHALLENGES Asia North America North World World South and Central America America Central and South regio(Billion dollars and percentage) by imports merchandise World Appendix Table 5 e d c b a Memorandum items: omnelho needn tts(I) . . 2.1 1.7 1.2 - - - - - Commonwealth of Independent States (CIS) Source: developments. Note: included. isalways trade Africa Europe Europe Middle East Comprising Hong Kong, China; Malaysia; Republic of Korea; Singapore; Taipei, Chinese and Thailand. Taipei, and Chinese Singapore; ofKorea; Republic Malaysia; China; Kong, Hong Comprising Figures refer to the EEC(6) in 1963, EEC(9) in 1973, EU(10) in 1983, EU(12) in 1993, EU(15) in 2003 and EU(25) in 2005. Intr in2005. EU(25) and in1983, in1993, in1973, EU(12) in2003 EU(15) in1963, EU(10) EEC(9) EEC(6) tothe refer Figures 1983. through 1948 from ofGermany Rep. Fed. tothe refer Figures Membership as of the Membership year stated. Union. Customs African Southern tothe longer no and only Africa toSouth refer figures 1998, with Beginning United Kingdom Developed countries 16.5 17.0 16.0 0.7 14.3 0.7 2.2 12.3 3.0 0.7 11.4 2.3 3.2 0.9 13.9 1.8 3.7 13.0 1.2 0.7 3.4 0.9 Germany 0.6 4.2 1.6 0.8 3.9 Brazil 1.8 0.9 5.5 1.0 Mexico 4.4 Canada States United ni ...... 1.3 4.9 6.3 0.9 5.0 5.4 0.6 6.4 2.8 0.7 6.7 1.1 0.5 6.5 0.9 1.5 4.1 0.9 1.4 2.8 1.6 2.3 India Japan 1.1 China 0.6 Developing countries GATT/WTO Members Members GATT/WTO tl ...... 3.6 3.9 3.9 4.2 4.7 4.6 South Africa 2.8 2.5 Italy USSR, former USSR, France Argentina Six East Asian traders Six Asian East Zealand andAustralia New European Union Between 1973 Between and 1983 1993 shares were influenced significantly and and by import between oil price and 2003 export WTO, International Trade Statistics. International WTO, a b e c d n eetdeooy 1948-2005 economy, selected and n 0. 0. 0. 0. 0. 0. 0. 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 9815 9317 9319 032005 2003 1993 1983 1973 1963 1953 1948 866. 428. 398. 6196.1 96.1 88.7 83.9 89.1 74.2 66.0 58.6 676. 387. 017. 1969.1 71.9 72.3 70.1 78.0 73.8 68.4 66.7 534. 205. 424. 5343.2 45.3 44.8 44.2 53.3 52.0 43.7 45.3 852. 611. 852. 2621.7 22.6 21.5 18.5 17.2 16.1 20.5 18.5 048360443833252.8 2.5 3.3 3.8 4.4 6.0 8.3 10.4 391. 421. 852. 3124.7 23.1 23.3 18.5 15.1 14.2 15.1 13.9 341...... 4.9 5.1 5.6 5.3 6.5 8.5 11.0 13.4 132. 201. 562. 6328.9 26.3 26.5 25.6 18.7 22.0 28.3 31.3 28 6 9 8236 6710511 7647 3769 1882 594 164 85 62 ...... 2.4 2.1 2.6 4.6 3.9 5.2 7.0 8.1 ...... 4.7 5.2 5.8 5.6 6.4 5.3 4.9 5.5 ...... 8.6 8.2 9.9 6.1 3.9 3.2 3.7 3.5 ...... 0.3 0.2 0.4 0.2 0.4 0.6 0.9 2.5 ...... 1.4 1.4 1.5 1.4 1.6 2.2 2.3 2.9 ...... 0.6 0.5 0.5 0.8 7.4 0.9 7.9 1.1 9.1 1.5 8.1 2.5 9.2 8.0 4.5 2.2 ...... 3.1 2.7 3.4 6.2 2.7 2.3 2.1 1.8 . . . . . - - - 4.3 3.6 4.3 3.3 1.9 903. 133. 1639.3 41.6 34.3 31.3 39.2 29.0 - - 200 Share Value a-EU the GATT/WTO multilateral for fivedecades. trading system the GATT/WTO China theUSSR, planned economies, other andmost to theUruguay for Round thecentrally of to use theymadetheGATT As reduce little orbind their tariffs. examination of the immediate post-World War II situatio War II post-World immediate ofthe examination countries.A careful indeveloped tariffs of non-agricultural has played acoreGATT role inthereduction have used the GATT/WTO system to reduce their tariffs. Evidence suggests that for many decades prior that for many Evidence suggests decades to reduce theirtariffs. system have theGATT/WTO used misleading.Subsec may be figures liberalization trade with an examination of developed countries’ market access commitments in the GATT/WTO system. The system. countries’ of market anexamination developed with intheGATT/WTO access commitments markets. andmore starts contribution open It actual to lowertariffs theGATT/WTO’s assesses section system for sterling balances. The United Kingdom, still theworld’s importer still Kingdom, United largest The for balances. sterling system retreated via the Ottawa Agreement into apreferential reinforcedretreated theOttawa via trading system by acommon clearing policy with minimal protection for almost one hundred years (except during the World War I period), had WarWorld the during Iperiod), (except years hundred one for almost minimalprotection with policy upto which 1931 Kingdom, United The deficits. large tradeJapan recorded liberal had followed avery American countries recorded substantial trade surpluses while the war-afflicted European countries and thewar-afflicted while surpluses trade substantial countries recorded American level of trade went major together with trade imba reductions benefited allcountriesthesyst within benefited reductions 1934 and1939. were applied agreements on these As early 1930s 17 with through trade agreements theconclusion bi-lateral of reciprocal countries between away theother hand, StatesOn had theUnites shifted financial crisisand had abandoned. to be by of returning theBritish pound toconvertibility th success. Subsection (e) considers the GATT/WTO’s contribution to world trade growth and subsection (f) (f) contribution andsubsection to worldtrade growth theGATT/WTO’s considers (e) success. Subsection extended thebindingcoverage, atlevelsfa sometimes extended concludes with a brief discussion on challenges aheadinthemarket onchallenges access area. abriefdiscussion with concludes He measures. onother border of theGATT/WTO effect to reduce tariffs. Having andthenorganize other negotiations that than wouldinhibit barriers tariffs of border theuse a system examined achievements on the tariff front, Information 1995). Technology(since The Agreement (I it is thus important acceded Members to of of thenewly some however, of tariffs WTO, inthereduction instrumental has been evaluate the re tariff so. Most todo system multilateral of the countriesdeveloping have not liberalized theirtariff signatories. Subsection (c) turns to non-tariff measur turnsto non-tariff (c) signatories. Subsection 28 27 26 25 thevalueof global though inflation had lifted belo werestill example, in1948 trade flows For global andth omnipresent ontheworldeconomy werestill II Tariff negotiations: developed countries negotiat to of situatethetariff order thebeginning In (a) asoneof of themainsuccess theGATT/WTO. stories bymany observers Tariff areseen reductions NEGOTIATIONS: ACCESS MARKET 2. few observations might be useful to recall the econom to recall useful might be few observations According to Maddison (2001) the ratio of world merchandise exports to world output was even in1950 lower even was still output toworld exports merchandise ofworld (2001) ratio the to Maddison According The share of the United Kingdom in world imports was 13.4 per cent in 1948, exceeding still that of the United States United ofthe that still 13.4 was exceeding in 1948, cent per imports inworld Kingdom United shareofthe The (Appendix Table 5). (Appendix negotiations. See Hoda (2001) discussion Hoda for aninteresting See negotiations. the invitation in of to the drafting the participate IT in1949. USSRdeclined The revolution its after departed but GATT ofthe member afounding China been had accession and negotiations. further See for instance Jackson (1997). Jackson instance for See than in 1913.See Table 3. Chart Appendix 3andAppendix IEAIAINADCONSOLIDATION AND LIBERALIZATION em. These agreements significantly reduced theSmoot- reduced significantly agreements em. These trade to $57 billion, twice thelevelin1938.trade to $57 billion, twice ductions were unilateral and remained unbound. The The unbound. andremained unilateral were ductions O charter (London Conference) and stayed outside the tariff tariff the outside and stayed Conference) (London O charter e gold standard in1947, standard e gold ina ended butthisattempt regimes – only that they have not made much use lances. UnitedThe States, Canada and Latin most es. The architects of the GATT had broadly inmind had broadly oftheGATT architects The es. ions under GATT inions their underGATT general historical context a r above the applied rates. This does not meanthat does rates. This theapplied r above ic situation in1947. The planned economies remained theorbitof outside tion (b) then examines how developing countries howdeveloping thenexamines tion (b) an unconditional MFN basis the bi-laterally agreed basisthebi-laterally an unconditional MFN from its extreme protectionist trade policies inthe trade policies protectionist extreme from its TA) has also had a significant effect for some of its ofits forTA) some had has asignificant effect also 201 of Poland’s of andRomania’s ma n, however, suggests that some of the oft-quoted oft-quoted the of some that suggests however, n, w theirlevelin1938 and1929 inrealterms,even re again, the multilateral system can claim partial claimpartial can system multilateral the re again, e level of international trade was very depressed. depressed. e levelof international trade wasvery 26 Uruguay Round commitments have mostly havemostly commitments Round Uruguay repercussions ofWorld Warrepercussions rket access commitments in 28 , tried to the, tried regain 27 The low 25 This

II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING WORLD TRADE REPORT 2007 SYSTEM: ACHIEVEMENTS AND CHALLENGES WORLD TRADE REPORT 2007 II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING SYSTEM: ACHIEVEMENTS AND CHALLENGES average US tariff in1947average US tariff considered wasstill to be processed agricultural and industrial products. agricultural andindustrial processed of raw materials not pr imports duty-free with pattern, intheUn trade share large of duty-free relative The and 1947, had the sharply reduced the USSRdidnot accept theinvitation andthat of theirtrade policy intheconduct backsovereignty Germany given andJapanhad not been of countries regard to inth With theparticipation ofUSdollars. reserves foreign exchange scarce control government widespread and countries European (i) The start of the GATT tariff negotiations of theGATT tariff start The Council, Economic andSocial UN had which orga The (i) feature of situation thetrade wasth important Another schedule dutiesintheUS tariff specific of use levelfor many addition, protection In theextensive ofHawley America’s majortrading partners. 32 31 30 29 negotiations Third, from theseparation of negotiations tariff ontheinstitutionaltariffs. framework was high fromits definitively to depart States of other wanted countries of themistrust to theUnited asto dispel States thesincerity intention inJune1948 andtheUnited expired to Second,trade theUSPresident’s issues. reduce tariffs authority negotiations itwasthought might that facilitate concrete intariff ofFirst, non-tariff thediscussions actions ITO charter. Various reasons have been given for the start ofat thesuggestion theUnited States, of to holdtariff tariff negotiations at such an early stage. of thisCharter, conference theparticipants agreed, negotiations. had Nevertheless nomandate for tariff willing towilling grant. Thereafter, could negotiations eachparticipant of thenegotiation at thebeginning from concessions thepa to itintended request which for of products alist putforward Firstly, approach. each country inathree-step consisted technique The ifconcessions hadcut than possible to balanced that wouldbe be which bi-laterally. teamswasto achievetariff negotiating among23countr hadthe negotiations to conducted be according to conducted the“principaland, (b) supplier” andthe conference London The outboththeobjective set th need wouldstill thenewtrade charter while also meaningful as the US President already had already the meaningfulastheUSPresident also was “to bring about a substantial reduction of tariff and of tariff was “to reduction asubstantial bringabout of thenegotiations “tested” were asthose thesame Agreement Act. Thus, benefits of thenegotiations benefits Thus, Agreement shou Act. The share of duty free imports in total US imports stood at 61 per cent in 1947. For the unprocessed goods (comprising (comprising at61 in1947. cent goods stood per unprocessed the USimports For intotal imports free shareofduty The The overview on the first years of GATT tariff liberalization draws heavily on Gardner (1969) (1969). andKock Gardner on heavily draws liberalization tariff ofGATT years first the on overview The According to the 1959 were of of the Treasury US of dutiable the imports Secretary Report more than three-quarters of Commerce, ‘Statistical Abstract of the United States, 1955’. States, United ofthe Table on 1130 arebased Abstract Calculations of Commerce, ‘Statistical (p.927) . Department US cent. per 48 sharewas the manufactures) andfinished semi- foodstuffs, manufactured (comprising goods andmanufactured 74 sharewas processed for the while cent animals) per andfood foodstuffs andcrude materials crude to1973). perspective(1821 inahistorical tariffs average States’ United on developments ofprice impact the on reports 1948 can be attributed to higher prices and the other half to the negotiations in the various (1996) trade Irwin agreements. 1930-33 and between incidence tariff ofthe decline ofthe half about (1948) Tariff States Commission United tothe According subject to and compound specific subject duties in 1948. tariff protection policy of the past and reduce significantly its own its significantly andreduce ofthepast policy protection tariff dvalorem ad reductions with anoverall with balance of reductions concessions andalarger tariff to join the tariff negotiations. to join thetariff 29 , in combination with the strong price increases between 1939 between , incombination price increases thestrong with 31 202 equivalent of these rates. e approval of theCongress inthefuture. start bilaterally oramongagroup of countries. start among the highest inthema amongthehighest meetings inparallel workfor meetings to the thepreparatory rticipants before the negotiations started. Secondly, started. thenegotiations before rticipants nized the London Conferencenized theLondon to preparefor theITO authority to sign an agreement on tariff reduction, reduction, to signanagreement ontariff authority e first GATT negotiations, one should recall that oneshouldrecall negotiations, GATT e first ited States reflected the highly skewed protection ies more or less simultaneously. challenge for the The more orless ies ld be: (a) “reciprocal” (a) and“mutuallyld be: advantageous”; oduced domestically and high tariffs on imports of onimports andhigh tariffs oduced domestically rule through requests and offers. However, this time in thenegotiations Trade undertheUS Reciprocal the elimination of tariff pr oftariff elimination the presented an offer list of the concessions itwas of theconcessions list anoffer presented e extensive use of non-tariff trade barriers bythe barriers trade ofnon-tariff use e extensive procedures for the tariff negotiations. The objective objective The negotiations. forprocedures thetariff of international transactio of international 32 30 Despite these reductions, the reductions, these Despite eferences”. basicrules The jor industrial countries. ns in order tomanage ns inorder tariff reductions has been calculated. has been reductions tariff Gi countries. inEuropean especially were widespread, for each of protection knowledge wouldrequire latter not onewouldstill reduction, of theaverage tariff w thatreminds thereader evenifonecould establish equivalent theaverage determined when onlybe can is not contained in the GATT schedules. The calculatio The schedules. is not intheGATT contained specific duties which define the duty asafixe define dutieswhich theduty specific started to bear fruit only from 1950 onward. Another difficulty in the evaluation is the widespread use of Eu (mainly International comparisons. complicates also schedules for thevariousnational used tariff systems of classification diversity isnotunbound, The shown. of areliableindicator the“bindingprovide coverage” as of thetari thecalculation precludes thenewbo only report schedules The task. an easy negotiations consolidated inthe20 presen schedules primarily thewar. took theform after were which of lifted quantitative restrictions, intheschedules. andincluded bound rates arealso some products have been bound atahigher rate bound have than been products some 36 35 34 33 of theGATT.part areanintegral which schedules in20 tariff arelaiddown negotiations of theGenevatariff results The XXVII Article of GATT later inpart considered aconcession equivalent reduct to thepartial were attenuated by the difficulties countries. These in offering enough“concessions” had difficulties low level of tariffs in negotiations withhigh tariff difficulties some caused also benefits” advantageous asaprincipal smallto too share qualify remained butcould not askto ente product inagiven interest of theprinciplesupplier return. Amajordisadvantage rulethat therequesti thereciprocity ensured under had to enter acountry which with intorule limited negotiations thenumber of trading and partners principalsupplierThe interest. had astrong italso onwhich of products inrespect among thirdparties could askfor concessionsgenerous eachcountry in agre cuts ruleontariff the application of theMFN butdepended negotiations bi-lateral own participant’s for from thenegotiations each potential benefits The elimination of preferences theCommonwealth which granted to members eachother. the United and States to to agreed thereduction content be concessions inrespect rather with modest negotiating order to In position. thenegotiatio save financ andtheBritishexternal Commonwealth solidarity the United States was willing to grant, namely re namely togrant, waswilling States United the of thenego amajorobjective wasconsidered regime rejected byGreatBritain. rejected onthegradual eliminat theUSproposal when stage, longnegotiations five-month facedThe amajor obst rates of 1934. an political Kingdom, theUnited In The United States’ proposal was a three year moratorium and afterwards a staged elimination of preferences over a over ofpreferences elimination astaged andafterwards moratorium year athree was proposal States’ United The France bound its tariffs for clothing items at 20 per cent while its corresponding pre-war tariffs did not exceed 16 cent. exceed per not did tariffs pre-war corresponding its while cent at20 per items clothing for tariffs its bound France For a on For detailed discussion the negotiation over preferences Imperial in 1947 Zeiler see (1997) and Gardner (1969: 348-361). General Agreement on Tariffs and Trade, ‘Schedules of Tariff Concessions (in two volumes)’, Geneva October 1947. October Geneva volumes)’, two (in ofTariff Concessions andTrade, Tariffs on Agreement ‘Schedules General maximum period of ten years. often period maximum However, the pre-war quantitative restrictions were lifted. (Documentation Française, 1948: 14) . 1948: Française, (Documentation lifted. were restrictions quantitative However, pre-war the 35 The schedules enumerate the detailed tariff tariff enumerate schedules thedetailed The 33 In theUnited In States, preferential theelimination of thediscriminatory trade bis ff reductions undertaken. The total number of tariffs bound does not does bound total of number tariffs The undertaken. reductions ff . d amount per unit (weight, number) unit(weight, d amount per for an which utoso pt 0prcent from thepre-agreement per of upto 50 ductions know the impact on overall trade restrictiveness. The onoverall trade restrictiveness. know theimpact ed among third parties. In order In toed amongthird encourage parties. more d economic considerations, (i.e. maintenance of the ng countries wouldgrant in concessions substantial recognition that the binding of a low tariff could be thatrecognition thebindingof alowtariff ith precision the binding coverage and the exact size thebindingcoverage ith precision andtheexact und rates and not the previously applied rate, applied und rates andnot thepreviously which ion of theCommonwealth Preferences Imperial was ted in two volumes andatotal of volumes 1265 intwo ted isnot pages ns and avoid adverse effects on its foreign policy, onits effects ns andavoid adverse product during a period when non-tariff measures non-tariff when duringaperiod product supplier. ruleof “reciprocity” The and“mutually prevailed before the World War II, when protection when II, before theWorldWar prevailed r into negotiations for concessions as their import r into for negotiations astheirimport concessions import value is known. Th isknown. value import tiations, which would justify the tariff concessions thetariff wouldjustify tiations, which formation on the progress made innegotiations made progress the on formation n is further complicated that by dutieson thefact n isfurther 203 ven these difficulties, nooverall rate of average difficulties, ven these rule was that small traders might rulewasthat have smalltraders astrong The evaluation of this first GATT round of tariff round of tariff GATT evaluation of thisfirst The participant were not limited to the results of a to werenot limited theresults participant in their application ascountries arelatively with ropean) efforts to harmonize tariff classifications classifications to harmonize tariff efforts ropean) the total number of tariff positions, including the positions, thetotal number of tariff ion of a high tariff rate. This recognition isfound rate. recognition This ofahightariff ion also on the indirect benefits obtained through obtained benefits ontheindirect also acle to their successful conclusion atthefinal ial crisisinJune1947) to led of ahardening the bindings, andtheprev is information on imports imports on is information 36 34 ailing preferential This last feature last This ad valorem

II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING WORLD TRADE REPORT 2007 SYSTEM: ACHIEVEMENTS AND CHALLENGES WORLD TRADE REPORT 2007 II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING SYSTEM: ACHIEVEMENTS AND CHALLENGES of tariff bindings at the time of the birth of GATT. bindingsatthetimeof thebirth of tariff negotiations (especially the centrally planned economies in Europe and Asia). Box 12 reports on estimates estimates on Box 12 reports andAsia). inEurope economies planned centrally the (especially negotiations inthe that didnot participate Members from GATT to imports treatment wasnot extended automatically calculation still overestimates the scope of the Agre ofthe scope the overestimates still calculation and for substantially half ofand for total worldimports”. substantially itemsandaccounts more than 45000 The US Department of State summarized the result of result the summarized State of Department US The 42 41 40 39 38 37 imply that less than 40 per cent (and not substantially a half) of world imports wereaffected. of worldimports ahalf) cent not substantially (and per than 40 thatimply less 1938 inboth would merchandise andin1948, of imports abindingcoverage two-thirds intheorder half indicated). those than that thenumber of isconsiderably items smallerthan bound (less indicated sources suggests calculations underlying the Department ofState est Department the underlying calculations buttheycouldpublications confirmed not byour be Documentation Françaises (1948) ‘La France et les accords tarifaires de Genève’ de tarifaires accords les et France ‘La (1948) Françaises Documentation For the evolution of the share of GATT Contracting Parties’ imports in world merchandise imports since 1948 see see 1948 since imports merchandise inworld imports Parties’ Contracting shareofGATT ofthe evolution the For A detailed account of each of the 20 tariff schedules suggest that the items listed in both parts of the schedules (Part (Part schedules ofthe parts inboth listed items the that suggest schedules 20 tariff ofthe ofeach account Adetailed Parties. from Contracting cent for imports per from and94 allsources cent 83per forreached imports intermsof import the bindingcoverage expressed to items intheUSTC respect of into schedule 1948. With several split tariff further have been detailed than the GATT schedule as various single tariff items reported in the GATT schedule in theGATT items than schedule asvariousreported detailed theGATT single tariff more issomewhat schedule thetruebindingcoverage astheUSTC tariff items understates tariff with all the 3505 tariff items reported in the USTC tariff schedule for 1948. The result based on result based for 1948. schedule The intheUSTC tariff itemsreported allthe3505with tariff on acomparison of thenumber of 1733 in1947, schedules intheGATT items shown tariff bound (import value) of thetrade before value) thewar”.(import cent of thetrade volume per butrepresented positions cent more than of 85 thetariff per 50 France, importer,For itisrepo thethirdlargest limit anupper share with butinarange precise ofth estimates own our lines, duty-free the include butnot modified. cent bound had been per and4 andbound cent reduced had been per tariff 3337 of 76 lines total a of out that indicates and negotiations) further two of results the incorporates 1953 inearly situation tothe wefound refers estimate (which earliest States the United the For lines. to total thebindingcoverage bound tariff indicate lines intheform of theshare of tariff above? Ve thirdsindicated oftwo binding coverage weknowfrom the do otherWhat sourcesabout all 727 tariff paragraphs shown in the US tariff schedule of schedule all 1948. 727 paragraphs in theUS shown tariff tariff o 2 siae ftrf idnso ao eeoe onre n1948 in countries developed major of bindings tariff of Estimates 12: Box In other words, on the basis of the tariff schedule applied in 1952, 80 per cent of US tariffs had cent of UStariffs per in1952, applied schedule other words,onthebasisofIn thetariff 80 item was bound in the GATT schedules (including (including schedules intheGATT item wasbound paragraphs onetariff for atleast which tariff of onacomparison all408 limitisbased upper The been bound. Assuming that all the reduced rates were actually bound and that the 3337 lines also also lines 3337 the that and bound actually were rates reduced the all that Assuming bound. been International Trade Organization’,International in does not specify which rates are bound while the GATT sc GATT the while arebound rates which specify not does I refers to MFN rates and Part II refers to preferential tariffs rate) do not exceed 15000 items. 15000 exceed not do rate) tariffs topreferential refers II andPart rates toMFN I refers proposed andthe program –agreements trade reciprocal States United ofState, ‘The Department States United United States Tariff Commission, No.780 p.12. ntdSae aifCmiso 14:3)Tbe43. Table (1949:138) Commission Tariff States United Appendix Table 5. 41 38 ihte2 eoitn onre conigfraot6 e cent of world per the23 negotiatingWith countries accounting for 60 about ‘United States Import Duties(1948) Department of State ,No455,Department Publication 3094 Bulletin, Vol.XVIII for two-thirds of the import trade of thenegotiating countries of theimport for two-thirds 204 42 37 f7 e etadamnmmlvlo 9prcent. per cent andaminimumlevelof 49 per of 70 These summary results were often taken upinother wereoften results summary These This statement shows that there can be alarge that be there shows can statement This rted that was“about thebindinglevelachieved rted imates are available, an examination of the original ofthe areavailable, anexamination imates hedules report the bound rates but not the unbound rates. unbound the not but rates bound the report hedules ement as it does nottake into accountement asitdoes thatMFN the 33 revenue code sections) with thetotal with ofthe 33 revenue sections) code the first round as follows: theAgreement “covers round asfollows: thefirst e US binding coverage in 1948 resulted notina in1948 resulted e USbindingcoverage binding levels and can weconfirmbinding levelsandcan theoverall own recent calculations. While no details ofthe details no While calculations. recent own ry few estimates exist in the literaturewhich inthe exist few estimates ry values of 1946, USTC figures indicate that it indicate of1946, figures USTC values ’, Miscellaneous Series TC1.10:Im7/4/1948. This report 40 The lower bound limitisbased lowerbound The . in Notes Documentaires et Études , March 21,, March 1948. 39 This latter Contracting Parties to 55Contracting cent. Parties per Taking intoaccounted account for 59 Members cent that per GATT of bringstheaverage bindinglevelfor allGATT for andBrazil), India theratio20 cent observed per (about concerning the average tariff reduction rate in the first GATT Round of tariff negotiations by isprovided Roundof tariff GATT rateconcerning inthefirst reduction theaverage tariff estimate comprehensive To only the reductions? knowledge our tariff on information the about What schedules. 1948the GATT tariff onehas to conclude that nearly on world imports, tariff peaks and their changes are not well taken into account as import values under these tariff lines tariff arenotthese welltaken andtheirchanges under into values account peaks asimport tariff cent. per TariffHawley thedecline is 47 Act) trade ag of thereciprocal the levelbefore thestart of 1948 are compared with theUStariffs If 7are schedule excluded). covered by UStariff products 44 43 45 46 the major industrial countries. the majorindustrial cent for per 60 exceeded likely somewhat hasmost values byimport measured bindingcoverage the ofSumming information upthepieces onbindingle fU aif o l rdcsbten14 n 98ws2 e et(n 6prcent ifagricultural per cent 26 (and per 1947 between and1948 was21 for allproducts of UStariffs the United States Tariff Commission for US tariffs. This calculation of average tariff cuts uses US import values as weights. The risk of this approach is that Aggregating the binding coverage of the United Kingdom, the United States and France by using the 1948 import import 1948 byusingthe andFrance States United the Kingdom, United ofthe coverage binding the Aggregating President of the Board of Trade to Parliament by Command of His Majesty, ofTrade byCommand Majesty, Board ofHis toParliament ofthe President 36 per cent of the corresponding import value in 1938 (or 24 per cent of total imports). In addition, In cent of total imports). per valuein1938 cent import of 24 thecorresponding (or per 36 Commonwealth total imports. countries, accounted of which its for one-third about had to bindal Kingdom the United accounted for £30.4 millionin1938. Altogether, th amounted to £67.1rates) millionin1938. Imports free any duty the Commonwealth) without (including change bound rates have under which been exports to Commonwealth countries (£94 million in 1938) were affected by these changes. to bythese Commonwealth millionin1938) countries wereaffected (£94 exports to Commonwealth countr exports onits enjoyed the other Commonwealth countries –of areduction featureA particular of theUnited concessions Kingdom istheacceptance –inagreement with toParliament report and to MFN evaluateastheycomprise difficult Kingdom, bytheUnited made concessions tariff The ingeneral larger thanbeing theformer. values, thelatter thecoverage lines andthat measured by import by tariff difference between oee usqetytruhteU/KTrade Agreement of 1938 and through thereafter of the inflation impact on lowered subsequently through the US/UK values results in a combined binding coverage of 63 per cent. The share of developed countries in total imports of imports intotal countries shareofdeveloped The cent. of63per coverage binding inacombined results values November 1947,November Cmd 7258. impact of theimpact trade including agreements 19 the GATT the enjoyinggoods preferences. preferences Imperial increasedmarkedly Agreement through in the 1932 Ottawa but were those rateon the twice andabout by1948 goods all on cent to6per fallen ratehad preferential average and the GATT Contracting Parties imports was 82 per cent in1948. cent per 82 was imports Parties Contracting GATT United States Tariff of Operation Commission(1949), the Trade Agreements Program, June 1934 to April 1948, Report The proportion of these imports from the Commonwealth of these imports proportion The enjo 1937 inboth and1948. imports total ofits one-third about for accounted countries Commonwealth from imports UK No 160. TableNo 4p.16 ad valorem incidence of specific duties. The latter developmen latter The duties. ofspecific incidence . 43 , indicates that imports from foreign countries, indicates that imports (i.e. not all to those belonging 45 Assuming ashare ofbindingcoverage Assuming l its preferential rates granted on one half of its imports from preferential ratesl its grantedimports ononehalf of its e-third of through worldmerchandise tradewasbound e-third 46 47 Agreement according to Macdougall and Hutt (1954). andHutt toMacdougall according 47 Agreement substantial preferentialA government trade flows. reements (i.e. toreements theSmoot- thelevelcorresponding under tariff rates subject to reduction andbinding to reduction rates subject tariff under According rate to thissource, theaverage reduction e binding agreed bye bindingagreed theUnited coveredKingdom vels of the three major developed countries above,vels of majordeveloped thethree e.Ol 0prcent Kingdom oftheUnited per 30 Only ies. still the largest importer in 1948, are particularly in1948, areparticularly importer thelargest still 205 or elimination of the preferential ofthe elimination or marginit ying preferential treatment was one about half in 1948 t is estimated to have been more important thanthe important more tohavebeen t isestimated Report on theReport Geneva Tariff Negotiations for the developing countries for the developing at 44 .

II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING WORLD TRADE REPORT 2007 SYSTEM: ACHIEVEMENTS AND CHALLENGES WORLD TRADE REPORT 2007 II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING SYSTEM: ACHIEVEMENTS AND CHALLENGES aifrt mn uoencutistu agdsmweebten1 n 0prcent. that Note per 10 rate and20 amongEuropean between countries thus somewhere tariff ranged than in the case ofthan theUnited theUn inthecase States. First, reduct that indications are overall, strong There tariff Trade 1952 levelsin referenceAnother to prevailingtariff ofStates). cent theUnited inthecase per in 1950 cutof 3 tariff (e.g asupplementary negoti cuts therather rates tariff include limited these less than 6 per cent of UK imports. that theEconomist reports Kingdom, theUnited For situation in1947 prep andtherefore had been hardly high tariffs until thelate1950s.high tariffs What about the tariff levels prevailing before and after andafter levelsprevailingbefore thetariff about What istherefore small. It tend to be 51 50 49 48 47 protection level for imports subject to specific duties. to specific subject levelfor imports protection reports dealing with the results of theresults with dealing reports France andtheUnited Kingdom, noaverage inthevarious provided government rate has been of reduction For of cent restrictions). quantitative for for to thelifting clothing compensate inorder per (e.g. upby37 were increased tariffs (e.g.afew unchanged In cases ormaintained pulpandpaper). products), chemical been recognized to be well below theaverage preva wellbelow to be recognized been at thetimeof negotiations. by morethan 100 lower cent, asignificantly implied per which and1947 themid-thirties account had theprices of increased internationally goods that traded between like might inamorefavourableThis look italso ameagreresult, butonemight light see ifonetakes into countries in1947 achieved th less wassomewhat is therefore plausible to assume that theaverage tariff bybinding principally countries concessions made these eue eg as(2prcn)adas os,adi ayohrcsslwrdb 0t 5prcent (e.g. per by 20 lowered andinmany to 25 other cases toys), cent) andalso per (42 (e.g.reduced cars West European countries,West covering agricultural and countries levelfor was industrial the average tariff in 1947? Woytinski and Woytinski (1955) reports estimates for (applied) tariff averages in1950 averages for 13 tariff for (applied) in 1947? (1955) estimates andWoytinski Woytinski reports vrgn ls o2 e cent (comprisin per to 20 averaging close tariffs group with cent andahightariff per 10 below somewhat tariffs with countries) the Benelux Denmark, Norway, group Sweden, (comprising and country confirm of alowtariff theexistence results A recalculation of the Woytinski results showed several inaccuracies. For some of the low rate countries errors in the inthe errors ratecountries low ofthe some For inaccuracies. several showed results Woytinski ofthe Arecalculation A rates tabulation of (i.e. US tariffs peak defined by the a 1950) had been far less above the country group average than indicated by Woytinski and Woytinski (1955). andWoytinski byWoytinski indicated than average group country the above far less been had 1950) average prices. Therefore the actual average rates tariff of lower much their with imports War to1950 II World not refer topre but prices) (and flows trade underlying the as ofthe (1953), ‘Effect Tariff Commission States United See lines). tariff 3400 ofroughly out (373 lines tariff ofall cent per ma This returns. UStrade from peak tothese subject Total imports recorded. were imports some atleast which for classes) import (statistical items tariff Unfortunately we have no information on the difference between bound and applied rates. In later periods it is known isknown it periods later In rates. andapplied bound between difference the on information wehaveno Unfortunately ‘Trade under the new Tariff’ in the Economist, November 22 November Economist, inthe Tariff’ new the ‘Trade under for which no import transactions took place could not be reported as no no as reported be not could place took transactions import no which for accountedtariffs for 1.3 cent per of dutiable and 0.5 cent per Unfortunately, of total imports. the really prohibitive tariffs that bound and applied tariff rates had been very similar for the industrial countries. industrial the similarfor very been had rates tariff andapplied bound that for the United are Kingdom at – present customs tariffs w least –andnot involved manycountries for that place, first note, “would inthe due take anobserver comments: summary Trade Agreement Concessions on United States Tariff Levels based on Imports in 1952’, Imports on Table based Tariff States 12, Levels United on Trade Concessions Washington. Agreement actually somewhat higher than reported. For Austria, Germ Austria, For thanreported. higher somewhat actually averaging calculations were found which imply that the, re See Appendix Chart 2. . In 1952, the GATT Secretariat asked the Contracting Parties to provide estimates of the tariff tariff ofthe estimates toprovide 1952,. In askedParties Contracting the Secretariat GATT the 49 Thus, keeping these applied rates unchanged implied a significantly lower asignificantly implied rates unchanged applied keepingThus, these rginal share of trade under peak tariffs contra tariffs peak under rginal shareoftrade 47 worth recalling that the US tariff contained a significant number of very ofvery number asignificant contained that theUStariff recalling worth these negotiations. The tariffs of th tariffs The negotiations. these 48 In France, rates In of sharply 1948 wereinafew cases thenewtariff g France, andtheUK). Italy, Portugal the early ‘fifties can be found in the GATT report found report be intheGATT can ‘fifties the early 206 an the reduction observed for States. theUnited observed an thereduction ions by other countries developed were pronounced less ited Kingdom and France were in a difficult economic andFrance wereinadifficult Kingdom ited around 40 per cent before the first GATT negotiation GATT cent before thefirst per around 40 uthors asuthors those exceeding 45 per cent ad valorem) contained 373 ithout any influence on the volume of trade 827). (page iling intheotherindustri ared for a significant reduction in protection levels. inprotection forared asignificantreduction 50 ated during the second round of tariff negotiationsated round during of thesecond tariff latively low, average rate for Denmark and Norway had been been had and Norway Denmark low, ratefor average latively imports covered by tariff reductions accounted for accounted reductions bytariff covered imports , 1947. The same issue of the Economist makes the following following makes the , 1947. Economist ofthe issue same The any andGreece,however, are upwardbiased, estimates the industrial products (see Appendix Table The Appendix 6). (see products industrial Austria and Germany (both not yet Contracting Parties in Parties Contracting yet not (both andGermany Austria the first GATT round? Is it possible to confirm that that confirm to possible it Is round? GATT first the reduction on industrial pr onindustrial reduction most of their tariffs at the already lowlevels.It atthealready of theirtariffs most ad valorem ad valorem sts with an estimated share of more than10 shareofmore anestimated with sts e Benelux countriese Benelux atthetime had incidence of the specific duties incidence of thespecific equivalent rate could be calculated calculated ratecould be equivalent al countries andtherefore 51 oducts of all industrial ofallindustrial oducts The averageThe applied International

eea(1955-56): Geneva (1950-51): Torquay Refers to 8. all products. and ilnRud(1961-62) Round Dillon 108 and US of Department State Commercial Publication 6348, Series 158, Policy released June 1956. 987 end on 16-7 -38 Kennedy Round (1964-67) 1968-72 (country coverage, product coverage, type ofta coverage, coverage, type product (country thesource indicates andthemethod which of this of report to theauthors theknowledge is nostudy a iutdi ag ewe 0ad3 e cent. Th per 20 and30 between inarange was situated 1947or 31 cent between per cumulative and1952 likely that )itismost in1947 rate theaverage tariff countries didnot exceed that of theUnited States 53 52 petroleum)) (excl. products for industrial countries of industrial reduction tariff (MFN G A T T /Table 5 W T O–6 0y e a r so ft a r i f fr e d u c t i o n s of list products. incidence onaspecific and Switzerland). and Sweden Norway, Finland, Austria, Japan, EU(12), States, (United markets toeight Refers calculations. Table own 5and Appendix (1947): Geneva Source: values. import byMFN weighted Note: 90Anc 14) 3 1947 1949 1954 1960 1939 -3 -4 -3 -4 -26 (1961-62) Round Dillon Torquay (1950-51) Geneva (1955-56) (1949) Annecy Geneva (1947) 1962-64 1956-58 1952 1950 1948 rtsvrigbten5ad9prcent, comprising per 5and9 between varying (rates group country confirm of of thegeneral alowtariff theexistence view Woytinski, theynevertheless 959 rga on 18-4 -38 Uruguay Round (1986-94) (1949): Annecy agricultural products). 1995-99 oy on (1973-79) Round Tokyo values. M.F.N. import 1964 on based aggregate the for calculations Own Kingdom. United and EEC(6) Japan, ofDepartment State Publication 7408, Commercial Series 194, Policy released July 1962. 908 oy on 17-9 -33 Tokyo Round (1973-79) 1980-87 40 per cent tariff average for industrial countries. average for industrial cent tariff per 40 States, Germany, France andIt Kingdom, theUnited rates, highertariff distinctively another groupwith rga on (1986-94): Round Uruguay Switzerland). and Sweden Norway, Finland, Austria, Japan, EEC(9), States, (1964-67) Round Kennedy arithmetic average of applied tariff rates was still between 10 and 20 per cent (see Appendix Table Appendix cent 7). (see per 10 and20 between rates wasstill arithmetic average of tariff applied average cutof theindustrial prevailing theassumption Round. that On theaverage before tariff thefirst in1950 tariff the and1952 reported about guess rateestimates aplausible permit tariff average These (Torquay). third round inthe made cuts the inprincipal include also estimates These Tariff average for the same products retained in the Leag inthe retained products Tariff same for the average Implementation on arithmetic average for these 78 commodities to (corresponding 530 items). and pamphlets, but no one gives a hint at methods or data us data or ahint atmethods gives butnoone and pamphlets, toused arrive at this cent. number per of Thereafter, 40 this andmethods 1973-79) Tokyo Round, (the place”. sources taken on had areprovided negotiations trade details multilateral No of round last the before even countries industrial most for cent and 8per cent 6per in1947 cent per tobetween of 40 level anaverage from in manufactures trade on tariffs cut had inGATT ofnegotiations “successive rounds 1987 134): (p. Report Development Bank World inthe time first the for reported ratewas tariff average pre-GATT this To knowledge our Tariff reductions for the first five rounds refer to the United States only. The calculation of average rates of reductions are ofreductions rates ofaverage calculation only. The States United tothe refer rounds five first the for reductions Tariff Period US Tariff Commission, Operations of the Trade Agreements US Tariff Commission, Operations of the Trade Agreements Program, April 1949-June 1950, Chapter 5,Tables 1949-June 7 April Program, Trade ofthe Agreements Operations USTariff Commission, Estimates based on based Estimates United States Tariff Commission, Fifth Report, July 1951-June July 1952, Report, pp.149-170, 4, Chapter Fifth Commission, Tariff States United 6. Tables 5and : Estimates based on United States Tariff Commission, 13 Tariff Commission, States United on based : Estimates : GATT, COM.TD/W/315, 4.7.1980, p.20 and 21 and own calculations. Refers to eight markets (United (United markets 4.7.1980, toeight Refers : GATT, COM.TD/W/315, 21 calculations. and p.20 own and : Preeg, E.(1970), E.(1970), : Preeg, GATT, The Results of the Uruguay Round of Multilateral Trade Negotiations ofMultilateral Round Uruguay ofthe Results The United States Tariff Commission, Ninth Report, July 1955-June 1956, 1955-June Chapter 3, July pp.100- Report, Ninth Tariff Commission, States United Round covered Weighted tariff reduction Weights based on MFN MFN on based Weights reduction tariff Weighted covered Round Traders and Diplomats 52 Although the data are not strictly comparable of those with are not thedata strictly Although riff) of how this average ratewasestimated. ofhowthisaverage riff) agn rm1 o2 e cent theUnited (including per ranging from 16 to 24 (i.e 27 per cent cumulative between 1947 27(i.e cent between cumulative per and1950 Although this estimate is frequently reported there reported isfrequently thisestimate Although the Benelux countries, and theBenelux Denmark andSweden) ue of Nations tariff estimates for 1913 estimates tariff ofNations ue and 1925 andbased number was taken up by articles many other in books, authors aly in ascending order). The industrial countries’ industrial The order). inascending aly 207 is estimate differs sharply from the widely quoted widely the from sharply differs is estimate ed to arrive at this implausible estimate of 40 per cent. per of40 estimate at thisimplausible toarrive ed , Tables A2 and A3. Refers to four markets: United States, States, United markets: tofour Refers A3. and , Tables A2 Program, June 1934-April 1948, Part III Table 16 (non- Table III Part 1948, 1934-April June Program, th Report, July 1959-June 1960, pp.17-29 1960, 1959-June July Report, US and 1988(or 1989) 1988(or 1977(or 1976) 1977(or imports (year) imports , November 1994,, November 1964 53

II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING WORLD TRADE REPORT 2007 SYSTEM: ACHIEVEMENTS AND CHALLENGES WORLD TRADE REPORT 2007 II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING SYSTEM: ACHIEVEMENTS AND CHALLENGES recession inrecession 1975 negotiations serious for postponed y succeeded in lowering substantially the industrial tariff theindustrial inloweringsubstantially succeeded formation libera of theEEC brought tariff asubstantial in tariffs for industrial products (excluding petroleum) was 38 per cent (see Tables cent (see 5and6). per was38 petroleum) (excluding products for industrial in tariffs OA fabove of TOTAL EEC(6) The Tokyo Round started in1973 TokyoThe Roundstarted buttheeconomic turbul was limited to 22 per cent to and18 22per was limited cent respectively per 32 cent per and39 between ranged machinery electrical Source: aa . . 3 5 12 -39 -36 4.5 5.9 7.3 9.2 Japan United States the Tokyo Round results stretched over the 1980-87 period (see GATT 1980: 33-41). 1980: GATT (see period the Tokyo overthe 1980-87 stretched Roundresults by 0.1 as theaverage unchanged decreased almost percen for indu cuts of tariff depth The for semi-manufactures. cent reduct per cent) bya34 followed per materials (64 of bystage reductions tariff import-weighted regards As values centcent and39per ifmeasured ifweighted by by simpleorarithmetic import averages. per was34 products for industrial reduction average tariff The of theGSPimprovements products. for tropical countries to has taken of developing interest mainly theform of onproducts action agricultural sector, tariff valueof $141 cent accounted which per of theimport for 90 products, the In byconcessions. billionaffected formula’) and an increase intheirbi andanincrease formula’) were accompanied through (achieved bytariffs of theapplication aharmonization the‘Swiss of tariffs the concessions affected asmallershare of trade and affected the concessions and paper, iron equipment. For machinery, andtransport we cuts andsharp tariff based Broadly sectors. between United Kingdom of onequarter andabout of theirimports two-thirds concessions made af the negotiations, the39participants Roun GATT thelaunchin1964 ofthefifth spurred This in European integration brought theri While the average tariff reductions we reductions tariff theaverage While Trader Round and change) products averages of industrial weighted tariff bound (Import Kennedy the of reductions Tariff Table 6 Roundin1956 wa progress little GATT thefourth After four Roundsbr in thenext reductions tariff The 55 54 the major industrial countries (United States, Japan, th countries (United the majorindustrial andconsolidation. reductions tariff Austria andJapanimplied further reduct than thetariff cent. important More per 15 export interest differed sharply among categories. The The sharply amongcategories. differed interest export of the membership. Negotiating the accession of new Contracting Parties such theaccession asGermany, of newContracting Negotiating ofParties themembership. Sweden, implemented between 1968 and1972implemented between andbrought substant GATT (1967), GATT Trade Negotiations. Brief Summary of Results. Press Release GATT/992; 30 June 1967. June 30 GATT/992; Release Press ofResults. Summary Brief Trade Negotiations. (1967), GATT GATT See Hoda (2001) for a discussion of tariff negotiations for accessions. for negotiations oftariff (2001) adiscussion for Hoda See Preeg, E.(1970), Traders and Diplomats, Tables A2 and A3. A3. and Tables A2 Diplomats, and Traders E.(1970), Preeg, 2072-07 -40 7.2 12.0 Pre- Post- Reduction Imports(MFN) Imports(MFN) Reduction Post- Pre- . . 3 41 -38 5.5 8.9 . . 3 16 -37 4.8 7.7 nding coverage. The tariff concessions concessions nding coverage. tariff The re quitesimilarinsize for themajo Kennedy Round rate Round Kennedy sk that non-EEC traders would be at a disadvantage intheEEC market. atadisadvantage wouldbe traders sk that non-EEC 208 ought a cumulative reduction in US tariffs of about inUStariffs ought reduction acumulative e EEC(6) and the United Kingdom) the average reduction theaverage reduction andtheUnitedKingdom) e EEC(6) reductions were less pronounced were less thanreductions theaverage. ions in the early GATT years wastheenlargement years GATT ions intheearly ears. The Round could only be concluded in1979 concluded be Roundcould only The ears. and lization among the six EEC member countries. Progress EEC countries. amongthesix member Progress lization . For footwear and travel goods, the tariffs remained remained thetariffs andtravel goods, footwear . For world trade. The results of theKennedy Roundwere results world trade.The d named after US President Kennedy. USPresident ofd named after thecourse In s of industrial countries. The reduction of industrial ofindustrial reduction The countries. s ofindustrial strial products in which developing countries had developing an inwhich products strial ion for finished products and a 30 per cent decrease cent per decrease anda30 ion for products finished processing, the steepest cuts were observed for raw wereobserved cuts thesteepest processing, per cent, while the reduction cent, thereduction while per reduction in tariffs for articles of metal, wood and of wood metal, for articles intariffs reduction re agreed for the following sectors: chemicals, pulp chemicals, for sectors: thefollowing re agreed s made on the multilateral tariff level. However, onthemultilaterals made tariff the fecting trade valued at$41 valued trade fecting billion, represented which and steel and textiles (including clothing), however, clothing), (including andtextiles and steel ence oilprice linked hike to thefirst andtheglobal tage point to point 13.1tage cent. implementation of per The ial tariff reductions at the multilateral level. For For level. multilateral atthe reductions ial tariff r importers they differed significantly significantly theydiffered r importers 54 concentrated largely onindustrial in % Billion $(1964) Billion in % for textiles and clothing andclothing for textiles 55 II.3). The tariff escalation observed on products of interest countries to thedeveloping was,ingeneral, onproducts observed escalation tariff The II.3). for of anumber Canada, countriesAustria, including the Finland, Japan, For andNorway. products EEC(9) OA fabove of TOTAL OA fabove of TOTAL aa . . 5 133 297 -56 Imports(MFN) -35 1.7 Reduction 3.5 Post- 3.9 5.4 Pre- calculations. Source: Japan United States Trader Round and change) products averages Uruguay of industrial weighted tariff bound (Import the of reductions Tariff Table 8 32 of cent. 43 per decrease atariff recorded category) of theagricultural product (part Tropical products (GATT, of 37 cent per Table 1994: onallagricultural andsecondly, reduction tariffs atariff tariffs, II.8) 78 qu import remainingagricultural ofthe tariffication firstly, the markets were two-fold: gains indeveloped theliberalization agricultural products, For -50 in more detail below. countries –wasthephasing outof thequantitative rest (GATT,reduced 1994:15). of themajorgainsin One -32 1.1 of between category rates byproduct toled average and2.4 tariff cent. per (GATT,1994: Table 2.7 manufactured articles n.e.s.) recorded above-average tariff cuts pulp, (wood, paper, categories in otherfive product me the range of 52 to 69 per cent which theUruguay Round, at15.5levels after cent, cent 8.9 per per and7.5 contrast, cent In per respectively. 4.3 continued average from 18 to categories (ranging thehighest cuts product to 26 These tariff cent). per leather, andfootw andclothing, rubber – textiles from 14dropped to 10 markedly. varied categories cent. per product Tariff bysector Three reductions 5.4 asarate 15 above (defined lines cent) per share tariff of peak The of theUruguay Roundresults. increase lines tariff share of The duty-free markets). cent, andleadingto per anaverage majorto cent countries than rate 40 (eight 4per inindustrial of less 6.3 re tariff substantial brought another Round Uruguay The Source: Japan United States Trader Round and change) products averages of industrial weighted tariff bound Tokyo (Import the of reductions Tariff Table 7 countries’ agricultu fullbindingof industrial The 9). to cent 69 Table per for inarange of JapanandtheEuropeanRound remained 44 countries (Appendix bind Table of theTokyo The Round(Appendix start 8). States andtheEU,United thebindin During theTokyo Roundnegotiations EU(12) GATT, COM.TD/W/315, 4.7.1980, GATT, COM.TD/W/315, calculations. 21 and own p.20 and GATT, The Results of the Uruguay Round of Multilateral Trade Negotiations, November 1994, Appendix Table own 5and Appendix 1994, November Trade Negotiations, ofMultilateral Round Uruguay ofthe Results GATT, The r-Ps-RdcinImports(MFN) Reduction Post- Pre- . . 3 172 -34 4.1 6.2 . . 2 62 -29 4.6 6.5 . . 3 627 -39 3.1 5.2 . . 3 197 -37 3.6 5.7 Uruguay Round rate Round Uruguay g level for industrial products was close to 100 wasclose cent per before the products g levelfor industrial Tokyo Round rate Tokyo Round a significant increase was achieved in wasachieved increase a significant ear, thesmallest equipment –recorded andtransport ral tariffs was only achieved intheUruguay achieved Round. wasonly ral tariffs d from 20 to 44 per cent after theimplementation cent per d from after 20 to 44 tals, non-electric machinery, mineral products and machinery, mineral products non-electric tals, otas andthecompleteotas bindingof allagricultural 209 ing level for agricultural products after the Tokyo the after ing levelfor agricultural products duction in industrial products, estimated at close atclose estimated products, inindustrial duction liberalization – of particular toliberalization thedeveloping –of particular rictions in the textiles sector, which is discussed sector, isdiscussed which inthetextiles rictions in % Billion $(1988) Billion in % in % Billion $(1977) Billion in % thebindinglevelofindustrial

II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING WORLD TRADE REPORT 2007 SYSTEM: ACHIEVEMENTS AND CHALLENGES WORLD TRADE REPORT 2007 II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING SYSTEM: ACHIEVEMENTS AND CHALLENGES Information Technology Agreement (I Kingdom negotiated onbehalf of Burma, Ceylon, subsequently,withdrew United fourthenegotiationsThe while didnot others conduct themselves. those countries which participated inthe1947 countriesthose participated which roun and telecommunications). For the six major developed importers majordeveloped thesix For and telecommunications). equipment semiconductor semi-conductors, andaccessories, parts computers, (including products 300 reciprocal preference have be schemes also reciprocal markets. Anumber of other non- inmajordeveloped of of theirproducts most of theminrespect most countries treatmentPreferential access infavourhas for brought tariff of duty-free theleast-developed than bound rates. While the tariff reductions of the industrial countries reported above reflect multilateral reflect above reported countries industrial ofthe reductions tariff the While rates. than bound applie MFN tariffs. relateto bound above discussed negotiations in agreed theGATT reductions tariff The andagricultural products. products industrial inlabour-intensive progress less with bysector, differed reductions tariff The negotiations. tariff various asignificant trade barrier. considered be still li The (b) Tariff negotiations: developing countries developing Tariff negotiations: (b) Concluding observations theirta reduced countries have substantially Industrial (ii) come not did reductions tariff agreed Multilaterally 57 56 Chile, China, Cuba, andSyria. Africa, Rhodesia, India, South Pakistan, Lebanon, Southern Pre-Uruguay Round of theoriginal theGATT, 23ContractingOf Parties 12 (i) overtime, applie with apart they have drifted to consid countries, important developing itisalso With did ornot have to theagreements. to market negotiate parties to access commitments become developing which under regime The levels. andtariff coverage ofbinding evolution the to illustrate data and the costs of calculating tariff statistics from of of thescarcity because years, theGATT For period. andtheWTO years theGATT between made negotiations for accession andcommitments negotiat Both tariff tariffs. of country themultilateral ondeveloping theimpact system assesses subsection This had become participants in the ITA. By the end of April 2007, theendof April By intheITA. participants had become theITA counting had 70 participants, initialparticipants for eight some years lasting cuts, of 1.4 intheorder to be in2005. isestimated Trade trilliondollars 2000. world-wide inITA products mid-1997 from implemented were in andterminated onwards reductions tozero. These respectively rates wereaverage cent reduced from unweighted 5per cent andappliedtariff 2.3 per bound regional integration andpreferential agreements sche countries acceded to the GATT/WTO is of particular importance. Depending onthisregime, countries Depending importance. isof particular countries to acceded theGATT/WTO NAFTA in particular have accounted for major (prefe for major haveaccounted inparticular NAFTA liberalization in the GATT/WTO framework, oneshould intheGATT/WTO liberalization nrae rm9 e eti 97adt 6prcent in per cent in1997 andto 96 per from 90 increased of ITA products the EU countries member individually. inworldimports share of ITA The participants countries.number of developing Th low, rates very already ina this had wasnot been thecase advanced economies tariff inmost Although discussion oftheITA). discussion Australia, Canada, EU(15), Japan, Norway and the United States. United and the Norway Japan, EU(15), Canada, Australia, Note that Africa, South which considered a develo itself counted assuch. counted ese developing countries agreed to a staged implementation of countries tariff developing to agreed ese astaged TA) was concluded, establishing duty-free trade for a list of for trade about alist duty-free TA) establishing wasconcluded, nefited many other developing countries. d rates coming down faster than bound rates. fasterd rates than coming down bound 210 beralization progressed in waves associated with the with associated inwaves progressed beralization er both bound and applied tariffs asinmany cases tariffs andapplied bound er both to a standstill after the Uruguay Round. In 1997 theUruguay Round.In after to the astandstill d of negotiations, three (China, andSyria) three d of negotiations, Lebanon (e.g. India). By the first half of 1997, thefirst By (e.g. India). 29 economies d tariffs have tended to decline somewhat earlier somewhat have to tended decline d tariffs and Southern Rhodesia, while the results of Rhodesia,while the theresults and Southern paper sources, a number of case studies are used studies sources, anumber of paper case mes in favour of developing countries. The EU andThe countries. infavourmes ofdeveloping were developing countries: Brazil, Burma, Ceylon, ped country until after the Uruguay Round, is sometimes issometimes Round, Uruguay the after until country ped riffs since 1947.riffs they can inafew Only categories rential) tariff reductions in developed countries. countries. indeveloped reductions tariff rential) not lose sight of tariff reductions effected through effected reductions sightnot oftariff lose ed during rounds are examined. A distinction is Adistinction duringrounds areexamined. ed 2006 (see Chapter I of this report for Chapter adetailed (see Iof thisreport 2006 56 of ITA products the pre-ITA (1996) thepre-ITA of ITA products 57 Among India’s tariff commitments and their applied tariffs ov tariffs applied andtheir India’s commitments tariff negotiations onpreferential aswellmost-favoured-nation duties. of 17 relating to thetariffs territories, record of ofsections andsix these theresults overseas dependent for France, butthat theirbindingcoverage fell overtime. cent 49 per and80 between coverage ranging somewhere 20 approximately cent bound per of theirta and India case These Brazil andIndia. parties: contracting Boxes 13other parties. and14 indetail examine 61 60 59 58 were outbyIndia carried negotiations Brazil, Chile, Cuba, the andwith negotiations Africa themselves conducted andSouth India amongst negotiated tariffs fornegotiated their colonie tariffs are high. As can be seen in Appendix Table inAppendix seen 11, be can are high. As in groups distinguished amongthe35 product the world. in1874protectionism oneof to thethree become Braz industries. toBrazilian ofprotection high level a afforded that it tobelieve However, reasons aregood there tariffs. andapplied bound Brazilian andcompare thelevelof to makes assess itdifficult of andminimumtariffs general the existence various protective measuresvarious to protective thetariff, andthat itshouldnot reduce thevolume of trade, increase other urgent with measures reform,was associated of fiscal that itamounted to thetransfer of government alsoThe goods. or through for exchange control imported onpayments operating restrictions in the form producers of import to given domestic had been increasingly protection and tariffs specific of theexisting effect theprotective had eroded currency value of thelocal theirincidence. increased andsubstantially duties substituted nomenclature, Brussels the with nomenclature out-of-date the under obligations its affected substantially themid-1950s,In reform which of theGovernment tariff of onamajorproject Brazil engaged lead, tinandzinc. apparatuswatches andscientific and andmedical in1949-1950, byBrazil used nomenclature the th the basis of special advantages and tariff reductions ontheminimum reductions tariff. andtariff advantages the basisof special on negotiated also Brazil which butwith treatment, MFN andunlimited unconditional received of countries to andfrom Brazil which to accorded not exclusively only products and reserved “conventionalThe corresponded which to tariff” t guaranteed also which ofcountries to products in countries Brazil which with had nocommercial “minimum agreement.The wasaccorded tariff” tariff schedule listed three different tariffs.Th Brazilian the late1940s, the In rates. tariff allapplied almost were as specific were bindings the 1947,In that lines, is1047 18 Brazil bound tariff cent outof per of atotal of its 5936All lines. 1947-94 Brazil, 1: study Case 13: Box tariff was thus lower or equal to the minimum tariff. The fact that most tariffs were specific and werespecific tariffs that most wasthus fact lowerorequal toThe theminimumtariff. tariff wished to increase tariff revenue. The Brazilian Government argued that the revision of the tariff tariff ofthe revision that the argued Government Brazilian revenue. The tariff toincrease wished See International Customs Tariffs Bureau (1949) The International Customs Journal, Year Customs Journal, 1949-1959, International (1949) The Bureau Tariffs Customs 6,Brazil, No International See See the case studies of Senegal and Nigeria below. See GATT (1950) The attack on trade barriers, A progress report on the operation of the GATT from January 1948 to 1948 January from GATT ofthe operation the on report Aprogress barriers, trade on attack (1950) The GATT See See Clemens and Williamson (2001), Bairoch (1989). Bairoch (2001), andWilliamson Clemens See Brussels: International Customs Bureau. Tariffs International Brussels: August 1949.August 61 Moreover, our estimates of average tariffs fo tariffs ofaverage Moreover, estimates our s. The schedules of Benelux, Fran of Benelux, schedules The s. accepted by both India and Pakistan. and accepted by India both e “general originating to wasapplied goods tariff” studies also document theevolutionof document Brazil’s also studies and the tariff commitments of two developing original developing of commitments two the tariff heir minimal tariff in favour of Brazilian products. infavour products. ofBrazilian minimaltariff heir General Agreement. The new tariff replacedGeneral anAgreement. newtariff The e highest bindingcoverage ratios e highest arefor clocks, Changes inthe intheprice levelsandadecline il had shifted towards a strict form of industrial ofindustrial form towardsastrict shifted il had the lowest for wood, cotton andaluminium, cotton for wood, thelowest er the GATT period. Estimates suggest thatBrazil suggest Estimates period. GATT er the the MFN binding, was defined as the tariff asthetariff binding,wasdefined theMFN riff lines in 1947,riff afigure compares which a with 211 to highly five countries most protectionist in per cent cent per for States and50per theUnited r various groups of products in the 1950s inthe ofproducts groups r various 59 ce and the United Kingdom include Kingdom ce andtheUnited 58 ad valorem The colonial powers also colonial powers The 60 The conventionalThe for specific

II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING WORLD TRADE REPORT 2007 SYSTEM: ACHIEVEMENTS AND CHALLENGES WORLD TRADE REPORT 2007 II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING SYSTEM: ACHIEVEMENTS AND CHALLENGES 66 65 64 63 62 Post 1994 estimates are provided for comparison but are not discussed. arenot but comparison for areprovided 1994 estimates Post Estimates ofbinding coverage for differ Estimates had previously granted tohad negotiations Brazil. previously The that other Contracting Parties would be free to free wouldbe that other Contracting Parties eetdyears selected respectively 203 cent per and186 cent per in1979/1980.respectively groups –clothing, footwear, product Four inthelate1970s. hightariffs Th had particularly Total number of lines products of selected food products and vehicles – still had averages exceeding 50 per cent had 50per inthelate1980s. averages exceeding –still andvehicles products food taxes, the Contracting Parties agreed to Br waive agreed theContracting Parties taxes, of controlsfor of and therevision an“out-moded” of asimplifiedsystem andthedesirability tariff odadatce fwo 201026. 2411.8 12.4 11.4 2001 15.6 decades. six across groups averages of products forapplied tariff selected 61.3 11.6 1997 inthe the late1970s decreasing started andonly 16.3 late1950s, in quite highinthe higher even were already were they but tariffs applied Brazilian 130.2 17.0 1986 54.0 71.1 62.0 1979 17.4 76.5 107.4 1957 84.9 a 58.2 58.4 138.3 132.9 of wood and Wood articles 11.61 resins and Artificial plastic materials vinegar and beverages foodstuffs, Prepared 9 fats andvegetable Animal 7 4 3 Description Section applied of average Simple Brazil: oralterthecomposition of imports. goods ofthe cost imported Source: Source: details. further Note: 2Fowa,haga,ubels1601608. 4821.9 17.4 24.8 24.0 85.6 57.7 186.0 71.9 116.0 42.3 equipment associated and aircraft Vehicles, Footwear, headgear, umbrellas 17 12 product groups iskeptproduct overtime. constant bound lines which is largely offset by an increase of thetotal of number byanincrease lines. offset islargely which lines bound for Figures the1970sslightly more than 6300. and1980s showaconsiderably highernumber of 1047 thetotal inth of number lines while to 234 TableAppendix 12 1949 that and1958, between from shows dropped lines of thenumber bound bindings subsequently which remained cent than around 5per less until theUruguayRound. in1957, newtariff of its theintroduction With Brazil reduced substantially thecoverage of its completed ayearof of within theenactment thetariff. bound duties andtherefore duties involvedbound Subsection 61 of section 11. Changes in tariff averages over time should be inte Brazil also initiated Art. XXVIII renegotiations in 1960, 1977 and 1991. See GATT documents Secret/135(1960), See technical appendix. methodology. See technical appendix. Secret/238(1977) and Secret/334(1991). See GATT (1956) International Trade GATT. (1956) 1956, International GATT Geneva: See Because of changes in nomenclature, tariff averages are not strictly comparable across years. See technical appendix for for appendix technical See years. across comparable strictly not are averages tariff innomenclature, ofchanges Because a International Customs Journal, Brazil (1957-1958), Brazil Journal, Customs Brazil International textiles fabricstextiles of accessories clothing and ofapparel Articles ad valorem ent periods are not strictly comparable comparable are notstrictly ent periods renegotiations under Article XXVIII. Article under renegotiations 212 66 Among the groups selected for this case study, for thiscase two thegroups selected Among aifrtsi percentage, in rates tariff rpreted cautiously because of changes in nomenclature and innomenclature ofchanges because cautiously rpreted regard as suspended theconcessions regard assuspended they which e average tariff on clothing and footwear reached onclothing andfootwear e average tariff e nomenclature increased from less than 6000 to e nomenclature than from 6000 less increased (1979-1980); Brazil (1986-1987); WTO-IDB; WTO estimates. estimates. WTO (1979-1980); (1986-1987); Brazil WTO-IDB; azil’s tariff commitments on the understanding on theunderstanding azil’s commitments tariff for the new schedule of bound rates wereto of be bound for thenewschedule first half of Table the1980s.first The simple shows 0 4814 371551 1357 1641 1478 804 2. 0. 0. 3022.5 23.0 104.9 203.5 120.0 62 The reform affected anumber of reform affected The because of changes innomenclature. ofchanges because eetdpoutgroups, product selected 63 Recognizing theneed Recognizing 65 64 The definition of definition The of market access commitments from accession until the Uruguay Round. Article XXXIII, ontheother of market access commitments from accession until XXXIII, theUruguayRound. Article and controls in international trade in 1954, the GATT Secretariat notes a few instances where boundand controls where ininternational afew notes instances in1954, trade Secretariat theGATT annual inbarriers of of changes other review countries. its In andthetariffs of Contracting Parties tariffs government becoming a Contracting Party under XXVI:5 under government aContracting becoming Party 70 69 68 67 Liberia and Nicaragua. developingFour countries acceded during theAn provision. this under ofaccessions illustrations of Box Argentina andtheRepublicof 16) studies Korea case provide (see The the Contracting Parties. theacceding government and that thetermsof between hand, accession had negotiated to stated be theevolution discuss studies case The XXVI:5(c). Article under status tosucceeded Contracting Party of Concessions.Schedule Box st 15 case two presents accepted government by themetropolitan onbehalf of Contracting bytheresponsible through adeclaration sponsorship territories upon customs States orindependent independent automatic accession of newly or XXVI:5(c) Article theyacceded under is whether Contracting Part countries became which developing For goods required for of industry. thedevelopment required goods time, anumber of developing countries unilaterally of capital reduced orremoved dutiesonimports to Germany inexchange for market anassured of products for sugar. involved the reductions These were brought reductions by about negotiation.tariff Cuba onarange accorded of tariff areduction review to impose additional chargesinternational 1953 competition. under The in theperiod tendency anincreased review observes also of one kind or another on imported atatimeof keen producers to domestic protection to moreeffective give wasthe desire increases tariff goods. In 1953, only very few note revenue. that reviews theusual prompted motivethose to by Most for tariff thedesire increase aimedataffo those restrictions, quantitative import of withdrawal the atoffsetting aimed increases hand,tariff other the and,on reductions and unilateral the 1953 be ismade for instance, adistinction review 1950s intheearly changes discussion included of tariff tariff rates were raised by special arrangement or negotiation. or arrangement byspecial raised were rates tariff changes, buttherewereimportant Contracting Parties by bound duties of import the1950s, toIn managed safeguard thestability moreorless theGATT didGuineain1958.and so XXXIII duringtheTorquay Roundin1951.XXXIII Ghana and Peru XXVI:5(c). to Article accede under country first acceded aContracting Indonesia Party. Round became disappearance of granted thepreferencesdisappearance on previously the total schedule number of lines inthetariff Uruguay Round. Uruguay cent 4per to inthewake reachabout of progressively the bindingcoverage decreased but its Table from Appendix seen be 13, can in1947 lines As 20 tariff cent about per bound of its India Box14:Casestudy2:India,1947-94 See Appendix Table 10. See GATT documents Secret/3(1953), Secret/7(1954), Secret/39(1955). India also renegotiations initiated XXVIII Art See GATT (1954) International Trade 1954 (general annual report). interpreted with caution. See technical appendix. technical See caution. with interpreted be should time over coverage ofbinding level inthe changes innomenclatures, changes ofrepeated Because in 1969, 1975 and 1976. See Secret/188(1969), Secret/227(1975) and Secret/232(1976). 69 The decline of thebindingcoverage inth decline The 67 In 1953, In andUruguay withdrew Liberia necy Round in 1949: The Dominican Republic, Haiti, Dominican Roundin1949: The necy and three renegotiations under Article XXVIII. Article under renegotiations andthree rding added protection for domestic industries, and industries, for domestic protection rding added andTurkey negotiated their accession underArticle under Article XXXIII. Article XXVI:5(c) provided for provided XXVI:5(c) Article XXXIII. Article under tween on the one hand negotiated tariff reductions reductions tariff ontheonehand negotiated tween udies – Senegal and Nigeria –of countries andNigeria that have –Senegal udies Malaysia acceded in 1957 under Article XXVI:5(c) in1957 acceded Malaysia XXVI:5(c) Article under 213 the territory in question, includingany inquestion, applicable theterritory these products to theUnited States. products these At thesame in 1950 upon achieving independence. It was the It in 1950 independence. achieving upon s of both tariff reductions and duty increases. In increases. andduty reductions tariff s ofboth mainly in an upward direction, in the unbound inthe inanupwarddirection, mainly Party, if the stated conditions were fulfilled. A fulfilled. were conditions stated the if Party, ies to the GATT after 1947, after toies theGATT arelevant distinction (c) did so onthetermsandconditions previously didso (c) 68 e first decade reflects an increase in It is interesting to note that the review tonotethatthe isinteresting It who had participated in the Annecy intheAnnecy had participated who 70

II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING WORLD TRADE REPORT 2007 SYSTEM: ACHIEVEMENTS AND CHALLENGES WORLD TRADE REPORT 2007 II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING SYSTEM: ACHIEVEMENTS AND CHALLENGES 71 Total number of lines products of selected Source: details. further Note: c b a consequence of theincreasing requirements asa had which declined reserves foreign to currency protect onarange of products the duty razoras for glas wines, blades, onsafety instance to the wasadded duty furnitureandfursk cutlery, metal of 15 Rates duties. as protective cent per were on sugarfor refining.At thesame werereduce stones uncut precious relatively tariffs its modified India thefifties, In d end of theeighties. eighties inthe declining andstarted late seventies eto ecito 9815 9417 9719 2001 1997 1987 1979 1964 1958 1948 3 Description Section applied of average Simple India: lateeighties. tothe lateforties the from groups followed anupward product trend averages for of selected Indian applied asample tariff andpharmaceuticals. chemicals extent and to alesser andfats, vegetables mainly eighties, allbindingswereconcentrated onafew of number products, had the instruments and scientific andprecision overtime. inthefort significantly changed While groups also of bindingcoverage product distribution lines. across The tariff number of bound early bindingcoverage inthe ofthe level in the didnot lines chan of number bound absolute The odadatce fwo 554. 506. 353. 28.8 36.7 31.4 36.6 63.5 70.4 65.0 34.4 58.0 45.0 38.4 47.0 42.2 150.0 49.7 80.0 25.5 25.8 72.8 72.8 Vehicles, aircraft equipment and associated 25.0 17 12 of wood and Wood articles 11.61 resins and materials plastic Artificial 9 7 4 rus eetdyears selected groups, and 92.5 wasan cent per onsparkplugs.There for selected groups of products and selected years. While Brazilian tariffs reached a peak inthe apeak reached tariffs Brazilian While years. andselected ofproducts groups for selected Subsection 61 of section 11. The share of specific lines in this section is 62 per cent in 2001. Share of specific lines in section 12 are 11.1 and 25 per cent respectively in 1958 and 1964. The share of specific tariff lines in section 3 ranges from 7.1 to 38.4 per cent in the first three years. years. 7.1 from three 3ranges first inthe cent per insection to38.4 lines tariff ofspecific share The The share of specific tariff lines in section 4 ranges from 3.3 to 38.8 per cent during the period 1948-1987. period the during cent per to38.8 3.3 from 4ranges insection lines tariff ofspecific share The methodology. See technical appendix. and innomenclature ofchanges because cautiously interpreted be should time over averages Changes intariff b a d Because of changes in nomenclature, tariff averages are not strictly comparable across years. See technical appendix for for appendix technical See years. across comparable strictly not are averages tariff innomenclature, ofchanges Because c International Customs Journal, India (1948), India (1957), India (1964), India (1979); India (1987); WTO-IDB; WTO estimates. WTO WTO-IDB; (1987); India (1979); India (1964), (1957), India India (1948), India Journal, Customs International oter eder mrla 704. 411001004. 34.8 44.7 100.0 100.0 54.1 63.3 49.2 35.5 27.0 200.0 57.1 45.2 30.1 50.3 29.7 104.0 122.0 29.5 Footwear, headgear, umbrellas 49.4 fabricstextiles of accessories clothing and ofapparel 40.8 Articles 35.4 vinegar and beverages foodstuffs, Prepared fats andvegetable Animal ad valorem duty. India also negotiated some increases of bound duties such duties ofbound increases some negotiated duty. also India d while in1955d while for period alimited rates wereprovided reduced ins, while for tiles, vacuum bottles and zip fasteners aspecific andzipfasteners for vacuumins, while bottles tiles, time, some fiscal tariff rates were increased and reclassified andreclassified rates wereincreased tariff time, fiscal some dvalorem ad 71 The TableThe simpleaverages of tariffs shows applied below 214 for the development of domestic industry.for of thedevelopment domestic frequently. 1954 In for therates instance, oncertain imposed on bleaching powder and paste and85 andpaste onbleaching powder imposed 1 5 5 282931077 943 802 72 155 152 110 501006. 0. 0. 5035.0 45.0 100.0 100.0 66.8 100.0 25.0 s beads and false pearls. In 1956, In andfalse pearls. s beads increased India seventies reflects a drop by two-thirds of the bytwo-thirds adrop reflects seventies increase for leather manufactures, cotton rope, cotton manufactures, for leather increase aifrtsi ecnae eetdproduct selected percentage, in rates tariff highest bindingcoverage, andhighest intheseventies ies, machinery apparatus, footwear, machinery etc,ies, hats, , Indian tariffs continued until to the increase tariffs , Indian ge muchuntil dropge thelate1960s. Asecond GATT on a de facto basis. In the early days, accessio days, theearly basis.In facto onade GATT Tunisia provisionally acceded in1959 andadozen basis of Article XXVI:5(c) while only seven n seven only while XXVI:5(c) basis of Article Special procedures were established to give attention toattention give wereestablished procedures Special Twenty-five countries developing de countries were mainly concerned with improving their access to developed country markets. Except forExcept markets. country countries theiraccess improving to concerned were mainly with developed retain freedom to use their tariff flexibility theirtariff to use freedom retain from themanditisaccepted that ingeneral, theymust, isexpected accession, reciprocity relatively little inrelation role ofentitled to GATT “The trade an sixties however non-reciprocity ruledinrelation with howevernon-reciprocity sixties andtheapplicant theContracting both with Parties 74 73 72 Argentina, with together Israel, theRepubliParties, countries hadamong theseven which to th negotiate onthe status to Contracting succeeded Party states were organized. independent Twenty-nine newly rounds of negotiations the1960s, countries andtwo In anumber of accededto developing theGATT Uruguay Round, thebindingcoverage of theRe Re the while lines tariff cent around 5per ofbound its inthe1960s sh didnot bindalarge XXXIII Article under of Argentina andtheRepublicof studies Ko case The (Hudec, 1987). (Hudec, countr fromdeveloping concessions more than token to extract by theUnited countries States, noeffort made attempts developed some a Contracting Party. by to theDirector-General th for acertification in1963 adopted provided XXVI:5(c) Art under status for theacquisitionprocedures of ContractingParty negotiations as follows: “While less-developed countries concessions have ontheirnegotiations tariff made less-developed some “While asfollows: A total of 63 countries acceded on the basis of Article XXVI:5(c). See Appendix Table 10. Appendix See XXVI:5(c). ofArticle basis the on acceded of63 countries Atotal Secretary of GATT that it wished to be deemed a Contracting Party under Article XXVI:5(c). Since XXVI:5(c). Article under aContracting thatto Party deemed of itwished be GATT Secretary o 5 aesuis3ad4 eea n Nigeria and Senegal 4: and 3 studies Case 15: Box new schedule comprising concessionsnew schedule those wasesta intheFrench concessions schedule pre-existing The independence.the day of its June, 1960. 27 On June, 1960 theGovernment on20 country anindependent became Senegal Senegal 3: Case study the conditions b were met,Senegal theGeneralapplying Agreement ba facto onade aContracting to Government had become which The been of Party. Senegal XXVI, of Article 5(c) French Government that thefact thereby established covered by territory. theGeneral for Agreement matters acquired inits The fullresponsibility of France that theGovernment independence asfrom theday had advised of of its Senegal Quoted in Hudec (1987), p. 59. inHudec Quoted See WTO (1995a) Guide to GATT law and practice, Geneva: World Trade World Organization. Geneva: lawandpractice, (1995a) toGATT Guide WTO See States. ofnewly-independent admission the for procedure asimplified for proposal toaSecretariat Council agreed under this article isunder automatic this article providing that co the stated accession though even Parties Contracting to the XXVI:5(c) Art under requests torefer 1963,Before customary was it 73 Spain and Portugal, which cl which SpainandPortugal, ies, which didnot which makeies, any significant market access commitments clared themselves participants in the Kennedy Round(1964-1967). intheKennedy participants themselves clared ecame a Contracting Party. Its rights and obligations datefrom andobligations rights Its a ContractingParty. ecame inthelight of needs”. theirdevelopment egotiated their accession under Article XXXIII. Article theiraccession under egotiated public of Korea to 9.5 had increased cent. per d development” summarizedd development” theapproach to accession e effect that thegovernment concernede effect had become c of Korea, RepublicandYugoslavia. Arab theUnited aimed developing country status atthistime, were status country developing aimed developing countries. Secretariat pamphletA GATT n negotiations entailed an exchange of concessions to theconcerns of developi countries making concessions (Hoda, 2001).countries makingconcessions the In (Hoda, rea suggest that eventhecountriesrea suggest acceded which public of Korea only bound 60 lines. Just before the before Just lines. public of 60 Korea bound only other countries declared they were applying the theywereapplying other countries declared sis since November 1960 advised the Executive theExecutive 1960sis since November advised nditions are fulfilled. At its meeting of April/May 1963, the ofApril/May meeting At its arefulfilled. nditions 215 that related to Senegal were continued anda continued were toSenegal thatrelated are of their tariffs. As shown inBox shown 16, As Argentina are of theirtariffs. e termsof theContracting theiraccession with blished by using the procedure of certification of byusingtheprocedure certification blished Senegal qualified, in the sense of paragraph inthesense qualified, Senegal ng countries. Developing 74 72 The simplified

II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING WORLD TRADE REPORT 2007 SYSTEM: ACHIEVEMENTS AND CHALLENGES WORLD TRADE REPORT 2007 II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING SYSTEM: ACHIEVEMENTS AND CHALLENGES 76 75 rus eetdyears selected groups, preferential rates for a dozen of products – mainly petroleum products – imported fromFrench the –imported products petroleum preferential –mainly rates for adozen of products and car parts) cent (cars per cent to30 4per from range bindinglevels The 70 products. covered approximately with two exceptions at 75 per 2Fowa,haga,ubels2. 885. 17.8 8.7 54.1 66.4 28.8 13.7 21.8 14.3 equipment associated and aircraft Vehicles, Footwear, headgear, umbrellas 17 12 Source: details. further Note: Nigeria’s schedule covered one single product: stockfish. Nigeria’s covered onesingleproduct: schedule 1960, the dateof decades, Nigeria’s several datefrom October obligations For independence. and rights Its XXVI:5(c). Article under status to Contracting succeeded Party also Nigeria Nigeria 4: Case study products. non-agricultural centwent average per far bindingswhich for thelevelof 30 theUR agricultural both below and 11.9 2002 againinthe19 reduced being higher levelsbefore the exception of clothing andfootwear. themid- In intheTable shown As above, until thelate1970 1985 58.9 1977 19.4 b 1969 20.8 a fats andvegetable Animal 4 3 Description Section applied of average Simple Senegal: of changes to GATT schedules. Nigeria’s policy. tariff on constraints limited bindingsimpose cent. These per atanaverage levelof 48.8 were bound atasimpleaveragelines levelof 150 cent. per Howe bythemid-1980s. to decline theUruguaystarted In tariffs were relatively highinthe1960s, theyin wererelatively tariffs odadatce fwo 522. 8512.4 58.5 10.7 20.0 56.1 15.2 21.9 23.2 of wood and Wood articles resins and plastic materials Artificial 11.61 9 7 Total number of lines products of selected cent) andanother 70 duringtheTorquay wereadded cent). orso bindingsat5per Round(most duringtheAnne wereadded Union. products Six Subsection 61 of section 11. a The share of specific tariff lines in section 4is14.7 in1969 12.7 cent and per in1977. cent insection lines per tariff ofspecific share The See GATT (1962) GATT See Protocol to the the results of embodying GATT the conference, 1960-61 tariff 16 July 1962. to the GATT, 29 April 1964.[Instrument No 92]. No 1964.[Instrument GATT,to the 29April See Schedule established XLIX in GATT (1964) Second Certif Because of changes in nomenclature, tariff averages are not strictly comparable across years. See technical appendix for for appendix technical See years. across comparable strictly not are averages tariff innomenclature, ofchanges Because b International Customs Journal, Senegal (1969), Senegal (1977), Senegal (1985); WTO-IDB; WTO estimates. WTO WTO-IDB; (1985); (1977), Senegal Senegal (1969), Senegal Journal, Customs International rprdfosuf,bvrgsadvngr2. 428. 16.9 83.7 24.2 fabricstextiles of accessories clothing and ofapparel Articles 23.7 and vinegar beverages foodstuffs, Prepared 75 The concessions made on behalf of Senegal in Geneva in 1947 dvalorem ad 216 cent for cigars and cigarettes. They also bound also They andcigarettes. cent for cigars cy Round (with bindings at 5 per cent bindingsat5per and7per Round(with cy creased slightly inthe1970s slightly creased buthad already s, applied tariffs remained relatively lowwiths, applied tariffs 90s. Note that the reduction of Note that applied tariffs thereduction 90s. aifrtsi ecnae eetdproduct selected percentage, in rates tariff Round, Nigeria bound all its agricultural tariff agricultural tariff allits bound Round, Nigeria 0 9 0 1116 900 797 404 eighties, however, to rose considerably tariffs 503. 5020.0 65.0 30.0 35.0 ver only 6.9 per cent of industrial tariff lines cent 6.9 tariff ver only of per industrial ication of Rectifications and of Modifications ofication Schedules Rectifications 76 As shown intheTable shown As below, applied 78 77 Round. rus eetdyears selected groups, the base rate. Argentina scheduled further concessions covering concessions atotal of 31 rate. further the base intheTokyo Argentina scheduled lines rate to ishigherorequal thebound ofcases, asignificantnumber intheschedule. In indicated rates lowerthan that thebase are arenot systematically note that rates of thefinal duty bound to isinteresting It products. cent per for atmorethan 200 certain cent peaks orevenhigherwith per at80 bound weretypically Tariffs machinery on aspharmaceuticals. aswell and machinery metals others amongst inputs andintermediary goods capital bindingscovered mainly Industrial to from zero for seeds ranged sugar-beet products was higher, equal rate. orlowerthan thebase Source: Source: details. further Note: as footwear and wood and articles of wood remained totally unbound. totally remained ofwood andarticles andwood as footwear animalsand12.1for live centfor vehicles per cent groups reaching23per product across Bindingcoverage differed lines. tariff cent of its attheendof theKennedy RoundinSeptember to theGATT aContracting Party Argentina became Argentina 5: study Case 2003 1999 1987 d 1970 c b 1965 a 3 Description Section applied of average Simple Nigeria: 2Fowa,haga,ubels4. 953. 2632.6 30.1 32.6 18.3 28.5 35.5 18.3 28.5 49.5 33.3 85.2 43.4 28.6 53.5 24.8 Vehicles, aircraft and associated equipment Total Footwear, headgear, number of lines products of umbrellas selected 17 12 of wood and Wood articles 11.61 9 7 4 per centper linesconcerned of thebound agricultura Aussenhandelsinformation, Nigeria (1987); WTO-IDB; WTO estimates. WTO WTO-IDB; (1987); Nigeria Aussenhandelsinformation, other cases, new lines were bound. As with earlier with As bound. were lines new cases, other o 6 aesuis5ad6 retn n h eulco Korea of Republic the and Argentina 6: and 5 studies Case 16: Box tariff concessions. As shown in Appendix Table inAppendix shown 14, As concessions. Argentina accepted 5.5tariff to bindabout per 1967. Like theRepublicof Korea, gaine Argentina Shares of specific lines in section 7 are 3.2 and 5 per cent respectively in1965 1970. and respectively cent 5per and 3.2 7are insection lines ofspecific Shares Share of specific tariff lines in section 3 are 33.3 and 25 per cent respectively in1965 1970. and respectively cent 25 and 33.3 per 3are insection lines tariff ofspecific Share Subsection 61 of section 11. Shares of specific tariff lines in section 4 are 28 to 31.8 per cent respectively in 1965 and 1970. See GATT (1979) Geneva Protocol. [Instrument_No_156]. the results of the 1964-67 trade conference,the resultsof the 1964-67 vol. V, 30 June 1967. embodying (1967) instruments inGATT Legal ofArgentina ofaccession Protocol tothe annexed LXIV Schedule See c b a Because ofBecause changes in nomenclature, averages tariff are not d International Customs Journal, Nigeria (1965), Nigeria (1970); Zoll- und Handelsinformation by the Bundesstelle für für Bundesstelle bythe Handelsinformation und (1970); Zoll- Nigeria (1965), Nigeria Journal, Customs International 78 In some cases, the new commitments were further reductions of already bound rates. In rates. bound ofalready reductions further were commitments new the cases, some In nmladvgtbeft 554. 002. 37.6 24.5 25.5 25.4 68.6 20.0 21.4 39.9 44.4 39.5 33.4 35.5 41.6 56.5 fabricstextiles of accessories clothing and ofapparel Articles 50.8 resins and materials plastic Artificial and beverages vinegar foodstuffs, Prepared fats andvegetable Animal dvalorem ad and aircrafts while other product groups such groups product other while andaircrafts d admission under Article XXXIII bynegotiating XXXIII Article under d admission 140 cent orsugarconfectionery. per for whisky 3 5 4 6 988 960 248 250 236 aifrtsi ecnae eetdproduct selected percentage, in rates tariff strictly comparable across years. See technical appendix for for appendix technical See years. across comparable strictly l products. The bindinglevelsfor agricultural The l products. 217 bindings, the level of the bound rate bindings,thelevelof of thebound duty 004. 465. 50.0 50.0 14.6 42.7 40.0 77 Overall, less thanOverall, 10 less

II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING WORLD TRADE REPORT 2007 SYSTEM: ACHIEVEMENTS AND CHALLENGES WORLD TRADE REPORT 2007 II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING SYSTEM: ACHIEVEMENTS AND CHALLENGES 81 80 79 Republic of Korea covered products. to theGATT 60 rus eetdyears selected groups, accession under Article XXXIII. The schedule anne schedule The XXXIII. accession underArticle the endof theKennedy Roundof trade negotiatio Total number of lines products of selected corresponding base rates.corresponding base theTokyo In Round, Some were further reductions of already boun ofalready reductions further were Some between 20 per cent and 40 per cent cent. afew 20per cent with per cent exceptions at50per per or60 and40 between Like a Argentina, theRepublicof Korea became Republicof Korea The 6: Case study 11.9 cent. per 30 above rates forRound final issomewhat Argentina bound 10.3 theUruguaynot to use Roundnegotiations reduce 11.5 2001 intheTable, reduce shown werefurther As tariffs 15.7 32.2 substantially reduced intheearly1980s. had been already of the1980s howevershowthat tariffs 8.9 1996 Argentina’s werehighinthe1960s appliedtariffs 13.8 60.7 intheTable shown averages for groups of tariff products applied that above,The suggest 16.8 1987 21.8 24.7 61.6 1971 14.3 68.2 62.2 1967 26.6 73.1 a 66.9 108.5 99.6 of wood and Wood articles resins and plastic materials Artificial 11.61 vinegar and beverages foodstuffs, Prepared 9 fats andvegetable Animal 7 4 3 Description Section applied of average Simple Argentina: Source: Source: details. further 2Fowa,haga,ubels1501632. 1921.4 19.3 21.9 15.3 24.7 27.4 156.3 60.5 125.0 79.6 Note: equipment associated and aircraft Vehicles, Footwear, headgear, umbrellas 17 12 products. cent. per Duringthe Kennedy and afew at80 atzero andmachinery. ofA number bindingswereset clothing products groups includingsome of product bindingscovered avariety Industrial products. food prepared cent per for certain 80 agricultural products. The level of the agricultural bindings ranged between zero and for bovines levelof theagricultural between bindingsranged The agricultural products. emerges fromemerges theconcessions onnon-agricultura cent per of30 theTokyo co Roundcommitments Subsection 61 of section 11. See GATT (1967) Protocol for the accession of Republic of Korea to the GATT, 1967, tothe ofKorea 2March ofRepublic accession Geneva. the for (1967) GATT Protocol See See Schedule LX in GATT (1979) Protocol supplementary to the Geneva (1979) protocol to the GATT, 22 November GATT, (1979) tothe 22November Geneva protocol tothe (1979) supplementary in GATT Protocol LX Schedule See 1979, Geneva. 1979, June 1967. See Schedule LX in GATT (1967) Legal instruments embodying the results of the 1964-67 trade conference, vol. V, vol. conference, 30 trade 1964-67 ofthe results the embodying instruments (1967) Legal inGATT LX Schedule See Because ofBecause changes in nomenclature, averages tariff are not st a International Customs Journal, Argentina (1967), Argentina (1971), Argentina (1987); WTO-IDB; WTO estimates. WTO (1971), WTO-IDB; (1987); Argentina (1967), Argentina Argentina Journal, Customs International textiles fabricstextiles of accessories clothing and ofapparel Articles 80 For those new bindings,theconcession rates those wereFor alllowerthan orequal to the 218 dvalorem ad theRepublicof Korea 143 made concessions. d rates while others were new bindings. About About werenewbindings. d ratesothers while Round, theRepublicof Korea another 18 bound and1970s. for half calculations thesecond Our Contracting Party to the GATT in1967 to theGATT aroundContracting Party ncerned agricultural products. No clearpattern No ncerned agricultural products. d in the early 1990s. Argentina most likely 1990s.d intheearly Argentina most did 4. 9. 802. 22.5 20.7 38.0 194.5 140.0 1 4 2915 1387 1350 1249 842 713 l products. The levelof thebindingsrangesThe l products. ns. The Republicof Korens. The xed to theprotocol for theaccession of the its applied tariffs. The average The of Uruguay appliedtariffs. its rictly comparable across years. See technical appendix for for appendix technical See years. across comparable rictly 79 ae npretg,slce product selected percentage, in rates Around 15Around cent per of concerned those a also negotiated its 81 under Article XXXIII and six succeeded to Contractin succeeded andsix XXXIII Article under According to Hudec (1987), developed countries pressed a little harder for reciprocity from thelarger harder for reciprocity According alittle (1987), to Hudec countries pressed developed for Tunisia andMorocco, allof thecountries that byacceding countries undertaken of commitments of international anddevelo trade inpromoting growth reflec of evolution probably Costa This Rica. the case 27 pe levelof between theceilingexceptions. varied The were boun thetariffs cases, lines. most In their tariff 83 82 or bindings of prevailing tariff rates on or bindingsof prevailingtariff reductions 19 tariff countries offered developing much. Nevertheless, countries butnotdeveloping very number of accessions increased significantly. About 25 countries succeeded to Contracting Party status status significantly. ofaccessionsnumber increased 25 to countries About Contracting succeeded Party In the late 1980s and early 1990s, that is just be 1970Between and1985, countries pl developing six countriesDeveloping didnot make many market ac 30. The participation of developing countries of inthe developing participation 30. The countries thenumber of period, developing ap same two were North African (Morocco andTunisia). African (Morocco were North two three were countries intransition and Honduras), Costa Bolivia, (Mexico, countries American were Latin 13 while countries acceded XXVI:5(c) Article under Or about $3.9 billion of their 1976 oftheir $3.9 billion about Or 1977 or imports. Source: details. further Note: applied of average Simple Korea: of Republic than 50 per cent and 93.8 per cent of its non-agricultural tariffs at10 centthan 50per and93.8 cent tariffs per onaverage. cent non-agricultural per of its 2001 intheTable groups shown product suggest for above selected simpleaverages of tariffs The applied 1997 1982 c 1974 b a 3 Description Section 2Fowa,haga,ubels7. 858010.4 6.4 5.5 8.0 6.5 8.8 6.0 48.5 12.1 9.0 25.1 79.2 32.0 33.3 67.7 39.1 equipment associated and aircraft Vehicles, Footwear, headgear, umbrellas 17 12 of wood and Wood articles materials plastic and resins Artificial 11.61 9 7 4 Total number of lines products of selected rus eetdyears selected groups, In theUruguayIn Round, theRepublicof after. reduced. groups wasalso At timeastheaverages between thesame were reduced, thedispersion Tariffs reduced. significantly had werefurthe been highbyth relatively still were that Korean tariffs Subsection 61 of section 11. The share of specific tariff lines is 0.87 in 1997 and in 2001 in section 3. The share of specific tariff lines range from 0.4 to 8 per cent in section 4. insection cent 0.4to8per from range lines tariff ofspecific share The See the details regarding accession in Appendix Table 10. inAppendix accession regarding details the See b a Because of changes in nomenclature, tariff averages are not strictly comparable across years. See technical appendix for for appendix technical See years. across comparable strictly not are averages tariff innomenclature, ofchanges Because c Korean Customs Association (1974); International Customs Journal, Korea (1982); WTO-IDB; WTO estimates. WTO WTO-IDB; (1982); Korea Journal, Customs (1974); International Association Customs Korean nmladvgtbeft 172. . 8.7 9.2 22.9 27.0 23.5 41.7 44.5 fabricstextiles of accessories clothing and 61.5 ofapparel Articles and vinegar beverages foodstuffs, Prepared fats andvegetable Animal 5 per cent imports. 5per of theirtotal MFN Korea bound all its agricultural tariffs atanaverage rate of more agricultural tariffs Korea allits bound 83 It is interesting to inthelevel isinteresting note It that thedispersion e mid-1970s 1980s, intheearly butthat they already dvalorem ad fore the orduringtheUruguayRound negotiations, acceded under Article XXXIII bound all or almost all alloralmost bound XXXIII Article under acceded (Czech Republic, Slovak Re (Czech Tokyo Round was not subject to the reciprocity rule.Tokyo to thereciprocity Roundwasnot subject r reduced as shown by the averages for bytheaverages 1996 asshown r reduced and us Romania and Hungary negotiatedus Romania their accession andHungary ts a progressive change in views regarding therole regarding inviews change aprogressive ts to the GATT under Article XXXIII. Eight of the13 XXXIII. Article under to theGATT d at an across-the-board ceiling level with a list of alist with level ceiling d atanacross-the-board g Party status under Article XXVI:5(c). Duringthe XXVI:5(c). Article under status g Party plying the GATT provisionally or de facto reached facto provisionally orde theGATT plying increased significantly during this period. Except duringthisperiod. significantly increased Rica, El Salvador,Rica, Venezuela, Guatemala,Paraguay 219 pment that could be observed during this period. duringthisperiod. pment that observed could be cess concessionscess inthe1970s or1980s either. 9 4 462522 2496 344 495 0. 008012.5 8.0 50.0 100.0 r cent in the case ofr cent Sloveniaand55 inthecase cent per in ae npretg,slce product selected percentage, in rates 82 public and Slovenia) and public andSlovenia)

II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING WORLD TRADE REPORT 2007 SYSTEM: ACHIEVEMENTS AND CHALLENGES WORLD TRADE REPORT 2007 II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING SYSTEM: ACHIEVEMENTS AND CHALLENGES evolved. Developing countries made onmark offers throughout theRound, while actively participated encouraged and supported by theWorld substitution strategies Bank,encouraged turned andsupported away from earlier import and undertook sometimes radical liberalizations of theirtrade regimes. liberalizations radical sometimes and undertook In the same perspective, this subsection also ex also this subsection perspective, thesame In mark goods country inaccess tothe changes developing Uruguay Round andafter The adramatic 1980s 1990s change andtheearly saw The (ii) International financial institutions 88 87 86 85 84 trade indevelopment strategies. trade reforms countries. indeveloping Tables 10 and11, showth subsection, inthenext 55 55 below afew cent above set only cent. bindingsset per with per valorem products. agenda. The report of the Working Party ontheAcce of theWorking Party report The agenda. of the13 most For 1986, countries of reform that abroader acceded after to accession GATT waspart are annexed to GATT 1994 and the GATS, became original Members of 1994are annexed to theWTO. GATT original andtheGATS, Members became Multilateral Trade andfor there which Agreements, accepted which theMarrakesh Contracting countries. GATT were developing Parties Agreement andthe of 1January,As 1995, was128, to theGATT thetotal number of Contracting Parties 100 of about which cent of their lines. for while industrial lines 5.4 cent per of theirtariff agriculture, that onethird.In are than eight below countries less had bound products non-agricultural in thelate1980s, alltheother countries inthesa and non-agricultural for products a set of 20 developing countries.Except for the countries which acceded was also reflected in the participation of developi intheparticipation reflected was also introduced as part of a Structural Adjustment Program. Costa Rica simplified its tariff structure and ofintroduced aStructural structure aspart Adjustment Program. tariff Costa simplified Rica its Uruguay Roundaswellthemarket access component of accessions that were negotiated Article under significantly reduced its applied rates. Taxes rates. applied its reduced significantly oncusto XII of theMarrakesh Agreement.XII and unified within the customs tariff. The maximum tari maximum tariff. The thecustoms within and unified per cent.per At time, thesame however, at55 schedule cent entire per tariff thegovernment its bound The discussion in this subsection is restricted tomarket isrestricted inthissubsection discussion The Winters (2000) discusses both the evolution discusses of the thinking and the and intellectual trade about experiential policy (2000) Winters see GATT (1994), Hoekman (1996) and (2001a). WTO agricultural market access issues are covered also commitments, although in detail. less of a For discussion services (2000), Woodrow (2000, 2001) and Barth et al. (2006). On basic telecommunications services, see Sherman (1998). Sherman see services, telecommunications basic On (2006). al. et 2001) andBarth (2000, Woodrow (2000), Qian (2000), Mattoo (1998), andJacquet (1997), Dobson Sorsa see services, financial On section. inthis discussed negotiations (finance also sectorial conducted in and services Members basic telecommunications) which are not factors behind the thinking. the behind factors 1987-1994. See the evaluation of World Bank support for trade (World Bank, 2006). Bank, (World trade for support Bank ofWorld evaluation the See of developing countries. that shows World Bank (2006) negotiations accession inthe players principal the havebeen Parties Contracting industrialized (2001) that notes Hoda with a few exceptions specified in an annex to its schedule. Most exceptions to theceiling were schedule. Most to inanannex afew its with exceptions specified 87 At the same time, however, unila At same the liberalized they 85 88 Slowly at first, butrapidly by thelate atfirst, 1980s, Slowly manycountries, developing and developed Contracting Parties were pushing harder infavour werepushingharder of Contracting Parties and developed 84 220 amines the ITA negotiation which took place after the theITAamines place took which after negotiation e pre-Uruguay Roundbindingcoverage for agricultural e pre-Uruguay mple have bindingcoverages for agricultural both and ng countries intheUruguay products, 10 than countries 10 products, less had bound per et access for agricultural both andnon-agricultural levant of Schedules Concessions andCommitments others increased their participation astheRound their increased participation others access for goods. While the focus is on industrial products, products, industrial ison focus the While goods. for access Bank lending for trade liberalization peaked in the period period inthe peaked liberalization trade for lending Bank ms values, surtaxes and surcharges werereduced andsurcharges surtaxes ms values, ets that were negotiated at the multilateral level. multilateral atthe negotiated that were ets ff level for most finished products was set at 40 at40 wasset products finished levelfor most ff ssion of Costa Rica describes the tariff reform of thetariff ssion Costa describes Rica in approaches towards the role ofinternational role towardsthe in approaches terally. This subsection attempts to isolate toisolate attempts terally. subsection This 86 This change in strategies Round. Many ofthem ad Developing economies Agriculture ondeveloping countries the isbeyond tariff lines increased from 17 increased lines centtariff th per before theirbindingco increased substantially in thesample Africa Asia Source: Source: Europe Central unbound. oflines number significant 91 90 89 A majorachievement of theUruguay estimates. previous with comparisons andinmaking andovertime countries across comparisons warrant rates only. issues on bound for considerab These for lines. unbound period inthebase duty the applied calculat were typically 1990s, averages tariffs of bound andpo pre- coverage between comparisons complicate tariffs Roundapplied Uruguay Roundandpost-Uruguay anu levelsovertimeraise Comparisons of tariff products non-agricultural and agricultural for coverage binding Round post-Uruguay and Pre- 9 Table theUruguay situationWith Round, thedata improved considerably. Uruguay Roundcommitments changes in tariff bindings and tariff levels. However, levels. bindingsandtariff intariff changes of the Agreement on subsidies jointly. of theeffects Acomprehensive discussion andexport support To defined. market to tackle access, decided domestic tostrictly get theroot of theproblem, Members ofincreasingly thatdisarray inagriculture evident market thecauses with went problems beyond access regions. 21 from Table seen to be can 73 cent. per As 9, averages these hide considerable differences between inpercentage thebindingcoverage expressed products, Roundbinding andpost-Uruguay pre- between made be can acomparison data, Usingthese for 27 economy participants. developing outof atotal of 94 products deviatedproducts from the general rules. covered bytheGATT, been always priorto theWTO, towards bringing agriculture back into therealm of Latin America Latin Transition economies the GATT/WTO Secretariat’sthe GATT/WTO Integrated Data Base allowed detailed calculations to be made electronically uniform ceiling level, African and Asian countriesuniform ad ceiling level, African andAsian Averages calculated on a sample of 55 countries (counting (counting of55 countries asample on calculated Averages See the discussion in WTO (2001a). in WTO discussion the See 93 developing in economy the Uruguay participants Round. the See discussion in (1994). GATT (2001a), OECD (1999), Martin and Winters (1996), GATT (1994). WTO instance for See elsewhere. documented extensively havebeen commitments market Round access Uruguay GATT (1994). 90 While almost all Latin American countries bound al countries bound American allLatin almost While Percentage of tariffs r RPs RPeU otU r RPs RPeU Post UR Pre UR Post UR Pre UR Post UR Pre UR Post UR Pre UR 6107 0 8105 100 57 100 38 100 74 100 36 9105 0 39 68 98 63 100 54 100 49 7105 0 39 496 74 98 73 100 59 100 57 5103 0 66 270 32 68 16 100 36 100 15 2108101 92 90 26 69 13 100 8 100 12 7102 0 17 361 13 73 21 100 22 100 17 lines bound lines Agricultural products Non Agricultural Non products Agricultural products RoundwastheAgreement onAgri 91 In theleadupto In theUruguay itbecame Roundnegotiations, Percentage of imports under bound rates bound under e Uruguay Roundto 100 non-agricultural cent. per For mber of difficulties. While comparisons between pre- between comparisons While of difficulties. mber opted more diverse strategies. Most of them left a of themleft Most strategies. morediverse opted verage. Their share of bound lines inallagricultural lines shareverage. of bound Their multilateral agriculture trade rules.Although had scope of this Report. This subsection focuses on focuses subsection This Report. of this scope Nowadays, averages of bound rates averages of arecalculated bound Nowadays, ed across all tariff lines, bound and unbound, using andunbound, bound lines, alltariff across ed 221 the 12 Members of the EU individually) including 27 including ofthe EU individually) ofthe 12the Members st-Uruguay Round averages of bound rates. In the In rates. bound of averages Round st-Uruguay coverage. average, On countries thedeveloping are relatively straightforward, changes inbinding changes straightforward, are relatively of all non-agricultural tariff lines increased from increased lines tariff of allnon-agricultural le caution in interpreting the statistics, inmaking ininterpretingle caution thestatistics, it is important to keep in mind that this only therulesthat applied to agricultural primary l their industrial tariff lines at agenerallyl their tariff industrial Percentage of tariffs 89 With regard to tariffs in particular, regard to tariffs With lines bound lines culture and the progress made culture andtheprogress Percentage of imports under bound rates bound under 97

II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING WORLD TRADE REPORT 2007 SYSTEM: ACHIEVEMENTS AND CHALLENGES WORLD TRADE REPORT 2007 II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING SYSTEM: ACHIEVEMENTS AND CHALLENGES Korea, Rep. of Rep. Korea, El Salvador Philippines Hong-Kong, China Hong-Kong, rzl541001. 5518 6419 12.6 1997 36.4 1989 35.5 17.2 100.0 5.4 Brazil rga on omtet,arclua rdcs eetddvlpn countries developing selected products, agricultural commitments, Round Uruguay 10 Table theMarrakeshsigned Agreement. that de of thedisciplines picture apartial provides Sri Lanka aa,Cia..100..0019 . 960.0 1996 0.0 1991 0.0 ... 100.0 ... Malaysia China Macao, aac . 0. . 7419 8519 17.3 1999 8.8 38.0 28.5 1998 1996 1991 22.0 76.3 14.2 97.4 1989 1988 1996 ... 47.0 14.1 114.5 11.0 55.5 100.0 1991 102.7 1996 ... 100.0 100.0 91.9 ... 4.7 14.3 16.7 ... 100.0 100.0 Jamaica 26.0 Indonesia India 35.0 100.0 Colombia Chile 100.0 Turkey South Africa eeul 0. 907. 5719 8519 14.6 1997 18.5 1990 55.7 71.1 99.0 100.0 Source: Venezuela valorem countries extended theirbindingcoverage th fromcountries less extended of non non of share large of its because andMalaysia China; andSingapore; Macau Hong-Kong, end ifoneexcludes cent. Two at rates onaverage higherthan 100 cent. tariffs per At countries theirbound set theother all20 rates Uruguay across countries Roundbound average isaround of 50per post un-weighted The 92 available. averages fo forapplied tariff agricultural products inTable data Ro The 10 post-Uruguay showpre-and b a igpr . 0. . . 990119 0.0 1996 0.1 1989 9.5 7.3 100.0 1.7 Singapore eio1001005. 5118 2819 20.6 1998 12.8 1988 35.1 54.5 100.0 100.0 Mexico went far theircommitments. beyond Tunisia Thailand cases except Hong-Kong, China; Macao, China; Singapore and Thailand with its large share China; of large non- Macao, its China; except with Hong-Kong, andThailand Singapore cases A large majority of countriesA large majority lowered their applied ta Including post UR rectifications and modifications. rectifications Including UR post Countries with shares of non-ad valorem tariffs in their agricultural post-UR applied rates exceeding 5 per cent. 5per exceeding rates applied post-UR agricultural intheir tariffs valorem ofnon-ad shares with Countries Because non- Because a note. valorem b WTO Secretariat.WTO b b ad valorem rates, applied tariffs in the late 1990s were on average substantially lower than post-UR tariffs. tariffs. inthelate1990s lowerthan wereonaverage post-UR substantially tariffs rates, applied 92 b With theexception ofWith 5 countries inthe1980s, had which acceded to developing theGATT tariffs in their agricultural or non-agricultural post-UR applied rates exceeding 5 per cent are signalled with with aresignalled cent 5per exceeding rates applied post-UR non-agricultural or agricultural intheir tariffs ad valorem rates, Chile and the Philippines set the lowest agricultural bindings on average. In all average. In on bindings agricultural lowest the set Chile Philippines rates, and the r RPost UR Pre UR 0. 0. 374. . . 9613.0 1996 ...... 42.1 53.7 100.0 100.0 Binding coverage Binding 059. 215. 982. 9650.1 1996 27.2 1988 52.9 52.1 99.1 20.5 319. 463. 981. 009.0 2000 11.2 1988 39.8 54.6 99.5 33.1 241002. 0118 0119 42.2 1996 50.1 1989 60.1 23.0 100.0 12.4 tariff rates are not taken into account in the calculations, countries with shares of non- shares with countries calculations, inthe intoaccount taken arenot rates tariff . 0. 20..18 4319 38.0 1999 44.3 1988 3.8 1999 ... 9.8 42.0 1988 100.0 12.2 4.9 28.3 99.9 4.7 . 0. 004. 913. 9825.6 1998 36.1 1991 49.7 50.0 100.0 4.9 . 943. 4719 4319 19.5 1996 34.3 1991 34.7 33.1 99.4 3.2 . 0. . . 920019 0.0 1996 0.0 1992 0.0 0.0 100.0 2.2 . 88..16018 2720 76.6 2000 32.7 1989 116.0 ... 98.8 ... a r RPost UR Pre UR 222 of bound tariffs of bound Simple average r 20 countries for developing information which was veloping countriesveloping upinthis they took area when riffs during the period under consideration butthey under duringtheperiod riffs und binding coverages, bound tariff averages and tariff und bindingcoverages, bound an one third of their tariff lines to lines fullcoverage.an onethirdof theirtariff a Pre UR year Simple average of applied tariffs Average Pre UR Post UR year Average Post UR ad ad China than ontheother less hand bound andSriLanka of Korea, Malaysia and South Africa bound more than 80 more bound Africa andSouth of Korea, Malaysia that is all Latin American countries boun plus Jamaica, American that isallLatin South Africa Africa South Thailand China Hong-Kong, Sri Lanka lSlao 0. 0. 453. 968.4 1996 35.7 44.5 100.0 100.0 El Salvador Philippines Turkey rga on omtet,nnarclua rdcs eetddvlpn countries developing selected products, non-agricultural commitments, Round Uruguay 11 Table igpr . 451. . 990519 0.0 1996 0.5 1989 6.3 10.0 64.5 0.3 Singapore aasa048. 101. 981. 9910.2 12.6 0.0 1999 7.1 1998 1996 19.7 1999 13.1 38.8 9.6 0.0 1988 1996 18.3 1988 1998 11.2 1991 78.7 1991 14.9 26.6 14.9 34.9 1996 0.0 1988 42.5 31.0 1997 1989 Source: 49.0 11.5 11.0 34.3 40.3 35.6 81.2 100.0 1996 1991 44.7 1989 100.0 32.7 0.4 15.6 35.4 100.0 69.8 30.8 96.1 0.0 0.0 51.3 4.6 28.0 11.4 100.0 Mexico 100.0 Malaysia 25.0 0.8 China Macao, 6.8 of Rep. Korea, Jamaica Indonesia India 100.0 Colombia Chile 100.0 Brazil eeul 0. 0. 003. 901. 9711.6 1997 17.0 1990 33.9 50.0 100.0 100.0 Venezuela 95 94 93 32 outof atotal of 70 2007. bytheendof April in1997 from 6outof atotal of increased 28 participants to participants country number of developing above, developing 2.(a) mentioned in subsection As InformationThe Technology Agreement inTable shown As lines. 11,bind alltheirtariff se thenon-agricultural marketIn access negotiations, on b a of agricultural products, they went beyond theywent beyond of agricultural products, andthelate1990s. theearly However, between asinthecase the countries tariffs theirapplied reduced Protection levels in developing economies for covered products by the ITA differed widely in 1997. Some Similarly, intheITA. participates country CentralAmerican not iswellrepresented, asingleSouth America For all countries except two, there is a large gap between bound and applied tariffs. andapplied bound gapbetween allcountries thereisalarge exceptFor two, atlevelsthat are on average lowerthan theonesnegotiated theirtariffs bound forsample agriculture. countries such Afric asBrazil, andSouth Mexico Tunisia developing aregion economies, Asia, in notably East has theAgreement. signed African butnoSub-Saharan countries country participate, North two Including ITA and modifications. rectifications UR and post Countries with shares of non-ad valorem tariffs in their non-agricultural post-UR applied rates exceeding 5 per cent. 5per exceeding rates applied post-UR non-agricultural intheir tariffs valorem ofnon-ad shares with Countries Developing country participants include countries participants in transition. country Developing Bound averages must be interpreted jointly with the corres coverage is incomplete, the bound and the applied averages are not strictly comparable. comparable. strictly arenot averages applied andthe bound the isincomplete, coverage Note that Africa South was considered in the Member Uruguay a developed Round. WTO Secretariat.WTO b b r RPost UR Pre UR Binding coverage Binding 443. 331. 994. 967.5 1996 45.2 1989 17.5 23.3 39.3 34.4 669. 041. 982. 006.1 2000 20.3 1988 15.8 10.4 96.0 16.6 . 182. 3419 6719 13.5 1996 26.7 1991 23.4 23.4 61.8 6.4 . 831. 9319 5919 9.4 1998 25.9 1991 19.3 17.1 28.3 4.1 . 114. 992. 0025.6 2000 28.7 1989 40.6 51.1 0.0 . 092. 4218 3719 39.8 1999 43.7 1988 24.2 24.6 70.9 2.6 . 383. 0118 9719 7.7 1996 19.7 1988 10.1 31.2 93.8 9.5 . 75000019 . 960.0 1996 0.0 1992 0.0 0.0 37.5 1.2 a what their commitments wouldhave theircommitments what required. r RPost UR Pre UR of bound tariffs of bound Simple average a have preferred to stay outside theagreement. a have outside preferred to stay 94 ven outof the20 countries inthesample, developing A number of developing economies, including large d all their tariff industrial ponding figure for the binding coverage. When the binding the When coverage. binding for the figure ponding heavily involved in global trade of ITA products, ofITA trade products, inglobal involved heavily 223 ly a subset of all developing countries ofly asubset alldeveloping to agreed economies participated actively in The theITA. actively economies participated one third of their lines. All thecountries onethirdofAll inthe theirlines. per cent per lines. of Macao, their industrial tariff a Pre UR year Simple average of applied tariffs Average Pre UR s. Indonesia, theRepublic s. Indonesia, 93 A large majority of majority large A Post UR year Average 95 Post UR While While

II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING WORLD TRADE REPORT 2007 SYSTEM: ACHIEVEMENTS AND CHALLENGES WORLD TRADE REPORT 2007 II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING SYSTEM: ACHIEVEMENTS AND CHALLENGES Because each accession is a negotiation between th eachaccession between isanegotiation Because ison that accession provides to theWTO XII Article complicates any assessment of the role of the WTO in tariff reductions. reductions. intariff complicates of any therole of assessment theWTO inasubstant thattheywereengaged means This principle be supposed to implement supposed reformsprinciple be before jo economy theyjoined. Anumber when of themwere onaccession also track forEuropean the Union. accession applied averages in Table 100 per cent of their non-agricultural tariff lines, which is more than many incumbent Members. They lines,100 ismore which than cent many per of incumbent Members. tariff theirnon-agricultural to close 100 have cent, bound also per orvery acceded Members Newly XII. have Article acceded under Pursuant to theAgreement onAgricul of the sectoral initiatives.of thesectoral to theInformation Techcountries participants arealso acceded transition of thenewly Most commitments. reduction theirtariff ofin theprocess phasing-in the same level, or have their applied tariffs above t above level,the same orhave tariffs theirapplied Several Memb of tariffs. applied induced areduction in time would be relevant forin timewouldbe thecomparison. of commitments thenewMemb The have theirs. bound members developing incumbent atlevelsthat are most atwhich lower than those have theirtariffs bound economies with the important exception of India (66 per cent) on the upward side and Hong-Kong, cent) andHong-Kong, per ontheupwardside exception (66 of India theimportant economies with 10 cent per and20 between ranged cent per for developing average cent, typically 5 per thesame below wastypically onITA products theaverage tariff economies bound for themajordeveloped While (e.g. India). for products some implementation aslong8years could be that thestaged importance levels(e.g. Indi high tariff third group had relatively IT for domestic drawbacks and granted duty generous Agreement. A majority of those countries of those Agreement. were ina Amajority of theMarrakeshSince XII 1995, of theprovisions Article under atotal of 22countries accededtoWTO the Accessions rates (e.g. lowapplied Hong-Kong, very had already 97 96 tariffs. First, data on pre-access China andChinese Taipei cent per and4.7 (0.0 cent) onthedownside. per unique. However, most commentators observe that observe unique. However, commentators most ril I. fteWOAgreement that states which a accepts Member the Marrakesh Agreement entry its after XIV.2 of Article the WTO See Evenett et al. (2004), Langhammer and Langhammer Lücke (1999) et Evenett al.See or (2004), Milthorp (1997). case to prove that such a period isnecessary. aperiod such that toprove case have made it clear that transition will periods only gran be Members practice, In ofmanoeuvre. amargin Members handoffers other the on XII Article governments. to acceding Agreement on the into date entry of force. its Transition are periods thus by no means made automatically available into with theimplemented entry force over of a period time starting of this Agreement as if it had accepted this into force shall implement and concessions those obligation ion tariffs are not necessarily available. ascountries Second, arenot wouldin necessarily ion tariffs 12 have must commitments that inanumber of clearlyshows cases ture, all agricultural tariff lines have been bound bycountries that bound have lines been ture, allagricultural tariff 224 97 However, post- of thecomparison with commitments terms negotiated between ive program of unilateral reforms which significantly ofunilateralreforms which program ive a and Egypt). For the latter group it was of particular group itwasof particular thelatter For a andEgypt). heir bound tariffs, which indicates that theyarestill indicates which tariffs, heir bound e WTO and a different economy, andadifferent WTO e eachaccession is China and Singapore). Others had moderate tariffs had tariffs moderate Others China andSingapore). nology Agreements, aswellto Agreements, asubstantial part nology ted if the applicant is successful in making a enough strong process of transitionprocess from to aplanned amarket the price of overtime. accession has increased ers either have their bound and applied tariffs at tariffs eitherhave andapplied theirbound ers ining the WTO, it is not clear exactly which point which itisnot clearexactly ining theWTO, industries (e.g. Malaysia or Costa Rica) while a ers are difficult to compare with pre-accession to pre-accession compare with aredifficult ers s in the MultilateralTrade that Agreements are to be the WTO andtheapplicant. the WTO 96 countries didnot make of themultilateral muchuse syst Estonia Estonia Kyrgyz Republic Republic ofArmenia Republic Saudi Arabia Arabia Saudi Panama ugra3. 842. 8.8 23.0 18.4 35.6 Cambodia Bulgaria ipeaeaeo on n applied and bound of average Simple 12 Table Mongolia Mongolia Source: Viet Nam Moldova odn2. 961. 12.1 6.9 15.2 6.5 19.6 11.7 23.7 11.7 Jordan Georgia bound and applied rates. andapplied bound 1986 alltheirtariff intensified. after of Anumber bound countries to acceded the GATT which theGATT countries for to pressure developing and external half regarding therole inthesecond of of changed trade the1980s views indevelopment Third, when inplace. measures of other restrictive had allsorts of play thestory. Quantitativeonly part restrictions contributed to significantly improvetransp the GATT of countries anumber of developing to tended rather increase applied tariffs than to Second, decrease. basis.Until onayearly themid-1980s, others andincreased tariffs the reduced some Governments overtime. the1950s In itdecreased cases in some made in accession negotiations orduring theroun developing 9.5 decades, for several First, system. multilateral ofthe utilization andtheir tariffs country observations Summary of theevolutionOverall, drawnfrom of this be developing briefoverview can anumber of lessons (iii) 9.1 16.2 15.8 Croatia China Nepal Note: Latvia Ecuador Oman Albania Chinese TaipeiChinese Lithuania FYR ofMacedonia FYR lines. The bindings,however, The lines. ataceiling wereset were tariffs of theperiod, most For measures. andnon-tariff quasi tariffs ontariffs, Contracting Parties role asaforum of trad for thediscussion important Year of applied tariff is 2004 except where indicated as follows: c a a b c WTO-IDB and UNCTAD. and WTO-IDB a b a b d c c d c c dvalorem ad on ple on Applied Bound Applied Bound 461. . 2.2 9.4 11.8 34.6 811. 7715.9 17.7 19.5 28.1 801. 165.0 11.6 10.2 28.0 24781. 4.8 10.5 7.8 22.4 551. 1111.5 21.1 14.7 25.5 89511. 4.9 17.3 5.1 18.9 852. 044.7 10.4 24.2 18.5 4766752.3 7.5 6.6 14.7 5297842.4 8.4 9.7 15.2 531. . 5.5 4.8 16.3 15.3 221. . 4.1 4.3 6.0 6.7 10.2 7.0 12.2 12.3 141. 3713.7 23.7 13.5 41.4 771. 297.4 22.9 14.8 27.7 131. . 8.7 6.2 12.7 11.3 751. . 0.1 7.3 12.2 17.5 . . . 7.2 6.6 9.0 9.4 . . . 4.1 5.5 9.3 9.4 Agricultural Products Industrial Products Industrial Agricultural Products level, which introduced a significant gap between their level, introduced asignificant which gapbetween e policies. GATT documents report discussions among discussions report documents GATT e policies. ds were limited. Binding coverage remained low and low remained Binding coverage limited. ds were take more grew, commitments in their participation and 1960s, tariffs were subject to frequent changes. weresubject and 1960s, tariffs ed a very important role and developing countries role anddeveloping important avery ed mottrfso el cee economies acceded newly of tariffs import The role of GATT in this area is examined below. inthisarea isexamined ofGATT role The arency inmarket an accessconditions andplayed arency 225 em to reduce their tariffs. Typically, em to reduce theirtariffs. commitments a 2001, b 2002, 2002, c 2003, 2003, d 2006.

II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING WORLD TRADE REPORT 2007 SYSTEM: ACHIEVEMENTS AND CHALLENGES WORLD TRADE REPORT 2007 II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING SYSTEM: ACHIEVEMENTS AND CHALLENGES products. While an assessment of the role of accession negotiations is more difficult, evidence suggests suggests evidence of therole of accession ismoredifficult, anassessment negotiations While products. theircent extended of lines America, their agriculturalandanumber in of Latin them, in tariff particular given theirnaturegiven andthelackof informat quantitative countries significantly extended theirbindingcovera countries extended significantly War II period. The low post-war level of monetary re levelof monetary lowpost-war The War period. II of countries Asian mostly used the ITA negotiations claim a number of successes. The focus hereison The ofclaim anumber successes. to measure. Second, the GATT/WTO system has addressed NTMs in so many inso ranging different ways from NTMs has addressed system to measure. theGATT/WTO Second, intheGATT/WTO of thetreatmentdiscussion of NTMs in the elimination of quantitative restrictions. Members on the other hand chose a unilateral or regional or aunilateral handchose other the on Members restrictions. ofquantitative elimination in the of the GATT/WTO on non-tariff measures (NTMs). onnon-tariff of theGATT/WTO measures Non-tariff of negotiations theimpact complement will adiscussion with of theexamination tariff subsection This (c) reinforced. wasfurther Many developing theUruguay with Round, therole of theGATT/WTO Fourth, 99 98 playedfor roles different GATT The to controlof andthemeasures instruments aconsiderable trade flows were with readjusted frequency. control,exchange andquantit licensing requirements interven government anddirect agreements by bilateral control Therefore, astrict theymaintained payments. of currecombined thegeneral with inconvertibility Quantitative restrictions Trade andother other than taxes duties, restrictions (i) the reduction of tariffs and quantitative restrictions. andquantitative restrictions. of tariffs the reduction negotiations, to makingand negotiations, rule Non-tariff measures played an important role in GATT times, as mentioned in subsections (a) and (b), and(b), (a) times,asmentioned role inGATT insubsections measures played animportant Non-tariff measures. those addressing of NTMs and trends to intheincidence some to identify attempt inits isthus analysis selective The difficult. would be provide some sense for the nature of the role played by the multilateral system in only very little “water” in the tariffs. “water” little tariffs. inthe very only there is anumber of cases, In of thenewMembers. that thetariffs inreducing theywere instrumental followed. After multilateral bindingprocess not. The whether unilateral, mainly was Liberalization tariffs. from bound continued independently set to be far tariffs other appliedrates. words,applied In above Howeve binding coverage products. of non-agricultural in the early years of GATT and on a number of other NTMs that progressively grew in importance with grew inimportance that progressively andonanumber of other of NTMs GATT years in theearly anditcan NTMs has fought against many battles of existence, however, years 60 its Over theGATT/WTO would be devoted to what they saw as the needs comm astheneeds to theysaw devoted what would be and theirpresenceto ontheDoha testifies thefa agenda mean that the GATT/WTO has att failed inits mean that theGATT/WTO The term The “non-tariff measure” rather than “non-tariff barrier” invention of non-tariff barriers will undoubtedly go onfor go ever.” undoubtedly will barriers invention of non-tariff will addition,In itisclearthat this ingenuity greatthatany inventor isso goods of competing “The ingenuity of man to devise various subtle as well as explicit ways to inhibit the importation See Jackson (1997), p. 154. Jackson See protectionist inintent. protectionist as regarded maybe they not or whether measures, protection andcontingent licenses quotas, as such measures, to dispute settlement that setting the boundaries ofthediscussion theboundaries that setting to disputesettlement different measures. As discussed belo discussed different measures. As empt to discipline NTMs. As stated byJackson: stated As empt to NTMs. discipline 226 never cease: like ways to avoid income tax, human tax, income like toavoid ways cease: never quantitative restrictions which played adominant which role quantitative restrictions 98 charges were pervasive in the immediate post-World intheimmediate werepervasive charges serves and the limited earningsofforeign andthelimited exchange, serves y of such measures quickly becomes quite large. becomes y of such quickly measures encouraged by international financial institutions or institutions financial byinternational encouraged the Uruguay Round, thetrend continued. Anumber ative restrictions. Each government had its own mix own Eachgovernment had its restrictions. ative ge in the Uruguay Round. They all bound 100 allbound per intheUruguayRound.They ge ncies, had deprived manyncies, had deprived countries of meansof For two mainreasons, however, two For acomprehensive to reduce their tariffs oninformationto reduce their tariffs technology anding highest priority. Trade priority. regulated were anding highest flows tion which took theform took tion which trading, of foreign state of imports to ensure that their limited resources resources limited that their toensure of imports ion, the evolution of NTMs over time is difficult overtimeisdifficult ion, theevolution of NTMs r, atlevels thebindingswereset cases inmost ct that theyare alive. still notct howeverdoes This is beyond the scope of this subsection. First, First, of thissubsection. thescope isbeyond is used in this Report. This Report. inthis isused 99 w, it played a substantive role role substantive a w, played it term includes all traditional of the 38 Contracting Parties stated that theywere stated Contractingof the38 Parties of payments was considered to be the most important intheearly1950s. wasconsideredof important payments to themost be orby value, eitherby financial quantity andbalance position external to inorder safeguard its imports, defined conditions. exception The contained in Articl exceptions for Agreement theus provides The charges. prohibited andshouldnot controlled be andother other by than means duties,taxes of restrictions that impo XI, the general rule, contained in Article upin1947, wasdrawn theGATT When accepted restrictions import employed which Contracting Parties 102 101 100 enterprises. of theremaining state-trading to discipline theactivities for tradingapproach enterprise theelimination of state Balance-of-payments restrictions were a major presence during the first decade of GATT. decade 1951, In duringthefirst wereamajorpresence restrictions Balance-of-payments 27 for protection. infant-industry XVIII Article conditions theirmaintenance. justified nolonger An their justified still reserves level of theirmonetary that extent tothe only them maintaining improved, Contracting Parties which applied re applied which Contracting Parties For a discussion of state-provided services under the GATS, see Adlung (2006). Adlung GATS, see the under services ofstate-provided adiscussion For countries sought GATT membership in1967 membership and1971countries GATT sought minimumannual import respectively, For example, given the extent of residual sta ofresidual extent the given example, For Special attention was paid to the issue when former of STEs CPEs acceded to the GATT/WTO. qu the creationof anewstandard reinforced obliga thetransparency XVII of Article adversely affected by such operations. The Urug The bysuch operations. affected adversely information relating theyfeel to where that of theoperations theyare another Member’s STE countries andthat have Member theright by to STEs request orexported imported the products shouldreport that stipulates Members It XVII:4. inArticle istackled of transparency the issue should be constrained to act only onthebasisof “commercial only to constrained act should be considerations”. states II:4 Article and XVIII ensures that the prohibition of quantitative restrictions also applies to STEs. Moreover, ensures applies that to also theprohibition STEs. of quantitative restrictions XVIII and former Centrally theiraccession upon to Planned theGATT. Economies (CPEs) by disciplining (STEs) of enterprises theiruse, State-trading and, limiting ways: theextent in two GATT inthe formally more tackled been has ofstate-trading issue the basis, aunilateral on place to Whilst hands. private werereturned industries retained to safeguard existing Members against potentially damaging export behaviour. damagingexport potentially against Members to existing safeguard retained mechanisms were andspecial Members of themby existing were demanded commitments growth intheGATT.levels bound additionto In this, the countries, theyshou of importing that, inthecase The GATT 1947 GATT The for provisions contains several disc World however, War II, of ho following thecessation wasprevalent during have to traded. Such be activity andimports or quantities exports atwhich theprices agovernment determines when oragovernment-backed occurs State-trading agency Box17:StatetradingintheGATT STEs are to be subject to the GATT principles of principles non-discrimination to theGATT subject areto be STEs GATT (1951) The use of quantitative import restrictions to safeguard balances of payments, Geneva: GATT. Geneva: ofpayments, balances tosafeguard restrictions (1951)GATT import ofquantitative use The It has clarified been through dispute that settlement obligation this includes non-discrimination the concept of national treatment. strictions under Article XII to relax them progressively asconditions them progressively to relax XII Article under strictions estionnaire for STE notifications. forestionnaire STE te-trading in Poland and Romania, when these when andRomania, Poland in te-trading application andtoapplication eliminate when themaltogether uay Round Understanding ontheInterpretation uay RoundUnderstanding tions under Article XVII, includingbymandating XVII, Article tions under other important exception was the one included in exception wastheoneincluded other important the position of theirbalancethe position andthe of payments rts from other shouldnot Contracting be Parties rts resorting to the provisions of Article XII andwere XII to of theprovisions Article resorting ld not mark-ups maintain higher than thetariff e XII, which allows a Contracting Party to restrict to restrict aContracting Party allows which e XII, this reduction in state-trading generally took in state-trading this reduction iplining the use of STEs. Article XVII states that states XVII Article of STEs. iplining theuse Interpretative XI, XII, Note XIII, XIV, to Articles e of restrictions in certain circumstances andunder circumstances incertain e of restrictions s. As explained inBox 17, explained s. As GATT’s contribution was 227 stilities, a large proportion of state controlled of state proportion alarge stilities, 101 and MFN treatment and andMFN 102 The Agreement requiredThe 100

II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING WORLD TRADE REPORT 2007 SYSTEM: ACHIEVEMENTS AND CHALLENGES WORLD TRADE REPORT 2007 II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING SYSTEM: ACHIEVEMENTS AND CHALLENGES and nineof the14 countries weredoing developing wererestric Contractingof the20 Parties developed thatUnited theywere States ac not taking reported By thelate 1950s, Contracting GATT developed Partie countries Developed to theirbalance redress of payments. restrictions quantitativeemploying import 105 104 103 remainingrestrictions. their eliminate payments restrictions, 23 were applying them in a discriminatory manner. 23were applyingtheminadiscriminatory restrictions, payments became merged with the general problem of non-tariff measures. thegeneral merged with problem of non-tariff became Eventually, countries, for balance-of-payme developed 1997).argued that iftheUnited States them(Jackson, use suchtheywouldalso could quotas, use the1951 agriculturalto under quotas use awaiver. for ithad which obtained statute countriesOther States continued theUnited because partly to agricultural products, respect with successful was least Parties, namely,Parties, Belgium, Canada, Cuba, Dominican quantitative restrictions inEurope.quantitative restrictions of-payments crisis started to harden the legal pressure from GATT disciplines in order to progressively to progressively inorder disciplines from to pressure GATT harden thelegal crisisstarted of-payments western Europeanwestern trading nations external established These are: Australia, Austria, Brazil, Ceylon, Chile, Czechoslovakia, Denmark, Finland, France, Finland, Germany, India, Greece, Denmark, Chile, Ceylon, Brazil, Czechoslovakia, Austria, Australia, are: These For a full description of how developed-country residual restrictions were progressively eliminated, see Hudec (1975) Hudec see eliminated, progressively were restrictions residual developed-country ofhow afulldescription For separate timetable was established to wasseparate from free established timetable qu appliedquantitative in intra-Euro restrictions 1949 according wasagreed to the16 which atimetable shouldeliminate theOEEC members steps for the progressive elimination for ofsteps theprogressive quantitat The agreed timetable for theelimination timetable of agreed The from Canada States). andtheUnited imports to by theOEEC inrespect collected data EuropeThe in restrictions quantitative of elimination The 18: Box and exchange rate adjustment made, could the (West) European oncoordinated countriesand exchange rate agree made, adjustment could the(West) of inlate1949 outputhad takenOnly place, thebasicrecovery when control inflation wasunder basisof trade andinvisible transactions. onanon-discriminatory Members reconstruction theEuropean Union intend Payments reconstruction were progressively phased outin Europe. thevarious Among measures to helpthe European agood provide Union Payments European the of their position. See GATT (1955) International Trade 1955, pp.158-159. The GATT legal system and world trade diplomacy, New-York: diplomacy, Praeger. trade andworld system legal GATT The South Africa and the United Kingdom. The governments of Burma and Liberia did not inform the Contracting Parties Parties Contracting the inform not did andLiberia ofBurma governments The Kingdom. United andthe Africa South Turkey, Sweden, Rhodesia, of Union Southern Pakistan, Norway, Zealand, New Netherlands, the Italy, Indonesia, 15 December 1949 50 per cent 50per 15 1949 December 14 January 1955 90 per cent per 90 75 cent per cent per 60 14 1955 January 1951 1 February 1 July 1950 104 The program wasputinplace which in1958,The themajor when 228 quantitative restrictions wasthefollowing: restrictions quantitative pean trade and conducted on private account. onprivate trade andconducted (A pean OEEC member countries OEEC member intheframework of Republic, Haiti, Peruandthe Nicaragua, Luxemburg, tion under these provisions. As of January 1954, of January 16 As provisions. these tion under ting their imports for balance-of-payments reasons for balance-of-payments ting theirimports s, which weres, which emerging balance- from thepost-war antitative restrictions, at a later stage, European atalaterstage, restrictions, antitative likewise. the25 Of countries balance-of- applying ive restrictions among themselves. In October amongthemselves. October In ive restrictions nts restrictions lost their distinctive character and character theirdistinctive lost restrictions nts illustration of how quantitative restrictions restrictions quantitative ofhow illustration currency convertibility, currency success, had some butit ed to facilitate the liberalization among its its among liberalization the tofacilitate ed 105 Box 18 describes the phasing-out of Box 18 thephasing-out describes 103 Nine Contracting 107 106 in this sector is much less clear. ismuchless in thissector financial of countries of position theexternal liberalization andthedegree that therelationship between of liberalized trade weresignificantly percentages the progressive phasing out of quantitative restrictions affecting trade in textiles and clothing products. andclothing products. intextiles trade affecting phasing outof restrictions quantitative the progressive use. Similarly, inBox 19, asexplained theUruguay Ro measures non-tariff of most required thetariffication explaine andclothing sector. As and inthetextiles countries. However, for inagriculture many outbydeveloped years phased theysurvived progressively were made. could be Quantitative restrictions adjustments transitional thenecessary duringwhich period a provided which adecision adopted theContracting consequences, Parties economic andsocial serious concerned may leadto that by thesudden abandonment quantitative afforded restrictions of protection report discussing theliberalization trade discussing of the notes intra-European that in theagricultural sector report th waseasierfor products non-agricultural restrictions inthe1950 howalready Available shows clearly evidence The same report also describes the protection of agriculture by means of import restriction in the US. See GATT (1953) GATT See US. inthe restriction ofimport bymeans ofagriculture protection the describes also report same The of European currencies (27 trade while four while countriestrade andTurkey) (e.g. France, margin. itbyalarge Norway Iceland, missed still cent to the30 target per 90 WarVarious of (Korean the to andanumber of led developments apostponement national crises) textile industry lobbies was highly potent (Khanna, 1991). (Khanna, potent highly was lobbies industry textile pressure from countries, industrial came from protectionist influential where agreements of these to thediscretion of ofdefinition wasleft which orthreatened caused, to cause, “market such imports whenever trading partners disruption”, the principleswasinitially very GATT with congruency system; asitwasintheformer GATT in theWTO, to highlight that trade. isimportant It to textile inbringinganendto restrictions quantitative and theATC theroleof theGATT/WTO anddiscusses of theMFA thehistory onthe1January,GATT, box charts This lifted 2005. being quota thelast with intheUruguaywas negotiated Roundasameasure to anditdiscriminated (QRs), restrictions quantitative thus It contravened principle andtheprohibition of theMFN exporters. country developing efficient applicationthe extensive of by quotas major indu Agreement onTextiles an to theWTO thereafter the GATT. to theAgre theyweresubject Instead Textiles andclothing were, until recently, theonly rules GATT from exempt long Textiles: 19: Box At the end of June 1958, 12 countries had attained the 90 per cent target on private intra-European intra-European onprivate cent target per At theendof June1958, 12 the90 countries had attained (more commonly(more referred to astheMulti-Fibre The ancestors of the MFA were the Short Term of theMFA of (STA) ancestors 1961 weretheShort The Agreement oncotton textiles andits the conclusion of weak inthisareabut,with These agreements allowed importing countries to im allowed importing agreements These 1962 successor, Term theLong Agreement International Regarding Trade inCotton Textiles (LTA). quantitative restrictions. See OEEC (1958). OEEC See restrictions. quantitative from free were attained was 1948) (generally year reference inthe imports ofprivate cent per 1958 June, 30 82.6 International Trade 1953.International December, 1958) wasachieved. June, 1959 107 In 1954, In of Western European countries, attheproposal were which 106 . This was only six months after the external convertibility convertibility theexternal months six after wasonly . This theATC, strengthened. significantly ithas been d below, theUruguay RoundAgreement onAgriculture textiles have been one of the hardest-fought issues issues hardest-fought ofthe one havebeen textiles the importing country. for theformation Impetus theimporting including quantitative restric includingquantitative lower than those reached in the other sectors and lower than reached those in theother sectors und Agreement onTextiles andClothing for provided d Clothing (ATC) (1995-2005). MFA involved The an for agricultural products. A1953 an for Secretariat agricultural products. GATT industrial products derogated from the rules of from the rules derogated products industrial against developing countr developing against ement International Regarding Trade inTextiles Arrangement,or“the MFA”) (1974-94) and strialized importers at the expense of themost attheexpense importers strialized 229 s liberalization of developed countries’ quantitative of developed s liberalization gradually integrate the textiles sector into the sector gradually integrate thetextiles pose restraints on textile imports from their their from imports textile on restraints pose ies. Eventually, theATC tions andproh ibited their

II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING WORLD TRADE REPORT 2007 SYSTEM: ACHIEVEMENTS AND CHALLENGES WORLD TRADE REPORT 2007 II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING SYSTEM: ACHIEVEMENTS AND CHALLENGES 108 the text of the GATT itself made nomention made trade. of treatment special of textile itself of theGATT the text it is pertinent to note that its members constituted only a proportion of GATT Contracting andthat of GATT Parties constituted to onlyaproportion note members thatit ispertinent its demands of the developed countries to address such issues as services and TRIPs, and the textile andthetextile TRIPs, and asservices countries such issues to address of thedeveloped demands Kostecki (2001) argue that animplicit was conducted within theenvironment within was conducted of theGATT, of theGATT, theDirector-General with anddeposited into fibres thecatego andsynthetic of wool imports internationalfrom existing legislation, theMFA wasintr measures normally allowed under GATT because th because GATT under allowed normally measures It is important to highlight thatATC the isimportant It provided and January, 2005. Hoekman by1 phases liberalization outinsuccessive phased were to be January, 1995 stipulated andwhich into came which force on1 theendof theMFAbring about intheUruguay Ro measures of theMFA culminatedregarding thetrade restricting intheinclusion of negotiations to the EU, Finland, Norway, theUS,JapanandSwitze ande (CEECs) EuropeanEastern exporters, country had 45 signatories, including31 1994, By andCentral MFA-IV developing Contracting Parties. and reign, anincreasingnumber of with 20-year throughout MFA times several its wasrenewed The created to ensure of theAgreement. thefunctioning Textiles was Body Surveillance cent compared theLTA. 5per under with inimports, A growth cent to thanone year, anallowance 6per annual of noless subject wereto be and, ifextended, for wereusually maintained upto to be Such QRs producers. to damage domestic serious to cause imminent) sharp, andmeasur (or substantial actual facing an intocountries imports limiting quotas that established actions unilateral or agreements MFA similarto wasinmany theLTA.The ways Ess text changes, gainsthrough technological productivity andthestrong competition Duetoimport theincreased fromcosts. lowlabour benefited who counterparts meant that they the nature of theclothing industry and European initi producers American though theNorth fibres, wh man-made cotton developed to the newly During theterm of theLTA, ex country developing to intheGATT. andnot quotas included not subjected andclothing goods ontextile imposed to be restrictions circumstances, strict under rationale thesequential phasing underlying outof tops andyarn; itemsfrom fourinclude categories: brought into should ineachphase theGATT that theproducts wasstipulated It cent, respectively. per to cent, annual of 8.7 per 6.96 expansions cent weresubject per and11.05 stages between periods cent49 respectively per ineachof the four years ATCThe in1995, of four involved liberalization phases of textile 1998, percentage The 2002 and2005. market of access developing requests countries. chose to back load their liberalizations by le liberalizations their load toback chose theminimu timeto with adjust exporters efficient to of thedevelopment several afall This suffered duringthis inemployment period. and garment products to be brought under GATT rules was16 rules brought to GATT be under cent, per 17and garment products cent, per 18 cent per and In the United States the combined employment of the textiles and apparel industry decreased from 1.53 from million decreased industry andapparel textiles ofthe employment combined the States United the In countries, such as Bangladesh, prospered hence industries there. textiles poorest the from exports on restrictions no EUsought the MFA, the Under employment. ofUSnon-farm cent 0.5 per people in the first quarter of1995 to le quarter first inthe people supra -LTA trade. to legitimize Seeking ontextile such departures restrictions ss than 0.67 million people in early 20 in early people 0.67million than ss quid pro quo quidpro aving the most sensitive products until last. products sensitive themost aving These safeguards were asthesafeguard not thesame These 230 and the quotas that remained in the intervening intervening inthe thatremained quotas andthe fabrics; made-up-textiles; and, clothing. While the the While and,clothing. made-up-textiles; fabrics; m amount of disruption, the developed countriesm amount of disruption, thedeveloped for transitional safeguar restrictions was to allow both importers and less andless wasto importers allowboth restrictions porters sought to circumvent QRs by switching from from byswitching to circumvent sought QRs porters galvanised renewed protectionist pressure which lead which pressure protectionist renewed galvanised link was established in the Round between the intheRoundbetween linkwasestablished able increase in imports causing or threatening or causing inimports increase able ry of exceptions to the GATT. Whilst theagreement Whilst of exceptions tory theGATT. ight industrialized importers: Austria, Canada, Austria, importers: ight industrialized could not their compete developing with country entially it facilitated a framework for bilateral aframework facilitated it entially ey could be applied on imports from specific ey could applied onimports be rland. Increasing develo rland. Increasing und. The result wasthecreationund. of The theATC, ich remained outside theambitofich remained theLTA. outside Even oduced in1973oduced against asto bringrestrictions so ile and clothing industries industries andclothing ile ally had a lead in textiles of man-made fibres, fibres, of man-made had aleadintextiles ally inter alia 05 when these industries accounted for accounted industries these 05 when that all MFA restrictions that allMFA restrictions d mechanisms to allow,d mechanisms ping country disquiet ping country in industrial countries in industrial 108 four decades, more than adozenfour countrie decades, developing the Committee is only called upon to reco upon called isonly the Committee XI were initially available to developing countries: Article XII and Article XVIII. andArticle were initially XII availableXI to countries: Article developing mentioned exceptions above, to two As thegeneral “peer andapply pressure”trade policy towards adop to exer trading allowed partners Restrictions Payments Table Appendix onBalance-of- theCommittee within of 15). consultations (see process The of cases inanumber to more from than years ranged several decades three restrictions duration of theirimport trade regimes,ma developing-country increasingly (1987), look Hudec restrictions emergency only in 1969, 1978 and 1989; in the interim, it en 112 111 110 109 restrictions. GATT’s were usingbalance-of-payments 16 members country developing 1959 half inthesecond of inNovember the1950s.expanded report AGATT showedthat 13 of the countries, fewer, thedeveloping of instead becoming restrictions For of balance-of-payments theuse countries Developing system and effect of the restrictions and without the participation of theIMF. theparticipation andwithout of therestrictions andeffect system countries, state were heldonthebasisof awritten developing the on burden administrative excess toalleviate in 1972. designed consultations, Simplified In 1970, detailed consultation procedures were introduced followed by “simplified” consultation procedures th where have countries led totrade restrictions use strict tandem, basis.In wide this exception onavery of theuse permitted adequate program for of theimplementation of (XVIII:9) economic development” its than ofArti stringent those were less XVIII:B Article to theirbalanc safeguard restrictions quantitative to use were introduced.changes particular, In therequirements to renegotiate GATT countriesdeveloping anopportunity 1954. 1950sin theearly 1954 offered itafter everto use The session country andwastheonly review and 1950, Cuba, eachhad asingleprod HaitiandIndia b partly waslimited XVIII Cof Article Section under of themultilateral throughoutindeed of thehistory theuse infant-industry exceptions trading system, developing countriesdeveloping this a20 exercised option. Over A particular feature of the balance of payments rules isth rules ofpayments balance feature ofthe Aparticular Article XII is available to all Members. toall isavailable XII Article agreement, reviewed requests for the use of safeguards, and facilitated disputesettlement. of for andfacilitated safeguards, theuse requests reviewed agreement, bytheTextiles to review Monitori was subject could implemented be eitherby mutual agreemen country. safeguard restriction The exporting from thespecific increase and asharp andsubstantial from allsources, inquestion of theproduct imports increased things: wastheresult of two damage damage, orwasthreatened damage serious andithad serious with tosuffering showthat the However,countr countries. importing the exporting It is interesting to read what was said at the time of the ofthe time atthe wassaid toreadwhat isinteresting It energy and attention disproportionate to value”energy and its disproportionate attention L/3772/Rev.1) of anamount mayrequire preparation adequate which for aformality maybecome andaconsultation cases in all necessary be maynot years two every restrictions ofthe justifications financial external ofthe discussion detailed that beyond the extent necessary to safeguard the external financial position”. financial external the tosafeguard necessary extent the beyond go not do “the restrictions form the took typically Fund’s the advice andprospects, situation ofpayments balance offully” the in GATT. accordance with the XV IMF with Article addition In to providing of an assessment the Member’s BISD (1960) 8 th Supplement, p. 66, cited in Hudec (1987), p.29. inHudec cited p. 66, Supplement, king other GATT obligations irreleva obligations GATT other king mmend whether full consultations aredesirable. fullconsultations mmend whether gaged in consultations under simplified procedures. simplified inconsultations under gaged ment, citing the balance-of-payments situation andthe ment, citingthebalance-of-payments cle XII and the language “to ensure a level of reserves “to andthelanguage ensure alevelofcle XII reserves e multilateral surveillance was looser (Frank, 1987). (Frank, looser was surveillance e multilateral surveillance by the IMF over exchange restrictions may overexchange restrictions by theIMF surveillance ecause the review procedure was very strict. In 1949 In strict. wasvery procedure thereview ecause ng Body which oversaw the functioning of the thefunctioning oversaw which ng Body -year period, Pakistan consulted under full procedures fullprocedures consulted under Pakistan period, -year adoption of this simplified procedure: “Some delegations feel prohibition of quantitative restrictions under Article Article under prohibition of quantitative restrictions at the Contracting Parties/Members are required to“consult arerequired Parties/Members Contracting at the ting more liberal policies, with varying results. results. varying with policies, ting moreliberal ed like featureed apermanent theywouldbecome of s invoked of theprovisions uct quota approved. Ceylon also used Article XVIII XVIII approved. quota Ceylon Article used also uct e of payments were relaxed. The new provisions of provisions new The relaxed. were e ofpayments 231 t following consultations,t following orunilaterally and y had to show that its domestic industry was industry domestic y had to showthat its that developing countries had to satisfy inorder that countries developing had to satisfy rules. As explained in subsection (a), three major (a), explained in subsection rules.As cise surveillance overtheconsulting surveillance country’scise nt. Over the course of the next of thenext thecourse nt. Over 111 Under simplified procedures, 110 Article XVIII:B andthe XVIII:B Article In the first years and years thefirst In 109 112 According to Most of the

II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING WORLD TRADE REPORT 2007 SYSTEM: ACHIEVEMENTS AND CHALLENGES WORLD TRADE REPORT 2007 II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING SYSTEM: ACHIEVEMENTS AND CHALLENGES came into effect. In this In Declaration, into thatcame Contracting theywere stated “convinced effect. Parties that restrictive WTO Member finally removed its balance-of-payments measures. balance-of-payments finally removed its Member WTO enforcement consensus where and, could inacase no In thisconsensus. “1994 reflects Understanding” theav and, (iii) for theremovalof therestrictions; re notification (i) tightening especially theprovisions, Finally, of theUruguay inthecourse Round, ther protection. to sectoral avoid theneed incidental and, (iii) phasing outrestrictions; ontrade (i.e. price-ba disruptive effect theleast with new orintensified measures, andintroduced theadditi countries might through that measures Contracting Parties to andco could alleviating drawthe Committee attention procedures fullconsultation the while Furthermore, meansto trade areingeneral aninefficient measures and provisions were used to aid the process of to aidtheprocess wereused and provisions how illustrate which studies case two Box 20 presents theTokyoFollowing Round, the“1979 onTr Declaration 116 115 114 113 for prompt called of notification purposes, to alltrade measures taken for QRs balance-of-payments beyond measuresthe 1979 of theexamination balance-of-payments reiterated Declaration extended also this It point. the Government of Indonesia had recently made to simplify its complex restrictive system.”the Government of complex restrictive Indonesia had recently its to made simplify of theCommittee “appreciated consultations,the timeof Members its which theconsiderable effort tiles were prohibited. Also, anadditional duty classified goods for into import separate categories; of only passenger imports vehicles and ceramic would be preferablewould be to outright prohibition.”. preferablyother methods, through operating those revoked. “suggested Duringtheconsultations, Members that consideration givento shouldbe (e.g. were not volume, met,theprohibition could andprices production) be of quality domestic anumber of If conditions industry. prohibition local to inorder protect conditionalunder import were sets) radio and TV motor cycles, cars, (tyres, cent. to per Asmallnumber of 58 imports 64 from lowered andaverage andsimplified tariffs revised had been policy convertible,fully import the reforms 1970. of April co the timeof its By possible made had rupiah inthe confidence increased policy, stabilization asuccessful Following licensing onraw materials mid-1960s, import had removed Indonesia inthe ofhyper-inflation aperiod after 1967,In package ofastabilization adoption the following Indonesia Box20:Thephasingoutofbalance-of-p onre:tocs studies case two countries: DS90/AB/R. See India - Quantitative Restrictions on Imports of Agricultural, Textile and Industrial Products, WT/DS90/R andWT/ WT/DS90/R Products, andIndustrial Textile ofAgricultural, Imports on Restrictions -Quantitative India See BOP/R/51, 20 November 1970, 20 November 13. para BOP/R/51, were often very complex with licenses designated by end-user or industry. or byend-user designated licenses with complex very often were Import licensing has typically been the principal instrument for effecting quantitative restrictions; import regimes regimes import restrictions; quantitative for effecting instrument principal the been typically has licensing Import BOP/R/16, para. 18. BOP/R/16, 232 integration into themultilateral trading system. 116 on imports bound under GATT had been removed. At removed. had been GATT under bound on imports While a number of surcharges were still levied, their levied, still were ofsurcharges anumber While already provided for “expanded” provided already consultations whereby e was considerable discussion on strengthening and onstrengthening e wasconsiderable discussion nsultations in1970,nsultations made had been thecurrency addition, the DSU became the ultimate method of theultimatemethod DSU became addition, the ade Measures Taken Measures ade Purposes” for Balance-of-Payments maintain or restore balance-of-payments equilibrium”. balance-of-payments restore or maintain oidance of the use of quantitative restrictions; the oidance of of quantitative theuse restrictions; sed measures); (ii) the submission of a timetable for of thesubmission atimetable (ii) measures); sed the discipline of the balance-of- payments principles payments the discipline of thebalance-of- rrecting balance-of-payments problems of balance-of-payments rrecting developing onal conditions of (i) giving preference giving onal conditions of to (i) measures yet etitosb developing by restrictions ayments t be reached, served as the vehicle by which one asthevehiclebywhich served reached, t be quirements; (ii) thepresentation of atimetable (ii) quirements; theprice mechanism, butthat evenquotas take to facilitate the expansion of export earnings, earnings, ofexport expansion the tofacilitate take 113 114 and abandoned a system of asystem andabandoned 115 125 124 123 122 121 120 119 118 117 pursue simplification andrationalizationpursue of their trade liberalization in 1972 begun andwelcomed theintention authorities to ofPakistan the which warranted the imposition of trade measures under Article XVIII:B. Members welcomed the Members XVIII:B. warrantedwhich of trade measures theimposition Article under plan in spite of the fragility of the balance-of-payments situation. plan inspite of of thebalance-of-payments thefragility Pa appreciated were preferable. Members 2000, By measures price-based when paragraph 11 to QRs therecourse andquestioned of theUnderstanding In 1978, the Committee noted that despite difficulties Pakistan had pursued its efforts towards 1978, In efforts its had pursued Pakistan theCommittee noted that difficulties despite andcomplex. restrictive remained regime that Pakistan’s import commented IMF the Meanwhile, licensing procedure had been simplified andalarg simplified licensing had procedure been moving away si policy fromthe mainfeature of import thecountry’s direct administrative contro faced by some exports of Pakistan [...] [...] of Pakistan balance of payments...”. affected its faced exports bysome environment, theCommittee “recognized [...] factors restraints that anumber of external import trade restrictions for balancetrade restrictions reasons. of payments wereinforce. 1979, By restrictions to had apply ceased note took theCommittee that Indonesia thro mainly wereprotected industries domestic of items onthenegativelist. andthereduction andwelcomed problem theloweringof tariffs faced balance-of-payments aserious phase-out of its balance-of-payments restrictions aheadof in2002. schedule restrictions balance-of-payments of its phase-out still a large number of banned or restricted goods. restricted or ofbanned number alarge still there were of trade barriers, inthereduction made noted had that been evenalthoughprogress Member One structure. andtherationalization of thetariff system ofthe simplification theimport inthenumber thereduction system, a negativelist had which takenchanges place inPakistan’s import 1989, difficulties In continued that to recognized Pakistan face theCommittee balance-of-payments products”.industrial basicmat of certain onimports restrictions relax “the to trend quantitative to since restrictions, werethenhad subject been all categories of imports gradual. toPrior 1959, wasvery thephasing of Pakistan, outof quantitative restrictions thecase In Pakistan Ta to theBrussels wasconverted tariff Indonesia’s amajorreform wasto when undergo system andthewhole reduced, total had been At its next consultation in 1975, under simplified Further consultations were held in1997 held were and2000 consultations Further BOP/N/59, 17 December 2001. 17 December BOP/N/59, BOP/R/27, 15BOP/R/27, July 1997. BOP/R/181, 28 April 1989, para 8. BOP/R/108, 15 November 1979. BOP/R/12, 10 1967. August BOP/R/12, BOP/R/98, 13 1978. February BOP/R/98, Ibid, para 11. BOP/R/56, 22 December 2000. BOP/R/56, BOP/4/Rev.1. 119 In the1967 In consultations, thegovernment representative confirmed that 123 However, aclearer inaccordance notification theyrequested with riff Nomenclature the following year. following the Nomenclature riff ls towards fiscal and monetary instruments. The instruments. andmonetary ls towards fiscal erials, consumer goods andafew agriculturalerials, consumer and goods nce 1960 atrendtowards liberalization, had been procedures, Indonesia’s statement reflected that Indonesia’s procedures, reflected statement : in1997, Pakistan that recognized theCommittee ugh tariffs andsurcharges andnoquantitative ugh tariffs trade regime. Drawing attention to trade regime. theexternal attention Drawing of commodities covered by import restrictions, restrictions, of commodities covered by import 122 118 233 e number of items restored to list. thefree regime since 1983;regime inparticular, themoveto kistan’s decision to implement its phase-out kistan’s phase-out to implement decision its 124 Pakistan, in fact, completed the completed infact, Pakistan, 117 125 121 120

II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING WORLD TRADE REPORT 2007 SYSTEM: ACHIEVEMENTS AND CHALLENGES WORLD TRADE REPORT 2007 II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING SYSTEM: ACHIEVEMENTS AND CHALLENGES the so-called codes, pertaining to NTMs were negoti to NTMs pertaining codes, the so-called the Kennedy Round and updated on a yearly basis. As basis.As onayearly the KennedyRoundandupdated to covered be inthen of theNTMs Identification was considered oneof themajor accomplishments in prog round. inthelatter The negotiations onNTMs a tariff negotiation, but some NTMs wereaddressed. NTMs negotiation, butsome a tariff Poland to theGATT. State regarding Trading andprovisions Procedure Ente Price Selling anagreement were ontheAmerican limited to an optional onanti-dumping, code on NTMs to provide fundsforto family provide for allowances agricultural from cent, 2to 3per tax 1955 stamp customs that France others, its mentions, amongst increased Report Republicofthe Dominican a various examplesofAmong changes in supplementary observed an increased tendency to impose additional charges of various kinds on imported goods. additional of charges variouskindsonimported to impose tendency anincreased observed countervailing duties, customs valu customs duties, countervailing attention to non-tariff measures. The Kennedy Roun The measures. to non-tariff attention devo wereprimarily Roundsof theGATT five first The visas. or invoices consular required normally still Parties theirrecommendation that reaffirm to notes that decided theContracting Parties Report The samples. treatmentand special of product offormalities, origin, certificates half thesecond of formalitiesIn the1950s, oncustom wasintroduced Secretariat intheGATT asection in indicated changes charges, the fieldof import As already mentioned, customs tariffs and quantitative restrictions under Articles XII and XVIII:B were andXVIII:B XII Articles under restrictions andquantitative tariffs mentioned, customs already As measures non-tariff Other (ii) 128 127 126 administrative entry procedures, standards, speci procedures, standards, administrative entry topi to five related thefollowing problems examine One of the major differences between theKenned of between themajordifferences One basis of a list of measures notified by exporting countries.basis of alist of measures notified by exporting uponthe wasdrawn (NTBs) barriers theKennedy Round, of after aninventory non-tariff Shortly negotiations. multilateral or bilateral necessitated that measures particular other di could be which issues general between distinguish bottled spirits. A working group was established to deal Aworkinggroup wasestablished spirits. bottled onimported collateral, of gallonassessment wine subsidies, internal charges, andtheUS system fiscal administrati regulations, andtechnical administrative oncoal,policies bilateral regulations, mixing variable residual quotas, levies, quantitative restrictions, import dumpingandrestrictive adjustments, government tax trading, border procurement state policies, valuation, customs practices, including anti-dumping list 18 clauses, escape measures: non-exhaustive shared information Contracting on Parties NTMs, existing to identify aneffort In place stage. atanearly the most important trade restrictions inplace inthe trade restrictions important the most process of andtheelaboration onrela identification process GATT in improving transparency inthearea of no transparency inimproving GATT information some andch published onother duties also reports on developments incommercial policy. ondevelopments reports the NTMs theyencountered a upwith came They intheirtradethe NTMs relations through system. anotification This was the first published inventory of NTMs. UNCTAD later created a comprehensive database on NTMs. on database acomprehensive created later UNCTAD ofNTMs. inventory published first the was This See GATT (1953) International Trade, p. 89. See document LT/KR/A/1, dated 30 June 1967. June 30 dated LT/KR/A/1, document See 127 One of the main difficulties faced byCont of themaindifficulties One complicated system of additional charges by a single tax of 23 per cent. of 23per A of additional byasingletax charges system complicated marks of origin, temporary importation, valuation for purposes customs importation, of origin, temporary marks ation, government procurement, standards andlicensingation, procedures. government procurement, standards all such formalities should be suppressed but that nine Contracting 234 fic limitations to trade and charges on import. to onimport. tradeandcharges fic limitations egotiations was based on the inventory drawn up after upafter drawn ontheinventory wasbased egotiations most instances a tendency towards increased rates. towards increased atendency instances most n-tariff measures. A 1953 GATT Report for instance Report A1953 measures. n-tariff GATT The 1956 Report, for instance, discusses consular 1956 for discusses instance, The Report, ress achieved by negotiators duringtheTokyo bynegotiators achieved Roundress ated. These codes covered respectively subsidies and subsidies covered respectively codes These ated. cs: government participation in government trade, participation and customs cs: ted agreements. Overall, theRound’s agreements. ted achievements early days of GATT. The GATT Secretariat, however, of GATT. days early Secretariat, GATT The sciplined through new rules and product specific or specific through andproduct sciplined newrules y RoundandtheTokyo Roundwastheextensive d which was launched in1963 waslaunched d which waspredominantly workers. In 1956, a Secretariat Report notesthat in 1956,workers. In Report aSecretariat ve guidance, subsidiaries’ import trading policies, The inclusion of NTMs in the negotiations took inthenegotiations inclusionof NTMs The charges, the Report mentions thereplacementcharges, theReport by explained in subsection 1, insubsection explained fivemainagreements, trade negotiations since ted to tariff reductions and dedicated very little little very anddedicated reductions totariff ted with the items on the list and to proceed with the theitems with andto onthelist with proceed rprises included intheProtocol included of Accession ofrprises arges. This information illustrates the role ofthe role the illustrates information This arges. 128 Five working groups were to established racting Parties in the negotiation wasto inthenegotiation Parties racting the creationof GATT. 126 gemns 1982-1995 Agreements, measures were taken to discipline the use of NTMs weretaken ofmeasures NTMs to theuse discipline andrecommendations. understandings declarations, Provisions addressing particular NTMs can be foun be can NTMs particular addressing Provisions requirements. ortransparency provisions regulating NTMs The Agreement onTextiles andClothingThe the required scatte were NTMs regulating ofprovisions number because countries which acceded between the early eighties and1995 theearly A number of Codes. some signed countries between acceded which because to more Codes and theirparticipation extended ContractingParties some because both over theyears, Dumping and1for Code. shown theProcurement As Code,the Subsidies 11 Code, Licensing 7for for theCustoms theImport Valuation Code, 9for Anti- 1982 15 was: signatories inFebruary country for ofdeveloping number theStandardsThe Code, 8for ofthe65 asubset or Only Meats. Bovine Regarding were reached and NTMs were regulated in areas such inareas regulated were andNTMs reached were Codes during theTokyo established Second, theNTB Roundwere revised. Third, other agreements motlcnig1 91 11 11 12 11 19 25 11 7 licensing Import Customs valuation andcounterv Subsidies from the most competitive producers into industrial country markets. into producers competitive country from industrial themost level of protection and prohibited the use of agriculture-specific trade-restrictive measures except tariffs. trade-restrictive andprohibited oflevel of agriculture-specific protection theuse anequivalent affording measures tariffs with non-tariff required thereplacement of agriculture-specific 130 129 21 21 rate quotas. banandphasing out of tariff assurance andimport of of absence quantitative restrictions licensing systems, elimination reform of requirements, tendering of import of quantitative restrictions, 24 15 Declaration Ministerial Este del Aof thePunta Part a Standards Round Tokyo selected signed having Parties Contracting developed and developing of Number 13 Table to of theCodes. some observers countries became also theAgricultural theIntern Agreements, Aircrafts, of measures various Provisions were other included agreements. in onnon-tariff theCode onCivil measures were negotiated inthecontext non-tariff covering arrangements further Legal was amended. addition, CodeIn theAntidumping had which originall Source Government Procurement Anti-dumping February 1995, after the new corresponding WTO Committees came intoeffect. came Committees WTO corresponding new the 1995, after February NTMs. First, eleven developing-cou First, NTMs. awhole,Group. theUruguay Roundnegotiations As by than went encompassed theNegotiatinggroups those much butthenegotiations further onNTMs measur specific onproduct focused Group onNTMs an thereduction Round negotiations Schedules. Those commitments cover inter alia: there cover commitments inter alia: Those Schedules. The UnitedThe States withdrew from the subsidies, standards, im The 11 countries are respectively Belize, Cameroon, China, E Cameroon, Belize, 11 The are respectively countries See Box 19. Chinese Taipei and Tr : GATT (1982) GATT Activities in 1981 and GATT (1996) GATT Activities 1994-1995. Activities in 1981 Activities and (1996) GATT GATT : GATT (1982) GATT iigdte 61 10 12 16 8 ailing duties inidad and Tobago. ntry Members made commitments on NTMs under Part III of their III Part under onNTMs commitments made Members ntry d elimination of non-tariff measures and obstacles. A Negotiating ANegotiating andobstacles. measures ofnon-tariff d elimination e-2Dc9 e-2Dec-95 Feb-82 Dec-95 Feb-82 010 10 3 9171 1110 eeoigDeveloped Developing e l rudWOAgreement allaroundWTO red port licensing effect and anti-dumping Agreements onAgreements 29 and anti-dumping licensing effect port d in most WTO Agreements. A number of important Anumber of important Agreements. WTO d inmost so developing Contracting Parties signed theCodes. signed ContractingParties developing so ational Dairy Arrangement, andtheArrangement Arrangement, ational Dairy established as one of the objectives of theUruguay asoneof theobjectives established in the agricultural and textiles and clothing sectors. andclothing sectors. in theagricultural andtextiles WTO rules addressed NTMs mainly through mainly specific NTMs addressed rules WTO moval of import licensing requirements, elimination requirements, licensing ofimport moval produced extremely broad and detailed results on results anddetailed broad produced extremely phasing out of all MFA quotas restricting imports imports phasing outof allMFA restricting quotas es which werenot which covered inotheres negotiating 235 y been negotiated as part of theKennedy negotiated Roundy been aspart gypt, Elgypt, Salvador, Indonesia, Saudi Malta, Arabia, Senegal, in Table 13, thenumber ofsignatories increased as services and intellectual property. Fourth, a Fourth, property. andintellectual asservices 130 The Agreement on Agriculture on Agreement The s, Ministerial andother a 129

II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING WORLD TRADE REPORT 2007 SYSTEM: ACHIEVEMENTS AND CHALLENGES WORLD TRADE REPORT 2007 II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING SYSTEM: ACHIEVEMENTS AND CHALLENGES Agreements disciplined orimproved disciplined thedisciplines Agreements WTO Other regulations. andtechnical measures andphyto-sanitary ofsanitary use the on respectively and any other similar measures affecting imports and exports. imports and any other similarmeasures affecting Other important measures taken measures towards theeliminatio important Other of agricultural markets. contributed asthemaincontribution that of wasseen theAgreement onAgriculture to theliberalization framework for future of liberalization subsidies that to it itcreated which reduction than theactual support domestic subsidies andcertain export down consistent pattern ofliberalization. pattern consistent countries. major exceptions The were Japanandothe consider that the onone’s Anumber process. oflargely experts depends of thetariffication assessment transparency. itcontributed Whether to liberalizatio relati inthetraderules amajorchange represented Many countries, both anddeveloping developed ha 132 131 agreements introduced tighter disciplines on the use of NTMs by most if not all of the WTO Members. Members. ifnot introduced by allof most agreements theWTO tighter of disciplines NTMs ontheuse wouldpr However, of experts thisReport. scope most of ontheuse of theUR of theimpact assessment countrie developing dispense cases did not inmost anddifferential treatmentspecial provisions were in 4below, anumber of insubsection discussed As to agreements. outof opt some not have thepossibility did Members documents. signatories had plusalltheappended to accept agreements alltheannexed to compared A majorchange theTokyo Round, wasth meat. andbovine products government dairy procurement, aircraft, trade incivil andcounterva subsidies procedures, licensing rulesof origin, import valuation, inspection, customs pre-shipment below), (see anti-dumping disciplines imposed Agreements below, andTBT inmoredetail theSPS discussed As restraints. export Uruguay Round contributed little to lower the actual toUruguay lowertheactual Roundcontributed little Safeguards Agreement which prohibited voluntary ex voluntary prohibited which Safeguards Agreement tariffs, to limit or control imports of agricultural products. The prohibition and tariffication of NTMs of NTMs prohibition andtariffication The of agricultural products. to limitorcontrol imports tariffs, importing country. importing alternative of measures the atthedisposal comparedattractive to other import-restricting amore countries, wasoften of theVER theGATT. XIX exporting For Article under protection orto pay compensation injury proof of serious countrie to from competition low-cost subject arrangements”. GATT to arecontrary some VERs asa quota. economic effect has AVER thesame byother names, including“orderly areknown VERs marketing of theirexports. or thegrowth countries, theformer where “voluntarily” andimporting limitthequantity exporting between countries’ industrial 1991).some (McClenehan, trade policies thereappearance with coincided This rest mid-1950s, inthe Beginning export voluntary (VERs) restraints export Voluntary 21: Box VERs provided a convenient wayprovisions, of especially an XI Articles protecting low-tariff industries that were increasingly player ininternationalof Japanasanimportant trade. being ortacit, isanagreement, AVER explicit See for instance Hathaway and Ingco (1996). andIngco Hathaway instance for See See the discussion of the discussion See the safeguards 2.(d). agreement in subsection 131 iling measures. In addition, plurila In iling measures. d XIII on export and import quotas. andimport onexport d XIII The Agreement onAgricultureThe provisions phasing included also 236 . These would have been conditions of wouldhave safeguard been . These s, without a country being required to being furnish acountry s, without cluded in the new agreements, but these provisions butthese inthenewagreements, cluded d been using NTMs, sometime in conjunction with inconjunction sometime usingNTMs, d been s from the main disciplines in the agreements. An s from themaindisciplines intheagreements. NTMs by individual Members is clearly beyond the isclearlybeyond by individual Members NTMs n is a controversial question, the answer to which theanswer n isacontroversial question, ng to agriculture, by notably contributing to more on the use of trade related investment measures, investment of related trade on theuse obably agree that compulsory adherence to allthe that agree compulsory obably protection levels for agricultural products inmost levelsfor agriculturalprotection products raints (VERs) began to emerge as elements of to emerge aselements began (VERs) raints r high income Asian countries, a exhibited r high which incomeAsian measures. Similarly, inthis area itwasmore the port restraints, orderly marketing orderly arrangements restraints, port e principle of the single undertaking whereby all whereby e principleof thesingleundertaking n or regulation of NTMs were included in the 132 Box 21 voluntary discusses below teral agreements were signed on weresigned teral agreements so simply because it is costly for exporters to ob for itiscostly exporters simplybecause so countries theyca across differ measures technical If measures andphytosanitary andsanitary Technical trade to barriers also likely to affect theoutcome ofinternational likelyalso to tr affect role inguaranteeing of markets. Technical functioning thesmooth important measures, however, are ex failures like ornetwork information asymmetries for may market measures well have theaim to technical correct measure. of atechnical Indeed, effect of discriminati andeffect the purpose foreign result indiscrimination between –can tariffs cost significant engenders measures to foreign technical hinder trade ifadjusting also measures can procedures. abroad andonrelated They conformity assessment Economic research on VERs suggested that they exacted a high cost on consumers with part ofEconomic ahigh suggested onconsumers cost that withpart research theyexacted onVERs orderly VERs, Agreement outexisting phased The andclothing, footwear, ironandsteel, textiles effect. effect. anti-development countries, had of astrong theyalso developing of thekeyat some exports directed bybeing countries.And of onconsumers importing cost ahigheconomic extracted They multilateral of the rules-based theboundaries trading system. measures outside operated These intheform challenge of VERs. animportant weathered successfully multilateral trading system The etal., for Berry 1999). example (see industry domestic competing to theimport andpart rents) quota (as transferred to being theexporters the benefits States. Finally, to take oneneeds into of account themselves. themeasures theeconomic costs United inthe plants manufacturing their byestablishing restrictions trade offuture possibility the evaded manufacturers 1980s of andJapanese theearly therecession after successfully) adjusted States’ automobiles –th onJapanese restraints Hamilton etal. 1992). (see adjust of these Some market share duringtheheight of therestrictions) failed to materialize) orineffe effect employment they countries because removed therestraints offootwear, thecase In industrial that ofVERs. contributed to thedemise factors economic akey factor.multilateral wascertainly onsafeguards agreement of Buttherewereanumber of anew measures? availability The extra-legal forWhy didcountries these findnomoreneed or whether imports. on exports to theUruguay Roundto complete thenegotiat 1997). could only Contracting(Jackson, The Parties of thedefinition “serioussurveillance, adjustment dispute settlement, of andissues structural injury” to theproliferationAttempts dealwith by negotiating of aninternational VERs agreement on since theywere “voluntary”, theydidnot require compensation. any form ofinternational oroversight. discipline considered could be “safeguard”VERs measures br of theinternational reachingtheir trading system, andother de tigers Asian subsequently theEast prom became Many VERs where of theindustries Parties were divided on a range of issues includin of onarange issues weredivided Parties completed inthe area of Contracting antidumping andsubsidiesThe andcountervailing duties. those alongside Round didnot inthemanner produce of to abreakthrough asafeguards code stand safeguards place took duri ng both theTokyong both andUruguay Roun ng, it can in practice be quite di be inpractice ng, itcan tain accuratetain andup-to-date and motor vehicles. VERs became amajorfeature became VERs and motor vehicles. g the non-discriminatory application of safeguards, g thenon-discriminatory n represent significant barriers to trade. maydo significant barriers They n represent ions andproduce theAgreement onSafeguards. They were selective, andthus discriminatory, and wereselective, They e big three American automakers recovered (or e bigthree American same factors accounted of United factors for thedemise same ternalities and well-designed standards can playan can standards andwell-designed ternalities ansactions and thus trade. If they are designed to andthus trade. theyaredesigned If ansactions and domestic products. But while a tariff clearly has clearly atariff Butwhile products. and domestic pinnacle in the decades of the1970spinnacle inthedecades and1980s. found them either superfluous (the expected (theexpected found themeithersuperfluous inent restrictions were those where Japan, where were and those inent restrictions veloping countries,veloping built-up – competitiveness ctive (the principal exporters maintained their maintained (theprincipalexporters ctive ought inthrough thebackdoor, to not subject marketing andsimilarmeasures arrangements 237 agree on continuing to negotiate. It was left wasleft continuing It tonegotiate. on agree , or else because the industry was able to s. In the latter case, technical measures –like measures technical case, thelatter In s. ds. The negotiations intheTokyo negotiations ds. The fficult to establish the purpose and thepurpose to establish fficult information on technical technical on information

II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING WORLD TRADE REPORT 2007 SYSTEM: ACHIEVEMENTS AND CHALLENGES WORLD TRADE REPORT 2007 II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING SYSTEM: ACHIEVEMENTS AND CHALLENGES the earlier version of theAgreem the earlierversion on the Tokyo TBT Agreement. The revamped Uruguay Round TBT Agreement was largely based on Agreementbased waslargely Uruguay revamped Agreement. RoundTBT The on theTokyo TBT Agreement recognizes that employtechni governments TBT Agreement goes further than its predecessor. The role of national enquiry points on TBT-related on points of role predecessor. national The than enquiry its further Agreement goes TBT provide English,provide French orSpanish translations of relevant documents. relevant are required for to documents national provide TBT-related Members requested, If points. exist, Members are obliged to assist other Members other Members to are assist obliged Members exist, point more where than onenational andincases enquiry measures has, for expanded instance, been or expand agreements negotiated agreements intheTokyoor expand negotiations Roundandinthis context took place also As mentioned above, duringAs theUruguay Roundnego of incidence to measure theactual isdifficult It measures. andillegitimate legitimate between to distinguish theprinciplesof themultilateral with conflict trading so,do i.e. asa“d areemployed measures iftechnical 136 135 134 133 to trade.barriers number incr ofnotifications The thenumber of since notifications shows receivedChart 1995 by theSecretariat 5below ontechnical measures. bytechnical covered China. are cent cent than oneper 2per contrast, of of only andless theEU’s By Japan’s imports imports of Brazil to inthecase halfabout of total imports covered by shareofimports thatthe indicate markets by measures technical ontrade. compiled lines for Counts affected their impact anumber of of tariff years. years. and systems, local, national, local, regional andinternatand systems, andconformity standards regulations, technical covers Members to notify relevant to notify measures toMembers theSecretariat. to order of enhanceIn ontheuse transparency objective(s). agovernment’sfulfil legitimate to to than international necessary trade. technical regulations So shouldnot to more trade-restrictive be to, aview with or applied or prepared, adopted be health orsafety, animalorplant life orhealth, or of human protection theprevention requirements, practices, of deceptive such asnational security Uruguay Round, decreased afterwards and appears to andappears afterwards Uruguay Round,decreased measures, and the Uruguay TBT Agreement added that developed-country Members can be asked be can to Members Agreement that developed-country added measures, andtheUruguay TBT This information is based on data from UNCTAD’s Trade from data on isbased information This ril 05TTAgreement. 10.5 Article TBT See the discussion in section IVG. for a more detailed description of the relevant data and of their limitations. andoftheir data relevant ofthe description detailed amore for See TBT Articles 2.9.2, 2.10.1, Articles 5.7.1 3.2, TBT and7.2.See 133 ent, but its scope wasaltered. scope ent, butits 238 technical measures and even more difficult to measure andevenmoredifficult measures technical the environment. But technical regulations must not must regulations technical But environment. the ional, governmental TBT The and non-governmental. eased quite significantly after theconclusion ofthe after quitesignificantly eased about a third in the case athirdinthecase about technical measures, the TBT Agreement requires Agreement theTBT measures, technical system. The challenge for the system isto findways for challenge thesystem The system. Analysis and Information System (TRAINS). See WTO (2005) (2005) WTO See (TRAINS). System andInformation Analysis have the effect of, creating unnecessary obstacles obstacles of,have creatingunnecessary theeffect in finding their way through the different enquiry in findingtheirway through enquiry thedifferent technical measures ranges, atthehighend, from ranges, measures technical assessment and applies to a wide range of to bodies andapplies awide assessment isguised” form of protectionism, this would be in be thiswould ofprotectionism, form isguised” have been following anupwardtrendinrecent following have been tiations place took onhowto improve, clarify 135 cal regulations to attain legitimate objectives objectives legitimate toattain regulations cal In this particular aspect, theUruguay Round aspect, this particular In 134 h rga on B Agreement TBT Round Uruguay The 136 of theUnited States and agreements encourage of international theuse agreements stan Agre outcome issue. The wastheSPS on thelatter measures de andthePunta andphytosanitory sanitary in recent years. years. in recent TBT, quit under have increased SPS under notifications theevolution overtimeof thenumber Chart 6reflects standard. an international from hasderogated for aMember which reason specific andthe pursued, objective legitimate specific Scie problems. orfundamental technological factors, for in objective, ofalegitimate fulfilment in the eitherinappropriate themto from be derogate international theydeem orineffective when standards or plant health, onthebasisof scientific info human, to protect animal necessary to only measures theextent SPS mayaddition, impose governments aremorestri which standards thechoice of are of required potential to resulting from justify arguments anassessment healthrisks many ofthe Nevertheless, Points”). (“Enquiry offices similar for requirements theadvance of notification have such Agreements common elements, some two The Agreement. to theTBT subject sanita to not considered be aregenerally regulations nutriti requirements, labelling Agreement. Most SPS of themeasure isrelevant which but thepurpose in Agreement, of measure coverage determines which by theTBT Agreement. itisthetype Thus the SPS are these when except aremet, these that ensure voluntar regulations, alltechnical covers instead, Agreement, TBT The limit from theentry, to other damage acountry orspread establishment of pests. to diseases; orplant-carried animal- human isto oranimalhealthfrom protect purpose to with deal Agreement satisfactory werenot considered andtheTokyo RoundTBT legaltexts GATT The Source: 1995 since notifications SPS circulated of number Total 5 Chart Number of notifications 1000 1200 1400 200 400 600 800 0 WTO Secretariat.WTO 9519 9719 9920 0120 0320 052006 2005 2004 2003 2002 2001 2000 1999 1998 1997 1996 1995 ngent than those advocated by international standard-setting bodies. In bodies. by internationalngent advocated than those standard-setting protect animals and plants from pests or diseases orto prevent or ordiseases from pests animalsandplants protect rmation. Under the TBT Agreement, WTO Members may Members Agreement, WTO rmation. theTBT Under y standards and conformity assessment procedures to procedures andconformity assessment y standards stance, due to fundamental climatic or geographic geographic or climatic tofundamental due stance, ry or phytosanitary measures andhence are normally orphytosanitary ry dards. However, Agreement scientific theSPS under proposed measures andthecreationof measures informationproposed on claimsandconcerns, ement. Agreement This covers allmeasures whose sanitary or phytosanitary measures by asdefined orphytosanitary sanitary ntific evidence may be relevant, depending onthe relevant,ntific may depending be evidence determining whether a measure is subject to the ameasure issubject whether determining food-borne risks; to protect human to healthfrom protect risks; food-borne of notifications circulated. Unlike the notifications substantive rules are different. For example, both For aredifferent. rules substantive 239 l Este Declaration asked Declaration for negotiations separate l Este e steadily overtimeandhave theirpeak reached e steadily as the basic obligation of non-discrimination and ofas thebasicobligation non-discrimination and quality andpackaging and quality

II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING WORLD TRADE REPORT 2007 SYSTEM: ACHIEVEMENTS AND CHALLENGES WORLD TRADE REPORT 2007 II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING SYSTEM: ACHIEVEMENTS AND CHALLENGES legal texts that give guidance on howtodistinguis guidanceon that give texts legal with Agreement. measures Both Members andtheSPS provide of nature: atechnical theTBT non-tariff with deal Today that explicitly agreements two with themultilateralisthus equipped trading system donors. andinterested organizations partner five its among issues assistance technical aforum for onSPS provides dialogue also market STDF gain ormaintain The access. grant financing to countries for that developing seek a Standards andTrade (STDF), Facility Development andimplementationthe establishment of appropriat andresour for coordination mechanisms and financial inDoha inNovember Ministerial Meeting At theWTO for international destined markets. agricultural products to implement sani andcapacity theexpertise develop the SPS Agreement. the SPS includinginternationa relevant measures, implement countries markets, developing continued to face measures inexport to problems and phytosanitory contributed requirements notification toAlthough reducing information related cost to sanitary Source: 1995 since notifications TBT of number Total 6 Chart 137 measures to short-term trade allow acountry off to inatrade agreement allowcountries Contingency liberalization. protection to commit to deeper measures contingency CofReport, this Section In Antidumping standards prevalent in export markets. prevalent inexport standards that finditdif Members to WTO those assistance in international relevant among collaboration involves thespiritof multilateral with conflict trade collabor Bank, WHO, and WTO issued ajoint communiqué comm issued andWTO Bank, WHO, positive effects on trade flows. With the SDTF the system has equipped itself with amechanism that with itself has equipped theSDTF thesystem With ontrade flows. effects positive possible with measures to technical related costs information tolowering havecontributed Agreements Number of notifications 1000 100 200 300 400 500 600 700 800 900 0 See the discussion in subsection 7. T 20)TefhAna eiwo h mlmnainadOeaino h B Agreement G/TBT/21/Rev.1. (2007) TwelfthWTO Annual Review of the Implementation and Operation of the TBT 9519 9719 9920 0120 0320 052006 2005 2004 2003 2002 2001 2000 1999 1998 1997 1996 1995 365 460 137 There was an increasing awareness that wasanincreasingawareness There 794 648 669 240 611 ation. The transparency requirements contained inthe requirements transparency ation.The h between legitimate measures legitimate h between ficult to implement international orother standards financing and a co-ordinating mechanism providing mechanism financing andaco-ordinating comply with international SPS standards andhence international standards comply with SPS were described as necessary tools of temporary of tools temporary as necessary weredescribed stitutions anddonorcountries,stitutions to technical provide protection for long-term commitment for to long-term protection market 2001, of theFAO, Heads theExecutive World OIE, l standards set by bodies explicitly referred to in explicitly bybodies set l standards e SPS measures. This led to led thecreation measures. This of thee SPS tary and phytosanitary standards, particularly for particularly standards, andphytosanitary tary ce mobilization to assist developing countries in countries developing toassist ce mobilization itting theinstitutions newtechnical to explore itting 538 developing countries need assistance to countries assistance developing need 581 794 and those thatarein andthose 638 771 875 United States, Canada,United andtheEC. Australia –the wereconfined Contracting to asmallgroup antidumping Parties of GATT actions most century), 138 Source: Note: 1980-2005 of(Number initiations) initiations, antidumping of Count 7 Chart years or40 30 first its In industry. an established andwh that isdumped onaproduct aduty to levy original multilateralThe ruleonantidumping iscontai antidumping legislations in1916 its enacted and1921. inCanada in1904 followed wasadopted legislation than theot hasAntidumping afar history longer of safeguards itis im orcountervailing actions, countries have preference arevealed forReport, the Cof this since, measures.And asnoted inSection onnon-tariff in multilateral this Section rules–under to inthrough rein these changes spread andattempts growth, –its inthetrading system used remedy of trade aspects itmay some make to discuss sense exists, Toopening. that this trade-off theextent cent during the same period. Second, antidumping initiat antidumping Second, period. same the during cent cent, rate higherthan is8per annual therate merchandize ofThe growth global of 5per tradeexpansion total antidumping initiationsthe maintrends. have First, of anindication Chart 7gives 2005). Prusa, Miranda etal., countries (see 2004; Zanardi, 1998; developing themid-1980s,In andto to thetraditional involve spread beyond began many users antidumping actions measures countries by developing ot are against Lastly, by antidumping actions 2005). and theEC (Prusa, 20 times more frequently per than dollar historically of imports) predominant like users the United States newus The since themid-90s. of antidumping activity user quiteactive have become Brazil, andMexico) India Canada, Stat theEC andtheUnited other developing countries. For the period 1995-2001, theperiod countries.other For developing thene Third, decade. inthelast off 1980s, has tailed 100 150 200 250 300 350 400 50 0 9018 9418 9819 9219 9619 0020 2004 2002 2000 1998 1996 1994 1992 1990 1988 1986 1984 1982 1980 together as developing countries for the of purpose the calculation. the latter group are usually treated or classified as develo as classified or treated areusually group latter the “developing” countrie between distinguishes (2004) Zanardi Traditional include Australia, users Canada, the EC and the United States. Prusa (2005) and WTO Secretariat. WTO and (2005) Prusa es), which made uptheoverwhelming made which es), her developing countries Zanardi, 2004). (see portant not to neglect discussing those measures. those discussing not to neglect portant of operation (or until the last two decades of the20 decades two until thelast (or of operation wcomers (primarily developing countries likeArgentina, use of antidumping measures, dwarfing thenumber of antidumping use measures, dwarfing her contingency measures. The first antidumping first The measures. her contingency ers initiate antidumpingers case ned in GATT Article VI. It allows a contracting party party acontracting allows It VI. Article inGATT ned continued to rise during the two decades since 1980. decades continued duringthetwo to rise ping countries in the WTO context, theyping have context, countries grouped been in the WTO ich causes or threatens to cause material injury to materialinjury orthreatens to cause ich causes s and have been responsible for much of the growth for muchof thegrowth responsible s andhave been about two-thirds of allinitiations andantidumping two-thirds about soon after by Australia in 1906. The United States United in1906. The byAustralia after soon ions by the historically predominant users (Australia, (Australia, users predominant historically bythe ions 241 developing countries are s and “transition economies”. Since many countries in part of initiations part during the Trad i t New Users s more intensively (15s moreintensively to i onal Users increasingly directed at directed increasingly 138 th

II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING WORLD TRADE REPORT 2007 SYSTEM: ACHIEVEMENTS AND CHALLENGES WORLD TRADE REPORT 2007 II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING SYSTEM: ACHIEVEMENTS AND CHALLENGES experiences in Latin America duringthelate 1980s America inLatin experiences Through these variousrounds, theelaboration of th these Through on Tariffs andTrade from 1994) theUruguay Round. current Agreement Antidumping onImplem (Agreement negotiations onantidumpi reform, which included liberalization of theirtrad liberalization reform, included which process, interim reviews, sunset, duty assessment duty sunset, reviews, interim process, less the ofinjury/causation, determinations issues: current Doha since RoundcontinuesThe thisprocess the measure, of reviews themeasures, etc. for condu initiatingacase, outtheprocedures spelling its aspects: determination of dumping, definition of aspects: its around the world (Zanardi, 2004). And there is the argument that antidumping is a necessary tool for tool there istheargument And that antidumping isanecessary 2004). around theworld(Zanardi, of theUruguay Round, which the singleundertaking aimed negotiations ofmultilateral rounds successive have asapotent looked used 1995). substitutebeing (Tharakan, for Others inthe theexplanation antidumping with measures (i.e. of intraditional protection tariffs) instruments reduction worldwide There is no lack of proposed explanations for this trend. Some have assigned the major role to the 1997).Kennedy Ro to duringthe led negotiations This theapplication of to whether themeasures question began were raising to trade newbarriers (Jackson, of theGATT, decade thefirst those After GATT/WTO. orstrengthening theantidumping atclarifying rulesin the thereThus, have frequent attempts been young. measures ensure onemust isone of of theparents aliberal not tradingits that devour system, itdoes of themeasures. cost real andimmediate by thevery measures, from are having such not asantidumping, contingency negated intrade agreements benefits oftrade. thelate period 1980s This andearly1990 was,not coincidentally, countries these when began thecountries allowed to sustain instruments these trade contingent of difficulty, this without liberalization. andnot measures always many aspart In cases, Colombia, of economic apainful Mexico, andPeruwent Costa Rica, process through was often what VI. The objective was“to greater provide uniformity objective The VI. multilateral rounds trade –Tokyo Round,Uruguay to curbthem of antidumping measures, andattempts countries undertaking trade liberalization. Finger and Nogues (2006) have to pointed thetrade reform (2006) trade liberalization. andNogues Finger countries undertaking The fundamental challenge for fundamental theinternationalThe tr Agreementthe Multi-fibre (Gallaway, etal, 1999). in1993 billion annually, dollars $4 about for hasbeen USeconomy the duties ofantidumping andcountervailing cost the estimate, to one example, accordingFor of thewelfareindicate that theyrepresent of cost abigpart trade restrictions. of available theeconomic cost about evidence less of information antidumping isalot initiations ofThere good onthefrequency andmeasures butmuch for Butthisdoes tradeliberalization. support political from andthelonger-term mustering protectionism short-term benefits between made being trade-off in arenecessary measures that idea contingency The of theprice to pay part forbe asuccessful transition trade. to moreopen initiations of andmeasures, thestory, thoughtheymay measures useful since be, these may onlytell part the Round ended with anewantidumping with code,the Roundended continue and improving the existing rules onantidumping. rules Prop theexisting and improving to appear as new users of antidumping. isa This asnewusers to appear ng rules. This led to led Tokyo anewantidumping inthe This code ng rules. Roundandthe a cost that is second only to that imposed by the restrictions under bytherestrictions to only that that imposed issecond a cost 242 worthwhile reminder that these trends that inantidumping reminder these worthwhile e regimes. Their governments created andmanaged created governments Their e regimes. , circumvention, the use of facts available, limited, circumvention, of facts theuse antidumping measures. Nevertheless, some studies some antidumping measures. Nevertheless, the momentum towards openness to themomentum international towards openness ading system is to make certain that thee isto make certain ading system er duty rule, public interest, transparency anddue rule, transparency publicinterest, er duty not mean that these short-term costs arenegligible. costs not short-term meanthat these helped spread of theadoption helped antidumping statutes at developing anantidumping code,at developing culminating in If indeed short-termIf protectionism from contingent and 1990s. Countries like and certainty intheirimplementation”. andcertainty Although Round and the Doha Round – to always include Round–toRound andtheDoha always und to for elaboraterules e antidumping has allof rules touchedonnearly the mandated negotiations are aimed at clarifying atclarifying areaimed negotiations mandated the material injury and domestic industry, causality, industry, anddomestic materialinjury who were frequent targets of antidumping were actions frequentwho targets trade agreements acknowledges that acknowledges trade there agreements isa ct of theinvestigation, evidence,ct theduration of through rule changes, have throughrulechanges, allsubsequent led osals have been made onanumber of made have specific osals been entation of Article VI of theGeneral VI Agreemententation of Article d problems or frustrations with theapplication orfrustrationsd problems with the application of Article the application ofArticle Argentina, Brazil, Chile, Brazil, Argentina, xpected more than twice as fast as trade in agricultural products (3.6 cent asfast astrade per inagricultural annualmore than products twice growth). Table (see 14). Tradeor fuelandminingproducts was muchmorepronounced forthan for trademanufactures expansion eitheragriculturalThe products Source: 1950-2005 GDP, 1950=100) (Volume indices, and exports merchandise World 8 Chart period.same three in times hasworldGDP,expansion faster been than growth eight-fold expanded which during the growth trade world to contribution GATT/WTO This Chart 8). Since 1950, fold involumeterms(see worldtrade has morethan grown twenty-seven (d) Members. of many WTO future,and theforeseeable likely will antidumping actions remain thedefault trade adjustment measure formalizesAntidumping ameaning fo of surges against meansof protection more focused of appeal for explanations thestrong possible preference for of theuse antidumping measures. D the negotiations that leadsto “improved disciplines” of antidumpingGiven theenduringappeal measures, it consideration, under andtheinitiationproduct andcompletion of investigations. parties, affiliated imports, ofdumped definition the settlement, dispute rates, andallothers examination Se 10000 500 2500 5000 1000 mi 250 100 -log scale 9016 9018 902000 1990 1980 1970 1960 1950 WTO, International Trade Statistics. International WTO, Total exports6 Manufactures 7 GDP 3 Average growth rates, 1950-2005 . . . 8 5 2 r “unfair trade” that strikes a Manufactures antidumping measures. It provides a stronger andantidumping astronger measures. provides It in manufactures grew(7.5in manufactures cent annual per growth) eardorff andStern various have (2005) discussed eardorff imports than GATT-legal safeguards laws permit. laws than safeguards GATT-legal imports will cause a fundamental alteration afundamental of cause countries’ will 243 is unlikely that even a successful outcome to chord in the public mind. For nowFor chord inthepublicmind. Total GDP

II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING WORLD TRADE REPORT 2007 SYSTEM: ACHIEVEMENTS AND CHALLENGES WORLD TRADE REPORT 2007 II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING SYSTEM: ACHIEVEMENTS AND CHALLENGES Sector G r o 14 wTable t ho ft r a d eb ys e c t o r ,1 9 5 0 - 2 0 0 5 auatrs7.5 Source: Manufactures Fuels andminingproducts Fuels Agricultural products the effect of GATT/WTO membership on reducing the volatility of acountry’s onreducing thevolatility trade. membership of GATT/WTO the effect traderelationship,had noprevious which dramatically reduced the cost of transportation andcommunication. ismore reason A second dramaticallywhich of reduced thecost transportation organization? Second, since two of theprincipalro organization? since two Second, rounds of tradenegotiations through increase its of orfrom the countries aMember WTO becoming and in industrial goods. The GATT/WTO appeared to have also been important in helping Members, who who Members, helping in important been also have to appeared GATT/WTO The goods. industrial in and countries ofdeveloped case inthe strong was expansion trade on impact system’s multilateral The trade. GDP Trade/GDP Source: Source: prices). 1990 (in 2005 for GDP world and exports world tocalculate used were and 2005 Statistics Note: Several reasons are often given to explain thisexpans to explain given areoften reasons Several 1913 1870 Exports Item 1870-2005 GDP, billions(In 1990 of constant dollars) world and exports World 15 Table 140 139 the expansion of the previous period of globalization. period of theprevious the expansion 19.4 reaching confir in2005, cent globalization per the post-war trade expansion. Two trade expansion. the post-war principalquesti of literature isnowagrowing onthesubject There liberalization. induced from cent 4.6 per in1870 to 7.9 cent per in1913. specialization, that may have been induced by both technological change and open markets. change andopen that induced by may technological both havespecialization, been First, there is econometric evidence that the GATT/WTO accounted inworld for of thisexpansion some that thereiseconometric evidence theGATT/WTO First, of work. by this provided body growing be can Several answers members? inthetrade of its stability m international amongits disputes trade andto resolve open trade policies. Athird refers trade policies. explanation to thechanges ineconomic organization,open such asvertical liberalization of trade regimes can ta can of trade regimes liberalization key question that is taken up in this subsection is the link between post-war trade expansion and WTO- and trade expansion post-war isthelinkbetween key that istaken upinthissubsection question GDP in the latter period. Based onMaddison’s Based period. inthelatter (2001)GDP ratio the trade to for data, GDP theworldrose Table F-5 in Maddison (2001), p. 363. (2001), Table inMaddison F-5 In effect, production becomes much production more trade-intensive.In effect, specialization requires much more and to components trade occur of unit per the of parts output of the final product. See Yi (2003). Vertical specialization leads to (2003). Yi countriesSee spec The last two columns are not from Maddison. The figures in the last column are derived from the International Trade International the from derived are column last inthe figures The Maddison. from not are columns two last The WTO (2006) International Trade Statistics 2006. Trade Statistics International (2006) WTO Maddison (2001), Tables B-18 and F-3 and own calculations. Tables calculations. B-18 (2001), own and F-3 and Maddison .%79 .%1.%19.4% 17.2% 5.5% 7.9% 4.6% ,0 ,0 .%5363,2 1463.8% 41,456 33,726 5,336 2.1% 2,705 1,102 0322434 9 8784 6.2% 8043 5817 296 3.4% 212.4 50.3 Average annual growth (in percent) (in to begin trading with oneanother. trading with to begin on research isconflicting There 4.2 3.6 ke unilaterally, place andmultilaterally. bilaterally, The regionally Annual Growth: Annual Growth: 1870-1913 244 139 ming how trade growth in this era had outstripped inthis era had outstripped ming howtrade growth This ratio farThis has wave risen of moreinthesecond ons have been addressed. First, the does GATT/ themultilateral trading system’s contribution to after taking into taking of accountafter thefaster growth even era persists andthepost-war globalization waveof thefirst between of trade expansion 1950 Table (see 15). intherate difference The half atabout since thepace ofexpand theperiod trade volume saw 1999), andMartin, (Baldwin wave of globalization asthefirst described been World War,the first that has sometimes aperiod 1870 of intrade between expansion andthestart the To terms. in historical putitinperspective, isunprecedented trade ininternational increase This les of the GATT/WTO are ruleson to establish les of theGATT/WTO ion in world trade. First is technological change, istechnological ion inworldtrade. First embers, to what extent has itresulted to whatextent ingreaterembers, ializing in particular stages ofializing a stages good’s in Such particular production. 9019 2005 1998 1950 Annual Growth: Annual Growth: 1950-2005 140 But account and focused only on aggregate trade flows. This masked the positive impact on the subset ofaccount onthesubset masked This onlyonaggregate impact andfocused trade thepositive flows. into institutional details hedidnot take important these ontrade wasbecause membership of WTO a 120 cent inworldtrade. per increase thereas Thus, impact ontrade was quicklychallenged.impact had no membership thecounterintuitiveGiven nature theconclusion of theresults, that GATT/WTO policy. didnot intrade significant changes entail membership leadonetocan theconclusion that GATT/WTO trade liberalization theGATT. within Members differences andlumping these allGATT together Ignoring acommitment asdeep on to hand, countries evidence showthat developing there undertook islittle duringtheGe one-fifth about rounds of negotiations: in thevarious multilateral in tariffs substantive reductions countries. countries Developed undertook between to distinguish itisessential shows, above and(b) 2.(a) However, insubsections byMembers. to asthediscussion significanttradeliberalization accession didnot lead GATT/WTO that argued thiswasbecause (2004b) byRose A subsequent paper intheirtrade.increase that evidence countries joinin that therewaslittle Rose’s study, 178 covered which about from 1948 countries to andspannedtheperiod 1999, concluded matte reductions oftrade andcost liberalization trade rates. much that Sincefaster worldtrade than has GDPgrowth expanded that, this suggests partners’ that bilateral trade shouldgrow atarate equal to thesum predicts of the model thegravity barriers, orpolicy common intrade costs border, of theabsence any In reduction barriers. etc. aswellpolicy theyarelandlocked, them, theyhave whether whether aof thecountries, like between thedistance 142 141 them. between trade costs to related thesize (u of theireconomies positively countries any be will two that thevolumeof trade between predicts model trade. gravity global The mode agravity (using econometric study was thefirst went considerably theGATT’s It examining beyond earlydecade. (2004a) by Rose Andrew paper The andforeign controquotas exchange rounds of three tariff thefirst conducted GATT The rules: – agriculture, textiles and clothing. They es They andclothing. –agriculture, textiles rules: whic sectors andthose multilateral anddisciplines rules intheimpact findasignificant difference also They of theorganization, on theyfound that theimpact marketThird, aregranted onan commitments access fo rules tomultilateral etc. not subject –were clothing, moremarket includingoffering obligations, Se access. that have have acceded to They had since theinstitution to of theestablishment theWTO. accept more anddifferentialspecial treatment. However, thesituation countries developing different may with be compared of to countries industrial because Members liberalization country by orless developing little countries and sectors where multilateral liberalization took place. took liberalization multilateral where andsectors countries effects as a reflection both of the history anddesign ofthehistory both asareflection effects this intrade unevenness explain ontrade. They butuneveneffect positive had astrongly membership Round; another one-third duringth anotherone-third Round; rapid liberalization of worldtrade. from commitments Buthedidgoonto for credit theGATT securing 1947-51.four years, (1995) didnot negotiations produce Irwin a rounds of found early GATT that these Contracting Parties to early tariff reductions, which kept them from instituting higher tariffs as import asimport kept which themfrom reductions, higher instituting tariffs toContracting earlytariff Parties The gravity model has proven to be popular among empirical trade economists because of the high explanatory value explanatory high ofthe because economists trade empirical among popular tobe proven has model gravity The of the model in explaining bilateral trade flows. Besides the trade effect of WTO membership, gravity models have models gravity membership, ofWTO effect trade the Besides flows. trade bilateral inexplaining model of the See, for example, Evenett et al. (2004) as etSee, well al. for as Goldstein (2005). example, et Evenett al. (2004) been used to study the impact of regionalism and currency unions. unions. andcurrency ofregionalism impact the tostudy used been 141 These trade costs are usually represented by geographical characteristics characteristics bygeographical areusually represented costs trade These e Tokyo Round; and 40 per cent per e Tokyo in the Uruguay theother Round.On and40 Round; ls were dismantled inthe1950s.ls weredismantled 142 Subramanian andWei orWTO (2007) that GATT concluded g the GATT/WTO experienced a statistically significant astatistically experienced g theGATT/WTO timated that GATT/WTO membership has resulted in hasresulted membership that GATT/WTO timated sually measured by GDP) and inversely related tothe related andinversely byGDP) measured sually liberalization by developed countries anddeveloping bydeveloped liberalization of the WTO in those sectors which werecovered by which sectors inthose WTO of the neva Round; a further one- afurther Round; neva of the multilateral trading system. First, therewas First, ofthemultilateral trading system. MFN basis only to Members. True basisonlyto Members. MFN to features these trade was strong for the industrialized countries. for theindustrialized trade wasstrong r a substantial part of the history of theinstitution. of thehistory part r asubstantial negotiations within the relatively short period ofnegotiations period therelatively within short red in the post-war period. Butto muchsurprise, period. inthepost-war red 245 on for Rose’s inability to find a positive impact l) on the effects of the multilateral system on of themultilateral system ontheeffects l) h, for many decades, were left outside of such cond, some sectors – agriculture, textiles and –agriculture, textiles sectors cond, some third duringtheKennedy

II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING WORLD TRADE REPORT 2007 SYSTEM: ACHIEVEMENTS AND CHALLENGES WORLD TRADE REPORT 2007 II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING SYSTEM: ACHIEVEMENTS AND CHALLENGES who, among other approaches, use anARCHwho, use amongother approaches, If the trade flows are unrecorded either because of censoring (as in Felbermayr andKohler, of are censoring in thetrade unrecorded Felbermayr (as If flows eitherbecause 2005) on andsignificant effect has astrong membership WTO to equations have findthat tended ingravity flows trade that unrecorded haveRecent studies included trade. has This ledto investigations of empirical wh in levels of protection of areduction because come about can This such links. did not have apriortrade relationto establish or thro bilateralpositive means inthesample. This trade flows imply greater security of a WTO Member’s access to of aWTO greatersecurity imply fa meanthat areneging itdoes commitments, Member thismechanism. cannot provide While anironclad flows or volumes andnotvariab orvolumes about flows ontradevolatili effect had asignificantdampening intheGATT/WTO that evidence membership foundin tradeHe little computed samples. over25-year policy reversals than non-Members. A country may infa Acountry than non-Members. reversals policy examines the frequency of such cases). Accession to of such cases). thefrequency examines apairof countries didnotwhere have who apriortrad A more important gapinRose’s andinmost analysis, A moreimportant 144 143 In the WTO, a Member’s market access rights are protected by its ability to use the WTOs dispute settlement disputesettlement theWTOs to use ability byits aMember’s market theWTO, areprotected In access rights this impact. ifone neglects multilateral to worldtrade growth trading system One onnewtrade relationships. and significant impact has apositive membership whatever assumption ismade, theendresult thesame. isstill GATT/WTO of payingcost ableto entry. thefixed be remain levelwill profitableafter But threshold productivity ontheir un depends decision selection or not. The market to enter whether anexport comes from firmsdeciding et al. (2006) inHelpman self-selection these institutions unless size the expected of bilate orpubli publicinfrastructure of certain the presence thresholdtheir bilateral trade potential some exceeds andKohleror trader himself. (2005), Felbermayr In traced of theabsence be trade by can to made thefirm decisions (self-selection), trader; inthesecond to thefirmor external non-actions) (or countries isaconsequence of actions two of trade between reduced export volatility, intheirview, providing export reduced or because of self-selection (as in Helpman et al., 2006). effect of GATT/WTO membership on trade volatility. The gravity model is a model about bilateral about trade isamodel model ontrade volatility. gravity The membership of GATT/WTO effect the istheappropriate for framework test for heuses which theempirical setup assessing model gravity measure of variability) of variation statistical onthecoefficient (a membership of GATT/WTO the effect over175 between flows countrannual bilateraltrade covering set Usingadata Member’s trade isconflicting. far, So of aWTO onthestability theevidence for of instance,it occurs, negotiated asaresult market of because rapid trade expansion access. trade volumes. It seems more reasonable, for example, to test whether WTO Members are less prone to areless Members morereasonable, seems forWTO It trade volumes. example, whether to test of stability andnot necessarily Member byaWTO market of negotiated isdesired iswhat access security trade. orstable However,predictable itisnot clearwh test the impact of GATT/WTO membership onit. membership ofGATT/WTO theimpact test Different assumptions about the unrecorded data lead to lead data unrecorded the about assumptions Different ARCH (Engle, 1982) for stands autoregressive conditional heteroskedasticity and is an econometric introduced method data are zero trade flows (i.e. the data is censored) leads leads iscensored) data (i.e. the flows arezero trade data to the autoregressive components of the disturbance term. disturbance ofthe components autoregressive to the autoregressive conditional process. heteroskedasticity) The (generalized GARCH intothe (1986) byBollerslev extended been has framework modelling The (“autoregressive”). terms disturbance ofpast afunction as term disturbance current the models ARCH process The applied. first was model the where area the prices, infinancial found iscommonly ofturbulence type This out. spread evenly more being than rather periods atcertain isconcentrated turbulence inwhich ofvolatility, apattern for to account because of self-selection, the appropriate estimation technique is the Heckman 2-step procedure. 2-step Heckman isthe technique estimation appropriate the ofself-selection, because ugh greater policy certainty from undertaking GATT/WTO commitments. GATT/WTO fromundertaking certainty ugh greaterpolicy ility. Adifferent result isfound 144 246 specification to directly model the variability of thevariability trade and model to directly specification evidence of the beneficial impact of theinstitution. of impact evidence thebeneficial They found that GATT/WTO membership significantly membership found thatThey GATT/WTO ether membership in the GATT/WTO results inmore results intheGATT/WTO ether membership guarantee that all Members wouldabideby guarantee their that all Members other Members’ markets and, therefore,other Members’ more stable the GATT/WTO can make can iteasierfor countries that the GATT/WTO derlying productivities because only firms above a positive trade between two countries onlyif arises two trade between positive ies between 1950 and1999, estimated between ies (2005) Rose different estimation methods. Assuming that the unrecorded unrecorded that the Assuming methods. estimation different to Tobit estimation. If one assumes that the data aremissing data thatthe assumes one Tobit If to estimation. ral trade justifies the cost of the investment.The ty. There is however some question whether the whether question ty. ishoweversome There value. Maintaining a trade relationship mayrequire relationship atrade value. Maintaining c institutions. But governments will not spend on notc institutions. will Butgovernments spend ether this is the appropriate test to carry outsince to carry test ether thisistheappropriate work on gravity models, wastheinclusionof only models, work ongravity “generalization” involves adding a moving average process that the analysis will not be able to examine cases cases abletothat not will theanalysis examine be ct welcome less predictability of if trade volumes predictability welcome less ct e relationship will begin to trade. (Box 22below to trade. begin e relationshipwill (Box ces the prospect of costly retaliation. This would This retaliation. of costly ces theprospect theformation ofbilatera will fail thecontributionwill ofthe capture to fully 143 In the first case (censoring), theabsence (censoring), case thefirst In by Mansfield and Reinhardt (2006) (2006) andReinhardt by Mansfield l trading relationships. 27 of them developed and the remainder developi 27 andtheremainder of themdeveloped Thus part of the increase in positive trade flows would be due to better data availability. data dueto better wouldbe trade flows of inpositive the increase part Thus Th zerobilateral represent trade matrix trade flows. for called ininterpreting may caution be cells this some inthe trend sinceNow not allempty country-pairs. South-South cent and39per of allpossible pairs country North-South cent for 83per flows of allpossible 2005, import there By were nowpositive 18 country-pairs. cent South-South per of allpossible andjust pairs country for 59 North-South flows cent per of allpossible import positive were only contrast, there In country-pairs. developed cent per for of allpossible 98 flows import positive 1980, In there trade). countries were andamong developing (South-South trade) (North-South innewtrading relationships growth pl took The to 105. doubled had sources nowalmost number of median import of that. The country-pairs) 41,412 for more flows than half (21,630 imports were nowpositive There x203) country-pairs. (204 is relationships import ofbilateral number possible maximum The countries. developing remainder for countries, 204 data andthe 32 of themdeveloped had import database 2005, thesame By countries in the IMF database imported from less than 53 partners. 53, wasonly sources i.e., number of import median The 182 half of the183 potential partners. from allthe imported than for athird(10,087 onecountry of that. less flows No country-pairs) (183 is33,306 relationships x18 import bilateral theyear1980, for of 183For Trade about data theIMF’s Direction countries, had import Statistics of innewtrading indication this relations gleanedfrom expansion Some bilateral be can trade data. has contributed theWTO, thereafter to worldtrade growth. that thisisoneavenue through theGATT, which suggests and strongly research relationship. New of newtrade amongcountries that throughalso had not thegrowth previously had atrade but trade amongpartners existing oftrade has already not through grown only theexpansion more andmore countries 50years, thepast trading oneanother. haveOver with begun Global relationships trade new Creating 22: Box Source: Source: 2005 and (Percentage) 1980 relationships, trading New 100 10 20 30 40 50 60 70 80 90 0 IMF Direction of Trade Direction Statistics. IMF 902005 1980 No tradeflowsrecorded Pos ace between developing countries anddeveloped ace between 2) country-pairs. But there were positive import import Butthere were positive 2) country-pairs. i t ng countries. The maximum possible number of possible ng countries. maximum The i ve tradeflows 247 ey may also reflect non-availability ofdata. non-availability reflect ey mayalso

II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING WORLD TRADE REPORT 2007 SYSTEM: ACHIEVEMENTS AND CHALLENGES WORLD TRADE REPORT 2007 II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING SYSTEM: ACHIEVEMENTS AND CHALLENGES unilaterally reductio binding without their tariff inmarket butnot access tonegotiat participate WTO and which are being taken are upinthecurrentand which being negotiatio some sheds inthissubsection discussed evidence The Round, however, to led asignificant reduction B, according to smallcountries which have inSection presented anincentiveapproach to jointheGATT/ in market evidence onparticipation The access negotiat countries, access to developing markets by develo ofIssues market access for developing countries, in that considerably are often higher than applied rates. these tariffs countries, bound and, theyexist, where that, thoughmuchlowerthan before, tariffs applied footwear, orfishand textiles, cases and insome in develo tariffs andapplied lowbound by relatively i on tariffs their toreduce system multilateral the Future challenges that indicates since 1947Evidence presented inthis subsection countries industrial of have use made (e) developing countries areallrele developing reduce other ordiscipline Members its helped also that theGATT/WTO suggests Evidence onNTMs games behind the changes in policies. countries butdidnot liberalized bind,developing w patterns interest indomestic changes relate which understand the role played inth discussed light ontheevidence interesting shed by changes in approachesdisincentives for coun those to openness in that suggest thefailureaccess They commitments. the 1980s.Liberalist this lack of enforcementsee andaconsequence countries’ of acause asboth developing limited market approaches, countries. donot challenge poor They Members role of acommitment mechanism thatWTO to thefact (200 andHoekman for Bown commitment purposes. system onMembers. participation GATT/WTO of 4above, findanuneveneffect which insubsection surveyed of econometric studies theresults with ataconsiderably higherlevelth tariffs theirbound set they commitments, made they Where reductions. not these bind did but unilaterally tariffs applied their didnot caus countries cases butthebindingsinmost of bindingcoverage for many andaconsiderable developing extension liberalization trade substantial countries andtheinternationaldeveloped financial in sta towards approaches trade andtrade policies when developing countries remained very lowandtheirta countries very remained developing balance-of-payments related restrictions for severa restrictions related balance-of-payments inplace inagricultureandte restrictions quantitative hand have made a more limited use of the system in of thesystem hand use have amorelimited made barriers to trade, such as quasi-tariffs and quantitative restrictions. GATT disciplines provided for provided disciplines GATT andquantitative restrictions. to trade,barriers such asquasi-tariffs the general elimination of quantitative restrictions eliminationthe general of quantitativerestrictions tries to negotiate additional International commitments. relations also theories vant intheDoha negotiations. 248 of remaining non-tariff obstacles to trade. obstacles of remainingnon-tariff ns suggests that theyare not usingtheGATT/WTO ns suggests ndustrial products. Developing countriesDeveloping ontheother products. ndustrial hile neorealist approaches help understand thepower helpunderstand approaches hile neorealist ped countries markets by andaccess toped developing to enforce developing-country commitments creates commitments to enforce developing-country with changes in trade policies can help explain why helpexplain can intradepolicies changes with cluding access to developed markets bydeveloping cluding access to developed l decades. The single undertaking of theUruguay singleundertaking The l decades. products. By contrast, developing countries contrast, By developing exhibit products. light on the challenges still faced by WTO Members, Members, light faced onthechallenges still by WTO xtiles, while some developing countries maintained maintained countries developing some while xtiles, are onaverage higher than of thedeveloped those with some exceptions. Developed countries keptDeveloped exceptions. some with ions. The fact that developing countries liberalized liberalized countries developing that fact The ions. stitutions increased. These changes translated These into increased. stitutions riffs very highuntil half of thesecond the1980s very riffs ped countries in all sectors except for agriculture countries inallsectors ped e the liberalization. Developing countries reduced reduced countries Developing liberalization. e the rted changing and pressure for liberalization from for changing liberalization andpressure rted is subsection. Constructivist approaches help Constructivist can is subsection. an their applied tariffs. This evidence is consistentan their applied tariffs. ns. The post-UR tariff landscape ischaracterized landscape tariff post-UR The ns. the tariff area. The bindingcoverage of most area.The thetariff ions is largely consistent with the terms-of-trade terms-of-trade the with consistent islargely ions 7) link thefailure to play the of thesystem Entering into force 1, onJanuary 1989, thenewHS Customs Cooperation Council correlation published Cooperation Council to thecreation of the“ andtheCCC theBTN of correlationof between tables updated nomenclature The amended. had 1.011 99 positions, (CCCN) to avoid confusion thenomenclature with of the European Community. 1978, In theCCCN was 1974,In Tariffs theBrussels Nom unavailability of correlation tables makes it diffi Geneva Nomenclature regard to with boththenumber of chapters andthenumber of andthe positions had 1097 BTN The ch 99 their production. positions, according i.e. weregrouped in process, to used thenature of of articles production logic theinputs wasestabl Tariffs (BTN) Brussels Nomenclature The nomenclatures Tariffs such astheBrussels tariff for ashort used wasonly GenevaNomenclature The the nomenclature sub with positions. have butgovernments flexibility some “ the as known nomenclature, This Nomenclature. 1937, In inthelate thirties. for tariffs customs of customs thecomparability atimproving aimed Efforts background Tariff historical nomenclatures: SUBSECTION 2 TO TECHNICAL APPENDIX 86 chapters, themselves grouped in 21 sections. The in21 grouped The chapters, themselves 86 sections. The need to further harmonize trade related data to further need The enclature was renamed the Customs Cooperation Council Nomenclature Council Customs the Nomenclature Cooperation renamed was enclature Harmonized Commodity Description andCoding System Description Commodity Harmonized cult to track changes and rectifications overtime. cult to track andrectifications changes Geneva Nomenclature Geneva the League of Nations published its Draft Customs Draft ofthe League Nations publishedits Nomenclature of theCustoms Cooperation Council. nomenclature progressively replaced the CCCN. the replaced progressively The nomenclature N makes it difficult toN makes track overtime. changes itdifficult tables between the1978 between tables CCCN andthe1989 HS. ished in1955ished followed a It used. andwaswidely 991 are common positions to all countries that use apters and 21 sections. The BTN differed from the differed BTN and21 The apters sections. (trade statistics, customs etc.) led the Customs 249 period of time, but it served asabasisfor other of time,period butitserved tariffs led to led thecreationof acommon framework tariffs chapters and 21 sections. Again, the unavailability unavailability Again,the and21 chapters sections. ”, has in 991 grouped positions ”. ”.

II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING WORLD TRADE REPORT 2007 SYSTEM: ACHIEVEMENTS AND CHALLENGES WORLD TRADE REPORT 2007 II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING SYSTEM: ACHIEVEMENTS AND CHALLENGES iei 1965-1966; Nigeria eea 1969-1970; Senegal rzl14-90Ntoa oecaueIJSchedule concessions, of tariff 1947 GATT ICJ National Nomenclature 1949-1950 Brazil India 1948-1949 Geneva Nomenclature ICJ Schedule of tariff concessions, GATT 1947 GATT concessions, oftariff Schedule ICJ Nomenclature Geneva 1948-1949 India Argentina Country Year Nomenclature Data Source Data Nomenclature Year Country studies incase used anddata sources Nomenclatures 2 insubsection studies case the for Sources calculation of HS 6-digit duty averages, only only averages, duty ofHS6-digit calculation Post-1995 data from tariff arecalculated averages inthetables. isindicated other duties) taken into account. However, of non- theproportion group. bythetotal Only number ofintheproduct lines group divided product groups, pre-1989 product theselected For inthe simpleaverages were calculated asthesum of alltariffs rates Average tariff applied were computed sources. from electronic Pre-1989 werecomputed estimates bindingcoverage coverage Binding 2 insubsection studies case the for used Methodology Korea FIZoll und Handelsinformation by the BFAI Journal. Customs International ICJ tariff averages overtime.tariff change from theCCCN nomenclature thecomparability of to in early1989 theHStariff probably affects Despite the use of tables of of correlation tables theuse Despite to keep groups overtime, aconstant definition of product the IDB WTO Integrated Data Base. Data Integrated WTO IDB 1964-1965; 1979-1980; 1979-1980; 1979-1980; 1979-1980; 1958-1959; 1958-1959; 1967-1968; 97 01H D - IDB HS 2001 1997; 97 01H D - IDB HS 2001 1997; 1957-1958; 1957-1958; 1977-1978; 1977-1978; 1971-1972; 1971-1972; 1986-1987 1985-1986 9716 T/CNIJSchedule of concessions, tariff GATT 1967 ICJ BTN/CCCN 1967-1968 9218 T/CNIJ- ICJ BTN/CCCN 1982-1983 1987-1988 1987-1988 1970-1971 03H D - IDB HS 2003 02H D - IDB HS 2002 01H D - IDB HS 2001 01H D - IDB HS 2001 97BNCC FI- BFAI BTN/CCCN 1987 94BNCC oenCsosAscain- Korean Customs Association BTN/CCCN 1974 BTN/CCCN eeaNmnltr C ICJ ICJ Nomenclature Geneva BTN/CCCN BTN/CCCN BTN/CCCN BTN/CCCN Bundesstelle für Aussenhandelsinformation. für Bundesstelle ad valorem 250 Applied tariffs pre-aggregated at the HS 6 digit level. For theFor attheHS6digitlevel. pre-aggregated ad valorem manually from paper sources. Post-1995 sources. paper from manually figures C - ICJ - ICJ C ICJ ICJ C - ICJ C ICJ ICJ duties were used. duties (specific, mixed, compound or duties(specific, ad valorem Bound tariffs dutieswere EU(25) United Kingdom France Denmark (Austria Denmark Total (arithmetic average) country Gec 905. 599. 472. 671. 14.0) 18.2) 19.7 20.3 26.7 9.0 25.0 10.8 24.7 14.9 92.5 28.2 55.9 27.9 53.1 81.6 39.0 26.4 (Greece (Germany United Kingdom ntdSae 63.7 16 United States Canada Austria Yearbook 1979. Source: Note: tl 532. 563. 061. 292. 24.6 22.6 13.7 32.9 24.0 13.0 6.3 19.5 13.5 7.9 30.6 8.7 20.0 5.7 30.0 4.8 1.7 3.4 15.6 3.7 1.5 27.0 3.0 24.0 16.2 25.3 22.7 8.2 6.9 9.2 19.9 Italy 2.3 3.2 11.2 10.8 8.5 Benelux Norway Sweden Sweden Italy Germany Benelux a 2005 and 1952 Members, GATT/WTO developed selected (All products) of rates tariff Applied Appendix Table 7 Source: Norway. and Sweden Note: c b a Country 1950 groups, product industrial and countries European 13 for (Percentage) rates average tariff Applied Appendix Table 6 Portugal Total (country import weighted) weighted) Total import (country France not to 1950. Some calculation errors have been found which, if corrected, increase somewhat the average rates for Denmark, Denmark, for rates average the somewhat increase corrected, if which, found havebeen errors calculation to1950.not Some Excluding trade with NAFTA members for Excluding members trade the with NAFTA Unweighted average of the eight group indexes. group eight ofthe average Unweighted Excludes knives. Arrayed in ascending order of average duty of all groups. groups. ofall duty ofaverage order inascending Arrayed The reported average rates for Germany, Austria and Greece are upward biased as they refer to pre-WW II trade flows and flows trade II topre-WW refer they as biased upward are Greece and Austria Germany, for rates average reported The Unweighted arithmetic average of in 1952 52 products and of lines in all 2005. tariff GATT, International Trade 1952, WTO, Trade Profiles 2006, WTO, International Trade Statistics 2006 and IMF, IFS Statistics Statistics IMF, and IFS 2006 Trade Statistics International WTO, Trade 2006, 1952, TradeGATT, Profiles WTO, International Woytinsky, W.S. and Woytinsky, E.S. (1955) -‘World a All Groups, 79 Items 333. 632. 201. 581. 20.4 19.2 15.8 14.0 42.0 26.0 16.3 33.1 23.3 801. 90-3. 931. 6618.6) 16.6 18.5 19.3 37.8 - 19.0 14.1 18.0 801. 866. . 3648933.9 9.3 4.8 13.6 6.1 61.0 28.6 16.7 18.0 791. 282. 841. 601. 20.0 18.4 16.0 18.1 18.4 22.0 12.8 17.4 17.9 ...... 5.9 5.4 1.0 1.9 1.8 6.7 4.5 0.4 3.4 b

Chemicals, 19 Items 19 Oils and Mineral a 16 Items 16 Textiles, Textiles, US and Canada and EU intra trade in2004. trade EUintra and Canada US and Apparel, 4 Items Commerce and Governments. Trends and Outlook’. 251 Iron and 8 Items Steel, Steel, Non-ferrous 1952 2005 1952 10 Items 10 Metals, 4(4.2) 24 403.9 14.0 6(4.2) 16 9(4.2) 19 514.1 15.1 7(4.2) 17 7(4.2) 17 13.8 11 6(4.2) 9(4.2) 5(4.2) -4.2 3 Items Tools, c Machinery, 13 Items 13 Transportation Equipment, Equipment, 6 Items

II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING WORLD TRADE REPORT 2007 SYSTEM: ACHIEVEMENTS AND CHALLENGES WORLD TRADE REPORT 2007 II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING SYSTEM: ACHIEVEMENTS AND CHALLENGES GNG/NG1/WW/2/Rev.1*, 27GNG/NG1/WW/2/Rev.1*, mars World 1987 (2007), Tariff WTO (Tokyo Round); Profiles Round). (Uruguay (2007), World Tariff WTO (Tokyo Round). Profiles. (Uruguay 1987. 27 mars MTN.GNG/NG1/WW/2/Rev.1*, document: GATT l’Accord de Général, cadre le dans établies tarifaires consolidations des e eln . 95 99.5 99.7 100.0 - 39-51 99-99 95-95 97-97 ... 98-98 79-81 94-95 Zealand New Switzerland Norway Sweden Finland Austria e eln 85 100.0 <100.0 48-54 44-46 Zealand New Switzerland Norway Sweden Finland 2000 and 1987 products, agricultural and countries lines) tariff on developed based –Coverage (Percentage bindings: tariff of Status Appendix Table 9 a United Kingdom 1972-2000 products, industrial and countries lines) tariff on developed based –Coverage (Percentage bindings: tariff of Status Appendix Table 8 ntdSae 09 100.0 90-93 a Japan United States Canada Source: 99.6 99.7 100.0 97-97 98-98 Source: 100-100 Note: 90-91 74-74 100-100 Japan States United Canada Note: Denmark EU Austria EU Australia Australia Refers to EEC(6) for Post-Kennedy, to EEC(9) for Post-Tokyo and to EU(15) for Post-Uruguay Round (including ITA). (including Round Post-Uruguay for toEU(15) and Post-Tokyo for toEEC(9) Post-Kennedy, for toEEC(6) Refers Refers to EEC(9) for Post-Tokyo and to Round EU(15) (incl. for ITA). Post-UR a a Lower end of binding coverage range refers to totally bound tariff lines while upper end includes partially bound tariff lines. tariff bound partially includes end upper while lines tariff bound tototally refers range coverage ofbinding end Lower Lower end of binding coverage range refers to totally bound tariff lines while upper end includes partially bound tariff lines. tariff bound partially includes end upper while lines tariff bound tototally refers range coverage ofbinding end Lower GATT (1971) Basic Documentation for the Tariff Study. Supplementary Tables, Geneva. (Kennedy Round). GATT (1987), Importance Importance (1987), GATT Round). (Kennedy Geneva. Tables, Study. Tariff Supplementary the for (1971) GATT Documentation Basic GATT (1987), Importance des consolidations tarifaires établies dans le cadre de l’Accord Général; GATT document: MTN. document: GATT l’Accord de Général; cadre le dans établies tarifaires consolidations des Importance (1987), GATT Post-Kennedy Round Post-Tokyo Round Post-Uruguay Round Post-Uruguay Post-Tokyo Round Round Post-Kennedy 68 69 - 96-96 86-87 89 99 100.0 99-99 98-99 58 79 - 97-97 55-86 39 - - 93-94 79 - - 97-91 9218 2000 1987 1972 . 11 96.5 11-17 ... 252 Round).WTO (2007), World (2007), Round).WTO Tariff Profiles. Round). (Uruguay otTkoRud otU Round Post-UR Post-Tokyo Round 06 100.0 60-63 65 - 46-50 56 - 55-62 36 100.0 63-65 09 100.0 90-91 76 100.0 67-69 63 100.0 26-32 15 - 51-56

Portugal Burkina Faso Pakistan Tanzania 9-Dec-61 Art XXVI:5(C) Art 9-Dec-61 Tanzania Sri Lanka Denmark wdn3-p-0Art XXXIII XXVI:5(C) Art 30-Apr-50 24-Feb-50 Contracting Original Party Party Contracting Original Party Contracting Original 30-Jul-48 29-Jul-48 11-Jul-48 Party Contracting Original Original Contracting Party Finland 20-Apr-48 Republic Dominican Sweden 1-Jan-48 Greece Indonesia Haiti Chile ofAccession Article Zealand New Brazil Date ofAccession Myanmar Zimbabwe Norway India South Africa Czechoslovakia United States of America United Kingdom Netherlands Luxembourg France Cuba Canada Belgium WTO the Country to accessions and GATT to successions and Accessions Appendix Table 10 Malaysia 24-Oct-57 Art XXVI:5(C) Art XXXIII Art 24-Oct-57 Art XXXIII 6-Dec-53 XXXIII Art 1-Oct-51 28-May-50 Sierra Leone Nigeria Malaysia Ghana Japan Uruguay Austria Turkey Peru Germany Italy Nicaragua Uganda 23-Oct-62 Art XXVI:5(C) Art 23-Oct-62 Uganda Israel Trinidad and Tobago 23-Oct-62 Art XXVI:5(C) Art 23-Oct-62 Trinidad and Tobago Australia 253 30-May-50 Art XXXIII Art 30-May-50 28-May-50 Art XXXIII Art 28-May-50 25-May-50 Art XXXIII Art 25-May-50 19-May-50 Art XXXIII Art 19-May-50 19-May-61 Art XXVI:5(C) Art 19-May-61 18-Nov-60 Art XXVI:5(C) Art 18-Nov-60 16-Mar-49 Original Contracting Party Contracting Original 16-Mar-49 0Sp5 Art XXXIII 10-Sep-55 13-Jun-48 Original Contracting Party Contracting Original 13-Jun-48 9Ot5 Art XXXIII 19-Oct-51 17-Oct-57 Art XXVI:5(C) Art 17-Oct-57 7 Ot5 Art XXXIII 17-Oct-51 -a-2Art XXXIII 6-May-62 -a-3Art XXVI:5(C) 3-May-63 30-Jul-48 Original Contracting Party Contracting Original 30-Jul-48 30-Jul-48 Original Contracting Party Contracting Original 30-Jul-48 29-Jul-48 Original Contracting Party Contracting Original 29-Jul-48 10-Jul-48 Original Contracting Party Contracting Original 10-Jul-48 1-Mar-50 Art XXXIII Art 1-Mar-50 -c-1Art XXXIII 7-Oct-51 -a-8Original Contracting Party Original Contracting Party Original Contracting Party 1-Jan-48 Original Contracting Party 1-Jan-48 Original Contracting Party Original Contracting Party 1-Jan-48 Original Contracting Party 1-Jan-48 1-Jan-48 1-Jan-48 1-Jan-48 -a-8Original Contracting Party 1-Jan-48 1-Jan-50 Art XXXIII XXXIII Art 1-Jan-50 8-Jul-48 Original Contracting Party Contracting Original 8-Jul-48 -u-2Art XXXIII 5-Jul-62 a (cont’d) a b

II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING WORLD TRADE REPORT 2007 SYSTEM: ACHIEVEMENTS AND CHALLENGES WORLD TRADE REPORT 2007 II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING SYSTEM: ACHIEVEMENTS AND CHALLENGES Hong Kong, China 23-Apr-86 Art XXVI:5(C) Art 23-Apr-86 XXXIII Art Kong,Hong China 14-Apr-67 Korea, Republic of Togo Kenya Thailand Democratic Republic of the Congo Rwanda Romania Philippines 27-Dec-79 Art XXXIII Art 27-Dec-79 Philippines Kuwait Republic African Central Barbados 15-Feb-67 Art XXVI:5(C) Art XXXIII Art Art XXXIII 15-Feb-67 XXVI:5(C) Art XXVI:5(C) Art 1-Aug-66 25-Aug-66 13-Mar-65 22-Feb-65 Barbados Switzerland Guyana Yugoslavia XXVI:5(C) Art Burundi Gambia ofAccession Article Malta Malawi 3-May-63 Date ofAccession Cameroon WTO the Country to accessions and GATT to successions and Accessions Appendix Table 10 Mauritius 2-Sep-70 Art XXVI:5(C) Art 2-Sep-70 Mauritius ouba3Ot8 Art XXXIII XXXIII Art XXVI:5(C) Art XXVI:5(C) Art 3-Oct-81 Art XXXIII 22-Mar-78 9-Sep-73 20-Aug-73 16-Dec-72 Zambia Columbia Suriname Hungary Singapore Bangladesh XXVI:5(C) Art XXVI:5(C) Art XXVI:5(C) Art XXVI:5(C) Art XXVI:5(C) Art Iceland 31-Dec-63 Ireland Poland 31-Dec-63 30-Sep-63 27-Sep-63 30-Sep-63 Niger Jamaica Côte d’Ivoire Mauritania Madagascar Senegal Benin Spain Cyprus Chad Gabon Congo advs1-p-3Art XXVI:5(C) 19-Apr-83 Belize Maldives Argentina 11-Oct-67 Art XXXIII Art 11-Oct-67 Argentina Egypt 254 28-Aug-64 Art XXVI:5(C) Art 28-Aug-64 9Ag6 Art XXXIII 29-Aug-63 20-Mar-64 Art XXVI:5(C) Art 20-Mar-64 0Nv8 Art XXXIII 20-Nov-82 17-Nov-64 Art XXVI:5(C) Art 17-Nov-64 14-Nov-71 Art XXXIII Art 14-Nov-71 0Fb8 Art XXVI:5(C) 10-Feb-82 8Ot6 Art XXXIII 18-Oct-67 2Dc6 Art XXXIII 22-Dec-67 31-Dec-63 Art XXVI:5(C) Art 31-Dec-63 1Ar6 Art XXXIII 21-Apr-68 12-Sep-63 Art XXVI:5(C) Art 12-Sep-63 1 Sp7 Art XXXIII 11-Sep-71 -a-3Art XXVI:5(C) Art XXVI:5(C) Art XXVI:5(C) Art XXVI:5(C) 3-May-63 3-May-63 3-May-63 3-May-63 -a-0Art XXXIII 9-May-70 15-Jul-63 Art XXVI:5(C) Art 15-Jul-63 -e-4Art XXVI:5(C) 5-Feb-64 12-Jul-63 Art XXVI:5(C) Art 12-Jul-63 7-Oct-83 Art XXVI:5(C) Art 7-Oct-83 1-Jan-66 Art XXVI:5(C) Art 1-Jan-66 -u-6Art XXVI:5(C) 5-Jul-66 a (cont’d) Czech Republic 15-Apr-93 Art XXXIII Art 15-Apr-93 Angola United Arab Emirates Paraguay Republic Czech Lesotho Djibouti 16-Dec-94 Art XXVI:5(C) Art XXVI:5(C) Art 16-Dec-94 16-Dec-94 Guinea New Papua Djibouti Brunei Darussalam 9-Dec-93 Art XXVI:5(C) Art 9-Dec-93 Brunei Darussalam El Salvador Tunisia Lichtenstein Fiji Saint Kitts and Nevis and Kitts Saint Kyrgyz Republic 20-Dec-98 Art XII Art XII Art XII Art 20-Dec-98 29-Jan-97 21-Jan-96 XXXIII Art XXXIII Art 30-Oct-94 10-Apr-94 XXVI:5(C) Art XXVI:5(C) Art Estonia Latvia Kyrgyz Republic 17-Mar-94 9-Feb-94 Mongolia Bulgaria Ecuador Art XXXIII XXVI:5(C) Art XXVI:5(C) Art XXVI:5(C) Art XXVI:5(C) Art Guinea Slovenia 15-Apr-93 XXVI:5(C) Art XXXIII Art 13-Apr-93 Honduras 8-Feb-93 18-May-93 Qatar 15-Sep-92 XXVI:5(C) Art 27-Jul-92 XXXIII Art 10-Oct-91 Guinea Bissau Grenada 11-Jan-91 Art XXVI:5(C) Art XXXIII Bahrain 31-Aug-90 Grenadines the and Vincent Saint 28-Aug-87 17-Jun-87 ofAccession Article Slovak Republic Lucia Saint Swaziland Date ofAccession Mali Namibia Mozambique Guatemala China Macao, Bolivia Venezuela Botswana Morocco Barbuda and Antigua Mexico WTO the Country to accessions and GATT to successions and Accessions Appendix Table 10 Solomon Islands 28-Dec-94 Art XXVI:5(C) Art 28-Dec-94 European Communities Solomon Islands Panama Costa Rica Costa Dominica 20-Apr-93 Art XXVI:5(C) Art 20-Apr-93 Dominica 255 4Ag8 Art XXXIII 24-Aug-86 9Ag9 Art XXXIII 19-Aug-90 2My9 Art XXXIII 22-May-91 0Mr8 Art XXVI:5(C) 30-Mar-87 29-Mar-94 Art XXVI:5(C) Art 29-Mar-94 4Nv9 Art XXXIII 24-Nov-90 24-Mar-94 Art XXVI:5(C) Art 24-Mar-94 16-Nov-93 Art XXVI:5(C) Art 16-Nov-93 13-Nov-99 Art XII Art 13-Nov-99 10-Feb-99 Art XII Art 10-Feb-99 13-Dec-93 Art XXVI:5(C) Art 13-Dec-93 11-Jan-93 Art XXVI:5(C) Art 11-Jan-93 -a-4Art XXVI:5(C) 8-Mar-94 -e-0Art XXXIII 8-Sep-90 -e-4Art XXVI:5(C) 8-Dec-94 -p-4Art XXVI:5(C) 8-Apr-94 -e-7Art XII 6-Sep-97 1-Dec-96 Art XII Art 1-Dec-96 7-Apr-94 Art XXVI:5(C) Art 7-Apr-94 -a-8Art XXVI:5(C) 8-Jan-88 6-Jan-94 Art XXXIII Art 6-Jan-94 1-Jan-95 Art Xi Xi Art 1-Jan-95 a (cont’d) c d

II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING WORLD TRADE REPORT 2007 SYSTEM: ACHIEVEMENTS AND CHALLENGES WORLD TRADE REPORT 2007 II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING SYSTEM: ACHIEVEMENTS AND CHALLENGES Republic of Yugoslavia whose participation in GATT was suspended, accepted the Agreement definitively. Liberia became a became Liberia definitively. Agreement the accepted suspended, was inGATT participation whose ofYugoslavia Republic 128 contracting parties to GATT (including Socialist Federal Repub Federal Socialist (including toGATT parties 128 contracting parties but withdrew in 1949 and 1951 respectively. At 1 January 1995 (date of entry into force of WTO Agreement), there were there Agreement), ofWTO intoforce ofentry 1995 (date At in1949 1951 1January and withdrew but respectively. parties Source: in1953. withdrew 1949 but inNovember party contracting Georgia 14-Jun-00 Art XII Art e d c ofAccession Article 14-Jun-00 b a Date ofAccession Georgia Jordan WTO the Country to accessions and GATT to successions and Accessions Appendix Table 10 Moldova 26-Jul-01 Art XII Art 26-Jul-01 China Moldova Croatia Viet Nam 11-Jan-07 Art XII Art XII Art 11-Jan-07 13-Oct-04 Note: Nam Viet Cambodia Nepal Saudi Arabia 11-Dec-05 Art XII Art XII Art 11-Dec-05 5-Feb-03 XII Art 4-Apr-03 Saudi Arabia Macedonia Republic Yugoslav Former Armenia Lithuania Oman Albania Chinese TaipeiChinese China was an original contracting party to the GATT but withdrew in 1950. Similarly, Lebanon and Syria were original contracti original were Syria and in1950. Lebanon Similarly, withdrew but GATT tothe party contracting China original an was Of theOf Marrakesh Agreement. Of GATT 1947. Of theOf Marrakesh Agreement. Of GATT 1947. e WTO (1995a) Guide to GATT law and practice - Analytical index, volume 2, Geneva: WTO. 2, Geneva: volume index, -Analytical practice and law toGATT (1995a) Guide WTO 256 lic of Yugoslavia). All of these, except the Socialist Federa Socialist the except ofthese, All ofYugoslavia). lic 30-Nov-00 Art XII Art 30-Nov-00 31-May-01 Art XII Art 31-May-01 23-Apr-04 Art XII Art 23-Apr-04 11-Apr- 00 Art XII Art 00 11-Apr- 11-Dec- 01 Art XII Art 01 11-Dec- -o-0Art XII 9-Nov-00 -e-0Art XII 8-Sep-00 1-Jan-02 Art XII Art 1-Jan-02 a (cont’d) ng l 5Mselnosatce 0 2.8 8.6 6 40.2 77.3 13 207 31 50.6 41 151 29.4 77 197 79.6 53 10 389 90.5 4.3 102 34 19.5 14.1 180 8.6 128 7.3 19.7 6 2.6 31.1 16 26 199 Source: 31.0 47 6.6 36 4 Miscellaneous articles 137 5 7.6 Machines, 29 apparatus, tools and miscellaneous 82 35 184 Vehicles and their accessories 22 34 239 11 instruments 487 Musical 46 33 191 apparatus veterinary and dental medical, Surgical, 11 93 11.6 32 apparatus optical and mathematical chemical, Physical, 71 31 166 watches and Clocks 4.1 30 Cutlery and accessories thereof 143 29 29 material war and ammunition wares, gunsmiths’ other and Armaments 28 Drugs, chemical and medicines pharmaceutical dietetic 27 2 and Inorganic organic ch 249 26 12.5 4.0 preparations miscellaneous and 9.0 materials Raw 25 27.5 15.3 11.9 Metalloids and miscellaneous 39.6 metals 6.9 24 6.7 alloys their and silver and platinum Gold, 48 21.9 23 2 alloys their and steel and Iron 2 6 22 19 15 Copper and nickel 14 42 21 5 zinc and tin lead, Aluminium, 7 16 20 and glassware Earthenware 16 50 19 66 products minerals other and ores earths, Stones, 69 117 98 106 18 Paper applications and its 72 104 73 17 ramie and jute, hemp Flax, 16 Cotton 15 vegetables similar other and kapok hemp, Coir, Manila esparto, 14 rushes bamboo, cane, other and Indian 13 Wood 12 beverages fermented and alcoholic juices, Vegetable barks roots, seeds, 11 fruits, flowers, leaves, Plants, 10 cereals, Fruits, pot herbs, vegetables thereof 9 products artificial similar other and rayon Silk, 8 7 tortoise ivory Mother-of-pearl, 6Wool fish, Meat, substances oleaginous 5 leather and skins Hides, 4 hair-animal Human hair 3 animals Live 2 1 Description Section 1949 section, by coverage Binding Brazil: Appendix Table 11 International Customs Journal, Brazil (1949); WTO estimates. WTO (1949); Brazil Journal, Customs International Total mclpout 177 6.5 77 1177 emical products 257 Total Number of Lines of Lines 9614 17.6 1047 5936 9 1.0 2 194 7 2.1 6 273 4 06.8 10 147 Bound Lines Number ofNumber Coverage in% Binding

II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING WORLD TRADE REPORT 2007 SYSTEM: ACHIEVEMENTS AND CHALLENGES WORLD TRADE REPORT 2007 II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING SYSTEM: ACHIEVEMENTS AND CHALLENGES 9Am n muiin1 . 80001 0.0 0 18 0.0 0 18 0.4 0.0 1 0.3 0.0 0 0.0 5.5 262 2 0 collectors’ ofart, Works 14 10 0 1.4 1.2 588 116 Miscellaneous 21 181 175 ammunition and Arms 4 20 4 1.2 2.2 15.9 Optical, photographic, 19 0.0 284 325 12 2 and aircraft Vehicles, 23 18 1.3 0 1.2 4.5 3.2 975 and mechanical Machinery 1.3 17 145 90 4 144 2 5 of and metals Base articles 19 16 2.4 6 19.6 4.1 308 Pearls, and precious semi 164 15 0.0 586 109 11 20 468 of stones, Articles of plaster 3 14 5.8 0 1.3 6.0 458 102 Footwear, headgear, 13 0.0 16 73 articles andtextile Textiles 30 2 81 12 material making Paper 0 277 11 ofwood articles and Wood 498 156 10 and Raw skins hides 93 11.9 9 3.6 resins and plastic Artificial 0.9 8 19 chemical ofthe 22 Products 1 7 160 Mineral products 603 6 110 foodstuffs, Prepared 5 Fats andvegetable Animal 4 Vegetable products 3 animals Live 2 1 Source: details. further Note: Description Section rzl idn oeaeb eto,slce years selected section, by coverage Binding Brazil: Appendix Table 12 Because of changes in Nomenclature, binding coverage are not strictly comparable across years. See technical appendix for appendix technical See years. across comparable strictly not are coverage binding inNomenclature, ofchanges Because International Customs Journal, Brazil (1957), Brazil (1979), Brazil (1986); WTO estimates. WTO (1986); (1957), (1979), Brazil Brazil Brazil Journal, Customs International Total pieces and antiques manufactured articles measuring cinematographic associated equipment appliances base metals precious stones umbrellas materials industries and allied and vinegar beverages Number Number of Lines of Lines 3324371374148128423.8 432 11258 4.8 491 10307 3.7 234 6303 352 . 818 . 245 1.7 55 3244 3.1 88 2871 0.9 22 2335 Total Total 0 663854 . 8 93.7 29 785 5.0 42 835 6.3 26 408 8 05017 9 3111 1 11.4 219 1919 13.1 193 1470 5.0 30 589 0 . 5 4672941.3 4 299 6.7 24 356 0.0 0 209 2 21. 2 353987 8.2 76 928 5.3 33 621 14.5 62 426 5 . 9 . 7 1.5 4 271 4.2 8 191 3.9 6 153 3 . 1 . 1 0.7 3 419 1.0 3 310 2.2 3 135 3 . 9 . 5 0.0 0 452 0.3 1 398 0.2 2 132 3130164341700.0 0 127 3.4 4 116 3.0 1 33 41137 . 500.0 0 85 0.0 0 78 1.3 1 74 . . 0.0 0 6 0.0 0 6 0.0 0 6 of Bound of Bound Number Number 9717 1986 1979 1957 Lines 258 Coverage Coverage Binding in % Number Number of Lines of Lines Total Total of Bound of Bound Number Number Lines Coverage Coverage Binding in % Number Number of Lines of Lines Total Total of Bound of Bound Number Number Lines Coverage Coverage Binding in % Source: details. further for Note: not otherwise Articles 22 9Am n muiin00000000000000.0 0 0.0 0 0.0 0 0.0 0 0.0 ofart, Works 0 Miscellaneous 21 Arms and ammunition 20 19 Optical, photographic, and aircraft Vehicles, 18 and Machinery 17 16 15 Base metals and Basemetals Pearls, precious and 15 14 0Pprmkn aeil22. 8831. . 0.0 0.0 0 0 0.0 0.0 0 0 16.7 0.0 3 0 18.8 0.0 3 of Articles stones, of 0 22.2 Footwear, headgear, 13 0.0 2 Textiles12 and textile material making Paper 0 11 of articles and Wood 10 Raw hides and skins 9 8 iea rdcs31. 3341. . 2.0 3 9.1 3 13.3 4 13.3 4 12.5 and resins Artificial 3 7 ofthe Products Mineral products 6 foodstuffs, Prepared 5 4 eto Description Section ieaias61. 1252. 0000.0 0 52.2 10.0 142 1 45.9 29.4 17 5 20.8 16 31.2 13.3 5 12 13.6 18.9 6 10 andvegetable Animal Vegetable products 3 animals Live 2 1 years selected section, by coverage Binding India: Appendix Table 13 Because of changes in Nomenclature, binding coverages are not strictly comparable across years. See technical appendix appendix technical See years. across comparable strictly not are coverages binding inNomenclature, ofchanges Because International Customs Journal, India (1948), India (1957), India (1964), India (1979); India (1987); WTO estimates. WTO (1987); India (1979); India (1964), (1957), India India (1948), India Journal, Customs International Total specified antiques and pieces collectors’ Fats manufactured articles measuring cinematographic, associated equipment mechanical appliances semi precious stones articles of metals base articles plaster umbrellas articles wood beverages and vinegar beverages plastic materials industries andchemical allied of Bound of Bound Number 2 00171. 3 544 . 3 4.4 230 7.9 44 15.4 130 14.9 137 20.0 127 24. 23. 92. . 0.0 0 0.0 0 29.2 19 31.9 22 46.8 22 88. 83. 43. . 0.0 0 0.0 0 30.0 24 39.4 28 84.8 28 62. 11. 81. 92. 07.1 60 24.4 19 11.5 18 12.6 21 21.0 26 Lines 00.000.000.000.000.0 0. . 0000000.0 0 0.0 0 50.0 1 0.0 0 100.0 1 0043. 3312600.0 0 2.6 1 33.3 4 33.3 4 00.0210.5211.800.000.0 50.0 3 313.6718.91334.200.000.0 00.016.700.000.000.0 . . . . 0.0 0 0.0 0 3.3 5 2.4 5 5.6 6 1831. 4300000.0 0 0.0 0 14.3 3 13.6 3 11.8 2 0033. 5000000.0 0.0 0 0 0.0 0.0 0.0 0 0 0 25.0 0.0 3.8 2 0 3 33.3 20.0 8.3 3 2 7 60.0 27.3 6.5 3 3 5 16.7 1 . . . . 0.0 0 0.0 0 0.0 0 0.0 0 0.0 0 6275. 7534. 547.2 25 42.9 3 37.5 6 50.0 7 46.2 6 9815 9417 1987-1988 1979 1964 1958 1948 Coverage Coverage Binding in % of Bound of Bound Number Lines Coverage Coverage Binding in % 259 of Bound of Bound Number Lines Coverage Coverage Binding in % of Bound of Bound Number Lines Coverage Coverage Binding in % of Bound of Bound Number Lines Coverage Coverage Binding in %

II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING WORLD TRADE REPORT 2007 SYSTEM: ACHIEVEMENTS AND CHALLENGES WORLD TRADE REPORT 2007 II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING SYSTEM: ACHIEVEMENTS AND CHALLENGES Tunisia Peru retn: idn oeaeb eto,slce years selected section, by coverage Binding Argentina: Appendix Table 14 Pakistan Nigeria Indonesia India Ghana eto Description Section Source: 3Atce fsoe,o lse 1 2.6 Colombia 0.0 Chile 2.1 11.8 0.0 3 Brazil 0.0 0 Bangladesh 13 5 0 5.1 114 Argentina 0 present 22 to 110 1959 XVIII:B, 244 Article 8 to 0.4 26 Recourse Appendix Table 15 155 4.8 4.2 1 157 11 2 3.1 10.6 257 262 82 42 9 2689 85 of stones, Articles of plaster Footwear, headgear, umbrellas 13 Textiles and textile articles 12 material making Paper 11 of wood and Wood articles 10 skins and hides Raw 9 resins and Artificial plastic materials 8 of the and chemical allied industries Products 7 Mineral products vinegar and 6 beverages foodstuffs, Prepared 5 Fats andvegetable Animal 4 Vegetable products 3 animals Live 2 1 7Vhce,arrf n soitdeupet111 12.1 9.0 6.4 0.0 17 124 34 0 141 1373 535 35 Optical, photographic, cinema equipment associated and aircraft Vehicles, 18 and appliances mechanical Machinery 17 of metals base and articles metals Base 16 Pearls, precious and semi precious stones 15 14 9Am n muiin1 0.0 0 10.2 0.0 6 12 0 59 8 antiques and pieces collectors’ ofart, Works Miscellaneous manufactured articles 21 and ammunition Arms 20 19 Source: Philippines Egypt Korea Sri Lanka International Customs Journal, Argentina (1967); WTO estimates. WTO (1967); Argentina Journal, Customs International WTO Secretariat.WTO Total orpi,mauig473 9.1 39 427 measuring tographic, 260 1960 – 2002 – 1960 1960 – 1998 – 1960 1980 – 1995 – 1980 1985 – 1998 – 1985 1969 – 1989 – 1969 1960 – 1997 – 1960 1963 – 1995 – 1963 1968 – 1991 1967 – 1997 – 1967 1986 – 1991 1974 – 2008 1960 – 1979 – 1960 1959 – 1989 – 1959 1961 – 1980 – 1961 1981 – 1992 – 1981 1962 – 1971 – 1962 1972 – 1978 – 1972 1976 – 1991 – 1976 Number ofNumber 83375.5 377 6853 Lines Total Total 0 323.0 23 100 Bound Lines Bound Number ofNumber 1967 Coverage Coverage Binding in % they are reasonably satisfied with the operation of the WTOs dispute settlement system, theyhave also system, dispute settlement of theoperation WTOs with they are reasonably satisfied ov anddeveloping) developed (both the ICJ was to help find a diplomatic solution. Other keOther wasto helpfind a diplomaticsolution. the ICJ waswide There 1969). (Jackson, bytheCourt decree aslit wouldnot appear opinion. Parties advisory settlement system to date. It concludes with an overview of various proposals by WTO legal scholars to legalscholars by ofWTO various proposals to date. anoverview concludes with It system settlement Members by successfully an increasing used number has of been WTO system dispute settlement WTO others. The subsection also highligh also subsection The others. timesthan atcertain worked are better providedasto system Explanations why thedispute settlement that appeals to the ICJ would only take wouldonly theform tothat theICJ of appeals disp for toready settling surrender alllegalauthority improve thesystem. dispute of theWTO theperformance thenanalyses It dispute settlement. the evolution of GATT/WTO le participation, developing country andimproved, insuch clarified areasas could be perhaps of thenewsystem thatrecognized aspects Early GATT dispute resolution ultimately economic countermeasures. references No to were provisions made other dispute settlement allowedfor formal XXIII Article vague,Although GATT etal., Charter) ITO 1995). morethan wasconsidered verbatimfrom (Jackson appropriate thedraft (copied small, “like-minded”its membership, therudimentary and 4) negotiations of subsection the provisional view wereIn nature ongoing,see still (ITO of theGATT key asintheGATT, ondisputes, provision Its of theCharter wasconsiderably modifi structure legal Ultimately, formal the 1990). (Hudec, members control the ofITO under remainultimately should hence potential disputes, rather aspure defined than being However, in negotiations theITO before were not theInternational participants Court of (ICJ). Justice arigorous States –foresaw bytheUnited – putforward Charter”) (“Suggested charter of theITO workingdraft first The wasborn. theGATT evenbefore begun diplomaticandlegal ofboth ontheuse Discussion andinstru theprocesses disputesettlement, GATT/WTO insettli orientation from apower- to arules-based DSU, andsu codified which ofnegotiation theWTOs to led the of affairs state unsatisfactory This effect. legal given in therulingsbeing on,ruled to delays in to led longdelays often This of panelreports. theadoption operated, to of theestablishment consensus panelsand/or block the system ruleonwhich were various ableto use thesystem under complaints dispute settlement history GATT/WTO lack of legalrigour, its Despite dispute sett theGATT (a) revise substantially were arrangements settlement in of thefinal theGATT,an increasing years incidence of procedural dispute bottlenecks theGATT PROCEDURES: STRENGTHENING SETTLEMENT DISPUTE by Plagued by manyWTO. jewelof asthecrown the isseen mechanism newdisputesettlement The OF EVOLUTION THE 3. its overhaul duringtheUruguay Round.its disputes, which had oscillated betw had oscillated which disputes, to of however, theGATT. years weresubject lateryears, the early who its Contracting In Parties GATT (i) Dispute settlement undertheGATT settlement 1948-94 Dispute (i) H UEO LAW OF RULE THE gal procedures andenforcement. This een legal anddiplomaticsolutions. legal een ts the deficiencies of GATT disput of thedeficiencies GATT ts er the past ten years. Although WTO Members have stated that have stated Members WTO Although ten years. er thepast was a clause on nullification andimpairment. nullification on was aclause igants and therefore could not become subject to andtherefore aigants could subject not become d duringtheUruguay Roundandtheresulting new complaints being heard,or, being complaints iftheywereheardand a request by the collective ITO membership for an membership ITO by thecollective arequest utes to independent experts. Thus, itwasproposedThus, utes experts. to independent ed to accommodate political demands for demands flexibility. toed accommodate political bstantially improved the GATT system for settling for settling system theGATT improved bstantially ng their differences. In reviewing the history of thehistory reviewing In ng theirdifferences. ly legal, also required an economic appraisal and aneconomicappraisal required legal, also ly dispute procedure onnulldispute procedure approaches to settling commercial disputes had 261 lement system actually performed rather wellin performed actually lement system consensus theinvolvement that, ifanything, of legal procedure that included theright procedure that legal to included appeal procedural techniques arising from the positive thepositive arisingfrom techniques procedural judgements, requests for corrective action and action for corrective requests judgements, y players, such astheUnited Kingdom, felt that ments used in resolving disputes are described. e settlement system, which led to led which system, e settlement The DSU moved disputing parties DSU disputingparties moved The subsection begins by discussing bydiscussing begins subsection ification andimpairmentification

II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING WORLD TRADE REPORT 2007 SYSTEM: ACHIEVEMENTS AND CHALLENGES WORLD TRADE REPORT 2007 II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING SYSTEM: ACHIEVEMENTS AND CHALLENGES Seventh Session of the Contracting Parties, theChairm of theContractingSeventh Session Parties, Article XXIII wasmade. XXIII Article GATT to reference No Parties. Contracting Chairman the of the of ruling affirmative an by resolved document on“Consideration of Concerning Panels”. Use theExtended Tenth in1955, of theContracting Parties, Session formalized inaSecretariat became thepanelprocedure (a subsequently by Panel examined were closely members werenot to theirarguments invited present Parties noneof thepartie first, noveltieswere twofold: The wasmo thisprocedure when the failure of theITO) deal with allof ontheagenda. thecomplaints with deal only once used more. participating in the proceedings and lobbying for andlobbying other countries’ intheproceedings support. participating (Hudec, 1990: 53). 1990: (Hudec, A range of cases was successfully settled wassuccessfully A range of cases andanumber of neutral to countries. consent needed supporters some to(who any taken), decisions to“w werereferred complaints years, following the In as to Charter theircharacter owing ITO of thedraft 154 153 152 151 150 149 148 147 146 while the Panel would discuss its dr its thePanel woulddiscuss while ensure of acceptability theoutcome, thepolitical didnot in Second, theproceedings. even take part themajorpowers, case, inthisparticular fact, In 145 on werestill period confrontation duringtheinterwar Contracting of number GATT andlimited cohesiveness totool induce compliance of intheearlydays theGA complainant, by rulings thedefendants, usually protests vigorous were anddespite accepted. main The “with diplomaticvagueness” anelusive drafted (Hude Despite this remained change proceedings inpractice, rather dispute informal. settlement Rulings were procedure, the“judicialization” of disputesettle The first bilateral dispute( first The As Hudec (1990: 86) observes, “the word observes, Hudec (1990: ‘panel’ As 86) ... evoked decisions notions by of and non-political impartial L/392/Rev.1. As a reminder: GATT was an agreement between the commercial powers of the time who sought to reduce tariffs tariffs toreduce sought who time ofthe powers commercial the between anagreement was GATT areminder: As For instance, at the Fourth Session in 1950, in a complaint by Chile, now with explicit reference to GATT Article XXIII, XXIII, Article toGATT reference explicit in1950, byChile, with now inacomplaint Session Fourth atthe instance, For GATT/CP.2/SR.11. In the “workingIn following years, parties” were still created in Ammonium Sulphate (GATT/CP.3/61 and GATT/CP.4/23); see also GATT/CP.4/SR.15 also see andGATT/CP.4/SR.21. and GATT/CP.4/23); Sulphate (GATT/CP.3/61 Ammonium GATT dispute settlement had taken a first step in the direction of third-party adjudication. See Australian Subsidy on Subsidy Australian See adjudication. of third-party direction inthe step afirst taken had settlement dispute GATT to the Contracting Parties’ approval of the report (Jackson report ofthe approval Parties’ Contracting to the decisions to Australia reviews before political the full eventually 79). 1990: membership” GATT gave way (Hudec, such subjecting ofnot importance the “stressing started was Acounter-lobby rejection. its for Parties Contracting among andlobbied inwriting Secretariat) bythe (prepared report Party Working tothe opposition its stated Australia SR.7/7. SR.7/5. SR.7/5. Some ofSome them were put on the agenda before bilateral consultations were (1990) Hudec exhausted. takes this as an indication that filing disputes as was a seen normal “diplomatic” act. of one of as the to parties the surrender of decision-mak the complainant was part of the Panel on Complaints. See, See, Complaints. on Panel ofthe part was complainant the individuals acting in their own capacity”. own intheir acting individuals 8). infootnote references 51; 1990: particularly see (Hudec, legislation” existing with inconsistent not extent a“provisional” on and“to fullest accepted basis the andonly trade docs_e/gattdocs_e.htm. GATT/CP.2/SR.11; http://www.wto.org/english/ see documents archive a of digital GATT For GATT/CP.2/9. also see States (complaint Restrictions by the Netherlands). the United States and a number of other countries, it was important that legal obligations in the GATT were limited to limited were GATT inthe obligations legal that important was it countries, ofother andanumber States United the in procedures ratification lengthy toavoid order intoforce. In come would ITO the before even themselves amongst 145 147 The functioning of GATT dispute of settlement GATT functioning The 146 This improvised procedure relying ontheChairman’s relying procedure improvised wasThis prestige personal Cuba–Consular Taxes Cuba–Consular aft report with each party, it eachparty, with report aft 148 , but agreement was not always possible with the disputants thedisputants with , butagreementpossible wasnot always 262 150 ment was well on its way (Petersmann, 1997b). way(Petersmann, its on waswell ment It was later referred to as the “Panel on Complaints”. “Panel on the toas referred later was It ) on whether Article I applied to consular taxes was to Iapplied consular taxes Article ) onwhether which had usually been present in working parties to present inworkingparties hadwhich usually been s to of thevarious thePanel. disputes were members orally, and inwriting rather were submitted these everybody’s mind (see Section B.1) Section mind(see everybody’s aswasthefailed TT was peer pressure. It usually pressure. worked It dueto waspeer the TT ing or authority simply because a country representative of the “legal machinery for the“legal aformal organization” machinery dified in a subtle, but important manner. inasubtle,dified butimportant At the orking parties” consisting of parties to thedisputeorking parties” consisting of parties an proposed establishing a single working party to workingparty asingle establishing an proposed Parties. The devastating experiences of commercial experiences devastating The Parties. , 1969). With this case, while still of a diplomatic nature, ofadiplomatic still while case, this With , 1969). c, 1993: 12). Mostly, theywereinfavour of the certain cases for cases reasons certain of sensitivities political domestic nd the Secretariat) as to their legal merits. At the asto merits. theirlegal nd theSecretariat) for instance, SR.7/10 regarding Dairy Products - United -United Products SR.7/10 Dairy regarding instance, for would determine thefindingsitself. would determine was tested from its very beginnings. beginnings. very its from wastested 153 With theadoption of thenewWith 149 It wasnot until It 1952 (after 154 152 151 articles. Rather than hostile acts to coerce acoun Ratherthanacts hostile articles. subsection 2.(b)) – to speak with onevoice –to with inth speak 2.(b)) subsection (see procedures of GATT users formation active of –previously theEEC in1958 members its obliged countermeasures was not an unusual situation (Jackson, 1967). On several occasions, countriescountermeasures had 1967). occasions, several wasnotOn anunusual situation (Jackson, focusing on “practical problems, leaving aside for the time being questions of law” (BISD 7 focusing of on“practical law” (BISD questions for aside leaving thetimebeing problems, issues onthese study of further in 1958, of theusefulness to convince itmanaged Parties Contracting colonies, via notably theEuropean Economic Commun an sector agricultural its with indealing flexibility to restore the balance of reciprocal concessions in a diplomatic, but assertive manner. inadiplomatic,butassertive concessions thebalanceto of restore reciprocal two these under werepermitted ofconcessions unilateralrebalancing XXIII, Article that unlike GATT 159 158 157 156 155 indispute decline 1960s weremarkedThe byasteep “Anti-judicialization” wanes –GATT in the1960s disputesettlement andXXVIII XIX Articles inGATT contained provisions clause escape towh inresponse unilaterally concessions withdrawn inplac quotas retaliatory its tokeep extensions obtained regularly to for come werenotmeasures andthecomplainant years withdrawn (Netherlands) was not 195-196). to amessage.” punish, 1990: but to across get (Hudec, Interestingly, theoffending wasretaliation everauthorized. onlyonecase In additional that domestically arguments could used be Panel of decision thedefendingthe cooperation party. “negotiation” its didnot lose on approach, disputesettlement strongly legalistic anddepended character to build alarger andmore formal internationaeffort and a set of export prices. of export and aset protection (Sampson andSnape, 1980). (Sampson protection no form basicelements, of legalchallenge asto its further legal examination. Disagreement ontheappr examination. Disagreement legal further entitled theUnited States to withdraw anequivalent amount of concessions (i.e. to retaliate) without tonoavail. albeit itemsthemselves, duty variable However,levies. theUnited any States form rejected of other compensation than ceiling bindingsonthe to thenewvariable not subject of theEEC, bindingsonother products theEC lowertariff againoffered re of tariff inthecontext arisen had also tariffs Common of its inthecontext variable levies Agricu toleranceContracting Parties’ of theEC thenewEC introduced when trading wasputto regime thetest 70). 1959: advanced by thedisputingparties. awardinan onaretaliatory a panel, decided which avoid charges of overreaction and yet large enoughto andyetlarge avoid of overreaction charges offending measures (Jackson, 1969). Further progress progress Further 1969). (Jackson, measures offending problems that could hardly be resolved by resorting to adversarial proceedings. In particular, In proceedings. theEC to sought adversarial thatproblems by could resorting hardly resolved be is more, of areview theEECs trading by regime Contra US on the sidelines of the Kennedy Round when the two sides agreed on standards for surplus disposal onstandards agreed sides thetwo of theKennedy Roundwhen US onthesidelines L/2088 “Panel on Poultry”, “Chicken L/2088 as also known the so-called War”. See for instance L/57. instance for See See, for instance, the Arrangement Concerning Certain Dairy Products (BISD 17 (BISD Products Dairy Certain Concerning Arrangement the instance, for See, oflitigants”. participation prior andthe ofuse, frequency –the momentum its Hudec (1990: ease 236) notes: and “[T]he legitimacy of the disputes procedure seemed to depend a good deal upon without further justification. L/61. without See further parties, byboth accepted readily a“middle was on ground” figure, which agreed manner. Panel The speculative inahighly ofdamage amount appropriate claimsofthe their supporting statistics provided SR.7/16. parties Both 159 Contracting Parties thus to Contracting mounting came tolerate without any Parties theCAP 158 Again, didnot leadto ofthe retaliation any modification meaningful e GATT and to settle disputes amongst themselves. amongst disputes andto settle e GATT negotiations under GATT Article XXVIII upon formation upon XXVIII Article GATT under negotiations 155 e. At thetime, acontinue try into compliance,try “sanctions” asameans were seen d in maintaining pref d inmaintaining Failure to agree on suitable compensation ultimately compensation Failure suitable on toagree l organization governing trade. anincreasinglyDespite The countermeasuresThe applied were “small enoughto amount that lay somewhere between the proposals theproposals amount between that lay somewhere tably inregard totably thedisputed measures of import cting Parties revealed anumb revealed Parties cting to justify a change in policy to its constituencies. to its achange inpolicy to justify opriate amount opriate finally led ltural Policy (CAP). Since the issue of Since fluctuating theissue (CAP). ltural Policy settlement activity intheGATT. onething,the For activity settlement on agricultural issues was made bytheEC andthe wasmade on agricultural issues ity Association Agreement. At theTwelfth Association Session ity 263 attract the public attention desired. ... desired. thepublicattention point The attract s essentially provided thelosinggovernment provided with s essentially at they considered to be abuses of the various ofthe abuses tobe considered at they 156 , although it should be recognised, althoughitshouldbe erential relations with its former its with erential relations th Supplement, 1970: 5-11. d breach of obligations d breachof obligations to of theestablishment er of politically sensitiveer of politically th Supplement, 157 What cum

II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING WORLD TRADE REPORT 2007 SYSTEM: ACHIEVEMENTS AND CHALLENGES WORLD TRADE REPORT 2007 II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING SYSTEM: ACHIEVEMENTS AND CHALLENGES Following the Uruguayan complaint and the proposed “radical” reforms of GATT Article XXIII, GATT dispute GATT XXIII, Article theUruguayan “radical” complaintFollowing andtheproposed reforms of GATT nations, developing countries began to constitute a powerful forcenations, countries to constitute developing began intheGATT. apowerful of many status former theshifting colonies obligations. into With GATT from independent theirown coun developing with coincided also developments all these countries’ non-tariff measures that were affecting Uruguay’s measures that countries’ were exports. all these affecting non-tariff byUruguay’s comp illustrated wasbest attitude This enforcemen forby demands moreeffective grievances with the GATT trading system. This was offset, however, wasoffset, This countries’ to trading bygrievances preserve resolve system. developed theGATT with settlement became increasingly associated with a more forceful pursuit by developing countries of their tie the issue to a larger problem that needed anoverall solution. that to problem needed tie theissue alarger we practices, of these criticizedin turn, for when certain legal infused with thus became trading system GATT The restrictions”, wh export (“voluntary of VERs) protectionism to have began exports andtheirexpanding membership The array theECThe of preferential between agreements 165 164 163 162 161 160 the idea of strengthening available remedies (calling (calling remedies available ofstrengthening idea the countries of of onbehalf alongwith developing complaints publicprosecutor that wouldpursue as atype act of theidea having itself theGATT againpursued the Kennedy Round, Brazil) Uruguay with (together suffered. itasked Instead, thePanel to retaliation authorized determinewhether shouldbe inanattempt US-EC “Chicken War” “Chicken US-EC a Following wasneeded. waswhat fulfilling obligations anunderstand account instead realities; ofeconomic of ru themeasures GATT with to thenon-conformity confrontation majortrading partners with avoid direct countries’ to developing publicattention at drawing ruling, theUr dispute settlement aspecific seeking panel procedure also failed. also panel procedure of self-initiated countries by developing inthelate that type 1960s spirit,otherIn some attempts to establish ofantagonizing wary negotiation, through conflicts 1) reinforced subsection this decline. Duringth (see 1963complete and1969. halt between Certainly, the a more flexibleapplication of rulesandto GATT addr developing and newer Contracting Parties, such asJ andnewerContracting Parties, developing “to make theprosecutor’s assume 242). to so. GATT do During Panel 1990: role” declined The (Hudec: special exemptionsspecial we countries for developing (which retaliate collectively). retaliate economic conflict, stringent enforcement of GATT law came to be seen as an inimical act that didnot take enforcement act asaninimical stringent economic conflict, seen to lawcame be of GATT as the formation of further trade agreements, such astheEuropean trade agreements, as theformation Free Trade of further andtheLatin (EFTA) Area American Free Trade Association (LAFTA), gave further impetus to “anti-legalistic” impetus These gave further tendencies. (LAFTA), Trade Free American Association Within a decade, more numbers developing country than trip Kennedy Round. At for least, developing complaints, country the after exhaustion of various consultation procedures ofthe end atthe adopted XXIII Article GATT under procedures ofthe 18-20, modifications the for (1966): BISD See COM.TD/W/68 and COM.TD/W/116.COM.TD/W/68 BISD 13 of a panel was forestalled in such cases. insuch forestalled was of apanel establishment the toblock possibility the Hence, 5). (para. ofexperts” apanel appoint “the Council forthwith shall countries in 1960 over tipped to reach a 25 to 52 ratio in 1970. 4.(a). subsection See balance-on-payments restrictions. balance-on-payments COM.TD/F/W.1. See L/1647 and L/1662 for Uruguay’s submissions; see BISD 11 See, for instance, SR.24/10 and SR.24/14 for a discussion of the New Zealand proposal on waivers for residual for waivers on proposal Zealand New ofthe for adiscussion andSR.24/14 SR.24/10 instance, for See, th Supplement (1965): 35-44, for the Panel’s compliance review. Panel’s compliance the for 35-44, (1965): Supplement 162 and the massive Uruguayan disput andthemassive complaint), Neither proposal met with any metwith success. proposal Neither 165 Instead of apublicprosecutor, Instead in1971, to createa agreed Contracting Parties t of developed country obligations. country t of developed 264 apan, had further changed the composition of thecomposition changed theGATT apan, had further uguayan aimed gesture, complaint wasmoreapolitical matters byengaginginformal disputesettlement. matters is period Contracting Parties preferred to address trade preferred to address Contracting Parties is period les and from submitting evidence of thetrade damageles andfrom submitting worsening trade situation (Jackson, 1969). Seeking to Seeking 1969). trade situation (Jackson, worsening ing developed that amore gradual towards approach ing developed tries’ own demands for greater freedom to deviate for greaterfreedom demands own tries’ ess their problems through theirproblems ess inter alia , Uruguay abstained from making legal arguments as arguments frommakinglegal , Uruguayabstained two majorrounds inthe1960s of trade negotiations two ly doubtful trade measures. GATT Contracting Parties, Contracting Parties, GATT trade measures. doubtful ly economic consequences, which triggered newforms triggered which economic consequences, laint against 15laint against countries, listed which developed nt back to negotiations) theITO were accompanied small number of confrontational cases (including the ofsmall number (including confrontational cases and its former colonies (see subsection 4) aswell 4) subsection former colonies (see and its re able to point to similar policies elsewhere or to or elsewhere tosimilarpolicies topoint re able ich did not appear to fall within GATT obligations. to obligations. ich didnot fall appear GATT within th led. A 21 to 16 majority of developed to developing Supplement (1963): 95-148, for the Panel ruling; see see ruling; 95-148, Panel the for (1963): Supplement for financial andtheright compensation to 163 164 With this increased potential for serious thisincreased With e settlement activity ground to a almost activity e settlement 160 diplomatic means. Rapidly Rapidly diplomatic means. 161 However, their calls for However, rather than to exercise its right to retaliate against French import import French against toretaliate right its to exercise anumberadministration of complaintsinth pursued interpreting legal concepts, in handling the large amou large inhandlingthe concepts, legal interpreting particular, theEC’s with fire increased coming under CAP right to apanel. Howeve 1980). rigorous, language (Hudec, although less establishment of a panel could no longer be blocked of be apanelcould bythedefendant. nolonger establishment Code, thenewSubsidies under importantly, andin Most co andeachcode wasundertaken, dispute settlement aconsequence, enforcement overhaul ageneral acredible of of As issues, GATT wasneeded. mechanism However, to rebuildtheGATT’s themajorimpetus legal procedures, incl ofstrengthening dispute settlement 172 171 170 169 168 167 166 in 1962. intheru administration sought newnegotiating authority 251). 1990: criticismof theGATT’s widespread “ineffectiveness”triggered (Hudec, At time, thesame theUS includingtrad policy, Congress economic ininternational to also theabandonment of(leading thedollar’s converti Deteriorating US economic conditions, thefirst notably dueto domest revived wasonly disputesettlement GATT towards moreinformal,accepted “diplomatic thetendency of amore“legalistic” approach majorsupporters With revivalThe of in formal the1970s disputesettlement and beyond countries andmake fordeveloping theirremoval. proposals “Group of Three” of Chairmen thethree theCouncil consisting andtheCommittee of theContractingParties, composition of thepanel. flexibility to act asapotential mediator that to could inandbroker act step confrontational aless flexibility solution. ( toexpose of“surveillance” wasintended body type specialized “legal in1981. office” specialized to prompted create theSecretariat foreshadoweddispute) a (as intheDISC already submitted evidence increasing of duringthe1980s, number complaints The such outvariousprocedural asrough issues, and set policies and the growing range andthegrowing of preferentialpolicies agreemen tax measures inseveral EC countries.tax more than For thereafter, Soon XVI. Article GATT rulesunder subsidy International theUSDomestic under Coprovided Sales tariff measures duringtheTokyo agreed tariff vi Round. In on Trade group wastasked This andDevelopment. to id L/4907 in BISD, 26 The automaticity of establishing a panel was modelled after the special 1966 procedures for developing countries. countries. developing for 1966 procedures special the after modelled was apanel ofestablishing automaticity The L/3744. It took until 1983 before it was more or less operational. See Hudec (1993). Australia and Thailand (Fink and Molinuevo, 2007). Panelbloc 2007). andMolinuevo, (Fink andThailand Australia regional free trade agreement, including recent ones, su or afeature inmanybilateral tobe continues ofapanel establishment the toblock possibility The (1966). BISD See matter, ofthe an complexity tothe due panel inthe experts tax outside toinvolve agreed parties both Interestingly, implicit adjudication. 260-261. Hudec (1990): acknowledgement See of the need for third-party BISD, 19 BISD, 18 by it became part of the negotiating m force by 2010 between the European Union and Mediterranean countries (Ramírez Robles, 2006). Robles, (Ramírez countries andMediterranean Union European the by2010force between 168 Being the target in most US co th th Supplement (1973): 31-47. The Group of Three operated between 1971 (1973): between and1973. 31-47. operated covered 1974, Supplement In ofThree Group The subjects the Supplement (1972): 70-87. 171 It didhoweverconfirm It anumber of establishe th Supplement: 210-218, see particularly para. 6(ii). 169 These events, combined with thecontinuing combined with events, of frustration unfettered agriculturalThese 172 However, the limits of the existing procedures soon became evident, in evident, became However, soon procedures of theexisting thelimits andate for the Tokyo Round and its work andate for theTokyo Roundand its mplaints, the EC responded by challenging income tax incentives incentives bychallenging income tax theEC responded mplaints, uding improved rights to retaliate (Hudec, 1993). (Hudec, to retaliate rights uding improved time limits for thedifferenttime limits of phases adispute. e GATT and, more importantly, announced its intention and, announced moreimportantly, its e GATT ew of the increase of obligations and the complexity ew of of theincrease obligations andthecomplexity two years, the two parties could not onthe agree parties thetwo years, two entify apparently unjustified trade restrictions affecting affecting apparently unjustifiedentify trade restrictions ch as the betwee agreements the United States mounted its own complaint own against States mountedthe United its system came from thenew“codes” came system onvariousnon- restrictions still inplace an still restrictions ntained its own, more advanced set of procedures. of procedures. set moreadvanced own, its ntained and embarrass) specific coun specific and embarrass) merchandise sinceWorld trade deficit War in1971 II nt of evidence submitted by parties and,ultimately, byparties submitted nt ofevidence their legal complexity and the sophistication of the andthesophistication theirlegalcomplexity (United States, major developing countries) having countries) States, majordeveloping (United r, thenewgeneral framework didnot for provide the n-up toTokyo the n-up Round. To resolve, theUS showits e. inCongress of Areview foreign trade restrictions bility into gold), strengthened theinterest strengthened of theUS intobility gold), rporation (DISC) legislation for violation of alleged rporation (DISC) 265 . On several occasions, the panel had difficulties in thepanelhad severaldifficulties occasions, . On light of the experience of the DISC dispute, light of theDISC of the theexperience ic events intheUnitedic events States intheearly1970s. ts bytheEC, States for to theUnited ts call a led ” means to address trade problems inthe1960s, trade problems ” meansto address kage is also foreseen in the FTA scheduled to come into tocome scheduled FTA inthe foreseen isalso kage 166 Rather than triggering panel proceedings, this Rather than panelproceedings, triggering d practices, such as third-party adjudication, such asthird-party d practices, 170 was suspended. See COM.TD/W/219. See wassuspended. The other codes contained similar, contained other codes The n Australia and Singapore and andSingapore Australia n d ruled illegal byapanel illegal d ruled tries, while preserving preserving tries, while 167

II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING WORLD TRADE REPORT 2007 SYSTEM: ACHIEVEMENTS AND CHALLENGES WORLD TRADE REPORT 2007 II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING SYSTEM: ACHIEVEMENTS AND CHALLENGES and Competitiveness Act of 1988,and Competitiveness Act whic growing dissatisfaction with the lack of enforcement under the GATT, threats of unilateral retaliation were were GATT, the retaliation ofunilateral ofenforcement under lack the threats with dissatisfaction growing negotiators began to press for to amore re fundamental press began negotiators It has entailed anincreasing“judicialization” has entailed It and“d also served to remind GATT Contracting Parties of the the of Parties Contracting GATT remind to served also decisions on dispute settlement but, what is but,what ondisputesettlement decisions contained arathercontained concerning ambiguousprovision acomplainants’ right to apanel. didnot alte thedecision could not agree), parties where Section its States bytheUnited under voiced, notably potent players surprisingly, there wasariskthat such non-GATT-autho complaints onforeign to theadministration which trade barriers wasrequired to (Sykes, respond 1992). Not to improve GATT dispute settlement rule to disputesettlement improve GATT procedures duringthe dispute settlement strengthen the Montreal Mid-term Meeting in December 1988. inDecember Meeting the Montreal Mid-term to be blocked by the party ruled to be in violation of inviolation to ruled be blockedto be bytheparty and to render more legally coherent theadopti decisions, The continued threat of unilateral sanctions was un was sanctions ofunilateral threat continued The of short 1982 theEC had stopped Meeting, Ministerial managed half of towards thedecade, thelatter system, adecision. in reaching 181 180 179 178 177 176 175 174 173 –1995 topresent Mechanism (DSM) Dispute Settlement WTO The Dispu theWTO of rules, for system Providing aunified (ii) power. retaliatory its wield panels includingbyexhorting and moreeffective, 1993). finall recommendations ondispute settlement The refined form, subsequently became part of the“Dunkelrefined form, 1991. part of December subsequently Draft” became a meeting the timeof Ministerial the1990 Brussels complaint in exchange for wiping this ruling off the books” (Hudec, 1993: 136). (Hudec, thebooks” complaint inexchangefor thisrulingoff wiping on of In asaresult frustration of thepanelprocess. the process going (for theDirector going instance, bygiving the process the GATT, asillustrated by theincreasing number of coun to all WTO Agreements, although some of them include special and additional dispute settlement provisions. andadditional of dispute special theminclude settlement althoughsome Agreements, to allWTO the end of the Uruguay Round as part of theSingle the endof theUruguay Roundaspart L/5142 and L/5142/Corr.1, not reprinted in BISD. The General Council merely noted the ruling rather than adopting it. adopting than rather ruling the noted Council merely andL/5142/Corr.1, L/5142 General The inBISD. reprinted not For instance, when Portugal adopted quotas on grains and soybeans in the context of the CAP upon its accession to accession its upon CAP ofthe context inthe andsoybeans grains on quotas adopted Portugal when instance, For L/5424 in BISD 26 Despite the success of its unilateral poli ofits thesuccess Despite Public 100-418. Law For instance, For in interpreting the concept of “equitable share” L/6489 in L/6489 BISD 36 the level of US exports. In response, the EC subjected ar ECsubjected the response, In ofUSexports. level the MTN.TNC/W/35 and MTN.TNC/W/FA: S.1-S.23. See C/M/152. instance, for See, panel. tothe available data ofthe basis the on market shares andincreased subsidization chainbetween causal apply similar measures if needed. See Hudec (1993): 203-206 in particular. Hudec See needed. if similar measures apply reduce not did restrictions Portuguese the as long as ECexports, on quota anon-restrictive USimposed EC, the the Decision to that extent. See, for instance, C/M/248 andC/M/249. C/M/248 instance, for See, extent. tothat Decision the GATT, was the driving force behind more automaticity in panel proceedings and even tried to interpret the 1990 the tointerpret tried andeven proceedings inpanel automaticity more behind force GATT, driving the the was See Article II.2 of the WTO Agreement and Article 1.2 Agreement and Article of the DSU. of the WTO II.2 Article See European Communities–Refunds on Exports of Sugar Exports on Communities–Refunds European 176 , but at the same time this policy proved quit proved timethispolicy , butatthesame th th 173 Supplement (1983): 9-23. Supplement (1990): 61-67. As a consequence, on a growing number of occasions parties experienced a sense asense experienced aconsequence, parties number of onagrowing occasions As 179 In order to subject such to measures multilateral control, to subject order Uruguay Round In cies, the United States, a long-time supp along-time States, theUnited cies, s and procedures as part of an “early harvest” agreed by Ministers at at Ministers by agreed “early an of harvest” part as procedures and s h intensified thepressure ontheUnited States’ administration to more important, genuinely reformed the system. reformed genuinely thesystem. moreimportant, 266 to render clear decisions andrecommendations. cleardecisions to render 177 e instance, the United States even offered “to States evenoffered theUnited e instance, its drop e-politicization” of the process (Esserman and Howse, andHowse, (Esserman of theprocess e-politicization” Uruguay Round. Indeed, in1989,Uruguay Round.Indeed, wastaken adecision draft understanding was presented that, in a further that, inafurther waspresented understanding draft agreeing to a“consensus-minus-two” agreeing principle(Hudec, value of a functioning dispute settlement system under under system value dispute of settlement afunctioning its obligations inasignifican obligations its te Settlement Understanding (DSU) became applicable became te (DSU) Understanding Settlement Understanding incorporated all of the earlier GATT earlier allofthe incorporated Understanding rized measures wouldsparkcounter-threats by equally While procedural steps were further clarified to clarified keep werefurther procedural steps While derscored by the adoption of the Omnibus Trade Omnibus ofthe adoption bythe derscored -General the right to appoint panellists in instances ininstances panellists right the toappoint -General 301 procedure, allowe which ange of US exports to special “surveillance” to tospecial threatening ofUSexports ange r the consensus required to adopt a report and only andonly areport to adopt r theconsensus required to deal more effectively with an increasing caseload anincreasingcaseload with to moreeffectively deal tries initiating disputes and by the decision to further tries initiating to disputes further andby thedecision y agreed were targeted at making the process faster atmakingtheprocess weretargeted y agreed on of rulings dealing with sensitive issues continued continued issues sensitive with dealing ofrulings on form of the GATT dispute settlement system. By system. form dispute settlement of theGATT , L/4833 in BISD 26 in subsidies disputes, it a to proved difficult establish e effective (Hippler BelloandHolmer, It (Hippler 1990). e effective orter of a stronger legal system under system legal ofastronger orter th Supplement (1980): 290-319. 174 t number of cases. At the t number ofcases. But even when the legal thelegal Butevenwhen 178 180 d private parties to file parties d private The DSU adopted at DSU adopted The 175 Following Following 181 that more and more cases were successfully brought weresuccessfully agains that moreand cases Increasingly, Stat theUnited the EC was given the right to impose import restrictions restrictions import the EC theright wasgiven to impose terms of such settlements and awards must be notified be andawardsmust terms of such settlements by consensus. At for any may call voluntary time, parties of the Appellate Body are expected to be rendered quic with theimplementation ofwith politi of theDSU, functioning smooth asanexpres butalso not of onlyasanindication modifications the takes to theinitialpropose reluctance Zimmermann (2006) expressed their satisfaction with theworkingsof with thesystem theirsatisfaction expressed 183 182 wasfound Corporation no Sales for theForeign (FSC) retaliatory of thebiggest United States theobject became complainant’s for request authorization of countermeasur successful challenge of implementing measures pursuant item under amajor became ultimately Compliance matters of reforms, to Mini evaluate order the performance In measures are considered temporary, to full be compliance pending theruling. with negotiated.be noagreement If isreached, priorauthorizationDSB, by with the measures retaliatory may be a20 triggers cannot agree) arbitration iftheparties tocome ruling ofanadverse object by andadopted theDSB. Body Failure the that has by been theMember rendered by thepanel/Appellate therecommendations measures these taken onwhether to days) comply satisfy (to rendered 90 within be taken, has been aseparate ruling Member by sought theresponding may be action corrective inviolation. If be Enforcement andis streamlined have been also procedures -another confirmationchallenged of by thirdtheemphasis of Members multilateral control. to to a appeal have gainedthepossibility Members WTO inexchange for to upthepower veto giving Both rulings innovations theyconsider erroneous, are connected: of andtheestablishment ofvetoing thereport) adoption (“reverse” (DSB) or Body making of theDisputeSettlement DSM ar features of theWTOs important Perhaps themost groups, expert from reports bysoliciting including informationto from seek any relevant other procedures, Some such astheinterim ofprocedures, panelreports. review andhas introduced new of thirdparties, for procedures andtheintervention multiplecomplainants limits, of theDSB apanelbefore be may only establishment have strengthened. Notably, clearlybeen theright to andmediation, arevoluntary offices suchasgood others, aremand suchasconsultations, procedures, Diplomatic 1997a). continuing not without albeit (Petersmann, to make andlegalelements of political both use 2003), in the early stages of thereview, attheendof stages which in theearly for improvement suggestions Few weremade subsection). next (see existence of its decade inthefirst activity DSU within the next four years. When theDSU wasinitiated review When four by theendof years. 1997,DSU thenext within largely Members must be equivalent to the economic harm and loss in trade benefits caused.Any compensatory or retaliatory implemented 10 later. days size The of such retalia token, time.second of thesame DSU By Articl byvirtue DSU such terms asthecomposition of codifies of anumberpractices, apanel, of reference, GATT its time- repris unilateral DSU, the the thus precluding through WT/DSB/M/42. WT/DS108/AB/RW. es’ proposals to reform the dispute settlement system began to reflect the fact thefact to reflect began to system reformes’ proposals thedisputesettlement cally sensitive disputes, sensitive suchcally as into compliance after a reasonable period of time (determined by binding bybinding (determined oftime period areasonable after intocompliance source inadditionto theinformatio are set out in more detail (Petersmann, 1997b). (Petersmann, outinmoredetail areset tion may be settled by arbitration before the WTO and by arbitrationWTO before the settled tion may be -day period during which voluntary compensation can can compensation voluntary duringwhich period -day t to incompliance be DSB recommendations with 2001 became part of the Doha Round of negotiations. sion of uncertainty about how the system would deal woulddeal howthesystem about sion of uncertainty sters intheir1994sters to agreed Declaration review the blocked a israised once, thematter butnot when e 23, all trade-related grievances must be channelled channelled be must grievances e 23, alltrade-related a panel has been made explicit. Requests for the Requests explicit. made apanelhas been award in WTO history, when awardinWTO ated to precede the establishment of apanel, while theestablishment toated precede als that had helped to stimulate the reforms. The The reforms. the tostimulate helped als that had on up to $4 billionon upto of $4 trad kly (60-90 days) and become binding unless overturned overturned bindingunless andbecome days) (60-90 kly to the WTO and consistent with WTO law, WTO andmay be with andconsistent toWTO the 267 the Appellate Body as a standing organfor review. legal asastanding Body the Appellate alternatives if the parties so agree. so Judicialalternatives elements iftheparties to Article 21.5to Article of theDSU wasaprerequisite for the olated from possible blockage by the party found to bytheparty blockage from possible olated “negative” from thelosingparty consensus that prevents t United States, especially review body on matters of legal interpretation. Rulings interpretation. oflegal matters on body review es (the so-called “sequencing” 2002, In the es (theso-called issue). arbitration or settle adispute bilaterally.arbitration orsettle However, the the review, in particular the question of whether a of whether question the review,the inparticular 182 e institutional, namely decision- thequasi-automatic , as witnessed also by also thehigh levelof dispute , aswitnessed EC-Hormones n provided by the disputing parties, by thedisputingparties, n provided and inter alia e from the United States. States. e from theUnited EC-Bananas in the trade remedy area.in thetrade remedy its replacement legislation its , theright of panels . 183 and

II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING WORLD TRADE REPORT 2007 SYSTEM: ACHIEVEMENTS AND CHALLENGES WORLD TRADE REPORT 2007 II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING SYSTEM: ACHIEVEMENTS AND CHALLENGES procedures under the GATT and WTO along with possible explanations of the patterns observed. observed. of thepatterns explanations possible alongwith andWTO theGATT under procedures of salient features of dispute intheuse settlement overview amore detailed provides following subsection 1997b). some discussing Before (Petersmann, rights includinginthenewarea issued, and morethan 140 reports DSU seemed to have served Members well over the first welloverthefirst Members to haveDSU served seemed (Jackson, 2006). (Jackson, and health, as illustrated by the bythe illustrated as and health, to pursue rights Members’ of protecting capable itself put onpanelsto consider concerns other than trade countries for developing fear bysome to of being that unduepressure endcontinueProposals opposed to be came under pressure from NGOs fo ipt eteetrprs h TsDSM descri has been theWTOs reports, dispute settlement ex issues, coverage ofpolicy broad-ranging its With as well as the limited use of legal techniques oftrea techniques oflegal use limited the as well as rulings), toreject possibility the (including proceedings Group of Three mentioned above). Despite theobviou Despite Group mentioned of Three above). to (akin the theinstitution theyprocedural, within orbe functions early references such asattorney to theICJ) theysubstantiv be orweakening elements, loss of certain with theadoption of bindin with theDSU, rule-oriented, elements characterizing dispute settlement under theGATT under characterizing dispute settlement elements implementation of rulings/countermeasures. and issued) andcontent recordparticipation of reports solutions, (mutuallyagreed disputes, settlement winning their cases, thehigh compliancewinning theircases, rate an a dispute, thelikelihood thelikelihood of of complainants concessions obtaining inearlysettlements, b Utilization dispute settlement procedures of GATT/WTO and outcomes that noted a few countries, large been has often It (b) States environmental measures ( contro andMember flexibility for increased US proposals 187 186 185 184 concern amongvarious environmental NGO groups intheUnited States. matters related to the use of GATT/WTO dispute sett dispute ofGATT/WTO use tothe related matters This subsection provides an overview of dispute settlement activities in the GATT and WTO interms of andWTO intheGATT activities of dispute settlement anoverview provides subsection This frequent of theDSM countries, use by developing However, disputesettlement. a of GATT/WTO users While regional most or bilateral free trade co agreements addressed in this Report (e.g. inaddressed this Report of concerning measures has and relied types dispute theReport outcomes), on settlement questions of categorization (e.g. how to characterize the content of a are dispute) questions different. the For analytical are not underlying sets The data made public, and accounting (e.g. methodologies what constitutes a “case”) as well as Lester (2006) See also earlier papers, such as Park and Panizzon (2002). These papers only contain summary statistics. statistics. summary contain only papers These (2002). Panizzon and Park as such papers, earlier also See (2006) Lester and Leitner see etc.) tocomplaints bringing/subject Members initiated, ofcomplaints (number settlement dispute WTO until February occurring to events include updated havebeen data the disputes, these For 1995 31 until 2004. 1January July from consultations for ofarequest filing Ultimately, inthe In fact, proposals in the DSU negotiations cover 25 out of the 27 Articles of the DSU. ofthe 27 25 ofthe Articles cover out DSUnegotiations inthe proposals fact, In support and a permanent Appellate Body, closely following the WTO model (Fink and Molinuevo, 2007). 2007). andMolinuevo, (Fink model WTO the following Body, closely Appellate andapermanent support dispute mechanism, settlement which provides both the ASEAN is exception A notable framework. institutional acomparable inplace haveput afew DSU, only WTOs the as steps States could maintain its environmental measure in modified form. inmodified measure environmental its States could maintain replicate aggregate results and verify questions of classification in specific cases. The methodology is alsoconsistentreplicate methodology aggregateThe questions of with and results classification in cases. verify specific to reader the enables which (2006b) andMavroidis byHorn prepared database documented andwell available publicly the on statistics descriptive up-to-date more For here. undertaken analysis ofthe inmuch used be cannot andhence ongoing (2 andMavroidis byHorn determined years two ofalmost Report) official the 311 all through initiated covers disputes WTO (2006b) andMavroidis byHorn compiled set data the WTO, the For the analysis of GATT disputes based on the equally publicly available data in Reinhardt (1996 inReinhardt and2001). data available publicly equally the on based disputes ofGATT analysis the 185 It has widely been hailed as a victory of the rule-of-law over bilateral power politics. Indeed, Indeed, overbilateral politics. power of therule-of-law hailed asavictory been has widely It US–Shrimp (Article 21.5 (Article –Malaysia) US–Shrimp US–Shrimp (Article 21.5 (Article US–Shrimp –Malaysia) US–Gasoline r more transparency in regard to WTO to inregard WTO r moretransparency 2006. Given the average2006. length of disputes and 187 It also cites the literature that has sought to explain various toexplain sought that has literature the cites also It 268 US–Shrimp d the limited recourse to retaliation todate. toretaliation recourse limited d the ty interpretation. Of course, some observers deplore the deplore observers course, some interpretation. Of ty clusive jurisdiction and virtually automatic adoption of automatic adoption andvirtually jurisdiction clusive concerns. Indeed, the DSM has inrecentconcerns. times proved Indeed, g adjudication has replacedg adjudication compromise solutions (instead ofcompromise winner-loser (instead solutions situations) compliance proceedings, it was determined that the United other policy objectives e.g. inthefieldsof environment objectives other policy remaining challenges identified in the literature, inthe the identified remaining challenges ten years given the over 300 requests for consultations requests theover300 given ten years particularly theUSandEC, theprincipal haveparticularly been more recent development has been theincreasinglymore recent has development been including to solve disputes amongst themselves. amongst disputes includingto solve s room for discussion on possible improvement onpossible fors room discussion ntain dispute settlement procedures, often following similar following often procedures, settlement dispute ntain lement procedures, such as the decision to bringlement such asthedecision procedures, l were thus put forward. In addition, certain United United addition, certain In l werethus putforward. e such as closer ties to ties publicinternationale such ascloser law(see bed as the most powerful international lawtribunal powerful asthemost bed s of services and trade-related intellectual property property intellectual andtrade-related s ofservices , such as flexible procedures, party control overthe party procedures, , such asflexible ) had previously been challenged, which sparked which challenged, been ) had previously an independent secretariat equipped to provide legal to provide equipped secretariat anindependent 006a), disputes initiated are thereafter likely to006a), still be and EC–Asbestos EC–Asbestos 184 As a consequence, the WTO also also aconsequence, theWTO As dispute settlement proceedings. proceedings. dispute settlement (until circulation of an Appellate Body Body ofanAppellate circulation (until many of the“diplomatic” cases. 186 , the other developing country Contracting Parties/Members. Contracting country developing other DE classification; UN with inaccordance countries least-developed LDC: Switzerland. Zealand, New Norway, Liechtenstein, Japan, are a reflection of theGATT’sare areflection evolution aswell continued th under of thesystem use the 1980s. Heavy additional two Members in 2007 isnottake Members two additional strongly after the Tokyo Round and further intensified the Tokyo after Roundandfurther strongly in cases initiated by the US and the EC offset by growing developing country activity ascomplaining activity country by developing growing initiated by theUS andtheECin cases offset IND IND DEV DEV events occuring until February 2006. occuring untilevents February toinclud updated havebeen data 1-311); the (DS disputes, 1995 2004 31 these and for July 1January between initiated disputes EC15 EC15 Totalnumberofdisputesovertimeandbycountrygroup 16 Table by thelatter. of andconsistent thesystem dispute settlement support States (responsible by their theUnited during increase that andthecontinued in(despite time numbers) period activity for 25 of 39 complaints) 15 wasreasonably inthefirst strong until of theGATT itbottomedthat years thevolume of activity unde of disputes matter andsubject in, Participation had it activity above, dispute settlement discussed As (i) On average,On giventheirweight ininternational trade, 188 Source: Source: l 04 04 54 43 66339 6 26 37 24 40 35 42 50 49 ofan and ECin2004 tothe Members new often Accession years. GATT the during complaints intra-EU as appear cases some in1995 in1958 to15 Members Members six from evolution toits Due WTO. the under counted are DSU WTO the under resolved 30 Notes: All US 8171711108143281 S1 02 13 1 81 116 37 31 25 10 13 US All LDC LDC 1988 MidtermReview. theannual theWTO, Under cas not even ten years aswere initiatednot eventen years theWTO has under multiplied activity Overall parties. out inthe1960s 1970s. andearly in sharp drop The developing countries, Argentina, Brazil andChile Brazil we Argentina, countries, developing Amongst WTO. the asadefendant theGATT,ismorebalanced under under picture active butits (Table andWTO of the GATT disputes under both Of course, as stated in Subsection 3.(a) above, trade 3.(a) course, Of nego as in stated Subsection through negotiations rather than disputes. issues certain addressed Members since period, time that during activity settlement indispute decline overall to the Use of dyadic disputes results in more observations than requests for consultations due to multiple complaints. GATT cases cases GATT complaints. tomultiple due consultations for requests than observations inmore results disputes ofdyadic Use GATT: compila own Reinhardt (1996) updated WTO: by authors; 9519 9719 9920 0120 0320 Total 2004 2003 2002 2001 2000 1999 1998 1997 1996 1995 41 081 11 91 139 1 18 19 19 21 12 8 10 17 14 1948-57 1958-67 1968-77 1978-87 1988-94 Total GATT Total 1988-94 1978-87 1968-77 1958-67 1948-57 0000011 000000 6877733102255 27161668143063 85 9121943339 433 149 132 39 55 58 2843 91563 105 29 32 4 8 32 1100021 313828267855 92324157132139 (433) inthe47 of(433) theGATT. years n into account. IND: other industrialized industrialized other IND: n intoaccount. of broader economic circumstances. Table economic circumstances. of broader 16 shows rscore the scepticism of thescepticism theformer towardsrscore formal 2; Horn and Mavroidis, 2006b). Japanwas mostly 2; andMavroidis, 2006b). Horn cases brought countries bytheEC anddeveloping cases s ups and down under the GATT until it exploded in until itexploded theGATT under s upsanddown GATT WTO re the most active dispute participants under the under dispute participants active re themost eload has been quite stable with arecent with decrease quite stable eload has been the EC and US have been involved in the majority majority inthe involved EC andUShavebeen the with almost as many cases (339) being initiated in initiated being (339) asmany cases almost with tiations, the Kennedy in particular Round, contributed also 269 during the final seven years of the GATT after the after of theGATT years during thefinal seven e WTO. These changes inthevolumeof litigation changes These e WTO. tion from Horn and Mavroidis (2006b); data include data alltion from and Horn Mavroidis (2006b); 188 countries, i.e. Australia, Canada, i.e. Iceland, Australia, countries, Dispute settlement activity grew activity Dispute settlement 1948-94 1995-2004 Total WTO Total V: e

II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING WORLD TRADE REPORT 2007 SYSTEM: ACHIEVEMENTS AND CHALLENGES WORLD TRADE REPORT 2007 II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING SYSTEM: ACHIEVEMENTS AND CHALLENGES the GATT. players over theinitial 10 biggest ofthe two years and EC also continue to be prime targets for developing countries, with 75 cases being brought being against countries,75 for with developing cases continueand EC also primetargets to be examine which countries which tendto findth litigate.examine They theUS to cent themselves, merely 5per theGATT. under opposed litigation between increased Despite have be WTO under complaints country of developing complaints against the EC as a percentage of theEC overal asapercentage against complaints use ofuse theDSM by developing countries. Developing their export interests. Indeed, a new development ov anewdevelopment Indeed, interests. their export anindica primarily ascomplainingthan parties, acting of complaints rather increasingly have thesubject become Members two that these observe also (2006a) developing countries complaints pursue according to to initiateaformal inadecision factors important relationship thedefendant, aswellits with for preferential via instance legal capacity are agreements, atstakeiscontrolled for, thesize that and evenwhen of shows exports acountry’s retaliatory (2005a) play role, some fairly can dispute patterns wellbe di inWTO theboost helps to explain andintroduced more elaborate implementation which, procedures) of of panelsandadoption reports removed thepossib theDSU with (which strengthened were of reachingthe implementation mechanism andtheprobability afavourable Both aspects decision. holdade (2000) BütlerandHauser system. settlement thefundamenta have to tried Several authors identify The WTO dispute settlement system has also system dispute settlement WTO The byanother breachof country. rules for inretaliation measures analleged investigation to initiate ananti-dumping/countervail findsthat theincentive to through(2005b) go formal l Interestingly, Bown interests. onthegovernment pressure to defend theirexport to exert in acountry to thelikelihood bring relationships,butrelates power less Reinhardtto (1999) launchdisputes. attributes violations and building inidentifying face difficulties from filing playersfor bigger adispute fear against of However, andMavroidis Horn theWTO). under 43 and47versus cent per for theEC andUSrespectively countries developing against than undertheGATT to 35 cent about theGATT theWTO. per under under theEC continuesWhile theUnited States to target and Mexico joinedof theirin participation. ranks terms of frequency theRepublicof India, Korea 10 thefirst of andcontinue theWTO Over GATT years intheWTO. to so be 189 mutually agreed solution and may deter disp andmaydeter solution agreed mutually of reaching costs a thetransaction increases participation outcomes. that caution third They party participation of third parties, including at the cons includingatthe ofthirdparties, participation findthat the andReinhardt Busch (2006) Indeed, 2003). (Lanye, concerns “systemic” (including interests) asit development this asapositive see observers disputes under the WTO ascompared cent to per 30 theWTO disputes under Third parties are Members that merely reserve their rights in a dispute (as opposed to co-complainants). The conditions conditions The toco-complainants). opposed (as inadispute rights their reserve merely that areMembers parties Third reflected in the final report. If a panel report is appealed, isappealed, report apanel If report. final in the reflected defendant. “Other parties” may also request to theco join defendant. request “Other mayalso parties” proceedings before the Appellate Body. aretobe which oflitigation round first inthe submissions andoral tomake written parties third DSU allows of the for third party participation depend on the Article under which the complainant requests consultations with the with consultations requests complainant the which under Article the on depend participation party for third spute settlement activity relative to theGATT. activity spute etal. settlement (1999) Horn utes from being filed in the first place. inthefirst filed from being utes 270 seen a growing participation by thirdparties. participation agrowing seen enlarges the circle of Members who can express their express can who the circle ofenlarges Members explained by the diversity and value of exports. Bown andvalueof exports. bythediversity explained ultation stage, has an impact on dispute settlement has animpact stage, ultation the WTO compared to 106 cases during 48 years of years compared to during48 106 cases WTO the complaint. Guzman and Simmons (2005) findthat complaint. GuzmanandSimmons (2005) a case and, hence, acase are constrained in their capacity leading to theimplementation of trade contingency l US complaints dropped from close to 60 per cent per to from 60 close dropped l UScomplaints reprisal. However, reprisal. to owing their immediate trade intere trade their immediate countries have instigated more than 40 per cent per of morethancountries 40 have instigated tion of of therise other countries to defend seeking (around 12(around cent theGATT per of disputesunder Both Members file proportionally more complaints file proportionally Both Members during the years of the GATT. Forty-two per cent per of theGATT. duringtheyears Forty-two importance to legal resources andinternational to resources legal importance DSU Article 17 gives those third parties similar access tothe similaraccess parties third 17 those gives DSU Article er the last ten years has been themorefrequent has been tenyears er thelast a dispute to the ability of domestic interest ofa dispute groups to domestic theability en directed against other developing countries other developing against asen directed in about 40 per cent of cases, theshare cent per of of US cases, 40 in about l factors accountingl factors for ofthedispute utilization at while differences in legal capacities appear to appear at while differences inlegalcapacities cision to bring a case depends on the strength of onthestrength depends cision to bringacase itigation is reduced, when it is easy for industries itiseasy itigation isreduced, when ility of responding parties to establishment block of parties responding ility nsultations in advance ofa inadvance nsultations panel proceeding. Article 10 Article panel proceeding. sts andarenot deterred sts a lack of resources they ofresources alack 189 Many LDC: least-developed countries in accordance with UN classification; DEV: other developing country Contracting Parties/Members. Contracting country developing other DEV: classification; UN with inaccordance countries least-developed LDC: taken into account. IND: other industrialized countries, i.e. Australia, Canada, Iceland, Japan, Liechtenstein, Norway, New Zea New Norway, Liechtenstein, Japan, Iceland, Canada, i.e. Australia, countries, industrialized other IND: into account. taken complaints duringintra-EU Accession the years. of GATT to ten the new and EC Members in of 2 in an 2004 Members additional two EC15 events occuring until February 2006. occuring untilevents February to includ updated havebeen data 1-311); the (DS disputes, 1995 2004 31 these and for July 1January between initiated disputes otfeun opannsaddefendants and complainants frequent Most 17 Table opann SE1 N E LDC DEV IND EC15 US Complainant h agt whom? targets Who 18 Table aa 51 13 18 10 11 12 13 13 9 35 25 21 3 3 8 23 9 6 18 33 19 Japan India Chile Canada Brazil S16168 92 0 0 11 81 1 13 6 116 12 3 2 116 4 5 9 Source: in 2007 Members isadditional not two taken into account. ofan and ECin2004 tothe Members new often Accession years. GATT the during complaints intra-EU as appear cases some in1995 in1958 to15 Members Members six from evolution toits Due WTO. the under counted are DSU WTO the under resolved Notes: US Norway Zealand New Mexico opann SE1 N E LDC DEV IND EC15 US Complainant events occuring until February 2006. occuring untilevents February toinclud updated havebeen data 1-311); the (DS disputes, 1995 2004 31 these and for July 1January between initiated disputes Source: appea cases in1995 in1958 some to15 Members Members six from evolution toits Due WTO. the under counted are DSU WTO the under Notes: Defendant Australia Defendant Korea, Rep. of Rep. Korea, Argentina Use of dyadic disputes results in more observations than requests for consultations due to multiple complaints. GATT cases res cases GATT complaints. tomultiple due consultations for requests than observations inmore results disputes ofdyadic Use Use of dyadic disputes results in more observations than requests for consultations due to multiple complaints. GATT cases cases GATT complaints. tomultiple due consultations for requests than observations inmore results disputes ofdyadic Use GATT: compila own Reinhardt (1996) updated WTO: by authors; GATT: compila own Reinhardt (1996) updated WTO: by authors; S004 02 594 282100 2 32.8 43 35.9 28 40 42 0 0 US oa 1 0 0 0 811102100 2 100 131 78 100 105 100 116 Total C52 58001 823 5200 0 0 0 25.2 28.8 35 40 18.2 47.3 10 26 41.3 0 26 0 0 35.8 0 29 DEV IND EC15 US oa 1106 0 51019101100 1 100 139 100 55 100 63 100 81 Total N 42. 12 11. 71. 0 0 13.7 17 14.1 11 20 21 29.3 34 LDC DEV IND LDC EC15 ubrsaenme hr ubrsaenme hr ubrshare number share number share number share number share number ubrsaenme hr ubrsaenme hr ubrshare number share number share number share number share number 84. 74. 42. 94. 100 1 42.4 59 25.4 14 42.8 27 46.9 38 75. 02. 74. 34. 0 0 48.1 63 47.4 37 28.6 30 57.8 67 41. 01. . . 0 0 3.6 5 9.1 5 15.9 10 17.3 14 51. 21. . . 0 0 5.4 8 2.6 2 11.4 12 12.9 15 0000000000 0000000000 opann eedn opann Defendant Complainant Defendant Complainant 0 9 374 63 197 105 4479 7 4 24 331 14 10 3 13 141112 GATT WTO ATWTO GATT 271 tion from Horn and Mavroidis (2006b); data include data alltion from and Horn Mavroidis (2006b); tion from Horn and Mavroidis (2006b); data include data alltion from and Horn Mavroidis (2006b); land, Switzerland. Switzerland. land, 007 is not isnot 007 e e olved r as r as

II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING WORLD TRADE REPORT 2007 SYSTEM: ACHIEVEMENTS AND CHALLENGES WORLD TRADE REPORT 2007 II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING SYSTEM: ACHIEVEMENTS AND CHALLENGES Figure 9 illustrates, by far the largest number of disputes areinagriculture, ofdisputes number byfar largest the Figure 9illustrates, than half (more ofabout allmeasures theGA under to offset them. United States AD/CvD measures are and historically have been a main target of measures trade areamaintarget them. have andhistorically United been Statesto offset AD/CvD “unfair” with deals cases andWTO of orthemeasures taken GATT trade practices one-quarter about /countervailing (AD) andantidumping subsidy the Combining important. more relatively became litigation NTB while trend, downward aconstant revealed events occuring until February 2006. occuring untilevents February toinclud updated havebeen data 1-311); the (DS disputes, 1995 2004 31 these and for July 1January between initiated disputes Source: Source: tariffs. not NTBs, as categorized are taxes, discriminatory as such ubr6 6 37 71 03 52 505 21 25 33 30 10 Total Services 37 IP 79 TBT 43 SPS 163 PTA 64 GATT WTO. the under counted are DSU WTO the SG under resolved cases GATT measures. contested tomultiple due consultations Notes: AD/CvD Subsidy share NTB number Tariff Contested Measure 1332916726754100 iptsb yeo measure of type by Disputes 19 Table ar Table 19 (NTBs) barriers that shows non-tariff 193 192 191 190 isavailable ontheHSclassificat data theWTO, For measures. of trade other ismore types across balanced thepicture aswellsafeguards, while toin regard AD catching countries up havedeveloping been quickly property rights barely accounting for 10 per cent of complaints. ubr8 6 45 7513 47 7 Total 54 PTA 54 SG 52 267 AD/CvD 16 Subsidy 84 NTB share Tariff number Contested Measure of-payments purposes). of-payments theexception of the 1950s(with for quotas behind were shielded balance- agricultural when products of isbroadly thedisputes. consistent This th with account except fish) for 45 cent per products alone(agricultural Ito IV Sections XVI). (Section machinery equipment (Sec vehicles andtransport XV), (Section remedy disputes (as compared disputesremedy (as to, for instance, Japanwho, until recently, disputes related tariff cut, were tariffs as that, confirms (1990) Hudec complaints). related andTBT SPS any theEC frequently such years, regime. dispute. subsidy had theWTO, to theGATT Under defend In its Codes, e.g. the Tokyo Round TBT Agreement, since all relevant disputes also referred to GATT provisions. Internal money charges, money Internal provisions. toGATT referred also disputes relevant all since Agreement, TBT e.g. Tokyo Round the Codes, disputes with European associated Economic GA Community (EEC). preferential trade disputes agreement a represents (PTA) lower Agricultural products under the WTO are defined as products contained in Sections I-IV, except fish and fish products, products, andfish fish except I-IV, inSections contained products as aredefined WTO the under products Agricultural See, for instance, Park and Panizzon (2002): 233, Table 6 as well as Hudec (1990): 340, Table 11.38. 340, (1990): 233, Table Hudec as well 6as (2002): andPanizzon Park instance, for See, Korea See Hudec, 1990: 327, Table 11.28. in established been has apanel 2006, In and certain products of Sections VI, VIII and XI; see Annex 1 of the Agreement on Agriculture. on Agreement 1ofthe Annex see andXI; VIII VI, ofSections products and certain Use of dyadic disputes in results than more number observations of bilateral complaints and number for of requests GATT: compila own Reinhardt (1996) updated WTO: by authors; (WT/DS336). 191 Most disputes under the WTO cover goods, with services and trade-related intellectual andtrade-related services with cover goods, disputes under theWTO Most 193 Japan–Countervailing Duties on Duties Dynamic Randomfrom Access Memories Japan–Countervailing 272 11 100 9 1 11 11 e GATT, wereagricultural cases one-half about where e the type of measure most frequently complained frequently of measure most e thetype bound due to missing data/conservative classification, but inclu but classification, data/conservative tomissing due bound TT and about 45 per cent under the WTO, including 45 cent theWTO, andabout per under TT ion of products categories subject to disputes. As to disputes. subject categories ion of products duty (CvD) categories, it seems remarkable that remarkable itseems categories, (CvD) duty tion XVII), textiles and clothing (Section XI) and XI) andclothing(Section textiles tion XVII), as defendants in trade remedy disputes, notably disputes, intrade remedy as defendants TT count does not single out measures under the plurilateral plurilateral the under measures out single not does count TT GATT WTO tion from Horn and Mavroidis (2006b); data include data alltion from and Horn Mavroidis (2006b); 190 has not been the target of thetarget has not been 192 followed by base metals de e

cent were dropped or mutually settled without official notice. official without cent ormutually Finally of were settled the151 dropped reports inwhich cases 20 per another stage, panel the to went that 189 complaints the Of filed. complaints of cent 45 per than 2004 (DS 1-311); for these disputes, the data have been updated to include events occurring until February 2006. February until occurring events toinclude updated have been data 1-311); the (DS disputes, 2004 these for appeal; andfinally, ali appeal; process during theappeal thelosinggovernment second, islikely pressurepart; to under interest from be groups domestic to asmall chance thereisatleast that First, appeal. ofcompellin that thishighrateisaresult explain andthat arenot settled mutually isissued report apanel centwhere per according of28 thecases, cent to Seventy per therules. of settled complaints 194 “decisive” andproved wasissued for apanelreport which disputes) ongoing (excluding this compares theWTO, Under to cent 62 per of thecomplaints panelreport. anadopted with ended unadopted. remained than aquarter more issued were Dueto consensus to thepositive theWTO. the GATT ru outcomes Disputesettlement far outcomes asdispute settlement As are concerned, (ii) Source: ofart. –works XXI –miscellaneous, XX ammunition, and XIX instruments, musical and –measuring XVIII equipment, –transport XVII appliances, mechanical and –machinery XVI thereof, a metals –base XV metals, stones, semi-precious or precious –pearls, XIV asbestos, cement, plaster, ofstone, –articles XIII X pulp – wood products, and- and – wood hides skins, wood IX andsummarized byHSchapters categorized Notes: WTOdisputesbytypeofproduct 9 Chart (about 10 of(about details abilateral cent notifying per without as agreement of thetotal) to themembership of them some settled, mutually have been WTO the under of cases completed than one-third More that the ones (counting went through totheir cases an cent) won complainants per have mostly (88 cent) andtheWTO per (82 theGATT under both Indeed, maintained. be can measure III – animal or vegetable fats, IV – prepared foodstuffs, V–mi foodstuffs, –prepared IV fats, vegetable –animalor III Count 10 15 20 25 30 35 40 45 50 For the present statistical purposes, “Panel/AB isdecisive” “Panel/AB purposes, statistical thepresent For 0 5 it was pro-complainant and defendant comp anddefendant it waspro-complainant but the complainant decided not to pursue the matter further. matter the topursue not decided complainant the but Use of dyadic disputes results in more observations than requests for consultations due to multiple complaints. Products Products complaints. tomultiple due consultations for requests than observations more in results disputes ofdyadic Use 93 54 369852 31 700110 1 0 0 27 16 43 1 4 5 23 5 8 9 6 13 8 45 15 35 49 Own compilation from Horn and Mavroidis (2006b); data include all disputes initiated between 1 January 1995 31 and July 1January between initiated disputes all include data (2006b); Mavroidis and Horn from compilation Own IIII IVIVI XXX I IIXVX V VIXIIXXX XXI XX XIX XVIII XVII XVI XV XIV XIII XII XI X IX VIII VII VI V IV III II I in HS Sections I-XXI as follows: I – animals and animal products, II – vegetable pro –vegetable II I–animalsandanimalproducts, asfollows: I-XXI in HSSections lies; or, itwaspro-complainan lies; (iii) neral products, VI – chemical products, VII – plastics andrubb –plastics VII products, –chemical VI products, neral ttle more time is gainedttle du or ongoing, are appealed. Bütler and Hauser (2000) (2000) or ongoing,are BütlerandHauser appealed. a panel’s in evenifonly reversed, findingsmight be products, XI – textiles and textile articles, XII – footwear, XII he articles, and textile – textiles XI products, g reasons on the part of the losing government to government losing ofthe part the on g reasons Table 20 confirms anumber from of improvements adopted report and “decisive” ruling respectively). and“decisive” report respectively). ruling adopted 273 le undertheGATT, panelswere in less established means that either (i) theruli that either(i) means In total, only 25 per cent of initial complaints t and compliance was t andcompliance ring theoffending which ng was pro-defendant; or, (ii) ng waspro-defendant; 194 andto another not forthcoming, nd articles nd articles adgear, – arms – arms er, VIII ducts, ducts,

II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING WORLD TRADE REPORT 2007 SYSTEM: ACHIEVEMENTS AND CHALLENGES WORLD TRADE REPORT 2007 II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING SYSTEM: ACHIEVEMENTS AND CHALLENGES Despite the rather high quota of mutual settlements, Holmes et al. (2003) andReinhardt etal. (2001) (2003) Holmes theratherDespite high of quota mutual settlements, donot to settle in consultations. When the subject matter matter thesubject inconsultations. When to settle elabor Simmons (2002) further for anegotiated compromise than “continuous” when there isconsiderably to room opportunity leaves compromiseasahealthmeasure), less (such little defendant, countries butthat ableto developing doso. have been less thegrea offers that settlement hold early and 2003) co theircases of seeing instead bilaterally to settle dev especially find evidence that weaker Members, a whole. 198 197 196 195 deal. This selection effect also helps to explain the high “victory” rate of complainants. thehigh“victory” helpsto explain also effect selection deal. This for harm acompromise than thedisputed measure political iftheyhadrepeal settled less andmay suffer Likewise, inthedefending country, politicians should giving in to foreign pressurenote of that damage thecomplainant thepolitical government may prefer to apanelbecause before go may not be offset by the expectedmore ruling likely itisto to resemble theexpected benefits from a negotiated thelatera of thedisputeprocess; stages the early settlement. are demonstrate more that likely bilateral at settlements (2000) ofdropping BütlerandHauser thecase. the contested measure wasremoved ornot, ifany, andifnot, what action, by ledto therespondent the When WTO Members negotiate a Members focus bilateral on the measure they specific WTO typically When settlement, at issue.According To recall, by virtue of Articles 3.7 and11 ofArticles DSU, ab ofthe To byvirtue recall, not allow for a determination of whether Article 3.6 of the DSU (stipulating that any mutually agreed settlement must settlement agreed anymutually that DSU(stipulating 3.6 ofthe Article ofwhether adetermination for allow not contend that even and the Mavroidis notificHoekman (2000) be consistentbe with the covered has complied been agreements) with. oppose the strategy of suchoppose linkage, than autocratic regimes. might who groups, domestic ofother interests the with concerned aremore they since “discontinuous”on issues), process fullpanel the through togo likely aremore hence (and deals complicated more these tonegotiate likely less by making or side link payments it matter. to another a corollary, policy As find the that authors democracies are to the it authors, would, of to course, possible be make a case has progressed to the panel stage or when a report has been issued. issued. been has areport when or stage panel tothe progressed has case defendant may be more powerful than their counterparts in than theircounterparts morepowerful maybe defendant (suffering little reputation loss aslon loss reputation little (suffering to onthecomplainant (seen inflicted maybe case a lost political and i.e. notpolitical symmetrical, not “zero-sum”. interest groups may This in for be the of affected a reasons: variety Guzman’s isthatunlike reasoning (2002) 195 Of those, a number of cases simply were dropped. Davey (2005a) raises the question whether raises thequestion Davey simplywere those, dropped. (2005a) anumber ofOf cases ate that thenature onthelikelihood of has thedisputed issue animpact g as the measure ultimately isremoved). ultimately measure g asthe in domestic litigation therelative litigation indomestic 274 . Busch and Reinhardt (2000) aswellGuzman(2002) andReinhardt (2000) . Busch mpleted. To mpleted. thecontrary, andReinhardt (2000 Busch mutually agreed settlement (MAS) is concluded the isconcluded (MAS) settlement agreed mutually ilateral settlement always remains possible, i.e. also when the i.e. when also possible, remains always settlement ilateral “lumpy” regulation) issue more as (such a “continuous” safety eloping countries, come under systematic pressure countries,eloping come systematic under the case be lost, can blame the WTO for the need to for theneed WTO blamethe can lost, be the case of the dispute has an all-or-nothing character and character of thedisputehas anall-or-nothing test likelihood of securing full concessions from a from fullconcessions ofsecuring likelihood test be bringing“meritless” be than onthedefendant lawsuits) the complainant orahigher variables, such as tariff levelsare concerned. variables, such astariff ations received under Article 3.6 of the DSU often do DSUoften 3.6 ofthe Article under received ations 198 payoffs of the disputing parties are ofthedisputing parties payoffs reputation damage following damage reputation 196 Guzmanand 197 report MAS occurred and 25 in MAS 1 an instance arbitration Art. report was agreed upon. Report unadopted Report opansntfe 3 opansntfe 339 Complaints notified 433 (141), p in6instances since reports ofadopted number the than (134) isless isdecisive” in“Panel/AB ofobservations number The 2006. isFebruary disputes ongoing for date Cut-off WTO: WTO. the under counted are DSU WTO the under resolved cases Notes: Complaints notified Source: cautions against taking the low number ofcountermeas thelownumber taking against cautions of theabsence aconfirmed despite made “positive”been for solution thecomplainant. (2004b) Bown 10 are“missing” cent for countermeasures of cases per completed have that norequests inthesense From Table of 20 leadto cent 21 that about threats only per of completed seen cases be also itcan cases. and countervailing or no panel established during panel phase Case dropped 199 panels 21.5 theincreasing of invocation DSU Article done.how this sees shouldbe Davey (2005a) compliance confinedmostly to recommendations to bringtheco nature of th theprecise to of defining theproblem (1998) point ReifandFlorestal own. of problems its that may WTO-consistency raise anewpolicy it with orreplace extent measure theoffending to acertain modify can that alosingMember thefact may hide toMember’s comply decision rather than concerns reputation.Table However, for in its thestatistics 21 of andhenc retaliation, finds that thepotential costs outcomes (2004a) dispute Bown settlement 21). of GATT/WTO alarge set analysing empirically By of 121 66 for atleast thecase to be (Table appears which iswithdrawn, at issue cases completed WTO favourable clearest The result commitments. forto thecomplainant its themeasure isachieved when up tolive Member offending the ifitinduces successful Ultimately, considered be only acomplaint can ruling of direction and outcomes settlement Dispute 20 Table Report adopted Report Settled by MAS (not notified) bySettled MAS measures. He finds evidence of the former particularly of theformer findsevidence He particularly measures. been updated to include events occurring until February 2006. 2006. February until occurring events toinclude updated been h data the 1-311); (DS disputes, 2004 1995 31 these for and July 1January between initiated disputes all include data (2006b); retaliation, and in only one half of those instances have retaliatory measures been imposed. Anotherretaliation, imposed. measures have andinonlyonehalf instances of been retaliatory those DSU Article 21.5 DSU Article that foresees where there is as disagreement to a with the covered or existence consistency panel – wherever possible the original panel – can be called upon to decide on such adispute. such on todecide upon called be –can panel original the possible –wherever panel agreement of measures taken to comply with the recommendations and rulings by a panel or theAppellate Body, a Use of dyadic disputes results in more observations than requests for consultations due to multiple complaints. GATT: GATT GATT: complaints. tomultiple due consultations for requests than observations inmore results disputes ofdyadic Use 199 GATT: Reinhardt (1996) updated by authors and own compilation. WTO: own compilation from Horn and Mavroidis Mavroidis and Horn from compilation own WTO: compilation. own and byauthors updated (1996) Reinhardt GATT: (many of which are ongoing) as an indication of asanindication of theproblem orreplacement of (many modified are which ongoing) r-eedn 0podfnat16 118 pro-complainant pro-defendant 89 20 pro-complainant pro-defendant ATWTO GATT 244 Settled by MAS (not (not MAS by Settled 244 0 ae/Brpr sdcsv 134 is decisive report Panel/AB 109 8Stldb A ntfe)55 (notified) byMAS Settled 38 42 ntested measure into suggesting conformity without Arbitration Settled by Art. 25 reasons procedural for Settled 122 notified) ongoing Complaint e consideration of theplaintiff’s power, influence a e losing party’s obligation given that given findingsare obligation e losingparty’s 275 in SPS matters and of the latter in anti-dumping inanti-dumping andof thelatter matters in SPS ures as a sign of lacking effectiveness. To the asasignof lackingeffectiveness. ures tpnlsae11 12 at panel stage at stage consultation 106 Panelactive consultation ongoing otrpr tg 6 21 post-report stage 28 at panel stage at stage consultation 16 23 4 1 ost- ave

II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING WORLD TRADE REPORT 2007 SYSTEM: ACHIEVEMENTS AND CHALLENGES WORLD TRADE REPORT 2007 II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING SYSTEM: ACHIEVEMENTS AND CHALLENGES AB is decisive” (134) in Table 20, since it included 6 instances in which post-report MAS occurred and 1 instance in which an A an inwhich 1instance and occurred MAS post-report inwhich 6instances (134) inTable included isdecisive” it 20,AB since 2004 (DS 1-311); for these disputes, the data have been updated to include events occuring until February 2006. February until occuring events toinclude updated havebeen data 1-311); the (DS disputes, 2004 these for Source: 25 arbitration was agreed upon. counter CM: measures. Notes: butongoing, no also CM requested for ongoing disputes is February 2006. The number of adopted repo ofadopted number The 2006. isFebruary disputes ongoing for CM requested compensation. providing while safeguards via “illegal” via industry measures andface adomestic aformal to complaint protect whether or“legally” Compliance forthcoming Implementation (reasonable of period ofwhich: adopted, Report disputes WTO in record Compliance 21 Table contrary, henotes that concerns retaliation af about 200 andim transparency, rights enhanced third party inthe current DSU range of review proposals whole Performance of the WTO’s DSM and challenges in discussed the literature literature of theacademic the andmakes to portray noattempt anoverview provides subsection This (c) report. Body ofanAppellate circulation from (23months) the years two average under of just inforcebe theduration for atleast of theproceedi taken into of be thecomplainant of view also point account, must that given any measure may offending to evaluate order thesuccess ofIn parties agree to agree suspend theproceedings. parties measured (as by their level of of parties capacity the number of invoked articles), the damage atstake thedamage the number of invoked articles), MAS (prior to request for CM) for torequest (prior MAS “Missing cases”: compliance not not no forthcoming, MAS, The authors conjecture that delays may be a function of the complexity of measured thedispute (as by of thecomplexity afunction may that be delays conjecture authors The Pro-defendant, i.e. officially settled i.e. officially Pro-defendant, The main topics discussed in the DSU review negoti intheDSU review discussed maintopics The consultations can take over three and a half years. andahalf three takeover can consultations for request the from starting process total the areadded report compliance Body andAppellate panel compliance averagesIf for the reasonable of period time during which implementation must occur as well as the time for a Use of dyadic disputes results in more observations than requests for consultations due to multiple complaints. Cut-off date Cut-off complaints. tomultiple due consultations for requests than observations inmore results disputes ofdyadic Use Own compilation from Horn and Mavroidis (2006b) data include all disputes initiated between 1 January 1995 31 and July 1January between initiated disputes all include data (2006b) Mavroidis and Horn from compilation Own ie non ecuigsqecn)20 ongoing sequencing) (excluding time) theDSM, thetimeittakes to ac 200 This is longer than the sum of statutory timelines (15 timelines than islonger thesumThis of statutory months). 276 proved participation of developingproved countries. participation under Art. 25 under Art. moe 13 1 2 4 imposed sequencing, i.e. pending n/a suspended or inactive pro-defendant CM, 21.5 for panel request post CM, MAS for request post niptdcmlac 66 panel pro-defendant CM, 21.5 for torequest prior undisputed compliance development). Delays may also occur simply because because occur simply may also Delays development). ngs. Horn and Mavroidis (2006a) have calculated an have calculated andMavroidis (2006a) ngs. Horn negotiations under theDoha Agenda. under Development negotiations ations include sequencing, remand, post-retaliation, remand,post-retaliation, sequencing, include ations fect governments’ decisions in the first place of inthefirst decisions governments’ fect (as claimed bythedefen claimed (as date of request for until consultations thedateofdate of request rts (141)rts is higher than thein number“Panel/ of observations hieve satisfactory results from the results hieve satisfactory dant) andthelitigation 1 1 3 2 141 68 25 14 11 3 rt. In the47In of of theGATT, theexistence years countries atotal of filed developing 132 30 complaints participation of developing countries of asagroup developing participation are not challenged eith (but interested third parties WTO dispute settlement is to provide security andpr security isto provide disputesettlement WTO Accord asitmayseem. DSM isnot asstraightforward system), for others it is an indication of growing ofgrowing itisanindication for others system), all, countries utilize isasignofsuccess the (after ofdisputes thenumber commentators, some For namely Argentina, Brazil, Chile, India, Mexico andSo Chile, Brazil, Mexico India, Argentina, namely areacco participation and 42 cent per of thirdparty Section. inthepreceding asportrayed of activity, referencefulfilment of theDSU’s iscommon objectives, to order In measure andobligations originally therights Members. negotiated amongits to preserve token, ag ahighlevelofmutually andSykes, thesame By 2002). for (Schwartz others atworkfor some, tendency butaworrisome system ofa isevidence ofretaliation frequency The 2004). (Iida, for others some, andasignofdueprocess Likewise, litigati 1999). anextensive trade (Reinhardt, implementation of rulings. challenges identified intheliterature categorized be into and can adjudication of questions participation, 2001: inCharnovitz: cited 792) byother internation andhas crea Members non-complying against decisions to enforce ability inits andespecially for of theadoption reports that exists the quasi-automaticity DSB’s The countries are authority usingthesystem. arecomparatively well processes dispute settlement aswellto similarinternationalpractices tribunal is andothers followed,(2005) have to who dispute GATT primarily settlement comparedWTO the theapproach of by thisJackson thepurposes subsection, For than less perfect. must be settlement light any problems, In of these evaluation of th 204 203 202 201 14about complaints. country developing by 31 teny countries duringthefirst developing y per to anaveragecorresponding 3cases of about fail who to eitherascomplainants engage or Members WTO reveal of anabsence thepoorest statistics of participation Issues rang alarge mentioned inthepreceding section, As (i) well. DSMworks WTO’s that the literature in the 12 consensus after of there operation, isanoverwhelming years 3.(a), foreshadowed insubsection As impossible toimpossible measure. to butisnext 2005), andHoekman, of“missingnumber offailure anindication cases” could (Bown be ofhowthe aconsequence are neverbrought maybe have incommon initiated isthat onlydisputes actually are considered, cases that some thefact while toou detrimental thatarepotentially understandings of 2001 (Horn and Mavroidis, 2006a). This meansthat This 2006a). andMavroidis, of 2001 (Horn complied with. The enforcementcomplied with. The apparatus ispowerful The term “missing cases” in this context refers to a di See e.g. Jackson (2005). For a discussion of alternative indicators of the DSU’s effectiveness, which are more difficult difficult aremore which DSU’s ofthe effectiveness, indicators of alternative adiscussion For (2005). e.g. Jackson See See exemplarily Davey (2005b). Davey exemplarily See outcomes that cannot be accounted for. In the literature, the term “missing cases” is also used in both contexts. parties in at least 49 per cent of WTO disputes arethird (Horn Members and country Mavroidis, developing addition, In offilings. cent per 40 2006a). about 139 represent of339 complaints to measure, see e.g. Iida (2004). refers are that to never cases some brought the possibility before the DSB, whereas above, the term denotes litigation 203 reed solutions may be a positive tr apositive maybe solutions reed 204 However, 57 per cent of all developing country complaints discontent theambiguit with 201 has increased under the WTO compared to compared theGATT. theWTO under has increased 202 e success and remaining challenges of WTO disputee success andremaining challenges of WTO s. In a qualitative manner, aqualitative thats. In WTO stated ithas been However, andmeasuring thesuccess defining of the ears of the WTO resulting inanannual average of theWTO ofears fferent phenomenon than in Table 20. Here, “missing cases” Yet, criteria these are far unambiguous. from being er). The descriptive statistics above reveal that above the statistics descriptive er). The defined and running smoothly. A large variety of andrunning smoothly. defined variety A large is accepted and its recommendationsis accepted are generally andits unted for by the most active developing countries, developing unted for active by themost ear. comparison, 139 In initiated have been cases al organizations. Along similar lines, some ofthe some similarlines, Along al organizations. uth Korea,uth aswellChina andChinese Taipei as on process is tantamount to istantamount bureaucratic slackforon process dispute settlement system is designed. Hence, isdesigned. the system dispute settlement edictability to themultilateral and tradingedictability system more than 80 developing Members litigate rarely, Members developing more than 80 e of countries make of theDSM. use Yet, these ly made to the workings of the system and its level andits to made theworkingsofly thesystem 277 tsiders (Busch, 2000). What all criteria What of these 2000). (Busch, tsiders ing to Article 3 of the DSU, the objective ofthe 3oftheDSU, theobjective ing to Article ted what Jackson calls “sanctions envy” (Jackson (Jackson “sanctions calls envy” Jackson what ted in being able to issue binding decisions, in decisions, binding toissue able inbeing end or a sign of power-politics and end orasignofpower-politics y of rules governing worldy of governing rules

II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING WORLD TRADE REPORT 2007 SYSTEM: ACHIEVEMENTS AND CHALLENGES WORLD TRADE REPORT 2007 II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING SYSTEM: ACHIEVEMENTS AND CHALLENGES direct financial support for litigati financial support direct partnerships (between developing country governme country developing (between partnerships isnot asabasisfor intended “to theenforcement that theTPRM explicit itismade serve WTO, of 1970s.the early of An Moreover, A.(i) in Article for theremovalof trade barrie not proposals include countries are commonly noted (Anderson, 2002; Mavroi countries arecommonly noted (Anderson, weaker, ofeconomically position countries. Two disadvantageous “small” for explanations thepossibly developing against biased Hence, concern some theWTO’s remains DSM systematically whether may be to facilitate the participation of WTO Members indisp Members ofto WTO facilitate theparticipation becoming involved inadispute. involved becoming that aremeant to andtime-frames procedures special contains DSU also The in2001 Borght, 1999). der (Van Law, established Centre onWTO Advisory countr developing tosupport initiative important An building. agreements (Footer, 2001). Nordstrom (2005) and Nordstrom and Shaffer (2007), while acknowledging while (2007), andShaffer andNordstrom (Footer, 2001). (2005) agreements Nordstrom anddifferential andother special treatmentSecretariat certain inrelation under to dispute settlement to build their case, from taking the necessary steps steps to thenecessary buildtheircase, from taking Secondly, argued that ithas resource been constrai below, of issues implementation andenforcement. with deals which (iii) avenues considerations possible of insubsection These (and indetail reform) are examined restrictions). orbalance-of-payments trade remedies via (for instance foropt theirinterests other to options protect small liti from countries engagingincostly abstain to of co theirendeavours thefutility Anticipating re thatargued smallcountries lackthenecessary if ever. inTable shown As 16, countr least-developed 207 206 205 inexistent. export (as well as domestic) markets. To that end, Bown and Hoekman (2005) advocate private-public private-public markets. To advocate wellasdomestic) (2005) (as that andHoekman end, Bown export of on acountry’s trade policies theimpact to areassess needed associations of consumer andindustry surveys of a representative cross-section of companies involved in importing and exporting as well as infrequent istoo andthat process periodic criticize that theTPRM andMavroidis (2000) Hoekman reviewed. theMember against asevidence used cannot be of ageneral attorney,function andreports obligations ...specific procedures”, orfor dispute settlement i.e. isnot meant theSecretariat to fulfil the trade policies of Members’ reviews While (TPRM). thecreationTrade of with the wasmade Mechanism progress Review transparency. Policy Important therole of “surveillance”, stress andMavroidis (2000) Hoekman interchangeably aterm theyuse for countries, inrelation co notably to non-violation (1999)and Mavroidis highligh Horn expertise. outside andmay have to bringordefend to acase on(expensive) rely at theirdisposal countries expertise have may legal only limited andleast-developed many developing detected, has been groups private resourceful of that another could aviolation country Once monitor foreign trade practices. sinc information, relevant tocollect costs higher with manner.the appropriate an Hoekman groups) in order to raise awareness and provide legal assistance. legal andprovide to awareness raise inorder groups) LDCs have a share of about 0.8 per cent in world trade (2005 merchandise export values) and only filed asingle filed andonly values) export merchandise (2005 trade inworld cent per 0.8 haveashareofabout LDCs 1.5 per cent of disputes. See also Shaffer (2005). Shaffer also See 1.5 ofdisputes. cent per developing countries’ challenges challenges countries’ developing and WTO inthe ofpublic-private-partnerships issue the over overview adetailed for 2006) (2003a; Shaffer See to the special procedures agreed in 1966. See BISD, 14 BISD, in1966. See agreed procedures special to the 3.12, Articles See 4.10, 8.10, 12.10, 12.11, 21.2, 21.7, 21.8 3.12, and27.2 Article DSU. In ofthe made isalso reference complaint in the WTO (which corresponds to 0.3 per cent of complaints). Furthermore, LDCs were third parties in only inonly parties third were LDCs Furthermore, ofcomplaints). cent per to0.3 corresponds (which WTO inthe complaint 205 t disadvantages in legal capacity that morepronounced may for be poorer capacity inlegal t disadvantages 207 in establishing suchmechanisms. in establishing Developing countries fromDeveloping entitled are theWTO also to legalassistance on, increased surveillance by the WTO Secretariat aswellcapacity- Secretariat bytheWTO surveillance on, increased d Mavroidis (2000) contend that smallcountries areconfrontedd Mavroidis (2000) 278 mplaints, monitoringmplaints, andimplementation of rulings. erce economically powerful countries intoerce powerful economically compliance, nex 3of the theMarrakeshnex establishing Agreement nts prevent poor countries from obtaining information countries from prevent obtaining poor nts th taliatory power to enforce power rulingsintheirfavour.taliatory gation procedures in the first place orrightgation procedures away inthefirst to initiateadisputeandfr nts and private companies, NGOs and/or consumer and/or NGOs companies, andprivate nts take place inamoresyst Supplement (1966): 18-20. e there isalack of national mechanisms aswell ute settlement activities, including the provision of includingtheprovision activities, ute settlement y participation in dispute settlement is practically ispractically indisputesettlement y participation rs, like the reports by the Group of Three didin bytheGroup of Three likers, thereports ies in dispute settlement activities has been the has been activities ies indispute settlement alleviate the burden of developing countries of alleviate theburden developing in dis, 2000; Pauwelyn 2000). Firstly, ithas been 2000). Pauwelyn dis, 2000; 206 The authors make proposals authors further The om arguing their case in om arguingtheircase ematic fashion, theydo assessed empirically. conceptual reflect differ assessed They of thelegitimacy in thelitigation undermines process deal with the existence of constructive ambiguity and ambiguity ofconstructive theexistence with deal howto disputesettlement: brought for to WTO debates question thesurfacefundamental These (e.g. 2004). McRae, reaching” Members muchdeference too to taken bygiving measures byWTO Article 17.6(ii)Article Agreement. of the Anti-Dumping for allegedl rulingsontraderemedies for certain 1997b). recently, (Petersmann, More health policies criticized have been Body panelsandtheAppellate – Malaysia) therulingsin when dieddown disputes, butsomewhat Interestingly, criticisms early 2003). and Howse, (Essermann objectives policy domestic legitimate right topursue their on have animpact and Members of WTO thesovereignty (Davey, 2001).may that curtail claimed such practice has been It in obligations orlimiting theirrights, to Members’ have, Body occasions, onseveral and theAppellate andpurpose.”. object andinthelight ofcontext its faith inaccordancein good meaning intheir givento to theterms be of theordinary thetreaty with and purpose of thetreaty.and purpose interpreting are with charged adjudicators thetreaty 210 209 208 31(1)According to Article of the mandateThe ofbodies disputesettlement shouldbe. dispute settlement Finally,and newdevelopments. anumber of commentators have that alack suggested of transparency sovereignty.argument may this leadto encroachment critique, with goes, aserious onMembers’ Along for law making literature inthe criticized been times law, at have they WTO However, interpreting in consistency. internal its possible extent maximum of adjudication Issues have Body createDispute panelsandtheAppellate (ii) Mavroidis, 2000). brought countriesfor developing up been has also of simpler dispute costly proced and less settlement current and, mandatefor asanalternative of avenue, impartiality, reasons its theintroduction propose aid,highlight oflegal thelimitation the importance the years. Toothe years. muchrigidity, preven itisclaimed, have theconcern raised also scholars that thes WTO the Tokyo Roundto createa“federal prosecutor” For a For discussion of the role of various methods of interpretation treaty e.g. see Petersmann (1998). According 17.6(ii) to Article Agreem of the Anti-Dumping Precedents for an independent international bureaucracy to act as a prosecutor exist. Pursuant to Article 226 ofthe toArticle Pursuant exist. aprosecutor as toact bureaucracy international anindependent for Precedents Dumping Agreement. Tarullo (2002) and Greenwald (2003), for example, are affirmative, while Durling (2003) and (2003) Durling while areaffirmative, forexample, (2003), Tarullo andGreenwald (2002) Agreement. Dumping thelimits exceeded DSM has upon one of those interpretations. There is considerable controversy among legal scholars as to whether the WTO than one “permissible” interpretation, it shall consider the na within the time the specified period, Commission may opinion ofthe terms the with comply not does opinion”. a“reasoned state issues it member the inquestion, If state 1957 Treaty of Rome Establishing the European Community, the European Commission, at own its initiative, can take Leibovitz (2001) do not see an excess ofmandate. (2001) anexcess notsee do Leibovitz action against member states that fail to fulfil their obligations. After having received the observations by the member member bythe observations the received having After obligations. their fail that tofulfil states member against action demonstrated the deference of WTO dispute settlement to national disputesettlement demonstrated thedeference environmental of and WTO 208 210 In addition, the Appellate Body has said, based on Article 31 of onArticle the has based said, Body addition, In theAppellate of the standard of review and ofreview of thestandard Vienna ConventionVienna of ontheLaw Treaties came from environmentalists after the after from environmentalists came 209 s of the WTO Secretariat in providing assistance under assistance inproviding Secretariat s of theWTO Others have criticized WTO jurisprudence for have “under- criticized WTO Others y having disregarded the standard of review under ofreview thestandard y having disregarded ts the DSB the from dealing unforeseen situations with ts bring the matter before the European Court ofJustice. Court European the before matter the bring ences among WTO scholars about what therole of about scholars ences amongWTO been accused of exceeding their mandatebyadding their ofexceeding accused been on occasion by certain authors (e.g. Hoekman and (e.g. authors Hoekman by certain on occasion ystem has become too rigid, “judicialized”, too too has become ystem over stead of merely clarifying theambitof provisions ofstead merely clarifying d a large body of WTO case law, case ensuring to the of WTO body d alarge In interpreting WTO law, dispute settlement panels panels law, settlement dispute WTO interpreting In or “general Secretariat theWTO within attorney” ures for “smallures claims”. from before proposal The instead of administering it.“Judicial of administering instead activism”, the rulings.Legal questions of this sort can hardly be 279 ent, where a panel finds that a provision admits ofmore admits aprovision that finds apanel where ent, text in its context and in the light of the object andinthelight of theobject context inits text the interpretative approach mandated under the Anti- the under mandated approach theinterpretative loopholes in the treaty text? As stated above, stated text?As in thetreaty loopholes tional authority’s determination in conformity if it rests EC–Asbestos , and : “A interpreted shall be treaty US–Tuna US–Shrimp (Article 21.5 (Article US–Shrimp and the US –ShrimpUS Vienna Vienna

II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING WORLD TRADE REPORT 2007 SYSTEM: ACHIEVEMENTS AND CHALLENGES WORLD TRADE REPORT 2007 II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING SYSTEM: ACHIEVEMENTS AND CHALLENGES have noted that the WTO is crucially dependant on the good-will of its Members andthat much too Members of its onthegood-will dependant iscrucially have that noted theWTO Proposals have been made by to afew made have curbth authors been Proposals Most WTO scholars observe that and, therefore, of there isnoevidence judicial activism Mercurio observe with agree scholars WTO Most 31 and32Articles of Convention) theVienna of definition. However, isamatter heemphasizes that Pauwelyn (2001) referred sense that to therelatively interpretationwithin acknowledges in strict (even move towards increased “judicialization” tocr towardsincreased move seeks “judicialization” dispute settlement. endangers undue encouragement of undisclosed deals with advers undue encouragement with deals of undisclosed fear,judicial process of amongother the things,aloss that] theorganization aswecurrently knowit upon tenets andthefundamental intheWTO settlement control were andMember implemented, “the for flexibility increased that basisof ifproposals dispute (2004) rules, to meaning togiving limited be must interpretation 211 isarela WTO that the Recognizing commentators haveSome arguedinfavour for different reason. asomewhat of more diplomacy system Has thedisputesettlement Convention 215 214 213 212 correct legal passage of the text. It is argued that a“judicialized” isargued It of thetext. counterproductive may approach be passage legal correct the answer to all possible issues of conflict and that dispute settlement is a matter of applying the rules creates the illusion that the WTO isacomplete (u that theWTO theillusion creates rules holdthat afocus on They jurisdiction. precedence of WTO of facto addendaandthepower de treaty an legalized institutionalized, progressively is becoming as well as to introduce stronger elements of post-report diplomacy. as wellto of introduce post-report elements stronger consensus ruleof thereverse away report adopting with Pauwelyn argues that “[f]or a non-WTO rule to play a role in this process, (1) the WTO term in question must be broad broad be must question in term WTO the (1) process, this in role a play to rule non-WTO a “[f]or that argues Pauwelyn The Appellate Body confirmed that “[a]n interpreter is not free to adopt a reading that would result inreducing result would that areading toadopt free isnot interpreter “[a]n that confirmed Body Appellate The “fiduciary”) contract is characterized by longevity, a continuing relationship and substantial incompleteness. As incompleteness. substantial and relationship acontinuing bylongevity, characterized is contract “fiduciary”) countries. to “refer” possibility The bilateral trade disputes can help to to the “remove” WTO (atto least extent some two between relationship broader the for counterproductive be mayeven “bilateralism” more matters intrade fact, In of their mandate and (ii) rules of rules of theirmandateand(ii) and to provide form some reports of additional guidance to of parts certain toadopt decline would DSB the where procedure, adoption” of“partial form some for to make provision dispute, the toresolving helpful or necessary arenot that report inapanel findings agreement bymutual todelete parties for the seeking establishment of a panel rather than a bilaterally negotiated solution. attheWTO. disputewasaddressed trade previous experience as a trade from negotiator who Jara, Alejandro has noted Director-General that Deputy progress on other matters became easier, once a bilateral toWTO isowed observation This issues. ofpolicy range wider and for trade time) some rows that recurrently spoil the cooperation), to try to settle disputes to to in settle relational to try by of thecooperation), letter contracts resorting the contract. of atmosphere the sours it (since counterproductive at least or details), contract implicit verify or observe cannot a party (since impossible isoften it that hold authors These provisions. andelaborate rules explicit through than rather of“what isright” andasense values norms, byshared aregoverned contracts relational a consequence, A“relational” (or relations. ofinternational school managerial Chayes andChayesSee (1993) so-called the for WTO term should mean,WTO i.e., there must be connection some the what about something say must rule other the and(2) rules; byother input for toallow enough and ambiguous party. In the current DSU negotiations, the United States and Chile have proposed, andChile States haveproposed, United the DSUnegotiations, current the In party. of a blockingdiplomatic mechanism the advocating re-introduction solutions cases, in by difficult politically the losing ( Conventional Gasoline ( orinutility” to redundancy orparagraphs ofatreaty clauses whole See e.g.See Hippler Bello (1996). few that (2001), such appears It only authors, very as Barfield really wish to go back to (Pauwelyn, 2001: 572-573). 2001: (Pauwelyn, meaning add cannot rules non-WTO interpretation, oftreaty process the ... [W]ithin process. interpretive to the panels or the to Appellate Body amend the DSU. ... have Members to the authority Only amend WTO theDSU” to WTO rules thatto either goes WTO beyond or against the United States-Import Measures on Certain Products from the European Communities Products Measureson Certain United States-Import 212 which is the prerogative of WTO Members through negotiations. Members istheprerogative which of WTO , that treaty interpretation could interpretation not occur in , that treaty : 23). Elsewhere, emphasized Body the: Appellate 23). that “it not the of task is either certainly interpretation of the WTO agreements. See TN/DS/W/82 and82/Add.1. TN/DS/W/82 See agreements. oftheWTO interpretation tional contract of trade cooperation, Guzman (2002) and others andothers Guzman(2002) cooperation, oftrade contract tional See also Guzman (2002) for related arguments on governments’ preference governments’ on arguments for related Guzman(2002) also See become too“judicialized”? become would cease to exist” (Mercurio, 2004: 818). 2004: (Mercurio, to wouldcease exist” 280 215 These authors observe that thecurrent trading system observe authors These ‘clear meaning of the terms’ of WTO covered agreements” agreements” covered WTO of ‘clear terms’ ofthe meaning public good nature of setting legal precedents andan precedents legal nature of setting public good eate the appearance that WTO agreements contain agreements eate theappearance thatWTO rules of law and cannot extend to creatingnew of extend lawandcannot rules WTO adjudicative bodies concerning (i) the nature and scope natureandscope the (i) concerning bodies adjudicative WTO e authority of panels and the Appellate Body,Appellate of panelsandthe to do e authority e effects on other Members (Holmes etal., 2003). (Holmes onother Members e effects s, to increase party control overthedispute outcome s, to party increase atmosphere in bilateral diplomatic relations dealing with a nambiguous) contract, when inreality, when contract, nambiguous) itisnot.A d formalized of institutional innovations, by virtue which the DSU operates [would be eroded ... eroded be theDSU which [would operates and with a WTO term for a non-WTO rule to impart meaning toimpart rule anon-WTO for term aWTO with clinical isolation from from isolation clinical United States-StandardsUnited forReformulated and 213 Opponents of this weakening ofOpponents the inter alia : para. 92). : para. public international law. , to provide a mechanism for for amechanism , toprovide 214 211 to allow the Appellate Body to collect factual evidence and complete the analysis itself orto remanda itself andcomplete theanalysis evidence factual to collect Body to allowtheAppellate of thisover-reliance of thetreaty, ontheletter criti panels and the Appellate Body, to inregard forpanels andtheAppellate instance conciliation andarbitration techniques. in international trade, Charnovitz (2001) andHolmes than through to coercion. counter order In apotentia throughpersuasion modified ismoreeasily behaviour Mavroidis, 2000). panelsexerciseunder which “judicial economy” or with their selection. with to ensurethat associated proposed andreduce have delays theavailability of been qualified panellists 221 220 219 218 217 216 heard. arguments make their to actors inpa to inregard publicparticipation both attention most has thepanelphase attracted of inallphases isanissue dispute settlement, transparency While procedur disputesettlement WTO Do unresolved. questions andleaveimportant disputants may frustrate details andlegalistic to procedural, statutory obedience et al., excessive Second, 1996). from themselves may distance parties and dissatisfied unanticipated with indealing situations of itentails flexibility aloss First, threefor reasons: atleast case to the original panel. and capacity building. and capacity reporti increased of information, through confrontational moreharmonious andless proc an example, contend anumber of promoted scholars that compliance isbest inrelational contracts “sunshine methods” 2001: (Charnovitz, Taking 824). infavour made have called of lawapproach, reformSeveral amultilateralalso been proposals soft 2002a). (Charnovitz, of cooperation and theshared sense the security and predictability of the multilateral trading system. Pauwelyn (2006), for instance, proposes (2006), Pauwelyn of themultilateral trading system. andpredictability the security to of theDSM. current functioning thesmooth practice, to inorder preserve initiate disputes that butagains are formally correct, Appellate Body and, Body Appellate more generally, thejudicial elemen of panels/ theauthority strengthen theother ofOn hand, onhowto literature further alarge body exists A pertinent example is the statutory prohibition is for example the A statutory the pertinent Ap For an For explanation of the various adjudicativ vs. political offending measures in the country. host At the time, same investor-to-state arbitrations offer a bilateral solution to challenge governments home their toconvince need not do investors isthat approach ofthis advantage The as Canada (TN/DS/W/41) on streamlining the panel selection process. process. selection panel the streamlining on Canada (TN/DS/W/41) as international tribunals anddisputesett tribunals international before tohave astanding parties private for ispossible body, it isanintergovernmental which WTO, Unlike atthe of the prompt resolution of disputes. interest inthe parties the between undisputed facts or panel bythe determinations offactual basis the on analysis” (2005). (2005). conformity. See also Fink and Molinuevo (2007). conformity. FinkandMolinuevo also See the complainantbetween and the government host without th either to the International Centre for or to the of Settlement Investment Disputes (ICSID) include provisions on investor Downs et al. (1996) and Bown (2004a). (2003), Lawrence see note acritical For Chayes Chayes and (1993) (2002). Guzman and (2002a), Charnovitz See established underestablished the Arbitration Rules of the United Nati See also proposals by the EC (TN/DS/W/1) on a permanent body of panellists and by Thailand (TN/DS/W/31) as well as (TN/DS/W/31) andbyThailand ofpanellists body apermanent on EC(TN/DS/W/1) bythe proposals also See panel or to fill gaps in fact-finding left by the panel. However, occasionally, the Appellate Body has “completed the On remand authority see also, see e.g., remandOn authority by the proposal EC (TN/DS/W/38). 220 217 This notionThis of “managing” thecompliance relies process ontheargument that 219 Another example is Mercurio (2004) who discusses arange of strategies discusses who (2004) isMercurio example Another -to-state arbitrations. Under agreements, most -to-state ng, monitoring, implementation procedures, involvement review NGO lement mechanisms. Several free trade agreements, such as NAFTA or ASEAN, ASEAN, or suchasNAFTA agreements, trade free Several mechanisms. lement 221 218 Some have also noted the opacity of the deliberation process by process of thedeliberation have noted theopacity Some also Most of these authors see theirsuggestions asacomplement see of authors these Most es lack adequate transparency? the decision to seek outside expertise (Hoekman and (Hoekman expertise outside to seek the decision cs maintain, is a loss of the initial spirit of the GATT ofthe initialspirit ofthe isaloss maintain, cs t the spirit of the agreement (Klein, 1996). The result The 1996). t thespiritof theagreement (Klein, nel hearings and the possibility of non-governmental ofnon-governmental nel hearingsandthepossibility et al. (2003) recommend a greater use of mediation, agreateruse recommend et al. (2003) l trend towards excessive an l trendtowards excessive 216 human rights and environmental agreements as andenvironmental human rights agreements the system and turn to outside solutions (Downs (Downs solutions andturn to outside thesystem anda“normative pull” culture of compliance) (a the role of the WTO Secretariat, thecircumstances Secretariat, therole of theWTO e models of international dispute settlement see Merrills 281 ons Commission on International Trade (UNCITRAL). Law ts of WTO dispute settlement in order to increase in order disputesettlement ofWTO ts Third, itmay invite “trigger-happy” to Members esses that andaccessibility rely on transparency esses pellate to Body reconsider by established the the facts e obligation of the latter to measures bring its into foreign submit can investors their claims d “unfriendly” litigation ad hoc arbitral tribunals

II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING WORLD TRADE REPORT 2007 SYSTEM: ACHIEVEMENTS AND CHALLENGES WORLD TRADE REPORT 2007 II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING SYSTEM: ACHIEVEMENTS AND CHALLENGES 2006). Therefore, every WTO Member is under anunalterable isunder international Member to obligation comply with WTO Therefore, every 2006). may comply by Member ameasure issuccessfully When challenged, thedefendingAgreements. WTO will be further discussed inturn. discussed further be will is appropriate, are punitive called damages orwhether terms of inducingcompliance, has been thequestion and equivalent retaliationharm intrade authorized benefits that andloss has by far.DSB the been so In noted. Finally, have the several authors questioned me ofretaliatory andpracticality availability limited Secondly, commitments. measures andthe theinfrequent from WTO derogation of compensatory use may,compensation, theaggrievedMember to subject concernedis accepted. neithercomp theMember If adequa basisifitoffers measure onatemporary measure, theoffending maywithdrawing the oritmay maintain achievecompliance It inother ways. composition of individual panels(Davey, ofindividual 2002).composition concerns to transparency but also address asto predictability andlegal professional quality to establish standing dispute panels or to streamline th proposals The for called authors. panelshave by these advising been andtheSecretariat experts external the victim by “rebalancing”the victim orto induce compliance? asto to shouldbe. what Shoulditbe compensate theaimof are dispute divided settlement scholars WTO ofWhat disputesettlement? theobjective should be of implementation Issues Enforcement implies that theoffending intheWTO (iii) to order duringpaneldelibe fosterIn transparency of consideration that wouldallowfor procedures asystematic operating to establish proposed has been It 223 222 anddeter tocompliance return aprompt motivate 22.4 abov of theDSU) to Article (contrary damages must is(and dispute settlement of WTO objective to prot order In of precedent. by creatingadegree international including organizations of andof character dispute emphasizing settlement, thepublic good s “compulsory disputesettlement and its worldwide Agreement of3.2 theDSU 2001). (Hilf, (1997b: Petersmann theWTO 57) has notof portraying tired DSU, andnumerous theruleof have of scholars argued theWTO’s that DSM themainfunction isto serve the DSU, that have some proposed into measures conformity.DSB rulingsandbringits H of themultilateral asmandated inArticle trading system, andpredictability law andensure thesecurity authors haveauthors theDSU’s questioned obligations insistence overtemporary oncompliance WTO with DSU’s of the enforcementFirstly, with dealing arange of matters. aspects certain taken with issue Anumberequivalent of caused. commentators have to theeconomic harm intrade benefits andloss The Appellate Body has ruled that panels have the discretion to accept toaccept discretion havethe panels that ruled has Body Appellate The A first experience with public hearings was made in the recent recent inthe made was hearings public with experience Afirst amicus curiae to accept or those briefs. reject See obligations in the EC–Hormones October 2006 for observation by WTO Members and the general public via closed-circuit broadcast to a separate toaseparate broadcast closed-circuit via public general andthe Members byWTO observation for 2006 October on 27-28 and their scientificopen proceedings with the parties experts on and 2-3 with the parties 2006 September of their right to seek information from any source (Article 13 of the DSU). It is left to the discretion of panels whether whether ofpanels discretion tothe isleft It 13 DSU). ofthe (Article anysource from information toseek right of their viewing room at WTO Headquarters inGeneva. Headquarters atWTO room viewing briefs by non-state actors bynon-state briefs dispute (DS320 and DS321). At the requestof the panels the agreed parties to US-Shrimp/Turtle extra- 222 contractual behaviour must be sanctioned through “punitive” sanctioned be must behaviour contractual vis-à-vis and the explicit right to open hearings (Charnovitz, 2001). right hearings(Charnovitz, to andtheexplicit open 282 (Appellate Body Report, WT/DS58/AB/R: paras. 107-108). paras. WT/DS58/AB/R: Report, Body (Appellate ect the integrity of themultilateral theintegrity the trading system, ect the nomination for andthe of theroster panellists litigating Members (Hoekm litigating Members asures, especially for developing countries forasures, developing especially have been deviations (Charnovitz, 2001; Mavroidis, 2000). te compensation tote compensation thecomplainant andtheoffer be) to re-establish adherence to the rules (Jackson, adherence to (Jackson, therules to re-establish be) methodologies used in the calculation of inthecalculation economic used methodologies rations, for guidelines therole andcompetence of raised whether the standard of equivalent damages ofequivalent thestandard whether raised measure isbrought into theWTO conformity with The latter is the principal objective enshrined inthe enshrined isthe principalobjective latter The ystem” for “constitutionalizing” asamodel other e selection process not only seek to ensure not constant seek only process e selection e and beyond the“rebalancinge andbeyond level” to inorder for. are not issues unrelated, these Although each ence, while satisfied with the current objective ofence, thecurrent with objective while satisfied lies nor provides mutually acceptable temporary temporary acceptable mutually provides nor lies prior DSB approval, take retaliatory measures priorDSB approval, take retaliatory United States/Canada–Continued suspension of States/Canada–Continued United amicus curiae briefs by non-state parties inbriefs by parties view non-state an and Mavroidis, 2000), 2000), an andMavroidis, 223 more flexible dispute settlement system (Zimmermann, more flexibledispute system settlement 228 227 226 225 224 under-utilized. isheavily compensation and temporary DSU to aMember thepressure inorder under compliance theprincipalremedy If isnot forthcoming, retaliationCompensation, andalternative remedies punishments. commensurate DSM’s towar orientation of theWTO the mainbenefit orasuspension isprovided ofcompensation concessions aconsequence, tolerated. As HipplerBellosees “optingon theonehand anddeliberately ontheother, obligations out”of certain aslongtariff compliance DSB rulings with between right to giventheexplicit shouldbe choose but holdthat Members of this view, such asHipplerBello(1996), are content thecurrent of “equivalent” with standard damages, re shouldallowforwhich anorderly asa“supranational”settlement “transnational” its stress authors compliance these system, character, asawebof bilateral concessions, theWTO argue see infavour who of authors, returningOther to a covered by WTO agreements. agreements. byWTO covered of andacomplexsuch set obligations, astheones multipleparties international between contract for an isill-suited players) literature two ontheexchange of market between access commitments such anapproach clauses, escape temporary with conceptu being (1999) arguethat convincingly besides a partial compensation for compensation thecomplainant.a partial constitutes atleast sectors import-competing of its protection party, ontheoffending deterrent effect as consumers and competitive industries (Pauwelyn, (Pauwelyn, industries andcompetitive as consumers additional economic onboth inefficiencies sides. bycooperation thedefendant, introduce Higherlevelsof butentails protection other disadvantages. measure tointo bringits Member pressureconformity. onthenon-compliant exert not direct of retaliation basicidea isthatThe sectors ofwithdrawal theinconsistent measure to compensation. sector (Guzman, 2002). (Guzman, sector to offered another protection to more foreign for asacompensation competition WTO-illegal industry wouldruninto internal Member diffi offending political why, reason One liberalization measures). inreality, ishardly compensation that may everoffered the be of onthescope and agree andtheway compensation to orother implement cuts it(e.g. via tariff to thecomplainant indispute wouldneed negotiate isrequired. andtherespondent Members between to measure into bringanoffending with conformity Retaliation induces exporters in the non-compliant country to lobby their government to keep foreign markets open open markets foreign tokeep government their tolobby country non-compliant inthe exporters induces Retaliation According to DSU Article 22.1, is“voluntary toDSUArticle According compensation This is This owing to so economy either political consideration Schwartz and SykesSchwartz (2002: 26) hold that the main innovation of the DSU ( repealed. Act Copyright Cases, in which compensationwas rare. agreed upon, are arbitration very Following in and act as a counterweight to the influence of import-competing industries. industries. ofimport-competing influence tothe acounterweight as and act old system at ensuring forold breach efficient system that are opportunities not undermined.” violators from the or actual threatened imposition of excessive In turn, sanctions. it ought than to better the perform ofprotecting job abetter does system new The … violation. bythe done harm tothe equivalent are substantially ‘buy of out’ the violation at a price set by an arbitrator who has carefully examined the of question what sanctions is large world prices. enough to affect anti-dumping duties, could be chosen, but may give rise to further legal questions. legal tofurther rise maygive but chosen, be could duties, anti-dumping ofexisting reductions as such compensation, oftrade forms other that possibility the mentions briefly (2007) Bagwell countries. third on externalities (positive) these for scope the limits below, discussed isfurther which compensation, to complainant both anddefendant, make attractive itless deter violation of most substantive rules ... What the system really adds is the opportunity for the losing disputant to disputant losing the for opportunity isthe adds really ... system the rules What substantive ofmost violation deter institutionalization of the “efficient breach” “[ principle: agreements”. that provision This e.g. suggests co tariff , the United States paid financial damages to the European music industry until the offending lawwas offending the until industry music European tothe damages financial paid States United , the 226 In addition, In for similar reasons, thesuccessful complainant islikely to prefer 224 However, Jackson (2004), Pauwelyn (2000) and Dunoff andTrachtman andDunoff (2000) Pauwelyn However, (2004), Jackson balancing of concessions between parties to thedispute. parties Proponents balancing of concessions between 228 Retaliation can be executed by thecomplainant be Retaliation can without (which is mainly based on an abstract game-theoretic game-theoretic onanabstract ismainlybased (which ly involved inthedisputeareharmed andconsequentlyly In addition, it affects “innocent bystanders”, addition,In itaffects such mpensation must be granted on an MFN-basis, which may must granted be mpensation on an MFN-basis, T]he innovation of the DSU was intended not so much to much so not intended DSUwas ofthe innovation T]he WTO law is retaliation. The option of voluntary ofvoluntary option The lawisretaliation. WTO or positive terms-of-trade effects if the retaliating country or terms-of-trade positive effects since exporters from third countries also benefit. Monetary Monetary benefit. fromthirdcountries also since exporters 283 ds the“rule of of law” intheinstitutionalization 2000; Charnovitz 2001, Hence,2000; itruns 2002a). ally flawed for flawed confusingally enforcement provisions culties if it were to expose an unrelated domestic domestic anunrelated toexpose were it if culties 2005). Rather than conceiving of WTO dispute Ratherthan conceiving of WTO 2005). 225 and, if granted, shall be consistent with the covered the with consistent shallbe granted, and,if The principal problem isthat principalproblem anagreementThe vis-à-vis the old GATT system) was the was system) GATT old the US–Section 110(5) of theUS US–Section 227 In additionto In the

II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING WORLD TRADE REPORT 2007 SYSTEM: ACHIEVEMENTS AND CHALLENGES WORLD TRADE REPORT 2007 II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING SYSTEM: ACHIEVEMENTS AND CHALLENGES (Bown and Hoekman, 2005). Reform proposals su Reform proposals 2005). andHoekman, (Bown commitments tomake willing liberalization trade less generally maybe power retaliatory sufficient lacking the effectiveness of tariff retaliation of tariff the effectiveness without any hope of obtaining reparation (Bronckers and van den Broek, 2005). andvan denBroek, of reparation any obtaining without (Bronckers hope by Member’s theoffending non-compliance, caused incurred ontop of wouldbe thecosts settlement i.e. by“small” complaints 2005), Hoekman, countries of that dispute areneverbrought, since costs mentioned gives previously, of retaliation thefutility unfavourable to conditions. date Indeed, developi at settlements oroffer countries may eitherremain non-compliant Large 2000). Pauwelyn 2000; to countries deter economically powerful from commit Hence, 2002). retaliation to fails alter pressure (Anderson, theirbehaviour sufficient onlarger Members Conversely,trade improvements. smallcountries, inview not obligations andeven incompliance to be its with found harm economic to theparty cause countries large can measures, However, retaliatory inapplying 2002). (Anderson, suppliers regular with relations disturbed from or higherprices suffer who of intermediate products andimporters byconsumers face resistance negotiations oncompensation. orincompliance intheoriginal proceedings procee Body exist than under earlierintheprocess determined be that thelevelof nullificatio suggest proposals review by adiscount offering as compared to more the retaliationcompensation attractive award.DSU Several thecreation of anarbitration proceduredispute. suggests for andto compensation Schropp make (2005) that to theypromise liberalize a theylose incase sectors pre-commit that Members proposes (2003) are consideredneeded imports too high winning complainant to choose sectors for compen winning complainant sectors to choose orthat itauthorize shouldreduce the tariffs Member thenon-complying indicate in sectors which DSB that theWTO proposed has been It 2000). andautomatic (Pauwelyn, mandatory compensation to made make has been aproposal tariff inother sectors, reductions through tariff trade) not less unlike (which compensation orderto of theremedy retaliationIn strengthen temporary leadsto more retroactive effect. alia retalia inapplying interest mayhaveno complainant likelyRetaliation isalso to leadto trade diversio obje andits counter to spiritof WTO theliberalizing 234 233 232 231 230 229 The African group has proposed to allow collective retaliation (TN/DS/W/15 and TN/DS/W42), see also the LDC group LDC the also see andTN/DS/W42), (TN/DS/W/15 retaliation collective toallow proposed has group African The , introducing the concept of remedies with effect , introducing theconcept of effect remedies with proposal (TN/DS/W/17). A group of developing countries comprising India, Cuba, the Dominican Republic, Egypt, Egypt, Republic, Dominican Cuba, the India, comprising countries ofdeveloping Agroup (TN/DS/W/17). proposal It should be noted that optimal tariffs are close to zero in countries that are too small to affect world prices, and, prices, world toaffect small aretoo that incountries tozero areclose tariffs optimal that noted be should It See, e.g., proposals by Ecuador (TN/DS/W/33), and Korea (TN/DS/W/35). andKorea (TN/DS/W/33), byEcuador e.g.,See, proposals (TN/DS/W/33). andbyEcuador (TN/DS/W/32) byJapan EC(TN/DS/W/1), bythe proposals See hence, increase tariff countries (TN/DS/W/47). countries Honduras, and Jamaica Malaysia has to proposed the ease more the defendant’s exporters depend onthemarket ofth depend more thedefendant’s exporters rulin with tocomply decision policy governments’ the defendant of complainants is the crucial determinant capacity affecting that shows retaliatory (2004a) Bown latter party’s self-enforcementlatter party’s threats. rulings. as thereby the complainant’s Retaliation is understood capacity market power See, e.g., proposals by Mexico (TN/DS/W/23), the LDC Group (TN/DS/W/37), and the African Group (TN/DS/W/42). Group African andthe (TN/DS/W/37), Group LDC the (TN/DS/W/23), byMexico e.g.,See, proposals 233 s would reduce welfare.s wouldreduce 234 232 and mechanisms that foster expeditious implementation by, andmechanisms that foster expeditious , both economically andpolitically., both economically 284 n, and hence economic impacts onthirdcountries. The n, andhence economic impacts gs adopted by the DSB or to remain recalcitrant recalcitrant toremain or DSB bythe gs adopted ggest promoting of theuse compensation,ggest ng countries have concessions. neversuspended As n or impairment caused by an inconsistent measure byaninconsistent caused impairment n or tory measures, when the costs of raising tariffs on of raising tariffs thecosts when measures, tory rise to the suspicion of “missing cases” and (Bown ing DSU rules,eitherby thepanelorAppellate ctive to secure predictable business opportunities. opportunities. business predictable to secure ctive extract additional economic benefits via terms-of- additional economic benefits extract ting a violation against small countries (Mavroidis, smallcountries (Mavroidis, against ting aviolation sation (Horlick, 2002). Alternatively, 2002). Lawrence (Horlick, sation as of of theadoption DSB rulings orevenwith conditions for the of use cross-retaliation by developing of their limited market of theirlimited size, areunable to exert e complainant, themorecre dings, with a view to facilitating aview dings, with andexpediting 229 Even larger Members mayEven larger Members vis-à-vis dible and deterring arethe anddeterring dible 230 Smaller countries Smaller the defendant: The thedefendant: 231 vis-à-vis improving those inter Payments received could be disbursed asreparation for disbursed could received be Payments amounts and the possibility for richcountries to buy andthepossibility amounts Others economy perspective. orpolitical efficiency from aneconomic for itwasdesirable Member theoffending whenever that used this wouldbe option become known as“carousel known become retaliation” 2002). (Sek, on morepressure to idea exert Another 2002). (Bown, the incentive to comply, “stiffer” penalties have been the means of enforcement since itisnot controlled by theoffender. resort, of last to order increase In 239 238 237 236 235 nations may perceived not welleither. be thepublic eye,In from moneyflows developing countries that have adispute lost to industrialized 2003). (Lawrence, lobbies pressure domestic less than faced trade retaliatory barriers triggers by export onthegovernment burden (shoulde budget increased of may anincentive represent less to for comply, theoffender pay-offs since an equivalent monetary theoriginal concern balance isthat of concessions. systemic compliance Another wouldnot re-establish current rules.However, of following theapproach under already eachyearandthat trade damage percentage arbitrators determine by acertain increase permanent basis.Bronckersand onamoreorless DSU inthe reform negotiations. to that effect proposals have submitted Members remedy. Several WTO su amongothers, (2005), Bronckers Broek andvanden than theviolation where occurred. those other agreements orunder to that cross-retaliation, countries’ isretaliationdeveloping insectors resort by the violating measure. violating by the developing countries to inorder developing overcome theproble Those who advocate more flexibility to temporarily totemporarily flexibility more advocate who Those may continue to disregard its duty,may continue form whatever its to disregard mandatory, Member theriskwouldremain became that compensation anon-compliant Even iftemporary There are several examples of other agreements envisaging agreements ofother examples areseveral There Limão and Saggi (2006) show that monetary fines act bo act fines monetary that show (2006) andSaggi Limão least-developed Members affected by WTO-inconsistent measures taken by developed Members. bydeveloped taken measures byWTO-inconsistent affected Members least-developed Market for Eastern and Southern Africa (COMESA) (Articles 8, 171) 8, 171). of principle ECTreaty The (Article andthe (Articles (COMESA) Africa andSouthern Eastern for Market and the African Group (TN/DS/W/15 and TN/DS/W/42) sugg andTN/DS/W/42) (TN/DS/W/15 Group African and the 20.6, para.5) and, furthermore, the North American Free Trade Agreement (NAFTA) (Chapter 11), (Chapter Common the (NAFTA) Trade Free Agreement American North the furthermore, and, 20.6, para.5) also the free See trade ag Final_Texts/Section_Index.html. TRIPS retaliation, denying foreign IP rights, at least in the short run, results in assets being available at a lower price, atalower available being inassets results run, short inthe atleast rights, IP foreign denying retaliation, TRIPS footnoteSee 232 Charnovitz of (2002), Hudec the In above case and. (2002a). Subramanian andWatal (2000), “Carousel” retaliation refers to the periodic revision of the ofthe revision periodic tothe “Carousel” refers retaliation See the proposals by Ecuador (TN/DS/W/33), China (TN/DS/W29), the LDC Group (TN/DS/W/17 and TN/DS/W/37), andTN/DS/W/37), (TN/DS/W/17 Group LDC the China (TN/DS/W29), (TN/DS/W/33), byEcuador proposals the See (TN/DS/W/3), for example, have prohibitions proposed of “carousel” retaliation. (TN/DS/W/3), criticism ofthisprac and maximizegreater pressure domestic number on of the offending exporters government. (2002) Sek notes wide animport byalleviating litigation of dynamics the maychange and,hence, lawfirms toprivate countries by developing fees oflegal payment facilitate “cash that could notes remedies” (2003a) Shaffer loss. todeadweight due tofines compared manner an inefficient See Ramírez Robles (2006). andMexico. Union European the between one the as such agreements, trade free incertain features it Nevertheless, 1992). (Cottier, agreements international other with conflicts andmaycreate inacountry rule-of-law the undermines toexpropriation, amounts natureofrights, private the given rights, property intellectual suspending that concern the raise discomfort”. ofcross-retaliation “political Critics considerable cause could area IP inthe of retaliation contends also that even “negligible” (2002: tariff. 90) Hudec of ai.e. retaliatory effect has the opposite amounts international law on State responsibility. State responsibility. lawon international establis firmly isalso parties toinjured liability financial the United Statesagreement between and Chile http://www.ustr.gov/Trade_Agreements/Bilateral/Chile_FTA/ see into a fund to appropriate sponsor initiatives to the facilitateFor full of the the text parties. trade free trade between 22.15, Article See para. 5. compensation is The paid to or, the complaining party if the FTA Commission decides, so make annual at payments a 50 per cent discount compared to the level of damages determined by the dispute panel. to possibility the including compensation, monetary for andChile,provides States instance, for United the between the inefficiencies introduced by tariff retaliation. Tariffs transfer income via terms-of-trade changes, but do so in so do but changes, terms-of-trade via income transfer Tariffs retaliation. bytariff introduced inefficiencies the tice, including from domestic i tice, includingfromdomestic 236 It may also be more easily applied retroactively (Davey, 2005b). appliedretroactively more 2005a, easily be may also It ant inbringingacase. constraint . 237 239 Some authors explore the idea of collective retaliation by of theidea collective explore authors Some ndustries. Australia (TN/DS/W/49), (TN/DS/W/49), Australia ndustries. derogate from certain WT certain from derogate are concerned with thedeterminationare concerned of appropriate with compensation wouldtake.compensation Retaliation wouldremain hed in the domestic law of many countries and exists also in also andexists lawofmanycountries domestic inthe hed 238 and van den Broek (2005) counter that could fines (2005) Broek and vanden proposed, i.e. deliberately punitive damage awards i.e. damage punitive proposed, deliberately introducing anelement of punishment to induce ms of limited market size (Maggi, 1999; Pauwelyn, marketms oflimited size (Maggi, a trading partner to comply with a WTO ruling has to WTO a comply with atrading partner themselves outof theirob themselves th as a deterrent and compensation mechanism and avoid reement between Singapore and thereement United between States (Article compensation in monetary form. free compensation trade The in monetary agreement 285 Furthermore, Members have to facilitate proposed Furthermore, Members red by a large number of unorganized taxpayers) taxpayers) ofunorganized number byalarge red the injury suffered by industries directly affected list of targeted sectors in order to (threaten to) harm a pport financial asanalternative compensation pport esting monetary compensati monetary esting and Thailand and the Philippines andthePhilippines and Thailand O obligations may presumeO obligations ligations “too cheaply” on for developing and/or on for developing and/or 235

II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING WORLD TRADE REPORT 2007 SYSTEM: ACHIEVEMENTS AND CHALLENGES WORLD TRADE REPORT 2007 II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING SYSTEM: ACHIEVEMENTS AND CHALLENGES protect their industries, supposedly atadiscount. supposedly theirindustries, protect re monetary some obtain can toretaliate opportune pursuant to Article 22.4 of the DSU. A systematic under-compensation is said to 22.4 result issaid from under-compensation theabsence ofpursuant theDSU. to Article Asystematic haveA number of criticized authors theway inwhich DSB authorized by the be to of levelof concessions onthe suspension Arbitration indecision-making, toparticipate meetings, attend “penalties”New intheliterature for to instance rights, thesuspension discussed include of membership ascompensation. to theaggrievedcountry isthendisbursed which bond, to whether pay ornot thefineandrecover to bond theright pay thedecide thefineandforfeit to its 2000). 245 244 243 242 241 240 assistance. technical to receive the trade agreement isconcluded. “escrow”) (an aneutral with party atthetime abond has posted eachcountry (2006), andSaggi Limão asa“back-up” Retaliation retaliation. if, avoided be by can compensation assuggested for monetary isfound that oneinterested that islarge country enoughto atleast credibly threaten necessary it isstill efficient ifonlythird countriesefficient were al (supposedly small developing countries) could higher expect revenues, but globally it would be more thelosing pa whether thequestion design, particularly or attempts to rally international mobilization mobilization international torally attempts or DSB rulings implementation of of more subtle such of asimproved Members’ methods, surveillance violation.A number have of theunderlying scholars with come outinfavour outofnot proportion be measures intoits conformity. Moreover, di itwouldbe of retaliation by the DSB (Pauwelyn, 2000; Bronckers and van den Broek, 2005; Trachtman, 2005; Bronckers Broek, andvanden 2006). 2000; bytheDSB (Pauwelyn, of retaliation commencement of thebreach andtheauthorizationfor between any suffered intheperiod damage influence onthecompliance process. stakeholders. As explained above, As stakeholders. todomestic mobilization”, ofgovernments exposure “home-directed that isanincreased includes latter “foot-dragging” tactics by offending WTO Members, i.e. measure of onenon-compliant Members, theswapping “foot-dragging” by WTO offending tactics damages prospective According (2003), to Lawrence alienate the penalized Member from further engaging in WTO matters and reduce its motivation andreduce to its bring matters alienate engaginginWTO from thepenalized further Member of retroactive damage awards. Under current DSU Under awards. damage of retroactive This idea has been taken up by Mexico. See WTO document TN/DS/W/23. document WTO See byMexico. up taken been has idea This Experiences with the suspension of have Experiences rights membership made in been the IMF, the Montreal Protocol for the The authors also show that the possibility of show also financial that authors The the co possibility The authors quote in authors The an article collective responsibility” championed responsibility” in Charter,collective the UN “principle of ofthe lines the along scheme retaliation acollective proposed countries developing other andnine India political economy ispolitical cost in likely interests other countries. theThis has to expected the outweigh consequence that Bagwell et al. (2007) show that the expected benefit of acquiring the right to retaliate in a country with strong domestic Protection of the Ozone Layer or the ILO (Charnovitz, 2001; Lawrence, 2003). 2003). 2001; Lawrence, (Charnovitz, ILO the or Layer Ozone ofthe Protection rights) can reduce overall efficiency. efficiency. overall reduce can rights) retaliatory toretire party losing the for possibility the (essentially stage compensation aprior conditions certain under option if compensation is not forthcoming. with the United States. However, in the final agreement, the suspension has of chosen as been a benefits fall-back only if it is backed up by bonds and not by retaliatory tariffs as a supporting instrument. point out that a “small” country may prefer that others retaliate, leading to possible collective action problems. action collective topossible leading retaliate, others that a“small” mayprefer that out point country Enforcement Mechanism”), in which Chile such proposes an “escrow” scheme for bilateral its free trade agreement 240 Others suggest makingretaliation tradable, donot suggest findit who rights such thatOthers Members 245 Inside U.S.Trade While such proposals may not entail negative trade effects, theymay trade effects, may not negative entail such proposals While proposals include “sunshine include proposals methods” 243 When a country isfound to obligations, ithas acountry haveto violatedWhen its lowed to acquirelowed theright to retaliate. 286 13 of 11 November 2002 (“Chile Looks for Monetary Sanctions as Sanctions 13 Monetary for of11 (“Chile 2002 Looks November vis-à-vis 241 Bagwell et al. (2007) further elaborate on auction elaborateonauction etal. Bagwell (2007) further to use the DSM or to exercise other WTO rights or rights DSMto the orto use exercise other WTO the equivalent calculated levelof has damages been mpensation has an added value for the level of cooperation see footnote 232 above. However, Limão and Saggi (2006) 232 footnote above. (2006) However,see andSaggi Limão fficult to identify a suspension of rights that asuspension of would rights to identify fficult paration, wouldacquire others theright while to rules, complaining parties arenotcompensated complaining parties rules, coupled with weak procedural disciplines invite disciplines weakprocedural with coupled non-compliant states (Charnovitz, 2001). (Charnovitz, The states non-compliant rty should be allowed to bid. If it was, sellers itwas,sellers allowedto bid.If shouldbe rty geared at exerting constructive constructive atexerting geared 244 242 Under the latter approach thelatter Under (2002) argue that the WTO is a profoundly political agreement between self-interested policymakers. self-interested policymakers. isaprofoundly agreement(2002) between argue political that theWTO level of adverse trade effects of the inconsistent measure (Anderson, 2002). of theinconsistent measure (Anderson, trade effects level of adverse of point Another concern that arbitrators has have been thelevelof authorized set retaliation equal to the for instance, seeks to estimate welfar toestimate seeks for instance, interim measures implemen DSB rulingsfully the adverse wouldhave(the implementing to Member demonstrate that themeasures ithas taken to comply with of of of timefor proof theburden onthereasonable period implementation,improved rules areversal include These process. upthedispute settlement to speed by authors theabove proposed have been o civn ulrblnigms ete“xetto damage”. “expectation the be must fullrebalancing for achieving andSykes contend (2002) andSchropp Schwartz (2005) that thebenchmark lines,these Mavroidis (2000), transparent methodologies used in certain past arbitration awards, past transparent incertain used methodologies than light fully In of theless 2007; (Bagwell, challenges Keck, 2004). anddata methodological posed have effects, letalonewelfare andother second-round trade effects, Even of thecalculation direct any balance. kindof criticismshave political not resulted These inreadily operational reform proposals. nature, political deny thatGiven its awards theauthors limited re-establish to can economic damage 251 250 249 248 247 246 another.with additionto In of theintroduction damages, retroactive US–Continued Dumping and Subsidy Offset Act of 2000 (CDSOA) (22.6) (CDSOA) of 2000 Act andSubsidy Offset Dumping US–Continued For example, in example, For The panel report on “Australia – Subsidies Provided toPr “Australia on Provided –Subsidies report panel The proposals, see, e.g., proposal by Australia (TN/DS/W/49). byAustralia e.g., see, proposal proposals, Since Since scenario on which the final award was based differed from the counterfactuals that had been proposed by the parties. parties. bythe proposed been had that counterfactuals the from differed based awardwas final the which on scenario applications rules. Keck for See of et more. al. WTO (2006) ofother inanumber also arerelevant effects trade Counterfactual measure. inconsistent bythe caused loss welfare 22.6arbitration under Article of the DSU. course, Of the equivalent not does measure value the of actual imports in standard the become has intoconformity, brought been had measure inconsistent the that counterfactual the are considered as protected by an overarching “liability ru “liability byanoverarching protected as are considered of remediessystem that provides for “expectation damages auth The violations. further totrigger likely are remedies show that, and for Staiger Howse the externalities. (2006) latter reason, such increase of the probability third-party wouldsuch require information a detailed system preferences a about government’s and might political-economic that cautions (2007) However, Bagwell forth. andso production, ofswitching costs markets/partners, new finding of costs ofscale, diseconomies foregone, ofprofits values (discounted) present the include losses efficiency Those by caused the breachadded production) of the agreement ofand inconsistent frequency administration or implementation. in takes which andimpairment ofnullification level of the terms-of-trade level is restored, retaliation results in an internal (local-price) distortion for the complainant. the for distortion (local-price) inaninternal results retaliation isrestored, level terms-of-trade true, as Bagwell (2007) notes, that even if byof virtue retaliation commensurate the pre-violation to trade effects, the implications ofbecause breach and retaliation concern th International Court of Justice (ICJ) see Merrills (2005). (2005). Merrills see (ICJ) ofJustice Court International the level of nullification or impairment caused by the inconsistent measure is the subject of a number of DSU review ofDSUreview ofanumber subject isthe measure inconsistent bythe caused impairment or ofnullification level the one. of Sequencing compliance and proceedings arbitration on retaliation, the implementing may Member successfully procrastinate by replacing one illegal measure with another is unclear on this (Valles question and McGivern, 2000). DSU The submitted. be can concessions tosuspend arequest before ofnon-conformity determination its have finished Judging from past experience with WTO arbitrations, an est WTO with Judging from experience past allow the arbitral tribun International Trade (UNCITRAL) Law e.g.See (1998) and Voon Jackson and Lockhart (2005). WTO-consistent regime. did not Arbitrators how counte disclose WTO-consistent banana the under ofECimports value the “Expectation damages” foregone (trade costs “Expectation embrace opportunities or in losses value- domestic all efficiency further proposal by Mexico (TN/DS/W/40); see also proposal by Japan (TN/DS/W/32) suggesting a prospective determination determination aprospective suggesting (TN/DS/W/32) Japan by proposal also see (TN/DS/W/40); Mexico by proposal not of beprecluded prohibited in respect subsidies in the may ofremedies application retrospective that illustrates 21.5 States” (DS/WT126/RW) United Article DSUbythe ofthe in the form of an interim award. See UNCITRAL Arbitration Ru Arbitration in the form of an interim UNCITRAL award. See that such subsidies be withdrawn. See in particular paragraphs 6.29-6.32. For remedies with retroactive effect, see remedies effect, For with retroactive that such paragraphs subsidies in withdrawn. be particular See 6.29-6.32. EC–Bananas 247 EC–Bananas (Article 22.6 of theDSU) EC–Bananas (Article and rules resolving the so-called “sequencing” problem. theso-called resolving andrules it has been contested whether or not a so-called “compliance panel” (Article 21.5 must “compliance ofDSU) (Article panel” aso-called not or whether contested been has it e rather than trade impacts, including indirect repercussions. Along Along repercussions. includingindirect impacts, thantrade e rather t those rulings), the right for panels or the Appellate Body to grant Body theright forAppellate panelsorthe rulings), t those import regime was compared toan wascompared regime import , in order to estimate the trade effect of an inconsistent measure, ofaninconsistent effect trade the toestimate , inorder If aIf compliance panel proceeding must precede arbitration on light of 4.7 the requirementArticle in of the SCM Agreement oducers and Exporters of Automotive to Leather: Recourse andoducers Exporters to account continued application of inconsistent measures measures ofinconsistent application continued to account 287 ors endorse the trade effects approach and liken the trade it endorse effects toors a Arbitration Rules of the United Nations Commission on ” if concessions negotiated within the GATT/WTO system system ” if concessions negotiated within the GATT/WTO le”. In addition, the trade ef al interim to impose measures, which may established be imation of the levelof trade that would on occur based over and above direct trade effects (Mavroidis 2000). 2000). (Mavroidis trade effects over and direct above rfactual scenarios and definedrfactual were and why selected the les Article 26,les Article para. 2. On similar measures taken by the e same bilateral relationship. However, relationship. isofcourse bilateral it e same the level of suspension of concessions equivalent to 250 251 Ethier (2004) and Schwartz andSykes andSchwartz Ethier (2004) the modelling approach laidoutin approach themodelling estimated value under a counterfactual acounterfactual under value estimated illustrates the need for amore theneed illustrates 246 249 several procedural reforms 248 In response, Breuss (2004), fects approach is attractive isattractive approach fects

II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING WORLD TRADE REPORT 2007 SYSTEM: ACHIEVEMENTS AND CHALLENGES WORLD TRADE REPORT 2007 II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING SYSTEM: ACHIEVEMENTS AND CHALLENGES country interests within the WTO arehighlighted theWTO within interests country for indust measures policy trade of ontheuse evidence of theempirical aswellsome Agreements currently available inWTO of S&D In light of these developments, the notion of increased “diversity” of GATT/WTO membership has membership “diversity” thenotion of increased light developments, In of of these GATT/WTO of countries. theindustrializeddeveloping na Most as ithas since operated theinception of theWTO. thecurrent under system achieved success from already the substantial not to norisitintended detract requiring drastic orfundamental drastic changes torequiring thecurrent disputes to ina resolve capacity its strengthening of theDSMlevel infacilitating theuse andinclar atthetechnical made be that additional could progress possibly suggests by trade scholars proposals on implementation and S&D in the context of the inthecontext on implementation andS&D continue to felt theframeworkwithin be of today, policy development intheongoingdebates not least policy trade oflocating complexities The Parties. Contracting GATT bythe decisions shaped thinking coun to as theyapply developing disciplines WTO (a) Developing countries in the GATT/WTO the in countries Developing overtime membership of GATT/WTO expansion The (a) incorporated into themultilateral The trading system. MEMBERSHIP: OFGATT/WTO ACCOMMODATING concerns ontheway thespecial focuses inwhich countries of developing have been subsection This EXPANSION THE 4. oneconomic theory. approach based systematic 254 253 252 concessions thehistorical within context. made to astheyapply developing disciplines GATT/WTO theevolution of describes group. thelatter within part countries, This thelarge despite heterogeneity anddeveloping developed fundamental differences ininterest between with associated principally been subsidies, benchmark themore where of flexible “appropriate” countermeasures applies. are to av be if punitive elements/over-compensation number of key challenges and possible modifications to thecurrent modifications system. number ofkey andpossible challenges Uruguay Round in the early 1990s saw particularly Uruguay particularly 1990s Roundintheearly saw around theKennedy Roundinthe1960s years andtowards theendof The the 10). (Chart existence countries orseveral developing joinedthemultilaOne have seen They traditionally earlyyears. been in its intergovernmental character, inthearea of has notably enforcement. concentrated ona overview This aremark have seen years 60 sum, thelast In Contracting Parties/Members have managed to strengthen the rule-of-law while preserving thesystem’s while preserving have to managed therule-of-law strengthen Contracting Parties/Members According to the special standard under under standard According to thespecial For an overview and analysis of andanalysis anoverview For the original exporter prices.the original exporter determine to the extent which the change in conditions of emphasize They merit from that an economic perspective. case as ancase example. particular, In as suggested above, th level of nullification or impairment should be defined and measured, using of 22.4 foregone) trade under of benefits Article the DSU. value the with equated (usually impairment or nullification level andthe retaliation of permissible level the between Howse and Staiger (2006) is a recent attempt to respond on the basis of economic theory to the question of how the ofhow question tothe theory of economic basis the on torespond attempt isarecent (2006) andStaiger Howse light of the fact that the subsidies ar that thesubsidies light ofthefact in “not 9and10) disproportionate” toFootnotes and (according act wrongful initial tothe “appropriate” aresponse as EEOIGCOUNTRIES DEVELOPING proposals made in the DSU negotiations see Zimmermann (2006). (2006). Zimmermann see DSUnegotiations inthe made proposals rial development. Remaining challenges to accommodate developing developing toaccommodate Remaining challenges development. rial e prohibited. This standard is different fr isdifferent standard This e prohibited. Articles 4.10Articles and4.11 areto oftheSCM be countermeasures Agreement, 288 tries and explains howcontemporaneoustries andexplains development and strategies for enhanced S&D arepresented. for enhanced S&D and strategies more timely and effective manner,more timelyandeffective necessarily without 252 tions were founding Members of the GATT oracceded of theGATT tions were founding Members able evolution of GATT/WTO dispute settlement. able evolution of GATT/WTO Sound methodologies are all the more important areallthemoreimportant methodologies Sound ifying its procedures, and perhaps even in further eveninfurther andperhaps procedures, its ifying countries and explains the timing of demands and thetimingof demands countries andexplains Doha Round. The second part discusses theforms discusses part second Doha Round. The large increases in developing country membership. country indeveloping large increases as driving the extent andcontent disciplines. theextent of its as driving oided, indisputes especially involving prohibited e authors finde that authors has arbitrators’ focus on trade effects first part describes the evolution of special GATT/ theevolutionof special describes part first in order to measure forgone trade arbitrators flows, must competition would have volumes led at to reduced export DSM rules. At time, thesame such analysis does teral trading system in almost every yearof its every inalmost teral trading system is mainly due to the successive accessions of accessions successive tothe due is mainly om the general standard of“equivalence” standard om thegeneral United States-Anti-Dumping Act of 1916 of Act States-Anti-Dumping United 254 The analysis ofthevarious analysis The 253 drafting process of charter, process theITO drafting the“no-exceptions” principleoriginally by advanced theUnited obliga legal charter’s draft the from for anddeviations atransfer both calling of resources weretabled of number proposals Alarge interests. countries and, American evenmoreIndia so, theLatin Source: Source: 1948, as Chile, although an original Contract in countries 22 shows Chart The Trade Agreement. World the Establishing Agreement Marrakesh ofthe XI Article under Member (although this is done sometimes differently the concessions made in the draft ITO charter regar charter ITO inthe draft made the concessions from therules. dispensation and required some thebasic adopted and parties States wasabandoned intheGATT. rulessurvived earlyoninthe Already charter, of theITO thedemise trade-policy With its subsidies. export use re quantitativeimport notably claimed for themselves, werereinforced in countries developing negotiations, by controlling trade andsuppressin economic benefits of developing countries’as areflection colonial in which past, parent countries to were maximize seen for trade-dist reason a legitimate could be development that by were theidea guided economic agreements, andcommodity preferences, non-reciprocity Chile, (Brazil, of theITO China, charter up thedraft to theHavana conference committee of thepreparatory Table drawing part of werealso which six 10), Twelve of of theoriginal the 23 Contracting Parties Failure of negotiations ITO of the early days GATT: andthe the limited exceptions (i) Contractin remainingGATT The States. United Kingdom, United Switzerla Sweden, Spain, Portugal, Norway, Zealand, New Netherlands, Luxembourg, Liechtenstein, Japan, Italy, Ireland, Iceland, Australia, Austria, developed: considered Notes: 1948-2006 GATT/WTO, the in membership country of(Number members) developed and Developing 10Chart 1949 and 1951 respectively. China acceded again in 2001. Yugoslavia, a GATT Contracting Party since 1966, did not become aWTO become not did 1966, since Party Contracting in2001. again aGATT Yugoslavia, 1949 China 1951 and acceded respectively. Cyprus, while were developing, considered and Portugal Czech Re latt the among counted are Parties Contracting original as Africa South and Czechoslovakia purposes, consistency For economies. Union in 2004 and 2007 respectively. China, Lebanon and Syria were original Contracting Parties to the GATT but withdrew in195 withdrew but GATT tothe Parties Contracting original were Syria and China, Lebanon respectively. 2007 and in2004 Union Republic and Slovenia as well as 100 110 120 130 140 150 10 20 30 40 50 60 70 80 90 0 For the purposes of this Chart, the following 24 countries plus the European Communities in their own right as of1995 as are right own intheir Communities European the plus 24 countries following the Chart, ofthis purposes the For 9015 9016 9017 9018 9019 002005 2000 1995 1990 1985 1980 1975 1970 1965 1960 1955 1950 WTO WTO (1995) and WTO website. for developingcountries for Bulgaria and Romania are considered developed at BulgariaRomania and are developed considered Belgium, Canada, Denmark, European Communities, Finland,France, Communities, Germany, European Canada, Denmark, Greece, Belgium, tions. These demands, notably for infant industry protection, unilateral protection, for infant industry notably demands, These tions. ing Party, formally joined only in 1949. in the literature, e.g. see Hudec, 1987). In the early days of the GATT, Greece, S However, could onall not governments agree GATT GATT 1947 GATT Appendix countries (see weredeveloping Cuba, India, Lebanon). Srinivasan (1998) recalls that (1998) recalls Srinivasan Cuba,Lebanon). India, public, Estonia, Hungary, Latvia, Lithuania, Malta, Poland,Slov Malta, Lithuania, Hungary,public, Latvia, Estonia, g Parties/WTO Members are counted as developing/transition asdeveloping/transition arecounted Members g Parties/WTO their beliefs by the exceptions developed countries bytheexceptions developed theirbeliefs ding exceptions for “economic development”. The g competition from overseas suppliers. During the suppliers. fromg competition overseas strictions on agricultural products andtheright to onagricultural products strictions considered the draft charter to their not represent charter thedraft considered premise that developing countries thatpremise developing were “special” 289 orting policies. Hudec (1987) Hudec thisattitude policies. explains orting Develop Developed Me i latest since their accession toEuropean the ng Me m m bers bers pain nd, ak er 0,

II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING WORLD TRADE REPORT 2007 SYSTEM: ACHIEVEMENTS AND CHALLENGES WORLD TRADE REPORT 2007 II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING SYSTEM: ACHIEVEMENTS AND CHALLENGES GATT for UNCTAD) and the creation of the Group of 77 bloc of developing countries andthe creationof theGroup of asacounterweight of developing 77bloc for UNCTAD) GATT Session, developing countries pressed for an extensive for anextensive countries pressed developing Session, exceptions obtained. Only limited use was made ofin made was use limited Only obtained. exceptions of of theGATT, operation years seven thefirst de In Perceived “competition” Co (developing UNCTAD with leeway to protect infant 1958, toleeway In protect industries. theHab of newprominence theformulation trade gained with of thesis, thePrebisch-Singer countries’ commodit Developing reliance onprimary 1987). market broad countries (Hudec, access from concessions developed towards extracting policies t countries gradually extended developing following, ear of export developing country the insufficiency India andYugoslavia.India countriespromote to trade led amongdeveloping th markets in developing countries. 1967, In markets indeveloping to efforts substitution andtheconcomitant andregional focus ondomestic onimport based an industrialization reinforced Both foundations developments foron Trade theintellectual (UNCTAD). andDevelopment inthe1960s and1970s, of popularity high degree andthecreation of theUnited Nations Conference discipline to applicable developing co “moreto obtain favourable” treatment attheITO originally made andrealize of theproposals some realities innumbers, andanincrease geo-political However, of restrictions. toovertime, other new types countries with to obviated which theneed resort anddeveloping developed inboth restrictions of balance-of-payments existence this wasthewidespread The moveof andCold colonies intoThe independence “more for quest the IV: andGATT Part Report 1955 Haberler The Session, Review (ii) 1974), albeit conceded, aright thatwasultimately of exceptions which to centred infant about include ontheprotection (Corden,controversy industries 258 257 256 255 favour countries. notion of of developing The prefer played an important role in order to understand some conference (Tussie, 1987). (1987) Hudec that, asaresult, “over thelegal four observes decades thenext GATT, as manifested by the inclusion of Part IV on GATT, IV bytheinclusionof Part asmanifested to nations industrialized contributed to theformal relationship between former colonizers and the newly former andthenewly colonizers relationship between Countries, auspices, negotiated entered GATT had which under been into 1981). force (Hamza, The first preferential scheme between developing coun preferential developing first The scheme between The thesis concerning The the declining trends of the terms-of These countries were Brazil, Chile, Egypt, India, Israel, Ko Israel, India, Chile, Brazil, were Egypt, countries These to a large extent GATT Article XVIII. Despite the insistence by XVIII. Article to a large GATT extent by Singer (1950) and Prebisch (1950). The original thes original (1950). The (1950)by Singer andPrebisch become part of the GATT (apart from a reference in Article XX(h)) nor did ITO Article 15 on “Preferential Agreements 15 Agreements “Preferential on Article ITO did nor XX(h)) inArticle areference from (apart GATT ofthe part become not did ultimately Agreements” Commodity “Intergovernmental 55-70) on (Articles VI chapter charter’s ITO the 13 Article on “Governmental to Economic Assistance ITO Uruguay and Yugoslavia, as well as Gree as andYugoslavia, well as Uruguay services produced in developing countries.services and Parra more For Ocampo see (2003). and goods toall applies second the income-elasticity), alow with togoods generally, (more tocommodities solely on effects the through indirectly terms-of-trade countries’ thispressure second inthe markets, in goods is generated prices commodity inreal adeterioration towards pressure the case, first the economy. In world ofthe “periphery” trade. other The hypothesis pointed to in the asymmetries to of of the de negative the income-inelasticity effect American Free Trade Area (LAFTA) set up in 1960. However, its goal arguably was the attainment of a free-trade area ofafree-trade attainment the was arguably goal in1960. up However, set its Trade (LAFTA) Free Area American covered under GATT Article XXIV (Tussie, 1987). XXIV Article GATT under covered for Economic Development and Reconstruction”. favourable” treatment 257 I 93 h ATProtocol relatingto 1973, In theGATT untries all but disappeared” (1987:untries allbutdisappeared” 15). ce and Spain that were still considered developingcountries at that time. 290 trade and development in1964, trade anddevelopment which, amongother obtain a temporary waiver from MFN obligations and obligations from waiver MFN atemporary obtain subject to prior approval by Contracting Parties. byContracting approval toprior subject developing countriesdeveloping gradually theirdemands raised ential market access wasomnipresent indefining the e signing of the Tripartite Agreement between Egypt, e signingoftheTripartite between Agreement erler Report (GATT, 1958) established a link between (GATT, alinkbetween 1958)erler Report established nings and developed country trade barriers. In the In trade barriers. country nings anddeveloped heir interests from securing exceptions for theirown from securing heir interests recognition of developing country concernsrecognition of country inthe developing mand for commodities on developing countries’ terms-of- is combined complementary two hypotheses.One referred War for competition influence World intheThird tries raising the issue of MFN inconsistency was the Latin Latin the was inconsistency ofMFN issue raisingthe tries veloping countriesveloping thefew to appeared with cope revision of GATT Article XVIII giving themadditional giving XVIII Article revision of GATT -trade for developing countrie y exports and the problem of andtheproblem deteriorating terms y exports rea, Mexico, Pakistan, Peru, the Philippines, Tunisia, Philippines, Turkey, the Peru, Pakistan, rea, Mexico, Development and Reconstruction” to appears have inspired fant industry provisions. An important reason for reason important An provisions. fant industry of the decisions taken during that time period in taken duringthat of thedecisions timeperiod ntracting Parties had threatened Parties tontracting abandon the the of functioning labour markets in the “centre” the vs. comes from factor markets developing and thus affects independent territories.During the1955 independent Review production costs. Whereas the first hypothesisWhereas the applies first costs. production developing countries on t Trade Negotiations amongDeveloping s was formulated concurrently s wasformulated heir other principal demands, 256 which gained which a 255 258 “graduation”. intheEnabling contained exhortation The agreed attheendof theTokyoagreed anumber Roundcodified cuts than from preference theywouldlose cuts erosion. These exemptions were institutionalizedThese of the 1979 inthecontext onDifferential andMoreDecision exchange for of theabolition “reverse preferences” en the problem of heterogeneity within that within group. ofthe problem heterogeneity “graduation”) aswelltherecognition of theleas theirde asandwhen concessions to make further countries was hardly tenable any longer, if it ever ha ever it longer, if any tenable hardly was countries theperception wasgaining ground that policy-makers agreements appeared asanalternative appeared to achieveagreements the newareasof Acco negotiations. in notably disciplines, multilateral on progress further absent afear was retaliation ofunilateral there exporters, developing against used were increasingly measures which contingency andtrade restraints of “voluntary” export use to theincreased discipline 259 and Murrayas Baldwin (1977), confirmed that develo Moreover, prominent such studies, exporters. forsuccessful theyhad which become products individual to “graduat countries andbegan ofdeveloping eligibility etal., 1991). andclothing (Page and textiles Second, liberalization, infurther interest anactive developed coun anumber of developing First, to this reversal. countr of developing thescope widened dramatically theGATT. halfunder of the19 culminated infirst It singleundertaking Uruguay Roundandthe The breakof aradical thetrendtowards 1980s saw The (iv) Clause. Enabling Favourable Treatment, andFuller Particip Reciprocity createdwell asthenewly GlobalSystem of Trad 1982; 1987), countrie andLaird, developing Finger of mark andinsufficiency toowing theuncertainty the new“Codes” of non-tariff avariety with dealing At highceilings. time,and atrelatively thesame mo countriesdeveloping to agreed make limited mark Bell 1984; andRobinson, had introduced (Nishimizu oncompetiti to worldowing therestrictions developing of the During the1970s, parts inseveral evident became policies substitution related problems to import Tokyo The Roundnegotiations heyday the Enabling andthe of Clause: (iii) andAfrica Mediterranean to certain (EC) Community UnitedStates that for The long had resented (GSP). (A things, codified theprincipleof non-reciprocity between developing countries.between 1971,In covering andpreferential GSP both schemes wereobtained agreements waivers 10-years two process and in the exchange of reciprocal concessions (Golt, 1978; Baldwin, 2006). Amongst trade Amongst 1978; (Golt, concessions andintheexchange of reciprocal 2006). process Baldwin, of developing countries’ flip-side The increased flexi Brazil (along with Japan) for possible action under its Omnibus TradingOmnibus its of under regional 1988. Fifth, Act action for possible Japan) with Brazil (along access culminated with UNCTAD II in1968access culminated II UNCTAD of andtheadoption with a“generalized of preferences” system L/4903. disengagement 259 rding to Low(1993), theUnited tries had succeeded in diversifying their economies and their economies hadtries indiversifying succeeded more ambitiousliberalization if the multilateral trading et access commitments, althoughbindingswereet access few commitments, e Preferences amongDeveloping Countries (GSTP). 90s with theconclusion with of theUruguay Roundwhich90s GSP donors extended their set of conditions theirset defining extended GSP donors d been (Koekkoek, 1989). While theEnabling While Clause 1989). (Koekkoek, d been velopment and trade situation improved (known as velopment andtrade situation (known improved bdel Kader,bdel for quest improved market The 1986). the provision of special preferences bytheEuropean ofthe provision special notably in the heavily distorted sectors of agriculture sectors distorted intheheavily notably t-developed group of countries wereaclearhint att-developed s pressed for covering waiver apermanent GSP ass pressed bility was a lack of engagement in the rule-making wasalackof engagement intherule-making bility et al., 1984). DuringtheTokyoet al., Roundnegotiations, 1984). measures. In order to overcome order In “exportmeasures. pessimism” et outlets for developing country products (Cline, products country for developing et outlets st of them refused to participate inandsignupto to participate ofthemrefused st ation of Developing Countries,ation of Developing asthe known also Third, GATT Contracting Parties realized theneed Contracting Parties GATT Third, increasing disengagement by developing countries byincreasing developing disengagement ping countries stood more to gain from MFN tariff tariff moreto gainfromping countries MFN stood ies’ obligations. Several contributed developments the proposition of group aunified of theproposition developing joyed by the EC in these countries (Hudec, 1987). countries bytheECjoyed inthese (Hudec, 291 particularly from Asia (Hindley,1987). Fourth, Asia from particularly n countries finally abandoned its opposition inn countries opposition finally abandonedits e” to applying countries outofpreferential tariffs Clause countries that developing were expected on as well as the policy bias against exports it exports bias against on aswellthepolicy of exemptions, introduced italso thenotion of States explicitly named India and named India States explicitly

II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING WORLD TRADE REPORT 2007 SYSTEM: ACHIEVEMENTS AND CHALLENGES WORLD TRADE REPORT 2007 II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING SYSTEM: ACHIEVEMENTS AND CHALLENGES Schuler, 2000). Others have significant identified op Others Schuler, 2000). The single undertaking oftheUruguayRoundmean singleundertaking The countries. measures developing amongst of trade contingency use an increased addition, In position. harmony South-South negotiators suffered from to aunified, develop well-defined to themthat itharder made for areas of andissue importance interests of domestic amultiplicity with countries andmarkets, several developing were confrontedunity. products across Having diversified marked for aturningpoint country traditional Uruguay developing Roundcertainly The 2002). Lengyel, (Tussie ontheirown and agenda anoffensive in theexchange advancing of concessions, butalso participating notonly negotiations, inthe role in 1986. anactive played countries Various developing that text the Uruguay adraft Roundbyproviding the“Caféof theG-20 Switzerland, established auLa agroup of with ninesm cooperation new round. In had which multilateral negotiations, trade in further traditional of theInformal position Group of developing countries to theinclusion block of services Africa and America, from Latin countries (G-20) liberalization andthestrengthening of trade rulesto anyFor combination multilateral reasons, of countries anumber these of further developing saw trade ofMexico. case inthe instance for efforts, liberalization trade tounilateral led andeven 1980s, inthe world developing ofthe parts promotion measures formerlyEast employedby government excessive interventions, includingexport thinking towards emphasizing introduced by therole of thedistortions markets andargued against andother studies substitution. These inspired import –thelackof foreign oneof financing theconstraints exchange–thatin private removed which had (1978), such asKrueger noted thesharp rise Fund (IMF), by theWorld BankandInternational Monetary of “hub-and-spokes” (Whalley, 1995). regional set-ups Finally, to have avariety under research expected ofstrengthening themultilateral they where system, from emerging regional trading blocs, appeared tofrom appeared emerging be regional trading blocs, wasnot nations, to itself. budge Developing system of geographical indications. of geographical of ortheprotection supply andmodes sectors services of to certain inregard theliberalization instance rights property intellectual related review mechanism. Even via thetradealso in policy mechanism andfrom from improved of thestrengthening transparency, thedisputebenefited settlement for instance, contingent trade remedies. Developing ofco number large A disciplines. multilateral under such asagri distortions, characterized by pervasive and each“group”). exporters within of to interest country interests developing of particular Sectors Round of both is anddevelo developed areflection Implementation Agreements of WTO of therules andstrengthening expansion The (v) of the reduction inpreference etal., margins(e.g.of Blackhurst thereduction 1995). ov outto be turned estimates trade, althoughsome onservices thenewAgreements to observe called theirmarket increased significantly access commitments, criticized the unevenness of the bargain struck from of thebargainstruck criticized theunevenness impl its examining of studies set alarge Round spawned including the ones evolving from the previous Code from theprevious evolving including theones “ countries. The Asian laissez-faire ” approach gained further influence fo further gained ” approach , a variety of developing countries have been active supporters, for supporters, countries of active have developing been , avariety 292 culture and textiles and clothing, have been brought havebeen andclothing, andtextiles culture Asia ledby ColombiaAsia broke atonepoint the with eroptimistic, for instance owing to non-consideration to non-consideration owing for instance eroptimistic, and trade-related intellectual property. The Uruguay The property. intellectual and trade-related formed the basis of the Punta del Este Declaration Este formed del thebasisofPunta the portunities for the expansion of developing country country ofdeveloping for theexpansion portunities Members, including small and poor countries, including have smallandpoor Members, untries supported the tightening of disciplines on, ofdisciplines tightening the supported untries t that all WTO Members accepted allAgreements, Members t that allWTO s of theTokyo Round. Many developing countries (e.g. Krugman, 1987) further shifted theeconomic(e.g. 1987) Krugman, shifted further the perspective of poorer nations (e.g. and of poorer Finger the perspective ping country trade interests (and of the diversity of thediversity (and trade interests ping country aller industrialized countries under the leadership theleadership countries under aller industrialized enjoyed greater bargaining power than they what greaterbargainingpower enjoyed the newly included areas of services andtrade- included areas thenewly of services multilateral intheUruguay agreed trading system turned out to be a major obstacle in launchinga amajorobstacle outto be turned it” Group that was instrumental inthelaunchofit” Group that wasinstrumental especially smaller countrie smaller especially be in their be interest.A group of 20 developing willing to to willing ifthisled accept a newdisciplines ications for developing countries, forications developing many of which especially inagriculture. addition, theywere In especially llowing the debt crises invarious crises debt the llowing s that feared exclusion In lightIn of theemphasis that cooperatio technical of toto LDCs. thetradeneeds development respond Ministerial Declaration (WT/MIN(01)/DEC/1), the WTO has expanded its technical assistance efforts efforts assistance technical its has expanded theWTO (WT/MIN(01)/DEC/1), Declaration Ministerial ITC, UNCTAD, UNDP, combine t theWorld BankandWTO to two related concerns: one is to help WTO Member related concerns:to oneis two helpWTO ne these to address more coherently andeffectively andencouraging themto worktogether Members of thetradeWTO needs organizations understand Trade effectively. andused delivered wouldbe in a monitoringWTO andevaluation inthe function to establish Director-General element for of Aid Trade important An bytheWTO istheproposal logistics. of concerns rangeset of andtrade facilities areas, infrastructure from awide covers testing to transport latter by offered themultilateral The of trading theopportunities advantage system. them from taking inhibits which Members inmany WTO capacity of trade-related concern second istheinsufficiency The thatmultilateral incurred. may be economic adjustment costs trade negotiations certain andto with cope 262 261 260 to deviate from substantive obligations onamore or not ataddition only were targeted tabled 100 proposals in problems theirperceived with dealing proposals 1998September 1999, to November range of countries awide anumber of developing putforward in obligations. Duringtheprepar to astheprincipaltool ineffective to be instances implementation butnot for differences asto thenature of turned obligations outinmany themselves, Longer priorities. anddevelopment economic interests national inconsistent with asbeing theirfinancial perceived andhumanstretched butwasalso resources, However, inanumber of countries, developing th further. activities, own its Besides initiatives, intherevamping not least of theIntegr other andadequate agencies elements funding. These “mainstreaming” areasinto national priority trade for Trade andcapacity assistance andother technical for Trade. for asacoordinator fo assistance, of trade-related acts Trust Global Agenda Fund(featuring anannual budge for technical cooperation activities administered by the Secretariat. In the run-up to the Doha to Ministerial the therun-up administered In by theSecretariat. for activities technical cooperation principles andoperational establishing objectives, directives Technical Cooperation (WT/COMTD/8) WTO 1996, In theCommitte efforts. and capacity-building andendorsed of theimplementation decision as part Capacity Building, Growth andIntegration” Building, Growth Capacity (WT/COMT Technical for Cooperation WTO for Strategy a“New formulated inlate2001 Secretariat the Meeting following theconclusion of theUruguay theyears In prov makingS&D on focusing specifically launched, For its recommendations see WT/AFT/1. The Task Force was created pursuant to the Hong Kong Ministerial Declaration Declaration Kong Ministerial Hong tothe pursuant Task created was The Force WT/AFT/1. see recommendations its For For a fuller overview of WTO technical cooperation and capacity-building see http://www.wto.org/english/tratop_e/devel_ see andcapacity-building cooperation technical ofWTO overview afuller For Corr.1. (see http://tcbdb.wto.org). The Aid for Trade monitoring and evaluation will draw on these data for a global review review aglobal for data these on draw will andevaluation Trade for Aid monitoring The http://tcbdb.wto.org). (see awareness of the of multiplicity programmes and help dono toincrease reports produce regularly also Secretariats two .The 2002 inNovember (TCBDB) Database Building aTrade launched Capacity andOECD Secretariats WTO the Agenda, Development Doha Declaration Ministerial Doha coherence, avoid duplication, share in and ofco-ordination degrees higher toachieve communities policy trade and development the toassist order In international organizations were invited to act in an toact invited were organizations international of range ofalimited andiscomposed (WT/MIN(05)/DEC) e/teccop_e/tct_e.htm. The 2007 Technical Assistance andTrai Technical 2007 Assistance The e/teccop_e/tct_e.htm. monitoring will form the substance of an Annual Aid for Trade Report and Debate amongst all WTO Members. Members. WTO all amongst andDebate Trade for Aid Report ofanAnnual substance the form will monitoring of Aid for trade but flows, will also rely on donor and self-assessments recipient variousThe studies. case levels of 261 In this respect, the WTO has a catalytic role to play –ensuring has that acatalytic relevant and agencies theWTO this respect, In 260 atory process of the Third WTO Ministerial Conference Ministerial from WTO of inSeattle theThird process atory which to an important extent are financed from extent theDoha Development to which animportant formation, and monitor the implementation of commitments registered in the 262 advisory role to the Task Force on a regular basis. Task basis. tothe aregular on role Force advisory Despite their increased importance, itisclearthat Aid importance, their increased Despite ated Framework (IF) for through theIMF, which LDCs, Framework ated (IF) help developing countries adjust to the steep increase countries tohelp developing adjust thesteep development strategies, increased coordination with increased strategies, development the implementation of WTO Agreements. The over The Agreements. theimplementation of WTO isions “more andoperational”. precise, effective Round, the WTO stepped up its technical assistance assistance technical upits stepped Round, theWTO n and capacity buildinghas intheDoha received n andcapacity e on Tradee on for Guidelines adopted andDevelopment r instance in the context of the Task of the inthecontext r instance Force onAid less permanent andself-det less e implementation of certain obligations not obligations onlye implementation of certain by the Ministerial Declaration, another exercise was exercise another Declaration, Ministerial by the eds. The Aid for Trade Aid to The respondeds. seeks initiative order to build confidence that increased Aid for to buildconfidence order Aid that increased t of 24 million Swiss francs), the WTO increasingly theWTO t of 24 francs), millionSwiss WTO Members, both develope Members, WTO transitory time periods which allowed for allowed which delayed timeperiods transitory D/W/90) consisting of ten core elements, including of tencore consisting elements, D/W/90) s in need tos inneed of implement thecurrent theresults 293 al phase-in periods, but also at increased flexibility flexibility atincreased butalso periods, al phase-in ning Plan is contained in document WT/COMTD/W/151 and WT/COMTD/W/151 indocument iscontained ning Plan have subsequently been reflected in a variety of inavariety reflected have been subsequently -building initiatives can only be a complement rs to identify where additional efforts could tors be applied where identify additional efforts heir efforts with those of recipients anddonors of recipients those with heir efforts erminedAt basis. Doha, d and developing. Relevantd anddeveloping.

II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING WORLD TRADE REPORT 2007 SYSTEM: ACHIEVEMENTS AND CHALLENGES WORLD TRADE REPORT 2007 II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING SYSTEM: ACHIEVEMENTS AND CHALLENGES Certain S&D provisions authorize other Members to provisions authorize other Members S&D Certain In the existing WTO agreements, WTO theexisting In assistance continue made, to assistance be with for example controversy. onagreement-specific technical improvements While asource of long-standing has been newmeasuresmay incomplying with face difficulties who exporters traditional country to developing assist encourage Members Agreements andSPS TBT instance, the For agreements. individual under assistance to technical provide are expected Members developing countries. come mostly in theform These GSP therear schemes, besides category, thefirst In Facility (STDF) in the SPS area targeted at enhancing the capacity of developing countries of developing to fulfil atenhancing area SPS targeted thecapacity intheSPS Facility (STDF) MFN principle. This is certainly true for some forms of S&D, but this statement must be further qualified. further be must butthisstatement forms truefor of some S&D, principle. iscertainly This MFN WTO inthe of S&D Main types majorexceptions to the asoneof two S&D portrayed C.2.(iii) insubsection established methodology The (i) for developing countries S&D in the WTO measures were arange mentioned of trade-related that ontherationale for C:2.(c).(ii) S&D, subsection In (b) development needs. to, andnot asubstitute for, rulesthat are ambitiousliberalization to responsive outcomesWTO and 265 264 263 ofrules. system amultilateral within interests country developing special accommodate ov and differential treatment before ashort providing theclaims for enhancedauthorized portrays also trade for special It policies development purposes. aswell currently available the WTO under of S&D thetypes examines subsection conditions.This tomultilateral certain usually subject trading system, the under extent accommodated to acertain has been of such overtimetheuse policies subsection, prohibited measures in away that normally are to be implemented on an MFN basis. implemented areto onanMFN normally be countries, allowfor while others flexibilities special could be employed to address specific problems inde problems employedtocould specific be address for developing country exporters. country for developing for allowing consul systems notification improved via take account concerns area newregulations,Members country with of for intheSPS developing instance that are made continuing efforts Nonetheless, suppliers. country to developing immediatewith effect that could applied not be standard safety of anurgent product in thecase for example objective, policy of thistype Often, e.g. measure isenacted. timeframes toTBT longer comment anew provide when more lenient applyingceimpose when requirements implications. Second, wher budgetary unknown with areunlikely en to to legally agree Members standards, mandatory exemptions have met with great resistance whenever S&D risks undermining a domestic adomestic undermining risks S&D whenever greatresistance have exemptions with met mandatory interest country thatdeveloping stipulates clause S&D Developing countries may be exempted from certain rules, but usually may not implement the otherwise butusually may rules, not implement theotherwise from countries certain exempted mayDeveloping be Conversely, flexibilities special available to developi For example, trade restrictions by developing countries for balance-of-payments purposes under GATT 1994 Article 1994 Article GATT under purposes balance-of-payments for countries bydeveloping restrictions trade example, For As discussed above, S&D also forms part of the current negotiations, notably in the context of non-reciprocity of ofnon-reciprocity context inthe notably negotiations, current ofthe part forms also S&D above, discussed As concessions. restrictions are to be applied, e.g. in order to avoid unnecessary damage to the interests of individual Members. ofindividual interests tothe damage unnecessary toavoid e.g. inorder applied, aretobe restrictions toEnhance aProcedure on 2004 of 27 October Measures andPhytosanitary Sanitary on Committee bythe Decision See XVIII are implemented on an MFN basis. Article XVIII para.10 are XVIII implemented basis. on B Article an provides conditions MFN further in Section on how suchXVIII Transparency of and Special Differential Treatment in document Favour G/ WTO of Country Developing Members, SPS/33. 263 264 discriminates amongtradingdiscriminates partners. S&D provisions may or may not imply a violation of the MFN principle. may provisions of ormay theMFN not aviolation imply S&D 294 the creation of theStan ng countries normally do not carry MFN implications. MFN ng countries not do carry normally that developing countries may dispose of, countries that may developing dispose butthat e two other forms of morefavourablee two treatment to as the empirical evidence on the usefulness of the ontheusefulness evidence as theempirical tations and information-sharing on special measures andinformation-sharingonspecial tations forceable obligations to provide technical assistance assistance forceable technical to provide obligations e possible, developed countries areencouraged to developed e possible, . The best endeavour character of these provisions of these endeavour character best . The s “shall taken into account”. be tocreate Attempts provide more favourableprovide treatment to developing of mere “exhortations”. developed-country First, rtain measures to developing-country Members, Members, measures to developing-country rtain erview of alternativeerview approaches on how to best veloping countries. As discussed intheprevious discussed countries.veloping As 265 Such exemptions from market dards and Tradedards and Development thinking shifted andasobligation thinking shifted 268 267 266 onother conditionsultimately thatto depends fulfilled need be for to preferential qualify treatment, itemsarecovered andma protected highly Even where ra high tariff items value attracting when of little economy implicat andpolitical as to their structural Majorconcerns relateto the atbest. picture mixed a give andgrowth diversification onthecontributionEmpirical studies of preferences towards export and“respond po andnon-discriminatory” reciprocal theEnabling principleunder exception to theMFN apermanent as accommodated been has countries todeveloping preferences ofunilateral provision the andeconomic reasons, of countries. bothpolitical developing performance For improving theexport for asatool into boost preferences came increasingly disrepute, afurther received non-reciprocal the1970s, In substitution policies aprominenthas become intrade policy-making. issue import when decolonizatio with 4.(a), mentioned in subsection As preferences Non-reciprocal safeguard orspecial mech cuts tariff to e.g. opposed (as differential agreements inexisting focus isthereby The onS&D isexamined. impact to da to order evaluateIn thetrack record of S&D to conditions or subject often albeit rights, access disciplines subsidy commitments, orother obl for alternative more andpossible flexibility solutions. complexity. of since thebeginnings demands country of developing andimplementation costs. adjustment difficulties exemptions from promotion therulesto aswelltemporary take account export protection, of industry relate to preferential system market access, infanttime that incorporated have intheGATT/WTO been over rights prominent most S&D The promises). on “hard” to “best endeavour” type opposed (as rights of Trade Preferences (GSTP). aswellpreferentialschemes amongde agreements countries” of developing Clause:needs para (Enabling Essentially, with and three implications. without MFN types the categorization chosenhere comprises three principal S&D Another long-standing developing country issue has been the stabilization of export earnings via commodity commodity via earnings ofexport stabilization the been has issue country developing long-standing Another and Estonia’s programmes feature separately. See UNCTAD (2005). For an in-depth discussion of certain programmes programmes ofcertain discussion an in-depth For (2005). UNCTAD See separately. feature and Estonia’s programmes Bulgaria while one, as ECiscounted The programmes. GSP available made Members country 12 2005, In developed country export earnings. export country Monetary developing instabilizing successful very International been havenot schemes the ofthese most as that empirically (1989) show al. et such schemes, Hermann financing of GATT/WTO. and the outside place taken largely has discussion this (IPC) (CFF), Facility Financing Fund’s Compensatory Commodities on Programme Integrated UNCTAD’s However,agreements. with the creation of following international on stocks based buffer agreements commodity and (vi) provisions relating to least-developed country Members (WT/COMTD/W/77/Rev.1). provisions Members relating country and (vi) to least-developed technical transitional assistance; (v) (iv) time periods; of instruments; commitments, of andflexibility of use action, policy Comm the In context. the on depending discussions, in WTO used or Cottier, (e.g. literature inthe 2006) proposed havebeen classifications other but asimilarfocus, choose (2005) andPage Kleen discussed. further arenot requirements, lenient andmore assistance i.e. technical fashion, endeavour inabest come usually that types two The agreements. resource-intensive toimplement periods transition longer and exports topromote flexibility imports, torestrict flexibility are latter the while requirements, lenient more and The former are non-reciprocal preferences,to former individual by Members The areMembers developingcountry technical assistance non-reciprocal see UNCTAD (1999)see (2001b). and WTO Under the Agreement on the Global System of Trade Preferences Among Members; (ii) provisions under which WTO Members should safeguard the interests of developing country Members; (iii) (iii) Members; country ofdeveloping interests the safeguard should Members WTO which under provisions (ii) Members; at aimed provisions (i) Secretariat: WTO bythe proposed been Developing Countries,Developing i.e. scheme, the GSTP the concessions (contained of in Annex IV the Agreement) of 42 countries, ___6206.aspx, visited on 25 April 2007. http://www.unctadxi.org/templates/Page_ See website. UNCTAD’s on arelisted Members, areWTO ofwhich all not 266 For each main type ofS&D maintype each For 268 s increased, notably after theUruguay after Round, innumber and both notably s increased, anisms still to be determined in determined tobe anisms still 267 the experience to date iscontrasted continuing theexperience with demands weakened by discretionary decision making. decision weakened bydiscretionary te, anddevelopment ontheiruse evidence theempirical tes are excluded or when pr orwhen areexcluded tes While the former two demands have demands formed thecore theformer two While coverage and depth ofcoverage preferences aswell anddepth schemes ions. On theformerions. On issue, preferences have proven veloping countries,veloping such astheGeneralized System .2(a) footnote 3 and para. 3(c)), thus covering GSP footnote 3andpara. 3(c)), .2(a) Clause. Preferences are “generalized, to be non- igations usually come intheform of enforceable 295 theGATT, have asdevelopment evolved thelatter sitively to thedevelopm n, preferential access countries for developing ittee on Tradeittee and Development, a has six-fold typology increasing of the developing country trade opportunities rgins are substantial, the size of the benefits thesizergins aresubstantial, of thebenefits the context of the negotiations) and of thenegotiations) the context eference marginsaresmall. ent, financial andtrade

II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING WORLD TRADE REPORT 2007 SYSTEM: ACHIEVEMENTS AND CHALLENGES WORLD TRADE REPORT 2007 II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING SYSTEM: ACHIEVEMENTS AND CHALLENGES preference beneficiaries (TN/CTD/W/3/Rev.2). Alexandraki and Lankes (2004) and IMF (2003) showthat (2003) andIMF (2004) andLankes Alexandraki preference (TN/CTD/W/3/Rev.2). beneficiaries MFN liberalization in key sectors, such as textiles, sugar and bananas, or to set market access targets for sugarandbananas, market orto set targets access suchastextiles, inkey liberalization sectors, MFN provider can more than offset preference more erosion than and can offset provider show liberalization MFN down slowing against caution countries. This conflict has been accentuated by the recent Appellate Body decision that GSP providers can that GSP decision providers accentuated Body has been countries. conflict bytherecent Appellate This Current onpref discussions Moreover, Lederman and Özden (2005) findthat eli Moreover, (2005) andÖzden Lederman of smallcountries andsectors. potential preference erosionisnot the provision of development assistance to fund ofthe provision assistance development andprovider products alternative utilization, increased asto trade for solutions doubts preference cast et al. (2005) erosion, noting thelimited potential for offer higheroffer preference margins countries group conditions. to of developing aspecific that fulfil certain economy in the future according to a country’s comparative advantage (Hoekman andÖzden, 2005). economy inthefutureaccording to (Hoekman acountry’s comparative advantage ofpreferences that resources may intheallocation make the entail inefficiencies itharder to restructure regional liberalization. Proposals have been made tobi made havebeen Proposals liberalization. regional 269 the notably imports, additional flexibilities to restrict andfewer bindin reductions tariff lesser Despite andpromoteexports imports restrict to Flexibility Beneficiaries remain concerned theerosion with of of rules origin(Brenton, notably 274 273 272 271 270 groups than to foster broad-based industrial development. industrial groups than to foster broad-based of preferences findthat theoverall impact (2005) wasrather to generate andtransfersto rents selected (Limão, future inthe liberalization discriminatory Preferences to and leadtobeneficiaries non- additional distortions. generate also opposed interests conditions relatedto other than motives development A and C). As discussed above, these provisions were provisions above, these discussed As A andC). Even if preferences that, do not in the foster sectors Part of the development impact of preferences depends on whether they stimulate the creation of an industry that ofanindustry creation the stimulate they whether on depends ofpreferences impact development ofthe Part For a more complete overview of studies on the extent of preference erosion, see Hoekman et al. (2006). al. et Hoekman see erosion, of preference extent the on ofstudies overview complete amore For LDCs may export either under the EBA initiative or the Cotono the or EBAinitiative the under either mayexport LDCs different preference schemes, and taken together, utilization rates may be higher. African maybe EC, rates the example, for In together, utilization andtaken schemes, preference different countries and featuring high preference margins, such as agricultural and textile products in the EC and US, are highly arehighly EC andUS, inthe products andtextile agricultural as such margins, preference high andfeaturing countries course, Of 2005). andJean, (Candau demanding origin areless he fails to fully take account of alternative schemes. For individual markets, exporters may be able to choose between between tochoose able maybe exporters markets, individual For schemes. ofalternative account take fails tofully he However, oforigin. ofrules complexity and/or stringency tothe largely EC, andJapan Canada ofthe US, GSP schemes the under beneficiaries for cent per 40 than rateofless autilization attributes who (2003) Inama instance, for See, http://www.imf.org/external/x10/changecss/changestyle.aspx, website visited on24 2007. visited website April http://www.imf.org/external/x10/changecss/changestyle.aspx, for arising from adjustments, difficulties instance, trade-related payments due to the erosion preferences. of tariff See likelihood of alleviating the relevant need (paras. 163-164). (paras. need relevant the ofalleviating likelihood international the preferential organization; second, a between nexus should sufficient exist treatment and the byanother instance, for recognized, widely tobe had aneed ofsuch existence the first, attached: were conditions countries andthat,shared by therefore, all developing be necessarily not were needs development found that 153). It “similarly-situated” (para. arenot who beneficiaries In Roy, 2001). and Subramanian 2005; andPage, (Kleen markets their havelost who producers sugar by inefficient faced difficulties toth exports sugar on prices fixed high inthe reductions the with economy. Nevertheless, its todiversify rents preferential used successfully has instance, for Mauritius, is used. still source be an important of income in countries, poor and their development depends on impact how that income Candau etal., 2004). 2004; andGallezot, (Bureau utilized place (Kleen and Page, 2005). 2005). andPage, (Kleen place totake need adjustments which within frame time the on depends also circumstances tonew toadapt challenge can survive when preferences are lowered or removed (essen removed or arelowered preferences when survive can See, for instance, the IMF’s Trade Integration Mechanism (TIM) which provides financial support for balance-of- for support financial provides which (TIM) Mechanism Trade IMF’s the Integration for instance, See, European Communitie –Tariff Preferences erences in the WTO principallypitbene erences intheWTO 273 Yeats (1994), Limão and Olarreaga (2005) and Amiti and Romalis (2006) andRomalis(2006) Yeats andAmiti (2005) andOlarreaga Limão (1994), 2003; Brenton andManchin,2003; 2003). significant for most countries, but is important for number alimited countries,significant for butisimportant most , the Appellate Body ruled that GSP providers could differentiate between between differentiate could providers GSP that ruled Body Appellate , the 296 adjustment costs (Hoekman andÖzden, 2005). (Hoekman adjustment costs medium-term, competitive, become 2005; Özden and Reinhardt, 2003). Kleen andPage Kleen Özden andReinhardt, 2003). 2005; preference margins following further multilateral andpreference further marginsfollowing gs/commitments, developing countries dispose of countries dispose developing gs/commitments, e EU, Mauritius has had to cope with considerable adjustment right to protect infant industries (GATT Article XVIII: Article infantright (GATT to protect industries nd existing preferences (Oyejide, 1997), preferences i.e. (Oyejide, nd existing to limit gibility under unilateral schemes is often tied to tied isoften unilateralschemes under gibility which may be costly to implement costly maywhich for be prospective inherited from the days of import substitution in substitution inherited of from import thedays s. As an alternative, some authors have endorsed have endorsed analternative, authors some As s. lead to export increases from Low beneficiaries. lead to export neficiaries could treated be differently 162). (para. Two ing that non-discriminatory liberalization bythe liberalization ing thatnon-discriminatory u agreement. The latter is better utilized since rules of sincerules utilized isbetter latter The u agreement. preferences in sectors of export interest to developing interest ofexport preferences insectors 271 tially an infant industry argument). Obviously, the argument). aninfanttially industry ficiaries against excluded developing 269 Regarding the second concern,Regarding thesecond the rents they generate can 274 272 270 sectors (Subramanian andRoy, 2001).sectors However, other countries similar pursued without strategies such as Mauritius, EPZs played an important role in indust export successful inestablishing involvement other “Asian of government quoted of are tigers” theimportance often asexamples asmajortraders including Uganda as the only LDC, requested extensions. requested LDC, only the as Uganda including rights to subsidize exports. These rights arefreque rights These to subsidizerights exports. export-processing zones (EPZs). SCM Article 27 for SCM aneight-year provides for Article transitiondeveloping period zones (EPZs). export-processing The evidence is less clear-cut for export promotion clear-cut for isless export evidence The maintained (Agreement on Trade-Related Investment Investment Trade-Related on (Agreement maintained could be balancingrequirements, content measures, investment such aslocal related orexport-import andseve (five transition longer periods given also or regional 161). markets” 1998: (Moran, foreign allowing thandoes linkages backward valuable markets lea content local inprotected requirements (1998) ofMoran review empirical findsfrom anextensive 280 279 278 277 276 275 totendencies trade raw materials goods. inexchange for capital as such sectors traditional bypenalizing policies had tool. asadevelopment introduced It discarded evidence, onempirical protecBased infant industry date. to not for call Article compensation. to anddoes apply isconsidered purposes easier for balance-of-payments ontrade restrictions XVIII:B reason isthat Article Another to orhigh ceiling S&D. applied increase rates recourse bindingscan without tariffs unbound with 1950s countries isthat developing invoked. have obviously 1960s. reason rarely andearly been They One countries. dozen developing far, bytwo So used have procedures been thevariousextension criteria (G/SCM/39). found to retard technological progress (Kokko (Kokko progress technological found toretard been hasalso (FDI) investment direct foreign on measures investment oftrade-related chilling effect Inspired by the successes of export promotion in East Asia, developing countries also requested special countries requested also developing promotion Asia, inEast of export bythesuccesses Inspired SCM Article 27.4SCM Article and, inaddition, afast-track proced to certain subject countries inSCM listed VII, Annex exemption poorer for andsome LDCs subsidies andanopen-ended countries to phase outexport At Kong the Hong Ministerial Conference in 2005, it wa The Tokyo Round Declaration on Trade Measures Taken for Balance-of-Payment Purposes (BISD 26S, 1979: 205- (BISD Purposes Taken Trade on Measures Tokyo Declaration Balance-of-Payment for Round The For two large collections of case studies see Balassa and associates (1971) andassociates (1970). al. et Balassa andLittle see studies ofcase collections large two For Local content schemes require firms to purchase higher cost, domestically-produced components instead of imported ofimported instead components domestically-produced cost, higher topurchase firms require schemes content Local For a For comprehensive of the channels overview throug periods during which BOP measures were kept in place, see subsection 2.(c). no such notification had received at been the of writing this Report. performance requirements affect trade, affect requirements performance See the G/SCM/-series of WTO documents starting with G/SCM/50. starting documents of WTO theSee G/SCM/-series restrictions andto announcetime-sched restrictions requires countries difficulties 209) in balance-of-payment and periodic review. All such measures are to be phased out by 2020 at the latest (WT/MIN(05)/DEC: F-2). However, F-2). (WT/MIN(05)/DEC: by2020 out latest atthe phased are tobe measures such review. All and periodic approval toMembers’ subject measures new andintroduce measures investment trade-related existing years seven distortions. offurther cost atthe albeit requirements, content oflocal investment on effect negative the may outweigh incentives, financial or andfiscal protection oftariff level the notably country, host inthe factors other course, Of attractive. substitutes, thus which involving costs, higher production UNCTAD (2002). 275 277 At theendof theUruguay Round, developing investment and growth as well as ules for removing of the measures. the an countriesFor overview and time 279 Besides the impact on production structure, theoverall structure, onproduction Besidestheimpact and Blomstrom, 1995; Smarzynska Javorcik, 2004). Javorcik, 1995; Smarzynska and Blomstrom, agriculture, discouraging exports and exacerbating andexacerbating exports discouraging agriculture, the diversification of production into of non-traditional production the diversification ries (Noland and Pack, 2003). For certain followers, certain For andPack, 2003). (Noland ries n years respectively) during which notified duringwhich trade- respectively) n years conditions. Individual extensions are possible under arepossible extensions Individual conditions. ntly claimed in order to ure was created forure wascreated countries of fulfilling anumber s decided that LDCs could notify and maintain for another another for andmaintain notify could LDCs that s decided XVIII:B has been used by 16 developing countries Measures (TRIMs) Article 5). Twenty-six countries, 5). Article Measures (TRIMs) makes investment in the respective downstream sector less less sector downstream respective inthe makes investment ds to less efficient production and provides less andprovides production ds to efficient less tion for import substitution purposes wassoon substitution purposes tion for import firms to set up operations oriented toward firmsto upoperations set global 297 h which trade-related investment measures andother measures investment trade-related h which to give priority to price-based measures overto quantitative to give price-based priority large distortions in thecountrieslarge such pursuing distortions policies. The rise of theRepublicof rise Korea The andpolicies. case studies that “[t]he imposition of imposition domestic- that studies “[t]he case 276 and least-developed countries (LDCs) were countries (LDCs) andleast-developed 278 On trade-related investment measures, measures, investment trade-related On of the and empirical evidence, WTO see cover certain features of features certain cover 280

II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING WORLD TRADE REPORT 2007 SYSTEM: ACHIEVEMENTS AND CHALLENGES WORLD TRADE REPORT 2007 II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING SYSTEM: ACHIEVEMENTS AND CHALLENGES have to offer compensation (TN/CTD/W/4/Add.1). In the same vein, countries anumber of thesame developing In have (TN/CTD/W/4/Add.1). to compensation offer Monetary Fund (IMF) inthe1980s. (1993) Rodrik noting that therecommended support empirical provides Fund (IMF) Monetary Current S&D discussions, despite the little encouraging thelittle despite discussions, Current S&D and export subsidies (TN/CTD/W/3/Rev.2) as they see fit their development objectives. The underlying The objectives. fittheirdevelopment astheysee subsidies (TN/CTD/W/3/Rev.2) and export TN/CTD/W/3/Rev.2) investment measures (TN/CTD/W/4; to trade-related free that use theybe proposed andnot (TN/CTD/W/3/Rev.2) cumbersome astoo protection to infantconditions attached industry success. 284 283 282 281 non-trade instruments, such as time-limited publicse such astime-limited instruments, non-trade thought. Panagariya (2000a) notes that the selection of first-, second or n-best policies is also a matter amatter isalso policies of orn-best first-, second notes that theselection thought. Panagariya (2000a) great treatedto caution, with be outthat albeit to inorder capture points of trade learningrestrictions, view, (2005) externalities, Melitz point preferable may be from anefficiency cases inmost default), declare to in(or step markets areready investment in new activities, while pushingout while innewactivities, investment to need governments andgrowth, change structural markets, protected inpreviously improvements functioning markets andinstitutions. functioning acknowled have been policies industrial of active aswell administrative informational, budgetary, the for government involvementaccount taking while of commentators inrecentAcademic timeshave taken amore nuanced arole that approach foresees success mixed atbest. met with inth intervention tominimizegovernment strategy andInternational Bank World bythe Consensus” “Washington tothe advocated acounter-reaction as presumption that fewer international for seen may development be better are obligations somehow than sector-specific interventions. In fact, theauthor interventions. fact, than In sector-specific and subsidize exporters. for theneed “policyhave space” stressed of developi 2000a). “winners” (Panagariya, inidentifying involved difficulties information the problems relate Other 2002). implications to thefiscal and of policies industrial (Lall, industries inefficient groups byinterest captured were polices support contrast, inother By cases, outof business. companies go i.e. non-performing byletting targets, export situation, political to owing theirstable problems etal., (Hoekman inefficiency andlong-term seeking manner. of selective that policies shows Experience andthat similarre theremainingprotection to offset improvements in economic performance either. ineconomic performance improvements Hausman policies and a highly-educated labour force, played labour andahighly-educated policies Panagariya (2000a) notes that the costs of export subsid notes that Panagariya of the export costs (2000a) These are important factors determining the investment climat investment the determining factors areimportant These The authors stress the to need stress authors learn The what one at is pr good transfer/spillovers via FDI are not automatic and may be fostered by appropriate policies. by appropriate fostered andmaybe automatic arenot FDI via transfer/spillovers studies, wherecase substantial has diffusion technological occurred that they due also to stress technologyFDI, of for the an literature overview et al. (2004) on and transfer. FDI technology While point the to authors numerous industrial ofthe andmodernization diversification inthe role proposes a more precisely defined operationalization of this concept that is further discussed below. discussed isfurther that concept ofthis operationalization defined precisely amore proposes non-traditional commodities. of exports on EPZs of impact asignificant find not do countries ofAfrican arange on (2002) inHelleiner contained studies case Similarly, most anddiversification. promotion ofexport interms benefits the exceeded largely countries upstream and downstream industri anddownstream upstream elaborates that if new industries are to flourish, governme concludeauthors that havewhat pioneers found out, the initial entrepreneur can only internalize of the value social part generated. The emulate quickly entrepreneurs other economy. Since ofthe ofspecialization pattern future the determine they value, as Hoekman (2005) notes content (2005) theHoekman widespread and use ill-defined of the term “policy space” in current debates and 281 Noland and Pack (2003) emphasize macroeconomic andPack (2003) that such Noland horizontal asgood factors, laissez-faire 282 It has been suggested that has It been developing countries any ableto should be reject policies lead to an under-provision of to lead anunder-provision policies es that depend on each other. under certain circumstances may be maybe circumstances certain under 283 On the other hand, while trade openness led to productivity to led theother productivity On hand, trade openness while 298 firms and sectors that outunproductive. turned firms andsectors laissez-faire e pursuit of outward-oriented development strategies development of outward-oriented e pursuit competent bureaucracies and strict enforcement competent bureaucracies andstrict of ged (Rodrik, 2004) as has been the importance of theimportance ashas been 2004) (Rodrik, ged a more important role in the East Asian experience experience Asian role intheEast amoreimportant ng countries to protect import-competing industries industries import-competing ng countries to protect leading to corruption and continued existence of existence continued and corruption to leading 2004). The Asian tigers wereableto contain these tigers Asian The 2004). as political economyas political concerns limiting thesuccess the experiences made to made date. theonehand, On theexperiences sults could have been obtained in a less wasteful inaless obtained havebeen could sults intervention pose important challenges of rent- play a role in encouraging entrepreneurship and inencouragingplay arole entrepreneurship s conclude that incentives export merely served oducing. They find that They oducing. such discoveries are of great social ctor credits orguarantees until financial private credits ctor ies provided by a number of byanumber provided ies nts may also need to coordinate investment decisions in decisions investment tocoordinate need may also nts evidence of selective government interventions, of evidence selective base in developing countries. See, in particular, Hoekman e in a country. FDI has been found to play an important animportant found toplay hasbeen e inacountry. FDI and Rodrik (2003) hold that to inorder foster (2003) and Rodrik policies did not result in the expected didnot result policies intheexpected innovation. further Rodriguez-Clare (2005) less distorting than previously distorting less Asian and Latin American and Latin Asian 284 While While requirements of theAgreementrequirements (eleve for fiveyears toappear have inthesens thetransition used period Only forallowed thecontinued of minimumvalues. use 20.1, Article CV under transition period years 32 with Under theCustoms Valuation Agreement, 56develo 1996; World Bank, 2002). However, estimates varied wi However, varied 2002). estimates Bank, World 1996; aswellannual cost operational costs modernization Avariety 2005). 2003 (Saha, and Technology Policy Science commercial for tool inits development its 2003 and2005, as animportant emphasizing2000, IP in 1970) it tomaking aview enacted with (originally 285 infrastructure. to modernize theexisting for general transition period The information 2016 untilundisclosed 1January (WT/MIN(01)DEC/2). theimplementation of thepatent provisio products, before.did not exist 2001, In that could itwasdecided LDCs delay, to pharmaceutical respect with such protection where inareas of technology extended not be need patent protection product which 65.4 for during provides atotal of tenyears Article Moreover, TRIPS of extension). possibility with countries we developing 3, 4and5), Articles (TRIPS Ag theTRIPS with experiences Developing-country andSokol, 2005). (Duran intransparency,improvements clearance timesand token,the same valuation customs wasasso where By valuation asaprerequisite systems. toof seen more theuse sophisticated be may also systems, bureaucraticinstitutional such problems, ascorruption, procedures andweakinternal heavy auditing orover-valuation revenues) of resolution broadertariff The controls) (circumvention of goods. of capital inor important make isparticularly comparisons price investment ininstitutions, equipment andtraining (S itmay require andobjectivity, transparency increased value asthepreferred methodology of thetransaction initi for the request no or requested were extensions no notifications received eventhoughnofurther have many In been expiry. cases, its was notified after andPage, 2005). (Kleen to alaterstage costs alimited implement toonly required were countries of an benefits andthelong-term costs immediate entitled andCustoms develo Valuationas TRIPS (CV), measures, such other agreements, of trade distorting related to economy thephasing-out costs political andtake account patterns of to to insectoral wereallowed facilitate adjustment changes time periods longer of compliance. such asTRIMs, costs Agreements, theexcessive complaints about some under While considerable inobligationsThe by increase develo Longer transition periodstoimpl take into toapproach better account thesp to their use, alternatives aswell asat possible andmay to need move way from aone-size-fits-all av currently instruments policy atthe look detailed inthis area to may discussions need take amore of theavailable within feasibility timehorizon. S&D countries already had intellectual property (IP) syst (IP) property hadcountries intellectual already Many developing until 2013 in2005 1July Agreement wasextended (IP/C/40). theTRIPS under LDCs andnational 65.2, from treatment MFN apart Article implementation concerns.Pursuant to TRIPS to create therequired administrative environment. Developing countries also used the opportunity to enhanced obtain countries Developing assistance,both bilaterally the used also opportunity and from multilateral IP systems. oftheir andmodernization upgrading the for (WIPO), Organization Property Intellectual World the notably agencies, ement resource-intensive obligationsement resource-intensive 285 India, for instance, further developed the Indian Patent theIndian Act developed for further India, instance, ecific situation in individual countries. inindividual situation ecific ping countries under the Uruguay Round soon led to led ping countries theUruguayRound soon under ailable in the WTO, including the conditions attached includingtheconditions attached WTO, ailable inthe Presumably, the itwasfelt that thebalance between agreement would be moreagreement favourable wouldbe ifdeveloping fully compatible with TR with compatible fully revenue performance mostly exceeded expectations ems in place before TRIPS, but used thetransition butused ems in place before TRIPS, e that legislation inaccordance theAgreement with number of reforms of atatimeanddeferthe some s of IP institutions would be substantial (UNCTAD, substantial wouldbe institutions s of IP n years for LDCs, according to TRIPS Article 66.1, Article according for LDCs, n years to TRIPS ciated with a more wide-ranging reform process, amorewide-ranging with ciated of developing country case studies noted studies that the case country of developing of themapplying for extensions, which essentially reform of the customs process as a whole implying asawhole reform process of thecustoms reement have revealed even more wide-ranging havereement evenmorewide-ranging revealed ns and provisions in respect of the protection of of theprotection inrespect ns andprovisions ping country Members requested theinitialfive requested Members ping country 299 re not required to adapt toadapt required re not a limited number of developing country Members Members alimited country number of developing der to avoidder fraud relatingto of theunder- (loss ping countries to delay implementation inorder al delay was made in the first place. While use While place. first inthe wasmade al delay hin, 1999). Access to electronic information to information electronic to Access 1999). hin, dely, and it was often not possible to identify the toidentify dely, notpossible anditwasoften for customs purposes is beneficial intermsof isbeneficial for purposes customs IPS through amendments in throughamendments IPS their legislation totheir legislation the

II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING WORLD TRADE REPORT 2007 SYSTEM: ACHIEVEMENTS AND CHALLENGES WORLD TRADE REPORT 2007 II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING SYSTEM: ACHIEVEMENTS AND CHALLENGES provisions need to be conceived of in negotiating ar ofinnegotiating conceived tobe need provisions including to LDCs (OECD, 2003; Smarzynska Javorcik, Javorcik, Smarzynska (OECD, 2003; including toLDCs andtransfer of technology, sectors) found onlyinIP-sensitive have to (not theflowof been increase FDI inventions applicants. by domestic submitted has been Pr State Intellectual bythe received for inventions incr threefold 2001 analmost and2005, has registered However, countries developing some Bank,2002;States, Germany Maskus, andJapan(World 2000). from coun developing other (and developed) outflows to resultinnetfinancial estimated run, thishas been the short countries.In in afew industrialized addition, obligations. countries In inanumber of developing revenues from of TRIPS incremental costs 288 287 286 countriesdeveloping are accommodated the within interests accommodating developingcountry towards approaches New to opportunity agood offer current negotiations The (ii) onother countries.compliance imposed of non- fostering incentives while for to inthecosts reform, factor need butitwouldalso and assets, infrastructure situation, account taking existing of its atthecountry-specific targeted towould need be effects on a range of development indicators, andshouldtherefore neglected. not onarange of indicators, be development effects ot with capacity for fundsandadministrative scarce reforms worldare incompetition inthedeveloping andcomplementary that therequired investments obligations may ratiothat of thecost-benefit certain considerations are not unrelated since ajustificatio since unrelated arenot considerations wasshown ButTRIPS 2002). (CIPR, expenses recurring exceeded of trademarks, mainly fees, registration leaving agapastoleaving se theappropriate wouldlikely from therules derogations putanend by accountability and analysis of theabsence policy first, remain that relevant forms areequally to of allof S&D: these areto modalities S&D Agreed (WT/MIN(01)/DEC/1). to aview provisions with are reviewed to be S&D same time, the empirical evidence has demonstrated that customs and IP modernization had positive time, modernization has same evidence that demonstrated andIP theempirical customs the expiring transition period has transition purposes fulfilledthe expiring period its that to demonstrate wouldneed Members Opposing andTN/CTD/W/4/Add.1). (TN/CTD/W/3/Rev.2 theCustoms under Agreem periods Valuation andTRIPS anumber of countries that developing transition have proposals tabled thecurrent onS&D, In discussions and Yang, 2003). onthesize of depending theroyalties) (Maskus effects positive countriesin arange of developing (with the moral hazard many While “a remain asto sceptical (or infrastructure base” technological of viable TRIPS). inthecase about how exemptions should be implemented without undermining the integrity of the system. These These of thesystem. howexemptions implemented theintegrity undermining about shouldbe without reverse engineer (OECD, 2003). In addition, technology transfer addition, licensing have via In technology (OECD, increased agreements engineer 2003). reverse have effects FDI isconstrained, transfer imitation via to have resource implicat to haveresource Over thatOver andin time each individual period, year since 2003, of patent themajority applications for are catching accession China up. preparation In of authoritiesand, WTO between IP has modernized its For further empirical work see also Swedish National Board ofTrade Board (2004). National Swedish also see work empirical further For likely to occur. more against insured event makes that the ofbehaviour alteration aninsurance-induced as isdefined hazard Moral countries 2000). (Maskus, in developing industry e.g. music the for beneficial haveproven copyrights, as such ofprotection, forms other on visited 27 2007. April Also, http://www.sipo.gov.cn/sipo_English/statistics/200607/t20060725_104689.htm, See 287 demandeurs problems that such an approach would that suchanapproach problems ions beyond operating budgets. Rightho budgets. operating ions beyond why exemptions are needed; and second, andsecond, why areneeded; exemptions lection mechanism to qualify for S&D. to mechanism qualify lection 300 operty Office (SIPO) (2001: 63,204; 2005: 173,327). (2001: 2005: 63,204; (SIPO) Office operty making them more precise, effective andoperational making themmoreprecise, effective n of special development needs andof therequired needs development n of special her development priorities (Hoekman, 2005). At the 2005). her development priorities(Hoekman, eas, such astrade facilitation. Two majorchallenges WTO. According to the Doha mandate, According Doha allexisting tothe WTO. been strongest in countries with a large capacity to incountries capacity alarge with strongest been reconsider the way in which the special interests of interests thespecial theway inwhich reconsider to the self-selection of developing country status country of developing to theself-selection 2002; Lee and Mansfield, 1996). While technology technology While 1996). andMansfield, 2002; Lee tries to technology exporters notably intheUnited notably tries to exporters technology andresulted of intheestablishment therequired be a function of development levels. It isargued of levels.It development afunction be ease in thenumberease of annual patent applications be applied be in thenegotiations andnewS&D 286 ents be extended automatically upon request Also on the positive side, improved IP rights side, IP improved onthepositive Also imply, ground theinsight some has gained lders are disproportionately located are disproportionately lders the lack of a realistic assessment assessment the lackof arealistic 288 Effective S&D Effective Some authors have made a distinction between core obligations, such as MFN-based market access and core obligations, such asMFN-based between have adistinction made authors Some sectors unilaterally and could tie in reforms under the WTO to prevent policy slippage. toprevent policy WTO the under inreforms tie andcould unilaterally sectors economic andstrategic wisdom of this approach ar of WTO rules andpossible rules of WTO thecontent which with andthelevelof detail of S&D scope asto theexact vary main alternativesalso of differentiationas to theextent amongdeveloping period of time, possibly until 2020 (WT/MIN(05)/DEC: F-2). While celebrated asasuccess, While F-2). the both until of time, 2020period possibly (WT/MIN(05)/DEC: eligibility and the type of S&D measure authorized. to be of S&D andthetype eligibility i.e. the shoulddetermine effective, is to situation be that theyagree of thespecific Members individual implies that further liberalization should not be slow shouldnot be liberalization thatimplies further adherence to core Universal disciplines valuation such ascustoms issues, andTRIPS. regulatory with dealing measures the prohibition of highly trade-distorting “ XVIII:B 1994 GATT Article under measures istaken ... action when theprovisions of under this Clause” orthat inevaluating balance-of-payments that“the inprinciple term itwasagreed example, intrinsic valueor noorlittle virtually with proposals to focus onS&D has approach been second The domestic industries. above, itma related investment measures, asdiscussed 292 291 290 289 (WT/L/579). inagricultural commitments marketundertake access orinthenewnegotiations ontrade facilitation consideration of the underlying rationale or consequences.For instance, LDCs are not expected to to that are LDCs, small economically too notably (s total flexibility to afford onehas been the first popu haveTwo proven particularly strategies extreme analytical approach. They allembrace thenotion They approach. of analytical A number on of commentators have proposals made C-2 andC-6,of short-termfinancial flows” (Job(03)/150/Rev.2: emphasis by author). LDCs could commit the status quoasabargaini could commit thestatus LDCs to make of “best endeavour”, yetmorepledges i.e. concede“rights” enforced. that hardly be can For As discussed in subsections B.2 and B.5, it is not straightforward to explain why a large country would bargain with with bargain would country alarge why toexplain straightforward andB.5, isnot it B.2 insubsections discussed As As noted in subsections B.2, B.5 and C.2.(c), the terms-of the B.5andC.2.(c), B.2, insubsections noted As For new For areas, such as trade facilitation and the other Si integration into the multilateral Kerr See trading (2005). system. stage. The author sees the WTO as a “global the author WTO stage. The sees coordinating cl not uncommon in reality, should be formalized under WTO not uncommon inreality, WTO formalized under shouldbe were allowed topartners have more or permanent less exemptions, it must asked be this whether practice, albeit totrading tomatter markets as small too are that ofnon-compliance costs generating countries all If problems. can act as a group when negotiating with large trading partners. trading large with negotiating when agroup as act can countries. ofdeveloping “plurilaterals” interest inthe consider not tobe do 2005) Hoekman, (e.g. many observers countries, poorest ofthe marginalization andafurther society” ofa“two-class offears light In framework. integration deeper ofa establishment the with co-exist can diversity inwhich acompromise constitute would a“club-of-clubs” Such atalater tojoin free be would but rules, club innegotiating participate would Members WTO all obligations, applicable intouniversally Tokyo Codes Round plurilateral ofthe conversion the following ofownership lack the toavoid order In ofcommitments. set extensive amore toaccept arewilling that subscribe would members only in thisregard. studies ofempirical lack general the deplores he 1987; al., et 2006), (Gros, Broda ofhisargument insupport papers countries are large enough in relevant markets to alter international prices choices. with their trade Citing policy two holds that the critical pieces(2006) of empirical eviden small market for certain products. Finally, market size large since products. marketsmall certain for a considered be maynot anLDC Also, protection. environmental as such trade, than other issues on in cooperating A plausib commitments. liberalization its over country a small developing countries should accommodated be in different governance domestic toaddress ameans as commitments international on B.2., B.5 andC.2.(c) subsections See akn.Lwec 20)pooe hteitn T Agreements supplemented be with additional ‘clubs’ to which that WTO proposes backing. existing (2005) Lawrence 289 Or, they may maintain existing or new trade-related investment measures for an extended for anextended measures investment trade-related new Or, or existing maymaintain they exemptions are examined. full consideration shall given be ng chip to assert their offensive interests. offensive their ng chiptoassert ometimes time-bound) to those developing countries, to developing those ometimes time-bound) , andobligations to implement “costly” agreements matter to the interests of other Members, without of other to Members, theinterests matter s andconditions of theEnabling Clause shall apply ed down byed down theconsideration of preference erosion heterogeneity amongdeveloping countries heterogeneity ifS&D countries and how this is to be achieved. The two two The countries achieved. andhowthisisto be -trade approach to trade would agreements imply that large ngapore issues, this approach has received academic some how to redirect S&D discussions towards amore discussions S&D howto redirect lar so farlar so helpingto analysis: avoid amoreserious ce are the and past present to degree which developing e highly doubtful. LDCs have liberalized certain LDCs doubtful. e highly 301 y not be the most cost-effective policy to foster policy cost-effective themost y not be ways than small developing co thansmalldeveloping ways le motivation may be the interest of the large country country large ofthe interest the maybe motivation le rules, thereby at putting risk these countries’ further ub” on trade that should deal with all issue linkages. 292 per se The proposed approaches differ, approaches proposed The however, provides significant bargainingpower, significant provides LDCs to the impact of thevolatility to theimpact untries.To recall, Staiger 290 291 In addition, In On trade- On

II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING WORLD TRADE REPORT 2007 SYSTEM: ACHIEVEMENTS AND CHALLENGES WORLD TRADE REPORT 2007 II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING SYSTEM: ACHIEVEMENTS AND CHALLENGES requirements (Article 12), that have (Article limited requirements such asCustoms Agreements, infrastructure-related linked to capacity and assistance, albeit in a non-objective manner. inanon-objective linked albeit andassistance, to capacity D-1, “best endeavou While paras. 2and6). (WT/L/579: re directly andassistance to ensure support effort countriesof developing andleast-developed ... [and andthetimingof entering intoextent commitments do not implement “resource-intensive” obligations shou that rather than creating formal exceptions to therule, complaints developing against countries that suggests (2005) exemption Hoekman to theprovision andcapacity-building. of technical assistance and coordination efforts. approaches these extent, to acertain Nevertheless, 2005). andPriyadarshi, (Keck done this shouldbe ult would andagencies groups competing among who stimulat intellectually While compliance (“development test”). thelikely that determines body oversight independent proceedings under the dispute sett under proceedings could leadtoanalysis enforceable S&D under rights to developing subdivide attempts first, in practice: to delegate such a fundamental role to anotherins role suchafundamental to delegate atalllevels.Finally,of assistance a “tailor-made” anextraordin wouldrequire approach decision-mak to discretionary subject making eligibility of thedisadvantage carry procedures orappeals assessments Country-by-country S&D. broad-ranging groupofcountries attheexclusion of the same cosWOAgreements. WTO across differentiationsuch wouldcover acrude practically “LDC plus” criteria,such bybroad group characterized Hoekman et al. (2004) advocate time-limited exempti time-limited advocate etal. (2004) Hoekman beneficiaries. possible Different to advanced strategies have identify been etal., 2004). (Hoekman subsidization export or measures investment trade-related for left any be “wiggle” if room little that and 295 294 293 distinction can be drawn between other “core” between drawn be can distinction disc However, affected. that several commentators aclean doubt that areparticularly countries/sectors those to assistance countries to interest developing andby compensation/adjustment providing of export over preference by elim with dealt erosion shouldbe access liberalization constitutes a“core” of themultilateral andthat concerns activity trading system audits” or“development islikely tests” wouldagree to contentious. be Members isunlikely It thatWTO be assessed on a country-by-country basis (“implementation audits”). The authors link basis(“implementation authors thetemporary The audits”). onacountry-by-country assessed be should (2002) holdthat (2002) implementation capacity andHoekman Prowse (2000), and Winters Wang isproposed. procedure basis,anappeals to have onacase-by-case rights access to thesame and maintain an equitable customs system. Furthermor system. customs anequitable and maintain Concerning the proposed scope of S&D, there is wide agreement intheliterature there iswide Concerning market that of further S&D, scope theproposed already have shaped current S&D debates. A number of institutions have stepped up their assistance Anumber of uptheirassistance institutions have debates. stepped havealready current shaped S&D This position appears to have received some backing by backing some tohave received appears position This Evenett (2005) mentions (2005) Evenett the idea of “pledging rounds” by a WTO Member and endorsed by a technical committee of committee byatechnical and endorsed Member by aWTO plan would constitute binding obligations. pledges as well as ofand capacity-building the additional See, for example, IMF and World Bank (2006) and WTO (2006b). andWTO (2006) Bank andWorld IMF example, for See, consensus could be reached on the findings of the study, it remains classified. study, remains it ofthe findings the on reached be could consensus study was discussed during a number of meetings of the Working Party of the Trade Committee in 2002. Since no Trade Since in2002. ofthe Committee Party Working ofthe ofmeetings anumber during discussed was study The countries. developed with together grouped be reasonably could others while ofkey indicators arange for LDCs Economic and Development showing Co-operation th (OECD) 293 294 In order to deal with complaints by individual countries not part of complaints by this countries to individual with order group deal In not part ing, defining S&D eligibility inoneof eligibility S&D ing, defining The modalities for modalities thenegotiationsThe onTrade Facilitation that stipulate “the theinvolvement “implementation authoritiesto of conduct external lement mechanism. Also, agreement would need to be reached on reached tolement be Also, mechanism. agreement wouldneed resource implications, but are crucial to implications, limit resource 302 other developing countries eligibleforother wouldbecome developing lated to the nature and scope of to thecommitments”lated thenature andscope countries haveprovenunwocountries whereby would donors commit requested targeted assistance that] developed-country Members will make will every Members that] developed-country an unpublished econometric anal econometric an unpublished all countries similar with implementation concerns trade facilitation commitments according to a management titution, especially sinceth titution, especially flexibilities or determine theright ordetermine flexibilities to initiate panel imately determine the costs ofcompliance andhow costs the determine imately ary improvement inthecoordination andprovisionary inating trade barriers on an MFN basis in sectors basisinsectors onanMFN inating trade barriers Valuation, such aspublication contain elements, ing instead ofcreatingenforceableing instead Second, rights. iplines and more extensive andmoreextensive iplines shall related be to theimplementation capacities ons from “resource-intensive” for agreements an e, the approach does not do justice to not justice e, thefact do does theapproach as per capita income or size. It is argued that benefits of implementation versus the costs of thecosts ofimplementation versus benefits ld be made conditionalld be onpriorapproval by an r” remain, elements implementation isformally experts. The execution of The both the technical assistance experts. at a number of developing these ways entails several shortcomings several entails ways these 295 rkable, since particularly e results fromsuchan e results ysis by the Organisation for Organisation bythe ysis countries weresimilarto obligations. one, For ad hoc exceptions exceptions can still be drawn from the experience to date: first, the lack of analysis of the reasons for S&D, its its for of thereasons the lackof S&D, analysis first, to date: from drawn theexperience be still can country Members is necessary. In view of the differing sets of criteria for different types of S&D, target of S&D, of criteria for different sets types of thediffering view In isnecessary. Members country manner. inasimilar tested be could matters infrastructure certain or measures investment trade-related measures, the a priori 298 297 296 economy considerationspolitical are involved. orcertain market when justified that may orquotas limited be imperfections exemptions for higher tariffs The biggest advantage of such an approach would be that of such no wouldbe anapproach advantage biggest The on thebasisof human indicators. development theadjustment foresee which of payments Agreement (WT/MIN(01)/DEC/2), and Public Health the TRIPS of royaltiesmethodologies intheCanadian andSwis As involve assessment. aneconomic should also countries, such ascompensation, onbeneficiary conditions imposed The track procedure (G/SCM/39). programmes pursuant to theSCM certain fast under tosubsidies provide apermission having obtained Stevens’the difference between of list (2002) countries of list hypothetical andtheactual beneficiaries support agricultural Keck andLow(2004) commodities. subsidies for thresholds certain allowedto production could be use a number of security-specific food atissue. Stev objective andpolicy circumstances “hard” onthe depending wouldvary into range of evidence indicators The theauthorization process. “automaticity” some introducing provision, or, atleast, S&D toaspecific access todetermine used be Ideally, measurable criteria found could be that characterize and, thesituation hence, of acountry could damaged.to be by WTO rules. by WTO oneconomic arguments forapproach based government prohibited interventions that are otherwise needs to be addressed. This would imply amoveaw would imply This addressed. to be needs compatibility forms andconditions aswellits morerelevant country made to developing be can WTO inthe Unfortunately, of theliterature onhowS&D has asthis overview shown,nosilver bulletexists theexemption duringwhich isgranted, an additional drawback. timeinterval represents precise “negotiation” or“decision-making” by themembersh of theapproach anelement of that thedata-intensity despite fact The 2004). relief programmes (IDA, determining thegrant-creditaccount when mixitisentitled to of debt moral also under hazard risks) inother to areas,pointing such precedents asthecriteria to used characterize (taking acountry’s needs and“automatic” wouldmake problems that theidea data amore objective rejects unfeasible approach for of thecalculation used to be by onthedatabase thelengthy of discussion various sources, aswitnessed andsuitability the quality compl and technical ofdetail level but alengthy could not be undertaking, only This However, of others. wo amajorchallenge the expense players take of stronger donot flexibilitiesat advantage to wish who of see those lower theresistance not alldevelo rights, “meaningful” S&D token, for thesame oneortwo By qualifying needs. while actual groups with wouldmatch moreclosely clear timetable forclear timetable removing themeasures inquestion by past complaints about the IMF’s central role in supplying data for BOP consultations. Cottier (2006) theIMF’s about central complaints consultations. for Cottierby past BOP data (2006) role insupplying Others have Others and elaborated further endorsed such an “issue”-, “provision”- or “situation”-specific approach. See, for For example, limited transition periods could be made available to bring EPZs into conformity with WTO rules if it is it if rules WTO with intoconformity EPZs to bring available made be could periods transition limited example, For demandeur and provide the required infrastructure. cluster ofanindustrial establishment the tocoordinate been has ofgovernments role principal the that demonstrated See the theoretical discussion in subsection C.2.(c).(ii) in the subsection discussion theoretical See instance, Cottier (2006), Paugam andNo Paugam (2006), Cottier instance, as a violation of “core” asaviolation butwould disciplines, 298 The right to S&D would obviously also depend on the extent to which third interests arelikely to thirdinterests which ontheextent depend also wouldobviously right to S&D The 297 , i.e. anda policies of theunavailability theexistence learning externalities, of first-best Hence, exemptions prot for infant industry ad valorem exity involved. Even where appropriate data exist, views differ asto differ views exist, involved. data Even appropriate where exity vel (2005) and Corralles-Leal (2005). and (2005). Corralles-Leal vel (2005) ping countries ableto wouldbe 296 equivalents in the current market access negotiations or currentmarket negotiations inthe access equivalents Keck and Low (2004) argue in favour of an issue-specific argueinfavour of anissue-specific Keck andLow(2004) ens (2002) demonstrates how countries fallingens (2002) demonstrates within and empirical evidence in part (a) of this and (a) evidence empirical subsection. in part with the rules-based character of theorganizationwith therules-based an example, Cottier (2006) cites thecalculationan example, Cottier (2006) would also strain Members’ resources dueto resources the Members’ strain would also s implementing legislations ay from broad-brushed political debates interms debates political ay from broad-brushed ip as a whole wouldremain, forip asawhole instance, onthe 303 . The rationales for delays in dealing with export export with rationales indealing for. The delays needs. Anumber for ofneeds. lessons future discussions be made conditional on the specific situation conditional made inbe onthespecific uld be to identify andmeasure criteria. suitable tould be identify the need for provision-specific criteria noting forthe need provision-specific ection, for example, excluded wouldnotection, be a priori differentiation between developing differentiation between claim all exceptions. This shouldclaim allexceptions. This of the Declaration on ofDeclaration the

II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING WORLD TRADE REPORT 2007 SYSTEM: ACHIEVEMENTS AND CHALLENGES WORLD TRADE REPORT 2007 II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING SYSTEM: ACHIEVEMENTS AND CHALLENGES and capacity constraints. It seems that more techni created (Mathis, 2002). The United States submitted submitted States United The 2002). (Mathis, created principleinbila from exemption theMFN received 1991).(Bhagwati, for explanation theexempti Another door for to European integration,door was believed which prominent forOne to explanation the exception given cu RTAs and what are the remainingchallenges RTAs arethe andwhat system without undermining its integrity. its undermining without system chance concerns to helpaccommodatethemultilateral country within thebest developing stand trading .TECALNEO REGIONALISM OF (1948-1994), existence 124 only its received Throughout theGATT of notifications RTAs. Butsince the CHALLENGE THE andahalf, decade thepast In thenumber of regional has trade orfree mushroomed. agreements 5. de not allS&D Second, instruments. and economic of “graduation” of market discussions “total imperfections vs. towards opt-outs” problem-oriented There are a number of explanations about the historical origins of GATT Article XXIV, which gives which XXIV, Article originsof GATT thehistorical about of areanumber explanations There implemented over theyears? been XXIV Regionalism history in the GATT/WTO has re themultilateralHow with dealt trading system (a) of transition. Finally, areunlikely approaches radical complement, constitutes also anindispensable assistance moreinstance, lenient when wouldrisk requirements essential to understand how the WTO has been dealin has been howtheWTO to understand essential embrace regionalism both andmultilateralism Members time, Giventhat atthesame WTO itis effects. thewelfare of non- affect formation may adversely anRTA Joining agreements. not guarantee does inthe RTA anincrease welfare. members’ Further, RTA conclusion from to that istheambi recall analysis RTAs andthemultilateral important One between andtheinteraction tradingagreements system. of regional trade into Cgave valuable insights thewelfare of RTAs effects analysis inSection The agreements. ofhad are shunned nowsome trade agreements, free past inthe which countries, RTA. Asian one toatleast areaparty Members WTO allother Mongolia, 21 XXIV, theEnabling un under ClauseArticle and44 of 1March notified. 2007,been As there were 194 exceptions from the obligation of to MFN customs unio sensitivities important orneglect to change thecontractual that nature seek toWTO of suggestions the ways of strengthening GATT Article XXIV. XXIV. Article of GATT strengthening ways literature from thetheoretical a number of are to results pulledtogether evidence discuss andempirical light RTAs to onwhether some inorder shed ha system, theproliferation ofRTAs between on theinteraction evidence andsystematic anecdotal provides also It to themultilateral trading system. blocs stumbling or literatureRTAs on of asbuildingblocs of thetheoretical point view. areview itprovides Third, from of aneconomic thedebate surrounding afocus ontheimportance with RTAs atWTO, presently account that remainto oftheissues an analytical in1995. since of made theWTO theestablishment itprovides Second, emphasis onefforts aspecial with theway themultilateral inwhich itdescribes First, creation of the WTO in1995,creation of theWTO over160 additional arra . This subsection addresses these issues. these addresses subsection . This 304 cal, open-minded and incremental approaches to S&D approaches andincremental cal, open-minded notified RTAs inforce, 129 with notified GATT under valence of the welfare effects of preferentialvalence of thewelfare trade effects be settled and that themaindebate characterize settled be members due to trade diversion andterms-of-trade dueto trade diversion members teral longbefore was trade agreements theGATT system has dealt with the challenge ofregionalism thechallenge with has dealt system to meet with therequired to with consensus. meet applies This gionalism? How have the provisions of GATT Article Article gionalism? have How of theprovisions GATT draft proposals for GATT Article XXIV that followed XXIV Article for GATT proposals draft undermining the policy objective pursued. Technical pursued. objective thepolicy undermining mands may result inenforceablemands may result for obligations, ngements covering trade in goods or services have covering orservices tradengements ingoods der GATS Article V. GATSder exception Article of thepossible With and the developments inthemultilateral andthedevelopments trading be essential to the future peace of the Continent ofthe peace future tothe essential be g with the challenge posed bytheproliferation thechallenge posed ofg with ns and free trade areasth trade ns andfree ve been building blocs or stumbling blocs. Finally, blocs. orstumbling buildingblocs ve been the most actively involved in negotiating new innegotiating involved actively most the on granted to customs unions isthattheyhad unions granted to customs on stoms unions is that it was intended to open the toopen isthatitwasintended unions stoms inregard to facilitating adjustment duringtimes at meet certain criteria. certain at meet agreement with the GATT relevantagreement theGATT with ruleswasnot able (GATS Article V). (GATS Article exception inpreferential to resulted MFN also involving inasanctioned trade agreements inservices Differential Favourable andMore Treatment allowe later, decades three Paragraph Nearly third parties. With respect to theexception giventoaccounts trade have areas, free most interpreted respect With itasaway of measures be eliminated? be measures commerce” of trade area, afree e.g. themembers eliminated shouldcontingent that be must between eventually dropped eventually trade agreement, free was which to US-Canada accommodate apossible inpart XXIV Article to GATT preferential However, trade agreements. that has theUnited suggested States Chase gave way (2006) andonly ground ontheprincipleof MFN its standing accounts contemporary of theHavana most In negotiations, as theUnited States portrayed wasalways 2002). wasoneway ofcountries’ accommodating (Mathis, demands developing XXIV Article the condition Introducing that anexception nonewpreferences to trade areas free under extended. be preferencgrandfather theexisting only had intended to I:2 Article tothe option negotiate preferential inthefuture. trade arrangements GATT countries of for developing theHavanahanging onto Charter, thesupport since many of themwanted than countries. developed into for themu regional arrangements transparency,requirements: commitment liberalization to intra-regional andneutrality deep three aslongtheysatisfied regional arrangements allowed ofGATT XXIV Article trading system. ma deeper byproviding liberalization, regional And 1947,In that trade libera therewasthegeneral belief war negotiations to preferential theITO pursue to establish trade arrangements. post- inthe involved countries bythe interest strong toisthe testify explanations various allthese What intheGATT. wasretained oftrade areasfrom MFN theobligation 303 302 301 300 299 unions. togranted exemptions customs Trade formed according which bilateralReciprocal to agreements theUS MFN Act, own Agreements its of theEEC-Association Countries of Overseas andTerrit on regional arrangem rules oftheGATT weakness The pre-occupy subsequent RTA examinations. Principal RTA Principal subsequent examinations. pre-occupy XXIV arrangement Article under to reviewed be first promoting their economic development andestablishing preferentialprovided treatment by theEEC members being negotiated secretly simultaneously with theHavana with negotiated simultaneously Charter.being secretly FTA was theUS-Canada Although an association between the EEC members and their overseas countries andterritories. andtheiroverseas theEEC members between an association covered by “other restrictive regulations ofcommerce regulations by“othercovered restrictive of“s definition werethe Association the examining offer a quantitative measure aquantitative ofoffer “substantially alltrad The only requirements applying to RTA concluded under the Enabling Clause is a certain degree of transparency. oftransparency. degree Clause isacertain Enabling the under toRTA concluded applying requirements only The There are currently 21 countries overseas and territories and territories: 6 French territories overseas and territorial communities ( countries; and 1 under the DanishCrown. the and1under countries; Notice that Canada the 1948 rejected agreement (Smith, 1988; Wonnacott, 1987). next subsection for subsection details). further next See Mathis (2002), p. Mathis (2002), See 33. Similar opaque requirements are established in Article V of the GATS for economic integration areas in services (see (see inservices areas integration GATS economic for Vofthe Article in areestablished requirements opaque Similar 300 (and not successfully pursued until four decades later), the language to thelanguage free exempt later), until four pursued decades not successfully (and 303 301 The Working Group responsible for the assessment of consistency of Working the of GroupThe consistency for responsible theassessment Further, thecreation of theGeneral Agreement onTrade in1995 inServices es at that time, such as those under the British imperial system, ones atthat time, system, theBritishimperial under such asthose tual reduction or elimination of tariffs on less restrictive criteria orelimination restrictive tual onless reduction of tariffs 299 d less-developed GATT Contracting Parties to Contracting enter GATT Parties d less-developed rket access was complementary to the multilateral tothe complementary was rket access 2(c) ofthe1979 Council2(c) oftheGATT on Decision , the examination prefigured , theexamination among the issues discussed bytheworkinggroup discussed among theissues to reach a clear-cut conclusion. Part ofto thereasons reach aclear-cut conclusion. Part e”? are What the“other regulations of restrictive reluctantly acquiescing to acquiescing to theexception given reluctantly scattered around the globe: 12 around the globe: scattered countries British overseas ubstantially alltrade” were measures andwhat ubstantially 305 lization, be it regional or multilateral, was good. good. was multilateral, or regional it be lization, ” cited in GATT Article XXIV:8. Is it possible to itpossible Is XXIV:8. Article in GATT ” cited ents became first apparent thenotification with first became ents to these countriesto of andterritories these inpursuit ories. Part IV of the Treaty of Rome established close economic relations. While itwasnot theWhile economic relations. close collectivités territoriales collectivités the issues that theissues would ); 2 Dutch overseas overseas 2Dutch ); 302 The Treaty vis-à-vis

II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING WORLD TRADE REPORT 2007 SYSTEM: ACHIEVEMENTS AND CHALLENGES WORLD TRADE REPORT 2007 II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING SYSTEM: ACHIEVEMENTS AND CHALLENGES consensus andfinalized any of theCRTA. of theexaminations ontheinterpretationquestions of theprovisions and195 RTAs consultation; areunder RTA examinat of examination thefactual examination; factual under 194 notified RTAs orar examined have eitherbeen (1989), prefigured nearly four decades earlier. four nearly (1989), decades prefigured For event wasthe catalytic The regionalism had begun. consider theimplications for of 1March themultilateral 2007, As trading system. more than half of the thecompliance ruleandtoto of assess therelevant thevarious with regional trade agreements WTO function thisexamination out tocarry established June 2007, prepared have presentations been factual for this may be political but part is also because of th because isalso butpart for political thismay be 306 305 304 modify, the areto review,Members andifnecessary to transparency,to completed. respect itrequires be allnotified With RTAs by aWTO to examined be ofestablishment theAgreement. It to calculate the“general incidence of theduties onhow guidelines of unions, specific customs for to itprovides theassessment example respect With and of neworenlarged agreements the assessment for thecriteriaandprocedures Agreement onTariffs to clarify andTrade seeks 1994. Understanding The of theGeneral XXIV ofArticle ontheInterpretation Uruguay RoundproducedThe theUnderstanding RTAs. on disciplines multilateral atstrengthening efforts included negotiations the Hence toregionalism. multilateralism from inUSpriorities shift fundamental thetimeUruguayBy Roundnegotiations got un keyof these concepts. Members agreed onnegotiations agreed aimedat“clarifyMembers As far areconcerned, asprocedural on14 issues General theWTO’s As Council 2006, established December have grea shown issues oversubstantive Negotiations andholdingconsultations onproced issues) legal for theissues negotiatio identifying tracks: along two to regional applying provisions WTO the existing adopted as part of of the overall theDoha results aspart adopted services. “shall refrain from any valuejudgement.” aimisto The announcement announcement oftheRTA. early ca This number of RTAs, in Doha, the multilateral effort at providing some oversight ofRTAs continued. oversight WTO some atproviding ofRTAs,number themultilateral inDoha, effort inthesurveillance Faced thecleardifficulties with After the creation of the WTO in1995, thecreationof theWTO After onRegional theCommittee Trade (CRTA) Agreements was inaccordance andtheUnderstanding. of both theprovisions theGATT with working party on a provisional basis a new WTO transparency mech transparency on aprovisional basisanewWTO even asearlyduringthenegotiation phase of th consideration of the RTA shall be based on a report of the WTO Secretariat, which shall be “factual” shall which be Secretariat, and consideration of theWTO of theRTA onareport based shall be of theagreement, andbefore theapplication parts of theRTA to nolater theWTO, than theparties’ WTO document WT/L/671. document WTO For an example of factual presentation see WTO document WT/REG169/3. document WTO see presentation offactual anexample For to conclude that the Agreement was consistent with the provisions of GATT Article XXIV. Article to conclude that the Agreement was consistent with the provisions of GATT However, during the GATT, the Working Party examining the Czech Republic-Slovak able was Czech Customs the Union examining Republic However, Party GATT, the Working during the 306 establishes 10 asthe“reasonableestablishes years lengthof time” forRTA an 306 ural related issues of to RTAs. transparency contained in Article XXIV, Members have not reached Members XXIV, inArticle contained function of the WTO andconcerned by theincreasing of theWTO function e RTA. The mechanism also requires early notification early requires also mechanism e RTA. The . The Committee was established with themandate with wasestablished Committee . The many, a itwasamomentous that reflected occasion Round. The transparency transparency Round. The trade agreements.” negotiations The were pursued ing and improving disciplines and procedures under andprocedures disciplines ing andimproving e inability to ontheinterpretation agree e inability substantively to of improve notified thetransparency agreements. and charges” that prevailed before and after theand charges” andafter before that prevailed derway (1986-94), the so-called “second wave” theso-called of (1986-94), derway of preferential treatment between the parties. Theof preferential theparties. treatment between t complexity and have experienced limited progress. progress. limited andhave experienced t complexity e in the process of being examined. Fourteen are Fourteen examined. of being e intheprocess decision, andreplacedecision, it n, including“substantive” and (e.g. issues systemic ratification ofRTA, the of orapplication relevant on atotal of and nineRTAs intheareasof goods creation of the US-Canada free trade agreement free creation of theUS-Canada ion reports have been adopted. However, to adopted. due havebeen reports ion anism for (RTAs). allregional trade agreements n take place after theRTAn take or place signed after just has been 62 RTAs have been concluded; the reports for 62 thereports RTAs concluded; have been improve the surveillance role of the WTO. As of As roleof theWTO. improve thesurveillance 304 by a permanent mechanismby apermanent mechanism requires early requires mechanism 305 Similar requirements are established in Article Vof inArticle areestablished Similar requirements prevailingbefore theformationthan those of theRTA. provisions remainsachalleng provisions preferential onwhich instruments appl rulesshouldbe coverage of trade of product andtheextent depth surrounding maindebate RTAs onthe The has focused economic integration agreement. toraise theoverall levelof trade inservic barriers Vrequires that theagreement shallArticle not barriers, Furthermore, regard with to extra-regional intoeliminated force eitherattheentry of theagreement oronthebasisof a“reasonable time-frame”. coverage” amongtheparties of thetrade inservices Vrequires particular, thatIn aneconomic Article format thatthe requires XXIV Article all trade” within a“reasonable lengthof time”. Se to“eliminate” ofcommerce” arerequired areas “substantially on regulation and“other duties restrictive key in conditions. two First, under In satisfy. should union) acustoms areaor trade themark defines XXIV Article perspective, From alegal system. andthedegr granted effects economic byaRTA, its determinants areessential elements these All parties. andthelevelof theMF reduction the pace of tariff of supply”. But the extent of the sectora the of supply”.of extent the But andof thefour modes volume “understood of trade affected should be interms of number of sectors, 307 areas andcustoms unions their contribution to of theexpansion worldtrade of free-trade amongthebenefits includes of GATT XXIV ontheInterpretationof Article Understanding avoiding RTAs that were formed theintent with to required liberalization oftrade andextent depth the likely, Most extensive. shouldbe all trade” coverage that of thesectoral theliberalization effort suggests coverage sectoral The that barrie XXIV inArticle requirement established The (i) eligiblefor preferen ofproducts set “substantive The issues” in the debate surrounding RTAs in the WTO inthe thatremainopen mainissues arethe What (b) sectoral coverage” amongthe sectoral of thetrade inservices have“substantial must agreement integration that aneconomic GATS requires Vofthe Similarly, Article coverage.product northeundersta XXIV excluded. But,neitherArticle is larger themore comprehensive isthecoverage of All RTAsAll grant preferential market However, access to theirmembers. RTAs greatly may asto differ the of therisks helpto minimise debate some of the trade created by the RTA may simply reflect trade diversion from countries outside the agreement. See See agreement. the outside countries from diversion trade RTA reflect bythe maysimply created trade ofthe some as RTA ofa isdesirable formation by the generated expansion trade all not ofview point aneconomic from that Note discussion in Section C on thispoint. Con inSection discussion e for further negotiations. e for further order to qualify under Article XXIV, customs unions and free-trade andfree-trade unions customs XXIV, Article under to qualify order distortions associated with RTAs? with associated distortions tial treatment, themarginofpr ion of aRTA higher shouldnot toward result inbarriers third-parties l coverage required remains unresolved. remainsunresolved. required l coverage es compared toes thelevelbefore theformation of the particular, Article XXIV allows theformation of allows RTAs XXIV particular, Article the GATS for economic integration areasinservices. N barrierof theRTA member create sectorally discriminatory arrangements. The arrangements. discriminatory createsectorally integration area must have “substantial sectoral have“substantial areamust sectoral integration debate on RTAs in the WTO? And, howcould And, thisRTAs on intheWTO? debate cond, with regard to extra-regional trade barriers, cond, regard with to extra-regional and that “substantially alldiscrimination” has to be the agreement and smaller if any major sector is theagreementandsmallerifany majorsector liberalization, the transition period and the policy liberalization, andthepolicy thetransition period was aimed atlimitingtheproliferationwas aimed of RTAs, at nding defined the precise extent of therequired extent theprecise nding defined of the overall extent ofof preferential theoverall extent market access 307 rs to trade should be eliminated on “substantially on eliminated be should totrade rs parties. Afootnote clarifparties. et access requirements thatRTA each et access requirements itafree (be ee of compatibility with themultilateral with of compatibility ee trading ied. To a large extent the interpretation of these ofthese interpretation the Toied. extent alarge interpretation conditions of these interms of the eference granted oneachproduct, 307 , and re-affirms how this , andre-affirms ies that this requirement -countries against third against -countries

II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING WORLD TRADE REPORT 2007 SYSTEM: ACHIEVEMENTS AND CHALLENGES WORLD TRADE REPORT 2007 II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING SYSTEM: ACHIEVEMENTS AND CHALLENGES a sector-by-sector examination should be favoured relative to one at the sub-sectoral level. of to arequirement trade andthat intermsof define percentages difficult itwouldbe trade inservices, percentage excluded. of sectors/trade It has been note or sub-sectors and whether the requirement of substantial coverage should be defined in terms of of thecoverage of shouldtake theexamination that theextent iswhether place atthelevelof sectors ofGATS ru interpretation tothe related issue Another Yet,4). interpretation has not emerged. aconsensus ontheprecise that integration noeconomic in areashouldexclude and the word“substantial” (e.g. transportation) not allowfor services theexclusion of does essential of “substantial coverage” It sectoral remainsunsettled. of supply, andmodes of theexte thequestion affected volumeof trade “substantial intermsof coverage” number of sectors, sectoral understood shouldbe Vof the GATS, theclarific despite Regarding Article extent. but to amuchlesser liberalizes party developing the or liberalizes, party developed the only whereby liberalization, asymmetric preferential agreement orshoulditrefer to theoverall relevant trade inthearea? isespecially for This therequirement to liberaliz iswhether issue Another lines. tariff liberalized reduced lines rather dutieshave where than been eliminated inthecount included tariff shouldbe of requires “eliminated”. that dutiesshouldbe XXIV Furthermore, Article Therefore, itisunclearwhether been liberalized or would it be sufficient that just at lines ifalltariff only counted asliberalized be si below lines ofhowtariff uptheissue this opens But, disaggregation. common levelofsectoral levelasthisisthemaximum atthesix-digit on tariffs should level threshold this ishow issue related A place. of anumerical threshold inthefirst to thesetting have objected Members level. Butot atthesix-digit lines tariff System (HS) suggested has for instance, Australia, used. be should asabasisfor lines of thedefinition theconcep tariff ex For discussion. andremainunder raised have been related issues toA number methodological of thedefinition of more “substantially specific alltrade” excluded agriculturecould be whether major sector) would be excluded from regional liberaliz regional from excluded be would sector) major high tariff barriers in the base year. in thebase barriers high tariff of bytheexistence biased may ontrade volumes be athreshold Furthermore, based excluded. could be cover. that However, entire sectors this not criterion ruleoutthepossibility does objected, ithas been that theagreement should theparties trade between lines and/or percentage of tariff such asacertain benchmark onastatistical coverage based of favours quantitative approach product adefinition This interm “substantially alltrade” established be should The discussions aimed at clarifying thiswordingha atclarifying aimed discussions The debate The 308 on other considerations. For example,on other considerations. “substantially For al North-South RTAs therequired where threshold leve North-South The issue may be of relevant importance in the case of may in issue the of The near-prohibitive be case for relevant example. initial this In importance case, tariffs, it parties, on the basis thatparties, low. trade the existing is very the between trade for potential ahigh with asector also liberalization regional the from toexclude possible be would 308 Beyond these statistical benchmar statistical Beyondthese in the regional integration process. in theregionalintegration process. 308 a deeper level of disaggregation (10 levelofdisaggregation a deeper or12 have digits) ve focused on whether a more precise definition of definition amoreprecise onwhether ve focused be calculated.be Clearly, calculations done should be the majority of tariff lines have of liberalized? tariff themajority been vestment and labour mobility (that is, Modes 3and (that is,Modes mobility andlabour vestment x-digit should be treated. Should a six-digit sector sector Shouldasix-digit treated. shouldbe x-digit her countries favour Still alowerthreshold. other t of “substantially alltrade” level threshold iswhat s of trade volumes, tariff lines or sectoral coverage. orsectoral lines tariff s of trade volumes, ation contained inthefootnote that thewording nt of liberalization needed to meet the requirement requirement the tomeet needed nt ofliberalization l of trade liberalization may be achieved through achieved may be l of liberalization trade les isthat of theadequate levelof disaggregation, using a threshold of 95 per cent of all Harmonized ofallHarmonized cent of95per using athreshold ample, one issue raised with regard to the use of to regard ample, theuse with raised oneissue l trade” could imply that no sector (or at least no atleast l trade” (or could that imply nosector ation. In practice, this debate has revolved around has practice, revolved ation. thisdebate In e should refer to each individual country inthee shouldrefer country to eachindividual d that, given the unavailability of reliable data on data ofreliable unavailability the given d that, has been argued that the flexibility allowedby argued that has theflexibility been ks, discussions have touched also discussions ks, especially trade diverting RTAs, may generate vested interests against MFN liberalization. MFN against interests RTAs, may vested generate diverting trade especially to of theprocess multilateral blocs stumbling be will liberalization, aspreferences granted throughRTAs, theagre outside theriskthatincrease third parties for countries to possible createRTAswould be bysi of RTAs by raising thebar to their formation.RTAs limited If withvery sectoral coverage were allowed, it the requirement that RTAs eliminate onsub protection onhowto guide evaluate Article aprecise not provide on at least 90 per cent of their imports from RTA bythe10 cent per partners of theirimports 90 on atleast differential treatment” in theRTAs even though ma circumstances, ifthemargin ofcircumstances, preference these In C(that C). to istheyproducerelative ataprice country incountry higherthan producers 310 309 stud region. The andtheAsia-Pacific America in Latin involved 20 RTAs, primarily (2006) Bank(IADB) Development bytheInter-American A morerecent study quiteprominent. peaks remaining highandtariff However, to agricultural exceptions average trade remained with subject agricultural preferential tariffs to theaccepted appeared be norm. of goalof products the agreement. trade free inindustrial The period in eitheronthedate of entry goods on industrial EC, EFTA andCEFTA. found resulted It that theagreements intheelimination ifnot all, of most, duties of ananalysis (2002) conducted Secretariat WTO The for treatment special countries? for developing has “substantiallyHow alltrade” interpreted in been The interpretation of the required extent of sectoral coverage in existing RTAs formation of aRTA themult with interaction andits ofthe ofwelfare consequences interms both implications important has liberalization trade regional From aneconomic point of view, thedefinition of duty free by the 10 implementation, convergence waseventually achieved so varied markedly inpartners line theshare of tariff found that study RTA Even thoughtheIADB reciprocal. trade commitment decidedly free isalso The measures. safeguard special measures thanis less trade. free non-tariff These measures ensure anoutcome non-tariff that completely be point eliminated sectors, sensitive onthese is products onthese inRTAs.problems RTAs, for In thetransition completely tariffs removing period multilat atthe toliberalize difficult been historically such tothisconclusion. Products caveats important uses the number of tariff lines or trade-weighted tariff lines as the relevant indicator. But there are of imports from B(that from preferential benefit access into A). of imports from C marginof preferencelarge may displace imports from CandtheRTA finditconvenientA may still to import may However, not generate trade diversion. a agreement. The same conclusion same isreachedagreement. if, The inst countries AandBform aRTA andthat of producers good RTAs ishigher,diverting thelevelof inte thedeeper that thelikelihood there shows are when circumstances of trade theother hand,On economic theory significantly longer (sometimes 20 years) than for other goods. And while tariffs may, distant tariffs atsome while And than for 20 other goods. years) (sometimes longer significantly The preference The and the margin preferential tariff is the defined applied MFN as the within difference tariff between See also subsection B.2 and Section C the region. th yearof implementation. isamarked There of absence theprincipleof “special and 310 that A provide to B is sufficiently low, to that Bissufficiently Aprovide incountry consumers include restrictive and complicated rules of originand rules andcomplicated restrictive include ement suffer from being discriminated andthatRTAs discriminated ement from being suffer s subjected to liberalization in the first few years of few years inthefirst to liberalization s subjected gration theregion. Suppose, within for example, that ead of the share of imports from RTA one ead of theshare partners, of imports mply swapping trade diverting concessions. will This trade diverting mply swapping to force of theagreement orduringthetransition the required coverage and depth of integration for ofintegration anddepth coverage required the as agriculture and textiles and clothing, which have which andclothing, andtextiles agriculture as RTAs? RTAs allow duties? Do Have RTAs eliminated ilateral trading system. But, economic theory does ilateral But,economic theory trading system. ny of themhave both and developing developed XXIV if global welfare is the objective. For example, For welfare ifglobal istheobjective. XXIV eral level, also appeared toeral encounter level, appeared also significant stantially alltrade may helpto avoidstantially aproliferation some 47 RTAs, mostly arrangements involving the involving arrangements 47some RTAs, mostly 309 y found that most of the RTAs eliminated duties RTAs eliminated ofthe y found that most (that continues to face import barriers) infavour barriers) toface import continues (that that at least 90 per cent of the tariff lines were lines cent tariff ofthe per 90 that atleast x , say agriculture, in country Bareinefficient agriculture, , say incountry th yearof implementation of the 309

II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING WORLD TRADE REPORT 2007 SYSTEM: ACHIEVEMENTS AND CHALLENGES WORLD TRADE REPORT 2007 II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING SYSTEM: ACHIEVEMENTS AND CHALLENGES the necessary timeto internally implementationLonger through finance profits. adjustment costs these the necessary fundsan wouldrequire This products. higher quality commitments in28commitments RTAs. are inefficient in these countries. inthese are inefficient ontheground justified that may andthat be firmsface financialperiods higher markets adjustment costs above highlighted that bythe10above discussed study (2006) RTAs? istheaverageWhat IADB inexisting lengthof thetransition The period settled. thatremainstobe anissue also sectors (their study covers 152 sub-sectors for mode 3 and 142 for mode 1).On average, the percentage sub- 25 takethirds of cent thecountries bindings inatleast neworimproved reviewed per of services termsof coverage, In theyfound than more than such services. two- asaudiovisualones oreducation Similarly, inGATS is“reasonable wording the time-fra thepace ofshould be liberalization thetransition within period. in “exceptional cases”. But,there isnoclearconsensus onwhat constitute “exceptional cases” andwhat “substantiallywhen alltrade” hascalculated to be length of time”. link The isdetermined that by thelengthof thefact affects thetransition period requirement The of a“reasonable” transition period Linked to thedefinition of “substantially all trad (ii) such asfinanc not onlyinkey sectors, infrastructure substantial countriesbe (developing eliminated d to not countries;RTA althoughthe difference appear does trade wasslowerthan developed partners’ found that study therate at IADB The programmes. reduction of thetariff of itinthestaging reflection to some present, be there explicitly not appears be member. country as from the thedeveloped Butwhile country asmuch from thedeveloping elimination to of trade The isexpected barriers Members. country 312 311 that the states of GATT XXIV ontheInterpretation ofArticle Understanding the transition The period. As far as regional liberalization in services trade is concerned, Roy et al. (2006) reviewed the services theservices reviewed trade far isconcerned, asregional Royetal. liberalizationAs (2006) inservices implementation compared countries). lines to cent for 95per of developed tariff of the possible adjustment costs arisingfrom trade trade isliberalized liberalization.When adjustment to costs firmsneed of thepossible From of aneconomic point view, for acertai theneed that this transitional countries. may for longer include developing period adopted,suggested rulesshouldbe butithas been of flexibility isnoclearconsensusThere onwhat type In general, it is recognised that some flexibility sh as 20 years. forthe transition isonaverage thecomplete period much longer, removal of tariffs ashigh sometimes andclothing, such liberalized,regional asagriculture trade has andtextiles been althoughfor products of sub-sectors committed in the countries reviewed increased from about per 40 cent in GATS to over 70 adjust toadjust environment. thenewcompetitive example, For (like for GATT Article XXIV), a five-year limit or any time limit to apply on a case-by-case basis. How to basis.How limitorany timelimitto onacase-by-case apply afive-year XXIV), Article (like for GATT centper inRTAs 1, for 3. Mode for cent, Mode per respectively, 50to andfrom about over80 GATS interms andthat bindingsboth of coverage this inthecommitments, wastrue andimprovements beyond to significantly go 3tended 1andMode inMode commitments found thatThey theservices “reasonable length of time” referred to in paragraph deal with a gradual and selected extension ofcertai extension agradual and selected with deal As of 1 March, 2007, 44 RTAs have been notified under GATS Article V (Economic Integration). V(Economic GATS Article under notified 2007, of1March, havebeen RTAs As 44 Bacchetta and Jansen (2003). and Jansen (2003). Bacchetta 311 About 17 of the RTAs take a negative list approach to services liberalization. 312 th yearof implementation of cent theagreement per onaverage of 90 310 uties on 89 per cent of tariff lines by the 10 ould be given to RTAs involving developing countries. developing RTAs involving to given be ould e” is the debate over what constitutes “reasonable constitutes what over e” debate isthe e and telecom, but also inmoretraditionallye andtelecom, butalso difficult d time. firmswith Gradual may provide liberalization and how the liberalization should proceed during shouldproceed andhowtheliberalization n transition period finds its findsits n transition period n GATS asnational obligations (such treatment) is me”. limit to meanaten-year argued has been This 5(c) of Article XXIV should exceed ten years only tenyears shouldexceed XXIV ofArticle 5(c) principle of special anddifferentialprinciple of treatment special may which developing countries eliminated dutieson they may need to theymay or need invest innewtechnologies justification onthebasisjustification th yearof that two countries A and B form a FTA. Suppose as well that country A is a very inefficient producer of inefficient Aisavery aswellthat country countries Suppose AandBformthat aFTA. two Finally, RoO RTAs from may their partner. define their additional markets dutiesin were thecase disrupted by imports may be convenient for country B to use tyres produced in country A (although ithas to A(although pay produced ahigher price convenient incountry may be Bto tyres for use country Agriculture), they may have a negative impact on third on impact mayhaveanegative they Agriculture), and will export cars to A under thepreferential to Aunder regi cars export and will tariff of from theworldatMFN therest tyres import Bwill country constraints, ofabsence specific incidence applied beforeincidence applied theformation of thecustoms theunionshall notcountries “on outside than thegeneral thewhole” higherormore restrictive be customs unions, therules ar restrictive barriers are them. raised against barriers restrictive formation of The theRTA have will quota-holders. a may entitlements reduce prices inthesector,quota for allpre-existing thus rents thequota eroding Agreement on (e.g. entitlements WTO inadditionto are the provided existing under regional partners Fo onthird parties. likelihood impact of an adverse to of preferential “otherdegree respect liberalization with provided regulations of commerce” andthe the relationship to there aninverse note may between be that, like of isimportant tariffs, It inthecase barrierto trade, bilateral reducing trade significantly effective ontheEU, Focusing AugierCadot et etal. 2005). accessto limitMexico’s free duty effectively RoO have recent that studies shown economic empirical onNAFTA, Focusing A. the market of country for cars for to inorder preferential qualify of treatment from theworld), therest inthan iftheywere imported an intermediate product 315 314 313 duties andother regulations of commerce” theagreement oncountries “shall outside imposed than thecorresponding higher not ormore be restrictive theformation of allows aFTA provided XXIV Article requirement The that RTAs should not result against in higher third barriers (iv) preferential of safegu market use The access. of that benefit by thepreferential access provided of arrangement, limit imports astheycan thequantity measures andrulesof or safeguard andanti-dumping rate there (TRQs), instruments quotas are these tariff Among onthirdas well astheimpact parties. liberalization, of preferential market andtheextent bytariff thedepth provided access that may qualify From of aneconomic point view, thereare anumber of as“other regarded be regulations of commerce”. restrictive should instruments Agreement not asto adefinition provide trade which policy does However, theGATT debate over The “other regulations of restrictive commerce” dutiesRTAs requires that also beside XXIV Article (iii) on 95 per cent of tariff lines by the 10 countries. slowerpace In thana somewhat developed findsthat co onaverage developing (2006) IADB The eliminated duties on 89 per cent of tariff lines by the same period. There is no definition of what may be meant by other regulation of commerce. And interestingly, there is no other other isno there interestingly, And ofcommerce. regulation byother meant maybe ofwhat definition isno There See Section C for a discussion on safeguard measures in the multilateral trading system. trading multilateral inthe measures safeguard on adiscussion Cfor Section See lowest import tariff. import lowest In free trade areas, RoO are set to prevent goods that can can that goods toprevent areset RoO areas, trade free In reference to “other regulation of commerce” in the GATT. parties parties 314 may be designed for protection (Krueger, 1997 (Krueger, for protection designed maybe andKrueger, andKrishna 1995). Suppose x , say tyres, used in the production of cars that country B exports. Then, intheThen, Bexports. that country of cars intheproduction used tyres, , say e similar but it is required that d e similarbutitisrequired th yearof implementation of countries theagreement, developing 315 existing before the formation of the RTA. With respect to before theformation of existing theRTA. respect With ards can also strongly limitmarket strongly access. also ards can eliminate “other regulations of commerce”. restrictive Canada Stat andtheUnited al. (2005) shows that non-cumulation represents an represents that non-cumulation shows al. (2005) me. But, RoO can be designed insuchaswaythat it designed be me. can But,RoO that “the dutiesandother regulation of commerce” r example, to the extent that TRQs entitlementsr example,of that to TRQs theextent untries eliminated dutiesonRTA trade at partners’ policy instruments policy on wh negative impact on third parties, even ifnomore onthird parties, negative impact enter the free trade area through the imposing the country fact, while developed countries eliminated duties developed while fact, parties. This is because an expansion of anexpansion theoverall is This because parties. 311 union. The Understanding ontheInterpretation Understanding union. The igin (RoO). TRQs can limit the extent of market limittheextent can TRQs igin (RoO). . uties andother regulations on imposed ich RTAs and may legislate es (Estevadeordal, 2000; 2000; (Estevadeordal, es 313 For example, example, For

II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING WORLD TRADE REPORT 2007 SYSTEM: ACHIEVEMENTS AND CHALLENGES WORLD TRADE REPORT 2007 II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING SYSTEM: ACHIEVEMENTS AND CHALLENGES Furthermore, theformationFurthermore, of RTAs –especially RTAs countries’ these increase incentive to moveonthemultilateral front to avoid trade diversion. market power of the regional arrangement (Bagwell andStaiger,market oftheregional arrangement power (Bagwell 1997b). increased the given future inthe retaliation aggressive toavoid trade multilateral liberal more to pursue blocs or stumbling blocs to themultilateral trading system. blocs orstumbling blocs The theoretical literature has provided contrasting an contrasting provided has literature theoretical The interaction The RTAs between and progress in the multilateral trading (c) of theestablishment theRTA. both before andafter trade barriers of thelevelof assessment anobjective countries mechanisms across impede differences inregulatory makes which arises problem itdifficul methodological Buthere to animportant thirdthe overall parties. level of respect barriers” with to trade in services Turning must ensure that that parties not theagreement Vestablishes to “raise does GATS, Article suchwith territories”. theconstituent tobe facilitate territories to andnot trade between trade raise of barriers other Members that thepurpos re-affirms of GATT XXIV of Article 316 ofmargin countr of competitiveness liberaliz tomultilateral opposition the liberalization. argument The applies to both RTA argumentOne multilateral isthat of RTAs further increase in thepressure thedirection to act force adriving for andbe multilateral liberalization. trade system asto why putforward have been arguments Several orbuildingblocs? RTAs blocs Are stumbling of view thebuildingbloc insupport Arguments (i) subsection (d) below). (d) subsection animportant be will onnon-RTA members effects Giventhecontinuing inthenumber of increase of RTAs, theKemp-Wan their adverse theorem). reducing unchan union members andthecustoms the non-members volume of trade between that leaves the theagreement tariff by adoptingacommon external outside that RTA has shown also unions, economic theory pa third unions areas against andcustoms of free-trade of consid inthedirection to go requirement appears Interestingly, the Understanding on the Interpretation unchanged (see Section C). andfrom deteriorationdiversion in their terms of trad “to the greatest possible extent avoidcreatingad extent “to possible thegreatest notnot raised ensure does be that theformation of aRTA not have does negativewelfare consequences From aneconomic of point view, thesimplerequiremen former, theproliferation andexpansion ofRTAs defacto increase in intra-RTA may actually come at the expense of non-RTA members who lose outfrom trade lose who of non-RTA inintra-RTA members increase come may attheexpense actually highlighted has theagreement. thecontrary, indeed On on countries howthe outside economic theory An alternative way is to sign a compensatory regional trade agreement. This case is discussed below in the context of context inthe below isdiscussed case This agreement. trade regional a compensatory wayistosign alternative An the domino theory. system ies that remain outside theagreemen ies that remain outside ation. With regard toation. With thelatter, itisargued that by the reducing 312 customs unions – may prompt non-member countries non-member –mayprompt unions customs e of customs unionse of trade agreement customs andfree “should members and non-RTA members. With regard to With the andnon-RTA members. members verse effects onthetrade of other Members”. effects verse This ering adverse welfare consequencesering adverse of theformation regionalism complement can themultilateral trading swers to the question of whether RTAs of whether to arebuilding thequestion swers challenge for the multilateral trading system (see (see challenge for themultilateral trading system e, even when barriers against third parties remain thirdparties against e, barriers evenwhen rtners may avoid imposing losses on third-parties third-parties on losses imposing mayavoid rtners t that overall barriers against thirdt that against countries overall barriers should of Article XXIV of GATT addsthat of RTAs GATT should XXIV ofArticle parties. Indeed, in the specific case of customs case inthespecific Indeed, parties. t to apply this provision. Data limitation andt to this provision. apply Datalimitation ged (see Box 9 in Section Cfor anexplanation Box 9inSection (see ged erode existing preferences, existing thus reducingerode t relative to partner countries,t relative to partner 316 therefore leadsto aspateof RTAs inthefuture(Bal political economy equilibrium characterised bythepr economy characterised equilibrium political for isconvinced economic reform ofthe WTO, theneed andof joiningthemultilateral trading system. that thegovernment Suppose through enhanced of acountry, FDI. system has which not yetacceded to and Robert-Nicoud, 2005). The argument isst The 2005). and Robert-Nicoud, Baldwin 1994; thejuggernaut rolling (Baldwin To start can putitinBaldwin’s effect terms,thedomino may of leadto gradual aprocess liberalization. proliferation theory bythedomino The of RTAs predicted domino theory, theformation theory, domino of aRTA theva raises that RTAs may helpagovernment to mobilize forces domestic for themultilateral in support trading present inEurope phases(1961, duringthefiveenlargements 1973, 1986, 1994, 2004). to on. join andso Historical country afourth trigger other thenew equilibrium with excluded countries. regional agreements both cases, will In compensatory 319 318 317 an enlargement. there be will is open, joining. thebloc If of theoption joiningthebloc between indifferent being govern the If in favour bloc. the ofjoining fiercely country,Therefore, from disadvantage. suffer theircost will inanon-member turn theywill morelocated countries.Th equilibrium the political innon-member inanexisting integration suchasdeeper is shock, theregi within competition fromstronger that suffer sector that gainfrom preferential forces balance (import-competing access) anti-membership (exporters the“domino” between interaction of regional theory for “taming bygenerating theneed the liberalization has theargument made that RTAs theforcesRecently, trigger will for (2006) multilateral Baldwin andStaiger,countries” (Bagwell 2002, p. 119). cooperation may have especially dire consequences St United ofthe awareness growing bythe in part argued that than be theenhanced itcan multilateral possessed, wasspurred cooperation have otherwise corresponding overthetransitionto th the GATT period thefollowing interpretation asto propose and Staiger theenhanced also multilateral under cooperation enables countries member to impose accompanies theformation unionmay of temp acustoms multila from deflecting theperceivedincrease penalty of regionalism strengthening mayof of anexogenous of RTAs onenforcement, ontheimpact Focusing andStaiger (1999b) Bagwell showthat theanticipation allowthegovernment andsubsequently fronts. alongboth to proceed successfully WTO infavour balance gains tilt thecountry thepolitical within ofThese economic reform andaccession to the access to themarket of RTA RTA its andfrom ofits other its because foreign investors, partner partner. from FDI country, trade arrangement ableto adeveloped thereforming wouldbe attract with country initiallyHowever, By entering of into action. to courses both apreferential opposition itfaces political afte ableto But,itmay achievethisgoal policy. be this view.support Agovernment may lack thepolitica extended being before ofsmall number countries first aslaboratories amonga ofRTAs international tested act be can trade cooperation cooperation, whereby Another argument of the complementarit in support accepted that the EC customs union offered its member accepted that its theEC unionoffered customs Notice that not does the investigate domino theory whether the expansion is in the interest of the incumbent countries. is It simply assumed that the incum trade diversion reduce the expected losses from deviating from multilateral rules (Bagwell andStaiger, 1997a). (Bagwell rules multilateral from deviating from losses expected the reduce diversion trade In contrast, the formation of a FTA may temporarily enhance multilateral tensions. This is because expectations of See Box 8 for a definition of trade creation. creation. oftrade adefinition 8for Box See a more credible threat Bagwell of against defection. punitive action bent will allow new entrant countries tojoin. countries entrant new allow will bent raightforward when RTAs when raightforward 317 RTA or theformation ofRTA. anew change will This ment of the country was (before the shock) close to close theshock) ment was (before of thecountry dwin, 1995). The domino theory starts from aninitial starts dominotheory 1995).dwin, The ly, Baldwin (2006) claims that the domino effect was claims that thedominoeffect ly, (2006) Baldwin on). Then, in these circumstances, suppose that there suppose circumstances, inthese Then, on). in the presence of a united group of ofEuropean aunited in thepresence r joining a RTA. example,r joininga Ethier For (1998) argues ism andthe“juggernaut” According theory. to the ates and others that abreakdownates andothers inmultilateral esence of a RTA, in which pro-membership forces ofRTA,esence a pro-membership inwhich tangle” argument onthe relies The of regionalism. lue of entering into aRTA and for non-members, e profits of the firms exporting to theregion, but of thefirmsexporting e profits fer a temporary boost to multilateralism, as it may it as tomultilateralism, boost fer atemporary isthat andmultilateralism regionalism y between multilaterally. of trade Political economic models 313 teral rules. That is, the market power effect that is, themarketteral That rules. effect power l support necessary to pursue a global free trade free to aglobal pursue necessary l support countries greatermarket than power theywould e formation and the extension of the EC. of the itis “If e formation andtheextension 318 or not, after the shock it will be in favour of orarily work in favour of multilateralism, as it as infavour ofmultilateralism, work orarily If it is closed, then the country may look for may look thenthecountry itisclosed, If are trade creating. aretrade 319 The export

II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING WORLD TRADE REPORT 2007 SYSTEM: ACHIEVEMENTS AND CHALLENGES WORLD TRADE REPORT 2007 II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING SYSTEM: ACHIEVEMENTS AND CHALLENGES the worldprice. Reciprocity, by neutralizing theworldprice decisions, implications of governments’ tariff particular free trade agreements) poses an important threat to multilateralism. animportant poses trade agreements) free particular theterms to of andthus trade problem solve regionalism ability (in ishampered inits trading system that externalities local-price generates This revenues. for –thus implying, example, tariff different astheyenter tariff adifferent (i.e. under price abroad) local sh therelative with butalso (i.e. theworldprice), environment arenolonger governments discriminatory theprincipleof re isviolated, MFN When unchanged. ensurewill thevolume of trade andwelfare theworldprice while remains (terms increases of trade) of MFN together.of ensures that MFN al principleof MFN The multilateral this isableto prob solve trading system agreement isto manage theterms of trade inefficienc of international of atrade themainpurpose tradeAccording cooperation, theory to thereceived view bloc of thestumbling insupport Arguments sector competing import andthe expand will sector 320 liberalization multilateral down mayslow countries co tosmall/developing preferences unilateral granting to argume up. may willing give not be governments The A third argument bargaining isthat that with preferential power members may provide arrangements 1995 andHelpman, 1998). andKrishna, (Grossman the multilateral trading system iswelfare butmight notonly reducing, also diverting, theregional higher with agreement be will power than Consequently, without. aRTA that isnettrade theregional received under arrangemen the protection will it because liberalization, global from preferential benefit itwill state, because rates. Preferential asaform against of rates protection act ableto may be overcomeinefficient, thecompetition although of that thebloc, isamember inacountry this case, afirmlocated In trade diverting. may be is that preferences granted through RTAs may genera multila further toachieve resources the or enthusiasm of regionalis view of bloc thestumbling Proponents of origin, incr rules while for existing firmsthat wererelocating originally inthehub-countr trade relationships. Therefore, asbilateral proliferate, andregional trade agreements a“spaghetti bowl” to eachpairof specific bilateral be theywill protection, driving interests are by determined theparticular of rules thisclaimare: behind to harmonize rules ormake these them multilateral. economy inthepolitical story elements Essential incoherent increasingly before andoverlappingrule andliberalize en are established regional agreements ar RTAsThe are trade creating ortrade diverting. of whether regardless liberalization multilateral with associated be ofRTAs can network growing The liberalization. w pressure andanti-liberalization stronger be will multilateralanother round of reciprocal negotiations non-members. Therefore, it is likely that an inefficient firm will lobby against the prospects of Therefore, future itislikely non-members. theprospects against lobby firmwill that aninefficient emerge. On will RoOs likely incompatible of most reciprocity can deliver an efficient outcome. anefficient deliver can reciprocity The intuition is that, if countries that form aCU thatform ifcountries aresuffic isthat, intuition The (CU). union and acustoms FTA a between different be can effects the that show also (1998) andStaiger Bagwell (larger) country. Therefore, as long conforms as the common tariff external to principle, the MFN the principle of origin (RoO) and the fragmentation of production. Since of andthefragmentation rules origin of production. origin (RoO) not want to forgo its privileged access to theregional market. not privileged want Since to forgo its easing the support for harmonization.easing thesupport 314 eaker. for Hence, multilateral RTAs arebuildingblocs the other hand, by thefragmentation of production, lem through reciprocal liberalization andtheprinciple liberalization lem through reciprocal are of imports coming from each supplying country coming country from eachsupplying are of imports untries (Limão, 2002) and explains why industrialized whyindustrialized andexplains 2002) (Limão, untries m stress the risks that may regionalism the reduce therisks m stress s would induce business to pressure governments to pressure s wouldinduce business from a more efficient firm located in a non-member inanon-member from firmlocated amore efficient l terms of trade externaliti teral liberalization. One of One liberalization. teral following aRTA country. asmalldeveloping with y into thespoke for example, lowerthesupport will te vested interests against MFN liberalization. RTAs liberalization. MFN against interests te vested y that arises from a non-cooperative outcome.The fromy that anon-cooperative arises cannot be solved with reciprocity. The multilateral The reciprocity. with solved be cannot iently similar, a union will approximately behave asa single behave similar,iently approximately will aunion is launched, pro-liberalization political pressure political islaunched, pro-liberalization gument is as follows. If enough criss-crossing enoughcriss-crossing If gument isasfollows. have negative effects on further liberalization of liberalization onfurther effects have negative nt is especially valid for large/developed countries countries for large/developed valid nt isespecially will shrink. This process will imply thatwhen imply will process This shrink. will ough trade, it would only be a matter of timeough trade, amatter be itwouldonly just concerned with the total amount of imports concernedjust the total with amount of imports t will reinforcet will lobbying firm, its theinefficient ciprocity is impaired. The intuition isthatina intuition The isimpaired. ciprocity 320 es are channelled through arechannelled es theirprinciplearguments model based on the median voter, onthemedian (1997) based model Levy show the value of multilateral liberalizatio ofmultilateral value the Recent that of evidence theaverage liberalizatio extent Fifth, RTAs may increase the adjustment costs associated with multilateral with associated RTAs liberalization,Fifth, maythus theadjustment costs increase rendering blocked. be will anyTherefore, tomultilateralism move regional arrangement (Limão, 2006; and Karacaovali andKaracaovali 2006; regional arrangement (Limão, (includi regions from thatareimported in products 322 321 voter themedian for thefactor-pricecompensate ch toamultila byamove gainsoffered variety remaining change. The aworker) but(as of from goods not will any suffer price/wage access to variety alarger aconsumer) voter gain(as themedian will from the thiscase In countries identical form aFTA. that two theme itmay offer because trade multilateral free argued that abila of thevoting population. Levy gains higher provide they if liberalization, multilateral for multilateral RTAs support may thepolitical erode Fourth, liberalization. economy Usingapolitical multilateral liberalization Theref property. migration andintellectual standards, market such issues, aslabour orenvironmental onnon-tariff ableto incooperation they may engage be RTAs, countries from large may benefit North-South In (country C) isnot, thenRTAs(country may leadto anoverall deterioration inmultilateral cooperation. tariff ac that theycan collaborating onabilateral basis(so at andStaiger are (1999b) Bagwell good model, countriesthree country andB) (A showthat iftwo to enforce the ability RTAs commitm affect Sixth, can arrangement, thus makingmovement to th Furthermore, 2003). (WTO, regimes of regulatory andpredictability theprinciplesof transparency itundermines to themultilateral because trading system, athreat iscommonly argued It that themaze poses regimes lock-in of members. different regulatory its in RTAs with isthatcompeting argument A related 2001). (McLaren, implemented first will andthecost compensated be sectors sensitive “sen createinefficient will decisions opposite The inthissector. invest Therefore, will they to high. thebloc be produced outside the prices of thegoods expect will world, inthebloc producers trade agreement to emerge. this region’s If agreements liberalization isnot asacredible perceived by agents aswell that Suppose agovernment investments. specific announcement to negotiate multilateral to that produce, inorder Suppose firmshave to attractive. make less multilateral sector- liberalization multilateral liberalization. A recent study (Piermartini study recent A liberalization. multilateral European standards requires making investments, these provisions may provisions to lock-in theregional these acountry makinginvestments, requires European standards To to EU that standards. country to theadjustment ofthespoke theextent partner the standards that anumber of that regional have arrangements “families” onte of rules RTAs differentiated with Changes in factor prices are the consequence of liberalization between diverse countries, that is, countries with with countries is, that countries, diverse between ofliberalization consequence the are prices infactor Changes different levels of capital-labour ratios.different levels of capital-labour See Section D for more details on these findings. findings. these on details more D for Section See in order to maintain a certain bargaining power power bargaining acertain tomaintain in order sitive sectors” that will lower ex-post (after theformation ofRTA) the (after that lowerex-post will sectors” sitive n. This is because multilateral libe multilateral isbecause This n. wards multilateral liberalization costly. liberalization wards multilateral teral free trade agreement can undermine support for support undermine tradeteral agreement can free compatible regulatory structures and standards may andstandards structures compatible regulatory ng small countries) with which these countries these which ng smallcountries) have with commitment, while they expect a particular regional aparticular commitment, theyexpect while hieve an agreement for free trade) andthethirdhieve anagreement one for trade) free will occur in the rest of the world. These investment of theworld.These occur intherest will chnical barriers to trade (TBTs). The study shows study The to trade (TBTs). barriers chnical the EU asthehub include ese different regulatory systems may hinder further further may hinder systems different regulatory ese dian voter better conditions. Suppose for conditions. Suppose example dian voter better and Budetta, 2006) has found evidence of distinct has found of distinct evidence 2006) andBudetta, be higher than had multilateral liberalization been been liberalization multilateral than had higher be than multilateral liberalization for over 50 per cent per 50 for over liberalization multilateral than and Limão, 2005) conformsand Limão, 2005) to thisprediction. anges that will follow multilateral liberalization. multilateral follow that will anges n at the multilateral level by level multilateral n atthe 315 teral to trade agreement insufficient free may be s that RTAs will thwart any further attempt at attempt any further s that RTAs thwart will ore, down toslow mayhaveanincentive they ents at the multilateral level. In particular, ina In level. multilateral atthe ents preferential smallcountries, with as agreements maintain high tariffs relative to the rest ofthe rest tothe relative hightariffs maintain ralization will require that these thatthese require will ralization vis-à-vis provisions to harmonize toharmonize provisions the US and EU theUSand islower the relevant partners. partners. relevant the A and 321 322

II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING WORLD TRADE REPORT 2007 SYSTEM: ACHIEVEMENTS AND CHALLENGES WORLD TRADE REPORT 2007 II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING SYSTEM: ACHIEVEMENTS AND CHALLENGES the fact that RTAs, s the fact bycreatingalternative legal RTAs maylock-in thatcompeting (iv) liberalization; proliferation of RTAs may crowd out negotiating re of this view have highlighted that: (i) the haveof this view highlighted (i) that: Proponents liberalization. for further asacatalyst reaching theconclusion serve that regionalism can “liberalization” highlights other school The andpredic non-tariff issues (such as standards), thus reducing the enthusiasm for MFN liberalization; (iii) that the (iii) thus liberalization; theenthusiasm reducing for MFN asstandards), (such issues non-tariff that RTAs may provideabargaining toolto exchange preferential market concessions access with on libera multilateral against margins andraisingconcerns promote rather than trade diversion trade creation, thus reinforcing to maintainpreference interests vested thatRTAs may therisks (i) economy. open ofthe development aglobal of stress: this view Proponents to threat a represents regionalism that suggesting thus liberalization, multilateral on regionalism of “discrimination” highlights school one liberalization: multilateral Have RTAs trading system? worked asbuil of regionalism andtheprocess between theinteraction showabout evidence empirical does What of schools two to distinguish Overall, itispossible liberalization. ofmultilateral process the stalling Finally, engagement inregional negotiations resources away absorbs from multilateral negotiation, thus rulerigidl weretheMFN theywouldset tariff butthey themselves, trade between free establish B will 324 323 isimpossib agreements trade sign multilateral free prediction theoretical because isprobably This limited. evidence islimited Systematic isvery liberalization multilateral accelerate or down slow RTAs whether on evidence systematic Direct (ii) liberalization? multilateral full or no multilateral liberalization. Therefore, adire Therefore, liberalization. multilateral no full or multilateral liberalization ambitiousliberalization more with orless scenarios, rather than opting for contrast, inpractice, multilateral trade to countries In agreement. signafree for negotiate acountry the WTO. of andpredictability theprinciplesof transparency undermines a maze systems of different regulatory thatthe enforcement theproliferation of thediscipline of (vi) themultilateral of system trading system; of the theoretical literatureof thetheoretical theformation onwhether focuses RTAs of reduces ornot theincentive rationalizing the system (or to put in Baldwin terms“taming to thetangle”). putinBaldwin (or rationalizing thesystem of force bygenerating theneed asapositive RTAs, for themultilateral may act system trade diverting viable; politically may make liberalization multilateral up tobuild multilaterally. helps This extended being amongasmallnumber of countries before tested be international can cooperation whereby cooperation, preferences, to thus multilateral aslaboratories reducingRTAs theopposition of act liberalization; (ii) See Baldwin (2006) and Section C. RTAs and multilateral trade liberalization. For example, on the bases of a repeated game model, Bagwell andStaiger Bagwell model, game ofarepeated bases the on example, For liberalization. trade andmultilateral RTAs general,In Bagwell and Staiger find that both a stumbling (1997a and 1997b, 1999b) show that the impact of region perceive penalty from deflecting multilateral rules). multilateral deflecting from penalty perceive ate mayoffer ofregionalism strengthening of anexogenous mechanism but is they efficient, building be wh can block ofstrength the multilateral enforcement are a mechanism multilateral when stumbling block (RTAs enforcement the on and(iii) higher); no be will members non-FTA andthe country home the between rates tariff is completed FTA the once but tariffs, multilateral higher totemporarily maylead (FTA consideration under period time the (ii) cooperation); multilateral mayimprove union customs while for incentive the reduce agreement RTA trade (free proliferationRTAs of facto de andexpansion y applied. However,y applied. occur too. can theopposite 316 ystems anddispute settlement ystems thought as to the dynamic impact of discriminatory of discriminatory thought impact asto thedynamic incompatible regulatory structures and standards; (v) (v) andstandards; structures incompatible regulatory and provides a pessimistic prognosis on the effects ontheeffects prognosis apessimistic andprovides le. Second, other theoretical models (e.g.le. models Bagwell other Second, theoretical the political consensus for further liberalization and liberalization consensus for further the political and, (iii) the network of overlappingRTAs, including thenetwork and, (iii) ct test of whether RTAs decrease the likelihood to thelikelihood RTAs decrease ofwhether test ct ts a benign effect of regionalism on multilateralism, on ofregionalism effect abenign ts sources necessary to achieve further multilateral to achievefurther necessary sources en the multilateral is – working anticipation poorly system ding blocks or stumbling blocks in the process of intheprocess blocks orstumbling ding blocks s are difficult to test for two reasons: first, most first, reasons: for two to test s aredifficult will set a tariff against country Chigherthan the country against atariff set will lization ontheground oflization preference (ii) erosion; bloc and a building bloc rela bloc andabuilding bloc alism on multilateralism will depend: (i) on the form of form the on (i) depend: will multilateralism alism on mporary boost to multilateralism as it may increase the mayincrease it as tomultilateralism boost mporary 324 mechanisms, mayweaken mechanisms, tionship is possible between between tionship is possible erode existing 323 are trade creating However, rather than trade diverting. RTAs this atthelevelof result specific appears American countries with PTAs after theUruguay Round. after countries PTAs with American Feenstra etal. (2001)Feenstra andFrankel (2002) fi andRose to Paragraph 16 text. of theHarbinson makes Decision across-reference 2004 Aof the1August inagriculture, of Annex agenda Paragraph 44 328 327 326 325 negotiations. multilateral installing contributed has theonehand, On th on themultilateral system. impact alternative views supports evidence Anecdotal approaches of howregional trade policy of views both found be insupport can evidence Anecdotal (iii) by theliterature provided may be ontrade creation andtrade diversion. Moreover, estimate they goods. similarnon-PTA on half aremultilateral onlyabout theamou cuts tariff not receive preferential treatment. particular, In imported that werebeing were smallerfor products inmultilateral onaverage tariffs thecuts characteristics, controlling findthat, for after product They thepreferentialoutside from countries imported bycountries aPTA within andgoods imported that isgoods goods, non-PTA PTA and between tariffs inMFN thedifferences of RTAs analysing onthemultilateral trading system, issupported perspective This blocks. may that workasstumbling PTAs theview to support appears sectors ontheeconometric of analysis thedifferences inmultilateral based across evidence robust More tariffs causation. ofreverse possibility for Latin (1998) tariffs example, Foroutan findsloweraverage For MFN the levelof multilateral tariffs. preferential and trade agreements, andnon-reciprocal including reciprocal both (PTAs), agreements thepresence of preferential correlation of apositive between trade exists evidence empirical Some therole played tothe multilateral by identify RTAs. that itisdifficult tariff that may many isthat Ageneral problem affect thereareso factors countries sectors. across oracross agreement. Therefore, has analysis to empirical rely that of aRTAto isamember acountry which wouldhave to theregional committed without trade of multilateral thedegree oflower intheabsence liberalization to RTAs. observe But,itisnot possible and Staiger, andshowthat 1999b, higheror itmay be tariff Limão, 2002)focus onthelevelof do MFN sensitive to alternative estimation procedures (Ghosh andYamarik, (Ghosh 2004). procedures estimation toalternative sensitive were raised in previous Rounds. In Rounds.In inprevious were raised for importance export areof which vital of products the riskthat theymay promote rather trade diversion have highlighted asaffectin theory block the stumbling down the pace of MFN liberalization for “tariff redu for “tariff liberalization the pace of MFN down To a certain extent, indirect empirical evidence onwhet evidence empirical To indirect extent, acertain by1.6 more. onthePTA products points percentage multilateral tariffs its reduced theeffect examine Both papers andLimão, 2005). andKaracaovali 2006; (Limão, recent papers by two The example actually refers to non-reciprocal preferences. But, preference erosion is equally an issue in reciprocal inreciprocal anissue isequally erosion preference But, preferences. tonon-reciprocal refers actually example The For example, Bayoumi and Eichengreen (1998) find apositi find (1998) andEichengreen Bayoumi example, For Aitken (1973), Bergstrand (1985), and Thursby Thursby WTO (2002) document TN/AG/W/1/Rev.1 of 18 March, 2003 (1997) from membership found significant negative effects Frankel contrast, In andSpain). Portugal, Greece, include (to Union European ofthe enlargement from diversion trade (1995), Frankel (1997) and Soloaga and Winters (2001). For a review see OECD (2001). see areview For (2001). Frankel(1995), andWinters (1997) andSoloaga diversion. preferential trade agreements. area. The papers focus on the behaviour by the US and the EC, bytheUSand focus onthebehaviour respectively. papers area. The the Tokyo calling Round, for table example, onthe Brazil putaproposal 328 The Harbinson text proposes anarrangement that wouldslow proposes text Harbinson The 327 for findthat theEU, (2005) andLimão Karacaovali nt in the goods imported duty-free under a PTA a under than duty-free imported nt inthegoods ctions affecting long-standing preferences in respect preferences inrespect long-standing affecting ctions developing country beneficiaries..”. country developing Similar concerns than trade creation. Recent papers by Rose (2000), (2000), by than Rose trade creation.Recent papers (1987), Frankel andWei (1993 Frankel and1995), andWei For example, in the context of example, theDoha inthecontext negotiatingFor nd that regional ingeneral, trading arrangements, on differences in liberalization patterns overtime,on differences inliberalization patterns that in the absence of PTAs, the EU the have would ofPTAs, absence that inthe ere is evidence thatere of isevidence theissue preference erosion under a PTA relative to similar products that did aPTAunder to similarproducts relative g the probability that RTAs are stumbling blocks is RTAs that blocks arestumbling g theprobability 317 in the EC andFrankel andWei (1in the her RTAs ariskfor multilateral pose liberalization ve trade creating effect fove trade creating effect But,this correlation the isnot against tested 325 326 One issue that proponents of that issue proponents One r the EU and no evidence of 995) find significant995) trade

II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING WORLD TRADE REPORT 2007 SYSTEM: ACHIEVEMENTS AND CHALLENGES WORLD TRADE REPORT 2007 II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING SYSTEM: ACHIEVEMENTS AND CHALLENGES failure to conclude Uruguay Round Round Uruguay failure toconclude the Kennedy Round, with regard to regard agriculture, Round,the Kennedy with theCh Committee pointed out to the representatives of theEE outto therepresentatives pointed Committee started and the European Single Act wassigned. and theEuropean SingleAct started tariffs on low-value rum (World Bank, 2005). Rum is one of the most important export products for products export Rum important isoneof themost Bank,2005). rum(World onlow-value tariffs developing countries” andVestine, (Curtis 1971). quoted of often Another exampleis US thecase conditions of of accessto to of expanded “the European achieving markets for difficulties products bytheECpreferences to through African provided andother theYaoundé LDCs Convention was linked the launchof anewRoundof mult of re theobjective with bargaining authority tariff andlosingcompetitiveness against 1964 (Metzger, andWinham,A number of authors 1986) have argued that this wasprompted by the evidence. of compelling Perhaps this example argument themost isthelaunchKennedy of the Round. the multilateral frontThese to avoid trade diversion. theagreement countries, relative tooutside RT partner of RTAs view a building block isthat by th reducing away resources byabsorbing liberalization multilateral Finally, there is evidence also that theengagement in regional negotiations of theprocess may stall started in tandem with major moves towards majormoves region with intandem started EFTA thelaunch with of together theDillon Roundandthelaunch of theKennedy Round. the Second, proces thetwo relationship between On the other hand, there is also anecdotal evidence in support of the view that RTAs that of theview may workasabuilding insupport theother evidence hand,On anecdotal thereisalso inth free the Caribbean anditentersduty region inthe example, For liberalization. multilateral Furthermore, there that isevidence theconcern for preference inless erosion reflected has actually theGeneralized of System Preferences. andextending improving preferential certain margins for -aswellarrangements exemptions to preserve tariff-cutting for MFN 330 329 concessions needed to conclude the Uruguay Round” in 19941990 thesubsequent inregional with increase together initiatives were “major (WTO, ineliciting the factors 1995b, p.54). success of theEuropean programme of liberalization. orasanexporter. as animporter international wouldgovern which trade inproducts as to aheadwithout, moveresolutely difficult it very field. covering same the negotiations in international time”:same elaborateandputinto force acommon ag atthe operations intwo theywere really there engaged wasareal dilemma for thembecause respects inhighvalue regime free duty aMFN established have theirpreferences. eroded response, In theUnited including Caribbean rum.of countries’ Governments some on white spirits, raised concerns that this may discussi 1996, of WTO inthecontext block toward further multilateral liberalization. For ex For liberalization. multilateral towardfurther block (2006) points atthe“coincidence” points (2006) that t thelast A relatedargument isthetimingof majorRTAs and Round. Third, in1986 waslaunch Round Third, Round. theUruguay Europe inWestern were all tariffs 1973-1979period the enlargement oftheEEC saw an WTO (1973) document MTN/W/2, 26 October, 1973. 26 October, (1973) MTN/W/2, document WTO The Summary of the Progress Report by the Chairman to the Meeting of the Trade Negotiations Committee on 5May on Committee Trade ofthe Negotiations Meeting Chairman tothe bythe Report Progress ofthe Summary The 1964, WTO document TN. 64/28, p.3 64/28, TN. document WTO 1964, 330 eliminated and, on the multilater the and,on eliminated in theEU market prompted theUS President to asktheCongress for ilateral negotiations. More recently, according to a WTO report the report recently, toaWTO according More negotiations. ilateral ses. First, the period 1958-1965 theperiod First, ses. theformation saw of theEEC and negotiations at the Ministerial Meeting in Brussels in December in negotiations inBrussels attheMinisterial Meeting ons, theUnited States andEC negotiated lowermultilateral tariffs 318 Kennedy Round, theconcern theerosion about of rum, but maintained MFN tariff onlowvaluerum. tariff MFN rum, butmaintained e USmarket theCaribbean Basininitiative. under In hree Roundsof multilateral trade negotiations have e margin of competitiveness ducing European external protection. This triggered This protection. ducing European external multilateral trade negotiations. particular, In Baldwin in which the Community played an important role” theCommunity played animportant in which predictions seem broadly compatible with historical compatible broadly with seem predictions But that at the same time, Butthat atthesame other countries “found matters stood, any asto indication theconditions stood, matters The need to avoid US exporters being discriminated being to avoid need USexporters The ample, of of oneof theproponents thearguments ed and, on the regional side, US-Canada FTA talks FTA talks and,ontheregionalside,ed US-Canada ricultural policy for theCommunity, ricultural policy and participate d the signing of the EEC-EFTA FTAs, where almost where FTAs, d thesigningofEEC-EFTA States introduced lines for four rumand newtariff from multilateral negotiation. For example, during example, For negotiation. multilateral from al integration of thebuildingblock asevidence As increase these countries’ incentive to move on incentive tomove countries’ these increase As airman to the Meeting of the Trade of the airman to theMeeting Negotiations C that“all wereawarethatinmany delegations 329 al side,Tokyo thelaunchof the of countries that remain FTA members and non-members that existed priorto that th existed and non-members FTA members fragmentation of production processes, these arrangements became burdensome. A constituency grew burdensome. Aconstituency became arrangements these processes, fragmentation of production non-FTA members from awelfare is,for members loss eachprod non-FTA onthe from awelfare Based thelatter loss. protect origin andcumulation rules. With inEurope, but duty-free wasalmost trade industrial Information Technologyis theWTO Agreement (ITA). between the current multiplicity of overlapping agreements andthemultilateral thecurrent of overlapping agreements multiplicity trading system. between to there ensure of isscope theissue whether address compatibility subsection above, thenext discussion of higherinthecase to be and that theriskappears highlight of evidence to themultilateralempirical theprogress threats that RTAs pose can trading system themultilateral RTAs liberalizationwhether eitherway. affect However, and arguments theoretical both conclusion,In itisfair limited istoo to conclusions evidence to that draw say empirical asto strong from theITA’s benefit can welfare-en commerce imposed on non-FTA partners shall not be higher or more restrictive than before shall isunlikely nothigher ormore be restrictive to partners commerce onnon-FTA imposed requ from of thecost The trade diversion. members Buttheeconomic literature thatto this condition the FTA. weakinshielding istoo non-FTA suggests of trade agreement thefree higher shouldnot be 331 theleveloftran regionalism wastowith increase that showed oneway theGATT, inwhich above discussion has dealt theWTO, The andsubsequently RT that ensure they do rules: WTO (d) signatories overtime. theITA, With new to intended attract andopen-ended, PECS zone. ITA, ontheother hand wasnon-discriminatory The the within addressed eventhoughmuch of had theproblem been to outsiders, meant disadvantages –hencearrangements motivated theITA. While by th arisingfrom multiplepr to efficiency to PECS. Tradebirth prod ininformation technology eventually which gave to exchange andproduction, obstacles to ridof these get sector in thebusiness Cumulation to isthePan-European themultilateral andtheother One recourse System system. (PECS) of from howthecost examples overlapping RTAs two theneed bygenerating multilateral liberalization argumentAnother in favour of thebuilding argument block is thatRTAs will triggertheforces for that “the dutiesandother regulations of commerce” on XXIV Article by GATT of theconditionsOne imposed examined. be will multilateralism with asto so make regionalism more compatible XXIV Article C, to GATT strengthen various proposals Section contribu theory economic can What multilateralism. Unfortunately, regionalism and may enoughto not between transparency ensure be complementarity multilateral existing with agreements. greater complementarity RTA may This induce countries members. entering RT to of therule some membership of theWTO the rest refrain from any “value judgement”, thefocus of there by mandatingtheWTO thelevelof transparency increases 2006 mechanism inDecember adopted administrative paraphernalia, there was a big difference between the PECS and ITA initiatives. PECSPECS still andITA the initiatives. between difference abig was there paraphernalia, administrative Secretariat to prepare a report onnotified RTAs. Whil to prepareareport Secretariat See discussion in subsection b.(iv) above. liberalization? the increasing prominence of produc therefore, thereareno eferential built pressure arrangements to ongovernments simplify hancing elimination of the tangle. ofthe hancing elimination sparency of these arrangements. The newtransparency The arrangements. of these sparency RTAs that penalize third parties. On thebasisof the On RTAs that penalize thirdparties. for “taming thetangle”. provides (2006) Baldwin trade flows were beset by complex and intertwining andintertwining bycomplex werebeset trade flows Kemp-Wan theorem, condition asufficient to shield or more restrictive than that those prevailedor more prior restrictive 331 ucts was virtually duty free, but the impediments free, buttheimpediments duty wasvirtually ucts The PECS arrangements came into being because because into being came PECS arrangements The s and practices in RTAs that adversely affect non- affect inRTAss andpractices that adversely te? In the light of the discussions above andin above te? thelight of In thediscussions irement that thedutiesandother regulations of e this report ontheRTAe thisreport has “factual” to be and 319 e same irritation with the tangle of RTA-induced thetangle with irritation e same uct, to preserve the volume of trade between the thevolume of trade between to preserve uct, applicable to non-members attheestablishment to applicable non-members As to increasinglyAs adopt RTA rules that leadto e establishment of the agreement (see discussion ofe establishment theagreement (see port and the analysis could still function to alert to alert function could still andtheanalysis port countries entering into trade agreement afree is can trigger a rationalization of the system or arationalization trigger can of thesystem As arecompatible withmultilateralAs insiders and outsiders – all interested parties parties –allinterested andoutsiders insiders tion sharing, orgeographical

II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING WORLD TRADE REPORT 2007 SYSTEM: ACHIEVEMENTS AND CHALLENGES WORLD TRADE REPORT 2007 II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING SYSTEM: ACHIEVEMENTS AND CHALLENGES has exploded, and that it now risks a serious erosion of its relevance. erosion of aserious its However, andthat itnowrisks has exploded, hearguestheWTO of anRTA change requires that themembers proposed theRTA (whether union trade orafree isacustoms by changing the focus from “theby changingthefocus from andother duties XXIV Article line theKemp-WanIn with theorem, McMillan (1993) anamendment has of proposed GATT costs. Finally, the WTO can provide a forum for the spokes in hub-and-spoke regional arrangements such regional arrangements aforum Finally, provide for can thespokescosts. inhub-and-spoke theWTO in this instan fieldplay role astheISO thesame ofacoordinate showtheimportance will production of for thecoordination/standardization/harmonization theproliferation with associated of RTAs. therisks about Second, to anegotiating provide forummembers forces to rationalize of trade. thesystem different “hub andspoke” this maze In arrangements. Europe Asia America, andEast in North main blocs around drawn the sharp cannot be lines because –fuzzy and“leaky”we have “fuzzy” three blocs trade could play avaluable in“taming role theregionalis Very recently, Baldwin (2006) warned that has the been GATT/WTO a passive bystander as regionalism unions), there may be no equivalent analogue in trade in services level. atthepre-integration non-partners trade with to a common external tariff. ofimport level aggregate their tomaintain agreement) agreements. andSouth-South onNorth-South services maylegalandeconomic advisory provide theWTO context, of power thehub. thehegemonic ofthat ways with dealing thespokes this ableto In wouldbe identify difficult to achieve than in the case of to merchandis achievethan inthecase difficult level. practice, In however, atthepre-integration this more non-members may with be trade inservices asto principle, tradeIn ingoods. to theKemp-Wan asapplicable shouldbe trade theorem inservices inthecountries that make of theworld. losers are noindividual uptherest that there that taken of theworldisnot asawhole, certain harmed. Butone cannot therest be certain The levels. at theirpre-integration maintained of theworldbe therest with andexports) requires thetrade (imports that for eachproduct, of isasimplification theKemp-Wanlevels. Note that conditions. Kemp-Wan theproposal theorem The of the Kemp-Wan theorem in Section C Box 9). This suggests that thedutiesandother regulations suggests of This CBox 9). of theKemp-Wan inSection theorem 332 By providing Members with qualified and impartial qualified with andimpartial Members providing By understanding adeeper toprovide work analytical One leaves the welfare of non-members unchanged if the establishment of iftheestablishment unchanged theRTA leavesOne thewelfare of non-members leaves theRTA’s commerce imposed on non-FTA partners may actually need to may need fall actually to partners achieve this heightenedcommerce onnon-FTA threshold. imposed In particular, Baldwin sees three roles for the WTO un for three roles theWTO particular,In sees Baldwin FTAs. multilateralizing Wan theorem requires adjustments to the common external tariff to preserve thebloc’s merchandise to preserve Wan tariff to thecommon requires adjustments external theorem with the rest of the world in every commodity. While of theworldinevery the rest with of theKemp-Wan thecriterion, applying otherwise, Kemp-Wan conditions, it does so at some cost. With aggregate imports astheindicator, aggregate onlybe imports With onecan cost. Kemp-Wan atsome conditions, so itdoes See Section C. McMillan simplification is intended to lessen the operational burden operational the tolessen isintended simplification McMillan 332 In addition, he claims, the WTO could play an active role in could play anactive addition, In heclaims, theWTO 320 dards. A timing intervention could help save onlarge coulddards. helpsave Atimingintervention e goods. In the case ofunion, acustoms theKemp- thecase In e goods. ; and leaky because of links amongthe“spokes” of links because ; andleaky in conditions would require examining theRTA’s examining conditions wouldrequire trade d set of rule of origin or cumulation. The WTO could of WTO ruleofd set originorcumulation. The m tangle”. onclaimthat today Hisargument relies information on critical issues, the WTO could alert could alert WTO the information issues, oncritical regulations of commerce” to import volumes. The The volumes. commerce” import of to regulations the proposal simplifies theoperationalization ofthe proposal the of the attractions of multilateralizing regionalism. ofmultilateralizing attractions of the der the present circumstances. Firstly, to undertake circumstances. thepresent der s from the rest of thewo s from therest But even in highly integrated regions (customs (customs regions integrated Buteveninhighly , complex and costly rules of rules originraise political , complex andcostly rules of origin. The process of fragmentation of process ofrules origin. The rld at the pre-integration pre-integration atthe rld focus on governance issues, including the legitimacy of legitimacy includingthe issues, governance focus on (a) Introduction which took place in the GATT andisaclearindicati place took which intheGATT The range of onabroad trade issues. to Members advice inputandlegal of policy providers important was nature themember-driven Whereas of theWTO Secretariat. rather than isthrough through agenda orgroups individual of theWTO Members, the WTO To public. andbyaninterested sure, be the membership WTO bythe scrutiny increased under placed why inunderstanding elements are allimportant advances inmultilateral andtherelativelyAgreements modest trade liberalization decade overthepast combination inconcluding theDo of thedifficulties proc theinternal has made agenda decision-making combined a with of multiple actors and assertiveness countries involvement thegrowing amongasmallgroup of developed byandconducted led generally prone increasingly to has grid become in theWTO proces 150 its andadecision-making With Members food security, human andeconomic development. rights onhealth, theenvironment, of trade andtrade policy ranginglong range of from newissues theimpact isnodiff – internally WTO aswellexternally. The to face anumber of institutional challenges wouldexpect intoexpands numerous newareas of activity Any healthy publicorprivate, institution, experienc which THE WTO BUSINESS IN DOING 6. decision-making process of the WTO and demonstrate anddemonstrate of theWTO process decision-making wesh First, objectives. chapter following has two The inavacuum. operates from different anything today isradically business does intheway thatWTO the society ofrole civil to turned thesubstant has increasingly NGOs most that drivethemu Members notion that itistheWTO few thelast years, intheearly organizations these have come NGOs to thegradual way decade to realization efficient influence that thepast themost Over evaluating the multilateral when andcivil society. therelationship trading between system important predominantly process-oriented focus to on the WTO inthecontext andless of theWTO making process termshave moreoften these few years over thepast However, process. into role theWTO amoredirect wouldallowNGOs which of interface aconsultative of theorganization transparency andtheabsence criticismsinitially thelack of targeted external These “democratic fororganizations its andthe lack deficit” criticized has by non-governmental been WTO The that inthe process feel produced theyhave therules. participated rules of these legitimacy relevant. The particularly of legal onaset based organization for aMember-driven but isacentral atth publicinstitutions themefor most political organisation. And whereas the GATT for much theGATT whereas And organisation. political different divergen levelsof andwith development in1948 to a clubof 23Contracting Parties obscure compared predecessor, different to entity its is avery theGATT. From butlargely thesmall, homogenous into areasbeyond organization ofthe diversification ofmore theworld’s than a quarter andthe combination of The membership agrowing population. has bymorethan grown 20 coverage ago, cent, membership addingto theWTO’s per its a decade interest beyond the trade community, the WTO isno thetrade community, beyond interest theWTO t ideological persuasions the WTO has become amore has become WTO the persuasions t ideological depends crucially on the extent to which all Members to allMembers which ontheextent crucially depends ive agenda of the WTO andtheyhave become often of theWTO ive agenda years have seen a much better understanding of the understanding amuchbetter have seen years the decision-making process of the WTO has been of process theWTO the decision-making on of howthemultilateral nolonger trading system near universal institution with 150 with institution atvery near universal Members lock. Whereas negotiations under the GATT were theGATT under negotiations Whereas lock. w scrutinized byageneral a publicconcernedw scrutinized with traditional tariff-cutting has ensured thatWTO the traditional tariff-cutting been applied when criticizingtheinternal when applied decision- been ess increasingly cumbersome. In this respect, the thisrespect, In cumbersome. increasingly ess ltilateralAccordingly, trading agenda. thefocus of decisions and processes, isnotWTO, uniqueto the andprocesses, decisions all attempt to analyse theevolutionininternal to analyse all attempt erent in this respect. Since its creation little over creation little Since its erent inthis respect. ha Round, theproliferation of Preferential Trade how the membership has addressed this important this important has addressed how themembership e domestic as well as international level. However, level. asinternational aswell e domestic more nuanced and substance-driven lobbying is lobbying morenuanced andsubstance-driven 321 widening, deepening and, above all,inter-linked and,above deepening widening, of external transparency. transition fromaThis of external s which operates by consensus, doing business byconsensus, doing operates s which organizations (NGOs) (NGOs) organizations of “legitimacy” of its decision-making process. of decision-making “legitimacy” of its poorly understood and appreciated by most of bymost andappreciated understood poorly of its 50 year existence rarely generated public rarely generated 50yearexistence of its es a six-fold increase in size over six decades and asix-fold decades insizees oversix increase ly binding rules agreed by all Members, this is byly bindingrulesagreed allMembers, and other civil society society and other civil

II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING WORLD TRADE REPORT 2007 SYSTEM: ACHIEVEMENTS AND CHALLENGES WORLD TRADE REPORT 2007 II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING SYSTEM: ACHIEVEMENTS AND CHALLENGES organized and hosted by elected chairpersons andby chairpersons byelected andhosted organized of a relatively limited number of developed coun of limited arelatively number of developed meetings among countries. The distinction is important, but often not understood. butoften isimportant, distinction amongcountries.meetings The thetrading fall which system’s outside processes institutional framework, e.g. bilateral orplurilateral of the aspects andinclude those to identify endeavour to both. definition deliberately analyse This seeks as well as track consultative and off-the-record to refers theinformal decision-making purposes, thepresent For to from theWTO. theGATT process is of thefollowing section principalobjective The consensus orunanimity. andmechanisms to name afew have structures complex MERCOSUR, NATOSteinberg andOECD (2002) such that notes asASEAN, other several organizations fact, In 2002). (Steinberg, of states inanotion equality of sovereign roots has which its category latter orunanimity. byconsensus takeand will decisions members equal offer of to andvoting representation will organizations power its category Another financial to contribution amembers’ to theorganization. inproportion voting isallocated where power to aweighted subscribe form will of andothers voting member ononevote per based among members or Some making action. rules for non-judicial most itto that such or generally say Suffice organizations. inother international rules of thedecision-making analysis isnot theplaceThis for anin-depth to thein which inevaluating theextent parameters of aninternational andpractices making procedures in equilibrium power tocater thenewmultipleactor on adiscussion havestimulated affairs international countries asinternational powerbrokers intheirow late 1950s, developed apractice of accessions and waivers, generally was characterized byconsensus. wascharacterized generally of accessions and waivers, that given surprising ishardly focus This forums. institutions of relatein thecurrent these discussion of 1983) (Keohane, andtherelevancy organizations Decision-making in the GATT and the WTO muchof the1980’sWhereas of debate international for ontheneed such institutions focused (b) institutional challenge. We shall outline thespec 333 process GATT decision-making The for one-country called which XXV Article from its Apart (i) heldresponsible, be e.g. can for consultations thesystem which process decision-making GATT/WTO Second, weshall at take look acloser Members. today,operates among theconsultative underpin which processes guidelines including thetransparency with theWTO. with worldandtheway in relationship theoutside with of today were founded in the immediate post World War II period and reflect the ideas andambitions theideas of andreflect World today were War intheimmediate founded period post II with civil society at large, particularly with NGOs. Th NGOs. with atlarge, particularly society civil with external pressure and input have contributed to important changes in the practices that guide the WTO’s the that guide inthepractices changes andinputhave pressure contributed to important external unless otherwise provided, the GATT treaty contained contained treaty theGATT provided, otherwise unless despite this clearandformaldespite reference to voting, th instrumental in the USpushfor launchin inthe instrumental It is worthwhile noting that Article XXV of a the GATT XXV noting is thatIt worthwhile Article two-thirds majority of majority the votestwo-thirds provided cast, that this included more than half was CPs. the GATT Article The by supported were that decisions permitted Article The negotiations. most launching for basis the been and had whereby the Chairperson of a meeting would take sense of wouldtakeameeting theChairperson of ameeting whereby sense g the Uruguay Round. See Croome (1995). Croome See Round. Uruguay g the 322 the more formal and recorded process andweshall process the moreformal andrecorded the evolution of the way in which the WTO interacts interacts the evolutionof theway theWTO inwhich some of the most powerful international powerful institutions of themost some ific practices which characterize theway which theWTO ific practices ganizations will oneoracombination use of decision- e GATT decision-making practice, theexception with decision-making e GATT The GATT and subsequently the WTO fall this under theWTO andsubsequently GATT The stitution reflects the diversity of its membership. of its thediversity reflects stitution whether existing institutional structures adequately institutional structures existing whether to examine theevolution to of examine thedecision-making tries. The emergence of anumber oftries. The developing which the outside world views and does business anddoes worldviews theoutside which to the manner in which decisions aretaken insuchto decisions themanner inwhich organization, it can be argued, represent important important represent argued, be itcan organization, ganizations will apply a system of majority votingganizations of majority will applyasystem uthorized “joint action” by Contracting GATT (CPs) Parties n right and the increasingly multi-polar nature of n right multi-polar andtheincreasingly their mandates, an increasingly important element important anincreasingly their mandates, is section will aimtoillu will is section the international economic system. The decision- The theinternational economic system. the Director-General. At timeitexcludes thesame very little concerning decision-making. However, decision-making. concerning little very one-vote and decision by a majority of votes cast cast ofvotes byamajority anddecision one-vote to ensure normallyare that taken decisions by 333 In the early years anduntil the years theearly In strate the extent to which towhich extent the strate continue the practice of decision-making by consensus followed under GATT 1947.”. GATT byconsensus followed under continue of decision-making thepractice the Uruguay Round (Blackhurst and Hartridge, 2004). andHartridge, the Uruguay Round(Blackhurst informal consultations both more frequent became a three-fourths majority. theGATT, Under re a three-fourths decisions Agreement, overinto carried have theWTO been accessions in the GATT were required to be taken practice was not articulated anywhere intheGATT, anywhere wasnot articulated practice meeting outside the GATT to discuss how to move the negotiations forward. These groups performed groups performed These howto forward. tomovethenegotiations discuss theGATT outside meeting the draft decisions to a vote were agreed bypriorconsensus. to avote wereagreed decisions the draft a vote theGATT, under noting that thete itisworth to theGATT.the Contracting Parties to However, that weresubmitted such decisions with inconnection to aformalsubmitted vote by themembership, either 50 year existence, particularly particularly 50 yearexistence, share almost of throughout problems its its experienced process decision-making theGATT Although products. onindustrial onthetraditionalfocused andrelatively uncontroversial tariff-cutting until an countries persisted small group of developed was determined theagenda inwhich and Nye, 2000) countries upto signed theAgreement, theso-calle asmore notionally somewhat of of wasdiluted theoriginal theGATT Contracting Parties homogeneity amongal inmeetings aired beforedevelopment being intermsof gradually expo function an important 338 337 336 335 334 amongafew meetings delega Room Green the so-called on heavily relied process decision-making GATT The countries.the developed to control thedetriment of of couldthesystem have numbers effective provided themwith and whose rather than askfor avote. Subsequently, anduntil decision-making thecreation theGATT of theWTO, required to be taken by a qualified majority of th taken to majority byaqualified be required continues to generatesystem considerable were theGATT, decisions interest. In certain asintheWTO, thecommitment Despite to consensus decision-making, this Article defines what consensus defines means this Article institutionalized in the WTO inthe institutionalized rounds under of thenegotiating efficiency and relative to countries theincreasing of number developing th wasthat of development ofpractice consensus. The the full benefits of theoutcome. Roundtrade negotiationsthe full benefits by addition, andlarge In thepre-Uruguay werenot asked of Contracting to Parties br a majority The footnote states that “The body concerned shall be deemed to have decided by consensus on a matter submitted submitted amatter on byconsensus tohavedecided deemed be shall concerned body “The that states footnote The (2005). andEhring Ehlermann see decision-making on rules andWTO GATT ofthe overview acomprehensive For The Results of the Uruguay Round of Multilateral Trade Negotiations, The Legal Texts, page 11. page Texts, Legal The Trade ofMultilateral Negotiations, Round Uruguay ofthe Results The Where not otherwise specified, and where a consensus cannot be established, simple majority voting is sufficient. In issufficient. voting majority simple established, be cannot aconsensus andwhere specified, otherwise not Where The term Green Room has been the subject of considerable speculation over the years. One theory explains the term the explains theory One years. the over speculation ofconsiderable subject the been has Room Green term The by the colour of the walls of the Director-General’s conference room at the time while another adheres to the more tothe adheres another while time atthe room conference Director-General’s ofthe walls ofthe colour by the fourths majority vote. majority fourths athree- require waivers, on decisions including agreements, WTO ofthe provisions ofthe interpretations and, (iii) to amendments issuestreatment, othe (ii) require unanimity; proposed decisions.”. for consideration, its if no Member, present at the meetin stage. oftraditional the green room understanding as the would space gather and where prepare actors before going on addition, there are three different of methods (i) voting: 335 , including the practice of taking de of taking , includingthepractice during the Tokyo and Uruguay Rounds, many of its practices wereduring theTokyo practices andUruguayRounds,many ofits 337 . Articles IX and X specify when voting ispossible. when andXspecify IX . Articles e membership. For instance, For e membership. at joined the GATT from the late1950s the from GATT andonwards the at joined by two-thirds of the membership. Similarprovisions of themembership. by two-thirds although waiver decisions in the WTO nowrequire intheWTO although waiverdecisions Article IX of the WTO Charter states “the WTO shall “the WTO Charter states of theWTO IX Article and involved more Contracting Parties throughout andinvolved moreContracting Parties d Club Model of multilateral cooperation (Keohane (Keohane d Club ofmultilateral cooperation Model xts of the draft decisions and the decision to submit andthedecision decisions of thedraft xts sing ideas and proposals which required further further required which andproposals sing ideas this practice of consensus was undoubtedly related undoubtedly was ofconsensus practice this informal of consultations. thepractice Although by postal ballots or by roll-call votes at meetings of atmeetings votes or byroll-call ballots by postal ing anything to the negotiating table, yet received yetreceived table, negotiating tothe ing anything d evenwellinto success theUruguayRound. The l the Contracting Parties. Although the ideological theideological Although l theContractingParties. amendments to general principles, e.g. MFN and national andnational e.g. MFN principles, togeneral amendments 323 334 and negotiations concluded amongarelatively concluded andnegotiations r than the general principles require a two-thirds majority; majority; atwo-thirds require principles general the r than the GATT were principally down to the fact that to thefact down wereprincipally the GATT quiring such qualified ma suchqualified quiring g when the decision is taken, formally objects to the In addition, numerous In informal groupsbegan tions had its originsintheTokyotions had its Round, these the issue of votingthe issue inthemultilateral trading cisions by consensus. Whereas this Whereas byconsensus. cisions decisions onwaivers and jorities were regularly regularly were jorities 336 The footnoteThe to 338

II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING WORLD TRADE REPORT 2007 SYSTEM: ACHIEVEMENTS AND CHALLENGES WORLD TRADE REPORT 2007 II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING SYSTEM: ACHIEVEMENTS AND CHALLENGES consensus and despite theamount ofconsensus anddespite Round negotiators, both theoretical objections to voting and the practical reality ensured that reality theGATT to voting andthe practical objections Round negotiators, theoretical both ballot. decided to streamline its working practice w workingpractice its to streamline decided andtheGeneral Council by Members complicated andtime-consuming considered unnecessarily soon was reached onthecontents been of consensus ballot had which of already adecision a vote bypostal where the matter cannot be decided by consensus. So byconsensus. So decided be cannot thematter where taken only avote be will provided, oranaccession byconsensusa waiver andthat, except asotherwise sensitive issues and because itintroduced theprincipl andbecause issues sensitive of anumber insofar newand asitincluded of theUruguay agenda matters Roundcomplicated The remained atthecoretradition of of themultilateral consensus decision-making trading system. makeprocedures itclearthat theGeneral Council will decision-making, which would surface intheWTO. wouldsurface which decision-making, the Uruguay Roundwouldforeshadow of anumber ins had which characterized grid-lock negotiation. numerous andthedecision-making wider The delays inthemultilateral traders wasenoughto assure biggest thecompletion trading of a system the two accord,EU incidental BlairHouse onagriculture. The Uruguay of conclusion successful the inthenegotiations. that amuch the fact Nonetheless, larger participated number of stakeholders eventual of aswell conclusionits theagenda in1994 of thecomplexity were agenuine reflection pr in thedecision-making participation that active that newruleswouldapplyto all, va althoughwith countries.outcome Th to wouldapply allparticipating (ii) The WTO decision-making process decision-making WTO The (ii) onthecontents of reached consensus had been after requ decisions of draft texts of submitting practice The 340 339 at thefinalto operation. jeopardize informal seriously Nevertheless, its on12 session 1996,December itge this group wascontroversial, theantagonism plac took Declaration theMinisterial of drafting At countries otherbuilding developing with difficult. delegations individual within oforganization Lack prepar countries poorly of came these and themajority number a large consultation andnegotiation.For included nevertheless theagenda significant trade-offs, 1996. wasmore of meeting theSingapore astoc Although appa became process decision-making Strains intheWTO theconsensus which principleoffers. participation of thepolitical nature because quasi-automatic mechanism are onlypossible of thedispute settlement that th membership generally accepted amongtheWTO countries. developing is It particularly amongalarge number ofhas drastically Members, increased Unlike theGATT, impo reached intheWTO agreements of theUruguay Roundandthenumerous failed ministerial conferences thepathto peppered which the first experience with the intense dynamic which tend to characterize WTO Ministerial Conferences theintense tend which to with dynamic characterizeWTO experience the first for andthedemand acti a premiumonparticipation into force. entry following its the months immediately the General Council ontheAccession of Ecuador to decision to avote agreed submit bypostal adraft WT/GC/M/6. On 15 November 1995, the General Council agreed on a statement by the Chairman on procedures regarding Chairman procedures bythe on astatement on Council 15 1995, agreed On General the November decision-making under Articles IX and XII of the WTO Agreement (WT/L/93). Agreement WTO ofthe andXII IX Articles under decision-making 339 This way of proceeding reflected theoldpractice reflected way ofThis proceeding Round still required a bilateral abilateral required still Round time and energy spentondesign timeandenergy ith regard of to such thetaking decisions. 324 e among 34 countriesofe among34 andalthoughtheexistence nerated wasneithercoherent enough norrebellious of developing countries wasof meeting theSingapore developing ocesses mattered for all participants. The duration The for allparticipants. mattered ocesses ve involvement in the WTO decision-making process process decision-making WTO ve involvement inthe in turn made effective coordination andcoalition effective in turnmade Singapore, the core consultative process incharge Singapore, process thecore consultative seek a decision on a matter related to a request for to arequest related onamatter adecision seek rying degrees of implementation flexibility, degrees meantrying ly, timethat thelast mayagreement be between e of a single undertaking, i.e. that thenegotiated e of asingleundertaking, the decisions, was initially followed in the WTO in WTO inthe followed wasinitially decisions, the This wasthecase, forThis example, 1995 inJuly when iring qualified majorities to a vote by postal ballot, toavotebypostal majorities qualified iring e principle of the single undertaking andthefact e principleof thesingleundertaking ed substantively and logistically 2006). (Pedersen, far, all decisions have in the WTO been agreed by a number of controversial issues which required which issues ofcontroversial anumber se legal obligations onal obligations legal se e extent of the WTO’s legal obligations andthe obligations of legal theWTO’s e extent titutional challenges, particularly intheareaof particularly titutional challenges, rent as early as the first Ministerial Conferencerent asearlythefirst in followed inGATT. followed However, to submission the k-taking andassuch exercise didnot envisage agreement between theUSand agreement between ing WTO voting rules byUruguay voting rules WTO ing l Members. This places This l Members. 340 The adopted adopted The consultations by eitherthefacilitators ortheConference Chairperson publicly theprocess denounced inthesmallgroup included countries had which of number not developing been final alarge days its of negotiating baton ishanded overto capital-based has demonstrated of how thedepth theGeneva asthe andautomaticity coordination lost be can This process. intheGenevapreparatory established to which were theybelonged determined to carr theconference clearthat countries manyAs way got developing andthevarious itbecame under groups incentive countriesadded for to these cooperate. of trade negotiations, including onanumber of conten improved Mi coordination, that theSeattle thefact feltthe frustration by many countries Ministerial attheSingapore Conference of this some explain can and confidence countries of intherunup developing organizat and international ofNGOs byanumber provided expertise analytical ofexternal use aswelltheirincreased (LDC), Group, theAfrican, Country Caribbean Group andPacific Group of States Developed (ACP) andtheLeast theenhanced coordination of anumber Group (LMG), level of coordination took which countries ofnumber of alarge developing andtheunprecedented participation wastheactive WTO pr preparatory the Seattle set What decision-making. for theagenda thereforms that WTO set today ways guide andinseveral of thepractices operates WTO intermsof howthe landmarks represent itself meeting andtheSeattle 1999 process The preparatory numerous weretoo andprofound atSeattle. solved toMembers be clearevenbefore theMinisterial Conference itbecame at Seattle, differences among that outstanding before Seattle. Furthermore, theoppositionto gran althoughneveralongthelines controversy generated of had to some theopposition always Ministers text the become agreement itwouldnevertheless reflect keyThe concern wasthat amongmany even delegations to document thedraft could forward Director-General andtheextent atSeattle to Ministers Geneva process from more the than aprocedural sparked debate anywhich other off wasthetransfer text of theministerial inGenevahad broken clearly issue process thenegotiation The down. amanageable product with Ministers to consolidate throughnumber of smallgroup this unsuccessful draft consultations asto attempts so present intheChairman’sto see ifany, Little, text. n draft the “Christmas Tree” ne submitted asdelegations text reflected language specific theirown to see delegations view, preparat thelengthandnature of theSeattle of point of inanumber procedural aswellapure Fromdown decision-making issues. asubstantive membership prior to Seattle and the extent to which the 14-month preparatory process became bogged WTO before the agenda thecomprehensive andcomplex substantive about written Much has been Ministerial Conference in Seattle. were placed ontheback-burner anddidnot surfacein an ofinclusiveness thislack toaccept willing longer prepared that andindicated theywere had no been themanner thetext inwhich with dissatisfaction number countries of those involved had which not been for adoption to required reachtheconsensus designed new Director-General. Although it is beyond the scope of this section to analyse the substantive agenda thesubstantive to analyse of this section thescope itisbeyond Although new Director-General. in1999 foll Members amongWTO of distrust general of theatmosphere to to wasareflection ministers alarge extent thetext tothe Director-General forward amandateto given prepar had been Director-General ran pa afull revision 34 ofand thesecond thetext ions, were all important elements in explaining the growing assertiveness assertiveness the growing inexplaining elements ions, were allimportant place amonganumber of groups. ges and contained some 402 square 402 andcontained a brackets. some Despite ges egotiation to narrow substantive differences took place y over themomentum andinfluence which theyhad ory process had created a sense of expectation among of expectation asense had created process ory d transparency. However, issues backinGeneva these nisterial Conferencenisterial atlaunchinganewround aimed ting amandateto theGene w proposals and specific wording which they expected theyexpected wordingwhich andspecific w proposals to theChairman which of theGeneral Council andthe Ministers or whether aconsensus wasrequired. orwhether Ministers is a particularly important point because experience experience because point important is aparticularly ficials and ministers. As the Seattle meeting entered meeting the Seattle As ficials andministers. ocess apart from previous experiences inthe GATT/ from experiences previous apart ocess owing a rather acrimonious selection process for process a aratherowing acrimoniousselection earnest until the preparatory process for the1999 process until thepreparatory earnest e/assemble a draft declaration but forwarding the butforwarding declaration adraft e/assemble in theChairman’s as known result became The text. 325 tious issues for developing countries, provided an of developing country groups such astheAfrican country of developing of the Singapore Ministerial Declaration, alargeDeclaration, Ministerial oftheSingapore basis for discussions. At the occasions previous basis for discussions. inthesmallgroup consul to Seattle. Although there is little doubt that there isAlthough little to Seattle. if it was acknowledged that the draft didnot that thedraft ifitwasacknowledged The creation of the Like-Minded creationof theLike-Minded The ral Council Chairman and tations articulated their articulated tations

II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING WORLD TRADE REPORT 2007 SYSTEM: ACHIEVEMENTS AND CHALLENGES WORLD TRADE REPORT 2007 II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING SYSTEM: ACHIEVEMENTS AND CHALLENGES process was necessary. The 2002 process, bycontrast, didnot 2002 asaresult come process, of about acrisisor The wasnecessary. process break-down of negotiations. The successful launchof successful The break-down of negotiations. wide-spread recognition among the membership that some sort of reform of the WTO decision-making decision-making of reform ofWTO the sort that some recognition amongthemembership wide-spread When the meeting ended inconclusively ended on3December themeeting When both before and at Seattle was immediate andrepres wasimmediate andatSeattle before both of the chairpersons of thenegotiatingof thechairpersons groups. of the anumber of shouldguide which guidelines thearticulation with and2002 process began number interms of of improvements thedecision-making the consultative practices of the WTO. If anything po anything If of theWTO. practices the consultative again in2002, from aresignificant and onthetransparency processes consultative The wasrequired. process to that the decision-making improvements sense significan itwasparticularly thiscontext reform. In atthe discussion inadedicated to engage agreed In the discussions ontransparenc thediscussions In the backdrop of afailed ministerial conference whic intheWT to theflaws the wayside, thefollow-up process scrutinize decision-making Members WTO fell improvements by Unlike of Singapore,systemic/institutional thediscussion theaftermath where (iii) move,and, inanunprecedented theirreadin signalled 342 341 making debate. weight andhave that ensured theyrema particular carry andhave the endeavour terminology nolegal status, andfairinclusiveness representation of different pos th inarticulating went further on1February the TNC of meeting intheChairman’s atthefirst section byMembers practices wasendorsed which statement, this outcome ofAlthough what ma clearly fell short compromise outcome.realistic remained themost endeavour practices required consensusof anumber of best andthat thearticulation to adopt impossible clearthat itwouldbe became Fo indecision-making. andtransparency efficiency were considerably between more nuanced, this difference to of thecore goes opinion of thetrade-off consultative wouldsimplyensure process that the addition, countries In these argued 2006). (Pedersen, amaximum required would strait-jacket which aprocess other hand, anumber of countries procedures ontheinformal argued specific that imposing consultations the On chairpersons. by WTO behaviour arbitrary wouldeliminate assometimes what theysaw processes to theinformal of rules guide set consultative andthat aspecific andaccountability lacked predictability crystallized. On the one hand, a number of delegations felt that the informal decision-making process of theWTO. making processes washowto improve theinternal delegations tr WTO andwere intheWTO accept merespectators being that a message However, strong avery itdidsend outcomea substantive from processes consultative group consultations onthebasisof procedural object with thenegativeramificationswith that wouldentail For a of For full the on discussions overview internal (2006). Pedersen see transparency TN/C/1. y in decision-making amongMemb y indecision-making an organisational point ofview. point an organisational 326 342 O decision-making process which had become apparent had which become process O decision-making large countries number of developing wouldnolonger process would go outside theframework of theWTO outside wouldgo process operation of the newly established TNC andthework TNC established of thenewly operation t that a very wide spectrum of Members shared the ofMembers spectrum wide t that avery in terms of transparency. thediscussions Although level of theGeneral Council of for options systemic h had underscored the institutional shortcomings of shortcomings theinstitutional h had underscored never materialized and a draft text neverappeared. text never materialized andadraft inclusiveness of WTO decision-making in 2000, and in2000, decision-making ofWTO inclusiveness llowing several informal several itllowing andformal discussions itions. While these principles were couched in best werecouched inbest principles these itions. While context and timing of their articulation made them made andtimingof theirarticulation context a specific set of rules on decision-making bythe of ondecision-making rules set a specific ny delegations had hoped for,ny had delegations hoped theprinciples and ented the first time in WTO history that Members that Members history timeinWTO ented thefirst ansparency of, in, thedecision- ansparency andparticipation e role and obligations of chairpersons inensuring ofchairpersons andobligations e role sitive came out of the Seattle meeting itwasthe meeting outof theSeattle sitive came theDoha Roundinlate2001 a had overall seen that imposing a strict set of formal set onthe rules astrict that imposing ready to accept a larger degree of responsibility. ofresponsibility. degree alarger toaccept ready ess to vetooutcome anyess substantive bythesmall ions. This threat was, of course, never tested as tested never threatwas,ofcourse, This ions. in the principal point ofin theprincipalpoint reference inthedecision- 1999 attheforefront theissue of for amajority of flexibility to to adjust different circumstancesof flexibility 341 The 2000 process took place took against process 2000 The ers two main arguments quickly mainarguments two ers smaller delegations in the context of inthecontext smaller delegations initiative to insuch body consultations, engage itisequally commonplaceWTO of a for themembership and the public within a few weeks after themeetin after afewand thepublicwithin weeks Members of theorganization Members informal gatherings is precisely that isprecisely informal gatherings have of althoughtheentire ontheabsence focused summaries meetings behind from also idea these of nature, theirexclusive i.e.other thingsbecause of theinformal processes thepast, consultative In intergovernmental entities. organizations orlarge non-governmental way arediff informal strange insome consultations formal both andinformal. mechanic various settings, The atvariouslevels– not only and involve discussions atbuildingconsensus among aimed consultations asinformaltrack, known also consultations, iswh theformal track iswher meeting Whereas process. guide the decision-making process WTO Members also Members WTO process thedecision-making guide developing countries anddeveloped in the between the proportionality reflects roughly meetings inthese andparticipation processes consultative these previously. didnot which exist addition, in In more more countries often of participate predictability has to provid thefull discussions membership these of theannouncement automaticity of The efficiency. and transparency theright balance isstriking above that between thecurrent asdescribed practice recognition to there vigilance maintain theneed iswidespread regarding transparency regularly articulate have generall the negotiating theTNC groups under inaconsultati included to be inorder directly aides consulted theyshouldbe believe who delegations in defining with of of autonomy all150 meetings Chairperson, degree of alarge ended course, retains The Members. whom and on what of open- are by implicit made interms recognition of of efficiency thelimits Suchmembership. requests is to be consulted,to request but it that has he/she become consults increasingly informally customary on speci for 345 344 343 from minutes which meetings general,In theformer areon-the-record of formal andinformal like it,consists before processes. process, theGATT decision-making WTO The Ministerial Conferences. decision-making inWTO practices New WTO the characterize which newpractices of those to anoverview provide seek following will The (iv) the full membership ontheoutcomethe full membership of such consultations. informal intention their tohold in formal meetings oftransparenc much greaterdegree However, inaformal setting. inform impossible be situation where more than one negotiating body meets atany time. given meets situation morethan body where onenegotiating to mandated keep under of meetings thecalendar been a feature ifnot all, ofinternational most, organizat decision-making process – in the day-to-day operatio –intheday-to-day process decision-making the WTO. For example, since 2000 Chairpersons of WTO bodies have of announcing followed apractice bodies Chairpersons of WTO example, since For 2000 the WTO. For a comprehensive overview of the role played by a WTO chairperson, see Odell (2005). Odell see chairperson, byaWTO played role ofthe overview acomprehensive For Exceptions are plurilateral such agreements as the Government Procurement Committee. Minutes of meetings are produced and areproduced ofmeetings Minutes Minutes are not verbatim although they are produced from 344 and the minutes provide the automatic transparency feature theautomatic andtheminutes transparency provide of this they allow participants to dis theyallowparticipants y and predictability compared to compared y andpredictability theeverincreasing of number translated into all three official l intotranslated official allthree 150 Member Governments are often time-consuming, 150 time-consuming, are often Governments Member ere such decisions arenego ere such decisions ions. It remains a serious remainsaserious ions. It ed the WTO decision-making process with anelement with process decision-making ed theWTO ve process. The regular bodies of the WTO aswell of theWTO bodies regular The ve process. the WTO have been the target of criticismamong thetarget have been WTO the fic issues before these arebrought backto these before thefullfic issues al consultations in the WTO today are subject to a today aresubject al consultations intheWTO to contact the Chairperson or his WTO Secretariat Secretariat theChairperson orhisWTO to contact not all Members are invited to take part. Critics are invited to take not part. allMembers consultations and their intent of reporting backtoconsultations andtheirintent of reporting y followed this approach andalthoughdelegations erent from similar processes inother internationalerent from similarprocesses e WTO decisions aretaken, decisions theinformal meeting WTO e bilateral, plurilateral and multilateral – but also in also –but andmultilateral plurilateral bilateral, g. The formal WTO meeting track is open to all track isopen meeting formalg. WTO The a consultative process and the reporting backon andthereporting process a consultative 327 n of the WTO and in relation to the conduct of andinrelationto theconduct n of theWTO either audio tapes or written statements by delegations. statements either or audio written tapes WTO. In articulating the practices that should thepractices articulating In WTO. s of this process is not unique to the WTO, butis isnotWTO, uniqueto s of the this process addressed the particular constraints faced by theparticular addressed tight surveillance to avoid,asfar atight aspossible, surveillance 345 Although aChairperson may takeAlthough the cuss and negotiate areasthat would andnegotiate cuss anguages of the WTO by the Secretariat. bytheSecretariat. WTO ofthe anguages meetings. Specifically, the TNC has Specifically,meetings. theTNC 343 the GATT and the early years of years andtheearly the GATT will be available to delegations misconceptionWTO that the tiated and prepared. Such andprepared. tiated

II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING WORLD TRADE REPORT 2007 SYSTEM: ACHIEVEMENTS AND CHALLENGES WORLD TRADE REPORT 2007 II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING SYSTEM: ACHIEVEMENTS AND CHALLENGES so-called G10so-called andhard-lin anirreconcilable took which Countries which opposed the attempts to bringserv theattempts Countries opposed which andhowimportant intheWTO itisto and substance separate process demonstrate howdifficult corner the as highlighted isoften which trust mutual element doubt inthe that adherence constitutes islittle There to newpractices animportant these Cairns Group managed survive thetransition intoCairns theWTO. survive Group managed and Group (anti-dumping) the Victims Morges the issues), of range (broad Group Paix La De traced back to the pre-Uruguay Round days, includin Rounddays, traced backto thepre-Uruguay countries. To sure, be of groups theoperation andcoalitions themultilateral be within can trading system bydiffer played istherole years of gr importance growing The th within significant developments ofthemost One (v) aseri Cancún Kong represented andHong The meetings Ministerial Conferences. features andtheyhave fixed practice become atWTO theGeneva consultative mirrors meetings transparency of these rhythm thefullwith The membership. onthevarious to shared consultative be processes to meetings allowreports of having daily open-ended eversince. In maintained and thisfeature hasbeen day to for per coordina delegations slots one-hour two aside At andpredictability. work of transparency andincrease delegations Dohaof setting thepractice Doha, Cancún Kong andHong conferences introduced anincreasing number of features to facilitate the Conferences. to response In theconfusion experienced ontheor had has asignificant also impact process of th andpredictability transparency increased The participation is to the sense of ownership of a substantive outcome. of asubstantive of ownership isto thesense participation to outcome managed keepsubstantive just the Doha only afloat of Round. themeeting ashaving ma seen Kong waswidely the Hong meeting Although membership. remain real concernsWTO amongthe provoking highdisasters profile political theriskof versus theagenda to moveforward meetings thepotential of these demonstrated, in 2000 Ministerial Conferences WTO continueNevertheless, thepredictab andincreased previously done had been of theinformal proc overview andpractical detailed informal withKong Cancún atboth provided were meetings delegations also andHong open-ended first announce of theroster facilitators priorto thes unprecedented commitment to ensuring with continuity of theConference inthefinal Chairpersons meet agriculture for much of the Uruguay Round. During During Round. Uruguay for ofthe much agriculture theUSEU and the theagendaon andsucceeded in setting between Cairns itself Group positioned coal countries in1986. and research-driven issue An for thecr theprecursor ways coalition were insome characteri operational ofinformation its sharing apart anddeveloped range of developing awide included their to pursue members allowed still which issue of thisgroup, astheCafé coalition, onacommon known inasingle wasfounded interest also Lait au (Tussi Round the Uruguay thatlaunched Declaration Este thebasisfor del thePunta provided astheG9 groups known andtheG20 efforts two andwhose G10 byColombia byacoalition led wasside-lined other issue-based initiatives during theUruguayRound fa other issue-based most alliances, However, of issue-based issues. althoughmany groups signalled theimportance of these ent groups andcoalitions amongdeveloping of countries, particularly the Rolle Group (services) brought countries onspecific together the RolleGroup (services) oups and coalitions in the WTO andcoalitions inthe oups 328 e meetings was widely welcomed by Members. At the welcomed byMembers. waswidely e meetings addition, inaugurated theDoha meeting thepractice and Switzerland which brought together members of brought which and Switzerland members together stone of multilateral trade negotiations. The practices The ofstone multilateral trade negotiations. countries and andhad apremiumonresearch placed e day-to-day business of the WTO decision-making decision-making oftheWTO business e day-to-day the Round, anumber of other groups, including the eation of the Cairns Group of agricultural exporting eation of theCairns Group of agricultural exporting g the existence of theInformalg theexistence Group of Developing e WTO decision-making process over the past few overthepast process decision-making WTO e Group (agriculture), the Group (agriculture), ganization, preparation and conduct ofMinisterial andconduct preparation ganization, own agendas in other areas. Similarly, inotherareas. agendas own thegroup stics. The experience andsuccess of experience theCaféThe auLait stics. e and Lengyel, 2002,e andLengyel, success Narlikar, The 2003). ess. new These initiatives went than further what ices into theGATT. From this groupthe emerged to represent important challenges. As thedebate As challenges. to important represent ing of the preparatory process represented an represented process ing of thepreparatory ition of developed and developing countries, anddeveloping theition of developed ility of the proceedings at Ministerial Conferences. atMinisterial of theproceedings ility te their work and consult with others wasinitiatedte theirworkandconsult others with de important strides interms of transparency, strides the important de by most delegations at the Seattle meeting, the meeting, attheSeattle delegations by most es of improvements over Doha. The participation participation es of overDoha. improvements The e approach to the services issue. Eventually, issue. toe approach theservices the the Geneva process. Similarly, theGenevaprocess. to thedecision red less well and it can be argued that the argued only be well anditcan less red Pacific Group (safeguards), (safeguards), Group Pacific the ACP, Group (LMG) theLCDs, andtheLike-Minded theSmallandVulnerable Economies, (SVEs) Ministerial Conferencefor theSeattle were relatively Cotton-Four, andtheG20 (agriculture). theG33 (agriculture) of several newcoalitions, including theCore the Group of developing countries issues), (Singapore groups, thefinal months existing before theemergence theCancúncoordination saw meeting between thegrowing had illustrated meeting theDoha Where iscontinued level. attheministerial process inthepreparatory achieved thesignificantchallengefaced based revealed byGeneva 349 348 347 346 inputto to indivi provide representatives society civil bythecoordinators of majorgroups.lobbying These day to to allow for coor delegations ro active aparticularly playing LMG the with reform following Seattle agenda occupied acentral onsystemic placeDiscussions WTO onthe reform.erosion, implementation andsystemic issues preference onsuch asS&D, conference tentative issues cooperation groups several of began these itself andatthe basis.However,process preparatory facedchallenges onaday-to-day during theSeattle groups “issue-specific”.these according to thespecific to organize theyappeared theirefforts Instead, any to wrong of label to itwouldbe of anumber “trade-and” issues, organized around theopposition group thegeneral outlineof cooperat revealed some group coordinati issue-specific of effective Examples Round. Doha in the of themultitude of groups whic anoverview provide Ministerial Conferences preparat andtheirrespective the following weshall take attheevol abrieflook level group atministerial wasdifferent a particular was challenge level.over to This theministerial howto ensure has been process that thelevelof coor have which significant challenges facedthe most coun amongsuch groups. cooperation Historically, groups as wellasthewider country of oneof individual Ministerial Conferences intheemergence andevolutionWTO part have important played aparticularly to the Cancún meeting was significant from a substantive as well as a process point ofview point aswellaprocess to the Cancún fromasubstantive wassignificant meeting Doha declaration contains several paragr several contains declaration Doha of different termsofautomatic. theeffectiveness In the ACP, andtheirinclusio African Group andLDCs At theDi process, Doha, asduringthepreparatory taken conference buttheDoha place atSeattle, a took significant because rather than simply rejecting th rather than rejecting simply significant because alternative pl to substantive whata serious had been contributions groups, particular ofsubstantive these conference more of than review theDoha amid-term aslittle negotiating wasenvisaged the agenda, groups aspower- these Cancún established meeting specific concerns being sidelined or sacrificed. As a As orsacrificed. concerns sidelined being specific since ofabsence Doha progress created anenvironm For an overview of the an agendas For overview of each of groups these Narlikar and see Tussie (2004) The informal Like-Minded Group was formed in 1999 to provide a platform for a common approach on implementation- on approach acommon for aplatform in1999 toprovide formed was Group Like-Minded informal The The Cotonou waiver is counted as a success for the ACP and many African countries, paragraphs 42 and43deal paragraphs countries, ACP the for andmanyAfrican asuccess as iscounted Cotonouwaiver The exclusively with LDCs, paragraph 35 recognises the concerns of SVEs, references to S&D are omnipresent in the text text inthe areomnipresent toS&D references ofSVEs, concerns the 35 recognises paragraph LDCs, with exclusively and paragraph 12 as well as a separate deal decision with implementation issues. related issues. issues. related organizations such as UNCTAD, prior to particularly Seat toIt is note important the considerable that official support many of these groups received from international dinate was specifically introduceddinate following by theDirector-General wasspecifically le. The initiative at Doha tomain atDoha initiative le. The aphs such where influence isvisible. often made more difficult because thecoordinator of because moredifficult made often e transatlantic proposal, e transatlantic proposal, ution of groups in the contexts of thevariousWTO ution of groups inthecontexts on in the WTO priorto the1999 process on intheWTO preparatory dual andgroupsofdelegati 347 compared to the ambassadorial levelinGeneva.In compared to theambassadorial dination wascarried intheGenevaprocess achieved scarce. groups such Although astheAfrican Group, n in the ministerial Green Rooms at Doha became atDoha became Rooms Green n intheministerial ory processes. Subsequently, processes. weshall endeavourory to tle and to at subsequent extent a lesser ministerials. groups in getting their issues onto theirissues the theagenda, groups ingetting rector-General met daily with thecoordinators of with metdaily rector-General h have emerged during the on-going negotiationsh have duringtheon-going emerged ly theG20’s onagriculture, proposal represented ion amongdeveloping countr brokers theCancún right. intheirown Although ent in which most delegations saw some of their some saw delegations ent most inwhich coordination meetings also provided a facility for afacility provided coordination also meetings 329 aced on the table by the EU is bythe andtheUS.This aced onthetable result, andinadditionto anincreasing levelof try groups and their coordinators intheGeneva groupsandtheircoordinators try significance of country groups in the WTO, the groupsintheWTO, ofcountry significance significant step in facilitating suchconsultations. infacilitating step significant groups inensuringthat 349 The emergence of groupsThe prior these tain two meeting free slots every every slots free meeting two tain the G20 submitted its own its the G20 submitted 348 ons. Such a dialogue had Suchadialogue ons. the levelofcoordination The Doha also meeting The ies, evenifprimarily . First, the First, 346

II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING WORLD TRADE REPORT 2007 SYSTEM: ACHIEVEMENTS AND CHALLENGES WORLD TRADE REPORT 2007 II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING SYSTEM: ACHIEVEMENTS AND CHALLENGES makes it impossible to overlook them in the WTO deci themintheWTO tomakes overlook itimpossible joint press conferencejoint Kong. press atHong WTO. But a number of other factors are important. First, the large numbers of Members ineachgroup of Members numbers thelarge First, areimportant. Butanumber of other factors WTO. bythei explained be today can groupsthree intheWTO previously multilateral than atanytime trading system legitimacy of theircause, aswastheinitiative of legitimacy in highlightinghave active the andusing to their their been combined numbers bolster membership Group, Group, theLDC theAfrican theG110, Group andtheSmallEconomies, dubbed quickly to holda largest coordination andamongthethree within The gatherings inpreparation Kong. for Hong an ofcoordination within degree In the context of theDoha thecontext theWT Round negotiations In thei coordination characterized which the extensive engageme andsubstantive ability through research onagriculture proposal detailed andin theproces 353 352 351 350 and coalitions. G20, countries agroup of comprisi developing of themultilateralunprecedented Cancún theemergence inthehistory of saw the also trading system. detail on the dynamics of these groups. However, of these for onthedynamics anumber of theinformaldetail ischaracteristic what front.to and2007) aunited present Wolfeand (2006 in Geneva attempt theywill consultativeatwhich around organize processes specific often theiractivities Conf Ministerial gatheringspriortoWTO ministerial andsuch proposals to anddraft coordinate positions secretariats evenestablished cases and insome support ableto analytical draw be onspecialized often andvi officials Geneva-based around evolve often most includingat position, ofnegotiating coordination level Group ortheAfrican Group, compared organized to loosely coalitions such astheFriends of Fish orthe groups, e.g. more structured theCairns between differences exist coalitions it isclearthat important and capitals, including at ministerial level. includingatministerial and capitals, theGenevaprocess between andcooperation of continuity to ensuremanaged amuchhigherdegree –have andinconcert thegroups –individually Fourth, intheWTO. roleandimportance its increased thecoordinatorand providing mand agenuine with However, task. easy internal byimproving groupdisc since Doha. Coordinating group of alarge countries, of Third, theirown. agenda therole a substantive these topositions buildupnegotiating organizations intergovernmental andinternational organizations society civil from expertise toexternal turning In arepu to establish youneed intheWTO substantively Group (45), the ACP (66) and the LDCs (34), have ensured that they play amorecentral role inthe (34), andtheLDCs theACPGroup (45), (66) Friends of Anti-Dumping Negotiations. The former groups will generally utilize a more formal andhigh- amore utilize generally will groups former The Negotiations. ofAnti-Dumping Friends Kong Ministerial Conference aswelltheprepar In addition to the groups already mentioned, G4,Recently G6, other Acceded groups include (non-exhaustive): groups met as the G90 on four separate occasions in 2006. in2006. occasions separate four on G90 the as met groups do figures These 71 held Group meetings. African and the noting in Geneva that it this isIn in context worth 2006 17 2005. Update, Daily December Bridges See Narlikar and Odell (2006) (2006) andOdell Narlikar See Members, Small and VulnerableMembers, Economies (general/cross-c Products (agriculture), ABI group, ABI Friends (agriculture), of Ambition, NAMA-11,Products Friends Paragraph of MFN, 6 Countries (N Mexican Group, G-7 (DSU); Friends of Anti-Dumping Negotiat ofAnti-Dumping Friends Group, G-7 (DSU); Mexican Environmental Group Goods, of Countries Developing (Environ Friends of GIs, Joint Proposal Group (TRIPS-GI-register). Group Proposal Joint ofGIs, Friends 353 Although this isnotAlthough theplace to elaborate onthedifferent groupings indetail and and Odell and Sell (2006). and Sell and Odell d among these groups, of includingthroughministerial several theuse d amongthese 351 Second, the recognition in these groups therecognition Second, that inthese to inorder participate 352 330 ng theAfrica Group, andACP LDCs countries. the Ministers representing theG-20, representing the Ministers theG-33, theACP of thegroup hasconsiderably coordinators changed the ACP held 46 meetings, the LDC group held 108 meetings 108 meetings held group LDC the meetings, ACP 46 the held atory process for confirmed process thismeeting thehighatory r preparations for Conference theMinisterial were nt. thecomposition of groups Second, and these s established thekind of comess established which credibility erences. The less organizederences. less The groups andcoalitions . Of course, the importance and centrality of these andcentrality course, theimportance . Of groups have the capacity to develop and articulate andarticulate to develop groups have thecapacity sion-making process. This is so because thegroups because isso This process. sion-making Narlikar and Tussie (2004) have elaborated inmore haveelaborated andTussieNarlikar (2004) ate to represent its membership, eachgroup hasate to its represent ipline as well as coordinating information sharing information ascoordinating aswell ipline O has witnessed adramatic proliferationO has of witnessed groups ministerial level, while the efforts of the latter will of thelatter theefforts level, while ministerial siting senior officials. The more formalsiting The officials. senior groups will tation for detailed and technically solid research. research. solid andtechnically for detailed tation some of whom have divergent interests, isno interests, havedivergent ofwhom some groups have heldtheir own often in thepast groups countries, of developing i.e. theAfrican r history of increasingly active involvement inthe involvement active ofincreasingly r history not include bilateral meetings of the groups. The three three The groups. ofthe meetings bilateral include not ment); Colorado Group, Core Group (Trade Facilitation); Group, Facilitation); Core (Trade Colorado Group ment); ions, Middle Group, Friends of utting issues); Cotton-4, G10, Cotton-4, issues); utting Group on Tropical Fish (Rules), Friends of Fish(Rules), 350 The Hong AMA); a certain fluidity to thecreation andabolishment fluidity of coalitions andgroups theWTO. within a certain today.the coalition Doha buildingintheWTO The North-South fault line which existed in UNCTAD and which pre-empted the flexibility that characterizes theflexibility pre-empted andwhich inUNCTAD fault existed linewhich North-South 356 355 354 progress. inreturnfor tangible deviation willing to may be accept argued themembership may that be such It sometimes atemporary Members. contin will ontransparency andpractices guidelines clearthat isalso forums. It and not decision-making aswellaguarantee that such and inclusiveness of such consultations tothe legitimacy ensure hinges ontheability of anadequate transparency degree course, Of thispremise. endorse generally Members forums for makingprogress. important they offer importan play to continue will consultations exclusive findingtheright balance be always will challenge theprincipal thiscontext, In processes. consultative to balance other morerestrictive activity and inclusive requires that process of there isanadequate open-ended degree of thedecision-making legitimacy The process. that have thecurrent improved thedecision-making practices Members among WTO adherence to an aculture transparency of increased process decision-making WTO tohas of that, to what manythe sought contrary demonstrate critics institutional challenges facing themultilateral section This have asimportant emerged trading system. remarks Concluding WTO of the process to related andthedecision-making internal issues transparency decade the past Over (vi) of donot agenda break alongthesort since thelaunch ontheWTO issues of theDoha Round. Most to generalize isdifficult itcomesIt to when themultitude of groups andcoalitions have which emerged Round. Doha inthe acentral role maintain insofar asthisentit theWTO within of to somewhat CancúnG20 represented intherun-up ot agendas countries whose anddeveloping developed inother coalitions areas. Some eveninclude that interests theyhave thefact despite agree opposing can of theDohacoalitions inthecontext Roundistheir WTO Members, including what has become annually has includingwhat become Members, WTO yearanumber of so-called inGeneva.Every process heldatministeria those gatherings–especially these of isthat for heldresponsible some cannot asaninstitution thefact be such meetings theWTO While take which theinstitutional place framework outside Members of theWTO. among WTO meetings in adi not engaged has deliberately subsection This to which pursue upon premise risky evidence in the day-to-day work of Chairpersons and the Director-General in the WTO to demonstrate workof ChairpersonsintheWTO andtheDirector-General intheday-to-day evidence onthe theirbehavioural impact status, legal little have practices these Although processes. thedecision-making with waswrong believed of Members consultations which within guidelines result take of what alarge placenumber are thedirect attheWTO, quite have successful andthe this current inaddressing issue. been practices, The Members argue, WTO It isIt probably too early to make a judgement as to the real See Narlikar and Tussie (2004) for a detailed account on the G20. the on account adetailed for andTussie (2004) Narlikar See evidence of the of ability thesegroups to respond rapidly to newis developments still inconclusive. However, present. isclearly consensus create tohelp groups ofthese potential the of150 Members organization consultative of the processes G6 in 2006. in the 1 August 2004 Decision was accepted Decision in the 1 much without August 2004 resulted which negotiations ofthe stretch exclusive in2007. and relatively G4 final andthe the example, in 2006 For G6 ofthe processes consultative for towait membership WTO bythe acceptance the include examples recent Most Another, albeit somewhat different, example was the acceptance by the membership to wait for the (inconclusive) (inconclusive) the for towait membership bythe acceptance the was example different, somewhat Another, albeit y, of anumber significant internal despite fault-lines, to has managed multilateral trade negotiations. trade multilateral 356 However, experience has also demonstrated that this is a very thatthisisavery demonstrated However,hasalso experience 354 way the WTO operates isconsiderable. operates isenough There way theWTO Round negotiations have negotiations Round mechanisms are understood to be coalition building to be areunderstood mechanisms ue to require some general acceptance general amongWTO ue to some require between efficiency and inclusiveness. Informal and andinclusiveness. efficiency between t roles in the overall WTO process since, process onbalance, intheoverallt roles WTO l level – can impact considerably onthemultilateral impact l level–can d participation andthereisageneral recognition d participation organization they issues onwhich around specific any attempt to short-circuit or deviate from the ordeviate to short-circuit any attempt mini-ministerial meetings are hosted by individual byindividual arehosted meetings mini-ministerial 331 herwise differ significantly. differ emergence ofthe The herwise scussion of the role of bilateral and plurilateral and bilateral of role the of scussion recurring events atDavo events recurring a watershed in the history ofinformal groupings history inthe awatershed criticism by delegations that were not in theRoom. Green significance of groups in facilitating consensus. an In added anewdimensionandadded s in January andatthe s inJanuary 355

II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING WORLD TRADE REPORT 2007 SYSTEM: ACHIEVEMENTS AND CHALLENGES WORLD TRADE REPORT 2007 II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING SYSTEM: ACHIEVEMENTS AND CHALLENGES negotiation will almost certainly continue tofeat continue certainly almost will negotiation international organizations. In all, the WTO Secreta all, WTO the In organizations. international ofseveral work inthe asobserver participates also WTO The bodies. inWTO status that haveobserver brinkmanship which hasbrinkmanship which characteri element to transparency theoverall international animportant economic provide Members andits WTO isnegl process decision-making on theinformal WTO same time it must be reiterated that the WTO can only can reiterated be timeitmust same that theWTO policymaking. These cooperation agreements have been in operation for more than a decade andhave for inoperation more havethan adecade been agreements cooperation These policymaking. coherent globaleconomic policymaking. theframework of the are outside meetings that to these recall At timeitisimportant thesame system. place intheoverall decisive apotentially occupy andmom direction both provide can mini-ministerials margins of theOECD inMay. aregene meetings These 358 357 intheearly1990s, failed case tocommunity, until capture atleast thetuna-dolphin agenda andtheGATT and civil GATT/WTO The society trade the beyond debate much not generate did GATT natureofthe technical andlargely obscure The (c) current consultative process at the WTO does not does attheWTO current process consultative the underpin nature which ofandpractices theinformal theprinciples andnon-legal Indeed, solved. that not related have allproblems suggest does andinclusiveness to above been transparency The coherence discussion. of other IGOs impact thedirect Although of theireconomic intheoperation policies. Members to assist andthat of other inte theworkof theWTO between ofsu extent the andtraining. Although assistance rangingfrom inactivities organizations international At the same time it is also agenda. aswellmanagement levelto cover of ontheWTO theissues most institutions atstaff recognized that the WTO system is only one part of a much broader set proved to be effective platforms for the expansion of for theexpansion platforms effective toproved be We here therole of have other in not discussed of to andtherefore thepractices not subject WTO Such of theWTO. aswelltheDirector-General Members WTO onaverage 30-35 and include some of the World Bank and the IMF for their secrecy andweakaccountability. for theirsecrecy of theWorld Bank andtheIMF governance among the public had already been ondisp governance been amongthepublichad already course, interest ininternational of anincreasing politicization themultilateralbut also Of trading system. among thepublic, interest agrowing ensured not only and services property environment, intellectual emphasize the need to maintain vigilance regarding transparency in decision-making at the WTO. At attheWTO. the emphasize to indecision-making vigilance maintain theneed regarding transparency re process of thedecision-making for short-circuiting organizations, such as UN, FAO, UNEP and UNCTAD, institutional relations several other maintains international with extensive WTO institutions. The Woods theBretton with cooperation theWTO’s formal gomuch beyond andspecific economic policymaking andthat related issues to global Members of international andobligations thatWTO bind rights activities which take which institutional framework. placeactivities its within with the IMF and the World Bank with the objective andtheWorld theobjective Bank with theIMF with the WTO they also articulated oneof thecore fu articulated theyalso the WTO in1994 ministers When process. decision-making the general public.However,the general andwideni the deepening See Danahar (1994). Danahar See Meeting in April 1994 to underscore thisobjective. 1994 tounderscore inApril Meeting of the Marrakesh III.5 Agreement Article See as well as the zed WTO decision-making at various times. The end-game of aWTO end-game The atvarioustimes. decision-making zed WTO 357 In 1996 In theGeneral Council formalized agreements cooperation 332 ure power based bargaining among states. The scope The bargainingamongstates. based ure power transparency and inclusiveness described earlier. described andinclusiveness transparency adopted theMarrakesh therebyfoundingadopted Declaration ternational governmental organizations in the inthe WTO organizations governmental ternational nctions of this new organization as achieving more asachieving of thisneworganization nctions decision-making process of themultilateral trading process decision-making provide a guarantee against a re-emergence of the are-emergence aguarantee against provide ch cooperation varies, coordination andcoherence coordination varies, ch cooperation statistics, research, standard-setting, and technical and there are some 140and there aresome international organizations riat maintains working relations with almost 200 almost with relations working maintains riat igible, their close substantive involvementigible, the substantive with theirclose activities, programmes andinitiatives of activities, thethree of further pursuing coherence economic pursuing inglobal of further mains real and this is clearly why many countriesmains realandthisisclearly entum andassuch they to amultilateral process lay inthemounting for criticism of anumber years rally organized and hosted by individual countries byindividual organized andhosted rally rnational organizations continues to evolve as so separate Ministerial Declaration adopted at the Ministerial Ministerial atthe adopted Declaration Ministerial separate ever hope to regulate or impress its practices on practices its to orimpress regulate everhope ng of the WTO agenda to include issues such to as issues agenda include ng of theWTO 358 The 1998 collapse of OECD- dealing with NGOs today. NGOs with dealing for dealing with NGOs within the context of the multilateral trading system (particularly as the ITO was astheITO of themultilateral (particularly thecontext within for NGOs trading with dealing system consulted.be recommendations these never Although associations andcitizens’ networks. associations incl excluding firms,also still while society, civil d’horizon, by made theUnited Nationsarrangements andthe provided International Trade (ICITO) Organization th organizations such with for interacting mechanism expertise. th to with interact would allowthetrading system theimport reflect theynevertheless never established), 363 362 361 360 359 concerned related issues with to environment, acloser agriculture began development and sustainable late 1980s andearly1990s astheUruguay Roundnegotiations that were anumber of intensifying NGOs society of civil theissue to address any formal butweredenied accreditation Secretariat, andits theGATT both with contacts and adhoc number organizations, of the notably business most to allowfo intheGATT wereincluded no provisions WTO GATT From the the to to institutionalize themultilateral with of theearlyattempts theinteraction NGOs Despite trading system, (ii) ofthisCharter...”. scope the within matters forarrangements consultation with andcooperation onthecreation ofthe agenda theInternational Trade Organization deliberations included on“[...] suitable Early considerations on NGOs non-existent, wasvirtually actors andnon-governmental theGATT therelationshipAlthough between (i) associatio industry unions, labour NGOs, publicaction encompasses context WTO of inthepresent thetermNGO use The operates. system organizations andinputof these havethe actions influenced themanner themultilateral inwhich trading inparticul society, andcivil theGATT/WTO between isto a provide of thefollowing section objective The scrutinyexternal underwhich internatio concerned theimplications with of globalization. we organizations international towhich extent of the entities signal inover70 sent astrong countries. episode This non-governmental 600 among atleast inve on agreement amultilateral on negotiations based which was adopted in dealing with NGOs, clearly pr clearly NGOs, with indealing wasadopted which NGOs could be adapted to suit the ITO the tosuit adapted be could NGOs and access (Marceau and Pedersen, 1999). Some observers of the GATT foresaw the need for the system for the system theneed foresaw of the GATT observers Some 1999). andPedersen, and access (Marceau Ministerial Conferenceand attheSeattle inlate 1999 priorto acentral the internet, coordination became subsequently for mechanism networks variousNGO The WTO does not have a formal definition of what constitutes an NGO. Public action NGOs, labour unions, labour NGOs, action Public anNGO. constitutes ofwhat definition haveaformal not does WTO The Art. V:2 of the Marrakesh Agreement and WT/L/162. For a complete overview of the early considerations regarding considerations early ofthe overview acomplete For andWT/L/162. Agreement Marrakesh V:2ofthe Art. matters related to those of the WTO. ofthe tothose related matters the ITO and NGOs see Marceau and Pedersen (1999). accreditation to Ministerial Conferences. Generally, have NGOs to demonstrate that are their concerned activities with are accredited to associations industry Havana Charter, 87, Art. paragraph 2. CT EC2/11,ICITO 15 July 1948. EC2/11,ICITO 15 July 1948 (note by the Secretariat). 362 the note included a set of recommendations an aset the note included In addition, the thrust behind these recommendations, in particular theinherent recommendations, addition, these vagueness behind inparticular In thethrust 363 ns, but not individual companies.ns, butnot individual involvement at some juncture (Jackson, 1969), butitwasnot until 1969), the (Jackson, involvement juncture atsome attend Ministerial Conferences. Ministerial attend Indivi 361 nal today. institutions findthemselves as well as an annex with a provisional list of NGOs which might which ofNGOs list aprovisional with anannex as well as 360 In assessing the merits of institutionalizing a structured astructured ofinstitutionalizing merits the assessing In udes parliamentarians and the general public,including andthegeneral parliamentarians udes The anti-MAI network, and its unprecedented use of use unprecedented andits network, anti-MAI The International Chamber of Commerce, informal pursued e outside world and benefit from external technical from external worldandbenefit e outside the Executive Committee anotethe Executive with onexisting ovide the basis for the current WTO provisions for provisions thebasisfor thecurrentovide WTO ar NGOs. We shall specifically seek to explain how to explain seek We shallar NGOs. specifically re attracting the interest of a wider general public general of theinterest awider re attracting short overview of theevolution of therelationship overview short non-governmental organizations concerned with non-governmental r their involvementTo orparticipation. sure, be a . These are only a few examples of theincreasing afew areonly examples . These UN specialized additionto In UN this agencies. 333 ance which was attached to defining a policy that apolicy to defining was attached ance which stment (MAI) owed much to a collaborative effort muchto owed acollaborative effort (MAI) stment e Secretariat of Commission theInterim fore Secretariat the materialized into a concrete set of procedures ofprocedures set intoaconcrete materialized d conclusions on how the procedures regardingd conclusions onhowtheprocedures 359 dual companies are The somewhat wider concept of not eligible for WTO tour

II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING WORLD TRADE REPORT 2007 SYSTEM: ACHIEVEMENTS AND CHALLENGES WORLD TRADE REPORT 2007 II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING SYSTEM: ACHIEVEMENTS AND CHALLENGES also adopted a first Decision on De-restriction of onDe-restriction Decision afirst adopted also much-needed platform for dealing with civil society society civil for with dealing platform much-needed 1948. Article V:2 of theMarrakesh 1948. Article Agreement states GATT rules – environmentalists across thegl across –environmentalists rules GATT of Tunaon Imports (“Tuna-Dolphin”) –ruling law decision that violated aUS conservation its issued thesummer ofIn 1991, dispute settle theGATT after importance of NGOs in the public debate ontrade andrecognized inthe public debate of NGOs that themultilateralimportance trading system did no longer exist in the vacuum which had characterized its predecessor. In addition, WTO Members Members predecessor.WTO addition, inthevacuum In had its which characterized exist did nolonger Although the Guidelines were a significant step forwards forwards wereasignificant step theGuidelines Although the public more systematically and promptly than andpromptly inthepast. the publicmoresystematically interaction with civil society reflected the sensitivity thesensitivity reflected society civil with interaction informal The and“arms-length”WTO. nature of theGu organizations of these providing fell short nevertheless between a large number of Members WTO and NGOs at the time. This sensitivity became particularly Article V:2 of theMarrakesh aArticle with Agreement Secretariat andthe1996 theWTO provided Guidelines asa of thetrade talks coordinated denouncement thefirst 1990 December witnessed in and theMinisterial inBrussels meeting access organizations thenegotiators amongthese frustration resulted tothe inability directly infurther monitoring of theGATT. additionto In thesubstant 369 368 367 366 365 364 and cooperation with NGOs, which resembled the original text considered for considered theCharter of in theITO theoriginal text resembled which NGOs, with and cooperation atMarrakesh asignificanttran by Ministers included period between 1996 and1999 between thatperiod thema However, to exchange of views. NGOs for the andrepresentatives it wascharacteristic Members for WTO principally exposed when the Secretariat sought to sought orga theSecretariat when exposed principally V:2 andtheGuidelines earlyimplementation of Article The the conference wouldnot createaprecedent matters related to those of the WTO.”. ofthe tothose related matters forarrangements consultation with andcooperation WTO Members inJuly1996 of of Members a set Guidelines WTO trading system concerned andaccess to transparency in trading system did not make for arrangements accommodating any NGOs. specific andthe1994 received of attention relatively theGATT openness little Marrakesh Ministerial Conference the environment adequate without input.At were made for thetimecalls and greater transparency secretive remained panels wasthatGATT conclusion WTO Secretariat played acrucialroleinbrokering Secretariat a WTO damag very andpotentially cumbersome extremely both wouldhaveaccreditation bytheWT approved to be requesting whereby eachNGO argued infavour Anumber of of themeeting. asystem Members attend of to accrediting concern NGOs attheprospect in 1996 expressed anumber duringwhich of Members to attendance ensure NGO inthediscussions evident issues with which developing countries developing which felt with uncomfortable,issues e.g. environment andlabour. was sensitivity This pushed countries and generally werefrom developed affairs WTO following thebulkof NGOs because For a full overview of the Guidelines see Marceau and Pedersen (1999). andPedersen Marceau see Guidelines ofthe afulloverview For WT/L/162. The Results of the Uruguay Round of Multilateral Trade Negotiations, The Legal Texts, p.9. Texts, Legal The Trade Negotiations, ofMultilateral Round Uruguay ofthe Results The WT/L/160.Rev1. NGO representatives present at the Marrakesh meeting were accredited as journalists. as accredited were meeting Marrakesh atthe present representatives NGO began referring to this case as “Gattzilla Ate Flipper”. “Gattzilla as case tothis referring began United States - Restrictions on Imports of Tuna, GATT BISD 39S/155 (Sept. 3, 1991). A number of NGOs subsequently 3, subsequently 1991). 39S/155 ofNGOs ofTuna, (Sept. Anumber BISD GATT Imports on -Restrictions States United “GATTastrophe” 366 by a number of NGOs (Croome, 1995). The inclusion of this provision and the subsequent adoption by inclusion of andthesubsequent adoption thisprovision The in preoccupations of the NGO community community of theNGO in preoccupations obe began scrutinizing the GATT moreclosely. theGATT scrutinizing began obe for of theorganization. subsequent meetings 334 documents which would make documents available to available make would which documents documents O membership. Clearly,O membership. wouldhave been such a system compromise which made clear made which compromise 367 and even hostility which char which and evenhostility and increasing the transparency of WTO operations. WTO of and increasing thetransparency ive concerns raised, theemerging which agreements sparency provision on arrangements for consultation onarrangements provision sparency at the first WTO Ministerial Conference WTO at thefirst inSingapore for the relations clearlyacknowledged NGOs with and closed to about thepublicandthat andclosed decisions nize a series of symposia designed to provide aforum to provide designed ofsymposia nize aseries ment Un panelin thecase non-governmental organizations concerned with non-governmental were particularly challenging for the WTO Secretariat Secretariat challenging for theWTO wereparticularly with any direct andformal intheworkof role anywith direct that “the General Council may make appropriate formation rather than specific substantive matters. formation matters. rather substantive than specific in terms of the WTO’s relationship with NGOs they NGOs in termsof relationshipwith theWTO’s idelines to which applied mostly theSecretariat’s ing to theOrganization’s theend, image. the In 368 365 However, the draft text adopted adopted However, text draft the acterized the relationship relationship the acterized ited States - Restrictions that NGO attendance at attendance thatNGO vis-à-vis the multilateral multilateral the 364 The initialThe 369 a Symposia to their demonstrate ability has been “activities related to andthis ofWTO” those the limited in time. At present around 25-30 Geneva-based NGOs actively follow theworkof theWTO. actively NGOs intime.limited At around present 25-30 Geneva-based Historically, theprincipalcriteria V:2 inArticle byMembers on themandateprovided in the co NGOs with of interacting Given thenovelty the WTO headquarters. The granting would The of badges headquarters. the WTO this Within scheme, journalists. NG for Geneva-based a that allowaccessrenewable badge will to theWTO anannual, to obtain acampaign haveHowever, pursued NGOs since 2001 agroupofGeneva-based frequent. less has become for to demand accreditation permanent theNGO theWTO recent years, In through appropriate metconstructively be can that consultation NGOs with closer andcooperation as theannual accreditation proces The Fora. Public granted for Minist been has only accreditation date, WTO andNGOs. theDirector-General informal between meetings 1998, July public.In then interested an increasingly Secre bytheWTO adopted theapproach extent, to alarge extern This decisions. to of enhance its thelegitimacy onth atthetimefocused debate panels, theacademic their delegation to attend various WTO meetings.their delegation to various attend WTO of aspart to representatives accredit NGO Members amongWTO tendency agrowing has witnessed meetings” remainsvalid.Similarly, its notion or the WTO ofthe work inthe involved directly to be how external pressure has led to a change in the way the WTO does business. does to has led intheway achange pressure theWTO how external of sensitizing the WTO membership (and the WTO Secre theWTO (and membership of sensitizing theWTO 370 abroadl that“there iscurrently namely Guidelines, inthe1996 by Members emphasized expressed timeitshouldbe same that theoriginal reservation theSecr with comfortable very to be seem Members of accreditation. and accreditation general, hashoc In worked this system decade welloverthepast hasfairly ensured very that definition broad only debate accreditation NGO The Since 1996 However, have infavour to argued theWTO. NGOs of status accreditation apermanent to (iii) in April 1999. placetook throughout 1998 paved theway for theor informal which The meetings aswelltheNGOs. theWTO wouldbenefit exercise which educational initiativ these topursue decision Secretariat’s in the to pressure in theexternal Although organizations. ofobjective these measures was to establish an of circulation NG regular of alist briefings for NGOs, initiatives for engagingmore actively, informal thoughstill dispute settlement inputto to substantive WTO provide had attempted anumberalready of NGOs Although formal accreditation mechanism for NGOs does not exist at the WTO. At time, formal attheWTO. decade thesame accreditation not thepast mechanism exist does for NGOs of continue theGuidelines elements These to constituteNGOs. thecore reasons of why apermanent itcomes to when thegeneral feeling amongMembers at the national represents levelstill processes upon which WTO structures its interaction with NGOs today and is perhaps the first clear example of clearexample today thefirst andisperhaps NGOs with interaction its structures WTO which upon initiativesabove to transparency, increase high while of themultilateral theoperation trading s de-mystifying A number of smaller and single-issue symposia had been held previously. In 1994 a symposium on trade and trade on 1994 asymposium In previously. held been had symposia single-issue and ofsmaller Anumber headquarters and involved a large number of industry associations. ofindustry number alarge andinvolved headquarters environment had taken place and in 1997 a meeting of NGOs was organized to mirror the agenda of the High ofthe agenda the tomirror organized was in1997 ofNGOs and place ameeting taken had environment Level Meeting on Trade Related Issues Affecting Least-Developed Countries. However, both symposia had seen only only seen had However, symposia both Countries. Least-Developed Affecting Trade Issues on Related Meeting Level sporadic participation by countries.sporadic Member participation In March 1998 on a trade symposium facilitation took place atWTO the 370 Although these early initiatives appear rela appear initiatives early these Although for accrediting non-profit NGOs to a WTO Ministerial Conference to for aWTO NGOs accrediting non-profit or al push for increased transpal pushfor increased Director-General Renato Director-General Ruggiero announcedof aset few organizations have ever been refused such ad- such refused been haveever few organizations es, it was also considered to be a worthwhile two-way two-way aworthwhile to be considered itwasalso es, crease overall transparenccrease s is administered by the WTO Secretariat andbased Secretariat s isadministered by theWTO O publications received by the Secretariat and regular andregular bytheSecretariat received O publications y held view that it would not be possible for NGOs that possible itwouldnoty heldview be informal confidence-building dialogue with these with dialogue informal confidence-building e merit of opening the WTO processes to NGOs so as so to NGOs processes theWTO e meritof opening long the lines of the accreditation system that exists that exists of system long thelines the accreditation ly controversial at the time, atthe controversial foundation remainthe ly Os would be granted access to the public parts of granted wouldbe access toOs thepublicparts ntext of themultilateral theinitialntext trading system 335 ganization of the first large-scale WTO Symposia WTO large-scale first ofthe ganization as well as the previously mentioned Guidelines. as wellthepreviously etariat’s administration of its mandate. At ofits etariat’s administration the ystem asperceived byystem civi ly with civil society, including separate Secretariat Secretariat includingseparate society, civil with ly be subject to strict criteriaandconditions, and to strict subject be erial Conferences such events, aswellspecific tariat in applying the provisions for dealing with for theprovisions with dealing inapplying tariat tariat) to aswell tariat) thevarious agendas NGO tively timid, they served thedual purpose tively timid, theyserved arency and openness guided, andopenness arency y wasasignificant element l society. Similarly,l society. the

II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING WORLD TRADE REPORT 2007 SYSTEM: ACHIEVEMENTS AND CHALLENGES WORLD TRADE REPORT 2007 II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING SYSTEM: ACHIEVEMENTS AND CHALLENGES of the Doha meeting saw the imposition of anumericof theimposition the Doha saw meeting of business, environment,of business, development andlabour inattracting wasawatershed meeting Seattle The need for inclusiveness and participation of allMemb for andparticipation need inclusiveness inputandad with well placed to delegations provide to the substantive agenda ofto agenda theWTO. thesubstantive wasreplaced NGOs by growing with indealing Members of many WTO thereluctance Second, agenda. a dramatic inthenu increase saw meeting the Seattle toane thisrelationship took inmany ways meeting confirmed automaticity in allowing inallowing automaticity confirmed representatives NGO with meeting began delegates country of number agrowing developing NGOs, WTO conferences. TableWTO Ministerial The Conferences. atWTO outlines attendance NGO below inDohaarrangements meant that organizations these part in the collapse of inthecollapse theconference. thispart is As an werequickto pickuponthetransparency of NGOs of themultilateral However, tradingunaccredited understanding system. little groups anumber with fringe crowde were, extent, toalarge issues to specific process issues such as external transparency andpart transparency such issues asexternal process to WTO previous to actors welcome these reluctant shari andinformation cooperation the overall number of accredited organization fell compared to Seattle. Confer Ministerial at subsequent attendance for NGO arrangements theprocedural and practical inSeattle, theexperiences Despite aswell. organizations of from transparency these ahigher wouldbenefit degree internal anddidnotwere apurely affair Conference onthewa impact had abriefnegative Overall, however, demonstrations thechaotic Ministerial andtheeventual street collapse of theSeattle make. to contribution the conference confirmed that extent andto NGOs some to as we inareasrelated development expertise with for briefings Secretariat WTO in However, countries. participating toregularly developing inaddition countries, inmany developed history have along terms of thenumber of representatives NGO accredit pa of contingent large a as well as increa asignificant saw addition,think-tanks. Seattle In The increasing sophistication among Members for amongMembers increasingsophistication The representatives from healthgroups, religious groups, huma Kong Hong to Seattle from Conferences: at Ministerial NGOs Ministerial Conferences atWTO of NGOs attendance The is arguably manifestations visible oneof themost (iv) 372 371 NGOs that had come to Seattle with the objective of theobjective that with hadNGOs come to Seattle matters ontrade policy NGOs with consultative for Whereas processes process Seattle. preparatory to ensure NGO attendance at the WTO Ministerial Conferencesto ensure attheWTO attendance NGO in1996 and1998, the1999 Seattle theOrganizatio relationshipbetween of theevolving consultation for the NGOs, the fact isthat theirchan thefact consultation for theNGOs, the NGO attendance, including the WTO Secretariat’s co Secretariat’s attendance, includingtheWTO the NGO It is at the discretion of each WTO Member who they who isIt at Member the discretion of each WTO Given the physical limits at Doha, each NGO was allowed to accredit one representative. one toaccredit allowed was NGO each at Doha, limits physical the Given similar accreditation of other NGOs was extremely rare. extremely was NGOs ofother similar accreditation accreditation of a number of representatives business (compa ences were not changed. The Minist The werenotchanged. ences rliamentarians from Member countries. The meeting was also unique in rliamentarians wasalso countries. meeting from The Member ng, including those among the membership that had been themost that had been amongthemembership ng, including those NGOs to attend such meetings. Arguably, such meetings. to attend constraintsNGOs thephysical per se per 336 relate to any direct improvement in terms of access and ofaccess interms improvement toany relate direct sue gained prominence in 2000 these organizations were organizations these prominencesue gained in2000 y WTO Members perceived the NGO community. theNGO perceived Those Members y WTO d out by the down-town mayhem caused primarily by primarily caused mayhem d outbythedown-town ed as members of individual country delegations. of individual country ed asmembers the attendance by NGOs beyond thetraditional beyond fields by NGOs the attendance vice on how to make the WTO more responsive to the moreresponsive onhowtovice makeWTO the include in their delegation. w level. First, the period leadingupto andincluding theperiod w level. First, such mechanisms existed only sporadically among sporadically only existed such mechanisms ging relationship with de ging relationshipwith icipation NGOs slowly began turning began slowly theiricipation attention NGOs ers. Although the transparency discussions in 2000 in2000 discussions thetransparency Although ers. se in the number of NGOs from developing countries fromdeveloping inthenumber ofNGOs se groups. The most significant newcomers included significant newcomers most groups. The lobbying delegations as we meetings. Third, from having focused primarily on primarily focused having from Third, meetings. d process difficulties whic difficulties d process mber and diversity of NGOs interested intheWTO of NGOs anddiversity mber dealing with NGOs was evident throughout the wasevident NGOs with dealing n and civil society. Following the first timidsteps thefirst Following society. n andcivil ll as more generally. This interaction continued at continued interaction generally.ll asmore This enjoyed the same rights andfacilities rights enjoyed thesame asatother al limit on the size of each NGO delegation andal limitonthesize delegation ofeachNGO n rights activists, consumer groups and a variety of consumer groupsandavariety activists, n rights were increasingly seen as seen wereincreasingly ntrol aswellthe of process theaccreditation nies as well to as individual associations) delegations, erial Conferenceerial (2001) inDoha 372 However, the parameters for Although Singapore had theAlthough seen legations wouldmeanthatlegations h had played asignificanth had played ll as bringing awareness awareness ll asbringing having an intellectual anintellectual having 371 the event over the years and its increasing visibility increasingvisibility andits the event overtheyears acn20 6 9 1578 795 961 Cancún 2003 374 373 gone. unthinkable afewyear wouldhave only year been every days for two Headquarters thehalls roaming of of of having NGOs theWTO idea thousands The Members. to for WTO aplatform maintain of theexchange community with ofsegment theNGO ideas to due inturn, isinnosmallpart This, is measured. by theirsuccess which thereal yard-stick shouldbe This membership. are embraced assuch by theWTO However, agenda. are nowarecur meetings WTO these aformalized access to with the NGOs andtheydonot and dialogue of provide anddirect transparency other words, these In andparticipants. organizers nature of thediscussi andinteractive quality The means. of budgetary thelackof regular because partly of theWTO, formal structure inthetraditional of theword.NGOs sense However, the falls exercise itremains which anadhoc outside journalist nowadays which includepeople, academics, are undisputable. Both andcomp interms of numbers couple have over of thepast Public years Forums theorganization and format of the to Members, considerable werewhich interference subject by WTO 1500 byparticipants organized were 30 some these, Of 362 moreth duringwhich symposium large-scale the seventh hosted theWTO counterproductive.2006, andwere In often interaction for direct opportunity little 235 bo who input of participants much to theconstructive in on toafocus sessions plenary open-ended large dialogue andamore interactive for agenda abroader in1999, fo symposia the large-scale and continuously commitment evolving to transparency, 686 represents Forum, Public WTO Symposium, nowcalled 128 Symposia Activities and Outreach WTO theWTO between interaction terms ofIn direct 108 (v) topetitions theDirector-General. 776 me culminate which to atthese campaigns orchestrate 153 of 12takes inexcess managed months have to organize organizations often such aconference, society civil to rallyexcellent theirconstituencies arou opportunities 159 Conferenc Ministerial WTO sinceSeattle, Particularly of Participants Number attending of NGOs Number Doha 2001 Seattle 1999 of NGOs eligible Number Geneva 1998 1996 Singapore ConferenceMinisterial Conferences Ministerial WTO at attendance NGO 22 Table clear sign of the significance of a civil soci ofacivil clear signofthesignificance Hong KongHong 2005 subsequently made available on the WTO website.subsequently available made Compared ontheWTO to theinauguralheldin1999 symposia A summary of the 2006 Public Forum was published by the WTO Secretariat in April 2007. inApril Secretariat WTO bythe published was Forum Public 2006 ofthe Asummary The submission ofOxfam’s submission “Big Noise” The most recent example. 374 373 rmat of thecurrent annual forum considerably to has allow evolved 05821596 812 1065 The media coverage that these campaigns generate represents a generate represents coverage campaigns media that these The 5 7 370 370 651 petition with 17.8 with petition million ety presence at WTO Ministerial Conferences. Ministerial atWTO presence ety been left to the WTO Secretariat. The improvement The of Secretariat. to theWTO left been as the WTO’s biggest and most critical outreach event critical andmost as theWTO’s biggest themselves. The summaries of the discussions were of summaries thediscussions The themselves. dividual and more interactive working sessions owes workingsessions andmoreinteractive dividual ons at the Public Forum depends crucially onthe crucially depends Public Forum ons atthe the persistent pressure by a large and cross-cutting andcross-cutting byalarge pressure thepersistent meetings do not amagicbulletinterms do represent meetings s back – today this sensitivity among Members is amongMembers s back–today this sensitivity osition, participation has to grown morethanosition, 1000 participation membership and civil society, theannual andcivil WTO membership th felt that the large-scale plenary sessions offered sessions plenary th felt that thelarge-scale etings, includingthrough es have provided civil society organizations with organizations society civil haveprovided es 337 with NGOs. The fine-tuning of theformat from fine-tuning The NGOs. with nd specific causes. Given the fact that itgenerally Giventhefact causes. nd specific the most substantive example of afundamental example substantive themost s, parliamentarians, business people as well as well as people business parliamentarians, s, dialogue andoutreach. dialogue Compared to thefirst rent annual feature on the WTO calendar and calendar rent annual feature onthe WTO an 36individual took place. working sessions signatures to theDirect the submission of signedthe submission or-General represents theor-General represents

II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING WORLD TRADE REPORT 2007 SYSTEM: ACHIEVEMENTS AND CHALLENGES WORLD TRADE REPORT 2007 II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING SYSTEM: ACHIEVEMENTS AND CHALLENGES interest to these organizations. The Director-General regularly briefs and interacts with NGOs, both NGOs, with andinteracts briefs regularly Director-General The organizations. tothese interest in Geneva and abroad, and engages in on-line web web inon-line andengages andabroad, in Geneva as previously outside theorganizatio outside as previously and the NGO section of the WTO websitecontinues to of theWTO section and theNGO In the following paragraphs thefollowing In weshall focus onaco As wasmentioned previously,As the1991 rulinginthe process. to transparency thedispute settlement some provide addition, In wesh operates. in theway theprocess andtheextent process influence thedisputesettlement appropriate” itdeems which from “to any orbody panels areallowed information advice individual andtechnical seek not DSU contain does any provisions explicit for although by of thesubmission NGOs briefs and Curae Amicus DisputeSettlement Briefs WTO The (vi) andconcerns. briefingsfor Regular NG expectations information, atproviding e aimed recently,More anoutreach encompassing strategy anumber of has activities Secretariat developed theWTO 376 375 amicus curiae and ShrimpProducts can play inbringing acrucialrole can re andaccountable legitimate the As trading system. recogniz informed work.This intheWTO’s andinvolved to approach keep parliamentarians andproactive abroad has pursued theSecretariat recent years, In briefings. andmoretechnical specific inissue- aswellother experts bodies to involve Chairpersons of WTO countries. has started also It progra outreach aregional hasinitiated Secretariat In general, these andother general, includingthe measures, In these group. of themultilateral amongthis important trading system understanding outreach programme towardsThe parliamentarians al their briefs to the US submission. In August 1998, to August their briefs the USsubmission. In th byattaching to sought onthecase introduce addition, In theNGOs arguments theirlegal briefs. the NGO GATT’s thepanel’s General appealed Exceptions, italso findingthat to itdidnot consider have authority DSU theUS rules. When government subsequently ap WTO the to under itdidnot do so have that authority itwouldnot consider because thebriefs parties dialogue. The results from this strategy may not be from thisstrategy results dialogue. The 1995 more accessible, recent has theWTO initiatives made place anincreasing emphasis onoutreach and thegradual, While of theWTO. butconsistent business commitment since to transparency the day-to-day - civil society relationship to a new and more productive level. relationship to anewandmoreproductive society - civil placed the GATT on the radar screen for mid-1997, ontheradar anumber of In screen environmentalplaced theGATT NGOs. sent NGOs two Appellate Body reversed thelower-level ruling reversed onwh Body Appellate bytheUSinmain part made on thearguments although Members, Body readbytheAppellate been to the USsubm would accept attached briefs theNGO one of those briefs directly from one of the NGOs. Du from oneof theNGOs. directly briefs one of those Art. 13.1 Art. DSU. ofthe from countries thatfrom countries theUShad notce Malaysia byIndia, acomplaint involved case This 1998). Prohibitions of ShrimpUnited States-Import Certain and Shrimp Products during shrimptrawling. 375 briefs to the WTO panelconsidering to briefs theWTO to a particular case. (“Shrimp-Turtle”). greater awareness andinformed deba greaterawareness ngaging into dialogue, and listening to civil society representatives’ representatives’ ngaging into society to civil dialogue, andlistening n, the availability of GATT and ofGATT availability n, the rtified as doing enough to safeguard e enoughto safeguard asdoing rtified 376 Two months later, 1997, inSeptember thepanelinformed the 338 immediate, but they will immediate, will butthey holding of smallersympos United States-Import Prohibitions of Certain Shrimp of Prohibitions Certain States-Import United mme for civil society representatives indeveloping representatives mme forsociety civil Os are now held at the WTO Headquarters andnot Headquarters are nowheldattheWTO Os of its submission. In addition, in October 1998, the addition, submission. In inOctober of its uple of examples where NGOs have attempted to have attempted NGOs where uple of examples United States–Restrictions on Imports of Tuna onImports States–Restrictions United the Appellate Body ultimately stated that itfocused stated ultimately Body the Appellate ether a panel had the authority to consider amicusether apanelhad theauthority , Pakistan, and Thailand about about andThailand , Pakistan, e Appellate Body made apr made Body e Appellate ring the case, it was made clear that the briefs had briefs that the clear it wasmade case, the ring all outline some of the more recent initiatives to of themorerecent initiatives all outlinesome pealed the panel’s decision regarding the scope of thepanel’s thescope pealed regarding decision ission, and that it had accepted a revised version of andthat version ission, ithad accepted arevised presentatives of the people who elect them they them elect who people ofthe presentatives chats with the public. In recent years, the thepublic. recent with WTO In years, chats es the important role they play inthemultilaterales theimportant so encompasses regional events to further the to regional further events encompasses so to which their efforts may have to led achange to theirefforts which provide statistics andinformation of particular statistics provide , Report of the Panel, WT/DS58/R (May 15, (May WT/DS58/R Panel, ofthe , Report WTO documents on-line isautomatic on-line documents WTO ndangered sea turtles from being killed frombeing turtles sea ndangered te on international trade issues. issues. trade international te on eventually elevatetheWTO ia and seminars, permeate ia andseminars, a US import ban on shrimp on ban a USimport eliminary ruling thatit ruling eliminary case EC attached two of the briefs to its submission. Thereafter, to of thebriefs its thepanel, two any providing without reason,EC attached individuals or groups. This procedure required applicants required procedure orgroups. This individuals EC-hormones dispute and, after consulting with the parties, established an established consultingand, theparties, after with a brief. In response to this rejection, several NGOs put out a critical press statement press putoutacritical severalNGOs a brief. to thisrejection, response In rejected thereafter, Body Shortly theAppellate briefs. inlegislating role governmental the for undermining Body General CouncilAppellate criticized the convenedWTO thisissue, many to with deal Members Appellate Body’s adoption of this procedure surpri The to had repetitive briefwouldnot what thegovernments articulated. already be how theproposed had to to respond anumber of includin questions, Containing Products In 2000, in the case involving the to thedispute.not party to acceptauthority 380 379 378 377 of obligations intheEC-hormones dispute disputes “Continued suspension of obligations inthe andthegene Members to otherpanel proceedings WTO forcalled of greater thedispute transparency settleme have Members aswellWTO mentioned has previously, been As observers anumber of external appropriate” itdeems which body a panel’s authority, theDSU, under “to informat seek not have do the“right” NGOs that while said Body to Appellate have considered, The theirbriefs briefs. extent, been instrumental in clarifying that inclarifying instrumental been extent, andCompliance Body to panels,theAppellate submitted 53 had been amicusbriefs 2006, January By given. had been forreason the rejection precedent for ofprecedent thesubmission government nature of the WTO and provided NGOs with greater rights than WTO Members that were Members than greater WTO with rights government NGOs andprovided nature of theWTO Agreement, that thegovernment-to- itundermined felt that that itwasnot theWTO inconformity with practice into WTO law, but it is similarly clear that the past experience has established an important animportant law, has established into experience practice clearthat WTO butitissimilarly thepast ableto onaspec wouldbe agree membership WTO influence of have such realized. briefs not to that been evidence the suggest there At islittle this stage andthat initial regarding fears thelikely system proliferation dispute settlement feature and of theWTO of the WTO Members that are parties in a case. At inacase. that areparties Members of theWTO to anyway, submit have amicusbriefs the encouragementyet several with NGOs decided sometimes course, thisisnot to equivalent aright Of taken to into have arguments settlement. NGO account, subsequent appeal by Canada, the Appellate Body reco Body byCanada, appeal subsequent the Appellate br attached announced that itwouldconsider thetwo the decision was significant because it established th itestablished wassignificant because the decision experts on 27-28 September 2006, and with the parties on 2-3 October 2006 for observation byWTO on27-28 for on2-3 observation 2006 theparties andwith experts October 2006, September Panels under Art. 21.5 to has,Panels Art. some atleast under demonstrate, activism NGO examples of thetwo theDSU. As that the first decade of the WTO indicates that indicates of theWTO decade that thefirst Press Release, Center The for International Environmental Law, A Court without Friends? OneYear After Seattle, the Art. 13.1 Art. DSU. ofthe DS135/R (Sept. 18, 2000). DS135/R (Sept. August 2002) and TN/DS/W/46 (11 2003). February andTN/DS/W/46 2002) August In the ongoing DSU negotiations, the US has submitted two proposals on on proposals two submitted UShas the DSU negotiations, ongoing the In European Communities-Measures Affecting Asbestos and Asbestos-Containing Products and Asbestos-Containing Asbestos Affecting European Communities-Measures WTO Slams the Door on NGOs (Nov. 22, 2000). (Nov. NGOs on Door Slamsthe WTO , four NGOs submitted briefs early inthepanel process. early briefs submitted , four NGOs amicus curiae , DS321) andscientific theparties with theirproceedings to open thepanels agreed amicus curiae briefs. The decision wascontroversial many which with governments decision The briefs. European Communities-Measures Affecting Asbestos andAsbestos- Asbestos Affecting Communities-Measures European 377 includes the authority to receive unsolicited NGO briefs. Thus, tobriefs. NGO receive unsolicited includes theauthority , DS320; DS320; , amicus curiae briefs in the future. inthe briefs amicus curiae g the objectives andfinancing of theapplicant and g theobjectives Canada-Continued suspension of obligations intheCanada-Continued sed governments and, at a special session of the session and, ataspecial governments sed ific ruleamendment wouldincorporate which such dispute procedures and against the idea ofamicus theidea and against dispute procedures the same time Durling and Harbin (2005) argue (2005) DurlingandHarbin time thesame ad hoc all 17 to submit for of theapplications permission nt process, including the possibility of opening up of opening includingthepossibility nt process, at both panels and the Appellate Body have the Body Appellate panelsandthe at both iefs, but not the other briefs. At the outset of butnot the Atiefs, theother briefs. theoutset 339 EC-hormone ion and technical advice from any advice or individual ion andtechnical to filefor leave to submit abrief. application The gnized that it was likely to receive NGO briefsgnized that itwaslikely NGO to receive ral public. At the request of the parties inthe ral of public.At theparties therequest briefs are not legally ex arenot legally briefs procedure for considering briefs byprivate for procedure briefs considering briefs havebriefs asaprominent not emerged 380 s dispute amicus curae 378 Subsequently, the defendant ” ( US-Continued suspension suspension US-Continued briefs. See TN/DS/W/13 (22 briefs. See TN/DS/W/13 , Report of the Panel, WT/ Panel, ofthe , Report cluded in WTO dispute inWTO cluded 379 complaining no

II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING WORLD TRADE REPORT 2007 SYSTEM: ACHIEVEMENTS AND CHALLENGES WORLD TRADE REPORT 2007 II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING SYSTEM: ACHIEVEMENTS AND CHALLENGES nevertheless represents an important initiative towa initiative animportant represents nevertheless lack of resources, have been turning to specialized NGOs for assistance in undertaking research and research inundertaking for assistance turning NGOs to havelack of specialized resources, been made availablemade for publi thegeneral precedent for other panels and remained a decision by forprecedent other adecision panelsandremained didnot create this experiment any Although broadcast. inGeneva closed-circuit via headquarters of the were ableto watch proceedings thelive the general public exceed 33 and the majority 33the general publicexceed andthemajority didthetotal number of representatives from broadcasts initiative, closed-circuit atnopoint duringthese despite thequite significant organizational andlogist mention. intheareas of three intellec examples trading system ofparticular issues on positions negotiating preparing anincreasing number of decade, countries, asaresult thepast only sporadic. of Over often agenuine theinfluence delegations, had country other of until NGOs most of recently developed been members ableto influence been negoti has often sector private ofthesubsta inthedesign roles important played thenegotiating with po associated closely have been intheUr industries andtherole ofGATT theservice the multilateral through demonstrated theearlyinvolvement ashas been of trading theICC system inthe which contained important clarifications about thefl about clarifications important contained which Agreement 14 andPublicOn Health 2001, ontheTRIPS aDeclaration adopted November Members WTO medicines to Access of the Legislative to Members providing Process influence NGO WTO respect We onthe mentioned confidence thegrowing with previously amongNGOs (vii) andthegeneral public. Members 381 Decl The access to medicines. health, inparticular testimony to the substantive support of a number of civil society groups in a specific area. groups inaspecific of society anumber of civil to support testimony thesubstantive ofadoption the2001 andthe2003 Declaration an insofar opponent astheresearch-bas aserious with combination,This that thealliance andthefact betw momentum and inpublicopinion important generated apubli designing simultaneously ofthemwhile number to a legaladvice aswellexpert of proposals, drafting including specific expertise, technical provide countries follow didnot th developing always While agenda. to issue thecentre of theWTO countriesalliance group andce of of alarge developing to point make arather The illustrates successfulDecision. here isthat debate theaccessto medicines It is beyond the licences to countriespharmaceuticals compulsory manufactured that under are unable to produce them. scope of this section to more cl WTO with technical and political advice. Of course, course, advice. Of andpolitical technical with WTO Members approved changes to the TRIPS Agreement that approved to changes theTRIPS Members 2005, WTO 6December forOn asolution. andcalled flexibility Agreement sufficient didnot provide The Decision directly transforms anearlier, directly Au Decision 30 The the TRIPS Agreement. waivermakes That iteasierfor the TRIPS of patented medicines by setting aside a provision of the TRIPS Agreement that could hinder exports of Agreement that exports could hinder of aprovision theTRIPS aside bysetting of patented medicines This was the second time that public hearings were organized in this case. The first time was in September 2005, for 2005, inSeptember was time first The case. inthis organized were hearings public that time second the was This the joint first substantive meeting of the panels with the parties. the with panels ofthe meeting substantive first joint the 381 c, including journalists, NGOs and WTO observers. These individuals These observers. andWTO NGOs c, includingjournalists, A special viewing room was established and some 200 seats were seats 200 andsome was established room viewing A special 340 of represented these andschools. universities gust 2003,gust “waiver” into amendment apermanent of osely analyse the mechanism enshrined intheabove enshrined themechanism analyse osely “hormones”WTO panelsat the dispute-settlement d 2005 Decisions allthe Decisions d 2005 aration also identified one issue on which theTRIPS onwhich oneissue aration identified also ed pharmaceutical industry wasconcerned, the made ed pharmaceutical industry lobbying is not a new phenomenon in the context of isnot anewphenomenoninthecontext lobbying ntive However, outcomes intheWTO. the whereas uguay Round. Similarly, other business organizations organizations Similarly,uguay Round. business other exibilities in the TRIPS Agreement to promote public topromote Agreement TRIPS inthe exibilities een developing countries and NGOs had to countries contend and NGOs developing een tual property, cotton and fisheries subsidies deserve subsidies deserve cotton andfisheries tual property, rds increasingtransparenc poorer countriespoorer to genericversions obtain cheaper concern of to themultilateral thecontext them. In e advice of civil society groups, these groups groups, did these of society civil e advice sitions of their respective host countries host andhavesitions of theirrespective ical arrangements which were arrangements which requiredical for this c campaign which is widely recognized ashaving recognized iswidely which c campaign ating positions at the domestic levelorevenas atthedomestic ating positions the Panel at the joint request of the Parties, it ofParties, Panel the the atthejoint request rtain civil society groups intermsof bringingan society civil rtain among political decision-makers onthisamong political decision-makers issue. provide additional provide flexibilities onthis point. more remarkable andstands y at the WTO. However,y attheWTO. NGOs thus haveNGOs not worked orcountries. through theyhave country Instead any taken specific aproactive These organizations). intergovernmental byinternational co-sponsored fora, (some and similaropen-ended publicsymposia via presented andproposals papers has taken involved NGOs theform of analytical actively different for compared thecontribution examples anumber of to reasons. of theprevious First, two themost to bringattent campaign ahigh-profile conducting NGOs gainedprominence issue attheCancúnThe Ministerial Conference anumber of 2003 with inSeptember Faso, agriculture negotiations. of Chad theWTO that cotton removal subsidy part demanded be andMali) relates to cotton. 2003, In four cotton-exporti poor input and policy advice which these developing countr developing these which advice input andpolicy access haveRound. to aswith And, medicines,theNGOs has which kept to apubliccampaign maintain and managed advice, includingdraf andpolicy expertise technical with 382 trading system. ontheother,and theNGOs themselves view in termsof howtheNGOs butalso intheway achange inwhic has seen decade past The Concluding remarks (viii) delegations country developing background provide NGOs information, to of anumber andother forms organize of seminars support areas such asagricultureOther resources andtraditional have security, andfood genetic seen knowledge throughdebate parallel fora, working without groups to has these take led issues fisheries aproactiv space. of fisheriessubsidies, thecase th In policy cotton theinvolvement developing helped of NGOs of for and access that to argued theissues atleast of medicines be time. can period It over anextended thecommitment oftheformerundoubtedly to remain theNGOs for thesuccess of therelationshipbetween to publiccampaigns efficient highly available not otherwise advice andpolicy resources provid NGOs cases first thetwo In agenda. legislative ontheWTO have animpact infact inputcan of howexternal examples provide issues of theabove All fishing afocus oneliminating subsidies, that with contribute those to overfishing. M to encourageWTO adecade forand others almost of fisheriessubsidies inparticular, theyhave been around theworldinpromoting environmentall active been of thedebate.sides Third, environmental have having infisheriesissues, NGOs considerable long experience access andcotton to were, medicines astherearede outcome.positive Second, thefisheriessubsidies deba subsidies debate, to influence thenegotiations to reac through theprov seeking, role asinterested stakeholders issomewhat subsidies attheWTO onfisheries of contribution thediscussions inthecontext The of NGOs subsidies Fisheries developing countries. theincreasingly has illustrated which issue second The Subsidies Cotton not only to the practical interaction between the WTO Secretariat and WTO Members ontheonehand Members andWTO Secretariat theWTO between interaction not to only thepractical See Baffes (2005). 382 Not unlike Not the accessassisting to had medicines,anumber of been NGOs raise awareness among a wider public. An important explanation important public.An amongawider awareness raise through any particular country orcountries. country through any particular e longinvolvement of intechnical environmental NGOs working with governments, governments, working with ng Central Burkina African countries andWest (Benin, close relationship betwee relationship close h what in their own view would be anenvironmentally wouldbe view intheir own h what ed developing country governments with intellectual with governments country ed developing ies would have struggled to independently. wouldhave muster ies struggled veloped anddevelopingveloped coun embers to bindingnewinternational adopt onembers rules found a specific niche in terms of substantive research research nicheintermsof substantive found aspecific countries defend, evenenlarge, andperhaps their to them and assisted the countriesto themandassisted inconducting ting specific proposals intheagriculture negotiations proposals ting specific te is not a North-South issue in the same sense as sense inthesame issue te isnot aNorth-South e role in directly providing intellectual inputtothe intellectual providing indirectly e role h the WTO interacts with ci with interacts h theWTO deeply involved and dedicate significant resources significant anddedicate involved deeply 341 and the developing countries in both contexts is countriesand thedeveloping contexts inboth ision of intellectual input ofintellectual ision y-friendly fishing policies and practices. In respect respect In andpractices. fishingpolicies y-friendly ion to the difficulties faced bycotton producing ion to thedifficulties the issue very muchontheforefront oftheDoha very theissue n WTO delegations andNGOs delegations WTO n international organizations, organizations, international and ideas toand ideas thefisheries vis-à-vis vis-à-vis tries represented onall represented tries vil society. This relates This society. vil the multilateral the demandeurs

II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING WORLD TRADE REPORT 2007 SYSTEM: ACHIEVEMENTS AND CHALLENGES WORLD TRADE REPORT 2007 II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING SYSTEM: ACHIEVEMENTS AND CHALLENGES an atmosphere re of will mutual This trust. isto perspective fromanorganizational challenge The anditwoul inthecultureof anchored theWTO solidly ableto are wouldbe formally by practices consensus. upon agree that These Members anything beyond through other channels. However, it role compared to thelevelof influence wouldenhance enjoy some theiradvocacy role theWTO inside Member andits that theWTO dealwith for NGOs most view of those NGOs that wouldlike NGOs amoreformal ofthose sta view result rather ofFrom practice than of thepoint procedural andthegranting changes rights. of specific organizations which have opted for a constructive have which organizations for opted aconstructive ontheinteractio has focused primarily section This The shape of the multilateral trade agenda has potentially important systemic consequences, asit systemic of shape the multilateralThe has trade agenda potentially important dialogue with civil society remains strong. As illustrated earlier the evolution of this relationship isa relationship ofthis evolution the earlier illustrated As strong. remains society civil with dialogue From aninstitutional thecommitment of point view to continue workingtowards amore constructive basis. onaregular of NGOs categories two thefirst workwith Members through established institutional channethrough established than possible wouldhave been moreeffectively agenda ininfluencingsucceeded substantive theWTO’s that argued through closer be can It cooperation. through substantive increased itself replaced relationship by manifests amore constructive often which remains anintergovernmental have organization, NGOs theWTO some Although interested stakeholders. one. addition, between of In itisanindication confidence thegrowing intheworkingrelation that exists in –NGO WTO the toinformation, access around proc From andmostly asensitive, one-dimensional single, all-embracing forum for internationalsingle, all-embracing cooper areas.Yet from other policy a apart seen be aloneandcannot not stand does multilateral trading system to accomplish mandate. The its capacity andchallenge its internal measures may the system overburden of deepening themultilateralfurther trade agendathrough theinclusion of many different kinds of to maylead domains policy inother cooperation and international andviability. ontrade matters cooperation Alackof coherence between efficiency of themultilateraldetermines perceptions thelegitimacy aswellthesystem’s about trading system, agenda. areas from the GATT/WTO ab from aconceptual said perspective be andsystemic trad foreign and therefore supplies andsuppliers affect and domestic theconditions degree insome ofand internal between competition measures affect measures inthatborder theyare applied internally rather than atthefrontier. Butinreality, border both from aredifferent tohere) arereferred they (as measures internal or policies border the Behind policies. intermsof drawn adist been has sometimes issue covered atallhave ruleareasshouldbe particular AGENDA TRADE competence. concerning Questions theappropriate re MULTILATERAL THE DEEPENING of its istheextent theyears thatA core has issue confronted down themultilateral trading system 7. organizations are regularly accredited to WTO Ministerial Conferences, the WTO Secretariat as well as well as Secretariat Conferences, WTO the Ministerial toWTO accredited areregularly organizations ofthe abolition themultilateral andhave generally refused dialogue. trading allof system these Although A number of organizations continue thesystem. to for engagement to call in order substantive modify of remain critical ongoing trade negotiations. Others of the andactivities recognizeThey theobjectives as andbusiness example, industry hesitation and suspicion among a majority of Members with respect to has therole ofbeen NGOs respect with of andsuspicion Members hesitation amongamajority to influence original aview role with that The theypursue theagenda. advocacy identified aparticular sociations, are usually supportive of themultilateral trading system. areusually supportive sociations, is clear that current WTO practices for interacting with NGOs go far go NGOs with for interacting practices WTO thatcurrent is clear ls, notably through the WTO Secretariat. through theWTO ls, notably quire vision and responsibility onallsides. andresponsibility quire vision 342 often raised sharp differences among governments. The amonggovernments. sharp differences raised often teraction has matured into a more substance-based into has matured amoresubstance-based teraction WTO andgenerally favour anambitiousresult intheWTO inction between “border” and“behind-the-border” between inction ation on all policy matte allpolicy on ation bilateral cooperation have withdelegations, NGOs the multilateral trading system, but have opted for buthave opted themultilateral trading system, inefficiencies in all areas. On theother inallareas. hand, On ainefficiencies ess-oriented relationship evolved primarily which ess-oriented n with andcontributionsn with from civil society those tus within the WTO this is disappointing. However, thisisdisappointing. WTO the tus within approach towards the WTO. Many towardsapproach of theWTO. these, for out the inclusion or exclusion of particular subject subject out theinclusionorexclusion of particular e. The discussion that centres can onwhat follows discussion e.The ensure that therelationship continues to evolvein ach of the multilateral rules and whether ornotach of themultilateral andwhether rules d be highly controversial to envisage a roll back. aroll controversial to highly envisage d be s on a regular basis it is doubtful that aformal basisitisdoubtful s onaregular rs ishardtoimagine.rs Agreement on Sanitary and Phytosanitary Measures. andPhytosanitary Agreement onSanitary 385 384 383 this purpose. that served text Thinking about internal measures in the contextof trade cooperation of concernsInternal that measures because such measures agenda initially may figuredontheGATT be (a) li relevant ofthe much thefeasibility about formation.agenda agnosticism This dimensions onthedesirable of an may views temper thedevelopment that consider will may a number of have factors affected should evolve. section This frame or of will referencecomprehensive howtheagenda to predict analytical itimpossible –render reas two These agenda. of agiven or disadvantages theoretic or conceptual Moreover, well-defined no istheoutcome process. of themultilateral of andscope apolitical trading shape system exact The common and certainly overlap.common andcertainly Both catego taxo thetwo to rights, advance those – andseeking preserving between from thedistinction Apart would apply, for example, to rulesoncompetition. ofsuchafocus. anexample areclearly in Services in shaping themultilateral motivation The trading system. theconditions of has competition increasingly isto played modify arole effect focus onmeasures whose fa measures ofinternal Examples objective. policy to of ameasure isnot directly objective putative they may of concern elements measures that embody or subsidy with discrimination, thecase aswouldbe Internal measures aimed acquired at preserving mark Agreement on Interpretation and Application of Articles VI, XVI andXXIII, XVI VI, of Articles Agreement andApplication onInterpretation motivati This commitments. in order those to protect up weredrawn provisions specified moreclearly and/or market stringent More access commitments. the circumvention thevalue of of existing market –inother access preserving commitments words, with to insufficient control XX andArticle III considered for reason Article One this evolution isthat Members entered themultilateral trade agenda. suppliesdomestic and suppliers of goods Consequently, and services. internal measures have increasingly foreign andmore concerned theconditions internal with of between competition measures that affect can discrimination. The reason for reason theoverlapisthatdiscrimination. an The (national treatment) and Article XX (general except (general XX treatment)(national andArticle III to of trade intheform barriers measures ofArticle thereduction were border days like about tariffs. inmarket made acce tocircumvent concessions used future its evolution. contemplating While affect suchof factors andpossibly theagendain thepast access, but rather to promote further market opportunities. Aspects of theGeneral Agreement onTradeAspects access, butrather market to promote opportunities. further of GATS. XIV orArticle of GATT XX covered byArticle objectives Tokyo theAgreement particularly Round Agreements, market access isinherently linked to theconditions of prevailing competition in therelevantA markets. agenda anddeeper abroader explaining factor A second See the discussion in Section C. as those on customs valuation, import licens import valuation, customs on those as that similaranti-cir isnoteworthy It See, for instance, Howse (2002) and Jackson (2002). andJackson (2002) Howse instance, for See, terature in this area. inthis terature 384 Over the years, the GATT and now the WTO have progressively become andnowtheWTO theGATT theyears, Over cumvention concerns prompted that agreements applied to measures, border such ing and anti-dumping and countervailing duties. andcountervailing ing andanti-dumping 383 ries also encompass measures involving involving measures encompass also ries acquis The same may be said of the TRIPS Agreement, and of theTRIPS said may be same The discriminate, but rather to secure a particular publicdiscriminate, aparticular butrather to secure ions) were the main provisions intheoriginal werethemainprovisions GATT ions) lling into this category include those pursuing the pursuing those include category lling intothis ss negotiations.ss Trade negotiations intheearlyGATT al framework exists for theadvantages analysing al framework exists government procurement Alternatively, provisions. agenda, they cannot provide ablueprint for provide theycannot futureagenda, y internal measure, motivation, whatever its will 343 – that is, protecting acquired rights inamarket rights acquired –thatis,protecting ons – the play of politics and the absence of andtheabsence ons a –theplay of politics nomical categoriesnomical defined above have much in et access rights mayfocus onavoidingexplicit rights et access de facto discrimination,theunderlying facto where de on Technical to Trade Barriers of the andparts on finds its clearest reflection in someof the reflection clearest on finds its of prediction or prescription is consistent with oninternal measures relates to thenotion that here is not to protect existing levelsof market existing hereisnot to protect 385 andintheUruguay Round de jure and de facto andde

II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING WORLD TRADE REPORT 2007 SYSTEM: ACHIEVEMENTS AND CHALLENGES WORLD TRADE REPORT 2007 II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING SYSTEM: ACHIEVEMENTS AND CHALLENGES Economic Community, “specific distortions” between and“general for example, madeadistinction As far as specificity isconcerned, group of orconsumers may suppliers measures far aparticular that target asspecificity As be considered more distorting than measures consideredbe of more distorting negotiated in the WTO. amonginternal consideration that inchoosing measures isauseful might be trade-relatedness whether for to andthus isclearly welfaredetermine governments It maximization. objectives policy for domestic not giveany anddoes indications trade asto flows therelevancemeasures of maythemeasures affect fundamentally,More theconcept oftrade-relatednes of idea therelative “trade relatedness”only provide arather imperfect of different internal measures. therefore can Economists anddata. methodologies existing with may comparison possible not be direct of internal measures of andsuch different a compare types thetrade impact donot directly surveyed suggests aranking of internal according measures suggests to theirtrade impact. onthis discipline. evidence related workandbased measure empirical Maskus to (2002) WTO surveys theargument wo andservices, ofand supplies goods an internal measure is able to affect therelativean internal measure isableto affect more to internal which The negotiation theWTO. within measures subject inidentifying useful should be lightIn of this reality, have that some notions suggested of “trade-relatedness” or“specificity” may be environmentoperating encountered by andsupplies suppliers andservices. of goods thekindsof theconditions access and/or to degree of in a market. competition some affect will It affect 387 386 inte on ofnegotiations context inthe likely toarise attention in the WTO. The SpaakRepo The intheWTO. attention issue negotiation linkage exists. By exchanging co By exists. linkage negotiation issue of cross- concerns –thepossibility andsecurity interdependent –for example, trade policy directly of dimensions multiple involve relations International that issues are entirely unrelated linkages to between marketseek access considerations. orcompetitive for negotiations oninternal measures by iscompounded another consideration may –governments clear ofestablishing difficulty The not clearguidance. yield Economic does analysis investigation. ortheoretical empirical to systematic to subject trade hasdetermining not proximity been criterion. disciplinessubsidy that rely onaspecificity Agreement theWTO similarlines, Along of activity. branches to particular measures ordisadvantageous that were specific were those advantageous Report todistortions” andarguedtheformer address infavour (Sapir, action of concerted 1995). theSpaak In the level of development will become morerelevant.the levelof become will development and traditions climate, regulatory ideology, suchasculturalheritage, factors Country-specific countries. and objectives policy when havealso disadvantages Harmonization level. international because negotiations on internal measures often go in becomes also parties for individual fromnegotiations international andbenefits more become complex, thecalculus of costs cooperation of drawback combiningA possible internal negotiations and(unrelated) onborder measures isthat asthe to environmental global andtrade, problems below. asindicated respect The gains. ofmutual attainment the countries insi ableto may achieve cooperation be Maskus concludes that the empirical evidence on the existence intellectual property rights than rights for of the case environmentalintellectual property measures. See also Howse (2002) on this Howse also point. See ex ante, may facilitate international transa international may facilitate possibility of cross-issue linkage has, with raised for of instance, cross-issue been possibility more multi-dimensional and less certain.This is the case in part rt, the precursor of theTreaty theprecursor of rt, objective criteria for harnessing themultilateralobjective trading system 344 competitive positions ofcompetitive positions foreign suppliers anddomestic rnal measures since the adoption and/or harmonization rnal measures since and/or theadoption general application andth tuations where scope would not otherwise exist for exist wouldnot otherwise scope tuations where on Subsidies andCountervailing Measures develops ncessions across different policy dimensions, two ncessions different across policy 387 appropriate measures across to themdiffer pursue Once again, Once however, asacriterion for specificity interaction. dimensions Even these are when not the direction of harmonizing relevant atthe rules thedirection uld go, the stronger the case for subjecting that for subjecting thecase uld go, thestronger Distributional issues are jurisdictions across more s only indicates the extent to internal which theextent indicates s only of is a trade positive impact ctions and understandings, butmay andunderstandings, ctions Rome establishing the European 386 But the individual studies Buttheindividual erefore more deserving of erefore moredeserving stronger for the of case architecture or desirable distribution of subject mat of subject distribution ordesirable architecture again, Once noconceptualor agreements. framew One risk of pursuing a complex set of negotiations is of negotiations set acomplex riskof pursuing One with thenegotiation outcome once they are in aposi 390 389 388 of for may parties. acost rules represent some category, these standards are likely to be too lax in the country that produces and exports thegood. that andexports produces inthecountry arelikely lax too to be standards these category, to ov intended ofstandards that inthecase shown outcomes. may have discussion affected inthis raised introductory andhowthedifferent factors trading system inte on negotiations ofhow illustrative rather but choice hereisbynomeanscomprehensive, of internal The environmental protection. measures discussed andphytosanitar sanitary standards, product standards, policy, competition include labour inmore These detail. are discussed ortheWTO of theGATT context taken place inthe has actually of adebate which areas inrespect of anumber policy follows, what In tothisquestion. below, inrelation areatplay many considerations Agr theWTO ofdefinition therelationship between Bringinginternal measures (MEAs). of multilateral inthecontext andenvironmental Organization standards environmentalLabour agreements attheCo arenegotiated standards international a –within fora, –butnot always often offorum. thechoice from separate ornot to whether embrace question The international negotiations oninternal measures is,of course, inve of attracting enhanced prospects itenjoyed orwhen intensive goods, of R&D to anetexporter anetimporter from being it changed of internationalbenefits rulesonintellectual proper countries dr thebenefits positions, in competitive the value of negotiated outcomes is also likely to may want theydidnot to recover theybelieve what be maythen negotiations Future outcomes. revealed defended by export industries are optimal for the exporting country itself. country for areoptimal theexporting industries byexport defended of negotiations measures.in thecase particular, that onborder In positions thecase itisnot necessarily on ofnegotiations generally,More thewelfare effects emerging from trade negotiations. a transfer, to trade, not related elements apackage within directly orabalance might found be directly fashion. insome are compensated ifthelatter viable could Such made may compensation comprise be win- thatentail level global atthe situations Win-win isrequired to inorder else terms, ensure of indistributional something cooperation. theviability parties for some implications inter-jurisdictional negative carry inrule-setting involved commitments the where outcomes dilemmas and to facilitate win-win prisoners’ would be considered in the WTO. But numerous consideredwould be intheWTO. kindsof internal measures are negotiated indifferent See Howse (2002) Howse onSee the interests in role the of of stance export the United States during the UruguayRound property rights. property agenda and Maskus on the WTO (2002)policy on the relevan promotion to on in policies the put the rolecompetition attempts of export negotiations, and (2004) Saggi Hoekman terms of co national being sovereignty See Sturm (2006). Costs are here referring to reductions in toreductions referring arehere Costs The discussion above has implicitl above discussion The dex Alimentarius Commission, labour standards at the International atthe Commission, standards labour Alimentarius dex mpromised by international agreements. agreements. byinternational mpromised into themultilateral trading sy stments intensive inhightechnology. intensive stments economic welfare. See Bagwell and Staiger (2004) for an analysis of costs in 388 change over time. With economic growth andchanges overtime.change growth economic With If international cooperatio international If aw from certain international rulesmayaw fromchange. certain The ercome information asymmetries in a certain product product ercome inacertain information asymmetries that some negotiating partners may be disappointed disappointed maybe partners negotiating thatsome rnal measures have evolved within the multilateral the within haveevolved measures rnal come even more complex because some participants participants some come evenmorecomplex because receive in previous negoti inprevious receive ty would, for instance, increase for a country when would, for for acountry increase instance, ty ork exists for determining an optimal international anoptimal for determining exists ork ter among institutions. As shown inthediscussion shown As ter amonginstitutions. eement and other relevant standard-setting bodies bodies andothereement relevant standard-setting internal measures may not be as straightforward as internal asstraightforward maynot be measures specialized international organization. Food safety safety Food organization. international specialized loss relationships at the level of individual parties, parties, relationshipsatthelevelofindividual loss –inother words,to welfare improve global –then 345 tion to evaluate it full ce of US export interests for negotiations on intellectual intellectual on negotiations for interests ce ofUSexport y measures, intellectual property rights and rights property intellectual y measures, y assumed that such negotiations stem therefore also calls for therefore calls astem also 389 ations. On theother hand,ations. On It has, for It instance, been n is intended toeliminate n isintended y, of includinginterms 390

II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING WORLD TRADE REPORT 2007 SYSTEM: ACHIEVEMENTS AND CHALLENGES WORLD TRADE REPORT 2007 II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING SYSTEM: ACHIEVEMENTS AND CHALLENGES affecting trade, althoughitcontained to nogeneral obligation law. acompetition adopt affecting Havana The nature. including arequirementto po practices, for members Havana anentire contained Charter chapter,The also Chapter business V, of restrictive onthesubject III imposes restrictions on the discriminatory use of internal use onthediscriminatory measures by Members. restrictions imposes III Box 23for therelevant text. legal andarenot u intheArticle, that arelisted objectives gives some flexibility in the use of domestic policies as long as they are used to pursue specific policy played different roles intrade negotiations andtrad intheHavana Competition Charter andlabour policy have protection of timetheissues environment,Over property labour, and intellectual policy competition evolving An from trade ITO agenda: to WTO (i) (b) 392 391 But as discussed earlier inthis study,But asdiscussed ratification of issues. forCharter provided intergovernmental also policy oncompetition cooperation industrial or intellectual property laws. Article 70 Article laws. property intellectual or industrial under patent, andmaintain mark,copyright trade orsimilarrights to obtain necessary asmay be product of such minimum 21 shouldnotquantities prevent of a theimportation thatArticle provided Members andto theenvironment rights were limited intheHavanaReferences Charter. property to intellectual astheGATT. known that became on trade ingoods What national andwasneveradopted. legislatures rules contained in GATT Article XX, Article contained inGATT rules similarto Provisions naturalresources. exhaustible ofexhaustible conservation tothe solely relate that Havana Charter stipulated in Article 7: inArticle stipulated Charter Havana to theformer reference the explicit 1940s made respect to policy. andcompetition With bothlabour Indeed, the approach taken in the GATT text to disc text taken theapproach intheGATT Indeed, approach takenapproach inChapter of theHavana Charter. IV The national The treatment provisions of the GATS are more co recognize that all countries have a common intere haveacommon allcountries that recognize with that organization in giving effect tothisundertaking.” effect ingiving thatorganization with of theInte members are which also (2) Members territory.conditions its within shall may be take whatevereach Member action in international create difficulties trade, for export, in production and, accordingly,particularly recognize that unfair Members conditions, The labour may permit. conditions asproductivity andth to productivity, related standards labour the rights of workers inter-governmentalthe rights under declarations, conventions They andagreements. recognize“(1) that measures Members relating to take The must employment fully into account See, for instance, Anderson and Holmes (2002). andHolmes Anderson instance, for See, formally different treatment. 391 The Charter would have required its members to act against anti-competitive behaviour anti-competitive against to act Charter members wouldhaveThe required its 346 foresaw flexibilities for commodity controlforesaw flexibilities for commodity agreements these allfound theirway intothese exceptions thegeneral natural resources, and Article 45 reference made toArticle natural and resources, survived of theCharter wasChapter IV,survived thechapter e cooperation. The Havana CharterThe conceived inthe e cooperation. the1947 insome Havana Charter difficult proved njustifiably discriminatory or restrictive of trade. See orrestrictive njustifiably discriminatory us in the improvement of wages andworkingus intheimprovement ofwages Like Article 18 Article of the Havana Charter, GATT rnational Labour Organization shall co-operate shall co-operate Organization rnational Labour st intheachievement andmaintenancest of fair iplining the use of internal measures reflects the reflects measures ofinternal use the iplining lice anti-competitive practices of aninternational practices lice anti-competitive appropriate and feasible to eliminate such toeliminate andfeasible appropriate mplicated, since they contemplate formally identical and 392 GT Article XX GATT be construed to of prevent construed orenforcement measures: theadoption be byany party contracting oninternationalconditions prevail, trade, restriction nothing oradisguised Agreement inthis shall orunjustifiableconstitute di ameans of arbitrary o 3 ATAtceXX Article GATT 23: Box ( ( ( ( ( ( ( ( ( ( f a e d c i h b g j ) involving restrictions on exports of domestic materials necessary to ensure essential essential ensure to necessary materials domestic of exports on restrictions involving ) ) essential to the acquisition or distribution of products in general or local short supply; short ingeneral orlocal to essential of theacquisition products ordistribution ) ) imposed for the protection of for national orarchaeological historic imposed theprotection treasures of artistic, ) ) relating to the importations or exportations of gold or silver; or ofgold exportations or importations relating tothe ) Subject to therequirement thatSubject such measur ) necessary to protect publicmorals; to protect necessary ) ) relating to the products of prison labour; of prison relating to theproducts ) ) undertaken inpursuance of obligations undertaken ) ) necessary to protect human, to animalorplant protect life orhealth; necessary ) ) relating to the conservation of exhaustible natural of relating exhaustible toifsuch resources measures theconservation are made ) ) necessary to secure compliance to secure orregulations laws are with which not inconsistent with necessary ) o ae hn3 ue1960. June thannot later 30 enforcement of monopolies operated under paragraph 4 of Article II and Article XVII, XVII, andArticle II enforcement paragraph under 4of operated Article of monopolies agreement which conforms to criteria submitted to the CONTRACTING PARTIES andnot PARTIES conformsagreement which to theCONTRACTING to criteriasubmitted ceased to exist. The CONTRACTING PARTIES shall review the need for thissub-paragraph theneed shall review PARTIES CONTRACTING The toceased exist. Agreement as discontinued shall be assoon and that areinco any which suchmeasures, are entitled share to anequitable ofparties theinternational supply of such products, provisions of this Agreement relating to non-discrimination; from the andshall industry, not depart to such domestic afforded of ortheprotection plan; stabilization price ofdomestic such materials of agovernmental theworld price is aspart heldbelow the when duringperiods quantities of such materials industry processing to adomestic disapproved;* andnot so submitted so isitself bythemorwhich disapproved Provided effective in conjunction with restrictions on domestic production orconsumption; production ondomestic restrictions inconjunction with effective value; practices; andtheprevention of andcopyrights, deceptive trade marks of patents, the protection the provisions of this Agreement, including that any the principle that such consistent allcontracting measures with shall be Provided that such restrictions shall not operate to increase the exports shall not to operate theexports increase that such restrictions General Exceptions Article XX scrimination between countries thesame where scrimination between 347 es arenot inamanner would which es applied under any intergovernmental commodity commodity any intergovernmental under those relatingthose to enforcement, customs the theconditions giving rise to themhave nsistent with the other provisions of the provisions other the with nsistent

II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING WORLD TRADE REPORT 2007 SYSTEM: ACHIEVEMENTS AND CHALLENGES WORLD TRADE REPORT 2007 II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING SYSTEM: ACHIEVEMENTS AND CHALLENGES the concept of negoti harmonization inthenewly The plurilateral TBT Agreement TBT plurilateral The to lower standards andthat such countriesto should, lowerstandards had which achieved high health argued that Members 46 signatories. 46 agreement from emerged theUruguay Round negoti standards arevised when themid-nineties, By procedures. assessment andconformity standards 1980. for rules thepreparation,January laiddown It a harmonization principle. international norms. toinvoke thisexception difficult human, to protect animalor plant to life make countries orhealth. proposed Some itmorenecessary GATT Article XX (b) had been designed to allowM designed had been (b) XX Article GATT multila of succession a through down came tariffs As Agreement The onTechnical toTrade and theAgreement Barriers on (TBT) (ii) 398 397 396 395 394 393 were of not origin) sufficient marks (on andIX III Article to trade. barriers itwasargued this that context In GATT asunnecessary did not act for concerned to rules theneed discussions of these theTokyo werelaun In discussions Round, measures. the border. andenforcement From aninspection po The SPS Agreement specifies in Annex Athat intern inAnnex Agreement specifies SPS The that standards had to justify importers and instead were “safe” that wouldhave theirproducts to justify that exporters words, were suggestions rejected of onplacingtheburden insisted justifiable through scientific evidence. wasmainly It arequirement that with emerged agreement An negotiations. byso sought may not achievethelevelof protection stringent than those agreed internationally. agreed than those stringent ot In not be undermined by product regulations. Thus, disc Thus, regulations. byproduct undermined not be through theconversion of non-ta gained inthat sector wanted to duringtheUruguay ensure Round, Members in theagricultural that themarket sector access forand measures theprevention of diseases, or pests from animalsandplants diseases, plant-carried or animal- from humanhealth risks, human andanimalhealthfrom to measures food-borne protect with Agreement dealt Uruguay RoundSPS addition, In the methods. andproduction onprocess provisions coverage to its certain and broadened Agreement andclarified strengthened th TBT WTO The internal measures. measures,to border eventhoughdefinitionally theyar eeefcieysprtdfo h B Agreement. from theTBT separated were effectively MTN.GNG/NG5/W118. See (2007). WTO BISD 26S/8 (1980). This agreement isal agreement This (1980). 26S/8 BISD See European News Agency (1975). See Abdel Motaal (2004), Croome (1995). Croome (2004), Motaal Abdel See See discussion in Abdel Motaal (2004). Motaal inAbdel discussion See Sanitary and Phytosanitary Measures (SPS) Measures andPhytosanitary Sanitary 395 Technical regulations and standards regarding products can often be controlled at controlled be often can products Technical regarding andstandards regulations 397 Indeed, the United States suggested amendments to Article XX (b) to incorporate (b) XX theUnited Indeed, States to amendments Article suggested 398 Ultimately, it was decided to leave Ar toleave Ultimately, itwasdecided 394 was signed attheendofTokyo wassigned by allowing derogation from therules only for measures on based proof regarding scientific evidence on importing countries. other In onimporting scientificproof evidence regarding to outcome. achieveanappropriate other damage from pests. As more stringent rules wereintroduced rules morestringent As from other pests. damage so referred to referred so astheStandards Code. 348 her words,thenotionth ational standards are those developed bytheCodex developed arethose ational standards deviations from international standards shouldbe frominternationaldeviations standards were more stringent than international weremorestringent standards. 396 therefore, allowedto be the Cairns group of that agricultural had producers ated SPS Agreement. Europeanated SPS The Communities adoption andapplication of technical regulations, ensure that packaging and labelling requirements requirements andlabelling ensurethatpackaging ations, theTokyo RoundAgreement had attracted ched on a Code of Standard Practices. One aspect onaCodeched aspect One of Standard Practices. iplines tailored for agricul tailored iplines int of view, suchmeasur me countries was explicitly raised duringtheSPS raised me countries wasexplicitly teral trade rounds, attention shifted to non-tariff to non-tariff shifted teral traderounds, attention riff measures into ordinary customs duties, would duties, customs into ordinary measures riff standards would find it difficult to accept moving wouldfinditdifficult standards embers to deviate from GATT rules ifthiswas rules fromGATT to deviate embers e generally treated asfalling treated therubricofe generally within rvsoso h oy on B Agreement Tokyo ofe provisions the RoundTBT ticle XX (b) unaltered andtoenshrine unaltered (b) XX ticle Round andentered into force on1 393 apply SPS standards more standards SPS apply at international standards tural product regulations tural product es thereforees come close by the World Intellectual Property Organization (WIP Organization Property Intellectual World by the countriescountries theConvention. to were amongthefirst ratify Today theConvention isadministered world increasingly considered of theParis that Convention thestandards were weakto too provide –that is,itcontains anationalowners Convention treatmentThe provision. contains also anumber of ParisConvention no The do that members requires from1886. dates byWIPO, administered also copyright, has 171 74 parties, contracting of ratified whom it Brazil, inothercountries. Tu commercially exploited wassigned Property ofIndustrial for theProtection International for concerning Convention Plant issues Protection plant health. (IPPC) between incorporated and non-incorporated PPMs, where the latter do not leave traces in the products not do leave traces thelatter intheproducts where PPMs, incorporated andnon-incorporated between controll be cannot PPMs necessarily characteristics, to product opposed As (PPMs). methods reference – theexplicit andproduction to process system legal characteristics of thefish that regulations arecharacteristics caught. at Working orsafety theworkplace hours donot 402 401 400 399 patent to protection WIPO. fromtheUSPatent and Trademrepresentatives adequate international patent thelate In protection. 1970s a number of pharmaceutical companies and time,Over to bu given patents. the levelof protection free butleaves members minimumstandards, important International of Inventions Exhibition in1873 inVienna outof fear and stolen that wouldbe theirideas the to refused foreign attend when evident exhibitors had become property of intellectual protection Agreement TRIPS The for alongtime. Paris has Convention existed issues The property International onintellectual cooperation (iii) of the andtheSecretariat –for animal healthandzoonoses (OIE) forWorld Health Animal Organization the issues, Commission safety for food Alimentarius that can easily be detected. be easily that can Agreement brought Agreement andtheSPS TBT WTO The not take place institution. thesame within isthuscooperation likely to take place evenifnegotiations are onboth issues linked not explicitly anddo betwee Interaction politicized. were increasingly ininternational st SPS Members forstakes WTO continue of avoluntar to be standards binding. Their thescientific community, outside attention b little to receive tended bodies standardizing of thethree for (1998), arguethat instance, activities Johanson non-incorporated PPMs attheinternational PPMs straightforward. levelistherefore less non-incorporated to related of rules andenforcement that inrespect areproduced. Inspection thegoods affect necessarily The Advisory Committee on Trade Policy Negotiation, a US body created to provide business advice on advice business to created provide onTrade Committee aUSbody Negotiation, Policy Advisory The All three standardizing bodies were bodies three standardizing All the WTO andtheinternational remain separate institutions, thereference bodies standardizing the WTO to trade matters to thePresident, agenda. consequently placing ontheGATT theissue trade suggested matters standardizing bodies in WTO legal texts appear texts legal inWTO bodies standardizing The TBT Agreement also encourages Members to thei base encourages also Agreement Members TBT The See Abdel Motaal (2004). See Ryan (1998). See, for instance, Abdel Motaal (1999). Motaal Abdel instance, for See, Members to play an active role in role to playanactive Members Agreement does notmake reference to explicit does Agreement 402 401 But developing countries vehemently opposed changes to changes theConvention. countries vehemently Butdeveloping opposed Fishing methods, for instance, do not necessarily have an impact onthe have animpact for notFishing methods, instance, do necessarily the development of such standards. Contrary to the SPS Agreement, theTBT Agreement, Contraryto theSPS ofsuchstandards. the development established priorto theadoptionestablished any particular internatio any particular s to have affected theirway of working. s to have affected ecause the standards they promulgated werenot theypromulgated legally thestandards ecause ark Office took their case for minimum standards of for minimumstandards theircase took ark Office n cooperation oninternational andtraden cooperation standards andards became higher,andards became andal ed at the border. A distinction is sometimes made attheborder. issometimes ed Adistinction nisia, theUnited States andanumber of European O), which was established in1970. wasestablished which ConventionO), The siness people and policy makers intheindustrialized andpolicy people siness y nature, Agreement, the butasaresult of theSPS International Office of Epizootics – now called the of Epizootics –nowcalled International Office t discriminate against foreign industrial property property foreign industrial against t discriminate after 1990. Convention Berne after The inthefieldof as early as1883,as early for international theneed after 349 r internal measures oninte r internal measures to determine the main standards thatregulate mainstandards the todetermine an important newelement into themultilateralan important nal standard setting body. setting standard nal of the SPS Agreement. of Although theSPS rnational standards andurges rnational standards l three organizationsl three 399 400 Stewart and Stewart

II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING WORLD TRADE REPORT 2007 SYSTEM: ACHIEVEMENTS AND CHALLENGES WORLD TRADE REPORT 2007 II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING SYSTEM: ACHIEVEMENTS AND CHALLENGES The Uruguay Round mandate on TRIPS that wasagreed Uruguay RoundmandateonTRIPS The and thecompetence of the GATT. we countries developing argued that such matters Most underlying public policy objectives of national IP systems, including developmental andtechnological including developmental of national systems, IP objectives publicpolicy underlying inthenegotiatio understandings: to important three wassubject andtransitional Agreement governments; points arrangements. onthese disputes between meansfor andappropriate theirenforcement; effective prot of basicprinciples IP elements: following five to acomprehensiv include wouldneed the negotiations 1989. inApril agreed review mid-term Round Uruguay Differences regarding thenegotiating mandate were es substantial. be could patent rights bystronger induced manufactures andhigh-technology goods of manufacturing imports patent like terms andpractices unauthorized copying. to referred for instance, submission, US The rights. emphasizing property theyencountered intellectual thetrade problems with inconnection Group in1987, of anumber to submissions theNegotiating In by countries theircase made developed Underlying the inclusion of intellectual property property ofintellectual inclusion the Underlying 406 405 404 403 on trade flows was later confirmed by academic studies waslaterconfirmed byacademic on trade flows other framework. implemented orsome prejudice wouldbe without intheGATT to the results whether undertaken be toreduce as so procedures multilateral through issues a provision toa provision “clarify andelaborat provisions GATT commitment to negotiate amultilateral framework deal by other countries, most developed in particular property intellectual on negotiations broad-ranging Th property. of intellectual for theprotection standards of minimum set abletowould not be realize worldwide afunctioning theircomparative without advantage characterize and/or and creativity butingoo products, manufactured technology standard enforce them did not themselves be enforce didnotthemselves them andto ensure to that andprocedures measures of IPRs, protection andadequate to promote effective to inte andimpediments distortions to reducing view discussion. Many countries developed argued that new of them thenegotiations, years two During thefirst the subsequent negotiation of the TRIPS Agreement wa the subsequent negotiation of theTRIPS in order to ensure that trade was not distorted and to promote the effective and adequate protection of IPRs. of IPRs. protection andadequate andto to promote ensurein order theeffective that wasnot trade distorted objectives; on the importance of co strengthened onthe importance objectives; of WTO Members that theircomparative ininternational advantage Members trade lay not inrawof materials WTO orin The submission referred to estimates provided by the In bythe provided toestimates referred submission The the multilateral is facilitated trading by system thethat fact enforcement through dispute is, resolution in ofTRIPS MTN.TNC/11. Agricultural on faced the losses Chemicals by due industries to Association unauthorized copying or of use copy- proceedings atparticular isaimed copying where ofIPRs, case in the ofco assignment the Indeed, task. amanageable principle, See Maskus and Penubarti (1995) Maskus andPenubarti See patent terms together with the lack for of protection product pharmaceuticals. MTN.GNG/NG11/W/7. See righted works. It also made reference made also provided It torighted estimates works. See Croome (1995). Croome See 406 403 and Maskus Maskus (2002). (2002) ma also d by high quality and reputation. These Members believed that they believed Members These andreputation. d byhighquality They maintained that WIPO was the appropriate forum. appropriate wasthe thatWIPO maintained They estimates produced by industry bodies on losses faced due to limited due faced losses on bodies byindustry produced estimates come barriers to legitimate trade. tolegitimate barriers come 350 theEuropean Communities, JapanandSwitzerland. as atopic for intheUruguay negotiation Roundand ection; adequate substantive standards of protection; of protection; standards adequate substantive ection; in the GATT framework joined andwassubsequently in theGATT products and technology that and technology may identified be products through court mmitments to resolve disputes on trade-related IP disputes to ontrade-related resolve mmitments eaning of this mandate was the subject of extensive of extensive eaning of thismandatewasthesubject rules for IPR protection andenforcement protection for rules IPR wereneeded e as appropriate new rules newrules e asappropriate ns appropriate consideration would be given to given the considerationns appropriate wouldbe ternational Intellectual Property Alliance and the National National andthe Alliance Property Intellectual ternational re outside both the mandate given at Punta del del Este atPunta themandategiven both re outside rnational trade, into and taking account theneed tensions in this area; and the negotiations would negotiations andthe area; inthis tensions 404 mmercial to damages appears relatively be straightforward at Punta del Este in September 1986, contained a contained 1986, September in Este del Punta at e agreement on intellectual property, covering the property, e agreement onintellectual ing with trade in counterfeit goods andcontained goods trade incounterfeit ing with by US pharmaceutical companies of losses due by to US pharmaceutical companies limited of losses Participants agreed that a successful outcome that asuccessful agreed to Participants 405 s a growing perception on the part of anumber perceptions agrowing onthepart ds and services that were intensive in technology intechnology intensive that were ds andservices e United States initially theleadinseeking took sentially resolved as part of of thepackage the aspart sentially resolved procedures for themultilateral of settlement The importance of the possible impact ofIPRs impact ofthepossible importance The , which showed that the estimated changes in changes estimated thatthe showed , which kes the point that inclusion of IPRs in ofIPRs thatinclusion kes point the and disciplines” a with agreements established after the TRIPS Agreement, li theTRIPS after established agreements The inclusion of the TRIPS Agreement inclusionof theTRIPS The Some observers have argued that the area of IPRs is IPRs of area the that argued have observers Some ontheimplic of debate. Muchof thishas focussed to the Agreement calls for a mutually supportive re to for theAgreement supportive calls amutually andenforceminternational for theprotection standards Convention andtheBerneConvention. Agreement substantial new outsome set addition,TRIPS In the incorporated in the TRIPS Agreement, and WTO Members are under no obligation to noobligation are adhere under to them. Members Agreement, andWTO incorporated intheTRIPS Third, developing countries’ acceptance of theTRIP Agreement andPublic Health. TRIPS s dispute settlement offrom theWTO theoperation reference many of theprovisions of thethenexistin theinternational builtupon framework for text This 1994. atMarrakesh andadopted approved inApril 410 409 408 407 anddevelopingdeveloped countries. thereafter, aheadrapidly workmoved bySubstantive number of of proposals thesubmission alarge with clear atthetimeof theUruguay Roundnegotiations ofdi of law, resolution rule multilateral the including flexibilities have resulted clarifications of TRIPS important Some objectives. and other public policy syst property theirintellectual to fine-tune Members Second, theAgreement of contained balanc elements Round. Uruguay ofthe conclusion for the important tohavebeen seem linkages cross-issue words, other In inot to countries gainadvantages developing hoped of resu package of abroader part was anessential Agreement outbelow. areset countries to accept theTRIPS However, four ofabsence TRIPS. considerations that may have playedby developing arole inthedecision of thecounterfactual, namely thesituationentail what wouldhave makinganassessment inthe been short-run. of andhave prospects limited production, of IPR-embodied countries thatdeveloping arenetimporters arelikely to industries intensive andexport-oriented followed different needs for IPR, andinparticular, for patent protection. needs IPR, different have ofdevelopment very countries stages atdifferent because consequences significant distributional yteErpa Community, United States, agroup of 14 countries, developing andJapan Switzerland by theEuropean A full analysis of these implications is beyond th isbeyond implications ofthese A fullanalysis First, in the latter phases of the Uruguay Round negotiations, it became accepted that the TRIPS Agreement phases of inthelatter theUruguay accepted Roundnegotiations,First, that itbecame theTRIPS attracting high-technology industries, industries, high-technology attracting For example Deardorff (1998) and Howse (2002). (2002). andHowse (1998) Deardorff example For See Deardorff (1998). suggested that WIPO be given the responsibility ofdeterm responsibility the given be WIPO that suggested section, this in discussion the of context the In 33/Rev.2. and byChile (MTN.GNG/NG11/W/ the submission isofinterest MTN.GNG/NG11/W/32/Rev.2 documents in Summarized MTN.GNG/NG11/W/68, 70, 71, 73, 74 respectively. intellectual property standards. In case In standards. property intellectual Group to WIPO intheNegotiating made because of their similarities to the approach taken in the SPS Agreement. SPS inthe taken approach tothe similarities oftheir because or not there had “trade-related been effects”. Chile’s Although suggestions were not accepted, they are interesting 408 410 , and the text negotiated bytheendof 1991 negotiated , andthetext 407 in the multilateral trading framework has given rise to a good dealin themultilateral trading to framework agood rise has given s of non-application, GATT panelswo GATT s ofnon-application, are likely from to regime, inthe aninternational lose atleast IPR Intensive negotiations on the basis of draft legal texts submitted submitted texts legal onthebasisof draft negotiations Intensive , in order that the latter wouldad that the latter , inorder S Agreement may reflect apreference forS Agreement themultilateral may reflect one where aharmonized of onewhere international set has rules lationship between the WTO and WIPO. International andWIPO. theWTO lationship between e scope of this discussion andinany event of thisdiscussion woulde scope g international agreements on IPRs, notably theParis notably g international onIPRs, agreements lts of theUruguay from Roundnegotiations, whichlts gain from increased patent protection, while many while patent protection, gainfrom increased that there was no longer a functioning internationalthat afunctioning there wasnolonger ems inthelight of publichealth their development, ke the WIPO Copyright Treaty,ke theWIPO arenot automatically ations ofAgreement the for countries. developing ystem, and also from theDoha onthe andalso Declaration ystem, sputes, in the area of intellectual property. It was It sputes, property. inthearea of intellectual IPRs that existed at the time and incorporated by andincorporated time atthe thatexisted IPRs 61). Chile suggested forwarding the proposals on standards onstandards theproposals 61). forwarding Chile suggested e and flexibility which allowed developing country country developing allowed which e andflexibility her areas – in particular agriculture and textiles. agriculture andtextiles. her areas–inparticular 351 ining cases ofnon-applicatio ining cases ent of intellectual property rights. The Preamble The rights. property ent of intellectual was very close to theonethat close wasfinally wasvery 409 Developed countries with important R&D countries important with Developed minister the new standards. Chile also thenewstandards. minister uld, upon request, uld, upon n of internationally-accepted n ofinternationally-accepted determine whether determine

II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING WORLD TRADE REPORT 2007 SYSTEM: ACHIEVEMENTS AND CHALLENGES WORLD TRADE REPORT 2007 II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING SYSTEM: ACHIEVEMENTS AND CHALLENGES agreements and related instruments inanumber of sp and related instruments agreements to anumber of WTO ispertinent thesubject WTO, inthe agreement policy oncompetition dedicated ofpolicies harmonization increased do system legal WTO the into incorporated texts legal GATT Charter. Havana The original the in included requires some Members to adapt domestic institutions in order to comply with WTO provisions. to institutions to inorder adapt domestic comply WTO with Members requires some market-oriented reforms that were being undertaken at undertaken reforms thatwerebeing market-oriented Finally, could promote that protection domestic enhanced another may thebelief factor haveIP been measures. tradetensions, to includingunilateral widespread rise trade andthiswasgiving property, intellectual of foreachother’s shouldprovide theprotection to trading which partners theextent consensus about strongest conclusion that can be drawn from it is that more research and analysis isnecessary. andanalysis fromitisthat drawn moreresearch conclusion be that can strongest inthisregard, the althoughperhaps literature the empirical to role for to point apositive IPRs appears transf the on impact isthe important ismore what bydomestic of thepatent intheuse system increases of large thereisevidence Asia, andSouth in East creativity and inventiveness as well as the transfer of technology and FDI, within the context of themore thecontext within andinventiveness aswellthe transferFDI, creativity and of technology firms and residents, as well as increased ininvestme asincreased aswell andresidents, firms 411 inachapter that over wasnot carried policy competition Internationa previously indicated, thestill-born As mergers. of adominant abuses andanti-competitive position such ascartels, practices anti-competitive Competition Policy thebehaviour with deals Competition policy (antitrust) (i) environment competition, with dealing policies domestic for role What (c) Third, givenits Members. of exporting the territory internalwith sites within potentially implementation measures can verifiedonproduction whose onlybe andproduc to Agreement areapplicable process TBT Agreement andthe theSPS both Second, andpatents. related to rights trademarks property intellectual standards”, granted for be will for forprotection which example, ofyears thenumber asitdefines, Agreem TRIPS The for Health. World Animal Organization bodies reference to setting international standard character. different a significantly theSP First, went Uruguay steps several RoundAgreements The intheprepar possible the extent to applyrelevantencouraging internationa Members in theinternational Agreement trade framework. The therefore andcan the border considered be anatura produc with Agreementthe plurilateral dealt level. The to approach moreinclusive a partially Agree of theTokyo theintroduction With RoundTBT disciplines wouldbe policies asto domestic which onharmonization not disciplines contain any specific Labo policies. ofdomestic towards types different measures internal of role the of summary of cooperation trade limits the short towards This Changingapproaches (iv) See Fink and Maskus (2005). FinkandMaskus (2005). See and labour? ation of international standards. standards. ofinternational ation at the global level. The SPS Agreement this by makingexplicit does SPS level.at theglobal The harmonization of national regula ofnational harmonization 352 S Agreement and the TRIPS Agreement both brought both Agreement andtheTRIPS S Agreement in conflict with the GATT and which wouldnot. andwhich theGATT with inconflict ur standards and competition policy were explicitly wereexplicitly policy andcompetition ur standards l Trade Organization (ITO) contained provisions on provisions contained Tradel (ITO) Organization nt in R&D. However, countries, for manynt inR&D. developing explicit reference to IPR rules, the TRIPS Agreement reference explicit rules,theTRIPS to IPR like CommissionAlimentarius theCodex andthe in trade negotiations illustrates distinct approaches approaches distinct illustrates negotiations in trade l standards where theyexist where l standards er of technology, Overall, includingthrough FDI. of internal measures, and merely stipulate general made explicit reference to international standards, reference standards, tointernational explicit made l candidate forl candidate theinclusionof internal measures tion methods, implying that WTO provisions deal that implying WTO tion methods, ment, trade cooperation went in the direction ofment, went trade cooperation inthedirection further andgave themultilateral trading system further the time. developi some In into theGATT. there isasyetnoequivalent While of enterprises and, specifically, theregulation of ecific ways. First, under each of the three main eachof thethree under First, ways. ecific t characteristics that can often be controlled at be often that can t characteristics ent itself contains such international “minimum suchinternational contains ent itself tion, but this happened only attion, only butthishappened ng countries, especially and to collaborate to andtocollaborate 411 plurilateral Agreement. Agreement onGovernment Procurement andtheTRIPS that impacts adversely on trade and/or competition ontrade and/or adversely that impacts contain provisions authorizing agreements part of WTO Paper” which contains competition safeguards and regulatory principles in this sector. Fourth, anumber principlesinthis sector. Paper” contains which safeguards competition Fourth, andregulatory Working Group on the Interaction between TradeWorking between Group ontheInteraction and number of WTO Members in regard to basic telecommunications services intheform of the“Reference inregard to basictelecommunications services Members number of WTO Ministerial Conference 1996, inDecember to aninitiative inresponse of theEuropean Communities. A and related instruments – notably the GATS (Article theGATS –notably (Article and relatedinstruments Agreements also contains broad rules onnon-discri contains rules broad also Agreements may relate, measure, insome trade. atleast to national that affect policies competition competition. on of trade policy theimpact and, (v) investment policy; andcompetition therelationship between (iv) policy; andcompetition rights property ofintellectual aspects trade-related the between relationship policies andregulatory exclusivemonopolies, rights, ofcompetitive of state practices oninternational enterprises theimpact andassociations (ii) trade; of anti- theimpact (i) trade andcompetition policy: dimensionsspecific of theinteraction between by such cartels ontheworldeconomydeveloping countries, and,by specifically such have cartels shown been inthegl of such arrangements andeffects extent of (i.e. internationalto price-fixi theimpact cartels Restrictive Business Practices (“the Set”) adopted in1980. adopted (“the Set”) Practices Business Restrictive of MultilaterallyAgre Set Nations of theUnited heart of non-tariff andtheliberalization of tariffs reduction ornegate ther donot impede practices competitive 419 418 417 416 415 414 413 412 inthis section. to thediscussion respect prac of anti-competitive –theimpact point first The any areasand to that identify might merit fields policy relating to ofthe mandate thetwo theinteraction to considerraised by Members issues wasraised attheSingapore WTO inthe of thetreatment general question The of policy competition practices. situations may involve anti-competitive incertain trade which to applicable ispotentially Understanding Settlement procedures practices. for consultations onanti-competitive andcooperation –theGA system that makeagreements uptheWTO to this mandate, in the first two years of its wo of its years two to thismandate, inthefirst tnad eaigt pcfcat-opttv rcie r otie ncrano h T Agreements WTO of the are contained incertain practices relating anti-competitive tostandards specific World Trade Organization (1997). See, for pertinent commentary, Ehlermann and Ehring (2002). andEhring Ehlermann commentary, (1997). pertinent for Trade See, World Organization For example, For in of cases a failure to adhere either to broad rules or the on to above-noted non-discrimination With regard With to the third Agreement recognizes item specifically noting it that is that worth the competitionTRIPS respect to the GATT); GATS, Article IX; and the TRIPS Agreement, Article 40. Agreement, Article and the TRIPS GATS, IX; to Article the GATT); respect Singapore Ministerial Declaration, Paragraph 20. Paragraph Declaration, Ministerial Singapore between Trade and Competition Policy (WT/WGTCP/2, 8 December 1998), Annex 1. Annex 8 1998), December Tradebetween and Competition (WT/WGTCP/2, Policy Interaction the on Group Working ofthe (1998) study,” for inReport suggested reprinted “Checklist ofissues See See, respectively, other practices. practices. other licensing and of property abuses role intellectual to has play anti-competitive against an in important protecting policy Telecommunications Services in panel ofthe report the connection, Paper. inthis See, Reference GATS andthe to the treatment of respect with the minimum standards Practices’, http://r0.unctad.org/en/subsites/cpolicy/docs/CPSet/cpset.htm. Business Control ofRestrictive the for andRules Principles Equitable Agreed ofMultilaterally Set ‘The Nations, United See, for details, World Trade Organization (1997). Trade World Organization details, for See, 418 Decision on for Arrangements Consultations Business on Practices Restrictive , WT/DS204/R, adopted 1 June 2004. 1June adopted , WT/DS204/R, 419 In the discussions onthis item thediscussions In further consideration in the WTO framework. consideration intheWTO further rk, theWorking onthefollowing five Group focused ng and similar arrangements). Note wastaken Note of the ng andsimilararrangements). mination, andprocedural fairness transparency which obalizing economic environment. The costs imposed imposed economic environment. costs obalizing The measures attributable to governments and affecting to andaffecting governments measures attributable ealization of the benefits that shouldflowfrom theealization of thebenefits TT, the GATS and the TRIPS Agreement –thereare TT, theGATS andtheTRIPS . These include the Anti-dumping Agreement, the theAnti-dumping include . These ed Equitable Principles andRules for Equitable Principles theControled of VIII) and the commitments entered into andthecommitments byalarge VIII) measures affecting international trade is also atthe isalso trade international affecting measures on competition andinternational oncompetition the (iii) trade; tices on trade – is the most interesting onewithtices ontrade –isthemost Competition Policy (WGCTP) was established with wasestablished (WGCTP) Competition Policy 353 anti-competitive practices which are in practices the embodied anti-competitive icular remedies in cases of enterpriseicular behaviour remedies incases 416 415 , particular attention wasgiven attention , particular 412 The need to need ensureThe that anti- Second, each of these three three these of each Second, 414 Mexico: Measures Affecting it,teWODispute theWTO Fifth, , BISD 9S/28-29 (with , 9S/28-29 BISD 413 Third, minimumThird, 417 Pursuant

II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING WORLD TRADE REPORT 2007 SYSTEM: ACHIEVEMENTS AND CHALLENGES WORLD TRADE REPORT 2007 II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING SYSTEM: ACHIEVEMENTS AND CHALLENGES But at the subsequent WTO Ministerial ConferenceBut atthesubsequent WTO inCancun, 2003, Mexico, inSeptember noconsensus Ministerial Conference to taken of onmodalities onthebasisof negotiations. be adecision atthat session that agreed negotiations Doha, wouldtakeIn oncompetition issues Members thenext place after negotiated rulesshouldbe additional specific C. Yet,mentioned inSection allthetopics aswith not be sufficiently strong to yield tangible benefits intheform of for countries. cooperation developing benefits to tangible strong yield sufficiently not be to involve billions of dollars annually. ofdollars billions to involve 427 426 425 424 423 422 421 on developing countries’ “policy space” inthisarea,a capacity alackof negotiating about concerns included considerations, thisrejection thereasons underlying tactical additiontoIn possible lack of consensusThe careful atCancun onlaunching reflection. merits negotiations policy oncompetition authorities of the exporting coun authorities of theexporting for such undernati arrangements exemptions existing ofeliminating possibility inthe interest expressed countries Working Group,the some are ofte cartels circumvention, of export theactivities theydo countries gains. Although register exporting in therelevant while country ismainly cartels astheir felt negative impact in theimporting effects neighbour” thy “beggar in result practices such that parties some by felt was It markets. export on solely cart toof export given theissue Attention wasalso thisproblem. wayinsolving some go could among national of competition authoritiesortheestablishment a literature anticompetitive abuse. theacademic argued In possible cooperation that ithas increased been not impossible, for national authorities–in competition if inmultiplemarkets itisdifficult, operate that Given such cartels products. of affected imports country operated extensively throughout thedeveloping world and has indeed been invoked – albeit unsuccessfully – in this context in the inthe –inthiscontext invoked unsuccessfully –albeit been and hasindeed and transparency ingovernmentand transparency procurement) in of ontheissues investment (nor towards negotiations undertaken work wouldbe policy oncompetition ‘July that nofurther package’ of 2004, of theso-called aspart General decided, Council of theWTO was reached onnegotiations ona“multilateral fr 420 suppliers. by market foreign entry nationalIf tolerate laws frustrate antitrust effective this can such practices of adominant abuses and position anti-competitive mentioned above, at item(i) under thediscussions In Doha Ministerial Declaration paragraph 23. Policy space that might be used, for example, to promote national champions. national topromote example, for used, be might that space Policy WT/L/579, 2 August 2004. 2August WT/L/579, WGTCP/2, 8 December 1998), paragraphs 81-96. paragraphs 1998), 8December WGTCP/2, Given are that likely cartels negotiations on to export outcomes, result in win-lose the of arises question issue-linkage agency. evidence The however, suggests, th some, For concern a financial further was the up direct a cost of national setting (2006). competition Bhattacharjea See See Hoekman and Saggi (2004). See, generally, (1998) Report of the Working Group Trade on the Interaction between and Competition (WT/ Policy enforced by countries high-income – and market access commitments. a deal involving specific linkage between of feasibility the investigate (2003) andSaggi Hoekman literature. economic inthe analysedd been indeed, and has, (Clarke and Evenett 2003). andEvenett (Clarke cases bid-rigging or cartels ofmajor prosecutions successful two or one just from accrue can that treasuries to public (2006). See, for details and relevant discussion, Levenstein and Levenstein andrelevant discussion, forSee, details 423 GATT Article XXIII could be interpreted to provide some protection against these practices these against protection interpreted some to could be provide XXIII Article GATT tries wouldhaveto jurisdiction onal competition laws, but others questioned whetherthenationalonal questioned butothers competition laws, 420 426 antitrust disciplines of interest to countries cartels poor – a ban on export Furthermore, in many such cases cartels are known to have areknown cartels inmany suchFurthermore, cases , and, for some, a sense that the proponents’ proposals might, and, proposals for that theproponents’ some, asense at the annual costs of such agencies pale by comparison to the benefits in order to protect negotiated to inorder protect commitments. 354 the WTO for theduration of theDoha theWTO Round. discussed in this section, the question arises whether arises thequestion inthis section, discussed amework oncompetition policy”. Subsequently, the perception by some that the proposals might intrude thatperception theproposals bysome n seen as violating thespiritof asviolating trade cooperation. Inn seen vertical market restraints in importing countries. market inimporting restraints vertical not represent a classical example of not commitment example represent aclassical els – that is, price-fixing arrangements that focus arrangements els –that is,price-fixing tention was also given to the impact on trade of totention given theimpact wasalso Suslow (2001), Evenett etSuslow (2001), al. Evenett (2001) andBhattacharjea particular in developing countries indeveloping –to discipline particular , substantially raising the costs of developing raising thecosts , substantially prosecute such prosecute arrangements. supra -national competition authority -national authority competition Japan-Film Japan-Film dispute, as 421 425 422 427 424 countries from the European Free Trade Association (EFTA). Trade theEuropean Free countries from Association for Areques thispurpose. established why references to of issues environmental protection of integration economic consequences werenot apr further institutionalised within the WTO through th institutionalised within theWTO further 431 430 429 428 trade andenvironment andin1971 aGroup of Environmental andInternational Measures Trade was time,Over that arose theimpression more clarif ...” resources natural exhaustible of to “protect human, animalorplant life or necessary conditi certain may under that policies provides which Environment World War, the Second after themultilateral wasestablished When trading system the environmental (ii) countries.among relevant of agencies theparticipating cooperation and/or practices contain provisions anti-competitive relating with dealing to orpolicies laws involvingregional trade orsimilar free agreements to elaborate relationships.Competition has onthese served Policy addition, In recently-concluded into called workof the not The question. been Charter, Havana inthe UN the reflected policy, interdependence of trade andcompetition recognition of any theimportant In case, thelongstanding not any exercise rule-makin and does andenhancing cooperation convergencecountries. worldwide onimproving focuses through It dialogue, ICN of agencies antitrust isaninformalThe network to wasfounded, Cancun, onthebasisof aUS proposal. an“International Competition (ICN) Network” Work has continuedOECD includinginthe onanumber of fronts, andUNCTAD. addition, In evenprior has not meant anendto international intheWTO decision policy. oncompetition deliberations This undesired complexity to negotiations. In other words, cross-sector linkages or cross-issues linkages of negotiations were seen as adding an issues would probably be affected by progress in tr themultilateral ruleswithin competition sound trading framework asany negotiation oncompetition made been has also observation The measures. border role producer haverelative lobbies played active of inthecontext other internal measures orcertain the with isinteresting toIt contrast of this policy competition of absence producer inthecase lobbies of character law competition thepublichave good andtherelated been of absence producer lobbies. factor,Another national may policies, highlighted competition intheWorking asaffecting Group also environment andpromoting sh development sustainable that noted safeguarding Members thisdecision In framework. intheWTO harnessed be will linked andhowfar be orwill butwhether thepotential can synergies liberalization and trade They expressed the concern expressed They that the approach to environmental making varied considerably policy from country Klein, J.I. (1996), page 14: “A WTO competition policy debate would competition have policy to WTO national balance diverse) many (often Klein, (1996), J.I. page 14: “A See, for documentation and analysis of andanalysis for documentation See, of Nordström and Vaughan (1999) for more detail. andVaughan more for (1999) of Nordström 1 Annex See totackle. equipped not was it issues with faced not was system settlement dispute its andthat makers trade disputes and they therefore wished to ensure that GA for stage the set potentially could differences policy resulting the that concern expressed countries EFTA problems. to econom due to country settings, geographical differing agriculture, services, intellectual property, or any of the myriad fields currently covered by WTO agreements.” byWTO covered currently fields myriad any ofthe or property, intellectual services, agriculture, in other trade of negotiations in positions response shifting to with theinterests, possibility related trade-offs to therein. See “AboutSee the ICN” (http://www.internationalcompetitionnetwork.org/index.php/en/about-icn). g or dispute settlement functions. g ordispute settlement t to activate this group was made for the first timein1990 for by the thisgroup wasmade thefirst t to activate such arrangements, Anderson and Evenett (2006) and other sources cited sources andother (2006) andEvenett Anderson arrangements, such Working Group on the Interaction between Trade between Working Group and ontheInteraction Set and the various above-noted WTO provisions, has provisions, WTO andthevariousabove-noted Set ade negotiations oronother topics. in other sectors both anddevelopi developed ication was needed ontherelationship wasneeded ication between the multilateral the andprotecting trading system e Marrakesh onTrade Decision and Environment. in the GATT were basically restricted to Article XX, XX, to Article restricted werebasically in theGATT health” oriftheyare related to “the conservation imary concern for policy makers. This may explain mayexplain This makers. for concern policy imary which is open to both developed anddeveloping to developed both isopen which 355 430 TT’s framework of rules provided clear guidance to policy topolicy guidance clear provided ofrules framework TT’s ons of entail discrimination elements ifthey are ic conditions, of stages development and environmental that it would be difficult to reach agreement on difficult that itwouldbe ould be mutually supportive. They further noted further They supportive. mutually be ould The question is not whether competition policy policy competition isnot whether question The 431 The debate ontrade andenvironment debate The was 429 ng countries increasingly 428

II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING WORLD TRADE REPORT 2007 SYSTEM: ACHIEVEMENTS AND CHALLENGES WORLD TRADE REPORT 2007 II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING SYSTEM: ACHIEVEMENTS AND CHALLENGES As noted earlier,As to relevant use international theAgreement encourages asa Members also standards will even tend to lower their standards in order to remain competitive in global markets. Economists to inorder remaininglobal eventend competitive will to lowertheirstandards increasing be will isthatgovernments argument The Committees arediscussed. Committees order to avoid regulatory “chill” regulatory a“race-to-the toavoid or order onaconcern inbased that different rulesonenvironmental WTO measures the within are needed possible two literature economic has analysed The –making,forissues instance, conditional onenvironmental trade cooperation oncooperation matters. 200 international200 of theenvironment. onthestate treaties andother agreements mentions Register over 2005, theUNEP In number of multilateral environmental (MEA). agreements trade andenvironment of of therelationship alarge istheexistence of theparticularities One between introduced. has been nosuch specificity sense), abroader of environmental (in the case protection –that to is,measures prot objectives of publicpolicy Agreement. Th of theapproach theSPS with texts WTO thetreatment may of note One environmental thecontrastin questions between setting. standard basis for regulations, theirtechnical not make althoughitdoes reference international to any particular Agreement refers to protection of the environment as a legitimate objective for a technical regulation. for atechnical objective asalegitimate environment ofthe toprotection refers Agreement of 2.2 the Agreement. Article of theenvironmentProtection mention receives intheTBT specific also of environmentalthemultilateralthe compatibility with policies trading system. The Preamble to the WTO Agreement includes refer Agreement includes to Preamble theWTO The that are relevant to introduced thetrade andenvironmentalso inthelegaltexts newelements debate. The 1994The the Marrakesh Agreement Establishing 1995.January mayresult which ofenvironmental policies aspects competence of themultilateral islimited which trade-related to andthose trade policies trading system, their desire to coordinate in policies thefieldof 436 435 434 433 432 the trade and environment community exists andinnegotiations of theDoha inthecontext Roundthe trade andenvironment exists community between co-ordination Some cooperation. trade on negotiations multilateral from fora, separate multiple view to ofview trade enhancing andenvironment”. themutual supportiveness no consensus was attained on this proposal, Article XX isof relevance for any legaldisputes concerning XX Article onthis proposal, no consensus wasattained as a legitimate reason for Members to depart under under to depart for reason Members as alegitimate of theenvironment mentions theprotection andexplicitly XX Article to wasmade alterGATT proposal theenvi andpreserve toand to protect theneed possible procedures for information regular procedures exchan possible current situation,The then, isthat governments There have been calls in the public debate for international closer in thepublicdebate calls ontrade andenvironmental have cooperation been There MEAs. WTO rules and specific trade obligations set out in multilateral environmental agreements (MEAs) with a with outinmultilateral trade obligations set rulesandspecific environmental (MEAs) WTO agreements “t upon arecalled Members andMEAs. Agreements WTO 2001 trade provisions. contain The explicit agreements also foresaw the establishment of onTrade place theCommittee took which in foresaw theestablishment also andEnvironment (CTE), Other “legitimate objectives” referred to in TBT Article Article Other “legitimate objectives” referred to inTBT Doha Ministerial Declaration paragraph 31 (ii). Paragraph 31 of the Doha Ministerial Declaration. Ministerial 31 Doha Paragraph ofthe See Bagwell and Staiger (2002), Bagwell et al. (2002). al. et Bagwell (2002), andStaiger Bagwell See deceptive practices, protection of human health or safety and animal or plant life or health. or life plant or andanimal safety or ofhumanhealth protection practices, deceptive United Nations Environment Programme, Register of International and Agreements in Other the Field of the Environment, Nairobi: 2005. Nairobi: Environment, 435 Butinternational environmental st 356 trade andenvironment, “but exceeding without the ronment. During the Uruguay Round negotiations, a negotiations, Round Uruguay the During ronment. -bottom” in standard-setting at the national level. national atthe instandard-setting -bottom” ge between MEA Secretariats andtherelevant WTO Secretariats MEA between ge ol rd raiain(h WOAgreement”) World Trade Organization (the“WTO negotiate international environmental standards in internationalnegotiate standards environmental in significant trade effects”. Marrakesh The Decision ect human, animalorplant life in orhealth–while ect certain conditions fromt certain reasons for such proposals. The first argument is first The for suchreasons proposals. ly hesitant to increase environmental standards or environmental to standards increase hesitant ly ence to the objective of development sustainable ence to theobjective Doha Declaration refers to the relationship between between relationship tothe refers Declaration Doha 2.2 are the requirements, prevention national of security e latter is a separate, explicit agreement onaset agreement isaseparate, explicit e latter o negotiate ontherelati o negotiate andards largely remain the domain of remainthedomain andards largely 434 heir obligations. Although heir obligations. onship between existing existing onship between 433 A number of these 436 432 partners to exchange concessions across different to different exchange across concessions partners This declaration, reaffirmed inDoha in2001, declaration, reaffirmed This emphas conditional onenvironmental cooperation. leadsto better find that significantly thisapproach to from international lose They to environmental countries standards. that expect side-payments cash athirdbargaining scenario to analyse theenvironment.–that set include also of offering Buttheauthors etal. (2001)climate change. Abrego anumerical use ismorelikely such for environmental to as animpediment conditionality tocooperation broader issues be 438 437 also It standards. labour that stipulates:: Labour isrefl standards onlabour position official WTO’s The (iii) of endowmentdifferences factor ontrade flows. the effect ismuch weaker than buttheireffect trade flows, found regulation that doaffect inpollution differences of international patterns trade. byCopeland Amorehad recent andTaylor not study affected (2003) etal.,environmental regulations (Jaffe 1995) found that environmental regulations onUS manufacturing of onthetrade effects study early An of trade asaresult of inenvironmental changes pattern policies. this If oncompetitiveness. impact a substantive of this concernhave thevalidity environmental by examined whether has analysing regulation indeed and vice-versa, could play a facilitating role in the case of “small” could play afacilitating role inthecase and vice-versa, environmental problems. that conditional makingtrade suggest cooperation results onenvironmentalboth fields.Their cooperation ahurdle role, itcouldin could to become play in multilateral apositive butthat cooperation inother cases negotiation tie- framework cases, andfindthat inatheoretical in some environmental andtrade matters gains from trade negotiatworthwhile economy ifinturn for itobtains costly its willing to accept very that environmental itconsiders standards mentioned before, cross- successful. As being matters of isthat negotiations together this closer theprobability wouldincrease onenvironmentalstandards literatu intheeconomic argument analysed second The chillisacute. regulatory ontrade orthat theriskofarace or to thebottom havethat significant effects environmental standards rules and disciplines, they argued, would provide a wouldprovide theyargued, anddisciplines, rules of anexplicit includingthepossibility the WTO, M WTO itisclearthat some discussions, From past with, standards. andpromote deal set, these from linked trade andenvironmental negotiations. Re Secretariats will continue their existing collaboration.” existing their continue will Secretariats andILO countries, putinto innoway this must be regard, In question. wenoteWTO that the that thecomparative andagree advantage purposes, We reject standards. to thepromotionofthese contribute liberalization trade andfurther trade byincreased fostered anddevelopment growth standards, and we affirm our support for its work for its oursupport andweaffirm standards, these with to anddeal set isthecompetent body (ILO) Organization InternationalThe Labour of“We in renewourcommitment to theobservance policies. Small, that is, in terms of the associated welfare costs andbe costs welfare associated ofthe interms is, that Small, See WTO (2005) for (2005) references WTO See to empirical studies analysin inter alia articulates the view of Members that the ILO is the competent body to that isthecompetent theILO body of Members theview articulates ions. Conconi andPerroni (2002) have reference to labour standards in the Agreements. WTO referenceAgreements. inthe to standards labour negotiation outcomes negotiation than makingtrade cooperation were the case, one would observe changes inthe changes werethecase,onewouldobserve embers would like to see the issue further explored in explored wouldlike further theissue toembers see policy dimensions. For example, a country may be example, acountry For dimensions. policy simulation modelto compute bargaining outcomes powerful incentive for Member nations incentive to for improve Member powerful ected in the 1996 Singapore Ministerial Declaration inthe1996 Ministerial Singapore ected the use of labour standards for protectionist for protectionist standards oflabour theuse re for tying negotiationsre ontrade for andenvironmental tying izes the importance WTO Members attach to core attach Members WTO izes theimportance sults indicate joint gains from expanding thetrade joint indicate gains from expanding sults inpromoting them. We that economic believe issue linkage in negotiations can allow negotiating allow can innegotiations linkage issue 357 ternationally recognized core labour standards. standards. labour core recognized ternationally of countries, particularly low-wage developing low-wage of countries, particularly g the effect ofg environmental the effect measures on FDI decisions. nefits in comparison with the costs and benefits of in trade and comparison benefits nefits with the costs 437 So far, So there evidence isthus nostrong analysed negotiation for tie-in 438 Butsuch

II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING WORLD TRADE REPORT 2007 SYSTEM: ACHIEVEMENTS AND CHALLENGES WORLD TRADE REPORT 2007 II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING SYSTEM: ACHIEVEMENTS AND CHALLENGES relationship between stronger freedom of association of freedom association stronger relationship between to a higher share of labour-intensive exports into to ahighershare oflabour-intensive exports of debate have emerged in the academic literatureof have debate intheacademic emerged work on the subject of trade and labour in the WTO’s intheWTO’s of trade andlabour work onthesubject Ministerial attheSingapore Conference, accordanceIn decided theposition with there iscurrently no putinto innoway be question. must thatSingapore thecomparative of advantage countr morethan for asmokescreen protectionis are little further contend that efforts to bring labour standar to bringlabour contend that efforts further whether limiting core labour standards in export se inexport standards limitingcore labour whether to see ofsimplemodels andinternational aseries develops standards trade policy. He core labour Secretariats launched a joint study onthe ajoint launched study Secretariats 2007, In Secretariats. thetwo for thetwo instance, andinformal between research cooperation continue exi Secretariats andILO theWTO Declaration, undermine their ability to raise standards through trad to standards raise theirability undermine andcould nations industrial to thecomparative trading of lowerwage undermine partners advantage some thiscontext, framework. In has theissue noplaceWTO inthe believe Members WTO Other supportive. andmutually areconsistent settings multilateral indifferent developed policies ensure workplace conditions andadvance “international cohe 441 440 439 The term core labour standards refers to ILO Conventi toILO refers standards labour core term The standards. and other labour standards core labour between to make relevant has tended research The adistinction thus flows. trade that thecase itisindeed whether analyse studies and “regulatory chill” in arguments. thecaseof As have standards andlabour trade relationship between with labour standards. labour with in general andthevolumeof trade, studie butthose andbargaining.association Earlyst than to childlabour related standards core labour areEmpirical research isnot different for entirely conclusive, to confirm butseems that trade effects of labour supply could expand exports in highly labour-intensivecountries oneexception misplaced, –th with arelargely sectors. countries onindustrial negative of impact limited rather than author theirreal concludes theopposite. costs, The and lowers that concerns the about other In words,of deficiencies. implementing those rather competitiveness th generally diminishes export that concludes deficient markets. He of provision core standards labour inexport price competitiveness employment andoccupation ofemployment andtheabolition child labour. and bargaining,elimination offorced andcompulsory Beyond the discussion among WTO Members onthetopi Members amongWTO Beyond thediscussion This includes participation by the WTO inmeetin WTO bythe participation includes This proposed standards could be too highfor too could be themto me standards proposed developing countries argue that the suggestion to bring labour issues into the WTO is actually abidby isactually countries developing argue into to that issues WTO bringlabour thesuggestion the Originally the term “core the term Originally to referred standards” si labour See ILO and (2007). WTO headings: Convention 29, Convention 87,headings: 105, 98, 111 torefer 1997). Today isused Maskus, term the instance for and138 (see See Granger and Siroën (2006) for an overview. GrangerSee and Siroën (2006) to eight ILO conventions: the six conventions mentioned before, convention 100 and convention 182. convention and 100 convention before, mentioned conventions six the conventions: ILO to eight 441 More recently, Rodrik (1998) found that timework and child labour contribute contribute labour andchild (1998) recently, found that timework Rodrik More udies showed the absence of a correlation between labour standards standards labour of theabsence acorrelation showed between udies relationship between trade andemployment. relationship between 358 wage, employment, and labour standards indeveloping standards wage, andlabour employment, changes in labour standards affect competitiveness and competitiveness affect standards inlabour changes gs of ILO bodies, exchange joint of documentation, bodies, gs of ILO . Theoretical and empirical economic analyses of the economic analyses andempirical . Theoretical the literature ontrade andenvironment, therelevant core labour standards increases workers’ productivity workers’ productivity increases standards core labour tal exports. Kucera and Sarna (2006) findarobust Kucera (2006) andSarna exports. tal ds into thearena of multilateral trade negotiations ons dealing with four with area ons dealing for core labour standards related to freedom of to freedom related standards for core labour an improving it because of the distortionary effects effects of thedistortionary itbecause an improving councils and committees. In line theSingapore In with councils andcommittees. s did not use reliable indicators of realcompliance reliableindicators s didnot use m. They hold strongly to holdstrongly thepronouncementm. They in x ILO conventions falling under the above-mentioned four conventions theabove-mentioned fallingx ILO under and collective bargaining (FACB) rights andhigher rights bargaining(FACB) and collective e exploitation of child labour through an expansion anexpansion through labour ofchild e exploitation ctors of developing co of developing ctors e and economic development. They also fear also thatThey e andeconomic development. labour, elimination of discrimination in respect of labour, inrespect ofdiscrimination elimination ies, particularly low-wag ies, particularly paid particular attention to attention “racepaid particular to thebottom“ et at their level of development. These countriesThese et attheirlevelof development. c of andlabour, trade dimensions interesting some sting collaboration and exchange ofinformation. andexchange collaboration sting rence” – that is, they would support efforts to rence” efforts –that is,theywouldsupport 440 Maskus (1997) between links analyses untries can improveuntries their can s – freedom of association of association s –freedom e developing countries,e developing 439 Agreement onAgriculture andtheGeneral Agreement on likeAgreement measures, internal the disciplining in the context of trade agreements is not necessarily restricted to core standards. labour restricted isnot of necessarily trade agreements in thecontext trade, thus confirming that potentially therange of standards labour relevant for market access concerns 442 than another. propositi orproven empirical theoretical of established onthebasisof framework. Butitisnot possible trading linked multilateral tothe explicitly be can measures internal on disciplines inwhich ofways variety inth discussed not explicitly Agreements WTO Other to byother international international set like of SPS. bodies, Codex standards inthecase minimum“standards”, international setting like inthe of theWTO are examples There orXXIII. XX III, Articles fitto bringacomplaint see GATT under Member shoulda to disputesettlement subject be butmay nevertheless nomention texts, receive inthelegal entrenched butare explicitly separate in agreements measures, environmental like Other are protection, not targeting governedby rights. those property have dedicated to been someinternal measures, like sign have ornegotiations differed discussions of these have ornegotiations taken place discussions in which areas considered have on been anumber of of policy internal measures. this section In types on certain Conclusions and challenges ahead Since theinception of themultilateral for disciplines there calls more have explicit been trading system (d) among18flows OECD countries. His measure of labo ontrade of standards labour differences influencing Van trade(1998) flows, theeffect Beers analyses of of those to evidence theexistence As standards. core not labour considered to standards respect amongindustrialized co differ also standards Labour to allowfor afirmconclusion inthisrespect. far so evidence scarce istoo Butempirical of core standards. – notlabour make for theother sense types to circumvent used market could be the former acce FACB. to related andthose While labour tochild related standards labour core the between distinguish to confirm thefindingsby Maskus (1997) ontrade, itmay make to to theireffect sense respect that with re findnorobust They exports. total manufacturing the very workers who are the intended beneficiaries. beneficiaries. aretheintended workers who the very levelledagainst the conclusion that trade sanctions are thefocus who of helpthose humanitarian actually concerns andcomes trade sanctions towhether paragraphs. intheprevious (200 Brown as discussed groundsrather onhumanitarian th standards to labour should make that made links trade agreements theargument thepublic debate explicit In been has also atinsuri aimed standards of labour trade-relevance efficiency between contends(2005) that atrade-off goes beyond the so-called core labour standards. core standards. labour theso-called beyond goes measure for FACB rights constructed by Kucera and Sarna (2006) and do not find evidence of notmeasure arace anddo findevidence for FACB byKucera (2006) andSarna constructed rights the use who (2006), Soysa andde findingsareconfirmed byNeumayer These exports. manufacturing rights violations than more closed ones. Taken ones. than violations moreclosed rights toge inFACBto thebottom theyfindthat Instead, countries rights. that to are trade have more open fewer This may explain why also in the context of regional agre ofregional context inthe also why mayexplain This discussion. (1995) extensive an for Sapir See policies. ofsocial harmonization the on place havetaken discussions Union, this discussion, and nor for that matter onthebasis andnorfor thatthis discussion, matter ng workers against adverse professional events. adverse ng workers against The author finds that labour standards doinfluence authorfindsthat standards labour The ther, appears three oflast papers the evidence these lationship between FACB andlabour-intensivelationship between rights sanitary and phytosanitary measures and intellectual andintellectual measures andphytosanitary sanitary withuntries differences are althoughthese stronger countries with poor labour practices may wellhurt practices labour countries poor with the context of the GATT or the WTO. The outcome The or theWTO. of thecontext theGATT case of TRIPS, and examples of legal texts referring texts oflegal andexamples ofTRIPS, case ss, this would – from an efficiency point of point view thiswould–from anefficiency ss, on Subsidies and Countervailing measures, the measures, andCountervailing Subsidies on 1) surveys the economic literature that analysess that analysess literature economic the 1) surveys and insurance exists and thus hints at a possible atapossible andthus hints and insurance exists ificantly across policy areas. Separate agreements agreements Separate areas. policy across ificantly 359 ements amongements industrialized countries, like the European legal texts. Yet ofinternal texts. another set legal measures ur standards is based onnational and isbased legislation ur standards an for reasons related to market access concerns, concerns, tomarket access related an for reasons ons, to conclude oneapproach isbetter whether is section have taken different approachesis section to Trade in Services. All this illustrates thebroad thisillustrates All Trade inServices. 442 Blanchard

II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING WORLD TRADE REPORT 2007 SYSTEM: ACHIEVEMENTS AND CHALLENGES WORLD TRADE REPORT 2007 II SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT? D SIXTY YEARS OF THE MULTILATERAL TRADING SYSTEM: ACHIEVEMENTS AND CHALLENGES set of accepted criteria would underlie any of accepted criteriawouldunderlie set determin distributional consequencesdistributional of multi possible tothe relates This literature. economic inthe attention received that has concern highlight one however, for shape institutional optimal international like.does, might look cooperation discussion The of incl aremoredeserving measures internal some itreveal whether does different Nor treatment than from awelfare others perspective. not internal allowfor some general conclusions measures onwhether heredoes deserve analysis The to negotiate. that take mightrelevant governments and issues upthethorny be of when issue what,andwhatnot, doisto that of can to point thequestions might asked some be that thisreport best existence. The its ofway of asthemultilateral defining theWTO’s movesinto agenda decade theseventh trading system offe thefuture. sum, about In thisreport uncertainty to formation recognize agenda wouldneed to pre-determine Moreover, cooperation. trade aneffort different motivations that ininternational have theyengage governments study andprioritieswhen very afool’s wouldbe inthisdirection why efforts reason surrounding thepolicy anduncertainties complexities of anagreement. Were thesubject this be to possible,a be could shaped itself shouldbe agenda WTO of howthe understanding form some of whether pre-committed question to theunderlying address inpart illustrative, tobe wasintended section inthis discussed issues policy ofdomestic choice The of internationalin thecontext agreements. ininternationalinstitution either international level, place atthe istaking harmonization ofpolicy level some inthissection areasdiscussed thatinallthe fact overall welfare, asach issue thedistributional leaving from multilateral ontrade andintern cooperation theother for asareason benefits hand,On disregarding concerns distributional thepossible cannot serve harmonization. policy agreed involved, bu trading partner to leadto gainsfor every Trade level. global liberalization atthe harmonization usion on the WTO agenda than others, orforwhatthe than agenda others, that matter usion ontheWTO lateral rules on internal measures, in particular if they involve ifthey inparticular internal on measures, lateral rules 360 s, specialized international standard setting bodies, or bodies, setting standard international specialized s, al measures. Trade-offs and linkages can improve can andlinkages al measures. Trade-offs errand. We have already seen in other parts of this inother parts errand.We have seen already ation of what to include on the WTO agenda. The agenda. ation of to what ontheWTO include allenge to be managed as of part a package. It is a rs no prescriptions for by ought what done noprescriptions to be rs issues discussed in this section provide one good onegood provide inthissection discussed issues through tariff reductions is expected, in general, is expected, reductions through tariff t this is not necessarily the case for multilaterally thecase t thisisnot necessarily