World Trade Organization History and Issues for International Business courses

1. BY
BASREEN AHMAD
ENGKU AHMAD FAIZ
MARWAN HADIID

2. HISTORY OF WORLD TRADE ORGANIZATION (WTO) & GATT
General Agreement on Tariff and Trade (GATT)
 Created in 1947 in Geneva Switzerland, consist of 23 members
 Part of Bretton Woods system
 To ensure a stable trade and economic world environment
International Trade Organization (ITO)
 It was thought that GATT would become part of ITO
 Charter was negotiated in Havana, 1948
 Set out the basic rules for international trade and other international
economic matters
 However, the ITO charter submitted was never approved by the US congress
 Any problem on international trade handled by GATT on that time
World Trade Organization (WTO)
 Created in 1 June 1995, replacing GATT
 Established by the final act of the Uruguay Round of negotiation

3. OBJECTIVE OF THE STUDIES
To identify World Trade Organization (WTO) main
objective and achievement
To examine briefly all round talk based on Uruguay,
Cancun and Doha round
To identify trade disputes and settlement in World
Trade Organization (WTO)

4. WORLD TRADE ORGANIZATION (WTO)
• Replacement of GATT
• Consist of 160 members, 117 developing countries
• Open trade for benefit of all
• The only global international organization dealing with the rules
of trade between nations
• Trade in industrial products, agricultural and services
• Run by government of it members or Minister of each country
• Meet al least once every two years in Geneva, Switzerland

5. WTO OBJECTIVE
Trade negotiation
• Provide a forum for negotiating agreements
• Aimed at reducing obstacles to international trade
• Helps trading industry to become smooth, fair, free and
predictable
• Trade agreement are not rigid
Implementation and monitoring
• Provide a legal and institutional framework
• Government of each country make their trade policies transparent
by informing the WTO
• All members in WTO must be reviewed on their trade policies

6. THE IMPORTANT OBJECTIVES OF WTO
WTO OBJECTIVE (cont.)
Dispute settlement
• Administer the rules and processes related to dispute
• Countries bring disputes to the WTO if getting their rights under
the agreements are being violated
• Settled by vote of 2/3 or ¾ of the nations
• Promote peace among members
 To improve the standard of living of people in the member countries
 To protect the environment
 Help promoting peace
 To ensure full employment
 Trade stimulates economic growth

7. Covered wide range of
issue but the main was
agriculture subsidies
Disagreement between
U.S and E.U
“Blair house accord”
The birth of WTO
Effective 1 July 1995

8. Some of the provisions
 Antidumping
Disputes resulting from the use of antidumping laws will be resolved with
tougher and quicker action.
 Subsidies
Over a six year period, 21 percent of the volume of subsidized agricultural
export was to be reduced
 Safeguards
Tariffs and other restrictions on import surge that harmed the domestic
industry can be raised temporarily. Administering health and safety standards
were barred unless it's based on solid evidence.
 Tariffs
The industrial products’ tariffs were reduced by 1.7 percent from an average of
4.7 percent to 3 percent.
 World Trade Organization (WTO)
The General Agreement on Tariffs and Trade (GATT) were replaced by the
World Trade Organization (WTO)

9. launched in Doha, Qatar
in 14 November 2001
should be completed by
the 1st January 2005
collapsed in 2008
The main reason of the
collapsed over the special
safeguard mechanism
(SSM)

10. September 2003, the
fifth WTO ministerial
conference
issue of the reduction
of the United States
and the European
Union farm subsidies.
Formation of G21

11. TRADE DISPUTE & SETTLEMENT IN WTO
A dispute arises when a member government believes another
member government is violating an agreement or a commitment
that it has made under WTO trade agreement.

12. Consultation 60 days
Panel Report 45 days
Final Panel Report to Parties 6 months
Final Panel Report to WTO Members 3 weeks
Dispute Settlement Body Adopts Report 60 days
Without Appeal 1 year
Appeals Report 60 – 90 days
Dispute Settlement Body Adopts Appeal Reports 30 days
Total 1 year 3 months
Sources: www.wto.org
These approximate periods for each stage of a dispute settlement
procedure are target figures the agreement is flexible. In addition, the
countries can settle their dispute themselves at any stage. Totals are
also approximate:

13. CASES IN WTO
DS55/54 Indonesia — Certain Measures Affecting the Automobile Industry
Complaint by European Communities, Japan & United State
Case chronology
• On 3 October 1996 the EC, Japan on 4 October 1996, while US on 8 October
1996 requested consultations with Indonesia concerning Indonesia’s National
Car Programme
• On 17 April 1997, Japan requested the establishment of a panel with respect
to complaints, while the EC on 12 May 1997
• On 17 April 1997 Japan requested the establishment of a panel, following by
the EC on 12 May 1992 (but both request has been deferred)
• On 12 June 1997 the DSB establish a panel (due to second request from the
EC and Japan
• On 12 June 1997, the US requested the establishment of a panel but its been
deferred on 25 June 1997
• On 30 July DSB establish the panel (due to second request from the US)
• On July 1998 the panel found Indonesia was in violation on TRIM’s
agreement, SCM’s agreement under article I & II of GATT 1994

14. CASES IN WTO
DS114 Canada — Patent Protection of Pharmaceutical Products
Complaint by the European Communities and their member States
Case chronology
• On 19 December 1997, the EC requested consultations with Canada due to
lack of protection of invention by Canada in the area of pharmaceuticals
• On 11 November 1998 the EC requested the establishment of a panel but
have been deferred on 25 November 1998
• On 1 February 1999 the DSB establish a panel (due to second request from
the EC)
• On 17 March 1999 the panel found that:
a) potential competitors of a patent owner are permitted to use the patented
invention, without the authorization of the patent owner during the term of the
patent, for the purposes of obtaining government marketing approval
b) competitors are allowed to manufacture and stockpile patented goods during
a certain period before the patent expires, but the goods cannot be sold until
after the patent expires.

15. CASES IN WTO
DS114 Canada — Patent Protection of Pharmaceutical Products
• On 25 April 2000 Canada informed DSB it would require reasonable time to
implement the recommendation
• At the DSB meeting of 23 October 2000 Canada informed member that from
7 October 2000 the recommendation will be implement.

16. CONCLUSION
• World Trade Organization (WTO) is the first global, constantly operating organization
responsible for the promotion of trade and the settlement of possible trade dispute
• Law of comparative advantage states that free trade will enable an increase in
economic welfare
• Free trade encourages greater competitiveness for the firm
• This enables more economies of scale, this is important for industries with high fixed
costs, such as car manufactures
• Free trade can help increase global economic growth
• The WTO has often been criticized for ignoring the problems of the developing world
such as tariff and subsidies

17. PAST YEAR QUESTION
1. JUNE 2014, QUESTION 4 (b)
2. JAN 2013, QUESTION 7 (c)
3. JUNE 2012, QUESTION 6 (b)
4. JAN 2012, QUESTION 7 (c)
5. APRIL 2010, QUESTION 6 (a)