IDST 1001H Lecture Notes - Lecture 7: World Trade Organization, Uruguay Round, General Agreement On Tariffs And Trade
14 Jun 2018
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Lecture 7: Regulating globalization, the World Trade Organization and trade agreements
• Global economy has become more trade intensive over last 30 years, partly because of
SAPs and PRSPs
• Many regions of world remain stuck in division of labour that reflects colonialism
• In 1995 World Trade Organization (WTO) was created in Uruguay Round, replaced
GATT which was founded 1947
• Regulates international trade
• Designed to monitor and organize global trade in order to produce freer trade,
creating a level playing field for all of those involved in international trade
• Promotes international trade because of comparative advantage
• If countries specialize in things they do best they should end up wealthier
• Formulated by David Ricardo, based on idea that every country has some
kind of cost advantage relative to other nations in production of goods
and services
• There are gains to be had from trade, leading to laissez-faire and less regulated
markets
• Remove barriers to trade inside countries and in between countries
• In order to set less regulate trade, WTO must set regulations
• Does not create free markets, rather freer, neo-regulated markets
• 164 Members of WTO agree to a set of rules on international trade and let WTO enforce
rules on trade, as well as measures to promote investment, intellectual property, and
domestic regulations
• WTO is not an independent body, it is intergovernmental
• Members adopt rules on basis on consensus
• General Council: all members meeting together (takes place in Geneva)
• Day-to-day affairs of WTO are run by a secretariat, has 634 employees
• 634 includes cleaners and catering staff, technical staff is likely around
200
• Managed by director-general, currently is Roberto Azevedo (Brazilian)
Four General Principles underpin way WTO operates:
• Tariffs: If a country is going to protect their economy, it should be done through tariffs
and not quotas
• Quota: limit on amount you will allow into your country
• Physical limit to trade, things may run out
• Tariff: tax on imports
• If you are willing to pay tax, you can still buy it
• BRICS (Brazil, Russia, India, China)
• Reciprocity: If your trading partner makes a concession to you, you have to offer
something comparable as a concession
• Non-discrimination: members of WTO agree rules by which they will abide apply equally
to all members
• Negotiations: members agree to commit themselves to negotiations which limit barriers
to trade and transform quotas into tariffs
• Lower tariffs turn to more global trade
WTO has dispute settlement mechanism
• Dispute: when one country thinks another is breaking the rules
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