World Trade Organization
During the May 2020 recognition of World Trade Month, and in the current worldwide political climate where trade policy has risen to a tier one issue, the World Trade Organization (WTO) finds itself at a crossroads.
The current Director General is departing early, so discussions over his successor will provide an opportunity to consider a new beginning for the organization.
2020 Departure of Director General / New Beginning
In a sudden announcement on May 14, WTO Director General Roberto Azevêdo of Brazil announced his early departure. Azevêdo said in a statement that he timed his departure, which falls a year before his term formally ends, so a selection process wouldn’t distract the WTO’s next big ministerial conference that is now likely to be delayed into 2021. The next major WTO meeting could be a turning point for discussions on the future of the organization. Per July 22, 2020 the WTO has put off a decision on Kazakhstan’s offer to host the group’s 12th ministerial conference in June 2021 because of lingering concern about the coronavirus pandemic.
The discussion will now center on from which continent or region the next Director General should hail. The previous Director General Pascal Lamay was from France. This may well help set the tone and agenda of the membership organization, as well as provide an opportunity for a new beginning.
Race to the WTO Leadership Is Down to the Final Two Candidates
Bloomberg, October 7, 2020
Race to Rescue WTO Draws Eight Nominees from Mexico to Moldova
American Journal of Transportation, July 9, 2020
Azevedo Stepping Down Early From a WTO Already on the Brink
Bloomberg, May 13, 2020
In 1994 the U.S. Congress approved the trade agreements resulting from the Uruguay Round of multilateral trade negotiations under the auspices of the General Agreement on Tariffs and Trade (GATT). The agreement liberalized world trade and created a new World Trade Organization (WTO) effective January 1, 1995, succeeding the 47-year-old GATT.
The WTO and its 164 member nations is the only global international organization dealing with the rules of trade between nations. At its heart are the WTO agreements, negotiated and signed by the bulk of the world’s trading nations and ratified or approved in their parliaments or legislatures. The goal is to help producers of goods and services, exporters and importers conduct their business.
The GATT was created in 1948 to expand economic activity by reducing tariffs and other barriers to trade. The Uruguay Round agreements built on past successes by reducing tariffs by roughly one-third across the board and by expanding the GATT framework to include additional agreements under the newer WTO.
The three pillars of the WTO are:
1. trade in goods (the area covered by the GATT),
2. the agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) in overseeing each of the main areas of intellectual property, and
3. the General Agreement on Trade in Services (GATS).
Generally, the WTO via the Final Uruguay Round Act:
- reduces or eliminates tariffs
- increases market access
- strengthens intellectual property protection
- creates a dispute settlement understanding
- strengthens anti-dumping and countervailing duty rules
- expands opportunities in foreign government procurement
- reduces standards barriers to U.S. exports
- maintains U.S. health and environmental studies
- simplifies and reduces the export process and related paperwork
The WTO accounts for more than 98 percent of world trade. Over 20 governments are currently negotiating or due to negotiate accession to the WTO. Its basic aim is to liberalize world trade and place it on a secure basis, thereby contributing to economic growth and development and to the welfare of the world’s peoples.
The functions of the WTO are:
- administering WTO trade agreements;
- providing a forum for trade negotiations;
- handling trade disputes;
- monitoring national trade policies;
- offering technical assistance and training for developing countries; and
- cooperation with other international organizations.
The ultimate goal of the WTO is to abolish trade barriers around the world so that trade can be totally free. Members have agreed to reduce, over time, the most favored nation (MFN) duty rates to zero – along with abolishing quotas and other non-barriers to trade. Currently there are over 21 different agreements dealing with goods, services, investment measures and intellectual property rights.
There also are 12 other multilateral agreements, which are agreements signed by all of the WTO member governments:
1. Agriculture Agreement
2. Antidumping Agreement
3. Customs Valuation Agreement
4. Import Licensing Procedures Agreement
5. Preshipment Inspection Agreement
6. Rules of Origin Agreement
7. Safeguards Agreement
8. Sanitary and Phytosanitary Measures
9. Subsidies and Countervailing Measures
10. Technical Barriers to Trade Agreement
11. Textiles and Clothing Agreement
12. Trade-related Investment Measures
There are five plurilateral agreements which have been signed by some of the WTO members:
1. Government Procurement Agreement
2. Trade in Civil Aircraft Agreement
3. Information Technology Agreement
4. Agreement on Trade in Financial Services
5. Agreement on Trade in Telecommunications Services
The WTO remained under scrutiny by President Donald J. Trump in 2019, as President Trump threatened to pull the United States out of the WTO. Although the U.S. has considered the prospect of blocking passage of a WTO budget to dismantle the global trade organization, the U.S. has successfully used the WTO’s consensus principle, which requires all 164 WTO members to agree on any decision, to block all new appointments to the Appellate Body. As a result, when the terms of two members of the Appellate Body came to an end in mid-December 2019, the body no longer had a quorum.
Trump administration spokespersons have said the WTO’s dispute settlement system threatens U.S. sovereign rights and has strayed from its original mandate. U.S. Trade Representative Robert Lighthizer stated that the dispute settlement system allowed nations to gain concessions that they never would have been able to get at the negotiating table.
The European Union and other major nations have come together to develop a new broad appeal-arbitration agreement, calling for a revamp of the WTO. Countries have supported the United States’ drive for greater transparency and discipline within the WTO, but also have stated it is important to uphold the global commercial order under growing tensions, not dismantle it.
In 2020, the European Union along with China, Brazil, Australia, Japan and other major nations will propose their plans for the dispute settlement body, hoping to revamp the WTO. The EU has suggested a multi-party “interim appeal arbitration” initiative, while Australia and Brazil are pushing for a “plurilateral initiative,” which would be more responsive to U.S. concerns. Although the United States has already rejected reform proposals, the lack of a quorum in the Appellate Body may force members to address the problems within the current system.
The next major WTO meeting could be a turning point for discussions on the future of the organization. The June 8-11, 2021 12th Ministerial “M 12” meeting is tentatively scheduled for Kazakhstan. Modernization and reform of the trading system will be a major topic.
The California Chamber of Commerce is hopeful the major trading economies can come to a consensus on a reform of the WTO in 2020. The revamp should address the functioning of the Appellate Body, encourage greater transparency and enhance discipline for members who fall behind on their reporting obligations.
History of WTO Negotiations
On May 18-29, 1998, the WTO held its second ministerial conference in Geneva, Switzerland, along with a commemoration of the 50th anniversary of the post-World War II multilateral trading system. President Clinton and a number of heads of state or government addressed the gathering, and WTO members accepted the U.S. invitation to host the third ministerial conference in late 1999.
Representatives of the member countries of the WTO met at the Washington State Convention and Trade Center in Seattle, Washington for the 1999 WTO Ministerial Conference Meeting, from November 30 to December 3, 1999. This third Ministerial Conference, was chaired by U.S. Trade Representative Charlene Barshefsky, and was expected to launch three year global negotiations due to start in early 2000 to further open markets in goods, services, and agricultural trade.
The U.S. agricultural agenda for the WTO millennium round of negotiations included: 1) eliminating export subsidies; 2) further reducing worldwide tariffs; 3) raising the ceilings on tariff-rate quotas, and phasing them out over the long run; 4) opening up operations of State Trading Enterprises to market-place risks; 5) facilitating trade in new technology products, including biotechnology; and 6) making sure the rules governing sanitary and phytosanitary measures continue to be effective. Barshefsky had told both Senate and House committees that agriculture was to be at the heart of the Seattle Round’s agenda. Further, she emphasized that the European Union’s Common Agricultural Policy (CAP) was the largest single distortion of agricultural trade in the world and reform of the CAP was to be a central focus of the Round.
The most difficult issue before WTO members was whether to include certain so-called “new issues” in the scope of the round. Four subjects on which work programs were agreed at the Singapore Ministerial in 1996 — investment, competition policy, transparency in government procurement and trade facilitation — were among the potential candidates for negotiation. The future of the WTO’s work on trade and the environment was another potentially contentious issue, as well as, a constitutional commitment to sustainable development.
Approximately 5,000 delegates, together with thousands of activists representing labor, environmental, and human rights groups, descended upon Seattle. Following a tumultuous week, the talks were suspended.
On December 7, 1999, WTO Director-General Mike Moore issued the following statement:
“We all left Seattle last Friday disappointed but not dismayed that it was not possible to finish the job we went there to do. The suspension of talks is not unprecedented in the history of the multilateral trading system. But what is vital is that we maintain and consolidate what has already been achieved. The progress made must not be lost. Despite the temporary setback in Seattle, our objectives remain unchanged.”
The General Council of the WTO shifted work back on track by taking the following decisions at its meeting on February 7-8, 2000:
- Agreeing on the organization of negotiations to further liberalize trade in services and agriculture;
- Agreeing that consultations will continue on several outstanding issues from Seattle; and
- Agreeing on a slate of chairpersons to head the key WTO bodies.
2001 Doha Ministerial Meeting
The 142 members of the World Trade Organization concluded their 2001 Ministerial Meeting in Doha, Qatar after approving a work program – which they called “broad and balanced” — that included negotiations on a wide range of subjects for the coming years.
The session, originally scheduled to last five days, November 9-13, stretched into an extra day before concluding. This was the first meeting of the WTO since the ill-fated December 1999 meeting in Seattle.
This WTO meeting agenda was very ambitious and held in the Persian Gulf state of Qatar — only 1,000 miles from the fighting in Afghanistan.
The main ministerial declaration included elaboration of objectives and timetables for the negotiations in agriculture and services, negotiations or possible negotiations in a range of issues such as industrial tariffs, trade and investment, trade and competition policy, some aspects of trade and the environment, as well as, implementation.
The successful conclusion of the 2001 Ministerial Meeting avoided a damaging rift between major trading nations at a time of global economic slowdown and promises economic benefits in the future.
2003 Cancun Ministerial Meeting
The Fifth Ministerial Conference was held in Cancun, Mexico, September 10-14, 2003 and was to be considered a “mid-term” review. However, negotiations broke down and the Ministerial was terminated.
Doha Development Agenda 2004 — The ‘July Package’
The WTO’s 148 member governments approved a package of framework and other agreements on July 31, 2004 which Director-General Supachai Panitchpakdi said would greatly enhance members’ chances for successfully completing the important Doha negotiations.
Dr. Supachai added, “For the first time, member governments have agreed to abolish all forms of agricultural export subsidies by a certain date. They have agreed to substantial reductions in trade distorting domestic support in agriculture. Governments have agreed to launch negotiations to set new rules streamlining trade and customs procedures. We have assigned ourselves ambitious guidelines for opening trade in manufactured products and have set ourselves a clear agenda for improving rules that are of great benefit to developing countries.”
2005 Hong Kong Ministerial Meeting
In preparation for the Hong Kong Ministerial Round of trade talks December 13-18, 2005, U.S. and European Union trade officials announced new proposals aimed at cutting agricultural tariffs and subsidies. U.S. Trade Representative Rob Portman said the United States was willing to make “steep tariff cuts,” but looked to the European Union and Japan to reduce their agricultural support programs proportionately. The U.S. proposal would have reduced tariffs and export subsidies over a five-year period, with a second five-year period to eliminate trade-distorting policies.
The California Chamber of Commerce joined the American Business Coalition for Doha and more than 200 other leading U.S. companies and associations in a “call to action” to the world trade ministers “to infuse optimism, creativity and a renewed sense of commitment and urgency to the Doha Round.”
The Hong Kong Ministerial talks held in December 2005 addressed:
- trade and development related concerns of developing countries;
- agricultural subsidies;
- elimination of tariff and non-tariff barriers of industrial, fish and forestry products;
- improved market access for manufactured goods;
- trade facilitation;
- trade and competition policy;
- transparency in government;
- opening in the global services market.
Hong Kong’s Commerce, Industry and Technology Secretary John Tsang, who chaired the conference, outlined the achievements in the ministerial declaration: securing an end date for all export subsidies in agriculture; reaching agreement on cotton; agreeing on duty-free, quota free access for the 32 least developed country members; fleshing out a significant framework for full modalities in agriculture and non-agricultural market access; and agreeing on a services text.
The talks ended without many of the desired agreements on agricultural subsidies, market access for manufactured goods, and government transparency.
July 2006 WTO Talks – Switzerland
The Group of Six (G-6) nations met in Switzerland in late July 2006 to revive stalled talks. After a weekend of difficult discussions about agricultural subsidies and tariffs, the meeting was suspended without any resolution. Advocates of freer trade will now need to shift their focus to renewing U.S. presidential authority to quickly negotiate future trade agreements.
July 2008 WTO Geneva – The July Package
The July 2008 package is a stepping stone on the way to concluding the Doha Round by the end of 2008. The main task before WTO members is to settle a range of questions that will shape the final agreement of the Doha Development Agenda. Political breakthrough requires consultations among a group of ministers representing all interests in the negotiations. A series of meetings were held in Geneva from 21 to 30 July.
On July 30, 2008, World Trade Organization (WTO) Director-General Pascal Lamy announced that the Doha Development Agenda negotiations failed to move forward after trade ministers stalled in their efforts to agree on blueprint agreements in agriculture and industrial products. Lamy told the media after speaking to members that out of a to-do list of 20 topics, 18 had seen positions converge, but the gaps could not narrow on the 19th — the special safeguard mechanism for developing countries.
Still on the table are the draft agriculture and non-agricultural modalities texts containing formulas for cutting tariffs and agricultural subsidies, flexibilities for making different cuts, and related rules and disciplines.
On April 16, 2011, Director-General Pascal Lamy told the World Bank’s Development Committee and the IMF’s International Monetary and Financial Committee in Washington that “WTO members have stalled on the last hurdles of the WTO Doha Round trade negotiations, i.e. industrial tariff reductions for developed and developing economies”. He added that “the consequences of a failure to conclude the Doha Round will be more detrimental to developing countries, particularly the least-developed among them”.
Kazakhstan To Hold WTO’s Next Ministerial Conference July 26, 2018
WTO members have accepted Kazakhstan’s invitation to host, in Astana, the organization’s Twelfth Ministerial Conference (MC12) to be held in June 2020. The decision was taken by consensus at today’s General Council meeting (26 July 2018) and marks the first time a Ministerial Conference is to be organized in Central Asia.
EU Pushes for a Revamp of the World Trade Organization June 19, 2018
European Union leaders plan to push for improvements in the way the World Trade Organization operates, saying it’s important to uphold the global commercial order amid “growing” tensions prompted by U.S. President Donald Trump’s tariffs. The group of heads of government or state, known as the European Council, “fully supports the re-balancing measures, potential safeguard measures to protect our own markets, and the legal proceedings at the WTO,” according to the text.
Paris – The United States released the following statement on trade policy in response to the Chair’s Statement and alongside the Consensus Statement of the Organization for Economic Cooperation and Development (OECD) Ministerial Council Meeting:
“The United States believes that free and fair trade and international investment can lead to economic growth and job creation. At the same time, we acknowledge that trade has not always worked to the benefit of everyone, given that unfair trade practices on the part of some countries disadvantage workers, farmers, ranchers, and businesses in global markets and can result in large, persistent trade imbalances.
“We stress the importance of achieving access to markets through the elimination of barriers and unfair trading practices. Accordingly, we support the removal of trade-distorting practices such as dumping, discriminatory non-tariff barriers, forced technology transfers, non-economic capacity, subsidies and other support by governments and government-controlled or -owned institutions that distort markets, so as to foster a truly level playing field. We acknowledge the right to use World Trade Organization (WTO)-consistent trade remedies to tackle such practices and enforce our rights.
“The United States recognizes the importance of international trading systems, including WTO-consistent trade agreements. We also commit to working with other Members to improve the functioning of the WTO, to ensure full and transparent implementation and effective and timely enforcement of the WTO agreements as negotiated and to make the utmost efforts to achieve a successful 11th WTO Ministerial Conference.”
WTO’s Trade Facilitation Agreement Enters into Force, February 22, 2017
A major milestone for the global trading system was reached on February 22, 2017 when the first multilateral deal concluded in the 21 year history of the World Trade Organization entered into force. In receiving ratification for the Trade Facilitation Agreement (TFA), the WTO has obtained the two-thirds acceptance of the agreement from its 164 members (including the US). The TFA will reduce the costs of trading across borders and lead to increased U.S. and foreign exports and jobs. It will provide enforceable government commitments, which will reduce red tape at the borders and speed movement of goods internationally.
WTO members secure “historic” Nairobi Package for Africa and the world
(December 19, 2015) WTO members concluded their Tenth Ministerial Conference in Nairobi on 19 December by securing an historic agreement on a series of trade initiatives. The “Nairobi Package” pays fitting tribute to the Conference host, Kenya, by delivering commitments that will benefit in particular the organization’s poorest members.
The Nairobi Package contains a series of six Ministerial Decisions on agriculture, cotton and issues related to least-developed countries. These include a commitment to abolish export subsidies for farm exports, which Director-General Roberto Azevêdo hailed as the “most significant outcome on agriculture” in the organization’s 20-year history.
“Two years ago in Bali we did something that the WTO had never done before — we delivered major, multilaterally-negotiated outcomes,” DG Azevêdo declared. “This week, here in Nairobi, we saw those same qualities at work. And today, once again, we delivered.”
DG Azevêdo congratulates TPP ministers
(October 5, 2015) WTO Director-General Roberto Azevêdo congratulated ministers and negotiators from the 12 Trans-Pacific Partnership (TPP) countries for successfully concluding wide-ranging trade negotiations. He said reaching agreement on a difficult range of issues proves that complex trade deals can be reached and called on WTO members to accelerate their work so that agreements on negotiated outcomes can be achieved by the organization’s 10th Ministerial Conference in Nairobi, 15-18 December.
“I congratulate the TPP countries, their ministers and their teams of negotiators,” the Director-General said. “The success of the TPP negotiations is proof that a diverse group of countries can strike a deal on a broad and complex trade agreement if the political will and determination are there. I hope that the result in Atlanta will serve as an inspiration for WTO members as we seek to produce substantial outcomes by Nairobi.”
Media accreditation for Tenth Ministerial Conference is now open
(September 21, 2015) Members of the media who wish to attend the WTO’s Tenth Ministerial Conference to be held in Nairobi (Kenya) from 15 to 18 December 2015 can now apply for accreditation. The deadline for receiving applications is 1 December 2015.
Azevêdo: Members unable to bridge the gap on trade facilitation
(July 31, 2014) Director-General Roberto Azevêdo reported to WTO ambassadors on 31 July 2014 that despite intensive consultations, “we have not been able to find a solution that would allow us to bridge the gap” on the adoption of the protocol on the Trade Facilitation Agreement. He urged members “to reflect long and hard on the ramifications of this setback”.
Wall Street Journal Article – WTO Fails to Ratify Trade Agreement
Failure to Reach Compromise With India Over Agricultural Subsidies Deals Blow to WTO
July 31, 2014
Round-the-clock consultations produce ‘Bali Package’
(December 7, 2013) The WTO’s Ninth Ministerial Conference concluded with a deal on the Bali Package to liberalize world trade and spur development by providing assistance to developing counties on food security and helping to boost their trade.
“With the Bali package you have reaffirmed not just your commitment to the WTO — but also to the delivery of the Doha Development Agenda,” Mr Azevêdo said. “The decisions we have taken here are an important stepping stone towards the completion of the Doha round.”
WTO, December 7, 2013
Roberto Azevêdo takes over
(September 1, 2013) Ambassador Roberto Azevêdo of Brazil took the helm of the WTO on 1 September 2013 as the sixth Director-General. Director-General Azevêdo was appointed to a four-year term by the General Council on 14 May 2013
WTO, September 1, 2013
Government Procurement Agreement (GPA)
On December 15, 2011, the Eighth Ministerial Conference of the World Trade Organization (WTO) opened in Geneva with news that — after more than 10 years of negotiations — a deal was reached on a more robust Government Procurement Agreement (GPA) to generate new business opportunities for U.S. companies in 42 countries and more than 150 central and sub-central government entities, such as Canada’s provinces. Additional sectors are being opened as well, and countries will enhance transparency by bidding for contracts through electronic methods.
According to WTO estimates, the total value of new market access opportunities is expected to be between $80 and $100 billion. The U.S. Chamber welcomed the news: “With ‘buy local’ mandates proliferating around the globe, the expanded GPA will help avoid a protectionist spiral and keep foreign procurement markets open to U.S. firms,” said Chamber Senior Vice President for International Affairs Myron Brilliant.
BENEFITS FOR THE UNITED STATES FROM THE REVISED WTO GOVERNMENT PROCUREMENT AGREEMENT
December 2011 WTO Geneva
At the Eighth Ministerial Conference held in Geneva, December 15-17, 2011, Ministers emphasized the value of the rules-based multilateral trading system and agreed to strengthen it and make it more responsive to the needs of members, especially in the current challenging global economic environment, in order to stimulate economic growth, employment and development.
However, Ministers deeply regretted that, despite full engagement and intensified efforts to conclude the Doha Development Agenda since the last Ministerial Conference, the negotiations are at an impasse.
U.S. Membership in WTO
The 1994 U.S. law covering the entry of the United States into the WTO, succeeding the GATT, provided special procedures for a congressional resolution on continued U.S. membership in the organization. Sections 124-125 of the Uruguay Round Agreements Act require the White House to send a report to Congress evaluating United States membership in the WTO every five years. Following the report, members of Congress may introduce legislation opposing US membership.
In March 2000, five years after the WTO began operating, a report from the U.S. trade representative was sent to the Congress. Following that report, a resolution was introduced to withdraw the United States from the international trade body. Perceived as a pro-trade vote, the U.S. House of Representatives overwhelmingly rejected the resolution. H.J. Res. 90, authored by Texas Republican Representative Ron Paul, was defeated 363-56, with 12 members not voting, on June 21, 2000.
In June 2005, Congress once again confirmed the United States’ WTO membership. After receiving an evaluation from the White House, Representative Bernard Sanders of Vermont proposed legislation to pull the United States out of the WTO. Through a vote of 338-86, the House easily defeated the bill. No similar bills were proposed in the Senate.
Despite President Trump’s concerns about the WTO, the Administration did not call for the withdraw from the membership organization in the annual Trade Report, but indicated “Despite the serious challenges facing the World Trade Organization, the United States values the WTO and is working diligently within the organization to find solutions.”
At issue is the non-working dispute settlement mechanism and new rules to counter non-market economic practices.
Every five years the U.S. Congress has the opportunity to vote on withdrawing from the WTO. This spring 2020, there have been two separate resolutions in the U.S. House of Representatives and the U.S. Senate, but they may have run out of time to vote, due to the timetable outlined in the 1994 Uruguay Round Agreements Act.
The Uruguay Round act, together with the 1974 Trade Act, approved U.S. entry into the WTO. The last vote on WTO membership took place in 2005, when the House defeated the withdrawal resolution proposed by then-Representative Bernard Sanders of Vermont by a vote of 338-86. The U.S. Senate has never voted on a withdrawal resolution.
Despite President Donald J. Trump’s concerns about the WTO, the administration did not call for withdrawal from the membership organization in the annual Trade Report, but indicated: “Despite the serious challenges facing the World Trade Organization, the United States values the WTO and is working diligently within the organization to find solutions.”
At issue is the nonworking dispute settlement mechanism and new rules to counter nonmarket economic practices.
Bipartisan Resolution Supporting U.S. Leadership at the World Trade Organization (WTO)
U.S. Senator Rob Portman, July 2020
Portman, Cardin Introduce Bipartisan Resolution Supporting U.S. Leadership at, and Reform of, the World Trade Organization
U.S. Senator Rob Portman, July 2, 2020
The WTO has a positive impact on how California producers of goods and services compete in overseas markets, as well as domestically, which creates jobs and economic growth through expanded international trade and investment. It gives businesses improved access to foreign markets and better rules to ensure that competition with foreign businesses is conducted fairly. Trade liberalization can create new jobs, higher incomes, and economic growth for countries around the world.
The WTO estimates that the impact of the 1994 Uruguay Round trade deal added over $100 billion to world income. The World Bank estimates that successful world trade talks could bring nearly $325 billion in income to the developing world by 2015, and could lift 500 million people out of poverty. Other studies have shown that an elimination of trade barriers would mean $2,500 a year in increased income to the average American family of four. Trade liberalization can create new jobs, higher incomes, and economic growth for countries around the world.
California is one of the ten largest economies in the world with an economy of over $3 trillion. International related commerce accounts for approximately one-quarter of the state’s economy. Although trade is a nationally determined policy issue, its impact on California is immense. California exports goods to over 225 foreign markets around the world. Trade offers the opportunity to expand the role of California’s exports. In its broadest terms, trade can literally feed the world and raise the living standards of those around us.
The WTO is credited with helping to create 1.5 million new jobs worldwide and since 1994, has bolstered trade by nearly 40 percent. The World Bank estimates that the percentage of people living in poverty worldwide declined in the last decade, a decade of expanding world trade. The Office of the U.S. Trade Representative estimates that liberalization of trade under the WTO has increased the purchasing power of the American household of four by $3,000.
Accession to The WTO
Ministers, in December 2011, welcomed the accessions of Vanuatu, Samoa, the Russian Federation and Montenegro to the WTO and recognized the contribution of accession to strengthening the multilateral trading system. Ministers remain committed to efforts to facilitate accessions, in particular of least-developed countries (LDCs).
The Russian Federation – See Russia’s Accession to the WTO page
On Saturday, November 10, 2001 concluding nearly 15 years of negotiations, members of the World Trade Organization – meeting in Doha, Qatar – unanimously approved China’s application for membership. China’s own Parliament immediately ratified the accession terms outlined in the nearly 1,000 page text. China waited 30 days and officially became a member of the WTO on Tuesday, December 11, 2001.
As a result of the negotiations, China agreed to undertake a series of important commitments to open and liberalize its regime in order to better integrate in the world economy and offer a more predictable environment for trade and foreign investment in accordance with WTO rules.
Among some of the commitments undertaken by China are:
- China will provide non-discriminatory treatment to all WTO members. All foreign individuals and enterprises, including those not invested or registered in China, will be accorded treatment no less favorable than that accorded to enterprises in China with respect to the right to trade.
- China will eliminate dual pricing practices as well as differences in treatment accorded to goods produced for sale in China in comparison to those produced for export.
- Price controls will not be used for purposes of affording protection to domestic industries or services providers.
- The WTO agreement will be implemented by China in an effective and uniform manner by revising its existing domestic laws and enacting new legislation fully in compliance with the WTO agreement.
- Within three years of accession, all enterprises will have the right to import and export all goods and trade them throughout the customs territory with limited exceptions.
- China will not maintain or introduce, but limit any export subsidies on agricultural products.
Taiwan also was approved for WTO accession in 2001. Admission of Taiwan was prearranged to follow China’s admission, with terms being completed 18 months prior. China originally objected to Taiwan’s independent admission, but it was agreed that the two are separate, functioning as different customs territories and imposing different regulations on the importation of goods. Taiwan is known as Chinese Taipei in the WTO.
On September 9, 2004, Cambodia completed the ratification of its invitation to join the WTO. It became a formal member of the organization on October 13, 2004.
The World Trade Organization gave Saudi Arabia approval to join the international trading body in November 2005, after over a decade of talks. The nation is the largest oil producer in the world and a powerful voice in the Organization of Petroleum Exporting Countries (OPEC). The decision to approve membership, according to a Saudi official, stemmed from structural reform and a pledge that Saudi Arabia will champion the needs of poor countries. Some of the commitments taken by Saudi Arabia as part of their WTO membership include:
- Saudi Arabia will not maintain any export subsidies on agricultural products.
- Within ten years, average bound tariff levels will decrease to 12.4 and 10.5 percent for agricultural and non-agricultural products respectively.
- Foreign insurance companies will be permitted to open and operate direct branches in Saudi Arabia.
- Commercial presence of banks will be permitted in the form of a locally incorporated joint-stock company or as a branch of an international bank.
- Within three years from accession, Saudi Arabia’s commitments will allow up to 70 percent foreign equity ownership in the telecommunications sector.
- While Saudi Arabia will maintain some restrictions on the distribution of goods inside the country, these restrictions will be phased out over a three-year transition period.
Vietnam’s bid for membership in the World Trade Organization was approved on November 7, 2006. This follows nearly a decade of negotiations between Vietnam and WTO members and economic preparation on the part of the Vietnamese government. “Vietnam has shown how anchoring domestic reforms in the WTO can yield dramatic results,” commented Director General Lamy. Vietnam’s economic growth topped 8 percent in 2005, foreign direct investment rose steeply to over $6 billion, and exports surged 20 percent. Vietnam formally entered the WTO 30 days after the country’s National Assembly passed the agreement in late November 2006. The United States Congress passed measures (H.R. 6111 in the Senate and H.R. 6406 in the House of Representatives) granting Vietnam Permanent Normal Trade Relations Status (PNTR) on December 8-9, 2006. Both California Senators and 19 California Representatives voted for PNTR. This means that the US benefits from the trading concessions Vietnam has made as part of their WTO membership.
Vietnam is a nation of 90.7 million people, the 13th most populated country in the world. The economy is growing and the volume of foreign trade has been increasing. Vietnam is a member of the World Bank, the International Monetary Fund and the Asian Development Bank. Vietnam is in the process of economic transition and is taking steps to integrate into the regional and world economy by, among other things, joining the Association of Southeast Asian Nations (ASEAN), the ASEAN Free Trade Area (AFTA), and the APEC, and has gained membership in the World Trade Organization (WTO). Vietnam is sponsoring more than $7 billion in infrastructure projects. Vietnam’s top priorities for investments are manufacturing and infrastructure projects, telecommunications, oil and gas development, agricultural production and tourism.
The United States is the home of more than 1.6 million people of Vietnamese origin, more than half of whom reside in California. Outside Vietnam, Orange County has the largest Vietnamese community, with approximately 180,000 people of Vietnamese descent. Two-way trade between the United States and Vietnam was approximately $36.3 billion in 2014. The United States exported over $5.7 billion to Vietnam, with top categories being electronic machinery, seeds and grain products, nuclear reactors, machinery, cotton products, fruit and nuts. Of the $30.6 billion imported from Vietnam, top categories included apparel articles, electronic machinery, footwear, and furniture. (US Department of Commerce)
In 2014, California was the top state exporter to Vietnam with over $1.2 billion, making up 21% of all U.S. exports in goods. California exports to Vietnam have more than doubled since 2007 and have increased by 9% from 2013 to 2014.
Vietnam is California’s 26th largest export destination. Computer and electronic products were credited with 19.7 percent of the total, with $237.7 million exports. Agricultural products held 19.2 percent with $231.7 million. Food manufactures held 17.4 percent with $210.3 million. Chemicals held 7.3 percent with $88.7 million.
Recognizing the environment in Vietnam is different from the United States and creates challenges for multinational corporations, the CalChamber supported the United States in establishing full economic relations by providing economic support and commercial program assistance for U.S. businesses operating in Vietnam and by granting PNTR status to Vietnam.
The best business prospects for Vietnam include infrastructure, energy and water resources, education and training, consumer retail (Gap opened in 2011), franchising, and hospitality. Market drivers include foreign investment, industrialization, urbanization, an emerging middle class, pent-up demand for infrastructure, and education. There are currently approximately 13,OOO Vietnamese college students in US.
Ukraine applied for WTO membership in 1993, and the Working Party concluded the negotiations in January 2008. The General Council accepted the Working Party report in February 2008. Ukraine ratified its accession package on April 16, 2008 which was the final step in the accession process before it could officially join the WTO.
The CalChamber, in keeping with long-standing policy, enthusiastically supports free trade worldwide, expansion of international trade and investment, fair and equitable market access for California products abroad and elimination of disincentives that impede the international competitiveness of California business.
- Report: Trade Facilitation Agreement Will Reduce Trade Costs, Increase Global Trade, Output – CalChamber, October 27, 2015
- World Trade Organization
- Regional Rules in the Global Trading System
The proliferation of regional trade agreements (RTAs) over the past two decades has led to the relationships between regional and WTO rules or disciplines becoming increasingly complex.