The World Trade System: The Structure and Organizations

The World Trade Organization held its Third Ministerial Conference in Seattle, Washington from 29 Nov. through 3 Dec. 1999. for a report on the Conference see, Kothari Miloon Prove Peter “Negative Impressions Mask Positive Developments in Seattle,” Economic and Political Weekly. January 8, 2000, pp. 16–17. Also see, Arun Kumar, “India at the Seattle Meeting,” Economic and Political Weekly, January 15, 2000, pp.89–92

See Pomfret Richard International Trade: An Introduction to Theory and Policy (Cambridge, MA.: Basil Blackwell, 1991), pp. 196–217. Also, see Jacob Viner, International Trade and Economic Development (London: Oxford University Press, 1953); and G. Haberler, International Trade and Development (Cairo: National Bank of Egypt, 1959)

See Finger Michael J. , “Development Economics and the General Agreement on Tariffs and Trade,” in Melo Jaime de Sapir Andre Trade Theory and Economic Reform: North, South, and East: Essays in Honour of Bela Balassa (Cambridge, M.A.: Basil Blackwell, 1991)

See, for instance, Nurske Ragnar , Problems of Capital Formation in Underdeveloped Countries (New York: Blackwell, 1953); or Raul Prebisch, Commercial Policy in the Underdeveloped Countries,” American Economic Review, 49 (May), pp. 251–73

Pomfret Richard , op. cit. p. 201

There is a lot of controversy regarding the pros and cons of international trade, and “many misunderstandings of the differences between these two schools of thought are mistaken or incomplete.” See, for example, Harlen Chrisine Margert “A Reprisal of Classical Economic Nationalism and Economic Liberalism,” International Studies Quarterly (1999), 43, 733–44

For a survey of the theories of international trade, see Heffernan Shelagh Sinclair Peter Modern International Economics (Cambridge, M.A.: Basil Blackwell, 1990), pp. 7–49

W. M. Corden has succinctly summarized free trade: ”… given certain assumptions, free trade is optimal. The assumptions upon which this proposition rests are notably that there is perfect competition, that all goods and factor services pass through the market, that there are no distorting taxes and other interventions, and that a country cannot affect its terms of trade. In that case free trade will, for any pair of goods, automatically bring about equality between the marginal rate of transformation in domestic production and the marginal rate of substitution in domestic consumption, and the marginal rate of transformation through trade (or, to be more precise, will ensure the absence of certain inequalities). The fulfilment of all the marginal conditions will suffice to ensure ‘Pareto-optimality’.” See his, Trade Policy and Economic Welfare (Oxford: Clarendo Press, 1980), pp. 6–7

Smith Adam , An Inquiry into the Nature and Causes of the Wealth of Nations (New York: Modern Library, 1937)

Gilpin Robert , The Political Economy of International Relations (Princeton, N.J.: Princeton University Press, 1978), p. 173

As Krugman writes: “(F)ree trade is not passe', but it is an idea that has irretrievably lost its innocence. Its status has shitted from optimum to reasonable rule of thumb. There is still a case for free trade as a good policy, and as a useful target in the practical world of politics, but it can never again be asserted as the policy that economic theory tells us is always right. See Krugman Paul R. , “Free Trade Passe?” in King Philip , International Economics and International Economic Policy: A Reader (New York: McGraw Hill Publishing Co.), p. 94

Ibid. p. 95

See my book India and the GAIT: Origin, growth and Development (Delhi: A.P.H.Co, 1996). A major portion of this paper is drawn from this book

According to Charles P. Kindleberger, it was due to lack of leadership in running the international system, the world faced severe economic crisis during the inter-war years. See his, The World in Depression, 1929–1939 (Berkeley: University of California Press, 1973)

According to Krasner, international regime consists of “sets of implicit and explicit principles, norms, rules, and decision making procedures around which actor's expectations converge in a given area of international relations. Principles are beliefs of fact, causation, and rectitude. Norms are standards of behaviour defined in terms of rights and obligations. Rules are specific prescriptions and proscriptions for action. Decision-making procedures are prevailing practices for making and implementing collective choice.” See Krasner Stephen , “Structural Causes and Regime Consequences: Regimes as Intervening Variables.” in Krasner Stephen (ed.), International Regimes (Ithaca, N. Y.: Cornell University Press, 1983)., p. 2

Bennet A. LeRoy , International Organizations: Principles and Issues (Englewood Cliffs, N.J: Prentice Hall, 1991) p. 272

See Keohane Robert , After Hegemony: Cooperation and Discord in the World Political Economy (Princeton: N.J, Princeton University Press, 1984), pp. 89–91

Bennet A. LeyRoy , op. cit. p. 3

For a historical survey of the international efforts to deal with commercial policy problems in the inter-war years see, League of Nations, Commercial Policy in the Inter-war Period: International Proposals and National Policies (Geneva: The Secretariat, 1942); also see, League of Nations, Commercial Policy in the Post-War World: Report of the Economic and Financial Committees (Geneva: The Secretariat, 1945)

Ibid. p. 17

For a detailed discussion of the negotiations that led to the emergence of GATT and the Havana Charter, see Brown W.A. , The United States and the Restoration of World Trade: An analysis and appraisal of the ITO Charter and the General Agreement on Tariffs and Trade (Washington D. C.: The Brookings Institutions, 1950); R. N. Gardner, Sterling Dollar Diplomacy (Oxford: Clarendon Press, 1956); and C. Wilcox, A Charter for World Trade (New York: Arno Press Inc.: 1949)

Art 4 of the Atlantic Charter provided for equal access to raw materials and Art. 7 of the Mutual Aid Programme embodied agreement for the expansion, employment, and elimination of discriminatory practices in trade. Further, Points 4 and 5 of the Atlantic Charter read as follows: “They will endeavour, with due respect for their existing obligations, to further the enjoyment by all states, great or small, victor or vanquished, of access, on equal terms, to the trade and to the raw materials of the world which are needed for their economic prosperity. They desire to bring about the fullest collaboration between all nations in the economic field with object of securing, for all, improved labour standards, economic advancement and social security.”

See Vernon Raymond , America's Foreign Trade Policy and the GATT (Princeton, N.J.: Princeton University Press, 1954); also see his, Essays in International Finance, No. 21. Oct. 1954

See Protocol amending the Preamble and Parts II and III of the GATT, 1955

The General Agreement consisted of thirty-eight Articles, divided into four Parts. Part I contains the first two Articles, which set out the basic most-favoured nation (MFN) rules and govern the application of the tariff rates established under GATT negotiations; these Articles could be amended by unanimous agreement of all members. Part II contained twenty-one Articles governing the use of particular trade policy measures and practices. The Part II Articles could be amended by a two-thirds vote, but amendments were to be effective only to members who accepted them. Part III contained thirteen Articles, dealing with procedural matters. Part IV contained three Articles which were added in the mid-1960s to deal with the special and differential treatment to the developing countries. Although there were many important features of GATT, we will only deal with a couple of them: MFN treatment and S & DT

Hoda Anwarul , Developing Countries in the International Trading System (New Delhi: Allied Publishers, 1987), p. 30

Dam Kenneth W. , The GATT:- Law and the International Organization (Chicago: University of Chicago Press, 1970), p. 22

Stone Frank , Canada, the GATT and the International Trade System (Montreal: The Institutes for Research on Public Policy, 1987), pp. 23–4

The eight rounds of GATT negotiations are: Geneva Round (1947), Annecy Round (1949), Torquay Round (1951), Geneva Round (1956), Dillon Round (1960–61), Kennedy Round (1963–67), Tokyo Round (1973–79), Uruguay Round (1986–94)

Dam Kenneth , The GATT: Law and International Economic Organization, op. cit., p. 335

According to the WTO: “The WTO is an agreement among 135 member governments. The members decide on the rules governing their trade relations, and periodically enter into rounds of negotiations aimed at further opening up markets and reforming the agreements. The WTO is a rule-based organization that seeks to foster a world where persuasion supersedes coercion, where the principle of non-discrimination members imparts fairness, giving small countries as well as big ones a voice, and where decisions are taken by consensus. The organization is served by a Secretariat answerable to the members.” Quoted in Arun Kumar, op. cit. p. 89

Sharma Shalendra D. , “The World Trade Organization and Implications for Developing Countries,” SAIS Review, Summer-Fall, 1997, p. 61

Anderson Sarah Cavanah John “World Trade Organization (WTO)” in Barry Tom Honey Martha (Eds.), Global Focus: A New Foreign Policy Agenda 1997:1998, (Silvercity, New Mexico: Interhermespher Resources Centre Press, 1997) p. 13

See “Seattle sinks, free trade in free fall,” The Statesman, dt. 6th Dec. 1999

The issues in the agenda of the meeting were: 1. Ongoing Business from the Marrakesh meeting a. Trade in agriculture. b. Trade in Services 2. The built-in agenda from the Marrakesh agareement a. Implementation issues. b. Dispute settlement issues. c. TRIPS 3. Trade problems of the poorest countries 4. New Issues/ new round of discussion a. Trade and competition policies. b. Trade and investment. c. Transparency in government procurement. d. Simplification of trade procedures. e. Trade and environment f. Core labour standards 5. Other Issues a. Information technology flow and tax on e-commerce. b. Entry of new members. See Arun Kumar, op. cit. p. 90

See, for instance, Thomson Kenneth J. , “The CAP and the WTO after the Uruguay Round Agreement on Agriculture,” European Foreign Affairs Review, 2: 1996, pp. 169–189

“USA forces labour agenda on developing world, The Statesman 5 Dec. 1999

See, for instance, Geradin Damien , “Trade and Environmental Protection in the context of World Trade Rules: A View from the European Union,” European Foreign Affairs Review, 2: 1997, pp. 33–61; also see, Pilaris Harvey, “Trade and Labour,” in Tom Barry and Martha Honey, op. cit. pp. 21–24

See n. 2