Tài chính doanh nghiệp - Chapter 7: The multilateral trade and investment framework

Appellate BodyWTO154 Rue de Lausanne, Geneva D S B QuotaCountervailingMeasuresTariffsAnti-DumpingChapter 7: The Multilateral Trade and Investment Framework TOPIC PLANBrief history of tradeGATT creation and impact on world tradeBasic principles of GATTThe Uruguay Round resultsPost-Uruguay Round progress:Basic Telecommunications;Information Technology; Financial ServicesThe World Trade Organisation (WTO)WTO’s dispute settlementThe next WTO roundUNCTADProgress to date in FDI liberalisationAncient tradeOne of the oldest economic activitiesFirst cities and trade (about 6000 BC): Mesopotamia (Babylon);Northern China; India;Central America. Trade between urban centres (e.g. Mesopotamia, Egypt and the Eastern Mediterranean) grew: food, cotton, timber, domesticated animals etc.Greek city states e.g.. Athens and Sparta (around 500BC) expanded trade.Ancient trade The Roman Empire(300BC-400AD) emphasised businessPax Romana(The Roman Peace) Common coinageSystematic law and administrationCentral market locations/CitiesExcellent communication systemOther city-nations and tribes joined the empire and agreed to pay tributes and taxesThe fall of the Roman empire(5th century AD)Copyright ©2003 McGraw-Hill Australia Pty Ltd PPTs t/aInternational Trade and Investment by John GioneaSlides prepared by John GioneaTrade under European feudalism(c.700-c.1500AD)Following the fall of the Roman empire (476AD) -decline in urban life/trade for about 500 yearsClosed-state economy pursuing self-sufficiency11th century AD-revival in export trade: Italy, Low Countries,German Hanse towns;East-West trade: Europe importing: spices, rice, oranges, dyes, cotton and silk;Western European merchants exporting: timber, arms, woollen clothing etc.Trading associated practices (e.g. banking, double-entry bookkeeping, bills of exchange, tariffs and commercial organisations) were introduced in the 15th and 16th century.The Industrial Era Trade(1750-1945)England led the world in industrialisation and trade (“The workshop of the world”)US and Western European countries followed a few decades laterDevelopment of urban/trade centres in Asia, Africa and L.America was largely the result of colonial expansion by the industrial powersDecline of the international trade between the two wars due to the Great Depression(1929-33) and strong protectionism in the US, UK, France etc.The 1913-1950 period has had the lowest average economic growth since 1820; also the only period over 250 years where trade has been slower than production. GATT (The General Agreement on Tariffs and Trade).Signed on 30 October 1947 by 23 nationsEntry into force on 1 January 19488 Rounds of multilateral trade negotiationsWorld Trade Organisation established on 1 January,1995GATT Negotiating RoundsRound &Year(s) No. of parties1.Geneva 1947 232.Annecy 1949 133.Torquay 1950-51 38 4.Geneva 1956 265.Dillon 1960- 2 456.Kennedy 1964-67 627.Tokyo 1973-79 998.Uruguay 1986-94 1179. Doha 2002-2005 144EValue of World trade(US$B) Impact of GATT on Industrial Tariff RatesWeighted Tariff Rates for the farm sector in selected countries and regions, %, 1997 GATT: Basic principlesTrade without discriminationMost Favoured Nation clauseProtection only through tariffsQuantitative restrictions prohibitedStable basis for tradeTariffs bindingsSpecial treatment for developing countriesThe principle of non-reciprocityThe Uruguay Round ResultsIncrease in incomesWorld income up by US$510 billion by 2005The Uruguay Round ResultsIndustrial Tariff reductionsDeveloped countries to reduce tariffs by 40 %Average tariff will range from 1.7%(Japan) to 4.8%(Canada)Developing countries reductions India,S.Korea and Singapore:by > than 50%Transition Economies reductionsPoland down by 38 %(Average at 9.9%)The Uruguay Round ResultsRemoval of Quantitative RestrictionsTextile and Clothing restraints under MFA to be phased out in 4 steps between 01.01.1995-01.01.2005The Uruguay Round ResultsIncreased Industrial Tariff BindingsDeveloped countries:from 78 to 99% Developing countries:from 21 to 73%Transition economies:from 73 to 98 %Post-Uruguay Round ProgressBasic telecommunications :Negotiations successfully concluded in Feb.1997 with 69 governments agreeing to wide-ranging liberalization measures.The agreement entered into force in Feb. 1998Information technology: In March 1997,40 governments agreed to cut customs duties on IT products beginning on 1 July 1997 and eliminating tariffs altogether on trade amounting to some US$ 600 billion p.a.Financial services:The agreement entered into force in March 1998, when 70 governments agreed to open their financial services sectors, covering more than 95 % of trade in banking, insurance, securities and financial informationMore global(prospective membership:150) Wider scope: Services, intellectual property,investmentFull-fledged international organisation in its own rightAppellate bodyWorld Trade Organisation versus GATTWorld Trade Organisation versus GATTAdministers a unified package of agreements to which ALL members are committed.Improved GATT rules plus a lot more.Reverses policies of protection in “sensitive areas”WTO DisputesAs of 31 December, 2000, WTO examined 200trade disputes compared to 196 by GATT in 50 years.US: 60 complaintsEU: 50 complaintsThe Hormone treated beef(US-EU).US won.The Banana war(US+Central American Banana producers vs. the EU);US won.Howe Leather(US+Canada vs. Australia);Australia lostLamb exports to the US(Australia+NZ);Australia and New Zealand won.WTO’s rulings encourage developing countriesEncouraged by the WTO tougher system developing countries started to use the settlement procedures more than under GATT (50 cases by May 2000: India, Brazil, Mexico and Thailand))Costa Rica and India won cases against the US on textile exports to the US The Doha RoundThe Declaration of Doha (Qatar)in November 2001, set 1 January 2005 as the date for completing all but two of the negotiations.7 negotiating bodies: ( 1) agriculture; (2) services; (3) non-agricultural market access;(4) rules; (5) trade and environment; (6)geographical indications for wines and spirits; (7) reform of the Dispute Settlement Understanding.“The risk is that the new round(and so the entire multilateral system ) could collapse under the weight of too many contentious issues”(The Economist).United Nations Conference on Trade and Development (UNCTAD)Permanent United Nations Agency established in 1964No executive powerConvenes a meeting every four yearsForum for examining North-South issues in trade, finance and development.Liberalisation of FDIOECD, UNCTAD, WTOOECD initiated in 1995 talks between its members with the purpose of drafting a Multilateral Agreement on Investment (MAI)Talks broke down primarily because the US refused to sign the agreement for too many exceptions that would weaken its powers.Not achievable in the foreseeable future.