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Mostrando postagens com marcador WTO. Mostrar todas as postagens
Mostrando postagens com marcador WTO. Mostrar todas as postagens

segunda-feira, 13 de junho de 2022

Patentes de vacinas anti-Covid na ministerial da OMC - Doug Palmer and Sarah Anne Aarup (Politico)

 Politico EU, Bruxelas – 11.6.2022

Globalization's gut check: 

World Trade Organization gathering offers a test of free trade system

If the global organization can’t reach a consensus on some of the low-hanging fruit on its agenda, there is little hope it can help tackle the world's biggest challenges.

Doug Palmer and Sarah Anne Aarup

 

The future of globalization faces a major test as the World Trade Organization kicks off its first big decision-making meeting in five years in Geneva on Sunday.

The immediate issues on the table involve Covid-19 vaccine patents, environmentally harmful fishing subsidies and global food security concerns heightened by Russia’s war in Ukraine.

But the bigger question looming over the gathering is whether the WTO can still forge international cooperation at a time when multiple crises and increasing frictions between the United States and China are upending the world order. Those crises have spurred a widespread re-think of globalization: Countries are increasingly turning their economic focus inward, looking to protect and promote their own industries — often at the expense of the open trade system that the WTO was designed to promote.

The WTO’s ministerial meeting, slated to run June 12 to June 15, will try to tackle some of those trends — albeit at the margins. If the organization can’t reach a consensus on even low-hanging fruit like easing fishing subsidies and maintaining a ban on e-commerce tariffs, there is little hope it can accomplish more challenging objectives such as contributing to the fight against global climate change or shoring up food systems as global hunger skyrockets.

“That’s why this is such a critical period for the system,” said Rufus Yerxa, a former WTO deputy director general who now works for McLarty Associates, an international trade consultancy. “Because if we really sort of disembowel the WTO now, it’s going to be harder to use it in the future to achieve those kinds of objectives.”

“I think it is important that the WTO be seen as part of the solution to the simultaneous crises we’re facing in the world now,” WTO Director-General Ngozi Okonjo-Iweala told POLITICO in an interview. “All of these crises at the same time that no one country in the world can solve. You need multilateralism. You need international cooperation.”

Recent crises like the Covid-19 pandemic and the Russian invasion of Ukraine have only served to further divide the globe, however — between rich countries able to rapidly produce their own Covid vaccines and low-income nations who couldn’t; and between Western democracies, who’ve rallied to isolate Russia, and much of the rest of the world, which is taking a far more ambivalent stance on the conflict. The crises have also heightened the rivalry between the U.S. and China, the world’s two leading economies, which are pushing very different models of trade and governance.

President Joe Biden has repeatedly described that rivalry as a battle to prove democracy still works better than autocracy in the 21st century. And his administration, including Treasury Secretary Janet Yellen, have been advocating a new model of economic engagement that focuses on collaboration with friendly countries, or “friend-shoring.”

Okonjo-Iweala, however, warned this week that splitting up the world’s economies and supply chains into political blocs would have damaging consequences — noting that WTO economists have made a preliminary estimate that dividing the world into two economic spheres would lead to a 5 percent decrease in real global GDP over the longer term.

“That is quite a stunning number,” the WTO chief said. “I’d like us to be careful. This multilateral trading system was built up over 75 years. It’s helped to lift over a billion people out of poverty. It’s delivered peace, which is one of the things it was intended to do, through interdependence.”

Still, Russia’s war in Ukraine has further fractured the international community and propelled the world toward an unprecedented hunger crisis as inflation and conflict push up the price of food for the world’s lowest-income people.

Okonjo-Iweala said she did not expect Russia’s participation next week to prevent deals from being reached, even though many delegations refuse to meet with them. Negotiators have devised ways to work around that obstacle over the past few months, she said.

“Undoubtedly, there will be some tensions as there have been in every meeting. We hope this will not stop us doing our work,” Okonjo-Iweala said.

But the war adds to the array of problems distracting attention from the rules-based trading system embodied in the WTO.

“I can hardly think of a more difficult backdrop for a WTO ministerial than this one,” Yerxa said. “I think the biggest challenge, obviously, is to try to make governments recognize that the risk of even further destabilizing multilateralism is that it won’t make their domestic politics better in the long run, it’ll make them worse.”

Okonjo-Iweala, who took the helm of the global trade body a little more than a year ago, is trying to notch up two big wins in the form of agreements that could potentially expand production of Covid vaccines and curtail environmentally harmful fishing subsidies.

She also is pushing the WTO to fashion a broader response to the pandemic — even though many see any agreement at this point as too little too late — and to issue a statement aimed at keeping food flowing across borders by discouraging export restrictions.

To accomplish that, she’ll have to bring every country on board — or at least persuade them not to voice their objections — because of the consensus-based nature of WTO rulemaking. Failure to do so could reinforce the idea that the WTO is incapable of reaching big deals involving all 164 members or addressing tough issues like climate change.

U.S.-China tensions are playing out in the Covid-19 vaccine talks, where the United States wants Beijing specifically excluded from using the proposed agreement to make generic versions of foreign vaccines, such as those produced by Moderna and Pfizer.

They’re also on display in the fishing subsidy talks, where Washington is pushing for countries to agree on a provision that would require WTO members to report annually on what they know about the use of forced labor in the seafood sector.

India, meanwhile, has issues that it is pursuing in a number of the negotiations that could frustrate efforts to reach agreement. One of its demands could lead to the end of a 24-year-old moratorium on the collection of duties on digital goods such as movies, software and video games, as well as an array of digitally-enabled services.

Members have also been fighting over the wording of a paragraph to set the stage for discussion for modernizing the WTO’s underlying rules.

Most countries favor a “streamlined” WTO reform statement containing three elements: a recognition of the broad consensus on the need for reform, the need for the process to be transparent and inclusive, and the need for it to address the interests of all members.

But India and a few other members favor a more prescriptive, strictly multilateral reform process that would open up the opportunity to revise the Marrakesh Agreement establishing the WTO. “It’s an agenda going backwards and reopening what we negotiated 30 years ago,” a Geneva-based trade official said.

That disagreement just further illuminates how hard it is to make progress in an institution that requires complete unanimity to operate, and why members like the United States and the EU are increasingly attracted to plurilateral pacts among smaller groups of WTO members rather than the entire organization.

Adding to the nervousness: The WTO has a history of producing big flops at its ministerial meetings, including spectacular meltdowns in Seattle in 1999 and Cancún in 2003. The group’s last ministerial conference in Buenos Aires in 2017 ended without any tangible outcome.

“I view it as a moment of truth for the WTO,” said Wendy Cutler, a former senior U.S. trade negotiator who now is vice president of the Asia Society Policy Institute.

If trade ministers leave Geneva next week with nothing to show for their efforts, that would accelerate “a trend we’re already beginning to see where countries want to work with other like-minded countries to set the rules,” Cutler said. “The WTO rules have kept everyone in the same room, and as the WTO becomes less and less productive and efficient, its ability to be relevant in this complex, complicated world diminishes.”

Kelly Ann Shaw, a former Trump administration trade official now at Hogan Lovells law firm, agreed: “If they can’t even agree on language just directing countries to think about WTO reform, it’s really hard to think about how they’re actually going to reform it.”

Just days ahead of the meeting, U.S. Trade Representative Katherine Tai was cautious about the chances for big breakthroughs at MC12.

“There are a lot of conversations, important ones, that we need to advance. Whether or not we can get them across the finish line, I don’t know,” Tai said on Monday at an event hosted by the Washington International Trade Association. “But it is really important for us to have MC12. And then it is really important for us to wake up the day after MC12 and feel like we have a vision for what we would like MC13 to be.”

Critics complain that the Biden administration has done little to shape that vision, aside from a speech Tai gave last year, where she repeated U.S. complaints about the WTO’s dispute settlement system and urged members “to start actually listening to each other” instead of spouting their favorite talking points.

“Historically, officials from the U.S. Trade Representative Office have worked diligently, often behind the scenes, to bring the members to positive outcomes,” Bill Reinsch, a trade policy specialist at the Center for Strategic and International Studies, recently wrote. “That does not seem to be the case this time around.”

Despite that, even modest progress would provide a shot in the arm for a world that is becoming less and less stable.

“If we invest in it now and reaffirm its centrality to more multilateral trade cooperation, then it becomes possible in the future to expand the agenda,” Yerxa said.

 

terça-feira, 1 de dezembro de 2020

World Trade Report 2020 (WTO) - November 2020: Government Policies to Promote Innovation in the Digital Age


World Trade Report 2020 (WTO)

 

World Trade Report 2020 – Government policies to promote innovation in the digital age published by World Trade Organization (2020)

“In recent years, a growing number of governments have adopted policies aimed at supporting the transition towards a digital economy. The World Trade Report 2020 looks at these policy trends and at how trade and the WTO fit with them.

Trade and trade policies have historically been important engines for innovation. In particular, the multilateral trading system has contributed significantly to the global diffusion of innovation and technology by fostering predictable global market conditions and by underpinning the development of global value chains. As data become an essential input in the digital economy, firms rely more on intangible assets than on physical ones, and digital firms are able to reach global markets faster without the amount of physical investment previously necessary in other sectors. Success in the digital economy will depend on openness, access to information and communication technology (ICT) goods and services, collaboration on research projects, and the diffusion of knowledge and new technology.

The World Trade Report 2020 shows that international cooperation can play a significant role in making the pursuit of digital development and technological innovation more effective, while minimizing negative spill-overs from national policies. The WTO agreements, reached a quarter of a century ago, have proved to be remarkably forward-looking in providing a framework that has favoured the development of ICT-enabled economies across all levels of development. Further international cooperation at the WTO and elsewhere would enable continued innovation and reduce trade tensions, helping international markets function more predictably…”



quinta-feira, 17 de setembro de 2020

Reforming the WTO - Chatham House

 Read the research paper >

Reforming the World Trade Organization: Prospects for Transatlantic Cooperation and the Global Trade System

11 September 2020

With trade tensions increasingly politicized, a key appeals process suspended and COVID-19 creating huge economic challenges, a modernized and fully functioning WTO is more essential than ever. This paper makes the case for transatlantic cooperation as a necessary, though insufficient alone, condition for WTO reform.

Authors

World Trade Organization headquarters in Geneva. Photo credit: Fabrice Coffrini/Contributor/Getty Images.

World Trade Organization headquarters in Geneva. Photo credit: Fabrice Coffrini/Contributor/Getty Images. 

Explainer: How Can the World Trade Organization be Improved?

Marianne Schneider-Petsinger explains the three key functions of the WTO and the current challenges facing each of these functions.

Summary

  • The World Trade Organization (WTO), which has been the cornerstone of the multilateral rules-based global trading system since its inception in 1995, faces a make-or-break moment. Even before the COVID-19 pandemic, all three of the organization’s functions – providing a negotiation forum to liberalize trade and establish new rules, monitoring trade policies, and resolving disputes between its 164 members – faced challenges. To reinvigorate the WTO, reform needs to cover all three pillars.
  • Of particular note is the need for a permanent solution to the crisis of the WTO’s Appellate Body and dispute settlement system. The Appellate Body’s operations have effectively been suspended since December 2019, as the US’s blocking of appointments has left the body without a quorum of adjudicators needed to hear appeals. Ending the impasse will require both the procedural and substantive concerns of the US to be addressed. For the most part, these reflect long-standing and systemic issues that not only have been voiced by previous US administrations but are shared by many other WTO members (even if they do not approve of the Trump administration’s tactics).
  • The crisis with the dispute settlement function of the WTO is closely linked to the breakdown in its negotiation function. While the global trade landscape has changed significantly over the past 25 years, WTO rules have not kept pace. Modernizing the WTO will necessitate the development of a new set of rules for dealing with digital trade and e-commerce. WTO members will also have to deal more effectively with China’s trade policies and practices, including how to better handle state-owned enterprises and industrial subsidies. Addressing the issue of subsidies is becoming more important due to the implications of COVID-19 for state provision of economic support in many countries. A better alignment of trade policy and environmental sustainability is also needed to keep the WTO relevant. To make progress on all these fronts, an increased focus on ‘plurilateral’ negotiations – which involve subsets of WTO members and often focus on a particular sector – could offer a way forward.
  • Reform will be impossible without addressing the problem that no agreed definition exists of what constitutes a developed or developing country at the WTO. Members can currently self-designate as developing countries to receive ‘special and differential treatment’ – a practice that is the subject of much contention. WTO members will also have to take steps to improve compliance with the organization’s notification and transparency requirements.
  • It is in the interests of the US and its European partners to maintain and reform the rules-based international trading system which they helped to create. The US and the EU agree that new rules for 21st-century trade are needed. They share many concerns regarding China’s trade policies and practices, but transatlantic differences remain over how to tackle these problems. The largest area of disagreement concerns how to reform the Appellate Body. If the US and the EU cannot work together bilaterally, reform of the WTO is unlikely. If progress is to be made, underlying frictions between the major trading partners need to be addressed, with China – as the world’s largest trading nation – included in the discussion. In short, transatlantic cooperation is a necessary, though not sufficient, condition for WTO reform.

Reforming the World Trade Organization

Speakers discuss some of the most pressing issues affecting the global trading system and the future of the WTO.

Read online > 

quarta-feira, 11 de março de 2020

Why did Trump end the WTO's Appellate Body? Tariffs - Chad P. Bown (PIIE) and Soumaya Keynes (The Economist)


U.S. President Donald Trump walks off under an umbrella after speaking to reporters from the White House in Washington, U.S. December 2, 2019.
REUTERS/Jonathan Ernst

Why did Trump end the WTO's Appellate Body? Tariffs.

Chad P. Bown (PIIE) and Soumaya Keynes (The Economist)
Peterson Institute for International Economics, March 11, 2020

The world trading system has long depended on the Appellate Body of the World Trade Organization (WTO) to referee trade disputes. The Trump administration’s refusal to appoint new members has rendered that body defunct. The administration’s rationale invokes process and is written in legalese. The real explanation lies elsewhere.

KEY TAKEAWAYS
  • The United States Trade Representative’s office accuses the Appellate Body of acting beyond its powers. But its real concerns are about tariffs, not a philosophical legal debate.
  • Under WTO rules, members can raise tariffs unilaterally to defend against cheap imports or to prevent damaging import surges. Increasingly, the Appellate Body has ruled against US use of those kinds of tariffs.
  • The solution to losing US appeals is not to shut down the Appellate Body but negotiate more precise rules in light of US complaints and legitimate concerns of trading partners.

==========

Article:

From January 1, 1995 until December 10, 2019, the world trading system had a relatively reliable referee. If one government reckoned that another had broken the rules, then instead of lashing out immediately on its own, it could complain to the World Trade Organization (WTO). After a first round of independent arbiters judged on which side was in the right, WTO members could appeal to the Appellate Body, which would deliver the final verdict. But now, because of the Trump administration’s refusal to appoint new members, that Appellate Body is defunct. Without a referee, the danger is that trade disputes blow up into trade wars. Why, then, has the Trump administration done this?
One answer came on February 11, 2020, when the Office of the United States Trade Representative (USTR) published the Report on the Appellate Body of the World Trade Organization. Over 174 pages, the report accused the Appellate Body of engaging in ultra vires actions (acting beyond its powers) and obiter dicta (going on and on). It complained about these adjudicators taking away members’ rights and adding new obligations, in ways that American policymakers had never intended when they signed up to the WTO.
From this body of lawyerly Latin one could easily conclude that the Trump administration is engaged in a philosophical legal debate. Perhaps this is about a clash of legal systems, with the American contract-based approach to international law pitted against a European one, where interpretation—or, in American eyes, misinterpretation—is more acceptable.
Dig through the details, though, and it becomes clear that a key area of conflict is much less grandiose. In particular, one collection of judgments by the Appellate Body has caused special angst. In the section of the report titled “Appellate Body Errors in Interpreting WTO Agreements Raise Substantive Concerns and Undermine the WTO,” four of the five alleged errors concerned “trade remedies.”[1]
In other words, this is about tariffs. In a new essay, we explain why.[2]

TRADE REMEDY BASICS
Under WTO rules, members commit not to raise their tariffs above a certain level. But under exceptional circumstances, governments can break those limits to apply trade remedies. These include antidumping duties to defend against cheap imports; countervailing duties to protect against subsidized imports; and safeguard tariffs in response to import surges. By alleviating the pressure caused by injurious foreign competition, these defensive duties are supposed to preserve the political legitimacy of the system.
UNDER THE WTO, AMERICA’S USE OF TRADE REMEDIES CAME UNDER FIRE
When negotiating the terms of the WTO, American trade negotiators fought hard to retain the right to use trade remedies. And immediately after joining the WTO, their import coverage increased (see figure). But then their import coverage fell, from a peak of 5.5 percent of total US goods imports in 1999 to a trough of 1.9 percent in 2013.

 

Pinning down exactly why this happened is all but impossible, as so many different things were happening at the same time. It is possible that this decline was the natural consequence of globalization. For example, as American companies built cross-border supply chains to take advantage of cheap inputs from other countries, their calls for tariffs should have quietened down.[3]
But one might also have expected to see the reverse. Over that period American producers were increasingly exposed to international competition, not only through tariff cuts agreed to as part of America’s WTO membership but also through the North American Free Trade Agreement with Mexico and the agreement to grant China permanent normal trade relations in 2000. The Great Recession, with its devastating impact on American manufacturing, should also have increased demands for protection.
Meanwhile, as demand for protection should have been on the up, the supply of tools to respond to such demands had fallen. Before the WTO, American negotiators had sometimes dealt with import competition by browbeating their trading partners into limiting their exports. At their peak in the late 1980s, such voluntary export restraints (VERs) affected 12 percent of US imports. But under the WTO, the United States agreed to relinquish this tool and use tariffs instead.
Implicit in the USTR’s report is the idea that this decline in trade remedy use was in fact the unnatural consequence of the WTO’s Appellate Body. Upon joining the institution, America’s use of trade remedies came under intense attack from other members. Nearly two-thirds of the disputes filed against it by other members were about trade remedies. Between 2002 and 2019, anywhere between a third and 60 percent of America’s trade remedies by import coverage were subject to a formal WTO dispute (see figure).
Time after time, the American government defended its behavior in front of the Appellate Body. And time after time, it lost. After losing, it would generally change its practices to comply with the Appellate Body’s judgments. But over time resentment built. To the likes of USTR Robert Lighthizer, these decisions from judges in Geneva were undermining the rights that American negotiators had fought so hard to protect and influencing American policymaking in ways that only Congress was supposed to.[4]
Of the five complaints about Appellate Body errors listed in the USTR’s report, two concerned antidumping, one was about countervailing duties, and the fourth was about safeguard tariffs.

THE TRUMP ADMINISTRATION’S SOLUTION IS MORE CONTROVERSIAL THAN ITS DIAGNOSIS
The Trump administration is not alone in finding fault with the WTO’s Appellate Body.[5] But its solution, of leaving too few arbiters for the dispute settlement system to work, has attracted criticism. For example, the Obama administration’s USTR, Michael Froman, has summarized the system of definitive rulings supported by the global trading community and not just one government as “an important advance over the last 20 plus years.”[6] The system’s defenders could point out that the United States has brought the most offensive disputes of any WTO member and has won an overwhelming number for the benefit of American companies and workers.
Some policymakers outside America may hope for a different American administration to sweep in, recognize the value of independent international arbiters, and restore the Appellate Body to its former glory. Other more pragmatically minded ones should get to work. First they must recognize the source of American discontent, which goes beyond procedural gripes.[7] And they must start working on a politically sustainable fix.

NOTES
1. The fifth error involves “Technical Barriers to Trade,” or how the Appellate Body ruled on challenges to US regulations such as the country of origin labeling program for beef and pork products.
2. For more on the history of this issue, see Chad P. Bown and Soumaya Keynes, 2020, Why Trump Shot the Sheriffs: The End of WTO Dispute Settlement 1.0, PIIE Working Paper 20-4, March.
3. For evidence that this contributed to the application of new trade remedies, see Emily J. Blanchard, Chad P. Bown, and Robert C. Johnson, 2016, Global Supply Chains and Trade Policy, NBER Working Paper No. 21883, January. For evidence that this contributed to the removal of old trade remedies, see Chad P. Bown, Aksel Erbahar, and Maurizio Zanardi, 2020,Global Value Chains and the Removal of Trade Protection, PIIE Working Paper 20-3, February.
4. Before becoming the USTR, Lighthizer represented the steel industry as it requested tariff protection through trade remedies. In any given year between 1999 and 2019, between 20 and 70 percent (by import coverage) of America’s trade remedies subject to a formal WTO dispute were in the steel sector.
5. See, for example, Payosova, Hufbauer, and Schott (2018); Schott and Jung (2019); González and Jung (2020); and Hillman (2018).
6. Chad P. Bown and Soumaya Keynes, 2019, US Trade Policy Before Trump, with Ambassador Michael Froman, Trade Talks podcast, Episode 93, July 19, at 18:50.
7. See Informal Process on Matters Related to the Functioning of the Appellate Body–Report by the Facilitator, H.E. Dr. David Walker (New Zealand), WTO legal document WT/GC/W/752, October 15, 2019.

terça-feira, 3 de dezembro de 2019

The End of WTO, as we know it - The Economist

It’s the end of the World Trade Organisation as we know it

And America feels fine

“WINTER IS COMING,” warned a Norwegian representative on November 22nd, at a meeting of the World Trade Organisation (WTO). The multilateral trading system that the WTO has overseen since 1995 is about to freeze up. On December 10th two of the judges on its appellate body, which hears appeals in trade disputes and authorises sanctions against rule-breakers, will retire—and an American block on new appointments means they will not be replaced. With just one judge remaining, it will no longer be able to hear new cases.
The WTO underpins 96% of global trade. By one recent estimate, membership of the WTO or General Agreement on Tariffs and Trade (GATT), its predecessor, has boosted trade among members by 171%. When iPhones move from China to America, or bottles of Scotch whisky from the European Union to India, it is the WTO’s rules that keep tariff and non-tariff barriers low and give companies the certainty they need to plan and invest.
The system is supposed to be self-reinforcing. Mostly, countries follow the WTO’s rules. But if one feels another has transgressed, then instead of starting a one-on-one trade spat it can file a formal dispute. If the WTO’s ruling displeases either party, it can appeal. The appellate body’s judgments pack a punch. If the loser fails to bring its trade rules into compliance, the winner can impose tariffs up to the amount the judges think the rule-breaking cost it. It is that punishment that deters rule breaking in the first place.
It is no surprise that President Donald Trump has axed these foreign arbiters, given his general distaste for internationally agreed rules. On November 12th he declared himself “very tentative” on the WTO. But the problems run far deeper than dislike of multilateral institutions. They stem from a breakdown in trust over the way international law should work, and the more general failure of the WTO’s negotiating arm. Had the Americans felt that they could negotiate away their grievances, resentment towards the appellate body might not have built up. But with so many members reluctant to liberalise, including smaller countries fearful of opening up to China, that has been impossible.
America has had some wins at the WTO: against the European Union for subsidies to Airbus, an aircraft-maker; and against China for its domestic subsidies; theft of intellectual property; controls on the export of rare earths, which are used to make mobile phones; and even its tariffs on American chicken feet. But it has also been dragged before the appellate body repeatedly, in particular by countries objecting to its heavy-handed use of “trade remedies”: tariffs supposed to defend its producers from unfair imports. Time after time, it has lost. In such cases, it has generally sought to become compliant with the rules rather than buy the complainant off.
Though previous administrations had grumbled, and occasionally intervened in judges’ appointments, the Trump administration went further. Its officials complained that disputes often dragged on much longer than the supposed maximum of 90 days, and—more seriously—that the appellate body made rulings that went beyond what WTO members had signed up to. They made it clear that unless such concerns were dealt with, no new judges would be confirmed.
Judicial overreach is in the eye of the beholder. Losers will always feel hard done by, and America has been quick to celebrate the WTO’s rulings when it wins. But plenty of others think that the appellate body had overstepped its remit. A recent survey of individuals engaged with the WTO, including national representatives, found that 58% agreed with that verdict.
Getting so many countries to sign up to the WTO was a remarkable achievement. One way negotiators managed this was by leaving the rules vague, and papering over their differences with ambiguous language. Take “zeroing”, for example: using dubious mathematics to calculate defensive tariffs on unfairly traded imports. The Americans claim that the rules do not say they cannot do it. But others counter that the rules do not say they can. It is such long-running differences that have set the scene for the latest showdown.

Offer me solutions

The American trade lawyers happy to kill the appellate body see a fundamental difference between their attitude to international law, and that of Europeans. Their position is that only clear contractual terms can be enforced, and they see Europeans as more comfortable with resolving ambiguities by going beyond what is written. Essentially, they regard the appellate body as too European. Moreover, in its eagerness to rule where terms are unclear, and in the American government’s willingness to change its laws in response, they feel an affront to America’s sovereignty.
Under the GATT, which lacked a proper enforcement system, ambiguities were hashed out in smoke-filled rooms. But the WTO was supposed to make naked power politics over trade obsolete. Had it worked as intended, there would have been a balance between settling disputes and writing new rules. Policy is best made with a vibrant judiciary interpreting the law, and a functioning legislative arm to fix any mistakes. Whenever the appellate body made decisions that annoyed members, they could have resolved their differences at the negotiating table. Perhaps America could have got others to agree to higher tariffs on imported steel, or been granted some flexibility in its defensive duties.
But the WTO’s negotiating arm has been broken for years. With the current count of members at 164, it has become more inclusive, but is unable to get much agreed. Each member has a veto over any further multilateral trade liberalisation. And without new negotiations, resentment towards the appellate body has built up.
If you think this has a happy ending...
Had the multilateral system been more effective at dealing with the rise of China, perhaps the single biggest issue of its times, then calls to save it might be louder in Washington. Although various American administrations pursued and won several cases, the process was slow and occasionally frustrating. America can justly claim that, when it tried to hold China to account for its breaches of trade rules, it got little support. America has been responsible for more than half of all complaints against China. And other WTO members’ complaints were generally copycat, filed in America’s wake.
Now that the Trump administration has bypassed the WTO and taken the fight straight to China, there is nothing remaining that it particularly wants from the WTO. And so the chances that it will relent and allow nominations to the appellate body by December 10th are slim to none. In response to proposals from other members to change the body’s rules, an American representative said that they were not persuaded that the rules would be stuck to.
On November 26th the Trump administration suggested slashing the pay of members of the appellate body. In October Chuck Grassley and Ron Wyden, the top Republican and Democrat politicians on the Senate Finance Committee, published an editorial saying that while they saw the value of an appellate body, it “needs to operate as the members agreed”.
Of the WTO’s 163 other members, 117 have signed a joint letter calling upon America to end the impasse. Although America has been the heaviest user of the dispute-settlement system, others will miss it too (see chart). Some have already begun preparing, for example by agreeing at the start of any disputes to forgo the right to appeal. The EU, Canada and Norway have agreed on an interim arbitration mechanism that will use retired members of the appellate body as judges. And the EU is considering beefing up its own enforcement mechanism to fill the hole left by the appellate body, though it would probably cleave more closely to the outcomes of first-stage rulings in WTO disputes.

But some members are likely to shun such alternatives—especially those that expect to be sued a lot. And it is unclear how robust they will be if disputes turn nasty. Some WTO members may try to choose their dispute-settlement mechanism case by case. An organisation as ambitious as the WTO, for all its faults, will be easier to break than replace.
All this means that global trade is about to become a lot less predictable and a lot more contentious. Without the appellate body to act as honest broker, disputes between the biggest members may escalate. Under the GATT America acted as global trade sheriff, launching investigations at will and bullying disputatious countries into submission. It is not impossible that it will resume this role. On November 27th the Trump administration announced that it had nearly finished an investigation into a French tax on digital services, which America reckons discriminates against its tech giants. That could lead to tariffs.

You’ll miss it when it’s gone

In the 1980s American unilateralism was no fun for countries on the receiving end. But at least back then Uncle Sam could point to the lack of any other power even theoretically capable of doing the job. Now the absence of independent referees is America’s own doing. And of all Mr Trump’s trade policies, it may prove the hardest to reverse and have the longest-lasting effects. 

This article appeared in the Finance and economics section of the print edition under the headline "It’s the end of the World…"

quinta-feira, 2 de novembro de 2017

OMC e o futuro do comercio internacional: China como economia de mercado - WSJ

Um dos mais importantes artigos que já li no Wall Street Journal: simplesmente o futuro do comércio internacional com a admissão (ainda oficiosa) da China como "economia de mercado" na OMC, e um estudo dos casos sendo examinados sob o seu sistema de solução de controvérsias. Repito: IMPORTANTE, para os que seguem o comércio internacional.
Paulo Roberto de Almeida

Globalization in Retreat

How China Swallowed the WTO

By Jacob M. Schlesinger
The Wall Street Journal, November 2, 2017
The U.S. helped create the group to smooth global commerce and integrate a rising China. Instead, it’s become a battleground for intense national rivalries

GENEVA—Inside the cement compound housing the World Trade Organization lies a colorful Chinese garden of cultivated rocks, arches and calligraphy. The gift from the Chinese commerce ministry symbolizes “world prosperity through cross-cultural fertilization,” according to a marble plaque.
It’s not the only way China has left its mark on the institution.
Sixteen years after becoming a member, the world’s second-largest economy is in an increasingly tense standoff with the U.S. and Europe that threatens to undermine the WTO’s authority as an arbiter of global trade.
The Chinese garden at the World Trade Organization’s Geneva headquarters. 
The Chinese garden at the World Trade Organization’s Geneva headquarters. Photo: Xinhua/ZUMA PRESS
 
Rather than fulfilling its mission of steering the Communist behemoth toward longstanding Western trading norms, the WTO instead stands accused of enabling Beijing’s state-directed mercantilism, in turn allowing China to flood the world with cheap exports while limiting foreign access to its own market.
“The WTO’s abject failure to address emerging problems caused by unfair practices from countries like China has put the U.S. at a great disadvantage,” Peter Navarro, a trade adviser to President Donald Trump, said in an interview. “The message to the WTO from this administration has been clear. Things have to change.”
Such criticism has percolated over many years in the U.S. with growing bipartisan intensity. Now it is coming to a head under the first American presidency of an open free-trade skeptic, in a case just starting to wend its way through the Geneva process. The issue: whether China has graduated to a “market economy,” a change of status that would make it considerably harder for other nations to block imports they believe are improperly aided by Chinese government distortions.
China has sued both the U.S. and European Union demanding the change, calling it “nonnegotiable,” and Chinese officials are likely to reiterate that demand when they talk trade next week with President Trump during his Beijing visit. Steelworkers have jammed the streets of Belgium and Germany protesting that ultimatum, while Europe’s parliament voted 546 to 28 to fight it, one Italian lawmaker saying acceptance “would be carrying out the suicide of the European industry.”

Focusing Eastward


As China’s share of global trade has grown rapidly...
Each nation's trade as a share of the global total
Exports
Imports
18
%
18
%
16
16
14
14
U.S.
China
12
12
10
10
U.S.
8
8
China
6
6
4
4
2
2
0
0
’15
’15
’05
’05
2000
1995
’10
’10
1995
2000
...the U.S. and other countries have ramped up accusations of unfair trading practices, and invoked those allegations to block Chinese imports.
Percentage of U.S. imports from China covered by restrictions
Imports affected by U.S. trade restrictions
9
%
China
Antidumping
8
S. Korea
7
Mexico
2016 estimate
6
2017 estimate
India
5
Japan
4
Canada
3
Antisubsidy*
Germany
2
France
1
U.K
0
$30
$20
$40
$10
$50
$0
billion
1995
2000
’05
’15
’10
*Countervailing duties
Sources: World Bank (exports and imports); Chad Bown, Peterson Institute for International Economics (restrictions)
“This is without question the most serious litigation matter we have at the WTO right now,” Robert Lighthizer, the Trump administration’s trade representative, told Congress in June. A China victory, he added, “would be cataclysmic for the WTO.”
Washington’s role challenging the WTO marks a reversal from the giddy mid-1990s heyday of globalization, and a reminder of how nationalism is increasingly the byword in global economic competition. When the WTO was forged in Morocco as a new international trade overseer, replacing the less-powerful General Agreement on Tariffs and Trade, the Cold War had ended and the U.S., as the sole superpower, saw a chance to weave economies together around American-style capitalism.
GATT and the WTO have, over the past seven decades, greased the wheels of interdependence. Under Geneva’s guidance, tariffs world-wide have plunged nearly 80% and trade’s share of the global economy has more than doubled. More than 160 countries representing 98% of world commerce are now WTO members, and most of the few remaining nonmembers—like Belarus and Timor-Leste—are negotiating to join.
The WTO’s defenders say it still plays an important role. Roberto Azevedo, the director-general of the WTO, credits his organization with preventing a recurrence after the 2008 financial crisis of the trade wars that exacerbated the Great Depression. “If we didn’t have the WTO, we would be in much worse shape,” Mr. Azevedo said in an interview.
Mr. Azevedo, who as a Brazilian trade diplomat successfully used WTO courts to challenge American cotton subsidies, plays down U.S. complaints that his body isn’t properly equipped to handle China. “We have 164 countries,” he said. “China is one of those countries that have their own practices, their own methodologies. The system was designed to respond to that diversity.”
A view inside the WTO headquarters.
A view inside the WTO headquarters. Photo: Laurent Gillieron/Keystone/Associated Press
But critics say the system is badly in need of an overhaul. After the violent 1999 street battles that killed the Seattle round and the effective 2015 death of the Doha Development Round, the world trade regime has now gone nearly a quarter-century without a comprehensive rules upgrade—the longest such period since World War II.
These failures have elevated the importance and prominence of the WTO’s judicial system, as countries concluded their only option for advancing their cause in Geneva was litigation, not negotiation.
At the WTO, disputes are handled before “panels,” not “courts,” terminology carefully chosen in deference to home-country political concerns about sovereignty. In a similar vein, judges are called “members,” and wear business attire, not robes, though they do preside from an elevated bench.
The courts are structured as an arbitration system, with a dispute-settlement panel and a more powerful appellate body. WTO officials call the process their “crown jewel” and say members comply with 90% of its rulings.
One of the most active litigants has been Beijing.

Clogging the Courts


A growing number of those disputes have landed before the WTO...
Disputes involving the U.S.
Disputes filed with the WTO involving China
As respondent
Third party
Complainant
Complainant
Third party
As respondent
35
35
30
30
25
25
20
20
15
15
10
10
5
5
0
0
’17*
’15
’05
’00
’10
1995
’15
’17*
1995
’10
’05
’00
...helping feed a backlog, which is straining the WTO's legal system, extending the duration of cases, and fueling dissatisfaction with the process at a time when challenges rise against China. Complaints can take more than four years to be resolved.
Active WTO disputes per year
Length of dispute process, 1995–2016
Actual avg.
Official deadline for each step
40
35
From request to panel
30
25
From panel to report
20
Appeals (2-3 mos.)
15
Agreed time to
implement agreement
10
Compliance panel
5
From compliance
appeal to final report
0
12
6
18
0
months
’15
’10
2000
’05
’17*
1995
*Through October †Through September
Sources: WTO (dispute counts, disputes per year); Louise Johannesson and Petros C. Mavroidis (length of dispute process)
China’s 2001 WTO entry was a transformative moment. Negotiations took 15 years—longer than those creating the WTO itself—and included more strings and conditions than had been imposed on any other member. The shared, underlying assumption was that China’s economy was undergoing a historic transition from state-run to market-oriented, and that WTO membership would ensure, and accelerate, that evolution.
Most countries combine their WTO diplomatic corps with delegations to other global bodies in Geneva. Beijing built a mammoth stand-alone “Permanent Mission of the People’s Republic of China to World Trade Organization” about a mile up the shore of Lake Geneva, flying the large red flag with yellow star.
The Chinese government was at first shy about using the WTO courts, modeled after the unfamiliar Western legal system, and filed just one complaint in its first five years after joining. But the surge in Chinese exports following its WTO entry, which suddenly made it the world’s largest exporter, thrust Beijing into the center of the legal system.
Since 2007, China has been party to more than a quarter of all WTO cases, as trading partners scrambled to erect barriers protecting their industries while demanding better access to China’s markets.
Facing such pressures, Chinese officials set about to master the process. China sought out disputes in which it had no direct stake and joined more than 100 as a “third party,” giving officials access to proceedings as observers. The Chinese offered large stipends to prominent American and European trade-law scholars to teach seminars in China for young bureaucrats. They retained top U.S. law firms. Steptoe & Johnson LLP became the go-to firm for combating a new American policy imposing extra-steep duties on Chinese imports aided by allegedly illegal subsidies; one member of the Steptoe China team had staffed the WTO appellate body for six years.
Chinese steel is among the many trade items in dispute between the U.S. and China.
Chinese steel is among the many trade items in dispute between the U.S. and China. Photo: Wang He/Getty Images
Beijing’s lawyers started notching notable court wins over the Americans who shaped the system. In a series of rulings from 2011 through May 2017, the appellate body concluded that Washington had cut too many corners in asserting that the state underwrites Chinese exports. Those decisions, covering four dozen industries, from off-road tires to wind towers to, literally, kitchen sinks, raised the bar for U.S. policy makers trying to block Chinese imports. And they complicated American efforts to impose higher duties on Chinese goods.
WTO defenders note the U.S. has still won the vast majority of cases it has filed in Geneva, and say it should be pleased that China has chosen to pursue its trade grievances through global arbiters.
“Since our accession to the WTO, China has always followed the WTO rules,” Cui Tiankai, China’s ambassador to the U.S., said in a recent interview with a Chinese TV station. “Sometimes we don’t have 100% agreement with them, but still we play by the rules. I hope America could do the same.”
The losses rankled the Washington trade community. In May 2016, aides to then-President Barack Obama cited two rulings favoring China as part of a broader list of grievances designed to block the reappointment of a South Korean judge on the appellate body.
At a tense meeting at WTO headquarters, the U.S. delegate told fellow trade diplomats that the judge, South Korean law professor Seung Wha Chang, had shown a pattern of judicial overreach and suggested that he had acted as an “independent investigator or prosecutor” on behalf of parties such as Beijing.
It was seen as a surprisingly hostile act in the genteel Geneva community. Thirteen veteran WTO jurists complained the U.S. had traversed “a Rubicon that must not be crossed,” putting “the very future of the entire WTO trading system at risk.” Mr. Chang himself responded through an interview with a Korean newspaper, saying he had been made a scapegoat. He added that the U.S. may have wanted him removed before the trade court heard a pending challenge to American restrictions on South Korean washing machine exports., an insinuation U.S. officials have rejected.
The WTO includes more than 160 countries representing 98% of world commerce.
The WTO includes more than 160 countries representing 98% of world commerce. Photo: Denis Balibouse/REUTERS
The Chang tensions exposed a bigger problem: The WTO’s failure to complete negotiating rounds aimed at updating rules for 21st-century business has forced judges to use often-outdated 1990s guidelines in settling disputes. That has fed complaints that the WTO courts were relying increasingly on their own interpretations of those rules, engaging in judicial overreach and activism.
Peter Van den Bossche, a Belgian judge on the appellate body, wrote a 2015 essay warning of the “dangerous institutional imbalance in the WTO between its ‘judicial’ branch and its political ‘rule-making’ branch,” that could “drastically weaken” the system.
Since the WTO doesn’t have detailed rules governing Chinese-type state-owned-enterprises, some observers say jurists have had to make decisions case by case.
The Trump administration has escalated the Obama administration’s battle over the appellate body, blocking appointments of any new judges and sparking fights even with members sympathetic to the U.S. campaign against China. By year’s end, the seven-member appellate body will have three vacancies, heightening worries about its ability to manage a mounting backlog and a looming “tsunami of cases,” as one judge warned in a recent speech. At an Aug. 31 meeting of the committee overseeing the courts, the U.S. said it would block any attempt to fill those slots until its “longstanding” complaints about the courts were addressed.
That’s just one of many ways Mr. Trump is testing the WTO. He’s staffing his trade team with longtime WTO detractors. As private lawyers, both Mr. Lighthizer and Gilbert Kaplan, nominated to be the Commerce Department’s trade point-man, helped shape strategy for U.S. industries combating Chinese imports after its WTO entry. Both won protections from the U.S. government—Mr. Lighthizer for steel pipes, Mr. Kaplan for various types of paper—that were later deemed improper by the WTO appellate body for taking too many liberties in asserting Chinese misbehavior.
There’s no sign Mr. Trump intends to follow through on the idea he once floated during the 2016 campaign of pulling the U.S. out of the organization. But aides have said they are exploring a number of policies that openly challenge the WTO’s authority, reflecting their skepticism about the body’s ability to handle China. They have openly discussed imposing sanctions unilaterally against China. Commerce Secretary Wilbur Ross in April launched an official study of “the structural problem” of the WTO and its courts, arguing the body has “an institutional bias…toward the exporters rather than toward the people that are being beleaguered by inappropriate imports.”

Who Wins at the WTO

The success rate of WTO members in filing claims, or defending against them, at the dispute panel level


Won claims it filed against
another member
Won claims filed against it
U.S.
E.U.
Canada
Korea
Mexico
Japan
Brazil
Argentina
India
China
60
40
20
80
0%
Note: Includes cases from 1995 through Feb. 23, 2016; countries shown were involved in at least 10 cases.
Source: Louise Johannesson and Petros C. Mavroidis
Research shows WTO courts tend to favor countries suing to challenge trade barriers over those defending them. In a study of all WTO disputes litigated from 1995 through early 2016 for the Journal of World Trade, Louise Johannesson and Petros Mavroidis concluded the plaintiffs won 71% of the claims filed at the panel level. But their data also show the U.S. is one of the most successful plaintiffs, winning far more of the cases at the panel level that it initiates than China does.
A looming challenge to the WTO is the pending case determining China’s official status in the world trading system—whether members are now required to treat it as a “market” economy. The debate is complicated because there appears to be no clear answer in WTO rules, which some participants say were left intentionally vague in the agreement governing China’s entry.
Beijing reads the pact as having automatically guaranteed it market status 15 years after its December 2001 accession. The U.S., Europe, Japan and others say the change was intended to be a privilege contingent on liberalization promises Beijing has yet to keep.
The penalty China pays for its WTO label as a “nonmarket economy” is high, as would be China’s benefits for wiping it away. The “nonmarket” designation makes it easier for trading partners to impose inflated tariffs on goods they conclude have been “dumped”—or sold below “fair” value. That’s because prices and costs are seen as so distorted in a “nonmarket economy” that other countries are given wide latitude to determine on their own what they consider “fair.” That contrasts with a stricter burden of proof and analysis required when leveling the same charges against a “market economy.”
A flip from “nonmarket” to “market” would boost EU imports from China by as much as 21%, or $84 billion, according to a 2016 study by CEPII, a French-government affiliated think tank on international economics. The same report noted the U.S. uses the nonmarket discretion more aggressively than the EU, both slapping penalties on a greater portion of Chinese imports and applying a steeper rate. The study concluded that Washington applied an average duty of 162% against Chinese goods, compared with a 33% rate for market economies.
China has waged a diplomatic campaign asking nations to grant it market status, winning over more than 70 countries, mainly in Africa, Latin America and Asia. On Dec. 12, 2016—the day after the 15th anniversary of its accession—Beijing filed separate complaints in Geneva against the U.S. and the EU demanding similar treatment from them, arguing that the stance of the two Western powers “nullify or impair benefits accruing to China.”
The European case is moving first, and a panel was appointed in July with veteran arbiters from Jamaica, Switzerland and New Zealand. The deliberations are likely to take more than a year, but interest is already intense, an unusually high 20 countries registering as “third parties,” including Ecuador, Russia, Tajikistan, and Japan.
WTO defenders and critics alike say the Geneva courts are the wrong way to resolve what are ultimately political and economic questions left ambiguous in the underlying rules.
“That gray zone is the key point of tension,” says Chad Bown, a WTO expert at the pro-free-trade Peterson Institute for International Economics. “How you deal with that is ultimately going to determine whether the WTO system in its current form can hang together or not.”
Write to Jacob M. Schlesinger at jacob.schlesinger@wsj.com