World Trade Organization Issues Research Articles

WTO Legal Issues Arising from Carbon Border Measures: An Introductory Primer

Carbon border measures (CBMs) are an important tool for integrating climate and trade policy. At the same time, however, they raise novel issues for the World Trade Organization (WTO). Although these issues may present themselves as legal issues, they are significant diplomatically and politically for a number of reasons. First, U.S. allies, the European Union (EU) in particular, are politically invested in the WTO as the center of a rules-based international trading system. Allies are therefore reluctant to adopt or acquiesce to measures that do not have a plausible justification under WTO rules. Diplomatic engagement on allies’ policies, such as the EU’s forthcoming CBM, is thus most effective when it is informed by WTO issues. Second, U.S. allies have perceived the United States under the Trump administration as actively undermining the WTO. They therefore would be especially sensitive now to U.S. policies, such as a potential U.S. CBM, that could fly in the face of WTO rules. Third, U.S. allies, led by the EU, are eager to rebuild the WTO’s Appellate Body (the lynchpin of the WTO’s dispute settlement system), which the Trump administration incapacitated following years of bipartisan discontent with the body. CBMs present a challenge to this endeavor. If the Biden administration adopts CBMs that cannot at least plausibly be justified before the WTO’s dispute settlement system, reviving dispute settlement at the WTO will be considerably more difficult. Preemptively thinking through WTO legal issues with CBMs may thus smooth the diplomatic and political path for adopting such measures and presenting them to both the U.S. business/environmental communities and U.S. allies. For simplicity, this memo focuses on the General Agreement on Tariffs and Trade (GATT), the cornerstone of WTO rules. Additional analysis under other WTO rules, such as the Technical Barriers to Trade Agreement or the Agreement on Subsidies and Countervailing Measures, can be provided upon request. The GATT follows a system of primary rules with which members must comply unless an exception to those primary rules applies. This memo discusses briefly why CBMs are likely to violate the GATT’s primary rules, before turning to issues that arise in justifying a CBM under GATT exceptions. We conclude with a discussion as to why the approach we’ve argued for elsewhere1 is perhaps particularly well suited to being defended under GATT exceptions.

A WTO Ruling Matters: Citizens’ Support for the Government’s Compliance with Trade Agreements

AbstractAn international court’s ruling is expected to influence public opinion because of the perception of its legality and the subsequent costs of noncompliance. However, there has been little direct empirical evidence to support this claim. To close this lacuna, I conducted a survey experiment to examine the power of a court’s ruling in the context of a trade dispute. The experiment shows that citizens become less supportive of their government’s noncompliance with GATT/WTO agreements when the World Trade Organization issues an adverse ruling, compared to when their government is verbally accused of a violation of the same agreements by a foreign country. However, the experiment also finds that the impact of a ruling is conditional upon the level of compliance of the winner of the dispute.

Training Needs of Farmers about World Trade Organization Issues

In the present study, efforts were made to assess the awareness level and its correlate with the selected variables among the farmers on World Trade Organization (WTO) issues with special reference to agriculture and also to ascertain the training needs. The study was carried out in the state of Maharashtra and multistage random sampling technique was used for the selection of the respondent farmers. The results revealed that the overall awareness level of farmers on WTO issues related to agriculture was very low. Farmers’ education, mass media exposure, social participation and extension contact were found to have positive and significant correlation with their awareness about WTO. Farmers were found to be unaware not only about the structure and functions of WTO, its origin and purpose etc. but also about the provisions under the Agreement on Agriculture and other Intellectual Property Related issues such as the system of plant variety protection in India in general and the Protection of Plant Variety and Farmers Rights Act, 2001 in particular. The present investigation concluded that farmers must be given training on every basic aspects of WTO.

China's Currency Devaluation and WTO Issues

INTRODUCTION The value of China's currency, the renminbi (RMB), and the conduct of China's exchange rate policy have generated intense debate in academic and international policy circles. The RMB was pegged from 1994 until mid-2005 at 8.28 yuan to the US dollar. China shifted in 2005 to a policy of loosely pegging the RMB to a basket of major currencies. Since then, the RMB has appreciated against the dollar, and the current RMB/dollar exchange rate stands at roughly 6:30. Over the same period, RMB generally depreciated against the Euro, falling from 10.06 in June 2005 to 10.79 in June 2008. With the 2007/2008 financial crisis, however, the Euro has depreciated and the RMB/Euro exchange rate presently stands at 8.99. Throughout this period, China has intervened actively in foreign exchange markets to prevent the RMB from appreciating faster by selling RMB and buying other major currencies (mostly US dollars). A number of economic commentators argue that China's policies amount to market-distorting manipulation. For example, C. Fred Bergsten of the Peterson Institute for International Economics recently suggested that the RMB must appreciate by approximately 40 per cent against the dollar to correct current and urged the United States to take multilateral, and if necessary unilateral action, to pressure China to change its ways. (1) Michael Mussa and Arvind Subramanian have expressed similar views. (2) Politicians have become involved. Trade officials from both the US and Europe have argued that Chinese practices unfairly distort trade, amounting to the equivalent of a subsidy to exports and a tariff on imports that would violate World Trade Organization (WTO) rules if imposed directly. US President Barack Obama stated in November 2009, for example, that China's current trade surplus is directly related to its manipulation of its currency's value. He concurrently promised to use all diplomatic means at his disposal to achieve change in China's manipulation of the value of its currency, a practice that contributes to massive global imbalances and provides Chinese companies with an unfair competitive advantage. (3) During the 2012 US elections season, Mr. Mitt Romney, one of the two presidential candidates, promised--while bashing President Obama, his opponent, of failing to act against China's currency manipulation--that if he was to be elected, he would label China a currency manipulator from day one. (4) Over the past few years, various proposals for action against China have been put forward in the US Congress. These range from insisting that the Treasury Department refer the matter to the International Monetary Fund (IMF), to requiring that the US Trade Representative bring a formal complaint to the WTO, treating China's alleged manipulation as a source of dumping or countervailable subsidies that would permit the imposition of antidumping or countervailing duties on Chinese imports. IMF case studies have shown that the IMF has never identified a certain member engaging in exchange manipulation, or indicated that the acts of any of its members amount to foreign exchange manipulation. Theoretically, the RMB exchange rate issue can become the subject matter of WTO dispute settlement proceedings only when China's trade partner(s) (e.g., the US and/or the European Union) lodge a complaint against China in the WTO dispute settlement body. Before moving to an action in the WTO, the governments of China's trade partners must take into consideration the translation of China's exchange rate policies (and specifically the magnitude of its exchange rate misalignment) into equivalent real trade policies that could then be more readily evaluated under the rules of the WTO, e.g., under Article XV of the General Agreement on Tariffs and Trade (GATT) 1994, Article XXIII of the GATT or Article 3 of the Agreement on Subsidies and Countervailing Measures (SCM). …

Non-violation Complaints - World Trade Organization Issues and Recent Free Trade Agreements

Non-violation Complaints - World Trade Organization Issues and Recent Free Trade Agreements