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The History and Future of the World Trade Organization ˜˚˛˝˙ˆˇ˛˚˛ The History and Future of the World Trade Organization draws on a wealth of human, documentary and statistical sources to examine in depth the economic, political and legal issues surrounding the creation of the WTO in 1995 and its subsequent evolution. Among the topics covered are the intellectual roots of the trading system, membership of the WTO and the growth of the Geneva trade community, trade negotiations and the development of coalitions among the membership, and the WTO™s relations with other international organizations and civil society. Also covered are the organization’s robust dispute settlement rules, the launch and evolution of the Doha Round, the rise of regional trade agreements, and the leadership and management of the WTO. It reviews the WTO’s achievements as well as the challenges faced by the organization, and identifies the key questions that WTO members need to address in the future. Craig VanGrasstek is publisher of the Washington Trade Report and a trade consultant. He earned his doctorate in political science from Princeton University, and has taught political economy at the Harvard Kennedy School, international relations at American University™s School of International Service, and literature at Georgetown University™s School of Foreign Service and in its Department of East Asian Languages and Cultures. The History and Future of the World Trade Organization ˜˚˛˝˙ˆˇ˛˘˚˛

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Disclaimer The opinions expressed in this publication are those of the author. They do not purport to reflect the opinions of the WTO or its members. The designations employed in this publication and the presentation of material therein do not imply the expression of any opinion whatsoever on the part of the WTO concerning the legal status of any country, area or territory or of its authorities, or concerning the delimitation of its frontiers. World Trade Organization 154 rue de Lausanne CH-1211 Geneva 21 Switzerland Tel: +41 (0)22 739 51 11 Fax: +41 (0)22 739 42 06 www.wto.org WTO Publications Email: publications@wto.org WTO Online Bookshop http://onlinebookshop.wto.org Publication designed by Services Concept Printed by Atar Roto Presse SA, Geneva © World Trade Organization 2013 ISBN 978-92-870-3871-5 Published by the World Trade Organization All photos copyright WTO unless otherwise indicated Cover photo: The Centre William Rappard, the historic home of the World Trade Organization, with the new WTO building inaugurated in 2013. © Brigida González

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Preface by WTO Director-General Pascal Lamy vii Foreword ixPart I. The foundations of the WTO Chapter 1 The theory and practice of the multilateral trading system 3Chapter 2 The creation of the multilateral trading system 39 Part II. Membership and representation Chapter 3 Members, coalitions and the trade policy community 83 Chapter 4 Accessions 121 Chapter 5 Relations with other organizations and civil society 151 Part III. Rules, norms and enforcement Chapter 6 Rules and norms 201 Chapter 7 Dispute settlement 229 Chapter 8 Notifications, trade policy reviews and monitoring 271 Part IV. Negotiations Chapter 9 Modalities, formulas and modes 303 Chapter 10 WTO negotiations conducted outside the Doha Round 335 Chapter 11 The launch: from Singapore to Doha, with a detour in Seattle 373 Chapter 12 The conduct of the Doha Round 413 Chapter 13 Discrimination and preferences 463 Part V. The organization, the institution and the future Chapter 14 Leadership of the organization and management of the institution 503 Chapter 15 The future of the WTO 549 Annex 1: Biographical appendix 571 Annex 2: GATT/WTO senior management, 1948-2013 599 Bibliography 601 Abbreviations 621 Index 625 Contents

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fiHistory,fl wrote James Baldwin, fidoes not refer merely, or even principally, to the past. On the contrary, the great force of history comes from the fact that we carry it within us, are unconsciously controlled by it in many ways, and history is literally present in all that we do.fl It is in this spirit that I have commissioned The History and Future of the World Trade Organization . The purpose of this work is to not only tell us about our past, but to explain our present and to inform our future. The General Agreement on Tariffs and Trade (GATT) arose in 1947 out of the ashes of the Second World War, as did the International Monetary Fund and what we now know as the World Bank. It was the product of unprecedented international cooperation by an international community that was deeply scarred by the damage and destruction that endless warfare had brought about; an international community searching for an entirely new beginning and a new international order. While GATT certainly ushered in a new era of international cooperation, it nonetheless had to weather the aborted effort to create the International Trade Organization, pressures of numerous other national and regional conflicts, and the entire Cold War, before eventually morphing into the WTO. Over a decade and a half later, it is now high time for a history of the WTO Πthe successor organization that inherited GATT. The recording and writing of history is no easy task and is subject to its own set of controversies. As many of you know, historians are in a constant quest for new perspectives, and would view this quest as the very lifeblood of historical understanding. However, the reinterpretation of history has sometimes been called firevisionismfl, and it is frowned upon by some and even viewed with suspicion by others. But there can be no recounting of history without a point of view. Historian Eric Foner often recounts his conversation with an eager young reporter from Newsweek . fiProfessor,fl she asked, fiwhen did historians stop relating facts and start all this revising of interpretations of the past?fl fiAround the time of Thucydides,fl he told her. This does not mean of course that absolutely any account of our past can count as history. In writing The History and Future of the World Trade Organization , Professor Craig VanGrasstek adhered to the strictest professional standards which clearly demarcate truths from falsehoods. We must nevertheless accept that there exists more than one legitimate account of the history of this organization. Preface by WTO Director-General Pascal Lamy

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viii THE HISTORY AND FUTURE OF THE W ORLD TRADE ORGANIZATION In constructing his narrative of the very complex past of the WTO, Craig not only explores the wide cast of characters and coalitions involved in making the WTO, but also walks us through the many different alleys of the organization Œ the well-known and the less well-known Œ that give us the story behind the story on numerous WTO agreements. In so doing, he opens our minds to new explanations of how the WTO has become what it is today. This also gives us a sense of where the WTO can go tomorrow. To my mind, the problems underlying the Doha Round Œ which is an important part of the WTO’s history of the past ten years Œ must be solved sooner or later, even if there is a less than complete outcome. This will preconfigure a future negotiating agenda. But the WTO is more than its negotiating arm. There is no doubt either that several new challenges lie at the doorstep of the multilateral trading system, whether they are part of WTO agreements or entirely new issues. In parallel, many members continue to liberalize their trade unilaterally or through preferential trade agreements between pairs or groups of countries, which move the bar higher. History shows that this is not new. The WTO is very much a response to a similar set of challenges with which the international community was confronted more than 20 years ago. It is my sincere hope that The History and Future of the World Trade Organization will start a conversation about the WTO’s future. The book will be translated into different languages and in addition to being made available through a variety of book-stores, it will be uploaded onto the WTO website for wider electronic dissemination. I am pleased that Craig, a historian at heart and an avid follower of the multilateral trading system, accepted this undertaking and wrote this publication in record time. The entire trade community has a debt of gratitude towards him. Pascal Lamy WTO Director-General

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What chiefly makes the study of history wholesome and profitable is this, that you behold the lessons of every kind of experience set forth as on a conspicuous monument; from these you may choose for yourself and for your own state what to imitate, from these mark for avoidance what is shameful in the conception and shameful in the result. Livy The History of Rome, preface (c. 27 BCE) This book is a history in form but a biography in spirit. That term is technically inaccurate, as one cannot literally write the record of a life for something that does not live. To the extent that we can speak of the World Trade Organization (WTO) as if it were living, however, it is still young. In most of its members, the WTO would barely be of legal age to drink, drive and vote. It has nevertheless been around long enough to permit preliminary assessments of those events that have changed the composition of its membership and altered the ways that those members interact with one another. An underlying theme of this study is that the character of an international organization represents more than the sum of its parties, being the institutional embodiment of specific ideas and aspirations. The fact that the membership of the WTO is virtually identical to that of several other international organizations that deal with global economic issues does not mean that their members meet in these different institutions with identical aims or that they deal with one another in these forums in identical ways. In 18 years of practice, and in its inheritance from a half-century of the General Agreement on Tariffs and Trade (GATT) and two centuries of trade diplomacy before that, the WTO has received and developed a character that sets it apart from all other global institutions. The main unifying element of this analysis is a focus on change over time. The presentation is more thematic than chronological, however, examining developments not in the sequential form of annals but instead by subject. Most of the information that follows is presented with a view towards either comparing the WTO with the GATT period or in illuminating the changes that have taken place over the WTO™s own tenure. Reference is made throughout this book to the GATT period, which can be precisely defined as 1947 to the end of 1994, and to the late GATT period, which can less precisely be defined as starting sometime in the latter years of the Tokyo Round (1972-1979) or in the interval between that round and the Uruguay Round (1986-1994). There are some ways in which the WTO period resembles the late GATT period, and other respects in which they are quite different eras. Foreword

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x THE HISTORY AND FUTURE OF THE W ORLD TRADE ORGANIZATION A few broad themes emerge in the story that follows. They concern the expanding scope of issues and associated controversies that are defined to fall within the trading system, the transformation of the WTO into a near-universal organization, the place of the WTO in the changing relations between its members, and the divergent evolution of the institution™s legislative and judicial functions. Each of these themes entails continuity as well as change from the GATT period, but the changes outweigh the continuity. Those aspects of the WTO that appear superficially similar or even identical to GATT can be deceptive, lulling observers into a false impression that the WTO is just an incrementally wider and taller version of GATT. It is instead best seen as a greatly revamped order that reflects the profound economic and political changes that long ago left behind a world of import quotas, fivoluntaryfl export restraints and unilateral enforcement, not to mention the revolutionary changes in the ways that words and ideas are communicated, goods and services are produced and traded, and states relate to one another. The WTO is a part of a global system in which countries are aligned very differently than they had been in the GATT period, both in trade and in other matters. Some that had once been outside the global market economy are now among its most active members, and others have moved from the periphery towards the centre. This is not your grandparents™ multilateral trading system. The most important development in the late GATT and WTO periods, and one from which so much else springs, has been the expanding scope of what we comprehend fitrade policyfl to be. For most of the GATT period, and for centuries before that, trade was understood to be principally or exclusively about the movement of goods across frontiers and trade policy was largely confined to initiatives affecting tariffs, quotas, and other border measures that tax, regulate or prohibit those transactions. That began to change late in the Tokyo Round, and especially in the Uruguay Round, when trade negotiators took on a much wider array of issues that vastly expanded the scope of the rules that they adopted. Trade now encompasses the cross-border movement not just of goods but of services, capital, ideas and even people. The expansion in what we understand trade policy to be all about was the principal reason for the transition from GATT to the WTO, as the earlier arrangement Œ which was more a contract than an institution Œ was considered to be too weak a vessel to contain the new issues. The creation of this new body did not put an end to the squabbles over what constitutes trade and trade policy, however, as WTO members continue to struggle over whether and in what ways the system might be stretched to deal with new issues. The potential scope of issues is quite broad, as the European Parliament demonstrated in 2011, when it approved a resolution identifying 15 other policy areas that fia modern trade policy is required to take into account.fl 1 These included not just the well-established matters of job creation as well as agricultural and industrial policy, together with development policy and foreign policy plus newer issues such as labour rights and environmental policy, but also (among others) the promotion of the rule of law, corporate social responsibility, protection of consumer interests and rights, and even neighbourhood policy. Membership in the multilateral trading system grew in both the GATT and WTO periods, but in the latter period that expansion has been just as notable for the qualitative as it is for the quantitative changes. Acceding countries such as China, the Russian Federation and

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