Are the rules written in a way that makes it unclear what the obligation is or are there countries that are actively skirting the rules? Is it both? Linscott: My assessment is that it is a combination of both. There are certainly circumstances in which a number of developing countries lack institutional capacity to readily comply with notification requirements in individual agreements.
A good example is the Agreement on Subsidies and Countervailing Measures , which has pretty elaborate requirements to notify the WTO of subsidies in individual countries. In many developing countries, that is a significant undertaking across their entire government to identify their full range of subsidies. There are also circumstances in which certain developing countries are not enthusiastic about providing detailed information on their programs under certain WTO agreements.
An example of that is the WTO Agriculture Agreement, in which there have been situations of delays in notification and assessments by the United States and others that there is not a full notification of information of programs that would fall under the notification requirements of the agreement. Consequently, there have, in fact, been times that the United States and other countries have counter notified programs.
India is an example where the United States and some other countries have provided submissions to the WTO to identify programs that they think should have been notified by India, which were not.
Oosterveld: Is counter notifying a practice that a lot of countries engage in? Linscott: It is really a recent phenomenon. It has mostly been used in an experimental way under the Agriculture Agreement. I think there may also be situations under the WTO Safeguards Agreement , so it is not a regular process.
It has really been used on an experimental basis. There are provisions in individual agreements for counter notification, like the Agriculture Agreement. I can imagine circumstances in which it is used more frequently in the future. What are the specific complaints the United States has about how this system functions? Linscott: This is an area that has been quite high-profile in terms of reporting on WTO reform.
A number of different coalitions among different groups of developing countries have emerged for this reason. The differences can be found in subjects of immense importance to developing countries, such as agriculture. This is a summary of some of the points discussed in the WTO.
The WTO agreements, which were the outcome of the Uruguay Round of trade negotiations, provide numerous opportunities for developing countries to make gains. Further liberalization through the Doha Agenda negotiations aims to improve the opportunities. But a number of problems remain.
Developing countries have placed on the Doha Agenda a number of problems they face in implementing the present agreements. Examples include tariff peaks on textiles, clothing, and fish and fish products. At the same time, the potential for developing countries to trade with each other is also hampered by the fact that the highest tariffs are sometimes in developing countries themselves. The situation is improving.
However, largely due to pressure from the business community and concerns about the ITO threatening U. Senate killed the organization by refusing to ratify it, leaving the more narrowly focused GATT to evolve on its own. It is slated to result in average tariff reductions of 38 percent for developed economies, reducing average tariffs worldwide from 6. In comparison, average tariff rates just after World War II were 40 percent.
The most controversial outcome of the Uruguay Round was the establishment of much stronger enforcement mechanisms in the WTO. Although GATT always had a dispute resolution process, member nations often ignored its rulings since they lacked serious enforcement power.
If the country fails to comply, the WTO can authorize the complainant nation to impose trade sanctions. Liberalization of investment was another goal of the Uruguay Round, but deadlocked negotiators had to extend the deadline for new rules in this area. Although U. Labor unions and environmental groups have only token representation, while family farm, consumer, health, and other citizens groups are completely shut out.
Likewise, the WTO lacks mechanisms for public accountability or participation. It is not required to consult with nongovernmental organizations or release documents until after decisions are made. If the WTO finds the law to be WTO-illegal, the federal government may overturn the law or face potential trade sanctions. This shift in power to a global-level bureaucracy undermines a cornerstone of democracy—the practice of citizens working with public officials to develop laws that protect the public welfare.
Small-scale, locally owned firms have difficulty competing with transnational firms because they lack comparable access to capital, economies of scale, or advanced technology. This concern is particularly acute in agriculture, where WTO rules on trade and domestic policy reform undermine national strategies to ensure food security.
New WTO rules also strip protections for local firms in the services sector. For example, countries must allow foreign banks to open branches in small towns, threatening locally owned banks with deeper ties to the community. Malaysian economist Martin Khor claims that new WTO rules could also decrease access to health care, because they require that private companies primarily from the North be allowed to buy up hospitals, which could raise costs for the public.
Members even refused to create a process for studying the inclusion of internationally recognized worker rights in the WTO, largely due to opposition from a coalition of Southern governments and a few nongovernmental groups concerned that worker-rights standards would be used as nontariff barriers against the exports of low-income countries. The argument for linking labor, as well as environmental standards, to the WTO is rooted in two concepts.
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