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Outlook for the WTO


Historical, legal and organizational overview

The WTO will continue to work on the "built-in" agenda from the Uruguay Round. It will also introduce new topics into the negotiations under the WTO framework. Currently proposed topics include competition policy, labor standards, trade and investment policy, regional economic groupings, and transparency in government procurement. The codification of the agenda under the WTO will bring about further policy harmonization among countries in the world trading system.

The WTO will make more profound efforts to achieve a state of "deep integration" among the member countries. It will actively seek common policies and harmonization rather than deciding not to take actions.

The WTO will continue to evolve as an international organization and will gain an increasing mandate and role in world trade system, especially given the new binding dispute settlement mechanism. As the trend of globalization of production continues, nations will find it increasingly difficult to use trade policy as a means of protection. Free trade is the alternative and the WTO is the mechanism to promote and codify such an endeavor.

WTO's dispute settlement

There will be increasing volume of "complaints" in the future. Since WTO's dispute resolution mechanism must adhere to a timely procedural process, the resolution of conflicts are likely to continue in the future.

The complexity of the complaints is likely to increase in the future. The advancement of technology will dictate the character of the variety of conflicts. In addition, the difficulties of multiple complaints will continue to lead the resolutions with potentially ambiguous findings.

With emerging new areas of international commercial involvement, the intricate relationships between the partners and competitors will increase conflicts. Consequently, member nations behaviors and positions are increasingly more difficult to predict in accepting the rulings that require major policy changes.

The main agreements I

Although the WTO has made some progress in its relationship with the developing countries, more assistance to LDCs will be necessary in the areas of economic, political, diplomatic, and human resources in order for the all members to fully benefit from the free trade regime under the WTO.

Since the questions on trade and environment will become increasingly complex and, yet blurred in other cases, the WTO will have to tread carefully in order to avoid the image of being environmentally apathetic.

Although the Agreement on Textiles and Clothing (ATC) is an historic milestone for reducing barriers, it remains questionable whether it will accomplish its goals due to political issues and demanding implementation procedures.

In the next round of multilateral trade negotiations, the already evident frictions between the US and the EU's interests are likely to be some source of complication of the WTO's path towards the further agricultural trade liberalization.

Main agreements II

In GATS (General Agreement on Trade in Services), widespread compliance is unlikely, because developing countries have made few commitments and because many loopholes exist. Still, once liberalization is achieved in areas like telecommunications, global industries (many of which are based in the US) will win out over inefficient local service providers.

The effects of trade-related intellectual property rights (TRIPs) will be more evident as the agreement's membership increases. Industrialized countries that rely on R&D-heavy exports will have greater incentives to expand the application of the TRIPs agreement.

Even with the TRIMs (Trade-related investment measures), the international investments will not be likely to guarantee a high degree of openness until a broader set of rules governing investment can be forged.

n Information Technology, the near term will show slow but definite progress toward becoming the only global agreement to eliminate ALL duties on a uniform list of products. The U.S. has a marked interest in pushing this process along. The list of products covered will gradually expand.

Government procurement Agreement (GPA) will continue to expand its scope by incorporating a series of bilateral agreements that may reduce restrictions on access to procurement opportunities. The supervising committee will also begin monitoring the GPA's implementation, including the parties' domestic legislation.

WTO accession and other issues

Most of the applicant governments are developing or transitioning economies, for whom WTO membership will accelerate development and benefit the systemic effects of increased transparency, predictability, and the reinforcement of a multilateral rule-based framework on their economic reform. The honesty and ability of an applicant to address the issues brought up by the Working Party will, by and large, determine the speed of the accession process, although there may be other political factors at play.

The accession will benefit current WTO members through increased market access and transparency. Regarding the harmonization of regional trading agreements with WTO rules, WTO accession may clarify for the applicants the role of regional preferential trading agreements.

The limited manpower available to the Trade Policy Review Division means that the increasing number of requests for review may constrain the scope and quality of reports in the future. Given the limited resources of the Trade Policy Review Division and the time limits on the review meetings, more detailed and structured report format and further systemization of the institution of the Trade Policy Review Mechanism will increase confidence and eliminate inconsistency.

China's entry into the WTO will provide a motive to catalyze the ongoing economic reforms, contributing to the transparency of Chinese economic structures and provide American firms with more important information on the price of doing business with China.

Based on China's notorious record and her efforts to keep Taiwan out of the WTO until after China becomes a member, it is possible that the WTO might not handle China effectively. The WTO lacks experience in dealing with non-compliant members and the size of China's economy may be a factor as well. Also, if these non-market economies are admitted to the WTO, they can become free-riders on the international trading system, enjoying the benefits of WTO membership without making any significant concessions or accepting any major responsibilities.

As more regional trading agreements are formed, more applicants will find conflicts between regional agreements they wish to join and WTO requirements

Countries will continue to be admitted on a Commercial viable Basis. Although some considerations will be given to developing countries, the days of non-reciprocal concessions are over.

Inclusion of new areas in the WTO - GATS, TRIMs and TRIPs - has made accession more difficult and costly.

The Trade Policy Review Mechanism's future is unclear. Without increases in funding and staff, the TPRM will produce documents of limited utility. Increase in staff, funding and process standardization are necessary if the TPRM is to be truly effective. Some believe that the TPRM process should be more judgmental and that the process should be used to promote freer trade.  

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Last Updated on 4/1/98