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The WTO and TPP amid the U.S.-China trade war

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Robert Azevedo, director-general of the World Trade Organization, will leave the office in August, a year before the end of his term. Behind his sudden resignation is the disfunction of the WTO.

The WTO has two key functions. One is legislative — drawing up new rules on trade in response to economic changes over time through negotiations among the member countries. The other is a judicial — dispute settlement procedures to judge whether member states are following its rules when a trade dispute crops up and to call on violators to correct their behavior.

What's going in the rule-making negotiations at the WTO? The General Agreement on Tariffs and Trade governed goods trade. The Uruguay round negotiations under GATT, which started in 1986 and were concluded in 1993, strengthened rules on agricultural and textile trade — which had been insufficient — and made new rules on services trade and intellectual property rights, areas that had previously not been covered. Out of this the WTO was born.

Under the WTO, the Doha round negotiations started in 2001 aiming at further liberalization. But antagonism between the developed and developing countries brought the talks to a virtual halt in 2011. Although there was a little progress, the talks produced no great changes to the WTO rules agreed on in the Uruguay round talks. Rules that were adopted 27 years ago are still applied without change today. The further liberalization of goods and services trade remains deadlocked and the rules are not attuned to new forms of trade, including e-commerce.

The interests of developed and developing countries also collided during the GATT talks. Brazil and India opposed the launch of the Uruguay round itself as they objected to liberalizing services trade where they lacked competitiveness. The developed countries on their part could not align their policies with each other. The European Union was negative about including agriculture, its cornerstone industry, in the agenda of the talks. The Uruguay round finally started four years after it was proposed by the United States.

A big factor behind the U.S. call for launching the talks was the EU’s agricultural policy, especially its export subsidies that led to lower prices in international markets. The U.S. wanted to introduce regulations in this area. The........

© The Japan Times