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How external influences have shaped the CAP
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Experts Publications. WTO members face a growing institutional complexity which does not allow for substantial liberalization steps. Rather, countries need to find alternative ways to improve their individual trade balance. My examinations will base on the insights of the New Institutional Theory NIE , which puts its scientific interest on institutions. Since institutions serve as a direct interface of societal processes, including economical as well as political characteristics, its application provides an appropriate attempt to approach multilateral trade negotiations — a subject that indeed touches both areas.
Since WTO negotiations comprise a variety of different subjects, that all have its own background and that all raise their own questions, I have to restrict my work to only one of them. In particular, this will be agriculture.
I have chosen especially this subject due to its inherent importance in the ongoing Doha Round. No other topic is negotiated as central as agriculture. The main reason is that it was held out from any liberalization commitment in the past rounds, while being actually one of the most important business areas for developing countries. Thus it is predestined for a development round to put focus on. In fact, progress in all other subjects depends on a successful compromise in agriculture.
The complete Doha Round will stop, if there is no agreement about how to liberalize the agricultural market. This thesis is divided into three parts. First of all, I will provide the reader with the general knowledge about the WTO and the previous liberalization process in chapter two. This will be followed by a brief introduction of the NIE, which is the theoretic concept underlying my examinations.
Its evaluation will answer the core question of my work: How much liberalization can be expected from the Doha Round?
Doha in the Doldrums
When approaching such a complex and opaque topic such as international trade politics, numerous questions about its actual background will soon come up in a readers mind. The history of multilateral trade is filled with so many incidents, agreements and negotiations that even the most attentive person can easily lose the thread and get confused with all the details. For this reason the following chapter will give a comprehensive introduction into the subject of multilateral trade negotiations. It will present the foundations and the development of the World Trade Organization with a particular focus on agriculture and its recent negotiations.
It will thus be possible for the reader to better understand the ongoing process of trade liberalization. This is especially necessary for the institution economical analysis in chapter 4, where selected issues of the current Doha Round will be examined. The chapter starts with a description of the origins and the underlying guidelines of the World Trade Organization and proceeds with a detailed presentation of the Doha Development Agenda. Based on the experiences of an exaggerated nationalism during World War II, an atmosphere of joint regulation in international politics emerged in the s.
Mainly driven by the United States US , an initiative to set up international institutions was launched. These institutions were supposed to guide the global process of reconstruction that followed World War II with the aim to prevent further interstate conflicts as well as global economic crisisses.
But first, negotiations about the so-called International Trade Organization ITO did not succeed due to the reserved attitude of some Western countries. Indeed they were concerned about the ambitious principles that were summarized in the Havana Charter, the official document to set up the ITO. But still there was a common consensus that international trade of goods needs to have a general framework.
But they were concerned that the domestic impact of liberalization could undermine political support for a liberal international system.
Thus, in a group of 23 countries concluded to set up the General Agreement on Tariffs and Trade GATT , which solely concentrated to establish a mechanism for reciprocal tariff reductions. Its obligations towards national governments were not as demanding as those of the ITO, which is why it was easier for all countries to accept it. While the GATT represented a simple contract between several states, the WTO finally received the formal status of an international organization and therewith fulfilled the initial intensions. The unintended result is, however, a pareto-inferior constellation since all other countries would follow raising trade barriers and thus limit the free flow of goods.
This in turn enables the maximization of global trade gains while at the same time reducing the risk of unpleasant tariff conflicts. Liberalizing Trade - To enhance the gains of international trade, tariffs have to be reduced step by step. Regular meetings — the Ministerial Conferences — decide about the extent to which the members have to participate in the mutual removal of trade barriers.
Doha in the Doldrums - WSJ
Generally, implementing new tariffs or raising existing tariffs above the bounded level is not allowed. The application of non-tariff restrictions such as quotas and export subsidies is forbidden. Non-Discrimination - No member of the WTO shall be discriminated due to any specific characteristics. National Treatment - Imported goods have to be treated as favorable as domestic goods. That means that all internal tariffs, laws or regulations have to be valid for imported and domestic goods without exceptions.
Reciprocity - Concessions concluded by the members have to have a mutual character. Thus, any kind of tariff reduction by one country must be faced with a tariff reduction by another country. A number of exceptions leave considerable space to adjust these basic principles to the more complicated reality of international politics.
For example, regional trade arrangements, such as free trade areas and customs unions between two or more countries, are allowed under certain conditions even though they violate against the Non-Discrimination principle.
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It is thought, that those arrangements would push the development of free trade. The same explanation is valid for preferential tariff treatment. Concerning agriculture, the GATT left some possibilities for active trade policy measures. Article 11 and 16 of the GATT permit the application of import quotas to support domestic farm incomes as well as of export subsidies. Since the implementation of GATT in , agriculture was always treated differently than the industrial sector.
Every two years, representatives of the member nations come together at Ministerial Conferences and decide about the instruments to cut tariffs and to liberalize trade. But even though a majority rule exists, its actual application is in fact restricted to a few cases. Normally, decisions on trade obligations are achieved by the consensus principle guaranteeing that no member actually opposes them. Since negotiations about international trade always include controversial opinions, results cannot be achieved within a couple of days. For this reason the GATT established liberalization rounds which may last up to years.
To date, eight liberalization rounds, recently consisting of several Ministerial Conferences, have been finished. While the first five rounds were solely concentrating on cutting the existing tariffs down, the following three rounds took up a vast number of new topics e.
However, GATT still serves as a part of the newly created organization conducting the liberalization process of merchandise. The most recent round of multilateral trade negotiations began in in Doha, Qatar and is still subject to intense negotiations. Table 1 summarizes the previous liberalization rounds and its covered subjects. The most visible progress has been achieved in the field of industrial goods. This is especially true for agricultural tariffs.
Gibson et al. Surveying the previous liberalization rounds, some general trends of the liberalization process become obvious:. The length of the several liberalization rounds has constantly increased. While the first rounds were finished within one year, negotiations of the Tokyo Round already lasted three years and those of the Uruguay Round even eight years.
The current Doha Round was supposed to end in after three years of negotiations. But as can be followed from recent developments this can rather be seen as an optimistic estimation than a realistic expectation. The number of WTO members are growing each round.
Today in contrast, except from a few smaller countries, no important economy is missing at the bargaining table. Decisions on duty-free and quota-free market access, preferential rules of origin and the LDC services waiver constituted important steps forward in further improving preferential market access for goods and services originating from LDCs. In addition, decisions on cotton provided for enhanced transparency and monitoring of trade-related as well as development assistance aspects of cotton.
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- The liberalization efforts of the Doha Round from an institution economical perspective;