Second Cold War

From Wikipedia, the free encyclopedia

https://en.wikipedia.org/wiki/Second_Cold_War

The Second Cold War, also called Cold War II or the New Cold War, is a term used to describe a post-Cold-War era of political and military tension between China and the Western powers, mostly the United States. The term may also refer to growing tensions between Russia and the Western powers, also mostly the United States.

Past usages

Past sources, such as academics Fred Halliday, Alan M. Wald, and David S. Painter, used the interchangeable terms to refer to the 1979–1985 and/or 1985–1991 phases of the Cold War. Some other sources used similar terms to refer to the Cold War of the mid-1970s. Columnist William Safire argued in a 1975 New York Times editorial that the Nixon administration's policy of détente with the Soviet Union had failed and that "Cold War II" was now underway. Academic Gordon H. Chang in 2007 used the term "Cold War II" to refer to the Cold War period after the 1972 meeting in China between US President Richard Nixon and Chinese Communist Party chairman Mao Zedong.

In 1998, George Kennan described the US Senate vote to expand NATO to include Poland, Hungary, and the Czech Republic as "the beginning of a new cold war", and predicted that "the Russians will gradually react quite adversely and it will affect their policies".

The journalist Edward Lucas wrote his 2008 book The New Cold War: How the Kremlin Menaces both Russia and the West, claiming that a new cold war between Russia and the West had begun already.

Russo–Western tensions

Several countries (green), many of which are NATO members and/or European Union members, introduced sanctions on Russia (blue) following the 2014–2015 Russian military intervention in Ukraine and 2015 Russian military intervention in the Syrian Civil War.

 

The United States (orange) and Russia (green).

Sources disagree as to whether a period of global tension analogous to the Cold War is possible in the future, while others have used the term to describe the ongoing renewed tensions, hostilities, and political rivalries that intensified dramatically in 2014 between Russia, the United States and their respective allies.

Michael Klare, a RealClearPolitics writer and an academic, in June 2013 compared tensions between Russia and the West to the ongoing proxy conflict between Saudi Arabia and Iran. Oxford Professor Philip N. Howard argued that a new cold war was being fought via the media, information warfare, and cyberwar. In 2014, notable figures such as Mikhail Gorbachev warned, against the backdrop of a confrontation between Russia and the West over the Ukrainian crisis, that the world was on the brink of a new cold war, or that it was already occurring. The American political scientist Robert Legvold also believes it started in 2013 during the Ukraine crisis. Others argued that the term did not accurately describe the nature of relations between Russia and the West.

Stephen F. Cohen, Robert D. Crane, and Alex Vatanka have all referred to a "US–Russian Cold War". Andrew Kuchins, an American political scientist and Kremlinologist speaking in 2016, believed the term was "unsuited to the present conflict" as it may be more dangerous than the Cold War.

While new tensions between Russia and the West have similarities with those during the Cold War, there are also major differences, such as modern Russia's increased economic ties with the outside world, which may potentially constrain Russia's actions, and provide it with new avenues for exerting influence, such as in Belarus and Central Asia, which have not seen the type of direct military action that Russia engaged in less cooperative former Soviet states like Ukraine and the Caucasus region. The term "Cold War II" has therefore been described as a misnomer.

The term "Cold War II" gained currency and relevance as tensions between Russia and the West escalated throughout the 2014 pro-Russian unrest in Ukraine followed by the Russian military intervention and especially the downing of Malaysia Airlines Flight 17 in July 2014. By August 2014, both sides had implemented economic, financial, and diplomatic sanctions upon each other: virtually all Western countries, led by the US and European Union, imposed punitive measures on Russia, which introduced retaliatory measures.

Some observers, including Syrian President Bashar al-Assad, judged the Syrian Civil War to be a proxy war between Russia and the United States, and even a "proto-world war". In January 2016, senior UK government officials were reported to have registered their growing fears that "a new cold war" was now unfolding in Europe: "It really is a new Cold War out there. Right across the EU we are seeing alarming evidence of Russian efforts to unpick the fabric of European unity on a whole range of vital strategic issues".

NATO has added 14 new members since the German reunification and the end of the Cold War

In an interview with Time magazine in December 2014, Gorbachev said that the US under Barack Obama was dragging Russia into a new cold war. In February 2016, at the Munich Security Conference, NATO Secretary General Jens Stoltenberg said that NATO and Russia were "not in a cold-war situation but also not in the partnership that we established at the end of the Cold War", while Russian Prime Minister Dmitry Medvedev, speaking of what he called NATO's "unfriendly and opaque" policy on Russia, said "One could go as far as to say that we have slid back to a new Cold War". In October 2016 and March 2017, Stoltenberg said that NATO did not seek "a new Cold War" or "a new arms race" with Russia.

In February 2016, a National Research University academic and Harvard University visiting scholar Yuval Weber wrote on E-International Relations that "the world is not entering Cold War II", asserting that the current tensions and ideologies of both sides are not similar to those of the original Cold War, that situations in Europe and the Middle East do not destabilise other areas geographically, and that Russia "is far more integrated with the outside world than the Soviet Union ever was". In September 2016, when asked if he thought the world had entered a new cold war, Russian Foreign Minister, Sergey Lavrov, argued that current tensions were not comparable to the Cold War. He noted the lack of an ideological divide between the United States and Russia, saying that conflicts were no longer ideologically bipolar.

In August 2016, Daniel Larison of The American Conservative magazine wrote that tensions between Russia and the United States would not "constitute a 'new Cold War'" especially between democracy and authoritarianism, which Larison found more limited than and not as significant in 2010s as that of the Soviet Union-era.

In October 2016, John Sawers, a former MI6 chief, said he thought the world was entering an era that was possibly "more dangerous" than the Cold War, as "we do not have that focus on a strategic relationship between Moscow and Washington". Similarly, Igor Zevelev, a fellow at the Wilson Center, said that "it's not a Cold War [but] a much more dangerous and unpredictable situation". CNN opined: "It's not a new Cold War. It's not even a deep chill. It's an outright conflict".

Large nuclear weapons stockpile with global range (dark blue), smaller stockpile with global range (medium blue)

In January 2017, a former US Government adviser Molly K. McKew said at Politico that the US would win a new cold war. The New Republic editor Jeet Heer dismissed the possibility as "equally troubling[,] reckless threat inflation, wildly overstating the extent of Russian ambitions and power in support of a costly policy", and too centred on Russia while "ignoring the rise of powers like China and India". Heer also criticised McKew for suggesting the possibility. Jeremy Shapiro, a senior fellow in the Brookings Institution, wrote in his blog post at RealClearPolitics, referring to the US–Russia relations: "A drift into a new Cold War has seemed the inevitable result".

In August 2017, Russian Deputy Foreign Minister Sergei Ryabkov denied claims that the US and Russia were having another cold war, despite ongoing tensions between the two countries and newer US sanctions against Russia. A University of East Anglia graduate student Oliver Steward and the Casimir Pulaski Foundation senior fellow Stanisław Koziej in 2017 attributed Zapad 2017 exercise, a military exercise by Russia, as part of the new Cold War. In March 2018, Russian President Vladimir Putin told journalist Megyn Kelly in an interview: "My point of view is that the individuals that have said that a new Cold War has started are not analysts. They do propaganda." Michael Kofman, a senior research scientist at the CNA Corporation and a fellow at the Wilson Center's Kennan Institute said that the new cold war for Russia "is about its survival as a power in the international order, and also about holding on to the remnants of the Russian empire". Lyle Goldstein, a research professor at the US Naval War College claims that the situations in Georgia and Ukraine "seemed to offer the requisite storyline for new Cold War".

In March 2018, Harvard University professors Stephen Walt and then Odd Arne Westad criticised application of the term to increasing tensions between the Russia and the West as "misleading", "distract[ing]", and too simplistic to describe the more complicated contemporary international politics.

In April 2018 relations deteriorated over a potential US-led military strike in Middle East after the Douma chemical attack in Syria, which was attributed to the Syrian Army by rebel forces in Douma, and poisoning of the Skripals in the UK. The Secretary-General of the United Nations, António Guterres, told a meeting of the UN Security Council that "the Cold War was back with a vengeance". He suggested the dangers were even greater, as the safeguards that existed to manage such a crisis "no longer seem to be present". Dmitri Trenin supported Guterres' statement, but added that it began in 2014 and had been intensifying since, resulting in US-led strikes on the Syrian government on 13 April 2018.

Russian news agency TASS reported the Russian Foreign Minister Sergei Lavrov saying "I don't think that we should talk about a new Cold War", adding that the US development of low-yield nuclear warheads (the first of which entered production in January 2019) had increased the potential for the use of nuclear weapons.

In October 2018, Russian military analyst Pavel Felgenhauer told Deutsche Welle that the new Cold War would make the Intermediate-Range Nuclear Forces (INF) Treaty and other Cold War-era treaties "irrelevant because they correspond to a totally different world situation." In February 2019, Russian Foreign Minister Sergey Lavrov stated that the withdrawal from the INF treaty would not lead to "a new Cold War".

Speaking to the press in Berlin on 8 November 2019, a day before the 30th anniversary of the fall of the Berlin Wall, U.S. secretary of state Mike Pompeo warned of the dangers posed by Russia and China and specifically accused Russia, "led by a former KGB officer once stationed in Dresden", of invading its neighbours and crushing dissent. Jonathan Marcus of the BBC opined that Pompeo's words "appeared to be declaring the outbreak of a second [Cold War]".

A philosophy academic Andrew Levine wrote on CounterPunch in January 2020, "Cold War revivalism has become the Democratic Party's watchword since even before Hillary Clinton needed an excuse for losing the 2016 election." Levine criticised the Democratic Party's "dangerous and blatantly hypocritical efforts to revive the Cold War with Russia and their glorification of the liars ... in America’s intelligence community."

Sino–American tensions

The United States (orange) and China (green)

The US senior defence official Jed Babbin, Yale University professor David Gelernter, Firstpost editor R. Jagannathan, Subhash Kapila of the South Asia Analysis Group, former Australian Prime Minister Kevin Rudd, and some other sources have used the term (occasionally using the term the Pacific Cold War) to refer to tensions between the United States and China in the 2000 and 2010s.

Talk of a "new Cold War" between a United States-led block of countries on the one hand and the putative Beijing-Moscow axis, including explicit references to it in the official PRC's media, intensified in the summer of 2016 as a result of the territorial dispute in the South China Sea, when China defied the Permanent Court of Arbitration′s ruling against China on the South China Sea dispute, and the US announcing in July 2016 it would deploy the Terminal High Altitude Area Defense (THAAD) in South Korea, a move resented by China as well as Russia and North Korea.

Donald Trump, who was inaugurated as US president on 20 January 2017, had repeatedly said during his presidential campaign that he considered China a threat, a stance that heightened speculations of the possibility of a "new cold war with China". Claremont McKenna College professor Minxin Pei said that Trump's election win and "ascent to the presidency" may increase chances of the possibility. In March 2017, a self-declared socialist magazine Monthly Review said, "With the rise of the Trump administration, the new Cold War with Russia has been put on hold", and also said that the Trump administration has planned to shift from Russia to China as its main competitor.

External video
"Vice President Mike Pence's Remarks on the Administration's Policy Towards China"

In July 2018, Michael Collins, deputy assistant director of the CIA's East Asia mission center, told the Aspen Security Forum in Colorado he believed China under paramount leader and general secretary Xi Jinping, while unwilling to go to war, was waging a "quiet kind of cold war" against the United States, seeking to replace the US as the leading global power. He further elaborated: "What they're waging against us is fundamentally a cold war — a cold war not like we saw during [the] Cold War (between the U.S. and the Soviet Union) but a cold war by definition". In October 2018, a Hong Kong's Lingnan University professor Zhang Baohui told The New York Times that a speech by United States Vice-President Mike Pence at the Hudson Institute "will look like the declaration of a new Cold War".

In January 2019, Robert D. Kaplan of the Center for a New American Security wrote that "it is nothing less than a new cold war: The constant, interminable Chinese computer hacks of American warships’ maintenance records, Pentagon personnel records, and so forth constitute war by other means. This situation will last decades and will only get worse".

In February 2019, Joshua Shifrinson, an associate professor from Boston University, criticised the concerns about tensions between China and the US as "overblown", saying that the relationship between the two countries are different from that of the US–Soviet Union relations during the original Cold War, that factors of heading to another era of bipolarity are uncertain, and that ideology play a less prominent role between China and the US.

In April 2019, economist and Yale University academic Stephen S. Roach wrote, "The US economy is weaker now than it was during [...] Cold War 1.0," and recommended that the US and China either improve their relations, particularly by resolving their trade war, or face "Cold War 2.0". Moreover, Roach predicted that "economic resilience" would occur in upcoming months in the US, while he asserted that the weakening of China's economy "could run its course by mid-year."

In June 2019, academic Stephen Wertheim called President Trump a "xenophobe" and criticised Trump's foreign policy toward China for heightening risks of a new Cold War, which Wertheim wrote "could plunge the United States back into gruesome proxy wars around the world and risk a still deadlier war among the great powers."

In the 2019, Yuan Peng of the China Institute of International Studies said that the financial crisis of 2007–2008 "initiated a shift in the global order." Yuan predicted the possibility of the new cold war between both countries and their global power competition turning "from 'superpower vs. major power' to 'No. 1 vs. No. 2'." On the other hand, scholar Zhu Feng said that their "strategic competition" would not lead to the new Cold War. Zhu said that the US–China relations have progressed positively and remained "stable", despite disputes in the South China Sea and Taiwan Strait and US President Trump's aggressive approaches toward China.

In January 2020, columnist and historian Niall Ferguson opined that China is one of the major players of this Cold War, whose powers are "economic rather than military", and that Russia's role is "quite small". Ferguson also wrote:

[C]ompared with the 1950s, the roles have been reversed. China is now the giant, Russia the mean little sidekick. China under Xi remains strikingly faithful to the doctrine of Marx and Lenin. Russia under Putin has reverted to Tsarism.

Ferguson further wrote that this Cold War is different from the original Cold War because the US "is so intertwined with China" at the point where "decoupling" is as others argued "a delusion" and because "America's traditional allies are much less eager to align themselves with Washington and against Beijing." He further wrote that the new Cold War "shifted away from trade to technology" when both the US and China signed their Phase One trade deal. In a February 2020 interview with The Japan Times, Ferguson suggested that, to "contain China", the US "work intelligently with its Asian and European allies", as the US had done in the original Cold War, rather than on its own and perform something more effective than "tariffs, which are a very blunt instrument." He also said that the US under Trump has been "rather poor" at making foreign relations.

In June 2020, Boston College political scientist Robert S. Ross wrote that the US and China "are destined to compete [but] not destined for violent conflict or a cold war." In the following month July, Ross said that the Trump "administration would like to fully decouple from China. No trade, no cultural exchanges, no political exchanges, no cooperation on anything that resembles common interests."

In August 2020, a La Trobe University professor Nick Bisley wrote that the US–China rivalry "will be no Cold War" but rather will "be more complex, harder to manage, and last much longer." He further wrote that comparing the old Cold War to the ongoing rivalry "is a risky endeavour."

Recent status

In June 2019, University of Southern California (USC) professors Steven Lamy and Robert D. English agreed that the "new Cold War" would distract political parties from bigger issues such as globalisation, "global warming, global poverty, increasing inequality," and right-wing populism. However, Lamy said that the new Cold War had not yet begun, while English said that it already had. English further said that China poses "a far greater threat than Russia" in cyberwarfare but not as much as right-wing populism does from within "liberal states" like the US.

United States–Mexico–Canada Agreement

From Wikipedia, the free encyclopedia

https://en.wikipedia.org/wiki/United_States%E2%80%93Mexico%E2%80%93Canada_Agreement 

Agreement between the United States of America, the United Mexican States, and Canada

Type	Free trade agreement
Drafted	30 September 2018
Signed	30 November 2018 10 December 2019 (revised version)
Location	Buenos Aires, Argentina
Effective	1 July 2020
Condition	3 months after notification of each state that all internal procedures have been completed
Expiration	Upon end of 16-year term (renewable)
Ratifiers	Canada Mexico United States
Languages	English Spanish French

The Agreement between the United States of America, the United Mexican States, and Canada, commonly known by its American English title United States–Mexico–Canada Agreement (USMCA), is a free trade agreement concluded between Canada, Mexico, and the United States as a successor to the North American Free Trade Agreement (NAFTA). The agreement has been characterized as "NAFTA 2.0," or "New NAFTA," since many provisions from NAFTA were incorporated and its changes were seen as largely incremental. On July 1, 2020, the USMCA entered into force in all member states.

The Agreement is the result of a 2017–2018 renegotiation between the member states of the North American Free Trade Agreement, which informally agreed to the terms of the new agreement on September 30, 2018 and formally on October 1. The USMCA was proposed by United States President Donald Trump and was signed by Trump, Mexican President Enrique Peña Nieto, and Canadian Prime Minister Justin Trudeau on November 30, 2018, as a side event of the 2018 G20 Summit in Buenos Aires. A revised version was signed on December 10, 2019, and was ratified by all three countries, with the final ratification (Canada) occurring on March 13, 2020 immediately before the Parliament of Canada adjourned due to the COVID-19 pandemic.

Negotiations "focused largely on auto exports, steel and aluminum tariffs, and the dairy, egg, and poultry markets." One provision "prevents any party from passing laws that restrict the cross-border flow of data". Compared to NAFTA, USMCA increases environmental and working regulations, and incentivizes more domestic production of cars and trucks. The agreement also provides updated intellectual property protections, gives the United States more access to Canada's dairy market, imposes a quota for Canadian and Mexican automotive production, and increases the duty-free limit for Canadians who buy U.S. goods online from US$20 to US$150. The full list of differences between USMCA and NAFTA is listed on the website of the United States Trade Representative (USTR).

In addition to provisions from the original NAFTA, the USMCA borrows heavily from the Trans-Pacific Partnership (TPP) and Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) trade agreements. On April 3, 2020, Mexico announced it was ready to implement the agreement, joining Canada. The agreement came into effect on July 1, 2020.

Background and nomenclature

The United States–Mexico–Canada Agreement is based on the North American Free Trade Agreement (NAFTA) which originally came into effect on January 1, 1994. The present agreement was the result of more than a year of negotiations including possible tariffs by the United States against Canada in addition to the possibility of separate bilateral deals instead.

During the 2016 U.S. presidential election, Donald Trump's campaign included the promise to renegotiate NAFTA, or cancel it if re-negotiations were to fail. Upon election, Trump proceeded to make a number of changes affecting trade relations with other countries. Withdrawing from the Paris Agreement, ceasing to be part of negotiations for the Trans-Pacific Partnership, and significantly increasing tariffs with China were some of the steps he implemented, reinforcing that he was serious about seeking changes to NAFTA. Much of the debate surrounding the virtues and faults of the USMCA is similar to that surrounding all free trade agreements (FTAs), for instance, the nature of FTA's as public goods, potential infringements of national sovereignty, and the role of business, labor, environmental, and consumer interests in shaping the language of trade deals.

The agreement is referred to differently by each signatory—in the United States, it is called the United States–Mexico–Canada Agreement (USMCA); in Canada, it is officially known as the Canada–United States–Mexico Agreement (CUSMA) in English and the Accord Canada–États-Unis–Mexique (ACEUM) in French; and in Mexico, it is called Tratado entre México, Estados Unidos y Canadá (T-MEC). The agreement is sometimes referred to as "New NAFTA" in reference to the previous trilateral agreement it is meant to supersede, the North American Free Trade Agreement (NAFTA).

Uniform regulations

On June 1, 2020, the USTR office released the uniform regulations, which is the last hurdle before implementing the agreement on July 1, 2020.

As per section 103(b)(2) of the USMCA Act, the date for the required interim regulations to be recommended will be no later than when the USMCA takes effect and the Uniform Regulations regarding Rules of Origin are implemented. The Uniform Regulations in the USMCA help interpret the different chapters of the USMCA, primarily chapters 4–7. These regulations were released 1 month before the trade deal took effect, replacing NAFTA on July 1, 2020.

Negotiations

A visualization of the timeline for the USMCA ratification process in the US, as prescribed by Trade Promotion Authority

The formal negotiation process began on May 18, 2017, when the USTR notified Congress that he intended to renegotiate NAFTA starting in 90 days. In accordance with Trade Promotion Authority statutes, the USTR released its key negotiating objectives document on July 7, 2017. Negotiations began on August 16, 2017, and continued with eight formal rounds of talks until April 8, 2018. Lacking any resolution, Lighthizer stated on May 2, 2018, that if the end of the month reached no deal, negotiations would be halted until 2019. This statement was motivated by the pending change of government in Mexico, in which the then-incoming President, Andres Manuel Lopez Obrador, disagreed with much of the negotiated language and might be unwilling to sign the deal.

Separately, on May 11, 2018, Speaker of the House Paul Ryan set May 17 as a deadline for Congressional action. This deadline was disregarded and the deal with Mexico was not reached until August 27, 2018. At this time Canada had not agreed to the presented deal. Because Mexico's outgoing president, Enrique Peña Nieto, left office on December 1, 2018, and 60 days are required as a review period, the deadline for providing the agreed text was the end of September 30, 2018. which was reached precisely on September 30. Negotiators worked around the clock and completed the agreement less than an hour before midnight of that date on a draft text. The next day on October 1, 2018, the USMCA text was published as an agreed-to document.

The agreed text of the agreement was signed by leaders of all three countries on November 30, 2018 as a side event to the 2018 G20 summit in Buenos Aires, Argentina. The English, the Spanish and French versions will be equally authentic, and the agreement will take effect after ratification from all three states through the passage of enabling legislation.

It was revealed in a memoir published by Stephen Schwarzman, the CEO and founder of American LBO specialist The Blackstone Group, that he had incited Justin Trudeau to concede the protected dairy market in the USMCA negotiations. According to Schwarzman, Trudeau feared that a recession would impact his government's prospects during the 2019 Canadian federal election. The executive, who had been retained by Trump, also was invited in January 2017 to address the Liberal Cabinet at a Calgary retreat when the Cabinet would be unprotected by its Privy Council Office civil servants. Then, as the negotiations reached their end come 1 October 2018, at a last-minute behind-the-scenes meeting at the United Nations in New York, Trudeau sacrificed the dairy industry to save the media industry and the automotive exemption. Chrystia Freeland, the Foreign Affairs minister from Trinity-Spadina riding in downtown Toronto whose constituents include many staff of the CBC and The Globe and Mail and the Toronto Star and the Toronto Sun, maps "Canadian culture" directly onto the media industry. Robert Fife in an election cycle article failed to obtain any comment from other than the Liberal party.

Fox News reported on December 9, 2019, that negotiators from the three countries reached an agreement on enforcement, paving the way for a final deal within 24 hours and ratification by all three parties before the end of the year. Mexico has agreed to the enforcement of a minimum wage of US$16/hour for Mexican automotive workers by a "neutral" third party. Mexico, which imports all of its aluminum, has also expressed opposition to provisions regarding American steel and aluminum contents in automobile components.

Provisions

Provisions of the agreement cover a wide range, including agricultural produce, homelessness, manufactured products, labor conditions, digital trade, among others. Some of the more prominent aspects of the agreement include giving US dairy farmers greater access to the Canadian market, guidelines to have a higher proportion of automobiles manufactured amongst the three nations rather than imported from elsewhere, and retention of the dispute resolution system similar to that included in NAFTA.

Dairy

The dairy provisions give the U.S. tariff-free access to 3.6%, up from 3.25% under the never-ratified Trans-Pacific Partnership, of the $15.2 billion (as of 2016) Canadian dairy market. Canada agreed to eliminate Class 7 pricing provisions on certain dairy products, while Canada's domestic supply management system remains in place. Canada agreed to raise the duty-free limit on purchases from the U.S. to $150 from the previous $20 level, allowing Canadian consumers to have greater duty-free access to the U.S market.

Automobiles

Automobile rules of origin (ROO) requirements mandate that a certain portion of an automobile's value must come from within the governed region. In NAFTA, the required portion was 62.5 percent. The USMCA increases this requirement by 12.5 percentage points, to 75 percent of the automobile's value. The initial proposal from the Trump administration was an increase to 85 percent, and an added stipulation that 50 percent of the automotive content be made by United States auto manufacturers. While the deal's text did not include the more demanding version of this provision, there is concern that the increased domestic sourcing, aimed at promoting US employment, will come with higher input costs and disruptions to existing supply chains.

De Minimis

To facilitate greater cross-border trade, the United States has reached an agreement with Mexico and Canada to raise its de minimis shipment value levels. Canada will raise its de minimis level for the first time in decades, from C$20 (US$15.38) to C$40 (US$30.77) for taxes. Canada will also provide for duty-free shipments up to C$150 (US$115.38). Mexico will continue to provide US$50 tax-free de minimis and also provide duty-free shipments up to the equivalent level of US$117. Shipment values up to these levels would enter with minimal formal entry procedures, making it easier for more businesses, especially small- and medium-sized ones, to be a part of cross-border trade. Canada will also allow 90 days after entry for the importer to make payment of taxes.

Labor

US Vice President Mike Pence speaks about the USMCA at a Uline distribution center in Pleasant Prairie, Wisconsin in 2019

USMCA Annex 23-A requires Mexico to pass legislation that improves the collective bargaining capabilities of labor unions. The specific standards Mexico is required to comply with are detailed in the International Labour Organization's Convention 98 on freedom of association and collective bargaining. The administration of Mexico's president, Andrés Manuel López Obrador, introduced legislation in late 2018 which pursues compliance with these international standards.

Other labor-related measures include a minimum wage requirement in the automotive industry. Specifically, 40 to 45 percent of the automobiles manufactured in North America must be made in a factory that pays a minimum of $16 per hour. This measure will be phased in during the first five years after USMCA ratification.

Intellectual Property

The USMCA will extend the copyright length in Canada to life plus 70 years, and 75 years for sound recordings. This extension mirrors the same IP policy captured in the text of the Trans-Pacific Partnership, paragraph 18.63. Furthermore, biotechnological firms would have at least 10 years exclusivity period for agricultural chemicals (double the current 5), and industrial designs' period would "jump" from current 10 to 15 years. Compared to NAFTA, USMCA would: Require criminal penalties and civil remedies be available for both satellite and cable theft, reaffirms Doha Declaration on TRIPS and Public Health, contains the strongest due process and transparency requirements for Geographic Indicator protection systems in any FTA, requires criminal procedures and penalties for recording copyrighted movies in movie theaters, and requires ex officio authority for customs officials to stop suspected counterfeit goods.

Elimination of Foreign Office and Local Presence requirements

The USMCA sunset clause would eliminate the need for companies to establish headquarters in any other USMCA country. It will encourage cross-border business by excluding US companies from the need to localize data, open a Canadian or Mexican HQ. For example, McDonald's Canada or Apple Canada would both cease to exist and the surviving entities would be a North American McDonald's or Apple.

Dispute Settlement Mechanisms

There are three primary dispute settlement mechanisms contained in NAFTA. Chapter 20 is the country-to-country resolution mechanism. It is often regarded as the least contentious of the three mechanisms, and it was sustained in its original NAFTA form in USMCA. Such cases would involve complaints between USMCA member states that a term of the agreement had been violated. Chapter 19 disputes manage the justifications of anti-dumping or countervailing duties. Without Chapter 19, the legal recourse for managing these policies would be through the domestic legal system. Chapter 19 specifies that a USMCA Panel will hear the case and act as an International Trade Court in arbitrating the dispute. The Trump administration attempted to remove Chapter 19 from the new USMCA text, though it has thus far endured in the agreement.

Chapter 11 is the third mechanism, known as investor-state dispute settlement, wherein multinational corporations are enabled to sue participating governments over allegedly discriminatory policies. Chapter 11 is broadly considered the most controversial of the settlement mechanisms. The Canadian negotiators effectively removed themselves from Chapter 11 in the USMCA version of this measure, Chapter 14. Canada will have a full exemption from ISDS three years after NAFTA has been terminated.

Beyond The Border Accord

In addition to building on the existing NAFTA fused with elements from the Trans-Pacific Partnership, the new USMCA just passed by the US Congress also incorporates elements from the "Beyond the Border" accord signed by Prime Minister Stephen Harper and former President Barack Obama, most notably the "single window" initiative and folding the "Regulatory Cooperation Council" into the "Good Regulatory Governance" chapter 28 of the new accord.

Sunset clause

Additionally, there is a stipulation that the agreement itself must be reviewed by the three nations every six years, with a 16-year sunset clause. The agreement can be extended for additional 16-year terms during the six-year reviews. The introduction of the sunset clause places more control in shaping the future of the USMCA in the hands of domestic governments. However, there is concern that this can create greater uncertainty. Sectors such as automotive manufacturing require significant investment in cross-border supply chains. Given the dominance of the United States consumer market, this will likely pressure firms to locate more production in the US, with a greater likelihood of increased production costs for those vehicles.

Currency

A new addition in the USMCA is the inclusion of Chapter 33 which covers Macroeconomic Policies and Exchange Rate Matters. This is considered significant because it could set a precedent for future trade agreements. Chapter 33 establishes requirements for currency and macroeconomic transparency which, if violated, would constitute grounds for a Chapter 20 dispute appeal. The US, Canada, and Mexico are all currently in compliance with these transparency requirements in addition to the substantive policy requirements which align with the International Monetary Fund Articles of Agreement.

Clause 32.10

The USMCA will impact how member countries negotiate future free trade deals. Article 32.10 requires USMCA countries to notify USMCA members three months in advance if they intend to begin free trade negotiations with non-market economies. Article 32.10 permits USMCA countries the ability to review any new free trade deals members agree to go forward. Article 32.10 is widely speculated to be targeting China in intent. In fact, a senior White House official said in connection to the USMCA deal that "We have been very concerned about the efforts of China to essentially undermine the US position by entering into arrangements with others."

Against exchange rate manipulation

The USMCA countries are to abide IMF standards aimed to prevent the manipulation of exchange rates. The agreement calls for public disclosure of market interventions. The IMF can be summoned to act as a referee if the parties dispute.

Against State-Owned Enterprises

State-owned enterprises, which are favored by China as levers for exercising its dominance, are somehow prevented from receiving unfair subsidies when compared to private enterprise.

Status (signatures and ratifications)

Outgoing Mexican President Enrique Peña Nieto, U.S. President Donald Trump, and Canadian Prime Minister Justin Trudeau sign the agreement during the G20 summit in Buenos Aires, Argentina, on November 30, 2018.

The USMCA was signed on November 30, 2018, by all three parties at the G20 summit in Buenos Aires, as expected. Disputes over labor rights, steel and aluminum prevented ratification of this version of the agreement. Canadian Deputy Prime Minister Chrystia Freeland, US Trade Representative Robert Lightizer and Mexican Undersecretary for North America Jesus Seade formally signed a revised agreement on December 10, 2019, which was ratified by all three countries as of March 13, 2020.

United States

Domestic procedures for ratification of the agreement in the United States are governed by the Trade Promotion Authority legislation, otherwise known as "fast track" authority.

Growing objections within the member states about U.S. trade policy and various aspects of the USMCA affected the signing and ratification process. Mexico stated they would not sign the USMCA if steel and aluminum tariffs remained. There was speculation after the results of the November 6, 2018 U.S. midterm elections that the Democrats' increased power in the House of Representatives might interfere with the passage of the USMCA agreement. Senior Democrat Bill Pascrell argued for changes to the USMCA to enable it to pass Congress. Republicans opposed USMCA provisions requiring labor rights for LGBTQ and pregnant workers. Forty Congressional Republicans urged Trump against signing a deal that contained "the unprecedented inclusion of sexual orientation and gender identity language"; as a result, Trump ultimately signed a revised version that committed each nation only to "policies that it considers appropriate to protect workers against employment discrimination" and clarified that the United States would not be required to introduce any additional nondiscrimination laws. The Canadian government expressed concern about the changes evolving within the USMCA agreement.

On December 2, 2018, Trump announced that he would begin the 6-month process to withdraw from NAFTA, adding that Congress needed either to ratify the USMCA or else revert to pre-NAFTA trading rules. Academics debate whether the president can unilaterally withdraw from the pact without the approval of Congress.

On March 1, 2019, numerous organizations representing the agricultural sector in the U.S. announced their support for the USMCA and urged Congress to ratify the agreement. They also urged the Trump administration to continue upholding NAFTA until the new trade agreement is ratified. However, on March 4, House Ways and Means Chairman Richard Neal predicted a "very hard" path through Congress for the deal. Starting March 7, senior White House officials met with House Ways and Means members, as well as moderate caucuses from both parties, such as the Problem Solvers Caucus, the Tuesday Group, and the Blue Dog Coalition in their efforts to gain support for ratification. The Trump administration has also backed down from the threat of withdrawing from NAFTA as the negotiations with Congress continued.

On May 30, the United States Trade Representative Robert E. Lighthizer submitted to Congress a draft statement on administrative measures concerning the implementation of the U.S.-Mexico-Canada Agreement (USMCA and the new NAFTA) in accordance with the Presidential Trade Promotion Authority (TPA) Act 2015 (Statement of Administrative Action). The draft will allow USMCA implementation legislation to be submitted to Congress after 30 days, on or after June 29. In a letter sent to Nancy Pelosi, Speaker of the House of Representatives, and Kevin McCarthy, the House Minority Leader, Republicans, Lighthizer said that the USMCA is the gold standard in U.S. trade policy, modernizing U.S. competitive digital trade, intellectual property, and services provisions and creating a level playing field for U.S. companies, workers and farmers, an agreement that represents a fundamental rebalancing of trade relations between Mexico and Canada.

With the draft statement on administrative measures submitted, Speaker Pelosi issued a statement, that U.S. Trade Representative Lighthizer should confirm that the draft wording of the USMCA would benefit U.S. workers and farmers and that although she agreed on the need to revise NAFTA, stricter enforcement of labor and environmental protection standards was needed.

U.S. President Donald Trump warned on 25 September that an impeachment inquiry against him could derail congressional approval of USMCA, dragging down Mexico's peso and stock market as investors fled riskier assets.

The U.S. House of Representatives was proceeding with work on USMCA, U.S. House Speaker Nancy Pelosi said on 26 September.

Bloomberg News reported on October 29, 2019, that the Trump administration planned to include in the legislation approving the pact a provision that would allow the USTR to directly control how and where cars and parts are made by global automakers.

On December 19, 2019, the United States House of Representatives passed the USMCA with bipartisan support by a vote of 385 (Democratic 193, Republican 192) to 41 (Democratic 38, Republican 2, Independent 1). On January 16, 2020, the United States Senate passed the trade agreement by a vote of 89 (Democratic 38, Republican 51) to 10 (Democratic 8, Republican 1, Independent 1) and the bill was forwarded to the White House for Donald Trump's signature. On January 29, 2020, Trump signed the agreement into law (Public Law No: 116–113). It officially amended NAFTA but not the 1989 Canada–United States Free Trade Agreement which is only "suspended," so in case parties fail to extend or renew it in 6 years, FTA would become the law.

On April 24, 2020 US Trade Representative Robert Lighthizer gave official notice to Congress that the new trade deal is set to come to force on July 1, 2020, and he also notified Canada and Mexico to that effect.

On June 1, 2020 the USTR Robert Lighthizer's office has released the uniform regulations, which is the last hurdle before implementing the agreement on July 1, 2020. Text of agreement can be found here: https://ustr.gov/trade-agreements/free-trade-agreements/united-states-mexico-canada-agreement/uniform-regulations

Mexico

On June 19, 2019, the Senate of Mexico ratified the agreement (114 yes, 3 no, 3 abstentions). Mexico's ratification procedure will be completed when the President announces ratification in the Federal Register.

On December 12, 2019, Mexico's Senate passed the revised treaty by a vote of 107–1. On April 3, 2020, Mexico announced it was ready to implement the agreement, joining Canada, though it requested that its automotive industry be given extra time to comply with the agreement.

Manufacturing in Mexico accounts for 17% of GDP. However, Andrés Manuel López Obrador, the Mexican president believes that this trade deal will be a net positive for the Mexican economy by growing foreign investments, creating jobs, and expanding trade.

Canada

On May 29, 2019, prime minister Justin Trudeau introduced a USMCA implementation bill in the House of Commons. On June 20, it passed second reading in the House of Commons and was referred to the Standing Committee on International Trade.

Governor General of Canada Julie Payette declared the dissolution of the 42nd Canadian Parliament on September 11, 2019 and formally issued the writs of election for the 2019 Canadian federal election. All pending legislation is scrapped upon any dissolution of Parliament, meaning that the USMCA implementation bill needed to be re-introduced in the 43rd Canadian Parliament which began on December 5, 2019.

On December 10, 2019, a revised USMCA agreement was reached by the three countries. On January 29, 2020, Deputy Prime Minister and Minister of Intergovernmental Affairs Chrystia Freeland introduced USMCA implementation bill C-4 in the House of Commons and it passed first reading without a recorded vote. On February 6, the bill passed second reading in the House of Commons on a vote of 275 to 28, with the Bloc Québécois voting against and all other parties voting in favor, and it was referred to the Standing Committee on International Trade. On February 27, 2020, the committee voted to send the bill to the full House for third reading, without amendments.

On March 13, 2020 the House of Commons passed bill C-4 to implement USMCA before suspending itself for 6 weeks due to the COVID-19 pandemic. Due to the "extraordinary circumstances", the third and final reading of the bill was deemed to be approved without a recorded vote, as part of an omnibus adjournment motion unanimously approved by all members present. Prime Minister Justin Trudeau was not present, since he was in self-isolation at home after his wife Sophie Grégoire Trudeau tested positive for COVID-19 infection. On the same day, the Senate passed first, second, and third readings of the bill without recorded votes, and Governor General Julie Payette signed it into law shortly thereafter, completing Canada's ratification of the law.

On April 3, 2020, Canada notified the United States and Mexico that it completed its domestic ratification process of the agreement.

Impact and analysis

U.S. Vice President Mike Pence speaks in support of the USMCA in 2019

Similarities to NAFTA

During his 2016 election campaign and presidency, Trump has been highly critical of NAFTA (oftentimes describing it as "perhaps the worst trade deal ever made") while extolling USMCA as "a terrific deal for all of us." However, the USMCA is very similar to NAFTA, carrying over many of the same provisions and making only modest, mostly cosmetic changes, and is expected only to make only a minor economic impact. Former U.S. Trade Representative Mickey Kantor, who oversaw the signing of NAFTA during the Bill Clinton administration, said, "It's really the original NAFTA."

Response

Representatives from the American Federation of Labor and Congress of Industrial Organizations (AFL–CIO) have criticized the labor standards in the USMCA as unenforceable and toothless. Senator Elizabeth Warren of Massachusetts said "the new rules will make it harder to bring down drug prices for seniors and anyone else who needs access to life-saving medicine", reflecting on the measure that expands the patent length for biological substances to 10 years, limiting access for new generic drugs to enter the market.

The Trump administration's Office of the U.S. Trade Representative has proposed the USMCA, citing new digital trade measures, the strengthening of protection for trade secrets, and the automobile rules-of-origin adjustments, as some of the benefits of the trade agreement.

In a 2018 op-ed, Jim Balsillie, former chair of once-dominant handheld telephone firm Research In Motion, wrote that the "colonial supplicant attitude" of Canadian politicians was a wrong-headed approach to the data and IP provisions of the USMCA.

A report published in summer 2018 was that the National Research Council of Canada feared that domestic firms run the risk of becoming "data cows" of foreign big data under the provisions of the USMCA.

Economic impact

USMCA is projected to have a very small effect on the economy. An International Monetary Fund (IMF) working paper issued in late March 2019 found that the agreement would have "negligible" effects on the broad economy. The IMF study projected that the USMCA "would adversely affect trade in the automotive, textiles and apparel sectors, while generating modest aggregate gains in terms of welfare, mostly driven by improved goods market access, with a negligible effect on real GDP." The IMF study noted that the USMCA's economic benefits would be greatly enhanced if there was an end to the Trump trade war (i.e., if the U.S. eliminated tariffs on steel and aluminum imports from Canada and Mexico, and Canada and Mexico dropped retaliatory tariffs on imports from the U.S.)

An April 2019 International Trade Commission analysis on the likely impact of the USMCA estimated that the agreement, when fully implemented (six years following ratification) would increase U.S. real GDP by 0.35% and would increase U.S. total employment by 0.12% (176,000 jobs). The analysis cited by another study from the Congressional Research Service found the agreement would not have a measurable effect on jobs, wages, or overall economic growth. In the summer of 2019, Trump's top economic advisor Larry Kudlow (the director of the National Economic Council in the Trump White House) made unsupported claims regarding the likely economic impact of the agreement, overstating projections related to jobs and GDP growth.

In December 2019, Thea M. Lee and Robert E. Scott of the Economic Policy Institute criticized USMCA as "weak tea, at best" because it would have "virtually no measurable impacts on wages or incomes for U.S. workers," noting that "The benefits are tiny, and it's highly uncertain whether the deal will be a net winner or loser, in the end."

In June 2020, the Nikkei Asian Review reported that Japanese auto companies are opting to "triple Mexican pay rather than move to US" in order to avoid tariffs on automotive parts.

 

World Trade Organization

From Wikipedia, the free encyclopedia

https://en.wikipedia.org/wiki/World_Trade_Organization 

World Trade Organization

Organisation mondiale du commerce (in French) Organización Mundial del Comercio (in Spanish)
Members   Members, dually represented by the EU   Observers   Non-participant states
Formation	1 January 1995; 25 years ago
Type	International trade organization
Purpose	Reduction of tariffs and other barriers to trade
Headquarters	Centre William Rappard, Geneva, Switzerland
Coordinates	46°13′27″N 06°08′58″ECoordinates: 46°13′27″N 06°08′58″E
Region served	Worldwide
Membership	164 member states
Official languages	English, French, Spanish
Director-General	Vacant
Budget	197.2 million Swiss francs (approx. 209 million US$) in 2018.
Staff	640
Website	www.wto.org

The World Trade Organization (WTO) is an intergovernmental organization that is concerned with the regulation of international trade between nations. The WTO officially commenced on 1 January 1995 under the Marrakesh Agreement, signed by 123 nations on 15 April 1994, replacing the General Agreement on Tariffs and Trade (GATT), which commenced in 1948. It is the largest international economic organization in the world.

The WTO deals with regulation of trade in goods, services and intellectual property between participating countries by providing a framework for negotiating trade agreements and a dispute resolution process aimed at enforcing participants' adherence to WTO agreements, which are signed by representatives of member governments and ratified by their parliaments. The WTO prohibits discrimination between trading partners, but provides exceptions for environmental protection, national security, and other important goals. Trade-related disputes are resolved by independent judges at the WTO through a dispute resolution process.

The WTO's current Director-General is Roberto Azevêdo, who leads a staff of over 600 people in Geneva, Switzerland. A trade facilitation agreement, part of the Bali Package of decisions, was agreed by all members on 7 December 2013, the first comprehensive agreement in the organization's history. On 23 January 2017, the amendment to the WTO Trade Related Aspects of Intellectual Property Rights (TRIPS) Agreement marks the first time since the organization opened in 1995 that WTO accords have been amended, and this change should secure for developing countries a legal pathway to access affordable remedies under WTO rules.

Studies show that the WTO boosted trade, and that barriers to trade would be higher in the absence of the WTO. The WTO has highly influenced the text of trade agreements, as "nearly all recent [preferential trade agreements (PTAs)] reference the WTO explicitly, often dozens of times across multiple chapters... in many of these same PTAs we find that substantial portions of treaty language—sometime the majority of a chapter—is copied verbatim from a WTO agreement." The United Nations Sustainable Development Goal 10 also referenced WTO agreements as instruments of reducing inequality.

History

The economists Harry White (left) and John Maynard Keynes at the Bretton Woods Conference.

The WTO precursor General Agreement on Tariffs and Trade (GATT), was established by a multilateral treaty of 23 countries in 1947 after World War II in the wake of other new multilateral institutions dedicated to international economic cooperation—such as the World Bank (founded 1944) and the International Monetary Fund (founded 1944 or 1945). A comparable international institution for trade, named the International Trade Organization never started as the U.S. and other signatories did not ratify the establishment treaty, and so GATT slowly became a de facto international organization.

GATT negotiations before Uruguay

Seven rounds of negotiations occurred under GATT (1949 to 1979). The first real GATT trade rounds (1947 to 1960) concentrated on further reducing tariffs. Then the Kennedy Round in the mid-sixties brought about a GATT anti-dumping agreement and a section on development. The Tokyo Round during the seventies represented the first major attempt to tackle trade barriers that do not take the form of tariffs, and to improve the system, adopting a series of agreements on non-tariff barriers, which in some cases interpreted existing GATT rules, and in others broke entirely new ground. Because not all GATT members accepted these plurilateral agreements, they were often informally called "codes". (The Uruguay Round amended several of these codes and turned them into multilateral commitments accepted by all WTO members. Only four remained plurilateral (those on government procurement, bovine meat, civil aircraft and dairy products), but in 1997 WTO members agreed to terminate the bovine meat and dairy agreements, leaving only two.) Despite attempts in the mid-1950s and 1960s to establish some form of institutional mechanism for international trade, the GATT continued to operate for almost half a century as a semi-institutionalized multilateral treaty régime on a provisional basis.

Uruguay Round: 1986–1994

Well before GATT's 40th anniversary, its members concluded that the GATT system was straining to adapt to a new globalizing world economy.  In response to the problems identified in the 1982 Ministerial Declaration (structural deficiencies, spill-over impacts of certain countries' policies on world trade GATT could not manage, etc.), the eighth GATT round—known as the Uruguay Round—was launched in September 1986, in Punta del Este, Uruguay.

It was the biggest negotiating mandate on trade ever agreed: the talks aimed to extend the trading system into several new areas, notably trade in services and intellectual property, and to reform trade in the sensitive sectors of agriculture and textiles; all the original GATT articles were up for review. The Final Act concluding the Uruguay Round and officially establishing the WTO regime was signed 15 April 1994, during the ministerial meeting at Marrakesh, Morocco, and hence is known as the Marrakesh Agreement.

The GATT still exists as the WTO's umbrella treaty for trade in goods, updated as a result of the Uruguay Round negotiations (a distinction is made between GATT 1994, the updated parts of GATT, and GATT 1947, the original agreement which is still the heart of GATT 1994). GATT 1994 is not, however, the only legally binding agreement included via the Final Act at Marrakesh; a long list of about 60 agreements, annexes, decisions and understandings was adopted. The agreements fall into six main parts:

• the Agreement Establishing the WTO
• the Multilateral Agreements on Trade in Goods
• the General Agreement on Trade in Services
• the Agreement on Trade-Related Aspects of Intellectual Property Rights
• dispute settlement
• reviews of governments' trade policies

In terms of the WTO's principle relating to tariff "ceiling-binding" (No. 3), the Uruguay Round has been successful in increasing binding commitments by both developed and developing countries, as may be seen in the percentages of tariffs bound before and after the 1986–1994 talks.

Ministerial conferences

The World Trade Organization Ministerial Conference of 1998, in the Palace of Nations (Geneva, Switzerland).

The highest decision-making body of the WTO, the Ministerial Conference, usually meets every two years. It brings together all members of the WTO, all of which are countries or customs unions. The Ministerial Conference can take decisions on all matters under any of the multilateral trade agreements. Some meetings, such as the inaugural ministerial conference in Singapore and the Cancun conference in 2003 involved arguments between developed and developing economies referred to as the "Singapore issues" such as agricultural subsidies; while others such as the Seattle conference in 1999 provoked large demonstrations. The fourth ministerial conference in Doha in 2001 approved China's entry to the WTO and launched the Doha Development Round which was supplemented by the sixth WTO ministerial conference (in Hong Kong) which agreed to phase out agricultural export subsidies and to adopt the European Union's Everything but Arms initiative to phase out tariffs for goods from the Least Developed Countries. At the sixth WTO Ministerial Conference of 2005 in December, WTO launched the Aid for Trade initiative and it is specifically to assist developing countries in trade as included in the Sustainable Development Goal 8 which is to increase aid for trade support and economic growth.

The Twelfth Ministerial Conference (MC12) was due to be held in Nur-Sultan, Kazakhstan, in June 2020 but was cancelled because of the COVID-19 pandemic.

Doha Round (Doha Agenda): 2001–present

During the Doha Round, the US government blamed Brazil and India for being inflexible and the EU for impeding agricultural imports.

The WTO launched the current round of negotiations, the Doha Development Round, at the fourth ministerial conference in Doha, Qatar in November 2001. This was to be an ambitious effort to make globalization more inclusive and help the world's poor, particularly by slashing barriers and subsidies in farming. The initial agenda comprised both further trade liberalization and new rule-making, underpinned by commitments to strengthen substantial assistance to developing countries.

Progress stalled over differences between developed nations and the major developing countries on issues such as industrial tariffs and non-tariff barriers to trade particularly against and between the EU and the US over their maintenance of agricultural subsidies—seen to operate effectively as trade barriers. Repeated attempts to revive the talks proved unsuccessful, though the adoption of the Bali Ministerial Declaration in 2013 addressed bureaucratic barriers to commerce.

As of June 2012, the future of the Doha Round remained uncertain: the work programme lists 21 subjects in which the original deadline of 1 January 2005 was missed, and the round remains incomplete. The conflict between free trade on industrial goods and services but retention of protectionism on farm subsidies to domestic agricultural sectors (requested by developed countries) and the substantiation of fair trade on agricultural products (requested by developing countries) remain the major obstacles. This impasse has made it impossible to launch new WTO negotiations beyond the Doha Development Round. As a result, there have been an increasing number of bilateral free trade agreements between governments. As of July 2012 there were various negotiation groups in the WTO system for the current stalemated agricultural trade negotiation.

Functions

Among the various functions of the WTO, these are regarded by analysts as the most important:

• It oversees the implementation, administration and operation of the covered agreements (with the exception is that it does not enforce any agreements when China came into the WTO in Dec 2001)
• It provides a forum for negotiations and for settling disputes.

Additionally, it is WTO's duty to review and propagate the national trade policies, and to ensure the coherence and transparency of trade policies through surveillance in global economic policy-making. Another priority of the WTO is the assistance of developing, least-developed and low-income countries in transition to adjust to WTO rules and disciplines through technical cooperation and training.

1. The WTO shall facilitate the implementation, administration and operation and further the objectives of this Agreement and of the Multilateral Trade Agreements, and shall also provide the framework for the implementation, administration and operation of the multilateral Trade Agreements.
2. The WTO shall provide the forum for negotiations among its members concerning their multilateral trade relations in matters dealt with under the Agreement in the Annexes to this Agreement.
3. The WTO shall administer the Understanding on Rules and Procedures Governing the Settlement of Disputes.
4. The WTO shall administer Trade Policy Review Mechanism.
5. With a view to achieving greater coherence in global economic policy making, the WTO shall cooperate, as appropriate, with the international Monetary Fund (IMF) and with the International Bank for Reconstruction and Development (IBRD) and its affiliated agencies.

The above five listings are the additional functions of the World Trade Organization. As globalization proceeds in today's society, the necessity of an International Organization to manage the trading systems has been of vital importance. As the trade volume increases, issues such as protectionism, trade barriers, subsidies, violation of intellectual property arise due to the differences in the trading rules of every nation. The World Trade Organization serves as the mediator between the nations when such problems arise. WTO could be referred to as the product of globalization and also as one of the most important organizations in today's globalized society.

The WTO is also a centre of economic research and analysis: regular assessments of the global trade picture in its annual publications and research reports on specific topics are produced by the organization. Finally, the WTO cooperates closely with the two other components of the Bretton Woods system, the IMF and the World Bank.

Principles of the trading system

The WTO establishes a framework for trade policies; it does not define or specify outcomes. That is, it is concerned with setting the rules of "trade policy". Five principles are of particular importance in understanding both the pre-1994 GATT and the WTO:

1. Non-discrimination. It has two major components: the most favoured nation (MFN) rule, and the national treatment policy. Both are embedded in the main WTO rules on goods, services, and intellectual property, but their precise scope and nature differ across these areas. The MFN rule requires that a WTO member must apply the same conditions on all trade with other WTO members, i.e. a WTO member has to grant the most favourable conditions under which it allows trade in a certain product type to all other WTO members. "Grant someone a special favour and you have to do the same for all other WTO members." National treatment means that imported goods should be treated no less favourably than domestically produced goods (at least after the foreign goods have entered the market) and was introduced to tackle non-tariff barriers to trade (e.g. technical standards, security standards et al. discriminating against imported goods).
2. Reciprocity. It reflects both a desire to limit the scope of free-riding that may arise because of the MFN rule, and a desire to obtain better access to foreign markets. A related point is that for a nation to negotiate, it is necessary that the gain from doing so be greater than the gain available from unilateral liberalization; reciprocal concessions intend to ensure that such gains will materialise.
3. Binding and enforceable commitments. The tariff commitments made by WTO members in a multilateral trade negotiation and on accession are enumerated in a schedule (list) of concessions. These schedules establish "ceiling bindings": a country can change its bindings, but only after negotiating with its trading partners, which could mean compensating them for loss of trade. If satisfaction is not obtained, the complaining country may invoke the WTO dispute settlement procedures.
4. Transparency. The WTO members are required to publish their trade regulations, to maintain institutions allowing for the review of administrative decisions affecting trade, to respond to requests for information by other members, and to notify changes in trade policies to the WTO. These internal transparency requirements are supplemented and facilitated by periodic country-specific reports (trade policy reviews) through the Trade Policy Review Mechanism (TPRM). The WTO system tries also to improve predictability and stability, discouraging the use of quotas and other measures used to set limits on quantities of imports.
5. Safety values. In specific circumstances, governments are able to restrict trade. The WTO's agreements permit members to take measures to protect not only the environment but also public health, animal health and plant health.

There are three types of provision in this direction:

1. articles allowing for the use of trade measures to attain non-economic objectives;
2. articles aimed at ensuring "fair competition"; members must not use environmental protection measures as a means of disguising protectionist policies.
3. provisions permitting intervention in trade for economic reasons.

Exceptions to the MFN principle also allow for preferential treatment of developing countries, regional free trade areas and customs unions.

Organizational structure

The highest authority of the WTO is the Ministerial Conference, which must meet at least every two years.

In between of each Ministerial Conference, the daily work is handled by three bodies whose membership is one and the same; they only differ by the terms of reference under which each body is constituted.

• The General Council
• The Dispute Settlement Body
• The Trade Policy Review Body

The General Council, whose Chair as of 2020 is David Walker of New Zealand, has the following subsidiary bodies which oversee committees in different areas:

Council for Trade in Goods

There are 11 committees under the jurisdiction of the Goods Council each with a specific task. All members of the WTO participate in the committees. The Textiles Monitoring Body is separate from the other committees but still under the jurisdiction of Goods Council. The body has its own chairman and only 10 members. The body also has several groups relating to text

Council for Trade-Related Aspects of Intellectual Property Rights

Information on intellectual property in the WTO, news and official records of the activities of the TRIPS Council, and details of the WTO's work with other international organizations in the field.

Council for Trade in Services

The Council for Trade in Services operates under the guidance of the General Council and is responsible for overseeing the functioning of the General Agreement on Trade in Services (GATS). It is open to all WTO members, and can create subsidiary bodies as required.

Trade Negotiations Committee

The Trade Negotiations Committee (TNC) is the committee that deals with the current trade talks round. The chair is WTO's director-general. As of June 2012 the committee was tasked with the Doha Development Round.

The Service Council has three subsidiary bodies: financial services, domestic regulations, GATS rules and specific commitments. The council has several different committees, working groups, and working parties. There are committees on the following: Trade and Environment; Trade and Development (Subcommittee on Least-Developed Countries); Regional Trade Agreements; Balance of Payments Restrictions; and Budget, Finance and Administration. There are working parties on the following: Accession. There are working groups on the following: Trade, debt and finance; and Trade and technology transfer.

As of 31 December 2019, the number of WTO staff on regular budget is 338 women and 285 men.

Decision-making

The WTO describes itself as "a rules-based, member-driven organization—all decisions are made by the member governments, and the rules are the outcome of negotiations among members". The WTO Agreement foresees votes where consensus cannot be reached, but the practice of consensus dominates the process of decision-making.

Richard Harold Steinberg (2002) argues that although the WTO's consensus governance model provides law-based initial bargaining, trading rounds close through power-based bargaining favouring Europe and the U.S., and may not lead to Pareto improvement.

Dispute settlement

The WTO's dispute-settlement system "is the result of the evolution of rules, procedures and practices developed over almost half a century under the GATT 1947". In 1994, the WTO members agreed on the Understanding on Rules and Procedures Governing the Settlement of Disputes (DSU) annexed to the "Final Act" signed in Marrakesh in 1994. Dispute settlement is regarded by the WTO as the central pillar of the multilateral trading system, and as a "unique contribution to the stability of the global economy". WTO members have agreed that, if they believe fellow-members are violating trade rules, they will use the multilateral system of settling disputes instead of taking action unilaterally.

The operation of the WTO dispute settlement process involves case-specific panels appointed by the Dispute Settlement Body (DSB), the Appellate Body, The Director-General and the WTO Secretariat, arbitrators, and advisory experts.

The priority is to settle disputes, preferably through a mutually agreed solution, and provision has been made for the process to be conducted in an efficient and timely manner so that "If a case is adjudicated, it should normally take no more than one year for a panel ruling and no more than 16 months if the case is appealed... If the complainant deems the case urgent, consideration of the case should take even less time. WTO member nations are obliged to accept the process as exclusive and compulsory.

According to a 2018 study in the Journal of Politics, states are less likely and slower to enforce WTO violations when the violations affect states in a diffuse manner. This is because states face collective action problems with pursuing litigation: they all expect other states to carry the costs of litigation. A 2016 study in International Studies Quarterly challenges that the WTO dispute settlement system leads to greater increases in trade.

However, the dispute settlement system cannot be used to resolve trade disputes that arise from political disagreements. When Qatar requested the establishment of a dispute panel concerning measures imposed by the UAE, other GCC countries and the US were quick to dismiss its request as a political matter, stating that national security issues were political and not appropriate for the WTO dispute system.

Accession and membership

The process of becoming a WTO member is unique to each applicant country, and the terms of accession are dependent upon the country's stage of economic development and current trade regime. The process takes about five years, on average, but it can last longer if the country is less than fully committed to the process or if political issues interfere. The shortest accession negotiation was that of the Kyrgyz Republic, while the longest was that of Russia, which, having first applied to join GATT in 1993, was approved for membership in December 2011 and became a WTO member on 22 August 2012.  Kazakhstan also had a long accession negotiation process. The Working Party on the Accession of Kazakhstan was established in 1996 and was approved for membership in 2015. The second longest was that of Vanuatu, whose Working Party on the Accession of Vanuatu was established on 11 July 1995. After a final meeting of the Working Party in October 2001, Vanuatu requested more time to consider its accession terms. In 2008, it indicated its interest to resume and conclude its WTO accession. The Working Party on the Accession of Vanuatu was reconvened informally on 4 April 2011 to discuss Vanuatu's future WTO membership. The re-convened Working Party completed its mandate on 2 May 2011. The General Council formally approved the Accession Package of Vanuatu on 26 October 2011. On 24 August 2012, the WTO welcomed Vanuatu as its 157th member. An offer of accession is only given once consensus is reached among interested parties.

A 2017 study argues that "political ties rather than issue-area functional gains determine who joins" and shows "how geopolitical alignment shapes the demand and supply sides of membership". The "findings challenge the view that states first liberalize trade to join the GATT/WTO. Instead, democracy and foreign policy similarity encourage states to join."

Accession process

WTO accession progress:

  Draft Working Party Report or Factual Summary adopted

  Goods or Services offers submitted

  Working party meetings

  Memorandum on Foreign Trade Regime submitted

  Working party established

A country wishing to accede to the WTO submits an application to the General Council, and has to describe all aspects of its trade and economic policies that have a bearing on WTO agreements. The application is submitted to the WTO in a memorandum which is examined by a working party open to all interested WTO Members.

After all necessary background information has been acquired, the working party focuses on issues of discrepancy between the WTO rules and the applicant's international and domestic trade policies and laws. The working party determines the terms and conditions of entry into the WTO for the applicant nation, and may consider transitional periods to allow countries some leeway in complying with the WTO rules.

The final phase of accession involves bilateral negotiations between the applicant nation and other working party members regarding the concessions and commitments on tariff levels and market access for goods and services. The new member's commitments are to apply equally to all WTO members under normal non-discrimination rules, even though they are negotiated bilaterally. For instance, as a result of joining the WTO, Armenia offered a 15 per cent ceiling bound tariff rate on accessing its market for goods. Together with the tariff bindings being ad valorem there are no specific or compound rates. Moreover, there are no tariff-rate quotas on both industrial and agricultural products. Armenia's economic and trade performance growth was noted since its first review in 2010, especially its revival from the 2008 global financial crisis, with an average annual 4% GDP growth rate, despite of some fluctuations. Armenia's economy was marked by low inflation, diminishing poverty and essential progress in enhancing its macroeconomic steadiness in which trade in goods and services, which is the equivalent of 87% of GDP, played a growing role.

When the bilateral talks conclude, the working party sends to the general council or ministerial conference an accession package, which includes a summary of all the working party meetings, the Protocol of Accession (a draft membership treaty), and lists ("schedules") of the member-to-be's commitments. Once the general council or ministerial conference approves of the terms of accession, the applicant's parliament must ratify the Protocol of Accession before it can become a member. Some countries may have faced tougher and a much longer accession process due to challenges during negotiations with other WTO members, such as Vietnam, whose negotiations took more than 11 years before it became official member in January 2007.

Members and observers

The WTO has 164 members and 24 observer governments. Liberia became the 163rd member on 14 July 2016, and Afghanistan became the 164th member on 29 July 2016. In addition to states, the European Union, and each EU country in its own right, is a member. WTO members do not have to be fully independent states; they need only be a customs territory with full autonomy in the conduct of their external commercial relations. Thus Hong Kong has been a member since 1995 (as "Hong Kong, China" since 1997) predating the People's Republic of China, which joined in 2001 after 15 years of negotiations. Taiwan acceded to the WTO in 2002 as the "Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu." The WTO Secretariat omits the official titles (such as Counsellor, First Secretary, Second Secretary and Third Secretary) of the members of Taiwan's Permanent Mission to the WTO, except for the titles of the Permanent Representative and the Deputy Permanent Representative.

As of 2007, WTO member states represented 96.4% of global trade and 96.7% of global GDP. Iran, followed by Algeria, are the economies with the largest GDP and trade outside the WTO, using 2005 data. With the exception of the Holy See, observers must start accession negotiations within five years of becoming observers. A number of international intergovernmental organizations have also been granted observer status to WTO bodies. 12 UN member states have no official affiliation with the WTO.

Agreements

The WTO oversees about 60 different agreements which have the status of international legal texts. Member countries must sign and ratify all WTO agreements on accession. A discussion of some of the most important agreements follows.

The Agreement on Agriculture came into effect with the establishment of the WTO at the beginning of 1995. The AoA has three central concepts, or "pillars": domestic support, market access and export subsidies.

The General Agreement on Trade in Services was created to extend the multilateral trading system to service sector, in the same way as the General Agreement on Tariffs and Trade (GATT) provided such a system for merchandise trade. The agreement entered into force in January 1995.

The Agreement on Trade-Related Aspects of Intellectual Property Rights sets down minimum standards for many forms of intellectual property (IP) regulation. It was negotiated at the end of the Uruguay Round of the General Agreement on Tariffs and Trade (GATT) in 1994.

The Agreement on the Application of Sanitary and Phytosanitary Measures—also known as the SPS Agreement—was negotiated during the Uruguay Round of GATT, and entered into force with the establishment of the WTO at the beginning of 1995. Under the SPS agreement, the WTO sets constraints on members' policies relating to food safety (bacterial contaminants, pesticides, inspection and labelling) as well as animal and plant health (imported pests and diseases).

The Agreement on Technical Barriers to Trade is an international treaty of the World Trade Organization. It was negotiated during the Uruguay Round of the General Agreement on Tariffs and Trade, and entered into force with the establishment of the WTO at the end of 1994. The object ensures that technical negotiations and standards, as well as testing and certification procedures, do not create unnecessary obstacles to trade".

The Agreement on Customs Valuation, formally known as the Agreement on Implementation of Article VII of GATT, prescribes methods of customs valuation that Members are to follow. Chiefly, it adopts the "transaction value" approach.

In December 2013, the biggest agreement within the WTO was signed and known as the Bali Package.

Office of director-general

The headquarters of the World Trade Organization in Geneva, Switzerland.

The procedures for the appointment of the WTO director-general were updated in January 2003, and include quadrennial terms. Additionally, there are four deputy directors-general. As of 13 June 2018 under director-general Roberto Azevêdo, the four deputy directors-general are:

• Yi Xiaozhun of China (since 1 October 2017),
• Karl Brauner of Germany (since 1 October 2013),
• Yonov Frederick Agah of Nigeria (since 1 October 2013) and
• Alan W. Wolff of the United States (since 1 October 2017).

List of directors-general

Source: Official website

Name	Country	Term
Peter Sutherland	Ireland	1995
Renato Ruggiero	Italy	1995–1999
Mike Moore	New Zealand	1999–2002
Supachai Panitchpakdi	Thailand	2002–2005
Pascal Lamy	France	2005–2009, 2009–2013
Roberto Azevêdo	Brazil	2013–2017, 2017–2020

(Heads of the precursor organization, GATT):

• Eric Wyndham White, 1948–1968
• Olivier Long, 1968–1980
• Arthur Dunkel, 1980–1993
• Peter Sutherland, 1993–1995

2020 Director-General selection

In May 2020, Director-General Roberto Azevedo announced that he would step down on 31 August 2020. As of October 2020, a nomination and selection process is currently under way with eight candidates and the final selection is expected on 7 November 2020 with the consensus of 164 member countries. A strong consensus had formed around the candidacy of Ngozi Okonjo-Iweala but on 28 October it emerged that the US representative had vetoed her appointment.

Budget

The WTO derives most of the income for its annual budget from contributions by its Members. These are established according to a formula based on their share of international trade.

2019 Top 10 Members’ contributions to the consolidated budget of the WTO

Rank	Country	CHF	Percentage
1	United States	22,660,405	11.59%
2	China	19,737,680	10.10%
3	Germany	13,882,455	7.10%
4	Japan	7,896,245	4.04%
5	United Kingdom	7,446,595	3.81%
6	France	7,440,730	3.81%
7	South Korea	5,777,025	2.96%
8	Netherlands	5,745,745	2.94%
9	Hong Kong	5,427,080	2.78%
10	Italy	5,096,685	2.61%
Others		94,389,355	48.28%
TOTAL		195,500,000	100.00%

Criticism

Although tariffs and other trade barriers have been significantly reduced thanks to GATT and WTO, the promise that free trade will accelerate economic growth, reduce poverty, and increase people's incomes has been questioned by many critics. Some prominent skeptics cite the example of El Salvador. In the early 1990s, they removed all quantitative barriers to imports and also cut tariffs. However, the country's economic growth remained weak. On the other hand, Vietnam which only began reforming its economy in the late 1980s, saw a great deal of success by deciding to follow the China's economic model and liberalizing slowly along with implementing safeguards for domestic commerce. Vietnam has largely succeeded in accelerating economic growth and reducing poverty without immediately removing substantial trade barriers.

Economist Ha-Joon Chang himself argues that there is a "paradox" in neo-liberal beliefs regarding free trade, because the economic growth of developing countries was higher in the 1960–1980 period compared to the 1980–2000 period even though its trade policies are now far more liberal than before. In addition, there are also results of research that show that new countries actively reduce trade barriers only after becoming significantly rich. From the results of the study, WTO critics argue that trade liberalization does not guarantee economic growth and certainly not poverty alleviation.

Critics also put forward the view that the benefits derived from WTO facilitated free trade are not shared equally. This criticism is usually supported by historical accounts of the outcomes of negotiations and/or data showing that the gap between the rich and the poor continues to widen, especially in China and India, where economic inequality is growing even though economic growth is very high. In addition, WTO approaches aiming to reduce trade barriers can harm developing countries. Trade liberalization that is too early without any prominent domestic barriers is feared to trap the developing economies in the primary sector, which often does not require skilled labor. And when these developing countries decide to advance their economy by means of industrialization, the premature domestic industry cannot immediately skyrocket as expected, making it difficult to compete with other countries whose industries are more advanced.

Impact

Studies show that the WTO boosted trade. Research shows that in the absence of the WTO, the average country would face an increase in tariffs on their exports by 32 percentage points. The dispute settlement mechanism in the WTO is one way in which trade is increased.

According to a 2017 study in the Journal of International Economic Law, "nearly all recent [preferential trade agreements (PTAs) reference the WTO explicitly, often dozens of times across multiple chapters. Likewise, in many of these same PTAs we find that substantial portions of treaty language—sometime the majority of a chapter—is copied verbatim from a WTO agreement... the presence of the WTO in PTAs has increased over time."