Description
i wrote my own papers but i just want you to edit the writing part and make it better. Keep the parts that i used in text citations the same so the paragraphs and sentences that i cited don’t edit it. the part where i wrote things in my own word i want you to edit and make it better. the theory of financial regulation and banking and tech are both a reflective report and we’re allowed to use first person narrative in the opinion part only. not in the whole paper. for the other two they should be formal and no use of first person narrative.keep in mind that i want the spelling to be in UK english.
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Theory of Financial Regulation
Read and analyse the article ‘The Credit Suisse crisis and the contradictions of global finance:
Three fallacies and a proposal’ by Mareike Beck (24 March 2023) available at Credit Suisse and
the contradictions of global finance | EUROPP (lse.ac.uk). Based on your understanding of the
main takeaways, write a reflective report.
Summary:
The article written by Mareike Beck starts off with the author portraying that Europeans
are not good at banking due to their failures as well as reliance on other banks such as American
banks. Beck believes that banks being big in Europe does not provide them global security
against failures in other wealthy nations, neither does a big balance sheet.
The article as a whole, has two main focuses firstly, being the Credit Suisse debacle and
secondly, being the UBS acquisition of Credit Suisse. The Credit Suisse debacle, based on the
author’s point of view, happened due to the failure of the Silicon Valley Bank. The Swiss
National Bank did try to step in by loaning Credit Suisse Bank emergency credit however, that
was not enough therefore UBS purchased Credit Suisse Bank. The author believes that the
reason behind UBS purchasing Credit Suisse was not to profit from its competitor but instead
because of it being backed by the government and having liquidity benefits. However, when
UBS acquired Credit Suisse Bank their shares collapsed due to the toxic collateralized debt
obligations. Beck also sees that there are two core things which demonstrate the bigger problems
of the financial system and the reasons behind being unable to solve them, quantitative easing
and merging-as-rescue.
The author then goes to talk about the most important part of the article, the most crucial
three misbeliefs in global financial crisis management, according to her. What she also believes
is that these three points highlight the mismanagement and inability to calm situations down.
First, merging to create strength second, European central banks as financial regulators and third,
Ensuring credit provision. For the first fallacy, the author does not believe that being a big bank
worth of hundreds of billions such as the Credit Suisse Bank prevents them from any risks.
Neither does she believe that when a bank is in crisis merging with another bank would resolve
the issues and create stability. It only makes the banks look desperate for good deals. What it
also does is it erases the name of the failing bank replacing it with the purchasing bank and then
leads to even bigger problems to which taxpayer’s money would have to be used to rectify the
situtaion. Mareike Beck states that banks merge in order to play around with the balance sheet
and make it more appealing by hiding bad debt, however she states that it does not end up
solving many issues such as bank runs, risk, and capital shortages. In addition, the writer clearly
indicated the importance of credit Suisse Bank to have been saved by the taxpayer’s money, to
prevent a systemic risk. Not helping large banks in crucial times leads to the banks vanishing
which leads to less large banks which then leads to a global systemic risk, therefore, it’s a
problem to not be using the taxpayer’s money as a preventative measure in helping large banks.
For the second fallacy, the author articulates on the fact that European central banks
decided collectively ‘to enhance the provision of liquidity by standing the US dollar liquidity
swap line arrangements’ to mitigate a bigger financial crisis after the collapse of the Credit
Suisse Bank. During a crisis, consumers tend to buy US dollar due to its low volatility and high
security however, what that emphasizes is that European central banks are not actually the
financial regulators. They’re not even the ones that stop a financial crisis from happening, it’s the
Fed (they have the upper power) since European central banks depend on the US dollar.
Therefore, European finance depends on the US.
For the third fallacy, Beck states that statements from the central banks’ press release were
ambiguous related to how credit provision would be economically helpful to households and
corporations. Beck also supposes that central banks do not have an actual solution to the
financial problem hence their expand of US dollar swap lines. What central banks do instead is
support banks in times of need basically placing a band aid on a wound, meaning the root cause
of the problem would still be present however dealt with when a problem arises. Central banks
also do not have much of a choice they are either to fall into a US dollar liquidity crisis, or they
would have to suffer inflation therefore, they choose to deal with situations using quantitative
easing to prevent a crisis and quantitative tightening to restrain inflation. At the end of it all, the
author believes that households are the ones that deal with the crises due to the increase in
housing prices, inequality, and a high cost of living.
At the end of the article, the writer portrays the lack of appropriate implication of the order
of investors being paid, bond holders are supposed to be paid and then the shareholders,
however, the opposite happened. Additionally, the bond holders had incurred some of the losses.
She then goes on about the importance of fixing the issue deeply and not superficially because
not doing so would mean adding fuel to the fire in making the financial system fail even greater.
Beck then goes on to suggest that different solutions should be explored such as the households’
solution by giving households that struggle access to credit. What the author meant was to shift
some of the focus on the households, to help the ones in need and not to merely focus on
commercial benefits. In order to fight against inequality with the goal of reducing it and make
households more capable of dealing with the costs of the living crisis.
Opinion:
There were many statements and points that the author brought forward which I did not
agree with. However, on the other hand, there were things that the author mentioned which I did
agree with, both will be addressed. Early on in the article, Beck shared her opinion about how
being a large bank and one of the ‘too big to fail’ banks does not insure you from failing. Which
I find to be a true statement, in fact multiple articles stated that it is not the concept of ‘too big to
fail’ which prevents the financial institutions from failing and being highly protected by the
government, it is the systemic impact which I completely agree with. One of the articles
mentioned,
‘Bail-out probabilities depend on a bank’s systemic importance rather than its
size, and that the two concepts do not necessarily coincide. It is the systemic risk
emanating from a bank that justifies government intervention. Therefore, banks
are not too big to fail (TBTF), but too systemic to fail (TSTF).’1
An example is the failure of the Lehman Brothers (a bank that was considered ‘too big to fail’ up
until its downfall) which was discussed in the first seminar titled as Financial Crisis and
Systemic Disruptions.
Andreas Barth and Isabel Schnabel, ‘Why Banks are Not Too Big to Fail—Evidence from the CDS Market’ (2013)
28(74) Economic Policy 337 [1] < https://academic.oup.com/economicpolicy/article/28/74/335/2918384>accessed
14 November 2023.
1
Moving on, the author also stated that the Silicon Valley Bank (SVB) was the reason
behind the collapse of Credit Suisse which I find to be true due to the systemic impact of larger
banks. However, saying so, I do not believe that it was the sole reason behind the debacle. The
Reserve Bank of Australia also stated that Credit Suisse was vulnerable and that SVB did cause a
spillover2 which further confirms my previous statement. What made Credit Suisse vulnerable
was that it ‘went through a few tumultuous events, from criminal investigations on money
laundering to losses due to large (unhedged) exposures to failing financial entities.’3 Not only
that, as well as ‘serious failures in risk management and organizational structures, with Credit
Suisse breaching in multiple occasions its supervisory obligations.’4 There are some terms
mentioned in this paragraph that have been discussed in the first seminar such as spillover and
systemic impact which shows how interlinked the topic is to the article.
An opinion of Beck that I don’t agree with is her believing that UBS acquired Credit
Suisse not for monetary purposes. I believe that the acquirement happened in order to profit off
of this catastrophic situation and turn it into a positive thing for UBS. In this way, they would
become an even bigger bank and they would be backed up by the government. As stated in the
article The Banking Crisis of Credit Suisse,
‘UBS was thus able to use its strong market position in the Swiss banking sector
to its own advantage (in the short term), to acquire Credit Suisse at an attractive
Reserve Bank of Australia, ‘Financial Stability Review’ (2023) Reserve Bank of Australia 16 [2] <
https://www.rba.gov.au/publications/fsr/2023/apr/pdf/box-a-recent-international-bank-failures-causes-regulatoryresponses-and-implications.pdf>accessed 14 November 2023.
3
Diego Valiante, ‘The Last Days of Credit Suisse: Banking Crisis Management Under Siege’ (2023) SSRN 244 [1]
accessed 14 November 2023.
4
Ibid 245 [1].
2
price, swallowing up all its assets. The result is a “monster bank” that will have a
much dominant position both in Switzerland and in the global economy…given
the now explicit guarantee it enjoys from the state.’5
Beck then moves on trying to bring her opinion forward about merging to create strength,
the first fallacy. I find her arguments to be weak and inadequate. Whether we would like to agree
or not, big banks are shielded from risks, however, to a certain degree. As stated, ‘U.S. banks
historically have been protected by a public safety net and prudentially supervised and regulated
to ensure they operate in a safe and sound manner.’6 There were also regulations put in place to
‘improve safety by limiting risks that banks could take.’7Especially when those banks have
systemic impacts. Governments would in such instances back those banks in order to prevent
greater economical disruptions. A term was introduced earlier on in this paragraph which is
important to highlight is prudential, it was discussed in class as well in session 2 Financial
Supervision Architectures. Adding on to that, more evidence of banks being shielded from risks
‘a bank’s approval for government support signals an increase in the probability that this bank
will be protected again in case of distress.’8 However, this does end up raising an issue of moral
hazard, where banks would be more inclined to take risks knowing that they are being protected.
However, it is not always the case since banks have to get pre-approved in order to get
Sergio Rossi, ‘The Banking Crisis of Credit Suisse’ (2023) 82(325) Facultad de Economia, Universidad Nacional
Autonoma de Mexico 26 [1] accessed 14 November 2023.
6
Charles S. Morris, ‘What Should Banks Be Allowed to Do?’ (2012) Federal Reserve Bank of Kansas City 56 [3]
accessed 14 November 2023.
7
Ibid.
8
Ran Duchin and Denis Sosyura, ‘Safer Ratios, Riskier Portfolios: Banks’ Response to Government Aid’ (2014)
113(1) Journal of Financial Economics 3 [4]
accessed 14 November 2023.
5
protection.9 Moral hazard was also discussed in session 2 but not only then, in session 5 as well
when discussing bail-in.
Continuing, I also disagree with her saying that merging would not create stability because
if that was the case then there wouldn’t have been a regulation in the EU on it.
‘EC Merger Regulation states that “Member states may take appropriate measures
to protect legitimate interests other than those taken into consideration by this
Regulation and compatible with the general principles and other provisions of
Community law”.’10
When banks merge it does not make them look desperate, that’s just a personal viewpoint of the
author. In my point of view, it makes them look smarter because they would take advantage of a
bad situation and turn it into something positive for themselves. Especially in the case of UBS
they eliminated one of their competitors through acquiring them.11 Beck also brought up the fact
that the failing bank loses its identity throughout the merging process, which I find to be
important because if it wasn’t being renounced then it would carry its bad reputation over to the
new institution causing negative impacts.
Moving forward, Beck indicated that banks merge to hide bad debt and play around with
the balance sheet however, that is simply not true because what that indicates is a lack of
transparency and regulation. However, there is a supervision that is placed to monitor the
9
Ibid.
Elena Carletti and Philipp Hartmann, ‘Competition and Stability: What’s Special About Banking?’ (2002)
European Central Bank 16 [2] accessed 14
November 2023.
11
Sergio Rossi, ‘The Banking Crisis of Credit Suisse’ (2023) 82(325) Facultad de Economia, Universidad Nacional
Autonoma de Mexico 35 accessed 14 November 2023.
10
banking industry, the ‘Basel core principles for effective banking supervision.’12 As to solving
bank runs, I do not believe that it is an issue created by the financial intuitions only. At times
financial institutions are in fault in times of crisis for example however, on the other hand it’s a
psychological problem such as when discussed in class (in week 2) the effects of social media on
bank run. ‘This so-called “panic view” of bank runs proposes that bank runs can happen even
when fundamentals are strong’ that is due to it being a decision made in a panic mode.13
As for the second fallacy, I completely agree with what she had to say because if
consumers and clients of the bank would run to buy US dollars during a crisis and if the
European central banks would depend on the ‘US dollar liquidity swap line arrangements’14 then
its ultimately the Fed that are the financial regulators and in control of everything.
For the third fallacy, I do agree that the press release needed to be more specific in regard
to how credit provision would bring economic well-being in order to reassure the consumer and
the society as a whole as well. However, I fail to see eye to eye Beck’s opinion regarding swap
lines not being used due to not having a solution so merely used as a remedy for the time being.
The US credit swap line has been agreed upon by many central banks including the Swiss
National Bank.15 There is a reason behind that in my opinion, it’s been proven time and time
again to be effective therefore, I do find it to be a solution and not a remedy.
12
Basel Committee on Banking Supervision, Guidelines for Identifying and Dealing with Weak Banks (Bank for
International Settlements 2015) 1.
13
Oege Dijk, ‘Bank Run Psychology’ (2017) 144 Journal of Economic Behavior & Organization 87 [1]
accessed 14 November 2023.
14
Mareike Beck, ‘The Credit Suisse Crisis and the Contradictions of Global Finance: Three Fallacies and a
Proposal’ (2023) LSE [10] accessed 14 November 2023.
15
Federal Reserve Bank of New York, ‘Central Bank Swap Arrangement’ Federal Reserve Bank of New York [1]
accessed 14 November 2023.
16
Fabian Pape, ‘Governing Global Liquidity: Federal Reserve Swap Lines and the International Dimension of US
Monetary Policy’ (2021) 27(3) Taylor & Francis Online 455
accessed 14 November 2023.
17
University of Bath, ‘Quantitative Easing as an Economy Boost—a Very Large Gamble?’ University of Bath [3]
accessed 14
November 2023.
‘The process of reversing or “unwinding” QE, either by stopping reinvestments or
selling bonds, is sometimes called “quantitative tightening”, or QT. It raises
interest rates and lowers inflation. But the size of this impact depends on the
economic circumstances of the time.’18
I do agree with Beck that households are the ones that suffer the consequences at the end.
When working in an industry, one can predict downfalls of certain institutions based on the
choices that they have been making. Granted they would not be able to Know everything.
However, in the case of Credit Suisse as I had stated earlier, there were many concerns in regard
to the bank, such as their mismanagement and being involved in legal issues. Therefore, there
were indications of the bank possibly failing. Now for the people within the financial industry,
it’s easy to spot these things and take precautionary measures whether that is to transfer your
money or even bank run. Meanwhile, households would not have this information, making them
high likely to absorb the aftermath of the bank failing such as the increase of house pricings and
the cost of living generally.
Lastly, the author mentioned an important thing that relates to The Insolvency Act 2016,
shareholders were compensated first which I do not agree with. Bondholders were supposed to
be compensated first since they come higher up in the order than shareholders. ‘Shareholders are
the final group to be paid. As they have taken a business risk in providing money to the
company, they are not entitled to a distribution until all other creditor groups have been paid.’19
Bank of England, ‘Quantitative Easing’ (2023) Bank of England acce
ssed 14 November 2023.
19
The Insolvency Experts ‘What is the Order of Creditors in Liquidation?’ The Insolvency Experts
a
ccessed 14 November 2023.
National Bank did not end Credit Suisse’s issues, UBS shares tumbled in value after acquiring
Credit Suisse, the ripples from the failure of Silicon Valley Bank were enough to make Credit
Suisse collapse, and that quantitative tightening is effective in lowering inflation. What the
author represented was that Europeans are bad at banking business and don’t have control over
it. She presented few arguments as well some of them were that the crisis demonstrated three key
fallacies in global crisis management merging to create strength, European central banks as
financial regulators, and ensuring credit provision, as well as Credit Suisse was supposed to be
saved using taxpayer’s money because of its systemic importance, and lastly the Fed have the
upper power. Then the author goes to conclude by sharing her proposal which is the households’
solution.
As for the central part of the essay, the author’s analysis was further discussed by sharing
personal opinions and backing it up with credible sources. The author’s claims and arguments
were scrutinized and further looked into. Other arguments were presented such as UBS’s
intentions to acquire Credit Suisse were due to profit off of them, big banks being shielded from
risks to a certain degree, merging creates stability, banks do not merge to hide bad debt and to
play around with the balance sheet, US dollar swap lines being a solution not a remedy for the
time being, and lastly the households’ solution being vague. Connections were also made
throughout the essay in regard to topics covered in the seminar. Then at the end suggestions were
made for a better solution which was to work with social media platforms to promote
transparency and prevent the spread of misinformation. In order to not face situations like bank
run. Adding to that, to make it a regulation and not just a casual talk to limit the spread of
misinformation that would have great systemic risks. What this will result in is more control over
psychological actions taken by consumers such as bank run. It will also reduce unexpected risks
and interventions from external industries that are inexperienced in the financial industry but
have been impacting them with their misinformation.
The main takeaways from this reflective report are that the US Fed have more control over
other central banks than people would think, the financial industry is an information sensitive
industry meaning that the spread of information (good and bad) effect the industry, there are no
black and white solutions for the financial crisis that happen meaning that it takes many different
solutions to fix this giant issue not one specific solution, following the rules and regulations does
prevent institutions from getting in trouble, not always do institutions follow the order of
creditors in liquidation (they do at times go in a different order), and that bank run is a
psychological issue.
Bibliography
•
The Insolvency (England and Wales) Rules 2016.
•
EC Merger Regulation 2004.
•
Barth A and Schnabel I, ‘Why Banks are Not Too Big to Fail—Evidence from the CDS
Market’ (2013) 28(74) Economic Policy 337 [1] <
https://academic.oup.com/economicpolicy/article/28/74/335/2918384>accessed 14
November 2023.
•
Reserve Bank of Australia, ‘Financial Stability Review’ (2023) Reserve Bank of
Australia 16 [2] < https://www.rba.gov.au/publications/fsr/2023/apr/pdf/box-a-recentinternational-bank-failures-causes-regulatory-responses-and-implications.pdf>accessed
14 November 2023.
•
Valiante D, ‘The Last Days of Credit Suisse: Banking Crisis Management Under Siege’
(2023) SSRN 244 [1]
accessed 14 November 2023.
•
Rossi S, ‘The Banking Crisis of Credit Suisse’ (2023) 82(325) Facultad de Economia,
Universidad Nacional Autonoma de Mexico 26 [1]
accessed 14 November 2023.
•
Morris C, ‘What Should Banks Be Allowed to Do?’ (2012) Federal Reserve Bank of
Kansas City 56 [3] accessed 14
November 2023.
•
Duchin R and Sosyura D, ‘Safer Ratios, Riskier Portfolios: Banks’ Response to
Government Aid’ (2014) 113(1) Journal of Financial Economics 3 [4]
accessed 14
November 2023.
•
Carletti E and Hartmann P, ‘Competition and Stability: What’s Special About Banking?’
(2002) European Central Bank 16 [2]
accessed 14
November 2023.
•
Basel Committee on Banking Supervision, Guidelines for Identifying and Dealing with
Weak Banks (Bank for International Settlements 2015) 1.
•
Dijk O, ‘Bank Run Psychology’ (2017) 144 Journal of Economic Behavior &
Organization 87 [1]
accessed 14
November 2023.
•
Beck M, ‘The Credit Suisse Crisis and the Contradictions of Global Finance: Three
Fallacies and a Proposal’ (2023) LSE [10]
accessed 14 November
2023.
•
Federal Reserve Bank of New York, ‘Central Bank Swap Arrangement’ Federal Reserve
Bank of New York [1] accessed 14 November 2023.
•
Pape F, ‘Governing Global Liquidity: Federal Reserve Swap Lines and the International
Dimension of US Monetary Policy’ (2021) 27(3) Taylor & Francis Online 455
accessed 14
November 2023.
•
University of Bath, ‘Quantitative Easing as an Economy Boost—a Very Large Gamble?’
University of Bath [3] accessed 14 November 2023.
•
Bank of England, ‘Quantitative Easing’ (2023) Bank of England
accessed 14 November 2023.
•
The Insolvency Experts ‘What is the Order of Creditors in Liquidation?’ The Insolvency
Experts accessed 14 November 2023.
WTO Law Coursework
Question: Examine the main achievements and challenges of the World Trade Organization from
1995 to 2023.
Introduction
‘The World Trade Organization (WTO) is the only global international
organization dealing with the rules of trade between nations. At its heart are the
WTO agreements, negotiated and signed by the bulk of the world’s trading
nations and ratified in their parliaments. The goal is to help produced of goods
and services, exporters, and importers conduct their business.’1
This paper will discuss four main achievements of the WTO being the General Agreement on
Tariffs and Trade (GATT), Dispute Settlement, Trade-Related Aspects of Intellectual property
(TRIPS) and finally, General Agreement on Trade in Services (GATS) from its birth January 1st
19952 to the current year, 2023. As well as three challenges of the WTO, the dispute settlement,
the failure of the Doha round, and the constituencies being displeased by the WTO.
i.
History of the WTO
Historically, there were many events that lead to the creation of the WTO. It all started
decades ago when the ‘international community made its first attempt at multilateral accord in
the arena of international economic relations.’3 Then after the Second World War a new system
was designed, the Bretton Woods System and its aim was to ‘encourage trade liberalization and
World Trade Organization, ‘What is the WTO?’ World Trade Organization [1]
accessed 11 November 2023.
1
World Trade Organization, ‘Understanding the WTO: Basics What is the World Trade Organization?’ World
Trade Organization [7]
accessed 11 November 2023.
3
Thomas J. Dillon, ‘The World Trade Organization: A New legal Order for World Trade’ (1995) 16(2) Michigan
Journal of International Law 351
accessed 11 November 2023.
2
multilateral economic cooperation.’4 The makers of the Bretton Woods System believed that
what caused the Second World War were the tariffs and trade policies in the 1930s.
‘The Bretton Woods System was to consist of three major international
organizations designed to administer and harmonize world trade: the International
Monetary Fund (IMF); the International Bank for Reconstruction and
Development (World Bank or IBRD); and the ill-fated International Trade
Organization (ITO)…They were to cooperate and assist one another in the pursuit
of their individual and collective goals.’5
However, due to certain issues specifically the lack of political will in the US, the ITO failed.
After the failure of the ITO, the GATT agreement is what regulated trade between nations.
Although the GATT was a success for decades, ‘it was ill-equipped to handle the broader task of
regulating world trade relations without some fundamental improvements.’6 Hence, the creation
of the WTO.
‘The framers of the WTO specifically designed it to remedy many of GATT’s
organizational shortcomings…the WTO plays the essential role of unifying the
existing and new obligations under one administrative roof and further providing
an internationally recognized organizational structure which its forerunner, the
GATT, had lacked.’7
ii.
4
Functions of the WTO
Ibid 351.
Thomas J. Dillon, ‘The World Trade Organization: A New legal Order for World Trade’ (1995) 16(2) Michigan
Journal of International Law 352
accessed 11 November 2023.
6
Ibid 354.
7
Ibid 355.
5
The functions of the WTO were clearly stated under Article III of the Marrakesh
Agreement Establishing the World Trade Organization. The agreement stated first, that
‘The WTO shall facilitate the implantation, administration and operation, and
further the objectives, of the Agreement and of the Multilateral Trade
Agreements, and shall also provide the framework for the implementation,
administration and operation of the Plurilateral Trade Agreements.’8
Second, that
‘The WTO shall provide the forum for negotiations among its Members
concerning their multilateral trade relations in matter dealt with under the
agreements in the Annexes to this Agreement. The WTO may also provide a
forum for further negotiations among its Members concerning their multilateral
trade relations, and a framework for the implementation of the results of such
negotiations, as may be decided by the Ministerial Conference.’9
Third, that
‘The WTO shall administer the Understanding on Rules and Procedures
Governing the Settlement of Disputes (hereinafter referred to as the “Dispute
Settlement Understanding” or “DSU”) in Annex 2 to this Agreement.’10
8
Marrakesh Agreement Establishing the World Trade Organization (adopted 15 April 1994, entered into force 1
June 1995) World Trade Organization art 3< https://www.wto.org/english/docs_e/legal_e/04wto_e.htm#:~:text=Article%20III,Functions%20of%20the&text=The%20WTO%20shall%20provide%20the%20forum%20for%20negotiations%20a
mong%20its,the%20Annexes%20to%20this%20Agreement>accessed 11 November 2023.
9
Marrakesh Agreement Establishing the World Trade Organization (adopted 15 April 1994, entered into force 1
June 1995) World Trade Organization art 3< https://www.wto.org/english/docs_e/legal_e/04wto_e.htm#:~:text=Article%20III,Functions%20of%20the&text=The%20WTO%20shall%20provide%20the%20forum%20for%20negotiations%20a
mong%20its,the%20Annexes%20to%20this%20Agreement>accessed 11 November 2023.
10
Ibid.
Fourth, that ‘The WTO shall administer the Trade Policy Review Mechanism (hereinafter
referred to as the “TPRM”) provided for in Annex 3 to this Agreement.’11 Fifth, that
‘With a view to achieving greater coherence in global economic policy-making,
the WTO shall cooperate, as appropriate, with the International Monetary Fund
and with the International Bank for Reconstruction and Development and its
affiliated agencies.’12
The Four Main Achievements of the WTO
With the WTO being almost 3 decades old and being of a great success (considering that
164 members had joined)13, without a doubt there have been many achievements that it has
accomplished. However, this paper will focus on four the GATT, Dispute Settlement, TRIPS,
and GATS.
i.
General Agreement on Tariffs and Trade (GATT)
The GATT Agreement came into effect in 1947 before the existence of the WTO. During
that time, only 23 members were involved. Whereas now, there has been a surge in the number
of member states involved.14
What makes the GATT highly significant is its positive impact on trade and
the economy.
11
Ibid.
Ibid.
13
World Trade Organization, ‘Understanding the WTO: The Organization Members and Observers’ World Trade
Organization [1] accessed 11 November 2023.
14
Meredith Crowley, ‘An Introduction to the WTO and GATT’ (2003) ResearchGate [4] <
https://www.researchgate.net/publication/5041026_An_introduction_to_the_WTO_and_GATT>accessed 11
November 2023.
12
‘Since the 1950s, world trade has grown dramatically faster than world GDP.
While in 2007, real-world output was about nine times higher than in 1950, trade
increased more than 20-fold. In this period, trade liberalization took place under
the auspices of the GATT/WTO which among others reduced ad valorem tariffs
on industrial products on average from over 40 percent to less than 4 percent.’15
GATT also has ‘an important trade-promoting effect on the extensive margin of trade, that is,
trade creation between countries that did not have trade relations before.’16 Another paper
published by Munich Society for the Promotion of Economic Research states that, ‘on average,
joining GATT and/or WTO has increased trade between members by 171% and trade between
member and non-member countries by about 88%.’17 Adding to that, ‘GATT/WTO increase
trade by 65% for developed countries, by 32% for developing countries that acceded WTO after
1995.’18
Moving on, the WTO, as an organization helps solve disputes when brought up to them.
Therefore, member states complain to the WTO in hopes for the WTO to help them reach a
solution.19 There have been many cases of complaints being raised to the WTO in regard to
violations of the GATT Agreement but one that stood out was the Canada—Additional Duties on
Certain Products from the United States.20 What happened was
Bernhard Herz and Marco Wagner, ‘The ‘Real’ Impact of GATT/WTO—a Generalised Approach’ (2011) Wiley
Online Library < https://onlinelibrary.wiley.com/doi/full/10.1111/j.1467-9701.2011.01362.x> accessed 11
November 2023.
16
Ibid.
17
Mario Larch and others, ‘On the Effects of GATT/WTO Membership on Trade: They are Positive and Large After
All’ (2019) SSRN < https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3421148>accessed 12 November 2023.
18
Ibid 1.
19
World Trade Organization, ‘The Process—Stages in a Typical WTO Dispute Settlement Case’ World Trade
Organization [1] accessed 12
November 2023.
20
Canada V Additional Duties on Certain Products from the United States [2019] World Trade Organization.
15
‘The United States alleged that Canada’s additional duties measure did not
impose the increased duties on like products originating in the territory of any
other WTO Member, and thus appeared to be inconsistent with the most-favoured
nations obligation in Article I of the GATT 1994. Additionally, the United States
alleged that the additional duties measures resulted in rates of duty greater than
rates of duty set out in Canada’s schedule of concessions, and thus appeared to be
inconsistent with Article II of the GATT 1994.’21
At the end of it, both parties ‘notified the DSB that they had reached a mutually agreed solution,
which consisted on Canada’s elimination of surtaxes on imports of certain products from the
United States.’22
ii.
Dispute Settlement
‘Resolving trade disputes is one of the core activities of the WTO. A dispute
arises when a member government believes another member government is
violating an agreement or a commitment that it has made in the WTO. The WTO
has one of the most active international dispute settlement mechanisms in the
world. Since 1995, 621 disputes have been brought to the WTO and over 350
