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Annual Report 2000
The Annual report of the WTO focuses on the regular activities of the organization the details of its current structure staff and budget. The Annual report is published in the first half of each year.
Korea - Measures Affecting Government Procurement
On 16 February 1999 the US requested consultations with Korea in respect of certain procurement practices of the Korean Airport Construction Authority (KOACA) and other entities concerned with the procurement of airport construction in Korea. The US claimed that such practices were inconsistent with Korea’s obligations under the Agreement on Government Procurement (GPA). These include practices relating to qualification for bidding as a prime contractor domestic partnering and the absence of access to challenge procedures that are in breach of the GPA. The US contended that KOACA and the other entities are within the scope of Korea’s list of central government entities as specified in Annex 1 of Korea’s obligations in Appendix I of the GPA and pursuant to Article I(1) of the GPA apply to the procurement of airport construction.
United States - Anti-Dumping Act of 1916 - Complaint by the European Communities
On 9 June 1988 the European Communities requested consultations with the United States in respect of the alleged failure of the United States to repeal its Anti-Dumping Act of 1916. The European Communities contended that the US Anti-Dumping Act of 1916 is still in force and is applicable to the import and internal sale of any foreign product irrespective of its origin including products originating in countries which are WTO Members. The European Communities also alleged that the 1916 Act exists in the US statute books in parallel with the Tariff Act of 1930 as amended which includes the US implementing legislation of multilateral Anti-Dumping provisions. The European Communities alleged violations of Articles III:4 VI:1 and VI:2 of the GATT 1994 Article XVI:4 of the WTO Agreement and Articles 1 2 3 4 and 5 of the Anti-Dumping Agreement.
Canada - Patent Protection of Pharmaceutical Products
On 19 December 1997 the EC requested consultations with Canada in respect of the alleged lack of protection of inventions by Canada in the area of pharmaceuticals under the relevant provisions of the Canadian implementing legislation in particular the Patent Act. The EC alleged that Canada’s legislation is not compatible with its obligations under the TRIPS Agreement because it does not provide for the full protection of patented pharmaceutical inventions for the entire duration of the term of protection envisaged by Articles 27.1 28 and 33 of the TRIPS Agreement.
United States - Tax Treatment for "Foreign Sales Corporations"
On 18 November 1997 the European Communities requested consultations with the United States in respect of Sections 921-927 of the US Internal Revenue Code and related measures establishing special tax treatment for “Foreign Sales Corporations” (FSC). The European Communities contended that these provisions were inconsistent with the United States' obligations under Articles III:4 and XVI of the GATT 1994 Articles 3.1(a) and (b) of the SCM Agreement and Articles 3 and 8 of the Agreement on Agriculture.
Australia - Measures Affecting Importation of Salmon - Recourse 1
On 5 October 1995 Canada requested consultations with Australia in respect of Australia’s prohibition of imports of salmon from Canada based on a quarantine regulation. Canada alleged that the prohibition is inconsistent with Articles XI and XIII of the GATT 1994 and also inconsistent with the SPS Agreement.
Canada - Certain Measures Affecting the Automotive Industry
On 3 July 1998 Japan requested consultations with Canada in respect of measures being taken by Canada in the automotive industry. Japan contended that under Canadian legislation implementing an automotive products agreement (Auto Pact) between the US and Canada only a limited number of motor vehicle manufacturers are eligible to import vehicles into Canada duty free and to distribute the motor vehicles in Canada at the wholesale and retail distribution levels. Japan further contended that this duty-free treatment is contingent on two requirements: Canadian value-added (CVA) content requirement that applies to both goods and services; and manufacturing and sales requirement. Japan alleges that these measures are inconsistent with Articles I:1 III:4 and XXIV of GATT 1994 Article 2 of the TRIMs Agreement Article 3 of the SCM Agreement and Articles II VI and XVII of GATS.
Mexico - Anti-Dumping Investigation of High Fructose Corn Syrup (HFCS) from the United States
On 8 May 1998 the US requested consultations with Mexico in respect of an anti-dumping investigation of high-fructose corn syrup (HFCS) grades 42 and 55 from the US conducted by Mexico. The US alleged that on 27 February 1997 the Government of Mexico published a notice initiating this anti-dumping investigation on the basis of an application dated 14 January 1997 from the Mexican National Chamber of Sugar and Alcohol Producers. The US further alleged that on 23 January 1998 Mexico issued a notice of final determination of dumping and injury in that investigation and consequently imposed definitive anti-dumping measures on these imports from the United States. The US contended that the manner in which the application for an anti-dumping investigation was made as well as the manner in which a determination of threat of injury was made is inconsistent with Articles 2 3 4 5 6 7 9 10 and 12 of the Anti-Dumping Agreement.
Australia - Subsidies Provided to Producers and Exporters of Automotive Leather - Recourse 1
On 4 May 1998 the United States requested consultations with Australia in respect of prohibited subsidies allegedly provided to Australian producers and exporters of automotive leather including subsidies provided to Howe and Company Proprietary Ltd. (or any of its affiliated and/or parent companies) which allegedly involve preferential government loans of about $A25 million and non‑commercial terms and grants of about $A30 million. The United States contended that these measures violate the obligations of Australia under Article 3 of the SCM Agreement.
United States - Imposition of Countervailing Duties on Certain Hot-Rolled Lead and Bismuth Carbon Steel Products Originating in the United Kingdom
On 30 June 1998 the EC requested consultations with the US in respect of the alleged imposition of countervailing duties on certain hot-rolled lead and bismuth carbon steel (leaded bars) from the UK. The EC asserted that the US imposed countervailing duties of 1.69 per cent on United Engineering Steels Ltd (UES) for the review period 1 January 1994 to 31 December 1994 and of 2.4 per cent for the review period 1 January 1995 to 20 March 1995 on the basis of subsidies which had been granted to British Steel Corporation (BSC). The EC also contended that the US imposed countervailing duties on British Steel plc (BSplc) / British Steel Engineering Steels LTD (BSES) for the review period 1 January 1996 to 31 December 1996 on the basis of subsidies granted to BSC before its privatization in 1988. The EC alleged that these impositions of countervailing duties constitute a violation of Articles 1.1(b) 10 14 and 19.4 of the Subsidies Agreement.
United States - Sections 301-310 of the Trade Act of 1974
On 25 November 1998 the EC requested consultations with the US in respect of Title III chapter 1 (sections 301-310) of the US Trade Act of 1974 (the Trade Act) as amended and in particular sections 306 and 305 of this Act.
Korea - Definitive Safeguard Measure on Imports of Certain Dairy Products
On 12 August 1997 the EC requested consultations with Korea in respect of a definitive safeguard measure imposed by Korea on imports of certain dairy products. The EC contended that under the provisions of different governmental measures Korea has imposed a safeguard measure in the form of an import quota on imports of certain dairy products. The EC considered that this measure is in violation of Articles 2 4 5 and 12 of the Agreement on Safeguard Measures as well as a violation of Article XIX of GATT 1994.
Argentina - Safeguard Measures on Imports of Footwear
On 10 November 2000 the EC requested consultations with the US concerning the continued application by the United States of countervailing duties on a number of products. In particular the EC claimed that the application of the “same person” methodology by the US and the continued imposition of duties based on it are in breach of Articles 10 19 and 21 of the SCM Agreement because there is no proper determination of a benefit to the producer of the goods under investigation as required by Article 1.1(b) of the SCM Agreement. The EC included in this request for consultations 14 US countervailing duty orders1 where this “same person” methodology was applied. All these cases involve alleged non-recurring subsidies granted to firms prior to a change of ownership.
Chile - Taxes on Alcoholic Beverages
On 4 June 1997 and 15 December 1997 the EC requested consultations with Chile in respect of Chile’s Special Sales Tax on spirits which allegedly imposes a higher tax on imported spirits than on Pisco a locally brewed spirit. The EC’s second request (WT/DS110) takes issue with the modification to the law on taxation on alcoholic beverages passed by Chile to address the concerns of the EC in WT/DS87. The EC contended that this differential treatment of imported spirits violates Article III:2 of GATT 1994.
European Communities - Measures Affecting Butter Products
On 3 May 1995 the US requested consultations with Korea in respect of requirements imposed by Korea on imports from the US which had the effect of restricting imports. The US alleged violations of Articles III and XI of GATT Articles 2 and 5 of the SPS Agreement Article 2 of the TBT Agreement and Article 4 of the Agreement on Agriculture.
Developments in trade policy, 1998-99
Two years ago the “Asian financial crisis” erupted in Thailand spread rapidly to other countries in the region and affected general investor sentiment in those and other developing countries and transition economies notably Russia in mid-1998 and later Brazil. Output and employment contracted sharply in the countries most directly affected in turn adversely affecting trade of their partners and together with steep commodity price declines trade of many other developing countries. In the past such events could have been invoked as a justification for raising import barriers in an attempt to contain the domestic consequences and shift the burden onto trading partners possibly provoking countermeasures and thereby exacerbating the downturn. However this very serious crisis unfolded in the framework of the WTO the strengthened multilateral trading system created by the Uruguay Round Agreements. The system and the good sense of governments helped to keep markets open facilitating adjustment and providing a critical element for recovery from the Asian crisis.
Overview
Last year’s Annual Report was written when the Asian financial crisis was only a year old. There was still considerable concern then about the risk of contagion and deep recession. A year later the situation is more healthy although only the complacent would contest the need for policy vigilance. Important challenges remain and recovery is far from complete. Global GDP growth decelerated sharply from the record expansion in the previous year while trade volume growth was more than halved. For parts of Asia a contraction in output growth also meant that import volume growth turned negative. The economic performance of other regions helped to maintain global output growth at around 2.0 per cent and world export growth at about 4 per cent in 1998. The United States continued a remarkable period of expansion contributing significantly to the global figure. The European Union grew less but above the global average.
World trade developments
Global output and trade growth decelerated sharply in 1998 as imports of Japan and East Asia fell for the first time since 1974 (first oil crisis). All regions and all broad product categories were affected by the slowdown. The share of the developing countries in world trade dipped for the first time in more than a decade. Nearly two thirds of the world’s economies recorded a decrease in their export earnings which was the worst performance observed in the 1990’s. Preliminary indicators point to an arrest of the slowdown of world trade in the first months of 1999 and an acceleration of growth in the second quarter.
Annual Report 1999
The Annual report of the WTO focuses on the regular activities of the organization the details of its current structure staff and budget. The Annual report is published in the first half of each year.
Whether and When to Liberalize Capital Account and Financial Services
Discussions about international capital movements raise extremely important and controversial questions. Why should countries open up their capital accounts especially considering that unrestricted international capital movement is a relatively new phenomenon? For example many OECD countries have not eliminated their foreign exchange restrictions only until the 1980's. If the answer is unequivocally affirmative does it matter how fast should countries do so? Should they wait until "all essential pieces" of the policy package are in place before they eliminate all restrictions? How are international capital movements related to domestic financial sectors? Is there a difference between opening to competition an industry such as car manufacturing as compared to the banking sector? Should the opening of the banking sector be governed by different rules? Rules about foreign exchange restrictions are already in place in the IMF Articles. Until recently the IMF Articles only called for the elimination of foreign exchange restrictions on the current account. The ongoing discussion and the controversy about globalization that calls for the capital account liberalization introduces therefore a relatively new element into the whole discussion. These questions have also implications for the World Trade Organization. It is well known that the Uruguay Round Agreements have already provided a coverage for a number of aspects that are directly related to foreign investment. Rules established elsewhere such as in the context of changes to the IMF Articles will obviously have an important bearing for the implementation of rules agreed in the Uruguay Round. This raises a variety of other questions in the mind of some observers. Who should decide about the rules on capital account liberalization? What rules? IMF? What is the role of the WTO? How does one link the two? All of the questions raised above are clearly extremely important and most of them are discussed in the following paper by John Williamson. Mr. Williamson's presentation is based on his lecture and discussion which was delivered on 17 June 1999 at the WTO. The actual text that follows is a transcript of that lecture.
Turkey - Restrictions on Imports of Textile and Clothing Products
On 21 March 1996 India requested consultations with Turkey concerning Turkey’s imposition of quantitative restrictions on imports of a broad range of textile and clothing products. India claimed that those measures are inconsistent with Articles XI and XIII of GATT 1994 as well as ATC Article 2. Earlier India had requested to be joined in the consultations between Hong Kong and Turkey on the same subject matter (WT/DS29).
Canada - Measures Affecting the Importation of Milk and the Exportation of Dairy Products
On 8 October 1997 the United States requested consultations with Canada in respect of export subsidies allegedly granted by Canada on dairy products and the administration by Canada of the tariff-rate quota on milk. The United States contended that these export subsidies by Canada distort markets for dairy products and adversely affect US sales of dairy products. The United States alleged violations of Articles II X and X1 of the GATT 1994 Articles 3 4 8 9 and 10 of the Agreement on Agriculture Article 3 of the SCM Agreement and Articles 1 2 and 3 of the Import Licensing Agreement.
United States - Tax Treatment for "Foreign Sales Corporations"
On 18 November 1997 the European Communities requested consultations with the United States in respect of Sections 921-927 of the US Internal Revenue Code and related measures establishing special tax treatment for “Foreign Sales Corporations” (FSC). The European Communities contended that these provisions were inconsistent with the United States' obligations under Articles III:4 and XVI of the GATT 1994 Articles 3.1(a) and (b) of the SCM Agreement and Articles 3 and 8 of the Agreement on Agriculture.
A Quantitative Assessment of Electronic Commerce
This paper tries to assess quantitatively the role of electronic commerce in economic activity and in trade and tariff revenue collection. The share of value added that potentially lends itself to electronic trade represents around 30 percent of GDP most importantly distribution finance and business services. Electronic commerce is also likely to boost trade in many services sectors significantly. Despite the growing importance of electronic commerce for economic activity and trade tariff revenue loss from electronic commerce is likely to be minimal. Trade in potentially digitizable media goods which currently faces a tariff in some countries represents less than one percent of total world trade. The revenue collected on these products amounts to less than one percent of total tariff revenue in most countries. Even if some of this trade moved “online” tariff revenue loss would be only a very small share of tariff revenue.
India - Quantitative Restrictions on Imports of Agricultural, Textile and Industrial Products
On 15 July 1997 the US requested consultations with India in respect of quantitative restrictions maintained by India on importation of a large number of agricultural textile and industrial products. The US contended that these quantitative restrictions including the more than 2700 agricultural and industrial product tariff lines notified to the WTO are inconsistent with India’s obligations under Articles XI:1 and XVIII:11 of GATT 1994 Article 4.2 of the Agreement on Agriculture and Article 3 of the Agreement on Import Licensing Procedures.
Canada - Measures Affecting the Export of Civilian Aircraft
On 10 March 1997 Brazil requested consultations with Canada in respect of certain subsidies granted by the Government of Canada or its provinces intended to support the export of civilian aircraft. The request was made pursuant to Article 4 of the SCM Agreement. Brazil contended that these measures are inconsistent with Article 3 of the SCM Agreement.
Brazil - Export Financing Programme for Aircraft
On 19 June 1996 Canada requested consultations with Brazil under Article 4 of the SCM Agreement which provides for special procedures for export subsidies. Canada claimed that export subsidies granted under the Brazilian Programa de Financiamento às Exportações (PROEX) to foreign purchasers of Brazil’s Embraer aircraft are inconsistent with Articles 3 27.4 and 27.5 of the SCM Agreement.
European Communities - Measures Concerning Meat and Meat Products (Hormones) - Original Complaint by Canada
On 12 July 1999 the WTO issued the dispute panel reports in the case "European Communities - Measures concerning meat and meat products (hormones) - Original complaint by Canada".
European Communities - Measures Concerning Meat and Meat Products (Hormones) - Original Complaint by the United States
On 12 July 1999 the WTO issued the dispute panel reports in the case "European Communities - Measures concerning meat and meat products (hormones) - Original complaint by the United States".
Argentina - Safeguard Measures on Imports of Footwear
On 10 November 2000 the EC requested consultations with the US concerning the continued application by the United States of countervailing duties on a number of products. In particular the EC claimed that the application of the “same person” methodology by the US and the continued imposition of duties based on it are in breach of Articles 10 19 and 21 of the SCM Agreement because there is no proper determination of a benefit to the producer of the goods under investigation as required by Article 1.1(b) of the SCM Agreement. The EC included in this request for consultations 14 US countervailing duty orders1 where this “same person” methodology was applied. All these cases involve alleged non-recurring subsidies granted to firms prior to a change of ownership;
Korea - Definitive Safeguard Measure on Imports of Certain Dairy Products
On 12 August 1997 the EC requested consultations with Korea in respect of a definitive safeguard measure imposed by Korea on imports of certain dairy products. The EC contended that under the provisions of different governmental measures Korea has imposed a safeguard measure in the form of an import quota on imports of certain dairy products. The EC considered that this measure is in violation of Articles 2 4 5 and 12 of the Agreement on Safeguard Measures as well as a violation of Article XIX of GATT 1994.
Chile - Taxes on Alcoholic Beverages
On 4 June 1997 and 15 December 1997 the EC requested consultations with Chile in respect of Chile’s Special Sales Tax on spirits which allegedly imposes a higher tax on imported spirits than on Pisco a locally brewed spirit. The EC’s second request (WT/DS110) takes issue with the modification to the law on taxation on alcoholic beverages passed by Chile to address the concerns of the EC in WT/DS87. The EC contended that this differential treatment of imported spirits violates Article III:2 of GATT 1994.
Turkey - Restrictions on Imports of Textile and Clothing Products
On 21 March 1996 India requested consultations with Turkey concerning Turkey’s imposition of quantitative restrictions on imports of a broad range of textile and clothing products. India claimed that those measures are inconsistent with Articles XI and XIII of GATT 1994 as well as ATC Article 2. Earlier India had requested to be joined in the consultations between Hong Kong and Turkey on the same subject matter (WT/DS29).
Australia - Subsidies Provided to Producers and Exporters of Automotive Leather
On 4 May 1998 the United States requested consultations with Australia in respect of prohibited subsidies allegedly provided to Australian producers and exporters of automotive leather including subsidies provided to Howe and Company Proprietary Ltd. (or any of its affiliated and/or parent companies) which allegedly involve preferential government loans of about $A25 million and non-commercial terms and grants of about $A30 million. The United States contended that these measures violate the obligations of Australia under Article 3 of the SCM Agreement.
Canada - Measures Affecting the Importation of Milk and the Exportation of Dairy Products
On 8 October 1997 the United States requested consultations with Canada in respect of export subsidies allegedly granted by Canada on dairy products and the administration by Canada of the tariff-rate quota on milk. The United States contended that these export subsidies by Canada distort markets for dairy products and adversely affect US sales of dairy products. The United States alleged violations of Articles II X and X1 of the GATT 1994 Articles 3 4 8 9 and 10 of the Agreement on Agriculture Article 3 of the SCM Agreement and Articles 1 2 and 3 of the Import Licensing Agreement.
Brazil - Export Financing Programme for Aircraft
On 19 June 1996 Canada requested consultations with Brazil under Article 4 of the SCM Agreement which provides for special procedures for export subsidies. Canada claimed that export subsidies granted under the Brazilian Programa de Financiamento às Exportações (PROEX) to foreign purchasers of Brazil’s Embraer aircraft are inconsistent with Articles 3 27.4 and 27.5 of the SCM Agreement.
Canada - Measures Affecting the Export of Civilian Aircraft
On 10 March 1997 Brazil requested consultations with Canada in respect of certain subsidies granted by the Government of Canada or its provinces intended to support the export of civilian aircraft. The request was made pursuant to Article 4 of the SCM Agreement. Brazil contended that these measures are inconsistent with Article 3 of the SCM Agreement.
European Communities - Regime for the Importation, Sale and Distribution of Bananas
On 09 April 1999 the WTO issued the dispute panel reports in the case "European communities - Regime for the importation sale and distribution of bananas".
India - Quantitative Restrictions on Imports of Agricultural, Textile and Industrial Products
On 15 July 1997 the US requested consultations with India in respect of quantitative restrictions maintained by India on importation of a large number of agricultural textile and industrial products. The US contended that these quantitative restrictions including the more than 2700 agricultural and industrial product tariff lines notified to the WTO are inconsistent with India’s obligations under Articles XI:1 and XVIII:11 of GATT 1994 Article 4.2 of the Agreement on Agriculture and Article 3 of the Agreement on Import Licensing Procedures.
Japan - Measures Affecting Agricultural Products
On 7 April 1997 the US requested consultations with Japan in respect of the latter’s prohibition under quarantine measures of imports of certain agricultural products. The US alleged that Japan prohibits the importation of each variety of a product requiring quarantine treatment until the quarantine treatment has been tested for that variety even if the treatment has proved to be effective for other varieties of the same product. The US alleged violations of Articles 2 5 and 8 of the SPS Agreement Article XI of GATT 1994 and Article 4 of the Agreement on Agriculture. In addition the US made a claim for nullification and impairment of benefits.
United States - Anti-Dumping Duty on Dynamic Random Access Memory Semiconductors (DRAMS) of one Megabit or above from Korea
On 14 January 1998 the EC requested consultations with Argentina in respect of definitive anti-dumping measures allegedly imposed by Argentina on imports of drill bits from Italy. The EC stated that on 12 September 1998 Argentina imposed definitive anti-dumping measures on imports of drill bits from Italy. The investigation which led to the imposition of these measures had allegedly been initiated on 21 February 1997. The EC alleged that due to the fact that Argentina’s investigation exceeded 18 months it was in violation of Article 1 of the Anti-Dumping Agreement.
Korea - Taxes on Alcoholic Beverages
On 4 April 1997 the EC requested consultations with Korea in respect of internal taxes imposed by Korea on certain alcoholic beverages pursuant to its Liquor Tax Law and Education Tax Law. The EC contended that the Korean Liquor Tax Law and Education Tax Law appear to be inconsistent with Korea’s obligations under Article III:2 of GATT 1994. On 23 May 1997 the US requested consultations with Korea in respect of the same measures complained of by the EC. The US also alleged violations of Article III:2.
The EU Model and Turkey
The customs union between the European Union (EU) and Turkey which entered into force in January 1996 extended and deepened the Association Agreement signed in 1964 and which foreshadows full EU membership for Turkey. In a number of areas the new relationship goes beyond the minimum requirements for a customs union: Turkey is also having to implement a number of measures which are part of the acquis communautaire similar to those applicable within the EU. This paper addresses the question whether this adoption of the EU model is beneficial to Turkey and third countries. The importance of this issue is the spreads of this model through the extension of the EU itself and the building of an increasing web of partnerships between the EU and other countries in Central and Eastern Europe as well as Mediterranean countries. Moreover other regions are looking at the EU model as a way in which to deepen their own preferential trading arrangements.
Developments in trade policy
Since the last WTO Annual Report conditions for trade and trade-related policy-making have become considerably more difficult. The effects of the financial and economic crisis affecting emerging markets and of the economic downturn in Japan are far from fully worked through. They are having a serious impact on the pattern of world economic growth and hence on trade and on commodity markets (Chapter Two). Although there has been some backtracking in trade liberalization the multilateral trading system – as seen in the development of trade policies – seemed in September 1998 to be standing up well to the turbulence in financial and trading markets.
WTO activities
The World Trade Organization (WTO) is the legal and institutional foundation of the multilateral trading system. It provides the principal contractual obligations determining how governments frame and implement domestic trade legislation and regulations. It also serves as the platform on which trade relations among countries evolve through collective debate negotiation and adjudication
Globalization and trade
The year 1998 marks five decades of the multilateral trading system. For 50 years the GATT and now the WTO have provided the framework for the conduct of trade relations in a world of growing complexity and interdependence – a world where trade has increased seventeen-fold since the founding of the system and foreign direct investment has grown five-fold in the last decade alone. At the same time the forces of globalization have brought extraordinary new opportunities. It is true of course that the upward trend in world output and trade has not been even or uninterrupted throughout the post-war period. Indeed there have been times of difficulty and disruption posing serious challenges for policy makers. The current economic crisis affecting much of Asia and Russia and exerting pressure on the economies of many other countries in different regions constitutes one of the most challenging sets of circumstances to have confronted the world economy in many decades. The financial crisis in South-East Asia the recession in Japan slower growth in Asia more generally as well as in various countries in other regions and the economic crisis in Russia have combined to create economic conditions in which the global economy could enter a period of contraction. If judicious policies are brought to bear however calming the fears of investors and restoring stability in the financial sector there is a good chance that while the world economy will suffer slower growth accompanied by a painful adjustment process in some countries a deep global depression is avoidable.
World trade in 1997 and in the first half of 1998
Despite the turmoil in world capital markets the global economy and trade expanded at an outstanding pace in 1997. Both GDP and trade growth were higher in 1997 than at any time in the 1990s. The increasing gap between trade and output growth rates in 1997 together with a further surge in foreign direct investment (FDI) indicate continued integration of national markets into the global economy. Increased integration inevitably means that disturbances in one country or region can have an impact elsewhere – a fact of which the world has become sharply aware in recent months as financial crises and lower growth in Asia have affected economic conditions in other regions. These developments emphasize the need for careful and well-directed policies based on adequate international cooperation. Among the policies that are important in reducing contagion and avoiding a downward spiral in the world economy are the maintenance of open markets for trade the restoration of financial stability and the development of adequate regulatory frameworks in the financial sector.
Overview
Financial and economic turmoil has shaken much of the world in the last few months affecting most of Asia and Russia in particular and presenting new challenges for many other countries. This crisis calls for a sense of collective responsibility as urgently as at any other time in the post-war period. From the perspective of the global trading system this means three things. First it requires a clear and continuing commitment by governments to the multilateral trading system and a firm resolve to resist protectionism. Second a fresh impetus toward trade liberalization would contribute to the resolution of the crisis and would send a positive signal to the markets. Third renewed efforts to bring the countries outside the system including Russia and China into the World Trade Organization would help to complete the global economic architecture for which the need has been so strongly demonstrated.