http://www.wto.org/
W T O

This page last updated 2015 June 22
 
this web page is refered to in the text
Global Human Resource Management
in
Global Business Today
Hill, McKaig ... and Richardson
.... online learning centre of the publisher http://www.mheducation.ca/highereducation/products/9780070401792/global+business+today/
2nd Edition 3rd Edition 4th Edition
..
Canada and the WTO on the DFAIT website (June 2015)
 http://www.international.gc.ca/trade-agreements-accords-commerciaux/agr-acc/wto-omc/index.aspx?lang=eng
 
 
http://www.youtube.com/watch?v=gWwQVGhYeCs
During the 4th week of July 2008 (July 30th) Richardson was interviewed live on CBC Newsworld by Andrew Nichols for a segment on the WTO and the collapse of the Doha round. Richardson explained the position that Canada had on subsidies in the agricultural sector and Canada's intentions to develop further bilateral relations for trade with countries.

In Sept 2010 Richardson made some additional commentary and subtitles on this clip and loaded it up to YouTube

nnnn
http://www.witiger.com/internationalbusiness/screenArticle-TR-Japan-WTO.jpg During the 2nd week of Sept 2010 Prof. Richardson was interviewed by Mary Gazze of CP about Ontario being challenged by Japan. The challenge was that the Japanese government said they would take Ontario to the WTO because Ontario is unfairly subsidizing companies that make products and services for the "green energy policy". 
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INTRODUCTION The IMF, World Bank, WTO, are NGOs Non-government organizations that have grown in importance in the late 1990's and early 2000's to take on a significant role in influencing the trade and commerce between nations.

Sometimes the rules and regulations and assistance provided by these NGOs has been helpful, sometimes it has been disruptive.

In this section we will look at the role of the WTO - sort of an int'l trade referee. We will discuss actual examples of WTO rulings involving specific countries and specific industries so that you may be able to form your own opinions as to the merits of this organization.

It is also helpful to understand the role and effect of the WTO as it applies to being involved in International Business Management - meaning: having to make decisions in consideration of a WTO ruling or requirement and how it can effect (positively or negatively) the international business of a company you might be working with.

Some of the WTO topics covered

  • WTO Basics
  • WTO - Canadian government issues and policy
  • Brazil - Canada conflict, Dec 2000
  • WTO and membership for China
  • WTO trade talks Nov 2001
  • WTO - rulings effecting Canada - Dairy Industry, Dec 2001
  • WTO - some criticism
  • WTO - sources of conflict
  • WTO - specific effects on Canadian international business
  • WTO - rulings effecting other countries


WTGR

....
KEY POINTS Both the IMF and the World Bank have become increasingly popular in the business media as people recognize the power and influence of these organizations. There are many many articles in the mainstream newspapers and magazines covering contemporary issues that the WTO is dealing with - we will refer to a limited number of these issues, but, before we do that, it would be useful to go straight to the origin of much of the information; namely, the WTO itself. The WTO, World Bank and the IMF have had websites up for a some time now and there is a wealth of information on these pages. However in reading through some of the links on the WTO pages, students are encouraged to be discriminating and keep in mind that the WTO does have an "agenda" which skews its stance on some key topics.

If you were a diligent student and took the time to read several of the links on the WTO site you could probably skip all the following material - basically - go to  www.wto.org and click around !

click on  http://www.wto.org/english/news_e/news_e.htm
to get the latest WTO news 

WTGR

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"The WTO was formally established in 1995 to replace the GATT and deal with its shortcomings. The WTO now has 130 members"
- said one text used for this course in 2001

"Gatt's most important activity was sponsoring rounds, or sessions [at which country trade representatives met]. These [rounds] led to a number of bilateral and multilateral reductions tariffs and nontariff barriers"

The WTO is essentially a world trade referee for countries wanting to grieve that parties to trade agreements have broken the agreements. Some people have commented that the participants in the WTO have behaved as extreme and sensational as that other international organization with three initials that also begins with the letter "w".http://www.wwf.com/
WTGR
 . . .
Basics of the WTO
http://www.wto.org/
Dispute Settlement
Introduction to dispute settlement in the WTO
 http://www.wto.org/english/tratop_e/dispu_e/dispu_e.htm
From the WTO site
"Dispute settlement is the central pillar of the multilateral trading system, and the WTOís unique contribution to the stability of the global economy. "

"Disputes in the WTO are essentially about broken promises. 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. That means abiding by the agreed procedures, and respecting judgments.  A dispute arises when one country adopts a trade policy measure or takes  some action that one or more fellow-WTO members considers to be  breaking the WTO agreements, or to be a failure to live up to obligations."

rulings are made by a panel
- diagram on the panel process
 www.wto.org/english/thewto_e/whatis_e/tif_e/disp2_e.htm
 ..
Basics of the WTO Dispute Settlement process
http://www.wto.org/english/tratop_e/dispu_e/dispu_e.htm
From the WTO site
 d
http://www.wto.org/english/thewto_e/whatis_e/tif_e/disp1_e.htm The process for settling disputes can be time consuming, and it is done only by a national government - individual companies are not involved, though they may be effected by the outcome
ad .
Appeals
 www.wto.org/english/thewto_e/whatis_e/tif_e/disp1_e.htm
"Either side can appeal a panelís ruling. Sometimes both sides do so. Appeals  have to be based on points of law such as legal interpretation ó they cannot   reexamine existing evidence or examine new issues.

Each appeal is heard by three members of a permanent seven-member Appellate Body set up by the Dispute Settlement Body and broadly  representing the range of WTO membership. Members of the Appellate Body   have four-year terms. They have to be individuals with recognized standing  in the field of law and international trade, not affiliated with any government. The appeal can uphold, modify or reverse the panelís legal findings and conclusions."
 . . .
 
Canadian
government
issues
and
policy 
positions

 

"Canada maps out WTO strategy"
"Reveals list of service sectors that it plans to negotiate"
is the title of a July 9th, 2002 story in the National Post

"Canada can  expand its economy and  boost its  knowledge-based companies by increasing  the export of services such as banking and telecommunications  through a new set of  trade talks under the   World Trade Organization, senior government officials said...Canada yesterday [2002 July 8]  released a list of a dozen service sectors over which it plans to negotiate with 40 countries. However,  officials won't say which nations they are targeting for improved market access under the current round of WTO trade negotiations, slated to  conclude by 2005."

"But while the export of goods has grown rapidly over the past decade, the sale of services internationally has lagged, suggesting there are large gains to be made in expanding WTO trade rules to the service sector, a senior official said."

"Services represent the biggest part of the Canadian domestic economy, encompassing everything from phone operators to flower shops. Services  account for nearly 70% of Canadian gross domestic product, and  three-quarters of jobs. Observers say any demands to open up foreign markets may mean Canada will have to liberalize its rules, such as in ownership of banks and  telecom companies."

"Canada has taken the unusual step of releasing the areas it wants to  negotiate in advance of the talks as a way of providing greater  transparency in the negotiation process," said Pierre Pettigrew, Minister  for International Trade. "We are going one step further by giving Canadians a clear,  sector-specific, detailed description of what we hope to achieve in  services negotiations ongoing at the WTO," he said."

 .
KEY
POINTS
In the 2nd week of December 2000,  the major Canadian newspapers reported the WTO ruling that backed Canada in its argument with Brazil over aircraft subsidies.

Many Canadians know that Bombardier of Quebec has been building snowmobiles for decades and that the company branched out into personal watercraft, subway cars and light aircraft.

A large number of Canadians may not know that through a combination of growth and acquisition (eg. they bought Lear Jet) Bombardier has become the third largest aircraft manufacturer in the world.

A large number of Canadians may not know that Brazil has a vibrant automotive and aircraft manufacturing sector and is now competing with Canada for the international aircraft market.

WTGR

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WTO
Current Issues 
effecting 
C A N A D A

 

WTO gave Canada the green light to impose sanctions against Brazilw

"The WTO has given Canada the green light to impose sanctions worth $2 billion against Brazil ... the approval followed an arbitrator's ruling that the sum was worth the amount Canada was losing because of Brazil's ProEx export subsidies program to aircraft maker Embraer SA. ...Bombardier says it lost international sales because of the subsidies program"

explained in a Toronto Star story in Dec 2000 by Madhavi Acharya business reporter
 

 .
WTO commentary on Canada / Brazil aircraft dispute

Dec 2000
 
 
 
 

 

In the second week of December 2000, the subject of WTO backing Canada in the aircraft subsidy challenge with Brazil, was noted on the front page of the WTO website.
http://www.wto.org/
"Canadaís retaliation against Brazil  approved in aircraft case"
"The WTO Dispute Settlement Body on 12 December 2000 approved Canadian trade sanctions in retaliation for Brazilís failure to implement a ruling on aircraft export subsidies. "

The use of the word retaliation means that as a result of finding that Brazil broke the rules in subsidizing aircraft production (which negatively effected Canadian aircraft producers), Canada will be authorized to impose high tariffs on Brazilian products being imported into Canada.

The consequences are daunting for Canadian importers who wish to continue importing products from Brazil because any price advantage they might have previously enjoyed (importing from a low production cost Latin American country) will be lost since the newly imposed tariffs will make it too costly to profitably import some consumer products and processed food products from Brazil.

"The WTO Dispute Settlement Body on 12 December 2000 agreed to let Canada  impose trade sanctions of up to C$344.2 million per year on imports from Brazil in retaliation for Brazilís failure to implement a ruling on aircraft export subsidies."
 www.wto.org/english/news_e/news00_e/dsb_12dec_e.htm
 

 .
WTO
Current Issues 
effecting 
C A N A D A
"Canada erects too many trade barriers, WTO says"
was the title of a Dec 2000 story in the Toronto Star

"Canada received top marks for its liberal trade policy on Friday but the World Trade Organization said there are still a few persistent  import barriers that make Canadian consumers pay more for certain goods"

"the report criticizes Canada for its ''persistent barriers in a few important areas.''
 These include restrictions aimed at protecting domestic producers against  foreign competition, such as tariff quotas on imports of textiles, clothing, dairy products and poultry."

 ..
 
WTO
Current Issues 
effecting 
C A N A D A
 

Brazil
"update"

Oct 2001
 
 
 

 

click to view readable version of the article
sdv
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KEY
POINTS
When we looked at the Canada-Brazil WTO issue in Dec 2000, it appeared as if Canada had "won" and this served as a good example of how an international NGO could facilitate "good trade" relationships. Since that time, the WTO has ruled against Canada and you are encouraged to click on the cropped view above, and read an update on the story.

The bottom line is, the Canadian government disputes the ruling and continues to pledge support for Bombardier - this is partly for business and political reasons.

WTGR

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WTO
Current Issues 
effecting 

C A N A D A
 

.
KEY
POINTS
The issue of Farm Subsidies is a big one for Canada since Canadian farmers have higher costs to produce food. We are a northern climate, the number of growing days is shorter, and we pay more for supplies such as seed, fuel, machines, etc.

WTGR


This story explains some of the current problems with WTO negotiations on farm subsidies

In July 2003 meetings regarding WTO subsidies were held in Montreal. The meetings received press coverage since the topic of farm subsidies greatly effects Canada, and also because the meetings were the target of protests.
WTGR
WTO and 
China (PRC)
 

 

The PRC has been, for some time, trying to gain admittance to the WTO.

American trade officials have been publicly making efforts to block China becoming a WTO member until China makes a more concerted and serious effort to stop producing illegally copied clothing products, computer software and moves and music.

The American government accuses the Chinese government of being a partner in the pirated film, and software production and says that Chinese efforts have not been sustained at stopping these activities which American consumer products companies claim costs them millions and millions of dollars in lost sales each year.

..
WTO and 
China (PRC)
 
 
 
 
 
 

WTO and 
China (PRC)

 

In a 2000 story in the Toronto Star, it is reported by the Associated Press reporter in Shanghai, that illegally pirated copies of Jim Carey's "Dr Seuss' How The Grinch Stole Christmas" are selling in China for as little as $1 USD.
click to read the story
The Associated Press reports that the "... vast counterfeiting industry is undercutting legitimate Chinese producers and threaten to complicate China's efforts to join the World Trade Organization"

Despite these concerns, the greater good of having the PRC part of a rules and regulations structure was considered more advantageous than the disadvantages of having it outside the WTO.

..
http://www.wto.org/english/news_e/pres01_e/pr243_e.htm
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What it means for China to join the WTO ! As a result of the negotiations, China has agreed to undertake a series of  important commitments to open and liberalize its regime in order to better  integrate in the world economy and offer a more predictable environment for trade and foreign investment in accordance with WTO rules. Among some of the commitments undertaken by China are the following:
 
  • "China will provide non-discriminatory treatment to all WTO Members.  All foreign individuals and enterprises, including those not invested  or registered in China, will be accorded treatment no less favourable than that accorded to enterprises in China with respect to the right   to trade.
  •  China will eliminate dual pricing practices as well as differences in treatment accorded to goods produced for sale in China in  comparison to those produced for export.
  • Within three years of accession all enterprises will have the right to import and export all goods and trade them throughout the customs  territory with limited exceptions.
  • China will not maintain or introduce any export subsidies on agricultural products."
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KEY
POINTS
The situation of the WTO is ongoing and there are constantly events, and activities involving the WTO which have consequences for Canada's international business circumstances - on a national level, and on an individual business level.

Some may also say that solving some of the world's trade problems will also help deal with the risk and threat situations we face globally in 2001 - which is in part manifest in the events of 911.

WTGR

. bz
 
WTO
- commentary and analysis by leading Canadians

Dr. Sylvia
Ostry

David Crane wrote a piece in the Toronto Star about the WTO in October 2001 in which he discusses the importance of the upcoming trade minister's meetings and how there are some significant issues on the table.

Crane's Oct 23rd article is based in part on a trade seminar at which Dr. Sylvia Ostry - a well known U of T academic, delivered some important remarks.
see www.utoronto.ca/cis/ostry.html

" Sylvia Ostry, distinguished research fellow at the University of Toronto's  Munk Centre for International Studies, told the trade seminar yesterday, the developing countries thought they had struck ``a grand bargain'' with the rich  countries in the Uruguay Round of trade negotiations in 1994-95. But that ``grand  bargain'' turned out to be ``a bum deal and left enormous anger in the developing  countries,'' she said.  While developing countries were forced into a wide range of difficult and costly  concessions to benefit multinational companies from rich countries, they gained  very little in improved access for their products and services.  But if we want a more peaceful and stable world, that cannot continue. The global divide has to be narrowed. This is also a matter of building better global institutions. Despite its size and importance, the WTO's budget is smaller than the travel budget of the IMF and,  Ostry argued, ``cannot survive without significant strengthening.  The WTO lacks the resources to help poorer countries participate effectively in  the global trading and investment system, to do serious research or to act as  forum for discussion of global issues. Continuing its current emphasis on litigation and rule-making, Ostry said, ``is a recipe for disaster'' because it will  become a source of ongoing conflict."

WTO
 

Dr. Sylvia
Ostry

Crane notes that Ostry advises
"We also need less dogmatic institutions.  Dogma can get us into quite serious trouble. An example of this is the ideological advice that the International Monetary Fund imposed on the world's poor  countries in the 1980s and much of the 1990s, forcing them into policies that made little sense but which reflected the rigid neoclassical mentality of the IMF's  economists.  A striking example is the pressure from the IMF on developing countries to  liberalize their financial markets. ``This misdirected financial liberalization played an important role in the East Asian crisis'' in 1997-1998, as Joseph Stiglitz, the  former chief economist of the World Bank and one of three winners of this year's  Nobel prize in economics, has argued. This devastated much of the emerging middle class in the region and, in the case of Indonesia, led to riots and religious conflict costing thousands of lives."

Crane concludes
"In many respects, the world is at a crossroads, dramatized by the deep divisions  between rich and poor countries.  We need a better way of managing the world if a growing global population is to  live in peace. A global system of trade can be part of the answer, but only if it  fairly reflects the needs of the world's poor as well as the world's wealthy. That's  the challenge of the next trade round."

Dr. Ostry emailed TR June 27th, 2005 to give permission to use these long quotes. Copies of emails are kept in the permissions binder.

 ..
WTO PROTESTS   Montreal 2003

In the July 2003 meetings in Montreal, the events were the target of protests - which has become more and more the "new normal" at int'l NGO events.
WTGR
This 2003 pic from Toronto Star
shows that the protests against the WTO are gathering a lot of attention and some people have very negative views towards the WTO.
.
This 2003 pic from the Toronto Star
shows that the protests against the WTO are becoming very aggressive with the participants "seriously prepared" for violence.

click on the image to read the story

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KEY
POINTS
People working in International Business in the 1980's and early 1990's rarely discussed the WTO - and it was not a featured topic in the curriculum for International Business Courses (beyond a few paragraphs) - however, since the end of the 1990's, and particular in the first 2 years of the millennium, the WTO has been "getting a lot of ink".

The following articles will illustrate some of the negative "ink" the WTO has been getting and highlight some of the issues people, and organizations are having problems with.

WTGR

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Criticism of the WTO Cameron Smith wrote a piece in Dec 2001 in the Toronto Star titled
"WTO is a monster and Canada is complicit"

Smith opens by saying
"In just six short years, the World Trade Organization has become the most powerful organization on Earth, baring a few national governments"
"Nations have ceded it more sovereignty than they have given the United Nations. And through its ability to regulate international trade, it has intruded into every aspect of life around the globe"

Smith reminds us that
"Under WTO rules, countries are forbidden to erect tariff barriers to establish export controls"

Some of the criticisms pointed out by Smith - which are also points made by others around the world, include

  • regional and national governments stripped of powers to protect the environment
  • lower wages
  • collective rights to agricultural seeds
  • genetically unaltered food
  • treaties negotiated behind closed doors
  • favour of transnational corporations
  • only govt's can argue to the dispute-resolution panels, not NGO's and SIGs
.
Criticism of the WTO This information comes from a web site promoting a book on the WTO written by a former WTO insider - in the process of flogging the promoting the book, it also serves as a good coverage of some of the contentious issues..
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http://www.odc.org/publications/pe27bib.html
.
Prof. Gary Sampson is Visiting Academic at the London School of Economics. For 12 years
 he served in a number of GATT/WTO divisions, most recently as Director of the WTO's Trade and Environment Division. 
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Criticism of the WTO Jim Travers wrote a well balanced article about the WTO in the summer of 2003 that should be read by students in order to understand the "big picture" within which the WTO opposition is placed.
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KEY
POINTS
Students studying international NGO's (non governmental organizations) like the IMF, WTO, OECD etc, often find it challenging to understand how knowing about these organizations can have any real consequences on day2day activities of Canadian companies involved in international business.

Aside from large companies like Bombardier, the WTO has an effect on medium sized businesses in Canada also and the following section will provide some examples.

WTGR

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KEY
POINTS
Many people in large cities like Toronto don't have much personal experience about farming - but,,, farming is still and important part of the Canadian economy. Dairy farming in Ontario and Quebec is still big business and with advances in agricultural technology, (including genetics) farm production has increased a lot from the mid 1990's so that there is a lot of farm products exported.

WTGR

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WTO
- effect on
Cdn companies
 

A CANADIAN PRESS story carried by the Toronto Star
"WTO Ruling costs 62 jobs at Saputo"

Saputo Inc.  www.saputo.com
The Toronto Star story is brief so we will quote direct from the press release on Saputo's site.
"Saputo Inc. announces the closing of a plant in its  Cheese Division (Canada) located in Cookstown, Ontario, ... 62 employees are affected by this decision. These announcements come in the wake of ... the recent decision by the World Trade Organization [2003] concerning the Canadian system of the supply of milk to be used in products for the export market. In order to comply with that decision, Canadian dairy processors are required to export their products at prices that make the exporting of dairy products from  Canada non-competitive. The Cookstown, Ontario, plant, which employs 26 people, will definitively cease  its operations on August 1, 2003."


Saputo is the leading cheese producer in Canada - it has 7,000 employees and 47 plants and distribution centres. It would be considered a large company by Canadian standards but  medium sized company by global standards.
 .
 
KEY
POINTS
- when they [Saputo] say "make the exporting of dairy products from  Canada non-competitive" it means Dairy companies cannot sell for a low price which might be lower than what Canadians pay - if you export a product at a price lower than what you sell to the customers in your own country this is called dumping. 

The reason this is bad is because it is presumed the domestic consumers have no choice but to pay the higher price because tariff & non-tariff barriers keep out foreign milk and milk products. In essence the higher prices Canadians pay for dairy products produces a profit for companies like Saputo, which help subsidize their ability to offer lower more competitive prices internationally. This is like Japanese camera companies selling cameras for high prices in Tokyo, but low prices in New York.

WTGR

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Saputo

Update Oct 2003

Saputo got around the WTO restrictions by buying a large dairy company in Argentina. This company already exports so Saputo can reach its Intl customers by exporting out of the Argentine company.
see entry for Saputo on www.witiger.com/internationalbusiness/outlineMGTC44c.htm
 .
 
KEY
POINTS
Many of the businesses in small countries are resource based - that is to say based on agriculture, fishing, forestry or mining. There have been several WTO rulings that make it "challenging" for the ability of companies, in those countries, to continue exporting to their customers in North America and Europe.

WTGR

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WTO rulings
- effect on
other countries
Saint Lucia: Caribbean -  exporters of bananas to the EU

The following information comes from a speech made by the  Prime Minister St. Lucia, Hon. Dr. Kenny D. Anthony, on the Impact of the WTO Ruling on the EU Banana Import Regime on W.I. Bananas. The Prime Minister made his remarks in the context of the three countries of Dominica, St. Lucia  and St. Vincent. 
 http://www.stlucia.gov.lc/primeminister/
"...the banana industry dominates the agriculture sector of these three islands. It is the single most important  sector of the economies of these islands and has been the main engine of growth and development, particularly rural development. It has contributed immensely to the socio-economic development of the islands and to the stable democratic climate which they have enjoyed."

 .
WTO rulings
- effect on
other countries

 

"Since the establishment of the EU Single Market for bananas, the small share of the market enjoyed by Saint Lucia and the other ACP countries has been coveted by the multinationals and other big suppliers to the market. The Windward's islands' banana export account for  less then 2.5% of the world banana trade and only 5% of the EU banana market. The comparative figures for all of the ACP are 7% and 17% respectively. On the other hand, the three North American Multinationals, between them, control about 70% of the world banana  trade and almost over 45% of the EU banana market. Yet, in its greedy pursuit of increased market share and to deny our producers their  measly share of the market, one US multinational, Chiquita International, was able to persuade the United States Administration to take up  its case and fight the preferential access arrangements that are in place for our producers. ...My understanding is that US companies have done well as a result of the EU banana regime. They have gained substantially from higher average prices of the bananas but also, in some cases, from increased market share. ... We will lose everything, but the companies and other suppliers that are already doing quite well stand to gain more and make bigger profits, at the expense of our farmers. That seems to be what the WTO ruling is all about, applying the ideology of "free trade" in its purest   form. regardless of the consequences and if it means making paupers of thousands of small farmers and entire nations, then so be it. The WTO is unconcerned that the benefits which have kept our many farmers in business, earning a decent living through their hard work, will now go to swell the profits of a few big companies."

Clearisa Leon in the office of the Prime Minister gave permission to quote the speech of the Hon. Dr. Kenny D. Anthony - in an email June 30th, 2003. Copies of emails kept in the permissions binder.

The population of St. Lucia is around 160,000, the island is 27 miles long and has a maximum width of 14 miles.

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Several links, quotes and other material and references on this page come directly from the WTO site. Specific permission was given to Prof. Richardson to use this material from the webmaster of the WTO. Copies of emails are kept on file in the permissions binder.
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