WTO & G20

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GROUP 9
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Why the need for WTO ?

General

Meeting Agreement on Tariffs and Trade (GATT), established in 1945 in the wake World War II and of other new multilateral institutions - IMF and World Bank US disapproval to International Trade Organization (ITO) treaty made GATT de facto international organization But by 1990s GATT system was straining to adapt to a newglobalizingworld economy.

Structural deficiencies Spill-over impacts of certain

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GATT vs WTO
GATT WTO GATT was Adhoc and WTO and its agreements provisional are permanent GATT had contracting WTO has members parties GATT system allowed WTO does not permit this existing domestic legislation to continue even if it violated GATT agreement GATT was less powerful, WTO is more powerful, dispute settlement system dispute settlement was slow, less efficient and mechanism is faster and 8/14/12 its ruling could be easily more efficient, very

WTO Functions

Communication Ministerial s Negotiating Rounds Working Groups de rs a Trade Policy Review Tr iste tc.) Mechanism in , e ery M TR v s Councils and Committees US et E ear ( Y
Me wo T

Tarif f Redu c Chan tions; ges Rule in s

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WTO Functions Contd..

Constraints Tariff Bindings Customs Valuation Product Regulations Quantitative Restrictions Subsidies

s ie r nt iate it ou ot m C g m m ne co imu nd ax ffs a m ri to ta

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WTO Functions Contd..

Exceptions

Anti-Dumping Countervailing Duties Safeguards , Balance of Payments Protection ted it erm ot P n ed Preferential Trade Agreements r 3-perso qui e n r Panel Dispute Settlement Consultation Decide s Panel RecommendationC ase Appellate Body e The Ultimat Remedy Implementation medy: Re s Compensation ermit Tariff P Retaliation
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All ow sN EU , e AFTA tc. ,

Journey over the Years

Rounds of GATT Multilateral Trade Negotiations
No. Years Name Accomplishments Reduced tariffs 1-5 1947-61 6 7 8

1964-67 Kennedy Tariffs + anti-dumping 1973-79 Tokyo Tariffs + NTB(Non-tariff barriers to trade)

1986-94 Uruguay Tariffs, NTBs, Services, Intellectual Property, Textiles, Agriculture, Dispute Settlement, Created WTO , TRIPS , TRIMS 2001 Till date Doha Doha Development Agenda
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Rounds of Parallel Bilateral Negotiations

Kennedy round (1967): across the board 50% tariff cut for all participants, but negotiated over which industries cut applied to. Tokyo round (1979): lowered average tariffs of industrial countries for LDC exports from 40% to 6% but high tariffs remained especially on goods important to LDCs like textiles Telecom and IT talks (1996): agreements to lower tariffs to 0%

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Salient Features of Uruguay Round Agreement Formation of WTO

Expansion

in the sphere of activities from international trade to services, investment and information. Liberalization of trade in agriculture and textile goods , patents and subsidies Tariff cut: developing countries have to cut tariff 24% over next 10 yrs while developed countries by 36% for 6yrs.

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Organizational Structure WTO

Top

decision making body is Ministerial conference which meets at least once in 2 years. Below this is General Council which meets several times a year At the next level are the following councils q q

q q

Council for Trade in Goods Council for Trade-Related Aspects of Intellectual Property Rights Council for Trade in Services Trade Negotiations Committee
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WTO Decision Making

Decisions

by consensus of all 157 member countries at ministerial meetings In contrast to IMF and World Bank In practice, large and rich countries dominate this process They first agree among themselves (Green Room) Is this democratic Yes: Every country has one vote No: Rich countries dominate decisions
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Organizations similar to WTO

SAPTA(1997) : reflected the desire of the Member States to promote and sustain mutual trade and economic cooperation within the SAARC region through the exchange of concessions. was to eliminate barriers to trade and investment between the US, Canada and Mexico and also to protect the intellectual property rights of the products. maximize thetrade,investmentand development opportunities ofdeveloping countriesand assist them in their efforts to integrate into the world economy on an equitable basis.
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NAFTA(1993):

UNCTD(1964):

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Major Principles of WTO

Non-Discrimination

- Most favoured nation (MFN) rule, and thenational treatment policy Reciprocity - Reflects a desire to limit the scope offree-ridingthat may arise because of the MFN rule and a desire to obtain better access to foreign markets. Binding and enforceable commitments Transparency - To improve

predictability and stability, discouraging the use ofquotasand other measures 8/14/12

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Has WTO delivered ?

WTO has been a Mixed Bag Benefits Development and Trade Effective mechanism for Dispute settlement Technical assistance and training Policy review Intellectual Property Liberalization of Agriculture Trade
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THE WTO Impact

GATT/GATS TRIMS

TRIPS
Provides monopoly power to owners of intellectual property

Liberalization of trade in goods and services

Liberalization of International Investments

Increases competition from foreign goods/services

Facilitates global sourcing

Increase Foreign investment & competition from foreign firms

Facilitates joint ventures & technology acquisitions

Threat to domestic firms

Benefits consumers

Increases competitiveness of domestic firms

Threat to domestic firms

Benefits the economy

Benefits domestic firms

Encourages Globalization of Firms

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Drawbacks / criticisms Unequal participation of Member countries Negotiations & decision making dominated by Developed countries - Arm twisting tactics. Failure to impose Organizations discipline on developed countries. Implementation Issues Issues oflaborandenvironment are steadfastly ignored.

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Doha Round No End in Sight

Pressures

faced both from within and

outside Members struggled to meet deadlines as timeline set were inappropriate & Delayed due to twin shocks of Asian Financial meltdown and 9/11 attacks Little progress made in key areas of Agriculture Owing to reduction of high doses of farm subsidies Services sector growth opportunities 8/14/12

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G20 Major Economies

19 Major economies of the world along with EU(European Union) Members countries are US, UK, China, India, South Africa, Brazil, Canada, Russia etc.

History It is the successor of G7. Founded to improve Global Economic dialogue in 1999 following the Asian and World economic crisis.

Initially aimed at improving cooperation and consultation on matters pertaining to 8/14/12 18 theinternational financial system

How does it work?

G20

Summit is held in a different country every year, Presidency rotates every year. types G20 meetings are held at any G20 summit. Finance ministers central bank governor's meeting the original purpose of G20 Leader`s Summit Inaugurated in Sept 2008 after the Global financial crisis Since April 2010 Labor & Employment minister`s meetings
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Difference between G20 and WTO

G20

G20 is an informal group of countries aimed at improving Global economic co-operation and dialogue A variety of issues are discussed along with economics It is like the central forum for all wealthy nations to meet and discuss their issues It doesn`t have any legal binding but has great clout on member countries
WTO
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G20 Developing Countries Unofficial G20

is the other bloc of 20 Developing economies of the world. This group emerged at the 5th Ministerial WTO conference, held inCancun, Mexico in 2003. Main members are India, Brazil and South Africa 8/14/12

This

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Indias role in G-20

Increasing

clout in global arena 2nd fastest growing economy. Handling of financial crisis. Respect for Dr. Manmohan Singh. Representation of developing economies Ratification of UN convention against corruption. Restricting monopolistic policies of economies such as US.

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Expectations from G20

Reforming

global governance Democratization of IMF and World Bank. Rescue package for poor countries Protectionism Climate change action Crackdown on tax havens

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Present Stalemate
Real

intentions of Developed economies. Agricultural and industrial imports require more commitment from developing economies. Currency issues Trade Related Intellectual Property Rights (TRIPS) - medicines for all

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 Differences

between the US and emerging economies on industrial tariff cuts

US demanding complete elimination of tariffs by emerging economies such as India, China and Brazil in sectors such as chemicals, industrial machinery, and electric and electronic products.

Recent

meet of WTO ended last month with no new direction in sight for deadlocked Doha Round of negotiations with only bright spot of Russias accession to WTO after 18 long years.
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Relevance of WTO today

AchallengetotheWTOrulesbythe current globalfinancialandeconomicmeltdow n AchallengetotheWTOinstitutionala rchitecturebytheendoftheWesterncentricsystem. AchallengetotheWTOpoliticsbyla ckofcare

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Thank you!!
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