Intl Trade in the evolving multilateral regime

Beyond Boundaries
Tap to Ocean

Multilateral - WTO Regional - SAFTA / BIMSTEC / Bangkok Agreement / Growth Quadrangle Bilateral - Nepal India/China/Bangladesh/Pakistan & Bhutan Saarc & EU Asian Highway-UN ESCAP

WTO
Part of global family of trade and legislation Global market access Diversification of products and markets possible Technical Assistance -Integrated Framework / Capacity Building Rights to Inherent & Indigenous Products Dispute settlement mechanism Priority to LDCs /Aid for Trade

WTO Policy
Rule based International trading System Member driven Organization Trade with global market access at competitive price of best quality product Harmonization of tariff - fusion with InfoTech Protection only through Tariff Trade Liberalization MFN to all members Quantity and Quota system restricted General agreement on trade & services (GATS)

Genesis
Virtual Collapse of the world economy in the 1930 due to global economic recession followed by World War II in 1940s International Meeting to hammer out strategy for the restructuring of the global economy - Bretton Woods Conference 1944 Three legs proposed to handle global economic restructuring World Bank, IMF, ITO

Genesis
IMF for facilitating world liquidity, World Bank for sectoral lending for restructuring and ITO for managing international trade Two legs of Bretton Woods (IMF and the World Bank) did come up but ITO could not because the US Senate refused to ratify the treaty

GATT
Multilateral Trade Treaty General Agreement on Tariff and Trade (GATT) singed by 23 countries on 30th October 1947 at UN building in Geneva. It was a multilaterally agreed treaty related to tariffs imposed on goods Decision making body with a set of rules for the conduct of international trade in goods, and formulated mechanisms for trade liberalisation

GATT
This provided a forum for the contracting parties to discuss and solve trade problems and negotiate tariff reductions to increase trade volume From 1947 to 1994 GATT provided the rules for world trade Additions made through trade rounds

GATT
From the seventh round (Tokyo Round) attention moved to other areas as well (such as non-tariff barriers) During the eighth round (Uruguay Round) new issues were added (e.g., agriculture, textile and clothing, services, IPR, standards etc.) and a concept of single undertaking was introduced This round gave birth to an institution to oversee the implementation of GATT and other agreements which is known as WTO
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WTO
Successor of GATT, Operational from 1 January 1995 Permanent inter-governmental body governing and regulating international trade in goods, services and IPR Its an organisation for liberalising trade help trade flow as freely as possible Its a place for settling trade disputes

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WTO
WTO is based on four pillars
Promoting rules based multilateral trading system Non-discrimination (Most-Favored Nations and National Treatment) Transparency Special treatment for less developed countries

It has 153 members Decisions are made through consensus It provides for an effective dispute settlement system
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WTO
At the heart of the system are WTO Agreements, negotiated and signed by members These Agreements are contracts that bind governments to keep their trade policies within agreed limits

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Major WTO Agreements

GATT 1994 Trade Related Aspects of Intellectual Property Rights (TRIPS) Agreement on Agriculture (AOA) General Agreement on Trade in Services (GATS) Agreement on Sanitary and Phytosanitary (SPS) Measures Technical Barriers to Trade (TBT) Agreement on Textile and Clothing (ATC)
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WTO Agreements
The WTO Agreements cover goods, services and intellectual property They spell out principles of liberalisation and permitted exceptions They include individual countries commitment to lower custom tariffs and other trade barriers and open key services sectors : 22,500 pages listing individual countries commitments They set procedures for settling disputes

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Cross-Cutting and New Issues

WTO work is not confined to agreements Members also discuss a range of other issues, usually in special Committees and working groups Trade and the environment, trade and investment, competition policy, trade facilitation, trade and labour rights

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How does the WTO Function ?

WTO is member-driven,with decisions taken by consensus All major decisions are made by membership as a whole, either by ministers or by ambassadors or delegates in Geneva Different from World Bank or IFM in that power is not delegated to a board of directors or the organisations head

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How does the WTO Function ?

Highest Level Ministerial Conference, composed of representatives of all the members, heads the WTO and is the highest policy making body Meets at least once every two years Seattle, Doha, Cancun, Hong Kong Second level General Council, composed of representatives of all the members and oversees the operation of the agreements and ministerial decisions on regular basis

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How does the WTO Function ?

Third Level Council for Trade in Goods Council for Trade in Services Council for Trade-Related Aspects of Intellectual Property Rights (TRIPS) Fourth Level Committees Cover specific issues and carry out the functions assigned to them by the GC Trade and Development, Plurilateral Agreements

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How does the WTO Function ?

The Director General appointed for a period of four years by the Ministerial Conference heads the secretariat of WTO

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Why is WTO Powerful

Single undertaking and binding Dispute Settlement Mechanism Cross retaliation

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Special Provisions for Developing Countries

Extra time and reduced level of commitments for developing and least developed countries to fulfill their commitments under most of the agreements Market Access Technical Assistance Aid for Trade

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Some myths and reality

WTO will not eliminate custom duties WTO does not set trade rules, it functions as per the mandate given by its members Members have flexibility to protect their domestic sectors through tariff and trade remedy measures WTO rules do not conflict with environmental conservation goals

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Reasons for Membership

Stable and predictable market Participatory (consensus based) decision making Rules based system and effective dispute resolution mechanism Reduced dependence on a single market Special and differential treatment for LDCs Transit right Policy lock-in Technical assistance

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Post accession agenda

Focus: maximising opportunities and minimising costs At the domestic level
Policy reforms Legislative Action Plan Actions and implementation
Government, business sector, academia, Civil Society

At the international level

Proactive negotiating agenda Alliance building

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SAFTA (South Asian Free Trade Area): The landmark achievement

1. 2. 3. 4. Objectives of Safta: eliminating barriers to trade, and facilitating the crossborder movement of goods; promoting conditions for fair competition & ensuring equitable benefits; creating effective mechanism for the implementation as well as resolution of disputes; establishing a framework for further regional cooperation

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SAFTA The landmark achievement

Contd. )
Takes care of the regional imbalance in development. Para 3(1) a reads eliminating barriers to trade in, and facilitating the cross-border movement of goods between the territories of the Contracting States; Para 3(2) d reads SAFTA shall involve the free movement of goods, between countries through, inter alia, the elimination of tariffs, para tariffs and non-tariff restrictions on the movement of goods, and any other equivalent measures;

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SAFTA The landmark Achievement

Para 3(2) f reads The special needs of the Least Developed Contracting States shall be clearly recognized by adopting concrete preferential measures in their favor on a non-reciprocal basis. Para 8(g) reads transit facilities for efficient intra-SAARC trade, especially for the land-locked Contracting States;

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SAARC ASEAN Cooperation.

Established on 8 August 1967 with 5 member states, ASEAN currently has 10 member states. ASEAN region has a population of about 500 million, a total area of 4.5 million square kilometers, a combined gross domestic product of US$737 billion, and a total trade of US$ 720 billion. When established the share of intra-ASEAN trade was just between 12 and 15 percent. It has now increased to almost 25 percent. Per capita income is $ 309 in South Asia compared to over $ 10,000 in East Asia (excluding China) Before formation of ASEAN in 1960s, the gap in per capita income between South Asia and East Asia (Excluding China) was $ 200, which has increased to over $ 9700 in a matter of few decades Intra-regional trade volume of SAARC countries stand at 4.46 percent of total trade of member states compared to 55 % of EU; 61% of NAFTA and 25% of ASEAN

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BIMSTEC (Bay of Bengal Initiative for MultiSectoral Technical

and Economic Cooperation) - Trade & Services Measures
Para 2 of Article 6 of the Final Draft Framework Agreement On the BIMST-

The parties further agree to enhance trade facilitation in areas, including but not limited to, the following:
EC Free Trade Area says:
(a) Mutual Recognition Arrangements (MRAs), conformity assessment, accreditation procedures and standards & technical regulations.
(b) Customs cooperation; (c) Trade finance; (d) E-commerce; and (e) Business Visa and travel facilitation
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Bangkok Agreement
China & India are the worlds fastest growing economy who are members. Sino India is also the worlds largest market in terms of headcount. It can provide both techno-financial and market support. SAARC, ASEAN & China can join hands to ensure the prosperous future for one-half of the world population. The geographical proximity between SAARC-China-Asean must be exploited for mutual benefit

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Growth Quadrangle
Nepal, East India, Bangladesh & Bhutan Cooperation Sub Regional Within SAARC Sectorial Development Like Trade, Transport, IT & Tourism etc. ADBs Sub Regional baby East Indias Focal Role
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Nepal India
Ocean Market / Sky Limit Preference Market Assess Value Addition Trade Balance Bilateral Within SAFTA/WTO Complementary & Supplementary 3rd Country Arrangement Like Pakistan & Bhutan
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Saarc & EU
Two of Worlds Largest Regional Cooperation Demand & Supply Asias Market size and resource EUs techno finance capacity Cooperation in WTO Win Win for both Economies

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Others
NAFTA (North Atlantic Free Trade Agreement) ASEAN (Association of Southeast Asian Nations)