WTO

GATT: Predecessor

GATT- General Agreement on Tariffs & Trade Original signatories: 23 countries in 1947 118 countries members in 1994 Concerned with promotion of international trade through multilateral trade negotiations- tariff reduction, doing away with non discriminatory practices, evolving rules to counter protectionism

Principles of GATT

Non discrimination (MFN clause): any advantage, favour, privilege granted by any contracting party to any product originated in or destined for any other country shall be accorded immediately & unconditionally to the like product originating in or destined for territories of all other contracting parties Reciprocity: any country receiving concession from other was to offer an equivalent concession in return Transparency: forbade use of direct controls on trade

Havana Conference (Geneva)

1947 1948 1948 1950 1956 60-61 64-67 73-79 86-93 1994 1995

GATT entered into force

Annecy (France)

GATT MILESTONES

Torquay (UK) Geneva Dillon Round (Geneva)

Kennedy Round (Geneva)

Tokyo Round (Japan) Uruguay Round (Geneva)

Marrakesh Conference
WTO established

GATT TRADE ROUNDS

YEAR 1947 1949 ROUND Geneva Annecy SUBJECTS COVERED Tariffs Tariffs PARTICIPATING COUNTRIES 23 13

1950
1956

Torgua
Geneva

Tariffs
Tariffs

38
26

1960- 61
1964- 67 1973- 79 1986- 93

Geneva (Dhillon round)

Geneva (Kennedy round) Geneva (Tokyo round) Geneva (Uruguay Round)

Tariffs
tariffs. Non tariff measures, anti dumping measures tariffs. Non tariff measures Tariffs, non tariff measures, rules, services, IPR, dispute settlement, agriculture, establishment of WTO

26
62 102 123

Inherent weakness of GATT

Cumbersome negotiations Most-favored nation trade concessions applied to all trading partners No mechanism to assure compliance with negotiated agreements

Differences
GATT WTO

multilateral agreement with no institutional foundation

applied on provisional basis

permanent institution

commitments are full, enduring & permanent

applied to trade in merchandise goods

blockages

wider- covers trade in services & trade relate aspects on intellectual property as well
faster dispute settlement

The WTO
Established: January 1, 1995 as a successor to GATT

Created by: Uruguay Round negotiations (1986-94)

Location: Geneva, Switzerland Membership: 150 countries (on 11 January 2007) Head: Pascal Lamy (Director-General)

WTO.Purpose
Purpose of WTO as spelled in the Preamble & Article II of the Agreement: WTO shall provide the common institutional framework for the conduct of trade relations among its members in matters related to agreements & associated legal instruments included in the Annexes to this agreement To Provide principal contractual obligations determining the manner in which member nations shall frame & implement domestic trade legislation & regulations

Core principles of WTO multilateraltrade system

Belief that an open, stable and rules-based multilateral trading system is beneficial for welfare of all countries, especially smaller and developing countries Recognition of need for flexibility to take account of the trade & development interests of developing countries

WTO.functions
To administer & implement multilateral trade agreements To act as a forum for multilateral trade negotiations To resolve trade disputes among members To oversee national trade priorities To cooperate with other international institutions involved in global policy making

WTO.membership
Presently 150 members Highest level decision making authority: Ministerial Conference Must meet at least once every two years Can take decisions on all matters under any of multilateral agreements

WTO. structure
Day to day working: General Council Composed of all WTO members Reports to Ministerial Conference Convenes in 2 forms: Dispute Settlement body (DSB) (to hear complaints of violations of WTO rules & agreements) Trade Policy Review Body (TPRB) (to review trade policies of all WTO member countries)

WTO. structure
Other bodies: Committee on trade & development- concerned with issues relating to developing countries Committee on BOP: responsible for consultations b/w WTO members & countries which take trade restrictive measures in order to cope up with their BOP difficulties Committee on budget, Finance & Administration- deals with issues relating to WTOs financing & budget

WTO MINISTERIAL CONFERENCES

Singapore (9-13 December 1996) Geneva, Switzerland (18-20 May 1998) Seattle, Washington State, US (30 Nov- 3 Dec1999) Doha, Qatar (9 14 November 2001) Cancun (10- 14 September 2003) Hong Kong (13-18 December 2005)

1996 1998 1999 2001

2003
2005

WTO. Agreements
Agreement on agriculture Long term reform of agricultural trade Increased market orientation in agricultural trade Commitments in areas of market access, domestic support & export competition Members to transform NTBs into tariff measures Decline in tariffs

WTO. Agreements
Agreement on trade in textiles & clothing (Multi- fibre agreement) Phasing out import quotas on textiles & clothing under MFA

WTO. Agreements
Agreement on market access Member nations to cut tariffs on industrial & farm products by an average of about 37%

WTO. Agreements
Agreement on TRIMs (trade related investment measures) Introducing national treatment of foreign investments, except for foll 5 invt measures: Obligation on foreign investors to use local inputs Obligation to produce for exports as a condition to obtain imported goods as inputs To balance forex outgo on importing inputs with forex earnings through exports Not to export more than a specified proportion of local production Removal of quantitative restrictions

WTO. Agreements
Agreement on TRIPs (Trade related intellectual property rights) Adoption of stringent conditions for protection of IPRs Scope of agreement widened to cover patents, copyrights & related rights, geographical indicators, industrial designs, layout designs of integrated circuits, protection of undisclosed information

WTO. Agreements
Agreement on services GATS (general agreement on trade in services) provides multilateral framework of principle & services which should govern trade in services under conditions of transparency & progressive liberalisation

WTO. Agreements
Disputes Settlement Body Plug loopholes as faced under GATT Provide security & predictability to multilateral trading system Mandatory to settle a dispute within 18 months

Benefits proclaimed for India

Benefits from expansion in trade Benefits from phasing out of MFA Improved prospects for agricultural exports Benefits from multilateral rules & disciplines

Critical review of working of WTO

Inequality within the structure of WTO TRIPs TRIMs Competition on services Trade & NTBs by developed countries Agreement on agriculture Labour standards & environment