WTO UNIT-2
Transcript of WTO UNIT-2
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UNIT 2 Chapter 3
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World TradeOrganization
Anish Abraham
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Introduction
Liberalization of Business Activities or Trades isessential for the economical growth of the country
Liberalization brings aboutfree trading (imports / exports)
More opportunities for expanding globally
More open to foreign participation and technology
Better Educated Customers/CitizensImproves competitiveness
More effective and dynamic firms
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Introduction
Liberalization of Trade activities has come to existence throughways of
Trade Agreements
Treaties and International Organizations
One such organization which plays a significant role in the globalbusiness environment is
World Trade Organization (WTO)
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GATT - Predecessor of WTO
GATT was born on 1948 with the objective ofliberalizing trade internationally
Reduction of barriers to international tradeThis was an outcome of the recommendationsmade in Bretton Woods Conference (1944)
IMF (1946)
World Bank (1946)
ITO
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GATT - Predecessor of WTO
ITO was not ratified as it was conceived tointerfere in the domestic policy making of
the different countries.
GATT; framed the international trading
system principles, rules and procedures
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GATT Objectives
Expand International Trade
Liberalizing trade and bring about economic
prosperity
Raising standard of living
Ensuring full employment
Full use of the resources of the world
Expansion of production and international trade
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GATT Achievements
Achievements
Continuing Consultation forDisputeSettlement
Trade Liberalization Exceptions: Agriculture & Textile
Average Tariffs on Manufactured products inindustrial countries was brought down from 40% (1947)
to 3 % (after UR, 1994)
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GATT ConferencesYear Place/Name Subjects covered Countries
1947Geneva Tariffs 23
1949Annecy Tariffs 13
1951Torquay Tariffs 38
1956Geneva Tariffs 26
1960-1961Dillon Round Tariffs 26
1964-1967Kennedy Round Tariffs and anti-dumping measures 62
1973-1979Tokyo Round Tariffs, non-tariff measures, frameworkagreements
102
1986-1994Uruguay Round Tariffs, non-tariff measures, rules,services, intellectual property, dispute
settlement, textiles, agriculture, creation ofWTO, etc
123
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Uruguay Round
This was the eighth round of GATT
It was launched in Punta del Este in Uruguay in
September 1986It extended upto 15th April 1994
It was actually scheduled to be concluded by
December 1990 but extended until 1994 due tothe complexities of the issues discussed and theconflicts among the participating countries
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Uruguay Round
Arther Dunkel, then Director General of GATT,presented a draft of what the conference would resultin.
This was popularly known as the Dunkel Draft
Later this was modified and enlarged and became thefinal draft which was approved by the member
countries on 15th December 1993The final draft was signed by them on 15th April 1994
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Uruguay Round
Until UR, only Tariffs and Trade of Goodswere concentrated.
After UR, the scope was broaden to newareas such as
Trade in Services (GATS)
TRIPs
TRIMs
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GATT vs WTO
GATT WTO
It was ad hoc and wasprovisional
Its agreement are permanent
It had contracting parties It has membersIt allowed existing legislationsto continue even if it violates
It does not permit this
Less powerful, disputesettlement system was slowand less efficient and its rulingcould be easily blocked
More powerful, disputesettlement is more faster andmore efficient, very difficult toblock the rulings
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World Trade Organization
Formed in 1 January 1995
The WTO was essentially an extension ofGATT
Only global international organizationDeals with rules of trade between nations
Agreements are negotiated and signed by the tradingnations and ratified by their Parliaments
It was the outcome of the lengthy (1986-1994) Uruguayround of GATT negotiations.
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WTO - Structure
It has 150 members as on 11 January 2007
They account for about 90% of the world trade
India is a member since 1 January 1995The latest member of WTO is Vietnam on 11 January 2007
Around 30 countries are acting as Observer Government
Decisions are made be the entire membership on aconsensus basis
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WTO - Organization Structure
Top - Level Decision Making : Ministerialconference
Next Level : General Council
Trade Policy Review Body
Dispute Settlement Body
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WTO - Objective
To help producers of goods and services,exporters and importers conduct their
businessMain function
To ensure that trade flows as smoothly,
predictably and freely as possible.
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WTO - Functions
The main objective is achieved through the following functions
Ensure that the rules are transparent and predictable
Settle trade related disputes
Administering trade agreements
Acting as a forum for trade negotiations
Reviewing national trade policies
Assisting developing countries in trade policy issues, through technicalassistance and training programmes
Cooperating with other international organizations
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WTO - Principles
Trade Without Discrimination
No Most Favoured Nation (MFN) Treatment - no special deals totrading partners, all members of WTO must be treated the same
No National Special Treatment - locals and foreigners are treatedequally
Freer Trade
Predictability through Binding - promising not to raise tariffsis called binding a tariff and binding leads to greater certainty
for businessesPromoting Fair Competition
Encouraging Development and Economic Reform
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WTO - Arguments For it
Promotes peace
Disputes are handled constructively
Rules make life easier for allFreer trade cuts the costs of living
More choice of products and qualities
Trade raises income
Trade simulates economic growth
Basic principle makes life more efficient
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WTO - Arguments Against it
Dictate policy
For free trade at any cost
Commercial interest take priority over developmentCommercial interest take priority over the environment
Commercial interest take priority over health and safety
Destroys jobs, worsens poverty
Small countries are powerless
Tool for powerful lobbies