WORLD TRADE ORGANISATION WORLD TRADE ORGANISATION

D. K. Nauriyal

The Case for Open Trade

Liberal trade policies That allow the unrestricted flow of goods and services. Advantages Increased production Sharpen competition and Production efficiencies Motivate innovation and breed success. Benefits to consumers: Increased variety and lower prices, best products, with the best design, at the best price. Employment Faster Economic Growth

Disadvantages of Free Trade

With the removal of trade barriers structural unemployment may occur in the short term. Increased domestic economic instability from international trade cycles, as economies became dependent on global markets. Developing or new industries may find it difficult to become established in a competitive environment with no short-term protection polices by governments. Free trade can lead to pollution and environmental problems as companies fail to include these costs in the price of goods.

Eight GATT Rounds

Period
1947-48 1949 1950-51 1956 1960-62 1963-67

No. of Countries 23 13 38 26 26 62
102 123

Subjects Covered
Tariff Tariff Tariff Tariff Tariff Tariff + Anti-dumping Tariffs + NTBs Tariffs, NTBs, Services, Intellectual Property, Textiles, Ag., Dispute Settlement, Created WTO

Geneva (Tokyo Round, 1973-79 initiated by Tokyo Declaration of 1973) Geneva (Uruguay Round, 1986-93 Formally launched in September 1986 at the GATT Ministerial in Punta del Este, Uruguay):

Uruguay Round (1986-94)

Marrakech Agreement established the WTO Agreement on Agriculture (AOA) Trade in Services (GATS) Intellectual Property Rights (TRIPS) Dispute Settlement Mechanism

What is the WTO?

The World Trade Organization (WTO) is the only global international organization dealing with the rules of trade between nations. At its heart are the WTO agreements, negotiated and signed by the bulk of the world's trading nations and ratified in their parliaments. The goal is to help producers of goods and services, exporters, and importers conduct their business.
Location : Geneva, Switzerland Established : 1 January 1995 Created by : Uruguay Round negotiations (1986-94) Membership : 153 countries (as of July 2008) accounting for over 99% of world trade. Over three-quarters of WTO members are developing or LDCs. Budget : Consolidated WTO Budget for the year 2009: CHF 189,257,600 Secretariat Staff : Over 600 Head : Pascal Lamy (Director-General)

Functions of WTO

Administering WTO trade agreements Forum for trade negotiations Handling trade disputes Monitoring national trade policies Technical assistance and training for developing countries Cooperation with other international organizations

Basic Principles of WTO

Trade without discrimination. Most Favoured Nation treatment to all the member nations and national treatment to all forms of businesses except for where exemptions have been granted. Protection through Tariff rather than through import quotas or other types of trade restrictions. Transparency in regulations, inquiry points. Regulations have to be objective and reasonable. Progressive liberalization: through further negotiations.

The Main Differences Between GATT and WTO

GATT was ad hoc and provisional. The General Agreement was never ratified i members' parliaments, and it contained no provisions for the creation of an organization. The WTO and its agreements are permanent. As an international organization, the WTO has a sound legal basis because members have ratified the WTO agreements, and the agreements themselves describe how the WTO is to function. The WTO has "members". GATT had "contracting parties", underscoring the fact that officially GATT was a legal text. GATT dealt with trade in goods. The WTO covers services and intellectual property as well.

The WTO dispute settlement system is faster, more automatic than the old GATT system. Its rulings cannot be blocked.

WTO Structure

Ministerial Conferences

Geneva, 30 November - 2 December 2009 Hong Kong, 13-18 December 2005 Cancn, 10-14 September 2003 Doha, 9-13 November 2001 Seattle, November 30 December 3, 1999 Geneva, 18-20 May 1998 Singapore, 9-13 December 1996

WTO Agreements

Agreement on Agriculture (AoA): It came into effect with the establishment of the WTO at the beginning of 1995. Comprises domestic support, market access and export subsidies. General Agreement on Trade in Services (GATS): The General Agreement on Trade in Services was created to extend the multilateral trading system to service sector, Trade-Related Aspects of Intellectual Property Rights Agreement (TRIPs): The Agreement on Trade-Related Aspects of Intellectual Property Rights sets down minimum standards for many forms of intellectual property (IP) regulation. Sanitary and Phyto-Sanitary (SPS) Agreement: The Agreement on the Application of Sanitary and Phytosanitary Measures - also known as the SPS Agreement. Under the SPS agreement, the WTO sets constraints on members' policies relating to food safety (bacterial contaminants, pesticides, inspection and labelling) as well as animal and plant health (imported pests and diseases). Agreement on Technical Barriers to Trade (TBT): It ensures that technical negotiations and standards, as well as testing and certification procedures, do not create unnecessary obstacles to trade".

GATS (Article 29)

GATS's 29 articles cover all services sectors. They contain the general obligations that all members have to apply. Total coverage The agreement covers all internationally-traded services. This includes all the different ways of providing an international service. GATS defines four:

Services supplied from one country to another (e.g. international telephone calls), officially known as "cross-border supply" Consumers or firms making use of a service in another country (e.g. tourism), officially known as "consumption abroad" A foreign company setting up subsidiaries or branches to provide services in another country (e.g. foreign banks setting up operations in a country), officially "commercial presence" Individuals travelling from their own country to supply services in another (e.g. fashion models or consultants), officially "presence of natural persons"