It’s a forum for governments to negotiate trade agreements.
It’s a place for them to settle trade disputes. It operates a system of trade rules.
The GATT , the predecessor of WTO, was born in 1948.
The GATT was a loose system of International agreement.
It did not crystallize as an institutional framework.
The primary objective of GATT was to expand international trade by liberalizing trade so as to bring about all round economic prosperity.
THE IMPORTANT OBJECTIVES OF GATT
Raising standard of living.
Ensuring full employment and a large steadily growing volume of real income and effective demand.
Developing full use of resources of the world.
Expansion of production and international trade.
DIFFERENCE BETWEEN GATT & WTO GATT WTO GATT was ad hoc and provisional WTO and its agreements are permanent. GATT had contracting parties WTO has member countries GATT system allowed existing domestic legislation to continue even if it violated a GATT agreement . WTO does not permit this. GATT was less powerful, dispute settlement system was slow and less efficient. Its ruling could be easily blocked. WTO is more powerful, dispute settlement mechanism is fast and more efficient. It is very difficult to block the rulings.
WTO & ITS INTRODUCTION
The WTO has 153 members, representing more than 95% of total world trade
The WTO is governed by a ministerial conference, meeting every two years.
a general council which implements the conference's policy decisions and is responsible for day-to-day administration;
Director-general, who is appointed by the ministerial conference.
The WTO's headquarters is at the Geneva, Switzerland
OBJECTIVES OF WTO
To help developing countries benefit fully from the global trading system
To set and enforce rules for international trade
To increase the transparency of decision-making processes
To facilitate trade without any discriminations
To resolve trade disputes
To provide forum for negotiating and monitoring the international trade
To cooperate with other major international economic institutions involved in global economic management
The main overall objective of WTO is to promote and ensure the international trade in the member countries with the mantra of Liberalization, Privatization and Globalization
WTO & INDIA
India se e ks to –
Protect its food & livelihood security by having sufficient flexibility for domestic policy measures
Protect domestic produces from surge in imports
Substantial reduction in export subsidies and domestic support to agriculture in developed countries for greater market access
Negotiation on trade in services are crucial to India
WTO & INDIA
What India should Do?
India should not be seen as a spoiler in Negotiations.
Should give constructive leadership to protect the interests of developing and Lest Developed Countries.
Should vigorously pursue liberalization of trade in services.
DISPUTE SETTLEMENT BODY
Disputes can arise if a member country resiles on its promise.
Permanent and structured dispute settlement system.
Dispute Settlement Body consists of all WTO members.
DSB establishes a Panel of experts to consider dispute.
Panel/ Appellate report is to be accepted by DSB. Rejection in case of consensus against the Report.
After final verdict of DSB, the losing country announces changes in its trade policy. If not, the complainant country can impose limited trade sanctions preferably in the sector of dispute .
PROGRESS MADE SO FAR
WTO’s trade liberalization measures are embodied in a variety of agreements, No.60,which each country has to sign for becoming member of WTO.
Agreement on Agriculture (AOA)
Tariffs on agricultural products are bound
Non Tariff barriers such as Quotas for Import have been converted to tariff (Tariffication) to give predictability to trade in agriculture commodities.
Developed countries have agreed to cut export subsidies by 36% (24% cut for developing countries).
PROGRESS MADE SO FAR
Trade Related Investment Masures Agreement (TRIMS)
Applies to measures that affect trade in goods.
No country shall apply any measure that discriminates against foreigners or foreign products (Principle of National treatment). However, permits utilization of local resources through ‘Local Content Requirements’.
Discourages ‘trade belonging requirements’ of countries by restricting import & pushing exports.
Member Countries can resort to anti dumping measures if they can establish that goods are being dumped at price lower than the price prevailing in the exporting country.
Extension of Import Duty can be levied to prevent dumping.
PROGRESS MADE SO FAR
Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS)
Enjoins on the member countries to protect the rights of the creators/invention of products or ideas.
Copyrights, trademarks, geographical indications, Industrial designs, patterns etc. are covered. e.g. Computer programs, films, wires & spirits are protected.
General Agreement on Trade in Services (GATS) –
Lays down obligations of member countries to provide access to import of services on the basis of MFN principle.
Exclusions permitted but to be notified by respective Govts. eg. Air Transport Services are excluded.
Abolition of farm subsidies –
Developed countries yet to abolish export subsidies as agricultural products.
Non Agricultural Market Access (NAMA).
Tariff reductions for various sectors is yet to be firmed up. Negotiations are going on 14 sectors (Automotive & parts, Chemicals, fish, textiles, Clothes, etc).
Developed countries want quick acceptance of tariff reductions by developing countries as per NAMA. Developing countries say that rapid tariff reductions can de-stabilise their economy.
No concrete proposal as yet mooted for ensuring free movement of professionals. This is linked with country’s Immigration Laws.
Environmental Impact of Trade.
Although a start has been made, but concrete agreements are yet to be framed. E.g. Due to grant of fisheries subsidy ($ 14-20 Billion p.a. ) trade in fish has gone up manifold resulting in depletion of fish stock.
WTO AND DEVELOPMENT OPPORTUNITIES
GLOBAL TRADE OPPORTUNITIES
On 9 July 2009 – WTO organises a workshop on environmental private standards, certification and labeling requirements.
6 September 2009 - WTO open its doors to the public for the first time.
India hosted an informal meeting of 35 countries, representing various interest groups, in September for ways to revive the Doha round of WTO negotiations for further opening up of markets for goods and services.
India proposed that the forthcoming seventh Ministerial Conference of the World Trade Organization (WTO) to held in November, should address some systemic issues for improving the functioning and efficiency of the WTO as a rules-based system, and make the system more useful, relevant, vibrant and user-friendly & submitted five proposals