World trade organization

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  • 1. 1 January, 1995 Geneva, Switzerland
  • 2. 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
  • 3. Objective of a rule-based system
    • Creation of a multilateral organization aimed at evolving a liberalized trade regime under a rule-base system
    • rule-based system designed to ensure that international markets remain open and their access is not disrupted by sudden and arbitrary imposition of import restrictions
    • trade rules : WTO agreements on goods, services, and intellectual property negotiated by member nations
    • rule-based system : WTO as an international organization that facilitates the implementation, administration, and operation of the trade agreements
  • 4. Multilateral trading regime: implications for firms
    • security of access to international markets
    • implication for importers of raw materials and
    • other inputs
  • 5. Security of access to international markets
    • tariff reduction : 40 % to 4 %
    • tariff binding: bound against further increases
    • binding enables international firms to prepare investment and production plans under conditions of certainty
    • bound tariff line: tariff rate on imports that are committed by the country to the WTO and difficult to increase
  • 6. Functions and structure of WTO
    • 150 member countries accounting for 97 % of world trade
    • to facilitate the implementation, administration, and operation of the trade agreements
    • to provide a forum for negotiations among member countries
    • responsible for the settlement of difference and disputes among member countries
  • 7. Multilateral trading system
    • The WTO agreements among member countries cover a
    • wide range of subjects related to international trade
    • Agriculture
    • Textiles and clothing
    • Banking
    • Telecommunications
    • Government purchases
    • Industrial purchases
    • Product safety
    • Food sanitation
    • Intellectual property
  • 8. WTO agreements
    • cover two basic areas of international trade: goods and services and intellectual property
    • reduction in industrial tariffs: increased access of industrial goods and security for investors and firms
    • tariff : customs duties on merchandise imports levied on either an ad valorem basis (percentage of value) or on a specific basis (rate per unit of weight)
    • tariffs provide a price advantage to locally produced goods and raise revenues for the government
  • 9. Reduction in tariffs
    • the average of tariffs applicable to industrial products are as follows:
    • 3.8% in developed countries
    • 12.3% in developing countries
    • 6% in transition economies
    • increased the number of imports items with bound tariff lines for developing countries increased from 21% (pre-WTO) to 73%
  • 10. Tariffs in India: Central Board of Excise and Customs
    • (www.cbec.gov.in)
    • electrical machinery and equipment : electric motors and generators, electric generating sets, and rotary converters 12.5 rate of duty
    • Range: 5-12 % for industrial and non-industrial imports
    • Agricultural goods
    • Range: 30%-100%
    • - Wheat: 100 %
    • - Rice: 80 %
    • - Tobacco: 30 %
  • 11. Elimination of non-tariff measures
    • quotas and other NTBs replaced by tariffs that provide equivalent levels of trade protection
    • textiles and agricultural products
    • Agreement on Agriculture reformed trade in agriculture
    • developed countries cut tariffs and export subsidies (lowers cost production, transportation, and marketing) and by 36 % and developing countries by 24%
  • 12. Trade in textiles
    • World trade in textiles: cotton, natural and man-made fibres was restricted by import quotas for four decades
    • 1974-1994 Multi-fibre Agreement: quota system put restrictions on quantities traded
    • 1995: WTO’s Agreement on Textiles and Clothing (ATC) replace MFA
    • a landmark Agreement that eliminated quotas on textile trade and replaced with import tariffs : 12.5 import duty on textiles and yarn in India
  • 13. Agreement on Sanitary and Phytosanitary Measures
    • based on the principle of that governments can act against trading activity in order to protect human, animal, and plant life
    • Set out basic rules on food safety and plant health standards
    • includes provision for control (pest), inspection (fumigation): fresh fruit, vegetables, live animals, and plant specimens
  • 14. The General Agreement on Trade in Services
    • GATS is the only set of multilateral rules governing international trade in services
    • Services represent the fastest growing sector: account for 60% of global output, 30% of global employment, and 20 % of global trade
    • the agreement covers all internationally traded services
    • banking, telecommunications, tourism, professional services, financial services, air transport, movement of natural persons
  • 15. GATS
    • defines four modes of trading services internationally
    • services supplied from one country to another (cross-border supply)
    • consumers or firms making use of a service in another country (tourism)
    • commercial presence: a foreign company setting up subsidiaries to provide services in another
    • presence of natural persons: individuals travelling from their own country to supply services in another (consultants)
  • 16. Trade-related Aspects of Intellectual Property Rights (TRIPS)
    • protection and enforcement of intellectual
    • property rights
    • TRIPS introduced intellectual property rules in the multilateral trading system for the first time
    • TRIPS narrowed the gaps in national laws among member countries and extended IPR protection under common international rules
    • Patents, trademarks, copyright, industrial designs, layout designs, integrated circuits
  • 17.  
  • 18.