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  1. 1. Submitted By: Maithilee Deshmukh [123] Siddhesh Hegde [151] Swapnil Wagh [153] PGDM-B / Group 3SIMSR PGDM-B / Group 3 1
  2. 2. World Trade Organization• International organization dealing with the global rules of trade between nations• Assurance to producers and consumers of secure supplies and greater choice of finished products, raw materials and services• At heart of the system: Trade Agreements, negotiated and signed by a large majority of world’s trading nations• The goal: To ensure that trade flows as smoothly, predictably and freely as possible in turn improving welfare of the peoples of the member countriesSIMSR PGDM-B / Group 3 2
  3. 3. Fact File• Location: Geneva, Switzerland• Established: 1 January 1995• Created by: Uruguay Round negotiations (1986- 94) under GATT• Membership: 153 countries as on 23 July 2008• Budget: 196 million Swiss francs(approx. 209 million USD) in 2011.• Secretariat staff: 629• Head: Director-General, Pascal LamySIMSR PGDM-B / Group 3 3
  4. 4. Basic Principles1. Non-discrimination: 2 major components o Most-favoured-nation (MFN) rule: • Product made in one member country be treated no less favourably than a “like” (very similar) good that originates in any other country • Exceptions are made for the formation of free trade areas or customs unions and for preferential treatment of developing countries • Guarantee to smaller countries against exploitation by larger countries by raising tariffs in bad times o The National Treatment Principle: • Foreign goods, once they have satisfied whatever border measures are applied, be treated no less favourably, in terms of internal (indirect) taxation than like or directly competitive domestically produced goodsSIMSR PGDM-B / Group 3 4
  5. 5. Basic Principles (Contd.) • Ensures that liberalization commitments are not offset through the imposition of domestic taxes and similar measures • It is irrelevant whether a policy hurts an exporter. What matters is the existence of discrimination, not its effectsSIMSR PGDM-B / Group 3 5
  6. 6. Basic Principles (Contd.)2. Reciprocity: fundamental element of negotiating process • Reflects both a desire to limit the scope for free-riding that may arise because of the MFN rule and a desire to obtain “payment” for trade liberalization in the form of better access to foreign markets • Reciprocal concessions ensure that gains from negotiations will materialize and will be greater than gain through unilateral liberalizationSIMSR PGDM-B / Group 3 6
  7. 7. Basic Principles (Contd.)3. Enforceable Commitments: • The non-discrimination principle of the GATT, is important in ensuring that market access commitments are implemented and maintained • The tariff commitments made by WTO members in a multilateral trade negotiation and on accession establish “ceiling bindings” • It is made sure that the value of the tariff concession is not nullified or impaired • If they are compromised, complaining country may invoke WTO dispute settlement proceduresSIMSR PGDM-B / Group 3 7
  8. 8. Basic Principles (Contd.)4. Transparency: • Need of access to information on the trade regimes that are maintained by members for enforcement of commitments • Routine meets of specialized committees, working parties, working groups, and councils for exchange of information and views and efficient diffusion of potential conflicts • Trade policy reviews • Help reduce uncertainty related to trade policy from economic perspectiveSIMSR PGDM-B / Group 3 8
  9. 9. Basic Principles (Contd.)5. Safety Valves: Ability of the government to restrict trade in specific circumstances 3 types of provisions: a) Use of trade measures to attain noneconomic objectives i. Protect public health ii. National security iii. Protect seriously injured industries b) Ensuring “fair competition”: i. Right to impose countervailing duties ii. Antidumping duties c) Intervention for economic reasons: i. Serious balance of payment difficulties ii. Desire to support infant industrySIMSR PGDM-B / Group 3 9
  10. 10. Functions• 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• Support trade barriers• IPR Compliance(TRIPS)SIMSR PGDM-B / Group 3 10
  11. 11. WTO Organization StructureSIMSR PGDM-B / Group 3 11
  12. 12. Historical Development of WTO• 1944: Bretton Woods Conference(New Hampshire, U.S.) recognized the need for a comparable international institution for trade to complement theInternational Monetary Fund and the World Bank(the later proposed International Trade Organization)• 1947: Agreement was reached on General Agreement on Tariffs and Trade (GATT) in Geneva during the UN Conference on Trade and Employment with 23 countries participating in negotiation• January 1, 1948 : The agreement of GATT enters into force mostly dealing with tariff concessions and reductions• 1948: Negotiations were completed on ITO, but It never came into force due to internal economic issues• 1955: Modification to numerous provisions of the GATT.US granted a waiver for certain agricultural policiesSIMSR PGDM-B / Group 3 12
  13. 13. Historical Development of WTO (Contd.)• 1965: Establishing new guidelines for trade policies of and toward developing countries• 1974: MFA (MultiFibre Arrangement) enters into force. restricts export growth in clothing and textiles to 6 percent per year• 1986: The Uruguay Round is launched in Punta del Este, Uruguay• 15 April1994: Ministers sign the final act establishing the WTO in Marrakech• January 1,1995: WTO came into force• GATT held a total of 8 rounds, since its foundation in 1947 till 1994, including Uruguay round• A new round of trade talks (the Doha Development Agenda) has started in Doha, Qatar in 2001SIMSR PGDM-B / Group 3 13
  14. 14. Uruguay round(1986-1994)• September 1986: Launched in Punta del Este, Uruguay, followed by negotiations in Montreal, Geneva, Brussels, Washington, D.C., and Tokyo• April 1994: 20 trade agreements finally signed in Marrakesh• 8th round of Multilateral trade negotiations (MTN) conducted within the framework of General Agreement on Tariffs and Trade (GATT)• Brought agricultural trade more fully under the GATT through agreement• The main objectives o to reduce agricultural subsidies o to put restrictions on foreign investment o to begin the process of opening trade in services like banking and insuranceSIMSR PGDM-B / Group 3 14
  15. 15. Uruguay round(1986-1994) (Contd.)• Achievements o An umbrella agreement (the Agreement Establishing the WTO) o Agreements for each of the three broad areas of trade that the WTO covers: o Trade Related Investment Measures (TRIMS) o General Agreement on Trade in Services (GATS) o Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) o Dispute settlement (DSU) o Agreement on Customs Valuation o Reviews of governments trade policies (TPRM)SIMSR PGDM-B / Group 3 15
  16. 16. WTO members and observers• Members: 153 on 23 July 2008• Membership for Russia was approved in Dec 2011• Observers: must start accession negotiations within five years of becoming observers• 31 LDCs are WTO members• Twelve additional LDCs are in the process of accession to the WTOSIMSR PGDM-B / Group 3 16
  17. 17. Candidates to WTO membership Country Application dateAlgeria 1987Belarus 1993Sudan 1994Uzbekistan 1994Seychelles 1995Kazakhstan 1996Azerbaijan 1997Lao Peoples Democratic Republic 1997Andorra 1999Lebanese Republic 1999Bosnia Herzegovina 1999Bhutan 1999Yemen 2000Bahamas 2001Tajikistan 2001Syria (WP established on 4 May 2010) 2001Ethiopia 2003Libya 2004Iraq 2004Afghanistan 2004Republic of Serbia 2004Iran 2005Sao Tomé and Principe 2005Union of the Comoros 2007Equatorial Guinea 2007Republic of Liberia 2007
  18. 18. Recent Accessions to WTO• Viet Nam on 11 January 2007• Tonga on 27 July 2007• Ukraine on 16 May 2008• Cape Verde on 23 July 2008SIMSR PGDM-B / Group 3 18
  19. 19. How to join the WTO• “Tell us about yourself”• “Work out with us individually what you have to offer”• “Let’s draft membership terms”• “The decision”SIMSR PGDM-B / Group 3 19
  20. 20. Transformation of Accession Process• The practice under GATT was to invoke non- application• This limited the negotiating leverage of the GATT members• This also prevented bilateral negotiations on market access• This practice has changed with WTOSIMSR PGDM-B / Group 3 20
  21. 21. Groups and alliances• G-20• C-4• European Union• ASEAN• MERCOSUR• NAFTA• Cairns GroupSIMSR PGDM-B / Group 3 21
  22. 22. Ministerial Conferences• The topmost decision-making body of the WTO Geneva, 15-17 December 2011 Geneva, 30 November - 2 December 2009 Hong Kong, 13-18 December 2005 Cancún, 10-14 September 2003 Doha, 9-13 November 2001 Seattle, November 30 – December 3, 1999 Geneva, 18-20 May 1998 Singapore, 9-13 December 1996SIMSR PGDM-B / Group 3 22
  23. 23. What is Dumping? “Dumping is a situation of international price discrimination, where the price of a product when sold to the importing country is less than the price of the same product when sold in the market of the exporting country.”SIMSR PGDM-B / Group 3 23
  24. 24. Why does dumping take place?• As a short-term predatory pricing strategy to drive competitors out of the market• As a result of market intervention or state subsidies that enable companies to artificially lower their pricesSIMSR PGDM-B / Group 3 24
  25. 25. Adverse effects of Dumping• Imperfect competition in the domestic market of the host country. – Actual or potential decline in sales – Loss of profits – Market share – Capacity utilization – Employment – Wages – Lost contractsSIMSR PGDM-B / Group 3 25
  26. 26. Terminologies• Export price: The price at which it is exported to the importing country (host country).• Normal Price: Price of the product when destined for consumption in the exporting country (home country)• Dumping Margin: The margin of dumping is the difference between the Normal value and the Export price of the goods under complaint. It is generally expressed as a percentage of the export price.SIMSR PGDM-B / Group 3 26
  27. 27. Dumping Margin Calculation Compare Exporter Price to Normal Value Exporters Price Normal Value Normal Value $110.00 Exporter Price $90.00 Difference Attributable $20.00 to Dumping Dumping Difference Attributable = to Dumping/exporter price $20.00 / $90.00=22.22% MarginSIMSR PGDM-B / Group 3 27
  28. 28. Essentials for initiating an anti- dumping investigation• Sufficient evidence to the effect that – there is dumping • there is injury to the domestic industry • there is a causal link between the dumping and the injury, that is to say, that the dumped imports have caused the alleged injury (material injury). – The domestic producers expressly supporting the anti dumping application must account for not less than 25% of the total production of the like article by the domestic industry.SIMSR PGDM-B / Group 3 28
  29. 29. Actions That Can Be Taken• Anti-dumping or Countervailing Duty• Exceptional CircumstancesSIMSR PGDM-B / Group 3 29
  30. 30. Countervailing Duty• Provisional Measure - takes the form of a provisional duty in the form of a cash bond on the allegedly subsidized products.• Definitive Duty - final countervailing duty imposed following an affirmative final decision.SIMSR PGDM-B / Group 3 30
  31. 31. Countervailing Duty (Contd.)• Lifetime: Provisional countervailing duty – not exceeding 6 months, extendable up to 9 months Definitive countervailing duty – 5 years from imposition• Sunset Review• Interim ReviewSIMSR PGDM-B / Group 3 31
  32. 32. Anti-dumping duty v/s Customs duty Antidumping Duty Normal Customs Duty Means of raising revenue and for overallTo guard against unfair trade practices development of the economy.Trade remedial measures. Trade and fiscal policies of the GovernmentNot necessary in the nature Necessary in natureLevied against exporter / country in as much as Universally applicable to all imports as perthey are country specific and exporter specific. the country of origin and the exporter.SIMSR PGDM-B / Group 3 32
  33. 33. Implementation and Monitoring by WTO• Monitor the implementation of the trade agreements• Increase Transparency at Multilateral and National Level• Trade Policy Review Mechanism (TPRM)SIMSR PGDM-B / Group 3 33
  34. 34. Trade Policy Review Mechanism• Established during the Uruguay Round• Agreement for regular and systematic review• Objectives: – Impact of Members’ trade policies – Improved adherence to WTO rules – Achieve greater transparency – Enhance communication to strengthen multilateral trading systemSIMSR PGDM-B / Group 3 34
  35. 35. Trade Policy Reviews• Fundamental activity of WTO• Performed by Trade Policy Review Body• Surveillance of national trade policies• Done for all WTO Members• Frequency for each WTO Member depends on its share of world trade European Union, the United States, Japan, and Canada – Every 2 yearsSIMSR PGDM-B / Group 3 35
  36. 36. Global Monitoring Reports• Annual report by the Director-General of the WTO• Overview of developments in the international trading environment and recent trade developments• These further supplement the Trade Policy Reviews.SIMSR PGDM-B / Group 3 36
  37. 37. THANK YOUSIMSR PGDM-B / Group 3 37