What is the WTO? The World Trade Organization (WTO) is the only global international organization dealing with the rules of trade between nations. MAIN FUNCTION : to ensure that trade flows as smoothly, predictably and freely as possible. GOAL : to help producers of goods and services, exporters, and importers conduct their business.
ABOUT W.T.O. Location : Geneva, Switzerland Established : 1 January 1995 Created by : Uruguay Round negotiations (1986-94) Membership : 153 countries on 10 February 2011 Budget : 196 million Swiss francs for 2011 Head : Pascal Lamy (Director-General) Functions: • Administering WTO trade agreements • Forum for trade negotiations • Handling trade disputes • Monitoring national trade policies • Technical assistance and training for developing countries • Co-operation with other international organizations
Working of W.T.O. The WTO is run by its member governments. All major decisions are made by the membership as a whole, either by ministers or by their ambassadors or delegates. Trade negotiations : The WTO agreements cover goods, services and intellectual property. They spell out the principles of liberalization, and the permitted exceptions. Implementation and monitoring : WTO agreements require governments to make their trade policies transparent by notifying the WTO about laws in force and measures adopted.
Dispute settlement : The WTO’s procedure for resolving trade quarrels under the Dispute Settlement Understanding is vital for enforcing the rules and therefore for ensuring that trade flows smoothly. Building trade capacity : WTO agreements contain special provision for developing countries, including longer time periods to implement agreements and commitments, measures to increase their trading opportunities, and support to help them build their trade capacity Outreach : The WTO maintains regular dialogue withNGOs, parliamentarians, the media and the general public on with the aim of enhancing cooperation and increasing awareness of WTO activities.
Following is the structure of WTO. Highest Level: Ministerial Conference The Ministerial Conference is the top most body of the WTO, which meets in every two years. It brings together all the members of WTO. Second Level: General Council The General Counsel of the WTO is the highest level decision making body in Geneva, which meets regularly to carry out the functions of WTO. Third Level: Councils for Trade The Workings of GATT, which covers international trade in goods, are the responsibility of the Council of Trade. Fourth Level: Subsidiary Bodies There are subsidiary bodies under the various councils dealing with specific subjects such as agriculture, subsidies, market access etc.
Principles of W.T.O. <ul><li>These following principles are the foundation of the multilateral trading system: </li></ul><ul><li>Non-discrimination </li></ul><ul><li>More open </li></ul><ul><li>Predictable and transparent </li></ul><ul><li>More competitive </li></ul><ul><li>Discouraging ‘unfair’ practices </li></ul><ul><li>More beneficial for less developed countries </li></ul><ul><li>Protect the environment </li></ul>
10 Benefits of W.T.O. 1. The system helps promote peace 2. Disputes are handled constructively 3. Rules make life easier for all 4. Freer trade cuts the costs of living 5. It provides more choice of products and qualities 6. Trade raises incomes 7. Trade stimulates economic growth 8. The basic principles make life more efficient 9. Governments are shielded from lobbying 10. The system encourages good government
INDIA and W.T.O. India has been a WTO member since 1 January 1995 .
INDIA and W.T.O. <ul><li>India is one of the founding members of WTO along with 134 other countries. </li></ul><ul><li>India's participation in an increasingly rule based system in governance of International trade, would ultimately lead to better prosperity for the nation. </li></ul><ul><li>Various trade disputes of India with other nations have been settled through WTO. </li></ul><ul><li>India has also played an important part in the effective formulation of major trade policies. </li></ul>
Effect on India <ul><li>In total world imports of goods and commercial services during the same period, the country's share has increased to 0.99 per cent from 0.78 per cent. </li></ul><ul><li>By being a WTO member, India also avails of the Most Favoured Nation (MFN) treatment and National Treatment for its exports to other WTO members. </li></ul><ul><li>In addition, the size of quotas was expanded annually by the restraining countries that maintained the quota. </li></ul><ul><li>With effect from January 2005, the entire textiles </li></ul><ul><li>and clothing trade would get integrated into </li></ul><ul><li>multilateral framework of the WTO </li></ul>
Trade Profiles W.T.O. The Trade Profiles provide standard information on the structural trade situation and trade policy measures of members, observers and other selected economies. The profiles are complemented with general macroeconomic indicators. Data are currently provided for over 180 economies and coverage will be gradually extended as information becomes available.
<ul><li>IMF is the intergovernmental organization that oversees the global financial system by following the macroeconomic policies of its member countries, in particular those with an impact on exchange rate and the balance of payments. </li></ul><ul><li>IMF is a forum of national economic policies, international monetary and financial systems, which involves active dialogue with each member country. </li></ul><ul><li>As of end-August 2009, IMF's total quotas stood at SDR 217.4 billion (about $325 billion). </li></ul><ul><li>Five largest shareholders:United States, Japan, Germany, France, United Kingdom. </li></ul>International Monetary Fund
<ul><li>The IMF was created to support orderly international currency exchanges and to help nations having balance of payment problems through short term loans of cash. </li></ul><ul><li>Its headquarters are in Washington, United States. </li></ul>International Monetary Fund
<ul><li>The International Monetary Fund was conceived in July 1944 originally with 45 members and came into existence in December 1945 when 29 countries signed the agreement </li></ul><ul><li>IMF started to make service with IBRD in 1947. </li></ul><ul><li>The IMF works to improve the economies of its member countries </li></ul>HISTORY
<ul><li>Promote international monetary cooperation. </li></ul><ul><li>Expansion and balanced growth of international trade. </li></ul><ul><li>Promote exchange rate stability. </li></ul><ul><li>The elimination of restrictions on the international flow of capital. </li></ul><ul><li>Help establish multilateral system of payments and eliminate foreign exchange restrictions. </li></ul>Purposes of the IMF
<ul><li>Make resources of the Fund available to members </li></ul><ul><li>Shorten the duration and lessen the degree of disequilibrium in international balances of payments </li></ul><ul><li>Promote international monetary cooperation, exchange stability, and orderly exchange arrangements. </li></ul><ul><li>Foster economic growth and high levels of employment. </li></ul><ul><li>Temporary financial assistance to countries to help the balance of payments adjustments </li></ul>
Growth in IMF Membership <ul><li>In the beginning 29 member countries </li></ul><ul><li>Today,187 member Countries </li></ul><ul><li>Staff of about 2680 Persons </li></ul>
<ul><li>Focusing on its core macroeconomic and financial areas of responsibility. </li></ul><ul><li>Working in a complementary fashion with other institutions established. </li></ul><ul><li>Collection and allocation of reserves. Rendering advice to member countries on their international monetary affairs. </li></ul><ul><li>Promoting research in various areas of international economics and monetary economics. </li></ul><ul><li>Providing a forum for discussion and consultation among member countries. Being in the center of competence. </li></ul>ROLE OF IMF
<ul><li>Surveillance (like a doctor) Gathering data and assessing economic policies of countries. </li></ul><ul><li>Technical Assistance (like a teacher) Strengthening human skills and institutional capacity of countries. </li></ul><ul><li>Financial Assistance (like a banker) Lending to countries to support reforms </li></ul>FUNCTIONS OF IMF
<ul><li>Monitoring economic and financial developments and policies, in member countries and at the global level, giving policy advance to its members based on its more than fifty years of experience. </li></ul><ul><li>Lending to member countries with balance of payments problems, supporting adjustment and reform policies aimed at correcting the underlying problems. </li></ul><ul><li>Providing the governments and central banks of its member countries with technical assistance and training in its areas of expertise. </li></ul>Operations
<ul><li>IMF looks at the performance of the economy as a whole (macroeconomic performance) </li></ul><ul><li>Focuses also on the financial sector policies Ex: regulation and supervision of banks and other financial institutions. </li></ul><ul><li>Pays attention to structural policies that affect macroeconomic performance. </li></ul><ul><li>Ex: labor market policies (affect employment and wage behavior) </li></ul>Contd…
<ul><li>The Executive Board meets three times a week, maybe more </li></ul><ul><li>The Board has a voting system:- The larger the economy, the more voting power it has </li></ul><ul><li>But, most decisions are based on consensus </li></ul>How the polices are determined:
<ul><li>Most loans are provided by member countries, determined by their quota, which is calculated based upon a country’s relative size in the world economy. </li></ul><ul><li>For a closer look at the Member Quotas we can reference the IMF website. </li></ul><ul><li>Upon joining, the 25% of the quota is paid in some major currency US Dollar, British Pound, Yen while the remaining 75% is paid in their own currency. </li></ul>Where does the IMF get it’s Money from?
<ul><li>IMF can only borrow from financially strong economies to finance lending. </li></ul><ul><li>The IMF Board selects these “strong currencies” every three months, which make up its “usable” resources. </li></ul>What is the IMF’s Lending Capacity?
<ul><li>India and the IMF has a positive relationship. The IMF has provided financial assistance to India, which has helped in boosting the country's economy. </li></ul><ul><li>The IMF praised the country for it was able to avoid the Asian Financial Crisis in 1999 and was also able to maintain the average rate of growth of its economy. </li></ul><ul><li>In 2005, the IMF said that the budget of India is very positive for it points that the economy of the country will grow at the rate of 6.7%. </li></ul>India and the IMF
<ul><li>The Managing Director of International Monetary Fund Rodrigo De Rato visited India in May 2005. </li></ul><ul><li>International Monetary Fund said that the reasons behind the economy growth of India are that the RBI has been able to control inflation and has also handled its monetary policies very skillfully. </li></ul><ul><li>The IMF has suggested that India can become a financial super power by bringing in more reforms in its economic policies that will increase its growth rate to 8%. </li></ul>Contd…
<ul><li>The IMF collaborates with </li></ul><ul><ul><li>the World Bank, </li></ul></ul><ul><ul><li>the regional development banks, </li></ul></ul><ul><ul><li>the World Trade Organization, </li></ul></ul><ul><ul><li>United Nations agencies, and </li></ul></ul><ul><ul><li>other international bodies. </li></ul></ul>Collaborating with Other Institutions
<ul><ul><li>Monitoring national, global, and regional economic and financial developments and advising member countries on their economic policies (“surveillance”) </li></ul></ul><ul><ul><li>Lending members hard currencies to support policy programs designed to correct balance of payments problems </li></ul></ul><ul><ul><li>Offering technical assistance in its areas of expertise, as well as training for government and central bank officials </li></ul></ul>How does the IMF serve its member countries?
<ul><li>The SDR, or Special Drawing Right s , is an international reserve asset that member countries can add to their foreign currency and gold reserves and use for payments requiring foreign exchange. </li></ul><ul><li>Its value is set daily using a basket of four major currencies: the euro, Japanese yen, pound sterling, and U.S. dollar. </li></ul><ul><li>The IMF introduced the SDR in 1969 because of concern that the stock and prospective growth of international reserves might not be sufficient to support the expansion of world trade. (The main reserve assets at the time were gold and U.S. dollars.) </li></ul>What is the SDR?
<ul><li>The SDR was introduced as a supplementary reserve asset, which the IMF could "allocate" periodically to members when the need arose, and cancel, as necessary. </li></ul><ul><li>IMF member countries may use SDRs in transactions among themselves, with 16 "institutional" holders of SDRs, and with the IMF. </li></ul><ul><li>The SDR is also the IMF's unit of account. A number of other international and regional organizations and international conventions use it as a unit of account, or as the basis for a unit of account. </li></ul>Contd…
<ul><li>Most comes from the quota subscriptions </li></ul><ul><ul><li>the money each member contributes when joining the IMF </li></ul></ul><ul><li>General Arrangements to Borrow (1962) </li></ul><ul><ul><li>line of credit set up with several governments and banks throughout the world </li></ul></ul>Where the IMF gets its money
<ul><li>A country that had not taken in enough foreign currency to pay the other countries for what they have bought </li></ul><ul><ul><li>spends more money than it takes in </li></ul></ul><ul><li>IMF will lend foreign exchange to that member </li></ul><ul><ul><li>hoping to stabilize its currency which will strengthen its trade </li></ul></ul>When is a country in need ?
<ul><li>Most of the IMF's loans to low-income countries are made on concessional terms, under the Poverty Reduction and Growth Facility . </li></ul><ul><li>Under a mechanism introduced by the IMF in 2005—the Policy Support Instrument —countries can request that the IMF regularly and frequently review their economic programs to ensure that they are on track. </li></ul>How Does the IMF help Poor Countries?
<ul><li>The success of a country's program is assessed against the goals set forth in the country's poverty reduction strategy , and the IMF's assessment can be made public if the country wishes. </li></ul><ul><li>The IMF also participates in debt relief efforts for poor countries that are unable to reduce their debt to a sustainable level even after benefiting from aid, concessional loans, and the pursuit of sound policies. </li></ul><ul><li>To ensure that developing countries reap full benefit from the loans and debt relief they receive, in 1999 the IMF and the World Bank introduced a process known as the Poverty Reduction Strategy Paper (PRSP) process. </li></ul>Contd…
<ul><li>25% of the country’s quota may be used </li></ul><ul><li>If this is not sufficient, then members can borrow up to 3 times the amount of its quota </li></ul><ul><ul><li>present plans for reform to Executive Directors </li></ul></ul><ul><li>If these plans are sufficient for the Executive Directors, the IMF grants the member a loan </li></ul>How much money a member can borrow from the imf ?
On the Agenda - Key Issues that The IMF is grappling with <ul><li>A partner in Europe </li></ul><ul><li>Reinforcing multilateralism </li></ul><ul><li>Rethinking macroeconomic principles </li></ul><ul><li>Stepping up crisis lending </li></ul><ul><li>Strengthening the international monetary system </li></ul><ul><li>Supporting low-income countries </li></ul>
<ul><li>The IMF works to foster global growth and economic stability. It provides policy advice and financing to members in economic difficulties and also works with developing nations to help them achieve macroeconomic stability and reduce poverty. </li></ul>CONCLUSION