WTO - BRICS Overview


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WTO - BRICS Overview

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WTO - BRICS Overview

  2. 2. INTRODUCTION The World Trade Organization (WTO) is an organization that intends to supervise and liberalize international trade. The organization officially commenced on 1 January 1995 under the Marrakech Agreement, replacing the General Agreement on Tariffs and Trade (GATT), which commenced in 1948. The organization deals with regulation of trade between participating countries; it provides a framework for negotiating and formalizing trade agreements, and a dispute resolution process aimed at enforcing participant's adherence to WTO agreements, which are signed by representatives of member governmentsand ratified by their parliaments. Most of the issues that the WTO focuses on derive from previous trade negotiations, especially from the Uruguay Round (1986–1994). Created by: Uruguay Round negotiations (1986-94) Membership: 159 countries Head : Director-General – Mr. Pascal Lamy Established: 01 January 1995 Location: Geneva, Switzerland The headquarters of the World Trade Organization, in Geneva, Switzerland.
  3. 3. ROLE OF WTO • The main goal of WTO is to help the trading industry to become smooth, fair, free and predictable. It was organized to become the administrator of multilateral trade and business agreements between its member nations. It supports all occurring negotiations for latest agreements for trade. WTO also tries to resolve trade disputes between member nations. • Multi-lateral agreements are always made between several countries in the past. Because of this, such agreements become very difficult to negotiate but are so powerful and influential once all the parties agree and sign the multi-lateral agreement. WTO acts as the administrator. If there are unfair trade practices or dumping and there is complain filed, the staff of WTO are expected to investigate and check if there are violations based on the multi- lateral agreements.  The system helps promote peace.  The system allows disputes to be handled constructively.  A system based on rules rather than power makes life easier for all.  Free trade cuts the cost of living.  It gives consumers more choice and a broader range of qualities to choose from.  Trade raises incomes.  Trade stimulates economic growth and that can be good news for employment  The basic principles make the system economically more efficient, and they cut costs.
  4. 4. OBJECTIVES OF WTO • To arrange the implementation, administration and operations of multilateral (involving three or more participants) and Plurilateral trade agreements (power which shared between different countries) • To arrange the forum for deliberations for the member nations in regard to their multilateral trade relations in issues deal with under the agreements. • To provide a framework for implementing of the results arising out of the deliberations (long and care full agreements/consideration) which taken place at ministerial conference level • To manage the created understanding on rules and procedure governing the settlement of disputes • To manage effectively and efficiency the trade policy review mechanism (TRIM) • To create more together relationship with all nations in respect of global economic policy- making, it would cooperate with the IMF and the world bank & its affiliated Organizations. • 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
  5. 5. FUNCTIONS OF WTO • Among the various functions of the WTO, these are regarded by analysts as the most important: • It oversees the implementation, administration and operation of the covered agreements. • It provides a forum for negotiations and for settling disputes. • Additionally, it is the WTO's duty to review and propagate the national trade policies, and to ensure the coherence and transparency of trade policies through surveillance in global economic policy-making. Another priority of the WTO is the assistance of developing, least- developed and low-income countries in transition to adjust to WTO rules and disciplines through technical cooperation and training. (i) The WTO shall facilitate the implementation, administration and operation and further the objectives of this Agreement and of the Multilateral Trade Agreements, and shall also provide the frame work for the implementation, administration and operation of the multilateral Trade Agreements. (ii) The WTO shall provide the forum for negotiations among its members concerning their multilateral trade relations in matters dealt with under the Agreement in the Annexes to this Agreement. (iii) The WTO shall administer the Understanding on Rules and Procedures Governing the Settlement of Disputes. (iv) The WTO shall administer Trade Policy Review Mechanism.
  6. 6. (v) With a view to achieving greater coherence in global economic policy making, the WTO shall cooperate, as appropriate, with the international Monetary Fund (IMF) and with the International Bank for Reconstruction and Development (IBRD) and its affiliated agencies. The above five listings are the additional functions of the World Trade Organization. As globalization proceeds in today's society, the necessity of an International Organization to manage the trading systems has been of vital importance. As the trade volume increases, issues such as protectionism, trade barriers, subsidies, violation of intellectual property arise due to the differences in the trading rules of every nation. The World Trade Organization serves as the mediator between the nations when such problems arise. WTO could be referred to as the product of globalization and also as one of the most important organizations in today's globalized society. The WTO is also a center of economic research and analysis: regular assessments of the global trade picture in its annual publications and research reports on specific topics are produced by the organization. Finally, the WTO cooperates closely with the two other components of the Bretton Woods system, the IMF and the World Bank.
  7. 7. AGREEMENTS • The WTO oversees about 60 different agreements which have the status of international legal texts. Member countries must sign and ratify all WTO agreements on accession. A discussion of some of the most important agreements follows. The Agreement on Agriculture came into effect with the establishment of the WTO at the beginning of 1995. The AoA has three central concepts, or "pillars": domestic support, market access and export subsidies. The General Agreement on Trade in Services was created to extend the multilateral trading system to service sector, in the same way as the General Agreement on Tariffs and Trade (GATT) provided such a system for merchandise trade. The agreement entered into force in January 1995. The Agreement on Trade-Related Aspects of Intellectual Property Rights sets down minimum standards for many forms of intellectual property (IP) regulation. It was negotiated at the end of the Uruguay Round of the General Agreement on Tariffs and Trade (GATT) in 1994. • The Agreement on the Application of Sanitary and Phytosanitary Measures—also known as the SPS Agreement—was negotiated during the Uruguay Round of GATT, and entered into force with the establishment of the WTO at the beginning of 1995. Under the SPS agreement, the WTO sets constraints on members' policies relating to food safety (bacterial contaminants, pesticides, inspection and labeling) as well as animal and plant health (imported pests and diseases). The Agreement on Technical Barriers to Trade is an international treaty of the World Trade Organization. It was negotiated during the Uruguay Round of the General Agreement on Tariffs and Trade, and entered into force with the establishment of the WTO at the end of 1994. The object ensures that technical negotiations and standards, as well as testing and certification procedures, do not create unnecessary obstacles to trade". The Agreement on Customs Valuation, formally known as the Agreement on Implementation of Article VII of GATT, prescribes methods of customs valuation that Members are to follow. Chiefly, it adopts the "transaction value" approach. • In December 2013, the biggest agreement within the WTO was signed and known as the Bali Package.
  8. 8. BRICS -ROLE OF WTO BRICS is the acronym for an association of five major emerging national economies: Brazil, Russia, India, China and South Africa. The grouping was originally known as "BRIC" before the inclusion of South Africa in 2010. The BRICS members are all developing or newly industrialized countries, but they are distinguished by their large, fast-growing economies and significant influence on regional and global affairs; all five are G-20 members. As of 2013, the five BRICS countries represent almost 3 billion people, with a combined nominal GDP of US$16.039 trillion, and an estimated US$4 trillion in combined foreign reserves. Presently, South Africa holds the chair of the BRICS group, having hosted the group's fifth summit in 2013. The BRICS have received both praise and criticism from numerous quarters. The foreign ministers of the initial four BRIC states (Brazil, Russia, India, and China) met in New York City in September 2006, beginning a series of high-level meetings. A full-scale diplomatic meeting was held in Yekaterinburg, Russia, on 16 May 2008. The BRIC grouping's first formal summit, also held in Yekaterinburg, commenced on 16 June 2009, with Luiz Inácio Lula da Silva, Dmitry Medvedev, Manmohan Singh, and Hu Jintao, the respective leaders of Brazil, Russia, India and China, all attending. The summit's focus was on means of improving the global economic situation and reforming financial institutions, and discussed how the four countries could better co-operate in the future. There was further discussion of ways that developing countries, such as the BRIC members, could become more involved in global affairs. In the aftermath of the Yekaterinburg summit, the BRIC nations announced the need for a new global reserve currency, which would have to be "diversified, stable and predictable". Although the statement that was released did not directly criticize the perceived "dominance" of the US dollar – something that Russia had criticized in the past – it did spark a fall in the value of the dollar against other major currencies.
  9. 9. The WTO agreements cover goods, services and intellectual property. They spell out the principles of liberalization, and the permitted exceptions. They include individual countries’ commitments to lower customs tariffs and other trade barriers, and to open and keep open services markets. They set procedures for settling disputes. They prescribe special treatment for developing countries. They require governments to make their trade policies transparent. WTO deals with the special needs of developing countries as two thirds of the WTO members are developing countries and they play an increasingly important and active role in the WTO because of their numbers, because they are becoming more important in the global economy, and because they increasingly look to trade as a vital tool in their development efforts. The BRICS Forum, an independent international organization encouraging commercial, political and cultural cooperation between the BRICS nations, was formed in 2011. In June 2012, the BRICS nations pledged $75 billion to boost the lending power of the International Monetary Fund (IMF). However, this loan was conditional on IMF voting reforms. In late March 2013, during the fifth BRICS summit in Durban, South Africa, the member countries agreed to create a global financial institution which they intended to rival the western-dominated IMF and World Bank. After the summit, the BRICS stated that they planned to finalize the arrangements for this new development bank by 2014. However, disputes relating to burden sharing and location have slowed down the agreements.
  11. 11. BENEFITS OF THE AGREEMENTS • Increase in foreign trade • Increase in agriculture exports • Increase in inflow of foreign investment • Improvement in services • Benefits for clothing and textile industry • Restricts dumping • Promotion to research on patents • Reduction in tariff and non-tariff barriers. • Amendment in patent act • Copyright, trademark and industrial designs • Geographically indications NEGATIVE IMPACTS • Disadvantage to agriculture sector -- reduction in subsidy -- Import of food grains • Loss to domestic industries • Patent of Domestic grown herbs taken over by foreign companies
  12. 12. CONCLUSION The share of BRICS in global trade has more than doubled over the past decade. This can be partly attributed to a shift in the countries’ trade policies. Tariff rates have been cut significantly over the past few years in the BRICS economies and average tariff rates currently range from 8% to 12% (Table 5). Moreover, the BRICS as WTO members are required to bind their tariffs, in other words to put ceilings beyond which they cannot increase their tariff rates. Russia, which has recently acceded to the WTO, bound its tariffs from the date of WTO membership. Spurred by domestic concerns, both bound and applied rates have been kept higher for agricultural good. A number of trade arrangements have emerged amongst the BRICS over the past few years, either on a bilateral basis or as a part of a larger grouping (e.g. South Africa as part of SACU). In addition, both India and China are members of Asia Pacific Trade Agreement (APTA), a preferential trade agreement seeking to promote trade among developing countries in the Asia-Pacific region. Negotiations on a Regional Comprehensive Economic Partnership Agreement (RCEP) are also on the anvil. Evidently, there are several areas of convergence and a few points of divergence in the trade policies of the BRICS. Efforts have been recently focused on increasing intra-BRICS trade and expanding the areas of possible collaboration. BRICS Trade Ministers at their New Delhi meeting in March 2012, resolved to more than double the trade among BRICS from US $230 billion in 2011 to US $500 billion by 2015. The Delhi Action Plan was endorsed at the Summit to encourage intra-BRICS cooperation in other key areas. Concrete suggestions are being put forward on setting up a development bank and enabling credit and trade finance facilities in local currencies. There is also scope for coordinating positions at the WTO and in other multilateral fora.