The document provides an overview of the World Trade Organization (WTO) and its impact on Pakistan. It discusses the history and establishment of the WTO, its principles of non-discrimination and trade liberalization. Key WTO agreements covering goods, services, intellectual property and disputes are examined. The document also analyzes Pakistan's industrial sectors and trade patterns before and after joining the WTO, finding that average tariff rates declined but exports remained stagnant at 28% of GDP. Several industries face challenges from trade liberalization under WTO rules.

2. WTO Regime and its impact
on Pakistan

3. Presented by:
Kiran Sultana M-01
Saba Farooq M-29
Najia M-08
Affifa Mariam M-55
Hina Batool M-47
M.sc Economics(2013-15)
Department of Economics
University of the Punjab, Lahore

4. Outlines
 Introduction to WTO
1. Introduction
2. History of WTO
3. Import Quotas and Tariffs
4. Arguments for protection
5. Why we need free trade?
6. Understanding the WTO
7. Principles of WTO
8. Agreements of WTO
9. Results and Doha Development Agenda

6. What is WTO?
“The World Trade Organization (WTO)
is the only global international
organization dealing with the rules
of trade between nations to ensure
that trade flows as smoothly, predictably
and freely as possible”

7. History of WTO

8. General Agreement on Tariff and Trade, (1st Jan, 1948)
Successor to GATT
International Organization embodied in results of Uruguay
Round
Established: 1 January 1995
Member driven (160 Members),
Director: Roberto Azevêdo
Decision making by CONSENSUS
Single Undertaking –several topics negotiated together
Serviced by Secretariat - 600+ staff
Based in Geneva

9. Import Quotas and Tariffs
World price is below the market price,(Pw is below Po)
If there were no imports, the domestic price and quantity
demanded would be Po and Qo, and consumer have
incentive to buy imports.
The domestic price Po will fall to the world price Pw; at
this lower price, domestic production will fall to Qs, and
domestic consumption will rise to Qd. Imports are then
the difference between domestic consumption and
domestic production, Qd – Qs.

10. Cont.
Consumers who still purchase the good after tariff/Quotas (in
quantity Qo) will pay more and will lose an amount of surplus
given by trapezoid A and triangle B. Also, some consumers
will no longer buy the good, so there is an additional loss of
consumer surplus, given by triangle C.
Consumer loss
Producer surplus
Producer surplus increases by trapezoid A.
Govt. Revenue
government gains tariff revenue of area D
Net gain or loss
Gain in producer surplus is less than loss in consumer surplus
and as a whole there is a loss of B and C to the economy

11. Arguments on Protectionism

12. Arguments on protection:
 Infant Industry
 Diversification of Industry
 Employment Argument
 Defense Argument
 Balance of payment
 Unfair competition

13. GDP Growth before and after
GATT & WTO

14. Why a need for Free Trade
 Positive relationship b/w freer trade and Economic Growth
Employment opportunities
Production
Aggregate demand
Increases Exports
Free Trade
Economy grows AD = C + I + G+ Nx

15. PRINCIPLES OF TRADE
 Non-Discrimination
 Most Favoured Nation Treatment (MFN)
 National Treatment
 Stability and predictability through binding
 Transparency
 Trade liberalization

16. Market Access as a result of WTO
 Reduction in tariffs (Uruguay Round)
Developed countries (from 40% to10% )
Developing countries ( overall 40% )
zero-for-zero sectors (Eliminate all the tariff)
MFN duty-free basis was expected to double from 22% to 44%
 Binding on tariffs
All imports into developed countries of both industrial and agricultural products now enter
under bound rates; the proportion for developing countries and transition economies are 73%
and 98% respectively

18. Agreements of WTO
 Multilateral Agreement on Trade in Goods along GATT
 Agreement on Subsidies and Countervailing measures
 Agreement on Agriculture
 Agreement on Textiles and Clothing
 Agreement on Technical Barriers to Trade (TBT)
 Agreement on Anti-Dumping
 Agreement on Safeguards
 Agreement on Trade Related Investment Measures (TRIMS)
 Agreement on Technical Barriers to Trade (TBT) and on Sanitary and Phytosanitary
Measures (SPS)
 Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPs)

19. Description of Agreements
SCM
 Uruguay Round SMC(subsidies and
countervailing measures).
Prohibited subsidies
Actionable subsidies
Non-actionable subsidies
TypesofSubsidies
• Dumping: Imports of a product at an export
price below its normal value.
• GATT(article VI) provide right to apply anti-
dumping measure for unfair imports.
Argument on Anti-Dumping:

20. • Provide remedies for domestic producers injured by fairly traded Imports.
• Temporary protective measures are allowed by WTO.
• TRIMS consists of investment incentives , such as subsidies, investment grants
etc.
• It provides that no contracting party shall apply any TRIMs inconsistent with
national treatment and prohibition of quantitative restrictions of the GATT.
Agreements on Safeguards:
TRIMS
Cont.

21. The agreements make provisions prohibiting the use of the right of governments to use
technical regulations, standards and sanitary and Phytosanitary measures. To create
unnecessary obstacles to trade.
The TRIPs covers areas like copyright and related rights, trademarks, geographical indications,
industrial designs, patents, the lay-out designs of Integrated circuits and disclosed information and
trade secrets. It contains the national treatment and MFN clause.
Cont.
TBT & SPS:
TRIPs:

22. Agreements other than trade in Goods
 Trade in Services
 General Agreement on Trade in Services (GATS)
 Intellectual Property Rights (IPRs)
 Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPs)
 Plurilateral Trade Agreements
 Agreement on Trade in Civil Aircrafts
 Agreement on Government Procurement

25. Doha Development Agenda, Qatar
(Nov. 2001)
 Implementation related issues and concerns
 General Agreement on Tariffs and Trade (GATT)
 Sanitary and Phytosanitary (SPS) measures
 Technical barriers to trade
 Trade-related investment measures (TRIMs)
 Anti-dumping (GATT Article 6)
 Subsidies and countervailing measures
 Trade-related aspects of intellectual property rights (TRIPS)
 Final provisions

26. Description of Agreements:
GATT
 Balance-of-payments exception: clarifying
less stringent conditions in GATT for
developing countries if they restrict imports in
order to protect their balance-of-payments.
 Market-access commitments: clarifying
eligibility to negotiate or be consulted on
quota allocation
SPS Measures
 New SPS measures and review of SPS agreements.
 Reasonable interval
 Equivalence
 Financial and technical assistance.
 Setting SPS international standards for developing
countries.

27. Cont.
Technical barrier to trade
 Technical assistance for LDC’s.
 Reasonable interval to adopt new measures( 6
month).
 The WTO director general encouraged to
continue efforts to help developing countries.
Anti-Dumping( GATT article 6)
 Annual reviews of the agreement’s implementation
to be improved.
 Article 15 of anti-dumping agreement recognizes
DC’s give “special regard” to LDC’s.
 No second anti-dumping investigation within a
year.

28. Cont.
TRIMs
 The Goods Council is “to consider positively”
requests from least-developed countries to
extend the seven-year transition period for
eliminating measures that are inconsistent
with the agreement.
TRIPs
 “Non-violation” complaints: the unresolved question
of how to deal with possible TRIPS disputes involving
loss of an expected benefit even if the TRIPS
Agreement has not actually been violated.
 Technology transfer to least-developed countries

29. Cont.
 Review of provisions on countervailing duty
investigations.
 Directing the Subsidies Committee.
 Reaffirming LDCs are exempt from the ban on
export subsidies.
 LDCs below US$ 1000 GNP are allowed to pay
subsidies.
Final provisions
 The WTO D-G is to ensure that WTO technical
assistance gives priority to help developing countries
implement WTO obligations, to increase their
capacity to participate effectively in future
negotiations.
 The WTO Secretariat is to cooperate closely with
other international organizations so that technical
assistance is more efficient.
Subsidies and countervailing measures

31. Textile industry
Sports industry
Telecom industry
Cement industry
Surgical industry
Sugar industry
Defense industry
Auto mobile industry
Fashion industry
Fertilizer industry
Oil & Gas Industries
Chemical industry

32. Tariff Structure in
Pakistan
After URUGUAY Round
Average tariff rate declined
from 51% in 1995 to around
17% in 2004.
In terms of import tariffs’
domestic prices, both simple
and weighted average tariff
rates fell by 22% between
1995 and 2003.

33. Regional Average
Tariff Rates of
Pakistan
• At the global level however,
Pakistan rank low: 109 out of
141 in terms of the average
tariff rate across all goods.
• It ranks in agricultural products
only: 71 out of 141
• In automobiles, edible oils
alcoholic beverages , there are
tariff slabs.
• The 2003-04 tariff four bands at
tariff rates of 5, 10, 20 and 25%
• 1995,15 different levels
between 0-80%.

35. Industrial Sector of Pakistan
(21.3% of GDP in 2014)
Pakistan’s Exports 2003-04 (28%)

36. Major causes
of
exports
of
Industrial sector
being stagnant
at 28%
• Low quality products
• Reliance on few exports products
and few export markets
• Inability of Pakistani exporter to
keep with the times with the
induction of new technology and
reducing the cost of production.

37. Cont.
Pakistan’s Imports 1990-91 Pakistan’s Imports 2003-04

38. Implication of WTO on Industrial Sector
IMPORTS:
ANALYSIS OF SIX MAJOR PRODUCTS
NO THREATS OF WTO AND GREATER
GLOBALIZATION ON IMPORTS
1. Chemicals ( 10-12% with tariff rate of 5%)
2. Vegetable oil (5-6% with tariff rate of 0%)
3. Fertilizer (2% in 2003-04 with tariff rate 5%)
4. Machinery Electrical and Non Electrical
(imports share decline with tariff rate 5-25%)
5. Petroleum Products (25% with tariff rate of
5% on fuels and on lubricants and other
product of 20-25%)
6. Transport Equipment (imports share fallswith
tariff rate of 35-200%)
9.1 to 5.3%
2 to 3%
Constant at 1.3%
2 to 3.16%

39. 6. Transport Equipment:
Transport industry is one particular industry that the Government of Pakistan is trying to establish under protection
of tariffs.
CBU – Complete Built Up
A CBU import means a vehicle is
completely built out of the country.
CKD – Complete Knock Down
A CKD vehicle means a vehicle is assembled
locally using all the major parts, components,
and technology imported from the country
of its origin.
Vehicle Type CKD CBU S.T
Cars up to 1000 cc 35% 100% 15%
1001-1300 cc 35% 120% 15%
1301-1800 cc 35% 150% 15%
1801-2999 cc 35% 250% 15%
LCV 30% 60% 15%
Trucks 30% 60% 15%
Buses 15% 60% 15%
Tractors 0% 35% 15%
Motorcycles 30% 105% 15%

40. CONCLUSIONS
&
RECOMMENDATIONS

41. Conclusions & Recommendations
Conclusions
 The local industry can't be protected with the
use of quotas or high tariffs.
 Pakistan face problems in hiring law firms
which is a constraining factor in
(DSB: Dispute settlement Body).
 Pakistan has a long way to go in obtaining
certification of ISO’s and other standards.
 Automobiles and Engineering goods are
working under deletion programme.
Recommendations
 The government needs to network of Anti-
dumping & countervailing duties to protect the
local industry.
 Need to train local lawyers with WTO expertise.
 A proper policy is required to enhance credibility
through adoption of international quality
standards.
 Special policies are needed for sectors so that
they could become efficient in shortest possible
time.

42. Impact of WTO on trade of Pakistan
Studies should be undertaken to ascertain the impact on trade of Pakistan
o Due to accession of China to WTO.
o Due to enlargement of EU.
o Due to bilateral agreements in which countries of our interest are also involved.