THE WORLD TRADE ORGANIZATION

Presented By-Tinaaz Wadia: 56Sakar Thakur:Ati Jain:Sharmeen:

FLOW OF CONTENT

Introduction Information Formation of the WTO Objectives of the WTO Structure of WTO Members of WTO- member nations and the voting

principle followed Principles of trading Functions of the WTO The WTO agreements and policies GATT & WTO trade rounds Pros and Cons of the WTO The WTO policies for India and its impact on the

Indian economy Conclusion

The World Trade Organization (WTO) is an organization that intends to supervise and liberalize international trade. The 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 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.

The WTO superseded and replaced the GATT which was a provisional, multilateral agreement governing international trade from 1947 until Jan 1, 1995.

The WTO has larger membership than GATT,the number of members stand at 153. India is one the founding members of the WTO.

INTRODUCTION

INFORMATION

Established: 1st January 1995.

Created By: Uruguay Round negotiations (1986-1994)

Headquarter: Geneva, Switzerland

Membership: 153 member states (till 2008)

Secretariat Staff: 625

Head: Pascal Lamy (Director-General)

Budget: 196 million Swiss francs (approx)

Mr. Pascal Lamy

WTO headquarters: Geneva

FORMATION OF THE WTO

The GATT was the only multilateral instrument governing international trade from 1948 until the WTO was established in 1995. The GATT managed to operate for almost half a century as a semi institutionalized multilateral treaty regime on a provisional basis.

Seven rounds of negotiations occurred under the GATT

The Tokyo round during the 70s was the first major attempt to tackle trade barriers that do not take the form of tariffs and to improve the system but the agreements were not accepted by all the member nations of GATT.

These agreements and policies were amended in URUGUAY ROUND leading to acceptance by the member nations and formation of WTO.

This final act concluding the Uruguay round and officially establishing the WTO regime was signed in 1994 at Marrakesh, Morroco and hence known as Marrakesh Agreement.

OBJECTIVE OF THE WTO

To implement the new world trade system as visualized in the agreement

To promote world trade in a manner that benefits every country

To ensure developing countries secure a better balance in sharing of the advantages resulting from the expansion of international trade corresponding to their developmental needs

To enhance competitiveness among all trading nations as to benefit customers

To increase the level of production and productivity with a view of ensuring level of employment in the world

To demolish all hurdles in to an open world trading system and usher in international economic renaissance

THE WTO STRUCTURE

WTO: THE MEMBERS The WTO is composed of 153 countries which represents 95% of

world trade.

Of these, 123 were signed during the Uruguay round

WTO members do not have to be full-sovereign nation members. Instead, they must be a custom territory with full autonomy in their external relations. Over 3/4th of WTO members are developing or least

developed countries.

There are 30 countries that are not members known as Observers. These countries are currently negotiating membership.

The biggest of these non-members is Russia, however they are in the process of accession.

Ukraine became the newest member on May 16, 2008

WTO: THE MEMBERS

VOTING PRINCIPLES IN WTO

• Voting

• Principle • One member, one vote

• Primary aim • Consensus

• No consensus • Majority vote

• Interpretation of agreements • 3/4 in favor

• Amendment to agreements • 2/3 in favor

• Propose amendments • Countries and Councils

CORE PRINCIPLES OF THE WTO

A CLOSER LOOK AT THESE PRINCIPLES:Without Discrimination – (MFN and National treatment to all)

Free – With barriers coming down through negotiation;

Predictable – Bound tariffs

More Competitive – By discouraging “unfair” practices such as export subsidies and dumping products at below cost to gain market share;

More Beneficial for Less Developed Countries – By giving them more time to adjust, greater flexibility, and special privileges

FUNCTIONS OF WTO

The main function is to ensure that trade flows as smoothly, predictably and freely as possible.Administering trade agreements- WTO agreements cover goods, services, intellectual property.

Acting as a forum for trade negotiations

Settling trade disputes-Importantly WTO set procedures to settle disputes

Reviewing national trade policies

Assisting developing countries in trade policy issues, through technical assistance and training programmes.

FUNCTIONS OF WTO

Negotiating the reduction or elimination of obstacles to trade (import tariffs, other barriers to trade) and agreeing on rules governing the conduct of international trade.Assisting the process of accession of some 30 countries who are not yet members of the organization.

Co-operating with other international organizations- IMF and The World Bank.

World Trade Organization coordinates with its secretariat, which employees 500 + staff including Economists, Statisticians, Lawyers and other experts in related area of concern.

WTO: AGREEMENTS & POLICIES

The WTO’s agreements are the result of negotiations between the members. The current set were the outcome of the 1986–94 Uruguay Round negotiations which included a major revision of the original General Agreement on Tariffs and Trade (GATT).

The WTO oversees about 60 different agreements which have the status of international legal texts. They deal with: agriculture, textiles and clothing, banking, telecommunications, government purchases,industrial standards, product safety and more.

WTO: AGREEMENTS & POLICIES

Goods • It all began with trade in goods. From 1947 to 1994,

GATT was the forum for negotiating lower customs duty rates and other trade barriers

Services• These principles appear in the new

General Agreement on Trade in Services (GATS).

Intellectual property • The WTO’s intellectual property agreement

amounts to rules for trade and investment in ideas and creativity.

Dispute settlementThe system encourages countries to settle their differences through consultation.

WTO AGREEMENTS: GATS

General Agreement on Trade in Services, is the first and the only comprehensive multilateral discipline covering international trade in Services.

WTO services are divided into 12 areas and sub divided into 164 areas:Business Services, Communication Services, Construction andEngineering Services, Distribution Services, Education Services, EnvironmentalServices, Financial Services, Health Services, Tourism and travel Services,Recreation, cultural and sporting  Services, Transport Services.

Modes of supply of services

Consumption Abroad

Cross - Border Supply

Commercial

Presence

Movement of Natural persons

The important principles falling in this category are:•Most Favoured Nation principle (MFN)•Domestic Regulations•Transparency.

WTO AGREEMENTS: TRIPS

It is the GATT Uruguay Round Agreement on Trade Related Intellectual Property.It deals with the protection & enforcement of “Trade-Related” intellectual property “rights".

DEALS IN :●How to give adequate protection to intellectual property rights●How countries should enforce those rights adequately in their own territories●How to settle disputes on intellectual property between members of the WTO●Special transitional arrangements during the period when the new system is being introduced.

Intellectual property comprises 2 distinct forms: Literary & Artistic Works- Books, paintings, musical compositions,plays, operas, movies, radio/ TV programs, performances, & other artistic works Industrial Property- Patented objects, trade secrets, geographical indications.

WTO AGREEMENTS: TRIMS

Trade related Investment Measures does not provide any new language ,

but It concentrates on 2 major articles. Article III & Article IX which talks

about National Treatment and Trade Restrictions respectively.

DEALS IN :ARTICLE III

●National treatment of imported

product, unless specified in otheragreements.

●Subjects the purchase or use byan enterprise of imported products to lessfavorable conditions than the purchase or use of domestic products.

ARTICLE XI

●Prohibition of quantitative restrictions on imports and exports.

●Part of the general trend in textiles and agriculture to phase out the use of quantitative restrictions.

WTO AGREEMENTS: SANITARY AND PHYTO-SANITARY (SPS) AGREEMENT

SPS agreement was negotiated during the Uruguay Round, and entered into force with the establishment of the WTO in1995.

The WTO sets constraints on member-states policies relating to food safety (bacterial contaminants, pesticides, inspection and labeling) as well as animal and plant health (imported pests and diseases).

WTO AGREEMENTS: AOA

The most important agreement 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 • Export subsidiesObjective:To reform trade in agriculture and to make policies more market oriented

A product is considered to be dumped if the export price is less than the price charged for the same product in the exporting country, or it is sold for less than its cost of production.

The WTO agreement on anti-dumping allows governments to act against dumping where there is genuine (‘material’) injury to the competing domestic industry.

WTO AGREEMENTS: ANTI-DUMPING PRACTICES (ADP)

WTO AGREEMENTS: ANTI-DUMPING PRACTICES (ADP)

ANTI DUMPING: INCREASE OVER THE YEARS.

GATT & WTO TRADE ROUNDS

Sr.no

Round

Place Year Features

1. First Geneva (Switzerlan

d)

1947 Tariff cuts for 45000 products worth $10 billion of trade on an annual

basis . 2. Secon

dAnnecy (France)

1949 Custom duty were reduced for another 5000 items of goods.

3. Third Torquay (Britain)

1950-51

Adopted 8700 tariff reduction.

4. Fourth Geneva(Switzerlan

d)

1955-56

To further cut duties for goods worth $2.5 billion.

5. Fifth Geneva(Switzerlan

d)

1960-62

It was known as Dillon Round. Custom duties charged for 4000 items worth

$5 billion.6. Sixth Geneva

(Switzerland)

1964-67

It was known as Kennedy Round. Cut tariffs for industrial goods upto 50.

7. Seventh

Tokyo (Japan)

1973-79

Ended at Geneva. Participants cut custom duties by 20-30 for goods

traded.8. Eight Uruguay

 1986-

93This was known as Uruguay Round.

Lead to the formation of WTO.

• After Marrakesh Agreement, India joined WTO since inception in 1995.

• Developing countries like India availed of greater trade opportunities and also challenged a certain policies of developed countries.

• For India, exposure to volatile international market would affect not only domestic prices but also incomes of poor.

• Aim to participate in WTO rule based system with greater stability, transparency and predictability in governance of international trade.

THE WTO AND INDIA

ARTICLES IN INDIAN EXPRESS: IMPACT OF WTO ON INDIA

POSITIVE IMPACT ON INDIAN ECONOMY

• Increase in export earnings• Agricultural exports• Export of textile and clothing• Multilateral rules and discipline• Growth to service exports• Foreign investment

PROS

• Promotes free-er trade• Raises world output levels via specialisation• Establishes a standard rule by law and terms of trade

for greater efficiency• Updates all participating countries and banks to

international standards and efficiency in terms of trade and commerce.

CONS

• Industrialised countries benefit more than poor countries

• Don’t allow the participaion of developing countries

CONCLUSION

• Although the stated aim of the WTO is to promote free trade and stimulate economic growth, some believe that globally free trade results in rich (both people and countries) becoming richer awhile the poor getting poorer.

• It will be able to help weak and poor countries if it frames rules accordingly