changing role of wto
TRANSCRIPT
SEMINAR REPORT ON
CHANGING ROLE OF WORLD TRADE
ORGANISATION (WTO)
SUBMITTED TO SUBMITTED BYMr. Liaqat Ali Khan Ramandeep kaur Roll No. 5290
MBA 1st Semester Section- E
SESSION 2011-2012SCHOOL OF MANAGEMENT STUDIES
PUNJABI UNIVERSITY, PATIALA
ACKNOWLEDGEMENT
I would like to take this opportunity to thank Mr. Liaqat Ali
Khan, Lecturer, MBA Department, School of management
studies, Punjabi university, Patiala, who has been guiding force
for my Report on
“CHANGING ROLE OF WORLD TRADE ORGANISATION
(WTO)”.
I am also thankful to my friends, for their support and
encouragement in finding out the appropriate material for this
Report, without them making this report would have been
impossible.
Ramandeep KaurRoll No. 5290
MBA 1st Semester, Sec: E
CHANGING ROLE OF WORLD TRADE ORGANIZATION
Location of the WTO headquarters in Geneva
WTO founder members (January 1, 1995) WTO
subsequent members
Formation January 1, 1995
HeadquartersCentre William Rappard,
Geneva, Switzerland
Membership 153 member states
Official languages English, French, Spanish
Director-General Pascal Lamy
Budget189 million Swiss francs (approx.
182 million USD) in 2009.
Staff 625
Website www.wto.int
WHAT IS THE WTO?
ONE OPINION:
The World Trade Organization (WTO) is the only global international organization
dealing with the rules of trade between nations.WTO agreements are negotiated and
signed by the trading nations and ratified in their parliaments. The goal is to help
producers of goods and services, exporters and importers conduct and grow their
business. The goal of WTO is to improve the welfare peoples of the member countries.
The Ranking of India is 16th in World Trade Organization.
ORIGIN OF WTO
General agreements of tariffs and trade (GATT) which was established in 1947 as a
forum to reduce trade barriers. WTO replaced GATT in 1995 as legal and institutional
foundation of multilateral trade relations. It designed to strengthen the trade rules by
providing a stronger set of institutions for resolving disputes and enforcing agreements.
In WTO negotiations take place in rounds. There have been 9 to date. Begins with an
agreement among members on agenda. Most recent completed round was Uruguay
round. The negotiations are continued in Doha round.
STRUCTURE OF WTO:
-Ministerial conference polices and strategy making body.
-General council –executive body of WTO –disputes settlement and trade related policy.
- Councils- trade in goods, trade in services and trade related aspects of intellectual property
body.
-Committees and management bodies- committees on trade and development, balance of payment
and budget, finance and administration.
-The WTO has 153 members, accounting for over 97% of world trade. Around 30 others are
negotiating membership.
The WTO‘s top level decision making body is the ministerial conference which meets at least
once every two years.
Below this is the general council (normally ambassadors and heads of delegation in Geneva, but
sometimes official sent from members’ capitals) which meets several times a year in Geneva
headquarters. The general council also meets as the trade policy review body and the dispute
settlement body.
At the next level, the GOOD COUNCIL, SERVICES COUNCIL, & INTELLECTUAL
PROPETRY (TRIPS) COUNCIL, report to general council.
numerous specialized committees, working groups and working parties deal with the individual
agreements and other areas such as environments, development membership applications and
regional trade agreements.
GATT (a treaty and an organization)
The general trade agreements on trade and tariff was first signed in 1947 ,it was designed to
provide an international forum that encouraged free trade between member states by
regulating and reducing tariffs on traded goods and also providing common mechanism for
resolving trade disputes. GATT was the outcome of the failure of negotiating governments
to create ITO
The Breton woods conference introduced the idea for an organization to regulate trade as
part of larger plan for economic recovery after World War IIAs governments negotiated
the ITO, 15 negotiating states began parallel negotiations for the GATT as a way to attain
early tariff reductions. Once the ITO failed in 1950 only the GATT agreements was left.
The GATT ‘main objective was the reduction of barriers to international trade. This was
achieved through the reduction of trade barriers, quantitative restrictions, subsides on
trade through a serious of agreements,
HISTORY OF GATT
First phase: from 1947 until torque round (commodities which would be covered by the
agreement and freezing existing tariff levels.
Year Place/name Subjects covered
1947 Geneva Tariffs
1949 Annecy Tariffs
1951 Torque Tariffs
Second phase: encompassing three rounds from 1959 to 1979(focused on reducing tariffs)
Year Place/name Subjects covered
1960-1961 Geneva (dillion round) Tariff
1964-1967 Geneva Kennedy
round
Tariff and anti dumping measures
1973-1979 Geneva Tokyo round Tariff and non tariffs measures, framework
agreements.
Third phase: consisting only the Uruguay round from 1986 to 1994
Extended the agreement fully to new areas such as intellectual property,
services, capital and agriculutre.out of this round WTO was born.
Year Place/name Subjects covered
1986-
1994
Geneva Uruguay
round
Tariffs, non tariffs measures, rules, services, intellectual property,
dispute settlement, textiles, agriculture, creation of WTO etc.
DID GATT SUCCED
Continual reductions in tariffs helped spur very high rates of world trade growth during the 1950s
and 1960s –around 8% a year on average. Trade growth consistently outpaced production growth.
The rush of new members during the Uruguay round demonstrated recognition of multilateral
tiding system as the anchor for development and an instrument of economic and trade reform. But
GATT sauced in reducing the tariffs it a low level with a series of economic recessions 1970s &
80’s drove governments to devise other form of protection for sectors facing increased foreign
competition.
High rates of unemployment and constant factory closures led governments in Western Europe
and North America to seek bilateral marketing sharing arrangements with competitors and to
embark on subsidies race to maintain their hold on agricultural trade.
Both these changes undermined GATT; s credibility and effectiveness.
The problem was not just deteriorating trade policy environment. By the early 1980’s the general
agreement was clearly no loger as relevant to the realities of the world trade as it had been in
1940s.
World trdadehas become far more complex and important than 40 year before.
The globalization of the economy was under way.
Trade in services- not covered by GATT rules
Ever increasing international investments.
Factors convinced GATT members that anew effort to reinforce and extend the multilateral
system should be attempted. That effort resulted in the Uruguay round the Marrakesh declaration
and the creation of the WTO.
Uruguay Round
It took seven and a half years, almost twice the original schedule. By the end, 123 countries
were taking part. It covered almost all trade, from tooth brushes to pleasure boats, from
banking to telecommunications from the genes of the wild rice to AIDS treatments. It was
quite simply the largest trade negotiation ever and most probably the largest negotiation of
any in history.
The agreements fall into a structure with six main parts:
The Agreement Establishing the WTO
Goods and investment — the Multilateral Agreements on Trade in Goods including the
GATT 1994 and the Trade Related Investment Measures
Services — the General Agreement on Trade in Services
Intellectual property — the Agreement on Trade-Related Aspects of Intellectual Property
Rights (TRIPS)
Dispute settlement (DSU)
Reviews of governments' trade policies (TPRM)
Ministerial conferences
First ministerial conference
The inaugural ministerial conference was held in Singapore in 1996. Disagreements
between largely developed and developing economies emerged during this conference
over four issues initiated by this conference, which led to them being collectively referred
to as the "Singapore issues".
Second ministerial conference
It was held in Geneva in Switzerland.
Third ministerial conference
The third conference in Seattle, Washington ended in failure, with massive
demonstrations and police and National Guard crowd control efforts drawing worldwide
attention.
Fourth ministerial conference
It was held in Doha In Persian Gulf nation of Qatar. The Doha Development Round
was launched at the conference. The conference also approved the joining of China,
which became the 143rd member to join.
Fifth ministerial conference
The ministerial conference was held in Cancun, Mexico, aiming at forging agreement on
the Doha round. An alliance of 22 southern states, the G20 developing nations (led by
India, China and Brazil), resisted demands from the North for agreements on the so-
called "Singapore issues" and called for an end to agricultural subsidies within the EU
and the US. The talks broke down without progress.
Sixth ministerial conference
The sixth WTO ministerial conference was held in Hong Kong from 13 December – 18
December 2005. It was considered vital if the four-year-old Doha Development Agenda
negotiations were to move forward sufficiently to conclude the round in 2006. In this
meeting, countries agreed to phase out all their agricultural export subsidies by the end of
2013, and terminate any cotton export subsidies by the end of 2006. Further concessions
to developing countries included an agreement to introduce duty free, tariff free access
for goods from the Least Developed Countries, following the Everything But Arms
initiative of the European Union — but with up to 3% of tariff lines exempted. Other
major issues were left for further negotiation to be completed by the end of 2010
Seventh ministerial conference
The WTO General Council, on 26 May 2009, agreed to hold a seventh WTO ministerial
conference session in Geneva from 30 November–December 2009. A statement by
chairman Amb. Mario Matus acknowledged that the prime purpose was to remedy a
breach of protocol requiring two-yearly "regular" meetings, which had lapsed with the
Doha Round failure in 2005, and that the "scaled-down" meeting would not be a
negotiating session, but "emphasis will be on transparency and open discussion rather
than on small group processes and informal negotiating structures".
Doha Round
THE DOHA ROUND of WTO negotiations began in November 2001.
The new round was instead launch at, ministerial conference in Doha Qatar. The new trade
agenda of developed world was dubbed the Doha development agenda and from there, all
countries were committed to negotiations opening agricultural and manufacturing markets, as
well as trade in services (GATS) negotiations and expanded intellectual property regulation
(TRIPS). The intent of the round, according to its proponents was to make trade rules fairer for
developing countries. Opponents changed that the round would expand a system o f trade rules
that were bad for development and interfered excessively with countries;’ domestic policy space.
The round was set to be concluded in four years in December 2005- after two more ministerial
conferences has produced a final draft declaration. Agriculture has a become the linchpin of the
agenda for both developing and developed countries, compulsory licensing of medicines and
patent protection.
A second deals with a review of previsions giving special and differential treatment to developing
countries & addressing Problems that developing countries are having in implementing current
trade obligations.
A Study by the University of Michigan found that if all trade barriers in agriculture, service, and
manufacturers were reduced by 33% has result of the Doha development agenda; there would be
an increase in global welfare of $ 574.0 billion. Some studies present moiré modest outcome
predicting world net welfare gains ranging from $ 84 billion to $ 287 billion by the year 2015
others up to $ 3000 billion per year.
GATT and WTO trade rounds
Name start Duration Countries Sub. Covered
1. Geneva April
1947
7mths 23 Tariffs
2.annecy April
1949
5mtnhs 13 Tariffs
3.torquay Sept,1990 8months 38 Tariffs
4.genevaII Jan.1956 5months 26 Tariff admission of
Japan
5.dillion Sept 1960 11months 26 tariffs
6.kennedy May
1964
37
months
62 Tariffs & anti dumping
7.tokyo Sept 1973 74
months
102 Tariff, non tariff
measures “frameworks
agreements
8.uruguay Sept 1986 87
months
123 Tariffs, non tariffs, rules
services
IP,DI,SPUTE,settlement,
TEXTILES agriculture
Principles of the trading system
The WTO establishes a framework for trade policies; it does not define or specify
outcomes. That is, it is concerned with setting the rules of the trade policy games. Five
principles are of particular importance in understanding both the pre-1994 GATT and the
WTO:
1. Non-Discrimination. It has two major components: the most favored nation
(MFN) rule, and the national treatment policy. Both are embedded in the main
WTO rules on goods, services, and intellectual property, but their precise scope
and nature differ across these areas. The MFN rule requires that a WTO member
must apply the same conditions on all trade with other WTO members, i.e. a
WTO member has to grant the most favorable conditions under which it allows
trade in a certain product type to all other WTO members. "Grant someone a
special favor and you have to do the same for all other WTO members." National
treatment means that imported and locally-produced goods should be treated
equally (at least after the foreign goods have entered the market) and was
introduced to tackle non-tariff barriers to trade (e.g. technical standards, security
standards et al. discriminating against imported goods).
2. Reciprocity. It reflects both a desire to limit the scope of free-riding that may
arise because of the MFN rule, and a desire to obtain better access to foreign
markets. A related point is that for a nation to negotiate, it is necessary that the
gain from doing so be greater than the gain available from unilateral
liberalization; reciprocal concessions intend to ensure that such gains will
materialize.
3. Binding and enforceable commitments. The tariff commitments made by WTO
members in a multilateral trade negotiation and on accession are enumerated in a
schedule (list) of concessions. These schedules establish "ceiling bindings": a
country can change its bindings, but only after negotiating with its trading
partners, which could mean compensating them for loss of trade. If satisfaction is
not obtained, the complaining country may invoke the WTO dispute settlement
procedures.
4. Transparency. The WTO members are required to publish their trade
regulations, to maintain institutions allowing for the review of administrative
decisions affecting trade, to respond to requests for information by other
members, and to notify changes in trade policies to the WTO. These internal
transparency requirements are supplemented and facilitated by periodic country-
specific reports (trade policy reviews) through the Trade Policy Review
Mechanism (TPRM). The WTO system tries also to improve predictability and
stability, discouraging the use of quotas and other measures used to set limits on
quantities of imports.
5. Safety valves. In specific circumstances, governments are able to restrict trade.
There are three types of provisions in this direction: articles allowing for the use
of trade measures to attain noneconomic objectives; articles aimed at ensuring
"fair competition"; and provisions permitting intervention in trade for economic
reasons. Exceptions to the MFN principle also allow for preferential treatment of
developing countries, regional free trade areas and customs unions.
Voting system
The WTO operates on a one country, one vote system, but actual votes have never been
taken. Decision making is generally by consensus, and relative market size is the primary
source of bargaining power. The advantage of consensus decision-making is that it
encourages efforts to find the most widely acceptable decision. Main disadvantages
include large time requirements and many rounds of negotiation to develop a consensus
decision, and the tendency for final agreements to use ambiguous language on
contentious points that makes future interpretation of treaties difficult.
In reality, WTO negotiations proceed not by consensus of all members, but by a process
of informal negotiations between small groups of countries. Such negotiations are often
called "Green Room" negotiations (after the color of the WTO Director-General's Office
in Geneva), or "Mini-Ministerial", when they occur in other countries. These processes
have been regularly criticized by many of the WTO's developing country members which
are often totally excluded from the negotiations. Richard Harold Steinberg (2002) argues
that although the WTO's consensus governance model provides law-based initial
bargaining, trading rounds close through power-based bargaining favoring Europe and
the United States, and may not lead to Pareto improvement.
Dispute settlement
Dispute settlement is regarded by the WTO as the central pillar of the multilateral trading
system. And as a unique contribution of the stability of global economy.
WTO member has agreed that if they believe fellow members are violating trade rules
they will use the multilateral system of settling disputes instead of taking actions
unilaterally.
The operation of the WTO dispute settlement process involves the DSB Panels, the
appellate body, the WTO sectarian, arbitrators, independent export and several
specialized institutions.
Example:-
WTO on 28th October 2011 issued the report of the panel that had examined china’s
Complaint in case “European-Union Antidumping measures on certain features from
china.
Registrations begin for public observation of appeal in Boeing dispute:-
At the Request of the participants in the dispute “United States –Measures affecting trade
in large civil aircraft. The Division hearing the appeal has decided to authorize public
observation of the oral hearing on 18th October 2011.
Accession and membership
Country wishing to joins submits an application to the general council and has to describe
all aspects of trade and economic policies that have a bearing on WTO agreements.
Application is examined by working party opened to all in tested WTO members.
The working party determines the terms and conditions of entry into the WTO for the
applicant nations.
Final phase-bilateral negotiations between the applicant nations and other member
countries regarding the concession and commitments on tariff level and market access for
goods and services.
After talks working party sends to the ministerial conference on accession package.
Once the general council or the ministerial conference approves of the terms of accession
the applicant‘s parliament must ratify the protocol of accession before it can become a
member.
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.
Agreement on Agriculture (AoA)
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.
General Agreement on Trade in Services (GATS)
The General Agreement on Trade in Services was created to extend the multilateral
trading system to service sector, in the same way the General Agreement on Tariffs
and Trade (GATT) provides such a system for merchandise trade. The Agreement
entered into force in January 1995
Trade-Related Aspects of Intellectual Property Rights Agreement (TRIPs)
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.At the time that negotiation began, over 40 countries in the world
did not grant patent. The trips agreement now requires all WTO members, with few
exactions, to adapt their laws to the minimum standards of pier protecting for
pharmaceutical product.
Sanitary and Phyto-Sanitary (SPS) Agreement
The Agreement on the Application of Sanitary and Phytosanitary Measures- also
known as the SPS Agreement 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 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).
Agreement on Technical Barriers to Trade (TBT)
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".
Multi fiber agreement (MFA)
International trade agreement under which two countries may negotiate quota restrictions
on textile and apparel imports from each other.MFA restrictions are normally prohibited
under world trade organization (WTO) rules band must have been phased out by 2005.
Multi fiber agreement (MFA) this agreement is dismantled with effect from Jan 1,
05 .resulting of removal of QR on the textile exports in several European countries. As a
consequence a huge textile market is opened up for developing countries.
SCOPE OF WTO
Four Basic Rules
1. Protection to Domestic Industry Through Tariffs:
a. The General Agreement on Tariffs and Trade (GATT) covers international trade in
goods. The workings of the GATT agreement are the responsibility of the Council for
Trade in Goods (Goods Council) which is made up of representatives from all WTO
member countries. GATT requires the member countries to protect their domestic
industry/production through tariffs only.
b. It prohibits the use of quantitative restrictions, except in a limited number of situations.
2. Binding of Tariffs: The member countries are urged to
a. Eliminate protection to domestic industry/ production by reducing tariffs and removing
other barriers to trade in multilateral trade negotiations.
b. The reduced tariffs are bound against further increases by listing them in each
country's national schedule.
c. The schedules are an integrated part of the GATT legal system.
3. Most Favored-Nation (MFN) Treatment:
a. The rule lays down the principles of non-discrimination amongst member countries.
b. Tariff and other regulations should be applied to imported or exported goods without
discrimination among countries.
c. Exceptions to the rules i.e., regional arrangements subjected to preferential or duty free
trade agreements, Generalized System of Preferences (GSP) where developed
countries apply preferential or duty free rates to imports from developing countries.
4. National Treatment Rule:
The rule prohibits member countries from discriminating between imported products and
domestically produced like goods in the matter of internal taxes and in the application of
internal regulations.
FUNCTIONS OF WTO:
WTO shall facilitate the implementation, administration and operation of the
plurilateral trade agreement.WTO shall proved a forum for the negotiations and its
members and concerning their multilateral trade relation.wto shall administer the
understanding on rules and procedures governing the settlement of disputes.WTO
Shall administer the trade policy review mechanism and WTO shall cooperates as
appropriate with IMF and IBRD and with the affiliated agencies.
WTO administers the 28 agreements contained in final act and the no. of the
plurilateral agreements and government’s procurements through various councils
and committee. Its oversees the implementation of issues related to tariffs cut and
nontariff measure and agreed to in the trade negotiations. It examines the trade
regimes of the individual member countries,
WTO provided dispute settlement courts and panel. It acts as management
consultant for world trade. It provide technical cooperation and training, it can be
used as forum for the continuous negotiations.
It cooperates with the international institution like IMF IBRS etc for maki9ng
global economic policies and it oversees the national trade policies of the member
governments. The goal behind these functions is set out in preamble to Marrakesh
agreement these include:
Raising standards of living
Ensuring full employment
Ensuring large and steadily growing realm income and demand and
Expanding the production & trade in goods and services.
ROLE OF WTO:
WTO not only provide a platform for healthy trade in goods and services but also
acts as international body involved in peace making process and focusing on other
crucial areas like health care, education , unemployment, and upliftment of the
underdeveloped and developing countries while sustaining the growth of the
developed nations like US, Russia etc .
WTO helps member states in various ways and this enables them to reap benefits
such as:
Help promote peace within nations : peace is partly an outcome of two of the most
fundamental principle of the trading system: helping trade flow smoothly and
providing countries with a constructive and fair outlet for dealing with disputes
over trade issues. Peace creates international confidence and cooperation that the
WTO creates and reinforces.
Disputes are handedly constructively : As trade expands in volume, in the numbers if
the products traded in no. of countries and the company trading, there is greater
chance that disputes will arise. The WTO help resolves theses disputes peacefully
and costrcutively.if this cud is left to the member states, the disputes may lead to
serious conflicts, but the lot of trade tension is reduced by organization such as
WTO.
Rules make life easier for all: WTO system is based on rules rather than power and this
makes life easier for all trading nations. WTO reduces some inequalities giving smaller
countries more voice, and at the same time freeing the major powers from the complexity
of having to negotiate trade agreements with each of the member states.
Free trade cuts the cost of living: Protectionism is expensive, it raises prices, and WTO
lowers trade barriers through negotiation and applies the principle of non-discrimination.
The result is reduced costs of production (because imports used in production are
cheaper) and reduced prices of finished goods and services, and ultimately a lower cost of
living.
It provides more choice of products and qualities: It gives consumer more choice and
a broader range of qualities to choose from.
Trade raises income: Through WTO trade barriers are lowered and this increases
imports and exports thus earning the country foreign exchange thus raising the country's
income.
Trade stimulates economic growth: With upward trend economic growth, jobs can be
created and this can be enhanced by WTO through careful policy making and powers of
freer trade.
Basic principles make life more efficient: The basic principles make the system
economically more efficient and they cut costs. Many benefits of the trading system are
as a result of essential principle at the heart of the WTO system and they make life
simpler for the enterprises directly involved in international trade and for the producers of
goods/services. Such principles include; non-discrimination, transparency, increased
certainty about trading conditions etc. together they make trading simpler, cutting
company costs and increasing confidence in the future and this in turn means more job
opportunities and better goods and services for consumers.
Governments are shielded from lobbying: WTO system shields the government from
narrow interest. Government is better placed to defend themselves against lobbying from
narrow interest groups by focusing on trade-offs that are made in the interests of
everyone in the economy.
The system encourages good governance: The WTO system encourages good
government. The WTO rules discourage a range of unwise policies and the commitment
made to liberalize a sector of trade becomes difficult to reverse. These rules reduce
opportunities for corruption.
LAND MARKS OF WTO
In the year 2000 for the first time, combined output of emerging economies accounted for
more than half of world GDP (in PPP) with India and china alone accounting for nearly
1/4th.The share of world exports of the emerging economies was 43% against a mere 20
% in 1970.They consumed over half of the world’s energy. The hold 70% of world’s
foreign exchange reserves.
The total ,merchandise goods exports of India have increased from US $ 26.33 Billion in
1994-95 to US $ 102.7 billion in 2005-06 (provisional) whereas total merchandise
imports (excluding petroleum products) grew from US$ 22.72 billion to US$ 105.1
billion ( provisional) during the same period. The export of pharmaceutical products has
increased from over US$ 854.51 million in 1999-2000 and to US$ 2444.06 million in
2005 -06.similarliy, India’s total commercial trade increase from US $14.06 billion in
1994 to US$ 80.58 billion.
WTO AND ENVIRONMENT
TRIPS: PATENTS AND ENVIRONMENT
Members may exclude from patentability inventions, the prevention of which within
their territory is necessary to protect, amongst the objectives, human, animals or
plant life or health or avoid serious prejudice to the environment. Also excluded
from patentability: plants and animals other than microorganisms, as well as a
essentially biological process for production of plants and animals (for ethical
purposes) Members must provide for protection for the plant varieties either by
patents or by effective sul genesis system or combination of two (for purpose of bio-
diversity).
The WTO has no specific agreement dealing with the environment. However, the WTO
agreements confirm governments’ right to protect the environment, provided certain
conditions are met, and a number of them include provisions dealing with environmental
concerns. The objectives of sustainable development and environmental protection are
important enough to be stated in the preamble to the Agreement Establishing WTO.
At the end of Uruguay round 1994 trade ministers from participating countries decided to
begin a comprehensive work programmed on trade and environment in the WTO. They
created a trade and environment committee. This has environmental and sustainable
development issue into the main stream of WTO work. The 2001 Doha ministerial
conference kicked off negotiations in some aspects of the subject. The committee broad
based responsibility. The committee work is based on two important principles.
WTO is not an environmental agency .its members do not want it to intervene in national
and international environmental policies or to set environmental standards’. The
committee work progress focused on ten areas. it agenda is driven by proposal by
individual WTO members. On issue of importance to them. The following section
outlines some of the issue, and what the committee has concluded so far. The WTO’s
committee say the most effective way to deal with international environmental problems
is through the environmental agreement include helping countries acquire
environmentally friendly technology giving them financial assistance , provide training
etc.
A WTO DISPUTE: The shrimp turtle case:
This was a case brought by India Malaysia Pakistan and Thailand against the US. The
official title is “united states” – import prohibition of certain shrimp and shrimp
products”, the official WTO case numbers are 58 and 61.
What was all that about?
Sea turtles have been adversely by human activity either directly or indirectly.
In early 1997, India, Malaysia, Pakistan and Thailand brought a joint complaint against a
ban imposed by the US on the importation of certain shrimp and shrimp products. The
protection of sea turtles was at heart of the ban.
In the practice, Countries that had any the five species of sea turtles within their
jurisdiction and harvested shrimp harvested shrimp with mechanical means, had to
impose on their fishermen requirements comparable to those borne by US shrimpers if
they wanted to be certified to export shrimp products to the US.
The ruling
In its report, the appellate body made clear that under WTO rules countries have the right
to take action to protect the environment. The WTO does not have to allow them this
right.
The US lost the case not because it sought to protect the environment but because it
discriminated between the WTO members.
A GATT dispute tune dolphins dispute
This case still attracts a lot of attention because of its implications for environmental
disputes. It was handled under the old GATT dispute settlements procedure.
ECO labeling good: if it doesn’t discriminate
For the WTO the key point is that labeling requirements and practices should not
discriminate either between trading partners (most favored nation) should apply) or
between domestically produced goods or services and imports.
Transparency: information without too much paperwork
WTO members should provide as much information as
possible about the environment policies they have
adopted or actions they may take when these can have a
significant impact on trade.
WTO AND POVERTY
A new WTO Secretariat study published today (19 June) finds that trade liberalization
helps poor countries to catch up with rich ones and that this faster economic growth helps
to alleviate poverty. WTO Director-General Mike Moore said: “This report confirms that
although trade alone may not be enough to eradicate poverty, it is essential if poor people
are to have any hope of a brighter future. For example, 30 years ago, South Korea was as
poor as Ghana. Today, thanks to trade led growth, it is as rich as Portugal “
Extreme poverty is a huge problem. 1.2 billion People survive on less than a
dollar a day. A further 1.6 billion, more than a quarter of the world's population,
make do with one to two dollars a day.
To alleviate poverty, developing economies need to grow faster, and the poor
need to benefit from this growth. Trade can play an important part in reducing
poverty, because it boosts economic growth and the poor tend to benefit from that
faster growth.
The study finds that, in general, living standards in developing countries are not
catching up with those in developed countries. But some developing countries are
catching up. What distinguishes them is their openness to trade. The countries that
are catching up with rich ones are those that are open to trade; and the more open
they are, the faster they are converging.
The study also finds that poor people within a country generally gain from trade
liberalization. It concludes that "trade liberalization is generally a strongly
positive contributor to poverty alleviation—it allows people to exploit their
productive potential, assists economic growth, curtails arbitrary policy
interventions and helps to insulate against shocks". This concurs with a new
World Bank study (2) which, using data from 80 countries over four decades,
confirms that openness boosts economic growth and that the incomes of the poor
rise one-for-one with overall growth.
The WTO study acknowledges that some people do lose in the short run from
trade liberalization. Some are well-off, others not. The report argues that the
plight of the losers should not be ignored, but that the right way to alleviate their
hardship is through social safety nets and job retraining rather than by abandoning
reforms that benefit most people.
WTO AND AGRICULTURE
The Agreement on Agriculture started with effect from January 1, 1995. The developed
countries would complete their reduction commitments within 6 years, i.e., by the year
2000, whereas the commitments of the developing countries would be completed within
10 years, i.e., by the year 2004.
The products, which are included within the purview of this agreement, are what are
normally considered as part of agriculture except that it excludes fishery and forestry
products as well as rubber, jute, sisal, abaca and coir.
SAILENT FEATURES
The WTO Agreement on Agriculture contains provisions in 3 broad areas.
Market Access
This includes tariffication, tariff reduction and access opportunities. Tariffication means
that all non-tariff barriers such as quotas, variable levies, minimum import prices,
discretionary licensing, state trading measures, voluntary restraint agreements etc. need to
be abolished and converted into an equivalent tariff. Ordinary tariffs including those
resulting from their tariffication are to be reduced by an average of 36% with minimum
rate of reduction of 15% for each tariff item over a 6 year period. Developing countries
are required to reduce tariffs by 24% in 10 years. Developing countries as were
maintaining Quantitative Restrictions due to balance of payment problems were allowed
to offer ceiling bindings instead of tariffication.
Special safeguard provision allows the imposition of additional duties.
It has also been stipulated that minimum access equal to 3% of domestic consumption in
1986-88 will have to be established for the year 1995 rising to 5% at end of the
implementation period.
Domestic support
For domestic support policies, subject to reduction commitments, the total support given
in 1986-88, measured by the total Aggregate Measurement of Support (AMS) should be
reduced by 20% in developed countries (13.3% in developing countries). Policies which
amount to domestic support both under the product specific and non-product specific
categories at less than 5% of the value of production for developed countries and less
than 10% for developing countries are also excluded from any reduction commitments.
Polices which have no or at most minimal trade distorting effects on production are
excluded from any reduction commitments (Green Box-Annex 2 of the Agreement on
Agriculture. The list of exempted green box policies includes such policies which provide
services or benefits to agriculture or the rural community, public stock holding for food
security purposes, domestic food aid and certain de-coupled payments to producers
including direct payments to production limiting program me, provided certain conditions
are met.
Special and Differential Treatment provisions are also available for developing country
members. Developing countries are permitted untargeted subsidized food distribution to
meet requirements of the urban and rural poor. Also excluded for developing countries
are investment subsidies that are generally available to agriculture and agricultural input
subsidies generally available to low income and resource poor farmers in these countries.
Export Subsidies
The Agreement contains provisions regarding member's commitment to reduce Export
Subsidies. Developed countries are required to reduce their export subsidy expenditure by
36% and volume by 21% in 6 years, in equal installment (from 1986-1990 levels). For
developing countries the percentage cuts are 24% and 14% respectively in equal annual
installment over 10 years. The Agreement also specifies that for products not subject to
export subsidy reduction commitments, no such subsidies can be granted in the future.
Criticism in terms of unaddressed issues by WTO.
In order not to discredit itself, globalizations would have to squarely address
sustainable development and poverty reduction. There must be an attempt to link
thee strategies of development to something more fundamentals in particular .the
ends of economic and social development.
The international trade rules are underpinned by an insufficient appreciation of the
adverse impact of rapid liberalization.., if it doesn’t pay adequate attention to the
need to reduce asset and income in equalities. Without substantial investment in the
capacity to supply and equally important , a guaranteed safety net against falling
prices and import surges , sudden liberalization will expose the constituents to
unbearable risk.
India and WTO
India is a founder member of general agreements on tariffs and trade GATT 1947 and its
successor the world trade organization WTO which came into effect on 1.1.95 after the
conclusion Uruguay round of multilateral trade negotiations.
India participation in an increasingly rule based system in the governance of international
trade is to ensure more stability and predictability , which ultimately lead to more trade
and prosperity for itself and 153 other nations which now comprise WTO. India
automatically avails national treatment for its export to all WTO members.
India’s ranking in leading exporters and importer in world merchandise trade till 2007 is
26 & in leading exporters and importer in world’s commercial services 2007 are 9
This fourth trade policy review of India has greatly improved our understanding of
India’s trade related polices and the challenges it faces in sustaining and indeed
improving its ecomic growth. Members all agreed that India; ecomic performance has
been impressive.
BENEFITS TO INDIA
The GATT Secretariat estimated that largest increase in the level of merchandise trade in
goods will be in the area of clothing, agriculture, fishery and processed foods. India
textile and clothing exports will increase due to the phasing out of MFA by 2005.
The reduction in agricultural subsidies and barriers to export of the agricultural products,
agricultural exports from India will increase.
Multilateral rules and disciples related to anti-dumping subsidies and countervailing
measures, safeguards & disputes settlement machinery will ensure greater predictability
of international trade.
It provides Market access to a number of developing countries without trade
discrimination.
DISADVANTAGES TO INDIA
Trips agreement went against the Indian patents act 1970.
Introduction of products patents in India lead to hike in drug prices by the MNCs. hence
the poor will left with no generic option.
Extension of intellectual property right to agriculture has negative effect on India. Indian
research institutions will be unable to compete financially with MNCs will be denied
access to patented genetic material.
Application to TRIMS agreement undermines any plan or strategy of self reliant growth
based on local technology.
Service sectors in India are backward compared to the service sectors in developed
countries .hence inclusion of trade in services is detrimental to interest of India.
The MFN clause proved to be detrimental to India’s interest & provided growth for
Chinese invasion in Indian market through dumping.
BIBLIOGRAPHY
http://www.iisd.org/trade/handbook/toc.htm
http://en.wikipedia.org/wiki/Agreement_on_Trade-
Related_Aspects_of_Intellectual_Property_Rights
http://en.wikipedia.org/wiki/Agreement_on_Agriculture
http://www.slideshare.net/charudatta/wto-and-indian-agriculture
http://www.wto.org/english/tratop_e/envir_e/edis00_e.htm
http://wiki.answers.com/Q/Advantages_and_disadvantages_of_wto
http://www.rediff.com/money/2005/dec/12wto2.htm
www.wto.org