project of wto

8/11/2019 Project of WTO

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INTRODUCTION

Formation January 1, 1995

HeadquartersCentre William Rappard, Geneva, Switzerl

Membership 153 member states

Official languages English, French, Spanish

Director-General Pascal Lamy

Budget 189 million Swiss francs

(approx. 182 millionUSD) in 2009.

Staff 625

The world Trade Organization (WTO) is the only international

organization dealing with theglobal rules of trade between nations.

The WTO has 153 members, representing more than 95% of total

world trade and 30observers, most seeking membership. The WTO is

governed by a ministerial conference,meeting every two years; a general

council, which implements the conference's policy decisionsand is

responsible for day-to-day administration; and a director-general, who is

appointed bythe ministerial conference. The WTO's headquarters is at

the Centre William Rappard, Geneva,Switzerland.

What is the World Trade Organization?


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Simply put: the World Trade Organization (WTO) deals with the

rules of trade betweennations at a global or near-global level. But there

is more to it than that.

There are a number of ways of looking at the WTO. Its an

organization for liberalizingtrade. Its a forum for governments to

negotiate trade agreements. Its a place for them tosettle trade disputes.

It operates a system of trade rules. (But its not Superman, just in

caseanyone thought it could solve or cause all the worlds

problems!)

Essentially, the WTO is a place where member governments go, to

try to sort out the tradeproblems they face with each other. The first step

is to talk. The WTO was born out of negotiations, and everything the

WTO does is the result of negotiations. The bulk of the WTOscurrent

work comes from the 198694 negotiations called the Uruguay Round

and earliernegotiations under the General Agreement on Tariffs and

Trade (GATT). The WTO is currentlyThe WTO is currentlythe host to

new negotiations, under the Doha Development Agenda launched in

2001.


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1. HISTORY

The World Trade Organization came into being in 1995. One of the

youngest of theinternational organizations, the WTO is the successor to

the General Agreement on Tariffs andTrade (GATT) established in the

wake of the Second World War.So while the WTO is still young, the

multilateral trading system that was originally set up underGATT is well

over 50 years old.

The past 50 years have seen an exceptional growth in world trade.

Merchandise exportsgrew on average by 6% annually. Total trade in

2000 was 22-times the level of 1950. GATT andthe WTO have helped to

create a strong and prosperous trading system contributing to

unprecedented growth.

Harry Dexter White (l) and John Maynard Keynes at the Bretton

Woods Conference Botheconomists had been strong advocates of a

liberal international trade environment, andrecommended the

establishment of three institutions: the IMF (fiscal and monetary issues),

theWorld Bank (financial and structural issues), and the ITO

(international economic cooperation).


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The WTO's predecessor, the General Agreement on Tariffs and

Trade (GATT), was establishedafter World War II in the wake of other

new multilateral institutions dedicated to internationaleconomic

cooperation - notably the Bretton Woods institutions known as the World

Bank and the International Monetary Fund. A comparable international

institution for trade, named theInternational Trade Organization was

successfully negotiated. The ITO was to be a UnitedNations specialized

agency and would address not only trade barriers but other issues

indirectlyrelated to trade, including employment, investment, restrictive

business practices, andcommodity agreements. But the ITO treaty was

not approved by the United States and a fewother signatories and never

went into effect.

I. Uruguay Round

During the Doha Round, the US government blamed Brazil and

India for being inflexible, andthe EU for impeding agricultural

imports.[16] The President of Brazil, Luiz Incio Lula da Silva,responded

to the criticisms by arguing that progress would only be achieved if the

richestcountries (especially the US and countries in the EU) make

deeper cuts in their agriculturalsubsidies, and further open their markets

for agricultural goods.


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Well before GATT's 40th anniversary, its members concluded that

the GATT system wasstraining to adapt to a new globalizing world

economy. In response to the problems identified inthe 1982 Ministerial

Declaration (structural deficiencies, spill-over impacts of certain

countries'policies on world trade GATT could not manage etc.), the

eighth GATT round known as theUruguay Round was launched in

September 1986, in Punta del Este, Uruguay. It was thebiggest

negotiating mandate on trade ever agreed: the talks were going to

extend the tradingsystem into several new areas, notably trade in

services and intellectual property, and to reformtrade in the sensitive

sectors of agriculture and textiles; all the original GATT articles were

upfor review.

The Final Act concluding the Uruguay Round and officially

establishing the WTO regime wassigned during the April 1994 ministerial

meeting at Marrakesh, Morocco, and hence is known asthe Marrakesh

Agreement. The GATT still exists as the WTO's umbrella treaty for trade

ingoods, updated as a result of the Uruguay Round negotiations (a

distinction is made betweenGATT 1994, the updated parts of GATT, and

GATT 1947, the original agreement which is stillthe heart of GATT

1994). GATT 1994 is not however the only legally binding


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agreementincluded via the Final Act at Marrakesh; a long list of about 60

agreements, annexes, decisionsand understandings was adopted. The

agreements fall into a structure with six main parts:

the Multilateral Agreements on Trade

in Goods including theGATT 1994 and the Trade Related Investment

Measures

the General Agreement on Trade in Services

the Agreement on Trade-Related

Aspects of Intellectual PropertyRights (TRIPS)\

ws of governments' trade policies (TPRM)

2. PrinciPles of the trading system

The WTO agreements are lengthy and complex because they are

legal texts covering a widerange of activities. They deal with: agriculture,

textiles and clothing, banking,telecommunications, government

purchases, industrial standards and product safety, foodsanitation

regulations, intellectual property, and much more. But a number of

simple,fundamental principles run throughout all of these documents.


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These principles are thefoundation of the multilateral trading system. A

closer look at these principles:

I. Trade without discrimination

1. Most-favored-nation (MFN):

treating other people equally Under the WTOagreements,

countries cannot normally discriminate between their trading partners.

Grantsomeone a special favor (such as a lower customs duty rate for

one of their products) and youhave to do the same for all other WTO

members.This principle is known as most-favored-nation (MFN)

treatment. It is so important that itis the first article of the General

Agreement on Tariffs and Trade (GATT), which governs tradein goods.

2. National treatment:

Treating foreigners and locals equallyImported and

locallyproduced goods should be treated equally at least after the

foreign goods have entered themarket. The same should apply to

foreign and domestic services, and to foreign and localtrademarks,

copyrights and patents. This principle of national treatment (giving

others thesame treatment as ones own nationals) is also found in all the

three main WTO agreements(Article 3 of GATT, Article 17 of GATS and

Article 3 of TRIPS), although once again the principleis handled slightly

differently in each of these.


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II. Freer trade:

gradually, through negotiationLowering trade barriers is one of the

most obvious means of encouraging trade. Thebarriers concerned

include customs duties (or tariffs) and measures such as import bans

orquotas that restrict quantities selectively. From time to time other

issues such as red tape andexchange rate policies have also been

discussed. Since GATTs creation in 194748 there have been eight

rounds of trade negotiations. Aninth round, under the Doha

Development Agenda, is now underway. At first these focused

onlowering tariffs (customs duties) on imported goods. As a result of the

negotiations, by the mid-1990s industrial countries tariff rates on

industrial goods had fallen steadily to less than 4%But by the 1980s, the

negotiations had expanded to cover non-tariff barriers on goods, and

tothe new areas such as services and intellectual property.Opening

markets can be beneficial, but it also requires adjustment. The WTO

agreementsallow countries to introduce changes gradually, through

progressive liberalization. Developingcountries are usually given longer

to fulfill their obligations.

III. Binding and enforceable commitments

The tariff commitments made by WTO members in a multilateral

trade negotiation and onaccession are enumerated in a schedule (list) of

concessions. These schedules establish "ceilingbindings": a country can


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change its bindings, but only after negotiating with its tradingpartners,

which could mean compensating them for loss of trade. If satisfaction is

not obtained,the complaining country may invoke the WTO dispute

settlement procedures.

IV. Transparency

The WTO members are required to publish their trade regulations,

to maintain institutionsallowing for the review of administrative decisions

affecting trade, to respond to requests forinformation by other members,

and to notify changes in trade policies to the WTO. Theseinternal

transparency requirements are supplemented and facilitated by periodic

country-specific reports (trade policy reviews) through the Trade Policy

Review Mechanism (TPRM). TheWTO system tries also to improve

predictability and stability, discouraging the use of quotasand other

measures used to set limits on quantities of imports.

V. 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 attainnoneconomic objectives; articles

aimed at ensuring "fair competition"; and provisions

permittingintervention in trade for economic reasons. Exceptions to the


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MFN principle also allow forpreferential treatment of developing

countries, regional free trade areas and customs unions.

3. WTO AGREEMENTS

The WTOs rules the agreementsare the result of negotiations

between the members. The current set were the outcome of the 1986-94

Uruguay Round negotiations which included amajor revision of the

original General Agreement on Tariffs and Trade (GATT).

GATT is now the WTOs principal rule-book for trade in goods. The

Uruguay Round alsocreated new rules for dealing with trade in services,

relevant aspects of intellectual property,dispute settlement, and trade

policy reviews. The complete set runs to some30,000 pages consisting

of about 30 agreements and separate commitments (called

schedules)made by individual members in specific areas such as lower

customs duty rates and servicesmarket-opening.

The table of contents of The Results of the Uruguay Round of

Multilateral TradeNegotiations: The Legal Texts is a daunting list of

about 60 agreements, annexes, decisionsand understandings. In fact,

the agreements fall into a simple structure with six main parts:

anumbrella agreement (the Agreement Establishing the WTO);

agreements for each of the threebroad areas of trade that the WTO

covers (goods, services and intellectual property); disputesettlement;


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and reviews of governments trade policies.The agreements for the two

largest areas goods and services share a common three-part

outline, even though the detail is sometimes quite different.

They start with broad principles: the General Agreement on

Tariffs and trade (GATT) (forgoods), and the General Agreement on

Trade in Services (GATT) (The third area, Trade-Related Aspects of

Intellectual Property Rights (TRIPS), also falls into this category although

at presentit has no additional parts.)

Then come extra agreements and annexes dealing with the

special requirements of specificsectors or issues.

Finally, there are the detailed and lengthy schedules (or lists) of

commitments made byindividual countries allowing specific foreign

products or service providers access to theirmarkets. For GATT, these

take the form of binding commitments on tariffs for goods in general,and

combinations of tariffs and quotas for some agricultural goods. For

GATS, the commitmentsstate how much access foreign service

providers are allowed for specific sectors, and theyinclude lists of types

of services where individual countries say they are not applying the

most-favored-nation principle of non-discrimination.

A. Tariffs: more bindings and closer to zero


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The bulkiest results of Uruguay Round are the 22,500 pages listing

individual countries commitments on specific categories of goods and

services. These include commitments to cutand bind their customs

duty rates on imports of goods. In some cases, tariffs are being cut

tozero. There is also a significant increase in the number of bound

tariffs duty rates that arecommitted in the WTO and are difficult to

rise.

Developed countries tariff cuts were for the most part phased in

over five years from 1January 1995. The result is a 40% cut in their

tariffs on industrial products, from an average of 6.3% to 3.8%. The

value of imported industrial products that receive duty-free treatment

indeveloped countries will jump from 20% to 44%.

There will also be fewer products charged high duty rates. The

proportion of imports into developed countries from all sources facing

tariffs rates of more than 15% will decline from 7%to 5%. The proportion

of developing country exports facing tariffs above 15% in

industrialcountries will fall from 9% to 5%.

The Uruguay Round package has been improved. On 26 March

1997, 40 countriesaccounting for more than 92% of world trade in

information technology products, agreed toeliminate import duties and

other charges on these products by 2000 (by 2005 in a handful of

cases). As with other tariff commitments, each participating country is


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applying its commitments equally to exports from all WTO members (i.e.

on a most favored - nation basis),even from members that did not make

commitments.

B. Agriculture: fairer markets for farmers

The original GATT did apply to agricultural trade, but it contained

loopholes. For example, it allowed countries to use some non-tariff

measures such as import quotas, and to subsidize. Agricultural trade

became highly distorted, especially with the use of export subsidies

which would not normally have been allowed for industrial products. The

Uruguay Round produced the first multilateral agreement dedicated to

the sector. It was a significant first step towards order, fair competition

and a less distorted sector. It was implemented over a six-year

period(and is still being implemented by developing countries under their

10-year period), that began in 1995. The Uruguay Round agreement

included a commitment to continue the reform through new negotiations.

These were launched in 2000, as required by the Agriculture Agreement.

C. Standards and safety

General Agreement on Tariffs and Trade (GATT) allows

governments to act on trade in order to protect human, animal or plant

life or health, provided they do not discriminate or use this as disguised

protectionism. In addition, there are two specific WTO agreements


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dealing with food safety and animal and plant health and safety and with

product standards in general. Both try to identify how to meet the need

to apply standards and at the same time avoid protectionism in disguise.

These issues are becoming more important as tariff barriers fall some

compare this to seabed rocks appearing when the tide goes down. In

both cases, if a country applies international standards, it is less likely to

be challenged legally in the WTO than if it sets its own standards.

D. Textiles: back in the mainstream

Textiles, like agriculture, were one of the hardest-fought issues in

the WTO, as it was in the former GATT system. It has now completed

fundamental change under a 10-year schedule agreed in the Uruguay

Round. The system of import quotas that dominated the trade since the

early 1960s has now been phased out.

From 1974 until the end of the Uruguay Round, the trade was

governed by the Multi fibre Arrangement (MFA). This was a framework

for bilateral agreements or unilateral actions that established quotas

limiting imports into countries whose domestic industries were facing

serious damage from rapidly increasing imports.

Since 1995, the WTOs Agreement on Textiles and Clothing (ATC)

took over from the Multifibre Arrangement. By 1 January 2005, the

sector was fully integrated into normal GATT rules. In particular, the


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quotas came to an end, and importing countries are no longer able to

discriminate between exporters. The Agreement on Textiles and

Clothing no longer exists: its the only WTO agreement that had self-

destruction built in.

E. Services: rules for growth and investment

Services represent the fastest growing sector of the global

economy and account for two thirds of global output, one third of global

employment and nearly 20% of global trade. When the idea of bringing

rules on services into the multilateral trading system was floated in the

early to mid 1980s, a number of countries were skeptical and even

opposed. They believed such an agreement could undermine

governments ability to pursue national policy objectives and constrain

their regulatory powers. The agreement that was developed, however,

allows ahigh degree of flexibility, both within the framework of rules and

also in terms of the marketaccess commitments.

F. Intellectual property: protection and enforcement

The WTOs Agreement on Trade-Related Aspects of Intellectual

Property Rights (TRIPS),negotiated in the 1986 94 Uruguay Round,

introduced intellectual property rules into themultilateral trading system

for the first time.


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The WTOs TRIPS Agreement is an attempt to narrow the gaps in

the way these rights areprotected around the world, and to bring them

under common international rules. It establishesminimum levels of

protection that each government has to give to the intellectual property

of fellow WTO members. In doing so, it strikes a balance between the

long term benefits andpossible short term costs to society. Society

benefits in the long term when intellectual propertyprotection encourages

creation and invention, especially when the period of protection

expiresand the creations and inventions enter the public domain.

Governments are allowed to reduceany short term costs through various

exceptions.

The agreement covers five broad issues:

How basic principles of the trading system and other international

intellectual propertyagreements should be applied,

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.


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1. How to protect intellectual property:

common ground-rules:The second part of the TRIPS agreement

looks at different kinds of intellectual propertyrights and how to protect

them. The purpose is to ensure that adequate standards of

protectionexist in all member countries. Here the starting point is the

obligations of the main internationalagreements of the World Intellectual

Property Organization (WIPO) that already existed beforethe WTO was

created:

Protection of Literary and Artistic Works (copyright).

Some areas are not covered by these conventions. In some cases,

the standards of protectionprescribed were thought inadequate. So the

TRIPS agreement adds a significant number of newor higher standards.

I. Copyright :

The TRIPS agreement ensures that computer programs will be

protected asliterary works under the Berne Convention and outlines how

databases should be protected. Italso expands international copyright

rules to cover rental rights. Authors of computer programsand producers

of sound recordings must have the right to prohibit the commercial rental

of their works to the public. A similar exclusive right applies to films


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where commercial rental hasled to widespread copying, affecting

copyright owners potential earnings from their films.The agreementsays

performers must also have the right to prevent unauthorized

recording,reproduction and broadcast of live performances (bootlegging)

for no less than 50 years.Producers of sound recordings must have the

right to prevent the unauthorized reproduction of recordings for a period

of 50 years.

II. Trademarks :

The agreement defines what types of signs must be eligible

forprotection as trademarks, and what the minimum rights conferred on

their owners must be. Itsays that service marks must be protected in the

same way as trademarks used for goods.Marks that have become well-

known in a particular country enjoy additional protection.

III. Geographical indications :

A place name is sometimes used to identify a product.This

geographical indication does not only say where the product was

made. More importantlyit identifies the products special characteristics,

which are the result of the products origins.

Well-known examples include Champagne, Scotch, Tequila,

and Roquefort cheese.Wine and spirits makers are particularly

concerned about the use of place names to identifyproducts, and the


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TRIPS Agreement contains special provisions for these products. But

theissue is also important for other types of goods.

Using the place name when the product was made elsewhere or

when it does not have theusual characteristics can mislead consumers,

and it can lead to unfair competition. The TRIPS Agreement says

countries have to prevent this misuse of place names

IV. Industrial designs :

Under the TRIPS Agreement, industrial designs must be protected

forat least 10 years. Owners of protected designs must be able to

prevent the manufacture,sale or importation of articles bearing or

embodying a design which is a copy of theprotected design.

V. Patents :

The agreement says patent protection must be available for

inventions for at least 20years. Patent protection must be available for

both products and processes, in almost all fieldsof technology.

Governments can refuse to issue a patent for an invention if its

commercialexploitation is prohibited for reasons of public order or

morality. They can also excludediagnostic, therapeutic and surgical

methods, plants and animals (other than microorganisms),and biological

processes for the production of plants or animals (other than

microbiologicalprocesses).


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G. Anti-dumping, subsidies, safeguards: contingencies, etc

Binding tariffs and applying them equally to all trading partners

(most-favored nationtreatment, or MFN) are key to the smooth flow of

trade in goods. The WTO agreements upholdthe principles, but they also

allow exceptions in some circumstances.

Three of these issues are:

Actions taken against dumping (selling at an unfairly low price)

Subsidies and special countervailing duties to offset the

subsidies

Emergency measures to limit imports temporarily, designed to

safeguard domesticindustries.

H. Non-tariff barriers: red tape, etc

A number of agreements deal with various bureaucratic or legal

issues that couldinvolve hindrances to trade

. Import licensing

Rules for the valuation of goods at customs

Preshipment inspection: further checks on imports

Rules of origin: made in ... where?

Investment measures


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4. Functions

Among the various functions of the WTO, these are regarded by

analysts as the mostimportant:

the coveredagreements.

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 globaleconomic 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 throughtechnical cooperation and training. The WTO is

also a center of economic research and analysis:regular assessments of

the global trade picture in its annual publications and research reportson

specific topics are produced by the organization. Finally, the WTO

cooperates closely withthe two other components of the Bretton Woods

system, the IMF and the World Bank.

5. Trade NegoTiaTioNs CommiTTee

The Trade Negotiations Committee (TNC) is the committee that

deals with the current tradetalks round. The chair is WTOs director-


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general. The committee is currently tasked with theDoha Development

Round.

A. Voting system

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

colour of the WTO Director-General's Office in Geneva),or "Mini-

Ministerial", when they occur in other countries. These processes have

been regularlycriticized by many of the WTO's developing country

members which are often totally excludedfrom the negotiations.

B. Members and observers

The WTO has 153 members (almost all of the 123 nations

participating in the UruguayRound signed on at its foundation, and the

rest had to get membership). The 27 states of theEuropean Union are

represented also as the European Communities. WTO members do

nothave to be full sovereign nation-members. Instead, they must be a

customs territory with fullautonomy in the conduct of their external

commercial relations. Thus Hong Kong (as "HongKong, China" since

1997) became a GATT contracting party, and the Republic of China

(ROC)(commonly known as Taiwan, whose sovereignty has been

disputed by the People's Republic of China) acceded to the WTO in


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2002 under the name of "Separate Customs Territory of Taiwan,Penghu,

Kinmen and Matsu" (Chinese Taipei). A number of non-members (30)

are observers atWTO proceedings and are currently negotiating their

membership. As observers, Iran, Iraq andRussia are not yet members.

With the exception of the Holy See, observers must startaccession

negotiations within five years of becoming observers. Some

internationalintergovernmental organizations are also granted observer

status to WTO bodies. 14 states and2 territories so far have no official

interaction with the WTO.

C. Ministerial conferences

a. The inaugural ministerial conferencewas held in Singapore in

1996.Disagreements between largely developed and developing

economies emergedduring this conference over four issues initiated by

this conference, which led tothem being collectively referred to as the

"Singapore issues".

b. The second ministerial conferenceWas held in Geneva in Switzerland.

c. The third conferencein Seattle, Washington ended in failure, with

massivedemonstrations and police and National Guard crowd control

efforts drawingworldwide attention.

d. Fourth ministerial conferencewas held in Doha in Persian Gulf nation

of Qatar. The Doha Development Round was launched at the


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conference. Theconference also approved the joining of China, which

became the 143rd memberto join.

e. The Fifth ministerial conferencewas held in Cancn, Mexico, aiming

atforging agreement on the Doha round. An alliance of 22 southern

states, the G20developing nations (led by India, China and Brazil),

resisted demands from theNorth for agreements on the so-called

"Singapore issues" and called for an endto agricultural subsidies within

the EU and the US. The talks broke down withoutprogress.

f. The sixth WTO ministerial conferencewas held in Hong Kong from

13December 18 December 2005. It was considered vital if the four-

year-old DohaDevelopment Agenda negotiations were to move forward

sufficiently to concludethe round in 2006. In this meeting, countries

agreed to phase out all theiragricultural export subsidies by the end of

2013, and terminate any cotton exportsubsidies by the end of 2006.

Further concessions to developing countries included an agreement to

introduce duty free, tariff free access for goods fromthe Least Developed

Countries, following the Everything But Arms initiative of the European

Union but with up to 3% of tariff lines exempted. Other majorissues

were left for further negotiation to be completed by the end of 2010

g. The WTO General Council, on 26 May 2009, agreed to hold aseventh

WTOministerial conferencesession in Geneva from 30 November

December 2009. A statement by chairman Amb. Mario Matus


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acknowledged that the primepurpose 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 beon

transparency and open discussion rather than on small group processes

andinformal negotiating structures"

6. BENEFITS OF THE WTO TRADING SYSTEM

1. The system helps to keep the peace

Peace is partly an outcome of two of the most fundamental

principles of the tradingsystem: helping trade to flow smoothly and

providing countries with a constructive and fairoutlet for dealing with

disputes over trade issues. It is also an outcome of the

internationalconfidence and cooperation that the system creates and

reinforces.

History is littered with examples of trade disputes turning into war.

One of the mostvivid is the trade war of the 1930s when countries

competed to raise trade barriers in order toprotect domestic producers

and retaliate against each others barriers. This worsened the

GreatDepression and eventually played a part in the outbreak of World

War 2.


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Two developments immediately after the Second World War

helped to avoid arepeat of the pre-war trade tensions. In Europe,

international cooperation developed in coal,and in iron and steel.

Globally, the General Agreement on Tariffs and Trade (GATT)

wascreated.

The GATT/WTO system is an important confidence builder. The

trade wars in the1930s are proof of how protectionism can easily plunge

countries into a situation where no onewins and everyone loses.

Confidence is the key to avoiding that kind of no-win scenario.

Whengovernments are confident that others will not raise their trade

barriers, they will not betempted to do the same. They will also be in a

much better frame of mind to cooperate witheach other.

The WTO trading system plays a vital role in creating and

reinforcing that confidence.Particularly important are negotiations that

lead to agreement by consensus and a focus on abiding by the rules.

2. The system allows disputes to be handled constructively

There could be a down side to trade liberalization and expansion.

More trade meansmore opportunities for disputes to arise. Left to

themselves, those disputes could lead to seriousconflict. But in reality, a

lot of international trade tension is reduced because countries can turnto

organizations, in particular the WTO, to settle their trade disputes.


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When they bring disputes to the WTO, the WTOs procedure

focuses their attentionon the rules. Once a ruling has been made,

countries concentrate on trying to comply with therules, and perhaps

later renegotiating the rulesnot on declaring war on each other.

Around 300 disputes have been brought to the WTO since it was

set up in 1995.Without a means of tackling these constructively and

harmoniously, some could have led tomore serious political conflict.

3. A system based on rules rather than power Makes life easier for all

Decisions in the WTO are made by consensus. The WTO

agreements werenegotiated by all members, were approved by

consensus and were ratified in all members parliaments. The

agreements apply to everyone. Rich and poor countries alike have an

equalright to challenge each other in the WTOs dispute settlement

procedures.

This makes life easier for all, in several different ways. Smaller

countries can enjoysome increased bargaining power. Without a

multilateral regime such as the WTOs system, themore powerful

countries would be freer to impose their will unilaterally on their smaller

tradingpartners. Smaller countries would have to deal with each of the

major economic powersindividually, and would be much less able to

resist unwanted pressure.


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4. It gives consumers more choice, and a broader range of qualities to

choosefrom

Think also of the things people in other countries can have

because they buy exportsfrom us and elsewhere. Look around and

consider all the things that would disappear if all ourimports were taken

away from us. Imports allow us more choiceboth more goods

andservices to choose from, and a wider range of qualities. Even the

quality of locally-producedgoods can improve because of the

competition from imports.

The wider choice isnt simply a question of consumers buying

foreign finished products.Imports are used as materials, components

and equipment for local production.

This expands the range of final products and services that are

made by domesticproducers, and it increases the range of technologies

they can use. When mobile telephoneequipment became available,

services sprang up even in the countries that did not make

theequipment, for example.

5. Trade raises incomes

The WTOs own estimates for the impact of the 1994 Uruguay

Round trade dealwere between $109 billion and $510 billion added to


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world income (depending on theassumptions of the calculations and

allowing for margins of error).

More recent research has produced similar figures. Economists

estimate thatcutting trade barriers in agriculture, manufacturing and

services by one third would boost theworld economy by $613 billion

equivalent to adding an economy the size of Canada to theworld

economy.

So trade clearly boosts incomes. Trade also poses challenges as

domesticproducers face competition from imports. But the fact that there

is additional income meansthat resources are available for governments

to redistribute the benefits from those who gainthe most.

7. CritiCism

The stated aim of the WTO is to promote free trade and stimulate

economic growth. Criticsargue that free trade leads to a divergence

instead of convergence of income levels within richand poor countries

(the rich get richer and the poor get poorer). Martin Khor, Director of

theThird World Network, argues that the WTO does not manage the

global economy impartially,but in its operation has a systematic bias

toward rich countries and multinational corporations,harming smaller

countries which have less negotiation power. He argues that

developingcountries have not benefited from the WTO agreements of


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the Uruguay Round because, amongother reasons, market access in

industry has not improved; these countries have had no gainsyet from

the phasing-out of textile quotas; non-tariff barriers such as anti-dumping

measureshave increased; and domestic support and export subsidies for

agricultural products in the richcountries remain high. Jagdish Bhagwati

asserts, however, that there is greater tariff protectionon manufacturers

in the poor countries, which are also overtaking the rich nations in

thenumber of anti-dumping filings.

Other critics claim that the issues of labor relations and

environment are steadfastlyignored. Steve Charnovitz, former director of

the Global Environment and Trade Study (GETS),believes that the WTO

"should begin to address the link between trade and labor

andenvironmental concerns." Further, labor unions condemn the labor

rights record of developingcountries, arguing that, to the extent the WTO

succeeds at promoting globalization, theenvironment and labor rights

suffer in equal measure. On the other side, Khor responds that "if

environment and labor were to enter the WTO system [...] it would be

conceptually difficult toargue why other social and cultural issues should

also not enter." Bhagwati is also criticaltowards "rich-country lobbies

seeking on imposing their unrelated agendas on tradeagreements."

Therefore, both Bhagwati and Arvind Panagariya of Columbia University

havecriticized the introduction of TRIPs into the WTO framework, fearing


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that such non-tradeagendas might overwhelm the organization's

function. Other critics have characterized thedecision making in the

WTO as complicated, ineffective, unrepresentative and non-

inclusive,and they have proposed the establishment of a small, informal

steering committee (a"consultative board") that can be delegated

responsibility for developing consensus on tradeissues among the

member countries. The Third World Network has called the WTO "the

mostnon-transparent of international organizations", because "the vast

majority of developingcountries have very little real say in the WTO

system"; the Network stresses that "civil societygroups and institutions

must be given genuine opportunities to express their views and

toinfluence the outcome of policies and decisions." Certain non-

governmental organizations, suchas the World Federalist Movement,

argue that democratic participation in the WTO could beenhanced

through the creation of a parliamentary assembly, although other

analysts havecharacterized this proposal as ineffective.

8. WTO IN CONTEXT OF INDIA

1. Probable advantages

A. Increment in export:

Due to be a member of WTO India is now connected withother

member countries. It is expected that as result of being the member of


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WTO, Indiancontribution in world trade was increased to 5170 million $

during 2002-03, rather than 2633million $ during 1994-95. Indias

contribution in world export was 0.61% in 1995 whichincreased to 0.86%

in 2001.

B. Increment in export of textiles:

From 1974 to 1995(formation of WTO) textileswas operated by

Multifibre Arrangement. There was a quota system in this field which has

beenabolished by 1995 and textiles is now operated by Agreements on

Textiles and Clothing to helpexport of clothes and textiles in India.

C. Advantages for services:

According to this agreement Developed Countries will openthe

service firms i.e. banks, transports, hotels, etc. in compensation they

present a market tosell Indian products.

D. Availability of foreign products:

GATT agreements provide availability of foreignproducts in Indian

markets. This helps in buying several foreign products easily and

cheaply.

E. Job Chances:

Increment in Indian trade, chances of job has been increased to a

greatextent.


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C. Loss from General Agreement on Trade in Services(GATS):

GATS is favorable fordeveloped countries because it gives

subsidies to those services whose advantage go tothe Developed

Countries. Our Banking, Insurance Transports, Education and Hotels

etc.cant compete with foreign companies. So our domestic Institutions

will find an endand our economical freedom will be lost.

D. Problems in construction of economical policy:

Due to WTO, Developing Countrieshave to face problems in

construction of free economy and non economic policies asthey have to

open their markets for Developed countries.

E. Economical torture:

Freedom to multinational companies for invests in India, willtorture

Indian economy. According to GATT agreement MNCs and National

Companiesare equal. This agreement will create problem of

conservation of industries in ourcountry.

F. Environmental Issues:

Developed Countries are creating problems to

DevelopingCountries about environmental issues. These countries are

trying to ban the productswhich affect environment and wants

compensation of these damages from DevelopingCountries. The critics


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say that the 3/4thpart of environmental damages are due toDeveloped

Countries. Developed Countries are creating pressure on us to use new

ecofriendly technologies.

For example:When Indian skirts became famous in U.S.A., they

started to spreadrumors about skirts, they are made of inflammable

materials and they banned it. Butall the rumors proved wrong and ban

was removed.

9. ConClusion

At the end we can say that WTO agreements are totally failed. The

decision of improvement will be successful when taken by self either it is

for person or for country. But ourimprovement decisions are those which

are imposed on us by foreign powers on the name of world trade

agreement. They are interested only that the doors of developing

markets open forthem, they are not interested in improvement of peoples

of country, improvement of agricultural development and in making a

strong base for whole economy.These hopeless results are due to lesser

competition power. Developed Countriesi.e.U.S.A. have latest

technologies of information and latest instruments and due to these

causeswe cant compete with them where half of the population is

illiterate and believing on oldtraditions either it is for industries or for

agriculture.Only those agreements will become successful which take

place between equal powers.So a justified agreement cant take place


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between richer and poorer and cant apply thosethings. The total export

of India is 0.6% of world export. This is a topic of concern, who wantto

listen that country whose total contribution in world income and world

trade are only 1.2%and 0.6%.

STRUCTURE

Around 30 others are negotiating membership.

consensus.Amajority vote is also possible but it has never been used in

the WTO, and was extremely rare under theWTOs predecessor, the

GeneralAgreement on Tariffs andTrade (GATT).

-making body is the

MinisterialConferencewhich meets at least once every two years.

bassadors andheads of

delegation in Geneva, but sometimes officials sent frommembers

capitals) which meets several times a year in the Genevaheadquarters.

The General Council also meets as theTrade PolicyReview Body and

the Dispute Settlement Body.


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next level, theGoods Council, Services Council andIntellectual

Property (TRIPS) Councilreport to the GeneralCouncil.

groupsandworkingpartiesdeal with the individual agreements and other

areas such as the environment, development, membership applications

andregional trade agreements.

WTO's main activities are:

-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 (e.g. antidumping, subsidies, product

standards, etc.)

-administering and monitoring the application of the WTO's agreed rules

for trade in goods, trade in services, and trade-related intellectual

property rights

-monitoring and reviewing the trade policies of our members, as well

asensuring transparency of regional and bilateral trade agreements

-settling disputes among our members regarding the interpretation

andapplication of the agreementsbuilding capacity of developing

country government officials in internationaltrade matters


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-assisting the process of accession of some 30 countries who are not

yetmembers of the organization

-conducting economic research and collecting and disseminating trade

datain support of the WTO's other main activitiesexplaining to and

educating the public about the WTO, its mission and itsactivities.

rounds, held under GATT. The first roundsdealt mainly with tariff

reductions but later negotiationsincluded other areas such as anti-

dumping and non-tariff measures. The last round the 1986-94 Uruguay

Round led tothe WTOs creation.

ntinued after theend of the

Uruguay Round.

services, with 69 governments agreeing towide-ranging liberalization

measures that went beyond thoseagreed in the Uruguay Round.

0 governments successfully concludednegotiations

for tariff-free trade in information technologyproducts, and 70 members

concluded a financial services dealcovering more than 95% of trade in

banking, insurance,securities and financial information.

In 2000, new talks started on agriculture and services. These have

nowbeen incorporated into a broader work programme, the Doha


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Development Agenda (DDA), launched at the fourth WTO

MinisterialConference in Doha, Qatar, in November 2001.

ns and other work on non-

agriculturaltariffs, trade and environment, WTO rules such as anti-

dumping andsubsidies, investment, competition policy, trade

facilitation,transparency in government procurement, intellectual

property, and arange of issues raised by developing countries as

difficulties they facein implementing the present WTO agreements.

negotiationsbetween the members.

-94 Uruguay

Roundnegotiations which included a major revision of the original

General Agreement on Tariffs and Trade (GATT).

-book for trade in goods.

TheUruguay Round also created new rules for dealing with trade

inservices, relevant aspects of intellectual property, dispute

settlement,and trade policy reviews. The complete set runs to some

30,000 pagesconsisting of about 30 agreements and separate

commitments (calledschedules) made by individual members in specific

areas such aslower customs duty rates and services market-opening.

MISSIONSTATEMENT OF WTO


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The World Trade Organization - the WTO - is the international

organization whoseprimary purpose is to open trade for thebenefit of all.

project of wto

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