WTO & GATT

Presented by-Sandeep singh

Sandeep kumarSatya Rawat

Shachi Sharma

Back ground1930 DEPRESSION-international trade was badly

affectedRestrictions-safegaurd their interestOct 30 1947,23 countries at Geneva signed an

agreement-GATTFollowing World War II, the victor nations sought to

create institutions that would eliminate the causes of war.

Their principles were to resolve or prevent war through the United Nations and to eliminate the economic causes of war by establishing three international economic

institutions.

Objectives of GATT

•To provide equal opportunities to all countries in terms of trade in international market

• Increase effective demand for real income growth goods

•Minimize tariffs and other restrictions on trade

•Provide amicable solutions to dispute related to international trade

•Ensure better living standard

AND•GATT,1947•– Because the ITO was stillborn the provisional agreement for the ITO, the General

Agreement on Tariffs and Trade (GATT) became the agreement and the organization for establishing and enforcing, through dispute settlement, the

international trade rules.•– In 1995 this agreement on trade in goods became the World Trade Organization

The predecessor to the WTO, GATT( General agreement on trades & tariff began in 1947 with only 23 members; today it has 146 members, comprising approximately 97 percent of world trade.

WTO , World Trade Organization was established in 1995 with its origins in the Bretton Woods Conference at the end of World War II.

The creation of a new international monetary system that would support postwar reconstruction, economic stability, and peace.

Two of the most important international economic institutions of the postwar period: the International Monetary Fund (IMF) and the International Bank for Reconstructionand Development (the World Bank) was established.

INTRODUCTION OF WTO

FUNCTIONS OF WTO

The WTO agreements cover goods, services and intellectual property.

They spell out the principles of liberalization, and the permitted exceptions.

They include individual countries’ commitments to lower customs tariffs and other trade barriers, and to open and keep open services markets.

They set procedures for settling disputes. They prescribe special treatment for developing

countries. They require governments to make their trade policies

transparent by notifying the WTO about laws in force and measures adopted, and through regular reports by the secretariat on countries’ trade policies

Timeline of GATT and the WTO

1944: At the Bretton Woods Conference, which created the World Bank and International Monetary Fund (IMF), there is talk of a third organization, the International Trade Organization (ITO).

1947: As support for another international organization wanes in the U.S. Congress, the General Agreement on Tariffs and Trade (GATT) is created. The GATT treaty creates a set of rules to govern trade among 23 member countries rather than a formal institution.

1950: Formal U.S. withdrawal from the ITO concept as the U.S. administration abandons efforts to seek congressional ratification of the ITO.

1951–86: Periodic negotiating rounds occur, with occasional discussions of reforms of GATT. In the 1980s,serious problems with dispute resolutions arise.

1986–94: The Uruguay Round, a new round of trade negotiations, is launched. This culminates in a 1994 treaty that establishes the World Trade Organization (WTO).

1995: The WTO is created at the end of the Uruguay Round, replacing GATT.

2003: The WTO consists of 146 members, accounting for approximately 97 percent of world trade.

1.Non-Discrimination.

It has two major components: the most favored nation (MFN) rule, and the national treatment policy. 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

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.

Principles of WTO

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.

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.

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

STRUCTURE OF WTO

WTO has nearly 150 members, around 30 other countries are negotiating members.

WTO’S top level decision making body is the “Ministerial Conference”.

The second level is the “General Council’( normally head by the ambassadors & delegations ).

The General Council also meets the Trade policy Review Body and the ‘Dispute settlement body’

The third level is “The goods council”, “Services Council” & “Intellectual Property Council” , which reports to the General Council.

WTO AGREEMENTS

The agreements are the outcome of negotiations between the members.

The current set of agreements are the result of 1986-1994 Uruguay round of negotiations,which is a revision of GATT.

A non-discriminatory trading system is operated through these agreements, which enlist the rights & obligations of the members.

Following are the various WTO agreements in different sectors:

a. In case of Goodsb. In case of Servicesc. In case of Intellectual property

IN CASE OF GOODS

• GATT was the forum for negotiating lower customs duty rates and other trade barriers, since 1947 to 1994.

• The main objective is emphasis on non discrimination.

• The GATT has become WTO’s umbrella agreement for trade in goods.

• It also deals with sectors such as agriculture and textiles, and with specific issues such as state trading, product standards, subsidies and anti-dumping actions.NOTE:

Nondiscrimination: The policy of treating all of one’s trading partners equally. A country is practicing nondiscrimination if it charges the same tariff on imports of a product (for example, 5 percent on shoes) without regard to where the product is made.

IN CASE OF SERVICES

• This agreement helps the Banks, insurance firms, telecommunications companies, tour operators, hotel chains and transport companies, who wants to do business abroad.

• It helps to enjoy free and fair trade that originally not applied to trade in goods.

IN CASE OF INTELECTUAL PROPERTY:

•WTO agreement deals with intellectual property in terms of amounts invested in ideas and creativity.

•Intellectual property includes copyrights, patents, trademarks

Areas of Uruguay Round

•Tariffs•Non-tariff measures•Tropical product•Textile product•National resource based proudcts•Textile & clothing•Agriculture •GATT –articles•Safeguards

Areas of Uruguay Round

•Multilateral trade agreements & arrangement

•Subsidies•Dispute settlement•Trade related aspects of intellectual

property rights (TRIPs)•TRIMS

MFA• At the General Agreement on Tariffs and Trade (GATT)

Uruguay Round, it was decided to bring the textile trade under the jurisdiction of the World Trade Organization. The Agreement on Textiles and Clothing provided for the gradual dismantling of the quotas that existed under the MFA. This process was completed on 1 January 2005. However, large tariffs remain in place on many textile products.

• Bangladesh was expected to suffer the most from the ending of the MFA, as it was expected to face more competition, particularly from China. However, this was not the case. It turns out that even in the face of other economic giants, Bangladesh’s labor is “cheaper than anywhere else in the world.” While some smaller factories were documented making pay cuts and layoffs, most downsizing was essentially speculative – the orders for goods kept coming even after the MFA expired. In fact, Bangladesh's exports increased in value by about $500 million in 2006.

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