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Dr. Manohar Pandit

• International Institutions - World Bank, IMF, UNCTAD, WTO, Customs Union, Common Markets, Free Trade Zones, Economic Communities; Trading Partners - Bilateral Trade Agreements, Commodity Agreements and GSP

Dr. Manohar Pandit

Institutions in the World Economy • Protection is harmful to Economic Growth and Consumer Welfare • Bretton Woods Conference 1944 suggested formation of IMF, World Bank and ITO

Dr. Manohar Pandit

• GATT in 1948 instead of ITO, started with 23 countries had 128 members in 1995 • Uruguay Round in 1995 GATT  WTO (Similar to ITO) • WTO - More powerful that GATT • India founder member of IMF, World Bank, GATT and ITO
Dr. Manohar Pandit

• GATT sought substantial reduction in tariff and other barriers to trade and to eliminate discriminatory treatment in international commerce
• Eight rounds of negotiations had taken place during five decades of its existence

Dr. Manohar Pandit

Manohar Pandit .Guided International Trade System Objectives: • Changes in Tariffs or Commercial Policies should not take place without consultations with other parties to the agreements • Countries should work towards reductions in Tariffs and Trade Barriers Dr.INTERNATIONAL BUSINESS GATT .

Manohar Pandit . should not raise barriers Dr.INTERNATIONAL BUSINESS GATT adapted the following principles for the objectives • Non discrimination • MFN Status to all • Free Trade Areas or Custom Unions can be formed but should not restrict other nations.

INTERNATIONAL BUSINESS • Prohibition of Quantitative Restrictions • However restrictions can be applied by Developing Countries • By countries facing BOP problems • Agriculture and Fishery Products Dr. Manohar Pandit .

INTERNATIONAL BUSINESS • Consultations between the member countries to resolve the problems • Meeting every four years • UR lasted for seven years GATT helped developed nations more than developing nations. Manohar Pandit . • Eight rounds of negotiations during five decades of its existence Dr.

Manohar Pandit .INTERNATIONAL BUSINESS Earlier GATT rounds concentrated on further reductions in tariffs The Kennedy Round in the midsixties brought about antidumping Agreement and a section on development The Tokyo Round during the seventies was the first major attempt to tackle NTB and to improve the system Dr.

Manohar Pandit . Different periods for different countries Dr.INTERNATIONAL BUSINESS All the original GATT articles were reviewed in UR Officially establishing the WTO regime was signed during the April 1994 ministerial meeting at Morocco UR implementation in 10 years.

INTERNATIONAL BUSINESS Three Basic Issues Taken up by UR • Reducing specific trade barriers and improving market access Strengthening GATT principles of • TRIPs (Trade Related Intellectual Property Rights) • TRIMs (Trade Related Investment Measures) Dr. Manohar Pandit .

Manohar Pandit .INTERNATIONAL BUSINESS World Trade Organization • 22. 1995 by 128 countries • 159 members as of Aug 2013 • WTO – Single Institutional frame work encompassing GATT and results of UR Dr.000 page document signed on Jan 1st.

administration & operation of Plurilateral Trade Agreements Dr. Manohar Pandit .INTERNATIONAL BUSINESS Specific Functions • Facilitate implementation. and further the objectives of Multilateral Trade Agreement • Provide framework for implementation. administration & operation.

INTERNATIONAL BUSINESS • Provide forum for negotiations among members concerning their multilateral trade relations • Administer understanding on Rules and Procedures governing settlements of disputes • Administer trade review mechanism Dr. Manohar Pandit .

Services. TRIPS • Act as dispute settlement body • To serve as Trade Review Mechanism Dr.INTERNATIONAL BUSINESS Main Functions of WTO • Supervise on regular basis operations related to declarations related to Goods. Manohar Pandit .

Manohar Pandit .INTERNATIONAL BUSINESS • Establish Goods Council. Services Council and TRIPS Council as subsidiary bodies • Monitor National Trade Policies • Cooperate with IMF and other bodies for achieving greater coherence in Global Economic Policy making Dr.

Qatar in November 2001 • An ambitious effort to make globalization more inclusive and help the world's poor Dr.INTERNATIONAL BUSINESS Doha Round • Started in 2001 today. Manohar Pandit . and continues • The WTO launched DDA at the Fourth Ministerial Conference in Doha.

Manohar Pandit .INTERNATIONAL BUSINESS Agenda comprised both further trade liberalization and new rulemaking The negotiations have been highly contentious and agreement has not been reached Disagreements still continue Dr.

Ministerial Conference General Council Meeting as Dispute Settlement Body General Council General Council Meeting as Trade Policy Review Committee on Trade and Environment Trade and Development Regional Trade Balance of Payments Budget. Finance and Administration Working parties on Accession Working Groups on Relationship between Trade and Investment Interaction between Trade and Competition Policy Transparency in Government Procurement Council for Trade in Goods Committees on Market Access Agriculture Sanitary and Phytosanitary Measures Technical Barriers to Trade Subsidies and Countervailing Measures Anti-Dumping Practices Customs Valuation Rules of Origin Import Licensing Trade Related Investment Measures Safeguards Textile Monitoring Body Working Party Council for Trade Related Aspects of Intellectual Property Rights Council for Trade in Services Plurilaterals Trade in Civil Aircraft Committee Government Procurement Committee Trade Negotiations Committee Dr. Manohar Pandit .

Issues:1)Transparency in government procurement 2) Trade facilitation 3) Trade & Investment 4) Trade & Competition Dr. Manohar Pandit .INTERNATIONAL BUSINESS The first ministerial conference was held in 1996 in Singapore.

Manohar Pandit . .Disturbances in financial market .50TH Anniversary Dr.INTERNATIONAL BUSINESS • The second ministerial conference of 1998 was held in Geneva in Switzerland.

Washington Dr.INTERNATIONAL BUSINESS The third ministerial conference of 1999 was held in Seattle. Manohar Pandit .

Manohar Pandit . Doha Development Round Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) Dr.INTERNATIONAL BUSINESS The fourth ministerial conference of 2001 was held in Doha.

aimed at forging agreement on the Doha development Round Dr.abbreviated as MC5 . Mexico. . Manohar Pandit .INTERNATIONAL BUSINESS The fifth ministerial conference of 2003 was held in Cancun.

Seventh WTO Ministerial Conference (15 December .17 December 2009) Geneva.INTERNATIONAL BUSINESS The sixth ministerial conference of 2005 was held in Hong Kong. and to strengthen the multilateral trading system Dr. Manohar Pandit . Switzerland Ni nth conference will be held at Bali. Indonesia in December 2013 MC9 to re-energize the negotiation process and the progress achieved so far.

INTERNATIONAL BUSINESS The sixth ministerial conference of 2005 was held in Hong Kong. the Mul tilateral Trading System and the Current Gl obal Ec onomic Environment” Dr. Switzerland The general theme for discussion was “The WTO.2 December 2009) Geneva. Manohar Pandit . Eighth WTO Ministerial Conference (30 November .

INTERNATIONAL BUSINESS AGREEMENTS • Agreement on Agriculture • General Agreement on Trade in Services (GATS) • Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) • Sanitary and Phyto-Sanitary (SPS) Agreement • Agreement on Technical Barriers to Trade (TBT) .

Manohar Pandit . one vote system Decision making is generally by consensus it encourages efforts to find the most widely acceptable decision Dr.INTERNATIONAL BUSINESS one country.

large time requirements . or "Mini-Ministerial" .negotiations proceed not by consensus of all members.use ambiguous language ―Green Room " negotiations.INTERNATIONAL BUSINESS Main disadvantages . but by a process of informal negotiations between small groups of countries Criticized by many of the WTO's developing country members Dr. Manohar Pandit .

Established quotas limiting imports into countries whose domestic industries were facing serious damage from rapidly increasing imports. Manohar Pandit .INTERNATIONAL BUSINESS From 1974 until the end of the Uruguay Round. the trade was governed by the Multifibre Arrangement (MFA). Dr.

INTERNATIONAL BUSINESS The quotas conflicted with GATT’s general preference for customs tariffs instead of measures that restrict quantities. Manohar Pandit . Quotas were also exceptions to the GATT principle of treating all trading partners equally. Dr.

Manohar Pandit . the quotas came to an end. the WTO’s Agreement on Textiles and Clothing (ATC) took over from the MFA.INTERNATIONAL BUSINESS Since 1995. the sector fully integrated into normal GATT rules. Dr. By 1 January 2005. and importing countries are no longer be able to discriminate between exporters. In particular.

INTERNATIONAL BUSINESS UNCTAD • LDCs feel that GATT benefits are not evenly distributed • Tariff reductions favour manufactured goods and not primary goods. LDCs have export of primary goods • UN Conference on Trade and Development is a response to the LDC needs (1964) • Permanent organ of UN Dr. Manohar Pandit .

INTERNATIONAL BUSINESS UNCTAD • Efforts led to New International Economic Order (NIEO) Programme • NIEO seeks • Stabilization of prices of primary products • Expansion of LDCs manufacturing capacity • Acquisition of advanced technology Dr. Manohar Pandit .

INTERNATIONAL BUSINESS Principal Functions • • • • • Promote international sales with a view to accelerate economic development To formulate principles and policies on international trade and related economic development Negotiate multilateral trade agreements To make proposals for putting its principles and policies into effect Goal: Encourage development of third world countries & enhance their exports Dr. Manohar Pandit .

Manohar Pandit . self determination of people and noninterference in the international matters of other countries Dr.INTERNATIONAL BUSINESS • • Basic Principles Every country has sovereign right to dispose its natural resources for economic development and well being of society and freely trade with other countries Economic relations based on respect for sovereign equality of states.

International programmes are designed to help the LDCs Achievement of UNCTAD is GSP (Generalised System of Preferences) 14 GSP Schemes and 29 preference giving countries Dr. Adaptation of trading practices and methods will be consistent with this principle UNCTAD played role in Maritime Shipping Code. International Aid Targets. Manohar Pandit .INTERNATIONAL BUSINESS • • • Basic Principles Non discrimination on the basis of socioeconomic systems.

World Bank.03. Manohar Pandit . IMF Unstable currencies & inadequate monetary reserves could not develop & function world markets 01.1947 – IMF Functioning 29 Signatories to start with. 188 by Aug 2013 Dr.INTERNATIONAL BUSINESS IMF     Bretton Woods Conference. 1945 – ITO.

Major Objectives To Promote International Monetary Cooperation To Facilitate Expansion and Balanced Growth of International Trade To Promote Exchange Rate Stability To Establish Multilateral System of payment To Make Its Resources Available to Its Members Who Are Experiencing Balance of Payment Difficulties Dr. Manohar Pandit .INTERNATIONAL BUSINESS      IMF .

Manohar Pandit .25% In 1971  US had 70% of World’s Gold Reserve in 1947  Redemption of Dollar in Gold Dr.INTERNATIONAL BUSINESS Bretton Woods Agreement Established Fixed Exchange Rates for Each Member Country  USD 35 = Gold 1 Oz. par Value was same whether Gold or USD was used  Variation of 1% allowed. raised to 2.

Trade Balance and Other Economic Indicators  Quota is Pool of Money IMF can Lend to Member Countries.INTERNATIONAL BUSINESS Member Countries Contribute to IMF Quota  Quota Depends Upon National Income. Monetary Reserves. Manohar Pandit . Basis of How Much Country Can Borrow as Allocation of SDR  Quota determines Voting Rights Dr.

and international reserves (5 percent) For this purpose. openness (30 percent). economic variability (15 percent).INTERNATIONAL BUSINESS   The current quota formula is a weighted average of GDP (weight of 50 percent). GDP is measured through a blend of GDP—based on market exchange rates (weight of 60 percent)—and on PPP exchange rates (40 percent) Dr. Manohar Pandit .

SDR 477 billion (about US$715 billion  Largest Quota USA 17.Germany 6. Manohar Pandit . France and UK 5.6%.INTERNATIONAL BUSINESS Total SDR . Japan 6.05% each  shift more than 6 percent of quota shares to dynamic emerging market and developing countries (EMDCs)  Board of Governors is Final Authority  Day to Day Business with 24 Executive Directors  Dr.5%.11%.

Manohar Pandit . of a basket of major currencies (the U. dollars. The SDR currency value is calculated daily (except on IMF holiday or whenever the IMF is closed for business) and the valuation basket is reviewed and adjusted every five years. Euro. and pound sterling).S.INTERNATIONAL BUSINESS The currency value of the SDR is determined by summing the values in U. Japanese yen. dollar. based on market exchange rates. Dr.S.

K.0175300000 1.0136300000 U.8764830000 0.0067895000 0.0067347100 U.0107255000 Dr.8763710000 0. 2013 August 08. 2013 Euro Japanese Yen 0.0195000000 1.0067660800 0.8777820000 0.INTERNATIONAL BUSINESS SDRs per Currency unit 2 August 09. Dollar Ind Rupee 0.6600020000 0.0107287000 0.0107450000 0. 2013 August 07.0185800000 1.6566800000 0. Pound Sterling 1.6563840000 0.8773240000 0.0067948700 0. Manohar Pandit .S.6586780000 0. 2013 August 06.

INTERNATIONAL BUSINESS    WORLD BANK Lending Money to the governments of developing countries to finance development projects in education. Manohar Pandit . health and infrastructure Providing assistance to governments for developmental projects to the poorest developing countries Lending directly to private sector to help strengthen the private sector in developing countries with long-term loans equity investments and other financial assistance Dr.

Manohar Pandit . Publication Contributed for trade since WW2 Dr. Research. to create an environment in developing countries to attract foreign investments Promoting increased flow of international investments by providing facilities for conciliation and arbitration between governments and foreign investors Advise.INTERNATIONAL BUSINESS     WORLD BANK Providing investors with investment guarantees against non-commercial risks.

INTERNATIONAL BUSINESS REGIONAL TRADE BLOCKS REGIONAL INTEGRATION Free Trade Area No Barriers To Trade of Goods and Services Among Member Countries No Discrimination of Quota. Subsidies Among Member Countries Member Countries Can Decide Own Policies for Non-member Countries Variable Tariffs By Each Member Country On Same Products Imported From Nonmember Countries Dr. Tariff. Manohar Pandit .

INTERNATIONAL BUSINESS REGIONAL TRADE BLOCKS REGIONAL INTEGRATION Customs Union Step Towards Economic and Political Integration No Barriers To Trade of Goods and Services Among Member Countries Common External Trade Policy Among Member Countries Administrative Mechanism To Oversee Trade Relations With Non-members Dr. Manohar Pandit .

Manohar Pandit .INTERNATIONAL BUSINESS REGIONAL TRADE BLOCKS REGIONAL INTEGRATION Common Market Similar To Customs Union No Barriers To Trade of Goods and Services Among Common and Same External Trade Policy Free Movement of Factors Like Labour and Capital No Restrictions on Immigration and Capital Movements Dr.

A Step Towards Political Union Dr. Hormonisation of Tax Rates and Common Fiscal & Monetary Policy.INTERNATIONAL BUSINESS REGIONAL TRADE BLOCKS REGIONAL INTEGRATION Economic Unions Closer Economic Integration and Cooperation Than Common Market No Barriers To Trade of Goods and Services Among Common and Same External Trade Policy and Free Movement of Factors Like Labour and Capital Common Currency. Manohar Pandit .

INTERNATIONAL BUSINESS REGIONAL TRADE BLOCKS Initiated by EEC EFTA (European Free Trade Association. SAARC. ASEAN. MERCASUR Dr. COMESA. NZCloser Economic Relations Trade Agreement Dec 1988) SADCC (South African Development Coordination Conference) ECOWAS (Economic Community of West African States) GCC. Stockholm Convention 1960) LAFTA (Latin American Free Trade Area. Montevideo 1961) NAFTA ANZCERTA (Australia. Manohar Pandit .