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Topic on Emergence of WTO
Submitted to Prof. R. Jyothirmayee
By NIROOP K MURTHY MBA IV Semester
On March 21, 2011
or rounds. competition policy. insurance.Emergence of WTO: The past 50 years have seen an exceptional growth in world trade. held under GATT. The system was developed through a series of trade negotiations. securities and financial information. The work programme. In February 1997 agreement was reached on telecommunications services. In 2000. and a range of issues raised by developing countries as difficulties they face in implementing the present WTO agreements. trade and environment. investment. Qatar. Merchandise exports grew on average by 6% annually. in November 2001. with 69 governments agreeing to wide-ranging liberalization measures that went beyond those agreed in the Uruguay Round. adds negotiations and other work on non-agricultural tariffs. the Doha Development Agenda (DDA). new talks started on agriculture and services. The negotiations did not end there. intellectual property. GATT and the WTO have helped to create a strong and prosperous trading system contributing to unprecedented growth. . trade facilitation. transparency in government procurement. In the same year 40 governments successfully concluded negotiations for tariff-free trade in information technology products. and 70 members concluded a financial services deal covering more than 95% of trade in banking. WTO rules such as anti-dumping and subsidies. These have now been incorporated into a broader agenda launched at the fourth WTO Ministerial Conference in Doha. The first rounds dealt mainly with tariff reductions but later negotiations included other areas such as anti-dumping and non-tariff measures. Total trade in 2000 was 22-times the level of 1950. Some continued after the end of the Uruguay Round. The last round — the 1986-94 Uruguay Round — led to the WTO’s creation.
. international investment and services which nation states had to follow.so that they would be linked with trade. commodity agreements.The deadline for the negotiations is 1 January 2005. through technical assistance and training programmes Cooperating with other international organizations • Causes for the Emergence of WTO (1) To create binding rules relating to trade . It does this by: • • • • • Administering trade agreements Acting as a forum for trade negotiations Settling trade disputes Reviewing national trade policies Assisting developing countries in trade policy issues. (6) To rectify some of the failings of the GATT.notably intellectual property rights .including on employment. restrictive business practices. (7) To establish formal institutions (which the GATT did not have) to deal with trade policy. (3) To include things which traditionally had not been considered in trade discussions . (2) To establish a binding dispute settlement mechanism so that trade disputes could be conclusively resolved. (4) To progressively reduce tariffs. (5) To generally promote trade liberalization around the world.
The Uruguay Round agreement introduced a more structured process with more clearly defined stages in the procedure. rulings were easier to block. It introduced greater discipline for the length of time a case should take to be settled. rulings are automatically adopted unless there is a consensus to reject a ruling — any country wanting to block a ruling has to persuade all other WTO members (including its adversary in the case) to share its view. A third group of countries can declare that they have an interest in the case and enjoy some rights. A dispute arises when one country adopts a trade policy measure or takes some action that one or more fellow-WTO members considers to be breaking the WTO agreements. The agreed time limits are flexible. or to be a failure to live up to obligations. It sets out in considerable detail the procedures and the timetable to be followed in resolving disputes. The Uruguay Round agreement also made it impossible for the country losing a case to block the adoption of the ruling. meaning that a single objection could block the ruling. if perishable goods are involved). and respecting judgements. . with flexible deadlines set in various stages of the procedure. it should not normally take more than about one year — 15 months if the case is appealed. and if the case is considered urgent (e. WTO members have agreed that if they believe fellow-members are violating trade rules. rulings could only be adopted by consensus. Now. they will use the multilateral system of settling disputes instead of taking action unilaterally.the solution was to automatically implement findings rather than to wait for a consensus Contribution to International Economic Integration: Disputes in the WTO are essentially about broken promises. If a case runs its full course to a first ruling.g. but it had no fixed timetables.(8) To establish a system which is less susceptible to blockages . it is accelerated as much as possible. That means abiding by the agreed procedures. Under the previous GATT procedure. A procedure for settling disputes existed under the old GATT. and many cases dragged on for a long time inconclusively. The agreement emphasizes that prompt settlement is essential if the WTO is to function effectively.
Not only concessions can be more . The so-called ‘old regionalism’ was motivated by the desire to pursue in developing countries import substitution development at a regional level. i. However. Moreover. It is easier to negotiate with few partners than with a large number of participants in the multilateral process as envisaged under the General Agreement of Tariffs and Trade (GATT)/World Trade Organization (WTO). Such societies also cannot relinquish their Nation-State that has not yet fulfilled its objectives. Political and economic considerations also played a major role.3 Recognising the gains from liberalisation. particularly in social areas. in those societies. The recent emergence of trade blocs (the so-called ‘new regionalism’) has been explained by various factors. globalization was planned in a rush. Was it acceptable to leave its handling to large capital and international financial organizations. it is often argued that concluding a PTA is politically easier than pursuing multilateral trade liberalisation agreements.e. to insulate a region from the world economy and to stabilise and foster the economy at a regional level. privatization is impossible because the private sector is unable to replace the public sector. created to serve capitalism and provide conditions for its limitless movement around the world? The societies that rightfully fear the negative aspects of globalization are those where national capitalism is unable to spread its hegemony for the simple reason that either it does not exist at all or that it is too weak.Positive and Negative aspects of WTO Contribution: WTO contribution has positive and negative aspects. 1951) and the European Economic Community (EEC. 1957). as in the case of the European Coal and Steel Community (ECSC. and where civil society and the private sector are still unable to take over the State’s authority and leading role. On top of its positive aspects comes the tremendous development of new information and communication technology. the societies where privatization is a squandering of the State’s wealth and resources in favour of foreign companies Causes for Development of Regional Trade Bloc: Several reasons explain the recent emergence of trade blocs. a world with unified feelings and with increasingly closer cultures and interacting civilizations. It is a momentous phenomenon indeed. This progress helped bring the various parts of the world closer and disseminate knowledge particularly through the Internet which created a new and open world.
The gravity model suggests that countries geographically close trade more than distant countries. PTAs also allow trading partners to go deeper and faster in their liberalisation process. PTAs can serve as commitment. the larger the number of issues on which it is possible to reach an agreement. trade blocs often involve (small) reform-minded countries willing to bind their commitments to (often unilateral) liberalisation process by entering a PTA with larger entities. among other things. trade blocs may serve to pursue non-economic objectives. geographic distance. or objectives beyond the immediate economic concerns of a PTA.e. that the volume of trade between two countries is negatively related to the economic distance (i. Finally. Indeed. labour and capital market considerations. More generally. As neighbouring countries tend to be ‘natural trading partners’. Preferential integration agreements can also entail elements beyond standard trade policy concerns. addressing modern trade barriers which are more varied. taking into account transport costs and trade barriers) between them. Moreover. as trade bloc formation diverts trade at the expense of non-member countries. they are more likely to form a trade bloc. hence contributing to reducing uncertainty and increasing credibility about political and economic developments. signalling and insurance mechanisms in the policy determination of its members. investments. more complex and less transparent than standard tariffs and quotas traditionally considered under GATT Rounds. Another claimed advantage of PTAs is that they may help ensuring the credibility of the reform process undertaken by one or several members of the trade bloc. the gravity equation predicts. or security threats between partner countries). such as competition. . or as a response to third-country security threats. preferential) path to trade liberalisation. the deepening of an existing bloc or the creation of a new one may cause excluded trading partners to join the PTA in order to reduce the costs of being “left out”: the so-called ‘domino effect’ of regionalism.e. such as political stability. the fewer the number of participants to trade negotiations. In other words. Namely.easily exchanged among a small number of countries. democratic development or security issues (either domestic security. The length and difficulties encountered during the Uruguay Round of GATT negotiations (1986-1994) is usually considered to have contributed to increase the attractiveness of the regional (i. but effective enforcement mechanisms can also be agreed upon at a lower cost. Trade blocs may exert other types of ‘pressures for inclusion’.
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