GATT/WTO and Global Liberalization

Dr. S.Venkata Seshaiah
I do not know much about the tariff, but I know this much: when we buy the manufactured goods abroad we get the goods and foreigners gets money. When we buy at home we get goods as well as money. Abraham Lincoln Abraham Lincoln argument has no merits, the only sensible words in it are the first eight words. The fact that imports are ultimately paid for exports keeping money at home and protection has no sense. Beveridge

1. International trading system
2. 3. 4. 5. 6. 7. 8. 9. History : GATT(General Agreement on Trade and Tariffs WORLD TRADE ORGANISATION Doha round History and Developmental Round KEY ISSUES AT DOHA Principles of the trading system Conference meetings Types of Impasses of relevance at DOHA round Weakness Of World Trade Organization

International trading system
• Trading strategies:

1. 2.

Outward oriented strategy Inward oriented strategy

Not much scope for corruption .Outward oriented strategy • Free trade Advantages (Outward oriented strategy) : 1. Efficiency improves because of competition 4. Leads to economic Utilization 2. Benefits consumers in different ways 5. Division of labor occurs 3.

Inward oriented strategy • • • • • • • • • Advantages of protectionism (Inward oriented strategy) Infant industry survives well Diversified industrial structure Improving balance of payments Improving The terms of trade Anti-dumping Bargaining Employment protection Curbs conspicuous consumption .

Inward oriented strategy Advantages of protectionism (Inward oriented strategy) : • National defense • Key Industries • Keeping money at home ( falsely attributed to Abraham Lincoln) • Size of the home market • Equalization of cost of production .

when it was replaced by the WTO in 1995. It was the outcome of the failure of negotiating governments to create the International Trade Organization (ITO). negotiate multilateral extensions of tariff reductions through the application of the Most Favored Nation (MFN) clause. • Purpose : 1.It was negotiated during the UN conference on Trade and Employment. Reduction of tariffs and other trade barriers and the elimination of preferences. 2. .History : GATT(General Agreement on Trade and Tariffs) • Was born 1947and lasted until 1994. • Who Formed it ? .

Developing full use of resources of the world 4. Expansion of production and international trade . Ensuring full employment and a large and steadily volume of real income 3.History : GATT(General Agreement on Trade and Tariffs) • Objectives and Principles: 1. Raising living standards 2.

History : GATT(General Agreement on Trade and Tariffs • • • • Principles: Non Discrimination Prohibition of Quantitative restrictions Consultation .

France. however. Germany. 1948.Disintegration of GATT • Members – 128 countries signed GATT by 1994. Pakistan etc. so the GATT was left as an independent organization. INDIA became the member of GATT on 8th July. • ITO . USA.GATT was originally intended to become a part of ITO. . Other members were UK. the ITO failed to be created.

45.9 billion of world trade Tariff concessions worth $40 billion of world trade . France Torquay.700 tariff concessions. cutting the 1948 tariff levels by 25% 1955-56 Geneva Tariffs.Rounds under GATT Year 1947 1949 1951 Round Geneva Annecy. admission of Japan Tariffs Tariffs. England Subject Tariffs Tariffs Tariffs Achievement Signing of GATT.5 billion in tariff reductions 1960-62 1964-67 Dillon Round Kennedy Round Tariff concessions worth $4.000 tariff concessions Countries exchanged some 8. AntiDumping $2.000 tariff concessions affecting $10 billion of trade Countries exchanged some 5.

rules. and an extension of intellectual property rights. . etc. creation of WTO. dispute settlement. and extended the range of trade negotiations. leading to major reductions in tariffs (about 40%) and agricultural subsidies. services. non-tariff measures. Achievement Tariff reductions worth more than $300 billion dollars achieved 1986-93 Uruguay AGRICULTURE. The round led to the creation of WTO.Rounds under GATT Continued… Year 1973-79 Round Tokyo Round Subject Tariffs. textiles. intellectual property. "framework" agreements Tariffs. an agreement to allow full access for textiles and clothing from developing countries. non-tariff measures.

Switzerland. 3. and therefore selective nature had been added. meeting every two years. • Governed by a ministerial conference. Inefficient dispute settlement system. • Represents 97 % of World trade. a General Council and a Director-General Note: India is one of the founder members of the IMF. 2. while GATT was a multilateral instrument. • Officially commenced on 1st January 1995. by 1980s many new agreements of a pluri-lateral. • Replaced the GATT with 153 member countries. • Headquartered in Geneva. GATT and WTO .WORLD TRADE ORGANISATION History: Why replaced by WTO – 3 Reasons 1. World Bank. GATT rules applied to trade only in merchandise goods.

• Dispute resolution process aimed at enforcing participants' adherence .WORLD TRADE ORGANISATION • Objective: • Supervise and Liberalize International Trade. • Provides a framework for negotiating and formalizing trade agreements.

In 1999 activists tried to shut down the meeting that was supposed to launch the WTO's new round of trade talks.DOHA ROUND : History • “Battle in Seattle”. The activists succeeded. . restrict poor countries' access to affordable drugs and prevent developing nations from protecting their domestic economic interests. and the WTO was forced to relocate the meeting to the capital of Qatar. • The activists feared the talks would let big corporations plunder the economies of the developing world.

• Succeeded the Uruguay round and the three ministerial conferences at Singapore (1996). Geneva (1998) and Seattle (1999). • Make trade rules fairer for developing countries . Objectives: • Lower trade barriers around the world. Qatar in November 2001. • Committing all countries to negotiations opening agricultural and manufacturing markets. as well as trade-in-services (GATS) negotiations and expanded intellectual property regulation (TRIPS).DOHA DEVELOPMENTAL ROUND History: • Launched at the fourth ministerial conference in Doha.

Technical Co-operation.KEY ISSUES AT DOHA • Agriculture has become the linchpin of the agenda for both developing and developed countries • • • •      Compulsory licensing of medicines and patent protection A review of provisions giving special and differential treatment to developing countries. Effective dispute settlement mechanism . Trade facilitation. Key Interests for ASEAN countries – Greater market access for industrial goods. Anti dumping and subsidies. Resolve problems that developing countries are having in implementing current trade obligations.

Principles of the trading system • Non-Discrimination – Most favored nation Reciprocity Binding and enforceable commitments Transparency Safety valves • • • • Agreements • Agreement on Agriculture (AoA) • • General Agreement on Trade in Services (GATS) Trade-Related Aspects of Intellectual Property Rights Agreement (TRIPs) .

India. and China. • Geneva Conference 2009 – On 26 May 2009. the Multilateral Trading System and the Current Global Economic Environment" . Called for an end to agricultural subsidies within the EU and the US. agreed to hold a seventh WTO ministerial conference session in Geneva from 30 November–3 December 2009. tariff free access for goods. – Agreement to introduce duty free. – The negotiations collapsed on July 29 over issues of agricultural trade between the United States. • Hong Kong Conference 2005 – Countries agreed to phase out all their agricultural export subsidies by the end of 2013. • Geneva Conference 2008 – Negotiation over the special safeguard mechanism.Conference meetings • Cancun Conference 2003 • • The conference was aimed at forging agreement on the DDA. – "The WTO.

) Parties could not agree on the subjects for the negotiation (Impasse on contents. subsequently the parties can only agree to conclude the activity of negotiation without an agreement. (Impasse as delay.) Having agreed to start a negotiation.) After agreeing to start a negotiation the parties take a long time to come to a mutually agreeable outcome. (Impasse as actual failure to agree—fortunately the DDA has not reached this point.) Having agreed to start a negotiation.Types of Impasses of relevance at DOHA round • • • • • Parties could not agree to launch a negotiation. subsequently the parties appear unable to conclude the negotiation with an agreement. (Impasse as high expected failure to agree.) . (Impasse on initiation.

Indian Case .

BENEFITS TO INDIA • Increase in India’s textile & clothing exports due to the phasing out of MFA (in 2005). • The reduction in agricultural subsidies & barriers to export of agriculture products. • Foster more rapid growth and poverty reduction. agricultural exports from India also increased. • Guarding against the intrusion of non-traded matters in WTO.INTERESTS OF INDIA • Accelerating integration with world economy (Globalization). • Market access to a number of developing countries without trade discrimination increased. • Voice in formulation of rules and Decision Making in the WTO. . • Expand access to World Markets.

Hence the poor were left with no generic option Extension of intellectual property right to agriculture has negative effects on India and Indian research institutions Application of Trade related Investment measures (TRIMs) agreement undermines any plan or strategy of self reliant growth based on local technology. Hence inclusion of trade in services is detrimental to the interest of India. . The MFN clause proved to be detrimental to India’s interest & provided grounds for Chinese invasion in Indian market through dumping.Disadvantages for India • • • • • • TRIPs (Trade related aspects of intellectual Property Rights) agreement went against the Indian Patents Act (1970) Introduction of product patents in India lead to hike in drug prices by the MNCs. Service sectors in India are backward compared to the service sectors in developed countries.

globalization would have to squarely address sustainable development and poverty reduction . if it does not pay adequate attention to the need to reduce asset and income inequalities. a guaranteed safety net against falling prices and import surges.Unaddressed Issues • • In order not to discredit itself. There must be an attempt to link the strategies of development to something more fundamental. The international trade rules are underpinned by an insufficient appreciation of the adverse impact of rapid liberalization. • • . the ends of economic and social development . sudden liberalization would expose the constituents to unbearable risk. Without substantial investment in the capacity to supply and. equally important.

Domestic Support. 40 to 50 % of support to the farmers in the form of Green Box subsidies.Agriculture Issues in Developing Nations • • One of the key issues is the Agreement on Agriculture (AoA). Trade Related Intellectual Property Rights . export Competition. • • Developed countries allowed to retain 80% of their subsidies while developing countries can subsidize their farmers not more than 10%. Areas related to Agriculture-Market Access. • . Increasing dependency on imports for food grains could bring strain on external payment position of these countries.

.Textile Industry • What is MFA all about ? What is ATC ? • he Multi Fibre Arrangement (MFA.. • What is TMB ? Textiles Monitoring Body • Impact of ATC termination • Textile industry merged into GATT under WTO.. also known as the Agreement on Textile and Clothing (ATC)) governed the world trade in textiles and..

Privatization of Essential services. Fuel issues. Forest issues. Food issues.Weakness Of World Trade Organization • • • • • • • WTO is fundamentally undemocratic. Creating a Rich man’s world. WTO causes trampling of labor and human rights. .

e.: Although most tariffs in developed countries are low. agricultural and labour-intensive products ( 10-20 times higher) .Glance on Tariffs Tariffs of Developed countries continue to be very highly loaded against developing countries. those on several categories are prohibitively high –esp those on many consumer.g.

but its tariffs on raw materials and electronics are only 5%! 2.5% on synthetic fibre shirts. The US collected duties on imports of $2. 180% on cereals.4 billion from Bangladesh (a major clothing exporter) of $400million in 2011. which was a little more than the $330 million it collected on the $30 billion imports from France during the same period. ( regressive rates!) .Glance on Tariffs 1.9 % while it is 20% on cotton shirts and 32. US tariff on imported shirt is only 1. 3. EU applies 236% tariff on meat.

Thank you .

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