WORLD TRADE ORGANIZATION

INTRODUCTION

Britton woods conference -1944

In 1946 three international bodies were formed

IMF

WB

ITO (Not approved by USA. So GATT was formed in 1948)

GATT transformed to WTO on Jan 1st 1995

Objective of WTO is to provide a framework of principles and rules

for globalisation of business for all-round economic prosperity.
 Differences between GATT
and WTO
GATT WTO

Adhoc and provisional permanent

Contracting partners Members

Allowed existing domestic Does not permit this

legislation to continue even

if it violated GATT agreement

Less powerful More powerful

Dispute settlement system - DSS - More faster and more efficient

slow and less efficient

• Before GATT: several joint declarations of free-trade ideals—and failed attempts to
create an international trade institution.
• Under US leadership, the GATT was created in 1948—as a step toward the “ITO.”
• GATT: 19 original “contracting parties.”
• Regulated trade in goods, only.
• WTO
• A rules-based, member-driven organization.
• “Its main function is to ensure that trade flows as smoothly, predictably and freely
as possible.”
• Created in 1995 by 120 nations to supersede and extend the GATT.
• Now:
– 164 member nations (over 97% of world trade).
– 23 ‘observer’ countries.
 Rounds of GATT and WTO Negotiations

Name Years Subjects Covered Countries

Participating

Geneva 1947 Tariffs 23

Annecy 1949 Tariffs 13

Torquay 1951 Tariffs 38

Geneva 1956 Tariffs 26

Dillon 1960-1961 Tariffs 26

Kennedy 1964-1967 Tariffs and antidumping measures 62

Tokyo 1973-1979 Tariffs, nontariff measures, plurilateral agreements 102

Uruguay 1986-1993 Tariffs, nontariff measures, rules, services, intellectual 123

property, dispute settlement, trade-related investment,
textiles, agriculture, creation of WTO

Doha (WTO) 1999- Agriculture, services, tariffs, nontariff measures, intellectual 149
property, dispute settlement
 OBJECTIVES OF WTO

• Raising standard of living and incomes, promoting full

employment, expanding production and trade, and
optimum utilisation of world’s resources.
• Introduce sustainable development - a concept which
envisages that development and environment can go
together.
• Taking positive steps to ensure that developing
countries, especially the least developed ones, secure a
better share of growth in world trade.
 FUNCTIONS OF WTO

• Administering WTO trade agreements

• Forum for trade negotiations
• Handling trade disputes
• Monitoring national trade policies
• Technical assistance and training for developing countries
• Cooperation with other international organizations
• Acting as a watchdog of international trade,constantly examining the
trade regimes of individual members.
 PRINCIPLES OF WTO

• Trade Without Discrimination

1. MFN Treatment
2. National treatment
3. Transparency
4. promoting fair competition
5. Encouraging development and economic reform.
6. Rule Based Trading System
7. Environment Protection
8. Treatment of LDCs
 PRINCIPLES OF WTO

• Trade Without Discrimination

1. Most-favoured-nation (MFN): treating other people equally Under the WTO agreements,
countries cannot normally discriminate between their trading partners. Grant someone a special favour
(such as a lower customs duty rate for one of their products) and you have to do the same for all other
WTO members.
2. National treatment: Treating foreigners and locals equally Imported and locally-produced
goods should be treated equally — at least after the foreign goods have entered the market. The same
should apply to foreign and domestic services, and to foreign and local trademarks, copyrights and
patents.Freer trade: gradually, through negotiation
Lowering trade barriers is one of the most obvious means of encouraging trade. The barriers concerned
include customs duties (or tariffs) and measures such as import bans or quotas that restrict quantities
selectively
• Predictability: through binding and transparency
Sometimes, promising not to raise a trade barrier can be as important as lowering one, because the
promise gives businesses a clearer view of their future opportunities. With stability and predictability,
investment is encouraged, jobs are created and consumers can fully enjoy the benefits of competition
— choice and lower prices. The multilateral trading system is an attempt by governments to make the
business environment stable and predictable.Member countries should publish their trade related
information.
• Promoting fair competition
The WTO is sometimes described as a “free trade” institution, but that is not
entirely accurate. The system does allow tariffs and, in limited circumstances, other
forms of protection. More accurately, it is a system of rules dedicated to open, fair
and undistorted competition.
• Encouraging development and economic reform.
The WTO system contributes to development. On the other hand, developing
countries need flexibility in the time they take to implement the system’s
agreements. And the agreements themselves inherit the earlier provisions of GATT
that allow for special assistance and trade concessions for developing countries.
• Rule Based Trading System : WTO sets and enforces rules necessary for
connecting world trade fairly.
• Environment Protection
• Treatment of LDCs
 STRUCTURES OF WTO

Ministerial Conference

Dispute Settlement Trade Policy Review

Body General Council
Body

The Committee Intellectual

Goods Council Services Council
on T&D Property Council

Committee on Budget,
Finance and Committee on BOP
Administration
.
 KEY SUBJECTS IN WTO
Agriculture

Health and safety measures

Helping Least Developed and Food Importing Countries

Textiles and Clothing

Antidumping

TRIPS

TRIMS

GATS

Dispute settlement
Agriculture
Tariffication

Tariff –Binding

Tariff-Cuts

Reduction in subsidies and domestic

support
Agreement on Health and safety measures

Application of food , animal and plant safety

Government’s right to take sanitary measures but they

should be scientific

Should be applied to the extent necessary to protect

humans, animals and plants

No discrimination among member countries when

identical situations prevail.
 .

Helping Least Developed and Food Importing

Countries

Assistance from IMF and World Bank

Aid for agricultural development

Basic food stuffs in full grant form

Agreement on Textiles and Clothing

The Multi Fibre Arrangement (MFA)

governed the world trade in textiles and garments
from 1974 through 2004, imposing quotas on the
amount developing countries could export to
developed countries. It expired on 1 January
2005.
Anti Dumping
Provide clarity in method for determining that a product is dumped

Additional criteria for determining injury caused to domestic industry by

dumping

Procedure to be followed in initiating and conducting anti-dumping investigation

Rules for implementation of antidumping measures and duration

If margin of dumping is less then 2% of export price or volume less then 3% of

total imports then no investigation

If several countries each supplying less then 3% of imports - total accounting for
7% or more of imports then investigation is initiated.
 General Agreement in Trade in Services (GATS)

It comprise of first set of multilateral, legally enforceable

rules covering international trade in services. It covers 4
modes of international delivery of services.

Cross Border Supply ( transportation of services, trans

border data flows)

Commercial Presence ( Provision of services abroad

through FDI/Representative offices)

Consumption Abroad (Tourism)

Movement of personnel ( Entry and temporary stay of

foreign consultants)
 TRIMs
Refers to certain conditions or restrictions imposed by Government in
respect of foreign investment in the country

No TRIM inconsistent with WTO article shall be applied.

Local content Requirement

Trade Balancing Requirement

Foreign Exchange Balancing Requirement

Domestic sales requirement

All these are inconsistent TRIMs

 TRIPS(Trade Related
Intellectual Property Rights)
According to WTO, IP rights are the rights given to persons over the creations of
their minds. This give creator an exclusive right over the use of his creation for a
certain period of time. main objective is to encourage R&D and creative works so as
to benefit the society.

It is divided into two main areas

Copyright and rights related to copy rights : Rights of authors of literary and artistic
works (books, paintings , computer programs, films etc.) are protected by copyright,
for a minimum period of 50 years after the death of author

Industrial Rights

protection of distinctive signs, in particular trade marks and geographic indicators.

and inventions (Protected by patents) , industrial designs and trade secrets
Intecllectual Properties

copyrights

Trademarks including service marks

Geographic indicators

Industrial designs

Patents including protection of new types of plants

Layout designs of integrated circuits

undisclsoed information, including trade secrets and trade data.

Dispute Settlement
Disputes in the WTO are essentially about broken promises. WTO members have agreed
that if they believe fellow-members are violating trade rules, they will use the
multilateral system of settling disputes instead of taking action unilaterally. That means
abiding by the agreed procedures, and respecting judgements.
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,
or to be a failure to live up to obligations.
Settling disputes is the responsibility of the Dispute Settlement Body (the General
Council in another guise), which consists of all WTO members. The Dispute Settlement
Body has the sole authority to establish “panels” of experts to consider the case, and to
accept or reject the panels’ findings or the results of an appeal. It monitors the
implementation of the rulings and recommendations, and has the power to authorize
retaliation when a country does not comply with a ruling.
 Dispute settlement

60 days Consultations, mediation, etc

45 days Panel set up and panellists appointed
6 months Final panel report to parties
3 weeks Final panel report to WTO members
60 days Dispute Settlement Body adopts report
(if no appeal)
Total = 1 year (without appeal)

60 days Appeals report

30 days Dispute Settlement Body adopts
appeals report
Total = 1y 3m (with appeal)
 Advantages to India
Benefits from reduction of tariffs on the products of export interest to India.
Improved prospects of agricultural exports because the prices of agricultural
products in world market will increase due to reduction of domestic subsidies
and barriers to trade
Increase in export of textiles and clothing due to phasing out of MFA by 2005.
Advantage from greater security and predictability of international trading
system
Compulsion imposed to be competitive in world market
Benefits from International Trade Centre jointly operated by WTO and USA.
(ITC responds to the requests of developing countries for assistance in
formulating and implementing export promotion programs as well as import
operations and techniques)
 Disadvantages
India’s share in world trade is low and so benefits are low
compared to other developing countries like china

Tariff reduction in the goods of export interest to India is

very small.

Less prospects of increasing in agricultural expenditure due

to limited extent of agricultural liberalisation.

Less extent of liberalisation of our textile exports during the

next 10 years

India is under pressure to liberalise service industries

Only marginal liberalisation in the movement of
labour

outflow of foreign exchange due to

commitments undertaken in the fields of
TRIPS,TRIMS and Services

Only few large firms are benefited and small

firms may disappear.
Protection of intellectual property rights (patents, copyrights,
trademarks etc.) has been made stringent. It is argued that the
TRIPs (Trade related Intellectual Property Rights) agreement
goes against the Indian Patents Act, 1970. Only process patents
can be granted in food, chemicals and medicines under the
Indian Patents Act. TRIPs agreement provides for granting
product patents also. Under TRIPs patents can be granted to
methods of agriculture and horticulture, bio-technological
process including living organism like plants and animals. The
duration of patents under TRIPs is 20 years. Introduction of
product patents in India will lead to hike in drug prices by the
MNCs who have the product patent. This will hit the poor
people who will not have the generic option open .