GATT/ WTO

GATT

General agreement on trade and tariff

GATT became the guiding principle and framework
for international business since 1948.
GATT was later transformed into WTO with effect
from 1995, since then original proposal of ITO has
taken shape of WTO.
India is among one of the founder members of IMF,
GATT, WORLD BANK , WTO.
 Objectives of GATT

Raising standard of living

Ensuring full employment at large and growth of real
income and effective demand.
Ensuring full use of resources around the world
Expansion of production and international trade
Any proposed change in tariff or economic policy of
country should not be undertaken without
consultation of other parties.
Member countries should work upon reduction of
tariff and promotion of international trade.
 Principles of GATT

Non Discrimination – MFN Policy w.r.t trade and

tariffs. However it allowed FTA if is motive is to
enhance trade between territories without raising
barriers to other countries.
Prohibition of Quantitative restrictions- GATT rule
seek to prohibit quantitative restrictions as far as
possible. However some import restrictions can be
allowed to developing countries and to agricultural
and fishery products.
Consultation- for solving disputes and
disagreements of nation on trade.
GATT transformed to WTO in 1995 with 128
signatories now have 159 members, and these
account for 97% of international trade.
 URUGUAY ROUND

Uruguay round (UR) is the eight round of

multilateral trade negotiations (MTN) held under
GATT in 1986
UR VIII took up basic subjects for discussion:
a) Reducing specific trade barriers and improving
market access.
b) Strengthening GATT disciplines.
c) problem of liberalization of trade in services
(GATS), trade related investment measures(TRIM),
TRIPS
GATT provisions were converted into a formal
international organization WTO with effect from Jan
1995.
WTO headquartered in Switzerland meet at least once
in every two years.
 GATS

Coverage of GATS:
The GATS covers all internationally traded services with two
exceptions: services provided by the Government and services in Air
transport sector. The GATS defines that trade in services can be
made in four ways, they are:
1. Services supplied from one country to another (e.g. selling
software)
2. Consumers from one country making use of another country (e.g.
Tourism)
3. A company from one country setting up subsidiaries or branch to
provide services in another country (e.g. Banking)
4. Individual travelling from their own country to supply services in
other country (e.g. Actress or construction worker)
 TRIMS

1. Abolition of restriction imposed on foreign capital

 2. Offering equal rights to the foreign investor at par with
the domestic investor
 3. No restrictions on any area of investment
 4. Granting of permission of without restrictions to import
raw material and other components
 5. No force on the foreign investors to use the total products
and or materials from home country
 6. Export of the part of the final product will not be
mandatory
 7. Restriction on repatriation of dividend interest and
royalty will be removed
 TRIPS

Trade Related Intellectual Property Rights (TRIPs)

Intellectual property rights may be defined as
“Information with commercial value”. IPR have been
characterised as a composite of “ideas and creative
expression”. Plus “ the public willingness to bestow
the status of property. It include
a. Protection of patent
b. Copyright
c. Trademarks
d. Trade secrets
Difference
 Lets test what you have learnt

 1.The balance of payments of a country on current account is equal to

 A. Balance of trade plus short term flows

 B. Balance of trade plus net invisible exports

 C. Balance of payment minus capital flows

 D. Balance of invisible trade plus imports

 2. The main objective of International Monetary Fund (IMF) was to

 A. Promote International trade

 B. Help economically backward countries

 C. Maintain stable exchange rates

 D. Promote international liquidity

 3. The balance of payments account is conventionally divided into

 A. Current Account and Capital Account

 B. Visible Account and Invisible Account

 C. Long-term capital Account and short term capital account

 D. None of the above

 4. The world bank is known as

 A.IMF

 B.IDA

 C.IBRD

 D. Both (b) & (c)

Which one is called Bretton-wood Twin's
A. IBRD and IDA
B. IMF and IFL
C. IMF and IBRD
D. IDA and IFL
 6. Ultimately ………………was replaced by the …………….on 1st Jan 1995

 a. GATS, WTO

 b. WTO, GATT

 c. GATT, WTO

 d. IMF, GATT