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LOGO World Trade Organization

Alok Singh

Ambesh Kumar Srivastava

Why International Trade?

Liberalization in International economics had made international trade more complicated. In the 90’s there had seen enormous change in the market structure. Previously to became competitive in the international market companies have to get competitive in their national market. But now the whole scenario had changed.

What were the changes in the 90’s?

Crude Establishment of W.T.O Emergence of Multi-Nationals Removal of Quantity restrictions Boom in Information Technology

These were some major changes that come into the global trade environment.

What is W.T.OIn common understanding

“World Trade Organization (WTO) is a body which deals with the rules of trade between nations at a global or near-global level”. But it is beyond it

IS IT A TABLE?

“What do you expect the table to do? People sit round the table and negotiate”. And this is the main agenda of W.T.O.

Essentially, the WTO is a place where member governments go, to try to sort out the trade problems they face with each other. The first step is to talk. The WTO was born out of negotiations, and everything the WTO does is the negotiation.

At its heart are the WTO agreements, negotiated and signed by the bulk of the world’s trading nations. These documents provide the legal ground-rules for international commerce. They are essentially contracts, binding governments to keep their trade policies within agreed limits.

How W.T.O Born?Immediately after the Second World War,

Countries came together to try and prevent such wars taking place in the future It was felt that one of the causes of the war was the constant battles countries

were fighting to protect and expand their foreign trade Countries competed with each to raise trade barriers in order to protect

domestic producers, and to retaliate against other country’s barriers. These barriers worsened the Great Depression of the 1930s which was one of

the factors that led to the Second World War.

After that there was a notion to form a International Trade Organization(ITO) by joining two “Bretton Woods” institutions, the World Bank and the International Monetary Fund.

Over 50 countries participated in negotiations to create an International Trade Organization (ITO) as a specialized agency of the United Nations at a UN Conference on Trade and Employment in Havana, Cuba in 1947.

Thought the ITO never took off, it led to the signing of a provisional agreement by 23 countries in 1948 called the General Agreement on Tariffs and Trade (GATT).

From 1948 to 1994, the General Agreement on Tariffs and Trade (GATT) provided the rules for much of world trade and presided over periods that saw some of the highest growth rates in international commerce. It seemed well-established, but throughout those 47 years, it was a provisional agreement and organization.

This General Agreement give rise to an unofficial international organization, also called GATT, which provided a format for a further several rounds of negotiations. Till 1994 this was the forum for negotiating lower customs duty rates and reducing other trade barriers. These multilateral negotiations are known as “trade rounds”.

The longest GATT series of negotiations is known as the Uruguay Round which took place from 1986 to 1994. This round lead to the creation of the WTO, which replaced the unofficial GATT organisation.

Principles of W.T.OThe WTO agreements are lengthy and complex because they are legal

texts covering a wide range of activities. They deal with: agriculture, textiles and clothing, banking, telecommunications, government purchases, industrial standards and product safety, food sanitation regulations, intellectual property, and much more. But the basic principals are as below

1) Trade without discrimination Most-favoured-nation :(MFN) clause(treating other people equally) National treatment :(Treating foreigners and locals equally)

2) 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.

3) Predictability: through binding and transparency(stability of trade)

4) Promoting fair competition

5) Encouraging development and economic reform

Composition of W.T.O.In a nutshell

The basic structure of the WTO agreements: how the six main areas fit together the umbrella WTO Agreement, goods, services, intellectual property, disputes and trade policy reviews.

The Agreements (Annex 1a)

Multilateral agreement on trade and goods: GATT

General agreements on tariffs and trade Agreement on agriculture Sanitary and Phyto-Sanitary (SPS) Agreement Textile and clothing Agreement on Technical Barriers to Trade Trade Related Aspects of Investment Measures(TRIM’S) Anti-dumping Customs Valuation Agreement on Pre-shipment Inspection Agreement on Rules of Origin Agreement on Subsidies and Countervailing Measures Agreement on Safeguards

(Annex-1b) General Agreement on Trade in Services(GATS)

Cross border supply(e.g. international telephonic calls) Consumption abroad(e.g. tourism) Commercial presence(e.g. foreign banks) Presence of natural person(e.g. fashion models or consultants)

(Annex-1c) Agreement on Trade Related Aspects of Intellectual Property Rights(TRIPS)

Copyright Trademarks Industrial designs Patents Integrated circuits layout designs Undisclosed information and trade secrets Curbing anti-competitive licensing contracts

Annex 2    Dispute Settlement Understanding

“The priority is to settle disputes, not to pass judgment”

Annex 3    Trade Policy Review Mechanism

Annex 4    Plurilateral Trade Agreements– Trade in civil aircraft– Government procurement– Dairy products– Bovine meat

How will it help the members?As we have seen how and in which way W.T.O functions

but are the policies are beneficial for the member countries let us have a look on the benefits of W.T.O. to member countries:-

Security of access Stability of access Stability of investment Wider choice Profits to landlocked countries Right of compensation

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