The general agreement on tariffs and trade GATT the predecessor of WTO was born in 1948 as result of the international desire to liberalise the trade The growing acceptance of GATT despite its shortcomings is evinced by the increase in the number of the signatories When the ID: 712241
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APRESENTATION ON WTOSlide2Slide3
INTRODUCTION TO GATT The general agreement on tariffs and trade (GATT), the predecessor of WTO, was born in 1948 as result of the international desire to liberalise the trade.
The growing acceptance of GATT ,despite its shortcomings, is evinced by the increase in the number of the signatories. When the GATT was signed in 1947 , only 23 nations were party to it .It increased to 99 by the time of the seventh round and 117 countries participated in the next, i.e., the Uruguay round . In April 2008, there were 151 members with several more countries formally seeking accession to the WTO. The signatory countries account for 90 per cent of the international trade indicating the potential of the WTO in bringing about an orderly development of the international trade.
The primary objective of GATT , the forerunner of WTO ,was to expand international trade by liberalizing trade so as to bring about all-round economic prosperity.Slide4
LIMITATIONS OF GATT
GATT achieved substantial trade liberalization .But sectors which would have significantly benefited developing countries ,like agriculture and textile ,were not liberalized.
Besides agriculture and textiles ,two exceptions to the general trade of trade liberalization have been trade of developing countries and economic integration.
Developing countries with balance of payment problems have been generally exempted from liberalization.
Increase of protectionism of developed countries when developing countries are liberalized.
The traditional concerns of GATT were limited to international trade in goods only
GATT was ad hoc and provisional.
GATT system allowed existing domestic legislation to continue even if it violated a GATT agreement.
GATT was less powerful, dispute settlement system was slow and less efficient , its ruling could be easily blocked . Slide5
INTRODUCTION TO WTOLocation: Geneva, Switzerland
Established: 1st January 1995
Created by: Uruguay Round negotiations (1986–94)
Membership: 153 countries
Budget: 175 million Swiss francs for 2006
Secretariat staff: 635
Head: Pascal Lamy (director-general)Slide6
The UR Agreement seeks to liberalise trade in manufactures by enlarging tariff bindings ,reducing tariffs and removing tariffs.
Following the UR Agreement , GATT was converted from a provisional agreement into a formal international organization called WTO with effect from January 1,1995 .
WTO now serves as a single institution framework encompassing GATT and all the results of the Uruguay round . It is directed by a Ministerial Conference that will meet at least once every two years and its regular business is over seen by a general Council.
Under the old system , there two GATTs
GATT the agreement
GATT the
organisation
As a part of the WTO alongside two new agreements
viz
, General Agreement on Trade in Services(GATs) and General Agreement on the Trade Related Aspects of Intellectual Property Rights(TRIPs) . Slide7
The global business environment is very significantly influenced by the World Trade Organisation (WTO)principles and agreements . They also affect the domestic environment. For example, India has had to substantially liberalise
imports, including almost complete removal of quantitative import restriction.
Domestic firms face increasing competition from foreign goods.
Liberalization of foreign investment.
The
liberalisation
also enables to seek foreign equity participation and foreign technology.
Liberalization facilitates global sourcing by Indian firms so that they can improve their competitiveness.Slide8
EVALUATION OF URUGUAY ROUNDUruguay round (UR) is the by which the eighth round of the multilateral trade negotiation (MTNs) held under the auspices of the GATT is popularly known because it was launched in Punta del este in Uruguay ,a developing country ,in September 1986.
UR was the most complex and controversial one.
It took more than seven years to complete the negotiations as against the originally contemplated more than four years indicates the complexities involved.
It includes the new areas like TRIPs, TRIMs, SERVICES and attempts to
liberalisation
agricultural trade and elimination of
NTBs.The
tarification
of trade barriers was claimed to be significant success of UR .According to some estimates in UR the real world income increase by between $212bn and $274bn in2005.According to estimates of increase in real income will be roughly 1.6 percent of GDP for the EU 0.2 percent in US 0.9 percent in JAPAN. 2.5percent of the GDP for china 0.5 percent for
india
,0.6 percent for
southafrica
,0.3 percent of brazil.
Largest gain in absolute term will accrue to US
Some developing countries in the category of LDCs and net food importers are expected to lose because of UR package.
In constant 1992 US dollar , this
reperesent
an increase of 745
bn export value increase by around 10 percent.Slide9
Some of the largest projected increase in world trade are in areas that are of interest to developing countries .World bank ,OECD and the GATT secrateriate the income effects of the implementation of the
ur
package will be added between $213 to $274bn annually to the world income .
The largest increase will be in the areas of
clothing,agriculture
, forestry and fishery products(20 percent) and processed food and beverages (19percent).
It was estimate cuts in protection on total merchandise trade will be increase real incomes in developing countries by $55 to $90 bn (or 1.2 to 2 percent of their GDP in 1992) while the gains to the world as a whole will be in the order of $200 bn.Slide10
FUNCTION OF UR Facilitates implementation, administration and operation and further objectives of MTAProvide forum for negotiation among members.Administer understanding of rules and procedures governing the
setelment
of issues and trade Review
Mechanise
.
Co operate with IMF and IBRD
General council functions.Supervise regular basis
operartion
on goods, services and TRIPSAct as Disputes Settelment bodyServe as a trade review mechanise
Establish goods services , TRIPS council as subsidiary body. Slide11
4th Session of Ministerial Conference
Held at – Doha (Capital of Qatar)
During 9-13 November, 2001
Participation – 142 member countries
China and Taiwan admitted as member country
Point of Attraction – Conflict of interest of developed countries and developing countries
Developed countries – A new round of multilateral trade negotiations covering “Singapore Issues”What is Singapore Issues?The "Singapore issues" refers to four working groups set up during the World Trade Organization Ministerial Conference of 1996 in Singapore. These groups are tasked with these issues: transparency in government procurement, trade facilitation (customs issues), trade and investment, and trade and competitionDeveloping Issues – Implementation IssuesDeveloped countries Vs. Developing CountriesIndia fought almost single handedlyDeveloped countries as expected won but India’s bold statements had a commendable impactIndia’s refusal to approve the agenda unless it was modified to include implementation issues
Effect – Chairman announced an explicit consensus required at 5
th
Ministerial Conference in 2003 for discussion of highly controversial Singapore IssuesEstablished – Power of single developing country, inspired for collective action by developing countries.Slide12
Developed CountriesA new round of multilateral trade negotiationsSlide13
Developing CountriesImplementation IssuesSlide14
dDoha Declaration
3 Major Declarations
On the negotiating agenda for the new WTO round
On some 40 implementation concerns of the developing countries
Political statement dealing with patents and public health
Remarkable achievement for developing country
In case of TRIPs and public health, waiver of patent law to face a national emergency
Intellectual property rights were subservient to public health concerns
Important outcomes/findings
In agriculture, subsidies need to be reduced and should be ultimately phased out.An exception is available for food security concerns
Success or failure of developing countries depends on support for their common cause.
The Declarations adopted by WTO Members at the Conference constitute a work programme of trade negotiations to be concluded no later than 1 January 2005.
The only exceptions are the negotiation on improving and clarifying the Dispute Settlement understanding, which is to conclude by the end of May 2003
The negotiations on a registration system for geographical indications, to conclude by the Fifth Ministerial Conference in 2003.
The declaration included all the points raised by developing country and developed country.
Finally, the Doha meet concluded by drawing up the “Doha Development Agenda” for new trade liberalization talks.Slide15
CLAUSES Tariff Reduction on Manufacturers Tariff on Agriculture
Liberalisation
of Services
Social Clause
Environmental Concerns
TRIPS and TRIMSSlide16
Tariff Reduction on ManufacturersMultilateral trade negotiation of several rounds have resulted in considerable reduction of tariff on manufacturers especially in developed countries.In developing countries although the share of exports has increased greatly in recent years, tariff levied by developed countries on imports from developing countries are still high.
Developing countries consists to a great extend of products like textiles and sugar which attract relatively high tariffs.
I
ndia’s duty rate were very high before 1990s. In some cases they were
upto
300% but after 1990s it reduced drastically and settled around 20%Slide17Slide18
Tariff on AgricultureTariff on agriculture are still high as compare to tariff on manufacturers.The rates on an average are:
But expansion of agricultural exports has not been satisfactory because of strict hygiene, product standardization and quality assurance.
Particular
Rate
Developed countries
15.6%
Developing countries
20.1%Slide19
Liberalisation of ServicesIn UR agreement negotiation as per provisions of GATS(General agreement on Trade and Services), there are new proposals in respect of services like Banking, Education, Telecom etc….GATS covers four modes of international delivery of services:
Cross border supply (
trasportation
services)
2. Commercial presence (provision of services through representative offices)
3. Consumption abroad (tourism)
4. Movement of personnel(entry and temporary stay of foreign consultants) Slide20
Banking servicesUnder this agreement foreign banks were allowed to establish branches of their banks in other countries.
Which lead to improvement in efficiency and better quality services in developing countries.
Developing countries facing problems:
difference in lending policy of foreign banks
loss of credit worthy borrowers
local banks getting
marginalisedSlide21
Educational ServicesUnder GATS education system has come to be treated as tradable services. Which lead to improvement in educational standards in developing countries.
Limitation:
Effort to preserve what is good in own system
Educational institutions getting
marginalisedSlide22
Social clauseAdoption of labour standards by developing countriesIt includes standards for wages, employment protection and protection of women and childrenSlide23
Environmental concernsIt includes environmental concern which the developed countries want to include in the negotiation.Slide24
TRIPS (Trade Related Intellectual Property Rights)
Anti dumping measures
It can be employed only if dumped imports are shown to cause serious damage to domestic industry
Safeguard actions
Country’s import restrictions for the protection of domestic market from import is called safeguard actions.Slide25
TRIMS(Trade related Investment Measures)The agreement on TRIMs provides list of TRIMs which they termed as inconsistent. 1. Local content requirement 2. Trade balancing requirement 3. Domestic sales requirementsSlide26
WTO – Developed and Developing countryDo developing countries lose out in the WTO system? It is true that the Uruguay Round mostly benefits the developed countries.That does not mean that developing countries like India are losing, but their gain is limited as compared to developed countries.Slide27
Effect of WTO on developing countries. Special considerationAgriculture Trade Liberalisation
Textiles Trade
Liberalisation
Dissimilar effects
Unequal Participation
Implementation IssuesSlide28
Special Consideration: As discussed in Uruguay Round, the developing countries, will have to lower the protection against competition from the unequal developed economies.Earlier also special consideration are given to developing countries, particularly to the least developed countries and to those who had balance of payment problems.The agreement lay down that member countries imposing trade restriction for should do in a way that causes minimum disruption to international trade and quantitative restriction should be avoided as far as possible .Slide29
Agriculture Trade liberalization: The developed countries would have to suffer the most by liberalization of the agriculture sector.The developed countries should completely liberalize agriculture without any reciprocity on part of the developing countries. ( is clearly illegal)
The UR give special consideration to the developing countries in respect of agriculture and developed countries will be hit hard.
For example: Agriculture subsidies in European countries have been of the order of 30 to 50%
So that exporters
benifited
and importers were
adversley affected because of increase in price due to cut in subsidies.Slide30
Textile trade Liberalization:International trade in textile was estimated to be worth $240 billion a year.Estimates are that after the phasing out of MFA(
Multifiber
Agreement), world exports of textile may go up by $25 billion a year.
India’s share in world textile trade is 2.2% i.e. $0.55 billion.
But real gain will depend on the country’s ability to compete with countries like China,
Hongkong
, Taiwan, South Korea etc. which are leaders in the textile trade.Slide31
Dissimilar effects:The effect of the UR is not the same on all countries. For example, a measure which favourably
affect one developed country may
unfavourabley
affect another developed country.
Latin American Countries were not very interested in
leberalising
the trade in textile because if they could gain a direct entry to the NAFTA through some regional agreement. They will not have to compete with India and Pakistan.Some countries will be poorer as a result of the UR Agreement. Ex. Saharan Africa, Indonesia, Caribbean island etc.
So we can say that no country is entirely pleased with UR proposals.Slide32
Unequal participation:The developing countries are disadvantage in the WTO system because of their inability to effectively participate in the negotiation process.They suffer from lack of intellectual and financial capability to meaningfully participate in the discussion.
Lack of seriousness on the part of the government is also responsible for the suffering of developing countries.Slide33
Implementation issues: Developed countries give more subsidies to their farmers .Rich countries have not taken steps to share their technology in the interest of reducing poverty.
Developing countries have submitted a large number of formal proposal for rectifying them.Slide34
WTO AND INDIASlide35
Impact on IndiaIndia Became founder member of WTO By ratifying the WTO agreement on December 30,1994.
By Being part of WTO India enjoys the most
favoured
nation status with all other members of WTO.
By entering in to bilateral negotiation with each and every trading partner which would amount to “having one ‘s arm twisted bilateral by the us and Japan on everything like intellectual property right, human rights and environmentally clean technologies for packing.
16-Sep-11
WTO & INDIASlide36
Effect on India s’ tradeIndia s ‘ market share in world exports improves from 0.5 % to 1%.
By taking advantage of the opportunities created 2.7 billion extra export per year.
After joining WTO in 1995 India followed policies of globalization.
As result of policy of globalization India have following effect in India’s export.
16-Sep-11
WTO & INDIA
Increase in Export
1994-95
1995-96
$
4.1
billion
$
5.5
billionSlide37
What are the polices and laws as WTO compliant in IndiaCopy right act in India meets the requirements of the trips agreement
A sui generis legislation
viz
the geographical indication act 1999
Protection of plant varieties and farmers right 2001
Protection and enforcement for different intellectual property
Amended patent law for mandatory disclosure
Connection on biological diversity came in force in December 1993.
16-Sep-11
WTO & INDIASlide38
1.Copy right act in India meets the requirements of the trips agreementCopy rights and related rights requires compliance with the provision of bern convention to which India is a signatory authority and also meets compliance with provision of trips agreement.
Trade and merchandise mark act 1958 was replaced by new act the trade mark act 1999.
16-Sep-11
WTO & INDIASlide39
2. A sui generis legislation viz the geographical indication act 1999
A sui generis legislation has been enacted in order to comply with requirement of the TRIPS agreement and to protect product if Indian origin as well.
The protection under the act is available only to the geographical indication registered under the act and authorized users.
16-Sep-11
WTO & INDIASlide40
3. Protection of plant varities and farmers right 2001.
The Indian parliament passed this act with main objective of giving significant thrust to agriculture growth and effective system for the protection of farmer plant varieties and farmers right.
As
result of
this it is expected to stimulate investment for research and both public and private sector for development of new plant varieties and appropriate returns on this.
16-Sep-11
WTO & INDIASlide41
4. Protection and enforcement for different intellectual propertyIndia provides protection for and enforcement of different intellectual property through national legislation as well as the code of civil procedure and code of criminal procedure.
16-Sep-11
WTO & INDIASlide42
5. Amended patent law for mandatory disclosureThe amended patent law of contains provision for mandatory disclosure of source and geographical origin of the biological material used in the invention while applying for patents.
Also provision for the wrong disclosure or non disclosure same as ground for opposition and for revocation of the patents.
16-Sep-11
WTO & INDIASlide43
6. Connection on biological diversity came in force in December 1993.India is party to connection on biological diversity come in force in December 1993.
It offers opportunities to India to realize the benefit of this resources.
The proposed legislation addresses the basic concerns of access to collection and utilization of biological an knowledge by foreigners and sharing of benefits arising out of such success.
16-Sep-11
WTO & INDIASlide44
Benefits of WTOSignificant achievements in reducing tariff and non-tariff barriers.2. Economic growth.
3. Increase in competition, improvement in quality and productivity.
4. Multilateral discussion of economic relations.
5. System for settlement of trade disputes.
6. Mechanism to deal with violation of trade agreements
7. Research related to trade global trade.Slide45
Criticisms of WTO.Negotiations and decision making in the WTO are dominated by the developed countries.Many developing countries do not have the financial and knowledge resources to efficiently participate in the WTO discussions and negations.
because of the dependence of developing countries on the developed ones, the developed countries are able to resort to arm-twisting tactics.
Many of the policy liberalizations are done without considering the vulnerability of the developing countries and the possible adverse effect on them.
The WTO has not been successful in imposing the organization’s on the developed countries.
the developing countries have, in general, been getting a raw deal from the WTO.Slide46
THE WTO IMPACTSGATT/ GATSLiberalisation of trade in goods and service.
-Increase competition from foreign goods and services.
-Threat to domestic firm.
-Benefits consumers.
-Increase competitiveness of domestic firms.
-Opportunities for Indian firms to exports.Slide47
TRIMS-Liberalisation of international investments.-Increase foreign investments and competitiveness from foreign firms.
-Facilitates joint ventures and technology acquisition.
-Facilitates foreign investment by Indian firms.
TRIPS
-Provides monopoly power to owners of intellectual property.