WTO
IBS B
01/29/2021
World Bank and IMF are called Bretton Wood institutions; they
were established at Bretton Wood Conference in 1944. The
original Bretton Woods agreement also included plans for an
International Trade Organisation (ITO)
ITO was to be created to establish multilateral rules for the
settlement of trade disputes and to resist protectionist
demands and provide for greater legal certainty. The ITO never
came into existence as it was eventually rejected by the U.S.
The General Agreement on Tariffs and Trade (GATT) came to
replace the ITO. This ad hoc and provisional mechanism GATT
was replaced by WTO in 1994.
01/29/2021
The World Trade Organization (WTO) is an intergovernmental
organization that regulates international trade.
The WTO officially commenced on 1 January 1995 under
the Marrakesh Agreement, signed by 124 nations on 15 April
1994, replacing the General Agreement on Tariffs and Trade
(GATT), which commenced in 1948.
It is the largest international economic organization in the world.
01/29/2021
GATT
The GATT’s purpose was to make international trade easier.
The GATT held eight rounds in total from April 1947 to
December 1993, each with significant achievements and
outcomes.
01/29/2021
One of the key achievements of the GATT was that of trade
without discrimination.
Every signatory member of the GATT was to be treated as equal
to any other. This is known as the MFN principle, and it has been
carried through into the WTO.
A practical outcome of this is, once a country had negotiated a
tariff cut with some other countries (usually its most important
trading partners), this same cut would automatically apply to all
GATT signatories.
Escape clauses did exist, whereby countries could negotiate
exceptions if their domestic producers would be particularly
harmed by tariff cuts.
Most nations adopted the MFN principle in setting tariffs, which
largely replaced quotas. Tariffs (preferable to quotas but01/29/2021
still a
trade barrier) were in turn cut steadily in rounds of successive
The first meeting was in Geneva, Switzerland, and included 23
countries. The focus in this opening conference was on tariffs.
The members established tax concessions touching over US$10
billion of trade around the globe.
The second series of meetings began in April 1949 and were held
in Annecy, France. Again, tariffs were the primary topic.
Thirteen countries were at the second meeting, and they
accomplished an additional 5,000 tax concessions reducing
tariffs.
Starting in September 1950 the third series of GATT meetings
occurred in Torquay, England. This time 38 countries were
involved, and almost 9,000 tariff concessions passed, reducing
tax levels by as much as 25%.
01/29/2021
Japan became involved in the GATT for the first time in 1956 at the
fourth meeting along with 25 other countries. The meeting was in
Geneva, Switzerland, and again the committee reduced worldwide
tariffs, this time by US$2.5 billion.
This series of meetings and reduced tariffs would continue, adding new
GATT provisions in the process. The average tariff rate fell from
around 22%, when the GATT was first signed in Geneva in 1947, to
around 5% by the end of the Uruguay Round, concluded in 1993.
In 1964 the GATT began to work toward curbing predatory pricing
policies. These policies are known as dumping. As the years have
passed, the countries have continued to attack global issues, including
addressing agriculture disputes.
01/29/2021
Difference between GATT and WTO
GATT was provisional. WTO is permanent.
GATT has contracting WTO has members.
parties. WTO does not permit this.
GATT system allows WTO is more powerful and
existing domestic, legislation dispute settlement mechanism
to continue even if it violated was more efficient.
GATT agreement.
GATT was less powerful and
dispute settlement
mechanism was less efficient
01/29/2021
Primary goals
Promote trade flows by encouraging nations to adopt non
discriminatory, predictable trade policies.
Reduce remaining trade barriers through multilateral
negotiations.
Establish impartial procedures for resolving trade disputes
among members.
01/29/2021
Objectives
To set and enforce rules for international trade.
To provide a forum for negotiating and monitoring further trade
liberalization.
No resolve trade disputes.
To increase the transparency of decision-making processes.
To cooperate with other major international economic institutions
involved in global economic management.
To help developing countries benefit fully from the global trading
system.
Although shared by the GATT, in practice these goals have been pursued
more comprehensively by the WTO.
For example, whereas the GATT focused almost exclusively on goods—
though much of agriculture and textiles were excluded—the WTO
encompasses all goods, services, and intellectual property, as well as
some investment policies.
01/29/2021
Rules
The rules embodied in both the GATT and the WTO serve at least
three purposes.
First, they attempt to protect the interests of small and weak
countries against discriminatory trade practices of large and
powerful countries. The WTO’s MFN and national-treatment
articles stipulate that each WTO member must grant equal market
access to all other members and that both domestic and foreign
suppliers must be treated equally.
Second, the rules require members to limit trade only through
tariffs and to provide market access not less favourable than that
specified in their schedules (i.e., the commitments that they
agreed to when they were granted WTO membership or
subsequently).
Third, the rules are designed to help governments resist lobbying
efforts by domestic interest groups seeking special favours.
01/29/2021
Although some exceptions to the rules have been made, their
Functions of WTO
Administering WTO trade agreements
Conducting forum for trade negotiations
Handling trade disputes
Monitoring national trade policies
Providing technical assistance and training for developing
countries
Cooperation with other international organizations
01/29/2021
Major challenges
The General Agreement on Trade in Services (GATS)
One challenge facing the WTO is reducing barriers to trade in
services. The Uruguay round developed a set of principles
under which such trade should be conducted.
For instance, government controls on service trade should be
administered in a non-discriminatory fashion.
01/29/2021
Agreement on Trade-related Aspects of Intellectual Property Rights
(TRIPS)
Entrepreneurs, artists, and inventors have been hurt by inadequate
enforcement by many countries of laws prohibiting illegal usage,
copying, or counterfeiting of intellectual property. These problems are
particularly widespread in the music, filmed, entertainment, and
computer software industries.
The Uruguay round agreement substantially strengthened the
protection granted to owners of intellectual property rights and
developed enforcement and dispute settlement to punish violators.
Because most of such owners reside in developed countries, and
many violators live in developing countries, this caused officials from
these countries to argue that the Uruguay Round’s protection of
intellectual property must be relaxed in the case of life saving drugs
consumed in less developed countries.
01/29/2021
Trade Related Investment Measures Agreement (TRIMS)
This agreement in the Uruguay Round started eliminating
national regulations on FDI that may distort or restrict trade.
TRIMS agreement affects trade-balancing rules - countries
may not require foreign investors to limit their imports of
inputs to an amount equal to their exports of local production.
Foreign-exchange access: countries may not restrict foreign
investors’ access to foreign exchange.
Domestic sales requirement: Countries may not require the
investors to sell a percentage of a factory’s output in the local
market.
01/29/2021
Tariffs and WTO
https://
[Link]/english/tratop_e/tariffs_e/tariffs_e.htm
01/29/2021
Thank you
01/29/2021
