INTRODUCTION TO WTO

WTO Established Jan 1, 1995 Created by : Uruguay round negotiation(1986-1994) Members: 153 Most recent: Saudi Arabia December 2005 Including: China (as of 2001) Not including: Russia, Iran, Iraq, N. Korea Headquarters: Geneva, Switzerland

Why gatt replaced by wto ?

 Reasons : 1.

Gatt rules applied to trade only in merchandise goods.

2. Gatt dispute settlement system is slow 3. Gatt was just provisional agreement.

STRUCTURE OF WTO
The WTO is run by its member governments. All major decisions are made by the membership as a whole, either by ministers ,who meet at least once every two years, Decisions are normally taken by consensus. the WTO is different from some other international organizations such as the World Bank and International Monetary Fund. In the WTO, power is not delegated to a board of directors or the organizations head.

Highest authority:
The countries make

their decisions through various councils and committees, whose membership consists of all WTO members.
The Ministerial

Conference can take decisions on all matters under any of the multilateral trade agreements.

CHART OF THE WTO STRUCTURE

Ministerial Conference

General Council

Dispute Settlement Body

Trade Policy Review Body

Council for

Council for

Intellectual

Trade in Goods

Trade in Services

Property Rights

1. Council for Trade in Goods

Since 1995, the updated GATT has become the WTOs umbrella agreement for trade in goods. It has dealing with specific sectors such as agriculture and textiles, and with specific issues such as state trading, product standards, subsidies and actions taken against dumping.

For example : JAPAN is better than INDIA at making automobiles, and INDIA is better than JAPAN at making Agriculture and Textile product . It is obvious that both would benefit if JAPAN specialized in automobiles and INDIA specialized in Agriculture and Textile and they traded their products. That is a case of absolute advantage.

Absolute advantage
JAPAN produce Automobile product.
INDIA produce Agriculture and textile product.

2. Council for Trade in Services

Banks insurance firms telecommunications

companies tour operators hotel chains transport companies

Example of Telecommunication services:

The telecommunications sector has a dual role: it is a distinct sector of economic activity; and it is an underlying means of supplying other economic activities for

example: electronic money transfers

3. INTELLECTUAL PROPERTY
The WTOs Intellectual Property Agreement amounts to

rules for trade and investment in ideas and creativity. The rules state how

Copyrights patents trademarks geographical names used to identify products industrial designs intellectual property should be protected when trade is involved.

4.DISPUTE SETTLEMENT
The WTOs procedure for resolving trade quarrels under the Dispute Settlement. Understanding is vital for enforcing the rules and therefore for ensuring that trade flows smoothly.

How long to settle a dispute?

60 days = Consultations mediation 45 days = Panel set up panelists appointed 6 months = Final panel report to parties 3 weeks = Final panel report to WTO members 60 days = Dispute Settlement Total = 1 year = (without appeal) 6090 days = Appeals report 30 days = Dispute Settlement
Total = 1year 3month

5.TRADE POLICY REVIEW

The Trade Policy Review Mechanisms purpose is to improve transparency, to create a greater understanding of the policies that countries are adopting, and to assess their impact.

2.function of organization
The WTOs overriding objective is to help trade flow smoothly, freely, fairly and predictably. It does this by: Administering trade agreements Acting as a forum for trade negotiations Settling trade disputes Reviewing national trade policies Assisting developing countries in trade policy Organize training programmers Cooperating with other international organizations

DEVELOPING COUNTRIES

THE WTO DEALS WITH THE SPECIAL NEEDS OF DEVELOPING COUNTRIES IN THREE WAYS

1. WTO Agreements 2. WTO Committees 3. WTO Technical Cooperation

1. WTO AGREEMENTS
In the agreements: more time, better terms Legal assistance: a Secretariat service Least-developed countries: special focus A maison in Geneva: being present is important,

but not easy for all

2. WTO COMMITTEES
Trade and Development Committee Sub-committee on Least-Developed Countries The Doha agenda committees

3. WTO TECHNICAL COOPERATION

Training Seminars workshops

SOME ISSUES RAISED

Participation in the system: opportunities and

concerns Erosion of preferences The ability to adapt: the supply-side

Ministerial Conference
First ministerial conference at Singapore on December 9

13,1196. Second ministerial conference at Geneva on May 1820,1998 Third ministerial conference at Seattle on November 30december 3,1999. Fourth ministerial conference at Doha on November 913,2001. Fifth ministerial conference at Cancun on September 1014,2003. Sixth ministerial conference at Hong Kong on December 13-18,2005.

First ministerial conference at Singapore on December 9-13,1196.

To strengthen the WTO as a forum as a forum for

negotiation. Assess the implementation of commitments under WTO agreements. Examine developments in the world economy. Address the challenges of an evolving world economy.

Second ministerial conference at Geneva on May 18-20,1998

Ministers agreed to work together in the WTO as in

the IMF and the World Bank to improve the coherence of international economic policy making with view to maximising the contribution that open, rule based trading system can make to stable growth for economies at all levels of development.

Third ministerial conference at Seattle on November 30-december 3,1999

The meeting of Washington, USA was suspended

without adopting any declaration.

Fourth ministerial conference at Doha on November 9-13,2001.

In the light of the global economic slowdown , the

ministers expressed determination to maintain the process of reform and liberalization of trade policies , thus ensuring that the system plays in full part in promoting recovery , growth and development objectives set out in the marrkesh agreement establishing the WTO and pledged to reject the use of protectionism.

The Doha Round is the latest round of trade negotiations among the WTO membership. Its aim is to achieve major

reform of the international trading system through the introduction of lower trade barriers and revised trade rules. The work programmed covers about 20 areas of trade. The Round is also known semi-officially as the Doha Development Agenda as a fundamental objective is to improve the trading prospects of developing countries.

Fifth ministerial conference at Cancun on September 10-14,2003.

Ministers launched at doha successfully by the date of

1st january,2005. Ministers welcomed the decision on implementation of doha declaration on the TRIPS agreement and public health.

Sixth ministerial conference at Hong Kong on December 1318,2005.

The ministerial declaration includes, progress on

negotiations and further actions in the areas of environment, dispute settlement understanding, special & differential treatment, matters relating to implementation, trips small economies trade, debt and finance, trade & transfer of technology, Ecommerce and least developed countries.

Impact on India:
Problems faced Commitments made Potential solutions to existing problems

Problems faced by India in WTO and its implementation:

Predominance of developed nations in negotiations Non-tariff barriers being created by developed

nations. Regional cooperation groups posing threat to utility of WTO agreement itself, which is multilateral encompassing all member countries Poor implementation of Doha Development Agenda Pressure to dismantle MFA (Muti Fibre Agreement) Under TRIPS question of high cost

Indias committment to WTO:

Reduction in tariff and non-tariff barriers Amendment in Patent Act; Trade Related Intellectual

Property rights (TRIPs) Sui generis system Trade related investment measures (TRIMs) General Agreement on Trade services (GATS)

What India should do?

Should speed up internal reforms in building up

world-class infrastructure Should focus on R&D in important fields Helping textile and garment Industry go multinational Invoking reforms facilitating major FDI infows Should downsize non-plan expenditure in Subsidies Lots of potential in renewable energy generation business

The 10 benefits
1. The system helps promote peace 2. Disputes are handled constructively 3. Rules make life easier for all 4. Freer trade cuts the costs of living 5. It provides more choice of products and qualities 6. Trade raises incomes 7. Trade stimulates economic growth 8. The basic principles make life more efficient 9. Governments are shielded from lobbying 10. The system encourages good government

Criticisms Of WTO
1> WTO is the fundamentally undemocratic
2> WTO will not make us safer 3> WTO tramples labour and Human Rights 4> WTO Would privatize essential services 5> WTO is increasing inequality 6> WTO is increasing hunger 7> WTO hurts poor ,small countries in favour of rich

powerful nations

WTO is fundamentally undemocratic

-> Environmental ,Human Rights, labour organization

is consistently ignored Example: Industry sector advisory committees

WTO will not make us safer

-> The Domination of the international trade by rich

countries for the benefit of the individual interest Example : Agriculture Export

WTO tramples labour And human rights

-> WTO has ruled that it is a illegal for government to

ban a product based on the way It is produced such as a good produced with a child labour. -> It has also rules that government can not take into account non commercial value such as human rights

WTO Would privatize essential services

-> Educations, healthcare, Energy and water -> Elder and childcare ,park maintenance , telecommunication, shipping, postal service, and tourism -> Working Class Communities and communities of colors are suffer the most

WTO is increasing inequality

-> The united nation development program reports that the richest 20% of the world population consume 86% of the world resources while The poorest 80% consume just 14%

WTO is increasing hunger

-> Corporate control of food distribution as many as 800 Million people worldwide suffer from chronic malnutrition.

WTO hurts poor, small countries in favor of rich powerful nations

-> Many important decision get made in process whereby poor countries negotiators are not even invited to closed door metting and there agreements are announced that poor countries did not even know where being discussed. ->