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GATT & WTO :

AN OVERVIEW
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A Project On
GATT & WTO : AN OVERVIEW
Submitted to
University of Mumbai

in the partial fulfillment of M.Com In Management part 1 Degree

by

Name : HITESH BORICHA.

Class: M.COM IN MANAGEMENT PART-1

Semester-1
Roll No. :15003

Studying at
Parle Tilak Vidyalaya.
Mulund College Of Commerce,
S.N.Road,Mulund(West),Mumbai-80.

Academic Year – 2012-2013

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DECLARATION

I Hitesh Boricha a student of Class M.Com In Management part 1, Roll

No. 15003, academic years 2012-2013 ,studying at Mulund College Of
Commerce, hereby declare that the work done on the project entitled GATT
& WTO : AN OVERVIEW is true and original and any reference used in the
project is duly acknowledged.

Date: Signature of student

(Hitesh Boricha)
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CERTIFICATE

I,Prof. S. A. Pawar & Prof.C. K. Kaul, hereby certify that Mr.Hitesh

Boricha studying in Class M.Com In Management Part 1 Roll No. 15003
academic years 2012-2013 at Mulund College Of Commerce has completed
project entitled GATT & WTO : AN OVERVIEW is under my guidance.

To the best of my knowledge information submitted in the project is

original and authentic.

_______________________ ______________________
Signature Of The Principal Signature Of The Project Co-ordinator
(Prof. S. A. Pawar)

______________________
Signature Of The Project Co-ordinator
(Prof. C. A. Kaul)
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ACKNOWLEDGEMENTS

First of all I would like to take this opportunity to thank the Mumbai University
for having projects as a part of the Master in Commerce curriculum.

I would also like to express my sincere gratitude to Prof.Seema Ashar &

Prof.Roopali Kotekar who have greatly influenced & shaped the contents of this
project in a very interesting manner.

I also would like to thank my brother who has helped and encouraged me throughout the
working of the project.

Last but not the least I would like to thank the Almighty for always helping me.
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Serial No. Contents Page No.

1 Introduction of GATT 7
2 Text Of Agreements & GATT Years 9
3 Basic Principles Of Gatt 10
4 Trade Negotiations Under GATT 14
5 Explanatory Notes 16
6 Success & Weaknesses Of GATT 19
7 Uruguay Round 20
8 What Is W.T.O. 22
9 The Agreements 23
10 World Trade Organisations & Functions 24
11 Objectives Of W.T.O. 26
12 Basic Principles Of W.T.O. 27
13 How is the WTO Different From GATT 33
14 World Trade In Services 35
15 Characteristics & Categories Of Services 36
16 Obstacles Or Restrictions In Service Sector 37
17 Institutional Infrastructure For Export Promotion 37
In India
18 Bibliography 38
INDEX
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The General Agreement on Tariffs and Trade (GATT)

Introduction:

The General Agreement on Tariffs and Trade (GATT), which was signed in 1947, is a

multilateral agreement regulating trade among 153 countries. According to its preamble, the

purpose of the GATT is the "substantial reduction of tariffs and other trade barriers and the

elimination of preferences, on a reciprocal and mutually advantageous basis."

The GATT functioned de facto as an organization, conducting eight rounds of talks addressing

various trade issues and resolving international trade disputes. The Uruguay Round, which was

completed on December 15, 1993 after seven years of negotiations, resulted in an agreement

among 117 countries (including the U.S.) to reduce trade barriers and to create more

comprehensive and enforceable world trade rules. The agreement coming out of this round, the

Final Act Embodying the Results of the Uruguay Round of Multilateral Trade Negotiations, was

signed in April 1994. The Uruguay Round agreement was approved and implemented by the

U.S. Congress in December 1994, and went into effect on January 1, 1995.

WorldTradeLaw.net contains WTO negotiating history materials. This agreement also

created the World Trade Organization (WTO), which came into being on January 1, 1995. The

WTO implements the agreement, provides a forum for negotiating additional reductions of trade

barriers and for settling policy disputes, and enforces trade rules. The WTO launched the ninth

round of multilateral trade negotiations under the "Doha Development Agenda" (DDA or Doha

Round) in 2001. TheWTO's website provides information about the Doha Round, including
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links to texts that have been generated by the negotiations and information regarding upcoming

meetings.

GATT and WTO materials are available in the Goodson Law Library and in Perkins. The

Davis Library at the University of North Carolina has been a depository library for GATT

materials, and continues to receive most of the materials published by the WTO.

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.

The original intention was to create a third institution to handle the trade side of international

economic cooperation, joining the two “Bretton Woods” institutions, the World Bank and the

International Monetary Fund.

The General Agreement on Tariff and Trade is a multilateral treaty that lays down

agreedrules for conducting international trade. It came into force in January

1948. 119governments which together account for 90 per cent of the world merchandise

tradesubscribe it to. Its basic aim is to liberalize trade and for the last 45 years it has

beenconcerned with negotiating the reduction of trade barriers and with international

traderelations. The rapid and uninterrupted growth in the volume of international trade till1992

provides a good testimony for the success of the GATT

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 Text of Agreements and Other Documents

The text of the original agreement establishing the GATT, with annexes and schedules, is

attached to the Final Act of the United Nations Conference on Trade and Employment. It was not

signed as a separate document, but is in force among the contracting parties through the Protocol

of Provisional Application and the subsequent Protocols of Accession. These documents are

found at 61 Stat. A3 and 55 U.N.T.S. 187. The Protocol of Provisional Application, which was

signed by the eight principal states involved in the negotiations (including the U.S.), is published

at 61 Stat. A2051 and 55 U.N.T.S. 308.

The GATT years: from Havana to Marrakesh

The WTO’s creation on 1 January 1995 marked the biggest reform of international trade since

after the Second World War. It also brought to reality — in an updated form — the failed

attempt in 1948 to create an International Trade Organization.

During that period, the trading system came under GATT, salvaged from the aborted attempt to

create the ITO. GATT helped establish a strong and prosperous multilateral trading system that

became more and more liberal through rounds of trade negotiations. But by the 1980s the system

needed a thorough overhaul. This led to the Uruguay Round, and ultimately to the WTO.
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Basic Principles Of GATT:

1.Trade without discrimination:

Trade must be conducted on the basis of non-discrimination. All contracting parties are bound to

grant to each other treatmentas favourable as they would to any country (most favoured nation)

in theapplication and administration of import and export duties and charges.Expectations to this

basic rule are allowed only in the case of regional tradingarrangements and the developing

countries.

2.Protection only through tariff:

Protection should be given to domesticindustries only through customs tariffs and not through

other commercialmeasures. The aim of this rule is to make the extent of protection clear and

toMake competition possible. Exception is, however, made in the case of developing countries

where the demand for imports by development may requirethem to maintain quantitative

restrictions in order to prevent an excessive drain ontheir foreign exchange resources.

3.A Stable basis of trade:

The binding of the tariff levels negotiated among thecontracting countries provides a stable

predictable basis for trade. Binding of tariffs means that these cannot

be increased unilaterally. Although provision ismade for the renegotiation of bound tariffs, a

return tariffs is discouraged by therequirement that any increase be compensated for.

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4.Consultation:

A basic principle of GATT is that member-countries shouldconsult one another on trade matters

and problems. They can call on GATT for afair settlement of cases in which they feel that their

rights under the GATT arebeing withheld or compromised by other members.The agreement

consists of four parts:Part I: Main obligations of the contracting parties;Part II: A code of fait

trade practices to guide members in their commercial policies;Part III: Conditions for

membership and withdrawal; andPart IV: Expansion of trade of developing countries through

special concessions.

The General Agreement on Tariffs and Trade 1994 ("GATT 1994") shall consist of:

(a) the provisions in the General Agreement on Tariffs and Trade, dated

30 October 1947, annexed to the Final Act Adopted at the Conclusion of the

Second Session of the Preparatory Committee of the United Nations Conference

on Trade and Employment (excluding the Protocol of Provisional Application), as

rectified, amended or modified by the terms of legal instruments which have

entered into force before the date of entry into force of the WTO Agreement;
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(b) the provisions of the legal instruments set forth below that have entered into force

under the GATT 1947 before the date of entry into force of the WTO Agreement:

(i) protocols and certifications relating to tariff concessions;

(ii) protocols of accession (excluding the provisions (a) concerning

provisional application and withdrawal of provisional application and (b)

providing that Part II of GATT 1947 shall be applied provisionally to the

fullest extent not inconsistent with legislation existing on the date of the

Protocol);

(iii) decisions on waivers granted under Article XXV of GATT 1947 and still

in force on the date of entry into force of the WTO Agreement1;

(iv) other decisions of the CONTRACTING PARTIES to GATT 1947;

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(c) the Understandings set forth below:

(i) Understanding on the Interpretation of Article II:1(b) of the General

Agreement on Tariffs and Trade 1994;

(ii) Understanding on the Interpretation of Article XVII of the General

Agreement on Tariffs and Trade 1994;

(iii) Understanding on Balance-of-Payments Provisions of the General

Agreement on Tariffs and Trade 1994;

(iv) Understanding on the Interpretation of Article XXIV of the General

Agreement on Tariffs and Trade 1994;

(v) Understanding in Respect of Waivers of Obligations under the General

Agreement on Tariffs and Trade 1994;

(vi) Understanding on the Interpretation of Article XXVIII of the General

Agreement on Tariffs and Trade 1994; and

(d) the Marrakesh Protocol to GATT 1994.

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Trade Negotiations under GATT:

Eight major trade negotiations took place under the GATT auspice as follows:

1.The first round in 1947 (Geneva) saw creation of the GATT.

2.The second round in 1949 (Annecy, France) involved negotiation with nationsthat desired

GATT membership. The principal emphasis was on tariff negotiations.

3.The third round in 1951 (Torquay, England) continued accession and tariff reduction

negotiations.

4.The fourth round in 1956 (Geneva) proceeded along the same track as earlierrounds.

5.The fifth round in 1960-61 (Geneva, Dillon Round) involved further revisionof the GATT and

the addition of more countries.

6.The sixth round in 1964-67 (Geneva Kennedy Round) was hybrid of earlierproduct by product

approach with across the board tariff reductions.

7.The seventh round in 1973-79 (Geneva, Tokya Round) centred on thenegotiation of additional

tariff cuts and developed a series of agreementsgoverning the use of non-tariff measures.
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8.The eight round (Uruguary Round ) started in 1986 and was concluded inApril 1994.As a

result of these negotiations, the tariff rates for thousands of items entering into worldtrade were

reduced or bound against increase. The average level of tariffs onmanufactured goods in

industrial countries was bout 3 per cent now as compared to about 40 percent in the immediate

second world was years. Developing countries weredisappointed with Kennedy round and

the Tokyo Round. However, given its provisionalnature and the limited field of action, the

success of GATT in promotion and securingliberalisation of much of world trade over 47 years

was incontestable.
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Explanatory Notes

(a) The references to "contracting party" in the provisions of GATT 1994 shall be

deemed to read "Member". The references to "less-developed contracting party" and "developed

contracting party" shall be deemed to read "developing country Member" and "developed

country Member". The references to "Executive Secretary" shall be deemed to read "Director-

General of the WTO".

(b) The references to the CONTRACTING PARTIES acting jointly in Articles XV:1,

XV:2, XV:8, XXXVIII and the Notes Ad Article XII and XVIII; and in the provisions on special

exchange agreements in Articles XV:2, XV:3, XV:6, XV:7 and XV:9 of GATT 1994 shall be

deemed to be references to the WTO. The other functions that the provisions of GATT 1994

assign to the CONTRACTING PARTIES acting jointly shall be allocated by the Ministerial

Conference.

(c) (i) The text of GATT 1994 shall be authentic in English, French and Spanish.

(ii) The text of GATT 1994 in the French language shall be

subject to the rectifications of terms indicated in Annex A to document

MTN.TNC/41.
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(iii) The authentic text of GATT 1994 in the Spanish

language shall be the text in Volume IV of the Basic Instruments

and Selected Documents series, subject to the rectifications of

terms indicated in Annex B to document MTN.TNC/41.

3. (a) The provisions of Part II of GATT 1994 shall not apply to measures taken by a

Member under specific mandatory legislation, enacted by that Member before it became a

contracting party to GATT 1947, that prohibits the use, sale or lease of foreign-built or foreign-

reconstructed vessels in commercial applications between points in national waters or the waters

of an exclusive economic zone. This exemption applies to: (a) the continuation or prompt

renewal of a non-conforming provision of such legislation; and (b) the amendment to a non-

conforming provision of such legislation to the extent that the amendment does not decrease the

conformity of the provision with Part II of GATT 1947. This exemption is limited to measures

taken under legislation described above that is notified and specified prior to the date of entry

into force of the WTO Agreement. If such legislation is subsequently modified to decrease its

conformity with Part II of GATT 1994, it will no longer qualify for coverage under this

paragraph.

(b) The Ministerial Conference shall review this exemption not later than five years

after the date of entry into force of the WTO Agreement and thereafter every two years for as

long as the exemption is in force for the purpose of examining whether the conditions which

created the need for the exemption still prevail.

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(c) A Member whose measures are covered by this exemption shall annually submit a

detailed statistical notification consisting of a five-year moving average of actual and expected

deliveries of relevant vessels as well as additional information on the use, sale, lease or repair of

relevant vessels covered by this exemption.

(d) A Member that considers that this exemption operates in such a manner as to

justify a reciprocal and proportionate limitation on the use, sale, lease or repair of vessels

constructed in the territory of the Member invoking the exemption shall be free to introduce such

a limitation subject to prior notification to the Ministerial Conference.

(e) This exemption is without prejudice to solutions concerning specific aspects of

the legislation covered by this exemption negotiated in sectoral agreements.

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Did GATT Succeed?

GATT was provisional with a limited field of action, but its success over 47 years in promoting

and securing the liberalization of much of world trade is incontestable. Continual reductions in

tariffs alone helped spur very high rates of world trade growth during the 1950s and 1960s —

around 8% a year on average. And the momentum of trade liberalization helped ensure that trade

growth consistently out-paced production growth throughout the GATT era, a measure of

countries’ increasing ability to trade with each other and to reap the benefits of trade. The rush of

new members during the Uruguay Round demonstrated that the multilateral trading system was

recognized as an anchor for development and an instrument of economic and trade reform.

WEAKNESS OF GATT:

The weakness of GATT is that its benefits have mainly gone to the industrializedcountries.

Under GATT, Most negotiations and tariff reductions have taken place inrespect of

manufactured goods. So the trade gap for the developing countries has becomemore

unfavourable. A search for a new institutional arrangement, especially one whichone would

tackle the problems of the global trade of developing countries, led to theformation of united

Nations Committee on Trade and Development in 1946.

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The Uruguay Round, Passing from GATT to WTO

The last and largest GATT round, was the Uruguay Round which lasted from 1986 to 1994 and

led to the WTO’s creation. Whereas GATT had mainly dealt with trade in goods, the WTO and

its agreements now cover trade in services, and in traded inventions, creations and designs

(intellectual property).

The Final Act Embodying the Results of the Uruguay Round of Multinational Trade

Agreementsconsists of the Final Act itself, the Agreement establishing the WTO ("WTO

Agreement") and agreements annexed to it, and additional GATT agreements, decisions and

declarations. The text can be found in various sources: 1867 U.N.T.S. 3, 33 I.L.M. 9 (1994)

(December 1993 text) and 33 I.L.M. 1143 (1994)(April 1994 text), The Final Act Embodying the

Results of the Uruguay Round of Multilateral Trade Negotiations(K4603 1987 .A3 1994), The

Legal Texts: The Results of the Uruguay Round of Multilateral Trade Negotiations (K4603

1987.A4 1999); reprint of The Results of the Uruguay Round of Multilateral Trade Negotiations:

The Legal Texts (Perkins Ref. 382.92 R436, 1994)and in The Uruguay Round of Multilateral

Trade Negotiations (Microforms Room, filed with GATT Documents). The text is also available

online on theWTO website, in LexisNexis (INTLAW;GATT) and Westlaw (GATT database

with the search pr(final)), and on WorldTradeLaw.net. Two of the most important of the annexed

agreements are the General Agreement on Trade in Services (GATS), 33 I.L.M. 44 (1994)

(December 1993 text) and 1869 UNTS 183, 33 I.L.M. 1167 (1994) (April 1994 text) and
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the Agreement on Trade Related Aspects of Intellectual Property (TRIPS), 33 I.L.M. 81 (1994)

(December1993 text) and 1869 UNTS 299, 33 I.L.M. 1197 (1994) (April 1994 text)
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What is the World Trade Organization?

The World Trade Organization (WTO) deals with the rules of trade between nations at a global

or near-global level. But there is more to it than that.

Above all, it’s a negotiating forum …      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 result of

negotiations.

It’s a set of rules …      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.

And it helps to settle disputes …      This is a third important side to the WTO’s work. Trade

relations often involve conflicting interests. Agreements, including those painstakingly

negotiated in the WTO system, often need interpreting. The most harmonious way to settle these

differences is through some neutral procedure based on an agreed legal foundation. That is the

purpose behind the dispute settlement process written into the WTO agreements.

Born in 1995, but not so young

The WTO began life on 1 January 1995, but its trading system is half a century older. Since

1948, the General Agreement on Tariffs and Trade (GATT) had provided the rules for the

system.
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The agreements

The WTO Agreements cover goods, services and intellectual property. They spell out the

principles of liberalization, and the permitted exceptions. They include individual countries’

commitments to lower customs tariffs and other trade barriers, and to open and keep open

services markets.

The agreements for the two largest areas — goods and services — share a common three-part

outline, even though the detail is sometimes quite different.

•  They start with broad principles: the General Agreement on Tariffs and Trade (GATT)

(for goods), and the General Agreement on Trade in Services (GATS). (The third area, Trade-

Related Aspects of Intellectual Property Rights (TRIPS), also falls into this category although at

present it has no additional parts.)

•  They come extra agreements and annexes dealing with the special requirements of

specific sectors or issues.

•  Finally, there are the detailed and lengthy schedules (or lists) of commitments made by

individual countries allowing specific foreign products or service-providers access to their

markets.
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WORLD TRADE ORGANISATION

Established on January 1, 1995 WTO is the embodiment of the Uruguary Round resultsand the

successor to GATT. T is not a simple extension of GATT; it completely replacesits

predecessor and has a very different character. As on 6’thNovember 2000, the membership of the

WTO stood at 139. 76 Governments became members of the WTO onits first day. The present

membership accounts for more than 90 per cent of world trade.Many more countries have

requested to WTO. The WTO is based in Geneva,Switzerland. 

Its essential functions are as follows.

1.To administer the trade policy mechanism.

2.To achieve greater coherence in global economic-policy making incooperation with World

Bank and IMF.

3.To provide a forum for negotiations among its members concerning theirmultilateral trade

relations in matters dealt with in the agreements.

4.To administer the understandings on Rules on Procedures governing thesettlement of disputes.

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5.To introduce the idea of 'sustainable development' in relation to the optimaluse of the world

resources and the need to protect and preserve theenvironment in a manner consistent with the

various levels of nationaleconomic development.

6.To recognize that there is a need for positive efforts to ensure that thedeveloping countries,

especially, the least developed countries secure a bettershare of the growth of the international

trade.
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Objectives of WTO:

Important objectives of WTO are mentioned below:

(i) to implement the new world trade system as visualised in the Agreement;

(ii) to promote World Trade in a manner that benefits every country;

(iii) to ensure that developing countries secure a better balance in the sharing of the advantages

resulting from the expansion of international trade corresponding to their developmental needs;

(iv) to demolish all hurdles to an open world trading system and usher in international economic

renaissance because the world trade is an effective instrument to foster economic growth;

(v) to enhance competitiveness among all trading partners so as to benefit consumers and help in

global integration;

(vi) to increase the level of production and productivity with a view to ensuring level of

employment in the world;

(vii) to expand and utilize world resources to the best;

(viii) to improve the level of living for the global population and speed up economic

development of the member nations.

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Basic Principles Of WTO:

The basic principles of the multilateral trading system, as embodied in the WTO Agreement,

derive mostly from the principles that constituted the foundations of the GATT. Trade without

discrimination is one of these basic principles, guaranteed through the operation of various

clauses included in the multilateral agreements on trade in goods, in the GATS, and in the TRIPs

Agreement. It includes the Most-Favored-Nation Clause and National Treatment. Besides, there

are principles of Transparency, Free Trade and Fair Competition, etc.

2.1 The Most-Favored-Nation treatment

The most-favored-nation clause has been the pillar of the system since the inception of the

GATT in 1947. The Contracting Parties to the GATT 1947 were bound to grant to the products

of other contracting parties treatment no less favorable than that accorded to products of any

other country. Members of the WTO have entered into similar commitments, under the GATT

1994 (Article I) for trade in goods, under the GATS (Article II) in relation to treatment of service

suppliers and trade in services, and under the TRIPs Agreement (Article 4) in regard to the

protection of intellectual property.

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2.2 National treatment

The national treatment principle condemns discrimination between foreign and national goods or

services and service suppliers or between foreign and national holders of intellectual property

rights. GATT 1994 and the TRIPS Agreement provide for national treatment as one of the main

commitments of WTO Members. Imported goods, once duties have been paid, must be given the

same treatment as like domestic products in relation to any charges, taxes, or administrative or

other regulations (GATT Article 3). With regard to the protection of intellectual property rights,

and subject to exceptions in existing international conventions, Members of WTO are committed

to grant to nationals or other Members treatment no less favorable than that accorded to their

own nationals (Article III). GATS, however, due to the special nature of trade in services, deals

with national treatment under its Part III, Specific Commitments, (Article XVII ), where national

treatment becomes a negotiated concession and may be subject to conditions or qualifications

that Members have inscribed in their schedules on specific commitments in trade in services.
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2.3 Transparency

Provisions on notification requirements and the Trade Policy Review Mechanism are set out in

the WTO Agreement and its Annexes, with the objective of guaranteeing the fullest transparency

possible in the trade policies of its Members in goods, services and the protection of intellectual

property rights. Article X of GATT 1994 deals with the publication and administration of trade

regulations; Article III of GATS sets out provisions on transparency as one of the general

obligations and disciplines under that agreement; and Article 3 establishes transparency rules for

the TRIPs Agreement.

2.4 Predictable and growing access to markets

Predictable and growing access to markets for goods and services is an essential principle of the

WTO. This principle is fulfilled through various provisions so as to guarantee security,

predictability and continued liberalization of trade.

2.5 Trade in goods

In the case of goods, a basic GATT postulate is that tariffs should normally be the only

instrument used to protect domestic industry. Furthermore, tariffs should be predictable and

stable.
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2.5.1 Binding of tariff

Security and predictability in trade in goods are achieved through the commitments embodied in

the "binding of tariffs". A "bound" tariff is a tariff in respect of which there is a legal

commitment not to raise it beyond the bound level. The binding of a tariff at a level higher than

the tariff actually applied is considered as a legitimate concession. In this case, the concession is

the binding itself, that is, the commitment not to raise the tariff beyond that level. The developed

countries have normally bound their tariffs at the applied levels. By contrast, and consistently

with open market policies, developing countries have adopted commitments on "ceiling

bindings", that is, bindings at levels higher than the applied rates. This has allowed developing

countries to substantially increase their bound commitments, thus underpinning their open

markets policies, while keeping a certain margin for protection in case of need.

2.5.2 Prohibition of quantitative restrictions

As a general rule, quantitative restrictions are prohibited under the GATT 1994. However, in

some cases, such as safeguard action, quantitative restrictions can be introduced under strictly

defined criteria. 

                                                        
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2.5.3 Tariff negotiations: progressive reduction in protection

In the past, tariff negotiations were launched periodically under the auspices of the GATT. These

negotiations served to reduce progressively the level of tariff protection in many countries now

Members of the WTO. Tariff negotiations will remain important in the future, particularly in

relation to agricultural products, where all nontariff barriers have been eliminated and substituted

by tariffs, in many cases at very high levels.

2.5.4 Emergency import measures: safeguards

A safeguard measure is an import restriction which can be adopted in emergency circumstances,

when imports have increased in such quantities and conditions that they are the cause of serious

injury or threat of such injury to a domestic industry producing a like or directly competing

product. An agreement on safeguards, setting out conditions and criteria for these actions, is one

of the multilateral trade agreements. Measures affecting prices, that is tariffs, are preferable to

quantitative restrictions. However, quantitative re- strictions can be applied as safeguard

measures in specific cases.

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2.5.5 Tariff renegotiations: compensation

The contractual nature of a bound tariff concession lies in the fact that the tariff rate cannot be

increased beyond the bound level. However, countries would not enter into this kind of

commitment without the possibility of revision when the situation of a domestic industry so

requires. The GATT 1994 allows for the possibility of renegotiations. A Member desiring to

withdraw or modify tariff bindings has to renegotiate them with other interested Members and

provide compensation, that is, substantially equivalent tariff concessions on other products.

2.6 Trade in services

The General Agreement on Trade in Services (GATS) establishes a multilateral framework of

principles and rules for trade in services with a view to the expansion of such trade under

conditions of transparency and progressive liberalization, and as a means to promote the

economic growth of all countries and the development of developing countries. Through general

obligations and principles, the negotiation of specific commitments, and the commitment to

launch further rounds of negotiations on trade in services, the GATS seeks to achieve predictable

and growing access to markets for services.

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HOW IS THE WTO DIFFERENT FROM THE GATT?

(1)The GATT was a set of rules, a multilateral agreement with noinstitutional foundation with

only a small associated secretariat. The WTO is apermanent institution with its own secretariat.

(2) The GATT was applied on a "Provisional basis" even if, after more than 40years,

governments chose to treat it as a permanent commitment. The WTOcommitments are full and

permanent.

(3)The GATT rules applied to trade in merchandise goods. In addition to goods,the WTO covers

trade in services and trade related aspects of intellectualproperty.

(4)While GATT was multilateral instrument by the 1980s many new agreementshad been added

of plurilateral, and therefore selective, nature. The agreementswhich constitute the WTO are

almost all multilateral and thus involvecommitments for the entire membership.

(5)The WTO dispute settlement system is faster, more automatic and thus muchless susceptible

to blockages than the old GATT system.

(6)The WTO is more global in its membership than the GATT.

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WTO is a watchdog of international trade, regularly examine the trade regimes

of individual members. Trade disputes that cannot be solved through bilateral

talks areadjudicated under the WTO dispute settlement 'court'. The WTO is also a

managementconsultant for world trade. Its economists keep a close watch on the pulse of the

globaleconomy and provide studies on the main trade issues of the day. The mandate of theWTO

includes trade in goods, trade in services, trade related in investment measures andtrade related

intellectual property rights.A number of simple and fundamental principles run throughout all of

theinstruments which, together, make up the multilateral trading system . They are:-

 Trade without discrimination-

 Predictable and growing access to markets.

 Promoting fair competition.-

 Encouraging development and economic reform.

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WORLD TRADE IN SERVICES

The industrial sector can be classified as production sector and service sector. Productionsector

refers the industries that are engaged in production and supply of goods. Servicesector refers

providing services and exchanging services to the public as well as society.The growing

importance of services is reflected in the international trade also. The valueof the international

trade in services comes to about one fourth of the value of the valueof the trade in goods.

Services make up a major share of the invisible account in theBalance of payments of a country.

The most important services in international trade include:

 Transport

 Travel

 Communication

 Media

 Business services

 Insurances

 Engineering and constructions services

 Banking Financial Services

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Characteristics and Categories of Services:

An important characteristics of services that has far reaching implications formarketing of

services is their inseparability. That is services cannot be sepearated fromtheir providers, whether

they are persons or machines. This does not, however mean thatall services require the physical

proximity of the provider and user.

CHARACTERISTICS:

(a)Those that necessarily require the physical proximity of the provider and theuser; and

(b)Those that do not, though such physical proximity may be useful.The services where physical

proximity is essential fall into three categories:

-The mobile provider and immobile user categorize the first category. In this casethe provider

goes into the place of user and doing services. For example the technicalpeople of L & T

Company in India goes to Srilanka and do the construction work.Similarly a technician may have

to go a plant abroad to rectify a problem with the plant.- Mobile user and immosbile provider

characterizes the second category. I.e. usergoes towards the provider. For example a patient who

wants an open-heart surgery willhave to go to a hospital where the required facilities are

available.-The third category consists of of mobile user and mobile provider. In this caseeither

the provider going to the user or the user going to the provider may achieveproximity. For

example dry-docking facilities for ships.

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OBSTACLES OR RESTRICTIONS IN SERVICE SECTOR:

Due to the special characteristics and the socio economic and politicalimplications of certain

services, they are generally subject to various types of

nationalrestrictions. Protective measures include visa requirements,

investment regulations,marketing regulations, restrictions on the employment of foreigners,

compulsion to uselocal facilities etc. Heavily protected r restricted services in different countries

includebanking and insurance; transportation, television, radio, film and other forms

of communications and so on.

INSTITUTIONAL INFRASTRUCTURE FOR EXPORT PROMOTION IN INDIA

The Government of India has set up a number of institutions whose main functions are tohelp an

exporter in its export efforts. It is therefore, necessary for the exporters toacquaint themselves

with these institutions and the nature of help they can render to themso that they can initially

contact them to get whatever help they could get from theseinstitutions in exporting their

products.
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Bibliography:

 www.wto.org

 http://en.wikipedia.org/wiki/World_Trade_Organization

 http://www.blurtit.com/q112370.html