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Perpose of The Study: Discuss Contemporary WTO Cases/ Issues in Terms of Their Implications For The Pakistan
Perpose of The Study: Discuss Contemporary WTO Cases/ Issues in Terms of Their Implications For The Pakistan
The World Trade Organization (WTO) is the only global international organization
dealing with the rules of trade between nations. At its heart are the WTO
agreements, negotiated and signed by the bulk of the world’s trading nations and
ratified in their parliaments. The goal is to help producers of goods and services,
exporters, and importers conduct their business.
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CONTEXT OF THE STUDY
I. HISTORY
The World Trade Organization came into existence in nineteen ninety-five. It operates a
system of trade rules. It serves as a place for nations to settle disputes and negotiate
agreements to reduce trade barriers. The newest of its one hundred fifty members,
Vietnam, joined in January. But the roots of the W.T.O. date back to World War Two and
the years that followed.
In nineteen forty-four, a meeting took place in Breton Woods, New Hampshire: the
International Monetary Conference. There, negotiators agreed to create the International
Monetary Fund and the World Bank. But they could not agree on an organization to deal
with international trade.
Three years later, in nineteen forty-seven, twenty-three nations approved the General
Agreement on Tariffs and Trade, or GATT. It was meant to be temporary. Trade
negotiations under GATT were carried out in a series of talks called rounds. The first
round lowered import taxes on one-fifth of world trade. Later rounds produced additional
cuts, and negotiators added more issues.
The sixth round began in nineteen sixty-three. It was called the Kennedy Round after the
murder of President John F. Kennedy. The results included an agreement against trade
dumping. This is when one country sells a product in another country at an unfairly low
price.The eighth round of talks began in Punta del Este, Uruguay, in nineteen eighty-six.
The Uruguay Round lasted almost twice as long as planned. In all, one hundred twenty-
three nations took part in seven-and-a-half years of work. They set time limits for future
negotiations. They also agreed to create a permanent system to settle trade disputes.
In April of nineteen ninety-four, most of those one hundred twenty-three nations signed
an agreement. It replaced GATT with the World Trade Organization.
The W.T.O. launched a new round on development issues in Doha, Qatar, in November
of two thousand one. These talks were supposed to end by January of two thousand five.
But negotiators could not agree on issues involving agricultural protections. The current
round has been suspended since last July.
II. REASONS
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• The WTO Will Not Make Us Safer
The WTO would like you to believe that creating a world of "free trade" will
promote global understanding and peace. On the contrary, the domination of
international trade by rich countries for the benefit of their individual interests
fuels anger and resentment that make us less safe. To build real global security,
we need international agreements that respect people's rights to democracy and
trade systems that promote global justice.
WTO rules put the "rights" of corporations to profit over human and labor rights.
The WTO encourages a 'race to the bottom' in wages by pitting workers against
each other rather than promoting internationally recognized labor standards. The
WTO has ruled that it is illegal for a government to ban a product based on the
way it is produced, such as with child labor. It has also ruled that governments
cannot take into account "non commercial values" such as human rights, or the
behavior of companies that do business with vicious dictatorships such as Burma
when making purchasing decisions.
The policies of the WTO impact all aspects of society and the planet, but it is not
a democratic, transparent institution. The WTO rules are written by and for
corporations with inside access to the negotiations. For example, the US Trade
Representative gets heavy input for negotiations from 17 "Industry Sector
Advisory Committees." Citizen input by consumer, environmental, human rights
and labor organization’s consistently ignored. Even simple requests for
information are denied, and the proceedings are held in secret. Who elected this
secret global government?
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SIGNIFICANS OF THE STUDY
The World Trade Organization (WTO) helps to facilitate global trade. It is the
major multilateral forum for creating agreements and settling trade disputes
among governments. It has 153 members that collectively account for more than
97% of world trade.
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PROBLEM DEFINATION
EFFECTS OF WTO
so that they may be able to face the increased competition from global market.
The complete integration of all textile and clothing products into the free trade
environment under the Agreement on Textile and Clothing (ATC) on 1st January
2005 was one of the most significant changes for Pakistan under the world trade
regime. Pakistan’s economy finds itself heavily dependent on the textile and
clothing (T&C) sector. It is because of the nature of textile industry being labor
intensive and requiring less capital and technical skills. However, a quota-free
trade era calls for structural and operational adjustments in the textile sector, to
enable Pakistan's exporters to be globally competitive. China is the biggest
challenge to Pakistan T&C exports in this post ATC regime.
As regards agriculture, Pakistan being an agrarian economy is still a net importer
of food items. The Agreement on Agriculture (AOA) of WTO has been significant
in molding agricultural policies of Pakistan. The Agreement on Agriculture
provides rules regarding export subsidies, domestic support and market access.
Furthermore, the WTO Agreement on the application of Sanitary and
Phytosanitary Measures (SPS) with regard to food safety and protection of
human and animal life, and health from agricultural imports has considerable
impact on Pakistan.
Apart from the major crops, Pakistan needs to exploit its comparative advantage
in the production and exports of meat, dairy products, fruits, vegetables,
horticulture, etc. The developing countries and the developed world are at
loggerheads over agriculture. With regard to agricultural negotiations in the WTO,
Pakistan along with the other developing countries, insists on a world trading
system that is fair.Moreover, Pakistan has a comparative advantage in many
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primary commodities. But in order to fully utilize its comparative advantage, it
needs to focus on and solve the problems in supply side (domestic
requirements). Pertaining to the Agreement on trade related aspects of
intellectual property rights (TRIPS), Pakistan needs to ensure that the industry is
encouraged to provide intellectual property protection for its products and also
make certain that there is effective protection of the intellectual property rights
attached to imported products. Services are the largest and most dynamic
component of both developed and developing country. It is impossible for any
country to prosper today under the burden of an inefficient and expensive
services infrastructure. In Pakistan, the services sector contributes more than
half of the GDP. Workers’ remittances account for the largest component of
services and the country has a large
In a nutshell, at present Pakistan maintains a fairly liberal trade regime, where all
quantitative restrictions on imports have either been removed or converted into
tariffs. It is noteworthy that the applied tariffs in Pakistan are well below the
bound tariffs under WTO, translating into market access. However, quality
LITRATURE REVIEW
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ARTICLE NO 1
The World Trade Organization oversees the drafting and implementation of rules
for global trade in goods and services. It started operation in 1995, but is
essentially a stronger version of its predecessor, the General Agreement on
Tariffs and Trade, or GATT. GATT was set up after World War II to prevent a
repeat of the ruinous rounds of protectionism in the 1930s that made the Great
Depression worse. The World Trade Organization, like the secretariat of the
GATT before it, is headquartered in Geneva.
Successive rounds of global trade talks since the founding of GATT in 1947 have
broadened international free trade rules. They initially emphasized lower tariffs in
manufacturing, but the Uruguay Round of talks broadened them to set many
more rules liberalizing trade in agricultural products, services, investment and
government procurement. The Uruguay Round also limited countries' ability to
impose anti-dumping duties on imports and made it harder for countries to defy
rulings against them by trade dispute panels composed of international experts
The Uruguay Round, which also effectively replaced GATT with the W.T.O.,
concluded with marathon talks in Geneva in December 1993.
The current round of global trade talks started in Doha, Qatar, in November
2001. Negotiations broke down in July 2008, but efforts are under way to restart
them. The W.T.O. has also been trying with limited success to persuade more
countries to sign up for its rules requiring free trade in government procurement.
China joined the organization in 2001 but has refused to sign the separate pact
on procurement, making it hard for other countries to object when China's many
state-controlled companies discriminate in their purchases in favor of Chinese
suppliers.
In August 2009, the W.T.O. gave the United States a victory in its trade battle
with China, ruling that Beijing had violated international rules by limiting imports
of books, songs and movies.
SUMMERY OF ARTICLE NO 1
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The Uruguay Round also limited countries' ability to impose anti-dumping duties
on imports and made it harder for countries to defy rulings against them by trade
dispute panels composed of international experts The Uruguay Round, which
also effectively replaced GATT with the W.T.O., concluded with marathon talks in
Geneva in December 1993.
The World Trade Organization oversees the drafting and implementation of rules
for global trade in goods and services.
In August 2009, the W.T.O. gave the United States a victory in its trade battle
with China, ruling that Beijing had violated international rules by limiting imports
of books, songs and movies.
ARTICLE NO 2
Since 1948 formation and then implementation and monitoring of these rules
pertaining to international trade was done according to general Agreement on
Tariff and Trade (GATT). From 1986 to 1994 under this agreement new rules of
the game were prepared and various agreements were signed and the World
Trade Organization (WTO) replaced the GATT. The broad objective behind
creation of the WTO was to ensure free trade among the members through
gradual withdrawal of tariff and non-tariff barriers. However, some of the recent
demonstrations, throughout the world, indicate an immense resentment against
the WTO.
Concerns
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The general consensus at the seminar was that WTO members were distinctly
divided into two categories, developed and developing countries. Most of the
articles and agreements are tilted towards developed countries. To bring a
change or amendment in these articles developing countries will have to join their
hands to reap the real benefits of globalization.It was also marked that while the
developed countries insist on continuation of their past practice, developing
countries are being forced to open up their markets and also withdraw the
subsidies provided to agriculture. It was also observed that developed countries
provide subsidies to many sectors, agriculture in particular, which comprise of a
small percentage of population. These groups may be small but enjoy enormous
political clout and are capable of pressurizing their governments to continue
subsidy on farm products. As against this a country like Pakistan has to protect
the interest of millions of people, nearly 60 per cent of total population,
dependent on agriculture. Therefore, subsidy on farm products is necessary to
avoid any distortion in social fabric.
As regards textile quota phase out and its integration in free trade regime, the
experience of developing countries may be expressed as 'completely
disappointing'. Some of the textile products have been termed 'sensitive' by the
developed countries and their integration is being done at a very slow pace.
These products are the main foreign exchange earners for the developing
countries. Despite the claim by the developed countries that their markets are
open, they resist import of various commodities from the developing countries by
imposing non-tariff barriers. While quota regime is being phased out, imposition
of anti-dumping duties to protect the local industries has become common. Often
the dumping allegations are based on very weak grounds and quantitative
restrictions and anti-dumping duties are imposed. Even if a country on which
these measures are imposed wins the case it has to bear colossal legal
expenses and loss of business. One is forced to draw a conclusion that by
imposing such duties and quantitative restrictions, breathing space is provided to
local industry.
Trade blocks
Regional trade blocks, mostly created by the developed countries, are against
the spirit of the true concept of globalization. These blocks are sponsored and
controlled by the developed countries and a few developing or least developed
countries are included. These peripheral countries are often the source of supply
for low cost manpower and raw materials for the developed countries. The added
advantage is that they also become a protected market for the items produced by
the developed countries.
SUMMERY OF ARTICLE NO 2
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These blocks are sponsored and controlled by the developed countries and a few
developing or least developed countries are included. Since 1948 formation and
then implementation and monitoring of these rules pertaining to international
trade was done according to general Agreement on Tariff and Trade (GATT).
The AoA is considered one of the most important in a set of 30 agreements and
generally viewed a threat to food security of the developing countries because
over 50 per cent of the population of these countries is involved in agriculture. In
the post World War II era a regime was created to favor the protectionist
environment for agricultural production and trade as it suited the USA. However,
it appears that many areas once considered the domain of state are now being
taken over by the WTO --- including agriculture. One is forced to draw a
conclusion that by imposing such duties and quantitative restrictions, breathing
space is provided to local industry. High subsidy levels as well as strict import
controls were placed which resulted in surpluses which are now being diverted to
rest of the world. While quota regime is being phased out, imposition of anti-
dumping duties to protect the local industries has become common. It was a
two-day seminar and experts provided the details about the agreements.
Concerns the general consensus at the seminar was that WTO members were
distinctly divided into two categories, developed and developing countries.
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• To resolve trade disputes,
SWOT ANALYSIS
Strength
Weakness
Opportunities
Threats
The groupings are meant for an orderly discussion and in many instances there
will be overlapping.
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Trade in Goods-Non-tariff barriers
Trade in Services-Restrictions on movement of Natural Persons
Intellectual Property Rights
Trade & Environment
Trade & Labor
Trade & Investment
Regional Trade Agreements & Plurilateral Agreements
Dispute Resolution-training of negotiators
Implementation Issues
Attitudinal
The signatories to the WTO have all made commitments to reduce and in many
cases do away with import restrictions in a time frame. However, this is fraught
with many obstacles, mainly opposition from strong groups within each country.
This aspect applies to all categories of members-Developed, Developing and
Least Developed. The Non tariff barriers then become a necessity to overcome
the political situation at home. These normally take the form of Sanitary &
Phytosanitary Standards.
Strengths-PAKISTAN has a strong R&D facility and has evolved into a nation
with surplus food production. It has a large manpower, which is capable of
developing new products. This will facilitate PAKISTAN to capture new markets
for its products.
Weakness-Years of foreign domination had killed the spirit of enquiry, which will
have to be rekindled in a big way. Shortage of funds for R&D is also a point.
Opportunities-The WTO has opened up a huge market fro products. PAKISTAN
should look at newer markets rather than concentrate on the traditional ones.
This will provide a huge opportunity. Development of trade with other Developing
and least developed nations will offer a great opportunity for PAKISTAN.
PAKISTAN has to actively perform in all International standard setting bodies and
this again will give PAKISTANn products a definite edge.
Threats-With the reduction/rationalization of Tariffs, foreign products made with
cheaper technology and mass produced, can flood the market. But this again will
peter off as has been evidenced by the demise of the threat from cheap Chinese
products.
The Trade in services is a significant one since the growth of the Services sector
far outstrips the trade in goods. Strengths -PAKISTAN has a strong services
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sector, which is growth, oriented. It has well-established bodies like the Institute
of Chartered Accountants of PAKISTAN who regulate the profession. In all
services the country has evolved norms that are in many instances better than
internationally accepted ones. The high quality of Pakistani professionals have to
be highlighted which will then provide new vistas. Weakness-In high technology
areas, PAKISTAN requires the technology transfer, until domestic R&D catches
up. The Visa regime in many countries is a weakness that hampers movement of
natural persons. This will have to be taken up at the WTO.Opportunities-As has
been seen in the case of Software; PAKISTAN has a huge talent pool. It also has
a large English speaking population. This coupled with the lower cost of living,
offers PAKISTAN, a big opportunity to tap newer markets. Threats-As seen
recently, there can be retaliation by way of new measures taken to curb
outsourcing of jobs to PAKISTAN. This can be countered by effective
intermediation at the WTO fora. Foreign firms, like the ones in the Accountancy
area, can offer threat to local firms because of their reach worldwide.
PAKISTAN has long been under a slumber and this has affected its
development of IPR. However we do have our strengths. Strengths -The
knowledge base of PAKISTAN in the fields of Agriculture & Medicine is very vast.
This can help in reaching newer markets. The Pharmaceutical Industry has been
concentrating on R&D and the effort in the Agree and other sectors are also very
advanced. We have a very good R&D in the area of Space and Defense
technology.
Trade& Environment
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These are newer areas, which have evolved mainly as a ruse by the bigger
trading parties to stifle exports by others.
Strengths-In many areas, PAKISTAN has a good system of concern for the
environment .This has to be strengthened further by streamlining with
International standards.
Weakness-Being a vast country that lacks many products, it will have to set up
newer facilities, which
May be deemed to be harmful to the environment.
This will have to be tackled by developing newer
Norms. Opportunities-PAKISTAN can afford to spend on
Environment friendly procedures since another
Component of cost namely labor is still cheaper. It will
Also help PAKISTAN have a healthier environment and
Avoid Bhopal’s in future. Threats-The Developed
Countries that have developed the technology for
Safer environment oriented processes can prove to be
A big threat to PAKISTAN, till PAKISTAN catches up.
PAKISTAN and many other countries have been consistently opposing the
linkage since there is another UN body, ILO for the purpose. However, it remains
an issue.
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Investment and Trade are interrelated especially in technology driven ones. It
has resulted in a lot of disagreement among member nations.
Strengths -PAKISTAN has a huge market for Goods and Services that remain to
be tapped. It also has a growing middle class and the real income of the villagers
is slated to grow exponentially. These are great strengths for the nation.
Weakness-Comparison with countries like China deters investment in
PAKISTAN. For high technology products wherein others hold patents,
PAKISTAN has to depend on imports.
Opportunities-By liberalizing investment norms (which has been done to a large
extent already) PAKISTAN is capable of attracting FDI in all sectors. This again
will result in employment generation and reduction of poverty. Threats-The
decision making process, steeped in red tape is a real threat to investment. This
will have to be tackled politically. Internationally, PAKISTAN offers good
investment opportunities and it has to have tight regulations to ward off another
East PAKISTAN Company experience. PAKISTAN cannot afford to forget the
historical fact that the British and many others who came to trade, ended up as
the rulers.
Opportunities-By being not a member of any block, PAKISTAN can bargain for
better terms at the WTO.Threats-The RTAs, by undermining the WTO system
eat into the opportunities otherwise available to PAKISTAN.
8. Dispute Resolution
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Weakness-PAKISTAN has not yet put in place a mechanism to make awareness
of WTO issues widely known and understood. The country being large, this
needs special effort.
Opportunities-The bodies like ICAI, Bar Council and others can offer Training
facilities along with the Training division of the WTO. This can open up new
vistas for professionals like CASs.
Threats-The highly trained professionals from developed nations offer threats,
but only in the short run.
9. Implementation Issues
The main agenda at the Doha conclave was issues related to implementation of
decisions at the WTO. PAKISTAN will have to identify the areas where the
implementation is tardy and rise at the fora. It can also group together other
developing nations and voice the collective concern. This also is an issue that will
need continuous monitoring by PAKISTAN through bodies like the ICAI.
Strengths Pakistan has a large talent pool of Accountants and Lawyers that is a
big strength in WTO negotiations on Implementation.
HYPOTHESIS DEVELOPMENT
H1
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The polices of wto implement on Pakistan
H NOT
CONCLUCION
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