What is it after all?

Tamanna Chaturvedi Consultant Indian Institute of Foreign Trade

WHY WTO?

The multilateral trading system is an attempt by the governments to provide investors,employers,employees and consumers with a business environment which encourages trade, investment and job creation as well as choice and low prices in the market place. Such an environment needs to be stable and predictable, if the business has to invest and thrive. How the membership benefits India is worth Examining.

History of WTO

Two world wars: 1914-1919 & 1939-45 followed by great depressions trade wars!!..GATT formed in 1945 Then why WTO was not formed in 1920/1930 or 1940 or even 1970? League of nations:- 1920; ILO:- 1919; WHO, FAO,UNESCO, UNICEF:-1945 Monopoly of G-7 countries: US, UK, Canada, Germany, France, Japan and Italy versus USSR WTO formed when Soviet Union collapsed in 1989

Brettons Wood meeting after IInd World War 1944

IMF

UK

US
India IBRD

ITO

GATT

WTO GENESIS The General Agreement on Trade and Tariff (GATT) came into existence in 1947

It sought substantial reduction in tariff and other barriers to trade and to eliminate discriminatory treatment in international commerce. India signatory to GATT 1947 along with twenty two other countries

Eight rounds of negotiations had taken place during five decades of its existence

1. 2. 3.

4.
5. 6. 7. 8. 9. 10. 11. 12.

Australia Belgium Brazil Burma (now Myanmar) Canada Ceylon (now Sri Lanka) Chile, China Cuba Czechoslovakia France India

13 Lebanon 14 Luxembourg 15 The Netherlands 16 New Zealand 17 Norway 18 Pakistan 19 Zimbabwe 20 21 22 23 Syria South Africa United Kingdom United States

UR 1986-93 Tokyo 1973-79 Kennedy 1964-67 Dhillon 1960-61

Geneva Round 1956 Torquay Round 1951 Annecy Round 1949 Geneva Round 1947

WTO establishment. Agriculture Textiles and Clothing TRIPS Services Dispute Settlement body

Some factS

The World Trade Organization (WTO) is the only global international organization dealing with the rules of trade between nations. Location Established Created by Membership Head Secretariat staff : : : : : : Geneva, Switzerland 1 January 1995 Uruguay Round negotiations 153 countries Pascal Lamy (DG) 550

Observer Status

1. 2.

3.
4. 5. 6.

7.
8. 9. 10.

11.

Afghanistan Algeria Belarus Bhutan Bosnia Ethipoia Iran Iraq Kazakastan Lao PDR Libya

12. 13.

14.
15. 16. 17.

18.
19. 20. 21.

Russian Federation Saudi Arabia Serbia Seychelles Sudan Tazakistan Tonga Ukraine Uzbekistan Yemen

Apart from Vatican, observer nations must start the process of becoming members within five years of becoming observers.

Round

Year

Nature of Negotiation

No of countries

The Geneva Round (Ist)

1947

Tariffs *elimination of certain duties & preferences *binding of duties at existing level

23

The Annecy Round (IInd)

1949

The Torquay Round(IIIrd)

1951

First five rounds reduced *concessions increased from 66% to 80% avg trade weighted tariff *147 sets of bilateral negotiations completed from 50% to 12%.
Tariffs Tariffs *About 8700 concessions were negotiated *Only 147 out of 400 agreements concluded

13

38

The Geneva Round(IVth)

1956

Tariffs *Only US granted concessions on imports. *No other country felt satisfied

26

The Dhillon Round (Vth)

1960-61

Tariffs *A bilateral tariff agreement between US & EEC to reduce tariff on variety of Industrial goods.

26

The Kennedy Round (VIth)

1964-67

Tariff and Antidumping measures *US Tariffs were reduced by 50% spread over 5 yrs *Increased access to world markets for ag products *Granting of concessions to the developing countries on a non reciprocal basis. *Anti dumping practice was established, S&D treatment

26

Tokyo Round (VIIth)

1973-79

Tariff and Non Tariff measures *Working on MFN Clause reviewed *Tariffs and Non tariff measures in favour of developing countries recognized *Dispute settlement was notified *Tariff cutting commitments legally binding

102

URUGUAY Round (VIII th)

1986-93

Tariff and Non tariff measures First time inclusion of:

WTO

123

establishment. Agriculture Textiles and Clothing TRIPS Services Dispute Settlement body

WTO Objectives

WTO Came into existence for the purpose of :

Transparent, free and rule-based trading system Provide common institutional framework for conduct of trade relations among members Facilitate the implementation, administration and operation of Multilateral Trade Agreements Rules and Procedures Governing Dispute Settlement Trade Policy Review Mechanism Concern for LDCs and NFIDCs Concern on Non-trade issues such as Food Security, environment, health, etc.

BASIC PRINCIPLES

1.

NON-DISCRIMINATION

MFN (Most Favored Nation) Members are bound to grant to the products of other members treatment not less favorable than that accorded to the products of any other country. National Treatment Once goods have cleared customs, imported goods must be treated no less favorably than the equivalent domestically produced goods.

2. PREDICTABLE AND GROWING ACCESS TO THE MARKETS

Prohibition of Quantitative Restrictions Binding of Tariffs Bound Tariffs cannot be increased Progressive reduction in the protection. Exceptions: Safeguards, BOP.

3.

FAIR COMPETITION

4. TRANSPARENCY 5. ENCOURAGE DEVELOPMENT

WTO Agreement contains some 29 Individual legal texts 25 Ministerial declarations 16 Articles

4 Annexes
31 Volumes (1-26 --- Trade in goods)

(27-31 --- Trade in services)

Article Article I Article II

Explanation Establishment of the organisation Scope of the WTO Common Institutional Framework for the conduct of Trade Relations among Members. Multilateral Trade Agreements (including annexes 1, 2, 3) are legally binding.

Articles III Functions of the WTO

Facilitate implementation ,administration and operation of all agreements Forum for Negotiations among the members and implementation thereof as decided by the Ministerial Conference. Seeking to resolve trade disputes. Cooperation with other International institutions i.e IMF,IBRD etc.

Article IV Structure of WTO

STRUCTURE OF WTO
Apellate Body
Council for Trade in Goods

Dispute Settlement Panel

Committee on Trade & Environment

- Textiles Monitoring Body - Committee on safeguards - Committee on Import Licensing - Committee on Anti Dumping Practices - Committee on Technical Barriers to Trade - Committee on Customs Valuation - Committee on Subsidies & Countervailing measures - Committee on Rules of Origin - Committee on Trade related Investment Measures - Committee on Sanitary & Phytosanitary Measures - Committee on Agriculture - Committee on Market Access

Dispute Settlement Body

Trade and Development

BOP

MINISTERIAL CONFERENCE

Budget Finance & Administration

General Council

Trade Policy Review Body

Trade in Civil Aviation

Council for Trade in Services - Working party on professional services - Committee on Trade in Financial Services - NG on Maritime Transport Services - NG on Movement of Natural Persons - NG on Basic Telecommunications

Council for TRIPS

Government procurement

International Dairy Council

International Meat Council

Ministerial conferences

Hong Kong, 13-18 December 2005

Cancn, 10-14 September 2003

Doha, 9-13 November 2001

Seattle, November 30 December 3, 1999 Geneva, 18-20 May 1998 Singapore, 9-13 December 1996

Article Article V

Explanation Relations with other Organizations

(General council is to make appropriate arrangements for effective cooperation with inter-governmental organizations.)
Article VI Article VII Article VIII Article IX The Secretariat Budget and contributions Status of WTO Decision Making
By

Consensus as far as possible Else by majority of the votes cast One Member one vote Article X Amendments
Any

member may initiate a proposal and submit to the ministerial conference Three fourth Majority for amendments
Article XI Original Membership Members who accept this agreement and schedules of concessions and commitments annexed to GATT 1994 and schedules of specific commitments to GATS shall be the original members of WTO. Article XII Accession Any state or customs territory having autonomy to conduct external commercial relations can have the accession.

HOW DOES A COUNTRY BECOME A MEMBER OF WTO?

First, the government applying for membership has to describe all aspects of its trade and economic policies that have a bearing on WTO agreements. This is submitted to the WTO and examined by a working party made up of members. Parallel bilateral talks begin Protocol of Accession finalized The overall report and the protocol and lists of commitments, is presented to the WTO General Council If a majority of WTO members vote in favour, the country can sign the protocol and accede to the WTO

Application

Working Party Established

Number of Working Party Meetings *

Draft Working Party Report ** Jun 2006

Afghanistan Algeria Andorra Azerbaijan Bahamas Belarus Bhutan Bosnia and Herzegovina Cape Verde Ethiopia Iran Iraq Kazakhstan Lao People's Democratic Republic Lebanese Republic Libyan Arab Jamahiriya

Nov 2004 Jun 1987 Jul 1997 Jun 1997 May 2001 Sep 1993 Sep 1999 May 1999 Nov 1999 Jan 2003 Jul 1996 Sep 2004 Jan 1996 Jul 1997 Jan 1999 Jun 2004

Dec 2004 Jun 1987 Oct 1997 Jul 1997 Jul 2001 Oct 1993 Oct 1999 Jul 1999 Jul 2000 Feb 2003 May 2005 Dec 2004 Feb 1996 Feb 1998 Apr 1999 Jul 2004 9 2 4 Dec 2005 (FS) Sep 2006 7 3 2 3 Nov 2005 Apr 2005 (FS) Aug 2005 (FS) 9 1 4

Application

Working Party Established Feb 2005 Jun 1993 Jul 1998 May 2005

Number of Working Party Meetings * 2 30 1

Draft Working Party Report **

Montenegro Russian Federation Samoa Sao Tome and Principe

Dec 2004 Jun 1993 Apr 1998 Jan 2005

Oct 2004 Nov 2006

Serbia
Seychelles Sudan Tajikistan Tonga Ukraine Uzbekistan Vanuatu

Dec 2004
May 1995 Oct 1994 May 2001 Jun 1995 Nov 1993 Dec 1994 Jul 1995

Feb 2005
Jul 1995 Oct 1994 Jul 2001 Nov 1995 Dec 1993 Dec 1994 Jul 1995

3
1 2 3 2 16 3 2 Accession Package Oct 2001 Jun 2006 (FS) May 2006 Jun 1997 Sep 2004 (FS) May 2006 (FS)

Yemen

Factual Summary (FS),

Apr 2000

Jul 2000

Article

Explanation

Article XIII Non Application of Multilateral Trade agreements between particular members Article IV Acceptance, Entry into Force and Deposit
Acceptance

of any member shall enter into force on the date decided by the ministerial conference. Members accepting the entry to implement the concessions and obligations of multilateral trade agreements over a period of time agreed on the date of entry.
Article XV Withdrawal
Any

member may withdraw upon the expiry of six months from the date of withdrawal notice.

Article XVI Miscellaneous

Provision

of Marrakaesh Agreement shall be final in case of any

conflict. Each member to ensure conformity of laws, regulations and administrative procedures with its obligations. No reservation in respect of any provision of this agreement

Annnexures

Annex I Trade in Goods

Annex II Dispute settlement

Annex III Trade policy Review Mechanism

Annex IV Plurilateral

I-A Ag on Trade in goods

Understanding of rules and procedures

IB Ag on Trade in Services

I-C Ag. On TRIPS

Annex 1-A: Agreement on Trade in Goods

1. 2. 3. 4. 5.

6.
7. 8. 9. 10.

Agreement Agreement Agreement Agreement Agreement Agreement Agreement Agreement Agreement Agreement

on on on on on on on on on on

Agriculture SPS Measures Textiles & Clothing Technical Barriers to Trade Trade related Investment Measures Pre Shipment Inspection Rules of Origin Import Licensing procedure SCM Safeguards

Service Sectors

WTO has defined services into 12 sector further divided into 155 sectors. Business (professional and computer) Communication Construction and Engineering services Distribution services Educational services Environmental services Financial services Health services Tourism services Recreational, cultural and sporting services Transport services. Other services.

1. 2. 3. 4. 5. 6. 7. 8. 9. 10.

11.
12.

Modes of Services

GATS applies to four modes:

(a) Cross border movement of service suppliers (b) Establishment of commercial presence in the country where service is provided. (c) Temporary movement of natural persons to another country to provide services there. (d) Movement of consumers to the country of importation.

Forms of IPR
Patents
Designs Copyright Plant Varieties Trade Secrets

Trademarks or Brands
Geographical Indications

Annnexures

Annex I Trade in Goods

Annex II Dispute settlement

Annex III Trade policy Review Mechanism

Annex IV Plurilateral

I-A Ag on Trade in goods

Understanding of rules and procedures

IB Ag on Trade in Services

I-C Ag. On TRIPS

Ministerial conferences

Hong Kong, 13-18 December 2005

Cancn, 10-14 September 2003

Doha, 9-13 November 2001

Seattle, November 30 December 3, 1999 Geneva, 18-20 May 1998 Singapore, 9-13 December 1996

Singapore, 9-13 December 1996

Review of first two years of work Setting up of working groups

International investment Competition policy Transparency in Govn procurement Trade facilitation

Geneva, 18-20 May 1998

Celebration of 50 years of GATT First negative views expressed (Asian financial crises) Developed countries interest Discussion of trade and environment Labour standards

Seattle, November 30 December 3, 1999

Divisions between rich and poor nations become most obvious Violent anti-WTO protests by NGOs Many country ministers actually walked out of the negotiations, leading to an early end to the conference with nothing of value achieved

Doha, 9-13 November 2001

Decisions taken at Doha related to the concerns of developing countries Doha Development Agenda

negotiations to clarify or revise anti-dumping rules; transparency in government procurement, investment and competition policy.

TRIPs not being allowed to be an impediment to public health in poorer countries

Cause Of Concern for Developing Economies

Cancn, 10-14 September 2003

Was it a great idea for India to join the gang? Will G-20 survive?

Overlapping Membership of G-20 Countries

Country ATR Argentina Brazil

F&V BTR 34.2 34.3

Spices, Cereal and other Food Preparations ATR 12.6 14 BTR 33.8 40.5 ATR

Grains BTR 31.1 48.3

Oilseeds, Fats and Oils and their Products ATR 7.8 9.2 BTR 34.6 34.6 168. 9 47.3 16.6 39.9 100

10.4 12.2

5.7 7

India
South Africa China Indonesia Pakistan

32
10.3 16.1 5 19.5

105
30.1 18.3 47 100

34.6
10.6 20.4 5.2 20.4

127
41.2 23.3 39.9 100

49.4
2.5 27.1 2.6 10.6

86.3
30.8 33.7 68.4 113

52.5
7.7 11.6 3.8 14.9

Cancn, 10-14 September 2003

Foreign investors (developing countries feared their industries will be controlled by foreign multinationals) Transparency in government purchasing (developing countries feared this might help foreign companies win public sector business) Trade facilitation -- making things like customs procedures simpler

What happened at Hongkong?

Will developing countries get enough trade in return for opening their markets?

Can they only economically lose to more powerful countries more able to rapidly take advantage of a trade situation?
Or will they be overwhelmed by foreign products and companies? Should the WTO deal with labour standards? environmental standards? TRIPS

Big or small same path to follow

1. 2.

3.
4.

5.

The WTO does NOT tell governments what to do The WTO is NOT for free trade at any cost Weaker countries do have a choice, they are NOT forced to join the WTO The WTO is NOT only concerned about commercial interests. This does NOT take priority over development The WTO is NOT undemocratic