Its Impact on Economy

Preston University, Islamabad

Presented by:

Rizwan Qamar

Outline

What is WTO
Brief Overview
Agreements of WTO
Principles of Trading
Impacts of WTO
Criticism on WTO
Conclusion
Questions??
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The International
Organization that
Governs the Rules of
Trade Between Nations
Functions:
-administer WTO trade agreements
-forum for trade negotiations
-handle trade disputes
-monitor national trade policies
-technical assistance and training
-cooperate with international organizations

Successor to GATT
International Organization
embodied in results of Uruguay Round
Established: 1 January 1995
Member driven (153 Members)
Decision making by CONSENSUS
Single Undertaking several topics
negotiated together
Serviced by Secretariat - 600+ staff
Based in Geneva

WTO
Organization
Trade
Policy
Review

Committees

Working
Parties

Council
for Trade
in Goods

Ministerial
Conference

General
Council

Dispute
Settlement

Council
for TRIPS

Council
for Trade
in Services

Committees

Committees

Working
Parties

Working
Parties

Ministerial Conferences
+ Singapore (1996)
+ Geneva (1998)
+ Seattle (1999)
+ Doha, Qatar (2001)
+ Cancun, Mexico (2003)
+ Hong

Kong, China (2005)

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Main WTO Agreements

Agreement on Agriculture (AoA)
General Agreement on Trade in
Services (GATS)
Agreement on Trade-Related Aspects
of Intellectual Property Rights
(TRIPS)
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PRINCIPLES OF TRADE

Most Favorite Nation

National Treatment
Negotiations
Barriers not raised
Arbitrarily
Discourage unfair
practices
GATT Articles
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MOST FAVORED NATION

Principle of Non-Discrimination
Tariffs and regulations applied
without discrimination
WTO Members receive most
preferential trade terms

GATT Article 1
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Impact of WTO on Economy

Helps promote peace between nations
Disputes are handled constructively
Rules make it easier for all WTO based on rules not on
power
Free trade cuts the cost of living, provides more choice of
products and quality
Trade stimulates economic growth
Trade raises income of country and its people
Basic principles make life more efficent
Governments shielded from lobbying
System encourages good governance
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Helps promote peace between nations

This sounds like an exaggerated claim, and it
would be wrong to make too much of it.
Nevertheless, the system does contribute to
international peace, and if we understand why,
we have a clearer picture of what the system
actually does.

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Disputes are handled constructively

As trade expands in volume, in the
number of products traded, and in the
numbers of countries and companies
trading, there is a greater chance that
disputes will arise. The WTO system
helps resolve these disputes peacefully
and constructively.
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How WTO Resolves Disputes

Member country complains about
violation of trade rule
Panel of judges chosen
Judicial-type hearing at WTO
Finding
Appeal and final ruling
Implementation (in reasonable time) or
penalties/compensation
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Rules make it easier for all

WTO based on rules not on power
The WTO cannot claim to make all
countries equal. But it does reduce
some inequalities, giving smaller
countries more voice, and at the same
time freeing the major powers from
the complexity of having to negotiate
trade agreements with each of their
numerous trading partners.
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Trade stimulates economic growth

Trade clearly has the potential to create
jobs. In practice there is often factual
evidence that lower trade barriers have
been good for employment. But the picture is
complicated by a number of factors.
Nevertheless, the alternative
protectionism is not the way to tackle
employment problems.
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Free trade cuts the cost of living

We are all consumers. The prices we
pay for our food and clothing, our
necessities and luxuries, and
everything else in between, are
affected by trade policies.

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Trade raises incomes

Lowering trade barriers allows trade
to increase, which adds to incomes
national incomes and personal
incomes. But some adjustment is
necessary.

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Governments shielded from lobbying

The WTO helps governments take a
more balanced view of trade policy.
Governments are better-placed to
defend themselves against lobbying
from narrow interest groups by
focusing on trade-offs that are made in
the interests of everyone in the
economy.
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System encourages good governance

Under WTO rules, once a commitment
has been made to liberalize a sector of
trade, it is difficult to reverse. The
rules also discourage a range of unwise
policies. For businesses, that means
greater certainty and clarity about
trading conditions. For governments it
can often mean good discipline.
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Criticism of the WTO

..is fundamentally undemocratic

..tramples labor and human rights
..would privatize essential services
..is destroying the environment
..is endangering human lives
..is increasing inequality
..hurts poor countries in favor of rich powerful nations
..undermines local level decision-making and national
sovereignty
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The WTO Is Fundamentally Undemocratic

rules are written by and for corporations with inside

access to the negotiations
simple requests for information are denied
proceedings are held in secret

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The WTO Will Not Make Us Safer

domination of international trade by rich countries for

the benefit of their individual interests fuels anger and
resentment that make us less safe

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The WTO Tramples Labor and Human Rights

The WTO encourages a 'race to the bottom' in wages
by pitting workers against each other
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
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The WTO Is Destroying the Environment

The WTO is attempting to deregulate industries

including logging, fishing, water utilities, and energy
distribution, which will lead to further exploitation of
these natural resources.

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The WTO is Increasing Inequality

the richest 20 percent of the world's population
consume 86 percent of the world's resources while the
poorest 80 percent consume just 14 percent. WTO
rules have hastened these trends by opening up
countries to foreign investment and thereby making it
easier for production to go where the labor is cheapest
and most easily exploited and environmental costs are
low.
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The WTO Hurts Poor, Small Countries in

Favor of Rich Powerful Nations
many important decisions get made in a process
whereby poor countries' negotiators are not even
invited to closed door meetings
Many countries do not even have enough trade
personnel to participate in all the negotiations
many countries are too poor to defend themselves
from WTO challenges
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CONCLUSION

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Recommendations
The Organization should operate
democratically
Every country must have equal representation
Rich countries should promote poor countries
Some laws must be prepared related with
Human Rights, Child Labour, Environment
The Dispute settlement system must be
Powerful to implement decisions
Public services must remains profit free.
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For more information:

?
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WTO TRADE ORGANIZATION

Thank you