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World Trade Organization
Transcript of World Trade Organization
General Agreements on
TARIFFS & TRADE
HISTORY OF WTO
The GATT came into force in the year 1948, January 1.
It is a global organization set up after the world war II due to economic disasters in the interwar period.
The General Agreement on Tariffs and Trade (GATT) covers international trade in goods.
GATT was signed in 1948 and had 128 member countries by its end, India being one of the founder members of it.
Its primary objective was to see that impediments to international trade - mainly in the form of tariffs - were reduced or removed in order to facilitate the movement of goods across borders. In the course of six to seven rounds of negotiation, it succeeded in getting countries to lower their tariff rates, thus enabling greater movement of goods
It gave the world a basic set of rules under which trade negotiations took place and a mechanism for monitoring the implementation of these rules.
The most important trade liberalization activity post world war II period had been through GATT.
It made efforts to persuade developed nations to cut down their tariff rates on imports from developing nations.
It had last launched a Urugay round in the year 1986 - 1994.
Need for formation of WTO
The downfall of Urugay eighth round lead to the formation of - World Trade Organization.
The end of the Urugay Round resulted in the formation of the WTO, which established a substantial set of rules regarding trade in goods -including agricultural goods, included agreements on trade in services and on trade-related aspects of intellectual property rights, as well as a strong and comprehensive mechanism to settle trade disputes between member countries.
Late-1990s there was a growing realisation amongst developing countries that the outcome of the Uruguay Round of negotiations was imbalanced. the creation of a new, permanent trade body became one of the principal objectives about half-way through the GATT's Uruguay round, which ran from 1986 to 1994.
GATT’s success in reducing tariffs to such a low level, combined with a series of economic recessions in the 1970s and early 1980s, drove governments to devise other forms of protection for sectors facing increased foreign competition. The problem was not just a deteriorating trade policy environment. By the early 1980s the General Agreement was clearly no longer as relevant to the realities of world trade as it had been in the 1940s. trade in services — not covered by GATT rules — was of major interest to more and more countries, and international investment had expanded.
Significant difference between
WTO & GATT
What is WTO?
WTO is the successor of GATT. It is an international organization with multilateral trading system. It is an organization for trade opening. Also being a forum for governments to negotiate trade agreements. It is a place for them to settle trade disputes.
It operates a system of trade rules. Essentially, the WTO is a place where member governments try to sort out the trade problems they face with each other. The WTO was born out of Urugay negotiations.
It provides technical assistance and training for developing countries and also in cooperation with other international organizations. It's secretrait staff has 640 people in it. The general council is the highest level decision making body in Geneva.
It deals with Goods, services and intellectualy property maintainance of member countries. It's headquarters being in Geneva, Switzerland, the head director-general being Mr. Roberto Azevêdo. It holds a membership of 160 countries with a financial budget of 196 million Swiss francs recorded in 2011.
Pros & Cons of
It provides a framework of operation, implementation and administration of multilateral trade agreements.
It gives equal voting and negotiating rights to the member countries.
Unlike UNO it is in favor of Foreign Direct Investment.
Free trade can help increase global economic growth.
The WTO is fundamentally undemocratic.
It is argued the benefits of free trade accrue mostly to the developed country.
Free trade may prevent the developing countries from developing infant industries.
Lower GDP per capita.
DOHA Development Agenda
2001 - to present
First, the GATT rules applied to trade only in merchandise goods. In addition to goods, the WTO covers trade in services and trade-related aspects of intellectual property (through the agreement on Trade-related Aspects of Intellectual Property Rights—TRIPs)
Second, while GATT was a bilateral instrument, by the 1980s many new agreements of a plurilateral, and therefore selective nature had been added. The agreements which constitute the WTO are almost all multilateral and, thus, involve commitments for the entire membership.
Third, the WTO dispute settlement system is faster, more automatic, and thus much less susceptible to blockages, than the old GATT system.
Fourth, the GATT was a set of rules, a multilateral agreement, with no institutional foundation. By contrast, the WTO is a permanent institution with its own secretariat.
The WTO is currently the host to new negotiations, under the ‘Doha Development Agenda’ launched in 2001. Doha Round talks are overseen by the Trade Negotiations Committee (TNC)The Trade Negotiations Committee (TNC) operates under the authority of the General Council.
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 programme covers about 20 areas of trade.
Its subject area of negotiations are:
Functions of WTO
Principles of WTO
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. These agreements are not static; they are renegotiated from time to time and new agreements can be added to the package.
Implementation and monitoring
WTO agreements require governments to make their trade policies transparent by notifying the WTO about laws in force and measures adopted. Various WTO councils and committees seek to ensure that these requirements are being followed and that WTO agreements are being properly implemented.
The WTO’s procedure for resolving trade quarrels under the Dispute Settlement Understanding is vital for enforcing the rules and therefore for ensuring that trade flows smoothly.
Building trade capacity
WTO agreements contain special provision for developing countries, the WTO organizes hundreds of technical cooperation missions to developing countries annually. Aid for Trade aims to help developing countries develop the skills and infrastructure needed to expand their trade.
The WTO maintains regular dialogue with non-governmental organizations, parliamentarians, other international organizations, the media and the general public on various aspects of the WTO.
Non-discrimination: Most-favoured-nation (MFN)
A country should not discriminate between its trading partners and it should not discriminate between its own and foreign products, services or nationals.
Lowering trade barriers is one of the most obvious ways of encouraging trade; these barriers include customs duties (or tariffs) and measures such as import bans or quotas that restrict quantities selectively.
Predictable and transparent
Foreign companies, investors and governments should be confident that trade barriers should not be raised arbitrarily. With stability and predictability, investment is encouraged, jobs are created and consumers can fully enjoy the benefits of competition — choice and lower prices.
Discouraging ‘unfair’ practices, such as export subsidies and dumping products at below cost to gain market share; the issues are complex, and the rules try to establish what is fair or unfair, and how governments can respond, in particular by charging additional import duties calculated to compensate for damage caused by unfair trade.
More beneficial for less developed countries
Giving them more time to adjust, greater flexibility and special privileges; over three-quarters of WTO members are developing countries and countries in transition to market economies.
Protect the environment
The WTO’s agreements permit members to take measures to protect not only the environment but also public health, animal health and plant health. However, these measures must be applied in the same way to both national and foreign businesses.
> Market access (non-agriculture)
> Balance between Agriculture and NAMA
> Intellectual property (TRIPS)
> TRIPS & public health
> TRIPS non-violation and situation complaints
> TRIPS and biodiversity
> Transparency in government procurement
> Trade facilitation
> WTO rules: anti-dumping
> Recently-acceded Members
> WTO rules: subsidies
> WTO rules: regional agreements
> Dispute settlement
> Small economies
> Trade, debt and finance
> Trade and technology transfer
> Technical cooperation
> Least-developed countries
> Special and differential treatment
> Integrated Framework
> Commodity issues
> Aid for trade
As it can be seen the Presence of an organization like WTO is a must to monitor the trade activities all around the world. The negotiation in such a uniform manner is very effective for improving the world trade eonomy.
The structure and foundational principles of WTO are in favor of equality and are a partial bliss to less developed nations. Hence, the benfits and importance of WTO cannot be denied.
Agriculture has become the most important and controversial issue. Agriculture is particularly important for developing countries, because around 75% of the population in developing countries live in rural areas, and the vast majority are dependent on agriculture for their livelihoods.
Access to patented medicines
A major topic at the Doha ministerial regarded the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS). The issue involves the balance of interests between the pharmaceutical companies in developed countries that held patents on medicines and the public health needs in developing countries.
Special and differential treatment
In the Doha Ministerial Declaration, the trade ministers reaffirmed special and differential (S&D) treatment for developing countries
Developing countries claim that they have had problems with the implementation of the agreements reached in the earlier Uruguay Round because of limited capacity or lack of technical assistance
A study by the University of Michigan found that if all trade barriers in agriculture, services, and manufactures were reduced by 33% as a result of the Doha Development Agenda, there would be an increase in global welfare of $574.0 billion. A 2008 study by World Bank Lead Economist Kym Anderson found that global income could increase by more than $3000 billion per year, $2500 billion of which would go to the developing world.
Others had been predicting more modest outcomes, e.g. world net welfare gains ranging from $84 billion to $287 billion by the year 2015. Pascal Lamy has conservatively estimated that the deal will bring an increase of $130 billion.
Several think tanks and public organizations assess that the conclusion of the trade round will result
in a net gain.
WTO. N.p., n.d. Web. 10 Oct. 2014. <http://wto.org/english/thewto_e/whatis_e/whatis_e.htm>.
N.p., n.d. Web. <http://www.wto.org/english/tratop_e/dda_e/dda_e.htm>.
<YouTube. YouTube, n.d. Web.>
By: Kirti Gurbani