By Group No 11

GATT & WTO

GROUP MEMBERS

CHINTAN THAKKER 90 marketing

SURAJ UGHE 95 marketing

NILESH VAZIRANI 100 marketing

STUTI PANDEY 173 marketing

PRASAD GAWADE 163 operation

SHRUTIKA DAHIGAOKAR 162 operation

SAGAR HARAL 156 operation

NISHANT BHALCHANDANI 176 operation

SANJIVANI BHOLE 180 operation

GATT

General Agreement for Tariff And Trade

GATT the predecessor of the WTO, was born in 1948 as result of the international desire to liberalize trade.

It was set up on October 30,1947 in Geneva with 23countries as its founder members.

India was the founder members of GATT along with World Bank , IMF and WTO.

The primary actions of organization were to freeze and reduce tariff levels on various commodities

It was originally set up as a temporary arrangements to bring about trade

liberalization.

It later became an important and permanent set up to attend to all trade issue among

the members countries.

GATT played a prominent role in settlement of trade disputes between 2 countries

During the next nearly half a century 1948-1994 many nations successively joined the

agreements .

There were 8 rounds of GATT trade negotiations in this period. Bringing forth significant

reductions in tariff and non-tariff barriers to trade

GATT was created to be part of the international trade organization(ITO),however ITO

failed to be created so GATT was left as an independent organization. In January, 1995

GATT was taken over by WTO.

Total number of member countries- 160

OBJECTIVES OF GATT

Free trade and reduce the trade barriers has been the motto of GATT.

To raise standard of living.

To ensure full employment to member countries.

To develop the full use of the resources of the world.

To expand production & international trade.

GATT

LIBERALIZATION OF TRADES IN GOODS AND SERVICES

Facilitates Global

Sourcing

Benefits To the Consumers

Opportunity For Indian Firms For

Export

Increases competitiveness of

domestic firms

Increases the globalization of Indian Firms

Threat To Domestic

Firms

Increases competition from foreign goods and

services

PRINCIPLES OF GATT

Trade without discrimination:

Country granting advantages( tariffs, subsidies) to open on GATT party must grant the same advantage to

other member countries in export and import duties and changes.

Exceptions: Incase of regional trading arrangements and the developing nations.

Protection through tariffs:

Protection to home industries can be provided only through customs tariffs and not through any other

Exceptions: Developing nation where development need more imports.

A stable Basis of Trade: Stable and predictable basis for trade is provided under rules.

Contracting countries should obey levels of tariffs.

No one country can change the tariffs.

Most favoured nations :

Refers to the non-discriminatory treatment toward identical or highly substitute goods coming from two different countries

Uruguay Round of Package

The Draft proposal by Arthur Dunkel in Gatt round includes :-

Market

Agriculture

TRIPS

TRIMS

TRADE In Services

GATT TO WTO

GATT rules apply to trade only in merchandise goods

GATT dispute settlement system is very slow and time consuming

Applied on provisional basis.

GATT VS WTO

Purpose To strengthen international trade.

To govern GATT and international trade practices.

Framework No permanent structure or framework.

Has a permanent structure with a permanent framework.

Scope Trade in goods. Trade in goods; trade in services and trade-related aspects of intellectual property rights.

Dispute resolution Has a permanent appellate body to review findings and settle disputes.

Disputes are resolved faster as settlement system has a select time frame.

GATT WTO

Decision- Making • Flexible• Fewer countries and less

complex members

Complicated Many actors in action

Drivers • The US and EU relationship determined the held of the trading system

• The US and EU relationships no longer hold

• Assertive demands by South

Ministerial Conference

• No time-span was fixed. • More frequently than GATT

• Once in two years

WTO (World Trade Organization)

The World Trade Organization

(WTO) is the only international

organization dealing with the global

rules of trade between nations. Its

main function is to ensure that

trade flows as smoothly, predictably

and freely as possible.

Quick facts

Location: Geneva, Switzerland

Established: 1 January 1995

Created by: Uruguay Round negotiations (1986-94)

Membership: 160 countries on 26 June 2014

Budget: 197 million Swiss francs for 2013

Secretariat staff: 640

Head: Roberto Azevêdo (Director-General)

Main Objectives

Explaining to and educating the public about the WTO, its mission and its activities.

Negotiating the reduction or elimination of obstacles to trade (import tariffs, other barriers to trade)

Settling disputes among member countries regarding the interpretation and application of the agreements 

Monitoring and reviewing the trade policies of our members, as well as ensuring transparency of regional and bilateral trade agreements

The Benefits

The system helps promote peace

Disputes are handled constructively

Rules make life easier for all

Trade raises income

Trade stimulates economic growth

Free trade cuts cost of living

Organizational Structure of the WTO

The Ministerial Conference has supreme authority over all matters

The second level is the General Council comprising the representatives of all the members also acts as the Dispute Settlement Body and the Trade Policy Body

Features

1. Non-Discrimination

2. Freer trade; gradually through negotiation (Reciprocity

3. Predictability: Through Binding

4. Transparency

5. Promoting Fair Competition

Topics Under Trade Negotiation

Agriculture

Textile

Information Technology

Goods schedules

Import Licensing

Customs valuation

Technical barriers to trade

Rules of origin

IMPACT OF THE WORLD TRADE ORGANISATION ON THE INDIAN ECONOMY

 FAVOURABLE IMPACT 

1) Increase in export earnings

•  Growth in merchandise exports :WTO has increased the exports of developing countries because of reduction in tariff and non-tariff trade barriers.India’s merchandise exports have increased from 32 billion us $ (1995) to 185 billion u $ (2008-09).

• Growth in service exports :The WTO introduced the GATS (general Agreement on Trade in Services ) that proved beneficial for countries like India.India’s service exports increased from 5 billion us $ (1995) to 102 billion us $ (2008-09) (software services accounted) for 45% of India’s service exports)

CONTD

2) Agricultural exports :Reduction of trade barriers and domestic subsidies raise the price of agricultural products in international market,India hopes to benefit from this in the form of higher export earnings from agriculture

3) Textiles and Clothing :The phasing out of the MFA will largely benefit the textiles sector.It will help the developing countries like India to increase the export of textiles and clothing

4) Foreign Direct Investment :As per the TRIMs agreement, restrictions on foreign investment have been withdrawn by the member nations of the WTO.This has benefited developing countries by way of foreign direct investment, euro equities and portfolio investment.In 2008-09, the net foreign direct investment in India was 35 billion us $.

CONTD

5) Multi-lateral rules and discipline :It is expected that fair trade conditions will be created, due to rules and discipline related to practices like anti-dumping, subsidies and countervailing measure, safeguards and dispute settlements.Such conditions will benefit India in its attempt to globalise its economy.

UNFAVOURABLE IMPACT 

1) TRIPsProtection of intellectual property rights has been one of the major concerns of the WTO.As a member of the WTO, India has to comply with the TRIPs standards. the agreement on TRIPs goes against the Indian patent act

2) TRIMS :The Agreement on TRIMs also favours developed nations as there are no rules in the agreement to formulate international rules for controlling business practices of foreign investors.Also, complying with the TRIMs agreement will contradict our objective of self – reliant growth based on locally available technology and resources

3) GATS:The Agreement on GATS will also favour the developed nations more.Thus, the rapidly growing service sector in India will now have to compete with giant foreign firms.Moreover, since foreign firms are allowed to remit their profits, dividends and royalties to their parent company, it will cause foreign exchange burden for India.

4) TRADE AND NON – TARIFF Barriers :Reduction of trade and non-tariff barriers has adversely affected the exports of various developing nations.Various Indian products have been hit by. Non- tariff barriers. These include textiles, marine products, floriculture, pharmaceuticals, basmati rice, carpets, leather goods etc.

India not agreeing to the WTO trade facilitation agreement

REASONS

The first problem is with the 10% cap on subsidies which will not be possible for India to achieve. Adding to the woes is the fact that the 10% cap is calculated based on 1986-88 prices when the prices of food grains were much lower. So the cap has to be updated taking into account the present prices of food grains.

The second problem is that even for providing subsidised food, India will have to open up its own stockpiling to international monitoring. It will not be able to add protein heavy grains like say, lentils, if it wants to, due to riders in the peace clause.

Contd..

Third, it might seem unfair to developing countries to not crack down on farm subsidies that the United States provides to its farmers to the tune of more than $20 billion per year. While the WTO is binding the developing countries to protocols, the issue of subsidies by developed giants like US seems to be off the table.

What India want?

India now wants a permanent solution to the issue of public stock holding of foodgrains. G33 members including China have supported India's stand on the ability to subsidise agricultural production and distribute it to the poor at low cost.

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” THANK YOU ….