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GATT – WTO (General Agreement on Tariffs and Trade – World Trade Organization)

Tariff - customs duty or due is the indirect tax levied on the import or export of goods in

international trade

General Agreement on Tariffs and Trade (GATT)

• Multilateral agreement regulating international trade

• Implemented to regulate world trade to aide in the economic recovery following World

War 2

World Trade Organization (WTO)

• Deals with regulation of trade between participating countries

• Provides a framewor for negotiating and formali!ing trade agreements

GATT vs WTO

• "#TT is a set of rules$guidelines• WT% is an institutional body

• "#TT focused on traded goods only

• WT% expanded scope to the service sector  and intellectual property rights

• "#TT has no provisions to settle trade disputes

• WT% has a dispute settlement body

Purpose:

• &ubstantial reduction of tariffs and other trade barriers

• 'limination of preferences( on a reciprocal and mutually advantageous basis

• )eview and propagate the national trade policies

• 'nsure the coherence and transparency of trade policies through surveillance in global

economic policy-maing

• #ssistance of developing( least-developed and low-income countries in transition to

ad*ust to WT% rules and disciplines through technical cooperation and training

• Involved in dispute resolution process aimed at enforcing participants+ adherence to

WT% agreements

History:

• ,ormed #pril ./0 in "eneva( &wit!erland

• &igned into law 1anuary ( ./

• #mended ../

•  3umber of countries4 25 original signatories

• )eplaced by World Trade %rgani!ation in ..6

• WT% was signed into law 1anuary ( ..6

• 7urrent number of members4 6.

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Rationale:

• "lobali!ation calls for an international organi!ation to manage trading systems

• #ddress the issues on protectionism( trade barriers( subsidies( violation of intellectual

 property rights

•

&ynchroni!e and standardi!e trading policies among member nations• #ct as mediator when conflicts$disputes arise

• #ct as center for economic research and analysis

Priniples of t!e trading system:

1.  Non-discrimination –

• Most ,avored 3ation 8M,39 rule - re:uires that a WT% member must apply the

same conditions on all trade with other WT% members; 'li minate discrimination;

Grant someone a special favor and you have to do the same for all other WTO

members.

•

 3ational Treatment Policy - imported goods should be treated no less favorablythan domestically produced goods

2.  Reciprocity – 

• <imit the scope of free-riding that may arise because of the M,3 rule

• %btain better access to foreign marets

3.  Binding and enforceable commitments –

• establish =ceiling bindings= on goods$trades

4. Transparency –

• )e:uired to publish their trade regulations

• Maintain institutions allowing for the review of administrative decisions affecting

trade

• )espond to re:uests for information by other members

•  3otify changes in trade policies to the WT%

5. afety valves –

• Permit members to tae measures to protect not only the environment but also

 public health( animal health and plant health

Organizational "truture:

!ouncil for Trade in Goods "G#TT$ - responsible for the operation of the "#TT #greement and

for the wor of the committees( woring groups and woring parties on the following sectors>

• #griculture

• Maret access for goods

• &anitary and phyto-sanitary measures

• &ubsidies and countervailing measure

• #nti-dumping

• 7ustoms valuation

• )ules of origin

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• Import licensing

• Investment

• &afeguards

• &tate trading enterprises 8woring group9

• Information technology agreement

!ouncil for Trade in ervices "G#T$ –

•  ,irst multilateral( legally enforceable agreement governing trade in services( and

investment in the service sector;

• 'liminates governmental measures that prevent services from being freely supplied

across national borders;

!ouncil for Trade-#spects of %ntellectual &roperty Rights "TR%&$ -

• Monitors implementation of the T)IP& agreement;

•Provides forum for WT% members on intellectual property matters;

• &ets minimum standards of protection for copy rights and related rights( trademars(

geographical indications 8"I?s9( industrial designs( patents( integrated circuit layout

designs( and undisclosed information;

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A!ievements of GATT# WTO glo$ally:

; Trade liberali!ation in industrial products

2; 'nhanced the value and :uantity of trade

5; 'radicated trade and non-trade barriers/; @roadened the trade governance scope to trade in investment( services and

intellectual property6; &ustainable trade development

A; ,ree trade cuts the cost of living( provides more choice of products and :uality

0; &timulates economic growth of member countries; )aises income of member countries and its people

GATT#WTO and t!e P!ilippines:

• %riginal member of WT% B 1anuary ( ..6

 

"rants M,3 treatment to all trading partners

  Participant in the WT% Information Technology #greement 8I,#9

  &ignatory of "#T& protocols on telecommunications and financial services 

Colds a strong record on notifications to WT% except the agricultural sector 

%ffets of GATT#WTO to t!e P!ilippines:

   The Philippines economy has performed well, based on a relatively open

trade regime

 

During 2005-2011, the Philippines had an annual real DP growth rate of 5!"

 

 The Philippines was the world#s $%th largest e&porter and the 2'th importer of

goods in 2010"

 Tari( was simpli)ed and now comprises *,2'' lines at the + eight-digit level

with the adoption of the 200% ./ +armonied Tari( /omenclature" 

mport uotas applied on notably sensitive goods3 i"e" rice"

 

Prohibited and regulated e&ports include endangered wildlife species and live

animals"

Price support for rice and corn 4which has been highly costly, high tari(s, rice

import uotas, as well as import and e&port restrictions"

ave birth to nitiatives to assist agricultural producers including6 various

incentives3 a new reuirement that all ban7ing institutions 4government and

private must set aside at least 25! of their total loanable funds to

agriculture and )sheries credit3 and to assist sugar producers, a reuirement

for a 10! locally sourced bioethanol blend in gasoline, and 2! in diesel"

 

8oreign euity in deep-sea-)shing vessels is capped at 90!, and all

)shermen must be 8ilipino citiens"

mports of fresh, chilled or froen )sh 4e&cept when imported for canning and

processing are allowed only when deemed :necessary:, and a certi)cate of

necessity is reuired"

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