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Presented by:David DPenha 33Deepa Thakkar 34Gayatri Das 48

Kunali Shah 69

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Before WTO

The General Agreement on Tariffs and Trade (GATT), multilateraltreaty between governments, was signed in 1947 and came into forceon 1st January 1948.

OBJECTIVES:

The primary of GATT is to expand international trade by liberalizingtrade so as to bring about all around economic prosperity. The

Preamble to the GATT mentions the following as its importantobjectives:

Raising standard of living.

Ensuring full employment and a large and steadily growing volumeof real income and effective demand.

Developing full use of resources of the world. Expansion of production and international trade.

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Evaluation of GATT

The member countries of GATT account for over 90 % of the internationaltrade. This indicates that GATT can considerably help in the orderlydevelopment of global trade.

One of the principles accomplishments of GATT has been the establishmentof the forum for continuing consultations. Disputes that might otherwisehave caused continuing hard feeling, reprisals and even diplomatic rupturehave been brought to the conference table and compromised.

GATT has so far held 8 multinational trade negotiations. Though GATTsefforts at getting tariff reductions and other measures aiming at tradeliberalizations are not up to expectations, they are in no way insignificant.The average level of tariff on manufactured goods in industrial countries isabout 3% now compared to about 40% in the immediate post 2nd war years.

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Formation of WTO The World Trade Organization was founded in 1995 to replace the General

Agreement on Tariffs and Trade (GATT). This multilateral organizationaims to lower tariffs and non-tariff barriers so as to increase internationaltrade.

The 146 member states meet in ministerial sessions at least once every twoyears. NGOs and poor countries fear that further liberalization of trade willonly benefit rich countries.

WTO negotiations favor the interests of investors and neglect agricultural

protectionism by rich countries. Critics often charge that the WTO functionsundemocratically and that it has opaque negotiation procedures that harmthe interest of the poor.

The World Trade Organization (WTO) is an international, multilateralorganization, which sets the rules for the global trading system and resolvesdisputes between its member states, all of whom are signatories to its about

30 agreements.

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The WTO in brief

The World Trade Organization (WTO) is the onlyinternational organization dealing with theglobal rules of trade between nations. Its mainfunction is to ensure that trade flows assmoothly, predictably and freely as possible.

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Fact File

Location: Geneva, Switzerland

Established: 1 January 1995

Created by: Uruguay Round negotiations (1986-94)

Membership: 153 countries on 10 February 2011

Budget: 196 million Swiss francs for 2011

Secretariat staff: 640

Head: Pascal Lamy (Director-General)

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10 Common misunderstandings aboutthe WTO WTO dictates policy

WTO is free for trade at any cost

Commercial interests take priority over development Commercial interests take priority over the environment

Commercial interests take priority over health and safety

WTO destroys jobs, worsens poverty

Small countries are powerless in the WTO

WTO is the tool of powerful lobbies Weaker countries are forced to join the WTO

The WTO is undemocratic

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Functions

Administering WTO trade agreements

Forum for trade negotiations

Handling trade disputes

Monitoring national trade policies

Technical assistance and training for developing countries

Cooperation with other international organizations

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Important Agreements under WTO

General Agreement on trade in Services

Trade Related Intellectual Property Rights

Trade Related Investment Measures

Agreement on Anti-Dumping

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New issues Regional economic groupings

Trade and the environment

Aid for trade

Transparency in government procurement

Trade facilitation

Electronic commerce

Trade and labour rights

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Dispute Settlement First stage: consultation

Second stage: the panel

Before the first hearing First hearing: the case for the complaining country and defence

Rebuttals

Experts

First draft Interim report

Review

Final report

The report becomes a ruling

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Difference between GATT and WTO

Sr.

No

GATT WTO

1 GATT was ad hoc andprovisional.

WTO and its agreements arepermanent.

2 GATT has contracting parties. WTO has members.

3 GATT system allowed existingdomestic legislation to continueeven if it violated a GATTagreement.

This is not permitted by WTO.

4 GATT was less powerful, disputesettlement system was slow andless efficient, its ruling could beblocked.

WTO is more powerful than GATT,dispute settlement mechanism isfaster and more efficient, verydifficult to block the ruling.

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10 benefits of the WTO trading system

The system helps promote peace

Disputes are handled constructively

Rules make life easier for all Freer trade cuts the costs of living

It provides more choice of products and qualities

Trade raises incomes

Trade stimulates economic growth

The basic principles make life more efficient Governments are shielding from lobbying

The system encourages good government

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Implications for India

It appears that India does not stand to gain much by shouting foragriculture reforms in developed countries because the overall tariff is

lower in those countries. India will have to tart major reforms in agriculture

sector in India to make Agriculture globally competitive.

It is likely that China, Germany, North African countries, Mexico and suchothers may reap benefit in textiles and Clothing areas unless India embarks

upon major reforms in modernization and up gradation of textile sector

including apparels.

In Pharma-sector there is need for major investments in R &D and mergersand restructuring of companies to make them world class to take

advantage. India has already amended patent Act and both product and

Process are now patented in India.

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Problems faced by India due to WTO &

its Implementation Predominance of developed nations in negotiations extracting more

benefits from developing and least developed countries

Resource and skill limitations of smaller countries to understand and

negotiate under rules of various agreements under WTO

Incompatibility of developed and developing countries resource sizesthereby causing distortions in implementing various decisions

Non-tariff barriers being created by developed nations.

Poor implementation of Doha Development Agenda

Dismantling of MFA (Multi Fiber Agreement) and its likely impact oncountries like India

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How does WTO help India?

Extra time

Trading opportunities

Safeguarding the interest

Means of helping to deal with committments

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What should India do?

The most important things for India to address are speed up internalreforms in building up world-class infrastructure like roads, ports andelectricity supply.

India's ranking in recent Global Competitiveness report is not veryencouraging due to infrastructure problems, poor governance, poor legalsystem and poor market access provided by India.

Our tariffs are still high compared to Developed countries and there will bepressure to reduce them further and faster.

India has solid strength, at least for mid term (5-7 years) in services sectorprimarily in IT sector.

India would do well to reorganize its Protective Agricultural policy in nameof rural poverty and Food security and try to capitalize on globalization of

agriculture markets.

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India must improve legal and administrative infrastructure, improve tradefacilitation through cutting down bureaucracy and delays and further ease itsfinancial markets.

India has to downsize non-plan expenditure in Subsidies and Governmentsalaries and perquisites like pensions and administrative expenditures.

Corruption will also have to be checked by bringing in fast remedial publicgrievance system, legal system and information dissemination by using e-governance.

The petroleum sector has to be boosted to tap crude oil and gas resourceswithin Indian boundaries and entering into multinational contracts to sourceoil reserves.

It wont be a bad idea if Indian textile and garment Industry go multinationalsetting their foot in western Europe, North Africa, Mexico and other suchstrategically located areas for large US and European markets.

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Thank You