SEMINAR REPORT ON

CHANGING ROLE OF WORLD TRADE

ORGANISATION (WTO)

SUBMITTED TO SUBMITTED BYMr. Liaqat Ali Khan Ramandeep kaur Roll No. 5290

MBA 1st Semester Section- E

SESSION 2011-2012SCHOOL OF MANAGEMENT STUDIES

PUNJABI UNIVERSITY, PATIALA

ACKNOWLEDGEMENT

I would like to take this opportunity to thank Mr. Liaqat Ali

Khan, Lecturer, MBA Department, School of management

studies, Punjabi university, Patiala, who has been guiding force

for my Report on

“CHANGING ROLE OF WORLD TRADE ORGANISATION

(WTO)”.

I am also thankful to my friends, for their support and

encouragement in finding out the appropriate material for this

Report, without them making this report would have been

impossible.

Ramandeep KaurRoll No. 5290

MBA 1st Semester, Sec: E

CHANGING ROLE OF WORLD TRADE ORGANIZATION

Location of the WTO headquarters in Geneva

     WTO founder members (January 1, 1995)     WTO

subsequent members

Formation January 1, 1995

HeadquartersCentre William Rappard,

Geneva, Switzerland

Membership 153 member states

Official languages English, French, Spanish

Director-General Pascal Lamy

Budget189 million Swiss francs (approx.

182 million USD) in 2009.

Staff 625

Website www.wto.int

WHAT IS THE WTO?

ONE OPINION:

The World Trade Organization (WTO) is the only global international organization

dealing with the rules of trade between nations.WTO agreements are negotiated and

signed by the trading nations and ratified in their parliaments. The goal is to help

producers of goods and services, exporters and importers conduct and grow their

business. The goal of WTO is to improve the welfare peoples of the member countries.

The Ranking of India is 16th in World Trade Organization.

ORIGIN OF WTO

General agreements of tariffs and trade (GATT) which was established in 1947 as a

forum to reduce trade barriers. WTO replaced GATT in 1995 as legal and institutional

foundation of multilateral trade relations. It designed to strengthen the trade rules by

providing a stronger set of institutions for resolving disputes and enforcing agreements.

In WTO negotiations take place in rounds. There have been 9 to date. Begins with an

agreement among members on agenda. Most recent completed round was Uruguay

round. The negotiations are continued in Doha round.

STRUCTURE OF WTO:

-Ministerial conference polices and strategy making body.

-General council –executive body of WTO –disputes settlement and trade related policy.

- Councils- trade in goods, trade in services and trade related aspects of intellectual property

body.

-Committees and management bodies- committees on trade and development, balance of payment

and budget, finance and administration.

-The WTO has 153 members, accounting for over 97% of world trade. Around 30 others are

negotiating membership.

The WTO‘s top level decision making body is the ministerial conference which meets at least

once every two years.

Below this is the general council (normally ambassadors and heads of delegation in Geneva, but

sometimes official sent from members’ capitals) which meets several times a year in Geneva

headquarters. The general council also meets as the trade policy review body and the dispute

settlement body.

At the next level, the GOOD COUNCIL, SERVICES COUNCIL, & INTELLECTUAL

PROPETRY (TRIPS) COUNCIL, report to general council.

numerous specialized committees, working groups and working parties deal with the individual

agreements and other areas such as environments, development membership applications and

regional trade agreements.

GATT (a treaty and an organization)

The general trade agreements on trade and tariff was first signed in 1947 ,it was designed to

provide an international forum that encouraged free trade between member states by

regulating and reducing tariffs on traded goods and also providing common mechanism for

resolving trade disputes. GATT was the outcome of the failure of negotiating governments

to create ITO

The Breton woods conference introduced the idea for an organization to regulate trade as

part of larger plan for economic recovery after World War IIAs governments negotiated

the ITO, 15 negotiating states began parallel negotiations for the GATT as a way to attain

early tariff reductions. Once the ITO failed in 1950 only the GATT agreements was left.

The GATT ‘main objective was the reduction of barriers to international trade. This was

achieved through the reduction of trade barriers, quantitative restrictions, subsides on

trade through a serious of agreements,

HISTORY OF GATT

First phase: from 1947 until torque round (commodities which would be covered by the

agreement and freezing existing tariff levels.

Year Place/name Subjects covered

1947 Geneva Tariffs

1949 Annecy Tariffs

1951 Torque Tariffs

Second phase: encompassing three rounds from 1959 to 1979(focused on reducing tariffs)

Year Place/name Subjects covered

1960-1961 Geneva (dillion round) Tariff

1964-1967 Geneva Kennedy

round

Tariff and anti dumping measures

1973-1979 Geneva Tokyo round Tariff and non tariffs measures, framework

agreements.

Third phase: consisting only the Uruguay round from 1986 to 1994

Extended the agreement fully to new areas such as intellectual property,

services, capital and agriculutre.out of this round WTO was born.

Year Place/name Subjects covered

1986-

1994

Geneva Uruguay

round

Tariffs, non tariffs measures, rules, services, intellectual property,

dispute settlement, textiles, agriculture, creation of WTO etc.

DID GATT SUCCED

Continual reductions in tariffs helped spur very high rates of world trade growth during the 1950s

and 1960s –around 8% a year on average. Trade growth consistently outpaced production growth.

The rush of new members during the Uruguay round demonstrated recognition of multilateral

tiding system as the anchor for development and an instrument of economic and trade reform. But

GATT sauced in reducing the tariffs it a low level with a series of economic recessions 1970s &

80’s drove governments to devise other form of protection for sectors facing increased foreign

competition.

High rates of unemployment and constant factory closures led governments in Western Europe

and North America to seek bilateral marketing sharing arrangements with competitors and to

embark on subsidies race to maintain their hold on agricultural trade.

Both these changes undermined GATT; s credibility and effectiveness.

The problem was not just deteriorating trade policy environment. By the early 1980’s the general

agreement was clearly no loger as relevant to the realities of the world trade as it had been in

1940s.

World trdadehas become far more complex and important than 40 year before.

The globalization of the economy was under way.

Trade in services- not covered by GATT rules

Ever increasing international investments.

Factors convinced GATT members that anew effort to reinforce and extend the multilateral

system should be attempted. That effort resulted in the Uruguay round the Marrakesh declaration

and the creation of the WTO.

Uruguay Round

It took seven and a half years, almost twice the original schedule. By the end, 123 countries

were taking part. It covered almost all trade, from tooth brushes to pleasure boats, from

banking to telecommunications from the genes of the wild rice to AIDS treatments. It was

quite simply the largest trade negotiation ever and most probably the largest negotiation of

any in history.

The agreements fall into a structure with six main parts:

The Agreement Establishing the WTO

Goods and investment — the Multilateral Agreements on Trade in Goods including the

GATT 1994 and the Trade Related Investment Measures

Services — the General Agreement on Trade in Services

Intellectual property — the Agreement on Trade-Related Aspects of Intellectual Property

Rights (TRIPS)

Dispute settlement (DSU)

Reviews of governments' trade policies (TPRM)

Ministerial conferences

First ministerial conference

The inaugural ministerial conference was held in Singapore in 1996. Disagreements

between largely developed and developing economies emerged during this conference

over four issues initiated by this conference, which led to them being collectively referred

to as the "Singapore issues".

Second ministerial conference

It was held in Geneva in Switzerland.

Third ministerial conference

The third conference in Seattle, Washington ended in failure, with massive

demonstrations and police and National Guard crowd control efforts drawing worldwide

attention.

Fourth ministerial conference

It was held in Doha In Persian Gulf nation of Qatar. The Doha Development Round

was launched at the conference. The conference also approved the joining of China,

which became the 143rd member to join.

Fifth ministerial conference

The ministerial conference was held in Cancun, Mexico, aiming at forging agreement on

the Doha round. An alliance of 22 southern states, the G20 developing nations (led by

India, China and Brazil), resisted demands from the North for agreements on the so-

called "Singapore issues" and called for an end to agricultural subsidies within the EU

and the US. The talks broke down without progress.

Sixth ministerial conference

The sixth WTO ministerial conference was held in Hong Kong from 13 December – 18

December 2005. It was considered vital if the four-year-old Doha Development Agenda

negotiations were to move forward sufficiently to conclude the round in 2006. In this

meeting, countries agreed to phase out all their agricultural export subsidies by the end of

2013, and terminate any cotton export subsidies by the end of 2006. Further concessions

to developing countries included an agreement to introduce duty free, tariff free access

for goods from the Least Developed Countries, following the Everything But Arms

initiative of the European Union — but with up to 3% of tariff lines exempted. Other

major issues were left for further negotiation to be completed by the end of 2010

Seventh ministerial conference

The WTO General Council, on 26 May 2009, agreed to hold a seventh WTO ministerial

conference session in Geneva from 30 November–December 2009. A statement by

chairman Amb. Mario Matus acknowledged that the prime purpose was to remedy a

breach of protocol requiring two-yearly "regular" meetings, which had lapsed with the

Doha Round failure in 2005, and that the "scaled-down" meeting would not be a

negotiating session, but "emphasis will be on transparency and open discussion rather

than on small group processes and informal negotiating structures".

Doha Round

THE DOHA ROUND of WTO negotiations began in November 2001.

The new round was instead launch at, ministerial conference in Doha Qatar. The new trade

agenda of developed world was dubbed the Doha development agenda and from there, all

countries were committed to negotiations opening agricultural and manufacturing markets, as

well as trade in services (GATS) negotiations and expanded intellectual property regulation

(TRIPS). The intent of the round, according to its proponents was to make trade rules fairer for

developing countries. Opponents changed that the round would expand a system o f trade rules

that were bad for development and interfered excessively with countries;’ domestic policy space.

The round was set to be concluded in four years in December 2005- after two more ministerial

conferences has produced a final draft declaration. Agriculture has a become the linchpin of the

agenda for both developing and developed countries, compulsory licensing of medicines and

patent protection.

A second deals with a review of previsions giving special and differential treatment to developing

countries & addressing Problems that developing countries are having in implementing current

trade obligations.

A Study by the University of Michigan found that if all trade barriers in agriculture, service, and

manufacturers were reduced by 33% has result of the Doha development agenda; there would be

an increase in global welfare of $ 574.0 billion. Some studies present moiré modest outcome

predicting world net welfare gains ranging from $ 84 billion to $ 287 billion by the year 2015

others up to $ 3000 billion per year.

GATT and WTO trade rounds

Name start Duration Countries Sub. Covered

1. Geneva April

1947

7mths 23 Tariffs

2.annecy April

1949

5mtnhs 13 Tariffs

3.torquay Sept,1990 8months 38 Tariffs

4.genevaII Jan.1956 5months 26 Tariff admission of

Japan

5.dillion Sept 1960 11months 26 tariffs

6.kennedy May

1964

37

months

62 Tariffs & anti dumping

7.tokyo Sept 1973 74

months

102 Tariff, non tariff

measures “frameworks

agreements

8.uruguay Sept 1986 87

months

123 Tariffs, non tariffs, rules

services

IP,DI,SPUTE,settlement,

TEXTILES agriculture

Principles of the trading system

The WTO establishes a framework for trade policies; it does not define or specify

outcomes. That is, it is concerned with setting the rules of the trade policy games. Five

principles are of particular importance in understanding both the pre-1994 GATT and the

WTO:

1. Non-Discrimination. It has two major components: the most favored nation

(MFN) rule, and the national treatment policy. Both are embedded in the main

WTO rules on goods, services, and intellectual property, but their precise scope

and nature differ across these areas. The MFN rule requires that a WTO member

must apply the same conditions on all trade with other WTO members, i.e. a

WTO member has to grant the most favorable conditions under which it allows

trade in a certain product type to all other WTO members. "Grant someone a

special favor and you have to do the same for all other WTO members." National

treatment means that imported and locally-produced goods should be treated

equally (at least after the foreign goods have entered the market) and was

introduced to tackle non-tariff barriers to trade (e.g. technical standards, security

standards et al. discriminating against imported goods).

2. Reciprocity. It reflects both a desire to limit the scope of free-riding that may

arise because of the MFN rule, and a desire to obtain better access to foreign

markets. A related point is that for a nation to negotiate, it is necessary that the

gain from doing so be greater than the gain available from unilateral

liberalization; reciprocal concessions intend to ensure that such gains will

materialize.

3. Binding and enforceable commitments. The tariff commitments made by WTO

members in a multilateral trade negotiation and on accession are enumerated in a

schedule (list) of concessions. These schedules establish "ceiling bindings": a

country can change its bindings, but only after negotiating with its trading

partners, which could mean compensating them for loss of trade. If satisfaction is

not obtained, the complaining country may invoke the WTO dispute settlement

procedures.

4. Transparency. The WTO members are required to publish their trade

regulations, to maintain institutions allowing for the review of administrative

decisions affecting trade, to respond to requests for information by other

members, and to notify changes in trade policies to the WTO. These internal

transparency requirements are supplemented and facilitated by periodic country-

specific reports (trade policy reviews) through the Trade Policy Review

Mechanism (TPRM). The WTO system tries also to improve predictability and

stability, discouraging the use of quotas and other measures used to set limits on

quantities of imports.

5. Safety valves. In specific circumstances, governments are able to restrict trade.

There are three types of provisions in this direction: articles allowing for the use

of trade measures to attain noneconomic objectives; articles aimed at ensuring

"fair competition"; and provisions permitting intervention in trade for economic

reasons. Exceptions to the MFN principle also allow for preferential treatment of

developing countries, regional free trade areas and customs unions.

Voting system

The WTO operates on a one country, one vote system, but actual votes have never been

taken. Decision making is generally by consensus, and relative market size is the primary

source of bargaining power. The advantage of consensus decision-making is that it

encourages efforts to find the most widely acceptable decision. Main disadvantages

include large time requirements and many rounds of negotiation to develop a consensus

decision, and the tendency for final agreements to use ambiguous language on

contentious points that makes future interpretation of treaties difficult.

In reality, WTO negotiations proceed not by consensus of all members, but by a process

of informal negotiations between small groups of countries. Such negotiations are often

called "Green Room" negotiations (after the color of the WTO Director-General's Office

in Geneva), or "Mini-Ministerial", when they occur in other countries. These processes

have been regularly criticized by many of the WTO's developing country members which

are often totally excluded from the negotiations. Richard Harold Steinberg (2002) argues

that although the WTO's consensus governance model provides law-based initial

bargaining, trading rounds close through power-based bargaining favoring Europe and

the United States, and may not lead to Pareto improvement.

Dispute settlement

Dispute settlement is regarded by the WTO as the central pillar of the multilateral trading

system. And as a unique contribution of the stability of global economy.

WTO member has agreed that if they believe fellow members are violating trade rules

they will use the multilateral system of settling disputes instead of taking actions

unilaterally.

The operation of the WTO dispute settlement process involves the DSB Panels, the

appellate body, the WTO sectarian, arbitrators, independent export and several

specialized institutions.

Example:-

WTO on 28th October 2011 issued the report of the panel that had examined china’s

Complaint in case “European-Union Antidumping measures on certain features from

china.

Registrations begin for public observation of appeal in Boeing dispute:-

At the Request of the participants in the dispute “United States –Measures affecting trade

in large civil aircraft. The Division hearing the appeal has decided to authorize public

observation of the oral hearing on 18th October 2011.

Accession and membership

Country wishing to joins submits an application to the general council and has to describe

all aspects of trade and economic policies that have a bearing on WTO agreements.

Application is examined by working party opened to all in tested WTO members.

The working party determines the terms and conditions of entry into the WTO for the

applicant nations.

Final phase-bilateral negotiations between the applicant nations and other member

countries regarding the concession and commitments on tariff level and market access for

goods and services.

After talks working party sends to the ministerial conference on accession package.

Once the general council or the ministerial conference approves of the terms of accession

the applicant‘s parliament must ratify the protocol of accession before it can become a

member.

Agreements

The WTO oversees about 60 different agreements which have the status of international

legal texts. Member countries must sign and ratify all WTO agreements on accession. A

discussion of some of the most important agreements follows.

Agreement on Agriculture (AoA)

The Agreement on Agriculture came into effect with the establishment of the WTO at

the beginning of 1995. The AoA has three central concepts, or "pillars": domestic

support, market access and export subsidies.

General Agreement on Trade in Services (GATS)

The General Agreement on Trade in Services was created to extend the multilateral

trading system to service sector, in the same way the General Agreement on Tariffs

and Trade (GATT) provides such a system for merchandise trade. The Agreement

entered into force in January 1995

Trade-Related Aspects of Intellectual Property Rights Agreement (TRIPs)

The Agreement on Trade-Related Aspects of Intellectual Property Rights sets down

minimum standards for many forms of intellectual property (IP) regulation. It was

negotiated at the end of the Uruguay Round of the General Agreement on Tariffs and

Trade (GATT) in 1994.At the time that negotiation began, over 40 countries in the world

did not grant patent. The trips agreement now requires all WTO members, with few

exactions, to adapt their laws to the minimum standards of pier protecting for

pharmaceutical product.

Sanitary and Phyto-Sanitary (SPS) Agreement

The Agreement on the Application of Sanitary and Phytosanitary Measures- also

known as the SPS Agreement was negotiated during the Uruguay Round of the General

Agreement on Tariffs and Trade, and entered into force with the establishment of the

WTO at the beginning of 1995.

Under the SPS agreement, the WTO sets constraints on members' policies relating to

food safety (bacterial contaminants, pesticides, inspection and labeling) as well as animal

and plant health (imported pests and diseases).

Agreement on Technical Barriers to Trade (TBT)

The Agreement on Technical Barriers to Trade is an international treaty of the World

Trade Organization. It was negotiated during the Uruguay Round of the General

Agreement on Tariffs and Trade, and entered into force with the establishment of the

WTO at the end of 1994.

The object ensures that technical negotiations and standards, as well as testing and

certification procedures, do not create unnecessary obstacles to trade".

Multi fiber agreement (MFA)

International trade agreement under which two countries may negotiate quota restrictions

on textile and apparel imports from each other.MFA restrictions are normally prohibited

under world trade organization (WTO) rules band must have been phased out by 2005.

Multi fiber agreement (MFA) this agreement is dismantled with effect from Jan 1,

05 .resulting of removal of QR on the textile exports in several European countries. As a

consequence a huge textile market is opened up for developing countries.

SCOPE OF WTO

Four Basic Rules

1. Protection to Domestic Industry Through Tariffs:

a. The General Agreement on Tariffs and Trade (GATT) covers international trade in

goods. The workings of the GATT agreement are the responsibility of the Council for

Trade in Goods (Goods Council) which is made up of representatives from all WTO

member countries. GATT requires the member countries to protect their domestic

industry/production through tariffs only.

b. It prohibits the use of quantitative restrictions, except in a limited number of situations.

2. Binding of Tariffs: The member countries are urged to

a. Eliminate protection to domestic industry/ production by reducing tariffs and removing

other barriers to trade in multilateral trade negotiations.

b. The reduced tariffs are bound against further increases by listing them in each

country's national schedule.

c. The schedules are an integrated part of the GATT legal system.

3. Most Favored-Nation (MFN) Treatment:

a. The rule lays down the principles of non-discrimination amongst member countries.

b. Tariff and other regulations should be applied to imported or exported goods without

discrimination among countries.

c. Exceptions to the rules i.e., regional arrangements subjected to preferential or duty free

trade agreements, Generalized System of Preferences (GSP) where developed

countries apply preferential or duty free rates to imports from developing countries.

4. National Treatment Rule:

The rule prohibits member countries from discriminating between imported products and

domestically produced like goods in the matter of internal taxes and in the application of

internal regulations.

FUNCTIONS OF WTO:

WTO shall facilitate the implementation, administration and operation of the

plurilateral trade agreement.WTO shall proved a forum for the negotiations and its

members and concerning their multilateral trade relation.wto shall administer the

understanding on rules and procedures governing the settlement of disputes.WTO

Shall administer the trade policy review mechanism and WTO shall cooperates as

appropriate with IMF and IBRD and with the affiliated agencies.

WTO administers the 28 agreements contained in final act and the no. of the

plurilateral agreements and government’s procurements through various councils

and committee. Its oversees the implementation of issues related to tariffs cut and

nontariff measure and agreed to in the trade negotiations. It examines the trade

regimes of the individual member countries,

WTO provided dispute settlement courts and panel. It acts as management

consultant for world trade. It provide technical cooperation and training, it can be

used as forum for the continuous negotiations.

It cooperates with the international institution like IMF IBRS etc for maki9ng

global economic policies and it oversees the national trade policies of the member

governments. The goal behind these functions is set out in preamble to Marrakesh

agreement these include:

Raising standards of living

Ensuring full employment

Ensuring large and steadily growing realm income and demand and

Expanding the production & trade in goods and services.

ROLE OF WTO:

WTO not only provide a platform for healthy trade in goods and services but also

acts as international body involved in peace making process and focusing on other

crucial areas like health care, education , unemployment, and upliftment of the

underdeveloped and developing countries while sustaining the growth of the

developed nations like US, Russia etc .

WTO helps member states in various ways and this enables them to reap benefits

such as:

Help promote peace within nations : peace is partly an outcome of two of the most

fundamental principle of the trading system: helping trade flow smoothly and

providing countries with a constructive and fair outlet for dealing with disputes

over trade issues. Peace creates international confidence and cooperation that the

WTO creates and reinforces.

Disputes are handedly constructively : As trade expands in volume, in the numbers if

the products traded in no. of countries and the company trading, there is greater

chance that disputes will arise. The WTO help resolves theses disputes peacefully

and costrcutively.if this cud is left to the member states, the disputes may lead to

serious conflicts, but the lot of trade tension is reduced by organization such as

WTO.

Rules make life easier for all: WTO system is based on rules rather than power and this

makes life easier for all trading nations. WTO reduces 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 the member states.

Free trade cuts the cost of living: Protectionism is expensive, it raises prices, and WTO

lowers trade barriers through negotiation and applies the principle of non-discrimination.

The result is reduced costs of production (because imports used in production are

cheaper) and reduced prices of finished goods and services, and ultimately a lower cost of

living.

It provides more choice of products and qualities: It gives consumer more choice and

a broader range of qualities to choose from.

Trade raises income: Through WTO trade barriers are lowered and this increases

imports and exports thus earning the country foreign exchange thus raising the country's

income.

Trade stimulates economic growth: With upward trend economic growth, jobs can be

created and this can be enhanced by WTO through careful policy making and powers of

freer trade.

Basic principles make life more efficient: The basic principles make the system

economically more efficient and they cut costs. Many benefits of the trading system are

as a result of essential principle at the heart of the WTO system and they make life

simpler for the enterprises directly involved in international trade and for the producers of

goods/services. Such principles include; non-discrimination, transparency, increased

certainty about trading conditions etc. together they make trading simpler, cutting

company costs and increasing confidence in the future and this in turn means more job

opportunities and better goods and services for consumers.

Governments are shielded from lobbying: WTO system shields the government from

narrow interest. Government is 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.

The system encourages good governance: The WTO system encourages good

government. The WTO rules discourage a range of unwise policies and the commitment

made to liberalize a sector of trade becomes difficult to reverse. These rules reduce

opportunities for corruption.

LAND MARKS OF WTO

In the year 2000 for the first time, combined output of emerging economies accounted for

more than half of world GDP (in PPP) with India and china alone accounting for nearly

1/4th.The share of world exports of the emerging economies was 43% against a mere 20

% in 1970.They consumed over half of the world’s energy. The hold 70% of world’s

foreign exchange reserves.

The total ,merchandise goods exports of India have increased from US $ 26.33 Billion in

1994-95 to US $ 102.7 billion in 2005-06 (provisional) whereas total merchandise

imports (excluding petroleum products) grew from US$ 22.72 billion to US$ 105.1

billion ( provisional) during the same period. The export of pharmaceutical products has

increased from over US$ 854.51 million in 1999-2000 and to US$ 2444.06 million in

2005 -06.similarliy, India’s total commercial trade increase from US $14.06 billion in

1994 to US$ 80.58 billion.

WTO AND ENVIRONMENT

TRIPS: PATENTS AND ENVIRONMENT

Members may exclude from patentability inventions, the prevention of which within

their territory is necessary to protect, amongst the objectives, human, animals or

plant life or health or avoid serious prejudice to the environment. Also excluded

from patentability: plants and animals other than microorganisms, as well as a

essentially biological process for production of plants and animals (for ethical

purposes) Members must provide for protection for the plant varieties either by

patents or by effective sul genesis system or combination of two (for purpose of bio-

diversity).

The WTO has no specific agreement dealing with the environment. However, the WTO

agreements confirm governments’ right to protect the environment, provided certain

conditions are met, and a number of them include provisions dealing with environmental

concerns. The objectives of sustainable development and environmental protection are

important enough to be stated in the preamble to the Agreement Establishing WTO.

At the end of Uruguay round 1994 trade ministers from participating countries decided to

begin a comprehensive work programmed on trade and environment in the WTO. They

created a trade and environment committee. This has environmental and sustainable

development issue into the main stream of WTO work. The 2001 Doha ministerial

conference kicked off negotiations in some aspects of the subject. The committee broad

based responsibility. The committee work is based on two important principles.

WTO is not an environmental agency .its members do not want it to intervene in national

and international environmental policies or to set environmental standards’. The

committee work progress focused on ten areas. it agenda is driven by proposal by

individual WTO members. On issue of importance to them. The following section

outlines some of the issue, and what the committee has concluded so far. The WTO’s

committee say the most effective way to deal with international environmental problems

is through the environmental agreement include helping countries acquire

environmentally friendly technology giving them financial assistance , provide training

etc.

A WTO DISPUTE: The shrimp turtle case:

This was a case brought by India Malaysia Pakistan and Thailand against the US. The

official title is “united states” – import prohibition of certain shrimp and shrimp

products”, the official WTO case numbers are 58 and 61.

What was all that about?

Sea turtles have been adversely by human activity either directly or indirectly.

In early 1997, India, Malaysia, Pakistan and Thailand brought a joint complaint against a

ban imposed by the US on the importation of certain shrimp and shrimp products. The

protection of sea turtles was at heart of the ban.

In the practice, Countries that had any the five species of sea turtles within their

jurisdiction and harvested shrimp harvested shrimp with mechanical means, had to

impose on their fishermen requirements comparable to those borne by US shrimpers if

they wanted to be certified to export shrimp products to the US.

The ruling

In its report, the appellate body made clear that under WTO rules countries have the right

to take action to protect the environment. The WTO does not have to allow them this

right.

The US lost the case not because it sought to protect the environment but because it

discriminated between the WTO members.

A GATT dispute tune dolphins dispute

This case still attracts a lot of attention because of its implications for environmental

disputes. It was handled under the old GATT dispute settlements procedure.

ECO labeling good: if it doesn’t discriminate

For the WTO the key point is that labeling requirements and practices should not

discriminate either between trading partners (most favored nation) should apply) or

between domestically produced goods or services and imports.

Transparency: information without too much paperwork

WTO members should provide as much information as

possible about the environment policies they have

adopted or actions they may take when these can have a

significant impact on trade.

WTO AND POVERTY

A new WTO Secretariat study published today (19 June) finds that trade liberalization

helps poor countries to catch up with rich ones and that this faster economic growth helps

to alleviate poverty. WTO Director-General Mike Moore said: “This report confirms that

although trade alone may not be enough to eradicate poverty, it is essential if poor people

are to have any hope of a brighter future. For example, 30 years ago, South Korea was as

poor as Ghana. Today, thanks to trade led growth, it is as rich as Portugal “

Extreme poverty is a huge problem. 1.2 billion People survive on less than a

dollar a day. A further 1.6 billion, more than a quarter of the world's population,

make do with one to two dollars a day.

To alleviate poverty, developing economies need to grow faster, and the poor

need to benefit from this growth. Trade can play an important part in reducing

poverty, because it boosts economic growth and the poor tend to benefit from that

faster growth.

The study finds that, in general, living standards in developing countries are not

catching up with those in developed countries. But some developing countries are

catching up. What distinguishes them is their openness to trade. The countries that

are catching up with rich ones are those that are open to trade; and the more open

they are, the faster they are converging.

The study also finds that poor people within a country generally gain from trade

liberalization. It concludes that "trade liberalization is generally a strongly

positive contributor to poverty alleviation—it allows people to exploit their

productive potential, assists economic growth, curtails arbitrary policy

interventions and helps to insulate against shocks". This concurs with a new

World Bank study (2) which, using data from 80 countries over four decades,

confirms that openness boosts economic growth and that the incomes of the poor

rise one-for-one with overall growth.

The WTO study acknowledges that some people do lose in the short run from

trade liberalization. Some are well-off, others not. The report argues that the

plight of the losers should not be ignored, but that the right way to alleviate their

hardship is through social safety nets and job retraining rather than by abandoning

reforms that benefit most people.

WTO AND AGRICULTURE

The Agreement on Agriculture started with effect from January 1, 1995. The developed

countries would complete their reduction commitments within 6 years, i.e., by the year

2000, whereas the commitments of the developing countries would be completed within

10 years, i.e., by the year 2004.

The products, which are included within the purview of this agreement, are what are

normally considered as part of agriculture except that it excludes fishery and forestry

products as well as rubber, jute, sisal, abaca and coir.

SAILENT FEATURES

The WTO Agreement on Agriculture contains provisions in 3 broad areas.

Market Access

This includes tariffication, tariff reduction and access opportunities. Tariffication means

that all non-tariff barriers such as quotas, variable levies, minimum import prices,

discretionary licensing, state trading measures, voluntary restraint agreements etc. need to

be abolished and converted into an equivalent tariff. Ordinary tariffs including those

resulting from their tariffication are to be reduced by an average of 36% with minimum

rate of reduction of 15% for each tariff item over a 6 year period. Developing countries

are required to reduce tariffs by 24% in 10 years. Developing countries as were

maintaining Quantitative Restrictions due to balance of payment problems were allowed

to offer ceiling bindings instead of tariffication.

Special safeguard provision allows the imposition of additional duties.

It has also been stipulated that minimum access equal to 3% of domestic consumption in

1986-88 will have to be established for the year 1995 rising to 5% at end of the

implementation period.

Domestic support

For domestic support policies, subject to reduction commitments, the total support given

in 1986-88, measured by the total Aggregate Measurement of Support (AMS) should be

reduced by 20% in developed countries (13.3% in developing countries). Policies which

amount to domestic support both under the product specific and non-product specific

categories at less than 5% of the value of production for developed countries and less

than 10% for developing countries are also excluded from any reduction commitments.

Polices which have no or at most minimal trade distorting effects on production are

excluded from any reduction commitments (Green Box-Annex 2 of the Agreement on

Agriculture. The list of exempted green box policies includes such policies which provide

services or benefits to agriculture or the rural community, public stock holding for food

security purposes, domestic food aid and certain de-coupled payments to producers

including direct payments to production limiting program me, provided certain conditions

are met.

Special and Differential Treatment provisions are also available for developing country

members. Developing countries are permitted untargeted subsidized food distribution to

meet requirements of the urban and rural poor. Also excluded for developing countries

are investment subsidies that are generally available to agriculture and agricultural input

subsidies generally available to low income and resource poor farmers in these countries.

Export Subsidies

The Agreement contains provisions regarding member's commitment to reduce Export

Subsidies. Developed countries are required to reduce their export subsidy expenditure by

36% and volume by 21% in 6 years, in equal installment (from 1986-1990 levels). For

developing countries the percentage cuts are 24% and 14% respectively in equal annual

installment over 10 years. The Agreement also specifies that for products not subject to

export subsidy reduction commitments, no such subsidies can be granted in the future.

 

Criticism in terms of unaddressed issues by WTO.

In order not to discredit itself, globalizations would have to squarely address

sustainable development and poverty reduction. There must be an attempt to link

thee strategies of development to something more fundamentals in particular .the

ends of economic and social development.

The international trade rules are underpinned by an insufficient appreciation of the

adverse impact of rapid liberalization.., if it doesn’t pay adequate attention to the

need to reduce asset and income in equalities. Without substantial investment in the

capacity to supply and equally important , a guaranteed safety net against falling

prices and import surges , sudden liberalization will expose the constituents to

unbearable risk.

India and WTO

India is a founder member of general agreements on tariffs and trade GATT 1947 and its

successor the world trade organization WTO which came into effect on 1.1.95 after the

conclusion Uruguay round of multilateral trade negotiations.

India participation in an increasingly rule based system in the governance of international

trade is to ensure more stability and predictability , which ultimately lead to more trade

and prosperity for itself and 153 other nations which now comprise WTO. India

automatically avails national treatment for its export to all WTO members.

India’s ranking in leading exporters and importer in world merchandise trade till 2007 is

26 & in leading exporters and importer in world’s commercial services 2007 are 9

This fourth trade policy review of India has greatly improved our understanding of

India’s trade related polices and the challenges it faces in sustaining and indeed

improving its ecomic growth. Members all agreed that India; ecomic performance has

been impressive.

BENEFITS TO INDIA

The GATT Secretariat estimated that largest increase in the level of merchandise trade in

goods will be in the area of clothing, agriculture, fishery and processed foods. India

textile and clothing exports will increase due to the phasing out of MFA by 2005.

The reduction in agricultural subsidies and barriers to export of the agricultural products,

agricultural exports from India will increase.

Multilateral rules and disciples related to anti-dumping subsidies and countervailing

measures, safeguards & disputes settlement machinery will ensure greater predictability

of international trade.

It provides Market access to a number of developing countries without trade

discrimination.

DISADVANTAGES TO INDIA

Trips agreement went against the Indian patents act 1970.

Introduction of products patents in India lead to hike in drug prices by the MNCs. hence

the poor will left with no generic option.

Extension of intellectual property right to agriculture has negative effect on India. Indian

research institutions will be unable to compete financially with MNCs will be denied

access to patented genetic material.

Application to TRIMS agreement undermines any plan or strategy of self reliant growth

based on local technology.

Service sectors in India are backward compared to the service sectors in developed

countries .hence inclusion of trade in services is detrimental to interest of India.

The MFN clause proved to be detrimental to India’s interest & provided growth for

Chinese invasion in Indian market through dumping.

BIBLIOGRAPHY

http://www.iisd.org/trade/handbook/toc.htm

http://en.wikipedia.org/wiki/Agreement_on_Trade-

Related_Aspects_of_Intellectual_Property_Rights

http://en.wikipedia.org/wiki/Agreement_on_Agriculture

http://www.slideshare.net/charudatta/wto-and-indian-agriculture

http://www.wto.org/english/tratop_e/envir_e/edis00_e.htm

http://wiki.answers.com/Q/Advantages_and_disadvantages_of_wto

http://www.rediff.com/money/2005/dec/12wto2.htm

www.wto.org