Integrating Poor Countries Into World Trading System 2(1)

8/8/2019 Integrating Poor Countries Into World Trading System 2(1)

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Group Members:Ashish Singh

Nikhil Shrestha

Rupendra Gopali

Sagar Gautam

Sandarva Pal

Satyendra Nath Subedi

Sugam Upadhyaya


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y Deals with the rules of Trade

y First step is to talk

y At its heart are WTO agreements

y Location: Geneva, Switzerlandy Established: 1 jan,1995

y Created By: Uruguay Round negotiations(1986-94)

y Membership:150 countries(since 11 Jan 2007)

y Budget: 175 million Swiss francs for 2006

y Secretariat staff: 635

y Head: Pascal Lamy(director-general)


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y Functions:

y Administering WTO trade agreements

y Forum for trade negotiations

y

Handling Trade disputesy Monitoring national trade policies

y Technical assistance and training for developingcountries

y Cooperation with other international organizations


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y Since 1948,GATT provided the rules for the system

y Last and the largest GATT round was the Uruguayround.

y Led to WTOd s creation

y 2/3rd of WTOd s 150 members are developing countries

y They look trade as the vital tool

y Deals with special nee s of eveloping countries in threeways

y WTO agreements contain special provisionsy Committee on tra e an evelopmenty WTO secretariat provi es technical assistance


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y Uruguay round agreement assigned several decisions intheir favor

y In 2002,WTO adopted the work programmed for least

developing countries.


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y Countries and regions that are linked by commoninstitutions, currencies, or policies enjoy relatively freeaccess to each otherd s markets.

y Between 1960 and 1982, for example, the incomes ofpoorer regions or countries converged to those of richerones at a rate of about 2 percent.

y Indeed, poorer countries and regions have grown fasterthan their richer neighbors with which they have close

ties.y Countries that trade widely tend to have good institutionsand microeconomic policies.


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y Trade openess is strongly linked to fastereconomicgrowth.

y Openness is measured in terms of a countryd s policies or asan outcome.

y Trade liberalization raises growth rates.

y Openness leads to higher productivity,including import ofmachinery and equipment.


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y Openness provide powerful channels for feedback.

y For eg:competition with foreign firms can exposeinefficient industrial policies.

y

It increases the marginal product of complementaryreforms i.e. better infrastructure, telephones ,roads.

y Raises the productivity of companies .


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y People living on less than two dollar a day fell sharplyfrom 38 percent to 19 percent from 1978-1998.

y The drop in number of poor was because of populationgrowth but less dramatic from 1.4 billion to 1 billion.

y People living in less than 2 dollars decreased by some250 million.


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Poor countries gains comes with certain costs

Difficult to meet obligations such as:

Ensuring the protection of patents and other

intellectual property rights Certification that products are in compliance withinternational standardization codes.

Wealthier trading partners can help developingcountries for these causes


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y Technical assistance.

Assistance on customs administration modernization and

tariff reform.Wider tax focus than tariffs alone

y IMF is examining the fiscal impact of tariff

reductions in poor countries


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y Trade Integration Mechanism.

y Introduced in 2004

To help countries experiencing temporary shortfalls in theirexport earnings because of trade liberalization by othercountries

Trade Facilitation Initiative.

Lending will be available for investments on ports, roads

and other necessary infrastructures. Retraining workers and making payments to help them

maintain their incomes


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y Expanding aid for trade.

Multiyear financing of about $200 million$400

million over an initial five-year periodExamine the adequacy of existing mechanisms foraddressing regional and cross-country aid for trade.

Assist countries with adjustment needs by providing

analysis, advice, and, when necessary, financialsupport


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Comparative Advantage/Better use of Resources

In Nepal:-

Carpet Industry

Tourism Industry Garment Industry

Agro and Forest based Industries

Economies of Large scale

Creation of employment Opportunities Equalization of Prices

Higher Standard Of living


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Promotion Of Globalization

Encouragement to MNCs and Foreign DirectInvestment(FDI)

Causes the flow of ideas, services, and capital acrossthe world

Offers consumers new choices/acquisition of a widervariety of products

Facilitates the mobility of labor, capital, and technology

Franchising

Management Contracts/Import-Export Trade

Opportunities for Sick Industries to Flourish


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Uncertainty & undefined

Impact of trade liberalization

Erosion of preferences

decline in export earningLoss of government revenue

Higher world prices for food imports

Creation of polarity


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y For low income countries one sixth of their governmentrevenues are from tariffs.

y Trend of trade liberalization has lead to decrease intariff since 20 yrs .

y Low income countries had been able to collect only 70%of their lost taxes from other sources


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y Local production may suffer

y Local industries may be overshadowed by theirinternational competitors

y Rich countries may influence political matters inother countries and gain control over weaker nations.

y Ideological differences may emerge between nationswith regard to the procedures in trade practices.


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y Internal

y uncompetitive product due to overvaluation of exchange rates

y the high costs of transportation, electricity, and water

y inadequate roads and port facilities and inefficient customsprocedures that slow delivery.

y unable to launch new exports due to lack of proper financinghigh interest rates

y government weak policy ,corruption.

y External

y high tariffs in OECD markets on agricultural products


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y Subsidies to agriculture in rich countries

y Don t import goo s pro uce in e sweatshopsan /or by chil labor

y High Tari s on Poor-Country Exports


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y Trade is an important determinant of growth and what better thanopen trade.

y The pace of economic growth experienced by developing countries isimmense for E.g.. China and India.

y Apart from strong internal economic policies, the rise of economicblocks such as EU or regional trading areas such as ASEAN,NAFTAhas helped to improve the Balance Of Payment (BOP) , fall inunemployment, rise in living standard etc.

y The allocation and reallocation of resources is facilitated by

international trade.y Benefits countries to take advantage of FDI, technology transfer,

Labor mobility etc.


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y Subsidies and tariffs set by rich developed economies: USAsteel tariffs, EU agricultural subsidies are two of the culprits.

y Dumping of low cost products by one country into anotherhas become common.

y Political influence in the name of trade negotiations andbargaining has affected poor countries.

y FDI hampering domestic investment.

y Depletion of natural resources of poor countries to meet the

demand of developed countries.y Impact trade liberalization will have on their balance of

payments, fiscal accounts, and terms of trade.

y Falling share of world trade taken by developing countries.


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y The ability to acquire goods that can't be produced locally.

y The opportunity to increase exportsand thus output and jobs.

y An increase in overall production efficiency.

y About half of the developing countries' exports of textiles goto other developing countries, and a fifth of their exports ofclothing go to other developing countries.

y Organisations have been set up to encourage the removal ofbarriers to free global trade.

y A productive way to engage other nations in a manner thatdevelops friendly political relations.

y The Solution to the WTO fFree and Fair Tradef


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Looking forward, it is difficult to see how a slow-moving WTO can produce timely results.

Despite the stall at the WTO level, world trade hascontinued to advance at historically unprecedentedrates.


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y Growth

y Autonomous Liberalization

y Bilateral and Regional Agreements

y Plurilateral Agreementsy The WTO


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y Will it be bad for world trade?

y Can the outcome be better?


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THANK YOU!!

Integrating Poor Countries Into World Trading System 2(1)

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