Student: Zeehsan Nazir Reg no.

: Sec: Assignment: Fa10-bba-007 BBA 6A Development of WTO

History of WTO and Reasons of Existence The WTO Word trade organization that intends to supervise and liberalize international trade was not formed until 1995. After the World War 1, The Great depression affected the economic conditions of many countries especially the Worlds most dominant exporters of that time i.e. USA and Britain. The USA passed the Smooth Hawley Act. Its purpose was to protect domestic unemployment and it contains high tariffs for the imports in the country. But this law was affecting the other countries by unemployment. In response to this other countries also raised their trade barriers, by which the Exports of USA suffered a lot. By realizing all this USA congress thought of the free trade and established the GATT in 1947. While this agreement and trend towards the free trade was successful, many countries joined this agreement. After many years of this agreement and its successful rounds, the need of same kind of trade in service sector was brought into consideration. For this the Intellectual property rights were to be establish before countries steps into the trade in service sector because of danger of piracy issues. This was not part of GATT which was in existent, so this agreement was given more extension by lowering the trade barriers more and increasing free trade not only in commodities but also in service sector and finally after extension, the World Trade Organization was established. The WTO succeeded the GATT with more formalized rules and lowering trade barriers. If we summarize the reasons for the need and existence of WTO we can conclude as following. WTO implies more effective policies and enforcement of rules of GATT. The WTO contains also two sister bodies which were not part of GATT, the GATS which holds for General agreement on trade and services and TRIPS which holds for Trade related aspects of Intellectual property rights.

The WTO not only makes policies just for the smooth running of trade but also monitors the trade policies of member countries and is responsible for the solving disputes among the member nations.

Different Rounds of GATT and their Objectives: Year 1947 Round Geneva round Objectives To make reductions in bilateral tariffs covering 20% of world trade. To make reductions in bilateral tariffs. To make reductions in bilateral tariffs covering a new range of goods. To make Reductions in bilateral

1949 1951

Annency, France Torquay, England

1955-1956

Geneva round

1960-1962

Dillon round

1964-1967 1973-1979

Kennedy round Tokyo round

1986-1993 1995 2001

Uruguay round WTO established Doha round

tariffs. To make reductions in bilateral tariffs. To discuss the creation of European economic community Reductions in bilateral tariffs. To establish negotiation rules Reductions in bilateral tariffs. To look for Procedures on dispute resolution, dumping and licensing Additional tariff reductions. Stalemate for agricultural tariffs. WTO replaces the GATT. To extent the trade in service sector To look Divergences between developing and developed countries. Issues over agricultural subsidies

The Importance and Future of WTO The World Trade Organization (WTO) helps to facilitate global trade in this complex world of globalization. It is the major multilateral forum for creating agreements and settling trade disputes among governments. It has 153 members that collectively account for more than 97% of world trade. Settling disputes in a timely and structured manner is important. It helps to prevent the detrimental effects of unresolved international trade conflicts and to mitigate the imbalances between stronger and weaker players by having their disputes settled on the basis of rules rather than having power determine the outcome. Issues pending in Doha round

Agriculture has become the most important and controversial issue. Agriculture is particularly important for developing nations as 75% of population lives in rural areas and vast majority is dependent on the agriculture for their livelihood. The USA has gives subsidies to its domestic producers to protect them although they are not able to excel in agriculture side and also has high trade barriers for the imports of the agricultural products from developing nations. Due to this developing nations export suffers a lot. Negotiations are being made on this issue in WTO. A major topic at the Doha ministerial regarded the WTO Agreement on Trade related aspects of intellectual property rights (TRIPS). The issue involves the balance of interests between pharmaceutical companies in developed countries that held patents on medicines and the public health needs in developing countries. The other major issue is Special and Differential Treatment for developing countries. The negotiations have been split along a developing-country/developed-country divide. Developing countries wanted to

negotiate on changes to S&D provisions, keep proposals together in the Committee on Trade and Development, and set shorter deadlines. Developed countries wanted to study S&D provisions, send some proposals to negotiating groups, and leave deadlines open. Developing countries claimed that the developed countries were not negotiating in good faith, while developed countries argued that the developing countries were unreasonable in their proposals. Future

The WTO can have a bright future but it cannot rely solely on its proven competencies as a judicial body nor its acknowledged expertise in gathering statistics and analyzing trends. Crowning these strengths, the WTO must launch a new era of trade and investment negotiations. Other promising approaches may exist, but we think that plurilateral agreements on pressing global issues offer an excellent path forward. Despite the progress made in several areas, it is clear that Doha agenda envisaged in 2001 will not be completed according to the original mandate. But to abandon the Doha agenda altogether would consign future trade liberalization entirely to the regional track and would likely inflict Lou Gehrigs disease on the WTO. Important global issues might be well put on back burner.