PROJECT REPORT ON WORLD TRADE ORGANIZATION

PROJECT REPORT
International Business BUS 301
PREPARED FOR
SYEDA ROWNAK AFZA SENIOR LECTURER, BBS

PREPARED BY
MD. MEHEDI HASAN (07304051) RAJIB ROY (07304012) MARZANA MOSLEM MOULI (07304087) NAZMUS SAKIB (07304004) HUMAIRA NAZIA (07204013) NAFIS AHMED (07204018)

SUBMISSION DATE- 22ND NOV, 2010

Letter of Transmittal

November 22, 2010

Syeda Rownak Afza Senior Lecturer BUS- 301 International Business BRAC Business School BRAC University.

Subject: Submission of Project Report Dear Madam, With great pleasure we are submitting our report on WORLD TRADE ORGANIZATION (WTO) that you have assigned to us as an important requirement of this course. We have found the study to be quite interesting, beneficial & insightful. We have tried our level best to prepare an effective & creditable report.

The report contains a detailed study on WTO and a look at how it is practiced its riles and regulation in the practical world. Here we have gathered information basically through websites.
We honestly hope that our report work will help to give idea of WTO in the real world and you will find this report worth all the labor we have put in it. We welcome your entire query & take pride to answer them. Thanking You.

With best regards,

MD. MEHEDI HASAN (07304051) RAJIB ROY (07304012) MARZANA MOSLEM MOULI (07304087) NAZMUS SAKIB (07304004) HUMAIRA NAZIA (07204013) NAFIS AHMED (07204018)

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Acknowledgement

First of all, we would like to thank our Course Instructor Syeda Rownak Afza for giving us such superlative opportunity to work on this topic of WTO. We are very thankful to her for devoting her precious time and knowledge to help us correctly prepare this report. We are also grateful for her assistance and clear instructions, which helped us a lot in preparing ourreport. Undoubtedly, this assignment would help us in future, thus preparing this report has given us a great moral boost and confidence.

Table of Contents

Topic
Chapter-01: Preparatory Parts Methodology of the report Limitations of the report

Page No.

Chapter-02: Organization Overview (WTO) Introduction History Objectives of WTO Member Countries Activities/Contribution Criticism A Case Where WTO is Involved Conclusion Chapter-03: Bibliography

4- 19

20

Executive Summary

WTO, the flagship organization, is holding the strong leadership position in the current business world since 1995 and is now on its way to becoming a high performance global player. Today, the world has become global with concern about the issue of competitiveness, globalization, falling trade barriers, computerization, automation, ethical behavior, and work force diversity with international business strategy. Worlds interest has shifted to use efficient approaches for business and trade activities and WTO gets most importance in this sector. World Trade Organization (WTO) is an international body whose purpose is to promote free trade by persuading countries to abolish import tariffs and other barriers. As such, it has become closely associated with globalization. the World Trade Organization (WTO), came into being, resulting

from the lengthy, extensive and complex Uruguay Round trade negotiation in the context of General Agreement on Tariffs and Trade (GATT). Basically the end of the UR resulted in the formation of the WTO. Their activities help to promote peace and Provides more choice of products and qualities. Disputes are handled constructively Free trade cuts the costs of living and raises incomes. Though they face some criticisms and their advances should be more significant
but still they are moving ahead on the track to achieve their goals.

CHAPTER- 01: Preparatory Parts

Methodology

The methods that we have used in preparing this report were basically Secondary Data basis. Through searching websites with different links, we collected information about WTO and its application. Finally, we put together all the data, analyzed them and prepared this project report.

Limitation

As we got the opportunity to work on this report within very short time, so it was a little bit tough to get the finest image about the WTO.

CHAPTER- 02: Organization Overview (WTO)

Introduction

International Business is one of the important fields of study now a day. In business world rate of profit and success depend on trade strategies and systems. The World Trade Organization (WTO) is the only global international organization dealing with the rules of trade between nations. At its heart are the WTO agreements, negotiated and signed by the bulk of the worlds trading nations and ratified in their parliaments. The goal is to help producers of goods and services, exporters, and importers conduct their business. WTO gives a better view of the overall strategies they are following and plan to implement more in future. We are assigned to make a report on WTO and here we are going to include the objectives, activities, criticism, case study and some opinions about WTO. Now the World Trade Organization (WTO) is an international body whose purpose is to promote free trade by persuading countries to abolish import tariffs and other barriers. As such, it has become closely associated with globalization.

History of WTO

Over the past 60 years, WTOs predecessor organization. the GATT, has helped to create a strong and prosperous international trading system, thereby contributing to unprecedented global economic growth. Under the GATT and WTO, there have been several "Rounds" of trade negotiations,
and several battles as well-but following established rules-when disputes could not be settled peacefully. Perhaps the most notable of these "Rounds" was the Kennedy Round of Trade Negotiations, wherein American tariffs were slashed approximately 35% across the board, without demanding reciprocity from other nations--unilateral. However, over time, the nature and character of global trade started to get

very complex. Countries began to realise that GATT did not have all answers to the questions posed by the increasingly complicated nature of the global trade.

Jan 1, 1995 - On 1 January 1995, a new international economic organization, the World Trade Organization (WTO), came into being, resulting from the lengthy, extensive and complex Uruguay Round trade negotiation in the context of General Agreement on Tariffs and Trade (GATT). Basically the end of the UR resulted in the formation of the WTO. This established a substantial set of rules regarding trade in goods, including agricultural goods, included agreements on trade in services and on trade related aspects of intellectual property rights, as well as a strong and comprehensive mechanism to settle trade disputes between member countries.

The Uruguay Round Agreement of GATT/WTO has been described as 'the most important event in recent economic history. The WTO has been fairly successful in resolving such multinational
disputes and has started moving into areas of protection of intellectual rights, services, etc. following patterns of international business change.

WTO..At a glance
Location: Geneva, Switzerland Established: 1st January 1995 Created by: Uruguay Round negotiations (1986-94) Membership: 153 countries on 23 July 2008 Budget: 194 million Swiss francs for 2010 Secretariat staff: 637 Head: Pascal Lamy (Director-General) Official Language: English, French and Spanish.

Objectives of WTO

The major Objectives of WTO are as follows:

To create a knowledge base on various matter concerning various National and International Trade Laws and Protocols, and their National and International implications and ramifications.

Carry out research and development and the building up of a clearing-house of cases on all matters of WTO agreements which are of national concern including safeguards and redressal mechanisms and suggesting alternative formulation in national interest which could form subject matters of future consultation or pre negotiations of WTO agreement.

Increasing awareness amongst Domestic Industry, business, agriculture, service and other sectors on the impacts of trade laws arising out of WTO agreement and other treaties as member of WTO.

Cooperating with industry associates, bodies set up by Govt. of India and Export Promotion Council on various issues related to tariff, non tariff and tactical barriers and undertake drive for awareness campaign by jointly or severally holding conferences, seminars, group discussions and other mode of awareness and campaign as also to develop linkages with overseas organizations in order to create a common perception and approach to the resolution of multilateral trade issues.

Exploit all potential provisions of WTO agreement available to the developing nations and advising and counseling the Government of India on all such issues of national importance.

To assist the Government in negotiating with the International Community in the perspective of the WTO regime and to help strengthen the Indian position in these

regards in all possible ways.

To co-ordinate efforts with the Government in creating a level playing field particularly for the accounting professionals in India specially in view of the implementation of the WTO regime on GATS through the most effective means possible including the organization of seminars, publication of articles and monographs, and presentation before the Government.

Identify areas of non-fulfillment of the WTO agreement which concern Indian interest and suggest line of action and remedies open for fulfillment of these obligations.

Initiate discussions on making the domestic trade and export and import policies more WTO compatible and suggest initiatives to be taken in this respect at various levels to ensure high growth in export and economy including the development of various modes of synergy and effective regulation of trade laws which are functionally divided between Commerce, Finance, Foreign and Product related Ministries.

To study the impact and threat perception of WTO agreement on the growing service sector industries including all those covered under 'business services' of GATS agreement in general and knowledge, accountancy and consulting services, transport, communication, medical, education, insurance, banking in particular and suggest policy issues, develop research and education programs aimed at educating members of ICAI.

To develop a base of expertise amongst the members of the Institute on Intellectual Property Rights, TRIPS, Anti-dumping laws, EXIM Policy matters etc., through Seminars, training programs and such other methods as may be considered effective.

Member Countries

There are 153 countries in the WTO from where some of the strong members of are given bellow:

Australia Argentina China Canada Greece India Italy Ireland Indonesia Pakistan Paraguay South Africa Srilanka

Activities/Contribution

The World Trade Organization (WTO) deals with the rules of trade between nations at a global or near-global level. Its an organization for liberalizing trade and a forum for governments to negotiate trade agreements. Moreover its a place to settle trade disputes as it operates a system of trade rules.

Principles
The WTO agreements are lengthy and complex because they are legal texts covering a wide range of activities. They deal with: agriculture, textiles and clothing, banking,

telecommunications, government purchases, industrial standards and product safety, food sanitation regulations, intellectual property, and much more. But a number of simple, fundamental principles run throughout all of these documents. These principles are the foundation of the multilateral trading system.

Basic Functions

1) Administering trade agreements 2) Forum for trade negotiations 3) Handling trade disputes 4) Monitoring National Trade policies 5) Technical assistance and training for developing countries 6) Cooperation with other international organizations

Contribution
Setting Predictable rules:-

The WTO is basically followed by the purpose to help trade flow as freely as possible so long as there are no undesirable side-effects because this is important for economic development and well-being. That partly means removing obstacles. It also means ensuring that individuals, companies and governments know what the trade rules are around the world, and giving them the confidence that there will be no sudden changes of policy. In other words, the rules have to be transparent and predictable.

Settlement of disputes:-

Trade relations often involve conflicting interests. Agreements, including those painstakingly negotiated in the WTO system, often need interpreting. The most harmonious way to settle these differences is through some neutral procedure based on an agreed legal foundation. That is the purpose behind the dispute settlement process written into the WTO agreements. Treating Local people and foreigners equally:-

Under the WTO agreements, countries cannot normally discriminate between their trading partners. Imported and locally-produced goods should be treated equally at least after the foreign goods have entered the market. The same should apply to foreign and domestic services, and to foreign and local trademarks, copyrights and patents. Conducting Freer trade:-

Lowering trade barriers is one of the most obvious means of encouraging trade. The barriers concerned include customs duties (or tariffs) and measures such as import bans or quotas that restrict quantities selectively. The WTO agreements allow countries to introduce changes gradually, through progressive liberalization. Developing countries are usually given longer to fulfill their obligations.

Promoting fair competition:-

The WTO is sometimes described as a free trade institution, but that is not entirely accurate. The system does allow tariffs and, in limited circumstances, other forms of protection. More accurately, it is a system of rules dedicated to open, fair and undistorted competition. Encouraging development and economic reform:-

The WTO system contributes to development. On the other hand, developing countries need flexibility in the time they take to implement the systems agreements. And these agreements allow for special assistance and trade concessions for developing countries.

Criticism of WTO

The stated aim of the World Trade Organization (WTO) is to promote free trade and stimulate economic growth. Although WTO works for the betterment of international business but they have some limitation about their activities. Some of the most talkative criticisms of WTO are as follows:

The WTO Is Fundamentally Undemocratic

The policies of the WTO impact all aspects of society and the planet, but it is not a democratic, transparent institution. The WTO rules are written by and for corporations with inside access to the negotiations. For example, the US Trade Representative gets heavy input for negotiations from 17 "Industry Sector Advisory Committees." Citizen input by consumer, environmental, human rights and labor organizations is consistently ignored. Even simple requests for information are denied, and the proceedings are held in secret. Who elected this secret global government?

The WTO Will Not Make Us Safer

The WTO would like you to believe that creating a world of "free trade" will promote global understanding and peace. On the contrary, the domination of international trade by rich countries for the benefit of their individual interests fuels anger and resentment that make us less safe. To build real global security, we need international agreements that respect people's rights to democracy and trade systems that promote global justice.

The WTO Tramples Labor and Human Rights

WTO rules put the "rights" of corporations to profit over human and labor rights. The WTO encourages a 'race to the bottom' in wages by pitting workers against each other rather than promoting internationally recognized labor standards. The WTO has ruled that it is illegal for a government to ban a product based on the way it is produced, such as with child labor. It has also

ruled that governments cannot take into account "non commercial values" such as human rights, or the behavior of companies that do business with vicious dictatorships such as Burma when making purchasing decisions.

The WTO Would Privatize Essential Services

The WTO is seeking to privatize essential public services such as education, health care, energy and water. Privatization means the selling off of public assets - such as radio airwaves or schools - to private (usually foreign) corporations, to run for profit rather than the public good. The WTO's General Agreement on Trade in Services, or GATS, includes a list of about 160 threatened services including elder and child care, sewage, garbage, park maintenance, telecommunications, construction, banking, insurance, transportation, shipping, postal services, and tourism. In some countries, privatization is already occurring. Those least able to pay for vital services - working class communities and communities of color - are the ones who suffer the most.

The WTO Is Destroying the Environment

The WTO is being used by corporations to dismantle hard-won local and national environmental protections, which are attacked as "barriers to trade." The very first WTO panel ruled that a provision of the US Clean Air Act, requiring both domestic and foreign producers alike to produce cleaner gasoline, was illegal. The WTO declared illegal a provision of the Endangered Species Act that requires shrimp sold in the US to be caught with an inexpensive device allowing endangered sea turtles to escape. The WTO is attempting to deregulate industries including logging, fishing, water utilities, and energy distribution, which will lead to further exploitation of these natural resources.

The WTO is Killing People

The WTO's fierce defense of 'Trade Related Intellectual Property' rights (TRIPs)patents, copyrights and trademarkscomes at the expense of health and human lives. The WTO has protected for pharmaceutical companies' 'right to profit' against governments seeking to protect their people's health by providing lifesaving medicines in countries in areas like sub-saharan

Africa, where thousands die every day from HIV/AIDS. Developing countries won an important victory in 2001 when they affirmed the right to produce generic drugs (or import them if they lacked production capacity), so that they could provide essential lifesaving medicines to their populations less expensively. Unfortunately, in September 2003, many new conditions were agreed to that will make it more difficult for countries to produce those drugs. Once again, the WTO demonstrates that it favors corporate profit over saving human lives.

The WTO is Increasing Inequality

Free trade is not working for the majority of the world. During the most recent period of rapid growth in global trade and investment (1960 to 1998) inequality worsened both internationally and within countries. The UN Development Program reports that the richest 20 percent of the world's population consume 86 percent of the world's resources while the poorest 80 percent consume just 14 percent. WTO rules have hastened these trends by opening up countries to foreign investment and thereby making it easier for production to go where the labor is cheapest and most easily exploited and environmental costs are low.

The WTO is Increasing Hunger

Farmers produce enough food in the world to feed everyone -- yet because of corporate control of food distribution, as many as 800 million people worldwide suffer from chronic malnutrition. According to the Universal Declaration of Human Rights, food is a human right. In developing countries, as many as four out of every five people make their living from the land. But the leading principle in the WTO's Agreement on Agriculture is that market forces should control agricultural policies-rather than a national commitment to guarantee food security and maintain decent family farmer incomes. WTO policies have allowed dumping of heavily subsidized industrially produced food into poor countries, undermining local production and increasing hunger.

The WTO Hurts Poor, Small Countries in Favor of Rich Powerful Nations
The WTO supposedly operates on a consensus basis, with equal decision-making power for all. In reality, many important decisions get made in a process whereby poor countries' negotiators

are not even invited to closed door meetings -- and then 'agreements' are announced that poor countries didn't even know were being discussed. Many countries do not even have enough trade personnel to participate in all the negotiations or to even have a permanent representative at the WTO. This severely disadvantages poor countries from representing their interests. Likewise, many countries are too poor to defend themselves from WTO challenges from the rich countries, and change their laws rather than pay for their own defense.

The WTO Undermines Local Level Decision-Making and National Sovereignty

The WTO's "most favored nation" provision requires all WTO member countries to treat each other equally and to treat all corporations from these countries equally regardless of their track record. Local policies aimed at rewarding companies who hire local residents, use domestic materials, or adopt environmentally sound practices are essentially illegal under the WTO. Developing countries are prohibited from creating local laws that developed countries once pursued, such as protecting new, domestic industries until they can be internationally competitive. California Governor Gray Davis vetoed a "Buy California" bill that would have granted a small preference to local businesses because it was WTO-illegal. Conforming with the WTO required entire sections of US laws to be rewritten. Many countries are even changing their laws and constitutions in anticipation of potential future WTO rulings and negotiations.

There are Alternatives to the WTO

Citizen organizations have developed alternatives to the corporate-dominated system of international economic governance. Together we can build the political space that nurtures a democratic global economy that promotes jobs, ensures that every person is guaranteed their human rights to food, water, education, and health care, promotes freedom and security, and preserves our shared environment for future generations.

The Tide is Turning Against Free Trade and the WTO!

International opposition to the WTO is growing. Massive protests in Seattle of 1999 brought over 50,000 people together to oppose the WTOand succeeded in shutting the meeting down. When the WTO met in 2001, the Trade negotiators were unable meet their goals of expanding the WTO's reach. In Cancn, Mexico and Hong Kong, China, the WTO met thousands of activists in protest, scoring a major victory for democracy. Developing countries refused to give in to the rich countries' agenda of WTO expansion - and caused the talks to collapse!

A Case Where WTO is Involved

Case study: automobiles auctioning license plates and national treatment

In Shanghai, individuals seeking to purchase and register an automobile for their own use must obtain a licence plate for the proposed vehicle through a monthly auction conducted by the municipal government authorities. The system is designed both to reduce the total number of automobiles released onto the streets of the city at any one time and also to act as an important revenue source for the municipality. The reasons for the auction are domestic, and nothing in the system is supposed to be designed in a way that would affect international trade. On 7 August 2002, US consulate staff informed the Centre that, to their knowledge, Shanghais monthly licence plate auction for individual and private-company buyers was relying on one method of auctioning and allocating licence plates for domestically produced cars and that another method was being employed in the case of licence plate auctions for imported cars. The US authorities alleged that the imported cars were being subjected to discriminatory treatment that adversely affected market access for imports. After being informed of the allegations, the Centres specialists immediately began an investigation, and notified the Shanghai Municipal Development Planning Commission. An

examination of the July auction rule used by the Shanghai International Commodity Auction Co. Ltd, as outlined on its website, showed that plans called for 3, 000 licence plates for domestically produced cars to be auctioned, compared with just thirty licence plates for imported cars. On further investigation it also became apparent that the Commodity Auction Co. had set a floor price at auction for imported cars (26, 000 yuan), but that no similar floor price existed in the case of domestically made cars. The practical effect was that domestically made cars were available at considerably lower prices (the average winning sealed bid at auction was 20, 904 yuan). In terms of the relevant laws and regulations, the Centres specialists acknowledged that the Chinese governments accession commitments required imported cars and auto parts to be given national treatment. The Centres specialists also recognized that there was an indispensable relationship between a car and its licence plate, such that any restriction applied to a licence plate also applied to the car. Accordingly, given the WTO national treatment principle and the general elimination of quantitative restrictions, the different systems put in place by the regional government for the acquisition of domestically made and imported cars resulted in different treatment and were therefore inconsistent with Chinas WTO commitments. Under WTO rules, this had a direct effect on the extent to which the Chinese government was meeting its WTO obligations, as it is responsible for abolishing regional regulations, rules and other regional measures that contradict WTO obligations and duties. To avert a potential trade dispute and protect Shanghais reputation as a place to do business, the Centre was committed to addressing this particular example of non-compliance. It entered into negotiations with the Shanghai Municipal Development Planning Commission and suggested that any different treatment by the licence plate auctioning systems be discontinued. As a result, since October 2002 there has been no floor price for imported cars and no difference between domestically produced and imported cars in terms of limits placed on the number of cars auctioned. In this case, the Centres approach was to build up a contact network, and seek a number of opinions on whether the relevant laws and regulations were in line with WTO rules. This included the opinions of representatives of foreign enterprises. At the same time, the Centre

carried out its own investigations and analysis, and was able to work with the relevant government departments on a quick and practical solution. In this respect, the Centre was an important link between government departments and the business sector.

Conclusion

Today, most of the organizations give more emphasis on their development activities and improving efficiency to reach maximum productivity. Business as well as trade practices, both are vital issue now a day. Through WTOs rules life has become easier. Their activities help to promote peace and

Provides more choice of products and qualities. Disputes are handled constructively Free trade cuts the costs of living and raises incomes. Moreover it stimulates economic growth and their activities encourage good government. Above all, we can come to the point that WTO, undoubtedly,
has a flourishing future in the long run and todays success and glory are the contribution of their proper policies and movements.

CHAPTER- 03:

Bibliography

http://wtowto.blogspot.com/2006/02/drawbacks-of-wto.html (d-9,t-6.10) http://www.economicshelp.org/trade/arguments-against-free-trade.html http://www.experts123.com/q/what-are-disadvantages-of-wto.html http://www.wto.org/ http://en.wikipedia.org/wiki/Economic_sanctions http://www.nationsencyclopedia.com/United-Nations-Related-Agencies/TheWorld-Trade-Organization-WTO-ACTIVITIES.html date- 15/11/2010 time- 11.30 pm