WTO

WTO FACT FILE

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Location: Geneva, Switzerland Established: 1January1995 Created by: Uruguay Round negotiations (198694) Membership: 153countries ( February2009) Budget: 175million Swiss francs for2008 Secretariat staff: 700 Head: Pascal Lamy (Director-General)

The World Trade Organization

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The WTO provides a forum for negotiating agreements aimed at reducing obstacles to international trade and ensuring a level playing field for all, thus contributing to economic growth and development. Over the past 60 years, the WTO, which was established in 1995, and its predecessor organization the GATT have helped to create a strong and prosperous international trading system, thereby contributing to unprecedented global economic growth

WTO: The Beginnings

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Born in 1995, but not so young In broad terms, its role is twofold. First is to establish and enforce the rules of the road for international trade in both goods and services. Second one is to progressively liberalize that trade Presently the world trade is valued at close to eight thousand billion dollars every year.

GATT
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An interim agreement was agreed to between a limited number of countries. This arrangement took the form of the General Agreement on Tariffs and Trade - the GATT and came into being in 1948 However, it did not deal with many of the most important aspects of international trade.

World Trade and Output since 1948

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Since 1948, world trade has consistently grown faster than world output. In fact, the volume of trade in goods has grown by an average 6 per cent a year, whereas world merchandise output has increased by 4 per cent a year. . Exports of manufactured goods are now 43 times higher than they were 50 years ago. The end result is that around one quarter of world production is now traded.

Eight Rounds of Negotiations

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Much of the post war trade expansion can be traced to eight rounds of multilateral trade negotiations carried out under the auspices of the GATT

Each round has involved more countries than the one before.

Average tariffs among industrialized countries were progressively cut from 40 and 50 percent to less than percent GATT was in some ways an Unsatisfactory instrument Its arrangement for settling disputes were ineffective Reach of GATT rules did not go beyond trade in goods

Multilateral Agreements
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All agreements that fall under the umbrella of WTO are called multilateral trade agreements
Regional trade agreements have a narrower participation in terms of the parties to the agreement such as EU, NAFTA and ASEAN free trade area

What is the WTO ?

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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

WTO: Different Things to Different People

Secretariat:
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Agreements:
y The WTO is a set agreements that create legally binding rights and obligations for all members y Negotiations: The WTO is also a forum where delegations from members countries meet to discuss and negotiate a number of trade related matters

The 700 staff member have neither enforcement power nor any role in the interpretation of the legal rights and obligations of members x After agreement is struck between trade negotiators, the agreements are then ratified by the domestic parliaments of all WTO member countries

How Does The WTO Function?

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Institutional Characteristics:
All WTO members have accepted all the agreements. They constitute a totality in terms of a single undertaking. There can be no choosing between them on governments, it is all or nothing
The Ministerial Conference: The organizational structure of WTO is such that it is headed by a Ministerial Conference. This is composed of all members of the WTO and meets at least once every two years. The most recent meeting was in Hong Kong ( December 2005}

Principles of Trading System

The trading should be:
 Without discrimination:

Most favoured nation (MFN) Under the WTO agreements, countries cannot normally discriminate between their trading partners. Some exceptions are allowed. Countries can set up Free trade agreements that applies only to goods traded within the group ( discrimination can be done to goods outside from the group) Special access to markets of developed countries to developing countries

Principles of Trading System (2)

National Treatment:
treating foreign goods and local goods equally National treatment only applies once a product or service or item of intellectual property has entered the market
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Freer Trade: gradually through negotiations

Lowering trade barriers is one of the most obvious means of encouraging trade. The WTO agreements allow countries to introduce changes through progressive liberalization

Trading Principles (3)

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Promoting fair competition:

The issues of dumping and subsidy are complex but many of the other WTO agreements support fair competition. Rules of non discrimination have been installed for making trade fair in the world
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Encouraging development and economic reform:

The WTO systems contributes to development. Over 75% of WTO members are developing countries. Transition time was provided to the developing countries to adjust their economies The limit was to expire at the end of year 2004

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The Principles of Trade (WTO)

Freer Trade Trade without Discrimination MFN & national treatment

Predictability Fair competition

Encouraging development and economic reform

The Case for Open Trade

The trading should be:
 Without discrimination:

Most favoured nation (MFN) Under the WTO agreements, countries cannot normally discriminate between their trading partners. Some exceptions are allowed. Countries can set up Free trade agreements that applies only to goods traded within the group ( discrimination can be done to goods outside from the group) Special access to markets of developed countries to developing countries

Principles of Trading System

The trading should be:
 Without discrimination:

Most favoured nation (MFN) Under the WTO agreements, countries cannot normally discriminate between their trading partners. Some exceptions are allowed. Countries can set up Free trade agreements that applies only to goods traded within the group ( discrimination can be done to goods outside from the group) Special access to markets of developed countries to developing countries