GATT (General Agreement on Tariffs and Trade.

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GATT is a multilateral treaty between government that lays down rules for international trade. Its basic objective is to liberalize world trade. The most fundamental principles of GATT is non discrimination between the contracting parties. GATT contains rules relating to tariffs, quantitative restrictions, trade measures for balance of payment purposes, export subsidies, antidumping and countervailing duties, customs valuations, state trading etc. GATT also provides forum for dispute settlement among member countries. When GATT was concluded by 23 countries at GENEVA in 1947 (to take effect from January, 1948.) it was considered an interim management pending the formation of a UN agency to supersede it. When such an agency failed to emerge, GATT was amplified and further enlarged at proved to be the most effective instrument of world trade liberalization. In short, GATT is an international agreement to reduce trade barriers among member countries. The GATT is really, a code of conduct to which members, called the contracting parties, subscribe. Since it was signed in 1947, it has become the chief international agreement on world trade. The GATT deals with a wide range of commercial policies. The contracting parties meet from time to time to negotiate the removal of barriers to international trade. They also review complaints against violations of GATT rules. These meetings have reduced tariffs and other trade obstacles on thousands of products. GATT rules specify that a party granting a trade advantage to one country must grant the same advantage to all the contracting parties. The rules limit the use of import quotas and other restrictions on the flow of goods among GATT nations. GATT includes a long schedule of specific tariff concessions for each contracting nation, representing tariff rates that each country has agreed to extend to others. It sets forth the general rules that are, in effect, a code of

commercial policy. They provide for unconditional most favoured clauses ( which guarantee to other GATT countries the extension of any tariff concessions granted to non GATT countries.), elimination of quantitative trade restrictions, uniform customs regulations, and the obligation of each contracting nation to negotiate for tariff cuts upon the request of another. An escape clause allows the contracting countries to alter agreements if their domestic producers suffer excessive losses as a result of trade concessions. Trade Ministers of 124 governments, on April 15,1994, signed a historic pact, which embodies the results of Uruguay Round of multilateral trade negotiations and paves the way for setting up of the World Trade Organisation with effect from JAN 1,1995. The Ministers also adopted what is being describe, the Marrakesh Declaration which veriates their commitment to the new multilateral trade framework envisaged under the Uruguay Round final act.

A Brief History (From GATT to WTO)

The inaugural session of the preparatory committee charged with creating an International Trade organization was held in church House, London 1946. 1) The Havana conference, cuba, December 1947 was mainly organized for setting up an International Trade Organisation as a third world economic pillar. The attempt failed, but the negotiated trade rules, the General Agreement on Tariffs and Trade (GATT), did take effect from Jan 1,1948 and the system that has become known as the multilateral trading system. For 47years GATT served as as ad hoc international organization. 2) The second meeting of GATT with 22 contracting parties to the General Agreement on Tariffs and Trade. (GATT members), Geneva, Switzerland held on August 17,1948. 3) Second Round of multilateral trade negotiations was held in Annecy france,1949. 4) The third Round which moved to England in Torquay, Uk, 1950 focused again on tariff reductions. The number of participants rose to 38.

5) The negotiations launched in Geneva on September 1,1960 were known as the Dillion Round, after C Douglas Dillion, US under secretary of state under President Eisenhower, and Treasury secretary under President Kennedy. 6) GATT trade rounds were getting longer and more complicated . The subjects discussed also expanded , from the traditional tariff cuts to new trade rules. 7) GATT negotiations move outside Europe for the first time. The seventh round was launched at a ministerial meeting in Tokyo, September 1214,1973. The Tokyo Round took a broader look at the trade rules than its predecessor. The Kennedy Round. The tariff negotiations led further substantial reductions in customs were reached on various non tariff barriers, but they were reached on various non tariff barriers, but they were only signed by some participants. The talks failed to come to grips with fundamental reforms in agricultural trade and stopped short of providing a new agreement on safeguards (emergency import measures). 8) In 1986, a GATT round was launched in developing country for the first time. By now developing countries had become the majority in the GATT system, and in this round they were to play an unprecedented active role in the talks, alongside their more powerful fellow participants. 9) The Uruguay round turned out to be the longest, most complicated and the last of the GATT rounds, it took seven and a half years to complete, and it led to the most fundamental reform of the world trade rules since GATT itself was created in 1948 10) The Uruguay round was supposed to last for four years. Therefore the ministerial meeting in Montreal two years later, in December 1988 was called the mid-term Review. The objective was to set the agenda for the remaining two years of the round. Instead the Montreal meeting ended in a deadlock that was not broken until April the following year, By the time the ministers met again in Brussels in December 1990, the talks were considerable behind schedule. 11) Several years later, the talk ended well, most of it. It was not until December 15, 1953 that the negotiations finally came to an end. GATT

Director General Peter Sutherland, brought the gavel down on a deal that would transform world trade. Some talking did continue, however, in the weeks leading up to the final signing ceremony including some last-minute bargaining on tariffs. 12) The Uruguay round package was signed in Marrakesh in April 1994, seven and a half years after the round has begun. This fourth ministerial meeting of the Uruguay round was held in Marrakeshs Palisades Congress. 13) At the signing ceremony, the agreement covered a large table. The most important result was the creation of the World Trade Organization, almost half a century after a failed attempt to create an International Trade Organization. And with the WTOs creation, the multilateral rules were expanded to cover new areas of trade. 14) Ever since the GATT was established after Second World War, it has been striving hard (along with the World Bank and the International Monetary Fund) to achieve international economic Co-operation. Towards this objective GATT has conducted several trade rounds, including the Uruguay round which was the most expensive round. Consensus was finally arrived and the agreement, called the final act was signed in April 1994 at Marrakesh Morocco.

GATT Trade Rounds: Year 1947 1949 1951 1956 1960-61 1964-67 1973-79 Round Geneva Annecy Torquay Geneva Dillon Kennedy Tokyo Areas covered Tariffs Tariffs Tariffs Tariffs Tariffs Tariffs and Antidumping. Tariffs and NonTariff measures and Framework Agreements. Tariffs, Non- Tariff measures ,GATTS, TRIPS,TRIMS, Disputes Settlement Textiles, Agriculture Creation of WTO etc. No. of Countries 23 13 38 26 26 62 102

1986-94

Uruguay

123

WTO:
The creation of World Trade Organisation (WTO) in 1995 marked the biggest reform of international trade since 1948. During those 47years, international commerce had come under General Agreement on Tariffs and Trade (GATT) which helped establish, a prosperous multilateral trading system. However, by the end of 1980s an overhaul was due. The eight round of multilateral trade negotiations held under GATT and lasting for seven years (1986-1993) named Uruguay Round, resulted in new legal

agreements for trade strengthening settlement system. Following this, there was a ministerial conference in Marrakesh, Morocco in April 1994 attended by 125 government representatives from across the world to sign for the establishment of a new successor institutions of GATT, namely the WTO. It is an embodiment of the Uruguay Round results. WTO entered into force on January 1,1995, with all assets and liabilities of GATT transferred to the former. Geneva is its headquarters. WTO replaced GATT which remained in existence from 1948 to 1994. GATT was multilateral treaty governing trade in goods only . WTO is much wider in scope and coverage. GATT dealt only with trade in goods.WTO agreement cover services and intellectual property as well. WTO is the only international body dealing with the rules of trade between nations. At is heart are the WTO agreements, the legal ground rules for international commerce and for trade policy. The agreements have three main objectives: a) To help trade flow as freely as possible. b) To achieve further liberalisation gradually through negotiations and c) To set up an impartial means of settling disputes. A number of simple, fundamental principles run throughout all the WTO agreements. They are the foundations of the multilateral trading system. They include: non discrimination free trade, predictable policies, encouragement to competition and extra provisions for less developed countries. WTO is based on the principles of non discrimination, free trade and promotion of fair competition among the member countries. About 95% of the global trade is governed by the rules and regulations of WTO. The rules and procedures of WTO offer opportunities and simultaneously pose challenges for economies of member countries. India has also braced itself to meet the challenges of the new world trade order.

UNDERSTANDING THE WTO: THE ORGANIZATION

Members and Observers

157 members on 24 August 2012 (with dates of membership). Click any member to see key information on trade statistics, WTO commitments, disputes, trade policy reviews, and notifications. > See this on a map
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Understanding the WTO

Basics Agreements Settling disputes Cross-cutting and new issues The Doha agenda Developing countries The organization Abbreviations

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Albania 8 September 2000 Angola 23 November 1996 Antigua and Barbuda 1 January 1995 Argentina 1 January 1995 Armenia 5 February 2003 Australia 1 January 1995 Austria 1 January 1995 Bahrain, Kingdom of 1 January 1995 Bangladesh 1 January 1995 Barbados 1 January 1995 Belgium 1 January 1995 Belize 1 January 1995 Benin 22 February 1996 Bolivia, Plurinational State of 12 September 1995 Botswana 31 May 1995 Brazil 1 January 1995 Brunei Darussalam 1 January 1995 Bulgaria 1 December 1996 Burkina Faso 3 June 1995 Burundi 23 July 1995 Cambodia 13 October 2004 Cameroon 13 December 1995 Canada 1 January 1995 Cape Verde 23 July 2008 Central African Republic 31 May 1995 Chad 19 October 1996 Chile 1 January 1995 China 11 December 2001 Colombia 30 April 1995 Congo 27 March 1997 Costa Rica 1 January 1995 Cte d'Ivoire 1 January 1995 Croatia 30 November 2000 Cuba 20 April 1995 Cyprus 30 July 1995 Czech Republic 1 January 1995

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Democratic Republic of the Congo 1 January 1997 Denmark 1 January 1995 Djibouti 31 May 1995 Dominica 1 January 1995 Dominican Republic 9 March 1995 Ecuador 21 January 1996 Egypt 30 June 1995 El Salvador 7 May 1995 Estonia 13 November 1999 European Union (formerly European Communities) 1 January 1995 Fiji 14 January 1996 Finland 1 January 1995 France 1 January 1995 Gabon 1 January 1995 The Gambia 23 October 1996 Georgia 14 June 2000 Germany 1 January 1995 Ghana 1 January 1995 Greece 1 January 1995 Grenada 22 February 1996 Guatemala 21 July 1995 Guinea 25 October 1995 Guinea-Bissau 31 May 1995 Guyana 1 January 1995 Haiti 30 January 1996 Honduras 1 January 1995 Hong Kong, China 1 January 1995 Hungary 1 January 1995 Iceland 1 January 1995 India 1 January 1995 Indonesia 1 January 1995 Ireland 1 January 1995 Israel 21 April 1995 Italy 1 January 1995 Jamaica 9 March 1995 Japan 1 January 1995 Jordan 11 April 2000 Kenya 1 January 1995 Korea, Republic of 1 January 1995 Kuwait, the State of 1 January 1995 Kyrgyz Republic 20 December 1998 Latvia 10 February 1999 Lesotho 31 May 1995 Liechtenstein 1 September 1995 Lithuania 31 May 2001 Luxembourg 1 January 1995 Macao, China 1 January 1995 Madagascar 17 November 1995 Malawi 31 May 1995 Malaysia 1 January 1995 Maldives 31 May 1995 Mali 31 May 1995

Malta 1 January 1995 Mauritania 31 May 1995 Mauritius 1 January 1995 Mexico 1 January 1995 Moldova, Republic of 26 July 2001 Mongolia 29 January 1997 Montenegro 29 April 2012 Morocco 1 January 1995 Mozambique 26 August 1995 Myanmar 1 January 1995 Namibia 1 January 1995 Nepal 23 April 2004 Netherlands 1 January 1995 New Zealand 1 January 1995 Nicaragua 3 September 1995 Niger 13 December 1996 Nigeria 1 January 1995 Norway 1 January 1995 Oman 9 November 2000 Pakistan 1 January 1995 Panama 6 September 1997 Papua New Guinea 9 June 1996 Paraguay 1 January 1995 Peru 1 January 1995 Philippines 1 January 1995 Poland 1 July 1995 Portugal 1 January 1995 Qatar 13 January 1996 Romania 1 January 1995 Russian Federation 22 August 2012 Rwanda 22 May 1996 Saint Kitts and Nevis 21 February 1996 Saint Lucia 1 January 1995 Saint Vincent & the Grenadines 1 January 1995 Samoa 10 May 2012 Saudi Arabia, Kingdom of 11 December 2005 Senegal 1 January 1995 Sierra Leone 23 July 1995 Singapore 1 January 1995 Slovak Republic 1 January 1995 Slovenia 30 July 1995 Solomon Islands 26 July 1996 South Africa 1 January 1995 Spain 1 January 1995 Sri Lanka 1 January 1995 Suriname 1 January 1995 Swaziland 1 January 1995 Sweden 1 January 1995 Switzerland 1 July 1995 Chinese Taipei 1 January 2002 Tanzania 1 January 1995 Thailand 1 January 1995

The former Yugoslav Republic of Macedonia (FYROM) 4 April 2003 Togo 31 May 1995 Tonga 27 July 2007 Trinidad and Tobago 1 March 1995 Tunisia 29 March 1995 Turkey 26 March 1995 Uganda 1 January 1995 Ukraine 16 May 2008 United Arab Emirates 10 April 1996 United Kingdom 1 January 1995 United States of America 1 January 1995 Uruguay 1 January 1995 Vanuatu 24 August 2012 Venezuela, Bolivarian Republic of 1 January 1995 Viet Nam 11 January 2007 Zambia 1 January 1995 Zimbabwe 5 March 1995

Observer governments

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Afghanistan Algeria Andorra Azerbaijan Bahamas Belarus Bhutan Bosnia and Herzegovina Comoros Equatorial Guinea Ethiopia Holy See (Vatican) Iran Iraq Kazakhstan Lao People's Democratic Republic Lebanese Republic Liberia, Republic of Libya Sao Tom and Principe Serbia Seychelles Sudan Syrian Arab Republic Tajikistan Uzbekistan Yemen

SCOPE, FUNCTIONS, AND STRUCTURE OF THE WTO.

The WTO is headed by a ministerial conference of all members that meets at least once two years. By contrast, under the GATT a decade could pass between ministerial meetings. The more frequent participation by trade ministers under the WTO was intended to strengthen the political guidance of the WTO and enhance the prominence and credibility of its rules in domestic political arenas. Article 2nd of the Marrakesh Agreement that established the WTO charges the organization with providing a common institutional framework for the conduct of trade relations among its members in matters to which agreements and associated legal obligations apply. Four annexes to the WTO define the substantive rights and obligations of members. Annex 1 has three parts: Annex 1A , Multilateral Agreements on Trade in Goods , which contains the GATT 1994 (the GATT 1947 as amended by a large number of understandings and supplementary agreements negotiated in the Uruguay Round); Annex 1B,which contains the GATS; and Annex 1C, the TRIPS agreement. Annex 2 contains the understanding on Rules and Procedures Governing the Settlement of Disputes (DSU) the WTOs common dispute settlement mechanism. Annex 3 contains the Trade policy Review Mechanism (TPRM), an instrument for surveillance of members trade policies. Finally, Annex 4, Plurilateral Trade Agreements, consist of Tokyo Round codes that were not multilateralized in the Uruguay Round and that therefore bind only their signatories. Together, Annexes 1 through 3 embody the multilateral trade agreements Article 2nd of the WTO species that all the agreements contained in these annexes are a integral part of the WTO agreement and are binding on all members. The WTO is charged with facilitating the implementation and operation of the multilateral trade agreements, providing a forum for negotiations, administrating the dispute settlement mechanism, exercising multilateral surveillance of trade policies, and cooperating with the World bank and the IMF to achieve greater coherence in global economic policymaking. The organization is managed by the

general council , at the level of diplomats. The general council meets over 12times a year. On average, about 70 percent of all the WTO members are usually represented by the delegations based in Geneva. The general council turns itself, as needed, into a body that adjudicates trade disputes. Three subsidiary councils, on goods, on services, and on intellectual property rights, operate under the general guidance of the general council. seperate committees deals with the interest of developing countries. About 40 councils , committees, subcommittees, bodies and standing groups or working portioned under wto auspices in 2000, more than twice the number under the GATT.

DECISIONMAKING.
Most decision making in the WTO follows GATT practices and is based on consultation and consensus. The consensus practice is of value to smaller countries, as it enhances their negotiating leverage in the informal consultations and bargaining that precede decision making, especially if they are able to form coalitions. Although recourse to voting may be had if a consensus cannot be reached, in practice voting occurs very rarely. If a vote is needed, ift is based on the principle of one members, one vote. Unanimity is required for amendments relating to general principles such as MFN or national treatment . Interpretation of the provisions of the WTO agreements and decisions on waivers of members obligations require approval by a three quarters majority vote. A two thirds majority vote is sufficient for amendments relating to issues other than the general principles mentioned above. Where not otherwise specified, and where consensus cannot be reached, a simple majority vote is, in principle, sufficient. In practice, voting does not occur. Indeed, in 1995 WTO members decided not to apply provisions allowing for a vote in the case of accessions and request for waivers but to continue to proceed on the basis of consensus. Legislative amendments are also likely to be quite rare, as, in practice, changes to the various agreements occurs as part of broader multilateral rounds.

WTO AGREEMENTS.
The WTO agreements cover goods, services and intellectual property. They spell out the principles of liberalization with guidelines, permitted exceptions and include member countries commitments to lower tariff and other trade barriers and set procedures for settling disputes. Governments are obliged to make their trade policies transparent by notifying the WTO laws in force.

1)AGREEMENT ON VALUATION OF GOODS FOR CUSTOMS PURPOSE:

Customs Duties are levied either on ad valorem basis (eg 15 percent of import value) or as specific duties ( eg Rs 2000 per ton/per litre) or a combination of both. The Agreement limits the discretion available to customs in determining the dutiable value ( when the declared value is not acceptable) by laying down five specific methods for assessing value.

OBECTIVES OF THE AGREEMENT:

The aim of this agreement is to require countries to follow the agreement for the valuation of imports and to check arbitrary decision of customs.

IMPACT ON INDIAN POLICY/LAWS:

India has amended its laws in conformity with the agreement by notification 26(NT)/24.04.95; Customs Act.

BUSINESS IMPLICATIONS:
The importers and exporters are to benefit from more transparent regime. While rejecting the value given by the importer, the customs authorities must give reasons in writing. Clear guidelines are provided for computing value

2) AGREEMENT ON PRESHIPMENT INSPECTION (PSI):

The agreement ensures that PSI companies do not reject the price agreed voluntarily between the importer and exporter. It lays down principles and rules which these companies must follow in verifying prices in exporting countries. It lays down principles and rules which these companies must follow in verifying prices in exporting countries. It also establishes a mechanism for reviewing exporters complaints. Over 30 developing countries use the services of preshipment inspection companies to deal with the problems of under or over valuation and fraud. The Agreement recognizes that the GATT principles and obligations apply to the activities of the pre-shipment inspection agencies mandated by the Governments, which use pre-shipment inspection, include non discrimination, avoidance of unreasonable delay, the use of specific guidelines for conducting price verification and the avoidance of conflicts of interest by the inspection agencies.

OBECTIVE OF THE AGREEMENT:

This agreement is framed with the view to checking the arbitrary ways of PSI companies in valuation of goods (around 30 countries use them).

IMPACT ON INDIAN POLICY/LAWS:

India does not use services of PSI Companies.

BUSINESS IMPLICATIONS:
Indian companies exporting to the countries using PSI companies such as SGS, Bureau Veritas etc,, benefit from improved systems, and the arbitrary actions of the PSI companies in computing export value to be checked.

3)AGREEMENT ON TECHNICAL BARRIERS TO TRADE (TBT):

A Technical Barrier barrier to trade is a product standard that may be used to discriminate against trade. Some of the almost commonly used discriminatory tactics are ,safety standards, marketing and labeling standards, marketing and labeling standards and inspectional assessment procedures that may be used to curb imports.

OBECTIVES OF THE AGREEMENT:

The agreement aims, 1)To check misuse of mandatory product standards by countries.