Hamza Ejaz

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INTERNATIONAL TRADE ORGANIZATIONS

Some of the most important International Trade Organizations include:

• WTO (World Trade Organization)

• UNCTAD (United Nations Conference on Trade & Development)

• EU (European Union)

• ASEAN (Association of Southeast Asian Nations)

• CARICOM (CARIBBEAN COMMUNITY)

• APEC (Asia-Pacific Economic Cooperation)

Different countries have also signed Regional Trade Agreements (RTA’s) and Free Trade
Agreements (FTA’s), for the promotion of trade. Some of the notable trade agreements are as
follows:

• NAFTA (North American Free Trade Agreement)

• SAFTA (South Asian Free Trade Agreements)

• MERCUSOL

The most prominent and active of all the organizations working towards the enhancement and
encouragement of international trade and having an extensive membership base is the WTO
(World Trade Organization)
WTO (World Trade Organization)

The World Trade Organization (WTO) is an international organization designed to

supervise and liberalize international trade. The WTO came into being on January 1,
1995, and is the successor to the General Agreement on Tariffs and Trade (GATT),
which was created in 1947, and continued to operate for almost five decades as a de facto
international organization.

The World Trade Organization deals with the rules of trade between nations at a near-
global level; it is responsible for negotiating and implementing new trade agreements,
and is in charge of policing member countries' adherence to all the WTO agreements,
signed by the bulk of the world's trading nations and ratified in their parliaments.

The WTO is governed by a Ministerial Conference, which meets in every two years; a
General Council, which implements the conference's policy decisions and is responsible
for day-to-day administration; and a director-general, who is appointed by the Ministerial
Conference. The WTO's headquarters are in Geneva, Switzerland.

The WTO has 151 members (almost all of the 123 nations participating in the Uruguay
Round signed on at its foundation, and the rest had to get membership).

MISSION, FUNCTIONS AND PRINCIPLES

The WTO's stated goal is to improve the welfare of the people of its member
countries, specifically by lowering trade barriers and providing a platform for
negotiation of trade.

Its main mission is "to ensure that trade flows as smoothly, predictably and freely
as possible".

This main mission is further specified in certain core functions serving and
safeguarding five fundamental principles, which are the foundation of the
multilateral trading system.

FUNCTIONS
 Among the various functions of the WTO, these are regarded by analysts as the
most important:

• It oversees the implementation, administration and operation of the

covered agreements.
• It provides a forum for negotiations and for settling disputes.
• Additionally, it is the WTO's duty to review the national trade
policies, and to ensure the coherence and transparency of trade policies
through surveillance in global economic policy-making.
• Another priority of the WTO is the assistance of developing, least-
developed and low-income countries in transition to adjust to WTO rules
and disciplines through technical cooperation and training.
• The WTO is also a center of economic research and analysis:
regular assessments of the global trade picture in its annual publications
and research reports on specific topics are produced by the organization.
• Finally, the WTO cooperates closely with the two other
components of the Bretton Woods system, the IMF and the World Bank.

UNCTAD (United Nations Conference on Trade & Development)

The United Nations Conference on Trade and Development (UNCTAD) was established
in 1964 as a permanent intergovernmental body. It is the principal organ of the United
Nations General Assembly dealing with trade, investment, and development issues. The
organization's goals are to "maximize the trade, investment and development
opportunities of developing countries and assist them in their efforts to integrate into the
world economy on an equitable basis." The creation of the conference was based on
concerns of developing countries over the international market, multi-national
corporations, and great disparity between developed nations and developing nations.
UNCTAD grew from the view that existing institutions like GATT and IMF were not
properly organized to handle the particular problems of developing countries. UNCTAD
has 193 members.

The primary objective of the UNCTAD is to formulate policies relating to all aspects of
development including trade, aid, transport, finance and technology. One of the principal
achievements of UNCTAD has been to conceive and implement the Generalized System
of Preferences (GSP). It was argued in UNCTAD forum that in order to promote exports
of manufactured goods from developing countries, it would be necessary to offer special
tariff concessions to such exports. Accepting this argument, the developed countries
formulated the GSP Scheme under which manufacturers' exports and some agricultural
goods from the developing countries enter duty-free or at reduced rates in the developed
countries. Since imports of such items from other developed countries are subject to the
normal rates of duties, imports of the same items from developing countries would enjoy
a competitive advantage.

Currently, UNCTAD has 193 member States and is headquartered

in Geneva, Switzerland. UNCTAD has 400 staff members and an annual regular budget
of approximately US$50 million and US$25 million of extra budgetary technical
assistance funds.

EU (European Union)

The European Union (EU) is an economic and political union of 27 member

states, located primarily in Europe. Committed to regional integration, the EU was
established by the Treaty of Maastricht on 1 November 1993 upon the foundations of
the European Communities. With over 500 million citizens, the EU combined generates
an estimated 30% share (US$ 18.4 trillion in 2008) of the nominal gross world
product and about 22% (US$15.2 trillion in 2008) of the PPP gross world product.

The EU has developed a single market through a standardized system of laws which
apply in all member states, ensuring the free movement of people, goods, services, and
capital. It maintains common policies on trade, agriculture, fisheries and regional
development. Sixteen member states have adopted a common currency, the euro,
constituting the Euro zone.

The European Union is composed of 27 sovereign Member States: Austria, Belgium,

Bulgaria, Cyprus, the Czech Republic, Denmark, Estonia, Finland, France, Germany,
Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands,
Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, and the United
Kingdom.

ASEAN (Association of Southeast Asian Nations)

The Association of Southeast Asian Nations, is a geo-political and economic organization

of 10 countries located in Southeast Asia, which was formed on 8 August 1967
by Indonesia, Malaysia, the Philippines, Singapore and Thailand. Since then, membership
has expanded to include Brunei, Burma (Myanmar), Cambodia, Laos, and Vietnam. Its
aims include the acceleration of economic growth, social progress, cultural development
among its members, the protection of the peace and stability of the region, and to provide
opportunities for member countries to discuss differences peacefully.

The foundation of the ASEAN is the ASEAN Free Trade Area (AFTA), a common
external preferential tariff scheme to promote the free flow of goods within
ASEAN. The ASEAN Free Trade Area (AFTA) is an agreement by the member nations
of ASEAN concerning local manufacturing in all ASEAN countries. The AFTA
agreement was signed on 28 January 1992 in Singapore. When the AFTA agreement was
originally signed, ASEAN had six members, namely, Brunei, Indonesia, Malaysia, the
Philippines, Singapore and Thailand. Vietnam joined in 1995, Laos and Myanmar in
1997, and Cambodia in 1999. The latecomers have not fully met the AFTA's obligations,
but they are officially considered part of the AFTA as they were required to sign the
agreement upon entry into ASEAN, and were given longer time frames in which to meet
AFTA's tariff reduction obligations.
CARICOM (CARIBBEAN COMMUNITY)

The Caribbean Community (CARICOM) is an organization of 15 Caribbean nations and

dependencies. CARICOM's main purposes are to promote economic integration and
cooperation among its members, to ensure that the benefits of integration are equitably
shared, and to coordinate foreign policy. Its major activities involve coordinating
economic policies and development planning; devising and instituting special projects for
the less-developed countries within its jurisdiction; operating as a regional single market
for many of its members (Caricom Single Market); and handling regional trade disputes.
The secretariat headquarters is based in Georgetown, Guyana.

CARICOM organization breaks its 15 member states into two groups: Less Developed
Countries (LDCs) and More Developed Countries (MDCs).

The countries of CARICOM which are designated as Less Developed Countries (LDCs)
are:

 Antigua & Barbuda

 Belize
 Commonwealth of Dominica
 Grenada
 Republic of Haiti
 Montserrat
 Federation of St. Kitts & Nevis
 St. Lucia
 St. Vincent & the Grenadines

The countries of CARICOM which are designated as More Developed Countries (MDCs)
are:

 Commonwealth of the Bahamas

 Barbados
 Co-operative Republic of Guyana
 Jamaica
 Republic of Suriname
 Republic of Trinidad & Tobago

From around the year 2000, the Caribbean Community (CARICOM) states have placed a
new focus and emphasis on establishing Free Trade Agreements (FTAs) with local and
international trading partners. In the past this was done in collaboration with
the Caribbean Regional Negotiating Machinery (CRNM), however in 2009 the
CARICOM Heads of Government have voted for the CRNM to be moved to the
Caribbean Community organization where it would become renamed the CARICOM
Office of Trade Negotiations (OTN).

APEC (Asia-Pacific Economic Cooperation)

Asia-Pacific Economic Cooperation (APEC) is a forum for 21 Pacific Rim countries

(styled 'member economies') to cooperate on regional trade and investment liberalization
and facilitation. APEC's objective is to enhance economic growth and prosperity in the
region and to strengthen the Asia-Pacific community. Members account for
approximately 40% of the world's population, approximately 54% of world GDP and
about 44% of world trade.

APEC is considering the prospects and options for a Free Trade Area of the Asia-Pacific
(FTAAP) which would include all member economies of Asia-Pacific Economic
Cooperation (APEC). Since 2006, the APEC Business Advisory Council, promoting the
theory that a free trade area has the best chance of converging the member nations and
ensuring stable economic growth under free trade, has lobbied for the creation of a high-
level task force to study and develop a plan for a free trade area. The proposal for a
FTAAP arose due to the lack of progress in the Doha round of World Trade
Organization negotiations, and as a way to overcome the 'spaghetti bowl' effect created
by overlapping and conflicting elements of free trade agreements between members -
there are as many as 60 free trade agreements and 117 being negotiated in Southeast
Asia and the Asia-Pacific region. The FTAAP is more ambitious in scope than the Doha
round, which limits itself to reducing trade restrictions. The FTAAP would create a free
trade zone that would considerably expand commerce and economic growth in the most
dynamic region in the world. The economic expansion and growth in trade could exceed
the expectations of other regional free trade areas such as the ASEAN Plus
Three (ASEAN + China, Japan, and South Korea). Some criticisms include that the
diversion of trade within APEC members would create trade imbalances, market conflicts
and complications with nations of other regions. The development of the FTAAP is
expected to take many years, involving essential studies, evaluations and negotiations
between member economies. It is also affected by the absence of political will and
popular agitations and lobbying against free trade in domestic politics.

NAFTA (North American Free Trade Agreement)

The North American Free Trade Agreement or NAFTA is an agreement signed by the
governments of the United States, Canada, and Mexico creating a trilateral trade bloc in
North America. The agreement came into force on January 1, 1994. It superseded
the Canada-United States Free Trade Agreement between the U.S. and Canada. In terms
of combined purchasing power parity GDP of its members, as of 2007 the trade block is
the largest in the world and second largest by nominal GDP comparison.

The North American Free Trade Agreement (NAFTA) has two supplements, the North
American Agreement on Environmental Cooperation (NAAEC) and the North American
Agreement on Labor Cooperation (NAALC). The mechanisms employed by NAFTA
include cooperation in the following areas amongst the member countries:

• Trade

• Industry

• Environment

• Agriculture
 • Mobility of persons

SAFTA (South Asian Free Trade Agreement)

Over the years, the SAARC members have expressed their unwillingness on signing a
free trade agreement. Though India has several trade pacts with Maldives, Nepal, Bhutan
and Sri Lanka, similar trade agreements with Pakistan and Bangladesh have been stalled
due to political and economic concerns on both sides. India has been constructing
a barrier across its borders with Bangladesh and Pakistan. In 1993, SAARC countries
signed an agreement to gradually lower tariffs within the region, in Dhaka. Eleven years
later, at the 12th SAARC Summit at Islamabad, SAARC countries devised the South
Asia Free Trade Agreement which created a framework for the establishment of a free
trade area covering 1.4 billion people.

The Agreement on the South Asian Free Trade Area is an agreement reached at the 12th
SAARC summit at Islamabad, capital of Pakistan on 6 January 2004. It creates a
framework for the creation of a free trade area covering 1.4 billion people
in India, Pakistan, Nepal, Sri Lanka, Bangladesh, Bhutan and the Maldives. The seven
foreign ministers of the region signed a framework agreement on SAFTA with zero
customs duty on the trade of practically all products in the region by end 2016. The new
agreement i.e. SAFTA, came into being on 1 January 2006 and will be operational
following the ratification of the agreement by the seven governments. SAFTA requires
the developing countries in South Asia, that is, India, Pakistan and Sri Lanka, to bring
their duties down to 20 percent in the first phase of the two year period ending in 2007. In
the final five year phase ending 2012, the 20 percent duty will be reduced to zero in a
series of annual cuts. The least developed nations in South Asia consisting of Nepal,
Bhutan, Bangladesh and Maldives have an additional three years to reduce tariffs to zero.
India and Pakistan have signed but not ratified the treaty.

MERCUSOL
Mercosur or Mercosul (English: Southern Common Market) is a Regional Trade
Agreement (RTA) among Argentina, Brazil, Paraguay and Uruguay founded in 1991 by
the Treaty of Asunción, which was later amended and updated by the 1994 Treaty of
Ouro Preto. Its purpose is to promote free trade and the fluid movement of goods, people,
and currency. The official languages are Portuguese and Spanish.

Mercosur is composed of 4 sovereign member states: Argentina, Brazil, Paraguay,

and Uruguay. Bolivia, Chile, Colombia, Ecuador and Peru currently have associate
member status. Venezuela signed a membership agreement on 17 June 2006, but before
becoming a full member its entry has to be ratified by the Paraguayan parliament.

The Southern Common Market promotes:

 The free transit of production goods, services and factors between the
member states with inter alia, the elimination of customs rights and lifting of
nontariff restrictions on the transit of goods or any other measures with similar
effects;
 Fixing of a common external tariff (TEC) and adopting of a common trade
policy with regard to nonmember states or groups of states, and the
coordination of positions in regional and international commercial and
economic meetings;
 Coordination of macroeconomic and sectorial policies of member states
relating to foreign trade, agriculture, industry, taxes, monetary
system, exchange and capital, services,
customs, transport and communications, and any others they may agree on, in
order to ensure free competition between member states;
 The commitment by the member states to make the necessary adjustments
to their laws in pertinent areas to allow for the strengthening of the integration
process. The Asunción Treaty is based on the doctrine of the reciprocal rights
and obligations of the member states. Mercosur initially targeted free-trade
zones, then customs unification and, finally, a common market, where in
addition to customs unification the free movement of manpower and capital
 across the member nations' international frontiers is possible, and depends on
equal rights and duties being granted to all signatory countries.

Conclusion:

The RTA’s (Regional Trade Agreements) and FTA’s (Free Trade Agreements) amongst various
nations help in the abolishment of trade barriers that inhibit the progression of economies.
Although much criticism based on sound grounds exists on such agreements, but once the
positive impacts of such agreements are analyzed in comparison to the adverse impacts that the
economy of a member country has to endure, we come to know that all member countries have
benefited in one way or another. But, one of the serious drawbacks of such agreements is that the
economy of a less developed country thrives more than that of a developed country under such
agreements. For example, the Mexican economy under NAFTA has flourished far more than that
of the US and the Canadian economy.

Much criticism also exists on the International Trade organizations. The WTO when analyzed for
its practices and overall role in the past years, one can find it to be more inclined towards the
interests of the few developed countries. The concept of free markets is far from being actually
realized when it comes to the interests of the developing nations. Reciprocity although is
considered to be an integral part of the role of WTO, but the trade agreement between the
developed and the developing nations seem to be unjust, when you consider the actual value that
the developing nations would be able to derive from the various trade agreements. But one
cannot wholly negate the positive role that the WTO plays in enhancing trade through the
settlement of disputes amongst various nations.
References:

• http://www.commerce.gov.pk/SAFTA.asp

• http://www.sdpi.org/help/research_and_news_bulletin/july_aug_05/safta.htm

• http://www.wto.org/english/thewto_e/thewto_e.htm#members

• http://en.wikipedia.org/wiki/World_Trade_Organization

• http://www.scribd.com/doc/13212140/Nafta

• http://en.wikipedia.org/wiki/Mercosur

• http://www.unctad.org/Templates/StartPage.asp?intItemID=2068

• http://www.aseansec.org/21861.htm

• http://en.wikipedia.org/wiki/CARICOM_Single_Market_and_Economy

• http://en.wikipedia.org/wiki/Asia-Pacific_Economic_Cooperation

• http://www.wto.org/english/tratop_e/region_e/scope_rta_e.htm

• http://www.apec.org/apec/apec_groups/other_apec_groups/FTA_RTA.html

• http://europa.eu/pol/index_en.htm

• http://www.caricom.org/jsp/single_market/single_market_index.jsp?menu=csme