WTO

PRESENTED BY
:VAISHALI SHARMA
LECTURER MBA -IBE
About WTO
 The World Trade Organization came into being in 1995. One
of the youngest of the international organizations, the
WTO is the successor to the General Agreement on Tariffs
and Trade (GATT) established in the wake of the Second
World War.



 The past 50 years have seen an exceptional growth in world

trade. Merchandise exports grew on average by 6%
annually. Total trade in 2000 was 22-times the level of
1950.GATT and the WTO have helped to create a strong
and prosperous trading system contributing to
unprecedented growth.



 The system was developed through a series of trade
negotiations, or rounds, held under GATT. The first
rounds dealt mainly with tariff reductions but later
negotiations included other areas such as anti-
dumping and non-tariff measures. The last round –
the 1986-94 Uruguay Round – led to the WTO’s
creation.

Overview
 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 world’s trading
nations.

 The goal is to help producers of goods and
services, exporters, and importers conduct their
business.
 Location :Geneva, Switzerland

 1 January 1995

 Uruguay Round negotiations (1986-94)

 153 countries (on 23 July 2008)

 185 million Swiss francs for 2008

 Director-General, Pascal Lamy

 � Administering WTO trade agreements
 � Forum for trade negotiations
 � Handling trade disputes
 � Monitoring national trade policies
 � Technical assistance and training for developing countries
 � Cooperation with other international organizations

 Director-General
Pascal Lamy
 The goal is to improve the welfare of the peoples of
the member countries
The organization
 Administering trade agreements

 Acting as a forum for trade negotiations

 Settling trade disputes

 Reviewing national trade policies

 Assisting developing countries in trade policy issues,
through technical assistance and training
programmes

 Cooperating with other international organizations

Structure
 The WTO has nearly 153 members, accounting for
over 97% of world trade. Around 30 others are
negotiating membership.


 The WTO’s top level decision-making body is the
Ministerial Conference which meets at least
once every two years.
Secretariat
 The WTO Secretariat, based in Geneva, has around
600 staff and is headed by a director-general. Its
annual budget is roughly 160 million Swiss francs

 The Secretariat’s main duties are to supply technical
support for the various councils and committees and
the ministerial conferences, to provide technical
assistance for developing countries, to analyze world
trade, and to explain WTO affairs to the public and
media.

 The Secretariat also provides some forms of legal
assistance in the dispute settlement process and
advises governments wishing to become members of
the WTO.
Basic Principles
 The WTO establishes a framework for Trade Policies , it
does not define or specify outcomes . That is , it’s
concerned with setting the rules of the trade policy.

 5 principles are of particular importance in
understanding both the pre-1994 GATT & the WTO .

Non Discrimination

Most Favored Nat ion Nat ional Treat m ent

(MFN)
Most Favored Nation
 The MFN rules requires that a product made in one
member country be treated no less favorably than a
“like” (very similar) good that originates in any other
country.

 It the best treatment granted a trading partner
supplying a specific product is a 5 % tariff, this rate
must be applied immediately & unconditionally to
imports of this Good originating in all WTO members.

 MFN also provides smaller countries with a guarantee
that larger countries will not exploit their market
power by raising their Tariffs.


National Treatment
 NT requires that foreign goods, once they have
satisfied whatever border measures are applied , be
treated no less favorably , in terms of internal
(indirect) taxations than like or directly competitive
domestically produced goods.

 That is , goods of foreign origin circulating in the
country must be subject to taxes , charges &
regulations that are “no less favorable “ than those
that apply to similar goods of domestic origin.
Reciprocity

 It is fundamental element of the negotiating process. It

reflects both a desire to limit the scope for free –
riding that may arise because of the MFN rule and a
desire to obtain “payment “ for trade liberalization in
the form of better access to foreign markets.
Binding & Enforceable
commitments
 Liberalization , commitments & agreements to abide
by certain rules of t6he game have little value if they
cannot be enforced . The Non discrimination
principle , embodied in articles I (on MFN) & III (on
National Treatment) of the GATT.

 It is important in ensuring that market access
commitments are implemented and maintained .

 The members cannot raise tariffs above bound levels
without negotiating compensations with the principal
suppliers of the products concerned.
Transperancy
 Enforcement of commitments requires access to
information on the trade regimes that are
maintained by members. the agreements
administrated by the WTO therefore incorporate
mechanisms designed to facilitate communication
between WTO members on issues

 Numerous specialized committees , working parties ,
working groups & councils meet regularly in Geneva.
These interactions allow for the exchange of
information & views & permit potential conflicts to be
defused efficiently.
 It is the basic pillar of WTO & it is legal obligation
embedded in Article X of the GATT.

 WTO members are required to publish their trade
regulations to establish & maintain institutions
allowing for the review of administrative decisions
affecting trade , to respond to requests for
information by other members & to notify change in
trade policies to the WTO.
Safety Valves
 A final principle  Articles allowing for the
embodied in the WTO use of trade measures
is that , in specific to attain noneconomic
circumstances , Govt objectives
should be able to 
restrict trade.  Articles aimed at
 ensuring fair
 There are 3 types of competition
provisions in this 
connection  Provisions permitting
intervention in trade
for economic reasons
 Includes provisions allowing for policies to protect
public health or national security & to protect
industries that are seriously injured by competition
from imports.

 The Govt should have right to step in when
competitions becomes so vigorous as to injure
domestic competitors.

 The right to impose duties on imports that have been
subsidized and antidumping duties.
Functions
 Administering trade agreements.

 Acting as a forum for trade negotiations.

 Settling trade disputes.

 Reviewing national trade policies.

 Assisting developing countries in trade policy issues,
through technical assistance and training
programmes

 Cooperating with other international organizations


The WTO agreements-GATT
 To raise standard of
living.

 To ensure full
employment & a large
and steadily growing
volume of real income
and effective demand.

 To develop the full use of
the resources of the
world

 To expand production
and international trade
 Decisions in the WTO are generally taken by consensus of
the entire membership. The highest institutional body is
the Ministerial Conference, which meets roughly every
two years. A General Council conducts the organization's
business in the intervals between Ministerial Conferences.
Both of these bodies comprise all members.
The WTO's main Activities


 Negotiating the reduction or elimination of obstacles to

trade (import tariffs, other barriers to trade) and agreeing
on rules governing the conduct of international trade (e.g.
antidumping, subsidies, product standards, etc.)

 Administering and monitoring the application of the WTO's

agreed rules for trade in goods, trade in services, and
trade-related intellectual property rights

 Monitoring and reviewing the trade policies of our members,

as well as ensuring transparency of regional and bilateral
trade agreements

 Settling disputes among our members regarding the

interpretation and application of the agreements
 Building capacity of developing country
government officials in international trade
matters

 Assisting the process of accession of some 30
countries who are not yet members of the
organization

 Conducting economic research and collecting and

disseminating trade data in support of the
WTO's other main activities

 Explaining to and educating the public about the
WTO, its mission and its activities.
 The opening of national markets to international
trade, with justifiable exceptions or with
adequate flexibilities, will encourage and
contribute to sustainable development, raise
people's welfare, reduce poverty, and foster
peace and stability.

 At the same time, such market opening must be
accompanied by sound domestic and
international policies that contribute to
economic growth and development according to
each member's needs and aspirations.
Ministerial Conferences

  Geneva, 30 November - 2 December 2009

  Hong Kong, 13-18 December 2005

  Cancún, 10-14 September 2003

 Doha, 9-13 November 2001

 Seattle, November 30 – December 3, 1999

 Geneva, 18-20 May 1998

 Singapore, 9-13 December 1996

DISPUTE SETTLEMENT BODY(DSB)
 Dispute settlement is the
central pillar of the
multilateral trading
system & the WTO’s
unique contribution to
the stability of the global
economy.


 The system is based on

clearly-defined rules, with
timetables for completing
a case.



DSB Process
 Consultations  Pre work ( first hearing )
 

 Panel establish  Rebuttles ( Present oral


arguments)

 Panel process:  Experts ( Scintific &
 technical matters
advisory report)



WTO : THE DOHA ROUND