Post on 18-Nov-2014
GENERAL AGREEMENT ON TARIFFS AND
TRADE
• The General Agreement on Tariffs and Trade (GATT) was first signed in 1947.
• GATT was designed to provide an international forum, that encouraged free trade between member states by regulating and reducing tariffs on traded goods providing a common mechanism for resolving trade disputes.
GATT ???
A Treaty, not an Organization
GATT was the outcome of the failure of negotiating governments to create the ITO
The Bretton Woods Conference introduced the idea for an organization to regulate trade as part of a larger plan for economic recovery after World War II
As governments negotiated the ITO, 15 negotiating states began parallel negotiations for the GATT as a way to attain early tariff reductions
Once the ITO failed in 1950, only the GATT agreement was left.
The GATT's main objective was the “Reduction of Barriers to International Trade”
This was achieved through the Reduction of Tariff barriers Quantitative Restrictions Subsidies on trade through a series of
agreements
Objective
3 Phases First Phase , from 1947 until the Torquay
Round A second phase, encompassing three
rounds, from 1959 to 1979
The Third phase, consisting only of the Uruguay Round from 1986 to 1994
History
Commodities which would be covered by the agreement and freezing existing tariff levels
First Phase
Year Place/name Subjects covered
1947 Geneva Tariffs
1949 Annecy Tariffs
1951 Torquay Tariffs
Focused on reducing tariffs
Second Phase
Year Place/name Subjects covered
1960-1961 GenevaDillon Round
Tariffs
1964-1967 GenevaKennedy Round
Tariffs and anti-dumping measures
1973-1979 GenevaTokyo Round
Tariffs, non-tariff measures, “framework”agreements
Extended the agreement fully to new areas such as intellectual property, services, capital, and agriculture. Out of this round the WTO was born.
Third Phase
Year Place/name Subjects covered
1986-1994 GenevaUruguay Round
Tariffs, non-tariff measures, rules, services, intellectual property, dispute settlement, textiles, agriculture, creation of WTO, etc
NAME START
DURATION
COUNTRIES SUB. COVERED
ACHIVEMENTS
1.GENEVA APRIL
1947
7 MONTHS 23 TARIFFS SIGNING OF GATT,
45,000 TARIFF
CONCESSIONS
AFFECTING $10
BILLION OF TRADE.
2. ANNECY
APRIL
1949
5
MONTHS
13 TARIFFS COUNTRIES
EXCHANGED SOME
5000 TARIFF
CONCESSIONS.
ROUNDS
NAME START DURATION
COUNTRIES
SUB. COVERED
ACHEVEMENTS
3.
TORQUAY
SEPT.
1950
8 MONTHS 38 TARIFFS COUNTRIES
EXCHANGED SOME
8700 TARIFF
CONCESSIONS,
CUTTING THE
TARIFFS BY 25%
4.
GENEVA
II
JAN. 1956 5 MONTHS 26 TARIFFS,
ADMISSION
OF JAPAN
$2.5 BILLION IN
TARIFF
REDUCTION
5.
DILLON
SEPT.
1960
11 MONTHS 26 TARIFFS TARIFF
CONCESSION
WORTH $4.9
BILLION OF
WORLD TRADE.
NAME START DURATION
COUNTRIES
SUB. COVERED
ACHIVEMENTS
6.
KENNED
Y
MAY
1964
37 MONTHS 62 TARIFFS &
ANTIDUMPING
TARIFF CONCESSION
WORTH $40 BILLION
OF WORLD TRADE
7.
TOKYO
SEPT.
1973
74 MONTHS 102 TARIFF, NON
TARIFF
MEASURES,
“FRAMEWORK
”
AGREEMENTS
TARIFF REDUCTION
WORTH $190 BILLION
ACHIEVED.
8.
URUGUA
Y
SEPT.
1986
87 MONTHS 123 TARIFFS,NON
TARIFFS,RULE
S,
SERVICES,IP,D
ISPUTE
SETTLEMENT,
TEXTILES,AGR
I.
CREATION OF WTO, &
EXTENDED THE RANGE OF
TRADE
NEGOTIATION,LEADING TO
THE REDUCTION IN
TARIFFS(ABOUT 40%).
Did GATT succeed?
Continual reductions in tariffs helped spur very high rates of world trade growth during the 1950s and 1960s — around 8% a year on average
Trade growth consistently out-paced production growth
The rush of new members during the Uruguay Round demonstrated recognition of multilateral trading system as the anchor for development and an instrument of economic and trade reform.
Impact Of GATT
GATT’s success in reducing tariffs to a low level, with a series of economic recessions 1970-80’s drove governments to devise other forms of protection for sectors facing increased foreign competition
High rates of unemployment and constant factory closures led governments in Western Europe and North America to seek bilateral market-sharing arrangements with competitors and to embark on a subsidies race to maintain their holds on agricultural trade.
Both these changes undermined GATT’s credibility and effectiveness.
The problem was not just a deteriorating trade policy environment.
By the early 1980s the General Agreement was clearly no longer as relevant to the realities of world trade as it had been in the 1940s
World trade had become far more complex and important than 40 years before
The globalization of the world economy was underway
Trade in services — not covered by GATT rules
Ever increasing international investments
Factors convinced GATT members that a new effort to reinforce and extend the multilateral system should be attempted.
That effort resulted in the Uruguay Round, the Marrakesh Declaration, and the
creation of the WTO.
Whereas GATT was a set of rules agreed upon by nations, the WTO is an institutional body. The WTO expanded its scope from traded goods to trade within the service sector and intellectual property rights
The workings of the GATT agreement are the responsibility of the Council for Trade in Goods (Goods Council) which is made up of representatives from all WTO member countries.
Why was IP Included In GATT?
Reasons for Including IP on the GATT Agenda:• Growth in world trading.• Increased importance of global IP protection.• Existing provisions of international law were
perceived insufficient.1. Absence of enforcement of rights
before national judicial authorities.2. Lack of a dispute settlement
mechanism between States. 3. Standards were outdated.
Drug Prices In India After GATT Agreement
Inventions should benefit mankind while giving a degree of advantage to the inventor.
But the central theme of Trade Related Aspects of Intellectual Property Rights (TRIPS) is to ensure that the innovator’s rights are protected, even at the cost of learning millions of the poor to disease and death.
The first and foremost issue is that a real difference comes in only regarding drugs which are under patent in any one of the WTO member countries.
Indian Government has issued a list of nearly 300 essential drugs required in healthcare a high percentage; nearly 90% of these drugs are of patent.
Pharmaceutical companies use a number of strategies to promote the sales of their drugs, especially their patented drugs, because they plan to make money before the patent expires. Ex: Terfenadine
Fexofenadine
A second strategy is to introduce a number of drugs of more or less same nature.
Ex : The first drug of a class of drugs called ACE inhibitors introduced was Captopril; which was followed by Enalapril. Now we have Lisinopril, Ramipril, Perindopril, Quinapril, Cilazapril, Benazepril, Fosinopril etc.
Now 85% of the Indian drug market is generic and 15% is covered by patents.
Patented drugs may be costly.
Regarding the prices of drugs which are not under patent, we should mention that Indian drugs are the cheapest in the world.
On average, drugs manufactured in India are between 1000 and 4000 percent cheaper than the same products produced in USA.
One reason why generics are so cheap in India is that in India manufacture of drugs is very cheap. India is placed fourth in terms of volume of generic market just after the US, Japan and Germany.
Indian Pharma companies have the advantage of very low cost of production of drugs.
Indian companies incur 0.05% of cost of production compared to developed countries. This impossible fact is being seen in India because of very less expensive manpower and low overheads.
Indian drug prices are well controlled by the Drug Price Control Orders.
NPPA, the National Pharmaceutical Pricing Authority was started in August 1997 to keep a proper control over drug price rise .
GATT has been replaced by WTO.
Even though the functions of GATT had been taken over by the WTO, it works on the frame work of GATT.
WTO is the working institutional body.