Global Trading & WTO
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Transcript of Global Trading & WTO
7/28/2019 Global Trading & WTO
http://slidepdf.com/reader/full/global-trading-wto 1/22
Global Trading & WTO
•
Earlier bilateral agreements now multilateralagreements
• Agreements at WTO platform are applicable to all153 nations (2011)
•
WTO replaced GATT on 1/1/1995• WTO promotes free trade among member
nations
• WTO aims at eliminating tariff and non tariff
barriers• WTO agreements covers services also (travel,
banking, insurance, telecom, IT, IT enabledservices)
7/28/2019 Global Trading & WTO
http://slidepdf.com/reader/full/global-trading-wto 2/22
WTO
• Established on 1 Jan 1995 with 124 members
• Till 2011 there were 153 nations as member
•
It aims at promoting free trade amongmembers
• It is steadily working towards removing tariff
and non tariff barriers like removing importquota, import licensing etc
7/28/2019 Global Trading & WTO
http://slidepdf.com/reader/full/global-trading-wto 3/22
• WTO is international trade organisation having
set of rules and principles to promote free
trade
• WTO along with IMF and World Bank together
influence world trade
• Eighth ministerial meet of WTO was held in
Dec 2011 at Geneva, Switzerland.
7/28/2019 Global Trading & WTO
http://slidepdf.com/reader/full/global-trading-wto 4/22
Feature of WTO
•
It aims to promote multilateral trade• It has replaced GATT
• It works for the removal of tariff and non tariff barriers
• It has its own set of rules and regulations andit has a legal status
• Its rules and regulations are applicable to all
its members. If any member doesn’t followthen its complaint can be lodged with disputessettlement body of WTO
7/28/2019 Global Trading & WTO
http://slidepdf.com/reader/full/global-trading-wto 5/22
• It includes trade in goods, trade in services,
protection of intellectual property rights,
foreign investment etc.
• Unlike IMF and World Bank WTO is not an
agent of United Nations
• All WTO members have equal voting rights
(one country, one vote)
• WTO has huge organizational set up
7/28/2019 Global Trading & WTO
http://slidepdf.com/reader/full/global-trading-wto 6/22
Objectives of WTO• To implement new world trade agreements
•
To promote multilateral trade• To abolish tariff and non tariff barriers
• To promote world trade in such a manner that it
benefits every member country
• To ensure better share for developing countries
• To remove hurdles in free trading
• To enhance competitiveness among all trading
partners
• To increase level of production and productivity
• Optimum utilization of world resources
• To take steps for the development of poorest nations
7/28/2019 Global Trading & WTO
http://slidepdf.com/reader/full/global-trading-wto 7/22
Functions of WTO
• Laying down code of conduct for member nationsfor reducing tariff & non tariff barriers
• Implementing its agreements
• Cooperating with IMF and World Bank forformulating world trade policies
• Settlement of trade related disputes amongmember nations
• Reviewing trade related economic policies of member nations
• Acting as forum for trade liberalization
7/28/2019 Global Trading & WTO
http://slidepdf.com/reader/full/global-trading-wto 8/22
Organizational Structure of WTO
Ministerial
Conference
Committees/Working
Group
Council forTrade in
Goods
Council forTRIPs
Council fortrade in
Services
Council forTRIMs
Tradenegotiation
Committee
Ministerial
Conference
Committees/Working
Group
Council forTrade in
Goods
Council forTRIPs
Council fortrade in
Services
Council forTRIMs
Tradenegotiation
Committee
Trade Policy
Review Body
Disputes
Settlement Body
7/28/2019 Global Trading & WTO
http://slidepdf.com/reader/full/global-trading-wto 9/22
A) Trade in Agriculture
• Reduction in domestic subsidies
– Subsidy on inputs (Seed, fertilizers, pesticides)
– Subsidy on output (minimum support price)
– WTO has urged member nations to reduce both
subsidies
– Developing nations can give maximum 10% of the
market price of crop as subsidy
7/28/2019 Global Trading & WTO
http://slidepdf.com/reader/full/global-trading-wto 10/22
Reduction in Export Subsidy
• WTO has asked its member countries to
reduce export subsidy in phased manner
• In 2001 WTO urged its members to abolish all
forms of export subsidy
• In 2005 ministerial conference agreed to
phase out export subsidies by 2013
7/28/2019 Global Trading & WTO
http://slidepdf.com/reader/full/global-trading-wto 11/22
Improvement in Market Access
•
Reduction in tariff on agricultural products.• WTO has fixed the top limit of tariff on
agricultural produce
•
Country can charge lesser tariff • Non tariff barriers like quota and licensing will
be removed
•Underdeveloped and developing nations canimpose tariff and non tariff barriers if their
balance of payment situation is unfavorable
7/28/2019 Global Trading & WTO
http://slidepdf.com/reader/full/global-trading-wto 12/22
Public Distribution System
• Distributing food grains by govt. at
concessional rates
• PDS is aimed at people living below the
poverty line
• WTO urged developed nations to abolish
subsidy on food grains in their PDS
• Developing nations can give this subsidy in
order to provide food security to poor people
7/28/2019 Global Trading & WTO
http://slidepdf.com/reader/full/global-trading-wto 13/22
7/28/2019 Global Trading & WTO
http://slidepdf.com/reader/full/global-trading-wto 14/22
Safeguard Mechanism
• The interest of developing countries has been
kept safe under safeguard mechanism
• This mechanism can be applied for three years
• Developing nations are allowed to impose
tariff and non tariff measures if imports are
threat to domestic industry
7/28/2019 Global Trading & WTO
http://slidepdf.com/reader/full/global-trading-wto 15/22
TRIPs (Trade Related Intellectual Property Rights)
• Related to copyrights, trade marks, patents
• This is to protect the rights of original inventor
•
Anyone who wants to use patent can do it bypaying royalty
• Underdeveloped countries who don’t have
patent rules must enact by 2005
• Plants can not be patented
7/28/2019 Global Trading & WTO
http://slidepdf.com/reader/full/global-trading-wto 16/22
• Sui Generis system
– Plants breeders have exclusive rights over the new
plant breeds – It allows farmer to retain the seed from their
cultivated crop for using as seed in their own farm
– Commercial sale of these seeds can be done by
only the plant breeders – Life of Patents has been fixed as follows
General Patents 20 yrs
Copyrights 50 yrs
Trademarks 7 yrs
Industrial Designs 10 yrs
Medicines 10 yrs
7/28/2019 Global Trading & WTO
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TRIMs (Trade Related Investment Measures)
• It tries to ensure free flow of investment all overthe world
• It will help underdeveloped nations by providingnecessary capital through foreign investment
• It aims at
– Fair treatment to all foreign investors at par withdomestic investors
–
To remove restriction on repatriation of dividend,interest and royalty to the parent country
– To allow 100% foreign equity participation in certaincases
7/28/2019 Global Trading & WTO
http://slidepdf.com/reader/full/global-trading-wto 18/22
General agreement on
Trade in Services
• First multilateral agreements in services
• It provides for free flow of services throughout
member nations
• The agreement covers all type of services like
Insurance, Travel & tourism, hotel, banking,
shipping, telecom, media, business
outsourcing etc• Treatment of foreign services at par with
domestic services
7/28/2019 Global Trading & WTO
http://slidepdf.com/reader/full/global-trading-wto 19/22
Dispute Settlement
• WTO has setup dispute settlement body (DSB)
• DSB consults parties under dispute
• Director General of WTO acts as mediator for the
settlement of dispute
• DSB can constitute a panel to listen to all parties
• Panel has to give its report within 6 months
• In case of urgency report can be asked for in 3
months
• DSB will take final decision on the basis of report
within 30 days
7/28/2019 Global Trading & WTO
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Agreement on Export Subsidies
• WTO prohibits export subsidies to promote
free and fair global competition
• Export subsidies will be eliminated by 2013
• Developing nations can give export subsidies
till 2018
• Only those countries can give export subsidy
whose share in world trade is less than 3.25 %
7/28/2019 Global Trading & WTO
http://slidepdf.com/reader/full/global-trading-wto 21/22
Anti Dumping Agreements
• Dumping is a practice exporting product at
unreasonably low price• Intention of the exporter is to damage the domestic
industry and later charge higher prices
• No country is allowed to dump its surplus output in
other nation
• If volume of dumped imports from a particular
country is less than 1% of domestic market sale of
that product, then this dumping will be treated asinsignificant
• In seventh ministerial meet in 2009 various safeguard
mechanism have been provided to check dumping
7/28/2019 Global Trading & WTO
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Reviewing Trade Policies of
Member Nations
• WTO provides for a Trade Policy Review Body
• It regularly examines the economic and tradepolicies of member nations
• Trade policy for four major traders (EuropeanUnion, US, Japan and Canada) is reviewedevery 2 years
•Every member has to report to TPRB regularlyabout the trade policies and practices pursuedby it.