1.WTO,REGIONAL BLOCS,INTERNATIONAL COMMODITY AGREEMENT & GLOBAL TRADE

2. MAR ATHANASIOS COLLEGE FOR ADVANCED STUDIES MACFAST,THIRUVALLA Group members Alpha Shine Aneesh George Chinchu P Thomas Joji Thomas Sukanya Devi 3. WORLD TRADE ORGANISATION Following UR agreement GATT was convertedfrom a provisional agreement to formal international organization called WTO in 1st Jan 1995 Directed by ministerial conference meet every two years and its regular activities are maintained by General council. 159 members at end of April 2013 It is designed to play the role of a watchdog in the spheres of trade in goods and services, foreign investment, intellectual property rights, etc. 4. Functions The WTO shall facilitate and provide framework forthe implementation, administration and operation of the Multilateral Trade Agreements The WTO shall provide the forum for negotiationsamong its members concerning their multilateral trade relations in matters dealt with under the Agreement in the Annexes to this Agreement. The WTO shall administer the Understanding onRules and Procedures Governing the Settlement of Disputes. The WTO shall administer Trade Policy ReviewMechanism. With a view to achieving greater coherence in globaleconomic policy making, the WTO shall cooperate, as 5. ROLES The WTO acts as Conductor Tribunal Monitor Trainer WTO has three main objectives To help trade flow as freely as possible. To achieve further liberalisation through negotiations To set up an impartial means of settling disputes. 6. Benefits Reducing tariff and non-tariff barriers Liberalisation of trade and investment Forum for multilateral discussions Place for trade dispute settlementDrawbacks Dominance of developed countries Policies are done without considering vulnerability ofdeveloping countries Lack of financial and knowledge resources of developing countries 7. REGIONAL TRADE BLOCS A trade bloc is a type of intergovernmental agreement, where regional barriers to trade are reduced or eliminated among the participating states. Different types of trade blocs are Free-trade area Member countries signed free-trade agreement which eliminates tariffs, import quotas, and subsidies on most goods and services traded between them. If people are also free to move between the countries, in addition to FTA, it would also be considered an open border. 8. Australia has seven FTAs currently in force withNew Zealand, Singapore, Thailand, US, Chile, the Association of South East Asian Nations (ASEAN) (with New Zealand) and Malaysia. European free trade association Customs Union Composed of a free trade area with a common external tariff. The participant countries set up common external trade policy, to oversee trade relations with non members but in some cases they use different import quotas. Customs Union of Belarus, Kazakhstan, and Russia 9. Common Market Group formed by countries within a geographical area to promote duty free trade and free movement of labour and capital among its members. No barriers of trade and group has common external trade policy Eg: MERCOSUR: the South American group of Argentina, Brazil, Paraguay,Uruguay Economic Union Involves the free flow of products and factors of production between member countries Common external trade policies Composed of a common market with a customs union 10. Requires a common currency, harmonizationin tax rates, common monetary and fiscal policy Eg: European union Political Union Central political apparatus coordinates economic, social, and foreign policy of member states. Eg: European union going to be political union like US 11. WHY TRADE BLOCS??? Stimulates economic growth in countries Increases FDI and world production Countries specialize in those goods and servicesefficiently produce. Additional gains from free trade beyond the international agreements such as GATT and WTO 12. Major trade blocs EU (EUROPEAN UNION) The worlds largest trading bloc Formed from the Treaty of Rome in 1957 It comprised of 6 membersGermany, France, Italy,Belgium, Netherlands and Luxemburg At present 27 members Objectives Setting up a common market for all goods & services by eliminating all trade barriers Promoting free trade among the members. Closer relations between the member states. 13. North American Free Trade Agreement (NAFTA) Initially bilateral trade between Canada NAFTA went into effect in January 1,1994 afterthejoining of Mexico Worlds largest free trade area. NAFTA has two supplements: the North American Agreement on Environmental Cooperation (NAAEC) and the North American Agreement on Labour Cooperation (NAALC). 14. Provisions Eliminate barriers to trade investment between US, Canada and Mexico Duty-free market access Dispute settlement mechanism. Protection of intellectual property. Trade rules- safeguard, subsidies countervailing & antidumping duties, health& safety standards. 15. Organisation of Petroleum Exporting Countries (OPEC) A permanent, intergovernmental Organization, created at the Baghdad Conference on September 1014, 1960 (Iraq, Kuwait, Iran, Saudi Arabia and Venezuela ) Later joined by 8 more countries The main objective is to coordinate and unify petroleum policies among the member countries. To secure fair and stable price for petroleum producers. Proper price and regular supply for petroleum consuming nations. Its Headquarter is in Vienna, Austria. 16. Association of Southeast Asian Nations (ASEAN) Formed 8thAugust,1967(Indonesia, Malaysia, Philippians, Singapore) Later joined by Brunei, Burma, Cambodia, Laos, Thailand, Vietna m Established as ASEAN Free Trade Area (AFTA) Headquarter- Jakarta, Indonesia. Primary goals of AFTA are: To encourage inflow of foreign investment into this region. To establish free trade area in the member countries. To reduce tariff of the products produced in 17. Objectives of ASEAN Discuss issues peacefully. Protection of regional peace and stability. Cultural Development among its members. Social Progress. Accelerating Economic Growth. 18. SAARC(South Asian Association for Regional Cooperation) It was established on 8th December 1985. It consists of nations of South Asia that includes Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan and Srilanka. SAARC focus on areas such as Science and Technology, agricultural and rural development, telecommunication, postal services etc. SAARC members signed an agreement called SAPTA. This agreement was signed to provide a framework for the exchange of trade concessions. It aims at accelerating the process of economic and social development in member states. Afghanistan became the eighth member of this group in 2007. 19. International Commodity Agreements Agreements between producing and consumingcountries to stabilise markets and raise average prices. Such agreements are common in many markets, including the market for coffee, tea, and sugar 20. Objectives: Expanding the resources for economic & social development. Consider the interest of the consumers in importing countries Considering the remunerative & equitable & stable prices for primary commodities. Considering the import purchasing power Increased imports & consumption & also coordination of production & marketing policies 21. Forms of Commodity Agreements 1. Quota agreements: In international trade, a government-imposed limit on the quantity of goods and services that may be exported or imported over a specified period of time. Limits on the amount of a goods produced, imported, exported or offered for sale. Seek to prevent a fall in commodity prices by regulating prices. This agreement undertake to restrict the export or production by a certain percentage of the basic quota decided by the Central Committee or Council. This type of agreement mostly in the case of the commodities like coffee, tea & sugar 22. 2. Buffer Stock Agreements: A practice in which a large investor, especially a government, buys large quantities of commodities during periods of high supply and stores them so they do not trade or circulate. The investor then sells them when supply is low. This is done to stabilize the price. It is to stabilizing the prices by maintaining the demand & supply balance. It is more useful for the commodities like tea, sugar rubber, copper. This arrangements only for those products which can be stored at relatively low cost without the danger of deterioration & this is one of the limitation of this agreement. 23. 3.Bilateral or Multilateral Contracts: Bilateral agreements may be formed as business orpersonal agreements between individuals, companies or countries. In either case, a bilateral agreement is a binding contract between the two parties that have agreed to mutually acceptable terms. Bilateral contract to purchase & sell certain quantities of a commodity at agreed prices. In this agreement, an upper price & a lower price are specified. 24. If the market price, throughout the period of theagreement, remains within these specified limits the agreement becomes inoperative. If the market price rises above the upper limit specified, the exporter country is obliged to sell to the importing country a certain specified quantity of the upper price fixed by the agreement. On the other hand, if the market price falls below the lower limit specified, the importer is obliged to purchase the contracted quantity at the specified lower price. 25. GLOBAL TRADE Global Trade is the exchange of goods andservices between countries. Also, global trade could be taken in the context that there are no barriers to trade, thus there is global 'free' trade between countries. 26. Important benefits of International Trade Enhances the domestic competitiveness Takes advantage of international trade technology Increase sales and profits Extend sales potential of the existing products Maintain cost competitiveness in domestic market Enhance potential for expansion of business Gains a global market share Reduce dependence on existing markets Stabilize seasonal market fluctuations 27. What are these trade barriers? They are tariffs imposed in international trade And non-tariff measures adopted by importing/exporting countries 28. Tariff Barriers (TB) A tariff is a tax levied on imports It is put in place to protect domestic products from foreign competition Non-Tariff Barriers (NTB) They are indirect measures to regulate and minimise They are put in place to protect domestic industries and NTBs are less transparent and difficult to identify imports conserve foreign exchange 29. Tariffs can be classified on the following basis: Based on origin and distribution of good Export duties Import duties Transit duties Based on quantification of tariff Specific tariffs Ad valorem tariffs Compound tariffs 30. Based on discriminatory rates of different countries Single column tariff Double column tariff Triple column tariffBased on their purpose Revenue tariff Protective tariff Countervailing & antidumping duties