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GATT – WTO (General Agreement on Tariffs and Trade – World Trade Organization)
Tariff - customs duty or due is the indirect tax levied on the import or export of goods in
international trade
General Agreement on Tariffs and Trade (GATT)
• Multilateral agreement regulating international trade
• Implemented to regulate world trade to aide in the economic recovery following World
War 2
World Trade Organization (WTO)
• Deals with regulation of trade between participating countries
• Provides a framewor for negotiating and formali!ing trade agreements
GATT vs WTO
• "#TT is a set of rules$guidelines• WT% is an institutional body
• "#TT focused on traded goods only
• WT% expanded scope to the service sector and intellectual property rights
• "#TT has no provisions to settle trade disputes
• WT% has a dispute settlement body
Purpose:
• &ubstantial reduction of tariffs and other trade barriers
• 'limination of preferences( on a reciprocal and mutually advantageous basis
• )eview and propagate the national trade policies
• 'nsure the coherence and transparency of trade policies through surveillance in global
economic policy-maing
• #ssistance of developing( least-developed and low-income countries in transition to
ad*ust to WT% rules and disciplines through technical cooperation and training
• Involved in dispute resolution process aimed at enforcing participants+ adherence to
WT% agreements
History:
• ,ormed #pril ./0 in "eneva( &wit!erland
• &igned into law 1anuary ( ./
• #mended ../
• 3umber of countries4 25 original signatories
• )eplaced by World Trade %rgani!ation in ..6
• WT% was signed into law 1anuary ( ..6
• 7urrent number of members4 6.
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Rationale:
• "lobali!ation calls for an international organi!ation to manage trading systems
• #ddress the issues on protectionism( trade barriers( subsidies( violation of intellectual
property rights
•
&ynchroni!e and standardi!e trading policies among member nations• #ct as mediator when conflicts$disputes arise
• #ct as center for economic research and analysis
Priniples of t!e trading system:
1. Non-discrimination –
• Most ,avored 3ation 8M,39 rule - re:uires that a WT% member must apply the
same conditions on all trade with other WT% members; 'li minate discrimination;
Grant someone a special favor and you have to do the same for all other WTO
members.
•
3ational Treatment Policy - imported goods should be treated no less favorablythan domestically produced goods
2. Reciprocity –
• <imit the scope of free-riding that may arise because of the M,3 rule
• %btain better access to foreign marets
3. Binding and enforceable commitments –
• establish =ceiling bindings= on goods$trades
4. Transparency –
• )e:uired to publish their trade regulations
• Maintain institutions allowing for the review of administrative decisions affecting
trade
• )espond to re:uests for information by other members
• 3otify changes in trade policies to the WT%
5. afety valves –
• Permit members to tae measures to protect not only the environment but also
public health( animal health and plant health
Organizational "truture:
!ouncil for Trade in Goods "G#TT$ - responsible for the operation of the "#TT #greement and
for the wor of the committees( woring groups and woring parties on the following sectors>
• #griculture
• Maret access for goods
• &anitary and phyto-sanitary measures
• &ubsidies and countervailing measure
• #nti-dumping
• 7ustoms valuation
• )ules of origin
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• Import licensing
• Investment
• &afeguards
• &tate trading enterprises 8woring group9
• Information technology agreement
!ouncil for Trade in ervices "G#T$ –
• ,irst multilateral( legally enforceable agreement governing trade in services( and
investment in the service sector;
• 'liminates governmental measures that prevent services from being freely supplied
across national borders;
!ouncil for Trade-#spects of %ntellectual &roperty Rights "TR%&$ -
• Monitors implementation of the T)IP& agreement;
•Provides forum for WT% members on intellectual property matters;
• &ets minimum standards of protection for copy rights and related rights( trademars(
geographical indications 8"I?s9( industrial designs( patents( integrated circuit layout
designs( and undisclosed information;
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A!ievements of GATT# WTO glo$ally:
; Trade liberali!ation in industrial products
2; 'nhanced the value and :uantity of trade
5; 'radicated trade and non-trade barriers/; @roadened the trade governance scope to trade in investment( services and
intellectual property6; &ustainable trade development
A; ,ree trade cuts the cost of living( provides more choice of products and :uality
0; &timulates economic growth of member countries; )aises income of member countries and its people
GATT#WTO and t!e P!ilippines:
• %riginal member of WT% B 1anuary ( ..6
"rants M,3 treatment to all trading partners
Participant in the WT% Information Technology #greement 8I,#9
&ignatory of "#T& protocols on telecommunications and financial services
Colds a strong record on notifications to WT% except the agricultural sector
%ffets of GATT#WTO to t!e P!ilippines:
The Philippines economy has performed well, based on a relatively open
trade regime
During 2005-2011, the Philippines had an annual real DP growth rate of 5!"
The Philippines was the world#s $%th largest e&porter and the 2'th importer of
goods in 2010"
Tari( was simpli)ed and now comprises *,2'' lines at the + eight-digit level
with the adoption of the 200% ./ +armonied Tari( /omenclature"
mport uotas applied on notably sensitive goods3 i"e" rice"
Prohibited and regulated e&ports include endangered wildlife species and live
animals"
Price support for rice and corn 4which has been highly costly, high tari(s, rice
import uotas, as well as import and e&port restrictions"
ave birth to nitiatives to assist agricultural producers including6 various
incentives3 a new reuirement that all ban7ing institutions 4government and
private must set aside at least 25! of their total loanable funds to
agriculture and )sheries credit3 and to assist sugar producers, a reuirement
for a 10! locally sourced bioethanol blend in gasoline, and 2! in diesel"
8oreign euity in deep-sea-)shing vessels is capped at 90!, and all
)shermen must be 8ilipino citiens"
mports of fresh, chilled or froen )sh 4e&cept when imported for canning and
processing are allowed only when deemed :necessary:, and a certi)cate of
necessity is reuired"
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