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The World Trade Organization (WTO), established on January 1, 1995, is a multilateral institution charged with administering rules for trade among member countries. Currently, there are 145 official member countries. The United States and other countries participating in the Uruguay Round of Multilateral Trade Negotiations (1986-1994) called for the formation of the WTO to embody the new trade disciplines adopted during those negotiations. The WTO functions as the principal international body concerned with multilateral negotiations on the reduction of trade barriers and other measures that distort competition. The WTO also serves as a platform for countries to raise their concerns regarding the trade policies of their trading partners. The basic aim of the WTO is to liberalize world trade and place it on a secure basis, thereby contributing to economic growth and development. (Source: WTO,2010)
was intended for opening negotiations on opening markets to agricultural, manufactured goods and services. In December 2001, China joins the WTO, whereas Taiwan was admitted a weeks later. In August 2002, EU got justice from WTO against US exporters, US government paid penalty of 4 billion $ to EU as damages charged by WTO. In September 2003,WTO declares a deal which was aimed for developing countries to access to cheaper medicines and due to this aid agencies were disappointed. The meeting of the WTO in Mexico fails whose aim was to give farm subsidies access to market. In August 2004,WTO tells US and EU to reduce their agricultural subsidies while developing countries should cut their tariffs on manufactured goods. In October 2005, US makes a deal to cut down its agricultural subsidies if other European countries do the same but France opposed it.In July 2008,US and India were not successful in compromising with each other, for the protection of poor countries farmers against import surges.WTO announces that the trade flows in developed countries has fall by 10%,poorer countries export has fall by 2-3% and global trade flows has shrink by 9% in 2009.
down to 4.7%. Tokyo Round failed to deal with fundamental problems which affect farm trade and agreement on safeguards. The availability of some non tariff barriers has resulted in new negotiations and agreements, but not all members of GATT were agreed to this agreement and due to this it was sometimes called codes as it was not accepted by all GATT members. Uruguay Round was held in 1986 in which 103 countries were participated and 128 countries in 1995.In this round many codes raised as an issue. Under this round special emphasis was placed on further reductions of tariffs and elimination of tariffs for certain products. Many codes of Tokyo Round were renegotiated, which increased a number of specific issues and this has resulted in the development of new GATT known as World Trade Organisation(WTO).Under WTO agreement, the agreements like General Agreement on Trade in Services (GATS), Trade Policies Review Mechanism (TRIM) and Trade-related intellectual property rights (TRIPs) are also included.
Scope Of GATT
The main function of GATT is to restrict member countries from imposing trade tariffs so that international trade can be controlled. To reduce trade tariff internationally is the main aim of GATT and this would help in free trade environment. The scope of GATT does not only covers tariffs, quotas, custom procedures, and state trading but it also helps in extending domestic activities such as internal taxes, subsidies, and domestic regulation and this imposes heavy tariffs on imported products. GATT had several rounds From 1947 to 1944 and these rounds had helped in several tariff reductions and agreement.
Rounds of GATT
There were eight trade rounds of negotiations, which were held under GATT. The following are the eight trade rounds. 1. The Geneva Round 2. The Annecy Round 3. The Torquay Round 4. The Geneva Round II 5. The Dillon Round 6. The Kennedy Round 7. The Tokyo Round 8. The Uruguay Round The Geneva Round The Geneva Round which was held in 1947 was the first round of trade negotiations. 23 countries participated. GATT was signed under this round. After the negotiation 45,000 tariff concession were exchanged.
It was the third Round which took place in 1950-51 in which 32 countries were participated. 8,700 tariff concession were made.
For Example:
The Dispute Settlement Body of WTO established a panel on 25th March 1998, inorder to examine the complaints against Canada's measures affecting dairy exports. United State claimed that, the Canadian government imposed export subsidies on its special milk classes, which is against the WTO agreements. The United State also said that the Canada imposed a tariff rate quota on imports of fluid Milk and Cream. As a result of this the US producers find it difficult for market access to Canadian market. New Zealand also said that Canada's export subsidies to dairy products have broken the provisions of GATT 1994 and the Agreement on Agriculture. The Dispute Settlement Body agreed in establishing a single panel for examining the complaints made by United States and New Zeland and came out with possible solution.
Conclusion
Benefits of WTO * WTO plays an important role in maintaining peace among its member countries. It avoids trade disputes among its member countries. For example: During 1930's every country raised their trade barriers, for protecting their domestic producer and retaliate against each other's barriers .As a result this led to outbreak of World War II therefore for maintaining trade peace an organisation was formed. * If there is more trade among member countries then the chances of arising trade disputes are more which can lead to serious conflicts. To settle their trade disputes, countries can seek help of WTO which plays an important role in reducing international trade tension. * A system which is based on rules is easier than those system based on power as it makes life easier for all. The WTO agreement was negotiated by all its members. Rich and poor countries have equal rights in the WTO dispute settlement procedures to challenge each other, which makes life easier for all in many ways. It results in higher bargaining power of small countries. On smaller trading partners, the powerful countries would be freer to impose their will. * Trade boosts economic growth and that economic growth means more jobs.
Disadvantages of WTO
* WTO is a member driven organization. All the decisions which are taken in the WTO are negotiated and democratic. All the rules of WTO system are agreements which results from negotiations among member government. * WTO is not a free trade. Its principle is to reduce trade barrier and allow trade to move freely. Due to low trade barrier there has been an increment in trade.WTO should be platform for free trade but instead of this it is a platform for fair trade.
Disputes
Europe and United States announced strict action against China for violating the rules of World Trade Organisation by restricting exports of essential raw materials. China restricted exports of commodities such as Silicon, Coke and Zinc for giving Chinese manufacturers an unfair advantage over their international rivals. China imposes 70% tariffs along with minimum prices, on the export range of raw materials.
The EU claims that these not only breaks WTO rules but also the promises which China had made while joining the organisation in 2001.The US claimed that in 2008 China has produced 336m tonnes of Coke but it has only exported 12m tonnes. Brussels said that manufacturers and processors in Europe were at risk, If the export flow from China was not restarted. The US and Europe announced that it would start formal Dispute resolution Consultation at the WTO because of violation of trade rules by the Chin