The WTO: Basic Structure and Trade Rounds

Amir Ullah Khan India Development Foundation (29 March 2005)

Training Modules on WTO-related issues for government officials in the SAARC region

A Free Economy
Perfect Competition Free entry Free exit No barriers to trade Perfect information MFN status National Treatment

Members
Number of countries 200 150 100 50 0 1947 1949 1951 1956 60-61 64-67 73-79 86-94 94-04 23 13 38 26 26 62 102

144

148

Year

Place

Name

Negotiations on

Participati ng countri es 23 13 38 26 26

1947 1949 1951 1956 196061 196467 197379 198694

Geneva Annecy Torquay Geneva Geneva Dillon Round Kennedy Round Tokyo Round Uruguay Round

Tariffs Tariffs Tariffs Tariffs Tariffs

Geneva

Tariffs, anti-dumping

62

Geneva

Tariffs, non-tariff measures, framework 102 agreements Tariffs, non-tariff barriers, agriculture, 123 textiles and garments, natural resource based products, tropical products, GATT articles, Tokyo Round codes, antidumping, subsidies, TRIPs, TRIMs, dispute settlement, services

Geneva, launched in Uruguay

Thematic areas
Market access - Tariffs, non-tariff barriers, textiles and garments, agriculture, tropical products and natural-resource based products. Rules of Trade - Subsidies and countervailing duties, anti-dumping, safeguards, MTN agreements and arrangements, dispute resolution and FOGS. New areas Agriculture, TRIMS, TRIPS and Services.

Three organisations
Three sub-organizations General Council in Goods. General Council in Services Intellectual Property Rights Organization.

Market Access
Quantitative Restrictions

Tariff Protection Commitment to cut tariffs by 30% MFN & National Treatment

Dumping
Against predatory pricing Imported product is dumped Causing material injury Causal link between the two Not applicable if it is less than 3% of imports or collective imports are less than 7% imports

Intellectual Property Rights

IPRs protect property produced using human creativity and thought. All forms of IPRs are intangible rights.

TRIPS
The TRIPS agreement protects Patents. Copyrights. Trademarks. Industrial design. Know-how. Layout designs of ICs Geographical indicators.

TRIMS
Measures on investment that distort trade flows. Local content requirements and Export commitments for foreign direct investments (FDI). A country is free to exclude certain sectors from FDI inflows. Also have equity participation limits for FDI.

Safeguards

Safeguards temporary deviations permitted if a sudden import surge hurts domestic industry. Must be imposed on MFN basis across all countries. A safeguards measure cannot normally continue for more than four years. If safeguards are imposed, trading partners must be compensated.

New Issues
Trade & Environment Trade & Competition Trade & Investment Trade Facilitation Global Electronic Commerce

Static Benefits
Trade Creation Domestic producers in some country suffer, customers gain. Trade diversion member countries import less from nonmembers.

Dynamic gains
Complementation Intensified competition Specialization and product differentiation Open borders Boost to reforms

The Problems
Training Managerial and skill Market access Finance Technology Cost-cutting and environmental

The Financing Issues

Relationship banking or branch banking versus a centralized portfolio approach Risk analysis Credit scoring or rating Ability of SMEs to bear risk

Some Possible Solutions

Information and disclosure Cluster Other intermediaries Focus on risk trading --- the moneylender

The Sinn Solution

Hans-Werner Sinn (2003) - selection principle: Governments should refrain from interfering where markets function well, and intervene optimally to correct market failures where these exist, either at the national or supranational level, and if necessary through intergovernmental cooperation. The selection principle, while covering the economic bases, also works when applied to the social issues that plague developing nations. It is through gradualism that the harms of poverty and inequality can be minimized as liberalization progresses. A brutish application of liberalization principles can have disastrous implications for the quality of life enjoyed by the most vulnerable. Policy measures that might mitigate putative national welfare losses from globalization include appropriate governance, transparency, optimal regulation of labor, product and financial markets, institutional safeguards, social safety nets, and adjustment assistance.

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THANK YOU
akhan@idfresearch.org