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LOGO World Trade Organization

Alok Singh
Ambesh Kumar Srivastava
Why International Trade?
Liberalization in International economics had made international trade
more complicated. In the 90’s there had seen enormous change in the market
structure. Previously to became competitive in the international market
companies have to get competitive in their national market. But now the whole
scenario had changed.

What were the changes in the 90’s?

v Crude
v Establishment of W.T.O
v Emergence of Multi-Nationals
v Removal of Quantity restrictions
v Boom in Information Technology

These were some major changes that come into the global trade
What is W.T.O
In common understanding
“World Trade Organization (WTO) is a body which deals with
the rules of trade between nations at a global or near-global level”. But it
is beyond it

“What do you expect the table to do? People sit round the table
and negotiate”. And this is the main agenda of W.T.O.

Essentially, the WTO is a place where member governments go, to try

to sort out the trade problems they face with each other. The first step is to
talk. The WTO was born out of negotiations, and everything the WTO does is
the negotiation.
At its heart are the WTO agreements, negotiated and signed by the
bulk of the world’s trading nations. These documents provide the legal
ground-rules for international commerce. They are essentially contracts,
binding governments to keep their trade policies within agreed limits.
How W.T.O Born?
Immediately after the Second World War,
Ø Countries came together to try and prevent such wars taking place in the future
Ø It was felt that one of the causes of the war was the constant battles countries
were fighting to protect and expand their foreign trade
Ø Countries competed with each to raise trade barriers in order to protect
domestic producers, and to retaliate against other country’s barriers.
Ø These barriers worsened the Great Depression of the 1930s which was one of
the factors that led to the Second World War.
After that there was a notion to form a International Trade
Organization(ITO) by joining two “Bretton Woods” institutions, the World
Bank and the International Monetary Fund.
Over 50 countries participated in negotiations to create an
International Trade Organization (ITO) as a specialized agency of the United
Nations at a UN Conference on Trade and Employment in Havana, Cuba in
Thought the ITO never took off, it led to the signing of a provisional
agreement by 23 countries in 1948 called the General Agreement on Tariffs
and Trade (GATT).
From 1948 to 1994, the General Agreement on Tariffs and Trade (GATT)
provided the rules for much of world trade and presided over periods that saw some of the
highest growth rates in international commerce. It seemed well-established, but
throughout those 47 years, it was a provisional agreement and organization.
This General Agreement give rise to an unofficial international organization,
also called GATT, which provided a format for a further several rounds of negotiations.
Till 1994 this was the forum for negotiating lower customs duty rates and reducing other
trade barriers. These multilateral negotiations are known as “trade rounds”.
The longest GATT series of negotiations is known as the Uruguay Round which
took place from 1986 to 1994. This round lead to the creation of the WTO, which
replaced the unofficial GATT organisation.
Principles of W.T.O
The WTO agreements are lengthy and complex because they are legal
texts covering a wide range of activities. They deal with: agriculture, textiles
and clothing, banking, telecommunications, government purchases, industrial
standards and product safety, food sanitation regulations, intellectual property,
and much more. But the basic principals are as below

3) Trade without discrimination

v Most-favoured-nation :(MFN) clause(treating other people equally)
v National treatment :(Treating foreigners and locals equally)
2) Freer trade: gradually, through negotiation
Lowering trade barriers is one of the most obvious means of
encouraging trade. The barriers concerned include customs duties (or tariffs)
and measures such as import bans or quotas that restrict quantities selectively.
3) Predictability: through binding and transparency(stability of trade)
4) Promoting fair competition
5) Encouraging development and economic reform
Composition of W.T.O.
In a nutshell
The basic structure of the WTO agreements: how the six main areas
fit together the umbrella WTO Agreement, goods, services, intellectual
property, disputes and trade policy reviews.
The Agreements (Annex 1a)
Multilateral agreement on trade and goods:
v General agreements on tariffs and trade
v Agreement on agriculture
v Sanitary and Phyto-Sanitary (SPS) Agreement
v Textile and clothing
v Agreement on Technical Barriers to Trade
v Trade Related Aspects of Investment Measures(TRIM’S)
v Anti-dumping
v Customs Valuation
v Agreement on Pre-shipment Inspection
v Agreement on Rules of Origin
v Agreement on Subsidies and Countervailing Measures
v Agreement on Safeguards
v General Agreement on Trade in Services(GATS)
v Cross border supply(e.g. international telephonic calls)
v Consumption abroad(e.g. tourism)
v Commercial presence(e.g. foreign banks)
v Presence of natural person(e.g. fashion models or consultants)
v Agreement on Trade Related Aspects of Intellectual Property Rights(TRIPS)
Ø Copyright
Ø Trademarks
Ø Industrial designs
Ø Patents
Ø Integrated circuits layout designs
Ø Undisclosed information and trade secrets
Ø Curbing anti-competitive licensing contracts
v Annex 2 Dispute Settlement Understanding
“The priority is to settle disputes, not to pass judgment”

v Annex 3 Trade Policy Review Mechanism

v Annex 4 Plurilateral Trade Agreements

– Trade in civil aircraft
– Government procurement
– Dairy products
– Bovine meat
How will it help the members?
As we have seen how and in which way W.T.O functions
but are the policies are beneficial for the member countries let us
have a look on the benefits of W.T.O. to member countries:-

v Security of access
v Stability of access
v Stability of investment
v Wider choice
v Profits to landlocked countries
v Right of compensation
Thank you