International and Regional

Agreements affecting Trade

World Trade Organization (WTO) is the only international organization dealing with the global rules of trade between nations. Its main function is to ensure that trade flows as smoothly, predictably and freely as possible.

The World Trade Organization came into being in 1995. One of the youngest of the international organizations, the WTO is the successor to the General Agreement on Tariffs and Trade (GATT)

established in the wake of the Second World War.

Location: Geneva, SwitzerlandEstablished:1 January 1995

Created by: Uruguay Round negotiations (1986-94) Membership: 159 countries on 2 March 2013 Budget: 196 million Swiss francs for 2011Secretariat staff: 640

Head: Roberto Azevêdo (Director-General)

Functions:• Administering WTO trade agreements• Forum for trade negotiations• Handling trade disputes• Monitoring national trade policies• Technical assistance and training for developing countries• Cooperation with other international organizations

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.

Trade in early 20th century.

Nondiscrimination“the elimination of discriminatory treatment in international trade relations”

A country to accord, immediately and unconditionally, “any advantage, favor, privilege or immunity” it grants to any product of any other country to the “like product” of

all other countries, with respect to (i) customs duties and charges levied on imports and exports or on the

international transfer of payments for imports or exports, (ii) the method of levying such duties and

charges, (iii) all rules and formalities in connection with importation and exportation, and (iv) internal taxation and regulations affecting the sale and use of imported

products.

Trade liberalization

The removal or reduction of restrictions or barriers on the free exchange of goods

between nations. This includes the removal or reduction of both tariff (duties and

surcharges) and non-tariff obstacles (like licensing rules, quotas and other

requirements).

The principlesThe trading system should be ...  without discrimination — a country should not discriminate between its trading partners (giving them equally “most-favoured-nation” or MFN status); and it should not discriminate between its own and foreign products, services or nationals (giving them “national treatment”);

The principlesThe trading system should be ...  freer — barriers coming down through negotiation;

The principlesThe trading system should be ...predictable — foreign companies, investors and governments should be confident that trade barriers (including tariffs and non-tariff barriers) should not be raised arbitrarily; tariff rates and market-opening commitments are “bound” in the WTO;

The principlesThe trading system should be ...more competitive — discouraging “unfair” practices such as export subsidies and dumping products at below cost to gain market share;

The principlesThe trading system should be ...  more beneficial for less developed countries — giving them more time to adjust, greater flexibility, and special privileges

Why ‘most-favoured’?This sounds like a contradiction. It suggests special treatment, but in the WTO it actually means non-

discrimination — treating virtually everyone equally.

In February 1997 an agreement was reached on telecommunications services, with 69 governments agreeing to wide-ranging

liberalization measures.In the same year, 40 governments successfully concluded negotiations for tariff-free trade in

information technology products, and 70 members concluded a financial services deal covering more than 95% of trade in banking,

insurance, securities and financial information.

In 2000, new talks started on agriculture and services. These have now been incorporated into Doha Development Agenda (DDA), launched at the fourth WTO Ministerial Conference in Doha,

Qatar, in November 2001.The agenda adds negotiations and other work on non-agricultural tariffs, trade and environment, WTO rules such as anti-dumping and subsidies,

investment, competition policy, trade facilitation, transparency in government procurement,

intellectual property, etc.

GATT is now the WTO’s principal rule-book for trade in goods. The Uruguay Round also

created new rules for dealing with trade in services, relevant aspects of intellectual

property, dispute settlement, and trade policy reviews. The complete set runs to some

30,000 pages consisting of about 30 agreements and separate commitments

(called schedules) made by individual members in specific areas such as lower customs duty rates and services market-

opening.

The South Asian Association for Regional Cooperation (SAARC) is in economic and geopolitical cooperation among eight member nations that are primarily located in South Asia continent. Its secretariat is headquartered in Kathmandu, Nepal.

South Asian Free Trade Area    

SAFTA was envisaged primarily as the first step towards the transition to a South Asian Free Trade Area (SAFTA) leading subsequently towards a Customs Union, Common Market and Economic Union. In 1995, the Sixteenth session of the Council of Ministers (New Delhi, 18–19 December 1995) agreed on the need to strive for the realisation of SAFTA. The Tenth SAARC Summit (Colombo, 29–31 July 1998) decided to set up a Committee of Experts (COE) to draft a comprehensive treaty framework for creating a free trade area within the region.

The SAFTA Agreement was signed on 6 January 2004 during Twelfth SAARC Summit held in Islamabad, Pakistan. The Agreement entered into force on 1 January 2006, and the Trade Liberalization Programme commenced from 1 July 2006. Under this agreement, SAARC members will bring their duties down to 20 per cent by 2009.

Association of Southeast Asian Nations ASEANEstablished on 8 August 1967ASEAN Member States:1. Brunei Darussalam2. Cambodia3. Indonesia4. Lao PDR5. Malaysia6. Myanmar7. Philippines8. Singapore9. Thailand10. Viet Nam

The ASEAN Free Trade Area (AFTA)ASEAN Member Countries have made significant progress in the lowering of intra-regional tariffs through the Common Effective Preferential Tariff (CEPT) Scheme for AFTA. More than 99 percent of the products in the CEPT Inclusion List (IL) of ASEAN-6, comprising Brunei Darussalam, Indonesia, Malaysia, the Philippines, Singapore and Thailand, have been brought down to the 0-5 percent tariff range.

The AANZFTA is a comprehensive and single-undertaking economic agreement that opens up and creates new opportunities for the 600 million peoples of ASEAN, Australia and New Zealand which have a combined economic output of USD 2.65 trillion via a platform of a more liberal, facilitative and transparent market access. The Agreement was signed on 27 February 2009 in Thailand. It entered into force on 1 January 2010.

THE EUROPEAN UNIONThe European Union (EU) is the oldest and most significant economic integration scheme, involving twenty-seven Western and Eastern European countries: Austria, Belgium, Bulgaria, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, and the United Kingdom.