role of wto in international trade93

8/3/2019 Role of Wto in International Trade93

1/24

INDEX

SR.

NO

TOPIC PAGENO.

1

2

3

4

5

6

7

8

9

10

11

12

Introduction

History of General Agreements

WTO and its Principles

WTO and its Functions

WTO and its Advantages

Disadvantages

10 Common Misunderstandings about WTO

The Dispute Settlement Body

WTO Agreements

DOHA Declaration

Benefits derived by India from WTO

Recent Developments in WTO

2

3

3

5

6

8

8

11

12

16

18

21


2/24

INTRODUCTION

The World Trade Organization (WTO) is an organization that intends to supervise

and liberalizeinternational trade. The organization officially commenced on January 1, 1995

under the Marrakech Agreement, replacing the General Agreement on Tariffs and

Trade (GATT), which commenced in 1948. The organization deals with regulation of trade

between participating countries; it provides a framework for negotiating and formalizing

trade agreements, and a dispute resolution process aimed at enforcing participants' adherence

to WTO agreements which are signed by representatives of member governments and ratified

by theirparliaments. Most of the issues that the WTO focuses on derive from previous trade

negotiations, especially from the Uruguay Round (19861994).

The organization is currently endeavouring to persist with a trade negotiation called the Doha

Development Agenda (or Doha Round), which was launched in 2001 to enhance equitable

participation of poorer countries which represent a majority of the world's population.

However, the negotiation has been dogged by "disagreement between exporters of

agricultural bulk commodities and countries with large numbers of subsistence farmers on the

precise terms of a 'special safeguard measure' to protect farmers from surges in imports. At

this time, the future of the Doha Round is uncertain."

Subject to formal ratification of the three most recent members, the WTO has 157 members,

representing more than 97% of the world's population, and 26 observers, most seeking

membership. The WTO is governed by a ministerial conference, meeting every two years; a

general council, which implements the conference's policy decisions and is responsible for

day-to-day administration; and a director-general, who is appointed by the ministerial

conference. The WTO's headquarters is at the Centre William Rappard, Geneva, Switzerland.
http://en.wikipedia.org/wiki/Free_tradehttp://en.wikipedia.org/wiki/International_tradehttp://en.wikipedia.org/wiki/Marrakech_Agreementhttp://en.wikipedia.org/wiki/General_Agreement_on_Tariffs_and_Tradehttp://en.wikipedia.org/wiki/General_Agreement_on_Tariffs_and_Tradehttp://en.wikipedia.org/wiki/Parliamenthttp://en.wikipedia.org/wiki/Uruguay_Roundhttp://en.wikipedia.org/wiki/Doha_Development_Agendahttp://en.wikipedia.org/wiki/Doha_Development_Agendahttp://en.wikipedia.org/wiki/Safeguardhttp://en.wikipedia.org/wiki/World_Trade_Organization_accession_and_membership#List_of_members_and_accession_dateshttp://en.wikipedia.org/wiki/Centre_William_Rappardhttp://en.wikipedia.org/wiki/Genevahttp://en.wikipedia.org/wiki/Switzerlandhttp://en.wikipedia.org/wiki/Free_tradehttp://en.wikipedia.org/wiki/International_tradehttp://en.wikipedia.org/wiki/Marrakech_Agreementhttp://en.wikipedia.org/wiki/General_Agreement_on_Tariffs_and_Tradehttp://en.wikipedia.org/wiki/General_Agreement_on_Tariffs_and_Tradehttp://en.wikipedia.org/wiki/Parliamenthttp://en.wikipedia.org/wiki/Uruguay_Roundhttp://en.wikipedia.org/wiki/Doha_Development_Agendahttp://en.wikipedia.org/wiki/Doha_Development_Agendahttp://en.wikipedia.org/wiki/Safeguardhttp://en.wikipedia.org/wiki/World_Trade_Organization_accession_and_membership#List_of_members_and_accession_dateshttp://en.wikipedia.org/wiki/Centre_William_Rappardhttp://en.wikipedia.org/wiki/Genevahttp://en.wikipedia.org/wiki/Switzerland


3/24

HISTORY OF GENERAL AGREEMENTS ON TARIFF & TRADE

The WTO's predecessor, the General Agreement on Tariffs and Trade (GATT), was

established afterWorld War IIin the wake of other new multilateral institutions dedicated to

international economic cooperation.

The GATT was the onlymultilateral instrument governing international trade from 1945 until

the WTO was established in 1995. Despite attempts in the mid-1950s and 1960s to create

some form of institutional mechanism for international trade, the GATT continued to operate

for almost half a century as a semi-institutionalized multilateral treaty regime on a

provisional basis.

WTO AND ITS PRINCIPLES:-

1. Non-Discrimination:-

This is the first key principle of the WTO rulebook. The principle applies at two

levels. The first form of non-discrimination is referred to as most favored nation

(MFN) treatment. The second form of non-discrimination is known as national

treatment.

2. Reciprocity:-

It reflects both a desire to limit the scope offree-riding that may arise because of the

MFN rule, and a desire to obtain better access to foreign markets. A related point is

that for a nation to negotiate, it is necessary that the gain from doing so be greater

than the gain available from unilateral liberalization; reciprocal concessions intend to

ensure that such gains will materialize.

3. Binding and Enforceable Commitment : -
http://en.wikipedia.org/wiki/World_War_IIhttp://en.wikipedia.org/wiki/World_War_IIhttp://en.wikipedia.org/wiki/Multilateralismhttp://en.wikipedia.org/wiki/Multilateralismhttp://en.wikipedia.org/wiki/World_War_IIhttp://en.wikipedia.org/wiki/Multilateralism


4/24

Liberalization commitments and agreements to abide by certain rules of the game

have little value if they cannot be enforced. The tariff commitments made by WTO

members in a multilateral trade negotiation and on accession are enumerated in

schedules (lists) of concessions. These schedules establish ceiling bindings: the

member concerned cannot raise tariffs above bound levels without negotiatingcompensation with the principal suppliers of the products concerned. Once tariff

commitments are bound, it is important that there be no resort to other, nontariff,

measures that have the effect of nullifying or impairing the value of the tariff

concession.

4. Transparency:-

Transparency at both the multilateral (WTO) level and the national level is essential

to ensure ownership of commitments, reduce uncertainty, and enforce agreements.

Efforts to increase the transparency of members trade policies take up a good portion

of WTO resources. The WTO requires that all trade laws and regulations be

published.

5. Safety Valve :-

A final principle embodied in the WTO is that, in specific circumstances,

governments should be able to restrict trade. There are three types of provisions in

this connection: (a) articles allowing for the use of trade measures to attain

noneconomic objectives; (b) articles aimed at ensuring fair competition; and (c)

provisions permitting intervention in trade for economic reasons.

Category (a) includes provisions allowing for policies to protect public health or

national security and to protect industries that are seriously injured by competitionfrom imports. The underlying idea in the latter case is that governments should have

the right to step in when competition becomes so vigorous as to injure domestic

competitors. Measures in category (b) include the right to impose countervailing

duties on imports that have been subsidized and antidumping duties on imports that

have been dumped (sold at a price below that charged in the home market). Finally,

under category (c) there are provisions allowing actions to be taken in case of serious

balance of payments difficulties or if a government desires to support an infant

industry.


5/24

WTO AND ITS FUNCTIONS:-

1. Administering WTO Trade Agreements: -

The main function of the WTO is to facilitate the implementation, administration and

operation of the Multilateral Trade Agreements signed at various rounds of

GATT/WTO negotiations.

2. Reduction of Trade Barriers: -

The fundamental objective of the WTO is to remove all types of hurdles to the free

flow of international trade. It secures implementation of significant tariff cuts and also

reduction of non-tariff measures agreed in trade negotiations.

3. Settlement of International trade Disputes: -

The dispute Settlement Body provides a mechanism for the settlement of trade

disputes which could not be solved through bilateral talks. It has now been mandatory

to settle a dispute within 18 months and the verdict of the Dispute Settlement Panels

is final and binding on all the parties.

4. Cooperation with Other International organizations: -


6/24

WTO cooperates with other International institutions like the International Monetary

Fund (IMF) and the International bank for Reconstruction and Development (IBRD)

and its affiliated agencies to achieve greater coherence in global economic policy

making.

5. Forum for Trade Negotiations: -

WTO provides a forum for negotiations among its members concerning their

multilateral trade relations in matters dealt with under the agreements of the WTO. It

provides a framework for the implementation of the results of such negotiations.

6. Trade policy Review Mechanism : -

WTO acts as a watchdog of national trade policies of its member countries. The

General Council of the WTO convenes Trade Policy Review Body in order to framesuch rules, which are necessary in order to keep a close watch over the trade policies

of different member countries.

7. Consultancy services: -

In order to achieve its objective of trade liberalization, the WTO acts as a

management consultant for its member countries. It also helps underdeveloped and

developing economies to promote their external trade by providing them with

technical assistance and training.

WTO AND ITS ADVANTAGES:-

1. Helps promote peace within nations:-

Peace is partly an outcome of two of the most fundamental principle of the tradingsystem; helping trade flow smoothly and providing countries with a constructive and


7/24

fair outlet for dealing with disputes over trade issues. Peace creates international

confidence and cooperation that the WTO creates and reinforces.

2. Disputes are handled constructively:-

As trade expands in volume, in the numbers of products traded and in the number of

countries and company trading, there is a greater chance that disputes will arise. WTO

helps resolve these disputes peacefully and constructively. If this could be left to the

member states, the dispute may lead to serious conflict, but lot of trade tension is

reduced by organizations such as WTO.

3. Rules make life easier for all:-

WTO system is based on rules rather than power and this makes life easier for all

trading nations. WTO reduces some inequalities giving smaller countries more voice,

and at the same time freeing the major powers from the complexity of having to

negotiate trade agreements with each of the member states.

4. Free trade cuts the cost of living:-

Protectionism is expensive, it raises prices, and WTO lowers trade barriers through

negotiation and applies the principle of non-discrimination. The result is reduced costs

of production (because imports used in production are cheaper) and reduced prices offinished goods and services, and ultimately a lower cost of living.

5. It provides more choice of products and qualities:-

It gives consumer more choice and a broader range of qualities to choose from.

6.Trade raises income:-

Through WTO trade barriers are lowered and this increases imports and exports thus

earning the country foreign exchange thus raising the country's income.

7. Trade stimulates economic growth:-

With upward trend economic growth, jobs can be created and this can be enhanced by

WTO through careful policy making and powers of freer trade.

8. Basic principles make life more efficient:-


8/24

The basic principles make the system economically more efficient and they cut costs.

Many benefits of the trading system are as a result of essential principle at the heart of

the WTO system and they make life simpler for the enterprises directly involved in

international trade and for the producers of goods/services. Such principles include;

non-discrimination, transparency, increased certainty about trading conditions etc.together they make trading simpler, cutting company costs and increasing confidence

in the future and this in turn means more job opportunities and better goods and

services for consumers.

9. Governments are shielded from lobbying:-

WTO system shields the government from narrow interest. Government is better

placed to defend themselves against lobbying from narrow interest groups by focusing

on trade-offs that are made in the interests of everyone in the economy.

10.The system encourages good governance:-

The WTO system encourages good government. The WTO rules discourage a range

of unwise policies and the commitment made to liberalize a sector of trade becomes

difficult to reverse. These rules reduce opportunities for corruption.

DISADVANTAGES:-

1. Free trade not possible: -

Free trade favours the developed countries ignoring the plight of the developing

countries.

2. Unfavourable for developing countries: -

Some of the laws of WTO are unfavourable to the developing countries.


9/24

3. Certain clauses of WTO agreement on agriculture put restrictions on the

provision of subsidised food grains in India

10 COMMON MISUNDERSTANDINGS ABOUT WTO

Is it a dictatorial tool of the rich and powerful? Does it destroy jobs? Does it ignore the

concerns of health, the environment and development?

Emphatically it doesnt. Criticisms of the WTO are often based on fundamental

misunderstandings of the way the WTO works. The debate will probably never end. People

have different views of the pros and cons of the WTOs multilateral trading system. Indeed,

one of the most important reasons for having the system is to serve as a forum for countries tothrash out their differences on trade issues. Individuals can participate, not directly, but

through their governments. However, it is important for the debate to be based on a proper

understanding of how the system works. This booklet attempts to clear up 10 common

misunderstandings.

The ten misunderstandings are as follows:

1. The WTO dictates Policies

The WTO does not tell governments how to conduct their trade policies. Rather, its a

member-driven organization.

That means:

the rules of the WTO system are agreements resulting from negotiations

among member governments,

the rules are ratified by members parliaments, and

Decisions taken in the WTO are virtually all made by consensus among allmembers?

In other words, decisions taken in the WTO are negotiated, accountable and

democratic.

The only occasion when a WTO body can have a direct impact on a governments

policies is when a dispute is brought to the WTO and if that leads to a ruling by the

Dispute Settlement Body (which consists of all members). Normally the Dispute

Settlement Body makes a ruling by adopting the findings of a panel of experts or an

appeal report.
http://www.wto.org/english/thewto_e/whatis_e/10mis_e/10m01_e.htmhttp://www.wto.org/english/thewto_e/whatis_e/10mis_e/10m01_e.htmhttp://www.wto.org/english/thewto_e/whatis_e/10mis_e/10m01_e.htmhttp://www.wto.org/english/thewto_e/whatis_e/10mis_e/10m01_e.htmhttp://www.wto.org/english/thewto_e/whatis_e/10mis_e/10m01_e.htmhttp://www.wto.org/english/thewto_e/whatis_e/10mis_e/10m01_e.htmhttp://www.wto.org/english/thewto_e/whatis_e/10mis_e/10m01_e.htmhttp://www.wto.org/english/thewto_e/whatis_e/10mis_e/10m01_e.htmhttp://www.wto.org/english/thewto_e/whatis_e/10mis_e/10m01_e.htmhttp://www.wto.org/english/thewto_e/whatis_e/10mis_e/10m01_e.htmhttp://www.wto.org/english/thewto_e/whatis_e/10mis_e/10m01_e.htmhttp://www.wto.org/english/thewto_e/whatis_e/10mis_e/10m01_e.htmhttp://www.wto.org/english/thewto_e/whatis_e/10mis_e/10m01_e.htmhttp://www.wto.org/english/thewto_e/whatis_e/10mis_e/10m01_e.htmhttp://www.wto.org/english/thewto_e/whatis_e/10mis_e/10m01_e.htmhttp://www.wto.org/english/thewto_e/whatis_e/10mis_e/10m01_e.htmhttp://www.wto.org/english/thewto_e/whatis_e/10mis_e/10m01_e.htmhttp://www.wto.org/english/thewto_e/whatis_e/10mis_e/10m01_e.htmhttp://www.wto.org/english/thewto_e/whatis_e/10mis_e/10m01_e.htmhttp://www.wto.org/english/thewto_e/whatis_e/10mis_e/10m01_e.htmhttp://www.wto.org/english/thewto_e/whatis_e/10mis_e/10m01_e.htmhttp://www.wto.org/english/thewto_e/whatis_e/10mis_e/10m01_e.htmhttp://www.wto.org/english/thewto_e/whatis_e/10mis_e/10m01_e.htmhttp://www.wto.org/english/thewto_e/whatis_e/10mis_e/10m01_e.htmhttp://www.wto.org/english/thewto_e/whatis_e/10mis_e/10m01_e.htmhttp://www.wto.org/english/thewto_e/whatis_e/10mis_e/10m01_e.htmhttp://www.wto.org/english/thewto_e/whatis_e/10mis_e/10m01_e.htmhttp://www.wto.org/english/thewto_e/whatis_e/10mis_e/10m01_e.htmhttp://www.wto.org/english/thewto_e/whatis_e/10mis_e/10m01_e.htmhttp://www.wto.org/english/thewto_e/whatis_e/10mis_e/10m01_e.htm


10/24

2. The WTO is for free trade at any cost

Yes, one of the principles of the WTO system is for countries to lower their trade

barriers and to allow trade to flow more freely. After all, countries benefit from the

increased trade those results from lower trade barriers.

But just how low those barriers should go is something member countries bargain

with each other. Their negotiating positions depend on how ready they feel they are to

lower the barriers, and on what they want to obtain from other members in return.

One countrys commitments become another countrys rights, and vice versa.

3. Commercial interests take priority over development

Underlying the WTOs trading system is the fact that freer trade boosts economic

growth and supports development. In that sense, commerce and development are good

for each other.

At the same time, whether or not developing countries gain enough from the system is

a subject of continuing debate in the WTO. But that does not mean to say the system

offers nothing for these countries. Far from it. The agreements include many

important provisions that specifically take developing countries interests into

account.

Developing countries are allowed more time to apply numerous provisions of the

WTO agreements. Least-developed countries receive special treatment, including

exemption from many provisions.
http://www.wto.org/english/thewto_e/whatis_e/10mis_e/10m02_e.htmhttp://www.wto.org/english/thewto_e/whatis_e/10mis_e/10m02_e.htm


11/24

4. In WTO, commercial interests take priority over environmental

protection

Many provisions take environmental concerns specifically into account.

The preamble of the Marrakesh Agreement Establishing the World Trade

Organization includes among its objectives, optimal use of the worlds resources,

sustainable development and environmental protection.

5. The WTO destroys jobs, worsens poverty

The WTO does NOT destroy jobs or widen the gap between rich and poor

The accusation is inaccurate and simplistic. Trade can be a powerful force for creating jobs and reducing poverty. Often it does just that. Sometimes adjustments are

necessary to deal with job losses, and here the picture is complicated. In any case, the

alternative of protectionism is not the solution.

6. In WTO, commercial interests take priority over health and safety

Key clauses in the agreements (such as GATT Art. 20) specifically allow

governments to take actions to protect human, animal or plant life or health. But these

actions are disciplined, for example to prevent them being used as an excuse for

protecting domestic producers protectionism in disguise.

7. Weaker countries are forced to join the WTO
http://www.wto.org/english/thewto_e/whatis_e/10mis_e/10m06_e.htmhttp://www.wto.org/english/thewto_e/whatis_e/10mis_e/10m09_e.htmhttp://www.wto.org/english/thewto_e/whatis_e/10mis_e/10m06_e.htmhttp://www.wto.org/english/thewto_e/whatis_e/10mis_e/10m09_e.htm


12/24

In recent years, developing countries have become considerably more active in WTO

negotiations, submitting an unprecedented number of proposals in the agriculture

talks, and working actively on the ministerial declarations and decisions issued in

Doha, Qatar, in November 2001. They expressed satisfaction with the process leading

to the Doha declarations. All of this bears testimony to their confidence in the system.

THE DISPUTE SETTLEMENT BODY

The WTOs procedure for resolving trade quarrels under the Dispute Settlement

Understanding is vital for enforcing the rules and therefore for ensuring that trade flows

smoothly.

A dispute arises when a member government believes another member government is

violating an agreement or a commitment that it has made in the WTO. The authors of these

agreements are the member governments themselves the agreements are the outcome of

negotiations among members. Ultimate responsibility for settling disputes also lies with

member governments, through the Dispute Settlement Body.

Made up of all the member governments, usually represented by ambassadors or equivalent.

The current chairperson is H.E. Mrs. Elin steb JOHANSEN (Norway).

Appellate Body

The Appellate Body was established in 1995 under Article 17 of the Understanding on Rules

and Procedures Governing the Settlement of Disputes (DSU). It is a standing body of seven

persons that hears appeals from reports issued by panels in disputes brought by WTO

Members. The Appellate Body can uphold, modify or reverse the legal findings and

conclusions of a panel, and Appellate Body Reports, once adopted by the Dispute Settlement
http://www.wto.org/english/docs_e/legal_e/28-dsu_e.htm#17http://www.wto.org/english/docs_e/legal_e/28-dsu_e.htm#17


13/24

Body (DSB), must be accepted by the parties to the dispute. The Appellate Body has its seat

in Geneva, Switzerland.

WTO AGREEMENT:-

The VIIIth and the latest round of Multilateral Trade Negotiations is known as Uruguay

Round because it was held in Patadel Este in Uruguay in September 1986. Because of the

complexities of the issues involved and conflict of interests among the participating countries

the Urugrary Round could not be concluded in December 1990 as it was originally scheduled.

This round concluded in 1993.

The traditional concerns of the GATT were limited to international trade in goods. The

Urugrary Round however went much beyond goods to services, technology, investment and

information. The major highlights of the Uruguay Round are:

a)Agreement on Agriculture:

The WTO agreement on agriculture provides for a framework for the long term

reform of agricultural trade and domestic policies over the years to come, with the

objective of introducing increased market orientation in agricultural trade. It provides

for:
http://www.wto.org/english/tratop_e/dispu_e/dispu_e.htm#dsbhttp://www.wto.org/english/tratop_e/dispu_e/dispu_e.htm#dsb


14/24

Reduction of domestic subsidies;

Reduction in export subsidies;

Tariff reduction, and

Bindings to provide market access.

As per this agreement, tariffs on agricultural products are to be reduced on an average

by 36 percent in the case of developed countries and 24 percent in the case of

developing countries. The reductions were required to be undertaken over 6 years in

the case of developed countries and 10 years in the case of developing countries. The

least developed countries were not required to make any commitment for reduction.

b) Agreement on in Textile and Clothing:

Multi-Fibre Arrangement (MFA), also known as the agreement on textile and clothing

(ATC) govern the world trade in textile and garments since 1974. It was introduced as

a short term major intended to allow developed countries to adjust to imports from the

developing world. Developing countries have a natural advantage in textile

production because it is labour intensive and they have low labour cost.

The WTO agreement on Trade in Textile and Clothing provides for facing out the import

quotas on textile and clothing over a span of 10 years, i.e by the end of the trasition period on

January 1, 2005. As a result, quotas on textile and clothing have now been abolished.

c) Agreement on TRIMs:

TRIMs agreement calls for introducing national treatment of foreign investment and

removal of quantitative restrictions. It identifies five investments majors which are

inconsistent with the GATT provisions. These majors include:

An obligation to use local inputs

Production for exports as a condition to import

Balance foreign exchange outgo on imports with foreign exchange earnings

through exports


15/24

Not to export more than a specified proportion of the local production ; and

Dividend balancing requirements.

The agreement requires all WTO members to notify the TRIMs that are inconsistent

with the provisions of the agreement, and to eliminate them after the expiry of the

transition provided in the Agreement. Transition periods of two years in the case of

developed countries, five years in the case of developing countries and seven years in

the case of LDCs, from the date of entry into force of the Agreement into ( i.e 1 st

January 1995) are provided in the Agreement.

d)Agreement on TRIPs :

TRIPs agreement sets out the minimum standards of protection to be adopted by the

parties in respect of the seven areas of intellectual property rights, viz., copyrights,

trademarks, geographical indications, industrial designs, patents, layout designs of

integrated circuits and trade secret.

The TRIPs is based on the basic principles of the other WTO agreements, like non-discrimination clauses National Treatment and Most Favoured Nation Treatment,

and are intended to promote Technological Innovation and Transfer and

dissemination of technology. Part IV of the TRIPs agreement provides an

institutionalized multilateral means for theprevention of disputes relating to IPRs

and settlement thereof. It aimed that preventing unilateral actions.

All the members shall give effect to the provisions of this agreement. However, they

are not obliged to implement in their law more extensive production than is requiredby this agreement and they shall be free to determine the appropriate method of

implementing the provisions of this agreement within their own legal system and

practice. The transition period of five years has been given to all developing countries

to give effect to the provisions of the TRIPs agreement.

e)Agreement on Services :


16/24

For the first time, trade in services like banking, insurance, travel, maritime

transportation, mobility of labour etc. was brought within the ambit of negotiations in

the Uruguay Round. However, developing countries were very apprehensive about the

proposal to liberalize trade in services.

The General Agreement on Trade in Service (GATS) provides a multilateral

framework of principles and services which should govern trade in services under

conditions of transparency and progressive liberalization. It spells out certain

obligations of the other member nations with regard to trade in services, maintenance

of transparency and also a commitment for liberalization in general terms.

The agreement establishes the basis for progressive liberalization in the services area

through successive rounds of negotiations and the development of national schedules.

It also permits after a period of three years, parties to withdraw or modify

commitments made in their schedules. Where commitments are modified or

withdrawn, negotiations should be undertaken with interested parties to agree on

compensatory adjustments. Where agreement cannot be reached, compensation would

be decided by arbitration.

However, the difference of opinions between the U.S. and European Community (EC)

on this issue left the service sector largely unaffected.

f) Agreement on Subsidies and Countervailing Measure:

The agreement on subsidies and countervailing does two things:

It disciplines the use of subsidies; and

It regulates the action countries can take to counter the effects of subsidies.

As per the provisions of this agreement:


17/24

A country can use the WTOs Dispute Settlement Body to seek the

withdrawal of the subsidy or the removal of its adverse effects.

The country can launch its own investigation and ultimately charge extra duty

( known as countervailing duty ) on subsidized imports that are found to be

hurting domestic procedures.

The agreement introduces the concept of a specific subsidy, i.e a subsidy available

only to a enterprise, industry, group of enterprises, group of industries in the country

that gives the subsidy. The disciplines set out in the agreement only apply to specific

subsidy, both domestic and export subsidies.

g) Dispute Settlement Body:

A settlement of disputes under GATT was a time consuming and unending process.

There was ample scope for procedural delays. At the same time there were chances of

rejection of the penal reports by the offending party. The dispute settlement body

(DSB) setup under WTO seeks to plugs these loopholes and thus to provide security

and predictability to the multilateral trading system. Now, it is mandatory to settle a

dispute within 18 months and the verdict of the penal will be final and binding on all

parties concern.

If the losing party fails to restore the conformity of its loss within the reasonable

period of time, the dispute settlement body may, on an exceptional basis, authorize a

successful complainant to take retaliatory measures to induce action on the part of thelosing party.


18/24

DOHA DECLARATION

The WTO Ministerial Conference is a meeting of the organisations highest level decision

making body. The fourth WTO Ministerial Conference was carried out in Doha, Qatar in

November 2001 and the outcomes of the meeting are referred to as Doha Declaration. Its

objective ids to lower trade barriers around the world, which allows countries to increase,

trade globally. As of 2008, talks have stalled over a divide on major issues, such as

agriculture, industrial tariffs and non-tariff barriers, services, and trade remedies. The most

significant differences are between developed nations led by European Union, the United

States (USA), and Japan and the major developing countries led and represented mainly by

China, Brazil, India, South Korea and South Africa. There is also considerable contention

against and between the EU and USA over their maintenance of agricultural subsidies, seen

to operate effectively as trade barriers.

The Doha round began with ministerial level meeting in Doha, Qatar in 2011. Subsequent

ministerial meetings took place in Cancun, Mexico (2003), and Hong Kong (2005). Related

negotiations took place in Geneva, Switzerland (2004, 2006, and 2008), Paris, France (2005)

and Potsdam, Germany (2007).

The most recent round of negotiations, 23-29 July 2008, broke down after failing to reach a

compromise on agricultural imports rules. Nevertheless, intense negotiations, mostly between

the USA, China, and India, were held in the end of 2008 in order to agree on negotiation

modalities. However, these negotiations did not result in any progress.

Doha Ministerial Declaration

The Doha Ministerial Declaration mandate for agriculture calls for comprehensive

negotiations aimed at substantial improvements in Market access, reduction of , with a view


19/24

to phasing out , all forms of export subsidies and substantial reductions in trade distorting

domestic support. These issues, Domestic support, export subsidies and market access, have

become to be known as the three pillars of agricultural negotiations. The declaration also

provides that special and differential treatment for developing countries would be an integral

part of all elements of the negotiations. The Declaration took note of non-trade concernsreflected in negotiating proposals of various member countries and confirmed that they would

be taken into account in the negotiations. March 31, 2003 was set as the deadline for reaching

agreement on modalities for achieving the mandated objectives, but the deadline was missed.

Intellectual Property Declaration

The Doha Declaration on Public Health sought to alleviate developing country dissatisfaction

with aspects of TRIPs regime. It delayed the implementation of patent system provisions for

pharmaceutical products for least developed countries (LDC) until 2016. The declaration

committed member states to interpret and implement the agreement to support public health

and to promote access to medicines for all. The Declaration recognised certain flexibilities in

the TRIPs agreement to allow each member to grant compulsory licenses for pharmaceuticals

and to determine what constitutes a national emergency, expressly including public health

emergencies such as HIV/ AIDS, malaria and other epidemics.

Chinas Accession to the WTO

The conference also approved the accession of China to the WTO on November 10.

Current progress

Several countries have called for negotiations to start again. Brazil and Pascal Lamy have led

in progress. A mini ministerial meeting held in India o September 3 rd and 4th pledged to

complete the round by the end of G20 summit of world leaders in London in 2009 included a

pledge to complete the Doha Round.


20/24

BENEFITS DERIVED BY INDIA FROM THE WTO

1. Increased competition

History is littered with examples of trade disputes turning into war. One of the most

vivid is the trade war of the 1930s when countries competed to raise trade barriers in

order to protect domestic producers and retaliate against each others barriers. This

worsened the Great Depression and eventually played a part in the outbreak of World

War 2.

Two developments immediately after the Second World War helped to avoid a repeat

of the pre-war trade tensions. India also benefitted from this situation cause of which

competition increased and monopoly started to fade away.

2. Disputes settlement

There could be a down side to trade liberalization and expansion. More trade means

more possibilities for disputes to arise. Left to themselves, those disputes could leadto serious conflict. But in reality, a lot of international trade tension is reduced

because countries can turn to organizations, in particular the WTO, to settle their trade

disputes.

Indias foreign relations also started to get better especially with Pakistan and China.

India is also part of many trade blocs like SAARC, SAFTA, etc.


21/24

3. Increased standard of living

Protectionism is expensive: it raises prices. The WTOs global system lowers trade

barriers through negotiation and applies the principle of non-discrimination. The

result is reduced costs of production (because imports used in production are cheaper)

and reduced prices of finished goods and services, and ultimately a lower cost of

living was achieved by India, not only that as the competition increased from across

the borders the prices of local commodities started to reduce drastically though now

due to recession the conditions are bit different

4. More choices

Imports allow us more choice both more goods and services to choose from, and a

wider range of qualities. Even the quality of locally-produced goods has improved

because of the competition from imports.

The wider choice isnt simply a question of consumers buying foreign finished

products. Imports are used as materials, components and equipment for local

production.

This has expanded the range of final products and services that are made by domestic

producers in India, and it has increased the range of technologies they are being used.

Though India can produce mobiles, it exports the major part of it and even gets a wide

variety of it from Nokia, Sony, Samsung, etc and the cost of producing quality phones

is far more than importing it. Only Spice phones are produced in India, for example.

5. Economic growth

This is a difficult subject to tackle in simple terms. There is strong evidence that trade

boosts economic growth, and that economic growth means more jobs, which is also

the same case in India where the GDP has increased and during hard times of

recession India and China were the only two countries going through development. It

is also true that some jobs are lost even when trade is expanding which has been seen

in India through mill closures. But a reliable analysis of this poses at least two

problems.


22/24

First, there are other factors at play. For example, technological advance has

also had a strong impact on employment and productivity, benefiting some

jobs, hurting others.

Second, while trade clearly boosts national income (and prosperity), this is not

always translated into new employment for workers who lost their jobs as a

result of competition from imports

6. The system encouraged good government

Under WTO rules, once a commitment has been made to liberalize a sector of trade, it

is difficult to reverse. For businesses, that means greater certainty and clarity about

trading conditions. For governments it can often mean good discipline. In India thishas encouraged a better government and reduced corruption

The rules include commitments not to backslide into unwise policies. Protectionism in

general is unwise because of the damage it causes domestically and internationally, as

we have already seen.

Particular types of trade barriers cause additional damage because they provide

opportunities for corruption and other forms of bad government.

One kind of trade barrier that the WTOs rules try to tackle in most countries

including India is the quota, for example restricting imports or exports to no more

than a specific amount each year.

Because quotas limit supply, they artificially raise prices, creating abnormally large

profits (economists talk about quota rent). That profit can be used to influence

policies because more money is available for lobbying.

7. Development of aids for trade

Aid for Trade are sectors which aims to help the actual process of trading which

includes transportation , warehousing, packaging, information system, etc. WTO has

helped in the growth of Aids for Trade particularly least-developed countries.

Developing their trade-related skills and infrastructure that is needed to implement

international trade. WTO has initiated an Aid-for-Trade Work Programme of

which India is also a beneficiary. The success of the initiative depends on creating

closer cooperation in national capitals between trades, finance and development

officials of WTO member governments. This needs to be matched by close

cooperation at the international and regional level among intergovernmentalorganisations with core responsibilities in these areas and their member governments.


23/24

8. Sustainable development

WTO has not only brought about a growth in GDP of India it has brought a proper

sustained development in India which includes development of Economy,Environment and People

WTO AND ITS RECENT DEVELOPMENT:-

The recent mini-ministerial meetings in New Delhi and Geneva to break the deadlock and

facilitate negotiations towards Doha Development Agenda were concluded without any

statement but no progress. There are still diverse interests among members of the WTOwhich blocked the possibilities of fresh negotiations on the Doha Agenda. This is made more

complicated by the International Financial crisis.

From a general orientation there is slow down of the economy in most developed countries

which resulted in slowing down of international trade. The outcome may be seen as lack of

credit and finance for traders and priority funding for others like food and other essential

commodities which come down to consumers with high prices. Whereas, both developing

and developed countries do face this problem but the risks are always to be taken by

developing countries.


24/24

On the relationship between the WTO regime and the financial crisis each reinforces each

other. It is a common knowledge that countries that liberalise financial services as under

GATs and FTAs are more susceptible to deeper And negative impact of financial crisis to

many sectors, especially in developing countries agriculture.

Indeed, more crises is expected on the agricultural sector of the developing countries when

reform of financial services would push banks into speculative and global money exchanges

rather than finance small farmers or generally provide services in the rural areas.

On this term what is needed is a Second Reform of the financial system to reduce the broad

liberalization and deregulation of the financial services and capital movements which came

through the GATs and FTAs.

However, WTO prevents regulation measures which most developed countries are now

pursuing to revive the global economy. That is why there are arguments that WTO is not

going to be useful in tackling the financial crisis.

The Doha Agenda in particular would be disastrous to put in place today because it could

only aggravate the economic, social, and financial problem facing both the development and

the developing countries.

In reality the Doha Round means further liberalization and derulation of all kind of financial

service providers which would contradict efforts to regulate the financial system to get out of

the crisis.

role of wto in international trade93

Documents