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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
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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.
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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 : -
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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.
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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: -
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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
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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:-
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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.
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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.
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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.
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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
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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
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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:
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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
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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 :
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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:
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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.
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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
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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.
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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.
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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.
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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.
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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.
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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.