World trade organization

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ISSUES & POLICIES OF WTO

In respect to developing & least developed countries

NAME : ANITA KUMARI

ROLL NO. : 12MBA05568

SEM : 4thSem

PAPER :

World Trade Organization

WORLD TRADE ORGANIZATION

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

World Trade Organization (WTO), is an organization for trade opening. It is a forum for governments to negotiate trade agreements. It is a place for them to settle trade disputes. It operates a system of trade rules. Essentially, the WTO is a place where member governments try to sort out the trade problems they face with each other.

Location: Geneva, SwitzerlandEstablished: 1 January 1995Created by: Uruguay Round negotiations (1986-94) Membership: 159 countries as on 2 March 2013 Budget: 196 million Swiss francs for 2011Secretariat staff: 640Head: Roberto Azevêdo (Director-General)

Functions:Administering WTO trade agreementsForum for trade negotiationsHandling trade disputesMonitoring national trade policiesTechnical assistance and training for developing countriesCooperation with other international organizations

10 things WTO can do

Cut living costs and raises living standards Settle disputes and reduce trade tensionsStimulate economic growth and employmentCut the cost of doing business internationallyEncourage good governanceHelp countries developGive the weak a stronger voiceSupport the environment and health

Contribute to peace and stabilityBe effective without hitting the headlines

TRADE TOPICSDeveloping countries comprise a majority of the WTO membership. They are grouped as “developing countries” and “least developed countries”.

Developing countryThere are no WTO definitions of “developed” and “developing” countries. Members announce for themselves whether they are “developed” or “developing” countries. However, other members can challenge the decision of a member to make use of provisions available to developing countries.

Advantages of “developing country”

Developing country status in the WTO brings certain rights. There are for example provisions in some WTO agreements which provide developing countries with longer transition periods before they are required to fully implement the agreement and developing countries can receive technical assistance.A WTO member announces itself as a developing country does not automatically mean that it will benefit from the unilateral preference schemes of some of the developed country members such as the Generalized System of Preferences (GSP). In practice, it is the preference giving country which decides the list of developing countries that will benefit from the preferences

Least-developed countries

Least-developed countries (LDCs) are the poorest members of the world community. They comprise about 12 per cent of the world's population but account for less than 2 per cent of world GDP and about 1 per cent of global trade in goods. Their participation in global trade in services is even less.

Among the 49 LDCs designated by the United Nations, 34 have become WTO members while another nine are negotiating to join the WTO. Some LDCs are:

Angola, Bangladesh, Madagascar, Mali, Myanmar, Nepal, Uganda, Zambia

AdvantagesLeast-developed countries

WTO members recognize that LDCs need special treatment and assistance to achieve their development objectives. WTO agreements include provisions aimed at increasing LDCs’ trade opportunities and allowing LDCs flexibility in implementing WTO rules. The WTO together with other international agencies has also established special programs to support LDCs in enhancing their participation in the global trading system.

WTO POLICIES & ISSUES

TRADE AND DEVELOPMENT

The WTO agreements recognize the link between trade and development and contain special provisions for developing countries.

At the Doha Ministerial Conference, in November 2001, Trade Ministers launched the Doha Development Agenda. With this Agenda, WTO members have placed development issues and the interests of developing countries.

In the Hong Kong Ministerial Declaration of 2005, members emphasized the central importance of development to the Doha Round. At the same time, the Aid for Trade Initiative was launched, designed to help developing countries build supply-side capacity in order to expand trade.

At the Bali Ministerial Conference in December 2013, ministers adopted a number of decisions under the developmental pillar, including those aimed at boosting least-developed countries' trade.

Special and differential treatment provisions

Several provisions in the WTO agreements relate specifically to developing and least-developed countries (LDCs). Certain of these provisions are referred to as “special and differential treatment” provisions .The latest WTO document setting out the implementation of these S&D provisions is in WT/COMTD/W/196.

Ministers in Doha, in the Decision on Implementation-Related Issues and Concerns mandated the Committee on Trade and Development to identify those special and differential provisions which are already mandatory, and to consider the implications of making mandatory those which are currently non-binding. The Committee was also asked to consider ways in which developing countries, particularly the LDCs, may be assisted to make best use of special and differential treatment.

The Bali Ministerial Conference in December 2013 established a mechanism to review and analyse the implementation of special and differential treatment provisions. The mechanism will provide members an opportunity to analyse and review all aspects of implementation of S&D provisions contained in multilateral WTO agreements, Ministerial and General Council decisions - with the possibility to make recommendations to the relevant WTO bodies.

BALI MINISTERIAL CONFERENCE IN DECEMBER 2013

BALI PACKAGE

Type : Trade agreementsContext : Doha Development Round of the World Trade OrganizationSigned : 7 December 2013Location : Nusa Dua, Bali, Indonesia

Introduction

The Bali Package is a trade agreement resulting from the Ninth Ministerial Conference of the World Trade Organization in Bali, Indonesia on 3–7 December 2013. It is aimed at lowering global trade barriers and is the first agreement reached through the WTO that is approved by all its members.The package forms part of the Doha Development Round, which started in 2001.

Provisions

The package includes provisions for lowering import tariffs and agricultural subsidies, with the intention of making it easier for developing countries to trade with the developed world in global markets. Developed countries would abolish hard import quotas on agricultural products from the developing world and instead would only be allowed to charge tariffs on amount of agricultural imports exceeding specific limits. Another important target is reforming customs bureaucracies and formalities to facilitate trade.

Developing countries in the WTO

DEVELOPING COUNTRIES IN THE WTO

Over three quarters of WTO members are developing or least-developed countries. All WTO agreements contain special provision for them, including longer time periods to implement agreements and commitments, measures to increase their trading opportunities and support to help them build the infrastructure for WTO work, handle disputes, and implement technical standards.

A WTO committee on trade and development, assisted by a sub-committee, looks at developing countries’ special needs. Its responsibility includes implementation of the agreements, technical cooperation, and the increased participation of developing countries in the global trading system

TRADE AND DEVELOPMENT

The WTO agreements recognize the link between trade and development and contain special provisions for developing countries. More than two-thirds of WTO members are classified as developing countries.

At the Doha Ministerial Conference, in November 2001, Trade Ministers launched the Doha Development Agenda. With this Agenda, WTO members have placed development issues and the interests of developing countries at the heart of the WTO’s work.

At the Bali Ministerial Conference in December 2013, ministers adopted a number of decisions under the developmental pillar, including those aimed at boosting least-developed countries' trade.

Work on special and differential provisions

The WTO Agreements contain special provisions which give developing countries special rights and which give developed countries the possibility to treat developing countries more favourably than other WTO Members. These special provisions include, for example, longer time periods for implementing Agreements and commitments or measures to increase trading opportunities for developing countries. These provisions are referred to as “special and differential treatment” provisions.

The special provisions include:

longer time periods for implementing Agreements and commitments,measures to increase trading opportunities for these countries,provisions requiring all WTO members to safeguard the trade interests of developing countries,support to help developing countries build the infrastructure for WTO work, handle disputes, and implement technical standards, and

The Bali Ministerial Conference in December 2013 established a mechanism to review and analyse the implementation of special and differential treatment provisions. The mechanism will provide members an opportunity to analyse and review all aspects of implementation of S&D provisions contained in multilateral WTO agreements, Ministerial and General Council decisions - with the possibility to make recommendations to the relevant WTO bodies.

Enabling Clause for developing countries

The Enabling Clause officially called the “Decision on Differential and More Favourable Treatment, Reciprocity and Fuller Participation of Developing Countries”.

The Enabling Clause is the WTO legal basis for the Generalized System of Preferences (GSP). Under the GSP, developed countries offer non-reciprocal preferential treatment (such as zero or low duties on imports) to products originating in developing countries. Preference-giving countries unilaterally determine which countries and which products are included in their schemes.

The Enabling Clause is also the legal basis for regional arrangements among developing countries and for the Global System of Trade Preferences (GSTP), under which a number of developing countries exchange trade concessions among themselves.

Technical assistance and training

The WTO organizes around 100 technical cooperation missions to developing countries annually. It holds on average three trade policy courses each year in Geneva for government officials. Regional seminars are held regularly in all regions of the world with a special emphasis on African countries. Training courses are also organized in Geneva for officials from countries in transition from central planning to market economies.

The WTO set up reference centres in over 100 trade ministries and regional organizations in capitals of developing countries, providing computers and internet access to enable ministry officials to keep abreast of events in the WTO in Geneva through online access to the WTO’s immense database of official documents and other material. Efforts are also being made to help countries that do not have permanent representatives in Geneva.

WTO & INDIA

India has had its way on the Bali Package at the Ninth Ministerial of the World Trade Organisation here. The draft Ministerial Decision takes care of India’s position on both food security and trade facilitation. As they do so, it would be the first major decision of the century on global trade after the WTO came into being. The draft proposes an interim mechanism to safeguard minimum support prices to farmers against WTO caps till a permanent solution is adopted.

WTO Director-General (DG) Roberto Azevedo and Ministerial Chair and Indonesian Trade Minister Gita Wirjawan held marathon meetings with U.S. Trade Representative Michael Froman and Mr. Sharma.

“India’s Ambassador and Permanent Representative to the WTO in Geneva JayantDasgupta handed over to the DG, the Bali text India had prepared. On Friday morning, the DG put up India’s proposed Bali text to the heads of delegations after a one-on-one meeting with Mr.Froman. He assured the heads of delegates that no members would be forced to adopt the final text of the Bali deal now being worked out, said official sources. “

--- THE HINDU

A range of gains for Delhi at Ministerial

Food Security Law may push India’s minimum support prices above WTO limits, but interim mechanism provides safeguards till WTO rules are corrected.Agreement on Trade Facilitation could boost India’s exports.

On December 4, 2013, Union Minister of Commerce and Industry Anand Sharma with WTO DG Roberto Azevedo at the 9th Ministerial Conference in Bali, Indonesia.

India spearheads first agreement in the ninthMinisterial held after the Doha Round.India gains global leadership by getting a crucial poor-rich country imbalance corrected on a multilateral forum.Support subsidies to poor farmers across all developing countries get safeguards against WTO rules

Least-developed countries in the WTO

LEAST-DEVELOPED COUNTRIES IN THE WTO

Least-developed countries (LDCs) are the poorest members of the world community.

The WTO Bali Ministerial Conference in December 2013 adopted several decisions in favour of LDCs, to further assist their better integration into the multilateral trading system.

DEVELOPMENT AND LDC ISSUES

Multilateral guidelines on preferential rules of origin to facilitate market access for LDC products;A decision in the area of trade in services initiating a process to help LDCs secure preferential market access for their services and service suppliersPreferential Rules of Origin for Least-Developed Countries - simplified rules for identifying origin and qualifying for preferential treatment with importing countries. Operationalization of the Waiver Concerning Preferential Treatment to Services and Service Suppliers of Least-Developed Countries - allows preferential treatment to be given to LDCs for 15 years from date of agreement adoption. Duty-Free and Quota-Free (DFQF) Market Access for Least-Developed Countries to improve their existing DFQF coverageMonitoring Mechanism on Special and Differential Treatment - consisting of meetings and other methods for monitoring special treatment given to developing countries.

Duty-free and quota-free market access for LDCs

At the December 2013 Bali Conference, Ministers will consider a draft decision that would further encourage developed-country members to improve their existing DFQF coverage for products originating from LDCs, so as to provide greater market access to LDCs. The text also encourages developing-country members, declaring themselves in a position to do so, to provide DFQF market access for products originating from LDCs, or to improve their existing DFQF coverage for such products. The draft decision instructs members to report on the implementation of this decision at the next WTO Ministerial Conference in 2015.

Draft decision on preferential rules of origin for LDCs

A draft decision on preferential rules of origin applicable to imports from least-developed countries is being submitted to Ministers at the WTO Ministerial Conference in Bali for its adoption.

The draft decision contains a set of multilateral guidelines for the rules of origin that WTO members apply to their non-reciprocal preference schemes for LDCs. For the first time, governments will have a set of multilaterally agreed guidelines, which should help make it easier for LDC exports to qualify for preferential market access. The draft decision recognizes that each country granting trade preferences to LDCs has its own method of determining rules of origin, and it invites members to draw upon the elements contained in the decision when they develop or build on their individual rules of origin arrangements applicable for LDCs.

The average non-weighted tariff applied by major trading partners to LDCs exports has fallen from 10.6% in 1997 to 6.9% in the first quarter of 2001.

For example:

Canada, effective 1 September 2000, added a further 570 tariff lines to the list of goods from LDCs eligible for duty-free treatment. About 90% of all LDC imports will now receive duty-free treatment;New Zealand, since 1 July 2001, offers duty-free and quota-free access to all imports from LDCsThe European Union, Norway and Switzerland provide duty-free, quota-free market access for all LDC exports (except arms). A transition period is in place for a few specific products.Japan in December 2000, announced its “99%-initiative on Industrial Tariffs”. Following implementation, in April 2001, the coverage of duty and quota-free treatment for LDCs industrial product exports increased from 94 to 99% and includes textile and clothing exported from LDCs;Hungary, the Czech Republic and the Slovak Republic provide duty free and quota free access to all imports from LDCs.Egypt notified tariff reductions ranging from 10% to 20% of existing applied duties for 77 products of export interest to LDCs, and provides duty free access for about 50 products. In addition, Egypt bound customs duties, with a 10% reduction for industrial products imported from LDCs.

Streamlined accession for the poorest countries

A decision to facilitate and accelerate the accession process for LDCs was formally approved by WTO members at the General Council on 25 July 2012. The decision strengthens the LDC accession guidelines adopted by members in 2002. The 2012 strengthened guidelines introduce precise flexibilities and parameters to help LDCs accede to the WTO at a pace and in a manner consistent with their development, trade and financial needs. The decision contains five key elements:

Benchmarks on goodsBenchmarks on servicesTransparency in accession negotiationsSpecial and differential treatment and transition periodsTechnical assistance.

WTO members have taken a host of initiatives to help LDCs participate more fully at the WTO. These include:

Expansion of the WTO training and policy courses;Establishment of WTO reference centres connecting LDCs’ capitals to WTO sources of information through the Internet;Establishment of a new programme to fund interns within country missions in Geneva;

LDCs' structure of commercial services by sector, 2012

Facilitating the participation of LDCs at WTO Ministerial — for example, financing LDC trade ministers’ travel and hotel expenses.

Conclusion

CONCLUSION

Much solid research has been done on the applied economics and macro political economy of trade policies in developing and less developed countries, but very little has materialized on the micro political economy of the trade policy process in these countries. This should be addressed urgently so that we can understand better why governments do not make better use of different tracks of trade policy. This would be the first step to offering advice on how the decision making process can be improved.

Though the issues & policies of WTO, comes with criticism also.The recently held World Trade Organisation (WTO) talks in Bali, non-government organisation Gene Campaign on Saturday said the outcome of the meeting was damaging for India. "The tragedy of the Bali outcome is that we have fallen into a trap. We have badly been taken for a ride in Bali," SumanSahai, chairperson, Gene Campaign, said. Gene Campaign is dedicated to protecting genetic resources, farmers' rights and food and livelihood security.

India's Food Security Act entitles 82 crore people to 5 kg of foodgrains per person a month at Rs 1-3 per kg. The country needs 62 million tonnes foodgrains a year to implement the law."Tomorrow if you want to change your food security act, you have to take permission from the WTO...It has been a disastrous negotiations from that perspective," she added.

"Facilitating trade means gaining more market access. Developed countries like the US would gain more in this. It will lead to increase in imports of agriculture products which would damage our farmers," Sahai said.

(As per an interview given to The Hindu)

BIBLIOGRAPHY

https://mc9.wto.org/system/files/documents/w10_1.pdf

http://www.theguardian.com/global-development/poverty-matters/2013/dec/06/wto-agreement-bali-helped-developing-countries-india

http://www.mission-indonesia.org/admin/upload/WTO.jpg

http://commerce.nic.in/trade/international_trade_tig_agriculture_wtoaoa.asp

http://commerce.nic.in/trade/international_trade_tig_agriculture_stateofplay_Doha_round.asp

http://commerce.nic.in/trade/international_trade_enviro_te.asp

http://wto.org/english/thewto_e/minist_e/mc9_e/brief_ldc_e.htm