WTO AND GATT

2. WORLD TRADE ORGANIZATION
World Trade Organization
The WTO was born out of the General Agreement on
Tariffs and Trade (GATT)
Headquarters : Geneva, Switzerland
Formation : 1 January 1995
Membership : 153 member countries
Budget : 163 million USD
(Approx).

3. Globalization of agriculture and WTO
Globalization (or globalisation, also mundialisation or
mundialization) is a common term for processes of
international integration arising from increasing human
connectivity and interchange of worldviews, products,
ideas, and other aspects of culture
Globalization is an attempt to abolish barriers, especially
in trade
In fact, globalization has been around longer than you
might think

4. Globalization is an elimination of barriers to
trade, communication, and cultural exchange
The theory behind globalization is that
worldwide openness will promote the inherent
wealth of all nations
Globalization is the system of interaction among
the countries of the world in order to develop the
global economy

5. Globalization refers to the integration of
economics and societies all over the world
Globalization involves technological,
economic, political, and cultural exchanges
made possible largely by advances in
communication, transportation, and
infrastructure

6. Effects of Globalization
According to economists, there are a lot of global
events connected with globalization and integration
It is easy to identify the changes brought by
globalization
 Improvement of International Trade. Because of
globalization, the number of countries where
products can be sold or purchased has increased
dramatically
Technological Progress. Because of the need to
compete and be competitive globally, governments
have upgraded their level of technology

7. Increasing Influence of Multinational
Companies. A company that has subsidiaries in
various countries is called a multinational
Often, the head office is found in the country
where the company was established
An example is a car company whose head office
is based in Japan
 This company has branches in different countries
While the head office controls the subsidiaries,
the subsidiaries decide on production

8. The subsidiaries are tasked to increase the
production and profits
They are able to do it because they have already
penetrated the local markets
The rise of multinational corporations began
after World War II
Large companies refer to the countries where their
subsidiaries reside as host countries
Globalization has a lot to do with the rise of
multinational corporations

9. •Power of the WTO, IMF, and WB. According to
experts, another effect of globalization is the
strengthening power and influence of
international institutions such as the World
Trade Organization (WTO), International
Monetary Fund (IMF), and World Bank (WB)
•Greater Mobility of Human Resources across
Countries. Globalization allows countries to source
their manpower in countries with cheap labour

10. For instance, the manpower shortages in
Taiwan, South Korea, and Malaysia provide
opportunities for labour exporting countries such
as the Philippines to bring their human resources
to those countries for employment

11. Greater Outsourcing of Business Processes to Other
Countries. China, India, and the Philippines are
tremendously benefiting from this trend of global
business outsourcing. Global companies in the US and
Europe take advantage of the cheaper labour and highly
skilled workers that countries like India and the
Philippines can offer.
7. Civil Society. An important trend in globalization is the
increasing influence and broadening scope of the global
civil society.

13. OBJECTIVES OF WTO
 The primary aim of WTO is to implement the new world trade agreement.
 To promote multilateral trade .
 To promote free trade by abolishing tariff & non-tariff barriers.
 To enhance competitiveness among all trading partners so as to benefit
consumers.
 To increase the level of production & productivity with a view to increase the level
of employment in the world.
 To expand & utilise world resources in the most optimum manner.
 To improve the level of living for the global population & speed up economic
development of the member nations.
 To take special steps for the development of poorest nations.

14. Functions oF WTO
• Implementing WTO agreements & administering the international
trade.
• Cooperating with IMF & World Bank & its associates for establishing
coordination in Global Trade Policy-Making.
• Settling trade related disputes among member nations with the help
of its Dispute Settlement
• Reviewing trade related economic policies of member countries with
help of its Trade Policy Review Body (TPRB).
• Providing technical assistance & guidance related to management of
foreign trade & fiscal policy to its member nations.
• Acting as forum for trade liberalisation.

15. Scope of WTO
• Trade in Goods.
• Trade Related Intellectual Property Rights
(TRIPs).
• Trade Related Investments Measures (TRIMs).
• General Agreement on Trade in Services.
(GATS).

16. More specifically, the WTO's main activities are:
•negotiating the reduction or elimination of obstacles to
trade (import tariffs, other barriers to trade) and agreeing
on rules governing the conduct of international trade
(e.g. antidumping, subsidies, product standards, etc.)
•administering and monitoring the application of the
WTO's agreed rules for trade in goods, trade in services,
and trade-related intellectual property rights
•monitoring and reviewing the trade policies of members,
as well as ensuring transparency of regional and bilateral
trade agreements

17. •settling disputes among members regarding the
interpretation and application of the agreements
•building capacity of developing country government
officials in international trade matters
•assisting the process of accession of some 30 countries
who are not yet members of the organization
•conducting economic research and collecting and
disseminating trade data in support of the WTO's other
main activities
•explaining to and educating the public about the WTO, its
mission and its activities.

18. Ten benefits of the WTO trading system
1. The system helps promote peace
2. Disputes are handled constructively
3. Rules make life easier for all
4. Freer trade cuts the costs of living
5. It provides more choice of products and
qualities
6. Trade raises incomes
7. Trade stimulates economic growth
8. The basic principles make life more efficient
9. Governments are shielded from lobbying
10. The system encourages good government

19. The ten misunderstandings
1. The WTO dictates policy
2. The WTO is for free trade at any cost
3.Commercial interests take priority over
development
4. and over the environment
5. and over health and safety
6. The WTO destroys jobs, worsens poverty
7. Small countries are powerless in the WTO
8. The WTO is the tool of powerful lobbies
9. Weaker countries are forced to join the WTO
10. The WTO is undemocratic

20. WTO powers
• WTO covers a much broader purview, including
subsidies, intellectual property, food safety and other
policies that were once solely the subject of national
governments.
• The WTO also has strong dispute settlement
mechanisms. As under GATT, panels weigh trade
disputes, but these panels have to adhere to a strict
time schedule.

21. It all began with trade in goods. From 1947 to 1994, GATT was the
forum for negotiating lower customs duty rates and other trade
barriers; the text of the General Agreement spelt out important
rules, particularly non-discrimination.
Since 1995, the updated GATT has become the WTO’s umbrella
agreement for trade in goods. It has annexes dealing with specific
sectors such as agriculture and textiles, and with specific issues
such as state trading, product standards, subsidies and actions
taken against dumping.
GATT

22. Banks, insurance firms, telecommunications
companies, tour operators, hotel chains and
transport companies looking to do business
abroad can now enjoy the same principles of freer
and fairer trade that originally only applied to
trade in goods.
These principles appear in the new General
Agreement on Trade in Services (GATS). WTO
members have also made individual commitments
under GATS stating which of their services sectors
they are willing to open to foreign competition,
and how open those markets are.

23. (GATT) is a multilateral agreement regulating international trade. Its purpose is the
"substantial reduction of tariffs and other trade barriers and the elimination of
preferences, on a reciprocal and mutually advantageous basis.
It was negotiated during the UN Conference on Trade and Employment and was the
outcome of the failure of negotiating governments to create the International Trade
Organization (ITO).
GATT was signed in 1947 and lasted until 1993, when it was replaced by the World
Trade Organization in 1995. The original GATT text (GATT 1947) is still in effect under
the WTO framework, subject to the modifications of GATT 1994

24. Achievements of GATT
• GATT has enjoyed a membership of over 100 countries and generated
about 85-90% of world trade.
(i) trade liberalization in industrial products (Kennedy Round)
(ii) Adopted codes on NTBs (Tokyo Round)
(iii) No world wars since 1948 (Increased trade promotes world peace)
(iv) Replaced by WTO on January 1, 1995.

25. Achievements of GATT
• GATT has enjoyed a membership of over 100 countries and generated
about 85-90% of world trade.
(i) trade liberalization in industrial products (Kennedy Round)
(ii) Adopted codes on NTBs (Tokyo Round)
(iii) No world wars since 1948 (Increased trade promotes world peace)
(iv) Replaced by WTO on January 1, 1995.

26. • To raise the standard of living.
• To ensure full employment and a large and steadily
growing volume of real income and effective demand.
• To develop the full use of the resource of the world
• To expand production and international trade.
OBJECTIVES OF GATT

27. In the textiles and clothing sector, an exception to GATT’s normal disciplines was negotiated
in the 1960s and early 1970s, leading to the Multifibre Arrangement. Even GATT’s dispute
settlement systems were causing concern.
The WTO framework ensures a “single undertaking approach” to the results of the Uruguay
Round thus, membership in the WTO entails accepting all the results of the round without
exception