WTO

1. Lecture No. 17
World Trade Organization,
Bilateral and Regional Trade
Agreements

2. General Agreement
on Tariffs and Trade
(GATT)

3. GATT
“General Agreement on Tariffs and Trade (GATT) A
World organization established in 1947 to work for
freer trade on a multilateral basis, the GATT was more
of a negotiating framework than an administrative
institution. It became WTO in 1995”. (Joshua.p.264)

4. Aims and Objectives-GATT
 To follow unconditionally most favoured nation (MFN)
principles
 To carry on trade on the principle on non-discrimination,
reciprocity and transparency
 To grant protection to domestic industry through tariffs only.
 To liberalize tariffs and non-tariff measures through
multilateral negotiations

5. Most Favoured Nation
“A Principle by which one state, by granting
another state MFN status, promises to give it
the same treatment given to the first state’s
most-favoured trading partner”. (Joshua.p.264)

6. GATT, MFN
Principle
• Non discrimination
• Concession granted by one member should extend to all members.
• reduction or increase in trade barriers will be for all.
• Trade would have to be based on reciprocity.
• Non tariff barriers (NTBs) such as quantitative restrictions, were to be
prohibited.
• States confine themselves to tariffs operated by price rather than volume.

7. Activities-GATT
There were two activities of
GATT
 Conference Diplomacy
 Dispute settlement

8. Conference
Diplomacy:
Important
Rounds of
GATT
 Kennedy Rounds-1960s
It is called Kennedy Round because started during the President John Kennedy, it
paid special attention to the growing role of European integration, which the
United States found somewhat threatening.
 Tokyo Rounds-1970s
This round adjusted rules of new conditions of world interdependence when, for
instance, OPEC raised oil prices and Japan began to dominate the automobile
export business.
 Uruguay Rounds-1986
The participant said GATT be renamed the “General Agreement to Talk and Talk”,
a successful conclusion to the round would add more than $100 billion to the
world economy annually. During this round they agreed to set up WTO. Besides
US also forced European state to reduce subsidies US somewhat gained its
objective, France won the right to protect its film industry against US films.

9. Important Provisions of the Uruguay
Rounds of Talks
 Rules to protect intellectual poverty rights of entrepreneurs, entertainment,
industries, and software produces
 Lower tariff and non tariff barriers for manufactured products and other
goods
 formation of new competition in agriculture
 full participation by the developing countries in global trading system
 More effective rules on anti-dumping, subsidies, and import safeguards
 a more effective dispute settlement process
 Creation of World Trade Organization to implement this agreement

10. Criticism
on
GATT
 Every developed country followed such agricultural trade policies which were inconsistent with the GATT
rules.
 Developed countries developed new techniques of trade restrictions such as quota, subsidies, voluntary
export restraints.
 Developed countries concluded bilateral, discriminatory and restriction outside of the GATT rules.
 GATT rules on the subsidies were not clear, or were kept deliberately ambiguous.

11. World Trade
Organization

12. WTO
“An organization begun in 1995 that replaced the
GATT and expanded its traditional focus on
manufactured goods. The WTO created monitoring
and enforcement mechanism”. (Joshua.p.283)

13. WTO and
Third
World
Countries
However, the fact is that international free trade doesn’t increase over all world economic growth. Rather, it
increases the economic growth of the developed countries at the cost of Third world countries.
 The third world countries being unable to produce manufactured goods will not be able to compete with
the developed countries which produce finished goods.
 The result of WTO supervision of the agreement of free trade will increase the market, for the developed
countries and in this process the under-developed countries
 And in this process the imported goods from industrial nations thereby destroying domestic manufacturers.
 WTO treaty would add more than 200 billion dollars in the world income, 174 billion dollar out of them
would go the developed countries.

14. Bilateral, Regional
Agreements

15. NAFTA
The United State, Canada, and Mexico singed
the North America Free Trade Agreement
(NAFTA) in 1994, following a US Canadian
(CUFTA-1988) free trade agreement in 1998. In
NAFTA’s first decade. US imports from both
Mexico and Canada more than doubled, then
fell somewhat. (USMCA), HQ: Washington DC
Video: https://www.youtube.com/watch?v=5cwY7fHNnrM

16. NAFTA

17. FTAA
Politicians in North and South America have long
spoken of creating a single free trade area in the
Western Hemisphere, from Alaska to Argentina-the Free
Trade Area of the Americas (FTAA). To empower him to
do so, President Clinton asked congress in 1997 to
reinstate fast-track legislation. But democrats in
Congress defeated the measure, demanding that free
trade agreement include requirements for labour and
environment standards for other countries.

18. South East Asia Map

19. ASEAN-1967
In 2007, the ten Association of South East Asia Nations
countries met with China, Japan, India, Australia, and New
Zealand to begin negotiation an East Asian free trade area.
The group, unlike some other Asia Pacific IGOs, doesn’t
include the United Sates, but it does include half the world’s
population and some of its most dynamic economies. In
2010, a free trade area went into effect among these
countries. The ASEAN-China FTA is the world’s third largest
free trade area, after the EU and NAFTA.

20. T-TIP
EU and US officials are currently
negotiating the Transatlantic Trade and
Investment (T-TIP), which would lower
tariffs and lower barriers to investment
between the US and the EU.

22. CIS
Commonwealth of Independence States (CIS)
formed by 12 former Soviet republic, remains
economically integrated, although Georgia quit
after its 2008 war with Russia. It was previously a
free trade zone by virtue of being part of single
state with integrated transportation,
communication, and other infrastructure links.

24. MERRCOSUR
The South Cone Common Market (MERRCOSUR),
begun in the early 1990s with Brazil, Argentina,
Uruguay, and Paraguay, which opposed letting
Venezuela in. after Paraguay’s president was hastily
impeached in 2012, Brazil engineered Paraguay’s
suspension from MERCOSUR for ten months, during
which Venezuela was admitted. Chile, Bolivia,
Colombia, Ecuador, and Peru have joined as associate
members.

26. CARICOM
A Caribbean Common Market (CARICOM) was
created in 1973, but the area is neither larger nor rich
enough to make regional free trade a very important
accelerator of economic growth, in 1969, Colombia,
Ecuador, Peru, Bolivia created a group non known as
the Andean Community of Nations, which had
modest success and counts the MERCOSUR
members as associate members.