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Submitted To: Tilak Raj Prof. University Business School Panjab University, Chandigarh
Submitted By: Aashish Arora Ravinder Singh Atwal MBA-Gen-A 1st Year
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History of WTO:
GATT:
General Agreement on Tariffs and Trade (GATT), was established after World War II in the wake of other new multilateral institutions dedicated to international economic cooperation notably the Bretton Woods institutions known as the World Bank and the International Monetary Fund. A comparable international institution for trade, named the International Trade Organization was successfully negotiated. The ITO was to be a United Nations specialized agency and would address not only trade barriers but other issues indirectly related to trade, including employment, investment, restrictive business practices, and commodity agreements. But the ITO treaty was not approved by the U.S. and a few other signatories and never went into effect. The General Agreement on Tariffs and Trade (typically abbreviated GATT) 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 formed in1948 and lasted until1993, when it was replaced by the World Trade Organization in 1995.
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Organizational structure:
The General Council has multiple bodies which oversee committees in different areas, re the following: 1. Council for Trade in Goods There are 11 committees under the jurisdiction of the Goods Council each with a specific task. All members of the WTO participate in the committees. The Textiles Monitoring Body is separate from the other committees but still under the jurisdiction of Goods Council. The body has its own chairman and only 10 members. The body also has several groups relating to textiles. 2. Council for Trade-Related Aspects of Intellectual Property Rights Information on intellectual property in the WTO, news and official records of the activities of the TRIPS Council, and details of the WTO's work with other international organizations in the field. 3. Council for Trade in Services The Council for Trade in Services operates under the guidance of the General Council and is responsible for overseeing the functioning of the General Agreement on Trade in Services (GATS). It is open to all WTO members, and can create subsidiary bodies as required. 4. Trade Negotiations Committee The Trade Negotiations Committee (TNC) is the committee that deals with the current trade talks round. The chair is WTO's director-general. The committee is currently tasked with the Doha Development Round. The Service Council has three subsidiary bodies: financial services, domestic regulations, GATS rules and specific commitments. The General council has several different committees, working groups, and working parties. There are committees on the following: Trade and Environment; Trade and Development (Subcommittee on Least-Developed Countries); Regional Trade Agreements; Balance of Payments Restrictions; and Budget, Finance and Administration. There are working parties on the following: Accession. There are working groups on the following: Trade, debt and finance; and Trade and technology transfer.
Agreements:
The WTO oversees about 60 different agreements which have the status of international legal texts. Member countries must sign and ratify all WTO agreements on accession. A discussion of some of the most important agreements follows:
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Reduction of peak and average tariffs on manufactured products Commitments to phase out the quantitative restrictions over a period as these were considered non-transparent measure in any countries policy structure.
The result of this agreement as mentioned earlier was limited as, GATT was only an agreement and there was no enforcing agency to strictly implement the clauses and punish the country which breaks the clauses. Thus the impact was partial. However, with WTO coming into effect, the competition from imports for the domestic firms has increased. WTO had the deadline till 2005, for the domestic policy was supposed to phase out the QR's; for those countries which face severe balance of payments problems special concession period was given. Thus it is very clear that only those firms that have competitive advantage would be able to survive in the long run, and those firms which are weak would fade into history in the process.
Major Conclusions
The Indian economy has experienced a major transformation during the decade of the 1990s. Apart from the impact of various unilateral economic reforms undertaken since 1991, the economy also had to reorient itself to the changing multilateral trade discipline within the newly written GATT/WTO framework. The unilateral trade policy measures have encompassed exchange-rate policy, foreign investment, external borrowing, import licensing, custom tariffs, and export subsidies. The multilateral aspect of India's WTO commitments is regarding trade in goods and services, trade-related investment measures, and intellectual property rights.
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IMPACT:
The World Trade organization was established to deal with all the major aspects of international trade and it had far reaching effects not only on Indias foreign trade but also on its internal economy. The WTO has both favourable and non-favourable impact on the Indian economy. It can be analysed on the basis and general concepts.
FAVOURABLE IMPACT :
Increase in export earnings : Increase in export earnings can be viewed from growth in merchandise exports and growth in service exports : Growth in merchandise exports: The establishment of the WTO has increased the exports of developing countries because of reduction in tariff and non-tariff trade barriers. Indias merchandise exports have increased from 32 billion us $ (1995) to 185 billion u $ (2008-09).
Growth in service exports : The WTO introduced the GATS (general Agreement on Trade in Services ) that proved beneficial for countries like India.
Agricultural exports : Reduction of trade barriers and domestic subsidies raise the price of agricultural products in international market, India hopes to benefit from this in the form of higher export earnings from agriculture
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UNFAVOURABLE IMPACT :
1)TRIPs Protection of intellectual property rights has been one of the major concerns of the WTO. As a member of the WTO, India has to comply with the TRIPs standards. However, the agreement on TRIPs goes against the Indian patent act, 1970, in the following ways: Pharmaceutical sector : Under the Indian Patent act, 1970, only process patents are granted to chemicals, drugs and medicines. Thus, a company can legally manufacture once it had the product patent. So Indian pharmaceutical companies could sell good quality products (medicines) at low prices. However under TRIPs agreement, product patents will also be granted that will raise the prices of medicines, thus keeping them out of reach of the poor people, fortunately, most of drugs manufactured in India are off patents and so will be less affected. Agriculture Since the agreement on TRIPs extends to agriculture as well, it will have considerable implications on Indian agriculture. The MNG, with their huge financial resources, may also take over seed production and will eventually control food production. Since a large majority of Indian population depends on agriculture for their livelihood, these developments will have serious consequences. Micro-organisms :
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CONCLUSION :
Thus the WTO is a powerful body that will enact international laws on various matters . It will also globalise many countries and help them to develop their competitive advantages and seek benefits from advanced technology of other nations. Though countries like India will face serious problems by complying to the WTO agreements, it can also benefit from it by taking advantage of the changing international environment.
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