3/7/2015

BankersAdda:WTOanditsPredecessor

WTOanditsPredecessor
Dearreaders,
We are presenting you a a brief article on WTO (World Trade Organization)
and its Predecessor. Article is useful for various bank exams, insurance
exams&SSCCGLexam.
The WTO's predecessor, the GATT, was established on a provisional basis
aftertheSecondWorldWarinthewakeofothernewmultilateralinstitutions
dedicated to international economic cooperation notably the "Bretton
Woods" institutions now known as the World Bank and the International
MonetaryFund.
The original 23 GATT countries were among over 50 which agreed a draft
Charter for an International Trade Organization (ITO) a new specialized
agencyoftheUnitedNations.TheCharterwasintendedtoprovidenotonly
world trade disciplines but also contained rules relating to employment,
commodityagreements,restrictivebusinesspractices.
TheobjectivesofGATTareasfollows:
1. To encourage full employment and large and steadily growing volume of
realincomeandeffectivedemand.
2.Toimprovetheworldproductionandexchangeofgoods.
3.Toensurethefulluseofworldresources.
4. To ensure a steady improvement in the living standards of people in
membercountries.
5. To settle the disputes through consultation within the framework of
GATT.nationalinvestmentandservices.
GATTRounds:
Between 1947 and 1995 there were 8 rounds of negotiations between the
participatingcountries.Thefirst6roundswererelatedtocurtailingtariffrates,
7throundincludedthenontariffobstacles.
The 8th round was entirely different from the previous rounds because it
included a number of new subjects for consideration. This 8th round known
as Uruguay Round became most controversial. The discussions at this
roundonlygavebirthtoWorldTradeOrganization(WTO).
ThemajordefectsofGATTareasfollows:
1.NoEnforcementAuthority:
TheGATThasattemptedtoprescribeaninternationalcodeofconductinthe
sphere of trade. But there was no enforcement authority to oversee the
compliance of GATT regulations by contracting parties and to settle their
tradedisputes.
2.ProblemsintheFormulationofGeneralRules:
The members of GATT are much diversify in nature, they had varied in
economic and political motives and they were also at different stages of
development. These reasons created difficulty in framing and implementing
uniformgeneralrulesofconductconcerningtrade,tariffsandpayment.
3.LessBenefitsfortheLDCs:
The most of the members of GATT were in the category of the LDCs. The
GATT had provided less benefit to these countries. At present, there are
more restrictive trade arrangements in the world. The Commodityto
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BankersAdda:WTOanditsPredecessor

Commodity based approach has

proved to be detrimental to the
interestsofLDCs.
This approach creates difficulty in
their future planning of production and
exports.TheGATTalsonotgivenany
compensation to the less developed
countries on account of damage to
theireconomiescausedbytheactions
ofdevelopedcountries.
4.QuantitativeTradeRestrictions:
The GATT had certainly ensured the sealing down of tariff structure but the
quantitative trade restrictions remained for a long time outside the GATT
ambit. Consequently, the developed countries had used with impunity the
quantitative trade restrictions such, as import quotas, export subsidies,
voluntary export restraints, health and safety regulation etc.Even though the
1993, agreement of GATT disapproved the adoption of quantitative trade
restrictionsandthesubstitutionoftariffsintheirplace,itdidnotprohibitthe
contractingpartiesfromtakingrecoursetothem.
DunkelProposals:
The 8th round GATT popularly known as Uruguay round was started in
September1986.Thenegotiationswereexpectedtobeconcludedin4years
butonaccountofdifferencesamongparticipatingcountriesoncertaincritical
areas, agreement could not be reached. To remove this deadlock Mr. Arthur
Dunkel, Director General of GATT, compiled a very detailed document,
popularly known as Dunkel Proposals. This proposal culminated into the
FinalActonDecember15,1993.IndiasignedthisproposalonApril15,1994.
All124membersthecountriessignedonthisagreement.
WTO
The World Trade Organization (WTO) is the only global international
organization dealing with the rules of trade between nations. At its heart are
the WTO agreements, negotiated and signed by the bulk of the worlds
tradingnationsandratifiedintheirparliaments.Thegoalistohelpproducers
ofgoodsandservices,exporters,andimportersconducttheirbusiness.
Headquarter:Geneva,Switzerland
Established:1January1995
Createdby:UruguayRoundnegotiations(198694)
Membership:160countrieson26June2014
Budget:197millionSwissfrancsfor2013
Secretariatstaff:640
Head:RobertoAzevdo(DirectorGeneral)
Functions:
AdministeringWTOtradeagreements
Forumfortradenegotiations
Handlingtradedisputes
Monitoringnationaltradepolicies
Technicalassistanceandtrainingfordevelopingcountries
Cooperationwithotherinternationalorganizations

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