BACKGROUND

PRINCIPLES ADOPTED BY GATT

ROUNDS OF GATT NEGOTIATION

Between
Between 1947
1947 and
and the
the last
last year
year of
of GATT
GATT there
there were
were 8
8 rounds
rounds of
of
negotiations
negotiations between
between the
the participating
participating countries.
countries.
The
The first
first 6
6 rounds
rounds were
were related
related to
to curtailing
curtailing tariff
tariff rates.
rates. 7th
7th
round
round included
included the
the non
non tariff
tariff obstacles.
obstacles.
The
The 8th
8th round
round was
was entirely
entirely different
different from
from the
the previous
previous rounds
rounds
because
because it
it included
included a
a number
number of
of new
new subjects
subjects for
for consideration.
consideration.
This
This 8th
8th round
round was
was known
known as
as URUGUAY
URUGUAY ROUND.
ROUND.
The
The discussions
discussions at
at this
this round
round only
only gave
gave birth
birth to
to WORLD
WORLD TRADE
TRADE
ORGANISATION
ORGANISATION (WTO).
(WTO).

FROM GATT TO WTO

Following the UR agreement, GATT was converted from
a provisional agreement into a formal international
organization called World Trade Organization (WTO),
with effect from January 1, 1995

World Trade Organization (WTO) deals with the global rules of

* The
trade between nations. Its main function is to ensure that trade
flows as smoothly, predictably and freely as possible.

is an organization for liberalizing trade, a forum for

* WTO
governments to negotiate trade agreements and a place for them
to settle trade disputes

the heartof the system known as the multilateral trading

* At
system are the WTOs agreements, negotiated and signed by a

large majority of the worlds trading nations, and ratified in their

parliaments.

WTO has larger membership than GATT, with the numbers

* The
being 153. India is one of the founder members of GATT.

Functions of WTO:

WTO is based in Geneva, Switzerland. Its

functions are:
Administering the multilateral trade
agreements which together make up the
WTO
Acting as a forum for multilateral trade
negotiations
Seeking to resolve trade disputes
WTO is not a Free trade institution. It
permits tariffs and other forms of protection
but only in limited circumstances.

*Non discrimination
*Free Trade: Promote free trade between nations
through negotiations.
*Stability in the trading system: Member
countries are committed not to raise tariff and
non tariffs barriers arbitrarily.
*Promotion of Fair Competition: WTO provides
for transparent, fair and undistorted
competition.
* It discourages unfair competitive practices such
as export subsidies and dumping.

*The agreement requires member countries to

provide patent protection to all products or

processes in all fields. The protection is granted
subject to the following three conditions:
* The product or process is a new one.
* It contains an inventive step.
* It is capable of industrial application for 20 years from the grant
of the patent

*TRIPS agreement covers the following

seven intellectual properties:

* Patents
* Copyright and other related Rights
* Geographical Indications
* Industrial Designs
* Trade marks
* Layout design of integrated circuits
* Undisclosed information including trade secrets

The GATS agreement covers four modes of supply for the delivery of services in crossborder trade:
Criteria

Mode 1: Crossborder supply

Service delivered within the territory of the

Member, from the territory of another Member.
Eg: transborder data flows

Mode 2:
Consumption
abroad

Service delivered outside the territory of the

Member, in the territory of another Member, to
a service consumer of the Member. Eg :
Tourism

Mode 3:
Commercial
presence

Supplier Presence

Service supplier not

present within the
territory of the
member

Service delivered within the territory of the

Member, through the commercial presence of
the supplier (provision of services abroad
through FDI or representative offices).

Service delivered within the territory of the

Member, with supplier present as a natural
Mode 4: Presence person (entry and temporary stay of foreign
of a natural person consultants)

Service supplier
present within the
territory of the
Member

*TRIMS refers to certain conditions or restrictions

imposed by a government in respect of foreign
investment in the country.

* In the late 1980's, there was a significant increase

in foreign direct investment throughout the world.

*TRIMS are widely employed by developing

countries. The Agreement on TRIMs provides that

no contracting party shall apply any TRIM which is
inconsistent with the WTO articles

Anti Dumping Measures:

*The WTO Agreement provides clarity in the method of

determining that a product is dumped.

*A product is regarded as dumped when its export price is

less than the normal price in the exporting country or its
cost of production plus a reasonable amount of
administrative, selling and any other costs.

*Anti-dumping duties

are to be imposed on goods that are

causing injury to producers of competing products in the
importing country.

*Countervailing measures - Action taken by the importing

country, usually in the form of increased duties to offset

subsidies given to producers or exporters in the exporting
country.

*The WTO members now account for over 97% of the

international trade indicating the potential of bringing

about an orderly development of international trade.

Benefits of WTO:
*GATT / WTO has made significant achievements in
reducing tariff and non tariff barriers to trade.
Developing countries too have been benefiting
significantly.
*Liberalization of investments has been fostering
economic growth of a number of countries.
*It has a system in place to settle trade disputes
between nations.
*It has a mechanism to deal with violation of trade
agreements.

Drawbacks:
* Negotiations and decision making in the WTO are dominated
by the developed countries.

* Many developing countries do not have the financial and

knowledge resources to effectively participate in WTO
discussions and negotiations.

* Due to the dependence of developing countries on the

developed ones, the developed countries are able to resort

to arms twisting tactics.

Tariff: A tariff is a tax.

It adds to the cost of imported goods and is one of several
trade policies that a country can enact.
Non-tariff barriers to trade(NTBs) aretrade barriersthat
restrict importsbut are not in the usual form of a tariff.
Some common examples of NTB's are anti- dumping measures
andcountervailing duties.
sanitary and phytosanitary measures (SPS):
* SPS measures refer to any measure, procedure, requirement,
or regulation, taken by governments to protect human,
animal, or plant life or health from the risks arising from the
spread of pests, diseases, diseasecausing organisms, or from
additives, toxins, or contaminants found in food, beverages,
or feedstuffs.

* Specific Tariffs: A fixed fee levied on one unit of an imported

good is referred to as a specific tariff. For example, a country

could levy a $15 tariff on each pair of shoes imported, but levy a
$300 tariff on each computer imported.
Ad Valorem Tariffs this type of tariff is levied on a good based
on a percentage of that good's value. An example of an ad
valorem tariff would be a 15% tariff levied by Japan on U.S.
automobiles.
Import Quotas: An import quotais a restriction placed on the
amount of a particular good that can be imported.
* free trade area : Trade within the group is duty free but
members set their own tariffs on imports from non-members
(e.g. NAFTA).

1.-What are the functions of the WTO?

Administering the multilateral trade agreements acting as a forum for multilateral
trade negotiations seeking to resolve trade disputes
it permits tariffs and other forms of protection
2.-When did the WTO come into effect?
january 1, 1995
3.-Where is the WTO situated? Geneva, Switzerland
4.-What are the conditions to provide patent protection?
-The product is new.
- It contains an inventive step.
-It is capable of industrial application for 20 years from the grant of the patent.
5.-Which intellectual properties does the TRIPS cover?
-Patents, copyright, geographiocal indications, industrial designs, trade marks, layout
design of integrated circuits and undisclosed information.
6.-It refers to certain conditions or restrictions imposed by a government in respect
of foreign investment in the country.
-The Trade Related Investment Measures (TRIMS)
7.- What is a Countervailing measure?
Action taken by the importing country, usually in the form of increased duties

7.-Which percentage of foreing trade manage the WTO

members?
97%
8.-Who dominates the decision making at WTO?
The developed countries
9.Antidumping measures and countervailing duties are
examples of this type of tariffs.
Non-tariff barriers
10.Mention 3 examples of free trade areas
NAFTA, MERCOSUR, ASEAN
11.Which kind of measure is used to protect animal or
plant life?
Sanitary and phytosanitary measures

WTO 2010
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