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Overview of WTO Agreements:

Past, Present and Future

Dr. Harish Anand


Economist
Presentation made to Faculty members of Master
of Business Management, RIMT, Govindgarh,
Punjab
International trade : An engine of
economic growth

 Ricardo’s
 Comparative Advantage Theory

David Ricardo, 1772-1823


Evolution of WTO:
The Rising of Expectations

Trend
Continues

WTO and
Doha
Round
Uruguay
Round
Tokyo
Round
Kennedy
Round
GATT
ITO

1930’ 1948 1964 1973- 1986 1995 Trend


-1948s -1961 -1967 79 -94 -2001 Continue…
What is expected from World Trade
Organisation

 Promotion of Free Trade

 Trade Dispute settlement forum

 Developmental concerns

 Growing influences of developing countries


Whether ‘the expected’ is delivered: NAMA

 Direction is right but process is slow

 Difficulties are many on the road to free trade


1. Formula for tariff cut-Swiss formula, coefficient
contentious issue, LTFR for developed countries( 30%
Vs 60%)
2. Flexibility for DC from applying Swiss formula
3. Anti-concentration clause
4. Sectoral negotiations: USA identify four sectors
High Tariff and Tariff Peaks

Tariff on industrial products


USA EU India

Average Import Tariff* 3-4% 3-4% 15%

Tariff on Textile and


clothing
9-32% Up to 12% 15%

* Based on average tariff of developed countries on import of


developing counting , HDR 2005
Tariff Escalation

IMPORT TARIFF ON TEXTILE PRODUCTS:


PERVERSE GRADUATION
20%-32%
25%

20%
12%-15%
UP TO
15% 12%
9%-12% EU
10% 8% USA

5% 4%

0%
YARN FABRIC GARMENTS
Whether ‘the expected’ is delivered: Agriculture

 Market access
 Level of export subsidy
 Level of domestic subsidy
 Amber box
 Blue Box
 Green Box
 No firm commitment by Developed
countries
 EU
 USA –difficult demands
Whether ‘the expected’ is delivered: Other areas

 Services sector
 Mode 3- commercial presence
 Mode 1- export of services
 Mode 4- Movement of natural person
 Investment : Export obligations
 Competition policy-Government procurement
 Intellectual Propriety Rights- Essential Medicines
 Trade and Environmental concerns
US President Trade Policy Agenda(2009):
Making Trade Work for American Families

 Trade is beneficial … it respects the right of workers…

 Trade a tool kit to addressing environmental challenges

 What United states would be expected to give is well


known but broad flexibilities available to other leaves
unclear the value of new opportunities for our workers

 Government procurements and market regulations in


partner countries

 Margin of preferences for poorest of countries


WTO: Is Doha Round failure is end of MTS
under WTO
Principle of Non Discrimination: GATT
Article-1

 MFN tariff and National treatment. However, there are some


exceptions:

 BOP problem, Infant industry, Special and differential


treatment

 GSP treatment
 Reasons for RTAs
 RTAs Limitations
 (Jacob Winner )
Whether “SPAGHETTI BOWL” PTAs are
complementary or undermine MTS

 Question 1: Will PTAs give incentive/disincentive to


members to bring in more non-members in PTAs

 Question 2: Whether PTAs handicapped or prompt


member countries to liberalise trade to non member
countries
 (WTO 1995 study and WTO 2005 study)

 Non trade issues and MTS under WTO

 How to deal with PTAs/RTAs


WTO and Sovereignty of Nations: A Real
Concern or Hype overblown

 WTO rules restrict ‘Policy Space’ for DCs.?

 A challenge to traditional thinking on sovereignty

 Regulating global companies, global factor, goods


and service markets

 Sovereignty reclaimed
WTO: Coordination with other
international organisations

 Growing ‘internalization of world’


 Global finance-Role of FII in Indian stock market

 Growing need for WTO to co-ordinate with other


international agencies like World Bank, IMF, ILO and
UNEP
WTO Dispute Settlement Mechanism and
emerging international trade flow

 Growing use of DSM facilities with variegated level

of interest in WTO than GATT

 Frequency of using DSM

 Regime interplay –non economic factor

consideration

 Way forward
WTO: Legitimacy concerns

 Growing role of civil society (NGOs)


 It reflects public opinion on trade, foreign, social,
environmental policy areas and found to be useful
 Issues like core labour standards have been raised in
Ministerial Declarations
 Public health and trade linkage is another issue
especially in IPR e.g. Case of life saving medicines
WTO: Structural and procedural issues;
Decision making and variable geometry

 Structure and procedures need revisit-consensus


 Variable geometry :
 Tokyo Round, PTAs, S&D treatment
 Alternatives to Single Undertaking
 Increased political reinforcement for commitment
made at WTO
Tailoring Commitments for LDCs
 Focus on capacity building

 Contractual agreement for financial support

 Technical assistance

 Longer implementation period and lower


commitment

 Complete waiver should be avoided to avoid


complacency
Some potential areas for WTO coverage

 Excess supply to stressed supply: Food Security


Concerns-Bio-fuel

 Oil and energy security-Oil cartels

 Sovereign wealth funds and national security:

 Excess liquidity leading to saving gut

 Trade and environment concern linkages


WTO AGREEMENTS: INDIAN
PERSPECTIVE
 GOVERNMENT LEVEL
 China factor
 Growing interest in oversea markets
 Exports, FDI, Service exports (Mode 4)

 Global finance –Mandi Govindgarh case


 To handle new challenges in emerging environment

 INDUSTRY
 ACADEMIC
Thank You

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