World Trade Organization (WTO)R

8/22/2019 World Trade Organization (WTO)R

1/36

1

World Trade Organization (WTO)

Is one of the world's most important andinfluential International Organization

The role of WTO is:

To administer the multilateral trade Agreements adopted during the Uruguay

Round of trade negotiations

To review national policies To serve as framework for further trade

negotiations


2/36

2

WTO has Power:

To issue bindings legal rulings on disputes

To enforce these rules by allowing impositionof trade sanctions


3/36

WTO

FROM GATT TO WTO

4 PILLERS OF GATT TRANSPARENCY

NON-DISCRIMINATION

LIBERALIZATION

SELF-ENFORCEMENT

3


4/36

4

WTO Covers:

1. Trade in goods2. Trade in services

3. Intellectual Property Rights


5/36

5

WTO SYSTEM ACCOUNT FOR MORE THAN 97PERCENT OF THE WORLD TRADE

THE WTO AGREEMENT TOOK 7 YEARS TO

NEGOTIATE AND THE RESULT IS BROAD ANDCOMPLICATED

IS EXTREMELY BROAD AND COMPLEX PROBABLY

ONLY A HANDFUL OF SPECIALIST REALLYUNDERSTAND ITS FULL IMPLICATIONS.

WTO IS A MEMBER DRIVEN ORGANIZATION


6/36

6

POLICY DECISIONS CONSTITUTETHREE DIMENSIONS:

ALL MEMBERS CANPARTICIPATE IN THEMINISTERIAL CONFERENCE

GENERAL COUNCIL OTHER COUNCILS AND

COMMITTEES


7/36

7

DOES NOT DELEGATE POWER TO SMALLER

SUB-GROUPS OF MEMBERSSUCH AS THE

EXECUTIVE BOARD.

WTO IS DESCRIBED AS "COLLEGIATE OF

DELEGATIONS SERVICED BY THE

SECRETARIATE"


8/36

8

THE ACCESSION PROCESS

1. COUNTRYPREPARES MEMORANDUMDESCRIBING ITS TRADE AND ECONOMIC

POLICIES

2. THIS IS EXAMINED BY 'WORKING PARTY'

3. WORKING PARTY ARE OPEN TO ALL, BUT ONLY

ABOUT 35 MEMBERS PARTICIPATE IN EACH,

USUALLY INCLUDING THE APPLICANT'S MOSTACTIVE TRADING PARTENER AND POWERFUL

ECONOMIES LIKE THE USA, EC, CANADA AND

JAPAN


9/36

9

EXAMPLES

1. OVER 60 MEMBERS ON CHINA

2. OVER 65 MEMBERS ON RUSSIA

3. OVER 25 MEMBERS ON NEPAL

4. OVER 15 MEMBER ON CAMBODIA


10/36

10

EXAMPLES

1. IT TOOK 15 YEARS FOR CHINA TO BE THEMEMBER

2. RUSSIA APPLIED IN 1993 and IS STILLNEGOTIATING( The recent news in October2011 has indication that Russia may getmembership)

3. IT TOOK 14 YEARS FOR NEPAL TO BE THEMEMBER

4. IT TOOK ONLY 34 MONTHS FORKYRGUSTAN TO BE THE MEMBER


11/36

11

4. January 1, 1995: Established WTO and replaced the

old GATT which had acted as "interim" World

Trade watchdog and negotiating forum since 1948.

5. Ministerial meeting (highest decision making

body):

December 1996: First meeting in Singapore

May 1998: Second meeting in Geneva

December 1999: Third meeting in Seattle

November 2001: Fourth meeting in Doha

September 2003: Fifth meeting in Cancun


12/36

12

6. As of September 2012: 157 countries are members.Nepal became the member in September 2003

meeting.

7. Special benefits WTO has special provisions tohelp least developed countries

Special provisions to provide technical assistance to foodimporting countries to remove negative effect with regardto food supplied.

Small tariff reduction commitments and longer timeframeto implement market access measures.

Can benefit from technical assistance of InternationalTrade Center.


13/36

13

Documentation

1. General Agreement, a 38 article code aimed at

ensuring open, non-discriminatory trade in

goods, services, agricultural produce and textiles.

2. 500 pages specific accords shaped in Uruguay

Round.


14/36

14

Functions

1. To administer and implement the multilateral andplurilateral trade agreement which together makeup WTO

2. To act as a forum of multilateral tradenegotiations.

3. To seek to resolve trade disputes.

4. To oversee national trade policies.

5. To cooperate with international institutionsinvolved global economic policy-making.


15/36

15

Helping Least Developed and Food Importing

Countries

1. Appropriate mechanism related to the availability

of food and the provision of basic foodstuffs in full

grant form and for agricultural development.

2. Possibility of assistance from the IMF and the

World Bank with respect to the short-termfinancing of commercial food imports.


16/36

16

PRINCIPLES

1. Promote trade without discrimination.

2. National treatment-Once goods have been

entered a market, they must be treated no less

favorably than the domestically produced goodsequivalent.

3. Intellectual property protection by WTO

member countries provides for Most FavoredNations (MFN) and national treatment.


17/36

17

5. Agreement requires members to offer MFNtreatment to services and service supplies of other

members.

6. Non-discrimination provisions include those on:

Rules of origin

Pre-shipment inspection

Trade related investment measures

Application of sanitary and phytosanitorymeasures


18/36

18

Major Provisions

Agriculture

1. Reform trade and provide the basis for market-

oriented policies, thereby improving economiccooperation for importing and exporting

countries alike.

2. Established new rules and commitments in:


19/36

19

Market access

Domestic support Export competition

Encourage the use of less trade-distorting domestic

support

Policies to maintain the rural economy.

Specific concerns for developing countries are

addressed including those of net-food importingdeveloping countries and less developed economies.


20/36

20

Health and Safety Measures

1. Application of Food safety and animal and plhealth regulations

2. Government's rights to take sanitary and

phytosanitory measures but stipulates that they

must be based on science, should be applied only

to the extent necessary to protect human, animal

or plant life or health and should be arbitrarily orunjustifiably discriminate among members where

identical or similar conditions prevail.


21/36

21

Textile and Clothing

To secure the integration of the textiles and clothing

sector-where much of the trade is currently subject to

bilateral quota negotiations under the Multi-fiber

Agreement (MFA) into the main stream of WTO.


22/36

22

Anti-dumping Measures

1. Imposed on imports, if such dumped importscause injury to the domestic industry in theterritory of the importing member.

2. Additional criteria for determining the injurycaused to a domestic industry by the dumpedproduct.

3. Procedure to be followed in initiating and

conducting anti-dumping investigations.4. The role of dispute settlement panels in disputes

relating to anti-dumping actions taken by WTOmembers.


23/36

23

TRIPS (Trade Related Aspects of Intellectual

Property Rights)

Protection and enforcement of intellectualproperty rights.

Effective enforcement measures for those

rights. Multilateral dispute settlement.


24/36

24

GATS (The General Agreement on Trade and

Services)

The agreement contains three elements:

1. A framework of general rules and disciples

2. Special conditions relating individual sectors

(movement of natural persons, financial services,

telecommunication and air transport services)3. A council of trade in services overseas the

operation of the agreement.


25/36

25

Some of the important steps undertaken by Nepal

during the WTO accession and negotiation

Applied under GATT on 16 May 1989

Working party was established on 21-22 May 1989

Memorandum of foreign trade regime of Nepal wassubmitted on 26 February 1990

Nepal communicated interest on 5 December 1995

General council decided to give continuity theworking group on 31 January 1996


26/36

26

Memorandum of foreign trade regime of Nepal submitted on 10August 1998

First formal meeting of working party held on 22 May 2000

Schedules on goods and services in July 2002

Second formal meeting of working party held on 12 September 2002

Protocol of accession submitted on 15 August 2003

Working party concluded Nepal's membership on 15 August 2003

Fifth ministerial conference held in Cancun, approved for accessionon Nepal's membership.

Nepal ratified on March 2004 and has become full fledge member ofWTO.


27/36

27

IMPACT OF WTO ON NEPAL'S ECONOMY

Positive Impact

Trade Expansion

Trade Diversification

Freedom of Transit will provide legal and secure transit

rights to Nepal through India and China Dispute Settlement will ensure a stronger, faster, impartial

and binding mechanism for settlement of disputes related to

trade

End of Bilateralism

Bilateral agreement with 17 countries.Trade and Transit Treaty with India will do away with the

need for bilateral trade agreement

Image and Power Almost of WTO members are

developing countries. This will empower Nepal.


28/36

28

NEGATIVE IMPACT

1. Erosion of Preference (enjoyed under bilateralagreement and treaties)

Tariff Rates Concession

Removal of concession

Removal of subsidies in agriculture

Opening up of trade and services etc.

Prohibition of quota restrictions Affect domestic industries


29/36

29

2. PriceHike Food, Drugs, Agricultural Inputs and

other items of importsforeign exchange outflow

3. Accession Commitment Accept stringentcommitments by existing members

4. Reduce flexibility in policy and strategy

formulation relating to trade

5. Institutional Requirements

6. Burden of WTO may be too heavy as there is no

level playing field in practice.

7. Lacks knowledge, information, experience,

capacity, resources, institutional infrastructure,

competent personnel


30/36

30

8. Dependence on foreign firms will increase for

technology and resources

9. Difficult to enforce its intellectual property rights

10. Patents taken by US Companies of traditional

generic commodities like Basmati Rice, Neem

leaves, Turmeric etc.11. Gaps in Theory and Practice

12. European Union and Japan are unwillingness to

reduce subsidies on agricultural products

13. Trade harassment is high for LDCs and Nepal


31/36

31

CHALLENGES

1. MAXIMIZE THE BENEFITS2. MINIMIZE ITS RIGHTS AND DOWNSIDE

EFFECTS

3. EQUIP OURSELVES WITH THE CAPACITYNECESSARY TO PARTICIPATEEFFICIENTLY IN GLOBAL MARKETS

4. ABILITY TO ADJUST OUR ECONOMICSTRUCTURES TO A CHANGINGEXTERNAL ENVIRONMENT


32/36

32

5. STABLE MACROECONOMY

6. PRUDENT FINANCIAL MANAGEMENT

7. SOUND REGULATORY PRACTICES

8. NECESSARY STRUCTURAL AND

INSTITUTIONAL REFORMS IN THE

FINANCIAL AND CORPORATE SECTORS


33/36

33

The World Bank (2003)

Diagnostic Trade Integration

Study (DTIS) or Trade Competitiveness Study

The study appraised Nepal's constraints to effectiveintegration into the global trading system. It has made policylevel recommendations to capacity building.

Conclusion

1. Improve production capacity, productivity andcompetitive strength through quality improvement,reduction of costs and wastages, remove supplyconstraints.

2. Export of products in which is has sustainablecomparative advantage tourism, hydropower, hers,

flowers, silver jewellery, handicrafts.


34/36

34

3. Product profile should be enhanced

4. Strengthen SAARC, SAPTA and SAFTA toSAFTA to improve negotiating power, strengtheninstitutional mechanism.

5. Educate people

6. Create legal safeguard for bio-diversity, genetics,protection of domestic industries and females'

rights.7. Amend laws to make them WTO friendly.


35/36

35

Nepal's contribution to the world

trade is 0.02%

The study recommends

1. Relaxation in custom barrier2. Allowing easy exit to foreign companies

3. Reforming labor market

4. Strengthening the government private sectorcoordination


36/36

36

Comparative and competitive advantage areas:

Dried leguminous

Spices

Seeds (Niger Seeds)

Leather and leather products

Fibers (hand knotted wool carpets)Yarn and textile garments

The study has shown that it costs us US$ 130 million (NRs.

10 Billions over 10% of estimated budget for fiscal year2002/2003) to implement just three of the WTO agreements

namely TRIPS, SPS and custom valuations.

Documents

World Trade Organization (WTO)R