Economics Uncategorized

World Trade Organization

The WTOwas established in1995 as a successorto the GATT. It is a new internationalorganization set upas a permanent body and is designed to play the role of watch dog in the spheresof trade in goods and services, foreign investment and intellectual propertyrights. The Dunkel Draft, formulatedby Arthur Dunkel, its Secretary Generalbecame the base for WTO.Every two years, the member countries’ Commerce MinistersConference are being organized to discussand settle the important souls and traderelated matters. The first WTO conference was held at Singapore in 1996. The recentconference was held at Argentina in 2017.It was planned to organize 12th ministerial conference at Kazakhstan in 2020.

Objectives of WTO:

The basic aim is to expand international trade and bring abouteconomic prosperity by liberalizing traderestrictions.

i) To ensure reduction of tariff and otherbarriers.

ii) To eliminate discrimination in trade.

iii) To facilitate higher standard of living.

iv) To facilitate optimal use of world’s
resources.

v) To enable the LDCs to secure fair share in the growth of international trade.

vi) To ensure linkages between trade
policies, environmental policies and
sustainable development.

WTO Agreements:

Agreement on TradeRelated Intellectual
Property Rights (TRIPs);

Intellectual Property Rightsinclude copy right, trade marks, patents,geographical indications, trade secrets,industrial designs, etc. TRIPS Agreement provides for granting product patentsinstead of process patents. The periodof protection will be 20 years for patents,50 years for copy rights, 7 years for trademarks and 10 years for layout designs. As and Indiaa result of TRIPS, the dependence of LDCs on advanced countries for seeds, drugs,fertilizers and pesticides has increased.
Farmers are depending on the industrial firm for their seeds.

Agreement on Trade Related Investment Measures (TRIMs);TRIMs are related to conditions or
restrictions in respect of foreign investmentin the country. It calls for introducing equal treatment for foreign companies on par with national companies. TRIMs were widely employed by developing countries.
Restrictions on foreign investment on
following grounds are to be removed

 No restriction on area of investment.

 No binding on use of local material.

 No mandatory exports.

 No restriction on repatriation of royalty,dividend and interest.

 No trade balancing requirement,
i.e. imports not exceeding exports.

General Agreement on Trade inServices
(GATS);

GATS is the first multilateral set of rules covering trade in services likebanking, insurance,transportation,communication, etc., All member countries are supposed to extend MFN(Most Favoured Nation) status to all othercountries without any discrimination.

Transparency should be maintained by
publishing all relevant laws and regulations over services.

Phasing out of Multi Fibre Agreement
(MFA);

The multi fibre agreement governed
the world trade in textiles and garments since 1974. It imposed quotas on export of textiles by developing nations to the developed countries. This quota system was to be phased out over a period of tenyears. This was beneficial to india.

Agreement on Agriculture (AoA);

Agriculture was included for the first
time under GATT. The important aspects of the agreement are Tariffication, Tariff cuts and Subsidy reduction.

Dispute Settlement Body;

The Disputes Settlement Body
puts an end to procedural delays. It is
mandatory to settle any dispute within
18 months. The disputes are resolved
through multilateral trading system.
However, India has lost a huge export
earnings because of the conditions laid
out by the Body.

Functions of WTO:

The following are the functions of the WTO:

i) It facilitates the implementation,
administration and operation of the objectives of the Agreement and of the Multilateral Trade Agreements.

ii) It provides the forum for negotiations
among its members, concerning their multilateral trade relations in matters
relating to the agreements.

iii) It administers the Understanding on Rules and Procedures governing theSettlement of Disputes.

iv) It cooperates with the IMF and the World Bank and its affiliated agencies with a view to achieving greater coherence in global economic policy making.

Achievements of WTO:

The major achievements of WTO are as
follows

1) Use of restrictive measures for BoP
problems has declined markedly;

2)Services trade has been brought into the multilateral system and many countries, as in goods, are opening their markets for trade and investment;

3) The trade policy review mechanism has created a process of continuous monitoring of trade policy developments.

WTO and India:

India is the founding member of the WTO. India favours multilateral trade approach. It enjoys MFN status and allows the same status to all other trading partners. India benefited from WTO on following grounds:

1. By reducing tariff rates on raw materials,components and capital goods, it was able to import more for meeting her developmental requirements. India’simports go on increasing.

2. India gets market access in several
countries without any bilateral trade
agreements.

3. Advanced technology has been obtained at cheaper cost.

4. India is in a better position to get quick redressal from the trade disputes.

5. The Indian exporters benefited from
wider market information.

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