GATT Trade Rounds Reduction of Trade barriers Strengthening of
rules.
Slide 5
Uruguay Rounds Nov1982 Geveva Sept 1986 Punta del Este Dec 1988
Montreal Dec 1990 Brussels Dec 1993 Geneva April 1994 Marrakesh-
Signature WTO
Slide 6
GATT VS WTO Multilateral GATT No Rules Includes Trade in
Services Includes Intellectual Property Rights Dispute Settlement
GATT 01-01-48 to 31-12-95 GATT 94
Slide 7
The WTO Location: Geneva, Switzerland Established: 1 January
1995 Created by: Uruguay Round negotiations (1986-94) Membership:
148 countries Budget: 155 million Swiss francs Secretariat staff:
560 Head: Director-General, Pascal Lamay Functions: Administering
WTO trade agreements Administering WTO trade agreements Forum for
trade negotiations Forum for trade negotiations Handling trade
disputes Handling trade disputes Monitoring national trade policies
Monitoring national trade policies Technical assistance and
training for developing countries Technical assistance and training
for developing countries Cooperation with other international
organizations Cooperation with other international
organizations
Slide 8
Members Total members 152 Countries Developed Countries
Developing Countries Transition economies Least Developed
countries. Small economies
Slide 9
Pakistans Membership 1947 One of the 23 founding members
Signatory to almost all of the WTO Agreements
Slide 10
Main Areas of WTO GOODS SERVICES INTELLECTUAL PROPERTY DISPUTE
SETTLEMENT POLICY REVIEW
Slide 11
Functions Implementation of Agreement Forum for negotiations
Dispute Settlement Review of trade policies Technical assistance
and training for developing countries Cooperation with other
international organizations
Slide 12
Basic Principles Trade wo Discrimintaiton MFN National
Treatment Transperancy Access to Markets Trade in Goods Binding of
Tariff Prohibitaion of Qty Restrictions Tariff Negotiations
Emergency Import Measures Trade in Services
Slide 13
FUNCTIONS OF THE WTO Permanent Forum for negotiations among
Members concerning their multilateral trade relations
Administration of dispute settlement understanding Facilitating
implementation, administration and operation of various WTO
agreements Administration of trade policy review mechanism
Co-operation with IMF and World Bank for achieving greater
coherence in global economic policy making
Slide 14
Decision making bodies Top level Ministerial Conference ( Meets
after every Two years- 5th Cancun, 6th Hongkong) General Council
(normally ambassadors and heads of delegation in Geneva, but
sometimes officials sent from members capitals) which meets several
times a year in the Geneva headquarters. The General Council also
meets as the Trade PolicyReview Body and the Dispute Settlement
Body. At the next level,Council the Goods Council, Services Council
and Intellectual Property(TRIPS) Council report to the General
Council. Numerous specialized committees, working groups and
working parties deal with the individual agreements and other areas
such as the environment, development, membership applications and
regional trade agreements. Commiites
Slide 15
Ministerial Conference Singapore 1996 Geneva 1998 Seattle 1999
Doha 2001 Cancun 2003 Hong Kong 2005
Slide 16
WTO: Early Experience WTO as a global policeman Up to
1995-1999: 160 cases brought for decision 30 withdrawn after direct
discussions between countries in dispute 100 + undergoing direct
discussion 20 in final stage of solution implementation 4 have been
settled 7 closed with no need for action GATT dealt with 196 cases
from 1947-1995! WTO telecommunications agreement 1998 (effect) WTO
Financial Services agreement 1999 (effect) Slide 5-14
Slide 17
HOW DID WTO COME INTO BEING? (contd.) Uruguay Round
negotiations launched in 1986 and concluded in 1993 Key features :
Specific agreements relating to Agriculture and Textiles Many new
disciplines to eliminate measures like VERs etc. An agreement on
Services, an area not covered by the old GATT
Slide 18
HOW DID WTO COME INTO BEING? (contd.) An agreement on TRIPS,
providing for minimum standards relating to different kinds of
Intellectual Property Rights A fast, automatic Dispute Settlement
System with provisions for retaliatory actions Based on the concept
of single undertaking Establishment of an organisation, that is,
WTO
Slide 19
WTO AGREEMENT PREAMBLE I To conduct relations in the field of
trade and economic endeavour with a view to: Raising standards of
living Ensuring full employment Ensuring growth of real income
Expanding production and trade in goods and services Protecting and
preserving environment
Slide 20
WTO AGREEMENT PREAMBLE II Need for positive efforts to ensure
that developing countries secure a share in growth in international
trade
Slide 21
PHILOSOPHY OF WTO Trade liberalisation is to be achieved
through reduction of tariff and non-tariff barriers Predictability
and security of trade through binding commitments increases trade
Trade contributes to growth and employment Well-defined rules
relating to all matters impacting on trade will have a positive
impact on trade
Slide 22
Basic Legal Principles of GATT/WTO
Slide 23
Content Basic legal principles: Tariff bindings / commitments
Prohibition on quotas Most-favoured-nation MFN treatment National
treatment
Slide 24
Content Rights of Members: General exceptions Safeguards
Regional Trade Agreements Security exception Waivers Antidumping /
Countervailing measures
Understandings Agreements on: Agriculture Sanitary and
phytosanitary measures Textiles and clothing Technical barriers to
trade Trade-related investment measures (TRIMS) Antidumping Customs
valuation Preshipment inspection Rules of origin Import licensing
Subsidies and countervailing measures Marrakech Protocol Safeguards
GATT 1994 (General Agreement on Tariffs and Trade) WTO: Trade Rules
and Disciplines 1A Multilateral trade agreement on trade in goods
Annex 1A Multilateral agreements on trade in Goods Goods 12
Slide 27
The 10 benefits 1. The system helps promote peace 2. Disputes
are handled constructively 3. Rules make life easier for all 4.
Freer trade cuts the costs of living 5. It provides more choice of
products & qualities 6. Trade raises incomes 7. Trade
stimulates economic growth 8. The basic principles make life more
efficient 9. Governments are shielded from lobbying 10. The system
encourages good government
Slide 28
The 10 misunderstandings 1. The WTO dictates policy 2. The WTO
is for free trade at any cost 3. Commercial interests take priority
over development 4. and over the environment 5. and over health and
safety 6. The WTO destroys jobs, worsens poverty 7. Small countries
are powerless in the WTO 8. The WTO is the tool of powerful lobbies
9. Weaker countries are forced to join the WTO 10. The WTO is
undemocratic
Slide 29
GLOBALIZATION GLOBALIZATION ICT- shrinking world ICT- shrinking
world Increased flow of goods, services & capital Increased
flow of goods, services & capital among countries: Challenges
& opportunities among countries: Challenges & opportunities
Growing disparity- Growing disparity- [Seattle-Genoa-Doha-Madrid -
Johannesburg-Cancun-Mombay] [Seattle-Genoa-Doha-Madrid -
Johannesburg-Cancun-Mombay] Why ? Why ? Global trends Global
trends
Slide 30
Global Trends Global Trends Trade Liberalization- dismantling
tariffs : Benignly protects markets in North and denies legitimate
space to markets in South Restructuring [MNCs/TNCs]- downsizing
Mergers & Acquisitions - speedy Global Giants- emerging cartels
Changing Production Systems Cyberspace- IT,E-business $Lay off-
unemployment [In Pakistan from 5.9% in 1999 to 7.8% in 2004,and is
growing] Expanding Service Sector [Real % change from 5-5.5%
1999-2004 in Pakistan] FDI-80 % directed at mergers &
acquisition: In Pakistan [net FDI] 0.51 billion $ in 1999-0.81
billion$ in 2004. Dominating Economies-financial& capital
markets
Slide 31
Globalization- an unequal World Globalization could and should
benefit DCS but unlike a rising tide that lifts all boats, large
& Small, Globalization is unequal Ever widening gap- rich and
the poor. 4.5 billion people live in DCs 1.2 billion confront
ravage of poverty daily 2.8 billions people- on less than2$/day;
and 1.2 billion have less than 1$/day. Richest 10% of USA[25
million] income= as lowest 43% of Globe[2 billion]. No of hungry
people in DCs has increased by 18 million in 2nd half of 90s. No of
hungry people in DCs has increased by 18 million in 2nd half of
90s. Globally 842 million people undernourished, 1999-2001[798
million in DCs]. 170 million people under 5 are malnourished. In 17
countries, including Pakistan, undernourishment is on
increase[FAO-2003] In 17 countries, including Pakistan,
undernourishment is on increase[FAO-2003]
Slide 32
Globalization: Biased & lopsided Globalization: Biased
& lopsided OECD[19%]:spent-1998, 520 billion$ on R&D,
directed to their own needs. OECD[19%]:spent-1998, 520 billion$ on
R&D, directed to their own needs. OECD: acquired 91% of all
patents. OECD: acquired 91% of all patents. 70 billion$:spent on
health[R]-300 million-tropical problems. 70 billion$:spent on
health[R]-300 million-tropical problems. IACs spend >300
billion$ on subsidies-6 times 300 billion$ on subsidies-6 times
< than development assistance. Divergent interests: unsafe
biotech [GMOs]-chemicals. Divergent interests: unsafe biotech
[GMOs]-chemicals. Environ. Vs food security-socio-economic
stability? Environ. Vs food security-socio-economic stability?
Slide 33
Perspectives on Globalization CulturalPolitical Trade &
Economic: Markets and economics the denominators of success
Slide 34
[More] Challenges [less] Opportunities Globalization forces
countries to adapt to changes that it presents. Changes in general
economic & political environment: alter the direction on
international economic flows and affect human development. Rules of
Globalization personified in the multilateral trading system-WTO,
affect not only markets but peoples lives. Pakistan undertook deep
& wide ranging reforms, to cope with challenge, related to:
Fiscal & monetary instruments Fiscal & monetary instruments
Banking System Banking System Trade & tariff measures [again
being reviewed in the budget [2004-5] Trade & tariff measures
[again being reviewed in the budget [2004-5] Agricultural sector
policies Agricultural sector policies Government role in regulating
markets Government role in regulating markets Political/Governance
front Political/Governance front These [globally] binding rules
restrict policy options a DC might choose for socio- economic
development of its people.
Slide 35
Pakistan most globalized nation in SA . Foreign Trade Policy
Magazine, based on Globalization Index [GI], ranks Pakistan at 46
out of 62 world economies that contribute 96% of total world GDP
and are home to 96% of total global population. GI Ranking[2004]:
Pakistan: 46 Sri Lanka: 51 Bangladesh : 56 India:61-4 points down
the ranking it achieved in 2003
Slide 36
Does WTO bring prosperity to developing countries based on a
just system ?
Slide 37
Membership in WTO Global Trade increased by 30 to 35%, the LDCs
representing 20% of the world population generate only 0.03% of
global trade flows
Slide 38
Is [global] free trade a key to affluence? Classic Economic
Theorist support the argument. They believe GATT/WTO have
contributed towards [trade] liberalization & prodigious growth
of [world] trade over the last 50 years. Freed trade apologists see
the GATT/WTO as key international institutions. According to
research [regression] study conducted by Andrew K. Rose [University
California,Sep.2002] on 175 countries, however---Countries joining
the GATT/WTO neither have significantly different trade from
non-members, nor do they experience increases in trade, holding
other factors constant
Slide 39
Rules of the game are clear.. They bring with them [less]
opportunities and [more] threats. How well prepared are we ? Rules
of the game are clear.. They bring with them [less] opportunities
and [more] threats. How well prepared are we ?
Slide 40
Doha Development Round [DDA] has every thing bar Development :
When the current Round was launched in 2001 IACS promised to
overhaul trade rules and reform their policies: Fine words that
follow business 9 th : Doha Round 9 th : Doha Round Comprehensive
Negotiations-DDA The TRs of IACs spoke volubly about a development
round @ Doha, a rhetoric that proved hollow@ Cancun. Distortions
continue :$ 318 billion subsidies[$235 direct support to the
farmers in OECD countries: 90% of subsidies reported to WTO-2002]
WTO didn't pursue development agenda [S/G UNCTAD] Crucial link
between trade, poverty & food security don't figure prominently
on WTO agenda, and "There was lack of good governance and a
coherent policy in international organization "There was lack of
good governance and a coherent policy in international organization
such as WTO- as in Cancun 'perverse conditions' for cotton on the
world market,10 million producers in DCs were prevented from
benefiting from globalization and escaping poverty because 25,000
cotton farmers in Texas & other southern US states pocketed
billion in subsidies. [Ms.Hein demire Wieczorek Zeul, German
Development Minister] such as WTO- as in Cancun 'perverse
conditions' for cotton on the world market,10 million producers in
DCs were prevented from benefiting from globalization and escaping
poverty because 25,000 cotton farmers in Texas & other southern
US states pocketed billion in subsidies. [Ms.Hein demire Wieczorek
Zeul, German Development Minister]
Slide 41
Business [not Development] Round? Business [not Development]
Round? "It has been a mistake in Doha to proclaim a 'Development
Round' and thereby arouse expectations which couldn't be fulfilled.
Whoever was engaged in trade took a hard - nosed business attitude
and didn't think about the development of their business partner."
[Rubens Ricupero, S/G UNCTAD ] [Rubens Ricupero, S/G UNCTAD ] US
& EU in-fights: steel tariff/tax break for exports Disagreement
between Ag superpowers-USA & EU, led to familiar pattern of
recrimination and deadlock@ WTO. Neither protagonist has
demonstrated any inclination to cut Ag subsidies at home as
promised before DDA was launched- Are they serious working for
multilateral trading system?. IACs systematically use subsidies to
skew the benefits of Ag trade in their favor.
Slide 42
Restriction impacting Access of DCs to IACs markets Un
[weighted]Fair Tariff Reduction[OECD]-Reduction
requirement-36%[15%/item]:low reduction on sensitive products[high
tariffs],higher reduction on low tariffs. Un [weighted]Fair Tariff
Reduction[OECD]-Reduction requirement-36%[15%/item]:low reduction
on sensitive products[high tariffs],higher reduction on low
tariffs. Complexity [OECD]: Multiple tariff lines-Seasonal
tariffs,in/above quota, brand-schemes, non-ad valorem[OECD tariff
lines expressed on ad valorem basis: Canada 22%,Japan 42 %,EU/USA
90%]. Complexity [OECD]: Multiple tariff lines-Seasonal
tariffs,in/above quota, brand-schemes, non-ad valorem[OECD tariff
lines expressed on ad valorem basis: Canada 22%,Japan 42 %,EU/USA
90%]. TRQs/SPS/TBT:-non-transparent quota dispensation,stringent
SPS measures-DMEs[DCs-infrastructure,technical assistance]-
[standards]sameness vs. equivalence. TRQs/SPS/TBT:-non-transparent
quota dispensation,stringent SPS
measures-DMEs[DCs-infrastructure,technical assistance]-
[standards]sameness vs. equivalence.
Slide 43
Distortions in global markets [also] increase Us & EU have
invented a category of support-GB/BB in WTO talks, and thereby have
shifted support channels through an elaborate repackaging exercise
WTO parlance Supports US[GB]: de-linked [not trade distorting]. WTO
parlance Supports US[GB]: de-linked [not trade distorting]. Yet, it
increases the income and lessen the risk of producers, hence
encourages more production. CAP shifts subsidies from BB to GB.
Mechanism of export becoming less transparent. Competitively priced
Ag products from US/EU will flood the markets.
Slide 44
Distortions in global markets [also] increase US thus raised
spending on Ag by $ 73.5 billion [US Farm Bill, May 2000]-8
crops-direct payment_ Us producers receive 75% in subsidies. US
provided support of 3.4 billion to cotton producers that exceeds
the amount it Sub Saharan Africa, and this. Artificially lowered
the world prices of cotton by 1/4th in 2001.[Intl.Cotton Advisory
Committee] US provided$ 5.7 billion in officially supported export
credit underUS FARM Bill,2000. She sells corn 25% & wheat 46%
below the cost of production, and cotton prices in US have also
been slashed by 66% since 1996 to 50% a pound in order to undercut
the 3 rd worlds producers. EU gave 2102 million Euro[1992-1999 EU
Wheat producers receive a direct payment equivalent to$ 60/MT of
the export price.
Slide 45
More Trade does not necessarily mean less poverty Mexico
exports have tripled but poverty has increased at the same time,
because There was often a big divide between the need of the people
and the export business, and it is at this point that LICs have
priority conflict with HICs, for "Every trade policy measure must
be examined to see if it suited the millennium goal of halving
world poverty by 2015" [German Development Minister] [German
Development Minister]
Slide 46
The globalisation of production The globalisation of production
Classic dependency theory assumes an international division of
labour: core countries producing manufactured goods for domestic
consumption and export peripheral economies trading in primary
productions from the extractive industries and agriculture
Slide 47
The [ Food insecurity] trends Exacerbated DCs are becoming more
dependent on food imports- especially in staple food. Food imports
of NFIDCs increased in 1995-97by 40% since 1980.[ from $9.3 to $13
billon] Cereals- that make of caloric intake ] production moving
towards OECD & handful of Latin American Countries [where same
[MNCs] giant controlling the trade in US operate. The EU production
increased by 25%[1992-99] with 35% increase in total subsidies.
Food deficit of DCs is on increase. Sky rocketing import bill of
DCs- BoP DCs share in worlds imports increased from 28%[1970] to
37%[1997] But their Ag exports remained the same as of 1980s-1/3rd
of their total exports.
Slide 48
Low production efficiency & poor quality constrains Price
& Quality Competitiveness A@ home Tariff-Applied[25%]lower than
bound[100%] Domestic Support-AMS negative [ bound 10% de minimis ]
Export Subsidy-Nil Efficiency? Infrastructure Regulations HRD Input
Cost- electricity, fertilizer, pesticide, water
Slide 49
SAARC:Regional Profile [1986-98]
Slide 50
Importance of trade blocs and regionalisation of trade??
Slide 51
Intra-Regional Trade % of Exports
Slide 52
Trade Liberalization: The losers & winners Annual Exports
:Pakistan : Approx: 14 billion $ Singapore: 100 billion$ Korea:
150$ Impossible to close borders to high quality+ low price
products impossible to sell low quality +price uncompetitive
products impossible to sell low quality +price uncompetitive
products
TT ech-Based Economic Development SS
cience-Industry-[Socio-]Economics interface Economic indexing IIPO
profiling TTech. communities CCapitalize on low tech agriculture
JAJAdd value- quality JEJEnhance efficiency- cost effectiveness
*S*Sustainable Technologies-socio-economics * Trade & economic
analysis *F*For integration of economies with trade starting point
would be integration of S &T with national economic development
plans
Slide 55
WTO & Pakistans Industry
Slide 56
Trade Liberalization
Slide 57
Textile
Slide 58
USA Textile Imports CountryChange%[2001-2002] World Total
15.59% 15.59% China 101.24% 101.24% Mexico -9.93 -9.93 Canada 2.81
2.81 Pakistan 5.55 5.55 South Korea South Korea 2.15 2.15 India
16.48 16.48 Thailand-15.92 Pakistan 5.55
Slide 59
CHINA-44% Rest of the World -2%
Slide 60
Distortions in global markets [also] increase Us raised
spending on Ag by $ 73.5 billion [US Farm Bill, May 2000]-8
crops-direct payment_ Us producers receive 75% in subsidies. She
sells corn 25% & wheat 46% below the cost of production, and
cotton prices in US have also been slashed by 66% since 1996 to 50%
a pound in order to undercut the 3 rd worlds producers. EU gave
2102 million Euro[1992-1999]
Doables: interfacing NARS * Improve efficiency-input,NRM,IPM *
Diversify-No to mono culture * Value addition * Contain
Residue-IPM,RVT * Infrastructure- Accredited Labs. *
Packaging/Labeling * Early Warning System * Storage
capacity/capability
Slide 63
Social Audit Social Compliance What does it mean? It is a form
of Social Audit or Social Accountability, which emphasizes managing
business activities in way that respects and promotes the human
rights of work force
Slide 64
Social Accountability : a threat or an opportunity
Slide 65
Workers have become a liability than an asset Un/Semiskilled
labor force Can produce only basic products Thus quality,
productivity and competitiveness are compromised
Slide 66
SA 8000 : Social Accountability 8000
Slide 67
Way Forward Proactive engagement in Social Accountability
standard setting & compliance Capacity building in Social Audit
Incentives for Compliance Investment in Social Capital Awareness of
respect for human rights & protection of environment
Slide 68
Compliance Requirements No and/Forced Child Labor Safe &
health work place compliant to the law Freedom to organize for
collective bargaining Non-discrimination-personal/belief No
corporate punishment: mental/physical coercion Compensation for
overtime and at least one day off/week Compensation: Minimum Wages+
some discretionary income & Management System: to dispense
SA8000-annual review, corrective action on non-conformity
Slide 69
Why? Age of awareness- Consumers expect industry to respect
human rights and protect environment WTO Agreement on Technical
Barriers [TBT] Neo-protectionism EU-US base buyers have already
started asking for Social Audit Recent Audit of Textile Settings in
Punjab Warning on health & hygiene