WTO

The World Trade Organization (WTO) is an organization that intends to supervise and liberalize international trade. The organization officially commenced on January 1, 1995 under the Marrakech Agreement, replacing the General Agreement on Tariffs and Trade (GATT), which commenced in 1948. The organization deals with regulation of trade between participating countries; it provides a framework for negotiating and formalizing trade agreements, and a dispute resolution process aimed at enforcing participants' adherence to WTO agreements which are signed by representatives of [5]:fol.9-10 [6] member governments and ratified by their parliaments. Most of the issues that the WTO focuses on derive from previous trade negotiations, especially from the Uruguay Round (19861994). The organization is attempting to complete negotiations on the Doha Development Round, which was launched in 2001 with an explicit focus on addressing the needs of developing countries. As of June 2012, the future of the Doha Round remains uncertain: the work programme lists 21 subjects in which the [7] original deadline of 1 January 2005 was missed, and the round is still incomplete. The conflict between free trade on industrial goods and services but retention of protectionism on farm subsidies to domestic agricultural (requested by developed countries) and the substantiation of the international liberalization of fair trade on agricultural products (requested by developing countries) remain the major obstacles. These points of contention have hindered any progress to launch new WTO negotiations beyond the Doha Development Round. As a result of this impasse, there has been an increasing number of bilateral free trade agreements signed. WTO's current Director-General is Pascal Lamy, who leads a staff of over 600 people in Geneva, Switzerland.

HISTORY
The WTO's predecessor, the General Agreement on Tariffs and Trade (GATT), was established after World War II in the wake of other new multilateral institutions dedicated to international economic cooperation notably the Bretton Woods institutions known as theWorld Bank and the International Monetary Fund. A comparable international institution for trade, named the International Trade Organization was successfully negotiated. The ITO was to be a United Nations specialized agency and would address not only trade barriers but other issues indirectly related to trade, including employment, investment, restrictive business practices, and commodity agreements. But the ITO treaty was not [10][11][12] approved by the U.S. and a few other signatories and never went into effect. In the absence of an international organization for trade, the GATT would over the years "transform itself" [13] into a de facto international organization.

GATT ROUNDS OF NEGOTIATIONS The WTO's predecessor, the General Agreement on Tariffs and Trade (GATT), was established after World War II in the wake of other new multilateral institutions dedicated to international economic cooperation notably the Bretton Woods institutions known as theWorld Bank and the International Monetary Fund. A comparable international institution for trade, named the International Trade Organization was successfully negotiated. The ITO was to be a United Nations specialized agency and

would address not only trade barriers but other issues indirectly related to trade, including employment, investment, restrictive business practices, and commodity agreements. But the ITO treaty was not [10][11][12] approved by the U.S. and a few other signatories and never went into effect. In the absence of an international organization for trade, the GATT would over the years "transform itself" [13] into a de facto international organization.

FROM GENEVA TO TOKYO The WTO's predecessor, the General Agreement on Tariffs and Trade (GATT), was established after World War II in the wake of other new multilateral institutions dedicated to international economic cooperation notably the Bretton Woods institutions known as theWorld Bank and the International Monetary Fund. A comparable international institution for trade, named the International Trade Organization was successfully negotiated. The ITO was to be a United Nations specialized agency and would address not only trade barriers but other issues indirectly related to trade, including employment, investment, restrictive business practices, and commodity agreements. But the ITO treaty was not [10][11][12] approved by the U.S. and a few other signatories and never went into effect. In the absence of an international organization for trade, the GATT would over the years "transform itself" [13] into a de facto international organization.

URUGUAY ROUND
Well before GATT's 40th anniversary, its members concluded that the GATT system was straining to [18][19] adapt to a new globalizing world economy. In response to the problems identified in the 1982 Ministerial Declaration (structural deficiencies, spill-over impacts of certain countries' policies on world trade GATT could not manage etc.), the eighth GATT round known as the Uruguay Round was [18] launched in September 1986, in Punta del Este, Uruguay. It was the biggest negotiating mandate on trade ever agreed: the talks were going to extend the trading system into several new areas, notably trade in services and intellectual property, and to reform trade in [19] the sensitive sectors of agriculture and textiles; all the original GATT articles were up for review. The Final Act concluding the Uruguay Round and officially establishing the WTO regime was signed April 15, 1994, during the ministerial meeting atMarrakesh, Morocco, and hence is known as the Marrakesh [20] Agreement. The GATT still exists as the WTO's umbrella treaty for trade in goods, updated as a result of the Uruguay Round negotiations (a distinction is made between GATT 1994, the updated parts of GATT, and GATT [18] 1947, the original agreement which is still the heart of GATT 1994). GATT 1994 is not however the only legally binding agreement included via the Final Act at Marrakesh; a long list of about 60 agreements, annexes, decisions and understandings was adopted. The agreements fall into a structure with six main parts: The Agreement Establishing the WTO

Goods and investment the Multilateral Agreements on Trade in Goods including the GATT 1994 and the Trade Related Investment Measures (TRIMS) Services the General Agreement on Trade in Services Intellectual property the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) Dispute settlement (DSU) Reviews of governments' trade policies (TPRM)
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In terms of the WTO's principle relating to tariff "ceiling-binding" (No. 3), the Uruguay Round has been successful in increasing binding commitments by both developed and developing countries, as may be [ seen in the percentages of tariffs bound before and after the 1986-1994 talks.

MINISTERAL REFERENCES The topmost decision-making body of the WTO is the Ministerial Conference, which usually meets every two years. It brings together all members of the WTO, all of which are countries or customs unions. The Ministerial Conference can take decisions on all matters under any of the multilateral trade agreements. The inaugural ministerial conference was held in Singapore in 1996. Disagreements between largely developed and developing economies emerged during this conference over four issues initiated by this conference, which led to them being collectively referred to as the "Singapore issues". The second ministerial conference was held in Geneva in Switzerland. Thethird conference in Seattle, Washington ended in failure, with massive demonstrations and police and National Guard crowd control efforts drawing worldwide attention. The fourth ministerial conference was held in Doha in the Persian Gulf nation of Qatar. The Doha Development Round was launched at the conference. The conference also approved the joining of China, which became the 143rd member to join. The fifth ministerial conference was held in Cancn, Mexico, aiming at forging agreement on the Doha round. An alliance of [23] 22 southern states, the G20 developing nations (led by India, China, Brazil, ASEAN led by the Philippines), resisted demands from the North for agreements on the so-called "Singapore issues" and called for an end to agricultural subsidies within the EU and the US. The talks broke down without progress. The sixth WTO ministerial conference was held in Hong Kong from 1318 December 2005. It was considered vital if the four-year-old Doha Development Round negotiations were to move forward sufficiently to conclude the round in 2006. In this meeting, countries agreed to phase out all their agricultural export subsidies by the end of 2013, and terminate any cotton export subsidies by the end of 2006. Further concessions to developing countries included an agreement to introduce duty free, tariff free access for goods from the Least Developed Countries, following the Everything but Arms initiative of the European Union but with up to 3% of tariff lines exempted. Other major issues were left for further negotiation to be completed by the end of 2010. The WTO General Council, on 26 May 2009, agreed to hold a seventh WTO ministerial conference session in Geneva from 30 November-3 December 2009. A statement by chairman Amb. Mario Matus acknowledged that the prime purpose was to remedy a breach of protocol requiring two-yearly "regular" meetings, which had lapsed with the Doha Round failure in 2005, and that the "scaled-down" meeting would not be a negotiating session, but "emphasis will be on transparency and open discussion rather than on small group processes and informal negotiating

structures". The general theme for discussion was "The WTO, the Multilateral Trading System and the [24] Current Global Economic Environment"

DOHA ROUND (THE DOHA AGENDA)

The topmost decision-making body of the WTO is the Ministerial Conference, which usually meets every two years. It brings together all members of the WTO, all of which are countries or customs unions. The Ministerial Conference can take decisions on all matters under any of the multilateral trade agreements. The inaugural ministerial conference was held in Singapore in 1996. Disagreements between largely developed and developing economies emerged during this conference over four issues initiated by this conference, which led to them being collectively referred to as the "Singapore issues". The second ministerial conference was held in Geneva in Switzerland. Thethird conference in Seattle, Washington ended in failure, with massive demonstrations and police and National Guard crowd control efforts drawing worldwide attention. The fourth ministerial conference was held in Doha in the Persian Gulf nation of Qatar. The Doha Development Round was launched at the conference. The conference also approved the joining of China, which became the 143rd member to join. The fifth ministerial conference was held in Cancn, Mexico, aiming at forging agreement on the Doha round. An alliance of [23] 22 southern states, the G20 developing nations (led by India, China, Brazil, ASEAN led by the Philippines), resisted demands from the North for agreements on the so-called "Singapore issues" and called for an end to agricultural subsidies within the EU and the US. The talks broke down without progress. The sixth WTO ministerial conference was held in Hong Kong from 1318 December 2005. It was considered vital if the four-year-old Doha Development Round negotiations were to move forward sufficiently to conclude the round in 2006. In this meeting, countries agreed to phase out all their agricultural export subsidies by the end of 2013, and terminate any cotton export subsidies by the end of 2006. Further concessions to developing countries included an agreement to introduce duty free, tariff free access for goods from the Least Developed Countries, following the Everything but Arms initiative of the European Union but with up to 3% of tariff lines exempted. Other major issues were left for further negotiation to be completed by the end of 2010. The WTO General Council, on 26 May 2009, agreed to hold a seventh WTO ministerial conference session in Geneva from 30 November-3 December 2009. A statement by chairman Amb. Mario Matus acknowledged that the prime purpose was to remedy a breach of protocol requiring two-yearly "regular" meetings, which had lapsed with the Doha Round failure in 2005, and that the "scaled-down" meeting would not be a negotiating session, but "emphasis will be on transparency and open discussion rather than on small group processes and informal negotiating structures". The general theme for discussion was "The WTO, the Multilateral Trading System and the [24] Current Global Economic Environment"

FUNCTIONS
Among the various functions of the WTO, these are regarded by analysts as the most important: It oversees the implementation, administration and operation of the covered agreements.
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It provides a forum for negotiations and for settling disputes.

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Additionally, it is the WTO's duty to review and propagate the national trade policies, and to ensure the coherence and transparency of trade policies through surveillance in global economic policy[31][33] making. Another priority of the WTO is the assistance of developing, least-developed and lowincome countries in transition to adjust to WTO rules and disciplines through technical cooperation and [34] training. The WTO is also a center of economic research and analysis: regular assessments of the global trade picture in its annual publications and research reports on specific topics are produced by the [35] organization. Finally, the WTO cooperates closely with the two other components of the Bretton Woods [32] system, the IMF and the World Bank.

PRINCIPLES OF THE TRADING SYSTEM

The WTO establishes a framework for trade policies; it does not define or specify outcomes. That is, it is [36] concerned with setting the rules of the trade policy games. Five principles are of particular importance in understanding both the pre-1994 GATT and the WTO: 1. Non-discrimination. It has two major components: the most favoured nation (MFN) rule, and the national treatment policy. Both are embedded in the main WTO rules on goods, services, and intellectual property, but their precise scope and nature differ across these areas. The MFN rule requires that a WTO member must apply the same conditions on all trade with other WTO members, i.e. a WTO member has to grant the most favorable conditions under which it allows [36] trade in a certain product type to all other WTO members. "Grant someone a special favour [22] and you have to do the same for all other WTO members." National treatment means that imported goods should be treated no less favorably than domestically produced goods (at least after the foreign goods have entered the market) and was introduced to tackle non-tariff barriers to trade (e.g. technical standards, security standards et al. discriminating against imported [36] goods). 2. Reciprocity. It reflects both a desire to limit the scope of free-riding that may arise because of the MFN rule, and a desire to obtain better access to foreign markets. A related point is that for a nation to negotiate, it is necessary that the gain from doing so be greater than the gain available from unilateral liberalization; reciprocal concessions intend to ensure that such gains will [37] materialise. 3. Binding and enforceable commitments. The tariff commitments made by WTO members in a multilateral trade negotiation and on accession are enumerated in a schedule (list) of concessions. These schedules establish "ceiling bindings": a country can change its bindings, but only after negotiating with its trading partners, which could mean compensating them for loss of trade. If satisfaction is not obtained, the complaining country may invoke the WTO dispute [22][37] settlement procedures. 4. Transparency. The WTO members are required to publish their trade regulations, to maintain institutions allowing for the review of administrative decisions affecting trade, to respond to requests for information by other members, and to notify changes in trade policies to the WTO. These internal transparency requirements are supplemented and facilitated by periodic country-

specific reports (trade policy reviews) through the Trade Policy Review Mechanism [38] (TPRM). The WTO system tries also to improve predictability and stability, discouraging the [22] use of quotas and other measures used to set limits on quantities of imports. 5. Safety valves. In specific circumstances, governments are able to restrict trade. The WTOs agreements permit members to take measures to protect not only the environment but also [39] public health, animal health and plant health. There are three types of provision in this direction: articles allowing for the use of trade measures to attain non-economic objectives; articles aimed at ensuring "fair competition"; members must not use environmental protection measures as a means of disguising protectionist policies.
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provisions permitting intervention in trade for economic reasons.

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Exceptions to the MFN principle also allow for preferential treatment of developing countries, regional free trade areas andcustoms unions.
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ORGANISATIONAL STRUCTURE:
The General Council has the following subsidiary bodies which oversee committees in different areas: Council for Trade in Goods There are 11 committees under the jurisdiction of the Goods Council each with a specific task. All members of the WTO participate in the committees. The Textiles Monitoring Body is separate from the other committees but still under the jurisdiction of Goods Council. The body has its own chairman and only 10 members. The body also has several groups relating to textiles. Council for Trade-Related Aspects of Intellectual Property Rights Information on intellectual property in the WTO, news and official records of the activities of the TRIPS Council, and details of the WTO's work with other international organizations in the field. Council for Trade in Services The Council for Trade in Services operates under the guidance of the General Council and is responsible for overseeing the functioning of the General Agreement on Trade in Services (GATS). It is open to all WTO members, and can create subsidiary bodies as required.
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Trade Negotiations Committee The Trade Negotiations Committee (TNC) is the committee that deals with the current trade talks round. The chair is WTO's director-general. As of June 2012 the committee was tasked with the Doha Development Round.
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The Service Council has three subsidiary bodies: financial services, domestic [40] regulations, GATS rules and specific commitments. The General council has several [44] different committees, working groups, and working parties. There are committees on the following: Trade and Environment; Trade and Development (Subcommittee on Least-Developed Countries); Regional Trade Agreements; Balance of Payments Restrictions; and Budget, Finance and Administration. There are working parties on the following: Accession. There are working groups on the following: Trade, debt and finance; and Trade and technology transfer.

MEMBERS AND OBSERVERS

The WTO has 157 members and 27 observer governments. In addition to states, the European Union is a member. WTO members do not have to be full sovereign nation-members. Instead, they must be a customs territory with full autonomy in the conduct of their external commercial relations. Thus Hong Kong (as "Hong Kong, China" since 1997) became a GATT contracting party, and theRepublic of China (Taiwan) acceded to the WTO in 2002 as "Separate Customs Territory [59] of Taiwan, Penghu, Kinmen and Matsu" (Chinese Taipei) despite its disputed status. The WTO Secretariat omits the official titles (such as Counselor, First Secretary, Second Secretary and Third Secretary) of the members of Chinese Taipei's Permanent Mission to the WTO, except for the titles of the [60] Permanent Representative and the Deputy Permanent Representative. Iran is the biggest economy outside the WTO. With the exception of the Holy See, observers must start accession negotiations within five years of becoming observers. A number of international [62] intergovernmental organizations have also been granted observer status to WTO bodies. 14 states and two territories so far have no official interaction with the WTO.
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AGREEMENTS
The WTO oversees about 60 different agreements which have the status of international legal texts. [63] Member countries must sign and ratify all WTO agreements on accession. A discussion of some of the most important agreements follows. The Agreement on Agriculture came into effect with the establishment of the WTO at the beginning of 1995. The AoA has three central concepts, or "pillars": domestic support, market access and export subsidies. The General Agreement on Trade in Services was created to extend the multilateral trading system to service sector, in the same way as the General Agreement on Tariffs and Trade (GATT) provided such a system for merchandise trade. The agreement entered into force in January 1995. The Agreement on Trade-Related Aspects of Intellectual Property Rights sets down minimum standards for many forms of intellectual property (IP) regulation. It was negotiated at the end of the Uruguay Round of the General Agreement on Tariffs and Trade (GATT) in 1994. The Agreement on the Application of Sanitary and Phytosanitary Measuresalso known as the SPS Agreementwas negotiated during the Uruguay Round of GATT, and entered into force with the establishment of the WTO at the beginning of 1995. Under the SPS agreement, the WTO sets constraints on members' policies relating to food safety (bacterial contaminants, pesticides, inspection and labelling)

as well as animal and plant health (imported pests and diseases). The Agreement on Technical Barriers to Trade is an international treaty of the World Trade Organization. It was negotiated during the Uruguay Round of the General Agreement on Tariffs and Trade, and entered into force with the establishment of the WTO at the end of 1994. The object ensures that technical negotiations and standards, as well as [64] testing and certification procedures, do not create unnecessary obstacles to trade". The Agreement on Customs Valuation, formally known as the Agreement on Implementation of Article VII of GATT, prescribes methods of customs valuation that Members are to follow. Chiefly, it adopts the "transaction value" approach

MARKET ACCESS FOR GOODS:-

Market access for goods in the WTO means the conditions, tariff and non-tariff measures, agreed by members for the entry of specific goods into their markets. Tariff commitments for goods are set out in each member's schedules of concessions on goods. The schedules represent commitments not to apply tariffs above the listed rates these rates are bound. Non-tariff measures are dealt with under specific WTO agreements (see list below). WTO Members seek to continually improve market access through the regular WTO work programme and through negotiations such as those launched at the Doha Ministerial Conference in November 2001. WORK OF THE COMMITTEE ON MARKET ACCESS Work of the Committee on Market Access
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At its meeting on 31 January 1995 the General Council established the WTO Committee on Market Access with the following terms of reference: The Committee on Market Access shall: (a) in relation to market access issues not covered by any other WTO body: supervise the implementation of concessions relating to tariffs and non-tariff measures; provide a forum for consultation on matters relating to tariffs and non-tariff measures;

(b) oversee the application of procedures for modification or withdrawal of tariff concessions; (c) ensure that GATT Schedules are kept up-to-date, and that modifications, including those resulting from changes in tariff nomenclature, are reflected; (d) conduct the updating and analysis of the documentation on quantitative restrictions and other nontariff measures, in accordance with the timetable and procedures agreed by the CONTRACTING PARTIES in 1984 and 1985 (BISD 31S/227 and 228, and BISD 32S/92 and 93). (e) oversee the content and operation of, and access to, the Integrated Data Base; (f) report periodically and in any case not less than once a year to the Council on Trade in Goods.

Market Access negotiations in non agricultural goods

Market Access Market access is an umbrella term for a number of measures that a country may use to restrict imports. The most common form of such restrictions are tariffs on imported goods. Non-tariff barriers to market access also exist for goods, such as technical standards, antidumping suits, import quotas, import licensing, and variable levies, among others.. The term market access is now generally used to refer to non-agricultural market access.

As a result of the tough negotiations on market access during the Uruguay Round, most countries have cut tariffs significantly, and have adopted tariff bindings levels above which tariffs may never rise - for almost all imports.

Many developing countries - including India, Pakistan, Malaysia and Egypt - are reluctant to reduce industrial tariffs, as they are significant sources of revenue for their respective governments. They also worry that opening up domestic industries to aggressive foreign competition will result in the decline of the domestic industries and job losses.

Market Access Barriers Tariff barriers Typical developing country exports face higher barriers, both in the markets of industrial countries and also in other developing countries. Barriers take a variety of forms. Applied simple average tariffs for merchandise imports into industrial countries are approximately 3 percent; but for textiles and clothing, and

agricultural products, which represent a relatively large share of developing country exports, average tariffs are 8 and 27 percent, respectively.

But average tariffs tell only part of the story. Tariff "peaks" within product groups, often exceeding 50 percent or, in agriculture, 100 percent, are concentrated in labor-intensive products of significant export interest to developing countries, and particularly Least Developed Countries (LDCs).

Tariff "escalation"in which tariffs on processed goods exceed those on primary productscan substantially reduce the returns to developing country entrepreneurs of engaging in activities with higher value-added. This hampers the diversification of exports, limits the accumulation of skills and capital, and thus helps to perpetuate dependence on a small number of unprocessed goods whose world demand grows little and whose prices are volatile.

Textiles and Clothing Textiles are clothing products together constitute one of the most contentious issues at the WTO. For developing countries, production of such goods through relatively low cost labor is a major part of their economic output. If, as is generally the case at present for developing countries, there are significant barriers to exporting these products to developed countries, their economies may suffer as a result.

The Agreement on Textiles and Clothing requires the progressive elimination of all quantitative restrictions in this economically important sector. At this point, 51% of products will have had their quantitative restrictions eliminated. By 2005, Members must bring the remaining 49% of their textiles trade policy into full conformity with the Agreement, at which point the textiles sector will be fully integrated into the multilateral trading system.

Developing countrieshave criticized the European Union, USA and other developed countries for this "backloading" of the liberalization of these key sectors until the very end of the implementation period. Developing countries are also concerned that only the minimum requirements of the ATC are being met, and that protection may still take place through other measures.

Yet the integration of the textiles trade may ultimately prove to be a mixed blessing for some developing countries. Countries that benefited from preferential agreements with the European Union or the United States will face stiffer competition from other nations once the MFA disappears. For other developing countries, China's accession has the potential to reduce the expected gains of textiles liberalization. The World Bank estimates that China's share of world garment production will increase from 20% to 50% by 2010 as a result. Though this may lead to greater economic efficiency, it may also produce a painful period of adjustment for countries who are already poor.

Market Access and Doha Mandate:

Paragraph 16 of the Declaration launches negotiations in the area of market access of non-agriculture products. Though non-tariff barriers have also been included for negotiations. The aim of negotiations is to reduce industrial tariffs. Tariff peaks, high tariffs and tariff escalation. Have also been specifically indentified as target for reduction. The stipulation is that the product coverage shall be comprehensive, which mean negotiations will not be limited to any particular areas.

What is offered in Doha mandate :

The work program aims at reducing the tariffs, in particular on products of export interest to developing countries.The paragraph says that the negotiations shall take fully into account the special needs and interest of developing as well least developing countries. The tariff reduction exercise will be based on modalities to be agreed. Hence first task in this process will be work out the modalities. The developing countries will have the opportunity to include their special concerns during this stage.

Doha Declaration : Some challenges

The main targets will be developing countries in this exercise of tariff reduction. The developed countries have generally low average industrial tariffs, though tariffs on some individual items export interest to developing countries are relatively high. . A large number of developing countries have comparatively higher average industrial tariff because of the need of protection of their local industries and development need. Hence the developing countries are vulnerable in the area of negotiations. There may be tendency to work out formulae for the reduction based on past practices. This may be harmful for developing countries. Some new alternative formulae should be evolved. What should be done:

The modalities for negotiations must include identification of products of export interest to the developing countries, including the LDCs, manners of giving special consideration in tariff reductions in the developed countries, identification of tariff peaks and tariff escalation in the developed countries.. Negotiations should be undertaken on tariff reduction exercise only after the modalities have been fully worked out. It is prudent for developing countries to have formula that reduces the gap between the average tariff and the higher tariffs rather than having formula which primarily aims at reducing the average tariff.