General Agreement on Trade and Tariff (GATT)/WTO

• The General Agreement on Tariffs and Trade (GATT) was

negotiated during the UN Conference on Trade and
Employment and was the outcome of the failure of
negotiating governments to create the International
Trade Organization (ITO)

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 General Agreement on Trade and Tariff (GATT)/WTO

• GATT was signed in 1947 and lasted until 1993, when it was replaced by the
World Trade Organization in 1995.

• The original GATT text (GATT 1947) is still in effect under the WTO framework,
subject to the modifications of GATT 1994

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 General Agreement on Trade and Tariff (GATT)/WTO

The General Agreement on Tariffs and Trade (GATT) is a multilateral

agreement regulating trade among 153 countries.

According to its preamble, the purpose of the GATT is the

"substantial reduction of tariffs and other trade barriers and the
elimination of preferences, on a reciprocal and mutually
advantageous basis."

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 General Agreement on Trade and Tariff (GATT)/WTO

The GATT functioned de facto as an organization, conducting

eight rounds of talks addressing various trade issues and
resolving international trade disputes.

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 General Agreement on Trade and Tariff (GATT)/WTO

• the Final Act Embodying the Results of the Uruguay Round of Multilateral
Trade Negotiations, was signed in April 1994

• also created the World Trade Organization (WTO), which came into being on
January 1, 1995

• The WTO launched the ninth round of multilateral trade negotiations under
the "Doha Development Agenda" (DDA or Doha Round) in 2001.

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 General Agreement on Trade and Tariff (GATT)/WTO

GATT was a set of rules agreed upon by nations, the WTO is an institutional
body. The WTO expanded its scope from traded goods to trade within the
service sector and intellectual property rights. Although it was designed to
serve multilateral agreements, during several rounds of GATT negotiations
(particularly the Tokyo Round) plurilateral agreements created selective
trading and caused fragmentation among members. WTO arrangements are
generally a multilateral agreement settlement mechanism of GATT

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 World Trade Organization (WTO)

In 1993, the GATT was updated (GATT 1994) to include new obligations upon its
signatories. One of the most significant changes was the creation of the World Trade
Organization (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. There
are a total of 157 member countries and 26 observers in the WTO.

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 World Trade Organization (WTO)
There are a number of ways of looking at the World Trade Organization.
• It is an organization for trade opening.
• It is a forum for governments to negotiate trade agreements.
• It is a place for them to settle trade disputes.
• It operates a system of trade rules.
Essentially, the WTO is a place where member governments try to sort out the
trade problems they face with each other.

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 World Trade Organization (WTO)
Objectives of WTO: The World Trade Organization (WTO) deals with the
global rules of trade between nations. Its main Objectives are
• to ensure that trade flows as smoothly, predictably and freely as
possible
• to expand world production and trade,
• optimal utilization of world’s resources; and
• to raise the living standards and the income of the people of the world.
• to protect and promote the interests of the developing countries by
providing more time to adjust, greater flexibility and special privileges

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 World Trade Organization (WTO)
WTO and Trade Agreements:
• The agreements fall into a structure There are elaborate agreements on 12 subjects in the area of trade in good, viz.,
with six main parts:
•Agriculture
• The Agreement Establishing the WTO
•Textiles and Clothing
• Goods and investment — the
Multilateral Agreements on Trade in •Trade Related Investment Measures (TRIMs)
Goods including the GATT 1994 and •Sanitary and Phyto-sanitary Measures (SPS)
the Trade Related Investment
Measures •Technical Barriers to Trade (TBT)

• Services — the General Agreement •Anti-Dumping

on Trade in Services (GATS) •Customs Valuation
• Intellectual property — the •Pre-shipment Inspection
Agreement on Trade-Related Aspects
of Intellectual Property Rights (TRIPS) •Rules of Origin
•Import Licensing
• Dispute settlement (DSU)
•Subsidies and Countervailing Measures
• Reviews of governments' trade
policies (TPRM) •Safeguards.

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 World Trade Organization (WTO)
Administration of WTO:
The WTO is run by its member governments. All major
decisions are made by the membership as a whole, either by
ministers (who usually meet at least once every two years,
i.e., the ministerial conference) or by their ambassadors or
delegates (who meet regularly in Geneva).

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 World Trade Organization (WTO)
Administration of WTO:
• Ministerial Conference

• General Council
• the Dispute Settlement body
• the Trade Policy Review body
• General Council also has:
• Council for Trade in Goods
• Council for Trade in Services
• Council for TRIPS
• Trade Negotiations Committee

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 World Trade Organization (WTO)
The Secretariat employs over 600 staff, and its
experts — lawyers, economists, statisticians and
communications experts — assist WTO
members on a daily basis to ensure, among
other things, that negotiations progress
smoothly, and that the rules of international
trade are correctly applied and enforced.

Centre William Rappard, Geneva,

Switzerland

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 World Trade Organization (WTO)
Settlement of Disputes:

- the central pillar of the multilateral trading system, and as a "unique contribution to the stability and
predictability of the global economy“

- The operation of the WTO dispute settlement process involves the DSB panels, the Appellate Body, the WTO
Secretariat, arbitrators, independent experts and several specialized institutions

- The dispute settlement forum of the WTO is one forum where stranger partnerships. India and Pakistan united
against the USA, the US agains EU, US against Canada, tiny Banana Republics against major powers, developing
versus the developed, developing versus the developing. The comment that there are no permanent friends,
only permanent interests that appears accurate in relation with respect to International Trade.

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 World Trade Organization (WTO)
Settlement of Disputes:
Dispute Settlement Mechanism
The Dispute Settlement Mechanism under the WTO is the subject matter of Chapter 27
under Section V and it works as follows.
At first, when one country believes that another is violating any aspect of the agreement
(including GATS, TRIPS and also GATT), the complaining country first requests consultation
with the offending country, and the two seek to resolve the dispute on their own.
If consultation fails, then the complaining country requests establishment of a panel,
consisting of three persons with appropriate expertise form countries not party to the
dispute. This panel assesses the evidence in the context of its interpretation of the WTO
members, acting through their Dispute Settlement Body (DSB), decide by consensus
against its adoption, or if one of the parties to the dispute voices its intention to appeal.
Therefore, the process requires unanimity among WTO members not to accept a panel
report, in marked contrast to the procedures of the old GATT, where a panel report could
be blocked by any one country, including the country that was complained for.

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 World Trade Organization (WTO)
Settlement of Disputes:
Dispute Settlement Mechanism
• To hear appeals, the WTO has established an Appellate Body, composed of
seven members of which three will serve on any given case. This Appellate
Body is to consider only issues of law and legal interpretations by the panel,
and it too issues a report which must be accepted by a unanimous decision of
the DSB.
• Once this process is completed, countries are expected to implement any
recommendations of the panel report. If they do not, then complaining
countries are entitled to compensation from them, or to use suspension of
concessions (usually increased trade barriers) against them.

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 World Trade Organization (WTO)
Settlement of Disputes:

Examples
• Trutle – Shrimp Case
• Canadian Periodicals case
• Japan – Taxes on Alcoholic Beverages and Chile – Taxes on Alcoholic Beverages
• Thai Cigarette Case

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 World Trade Organization (WTO)
Anti – Dumping Measures:
The provisions with respect to anti-dumping measures:
• According to GATT, 1994, member nations have a right to impose anti-dumping measures under two
conditions:
• a product is supplied at an export price which is below ‘normal’ value, i.e., a price which is
lower than the domestic cost in the exporting country; and
• the ‘dumped’ imports are shown to cause serious damage to a domestic industry located in
the importing country.
• Rules for determining ‘dumping’ are provided by GATT. Criteria are provided for allocating costs for
determining normal value and for determining the causal relation between ‘dumped’ imports and
injury to a domestic industry.
• Procedures are set out in detail to deal with anti-dumping cases.
• Anti-dumping measures should expire after five years.
• Anti-dumping measures are not allowed to be applied when the price of ‘dumped’ imports is lower
by 2% or less of the normal value or when the quantity of imports dumped is negligible., i.e., 3% or
less of total imports of the product imported by a country

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 World Trade Organization (WTO)
Environmental Aspects of International Trade:
The WTO has been under intense pressure to legitimize the use of trade measures for
environmental purposes as they are percived as effective tools for ensuring
compliance with environmental standards. However, the WTO may not be an
appropriate forum to deal with global environmental issues.

From the trade perspective, environment issues can be divided into trading in
commodities that affect the environment of:
• Importing country
• Exporting country
• Global (or trade-boundary) environment
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 World Trade Organization (WTO)
Functions of WTO:
• It oversees the implementation, administration and operation of the covered
agreements,
• To supervise on a regular basis the operations of the revised GATT agreements and
ministerial declarations,
• It provides a forum for negotiations and for settling disputes (i.e., to act as a Dispute
Settlement Body),
• Serving as a Trade Review mechanism,
• Assisting developing countries with trade policy issues through technical assistance
and training programme,
• To establish various councils such as the goods council, services council, TRIPS
council as subsidiary bodies

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 World Trade Organization (WTO)
WTO Principles of Trade Policy:

1. Non-Discrimination - the most favoured nation (MFN) rule, and the national
treatment policy - "Grant someone a special favour and you have to do the same
for all other WTO members"
2. Reciprocity.
3. Binding and enforceable commitments - "ceiling bindings"
4. Predictable and Transparency
5. Safety valves
6. More competitive
7. Protect the environment
8. More beneficial for less developed countries
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