WTO.pdf

wto

1. WTO
World Trade Organisation
Dr.Chhavi Jain
Copyright © Dr. Chhavi JainSWAYAM MOOC Business Environment

2. GATT
•TheGeneralAgreementonTariffsandTrade(GATT)wassignedby
23countriesinOctober1947,afterWorldWarII,andbecamelawon
Jan.1,1948.
•ThepurposeoftheGeneralAgreementonTariffsandTrade(GATT)
wastomakeinternationaltradeeasier.
•TheGeneralAgreementonTariffsandTrade(GATT)heldeight
roundsintotalfromApril1947toDecember1993.
•In1995,theGeneralAgreementonTariffsandTrade(GATT)was
absorbedintotheWorldTradeOrganization(WTO),whichextended
it.
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3. GATTwasformedtoprovideaninternationalforumtoencouragefree
tradebetweenmemberstatesbyregulatingandreducingtariffson
tradedgoodsbyprovidingacommonmechanismforresolvingtrade
disputes.
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4. Objectives of GATT
•ToreducebarrierstoInternationalTrade
•Toraisestandardofliving
•Toensurefullemployment
•Optimumutilisationofresourcesintheworld
•Toexpandproductionandinternationaltrade
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5. GATT’s objectives were achieved through the
reduction of:
•Tariffbarriers
•QuantitativeRestrictions
•Subsidiesontradethroughaseriesofagreements
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6. GATT Phases
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First Phase, from 1947 until the Torquay
Round
Second phase, encompassing three
rounds, from 1956 to 1979
Third phase, consisting only of the Uruguay
Round from 1986 to 1994

7. GATT Trade Rounds
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8. Objective and Evolution of GATT
•From1948to1994,theGATTprovidedtherulesformuchofworld
tradeandpresidedoverperiodsthatsawsomeofthehighestgrowth
ratesininternationalcommerce.Itseemedwell-establishedbut
throughoutthose47years,itwasaprovisionalagreementand
organization.
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9. Uruguay Round
•HeldatMarrakesh,Moroccoin1994.
•Ittransformedtheprovisionalmultilateraltradingsystemwhichhad
existedunderGATTintothepermanentbody-WTOwitha
significantlystrengthenedlegalmechanismforresolvingtrade
disputesmultilaterally.
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10. Why WTO??
•GATTmainlydealtwithtradeingoods,theWTOanditsagreements
alsocovertradeinservicesandintellectualproperty.TheWTO’s
creationon1January1995markedthebiggestreformofinternational
tradesincetheendoftheSecondWorldWar.ThebirthoftheWTO
alsocreatednewproceduresforthesettlementofdisputes.
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11. GATT vs WTO
GATT
•Itisasetofrulesandmultilateralagreements.
•Itwasdesignedwithanattempttoestablish
InternationalTradeOrganisation.
•Itwasappliedonaprovisionalbasis.
•Itsrulesareapplicabletotradeinmerchandisegoods.
•GATTwasoriginallyamultilateralinstrument,butat
alaterstageplurilateralagreementswereadded.
•Itsdisputesettlementsystemwasnotfasterand
automatic.
WTO
•Itisapermanentinstitution.
•Itisestablishedtoserveitsownpurpose.
•Itsactivitiesarefullandpermanent.
•Itsrulesareapplicabletotradeinmerchandiseandtradein
servicesandtradeinrelatedaspectsofintellectualproperty.
•Itsagreementsarealmostmultilateral.
•Itsdisputesettlementsystemisfastandautomatic.

12. WTO: Facts
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Location-Geneva, Switzerland
Established-January 1, 1995
Created by-Uruguay Round negotiations (1986-94)
Membership-164 members representing 98% of world trade
Budget-197 Million Swiss Francs for 2020
Secretariat Staff-624
Head-Ngozi Okonjo-Iweala (Director-General)

13. TheWTOhas164
members,accountingfor
98%ofworldtrade.A
totalof25countriesare
negotiatingmembership.
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14. Functions of WTO
TheWTO’soverridingobjectiveistohelptradeflowsmoothly,freely
andpredictably.Itdoesthisby:
•administeringtradeagreements
•actingasaforumfortradenegotiations
•settlingtradedisputes
•reviewingnationaltradepolicies
•buildingthetradecapacityofdevelopingeconomies
•cooperatingwithotherinternationalorganizations
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15. SWAYAM MOOC Business Environment Copyright © Dr. Chhavi Jain
Organisation of WTO

16. TRIPS
•https://www.wto.org/english/tratop_e/trips_e/trips_e.htm
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17. TRIMS
•https://www.wto.org/english/tratop_e/invest_e/invest_e.htm
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18. GATS
•https://www.wto.org/english/tratop_e/serv_e/serv_e.htm
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19. Dispute Settlement Mechanism
•https://www.wto.org/english/tratop_e/dispu_e/dispu_e.htm
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20. Dumping
•Dumpinginthefinancialworldoccurswhenacompanyoracountry
exportsitsproductsatapricelowerthanitsdomesticprice.Exporters
dumptocompetewiththeproducersandsellersintheimporting
country.
•Dumpingenablesconsumersintheimportingcountrytoobtainaccess
togoodsatanaffordableprice.However,itcanalsodestroythelocal
marketoftheimportingcountry,whichcanresultinlayoffsandthe
closureofbusinesses.
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21. Dumping
•TheWTOandEUregulatedumpingbyputtingtariffsandtaxeson
tradingpartners.Sufficientproofmustbeprovidedthatdumpinghas
happened.
•Dumpingcanalsotakeplaceintheexporter’shomemarket.Ifthe
productcanbepricedatahighercostabroad,thecompanycansellat
alowerpriceathome.
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22. Types of Dumping
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•Companies dump excess unsold inventories to avoid price wars in the home
market and preserve their competitive position. They can either dump by
destroying excess supplies or export them to a foreign market where the products
are not sold.
Sporadic Dumping
•Unlike sporadic dumping, which is occasional, predatory dumping is permanent. It
involves the sale of goods in a foreign market at a price lower than the home
market. Predatory dumping is done to gain access to the foreign market and
eliminate competition. It creates a monopoly in the market.
Predatory Dumping
•When a country consistently sells products at a lower price in the foreign market
than the local prices, it is called persistent dumping. It happens when there is a
constant demand for the product in the foreign market.
Persistent Dumping
•Reverse dumping happens when the demand for the product in the foreign market
is less elastic. It means that price changes do not impact demand. Therefore, the
company can charge a higher price in the foreign market and a lower price in the
local market.
Reverse Dumping

23. Dumping Advantages
•Consumersintheimporter’scountrycangainaccesstoproductsat
lowerprices.
•Exportersreceivesubsidiesfromtheirgovernmenttosellatlower
pricesabroad.
•Theexporter’scountrycangenerateemploymentandbecomeindustry
leaders.
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24. Dumping Disadvantages
•Thedebtoftheexporter’scountrywillincreaseduetosubsidies
providedtosellatlowerpricesabroad.
•Dumpingisexpensive,anditwilltaketheexportersyearstosellata
lowerpriceandputcompetitorsoutofbusiness.
•Thetargetcompanycanretaliateandcauseatradewar.
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25. Anti-dumping measures
•https://www.wto.org/english/thewto_e/whatis_e/tif_e/agrm8_e.htm
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26. References
•https://www.wto.org/
•https://corporatefinanceinstitute.com/resources/knowledge/economics/
dumping/
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