WTO presentation

world trade organisation

principles , objectives, achievements and challenges

Name : Muskan SharmaRoll no : 2020pol1166 course:- BA polsci honors 2nd year

01. Introduction

The World Trade Organisation (WTO) is an intergovernmental organisation that regulates and facilitates international trade between nations and it is the only organisation that deals with rules of trade between nations (It is not a specialized agency of UN)It officially commenced operations on 1st january 1995 on the basis of marrakesh agreement 1994 , thus replacing the General Agreement on Tariffs and Trade(GATT) that had been established in 1948. It was born out of negotiationS; the bulk of the WTO`s current work comes from the 1986-94 negotiations called the Uruguay Round . The WTO is the world`s largest international economic organisation , with 164 member states representing over 98% of global trade and global GDP

02. WHY WTO replaced GATT?

There were certain limitations of GATT, like

• It lacked institutional structure. GATT by itself was only the set of rules and multilateral agreements .

• It didn`t cover trade in services , Intellectual Property Rights etc. Its main focus was on Textiles and agricultural sector.
• A strong Dispute Resolution Mechanism was absent.
• By developing countries , it was seen as a body meant for promoting interests of wests. This was because Geneva Treaty of 1946, where GATT was signed had no representation from newly independent states and socialist states

• Under GATT, countries failed to curb quantitive restrictions on trade ( Non Tariff barriers)

03. Principles of WTO

Principles that are of importance to WTO:

Non Discrimination:- It has two major components: 1. The most favoured nation(MFN) rule : 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 favourable conditions under which it allows trade in a certain product type to all other WTO members 2. The national treatment policy: National treatment means that imported goods should be treated no less favourably 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 etc , discriminating against imported goods) 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 materialize

03. Principles

Binding and enforceable commitments:- . the tariff commitments made by WTO members in multilateral trade negotiation and on accession are enumerated in a legal instrument known as a schedule ( list ) of concession. 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(TPRM) Safety values :- . In specific circumstances , governments are able to restrict trade.. . The WTO`s agreements permit members to take measures to protect not only the environment but also public health, animal health and plant health

04. OBJECTIVES

. To set and execute rules for international trade. . To present a panel for negotiating and controlling additional trade liberalization . . To solve trade conflicts. . To improve the clarity of decision making methods . . To raise the standard of living in member countries. . Development of a multilateral trading system. . To eliminate discriminatory treatment in international trade relationships. . To make coordination between trade policies , environmental policies and sustainable development.

04. ACHIEVEMENTS OF WTO

To what extent has the WTO being able to promote free trade? . The WTO has over 160 members representing 98 percent of world trade. Over 20 countries are seeking to join the WTO . An increased nucausing mber of trade disputes have been brought to the WTO, showing the WTO is a forum for helping to solve disputes. .WTO regulations and cooperation helped avoid a major trade war ; this was significant during 2008-09 global recession . We could compare this to 1930`s ,where trade wars broke out causing a fall in global trade. According to Bagwell and Staiger 2002, the average tariff in 1930`s was 50%. In 2000s, average tariff is 9% . According to Ralph Ossa, '' WTO success : no trade agreement but no trade war'' the value of WTO in preventing trade wars could be estimated at up to $340 billion per year.

04. ACHIEVEMENTS

World exports as a % of GDP have increased from 22% of GDP in 1995 (when WTO formed to just under 30% in 2015. Indicating importance of trade to global economy .

05. Challenges

China`s state capitalism:The nature of China`s economic system , combined with the size and growth of its economy, has created tensions in the global trading system. China`s state owned enterprises present a major challenge to the free market global trading system. However, a critical part of the problem is that the rule book of the WTO is inadequate for addressing the challenges that China presents in respect of intellectual property , state owned enterprises and industrial subsidies It is due to this US China are engaged in Trade war. Institutional Issues: The Appellate Body`s operations have effectively been suspended since December 2019, as the US`s blocking of appointments has left the body without a quorum of adjudicators needed to hear appeals the crisis with the dispute settlement function of the WTO is closely linked to the breakdown in its negotiation function.

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05. Challenges

. Lack of Transparency: there is a problem in WTO negotiatiobs as there is no agreed definition of what constitutes a developed or developing country at the WTO. Members can currently self designate as developing countries to receive 'special and differential treatment' - a practice that is subject of much contention E-commerce & Digital Trade: While the global trade landscape has changed significantly over the past 25 years , WTO rules have not kept pace. In 1998, realizing that e- commerce would play a growing role in the global economy, WTO memebers established a WTO e- commerce moratorium to examine all trade releted issues relating to global electronic commerce. Recently , however , the moratorium has been called into question by developing countries because of its implications for collecting revenue. Moreover, as the covid 19 pandemic accelerates the shift to e- commerce, rules to regulate online trade will be more important than ever . but in contrast to trade in goods and servuces, few international rules govern cross border e- commerce.

05. Challenges

Agriculture and Development: The WTO Agreement on Agriculture, which came into force in 1995, was an important milestone. Agreement on Agriculture targets reform of subsidies and high trade barriers, which distort agricultural trade, However , agreement on agriculture is facing issues due to food security and development requirements for developing countries like India

06. WAY FOWARD

New set of Rules: Modernizing the WTO will necessiate the development of a new set rules for dealing with digital trade and e-commerce. WTO members will also have to deal more effectively with China`s trade policies and practices, including how to better handle state owned enterprises and industroal subsidies. Environmental Sustainability: Given the pressing issues around climate change, increased efforts to align trade and environmental sustainability could help to both tackle climate change and reinvigorate the WTO. Trade and the WTO have key roles to play in efforts to achieve the UN Sustainable Development Goals ( SGDs) and the Paris Agreement climate goals. Also, the WTO can play a role in reforming fossil fuel subsidies for example:- at the Buenos Aires Ministerial Conference in 2017, a coalition of 1 WTO members led by New Zealand called on the WTO 'to achieve ambitious and effective disciplines on inefficient fossil fuel subsidies that encourage wateful consumption'

08. Conclusion

In future , WTO members will have to strike a balance between moving foward with negotiations on 21st century issues and keeping sight of the unresolved 'old trade issues' such as agriculture and development

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