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GATT & WTO :

AN OVERVIEW

A Project On GATT & WTO : AN OVERVIEW Submitted to University of Mumbai

in the partial fulfillment of M.Com In Management part 1 Degree

by

Name : HITESH BORICHA.

Class: M.COM IN MANAGEMENT PART-1 Semester-1 Roll No. :15003

Studying at Parle Tilak Vidyalaya. Mulund College Of Commerce, S.N.Road,Mulund(West),Mumbai-80.

Academic Year 2012-2013

DECLARATION

I Hitesh Boricha a student of Class M.Com In Management part 1, Roll No. 15003, academic years 2012-2013 ,studying at Mulund College Of Commerce, hereby declare that the work done on the project entitled GATT
& WTO : AN OVERVIEW is true and original and any reference used in the

project is duly acknowledged.

Date:

Signature of student (Hitesh Boricha)

CERTIFICATE

I,Prof. S. A. Pawar & Prof.C. K. Kaul, hereby certify that Mr.Hitesh Boricha studying in Class M.Com In Management Part 1 Roll No. 15003 academic years 2012-2013 at Mulund College Of Commerce has completed project entitled GATT & WTO : AN OVERVIEW is under my guidance.

To the best of my knowledge information submitted in the project is original and authentic.

_______________________ Signature Of The Principal

______________________ Signature Of The Project Co-ordinator (Prof. S. A. Pawar)

______________________ Signature Of The Project Co-ordinator (Prof. C. A. Kaul)

ACKNOWLEDGEMENTS

First of all I would like to take this opportunit y to thank the Mumbai Universit y for having projects as a part of the Master in Commerce curriculum.

I would also like to express m y sincere gratitude to Prof.Seema Ashar & Prof.Roopali Kotekar who have greatl y influenced & shaped the contents of this project in a very interesting manner.

I also would like to thank my brother who has helped and encouraged me throughout the working of the project. Last but not the least I would like to thank the Almighty for always helping me.

INDEX

Serial No. Contents 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 Introduction of GATT Text Of Agreements & GATT Years Basic Principles Of Gatt Trade Negotiations Under GATT Explanatory Notes Success & Weaknesses Of GATT Uruguay Round What Is W.T.O. The Agreements World Trade Organisations & Functions Objectives Of W.T.O. Basic Principles Of W.T.O. How is the WTO Different From GATT World Trade In Services Characteristics & Categories Of Services Obstacles Or Restrictions In Service Sector Institutional Infrastructure For Export Promotion In India Bibliography

Page No. 7 9 10 14 16 19 20 22 23 24 26 27 33 35 36 37 37 38

The General Agreement on Tariffs and Trade (GATT)

Introduction:

The General Agreement on Tariffs and Trade (GATT), which was signed in 1947, 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." The GATT functioned de facto as an organization, conducting eight rounds of talks addressing various trade issues and resolving international trade disputes. The Uruguay Round, which was completed on December 15, 1993 after seven years of negotiations, resulted in an agreement among 117 countries (including the U.S.) to reduce trade barriers and to create more comprehensive and enforceable world trade rules. The agreement coming out of this round, the Final Act Embodying the Results of the Uruguay Round of Multilateral Trade Negotiations, was signed in April 1994. The Uruguay Round agreement was approved and implemented by the U.S. Congress in December 1994, and went into effect on January 1, 1995. WorldTradeLaw.net contains WTO negotiating history materials. This agreement also created the World Trade Organization (WTO), which came into being on January 1, 1995. The WTO implements the agreement, provides a forum for negotiating additional reductions of trade barriers and for settling policy disputes, and enforces trade rules. The WTO launched the ninth round of multilateral trade negotiations under the "Doha Development Agenda" (DDA or Doha Round) in 2001. TheWTO's website provides information about the Doha Round, including

8 links to texts that have been generated by the negotiations and information regarding upcoming meetings. GATT and WTO materials are available in the Goodson Law Library and in Perkins. The Davis Library at the University of North Carolina has been a depository library for GATT materials, and continues to receive most of the materials published by the WTO.

From 1948 to 1994, the General Agreement on Tariffs and Trade (GATT) provided the rules for much of world trade and presided over periods that saw some of the highest growth rates in international commerce. It seemed well-established, but throughout those 47 years, it was a provisional agreement and organization. The original intention was to create a third institution to handle the trade side of international economic cooperation, joining the two Bretton Woods institutions, the World Bank and the International Monetary Fund.

The General Agreement on Tariff and Trade is a multilateral treaty that lays down agreedrules for conducting international trade. It came into force in January

1948. 119governments which together account for 90 per cent of the world merchandise tradesubscribe it to. Its basic aim is to liberalize trade and for the last 45 years it has beenconcerned with negotiating the reduction of trade barriers and with international traderelations. The rapid and uninterrupted growth in the volume of international trade till1992 provides a good testimony for the success of the GATT

Text of Agreements and Other Documents The text of the original agreement establishing the GATT, with annexes and schedules, is attached to the Final Act of the United Nations Conference on Trade and Employment. It was not signed as a separate document, but is in force among the contracting parties through the Protocol of Provisional Application and the subsequent Protocols of Accession. These documents are found at 61 Stat. A3 and 55 U.N.T.S. 187. The Protocol of Provisional Application, which was signed by the eight principal states involved in the negotiations (including the U.S.), is published at 61 Stat. A2051 and 55 U.N.T.S. 308.

The GATT years: from Havana to Marrakesh The WTOs creation on 1 January 1995 marked the biggest reform of international trade since after the Second World War. It also brought to reality in an updated form the failed attempt in 1948 to create an International Trade Organization. During that period, the trading system came under GATT, salvaged from the aborted attempt to create the ITO. GATT helped establish a strong and prosperous multilateral trading system that became more and more liberal through rounds of trade negotiations. But by the 1980s the system needed a thorough overhaul. This led to the Uruguay Round, and ultimately to the WTO.

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Basic Principles Of GATT: 1.Trade without discrimination: Trade must be conducted on the basis of non-discrimination. All contracting parties are bound to grant to each other treatmentas favourable as they would to any country (most favoured nation) in theapplication and administration of import and export duties and charges.Expectations to this basic rule are allowed only in the case of regional tradingarrangements and the developing countries.

2.Protection only through tariff: Protection should be given to domesticindustries only through customs tariffs and not through other commercialmeasures. The aim of this rule is to make the extent of protection clear and toMake competition possible. Exception is, however, made in the case of developing countries where the demand for imports by development may requirethem to maintain quantitative restrictions in order to prevent an excessive drain ontheir foreign exchange resources.

3.A Stable basis of trade: The binding of the tariff levels negotiated among thecontracting countries provides a stable predictable basis for trade. Binding of tariffs means that these cannot be increased unilaterally. Although provision ismade for the renegotiation of bound tariffs, a return tariffs is discouraged by therequirement that any increase be compensated for.

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4.Consultation: A basic principle of GATT is that member-countries shouldconsult one another on trade matters and problems. They can call on GATT for afair settlement of cases in which they feel that their rights under the GATT arebeing withheld or compromised by other members.The agreement consists of four parts:Part I: Main obligations of the contracting parties;Part II: A code of fait trade practices to guide members in their commercial policies;Part III: Conditions for membership and withdrawal; andPart IV: Expansion of trade of developing countries through special concessions.

The General Agreement on Tariffs and Trade 1994 ("GATT 1994") shall consist of:

(a)

the provisions in the General Agreement on Tariffs and Trade, dated 30 October 1947, annexed to the Final Act Adopted at the Conclusion of the Second Session of the Preparatory Committee of the United Nations Conference on Trade and Employment (excluding the Protocol of Provisional Application), as rectified, amended or modified by the terms of legal instruments which have entered into force before the date of entry into force of the WTO Agreement;

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(b)

the provisions of the legal instruments set forth below that have entered into force

under the GATT 1947 before the date of entry into force of the WTO Agreement:

(i)

protocols and certifications relating to tariff concessions;

(ii)

protocols of accession (excluding the provisions (a) concerning provisional application and withdrawal of provisional application and (b) providing that Part II of GATT 1947 shall be applied provisionally to the fullest extent not inconsistent with legislation existing on the date of the Protocol);

(iii)

decisions on waivers granted under Article XXV of GATT 1947 and still in force on the date of entry into force of the WTO Agreement1;

(iv)

other decisions of the CONTRACTING PARTIES to GATT 1947;

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(c)

the Understandings set forth below:

(i)

Understanding on the Interpretation of Article II:1(b) of the General Agreement on Tariffs and Trade 1994;

(ii)

Understanding on the Interpretation of Article XVII of the General Agreement on Tariffs and Trade 1994;

(iii)

Understanding on Balance-of-Payments Provisions of the General Agreement on Tariffs and Trade 1994;

(iv)

Understanding on the Interpretation of Article XXIV of the General Agreement on Tariffs and Trade 1994;

(v)

Understanding in Respect of Waivers of Obligations under the General Agreement on Tariffs and Trade 1994;

(vi)

Understanding on the Interpretation of Article XXVIII of the General Agreement on Tariffs and Trade 1994; and

(d)

the Marrakesh Protocol to GATT 1994.

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Trade Negotiations under GATT:

Eight major trade negotiations took place under the GATT auspice as follows:

1.The first round in 1947 (Geneva) saw creation of the GATT.

2.The second round in 1949 (Annecy, France) involved negotiation with nationsthat desired GATT membership. The principal emphasis was on tariff negotiations.

3.The third round in 1951 (Torquay, England) continued accession and tariff reduction negotiations.

4.The fourth round in 1956 (Geneva) proceeded along the same track as earlierrounds.

5.The fifth round in 1960-61 (Geneva, Dillon Round) involved further revisionof the GATT and the addition of more countries.

6.The sixth round in 1964-67 (Geneva Kennedy Round) was hybrid of earlierproduct by product approach with across the board tariff reductions.

15 7.The seventh round in 1973-79 (Geneva, Tokya Round) centred on thenegotiation of additional tariff cuts and developed a series of agreementsgoverning the use of non-tariff measures.

8.The eight round (Uruguary Round ) started in 1986 and was concluded inApril 1994.As a result of these negotiations, the tariff rates for thousands of items entering into worldtrade were reduced or bound against increase. The average level of tariffs onmanufactured goods in industrial countries was bout 3 per cent now as compared to about 40 percent in the immediate second world was years. Developing countries weredisappointed with Kennedy round and the Tokyo Round. However, given its provisionalnature and the limited field of action, the success of GATT in promotion and securingliberalisation of much of world trade over 47 years was incontestable.

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Explanatory Notes

(a)

The references to "contracting party" in the provisions of GATT 1994 shall be

deemed to read "Member". The references to "less-developed contracting party" and "developed contracting party" shall be deemed to read "developing country Member" and "developed country Member". The references to "Executive Secretary" shall be deemed to read "DirectorGeneral of the WTO".

(b)

The references to the CONTRACTING PARTIES acting jointly in Articles XV:1,

XV:2, XV:8, XXXVIII and the Notes Ad Article XII and XVIII; and in the provisions on special exchange agreements in Articles XV:2, XV:3, XV:6, XV:7 and XV:9 of GATT 1994 shall be deemed to be references to the WTO. The other functions that the provisions of GATT 1994 assign to the CONTRACTING PARTIES acting jointly shall be allocated by the Ministerial Conference.

(c)

(i)

The text of GATT 1994 shall be authentic in English, French and Spanish.

(ii)

The text of GATT 1994 in the French language shall be

subject to the rectifications of terms indicated in Annex A to document MTN.TNC/41.

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(iii)

The authentic text of GATT 1994 in the Spanish

language shall be the text in Volume IV of the Basic Instruments and Selected Documents series, subject to the rectifications of terms indicated in Annex B to document MTN.TNC/41.

3.

(a)

The provisions of Part II of GATT 1994 shall not apply to measures taken by a

Member under specific mandatory legislation, enacted by that Member before it became a contracting party to GATT 1947, that prohibits the use, sale or lease of foreign-built or foreignreconstructed vessels in commercial applications between points in national waters or the waters of an exclusive economic zone. This exemption applies to: (a) the continuation or prompt renewal of a non-conforming provision of such legislation; and (b) the amendment to a nonconforming provision of such legislation to the extent that the amendment does not decrease the conformity of the provision with Part II of GATT 1947. This exemption is limited to measures taken under legislation described above that is notified and specified prior to the date of entry into force of the WTO Agreement. If such legislation is subsequently modified to decrease its conformity with Part II of GATT 1994, it will no longer qualify for coverage under this paragraph.

(b)

The Ministerial Conference shall review this exemption not later than five years

after the date of entry into force of the WTO Agreement and thereafter every two years for as long as the exemption is in force for the purpose of examining whether the conditions which created the need for the exemption still prevail.

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(c)

A Member whose measures are covered by this exemption shall annually submit a

detailed statistical notification consisting of a five-year moving average of actual and expected deliveries of relevant vessels as well as additional information on the use, sale, lease or repair of relevant vessels covered by this exemption.

(d)

A Member that considers that this exemption operates in such a manner as to

justify a reciprocal and proportionate limitation on the use, sale, lease or repair of vessels constructed in the territory of the Member invoking the exemption shall be free to introduce such a limitation subject to prior notification to the Ministerial Conference.

(e)

This exemption is without prejudice to solutions concerning specific aspects of

the legislation covered by this exemption negotiated in sectoral agreements.

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Did GATT Succeed?

GATT was provisional with a limited field of action, but its success over 47 years in promoting and securing the liberalization of much of world trade is incontestable. Continual reductions in tariffs alone helped spur very high rates of world trade growth during the 1950s and 1960s around 8% a year on average. And the momentum of trade liberalization helped ensure that trade growth consistently out-paced production growth throughout the GATT era, a measure of countries increasing ability to trade with each other and to reap the benefits of trade. The rush of new members during the Uruguay Round demonstrated that the multilateral trading system was recognized as an anchor for development and an instrument of economic and trade reform.

WEAKNESS OF GATT: The weakness of GATT is that its benefits have mainly gone to the industrializedcountries. Under GATT, Most negotiations and tariff reductions have taken place inrespect of manufactured goods. So the trade gap for the developing countries has becomemore unfavourable. A search for a new institutional arrangement, especially one whichone would tackle the problems of the global trade of developing countries, led to theformation of united Nations Committee on Trade and Development in 1946.

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The Uruguay Round, Passing from GATT to WTO

The last and largest GATT round, was the Uruguay Round which lasted from 1986 to 1994 and led to the WTOs creation. Whereas GATT had mainly dealt with trade in goods, the WTO and its agreements now cover trade in services, and in traded inventions, creations and designs (intellectual property).

The Final Act Embodying the Results of the Uruguay Round of Multinational Trade Agreementsconsists of the Final Act itself, the Agreement establishing the WTO ("WTO Agreement") and agreements annexed to it, and additional GATT agreements, decisions and declarations. The text can be found in various sources: 1867 U.N.T.S. 3, 33 I.L.M. 9 (1994) (December 1993 text) and 33 I.L.M. 1143 (1994)(April 1994 text), The Final Act Embodying the Results of the Uruguay Round of Multilateral Trade Negotiations(K4603 1987 .A3 1994), The Legal Texts: The Results of the Uruguay Round of Multilateral Trade Negotiations (K4603 1987.A4 1999); reprint of The Results of the Uruguay Round of Multilateral Trade Negotiations: The Legal Texts (Perkins Ref. 382.92 R436, 1994)and in The Uruguay Round of Multilateral Trade Negotiations (Microforms Room, filed with GATT Documents). The text is also available online on theWTO website, in LexisNexis (INTLAW;GATT) and Westlaw (GATT database with the search pr(final)), and on WorldTradeLaw.net. Two of the most important of the annexed agreements are the General Agreement on Trade in Services (GATS), 33 I.L.M. 44 (1994) (December 1993 text) and 1869 UNTS 183, 33 I.L.M. 1167 (1994) (April 1994 text) and

21 the Agreement on Trade Related Aspects of Intellectual Property (TRIPS), 33 I.L.M. 81 (1994) (December1993 text) and 1869 UNTS 299, 33 I.L.M. 1197 (1994) (April 1994 text)

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What is the World Trade Organization?

The World Trade Organization (WTO) deals with the rules of trade between nations at a global or near-global level. But there is more to it than that. Above all, its a negotiating forum Essentially; the WTO is a place where member

governments go, to try to sort out the trade problems they face with each other. The first step is to talk. The WTO was born out of negotiations, and everything the WTO does is the result of negotiations. Its a set of rules At its heart are the WTO agreements, negotiated and signed by the bulk

of the worlds trading nations. These documents provide the legal ground-rules for international commerce. They are essentially contracts, binding governments to keep their trade policies within agreed limits. And it helps to settle disputes This is a third important side to the WTOs work. Trade

relations often involve conflicting interests. Agreements, including those painstakingly negotiated in the WTO system, often need interpreting. The most harmonious way to settle these differences is through some neutral procedure based on an agreed legal foundation. That is the purpose behind the dispute settlement process written into the WTO agreements. Born in 1995, but not so young The WTO began life on 1 January 1995, but its trading system is half a century older. Since 1948, the General Agreement on Tariffs and Trade (GATT) had provided the rules for the system.

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The agreements

The WTO Agreements cover goods, services and intellectual property. They spell out the principles of liberalization, and the permitted exceptions. They include individual countries commitments to lower customs tariffs and other trade barriers, and to open and keep open services markets. The agreements for the two largest areas goods and services share a common three-part outline, even though the detail is sometimes quite different. They start with broad principles: the General Agreement on Tariffs and Trade (GATT)

(for goods), and the General Agreement on Trade in Services (GATS). (The third area, TradeRelated Aspects of Intellectual Property Rights (TRIPS), also falls into this category although at present it has no additional parts.) They come extra agreements and annexes dealing with the special requirements of

specific sectors or issues. Finally, there are the detailed and lengthy schedules (or lists) of commitments made by

individual countries allowing specific foreign products or service-providers access to their markets.

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WORLD TRADE ORGANISATION

Established on January 1, 1995 WTO is the embodiment of the Uruguary Round resultsand the successor to GATT. T is not a simple extension of GATT; it completely replacesits predecessor and has a very different character. As on 6thNovember 2000, the membership of the WTO stood at 139. 76 Governments became members of the WTO onits first day. The present membership accounts for more than 90 per cent of world trade.Many more countries have requested to WTO. The WTO is based in Geneva,Switzerland.

Its essential functions are as follows.

1.To administer the trade policy mechanism.

2.To achieve greater coherence in global economic-policy making incooperation with World Bank and IMF.

3.To provide a forum for negotiations among its members concerning theirmultilateral trade relations in matters dealt with in the agreements.

4.To administer the understandings on Rules on Procedures governing thesettlement of disputes.

25 5.To introduce the idea of 'sustainable development' in relation to the optimaluse of the world resources and the need to protect and preserve theenvironment in a manner consistent with the various levels of nationaleconomic development.

6.To recognize that there is a need for positive efforts to ensure that thedeveloping countries, especially, the least developed countries secure a bettershare of the growth of the international trade.

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Objectives of WTO:

Important objectives of WTO are mentioned below: (i) to implement the new world trade system as visualised in the Agreement; (ii) to promote World Trade in a manner that benefits every country; (iii) to ensure that developing countries secure a better balance in the sharing of the advantages resulting from the expansion of international trade corresponding to their developmental needs; (iv) to demolish all hurdles to an open world trading system and usher in international economic renaissance because the world trade is an effective instrument to foster economic growth; (v) to enhance competitiveness among all trading partners so as to benefit consumers and help in global integration; (vi) to increase the level of production and productivity with a view to ensuring level of employment in the world; (vii) to expand and utilize world resources to the best; (viii) to improve the level of living for the global population and speed up economic development of the member nations.

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Basic Principles Of WTO:


The basic principles of the multilateral trading system, as embodied in the WTO Agreement, derive mostly from the principles that constituted the foundations of the GATT. Trade without discrimination is one of these basic principles, guaranteed through the operation of various clauses included in the multilateral agreements on trade in goods, in the GATS, and in the TRIPs Agreement. It includes the Most-Favored-Nation Clause and National Treatment. Besides, there are principles of Transparency, Free Trade and Fair Competition, etc.

2.1 The Most-Favored-Nation treatment

The most-favored-nation clause has been the pillar of the system since the inception of the GATT in 1947. The Contracting Parties to the GATT 1947 were bound to grant to the products of other contracting parties treatment no less favorable than that accorded to products of any other country. Members of the WTO have entered into similar commitments, under the GATT 1994 (Article I) for trade in goods, under the GATS (Article II) in relation to treatment of service suppliers and trade in services, and under the TRIPs Agreement (Article 4) in regard to the protection of intellectual property.

28 2.2 National treatment

The national treatment principle condemns discrimination between foreign and national goods or services and service suppliers or between foreign and national holders of intellectual property rights. GATT 1994 and the TRIPS Agreement provide for national treatment as one of the main commitments of WTO Members. Imported goods, once duties have been paid, must be given the same treatment as like domestic products in relation to any charges, taxes, or administrative or other regulations (GATT Article 3). With regard to the protection of intellectual property rights, and subject to exceptions in existing international conventions, Members of WTO are committed to grant to nationals or other Members treatment no less favorable than that accorded to their own nationals (Article III). GATS, however, due to the special nature of trade in services, deals with national treatment under its Part III, Specific Commitments, (Article XVII ), where national treatment becomes a negotiated concession and may be subject to conditions or qualifications that Members have inscribed in their schedules on specific commitments in trade in services.

29 2.3 Transparency

Provisions on notification requirements and the Trade Policy Review Mechanism are set out in the WTO Agreement and its Annexes, with the objective of guaranteeing the fullest transparency possible in the trade policies of its Members in goods, services and the protection of intellectual property rights. Article X of GATT 1994 deals with the publication and administration of trade regulations; Article III of GATS sets out provisions on transparency as one of the general obligations and disciplines under that agreement; and Article 3 establishes transparency rules for the TRIPs Agreement.

2.4 Predictable and growing access to markets

Predictable and growing access to markets for goods and services is an essential principle of the WTO. This principle is fulfilled through various provisions so as to guarantee security, predictability and continued liberalization of trade.

2.5 Trade in goods

In the case of goods, a basic GATT postulate is that tariffs should normally be the only instrument used to protect domestic industry. Furthermore, tariffs should be predictable and stable.

30 2.5.1 Binding of tariff

Security and predictability in trade in goods are achieved through the commitments embodied in the "binding of tariffs". A "bound" tariff is a tariff in respect of which there is a legal commitment not to raise it beyond the bound level. The binding of a tariff at a level higher than the tariff actually applied is considered as a legitimate concession. In this case, the concession is the binding itself, that is, the commitment not to raise the tariff beyond that level. The developed countries have normally bound their tariffs at the applied levels. By contrast, and consistently with open market policies, developing countries have adopted commitments on "ceiling bindings", that is, bindings at levels higher than the applied rates. This has allowed developing countries to substantially increase their bound commitments, thus underpinning their open markets policies, while keeping a certain margin for protection in case of need.

2.5.2 Prohibition of quantitative restrictions

As a general rule, quantitative restrictions are prohibited under the GATT 1994. However, in some cases, such as safeguard action, quantitative restrictions can be introduced under strictly defined criteria.

31 2.5.3 Tariff negotiations: progressive reduction in protection

In the past, tariff negotiations were launched periodically under the auspices of the GATT. These negotiations served to reduce progressively the level of tariff protection in many countries now Members of the WTO. Tariff negotiations will remain important in the future, particularly in relation to agricultural products, where all nontariff barriers have been eliminated and substituted by tariffs, in many cases at very high levels.

2.5.4 Emergency import measures: safeguards

A safeguard measure is an import restriction which can be adopted in emergency circumstances, when imports have increased in such quantities and conditions that they are the cause of serious injury or threat of such injury to a domestic industry producing a like or directly competing product. An agreement on safeguards, setting out conditions and criteria for these actions, is one of the multilateral trade agreements. Measures affecting prices, that is tariffs, are preferable to quantitative restrictions. However, quantitative re- strictions can be applied as safeguard measures in specific cases.

32 2.5.5 Tariff renegotiations: compensation

The contractual nature of a bound tariff concession lies in the fact that the tariff rate cannot be increased beyond the bound level. However, countries would not enter into this kind of commitment without the possibility of revision when the situation of a domestic industry so requires. The GATT 1994 allows for the possibility of renegotiations. A Member desiring to withdraw or modify tariff bindings has to renegotiate them with other interested Members and provide compensation, that is, substantially equivalent tariff concessions on other products.

2.6 Trade in services

The General Agreement on Trade in Services (GATS) establishes a multilateral framework of principles and rules for trade in services with a view to the expansion of such trade under conditions of transparency and progressive liberalization, and as a means to promote the economic growth of all countries and the development of developing countries. Through general obligations and principles, the negotiation of specific commitments, and the commitment to launch further rounds of negotiations on trade in services, the GATS seeks to achieve predictable and growing access to markets for services.

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HOW IS THE WTO DIFFERENT FROM THE GATT?

(1)The GATT was a set of rules, a multilateral agreement with noinstitutional foundation with only a small associated secretariat. The WTO is apermanent institution with its own secretariat.

(2) The GATT was applied on a "Provisional basis" even if, after more than 40years, governments chose to treat it as a permanent commitment. The WTOcommitments are full and permanent.

(3)The GATT rules applied to trade in merchandise goods. In addition to goods,the WTO covers trade in services and trade related aspects of intellectualproperty.

(4)While GATT was multilateral instrument by the 1980s many new agreementshad been added of plurilateral, and therefore selective, nature. The agreementswhich constitute the WTO are almost all multilateral and thus involvecommitments for the entire membership.

(5)The WTO dispute settlement system is faster, more automatic and thus muchless susceptible to blockages than the old GATT system.

(6)The WTO is more global in its membership than the GATT.

34 WTO is a watchdog of international trade, regularly examine the trade regimes of individual members. Trade disputes that cannot be solved through bilateral talks areadjudicated under the WTO dispute settlement 'court'. The WTO is also a managementconsultant for world trade. Its economists keep a close watch on the pulse of the globaleconomy and provide studies on the main trade issues of the day. The mandate of theWTO includes trade in goods, trade in services, trade related in investment measures andtrade related intellectual property rights.A number of simple and fundamental principles run throughout all of theinstruments which, together, make up the multilateral trading system . They are:-

Trade without discrimination-

Predictable and growing access to markets.

Promoting fair competition.-

Encouraging development and economic reform.

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WORLD TRADE IN SERVICES

The industrial sector can be classified as production sector and service sector. Productionsector refers the industries that are engaged in production and supply of goods. Servicesector refers providing services and exchanging services to the public as well as society.The growing importance of services is reflected in the international trade also. The valueof the international trade in services comes to about one fourth of the value of the valueof the trade in goods. Services make up a major share of the invisible account in theBalance of payments of a country. The most important services in international trade include: Transport Travel Communication Media Business services Insurances Engineering and constructions services Banking Financial Services

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Characteristics and Categories of Services:

An important characteristics of services that has far reaching implications formarketing of services is their inseparability. That is services cannot be sepearated fromtheir providers, whether they are persons or machines. This does not, however mean thatall services require the physical proximity of the provider and user.

CHARACTERISTICS:
(a)Those that necessarily require the physical proximity of the provider and theuser; and

(b)Those that do not, though such physical proximity may be useful.The services where physical proximity is essential fall into three categories:

-The mobile provider and immobile user categorize the first category. In this casethe provider goes into the place of user and doing services. For example the technicalpeople of L & T Company in India goes to Srilanka and do the construction work.Similarly a technician may have to go a plant abroad to rectify a problem with the plant.- Mobile user and immosbile provider characterizes the second category. I.e. usergoes towards the provider. For example a patient who wants an open-heart surgery willhave to go to a hospital where the required facilities are available.-The third category consists of of mobile user and mobile provider. In this caseeither the provider going to the user or the user going to the provider may achieveproximity. For example dry-docking facilities for ships.

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OBSTACLES OR RESTRICTIONS IN SERVICE SECTOR:


Due to the special characteristics and the socio economic and politicalimplications of certain services, they are generally subject to various types of nationalrestrictions. Protective measures include visa requirements, investment regulations,marketing regulations, restrictions on the employment of foreigners, compulsion to uselocal facilities etc. Heavily protected r restricted services in different countries includebanking and insurance; transportation, television, radio, film and other forms of communications and so on.

INSTITUTIONAL INFRASTRUCTURE FOR EXPORT PROMOTION IN INDIA


The Government of India has set up a number of institutions whose main functions are tohelp an exporter in its export efforts. It is therefore, necessary for the exporters toacquaint themselves with these institutions and the nature of help they can render to themso that they can initially contact them to get whatever help they could get from theseinstitutions in exporting their products.

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Bibliography:

www.wto.org http://en.wikipedia.org/wiki/World_Trade_Organization http://www.blurtit.com/q112370.html

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