TERM

PAPER
OF

BUSINESS ENVIRONMENT

TOPIC- WTO AND THEIR IMPACT ON TRADE

SUBMITTED TO:

MR BALJEET SIR

SUBMITTED BY:

SAMEER LAMBA
E17B1
ROLL NO. 31

1
 CONTENTS

 INTRODUTION

 OBJETIES

 FUNTIONS

 STRUTURE OF WTOPRINIPLES OF WTO

 PROVISIONS FOR DEVELOPING COUNTRIES

 GATT AND ITS EXISTANCE

 WTO AGREEMENTS

 ITS IMPACT

 ADVANTAGES & DISADVANTAGES

 ITS CRITICISM

 CONCLUSION

2
 ACKNOWLEDGEMENT

I have taken efforts in this project. However, it would not

have been possible without the kind support and help of
many individuals and organizations. I would like to extend
my sincere thanks to all of them.

I am highly indebted to MR. Baljeet sir for their guidance

and constant supervision as well as for providing necessary
information regarding the project & also for their support in
completing the project.

I would like to express my gratitude towards my parents.

My thanks and appreciations also go to my colleague in

developing the project and people who have willingly helped
me out with their abilities.

With regards
Sameer

3
Introduction
Trade Organization

Location :- Geneva, Switzerland

Established: 1 January 1995

Created by : Uruguay Round negotiations (1986-94)

Membership :153 countries (on 23 July 2008)

Budget : 185 million Swiss francs for 2008

2007 Secretariat Staff : 625

Head : Director-General, Pascal Lamy

The World Trade Organization (WTO) is one of the most important

institutions dealing with international economic relations.
In broad terms, its role is twofold.

 One, to establish and enforce the rules of the road for

international trade in both goods and services.
 Two, to progressively liberalise that trade

MEANING AND AGREEMENTS MEANING AND AGREEMENTS

Different Things to Different People

 The criticisms include the accusation that the WTO is non-
transparent, nondemocratic,and non-accountable to the public.
 We hear that the WTO is harmful for the environment
and not sufficiently supportive of any economic development.

4
 OBJECTIVES

 The WTO reiterates the objectives of GATT .

 Raising standard of living and income .
 Introduce sustainable development.
 Taking positive steps to ensure that developing countries.

Functions of
WTO

 Administering and Implementing the multilateral and plurilateral

trade agreements.
 Acting as a forum for multilateral trade negotiations .
 Seeking to resolve trade disputes.
 Overseeing national trade policies.
 Cooperating with other international institutions.
 Maintaining trade related database.
 Acting as a watchdog of international trade .
 Technical assistance and training for developing countries.
 Institutional Characteristics
 Ministerial Conferences

5
 Taking Decisions

STRUCTURE OF WTO

6
 The WTO Structure

Ministerial Director General

conference

Secretariat

Dispute Settlement
Body General Council

Trade Policy Review Body

7
 Trade
related
Committee Committee Council for Council for Intellectual
On T & D On BoP Service Goods Property
rights
council

THE WTO
PRINCIPLES

8
 The WTO Principles

Environment Transparenc
Protection y
MFN
Treatment
Competition
On BoP
Principles National
Of Treatment
Treatment WTO
For LDCs

Free
Trade
Rule Based
Principle
Trading
Dismantling
System Trade
Barriers

9
PROVISIONS FOR DEVELOPING COUNTRIES

 Growing Number
 Need for Flexibility
 Trade and Development
 Enabling Clause
 Least Developed Countries (LDCs)
 Gradual Evolution
 Package Approach
 Making Trade-offs
 Strengths and Weaknesses

GATS & its Existence

 Services were considered to offer less potential

for trade expansion than goods

 Development of new transmission technologies

facilitating the supply of services

 Opening of monopolies in many countries

10
  Gradual liberalization of regulated sectors like
transport, banking and insurance combined with
changes in consumer preferences, enhanced the
“tradability” of services

 Developments increased international services

flows and created a similar need for multilateral
disciplines
 Main purpose of GATS was to create a credible
and reliable system of international trade rules,
which ensured fair and equitable treatment of all
countries on the principles of non-discrimination

 It aims at stimulating trade and development by

seeking to create a predictable policy
environment wherein the member countries
voluntarily undertake to bind their policy
regimes relating to trade in services

WTO
AGREEMENTS

Agreement on Subsidies and Countervailing Measures

 Subsidies which directly or indirectly affect trade flows

 2 Types of subsidies

11
  Prohibited subsidies
 Actionable subsidies
 More concerned with Agricultural trade
Agreements on Safeguards
 “Emergency” actions with respect to unexpected increased
imports of particular products

 measures can consist of

 quantitative import restrictions or
 duty increases

 costly for the country applying them

TRIMS Agreement
 Agreement in 1995

 Applicable to goods only

 Prohibition of inconsistent TRIMS

 Article III (National treatment), or
 Article XI (General elimination of quantitative
restrictions
 Notification of inconsistency

 Transition period

 Extension

 Illustrative list
TRADE-RELATED ASPECTS OF INTELLECTUAL PROPERTY
RIGHTS (TRIPS)

The WTO’s agreement on TRIPS covers nine categories of IP:

1. Patents
2. Plant and seed variety
3. Micro-organism
4. Copyrights and neighbouring rights
5. Trademarks, including service marks
6. Industrial designs
7. Geographical indications
8. Integrated circuits
9. Trade secrets
India’s major concerns in the area of IPR are as follows:

12
 1. Granting of product patents to pharmaceuticals and agro-
chemicals.
2. Patenting of micro-organisms or life forms.
3. Establishing an eff ective “sui generis system” for the protection
of new plant varieties and plant breeders’ rights,

TRADE-RELATED INVESTMENT
MEASURES (TRIMS)

WTO provisions explicitly prohibit the following trade-restrictive and

distortive measures:

 Local Content Requirement. Mandatory use of local outputs in

production.
 Trade-balancing Requirement. Imports to be maintained at a
specific proportion of exports.
 Foreign Exchange Balancing Requirement. Forex made
available for imports to equal a certain proportion of value of
forex from exports.
 Exchange Restrictions. Free access to forex curbed, resulting
in import restrictions.
 Export Performance Requirement. Certain proportion of
production should be
exported.

NON-TARIFF BARRIERS (NTBs) AND DISPUTE

SETTLEMENT MECHANISM
 The NTBs are often used as a protectionist measure, which goes
against the very spirit of the WTO mandate.
 India has taken the United States, the EU, and several others to
the Dispute Settlement Panel of the WTO and has won many
cases.
ANTI-DUMPING MEASURES
 GATT permits the imposition of anti-dumping duties against
dumped goods, equal to the differences between their export
price and their normal value.

 Apart from anti-dumping action, a country can take safeguard

measures (emergency action) to protect the domestic producers
against any serious injury or a threat thereof caused by the
increased imports.

13
Important Agreements under WTO

 General Agreement on trade in Services

 Trade Related Intellectual Property Rights

 Trade Related Investment Measures

 Agreement on Anti-Dumping

IT’S
IMPACT

Impact on financial services

 Insurance :
 Indian party Indian insurance company
 26% foreign equity
 Auxiliary services:- JV 51% FP with FIPB
approval
 Banking:

14
  Applicability of mode 3 (Opening of branch)
 Max 20 license per year
 No license if asset (on& off B/s) >15% of total
 FB participation for IPO, FPO up to 74%
 Venture capital:- no cap
 Restriction on PSE for surplus fund
 FB investment in PVT SEC Bank (49%)
 Financial information & data processing:- full
commitment
 Asset mngt, trust services, pension fund,
invest mngt 26 % cap

 Telecommunication

 Licensing requirement

 Wired communication:- 25%

 Mode 2:- full commitment

 Mode 3:- FDI 49%

 Mode 4:- horizontal section

IMPACT OF DUMPING ON INDIAN INDUSTRY

Toy INDUSTRY
 Chinese manufacturers

 80 per cent of the toys

15
 Indian manufacturers have been selling the
Chinese toys

 A Big toy car

Chinese Toy - Rs 80
Indian Toy - Rs 250

IMPACT ON ELECTRONICS INDUSTRY

 Chinese dry batteries

 Exported to India below its normal value

 5.37 mn pieces in 1997-98 to 36.60 mn pieces

in 1998-99

 Chinese batteries - Rs 1.5 to Rs 2

 In Indian batteries - Rs 8 – Rs 10

 The damage was not permanent

 Quality problems

 Imposition of Anti-dumping duty

16
 IT’S ADANTAGES &
DISADANTAGES

LIBERALISING TRADE IN GOODS

Industrial Goods: Tariffs

 WTO negotiations produce general rules that apply to all
members and specific commitments made by the individual
member governments.
Tariffs and Developed Countries
 The tariffs on industrial products imported by the developed
countries were reduced by 40
Tariffs and Developing Countries
 As far as the developing countries are concerned, the tariff levels
and the continuing process of negotiated reductions varies
considerably.
Binding of Tariffs…….. But
 Countries can break a commitment of not to raise a tariff above
the bound rate but only with difficulty.

Advantage for Chinese Manufacturers

17
  Price sensitive

 Competitive Prices

STANDARDS AND PROCEDURES

Technical Barriers to Trade

 Standards and Technical Regulations.
 Right to Adopt Standards.
Sanitary and Phytosanitary Measures (SPS)
Role for Scientific Evidence

ADMINISTRATIVE PROCEDURES

 Customs Valuation.
 Import Licensing.
 Pre-shipment Inspection.
 Rules of Origin.

DISPUTES SETTLEMENT MECHANISMS

The WTO DSU emphasises that a prompt settlement of dispute is

essential if the WTO is to function effectively.

 Rapid Settlement
 Better than GATT
 Dispute Settlement
 Right to Appeal
 More is Better

18
 It’s
Criticis
m

 No self reliant growth

 Restrictive business practices

CONCLUSION

19
  The major challenges before the industry is to accept the
inevitable,
and vigorously work towards exploiting opportunities likely to be
unleashed by globalization
 It is no one’s case that commitment to the goals of WTO alone
will deliver growth and prosperity across the world, leave alone
in India.

THANKS……………

20