Understanding the

Effects of the GATT and the WTO

on World Trade
 WORLD TRADE- is exchange of capital, goods,
and services across international borders or territories. And its present
throughout much of history (silk road, amber road),but its economic,
social, and political importance has risen it recent times, because of the
advancement of transportation, industrialization, globalization, MNC’S
and Outsourcing.

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 World Trade Organization (WTO)

It’s an organization for liberalizing trade. It’s a forum for governments

to negotiate trade agreements. It’s a place for them to settle trade
disputes. It operates a system of trade rules. (But it’s not Superman,
just in case anyone thought it could solve — or cause — all the
world’s problems!)

HISTORY- 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. The
last and largest GATT round, was the Uruguay Round which lasted
from 1986 to 1994 and led to the WTO’s creation.
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 Introduction

• The article “Institutions in International Relations: Understanding the

Effects of the GATT and the WTO on World Trade by Judith L. Goldstein,
Douglas Rivers, and Michael Tomz.

• The article comprehensively evaluates the effects of the GATT/WTO and

other trade agreements since World War II.

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• Effects of GATT\WTO on the World Trade.

Evaluation on two Factors-

1. Institutional standing ,
2. Institutional Embeddedness.

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 Standing: Rights and Obligations in
International Organizations

• A state, territory, or nongovernmental actor has standing to the extent

that it possesses rights and obligations established by the institution.
• Formal members ,Non formal membership,

• Institutions such as the GATT/WTO create rights and obligations for

nonmembers and therefore can have broad effects.
• It follows that, even within the core group of formal members, rights and
obligations may be weaker for some parties than for others.

• The concept of standing, which can be wider or narrower than formal

membership, helps us understand the true reach of international
institutions.

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 Standing Rights –Cont…

Standing differs from formal membership in two ways:

– Rights and obligations to territories and groups that never signed the
agreement.

– Some formal members employ opt-out clauses or express reservations

that affect the distribution of rights and obligations.

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Institutional Embeddedness

 Analysts used it to assess the effect of different, functionally

equivalent, institutions
 Four types of arrangements:

• GATT/WTO
• PTAs
• Nonreciprocal agreements such as GSP

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 Embeddedness: The GATT/WTO in the
Context of Other Commercial Agreements

• The international system is complex, and most countries participate in a wide

range of military, economic, and social institutions.

• Even the "least integrated" country in the world belonged to fourteen

intergovernmental organizations, and that all but two were signatories to at
least 100 IGOs.

• The GATT/WTO is embedded in a system of other trade agreements,

including PTAs.

• Hierarchy hypothesis: the effect of the GATT/WTO depends on the presence

or absence of higher-order agreements.
 Conclusion

• The empirical analysis in this article focuses on trade, but the work suggests other
avenues for research.

• Standing in the GATT/WTO is not coterminous with membership.

• The concept of embeddedness also has wide-reaching implications for other areas of
international relations

• In a world where countries enter multiple agreements, we must examine agreements

in context, rather than studying each agreement in isolation.

• The findings in this article show that such an approach can pay valuable dividends for
understanding international relations
 ANY QUESTION

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 Happy Republic day
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