wto intro bretton wood agreements 1945 ibrd imf gatt 1947

WTO Intro

Bretton Wood Agreements 1945 IBRD IMF GATT 1947

GATT Trade Rounds Reduction of Trade barriers Strengthening of rules.

Uruguay Rounds Nov1982 Geveva Sept 1986 Punta del Este Dec 1988 Montreal Dec 1990 Brussels Dec 1993 Geneva April 1994 Marrakesh- Signature WTO

GATT VS WTO Multilateral GATT No Rules Includes Trade in Services Includes Intellectual Property Rights Dispute Settlement GATT 01-01-48 to 31-12-95 GATT 94

The WTO Location: Geneva, Switzerland Established: 1 January 1995 Created by: Uruguay Round negotiations (1986-94) Membership: 148 countries Budget: 155 million Swiss francs Secretariat staff: 560 Head: Director-General, Pascal Lamay Functions: Administering WTO trade agreements Administering WTO trade agreements Forum for trade negotiations Forum for trade negotiations Handling trade disputes Handling trade disputes Monitoring national trade policies Monitoring national trade policies Technical assistance and training for developing countries Technical assistance and training for developing countries Cooperation with other international organizations Cooperation with other international organizations

Members Total members 152 Countries Developed Countries Developing Countries Transition economies Least Developed countries. Small economies

Pakistans Membership 1947 One of the 23 founding members Signatory to almost all of the WTO Agreements

Main Areas of WTO GOODS SERVICES INTELLECTUAL PROPERTY DISPUTE SETTLEMENT POLICY REVIEW

Functions Implementation of Agreement Forum for negotiations Dispute Settlement Review of trade policies Technical assistance and training for developing countries Cooperation with other international organizations

Basic Principles Trade wo Discrimintaiton MFN National Treatment Transperancy Access to Markets Trade in Goods Binding of Tariff Prohibitaion of Qty Restrictions Tariff Negotiations Emergency Import Measures Trade in Services

FUNCTIONS OF THE WTO Permanent Forum for negotiations among Members concerning their multilateral trade relations Administration of dispute settlement understanding Facilitating implementation, administration and operation of various WTO agreements Administration of trade policy review mechanism Co-operation with IMF and World Bank for achieving greater coherence in global economic policy making

Decision making bodies Top level Ministerial Conference ( Meets after every Two years- 5th Cancun, 6th Hongkong) General Council (normally ambassadors and heads of delegation in Geneva, but sometimes officials sent from members capitals) which meets several times a year in the Geneva headquarters. The General Council also meets as the Trade PolicyReview Body and the Dispute Settlement Body. At the next level,Council the Goods Council, Services Council and Intellectual Property(TRIPS) Council report to the General Council. Numerous specialized committees, working groups and working parties deal with the individual agreements and other areas such as the environment, development, membership applications and regional trade agreements. Commiites

Ministerial Conference Singapore 1996 Geneva 1998 Seattle 1999 Doha 2001 Cancun 2003 Hong Kong 2005

WTO: Early Experience WTO as a global policeman Up to 1995-1999: 160 cases brought for decision 30 withdrawn after direct discussions between countries in dispute 100 + undergoing direct discussion 20 in final stage of solution implementation 4 have been settled 7 closed with no need for action GATT dealt with 196 cases from 1947-1995! WTO telecommunications agreement 1998 (effect) WTO Financial Services agreement 1999 (effect) Slide 5-14

HOW DID WTO COME INTO BEING? (contd.) Uruguay Round negotiations launched in 1986 and concluded in 1993 Key features : Specific agreements relating to Agriculture and Textiles Many new disciplines to eliminate measures like VERs etc. An agreement on Services, an area not covered by the old GATT

HOW DID WTO COME INTO BEING? (contd.) An agreement on TRIPS, providing for minimum standards relating to different kinds of Intellectual Property Rights A fast, automatic Dispute Settlement System with provisions for retaliatory actions Based on the concept of single undertaking Establishment of an organisation, that is, WTO

WTO AGREEMENT PREAMBLE I To conduct relations in the field of trade and economic endeavour with a view to: Raising standards of living Ensuring full employment Ensuring growth of real income Expanding production and trade in goods and services Protecting and preserving environment

WTO AGREEMENT PREAMBLE II Need for positive efforts to ensure that developing countries secure a share in growth in international trade

PHILOSOPHY OF WTO Trade liberalisation is to be achieved through reduction of tariff and non-tariff barriers Predictability and security of trade through binding commitments increases trade Trade contributes to growth and employment Well-defined rules relating to all matters impacting on trade will have a positive impact on trade

Basic Legal Principles of GATT/WTO

Content Basic legal principles: Tariff bindings / commitments Prohibition on quotas Most-favoured-nation MFN treatment National treatment

Content Rights of Members: General exceptions Safeguards Regional Trade Agreements Security exception Waivers Antidumping / Countervailing measures

Content Procedural aspects: Transparency Dispute Settlement mechanism 1

Understandings Agreements on: Agriculture Sanitary and phytosanitary measures Textiles and clothing Technical barriers to trade Trade-related investment measures (TRIMS) Antidumping Customs valuation Preshipment inspection Rules of origin Import licensing Subsidies and countervailing measures Marrakech Protocol Safeguards GATT 1994 (General Agreement on Tariffs and Trade) WTO: Trade Rules and Disciplines 1A Multilateral trade agreement on trade in goods Annex 1A Multilateral agreements on trade in Goods Goods 12

The 10 benefits 1. The system helps promote peace 2. Disputes are handled constructively 3. Rules make life easier for all 4. Freer trade cuts the costs of living 5. It provides more choice of products & qualities 6. Trade raises incomes 7. Trade stimulates economic growth 8. The basic principles make life more efficient 9. Governments are shielded from lobbying 10. The system encourages good government

The 10 misunderstandings 1. The WTO dictates policy 2. The WTO is for free trade at any cost 3. Commercial interests take priority over development 4. and over the environment 5. and over health and safety 6. The WTO destroys jobs, worsens poverty 7. Small countries are powerless in the WTO 8. The WTO is the tool of powerful lobbies 9. Weaker countries are forced to join the WTO 10. The WTO is undemocratic

GLOBALIZATION GLOBALIZATION ICT- shrinking world ICT- shrinking world Increased flow of goods, services & capital Increased flow of goods, services & capital among countries: Challenges & opportunities among countries: Challenges & opportunities Growing disparity- Growing disparity- [Seattle-Genoa-Doha-Madrid - Johannesburg-Cancun-Mombay] [Seattle-Genoa-Doha-Madrid - Johannesburg-Cancun-Mombay] Why ? Why ? Global trends Global trends

Global Trends Global Trends Trade Liberalization- dismantling tariffs : Benignly protects markets in North and denies legitimate space to markets in South Restructuring [MNCs/TNCs]- downsizing Mergers & Acquisitions - speedy Global Giants- emerging cartels Changing Production Systems Cyberspace- IT,E-business $Lay off- unemployment [In Pakistan from 5.9% in 1999 to 7.8% in 2004,and is growing] Expanding Service Sector [Real % change from 5-5.5% 1999-2004 in Pakistan] FDI-80 % directed at mergers & acquisition: In Pakistan [net FDI] 0.51 billion $ in 1999-0.81 billion$ in 2004. Dominating Economies-financial& capital markets

Globalization- an unequal World Globalization could and should benefit DCS but unlike a rising tide that lifts all boats, large & Small, Globalization is unequal Ever widening gap- rich and the poor. 4.5 billion people live in DCs 1.2 billion confront ravage of poverty daily 2.8 billions people- on less than2$/day; and 1.2 billion have less than 1$/day. Richest 10% of USA[25 million] income= as lowest 43% of Globe[2 billion]. No of hungry people in DCs has increased by 18 million in 2nd half of 90s. No of hungry people in DCs has increased by 18 million in 2nd half of 90s. Globally 842 million people undernourished, 1999-2001[798 million in DCs]. 170 million people under 5 are malnourished. In 17 countries, including Pakistan, undernourishment is on increase[FAO-2003] In 17 countries, including Pakistan, undernourishment is on increase[FAO-2003]

Globalization: Biased & lopsided Globalization: Biased & lopsided OECD[19%]:spent-1998, 520 billion$ on R&D, directed to their own needs. OECD[19%]:spent-1998, 520 billion$ on R&D, directed to their own needs. OECD: acquired 91% of all patents. OECD: acquired 91% of all patents. 70 billion$:spent on health[R]-300 million-tropical problems. 70 billion$:spent on health[R]-300 million-tropical problems. IACs spend >300 billion$ on subsidies-6 times 300 billion$ on subsidies-6 times < than development assistance. Divergent interests: unsafe biotech [GMOs]-chemicals. Divergent interests: unsafe biotech [GMOs]-chemicals. Environ. Vs food security-socio-economic stability? Environ. Vs food security-socio-economic stability?

Perspectives on Globalization CulturalPolitical Trade & Economic: Markets and economics the denominators of success

[More] Challenges [less] Opportunities Globalization forces countries to adapt to changes that it presents. Changes in general economic & political environment: alter the direction on international economic flows and affect human development. Rules of Globalization personified in the multilateral trading system-WTO, affect not only markets but peoples lives. Pakistan undertook deep & wide ranging reforms, to cope with challenge, related to: Fiscal & monetary instruments Fiscal & monetary instruments Banking System Banking System Trade & tariff measures [again being reviewed in the budget [2004-5] Trade & tariff measures [again being reviewed in the budget [2004-5] Agricultural sector policies Agricultural sector policies Government role in regulating markets Government role in regulating markets Political/Governance front Political/Governance front These [globally] binding rules restrict policy options a DC might choose for socio- economic development of its people.

Pakistan most globalized nation in SA . Foreign Trade Policy Magazine, based on Globalization Index [GI], ranks Pakistan at 46 out of 62 world economies that contribute 96% of total world GDP and are home to 96% of total global population. GI Ranking[2004]: Pakistan: 46 Sri Lanka: 51 Bangladesh : 56 India:61-4 points down the ranking it achieved in 2003

Does WTO bring prosperity to developing countries based on a just system ?

Membership in WTO Global Trade increased by 30 to 35%, the LDCs representing 20% of the world population generate only 0.03% of global trade flows

Is [global] free trade a key to affluence? Classic Economic Theorist support the argument. They believe GATT/WTO have contributed towards [trade] liberalization & prodigious growth of [world] trade over the last 50 years. Freed trade apologists see the GATT/WTO as key international institutions. According to research [regression] study conducted by Andrew K. Rose [University California,Sep.2002] on 175 countries, however---Countries joining the GATT/WTO neither have significantly different trade from non-members, nor do they experience increases in trade, holding other factors constant

Rules of the game are clear.. They bring with them [less] opportunities and [more] threats. How well prepared are we ? Rules of the game are clear.. They bring with them [less] opportunities and [more] threats. How well prepared are we ?

Doha Development Round [DDA] has every thing bar Development : When the current Round was launched in 2001 IACS promised to overhaul trade rules and reform their policies: Fine words that follow business 9 th : Doha Round 9 th : Doha Round Comprehensive Negotiations-DDA The TRs of IACs spoke volubly about a development round @ Doha, a rhetoric that proved hollow@ Cancun. Distortions continue :$ 318 billion subsidies[$235 direct support to the farmers in OECD countries: 90% of subsidies reported to WTO-2002] WTO didn't pursue development agenda [S/G UNCTAD] Crucial link between trade, poverty & food security don't figure prominently on WTO agenda, and "There was lack of good governance and a coherent policy in international organization "There was lack of good governance and a coherent policy in international organization such as WTO- as in Cancun 'perverse conditions' for cotton on the world market,10 million producers in DCs were prevented from benefiting from globalization and escaping poverty because 25,000 cotton farmers in Texas & other southern US states pocketed billion in subsidies. [Ms.Hein demire Wieczorek Zeul, German Development Minister] such as WTO- as in Cancun 'perverse conditions' for cotton on the world market,10 million producers in DCs were prevented from benefiting from globalization and escaping poverty because 25,000 cotton farmers in Texas & other southern US states pocketed billion in subsidies. [Ms.Hein demire Wieczorek Zeul, German Development Minister]

Business [not Development] Round? Business [not Development] Round? "It has been a mistake in Doha to proclaim a 'Development Round' and thereby arouse expectations which couldn't be fulfilled. Whoever was engaged in trade took a hard - nosed business attitude and didn't think about the development of their business partner." [Rubens Ricupero, S/G UNCTAD ] [Rubens Ricupero, S/G UNCTAD ] US & EU in-fights: steel tariff/tax break for exports Disagreement between Ag superpowers-USA & EU, led to familiar pattern of recrimination and deadlock@ WTO. Neither protagonist has demonstrated any inclination to cut Ag subsidies at home as promised before DDA was launched- Are they serious working for multilateral trading system?. IACs systematically use subsidies to skew the benefits of Ag trade in their favor.

Restriction impacting Access of DCs to IACs markets Un [weighted]Fair Tariff Reduction[OECD]-Reduction requirement-36%[15%/item]:low reduction on sensitive products[high tariffs],higher reduction on low tariffs. Un [weighted]Fair Tariff Reduction[OECD]-Reduction requirement-36%[15%/item]:low reduction on sensitive products[high tariffs],higher reduction on low tariffs. Complexity [OECD]: Multiple tariff lines-Seasonal tariffs,in/above quota, brand-schemes, non-ad valorem[OECD tariff lines expressed on ad valorem basis: Canada 22%,Japan 42 %,EU/USA 90%]. Complexity [OECD]: Multiple tariff lines-Seasonal tariffs,in/above quota, brand-schemes, non-ad valorem[OECD tariff lines expressed on ad valorem basis: Canada 22%,Japan 42 %,EU/USA 90%]. TRQs/SPS/TBT:-non-transparent quota dispensation,stringent SPS measures-DMEs[DCs-infrastructure,technical assistance]- [standards]sameness vs. equivalence. TRQs/SPS/TBT:-non-transparent quota dispensation,stringent SPS measures-DMEs[DCs-infrastructure,technical assistance]- [standards]sameness vs. equivalence.

Distortions in global markets [also] increase Us & EU have invented a category of support-GB/BB in WTO talks, and thereby have shifted support channels through an elaborate repackaging exercise WTO parlance Supports US[GB]: de-linked [not trade distorting]. WTO parlance Supports US[GB]: de-linked [not trade distorting]. Yet, it increases the income and lessen the risk of producers, hence encourages more production. CAP shifts subsidies from BB to GB. Mechanism of export becoming less transparent. Competitively priced Ag products from US/EU will flood the markets.

Distortions in global markets [also] increase US thus raised spending on Ag by $ 73.5 billion [US Farm Bill, May 2000]-8 crops-direct payment_ Us producers receive 75% in subsidies. US provided support of 3.4 billion to cotton producers that exceeds the amount it Sub Saharan Africa, and this. Artificially lowered the world prices of cotton by 1/4th in 2001.[Intl.Cotton Advisory Committee] US provided$ 5.7 billion in officially supported export credit underUS FARM Bill,2000. She sells corn 25% & wheat 46% below the cost of production, and cotton prices in US have also been slashed by 66% since 1996 to 50% a pound in order to undercut the 3 rd worlds producers. EU gave 2102 million Euro[1992-1999 EU Wheat producers receive a direct payment equivalent to$ 60/MT of the export price.

More Trade does not necessarily mean less poverty Mexico exports have tripled but poverty has increased at the same time, because There was often a big divide between the need of the people and the export business, and it is at this point that LICs have priority conflict with HICs, for "Every trade policy measure must be examined to see if it suited the millennium goal of halving world poverty by 2015" [German Development Minister] [German Development Minister]

The globalisation of production The globalisation of production Classic dependency theory assumes an international division of labour: core countries producing manufactured goods for domestic consumption and export peripheral economies trading in primary productions from the extractive industries and agriculture

The [ Food insecurity] trends Exacerbated DCs are becoming more dependent on food imports- especially in staple food. Food imports of NFIDCs increased in 1995-97by 40% since 1980.[ from $9.3 to $13 billon] Cereals- that make of caloric intake ] production moving towards OECD & handful of Latin American Countries [where same [MNCs] giant controlling the trade in US operate. The EU production increased by 25%[1992-99] with 35% increase in total subsidies. Food deficit of DCs is on increase. Sky rocketing import bill of DCs- BoP DCs share in worlds imports increased from 28%[1970] to 37%[1997] But their Ag exports remained the same as of 1980s-1/3rd of their total exports.

Low production efficiency & poor quality constrains Price & Quality Competitiveness A@ home Tariff-Applied[25%]lower than bound[100%] Domestic Support-AMS negative [ bound 10% de minimis ] Export Subsidy-Nil Efficiency? Infrastructure Regulations HRD Input Cost- electricity, fertilizer, pesticide, water

SAARC:Regional Profile [1986-98]

Importance of trade blocs and regionalisation of trade??

Intra-Regional Trade % of Exports

Trade Liberalization: The losers & winners Annual Exports :Pakistan : Approx: 14 billion $ Singapore: 100 billion$ Korea: 150$ Impossible to close borders to high quality+ low price products impossible to sell low quality +price uncompetitive products impossible to sell low quality +price uncompetitive products

Doables Improve efficiency-input, NRM,IPM * * Diversify-No to mono culture * * Value- addition * * Contain Residue-IPM,RVT * * Infrastructure- Accredited Labs. * * Packaging/Labeling * * Early Warning System * * Storage capacity/capability

TT ech-Based Economic Development SS cience-Industry-[Socio-]Economics interface Economic indexing IIPO profiling TTech. communities CCapitalize on low tech agriculture JAJAdd value- quality JEJEnhance efficiency- cost effectiveness *S*Sustainable Technologies-socio-economics * Trade & economic analysis *F*For integration of economies with trade starting point would be integration of S &T with national economic development plans

WTO & Pakistans Industry

Trade Liberalization

Textile

USA Textile Imports CountryChange%[2001-2002] World Total 15.59% 15.59% China 101.24% 101.24% Mexico -9.93 -9.93 Canada 2.81 2.81 Pakistan 5.55 5.55 South Korea South Korea 2.15 2.15 India 16.48 16.48 Thailand-15.92 Pakistan 5.55

CHINA-44% Rest of the World -2%

Distortions in global markets [also] increase Us raised spending on Ag by $ 73.5 billion [US Farm Bill, May 2000]-8 crops-direct payment_ Us producers receive 75% in subsidies. She sells corn 25% & wheat 46% below the cost of production, and cotton prices in US have also been slashed by 66% since 1996 to 50% a pound in order to undercut the 3 rd worlds producers. EU gave 2102 million Euro[1992-1999]

Regulations & Responsibility Regulations & Responsibility

Doables: interfacing NARS * Improve efficiency-input,NRM,IPM * Diversify-No to mono culture * Value addition * Contain Residue-IPM,RVT * Infrastructure- Accredited Labs. * Packaging/Labeling * Early Warning System * Storage capacity/capability

Social Audit Social Compliance What does it mean? It is a form of Social Audit or Social Accountability, which emphasizes managing business activities in way that respects and promotes the human rights of work force

Social Accountability : a threat or an opportunity

Workers have become a liability than an asset Un/Semiskilled labor force Can produce only basic products Thus quality, productivity and competitiveness are compromised

SA 8000 : Social Accountability 8000

Way Forward Proactive engagement in Social Accountability standard setting & compliance Capacity building in Social Audit Incentives for Compliance Investment in Social Capital Awareness of respect for human rights & protection of environment

Compliance Requirements No and/Forced Child Labor Safe & health work place compliant to the law Freedom to organize for collective bargaining Non-discrimination-personal/belief No corporate punishment: mental/physical coercion Compensation for overtime and at least one day off/week Compensation: Minimum Wages+ some discretionary income & Management System: to dispense SA8000-annual review, corrective action on non-conformity

Why? Age of awareness- Consumers expect industry to respect human rights and protect environment WTO Agreement on Technical Barriers [TBT] Neo-protectionism EU-US base buyers have already started asking for Social Audit Recent Audit of Textile Settings in Punjab Warning on health & hygiene

Tech-Based Economic Development Science-Industry-[Socio-]Economics interface Economic indexing IPO profiling Tech. communities Capitalize on low tech agriculture J Add value- quality J Enhance efficiency- cost effectiveness * Sustainable Technologies-socio- economics

wto intro bretton wood agreements 1945 ibrd imf gatt 1947

Documents

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