MGT601 SME MANAGEMENT

Lesson 39 Word Trade Organization (WTO

Chapter Learning Objectives This chapter deals with;  World Trade Organization  WTO Agreements

World Trade Organization (WTO)  It is an organization that intends to supervise and liberalize international trade.  The organization officially commenced on January 1, 1995 under the Marrakech Agreement, replacing the General Agreement on Tariffs and Trade (GATT), which commenced in 1948.

WTO……  Formation January 1, 1995  Headquarters Centre William Rappard, Geneva, Switzerland  Membership 157 member states

Continued….  The organization deals with regulation of trade between participating countries; it provides a framework for negotiating and formalizing trade agreements, and a dispute resolution process aimed at enforcing participants' adherence to WTO agreements which are signed by representatives of member governments and ratified by their parliaments.

Continued….  The main guiding principles of WTO are: non-discrimination among the members in stipulation of favours regarding market access and tariff reductions provision of national treatment to foreign investors, imported goods and services stability and predictability of international trade patterns to promote confidence of investors and businesses by bounding the tariffs and market access for services.

Continued…  The promotion of economic development by encouraging reforms in the less developed and transition economies.  Most of the issues that the WTO focuses on derive from previous trade negotiations, especially from the Uruguay Round (1986–1994).

WTO Agreements: Salient Features 1. Trade in Services  Trade in Services is regulated by the GATS, which concerns with some basic obligations that apply to all members. its second part deals with nations schedules of commitments that contain specific assurances that will be the subject matter of ongoing process of liberalization and the third part deals with the annexes addressing the special situations of individual services sectors that are not binding on all members.

2. Agreement on Textile and Clothing  The Agreement of Textile and Clothing stipulates that the Multifibre Arrangement will be phased out and that the textiles and clothing sector will be integrated into WTO in four stages over 10years. The major portion i.e., 49% will be assimilated in the stage four (ending January 1, 2005).

3. Agreement on Subsides and Countervailing Measures  Agreement on Subsides and Countervailing Measures lays down rules on the subsidies for industrial products and on countervailing duties to counteract the effects of subsidies. Subsidies are divided into three categories; prohibited subsidies, actionable subsidies and non- actionable subsidies. Export subsidies and those contingents on the use of domestic as opposed to imported products are categorized as prohibited subsidies.

4. Agreement on Anti-dumping  Agreement on Anti-dumping provides the right to the contracting parties to apply anti-dumping measures, i.e. measures against imports of a product at an export price below its “normal value” if such dumped imports caused injury to a domestic industry.

5. Agreement on Safeguards  Agreement on Safeguard provides remedies for domestic producers injured by fairly traded imports. It allows the use of temporary protective measures but sets rules to guard against the abuse of such measures.

6. TRIMs Agreement  The TRIMs agreement identifies trade related investment measures that are against the provisions of the GATT and prohibits the use of such measures. TRIMs consist of investment incentives, such as subsidies, investment grants and allowances, priority access to credit, tax relief and exemption, tariff protection and other forms of fiscal, financial and commercial inducements for investment and performance requirements, such as local content, trade-balancing and export requirements.

7. The Agreement on Custom Valuation  The agreement on Customs Valuation intends to provide greater uniformity and certainty in the application of customs valuation rules and procedures. It provides for a fair, uniform and neutral system for the valuation of goods for customs purposes and precludes the use of arbitrary or fictitious customs values. Transaction value is the principal basis and method of value.

8. The TBT & SPS Agreements  The TBT and SPS Agreements do not question the right of governments to use technical regulation, standards and sanitary and phytosanitary measures for health and safety reasons. The SPS Agreement also requires that SPS measures be based on scientific justification.

9. Agreement on TRIPs  The Agreement on TRIPs provides for adequate intellectual property rights for copyrights, trademarks, industrial designs, layout designs of integrated circuits, patents etc. and the provision of effective enforcement measures for those rights, multilateral dispute settlement and transitional arrangements. Adequate arrangements are also proposed for the protection of Geographical Indications.

10. General Agreement on Trade in Services  General Agreement on Trade in Services establishes rules of conduct for governments to follow in their laws and regulations relating to services. It provides for specific commitments by member countries to open up certain sectors of services to import competition.

11. The Dispute Settlement Mechanism  The Dispute Settlement Mechanism is a keystone of multilateral trade order that encourages the members to solve mutual disputes by consultation but also have a legal framework for solving the matter if concerned parties fail to reach a consensus.

12. Trade Policy Review Body  Trade Policy Review Body encourages greater transparency in national trade policies by conduction mid term trade policy reviews.

Thanks you Happy Learning, Keep Learning