WORLD TRADE ORGANIZATION(WTO) - PowerPoint PPT Presentation


Title: WORLD TRADE ORGANIZATION(WTO)


1
WORLD TRADE ORGANIZATION(WTO)
  • REFERENCES

2
WTO
  • Carnegie Endowment for International Peace
  • Sandra Polaski. What Future for the WTO?
  • www.carnegieendowment.org
  • 2. The International Forum on Globalalization(IFG)
  • Invisible Government- The WTO Global Government
    for the new Millennium.
  • www.ifg.org
  • 3. World Economic Forum. The Global Trade
    Enabling Report, 2009

3
WTO
  • 4. ADB/DFiD/ILO(2009).
  • Country Diagnostic Studies
  • Nepal Critical Development Constraints.
  • 5. UNDP. Enhancing Nepals Trade Related Capacity
  • www.entrec.org.np
  • 6. Annapurna, Mangsir 29, 2066(Dec. 14, 2009)
    Monday.
  • 7. Kantipur, 24 Poush, 2066, Friday.

4
GATT Founding Members
  • Australia, Belgium, Brazil, Burma, Canada,
  • Ceylon, Chile, China, Cuba, the Czechoslovak
  • Republic, France, India, Lebanon, Luxembourg,
  • Netherlands, New Zealand, Norway, Pakistan,
  • Southern Rhodesia, Syria, South Africa, the
  • United Kingdom, and the United States.

5
General Agreement on Tariffs and Trade.(GATT)
  • Definition

6
GATT
  • General Agreement on Tariffs and Trade.
  • Treaty organization affiliated with the United
    Nations
  • whose purpose was to facilitate international
    trade.
  • The primary actions of the organization were to
    freeze and reduce tariff levels on various
    commodities.

7
GATT
  • GATT was created in 1947, and was originally
    intended to become a part of the International
    Trade Organization (ITO)
  • however, the ITO failed to be created,
  • so the GATT was left as an independent
    organization.
  • In 1994, GATT was superseded by the WTO.

8
World Trade Organization (WTO)
  • Is one of the world's most important and
    influential International Organization
  • The role of WTO is
  • To administer the multilateral trade
  • Agreements adopted during the Uruguay
  • Round of trade negotiations
  • To review national policies
  • To serve as framework for further trade
    negotiations

9
  • WTO has Power
  • To issue bindings legal rulings on disputes
  • To enforce these rules by allowing imposition of
    trade sanctions

10
  • WTO Covers
  • Trade in goods
  • Trade in services
  • Intellectual Property Rights

11
  • WTO SYSTEM ACCOUNT FOR MORE THAN 97 PERCENT OF
    THE WORLD TRADE
  • THE WTO AGREEMENT TOOK 7 YEARS TO NEGOTIATE AND
    THE RESULT IS BROAD AND COMPLICATED
  • IS EXTREMELY BROAD AND COMPLEX PROBABLY ONLY A
    HANDFUL OF SPECIALIST REALLY UNDERSTAND ITS FULL
    IMPLICATIONS.
  • WTO IS A MEMBER DRIVEN ORGANIZATION

12
  • POLICY DECISIONS CONSTITUTE THREE DIMENSIONS
  • ALL MEMBERS CAN PARTICIPATE IN THE MINISTERIAL
    CONFERENCE
  • GENERAL COUNCIL
  • OTHER COUNCILS AND COMMITTEES

13
  • DOES NOT DELEGATE POWER TO SMALLER SUB-GROUPS OF
    MEMBERS SUCH AS THE EXECUTIVE BOARD.
  • WTO IS DESCRIBED AS "COLLEGIATE OF DELEGATIONS
    SERVICED BY THE SECRETARIATE"

14
  • THE ACCESSION PROCESS
  • COUNTRYPREPARES MEMORANDUM DESCRIBING ITS TRADE
    AND ECONOMIC POLICIES
  • THIS IS EXAMINED BY 'WORKING PARTY'
  • WORKING PARTY ARE OPEN TO ALL, BUT ONLY ABOUT 35
    MEMBERS PARTICIPATE IN EACH, USUALLY INCLUDING
    THE APPLICANT'S MOST ACTIVE TRADING PARTENER AND
    POWERFUL ECONOMIES LIKE THE USA, EC, CANADA AND
    JAPAN

15
  • EXAMPLES
  • OVER 60 MEMBERS ON CHINA
  • OVER 65 MEMBERS ON RUSSIA
  • OVER 25 MEMBERS ON NEPAL
  • OVER 15 MEMBER ON CAMBODIA

16
  • EXAMPLES
  • IT TOOK 15 YEARS FOR CHINA TO BE THE MEMBER
  • RUSSIA APPLIED IN 1993' IS STILL NEGOTIATING
  • IT TOOK 14 YEARS FOR NEPAL TO BE THE MEMBER
  • IT TOOK ONLY 34 MONTHS FOR KYRGUSTAN TO BE THE
    MEMBER

17
  • NOTE
  • ACCEDING COUNTRIES ARE ASKED TO AGREE TO
    COMMITMENTS THAT GO WELL BEYOND WHAT WTO LAW
    ACTUALLY REQUIRES, AND THAT OFTEN EVEN EXCEED
    THOS OF EXISTING WTO MEMBERS.
  • ROMAN GRYUBERG ROY MICKEY POINT OUT THAT WHILE IT
    IS ONE OF THE '... ENDURING CONVENIENT CLICHES OF
    THE MULTILATERAL TRADING SYSTEM THAT THE WTO IS A
    'RULES-BASED SYSTEM', THE ACTUALITY IS THAT
    ACCESSION IS INHERENTLY POWER BASED AND THE VERY
    ANTITHESIS OF THE WTO'S CREDO'.

18
World Trade Organization
  • Stages of development
  • 1947 23 countries formed an association called
    The General Agreement on Tariffs and Trade (GATT)
    to negotiate reductions on trade restrictions and
    work towards common procedures for handling
    imports and exports.
  • 1986-93 Uruguay round of international trade
    negotiation agreed to establish World Trade
    Organization.
  • April 1994 Approved by the Trade Ministers in
    Marrakech, Morocco.

19
  • January 1, 1995 Established WTO and replaced the
    old GATT which had acted as "interim" World Trade
    watchdog and negotiating forum since 1948.
  • Ministerial meeting (highest decision making
    body)
  • December 1996 First meeting in Singapore
  • May 1998 Second meeting in Geneva
  • December 1999 Third meeting in Seattle
  • November 2001 Fourth meeting in Doha
  • September 2003 Fifth meeting in Cancun

20
  • As of September 2003 148 countries are members.
    Nepal became the member in September 2003
    meeting.
  • Special benefits WTO has special provisions to
    help least developed countries
  • Special provisions to provide technical
    assistance to food importing countries to remove
    negative effect with regard to food supplied.
  • Small tariff reduction commitments and longer
    timeframe to implement market access measures.
  • Can benefit from technical assistance of
    International Trade Center.

21
  • WTO is defined as
  • "The legal and institutional foundation of the
    multilateral trading system" a term that
    encompasses its role as the forum for negations
    and settlement of disputes and the guardian of
    trade rules.
  • It is a permanent organization created by
    international treaty ratified by the government
    and legislatures of members' states (unlike thee
    GATT).
  • It has similar status to that of the
    international Monetary Fund (IMF), The World Bank
    etc, but it is not a United Nations Agency.
  • A member driven organization and all decisions on
    any subject have to be taken by consensus, i.e.,
    without objection from any members.

22
  • Secretariat
  • Headed by a Director-General. The current one is
    from France
  • General Council
  • WTO's main standing decision-making body
  • Each member country sends representatives
    normally led by the head of its permanent mission
    in Geneva.
  • The council appoints the Deputy Director General
    after consultation among member countries.
  • They would each serve three years each.
  • the General council appoints a Chairman from
    among the Ambassadors and serves for one year.

23
  • Voting can in principle take place but would have
    to be a consensus to allow it.
  • Binds all members to give equal treatment to the
    products and services of WTO members.
  • Members can suspend this obligation in defense of
    national security or public health (USA and CUBA
    for example)
  • Critics say it "as a cabal of faceless
    bureaucrats dictating trade policy to the world,
    is an administrative and research structure with
    no decision-making role on policy.

24
  • Documentation
  • General Agreement, a 38 article code aimed at
    ensuring open, non-discriminatory trade in goods,
    services, agricultural produce and textiles.
  • 500 pages specific accords shaped in Uruguay
    Round.

25
  • Functions
  • To administer and implement the multilateral and
    plurilateral trade agreement which together make
    up WTO
  • To act as a forum of multilateral trade
    negotiations.
  • To seek to resolve trade disputes.
  • To oversee national trade policies.
  • To cooperate with international institutions
    involved global economic policy-making.

26
  • Helping Least Developed and Food Importing
    Countries
  • Appropriate mechanism related to the availability
    of food and the provision of basic foodstuffs in
    full grant form and for agricultural development.
  • Possibility of assistance from the IMF and the
    World Bank with respect to the short-term
    financing of commercial food imports.

27
  • PRINCIPLES
  • Promote trade without discrimination.
  • National treatment-Once goods have been entered a
    market, they must be treated no less favorably
    that the equivalent.
  • Domestically produced goods.
  • Intellectual property protection by WTO member
    countries provides for Most Favored Nations (MFN)
    and national treatment.

28
  • Agreement requires members to offer MFN treatment
    to services and service supplies of other
    members.
  • Non-discrimination provisions include those on
  • Rules of origin
  • Pre-shipment inspection
  • Trade related investment measures
  • Application of sanitary and phytosanitory
    measures

29
  • Major Provisions
  • Agriculture
  • Reform trade and provide the basis for
    market-oriented policies, thereby improving
    economic cooperation for importing and exporting
    countries alike.
  • Established new rules and commitments in

30
  • Market access
  • Domestic support
  • Export competition
  • Encourage the use of less trade-distorting
    domestic support
  • Policies to maintain the rural economy.
  • Specific concerns for developing countries are
    addressed including those of net-food importing
    developing countries and less developed economies.

31
  • Health and Safety Measures
  • Application of Food safety and animal and pl
    health regulations
  • Government's rights to take sanitary and
    phytosanitory measures but stipulates that they
    must be based on science, should be applied only
    to the extent necessary to protect human, animal
    or plant life or health and should be arbitrarily
    or unjustifiably discriminate among members where
    identical or similar conditions prevail.

32
  • Textile and Clothing
  • To secure the integration of the textiles and
    clothing sector-where much of the trade is
    currently subject to bilateral quota negotiations
    under the Multi-fiber Agreement (MFA) into the
    main stream of WTO.

33
  • Anti-dumping Measures
  • Imposed on imports, if such dumped imports cause
    injury to the domestic industry in the territory
    of the importing member.
  • Additional criteria for determining the injury
    caused to a domestic industry by the dumped
    product.
  • Procedure to be followed in initiating and
    conducting anti-dumping investigations.
  • The role of dispute settlement panels in disputes
    relating to anti-dumping actions taken by WTO
    members.

34
  • TRIPS (Trade Related Aspects of Intellectual
    Property Rights)
  • Protection and enforcement of intellectual
    property rights.
  • Effective enforcement measures for those rights.
  • Multilateral dispute settlement.

35
  • GATS (The General Agreement on Trade and
    Services)
  • The agreement contains three elements
  • A framework of general rules and disciples
  • Special conditions relating individual sectors
    (movement of natural persons, financial services,
    telecommunication and air transport services)
  • A council of trade in services overseas the
    operation of the agreement.

36
Some of the important steps undertaken by Nepal
during the WTO accession and negotiation
  • Applied under GATT on 16 May 1989
  • Working party was established on 21-22 May 1989
  • Memorandum of foreign trade regime of Nepal was
    submitted on 26 February 1990
  • Nepal communicated interest on 5 December 1995
  • General council decided to give continuity the
    working group on 31 January 1996

37
  • Memorandum of foreign trade regime of Nepal
    submitted on 10 August 1998
  • First formal meeting of working party held on 22
    May 2000
  • Schedules on goods and services in July 2002
  • Second formal meeting of working party held on 12
    September 2002
  • Protocol of accession submitted on 15 August 2003
  • Working party concluded Nepal's membership on 15
    August 2003
  • Fifth ministerial conference held in Cancun,
    approved for accession on Nepal's membership.
  • Nepal ratified on March 2004 and has become full
    fledge member of WTO.

38
  • IMPACT OF WTO ON NEPAL'S ECONOMY
  • Positive Impact
  • Trade Expansion
  • Trade Diversification
  • Freedom of Transit will provide legal and
    secure transit rights to Nepal through India and
    China
  • Dispute Settlement will ensure a stronger,
    faster, impartial and binding mechanism for
    settlement of disputes related to trade
  • End of Bilateralism Bilateral agreement with 17
    countries. Trade and Transit Treaty with India
    will do away with the need for bilateral trade
    agreement
  • Image and Power Almost ¾ of WTO members are
    developing countries. This will empower Nepal.

39
  • NEGATIVE IMPACT
  • Erosion of Preference (enjoyed under bilateral
    agreement and treaties)
  • Tariff Rates Concession
  • Removal of concession
  • Removal of subsidies in agriculture
  • Opening up of trade and services etc.
  • Prohibition of quota restrictions
  • Affect domestic industries

40
  1. PriceHike Food, Drugs, Agricultural Inputs and
    other items of importsforeign exchange outflow
  2. Accession Commitment Accept stringent
    commitments by existing members
  3. Reduce flexibility in policy and strategy
    formulation relating to trade
  4. Institutional Requirements
  5. Burden of WTO may be too heavy as there is no
    level playing field in practice.
  6. Lacks knowledge, information, experience,
    capacity, resources, institutional
    infrastructure, competent personnel

41
  1. Dependence on foreign firms will increase for
    technology and resources
  2. Difficult to enforce its intellectual property
    rights
  3. Patents taken by US Companies of traditional
    generic commodities like Basmati Rice, Neem
    leaves, Turmeric etc.
  4. Gaps in Theory and Practice
  5. European Union and Japan are unwillingness to
    reduce subsidies on agricultural products
  6. Trade harassment is high for LDCs and Nepal

42
  • CHALLENGES
  • MAXIMIZE THE BENEFITS
  • MINIMIZE ITS RIGHTS AND DOWNSIDE EFFECTS
  • EQUIP OURSELVES WITH THE CAPACITY NECESSARY TO
    PARTICIPATE EFFICIENTLY IN GLOBAL MARKETS
  • ABILITY TO ADJUST OUR ECONOMIC STRUCTURES TO A
    CHANGING EXTERNAL ENVIRONMENT

43
  1. STABLE MACROECONOMY
  2. PRUDENT FINANCIAL MANAGEMENT
  3. SOUND REGULATORY PRACTICES
  4. NECESSARY STRUCTURAL AND INSTITUTIONAL REFORMS IN
    THE FINANCIAL AND CORPORATE SECTORS

44
The World Bank (2003)Diagnostic Trade
IntegrationStudy (DTIS) or Trade Competitiveness
Study
  • The study appraised Nepal's constraints to
    effective integration into the global trading
    system. It has made policy level recommendations
    to capacity building.
  • Conclusion
  • Improve production capacity, productivity and
    competitive strength through quality improvement,
    reduction of costs and wastages, remove supply
    constraints.
  • Export of products in which is has sustainable
    comparative advantage tourism, hydropower, hers,
    flowers, silver jewellery, handicrafts.

45
  • Product profile should be enhanced
  • Strengthen SAARC, SAPTA and SAFTA to SAFTA to
    improve negotiating power, strengthen
    institutional mechanism.
  • Educate people
  • Create legal safeguard for bio-diversity,
    genetics, protection of domestic industries and
    females' rights.
  • Amend laws to make them WTO friendly.

46
Nepal's contribution to the world trade is 0.02
  • The study recommends
  • Relaxation in custom barrier
  • Allowing easy exit to foreign companies
  • Reforming labor market
  • Strengthening the government private sector
    coordination

47
  • Comparative and competitive advantage areas
  • Dried leguminous
  • Spices
  • Seeds (Niger Seeds)
  • Leather and leather products
  • Fibers (hand knotted wool carpets)
  • Yarn and textile garments
  • The study has shown that it costs us US 130
    million (NRs. 10 Billions over 10 of estimated
    budget for fiscal year 2002/2003) to implement
    just three of the WTO agreements namely TRIPS,
    SPS and custom valuations.
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Title: WORLD TRADE ORGANIZATION(WTO)


1
WORLD TRADE ORGANIZATION(WTO)
  • REFERENCES

2
WTO
  • Carnegie Endowment for International Peace
  • Sandra Polaski. What Future for the WTO?
  • www.carnegieendowment.org
  • 2. The International Forum on Globalalization(IFG)
  • Invisible Government- The WTO Global Government
    for the new Millennium.
  • www.ifg.org
  • 3. World Economic Forum. The Global Trade
    Enabling Report, 2009

3
WTO
  • 4. ADB/DFiD/ILO(2009).
  • Country Diagnostic Studies
  • Nepal Critical Development Constraints.
  • 5. UNDP. Enhancing Nepals Trade Related Capacity
  • www.entrec.org.np
  • 6. Annapurna, Mangsir 29, 2066(Dec. 14, 2009)
    Monday.
  • 7. Kantipur, 24 Poush, 2066, Friday.

4
GATT Founding Members
  • Australia, Belgium, Brazil, Burma, Canada,
  • Ceylon, Chile, China, Cuba, the Czechoslovak
  • Republic, France, India, Lebanon, Luxembourg,
  • Netherlands, New Zealand, Norway, Pakistan,
  • Southern Rhodesia, Syria, South Africa, the
  • United Kingdom, and the United States.

5
General Agreement on Tariffs and Trade.(GATT)
  • Definition

6
GATT
  • General Agreement on Tariffs and Trade.
  • Treaty organization affiliated with the United
    Nations
  • whose purpose was to facilitate international
    trade.
  • The primary actions of the organization were to
    freeze and reduce tariff levels on various
    commodities.

7
GATT
  • GATT was created in 1947, and was originally
    intended to become a part of the International
    Trade Organization (ITO)
  • however, the ITO failed to be created,
  • so the GATT was left as an independent
    organization.
  • In 1994, GATT was superseded by the WTO.

8
World Trade Organization (WTO)
  • Is one of the world's most important and
    influential International Organization
  • The role of WTO is
  • To administer the multilateral trade
  • Agreements adopted during the Uruguay
  • Round of trade negotiations
  • To review national policies
  • To serve as framework for further trade
    negotiations

9
  • WTO has Power
  • To issue bindings legal rulings on disputes
  • To enforce these rules by allowing imposition of
    trade sanctions

10
  • WTO Covers
  • Trade in goods
  • Trade in services
  • Intellectual Property Rights

11
  • WTO SYSTEM ACCOUNT FOR MORE THAN 97 PERCENT OF
    THE WORLD TRADE
  • THE WTO AGREEMENT TOOK 7 YEARS TO NEGOTIATE AND
    THE RESULT IS BROAD AND COMPLICATED
  • IS EXTREMELY BROAD AND COMPLEX PROBABLY ONLY A
    HANDFUL OF SPECIALIST REALLY UNDERSTAND ITS FULL
    IMPLICATIONS.
  • WTO IS A MEMBER DRIVEN ORGANIZATION

12
  • POLICY DECISIONS CONSTITUTE THREE DIMENSIONS
  • ALL MEMBERS CAN PARTICIPATE IN THE MINISTERIAL
    CONFERENCE
  • GENERAL COUNCIL
  • OTHER COUNCILS AND COMMITTEES

13
  • DOES NOT DELEGATE POWER TO SMALLER SUB-GROUPS OF
    MEMBERS SUCH AS THE EXECUTIVE BOARD.
  • WTO IS DESCRIBED AS "COLLEGIATE OF DELEGATIONS
    SERVICED BY THE SECRETARIATE"

14
  • THE ACCESSION PROCESS
  • COUNTRYPREPARES MEMORANDUM DESCRIBING ITS TRADE
    AND ECONOMIC POLICIES
  • THIS IS EXAMINED BY 'WORKING PARTY'
  • WORKING PARTY ARE OPEN TO ALL, BUT ONLY ABOUT 35
    MEMBERS PARTICIPATE IN EACH, USUALLY INCLUDING
    THE APPLICANT'S MOST ACTIVE TRADING PARTENER AND
    POWERFUL ECONOMIES LIKE THE USA, EC, CANADA AND
    JAPAN

15
  • EXAMPLES
  • OVER 60 MEMBERS ON CHINA
  • OVER 65 MEMBERS ON RUSSIA
  • OVER 25 MEMBERS ON NEPAL
  • OVER 15 MEMBER ON CAMBODIA

16
  • EXAMPLES
  • IT TOOK 15 YEARS FOR CHINA TO BE THE MEMBER
  • RUSSIA APPLIED IN 1993' IS STILL NEGOTIATING
  • IT TOOK 14 YEARS FOR NEPAL TO BE THE MEMBER
  • IT TOOK ONLY 34 MONTHS FOR KYRGUSTAN TO BE THE
    MEMBER

17
  • NOTE
  • ACCEDING COUNTRIES ARE ASKED TO AGREE TO
    COMMITMENTS THAT GO WELL BEYOND WHAT WTO LAW
    ACTUALLY REQUIRES, AND THAT OFTEN EVEN EXCEED
    THOS OF EXISTING WTO MEMBERS.
  • ROMAN GRYUBERG ROY MICKEY POINT OUT THAT WHILE IT
    IS ONE OF THE '... ENDURING CONVENIENT CLICHES OF
    THE MULTILATERAL TRADING SYSTEM THAT THE WTO IS A
    'RULES-BASED SYSTEM', THE ACTUALITY IS THAT
    ACCESSION IS INHERENTLY POWER BASED AND THE VERY
    ANTITHESIS OF THE WTO'S CREDO'.

18
World Trade Organization
  • Stages of development
  • 1947 23 countries formed an association called
    The General Agreement on Tariffs and Trade (GATT)
    to negotiate reductions on trade restrictions and
    work towards common procedures for handling
    imports and exports.
  • 1986-93 Uruguay round of international trade
    negotiation agreed to establish World Trade
    Organization.
  • April 1994 Approved by the Trade Ministers in
    Marrakech, Morocco.

19
  • January 1, 1995 Established WTO and replaced the
    old GATT which had acted as "interim" World Trade
    watchdog and negotiating forum since 1948.
  • Ministerial meeting (highest decision making
    body)
  • December 1996 First meeting in Singapore
  • May 1998 Second meeting in Geneva
  • December 1999 Third meeting in Seattle
  • November 2001 Fourth meeting in Doha
  • September 2003 Fifth meeting in Cancun

20
  • As of September 2003 148 countries are members.
    Nepal became the member in September 2003
    meeting.
  • Special benefits WTO has special provisions to
    help least developed countries
  • Special provisions to provide technical
    assistance to food importing countries to remove
    negative effect with regard to food supplied.
  • Small tariff reduction commitments and longer
    timeframe to implement market access measures.
  • Can benefit from technical assistance of
    International Trade Center.

21
  • WTO is defined as
  • "The legal and institutional foundation of the
    multilateral trading system" a term that
    encompasses its role as the forum for negations
    and settlement of disputes and the guardian of
    trade rules.
  • It is a permanent organization created by
    international treaty ratified by the government
    and legislatures of members' states (unlike thee
    GATT).
  • It has similar status to that of the
    international Monetary Fund (IMF), The World Bank
    etc, but it is not a United Nations Agency.
  • A member driven organization and all decisions on
    any subject have to be taken by consensus, i.e.,
    without objection from any members.

22
  • Secretariat
  • Headed by a Director-General. The current one is
    from France
  • General Council
  • WTO's main standing decision-making body
  • Each member country sends representatives
    normally led by the head of its permanent mission
    in Geneva.
  • The council appoints the Deputy Director General
    after consultation among member countries.
  • They would each serve three years each.
  • the General council appoints a Chairman from
    among the Ambassadors and serves for one year.

23
  • Voting can in principle take place but would have
    to be a consensus to allow it.
  • Binds all members to give equal treatment to the
    products and services of WTO members.
  • Members can suspend this obligation in defense of
    national security or public health (USA and CUBA
    for example)
  • Critics say it "as a cabal of faceless
    bureaucrats dictating trade policy to the world,
    is an administrative and research structure with
    no decision-making role on policy.

24
  • Documentation
  • General Agreement, a 38 article code aimed at
    ensuring open, non-discriminatory trade in goods,
    services, agricultural produce and textiles.
  • 500 pages specific accords shaped in Uruguay
    Round.

25
  • Functions
  • To administer and implement the multilateral and
    plurilateral trade agreement which together make
    up WTO
  • To act as a forum of multilateral trade
    negotiations.
  • To seek to resolve trade disputes.
  • To oversee national trade policies.
  • To cooperate with international institutions
    involved global economic policy-making.

26
  • Helping Least Developed and Food Importing
    Countries
  • Appropriate mechanism related to the availability
    of food and the provision of basic foodstuffs in
    full grant form and for agricultural development.
  • Possibility of assistance from the IMF and the
    World Bank with respect to the short-term
    financing of commercial food imports.

27
  • PRINCIPLES
  • Promote trade without discrimination.
  • National treatment-Once goods have been entered a
    market, they must be treated no less favorably
    that the equivalent.
  • Domestically produced goods.
  • Intellectual property protection by WTO member
    countries provides for Most Favored Nations (MFN)
    and national treatment.

28
  • Agreement requires members to offer MFN treatment
    to services and service supplies of other
    members.
  • Non-discrimination provisions include those on
  • Rules of origin
  • Pre-shipment inspection
  • Trade related investment measures
  • Application of sanitary and phytosanitory
    measures

29
  • Major Provisions
  • Agriculture
  • Reform trade and provide the basis for
    market-oriented policies, thereby improving
    economic cooperation for importing and exporting
    countries alike.
  • Established new rules and commitments in

30
  • Market access
  • Domestic support
  • Export competition
  • Encourage the use of less trade-distorting
    domestic support
  • Policies to maintain the rural economy.
  • Specific concerns for developing countries are
    addressed including those of net-food importing
    developing countries and less developed economies.

31
  • Health and Safety Measures
  • Application of Food safety and animal and pl
    health regulations
  • Government's rights to take sanitary and
    phytosanitory measures but stipulates that they
    must be based on science, should be applied only
    to the extent necessary to protect human, animal
    or plant life or health and should be arbitrarily
    or unjustifiably discriminate among members where
    identical or similar conditions prevail.

32
  • Textile and Clothing
  • To secure the integration of the textiles and
    clothing sector-where much of the trade is
    currently subject to bilateral quota negotiations
    under the Multi-fiber Agreement (MFA) into the
    main stream of WTO.

33
  • Anti-dumping Measures
  • Imposed on imports, if such dumped imports cause
    injury to the domestic industry in the territory
    of the importing member.
  • Additional criteria for determining the injury
    caused to a domestic industry by the dumped
    product.
  • Procedure to be followed in initiating and
    conducting anti-dumping investigations.
  • The role of dispute settlement panels in disputes
    relating to anti-dumping actions taken by WTO
    members.

34
  • TRIPS (Trade Related Aspects of Intellectual
    Property Rights)
  • Protection and enforcement of intellectual
    property rights.
  • Effective enforcement measures for those rights.
  • Multilateral dispute settlement.

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  • GATS (The General Agreement on Trade and
    Services)
  • The agreement contains three elements
  • A framework of general rules and disciples
  • Special conditions relating individual sectors
    (movement of natural persons, financial services,
    telecommunication and air transport services)
  • A council of trade in services overseas the
    operation of the agreement.

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Some of the important steps undertaken by Nepal
during the WTO accession and negotiation
  • Applied under GATT on 16 May 1989
  • Working party was established on 21-22 May 1989
  • Memorandum of foreign trade regime of Nepal was
    submitted on 26 February 1990
  • Nepal communicated interest on 5 December 1995
  • General council decided to give continuity the
    working group on 31 January 1996

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  • Memorandum of foreign trade regime of Nepal
    submitted on 10 August 1998
  • First formal meeting of working party held on 22
    May 2000
  • Schedules on goods and services in July 2002
  • Second formal meeting of working party held on 12
    September 2002
  • Protocol of accession submitted on 15 August 2003
  • Working party concluded Nepal's membership on 15
    August 2003
  • Fifth ministerial conference held in Cancun,
    approved for accession on Nepal's membership.
  • Nepal ratified on March 2004 and has become full
    fledge member of WTO.

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  • IMPACT OF WTO ON NEPAL'S ECONOMY
  • Positive Impact
  • Trade Expansion
  • Trade Diversification
  • Freedom of Transit will provide legal and
    secure transit rights to Nepal through India and
    China
  • Dispute Settlement will ensure a stronger,
    faster, impartial and binding mechanism for
    settlement of disputes related to trade
  • End of Bilateralism Bilateral agreement with 17
    countries. Trade and Transit Treaty with India
    will do away with the need for bilateral trade
    agreement
  • Image and Power Almost ¾ of WTO members are
    developing countries. This will empower Nepal.

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  • NEGATIVE IMPACT
  • Erosion of Preference (enjoyed under bilateral
    agreement and treaties)
  • Tariff Rates Concession
  • Removal of concession
  • Removal of subsidies in agriculture
  • Opening up of trade and services etc.
  • Prohibition of quota restrictions
  • Affect domestic industries

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  1. PriceHike Food, Drugs, Agricultural Inputs and
    other items of importsforeign exchange outflow
  2. Accession Commitment Accept stringent
    commitments by existing members
  3. Reduce flexibility in policy and strategy
    formulation relating to trade
  4. Institutional Requirements
  5. Burden of WTO may be too heavy as there is no
    level playing field in practice.
  6. Lacks knowledge, information, experience,
    capacity, resources, institutional
    infrastructure, competent personnel

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  1. Dependence on foreign firms will increase for
    technology and resources
  2. Difficult to enforce its intellectual property
    rights
  3. Patents taken by US Companies of traditional
    generic commodities like Basmati Rice, Neem
    leaves, Turmeric etc.
  4. Gaps in Theory and Practice
  5. European Union and Japan are unwillingness to
    reduce subsidies on agricultural products
  6. Trade harassment is high for LDCs and Nepal

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  • CHALLENGES
  • MAXIMIZE THE BENEFITS
  • MINIMIZE ITS RIGHTS AND DOWNSIDE EFFECTS
  • EQUIP OURSELVES WITH THE CAPACITY NECESSARY TO
    PARTICIPATE EFFICIENTLY IN GLOBAL MARKETS
  • ABILITY TO ADJUST OUR ECONOMIC STRUCTURES TO A
    CHANGING EXTERNAL ENVIRONMENT

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  1. STABLE MACROECONOMY
  2. PRUDENT FINANCIAL MANAGEMENT
  3. SOUND REGULATORY PRACTICES
  4. NECESSARY STRUCTURAL AND INSTITUTIONAL REFORMS IN
    THE FINANCIAL AND CORPORATE SECTORS

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The World Bank (2003)Diagnostic Trade
IntegrationStudy (DTIS) or Trade Competitiveness
Study
  • The study appraised Nepal's constraints to
    effective integration into the global trading
    system. It has made policy level recommendations
    to capacity building.
  • Conclusion
  • Improve production capacity, productivity and
    competitive strength through quality improvement,
    reduction of costs and wastages, remove supply
    constraints.
  • Export of products in which is has sustainable
    comparative advantage tourism, hydropower, hers,
    flowers, silver jewellery, handicrafts.

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  • Product profile should be enhanced
  • Strengthen SAARC, SAPTA and SAFTA to SAFTA to
    improve negotiating power, strengthen
    institutional mechanism.
  • Educate people
  • Create legal safeguard for bio-diversity,
    genetics, protection of domestic industries and
    females' rights.
  • Amend laws to make them WTO friendly.

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Nepal's contribution to the world trade is 0.02
  • The study recommends
  • Relaxation in custom barrier
  • Allowing easy exit to foreign companies
  • Reforming labor market
  • Strengthening the government private sector
    coordination

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  • Comparative and competitive advantage areas
  • Dried leguminous
  • Spices
  • Seeds (Niger Seeds)
  • Leather and leather products
  • Fibers (hand knotted wool carpets)
  • Yarn and textile garments
  • The study has shown that it costs us US 130
    million (NRs. 10 Billions over 10 of estimated
    budget for fiscal year 2002/2003) to implement
    just three of the WTO agreements namely TRIPS,
    SPS and custom valuations.
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