Preston University, Islamabad

Its Impact on Economy

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Presented by:

• Rizwan Qamar

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Outline

What is WTO Brief Overview Agreements of WTO Principles of Trading Impacts of WTO Criticism on WTO Conclusion Questions??

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The International Organization that Governs the Rules of Trade Between Nations

Functions:-administer WTO trade agreements-forum for trade negotiations-handle trade disputes-monitor national trade policies-technical assistance and training-cooperate with international organizations

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Successor to GATT

International Organization embodied in results of Uruguay Round

Established: 1 January 1995

Member driven (153 Members)

Decision making by CONSENSUS

Single Undertaking –several topics negotiated together

Serviced by Secretariat - 600+ staff

Based in Geneva

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MinisterialConferenceWTO

Organization

General Council

Council for Trade in Goods

Council for TRIPS

Council for Trade

in ServicesCommittees

CommitteesCommittees

Working Parties

Working Parties

Working Parties

Dispute Settlement

TradePolicy Review

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Ministerial Conferences

+ Singapore (1996)

+ Geneva (1998)

+ Seattle (1999)

+ Doha, Qatar (2001)

+ Cancun, Mexico (2003)

+ Hong Kong, China (2005)

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Main WTO Agreements

Agreement on Agriculture (AoA) General Agreement on Trade in

Services (GATS) Agreement on Trade-Related Aspects

of Intellectual Property Rights (TRIPS)

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PRINCIPLES OF TRADE

• Most Favorite Nation• National Treatment • Negotiations • Barriers not raised

Arbitrarily • Discourage unfair

practices

GATT Articles

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MOST FAVORED NATIONPrinciple of Non-Discrimination

• Tariffs and regulations applied without discrimination

• WTO Members receive most preferential trade terms

GATT Article 1

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• Helps promote peace between nations• Disputes are handled constructively• Rules make it easier for all – WTO based on rules not on

power• Free trade cuts the cost of living, provides more choice of

products and quality • Trade stimulates economic growth• Trade raises income of country and it‘s people• Basic principles make life more efficent• Governments shielded from lobbying• System encourages good governance

Impact of WTO on Economy

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• This sounds like an exaggerated claim, and it would be wrong to make too much of it. Nevertheless, the system does contribute to international peace, and if we understand why, we have a clearer picture of what the system actually does.

Helps promote peace between nations

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• As trade expands in volume, in the number of products traded, and in the numbers of countries and companies trading, there is a greater chance that disputes will arise. The WTO system helps resolve these disputes peacefully and constructively.

Disputes are handled constructively

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How WTO Resolves Disputes

• Member country complains about violation of trade rule

• Panel of judges chosen• Judicial-type hearing at WTO• Finding• Appeal and final ruling• Implementation (in reasonable time) or

penalties/compensation

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• The WTO cannot claim to make all countries equal. But it does reduce some inequalities, giving smaller countries more voice, and at the same time freeing the major powers from the complexity of having to negotiate trade agreements with each of their numerous trading partners.

Rules make it easier for all –

WTO based on rules not on power

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• Trade clearly has the potential to create jobs. In practice there is often factual evidence that lower trade barriers have been good for employment. But the picture is complicated by a number of factors. Nevertheless, the alternative — protectionism — is not the way to tackle employment problems.

Trade stimulates economic growth

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• We are all consumers. The prices we pay for our food and clothing, our necessities and luxuries, and everything else in between, are affected by trade policies.

Free trade cuts the cost of living

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• Lowering trade barriers allows trade to increase, which adds to incomes — national incomes and personal incomes. But some adjustment is necessary.

Trade raises incomes

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• The WTO helps governments take a more balanced view of trade policy. Governments are better-placed to defend themselves against lobbying from narrow interest groups by focusing on trade-offs that are made in the interests of everyone in the economy.

Governments shielded from lobbying

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• Under WTO rules, once a commitment has been made to liberalize a sector of trade, it is difficult to reverse. The rules also discourage a range of unwise policies. For businesses, that means greater certainty and clarity about trading conditions. For governments it can often mean good discipline.

System encourages good governance

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Criticism of the WTO

• ..is fundamentally undemocratic• ..tramples labor and human rights• ..would privatize essential services• ..is destroying the environment• ..is endangering human lives• ..is increasing inequality• ..hurts poor countries in favor of rich powerful nations• ..undermines local level decision-making and national

sovereignty

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The WTO Is Fundamentally Undemocratic

• rules are written by and for corporations with inside

access to the negotiations• simple requests for information are denied• proceedings are held in secret

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The WTO Will Not Make Us Safer

• domination of international trade by rich countries for the benefit of their individual interests fuels anger and resentment that make us less safe

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The WTO Tramples Labor and Human Rights

• The WTO encourages a 'race to the bottom' in wages by pitting workers against each other

• The WTO has ruled that it is illegal for a government to ban a product based on the way it is produced, such as with child labor

• It has also ruled that governments cannot take into account "non commercial values" such as human rights

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The WTO Is Destroying the Environment

• The WTO is attempting to deregulate industries including logging, fishing, water utilities, and energy distribution, which will lead to further exploitation of these natural resources.

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The WTO is Increasing Inequality

• the richest 20 percent of the world's population consume 86 percent of the world's resources while the poorest 80 percent consume just 14 percent. WTO rules have hastened these trends by opening up countries to foreign investment and thereby making it easier for production to go where the labor is cheapest and most easily exploited and environmental costs are low.

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The WTO Hurts Poor, Small Countries in Favor of Rich Powerful Nations

• many important decisions get made in a process whereby poor countries' negotiators are not even invited to closed door meetings

• Many countries do not even have enough trade personnel to participate in all the negotiations

• many countries are too poor to defend themselves from WTO challenges

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CONCLUSION

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Recommendations

• The Organization should operate democratically

• Every country must have equal representation• Rich countries should promote poor countries• Some laws must be prepared related with

Human Rights, Child Labour, Environment• The Dispute settlement system must be

Powerful to implement decisions • Public services must remains profit free.

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For more information:For more information:

WTO TRADE ORGANIZATION

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