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PROJECT REPORT

ON
WORLD TRADE
ORGANIZATION

PROJECT REPORT
International Business
BUS 301
PREPARED FOR
SYEDA ROWNAK AFZA
SENIOR LECTURER, BBS

PREPARED BY
MD. MEHEDI HASAN (07304051)
RAJIB ROY (07304012)
MARZANA MOSLEM MOULI (07304087)
NAZMUS SAKIB (07304004)
HUMAIRA NAZIA (07204013)
NAFIS AHMED (07204018)

SUBMISSION DATE- 22ND NOV, 2010

Letter of Transmittal

November 22, 2010

Syeda Rownak Afza


Senior Lecturer
BUS- 301
International Business
BRAC Business School
BRAC University.

Subject: Submission of Project Report


Dear Madam,
With great pleasure we are submitting our report on WORLD TRADE ORGANIZATION
(WTO) that you have assigned to us as an important requirement of this course. We
have found the study to be quite interesting, beneficial & insightful. We have tried
our level best to prepare an effective & creditable report.

The report contains a detailed study on WTO and a look at how it is practiced
its riles and regulation in the practical world. Here we have gathered
information basically through websites.
We honestly hope that our report work will help to give idea of WTO in the real world
and you will find this report worth all the labor we have put in it.
We welcome your entire query & take pride to answer them.
Thanking You.

With best regards,

MD. MEHEDI HASAN (07304051)

------------------------------

RAJIB ROY (07304012)

------------------------------

MARZANA MOSLEM MOULI (07304087)

------------------------------

NAZMUS SAKIB (07304004)

------------------------------

HUMAIRA NAZIA (07204013)

------------------------------

NAFIS AHMED (07204018)

------------------------------

Acknowledgement

First of all, we would like to thank our Course Instructor Syeda Rownak Afza for
giving us such superlative opportunity to work on this topic of WTO. We are very
thankful to her for devoting her precious time and knowledge to help us correctly
prepare this report. We are also grateful for her assistance and clear instructions,
which helped us a lot in preparing ourreport. Undoubtedly, this assignment would
help us in future, thus preparing this report has given us a great moral boost and
confidence.

Table of Contents

Topic

Page No.

Chapter-01: Preparatory Parts


Methodology of the report

Limitations of the report


Chapter-02: Organization Overview (WTO)
Introduction

4- 19

History
Objectives of WTO
Member Countries
Activities/Contribution
Criticism
A Case Where WTO is Involved
Conclusion
Chapter-03:

20

Bibliography

Executive Summary

WTO, the flagship organization, is holding the strong leadership position in the
current business world since 1995 and is now on its way to becoming a high
performance global player. Today, the world has become global with concern about
the issue of competitiveness, globalization, falling trade barriers, computerization,
automation, ethical behavior, and work force diversity with international business
strategy. Worlds interest has shifted to use efficient approaches for business and
trade activities and WTO gets most importance in this sector. World Trade
Organization (WTO) is an international body whose purpose is to promote free trade
by persuading countries to abolish import tariffs and other barriers. As such, it has
become closely associated with globalization. the World Trade Organization (WTO), came

into being, resulting from the lengthy, extensive and complex Uruguay Round trade negotiation
in the context of General Agreement on Tariffs and Trade (GATT). Basically the end of the UR
resulted in the formation of the WTO. Their activities help to promote peace and Provides more
choice of products and qualities. Disputes are handled constructively Free trade cuts the costs of
living and raises incomes. Though they face some criticisms and their advances should
be more significant but still they are moving ahead on the track to achieve their
goals.

CHAPTER- 01:
Preparatory Parts

Methodology

The methods that we have used in preparing this report were basically Secondary Data basis. Through
searching websites with different links, we collected information about WTO and its application. Finally,
we put together all the data, analyzed them and prepared this project report.

Limitation

As we got the opportunity to work on this report within very short time, so it was a little bit tough to get
the finest image about the WTO.

CHAPTER- 02:
Organization Overview (WTO)

Introduction

International Business is one of the important fields of study now a day. In business world rate of
profit and success depend on trade strategies and systems. The World Trade Organization (WTO)
is the only global international organization dealing with the rules of trade between nations. At
its heart are the WTO agreements, negotiated and signed by the bulk of the worlds trading
nations and ratified in their parliaments. The goal is to help producers of goods and services,
exporters, and importers conduct their business. WTO gives a better view of the overall
strategies they are following and plan to implement more in future. We are assigned to make a
report on WTO and here we are going to include the objectives, activities, criticism, case study
and some opinions about WTO. Now the World Trade Organization (WTO) is an international
body whose purpose is to promote free trade by persuading countries to abolish import tariffs and
other barriers. As such, it has become closely associated with globalization.

History of WTO

Over the past 60 years, WTOs predecessor organization. the GATT, has helped to create a
strong and prosperous international trading system, thereby contributing to unprecedented global
economic growth. Under the GATT and WTO, there have been several "Rounds" of trade negotiations,
and several battles as well-but following established rules-when disputes could not be settled peacefully.
Perhaps the most notable of these "Rounds" was the Kennedy Round of Trade Negotiations, wherein
American tariffs were slashed approximately 35% across the board, without demanding reciprocity from
other nations--unilateral. However, over time, the nature and character of global trade started to get

very complex. Countries began to realise that GATT did not have all answers to the questions
posed by the increasingly complicated nature of the global trade.
Jan 1, 1995 - On 1 January 1995, a new international economic organization, the World Trade
Organization (WTO), came into being, resulting from the lengthy, extensive and complex
Uruguay Round trade negotiation in the context of General Agreement on Tariffs and Trade
(GATT). Basically the end of the UR resulted in the formation of the WTO. This established a
substantial set of rules regarding trade in goods, including agricultural goods, included
agreements on trade in services and on trade related aspects of intellectual property rights, as
well as a strong and comprehensive mechanism to settle trade disputes between member
countries.

The Uruguay Round Agreement of GATT/WTO has been described as 'the most important event
in recent economic history. The WTO has been fairly successful in resolving such multinational
disputes and has started moving into areas of protection of intellectual rights, services, etc. following
patterns of international business change.

WTO..At a glance

Location: Geneva, Switzerland


Established: 1st January 1995
Created by: Uruguay Round negotiations (1986-94)
Membership: 153 countries on 23 July 2008
Budget: 194 million Swiss francs for 2010
Secretariat staff: 637
Head: Pascal Lamy (Director-General)
Official Language: English, French and Spanish.

Objectives of WTO

The major Objectives of WTO are as follows:

To create a knowledge base on various matter concerning various National and

Member Countries

There are 153 countries in the WTO from where some of the strong members of are given
bellow:

Australia
Argentina
China
Canada
Greece
India
Italy
Ireland
Indonesia
Pakistan
Paraguay
South Africa
Srilanka

Activities/Contribution

The World Trade Organization (WTO) deals with the rules of trade between nations at a global or
near-global level. Its an organization for liberalizing trade and a forum for governments to
negotiate trade agreements. Moreover its a place to settle trade disputes as it operates a system
of trade rules.

Principles
The WTO agreements are lengthy and complex because they are legal texts covering a wide
range

of

activities.

They

deal

with:

agriculture,

textiles

and

clothing,

banking,

telecommunications, government purchases, industrial standards and product safety, food


sanitation regulations, intellectual property, and much more. But a number of simple,
fundamental principles run throughout all of these documents. These principles are the
foundation of the multilateral trading system.

Basic Functions

1) Administering trade agreements


2) Forum for trade negotiations
3) Handling trade disputes
4) Monitoring National Trade policies
5) Technical assistance and training for developing countries
6) Cooperation with other international organizations

Contribution

Setting Predictable rules:-

The WTO is basically followed by the purpose to help trade flow as freely as possible so long
as there are no undesirable side-effects because this is important for economic development
and well-being. That partly means removing obstacles. It also means ensuring that individuals,
companies and governments know what the trade rules are around the world, and giving them the
confidence that there will be no sudden changes of policy. In other words, the rules have to be
transparent and predictable.

Settlement of disputes:-

Trade relations often involve conflicting interests. Agreements, including those painstakingly
negotiated in the WTO system, often need interpreting. The most harmonious way to settle these
differences is through some neutral procedure based on an agreed legal foundation. That is the
purpose behind the dispute settlement process written into the WTO agreements.

Treating Local people and foreigners equally:-

Under the WTO agreements, countries cannot normally discriminate between their trading
partners. Imported and locally-produced goods should be treated equally at least after the
foreign goods have entered the market. The same should apply to foreign and domestic services,
and to foreign and local trademarks, copyrights and patents.

Conducting Freer trade:-

Lowering trade barriers is one of the most obvious means of encouraging trade. The barriers
concerned include customs duties (or tariffs) and measures such as import bans or quotas that
restrict quantities selectively. The WTO agreements allow countries to introduce changes
gradually, through progressive liberalization. Developing countries are usually given longer to
fulfill their obligations.

Promoting fair competition:-

The WTO is sometimes described as a free trade institution, but that is not entirely accurate.
The system does allow tariffs and, in limited circumstances, other forms of protection. More
accurately, it is a system of rules dedicated to open, fair and undistorted competition.

Encouraging development and economic reform:-

The WTO system contributes to development. On the other hand, developing countries need
flexibility in the time they take to implement the systems agreements. And these agreements
allow for special assistance and trade concessions for developing countries.

Criticism of WTO

The stated aim of the World Trade Organization (WTO) is to promote free trade and stimulate
economic growth. Although WTO works for the betterment of international business but they
have some limitation about their activities. Some of the most talkative criticisms of WTO are as
follows:

The WTO Is Fundamentally Undemocratic


The policies of the WTO impact all aspects of society and the planet, but it is not a democratic,
transparent institution. The WTO rules are written by and for corporations with inside access to
the negotiations. For example, the US Trade Representative gets heavy input for negotiations
from 17 "Industry Sector Advisory Committees." Citizen input by consumer, environmental,
human rights and labor organizations is consistently ignored. Even simple requests for
information are denied, and the proceedings are held in secret. Who elected this secret global
government?

The WTO Will Not Make Us Safer


The WTO would like you to believe that creating a world of "free trade" will promote global
understanding and peace. On the contrary, the domination of international trade by rich countries
for the benefit of their individual interests fuels anger and resentment that make us less safe. To
build real global security, we need international agreements that respect people's rights to
democracy and trade systems that promote global justice.

The WTO Tramples Labor and Human Rights


WTO rules put the "rights" of corporations to profit over human and labor rights. The WTO
encourages a 'race to the bottom' in wages by pitting workers against each other rather than
promoting internationally recognized labor standards. 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,
or the behavior of companies that do business with vicious dictatorships such as Burma when
making purchasing decisions.

The WTO Would Privatize Essential Services


The WTO is seeking to privatize essential public services such as education, health care, energy
and water. Privatization means the selling off of public assets - such as radio airwaves or schools
- to private (usually foreign) corporations, to run for profit rather than the public good. The
WTO's General Agreement on Trade in Services, or GATS, includes a list of about 160
threatened services including elder and child care, sewage, garbage, park maintenance,
telecommunications, construction, banking, insurance, transportation, shipping, postal services,
and tourism. In some countries, privatization is already occurring. Those least able to pay for
vital services - working class communities and communities of color - are the ones who suffer
the most.

The WTO Is Destroying the Environment


The WTO is being used by corporations to dismantle hard-won local and national environmental
protections, which are attacked as "barriers to trade." The very first WTO panel ruled that a
provision of the US Clean Air Act, requiring both domestic and foreign producers alike to
produce cleaner gasoline, was illegal. The WTO declared illegal a provision of the Endangered
Species Act that requires shrimp sold in the US to be caught with an inexpensive device allowing
endangered sea turtles to escape. 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.

The WTO is Killing People


The WTO's fierce defense of 'Trade Related Intellectual Property' rights (TRIPs)patents,
copyrights and trademarkscomes at the expense of health and human lives. The WTO has
protected for pharmaceutical companies' 'right to profit' against governments seeking to protect

their people's health by providing lifesaving medicines in countries in areas like sub-saharan
Africa, where thousands die every day from HIV/AIDS. Developing countries won an important
victory in 2001 when they affirmed the right to produce generic drugs (or import them if they
lacked production capacity), so that they could provide essential lifesaving medicines to their
populations less expensively. Unfortunately, in September 2003, many new conditions were
agreed to that will make it more difficult for countries to produce those drugs. Once again, the
WTO demonstrates that it favors corporate profit over saving human lives.

The WTO is Increasing Inequality


Free trade is not working for the majority of the world. During the most recent period of rapid
growth in global trade and investment (1960 to 1998) inequality worsened both internationally
and within countries. The UN Development Program reports that 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.

The WTO is Increasing Hunger


Farmers produce enough food in the world to feed everyone -- yet because of corporate control
of food distribution, as many as 800 million people worldwide suffer from chronic malnutrition.
According to the Universal Declaration of Human Rights, food is a human right. In developing
countries, as many as four out of every five people make their living from the land. But the
leading principle in the WTO's Agreement on Agriculture is that market forces should control
agricultural policies-rather than a national commitment to guarantee food security and maintain
decent family farmer incomes. WTO policies have allowed dumping of heavily subsidized
industrially produced food into poor countries, undermining local production and increasing
hunger.

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

The WTO supposedly operates on a consensus basis, with equal decision-making power for all.
In reality, many important decisions get made in a process whereby poor countries' negotiators
are not even invited to closed door meetings -- and then 'agreements' are announced that poor
countries didn't even know were being discussed. Many countries do not even have enough trade
personnel to participate in all the negotiations or to even have a permanent representative at the
WTO. This severely disadvantages poor countries from representing their interests. Likewise,
many countries are too poor to defend themselves from WTO challenges from the rich countries,
and change their laws rather than pay for their own defense.

The WTO Undermines Local Level Decision-Making and National


Sovereignty
The WTO's "most favored nation" provision requires all WTO member countries to treat each
other equally and to treat all corporations from these countries equally regardless of their track
record. Local policies aimed at rewarding companies who hire local residents, use domestic
materials, or adopt environmentally sound practices are essentially illegal under the WTO.
Developing countries are prohibited from creating local laws that developed countries once
pursued, such as protecting new, domestic industries until they can be internationally
competitive. California Governor Gray Davis vetoed a "Buy California" bill that would have
granted a small preference to local businesses because it was WTO-illegal. Conforming with the
WTO required entire sections of US laws to be rewritten. Many countries are even changing their
laws and constitutions in anticipation of potential future WTO rulings and negotiations.

There are Alternatives to the WTO


Citizen organizations have developed alternatives to the corporate-dominated system of
international economic governance. Together we can build the political space that nurtures a
democratic global economy that promotes jobs, ensures that every person is guaranteed their
human rights to food, water, education, and health care, promotes freedom and security, and
preserves our shared environment for future generations.

The Tide is Turning Against Free Trade and the WTO!


International opposition to the WTO is growing. Massive protests in Seattle of 1999 brought over
50,000 people together to oppose the WTOand succeeded in shutting the meeting down. When
the WTO met in 2001, the Trade negotiators were unable meet their goals of expanding the
WTO's reach. In Cancn, Mexico and Hong Kong, China, the WTO met thousands of activists in
protest, scoring a major victory for democracy. Developing countries refused to give in to the
rich countries' agenda of WTO expansion - and caused the talks to collapse!

A Case Where WTO is Involved


Case study: automobiles auctioning license plates and national treatment
In Shanghai, individuals seeking to purchase and register an automobile for their own use
must obtain a licence plate for the proposed vehicle through a monthly auction conducted by the
municipal government authorities. The system is designed both to reduce the total number of
automobiles released onto the streets of the city at any one time and also to act as an important
revenue source for the municipality. The reasons for the auction are domestic, and nothing in the
system is supposed to be designed in a way that would affect international trade.
On 7 August 2002, US consulate staff informed the Centre that, to their knowledge,
Shanghais monthly licence plate auction for individual and private-company buyers was relying
on one method of auctioning and allocating licence plates for domestically produced cars and
that another method was being employed in the case of licence plate auctions for imported cars.
The US authorities alleged that the imported cars were being subjected to discriminatory
treatment that adversely affected market access for imports.

After being informed of the allegations, the Centres specialists immediately began an
investigation, and notified the Shanghai Municipal Development Planning Commission. An
examination of the July auction rule used by the Shanghai International Commodity Auction Co.
Ltd, as outlined on its website, showed that plans called for 3, 000 licence plates for domestically
produced cars to be auctioned, compared with just thirty licence plates for imported cars. On
further investigation it also became apparent that the Commodity Auction Co. had set a floor
price at auction for imported cars (26, 000 yuan), but that no similar floor price existed in the
case of domestically made cars. The practical effect was that domestically made cars were
available at considerably lower prices (the average winning sealed bid at auction was 20, 904
yuan).
In terms of the relevant laws and regulations, the Centres specialists acknowledged that
the Chinese governments accession commitments required imported cars and auto parts to be
given national treatment. The Centres specialists also recognized that there was an
indispensable relationship between a car and its licence plate, such that any restriction applied to
a licence plate also applied to the car. Accordingly, given the WTO national treatment principle
and the general elimination of quantitative restrictions, the different systems put in place by the
regional government for the acquisition of domestically made and imported cars resulted in
different treatment and were therefore inconsistent with Chinas WTO commitments. Under
WTO rules, this had a direct effect on the extent to which the Chinese government was meeting
its WTO obligations, as it is responsible for abolishing regional regulations, rules and other
regional measures that contradict WTO obligations and duties.
To avert a potential trade dispute and protect Shanghais reputation as a place to do
business, the Centre was committed to addressing this particular example of non-compliance. It
entered into negotiations with the Shanghai Municipal Development Planning Commission and
suggested that any different treatment by the licence plate auctioning systems be discontinued.
As a result, since October 2002 there has been no floor price for imported cars and no difference
between domestically produced and imported cars in terms of limits placed on the number of
cars auctioned.

In this case, the Centres approach was to build up a contact network, and seek a number
of opinions on whether the relevant laws and regulations were in line with WTO rules. This
included the opinions of representatives of foreign enterprises. At the same time, the Centre
carried out its own investigations and analysis, and was able to work with the relevant
government departments on a quick and practical solution. In this respect, the Centre was an
important link between government departments and the business sector.

Conclusion

Today, most of the organizations give more emphasis on their development activities and improving
efficiency to reach maximum productivity. Business as well as trade practices, both are vital issue now a
day. Through WTOs rules life has become easier. Their activities help to promote peace and Provides

more choice of products and qualities. Disputes are handled constructively Free trade cuts the
costs of living and raises incomes. Moreover it stimulates economic growth and their activities
encourage good government. Above all, we can come to the point that WTO, undoubtedly, has a
flourishing future in the long run and todays success and glory are the contribution of their proper
policies and movements.

CHAPTER- 03:

Bibliography

http://wtowto.blogspot.com/2006/02/drawbacks-of-wto.html (d-9,t-6.10)
http://www.economicshelp.org/trade/arguments-against-free-trade.html
http://www.experts123.com/q/what-are-disadvantages-of-wto.html
http://www.wto.org/
http://en.wikipedia.org/wiki/Economic_sanctions
http://www.nationsencyclopedia.com/United-Nations-Related-Agencies/TheWorld-Trade-Organization-WTO-ACTIVITIES.html date- 15/11/2010 time- 11.30
pm

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