The Evolution Of WTO

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The Great Depression

Took place in the decade preceding the

World War II.

1929- late 30s and early 40s.

Longest , most widespread and deepest

depression of 20th century

Used as an example on how far an

economy can decline.

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Love Thy Neighbour!

In response to the Great Depression , USA

began an experiment- the Reciprocal Trade Agreements Act of 1934.

It allowed Bilateral negotiations between

countries- an attempt to gear up international trade

However forcibly , but the focus changed from

Beggar Thy Neighbour to Love Thy Neigbour. 3/28/12

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International Trade Organization

The Bretton Woods Conference of 1944 recognized the

need for a comparable international institution for trade (the later proposed International Trade Organization, ITO) to complement the International Monetary Fund and the World Bank.

In March 1948, the negotiations on the ITO Charter were

successfully completed in Havana.

The Charter provided for the establishment of the ITO,

and set out the basic rules for international trade and other international economic matters.
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International Trade Organization

The ITO Charter, however, never entered into force;

while repeatedly submitted to the US Congress, it was never approved.

The most usual argument against the new organization

was that it would be involved into internal economic issues.

On December 6, 1950 President Truman announced that

he would no longer seek Congressional approval of the ITO Charter.

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Global Agreement on Trade and Tariffs

Since the Bretton Woods Conference in 1944 ,

negotiations for both ITO and GATT had been going on simultaneously.

In October 1947 an agreement was reached.

On October 30, 1947 in Geneva , eight of the

twenty-three countries that had negotiated the GATT signed the "Protocol of Provisional Application of the General Agreement on Tariffs and Trade.
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Global Agreement on Trade and Tariffs

Purpose- Substantial reduction of tariffs and other trade

barriers and the elimination of preferences, on a reciprocal and mutually advantageous basis.

The GATT functioned de facto as an organization,

conducting eight rounds of talks addressing various trade issues and resolving international trade disputes.

Intrestingly , although GATT regulated almost entire

world trade , it remained provisional itself..all through the 47 years of its existence!
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The Eight Rounds of GATT

Year 1947 1949 1951 1956 1960-1961 1964-1967 Place/name Geneva Annecy Torquay Geneva Geneva Dillon Round Geneva Kennedy Round Geneva Tokyo Round Geneva Uruguay Round Subjects covered Tariffs Tariffs Tariffs Tariffs Tariffs Tariffs and anti-dumping measures Tariffs, non-tariff measures, framework agreements Tariffs, non-tariff measures, rules, services, intellectual property, dispute settlement, textiles, agriculture, creation of WTO, etc Countries 23 13 38 26 26 62

1973-1979 1986-1994

102 123

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Global Agreement on Trade and Tariffs

This first round of negotiations resulted in a package of

trade rules and 45,000 tariff concessions affecting $10 billion of trade, about one fifth of the worlds total.

For almost half a century, the GATTs basic legal

principles remained much as they were in 1948.

There were additions in the form of a section on

development added in the 1960s and plurilateral agreements (i.e. with voluntary membership) in the 1970s, and efforts to reduce tariffs further continued
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The Birth Of WTO

The last round of GATT , The Uruguay round ,

was the longest and the most significant round.

Began in 1986 , the most ambitious round to date,

hoping to expand the competence of the GATT to important new areas such as services, capital, intellectual property ,textiles, and agriculture. 123 countries took part in the round.
Was also the first set of multilateral trade
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negotiations in which developing countries had

 These fourteen countries came

to be known as the "Cairns Group", and included mostly small and medium sized agricultural exporters such as Australia, Brazil, Canada, Indo nesia, and New Zealand.
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WTOs Powers
The WTO is not simply GATT transformed into a

formal international organization.

Covers a much broader purview, including subsidies,

intellectual property, food safety and other policies that were once solely the subject of national governments.
Has strong dispute settlement mechanisms. Panels

weigh trade disputes, but these panels have to adhere to a strict time schedule.
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 Organizes hundreds of technical cooperation missions to

developing countries annually.

Requires governments to make their trade policies

transparent by notifying the WTO about laws in force and measures adopted

Unlike GATT , no country can veto or delay panel

decisions.

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Mixed Record
Since the WTO was created, its members have not been able to agree on the scope of a new round of trade talks.
Many developing countries believe that their

industrialized trading partners have not fully granted them the benefits promised under the Uruguay Round of GATT.

Some countries regret including intellectual property

protections under the aegis of the WTO.

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Issues..
During the first thirty years of GATT's history, the

relationship of trade policy to human rights, labor rights, consumer protection, and the environment were essentially "off-stage.

Tariff escalation- Where an importing country

protects its processing or manufacturing industry by setting lower duties on imports of raw materials and components, and higher duties on finished products.

Tariff peaks Developing countries still face

exceptionally high tariffs on selected products in important markets that continue to obstruct their 3/28/12

 Erosion of preferences Special tariff concessions

granted by developed countries on imports from certain developing countries become less meaningful if the normal tariff rates are cut because the difference between the normal and preferential rates is reduced.

The potential for developing countries to trade with each

other is also hampered by the fact that the highest tariffs are sometimes in developing countries themselves

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Final Word
Can developing countries benefit from the changes? Yes, but only if their economies are capable of

responding. This depends on a combination of actions: from improving policy-making and macroeconomic management, to boosting training and investment.

The least-developed countries are worst placed to

make the adjustments because of lack of human and physical capital, poorly developed infrastructures, institutions that dont function very well, and in some cases, political instability.
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Thank You!

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