International Trade Institutions

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International Trade Institutions

• GATT
• GATS
• WTO

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• The General Agreement on Tariffs and Trade
  (GATT) established in the wake of the Second
  World War.
• The General Agreement on Trade in Services (GATS)

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SERVICES AGREEMENT Part I Scope and
definition

• Article I Scope and Definition
• 1. This Agreement applies to measures by Members
  affecting trade in services.
• 2. For the purposes of this Agreement, trade in
  services is
• defined as the supply of a service
• (a) from the territory of one Member into the
  territory of any other Member
• (b) in the territory of one Member to the
  service consumer of any other Member
• (c) by a service supplier of one Member,
  through commercial presence in the territory of
  any other Member
• (d) by a service supplier of one Member,
  through presence of natural persons of a Member
  in the territory of any other Member.

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• 3. For the purposes of this Agreement
• (a) measures by Members means measures taken
  by
• (i) central, regional or local governments and
  authorities and
• (ii) non-governmental bodies in the exercise of
  powers delegated by central, regional or local
  governments or authorities
• In fulfilling its obligations and
  commitments under the Agreement, each Member
  shall take such reasonable measures as may be
  available to it to ensure their observance by
  regional and local governments and authorities
  and non-governmental bodies within its
  territory
• (b) services includes any service in any
  sector except services supplied in the exercise
  of governmental authority
• (c) a service supplied in the exercise of
  governmental authority means any service which
  is supplied neither on a commercial basis, nor in
  competition with one or more service suppliers.
• Source www.wto.org

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World Trade Organization (WTO)

• Created in 1995. It is the successor to the
  General Agreement on Tariffs and Trade (GATT)
• Responsibilities/Tasks
• Administers trade agreements
• Acts as a forum for trade negotiations
• Settles trade disputes
• Reviews national trade policies
• Assists developing countries in trade policy
  issues, through technical assistance and training
  programs
• Cooperates with other international organizations

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Ten benefits

• 1.The system helps promote peace
• 2. Disputes are handled constructively
• 3. Rules make life easier for all
• 4. Freer trade cuts the costs of living
• 5. It provides more choice of products and
  qualities
• 6. Trade raises incomes
• 7. Trade stimulates economic growth
• 8. The basic principles make life more efficient
• 9. Governments are shielded from lobbying
• 10. The system encourages good government

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10 common misunderstandings about the WTO

• The WTO dictates policy
• 2. The WTO is for free trade at any cost
• 3. Commercial interests take priority over
  development
• 4. and over the environment
• 5. and over health and safety
• 6. The WTO destroys jobs, worsens poverty
• 7. Small countries are powerless in the WTO
• 8. The WTO is the tool of powerful lobbies
• 9. Weaker countries are forced to join the WTO
• 10. The WTO is undemocratic

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Unfair Trade Practices

• Dumping
• Subsidization
• Antidumping
• Countervailing duties

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Dumping and antidumping

• If a company exports a product at a price lower
  than the price it normally charges on its own
  home market, it is said to be dumping the
  product. Many governments take action against
  dumping in order to defend their domestic
  industries. The WTO agreement does not pass
  judgment. Its focus is on how governments can or
  cannot react to dumping it disciplines
  anti-dumping actions, and it is often called the
  Anti-Dumping Agreement.
• Source www.wto.org

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Subsidies and countervailing duties  

• This agreement does two things it disciplines
  the use of subsidies, and it regulates the
  actions countries can take to counter the effects
  of subsidies. It says a country can use the WTOs
  Dispute and Settlement Procedure to seek the
  withdrawal of the subsidy or the removal of its
  adverse effects. Or the country can launch its
  own investigation and ultimately charge extra
  duty (known as countervailing duty) on
  subsidized imports that are found to be hurting
  domestic producers.
• Source www.wto.org

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Safeguards emergency protection from imports  

• A WTO member may restrict imports of a product
  temporarily (take safeguard actions) if its
  domestic industry is injured or threatened with
  injury caused by a surge in imports. Here, the
  injury has to be serious.

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• An import surge justifying safeguard action can
  be a real increase in imports (an absolute
  increase) or it can be an increase in the
  imports share of a shrinking market, even if the
  import quantity has not increased (relative
  increase).
• Source www.wto.org