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INTERN TION L BUSINESS

GATT, WTO

IMF, WB

RTA

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International Institutions - World Bank,

IMF, UNCTAD, WTO, Customs Union,

Common Markets, Free Trade Zones,Economic Communities; Trading

Partners - Bilateral Trade Agreements,

Commodity Agreements and GSP


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Institutions in the WorldEconomy

Protection is harmful to EconomicGrowth and Consumer Welfare

Bretton Woods Conference 1944

suggested formation of IMF,World Bank and ITO


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GATT in 1948 instead of ITO,started with 23 countries had

128 members in 1995Uruguay Round in 1995 GATT

WTO (Similar to ITO)

WTO - More powerful that GATTIndia founder member of IMF,

World Bank, GATT and ITO


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GATT sought substantialreduction in tariff and otherbarriers to trade and to eliminatediscriminatory treatment ininternational commerce

Eight rounds of negotiations had

taken place during five decadesof its existence


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GATT- Guided InternationalTrade System

Objectives:

Changes in Tariffs orCommercial Policies should nottake place without consultationswith other parties to the

agreements Countries should work towards

reductions in Tariffs and TradeBarriers


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GATT adapted the followingprinciples for the objectives

Non discrimination MFN Status to all

Free Trade Areas or Custom

Unions can be formed but shouldnot restrict other nations, shouldnot raise barriers


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Prohibition of QuantitativeRestrictions

However restrictions can beapplied by DevelopingCountries

By countries facing BOPproblems

Agriculture and FisheryProducts


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Consultations between themember countries to resolve theproblems

Meeting every four years UR lasted for seven yearsGATT helped developed nations

more than developing nations.Eight rounds of negotiationsduring five decades of its existence


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Earlier GATT rounds concentratedon further reductions in tariffs

The Kennedy Round in the mid-

sixties brought about anti-dumpingAgreement and a sectionon development

The Tokyo Round during theseventies was the first majorattempt to tackle NTB and toimprove the system


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All the original GATT articles were

reviewed in UR

Officially establishing the WTO

regime was signed during the

April 1994 ministerial meeting at

Morocco

UR implementation in 10 years.

Different periods for different

countries


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Three Basic Issues Taken up byUR

Reducing specific trade barriersand improving market access

Strengthening GATT principles of TRIPs (Trade Related Intellectual

Property Rights) TRIMs (Trade Related Investment

Measures)


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World Trade Organization

22,000 page document signedon Jan 1st, 1995 by 128countries

159 members as of Aug 2013

WTO Single Institutionalframe work encompassing GATTand results of UR


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Specific Functions

Facilitate implementation,

administration & operation, andfurther the objectives ofMultilateral Trade Agreement

Provide framework forimplementation, administration& operation of Plurilateral TradeAgreements


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Provide forum for negotiationsamong members concerning

their multilateral trade relations Administer understanding on

Rules and Procedures governing

settlements of disputes Administer trade review

mechanism


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Main Functions of WTO

Supervise on regular basisoperations related to declarationsrelated to Goods, Services, TRIPS

Act as dispute settlement body

To serve as Trade ReviewMechanism


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Establish Goods Council,Services Council and TRIPS

Council as subsidiary bodies Monitor National Trade Policies

Cooperate with IMF and otherbodies for achieving greatercoherence in Global EconomicPolicy making


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Doha RoundStarted in 2001 and continues

today.

The WTO launched DDA at theFourth Ministerial Conference inDoha, Qatar in November 2001

An ambitious effort to makeglobalization more inclusiveand help the world's poor


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Agenda comprised both furthertrade liberalization and new rule-making

The negotiations have been highlycontentious and agreement has

not been reached

Disagreements still continue


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The first ministerial conference

was held in 1996 in Singapore.

Issues:-1)Transparency in government

procurement

2) Trade facilitation3) Trade & Investment

4) Trade & Competition


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The second ministerial conferenceof 1998 was held in Geneva in

Switzerland.

- Disturbances in financial market

- 50TH

Anniversary


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The third ministerial conference of1999 was held in Seattle,

Washington


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The fourth ministerial conference of2001 was held in Doha.

Doha Development RoundAgreement on Trade-Related

Aspects of Intellectual Property

Rights (TRIPS)


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The fifth ministerial conference of2003 was held in Cancun, Mexico.

- abbreviated as MC5- aimed at forging agreement on

the Doha development Round


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The sixth ministerial conference of2005 was held in Hong Kong.Seventh WTO Ministerial

Conference (15 December - 17December 2009) Geneva,Switzerland

Ninth conference wi l l be held atBal i , Indonesia in December 2013

MC9 to re-energize the negotiationprocess and the progress achieved sofar, and to strengthen the multilateraltrading system


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The sixth ministerial conference of2005 was held in Hong Kong.Eighth WTO Ministerial Conference

(30 November - 2 December2009)Geneva, SwitzerlandThe general theme for

d iscuss ion was The WTO, the

Mul ti la te ra l Trading Sys tem andthe Current Global EconomicEnvironment


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AGREEMENTSAgreement on AgricultureGeneral Agreement on Trade in

Services (GATS)Agreement on Trade-Related

Aspects of Intellectual PropertyRights (TRIPS)

Sanitary and Phyto-Sanitary(SPS) Agreement

Agreement on Technical Barriersto Trade (TBT)


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one country, one votesystem

Decision making is generally by

consensusit encourages efforts to find the

most widely acceptable decision


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Main disadvantages- large time requirements- use ambiguous language

Green Room " negotiations, or"Mini-Ministerial" - negotiationsproceed not by consensus of allmembers, but by a process of

informal negotiations betweensmall groups of countriesCriticized by many of the WTO'sdeveloping country members


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From 1974 until the end of theUruguay Round, the trade wasgoverned by the MultifibreArrangement (MFA).

Established quotas limiting importsinto countries whose domesticindustries were facing seriousdamage from rapidly increasingimports.


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The quotas conflicted with GATTsgeneral preference for customs

tariffs instead of measures thatrestrict quantities.

Quotas were also exceptions to theGATT principle of treating all tradingpartners equally.


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Since 1995, the WTOs Agreementon Textiles and Clothing (ATC) tookover from the MFA.By 1 January 2005, the sector fullyintegrated into normal GATT rules.In particular, the quotas came to an

end, and importing countries are nolonger be able to discriminatebetween exporters.


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UNCTAD

LDCs feel that GATT benefits are notevenly distributed

Tariff reductions favour manufacturedgoods and not primary goods, LDCshave export of primary goods

UN Conference on Trade andDevelopment is a response to the LDCneeds (1964)

Permanent organ of UN


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UNCTAD

Efforts led to New InternationalEconomic Order (NIEO) Programme

NIEO seeks

Stabilization of prices of primaryproducts

Expansion of LDCs manufacturingcapacity

Acquisition of advanced technology


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Principal Functions Promote international sales with a view

to accelerate economic development

To formulate principles and policies oninternational trade and relatedeconomic development

Negotiate multilateral trade agreements

To make proposals for putting itsprinciples and policies into effect

Goal: Encourage development of thirdworld countries & enhance their exports


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Basic Principles

Every country has sovereign right todispose its natural resources for

economic development and well beingof society and freely trade with othercountries

Economic relations based on respect

for sovereign equality of states, selfdetermination of people and non-interference in the internationalmatters of other countries


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Basic Principles Non discrimination on the basis of

socioeconomic systems. Adaptation oftrading practices and methods will be

consistent with this principle UNCTAD played role in Maritime

Shipping Code, International AidTargets, International programmes are

designed to help the LDCs Achievement of UNCTAD is GSP(Generalised System of Preferences)14GSP Schemes and 29 preference givingcountries


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IMF

Bretton Woods Conference, 1945 ITO, World Bank, IMF

Unstable currencies & inadequatemonetary reserves could notdevelop & function world markets

01.03.1947 IMF Functioning

29 Signatories to start with, 188 byAug 2013


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IMF- Major ObjectivesTo Promote International Monetary

Cooperation

To Facilitate Expansion and BalancedGrowth of International TradeTo Promote Exchange Rate StabilityTo Establish Multilateral System of

paymentTo Make Its Resources Available to

Its Members Who Are ExperiencingBalance of Payment Difficulties


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Bretton Woods Agreement EstablishedFixed Exchange Rates for EachMember Country

USD 35 = Gold 1 Oz. par Value wassame whether Gold or USD was used

Variation of 1% allowed, raised to2.25% In 1971

US had 70% ofWorldsGold Reservein 1947

Redemption of Dollar in Gold


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Member Countries Contribute to IMF -Quota

Quota Depends Upon National Income,

Monetary Reserves, Trade Balance andOther Economic Indicators

Quota is Pool of Money IMF can Lend toMember Countries, Basis of How Much

Country Can Borrow as Allocation ofSDR

Quota determines Voting Rights


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The current quota formula is a weightedaverage of GDP (weight of 50 percent),openness (30 percent), economic

variability (15 percent), andinternational reserves (5 percent)

For this purpose, GDP is measured

through a blend of GDP

based onmarket exchange rates (weight of 60percent)and on PPP exchange rates(40 percent)


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Total SDR - SDR 477 billion (aboutUS$715 billion

Largest Quota USA 17.5%, Japan

6.6%,Germany 6.11%, France andUK 5.05% each shift more than 6 percent of quotashares to dynamic emerging market

and developing countries (EMDCs) Board of Governors is Final Authority Day to Day Business with 24Executive Directors


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The currency value of the SDR isdetermined by summing the values inU.S. dollars, based on market exchange

rates, of a basket of major currencies(the U.S. dollar, Euro, Japanese yen, andpound sterling).The SDR currency value is calculated

daily (except on IMF holiday or wheneverthe IMF is closed for business) and thevaluation basket is reviewed and adjustedevery five years.


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SDRs per Currency unit2

August 09,

2013

August 08,

2013

August 07,

2013

August 06,

2013

Euro 0.8777820000 0.8773240000 0.8763710000 0.8764830000

Japanese Yen 0.0067948700 0.0067895000 0.0067660800 0.0067347100

U.K. PoundSterling 1.0195000000 1.0185800000 1.0175300000 1.0136300000

U.S. Dollar 0.6563840000 0.6566800000 0.6586780000 0.6600020000

Ind Rupee 0.0107450000 0.0107287000 0.0107255000


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WORLD BANK

Lending Money to the governments ofdeveloping countries to finance developmentprojects in education, health andinfrastructure

Providing assistance to governments fordevelopmental projects to the poorestdeveloping countries

Lending directly to private sector to helpstrengthen the private sector in developingcountries with long-term loans equityinvestments and other financial assistance


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WORLD BANK

Providing investors with investmentguarantees against non-commercial risks,

to create an environment in developingcountries to attract foreign investments

Promoting increased flow of internationalinvestments by providing facilities for

conciliation and arbitration betweengovernments and foreign investors

Advise, Research, Publication

Contributed for trade since WW2


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INTERN TION L BUSINESSREGIONAL TRADE BLOCKS

REGIONAL INTEGRATIONFree Trade Area

No Barriers To Trade of Goods and Services

Among Member CountriesNo Discrimination of Quota, Tariff,Subsidies Among Member CountriesMember Countries Can Decide Own Policies

for Non-member CountriesVariable Tariffs By Each Member CountryOn Same Products Imported From Non-member Countries

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REGIONAL INTEGRATIONCustoms Union

Step Towards Economic and PoliticalIntegrationNo Barriers To Trade of Goods and Services

Among Member Countries

Common External Trade Policy AmongMember Countries

Administrative Mechanism To OverseeTrade Relations With Non-members

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REGIONAL INTEGRATIONCommon Market

Similar To Customs UnionNo Barriers To Trade of Goods and ServicesAmong Common and Same ExternalTrade Policy

Free Movement of Factors Like Labour andCapital

No Restrictions on Immigration and CapitalMovements

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REGIONAL INTEGRATIONEconomic Unions

Closer Economic Integration and

Cooperation Than Common MarketNo Barriers To Trade of Goods and ServicesAmong Common and Same External TradePolicy and Free Movement of Factors Like

Labour and CapitalCommon Currency, Hormonisation of TaxRates and Common Fiscal & MonetaryPolicy. A Step Towards Political Union

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Initiated by EECEFTA (European Free Trade Association,

Stockholm Convention 1960)

LAFTA (Latin American Free Trade Area,Montevideo 1961)NAFTAANZCERTA (Australia, NZCloser Economic

Relations Trade Agreement Dec 1988)

SADCC (South African DevelopmentCoordination Conference)ECOWAS (Economic Community of West

African States)GCC, ASEAN, SAARC, COMESA, MERCASUR

Documents

2013 WTO IMF