World Trade Organization (WTO)

What is the World Trade Organization?

The World Trade Organization (WTO) is an international organization that promotes free trade and economic
cooperation among its member countries.
 Intergovernmental organization which regulates international trade
 Officially founded on 1st Jan 1995 under the Marrakesh Agreement
 WTO replaced GATT (General Agreement on Tariffs and Trade)

About World Trade Organization

 Location: Geneva, Switzerland
 Established: 1 January 1995
 Created by: Uruguay Round negotiations (1986-94)
 Membership: 162 countries (as of 30 November 2015)
 Head: Roberto Azevêdo (Director-General)
 Secretariat staff: 625

Why WTO?
 To arrange the implementation, administration, and operations of trade agreements
 Settlement of disputes
 Trade relations in issues dealt with under agreements
 To provide a framework for implementing results from ministerial conferences
 To manage the trade policy review mechanism (TRIM) effectively and efficiently
 To create stronger relationships among nations for global economic growth

Functions of WTO
 Administering WTO trade agreements
 Forum for trade negotiations
 Handling trade disputes
 Monitoring national trade policies
 Providing technical assistance and training for developing countries
 Cooperating with other international organizations

Principles of WTO
1. Trade Without Discrimination
o Most Favoured Nation (MFN): Treating other members equally
o National Treatment: Treating foreigners and locals equally
2. Freer trade: Gradually through negotiation
3. Predictability: Ensuring binding and transparency
4. Promoting fair competition
5. Encouraging development and economic reform

Role of WTO
1. The main goal of WTO is to make trade smooth, fair, free, and predictable. It administers multilateral
trade agreements and supports ongoing negotiations for new agreements.
2. Multilateral agreements are negotiated among multiple nations, often complex but highly influential
when agreed upon. The WTO oversees these agreements and investigates complaints of unfair trade
practices.

TRIMs and TRIPS of WTO

1. Agreement on Trade-Related Investment Measures (TRIMs):
o Refers to conditions or restrictions imposed by governments on foreign investment.
 o No contracting party shall apply TRIMs inconsistent with WTO Articles.
2. Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS):
o Sets minimum standards for IP regulation among WTO members.
o Covers copyrights, geographical indications, industrial designs, patents, trademarks, trade
secrets, etc.
o Specifies enforcement procedures, remedies, and dispute resolution mechanisms.

The Relevance of WTO

 Promotes peace
 Handles disputes constructively
 Ensures a rules-based system instead of power-based, easing global trade relations
 Freer trade reduces living costs and provides consumer choices
 Stimulates economic growth and employment
 Makes the system more efficient and cost-effective

The Agreements
 WTO is a rules-based system, and its rules are negotiated agreements.
 Overview includes:
o Plurilateral agreements
o The Doha Agenda

Key Agreements Include:

1. Tariffs: Moving towards more bindings and zero tariffs
2. Agriculture Agreement: New rules and commitments
3. Textiles: Integration into mainstream trade rules
4. Intellectual Property: Protection and enforcement

Conclusion
 It is the place where the member country comes and talks together and shares their grievance in order to
resolve their problem related to International trade.
 The countries make their decisions through various councils and committees, whose membership
consists of all WTO members.
 The system helps promote peace, by handling Dispute of member countries. It provides free trade which
cuts the costs of living and provides more choice of products and qualities and stimulates economic
growth.
 WTO deals with the special needs of developing countries as two thirds of the WTO members are
developing countries and they play an increasingly important and active role in the WTO because of
their numbers, because they are becoming more important in the global economy, and because they
increasingly look to trade as a vital tool in their development efforts.

ADDITIONAL INFORMATION ON WTO

1. Key Milestones:
o Seattle Ministerial Conference (1999): Marked by protests against globalization, showcasing
public concerns about the effects of global trade.
o Doha Development Round (2001): Aimed to focus on the needs of developing countries,
addressing issues like agricultural subsidies, tariffs, and market access. It remains incomplete
due to disagreements between developed and developing nations.
2. Functions Beyond Trade:
o The WTO also oversees negotiations on environmental goods and services, aiming to integrate
sustainable practices into trade frameworks.
3. Dispute Settlement System:
 o The WTO has a robust dispute settlement system, often referred to as the "court" of world trade.
Since 1995, it has resolved hundreds of trade disputes, ensuring compliance with global trade
rules.
4. Impact on Global Trade:
o The WTO has facilitated significant trade liberalization, contributing to a reduction in global
poverty. However, it has faced criticism for favoring developed countries in some agreements.
5. Challenges:
o The WTO has faced challenges in addressing modern trade issues like e-commerce, digital trade,
and the rise of protectionism in recent years.
General Agreement on Tariffs and Trade (GATT)

What is GATT?
 The General Agreement on Tariffs and Trade (GATT) is a multilateral trade agreement aimed at
reducing tariffs and other trade barriers.
 Formed in 1947 and transformed into the World Trade Organization (WTO) in 1995.
 It emerged from the failure of governments to create the International Trade Organization (ITO).

About GATT
 The General Agreement on Tariffs and Trade (GATT) was signed in 1947.
 Purpose:
o To provide an international forum encouraging free trade between member states by:
 Regulating and reducing tariffs on traded goods
 Providing a common mechanism for resolving trade disputes
 A treaty not an organization.
 The Bretton Woods Conference introduced the idea of regulating trade as part of economic recovery
after World War II.
 Governments began parallel negotiations for GATT as an early measure to reduce tariffs.
 After the ITO failed in 1950, GATT remained the only trade agreement.

Objective
 Reduction of barriers to tariffs and international trade.
 Promotes economic cooperation.
 Achieved through reduction of tariff barriers, quantitative restrictions, and subsidies on trade through a
series of agreements.

Impact of GATT
 Laid the foundation for WTO.
 Reduced trade tensions.
 Economic growth and development.
 Improved market access.

History of GATT Negotiation Rounds:

1. Geneva Round (1947).
2. Annecy Round (1949).
3. Torquay Round (1950-1951).
4. Geneva Round (1955-1956).
5. Dillon Round (1960-1962).
6. Kennedy Round (1964-1967).
7. Tokyo Round (1973-1979).
8. Uruguay Round (1986-1994).

 GATT signatories occasionally negotiated new trade agreements that all countries would enter
into
 Each set of agreements was called a round
 In general, each agreement bound members to reduce certain tariffs. Usually this would include
many special- case treatments of individual products, with exceptions or modifications for each
country.
 Divided into 3 phases:
o First
 From 1947 until the Torquay Round
 Largely concerned which commodities would be covered by the agreement
  Freezing existing tariff levels
o Second
 From 1959 to 1979
 Focused on reducing tariffs
o Third
 Consists only of the Uruguay Round from 1986 to 1994
 It extended the agreement to new areas such as intellectual property, services, capital, and
agriculture.
 Final outcome was creation of WTO.

Trade Barriers: Tariff and Non-Tariff Barriers

 While free trade maximizes world welfare, most nations impose some trade restrictions that benefit
special groups in the nation.
 The most important type of trade restriction historically is the tariff.
 When a small nation imposes an import tariff, the domestic price of the importable commodity rises by
the full amount of the tariff.
 As a result, domestic production of the importable commodity expands, while domestic consumption
and imports fall.

Tariffs
 Three types of tariffs: Ad-Valorem, Specific, or Compound.
o Ad-Valorem tariff: Expressed as a fixed percentage of the value of the traded commodity.
o Specific tariff: Expressed as a fixed sum per physical unit of the traded commodity.
o Compound tariff: A combination of an Ad-Valorem and a specific tariff.

Trade Barriers
 An import tariff is a duty on the imported commodity, while an export tariff is a duty on the exported
commodity.
 Example of Barrier:
o Export tariffs are prohibited by the U.S. Constitution but are often applied by developing
countries on their exports (e.g., Ghana on its cocoa and Brazil on its coffee) to get better prices
and revenues.

Non-Tariff Barriers (Subsidies)

 National governments sometimes grant subsidies to domestic producers to help improve their trade
position.
 Two types of subsidies can be distinguished:
o A domestic subsidy, which is sometimes granted to producers of import-competing goods.
o An export subsidy, which goes to producers of goods that are to be sold overseas.

Conclusion
 GATT played a crucial role in promoting free trade and economic cooperation, laying the groundwork
for the World Trade Organization.
 Its successes include huge increases in world trade, new members (23 to 110), and enormous reductions
in tariffs.

ADDITIONAL INFORMATION ON GATT

Origin
 Post-World War II Context:
o After World War II, nations sought to rebuild their economies and prevent future conflicts.
 o The Bretton Woods Conference (1944) laid the groundwork for global economic cooperation,
establishing the International Monetary Fund (IMF) and the World Bank.
o A proposal for an International Trade Organization (ITO) was introduced to regulate global
trade and reduce protectionism.
 Failure of the ITO:
o The ITO charter, known as the Havana Charter (1948), was never ratified, mainly due to
opposition from the United States Congress.
o GATT emerged as a provisional solution to regulate international trade in the absence of the
ITO.

Establishment
 Signed in 1947:
o GATT was signed by 23 countries on October 30, 1947, in Geneva, Switzerland.
o It came into effect on January 1, 1948.
o Initially, it was a temporary arrangement aimed at liberalizing trade through tariff reductions.

Objectives
 To reduce tariffs and trade barriers.
 To foster economic recovery and growth through international trade.
 To create a rules-based system for resolving trade disputes.

Key Rounds of Negotiation

GATT evolved through a series of negotiation rounds, each addressing specific trade issues:

1. Geneva Round (1947)

 Participants: 23 countries.
 Focus: Tariff reductions.
 Outcome:
o 45,000 tariff concessions agreed upon.
o Trade value affected: $10 billion.
 Significance: Established the foundation of GATT.

2. Annecy Round (1949)

 Participants: 13 countries.
 Focus: Tariff reductions and expansion of membership.
 Outcome:
o Additional tariff concessions made.
o New members joined GATT.

3. Torquay Round (1950–1951)

 Participants: 38 countries.
 Focus: Further tariff reductions.
 Outcome:
o Tariff reductions covering 25% of global trade.

4. Geneva Round (1956)

 Participants: 26 countries.
 Focus: Tariff reductions.
 Outcome:
o Tariff cuts valued at approximately $2.5 billion.
 5. Dillon Round (1960–1961)
 Participants: 26 countries.
 Focus:
o Tariff negotiations.
o Addressing the impact of the formation of the European Economic Community (EEC).
 Outcome:
o Initial attempts to harmonize tariffs among EEC members and GATT participants.

6. Kennedy Round (1964–1967)

 Participants: 62 countries.
 Focus:
o Tariff reductions (industrial goods).
o Anti-dumping measures.
 Outcome:
o Average tariff cuts of 35%.
o Adoption of the Anti-Dumping Agreement.

7. Tokyo Round (1973–1979)

 Participants: 102 countries.
 Focus:
o Reduction of non-tariff barriers (NTBs).
o Plurilateral agreements.
 Outcome:
o Further tariff cuts worth $300 billion in trade.
o Plurilateral codes for specific trade issues like subsidies, technical barriers, and anti-
dumping.

8. Uruguay Round (1986–1994)

 Participants: 123 countries.
 Focus:
o Expansion beyond tariffs to include:
 Agriculture and textiles.
 Services (General Agreement on Trade in Services - GATS).
 Intellectual property (Trade-Related Aspects of Intellectual Property Rights - TRIPS).
 Trade-related investment measures (TRIMs).
o Strengthening the dispute settlement mechanism.
 Outcome:
o Creation of the World Trade Organization (WTO) in 1995.
o Comprehensive reduction in tariffs and non-tariff barriers.
o Incorporation of new trade areas under GATT.

Round Years Focus Notable Outcome

Geneva Round 1947 Initial tariff reductions 45,000 tariff concessions.
Annecy Round 1949 Tariff reductions, membership Additional tariff concessions.
expansion
Torquay Round 1950–1951 Further tariff reductions Affected 25% of global trade.
Geneva Round 1956 Tariff reductions Cuts worth $2.5 billion.
Dillon Round 1960–1961 Tariff negotiations, EEC impact Harmonization efforts.
Kennedy Round 1964–1967 Industrial goods, anti-dumping 35% tariff cuts, Anti-Dumping
measures Agreement.
Tokyo Round 1973–1979 Non-tariff barriers $300 billion in trade reductions,
 plurilateral codes.
Uruguay Round 1986–1994 Comprehensive trade Creation of WTO, inclusion of
liberalization services and IP rights.
Evolution into the WTO
 By the early 1990s, GATT's framework proved insufficient to handle the complexities of modern global
trade.
 The Marrakesh Agreement in 1994 established the WTO, which absorbed and expanded GATT’s
functions.
 GATT (1947) became GATT (1994), forming part of the WTO agreements.

Impact of GATT
 Promoted Trade Liberalization:
o Reduced global average tariffs significantly from 22% (1947) to 5% (1994).
 Laid the Foundation for the WTO:
o Its principles and mechanisms continue to underpin the WTO.
 Encouraged Economic Cooperation:
o Helped rebuild war-torn economies and fostered globalization.

Summary
The history of GATT reflects a progressive effort to create a stable, rules-based global trading system. It started
as a provisional agreement and evolved into the foundation of the WTO, shaping the way nations interact in
international trade.

Country
Country Capital City Currency Currency Code
Code
AU Australia Canberra Australian Dollar AUD
BE Belgium Brussels Euro EUR
BR Brazil Brasília Brazilian Real BRL
MM Myanmar (formerly Burma) Naypyidaw Myanmar Kyat MMK
CA Canada Ottawa Canadian Dollar CAD
LK Sri Lanka (formerly Ceylon) Colombo Sri Lankan Rupee LKR
CL Chile Santiago Chilean Peso CLP
CN China Beijing Renminbi (Yuan) CNY
CU Cuba Havana Cuban Peso CUP
CZ/SK Czech Republic/Slovakia Prague/Bratislava Czech Koruna/Euro CZK/EUR
FR France Paris Euro EUR
IN India New Delhi Indian Rupee INR
LB Lebanon Beirut Lebanese Pound LBP
LU Luxembourg Luxembourg City Euro EUR
NL Netherlands Amsterdam Euro EUR
NZ New Zealand Wellington New Zealand Dollar NZD
NO Norway Oslo Norwegian Krone NOK
PK Pakistan Islamabad Pakistani Rupee PKR
Zimbabwe (formerly Southern Zimbabwean Dollar/US
ZW Harare ZWL/USD
Rhodesia) Dollar
SY Syria Damascus Syrian Pound SYP
Pretoria
ZA South Africa South African Rand ZAR
(administrative)
GB United Kingdom London British Pound GBP
US United States Washington, D.C. United States Dollar USD

Asia-Pacific Economic Cooperation (APEC)

APEC (Asia-Pacific Economic Cooperation) is a regional economic forum that brings together 21 member
economies from the Asia-Pacific region to promote free trade, economic cooperation, and sustainable
development. It was founded in 1989 with the aim of enhancing economic growth and prosperity in the Asia-
Pacific region. APEC works to foster economic integration, encourage trade liberalization, reduce trade barriers,
and promote a more open and cooperative regional economy.

Member Economies: APEC consists of 21 member economies, which are not strictly countries but include
both nations and special administrative regions. The full list of APEC members is:
 Australia  Japan  Philippines
 Brunei  South Korea  Russia
 Canada  Malaysia  Singapore
 Chile  Mexico  Taiwan
 China (including Hong  New Zealand  Thailand
Kong and Macau)  Papua New Guinea  United States
 Indonesia  Peru  Vietnam

Country Code Country Capital City Currency Currency Code

AU Australia Canberra Australian Dollar AUD
BN Brunei Bandar Seri Begawan Brunei Dollar BND
CA Canada Ottawa Canadian Dollar CAD
CL Chile Santiago Chilean Peso CLP
CN China Beijing Renminbi (Yuan) CNY
HK Hong Kong Hong Kong Hong Kong Dollar HKD
MO Macau Macau Macanese Pataca MOP
ID Indonesia Jakarta Indonesian Rupiah IDR
JP Japan Tokyo Japanese Yen JPY
KR South Korea Seoul South Korean Won KRW
MY Malaysia Kuala Lumpur Malaysian Ringgit MYR
MX Mexico Mexico City Mexican Peso MXN
NZ New Zealand Wellington New Zealand Dollar NZD
PG Papua New Guinea Port Moresby Papua New Guinean Kina PGK
PE Peru Lima Peruvian Sol PEN
PH Philippines Manila Philippine Peso PHP
RU Russia Moscow Russian Ruble RUB
SG Singapore Singapore Singapore Dollar SGD
TW Taiwan Taipei New Taiwan Dollar TWD
TH Thailand Bangkok Thai Baht THB
US United States Washington, D.C. United States Dollar USD
VN Vietnam Hanoi Vietnamese Dong VND

Key Goals: APEC focuses on several main objectives:

 Trade and Investment Liberalization: Reducing tariffs and other trade barriers, promoting regional
trade agreements.
 Economic and Technical Cooperation: Encouraging collaboration in areas such as education,
infrastructure, technology, and environmental sustainability.
 Sustainable Development: Ensuring that economic growth does not come at the cost of the
environment and that future generations benefit from current policies.
 Strengthening Regional Integration: Enhancing cooperation between diverse economies to ensure
long-term economic growth and regional stability.

Annual Meetings: APEC holds an annual Leaders' Meeting, where heads of government or their
representatives from the member economies come together to discuss regional issues. These meetings often
result in declarations that guide the future direction of the region’s economic policies.
What Does APEC Do?
APEC ensures that goods, services, investment and people move easily across borders. Members facilitate this
trade through faster customs procedures at borders; more favorable business climates behind the border; and
aligning regulations and standards across the region. For example, APEC's initiatives to synchronize regulatory
systems are key to integrating the Asia-Pacific economy. In such cases, a product can be more easily exported
with just one set of common standards across all economies.

Sustainable and Inclusive Asia-Pacific

APEC works to help all residents of the Asia-Pacific participate in the growing economy. For example, APEC
projects provide digital skills training for rural communities and help indigenous women export their products.
Recognizing the impacts of climate change, APEC members implement initiatives to increase energy efficiency
and promote sustainable management of forest and marine resources.

The forum adapts to allow members to deal with important new challenges to the region's economic well-being.
This includes ensuring disaster resilience, planning for pandemics, and addressing terrorism.

Three Pillars: APEC's work is organized around three main pillars:

 Trade and Investment Liberalization: Removing barriers to trade and fostering economic integration.
 Business Facilitation: Improving the ease of doing business through harmonizing regulations and
practices.
 Economic and Technical Cooperation: Promoting cooperation among economies to address shared
challenges like climate change, infrastructure, and human resources development.

APEC's Key Achievements:

 Trade Growth: APEC economies represent approximately 60% of global GDP and around 47% of
world trade, making it a powerful engine for global economic growth.
 Cooperation on Global Challenges: APEC has addressed challenges like climate change, energy
security, and digital transformation, promoting a cooperative approach to solving regional and global
issues.
 Global Supply Chains: APEC's efforts in reducing barriers to trade and investment have helped
establish a robust network of supply chains across the Asia-Pacific region.

Recent Developments:
 Digital Trade and Innovation: APEC has increasingly focused on promoting digital trade and
innovation, addressing issues like cybersecurity, data privacy, and e-commerce.
 Post-COVID Economic Recovery: The economic impact of the COVID-19 pandemic has made
regional recovery and cooperation in areas like health security and economic resilience key priorities
for APEC.

In summary, APEC serves as an important platform for fostering economic cooperation and addressing
challenges in the Asia-Pacific region, promoting prosperity, sustainability, and integration among its diverse
member economies.

ADDITIONAL INFORMATION ON APEC:

Historical Background and Formation

 Establishment in 1989:
o APEC was formed in response to the growing interdependence of Asia-Pacific economies
and the need to promote regional cooperation in an increasingly globalized world.
o The inaugural APEC meeting was held in Canberra, Australia, with 12 founding members.
 Drivers for Formation:
o Rising economic power of Asian economies in the 1980s.
 o Desire for a multilateral platform that balances US-led initiatives and the needs of emerging
Asian economies.

Key Features of APEC

 Non-Binding Commitments:
o Unlike other international organizations, APEC operates on the principle of voluntary
cooperation and non-binding commitments.
o Decisions are made by consensus, emphasizing flexibility and inclusivity.
 Focus on Practical Solutions:
o APEC concentrates on practical policy initiatives to address trade and economic challenges,
such as simplifying customs procedures and harmonizing standards.

Notable Initiatives and Achievements

1. Bogor Goals (1994):
o Leaders committed to achieving free and open trade and investment by 2020 for all member
economies.
o Differentiated goals: Developed economies aim for 2010, and developing economies target
2020.
2. Supply Chain Connectivity Framework:
o Introduced in 2009 to improve supply chain efficiency across the region by addressing
barriers such as infrastructure gaps, regulatory mismatches, and delays.
3. Cross-Border E-Commerce:
o Facilitates secure and efficient e-commerce practices, particularly for small and medium
enterprises (SMEs) to participate in the global market.
4. Structural Reform:
o Focused on improving domestic regulatory environments, promoting competition policy, and
fostering transparency in governance.

Key Areas of Focus

1. Digital Economy:
o APEC has prioritized fostering a robust digital economy, addressing data privacy,
cybersecurity, and cross-border data flow regulations.
2. Inclusivity:
o Special focus on empowering underrepresented groups, including women, indigenous
populations, and rural communities, to participate in regional growth.
3. Climate Action:
o Supports green growth strategies, renewable energy adoption, and sustainable resource
management to combat climate change.

Impact of APEC
 Economic Contributions:
o APEC economies collectively account for about 60% of global GDP and 47% of world
trade.
o Between 1989 and 2019, the region's trade expanded by more than sevenfold, reflecting the
effectiveness of APEC policies.
 Employment:
o APEC's policies have supported job creation by facilitating trade and investment, particularly
in sectors like technology, manufacturing, and services.
 Crisis Management:
o Played a crucial role in regional economic recovery during crises such as the 1997 Asian
Financial Crisis and the COVID-19 pandemic.
Current Challenges and Opportunities
1. Evolving Trade Dynamics:
o The rise of regional trade agreements like the Comprehensive and Progressive Agreement for
Trans-Pacific Partnership (CPTPP) creates overlapping jurisdictions and requires alignment
with APEC goals.
2. Geopolitical Tensions:
o Strains between major economies, such as the US and China, could impact the unity and
effectiveness of APEC initiatives.
3. Post-Pandemic Recovery:
o APEC is focusing on rebuilding resilient supply chains, addressing vaccine inequities, and
boosting economic resilience.
4. Technological Advancements:
o Need for policy frameworks to manage artificial intelligence, blockchain, and other emerging
technologies in trade and governance.

Future Directions
1. Sustainability Goals:
o Integrating climate-resilient strategies and renewable energy projects into regional economic
planning.
2. Digital and Green Trade:
o Enhancing support for industries that align with digital transformation and green technology
to sustain long-term economic growth.
3. Deeper Integration:
o Moving toward a Free Trade Area of the Asia-Pacific (FTAAP) to streamline trade
agreements and reduce redundancy in existing frameworks.