SlideShare a Scribd company logo
1 of 37
Download to read offline
IMPACT OF WTO POLICIES
ON DEVELOPING COUNTRIES
Globalisation and development

5th November 2013
THE WTO: ITS EVOLUTION
• The ITO and GATT 1947

• Filling the gap left by still born ITO
• De facto international trade organisation
• Success and failure

• Uruguay Round (1986-1993): the longest round ever
•
•
•
•

Punta del Este Declaration
Proposals for a MTO (1990)
Marrakesh Agreement (1994)
WTO since 1.1.1995

2
WTO-A BRIEF PROFILE

159 member nations (over 97% of world trade).
3
25 ‗observer‘ countries.
4

GATT/WTO Membership
180
160
140
120
100
80
60
40
20

19
48
19
53
19
61
19
65
19
70
19
78
19
83
19
90
19
94
19
98
20
02
20
07

0

total membership
new members
The World Trade Organization (WTO/GATT)

5

Duration of GATT rounds and number of countries involved

100
To k y o

U ru g u a y

K ennedy

Fourth

40

S econd

60

Third

80

First

num ber of countries at start

120

D illo n

20
0
1945

1955

1965

1975
y ear

1985

1995
6

-December 3-6, 2013 in
Bali, Indonesia.
-Trade Facilitation
-WTO rules
-Agriculture
7

VIDEO
WTO-an introduction
8

ECONOMIC GLOBALISATION AND WTO LAW
• Economic Globalisation and International Trade
• What is meant by economic globalisation?

• Gradual integration of national economies into a global borderless economy
• Influenced by (and their democratisation)
• forces of technology
• of finance
• of information

• Why is it under critique?
•
•
•
•
•

Reasons and reactions
Globaphiles vs globaphobes
Expansion of cross-border economic interaction: more trade, more welfare
Erosion of local control, autonomy and identity
Soverignity

• WTO as vehicle of freer and open trade?
• Balancing of interests necessary
• Global economic governance
9

ECONOMIC GLOBALISATION AND WTO LAW
• Figures on trade (last 50 years) show changes in trade developments
General increase of world trade
Increase of share of services in relations to goods
decline of trade in Europe
raise in Latin-America, Africa and Asia
48 LDC account to only 0.5 percent of world trade
China, India and Mexico major suppliers of cutting/-edge technologies and laborintensive goods
• Increased trade with companies and foreign direct investment
•
•
•
•
•
•

• International trade rules: reasons
• Restraining protectionism
• More security and predictability
• Governance in globalised economy
10

URUGUAY ROUND REQUIREMENTS: DIFFICULTIES
• Intellectual Property (TRIPS) : Time frame-5 years
• TRIMS (TRIMS) :
o Minimum local content and trade balancing ;
o Flexibility to choose investment promotion policies;
o Time frame (by 1st Jan 2001)
o Sanitary and phytosanitary measures and technical barriers to trade (SPS) :
o No consultation
o Difficulty to meet global standards
o Market Access:
o Agricultureo Extremely high tariffs
o Escalated tariff on processed foods
o Trade distorting subsidies
o Quotas
o Textiles and Clothing
o Quota (Multi fibre agreement)
o Transitional Safeguards
o Anti dumping actions
o Discriminatory rule of origin
11

DOHA ROUND
• Launched in Doha (Qatar) in November 2001
• Doha Development Agenda
• To postpone the deadline for some developing countries to eliminate export
subsidies and for least-developed countries to provide protection for
pharmaceutical patents and test data, and to tackle problems faced by countries
unable to make generic versions of patented medicines.
• Areas of Concern:
•
•
•
•

Implementation-related issues and concerns
Agriculture
Services
TRIPS and issues
•
•
•
•

And public health
And geographical indications
And biodiversity
Protection of traditional knowledge and folkore
12

SUBJECTS IN DOHA DECLARATION
•
•
•
•
•
•

•
•
•

Agriculture (par 13, 14)
Services (par 15)
Non-agricultural products (par 16)
TRIPS (par 17-19)
Relationship between trade and investment
(par 20-22)
Interaction between trade and competition
policy (par 23–25)
Transparency in government procurement
(par 26)
Trade facilitation (par 27)
WTO rules: anti-dumping and subsidies (par
28)

WTO rules: regional trade agreement (par 29)
Dispute Settlement Understanding (par 30)
Trade and environment (pars 31–33)
Electronic commerce (par 34)
Small economies (par 35)
Trade, debt and finance (par 36)
Trade and technology transfer (par 37)
Technical
cooperation
and
capacity
building (pars 38–41)
• Least-developed countries (pars 42, 43)
• Special and differential treatment (par 44)
•
•
•
•
•
•
•
•

http://www.wto.org/english/tratop_e/dda_e/dohaexplained_e.htm#agriculture
13

WTO Ministerial Meeting in Cancun
Developing countries, led by Brazil, China, and
India, were unwilling to move forward without
meaningful cuts in agricultural subsidies.
Moreover, they never fully accepted to the
idea of the Singapore agenda :
--Trade and Investment
--Trade and Competition
--Transparency in Government Procurement

--Trade Facilitation.

Two issues caused the negotiations to
break down, The developed world :
1)

The developed world would not
compromise on the issue of agricultural
subsidies.

2)

The developed world called for a
liberalization of foreign investment rules
to improve transparency, reduce red
tape,
and
open
government
procurement.

5th Ministerial Conference of the WTO
Cancun, September 9-14, 2003
14

WHY DO DEVELOPED WORLD DOMINATE WTO?
• Arm Twisting Technique
• Low level of financial and knowledge resources among developing economies
• Negotiations and decisions are dominated by the developed economies
• The developing economies are not consulted/considered while formulating policies
• WTO remains ineffective in imposing it‘s disciplines on developed economies
15

WHAT IS A DEVELOPING COUNTRY ?
• No definitions
Countries

from

WTO

on

Developing

• Members declare themselves
• They are challengeable
• Mostly the standards of World Bank
considered for classification of countries.

are

• There are provisions for special, differential and
more favorable treatment for the developing
countries

 WB classifies its member countries on the basis
of GNI per capita.
 Economies are divided according to 2012 GNI
per capita, calculated using the World Bank
Atlas method.
 World Bank Atlas method :
 The groups are:
low income: $1,035 or less; lower middle
income: $1,036 - $4,085; upper middle
income: $4,086 - $12,615; and high
income:$12,616 or more.
 With this classification, 2/3 rd of the member
countries are developing countries
16

WHY DEVELOPING ECONOMIES ARE TOO SENSITIVE ?
• Agriculture is the major source of livelihood
• Disturbance leads to breaking down of agricultural ecosystem

• Unemployment
• Vicious cycle
• Poor people are fragile & distress migration followed by starvation
• Difficult to revive
17

WTO AND DEVELOPING COUNTRIES
• Over three quarters of WTO members are developing or least-developed
countries
• WTO agreements contain special provisions for them
 Longer time periods to implement agreements and commitments
 Measures to increase their trading opportunities
 Support to help them build the infrastructure for WTO work
 Handle disputes
 Implement technical standards
 Technical Assistance and Training
18

WHY ARE DEVELOPING COUNTRIES IMPORTANT?

• Change in the equilibrium of power in the
global economy
The emerging powers gain importance
• 2/3 of the WTO members are developing
countries
19

HOW WTO DEALS WITH DEVELOPING COUNTRIES?
• In the agreements: more time , better terms
• Legal Advice: a secretariat service
• Gainful opportunities for developing countries:

• Fundamental reforms in agricultural trade
• Phasing out quotas on developing countries exports of textiles and clothing
• Reductions in customs duties on industrial products
• Expanding the number of products whose customs duty rates are ―bound‖ under the WTO, making the rates
difficult to raise
• Phasing out bilateral agreements to restrict traded quantities of certain goods —these ―grey area‖ measures
(the so-called voluntary export restraints)

• Tariff peaks (37% Vs 40%) and Tariff escalation
• Erosion of preferences
• The ability to adapt (difficult for lDC)
20

SPECIAL AND DIFFERENTIAL PROVISIONS
• Longer time periods for implementing Agreements and commitments,
• Measures to increase trading opportunities for these countries,
• Provisions requiring all WTO members to safeguard the trade interests of
developing countries,
• Support to help developing countries build the infrastructure for WTO
work, handle disputes, and implement technical standards, and
• Provisions related to Least-Developed country (LDC) Members
21

SPECIAL & DIFFERENTIAL TREATMENT. DO WE NEED IT?
• Yes !
• Lack of financial & human resources to fulfil their commitments.
• S & D:

o More flexible terms within specified time limits: for example, longer transition
periods, smaller commitments (for example the commitments on agriculture)
o Clauses which say in broad terms that developed countries should help
developing countries in specific areas (such as technology transfer under
intellectual property protection) but without defining exactly what action is
needed.

• Did S & D yield the desired result?
• NO.. S & D were usually insufficient and that the broader requirements of
category are too vague and often ignored.
22

NEGOTIATIONS COLLAPSE
• Pro-liberalization lobbies
• Comfortable with current regulation
• The WTO is not useful to liberalize services

• Tariffs below max 
• Increase in the price of commodities
• Inefficient Market and global economy
23

STAGNATED NEGOTIATIONS: STRUCTURAL CAUSES
• Change in the equilibrium of power in the global
economy
 The emerging powers gain importance

GATT Institutional inertia  governance problems
• High Expectations: Development Round and UR
background




2/3 of the WTO members are developing
countries
The G-20: joint group with offensive interests
24

What’s at stake?
Who wins?
Who loses?

IMPACT
OVER
THE
INCOME OF A FULL
MERCHANDISE TRADE
LIBERALIZATION
(NOT
SERVICES) BY COUNTRY
AND REGION IN 2015
(COMPARED
WITH
2001)
25

WTO: BALANCE AGAINST THE DEVELOPING WORLD

Video
26

1. Cotton
2. Agricultural Subsidies
3. Trade Agreements
4. Special Treatment
5. Medicines
6. Legal Costs
7. Protectionist Economic Policies
8. Natural Disaster
9. Decision Making
10. Fair Trade

http://www.theguardian.com/global-development/povertymatters/2011/nov/14/wto-fails-developing-countries
27

 Double standard of US.
 US Domestic Aid in 2012-$100 Bn and India -$20
Bn.
 Avg supply of subsidized food-US-358
kg/person/year, India-60.
 India has been criticized by WTO for ―creating
a massive new loophole for potentially
unlimited trade-distorting subsidies.‖
 India‘s subsidies for feeding its hungry are
being blamed for distorting trade in agriculture
while the US, which provides six times more
subsidies than India for feeding its hungry, is
seen as doing humanitarian service.
 Peace Clause (Art 13) : Expired in 2003
 Procurement price:10% of the total production,
and refrain from increasing the wheat
procurement price in future.
 No Penalisation from WTO on US and other
developed countries.
http://www.hindustantimes.com/comment/columns/the-wto-is-destroying-indian-farming/article11137811.aspx
28

IMPACT ON INDUSTRIALIZATION: A POLICY PERSPECTIVE
1. Tariff liberalisation under NAMA
• Under the emerging NAMA rules in the Doha round negotiations, developing countries, with the exception of LDCs, have to
reduce their import tariffs on industrial products and bind tariff rates below a certain ceiling. Developing countries have the option,
however, of applying deeper cuts in tariff lines in exchange for greater flexibilities and vice versa. Flexibilities are in the form of
exempting a certain percentage of sensitive product lines from tariff cuts as long as their import shares in total NAMA imports do
not exceed a certain threshold. However the exemption of a whole sector from tariff cuts will not be possible. This implies that nonLDC African countries will have less room for pursuing import-substitution strategies behind high tariff barriers or through gradual
and selective tariff liberalisation. This is further compounded by the insertion of the "national treatment" principle in WTO laws,
whereby foreign firms and foreign goods are to be granted the same treatment as local firms and locally produced goods in the
country.
• Developing countries will apply tariff cuts according to a "Swiss" formula. Countries that apply the deepest tariff cuts will be able to
"make smaller or no cuts in 14% of its most sensitive industrial tariff lines, provided that these tariff lines do not exceed 16 percent of
the total value of its NAMA imports".
• That country can also keep "6.5 % of its tariff lines unbound or exclude them from tariff cuts, provided they do not exceed 7.5%
percent of the total value of its NAMA imports" (WTO). LDCs will not face tariff reductions but will have to raise the percentage of
their tariff lines that are bound.
• The WTO text mentions that additional flexibilities will be negotiated at a future date for South Africa, Botswana, Lesotho, Namibia,
Swaziland and members of the South African Customs Union (SACU). According to the WTO, "the tariff reductions will be
implemented gradually over a period of five years for developed members and ten years for developing members, starting 1
January of the year following the entry into force of the Doha results".
29

THE WTO AND ITS IMPACT ON INDUSTRIALIZATION
• Proponents of NAMA reforms argue that, in a low-tariff world, developing countries will benefit in the
form of increased market access for their industrial products to other countries, especially developed
countries. For instance, in developed countries the proportion of industrial imports entering on a dutyfree basis has jumped over the last fifteen years from 20 % to 44%.
•

However, critics of NAMA reforms argue that the emerging rules will lead to de-industrialisation in
countries that are in their early stages of industrialisation (Shafaeddin 2006).

• Furthermore, they argue that the parameter of interest for developing countries should not be the
average industrial tariff rate imposed by developed countries on imports but the actual rates imposed
by the latter on the exports of interest to developing countries. It is not clear that such rates have been
considerably lowered in return for increased market access.
• There is also the fear that NAMA liberalisation will lock poor developing countries into their current or
existing patterns of export specialisation. In order to build dynamic comparative advantage in higher
value-added activities, entrepreneurs need to be rewarded with higher expected returns in exchange
for the higher risks involved in undertaking strategic investments in new industries and new technologies.
However the emerging trade rules will make it harder for developing countries to turn to selective tariffs
and subsidies to provide such returns to their entrepreneurs (Shafaeddin 2006).
30

THE WTO AND ITS IMPACT ON INDUSTRIALIZATION
2. Subsidies
• With respect to the use of subsidies as a tool for promoting industrial development, under
WTO rules subsidies linked to either export performance (export subsidies) or the use of
domestic over imported goods (local content subsidies) are prohibited, except for LDCs and
countries with less than US $1,000 GNI per capita.

• When linked to export performance, export subsidies can provide appropriate incentives to
domestic firms to invest in building their competitiveness rather than stay complacent.
However, such type of subsidies can no longer be used. Other types of subsidies, for
example production subsidies, are allowed but are now actionable which means that their
use can be challenged if deemed to damage the interests of other parties. In importcompeting industries with high sunk costs, there may be a case for subsidizing production by
domestic infant firms, albeit temporarily, in order to promote greater entry and more
competition in the long-run. As a result of WTO rules, it is now more difficult to nurture local
infant industries through subsidies.
31

THE WTO AND ITS IMPACT ON INDUSTRIALIZATION
3. Investment measures

• The Trade-Related Investment Measures (TRIMs) Agreement under the WTO prohibits countries
from using local content or trade balancing requirements. In addition, as discussed in the
preceding section, countries cannot subsidise firms to favour use of domestic inputs over
imported ones.
• This means that these industrial policy instruments used by currently advanced and emerging
economies, are no longer available to the non-industrialised countries. While Brazil for
instance was able to use local content requirements to establish a local auto manufacturing
industry, Indonesia had to review the local content provisions of its National Car Program in
1999 under the WTO (DiCaprio and Gallager, 2006).
• Under the TRIMs agreement, countries can no longer use local procurement programs to
minimize import leakage rates, optimize the domestic value-chain and promote the building
of production linkages across sectors in their industrial policy programs.
• TRIMs also prohibits the use of performance requirements in FDI policies for the purpose of
maximising benefits from FDI such as promoting use of local industrial products, inserting local
enterprises in the production chain of transnational corporations (TNCs) and facilitating
technology transfer to local suppliers.
32

IMPACT ON INDUSTRIAL SECTOR : SUMMARY
• Significant reduction in industrial tariffs
• Tariff binding (progressively high)
• De-industrialization phase : as a result of cheaper imports from
developed/industrialised economies
• Doha round : strong pressures from developed world for a steep cut on the
tariff rates (non linear formula) & almost 100% tariff binding
33
34

ACTUAL WTO IMPACT ON POLICY SPACE

• Membership of GATT/WTO has not had a major impact on bindings or
tariffs of developing countries

• Other sources of tariff and NTB reforms (unilateral and regional)
• Very limited use of industrial and export subsidies
• Evidence of greater WTO influences on new members (e.g. Saudi Arabia,
Vietnam)

• Concerns about future tightening and stricter implementation of rules
35

PRE- AND POST REFORM NTBS AND EXCHANGE RATE DISTORTIONS
Pre-Reform (1)
Country

(1)

Various years, usually 1980s
(2) Various years, usually early 1990s

Source: Dean, Univ Nottingham (1995)

Cote d’Ivoire
Ghana
Kenya
Madagascar
Malawi
Mali
Nigeria
Senegal
South Africa
Tanzania
Uganda
Zaire

NTB Coverage

38%
100%
71%
100%
100%
58%
100%
55%
100%
100%

Black Market
Premium
(average)
985%
16%
37%
51%
210%
0%
242%
303%
71%

Post-Reform (2)
NTB
Coverage

38%
2%
0%
0%
Few
0%
17%
15%
23%
100%
5%
100%

Black Market
Premium
(average)
17%
9%
13%
12%
27%
3%
119%
79%
9%
36

OVERALL ASSESSMENT AND CONCLUSIONS
• WTO has not significantly affected developing countries‘ policy space
to-date
• The effects (constraints and enhancements) may increase in future
• but scope for phased or gradual affects and differentiation within
WTO rules
• Many of the key pro-development issues are outside the WTO agenda
• improving governance, institutions, human capital and infrastructure
37

More Related Content

What's hot

SAFTA - South Asian Free Trade Area
SAFTA - South Asian Free Trade AreaSAFTA - South Asian Free Trade Area
SAFTA - South Asian Free Trade AreaRaqeeb Ahmed
 
International commodity agreement - International Business - Manu Melwin Joy
International commodity agreement - International Business - Manu Melwin JoyInternational commodity agreement - International Business - Manu Melwin Joy
International commodity agreement - International Business - Manu Melwin Joymanumelwin
 
Tariff and non tariff barriers
Tariff and non tariff barriersTariff and non tariff barriers
Tariff and non tariff barriersJerin M James
 
Trading blocs and their impact
Trading blocs and their impactTrading blocs and their impact
Trading blocs and their impactAnkur Sarkar
 
Commodity agreements
Commodity agreementsCommodity agreements
Commodity agreementsRavi Karthik
 
Wto agreement on agriculture
Wto agreement on agricultureWto agreement on agriculture
Wto agreement on agriculturevyas vemuri
 
WTO Agreement on Agriculture
WTO Agreement on AgricultureWTO Agreement on Agriculture
WTO Agreement on AgricultureFAO
 
WTO & Differences between GATT and WTO
WTO & Differences between GATT and WTOWTO & Differences between GATT and WTO
WTO & Differences between GATT and WTORaja Adapa
 
South asian free _trade_ area (safta)
South  asian  free _trade_ area (safta)South  asian  free _trade_ area (safta)
South asian free _trade_ area (safta)Kirankumar Dash
 
Presentation on wto & india
Presentation on wto & indiaPresentation on wto & india
Presentation on wto & indiaPreeti Gulati
 
208 - Geopolitics & World Economic Systems UNIT 1
208 - Geopolitics & World Economic Systems UNIT 1208 - Geopolitics & World Economic Systems UNIT 1
208 - Geopolitics & World Economic Systems UNIT 1ASM's IBMR- Chinchwad
 
Wto and its impact on indian economy
Wto and its impact on indian economyWto and its impact on indian economy
Wto and its impact on indian economykenalpatel
 

What's hot (20)

SAFTA - South Asian Free Trade Area
SAFTA - South Asian Free Trade AreaSAFTA - South Asian Free Trade Area
SAFTA - South Asian Free Trade Area
 
UNCTAD
UNCTADUNCTAD
UNCTAD
 
TRADING BLOCKS
TRADING BLOCKSTRADING BLOCKS
TRADING BLOCKS
 
Free trade and protection
Free trade and protectionFree trade and protection
Free trade and protection
 
International commodity agreement - International Business - Manu Melwin Joy
International commodity agreement - International Business - Manu Melwin JoyInternational commodity agreement - International Business - Manu Melwin Joy
International commodity agreement - International Business - Manu Melwin Joy
 
Wto and gatt
Wto and gattWto and gatt
Wto and gatt
 
Tariff and non tariff barriers
Tariff and non tariff barriersTariff and non tariff barriers
Tariff and non tariff barriers
 
Absolute advantage
Absolute advantageAbsolute advantage
Absolute advantage
 
Trading blocs and their impact
Trading blocs and their impactTrading blocs and their impact
Trading blocs and their impact
 
Commodity agreements
Commodity agreementsCommodity agreements
Commodity agreements
 
What is gatt
What is gattWhat is gatt
What is gatt
 
Wto agreement on agriculture
Wto agreement on agricultureWto agreement on agriculture
Wto agreement on agriculture
 
WTO and agriculture
WTO and agricultureWTO and agriculture
WTO and agriculture
 
WTO Agreement on Agriculture
WTO Agreement on AgricultureWTO Agreement on Agriculture
WTO Agreement on Agriculture
 
WTO & Differences between GATT and WTO
WTO & Differences between GATT and WTOWTO & Differences between GATT and WTO
WTO & Differences between GATT and WTO
 
South asian free _trade_ area (safta)
South  asian  free _trade_ area (safta)South  asian  free _trade_ area (safta)
South asian free _trade_ area (safta)
 
Presentation on wto & india
Presentation on wto & indiaPresentation on wto & india
Presentation on wto & india
 
WTO AGREEMENTS
WTO AGREEMENTSWTO AGREEMENTS
WTO AGREEMENTS
 
208 - Geopolitics & World Economic Systems UNIT 1
208 - Geopolitics & World Economic Systems UNIT 1208 - Geopolitics & World Economic Systems UNIT 1
208 - Geopolitics & World Economic Systems UNIT 1
 
Wto and its impact on indian economy
Wto and its impact on indian economyWto and its impact on indian economy
Wto and its impact on indian economy
 

Viewers also liked

Impact of WTO on Economy
Impact of WTO on EconomyImpact of WTO on Economy
Impact of WTO on EconomyRizwan Qamar
 
Wto and implications for small and developing countries
Wto and implications for small and developing countriesWto and implications for small and developing countries
Wto and implications for small and developing countriesDavepres
 
Ca cap and trade presentation
Ca cap and trade presentationCa cap and trade presentation
Ca cap and trade presentationDavid Fanfan
 
WTO _ World trade organisation
WTO _ World trade organisationWTO _ World trade organisation
WTO _ World trade organisationAshuvyas2128
 
International Trade and Environment
International Trade and EnvironmentInternational Trade and Environment
International Trade and EnvironmentMargareta Heidt
 
Overview of the Multilateral Trade Negotiations
Overview of the Multilateral Trade NegotiationsOverview of the Multilateral Trade Negotiations
Overview of the Multilateral Trade NegotiationsDavid Laborde
 
Globalization and Role of WTO
Globalization and Role of WTOGlobalization and Role of WTO
Globalization and Role of WTOAmarnath K
 
A CRITICAL APPRAISAL ON PERFORMANCE OF WTO
A CRITICAL APPRAISAL ON PERFORMANCE OF WTOA CRITICAL APPRAISAL ON PERFORMANCE OF WTO
A CRITICAL APPRAISAL ON PERFORMANCE OF WTOSoumeet Sarkar
 
Foreign Trade of India: Critical Analysis
Foreign Trade of India: Critical AnalysisForeign Trade of India: Critical Analysis
Foreign Trade of India: Critical AnalysisTony Sebastian
 
GSP plus [generalized scheme of preferences plus]
GSP plus [generalized scheme of preferences plus]GSP plus [generalized scheme of preferences plus]
GSP plus [generalized scheme of preferences plus]Muhammad Mushtaq Mangat
 
Wto and its impact on pakistan economy
Wto and its impact on pakistan economyWto and its impact on pakistan economy
Wto and its impact on pakistan economyWajahat Ali
 
Technical Barriers to Trade - Dianne Lalla-Rodrigues - Director of the Antigu...
Technical Barriers to Trade - Dianne Lalla-Rodrigues - Director of the Antigu...Technical Barriers to Trade - Dianne Lalla-Rodrigues - Director of the Antigu...
Technical Barriers to Trade - Dianne Lalla-Rodrigues - Director of the Antigu...Antigua Epa
 
Sanitary and phytosanitary measures
Sanitary and phytosanitary measuresSanitary and phytosanitary measures
Sanitary and phytosanitary measuresbabasahebkumbhar
 

Viewers also liked (20)

Impact of WTO on Economy
Impact of WTO on EconomyImpact of WTO on Economy
Impact of WTO on Economy
 
Wto and implications for small and developing countries
Wto and implications for small and developing countriesWto and implications for small and developing countries
Wto and implications for small and developing countries
 
Wto ppt
Wto pptWto ppt
Wto ppt
 
World trade law
World trade lawWorld trade law
World trade law
 
Trade and environment
Trade and environmentTrade and environment
Trade and environment
 
Ca cap and trade presentation
Ca cap and trade presentationCa cap and trade presentation
Ca cap and trade presentation
 
WTO _ World trade organisation
WTO _ World trade organisationWTO _ World trade organisation
WTO _ World trade organisation
 
Wto dispute settlement
Wto dispute settlementWto dispute settlement
Wto dispute settlement
 
International Trade and Environment
International Trade and EnvironmentInternational Trade and Environment
International Trade and Environment
 
Overview of the Multilateral Trade Negotiations
Overview of the Multilateral Trade NegotiationsOverview of the Multilateral Trade Negotiations
Overview of the Multilateral Trade Negotiations
 
Globalization and Role of WTO
Globalization and Role of WTOGlobalization and Role of WTO
Globalization and Role of WTO
 
A CRITICAL APPRAISAL ON PERFORMANCE OF WTO
A CRITICAL APPRAISAL ON PERFORMANCE OF WTOA CRITICAL APPRAISAL ON PERFORMANCE OF WTO
A CRITICAL APPRAISAL ON PERFORMANCE OF WTO
 
Foreign Trade of India: Critical Analysis
Foreign Trade of India: Critical AnalysisForeign Trade of India: Critical Analysis
Foreign Trade of India: Critical Analysis
 
GSP plus [generalized scheme of preferences plus]
GSP plus [generalized scheme of preferences plus]GSP plus [generalized scheme of preferences plus]
GSP plus [generalized scheme of preferences plus]
 
Wto
WtoWto
Wto
 
Wto and its impact on pakistan economy
Wto and its impact on pakistan economyWto and its impact on pakistan economy
Wto and its impact on pakistan economy
 
Technical Barriers to Trade - Dianne Lalla-Rodrigues - Director of the Antigu...
Technical Barriers to Trade - Dianne Lalla-Rodrigues - Director of the Antigu...Technical Barriers to Trade - Dianne Lalla-Rodrigues - Director of the Antigu...
Technical Barriers to Trade - Dianne Lalla-Rodrigues - Director of the Antigu...
 
Sanitary and phytosanitary measures
Sanitary and phytosanitary measuresSanitary and phytosanitary measures
Sanitary and phytosanitary measures
 
Euro currency markets
Euro currency marketsEuro currency markets
Euro currency markets
 
WTO and GATT
WTO and GATTWTO and GATT
WTO and GATT
 

Similar to Impact of WTO policies on developing economies

WTO - World trade organisation
WTO - World trade organisationWTO - World trade organisation
WTO - World trade organisationAshuvyas2128
 
MODULE II Business Environment.pptx
MODULE II Business Environment.pptxMODULE II Business Environment.pptx
MODULE II Business Environment.pptxPrakash Vadavadagi
 
World Trade Organisation and Case Studies
World Trade Organisation and Case StudiesWorld Trade Organisation and Case Studies
World Trade Organisation and Case StudiesOlivia Rodrigues
 
how WTO controls the trade
how WTO controls the tradehow WTO controls the trade
how WTO controls the tradeprasuntiwar2580
 
Multilateral Trade Negotiations and Agreements Under GATT and WTO
Multilateral Trade Negotiations and Agreements Under GATT and WTOMultilateral Trade Negotiations and Agreements Under GATT and WTO
Multilateral Trade Negotiations and Agreements Under GATT and WTOKhandokar Uz Zaman
 
Doha round International economics
Doha round International economicsDoha round International economics
Doha round International economicsLal Sivaraj
 
Multilateralism & regional integration
Multilateralism & regional integrationMultilateralism & regional integration
Multilateralism & regional integrationAnkit Jain
 
WtO, GATT - Trade (Subin Aryal).pptx
WtO, GATT  - Trade (Subin Aryal).pptxWtO, GATT  - Trade (Subin Aryal).pptx
WtO, GATT - Trade (Subin Aryal).pptxSubinAryal1
 
evolution of WTO from GATT
evolution of WTO from GATTevolution of WTO from GATT
evolution of WTO from GATTprachibharadwaj2
 
Regional and bilateral trade agreement
Regional and bilateral trade agreementRegional and bilateral trade agreement
Regional and bilateral trade agreementIra Tobing
 
WORLD TRADE ORGANISATION
WORLD TRADE ORGANISATIONWORLD TRADE ORGANISATION
WORLD TRADE ORGANISATIONAvi Vani
 

Similar to Impact of WTO policies on developing economies (20)

WTO role and functions
WTO role and functionsWTO role and functions
WTO role and functions
 
WTO - World trade organisation
WTO - World trade organisationWTO - World trade organisation
WTO - World trade organisation
 
MODULE II Business Environment.pptx
MODULE II Business Environment.pptxMODULE II Business Environment.pptx
MODULE II Business Environment.pptx
 
World Trade Organisation and Case Studies
World Trade Organisation and Case StudiesWorld Trade Organisation and Case Studies
World Trade Organisation and Case Studies
 
how WTO controls the trade
how WTO controls the tradehow WTO controls the trade
how WTO controls the trade
 
Wto intro
Wto introWto intro
Wto intro
 
Multilateral Trade Negotiations and Agreements Under GATT and WTO
Multilateral Trade Negotiations and Agreements Under GATT and WTOMultilateral Trade Negotiations and Agreements Under GATT and WTO
Multilateral Trade Negotiations and Agreements Under GATT and WTO
 
Doha round International economics
Doha round International economicsDoha round International economics
Doha round International economics
 
Multilateralism & regional integration
Multilateralism & regional integrationMultilateralism & regional integration
Multilateralism & regional integration
 
Doha round 2001
Doha round 2001Doha round 2001
Doha round 2001
 
World trade organization
World trade organizationWorld trade organization
World trade organization
 
WtO, GATT - Trade (Subin Aryal).pptx
WtO, GATT  - Trade (Subin Aryal).pptxWtO, GATT  - Trade (Subin Aryal).pptx
WtO, GATT - Trade (Subin Aryal).pptx
 
Wto
WtoWto
Wto
 
Wto
WtoWto
Wto
 
Wto
WtoWto
Wto
 
evolution of WTO from GATT
evolution of WTO from GATTevolution of WTO from GATT
evolution of WTO from GATT
 
Small States and Trade Politics
Small States and Trade PoliticsSmall States and Trade Politics
Small States and Trade Politics
 
Regional and bilateral trade agreement
Regional and bilateral trade agreementRegional and bilateral trade agreement
Regional and bilateral trade agreement
 
WORLD TRADE ORGANISATION
WORLD TRADE ORGANISATIONWORLD TRADE ORGANISATION
WORLD TRADE ORGANISATION
 
WTO.pptx
WTO.pptxWTO.pptx
WTO.pptx
 

Recently uploaded

Slicing Work on Business Agility Meetup Berlin
Slicing Work on Business Agility Meetup BerlinSlicing Work on Business Agility Meetup Berlin
Slicing Work on Business Agility Meetup BerlinAnton Skornyakov
 
Live-Streaming in the Music Industry Webinar
Live-Streaming in the Music Industry WebinarLive-Streaming in the Music Industry Webinar
Live-Streaming in the Music Industry WebinarNathanielSchmuck
 
Borderless Access - Global Panel book-unlock 2024
Borderless Access - Global Panel book-unlock 2024Borderless Access - Global Panel book-unlock 2024
Borderless Access - Global Panel book-unlock 2024Borderless Access
 
Harvard Business Review.pptx | Navigating Labor Unrest (March-April 2024)
Harvard Business Review.pptx | Navigating Labor Unrest (March-April 2024)Harvard Business Review.pptx | Navigating Labor Unrest (March-April 2024)
Harvard Business Review.pptx | Navigating Labor Unrest (March-April 2024)tazeenaila12
 
Borderless Access - Global B2B Panel book-unlock 2024
Borderless Access - Global B2B Panel book-unlock 2024Borderless Access - Global B2B Panel book-unlock 2024
Borderless Access - Global B2B Panel book-unlock 2024Borderless Access
 
MC Heights construction company in Jhang
MC Heights construction company in JhangMC Heights construction company in Jhang
MC Heights construction company in Jhangmcgroupjeya
 
IIBA® Melbourne - Navigating Business Analysis - Excellence for Career Growth...
IIBA® Melbourne - Navigating Business Analysis - Excellence for Career Growth...IIBA® Melbourne - Navigating Business Analysis - Excellence for Career Growth...
IIBA® Melbourne - Navigating Business Analysis - Excellence for Career Growth...AustraliaChapterIIBA
 
Tata Kelola Bisnis perushaan yang bergerak
Tata Kelola Bisnis perushaan yang bergerakTata Kelola Bisnis perushaan yang bergerak
Tata Kelola Bisnis perushaan yang bergerakEditores1
 
Project Brief & Information Architecture Report
Project Brief & Information Architecture ReportProject Brief & Information Architecture Report
Project Brief & Information Architecture Reportamberjiles31
 
NASA CoCEI Scaling Strategy - November 2023
NASA CoCEI Scaling Strategy - November 2023NASA CoCEI Scaling Strategy - November 2023
NASA CoCEI Scaling Strategy - November 2023Steve Rader
 
Borderless Access - Global B2B Panel book-unlock 2024
Borderless Access - Global B2B Panel book-unlock 2024Borderless Access - Global B2B Panel book-unlock 2024
Borderless Access - Global B2B Panel book-unlock 2024Borderless Access
 
Michael Vidyakin: Introduction to PMO (UA)
Michael Vidyakin: Introduction to PMO (UA)Michael Vidyakin: Introduction to PMO (UA)
Michael Vidyakin: Introduction to PMO (UA)Lviv Startup Club
 
Borderless Access - Global Panel book-unlock 2024
Borderless Access - Global Panel book-unlock 2024Borderless Access - Global Panel book-unlock 2024
Borderless Access - Global Panel book-unlock 2024Borderless Access
 
Plano de marketing- inglês em formato ppt
Plano de marketing- inglês  em formato pptPlano de marketing- inglês  em formato ppt
Plano de marketing- inglês em formato pptElizangelaSoaresdaCo
 
Chicago Medical Malpractice Lawyer Chicago Medical Malpractice Lawyer.pdf
Chicago Medical Malpractice Lawyer Chicago Medical Malpractice Lawyer.pdfChicago Medical Malpractice Lawyer Chicago Medical Malpractice Lawyer.pdf
Chicago Medical Malpractice Lawyer Chicago Medical Malpractice Lawyer.pdfSourav Sikder
 
Building Your Personal Brand on LinkedIn - Expert Planet- 2024
 Building Your Personal Brand on LinkedIn - Expert Planet-  2024 Building Your Personal Brand on LinkedIn - Expert Planet-  2024
Building Your Personal Brand on LinkedIn - Expert Planet- 2024Stephan Koning
 
Upgrade Your Banking Experience with Advanced Core Banking Applications
Upgrade Your Banking Experience with Advanced Core Banking ApplicationsUpgrade Your Banking Experience with Advanced Core Banking Applications
Upgrade Your Banking Experience with Advanced Core Banking ApplicationsIntellect Design Arena Ltd
 
Boat Trailers Market PPT: Growth, Outlook, Demand, Keyplayer Analysis and Opp...
Boat Trailers Market PPT: Growth, Outlook, Demand, Keyplayer Analysis and Opp...Boat Trailers Market PPT: Growth, Outlook, Demand, Keyplayer Analysis and Opp...
Boat Trailers Market PPT: Growth, Outlook, Demand, Keyplayer Analysis and Opp...IMARC Group
 
Team B Mind Map for Organizational Chg..
Team B Mind Map for Organizational Chg..Team B Mind Map for Organizational Chg..
Team B Mind Map for Organizational Chg..dlewis191
 

Recently uploaded (20)

Slicing Work on Business Agility Meetup Berlin
Slicing Work on Business Agility Meetup BerlinSlicing Work on Business Agility Meetup Berlin
Slicing Work on Business Agility Meetup Berlin
 
Live-Streaming in the Music Industry Webinar
Live-Streaming in the Music Industry WebinarLive-Streaming in the Music Industry Webinar
Live-Streaming in the Music Industry Webinar
 
Borderless Access - Global Panel book-unlock 2024
Borderless Access - Global Panel book-unlock 2024Borderless Access - Global Panel book-unlock 2024
Borderless Access - Global Panel book-unlock 2024
 
Harvard Business Review.pptx | Navigating Labor Unrest (March-April 2024)
Harvard Business Review.pptx | Navigating Labor Unrest (March-April 2024)Harvard Business Review.pptx | Navigating Labor Unrest (March-April 2024)
Harvard Business Review.pptx | Navigating Labor Unrest (March-April 2024)
 
Borderless Access - Global B2B Panel book-unlock 2024
Borderless Access - Global B2B Panel book-unlock 2024Borderless Access - Global B2B Panel book-unlock 2024
Borderless Access - Global B2B Panel book-unlock 2024
 
MC Heights construction company in Jhang
MC Heights construction company in JhangMC Heights construction company in Jhang
MC Heights construction company in Jhang
 
IIBA® Melbourne - Navigating Business Analysis - Excellence for Career Growth...
IIBA® Melbourne - Navigating Business Analysis - Excellence for Career Growth...IIBA® Melbourne - Navigating Business Analysis - Excellence for Career Growth...
IIBA® Melbourne - Navigating Business Analysis - Excellence for Career Growth...
 
Tata Kelola Bisnis perushaan yang bergerak
Tata Kelola Bisnis perushaan yang bergerakTata Kelola Bisnis perushaan yang bergerak
Tata Kelola Bisnis perushaan yang bergerak
 
Project Brief & Information Architecture Report
Project Brief & Information Architecture ReportProject Brief & Information Architecture Report
Project Brief & Information Architecture Report
 
NASA CoCEI Scaling Strategy - November 2023
NASA CoCEI Scaling Strategy - November 2023NASA CoCEI Scaling Strategy - November 2023
NASA CoCEI Scaling Strategy - November 2023
 
Borderless Access - Global B2B Panel book-unlock 2024
Borderless Access - Global B2B Panel book-unlock 2024Borderless Access - Global B2B Panel book-unlock 2024
Borderless Access - Global B2B Panel book-unlock 2024
 
Michael Vidyakin: Introduction to PMO (UA)
Michael Vidyakin: Introduction to PMO (UA)Michael Vidyakin: Introduction to PMO (UA)
Michael Vidyakin: Introduction to PMO (UA)
 
Borderless Access - Global Panel book-unlock 2024
Borderless Access - Global Panel book-unlock 2024Borderless Access - Global Panel book-unlock 2024
Borderless Access - Global Panel book-unlock 2024
 
Plano de marketing- inglês em formato ppt
Plano de marketing- inglês  em formato pptPlano de marketing- inglês  em formato ppt
Plano de marketing- inglês em formato ppt
 
Chicago Medical Malpractice Lawyer Chicago Medical Malpractice Lawyer.pdf
Chicago Medical Malpractice Lawyer Chicago Medical Malpractice Lawyer.pdfChicago Medical Malpractice Lawyer Chicago Medical Malpractice Lawyer.pdf
Chicago Medical Malpractice Lawyer Chicago Medical Malpractice Lawyer.pdf
 
Building Your Personal Brand on LinkedIn - Expert Planet- 2024
 Building Your Personal Brand on LinkedIn - Expert Planet-  2024 Building Your Personal Brand on LinkedIn - Expert Planet-  2024
Building Your Personal Brand on LinkedIn - Expert Planet- 2024
 
Upgrade Your Banking Experience with Advanced Core Banking Applications
Upgrade Your Banking Experience with Advanced Core Banking ApplicationsUpgrade Your Banking Experience with Advanced Core Banking Applications
Upgrade Your Banking Experience with Advanced Core Banking Applications
 
Boat Trailers Market PPT: Growth, Outlook, Demand, Keyplayer Analysis and Opp...
Boat Trailers Market PPT: Growth, Outlook, Demand, Keyplayer Analysis and Opp...Boat Trailers Market PPT: Growth, Outlook, Demand, Keyplayer Analysis and Opp...
Boat Trailers Market PPT: Growth, Outlook, Demand, Keyplayer Analysis and Opp...
 
WAM Corporate Presentation Mar 25 2024.pdf
WAM Corporate Presentation Mar 25 2024.pdfWAM Corporate Presentation Mar 25 2024.pdf
WAM Corporate Presentation Mar 25 2024.pdf
 
Team B Mind Map for Organizational Chg..
Team B Mind Map for Organizational Chg..Team B Mind Map for Organizational Chg..
Team B Mind Map for Organizational Chg..
 

Impact of WTO policies on developing economies

  • 1. IMPACT OF WTO POLICIES ON DEVELOPING COUNTRIES Globalisation and development 5th November 2013
  • 2. THE WTO: ITS EVOLUTION • The ITO and GATT 1947 • Filling the gap left by still born ITO • De facto international trade organisation • Success and failure • Uruguay Round (1986-1993): the longest round ever • • • • Punta del Este Declaration Proposals for a MTO (1990) Marrakesh Agreement (1994) WTO since 1.1.1995 2
  • 3. WTO-A BRIEF PROFILE 159 member nations (over 97% of world trade). 3 25 ‗observer‘ countries.
  • 5. The World Trade Organization (WTO/GATT) 5 Duration of GATT rounds and number of countries involved 100 To k y o U ru g u a y K ennedy Fourth 40 S econd 60 Third 80 First num ber of countries at start 120 D illo n 20 0 1945 1955 1965 1975 y ear 1985 1995
  • 6. 6 -December 3-6, 2013 in Bali, Indonesia. -Trade Facilitation -WTO rules -Agriculture
  • 8. 8 ECONOMIC GLOBALISATION AND WTO LAW • Economic Globalisation and International Trade • What is meant by economic globalisation? • Gradual integration of national economies into a global borderless economy • Influenced by (and their democratisation) • forces of technology • of finance • of information • Why is it under critique? • • • • • Reasons and reactions Globaphiles vs globaphobes Expansion of cross-border economic interaction: more trade, more welfare Erosion of local control, autonomy and identity Soverignity • WTO as vehicle of freer and open trade? • Balancing of interests necessary • Global economic governance
  • 9. 9 ECONOMIC GLOBALISATION AND WTO LAW • Figures on trade (last 50 years) show changes in trade developments General increase of world trade Increase of share of services in relations to goods decline of trade in Europe raise in Latin-America, Africa and Asia 48 LDC account to only 0.5 percent of world trade China, India and Mexico major suppliers of cutting/-edge technologies and laborintensive goods • Increased trade with companies and foreign direct investment • • • • • • • International trade rules: reasons • Restraining protectionism • More security and predictability • Governance in globalised economy
  • 10. 10 URUGUAY ROUND REQUIREMENTS: DIFFICULTIES • Intellectual Property (TRIPS) : Time frame-5 years • TRIMS (TRIMS) : o Minimum local content and trade balancing ; o Flexibility to choose investment promotion policies; o Time frame (by 1st Jan 2001) o Sanitary and phytosanitary measures and technical barriers to trade (SPS) : o No consultation o Difficulty to meet global standards o Market Access: o Agricultureo Extremely high tariffs o Escalated tariff on processed foods o Trade distorting subsidies o Quotas o Textiles and Clothing o Quota (Multi fibre agreement) o Transitional Safeguards o Anti dumping actions o Discriminatory rule of origin
  • 11. 11 DOHA ROUND • Launched in Doha (Qatar) in November 2001 • Doha Development Agenda • To postpone the deadline for some developing countries to eliminate export subsidies and for least-developed countries to provide protection for pharmaceutical patents and test data, and to tackle problems faced by countries unable to make generic versions of patented medicines. • Areas of Concern: • • • • Implementation-related issues and concerns Agriculture Services TRIPS and issues • • • • And public health And geographical indications And biodiversity Protection of traditional knowledge and folkore
  • 12. 12 SUBJECTS IN DOHA DECLARATION • • • • • • • • • Agriculture (par 13, 14) Services (par 15) Non-agricultural products (par 16) TRIPS (par 17-19) Relationship between trade and investment (par 20-22) Interaction between trade and competition policy (par 23–25) Transparency in government procurement (par 26) Trade facilitation (par 27) WTO rules: anti-dumping and subsidies (par 28) WTO rules: regional trade agreement (par 29) Dispute Settlement Understanding (par 30) Trade and environment (pars 31–33) Electronic commerce (par 34) Small economies (par 35) Trade, debt and finance (par 36) Trade and technology transfer (par 37) Technical cooperation and capacity building (pars 38–41) • Least-developed countries (pars 42, 43) • Special and differential treatment (par 44) • • • • • • • • http://www.wto.org/english/tratop_e/dda_e/dohaexplained_e.htm#agriculture
  • 13. 13 WTO Ministerial Meeting in Cancun Developing countries, led by Brazil, China, and India, were unwilling to move forward without meaningful cuts in agricultural subsidies. Moreover, they never fully accepted to the idea of the Singapore agenda : --Trade and Investment --Trade and Competition --Transparency in Government Procurement --Trade Facilitation. Two issues caused the negotiations to break down, The developed world : 1) The developed world would not compromise on the issue of agricultural subsidies. 2) The developed world called for a liberalization of foreign investment rules to improve transparency, reduce red tape, and open government procurement. 5th Ministerial Conference of the WTO Cancun, September 9-14, 2003
  • 14. 14 WHY DO DEVELOPED WORLD DOMINATE WTO? • Arm Twisting Technique • Low level of financial and knowledge resources among developing economies • Negotiations and decisions are dominated by the developed economies • The developing economies are not consulted/considered while formulating policies • WTO remains ineffective in imposing it‘s disciplines on developed economies
  • 15. 15 WHAT IS A DEVELOPING COUNTRY ? • No definitions Countries from WTO on Developing • Members declare themselves • They are challengeable • Mostly the standards of World Bank considered for classification of countries. are • There are provisions for special, differential and more favorable treatment for the developing countries  WB classifies its member countries on the basis of GNI per capita.  Economies are divided according to 2012 GNI per capita, calculated using the World Bank Atlas method.  World Bank Atlas method :  The groups are: low income: $1,035 or less; lower middle income: $1,036 - $4,085; upper middle income: $4,086 - $12,615; and high income:$12,616 or more.  With this classification, 2/3 rd of the member countries are developing countries
  • 16. 16 WHY DEVELOPING ECONOMIES ARE TOO SENSITIVE ? • Agriculture is the major source of livelihood • Disturbance leads to breaking down of agricultural ecosystem • Unemployment • Vicious cycle • Poor people are fragile & distress migration followed by starvation • Difficult to revive
  • 17. 17 WTO AND DEVELOPING COUNTRIES • Over three quarters of WTO members are developing or least-developed countries • WTO agreements contain special provisions for them  Longer time periods to implement agreements and commitments  Measures to increase their trading opportunities  Support to help them build the infrastructure for WTO work  Handle disputes  Implement technical standards  Technical Assistance and Training
  • 18. 18 WHY ARE DEVELOPING COUNTRIES IMPORTANT? • Change in the equilibrium of power in the global economy The emerging powers gain importance • 2/3 of the WTO members are developing countries
  • 19. 19 HOW WTO DEALS WITH DEVELOPING COUNTRIES? • In the agreements: more time , better terms • Legal Advice: a secretariat service • Gainful opportunities for developing countries: • Fundamental reforms in agricultural trade • Phasing out quotas on developing countries exports of textiles and clothing • Reductions in customs duties on industrial products • Expanding the number of products whose customs duty rates are ―bound‖ under the WTO, making the rates difficult to raise • Phasing out bilateral agreements to restrict traded quantities of certain goods —these ―grey area‖ measures (the so-called voluntary export restraints) • Tariff peaks (37% Vs 40%) and Tariff escalation • Erosion of preferences • The ability to adapt (difficult for lDC)
  • 20. 20 SPECIAL AND DIFFERENTIAL PROVISIONS • Longer time periods for implementing Agreements and commitments, • Measures to increase trading opportunities for these countries, • Provisions requiring all WTO members to safeguard the trade interests of developing countries, • Support to help developing countries build the infrastructure for WTO work, handle disputes, and implement technical standards, and • Provisions related to Least-Developed country (LDC) Members
  • 21. 21 SPECIAL & DIFFERENTIAL TREATMENT. DO WE NEED IT? • Yes ! • Lack of financial & human resources to fulfil their commitments. • S & D: o More flexible terms within specified time limits: for example, longer transition periods, smaller commitments (for example the commitments on agriculture) o Clauses which say in broad terms that developed countries should help developing countries in specific areas (such as technology transfer under intellectual property protection) but without defining exactly what action is needed. • Did S & D yield the desired result? • NO.. S & D were usually insufficient and that the broader requirements of category are too vague and often ignored.
  • 22. 22 NEGOTIATIONS COLLAPSE • Pro-liberalization lobbies • Comfortable with current regulation • The WTO is not useful to liberalize services • Tariffs below max  • Increase in the price of commodities • Inefficient Market and global economy
  • 23. 23 STAGNATED NEGOTIATIONS: STRUCTURAL CAUSES • Change in the equilibrium of power in the global economy  The emerging powers gain importance GATT Institutional inertia  governance problems • High Expectations: Development Round and UR background   2/3 of the WTO members are developing countries The G-20: joint group with offensive interests
  • 24. 24 What’s at stake? Who wins? Who loses? IMPACT OVER THE INCOME OF A FULL MERCHANDISE TRADE LIBERALIZATION (NOT SERVICES) BY COUNTRY AND REGION IN 2015 (COMPARED WITH 2001)
  • 25. 25 WTO: BALANCE AGAINST THE DEVELOPING WORLD Video
  • 26. 26 1. Cotton 2. Agricultural Subsidies 3. Trade Agreements 4. Special Treatment 5. Medicines 6. Legal Costs 7. Protectionist Economic Policies 8. Natural Disaster 9. Decision Making 10. Fair Trade http://www.theguardian.com/global-development/povertymatters/2011/nov/14/wto-fails-developing-countries
  • 27. 27  Double standard of US.  US Domestic Aid in 2012-$100 Bn and India -$20 Bn.  Avg supply of subsidized food-US-358 kg/person/year, India-60.  India has been criticized by WTO for ―creating a massive new loophole for potentially unlimited trade-distorting subsidies.‖  India‘s subsidies for feeding its hungry are being blamed for distorting trade in agriculture while the US, which provides six times more subsidies than India for feeding its hungry, is seen as doing humanitarian service.  Peace Clause (Art 13) : Expired in 2003  Procurement price:10% of the total production, and refrain from increasing the wheat procurement price in future.  No Penalisation from WTO on US and other developed countries. http://www.hindustantimes.com/comment/columns/the-wto-is-destroying-indian-farming/article11137811.aspx
  • 28. 28 IMPACT ON INDUSTRIALIZATION: A POLICY PERSPECTIVE 1. Tariff liberalisation under NAMA • Under the emerging NAMA rules in the Doha round negotiations, developing countries, with the exception of LDCs, have to reduce their import tariffs on industrial products and bind tariff rates below a certain ceiling. Developing countries have the option, however, of applying deeper cuts in tariff lines in exchange for greater flexibilities and vice versa. Flexibilities are in the form of exempting a certain percentage of sensitive product lines from tariff cuts as long as their import shares in total NAMA imports do not exceed a certain threshold. However the exemption of a whole sector from tariff cuts will not be possible. This implies that nonLDC African countries will have less room for pursuing import-substitution strategies behind high tariff barriers or through gradual and selective tariff liberalisation. This is further compounded by the insertion of the "national treatment" principle in WTO laws, whereby foreign firms and foreign goods are to be granted the same treatment as local firms and locally produced goods in the country. • Developing countries will apply tariff cuts according to a "Swiss" formula. Countries that apply the deepest tariff cuts will be able to "make smaller or no cuts in 14% of its most sensitive industrial tariff lines, provided that these tariff lines do not exceed 16 percent of the total value of its NAMA imports". • That country can also keep "6.5 % of its tariff lines unbound or exclude them from tariff cuts, provided they do not exceed 7.5% percent of the total value of its NAMA imports" (WTO). LDCs will not face tariff reductions but will have to raise the percentage of their tariff lines that are bound. • The WTO text mentions that additional flexibilities will be negotiated at a future date for South Africa, Botswana, Lesotho, Namibia, Swaziland and members of the South African Customs Union (SACU). According to the WTO, "the tariff reductions will be implemented gradually over a period of five years for developed members and ten years for developing members, starting 1 January of the year following the entry into force of the Doha results".
  • 29. 29 THE WTO AND ITS IMPACT ON INDUSTRIALIZATION • Proponents of NAMA reforms argue that, in a low-tariff world, developing countries will benefit in the form of increased market access for their industrial products to other countries, especially developed countries. For instance, in developed countries the proportion of industrial imports entering on a dutyfree basis has jumped over the last fifteen years from 20 % to 44%. • However, critics of NAMA reforms argue that the emerging rules will lead to de-industrialisation in countries that are in their early stages of industrialisation (Shafaeddin 2006). • Furthermore, they argue that the parameter of interest for developing countries should not be the average industrial tariff rate imposed by developed countries on imports but the actual rates imposed by the latter on the exports of interest to developing countries. It is not clear that such rates have been considerably lowered in return for increased market access. • There is also the fear that NAMA liberalisation will lock poor developing countries into their current or existing patterns of export specialisation. In order to build dynamic comparative advantage in higher value-added activities, entrepreneurs need to be rewarded with higher expected returns in exchange for the higher risks involved in undertaking strategic investments in new industries and new technologies. However the emerging trade rules will make it harder for developing countries to turn to selective tariffs and subsidies to provide such returns to their entrepreneurs (Shafaeddin 2006).
  • 30. 30 THE WTO AND ITS IMPACT ON INDUSTRIALIZATION 2. Subsidies • With respect to the use of subsidies as a tool for promoting industrial development, under WTO rules subsidies linked to either export performance (export subsidies) or the use of domestic over imported goods (local content subsidies) are prohibited, except for LDCs and countries with less than US $1,000 GNI per capita. • When linked to export performance, export subsidies can provide appropriate incentives to domestic firms to invest in building their competitiveness rather than stay complacent. However, such type of subsidies can no longer be used. Other types of subsidies, for example production subsidies, are allowed but are now actionable which means that their use can be challenged if deemed to damage the interests of other parties. In importcompeting industries with high sunk costs, there may be a case for subsidizing production by domestic infant firms, albeit temporarily, in order to promote greater entry and more competition in the long-run. As a result of WTO rules, it is now more difficult to nurture local infant industries through subsidies.
  • 31. 31 THE WTO AND ITS IMPACT ON INDUSTRIALIZATION 3. Investment measures • The Trade-Related Investment Measures (TRIMs) Agreement under the WTO prohibits countries from using local content or trade balancing requirements. In addition, as discussed in the preceding section, countries cannot subsidise firms to favour use of domestic inputs over imported ones. • This means that these industrial policy instruments used by currently advanced and emerging economies, are no longer available to the non-industrialised countries. While Brazil for instance was able to use local content requirements to establish a local auto manufacturing industry, Indonesia had to review the local content provisions of its National Car Program in 1999 under the WTO (DiCaprio and Gallager, 2006). • Under the TRIMs agreement, countries can no longer use local procurement programs to minimize import leakage rates, optimize the domestic value-chain and promote the building of production linkages across sectors in their industrial policy programs. • TRIMs also prohibits the use of performance requirements in FDI policies for the purpose of maximising benefits from FDI such as promoting use of local industrial products, inserting local enterprises in the production chain of transnational corporations (TNCs) and facilitating technology transfer to local suppliers.
  • 32. 32 IMPACT ON INDUSTRIAL SECTOR : SUMMARY • Significant reduction in industrial tariffs • Tariff binding (progressively high) • De-industrialization phase : as a result of cheaper imports from developed/industrialised economies • Doha round : strong pressures from developed world for a steep cut on the tariff rates (non linear formula) & almost 100% tariff binding
  • 33. 33
  • 34. 34 ACTUAL WTO IMPACT ON POLICY SPACE • Membership of GATT/WTO has not had a major impact on bindings or tariffs of developing countries • Other sources of tariff and NTB reforms (unilateral and regional) • Very limited use of industrial and export subsidies • Evidence of greater WTO influences on new members (e.g. Saudi Arabia, Vietnam) • Concerns about future tightening and stricter implementation of rules
  • 35. 35 PRE- AND POST REFORM NTBS AND EXCHANGE RATE DISTORTIONS Pre-Reform (1) Country (1) Various years, usually 1980s (2) Various years, usually early 1990s Source: Dean, Univ Nottingham (1995) Cote d’Ivoire Ghana Kenya Madagascar Malawi Mali Nigeria Senegal South Africa Tanzania Uganda Zaire NTB Coverage 38% 100% 71% 100% 100% 58% 100% 55% 100% 100% Black Market Premium (average) 985% 16% 37% 51% 210% 0% 242% 303% 71% Post-Reform (2) NTB Coverage 38% 2% 0% 0% Few 0% 17% 15% 23% 100% 5% 100% Black Market Premium (average) 17% 9% 13% 12% 27% 3% 119% 79% 9%
  • 36. 36 OVERALL ASSESSMENT AND CONCLUSIONS • WTO has not significantly affected developing countries‘ policy space to-date • The effects (constraints and enhancements) may increase in future • but scope for phased or gradual affects and differentiation within WTO rules • Many of the key pro-development issues are outside the WTO agenda • improving governance, institutions, human capital and infrastructure
  • 37. 37

Editor's Notes

  1. http://www.youtube.com/watch?v=VtqsaplcCQE
  2. TarifficationTariff BindingTariff cutsReduction in subsidies and domestic support
  3. The WTO organizes around 100 technical cooperation missions to developing countries annually. It holds on average three trade policy courses each year in Geneva for government officials. Regional seminars are held regularly in all regions of the world with a special emphasis on African countries. The WTO set up reference centres in over 100 trade ministries and regional organizations in capitals of developing and least-developed countries, providing computers and internet access to enable ministry officials to keep abreast of events in the WTO in Geneva through online access to the WTO’s immense database of official documents and other material.
  4. http://www.youtube.com/watch?v=skdug8hgIKA