World Trade Organization

The World Trade Organization (WTO) is the only global international organization
dealing with the rules of trade between nations. It was established on 1 st January 1995.
The WTO was born out of the General Agreement on Tariffs and Trade (GATT), which
was established in 1947.The WTO (World Trade Organization) is an association of 146
member countries, of the 190 countries in the world today. There are another 30
countries that have observer status, a step that precedes becoming a full-fledged
member. So almost all the countries in the world are members. There are all types of
countries in the WTO, capitalist, socialist, rich and poor countries, very industrialized
and developing countries. Its main function is to ensure that trade flows as smoothly,
predictably and freely as possible.

History of WTO:
The WTO’s origins began with trade negotiations after 2 nd World War. In 1948, the
General Agreement on Tariffs and Trade (GATT) focused on reducing tariffs, anti-
dumping, and non-tariff measures. GATT created in 1947 in Geneva, Switzerland,
consist of 23 members. GATT is a part of Bretton Wood System. GATT focus on to
ensure a stable trade and economic world environment.
It was thought that GATT would become a part of International Trade Organization
(ITO). ITO charter was negotiated in Havana, 1948. ITO set out the basic rules of
international trade and other international economic matters. However, the ITO charter
submitted was never approved by the US congress. Any problem on international trade
handled by GATT on that time.
From 1986 to 1994 the Uruguay Round of negotiations led to the formal creation of the
WTO. In 1997, the WTO brokered agreements promoting trade in telecommunications
services among 69 countries. It also removed tariffs on information technology products
between 40 members. It improved trade of banking, insurance, securities and financial
information between 70 countries.

Goals /Targets of WTO:

Goal 1: Eradicate extreme poverty and hunger
 Target 1a: Reduce by half the proportion of individuals living on but a dollar each
day.
  Target 1b: Achieve full and productive employment and decent work for all,
including women and children. 
 Target 1c: Reduce by half the proportion of individuals that suffer from hunger.
Goal 2: Achieve universal primary education
 Target 2a: make sure that all boys and girls complete a full course of primary
schooling.
 Goal 3: Promote gender equality and empower women
 Target 3a: Eliminate gender disparity in primary and education preferably by
2005, and in the least levels by 2015.
Goal 3: Promote gender equality and empower women
 Target 3a: Eliminate gender disparity in primary and education preferably by
2005, and in the least levels by 2015.
Goal 4: Reduce child mortality
 Target 4a: Reduce by two thirds the mortality rate among children under five.
Goal 5: Improve maternal health
 Target 5a: Reduce by three quarters the maternal mortality ratio.
 Target 5b: Achieve, by 2015, universal access to reproductive health.
Goal 6: Combat HIV/AIDS, malaria and other diseases
 Target 6a: Halt and start to reverse the spread of HIV/AIDS.
 Target 6b: Achieve, by 2010, universal access to treatment for HIV/AIDS for all
those that need it.
 Target 6c: Halt and start to reverse the incidence of malaria and other major
diseases.
Goal 7: Ensure environmental sustainability
 Target 7a: Integrate the principles of sustainable development into country
policies and programs; reverse the loss of environmental resources.
 Target 7b: Reduce biodiversity loss, achieving, by 2010, a big reduction within
the rate of loss.
 Target 7c: Reduce by half the proportion of individuals without sustainable
access to safe beverage and basic sanitation.
 Target 7d: Achieve significant improvement in the lives of at least 100 million
slum dwellers, by 2020.
Goal 8: Develop a Global Partnership for Development
 Target 8a: Develop further an open, rule-based, predictable, non-discriminatory
trading, and economic system.
 Target 8b: Address the special needs of the smallest amount of developed
countries.
 Target 8c: Address the special needs of landlocked developing countries and
little island developing States.
 Target 8d: Deal comprehensively with the debt problems of developing countries.
 Target 8e: In cooperation with pharmaceutical companies, provide access to
affordable essential drugs in developing countries.
 Target 8f: In cooperation with the private sector, make available the advantages
of the latest technologies, especially information and communications.

Agreements of WTO:
                   The WTO agreements cover goods, services, and property. They spell out
the principles of liberalization, and therefore the permitted exceptions. They include
individual countries’ commitments to lower customs tariffs and other trade barriers and
to open and hold open services markets. They set procedures for settling disputes.
They prescribe special treatment for developing countries. They require governments to
form their trade policies transparent by notifying the WTO about laws effective and
measures adopted, and thru regular reports by the secretariat on countries’ trade
policies.
There are 10 agreements points about WTO. Such as,

1. Tariffs:
                 The bulkiest results of Uruguay Round are the 22,500 pages listing
individual countries’ commitments on specific categories of products and services.
These include commitments to chop and “bind” their customs rates on imports of
products. In some cases, tariffs are being move zero. There’s also a big increase within
the number of “bound” tariffs — duty rates that are committed within the WTO and are
difficult to boost .
2. Agriculture:
             The objective of the Agriculture Agreement is to reform trade the world and to
form policies more market-oriented. This is able to improve predictability and security for
importing and exporting countries alike.
 3. Standards and safety:
  GATT allows governments to act on trade order to guard human, animal or
flowers or health, provided they are doing not discriminate or use this as disguised
protectionism. Additionally, there are two specific WTO agreements handling food
safety and animal and plant health and safety, and with product standards generally.
Both attempt to identify the way to meet the necessity to use standards and at an
equivalent time avoid protectionism in disguise.
4. Textiles:
                The Agreement on Textiles and Clothing (ATC) and all restrictions thereunder
terminated on January 1, 2005. The expiry of the ten-year transition period of ATC
implementation means that trade in textile and clothing products is no longer subject to
quotas under a special regime outside normal WTO/GATT rules but is now governed by
the general rules and disciplines embodied in the multilateral trading system.
5. Services:
                  The General Agreement on trade Services (GATS) is that the first and only
set of multilateral rules governing international trade services. Negotiated within the
Uruguay Round, it had been developed in response to the large growth of the services
economy over the past 30 years and therefore the greater potential for trading services
caused by the communications revolution.
6. Intellectual Properties:
          "Intellectual property" refers to creations of the mind. These creations can take
many various forms, like artistic expressions, signs, symbols and names utilized in
commerce, designs and inventions. Governments grant creators the proper to stop
others from using their inventions, designs or other creations — and to use that right to
barter payment reciprocally for others using them. These are “intellectual property
rights”. They take variety of forms. Forinstance, books, paintings and films come under
copyright; eligible inventions are often patented; brand names and merchandise logos
are often registered as trademarks; then on. Governments grant creators these rights as
an incentive to supply and spread ideas which will benefit society as an entire.
7. Anti-dumping subsidies etc.:
 GATT (Article 6) allows countries to require action against dumping. The Anti-Dumping
Agreement clarifies and expands Article 6, and therefore the two operate together. they
permit countries to act during a way that might normally break the GATT principles of
binding a tariff and not discriminating between trading partners — typically anti-dumping
action means charging extra duty on the actual product from the actual exporting
country so as to bring its price closer to the “normal value” or to get rid of the injury to
domestic industry within the importing country.

8. Non-tariffs barriers:
                            A number of agreements deal with various bureaucratic or legal
issues that could involve hindrances to trade.
 Import licensing
 Rules for the valuation of goods at customs
 Reshipment inspection: further checks on imports
 Rules of origin: made in ... where?
 Investment measures
Although less widely used now than within the past, import licensing systems are
subject to disciplines within the WTO. The Agreement on Import Licensing Procedures
says import licensing should be simple, transparent and predictable. for instance , the
agreement requires governments to publish sufficient information for traders to
understand how and why the licenses are granted. It also describes how countries
should notify the WTO once they introduce new import licensing procedures or change
existing procedures. The agreement offers guidance on how governments should
assess applications for licenses.

9. Plurilaterals
                       For the most part, all WTO members subscribe to all WTO agreements.
After the Uruguay Round, however, there remained four agreements, originally
negotiated in the Tokyo Round, which had a narrower group of signatories and are
known as “plurilateral agreements”. All other Tokyo Round agreements became
multilateral obligations (i.e. obligations for all WTO members) when the World Trade
Organization was established in 1995. The four were:
 Trade in civil aircraft
 Government procurement
 Dairy products
 Bovine meat.

10. Trade and policy reviews:

                        Individuals and corporations involved in trade need to know the
maximum amount as possible about the conditions of trade. It’s therefore fundamentally
important that regulations and policies are transparent.

Implication of WTO for Bangladesh:

  WTO creates a number of rights for the business community. The
improved rule-based system is designed to promote the expansion of international
trade. The system’s primary goal is to provide liberal, secure and predictable access to
foreign markets for the goods and services of exporting enterprises. This allows
business enterprises to work within the parameters of clearly identified arrangements.
WTO accession helps to ensure that enterprises can market their
products internationally under competition conditions that are equitable and predictable
without the disruptions caused by the sudden imposition of restrictions. The
implementation of accession commitments measures can create both opportunities and
challenges for the business community.
WTO gives Bangladesh greater flexibility in fulfilling rigid rule of
multilateral trade and market access in developed countries and developing countries at
will, WTO has helped Bangladesh enjoy 100 percent Duty Free Quota Free (DFQF)
market access in some of the developed countries The expiration of Multi-Fiber
Arrangement (MFA) and full withdrawal of quota system on textile and clothing imports
in developed countries from January 01, 2005, became a boon for the ready-made
garments (RMG) industry of Bangladesh. RMG is the largest exportable of the country
and its export increased significantly after MFA expiration under WTO framework.
WTO framework for Bangladesh is the waiver of complying Trade
Related Intellectual Property Right until 2021. The pharmaceutical industry in
Bangladesh is taking the advantage of TRIPS waiver.
As WTO facilitates in the dispute settlement process, most countries get
benefited from it. As par the source- Financial Express; Bangladesh has taken resort to
the mechanism to challenge imposition of anti-dumping duty by India on lead-acid
battery exports of Rahimafrooz. It was in 2003, when WTO asked two countries for
consultation, India, however, unilaterally withdrew anti-dumping duty it had earlier
imposed, This is the first, and so far the only case when a LDC put a powerful
developing country in the dock of WTO.
Advantage and Disadvantage of WTO:
World Trade Organization is a body designed to promote free trade
through organizing trade negotiations and act as an independent arbiter in settling trade
disputes. The advantage of WTO are:
 Lower prices for consumers: Lower prices for consumers helps in removing
tariffs and enables us to buy cheaper imports
 Free trade encourages greater competitiveness: Through free trade, firms
face a higher incentive to cut costs. For example, a domestic monopoly may now
face competition from foreign firms.
 The law of comparative advantage: The law of comparative advantage states
that free trade will enable an increase in economic welfare. This is because
countries can specialize in producing goods where they have a lower opportunity
cost.
 Economies of scale: By encouraging free trade, firms can specialize and
produce a higher quantity. This enables more economies of scale, this is
important for industries with high fixed costs, such as car and airplane
manufacture.

However, the WTO has often been criticized for trade rules which are still unfavorable
towards developing countries: some of them are:

 Difficulty of making progress:WTO trade deals have been quite difficult to form
consensus. Various rounds have taken many years to slowly progress. It results
in countries seeking alternatives such as TIPP or local bilateral deals.
 Overshadowed by new TIPP trade deals: WTO is being overshadowed by new
TIPP trade deals these deals are negotiated away from WTO and focuses mainly
on US and EU. It excludes China, Russia, India, Brazil and South Africa. It
threatens to diminish the global importance of WTO.
 Favor Multinationals: WTO has rules which favor multinationals. For example,
'most favored nation' principle means countries should trade without
discrimination. This has advantages but can mean developing countries cannot
give preference to local contractors, but may have to choose foreign
multinationals - whatever their history in repatriation of profit, investment in area.