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INSIGHTS ON GATT & WTOPresented by : Group 3

National College, Center for Development Studies

HISTORICAL BACKGROUND AND DEVELOPMENT

Mercantilist economist(1500-1750AD)Focus on country’s economic welfare and growthBut focused on Protectionism trade policy rather than

free trade.UK, France, Germany, Austria and other- EuropeImperialism concept developed in Asia, Africa and

South America by European countriesBut trade didn’t foster within European nations(trade

barriers and protectionism)

BRETTON WOOD CONFERENCE AND GATT

•New Hampshire, USA(1944, July)-45 nations•IBRD(World Bank): established on 1945, December•IMF: established on 1945, December•International Trade Organization(ITO): No agreement between USA and other nations

1945,December: 15 countries group sat for tariffs reduction and boundary of trading goods.

1st round: trading rules determination, 4500 goods tariffs cutoff

Trading: $10 Arab(1/5th of world trade) Member nations increased to 23. 1947,October 30: GATT came into existence until

ITO will be formed 1948, January 1: GATT Contracting Parties 1948, June 30: Tariff subsidy regulations came into

existence

Havana, Cuba(1947, November): Charter prepared and presented on United Nations Conference on Trade and Employment.

But failed. Between 1st Jan 1948-1st Jan 1995: GATT worked as the facilitator

for multilateral trade system and monitoring body.• 1989, may16 applied for GATT membership.• 1995, dec05 formal application for membership.• 2004, april23 Nepal got membership.

Year Country Negotiation Topics Participation

1947 Geneva, Switzerland

Custom Duty Reduction 23

1949 Annissee, France

Custom Duty Reduction 13

1951 Torkee, U.S. Custom Duty Reduction 38

1956 Geneva, Switzerland

Custom Duty Reduction 26

1960-61

Geneva(Dillon Round)

Custom Duty Reduction 26

1964-67

Geneva(Kennedy Round)

Custom Duty Reduction and Anti-dumping provision

62

1973-79

Geneva(Tokyo Round)

Custom, non-custom and framework negotiation

102

1986-1994

Geneva(Uruaguay Round)

Custom, non-custom rules, service sector, TRIPS, conflict management, establishment of WTO

123

NEPAL’S COMMITMENTS IN THE WTO

Agricultural products- Non- Agricultural products-ServicesTrade-related Aspects of Intellectual

Property Rights (TRIPS)Regulatory reforms

BENEFITS OF JOINING WTO TO NEPAL

1. Degree of certainty of market access:

WTO trading system provides a degree of certainty of market access. Trade become more predictable, which in turn encourages trade and invest in the country.

2. Transit right :

The WTO rules grant transit rights to the member countries. This is a most important benefit of WTO membership for a landlocked country such as Nepal. It has a crucial impact not only on Nepal’s foreign trade but also on the whole process of its development. An unhindered and cost-effective transit facility enhances the competitive strength of the economy.

3. Rule based trade regime:-

WTO membership enforces a rules-based trade regime, increasing transparency and reducing corruption and uncertainties in trading activities.

4. Market access:-

Market access opportunities provided by the WTO system can lead to further investment addressing the constraint of limited domestic market for economic scale of productive operation, which will also help to raise investment, economic production of goods and services and industrialization process .

5. Policy stability.

6. Attract foreign direct investment.

7. Benefits from liberalization

8. Mobility of trade related technical assistance.

MARKET ACCESS BARRIERS FOR NEPAL

TARIFF AND NON-TARIFF BARRIERS

Tariff barriers serve the legitimate interest of the importing countries to protect their domestic industrial or agricultural sectors from foreign competition. The tariff barriers for Nepal are as following:-

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Tariff barriers on leather. Tariff barriers on readymade garments. Tariff barriers on tea. Tariff barriers on readymade garments.

NON- TARIFF BARRIERS

The term “non-tariff ” is a residual one that covers all measures that restrict imports other than tariffs. Non tariff barriers are as follows:-

Rules of origin Regulatory barriers

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SUPPLY SIDE CONSTRAINT

Despite the market access barriers mentioned above, Nepal’s WTO membership offers predictable market access in a range of products of export interest to Nepal. However, several supply-side constraints reduce the competitiveness of Nepalese exports and they are as follows:

Human capital Infrastructures Quality assurance and certification Access to finance

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IMPACT OF TRADE BARRIERS Advanced industrial nations committed themselves after

World War II to removing barriers to the free flow of goods, services, and capital between nations

This goal was enshrined in the General Agreement on Trade and Tariffs .

Under the umbrella of GATT, eight rounds of negotiations among member states(now numbering 146) have worked to lower barriers to the free flow of goods and services

The most recent round of negotiations, known as the Uruguay Round, was completed in Dec,1993.The Uruguay round further reduced trade barriers; extended GATT to cover services as well as manufactured goods; provided enhanced protection for patents, trademarks, and copyrights; and established the World Trade Organization (WTO)to police the international trading system

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IMPACT OF TRADE BARRIERS In the late 2001, the WTO launched a new round of talks

[Doha,Qatar] aimed at further liberalizing the global trade and investment framework.

The agenda included cutting tariffs on industrial goods, services,and agricultural products; phasing out subsidies to agricultural producers; reducing barriers to cross border investments; and limiting the antidumping laws.

The rich nations spend around $300 billion a year in subsidies to support their farm sectors. The worlds poorer nations have the most to gain from any reductions in agricultural tariffs and subsidies.

• Trade openness: Trade/GDP is one of the variables used to measure trade openness of an economy.

• Export: Nepal has witnessed a slow increase in the absolute value of exports in recent years.

• Import: In terms of imports, Nepal’s imports over the years have been higher than exports

Nepal’s trade performance after WTO membership

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THANK YOU