WTO and GATT

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What is International Trade? It is the Exchange of Goods and Services between Countries Example Import Computers China Export Softwares USA Who Monitors this International Trade? Earlier(From 1948-1995) GATT Now (1995 onwards) WTO Note- International Trade is also Called Multilateral Trade Difference between GATT AND WTO PARTICULARS Full Form Established in Nature Scope Participating Countries Domestic Legislation General Agreement of Trade and Tariff 1948 It was an agreement between different countries It covers only trade in goods These are called contracting parties It allows domestic Legislation to continue World Trade Organisation 1995 It is an organization which monitors International Trade It covers trade in goods as well as trade in services These are called member nations It does not permit domestic Legislation Functions and Role of WTO To establish rule-based trading system To ensure nations do not put arbitrary restrictions on trade To ensure optimum utilization of world resources To protect environment To provide greater market access to different countries To remove quantitative restrictions on import To reduce tariff on imports (To ensure there are rules in international trade) (Countries cannot say that they will not allow import from a particular country) (WTO monitors trade of not only goods but also services and ensure that countries get optimum value for their resources) (Ensure that member countries are not doing activities which cause pollution or damage environment) (Member nations can sell their products to different places) (Member Nations cant put Restrictions on Max quantities which can be imported) (Member nations can't charge very high import duties) India's Role in WTO Positive Points India an Important Member of WTO It always followed WTO guidelines like WTO Guidelines Removing quantitative restrictions on Import Reducing Tariff Rates Earlier Now Earlier there was max. Quantity of goods which could be imported) Custom Duty on Imports was very high Earlier Now Now there is no Maximum Quantity Custom Duty on Imports Reduced Criticisms of WTO Criticism 1-WTO Favors Developed Countries rather than Developing Countries Exports of INDIA Exports of USA 2528 Billion Dollars India, a Developing Country Had Less International Trade USA, a Developed Country Has More Trade Criticism of WTO WTO favours Developed Countries rather than Developing Countries Criticisms of WTO Criticism 2- WTO Does not object to Subsidy on Agriculture Goods by Developed Countries Subsidy of Agriculture Price of product 1000 Less Subsidy 200 Net Price 800 Price of product 1000 Less Subsidy 600 Net Price 400 India, a Developing Country with less funds Provides Less Subsidy to Agriculture So Agricultural Products expensive USA, a Developed Country with more funds Provides More Subsidy to Agriculture So Agricultural Products Cheaper Criticism of WTO WTO Does not object to more Subsidy on Agriculture Goods by Developed Countries Criticisms of WTO Criticism 3- Developing Countries are forced to open their markets for developed countries But are not allowed access to the markets of developed countries. "We will Stop Products from India by Charging Higher Import Duty" "We will Charge higher custom duty on imports to Boost local economy As per WTO This is allowed As per WTO This is not allowed (India has to Open its Economy)