1. Submitted By:
Maithilee Deshmukh [123]
Siddhesh Hegde [151]
Swapnil Wagh [153]
PGDM-B / Group 3
SIMSR PGDM-B / Group 3 1

2. World Trade Organization
• International organization dealing with the global rules of
trade between nations
• Assurance to producers and consumers of secure supplies
and greater choice of finished products, raw materials and
services
• At heart of the system: Trade Agreements, negotiated and
signed by a large majority of world’s trading nations
• The goal: To ensure that trade flows as smoothly,
predictably and freely as possible in turn improving welfare
of the peoples of the member countries
SIMSR PGDM-B / Group 3 2

3. Fact File
• Location: Geneva, Switzerland
• Established: 1 January 1995
• Created by: Uruguay Round negotiations (1986-
94) under GATT
• Membership: 153 countries as on 23 July 2008
• Budget: 196 million Swiss francs(approx. 209
million USD) in 2011.
• Secretariat staff: 629
• Head: Director-General, Pascal Lamy
SIMSR PGDM-B / Group 3 3

4. Basic Principles
1. Non-discrimination: 2 major components
o Most-favoured-nation (MFN) rule:
• Product made in one member country be treated no less
favourably than a “like” (very similar) good that originates in any
other country
• Exceptions are made for the formation of free trade areas or
customs unions and for preferential treatment of developing
countries
• Guarantee to smaller countries against exploitation by larger
countries by raising tariffs in bad times
o The National Treatment Principle:
• Foreign goods, once they have satisfied whatever border measures
are applied, be treated no less favourably, in terms of internal
(indirect) taxation than like or directly competitive domestically
produced goods
SIMSR PGDM-B / Group 3 4

5. Basic Principles (Contd.)
• Ensures that liberalization commitments are not offset
through the imposition of domestic taxes and similar
measures
• It is irrelevant whether a policy hurts an exporter. What
matters is the existence of discrimination, not its effects
SIMSR PGDM-B / Group 3 5

6. Basic Principles (Contd.)
2. Reciprocity: fundamental element of negotiating
process
• Reflects both a desire to limit the scope for free-riding
that may arise because of the MFN rule and a desire
to obtain “payment” for trade liberalization in the
form of better access to foreign markets
• Reciprocal concessions ensure that gains from
negotiations will materialize and will be greater
than gain through unilateral liberalization
SIMSR PGDM-B / Group 3 6

7. Basic Principles (Contd.)
3. Enforceable Commitments:
• The non-discrimination principle of the GATT, is
important in ensuring that market access
commitments are implemented and maintained
• The tariff commitments made by WTO members in a
multilateral trade negotiation and on accession
establish “ceiling bindings”
• It is made sure that the value of the tariff concession
is not nullified or impaired
• If they are compromised, complaining country may
invoke WTO dispute settlement procedures
SIMSR PGDM-B / Group 3 7

8. Basic Principles (Contd.)
4. Transparency:
• Need of access to information on the trade regimes
that are maintained by members for enforcement of
commitments
• Routine meets of specialized committees, working
parties, working groups, and councils for exchange of
information and views and efficient diffusion of
potential conflicts
• Trade policy reviews
• Help reduce uncertainty related to trade policy from
economic perspective
SIMSR PGDM-B / Group 3 8

9. Basic Principles (Contd.)
5. Safety Valves: Ability of the government to restrict
trade in specific circumstances
3 types of provisions:
a) Use of trade measures to attain noneconomic objectives
i. Protect public health
ii. National security
iii. Protect seriously injured industries
b) Ensuring “fair competition”:
i. Right to impose countervailing duties
ii. Antidumping duties
c) Intervention for economic reasons:
i. Serious balance of payment difficulties
ii. Desire to support infant industry
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10. Functions
• Administering WTO trade agreements
• Forum for trade negotiations
• Handling trade disputes
• Monitoring national trade policies
• Technical assistance and training for developing
countries
• Cooperation with other international
organizations
• Support trade barriers
• IPR Compliance(TRIPS)
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11. WTO Organization Structure
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12. Historical Development of WTO
• 1944: Bretton Woods Conference(New Hampshire, U.S.) recognized
the need for a comparable international institution for trade to
complement theInternational Monetary Fund and the World
Bank(the later proposed International Trade Organization)
• 1947: Agreement was reached on General Agreement on Tariffs
and Trade (GATT) in Geneva during the UN Conference on Trade and
Employment with 23 countries participating in negotiation
• January 1, 1948 : The agreement of GATT enters into force mostly
dealing with tariff concessions and reductions
• 1948: Negotiations were completed on ITO, but It never came into
force due to internal economic issues
• 1955: Modification to numerous provisions of the GATT.US granted
a waiver for certain agricultural policies
SIMSR PGDM-B / Group 3 12

13. Historical Development of WTO (Contd.)
• 1965: Establishing new guidelines for trade policies of and toward
developing countries
• 1974: MFA (MultiFibre Arrangement) enters into force. restricts
export growth in clothing and textiles to 6 percent per year
• 1986: The Uruguay Round is launched in Punta del Este, Uruguay
• 15 April1994: Ministers sign the final act establishing the WTO in
Marrakech
• January 1,1995: WTO came into force
• GATT held a total of 8 rounds, since its foundation in 1947 till 1994,
including Uruguay round
• A new round of trade talks (the Doha Development Agenda) has
started in Doha, Qatar in 2001
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14. Uruguay round(1986-1994)
• September 1986: Launched in Punta del Este, Uruguay, followed by
negotiations
in Montreal, Geneva, Brussels, Washington, D.C., and Tokyo
• April 1994: 20 trade agreements finally signed in Marrakesh
• 8th round of Multilateral trade negotiations (MTN) conducted
within the framework of General Agreement on Tariffs and
Trade (GATT)
• Brought agricultural trade more fully under the GATT through
agreement
• The main objectives
o to reduce agricultural subsidies
o to put restrictions on foreign investment
o to begin the process of opening trade in services
like banking and insurance
SIMSR PGDM-B / Group 3 14

15. Uruguay round(1986-1994) (Contd.)
• Achievements
o An umbrella agreement (the Agreement Establishing
the WTO)
o Agreements for each of the three broad areas of trade
that the WTO covers:
o Trade Related Investment Measures (TRIMS)
o General Agreement on Trade in Services (GATS)
o Agreement on Trade-Related Aspects of Intellectual Property
Rights (TRIPS)
o Dispute settlement (DSU)
o Agreement on Customs Valuation
o Reviews of governments' trade policies (TPRM)
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16. WTO members and observers
• Members: 153 on 23 July 2008
• Membership for Russia was approved in Dec
2011
• Observers: must start accession negotiations
within five years of becoming observers
• 31 LDCs are WTO members
• Twelve additional LDCs are in the process of
accession to the WTO
SIMSR PGDM-B / Group 3 16

17. Candidates to WTO membership
Country Application date
Algeria 1987
Belarus 1993
Sudan 1994
Uzbekistan 1994
Seychelles 1995
Kazakhstan 1996
Azerbaijan 1997
Lao People's Democratic Republic 1997
Andorra 1999
Lebanese Republic 1999
Bosnia Herzegovina 1999
Bhutan 1999
Yemen 2000
Bahamas 2001
Tajikistan 2001
Syria (WP established on 4 May 2010) 2001
Ethiopia 2003
Libya 2004
Iraq 2004
Afghanistan 2004
Republic of Serbia 2004
Iran 2005
Sao Tomé and Principe 2005
Union of the Comoros 2007
Equatorial Guinea 2007
Republic of Liberia 2007

18. Recent Accessions to WTO
• Viet Nam on 11 January 2007
• Tonga on 27 July 2007
• Ukraine on 16 May 2008
• Cape Verde on 23 July 2008
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19. How to join the WTO
• “Tell us about yourself”
• “Work out with us individually what you have
to offer”
• “Let’s draft membership terms”
• “The decision”
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20. Transformation of Accession Process
• The practice under GATT was to invoke non-
application
• This limited the negotiating leverage of the
GATT members
• This also prevented bilateral negotiations on
market access
• This practice has changed with WTO
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21. Groups and alliances
• G-20
• C-4
• European Union
• ASEAN
• MERCOSUR
• NAFTA
• Cairns Group
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22. Ministerial Conferences
• The topmost decision-making body of the WTO
 Geneva, 15-17 December 2011
 Geneva, 30 November - 2 December 2009
 Hong Kong, 13-18 December 2005
 Cancún, 10-14 September 2003
 Doha, 9-13 November 2001
 Seattle, November 30 – December 3, 1999
 Geneva, 18-20 May 1998
 Singapore, 9-13 December 1996
SIMSR PGDM-B / Group 3 22

23. What is Dumping?
“Dumping is a situation of international price
discrimination, where the price of a product
when sold to the importing country is less
than the price of the same product when sold
in the market of the exporting country.”
SIMSR PGDM-B / Group 3 23

24. Why does dumping take place?
• As a short-term predatory pricing strategy to
drive competitors out of the market
• As a result of market intervention or state
subsidies that enable companies to artificially
lower their prices
SIMSR PGDM-B / Group 3 24

25. Adverse effects of Dumping
• Imperfect competition in the domestic market
of the host country.
– Actual or potential decline in sales
– Loss of profits
– Market share
– Capacity utilization
– Employment
– Wages
– Lost contracts
SIMSR PGDM-B / Group 3 25

26. Terminologies
• Export price: The price at which it is exported to
the importing country (host country).
• Normal Price: Price of the product when destined
for consumption in the exporting country (home
country)
• Dumping Margin: The margin of dumping is the
difference between the Normal value and the
Export price of the goods under complaint. It is
generally expressed as a percentage of the export
price.
SIMSR PGDM-B / Group 3 26

27. Dumping Margin Calculation
Compare Exporter Price
to Normal Value
Exporters Price Normal Value
Normal Value $110.00
Exporter Price $90.00
Difference Attributable
$20.00
to Dumping
Dumping Difference Attributable
= to Dumping/exporter price $20.00 / $90.00=22.22%
Margin
SIMSR PGDM-B / Group 3 27

28. Essentials for initiating an anti-
dumping investigation
• Sufficient evidence to the effect that
– there is dumping
• there is injury to the domestic industry
• there is a causal link between the dumping and the
injury, that is to say, that the dumped imports have
caused the alleged injury (material injury).
– The domestic producers expressly supporting the
anti dumping application must account for not
less than 25% of the total production of the like
article by the domestic industry.
SIMSR PGDM-B / Group 3 28

29. Actions That Can Be Taken
• Anti-dumping or Countervailing Duty
• Exceptional Circumstances
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30. Countervailing Duty
• Provisional Measure - takes the form of a
provisional duty in the form of a cash bond on
the allegedly subsidized products.
• Definitive Duty - final countervailing duty
imposed following an affirmative final
decision.
SIMSR PGDM-B / Group 3 30

31. Countervailing Duty (Contd.)
• Lifetime:
Provisional countervailing duty – not exceeding
6 months, extendable up to 9 months
Definitive countervailing duty – 5 years from
imposition
• Sunset Review
• Interim Review
SIMSR PGDM-B / Group 3 31

32. Anti-dumping duty v/s Customs duty
Antidumping Duty Normal Customs Duty
Means of raising revenue and for overall
To guard against unfair trade practices
development of the economy.
Trade remedial measures. Trade and fiscal policies of the Government
Not necessary in the nature Necessary in nature
Levied against exporter / country in as much as
Universally applicable to all imports as per
they are country specific and exporter specific.
the country of origin and the exporter.
SIMSR PGDM-B / Group 3 32

33. Implementation and Monitoring by
WTO
• Monitor the implementation of the trade
agreements
• Increase Transparency at Multilateral and
National Level
• Trade Policy Review Mechanism (TPRM)
SIMSR PGDM-B / Group 3 33

34. Trade Policy Review Mechanism
• Established during the Uruguay Round
• Agreement for regular and systematic review
• Objectives:
– Impact of Members’ trade policies
– Improved adherence to WTO rules
– Achieve greater transparency
– Enhance communication to strengthen
multilateral trading system
SIMSR PGDM-B / Group 3 34

35. Trade Policy Reviews
• Fundamental activity of WTO
• Performed by Trade Policy Review Body
• Surveillance of national trade policies
• Done for all WTO Members
• Frequency for each WTO Member depends on
its share of world trade
European Union, the United States, Japan, and
Canada – Every 2 years
SIMSR PGDM-B / Group 3 35

36. Global Monitoring Reports
• Annual report by the Director-General of the
WTO
• Overview of developments in the
international trading environment and recent
trade developments
• These further supplement the Trade Policy
Reviews.
SIMSR PGDM-B / Group 3 36

37. THANK YOU
SIMSR PGDM-B / Group 3 37