GATT WTO (General Agreement on Tariffs and Trade World Trade Organization)

Tariff - customs duty or due is the indirect tax levied on the import or export of goods in
international trade
General Agreement on Tariffs and Trade (GATT)

Multilateral agreement regulating international trade

Implemented to regulate world trade to aide in the economic recovery following World
War 2

World Trade Organization (WTO)

Deals with regulation of trade between participating countries

Provides a framework for negotiating and formalizing trade agreements

GATT vs WTO

GATT is a set of rules/guidelines

WTO is an institutional body
GATT focused on traded goods only
WTO expanded scope to the service sector and intellectual property rights
GATT has no provisions to settle trade disputes
WTO has a dispute settlement body

Purpose:

Substantial reduction of tariffs and other trade barriers

Elimination of preferences, on a reciprocal and mutually advantageous basis
Review and propagate the national trade policies
Ensure the coherence and transparency of trade policies through surveillance in global
economic policy-making
Assistance of developing, least-developed and low-income countries in transition to
adjust to WTO rules and disciplines through technical cooperation and training
Involved in dispute resolution process aimed at enforcing participants' adherence to
WTO agreements

History:

Formed April 1947 in Geneva, Switzerland

Signed into law January 1, 1948
Amended 1994
Number of countries: 23 original signatories
Replaced by World Trade Organization in 1995
WTO was signed into law January 1, 1995
Current number of members: 159

Rationale:

Globalization calls for an international organization to manage trading systems

Address the issues on protectionism, trade barriers, subsidies, violation of intellectual
property rights
Synchronize and standardize trading policies among member nations
Act as mediator when conflicts/disputes arise
Act as center for economic research and analysis

Principles of the trading system:

1. Non-discrimination
Most Favored Nation (MFN) rule - requires that a WTO member must apply the
same conditions on all trade with other WTO members. Eli minate discrimination.
Grant someone a special favor and you have to do the same for all other WTO
members.
National Treatment Policy - imported goods should be treated no less favorably
than domestically produced goods
2. Reciprocity
Limit the scope of free-riding that may arise because of the MFN rule
Obtain better access to foreign markets
3. Binding and enforceable commitments
establish "ceiling bindings" on goods/trades
4. Transparency
Required to publish their trade regulations
Maintain institutions allowing for the review of administrative decisions affecting
trade
Respond to requests for information by other members
Notify changes in trade policies to the WTO
5. Safety valves
Permit members to take measures to protect not only the environment but also
public health, animal health and plant health
Organizational Structure:
Council for Trade in Goods (GATT) - responsible for the operation of the GATT Agreement and
for the work of the committees, working groups and working parties on the following sectors;

Agriculture
Market access for goods
Sanitary and phyto-sanitary measures
Subsidies and countervailing measure
Anti-dumping
Customs valuation
Rules of origin

Import licensing
Investment
Safeguards
State trading enterprises (working group)
Information technology agreement

Council for Trade in Services (GATS)

First multilateral, legally enforceable agreement governing trade in services, and

investment in the service sector.
Eliminates governmental measures that prevent services from being freely supplied
across national borders.

Council for Trade-Aspects of Intellectual Property Rights (TRIPS)

Monitors implementation of the TRIPS agreement.

Provides forum for WTO members on intellectual property matters.
Sets minimum standards of protection for copy rights and related rights, trademarks,
geographical indications (GIs), industrial designs, patents, integrated circuit layout
designs, and undisclosed information.

Achievements of GATT- WTO globally:

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Trade liberalization in industrial products

Enhanced the value and quantity of trade
Eradicated trade and non-trade barriers
Broadened the trade governance scope to trade in investment, services and
intellectual property
Sustainable trade development
Free trade cuts the cost of living, provides more choice of products and quality
Stimulates economic growth of member countries
Raises income of member countries and its people

GATT-WTO and the Philippines:

Original member of WTO January 1, 1995

Grants MFN treatment to all trading partners
Participant in the WTO Information Technology Agreement (IFA)
Signatory of GATS protocols on telecommunications and financial services
Holds a strong record on notifications to WTO except the agricultural sector

Effects of GATT-WTO to the Philippines:

The Philippines economy has performed well, based on a relatively open

trade regime
During 2005-2011, the Philippines had an annual real GDP growth rate of 5%.
The Philippines was the world's 37th largest exporter and the 29th importer of
goods in 2010.
Tariff was simplified and now comprises 8,299 lines at the HS eight-digit level
with the adoption of the 2007 ASEAN Harmonized Tariff Nomenclature.
Import quotas applied on notably sensitive goods; i.e. rice.
Prohibited and regulated exports include endangered wildlife species and live
animals.
Price support for rice and corn (which has been highly costly), high tariffs, rice
import quotas, as well as import and export restrictions.
Gave birth to Initiatives to assist agricultural producers including: various
incentives; a new requirement that all banking institutions (government and
private) must set aside at least 25% of their total loanable funds to
agriculture and fisheries credit; and to assist sugar producers, a requirement
for a 10% locally sourced bioethanol blend in gasoline, and 2% in diesel.
Foreign equity in deep-sea-fishing vessels is capped at 40%, and all
fishermen must be Filipino citizens.
Imports of fresh, chilled or frozen fish (except when imported for canning and
processing) are allowed only when deemed "necessary", and a certificate of
necessity is required.