Transcript GLOBAL GROWTH AND TRADE BARRIERS

GLOBAL GROWTH AND
TRADE BARRIERS
R K Agrawal
XISS, Ranchi
Contact: 9431109076
GLOBAL GROWTH
•Global
growth slowed to 3.6% in 2007 from 3.9 in
2006.
•Most of it was caused by slow down in high-income
countries.
•US growth fell to 2.2 in 2007 from 2.9 in 2006
•Fall in global growth was cushioned to some extent
by developing countries, which posted a robust 7.4%
in 2007, just about same as in 2006.
•China and India are two fastest growing major
economies of the world.
•World growth likely to slow down mainly due to
global financial turmoil, high commodity and food
prices.
WHAT IS WTO
•WTO
BORN OUT OF NEGOTIATIONS
•BULK OF WTO’S CURRENT WORK
COMES FROM 1986-94 NEGOTIATIONS
CALLED URUGUAY ROUND
•EARLIER NEGOTIATIONS UNDER GATT
•CURRENT NEGOTIATIONS UNDER
DOHA ROUND STARTED IN 2001
PRINCIPLES OF TRADING
SYSTEM
•TRADE
WITHOUT DISCRIMINATION: MOST
FAVOURED NATION (MFN) TREATMENT
•EXCEPTIONS: TRADING BLOCS
•NATIONAL
TREATMENT: NO
DISCRIMINATION BETWEEN OWN AND
FOREIGN PRODUCTS
•TREATING FOREIGNERS AND LOCALS EQUALLY
•APPLIES TO GATT, GATS AND TRIPS AT LEAST
AFTER THE GOOD HAS ENTERED THE MARKET
•CUSTOMS DUTIES NOT CONSIDERED VIOLATION
OF NATIONAL TREATMENT
PRINCIPLES OF TRADING
SYSTEM CONT..
•
FREER TRADE: MARKET ACCESS
•REDUCTION IN TARIFF AND NON-TARIFF
BARRIERS THROUGH NEGOTIATIONS
•PREDICTABILITY:
FOREIGN COMPANIES,
INVESTORS AND GOVERNMENTS SHOULD BE
CONFIDENT THAT
•THAT TARIFFS WILL NOT GO UP ARBITRARILY
•TARIFFS AND MARKET COMMITMENTS ARE
BOUND
PRINCIPLES OF TRADING
SYSTEM CONTD…
•MORE
COMPETITIVE: DISCOURAGING
UNFAIR PRACTICES SUCH AS EXPORT
SUBSIDIES AND DUMPING PRODUCTS
AT BELOW COST TO GAIN MARKET
SHARE
•MORE BENEFICIAL FOR LDCs: GIVING
THEM MORE TIME TO ADJUST,
GREATER FLEXIBLITY AND SPECIAL
PRIVILEGES
CASE FOR OPEN TRADE
•THEORY
OF COMPARATIVE
ADVANTAGE
•THEORY
OF ABSOLUTE ADVANTAGE
TRADE ROUNDS
Year
Place
Subjects covered
Countries
1947
Geneva
Tariffs
23
1949
Annecy
Tariffs
13
1951
Torquay
Tariffs
38
1956
Geneva
Tariffs
26
Geneva (Dillon
Round) Tariffs
26
1960-61
1964-67
1973-79
1986-94
Geneva
(Kenned
y Round) Tarrifs and anti dumping measures
Geneva (Tokyo
Round) Tariffs and non-tariff measures
Geneva
(Uruguay Tariffs, non-tariffs, services, intellectual property, dispute settlement,
Round)
textiles, agriculture and creation of WTO
62
102
123
FARM SUBSIDIES
•Agricultural
subsidy is the process whereby governments give large
sums of money to agriculture traders and farmers to increase their
overall profits; this allows these exporters to drastically reduce the
prices of their goods
•U.S.
producers will market crops at very low prices, and then have their
incomes topped up by government transfers.
•These
measures have allowed the U.S. to dump its farm surplus on
world markets. For example, the U.S. exports corn at prices 20 percent
below the cost of actual production, and wheat at 46 percent below
cost. This has resulted in Mexican corn farmers being put out of
business.
•Giant
grain traders, such as the Cargill Corporation, will be able to buy
commodities from farmers at artificially low prices and farmers will get
fat government checks to make up for their losses.
TARIFF BARRIERS
•CUSTOMS
DUTY ON IMPORT OF GOODS
•BINDING TARIFFS:
•The market access schedules are not simply announcements
of tariff rates. They represent commitments not to increase
tariffs above the listed rates — the rates are “bound”. For
developed countries, the bound rates are generally the rates
actually charged. Most developing countries have bound the
rates somewhat higher than the actual rates charged, so the
bound rates serve as ceilings.
•Countries can break a commitment (i.e. raise a tariff above
the bound rate), but only with difficulty. To do so they have
to negotiate with the countries most concerned and that
could result in compensation for trading partners’ loss of
trade.
URUGUAY ROUND
INCREASED TARIFF
BINDINGS
•Percentages
of tariffs bound before and
after the 1986–94 talks
After
•Developed countries
•Developing countries
•Transition economies
Before
78
21
73
99
73
98
NON-TARIFF BARRIERS
•BARRIERS
TRADE
•NTB
OTHER THAN CUSTOMS DUTY THAT RESTRICTS
INCLUDES
•IMPORT LICENSING SYSTEM
•RULES FOR THE VALUATION OF GOODS AT CUSTOMS
•PRESHIPMENT INSPECTION
•RULES OF ORIGIN: Laws, regulations and administrative
procedures which determine a product’s country of origin. A
decision by a customs authority on origin can determine
whether a shipment falls within a quota limitation, qualifies
for a tariff preference or is affected by an anti-dumping duty.
These rules can vary from country to country.
•INVESTMENT MEASURES: LOCAL CONTENT REQUIREMENT
AND TRADE BALANCING MEASURES
TRADING BLOCKS
•FTA
•CUSTOMS
UNION
•COMMON MARKET
•ECONOMIC UNION
FREE TRADE AREA
•A
GROUP OF COUNTRIES GET TOGETHER
AND DECIDE TO REMOVE ALL BARRIERS TO
TRADE (INCLUDING NTBs) AMONG
THEMSELVES.
•THE INDIVIDUAL MEMBERS ARE FREE TO
DECIDE HOW TRADE WILL BE CONDUCTED
WITH NON-MEMBERS, E.G., INDEPENDENT
TARIFFS CAN BE SET WITH NON-MEMBER
COUNTRIES.
•ASEAN (Brunnei Darusalam, Cambodia,
Indonesia, Malayasia, Myanmar, Phllipines,
Thailand, Singapore and Vietnam)
CUSTOMS UNION (CU)
•IT
GOES BEYONG THE CONCEPT OF FTA.
•MEMBERS OF A CUSTOMS UNION
OBVIOUSLY HAVE FREE TRADE AMONG
THEMSELVES. IN ADDITION, THEY DECIDE
ON A COMMON AND UNIFORM COMMERCIAL
POLICY (T&NTB) FOR FREE TRADE WITH
NON-MEMBERS.
•MEMBERS OF A CU WILL THEREFORE HAVE
THE SAME TARIFFS FOR IMPORTS FROM A
COUNTRY THAT IS NOT A MEMBER.
•Example: EUROPEAN UNION (27
COUNTRIES)
COMMON MARKET (CM)
•THIS
GOES BEYOND THE CUSTOMS UNION.
AN FTA OR A CU MERELY REMOVES
BARRIERS TO FREE FLOW OF GOODS AMONG
THE COUNTRIES.
•IN A CM, ALL BARRIERS TO THE MOVEMENT
OF CAPITAL AND LABOUR AMONG THE
MEMBERS ARE ALSO REMOVED.
•MERCOSUR, the Southern Common Market (
Argentina, Brazil, Uruguay and Paraguay)
ECONOMIC UNION
•THIS
GOES BEYOND A COMMON
MARKET.
•BEYOND THE OBJECTIVES OF A
COMMON MARKET, AN ECONOMIC
UNION HARMONISES MACROECONOMIC
POLICIES OF MEMBER COUNTRIES.
•THIS MEANS EXCHANGE RATES,
TAXES, MONETARY POLICY AND THE
LIKE.
EXAMPLES OF TRADE
BLOCS
•EU
•EUROPEAN
•NAFTA
FREE TRADE AREA
•AUSTRALIA-NEWZEALAND
CLOSER ECONOMIC RELATIONS
TRADE AGREEMENT (ANZCERTA)
•LAFTA
•CENTRAL AMERICAN COMMON MARKET
•CARIBBEAN COMMON MARKET (CARICOM)
•GULF COOPERATION COUNCIL
•SAARC
•APEC
•ASEAN
THANK YOU
DR. RAMAKANT AGRAWAL
XISS, RANCHI
[email protected]
Contact: 09431109076