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Unit 24 : Multilateralism and WTO

countries. As a result, the weighted average levels of tariffs applicable to industrial products were Notes
expected to fall in a period of five years from
• 6.3 per cent to 3.8 per cent in developed countries
• 15.3 per cent to 12.3 per cent in developing countries
• 8.6 per cent to 6 per cent in the transition economies
Additional commitments were made under the Information Technology Agreement in 1997 wherein
40 countries accounting for more than 92 per cent of trade in information technology products, agreed
to eliminate import duties and other charges on most of these products by 2000 and on a handful of
the products by 2005. As with other tariff commitments, each participating country is applying its
commitments equally to exports from all WTO members, i.e. on a most-favoured nation basis, even
from members that did not make the commitments.
Tariff bindings : Besides the commitments to reduce tariffs, market access schedules represent
commitments on the part of member countries not to increase the tariffs above the listed rates known
as ‘bound’ rates. Binding of tariff lines has substantially increased the degree of market security for
traders and investors.
Opening Up International Business Opportunities in Textiles

World trade in textiles and clothing had been subject to a large number of bilateral quota arrangements
over the past four decades. The range of products covered by quotas expanded from cotton textiles
under the short-term and long-term arrangements of the 1960s and early 1970s to an ever-increasing
list of textile products made from natural and man-made fibres under five expansions of the multi-
fibre agreement. From 1974 until the end of the Uruguay Round, the international trade in textiles
was governed by the Multi-fibre Arrangement (MFA). This was a framework for bilateral agreements
or unilateral actions that established quotas limiting imports into countries whose domestic industries
were facing serious damage from rapidly increasing imports.
The quota system under MFA conflicted with GATT’s general preference for customs tariffs instead
of measures that restricted quantities. The quotas were also exceptions to the GATT principle of
treating all trading partners equally because they specified how much the importing country was
going to accept from individual exporting countries.
Since 1995, the WTO’s Agreement on Textiles and Clothing (ATC) took over from the MFA and had
been the WTO’s significant agreement.
A Textiles Monitoring Body (TMB) supervised the implementation of the agreement. It monitored actions
taken under the agreement to ensure that they are consistent, and reports to the Council on Trade in
Goods and reviews the operation of the agreement. The TMB also dealt with disputes under the ATC. If
they remain unresolved, the disputes could be brought to the WTO’s regular Dispute Settlement Body.
General Agreement on Trade in Services
The General Agreement on Trade in Services (GATS) is the first and only set of multilateral rules
governing international trade in services. Negotiated in the Uruguay Round, it was developed in
response to the strong growth of the services economy over the past three decades and the greater
potential for marketing services internationally brought about by the communications revolution.
The GATS has three elements :
1. The main text containing general obligations and disciplines
2. Annexes dealing with rules for specific sectors
3. Individual countries’ specific commitments to provide access to their markets, including
indications where countries are temporarily not applying the most-favoured nation principle
of non-discrimination.
General obligations and disciplines : The agreement covers all internationally-traded services, e.g.,
banking, telecommunications, tourism, professional services, etc. It also defines four ways (or ‘modes’)
of trading services internationally :

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