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Hitesh Jhanji, Lovely Professional University Unit 29 : Functions of WTO/GATT

Unit 29 : Functions of WTO/GATT Notes

CONTENTS
Objectives
Introduction
29.1 Impact of WTO on Various Aspects of Indian Economy
29.2 Geneva Framework of WTO and India
29.3 WTO
29.4 Uruguay Round Final Act and Its Implications for India
29.5 Social Clause in GATT
29.6 Summary
29.7 Key-Words
29.8 Review Questions
29.9 Further Readings

Objectives

After reading this Unit students will be able to:
• Discuss the Impact of WTO on Various Aspects of Indian Economy.
• Know Geneva Framework of WTO and India.
• Explain Uruguay Round Final Act and Its Implications for India.
• Describe Social Clause in GATT.
Introduction

The General Agreement on Tariff and Trade (GATT) was established in 1948 in Geneva to pursue the
objective of free trade in order to encourage growth and development of all member countries. The
principal purpose of GATT was to ensure competition in commodity trade through the removal or
reduction of trade barriers. The first seven rounds of negotiations conducted under GATT were aimed
at stimulating international trade through reduction in tariff barriers and also by reduction in non-
tariff restrictions on imports imposed by member countries. GATT did provide a useful forum for
discussion and negotiations on international trade issues.
The Uruguay Round of Negotiations—8th Round of GATT
The 8th round of Multi-lateral Trade Negotiations, popularly known as Uruguay Round (since it was
launched at Punta del Este in Uruguay) was started in September 1986 at a special session of GATT
Contracting Parties held at Ministerial level. World trade had undergone a structural change during
the four decades since the establishment of GATT in 1948. The share of agriculture in world
merchandise trade which was 46 percent in 1950 had declined to 13 percent in 1987. Simultaneously,
the structure of employment and the contribution of various sectors to GDP of developed countries
had undergone a qualitative change. The share of the service sector in the GDP of developed countries
was rapidly increasing. It ranged between 50 to 70 per cent of the GDP by 1986. The share of
employment in the service sector was also increasing. For instance, in USA, services represented
two-thirds of GDP and employed over 70 per cent of work force. In 1980, US exports of services
amounted to $ 35 billion. In the commodity sector, the comparative cost advantages had moved in
favour of Japan and several other newly industrialised nations. These factors impelled developed
countries, under the leadership of USA to take the initiative of bringing service sector into trade

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