Page 277 - DMGT401Business Environment

Business Environment

Notes free trade. Economic nationalism may include such doctrines as protectionism and import
substitution.

13.1 World Trade Organisation (WTO)

The first half of the 20th century was marked by a major worldwide economic depression that
occurred between the two world wars and that all but destroyed most of the industrialised
nations. International trade got a set back when after the First World War countries erected high
tariff walls and raised other tariff barriers to intolerable heights. International trade was stalled
along with most economies. All this resulted in the great depression. This was also one of the
fundamental reasons of the World War II.
After the Second World War, world leaders created General Agreement on Tariffs and Trade
(GATT), to avoid the repetition of the same. GATT was a forum for member countries to negotiate
a reduction of tariffs and other barrier to trade. Countries including India signed the GATT. The
original agreement provided a process to reduce tariffs and created an agency to serve as a
watchdog over world trade. In general, the agreement covers three basic elements:
1. trade shall be conducted on a non-discriminatory basis,
2. protection shall be afforded to domestic industries through customs tariffs, not through
such commercial measures as import quotas,
3. consultation shall be the primary method used to solve global trade problems.

Notes The GATT Trade Rounds

Year Place/ name Subjects covered Countries
1947 Geneva Tariffs 23
(Switzerland)
1949 Annecy (France) Tariffs 13
1951 Torquay (UK) Tariffs 38
1956 Geneva Tariffs 26
1960–1961 Geneva (Dillon Tariffs 26
Round)
1964–1967 Geneva Tariffs and anti-dumping measures 62
(Kennedy
Round)
1973–1979 Geneva (Tokyo Tariffs, non-tariff measures, “framework” 102
Round) agreements
1986–1994 Geneva Tariffs, non-tariff measures, rules, services, 123
(Uruguay intellectual property, dispute settlement,
Round) textiles, agriculture, creation of WTO, etc

13.2 Function of WTO

Instead of calling it Word Trade Organization it should be called World Trade of Opportunities.
WTO gives an opportunity to the nations to sit together and talk trade. It gives them the forum
where nations can negotiate with the objective of a win-win situation. WTO administers the 28
agreement contained in the final Act and a number of plurilateral agreements and government

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