International

Trading
Environment
Prof. savita Gautam (FSM)

International Trading
Environment

Rule based trading system

Trading blocks
Trading Agreements
Trade policies

Multilateral Trading
System

Governs the trade among countries

( 97%)
International trade negotiations
Emergence of trade blocks
Formation of trade agreements
GATT 1948/various rounds of GATT/
Uruguay Round/ Marrakesh Agreement
Leading to WTO subsuming (GATT 94)

Multilateral Trading
System

Objective of WTO
Provide a stable and predictable
environment for the business
enterprises of the countries
Fair and equitable competition
Free trade

Who benefits , the business

enterprise and its country and how?

WTO preamble

Raising standards of living

Ensuring full employment
Expanding production trade and
optimal use of world resources
Protection and preservation of the
environment as per the levels of
economic development
Special status to developing and Least
developing countries

Functions of WTO

Facilitate the implementation of the

Agreement in full
Forum for further negotiations
Settlement of disputes and
differences between trading
countries
( DSB) & (TPRB) Dispute Settlement
Board & Trade Policy Review Board

Legal framework of the

Multilateral trade system

Rules and the various agreements

Rules
Protection through import tariffs
Reduction of the same through negotiations
MFN ( Most Favoured Nation) Principle
National Treatment
Transparency

Protection mechanism in place

( safeguard measures, ADA, subsidies
and countervailing Duties

Regional Trading
Agreement

Its and essentially economic

partnership
Exceptions to the MFN ( come under
article XXIV)
Regional Preferential Arrangement
One way preferential

What is an RTA in the

WTO?
Types of preferential trade liberalization:
Concession
Members
s

Examples

Reciprocal

Selective

EU, NAFTA,
Mercosur

Unilateral

Selective

Cotonou,
AGOA

Unilateral

Generaliz GSP
ed

RTA
?

Types
of
RTAs
of two or more customs territories

a group
that have eliminated all or most tariff and
non-tariff measures affecting trade among
themselves. Participating countries continue
to apply their existing tariffs on external
goods. ( Partial scope indicating certain
products

Free Trade Area

Partial
Scope

Formation of a FTA
Country A & B sign a
FTA
Tariffs are eliminated on
most goods
Each party maintains its
tariff structure
A Roo regime is put in
place
Other common features
Reciprocal concessions
(possible asymmetrical
implementation)

Country A
Uniform MFN tariff
of 6%

0% duties

B
Country B
Variable MFN tariff

Types of RTAs

a group of two or more customs territories that

have eliminated all or most tariff and non-tariff
measures affecting trade among themselves.
Participating countries replace their individual
MFN tariffs with a single tariff applied to third
countries.
Customs Union
Free Trade Area
Partial
Scope

Formation of a CU
Country A
Uniform MFN tariff
of 6%

CET 5 10
%

Country A & B sign a

CU
Tariffs are eliminated on
most goods
A common external tariff
is adopted
A mechanism to share
customs revenues is
devised
A temporary Roo regime
may be put in place
Compensation is paid to

0%
duties

B
Country B
Variable MFN tariff

Types of RTAs
Economic Union

Customs Union
of
ge y
r a v it
ve cti
co a
er ic
ss om
Le on
ec

Free Trade Area

Partial
Scope

an M
d
po ore
lit ec
ic on
al
in om
te i c
gr
at
io
n

Common Market

No. of RTAs

110
105
100
95
90
85
80
75
70
65
60
55
50
45
40
35
30
25
20
15
10
5
0

RTA trends &

characteristics

500
450
400
350
300
250
200
150
100
50
0

Notified RTAs (goods, services & accessions)

Inactive RTAs

Cumulative RTA notifications

Cumulative active RTAs

As of 1 April 2010, 463 RTAs have been notified to the

GATT/WTO of which 272 are currently in force
Approximately 100 RTAs in the pipeline (signed, not yet in
force/under negotiation) Unaccounted number of RTAs in

Typology of RTAs

FTAs account for the great majority of RTAs

notified and in force
Notified RTAs in force as of 1
April 2010
10%

8%

82%

Free Trade Agreement

Customs Union

Preferential Trade Agreement

Configuration of RTAs
Notified RTAs in goods by type of partner as of 1
April 2010
26%
37%

37%
Developed only

Developed-Developing

Developing only

Configuration of RTAs
Notified RTAs in services by type of partner as of 1
April 2010

13%
38%

49%
Developed only

Developed-Developing

Developing only

Network of Plurilateral
Groupings in Europe and
Central Asia
EAEC

Rus. Fed.

EurAsEc

Kyrgyz Rep.

Belarus

EEA

Kazakhstan Tajikistan

CEZ
Ukraine
CIS

CARICOM
OCTs

Uzbekistan

Georgia
Armenia

European Union

Moldova
EFTA
Norway
Iceland
Liechtenstein

SACU

Turkmenistan
Azerbaijan

Iran
Pakistan

UNMIK

CEFTA

Switzerland

Serbia
Albania
Croatia

Afghanistan
Turkey

FYROM

Montenegro
Bosnia & Herz.
EuroMed Partners

Morocco
Pal. Auth.

Algeria

Israel

Jordan

Tunisia

ECO

Egypt

Lebanon

Syria

EU
EFTA

Common Principles*
The purpose of an RTA is to facilitate
trade among the parties
The formation of the RTA must not entail
placing barriers towards third parties
higher than those existing before its
formation
The RTA must provide for
mutual/reciprocal trade concessions
*GATT Art. XXIV:4; Enabling Clause para. 3(a); GATS

RTA database
Available at:
http://rtais.wto.org/UI/PublicMaintainRTA
Home.aspx

Thank you
Discussion?
Assignment
Indias participation in WTO, Are we having a major role
in the negotiations? Can we make the situation to our
advantage?
The food safety fiasco in India ( Maggi) are we correct in
stopping and banning the goods. How will it impact
Indias image ,and regulatory environment.
All groups a 15 minutes presentation. Any of the groups