With the coming up of the World Trade Organization (WTO) the General Agreement on Tariffs and Trade (GATT) has ceased to exist from 1-1-96. However, for practical reason both the organizations stayed together for one year to ensure smooth transit of work and membership from GATT to WTO.
Why GATT? GATT was set up in 1947 to make global trade freer than it was before. The central aim was to reduce tariffs (high custom duties) and non-tariff barriers (quantitative restrictions).
Negotiations (talks) in this connection continued for around 1947 t 1986 spread over 8 rounds- 1947-Havana round (Cuba), 1949-Annecy round (France), 1950 Torquaya round (Britain), 1956-Geneva round, 1661-Dillon round, 1962-Kennedy round (USA), 1973-Tokyo round (Japan) and 1986-Uruguay round. The Uruguay round being the toughest was finally signed by the world community paving the way for the establishment of WTO a new effective world body. With that the GATT negotiation came to an end.
On April 15, 1994, 124 countries including India signed the historic pact for a new multi-national trading system at Marrakesh in Morocco. The six documents signed at Marrakesh included agreement for establishment of WTO. The final draft Act known as Dunkel Draft after its architect Arthur Dunkel, former Chairman of the GATT, was result of the negotiations which began in Uruguay in 1986.
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India signed the agreement on the final Act on Uruguay round which was provisional and subject to ratification by the Indian Cabinet. Rallies, Bundha and Dharnas all over the country marked the signing of the GATT agreement on April 15. The political parties organized widespread protests in various parts of the country. The Union Government maintained that it was in the larger interest of country and moreover India could not afford to be isolated at global level.
2 years after its birth, the World Trade Organization (WTO) held its first ministerial conference, which is its supreme polity making body. Since it was the first ever ministerial conference, it set its own agenda, format and procedures what was to become part of an evolving mechanism. The inaugural meeting of the WTO was the biggest event in the trading history in 1996 where foreign trade ministers from over 128 countries congregated for 5 days to debate trade deliberation and to protect their interests. This meeting started at Singapore on December 9, 1996 with Mr. Renato Ruggerio, the Director General of the WTO calling on the member countries to strengthen the fragile unity of the trade body by reaching agreements on ministerial declaration that was to be issued at the end of the conference. The meeting began after a preparatory meeting in Geneva in November. On December 13, 1996, the WTO reaffirmed its commitment to internationally recognized labor standards, but rejected using these for protectionist purposes and hailed an epoch making zero tariff pacts on information technology. At the close of the 5 days inaugural WTO meet at Singapore, the Trade Ministers of 128 member nations adopted a declaration vowing to fully implementing various agreements to strengthen the world trade regime and pledged to tackle new issues such as investment and competition.
Though the main agenda at the conference was to review the pacts arrived at the Uruguay round after seven years of negotiations between various trading blocs, peripheral issue like core labor standards, investment rules, competition policy and transparency in government procurement occupied the centre stage pushing out the agenda. India, Pakistan and Egypt were the three countries which were in the forefront of the debate on labor standard opposing from the very beginning any mention of it in the final text of the ministerial declaration. These issues became contentious and the Trade Ministers had to undergo tough exercise to hammer out a solution so that the final text became a reality. It was at the last day that the developed and the developing nations reached the agreement in principle. In the final settlement the developed countries agreed to recognize the ILO (International Labor Organization) as the supreme body to deal with the core labor standard and that these standards would not be enforced on any developing countries to pursue protectionist measures. Also, that the developed countries would not at any time call into question the competitive advantage of the low wage countries. In deference to the wishes of developing world, the final document took note of the concern of the third world countries linking labor issues with trade, and recognized that the International Labor Organization (ILO) was the only competent forum for setting and dealing with the labor standards. A landmark agreement to scrap massive tariffs on information technology trade by the year 2000 gained support with 28 countries pledging their commitment to the plan. This information technology pact is regarded as a key achievement of this biennial ministerial conference.
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India can feel satisfied that its concern were fully addressed to in the final declaration. Although India had to make compromises at WTO ministerial conference at Singapore, but it did not surrender country’s interest. India’s view was quite clear that issues like investment and labor were not the concern of the WTO, and therefore the declaration need not make any reference to these controversial areas. However India had to soften its stand. But it was not a sellout for India.
Under WTO an economic world is being visualized where flow of goods and services between countries would be free, unimpeded and governed by mutual growth consideration. An important step towards establishing a globalize set-up for free exchange of commodities and services, has been the establishment of WTO (World trade Organization), as a successor of the GATT (General Agreement on Trade and Tariffs). Within the framework WTO, attempts have been initiated to remove prohibitive restrictions of various kinds in the arena of international trade. With the WTO having more than 130 nations as members, any framework of trading applicable to member-nation, is bound to have global implications.