This is all about How Gatt & Wto effects world trade

1. INTERNATIONAL BUSINESS “EFFECTS OF GATT & WTO IN WORLD TRADE” MayankMaindola (10609029)

2. INTRODUCTION International business may be defined as a contract of buying & selling of goods & services entered into between 2 parties whose places of business are in different countries or business in goods & services that cut across international borders or boundaries or between national of different coutries.

4. WORLD TRADE ORGANISATION The World Trade Organization (WTO) is the only global international organization dealing with the rules of trade between nations. At its heart are the WTO agreements, negotiated and signed by the bulk of the world’s trading nations and ratified in their parliaments. The goal is to help producers of goods and services, exporters, and importers conduct their business.

5. IMPORTANCE OF GATT/WTO There are two main reasons. First, in a globalizing economy, the WTO agreements determine more and more national trade rules. For business, it is vital to be familiar with the present and future trade rules in their markets. The new trading environment will provide definite advantages to more efficient producers, who will increase their market share at the expense of less efficient ones.

6. IMPORTANCE (CONTD.) The other reason is more general but equally important. In many developing countries and transition economies, there is no systematic dialogue between business and government in trade matters. This is partly due to historical reasons, such as weak economic structures and legal and institutional underdevelopment. But a contributing factor is that businesses in that part of the world do not know the rules of the game and therefore are not in a position to participate in a meaningful dialogue with the government. As a result, multilateral trading system rules are alien to them; businesses do not feel that they can have an impact on them, however small it may be. This strengthens the already widespread anti-globalization feelings.

7. ANALYSIS The leading statistical analysis to date finds no evidence that the GATT/WTO increased trade among members The following analysis seeks to fill the void between theoretical insight & empirical evidence by comprehensively evaluating the effects of the trade agreements on trade flows in the years since world war II . The analysis is organized around 2 factors:- 1. institutional standing 2. institutional embeddedness

8. INSTITUTIONAL STANDING The concept of standing which can be wider or narrower than formal membership, helps us understand the true reach of international institutions. Standing differs from formal membership in two ways:- a) First, some institutions give rights & obligations not only to formal members, but also the territories & groups that never signed the agreement. b) even formal members do not necessarily accept all parts of an agreement as binding on themselves.

9. INSTITUTIONAL EMBEDDEDNESS The concept of embeddedness and use is to access the effect of different, but what many analysis see as functionally equivalent institutions. The GATT/WTO is embedded in a system of other trade agreements, including PTAs. As a the number of PTAs grew in the 1980s & 1990s, scholars worried that such agreements would undermine the GATT/WTO system. PTAs seemed problematic because they excluded countries; any benefit accruing to a would be even greater if expanded multilaterally through the GATT/WTO.

10. STATISTICAL MODEL They employ the statistical model of international trade- the gravity model- to estimate the effects of postwar trade agreements. This approach while standard, does not capture all potential effects of the GATT/WTO.

11. CONCLUSION Trade among those with standing in the GATT was considerably higher than what one would predict, based purely on proximity, national income & other nonpolitical variables. The concept of embeddedness also has wide reaching implications for other areas of international relation.

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