In article it is reported about fundamental principles and rules of the WTO and concepts: "most favored nation treatment", a principle of a national treatment, tariff regulation of foreign trade, quantitative restrictions, transparency of a trade policy, and also about advantages from membership of the country in the WTO.
Purposes and principles
The agreements signed within the WTO – it is volume and difficult documents as their text has legal character and covers a wide number of problems. Agreements concern trade in agricultural production, textile products and clothes, bank operations, telecommunications, the state purchases, industrial standards, standards for foodstuff, intellectual property and there is a lot of another. However at the heart of all such documents a number of simple, initial principles lies. These principles form the international trade system base.
Fundamental principles and rules of the World Trade Organization are:
trade without discrimination, i.e. mutual granting a most favored nation treatment in trade and mutual granting a national treatment to the goods and services of a foreign origin; regulation of trade by mainly tariff methods; refusal of use of quantitative and other restrictions; transparency (information openness) trade policy; permission of trading disputes by consultations and negotiations etc.
Rules of trade should:
· to exclude any kind of discrimination: the state has no right differently to treat trading partners (to all of them the most favored nation treatment is equally provided and it is impossible to do distinctions between the and foreign citizens, the goods or services (it is provided the national status);
· to provide the big freedom, thus arising obstacles should be eliminated with a way of negotiations;
· to be consecutive and predictable – the foreign companies, investors and heads of foreign states should have confidence that the measures interfering trade (including tariff and non-tariff barriers, and also other restrictions), won’t be entered any way; the increasing number of the states is "fixed" by the legal obligations on tariffs and the new possibilities offered foreign investors through the WTO;
· to provide the competition, interfering and refusing discrimination in trade relations, including, from export subsidies and a dumping at which production jumps out on the market at the prices, below cost, for sales market expansion.
What means "most favored nation treatment"? In itself this name sounds is a little inconsistent. It assumes the special relations with the separate state, but in the WTO this term designate the return – total absence of discrimination measures, equal relations with all member countries of the organization. Within cooperation with the WTO each state member of the organization equally provides a most favored nation treatment to all other state members of the WTO. If the country expands privileges concerning one trading partner, it should provide the same privileges to all other members of the WTO so all of them receive the status of trading partners with a most favored nation treatment. Each time when the country reduces trading restrictions or opens domestic market for any goods and services, it should take the same measures concerning the similar goods and the services arriving from all member countries of the WTO, irrespective of, rich they or poor, strong or weak.
What means concept "a principle of a national treatment"? The principle of a national treatment excludes discrimination of foreign producers within state regulation of national economy. It is thus supposed that the same mode, as national, on internal taxes and fees, and also a mode of national laws, orders and rules which regulate foreign trade will be provided to the goods of a foreign origin. "National treatment" comes into force only after production, services or a subject of intellectual property entered domestic market. Therefore collection of custom duties from an import isn’t "national treatment" violation even if from the domestic goods don’t take the same tax.
What is "tariff regulation of foreign trade"? Tariff regulation of foreign trade provides duty application – the national monetary tax which is raised from the goods, property and the values taken through border of the country. Respectively, at goods import to the country import duty (import duty) is raised, and at export – an export duty (export duty) and if the goods cross the national territory transit – transit duty.
Duties unite in a customs tariff which represents the arch of customs rates established at legislative level depending on a type of the goods which is passed through border in both directions. In WTO terminology the term "duty in advalerny charge" often meets. It means that duty is raised as a percentage to customs cost of the goods.
What means concept "quantitative restrictions"?
Quantitative restrictions in foreign trade – this restriction in the form of establishment of limiting volumes of export or an import of the goods: quotas, licenses, etc. Quantitative restrictions are used for protection of own producers.
The import quota – is a quantitative index which pays off as the relation of volume of an import in natural or in terms of money for this period to internal consumption in the country. For the goods on which quotas are established, importers should obtain in government institutions of the license for import. Quotas, in particular, are used in Ukraine for quantitative restriction of import of sugar raw from a reed.
Reduction of restrictions on production import – is one of the simplest ways of expansion of trade relations. Custom duties belong to such restrictions (or tariffs) and various measures, for example, prohibition or introduction of quotas of an import that causes reduction of volumes of deliveries of the separate goods. From time to time such questions, as bureaucratic delays and an exchange rate of this or that currency are discussed.
From the moment of GATT creation in 1947-48 eight rounds of trade negotiations were carried out. In the beginning they concerned generally decrease in tariffs (custom duties) on the import goods. As a result of these negotiations by the end of the 80th years tariff rates of developed countries on an industrial output gradually decreased to 6,3 %.
Opening of domestic market can be favorable to the state, but it can demand and some changes in policy, economy structure, attitude. Agreements of the WTO give the chance to the state to carry out changes step by step, through gradual removal of import restrictions (so-called smooth liberalization). Developing states are given usually more time for implementation of the obligations connected with providing a freedom of trade.
What means "transparency of a trade policy"? Member countries of the WTO agreed to provide publicity in regulation of foreign trade. It means that all relevant national activities can be carried out on the basis of laws, resolutions, orders which are published, and to them it is necessary to provide open access to all governments and direct participants of foreign economic activity.
Thus, from the basic principles of the WTO follows that the main direction of activity of the WTO is liberalization of international trade.
The general advantages from WTO membership can be summarized as follows:
– creation of more favorable conditions of access to the world markets of the goods and services on the basis of predictability and stability of development of trade relations with WTO member countries, including transparency ((information openness) their external economic policy;
– access to the WTO mechanism on the settlement of disputes providing protection of national interests if they are restrained by partners, and, thus, discrimination elimination;
– possibility of realization of the current and strategic trade and economic interests at development of new rules of international trade.
T.Ostashko Agricultural industry in the conditions of the WTO and EU, Institute of rural development
(On materials: Internet site).