WTO AND INDIA PRESENTED BY -: ASHWANI MOYAL HARPREET SINGH HRIDESH SHARMA NAVJOT SINGH.
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Transcript of WTO AND INDIA PRESENTED BY -: ASHWANI MOYAL HARPREET SINGH HRIDESH SHARMA NAVJOT SINGH.
WTO AND INDIA
PRESENTED BY -:ASHWANI MOYALHARPREET SINGHHRIDESH SHARMANAVJOT SINGH
GENERAL AGREEMENT ON TARRIFS AND TRADE
GATT born in 1948 as result of international desire to liberalise
trade.
BRETTON WOODS CONFERENCE (1944) recommended
IMF, WORLD BANK ,ITO.
IMF , WORLD BANK were established in1946.
ITO charter was never ratified ,so GATT formed as interim
measure.
GATT transformed to WTO with effect from January 1995.
GATT OBJECTIVES
Raising standard of living.
Ensuring full employment and a large and steadily growing
volume of real income and effective demand.
Developing full use of the resources.
Expansion of production and international trade.
RULES GOVERNING INTERNATIONAL TRADE
Any proposed change in tariff or commercial policy of a
member country should not be undertaken without
consultation of other parties to the agreement.
Countries that adhere to GATT should work towards reduction
of tarrifs and other barriers to international trade ,which
should be negotiated within the framework of GATT.
PRINCIPLES OF GATT
Non-discrimination(principle of most favoured nation).
Prohibition of Quantitative Restrictions.
Consultation(Resolve disagreements).
WORLD TRADE ORGANIZATION
World Trade Organization (WTO) is an organization that intends to
supervise and liberalize international trade.
WTO officially commenced on January 1, 1995 replacing the General
Agreement on Tariffs and Trade (GATT), which commenced in 1948.
Only international organization dealing with the rules of trade between
nations whose goal is to help producers of goods and services,exporters
and importers conduct their business fairly.
The objective of WTO , the successor of GATT is to provide a framework
of principles and rules for globalization of business to achieve all round
economic prosperity.
WORLD TRADE ORGANIZATION
The WTO has 153 members,representing more than 97% of
total world trade and 30 observers, most seeking membership.
The WTO's headquarters is at the Centre William Rappard,
Geneva, Switzerland.
FUNCTIONS OF WTO
Administering the WTO trade agreements.
Providing forum for negotiations among its members.
Administering the mechanism for settling trade disputes between member
countries.
Providing technical assistance and training for developing countries.
Cooperating with other international organizations like the IMF and IBRD
and its affiliated agencies with a view to achieving greater coherence in
global economic policy making.
WTO PRINCIPLES
WTO agreements have three main objectives:-
To help trade flow as freely as possible.
To achieve further liberalization gradually through negotiation.
To set up an impartial means of settling disputes.
Non discrimination(“most favoured nation” and “national” treatment).
Extra provisions for less developed countries.
THE WTO AGREEMENTS
GOODS – Annexes dealing with agriculture , textiles ,
product standards,subsidies and actions against anti-dumping.
SERVICES(GATS) – Applies to banks,insurance
firms ,telecommunications companies ,tour operators ,hotel
chains and transport companies.
INTELLECTUAL TRAINING- Rules for trade and
investment in ideas and creativity.Rules about
copyrights,patents,trademarks,geographical names etc.
THE WTO AGREEMENTS DISPUTE SETTLEMENTS - To resolve trade quarrels under Dispute
Settlement Understanding to ensure trade flows smoothly.
POLICY REVIEW – To improve transparency,greater understanding of
policies which countries are adopting and to assess their impact.
DEVELOPMENT AND TRADE – Sub-committee on least development
countries,looks at developed countries special needs,implementation of
agreements,technical cooperation,encouraging trade.
TECHNICAL ASSISTANCE AND TRAINING – 100 technical
cooperation missions,reference centers,trade policy courses.
THE URUGUAY ROUND
The Uruguay Round(1986-1994)was the 8th round of multilateral trade negotiations (MTN) .
Main objectives of the Uruguay Round were:a. to reduce agricultural subsidies.
b. to put restrictions on foreign investment.
c. to begin the process of opening trade in services like banking and insurance.
d. They also wanted to draft a code to deal with copyright violationand other forms of intellectual property rights.
Inclusion of new areas:-a. Trade in services.
b. Trade related aspects of intellectual property(TRIPS).
c. Trade related invested measures(TRIM).
INDIA’S COMMITMENT
As India was maintaining Quantitative Restrictions due to balance of payments
reasons(which is a GATT consistent measure), it did not have to undertake any
commitments in regard to market access.
India does not provide any product specific support other than market price
support.
In India, exporters of agricultural commodities do not get any direct subsidy.
a) exemption of export profit from income tax under section 80-HHC of the Income Tax.
b) subsidies on cost of freight on export shipments of certain products like fruits,
vegetables and floricultural products.
WHAT INDIA WANTS
To protect its food and livelihood security concerns and to
protect all domestic policy measures taken for poverty
alleviation, rural development and rural employment.
To create opportunities for expansion of agricultural exports
by securing meaningful market access in developed countries.
TRADE IN SERVICES
The General Agreement on Trade in Services(GATS) came into existence as a result of the
Uruguay Round of negotiations.
GATS covers four modes of international delivery of services:-
a) Cross border supply(transborder data flows,transportation of services.)
b) Commercial presence(provision of services abroad through FDI or representative offices)
c) Consumption abroad(tourism).
d) Movement of personnel(entry & foreign stay of foreign consultants).
Travel and Tourism related services are activities in which most developing countries made
commitments.
Heavily protected services include banking,Insurance,transportation,television,radio,film
etc.
TRADE RELATED ASPECTS OF INTELLECTUAL PROPERTY RIGHTS(TRIPS)
IPR includes patents,trademarks,copyrights,geographic
indications,trade secrets,industrial designs,layout design of integrated
circuits.
Objectives:
a) Encourage and Reward Creative Work.
b) Encourage Innovation.
c) To Promote Fair Competition.
d) To Help Consumer Protection.
e) To Facilitate Transfer of Technology.
TRADE RELATED INVESTMENT MEASURES(TRIMS)
TRIMS refer to certain conditions or restrictions imposed by a government in respect of foreign investment in country.
WTO inconsistent TRIMS:- Local Content requirement(certain amount of local input
be used in products) Trade Balancing Requirements(imports shall not exceed a
certain proportion of exports). Trade and Foreign exchange balancing requirements. Domestic sales requirement(co. shall sell certain
proportion of its output locally).
INDIA’S NOTIFIED TRIMS
Local content (mixing) requirements in the
production of News Print
Local content requirement in the production of
Rifampicin and Penicillin – G
Dividend balancing requirement in the case of
investment in 22 categories consumer goods.
THE DOHA ROUND
Launched at the fourth ministerial conference in Doha, Qatar in November 2001.
Objectives:
a. Lower trade barriers around the world.
b. Committing all countries to negotiations opening agricultural and
manufacturing markets, as well as trade-in-services (GATS)
negotiations and expanded intellectual property regulation (TRIPS).
c. Make trade rules fairer for developing countries
BENEFITS TO INDIA
Increase in India’s textile & clothing exports due to
the phasing out of MFA (in 2005).
The reduction in agricultural subsidies & barriers to
export of agriculture products, agricultural exports
from India also increased.
Market access to a number of developing countries
without trade discrimination increased.
DISADVANTAGES FOR INDIA
TRIPs agreement went against the Indian Patents Act (1970)
Introduction of product patents in India lead to hike in drug prices by the MNCs. Hence the poor
were left with no generic option
Extension of intellectual property right to agriculture has negative effects on India and Indian
research institutions
Application of TRIMs agreement undermines any plan or strategy of self reliant growth based on
local technology.
Service sectors in India are backward compared to the service sectors in developed countries.
Hence inclusion of trade in services is detrimental to the interest of India.
The MFN clause proved to be detrimental to India’s interest & provided grounds for Chinese
invasion in Indian market through dumping.
WTO AND INDIA
INDIAN PATENT LAW
1. Grant and Revocation of Patents.
2. Items Not Patentable.
3. Product Patent.
4. Patent Period.
5. Rights and Obligations of Patentee.
6. Working of the Patent.
7. Compulsory Licensing.
8. Parallel Import.
9. Exceptions.
WTO AND INDIA
Agricultural Subsidies.
Subsidies into three categories in a traffic light schema:
• prohibited ‘red light’ subsidies
• actionable or ‘yellow’ light subsidies
• non-actionable ‘green light’ subsidies.
Two types of subsidies are prohibited: export subsidies and domestic-content subsidies; in
short, subsidies contingent upon the export of a good or service, or that requires the subsidized
producers to use domestic inputs.
India’s global trade gain.
India and Compliance Issues.
Removal of Quantitative Restrictions.
A number of steps were taken by the Government of India to handle
sudden and significant increase in import of select items:
Number of tariff lines were identified which were sensitive to imports
A control room was set-up to watch sudden increase in import of
commodities, for appropriate action;
Imposition of WTO-consistence Non-Tariff Measures (NTMs), like
standards, were stream-lined
Tariffs of sensitive items are not significantly reduced below committed
bound levels, mentioned in schedules of the WTO.
Re-negotiating Bound Tariffs of Agriculture Commodities
India had agreed to keep its import duty on some agriculture items at 0 per cent,
as India was a food deficit country when the pact was signed.
Some of these agriculture items were rice, split wheat, skimmed milk powder,
sorghum, Jawar (or Millet), maize, etc.
India's import of number of agriculture items increased sharply in QR-removed
and zero-tariff regime.
India's import of skimmed milk powder increased from 2000-3000 tonnes
between April to October 1998, to around 18,000 tonnes during the same
period in 1999.
CONT…….
During 1999/2000, India has successfully renegotiated the binding rates under
the WTO framework on select agriculture products (with zero bound tariffs)
with its principal trading partners.
the renegotiated agreement would enable the country to change the import
duty on 17 items such as sorghum, jawar6, maize, rice, split wheat, skimmed
milk powder, etc.
The deal was a part of a trade-off with agriculture exporting countries under
which India has given more access on other items by decline/restructure in
tariff bindings like groundnut oil.
Safeguard Measures and Anti-Dumping Duties
The WTO agreement allows for imposition of trade restrictions for a temporary period under
certain circumstances. These restrictions can be in the form of additional custom duties, which
can be classified in the form of safeguard duties or anti-dumping duty, etc.
Safeguard duties can be imposed under article XIX of GATT 1994 on a particular product if
there is a significant increase in its imports, which can cause or threaten to cause domestic
products on directly competitive products.
Highest number of anti-dumping cases(against INDIA) for a product are engineering products
(including steel products), which account for 32 per cent of the total cases, followed by
textiles and articles (19 per cent) thereof, drugs and pharmaceuticals (18 per cent),
rubber/plastics and articles thereof (13 per cent), and consumer industrial goods (12 per cent).
CONT…..
In the anti-subsidy cases again engineering products (including steel
products) account for 38 per cent of the total cases, followed by
rubber/plastic articles (25 per cent) and textiles/articles and drugs (13 per
cent each).
Removal of MFA for Textiles and Apparel Industry
A major portion of textile and clothing exports from India and other
developing countries to the developed countries was subject to quotas.
On January 1, 1995, MFA was replaced by the WTO agreement on
textiles and clothing (ATC), which set out the process for ultimate
removal of these quotas by December 31, 2004.
In terms of India's global export by commodity groups, textiles and
clothing constitute around 20 per cent.
China is top exporter of textile and clothing in world market.
Problems faced by India in WTO & its Implementation
Predominance of developed nations in negotiations extracting more
benefits from developing and least developed countries
Resource and skill limitations of smaller countries to understand
and negotiate under rules of various agreements under WTO
Incompatibility of developed and developing countries resource
sizes thereby causing distortions in implementing various decisions
Non-tariff barriers being created by developed nations.
CONT……
Poor implementation of Doha Development Agenda
Agriculture seems to be bone of contention for all types of
countries where France, Japan and some countries are just not
willing to budge downwards in matter of domestic support and
export assistance to farmers and exporters of agriculture produce.
Dismantling of MFA (Multi Fiber Agreement) and its likely
impact on countries like India
Implications for India
It appears that India does not stand to gain much by shouting for agriculture
reforms .India will have to undertake major reforms in agriculture sector in India to
make Agriculture globally competitive.
It is likely that China, Germany, North African countries, Mexico and such others
may reap benefit in textiles and Clothing areas unless India embarks upon major
reforms in modernization and up gradation of textile sector including apparels.
In Pharma-sector there is need for major investments in R &D and mergers and
restructuring of companies to make them world class to take advantage. India has
already amended patent Act and both product and Process are now patented in
India.
What India should do?
• The most important things for India to address are speed up internal
reforms in building up world-class infrastructure like roads, ports and
electricity supply.
• India's ranking in recent Global Competitiveness report is not very
encouraging due to infrastructure problems, poor governance, poor legal
system and poor market access provided by India.
• Our tariffs are still high compared to Developed countries and there will be
pressure to reduce them further and faster.
• India has solid strength, at least for mid term (5-7 years) in services sector
primarily in IT sector.
• India would do well to reorganize its Protective Agricultural policy in name of
rural poverty and Food security and try to capitalize on globalization of
agriculture markets.
India must improve legal and administrative infrastructure, improve trade facilitation
through cutting down bureaucracy and delays and further ease its financial markets.
India has to downsize non-plan expenditure in Subsidies and Government salaries and
perquisites like pensions and administrative expenditures.
Corruption will also have to be checked by bringing in fast remedial public grievance
system, legal system and information dissemination by using e-governance.
The petroleum sector has to be boosted to tap crude oil and gas resources within
Indian boundaries and entering into multinational contracts to source oil reserves.
CONT…
It wont be a bad idea if Indian textile and garment Industry go
multinational setting their foot in western Europe, North Africa, Mexico
and other such strategically located areas for large US and European
markets.
The performance of India in attracting major FDI has also been poor
and certainly needs boost up, if India has to develop globally competitive
infrastructure and facilities in its sectors of interest for world trade.
CONCLUSION
India, as a developing economy, has been benefitted
being a founding member of the World trade
Organization. The country at large has seen many
significant changes which have taken place after the
formation of WTO. There are some issues which are
yet to be sorted out with the WTO and but by and large
things are falling in shape for the Indian Economy.
THANKYOU