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principle re-uires all the members to treat imported goods in the same manner as domestic products. "dditionally! custom duties must be the only tools to protect domestic goods. "lthough! these two very basic principles were agreed under the G"$$.)$,! there are! indeed! some effective exceptions to these rules. ,ne exemption from the mostfavoured nation clause is the case of free trade areas and customs union. ,nly in these economic groupings is /discrimination0 made permissible against the non-member countries. "nother exception to the principle of non-discrimination is the special status of the developing countries. $rade preferences extended to the developing are also excluded from the +(# 1lause. 2n other words! preferential treatment extended to the developing countries will not be granted compulsorily to the other countries. "lthough trade liberalisation efforts at the global level are accelerating even day by day! regional economic groupings or regional trade blocs are also gaining momentum as indispensable forms of increasing trade amongst the countries! developed or developing! to satisfy! their growth and development aspirants. "t the level of developed countries! the European Union (EU ! the #orth "merican (ree $rade "greeement (#"($" and the "sia 3acific Economic 1o-operation ("3E1 have created huge economic blocs. $hese three blocs are very important in terms of both their weights in the world trade and economy and their inherent tendencies towards further enlargement and deepening.
(c
Customs &nion$ " customs union is a more advanced form of economic integration which not only provides for internal free trade between member countries but also adopts a uniform commercial policy against non-members. For example, European Economic 1ommunity (EE1 . 2n a customs union! the participants not only agree to abolish or reduce tariffs between themselves! they also set a common external tariff policy against third parties. 2n this manner! the member countries! on the one hand! secure the free or privileged flow of tradable goods amongst themselves and on the other hand! they form a discriminatory trade bloc against the non-member countries. 2n this case! the main concern becomes the coordination of the trade policies amongst the member countries instead of developing elaborate rules of origin.
(d
Common Mar'et$ " common mar%et allows free movement of labour and capital within the common mar%et in addition to having free movement of goods between the member countries. $he member countries of common mar%et also adopt a common commercial policy with respect to non-members. 5owever! such a scheme necessitates the co-ordination of commercial and industrial policies. 1iti*ens of a common mar%et can wor% and invest in any member country without any restriction.
(e
Economic &nion$ 2n the case of economic union! the member countries have the same economic policies! including monetary and fiscal policy! in addition to the features of common mar%et. "dditionally! they also agree to harmonise their national economic policies and act as single economic unit. For example, the European Union introduced a common currency Euro 7888 for its member countries.
(f
#olitical &nion$ 3olitical union is the ultimate type of economic integration whereby member countries achieve not only monetary and fiscal integration but also political integration. (or example! EU is moving towards a political union similar to the one created by 97 states of "merica.
due to the elimination of trade barriers and other restrictions. $his promotes prosperity in the region and improves general standard of living. (b #romotes Efficient irms$ Elimination of trade barriers within the region encourages the efficient firms to expand their business activities in the region. "t the same time! healthy competition within the region helps the less efficient firms in ac-uiring competencies in order to challenge the efficient firms. (c )mpro(es #erformance$ 1ompetition between firms from different countries in the region leads to improvement in the overall business performance in terms of productivity! -uality! price! delivery and customer service. 1onsumers get better -uality goods and services at the competitive price. (d Reduction in Transaction Costs$ Elimination of trade barriers reduces transaction costs involved in conversion of currencies. $his also eliminates the ris%s involved in international transactions due to fluctuation in currency rates. $his gives boost to tourism and other related sectors in the region. (e #rice Transparenc"$ (ree trade among countries in the region also promotes price transparency. 3rice transparency means more or less same price prevails in all the countries in the region. "s a result! customers need not wrec% their brains trying to calculate what price a commodity is in their currency. (f #romotes )n(estment$ +any firms become wary when investing in other countries due to uncertainty caused by the fluctuating currencies. Regional grouping prevents such uncertainty and promotes investment in the region due to universal currency and elimination of ris%s due to fluctuations in currency. (g Reduces +ependence$ Economic regional grouping reduces dependence of member countries on the other countries of the world. $his is because most of the re-uirements of the member nations can be met within the group. $his helps the member countries become self-reliant in the long run. (h #romotes )nternational #eace$ Regional groups are more of political unions rather than 'ust economic unions. $his is because it is the political will of the countries that compels them to come together for their common benefits. $his prevents friction between them and promotes international peace. (i ,ptimum &se of Resources$ 2ntegration of nations would promote smooth flow of resources and technology among the member nations. $his would lead to better
utilisation of natural and human resources in the member countries and would improve general standard of living in the region.
(c interest . (d (e
$he European 1ommission (representing the common EU 1ouncil of Dustice of the European Union. European 1entral &an%.
$he European 3arliament is elected every five years by member statesE citi*ens! to whom the citi*enship of the European Union is guaranteed.
$he European Union is composed of 7= sovereign +ember States4 "ustria! &elgium! &ulgaria! 1yprus! the 1*ech Republic! :enmar%! Estonia! (inland! (rance! Germany! Greece! 5ungary! 2reland! 2taly! 6atvia! 6ithuania! 6uxembourg! +alta! the #etherlands! 3oland! 3ortugal! Romania! Slova% Republic! Slovenia! Spain! Sweden! and the United Fingdom.
$he main ob'ectives of the Union are now to promote peace! the UnionEs values and the well-being of its peoples. $hese general ob'ectives are supplemented by a list of more detailed ob'ectives4 (a (b (c (d (e (f (g (h (i $o create an area of freedom! security and 'ustice without internal frontiersG $o establish an internal mar%et where competition is free and undistortedG $o strive for sustainable development! based on balanced economic growth and price stabilityG $o establish a highly competitive social mar%et economy! aiming at full employment and social progressG $o achieve a high level of protection and improvement of the -uality of the environmentG $o promote social 'ustice and protection! e-uality between women and men! solidarity between generations and protecte the rights of the childG $o promote economic! social and territorial cohesion and solidarity among the +ember States. $o promote scientific and technological advancementG $o combat social exclusion and discriminationG
2n addition! the Union respects cultural and linguistic diversity and ensures that EuropeEs cultural heritage is safeguarded and enhanced.
2ndia-EU relations go bac% to the early ;<C8s. 2ndia was among the first countries to establish diplomatic relations with the then European Economic 1ommunity (EE1 . $he ;<<> cooperation agreement signed between EU and 2ndia too% bilateral relations well beyond trade and economic cooperation. $he 9th 2ndia-EU Summit at $he 5ague in 788> endorsed the EU0s proposal to upgrade its relationship with 2ndia to a /Strategic 3artnership0. $he two sides also adopted a Doint "ction 3lan in 7889 which provides for4 (a (b (c (d (e Strengthening :ialogue and 1onsultation mechanismsG :eepening political dialogue and cooperationG &ringing together 3eople and 1ulturesG Enhancing Economic 3olicy :ialogue and 1ooperationG and :eveloping $rade and 2nvestment.
#olitical +ialogue$
2ndia and the EU have held ten annual Summits to date. $he ;8 th 2ndia-EU Summit was held in #ew :elhi on C #ovember 788<. 2ndia was represented by 3rime +inister :r. +anmohan Singh and the EU was represented by +r. (redri% Reinfeldt! 3rime +inister of Sweden and European 1ommission 3resident Dose +anuel :urao &arroso. Some of the important outcomes of the Summit are4 (a EUG (b (c (d (e 2t agreed to wor% towards early conclusion of the &road-based $rade and 2nvestment "greement and the +aritime "greement. 2t recogni*ed the need to pursue the reform of the principal U# bodies with a view to enhance the representativeness! transparency and effectiveness of the systemG 2t too% note of the signing of the 2ndia-EU "greement in the field of nuclear fusion energy research underlining the importance of energy security and clean energyG 2t resolved to 'ointly fight terrorism in all its forms and manifestationG 2t reviewed 2ndia-EU Relations and exchanged views on developments in 2ndia and
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$he leaders also identified trade and investment! energy! counter-terrorism! science and technology! climate change! and movement of peoples as priority areas of co-operation. $here is a regular mechanism of Senior ,fficials +eeting (S,+ between 2ndia and the EU. Eighteen S,+s have been held till date.
The E&8 as a bloc of !3 countries8 is )ndia9s largest trading partner :hile )ndia :as E&9s 7th largest trading partner in !;;<.
(a
EU-2ndia trade has been growing steadily reaching H C8.< billion in 788@ (;.<A of EU0s total trade .
(b
2n 788@! 2ndia was the ;;th largest exporter to the EU and had a share of ;.<A in the total EU imports.
(c
,n the other hand! 2ndia was the < th largest importer of EU0s products and had a share of 7.> A in the EU0s global exports.
(d
2n 788@! 2ndia exported services worth =.<> billion euros whereas total 2ndian imports from the EU was worth @.9C billion euros.
(e
2n the first half of 788<! 2ndia0s exports to EU was ;7.< billion euros while 2ndia0s imports was ;7.= billion euros.
$he EU is one of the largest sources of (:2 for 2ndia. 5owever! the (:2 inflows from the EU to 2ndia declined from Euro >.8;< billion in 788= to Euro ?.7= billion in 788@. 2ndia has also emerged as a ma'or investor in the EU countries with total investment from 2ndia increasing from Euro ;.88? billion in the year 788= to Euro ?.C< billion in 788@.
)nstitutional )nteractions$
2ndia and the EU have held eight rounds of negotiations for a bilateral &road-based $rade and 2nvestment "greement. #egotiations commenced in 788= and cover $rade in goods!
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Sanitary I 3hyto-sanitary +easures and $echnical &arriers to $rade! $rade in services! 2nvestment! 2ntellectual 3roperty Rights and Geographical 2ndications! 1ompetition 3olicy! 1ustoms and $rade (acilitation! $rade :efence and :ispute Settlement.
$he 2ndia-EU Doint 1ommission with its three sub-commission on trade! economic cooperation and development cooperation meets annually. 2ndia and EU have Doint )or%ing Groups on 1ounter $errorism! 1onsular 2ssues! "griculture and +arine 3roducts! Energy! Environment! $echnical &arriers to $rade and Sanitary and 3hytosanitary 2ssues! $extiles! Steel! 2nformation $echnology I 1ommunications! 3harmaceuticals I &iotechnology! (ood 3rocessing 2ndustries and 1ustoms 1ooperation. &oth sides also have regular dialogues on Security! 5uman Rights! +acro Economy and Science and $echnology.
Bilateral Agreements$
2ndia and the EU have signed bilateral agreements which includes cooperation in the field of Science I $echnology in 788; which was renewed in 788=G Doint Jision Statement for promoting cooperation in the field of information and communications technology in 788;G customs cooperation agreement in 788>G +emorandum of Understanding on 1ooperation on Employment and Social "ffairs in #ovember 788CG 5ori*ontal 1ivil "viation "greement in 788@G Doint :eclaration in field of Education in 788@G Doint :eclaration on +ultilingualism in +arch 788< and "greement in the field of nuclear fusion energy research in #ovember 788<.
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,b6ecti(es of .A TA
$he ob'ectives of #"($"! as elaborated more specifically through its principles and rules including national treatment! most favoured nations treatment and transparency are4 (a $o eliminate the barriers to trade and facilitate the cross border movement of goods and services among the member countries. (b $o increase substantially investment opportunities among the member countries. (c $o enhance the competitive advantage of the companies operating in the US"! 1anada and +exico in wider international mar%ets. (d $o provide ade-uate and effective protection and enforcement of intellectual property rights in each member country. (e $o create effective procedures for the implementation and application of this agreement! for its 'oint administration and for the resolution of disputes.
1%
(f
$o establish a framewor% for further trilateral! regional and multilateral cooperation to expand and enhance the benefits of this "greement
Critical Appraisal
2t was felt that the emergence of #"($" would enable further development of the US" and 1anada and the significant development of +exico. (urther! the free flow of capital and human resources would enable countries in achieving balanced regional development. 5owever! the formation of #"($" is criticised on the following grounds4 (a +ost of the US industries will shift to +exico as +exico has less stringent environmental protection and health and safety legislations than the US". (b #"($" agreement has been implemented without prior preparations. $herefore! the +exican economy may face the problem of ad'ustment and assimilation with the US" and 1anada.
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A1EA. Charter$
$he "SE"# 1harter serves as a firm foundation in achieving the "SE"# 1ommunity by providing legal status and institutional framewor% for "SE"#. 2t also codifies "SE"# norms! rules and valuesG sets clear targets for "SE"#G and presents accountability and compliance. $he "SE"# 1harter came into force on ;9th :ecember 788@. " gathering of the "SE"# (oreign +inisters was held at the "SE"# Secretariat in Da%arta to mar% this very historic occasion for "SE"#. 2n effect! the "SE"# 1harter has become a legally binding agreement among the ;8 "SE"# +ember States.
A1EA. Communit"$
1*
$he "SE"# Jision 7878! adopted by the "SE"# 6eaders on the ?8 th "nniversary of "SE"#! agreed on a shared vision of "SE"# as a concert of Southeast "sian nations! outward loo%ing! living in peace! stability and prosperity! bonded together in partnership in dynamic development and in a community of caring societies. "t the <th "SE"# Summit in 788?! the "SE"# 6eaders resolved that an "SE"# 1ommunity shall be established. "t the ;7th "SE"# Summit in Danuary 788=! the 6eaders affirmed their strong commitment to accelerate the establishment of an "SE"# 1ommunity by 78;9 and signed the 1ebu :eclaration on the "cceleration of the Establishment of an "SE"# 1ommunity by 78;9. $he "SE"# 1ommunity is comprised of three pillars! namely4 (a (b (c "SE"# 3olitical-Security 1ommunity! "SE"# Economic 1ommunity. "SE"# Socio-1ultural 1ommunity.
#rinciples of A1EA.$
2n pursuit of the 3urposes stated in "rticle ;! "SE"# and its +ember States reaffirm and adhere to the fundamental principles contained in the declarations! agreements! conventions! concords! treaties and other instruments of "SE"#. "SE"# and its +ember States shall act in accordance with the following 3rinciples4 (a (b (c (d (e Respect for the independence! sovereignty! e-uality! territorial integrity and national identity of all "SE"# +ember StatesG Shared commitment and collective responsibility in enhancing regional peace! security and prosperityG Renunciation of aggression and of the threat or use of force or other actions in any manner inconsistent with international lawG Respect for the right of every +ember State to lead its national existence free from external interference! subversion and coercionG Enhanced consultations on matters seriously affecting the common interest of "SE"# and reliance on peaceful settlement of disputesG
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(f (g (h (i ('
"dherence to the rule of law! good governance! the principles of democracy and constitutional governmentG Respect for fundamental freedoms! the promotion and protection of human rights! and the promotion of social 'usticeG Upholding the United #ations 1harter and international law! including international humanitarian law! subscribed to by "SE"# +ember StatesG Respect for different cultures! languages and religions of the peoples of "SE"#! while emphasising their common values in the spirit of unity in diversityG "dherence to multilateral trade rules for effective implementation of economic commitments and progressive reduction towards elimination of all barriers to regional economic integration! in a mar%et-driven economy.
,b6ecti(es of A1EA.$
"s per the "SE"# 1harter the aims and purposes of the "ssociation are as under4 (a undamental ,b6ecti(e$ $he fundamental ob'ective of "SE"# is to maintain and enhance peace! security and stability and further strengthen peace-oriented values in the region. (b To enhance regional resilience$ $he "ssociation also endeavours to enhance regional resilience by promoting greater political! security! economic and socio-cultural cooperationG (c To create :eapon free region$ $he "ssociation also aims to preserve Southeast "sia as a #uclear )eapon-(ree Kone and free of all other weapons of mass destructionG (d To promote peace in the region$ $he "ssociation shall ensure that the peoples and +ember States of "SE"# live in peace with the world at large in a 'ust! democratic and harmonious environmentG (e To create a single mar'et$ $he "ssociation also aims to create a single mar%et and production base that promotes free flow of goods! services! investment! business persons! professionals! talents and labour. (f To alle(iate po(ert"$ $he "ssociation aims to alleviate poverty in the region and narrow the development gap within "SE"# through mutual assistance and cooperation.
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(g
To strengthen democrac"$ $he "ssociation shall endeavour to strengthen democracy! enhance good governance and the rule of law and to promote and protect human rights and fundamental freedoms.
(h
To ensure collecti(e securit"$ $he "ssociation shall respond effectively! in accordance with the principle of comprehensive security! to all forms of threats! transnational crimes and trans-boundary challenges.
(i
To promote sustainable de(elopment$ 2t shall promote sustainable development so as to ensure the protection of the region0s environment! its natural resources! cultural heritage and the -uality of human life.
('
To de(elop human resource$ 2t shall develop human resources through closer co-operation in education and life-long learning and in science and technology! for the empowerment of the peoples of "SE"#.
(%
To promote inclusi(e gro:th$ (inally! it aims to promote a people-oriented "SE"# in which all sectors of society are encouraged to participate in! and benefit from! the process of "SE"# integration and community buildingG
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established on @ :ecember! ;<@9 by &angladesh! &hutan! +aldives! #epal! 3a%istan! 2ndia and Sri 6an%a. 2n "pril 788=! at the "ssociationEs ;> th Summit! "fghanistan became its eighth member.
,b6ecti(es of 1AARC
(a $o improve the -uality of life and welfare of the people of the S""R1 member countries. (b $o enhance mutual assistance among member countries in the economic! social! cultural! scientific and technical fields. (c $o provide an opportunity to the people of the region to live with dignity and to exploit their potentialities. (d $o provide a conducive climate for creating and enhancing mutual trust! understanding and appreciation of one another0s problems.
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(e (f (g
$o promote and strengthen collective self-reliance among the countries of South "siaG $o strengthen cooperation among themselves in international forums on the matters of common interestG and $o co-operate with international and regional organisations with similar aims and purposes.
(h $o develop the region economically! socially and culturally. $he S""R1 countries are committed to a step-by-step trade liberalisation in such a manner that all countries in the region share the benefits of trade expansion e-uitably.
$he :eclaration on South "sian Regional 1ooperation was adopted by the (oreign +inisters in ;<@? in #ew :elhi. :uring the meeting! the +inisters also launched the 2ntegrated 3rogramme of "ction (23" in nine agreed areas! namely! "gricultureG Rural :evelopmentG $elecommunicationsG +eteorologyG 5ealth and 3opulation "ctivitiesG $ransportG 3ostal ServicesG Science and $echnologyG and Sports! "rts and 1ulture. $he South "sian "ssociation for Regional 1ooperation (S""R1 was established when its 1harter was formally adopted on @ :ecember ;<@9 by the 5eads of State or Government of &angladesh! &hutan! +aldives! #epal! 3a%istan! 2ndia and Sri 6an%a. 2n Duly! ;<<7! a decision was reached to draft an agreement for the South "sian 3referential $rading "greement (S"3$" . $he draft agreement was submitted to the S""R1 Standing 1ommittee in ;<<7 and signed by foreign ministers in :ha%a on ;; th "pril! ;<<?. 2t entered into force on = th :ecember! ;<<9. $he S"3$" aims to remove paratariff and non-tariff barriers to trade exchanges in the region! to deepen the tariff cuts and to expand the list of products to be included in intra S""R1 preferential trade. #egotiations still continue to finalise schedules of concessions and to expand them further. S"3$" is considered to be a step to create a South "sian (ree $rade "rea (S"($" ! which is still at the discussion stage. "fghanistan was added to the regional grouping at the behest of 2ndia on ;? th #ovember 7889! and became a member on ?rd "pril 788=. )ith the addition of "fghanistan! the total number of member states was raised to eight. 2n "pril 788C! the United States of "merica and South Forea made formal re-uests to be granted observer status. $he European Union has also indicated interest in being given observer status! and made a formal re-uest for the same to the S""R1 1ouncil of +inisters meeting in Duly 788C. ,n 7 nd
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"ugust 788C the foreign ministers of the S""R1 countries agreed in principle to grant observer status to the US! South Forea and the European Union. ,n > +arch 788=! 2ran re-uested observer status. 3overty alleviation is also one of the ma'or issues addressed within the framewor% of S""R1. 2n ;<<;! the Sixth S""R1 Summit held in 1olombo decided to establish an 2ndependent South "sian 1ommission on 3overty "lleviation (2S"13" .
(a
uture Membership$
$he 3eople0s Republic of 1hina has shown its interest in 'oining S""R1. )hile
3a%istan and &angladesh support 1hinaEs candidature! 2ndia is more reluctant about the prospect of 1hinese membership! while &hutan does not even have diplomatic relations with 1hina. 5owever! during the 7889 :ha%a summit! 2ndia agreed on granting observer status to the 3eople0s Republic of 1hina along with Dapan. :uring the ;>th summit! #epal along with 3a%istan and &angladesh! announced their support for the membership of 1hina. (b (c 2ndonesia intends to become an observer as well and is supported by Sri 6an%a. 2ran! a state with borders to two S""R1 members! has traditionally en'oyed strong cultural! economic and political relationships with "fghanistan! 3a%istan! 2ndia and &angladesh and has expressed its desire to become a member of the South "sian organi*ation. ,n ?rd +arch 788=! 2ran as%ed to 'oin the S""R1 as an observer. (d (e Russia intends to become an observer as well! and is supported by 2ndia. +yanmar has expressed an interest in 'oining as a full member. 2ndia is currently bac%ing +yanmar. +yanmar0s military regime officially applied for full S""R1 membership in +ay 788@. 5owever! the application is still being considered and the government is currently restricted to observer status.
!1
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(b
3romoting conditions of fair competition in the free trade area! and ensuring e-uitable benefits to all 1ontracting StatesG
(c
1reating effective mechanism for the implementation and application of this "greement! for its 'oint administration and for the resolution of disputesG and
(d
Establishing a framewor% for further regional cooperation to expand and enhance the mutual benefits of this "greement.
"ccording to the agreement! S"($" will be implemented through the following instruments4 (a (b (c (d (e (f $rade 6iberalisation 3rogramme. Rules of ,rigin. 2nstitutional "rrangements. 1onsultations and :ispute Settlement 3rocedures. Safeguard +easures. "ny other instrument that may be agreed upon.
"rticle = of the S"($" "greement provides for a phased tariff liberali*ation programme ($63 under which! in two years! #6:1S would bring down tariffs to 78A! while 6:1S will bring them down to ?8A. #on-6:1S will then bring down tariffs from 78A to 8-9A in 9 years (Sri 6an%a C years ! while 6:1S will do so in @ years. #6:1s will reduce their tariffs for 6.:.1. products to 8-9A in ? years. $his $63 would cover all tariff lines except those %ept in the sensitive list (negative list by the member states.
!%
Chapter 1;. Global 1"stem of Trade #references among +e(eloping Countries 4G1T#5
$he "greement on the Global System of $rade 3references among :eveloping 1ountries (GS$3 was established in ;<@@ as a framewor% for the exchange of trade preferences among developing countries in order to promote intra-developing country trade. $he idea received its first political expression at the ;<=C ministerial meetings in "rusha (;<=< and 1aracas (;<@; . 2n ;<@7! the +inisters of (oreign "ffairs of the Group of == in #ew Lor% defined the basic components of the "greement and established a framewor% for negotiations. 2n ;<@>! the G== began preparatory wor% in Geneva on various aspects of a framewor% agreement. 2n ;<99! the #ew :elhi ministerial meeting provided further impetus to the process negotiations in Geneva. $he ministerial meeting in &rasilia in ;<@C established the provisional framewor% for the "greement and launched the first round of negotiations on preferential trade concessions. 2n ;<@@! the text of the "greement was adopted and the first round of negotiations concluded in &elgrade. $o date! >> countries have ratified.acceded to the "greement4 "lgeria! "rgentina! &angladesh! &enin! &olivia! &ra*il! 1ameroon! 1hile! 1olombia! 1uba! :emocratic 3eopleEs Republic of Forea! Ecuador! Egypt! Ghana! Guinea! Guyana! )ndia! 2ndonesia! 2ran! 2ra-! 6ibya! +alaysia! +exico! +orocco! +o*ambi-ue! +yanmar! #icaragua! #igeria!
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3a%istan! 3eru! 3hilippines! Republic of Forea! Romania! Singapore! Sri 6an%a! Sudan! $hailand! $rinidad and $obago! $unisia! $an*ania! Jene*uela! Jiet #am and Kimbabwe. $he GS$3 received a further boost on 78 th ,ctober! 788C with the accession of +ercosur! the Southern 1ommon +ar%et! comprising of "rgentina! &ra*il! 3araguay and Uruguay. Romania has verbally informed GS$3 of its withdrawal in view of their accession to the European Union! scheduled for ;st Danuary 788=.
"s per the "rticle 7 of the "greement on Global System of $rade 3references among :eveloping 1ountries (GS$3 the aims of the GS$3 is promote and sustain mutual trade and the development of economic co-operation among developing countries! through exchange of concessions in accordance with this "greement. "s per the "rticle ? of the "greement on Global System of $rade 3references among :eveloping 1ountries (GS$3 the GS$3 shall be established in accordance with the following principles4 (a (b (c $he GS$3 shall be reserved for the exclusive participation of developing countries members of the Group of ==G $he benefits of the GS$3 shall accrue to the developing countries members of the Group of == who are participants in accordance with article ; (a G $he GS$3 shall be based and applied on the principle of mutuality of advantages in such a way as to benefit e-uitably all participants! considering their respective levels of economic and industrial development! the pattern of their external trade and their trade policies and systemsG (d (e $he GS$3 shall be negotiated step by step! improved and extended in successive stages! with periodic reviewsG $he GS$3 shall not replace! but supplement and reinforce! present and future subregional! regional and interregional economic groupings of developing countries of the
!*
Group of == and shall ta%e into account the concerns and commitments of such economic groupingsG (f $he special needs of the least developed countries shall be clearly recogni*ed and concrete preferential measures in favour of these countries should be agreed uponG the least developed countries will not be re-uired to ma%e concessions on a reciprocal basisG (g (h $he GS$3 shall include all products! manufactures! and commodities in their raw! semi-processed and processed formsG 2nter-governmental sub-regional! regional and inter-regional groupings for economic co-operation among developing countries members of the Group of == may participate! fully as such! if and when they consider it desirable! in any or all phases of the wor% on the GS$3. "s per the "rticle > of the "greement on Global System of $rade 3references among :eveloping 1ountries (GS$3 components4 (a (b (c (d (e (a "rrangements relating to tariffsG "rrangements relating to para-tariffsG "rrangements relating to non-tariff measuresG "rrangements relating to direct trade measures including medium and long-term contractsG "rrangements relating to sectoral agreements. Benefits of G1T# Agreement$ $he agreement on GS$3! which was signed by >@ members of G-== in ;<@@! was the first instrument available to developing countries for promoting trade and economic cooperation among themselves. (b (c GS$3 is a useful instrument for promoting South-South cooperation on a broad front. GS$3 3articipants could increase their participation in the global economy and identify complementarities among their economies so as to open the tremendous potential for trade cooperation envisaged when they adopted the "greement in ;<@@. (d GS$3Es importance lies in the fact that as developing countries become more comfortable with tariff reductions! much wider range of products and more substantial preferences can be offered under this instrument. the GS$3 may inter alia consist of the following
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(e
2t could also be used to draw in countries that have so far benefited little from trade preferences. Role of )ndia in G1T#$
2ndia has been an active member of GS$3 ever since its genesis. :uring the irst Round 2ndia exchanged concessions with ;> countries. $he number of tariff lines on which concessions were granted by 2ndia is ?; and in return 2ndia received tariff concessions on a wide range of products of its export interest from these ;> countries. 2n order to carry forward the exchange of concessions! the 1econd Round of GS$3 #egotiations was launched in ;<<;. :uring the Second round! 2ndia held bilateral negotiations for exchange of concessions with ;7 countries. $hese concessions have not been implemented so far. $he Third Round of the GS$3 was launched at a special ministerial session of U#1$": M2 meeting with the adoption of the Sao 3aulo :eclaration. 3articipants including 2ndia expressed strong support to revitali*e the GS$3 and to ensure the success of the third round of negotiations through broader and deeper exchange of tariff preferences among developing countries. 2ndia articulated its full support for the re'uvenation of GS$3 %eeping in mind that the broadening of trade and economic cooperation across the full breadth of developing countries would bring in the attendant benefits of increased investment flows! technology transfer and maximi*ation of economic strengths of each country besides boosting southsouth trade. Current 1cenario$
GS$3 "greements to date are not economically significant. $he reduction of tariff barriers in developing countries has happened through unilateral action (often under the pressure of 2+( and )orld &an% ! and through multi-lateral and regional agreements. GS$3 negotiations have suffered from the unwillingness of some members to ma%e concessions in the hope that they could gain benefits for free. $he effectiveness of GS$3 in future depends on the political will of the members! and its capacity to recruit more participants. $he GS$3 needs to be strengthened and extended! both in terms of the number of countries and in scope so as to include investment! production and mar%eting.
!3
28
(b .on/discrimination$ #on-discrimination is one of the most important principles of the )$,. $his principle re-uires that no member country shall discriminate between the members of )$, in the conduct of international trade. $his principle is %nown as the +ost (avoured #ations (+(# 1lause. (c Raising 1tandards of 0i(ing$ $he )$, "greement aims to raise the standards of living and the progressive development of the economies of all contracting parties. 2t also ensures that the attainment of these ob'ectives is particularly urgent for lessdeveloped contracting parties. (d Ensuring ,ptimum &se of >orld Resources$ $he )$, "greement endeavours to allow for the optimal use of the worldEs resources in accordance with the ob'ective of sustainable development and thereby expanding production of goods and services and international trade. (e En(ironmental Concern$ $he 3reamble to the )$, "greement includes direct references to the ob'ective of sustainable development and to the need to protect and preserve the environment. (f +e(elopment of 0ess +e(eloped Countries$ $he )$, "greement ensures that developing countries should secure a share in the growth in global trade commensurate with the needs of their economic development. (g ull Emplo"ment$ $he )$, "greement aims to ensure full employment of world resources! both natural as well as human! and a large and steadily growing volume of real income and effective demand in the member nations. (h Multilateral Trading 1"stem$ $he ultimate aim of the )$, "greement is to develop an integrated! more viable and durable multilateral trading system through mutual consultation and negotiations.
unctions of >T,$
$he main functions of the )$, as set out in "rticle 222 are4 (a Administering >T, Trade Agreements$ $he main function of the )$, is to facilitate the implementation! administration and operation of the +ultilateral $rade "greement and the 3lurilateral $rade "greements signed at the various Rounds of the G"$$.)$, negotiations.
!7
(b
Reduction of Trade Barriers$ $he fundamental ob'ective of the )$, is to remove all types of hurdles to the free flow of international trade. 2t secures implementation of the significant tariff cuts and also reduction of non-tariff measures agreed in the trade negotiations.
(c
1ettlement of )nternational Trade +isputes$ $he :ispute Settlement &ody provides a mechanism for the settlement of trade disputes which could not be solved through bilateral tal%s. 2t has now been mandatory to settle a dispute within ;@ months and the verdict of the :isputes Settlement 3anels is final and binding on all parties.
(d
Co/operation :ith ,ther )nternational ,rgani?ations$ )$, co-operates with other international institutions li%e the 2nternational +onetary (und (2+( and the 2nternational &an% for Reconstruction and :evelopment (2&R: and its affiliated agencies to achieve greater coherence in global economic policy ma%ing.
(e
orum for Trade .egotiations$ )$, provides a forum for negotiations among its members concerning their multilateral trade relations in matters dealt with under the agreements of the )$,. 2t also provides a framewor% for the implementation of the results of such negotiations.
(f
Trade #olic" Re(ie: Mechanism$ )$, acts as a watchdog of national trade policies of its member countries. $he General 1ouncil of the )$, convenes $rade 3olicy Review &ody in order to frame such rules! which are necessary in order to %eep a close watch over the trade policies of different member countries.
(g
Consultanc" 1er(ices$ 2n order to achieve its ob'ective of trade liberalisation! the )$, acts as a management consultant for its member countries. 2t also helps underdeveloped and developing economies to promote their external trade by providing them with technical assistance and training.
$he )$, establishes a framewor% for trade policiesG it does not define or specify outcomes. $hat is! it is concerned with setting the rules of the trade policy games. (ive principles are of particular importance in understanding both the pre-;<<> G"$$ and the )$,4
30
(a
.on/discrimination4
2t
has
two
ma'or
components4
the most
favoured
nation (+(# rule and the national treatment policy. &oth are embedded in the main )$, rules on goods! services and intellectual property! but their precise scope and nature differ across these areas. $he +(# rule re-uires that a )$, member must apply the same conditions on all trade with other )$, members! i.e. a )$, member has to grant the most favourable conditions under which it allows trade in a certain product type to all other )$, members. Grant someone a special favour and you have to do the same for all other )$, membersO. #ational treatment means that imported goods should be treated no less favourably than domestically produced goods (at least after the foreign goods have entered the mar%et and was introduced to tac%le non-tariff barriers to trade (e.g. technical standards! security standards et al. discriminating against imported goods .
(b
Reciprocit". 2t reflects both a desire to limit the scope of free-riding that may arise because of the +(# rule! and a desire to obtain better access to foreign mar%ets. " related point is that for a nation to negotiate! it is necessary that the gain from doing so be greater than the gain available from unilateral liberali*ationG reciprocal concessions intend to ensure that such gains will materialise.
(c
Binding and enforceable commitments. $he tariff commitments made by )$, members in a multilateral trade negotiation and on accession are enumerated in a schedule (list of concessions. $hese schedules establish Pceiling bindingsP4 a country can change its bindings! but only after negotiating with its trading partners! which could mean compensating them for loss of trade. 2f satisfaction is not obtained! the complaining country may invo%e the )$, dispute settlement procedures.
(d
Transparenc". $he )$, members are re-uired to publish their trade regulations! to maintain institutions allowing for the review of administrative decisions affecting trade! to respond to re-uests for information by other members! and to notify changes in trade policies to the )$,. $hese internal transparency re-uirements are supplemented and facilitated by periodic country-specific reports (trade policy reviews through the $rade 3olicy Review +echanism ($3R+ . $he )$, system tries also to improve predictability and stability! discouraging the use of -uotas and other measures used to set limits on -uantities of imports.
%1
(e
1afet" (al(es. 2n specific circumstances! Governments are able to restrict trade. $he )$,0s agreements permit members to ta%e measures to protect not only the environment but also public health! animal health and plant health. $here are three types of provision in this direction4 "rticles allowing for the use of trade measures to attain non-economic ob'ectivesG
"rticles aimed at ensuring Pfair competitionPG members must not use environmental protection measures as a means of disguising protectionist policies. 3rovisions permitting intervention in trade for economic reasons.
Exceptions to the +(# principle also allow for preferential treatment of developing countries! regional free trade areas and customs unions.
32
Countr" 1anada 1ape Jerde 1entral "frican Republic 1had 1hile 1olombia 1osta Rica 1roatia 1uba 1yprus 1*ech Republic 1Qte dE2voire :emocratic Republic of the 1ongo :enmar% :'ibouti :ominica :ominican Republic Ecuador Egypt El Salvador Estonia European Union (i'i (inland (rance Gabon Gambia Georgia Germany Ghana Greece Grenada Guatemala Guinea Guinea-&issau Guyana 5aiti 5onduras 5ong Fong! 1hina 5ungary 2celand 2ndia 2ndonesia 2reland 2srael
+ate of Accession ; Danuary ;<<9 7? Duly 788@ ?; +ay ;<<9 ;< ,ctober ;<<C ; Danuary ;<<9 ?8 "pril ;<<9 ; Danuary ;<<9 ?8 #ovember 7888 78 "pril ;<<9 ?8 Duly ;<<9 ; Danuary ;<<9 ; Danuary ;<<9 ; Danuary ;<<= ; Danuary ;<<9 ?; +ay ;<<9 ; Danuary ;<<9 < +arch ;<<9 7; Danuary ;<<C ?8 Dune ;<<9 = +ay ;<<9 ;? #ovember ;<<< ; Danuary ;<<9 ;> Danuary ;<<C ; Danuary ;<<9 ; Danuary ;<<9 ; Danuary ;<<9 7? ,ctober ;<<C ;> Dune 7888 ; Danuary ;<<9 ; Danuary ;<<9 ; Danuary ;<<9 77 (ebruary ;<<C 7; Duly ;<<9 79 ,ctober ;<<9 ?; +ay ;<<9 ; Danuary ;<<9 ?8 Danuary ;<<C ; Danuary ;<<9 ; Danuary ;<<9 ; Danuary ;<<9 ; Danuary ;<<9 ; Danuary ;<<9 ; Danuary ;<<9 ; Danuary ;<<9 7; "pril ;<<9
%%
Countr" 2taly Damaica Dapan Dordan Fenya Fuwait Fyrgy*stan 6atvia 6esotho 6iechtenstein 6ithuania 6uxembourg +acau! 1hina +adagascar +alawi +alaysia +aldives +ali +alta +auritania +auritius +exico +oldova +ongolia +ontenegro +orocco +o*ambi-ue +yanmar #amibia #epal #etherlands #ew Kealand #icaragua #iger #igeria #orway ,man 3a%istan 3anama 3apua #ew Guinea 3araguay 3eopleEs Republic of 1hina 3eru
+ate of Accession ; Danuary ;<<9 < +arch ;<<9 ; Danuary ;<<9 ;; "pril 7888 ; Danuary ;<<9 ; Danuary ;<<9 78 :ecember ;<<@ ;8 (ebruary ;<<< ?; +ay ;<<9 ; September ;<<9 ?; +ay 788; ; Danuary ;<<9 ; Danuary ;<<9 ;= #ovember ;<<9 ?; +ay ;<<9 ; Danuary ;<<9 ?; +ay ;<<9 ?; +ay ;<<9 ; Danuary ;<<9 ?; +ay ;<<9 ; Danuary ;<<9 ; Danuary ;<<9 7C Duly 788; 7< Danuary ;<<= 7< "pril 78;7 ; Danuary ;<<9 7C "ugust ;<<9 ; Danuary ;<<9 ; Danuary ;<<9 7? "pril 788> ; Danuary ;<<9 ; Danuary ;<<9 ? September ;<<9 ;? :ecember ;<<C ; Danuary ;<<9 ; Danuary ;<<9 < #ovember 7888 ; Danuary ;<<9 C September ;<<= < Dune ;<<C ; Danuary ;<<9 ;; :ecember 788; ; Danuary ;<<9
34
Countr" 3hilippines 3oland 3ortugal Ratar Republic of Forea Republic of +acedonia Republic of the 1ongo Romania Russia Rwanda Saint Fitts and #evis Saint 6ucia Saint Jincent and the Grenadines Samoa Saudi "rabia Senegal Separate 1ustoms $erritory of $aiwan! 3enghu! Finmen I +atsu Sierra 6eone Singapore Slova%ia Slovenia Solomon 2slands South "frica Spain Sri 6an%a Suriname Swa*iland Sweden Swit*erland $an*ania $hailand $ogo $onga $rinidad and $obago $unisia $ur%ey Uganda U%raine United "rab Emirates United Fingdom United States Uruguay Januatu
+ate of Accession ; Danuary ;<<9 ; Duly ;<<9 ; Danuary ;<<9 ;? Danuary ;<<C ; Danuary ;<<9 > "pril 788? 7= +arch ;<<= ; Danuary ;<<9 77 "ugust 78;7 77 +ay ;<<C 7; (ebruary ;<<C ; Danuary ;<<9 ; Danuary ;<<9 ;8 +ay 78;7 ;; :ecember 7889 ; Danuary ;<<9 ; Danuary 7887 7? Duly ;<<9 ; Danuary ;<<9 ; Danuary ;<<9 ?8 Duly ;<<9 7C Duly ;<<C ; Danuary ;<<9 ; Danuary ;<<9 ; Danuary ;<<9 ; Danuary ;<<9 ; Danuary ;<<9 ; Danuary ;<<9 ; Duly ;<<9 ; Danuary ;<<9 ; Danuary ;<<9 ?; +ay ;<<9 7= Duly 788= ; +arch ;<<9 7< +arch ;<<9 7C +arch ;<<9 ; Danuary ;<<9 ;C +ay 788@ ;8 "pril ;<<C ; Danuary ;<<9 ; Danuary ;<<9 ; Danuary ;<<9 7> "ugust 78;7
%*
+ate of Accession ; Danuary ;<<9 ;; Danuary 788= ; Danuary ;<<9 9 +arch ;<<9
36
C. :r :.+. +ithani! /Economics of Global $rade and (inance0! 788<! 5imalaya 3ublishing 5ouse. =. "run Fumar $rivedi and $arsem Singh &hogal! /2nternational $rade (inance N " 3ragmatic "pproach0. @. Dagdish #. &hagwati! /6ectures on 2nternational $rade0! 7nd edition.
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