WTO - Faculty Notes

Indian Economy for IAS by Pratik Gupta 2017
WTO & Doha

Before going into depth regarding what WTO is, when it was started, how it become WTO from
GATT, etc., let us first discuss some very basic things which will help us to understand why WTO exist
Page | 1 and its importance in this globalized world.
Tariff Barriers:
1. Tariff is a tax imposed by the government on imports or exports.
2. When Indian Govt. puts heavy import duty / custom duty on Foreign Products either that import
item becomes very costly so people will buy Indian/native or Desi products.
3. This protects domestic players (domestic companies/industrialists/ businessmen) from competition
from foreign players.
Non-Tariff Barriers:
When Domestic players are given subsidies/preference over the foreign players by Govt. of India. For
example,
When Govt. is buying some phones/ Xerox Machines, in the tender by mentioning that only
Domestic companies can fill the tender.
making polices in such a way that its hard for foreign player to start factory / introduce its product
in India
Intentionally setting the Quality standards so high that certain players cant sell their products
here.
- Here no tariff (=tax/money) is involved but still there is a barrier for foreign players. Thats
why its termed Non-Tariff barrier.
Before WTO.
Nations were putting heavy custom duties on foreign items to protect the domestic industries; this is
called Protectionism / Tariff Barriers'.
All these sounds good from patriotic point of view but when there is less competition - products might
be more expansive & customer won't have much choices. For Example, compare;
the price of Cell phones available in 1999 with current prices and also
the features provided in it (was there any MP3, radio, Camera, Color Screen etc features, if yes- how
expensive it was)
talk-time plans (in 1999 it was about 7 Rs./minute and incoming was charged, now its around 50
Paisa / minute + Free incoming)
Today we have all these fun, because of globalization + import of foreign products because Govt.
doesn't put high custom / import tax on it (no high tariff barriers).
So, basically the Primary objective of WTO is to remove the tariff barriers / custom duties to integrate
all the nations in this globalised world.
For this, WTO consults with all member-nations, and will make legally binding agreements.
WTO.
WTO was earlier called GATT, which came into being in 1948.
GATT was a mere agreement, while WTO is a well-established body and an organization.
India was founder member of WTO.
1|Page
Both of them have one common objective, viz. promotion of free trade be reducing barriers to free
trade. There are several agreements in WTO, but most important are 3.
- These agreements talks about what is compulsory & what is non-compulsory for each nation.
- And what will be the penalties if a nation doesn't follow these agreements.
- Every Agreement has an 'Annex'- in that you'll find the detailed provisions & items included in the
Page | 2 agreements.
- The Secretariat of WTO keeps an eye on every nation seeing whether agreements are followed
or not.
But there will be some bad-nations who won't abide by the rules & try to cheat such
agreements. So second objective of WTO is 'Dispute Resolution' that's like an international civil court.
Now lets see the 3 most imp agreements of WTO. See this chart
WTO was set up on 1st Jan 1995, as a result of Uruguay round of negotiation held in 1986,
culminating after eight years in the setting up of WTO.
WTO was set up with six major issues/agreements (Promotion of free trade in goods, GATS, TRIPS,
TRIMS, MFA and AoA) concluding among member nations which were known as Dunkel Draft as a
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consensus draft prepared by the GATTs DG Arthur Dunkel.
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What Agreements?
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Total 19 Agreements but 3 were
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most important and need to
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understand
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TRIPS- Trade
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GATT- General Related Intellectual

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Agreement on GATS- General Property Rights

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Trade and Tariff Agreement on

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Trade in Services
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For Example- Copyright,

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trademark, Geographical
For Example- For Example- Indicators, Industrial design,
Food and Phone lines, patents, trade secrets, lay-out
Electronic Items airlines, DTH design of integrated circuits.
System
Now lets see their annex 1 by 1 via charts.
2|Page
1 Annex: GATT
On Farm Products Non Farm Products

Page | 3
SPS: Sanitary and
TBT: Technical Barriers to
Phytosanitary Measures
Trade Agreement
Each nation can make its own If they are dangerous to

quality control health and environment:
Nation can ban its entry
But they have to be
Scientific For example USA banning
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Ranbaxys Drugs made in
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1 SPS is post Doha development.
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Now another important annex of GATT is, SCM = subsidies & counter veiling measures (the Red, Green
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& Amber list) see this chart-
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SCM: Agreement on Subsidies and Counter Veiling Measures

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3 Product Categories
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No action can be
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taken in this regard

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Exempt up to
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Banned certain limits.

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Green:
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Red Box Subsidies: Blue Box Subsidies:

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If China is giving subsidy Given for production Products which are

on its product Exported limitation program by Neither Blue nor
to India developed countries. Amber
Then Indian can ban such
Chinese items.
Apart from this, shipment inspection and anti-dumping are also included in GATT annex.
3|Page
2: Annex of GATS (services)
A) Movement of natural person Migrant workers can get temporary visas for providing services;
Doesnt deal with granting permanent Visas
Page | 4 B) Airlines- Repairs, Maintenance, and Reservation of Seats.
C) Telecom Sector- Government cant discriminate foreign players.
3: TRIPS TRIPS doesnt have any annex.
But TRIPS is very important agreement in todays world.
TRIPS =Trade related intellectual property rights
In short, under TRIPS agreement, every member-nation has to make laws and tough punishments for
anyone who breaks / copies other people's copyright / patent etc.
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Why TRIPS is important?
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Otherwise, there will be wide spread piracy & foreign investor wont invest in developing countries.
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There are certain items whose actual price can't be counted based on 'physical material used in it'
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(e.g. Books are not sold based on number of pages/ cost of paper but content & fame of author) so
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we can't apply GATT (which is for physical goods) and Book is not a 'service' either (so can't apply
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Research & Development (R&D).

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It takes years and billions of rupees to make a new drug. In the absence of TRIPS, drugs can be easily
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copied and sold in the market at a very cheaper price. (India has accordingly amended the Patent
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Act, 1970 in the year 2005 to switch from process to product in drugs, pharmacy, chemical and food
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products).
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So, if the patent / copyrights werent protected, then inventors will not invest in R&D & then world
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will be deprived of better products.

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the GI (Geographical indicator), like Darjeeling tea- only the tea made in Darjeeling can be sold as
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'Darjeeling tea', otherwise, Britishers would also sell their tea claiming it to be 'Darjeeling variety'
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and then our tea makers will face unfair competition.

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India's Problem with GI

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Pakistan also claim GI for their Basmati Rice.

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TRIPS dont talk about trans-border GIs.

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Time limit
It came into force on 1st January 1995 and according to its provision
Developed nations have to make such laws within 1 year.
Developing nations (like India) have to make such laws within 5 years.
Least Developing countries (like Zimbabwe/ Somalia) were given time limit up to 11 years (=2006) ,
but now the time is extended to 2016 for pharmaceutical patent laws.
Apart from above 3 agreements (GATT, GATS, and TRIPS) other 3 important agreements are
4|Page
Other Important Agreements

1- Information Technology Agreement (1996)- eliminate tariff to zero level in computer-related
products
2- Multilateral Agreement on Investment- to give MNCs right to establish any business in any
Page | 5 country; without being discriminated against by virtue of being foreign MNCs.
3- Agreement on Textile and Clothing- eliminate Multi Fiber Agreement; In MFA, UK was putting
quantitative restriction on Indian Cotton in British Market.
What is the Use of these agreements? / What are the trading principles in WTO?
Without Discrimination:
MFN is Most Favored Nation

In WTO, every nation is MFN
So, if India grants a special favor to one nation India will have to give that special favor to
all member-nations of WTO.
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India will have to treat locals & foreign players equally (e.g. you cant have a system like Local
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businessmans file will be cleared first or local man will be given preference in contract / tenders/
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3G frequency allocation)
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Exception to this principle
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Group of nations can form FTA = Free trade agreements.
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Country can give special favors to 3rd world / poor nations.
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A nation can impose high import duty/ prevent entry of goods from a nation thats doing unfair
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trade practices (like dumping* / Products dangerous to health**)

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But there are strict conditions in WTO and a nation has to follow certain strict norms imposed by
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WTO.
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*Dumping =China intentionally sends extremely cheap toys in India, so Indian toy makers collapse
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and toy market in India is captured by China.

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** Products dangerous to health like Chinas milk powder which had melamine.
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Freer Trade (bringing down barriers in international trade);

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WTO agreements try to abolish following things-

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1. Custom duties
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2. Quotas
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3. Subsidies
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4. Non-tariff barriers* (explained later.)

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5. Red tape
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6. Artificially propped up exchange rates, like China intentionally keeps the value of Yuan
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low, so Americans will find it cheap to buy from China compared to other nations.
Predictability
When there are legally binding agreements between member nations of WTO- it means, even after
change in Govt. (BJP / Congress / whatever) the Indian policy of international trades wont alter very
much. This gives confidence to foreign investors because of;
Promise of stability (Ceilings on customs tariffs).
Policy environment is predictable (transparency in trade rules).
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Equal treatment to Local players & foreign players (open access to markets).
Binding commitments (WTO keeps an eye on each nation so Govt. cant cheat. And if you cheat-
youll have to pay fine).
And foreign investment helps the domestic economy as well.
Page | 6 Fair Competition

WTO agreements prevent unfair dumping, subsidies, government procurement.
Economic Reforms
To implement WTO Agreements, the 3rd world nations have to change their policies and brings in
reforms (remember the pre-LPG Era - quota, license and inspector raj).
What was before WTO?

Before WTO, there was GATT (General Agreement on Tariff and Trade).
GATT was criticized for being 'Rich men's club'.
Everything in GATT used to work in a manner that'd suit the rich nations.
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Why WTO is better than GATT?
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Yes indeed, because of following reasons.
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WTO has well embodied dispute settlement mechanism in it while GATT didnt had such (disputes
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have to be solved within 18 months)
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In GATT, the bad-nation was free to determine its own penalty.
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But in WTO, bad nation has to pay high penalties for not following the rules.
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GATT talked only about goods (physical products), while WTO talks about services (phone lines,
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BPO) & Intellectual property rights, along with goods.

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The working of WTO is more transparent.

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In WTO, every nation has one vote only. Unlike IMF where rich nations have more voting powers.
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India and WTO

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India has been a WTO member since 1 January 1995; in fact India was a founder member of WTO.
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First lets see what positive things happened then we talk of Doha Rounds and finally about whats
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India's concerns in Doha round.

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Principle of Trading System at WTO.

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1- Non-Discrimination- MFN and National Treatment Policy.

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2- Reciprocity- It reflects both a desire to limit the scope of free-riding that may arise because of
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the MFN rule, and a desire to obtain better access to foreign markets.
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3- Binding and enforceable commitment.

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4- Transparency- Publish trade regulations, to maintain institutions allowing for the review of
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administrative decisions affecting trade, etc.

5- Safety valves- In specific circumstances, governments are able to restrict trade. There are three
types of provision in this direction:
articles allowing for the use of trade measures to attain non-economic objectives;
articles aimed at ensuring "fair competition"; and
provisions permitting intervention in trade for economic reasons.
Exceptions to the MFN principle also allow for preferential treatment of developing countries,
regional free trade areas and customs unions.
6|Page
What did India Gain from WTO?
India got a boom in exports because WTO gradually lowered various barriers internationally.
Indian exports were only $33.22 billion in 1998-99, which was more than $298.2 billion in 2011.
Page | 7 India won multilateral trade disputes against powerful economies like USA
Because of TRIPS, India had to adopt international standards in Intellectual property rights, which
leads to Increase in flow of foreign investment & technological support and also foreigners
established research labs/ manufacturing units in India & started selling their products here.
Textiles boom (because MFA = Multilateral Fiber Agreement was scrapped under WTO's ATC:
Agreement on Textile Clothing) otherwise previously UK and other nation had put a quantitative
limits on Indian Cotton's Entry in their market.
DOHA
The negotiations have been highly contentious. As of March 2012, agreement has not been reached,
despite the intense negotiations at several ministerial conferences and at other sessions. Disagreements
still continue over several key areas including agriculture subsidies
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What is Doha?
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Doha is a capital city of a small Arab nation Qatar.
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4th Ministerial conference (after Singapore, Geneva and Seattles conference) of WTO was held in
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Doha city in Nov.2001 and the member nations started talking about some new agreements &
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issues and still the talks going on various issues. This entire package is called 'Doha round of talks.'
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aka "DDA = Doha Development agenda."

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The Doha round was to be an ambitious effort to make globalization more inclusive and help the
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world's poor, particularly by slashing barriers and subsidies in farming.

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The initial agenda comprised both further trade liberalization and new rule-making, underpinned
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by commitments to strengthen substantial assistance to developing countries.

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Fifth Ministerial Conference was held in Cancun, Mexico in September 2003 and sixth one in Hong
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Kong.
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The negotiations have been highly contentious. As of Dec, 2016, agreement has not been reached,
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despite the intense negotiations at several ministerial conferences and at other sessions.
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Disagreements still continue over several key areas including agriculture subsidies.
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What were they talking in Doha?

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Developing nations were complaining that they're facing difficulties in implementing WTO agreements.
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Concessions given to Developing Nations.

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SPS annex added under GATT

1. SPS: Sanitary+ Phytosanitary Measures Agreement (on farm products)
2. Each nation can make its own Quality control rules but they've to be scientific.
Earlier TRIPS (intellectual property rights) was strict.
1. Now it was relaxed- and agreement changed saying that Laws should be made which supports
existing medicines and public health interest at large.
Items for new negotiations in Doha
7|Page
Multilateral environmental agreements

Trade barriers on environmental goods & services
Fisheries subsidies =they harm environment, by encouraging too many fishermen to chase
insufficient fish
Page | 8
The Doha conference failed because it ended without any consensus because
Members were divided on competition policy & transparency in Govt. procurements.
First world blames India to be the main villain for failure of Doha talks.
Indias concern at Doha Development Agenda.
1. Special Safeguard Mechanism

It is a measure designed to protect poor farmers by allowing nations to impose a special tariff on
certain agricultural goods in the event of an import surge or price fall. For example, if USA exports so
much cheap corn to India, which leads to drastic decrease in the price of corn, then India can put
tariff barrier on it to stabilize the prices in the domestic market, otherwise, no one would by Indian
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Corn, and our farmers will come under huge debt.
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United States arguing that the threshold should be fixed at a lower level (e.g. if it was decided that if
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price fall to 5 Rs. / kg corn, then India could do this. but US wants that India shouldn't be allowed to
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act, unless price of corn falls very low, something like Rs2 / kg). India never agreed on this.
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Apart from this, India has insisted on a large number of special products that would not be exposed
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to wider market opening. l.g
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India is insisting on this because around 55-60% of Indias population depends on agriculture sector. So
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if cheap foreign items are allowed, then itll create huge problem for them. Its easy for each American
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farmer to produce tons of food grain and sell its produce cheaply, because their farmers have huge
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farms, latest machinery, fertilizers & great seeds, continuous water supply and more importantly
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subsidies provided by their Govt. But same is not true in case of India.
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More trouble for India.

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NAMA= Non-Agricultural Market Access, i.e. opening up of markets by member nations for non-
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agricultural products .i.e. manufactured and industrial products by reducing tariffs. Developed countries
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advocated the use of Swiss Formula for reducing tariff on industrial products according to which there
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will be greater obligations on developing nations to reduce tariffs on industrial products by much higher
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percentage than for developed countries- a formula is being resisted by developing countries.
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European Union has threatened to approach the World Trade Organization (WTO) if India does not
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remove the inter-state tariff disparities. We want India to get rid of its taxes on wines and spirits in
different states to allow easier access to European wines, failing which we will approach, the WTO
again,".
Criticism of WTO.
Mostly comes from environment activities.
8|Page
WTO promotes industries, MNC (Multi-national corporations) which sometimes are involved in
illegal things. E.g. they pay huge bribes to Burmas military regime for operating the gas lines, nickel
mines etc. and employ forced laborers in it.
The infrastructure boom because of WTO (more foreign companies making factories in India) leads
to habitat / bio-diversity loss & pollution etc.
Page | 9 Its hard to put barriers on imported items, thus the domestic industries face tough competition
which sometimes ruins them (e.g. its not possible for Indian Toy maker to compete with Chinese
toys in retail price) and yet not much the Indian Govt. can do. If they put some ban on it, then China
will go to WTO, and WTO will impose heavy fines on India.
3rd world has to open its market for first world product without much benefit in the reverse
process. (=3rd worlds products lag in race in 1st worlds market.) e.g. as you know in colonial era,
when India was under British Rule, if we exported our Indian Textiles to Britain, theyd put huge
import tax on it. Thus our cloths would become very expensive in their market. So Britishers would
only buy locally made cloths from Manchester. This sort of protectionism in old
times (almost upto 1995) = their companies made lot of profit during that era & had lot profit
invested in Research and technology, so currently their products will be technically and in quality far
superior than ours. So even if there is no barrier today, British people will buy their product and not
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ours. This argument runs on the same line like of climate change. America allowed its factories to
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pollute the atmosphere and thus became a developed nation but now, it wants the developing
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nations to stop polluting the world & cut their emissions.
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BALI ROUND OF NEGOTIATION 2013
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The Bali Package is a trade agreement resulting from the Ninth Ministerial Conference of the World
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Trade Organization in Bali, Indonesia on 37 December 2013. It is aimed at lowering global trade
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barriers and is the first agreement reached through the WTO that is approved by all its members. The
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package forms part of the Doha Development Round, which started in 2001
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Negotiation
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Before the agreement, the negotiations repeatedly came close to collapsing. India's demand that it
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should be allowed to extend its domestic agricultural subsidies indefinitely was met by opposition from
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the U.S., while Cuba, Bolivia, Nicaragua, and Venezuela objected to the removal of a text relating to the
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U.S. embargo against Cuba. Eventually, India and the U.S. reached a compromise where a permanent
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solution to the Indian subsidies will be decided in separate future negotiations within four years, while
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Cuba reached a compromise that saw it refrain from vetoing the agreement. The U.S. and India came to
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a permanent agreement regarding India's food subsidies in November 2014.

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The negotiations were originally scheduled for 36 December 2013. However, they had to extend until 7
December for an agreement to be reached.
This was the first global agreement by the WTO. Director-General Roberto Azevdo said: "For the first
time in our history, the WTO has truly delivered. We're back in business Bali is just the beginning." He
also expressed fears of bilateral agreements if the WTO talks failed. The Trade Minister of the host
country, Indonesia, Gita Wirjawan, said the agreement was "historic". The United States Chamber of
9|Page
Commerce issued a statement that read: "With this landmark accord on trade facilitation and other
issues, the WTO has re-established its credibility as an indispensable forum for trade negotiations."
Bali Package
Page | 10 For the Least Developed Countries (LDCs), the Ninth Ministerial Conference of the WTO (MC9) held in
Bali, Indonesia on 3-7 December, 2013 was of high importance on several counts. Firstly, MC9 was able
to infuse a new life into the stalled Doha Round of negotiations of the WTO and in a way that helped
salvage the WTO. For relatively weaker countries a multilateral trading system is a more preferred
option since it provides them with a rule-based policy platform to negotiate flexibilities, waivers and
special and differential treatment. This was rather difficult to accomplish, on a non-reciprocal basis,
through bilateral or plurilateral trade negotiations. Secondly, the Bali Package, with its three pillars of
trade facilitation, agriculture and cotton, development and LDC issues, concerned a number of areas
where LDCs had both offensive and defensive interests. Thirdly, in line with the work programme agreed
in Bali, subsequent negotiations in Geneva will require a proactive engagement on the part of LDCs. The
Bali decision, thus, obligates the LDCs to do the necessary homework and pursue and advance their
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interests through future negotiations.
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From the above perspective, the present article attempts to examine the Bali Package to capture the
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implications of MC9 decisions for the LDCs and tries to anticipate some of the needed follow-up
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initiatives in this regard.
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Trade Facilitation
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Trade facilitation emerged as a key deal maker/breaker in Bali. Major objectives of the TF agreement
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were to accelerate customs procedure, reduce costs, bring clarity, efficiency and transparency in
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customs dealing, reduce bureaucracy and corruption and promote use of modern tools and technology
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at customs clearance points. The deal was estimated to generate about one trillion US dollars worth of
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gains globally. MC9 decision stipulated that, LDCs will be required to undertake commitments to the
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extent these were commensurate with their capacities. Both developed and developing country
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members were asked to provide capacity-building support to the LDCs.

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In view of the MC9 decision, LDCs should remain actively engaged in the work of the Preparatory
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Committee envisaged under the TF agreement. LDCs should put emphasis on the followings: (a)
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identification of needs and gaps in areas of infrastructure development, regulatory reforms areas and
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technical support; (b) estimation of costs involved to undertake the needed TF measures; (c)
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identification of sources of funds including the support promised under the ambit of the WTO; (d)
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monitoring of the implementation of the action plans; (e) coordination of the work of relevant agencies;
(f) being engaged with future WTO negotiations to safeguard LDC interests in the context of TF.
The Trade Facilitation Agreement (TFA) entered into force on 22 February 2017 when Rwanda, Oman,
Chad and Jordan submitted their instruments of acceptance, achieving the requirement that two-thirds
of the 164 WTO members formally accept the Agreement.
10 | P a g e
The following WTO members have formally accepted the TFA: Hong Kong China, Singapore, the United
States, Mauritius, Malaysia, Japan, Australia, Botswana, Trinidad and Tobago, the Republic of Korea,
Nicaragua, Niger, Belize, Switzerland, Chinese Taipei, China, Liechtenstein, Lao PDR, New Zealand, Togo,
Thailand, the European Union (on behalf of its 28 member states), the former Yugoslav Republic of
Macedonia, Pakistan, Panama, Guyana, Cte dIvoire, Grenada, Saint Lucia, Kenya, Myanmar, Norway,
Page | 11
Viet Nam, Brunei Darussalam, Ukraine, Zambia, Lesotho, Georgia, Seychelles, Jamaica, Mali, Cambodia,
Paraguay, Turkey, Brazil, Macao China, the United Arab Emirates, Samoa, India, the Russian Federation,
Montenegro, Albania, Kazakhstan, Sri Lanka, St. Kitts and Nevis, Madagascar, the Republic of Moldova,
El Salvador, Honduras, Mexico, Peru, Saudi Arabia, Afghanistan, Senegal, Uruguay, Bahrain, Bangladesh,
the Philippines, Iceland, Chile, Swaziland, Dominica, Mongolia, Gabon, the Kyrgyz Republic, Canada,
Ghana, Mozambique, Saint Vincent and the Grenadines, Nigeria, Nepal, Rwanda, Oman, Chad and
Jordan.
Agriculture and cotton
Major focus of the negotiations here concerned the issue of public stockholding for food security and
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elimination of cotton subsidy. The challenge was to identify ways to allow developing countries some
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flexibility from earlier commitments. In the end, MC9 decided that, under certain conditions, developing
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countries would not be challenged legally even when level of trade-distorting domestic support
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exceeded the permissible limit. However, this solution was to be an interim one until a permanent
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solution was reached and members committed themselves to set up a work programme to find a
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permanent negotiated outcome before MC11 in 2015.
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The MC9 decision in this regard could have significant implications for food prices and food availability in
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the global market. It will, thus, be important to examine how the decision could affect the interests of
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net-food importing LDCs, as well as food-surplus ones. On a similar vein, cotton importing LDCs will also
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need to examine the impact of MC9 decision as regards elimination of domestic and export subsidies on
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cotton. LDCs will need to identify appropriate measures if their interests are adversely affected.
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Four issues were discussed in Bali as part of the LDC package: DFQF market access for the LDCs,
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preferential rules of origin, LDCs waiver in the services sector and monitoring mechanism on Special and
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Differential Treatment.
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DFQF market access for the LDCs

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Commercially meaningful market access through duty-free, quota-free (DFQF) treatment for all goods
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originating from all LDCs was a key demand of the LDCs. The DF-QF decision of the Hong Kong
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Ministerial (MC6 in 2005) in this regard was certainly a major progress. However, the decision allowed
developed countries and other members having difficulty in providing duty-free access for all products
to start with a 97 percent list. LDCs were interested to know upfront about tariff lines included in the 97
percent list and were keen to have a concrete time line for inclusion of the three per cent exclusion list.
However, some of the LDCs also voiced concern that their exports could be adversely affected if the
Hong Kong decision was implemented.
11 | P a g e
In the event, MC9 asked members to improve their existing DFQF coverage so as to provide increasingly
greater market access to the LDCs. Members were also asked to notify their respective DFQF schemes
for the LDCs. Periodic reviews were to be undertaken to examine how the DFQF decision was being
implemented. MC9 also asked for the preferential rules of origin to be simple and transparent. However,
no time-bound commitment came out of Bali as regards granting for DFQF treatment to all products
Page | 12
originating from all LDCs. LDCs will need to continue their fight in this regard (DFQF treatment) in the
course of subsequent negotiations in Geneva.
LDCs waiver in the services sector
The WTO ministerial conference in 2011 adopted a services waiver for the LDCs which made way for
preferential treatment of the services export from the LDCs. LDCs had earlier proposed that a Signalling
Conference be held in July 2014 for members to indicate sectors and modes of supply with respect to
which they would seek preferential treatment. LDCs interests in this context were in several areas: (a)
expeditious and effective operationalisation of the LDC services waiver to allow meaningful preferential
access to LDC services and service suppliers; (b) increased technical and financial assistance to
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strengthen domestic services capacity of LDCs to take advantage of the preferences; (c) convening of a
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High Level Meeting as early as possible in 2014 to address the attendant issues; (d) elimination of all
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economic needs test for services and suppliers from LDCs; (e) information on steps members were
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taking in view of the services waiver decision.
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In this context MC9 decision noted that no WTO member had yet made use of the waiver since its
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adoption in 2011. Ministers instructed the Council for Trade in Services (CTS) to initiate a process to
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promote expeditious and effective operationalization of the LDC services waiver, with provisions for
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periodic review. CTS was asked to convene a high-level meeting six months after the submission of a
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collective request from the LDCs which would identify sectors and modes of supply of particular export
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interest to LDCs. Members were also asked to provide technical assistance and capacity building support
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to the LDCs in view of this. LDCs will need to prepare the aforesaid collective request' which will require
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significant work. Since LDCs have special interest in Mode-4 (movement of natural persons) and Mode-3
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(commercial presence), detailed request lists will have to be designed to articulate their concrete
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interests in this regard keeping in view the possible offer lists of members.
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Monitoring mechanism on Special and Differential Treatment

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Special and Differential Treatment (S&D) provisions in support of the developing countries and LDCs
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have faced criticism in the past for being weak in terms of implementation and enforcement. In view of
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this, a Monitoring Mechanism for review and implementation of the S&D provisions was perceived to be
of high interest to the LDCs. LDCs felt that the mechanism should have the ability to make
recommendations to the appropriate technical body to make particular S&D provisions more effective.
MC9 adopted the decision to establish such a Monitoring Mechanism on S&D Treatment which was to
serve as a focal point to analyse and review the implementation of the S&D provisions. In tune with
what LDCs had asked for, the Mechanism was empowered to make recommendations to the relevant
WTO body for (a) consideration of actions to improve implementation of the particular S&D provision or
12 | P a g e
(b) initiate negotiations aiming at the above. The decision, however, does not mention any time-bound
commitment. LDCs should try to make best use of this new window (of Monitoring Mechanism) to
ensure that appropriate actions are taken towards operationalisation and enforcement of S&D
measures.
Page | 13 Conclusion
The post-Bali Work Programme adopted at MC9 will require the LDCs to focus on four areas: Firstly, they
should do the needed homework - e.g. prepare the collective request list in view of the high Level
meeting on services waiver; Secondly, they should closely examine the implications of various MC9
decisions - e.g. impact of the decision as regards food security and that of cotton. Thirdly, they should
identify their technical and financial needs in view of the decision on trade facilitation and bring this to
the attention of the relevant WTO body. Fourthly, LDCs should be proactively engaged in future
negotiations in Geneva to safeguard their interests in the context of the Doha Development Round.
MINISTERIAL CONFERENCES OF WTO
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# Date Host City
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1st 913 December 1996 Singapore
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2nd 1820 May 1998 Geneva, Switzerland
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3rd 30 November 3 December 1999 Seattle, United States an
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4th 914 November 2001 Doha, Qatar

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5th 1014 September 2003 Cancn, Mexico

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6th 1318 December 2005 Hong Kong

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7th 30 November 2 December 2009 Geneva, Switzerland

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8th 1517 December 2011 Geneva, Switzerland

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9th 36 December 2013 Bali, Indonesia

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10th 1518 December 2015 Nairobi, Kenya

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11th 1114 December 2017 Buenos Aires, Argentina

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13 | P a g e
IMF AND WORLD BANK
If you have difficulty distinguishing the World Bank from the International Monetary Fund, you are not
alone. Most people have only the vaguest idea of what these institutions do, and very few people
indeed could, if pressed on the point, say why and how they differ. Even John Maynard Keynes, a
Page | 14 founding father of the two institutions and considered by many the most brilliant economist of the
twentieth century, admitted at the inaugural meeting of the International Monetary Fund that he was
confused by the names: he thought the Fund should be called a bank, and the Bank should be called a
fund. Confusion has reigned ever since.
Known collectively as the Bretton Woods Institutions after the remote village in New Hampshire, U.S.A.,
where they were founded by the delegates of 44 nations in July 1944, the Bank and the IMF are twin
intergovernmental pillars supporting the structure of the world's economic and financial order. That
there are two pillars rather than one is no accident. The international community was consciously trying
to establish a division of labor in setting up the two agencies. Those who deal professionally with the
IMF and Bank find them categorically distinct. To the rest of the world, the niceties of the division of
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labor are even more mysterious than are the activities of the two institutions.
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Similarities between them do little to resolve the confusion. Superficially the Bank and IMF exhibit many
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common characteristics. Both are in a sense owned and directed by the governments of member
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nations. The People's Republic of China, by far the most populous state on earth, is a member, as is the
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world's largest industrial power (the United States). In fact, virtually every country on earth is a member
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of both institutions. Both institutions concern themselves with economic issues and concentrate their
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efforts on broadening and strengthening the economies of their member nations. Staff members of
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both the Bank and IMF often appear at international conferences, speaking the same recondite
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language of the economics and development professions, or are reported in the media to be negotiating
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involved and somewhat mystifying programs of economic adjustment with ministers of finance or other
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government officials. The two institutions hold joint annual meetings, which the news media cover
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extensively. Both have headquarters in Washington, D.C., where popular confusion over what they do
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and how they differ is about as pronounced as everywhere else. For many years both occupied the same
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building and even now, though located on opposite sides of a street very near the White House, they
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share a common library and other facilities, regularly exchange economic data, sometimes present joint
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seminars, daily hold informal meetings, and occasionally send out joint missions to member countries.
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Despite these and other similarities, however, the Bank and the IMF remain distinct. The fundamental
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difference is this: the Bank is primarily a development institution; the IMF is a cooperative institution
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that seeks to maintain an orderly system of payments and receipts between nations. Each has a
different purpose, a distinct structure, receives its funding from different sources, assists different
categories of members, and strives to achieve distinct goals through methods peculiar to itself.
Purposes
At Bretton Woods the international community assigned to the World Bank the aims implied in its
formal name, the International Bank for Reconstruction and Development (IBRD), giving it primary
14 | P a g e
responsibility for financing economic development. The Bank's first loans were extended during the late
1940s to finance the reconstruction of the war-ravaged economies of Western Europe. When these
nations recovered some measure of economic self-sufficiency, the Bank turned its attention to assisting
the world's poorer nations, known as developing countries, to which it has since the 1940s loaned more
than $330 billion. The World Bank has one central purpose: to promote economic and social progress in
Page | 15
developing countries by helping to raise productivity so that their people may live a better and fuller life.
The international community assigned to the IMF a different purpose. In establishing the IMF, the world
community was reacting to the unresolved financial problems instrumental in initiating and protracting
the Great Depression of the 1930s: sudden, unpredictable variations in the exchange values of national
currencies and a widespread disinclination among governments to allow their national currency to be
exchanged for foreign currency. Set up as a voluntary and cooperative institution, the IMF attracts to its
membership nations that are prepared, in a spirit of enlightened self-interest, to relinquish some
measure of national sovereignty by abjuring practices injurious to the economic well-being of their
fellow member nations. The rules of the institution, contained in the IMF's Articles of Agreement signed
by all members, constitute a code of conduct. The code is simple: it requires members to allow their
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currency to be exchanged for foreign currencies freely and without restriction, to keep the IMF informed
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of changes they contemplate in financial and monetary policies that will affect fellow members'
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economies, and, to the extent possible, to modify these policies on the advice of the IMF to
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accommodate the needs of the entire membership. To help nations abide by the code of conduct, the
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IMF administers a pool of money from which members can borrow when they are in trouble. The IMF is
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not, however, primarily a lending institution as is the Bank. It is first and foremost an overseer of its
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members' monetary and exchange rate policies and a guardian of the code of conduct. Philosophically
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committed to the orderly and stable growth of the world economy, the IMF is an enemy of surprise. It
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receives frequent reports on members' economic policies and prospects, which it debates, comments
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on, and communicates to the entire membership so that other members may respond in full knowledge
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of the facts and a clear understanding of how their own domestic policies may affect other countries.
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The IMF is convinced that a fundamental condition for international prosperity is an orderly monetary
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system that will encourage trade, create jobs, expand economic activity, and raise living standards
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throughout the world. By its constitution the IMF is required to oversee and maintain this system, no
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more and no less.

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Size and Structure

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The IMF is small (about 2,300 staff members) and, unlike the World Bank, has no affiliates or
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subsidiaries. Most of its staff members work at headquarters in Washington, D.C., although three small
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offices are maintained in Paris, Geneva, and at the United Nations in New York. Its professional staff
members are for the most part economists and financial experts.
The structure of the Bank is somewhat more complex. The World Bank itself comprises two major
organizations: the International Bank for Reconstruction and Development and the International
Development Association (IDA). Moreover, associated with, but legally and financially separate from the
World Bank are the International Finance Corporation, which mobilizes funding for private enterprises in
15 | P a g e
developing countries, the International Center for Settlement of Investment Disputes, and the
Multilateral Guarantee Agency. With over 7,000 staff members, the World Bank Group is about three
times as large as the IMF, and maintains about 40 offices throughout the world, although 95 percent of
its staff work at its Washington, D.C., headquarters. The Bank employs a staff with an astonishing range
of expertise: economists, engineers, urban planners, agronomists, statisticians, lawyers, portfolio
Page | 16
managers, loan officers, project appraisers, as well as experts in telecommunications, water supply and
sewerage, transportation, education, energy, rural development, population and health care, and other
disciplines.
Source of Funding
The World Bank is an investment bank, intermediating between investors and recipients, borrowing
from the one and lending to the other. Its owners are the governments of its 180 member nations with
equity shares in the Bank, which were valued at about $176 billion in June 1995. The IBRD obtains most
of the funds it lends to finance development by market borrowing through the issue of bonds (which
carry an AAA rating because repayment is guaranteed by member governments) to individuals and
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private institutions in more than 100 countries. Its concessional loan associate, IDA, is largely financed
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by grants from donor nations. The Bank is a major borrower in the world's capital markets and the
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largest nonresident borrower in virtually all countries where its issues are sold. It also borrows money by
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selling bonds and notes directly to governments, their agencies, and central banks. The proceeds of
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these bond sales are lent in turn to developing countries at affordable rates of interest to help finance
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projects and policy reform programs that give promise of success.
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Despite Lord Keynes's profession of confusion, the IMF is not a bank and does not intermediate between
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investors and recipients. Nevertheless, it has at its disposal significant resources, presently valued at
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over $215 billion. These resources come from quota subscriptions, or membership fees, paid in by the
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IMF's 182 member countries. Each member contributes to this pool of resources a certain amount of
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money proportionate to its economic size and strength (richer countries pay more, poorer less). While
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the Bank borrows and lends, the IMF is more like a credit union whose members have access to a
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common pool of resources (the sum total of their individual contributions) to assist them in times of
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need. Although under special and highly restrictive circumstances the IMF borrows from official entities
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(but not from private markets), it relies principally on its quota subscriptions to finance its operations.
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The adequacy of these resources is reviewed every five years.

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Recipients of Funding
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Neither wealthy countries nor private individuals borrow from the World Bank, which lends only to
creditworthy governments of developing nations. The poorer the country, the more favorable the
conditions under which it can borrow from the Bank. Developing countries whose per capita gross
national product (GNP) exceeds $1,305 may borrow from the IBRD. (Per capita GNP, a less formidable
term than it sounds, is a measure of wealth, obtained by dividing the value of goods and services
produced in a country during one year by the number of people in that country.) These loans carry an
interest rate slightly above the market rate at which the Bank itself borrows and must generally be
16 | P a g e
repaid within 12-15 years. The IDA, on the other hand, lends only to governments of very poor
developing nations whose per capita GNP is below $1,305, and in practice IDA loans go to countries with
annual per capita incomes below $865. IDA loans are interest free and have a maturity of 35 or 40 years.
In contrast, all member nations, both wealthy and poor, have the right to financial assistance from the
Page | 17 IMF. Maintaining an orderly and stable international monetary system requires all participants in that
system to fulfill their financial obligations to other participants. Membership in the IMF gives to each
country that experiences a shortage of foreign exchange--preventing it from fulfilling these obligations--
temporary access to the IMF's pool of currencies to resolve this difficulty, usually referred to as a
balance of payments problem. These problems are no respecter of economic size or level of per capita
GNP, with the result that over the years almost all members of the IMF, from the smallest developing
country to the largest industrial country, have at one time or other had recourse to the IMF and
received from it financial assistance to tide them over difficult periods. Money received from the IMF
must normally be repaid within three to five years, and in no case later than ten years. Interest rates are
slightly below market rates, but are not so concessional as those assigned to the World Bank's IDA loans.
Through the use of IMF resources, countries have been able to buy time to rectify economic policies and
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to restore growth without having to resort to actions damaging to other members' economies.
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World Bank Operations
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The World Bank exists to encourage poor countries to develop by providing them with technical
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assistance and funding for projects and policies that will realize the countries' economic potential. The
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Bank views development as a long-term, integrated endeavor.

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During the first two decades of its existence, two thirds of the assistance provided by the Bank went to
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electric power and transportation projects. Although these so-called infrastructure projects remain
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important, the Bank has diversified its activities in recent years as it has gained experience with and
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acquired new insights into the development process.

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The Bank gives particular attention to projects that can directly benefit the poorest people in developing
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countries. The direct involvement of the poorest in economic activity is being promoted through lending
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for agriculture and rural development, small-scale enterprises, and urban development. The Bank is
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helping the poor to be more productive and to gain access to such necessities as safe water and waste-
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disposal facilities, health care, family-planning assistance, nutrition, education, and housing. Within
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infrastructure projects there have also been changes. In transportation projects, greater attention is
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given to constructing farm-to-market roads. Rather than concentrating exclusively on cities, power
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projects increasingly provide lighting and power for villages and small farms. Industrial projects place
greater emphasis on creating jobs in small enterprises. Labor-intensive construction is used where
practical. In addition to electric power, the Bank is supporting development of oil, gas, coal, fuelwood,
and biomass as alternative sources of energy.
The Bank provides most of its financial and technical assistance to developing countries by supporting
specific projects. Although IBRD loans and IDA credits are made on different financial terms, the two
institutions use the same standards in assessing the soundness of projects. The decision whether a
17 | P a g e
project will receive IBRD or IDA financing depends on the economic condition of the country and not on
the characteristics of the project.
Its borrowing member countries also look to the Bank as a source of technical assistance. By far the
largest element of Bank-financed technical assistance--running over $1 billion a year recently--is that
Page | 18 financed as a component of Bank loans or credits extended for other purposes. But the amount of Bank-
financed technical assistance for free-standing loans and to prepare projects has also increased. The
Bank serves as executing agency for technical assistance projects financed by the United Nations
Development Program in agriculture and rural development, energy, and economic planning. In
response to the economic climate in many of its member countries, the Bank is now emphasizing
technical assistance for institutional development and macroeconomic policy formulation.
Every project supported by the Bank is designed in close collaboration with national governments and
local agencies, and often in cooperation with other multilateral assistance organizations. Indeed, about
half of all Bank-assisted projects also receive cofinancing from official sources, that is, governments,
multilateral financial institutions, and export-credit agencies that directly finance the procurement of
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goods and services, and from private sources, such as commercial banks.
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In making loans to developing countries, the Bank does not compete with other sources of finance. It
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assists only those projects for which the required capital is not available from other sources on
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reasonable terms. Through its work, the Bank seeks to strengthen the economies of borrowing nations
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so that they can graduate from reliance on Bank resources and meet their financial needs, on terms they
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can afford directly from conventional sources of capital.

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The range of the Bank's activities is far broader than its lending operations. Since the Bank's lending
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decisions depend heavily on the economic condition of the borrowing country, the Bank carefully
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studies its economy and the needs of the sectors for which lending is contemplated. These analyses help
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in formulating an appropriate long-term development assistance strategy for the economy.

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Graduation from the IBRD and IDA has occurred for many years. Of the 34 very poor countries that
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borrowed money from IDA during the earliest years, more than two dozen have made enough progress
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for them no longer to need IDA money, leaving that money available to other countries that joined the
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Bank more recently. Similarly, about 20 countries that formerly borrowed money from the IBRD no
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longer have to do so. An outstanding example is Japan. For a period of 14 years, it borrowed from the
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IBRD. Now, the IBRD borrows large sums in Japan.

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IMF Operations
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The IMF has gone through two distinct phases in its 50-year history. During the first phase, ending in
1973, the IMF oversaw the adoption of general convertibility among the major currencies, supervised a
system of fixed exchange rates tied to the value of gold, and provided short-term financing to countries
in need of a quick infusion of foreign exchange to keep their currencies at par value or to adjust to
changing economic circumstances. Difficulties encountered in maintaining a system of fixed exchange
rates gave rise to unstable monetary and financial conditions throughout the world and led the
18 | P a g e
international community to reconsider how the IMF could most effectively function in a regime of
flexible exchange rates. After five years of analysis and negotiation (1973-78), the IMF's second phase
began with the amendment of its constitution in 1978, broadening its functions to enable it to grapple
with the challenges that have arisen since the collapse of the par value system. These functions are
three.
Page | 19
First, the IMF continues to urge its members to allow their national currencies to be exchanged without
restriction for the currencies of other member countries. As of May 1996, 115 members had agreed to
full convertibility of their national currencies. Second, in place of monitoring members' compliance with
their obligations in a fixed exchange system, the IMF supervises economic policies that influence their
balance of payments in the presently legalized flexible exchange rate environment. This supervision
provides opportunities for an early warning of any exchange rate or balance of payments problem. In
this, the IMF's role is principally advisory. It confers at regular intervals (usually once a year) with its
members, analyzing their economic positions and apprising them of actual or potential problems arising
from their policies, and keeps the entire membership informed of these developments. Third, the IMF
continues to provide short- and medium-term financial assistance to member nations that run into
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temporary balance of payments difficulties. The financial assistance usually involves the provision by the
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IMF of convertible currencies to augment the afflicted member's dwindling foreign exchange reserves,
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but only in return for the government's promise to reform the economic policies that caused the
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balance of payments problem in the first place. The IMF sees its financial role in these cases not as
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subsidizing further deficits but as easing a country's painful transition to living within its means.
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How in practice does the IMF assist its members? The key opening the door to IMF assistance is the
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member's balance of payments, the tally of its payments and receipts with other nations. Foreign
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payments should be in rough balance: a country ideally should take in just about what it pays out. When
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financial problems cause the price of a member's currency and the price of its goods to fall out of line,
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balance of payments difficulties are sure to follow. If this happens, the member country may, by virtue
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of the Articles of Agreement, apply to the IMF for assistance.

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To illustrate, let us take the example of a small country whose economy is based on agriculture. For
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convenience in trade, the government of such a country generally pegs the domestic currency to a
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convertible currency: so many units of domestic money to a U.S. dollar or French franc. Unless the
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exchange rate is adjusted from time to time to take account of changes in relative prices, the domestic
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currency will tend to become overvalued, with an exchange rate, say, of one unit of domestic currency
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to one U.S. dollar, when relative prices might suggest that two units to one dollar is more realistic.
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Governments, however, often succumb to the temptation to tolerate overvaluation, because an

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overvalued currency makes imports cheaper than they would be if the currency were correctly priced.
The other side of the coin, unfortunately, is that overvaluation makes the country's exports more
expensive and hence less attractive to foreign buyers. If the currency is thus overvalued, the country will
eventually experience a fall-off in export earnings (exports are too expensive) and a rise in import
expenditures (imports are apparently cheap and are bought on credit). In effect, the country is earning
less, spending more, and going into debt, a predicament as unsustainable for a country as it is for any of
19 | P a g e
us. Moreover, this situation is usually attended by a host of other economic ills for the country. Finding a
diminished market for their export crops and receiving low prices from the government marketing board
for produce consumed domestically, farmers either resort to illegal black market exports or lose the
incentive to produce. Many of them abandon the farm to seek employment in overcrowded cities,
where they become part of larger social and economic problems. Declining domestic agricultural
Page | 20
productivity forces the government to use scarce foreign exchange reserves (scarce because export
earnings are down) to buy food from abroad. The balance of payments becomes dangerously distorted.
As an IMF member, a country finding itself in this bind can turn to the IMF for consultative and financial
assistance. In a collaborative effort, the country and the IMF can attempt to root out the causes of the
payments imbalance by working out a comprehensive program that, depending on the particulars of the
case, might include raising producer prices paid to farmers so as to encourage agricultural production
and reverse migration to the cities, lowering interest rates to expand the supply of credit, and adjusting
the currency to reflect the level of world prices, thereby discouraging imports and raising the
competitiveness of exports.
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Because reorganizing the economy to implement these reforms is disruptive and not without cost, the
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IMF will lend money to subsidize policy reforms during the period of transition. To ensure that this
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money is put to the most productive uses, the IMF closely monitors the country's economic progress
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during this time, providing technical assistance and further consultative services as needed.
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In addition to assisting its members in this way, the IMF also helps by providing technical assistance in
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organizing central banks, establishing and reforming tax systems, and setting up agencies to gather and
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publish economic statistics. The IMF is also authorized to issue a special type of money, called the SDR,
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to provide its members with additional liquidity. Known technically as a fiduciary asset, the SDR can be
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retained by members as part of their monetary reserves or be used in place of national currencies in
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transactions with other members. To date the IMF has issued slightly over 21.4 billion SDRs, presently
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valued at about U.S. $30 billion.

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Over the past few years, in response to an emerging interest by the world community to return to a
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more stable system of exchange rates that would reduce the present fluctuations in the values of
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currencies, the IMF has been strengthening its supervision of members' economic policies. Provisions
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exist in its Articles of Agreement that would allow the IMF to adopt a more active role, should the world
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community decide on stricter management of flexible exchange rates or even on a return to some
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system of stable exchange rates.

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Measuring the success of the IMF's operations over the years is not easy, for much of the IMF's work
consists in averting financial crises or in preventing their becoming worse. Most observers feel that
merely to have contained the debt crisis of the 1980s, which posed the risk of collapse in the world's
financial system, must be counted a success for the IMF. The Fund has also gained some recognition for
assisting in setting up market-based economies in the countries of the former Soviet Union and for
responding swiftly to the Mexican peso crisis in 1994, but its main contribution lies in its unobrusive,
day-to-day encouragement of confidence in the international system. Nowhere will you find a bridge or
20 | P a g e
a hospital built by the IMF, but the next time you buy a Japanese camera or drive a foreign car, or
without difficulty exchange dollars or pounds for another currency while on holiday, you will be
benefiting from the vast increase in foreign trade over the past 50 years and the widespread currency
convertibility that would have been unimaginable without the world monetary system that the IMF was
created to maintain.
Page | 21
Cooperation between Bank and IMF
Although the Bank and IMF are distinct entities, they work together in close cooperation. This
cooperation, present since their founding, has become more pronounced since the 1970s. Since then
the Bank's activities have increasingly reflected the realization that the pace of economic and social
development accelerates only when sound underlying financial and economic policies are in place. The
IMF has also recognized that unsound financial and economic policies are often deeply rooted in long-
term inefficient use of resources that resists eradication through short-term adaptations of financial
policies. It does little good for the Bank to develop a long-term irrigation project to assist, say, the export
of cotton, if the country's balance of payments position is so chaotic that no foreign buyers will deal with
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the country. On the other hand, it does little good for the IMF to help establish a sound exchange rate
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l.
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for a country's currency, unless the production of cotton for export will suffice to sustain that exchange
mff
rate over the medium to long term. The key to solving these problems is seen in restructuring economic
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sectors so that the economic potential of projects might be realized throughout the economy and the
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stability of the economy might enhance the effectiveness of the individual project.
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Around 75 percent of the Bank's lending is applied to specific projects dealing with roads, dams, power
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stations, agriculture, and industry. As the global economy became mired in recession in the early 1980s,
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the Bank expanded the scope of its lending operations to include structural- and sector-adjustment
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loans. These help developing countries adjust their economic policies and structures in the face of
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serious balance of payments problems that threaten continued development. The main objective of
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structural-adjustment lending is to restructure a developing country's economy as the best basis for
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sustained economic growth. Loans support programs that are intended to anticipate and avert
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economic crises through economic reforms and changes in investment priorities. By using so-called
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policy-based lending, the Bank stimulates economic growth in heavily indebted countries--particularly in
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Latin America and in sub-Saharan Africa--that are undertaking, often at much social pain, far-reaching
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programs of economic adjustment.

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In addition to its traditional function as provider of short-term balance of payments assistance, the
do
advent of the oil crisis in the mid-1970s and the debt crisis in the early 1980s induced the IMF, too, to
is
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rethink its policy of restricting its financial assistance to short-term lending. As balance of payments
shortfalls grew larger and longer-term structural reforms in members' economies were called for to
eliminate these shortfalls, the IMF enlarged the amount of financial assistance it provides and
lengthened the period within which its financial assistance would be available. In doing so, the IMF
implicitly recognizes that balance of payments problems arise not only from a temporary lack of liquidity
and inadequate financial and budgetary policies but also from long-standing contradictions in the
structure of members' economies, requiring reforms stretching over a number of years and suggesting
21 | P a g e
closer collaboration with the World Bank, which commands both the expertise and experience to deal
with protracted structural impediments to growth.
Focusing on structural reform in recent years has resulted in considerable convergence in the efforts of
the Bank and IMF and has led them to greater reliance on each other's special expertise. This
Page | 22 convergence has been hastened by the debt crisis, brought on by the inability of developing countries to
repay the enormous loans they contracted during the late 1970s and early 1980s. The debt crisis has
emphasized that economic growth can be sustained only when resources are being used efficiently and
that resources can be used efficiently only in a stable monetary and financial environment.
The bedrock of cooperation between the Bank and IMF is the regular and frequent interaction of
economists and loan officers who work on the same country. The Bank staff brings to this interchange a
longer-term view of the slow process of development and a profound knowledge of the structural
requirements and economic potential of a country. The IMF staff contributes its own perspective on the
day-to-day capability of a country to sustain its flow of payments to creditors and to attract from them
investment finance, as well as on how the country is integrated within the world economy. This
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interchange of information is backed up by a coordination of financial assistance to members. For
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instance, the Bank has been approving structural- or sector-adjustment loans for most of the countries
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that are taking advantage of financial assistance from the IMF. In addition, both institutions encourage
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other lenders, both private and official, to join with them in cofinancing projects and in mobilizing
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credits to countries that are in need. Cooperation between the Bretton Woods Institutions has two
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results: the identification of programs that will encourage growth in a stable economic environment and
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the coordination of financing that will ensure the success of these programs. Other lenders, particularly
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commercial banks, frequently make credits available only after seeing satisfactory performance by the
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borrowing country of its program of structural adjustment.

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Cooperation between the Bank and the IMF has over the past decade been formalized with the
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establishment in the IMF of procedures to provide financing at below market rates to its poorest
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member countries. These procedures enable the IMF to make available up to $12 billion to those 70 or
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so poor member countries that adjust the structure of their economies to improve their balance of
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payment position and to foster growth. The Bank joins with the IMF in providing additional money for
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these countries from IDA. But what IDA can provide in financial resources is only a fraction of the world's
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ti
minimum needs for concessional external finance. Happily, various governments and international
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agencies have responded positively to the Bank's special action program for low-income, debt-
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distressed countries of the region by pledging an extra $7 billion for cofinancing programs arranged by
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the Bank.
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The Bank and the IMF have distinct mandates that allow them to contribute, each in its own way, to the
stability of the international monetary and financial system and to the fostering of balanced economic
growth throughout the entire membership. Since their founding 50 years ago, both institutions have
been challenged by changing economic circumstances to develop new ways of assisting their
membership. The Bank has expanded its assistance from an orientation toward projects to the broader
aspects of economic reform. Simultaneously the IMF has gone beyond concern with simple balance of
22 | P a g e
payment adjustment to interest itself in the structural reform of its members' economies. Some
overlapping by both institutions has inevitably occurred, making cooperation between the Bank and the
IMF crucial. Devising programs that will integrate members' economies more fully into the international
monetary and financial system and at the same time encourage economic expansion continues to
challenge the expertise of both Bretton Woods Institutions.
Page | 23
The International Monetary Fund and the World Bank at a Glance

International Monetary Fund World Bank
oversees the international monetary system seeks to promote the economic development of
promotes exchange stability and orderly the world's poorer countries
exchange relations among its member assists developing countries through long-term
countries financing of development projects and programs
assists all members--both industrial and provides to the poorest developing countries
)
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developing countries--that find themselves in whose per capita GNP is less than $865 a year
co
temporary balance of payments difficulties by special financial assistance through the
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providing short- to medium-term credits International Development Association (IDA)
ff
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supplements the currency reserves of its encourages private enterprises in developing
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members through the allocation of SDRs countries through its affiliate, the International
ar
gw
(special drawing rights); to date SDR 21.4 billion Finance Corporation (IFC)
an
has been issued to member countries in acquires most of its financial resources by
l.g
proportion to their quotas borrowing on the international bond market

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draws its financial resources principally from has an authorized capital of $184 billion, of which
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the quota subscriptions of its member members pay in about 10 percent

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countries has a staff of 7,000 drawn from 180 member

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has at its disposal fully paid-in quotas now countries

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totaling SDR 145 billion (about $215 billion)

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has a staff of 2,300 drawn from 182 member

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countries
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23 | P a g e

WTO - Faculty Notes

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Indian Economy for IAS by Pratik Gupta 2017

WTO & Doha

GATT- General Related Intellectual

Agreement on GATS- General Property Rights

Trade and Tariff Agreement on

For Example- Copyright,

Now lets see their annex 1 by 1 via charts.

On Farm Products Non Farm Products

Each nation can make its own If they are dangerous to

SCM: Agreement on Subsidies and Counter Veiling Measures

taken in this regard

Banned certain limits.

Red Box Subsidies: Blue Box Subsidies:

If China is giving subsidy Given for production Products which are

2: Annex of GATS (services)

3: TRIPS TRIPS doesnt have any annex.

But TRIPS is very important agreement in todays world.

TRIPS =Trade related intellectual property rights

Research & Development (R&D).

will be deprived of better products.

and then our tea makers will face unfair competition.

India's Problem with GI

Pakistan also claim GI for their Basmati Rice.

TRIPS dont talk about trans-border GIs.

Other Important Agreements

MFN is Most Favored Nation

trade practices (like dumping* / Products dangerous to health**)

and toy market in India is captured by China.

Freer Trade (bringing down barriers in international trade);

WTO agreements try to abolish following things-

4. Non-tariff barriers* (explained later.)

Page | 6 Fair Competition

What was before WTO?

BPO) & Intellectual property rights, along with goods.

The working of WTO is more transparent.

India and WTO

India's concerns in Doha round.

Principle of Trading System at WTO.

1- Non-Discrimination- MFN and National Treatment Policy.

3- Binding and enforceable commitment.

administrative decisions affecting trade, etc.

What did India Gain from WTO?

aka "DDA = Doha Development agenda."

world's poor, particularly by slashing barriers and subsidies in farming.

by commitments to strengthen substantial assistance to developing countries.

What were they talking in Doha?

Concessions given to Developing Nations.

SPS annex added under GATT

Items for new negotiations in Doha

Multilateral environmental agreements

Indias concern at Doha Development Agenda.

1. Special Safeguard Mechanism

More trouble for India.

a permanent agreement regarding India's food subsidies in November 2014.

members were asked to provide capacity-building support to the LDCs.

Agriculture and cotton

DFQF market access for the LDCs

LDCs waiver in the services sector

Monitoring mechanism on Special and Differential Treatment

MINISTERIAL CONFERENCES OF WTO

4th 914 November 2001 Doha, Qatar

5th 1014 September 2003 Cancn, Mexico

6th 1318 December 2005 Hong Kong