Indian Institute Of Management

Jammu

Business Environment In India And The World

“PROJECT REPORT”
WTO and Developing Nations

Submitted By:

Manas Gupta MBA21102

Naman Saxena MBA21119
Piyush Patnaik MBA21136
Pronit Dihingia MBA21153
Rahul Kumar MBA21154
Yash Agarwal MBA21242
 INTRODUCTION

On January 1, 1995, the World Trade Organization took effect, with all of GATT's assets and
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obligations being transferred to the latter. Their headquarters were in Geneva. WTO
committees got a hold of all GATT committees. The WTO established that each member nation
negotiates its conditions of entrance into the multilateral trading system as well as a market
access plan for products and services with its trading partners. All contracting parties (member
nations) agreed to make every effort to complete a domestic WTO rectification as soon as
possible.”
The establishment of the World Trade Organization (WTO) on January 1, 1995, was the most
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significant change in international trade since 1948. During those 47 years, international
business was governed by the GATT, which aided in the development of a successful
multilateral trading system. By the end of the 1980s, however, a complete renovation was
required. That change was brought about by the Uruguay Round. It was the WTO's largest
trade negotiation ever. The discussions appeared fatal at times, but in the end, the Uruguay
Round brought forth the necessary changes. It was the WTO's largest trade organisation to date.
The discussions appeared fatal at times, but the Uruguay Round was ultimately successful.”
The World Trade Organization (WTO) is the GATT plus a lot more. GATT was a minor, ad
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hoc organisation that was not even legally recognised as an international organisation. The
World Trade Organization (WTO) has now taken its place. The GATT has been updated and
is now part of the new WTO accords. The GATT exclusively dealt with commodities
commerce, whereas WTO accords also include services and intellectual property.”
Objectives Of WTO
The World Trade Organization (WTO) is the sole international organisation that deals with
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international trade rules. The WTO accords, as well as the legal round norms for international
commerce and trade policy, must be understood. The following are the three major goals of the
agreements:”
1. To facilitate the free flow of trade as much as feasible.”
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2. To gradually liberalise the market through discussions.”

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3. To establish a fair and unbiased method of resolving conflicts.”

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However, in broader perspective WTO has the following roles to play:

1. Administrate the World Trade Organization's (WTO) trade agreements.
2. Provide a platform for trade discussions.
3. Handle any commercial disputes that arise.
4. Keep an eye on national trade policies.
5. Provide developing countries with technical support and training.
6. Collaboration with other international organisations is a must.
WTO and Developing Countries
The various provisions WTO has introduced for the developing nations are as follows:
Growing Number
More than two-thirds of the WTO's membership is made up of developing nations. They have
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every right to expect the multilateral trading system to help them achieve their development
goals. As a result, they are becoming increasingly crucial in all facets of the WTO's activity.
As a result, the multilateral trade system pays close attention to the unique demands and
concerns of emerging nations.”
Need for Flexibility
It has long been acknowledged that poor nations require more flexibility in their GATT
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responsibilities when it comes to their use of commercial policy instruments. The structural
basis of their balance of payment (BoP) concerns, for example, was understood over half a
century ago, as was the flexibility required to keep BoP limits in place. Similarly, developing
nations have long been free to take actions that are not in accordance with GATT rules in order
to promote a certain industry.”
Trade and Development
The GATT was amended in 1965 to include a new provision named "Trade and Development."
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This part highlighted the necessity for less developed nations' export profits to grow rapidly
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and sustainably (LDCs). To this end, industrialised nations were urged to make the reduction
and elimination of impediments to the export of items of interest to developing countries a top
priority. It also established the notion of non-reciprocity in trade discussions between rich and
developing nations under the multilateral trading system.”
Enabling Clause
The GATT's Trade and Development Section was further developed towards the end of the
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1970s in a debate that became known as the 'enabling clause.' The idea of 'differential and
preferential treatment for developing nations,' as well as the principle of non-reciprocity in
trade talks, were both strengthened by this ruling. The most important component of the
enabling clause is the one that allows members to treat poor countries differently and more
favourably than developed countries under the MFN clause. A variety of types of such
treatment are identified, including preferential tariff treatment for items originating in poor
nations by rich countries.”
Other special provisions in favour of developing countries can be found in WTO multilateral
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trade agreements, such as provisions requiring WTO members to protect the interests of
developing countries when adopting their own trade measures; technical assistance in the
implementation of developing countries' commitments; and also providing technical assistance
in the implementation of developing countries' commitments.”
WTO and India
On December 30, 1994, India ratified the WTO agreement, making it a founder member of the
organisation. According to the 1994-95 Economic Survey,
"Because India's present and future export competitiveness is concentrated in product
categories, it is reasonable to expect significant advances in these areas. Assuming that India's
market share in global exports increases from 0.5 percent to 1%, and that we are able to take
advantage of the possibilities that result, the trade profits might be as high as 2.7 billion US
dollars per year. A more liberal estimate puts the additional exports at 2.5 to 7 billion dollars."
India was the most ardent supporter for the developing bloc in the Doha World Trade
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Organization summit in 2001. The summit was deemed a success as participants from 142
nations agreed to a new round of trade discussions including environmental, competition, and
investment issues.”
The numerous accords reached as part of the WTO have several consequences for the Indian
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economy.”
 “ Reduction of Tariffs and Non-Tariffs Barriers”
 “ Trade-Related Investment Measures (TRIMS)”
 “ Trade-Related Intellectual Property Rights (TRIPS)”
 “ Agreement on Agriculture (AOA)”
 “ Agreement on Sanitary and Phyto-sanitary measures (SPM)”
 Multi-Fibre Agreement (MFA) (Valid until 2004 only)”
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 Data Methodology

Based on secondary data collected from WTO website and other government websites, we
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analysed if WTO policies and special provisions for developing countries such as India, Brazil,
China has helped these countries grow their economy and has led to increase in export and
decrease their dependence on imports.”
India Import of Iron and Steel from UK

Tariff data of India

Tariff data of US
 Tariff data of Germany

Studies have shown that post liberalisation the Average trade to GDP has risen

Evolution of World Trade, 1950-2020

Values, Billion USD
25000
17249
20000

15000

10000

5000

0
1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020
 Goods and services trade of developing countries

Source: UNCTAD (2021a)

The below table shows the share of global trade of Least developed countries LDC and
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developing countries”

Source: UNCTAD (2021a)

Analysis
The Uruguay Round took six years to be negotiated and was merely the kick-off for the World
i i i i i i i i i i i i i i i i i

Trade Organization. It was foreseeable that poles and interest groups would form over time.
i i i i i i i i i i i i i i

The Fourth Ministerial Conference in Doha, Qatar, in November of 2001, saw government
i i i i i i i i i i i i i

officials from the member states launch a new set of negotiations.

i i i i i i i i i i i

Academic research is highly critical on what the initial goal of the Uruguay Round was and what
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it displayed as a final product. Industrial countries were to reduce their barriers to exports from
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the South, especially in the most important sectors, like clothing, textiles, and agriculture.
i i i i i i i i i i i i i

Despite the failure of the Uruguay Round to address all key points from the start, the coalition
i i i i i i i i i i i i i i i i i

of countries built up a complete and extensive list of work in the Doha negotiations.
i i i i i i i i i i i i i i

In short, Doha aimed to eliminate distorting domestic support in agriculture, reduce tariffs and
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create a method for tariff escalation: higher tariffs protecting final products and lower tariffs on
i i i i i i i i i i i i i i i

raw materials. Another highly debated factor was trade facilitation i.e., reduction of
i i i i i i i i i i i i
bureaucracy easing customs procedure and clearance of exports and imports. The Doha i i i i i i i i i i i i

Agenda aimed to cut import taxes, restricts countries' use of subsidies for agriculture and lower
i i i i i i i i i i i i i i i

taxes and regulatory barriers that affect the multilateral trading system. Doha produced a final
i i i i i i i i i i i i i i

declaration on intellectual property issues, as well as on the implementation of policies, but i i i i i i i i i i i i i i

lacked conclusion on many points that sparked heated discussions.

i i i i i i i i

While the WTO has 160 members over its 20 years of existence, about two-thirds are
i i i i i i i i i i i i i i i

developing economies. The WTO is the “arbiter” of global trade. In line with the World Bank, a i i i i i i i i i i i i i i i i i

developing country is a country in which most of the population lives on less money and with i i i i i i i i i i i i i i i i i

fewer basic public services than persons in highly industrialized countries. While this is a broad
i i i i i i i i i i i i i i i

definition, scholars and anyone interested in current issues can determine whether a certain i i i i i i i i i i i i i

country is a developed or developing nation. Countries with a Gross National Income (GNI) of
i i i i i i i i i i i i i i i

US$ 11,905 and less are defined as developing.

i i i i i i i

Because developing nations have most of their population living in rural areas, the farming
i i i i i i i i i i i i i i

subsidies issue was critical in the Doha Round. There was also concern that the Doha approach
i i i i i i i i i i i i i i i i

was a minimalist one. The United States knew that it committed to offering more farm subsidy
i i i i i i i i i i i i i i i i

cuts. The E.U. knew it would need to cut down on agriculture tariffs. Large emerging countries
i i i i i i i i i i i i i i i i

would need to offer deeper industrial cuts. i i i i i i

Much of the scepticism to trade opening was because countries tended to associate high
i i i i i i i i i i i i i i

unemployment rates with increasing trade liberalization. The conclusion invoked by the i i i i i i i i i i i

International Labour Organization (ILO) and the WTO is that trade opening leads countries to i i i i i i i i i i i i i i

seek to leverage where they can have a comparative advantage, and that this carries short-run
i i i i i i i i i i i i i i i

effects in which certain sectors of the economy will endure the transition hardship. Studies
i i i i i i i i i i i i i i

display that, absent other reasons, liberalization helps raise the average trade to Gross
i i i i i i i i i i i i i

Domestic Product (GDP) ratio. i i i

Moreover, a recent study provided data that alleged that jobless rate was not a result of i i i i i i i i i i i i i i i i

increased imports in the long run. Since 1990, the imports line constantly rose and diverged i i i i i i i i i i i i i i i

from a constant line of unemployment rate.

i i i i i i

In having evaluated mostly developed countries, the graphic might suggest that trade
i i i i i i i i i i i i

liberalization that is tied to the maintenance of effective social security programs may succeed i i i i i i i i i i i i i i

to promote stable economic growth. Developing countries, including the BRICS, will not
i i i i i i i i i i i i

necessarily suffer from reducing local taxes on industrial products. The key factor is the i i i i i i i i i i i i i i

maintenance of well-construed social policies. i i i i

Past the effect that Doha represents in the geopolitics of trade, the WTO has over the years
i i i i i i i i i i i i i i i i i

played a significant role in implementing its applauded Dispute Resolution mechanism, its data
i i i i i i i i i i i i i

collection expertise and review of trade policies. The general sense, however, is that i i i i i i i i i i i i i

implementation was inconsistent and lacked further development in the Doha Agenda. Bali i i i i i i i i i i i i

was the Ninth Ministerial Conference, held in December 2013, and the first one headed by the
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new Brazilian Director-General, Roberto Azevêdo.

i i i i
The Bali Package shows how the WTO is a helpful hand for the BRICS. The emergence of these
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new players is one of the central facets of the evolution currently taking place in global trade
i i i i i i i i i i i i i i i i i

and global governance mechanisms. With the Doha Round in 2001, member states declared
i i i i i i i i i i i i i

their willingness to negotiate a more liberal multilateral trade regime that would make trade
i i i i i i i i i i i i i i

serve the development of all countries.9 But because this was only a declaration, the big players
i i i i i i i i i i i i i i i i

often diverted in different ways and negotiated regional agreements in their own terms.
i i i i i i i i i i i i

Mr. Azevêdo had been appointed to office less than three months before the Ninth Ministerial
i i i i i i i i i i i i i i i

Conference and was conscious of the need to negotiate key agriculture matters. He pledged to
i i i i i i i i i i i i i i i

boost world economy, adjust agricultural rules and aid developing countries, and to
i i i i i i i i i i i i

substantiate the WTO as a forum for trade negotiation. i i i i i i i i

As detailed in academic literature: “it is precisely because agricultural earnings are so important
i i i i i i i i i i i i i i

to a large number of developing countries that the highly protective farm policies of a few
i i i i i i i i i i i i i i i i

wealthy countries are being targeted by them in the WTO negotiations. Better access to rich
i i i i i i i i i i i i i i i

countries’ markets for their farm produce is a high priority for them.” At Bali, the areas of trade
i i i i i i i i i i i i i i i i i i

facilitation, food security and agricultural subsidies and matters concerning the least
i i i i i i i i i i i

developed countries (LSD) were discussed; much of the debate related to the BRICS.
i i i i i i i i i i i i

The BRICS are devoting time to the formation of an effective anti-cartel system and growing
i i i i i i i i i i i i i i i

cooperation between competition authorities of the BRIC countries. Therefore, the Bali Round
i i i i i i i i i i i i

was fundamental in trying to solve key issues for the BRICS members, such as India’s agriculture
i i i i i i i i i i i i i i i i

and food matters as well as its excessive bureaucracy with the trade facilitation talks.
i i i i i i i i i i i i i

References
https://sdgpulse.unctad.org/trade-developing-economies/#:~:text=Goods%20trade%20in%
20developing%20countries,24.8%20per%20cent%20in%202020.
https://tradingeconomics.com/india/imports/united-kingdom/iron-steel
https://www.wto.org/english/thewto_e/countries_e/india_e.htm
https://chicagounbound.uchicago.edu/cgi/viewcontent.cgi?article=1010&context=internati
onal_immersion_program_papers