UNCTAD

Introduction:
• The United Nations Conference on Trade and
Development (UNCTAD) was established in 1964 as a
permanent intergovernmental body.
• UNCTAD is the part of the United Nations Secretariat dealing
with trade, investment, and development issues.
• The organization's goals are to: "maximize
the trade, investment and development opportunities
of developing countries and assist them in their efforts to
integrate into the world economy on an equitable
basis".UNCTAD was established by the United Nations
General Assembly in 1964 and it reports to the UN General
Assembly and United Nations Economic and Social Council.

History:
In the early 1960s, growing concerns about the place of developing
countries in international trade led many of these countries to call for
the convening of a full- fledged conference specifically devoted to
tackling these problems and identifying appropriate international
actions.
• The first United Nations Conference on Trade and Development
(UNCTAD) was held in Geneva in 1964. Given the magnitude of the
problems at stake and the need to address them, the conference was
institutionalized to meet every four years, with intergovernmental
bodies meeting between sessions and a permanent secretariat
providing the necessary substantive and logistical support.
• Simultaneously, the developing countries established the Group of
77 to voice their concerns.
Objectives:
The objective of UNCTAD is to carry out the following key functions:
Main Objective ¬ “Maximize the trade, investment and development
opportunities of developing countries and assist them in their efforts
to integrate into the world economy on an equitable basis. “
• Other It functions as a forum for intergovernmental
deliberation
• To review and facilitate the co-ordination of activities of the
other institutions within the U.N. system in the field of
international trade
• It undertakes research, policy analysis and data collection for
the debates of government representatives and experts
• It provides technical assistance tailored to the specific
requirements of developing countries, with special attention to
the needs of the least developed countries and of economies
in transition
• To be available as a centre for harmonious trade and related
documents in the development policies of governments.

Main areas of work by UNCTAD

• Globalization and Development
• International Trade and Commodities
• Investment and Enterprise
• Technology and Logistics

Advantages
Training material is disseminated more efficiently.
• The programme provides universities and accounting institutions in
developing countries with access to material and training in a
cost-effective way.
• The programme allows students and professionals to learn on their
own time, in their own place, at their own pace.
• Study materials and lessons are accessible in PDF format for online
study. Participants can learn independently or with offline
instructional support.
• The programme can reach remote locations in instances where the
instructor cannot travel. This way, course participants, policy makers
and company managers can be reached in developing countries.

Functions
• To promote international trade between the developed and
under-developed countries having diverse socio-economic
organisations with special emphasis upon the accelerated
development of the under-developed countries.
• To formulate the principles and policies concerning international
trade and related problems of economic development.
• To make proposals for putting the said principles and policies
into effect and to adopt measures that may be relevant to this
end
• To generally review and facilitate the coordination of activities
of other institutions within the fold of the United Nations related
to international trade and economic development.
• To be available as a centre for harmonious trade-related policies
of governments and the regional economic groupings in
pursuance of Article 7 of the Charter of the United Nations.
• To negotiate multinational trade agreements.
• To promote research and support negotiations for commodity
agreements, technical elaboration of new trade activities
designed to assist in the areas of trade and capital for developing
countries.
• Providing a forum for intergovernmental deliberations
 • Undertaking research, policy analysis and data collection to
inform these deliberations
• Providing technical assistance to developing countries

EURO- DOLLAR MARKET

Introduction:
● The term euro-dollar refers to U.S. dollar-denominated deposits
at foreign banks or at the overseas branches of American banks.
Because they are held outside the United States, euro-dollars are
not subject to regulation by the Federal Reserve Board,
including reserve requirements.
● Dollar-denominated deposits not subject to U.S. banking
regulations were originally held almost exclusively in Europe,
hence the name Eurodollar.
● Euro-dollar market is the creation of the international bankers. It
is simply a short-term money market facilitating banks’
borrowings and lending’s of U.S. dollars. The Euro-dollar
market is principally located in Europe and basically deals in
U.S. dollars.
● But, in a wider sense, Euro-dollar market is confined to the
external lending and borrowing of the world’s most important
convertible currencies like dollar, pound, sterling, Swiss franc,
French franc etc.
● In short, the term Euro-dollar is used as a common term to
include the external markets in all the major convertible
currencies

Characteristics
• It has emerged as a truly International short-term money market.
• It is unofficial but profound.
• It is free.
• It is competitive.
• It is a more flexible capital market
 Advantages
• It has provided a truly international short-term capital market,
owing to a high degree of mobility of the Euro- dollars.
• Euro-dollars are useful for the financing of foreign trade.
• It has enabled the financial institutions to have greater flexibility
in adjusting their cash and liquidity positions.
• It has enabled importers and exporters to borrow dollars for
financing trade, at cheaper rates than otherwise obtainable.
• It has helped in reducing the profit margins between deposit
rates and lending rates.
• It has enhanced the quantum of funds available for arbitrage.

Disadvantage
1.It may lead banks and business firms to overtrade.
2. It may weaken discipline within the banking communities.
3. It involves a grave danger of sudden large- scale withdrawal of
credits to a country.
4. It has rendered official monetary policies less effective for the
countries involved.
5.It has destabilisation effect. It increases the pressure on exchange
rate and official foreign exchange reserves. This may require
additional liquidity. If such additional reserves are not provided, it
may endanger existence of the present gold exchange standard.
6.Above all, the Euro-dollar market has caused the growth of
semi-independent international interest rates, on which there can be
no effective control by a single country or an institution

Features
• Eurodollar, a single currency increases the transparency of
prices.
• Having a single currency, using the Eurodollar, makes economic
transactions easier than having different currencies for the
union.
 • Eurodollar reduces the transaction costs of buying and selling
goods because people do not have to convert money from one
currency to another.
• Eurodollar would eliminate exchange rate risk among the
countries that shared the Eurodollar currency.
• Using Eurodollar, USA and Europe could no longer use
devaluations as part of their economic policy to gain an
advantage one over the other.
• Because the Central Bank which would oversee the Eurodollar
union would not be controlled by a single government, it would
be easier for the Central Bank to focus on its primary
objective-to control prices and fight inflation.
• Eurodollar would encourage international trade and reduce the
disruptions that result from currency fluctuations.

WTO- WORLD TRADE ORGANISATION

Introduction
The World Trade Organisation (WTO)is the only global international
organisation dealing with the rules of trade between nations to ensure
that trade flows as smoothly and freely as possible.
Headquarters: Centre William Rappard, Geneva, Switzerland
Established: 1st January 1995
Created by: Uruguay Round Negotiations (1986-94)
Member: 164 as of 2016
Director General: Roberto Azevêdo
Budget: 197.2 million Swiss francs (approx. 209 million US$) in
2018.
History
⚫ The organization grew from the General Agreement on
Tariffs and Trade (GATT), which was established shortly
after World War 2.
⚫ Since 1948, the General Agreement on Tariffs and Trade
(GATT) had provided the rules for the trading system.
⚫ The members of GATT singed on the Marrakesh agreement
of Uruguay round in April 1994 in Morocco for establishing
a new organization named WTO.
⚫ Contrary to the temporary nature of GATT, WTO is a
permanent organization which has been established on the
basis of an international treaty approved by participating
countries. It achieved the international status like IMF and
IBRD, but it is not an agency of the United Nations
Organization (UNO).
Objectives
⚫The main objective of WTO is to ensure that trade flows as
smoothly and predictably as possible. Some of the other

⚫
objectives of WTO are:
To improve the standard of living of people in the member

⚫
countries.
To ensure full employment and broad increase in effective

⚫
demand.

⚫
To enlarge production and trade of goods.

⚫
To increase the trade of services.

⚫
To ensure optimum utilization of world resources.
To protect the environment.

⚫andToadministering
Functions
implement rules and provisions related to trade policy

⚫negotiation the various trade agreements

To provide a platform to member countries for trade
 ⚫andTooperation
provide facilities for implementation, administration
of multilateral and bilateral agreements of the

⚫settlement
world trade
To administer the rules and processes related to dispute

Advantages
• Helps promote peace within nations
•Disputes are handled constructively
•Rules make WTO easier for all
•Free trade cuts the cost of living
•It provides more choice of products and qualities
•Trade raises income
•Trade stimulates economic growth
Disadvantages
• WTO is fundamentally undemocratic
• WTO won’t make us safer
• WTO tramples labor and human rights
• WTO Would Privatize Essential Services
• WTO Is Destroying the Environment
• WTO is Killing People
• WTO is not a completely free trade body

FOREIGN EXCHANGE MANAGEMENT

ACT(FEMA),1999
Introduction
The Foreign Exchange Management Act, 1999 (FEMA) is
an Act of the Parliament of India "to consolidate and amend the law
relating to foreign exchange with the objective of facilitating external
trade and payments and for promoting the orderly development and
maintenance of foreign exchange market in India".
It was passed in the winter session of Parliament in 1999, replacing
the Foreign Exchange Regulation Act (FERA).

History
• The Foreign Exchange Regulation Act (FERA) was
legislation passed in India in 1973 that imposed strict
regulations on certain kinds of payments, the dealings in foreign
exchange (forex)and securities and the transactions which had
an indirect impact on the foreign exchange and the import and
export of currency.
• FERA did not succeed in restricting activities such as the
expansion of Multinational Corporations. The concessions made
to FERA in 1991-1993 showed that FERA was on the verge of
becoming redundant. After the amendment of FERA in 1993, it
was decided that the act would become the FEMA.
• FERA was repealed in 1998 by the government of Atal Bihari
Vajpayee and replaced by the Foreign Exchange Management
Act, which liberalized foreign exchange controls and restrictions
on foreign investment

Objectives
• To consolidate & amend the law relating to foreign exchange.
• To facilitating external trade & payments.
• To remove imbalance of payments.
• To make strong & developed foreign exchange market.
• Regulation of employment business & investment of
non-residents

Functions
• Activities such as payments made to any person outside India or
receipts from them, along with the deals in foreign exchange
security is restricted.it is fema that gives the central government
the power to impose the restrictions.
• Restrictions are imposed on residents of india who carry out
transactions in foreign exchange, foreign security or who own or
hold immovable property abroad.
 • Without general or specific permission of the ma restricts the
transaction involving foreign exchange or foreign security and
payments from outside the country to india -the transaction
should be made only through an authorized person.
• Deals in foreign exchange under the current account by an
authorized person can be restricted by the central government,
based on public interest generally.
• Although selling or drawing of foreign exchange is done
through an authorized person, the RBI is empowered by this act
to subject the capital account transactions to a number of
restrictions.
• residents of India will be permitted to carry out transactions in
foreign exchange, foreign security or to own or hold immovable
property abroad if the currency, security or property was owned
or acquired when he/she was living outside India, or when it was
inherited by him/her from someone living outside India.
• Exporters are needed to furnish their export details to RBI. To
ensure that the transactions are carried out properly, RBI may
ask the exporters to comply to its necessary requirements.
Regulation and Management of Foreign Exchange
● Holding of Foreign exchange – No person resident in India shall
acquire, hold, own, possess or transfer any foreign exchange,
foreign security or any immovable property situated outside
India.
● Regulations on current Account Transaction – Generally, all
current account transaction are free unless specifically restricted
by government of India.
● Regulations of Capital Account Transactions – The Reserve
bank in consultation with the Central Government, specify the
permissible capital account transaction and the limits up to
which foreign exchange be allowed for such transactions.
● Export of goods and services – Every exporter of goods or
services shall furnish to Reserve Bank or to such other authority
a declaration, in such form and in such manner as may be
specified, containing true and correct material particulars
including the amount representing the full export value of the
goods or services.
 ● Realization and repatriation of foreign exchange – Where any
amount of foreign exchange is due or has been accrued to any
person resident in India, such person should take all reasonable
steps to realize and repatriate to India such foreign exchange,
within such time and in such manner as may be specified by
Reserve Bank.

General Agreement on Tariffs and Trade

⚫legalTheagreement
Introduction
General Agreement on Tariffs and Trade (GATT) is a
between many countries, whose overall purpose
was to promote international trade by reducing or eliminating
trade barriers such as tariffs or quotas.
History
⚫Nations
The GATT was first discussed during the United
Conference on Trade and Employment and was the
outcome of the failure of negotiating governments to create

⚫ the International Trade Organization (ITO).

The General Agreement on Tariffs and Trade (GATT) is a
multilateral trade treaty among countries to regulate
international trade and tariffs in accordance with specific
rules, norms or code of conduct It was signed by 23 nations
in Geneva on 30 October 1947, and took effect on 1 January

⚫ 1948.
It remained in effect until the signature by 123 nations in
Marrakesh on 14 April 1994, which established the World

⚫ Trade Organization (WTO) on 1 January 1995.

The WTO is the successor to the GATT, and the original
GATT text (GATT 1947) is still in effect under the WTO

⚫ framework, subject to the modifications of GATT 1994.

The GATT, and its successor the WTO, have successfully
reduced tariffs.
 ⚫wereTheabout
average tariff levels for the major GATT participants
22% in 1947, but were 5% after the Uruguay
Round in 1999.

Objectives
⚫international
The primary objective of GATT was to expand
trade by liberalizing so as to bring about all
round economic prosperity, the important objective are as

⚫
⚫
follows:
To raise the standard of living of the people
To ensure full employment and a large and steadily

⚫
⚫
growing volume of real income and effective demand.
To tap the use of the resources of the world fully.
To expand overall production capacity and international
trade.
Advantages
⚫GATT reduced tariffs and increase world trade 8 percentage
⚫It was success that many more countries wanted to join
a year

⚫GATT also improved communication and it also provided

⚫It gave less developed countries a competitive advantage
incentive to countries to learn English

⚫By learning English language, they developed countries

culture and marketing and product needs

Disadvantages
⚫moreGovernments subsidized many industries to make them

⚫
⚫GATT
competitive on a global scale.
GATT reduces the right of nation to rule its own people
Less developed countries could only get the benefits from

⚫ Lack of legal status

Functions
1 Most Favoured Nation clause

The “Most favoured Nation clause is one of the significant provisions

adopted by GATT. Under the concept of Most Favoured Nation, all
contracting parties of the agreement would be treated as most
favoured nations. The principal objective is that the benefits extended
to one should also be extended to all contracting parties. There should
be no discrimination among nations. Trading should be carried on the
principle of non-discrimination and reciprocity. This clause
discouraged the member countries from granting any new trade
concessions unless those were mutually agreed upon. However, many
escape clauses were found. Under specific circumstances, less
developed countries were allowed to exercise the right to
discriminate. For example, dumping and export subsidy might be
countered by trade measures only against the offending country.
Moreover, special concessions were allowed for trade with former
colonies of less developed western countries.

2. Trade negotiations under GATT

From 1947 to 2001, GATT has organized 12 trade negotiations. The

following table shows various negotiations of GATT and WTO since
1947.

Year Round Outcome of Negotiations

Geneva Several thousands of tariff concessions
1947
Round covering nearly 50 per cent of world trade.
Annecy
1949 Round Announcement of modest tariff reductions.
(France)
Torquay,
Over 1948 level, 25 per cent ' tariff reductions
1950-51 England
were made.
Round
Geneva
1955-56 Modest tariff reductions
Round
 Year Round Outcome of Negotiations
Geneva,
1961-62 Modest tariff reductions
Dillon Round
35 percent tariff reduction on industrial
Geneva,
products and modest reduction in agricultural
1964-67 Kennedy
products. Also antidumping code was
Round
announced.
Negotiation of additional tariff cuts developed
Geneva,
1973-79 a series of agreements governing the use of
Tokyo Round
non-tariff measures.
Tariff non tariff measures, rules, services,
Uruguay
1986-94 intellectual property, dispute settlement,
Round
creation of WTO etc.
Two separate working parties were setup on
1996 (9 investment and commercial law. Working
Singapore
to 13 group was also formed on Government
Ministerial
Dec) procurement, Trade facilitation added to WTO
agenda.
1998 (18
Geneva
to 20 Programme on E-commerce launched.
Ministerial
May)
1999 (30
Seattle Market access, agriculture, services,
Nov to 3
Ministerial E-Commerce
Dec)
2001 (9
Doha
to 13 New Round
Ministerial
Dec)

3. Tariff and Non-tariff measures

Tariff measures:

Tariffs were the important obstacle to international trade. Therefore,

GATT encouraged negotiations for the reduction of hig4 tariffs, the
participating countries agreed to cut tariff of thousands of industrial
products. Reduction of tariff was on reciprocal and mutually
advantageous basis. Article 11 of the GATT provided that all
concessions granted by contracting parties must be entered in a
schedule of concessions. Once a concession was included in the
schedule of concessions, it could not be withdrawn except under
specified circumstances.

Non-tariff measures

Post-World War II witnessed reduced distorting effects of non-trade

barriers world trade. The Tokyo Round held during 1973 — 1979
tackled the problems of non-tariff barriers under more effective
international discipline. All the agreements provide for special and
more favorable treatment for developing countries. The negotiations
led to the following non-tariff measures:

▪ restriction on use of subsidies,

▪ technical barriers,
▪ import licensing procedures,
▪ government procurement,
▪ custom valuation,
▪ permission of anti-dumping code.

To read more about the non-tariff measures of GATT, refer this

article: Non-tariff measures of GATT

5. Complaints and waivers

Article XXII of the GATT entertains complaints from contacting party

relating to the operation of the agreement. The contracting party who
is likely to be deprived of the benefits under GATT agreement can
request the other party for consultation. The basic principle of GATT
is that member countries should consult one another on trade matters
and problems. Article XXV of the GATT provides the procedure for
granting waiver to some contracting party from the application of the
provisions of the GATT. Waivers are granted on the approval by two
thirds of voting contracting parties.

6. Settlement of disputes
GATT aimed at the smooth settlement of disputes among the
contracting parties. GATT allows the member countries to settle
problems among them by consulting one another on matters of trade.
Initially, the contracting parties should resolve the disputes by holding
talks on bilateral basis. In case of failure, the dispute may be referred
to panels of independent experts formed under GATT council. The
panel members are drawn from countries which have no direct interest
in the disputes. If the offending parties does not act upon the panel’s
decision, the aggrieved party is authorized to withdraw all
concessions offered to the offending party. Since the panel procedure
ensures mutually satisfactory settlement, members make increased
use of the panel.