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SEM II (2011-12)
TOPIC – IMPACT OF WTO ON INDIA
VANAJA.NADAR T.Y.B.COM- ‘C’ ROLL. NO- 465
Roll.Y.No .No-1 .Com‘C‘ Page.Impact of WTO on India.465 CONTENTS Reason to choose this topic Introduction History of WTO The Objective of WTO Reiterated Problems facing India in WTO and its Implementations€ Implications for India What should India do? TRIMS TRIPS Patents Impact of WTO in India Present stage of Negotiations Conclusion Reference Vivek College of Commerce T.B.
with appropriate domestic policies in place.O is an important landmark in the history of international trade. they felt the need for better export opportunities.T.O provides opportunities for countries to grow and realize their export potentials.465 Reason to choose this topic Trade is an engine of economic development.Y. At one time a country‘s trade pattern was determined by its natural resources and the productivity of its land.No .T. Today. changed dramatically after the industrial revolution. Leaving aside political and institutional factors. which made India an attractive market for import of most agricultural commodities.O offered ample opportunities to India to expand its export market. The provisions of W.Impact of WTO on India. a country‘s level of income was also largely determined by the global demand for its natural resources and its relative efficiency in exploiting them. however. The W. India will be able to expand its exports of agricultural products in which it has tremendous comparative advantage. This situation resulted in a wide spread decline in agricultural export and had also pressure on domestic prices. The issue of globalization in the Indian context has occurred in the patterns of trade and capital flow in recent years. because of which domestic price turned higher than international price. Contrary to this.Com‘C‘ Page.O.T.B. After the industrial revolution. it is almost insignificant. International price of agricultural commodities have since then plummeted. The importance of land as a source of comparative advantage. the price situation changed dramatically after 1996. When developing countries were liberalizing their economies. Roll. so far we have not made much use of it. which was the first year after implementation of Urguay Round Agreement and formation of W. The establishment of W.No-2 . the availability of ―capital‖ became the most dominant source of comparative advantage. Vivek College of Commerce T. And many such impact which are detailed below.T. unfortunately.
1995 under the Marrakech Agreement. The organization deals with regulation of trade between participating countries. which was launched in 2001 to enhance equitable participation of poorer countries which represent a majority of the world's population." The WTO has 153 members. exporters. representing more than 97% of the world's population. The organization is currently endeavoring to persist with a trade negotiation called the Doha Development Agenda (or Doha Round). and a director-general. The goal is to help producers of goods and services. and importers conduct their business. replacing the General Agreement on Tariffs and Trade (GATT).Impact of WTO on India. the future of the Doha Round is uncertain. At this time.B. meeting every two years. the negotiation has been dogged by "disagreement between exporters of agricultural bulk commodities and countries with large numbers of subsistence farmers on the precise terms of a 'special safeguard measure' to protect farmers from surges in imports. The organization officially commenced on January 1. However.No . most seeking membership.No-3 . and 30 observers.Com‘C‘ Page.465 Introduction ‡The World Trade Organization (WTO) is the only global international organization dealing with the rules of trade between nations. it provides a framework for negotiating and formalizing trade agreements. who is appointed by the ministerial conference. The WTO's headquarters is at the Centre William Rappard. a general council. Switzerland. The WTO is governed by a ministerial conference.Y. At its heart is the WTO agreement. Most of the issues that the WTO focuses on derive from previous trade negotiations. which implements the conference's policy decisions and is responsible for day-to-day administration. and a dispute resolution process aimed at enforcing participants' adherence to WTO agreements which are signed by representatives of member governments and ratified by their parliaments. The World Trade Organization (WTO) is an organization that intends to supervise and liberalize international trade. negotiated and signed by the bulk of the world‘s trading nations and ratified in their parliaments. especially from the Uruguay Round (1986–1994). which commenced in 1948. Roll. Vivek College of Commerce T. Geneva.
investment. should be the cornerstone of all our deliberations.No .Y. expand production.Impact of WTO on India. to raise standards of living. the GATT would over the years "transform itself" into a de facto international organization. Trade. has to be viewed in this context. It must be recognized that all Members should assume a negotiating rather than an adversarial posture. The WTO must never lose sight of this basic principle. But the ITO treaty was not approved by the U. the General Agreement on Tariffs and Trade (GATT). It should also be recognized that different economies have different features and structures. named the International Trade Organization was successfully negotiated.Com‘C‘ Page. different cultures. Developing countries have generally been apprehensive in particular about the implementation of special and differential treatment provisions (S&D) in various Uruguay Vivek College of Commerce T. The ITO was to be a United Nations specialized agency and would address not only trade barriers but other issues indirectly related to trade. It must be used in such a manner that the letter and spirit of the Agreements is fully observed. The Objective of WTO Reiterated It is very clear that the intention of the negotiators was to use trade as an instrument for development. every legal decision. including employment. A comparable international institution for trade. Roll.No-4 . and commodity agreements.465 History of WTO The WTO's predecessor.B. In the absence of an international organization for trade. the system should be seen to be equitable and fair. restrictive business practices. decisions and actions. Besides. and a few other signatories and never went into effect. All Members should guard against unilateral action that cuts at the root of multilateral agreement and consensus. The pace of change must be carefully calibrated to take into account such differences. The WTO Members must mutually support and encourage each other to achieve the final goal. keeping in view. different problems. as an instrument for development. particularly. was established after World War II in the wake of other new multilateral institutions dedicated to international economic cooperation — notably the Bretton Woods institutions known as the Bank and the International Monetary Fund. the needs of developing countries and least-developed countries.S. Every act of implementation and of negotiation.
No-5 .465 Round Agreements. The Singapore Ministerial Conference (SMC) set up open-ended Work Program to study the relationship between Trade and Investment.No . and who also perceived many of the new issues to be non-trade issues. Not many people in this country are aware that there is a dispute settlement system in the WTO. India must effectively use this mechanism to extract fair share in world markets. as clear guidelines have not been laid down on how these are to be implemented.B. India and the developing countries.Impact of WTO on India. Pressures were generated to introduce new Agreements on Investment. particularly low-wage developing countries. must in no way be put into question. resisted the introduction of these new subjects into WTO. It would be advantageous for India to give concrete shape to SAARC economic forum or free market and align itself with ASEAN. " The first Ministerial Conference held in 1996 in Singapore saw the commencement of pressures toenlarge the agenda of WTO.Y. Most importantly the SMC clearly declared on the Trade-Labor linkage as follows: ―We reject the use of labor standards for protectionist purposes.Com‘C‘ Page. and do analytical work on simplification of trade procedures (Trade Facilitation). In this regard we note that the WTO and ILO Secretariat will continue their existing collaboration". The concept ofCore Labor Standards was also taken up for introduction. Vivek College of Commerce T. Transparency in Government Procurement and Trade Facilitation. Roll. which were already under the burden of fulfilling the commitments undertaken through the Uruguay Round Agreements. India too has complained against the US and Europe and it too has won its fair share of disputes in areas like textiles. and agree that the comparative advantage of countries. This is at the heart of the WTO and sets it apart from the earlier GATT. Full benefits of these provisions have not accrued to the developing countries. Competition Policy. to conduct a study on Transparency in Government Procurement practices. They were partly successful. Countries like the USA and the European Union have brought cases against us and won these cases like in pharmaceutical patents. Trade and Competition Policy.
protection of Bio Diversities and geographical Indications of origin.Regional cooperation groups posing threat to utility of WTO agreement itself. . The protection has been given so far in wines and spirits that suit US and European countries. Roll. protection of Traditional Knowledge and Folk arts.Y. Mysore Dosa or Champagne.Predominance of developed nations in negotiations extracting more benefits from developing and least developed countries . Bio Diversity protection. Non-tariff barriers being created by developed nations.465 Problems facing India in WTO and its Implementations€ Predominance of developed nations in negotiations extracting more benefits from developing and least developed countries.Com‘C‘ Page. Vivek College of Commerce T.B. protection of Bio Diversities and geographical Indications of origin. for example Basmati.No-6 .Under TRIPS question of high cost of Technology transfer.Impact of WTO on India.Non-tariff barriers being created by developed nations. € Incompatibility of developed and developing countries resource sizes thereby causing distortions in implementing various decisions. Resource and skill limitations of smaller countries to understand and negotiate under rules of various agreements under WTO. protection of Traditional Knowledge and Folk arts. Dismantling of MFA (Multi Fiber Agreement) and its likely impact on countries like India.Resource and skill limitations of smaller countries to understand and negotiate under rules of various agreements under WTO . But there are several problems facing these Multilateral Trade agreements: . Bio Diversity protection.Poor implementation of Doha Development Agenda . which is multilateral encompassing all member countries . Mysore Dosa or Champagne. The protection has been given so far in wines and spirits that suit US and European countries. . Japan and some countries are just not willing to budge downwards in matter of domestic support and export assistance to farmers and exporters of agriculture produce. for example Basmati.No .Incompatibility of developed and developing countries resource sizes thereby causing distortions in implementing various decisions .Questionable effectiveness in implementation of agreements reached in past and sincerity . Under TRIPS question of high cost of Technology transfer.Dismantling of MFA (Multi Fiber Agreement) and its likely impact on countries like India .Agriculture seems to be bone of contention for all types of countries where France.
India will have to tart major reforms in agriculture sector in India to make Agriculture globally competitive.T.T. The Impact of W. It is likely that China. Roll.B.T. It is likely that China. Trade and Investment. This situation resulted in a wide spread decline in agricultural export and had also pressure on domestic value.465 Implications for India It appears that India does not stand to gain much by shouting for agriculture reforms in developed countries because the overall tariff is lower in those countries. which made India an attractive market for import of most agricultural commodities. Same way it is questionable if India will be major beneficiary in dismantling of quotas.Impact of WTO on India. the changes in agricultural exports reveal that during pre W.O on agriculture was severely felt by India as cheap imports have frequently hit the Indian market. Vivek College of Commerce T. which were available under MFA for market access in US and some EU countries. Some of Singapore issues are also important like Government procure.Y.T. India will have to tart major reforms in agriculture sector in India to make Agriculture globally competitive.O period and the rising export trend rose steadily. North African countries. because of which domestic price turned higher than international price. Germany. Mexico and such others may reap benefit in textiles and Clothing areas unless India embarks upon major reforms in modernization and up gradation of textile sector including apparels. Same way it is questionable if India will be major beneficiary in dismantling of quotas.Com‘C‘ Page. causing shock waves among the agriculture producers. Mexico and such others may reap benefit in textiles and Clothing areas unless India embarks upon major reforms in modernization and up gradation of textile sector including apparels.T. which were available under MFA for market access in US and some EU countries.O offered ample opportunities to India to expand its export market.O period the increase was significant and could not be sustained in the post W. Trade facilitation and market access mechanism.No . Germany.O period whereas imports remarkable than post W. Agricultural sector The provisions of W. International price of agricultural commodities have since then plummeted. India does not stand to gain much by shouting for agriculture reforms in developed countries because the overall tariff is lower in those countries.No-7 . North African countries.
international trade in services constituted approximately $1. textiles.450 trillion which represents almost 20% of total global trade in goods and services combined.No-8 . if tapped intelligently. What should India do? The most important things for India to address are speed up internal reforms in building up world-class infrastructure like roads.465 Pharma sector In Pharma-sector there is need for major investments in R &D and mergers and restructuring of companies to make them world class to take advantage. Our tariffs are still high compared to Developed countries and there will be pressure to reduce them further and faster. India should also focus on original knowledge generation in important fields like Pharmaceutical molecules. IT high end products.Y. Corruption will also have to be checked by bringing in fast remedial public Vivek College of Commerce T. In 2001.No . improve trade facilitation through cutting down bureaucracy and delays and further ease its financial markets. the large number of patents going off in USA recently. Some companies in India have organized themselves for this. Tele com sector The General Agreement on Trade in Services (the ―GATS‖) was one of the most important achievements of the Uruguay Round of negotiations that led to the creation of the World Trade Organization (the ―WTO‖).Impact of WTO on India. India must improve legal and administrative infrastructure. installation of cold chain and agricultural logistics. ports and electricity supply.Com‘C‘ Page. € India's ranking in recent Global Competitiveness report is not very encouraging due to infrastructure problems. India has already amended patent Act and both product and Process are now patented in India. poor legal system and poor market access provided by India. Roll. processed food.B. Telecommunication services are important not just because annual telecommunications revenues run into hundreds of billions of dollars a year and a significant proportion of global GDP but also because they enable the supply of other types of services as well as the production of goods. gives the Indian Drug companies windfall opportunities. poor governance. € However.
at least for midterm (5-7 years) in services sector primarily in IT sector. legal system and information dissemination by using e-governance. poor legal system and poor market access provided by India. which should be tapped and further strengthened. It should rather focus on Textile industry modernization and developing international Marketing muscle and expertise. capitalize on drug sector opportunities. India's ranking in recent Global Competitiveness report is not very encouraging due to infrastructure problems. improve trade facilitation through cutting down bureaucracy and delays and further ease its financial markets. Corruption will also have to be checked by bringing in fast remedial public grievance system. use its traditional arts and designs intelligently to give competitive edge.No-9 . legal system and information dissemination by using e-governance. Vivek College of Commerce T. The most important things for India to address are speed up internal reforms in building up world-class infrastructure like roads.465 grievance system. The petroleum sector has to be boosted to tap crude oil and gas resources within Indian boundaries and entering into multinational contracts to source oil reserves.Com‘C‘ Page.No . IT high end products. India would do well to reorganize its Protective Agricultural policy in name of rural poverty and Food security and try to capitalize on globalization of agriculture markets.B. ports and electricity supply. India should also focus on original knowledge generation in important fields like Pharmaceutical molecules.Y. India must improve legal and administrative infrastructure. India has to downsize non-plan expenditure in Subsidies (which are highly ineffective and wrongly applied) and Government salaries and perquisites like pensions and administrative expenditures. Our tariffs are still high compared to Developed countries and there will be pressure to reduce them further and faster. textiles. developing of Brand India image. installation of cold chain and agricultural logistics to tap opportunities of globalization under WTO regime. processed food. poor governance. Roll. processed foods industry and the high end outsourcing services. and develop selective engineering sector industries like automobiles & forgings & castings. India has solid strength.Impact of WTO on India.
€ It also discourages measures that limit a company‘s imports or sets targets for a company to export. The performance of India in attracting major FDI has also been poor and certainly needs boost up. It outlaws investment measures that lead to restrictions in quantities.2 of TRIPS. Roll. is to date the most comprehensive multilateral agreement on intellectual property. Mexico and other such strategically located areas for large US and European markets. which came into effect on 1 January 1995. for a limited period Vivek College of Commerce T. TRIMS The Agreement on Trade Related Investment Measures (TRIMS) applies only to measures that affect trade in goods. every member country must provide to a right holder. It won‘t be a bad idea if Indian textile and garment Industry go multinational setting their foot in western Europe. TRIPS The Agreement on Trade Related of the Intellectual Property Rights (TRIPS) of the WTO.Impact of WTO on India. All the countries that are a part of GATT/WTO have to comply with the TRIPS text. India as a developing country has fallen under the WTO commitments after 1 Jan 2000.Com‘C‘ Page. North Africa. Patents Patents are one of the oldest forms of intellectual property protection and the aim of a patent system is to encourage economic and technological development by rewarding intellectual creativity.Y. Under Article 65. Patent under the Act is grant from the Government to inventor.No-10 . if India has to develop globally competitive infrastructure and facilities in its sectors of interest for world trade. WTO and TRIPS set the minimum level of protection and enforcement provision. It recognizes that certain measures can restrict and distort trade.465 The petroleum sector has to be boosted to tap crude oil and gas resources within Indian boundaries and entering into multinational contracts to source oil reserves.B.No . and states that no member shall apply any measure that discriminates against foreigners or foreign products.
When the patent rights expire. As regards the removal of QR on 1429 items (6digit HS) in 2000/2001. the exclusive right to make. The liberalization of textile imports seems to have led to a sharp increase in imports of textiles in the period 2000 to 2003. use exercise and vend invention. and this may have adversely affected capacity utilization in such industries. a number of them (nearly half) were already importable by the SIL route (Mehta 2000). But. the increase in imports of textiles is small in relation to the increase in exports in this period. the imports increased substantially in a small number of them. but they are also intended for small technological increments.No-11 . selling or importing the invention. in November 2000. and the public is free to use it for their own good.Impact of WTO on India. uncompensated by export increase. using. in that process. overall.B. Patents are intended for breakthroughs in technology.No .Com‘C‘ Page. a list of 133 products and product groups for which standards had previously been voluntary or which had been compulsory but not enforced against imports. were made compulsory (Pursell and Sattar. Impact of WTO in India Two major components of trade liberalization that may be traced to India‘s commitments are (a) removal of quantitative restrictions on textile imports. The purpose of patent is to provide a form of protection for technological advances. First.Y. Roll.465 of time. For instance. The defensive measures had the intended effect of containing imports of the products freed from QR. a number of ‗trade defensive measures‘ were put in place to provide ‗adequate protection and a level playing field to domestic players vis-à-vis import‘ as a result of phasing out of QR (Economic Survey. Three reasons can be given for the absence of any large-scale across-the-board increase in imports of items recently freed from QR. But. 2003). a number of agricultural items in the list have been canalized. But. and the removal of QR is unlikely to have led to any large increase in imports. The advantage of taking out a patent are that the owner of a patent can exclude all others in the territory covered by the patent from making. Third. the technology becomes public property. so that the overall effect of import increase on domestic industry must have been modest. there has been only a limited increase in the imports of the 1429 items (mostly consumer goods) recently freed from QR. 2002). Second. and (b) removal or quantitative restrictions on 1429 items (at 6-digit HS) in 2000/2001 after India had to give up the BOP cover. the gains expected from a liberalized trade regime in terms of Vivek College of Commerce T.
China. the modality of the Agreement was to be established by 31.B. Framework proposes modalities.Com‘C‘ Page. Introduction of a new concept of Special Products for developing countries. average tariff reduction on SP to be at 10%. Present stage of Negotiations • • • • • • • • • • • • • • The third phase of negotiations ended in March-2003.465 higher efficiency and structural adjustment to market driven pattern of comparative advantage were not realized (Wacziarg. G-20 at Cancun. and minimum reduction. Reduction in the De-minimis support for developed countries Proposals only to discipline the Blue Box payments. Harbinson‘s original and revised draft.No-12 .2003. 2003). India. The deadline for establishment of Modality has been missed In the last one year a number of drafts for establishment of Modality have been proposed The major drafts include.Y. Tariff reduction higher than Uruguay Round. 5%. US-EU combined draft. using the concept of average and minimal reductions based on tariff bands. • • • Reduction mainly in the amber box support by developed countries.No .03. especially in agriculture The US & EU attempted to drive their own agenda. Original Cancun Draft and the Derbez Text (Cancun revised draft ) The Cancun Ministerial failed to arrive at any agreement on modality for agriculture. As per original schedule. Vivek College of Commerce T.Impact of WTO on India. Argentina and South Africa were the moving spirits behind the formation of this Group. at the expense of Doha Declaration The concerns of the developing countries were expressed by a group viz. Roll. Brazil. Some of important features of the two Harbinson Drafts are as follows: Includes the crucial numbers. no reduction. There was no willingness on part of developed countries to recognize the genuine concerns of the developing countries. Introduction of Safeguard Mechanism for developing countries.
provision of Special Products with lower tariff reduction. retention of provisions of the present AoA. with possible widening and retention of de-minimus in Amber Box Support • • • • • • • • • • • • • • • • • The US-EU draft. a longer implementation period. Reduction mainly in the amber box support by developed countries. with lower final commitment. They don‘t indicate the key numbers Aggressive reductions in tariff by using a hybrid formula. and the two Cancun drafts are similar in nature and their main features are: The drafts propose only a framework. The criteria for Green Box payments may possibly be reviewed. Roll. The trade distorting elements of export credit to be similarly treated. Reduction in the De-minimis support for developed countries. Reduction commitments for developing countries lower with longer implementation period. Capping of the expenditure under new Blue Box. with a possible phased reduction over the implementation period.B. The de-minimus for the developing countries to be retained at 10%. The S&D for developing countries include. no final proposal The S&D for the developing countries remains on the lines as Uruguay Round. The drafts fail to recognize the inter-linkages in the three pillars of AoA. Swiss formula to be a component of the hybrid formula Reduction for developing countries also to be by same formula. Elimination of export subsidies over an extended period during the implementation period.No-13 . Vivek College of Commerce T.Y.465 • • • • Proposals to tighten the criteria for Green Box payments for developed countries. Capping of product specific support in Amber Box Expansion of Blue box by inclusion of direct payments. SPs to be limited in numbers. a marginally lower rate of tariff reduction. No specific timeframe for elimination suggested.Com‘C‘ Page. Indirect subsidies. No reduction in Green Box payments. provision of Safe guard mechanism. expansion of Green Box for developing countries Elimination of direct export subsidies over a longer period.No .Impact of WTO on India.
The Uruguay Round negotiators had stated their intentions quite clearly in the Preamble to the Marrakesh Agreement establishing the WTO. Vivek College of Commerce T. India has had separate bilateral discussions with USA as well as EU. it is necessary to go back to the basic principles. secure a share in the growth in international trade commensurate with the needs of their economic development". while allowing for the optimal use of the world's resources in accordance with the objective of sustainable development. G-20 had bi-laterals with EU.Com‘C‘ Page.465 • • • • • • • • • The reductions suggested in domestic support are minimal. seeking both to protect and preserve the environment and to enhance the means for doing so in a manner consistent with their respective needs and concerns at different levels of economic development. at present is more on arriving at bilateral understandings.Y.Impact of WTO on India. The stress. and especially the least developed among them. They recognized also "that there is need for positive efforts designed to ensure that developing countries.B. Roll. which serves the objectives for which it was set up. and expanding the production of and trade in goods and services. Conclusion "In order to make WTO an effective multilateral body. as compared to the steep reduction in tariff included in the Draft.No . The drafts fail to recognize the food security and livelihood concerns of the developing countries. They recognised "that their relations in the field of trade and economic endeavour should be conducted with a view to raising standards of living. The Cancun process led to loss of confidence of developing countries in the developed countries. The drafts are not meeting the spirit of Doha Development Agenda. The negotiations have formally not yet started at Geneva. The G-20 has survived the pressures of the developed countries and almost remained united on agriculture issues.No-14 . ensuring full employment and a large and steadily growing volume of real income and effective demand. one in Brazil and other in Geneva.
Y.icrier.wikipedia.org www.ak.Com‘C‘ Page.indianmba.net www.repec.No-15 .org www.fbcdn.commerce.No .s-static.in www.B.scribd.ideas.slideshare.com www. Roll.com www.managementparadise.Impact of WTO on India.org www.465 Reference www.com www.nic.net Vivek College of Commerce T.
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