This action might not be possible to undo. Are you sure you want to continue?
WTO - Past
in 1995, replacing GATT(194794), after 7 years of hard negotiations (Uruguay Round Agreement) - 122 million CHF, Head Office Geneva (www.wto.org) - Free Trade across the countries
of Trade Agreements
for Trade Negotiations
Trade Disputes (DSB of WTO), eg: QR Removal Dispute b/w India and US Agreement 94 - Organisation that seeks to foster a world where persuation supersedes coercion
STRUCTURE OF WTO
Ministerial Conference - Highest Body (At least Once Every 2 years); 1st Conference- Singapore (Dec 1996), Second - Geneva (May1998), 3rd Seattle (Dec 1999), 4th Doha (nov. 01) Cancun (03), Hong Kong (Dec. 2005) General Council - To carry out functions of ministerial conference 1. Dispute Settlement Body 2. Trade Policy Committee
stands for implementing the Uruguay Round (8th) Agreements under GATT - a) ATC b) GATS c) TRIPS d) TRIMS e) Elimination of QRs etc. is against QRs on Imports/the Licensing Restrictions. However, Countries which have BoP problems, have been permitted to impose QRs, under Article 18B.
General Elimination of QRs on Imports
There was pressure from Developed Countries like US to remove BoP clause. Outcome of Uruguay Round: Members confirm their commitment to announce, time-schedules for the removal of QRs on imports for BoP purposes. It needs to be AS SOON AS POSSIBLE. Restrictions can be through price based measures eg: TARIFF
AGREEMENT ON TEXTILES AND CLOTHING (ATC) 1995-2004
Textiles and Clothings historically exempted from purview of GATT disciplines. Thus trade was subjected to Quotas/QRs. GATT 1994 extended to QR removal in Textiles and Clothing (ATC), not cover tariffs. Members were asked to remove QRs on T & C over 10 year period, in 3 stages (3 years, 4 years, 3 years). QRs on Textiles have been removed by all countries.
GATS (General Agreement on Trade in Services )
Cross border Supply (Eg: Software exported in Floppies) i.e., Services supplied from one country to another country Consumption Abroad (Tourism) Commercial Presence (Banking) Ex: RBI increased the number of new Branches of Foreign Banks they can open in an year in India Presence of natural persons (visa issues) Removing Restrictions in Telecom, Insurance, education etc. sectors
TRIPS (Trade related Intellectual Property Rights)
Patents (Process and Copyrights, Designs etc.
May create monoply, but encourages the innovative ideas, original works etc. Basmati Rice example. DSB case Trade Marks (Bislari, Bismillari,ISBHyd and Pune)
No member shall apply any TRIM that is inconsistent with the provisions of Articles 3 or Article 9 of GATT 94.
Article 3 sets out that a foreign provider of a good must be accorded the same treatment that is given to a domestic provider. principle of Article 9 embodies GATT of QRs. Local Input elimination
Requirement in FDI – Relaxed in same countries, but conditions apply in many countries.
Agreement on Agriculture
Benchmark is 5% of the total value of agricultural production (Aggregate Measurement of Support). For Developing countries, benchmark is 10%. India’s AMS is less than 10%. Logic: Subsidies are given to get rid of surplus agricultural commodities abroad at prices below AC of production. i. ii. Market Access Domestic Support
iii. Export Subsidies
Agreement on Agriculture contd.
i. Market Access Rule: Conversion of all non-tariff barriers into tariff rates (Tariffs only) ii. Domestic Support AoA distinguishes support programmes that stimulate production directly and those that are considered to have no direct effect. Those with direct effect should not be more than 5% of total value of production in developed countries and 10% in developing countries.
For and Against WTO
Rules make life easier for all countries Free trade cuts Cost of living It provides more choice of products Foreign Trade raises incomes & Economic Growth
Dictates policy Does not help the new Domestic industrial units as they have to compete with the MNCs in the market for sales. Free Trade may create monopoly/oligopoly
on 1429 items(Before 1st April 2000)- SIL685, Restricted List(Quota-Zero)- 700 items incl. Cars, Canalised List- 44 Items eg: Onion on 714 items removed on 1st April, 00. R.list reduced to 444, SIL to 230 & Cana.list to 41. QRs on remaining 715(444+230+41) removed on 1st Ap.2001
QUOTA and Tariff
on how much of specific products can be imported every year, administered by Government = Import Duty, charged by Customs Average Customs Duty on non-agri goods has come down to 12.5% with surcharge 10% & CVD 4%.
More imports, Choice of Items for Consumers Low Rate of Tariff will reduce the prices(71% in 199394 to 35% average duty) Competition between domestic companies and foreign players, will force the former to manufacture HighQuality items and sell Govt. can impose high tariffs on selected items to protect the domestic industry (LH car imports restricted)