WORLD TRADE ORGANISATION

IN PARTIAL FULFILLMENT OF THE REQUIREMENT UNDER SEMESTER BASED CREDIT & GRADING SYSTEM FOR POST

GRADUATE SEMESTER I

PROGRAM UNDER FACULTY OF COMMERCE

MASTER OF COMMERCE (MORNING)

SYDENHAM COLLEGE OF COMMERCE & ECONOMICS

SUBMITTED BY:

PANKAJ DAFDA

ROLL NO.7

PROJECT GUIDE

DR.

(Professor)

SYDENHAM COLLEGE OF COMMERCE &

ECONOMICS

2015-2016

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I would firstly like to thank the “UNIVERSITY OF MUMBAI” for giving us the liberty of choosing such topic which will be benefited to us in future. I would like to thanks the Principal of Sydenham College Dr. ANNASAHEB KHEMNAR for giving me the opportunity to study in this esteemed college and doing the course of Banking and Finance. I would like to express my sincere gratitude and thanks to DR ANJALI ALEKAR. who is my project guide, as he has been the guiding light for this project and has also provided me with the best of my knowledge, advice and encouragement which helped me in successful completion of my project.

My special thanks to my parents and classmates who have also supported and encouraged me, the success of this project to the large extent is also dedicated to them.

I would also like to thank all those who have helped me and whom I have forgotten to mention in this space.

SIGNATURE OF STUDENT:

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INTRODUCTIONACKNOWLEDGEMENT

CERTIFICATE

This is to certify that MR.PANKAJ DAFDA of M.com-I(morning) 1st. semester (2015-2016) has successfully completed the project on “CONTETIOUS ISSUE OF WTO ”. under the guidance of DR.ANJALI ALEKAR

Project guide:

Internal examiner:

External examiner:

DATE:

PLACE:

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DECLARATION

I Mr.PANKAJ DAFDA the student of M.com-I (morning) 1ST Semester (2015-16), hereby declare that I have completed the project on “CONTETIOUS ISSUE OF WTO”. The information submitted is true and original to the best of my knowledge.

Signature of student

PANKAJ DAFDA

Roll No. 7

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1. EXECUTIVE SUMMARY..............................................................................................

2.

INTRODUCTION...............................................................................................

GATT..........................................................................................................................THE URAUGUAY ROUND....................................................................................FROM GATT TO WTO............................................................................................

3.

OBJECTIVE...........................................................................................................

4. CONTETIOUS ISSUE OF WTO....................................................................................

AGRICULTURE....................................................................................................PHARMACEUTICALS.........................................................................................THE SERVICE SECTOR.......................................................................................TEXTILES AND CLOTHING.............................................................................INFORMATION TECHNOLOGY..........................................................................TRIPS...................................................................................................................

5. INDIA AND THE WTO.......................................................................................

INDIA’S ROLE IN THE WTO...............................................................................INDIA’S WTO COMMITMENT.................................................................................

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CONTENTS

6. COMPARISON OF INDIA’S FOREIGN TRADE BENEFITS.........................................

BEFORE BECOMING THE MEMBER OF WTO........................................................AFTER BECOMING THE MEMBER OF WTO...........................................................

7. EXIM POLICY....................................................................................................

IMPORT..............................................................................................................EXPORT..................................................................................................................

8.

CONCLUSION.......................................................................................................

9.

BIBLIOGRAPHY.....................................................................................................

The Project describes all about the World Trade Organisation (WTO), its Introduction in the World Economy, the Objectives laid for the Organisation, Functions that operates, EXIM Trade Policies, and Scenarios occurred with India Before the formation of WTO & the Benefits gained by India from the organisation.

The topic discussed in this project has a long history with India as one of the powerful member attached to it. Following the Uruguay Round Agreement, the General Agreement on Tariff and Trade (GATT) was converted from a provisional agreement into a Formal Organisation known today as the World Trade Organisation (WTO), with effect from January 1, 1995. There were 128 member countries in 1995, which has

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EXECUTIVE SUMMARY1

increased to 144, with India as one of the important member. The Secretariat of the WTO is based in Geneva, Switzerland. According to the current status WTO now accounts for about 97 per-cent of international trade.

TRADE & INEQUALITIES

Where trade has contributed to increased inequality, its impact has generally being minor to others factors, most notably Technological Change.

TRADE & STRUCTURAL ADJUSTMENT

If Trade reforms are introduced, economic changes need to be made. Import-competing firms appear to adjust by reducing mark-offs, increasing efficiency & often by reducing firm

TRADE & POVERTY

One of the biggest challenges facing the world community is to how to address poverty.

INTRODUCTIONSimply put: “The World Trade Organization (WTO) deals with the rules of trade between nations at a global or near-global level. But there is more to it than that.”

2-1 GATT

In 1947, 23 countries came into an agreement in Geneva on multilateral Trade. This agreement was termed as The General Agreement on Tariffs and Trade (GATT) which came into effect on 1st of Jan. 1948. These countries sought to expand multilateral trade among them. India was one of the founder

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INTRODUCTION2 INTRODUCTION

members of GATT. Many countries signed this agreement in 1994 which resulted no. of members of GATT to 124.

The agreement consists of two main themes:-

1) The agreement formulated some regulations which were to be observed by the member countries.

2) The member countries were to comply with was the Most Favoured Nation (MFN) clause.

GATT was not an organization but was a multilateral treaty, it had no legal status. It provided a platform to its member nations to negotiate and enlarge their trade.

2-1.1 OBJECTIVES OF GATT

The primary objective of GATT was to expand international trade by liberalising trade to bring economic prosperity. GATT mentions the fallowing important objectives.

1) Raising standard of living of the member countries.2) Ensuring full employment through a steady growth of

effective demand and real income. 2 - INTRODUCTION

3) Developing optimum utilisation of resources of the world.4) Expansion in production exchange of goods and services

on a global level.

2-1.2 PRINCIPLES

1) Follow the Most Favoured Nation (MFN) clause.2) Carry on trade in a non discriminatory way.3) Grant protection to domestic industries.4) Condemn the use of quantitative restrictions or quotas.5) Liberalise tariff and non-tariff measures through

multilateral negotiations.

2-2 THE URUGUAY ROUND

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Uruguay Round (UR) is the name by which the 8th and the latest round of Multilateral Trade Negotiations (MTNs) held under the auspices of the GATT popularly known in Punta Del Este in Uruguay launched in September 1986. The main issues in this round discussed were of Agricultural Subsidies, Multi Fibre Agreement (MFA), Trade in Services, Anti Dumping etc.

These discussions were resolved by the then Director General of GATT, Arthur Dunkel. Who came up or Draft of the Uruguay Round consisted of 28 agreements which spelt out the results of Multilateral Trade Negotiations (MTN).

Some of the main agreements of the Uruguay Round were as follows:-

1) Anti-Dumping Code: Dumping is to be condemned if it causes or threatens material injuries to an established domestic industry. A committee on anti-dumping practices should look into such matters related to dumping.

2) Trade Related Investment Measures (TRIMs): Refers to certain conditions or restrictions imposed by a Government in respect of foreign investment in the country. TRIM is widely employed by developing countries.

The agreement on TRIMs provides that no contracting party shall apply any TRIM which is inconsistent with GATT articles. An illustrative list identifies the fallowing TRIMS as inconsistent:-WORLD TRADE ORGANISATION

i. Local content requirement.ii. Trade balancing requirementiii. Trade and foreign exchange balancing requirements.iv. Domestic sales requirements.

3) Trade related aspects of Intellectual Property Rights (TRIPs) - One of the most controversial outcomes of Uruguay Round is the agreement on Trade Related aspects of Intellectual Property Rights (TRIPs) including Trade in counterfeit Goods. According to GATT “Intellectual Property Rights” are the rights given to

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persons over the creations of their minds. They usually give the creator an exclusive right over the use of individual’s creation for a certain period of time.

4) Trade in services - Bank, Insurance, Transport and Communication, etc. are trade related services. The draft agreement proposed that all restrictions on such services should be waived.

Conclusion:

Following the Uruguay Round (UR) Agreement GATT was converted from a provisional agreement into a formal international organisation known as World Trade Organisation (WTO). The organisation began its function from 1st Jan. 1995. It serves as a single institutional framework directed by a Ministerial Conference once every two years and its regular business is overseen by a general council. The WTO secretariat is based in Geneva, Switzerland. The membership of the WTO increased from 128 in July 1995 to 144 countries by Jan. 1st

2002. The WTO members now accounts for over 97 percent of the international trade.

2-3 FROM GATT TO WTOAfter World War II over 50 countries came together to

create the International Trade Organisation (ITO) as specialise agency of the UN to manage the business aspect of international economic co-operation. The combined package of trade rules and tariff concessions negotiated and agreed by 23 countries out of the 50 participating countries came to be known as the General 2 - INTRODUCTION

Agreement on Tariffs and Trade. It came into force in 1948; well the WTO charter was still being negotiated. WTO came into effect from 1 January, 1995.

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The GATT was provisional for almost half a century but it succeeded in promoting and securing liberalization of world trade. Its membership increased from 23 countries in 1947 to 123 countries in 1994. The membership of WTO increased from 128 in July, 1995 to 144 countries as of 1 January, 2002. During its existence from 1948 to 1994 the average tariffs on manufacture good on developed countries declined from about 40% to a mere 4%. GATT focused on tariff reduction till 1973. It was only during Tokyo and Uruguay Rounds that non-tariff barriers were discussed under GATT. With increasing use of non tariff barriers and the increasing significance of service sector in the economy the need was felt to bring non-tariff barriers and intellectual property under the preview of multilateral trade.

2-3.1 OBJECTIVES OF WTOThe WTO has the fallowing objectives:

1) To raise the standard of living in member countries by ensuring full employment and by expanding production and trade in goods and services.

2) To develop an integrated, viable and durable multilateral trading system.

3) To promote sustainable development in member countries by the optimal use of resources.

4) To help the developing countries to get a share in the growth in the international trade.

5) To reduce tariffs and other trade barriers among member countries and to eliminate discriminatory treatment in international trade relations.

6) To insure linkages between trade policies, environmental policies and sustainable development.

2-3.2 FUNCTIONS OF WTOThe basic functions of WTO are as follows:

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1) It facilitates the implementation, administration and operation of the trade agreements.

WORLD TRADE ORGANISATION

2) It provides the forum for further negotiations among member countries on matters covered by the agreement as well as the new issues falling within its mandate.

3) It is responsible for the settlement of the differences and dispute among its member countries.

4) It is responsible for carrying out periodic reviews of the trade policies of its member countries.

5) It assists developing countries in trade policies issues through technical assistance and training programme.

6) It encourages co-operation within international organisations.

1. To know about the structure, function and objective of WTO.2. GATT and how it changed to WTO3. Uruguay Round and its resolution

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OBJECTIVE3

4. How WTO had its impact of India5. India and WTO- India’s role in WTO, India’s commitment6. How India was benefited before and after joining WTO7. EXIM policy

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WTO is the institutional platform for the settlement of trade related issues through discussions and negotiations. Unlike GATT, WTO is both agreement and intuition to implement trade related rules and regulations The conversion of GATT into WTO with necessary powers in 1997 was an historical mile stone in the history of global trade. It is rightly said that GATT with teeth is WTO.. Ever since its inception, WTO could settle large number of trade related issues. How ever still there are a number of contentious and disputed issues before the WTO and creating roadblocks. Such issues have become contentious due to disagreement between members on its interpretation and implementation. Many WTO members especially developing nations feel that, their voice and problems in global trade is not addressed properly. Further the WTO members are also totally divided over some of the issues. Some such serious issuers are

1) Multi fiber agreement: MFA is a major contentious issues at the WTO. During the Uruguay Round talks, WTO Members signed an Agreement on Textiles and Clothing popularly known as Multi fiber agreement or ATC. The agreement mandates that WTO members to implement the ATCs including Minimum Market Access condition over a period of 10 years, starting from 1995. The Agreement on Textiles and Clothing requires the progressive elimination of all quantitative restrictions in four stages and give market access to textiles.

a) Although, MMA conditions have been adopted, many developed countries still practice quotas, tariffs and NTB’s on textiles and clothing of developing nations.

b) Developing countries also complain that the many developed countries still do not meet the minimum requirements of the ATC.

2) Agriculture Subsidies : Agriculture subsidies is another serious contentious issue .Developed still continue to provide subsidies including red box subsidies, disturbing the level playing field of trade. More recently, the World Bank has estimated that 140 million people could be lifted out of poverty by 2015, if WTO members agree to end subsidies and other NTB barriers to agricultural trade.

Although Rich countries have agreed in principle to phase out farm subsidies and Minimum market access conditions , nothing much has been done on this direction.

With respect to subsides to cotton many countries in West Africa, Latin America, and Asia complain that subsidies stimulate excess production, depress world prices, and destroy the value of cotton as a cash crop.

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IMPACT OF WTO ON INDIA4 CONTETIOUS ISSUE OF WTO

3) Labour Standards : This is the most controversial issue before WTO. There is a growing tendency to link labour standards with global trade. Labour standards are misused as strong trade barrier.

The Labor standards are those standard to be applied to the way workers are treated. It covers a wide range of issues, such as Right to Minimum wages ,child labor, forced labor, and the right to organize trade unions.

WTO does not have any agreements on core labor standards, but follow ILO ( International Labor organization) standards. The WTO members are deeply divided over launching negotiations on the above issues.

a) Poor and Developing countries argue , that standards of ILO are distorted and misused by developed nation as a strong trade barrier.

b) At the same time, MMC and developed nations are against the works right such as labour union and labour welfare measures , as such measures will cause hurdle to their investment abroad.

C) Poor countries feels that Some forms of child labor are essential to the survival of poor families as they depend upon the income generated by every family member.

d) Trade restrictions cannot be imposed on a product purely because of the way it has been produced.

e) No country cannot reach out beyond its own territory to impose its standards on another

f) Many developing countries are not ready of making a legal commitment to labor standards.

4) Trade and Environment : Like labour standard, WTO does not have any specific agreement on environment. However the concern for the environment is built into the frame work of WTO agreements. The WTOs environmental mandate has become the subject of intense debate due to disagreement about the impact of international trade rules on the environment.

a) Developing nations very often link trade and environmental issues to support their trade barriers . They use environmental protection as defense to support their Non tariff barrier against the imports from developing nations.

b)Developing countries often find it difficult to implement regulations devised by developed countries because the standards are too strict.

5) Singapore issues : In addition to the above, few more pending issues were raised in Singapore meet of WTO. They are called ‘Singapore issues” The Singapore issue covers

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a) Electronic Commerce: This area of trade involves goods and services crossing borders. , electronically through the internet. It is very difficult to bring transparency in E- trading.

WTO members are silent on the issue and have agreed to continue their current practice of not imposing customs duties on electronic commerce.

b)Transparency in Government Purchases: The WTO has an Agreement on Government Procurement. The agreement covers issues of transparency and non-discrimination.

However the agreement is pluri lateral. Only few members have signed the agreement so far. Many members feel that it is an attack on the sovereignty of nation

At present, members are allowed to exempt govt procurement from WTO market access rules. This state monopoly in trade becomes a de-facto trade barrier.

c) Competition Policy: WTO agreement on Competition policy is a powerful tool to prevent monopolistic abuse of trade.

However member countries argue for full freedom and flexibility to choose a competition law which suits them. Such freedom is essential to protect the national interest in the context of globalization and liberalization

6) Need to deal with Quantitative restrictions : How to deal with NTBs such as voluntary export restraints, social dumping, anti-dumping and countervailing duties etc is another contentious issue.

a) In spite of WTO agreements many counties still follow such unethical practices in trade.

7) Need to deal with Regional trade agreements: Another major challenge which lie ahead for WTO is how to cope up with challenges of regional trade blocks and their activities that may come in the way of multilateral trade.

Trade blocs in effect, have become a stumbling bloc rather than building bloc as claimed by supporters of Regional trade blocs. Global trading scenario is distorted by presence of large number of trade blocs

8) Measures to be taken for trade Facilitations: : After Doha round of WTO , developing countries continued to voice concerns that new multilateral obligations on trade facilitation is non practical and difficult to implement.

Although the “trade facilitation” or promotion measures of national government seems to be harmless, the establishment of multilateral rules in this area may go against the interests of developing countries.

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Thus, WTO is plagued with large number of contentious issues. There is an urgent need to address the issues and iron out differences. The success and survival of WTO depends upon how fast we can find solutions to the contentious issues.

4-1 AGRICULTURE

Globalization – manifesting in progressive integration of economies and societies has assumed increasing significance in the lives of common people all over the world. In the field of the trade the World Trade Organization (WTO) is the principal international institution responsible for laying down rules for the smooth conduct of trade in goods and services among nations in this globalized world. This is achieved by developing a set of rules of multilateral trading system which aims to remove, inter alia, trade barriers (tariff and non tariff) as well as reduce and eventually remove domestic support and system of export subsidies that distort international trade between nations. These problems of trade distortion are most conspicuous in agriculture sector.

Agriculture is of special significance for developing countries particularly the extreme poor (i.e. those living on one dollar or less per day). It has been estimated that “three quarters of them about 900 million people – live and work in rural areas, most of them as small farmers”. Table 1 shows that where as agriculture contributes 3% to the GDP and employs only 4% of the 4 – IMPACT OF WTO ON INDIA

population in developed countries the corresponding figures for developing countries are 26% and 70% respectively.

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Table 1: Key differences between agriculture systems in developed and developing countries

Parameters Developed Countries

Developing Countries(including least developed)

Nature of Agriculture System

Commercial/Export Oriented

Subsistence

Share of GDP 3% 26%Contribution to foreign exchange

8.3% 27%

Population engaged in agriculture

4% 27%

Source: Green, D and Priyadarshi, S. (2001) Proposal for “development Box” in the WTO Agreement on Agriculture, CAFOD and South Centre, Kaukab, R; (2002) Presentation at Agriculture and WTO Seminar, Ministry of Commerce, Government of Pakistan, Islamabad, August, 2002, Action Aid “Food Rights” The WTO Agreement on Agriculture, 2003.

The agriculture was included in the multilateral trading system after the eighth (Uruguay) round of talks under GATT on demand of developing countries who had a comparative advantage in this sector and its benefits were being denied to them. This trade round stretched from 1986-1994 and concluded in establishment of WTO and inclusion among others of agriculture in the discipline of WTO. This was achieved by developing countries only after paying a heavy price in the form concessions on many fronts especially intellectual property rights and services.

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WTO policies impact agriculture principally through the following agreements:

1. Agreement on Agriculture (AOA)2. Agreement on Application of Sanitary and Phytosanitary

Standards (SPS):(Dealing with Health and disease related issues)

3. Agreement on Technical Barriers to Trade (TBT):(Dealing with Regulations, standards, testing and certification procedures, packaging, marking and labeling requirements, etc)

4. Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPs): (Dealing with Patents and copyrights, plant breeders’ rights etc).

Activists cry foul that Indian agriculture, already reeling under severe drought and fall in cash crop prices, will die once the import curbs are removed and free flow of food items are allowed into India.

"There is going to be 'madness' in the agriculture sector. Farmers will be hit hard by the WTO regime. What happens to our vegetable oils, rice, rubber, coconuts and fruits, if similar items can be imported cheaply from other countries," asks K Sundaran, a social activist espousing farmers causes in South India.

He says currently there is a massive distortion in the international trade in agriculture. Industrialised countries have been giving huge domestic subsidies to their agricultural sector that there is excessive production, import restrictions and dumping of agri-products in international markets. But despite the concerns of farmers, many believe the WTO rules will not adversely affect the Indian agriculture as it is made out. Developed nations have committed to the WTO that they would reduce subsidies and tariff. So then better overseas markets will be available for Indian agricultural products.

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4-2 PHARMACEUTICALS

India has one of the most efficient pharmaceutical industries in the world.

Pharmaceutical firms grew mainly thanks to the absence of patent protection of medical drugs in the country. For instance, Indian companies are now producing their own AIDS drugs, which are available cheaply, compared to the original products from foreign countries.

But the imposition of the new WTO rules will begin to threaten India's achievements in the pharmaceutical field. The Indian Patents Act, introduced in 1970, boosted Indian pharma companies. The Act allowed them to develop and patent alternative processes for products discovered and patented elsewhere.

According to the Indian Drug Manufacturers' Association, self-sufficiency in Indian pharmaceutical sector is more than 70 per cent.

"Worldwide, India is a country of very low prices for high-quality medicines," points out the IDMA president Nishchal H Israni.

But now the rules of the game in the pharmaceutical industry will change as India has committed to toe the WTO line on product patents. Product patent rules and Exclusive Marketing Rights (EMR) under the WTO could affect a paradigm shift in India's pharma majors.

As per the EMR provision, a product for which original patent was granted prior to 1995, is not fit for an EMR in the country. This has forced nine leading domestic pharma companies to form the Indian Pharmaceutical Alliance that has demanded a more transparent WTO regime for EMR grants.

How will the WTO rules affect 500,000 employees working in roughly 20,000 pharma firms in the country?

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Well, many expect a spate of mergers, acquisitions and alliances in the domestic pharmaceutical industry in the coming years, as the impact of WTO regulations kick in, Indian pharma players are learning to collaborate and consolidate to grow.

If the industry is to be believed, the Matrix-Strides merger is only the beginning of the shakeout that the pharma sector is set to witness over the next few years.WORLD TRADE ORGANISATION

4-3 THE SERVICE SECTOR

As per the WTO rules, two obligations apply to all services. They are the Most Favoured Nation (MFN) treatment and transparency by way of publication of all laws and regulations. Which in other words means that areas like banking, insurance, investment banking, health, and many other professional services that are opened up will be bound by the WTO commitments? India will have to open up its services sector to other WTO member countries. The result: many overseas service providers will enter into the services sectors in the country, thereby reducing the chances of domestic enterprises.

But experts believe India need not be frightened of the WTO rules on services because the country at present has a distinct competitive advantage in many areas that include health, engineering construction, computer software and other professional services.

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4-4 TEXTILES AND CLOTHING The WTO agreement on textiles and clothing states that

the Multi-Fibre Agreement (MFA) will eventually be eliminated. MFA at present groups the major importer countries -- the United States, Austria, Canada, the European Community, Finland and Norway -- who apply restrictions by way of quota.

Exporting countries like India are a part to the MFA. The phasing out of MFA will boost textile exports from India. It will

also increase investment in textiles and joint ventures. But the risk is that as India opens up its market from next month, import of textiles and clothing will considerably increase from countries like China, the Unites States, Taiwan and Indonesia.

This will force many textile manufacturers to modernise their mills and improve quality.

4-5 INFORMATION TECHNOLOGY

Under the Information Technology Agreement signed under the WTO, Indian hardware and software companies can become major players in the value-added arena.

Availability of high-skilled of IT personnel and low cost of labour and operation will allow India to compete in the international market.

4-6 TRIPS (TRADE RELATED INTELLECTUAL PROPERTY RIGHTS)

TRIPS Article 27.3(b), which requires all WTO countries to provide some kind of intellectual property rights (IPR) on plant varieties, was up for review in 1999. TRIPS are a clearly anti-developing country treaty. Its provisions seriously threaten self reliance in agriculture and the livelihoods of farmers. TRIPS do

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not contain any elements of equity or benefit sharing. It does not allow countries to claim a share of benefits companies who breed new varieties using farmers’ varieties as the base since there is no provision requiring disclosure of the country of origin from where base materials have been taken. The Trade Related Aspects of Intellectual Rights (TRIPS) agreement set minimum standards for protection of IPRs, a standard that is closer to the level of protection provided in the developed world

5-1 INDIA’S ROLE IN THE WTOIndia is a founding member of the GATT (1947), it actively

participated in the Uruguay Round Negotiations, and is a founding member of the WTO. India strongly favours the multilateral approach to trade relations and grants MFN treatment to all its trading partners, including some who are not members of WTO. Within the WTO, India is committed to ensuring that the sectors in which the developing countries enjoy a comparative advantage are adequately opened up to international trade. It also has to see that the different WTO Agreements are translated into specific enforceable dispensations, in order that developing countries are facilitated in their developmental efforts. India feels that the multilateral system would itself gain if it adequately reflected these concerns of the developing countries, so as to create the necessary impetus to enable developing country members to catch up with their developed country counterparts.

5-2 INDIA’S WTO COMMITMENT

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5 INDIA AND THE WTO

Under the Uruguay Round India has bound 67% of all its tariff lines, whereas prior to that only 6% of tariff lines were bound. The bindings range from 0 to 300% for agricultural products from 0 to 40% for other products. Under the Uruguay Round manufactured products were bound at 25% on intermediate goods and 40% on finished goods.

5-2.1 Balance of paymentsUnder the exceptional provision of Article XVIII: B of GATT,

India has some residual quantitative restrictions on imports WORLD TRADE ORGANISATION

maintained for balance-of-payments purpose. These aggregate to 2,714 tariff lines at the eight-digit level of the Indian Trade Classification. In May 1997, India presented to the WTO a plan for the elimination of these restrictions in imports, including those on consumer goods. This plan was considered at the consultations with India of the WTO Committee on Balance-of-Payments Restrictions in June-July 1997. At the request of the United States, a panel was constituted on 18 November 1997 to examine the US allegation that the continued maintenance of quantitative restrictions on imports by India is inconsistent with India's obligations under the WTO Agreement.

5-2.2 AGRICULTUREThe only commitment India has undertaken under the

Agreement is to bind its agricultural tariffs. This commitment has been fulfilled by India binding its tariffs for primary agricultural products at 100%, processed food products at 150% and edible oils at 300%.India's prevailing agricultural tariffs are well within the bound rates. Under the Uruguay Round, whenever we have bound tariffs on agricultural commodities at zero or very low-levels, renegotiation of tariff bindings have been sought under Article XXVIII of GATT.

The Agreement on Agriculture was designed to improve world trade, raise prices of agricultural products and ensure higher standards of living for farmers.

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5-2.3 TEXTILESAs per the obligations under the Agreement on Textile and

Clothing (ATC) to integrate this sector into GATT 1994 in stages, the Indian Government moved cotton and wool yarn, polyester staple fibre and 20 other industrial fabrics on to the list of freely importable goods in 1995. India is concerned about the fact that repeated anti-dumping investigation by certain trading partners on the same product lines, without giving full effect to the special dispensation provisions of Article 15 of the Anti-dumping Agreement has resulted in trade harassment for its exporters of textiles. 5 – INDIA AND WTO 5-2.4 INTELLECTUAL PROPERTY

India is availing itself of the transition periods due to her under Article 65 of the TRIPS Agreement to meet her obligations under the seven areas covered by the Agreement.     India's achievements in this field have been in the passing of TRIPS plus legislation in the field of Copyright Law. The 1994 amendments to the Act of 1957 provides protection to all original literary, dramatic, musical and artistic works, cinematographic films and sound recordings. The most recent changes bring sectors such as satellite broadcasting, computer software and digital technology under Indian copyright protection.

5-2.5 TRADES RELATED INVESTMENT MEASURES

Substantial modifications have already been made to the foreign investment regime, increasing the number of sector where foreign investment can take place and also increasing the foreign equity limit on these investments. India has already notified the trade-related investment measures maintained by it in terms of Articles 2 and 5 of the TRIMs Agreement and the illustrative list annexed to the TRIMs Agreement.

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5-2.6 ANTI-DUMPINGAnti-dumping and countervailing duties are imposed under

the Customs Tariff Act 1975 and the Rules made there under. The Act and Rules are on the lines of the respective GATT Agreement on anti-dumping and countervailing duties. The time limits and the procedures prescribed under the Indian laws/GATT Agreement is strictly followed by the designated authority. With the increasing number of cases, the Government of India proposes to set up a Directorate General of Anti-dumping and Allied Duties for expeditious disposal of anti-dumping and countervailing duty cases.

WORLD TRADE ORGANISATION

5-2.7 SERVICE SECTORThe services sector accounts for about 40% of India's GDP,

25% of employment and 30% of export earnings. Recognizing the importance of the services sector in achieving higher economic growth, the government is giving added emphasis to improving services such as telecommunications, shipping, roads, ports and air transport. The foreign direct investment regime has been liberalized to attract foreign investment in the services sector.India actively participated in the Uruguay Round services negotiations and made commitments in 33 activities as compared to an average of 23 for developing countries. India also participated in the spill-over negotiations. In basic telecommunication services, India has undertaken commitments in the areas of voice telephone service for local and long-distance (within the service area), cellular mobile services and other services such as circuit switched data transmission sources, facsimile services, private leased circuit services as per details given in the schedule of commitments.

While developed countries have surplus capital to invest, most of the developing countries have surplus of skilled, semi-skilled and unskilled workers. We have a large pool of well-qualified professionals capable of providing services abroad. As developed countries have a comparative advantage in exporting capital intensive services, similarly developing

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countries have a comparative advantage in exporting labour intensive services involving movement of persons.

In Article IV of GATS, there is a clear obligation to increase the participation of developing countries in trade in services. The Agreement also recognizes the basic asymmetry in the level of development of the services sector in developed and developing countries and a commitment that the developed countries will take concrete measures aimed at strengthening the domestic service sector of developing countries and providing effective market access in sectors and modes of supply of export interest to developing countries. 5 – INDIA AND WTO

5-2.8 INFORMATION TECHNOLOGYIndia participated in the negotiations on the Agreement

from the early stages and after examination of the implications of the proposed agreement and extensive discussions with trading partners joined as a participant on 1 April 1997. India is committed to phasing out the import tariffs on the products covered by the ITA as scheduled.

5-2.9 REGIONAL TRADE AGREEMENTSIndia attaches significance to her participation in regional agreements within the framework of multilateral rules. India has been instrumental in setting up the South Asian Association for Regional Cooperation (SAARC), whose major achievement in 1995 was the conclusion of the negotiations on trade preferences within the framework of the SAARC Preferential Trading Arrangement (SAPTA). SAPTA became operational on 7 December 1995 and includes preferential tariff concessions on 226 items and product groups. A second round of SAPTA trade negotiations was launched in January 1996 to broaden tariff concessions. India granted concessions on 902 tariff lines, effective 1 March 1997.

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6-1 BEFORE BECOMING THE MEMBER OF WTOIt’s agreed that India was one of the founder member of

WTO; it faced problems in Foreign Trade grounds. The problems that India faced before the formation of WTO were the following:

(1) Absence of Anti – dumping (2) No Subsidy Facilities(3) Absence of TRIMs & TRIPs(4) Lac of Market Scenario & Strategies

6-2 AFTER BECOMING THE MEMBER OF WTO(1) Anti-Dumping - Dumping is condemned if it causes or

threatens material injury to an established industry. A product is considered as dumped when its export price becomes less as compared to the normal price in the exporting country plus a reasonable amount for administrative, selling and any other costs and for profits.

Anti dumping measures can be employed only if dumped imports are shown to cause serious damage to the domestic industry in the import industry. The measures are not allowed if the margin of dumping is de minimise.

(2) Subsidies - The draft agreement defined certain specific subsidies which would be subjects to various disciplines. Certain other types of subsidies would fall under” prohibited ” category.

(3) Technical barriers to trade - Technical regulation and standards along with testing and certification procedures should not create unnecessary obstacles to trade.

6 – COMPARISON OF INDIA’S FOREIGN TRADE BENEFITS

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COMPARISON OF INDIA’S FOREIGN TRADE BENEFITS6

(4) Right of market-The main issue is to reduce tariff and other trade restriction in case of commodities like agricultural goods, textiles etc.

(5) TRIMs (Trade related investment measures) - Widely employed by developing countries. Refers to certain conditions imposed by government in respect of foreign investment. The agreement of TRIM provides the following inconsistent TRIMs.a) Local content requirementb) Trade balancing requirementc) Trade and foreign exchange balancing requirement.d) Domestic sales requirements.

(6) TRIPs (Trade Related Aspects of Intellectual Property Rights-It is defined as “information with commercial value”. Intellectual Property Rights have been characterised as a composite of “ideas, inventions and creative expression”.

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7–1 IMPORT7-1.1 Indian Import Policy

Import is the antonym of export. In the terms of economics, import is any commodity brought into one country from another country in a legal way. The economic needs of the country, effective use of foreign currency are the basic factors which influence India's import policy. There are mainly 3 basic objectives of the import policy of India:

To make the goods easily available. To simplify importing license. To promote efficient import substitution.

7-1.2 Current Scenario of Imports in India There are few goods which cannot be imported namely tallow fat, animal rennet, wild animals, unprocessed ivory etc. Most of the restrictions are on the ground of security, health, environment protection etc. Imports are allowed free of duty for export production. Input output norms have been specified for more than 4200 items. The norms tell about the amount of duty free import of inputs allowed for specified products. There are no restrictions on imports of capital goods. Import of second hand capital goods whose minimum residual life is of five years is permitted. Export Promotion Capital Goods (EPCG) scheme provides exporters to import capital goods at a concessionary custom rates. In the past 30 years Indian imports have risen quite dramatically. At present imports accounts for 17% of the GDP. Capital goods have been continued to be imported and in the last three years, their share has fallen from 25% to 22%. 7 – EXIM POLICY

7-1.3 Major Indian Imports30

7 EXIM POLICY

There are facilities available for the service industries to enjoy the facility of zero import duty under EPCG scheme. Some of the major imports of India are edible oil, newsprint, petroleum and crude products, crude rubber, fabrics, electronic goods etc.

7-1.4 Problems due to Large Import of Products The recent trend of imports is of some concern. The regular imports of oil reflect upon the fact that India is not able to produce the quantity of oil required in India. Moreover the increase in the imports of products also highlights the fact that the Indian domestic industries need to be developed. It also creates pressure on the economy as the money ultimately has to be bearded by the people.

WORLD TRADE ORGANISATION

7-2 EXPORT

Export means the transferring of any good from one country to another country in a legal way for the purpose of trade. Export goods are provided to the foreign consumers by the domestic producers.

7-2.1 Indian Exports: A History The history of Indian exports id very old. During prehistoric times India exported spices to the other parts of the world. India was also famous for its textiles which were a chief item for export in the 16th century. Textiles and cotton were exported to the Arab countries from Gujarat. During the Mughal era India exported various precious stones such as ivory, pearls, tortoise stones etc. But during the British era, Indian exports declined as the East India Company foreign trade of India.

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7-2.2 Indian Exports: Current Scenario Every year India earns billion of dollars by exporting various goods and items. The Indian government has outlined certain export policies. The export policies tell about the products to be exported and the countries to whom exports are to be done. The government of India works with the Federation of Indian Export Organization, the leading export promotion organization of India. Exports are the major focus of India's trade policy and most of 7 – EXIM POLICY

the items can be freely exported from India. A few items are subject to export control to prevent their shortage. The profits from exports are exempted from income tax. Indian exports contribute nearly 12.4% in the GDP.

7-2.3 Leading Export Items of India In the past ten years, exports have grown at a rate of nearly 22%. Some commodities have enjoyed faster export growth than others. Some of India's main export items are cotton, textiles, jute goods, tea, coffee, cocoa products, rice, wheat, pickles, mango pulp, juices, jams, preserved vegetables etc. India exports its goods to some of leading countries of the world such as UK, Belgium, USA, China, Russia etc.

7-2.4 Restriction on the Exports of Items However there are some restrictions on the export of goods. Under sub section (d) of section 111 and sub section (d) of section 113, any good exported or attempted to be exported,

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contrary to any prohibition imposed by or under the customs act or any other law is liable for confiscation.WORLD TRADE ORGANISATION

7-2.5 Problems of the Indian Export Sector

But there are few problems which need to be solved before India makes a mark for itself in the export sector. The Indian goods have to be of superior quality. The packaging and branding such be such that countries are interested to export from India. At the same time India must look for potential market to sell their goods. The government should frame policies which gives boost to the exports.

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The developed countries want that the underdeveloped countries observe some restrictions relating to labour employment and ecological balance. Their argument is that the underdeveloped countries use child labours or their social security measures are very poor. Further, these countries do not take measures to control pollution or to maintain ecological balance. As a result, cost of production in such countries is low. So, the developed countries should be allowed to impose tariffs or imports from underdeveloped countries until the developing countries improve the condition of labour and do not employ child labour. Thus, the developed countries tried to impose many restrictions on the production process of the underdeveloped countries. Thus, if the developing countries try to protect their interest as a group, they may stand to gain from the WTO system.

If we consider both sides of a coin then we can conclude that if the developed countries liberalise their import of agricultural goods, India’s export of agricultural goods will increase. India has a comparative cost advantage in the production of agricultural commodities. Hence India’s of such commodity is expected to increase.

On the other side according to the agreement of Trade Related Investment Measure’s (TRIMs), there should not be any discrimination between foreign and domestic investments. As a result, it will very difficult to control the restrictive activities of

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8 CONCLUSION

the following investors. This agreement will also favour the investors of the developed countries.

(1) Business Economics & Business Environment – Jaydeb Sarkhel.

(2) International Business - Francis Cherunilam

(3) International Marketing – Rakesh Mohan Joshi

(4) www.wikipedia.org

(5) www.exprasspharma.com

(6) www.wto.org

(7) Annual Report 2007

(8) Department of Commerce, Government of India

(9) Trade Policy Reviews 2002

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BIBLIOGRAPHY9