India At Wto Loss Or Gain Economic Environment Of Business - Aneesh Bhandari & Group Lbsim New Delhi

Economic Environment Of Business

INDIA AS A MEMBER OF WTO: LOSS OR GAIN Presented By: (Group- 7)

Aishwarya Asopa Aneesh Bhandari Rahul Mittal Amit Garg

Sumit Singh Anand

Geetanjali Khanna

From the scratch... 

After World War-II, need for international trade platform.



Havana Charter - International Trade Organization (ITO) was envisaged along with IMF & WB as a pillar of post World War -II Construction & Economic Development

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Inception of General Agreements for Tariff & Trade st (GATT) on 1 January 1948, at Geneva

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Proved remarkably successful in liberalizing world trade over the next five decades

G.A.T.T. 

India signatory to GATT 1948 along with twenty two other countries



It was a provisional agreement and organisation under whose umbrella ‘negotiation rounds’ were held.

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From 1948 to 1995, there have been 8 trade rounds.

G.A.T.T. 

First 6 rounds were on negotiations on Tariff Barriers.

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Seventh round (Tokyo) focused on reducing tariff as well as non tariff barriers.

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The most comprehensive round was the Uruguay round (1986 - 1994). 123 countries took part in the discussions, laid foundation for the WTO.

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A ninth round, the ‘Doha Development agenda’(started in 2001) is currently ongoing wherein GATT serves as an agreement for trade of Goods.

During the Uruguay Rounds under GATT, a need was identified for a stronger multilateral organization to monitor trade and resolve trade disputes

Inception of the World Trade Organization (W.T.O.)  The WTO replaced GATT on January headquartered at Geneva, Switzerland

1, 1995,

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It came into existence to provide for an international organization designed to supervise and liberalize international trade

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The World Trade Organisation deals with the rules of trade between nations at a global level.

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Currently, WTO has 153 members and channelizes 95% Of World Trade

Objective 

Strengthen the relations between the member countries in the field of trade and development with an endeavour to raising the standards of living of their people.

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Ensuring full employment and a steady growing of real income and effective demand.

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Developing the full use of the resources of the world, reciprocally and mutually advantageous to all.

Roles……….. •

Transparent, free and rule-based trading system

•

Provide common institutional framework for conduct of trade relations among members

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Facilitate the implementation, administration and operation of Multilateral Trade Agreements

•

Rules and Procedures Governing Dispute Settlement

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Trade Policy Review Mechanism

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Concern on Non-trade issues such as Food Security, environment, health, etc.

Areas The WTO covers three broad areas: goods, services and intellectual property. For each, there is a main agreement:   

Goods: the General agreement on tariffs and Trade Services: the General Agreements on Trade in Services Intellectual property: Trade Related Aspects of Intellectual property Rights Under each of these agreements, there are subagreements dealing with specific sectors or issues.

The system helps promote peace  Disputes are handled constructively  Rules make life easier for all  Freer trade cuts the costs of living  It provides more choice of products and qualities  Trade raises incomes  Trade stimulates economic growth  The basic principles make life more efficient  Governments are shielded from lobbying  The system encourages good government 

On the other hand … Opposing forces argue that the WTO infringes upon national sovereignty & promotes interests of large corporations at the expense of smaller local firms struggling to cope with import competition It has been repeatedly argued that WTO provides for extensive environmental damage, also harms interests of low-skilled & unionized workers. The third world network has called the WTO "the most nontransparent of international organisations", because "the vast majority of developing countries have very little real say in the WTO system

INDIA & W.T.O.  India

is one of the 23 founding members of WTO.

 India

has been a passive member of WTO until the 8th Trade Round.

 Started

1991.

to play an active role from the year

Passive approach 

In May 1995, about 2/3rd of tradable GDP was still protected by some kind of nontariff import restrictions.



Since 1955,India had used the GATT balance of payments provision (Article VIII(B)) to justify her routine use of QRs.

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International pressure increased because India had a strong foreign exchange reserves.

India’s first big step….  In

the Uruguay Round (8th) negotiations, India agreed to reduce tariff on a large number of commodities and remove quantitative restrictions (QRs) on all commodities, except for about 600 commodities for security or other reasons.  For industrial products, India decreased the average tariff rate from about 71 per cent in the pre-Uruguay Round period to about 32 per cent in the post-Uruguay Round era.

Assessing the Impact

Tariff Reform 

Decline in India’s tariff rates from 150% in 1990-91 to 40% in 1997-98 and 20% at the end of 2003-04.

 The

import weighted average tariff for Indian industries declined from 84% in 1993-94 to 30% in 1999-00 and further to 27% in 2001-02.

Agricultural sector  Reduction

of domestic support in the form of

subsidies  Minimum

market access commitment

 Possibility

of disbanding public distribution

system  Extension

of trade related intellectual property rights (TRIPS)

TRIPS TRIPS Article 27.3(b), which requires all WTO countries to provide some kind of intellectual property rights (IPR) on plant varieties, has been a focus of debate.  TRIPS is clearly an anti-developing country treaty. Its provisions seriously threaten self reliance in agriculture and the livelihoods of farmers, by seeking to establish a monopoly for the Life Science Corporations on seed production and sale.  Not obligatory in India. 

In India.. 

Enacted a system for protection of plant varieties- “Plant Breeder’s Rights” system by 2000 AD.

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Under this system, India is free to provide the “farmer’s privilege” and “researcher’s privilege”.

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Farmer will have the privilege to retain the farm produce for growing subsequent crops on his own land or leased-in land, to exchange or sell as grains, except sell of seeds with a brand name.

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Almost all agricultural research and plant breeding in India is financed with the taxpayers money. It is conducted in public institutions like agricultural universities and institutions of the Indian Council of Agricultural Research (ICAR). This research belongs to the public.

Impact of WTO on India’s oilseed economy The import of edible oils  Level of tariffs for imported oil  Demand projections for India’s edible oil  International oil prices and consequent impact on domestic availability & demand  Government of India’s fiscal incentives for motivating the farmer to shift to oilseed cultivation  Agricultural reforms’ policy 

Energy  We

have the world’s fourth-largest coal reserves. But a mixture of bureaucratic red tape, poor infrastructure, corruption and social unrest around the mines means the growth of our domestic coalmining industry is not keeping pace with the demands of our rapidly expanding economy.  The WTO can contribute to a more efficient allocation of energy resources and generally a better trading environment for energy.

Environment Related Standards

 The

debate on the impact of trade liberalization has intensified with a growing literature on the effects of international trade on the environment.  Participants like India fear that there could be conflicts between trade liberalization and environmental concerns.  Issues related to market access, particularly the impact of environmental measures on the access from an Indian perspective in case of two products: (1) marine products, and (2) tea.

…………..Health related

 The

WTO can contribute to a more efficient allocation of energy resources and generally a better trading environment for energy.  Critics suggest that the WTO prioritizes trade objectives at the expense of environmental and health and safety objectives.

Anti-Dumping Duties  India

ranks first in imposing anti-dumping duties

 India

led all WTO member-countries in implementing anti-dumping measures followed by European Union and Indonesia

 Government

takes anti-dumping measures to protect domestic industries from cheap imports.

Liberalization of Textiles Imports 

It provides dismantling of the discriminatory quota regime and practices under the Multi Fibre Agreement



In 2000 and 2001, QRs were removed on 1429 items and these included a large number of textile items. Thus, by 2001, QRs on textile imports were completely removed.



It helped to increase the import of fabric.It was doubled in 2003-04 than 1999-00.

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As a result, Textile contributes 26% of total exports of india.

Impact on service sector  Movement

of natural persons supplying

services  Supply  World

of financial services

class quality of management education

Doha Development Agenda Impact of Trade and  Past Trade liberalization Poverty  India

& Jobless growth?  Tracking the MDGs  Poverty at centre stage of trade liberalization  Services as a driver of Indian Economy  High Poverty Alleviation potential of Agriculture.  Textiles & Trade Protection  Where to now???

Concluding …

India Seeks •

Protecting our food and livelihood security by having sufficient flexibility for domestic policy measures.

•

Protecting domestic producers from the surge in imports or significant decline in import prices.

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Substantial reduction in export subsidies and domestic support to agriculture in the developed countries for greater market access to products of developing countries.

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Finally, a more equitable & fair trading framework for agricultural commodities.

1. Market Access The negotiations on market access should include the following issues:



Reduction of peak tariffs and removal of tariff escalations

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Reduction in the number of tariff rate quotas (TRQs) in a progressive manner.

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Volume of imports allowed under quotas to be substantially expanded till TRQs are eventually eliminated

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Transparent administration of TRQs

•

2. Domestic support The negotiations on domestic support should include the following elements: 

Substantial reductions in all forms of domestic support should be undertaken by the developed countries.

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Subsidies excluded from the discipline introduced by the AoA, i.e. those appearing in the “Blue Box” and the “Green Box”, need to be re-assessed, particularly from the point of view of their influence on production.

3. Export Subsidies The negotiations on export subsidies should include the following issues: 

Countries using export subsides should phase out this form of farm support within two years of implementation of the revised disciplines to be followed by countries in the agricultural sector.



Export subsidies discipline should include all forms of spending that enhances the capacities of exporters to increase trade, e.g. export credit, guarantees and insurance programs.

References  Paper

from Overseas Development Institute, U.K.  Paper on FTA by Deutche Bank, Germany  Paper on “Impact on India of Trade & Quantitative Restrictions under WTO” by ICRIER  http://www.wto.org  ILO website

THANK YOU !