India's Role In Forming Wto

When the Uruguay round of GATT talks was in progress during early 1990s, Indian economy was ailing and was totally out of track. Under this compelling situation, India adopted new economic reforms (NERS) in 1991 based on Rao-Manmohan Model as a crisis driven strategy. Macro Economic Stabilization (MES) which covered reforms in monetary policy, fiscal policy and external sector was brought to provide immediate relief to ailing economy. But, structural reforms, also called SAP(Structural Adjustment Programmes), was meant for long term reform process which covered components of industrial policy reform, PSU reform, financial sector reform and trade & capital flow reforms. Then crisis-driven reforms has now reached to consensus driven under second generation of our reform policies. These changes in Indian economy based on LPG gave rise to a new market economy that brought growth and development in India. In this context, the emergence of WTO as multilateral trade body to make trade friendly environment at the global level and Indian attachment to this body could be understood. India one of the founder member of WTO, had its own expectations as well as reservations about the new economic order. While it unleashed great opportunities for agriculture and textiles sectors by improving their access to developed countries (as provided by AoA-Agreement on Agriculture and phasing out of MFA- Multi Fiber Agreement), it has some grey areas in the form of provisions for patent regime and services sector. As the events gradually unfolded, India, like other developing countries recognized that the rules of the game were not favorable to them and they must play on active role within the permissible limits to minimize the damage. In the last decade, our economic agenda and the policies to be pursued have been largely shaped by the WTO commitments. India adopted the process of globalization and WTO rulings as a facet of structural reforms. It brought devaluation in currency in 1991 and also adopted convertibility system in Indian rupees in different stages. Trade and current account have been made fully convertibility regime, though cautious and as a long term objective. Various steps have been taken towards import liberalization in India, for example, de-licensing, de-canalisation &expansion of OGL (open general license), removing quantitative restriction, lowering peak custom rate, etc,. India has also adopted a very liberal policy towards foreign capital to attract direct foreign investment and portfolio investment. Insurance and print media have been opened for private competition. India has made following changes in the economy as mandated by WTO. •

Quantitative restrictions have been completely phased out in 2000-01 and only the tariff structure remains which itself has been lowered considerably, with 67% of the tariff lines being bound.

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Patent law has been reformed with amendment of Patent act (2006). It provides for product patent in pharmaceutical and farm products.

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Under the TRIMS agreement, restrictions on entry of foreign investment and conditions upon various aspects have been removed and relaxed. Except a

few sectors, FDI is being allowed upto 100% though automatic route and Indian companies are also free to invest abroad. •

Under the GATS(General Agreement on Trade in Services), India has made commitment in 33 activities where foreign service providers are allowed to enter keeping in view national interests.

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India’s legislation on Custom Valuation rules, 1998 has been amended to bring it in conformity with the provisions of WTO agreements on implementation of article VII of GATT 1994 and the Customs Valuation Agreement.

A survey of last 15 years since adoption of new economic reforms and especially after joining WTO, it is now clear that we have done well and still a lot of scope remained for further development. The process of globalization and the provision of WTO have had, no doubt, some important positive implications. Under this process, a platform has been created for different types of multilateral agreements. Multilateral regulation and discipline have been established & imposed and up to certain extent, trade friendly environment has been created. Disputes are being solved & managed and trading activities are getting protection. India is also getting the benefits of this emerging trade friendly environment. Indian exports, especially exports of agricultural good, have been increased. The Doha development Agenda, though passing through hard times; is built on the long term objective of the AOA to establish a fair and a market oriented trading system. India could be highly advantaged with DDA. During the ongoing negotiations, India and other developing countries have sought a special safeguard mechanism (SSM) for addressing situations of import surges or swings in international prices of agricultural products. Other measures concerning developing countries in the WTO agreements include: • Extra time for developing countries to fulfill their commitments (in many of the WTO agreements) • Provisions designed to increase developing countries’ trading opportunities through greater market access (e.g. in textiles, services, technical barriers to trade) • Provisions requiring WTO members to safeguard the interests of developing countries when adopting some domestic or international measures (e.g. in anti-dumping, safeguards, technical barriers to trade) • Provisions for various means of helping developing countries (e.g. to deal with commitments on animal and plant health standards, technical standards, and in strengthening their domestic telecommunications sectors). The WTO agreements, which were the outcome of the 1986–94 Uruguay Round of trade negotiations, provide numerous opportunities for developing countries to

make gains. Further liberalization through the Doha Agenda negotiations aims to improve the opportunities. Among the gains are export opportunities. They include: • Fundamental reforms in agricultural trade • phasing out quotas on developing countries’ exports of textiles and clothing • Reductions in customs duties on industrial products • expanding the number of products whose customs duty rates are “bound” under the WTO, making the rates difficult to raise • phasing out bilateral agreements to restrict traded quantities of certain goods —these “grey area” measures (the so-called voluntary export restraints) are not really recognized under GATT-WTO.