WTO AND INDIA PRESENTED BY -: ASHWANI MOYAL HARPREET SINGH HRIDESH SHARMA NAVJOT SINGH

GENERAL AGREEMENT ON TARRIFS AND TRADE GATT born in 1948 as result of international desire to liberalise trade. BRETTON WOODS CONFERENCE (1944) recommended IMF, WORLD BANK ,ITO. IMF , WORLD BANK were established in1946. ITO charter was never ratified ,so GATT formed as interim measure. GATT transformed to WTO with effect from January 1995.

GATT OBJECTIVES Raising standard of living. Ensuring full employment and a large and steadily growing volume of real income and effective demand. Developing full use of the resources. Expansion of production and international trade.

RULES GOVERNING INTERNATIONAL TRADE Any proposed change in tariff or commercial policy of a member country should not be undertaken without consultation of other parties to the agreement. Countries that adhere to GATT should work towards reduction of tarrifs and other barriers to international trade ,which should be negotiated within the framework of GATT.

PRINCIPLES OF GATT Non-discrimination(principle of most favoured nation). Prohibition of Quantitative Restrictions. Consultation(Resolve disagreements).

WORLD TRADE ORGANIZATION World Trade Organization (WTO) is an organization that intends to supervise and liberalize international trade. WTO officially commenced on January 1, 1995 replacing the General Agreement on Tariffs and Trade (GATT), which commenced in 1948. Only international organization dealing with the rules of trade between nations whose goal is to help producers of goods and services,exporters and importers conduct their business fairly. The objective of WTO , the successor of GATT is to provide a framework of principles and rules for globalization of business to achieve all round economic prosperity.

WORLD TRADE ORGANIZATION The WTO has 153 members,representing more than 97% of total world trade and 30 observers, most seeking membership. The WTO's headquarters is at the Centre William Rappard, Geneva, Switzerland.

FUNCTIONS OF WTO Administering the WTO trade agreements. Providing forum for negotiations among its members. Administering the mechanism for settling trade disputes between member countries. Providing technical assistance and training for developing countries. Cooperating with other international organizations like the IMF and IBRD and its affiliated agencies with a view to achieving greater coherence in global economic policy making.

WTO PRINCIPLES WTO agreements have three main objectives:- To help trade flow as freely as possible. To achieve further liberalization gradually through negotiation. To set up an impartial means of settling disputes. Non discrimination(“most favoured nation” and “national” treatment). Extra provisions for less developed countries.

THE WTO AGREEMENTS GOODS – Annexes dealing with agriculture , textiles , product standards,subsidies and actions against anti-dumping. SERVICES(GATS) – Applies to banks,insurance firms ,telecommunications companies ,tour operators ,hotel chains and transport companies. INTELLECTUAL TRAINING- Rules for trade and investment in ideas and creativity.Rules about copyrights,patents,trademarks,geographical names etc.

THE WTO AGREEMENTS DISPUTE SETTLEMENTS - To resolve trade quarrels under Dispute Settlement Understanding to ensure trade flows smoothly. POLICY REVIEW – To improve transparency,greater understanding of policies which countries are adopting and to assess their impact. DEVELOPMENT AND TRADE – Sub-committee on least development countries,looks at developed countries special needs,implementation of agreements,technical cooperation,encouraging trade. TECHNICAL ASSISTANCE AND TRAINING – 100 technical cooperation missions,reference centers,trade policy courses.

THE URUGUAY ROUND Inclusion of new areas:- The Uruguay Round(1986-1994)was the 8th round of multilateral trade negotiations (MTN) . Main objectives of the Uruguay Round were: to reduce agricultural subsidies. to put restrictions on foreign investment. to begin the process of opening trade in services like banking and insurance. They also wanted to draft a code to deal with copyright violationand other forms of intellectual property rights. Inclusion of new areas:- Trade in services. Trade related aspects of intellectual property(TRIPS). Trade related invested measures(TRIM).

INDIA’S COMMITMENT As India was maintaining Quantitative Restrictions due to balance of payments reasons(which is a GATT consistent measure), it did not have to undertake any commitments in regard to market access. India does not provide any product specific support other than market price support. In India, exporters of agricultural commodities do not get any direct subsidy. exemption of export profit from income tax under section 80-HHC of the Income Tax. subsidies on cost of freight on export shipments of certain products like fruits, vegetables and floricultural products.

WHAT INDIA WANTS To protect its food and livelihood security concerns and to protect all domestic policy measures taken for poverty alleviation, rural development and rural employment. To create opportunities for expansion of agricultural exports by securing meaningful market access in developed countries.

TRADE IN SERVICES The General Agreement on Trade in Services(GATS) came into existence as a result of the Uruguay Round of negotiations. GATS covers four modes of international delivery of services:- Cross border supply(transborder data flows,transportation of services.) Commercial presence(provision of services abroad through FDI or representative offices) Consumption abroad(tourism). Movement of personnel(entry & foreign stay of foreign consultants). Travel and Tourism related services are activities in which most developing countries made commitments. Heavily protected services include banking,Insurance,transportation,television,radio,film etc.

TRADE RELATED ASPECTS OF INTELLECTUAL PROPERTY RIGHTS(TRIPS) IPR includes patents,trademarks,copyrights,geographic indications,trade secrets,industrial designs,layout design of integrated circuits. Objectives: Encourage and Reward Creative Work. Encourage Innovation. To Promote Fair Competition. To Help Consumer Protection. To Facilitate Transfer of Technology.

TRADE RELATED INVESTMENT MEASURES(TRIMS) TRIMS refer to certain conditions or restrictions imposed by a government in respect of foreign investment in country. WTO inconsistent TRIMS:- Local Content requirement(certain amount of local input be used in products) Trade Balancing Requirements(imports shall not exceed a certain proportion of exports). Trade and Foreign exchange balancing requirements. Domestic sales requirement(co. shall sell certain proportion of its output locally).

INDIA’S NOTIFIED TRIMS Local content (mixing) requirements in the production of News Print Local content requirement in the production of Rifampicin and Penicillin – G Dividend balancing requirement in the case of investment in 22 categories consumer goods.

THE DOHA ROUND Launched at the fourth ministerial conference in Doha, Qatar in November 2001. Objectives: Lower trade barriers around the world. Committing all countries to negotiations opening agricultural and manufacturing markets, as well as trade-in-services (GATS) negotiations and expanded intellectual property regulation (TRIPS). Make trade rules fairer for developing countries

BENEFITS TO INDIA Increase in India’s textile & clothing exports due to the phasing out of MFA (in 2005). The reduction in agricultural subsidies & barriers to export of agriculture products, agricultural exports from India also increased. Market access to a number of developing countries without trade discrimination increased.

DISADVANTAGES FOR INDIA TRIPs agreement went against the Indian Patents Act (1970) Introduction of product patents in India lead to hike in drug prices by the MNCs. Hence the poor were left with no generic option Extension of intellectual property right to agriculture has negative effects on India and Indian research institutions Application of TRIMs agreement undermines any plan or strategy of self reliant growth based on local technology. Service sectors in India are backward compared to the service sectors in developed countries. Hence inclusion of trade in services is detrimental to the interest of India. The MFN clause proved to be detrimental to India’s interest & provided grounds for Chinese invasion in Indian market through dumping.

WTO AND INDIA INDIAN PATENT LAW Grant and Revocation of Patents. Items Not Patentable. Product Patent. Patent Period. Rights and Obligations of Patentee. Working of the Patent. Compulsory Licensing. Parallel Import. Exceptions.

WTO AND INDIA Agricultural Subsidies. Subsidies into three categories in a traffic light schema: prohibited ‘red light’ subsidies actionable or ‘yellow’ light subsidies non-actionable ‘green light’ subsidies. Two types of subsidies are prohibited: export subsidies and domestic-content subsidies; in short, subsidies contingent upon the export of a good or service, or that requires the subsidized producers to use domestic inputs. India’s global trade gain. India and Compliance Issues.

Removal of Quantitative Restrictions. A number of steps were taken by the Government of India to handle sudden and significant increase in import of select items: Number of tariff lines were identified which were sensitive to imports A control room was set-up to watch sudden increase in import of commodities, for appropriate action; Imposition of WTO-consistence Non-Tariff Measures (NTMs), like standards, were stream-lined Tariffs of sensitive items are not significantly reduced below committed bound levels, mentioned in schedules of the WTO.

Re-negotiating Bound Tariffs of Agriculture Commodities India had agreed to keep its import duty on some agriculture items at 0 per cent, as India was a food deficit country when the pact was signed. Some of these agriculture items were rice, split wheat, skimmed milk powder, sorghum, Jawar (or Millet), maize, etc. India's import of number of agriculture items increased sharply in QR-removed and zero-tariff regime. India's import of skimmed milk powder increased from 2000-3000 tonnes between April to October 1998, to around 18,000 tonnes during the same period in 1999.

CONT……. During 1999/2000, India has successfully renegotiated the binding rates under the WTO framework on select agriculture products (with zero bound tariffs) with its principal trading partners. the renegotiated agreement would enable the country to change the import duty on 17 items such as sorghum, jawar6, maize, rice, split wheat, skimmed milk powder, etc. The deal was a part of a trade-off with agriculture exporting countries under which India has given more access on other items by decline/restructure in tariff bindings like groundnut oil.

Safeguard Measures and Anti-Dumping Duties The WTO agreement allows for imposition of trade restrictions for a temporary period under certain circumstances. These restrictions can be in the form of additional custom duties, which can be classified in the form of safeguard duties or anti-dumping duty, etc. Safeguard duties can be imposed under article XIX of GATT 1994 on a particular product if there is a significant increase in its imports, which can cause or threaten to cause domestic products on directly competitive products. Highest number of anti-dumping cases(against INDIA) for a product are engineering products (including steel products), which account for 32 per cent of the total cases, followed by textiles and articles (19 per cent) thereof, drugs and pharmaceuticals (18 per cent), rubber/plastics and articles thereof (13 per cent), and consumer industrial goods (12 per cent).

CONT….. In the anti-subsidy cases again engineering products (including steel products) account for 38 per cent of the total cases, followed by rubber/plastic articles (25 per cent) and textiles/articles and drugs (13 per cent each).

Removal of MFA for Textiles and Apparel Industry A major portion of textile and clothing exports from India and other developing countries to the developed countries was subject to quotas. On January 1, 1995, MFA was replaced by the WTO agreement on textiles and clothing (ATC), which set out the process for ultimate removal of these quotas by December 31, 2004. In terms of India's global export by commodity groups, textiles and clothing constitute around 20 per cent. China is top exporter of textile and clothing in world market.

Problems faced by India in WTO & its Implementation  Predominance of developed nations in negotiations extracting more benefits from developing and least developed countries Resource and skill limitations of smaller countries to understand and negotiate under rules of various agreements under WTO Incompatibility of developed and developing countries resource sizes thereby causing distortions in implementing various decisions Non-tariff barriers being created by developed nations.

CONT…… Poor implementation of Doha Development Agenda Agriculture seems to be bone of contention for all types of countries where France, 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. Dismantling of MFA (Multi Fiber Agreement) and its likely impact on countries like India

Implications for India It appears that India does not stand to gain much by shouting for agriculture reforms .India will have to undertake major reforms in agriculture sector in India to make Agriculture globally competitive. It is likely that China, Germany, North African countries, 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. 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. India has already amended patent Act and both product and Process are now patented in India.

What India should do? The most important things for India to address are speed up internal reforms in building up world-class infrastructure like roads, ports and electricity supply. India's ranking in recent Global Competitiveness report is not very encouraging due to infrastructure problems, poor governance, poor legal system and poor market access provided by India.

Our tariffs are still high compared to Developed countries and there will be pressure to reduce them further and faster. India has solid strength, at least for mid term (5-7 years) in services sector primarily in IT sector. 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.

India must improve legal and administrative infrastructure, improve trade facilitation through cutting down bureaucracy and delays and further ease its financial markets. India has to downsize non-plan expenditure in Subsidies and Government salaries and perquisites like pensions and administrative expenditures. Corruption will also have to be checked by bringing in fast remedial public grievance system, legal system and  information dissemination by using e-governance. 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.

CONT… It wont be a bad idea if Indian textile and garment Industry go multinational setting their foot in western Europe, North Africa, Mexico and other such strategically located areas for large US and European markets. The performance of India in attracting major FDI has also been poor and certainly needs boost up, if India has to develop globally competitive infrastructure and facilities in its sectors of interest for world trade.  

CONCLUSION India, as a developing economy, has been benefitted being a founding member of the World trade Organization. The country at large has seen many significant changes which have taken place after the formation of WTO. There are some issues which are yet to be sorted out with the WTO and but by and large things are falling in shape for the Indian Economy.

THANKYOU