INTRODUCTION st The World Trade Organisation (W.T.O) was established on 1 january1995.

It may be noted as a result the Uruguay Round Conference the GATT (General Agreement on Trade and Tariffs) was transformed into the WTO with effect from January, 1995. The primary objective of GATT was to expand international trade by liberalising trade so as to bring about allround economic prosperity. The WTO administers the trade agreements negotiated by its members, in particular the GATT, the GATS (General Agreement on Trade in Services), and the TRIPS (Trade Related aspects on Intellectual Property Rights). Therefore the WTO has an enlarged role than the GATT. The WTO has larger membership than GATT, the number of members stand at148 (Oct.13, 2004). India is one of the founder members of WTO. BASIC PRINCIPLES OF WTO These principles are the basic foundations of the WTO. The fundamental principles are:1.Non-discrimination-this principle is based on the concept of normal trade relations which requires that all the WTO members should extend the same favourable terms of trade to all members that they extend to any single member. 2.Transparency- it is the basic pillar of the WTO. The WTO members are required to publish their trade regulations, to establish and maintain institutions allowing for the review of administrative decisions affecting trade, to respond to requests for information by other members, and to notify changes in trade policies to the WTO. 3.Binding commitments-in the WTO, when countries agree to open their markets for goods and services, they bind their commitments. In the case of goods, these bindings amount to ceilings on customs tariffs rate. Often countries, particularly the developing ones, tax imports at rates lower than the bound rates. But in the developed countries, the rates actually charged and the bound rates tend to be the same. A country can change its bindings, but only after negotiating with its trading partners, which can mean compensating them for loss of trade Contd. 4. Safety valves- four types of provisions exist in this connection: (a) Goods and services meant for non economic objectives such as public health and national security (b) Industries likely to be injured by competition from imports. (c) Provisions permitting intervention in trade for economic reasons. Economic reasons include measures to correct a serious unfavourable balance of trade or the desire to protect an infant industry. OBJECTIVES OF GATT Raising standard of living Ensuring full employment Developing full use of the resources of the world Expansion of production and international trade OBJECTIVES OF WTO All 4 0bjectives of GATT Introduce sustainable development- a concept which envisages the development and environment can go together. Taking positive steps to ensure that developing countries especially the least developed ones, secure a better share of growth in world trade. Establish procedures for solving trade disputes among members FUNCTIONS OF WTO WTO is based in Geneva, Switzerland. Its functions are:1. Administering and implementing the multilateral and plurilateral trade agreements which together make up the WTO; 2. Acting as a forum for multilateral trade negotiations; 3. Seeking to resolve trade disputes; 4. Overseeing national trade policies; and

5. Cooperating with other international institutions involved in global economic policy-making. DIFFERENCE BETWEEN GATT AND WTO The major differences between the two bodies are the following:1. The GATT was a set of rules, a multilateral agreement, with no institutional foundations, only as a small associated secretariat which had its origin in the attempt to establish an International Trade Organisation in the 1940s. The WTO is a permanent institution with its own secretariat. 2. The GATT rules applied to trade in merchandise goods. In addition to goods, the WTO covers trade in practices and trade-related aspects of intellectual property. 3. The WTO dispute settlement system is faster, more automatic and thus much less susceptible to blockages, than the old GATT system. The implementation of WTO dispute findings will also be more easily assured. 4. The GATT was applied on a provisional basis even if, after more than 40 years, governments chose to treat it a permanent commitment. The WTO commitments are full and permanent. INDIAS COMMITMENTS OF WTO 1. Tariff Lines 2. Quantitative Restrictions (QRs) 3. TRIPS (Trade Related aspects on Intellectual Property Rights) 4. TRIMS (Trade Related Investment Measures) 5. General Agreement on Trade In Services (GATS) 6. Customs Valuation Rules Tariff Lines Tariffication means the replacement of existing non-tariff restrictions on trade such as import quotas by such tariffs as would provide substantially the same level of protection As a member of the WTO, India has bound about 67 percent of its tariff lines whereas prior to the Uruguay Round only 6 percent of the tariff lines were bound. For non-agricultural goods, with a few exceptions, ceiling bindings of 40 per cent ad valorem on finished goods and 25 per cent on intermediate goods, machinery and equipment have been undertaken. The phased reduction to these bound level is being undertaken over the period March 1995 to the year 2005. Under the Agreement on Agriculture, except for a few items, Indias bound rate ranges from 100 to 300 percent and no commitments have been made regarding market access, reduction of subsidies or tariffs. Quantitative Restrictions (QRs) QRs on imports maintained on balance of payments grounds were notified to WTO in 1997 for 2,714 tariff lines at the eight-digit level. In view of the improvements in Indias balance of payments, the Committee on Balance of Payments Restrictions had asked India for a phase out for the QRs. Based on presentations before this committee and subsequent consultations with main trading partners, India reached an agreement with these countries, except USA, to phase out the QRs over a period of six years beginning 1997. The Disputes Settlement Panel and the Appellate Body ruled in favour of USA and against India. This means that India is now required to phase out QRs in a period of less than six years. In fact, an agreement between USA and India has already been reached which envisages the phasing out of all QRs by India by April 1,2001. Prior to the announcement of the Exim Policy for the year 2000-01 on March 31,2000 there were 1,429 items on which QRs were present in India. This policy removed QRs on 714 items. QRs on the balance 715 items will go by April 1, 2001. TRIPs(Trade Related Aspects On Intellectual Property Rights).) One of the most controversial outcomes of the UR is the Agreement on Trade Related Aspects On Intellectual Property Rights including Trade in Counterfeit Goods (TRIPS). TRIPs along with TRIMs and services were called the new issues negotiated in the UR. Intellectual Property Rights maybe defined as information with a commercial value . IPS has been characterised as a composite of ideas inventions and creative expression plus the public willingness to bestow the status of property. IPRs may be legally protected by patents, copyrights, industrial designs and trade marks. TRIMs (Trade Related Investment Measures)

Trade Related Investment Measures (TRIMs) refers to certain conditions or restrictions imposed by a government in respect of foreign investment in the country. TRIMs were widely employed by developing countries. The agreement on TRIMs provides thatno contracting party shall apply any TRIM which is inconsistent with the WTO Articles. An illustrative list identifies the following TRIMs as inconsistent: 1. local content requirement ie; certain amount of local inputs be used in products 2. Trade balancing requirement i.e; imports shall not exceed a certain proportion of exports. 3. Trade and foreign exchange balancing requirements. 4. Domestic sales requirements i.e; a company shall sell a certain proportion of its output locally. GATS (General Agreement on Trade in Services ) The General Agreement on Trade in Services (GATS) which extends multilateral rules and disciplines to the services is regarded as a landmark achievement of the UR, although it achieved only little in terms of immediate liberalization. The GATS defines services as the supply of a service: Contd: From the territory of one member into the territory of any other member. In the territory of one member to the services consumer of any other member. By a service supplier of one member, through commercial presence in the territory of any other member. By a service supplier of one member, through presence of natural persons of a member in the territory of any other member. Customs Valuation Rules Indias legislation on Customs Valuation Rules, 1998, has been amended to bring it in conformity with the provisions of the WTO Agreement or implementation of Article VII of GATT 1994 and the Customs Valuation Agreement. The WTO And The Developing Countries Receive special recognition in the WTO. Establishing an agreement with the WTO to ensure positive effort . Secure a share in the growth of international trade commensurate with the need of their economic development. Provides special assistance, which include technical assistance, strengthening and diversification in their production . Contd.. Assist in trade promotion, to enable them to maximize the benefits from liberalized access to markets. Further trade liberalization in agricultural products and labour-incentive manufactures in comparative advantage. DOHA ROUND OF ROUND NEGOTIATIONS IIndias Current Negotiating Strategy The Doha Development Agenda of the WTO was launched in Doha, Qatar in November 2001 with the intention of advancing poverty alleviation and economic development through the benefits of a free international trading system.Two-thirds of the WTOs membership is comprised of developing countries in need of greater access to both developed and other developing country markets. The Doha Development Round or Doha Development Agenda (DDA) is the current trade-negotiation round of the World Trade Organization (WTO) which commenced in November 2001. Its objective is to lower trade barriers around the world, which allows countries to increase trade globally. Indias share in world trade may be less than one percent but its power to influence trade negotiations in the World Trade Organization (WTO) has increased immensely over the last few years, especially since the Doha Ministerial Conference. At Doha the Indian Commerce Minister put up a strong fight and succeeded in extracting better returns in comparison to the Uruguay Round and previous Ministerial conferences, held since the inception of the WTO in 1995. II. Indias Existing Position on Doha Development Agenda India was at the forefront when the Doha Work Programme was finalised at the last WTO Ministerial Conference, held in the year 2001. India was instrumental in blocking the European Unions aggressive push for the launch of

negotiations on four Singapore issues. As a result the final Ministerial Declaration has succeeded in postponing the negotiations to an extent and finally dropping three of them from the Doha agenda while launching negotiation on trade facilitation. (a) Agriculture India has made one of the most comprehensive submissions on agriculture to the WTO. It has submitted its initial negotiating proposals in the areas of market access, domestic support, export competition and food security with the objective of protecting its food and livelihood security and creating increased market access opportunities with a view to promote its agricultural exports. (i) Export Competition Export subsidies were subject to reduction commitment, in the area of export competition, though several kinds of direct payments were exempted. The export subsidy commitment is either in the form of budgetary outlay reduction commitments or in the form of export quantity reduction commitments. . The least developed countries (LDCs) are not subject to any reduction commitments. The only subsidies available to exporters of agricultural commodities are in the form of: (i) income tax exemptions on profits from export sales and (ii) subsidies on costs of freight (export shipments) of certain products like fruits, vegetables and floricultural products. Since these payments are exempt for developing countries from reduction commitments during the implementation period, they will not cause any adverse impact on agricultural exports from India, at least during this period. Therefore, India is making use of these subsidies in certain schemes of Agricultural & Processed Food Products Export Development Authority (APEDA), especially for facilitating export of rice, wheat and horticulture products. But once the export supplies become selfsustaining during the adjustment period, these will have to be withdrawn. (ii)Domestic Support Domestic support measures, according to the Agreement, are meant to identify acceptable measures of support to farmers and curtailing unacceptable trade distorting support to farmers. The trade distorting domestic support is measured in terms of what is called the Total Aggregate Measurement of Support, which is expressed as a percentage of the total value of agricultural output and includes both product specific and non-product specific support. (b) Non-Agricultural Market Access Background Reducing tariffs on industrial goods was the core of multilateral trade negotiations under the GATT. Paragraph 16 of the Doha Ministerial Declaration on Market Access for Non-agricultural Products provides a clear mandate for negotiations on this important subject. It require members to reduce or as appropriate eliminate tariffs, including the reduction or elimination of tariff peaks, high tariffs and tariff escalation in particular on products of export interest to developing countries. India has identified agriculture and services (movement of natural persons) as major areas of their interests. That is why India has very comprehensive submission on these two issues. Current Negotiating Position Indias objectives include enhancing market access in developed countries; retaining flexibility to accord tariff protection to sensitive products where the need arises in future, and; obtaining adequate flexibilities for developing countries to address developmental sensitivities. India is greatly interested in Mode 1 and Mode 4 negotiations in the General Agreement on Trade in Services (GATS). The first relates to business process outsourcing (BPO),which has already raised a controversy with several States in the U.S. banning shifting of such jobs from their domestic market to countries such as India. In this area, India is seeking complete liberalisation. The second is what is known as movement of natural persons where India has been seeking a rise in the bound rate for granting visas for independent professionals Current Negotiating Strategy on Services The services sector is playing a significant role in the economies of developing countries. It accounts for about 50 percent of the total Gross Domestic Product (GDP) in developing Countries The services sector is very important for India, as it has been the engine of growth. India is internationally being seen as the services powerhouse. India ranks in the top 20 services exporting countries. In particular the Information Technology (IT) industry in India has witnessed stupendous growth.

Impact of WTO on Indian Industries In developing economies like India, the economic problem like low per capita income, high dependence on agriculture, lack of efficient exploitation of natural resources, unemployment etc, can be solved only by the industrialization . Impact of WTO on Small Scale Industries In India The small-scale industries sector plays a vital role in the growth of the country. It contributes almost 40% of the gross industrial value added in the Indian economy. It has been estimated that a million Rupees of investment in fixed assets in the small scale sector produces 4.62 million worth of goods or services with an approximate value addition of ten percentage points. The small-scale sector has grown rapidly over the years. The growth rates during the various plan periods have been very impressive. From 1947 to 1994, General Agreement on Trade and Tariff (GATT) was the forum for negotiating lower customs duty rates and other trade barriers. Positive Impact of WTO on SSIs. After the origin of WTO, the SSIs in India enjoy the following privileges: Enabling India to export goods to the member countries of the WTO with fewer restrictions. Reduction of tariffs on the export products to India i.e., Tariff based protection has become the rule. Export in India has been increased from Rs.13883 crores in 1992 to Rs.53975 crores in the year 2000 in SSI sector. Greater Market orientation Radical trade in SSI sector opened new investment opportunities thereby the acceleration of economic growth. Availability of modern technologies from the other countries at reduced cost. In India, there has been a significant and absolute gain in trade under WTO. Exports increased marginally from $ 30.63 billion during the year 1995 to $ 44.2 billion in the year 2000 though share in the global trade increased marginally from 0.6 to 0.65 percent. India has been a net gainer, though in a limited wa y. Growth in Indias exports has been marginally above the growth in world exports. This shows that WTO has made significant contribution to the expansion of world trade Impact on domestics Industry The impact of WTO commitments to liberalize commodity and to provide market access will affect domestic industry, though the specificities will differ across sectors depending on several factor. Competing in global market encounter two aspect : Contd... 1. The potential threat to domestic industries through rising imports of low-priced product as a result of lowered berries in a hitherto protected market. 2. The potential export opportunities. CONCLUSION Problems facing 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 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 in developed countries because the overall tariff is lower in those countries. India will have to tart major reforms in agricultural sector 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 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. THANK YOU