2013 Page 1

Executive Summary

The Project describes all about the World Trade Organization (WTO), its Introduction in
the World Economy, the Objectives laid for the Organization, Functions that operates,
EXIM Trade Policies, and Scenarios occurred with India Before the formation of WTO &
the Benefits gained by India from the organization.
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
Organization known today as the World Trade Organization (WTO), with effect from
January 1, 1995. There were 128 member countries in 1995, which has 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 97per-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 size.
Trade & Poverty
One of the biggest challenges facing the world community is to how to address poverty.
2013 Page 2

Introduction
World Trade Organization
The World Trade Organization (WTO) is an organization that intends to supervise and
liberalize international trade. The organization officially commenced on 1 January 1995
under the Marrakech Agreement, replacing the General Agreement on Tariffs and Trade
(GATT), which commenced in 1948. The organization deals with regulation of trade
between participating countries; it provides a framework for negotiating and formalizing
trade agreements, and a dispute resolution process aimed at enforcing participant's
adherence to WTO agreements, which are signed by representatives of member
governments:fol.910 and ratified by their parliaments. Most of the issues that the WTO
focuses on derive from previous trade negotiations, especially from the Uruguay Round
(19861994).
The organization is attempting to complete negotiations on the Doha Development
Round, which was launched in 2001 with an explicit focus on addressing the needs of
developing countries. As of June 2012, the future of the Doha Round remained uncertain:
the work programme lists 21 subjects in which the original deadline of 1 January 2005
was missed, and the round is still incomplete. The conflict between free trade on
industrial goods and services but retention of protectionism on farm subsidies to domestic
agricultural sector (requested by developed countries) and the substantiation of the
international liberalization of fair trade on agricultural products (requested by developing
countries) remain the major obstacles. These points of contention have hindered any
progress to launch new WTO negotiations beyond the Doha Development Round. As a
result of this impasse, there has been an increasing number of bilateral free trade
agreements signed. As of July 2012, there were various negotiation groups in the WTO
system for the current agricultural trade negotiation which is in the condition of
stalemate.
WTO's current Director-General is Roberto Azevdo, who leads a staff of over 600
people in Geneva, Switzerland.

2013 Page 3

History
The WTO was born out of negotiations, and everything the WTO does is the result of
negotiations. The bulk of the WTOs current work comes from the 198694 negotiations
called the Uruguay Round and earlier negotiations under the General Agreement on
Tariffs and Trade (GATT). The WTO is currently the host to new negotiations, under the
Doha Development Agenda launched in 2001.
Where countries have faced trade barriers and wanted them lowered, the negotiations
have helped to open markets for trade. But the WTO is not just about opening markets,
and in some circumstances its rules support maintaining trade barriers for example, to
protect consumers or prevent the spread of disease.
At its heart are the WTO agreements, negotiated and signed by the bulk of the worlds
trading nations. These documents provide the legal ground rules for international
commerce. They are essentially contracts, binding governments to keep their trade
policies within agreed limits. Although negotiated and signed by governments, the goal is
to help producers of goods and services, exporters, and importers conduct their business,
while allowing governments to meet social and environmental objectives.
The systems overriding purpose is to help trade flow as freely as possible so long as
there are no undesirable side effects because this is important for economic
development and well-being. That partly means removing obstacles. It also means
ensuring that individuals, companies and governments know what the trade rules are
around the world, and giving them the confidence that there will be no sudden changes of
policy. In other words, the rules have to be transparent and predictable.
Trade relations often involve conflicting interests. Agreements, including those
painstakingly negotiated in the WTO system, often need interpreting. The most
harmonious way to settle these differences is through some neutral procedure based on an
agreed legal foundation. That is the purpose behind the dispute settlement process written
into the WTO agreements.

2013 Page 4

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 1st into effect on of Jan. 1948. These countries sought to expand multilateral trade
among them. India was one of the founder 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.

Objectives of GATT
The primary objective of GATT was to expand international trade by liberalizing 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.
3) Developing optimum utilization of resources of the world.
4) Expansion in production exchange of goods and services on a global level.

2013 Page 5

Principles

1) Follow the Most Favored 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) Liberalize tariff and non-tariff measures through multilateral negotiations.

The Uruguay Round

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 Fiber 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.
2013 Page 6

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:
i. Local content requirement.
ii. Trade balancing requirement
iii. Trade and foreign exchange balancing requirements.
iv. Domestic sales requirements.
1) 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 persons over the creations of
their minds. They usually give the creator an exclusive right over the use of individuals
creation for a certain period of time.
2) 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.






2013 Page 7

From GATT to WTO
After World War II over 50 countries came together to create the International Trade
Organization (ITO) as specialize 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 23countries out of the 50 participating countries
came to be known as the General 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.
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 to123 countries in 1994. The membership of WTO increased from128 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 about40% 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.










2013 Page 8


Objectives Of WTO
While the WTO is driven by its member states, it could not function without its
Secretariat to coordinate the activities. The Secretariat employs over 600 staff, and its
experts lawyers, economists, statisticians and communications experts assist WTO
members on a daily basis to ensure, among other things, that negotiations progress
smoothly, and that the rules of international trade are correctly applied and enforced.

Trade negotiations
The WTO agreements cover goods, services and intellectual property. They spell out the
principles of liberalization, and the permitted exceptions. They include individual
countries commitments to lower customs tariffs and other trade barriers, and to open and
keep open services markets. They set procedures for settling disputes. These agreements
are not static; they are renegotiated from time to time and new agreements can be added
to the package. Many are now being negotiated under the Doha Development Agenda,
launched by WTO trade ministers in Doha, Qatar, in November 2001.

Implementation and monitoring
WTO agreements require governments to make their trade policies transparent by
notifying the WTO about laws in force and measures adopted. Various WTO councils
and committees seek to ensure that these requirements are being followed and that WTO
agreements are being properly implemented. All WTO members must undergo periodic
scrutiny of their trade policies and practices, each review containing reports by the
country concerned and the WTO Secretariat.


2013 Page 9


Dispute settlement
The WTOs procedure for resolving trade quarrels under the Dispute Settlement
Understanding is vital for enforcing the rules and therefore for ensuring that trade flows
smoothly. Countries bring disputes to the WTO if they think their rights under the
agreements are being infringed. Judgements by specially appointed independent experts
are based on interpretations of the agreements and individual countries commitments.

Building trade capacity
WTO agreements contain special provision for developing countries, including longer
time periods to implement agreements and commitments, measures to increase their
trading opportunities, and support to help them build their trade capacity, to handle
disputes and to implement technical standards. The WTO organizes hundreds of technical
cooperation missions to developing countries annually. It also holds numerous courses
each year in Geneva for government officials. Aid for Trade aims to help developing
countries develop the skills and infrastructure needed to expand their trade.

Outreach
The WTO maintains regular dialogue with non-governmental organizations,
parliamentarians, other international organizations, the media and the general public on
various aspects of the WTO and the ongoing Doha negotiations, with the aim of
enhancing cooperation and increasing awareness of WTO activities.

Non-discrimination
A country should not discriminate between its trading partners and it should not
discriminate between its own and foreign products, services or nationals.
2013 Page 10


More open
Lowering trade barriers is one of the most obvious ways of encouraging trade; these
barriers include customs duties (or tariffs) and measures such as import bans or quotas
that restrict quantities selectively.

Predictable and transparent
Foreign companies, investors and governments should be confident that trade barriers
should not be raised arbitrarily. With stability and predictability, investment is
encouraged, jobs are created and consumers can fully enjoy the benefits of competition
choice and lower prices.

More competitive
Discouraging unfair practices, such as export subsidies and dumping products at below
cost to gain market share; the issues are complex, and the rules try to establish what is
fair or unfair, and how governments can respond, in particular by charging additional
import duties calculated to compensate for damage caused by unfair trade.

More beneficial for less developed countries
Giving them more time to adjust, greater flexibility and special privileges; over three-
quarters of WTO members are developing countries and countries in transition to market
economies. The WTO agreements give them transition periods to adjust to the more
unfamiliar and, perhaps, difficult WTO provisions.


2013 Page 11


Protect the environment
The WTOs agreements permit members to take measures to protect not only the
environment but also public health, animal health and plant health. However, these
measures must be applied in the same way to both national and foreign businesses. In
other words, members must not use environmental protection measures as a means of
disguising protectionist policies.
The WTO provides a forum for negotiating agreements aimed at reducing obstacles to
international trade and ensuring a level playing field for all, thus contributing to
economic growth and development. The WTO also provides a legal and institutional
framework for the implementation and monitoring of these agreements, as well as for
settling disputes arising from their interpretation and application. The current body of
trade agreements comprising the WTO consists of 16 different multilateral agreements
(to which all WTO members are parties) and two different plurilateral agreements (to
which only some WTO members are parties).
Over the past 60 years, the WTO, which was established in 1995, and its predecessor
organization the GATT have helped to create a strong and prosperous international
trading system, thereby contributing to unprecedented global economic growth. The
WTO currently has 159 members, of which 117 are developing countries or separate
customs territories. WTO activities are supported by a Secretariat of some 700 staff, led
by the WTO Director-General. The Secretariat is located in Geneva, Switzerland, and has
an annual budget of approximately CHF 200 million ($180 million, 130 million). The
three official languages of the WTO are English, French and Spanish.
Decisions in the WTO are generally taken by consensus of the entire membership. The
highest institutional body is the Ministerial Conference, which meets roughly every two
years. A General Council conducts the organization's business in the intervals between
Ministerial Conferences. Both of these bodies comprise all members. Specialised
subsidiary bodies (Councils, Committees, Sub-committees), also comprising all
2013 Page 12

members, administer and monitor the implementation by members of the various WTO
agreements.
More specifically, the WTO's main activities are:
negotiating the reduction or elimination of obstacles to trade (import tariffs, other
barriers to trade) and agreeing on rules governing the conduct of international trade (e.g.
antidumping, subsidies, product standards, etc.)
administering and monitoring the application of the WTO's agreed rules for trade in
goods, trade in services, and trade-related intellectual property rights
monitoring and reviewing the trade policies of our members, as well as ensuring
transparency of regional and bilateral trade agreements
settling disputes among our members regarding the interpretation and application of
the agreements
building capacity of developing country government officials in international trade
matters
assisting the process of accession of some 30 countries who are not yet members of
the organization
conducting economic research and collecting and disseminating trade data in support
of the WTO's other main activities
explaining to and educating the public about the WTO, its mission and its activities.
The WTO's founding and guiding principles remain the pursuit of open borders, the
guarantee of most-favoured-nation principle and non-discriminatory treatment by and
among members, and a commitment to transparency in the conduct of its activities. The
opening of national markets to international trade, with justifiable exceptions or with
adequate flexibilities, will encourage and contribute to sustainable development, raise
people's welfare, reduce poverty, and foster peace and stability. At the same time, such
market opening must be accompanied by sound domestic and international policies that
2013 Page 13

contribute to economic growth and development according to each member's needs and
aspirations.
Function of WTO
The basic functions of WTO are as follows:
1) It facilitates the implementation, administration and operation of the trade agreements.
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 programmed.
6) It encourages co-operation within international organizations.









2013 Page 14


Impact of WTO On India

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 ofthe 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.
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
2013 Page 15

pharmacy 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.
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.
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.
2013 Page 16

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

Textiles and Clothing
The WTO agreement on textiles and clothing states that the Multi-Fiber Agreement
(MFA) will eventually be eliminated. 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 modernize their mills and improve quality.

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 labor and operation will allow India to
compete in the international market.

TRIPS (Trade Related Intellectual Property rights)
TRIPS Article 27.3(b), which requires all WTO countries top 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 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.
2013 Page 17

Indias Role in The WTO

India 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 favors 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.
Indias WTO Commitment
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.
India has some residual quantitative restrictions on imports 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 1997to 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.
2013 Page 18

Agriculture
The only commitment India has undertaken under the Agreement is to bind its
agricultural tariffs. This commitment as 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.

Textiles
As 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.

.




2013 Page 19

India And WTO

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 1994amendments 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.

Trades Related Investment Measures
Substantial modifications have already been made to the foreign investment regime,
increasing the number of sector where foreign investment cans 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.

Anti-Dumping
Anti-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.
2013 Page 20

Service Sector
The 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 23for developing countries.
India also participated in the spillover 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, semiskilled 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 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.


2013 Page 21

Information Technology
India 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.

Regional Trade Agreements
India 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 January1996 to
broaden tariff concessions. India granted concessions on 902 tariff lines, effective 1
March 1997.


2013 Page 22

Comparison Of Indias Foreign Trade Benefits

Before Becoming The Member Of WTO
Its 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

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 minimized.
(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.
2013 Page 23

(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 Trade balancing requirement) 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.

2013 Page 24

EXIM Policy

Import
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.

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%.
2013 Page 25

Major Indian Imports
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.

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.

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.
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.

2013 Page 26

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 which 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 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.
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.
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, contrary to any prohibition imposed by or under the customs act or any other
law is liable for confiscation.
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.
2013 Page 27

THE THREE BOXES: GREEN, AMBER AND BLUE

The Green Box
In order to qualify for the green box, a subsidy must not bend
trade, or at most cause minimal distortion. These subsidies have to be
government-funded (not by charging consumers higher prices) and
must not involve price support. They tend to be programmes that are
not directed at particular products, and include direct income
supports for farmers that are not related to current production levels or prices.
Green box subsidies are therefore allowed without limits, provided they comply
with relevant criteria. They also include environmental protection and regional
development programmes. Canada has proposed setting limits on all boxes
combined, which would mean limits on green box subsidies as well.
Some countries say they would like to review the domestic subsidies listed in the green
box because they believe that some of these, in certain circumstances, could have an
influence on production or prices. Some others have said that the green box should not be
changed because it is already satisfactory. Some say the green box should be expanded to
cover additional types of subsidies.
The Amber Box

All domestic support measures considered to distort production and trade
(with some exceptions) fall into the amber box, which is defined in Article 6
of the Agriculture Agreement as all domestic supports except those in the
blue and green boxes. These include measures to support prices, or subsidies
directly related to production quantities.

2013 Page 28

These supports are subject to limits: de minimis minimal supports are allowed (5% of
agricultural production for developed countries, 10% for developing countries); the
30 WTO members that had larger subsidies than the de minimis levels at the beginning of
the post-Uruguay Round reform period are committed to reduce these subsidies.
The reduction commitments are expressed in terms of a Total Aggregate Measurement
of Support (Total AMS) which includes all supports for specified products together with
supports that are not for specific products, in one single figure. In the current
negotiations, various proposals deal with how much further these subsidies should be
reduced, and whether limits should be set for specific products rather than continuing
with the single overall aggregate limits. In the Agriculture Agreement, AMS is defined
in Article 1 and Annexes 3 and 4.
The Blue Box
The blue box is an exemption from the general rule that all subsidies
linked to production must be reduced or kept within defined minimal
levels. It covers payments directly linked to acreage or animal numbers,
but under schemes which also limit production by imposing production
quotas or requiring farmers to set aside part of their land. Countries using
these subsidies (and there are only a handful) say they distort trade less
than alternative amber box subsidies. Currently, the only members notifying the WTO
that they are using or have used the blue box are: the EU, Iceland, Norway, Japan, the
Slovak Republic and Slovenia
At the moment, the blue box is a permanent provision of the agreement. Some countries
want it scrapped because the payments are only partly decoupled from production, or
they are proposing commitments to reduce the use of these subsidies. Others say the blue
box is an important tool for supporting and reforming agriculture, and for achieving
certain non-trade objectives, and argue that it should not be restricted as it distorts trade
less than other types of support. The EU says it is ready to negotiate additional reductions
in amber box support so long as the concepts of the blue and green boxes are maintained.
2013 Page 29

The Agreement also imposes constraints on the level of domestic support provided to the
agricultural sector. In Indias case, it may have in future some implications on minimum
support prices given to farmers and on the subsidies given on agricultural inputs. The
Agreement allows us to provide domestic support to the extent of 10% of the total value
of agricultural produce. India is not providing any export subsidy on agricultural
products. The Agreement allows unlimited support to activities such as (i) research, pest
diseases control, training, extension, and advisory services; (ii) public stock holding for
food security purposes; (iii) domestic food aid; and (iv) income insurance and food needs,
relief from natural disasters and payments under the environmental assistance
programmers. Moreover, investment subsidies given for development of agricultural
infrastructure or any kind of support given to low income and resource poor farmers are
exempt from any commitments. Most of our major rural and agricultural development
programmers are covered under these provisions. Therefore, the Agreement does not
constrain our policies of investments in these areas.











2013 Page 30

Conclusion

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
liberalize their import of agricultural goods, Indias export of agricultural goods will
increase. India has a comparative cost advantage in the production of agricultural
commodities. Hence Indias of such commodity is expected to increase.
On the other side according to the agreement of Trade Related Investment Measures
(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 the
following investors. This agreement will also favour the investors of the developed
countries.


2013 Page 31

Bibliography

(1) Business Economics & Business Environment JaydebSarkhel.
(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