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The WTO has 153 members, representing more than 97% of total world trade and
30 observers, most seeking membership. The WTO is governed by a ministerial
conference, meeting every two years; a general council, which implements the
conference's policy decisions and is responsible for day-to-day administration; and
a director-general, who is appointed by the ministerial conference. The WTO's
headquarters is at the Centre William Rappard, Geneva, Switzerland.
OBJECTIVES OF WTO
(1)?ree trade i.e. trade without discrimination,
(2)? Growth of less developed countries,(LDCs),
(3)?Protection and preservation of environment,
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Functions of WTO :
1.? To promote trade without discrimination.
2.? To administer and implement the trade agreements signed under Uruaguay
round negotiations .It administers 29 agreements contained in the find Act of
the Uruaguay Round .
3.? To act as a forum for multilateral trade negotiations .
4.? To implement tariff cuts and reduction of non-tariff barriers by members
countries .
5.? To co-operate with other international institutions involved in global policy-
making .
6.? To act as watchdog of international trade and to regularly examine trade
policies and regimes of individual member nations.
7.? To assist developing countries in implementing uruaguay agreements
through a development division .
8.? To provide consultancy services to member countries .
9.? to examine foreign trade policies of member countries and to see that such
policies are as per the guidelines of WTO .
10.?To collect trade statistics of member countries.
|chievements of WTO :
WTO is operating as a global trade forum since 1995 . Negotiations are going
on among the member countries for agreements and also for achieving the basic
objectives of WTO. Unfortunately, the concrete achievements of WTO are few . A
brief reference to the following achievements is worth knowing :
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In future, the WTO will not be able to take India and other developing
countries for granted. WTO will not be allowed to function as undemocratic, non-
transparent and anti-people organization. As a global trade organization, it must be
fair to all member countries and offer them the benefits global trade.
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items for agricultural products are the important achievements of the Declaration.
On the issue of Non-Agricultural Market Access (NAMA) the US and the EU
managed to introduce liberalization on a large scale through the ³Swiss formula´
for tariff cuts. The developing countries and their farmers will have to wait at least
till 2010 to get some justice in prices for their products in the international market
as a result of cut in huge export subsidies at present given by the US and EU.
The Hong Kong declaration clearly indicates that the views of developing
countries are clearly reflected in it. This declaration suggests that the world¶s
economic architecture has changed and it is no longer possible for the developed
countries to push their agendas down the throats of the developing world.
CURRENT POSITION:
In the last week of July, 2008 WTO mini-ministerial talks held at WTO
headquarters in Geneva collapsed ultimately because the US and the EU were
unwilling to scrap huge subsidies they pay their farmers. The root cause was that
the rich countries cared too much about their own interests and too little about
those of developing nations. The lalks failed to bridge differences over adequate
measures to protect poor farmers in developing countries against import surges.
The US and EU have created an impression that they have made a huge
µsacrifice¶ by offering drastic cuts in their trade-distorting farm subsidies. However
the promise was simply an eyewish. These were merely paper cuts and behind this
smokescreen, both rich trading blocs had actually ensured provision to double their
trade ± distorting subsidies. or making these paper cuts the US and EU wanted the
developing countries to pay a corresponding price by way of providing more
market access in agriculture and industry. This is where the lalks broke. The lalks
may resume again. However, the breakthrough is possible only when there is a
clear and noteable change takes place in the approach and attitude of US and EU.
The seventh WTO Ministerial meeting was the first full Ministerial meeting
of the WTO. It was held in Geneva from November 30 ± December 3, 2009. While
the Conference was not intended as a negotiating forum, it provided a platform for
different groups to assess the direction of the negotiations. India and her coalition
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In brief, WTO negotiations are yet not going smoothly and peacefully. The
Doha round negotiations need to be concluded in a fair manner. Here, the approach
of developed countries is important. They have to make new initiatives for the
success of ongoing negotiations.
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Major portion of world trade is handled by MNCs and TNCs. It is just not
possible to reduce domination of MNCs are bound to dominate global trade.
However, their unfair policies need to be regulated to the extent to play active role.
In addition, export organisations from different countries should try to become
more competitive in export marketing. This will reduce the importance of MNCs in
a gradual manner. Along with MNCs, developed countries also dominate
international trade. They do not give concessions, etc. to poor and developing
countries. Such counties even dominate world trade organisations such as WTO.
Even the trading blocs are not in a position to control the operations of MNCs.
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It may be noted that flow of foreign capital has close links with the flow of
goods and services. In collaboration and joint ventures, financial
participations may be in different forms. In the case of foreign capital, such
funds are utilized for purchasing machinery or other services capital in any
form leads to promotion of international trade in terms of goods and
services. The inflow of foreign capital from developed to developing
countries leads to expansion of trade between developed and developing
countries. This also suggests that large-scale movement of funds lead to
expansion of international trade.
ME|NING OF FDI:
Broadly speaking, there are two forms in which the private capital may flow
to India. These are: (a) Direct foreign Investment (DFI) and (b) Portfolio
Investment.
DFI is one where the foreign investor establishes and does business in a
country i.e. India. In case of portfolio investment, the foreign funds flow in
terms of subscription to securities or investment is made through Euro
Issues, External Commercial Borrowings (ECBs) and Stock Market
Transactions, etc. DI represents investment made in India by setting up
branches, units or subsidiaries by the overseas bodies. DI is beneficial to
both ± the home country (here India) and the host country. The home
country gets fund transferred to the host country which benefited by getting
scarce materials, goods and technologies. It is necessary to have well
planned strategy to control and regulate the DI as it may affect the political
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and economic relations between the two countries i.e. India (home country)
and the host country i.e. USA, Germany or any other country making DI.
The policy of the government of India (GoI) towards DI by NRIs and
Overseas Corporate Bodies (OCBs) has been liberal and encouraging.
However, for certain sectors, ceilings of investment (upto 20 or 30 or 50%)
have been laid down. The RBI is empowered to sanction projects under the
automatic route for several items in which 100% foreign investment is
proposed by NRI and OCB. Investment in 100% EOUs and units in the
Export Processing Zones also comes under automatic route.
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The present UPA govt. is likely to make DI policy more liberal. Entry of
DI would be allowed in new sectors of the Indian economy. This is clearly visible
from the observation made in the economy survey 2008-09 (submitted to loksabha
on 2nd July 2009). The survey has advocated raising DI limit in insurance firms to
49% from 26 %, direct investments by foreigners in India stocks, and greater entry
of foreign banks .This suggest economy . However DI crowds out domestic
investments opportunities and hence certain conditions in the form of minimum
level of local content, expert commitment, technology transfer and compulsory
listing on the local stock exchanges are generally imposed on DI¶s.
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The above noted table shows that the total amount approved (under DI)
since 1991 to 2003 amounted to Rs.2,90,854 crores against just Rs.1,274 crores
approved during the previous decades (1981-90) actual flow as a proportion of
approvals were low till 1997 but the situation improved considerably thereafter .
With modifications and reforms policies, better infrastructure and a more vibrant
financial sector, DI inflows into India accelerated in 2005-06 and the same trend
continue in 2006-07 . Total direct foreign investments amounted to 8,961 (US$
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million) during 2005 ± 06 and increased to 22,079 (US$ million) during 2006-07.
DI inflows continued to be preponderantly of the equity variety. The DI is
mainly seen in certain sectors such as electrical equipments, service sector,
telecommunications, transportation, fuels, chemicals, food processing industries,
drugs and cement. oreign direct investments come from different countries but
mainly from Mauritius, USA, Japan, UK, Germany, and rance and so on. NRI¶s
accounted for 9.7% of total inflows during the period 1991 ± 2004. This
contribution of NRI¶s in the field of foreign direct investment is worth nothing.
The table given below shows country wise ± inflows of FDI in recent
years:
Foreign direct investments inflows (country wise)
2006-07 2005-06 2004-05 2003-04 2002-03
US $ Mn.
Japan. 80 86 122 67 65
South Korea. 68 61 13 22 15
It may be pointed out that certain countries such as china, Brazil and Mexico
have shown the better performance in DI. OUR share of DI is comparatively
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lower. This may partly due to current global recession. In spite of providing end
carpet treatment to foreign investors, India has not been able to benefit much from
DI.
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