A PROJECT REPORT ON

WTO AND INDIA

SUBMITTED BY PRASAD D. MAHAJAN ROLL NO: 34

FOR THE DEGREE OF M.COM (PART II) MANAGEMENT

UNDER THE GUIDANCE OF PROF. KANCHAN FULMALI

M.L.DAHANUKAR COLLEGE OF COMMERCE DIXIT ROAD, VILE PARLE, EAST, MUMBAI 57

ACADEMIC YEAR 2013-14

WTO AND INDIAN ECONOMY (AGRICULTURAL IMPLICATIONS)

Declaration

I, Mr. Prasad D. Mahajan student of M.Com Part- II Management studying in M.L.Dahanukar College of Commerce, hereby declare that I have completed project on WTO AND INDIA for the academic year 2013-14, as per the requirements of the University of Mumbai as a part of Master Of Commerce- Part II programme. The information submitted is true and original to the best of my knowledge.

(Prasad D. Mahajan)

Acknowledgement

This satisfaction that accomplishes the successful completion of any work is when we say thank you to the people who made it possible, whose constant encouragement and guidance has been a source of inspiration throughout the completion of project. Firstly I extend my thanks to the various people who have shared their opinion and experiences through which I received the required information which is crucial for my project. Finally, I express my thanks to Professor Kanchan Fulmali who gave me

this opportunity to learn the subject and guided me with valuable suggestions.

Index

Sr. No. 1 2 3 4 5 6 7 8 9 10

Topic Executive Summary Introduction History GATT Impact Of WTO On India India And The WTO Comparison Of Indias Foreign Trade Benefits EXIM Policy Conclusion Bibliography

Executive Summary

The Project describes all about the World Trade Organisation (WTO), its Introduction in the World Economy, the Objectives laid for the Organisation, Functions that operates, EXIM Trade Policies, and Scenarios occurred with India Before the formation of WTO & the Benefits gained by India from the organisation. The topic discussed in this project has a long history withIndia 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 Organisation known today as the World Trade Organisation (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.

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.

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.

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 utilisation of resources of the world. 4) Expansion in production exchange of goods and services on a global level.

Principles

1) Follow the Most Favoured 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) Liberalise 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 Fibre 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.

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.

From GATT To WTO After World War II over 50 countries came together to create the International Trade Organisation (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.

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.

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.

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 threequarters 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.

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 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 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 programme. 6) It encourages co-operation within international organisations.

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 pharma 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.

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 labour 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.

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 favours 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-ofpayments 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-ofPayments 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.

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.

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.

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.

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.

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.

(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.

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%.

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.

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.

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.

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.

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 programmes. 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 programmes are covered under these provisions. Therefore, the Agreement does not constrain our policies of investments in these areas.

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 donot 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 liberalise 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.

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