Ilp Set 4 Block 3 Part 1

ILP Value Add SET 4 Block 3 2017
TABLE OF CONTENTS
International economic organisations and India ...........................................................................................................2

IMF and WORLD BANK...............................................................................................................................................2
IMF – International monetary Fund ......................................................................................................................2
World Bank ............................................................................................................................................................4
DIFFERENCE BETWEEN IMF and WORLD BANK .....................................................................................................5
CRITICISM ..............................................................................................................................................................7
WTO – World trade organisation...............................................................................................................................7
FROM GATT to WTO ..............................................................................................................................................7
PRINCIPLES OF WTO ..............................................................................................................................................8
STRUCTURE OF WTO..............................................................................................................................................9
AGREEMENTS.......................................................................................................................................................10
WTO Agreement ..................................................................................................................................................10
WTO Rounds ............................................................................................................................................................15
DOHA ROUND ......................................................................................................................................................15
Few Important Terms ..............................................................................................................................................18
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INTERNATIONAL ECONOMIC ORGANISATIONS AND INDIA
After the rise of globalization, the whole world gets interconnected. Interconnection involves
exchanges of goods, services, currency, labour etc. To maintain the equilibrium and stability in
the world market the need of various specialized institution arouse which led to the creation of
various institutions like IMF, WTO etc. we will look into these institutions in details and also see
the status of India’s relation with them
IMF AND WORLD BANK
The Bretton Woods conference established the International Monetary Fund (IMF) to deal with
external surpluses and deficits of its member nations. The International Bank for
Reconstruction and Development (popularly known as the World Bank) was set up to finance
postwar reconstruction. By so called Gentleman’s Agreement, World Bank has always been
headed by a person of US’ choice and IMF of Europe’s choice and many countries including
most developing countries have protested against this hegemony.
IMF – INTERNATIONAL MONETARY FUND
 Established: 1944.
OBJECTIVES OF IMF
According to the ‘Articles of Agreement’ of the IMF, its main objectives are as follows:
To promote international monetary cooperation

Objectives of IMF
To ensure balanced international trade
To ensure exchange rate stability
To eliminate or to minimize exchange restrictions by promoting the system of

multilateral payments.
To grant economic assistance to member countries for eliminating the adverse

imbalance in balance of payments.
To minimize imbalances in quantum and duration of international trade
CONSTITUTION & MEMBERSHIP
 IMF is controlled and managed by a Board of Governors. Each member country

nominates a Governor. All the nominated Governors make the Board of Governors. Each
country also nominates an alternate Governor who casts his vote in absence of
Governor.
 IMF grants loans to only member countries and not to other organizations and private
entities. The main source of IMF resources is supposed to be IMF quota contributions;
the money countries pay into the Fund for their membership of the institution.
 The quota is used in three ways: to determine voting rights, to determine
contributions, and to set a guideline for the level of resources a country can borrow
i.e. access to financing. Quota reforms in wake of changing nature of economies is one
of the prime demands of developing countries like India which have grown significantly
over the years.
Present Status of Quota.
FUNCTIONS OF IMF
 Helps Countries in Balance of Payment Difficulties – When financial problems cause the
price of a member's currency and the price of its goods to fall out of line, balance of
payments difficulties are sure to follow. IMF helps in case of Balance of Payment crisis
situation.
 Exchange Rate Stabilization – It oversees members' monetary and exchange rate
policies and an acts as a guardian of the code of conduct.
 Macroeconomic Policy Aid, Supervision and Advice – It receives frequent reports on

members' economic policies and prospects, which it debates, comments on, and
communicates to the entire membership so that other members may respond in full
knowledge of the facts and a clear understanding of how their own domestic policies
may affect other countries.
WORLD BANK
Above figure shows the structuring of World bank institutions and their respective roles.
As both IMF & WB are called ‘Bretton woods twins’. We will learn about both of them by
comparing themselves against each other.
DIFFERENCE BETWEEN I MF AND WORLD BANK
Role / Function WB IMF

Development vs Monetary the Bank is primarily a the IMF is a cooperative
Function development institution the institution that seeks to
poorer the country, the more maintain an orderly system of
favorable the conditions under payments and receipts
which it can borrow from the between nations i.e. it looks at
Bank i.e. it looks at monetary aspects
development aspects.
Lending vs Stabilizing Function Lending institution To help nations abide by the

code of conduct, the IMF
administers a pool of money
from which members can
borrow when they are in
trouble. The IMF is not,
however, primarily a lending
institution as is the Bank.
Size and Complexity The structure of the Bank is The IMF is small (about 2,300
somewhat more complex. The staff members) and, unlike the
World Bank itself comprises World Bank, has no affiliates
two major organizations: The or subsidiaries. Most of its
International Bank for staff members work at
Reconstruction and headquarters in Washington,
Development and the D.C.
International Development
Association (IDA).
Source of Funding World Bank acts as an IMF has its resources as

investment banker and raise pooled funds by members in
funds via bonds and partly by different proportions which
donations determine their SDR share also
Recipient of Funding In case of World Bank, only Only members.

developing countries can seek
assistance. In contrast to
World Bank, all member
nations, both wealthy and
poor, have the right to
financial assistance from the
IMF
RECIPIENT OF FUNDING: WORLD BANK
Neither wealthy countries nor private individuals borrow from the World Bank but instead it
lends only to credit worthy governments of developing nations. The poorer the country, the
more favorable the conditions under which it can borrow from the Bank.
There are various categories of recipients depending upon their economy and per capita
income etc –
a. IBRD LOANS – Developing countries whose per capita gross national product (GNP) exceeds
$1,305 may borrow from the IBRD. These loans carry an interest rate slightly above the market
rate at which the Bank itself borrows and must generally be repaid within 12-15 years.
b. IDA LOANS – The IDA, on the other hand, lends only to governments of very poor developing
nations whose per capita GNP is below $1,305, and in practice IDA loans go to countries with
annual per capita incomes below $865. IDA loans are interest free and have a longer maturity
of 35 or 40 years.
RECIPIENT OF FUNDING: IMF
In contrast to World Bank, all member nations, both wealthy and poor, have the right to
financial assistance from the IMF (in case of World Bank, only developing countries can seek
assistance). As monetary and fiscal problems can be faced by any country, IMF assistance is
available to all members. Money received from the IMF must normally be repaid in
comparatively shorter periods within three to five years, and in no case later than ten years.
Interest rates are slightly below market rates, but are not so concessional as those assigned to
the World Bank's IDA loans. Through the use of IMF resources, countries have been able to buy
time to rectify economic policies and to restore growth without having to resort to actions
damaging to other members' economies.
CRITICISM
The International Monetary Fund (IMF) is an international organization that oversees those
financial institutions and regulations that act at the international level. The IMF has 184
member countries, but they do not enjoy an equal say. The top ten countries have 55 per cent
of the votes. They are the G-8 members (the US, Japan, Germany, France, the UK, Italy, Canada
and Russia), Saudi Arabia and China. The US alone has 17per cent voting rights. Unequal
shareholding has led to perpetual western influence over key decisions of the Bretton woods
institutions.
WTO – WORLD TRADE ORGANISATION
WT0 is an international organization established to promote multilateral trade. It is successor to

erstwhile GATT (General Agreement on Tariffs and Trade). It came into force on January 1, 1995
and has played a pivotal role in facilitating international trade.
FROM GATT to WTO
GATT is a forum for international trade. Actually it was intended to be established as an

organization (International Trade Organisation) but US parliament refused to accede to it. So it
came into force, as an agreement short of an institution, in 1947. It was established with an aim
to ensure free trade among world countries by way of reduction of tariff and other barriers
to trade. Under the aegis of GATT, eight rounds of negotiations were held between 1986 and 94
among members to ensure free trade. The last one was Uruguay round. The Uruguay round
included the service trade, intellectual property rights, textiles and agriculture in its
negotiation. As a result of conclusion of Uruguay Round (8Th round) WTO has been established.
This brought many amendments to GATT. This amended version now forms the basis for WTO.
PRINCIPLES OF WTO
main principles of WTO
The member countries

Most
to treat all nations on equal footing in the policies concerning
Favoured Nation (MFN)
import and export of goods and services.
to treat imported goods and senices equal to domestic goods

National Treatment(NT)
and services in domestic sale and consumption.
STRUCTURE OF WTO
MINISTERIAL CONFERENCE
It is the top level decision making body. It meets once in two years. The trade and commerce
ministers, by whatever name called in member countries, form this council.
GENERAL COUNCIL.
It is functioning under the Ministerial Conference. The ambassadors or other representatives

appointed by member countries constitute this council. The general council also acts as Dispute
Settlement Body (DSB) and Trade Policy Review Body. It meets many times in a year as and
when required. As a DSB. it helps the member countries in solving their disputes arising out of
trade.
It also reviews the trade policies adopted by member countries to cheek if they are compatible
with WTO’s agreements and their impact on trade.
COUNCIL FOR TRADE IN GOODS & SERVICES
It is also called Goods Council. It looks after the working of GATT agreement. The Council for
Trade in Service is called Service Council. It looks after implementation of General Agreement
on Trade in Services (GATS).
TRIPS Council
It looks after issues related with Trade Related Aspects of Intellectual Property Rights (TRIPS)
Agreement implementation.
AGREEMENTS
As a result of Uruguay round 20 agreements were signed. Here we are going to have a look
about few important agreements- the WTO agreement, Agreement on Agriculture (AoA ). Trade
Related Aspects of Intellectual Property Rights (TRIPS). Trade Related Aspects of Investment
Measures (TRIMS). General Agreement on Trade in Services (GATS).
WTO AGREEMENT
The WTO was established under this agreement. It is an Umbrella agreement. Other
agreements are annex to this agreement
AGREEMENT ON AGRICULTURE (AOA)
Agreement on Agriculture calls for freeing agriculture trade. The commitments under this
agreement are based on Special and Differential treatment. Special and Differential treatment
means flexible and lesser commitment on the pan of
developing and less developed countries compared to developed countries in

fulfilling the obligation under this agreement. This agreement also has special safeguard
mechanism. Special safeguard mechanism means the option available to countries to impose
additional duties on imported products when there is surge in imports or products are
imported at lower price. The main components of this agreement are Market access, Domestic
support or Domestic subsidies and Export subsidies
AoA
Domestic
Market access Export subsidies
subsidies
MARKET ACCESS
Market access provision calls for provision of access to imported agricultural goods in the
member countries. There are two provisions one is tariffication and tariff' reduction and
another one is minimum market access.
Tariffication means converting non-tariff' barriers into tariff's that ensures same level of
protection. Tariff reduction calls for 36% tariff reduction by developed countries over 6 years
period and 24% by developing countries over the period of 10 years. The least developed
countries do not have any commitments.
Minimum access calls for at least minimum of 5 % of imported agriculture products in domestic
consumption by the year 2000 in developed countries and 2004 in developing countries. The
less
developed countries are exempted from this obligation.
DOMESTIC SUPPORT OR DOMESTIC SUBSIDIES
This provision calls for reduction of domestic subsidies that result in lower price of exported
products and distort free trade. These subsidies are called Amber Box subsidies.
In WTO terminology, subsidies in general are identified by “Boxes” which

are given the colours of traffic lights: green (permitted), amber (slow down
— i.e. be reduced), red (forbidden). In agriculture, things are, as usual,
more complicated. The Agriculture Agreement has no Red Box, although domestic support
exceeding the reduction commitment levels in the Amber Box is prohibited; and there is a Blue
Box for subsidies that are tied to programmes that limit production. There are also exemptions
for developing countries (sometimes called an “S&D Box”).
DIFFERENT SUBSIDIES
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.
Blue box - This is the “amber box with conditions” — conditions

designed to reduce distortion. Any support that would normally be in the
amber box, is placed in the blue box if the support also requires farmers
to limit production. At present there are no limits on spending on blue
box subsidies. In the current negotiations, some countries want to keep
the blue box as it is because they see it as a crucial means of moving
away from distorting amber box subsidies without causing too much
hardship. Others wanted to set limits or reduction commitments, some advocating moving
these supports into the amber box.
Green box - It is defined in Annex 2 of the Agriculture Agreement. In

order to qualify, green box subsidies must not distort trade, or at most
cause minimal distortion. They 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 targeted at particular products,
and include direct income supports for farmers that are not related to
(are “decoupled” from) current production levels or prices. They also include environmental
protection and regional development programmes. “Green box” subsidies are therefore
allowed without limits, provided they comply with the policy-specific criteria set out in Annex 2.
Export Subsidies
The subsidies that subsidise export are called export subsidies. These are direct subsidies given
by government or government agencies either in cash or in kind to producers of agriculture
products against export performance and export of non- commercial agricultural product at
lower price and transport subsidies etc. The developed member countries have to reduce
subsidised export in value terms by 36% and in terms of volume by 21% over a period of 6 years
below the level of 1986- 90. For developing countries, it is 24% and 14% respectively over a
period of 10 years
SANAITARY AND PHYTO-SANITARY AGREEMENT
The SPS Agreement was signed as a part of the Final Act of the Uruguay Round and came into
effect in 1995. The Agreement took effect with the establishment of the WTO. The objective of
the SPS Agreement is twofold. First, it aims to reduce the arbitrary nature of sovereign
governments using SPS measures as trade restricting devices. Second, it seeks to promote the
harmonization of national SPS measures to the international standards while protecting
member governments' rights to regulate their own food safety, animal and plant health issues.
Codex Alimentarius Commission is one of the premier body which sets SPS standards.
TRADE RELATED INTELLECTUAL PROPERTY RIGHTS (TRIPS)
Intellectual properties are knowledge oriented creations, inventions and

innovations. The WIPO (World Intellectual Property Organisation) observes as: “Intellectual
property (IP) refers to creations of the mind: inventions, literary and artistic works, and
symbols, names, images, and designs used in commerce”.
The intellectual property rights refer to the recognised ownership of the intellectual property to
creator, inventor and innovator. The ownership is ensured through copyrights, patents etc.
TRIPS cover Copy right and related rights, trademarks including service marks, geographical
indictors, industrial designs, patents, lay out designs (topographies) of integrated circuits, trade
secrets.
GEOGRAPHICAL INDICATOR
Geographical indicator means the unique identity attached to a particular product for the
reason that particular product is produced in a particular geographical location. It may be
natural product or manmade product. For example, Banaras silk sarees, Coimbatore wet
grinder etc. The Geographical Indications of Goods (registration and protection) Act, 1999
observes “geographical indication’, in relation to goods, means an indication which identifies
such goods as agricultural goods, natural goods or manufactured goods as originating, or
manufactured in
the territory of a country, or a region or locality in that territory, where a given quality,
reputation or other characteristic of such goods is essentially attributable to its geographical
origin and incase where such goods are manufactured goods one of the activities of cither the
production or of processing or preparation of the goods concerned takes place in such territory,
region or locality, as the case may be”. If geographical indication is given to any product others
cannot use that name. For example, if Banaras silk saree is conferred with Geographical
indication, others can produce silk saree but cannot claim that their saree is Banaras silk saree.
INDUSTRIAL DESIGN
Designs when recognised as it belongs to anybody, others cannot use that design. The Designs
Act,2000 observes “design" means only the features of shape, configuration, pattern, ornament
or composition of lines or colours applied to any article whether in two dimensional or three
dimensional or in both forms, by any industrial process or means, whether manual, mechanical
or chemical, separate or combined, which in the finished article appeal to and are judged solely
by the eye.
TRIMS OR AGREEMENT ON TRADE RELATED INVESTMENT MEASURES
Trade Related Investment Measures – In general any measure taken by government that may
affect trade is TRIMS. According to WTO, some TRIMS might cause trade distortion and violate
WTO principles. Therefore, a multilateral agreement was signed during Uruguay rounds in
1994. It requires phasing out of those TRIMS that are distorting. Policies such as local content
requirements and trade balancing rules that have traditionally been used to both promote the
interests of domestic industries and combat restrictive business practices are now banned. US
sought to drag India to WTO under provision of this agreement in case of solar panel issues as a
part of Jawahar Lal Nehru National Solar Mission phase 1 biddings.
INFORMATION TECHNOLOGY AGREEMENT
The aim of the treaty is to lower all taxes and tariffs on information technology products by
signatories to zero.
WTO ROUNDS
WTO was born out of Uruguay round of negotiation as said at the outset. Under
WTO, a new round of negotiation was started and named as Doha Round. This fresh round
actually started in the year 2001 but declaration and decisions were made in Doha ministerial
conference and named after Doha as Doha development round. This round is continuing. This
round is concerned with implementation of agreements made in the Uruguay' round of
negotiation. It covers a whole ran of issues from agriculture to e-commerce.
DOHA ROUND
Doha Rounds are an attempt to set the framework for global trade and it commenced in 2001.
Its major objective is to lower the trade barriers to facilitate free flow of goods and services.
Key areas of negotiation include agriculture, non-agricultural market access (NAMA), services,
intellectual property rights, trade and environment, trade facilitation, WTO rules and dispute
settlement and so on. Discussions so far has concentrated mainly on agriculture, NAMA and
sometimes on services. WTO round talks have stalled after deadlock between developing and
developed countries over the conditions like tariffs, agricultural subsidies and so on.
Major issues of confrontation between the developed and the developing countries are –
Biggest issue is regarding agriculture– many developing countries like US are pouring
enormous subsidies for their farmers which make their agriculture produce cheaper.
Another issue was that of Compulsory Licensing – this has been resolved after amendments
were made in TRIPS.
Another issue is Differential Treatment. Under this there are clauses relating to ‘Special and
Differentiated’ treatment for the developing countries which are under non-agreement and
contention.
Regarding NAMA, developing countries seek protection of their vulnerable industries. Further
there are implementation issues, developing countries say that they have technical problems in
implementing even the Uruguay Round declaration. As a result, talks have stalled since 2008
and no significant progress has been made since.
Scope of Doha round –
 Agriculture – Many of the Uruguay commitments were to be implemented by 2000 but
were not (implementation issues). So it aimed at reviewing these, improving market
access, phasing out export subsidies and reductions in trade distorting domestic
support.
 NAMA: Issue of trade facilitation and improving market access.
 Services: Expanding the scope of GATS.

 TRIPS: Expanding the scope of TRIPS.
PRINCIPLES OF DOHA ROUND ARE –
I. Single undertaking: Every item of the negotiation is part of a whole and indivisible package
and cannot be agreed separately. Some developed countries on the other hand demand that
separate agreements should be put into effect to make some progress on Doha round.
II. Participation: The negotiations are open to all WTO members and to observer governments
negotiating or intending to negotiate membership. But decisions on the outcomes are only
taken by members.
III. Transparency: The negotiations have to be transparent.
IV. Special and differential treatment: The negotiations have to take fully into account the
principle of special and differential treatment for developing and least-developed countries.
V. Sustainable development.
VI. Subjects not negotiated: Non trade issues like labor, environment etc.
CRITICISM OF WTO/DOHA DEVELOPMENT ROUND –
 WTO, it seems, is slowly moving away from being a multilateral institution to a pluri-
lateral (covering only a select few members) institution and only a few countries call the
shots.
 It is also argued that it will open up the world trade to the disadvantage of the
developing countries and will cripple the fledgling industries of the developing countries
by flooding the markets with subsidized cheap goods.
 Criteria for De-Minimus as 10% of agriculture production is also spurious as the value
can vary greatly for developed and developing countries and is also not set realistically
and is currently set at 1980s price levels.
 WTO norms are likely to lead to a new economic colonialism where only a few big
multinationals will call the shot putting developing country economies at poor second
place in global supply chain.
 Developing countries claim that they have had problems with the implementation of the
agreements reached in the earlier Uruguay Round because of limited capacity or lack of
technical assistance. They also claim that they have not realized certain benefits that
they expected from the Round, such as increased access for their textiles and apparel in
developed-country markets. They seek a clarification of language relating to their
interests in existing agreements.
 WTO rounds focus excessively on some issues and ignore others. For example, there are
strikingly few rules governing trade in oil which is a major component of trade basket of
countries like India and is one of the most valued commodity trade in global trade.
 Developed countries like US have been adamant on the domestic subsidies. Subsidies on
items like Cotton are of concern for countries of cotton producing African countries. So,
countries like India demand substantial cuts (75 - 80%) by US and EU on their overall
trade distorting domestic support (subsidies).
 It has been argued that the SPS agreement has been used by the developed countries to
selectively ward off imports from developing nations.
 It is often criticized for being a biased one in favor of developed countries. A developing
country like India still does not have the access to developed countries’ markets because
of high non-tariff barriers. For example, although all quota restrictions on exports of
textiles and clothing have been removed in India, U.S.A. has not removed their quota
restriction on import of textiles from India and China.
IMPACT OF DOHA ROUND (AND WTO AGREEMENTS) ON INDIA –
 Agriculture – India have to curtail subsidies in many areas to comply with WTO rules
and as a result its products may become less competitive on the one hand and on the
other hand, its farmers and fledgling industry may face adverse effect in form of loss of
income of poor farmers and loss to domestic industries.
 Services – India is also unhappy over non-opening of mode-IV services in which it has
expertise. On the other hand, opening of mode-III services has impacted its domestic
service industry as developed nations have expertise in it.
 TRIPS – In TRIPS, Indian pharma industry has faced huge challenges in European and
American markets due to stringent provisions. It has also resulted in poor access to
medicines in developing countries like India as they are not able to develop cheaper
generic drugs due to tight TRIPS norms.
 Sanitary and Phyto Sanitary Measures – Developed countries have also used SPS to
erect non-tarrif barriers which have harmed Indian farm export. Ban on mango import is
the most recent example.
However, WTO rules have benefitted India as well in terms of lower tariffs in other
markets which are more easily accessible for India and domestic consumers have also
benefitted from cheaper imports and have more choice now. Trade has also increased
many a times and there has also been technology transfer which has benefitted Indian
industry.
INDIA’S STAND ON DOHA DEVELOPMENT ROUND –
 India strongly supports ‘Special and Differential treatment’ for the developing countries.
As a result of efforts of countries like India, several clauses and flexibilities have been
introduced in the agreements, like, compulsory licensing clause in TRIPS, higher subsidy
clauses, peace clause extension and so on.
 As a part of special and differential clause, India also supports ‘Duty-Free and Quota
Free (DFQF) market access’ for the least developed countries. India became the first
developing country to extend this facility to LDCs when it announced a Duty Free Tariff
Preference (DFTP) Scheme for LDCs in 2008 on about 85 per cent of India's total tariff
lines and preferential access (Positive List) on about 9 per cent of tariff lines. Only 6 per
cent tariff lines were under the Exclusion List.
 In agriculture, India wants substantial and effective reductions in overall trade distorting
domestic support (OTDS) of the US and EU; An operational and effective Special
Safeguard Mechanism (SSM); Simplification and capping of developed country tariffs
and along term permanent solution to the problem of food security in developing
countries.
 In Non-Agricultural Market Access (NAMA), India wants adequate and appropriate
flexibilities for protecting economically vulnerable industries.
 In case of rules/agreements, India wants tightening of disciplines on anti-dumping
(deletion of zeroing clause and reiteration of the lesser duty rule).
 In case of TRIPS, India wants certain flexibilities to alleviate hunger, poverty and disease.
It also wants enhanced protection for geographical indications (GIs) other than wines
and spirits and enhanced safeguards to check bio-piracy and access and benefit sharing.
FEW IMPORTANT TERMS
SAFEGUARD MECHANISMS
To protect domestic vulnerable industries and economy, WTO provides for three measures –
I. Safeguard Mechanism.
II. Anti-dumping.
III. Countervailing duties.
BARRIERS TO TRADE
NON-TARIFF BARRIERS
All the restrictions on imports by a government in the form other than taxes. They mainly
include restrictions on quantity and quality of goods imported. Technical Barriers to Trade –
Include – Product standards, product characteristics, processes, packaging and labeling. They
should not cause unnecessary obstacles,
PEACE CALUSE
Peace clause in WTO parlance gives legal security to member countries and protects them from
being challenged under other WTO agreements. Domestic support measures and export
subsidies of a WTO Member that are legal under the provisions of the AoA cannot be
challenged by other WTO Members on grounds of being illegal under the provisions of another
WTO agreement. The Peace Clause has expired on January 1, 2004. It is now possible,
therefore, for developing countries to use the WTO dispute settlement mechanism in order to
challenge, in particular, U.S. and EU export subsidies on agricultural products.
NAMA
It refers to all those products that are not covered by the AoA or GATS constituting bulk of
world's merchandise exports. Doha called for reduction in tariff and non-tariff barriers on these
products by May 2003 but this deadline was missed.
BALI PACKAGE, DECEMBER 2013
The Ninth Ministerial Conference of the WTO held in Bali, Indonesia, from 3 to 7 December
2013 lead to ‘Bali Package’. A trade facilitation agreement known as the Bali Package was
reached by all members on 7 December 2013, the first comprehensive agreement in the
organization's history. Its three basic pillars were – Trade facilitation, Agriculture and
Development. The accord includes provisions for lowering import tariffs and agricultural
subsidies, with the intention of making it easier for developing countries to trade with the
developed world in global markets. Developed countries would abolish hard import quotas on
agricultural products from the developing world and instead would only be allowed to charge
tariffs on amount of agricultural imports exceeding specific limits. Another important target is
reforming customs bureaucracies and formalities to facilitate trade. It has following highlights –
 Among the two most important outcomes of the Bali package were the decisions on the
Agreement on Trade Facilitation (TF) which relates to the reduction of administrative
barriers to trade — like dealing with custom barriers, documentation and transparency
 Second important agreement was on Public Stockholding for Food Security Purposes. It
concerns the procurement and storage of food grains by state agencies for the public
distribution of food. The G-33 (a group of 46 developing countries in the WTO including
India) decided to bring the issue of procurement of food grains from subsistence
farmers for public stockholding for food security into the agenda for the Bali Ministerial
Conference. India's consistent position in the WTO has been that matters pertaining to
livelihood, food security, and rural development are of vital importance.
 ‘Preferential Rules of Origin’ for least developed countries – simplifying rules for
identifying and qualifying for preferential treatment with importing countries and
operationalisation of preferential treatment for Least Developed Countries in services
 Duty Free and Quota Free market access to least developed countries
 Monitoring Mechanism on Special and Differential Treatment
 Peace Clause to be applicable till 2017
 Before the agreement, the negotiations repeatedly came close to collapsing. India's
demand that it should be allowed to extend its domestic agricultural subsidies
indefinitely was met by opposition from the U.S., while Cuba, Bolivia, Nicaragua, and
Venezuela objected to the removal of a text relating to the U.S. embargo against Cuba.
Issues and Analysis of Bali Package –
 It was made amply clear that while being fully prepared to engage, India will never
compromise on fundamental issues pertaining to food security, livelihood security, and
the welfare of its poor.
 Special and differential treatment is a must for developing countries as provided under
the provisions of the WTO. It is also in complete conformity with the commitment of
member states in other multilateral fora like the United Nations (UN) and the Food and
Agriculture Organization (FAO) where the fight against poverty and hunger is accorded
highest priority.
 India emphasized that an interim solution cannot be a temporary solution nor can it be
terminated until a negotiated permanent solution is in place.
 It was made clear that without a satisfactory decision on food security, India considered
the Bali Package as lacking in horizontal balance and would, therefore, not be able to
support it. The outcome on the food security proposal provides an opportunity to begin
correcting some of the imbalances in the trade rules which are part of the historical
legacy of imbalance in the WTO.
 Industry in India supports a trade facilitation agreement at Bali. The industry is of the
view that such an agreement could go a long way in bringing down transaction costs
that is critical to tap markets in the current global economic environment.
 But there is a word of caution emerging from the industry. It is clear that the burden of
financing these obligations should not fall on the private sector. Any such additional cost
burden on the private sector would then take away the benefit of an agreement, which
is aimed at cutting costs of exports and imports.
 Developing countries also think the proposal on table at present on trade facilitation
only increases the burden on developing countries by forcing them to upgrade their
export infrastructure without any reciprocal commitment on the part of developed
countries for financial assistance or technology transfer.
TRADE FACILITATION AGREEMENT NEGOTIATIONS, 2014
Background – India raised the red flag over domestic support (by developed countries)
to farmers in Bali meet. Since then, developed countries have been on a watch to pick
holes in India farm and export policies. In December 2013 last year in Bali, Indonesia,
the WTO members agreed on a package including decisions on public stockholding for
food security purposes; export competition; government support for agriculture-related
services and cotton.
SWISS FORMULA
Swiss formula gives the rate of tariff reduction. It calls for higher rate of
reduction for countries which has higher initial tariff and lower rate for countries which has
lower initial tariff. For example, a country with 60% tariff has to reduce its tariff at a higher rate
than a country with 30 %. It means, the former has to reduce its tariff speedily.

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International economic organisations and India ...........................................................................................................2

INTERNATIONAL ECONOMIC ORGANISATIONS AND INDIA

IMF AND WORLD BANK

IMF – INTERNATIONAL MONETARY FUND

To promote international monetary cooperation

To ensure balanced international trade

To ensure exchange rate stability

To eliminate or to minimize exchange restrictions by promoting the system of

To grant economic assistance to member countries for eliminating the adverse

To minimize imbalances in quantum and duration of international trade

CONSTITUTION & MEMBERSHIP

 IMF is controlled and managed by a Board of Governors. Each member country

Present Status of Quota.

 Macroeconomic Policy Aid, Supervision and Advice – It receives frequent reports on

DIFFERENCE BETWEEN I MF AND WORLD BANK

Role / Function WB IMF

Lending vs Stabilizing Function Lending institution To help nations abide by the

Source of Funding World Bank acts as an IMF has its resources as

Recipient of Funding In case of World Bank, only Only members.

RECIPIENT OF FUNDING: WORLD BANK

RECIPIENT OF FUNDING: IMF

WTO – WORLD TRADE ORGANISATION

WT0 is an international organization established to promote multilateral trade. It is successor to

FROM GATT to WTO

GATT is a forum for international trade. Actually it was intended to be established as an

The member countries

to treat imported goods and senices equal to domestic goods

It is functioning under the Ministerial Conference. The ambassadors or other representatives

COUNCIL FOR TRADE IN GOODS & SERVICES

AGREEMENT ON AGRICULTURE (AOA)

developing and less developed countries compared to developed countries in

DOMESTIC SUPPORT OR DOMESTIC SUBSIDIES

In WTO terminology, subsidies in general are identified by “Boxes” which

Amber box - All domestic support measures considered to distort

Blue box - This is the “amber box with conditions” — conditions

Green box - It is defined in Annex 2 of the Agriculture Agreement. In

SANAITARY AND PHYTO-SANITARY AGREEMENT

TRADE RELATED INTELLECTUAL PROPERTY RIGHTS (TRIPS)

Intellectual properties are knowledge oriented creations, inventions and

TRIMS OR AGREEMENT ON TRADE RELATED INVESTMENT MEASURES

INFORMATION TECHNOLOGY AGREEMENT

 Services: Expanding the scope of GATS.

PRINCIPLES OF DOHA ROUND ARE –

CRITICISM OF WTO/DOHA DEVELOPMENT ROUND –

BALI PACKAGE, DECEMBER 2013

TRADE FACILITATION AGREEMENT NEGOTIATIONS, 2014

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