The Wto: The Result Is Assurance. Consumers and Producers Know

The WTO: Impact on the Freight Forwarding Industry
THE WTO
The world trade organization (WTO) is the only international organization dealing with the global rules of trade between nations. Its main function is to ensure that trade flows as smoothly, predictably and freely as possible. The Result is assurance. Consumers and producers know that they can enjoy secure supplies and greater choice of the finished products, components, raw materials and services that they use. Producers and exporters know that foreign markets will remain open to them. The result is also a more prosperous, peaceful and accountable economic world. Decisions in the WTO are typically taken by consensus among all member countries and they are ratified by members parliaments. Trade friction is channelled into the WTOs dispute settlement process where the focus is on interpreting agreements and commitments, and how to ensure that countries trade policies conform with them. That way, the risk of disputes spilling over into political or military conflict is reduced. By lowering trade barriers, the WTOs system also breaks down other barriers between peoples and nations. At the heart of the system : Known as the multilateral trading system are the WTOs agreements, negotiated and signed by a large majority of the worlds trading nations, and ratified in their parliaments. These agreements are the legal ground-rules for international commerce. Essentially, they are contracts, guaranteeing member countries important trade rights. They also bind governments to keep their trade policies within agreed limits to everybodys benefit. The agreements were negotiated and signed by governments. But their purpose is to help producers of goods and services, exporters, and importers conduct their business. The goal is to improve the welfare of the peoples of the member countries.
THE ORGANIZATION
The WTOS overriding objective is to smoothly, freely, fairly and predictably. It does this by: Administering trade agreements. Acting as a forum for trade negotiations. Settling trade disputes. Reviewing national trade policies. Assisting developing countries in trade policy issues, through technical assistance and training programmes. Cooperating with other international organizations. help trade flow
Structure The WTO has more than 130 members, accounting for over 90% of world trade. Over 30 others are negotiating membership. Decisions are made by the entire membership. This is typically by consensus. A majority vote is also possible but it has never been used in the WTO, and was extremely rare under the WTOs predecessor, GATT. The WTOs agreements have been ratified in all members parliaments. The WTOs top level decision-making body is the Ministerial Conference which meets at least once every two years. Below this is the General Council (normally ambassadors and heads of delegation in Geneva, but sometimes officials sent from members capitals) which meets several times a year in the Geneva headquarters. The General Council also
meets as the Trade Policy Review Body and the Dispute Settlement Body. Numerous specialized committees, working groups and working parties deal with the individual agreements and other areas such as the environment, development, membership applications and regional trade agreements. The first Ministerial Conference in Singapore in 1996 added three new working groups to this structure. They deal with the relationship between trade and investment, the interaction between trade and competition policy and transparency in government procurement. At the second Ministerial Conference in Geneva in 1998 ministers decided that the WTO would also study the area of electronic commerce, a task to be shared out among existing councils and committees. Secretariat The WTO Secretariat, based in Geneva, has around 500 staff and is headed by a director-general. It does not have branch offices outside Geneva. Since decisions are taken by the members themselves, the Secretariat does not have the decision-making role that other international bureaucracies are given. The Secretariats main duties are to supply technical support for the various council and committees and the ministerial conferences, to provide technical assistance for developing countries, to analyse world trade, and to explain WTO affairs to the public and media. The Secretariat also provides some form of legal assistance in the dispute settlement process and advises governments wishing to become members of the WTO. The annual budget is roughly 117 million Swiss francs.
THE WTO AGREEMENTS

How can you ensure that trade is as fair as possible, and as free as is practical? By negotiating rules and abiding by them. The WTOs rules the agreements are the result of negotiations between the members. The current set were the outcome of the 1986-94 Uruguay Round negotiations which included a major revision of the original General Agreement on Tariffs and Trade (GATT). GATT is now the WTOs principal rule-book for trade in goods. The Uruguay Round also created new rules for dealing with trade in services, relevant aspects of intellectual property, dispute settlement, and trade policy reviews. The complete set runs to some 30,000 pages consisting of about 60 agreements and separate commitments (called schedules), made by individual members in specific areas such as lower customs duty rates and services market-opening. Through these agreements, WTO members operate a nondiscriminatory trading system that spells out their rights and their obligations. Each country receives guarantees that its exports will be treated fairly and consistently in other countries markets. Each promises to do the same for imports into its own market. The system also gives developing countries some flexibility in implementing their commitments. It all began with trade in goods. From 1947 to 1994, GATT was the forum for negotiating lower customs duty rates and other trade barriers; the text of General Agreement spelt out important rules, particularly non-discrimination. Since 1995, the updated GATT has become the WTOs umbrella agreement for trade in goods. It has annexes dealing with specific sectors such as agriculture and
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textiles, and with specific issues such as state trading, product standards, subsidies and actions taken against dumping. Services Banks, insurance firms, telecommunications companies, tour operators, hotel chains and transport companies looking to do business abroad can now enjoy the same principles of freer and fairer trade that originally only applied to trade in goods. These principles appear in the new General Agreement on Trade in Services (GATS). WTO members have also made individual commitments under GATS stating which of their services sectors they are willing to open to foreign competition, and how open those markets are. Intellectual Property The WTOs intellectual property agreement amounts to rules for trade and investments in ideas and creativity. The rules state how copyrights, trademarks, geographical names used to identity products, industrial designs, integrated circuit layout-designs and undisclosed information such as trade secrets intellectual property should be protected when trade is involved. 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.
The system encourages countries to settle their differences through consultation. Failing that, they can follow a carefully mapped out, stage-by-stage procedure that includes the possibility of a ruling by a pane of experts, and the chance to appeal the ruling on legal grounds. Confidence in the system is borne out by the number of cases brought to the WTO 167 cases by March 1999 compared to some 300 disputes dealt with during the entire life of GATT (1947-94). Policy Review The Trade Policy Review Mechanisms purpose is to improve transparency, to create a greater understanding of the policies that countries are adopting, and to assess their impact. Many members also see the reviews as constructive feedback on their policies. All WTO members must undergo periodic scrutiny, each review containing reports by the country concerned and the WTO Secretariat. Over 45 members have been reviewed since the WTO came into force.
THE WTO DEVELOPING COUNTRIES

Over three-quarters of WTO members are developing or least-developed countries. Special provisions for these members are included in all the WTO agreements. The special provisions include: longer time periods for implementing agreements and commitments. measures to increase trading opportunities for these countries, provisions requiring all WTO members to safeguard the trade interests of developing countries, and support to help developing countries build the and
infrastructure for WTO work, implement technical standards.
handle
disputes
In 1997, a high-level meeting on trade initiatives and technical assistance for least-developed countries brought their concerns to centre stage. The meeting involved six intergovernmental agencies and resulted in an integrated framework to help leastdeveloped countries increase their ability to trade, and some additional preferential market access agreements. A committee on trade and development, assisted by a subcommittee on least-developed countries, looks at developing countries special needs. Its responsibility includes implementation of the agreements, technical cooperation, and the increased participation of developing countries in the global trading system.
Technical Assistance and Training The WTO organizes around 100 technical cooperation missions to developing countries annually. It holds on average three trade policy courses each year in Geneva for government officials. Regional seminars are held regularly in all regions of the world with a special emphasis on African countries. Training courses are also organized in Geneva for officials from countries in transition from central planning to market economies. In 1997-98, the WTO set up reference centres in almost 40 trade ministries in capitals of least-developed countries, providing computers and internet access to enable ministry officials to keep abreast of events in the WTO in Geneva through online access to the WTOs immense database of official documents and other material.
THE WTO THE MULTILATERAL TRADING SYSTEM PAST, PRESENT AND FUTURE
The World Trade Organization came into being in 1995. One of the youngest of the international organizations, the WTO is the successor to the General Agreement on Tariffs and Trade (GATT) established in the wake of the Second World War. So while the WTO is still young, the multilateral trading system that was originally set up under GATT is already 50 years old. The system celebrated its golden jubilee in Geneva on 19 May 1998, with many heads of state and government leaders attending. The past 50 years have seen an exceptional growth in world trade. Merchandise exports grew on average by 6% annually. Total trade in 1997 was 14 times the level of 1950. GATT and the WTO have helped to create a strong and prosperous trading system contributing to unprecedented growth. The system was developed through a series of trade negotiations, or rounds, held under GATT. The first rounds dealt mainly with tariff reductions but later negotiations included other areas such as anti-dumping and non-tariff measures. The latest round the 1986-94 Uruguay Round led to the WTOs creation. The negotiations did not end there. Some continued after the end of the Uruguay Round. In February 1997 agreement was reached on telecommunications services, with 69 governments agreeing to wide-ranging liberalization measures that went beyond those agreed in the Uruguay Round. In the same year 40 governments successfully concluded negotiations for tariff-free trade in information technology
products, and 70 members concluded a financial services deal covering more than 94% of trade in banking, insurance, securities and financial information. At the May 1998 ministerial meeting in Geneva, WTO members agreed to study trade issues arising from global electronic commerce. The next ministerial conference is due to be held in the United States in late 1999. In 2000, new talks are due to start on agriculture and services and possibly a range of other issues. TRADE POLICY REVIEWS: FIRST PRESS RELEASE, SECRETARIAT AND GOVERNMENT SUMMARIES INDIA: APRIL 1999 Indias economic reforms and trade liberalization policies contributed to a dramatic increase in its economic growth in the mid-1990s. larger flows of inward foreign investment and increased international trade helped India achieve annual average growth rates of 7 percent from 1993 to 1996. India should keep up with its trade reforms to ensure strong economic growth Indias economic reforms and trade liberalization policies contributed to a dramatic increase in its economic growth in the mid-1990s. Larger flows of inward foreign investment and increased international trade helped India achieve annual average growth rates of 7 percent from 1993 to 1996. Economic growth slowed, however, in 1997 and, according to a new WTO Secretariat report on Indias trade policies and practices, India should continue liberalizing its trade and investment regime to ensure strong and stable economic growth.
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The WTO Secretariat report and a policy statement prepared by the Government of India, will provide the basis for a review of Indias trade policies and practices on 16 and 17 April, 1998. The focus of the WTOs report is on Indias policy and trade measures affecting imports, exports and production. The report notes that India recognizes the need to continue economic reform, with an increased emphasis on improving its industrial infrastructure. The later has proved to be a constraint on expanding economic activity and stimulating exports. Other measures under consideration are reductions in tariffs and non-tariff measures, reforming the subsidies structure (estimated to account for 14 per cent of GDP), and restructuring public sector enterprises. The Indian Government initiated a major programme of economic reform and liberalization in 1991. Reforms in the manufacturing sector have been widespread, including reduction in average tariff rates, import licensing restrictions for industrial inputs and capital goods and compulsory industrial licensing; the agricultural sector and consumer goods trade have, as yet, been relatively untouched by government reform efforts. While there has been some liberalization, there has been no change in the structure of agricultural incentives and subsidies. India financial service are gradually being liberalized while significant headway has already been made in liberalizing telecommunications. Other services, such as shipping, roads, ports and air, are beginning to open up, but, the report states, foreign participation remains relatively low and significant administrative barriers remain. India amended its Copyright Law in 1994 to comply with its obligations under the Trade-Related Intellectual Property Rights (TRIPS) Agreement. As a developing country, India has until the year 2000 for most product, but until 2005 for some goods, to comply with the TRIPS Agreement but is currently required to provide means for receiving product
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patent application in certain areas. On this issue, a decision by a WTO dispute settlement pane and the Appellate Body has started that India was in violation of its obligation. Tariffs have been reduced from an average of 71 per cent in 1993 to a current average of 35 per cent. The report notes, however, that the tariff structure remains complex and that escalation remains high in several industries, notably paper and paper products, printing and publishing, wood and wood products, and food, beverages and tobacco. In general, bound tariffs remain substantially higher than applied rates, especially on agricultural products. The report observes that import licensing remains Indias main non-tariff barrier, although reforms to the system of restrictive import licensing have moved ahead steadily. The number of goods subject to import licensing has been gradually reduced albeit with an emphasis on industrial and capital goods, rather than consumer products. The report notes that last year India presented a phaseout programme for the remaining restrictions to its trading partners. Agreement was reached with all major partners except the United States, with which India is currently in dispute settlement proceedings over its remaining restrictions. The report observes that reforms in tariffs and non-tariff barriers have not been accompanied by similar reforms on export subsidies and incentives. India continues to maintain a large number of incentive programmes for exports. These include income tax exemptions, subsidized credit, export insurances and guarantees. The overall scope of such incentives has been enhanced, resulted in more explicit export-oriented policies, which have increased the possibility of resource misallocation. The report notes that India has simplified its foreign investment regime and opened up a number of sectors to foreign direct investment. This the case in manufacturing
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where foreign participation of up to 51 or 74 per cent can take place automatically in a number of sectors. Production in the food manufacturing sector has grown rapidly following increased foreign investment. In this sector, up to 50 and 100 per cent of participation is allowed automatically for foreigners and non-resident Indians. In the automobile sector, 51 per cent foreign equity participation is granted automatically and up to 100 per cent foreign equity participation is also allowed if approved by government authorities. This has triggered a high rate of foreign investment, mostly through joint ventures with Indian manufacturers. Major policy changes since 1993 have also included automatic permission for foreign equity participation of up to 50 per cent in some mining activities. This also applies to oil exploration where the government seeks to reduce its dependence on imports and now offers investors incentives such as tax holidays. The report concludes that Indias increased openness and integration with the world economy are important factors in explaining the healthy economic growth recorded in the mid-1990s. however, the recent economic slowdown demonstrates the need for continued and even accelerated reform. Greater transparency in decision-making, for example, could complement Indias ongoing trade liberalization process in promoting a more efficient and productive economic structure. Such reforms, notes the report, should lower the anti-export bias that is still inherent in both the trade and industrial support structures and allow the government to lower export incentives and move towards a more outward, rather than export-oriented policy framework. Such steps would not only help to further Indias integration into the worlds economy but provide it with a firm basis for future sustained growth. The WTOs Secretariats report, together with a report prepared by India will be discussed by the WTO Trade Policy Review Body (TPRB) on 16 and 17 April 1998. The WTOs
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TPRB conducts a collective evaluation of the full range of trade policies and practices of each WTO member at regular periodic intervals and monitors significant trends and developments which may have an impact on the global trading system. The two reports, together with a report of the TPRBs discussion and of the Chairmans summing up, will be published in due course as the complete Trade Policy Review of India and will be available from the WTO Secretariat, Centre William Rappard, 154 rue de Lausanne, 1211 Geneva 21.
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THE SECRETARIATS REPORT: SUMMARY

TRADE POLICY REVIEW BODY: INDIA REPORT BY THE SECRETARIAT SUMMARY OBSERVATIONS Introduction The Indian Government initiated a major programme of economic reform and liberalization in 1991, reversing a policy direction followed for decades. Since then, successive Governments have progressively reduced tariff protection and relaxed and simplified Indias restrictive import licensing regime. Internal reforms have included reduced control over locational and industrial licensing controls, in addition to some loosening of controls on administered prices in some sectors. In this process, however, the policy focus was principally on liberalization of capital goods and inputs for industry, to encourage domestic and exportoriented growth: by and large, imports of consumer goods remained regulated. These reforms contributed to a dramatic increase in growth in the 1990s, accompanied by larger flows of inward foreign investment and increased international trade. The balance of payments situation also improved greatly. To build on this success, India has recognized the need to continue the economic reform process, with an increased emphasis now on improving infrastructure, which appears to be a major constraint on the growth of industrial activity and exports; further liberalizing trade through reductions in tariffs and non-tariff measures; reforming the subsidy structure, which is estimated to cost around 14 per cent of GDP; and restructuring public sector enterprises, which continue to be a fiscal drain. These reforms, if fully implemented, should lower the anti-export bias that is still inherent in both the trade and industrial support structures. This would also permit India to lower export incentives, thus moving towards a more outward, rather than export, oriented policy
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framework, further integrating India into the multilateral system and providing a firm basis for future sustained growth. The Economic Environment Since its previous Review in 1993, India has continued liberalizing its economy, albeit at a somewhat slower pace. Economic reforms initiated in 1991 have produced strongly positive results, most notably annual real growth rates averaging 7 per cent between 1993/94 and 1996/97, led by strong industrial recovery. Over the same period, merchandise exports grew at an annual rate of some 20 per cent in current US dollar terms. In 1996/97, however, some economic slowdown occurred and export growth fell to 8 per cent, party as a result of infrastructural bottlenecks and indicative of the need for continued structural reform. In the area of trade reform, a tariff reduction programme has continued and is to progress further. Average rates have consequently declined. The number of goods subject to import licensing restrictions has been gradually reduced albeit with an emphasis on industrial and capital, rather than consumer goods until recently. The foreign investment regime has also been simplified with a number of sectors being opened up to foreign direct investment. Further structural reform needs the support of continued macroeconomic stability. An important issue is the reduction of the public sector deficit, estimated at 8.5 per cent of GDP in 1996/97 averaging 7 percent between 1993/94 and 1996/97, led by strong industrial recovery. Over the same period, merchandise exports grew at an annual rate of some 20 per cent in current US dollar terms. In 1996/97, however, some economic slowdown occurred and export growth fell to 8 per cent, partly as a result of infrastructural bottlenecks and indicative of the need for continued structural reform.
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In the area of trade reform, a tariff reduction programme has continued and is to progress further. Average rates have consequently declined. The number of goods subject to import licensing restrictions has been gradually reduced albeit with an emphasis on industrial and capital, rather than consumer goods until recently. The foreign investment regime has also been simplified with a number of sectors being opened up to foreign direct investment. Further structural reform needs the support of continued macroeconomic stability. An important issue is the reduction of the public sector deficit, estimated at 8.5 per cent of GDP in 1996/97. The Central Government deficit fell to 5 per cent in 1996/97, but adjustments to reduce State deficits have not been as forthcoming and shoring up parts of the public sector, prior to planned reform and disinvestment, has been expensive. With the cost of supporting important sectors such as agriculture and related transfer programmes, it is unclear how far the public sector deficit may crowd out investment. Overall, subsidies remain a drain on Government revenue and lead to a misallocation of resources. Trade Policy Measures Features Type and Incidence of Trade
Since 1993, tariff reform has brought the simple average of all rates down to 35 per cent in 1997/98, from 71 per cent in 1993/94; the process of tariff reform and reduction is ongoing. However, the structure of the tariff remains complex, with a large number of bands; in several industries, notably paper and paper products, printing and publishing, wood and wood products, printing and publishing, wood and wood products and food, beverages and tobacco, tariff escalation remains high. Reforms to the system of restrictive import licensing have moved ahead steadily, but further steps remain to be taken and are encouraged. In general, products are first moved to
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a Special Import Licence (SIL) list, with producers being exposed to limited foreign competition, before the product is moved to the list of freely importable goods. The list of freely importable goods currently cover some 68 per cent of tariff lines: remaining restrictions covers mainly consumer goods, and India has proposed a six year phase-out programme for these restrictions. India is currently in dispute settlement proceedings with the United States regarding its remaining restrictions. Approximately 10 per cent of all tariff lines are presently subject to the SIL list, increasing SIL coverage by around one-third from 1995/96. India also continues to use state trading monopolies to retain some control over exports and imports of certain products (canalization). Since the previous Review, the product coverage of imports through such canalization has increased slightly; however, private operators can also trade in some of these canalized products and the share of such products in total imports has declined to 19 per cent, compared to 27 per cent at the turn of the decade. The reforms in tariff and non-tariff barriers have not been accompanied by similar reforms to export subsidies and incentives. India continues to maintain a large number of incentive programmes for exports, incentive which, according to the authorities, are intended to compensate for import restrictions. These include income tax exemptions, subsidized credit, export insurance and guarantees, export promotion and marketing assistance schemes and access to some imports that are normally subject to restrictive licensing. The overall scope of such incentives has been enhanced, turning Indias overall policy stance more explicitly export-oriented and increasing the possibility of resource misallocation.
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Sectoral Policy Developments Agricultural Products The agricultural sector has thus far remained relatively untouched by the reform programme. Nevertheless, agriculture has benefited from the price realignments resulting from manufacturing sector trade reforms. Some progress has also been made in the removal of state controls on the inter-state movement of certain grains and of administered prices; however, controls on the export and import of certain products through licensing policies remain. During the Uruguay Round, India bound its agricultural tariffs at ceiling rates ranging from 0 to 300 per cent. In reality, applied rates for 1997/98 are considerably lower, averaging 26 per cent for the sector, with a peak of 45 per cent. This is however likely to change as India tariffies its present licensing restrictions; in this context, India is currently renegotiating its tariff bindings on some zero-or low-duty products. Progress in changing the structure of agricultural incentives and subsidies is likely to remain constrained by the Governments policy of providing support prices to farmers and ensuring low cost supplies to the population through the public distribution system. Food Processing Although tariff reforms have resulted in average duties in the food sector being halved since 1993 (currently around 29 per cent for food products and 134 per cent for beverages), industrial and import licensing restrictions continue to be maintained for a number of industries. In addition, a number of products are reserved for production by the small scale sector. Production by the food manufacturing sector has grown rapidly, especially following increased foreign investment where up to 51 and 100 per cent of participation in allowed automatically for foreigners
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and non-resident Indians, except for products reserved for the small scale sector. Mining and Petroleum Major policy changes since 1993 include automatic permission for foreign equity participation of up to 50 per cent in the mining of 13 minerals; foreign equity above this share must be approved by the Foreign Investment Promotion Board (FIPB). In an attempt to increase exploration, liberalization has also taken place in licenses granted for exploration. Trade reforms include a reduction in tariff rates to averages of around 10 per cent (from 46 per cent in 1993/94) for non-ferrous and iron ores and to 13 per cent (from 65 per cent in 1993/94) for coal. India depends on imports of petroleum. Prices, until recently, continued to be administered although some effort has been made since 1993 to raise these prices periodically to reduce the fiscal burden of the oil-pool. Despite this; the growing subsidy for petroleum products prompted the Government in 1997 to declare a phase out of most administered prices in the sector. The Government has recently also placed an emphasis on increased oil exploration domestically to reduce import dependence, through the New Exploration Licensing Policy which offers companies investment incentives such as tax holidays to invest in India. Manufacturing Reforms have been most widespread in the manufacturing sector, including reductions in average tariff rates, import licensing restrictions, compulsory industrial licensing, and a liberalization of foreign investment policies. The sector has responded positively to the reforms, although some slowdown in growth has occurred in 1996/97 due, in part, to infrastructure constraints.
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Since Indias previous Review, the average tariff on imports of manufactures (ISIC3) has been lowered from 73 to around 36 per cent in 1997/98. Despite this, tariff escalation in some areas remains high, since the largest reductions in tariff rates have taken place for capital goods and intermediate inputs. Tariff escalation is important in sectors such as paper and paper products and to some extent in textiles and clothing, where India has traditionally maintained, and still has, high levels of protection. In certain sectors, such as automobiles, tariff reform has had little impact on imports of fully assembled items, because the liberalization of foreign direct investment without accompanying reform of import licensing restrictions has promoted local investment in manufacturing. Approximately 1,977 tariff lines, at the HS eight-digit level, in the manufacturing and mining sectors, continue to be subject to import licensing restrictions. As noted, the authorities have proposed a phase out of these restrictions over a six year period. Foreign investment has also been considerably simplified, with an enlarged list of industries, including the automobile sector, where foreign equity participation of up to 51 or 74 per cent can take place automatically. Compulsory industrial licensing is now limited to nine industries, compared to 18 during Indias previous Review; some reduction in the list of items reserved for production by the small-scale sector has also occurred. Services Services contribute more than 40 per cent to Indias GDP. Their overall growth has been underpinned by rapid expansion of activities in the area of finance, and, to a lesser extent, commerce and tourism. Significant headway has been made liberalizing telecommunications. While the government-controlled corporation VSNL operates as the exclusive provider of
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international long-distance services and the monopoly Department of Telecommunications for the domestic longdistance services, private investors in joint ventures are allowed to provide intra-voice telephone services in various States and metro areas. Many value added services including voice mail, radio paging and cellular mobile telephone are now open to 49 per cent foreign equity participation. In the area of financial services, the banking sector remains fairly closed to foreign participation, while the insurance sector is still monopolized by the government. Under the Financial Services Agreement, the Government has offered to remove reciprocity requirements in the banking sector and also raised the annual limit on new banking licenses from eight to 12. Other services areas such as shipping, roads, ports and air are beginning to open up, but foreign participation remains relatively low and significant administrative barriers remain. India in the Multilateral Trading System India was, from the start, an active member of the GATT and a founding member of the WTO. As a result of the Uruguay Round, India bound 67 per cent of its tariff lines; lines remaining unbound include those on certain industrial items and many consumer products. Under the General Agreement on Trade in Services (GATS), India has made commitments in 33 activities (compared with an average of 23 for developing countries) out of total of 161. In addition, India also took part in the Information Technology Agreement covering computers, telecommunication equipment, semicondutors, semiconductor manufacturing equipment, software, and scientific instruments. Indias anti-dumping and countervailing legislations have been amended in line with relevant WTO Agreements. With respect to intellectual property rights, Indias Copyright Law was amended in 1994 in accordance with its obligations under the TRIPS Agreement. India plans to make use of the transition period available to developing member countries
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of the WTO to implement other changes to its intellectual property rights; however, in a dispute with the United States over pipeline patent protection and exclusive marketing rights, the WTOs Dispute Settlement Body has found that India is obliged to implement the necessary measures. India is currently in two WTO disputes: one as a defendant with the United States, as noted above, and the other as a complainant with Hungary, relating to restrictions on textiles and clothing. In terms of WTO tariff commitments, India has bound 67 per cent of its tariffs in manufacturing and 100 per cent in agriculture in consequence of its Uruguay Round commitments; however, most of these bindings are at ceiling levels, ranging up to 300 per cent in agriculture. The bound simple average tariff to be implemented by the eyar 2005 is 54 per cent, compared with the present applied rate of 35 per cent, itself set to decline further. In the services area, the initial commitments made under GATS are such that the existing policy framework is either more liberal, or equivalent to the bound measures. In both areas, thus, India, like most other developing countries, has put a ceiling on its protective structure, rather than binding it at effective levels, while pursuing unilateral liberalization. India maintains several plurilateral agreements with countries in the region: the Bangkok Agreement, the South Asian Preferential Trading Agreement (SAPTA), and the Global System of Trade Preferences (GSTP). Further concessions to some of these countries are also provided within the framework of bilateral trade agreements. However, the impact of these agreements on Indias trade seems to have been minimal. India merchandise imports resulting from the eighth Bangkok Agreement and SAPTA member countries accounted for only 3 per cent of total merchandise imports and about 7 per cent of its merchandise exports in 1995/96.
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Outlook Indias increased openness and integration with the world economy have been important factors in explaining the healthy economic growth recorded in the 1990s. The recent economic slowdown demonstrates the need for continued and even accelerated reform. Transparency in decisionmaking, especially with regard to foreign investment, should also be increased if India is to reach its foreign investment targets. Continued opening of the trade regime and liberalization of the foreign investment regime are likely to be translated into even higher growth rates than have been experienced so far. Other factors constraining economic growth may include the fiscal deficit, which may, for example, contribute to high interest rates. There is also concern with regard to the large share of subsidies in government expenditures: while many of these are aimed at assisting the very poor, it is not clear that this target is being reached. Second, the poor quality and coverage of certain infrastructure facilities notably power and transportation services which are all essential for the development of both domestic and export markets, needs to be addressed. Third, reform efforts in industrial restructuring, need to be accelerated, especially to enable the closure of unviable units in order to release resources for use in more productive areas. Internal deregulation could therefore complement Indias ongoing trade liberalization process in promoting a more efficient and productive economic structure.
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GOVERNMENT REPORT Trade Policy Review Body: India Introduction India has taken important policy initiatives since July 1991 to emerge as a significant player in an increasingly interdependent world economy. The policy reforms provided a free and conducive environment for trade and include various measures which helped to achieve the high export growth rates in some recent years. The Eight Plan recognized that for India it was not a choice between market mechanism and planning, but that the challenge was to effectively dovetail the two, so that they are complementary to each other. The Government introduced major reforms to pro9vide greater competitive stimulus to Indian trade and industry. India's active participation in the WTO continued and the general direction of her trade and investment reforms initiated in 1991 and highlighted in the last Trade Policy Review in December 1993, have been maintained by successive governments. The following presentation is divided into four sections. The first deals with liberalization of trade and other economic reforms, which are mutually supportive. The second deals with India's inter action with the WTO. The third focuses on Regional Trade Arrangements. The final section contains conclusions. Key developments in trade and economic policy since the last review Objectives of Trade a Policy In 1991, India initiated a wide-ranging programme of trade liberalization and economic deregulation, with the objective of integrating the Indian economy more closely with the world economy. The principal objective of India's trade
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policy defined in the Export - Import Policy for 1997 to 2000 are: (i) To accelerate the country's transition to a globally oriented, vibrant economy, with a view to deriving maximum benefits from expanding global market opportunities; To stimulate sustained economic growth by providing access to essential raw materials, intermediates, components, co summer goods and capital goods required for augmenting production; To enhance the technological strength and efficiency of Indian agriculture, industry and services thereby improving their competitive strength, while generating new employment internationally accepted standards of quality. To provide consumers with good quality products at reasonable prices.
(ii)
(iii)
(iv)
Moreover, the Eight Five Year Plan (1992-97), called for the movement of India's trade policy regime "towards greater openness and to reap the full benefits of international trade". This has been sought to be achievd through (I) a reduction of the "negative" list of imports and exports, (ii) a gradual reduction in the level of the tariff rate, and (iii) other trade policy reforms. Significant Trade Policy Reforms With increased liberalization and globalization of trade, India's focus is on areas of her strength and advantage to meet global competition, as also areas having trade potential. This is the rationale which has given the impetus for shortening of the Negative List of Imports considerably and for expanding the freely importable list. Currently,
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approximately 6,647 items are freely importable; 58 items are prohibited, 168 items are canalized, and as notified by India to the WTO (Notification No. WT/BPO?N/24, dates 22 May 1997) certain products included in 2,714 tariff lines at the eight-digit level of the Indian tariff classification are restricted for balance of payments reasons are per Article XVIII: B of GATT, and certain products included in some 600 tariff lines are restricted under additive. Compared to 1.4.96 when the percentage of restricted item came to 37%, the figure for 1.4.1997 is only 32%. There is a decrease of 5% in the restricted items, whereas there is increase of 488 items in the free list. Out of the restricted items, 1,051 are importable against Special Import Licences (SILs), which are freely tradeable and transferable. Among the items importable under freely transferables (SILs) are a number of consumer durables. An agreement on time schedules for removal of quantitative restrictions (QRs) maintained for balance of payment reasons has been reached by Indian with its major trading partners other than the United States. Many of the cancalized items (equivalent to 47 items out of 176 in total) are also under the SIL regime, and imports of canalized items have fallen from 27% of merchandise imports in 1988-89 to 19% in 1996-97, with all canalizing agencies amongst the PSUs being required to follow commercial principles in carrying out their operations. Several stages of reforms have lifted all licensing restrictions on imports of capital goods, liberalized partially imports of consumer goods and reduced maximum tariffs from over 300% to 45% (including a surcharge of 5%). Collections rates, which are a better indicator of protection than declared rates, came down from the level of 47% in 1990-91 to 29% in 1995-96.
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Exchange Market Reforms The Eight Plan had envisaged exchange rate reforms as part of the general trade policy reforms, and in March 1993 the exchange rates were unified and transactions on the trade account were freed from foreign exchange control. Further measures taken to simplify procedures related to the purchase of foreign exchange so as to enhance current account convertibility. These included permission to Exchange Earner's foreign Currency (EEFC) account holders to use these funds for business related current account transactions. Authorized dealers were allowed to export surplus currency to private money changers abroad, in addition to their own branches and correspondents. They were empowered to allow Indian resident families to remit US$5,000 per year to close relatives abroad, without reference to the RBI. Monetary ceiling on remittances for wide range of purposes were also removed. Reforms in the Foreign Investments Regime Since export growth depends on the existence of a strong production base in thrust sectors, which could expand to meet further growth needs, the stimulus in such thrust areas has been provided by streamlining the procedures for foreign investment. The Fopreign Investment Promotion Board (FIPB) has been revmped to make the rules and regulations pertaining to foreign investment more transparent. The first ever guidelines for approving FDI by the FIPB have been announced to expedite approval of foreign investment in areas not covered under automatic approval. Priority areas for allowing 100% foreign equity have been spelt out. An expanded list of 46 industries eligible for automatic approval up to 51% foreign equity, three industries relating to mining activity eligible for automatic approval up to 50% foreign equity and another set of nine industries eligible for 74% foreign equity have been announced by the government. The limit on holdings
28
by individual foreign institutional investors (FIIs) in a company has been raised from 5% to 10% of the company's shares, while the aggregate limit has been increased from 24% to 30%. FIIs have also recently been allowed to invest in non-listed companies. It is no longer necessary for automatic approvals by the Reserve Bank of India (RBI) that the amount of foreign equity should cover the foreign exchange requirements for import of capital goods needed for the project. To impart flexibility in souring of technology imports, technology transfer has been delinked from equity investment. Reforms in the Infrastructure Sector Removing infrastructural bottlenecks has been another key component of the trade reforms package. In the telecommunications sector, significant progress has been made in invloving the private sector in value added services, such as cellular, mobile and paging services. A Telecom Regulatory Authority was established in March 1997, which will separate the regulatory functions from policy formulation and operational functions. New guidelines allow private participation in ports, investments being on B.O.T. basis, and already approval for a private container terminal valued at Rs 70 billion has been awarded. Similarly, fresh guidelines for privte investment in the highway sector have been announced, procedures have been simplified and environmental clearance and equity participation made easier. Approval has been given for a rail based mass rapid transit system (MRTS) in Delhi, and the cities of Bangalore, Hyderabad, Mumbai and Calcutta have proposed major improvements in their public transport system through the introduction/augmentation of rail-based transit systems. A new policy for private investment in civil aviation has been announced, and this includes allowing 40% equity in domestic airlines.
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Domestic Tax Reforms Several new measures for streamlining and rationalizing the tax structure have been initiated. The MODVAT scheme has been extended to the textile sector by rationalization of rate structure to modernize and revive the textile industry. The direct tax regime has been strengthened by measur3es like moving towards a "presumptive" tax system, greater reliance on "pay as you earn" and self assessment schemes, restricting "scrutiny assessment" to a limited number of cases, broadening of the tax base through the "four economic criteria" scheme and the introduction of the Minimum Alternate Tax (MAT) for the corporate sector (with the exception of companies engaged in power and infrastructure sectors) and measures such as progressive computerization. The rates of corporate tax have also been progressively reduced to 35% for assessment year 1999899 and the corporate surcharge has been eliminated. Other key Economic Reforms Other than the reforms directly connected with the trade regime, an array of reforms to make the economy more competitive, and thereby, indirectly, provide a greater impetus to trade, both domestic and international, have been introduced. Through the New Industrial Policy of 1991, the total number of industries reserved for public sector enterprises was reduced to eight, and since then two more industries in the mining sector have been further de-reserved. With delicensiung of consumer electronics, at present only 14 industries remain under the purview of industrial licensing. Guidelines for Euro Issues and External Commercial Borrowing (ECB) have been liberalized to ease the access of Indian companies to international capital markets. Some deregulation of administered prices have taken place with the deregulation, in February 1977, of the prices and
30
distribution of certain grades of coal and by the decision of the government on 1.9.1997 to dismantle the Administered Pricing Mechanism in the petroleum sector by introducing reforms in a phased manner, whereby consumer prices of major petroleum products will be moved toward import parity. Decontrol of the banking system is continuing. There has been deregulation of interest rages on term deposits of over one year, and on non-resident external rupee deposits above two years, Selective credit controls on a number of commodities were eliminated from October 1996. Competition in the banking sector has increased gradually as ten new private sector banks, out of the 13 "in principle approvals given so far, have started functioning. The RBI has issued guidelines for the setting up of new local area private banks. Two such banks have already been given "in principle" approval. Banks were allowed to fix their own foreign exchange aggregate gap limits, starting April 1996. From October 1996, banks were permitted to provide foreign currency denominated loans based on their FCNR accounts, to be used to meet either foreign currency or rupee requirements. The Incremental Cash Reserve Ratio of 10% for banks has been removed and the Statutory Liquidity Ratio on incremental net domestic demand and time liability reduced substantially. The replacement of the system of issue of ad hoc Treasury Bills by the RBI to meet temporary mismatches in Government receipts and expenditure with a system of ways and Means advances has been put in place to act as an effective ceiling on the automatic magnetization of the fiscal deficit and create a favorable macroeconomic condition for setting a "monetary target". An Insurance Regulation Authority ahs been established. Significant capital market reforms introduced and encompassed primary and secondary markets, equity and debt, and foreign institutional investment. Among the
31
reforms undertaken to impart greater flexibility were the Capital Depositary's Act 1996 to facilitate dematerialization of securities; formulation of SEBI regulations, 1996 which allow the Securities and Exchange Board of India (SEBI) to regulate establishment and functioning of depositories; giving up vetting of public issue offer documents by SEBI; FIIs permitted to set up pure (100%) debt funds, and make investments in government securities; modification of eligibility criteria for registration as an FII to allow endowment funds, university funds, foundations and charitable trusts to register; issuance of SEBI regulations and charitable trusts to register: issuance of SEBI regulation on Venture Capital Funds (VCFs), allowing them to invest in unlisted companies etc. so as to provide flexibility to VCFs to provide high risk finance; introduction of a modified take over code; and the decision to constitute an Independent Tariff Commission. India is of the view that not all areas of economic activity can be made a subset of trade concerns for consideration in the WTO, since many of these areas have a development perspective. However, insofar as the ongoing reforms have proved conducive to trade, they have been touched on in this presentation. Recent Trade Facilitation Measures Since the last Review in 1993, the green channel facility for customs clearance has been enhanced. Large established exporters receive expeditious assessment of their imports Bills of Entry by a group of Appraisers and Assistant Collectors especially earmarked for this purpose. They are also provided facilities for de-stuffing containers at their factory premises by the Central Excise Officers, after the containers are moved straight from the port to the factory. On-line assessment and clearance through Electronic Data Interchange (EDI) has started at Delhi and is likely to be extended to all other Customs Stations by the end of 1998.
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An importer can file documents 30 days in advance of the expected date of arrival of a vessel, which facilitates customs clearance. Exports of perishable goods have been exempted from routine customs examination. A large number of ICDs/Container Freight Stations have been started in the hinterland areas to facilitate imports nad clearing cargo at production/consumption sites. Further, import of cargo by courier has been provided and the Multimodal Transport Act has been enacted with the objective of expeditious movement of cargo. Harmonization of Indian standards with international standards, which is progressing rapidly under the activities of BIS, etc., are also adding to the quality/sanitary aspects of India products and therefore to their competitiveness. Key economic process parameters: result of the reform
The initial spurt of reforms from 1990-91 to 1993-94 was successful, by a all accounts, resulting in a jump in economic growth to 7.2% in 1994-95 (in terms of GDP at factor cost). GDP grew by 7.1% in 1995-96 and at 6.8% during 1996-97. The average growth rate during the latest three years at 7% probably places Indian among the top ten performers in the world during this period. Foreign currency assets grew by 16.4% during 1996-97. The average annual growth of exports during 1993-94 to 1995-96 was buoyant, amounting to 20% in US$ terms. Consequently, India's share in world exports increased from 0.41% in 1992-93 to 0.6% in 1995-96. The growth rate of imports also increased, from a rate of 15.3% in 1993-94 to 36.4 in 1995-96. However, a slow-down occurred in 199697, with exports registering a growth of only 4% and imports and growth rate of 6% with an increase in the trade deficit to $5.4 billion in 1996-97 as compared to $4.5 billion in 1995-96.
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Impediments to growth of India's international trade India's share of world exports had declined from 2.53% at the time of independence (1947) to only 0.4% in 1980,but the reforms instituted led to some growth, with India's share in trade reaching 0.64% in 1995. However, the deceleration of the reforms to just 0.41% during 1996-97, and the slow down in the growth is partly related to a general slow-down in the growth of world merchandise trade from an annual increase of 19% in 1995 to 4% in 1996, it is also, to a degree, due to denial of meaningful market access to Indian goods, and to non-tariff barriers, including anti-dumping activity, by developed countries. This is attributable to the fact that although multilateral negotiations conducted under the aegis of GATT have greatly helped in bringing down tariffs all over the world, similar success has not, however, been achieved on nontariff barriers affecting world trade. Although quantitative restrictions are not overtly being used by most of the countries to restrict the flow of trade, quotas, standards, subsidies and indiscriminate use of antidumping/countervailing duty investigations are some of the most important NTBs being used to restrict the flow of trade from countries such a India. An analysis of India's external trade reveals that the 16 countries/territories to whom four-fifths of our exports are directed, maintain eight major categories of non-tariff barriers restricting our market access. These are : i. restrictive import policy regimes (import charges other than customs tariff, quantitative restriction, import licensing, customs barriers); standards, testing, labeling and certification (including phytosanitary standards) which are set at unrealistic levels for Developing countries or are scientifically unjustified;
ii.
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iii. iv.
Export subsidies (including terms erc.); Barriers on services (visible and invisible barriers restricting movement of service providers etc.); Lack of intellectual property, protection; Government procurement regimes; Barriers to investment; Other barriers (including countervailing measures). anti-dumping and
v. vi. vii. viii.
Amongst the import policy issues, quantitative restrictions, especially in the textiles are, are one of the most important of the non-tariff barriers affecting Indias trade. While the MFA is being phased out, there is a certain back loading insofar as items of interest to India re concerned. Another problem in the area of textiles arose with the introduction of new country of origin rules by some of our major trading partners, limiting the flexibility of India exporters in finishing garmet/textile items from other countries for export to the trading partners, which have invoked such rules. Numerous restrictions on sanitary and phytosanitary grounds on Indias agricultural products are often not supported by adequate scientific justification. Even the socalled environmental bans, as, for example, on Indian marine products harvested without certain environmental protection desices insisted on by certain trading partners, do not appear to be substantiated by sufficient scientific evidence. The restrictive visa regime in several developed countries has proved to be a disincentive for exports in the services sector by our skilled professionals, especially in the software sector. Repeated anti-dumping investigations on the same items, without regard to the special dispensation enshrined in Article 15 of the Agreement on Anti-dumping, have proved to be extremely disruptive to our external commerce.
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Most of these problems are being vigorously addressed in the appropriate for a, including the dispute settlement Body However, it is our perception that the time has come when nations would suo motu realise that in an interdependent world, there is no room for unjustified trade confrontations. Non-tariff barriers, especially levy of anti-duymping duties and repeated investments on the same issues give rise to a feeling that we should in turn retaliate by denying market access to outsiders. A slow-down in exports, with consequent widening of the trade gap, will definitely militate against our efforts to bring down tariffs. Export growth, especially for reduction of the trade deficit, is very necessary if India is to progress with further trade and economic liberalization. This calls for better and greater market access by Indias trading partners.
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INDIA AND THE WTO

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. India participated actively in the last Ministerial Conference held in Singapore. 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, and also that the special and differential treatment provisions for developing countries under the different WTO agreements are translated into specific enforceable dispensations, in order that developing countries are facilitated in their developmental efforts. India feels that he 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 Bindings 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. The phased reduction to these bound levels from the very high level prevailing in 1990, is here necessary, in
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installments over the period March 1995 to the year 2005. In textiles, where reductions will be achieved over ten years, India has reserved the right to duty levels prevailing in 1990, if the integration process envisaged under the agreement on textiles and clothing does not materialize in full or is delayed. Finaly; in agriculture, where except for a few goods, Indias bound rates range from 100 to 300%, India is the process of renegotiating some of its tariff bindings. Many applied tariffs are below the Uruguay Round levels. Balance of Payments Under the exceptional provision of Article XVIII:B of GATT, India has some residual quantitative restrictions on imports maintained for balance-of-payments purpose. These aggregate to 2,714 tariff lines at the eight-digit level of the Indian Trade Classification. In May 1997, India presented to the WTO a plan for the elimination of these restrictions in imports, including those on consumer goods. This plan was considered at the consultations with India of the Wto Committee on Balance-of-Payments Restrictions in JuneJuly 1997, when noting the divergence of opinion among WTO Members on, Inter alia, the length of the plan, it was agreed to conclude the consultations. However, pursuant to consultations under Article XXII of the GATT 1994, a bilateral mutually agreed solution has been reached with Australia, Canada the European communities, New Zealand and Switzerland, as well as with Japan (which had thirdparty Interest in these disputes). At the request of the United states a panel was constituted on 18 November 1997 to examine the US allegation that the continued maintenance of quantitative restrictions on imports by India is inconsistent with Indias obligations under the WTO agreement.
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Simplification of customs procedures The customs valuation rules, 1988, Indias legislation on customs Valuation has been amended to bring it into conformity with provisions of the WTO Agreement on Implementation of Article VII of GATT 1994, the Customs Valuation agreement. Steps for industry international standards in trade and
India is a signatory to the agreement on technical barriers to trade and that on sanitary and phytosanitary measures and there is greater emphasis on bringing Indian standards to international levels. Most standards in India are voluntary although health and safety regulations are mandatory for several products. The bureau of India standards (BIS) responsible for formulating and setting national standards, has been harmonizing Indian standards with international standards for the last decade. So far nearly 3,500 Indian standards have been harmonized with ISOTEC and EC standards/regulations. Although BIS is the national standards body of India, standards and certification schemes are also operated and enforced in certain specified sectors by other bodies. Thus for example, sanitary and phytosanitary measures are regulated by Director of Marketing and Inspection, Ministry of Agriculture and quality and hygiene of processed foods are dealt with by the Ministries of Health and Food Processing. India is concerned that although the BIS and the expert bodies in the field of sanitary standards participate in the policy making committees of international bodies such as the ISO, the Codex Alimentarius etc., the developing countries are grossly outnumbered in these deliberations, at
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times resulting in standards development not conducive to their implementation./ there is a strong sentiment in India that in view of our lack of access to technologies developed aboard for achieving standards acceptable to importing countries, specific measures need to be taken by developed country Members to give effect to the clauses extending Special and Differential treatment to India as a developing country in the implementation of these WTO Agreements. AGRICULTURE The only commitment India has undertaken under the agreement is to bind its agricultural tariffs. This commitment has been fulfilled by India binding its tariffs for primary agricultural products at 100%, processed food products at 150% and edible oils at 300%. Indias 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 lowlevels, renegotiations of tariff bindings have been sought under Article XXVIII of GATT. The phased reductions of quantitative restrictions would also cover certain agricultural products. The agreement on agriculture was designed to improve world trade, raise prices of agricultural products and ensure higher standards of living for farmers. The retention of domestic subsidies at a high rate by many developed countries continues to give us cause for concern. In our view, the clamour for greater market access for agricultural products would carry more conviction if a definite efforts is also made to force the pace in respect of bringing down such subsidies. TEXTILES As per the obligations under the agreement on textile and clothing (ACT) to integrate this sector into GATT 1994 in
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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. For implementation of the second stage of integration, with effect from 1.1.98, as second tranche of textile products, mainly fabrics was placed on the free list. 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 antidumping agreement has resulted in trade harassment for its exporters of textiles. INTELLECTUAL PROPERTY India is availing itself of the transition periods due to her under article 65 of the TRIPS agreement to met her obligations under the seven areas covered by the agreement. Indias achievements in this field have been in the passing of TRIPS plus legislation in the field of Copyright law. The 1994 amendments to the act of 1957 provides protection to all original literary, dramatic, musical and artistic works, cinematographic films and should recordings. The most recent changes bring sectors such as satellite broadcasting, computer software and digital technology under Indian copyright protection. TRADE RELATED INVESTMENT MEASURES Substantial modifications have already been made to the foreign investment regime, increasing the number of sector where foreign investment can 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. India has time up to 1.1.2000 to eliminate
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these TRIMs which have already been removed include dividend-balancing requirements and mixing requirements in respect of newsprint. ANTI-DUMPING AND SAFEGUARDS Anti-dumping and countervailing duties are imposed under the Customs Tariff Act 1975 and the rules made thereunder. 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 are strictly followed by the designated authority. With the increasing number of cases, the government of India proposes to set up a directorate general anti-dumping and countervailing duty cases. Section 8 (B) of the customs Tariff act, 1975, was introduced recently to make provisions for imposition of safequard duties as per the provisions of the WTO agreement on safequards. The act provides for imposition of safequard as to cause or threaten to cause serious injury to the domestic industry that pro9duces directly or indirectly a competitive product. The director general of safequards has been appointed to consider complaints received from domestic industry suffering injury from the increased imports, for imposition of safequard duties. SERVICES SECTOR The services sector accounts for about 40% of Indias 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 in the services sector. However, a path of gradual liberalization has been adopted so as to have wider acceptability of the reform process. India actively participated in the uruguary round
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services negotiations and made commitments in 33 activities as compared to an average of 23 for developing countries India also participated in the spill-over 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 service such as circuit switched data transmission sources, facsimile services, private leased circuit services as per details given in the schedule of commitments. India also participated in the recently concluded financial services negotiations and improved its offer by enhancing the annual limit for foreign bank branches from 8 to 12 and withdrawing Indias MFN exemptions relating to banking services. While developed countries have surplus capital to invest, most of the developing countries have surplus of skilled, semi-skilled 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. While GATS recognizes movement of natural persons as one of the modes for supply of services the commitments undertaken by the developed countries have little to offer to the developing countries in terms of opening their markets or facilitating the administrative arrangements or providing national treatment in the area of movement of natural persons. The present commitments are largely restricted to business visitors and intracorporate transferees. There are very limited commitments for qualified specialist personnel and even where commitments are made for qualified professionals, they cannot move in an individual capacity but should be an employee for a specified duration of the juridical person supplying the services.
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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. However, the GATS objectives of increased participation of developing countries in trade in services has hardly been addressed. Therefore in order to achieve required balance in GATS and increase the participation of developing countries in trade in services as per article IV of GATS, the developed countries should undertake a higher level of commitments on movement of natural persons mode and other areas of export interest to the developing countries. GOVERNMENT PROCUREMENT India is not a member of the Plurilateral Agreement on government procurement. However, we are taking part in the discussions in the working group on transparency in government procurement set up as per the mandate of the Singapore Ministerial conference of the WTO. ENVIRONMENT With the rapid increase in the international trade and consequent increase in cross-border movement of products, the linkage between trade and environment has become a relevant issue for the international community. GATT/WTO being the chief trade body addressing international trade issues has taken cognizance of it. Already certain agreements within WTO, such as the agreement on Technical Barriers to Trade, and the agreement on sanitary and phytosanitary measures have addressed environmental issues to some extent.
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Indias approach on the issue of the relationship between trade and environment has been : Work already accomplished in the GATT must provide the starting point; International rules should bot create unnecessary or unjustifiable obstacles to international trade; There has to be a clear recognition that environmental
Standards differ from country to country and that the solution lies in mutual recognition of product-related standards rather than harmonization and, lastly; - where proprietary substances or processes are mandated for use by international or national laws for environmental purposes, owners of intellectual property should be obliged to sell technologies or products at fair and most favourable terms and conditions Information technology (IT) During in singapore Ministerial conference a Ministerial Declaration on Trade in Information Technology Products was adopted. This Declaration aims to expand world trade in information technology products. 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 then import tariffs on the products covered by the ITA as scheduled. The quantitative restrictions imposed on these products for BOP reasons would also be phased out by 31 March 2000. At the same time, India has also raised the issue during plurilateral discussion that if the global information technology infrastructure is to be strengthened, the rules
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for movement of skilled persons working in this sector should also be liberalized. Trade and Investment and Competition Policy India has been actively participating in the educative process in the Working Groups in the WTO. Indias standpoint in this educative process is that the development dimension should be fully integrated into the process. Regional trade arrangements 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 become 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 January 1996 to broaden tariff concessions. India granted concessions on 902 traiff lines, effective 1 March 1997. The third round of trade negotiations commenced in july 1997. The goal is to continue the SAPTA process with the ultimate aim of having a South Asian Free Trade Area(SAFTA) not later than the year 2001. India is member of the Bangkok Agreement, originally signed in 1975, and now alaso included Bangladesh, the Republic of Korea, the Lao Peoples Democratic Republic, Papua New Guinea and Sri Lanka. The Agreement provides for the liberalization of tariff and non-tariff barriers between its members. The Indian Ocean Rim Association for Regional Cooperation was recently formed along with 13 other countries in the region. The Character of the Association was adopted in March 1997. Economic cooperation is expected to take place in trade facilitation, promotion and liberalization, promotion
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of foreign investment, promotion of scientific and technological cooperation, tourism, the movement of natural persons and service providers, and the development of infrastructure and human resources. An enabling clause to identify other areas of signed sub-regional agreements with Nepal, Bangladesh, Myanmar and Bhutan and more recently with Bangladesh, Srilanka and Thailand. Details of the agreement known as BISTEC are presently being formulated. India has signed bilateral agreements with two neighboring Countries,Bhutan and Nepal,to provide them with preferential access. More limited agreements have been signed with Bangladesh, which receives the preferntial treatement India accords to least developed countries under SAPTA, and with Myanmar. Commonwealth preferences continue to be extended to Mauritius, Tonga and the seycheless. Conclusions India, with its per capita GNP of barely US$340 (which is low even as per the general income levels of US$430 and US$1,090 for low-income and middle-income economies respectively) has already taken major strides in integrating herself with a globalized world trade order and is commited to fulfilling her multilateral obligations. It is her perception that the multilateral trading system is itself likely to gain in ctedibility and acceptance if the sectors of comparative advantage to the developing world are liberalized early, justified marker access is not denied to them and enough time and resoureces are made available to the developing world to catch up their developed country trading partners. To this end, it is our percepation that the concerns of special interest to developing countries should be addressed early and the enabling special and differential treatment provisions for developing country members enshrined in the
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WTO Agreements dispensations.
translated
into
specific,
enforceable
48
TRENDS IN INDIAS FOREIGN TRADE

During the current year, as per provisional estimates exports amounted to Rs.1,18,638 crores during April to December, 1999 as compared to Rs.1,01,850 crores during April to December,1998, registering a growth of 16.5%. imports have registered as increase of 12.6% in Rupee terms having increased to Rs.1,49,087 crores in April to December,1999 from Rs.1.32,447 crores during April to December,1998. The trade deficit during April to December,1999 is estimated at Rs.30,449 crores. The details of foreign trade in rupee terms and dollar terms for the period April to December,1999-2000 are given in Table I(a) and1(b) respectively. The trends in indias exports of principal products/groups during 1997-98, 1998-99 and April to October, 1998 and April to October,1999 are given in Table II. During April to October, 1999, the principal commodities which registered significant increase in exports over the corresponding period of the previous year include nut and seeds, processed foods, gems & jewellery, chemicals & related products, engineering goods, electronic hardware, textiles, handicrafts and carpets. Commodities that witnessed low growth up to 10% include spices and marine products. Exports of tea, coffee, rice, ores and minerals, leather and manufactures (excepts footwear) declined during this period. The export performance of principle commodities/goups during 1998-99 and Aprils to October, 1999 are reviewed in the following paragraphs. Plantation crops primarily comprise tea and coffee. Export of plantation crops decreased during April to October, 1999 by 23.7% in Rupee terms. Export of tea decreased by 17.1% during this period to Rs.1,127 crores from Rs.1,360 crores during the same period of last year. Exports of coffee decreased from Rs.1,185 crores during April-October, 1999
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to Rs.815 crores during April to October, 1998 registering a negative growth of 31.2%. This group comprises a wide variety of agricultural products covering cereals, pulses, tobacco, spices, nuts and seeds, oilmeals, guargum meals, castor oil, chellac, sugar and molases, processed food, meat and meat products, etc. Share of items under the groups Agricultural and allied products, was 9.1% in total exports during April-October, 1999. During April to October, 1999 the exports of agricultural and allied products showed a decrease of 9.7% from Rs.9,097 crores during April to October, 1998 to Rs.8,219 crores during April to October, 1999. The items which have indicated significant increase during this period as compared to the corresponding period of the previous year are pulses, tobacco(manufactured and unmanufactured), spices, nuts and seeds, castor oil, shellac, sugar and mollasses, processed fruits & vegetables and spirits and beverages. The exports of marine products were estimated at Rs.2.218 crores during April to October, 1999 as against Rs.2,640 crores during April to October, 1998 indicating an increase of 6.7%. Ores and minerals are traditional items of exports. Their contribution in the total exports is about 2.1% during April to October, 1999. The main items of exports in this category are iron ore, manganese ore, chrome ore, aluminum, mica and coal. During April to October,1999 the exports of ores and minerals were valued at Rs.1,890 crores registering a decline of 0.5% over the sane period of last year. Iron ore and processed minerals have shown a sharp decline during this period while mica and other ores and minerals have registered a positive growth of 12.5% and 84.9% respectively during April to October, 1999 as compared to the corresponding period of the previous year.
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DETAILS OF INDIAS FOREIGN TRADE The value of exports of leather and leather manufactures has decreased from Rs.3,917 crores during April to October, 1998 to Rs.3,735 during April to October,1999 showing a decline of 4.6%. leather goods account for 4.2% share in the total exports during April to October,1999. footwear exports constitute 36.5% of the exports of leather and leather products and exports of leather footwear increased by 10.4% during April to October, 1999, as compared with corresponding period of the previous year. Most of the leather products are exported to developed countries like Germany, France, U.S.A., U.K., Italy, Japan including CIS Countries. INDIAS EXPORT OF PRINCIPAL COMMODITIES Gems and Jewellery Gems and jewellery is a major export item accounting for about 20.5% of our total exports during April to October, 1999. The export of gems and jewellery during April to October, 1999 was valued at to Rs. 18,340 crores as compared to Rs.14,533 crores during the corresponding period of last year, showing a positive growth rate of 26.2%. Chemicals and Allied Products Chemical and allied products have a positive growth of 14.4% during April to October, 1999 over the same period of the previous year in Rupee terms. The plastic and linoleum products in the international market are very competitive and stringent environment and public health controls need to be maintained. Quality Control in terms of packaging standards, delivery, schedules require further attention if a continuous increase is to be maintained.
51
Engineering Goods The share of engineering goods is about 12% in the total exports during April to October, 1999. The main items under the groups Engineering Goods are non-ferrous metals & machine tools, machinery and instruments, transport equipments. Exports of engineering goods amounted to Rs.10.424 crores during April to October, 1999 as against Rs.8.849 crores during April to October, 1998 showing a growth of 17.8%. Electronic and Computer Software In the event of technological advancement and breakthrough in industrial infrastructure, electronics and computer software industry has been identified as a thrust sector for export. The non-traditional sector consists broadly of consumer electronics, control instrumentation and industrial electronics, computer systems, communication equipments, components and software. Electronic goods excluding software have a share of 1.6% of indias exports during April to October, 1999. Exports of electronic goods excluding software during April to October, 1999 are valued at Rs.1,449 crores as compared to Rs.1,180 crores during April to October, 1998 showing a growth of 22.8%. INDIAS IMPORTS OF PRINCIPAL COMMODITIES Graph Textiles Textiles account for nearly one-fourth of our exports. In addition, carpets, handicrafts and raw cotton are other major traditional export items accounting for nearly 3.7% share in the total exports during April to October, 1999. Total value of Indian textiles exports during April to October,1999 increased to Rs.22,059 crores from Rs.19,124
52
crores during the corresponding period of previous year showing a positive growth rate of 15.3%. Natutal silk textiles recorded a high growth rate of 35.4% followed by ready made garments (17.2%), cotton yarn fabrics, madeups, etc. (15.8%) and man made textiles made-ups, etc. (15.6). wool and woolen manufactures, coir and coir manufactures and jute manufactures however, witnessed a decline in exports during this period. Handicrafts The main items of exports of handicrafts are various types of works of are, such as metal artware, textiles (hand printed), woodwares and zari goods. During April to October, 1999, handicrafts exports increased to Rs.1,861 crores from Rs.1,594 crores during the corresponding period of the last year showing a positive growth of 16.8%. Exports of carpets increased during April to October, 1999 to Rs. 1,484 crores from Rs.1,129 crores during April to October, 1998 indicating a positive growth of 31.4%. Trends in Indias Imports The trends in Indias imports during the year 1998-99 as compared to 1997-98 and April to October,1999 and April to October, 1998 are shown in Table-iii. Indias total impoets amounted to Rs.1.15,965 crores during April to October,1999 as compared to Rs. 1,03,490 crores during the same period of the last year showing a positive growth rate of 12.1% in Rupee terms. Imports of items under bulk category comprising inter-alia, POL, fertilizers, edible oil, sugar, etc. registered an increase toRs.43,432 cores during April to October,1998 reflecting a growth of 31.3%. The majaor items which witnessed an increase are rice (33.3%), cereals preparations (41.7%), fertilizers (72.2%), edible oil (16.4%), pulp and waste
53
papers (6.6%), petroleum crude and products (57.9%), sugar (0.8%). Items which recorded negative growth are wheat (-59.0%), newsprit(-27.4%),crude rubber including synthetic rubber (-14.0), non-ferrous metals (-18.0%) metaliferrous ores and scarp (-18.8) and iron and steel (-7.9%). Other items in which significant growth has been recorded during April to October, 1999 over the same period of the last year are pearls, precious and semi-precious stones (48.9%), raw silk (70.0%) leather (8.7%), non-metal minerals manufactures (7.7%), organic and inorganic chemicals (9.1%), artificial resins (12.2%), and professional instruments (2.0%). Decline has been recorded in electrical and non-electrical machinery (-10.4), project goods (-60.7%), Cashew nuts (-1.9%) fruits and nuts (46.0%), raw wool (-7.1d%), synthetic and regenerated fibres (-58.3%), pulses (-68.0%), raw hides and skin (12.3%), coke, coal and briquets (-9.5%), medicinal pharmaceutical products (-10.6%), chemical products (23.5%) and textile yarns, fabrics etc. (-11.1%). Oil and Petroleum Products Imports of major products are reviewed in the following paragraphs. The imports of petroleum crude and products during April to October,1999 were valued at Rs.25.035 crores as against Rs. 15.856 crores during April to October, 1998 showing a growth of 57.9%. Fertilizers The total imports of fertilizers have increased from Rs. 2,569 crores during April to October, 1998 to Rs, 4,423 crores during April October, 1999 showing a growth of 72.2%. This includes crude fertilizers as well as those of manufactured and sulphur and unroasted pyrites.
54
Pearls, Precious and Semi-Precious Stones The diamond industry in the country draws heavily on imports or rough precious semi-precious stones. Imports of pearls and precious and semi-precious and semi-precious stones amounted to Rs.12,843 crores during AprilOctober,1999 as compared to Rs. 8,623 crores during the corresponding period of the previous year showing a significant growth of 48.9%. Imports of Capital goods largely represented by machinery, including transports equipments, projects goods and professional instruments have shown a decline during AprilOct, 1999 over the same period of last year. Project goods exports have declined sharply from Rs.6,129 crores in April to October,1998 to Rs.2,406 crores in April to October,1999 registering a negative growth of 60.7%. other items showing negative growth are machine tools (-28.5), nonelectric machinery (-12.6) and electric machinery (-12.6%) and electric machinery (7.7%). In this category transports equipments and professional intruments have shown a positive growth of 9.0% and 2.0% respectively. Chemicals and Chemicals Materials Organic and inorganic chemical materials and medicinal and pharmaceuticals products constituted the major compinents of imports under this category. The imports of organic and inorganic chemicals rose to Rs.7,469 crores during April to October, 1999 from Rs. 6,848 crores during April to October, 1998 showing a positive growth of 9.1% . The medicinal a decrease October,1998 October, 1999 and pharmaceutical products have registered from Rs. 993 crores during April To to Rs.888 crores during the period April to showing a negative growth of 10.6%
55
Provision of Indias Foreign Trade The trends of Indias export to and import from different regions are given in table-iv and v respectively. The exports figures is respect of regions and sub-regions shown in table iv do not include exports of crude oil from Mumbai High and Petroleum products to respective countries of consignments, but these are included in the aggregate of exports. During April-October,1999 East Europe accounted for highest growth of 23.8% followed by America (19.9%), Asia and oceania (16.3), West Europe (11.2%). Exports to African regions declined slightly by 2.6% During April-October,1999 Asia and Oceania was the largest supplier of goods accounting for 45.0% of our total imports followed by West Europe (27.9%),Africa (13.7), America (11.1%) and East Europe(2.2%). Imports by India during April to October,1999 over the same period of last year increased from Asia and Oceania, Africa, America, East Europe, while imports from West Europe showed a slight decline (-5.1%).
56
Table 1(a) Details of Indias foreign trade 1999-2000 Imports and exports (Provisional) December 1998-99 1999-2000 % Growth 992000/98-99 1998-99 1999-2000 % Growth 992000/98-99 1998-99 1999-2000 11852.61 13892.05 7.21 April-December 101850.15 118638.40 16.48
14463.56 17671.43 22.18
132446.84 149087.17 12.56
-2610.95 -3779.38
-30596.69 -30448.77
57
Table 1(b) Details of Indias foreign trade 1999-2000 Imports and exports (Provisional) December 1998-99 1999-2000 % Growth 992000/98-99 1998-99 1999-2000 % Growth 992000/98-99 1998-99 1999-2000 2785.38 3194.68 14.69 April-December 24279.08 27419.23 12.93
3398.95 4063.80 19.56
31607.50 34457.91 9.02
-617.57 -869.12
-7328.42 -7038.68
58
Table II Export of principal commodities

S. No. Commodities Apr.-Mar. 1998 Apr.-Mar. 1999(P) % Change Mar99 March98 Apr.Nov.199 8 Apr.Nov. 1999(P) % Change Apr.Nov.99 Apr.Nov.98 -17.2 -31.2 -50.8 -50.8 65.5 31.4 39.2
1) Tea 2) Coffee 1. Cereal a. Rice b. Wheat c. Others 1(a) Pulses 2. Tobacco a. Unmanufactur ed 3. Spices 4. Nuts and Seeds a. Cashew incl. CNSL b. Sesame and Niger Seed c. Groundnuts 5. Oils Meats 6. Guargum Meal 7. Castor Oil 8. Shellac 9. Sugar and Mollasses 10. Processed Food a. Fruits and Vegetables b. Processed Fruits & Juices c. Misc. Processed Items 11. Meat and Meat Products 12. Floriculture Products 13. Spirit & Beverages 1. Iron Core 2. Mica 3. Processed Minerals
1876 1696 3384 3371 13 361 1070 917
2302 1703 6220 620 3 16 219 779 591
22.7 0.4 83 95 23.1 -39.3 -27.2 -35.6
1360 1185 3376 3372 1 3 142 494 380
1127 815 1661 1658 3 235 649 529
1410 2276 1407 303
1617 2060 1613 325
14.7 -9.5 14.6 7.3
941 1118 942 122
1012 1727 1488 149
7.5 54.5 58.0 22.1
566 3435 545 576 58 255 1235 706 273
122 1912 722 669 70 23 1243 693 296
-78.4 -44.3 32.5 16.1 20.7 -9.1 0.6 1.8 8.4
54 743 463 474 29 6 759 424 185
90 491 384 612 49 20 874 427 294
66.7 -33.9 -17.1 29.1 69 233.3 15.2 0.7 58.9
256
254
-0.8
150
153
2.0
808 87
760 103
-5.9 18.4
452 59
412 50
-8.8 -15.3
74 1770 40 1251
71 1600 44 989
-4.1 -9.6 10 -20.9
41 771 24 624
43 504 27 536
4.9 -34.6 12.5 -14.1
59
4. Others Ores & Minerals 5. Coal 1. Footwear 2. Leather and Manufactures 1. Basic Chem., Pharms & Cosmet 2. Plastics and Linoleum 3. Rubber, Glass and Other Products (incl. Paints, Enamels, Varnish) 4. Residual Chemicals & Allied Products 1. Readymade Garments 2. Cotton yarn, Fabrics, Made-ups, etc. 3. Manmade Textiles, Made-ups, etc. 4. Natural Silk Textiles 5. Wool & Woolen Manufactures 6. Coir & Coir Manufactures 7. Jute Manufacturers 1. Hand-made (excl. Silk) 2. Mill made (excl. Silk) 3. Silk Carpet
793
982
23.8
423
782
84.9
88 1942 4119
134 2778 4539
52.3 17.3 10.2
57 1235 2682
41 1363 2372
-28.1 10.4 -11.6
10487
11129
6.1
6350
7041
10.9
1911 2646
2021 2704
5.8 2.2
1106 1422
1327 1732
20.0 21.8
1294
1038
-19.8
546
640
17.2
14405 12132
18698 11669
29.8 -3.8
9609 6615
11260 7659
17.2 15.8
2991
2930
-2
1717
1984
15.6
656 408
764 314
16.5 -23
426 214
577 147
35.4 -31.3
255 694 2027 1526 392
313 595 2250 1739 420
22.7 -14.3 14 7.1
187 356 1129 826 235
126 306 1484 1234 223
-32.6 -14.0 31.4 49.4 -5.1
*Includes Paints, Enamels, Varnish. (P) Provisional
60
Table III Imports of Principal Commodities

S. No. Commodities 1. Cereals & Preparations a. Rice b. Wheat c. Other Cereals d. Cereals Preparations 2. Fertilizers a. Crude b. Sulpher & Unroasted Pyrites c. manufactured 3. Edible Oil 4. Sugar 5. Pulp & Waste Paper 6. Paper Board & Manufactures 7. Newsprint 8. Crude Rubber incl. Synthetic 9. NonFerrous Metals 10. Metalliferrous Ore & Scrap 11. Iron & Steel 12. Petroleum Crude & Products 1. Machinery Tools 2. NonElectrical Machinery @ 3. Electrical Machinery @ 4. Transport Equipment 1. Cashew Nuts 2. Fruits & Nuts 3. Wool Raw 4. Silk Raw Apr.97 Mar.98 1083 989 94 4149 662 350 Apr.97 Mar.98 978 6 939 1 32 4516 868 337 % Change -9.7 -5.1 -66.0 8.8 31.1 -3.7 Apr.98O ct.98 893 3 878 12 2569 395 182 Apr.98 Oct.98 468 4 360 17 4423 521 327 % Change Apr.-47.6 33.3 -59.0 87 41.7 72.2 31.9 79.7
3137 2765 470 1055 819
3311 7131 1085 973 887
5.5 157.9 130.8 -7.8 8.3
1992 4774 759 592 512
3575 5556 765 631 515
79.5 16.4 0.8 6.6 0.6
1047 596
1004 592
-4.1 -0.7
663 358
481 308
-27.4 -14.0
3420
2823
-17.5
1607
1318
-18.0
2744
2550
-7.1
1861
1512
-18.8
5290 30341
4956 27064
-6.3 -10.8
2627 15856
2420 25035
-7.9 57.9
1569 13461
1385 13073
-11.7 -2.9
896 7371
641 6441
-28.5 -12.6
1406 3907 767 575 600 218
1876 2571 639 402 466 242
33.4 -34.2 -9.6 -30.1 -22.3 11
984 1514 364 324 310 120
908 1650 357 175 288 204
-7.7 9 -1.9 -46.0 -7.1 70
61
5. Synthetic & Regenerated Fibres 6. Pulses 7. Raw Hides & Skins 8. Leather 9. Coal, Coke & Briquettes 10. Non-Metal Minerals Manufacturers 11. Other Raw Minerals 12. Organic & Inorganic Chemicals 13. Dyeing, Tanning Material 14. Medicinal & Pharma Products 15. Artificial Resins etc. 16. Chemical Products 17. Textile Yarn, Fabrics, etc. 18. Metal Manufactures 19. Professional Instruments etc. @ 20. Electronics goods incl. Computer Software
465
282
-39.4
218
91
-58.3
1195 168 366 4432 515
405 179 417 3954 643
-66.1 6.5 13.9 10.8 24.9
516 130 231 2541 405
165 114 251 2299 436
-68.0 -12.3 8.7 -9.5 7.7
302 10987
387 11435
28.1 4.1
253 6848
262 7469
3.6 9.1
667
796
19.3
471
466
-1.1
1447
1447
993
888
-10.6
2574 1111 1519
2781 1642 1836
8 47.8 20.9
1620 978 1137
1818 748 1011
12.2 -23.5 -11.1
1209 2771
1705 23.3
41.0 3418
933 1925
949 1964
1.7 2.0
83
9351
11.4
5609
6104
8.8
N.B @ - Other than Electronic (P) Provisional Others includes Errors & Omission and Transactions are under Reference.
62
Table IV Indias Exports B Y Regions/Sub-Regions

S. No. I. Region/SuRegion West Europe 1997-98 199899(P) 30486 28.7 38114 27 1616 1.1 856 0.6 51246 1.3 -21.3 -3.7 12.1 % Change 10.4 Apr.Oct.98 22194 28.4 20722 26.5 933 1.2 539 0.7 27941 Apr. Oct.99( P) 24690 27.5 23165 25.8 969 1.1 556 0.6 32488 16.3 3.2 3.9 11.8 % Change
36752 28.5
11.1
a. E.C.M. Countries
33986 26.4
b. EFTA Countries
1678 1.3
c. Rest of Europe
1088 0.8
II.
Asia & Oceania
50613
39.3 a. ESCAP 36419 28.3 b. Rest of Asia & Ocenia 14194
36.3 34520 24.5 16726 17.8 -5.2
35.7 18406 23.5 9535
36.2 22067 24.6 10421 9.3 19.9
11.0 III. Africa 71355.6
11.8 8836 6.3 23.8
12.2 4980 6.4 22.1 20494 26.2 22.1 18903 24.3 -2.4 1064 1.3 71.7 527
11.6 4853 5.4 24578 27.4 22788 25.4 1008 1.1 782 48.4 -5.3 20.6 19.9 -2.6
IV.
America
29518 22.9
36037 25.5 32848 23.3 1779 1.2 1453
a. North America
26893 20.9
b. South America
1736 1.4
c. Other America Countries
846
0.6 V. East Europe 4772
1.0 4501 -5.7
0.7 2586
0.9 3202 23.8
63
3.7 a. Former RPA Countries 4196
3.2 3889 -7.3
3.3 2172
3.5 2826 30.1
3.3 b. Other East European Countries 576
2.8 612 6.3
2.8 414
3.1 376 -9.2
0.4 Total of the above 128790 131101
0.4 141206 141604 9.6 8.8
0.5 78195 78545
0.4 89811 89940 14.9 14.5
Table V Indias Imports by Regions and Sub-Regions

S. No. Region & Principals Countries Apr.97 Mar.99 Apr.98 Mar.99(P ) % Change 1998-99 over 1997-98 11.9 Apr.98O ct.98 Apr.99 Oct.99(P ) % Change 1999 over 1998
I.
West Europe
50242 32.6
56244 31.9 43504
34139 33
32405 27.9 25196
-5.1
a. E.C.M. Countries
39694
9.6
26400
-46
25.7 b. EFTA Countries 10178
24.7 12303 20.9
25.5 6897
21.7 7627 -9.6
6.6 c. Rest of Europe 370
7.0 437 17.8
7.4 112
5.9 312 178.6
0.3 II. Asia & Oceania 71406
0.2 78974 10.6
0.1 47449
0.3 52241 10.1
46.3 a. ESCAP 39537 25.6
44.9 49961 28.4 26.4
45.8 31130 30.1
45 32205 27.8 3.5
64
b. Rest of Asia & Ocenia
31869
29013
-9.0
16319
20036
22.8
20.7 III. Africa 10851 7.0 IV. America 17533 11.4 a. North America 15378
16.5 17564 10.4 19729 11.2 16879 12.5 12.5 61.9
15.8 8353 8.1 11675 11.3 9852 15832 13.7 12885 11.1 10621
17.3 89.5
10.4
7.8
10.4 b. South America 1649
9.5 2411 46.2
9.5 1534
9.2 2094 36.5
1.1 c. Other America Countries 506
1.4 439 -13.2
1.5 289
1.8 170 -41.2
0.3 V. East Europe 4143 2.7 a. Former RPA Countries 0040
0.2 3586 2.0 0040 -10.0 -13.4
0.3 1874 1.8 1740
0.1 2602 2.2 2200 1.2 38.8
2.4 b. Other East European Countries 403
1.9 243 -40.0
1.7 1.2
2.0 307 145.6
0.3 154176
0.1 176098 14.2
0.1 103490
0.3 115965 12.1
65
MARITIME TANSPORT
On 28 June 1996, WTO members governments agreed to suspend market access negotiations for maritime transports services. The negotiations will resume in 2000 when a new comprehensive round covering all services is due to begin. At the time of the suspension, 42 governments (counting the European Communities as one) were participating. Conditional offers for markets access commitments had been submitted by 24 of these. Following the suspension, participants allowed themselves a month a modify or withdraw commitments they had made previously. Austria (by then an EC member) and the Dominician Republic withdrew their commitments. Despite the suspension, two countries turned their best offers into formal commitments _Iceland and Norway. The decision to suspend the talks actually contains four parts: First, the suspension. Second , for the time being, the non-discrimination provision(known as most favoured nation treatment) of the General Agreement on Trade in Services(GATS) will not apply to maritime transports. Third, when negotiations resume in 2000, they will continue where they left off instead of starting from scratch, so that the starting point will be the existing offers. Fourth, while the talks remain suspended, participants will not raise barriers or apply measures in the sector in order to improve their bargaining power (for example, withdrawing some forms of market access in order to improve their baggaining power(for example, with drawing some forms of maket access in order to put pressure on other participants) excepts in response to measures applied by other countries. Naturally, no one would object if countries voluntarily liberalized further during the suspension. Calculations of the value of maritime transportation are difficult to make because of statistical difficulties. But the
66
UN Conference on Trade and Development (UNCTAD) estimates that freight accounts for more than 5% of the total value of imports around the world. The tonnage of world seaborne freight has been growing steadily over the past 10 years. In 1995, it grew by 3.7% to a new record volume of 4.65 billion tons, with about 4.8 billion tons expected in 1996, adding another 3% - 3.5%. History Maritime transport, financial services and basic telecommunications were the three services sectors whose market-opening negotiations continued after the Uruguay Round. Although 32 countries had made commitments on maritime transport in the round, members agreed that negotiations should continue because some major participants had made no or very limited commitments, among them the United States. The renewed maritime negotiations began immediately after the round concluded in April 1994. They were suspended two years later because the US said the 24 offers on the table were too few and the extent of market access proposed in those offers was insufficient to justify making a new offer of its own. Many other countries disagreed. What is maritime transport? Maritime transport is difficult to negotiate for two reasons. It involves several different kinds of services, from shipping to port facilities. And each of these services is organized in complex ways. Some (including bulk shipping) are relatively competitive, others (such as much of inner shipping) are dominated by rate-setting conferences, bilateral arrangements or monopolies. Some are operated by state enterprises. Some are highly protected with strong domestic political lobbies and long-established labour union practices. Finding appropriate formulas for negotiated liberalization in these circumstances is not easy.
67
The negotiations have dealt with the so-called three pillars of the maritime transport sector: International shipping: transporting passengers or freight between ports in different countries. Auxiliary services such as cargo-handling, storage and warehousing, stevedoring, freight forwarding, customs clearance services, container-station and depot services. Negotiations deal also with foreign operators rights to establish their own facilities and supply these services. Access to and use of port facilities, such as pilotage, towing and tug assistance, provisioning, garbage collection, port captains services, and anchorage. Negotiations deal with rights of foreign ships to gain access to these services without discrimination. A fourth pillar, multimodal transport emerged later in the negotiations with a US proposal. Essentially a door-to-door services, this involves the use of one or more modes (ie: road, rail, air, or inland water transport) in addition to shipping by sea. The negotiations have not dealt with domestic coastal shipping known as cabotage (i.e. shipping between ports in the same country), a highly protected sector. Most countries reserve this kind of transportation for nationalflag ships. Economists argue that the costs of cabotage protection are extremely high. Broadly speaking, there are two kinds of shipping: bulk (complete shiploads of commodities and more recently steel, paper and even cars, for example) and liner services (crates, containers, etc of freight, and passengers). Bulk shipping is considered to be more competitive. Liner shipping is traditionally dominated by rate-setting bodies known as conferences. Many countries exempt these
68
conferences from anti-monopoly laws but how this is done varies from country to country. Seaborne shipping and its international liberalization is further complicated by the use of flags of convenience such as those of Panama and Liberia. Flag of convenience laws mean ships can be owned by nationals of one country and be registered in another. Most ships in the major shipowning nations sail under flags of convenience (71% of US ships, 56% of Greek ships, 69% of Japanese ships, 81% of Hong Kong ships, 73% of UK ships and 61% of German ships, according to UNCTAD figures for 1994). Under GATS, it is the nationality of the owner that counts. An important additional factor is shipping technology. This is changing so rapidly that in some areas experts say negotiating liberalization ought to be easier than during the Uruguay Round, even only two years after the round ended. One example of rapid change is in port handling of containerized cargoes. This has allowed movement away from public sector structures towards market-oriented approaches including deregulation, decentralization, antimonopoly laws, and privatization. Selected Glossary Some of the terms that frequently appear in documents on maritime transport:
Binding Commitment under GATT or GATS to keep market open, specifying maximum level of trade barriers (and for GATS, the extent of national treatment). Requires negotiation and possibly compensation if a trade barrier is to Modes of delivery In GATS, how international trade in services is supplied and consumed. Mode 1 : Cross border supply. Mode 2 : Consumption abroad. Mode 3 : Foreign commercial presence. Mode 4 : Movement of natural National treatment Non-discrimination between ones own nationals and foreigners.
69
be raised beyond the bound ceiling. Cabotage Sea shipping between ports of the same country, usually along coasts. Conferences Cartels regulating international shipping.
persons. Mode (transport) Method of transportation (e.g. road, rail, air, sea). multi-modal Transportation using more than one mode. In the negotiations, essentially door-todoor services that include international shipping. NGMTS Negotiating Group on Maritime Transport Services.
Pillars The three pillars of the negotiations are: international shipping, auxiliary services, and port facilities. A fourth pillar introduced later is multi-modal service. Offer A countrys proposal for binding its market opening levels. Schedule Table of a countrys market access (and for GATS national treatment) bindings.
GATS General Agreement on Trade in Services MFN Most Favoured Nation: basic nondiscrimination between trading partners.
The European Union is called the European Communities WTO affairs. Normally, countries have to declare publicly which sectors or sections of service trade they are exempting from nondiscrimination (most-favoured nation treatment). The June 28 decision means that for maritime transport, no public announcements have to be made. Countries are assumed to be discriminating until the negotiations are completed.
70
ACKNOWLEDGEMENT
I would like to thank each and everyone in person who has helped me to compile the project successfully. 1. Ms. Suparna Pandi, CII Library 2. Ms. Anjali, CII Library 3. Mr. Ashok Sharma, Librarian-UN Library 4. Mr. Arun Kumar, Librarian-FIIB. All my friends who have helped me with various sources of information. Last but not the least I would like to thank Mr. Nobel Pillai, who had assigned me with this project and guided me throughout the compilation of the Project.
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PURPOSE
WTO is the only International Organization dealing with the global rules of trade between nations. WTO agreements are Multilateral Trading Systems its purpose is to help producers of goods and services, exporters and importers to conduct their business and to improve the welfare of the people of the member countries. It is run by its Secretariat with agreements and policies made with reference to the 130 member countries after being ratified in the Parliament. Indias trade policy has to keep up with its trade reforms to be comparable with the WTO so as to ensure strong economic growth. The measures under consideration are reduction in tariffs and on-tariff measures, reforming the subsidy structure and restructuring Public Sector Units. India has made a beginning since 1991 with the economic reforms and liberalization. With the opening up of the economy in select sectors with similar plans to be implemented in other sectors. India has simplified its foreign investment policy. With sectoral policy developments in Agricultural products, Food Processing, Mining and Petroleum, Manufacturing systems and multilateral trading system being implemented its impact on Indias foreign trade has far reaching results. With its implementation India is likely to gain credibility and acceptance if the sectors of comparative advantage to the developing countries are liberalized early, justified market access is not denied. Enough time and resources are made available to catch up with the developed countries as trading partners. WTO agreement can then be translated into specific enforceable regulations, both exports and imports of India, growing significant, it would enhance the freight forwarding aspect. The future of freight forwarding is bright in India and the time is right to cash-in with planned future strategies ascertaining the sectors of growth in foreign trade.
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METHODOLOGY
The project was complied on the basis of: 1. Primary Data 2. Secondary Data 1. Primary Data: It was collected on personal basis from different sources like exporters of garments, handicraft etc. However, it was very limited. 2. Secondary Data: The project was based on information collected from libraries i.e. CII and UN in form of trade reports, statistics and hand-out. Internet has been a very useful resource of information, required for the compilation of data.
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FINDINGS
India has reformed its trade policy in manufacturing sector by reducing average tariff rates, import licensing for the industrial input and capital goods and compulsory industrial licensing. Liberalization has a very significant impact on telecommunication. Other services such as shipping, roads, ports and air are beginning to open up, slowly and gradually. Tariffs has been reduced from average of 71% in 1993 to a current average of 35%. The margin is obvious. Foreign participation is up to 51% or 74% in a number of sectors. Reforms to the system of restrictive import licensing has been done by first moving products to Special Import License (SIL) and then to the list of freely importable goods. India has a six year Phase-out programme for these restrictions from 1997-1998. Exports of perishable goods have been exempted from routine custom examination. On-line agreement and clearance through EDI has taken the whole thing a few steps ahead is technology. Under WTO bindings, India has been bound 67% of all its tariff lines. Exports of leather products, Gems and Jewellery has increased by 10.4% and 26.2% respectively, engineering goods by 17.8% and electronic goods by 22.8%. Exports of leather has enhanced by 31.4%. Indias imports increased in bulk category by 31.3% (POL, fertilizer, edible oil, sugar etc.), in pearls, precious and semi-precious stones (48.9%), raw silk (70%), leather (8.7%), non metal minerals manufactures (7.7%), organic and inorganic chemicals (9.1%) artificial resins (12.2%) and professional instruments (2.0%), petroleum and its products (57.9%), fertilizer (72.2%) and diamond (48.9%).
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CONCLUSIONS
We can actually focus ourselves in various sectors in terms of export and imports where growth is inevitable. Engineering Goods Leather Products Electronic Goods Transport Equipment Project Goods Professional Equipment Project Movement Professional Instrument Organic and Inorganic Chemical Material Pharmaceutical Products Textile and Garments Handicrafts.
Regions to look out for: Asia America East Europe (Former RPA Countries) West Europe (ECM Countries, EFTA, rest of Europe)
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CONTENTS
Topics Acknowledgement Purpose Methodology The WTO The WTO Multilateral Present and Future Trading system-Past,
Page No.
1 9 15 25 37 49 66
The secretariats Report: Summary The government Report India and the WTO Trends in Indias Foreign Trade Maritime Transport Findings Conclusion Annexes
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THE WTO : IMPACT ON THE FREIGHT FORWARDING INDUSTRY
Submitted to: Mr. Nobel Pillai-DEL BM
Submitted by: Pritiman Sarkar-DEL MT
KUEHNE & NAGEL INDIA LTD.
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The WTO: Impact on the Freight Forwarding Industry

The WTO: Impact on the Freight Forwarding Industry

The WTO: Impact on the Freight Forwarding Industry

The WTO: Impact on the Freight Forwarding Industry

THE WTO AGREEMENTS

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THE WTO DEVELOPING COUNTRIES

infrastructure for WTO work, implement technical standards.

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THE SECRETARIATS REPORT: SUMMARY

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v. vi. vii. viii.

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INDIA AND THE WTO

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WTO Agreements dispensations.

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TRENDS IN INDIAS FOREIGN TRADE

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