India has been a WTO member since 1st January 1995.

Pascal Lamy is the fifth Director General of the WTO appointed on 1st Sep 2005 for a four-year term.

GENERAL AGREEMENTS ON TARIFFS & TRADE (GATT)

The General Agreement on tariffs & Trade (GATT) was an international body which remained in existence for a period of 46 years. It was negotiated in 1947 & came into force on 1st JANUARY 1948. It started as a general agreement for trade concessions among 23 nations, including INDIA & its membership increase to117 countries as on 31st DECEMBER 1994.

Four Principles were regarded as follows: 1. Trade should be carried on nondiscriminatory basis. 2. Domestic industry should only be protected by means of custom tariffs 3. Aim of consultations should be avoidance of damage to members interest. 4. GATT held to reduce tariffs & other trade barriers.

To follow unconditional (MFN) principles. To carry on trade on the principles of non discrimination. To grant protection to domestic industry through Tariffs only. To liberalize tariff & non- tariff measures through multilateral negotiations.

FIRST ROUND : Geneva in Switzerland in 1947 SECOND ROUND : Annecy in France in 1949 THIRD ROUND : Torquay in Britain in 195051 FOURTH ROUND : Geneva in Switzerland in1955-56.

FIFTH ROUND : Geneva in Switzerland in 1960-62 . SIXTH ROUND : Geneva in 1964. SEVENTH ROUND : Tokyo in 1973 and Geneva in 1979. EIGHTH ROUND : Uruguay in December 15,1993.

Every country followed such agriculture trade policies which were inconsistent with GATT rules. The developed countries had abolished the majority of tariff barriers . The role of GATT was being backstabbed by concluding bilateral . The GATT was side-tracked due to the increased use of subsidies. The GATT was a mandatory body.

The World Trade Organization (WTO) came into effect on January 1, 1995 with the support of 85 founder members. India was one of them. It is third pillar of worldwide economic dimensions along with the IMF and the World Bank. Now the membership has increased to 128 by 2001. The WTO is an international trade organization, having set of rules and principles which were mutually designed and agreed upon to promote international trade in general and to reduce tariff barriers and to remove import restrictions in particular. It can be called as World Trade System.

The Preamble of WTO states that there is a need for positive efforts designed to ensure that developing countries, and especially the least developed among them, secure a share in the growth of international trade commensurate with needs of their economic development.

1. 2.

3.

i. ii. iii.

4.

a)
b) c)

Ministry Conference General Council Functional Councils under the General Council Council for Trade in Goods Council for Trade in Services Council for Trade-Related Aspects of Intellectual Property Rights (TRIPs) Committees and Management Bodies Committee on Trade and Development Committee on Balance of Payment Committee on Budget, Finance and Administration

Trade in services like insurance , hotel, banking has been brought within the purview of GATT for the first time. The general agreement on trade in services provide a multilateral framework of principles and services. In the telecommunication sector the member is to establish , construct , transport network and services make it available to the public.

Trips agreement are related to intellectual property rights .These intellectual property Rights can be with regard to : COPYRIGHT TRADEMARK PATENT

Dispute Settlement System Plurilateral Trade Agreement (PTA) Trade Policy Review Mechanism (TPRM)

Distinction between GATTGATT and WTO

1. 2. 3. 4. 5. 6.

WTO
1.

It is a set of rules and multilateral agreement. It had no legal status. The GATT framework includes many important side agreements. It had a smell secretariat managed by a Director General. The rules of GATT were applied to trade in goods only. Its dispute settlement system was dilatory and not binding on the parties. It was a forum where the member countries met after a long period to discuss and solve trade problems.

It is a permanent institution and has legal status. It administers a unified package of agreements to which all members are committed. It has a large secretariat and a huge organisational set-up. It includes not only trade in goods and services but also trade related aspects of intellectual property rights. Its dispute settlement mechanism is automatic, faster and binding on the parties. It is a property established rulebased world trade organisation where decisions on agreements are time bound.

2. 3. 4.

5. 6.

Increase in foreign trade: India has trade relations with 149 countries. WTO has helped in removing tariff and non-tariff barriers and this has opened various new markets for India. Increase in agricultural exports: WTO has recommended a cut in custom duties and restrictions on agricultural goods. It will also promote agri. Exports from India. In year 200405 our agri. Exports are US$ 8,475 million and these are expected to double in the next five year.

ADVANTAGES TO INDIA contd.

Increase in Inflow of Foreign Investment: Barriers in foreign investment has been removed which has increased foreign investment in India. Many MNCs have set up their branches in India like L.G.,Samsung,Sony, etc. It has improved the level of investment in the economy. Hence employment has also increased.

ADVANTAGES TO INDIA contd..

Benefits for clothing and textile Industry: WTO has removed restrictions which was applied by MFA(Multi-Fiber Arrangements). Hence exports of Indian clothes and textiles has increased. Restricts Dumping: If a country dumps its excess production in other nation-to damage its domestic industry, then the affected country can lodge a complaint with WTO in this regard.

Disadvantages to agricultural sector: By including agriculture in WTO , Indian farmers will become dependent on MNCs for improved seeds and agricultural technology. Farmers will have to pay huge amt. to MNCs for branded seeds, fertilizers and pesticides.

Patents of Indian Herbs by Foreign Companies: Under TRIPs , patents can be granted to methods of agriculture and horticulture , biotechnological process including living organisms like plants and animals. Patents have been granted for NEEM (as a pesticide) ,to a American company. Basmati Rice has been patented as Kasmati and Texmati. Tulsi plant is underway to patenting. So, India will have to make heavy payments as royalty to patent holders for using these herbs/foodgrains.

Increase in Unemployment: WTO will encourage the free flow of imported goods and MNCs in developing countries. MNCs use capital intensive technology which creates less employment opportunities.