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WORLD TRADE

ORGANIZATION

By GROUP 5:

Aditi Agarwal-01

Vivek Agarwal -07

Abhishek Jalan-22

Neha Kothari-29

Shruti Lodha-31

Darshit Morakhia-36

Amit Sharma-54

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GATT

� The General Agreement on Trade and Tariff (GATT)came into existence in1947

� It sought substantial reduction in tariff and otherbarriers to trade and to eliminate discriminatory treatment in international commerce

� Original intention behind the GATT was to create athird institution to supervise international trade,other two being the World Bank and IMF.

� India signatory to GATT 1947 along with twenty two

other countries

� Eight rounds of negotiations had taken place duringfive decades of its existence

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URUGUAY ROUND

Held in September 1986 in Punta del Estate in Uruguay.The major highlights were:

� Expansion in the sphere of activities frominternational trade to services, investment andinformation

� Liberalization of trade in Agriculture and Textilegoods

� Patents & Subsidies

� Tariff cut- Developing countries have to cut tariffsby 24% over next 10 years while developed countriesby 36% for 6 years.

� Establishment of WTO in January 1995

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World Trade Organisation

� Location: Geneva, Switzerland

� Established: 1 January 1995

�Created by: Uruguay Round negotiations (1986±94)

� Membership: 150 countries (11January 2007)

� Budget: 175 million Swiss francs (for 2006)

� Secretariat staff: 635

� Head: Pascal Lamy (director-general)

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World Trade

Organization� The World Trade Organization (WTO) deals with the

rules of trade between nations at a global or near-

global level

� It¶s an organization for liberalizing trade

� It¶s a negotiating forum

� It¶s a set of rules

� It helps to settle disputes

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GATT TO WTO ± A half A Century Journey

WTO

WTO and its agreement are

permanent

WTO has members

WTO is more powerful than

GATT

Dispute settlement

mechanism faster and efficient

Very difficult to block its

rulings

GATT

GATT was Ad-Hoc and

provisional

GATT had contracting parties

GATT allowed domestic

legislative purview

GATT was less powerful,

dispute settlement slow and

inefficient

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MEMBERS OF WTO

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AGREEMENTS MADE BY WTO

Start with broad principles: the General Agreement onTariffs and Trade (GATT) (for goods), and the General

Agreement on Trade in Services (GATS). (The third area,

Trade-Related Aspects of Intellectual Property Rights

(TRIPS).

� Tariffs

� Agriculture

� Standards & Safety

� Textiles

� Services

� Intellectual property � Anti-Dumping, Subsidies, etc.

� Non-Tariff Barriers.

� Plurilaterals

� Trade Policy Reviews.

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TRADING SYSTEM

� Multilateral¶ trading system i.e. the system

operated by the WTO.

� Most nations ² including almost all the main

trading nations ² are members of the system.But some are not, so ³multilateral´is used to

describe the system instead of ³global´ or

³world´.

� In WTO affairs, ³multilateral´ also

contrasts with actions taken regionally or

by other smaller groups of countries.

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PRINCIPLES OF TRADING

SYSTEM

� Without discrimination:

� Freer:

� Predictable:

� More competitive:

� More beneficial for less developed

countries:

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TRADE PERFORMANCE HIGHLIGHT

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WTO IN CONTEXT OF INDIA

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WTO And INDIA

i) India¶s trade gain

ii) Competitive advantage due to WTO

iii) Potential of becoming a knowledge hub due toCBD (Connection on Biological Diversity) and

better IPR protection

iv) FDI and MNC Exposure

v) India getting a platform to showcase its talent

globally .

³Seattle is Bangalored«´

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Probable advantages

A. Increment in export

� contribution in world trade was increased to

5170 million $ during 2002-03, rather than2633

� million $ during 1994-95. India¶s contribution

in world export was 0.61% in 1995 which

increased to 0.86% in 2001.

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B. Increment in export of textiles:

� From 1974 to 1995(formation of WTO) textiles wasoperated by Multifibre Arrangement.

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C. Advantages for services:

� According to this agreement Developed Countries will open

the service firms i.e. banks, transports, hotels, etc. in

compensation they present a market to sell Indian products.

D. Availability of foreign products:

� GATT agreements provide availability of foreign products in

Indian markets. This helps in buying several foreign products

easily and cheaply.

E. Job Chances:

� Increment in Indian trade, chances of job has been increased

to a great extent.

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Probable disadvantages

A. Agriculture:

� India has to reduce subsidies which will affect poor

formers.� Reduction in import of many agricultural products

by Developed Countries to pretend environmental

conservation.

� Indians have to buy costly multinational products.

� 3% of grain consumption of the country has toimport, which affects balance payment of the

country.

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B. Disadvantages of TRIPS:

� There is an extension of patents related to medicines,

agriculture, plants and animals, etc. It will help only

Developed Countries having better technologies andunlimited resources.

� Foreign outsourcing and royalty of patents etc. payments

send Indian money outside which affects balance payment.

� In Developing countries, imports of patented raw materialsreduce export.

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C. Loss from General Agreement on Trade in

Services(GATS):

� domestic Institutions will find an end and our

economical freedom will be lost.

D. Problems in construction of economical policy:

� they have to open their markets for Developed

countries.

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E. Economical torture:

� Freedom to multinational companies for invests in India, willtorture Indian economy. According to GATT agreement MNCs andNational Companies are equal. This agreement will createproblem of conservation of industries in our country.

F. Environmental Issues:

� Developed Countries are creating problems to DevelopingCountries about environmental issues. Developed Countries arecreating pressure on us to use new eco ±

friendly technologies. For example: When Indian skirts became famous in U.S.A., they

started to spread rumors about skirts, ³they are made ofinflammable materials´ and they banned it. But all the rumorsproved were wrong and the ban was removed.

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India¶s Foreign Trade Policy 2009-14

The Union Commerce Ministry,

Government of India

announces the integrated

Foreign Trade Policy FTP inevery five year. This is also

called EXIM policy

The Foreign trade Policy

which was announced onAugust 28, 2009 is an

integrated policy for the

period 2009-14

What Is FOREIGN TRADE POLICY?

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1. To arrest and reverse declining trend of

exports is the main aim of the policy. This aim

will be reviewed after two years.

2. To Double India's exports of goods and

services by 2014.

3. To double India's share in global merchandise

trade by 2020 as a long term aim of this

policy. India's share in Global merchandise

exports was 1.45% in 2008.

Objectives of Foreign Trade Policy 2009-14

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4. Simplification of the application procedurefor availing various benefits

5. To set in motion the strategies and policy

measures which catalyse the growth ofexports

6. To encourage exports through a "mix of

measures including fiscal incentives,institutional changes, procedural

rationalisation and efforts for enhance

market access across the world and

diversification of export markets.

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AIM

� The policy aims at developing export

potential, improving export performance,

boosting foreign trade and earning valuable

foreign exchange.

� A fall in exports has led to the closure of

several small- and medium-scale export-

oriented units, resulting in large-scaleunemployment

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� Export Target : $ 200

Billion for 2010-11

� Export Growth Target:

15 % for next two year

and 25 % thereafter

TARGETS

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Growth of India¶s International Trade

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India¶s Trading Partners

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India¶s Trade Basket

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India¶s International Trade:

2008-09

� Exports in August 2008- US$ 16.0 billion:growth of 26.9% (18.2% previous year)

� Imports in August 2008- US$ 29.9 billion:increase of 51.2% (34.2% previous year)

� POL imports during April-August 2008:

US$ 46.1 billion- growth of 60% (17.9%previous year)

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India¶s International Trade: 2008-09

Items 2007-08 2008-09P

Exports 60.1 81.3

(19.3) (35.3)

Oil Exports* 4.7 9.0

(6.2) (91.5)

Non-Oil Exports* 26.0 39.1

(5.5) (50.3)

Imports 94.6 130.5

(34.2) (38.0)

Oil Imports 28.8 46.1

(17.9) (60.0)

Non-Oil Imports 65.8 84.5

(42.7) (28.3)

Trade Balance -34.6 -49.3Oil Trade Balance* -12.3 -20.5

Non-Oil Trade Balance* -13.5 -9.0

* : Figures pertain to April-June

P: Provisional

Note : All figures in US$ billion. Figures in parentheses show percentage change over the previous year.

Source : DGCI & S

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Source: DGFT, Annual Report 2007-08

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India¶s Export: 2008-09(Percentage Shares)

Commodity Group 2006-07 2007-08 2008-09

Primary products 15.6 1 7 16.2

1. Agriculture and

allied products 10.0 11.4 11.4

2. Ores and minerals 5.5 5.7 4.8

Manufactured goods 67.2 63.6 58.3

1. Leather and

manufactures 2.4 2.2 1.8

2. Chemicals and

related products 13.7 12.9 11.4

3. Engineering goods 23.4 23.1 24.1

4. Textile and textile

products 13.7 12.0 10.4

5. Gems and jewellery 12.6 12.4 9.7

Petroleum products 14.8 15.6 18.7

Others 2.4 3.8 6.8

Total exports 100.0 100.0 100.0Source: Compiled from DGCI & S data.

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India¶s Import: 2008-09

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Services Trade

� Services trade shares about 9% of GDP

� Services export growing much faster

than world services exports;In 2000-2006-

India: 38.22%, World: 12.84%.

� Services trade contributes about 2.64%of world services trade

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Services Trade

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Services Export

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Services Import

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Conclusion

� Significant contribution to growth

of economy

� Creation of foreign currency pool

� Local factors- political interests,

culture & values

� Oil imports & unstable oil prices-

negative trade balance

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THANK YOU...

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