wto explanation

7/29/2019 wto explanation

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World trade organization Governments of the member countries of GATT (GENERAL

AGREEMENT ON TAFIFFS AND TRADE) concluded the

Uruguay round negotiations on the 15th December, 1994.

The ministers expressed their political support to the outcome of

the meeting by signing the final act in Marrakesh, Morocco on

the 15th April 1994.

According to Marrakesh declaration, the results of the Uruguay

round would, strengthen the world economy and lead to more

trade, investment, employment and income growth throughout

the world.

To implement the final act of Uruguay round agreement of GATTthe world trade organization (WTO) was established on January

1, 1995.

WTOs membership increased from 104 as on 1st January 1995 to

151 as on 27th July 2007.


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Objectives of WTO:

Promote trade flows by encouraging nations to adopt

nondiscriminatory (fair, equal ) and predictable trade policies.

Raising standard of living and incomes.

Promoting full employment, expanding production and trade, and

optimum utilization ofworlds resources.

Introduce sustainable development a concept which envisage

(visualize, picture) that development and environment can go

together.

To ensure that developing countries, especially the least

developed ones, secure a better share of growth in world trade.

Establish procedures for resolving trade disputes among members.


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Functions of WTO:

Administering and implementing the multilateral trade agreement, whichtogether make up the WTO.

Acting as a forum (meeting, discussion) for multilateral trade

negotiations.

Seeking (in search of, looking for) to resolve trade disputes.

Overseeing (supervision, control) national trade policies.

Cooperating with other international institutions involved in global

economic policy-making. Maintaining trade related database.

Acting as a watchdog of international trade, constantly examining thetrade regimes of individual members.

Acting as a management consultant for world trade.

Experts on the panel of WTO scan the world economic environment, andmake observations on contemporary issues.

Technical assistance and training for developing countries.

WTO does not aim at economic or political integration, but seeks topromote free trade among member countries.


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Difference between GATT and WTO:

GATT WTO

It is a set of rules and multilateral

agreement

It is a permanent institution

It was designed with an attempt to establish

international trade organization

It is established to service its own purpose

It was applied on a provisional basis Its activities are full and permanent

Its rules are applicable to trade in

merchandise goods

Its rules are applicable to trade in

merchandise and trade in services and trade

in related aspects of intellectual property

GATT was originally a multilateral

instrument, but plurilateral agreements

were added at a later stage.

Its agreements are almost multilateral

Its dispute settlement system was not faster

and automatic

Its dispute settlement system is fast and

automatic.


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Principles of World Trade Organization Transparency:

Obligating members to publish their respective laws, judicialdecisions, administrative ruling , valuation of products for

customs, rates of duty, taxes, transportation, insurance and

warehousing with objective of enabling governments and traders

to become familiar with them.

WTO conducts periodic review of trade policies of member

countries to promote transparency in their trade policies.

MFN treatment: (Most Favoured Nation)

That every member country lowers a trade barrier or open up a

market, it needs to extend the benefits to all trading partners.

Member country shall not discriminate between its trading

partners all members countries are granted most favoured

nation or MFN status.


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National treatment: Non-discrimination within a country:

Implies that imported and locally-produced goods should be

treated equally.

Free trade principle: optimal utilization of resources:

Lowering trade barriers is the best way of promoting trade. Trade

ensures optimum utilization of resources.

All countries including the poorest have assetshuman, industrial,

natural, financial which they can employ to produce goods andservices for their domestic market or to compete overseas.

Dismantling trade barriers:

Physical restrictions on the import and export of goods are

prohibited under GATT.

Member countries can protect domestic industry through tariff.

WTO is not a free trade institution. It permits tariffs and other

forms of protection but only in limited circumstances.


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Rulebased trading system:

WTO sets and enforces rules necessary for conducting world

trade fairly.

Through its automatic and speedier disputes settlement

mechanism, the WTO adjudicate (pass judgment, referee) on

disputes between members.

Treatment for LCDs: ( least developed countries)

Recognizes the need for positive policies efforts to help

developing countries reap the benefits of trade liberalization.

WTO agreements that stipulate trade concessions for developing

and least developed countries.

Concessions include waiver or deferral (delay, rearrangement)

of obligations, transfer of technology, etc.,


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Competition principle:

WTO system is designed to promote open and fair competition.

Removal or reduction of tariffs and subsidies will expose locallyproduced goods and services to imported ones.

Level playing field between foreign and local goods and

services and this promotes competition between them.

Environment protection:

Agreement on technical barriers to trade and sanitary contain

provisions to protect human, animal and plant life, health and the

environment.


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Economic Integration

Economic integration is concerned with the removal of trade

barrier or impediment (hurdle, hindrance) between at least twoparticipating nations and establishment of cooperation and

coordination between them.

Integration, also called regional trading block, involves the

organizing of individual countries into groups that eventuallyabolish trade restrictions with member countries.

Countries create business opportunities for themselves by

integrating their economies in order to avoid unnecessary

competition among themselves and also form other countries.

Spirit of cooperation was designed to promote economic growth

and stability.


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Preferential (privileged, special) trading agreement:

It is merely a trading arrangement between countries rather than

integration.

These are agreements between developed and developingcountries and are designed primarily to support the latter countries

economic development.

A group of countries have a formal agreement to allow each

others goods and services to be traded on preferential terms. The tariffs are reduced between the countries or that special

quotas allow preferential access for their product.

Free trade area:

A group of countries agree to abolish all trade restrictions andbarriers among or charge low rates of tariffs in carrying out

international trade, such a group is called free trade area.

Example , North American free trade agreement (NAFTA)

comprising US, Canada, and Mexico.


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Customs Union:

Customs unions have two basic features:

(a) the member countries abolish all the restrictions and barriers on trade

among themselves or charge low rates of tariffs and (b) they adopt a uniform commercial policy of barriers and restrictions

jointly with regard to the trade with the non-member countries.

Example , the European Union consisting of six countries namely (West

Germany, France, Italy, Belgium, Netherlands and Luxembourg).

Common market:

Common market has three basic features:

(a) the member countries abolish all the restrictions and barriers on trade

among themselves or charge low rates of tariffs and

(b) they adopt a uniform commercial policy of barriers and restrictions

jointly with regard to the trade with the non-member countries.

(c) they allow free movement of human resources and capital among the

member countries.


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Economic union:

Economic union has four basic features:

(a) the member countries abolish all the restrictions and barriers on

trade among themselves or charge low rates of tariffs and

(b) they adopt a uniform commercial policy of barriers and

restrictions jointly with regard to the trade with the non-member

countries.

(c) they allow free movement of human resources and capitalamong the member countries

(d) they achieve uniformity in monetary policy and fiscal policy

among the member countries.

Political union:

Some degree of political integration often accompanies economic

integration .

political union implies more formal political links between

countries.


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Limited form of political union may exist where two or more

countries share common decision-making bodies and have

common policies.

The worlds best example of a political union occurred when

thirteen separate colonies operating under the Article of

Confederation grew into a new countrythe USA.

India, as a countries, emerged after unification (merger, union) of

numerous kingdom.


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Impact of Integration Trade Creation and Trade Diversion:

Trade barriers between countries are removed, industries inrespective countries will concentrate on the most efficient use of

resources and produce those goods that they are most efficient in

producing.

Exports can now be sold or imports bought at more reasonable

rates inside the trading block.

Efficient exporter can sell surplus goods abroad, and the importer,

instead of producing the goods inefficiently at home, can reallocate

resources to more efficient production.

Trade diversion occurs when trade is diverted from countries

outside the trading area to countries inside.

Removal of tariffs and other barriers in the trading area, making it

cheaper or easier to export to or import from these countries.


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Trade diversion may not be beneficial as trade may be diverted

from a more efficient producer outside the trading area to less

efficient one inside.

There will be gainers and losers from trade diversion net gain orloss will depend on the particular circumstances.

Prices and competition:

Consumption effects are noticed on prices and consumer choice.

Trade barriers come down consumers can buy goods more cheaply. Trade creation increase the availability of goods enabling the

consumers to pick and choose.

The longer the trading area and the higher the level of integration

the more competition will be created. Competition benefits consumers immensely in the form of power

prices, wider choice, and better value for money.

Competition stimulates innovation, not only in the products but

also in the channels of distribution, methods of payment, etc.,


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Economies of scale:

Industries, such as steel and automobiles require large-scale

production in order to obtain economies of scale in

manufacturing.

Industries , of this type and other may not be economically

viable in smaller, tradeprotected countries.

The formation of a trading block enlarges the market so that

large-scale production is justified.

Lower per unit cost resulting from scale economies may then be

obtained.

A common market allows factors of production to flow freely

across borders, the firm may have access to cheaper capital,

more skilled labour, or superior technology.


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Dynamic effects of integration:

Dynamic effects describes the continues pressure for change

that is a feature of an integrated competitive environment. Market forces act as a spur (encourage, drive) to improvement

in efficiency, increase in investment, and continual innovation.

Search for success is ongoing.

Need to innovate promotes investment in new technology, newmethods of production and distribution, and product design.

The dynamic effect of integration brings about a more efficient

allocation of resources throughout the trading block, promoting

the growth of businesses and decline of other, the developmentof new technology and products and the elimination of old.


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SOUTH ASIAN ASSOCIATION FOR REGIONAL

CO-OPERATION (SAARC)

Successful performance of European Economic Community

(EEC) , North American Free Trade Agreement (NAFTA) and

other trade blocks in the economic development of the member

countries and in improving the employment opportunities,

incomes and living standards of the people of the region gave

impetus (force, thrust) for the formation of South AsianAssociation for Regional Co-operation (SAARC)

India, Bangladesh, Bhutan, Pakistan, the Maldives and Sri Lanka

established SAARC on December 8th 1985. Afghanistan joined

SAARC in April 2007.Objective of SAARC:

To improve the quality of life and welfare of people of member

countries.


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To develop the region economically, socially and culturally.

To provide the opportunity to the people of the region to live in

dignity and to exploit their potentialities.

To enhance the self-reliance (self sufficiency, autonomy ) of the

member countries jointly.

To provide conducive climate for creating and enhancing mutual

trust, understanding and application of one anothers issues.

To enhance the mutual assistance among member countries in the

area of economic, social, cultural, scientific, and technical fields.

To enhance the co-operation with other developing economies.

To have unity among the member countries regarding the issues ofcommon interest in the international forums.

To extend co-operation to other trade blocks.


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Organization structure of SAARC:

The Council of the SAARC is the highest policy making body.

Council is represented by the heads of the government of themember countries.

Council meets once in two years. It is assisted by the council of

ministers.

Council of ministers is represented by the foreign ministers ofmember government.

It formulates policies, reviews the functioning and decides the

new areas of co-operation , establishes additional mechanism,

decides the issues of general interest to the SAARC member

countries.

Council meets twice a year and more if necessary.

Council of ministers assisted by the standing committee.

.


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Standing committee consists of foreign secretaries of member

government.

Functions of the standing committee include:

(a) Monitoring and coordinating the programmes.

(b) Determining inter-sectoral priorities.

(c) Mobilizing cooperation within and outside the region.

(d) Formulating the modalities of financing. Standing committee meet as and when necessary and submits the

report to the council of ministers.

Standing committee is assisted by the programming committee.

Programming committee includes the senior officials of themember government.

Functions of programming committee are:

Scrutinizing the budget of the secretariat.


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Finalizing the annual schedule of the secretariat.

Carrying out the activities assigned by the standing committee

Analyzing the reports of the technical committee and SAARC

regional centers and submitting to the standing committee.

Technical committee comprise the representative of all member

countries. Their function include:

Formulating projects and programmes in their respective areas.

Monitoring and implementation the projects.

Submitting the reports to the standing committee through the

programme committee.

Technical committee of the SAARC include:

Agriculture, Communications, Environment, Health and

Population activities, Rural Development, Science and

Technology , Tourism and Transport


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All the secretarial work is done by the SAARC secretariat , which

is located in Nepal.

The activities of the secretariat include:

Coordinating , monitoring and implementing SAARC activities.

Servicing the meeting of the SAARC.

Serving as communication link between SARRC and other

international forums.

SecretaryGeneral is the chief of the secretariat.

Appointed by the council of ministers on rotation basis among

members for a period of three years.


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North American Free Trade Agreement (NAFTA) North American Free Trade Agreement (NAFTA) came into being

on January 1, 1994.

It comprising United States, Canada, along with Mexico a

developing country joined together to form a trade block.

Free trade agreement was signed by the USA and Canada in 1989.

This was extended to Mexico in 1994.

NAFTA is expected to eliminate all tariff and trade barriers among

these countries by 2009.

Objective of NAFTA:

To create new business opportunities particularly in Mexico. To enhance the competitive advantage of the companies operating

in the USA, Canada and Mexico in wider international markets.


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To reduce the prices of the products and services by enhancing the

competition.

To enhance industrial development and employment throughout

the region.

To provide stable and predictable political environment for the

investors.

To develop industries in Mexico in order to create employment

and to reduce migration from Mexico to the USA.

To assist Mexico in earning additional foreign exchange to meet

its foreign debt burden.

To improve and consolidate political relationship among member

countries.


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Measures of NAFTA:

Residents of NAFTA countries can invest in any other NAFTA

countries freely.

Protection of intellectual property rights of the NAFTA member

countries.

Simplification and harmonization of product standards in all the

member counties .

Free flow of employees and business people from one member

country to another.

Avoidance of re-export of the products imported by any member

country from the third party.

Pollution control along the USAMexico border.


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Critical Appraisal:

Emergence of NAFTA enables further development of the USA

and Canada and for the significant development of Mexico.

Free flow of capital and human resources enables achieving

equilibrium in the regional development.

NAFTA is a good example of trade diversion .

Many firms have established manufacturing facilities in Asian to

take advantage of cheap labour and then ship products from there

to the US.

NAFTA members will be able to use each other rather than Asian

countries as locations for trade investment.

When it was formed NAFTA, was seen as bold attempt to

demonstrate to the world the power and ability of free trade to

convert a poor country into a developing one.


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American manufactures , desperate for relief from Asian

competition , flocked (gather, collect, group) to Mexico to take

advantage of wages that were a tenth of those in the US.

Foreign investment almost flooded into Mexico, which is three

times what India receives. Export grew, Mexico per capita income

rose which is ten times higher than the per capita income in

china.

Economy of the country is ranked the ninth largest in the world.

Impact of NAFTA:

One fear expressed is the loss of jobs to both US and Canada in

favour of Mexico.

This loss stems from the increasing location of manufacturing

facilities in Mexico to take advantage of low-wage labour there.

Mexico , the integration may lead to massive restructuring of the

economy and consequent (following, subsequent) unemployment.


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European Union (UN) Origin of EU goes back to the European Coal and Steel

Community (ECSC) which was formed with the West Germany,

France, Italy, Belgium, Netherlands and Luxembourg in 1952.

Aim of ECSC was to eliminate import duties and quotas (share,

allocation) on coal, iron ore, steel and scrap regarding the

international trade among the member countries.

Successful function of ECSC stimulated the member countries to

extend this facility to all commodities by the Treaty (agreement,

contract) of Rome in 1957.

Treaty gave birth to European Economic Community. It is also

known as European Common Market.

It came into being on 1st January 1958.

Joining the EU as member are (a) the country must be European

country (b) it must be a democratic country.


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Objectives:

EU consists of three organization (a)European Coal and Steel

Community (ECSC) (b) European Economic Community(EEC) (C) European Atomic Energy Community (Euratom)

Community have its task by setting up a common market.

To promote the community a harmonious development by

economic activities. A continuous and balanced expansion , an increase in stability

and accelerated (go faster, speed up) raising of the standard of

living and closer relations between the member states

belonging to it.


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Activities of the EU:

Elimination of customs duties among member states.

Elimination of obstacles to the free flow of import and or export

of goods and services among member nations.

Formulation of common policy in the area of agriculture and

transport.

Abolition of all obstacles for movement of person, services and

capital among member countries.

Common law to maintain competition throughout the community

and to fight monopolies or illegal cartels.

Establishment of European Investment Bank for mobilization of

fresh resources and to contribute to the economic development of

the community.

Establishment of a common customs tariff and common

commercial policy regarding countries outside the community.


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Organization of EU:

European council is the main administrative body of the EU.

Each member country is represented by a minister in this council.

Member country holds the presidency of the council for six-

monthly period by rotation.

A committee of permanent representatives acts as the secretariat of

the council. Committee is also called Corper .

Corper is the link between the EU and member governments.

European council consist of various committees like

(a) European commission

(b) Court of justice(c) Court of auditors

(d) European parliament

(e) Advisory committeeconsists of (i) economic and social

committee (ii) monetary committee


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European commission:

European commission assists the council.

Executive body of the EU.

Member of commission are appointed for a period of four years.

One or more EU policies are entrusted (hand over, assign) to each

commissioner.

Commissioner is assisted by a chief of cabinet of his country.

Assistant take decision on behalf of their commissioner.

Court of justice:

Court of justice to adjudicate disputes relating to agriculture,

social security for migrants among the member countries andcompetition policy.

Court also adjudicate disputes between the member countries

brought by the commission against the council or commission

reported by a person or a company.


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Court of Auditors:

Activities of court of auditors are:

(a) Auditing the European Economic Community.

(b) Monitoring the EECs expenditure.

(c) Laying down improved procedures for collection of duties and

levies.

European Parliament:

Commission should consult the parliament before a final decision

is taken.

Activities of European parliament are:

(a) Provide consultations and information to the commission.

(b) Approve or reject the draft budget prepared by the

commission.

(c) Dismiss the commission.


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Advisory Committee

Economic and Social Committee:

Committee represents the activities like employers, employee

unions, farmers, retail traders.

Commission appoints the members on this committee.

Monetary committee:

Committee examines the monetary problems, problems of the

balance of payments and suggests measures to overcome.


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Functioning of the EU:

Common agricultural policy:

Agricultural products are free to move from one member country

to other member countries.

Imports are allowed only when the demand for a product is more

than its supply.

Variable import levy is used to offset any price advantage to the

importers.

Community supply is more than the demand, subsidies are

allowed to export or to encourage additional consumption among

the member countries.

European Economic Community (EEC) has achieved self-

sufficiency in agriculture.

Reforms enabled the rich farmers to become richer, but the poor

farmers incurred losses.

EEC f d i CAP b i d i i b idi i i


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EEC reformed its CAP by introducing cuts in subsidies in a view

to make its agriculture more competitive globally.

Common Fisheries Policy:

Policy can into force February 1971. Market for fresh frozen and preserved fish.

Common market standards and facilities for trading among

members.

Equal access to fishing areas to all the nationals of the EUcountries.

This policy fails in the reality as it was based on ad hoc

compromises and concessions to member countries.

European monetary union:

Started in March 1979.

Exchange Rate Mechanism helps the member countries to

regulate inflation and interest rates.

To prevent wide shifts in the value of their currencies.


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European Currency Unit meant for settlement between the

central banks of the member countries.

Official rate of the ECU is calculated on daily-basis.

European Monetary Cooperation Fundact as clearinghouse

of the central banks of the member countries.

Factor mobility:

Formal restrictions on the movement of labour were abolished by

July 1968.

The workers and their family members can move freely from one

member country to the another without any permit.

Similar rights and obligations as the nationals have like right to

work, social security and taxation.

EU could not achieve its objective with regard to capital mobility.

R i l d l t li


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Regional development policy:

To promote balanced development of the member countries by

reducing disparities and by developing rapidly the backward

regions. To achieve the objective, EU provides financial assistance to the

backward regions of the member countries.

Financial assistance is provided through(a) European investment

bank (b) European social fund (c) European regional developmentfund .

Common transport policy:

Removal of obstacles for having a common transport policy with a

view to have common market place. Integration of transport facilities of the entire community.

Organization and control of the transport system within the

community.

EEC fails to achieve due to infrastructure pricing, entry control.


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The Association of South-East Asian Nations (ASEAN)

The six countries namely Singapore, Brunei, Malaysia,

Philippines, Thailand and Indonesia, agreed in January 1992 to

establish a common effective preferential tariffs (CEPT) plan. CEPT allows for tariffs cut ranging from .50 per cent to 20 per

cent beginning with 15 products.

Emergence and successful operation of EEC and NAFTA gave

impetus (drive, force) for forming of ASEAN. Member countries have developed economically at a fast rate in

the globe.

Strength lies is well educated and skilled human resources.

Strength enabled to achieve faster industrialization.

Member countries are rich in oil, mineral resources, agricultural

goods and modern industrial products.

Member countries invite and allow the free-flow of foreign capital.


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Formation of ASEAN enabled member countries to have close

cohesiveness (interrelated, interconnected) share their economic

and human resources and achieve synergy in development of their

agricultural sectors, industrial sectors and service sectors. Common historical and cultural background made member

countries to maintain their unity and solidarity (team spirit) by

establishing a trade block.


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European Free Trade Association (EFTA)

European free trade association was formed in 1959.

Member countries of EFTA include Austria, Norway, Portugal,Sweden and Switzerland.

Associate (join together) member countries are Finland, Iceland,

Great Britain and Denmark.

Objectives: To eliminate almost all tariffs among member countries.

To abolish the trade restrictions regarding imports and exports of

goods among member countries.

To enhance economic development, employment, income andliving standards of the people of the member countries.

To enable free trade in western Europe.

A d l h i l d f h


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EFTA does not regulate the agriculture and economy of the

member countries and members trade outside the EFTA.

EFTA is managed by council and each member country is

represented by its representative. EFTA council makes policy decisions of the organization.

SAARC P f ti l T di A t SAPTA)


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SAARC Preferential Trading Arrangement SAPTA) Sixth SAARC summit (meeting) held in Colombo in 1991 strongly

mooted (debatable, arguable) the idea of a SAARC Preferential

Trading Arrangement (SAPTA) The foreign ministers of all the member states signed the

Agreement on April 2, 1992 during the seventh SAARC Summit in

Dhaka.

SAPTA became effective from 7 December 1995. Principles of SAPTA:

Overall reciprocity (give and take) and mutuality of advantages.

Step-by-step negotiations and extension of preferential trade

arrangement in stages. Inclusion of all types of products raw material, semi-finished

goods and finished goods.

Special and favorable treatment to Least Developed Countries

(LDCs)


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Objective :

To gradually liberalize the trade among member countries.

To eliminate trade barriers and reduce or eliminate tariffs.

To promote and sustain mutual trade and economic cooperation

among member countries.

Tariffs:-- Special treatment for the least developed countries are --

Providing technical assistance, establishment of industrial and

agricultural projects in order to boost up their exports.

Enhancing their exports by eliminating non-tariff and Para-tariffs

barriers, providing duty free access, etc.

Establishing training facilities in the area of export trade.

Providing export and credit insurance and market information.

Entering into long-term contracts.


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Objectives of the Foreign Trade Policy of India

Trade propels (drive, boost) economic growth and national

development. The primary purpose is not the mere earning of foreign

exchange, but the stimulation ofgreater economic activity.

The Foreign Trade Policy of India is based on two major

objectives, they are - To double the percentage share ofglobal merchandise trade

within the next five years.

To act as an effective instrument of economic growth by

giving a thrust to employment generation.

St t f F i T d P li f I di


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Strategy of Foreign Trade Policy of India -

Removing government controls and creating an atmosphere of trust

and transparency to promote entrepreneurship, industrialization and

trades. Simplification of commercial and legal procedures and bringing

down transaction costs.

Facilitating development of India as a global hub for

manufacturing, trading and services. Generating additional employment opportunities, particularly in

semi-urban and rural areas, and developing a series of Initiatives

for each of these sectors.

Facilitating technological and infrastructural up gradation of all thesectors of the Indian economy, especially through imports and

thereby increasing value addition and productivity, while attaining

global standards of quality.

Si lifi ti f l i d d ti i t d i t


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Simplification of levies and duties on inputs used in export

products.

Neutralizing inverted duty structures and ensuring that India's

domestic sectors are not disadvantaged in the Free Trade Agreements / Regional Trade Agreements / Preferential

Trade Agreements that India enters into in order to enhance

exports.

Up gradation of infrastructural network, both physical and virtual,related to the entire Foreign Trade chain, to global standards.

Revitalizing the Board of Trade by redefining its role, giving it due

recognition and inducting foreign trade experts while drafting

Trade Policy. Involving Indian Embassies as an important member of export

strategy and linking all commercial houses at international

locations through an electronic platform for real time trade

intelligence, inquiry and information dissemination.

P t hi


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Partnership -

Foreign Trade Policy of India foresees merchant exporters and

manufacturer exporters, business and industry as partners of

Government in the achievement of its stated objectives and goals. Road ahead of Indian foreign trade policy:

Foreign Trade Policy of India is a stepping stone for the

development ofIndias foreign trade.

It contains the basic principles and points the direction in which itpropose to go.

A trade policy cannot be fully comprehensive in all its details.

It would naturally require modification from time to time with

changing dynamic of international trade.

P ti l M


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Promotional Measures:

Assistance to States for Infrastructure Development of Exports

(ASIDE):

Encouraged to participate in promoting exports from theirrespective states.

Utilize this amount for developing infrastructure such as roads

connecting production centers with ports, setting up of inland

container depots and container freight stations. Creation of new state level export promotion industrial parks/

zones and stabilizing power supply, etc.,

Market Access Initiative (MAI):

To provide financial assistance for medium term export promotionefforts with a sharp focus on a country and product.

MAI scheme include market studies, setting up of showroom/

warehouse, sales promotion campaigns, international departmental

stores, publicity campaigns.


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Participation in international trade fair, brand promotion, etc.,

Can receive financial assistance from the government ranging

from 25% to 100% of the total cost depending upon the activity

and the implementing agency. Market Development Assistance (MDA)

To provide financial assistance for a range of export promotion

activities implemented by export promotion councils, industries

and trade associations. MDA is available for exporters with annual export turnover up to

Rs.5 crores.

Include participation in trade fairs and buyers seller meets abroad

or in India, export promotion seminars, etc., Assistance for participation in trade fairs abroad and travels grant

is available to such exporters if they travel to countries in one of

the four focus area, such as Latin America, Africa, Australia, and

New Zealand


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Towns of Exports Excellence (TEE):

Number of towns in specific geographical locations have emerged

as dynamic industrial clusters contributing handsomely to Indias

exports.

Selected towns producing goods of Rs.1000 crore or more will be

notified as towns of exports excellence on the basis of potential for

growth in exports.

Towns of Exports Excellence in the Handloom, Handicraft,Agriculture and Fisheries sector, the threshold limit would be

Rs.250 crores.

Brand Promotion and Quality (BPQ):

To encourage manufacturers and exporters to attain internationallyaccepted standards of quality for their products.

Extend support and assistance to trade and industry to launch a

nationwide programme on quality awareness and to promote the

concept of total quality management.

T t l h (TPS)


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Target plus scheme (TPS):

To accelerate growth in exports by rewarding star export houses

who have achieved a quantum growth in exports.

High performing star export houses shall be entitled for a dutycredit based on incremental exports substantially higher than the

general annual export target fixed.

Export promotion capital goods scheme (EPCG):

Scheme allows import of capital goods for re-production,production and post-production at 5% customs duty subject to an

export obligation equivalent to 8 times of duty saved on capital

goods imported.

EPCG scheme to be fulfilled over a period of 8 years reckoned(consider) from the date of insurance license.

Capital goods be allowed at 0% duty for exports of agricultural

products and their value added variant.


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Regulation and Promotion of Foreign Trade

Foreign trade policy is implemented by means of the regulatory

framework provided by the Foreign Trade (Development and

Regulation ) Act, 1992.

This Act, which replaced the Imports and Exports (Control) Act,

1947, came into force on 19th June 1992.

No export or import shall be made by any person except in the

provision of this Act, the orders and rules made under this Act and

the export and import policy.

Main Provisions of the Foreign Trade (Development and


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Main Provisions of the Foreign Trade (Development and

Regulation) Act (FTDR):

Development and regulation --- facilitating imports and increasing

exports. Prohibition and Restriction

Exim Policyformulate and announce the export and import

policy and may also amend that policy.

Director General of Foreign Tradeadvice central government toformulate the export and import policy and responsible for carry

out.

Importer-Exporter Code numberno person shall make any import

and export except under an Importer-Exporter Code (IEC) Issue and Suspension/ Cancellation of licenseempowered to

suspend or cancel a license issued for export and import.

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