Wto Final Project

8/10/2019 Wto Final Project

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Executive Summary

The Project describes all about the World Trade Organization (WTO), its Introduction inthe World Economy, the Objectives laid for the Organization, Functions that operates,

EXIM Trade Policies, and Scenarios occurred with India Before the formation of WTO &

the Benefits gained by India from the organization.

The topic discussed in this project has a long history with India as one of the powerful

member attached to it. Following the Uruguay Round Agreement, the General Agreement

on Tariff and Trade (GATT) was converted from a provisional agreement into a Formal

Organization known today as the World Trade Organization (WTO), with effect fromJanuary 1, 1995. There were 128 member countries in 1995, which has increased to 144,

with India as one of the important member. The Secretariat of the WTO is based in

Geneva, Switzerland.

According to the current status WTO now accounts for about 97per-cent of international

trade.

Trade & Inequalities

Where trade has contributed to increased inequality, its impact has generally being minor

to others factors, most notably Technological Change.

Trade & Structural Adjustment

If Trade reforms are introduced, economic changes need to be made. Import-competing

firms appear to adjust by reducing mark-offs, increasing efficiency & often by reducing

firm size.

Trade & Poverty

One of the biggest challenges facing the world community is to how to address poverty.


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History

The WTO was born out of negotiations, and everything the WTO does is the result of

negotiations. The bulk of the WTOs current work comes from the 198694 negotiations

called the Uruguay Round and earlier negotiations under the General Agreement on

Tariffs and Trade (GATT). The WTO is currently the host to new negotiations, under the

Doha Development Agenda launched in 2001.

Where countries have faced trade barriers and wanted them lowered, the negotiations

have helped to open markets for trade. But the WTO is not just about opening markets,

and in some circumstances its rules support maintaining trade barriers for example, to

protect consumers or prevent the spread of disease.

At its heart are the WTO agreements, negotiated and signed by the bulk of the worlds

trading nations. These documents provide the legal ground rules for international

commerce. They are essentially contracts, binding governments to keep their trade

policies within agreed limits. Although negotiated and signed by governments, the goal is

to help producers of goods and services, exporters, and importers conduct their business,

while allowing governments to meet social and environmental objectives.

The systems overriding purpose is to help trade flow as freely as possible so long asthere are no undesirable side effects because this is important for economic

development and well-being. That partly means removing obstacles. It also means

ensuring that individuals, companies and governments know what the trade rules are

around the world, and giving them the confidence that there will be no sudden changes of

policy. In other words, the rules have to be transparent and predictable.

Trade relations often involve conflicting interests. Agreements, including those

painstakingly negotiated in the WTO system, often need interpreting. The mostharmonious way to settle these differences is through some neutral procedure based on an

agreed legal foundation. That is the purpose behind the dispute settlement process written

into the WTO agreements.


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GATT

In 1947, 23 countries came into an agreement in Geneva on multilateral Trade. Thisagreement was termed as The General Agreement on Tariffs and Trade (GATT) which

came 1st into effect on of Jan. 1948. These countries sought to expand multilateral trade

among them. India was one of the founder members of GATT. Many countries signed

this agreement in 1994 which resulted no. of members of GATT to 124.

The agreement consists of two main themes:

1) The agreement formulated some regulations which were to be observed by the member

countries.

2) The member countries were to comply with was the Most Favoured Nation (MFN)

clause.

GATT was not an organization but was a multilateral treaty, it had no legal status. It

provided a platform to its member nations to negotiate and enlarge their trade.

Objectives of GATT

The primary objective of GATT was to expand international trade by liberalizing trade to

bring economic prosperity. GATT mentions the fallowing important objectives.

1) Raising standard of living of the member countries.

2) Ensuring full employment through a steady growth of effective demand and real

income.

3) Developing optimum utilization of resources of the world.

4) Expansion in production exchange of goods and services on a global level.


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Principles

1) Follow the Most Favored Nation (MFN) clause.

2) Carry on trade in a non discriminatory way.

3) Grant protection to domestic industries.

4) Condemn the use of quantitative restrictions or quotas.

5) Liberalize tariff and non-tariff measures through multilateral negotiations.

The Uruguay Round

Uruguay Round (UR) is the name by which the 8th and the latest round of Multilateral

Trade Negotiations (MTNs) held under the auspices of the GATT popularly known in

Punta Del Este in Uruguay launched in September 1986. The main issues in this round

discussed were of Agricultural Subsidies, Multi Fiber Agreement (MFA), Trade in

Services, Anti Dumping etc.

These discussions were resolved by the then Director General of GATT, Arthur Dunkel.

Who came up or Draft of the Uruguay Round consisted of 28 agreements which spelt out

the results of Multilateral Trade Negotiations (MTN).

Some of the main agreements of the Uruguay Round were as follows:

1) Anti-Dumping Code: Dumping is to be condemned if it causes or threatens material

injuries to an established domestic industry. A committee on anti-dumping practices

should look into such matters related to dumping.


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2) Trade Related Investment Measures (TRIMs): Refers to certain conditions or

restrictions imposed by a Government in respect of foreign investment in the country.

TRIM is widely employed by developing countries.

The agreement on TRIMs provides that no contracting party shall apply any TRIM which

is inconsistent with GATT articles. An illustrative list identifies the fallowing TRIMS as

inconsistent:

i. Local content requirement.

ii. Trade balancing requirement

iii. Trade and foreign exchange balancing requirements.

iv. Domestic sales requirements.

1) Trade related aspects of Intellectual Property Rights (TRIPs) -One of the most

controversial outcomes of Uruguay Round is the agreement on Trade Related aspects of

Intellectual Property Rights (TRIPs) including Trade in counterfeit Goods. According to

GATT Intellectual Property Rights are the rights given to persons over the creations of

their minds. They usually give the creator an exclusive right over the use of individuals

creation for a certain period of time.

2) Trade in services -Bank, Insurance, Transport and Communication, etc. are trade

related services. The draft agreement proposed that all restrictions on such services

should be waived.


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From GATT to WTO

After World War II over 50 countries came together to create the International Trade

Organization (ITO) as specialize agency of the UN to manage the business aspect of

international economic co-operation. The combined package of trade rules and tariff

concessions negotiated and agreed by 23countries out of the 50 participating countries

came to be known as the General Agreement on Tariffs and Trade. It came into force in

1948; well the WTO charter was still being negotiated. WTO came into effect from 1

January, 1995.

The GATT was provisional for almost half a century but it succeeded in promoting and

securing liberalization of world trade. Its membership increased from 23 countries in

1947 to123 countries in 1994. The membership of WTO increased from128 in July, 1995

to 144 countries as of 1 January, 2002. During its existence from 1948 to 1994 the

average tariffs on manufacture good on developed countries declined from about40% to a

mere 4%. GATT focused on tariff reduction till 1973. It was only during Tokyo and

Uruguay Rounds that non-tariff barriers were discussed under GATT.


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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.

Building trade capacity

WTO agreements contain special provision for developing countries, including longer

time periods to implement agreements and commitments, measures to increase their

trading opportunities, and support to help them build their trade capacity, to handle

disputes and to implement technical standards. The WTO organizes hundreds of technical

cooperation missions to developing countries annually. It also holds numerous courses

each year in Geneva for government officials. Aid for Trade aims to help developing

countries develop the skills and infrastructure needed to expand their trade.

Outreach

The WTO maintains regular dialogue with non-governmental organizations,

parliamentarians, other international organizations, the media and the general public on

various aspects of the WTO and the ongoing Doha negotiations, with the aim of

enhancing cooperation and increasing awareness of WTO activities.

Non-discrimination

A country should not discriminate between its trading partners and it should not

discriminate between its own and foreign products, services or nationals.


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More open

Lowering trade barriers is one of the most obvious ways of encouraging trade; these

barriers include customs duties (or tariffs) and measures such as import bans or quotas

that restrict quantities selectively.

Predictable and transparent

Foreign companies, investors and governments should be confident that trade barriers

should not be raised arbitrarily. With stability and predictability, investment is

encouraged, jobs are created and consumers can fully enjoy the benefits of competition

choice and lower prices.

More competitive

Discouraging unfair practices, such as export subsidies and dumping products at below

cost to gain market share; the issues are complex, and the rules try to establish what is

fair or unfair, and how governments can respond, in particular by charging additional

import duties calculated to compensate for damage caused by unfair trade.

More beneficial for less developed countries

Giving them more time to adjust, greater flexibility and special privileges; over three-

quarters of WTO members are developing countries and countries in transition to market

economies. The WTO agreements give them transition periods to adjust to the more

unfamiliar and, perhaps, difficult WTO provisions.


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Protect the environment

The WTOs agreements permit members to take measures to protect not only the

environment but also public health, animal health and plant health. However, these

measures must be applied in the same way to both national and foreign businesses. In

other words, members must not use environmental protection measures as a means of

disguising protectionist policies.

The WTO provides a forum for negotiating agreements aimed at reducing obstacles to

international trade and ensuring a level playing field for all, thus contributing to

economic growth and development. The WTO also provides a legal and institutional

framework for the implementation and monitoring of these agreements, as well as for

settling disputes arising from their interpretation and application. The current body of

trade agreements comprising the WTO consists of 16 different multilateral agreements

(to which all WTO members are parties) and two different plurilateral agreements (to

which only some WTO members are parties).

Over the past 60 years, the WTO, which was established in 1995, and its predecessor

organization the GATT have helped to create a strong and prosperous international

trading system, thereby contributing to unprecedented global economic growth. The

WTO currently has 159 members, of which 117 are developing countries or separate

customs territories. WTO activities are supported by a Secretariat of some 700 staff, led

by the WTO Director-General. The Secretariat is located in Geneva, Switzerland, and has

an annual budget of approximately CHF 200 million ($180 million, 130 million). The

three official languages of the WTO are English, French and Spanish.

Decisions in the WTO are generally taken by consensus of the entire membership. Thehighest institutional body is the Ministerial Conference, which meets roughly every two

years. A General Council conducts the organization's business in the intervals between

Ministerial Conferences. Both of these bodies comprise all members. Specialised

subsidiary bodies (Councils, Committees, Sub-committees), also comprising all


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members, administer and monitor the implementation by members of the various WTO

agreements.

More specifically, the WTO's main activities are:

negotiating the reduction or elimination of obstacles to trade (import tariffs, other

barriers to trade) and agreeing on rules governing the conduct of international trade (e.g.

antidumping, subsidies, product standards, etc.)

administering and monitoring the application of the WTO's agreed rules for trade in

goods, trade in services, and trade-related intellectual property rights

monitoring and reviewing the trade policies of our members, as well as ensuring

transparency of regional and bilateral trade agreements

settling disputes among our members regarding the interpretation and application of

the agreements

building capacity of developing country government officials in international trade

matters

assisting the process of accession of some 30 countries who are not yet members of

the organization

conducting economic research and collecting and disseminating trade data in support

of the WTO's other main activities

explaining to and educating the public about the WTO, its mission and its activities.

The WTO's founding and guiding principles remain the pursuit of open borders, the

guarantee of most-favoured-nation principle and non-discriminatory treatment by and

among members, and a commitment to transparency in the conduct of its activities. The

opening of national markets to international trade, with justifiable exceptions or with

adequate flexibilities, will encourage and contribute to sustainable development, raise

people's welfare, reduce poverty, and foster peace and stability. At the same time, such

market opening must be accompanied by sound domestic and international policies that


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contribute to economic growth and development according to each member's needs and

aspirations.

Function of WTO

The basic functions of WTO are as follows:

1) It facilitates the implementation, administration and operation of the trade agreements.

2) It provides the forum for further negotiations among member countries on matters

covered by the agreement as well as the new issues falling within its mandate.

3) It is responsible for the settlement of the differences and dispute among its member

countries.

4) It is responsible for carrying out periodic reviews of the trade policies of its member

countries.

5) It assists developing countries in trade policies issues through technical assistance and

training programmed.

6) It encourages co-operation within international organizations.


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pharmacy companies. The Act allowed them to develop and patent alternative processes

for products discovered and patented elsewhere.

According to the Indian Drug Manufacturers' Association, self-sufficiency in Indian

pharmaceutical sector is more than 70 per cent.

"Worldwide, India is a country of very low prices for high- quality medicines," points out

the IDMA president Nishchal H Israni.

But now the rules of the game in the pharmaceutical industry will change as India has

committed to toe the WTO line on product patents. Product patent rules and Exclusive

Marketing Rights (EMR) under the WTO could affect a paradigm shift in India's pharma

majors.

As per the EMR provision, a product for which original patent was granted prior to 1995,

is not fit for an EMR in the country. This has forced nine leading domestic pharma

companies to form the Indian Pharmaceutical Alliance that has demanded a more

transparent WTO regime for EMR grants.

Well, many expect a spate of mergers, acquisitions and alliances in the domestic

pharmaceutical industry in the coming years, as the impact of WTO regulations kick in,

Indian pharma players are learning to collaborate and consolidate to grow.

If the industry is to be believed, the Matrix-Strides merger is only the beginning of the

shakeout that the pharma sector is set to witness over the next few years.

The Service Sector

As per the WTO rules, two obligations apply to all services. They are the Most Favoured

Nation (MFN) treatment and transparency by way of publication of all laws and

regulations. Which in other words means that areas like banking, insurance, investment

banking, health, and many other professional services that are opened up will be bound

by the WTO commitments? India will have to open up its services sector to other WTO

member countries. The result: many overseas service providers will enter into the

services sectors in the country, thereby reducing the chances of domestic enterprises.


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But experts believe India need not be frightened of the WTO rules on services because

the country at present has distinct competitive advantage in many areas that include

health, engineering construction, computer software and other professional services.

Textiles and Clothing

The WTO agreement on textiles and clothing states that the Multi-Fiber Agreement

(MFA) will eventually be eliminated. Exporting countries like India are a part to the

MFA. The phasing out of MFA will boost textile exports from India. It will also increase

investment in textiles and joint ventures. But the risk is that as India opens up its market

from next month, import of textiles and clothing will considerably increase from

countries like China, the Unites States, Taiwan and Indonesia. This will force many

textile manufacturers to modernize their mills and improve quality.

Information Technology

Under the Information Technology Agreement signed under the WTO, Indian hardware

and software companies can become major players in the value-added arena. Availability

of high-skilled of IT personnel and low cost of labor and operation will allow India to

compete in the international market.

TRIPS (Trade Related Intellectual Property rights)

TRIPS Article 27.3(b), which requires all WTO countries top provide some kind of

intellectual property rights (IPR) on plant varieties, was up for review in 1999. TRIPS are

a clearly anti-developing country treaty. Its provisions seriously threaten self reliance in

agriculture and the livelihoods of farmers. TRIPS do not contain any elements of equity

or benefit sharing. It does not allow countries to claim a share of benefits companies who

breed new varieties using farmers varieties as the base since there is no provision

requiring disclosure of the country of origin from where base materials have been taken.


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Indias Role in The WTO

India is a founding member of the GATT (1947), it actively participated in the UruguayRound Negotiations, and is a founding member of the WTO. India strongly favors the

multilateral approach to trade relations and grants MFN treatment to all its trading

partners, including some who are not members of WTO. 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. It also has to see

that the different WTO Agreements are translated into specific enforceable dispensations,

in order that developing countries are facilitated in their developmental efforts. India

feels that the 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 membersto catch up with their developed country counterparts.

IndiasWTO Commitment

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.

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 June-July 1997. At the request of the United States, a panel was

constituted on 18 November 1997to examine the US allegation that the continued

maintenance of quantitative restrictions on imports by India is inconsistent with India's

obligations under the WTO Agreement.


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India And WTO

Intellectual Property

India is availing itself of the transition periods due to her under Article 65 of the TRIPS

Agreement to meet her obligations under the seven areas covered by the Agreement.

India's achievements in this field have been in the passing of TRIPS plus legislation in

the field of Copyright Law. The 1994amendments to the Act of 1957 provides protection

to all original literary, dramatic, musical and artistic works, cinematographic films and

sound recordings. The most recent changes bring sectors such as satellite broadcasting,

computer software and digital technology under Indian copyright protection.

Trades Related Investment Measures

Substantial modifications have already been made to the foreign investment regime,

increasing the number of sector where foreign investment cans 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.

Anti-Dumping

Anti-dumping and countervailing duties are imposed under the Customs Tariff Act 1975

and the Rules made there under. 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 is strictly followed by the

designated authority. With the increasing number of cases, the Government of India

proposes to set up a Directorate General of Anti-dumping and Allied Duties for

expeditious disposal of anti-dumping and countervailing duty cases.


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Service Sector

The services sector accounts for about 40% of India's 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 regime has been liberalized to attract foreign investment in the services

sector. India actively participated in the Uruguay Round services negotiations and made

commitments in 33 activities as compared to an average of 23for developing countries.

India also participated in the spillover 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 services such as

circuit switched data transmission sources, facsimile services, private leased circuit

services as per details given in the schedule of commitments.

While developed countries have surplus capital to invest, most of the developing

countries have surplus of skilled, semiskilled 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.

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 domesticservice sector of developing countries and providing effective market access in sectors

and modes of supply of export interest to developing countries.


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Information Technology

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 the import tariffs on the products covered by the ITA as scheduled.

Regional Trade Agreements

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 became 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 January1996 to

broaden tariff concessions. India granted concessions on 902 tariff lines, effective 1

March 1997.


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Comparison Of Indias Foreign Trade Benefits

Before Becoming The Member Of WTO

Its agreed that India was one of the founder member of WTO; it faced problems in

Foreign Trade grounds. The problems that India faced before the formation of WTO were

the following:

(1)Absence of Antidumping

(2)No Subsidy Facilities

(3)Absence of TRIMs & TRIPs

(4) Lac of Market Scenario & Strategies

After Becoming The Member Of WTO

(1)Anti-Dumping -Dumping is condemned if it causes or threatens material injury to an

established industry. A product is considered as dumped when its export price becomesless as compared to the normal price in the exporting country plus a reasonable amount

for administrative, selling and any other costs and for profits.

Anti dumping measures can be employed only if dumped imports are shown to cause

serious damage to the domestic industry in the import industry. The measures are not

allowed if the margin of dumping is minimized.

(2)Subsidies -The draft agreement defined certain specific subsidies which would be

subjects to various disciplines. Certain other types of subsidies would fall under

prohibitedcategory.

(3)Technical barriers to trade -Technical regulation and standards along with testing and

certification procedures should not create unnecessary obstacles to trade.


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(4)Right of market-The main issue is to reduce tariff and other trade restriction in case of

commodities like agricultural goods, textiles etc.

(5)TRIMs (Trade related investment measures) -Widely employed by developing

countries. Refers to certain conditions imposed by government in respect of foreign

investment. The agreement of TRIM provides the following inconsistent TRIMs.

a) Local content Trade balancing requirement) Trade and foreign exchange balancing

requirement.

d) Domestic sales requirements.

(6) TRIPs (Trade Related Aspects of Intellectual Property Rights-It is defined as

information with commercial value.

Intellectual Property Rights have been characterised as a composite of ideas, inventions

and creative expression.


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EXIM Policy

Import

Indian Import Policy

Import is the antonym of export. In the terms of economics, import is any commodity

brought into one country from another country in a legal way. The economic needs of the

country, effective use of foreign currency are the basic factors which influence India's

import policy. There are mainly 3 basic objectives of the import policy of India:

To make the goods easily available.

To simplify importing license.

To promote efficient import substitution.

Current Scenario of Imports in India

There are few goods which cannot be imported namely tallow fat, animal rennet, wildanimals, unprocessed ivory etc.

Most of the restrictions are on the ground of security, health, environment protection etc.

Imports are allowed free of duty for export production. Input output norms have been

specified for more than 4200 items. The norms tell about the amount of duty free import

of inputs allowed for specified products. There are no restrictions on imports of capital

goods. Import of second hand capital goods whose minimum residual life is of five years

is permitted. Export Promotion Capital Goods (EPCG) scheme provides exporters to

import capital goods at a concessionary custom rates. In the past 30 years Indian imports

have risen quite dramatically. At present imports accounts for 17% of the GDP. Capital

goods have been continued to be imported and in the last three years, their share has

fallen from 25% to 22%.


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Major Indian Imports

There are facilities available for the service industries to enjoy the facility of zero import

duty under EPCG scheme. Some of the major imports of India are edible oil, newsprint,

petroleum and crude products, crude rubber, fabrics, electronic goods etc.

Problems due to Large Import of Products

The recent trend of imports is of some concern. The regular imports of oil reflect upon

the fact that India is not able to produce the quantity of oil required in India. Moreover

the increase in the imports of products also highlights the fact that the Indian domestic

industries need to be developed. It also creates pressure on the economy as the money

ultimately has to be bearded by the people.

Export

Export means the transferring of any good from one country to another country in a legal

way for the purpose of trade. Export goods are provided to the foreign consumers by the

domestic producers.

Indian Exports: A History

The history of Indian exports id very old. During prehistoric times India exported spices

to the other parts of the world. India was also famous for its textiles which were a chief

item for export in the 16th century. Textiles and cotton were exported to the Arab

countries from Gujarat. During the Mughal era India exported various precious stones

such as ivory, pearls, tortoise stones etc. But during the British era, Indian exports

declined as the East India Company foreign trade of India.


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Indian Exports: Current Scenario

Every year India earns billion of dollars by exporting various goods and items. The

Indian government has outlined certain export policies. The export policies tell about the

products to be exported and the countries to which exports are to be done. The

government of India works with the Federation of Indian Export Organization, the

leading export promotion organization of India. Exports are the major focus of India's

trade policy and most of the items can be freely exported from India. A few items are

subject to export control to prevent their shortage. The profits from exports are exempted

from income tax. Indian exports contribute nearly 12.4% in the GDP.

Leading Export Items of India

In the past ten years, exports have grown at a rate of nearly 22%. Some commodities

have enjoyed faster export growth than others. Some of India's main export items are

cotton, textiles, jute goods, tea, coffee, cocoa products, rice, wheat, pickles, mango pulp,

juices, jams, preserved vegetables etc. India exports its goods to some of leading

countries of the world such as UK, Belgium, USA, China, Russia etc.

Restriction on the Exports of Items

However there are some restrictions on the export of goods. Under sub section (d) of

section 111 and sub section (d) of section 113, any good exported or attempted to be

exported, contrary to any prohibition imposed by or under the customs act or any other

law is liable for confiscation.

Problems of the Indian Export Sector

But there are few problems which need to be solved before India makes a mark for itself

in the export sector. The Indian goods have to be of superior quality. The packaging and

branding such be such that countries are interested to export from India.


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THE THREE BOXES: GREEN, AMBERAND BLUE

The Green Box

In order to qualify for the green box, a subsidy must not bend

trade, or at most cause minimal distortion. These subsidies have to be

government-funded (not by charging consumers higher prices) and

must not involve price support. They tend to be programmes that are

not directed at particular products, and include direct income

supports for farmers that are not related to current production levels or prices.

Green box subsidies are therefore allowed without limits, provided they comply

with relevant criteria. They also include environmental protection and regional

development programmes. Canada has proposed setting limits on all boxes

combined, which would mean limits on green box subsidies as well.

Some countries say they would like to review the domestic subsidies listed in the green

box because they believe that some of these, in certain circumstances, could have an

influence on production or prices. Some others have said that the green box should not be

changed because it is already satisfactory. Some say the green box should be expanded to

cover additional types of subsidies.

The Amber Box

All domestic support measures considered to distort production and trade

(with some exceptions) fall into the amber box, which is defined in Article 6

of the Agriculture Agreement as all domestic supports except those in the

blue and green boxes. These include measures to support prices, or subsidies

directly related to production quantities.


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These supports are subject to limits: de minimis minimal supports are allowed (5% of

agricultural production for developed countries, 10% for developing countries); the

30 WTO members that had larger subsidies than the de minimis levels at the beginning of

the post-Uruguay Round reform period are committed to reduce these subsidies.

The reduction commitments are expressed in terms of a Total Aggregate Measurement

of Support (Total AMS) which includes all supports for specified products together with

supports that are not for specific products, in one single figure. In the current

negotiations, various proposals deal with how much further these subsidies should be

reduced, and whether limits should be set for specific products rather than continuing

with the single overall aggregate limits. In the Agriculture Agreement, AMS is defined

in Article 1 and Annexes 3 and 4.

The Blue Box

The blue box is an exemption from the general rule that all subsidies

linked to production must be reduced or kept within defined minimal

levels. It covers payments directly linked to acreage or animal numbers,

but under schemes which also limit production by imposing production

quotas or requiring farmers to set aside part of their land. Countries using

these subsidies (and there are only a handful) say they distort trade less

than alternative amber box subsidies. Currently, the only members notifying the WTO

that they are using or have used the blue box are: the EU, Iceland, Norway, Japan, the

Slovak Republic and Slovenia

At the moment, the blue box is a permanent provision of the agreement. Some countries

want it scrapped because the payments are only partly decoupled from production, or

they are proposing commitments to reduce the use of these subsidies. Others say the bluebox is an important tool for supporting and reforming agriculture, and for achieving

certain non-trade objectives, and argue that it should not be restricted as it distorts trade

less than other types of support. The EU says it is ready to negotiate additional reductions

in amber box support so long as the concepts of the blue and green boxes are maintained.


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The Agreement also imposes constraints on the level of domestic support provided to the

agricultural sector. In Indias case, it may have in future some implications on minimum

support prices given to farmers and on the subsidies given on agricultural inputs. The

Agreement allows us to provide domestic support to the extent of 10% of the total value

of agricultural produce. India is not providing any export subsidy on agricultural

products. The Agreement allows unlimited support to activities such as (i) research, pest

diseases control, training, extension, and advisory services; (ii) public stock holding for

food security purposes; (iii) domestic food aid; and (iv) income insurance and food needs,

relief from natural disasters and payments under the environmental assistance

programmers. Moreover, investment subsidies given for development of agricultural

infrastructure or any kind of support given to low income and resource poor farmers are

exempt from any commitments. Most of our major rural and agricultural development

programmers are covered under these provisions. Therefore, the Agreement does not

constrain our policies of investments in these areas.


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Wto Final Project