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INTERNATIONAL TRADE AGREEMENTSOriginally GATT 1948 23
CountriesUNDER ONE UMBRELLA WTO HQ Geneva ( Switzerland )145
Countries As On 31st March - 2006GATT / GATS TRIPS TRIMSGeneral
Agreement On Trade In ServicesTrade Related Aspects Of Intellectual
Property RightsTrade Related Investment Management System
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GATT - GATSLiberalisation of trade in goods &
servicesIncreases competition from foreign goods /
servicesFacilitates global sourcingOpportunity for Indian firms to
exportThreat to Domestic FirmsBenefits consumersIncreases
competitiveness of domestic firms
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TRIMSLiberalisation of International investmentsIncreases
foreign investments and competition from foreign firmsFacilitates
joint ventures and technology acquisitionFacilitates foreign
investment by Indian Firms including joint venturesThreat to
domestic firmsBenefits the economyBenefits domestic firms
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TRIPS PROVIDES MONOPOLY POWER TO OWNERS OF INTELLECTUAL
PROPERTY-----------------------------------------------------------------------------------------------
THE WTO IMPACT IN TOTAL IB AND INDIA - Encourages Globalisation Of
Indian Firms MFN CLAUSE - Most Favoured Nation Clause - No
Discrimination Among Member Countries But WTO is Biased towards
India regarding agricultural farm products like vegetables and
fruits THE FIGHT/ ATTEMPT IS ON
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NAFTA The North American Free Trade AgreementLaunched during -
Jan 1994 : Canada USA MexicoWorlds largest FTA Free Trade AreaTo
foster increased trade & investment among partnersAmbitious
schedule for tariff elimination & reduction of non-tariff
barriersComprehensive provisions on the conduct of business in the
free trade area(i.e) Disciplines on the regulations of investment,
services, intellectual property, competition and the temporary
entry of business persons
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SOME GOALS OF NAFTATo act as a catalyst for international
co-operation To create, expand and secure future marketsTo ensure a
predictable framework for business planningTo ensure firms
competitiveness in foreign marketsTo foster creativity and
innovation
SOME CHARACTERISTICS & BENEFITS OF NAFTAJob creation in its
member countries so that demand for local products
increasesExpanding the trade liberalisation process in the region
Providing an adjustment period for local manufacturers because
tariffs on certain products will be eliminated after 15 years
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Contd.Certain products that were excluded under the agreement
with USA and the Caribbean Agreement with CANADA will be permitted
duty-free entry to the US market under NAFTA : These are :Textiles,
Petroleum & Petroleum products, Footwear, Certain leather
goods, Canned Tuna, Certain Brands of watches, luggage, handbags,
Rubber & Plastic Gloves
CLASSIFICATION OF TARIFFS / NON TARIFFS ( EXAMPLES ) TARIFFS :
Basic Customs Duty, CounterVailing Duty, Advalorem Duty,
Anti-dumping Duty, etc. NON-TARIFFS : Licensings, Quantitative
Restrictions, Certifications like Origin, Consulate Approvals, etc.
HS : Harmonisation of documentations in foreign trade and valuation
of goods and services
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NAFTA AND THE WTOEUROPEAN UNION Sustained economic growth and
political stabilityMajor World Monetary Crisis and Costly
Reunification of Germany REGIONAL INTEGRATION HAS NOT HARMED THE
GLOBAL ECONOMY *** BUSINESS BETWEEN NAFTA COUNTRIES AND INDIA
***Since 2003-2004, the maximum funds have started flowing towards
India from USAUS - MNCs are now operating in India & likewise
Indian Cos such as M&M have set up Mfg. Units in USA TRACTOR
DIVISION & EARTH MOVING EQUIPMENTSThe US is Indias largest
partner & a strategic market for many of Indias leading export
Cos especially in apparels, gems & jwellery, leather goods, sea
food, IT PRODUCTS, KPOS, BPOS, etc
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Coming Back to WTO8 Arguments for WTO :
The system helps to promote peaceDisputes are handled
constructivelyRules make life easier for allFreer trade cuts the
costs of livingIt provides more choice of products and
qualitiesTrade raises incomesTrade stimulates economic growthThe
basic principles make life more efficient
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Contd..8 Criticisms Against WTO :
1. WTO dictates policyWTO is for free trade at any
costCommercial Interests take priority over developmentCommercial
Interests take priority over health and safetyThe WTO destroys jobs
and worsens povertySmall countries are powerless in the WTOThe WTO
is the tool of powerful lobbies
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AOA Agreement on AgricultureFairer Markets for FarmersGATT
LoopholesEarlier had allowed non-tariff measures to subsidizeHigh
Distortion effectUruguay Round : Discipline Orderly form, fair
competition, Less DistortionsBegan during 1995 : 6 year period (
for developing countries 10 year period ) India : Negotiations
under progressIndia already fighting towards biased decisions of
WTO regarding fruits, vegetables and other farm products : to get
opportunities for exports to various advanced and developed
countries in terms of quantity, price, etc. Tariffs and Non-tariffs
in various countries preventing Indian Exports of Farm
ProductsMarket Access : An important element of IB environment
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AGREEMENT ON ANTI-DUMPINGExporting a product at a price lower
than the price normally charged in home market is said to be
dumping the productWTO disciplines anti-dumping actions and is
known as anti-dumping agreementWTO agreement allows governments to
act against dumping where there is genuine ( material ) injury to
the competing domestic industryEXAMPLES : 1. During 1997-98 China
had started dumping coking coal in the Indian market General
varieties of coal which were already produced in India at various
coal mines. Hence Indian Government had to impose anti-dumping duty
on Imports from Chinese Market Mines 2. Few years back, Indian
steel manufacturers started dumping steel products in the US market
and US Government had imposed anti-dumping duty on Indian Steel***
However things become easier if manufacturing bases are distributed
through out the world ( of an organisation ) which could change the
origin of the country even if you are an Indian and allows you to
continue exporting and importing through various matrix and
logistical opportunities without getting into various restrictions
and balance in terms of quantity and profitablities
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CONTD.The WTO anti-dumping agreement introduced the following
modifications :More detailed rules for calculating the amount of
dumpingMore elaborate procedures for initiating and conducting
anti-dumping investigationsRules on the implementation and duration
( normally five years ) of anti-dumping measuresParticular
standards for dispute settlement panels to apply in anti-dumping
disputes
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WTO Intellectual Property Rights & Industrial SectorPatents.
Industrial Designs, Copyright, Trade Marks, Know-how &
Confidential informationAll the above are used for identifying
quality & nature of products and hence to be considered as
different types of Industrial PropertyWhen a copyright &
confidential information are included, the term Intellectual
Property though a little high sounding is a more appropriate
description for this class of propertyIn the information age, IPRs
protection takes on a pivotal roleIn a world linked by a digital
framework, empowered by software and where innovations of the mind,
derived through massive expenditure of intellect and resources, are
the key products, the strength of IPR regimes can mark the
difference between a flourishing and a depressing marketIPR
policies will play a key role in developing some of Indias most
exciting growth areas, including software development,
bio-technology, entertainment and pharmaceutical development-
Intellectual property rights are supposed to help protect
investments into research and development and stimulate innovation
by providing incentives to invent, progress, develop, etc.
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TARIFFSA Tariff refers mainly to a schedule of import duties or
customs duties levied on goods imported in a country from foreign
countriesIn a Broad sense, tariffs include import duties of various
nature, export duties and transit duties which are levied on goods
passing through the national frontiers of a country
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COMMON MARKETThis is a Customs Union where internal non-tariff
barriers have also been removedIt allows free movements of goods,
services and capital among member countriesA common market implies
that there is an internal market, comprising of all the member
nations, which is common to the all firms trading within that
market
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DUMPINGA PRODUCT IS REGARDED AS DUMPED IN HOST COUNTRY WHEN ITS
EXPORT PRICE IS LESS THAN THE NORMAL PRICE IN THE EXPORTING COUNTRY
HOME COUNTRY OR ITS COST OF PRODUCTION PLUS A REASONABLE AMOUNT FOR
ADMINISTRATIVE, SELLING AND ANY OTHER COSTS AND FOR
PROFITSANTI-DUMPING MEASURES CAN BE EMPLOYED ONLY IF DUMPED IMPORTS
ARE SHOWN TO CAUSE SERIOUS DAMAGE TO THE DOMESTIC INDUSTRY IN THE
IMPORTING COUNTRY
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COUNTER TRADEDue to BOP difficulties, many countries encourage
Counter Trade as a means of financing ImportsUnder this, imports
are paid in the form of goods and services and not in terms of
convertible currencyExample : India was engaged in Counter Trade
with erstwhile Soviet Union and some East European countriesImports
By India from these countries were paid for by way of purchase of
goods/services by those countries
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PATENTSThis is related to Intellectual Property Rights and WTO
Agreements on Trade issues which came into effect for developed
countries on 01.01.1996The Agreement sets out the minimum standards
of protection to be adopted by the parties in respect of :Copy
rights and related rightsTrade MarksGeographical
IndicationsIndustrial DesignsLayout Designs & Integrated
CircuitsProtection of Undisclosed Information ( Trade Secrets)
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FORMS OF ECONOMIC INTEGRATIONPTA - Preferential Trade
Agreement
Simplest from of economic integrationA group of countries have
formal agreement to allow each others goods to be traded on
preferential termsThe preferential treatment may be in the form of
Reduced Tariff or Special Quota for the goods of the countries
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ContdFTA - Free Trade AreaIt is a permanent arrangement between
neighbouring countries USA / Canada / Mexico ( example )There is a
complete removal of tariffs on goods traded between the members of
the FTAIt involves tariff free trade among the member countriesThe
members are free to impose their own trade restrictions on imports
from countries outside FTAAs a result of this, the goods from
outside FTA may enter into the Free Trade Area through the member
country levying the Lowest TariffsTo overcome this problem, the
members have to maintain Customs Points at their Common Borders to
make sure that imports do not enter into the FTA through the member
levying the lowest tariff on each itemThey should also agree on
rules of origin to establish when a good is manufactured in a
member country and therefore it is able to pass duty free across
their borders
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Contd .CUSTOMS UNIONS
This is a FTA plus an Agreement to establish common barriers to
trade with the Rest of the World(b) They have common tariff against
the outside world , therefore the members need not have their
customs control on goods moving among themselves or rules of the
origin(c) Agreement is needed on the level of the common external
tariff and on the administration of the Tariff Revenues
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Contd..COMMON MARKET :
Common market is a customs union where internal non-tariff
barriers have also been removedIt allows free movement of goods,
services and capital among the member countriesA common market
implies that there is an internal market, comprising of all the
member nations, which is common to all firms trading within that
market
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Contd.ECONOMIC UNION :
EU is the most complete form of economic integration between
countries - EU ties up its members economies closely so that in
effect, they function as a single economyThis involves common
market and also the harmonisation of economic policies in
particular Monetary Union and the Co-ordination of Fiscal
PoliciesMonetary Union may involve a Fixed Exchange Rate system
between the Member Countries with a Single or Common Currency and
Control over Interest Rates and other Instruments of Monetary
PolicyFiscal Policy co-ordination involves rationalisation of TAX
Rates and some Degree of control over Government Budgets and Budget
DeficitsThere is also likely co-ordination of other economic
policies such as agricultural, industrial and other policies