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WTO & Doha Made Easy Via Diagrams
WTO & Doha Made Easy Via Diagrams
Contents
Tariff barriers..........................................................................................................................................................2 Non-Tariff barriers. .................................................................................................................................................2 what was happening before WTO. ...............................................................................................................................3 Why agreements? ......................................................................................................................................................3 Annex ........................................................................................................................................................................5 #1 Annex : GATT .........................................................................................................................................................5 #2 : Annex of GATS (services)...................................................................................................................................6 TRIPS =Trade related intellectual property rights ..........................................................................................................6 What is TRIPS all about?..........................................................................................................................................6 why TRIPS is imp? ...................................................................................................................................................6 India's Problem with GI ...........................................................................................................................................7 Time limit...............................................................................................................................................................7 What is the Use of these agreements? / What are the trading principles in WTO?..........................................................8 Without Discrimination ...........................................................................................................................................8 Freer Trade (bringing down barriers in international trade) ....................................................................................8 Predictability ..........................................................................................................................................................9 Fair compitition ......................................................................................................................................................9 Economic Reforms ..................................................................................................................................................9 Get my articles in your Email-inbox- absolutely free : to subscribe- click Me or Visit my blog www.mrunal-exam.blogspot.com
What was before WTO? ..............................................................................................................................................9 so WTO is better than GATT? ......................................................................................................................................9 India & WTO............................................................................................................................................................. 10 What did India Gain from WTO? ............................................................................................................................ 10 DOHA....................................................................................................................................................................... 10 what is DOHA?...................................................................................................................................................... 10 What were they talking in Doha? ........................................................................................................................... 11 so concessions were given to them. ....................................................................................................................... 11 items for new negotiations in Doha........................................................................................................................ 11 What was India's Problem in Doha? ....................................................................................................................... 11 SSM=special safeguard mechanism .................................................................................................................... 11 More trouble for India ....................................................................................................................................... 12 Criticism of WTO....................................................................................................................................................... 12 Timeline Evolution of WTO ................................................................................................................................. 13 1944.................................................................................................................................................................... 13 1947:................................................................................................................................................................... 13 1986.................................................................................................................................................................... 13 1994 (Marrakesh, Morocco) .................................................................................................................................. 14 2004 .................................................................................................................................................................... 14
Tariff barriers
on imports or exports
When Indian Govt. puts heavy import duty / custom duty on Foreign Products either that import item becomes very costly so people will buy desi* items. (and there will be smuggling of foreign items! Like Gold watches/ perfumes etc in the 80s.) *Desi= domestic / indian
This protects domestic players. (= industrialists/ businessmen.) from competition from foreign players.
Non-Tariff barriers.
When Desi players are given subsidies / preference over the foreign players by Govt. of India. For example, Get my articles in your Email-inbox- absolutely free : to subscribe- click Me or Visit my blog www.mrunal-exam.blogspot.com
o when Govt. is buying some phones/ Xerox Machines, in the tender itll mention that only Domestic companies can fill the tender. o making polices in such a way that its hard for foreign player to start factory / introduce his product in India o Intentionally setting the Quality standards so high that certain players cant sell their products here. Here no tariff (=tax/money) is involved but still there is a barrier for foreign players. Thats why its called Non-Tariff barrier.
Today we have this fun, because of globalization + import of foreign products & Govt. doesn't put high custom / import tax on it. (no high tarrif barriers)
So, The Primary objective of WTO is to remove the tarrif barriers / Custom duties. = integrate all nations in international economy. For this, WTO will consult with all member-nations, and will make legally binding agreements.
Why agreements?
there are total 19 Agreements in WTO, but most imp. are 3. (i'll explain it later in this article.) Get my articles in your Email-inbox- absolutely free : to subscribe- click Me or Visit my blog www.mrunal-exam.blogspot.com
these agreements talk about what is compulsory & what is non-compulsory for each nation. And what will be the penalties if a nation doesn't follow these agreements. Every Agreement has an 'Annex'- in that you'll find the detailed provisions & items included in the agreements.
The Secretariat of WTO keeps an eye on every nation seeing whether agreements are followed or not.
But there will be some bad-nations who won't play by the rules & try to cheat such agreements. So second objective of WTO is 'Dispute Resolution' that's like an international civil court.
Now lets see the 3 most imp agreements of WTO. See this chart
Like I said ago, theyve annexes which provide operation details about how to implement these agreements. ( only TRIPS doesnt have any annex) Get my articles in your Email-inbox- absolutely free : to subscribe- click Me or Visit my blog www.mrunal-exam.blogspot.com
1 SPS came after Doha Now another mimp annex of GATT is, SCM = subsidies & counter veiling measures (=the Red, Green & Amber list) see this chart-
Apart from this, shipment inspection and anti-dumping are also included in GATT annex.
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#3 : TRIPS like I said ago, TRIPS doesnt have any annex! But TRIPS is very imp agreement in todays world full of technologies-so lets see whats it about t.
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o here, if the patent / copyright wasn't protected, then inventors will not invest in R&D.& then world will be deprived of better products. the GI (Geographical indicator) o like Darjiling tea- only the tea made in Darjiling can be sold as 'Darjiling tea' o otherwise, Britishers would also sell their tea claiming it to be 'Darjiling variety' and then our tea makers will face unfair compitition.
Time limit
it came in force from 1st January 1995. and according to its provision Developed nations have to make such laws within 1 year. developing nations (like India) have to make such laws within 5 years. Least Developing countries (like Zimbabway/ Somalia) were given time limit upto 11 years (=2006) , but now the time is extended upto 2016 for pharmaceutical patent laws. Apart from above 3 agreements (GATT, GATS, TRIPS) other 3 imp agreements are-(see this diagram)
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What is the Use of these agreements? / What are the trading principles in WTO?
Without Discrimination
MFN = Most favored nation In WTO, every nation is MFN So, if India grants a special favor to one nation India will have to give that special favor to all membernations of WTO. India will have to treat locals & foreign players equally. (e.g. you cant have a system like Local businessmans file will be cleared first or local man will be given preference in contract / tenders / 3G frequency allocation.) Exception to this principle a. Group of nations can form FTA = Free trade agreements b. Country can give special favors to 3rd world / poor nations. c. A nation can impose high import duty/ prevent entry of goods from a nation thats doing unfair trade practices (like dumping* / Products dangerous to health**) d. But there are strict conditions in WTO, before you can do above things. i. *Dumping =China intentionally sends extremely cheap toys in india, so Indian toy makers collapse and toy market in India is captured by China. ii. ** Products dangerous to health like Chinas milk powder which had melamine.
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Predictability
When there are legally binding agreements between member nations of WTO- it means, even after change in Govt. (BJP / Congress / whatever) the Indian policy of international trades wont alter very much. This gives confidence of foreign investors because of Promise of stability (=Ceilings on customs tariffs.) policy environment is predictable.(= Transparency in trade rules) Equal treatment to Local players & foreign players. (=open access to markets) binding commitments (WTO keeps an eye on each nation so Govt. cant cheat. And if you cheat- youll have to pay fines.) And foreign investment helps the domestic economy as well.
Fair compitition
WTO agreements prevent unfair dumping, subsidies, government procurement
Economic Reforms
to implement WTO Agreements, the 3rd world nations have to change their policies. = reform (remember the pre-LPG Era - quota,licence,inspctor raj)
7. (because Foreigners established research labs/ manufacturing units in India & started selling their products here.) 8. Textiles boom (because MFA = Multilateral Fiber Agreement was scrapped under WTO's ATC=Agreement on Texttile clothings.) otherwise previously UK and other nation had put quantitative limits on Indian Cotton's Entry in their market.
DOHA
what is DOHA?
Doha is capital city of a small nation called Qatar. 4th Ministerial conference of WTO was held in that city in Nov.2001. and they (member nations) started talking about some new agreements & issues - and the talks continued.. so this entire package is called 'Doha round of talks.' aka "DDA =
Fifth Ministerial Conference was held in Cancun, Mexico in September 2003. Get my articles in your Email-inbox- absolutely free : to subscribe- click Me or Visit my blog www.mrunal-exam.blogspot.com
the Doha conference failed because it ended with out any consensus. Members were divided on competition policy & transparency in Govt. procurements. First world blames India to be the main villain for failure of Doha talks.
(e.g. if it was decided that if price fall to 5 Rs. / kg corn, then India could do this. but US wants that India shouldn't be allowed to act, unless price of corn falls very low, something like 50 paisa / kg.!)
Apart from this, India has insisted on a large number of special products that would not be exposed to wider market opening
Like I said ago, more mobile companies are good. Because it increases employment. (you can be a representative of some mobile co. or if youve retail store, you can sell pre-paid cards etc. or you can start your own mobile repair shop and so on) But same is not true about agriculture sector, since 70% of Indias population depends on one way or another with the agriculture sector. So if cheap foreign items are allowed, then itll create huge problem for their employment. Its easy for each American farmer to produce tonnes of grain (and sell his produce cheap), because every farmer has huge farms, latest machinery, fertilizers & great seeds+ continuous water supply + subsidy. But same is not true in India.
However the problem of food-price inflation should also be taken into account. (= read editorials, youll face such topics in mains / essay.)
More trouble for India NAMA= Non-agricultural market access negotiations European Union has threatened to approach the World Trade Organisation (WTO) again if India does not remove the inter-state tariff disparities. We want India to get rid of its taxes on wines and spirits in different states to allow easier access to European wines, failing which we will approach the WTO again,"
Criticism of WTO
Mostly comes from environment activities. 1. WTO promotes industries, MNC (Multi-national corporations) a. But these MNCs sometimes are involved in bad things. Eg. They pay huge bribes to Burmas military regime for operating the gas lines, nickel mines etc. and employ forced laborers in it.
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2. The infrastructure boom because of WTO (more foreign companies making factories in India) leads to habitat / bio-diversity loss & pollution etc. 3. Its hard to put barriers on imported items, thus the domestic industries face tough competition which sometimes ruins them. (e.g. its not possible for Indian Toy maker to compete with Chinese toys in retail price.) and yet not much the Indian Govt. can do. If they put some ban on it, then China will go to WTO, and WTO will impose heavy fines on India. 4. 3rd world has to open its market for first world product without much benefit in the reverse process. (=3rd worlds products lag in race in 1st worlds market.) e.g. as you know in colonial era, when India was under British Rule, if we exported our Indian Textiles to Britain, theyd put huge import tax on it. Thus our cloths would become very expensive in their market. So Britishers would only buy locally made cloths from Manchester. This sort of protectionism in old times (almost upto 1995) = their companies made lot of profit during that era & had lot profit invested in Research and technology, so currently their products will be technically and in quality far superior than ours. So even if there is no barrier today, British people will buy their product and not ours. This argument runs on the same line like of climate change. America allowed its factories to pollute the atmosphere and thus became a developed nation but now, it wants the developing nations to stop polluting the world & cut their emissions!
1947:
GATT (General Agreement on Trade & Tariffs) established It was criticized as being 'RICH MEN'S CLUB'
1986
Uruguay Round of Talks Service & Intellectual Property rights related topics included in the debate 1993, everyone agreed on it
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2004
148 nations are members of WTO, covering 94% of international trade
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