TRIMS (Trade Related Aspects of Investment Measures)

The Uruguay Round took Trade Related Investment Measures in its Final Act. It calls for the
removal of all trade related investment measures within a period of five years (For Developing
countries). These measures are confined to quantitative restrictions and national treatment. In
particular, they relate to such measures as investment identified areas, level of foreign investment
for treating foreign companies at par with national companies, export obligations, and use of
local raw materials.

The agreement recognizes that certain investment measures restrict and distort trade. It,
therefore, requires mandatory notification of all non confirming TRIMS and their removal
within two years for developed countries, within five years for developing countries for
developing countries and within seven years for least developed countries.

TRIPS (Trade related Intellectual Property Rights)

The Uruguay Round also contained the agreement on Trade related Intellectual Property Rights.
It provides norms and standards for copyrights, and related rights, trademarks, geographical
indications, industrial designs, patents, integrated circuits, trade secrets etc. The agreement
allowed 1 year for developed countries, 5 years for developing countries and 11 years for least
developed countries to change their laws for the implementation of TRIPs. The three major areas
where it has been applied are copyright, trademark and patent.

Copyright is basically for the protection of library and artistic work. Computer programmes are
included in literary works. Authors of computer programmes, performers on a phonogram,
producers of phonogram (sound recording) and broadcasting organizations are to be given the
right to authorize or prohibit the commercial rental of their works to the public. A similar
exclusive right applies to the films also. The protection for performers and producers of sound
recording are to be for no less than 50 years and for broadcasting organizations for at least 20
years.

Any sign, or any combination of signs, capable of distinguishing the goods and services of one
undertaking from those of other undertakings constitute a trade mark. Such signs, in particular

words including personal names, letters, numerals, figurative elements and combinations of
colors as well as combination of such are eligible for registration as trademarks. The owner of a
registered trade has the exclusive right to prevent all third parties not having the owners consent
for using a similar sign for goods or services. Initial registration and each renewal of a trademark
is for a term no less than seven years. The registration of a trademark is renewable indefinitely.

Patents shall be available for any inventions, whether products or processes, in all fields of
technology, provided they are new, involve an inventive and are capable of industrial application.
Patent owners have the right to assign or transfer the patent by succession. The agreement
requires 20 years patent protection.

GATT (General Agreement on Tariff and Trade)

The General Agreement on Tariff and Trade (GATT) emerged from the ashes of Havana
Charter. After Second World War the Allied Power thought of having a liberal world of trading
system and for this purpose the International Conference on Trade and Employment was held in
Havana in the winter of 1947-48.Fifty Three nations drew up and signed a charter for
establishing an International Trade Organization (ITO).But the US Congress did not ratify the
Havana Charter with the result that ITO never came into existence. Simultaneously 23 nations
agreed to continue extensive tariff negotiations for trade concessions at Geneva which were
incorporated in General Agreement on tariff and Trade. This was signed on October 30, 1947 and
came into force from January 1, 1948.

The General Agreement on Tariff and Trade (GATT) was a multilateral treaty signed by 96
governments known as contracting parties. GATT was neither an organization nor a court of
justice. It was simply a multilateral treaty which covered 80 percent of world trade. It was a
decision making body with a code of rules for the conduct of international trade, and a
mechanism for trade liberalization. It was a forum where contracting parties met from time to
time to discuss and solve their trade problems, also negotiated to enlarge their trade.

The Gatt had a permanent international organization having a permanent Council of

Representatives with headquarters at Geneva. Its function was to call international conferences

to decide on trade liberalization on a multilateral basis. On January 1, 1995, the GATT

disappeared and passed into history when it was merged in the World Trade Organization.

Objectives of GATT: -

The objectives of GATT were based on a few fundamental principles contained in the Code of
International Trade Conduct

To follow unconditional Most favored Nation (MFN) principle

To carry on trade on the principle of non-discrimination, reciprocity and transparency
To grant protection to domestic industry through tariffs only
To liberalize tariff and non-tariff measures through multilateral negotiations

To achieve those objectives, the Agreement provided for : (a) multilateral trade negotiations, (b)
consultation, conciliation and settlement of disputes, and (c) waivers to be granted in exceptional
cases.

The ultimate aim of establishing liberal world trading system was to raise living standard, ensure
full employment though a steadily growing effective demand and real income, develop fully the
resources of the world and expand the production and exchange of goods on global level.

World Trade Organization (WTO)

Origin: The Uruguay Round of GATT negotiations concluded on April 15, 1994 at Marrakesh,
Morocco. India, along with 123 ministers besides the EC Countries signed the final Act
incorporating the Eighth Round multilateral trade negotiations. The final act consists of: (i) the
WTO agreement which covers the formation of the organization and the rules governing its
working; (ii) the Ministerial decisions and declarations which contain the important agreements
covering trade in goods, services, intellectual property etc. They also contain the dispute
settlement rules and trade policy review system. The WTO Agreement is in fact the Uruguay
Round agreements whereby the original GATT is now a part of the WTO agreement which came
into force from January 1, 1995.

WTO Has legal status and enjoys privileges and immunities on the same footing as the IMF and
the World Bank. It includes: (i) The GATT, as modified by the Uruguay Round (ii) All
agreements and arrangements concluded under the GATT (iii) The complete results of the
Uruguay round.

The structure or organization of the WTO is headed by the Ministerial Conference composed of
representatives of all members who meet at least once every two years. There is a General
Council composed of representatives of all members to oversee the operation of the WTO
agreement and ministerial decision on a regular basis. It also acts as Dispute Settlement Body
(DSB) and a Trade Policy Review Body (TPRB). The General Council sits in Geneva on an
average of once a month. The Secretariat of the WTO is headed by the Director General. The
Ministerial Conference appoints the Director General.

Objectives of WTO: In its preamble, the agreement establishing the WTO lays down the
following objectives of the WTO:

Its relations in the fields of trade and economic endeavor shall be conducted with a view
to raising standards of living, ensuring full employment and large and steadily growing
volume of real income and effective demand and expanding the production and trade in
goods and services.
To allow for the optimal use of the worlds resources in accordance with the objectives of
sustainable development, seeking both (a) to protect and preserve the environment, (b) to
enhance the means for doing so in a manner consistent with respective needs and
concerns at different levels of economic development.

 To make positive efforts designed to ensure that developing countries, especially the least
developed among them, secure a share in the growth in international trade commensurate
with the needs of their economic development
To achieve those objectives by entering into reciprocal and mutually advantageous
arrangements directed towards substantial reduction of tariffs and other barriers to trade
and the elimination of discriminatory treatment in international trade relations.
To develop an integrated, more viable and durable multilateral trading system
encompassing the GATT, the results of past liberalization efforts, and all the results of the
Uruguay Round of multilateral trade negotiations.
To ensure linkages between trade policies, environmental policies and sustainable
development.
Functions of WTO: The following are the functions of WTO:

It facilitates the implementation, administration and operation of the objectives of the

Agreement and the Multilateral trade Agreements.
It provides the framework for the implementation, administration and operation of the
Plulateral Trade Agreements relating to trade in civil aircraft, government procurement,
trade in dairy products and bovine meat.
It provides the forum for negotiations among its members concerning their multilateral
trade relations in matters relating to the agreements and framework for the
implementation of the results of such negotiations, as decided by the Ministerial
Conference.
It administers the Understanding on Rules and Procedures governing settlement of
Disputes of the agreement
It cooperates with the IMF and the World Bank and its affiliated agencies with a view to
achieving greater coherence in global economic policy making.

IMF (International Monetary Fund)

Origin: The International Monetary Fund, also called the Fund, is an

international monetary institution established by 44 nations under the
Bretton Woods Agreement of July 1944. The principle aim was to avoid the
economic mistakes of the 1920s and 1930s.The attempts of many
countries to return to the old gold system after the First World War failed
miserably. The World Depression of the thirties forced every country to

abandon the gold standard. This led to the adoption of purely nationalistic
policies whereby almost every country imposed trade restrictions,
exchange controls and resorted to exchange depreciation in order to
encourage its exports. This further brought a marked decline in world
trade and extension of depression. It was against this background that 44
nations assembled at the United Nations Monetary and Financial
Conference at Bretton Woods, New Hampshire (USA) from July 1 to July 22,
1944. Thus the IMF was established to promote economic and financial
cooperation among its members in order to facilitate the expansion and
balanced growth of world trade. Its started functioning from March 1,
1947.

Objective of the Fund:

1. To promote international monetary cooperation through a permanent
institution which provides the machinery for consumption and
collaboration in international monetary problems.
2. To facilitate the expansion and balanced growth of international trade
and to contribute thereby to the promotion and maintenance of high
levels of employment and real income and to the development of the
productive resources of all members as primary objective of economic
policy.
3. To promote exchange stability, to maintain orderly exchange
arrangements among members, and to avoid competitive exchange
depreciation.
4. To assist in the establishment of a multilateral system of payments in
respect of current transactions between member and the elimination of
foreign exchange restrictions which hamper the growth in the world
trade.
5. To lend confidence to members by making the Funds resources
available to them under adequate safeguards, thus providing them
with opportunity to correct maladjustments in their balance of
payments without resorting to measures destructive of national or
international prosperity.
6. In accordance with the above, to shorten the duration and lessen the
degree of disequilibrium in the international balance of payments of
members.
Functions of the Fund

To fulfill the above objectives, the IMF performs the following functions:
1. The IMF operates in such a way as to fulfill its objective as laid down in
the Bretton Woods Articles of agreement s. It is Funds duty to see that
these provisions are observed by member countries. Some of the
provisions of the original Articles such as relating to exchange rates
have become obsolete due to international monetary events.
Accordingly the Fund has amended its article of Agreement to make
appropriate adjustments.
2. The fund gives short term loans to its members so that they may
correct their temporary balance of payments disequilibrium.
3. The Fund is regarded as the guardian of good conduct in the sphere
of balance of payments. It aims at reducing tariffs and other trade
restrictions by the member countries. Without the approval of the
Fund, no members can impose restrictions on the making of payments
or engage in discriminatory currency arrangements or multiple
currency practices. It is the functions of the Fund to have a surveillance
of the policies being adopted by the member countries.
4. The fund also renders technical advice to its members on monetary
and fiscal policies
5. It conducts research studies and publishes them in IMF staff papers,
Finance and Development, etc.
6. It provides technical experts to member countries having BOP
difficulties and other problems.
7. It also conducts short training courses on fiscal, monetary and balance
of payments for personnel from member nations through its Central
Banking Service Development, the Fiscal Affairs Department, the
Bureau of Statistics and the IMF Institute.
Thus, the Fund performs financial, supervisory and controlling
functions.

World Bank (IBRD)

The World Bank is one of the worlds largest sources of funding for the developing world. Its
primary focus is on helping the poorest people and the poorest countries. It uses its financial
resources, its staff, and extensive experience to help developing countries, reduce poverty,
increase economic growth, and improve their quality of life.

IBRD or the World Bank was established in 1945 under the Bretton Woods Agreement of 1944
to assist in bringing about a smooth transition from a war time to peace-time economy. Like the
IMF, the IBRD has a three tier structure with a President, Executive Directors and Board of
Governors. The President of the World Bank Group (IBRD, IDA and IFC) is elected by the
Bank's Executive Directors whose number is 21. US, UK, Germany, France and Japan are the 5
largest shareholders of the World Bank and 5 Executive Directors are appointed by these five
countries. The remaining sixteen are elected by the Board of Governors.

The members of the International Monetary Fund are the members of the IBRD. It has 188
members. If a country resigns its membership, it is required to pay back all loans with interest on
due dates.

Functions of the IBRD: The IBRD also called the World Bank performs the following
functions:

To assist in the reconstruction and development of territories of its members by

facilitating the investment of capital for productive purpose, and the encouragement of
the development of productive facilitates and resources in less developed countries.
To promote private foreign investment by means of guarantees on participation in loans
and other investment made by private investors, and when capital is not available on
reasonable terms, to supplement private investment by providing finance for productive
purpose out of its own resources or from borrowed funds.
To promote the long range balanced growth of international trade and the maintenance of
equilibrium in the balance of payments of member countries by encouraging international
investment for the development of their productive resources, thereby assisting in raising
productivity, the standard of living and conditions of workers in their territories.
To arrange the loans made or guaranteed by it in relation to international loans through
other channels so that more useful and urgent small and large projects are dealt with first.

Activities of the IBRD: The IBRD performs a wide range of activities which can be divided into
some major activities like fund generation, Bank borrowings, lending facility and many other
activities.

A. FUND GENERATION

 To ensure the availability of the funds to the Bank. For this purpose, the IBRD seeks to
maintain unutilized access to funds in the markets in which it borrows.
Minimize the effective cost of those funds to its borrowers.
Control volatility in net income and overall loan charges.
Provide an appropriate degree of maturity transformation between its borrowings and
lending
B. LENDING OPERATIONS
The bank lends to member countries in any of the following ways:
By marketing or participating in loans out of its own funds
By making or participating in direct loans out of funds raised in the market of a member
or otherwise borrowed by the bank
By guaranteeing in whole or in part loans made by private investors thorough the usual
investment channels.
The total amount outstanding of participating in loans, direct loans and guarantees should
not exceed 100% of its unimpaired subscribed capital.

C. BANK BORROWINGS
The Bank borrows from the following sources:

The Bank can go for its medium and long term borrowings in the international capital
markets, and currency swap agreement.
The Bank also borrows under the Discount Note Programme.
IBRD has evolved two new borrowing instruments.
i. Central Bank Facility (CBF)
ii. Floating Rate Notes ( FRNs)

D. OTHER OPERATIONS
Training: The Bank set up a staff college in 1956, known as the Economic Development
Institute (EDI) for training senior officials of the member developing countries. It helps
them to improve the management of their economies and to increase the efficiency of
their investment programmes. Its training material ranges from macro economic
planning, pricing, and development policies to the management of agricultural research,
rural healthcare, industrial policy, railway management etc.
Technical Assistance: Technical assistance has been an integral part of the Bank
Operations since its inception. It consists of two broad categories: (i) engineering related,
such as feasibility studies, engineering design and construction supervision, (ii)

institution related, such as diagnostic policy and institutional studies, management

support and training.
The primary way of providing technical assistance is through loans made for specific
sectors and in components of loans made for capital infrastructures. Such technical assistance
includes funds for supervision, implementation and engineering services, energy, power,
transportation, water supply, industry, etc.
Inter-organizational cooperation: The IBRD is also engaged in inter organizational
cooperation. Cooperation between the IBRD and other international organization is based
on formal agreements such as the Cooperative Programmes between it and the FAO, the
UNESCO, the WHO, the GATT, the UNCTAD, the Asian Development Bank, the
African Development Bank etc.
Economic and social research: The Bank devotes roughly three percent of its
administrative budget to economic and social research. Research activities are undertaken
by the Banks own research staffs and also in collaboration with outside researchers.
Projects appear in articles in international economic journals, books, in World Bank Staff
Working Papers and its own journals.
Operations evaluation: The Bank helps borrowers in the post-evaluation of their Bank
assisted projects. Projects reviewed are subject to performance audit by the Banks staffs.
Settlement of Investment Disputes: The Bank has set up the International Centre of
Settlement of Investment Disputes (ICSID) between states and Nationals of the other
states. The Bank has successfully mediated in solving many international investment
disputes such as the River Water Dispute between India and Pakistan and of the Suez
Canal between Egypt and the UK.

The International Monetary Fund and the World Bank at a Glance

Internationals Monetary Fund

World Bank

oversees the international

monetary system

promotes exchange stability

and orderly exchange relations
among its member countries

assists all members--both

industrial and developing

seeks to promote the

economic development of the
world's poorer countries
assists developing countries
through long-term financing of
development projects and
programs

countries--that find themselves

in temporary balance of
payments difficulties by
providing short- to medium-term
credits

supplements the currency

reserves of its members through
the allocation of SDRs (special
drawing rights); to date SDR
21.4 billion has been issued to
member countries in proportion
to their quotas

draws its financial resources

principally from the quota
subscriptions of its member
countries

has at its disposal fully paidin quotas now totaling SDR 145
billion (about $215 billion)

has a staff of 2,300 drawn

from 182 member countries

provides to the poorest

developing countries whose per
capita GNP is less than $865 a
year special financial assistance
through the International
Development Association (IDA)
encourages private
enterprises in developing
countries through its affiliate,
the International Finance
Corporation (IFC)
acquires most of its financial
resources by borrowing on the
international bond market
has an authorized capital of
$184 billion, of which members
pay in about 10 percent
has a staff of 7,000 drawn
from 180 member countries

SAARC

The South Asian Association for Regional Cooperation (SAARC) comprises

of Afganistan, Bangladesh, Bhutan, India, The Maldives, Nepal, Pakistan
and Srilanka. The basic aim of the organization is to accelerating the
process of economic and social development in Member States through
joint action in the agreed areas of cooperation. The idea of regional

cooperation was first mooted in November 1980. After consultations, the

Foreign Secretaries of the seven countries set for the first time in Colombo
in April 1981. The Foreign Ministers, at their first meeting in New Delhi in
August 1983, adopted the Declaration on SAARC. The SAARC Secretariat
was established in Kathmandu on 16 January 1987 and was inaugurated
by Late King Birendra Bir Bikram Shah of Nepal. Afghanistan was the first
to have been accessed in the physical enlargement of the SAARC in 2007.

Objectives:
To promote the welfare of the people of South Asia and to improve
their quality of life
To accelerate economic growth, social progress and cultural
development in the region and to provide all individuals the
opportunity to live in dignity and to realize their full potential
To promote and strengthen collective self reliance among the member
countries
To contribute to mutual trust, understanding and appreciation of one
anothers problem
To promote active collaboration and mutual assistance in the
economic, social, cultural, technical and scientific fields
To strengthen cooperation with other developing countries
To strengthen cooperation among themselves in international forums
on matters of common interest