WORLD TRADE

ORGANIZATION

By GROUP 5:
Aditi Agarwal-01
Vivek Agarwal -07
Abhishek Jalan-22
Neha Kothari-29
Shruti Lodha-31
Darshit Morakhia-36
Amit Sharma-54
 GATT
• The General Agreement on Trade and Tariff (GATT) came into
existence in1947

• It sought substantial reduction in tariff and other barriers to trade and

to eliminate discriminatory treatment in international commerce

• Original intention behind the GATT was to create a third institution to

supervise international trade, other two being the World Bank and IMF.

• India signatory to GATT 1947 along with twenty two other countries

• Eight rounds of negotiations had taken place during five decades of its
existence
 URUGUAY ROUND
Held in September 1986 in Punta del Estate in Uruguay.
The major highlights were:

• Expansion in the sphere of activities from international trade to services,

investment and information

• Liberalization of trade in Agriculture and Textile goods

• Patents & Subsidies

• Tariff cut- Developing countries have to cut tariffs by 24% over next 10
years while developed countries by 36% for 6 years.

• Establishment of WTO in January 1995

 World Trade Organisation
• Location: Geneva, Switzerland

• Established: 1 January 1995

• Created by: Uruguay Round negotiations (1986–94)

• Membership: 150 countries (11January 2007)

• Budget: 175 million Swiss francs (for 2006)

• Secretariat staff: 635

• Head: Pascal Lamy (director-general)

 World Trade Organization
• The World Trade Organization (WTO) deals with the rules of trade
between nations at a global or near-global level

• It’s an organization for liberalizing trade

• It’s a negotiating forum

• It’s a set of rules

• It helps to settle disputes

 GATT TO WTO – A half A Century Journey

WTO

WTO and its agreement are GATT

permanent
GATT was Ad-Hoc and provisional
WTO has members
GATT had contracting parties
WTO is more powerful than GATT
GATT allowed domestic legislative
Dispute settlement mechanism faster
purview
and efficient
GATT was less powerful, dispute
Very difficult to block its rulings
settlement slow and inefficient
MEMBERS OF WTO
 AGREEMENTS MADE BY WTO
Start with broad principles: the
General Agreement on Tariffs and Trade (GATT) (for goods), and the
General Agreement on Trade in Services (GATS). (The third area,
Trade-Related Aspects of Intellectual Property Rights (TRIPS).
• Tariffs
• Agriculture
• Standards & Safety
• Textiles
• Services
• Intellectual property
• Anti-Dumping, Subsidies, etc.
• Non-Tariff Barriers.
• Plurilaterals
• Trade Policy Reviews.
 TRADING SYSTEM
• ‘Multilateral’ trading system i.e. the system operated by the
WTO.
• Most nations — including almost all the main trading nations
— are members of the system. But some are not, so
“multilateral”is used to describe the system instead of “global”
or “world”.
• In WTO affairs, “multilateral” also contrasts with actions
taken regionally or by other smaller groups of countries.
PRINCIPLES OF TRADING SYSTEM
• Without discrimination:

• Freer:

• Predictable:

• More competitive:

• More beneficial for less developed countries:

TRADE PERFORMANCE HIGHLIGHT
WTO IN CONTEXT OF INDIA
 WTO And INDIA
i) India’s trade gain

ii) Competitive advantage due to WTO

iii) Potential of becoming a knowledge hub due to CBD (Connection

on Biological Diversity) and better IPR protection

iv) FDI and MNC Exposure

v) India getting a platform to showcase its talent globally.

“Seattle is Bangalored…”
 Probable advantages

A. Increment in export
• contribution in world trade was increased to 5170 million $
during 2002-03, rather than 2633
• million $ during 1994-95. India’s contribution in world export
was 0.61% in 1995 which increased to 0.86% in 2001.
B. Increment in export of textiles:

• From 1974 to 1995(formation of WTO) textiles was operated by

Multifibre Arrangement.
C. Advantages for services:
• According to this agreement Developed Countries will open the service firms i.e.
banks, transports, hotels, etc. in compensation they present a market to sell Indian
products.

D. Availability of foreign products:

• GATT agreements provide availability of foreign products in Indian markets. This
helps in buying several foreign products easily and cheaply.

E. Job Chances:
• Increment in Indian trade, chances of job has been increased to a great extent.
 Probable disadvantages

A. Agriculture:
• India has to reduce subsidies which will affect poor formers.
• Reduction in import of many agricultural products by Developed
Countries to pretend environmental conservation.
• Indians have to buy costly multinational products.
• 3% of grain consumption of the country has to import, which affects
balance payment of the country.
B. Disadvantages of TRIPS:

• There is an extension of patents related to medicines, agriculture, plants and

animals, etc. It will help only Developed Countries having better technologies and
unlimited resources.

• Foreign outsourcing and royalty of patents etc. payments send Indian money
outside which affects balance payment.

• In Developing countries, imports of patented raw materials reduce export.

C. Loss from General Agreement on Trade in Services(GATS):
• domestic Institutions will find an end and our economical freedom will be
lost.

D. Problems in construction of economical policy:

• they have to open their markets for Developed countries.
E. Economical torture:

• Freedom to multinational companies for invests in India, will torture Indian economy.
According to GATT agreement MNCs and National Companies are equal. This
agreement will create problem of conservation of industries in our country.

F. Environmental Issues:

• Developed Countries are creating problems to Developing Countries about

environmental issues. Developed Countries are creating pressure on us to use new eco –
 friendly technologies.
 For example: When Indian skirts became famous in U.S.A., they started to spread
rumors about skirts, “they are made of inflammable materials” and they banned it. But
all the rumors proved were wrong and the ban was removed.
 India’s Foreign Trade Policy 2009-14
What Is FOREIGN TRADE POLICY?
The Union Commerce Ministry,
Government of India announces the
integrated Foreign Trade Policy FTP
in every five year. This is also called
EXIM policy

The Foreign trade Policy which was

announced on August 28, 2009 is an
integrated policy for the period 2009-
14
 India’s Foreign Trade Policy 2009-14
Objectives of Foreign Trade Policy 2009-14

1. To arrest and reverse declining trend of exports is the main

aim of the policy. This aim will be reviewed after two years.

2. To Double India's exports of goods and services by 2014.

3. To double India's share in global merchandise trade by 2020 as

a long term aim of this policy. India's share in Global
merchandise exports was 1.45% in 2008.
 India’s Foreign Trade Policy 2009-14

4. Simplification of the application procedure for availing various

benefits

5. To set in motion the strategies and policy measures which

catalyse the growth of exports

6. To encourage exports through a "mix of measures including

fiscal incentives, institutional changes, procedural
rationalisation and efforts for enhance market access across the
world and diversification of export markets.
 India’s Foreign Trade Policy 2009-14

AIM
• The policy aims at developing export potential, improving
export performance, boosting foreign trade and earning
valuable foreign exchange.

• A fall in exports has led to the closure of several small- and

medium-scale export-oriented units, resulting in large-scale
unemployment
 India’s Foreign Trade Policy 2009-14
TARGETS
• Export Target : $ 200 Billion for
2010-11

• Export Growth Target: 15 % for

next two year and 25 %
thereafter
Growth of India’s International Trade
India’s Trading Partners
India’s Trade Basket
 India’s International Trade:
2008-09

• Exports in August 2008- US$ 16.0 billion: growth of

26.9% (18.2% previous year)

• Imports in August 2008- US$ 29.9 billion: increase of

51.2% (34.2% previous year)

• POL imports during April-August 2008:

US$ 46.1 billion- growth of 60% (17.9%
previous year)
 India’s International Trade: 2008-09
Items 2007-08 2008-09P
Exports 60.1 81.3
  (19.3) (35.3)
Oil Exports* 4.7 9.0
  (6.2) (91.5)
Non-Oil Exports* 26.0 39.1
  (5.5) (50.3)
Imports 94.6 130.5
  (34.2) (38.0)
Oil Imports 28.8 46.1
  (17.9) (60.0)
Non-Oil Imports 65.8 84.5
  (42.7) (28.3)
Trade Balance -34.6 -49.3
Oil Trade Balance* -12.3 -20.5

Non-Oil Trade Balance* -13.5 -9.0

* : Figures pertain to April-June
P: Provisional
Note : All figures in US$ billion. Figures in parentheses show percentage change over the previous year.
Source : DGCI & S
Source: DGFT, Annual Report 2007-08
 India’s Export: 2008-09
(Percentage Shares)
Commodity Group 2006-07 2007-08 2008-09
Primary products 15.6 17 16.2
1. Agriculture and      

  allied products 10.0 11.4 11.4

2. Ores and minerals 5.5 5.7 4.8

Manufactured goods 67.2 63.6 58.3

1. Leather and      
  manufactures 2.4 2.2 1.8

2. Chemicals and      

  related products 13.7 12.9 11.4

3. Engineering goods 23.4 23.1 24.1

4. Textile and textile      

  products 13.7 12.0 10.4

5. Gems and jewellery 12.6 12.4 9.7

Petroleum products 14.8 15.6 18.7

Others 2.4 3.8 6.8
Total exports 100.0 100.0 100.0
Source: Compiled from DGCI & S data.
India’s Import: 2008-09
India’s Import: 2008-09
 Services Trade
• Services trade shares about 9% of GDP

• Services export growing much faster than world

services exports;
In 2000-2006-
India: 38.22%, World: 12.84%.

• Services trade contributes about 2.64% of world

services trade
Services Trade
Services Export
Services Import
 Conclusion
• Significant contribution to growth of economy

• Creation of foreign currency pool

• Local factors- political interests, culture & values

• Oil imports & unstable oil prices- negative trade

balance
THANK YOU...