international trade agreements etc (5)

7/29/2019 International Trade Agreements Etc (5)

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INTERNATIONAL TRADE

AGREEMENTSOriginally GATT 1948

23 Countries

UNDER ONE UMBRELLA WTO

HQ Geneva ( Switzerland )

145 Countries As On 31st March - 2006

GATT / GATS TRIPS TRIMS

General Agreement On Trade In Services

Trade Related Aspects Of Intellectual Property Rights

Trade Related Investment Management System


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GATT - GATS

Liberalisation of trade in goods & services

Increases competition from foreign goods / services

Facilitates global sourcing

Opportunity for Indian firms to export Threat to Domestic Firms

Benefits consumers

Increases competitiveness of domestic firms


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TRIMS

- Liberalisation of International investments

- Increases foreign investments and competition from

foreign firms

- Facilitates joint ventures and technology acquisition- Facilitates foreign investment by Indian Firms including

joint ventures

- Threat to domestic firms

- Benefits the economy- Benefits 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 Indiaregarding agricultural farm products

like vegetables and fruits

THE FIGHT/ ATTEMPT IS ON


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NAFTA The North American Free

Trade Agreement Launched during - Jan 1994 : Canada USA Mexico

Worlds largest FTA Free Trade Area

To foster increased trade & investment among partners

Ambitious schedule for tariff elimination & reduction of non-tariff

barriers Comprehensive 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 NAFTA

To act as a catalyst for international co-operation

To create, expand and secure future markets

To ensure a predictable framework for business planning

To ensure firms competitiveness in foreign markets

To foster creativity and innovation

SOME CHARACTERISTICS & BENEFITS OF NAFTA

- Job creation in its member countries so that demand for local

products increases

- Expanding 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 USAand 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 leathergoods, 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 WTO

EUROPEAN UNIONSustained economic growthand political stability

- Major 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 towardsIndia from USA

- US - MNCs are now operating in India & likewise Indian Cos such asM&M have set up Mfg. Units in USA TRACTOR DIVISION & EARTH

MOVING EQUIPMENTS- The 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 WTO

8 Arguments for WTO :

1. The system helps to promote peace

2. Disputes are handled constructively

3. Rules make life easier for all

4. Freer trade cuts the costs of living

5. It provides more choice of products and qualities

6. Trade raises incomes

7. Trade stimulates economic growth

8. The basic principles make life more efficient


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Contd..

8 Criticisms Against WTO :

1. WTO dictates policy

2. WTO is for free trade at any cost

3. Commercial Interests take priority over development

4. Commercial Interests take priority over health and safety

5. The WTO destroys jobs and worsens poverty

6. Small countries are powerless in the WTO

7. The WTO is the tool of powerful lobbies


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AOA Agreement on Agriculture

Fairer Markets for Farmers

GATT Loopholes

Earlier had allowed non-tariff measures to subsidize

High Distortion effect

Uruguay Round : Discipline Orderly form, fair competition,

Less Distortions- Began during 1995 : 6 year period ( for developing countries

10 year period )

- India : Negotiations under progress

- India already fighting towards biased decisions of WTO regardingfruits, vegetables and other farm products : to get opportunities forexports to various advanced and developed countries in terms of

quantity, price, etc.- Tariffs and Non-tariffs in various countries preventing Indian Exports

of Farm Products

- Market Access : An important element of IB environment


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AGREEMENT ON ANTI-DUMPING

- Exporting a product at a price lower than the price normally charged in home marketis said to be dumping the product

- WTO disciplines anti-dumping actions and is known as anti-dumping agreement

- WTO agreement allows governments to act against dumping where there is genuine (material ) injury to the competing domestic industry

- EXAMPLES :

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 youare an Indian and allows you to continue exporting and importing through variousmatrix and logistical opportunities without getting into various restrictions and balancein terms of quantity and profitablities


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CONTD.

The WTO anti-dumping agreement introduced the following

modifications :

1. More detailed rules for calculating the amount of dumping

2. More elaborate procedures for initiating and conducting anti-

dumping investigations3. Rules on the implementation and duration ( normally five years )

of anti-dumping measures

4. Particular standards for dispute settlement panels to apply in

anti-dumping disputes


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WTO Intellectual Property Rights

& Industrial Sector Patents. Industrial Designs, Copyright, Trade Marks, Know-how & Confidential

information

All the above are used for identifying quality & nature of products and hence tobe considered as different types of Industrial Property

When a copyright & confidential information are included, the term

Intellectual Property though a little high sounding is a more appropriate

description for this class of property- In the information age, IPRs protection takes on a pivotal role

- In a world linked by a digital framework, empowered by software and whereinnovations of the mind, derived through massive expenditure of intellect andresources, are the key products, the strength of IPR regimes can mark thedifference between a flourishing and a depressing market

- IPR policies will play a key role in developing some of Indias most exciting

growth areas, including software development, bio-technology, entertainmentand pharmaceutical development

- Intellectual property rights are supposed to help protect investments intoresearch and development and stimulate innovation by providing incentives toinvent, progress, develop, etc.


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TARIFFS

A Tariff refers mainly to a schedule of import duties or

customs duties levied on goods imported in a country

from foreign countries

In 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 MARKET

This is a Customs Union where internal non-tariff

barriers have also been removed

It allows free movements of goods, services and capital

among member countries

A 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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DUMPING

A 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 FORADMINISTRATIVE, SELLING AND ANY OTHER

COSTS AND FOR PROFITS

ANTI-DUMPING MEASURES CAN BE EMPLOYED

ONLY IF DUMPED IMPORTS ARE SHOWN TO CAUSESERIOUS DAMAGE TO THE DOMESTIC INDUSTRY IN

THE IMPORTING COUNTRY


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COUNTER TRADE

Due to BOP difficulties, many countries encourage

Counter Trade as a means of financing Imports

Under this, imports are paid in the form of goods and

services and not in terms of convertible currency

Example :

- India was engaged in Counter Trade with erstwhile

Soviet Union and some East European countries

- Imports By India from these countries were paid for byway of purchase of goods/services by those countries


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PATENTS

This is related to Intellectual Property Rights and WTOAgreements on Trade issues which came into effectfor developed countries on 01.01.1996

The Agreement sets out the minimum standards of

protection to be adopted by the parties in respect of :1. Copy rights and related rights

2. Trade Marks

3. Geographical Indications

4. Industrial Designs5. Layout Designs & Integrated Circuits

6. Protection of Undisclosed Information ( Trade Secrets)


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FORMS OF ECONOMIC

INTEGRATION

PTA - Preferential Trade Agreement

(a) Simplest from of economic integration

(b) A group of countries have formal agreement to alloweach others goods to be traded on preferential terms

(c) The preferential treatment may be in the form of

Reduced Tariff or Special Quota for the goods of the

countries


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Contd

FTA - Free Trade Area(a) It is a permanent arrangement between neighbouring

countries USA / Canada / Mexico ( example )

(b) There is a complete removal of tariffs on goods traded between themembers of the FTA

(c) It involves tariff free trade among the member countries

(d) The members are free to impose their own trade restrictions onimports from countries outside FTA

(e) As a result of this, the goods from outside FTA may enter into theFree Trade Area through the member country levying the LowestTariffs

(f) To overcome this problem, the members have to maintain Customs

Points at their Common Borders to make sure that imports do notenter into the FTA through the member levying the lowest tariff oneach item

(g) They should also agree on rules of origin to establish when a goodis manufactured in a member country and therefore it is able topass duty free across their borders


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Contd .

CUSTOMS UNIONS

(a) 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 , thereforethe 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 :

(a) Common market is a customs union where internal

non-tariff barriers have also been removed(b) It allows free movement of goods, services and capital

among the member countries

(c) A common market implies that there is an internal

market, comprising of all the member nations, which iscommon to all firms trading within that market


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Contd.

ECONOMIC UNION :

(a) EU is the most complete form of economic integration

between countries - EU ties up its members economies closely sothat in effect, they function as a single economy

(b) This involves common market and also the harmonisation ofeconomic policies in particular Monetary Union and the

Co-ordination of Fiscal Policies

(c) Monetary Union may involve a Fixed Exchange Rate systembetween the Member Countries with a Single or Common Currencyand Control over Interest Rates and other Instruments of MonetaryPolicy

(d) Fiscal Policy co-ordination involves rationalisation of TAX Ratesand some Degree of control over Government Budgets and BudgetDeficits

(e) There is also likely co-ordination of other economic policies such asagricultural, industrial and other policies

international trade agreements etc (5)

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