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The WTO was born out of negotiations, and everything the WTO does is the result of negotiations. The bulk of the WTOs current work comes from the198694 negotiations called the Uruguay Round and earlier negotiations under the General Agreement on Tariffs and Trade (GATT). The WTO is currentlythe host to new negotiations, under the Doha Development Agenda launched in 2001.

Where countries have faced trade barriers and wanted them lowered, the negotiations have helped to open markets for trade. But the WTO is not justabout opening markets, and in some circumstances its rules support maintaining trade barriers for example, to protect consumers or prevent the spreadof disease.

At its heart are the WTO agreements, negotiated and signed by the bulk of the worlds trading nations. These documents provide the legal ground rules forinternational commerce. They are essentially contracts, binding governments to keep their trade policies within agreed limits. Although negotiated andsigned by governments, the goal is to help producers of goods and services, exporters, and importers conduct their business, while allowing governments to

meet social and environmental objectives.

The systems overriding purpose is to help trade flow as freely as possible so long as there are no undesirable side effects because this is important foreconomic development and well-being. That partly means removing obstacles. It also means ensuring that individuals, companies and governments knowwhat the trade rules are around the world, and giving them the confidence that there will be no sudden changes of policy. In other words, the rules haveto be transparent and predictable.

Trade relations often involve conflicting interests. Agreements, including those painstakingly negotiated in the WTO system, often need interpreting. Themost harmonious way to settle these differences is through some neutral procedure based on an agreed legal foundation. That is the purpose behind thedispute settlement process written into the WTO agreements

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I. Indias commitment to WTO.

A- India is committed to phased liberalization of trade and investment and progressive integration of its domestic economy with the world

economy. Post 2005, India is likely to be the largest free market economy in the world, purely on account of her 1 billion populations.

Indias progress in fulfilling her commitment to the WTO can be explained as follows

1. Quantitative Restrictions India has been maintaining QRs on imports on BoP grounds and had committed to the WTO that the QRs

will be completely phased out by 2003. However, the United States had filed a case in the WTO dispute settlement body against these

QRs in May 1997. The DSB had ruled against India and had found that Indias QRs on imports were not justified on BoP grounds. The

DSP recommended that India should bring its imports regime in conformity with its commitment under the WTO agreement. Accordingly,quantitative restrictions on all imports were withdrawn on April 2001.

2. Trade Related Intellectual Property Rights (TRIPs) The agreement on TRIPS lays down the minimum standards of protection to be

adopted by the parties in respect of -

i. Copyrights

ii. Trade marks

iii. Geographical indications

iv. Industrial designs

v. Patents

vi. Lay-out designs of integrated circuits and

vii. Protection of trade secrets and its enforcement

The developing countries were given a transition period of 5 yrs to implement the TRIPs agreement. Those countries who dont give

product patents in certain areas were given the facilities to delay the provisions of product patents for an additional period of 5yrs on the

condition that these countries will provide exclusive marketing rights for products which obtain patents after 1st Jan 1995. India cleared

the patents (Amendments) Act, 1999 in March 1999 to provide for exclusive marketing rights.

3. Commitments related to industrial design and lay-out design of integrated circuits Under WTO agreements, the Government of India

has committed to protect new industrial design and lay-put design of integrated circuit. The bill related with industrial design and lay-out

design was cleared by parliament in December 1999 and bill related with industrial design has been introduced in Rajya Sabha on 20th

Dec 1999.4. Copyrights and related rights In case of rights of performers, producers of phonograms and broadcasting organizations, the

agreement requires compliance with the provision of the Berne Convention. Computer programs are to be protected as literary works. The

term of protection for copyrights and rights of performers and producers of phonograms is 50yrs. In case of broadcasting organizations

the term is 20yrs. Since India is a signatory to the Berne convention, India has to comply with its provisions. Accordingly the Copyright

Act 1957 was amended in 1994 to be in tune with the requirements of the TRIPs agreement. A bill to increase the term of performers

rights to 50yrs was passed by parliament in December 1999.

5. Trademarks A bill to amend the Trade and Merchandise Marks Act 1958 was passed by the parliament in December 1999 which

amongst other things provides protection to Service Marks.

6. Geographic Indications The GATT agreement contains a general obligation that parties shall provide the legal means for interested

parties to prevent the use of any means in the designation or presentation of a good that indicates or suggests that the good in questions

originates in a geographical area other than the true place of origin of the good. An Act on geographical indication was passed by the

parliament in December 1999.

7. Trade Related Investment Measures (TRIMs) The TRIMs agreement provides a transition period of 5yrs to developing countries i.e.

upto December 1999. The developing countries have demanded for additional transition period of 5yrs i.e. upto 2004. A decision by the

General Council of the WTO is awaited.

8. Industrial designs According to the agreements independently created new industrial designs or original designs are to be protected.

The Indian Design Act 1911 was reworked to suit to the requirements of the agreement and a bill in this regard was cleared by the Rajya

Sabha in December 1999.

9. Reduction of Tariff India has committed to WTO to reduce tariff on non-agricultural goods. The government has undertaken the

phased reduction of tariff over the period March 1995 to 2005. In case of textiles, the reduction of tariff will be achieved over a period of

10yrs but India reserves the right to revert back duties to 1990 level, if certain conditions are not fulfilled according to agreement.

10. Commitment under GATS Under the General Agreement on Trade in Services (GATS), India has made commitment to WTO in 33

activities. The foreign service providers will be allowed to enter into these activities.

Conclusion It is clear from the above points that India has fulfilled some of the major commitments made to WTO. The government of

India in order to face the challenges from WTO has to accelerate the process of reforms in agriculture, industry and service sector to make

them competitive and to take advantage of globalization.

II. Implications of WTO agreement for Indian economy

A- Implications of WTO agreement for Indian economy are as follows

1. Reduction in Custom Duties and Export Subsidies India has agreed to reduce custom duties by 30% over a period of 6yrs.

Accordingly the union budget 2000-01 brought down the peak rate of basic custom duty to 35% along with rationalization of total number

of slabs in custom duty rates to four i.e. 35, 25, 15 and 5%. Basic custom duty reduction was to be made on items such as raw materials,

intermediates and capital goods with the exception of agricultural products, petroleum products, fertilizers and non-ferrous metals like

zinc and copper. The WTO agreement enjoins upon its members to remove all export subsidies. However, countries with per capita income

of less than $1000 and less than 3.25/- share in the world trade for products are exempted from the removal of subsidies. The economic

survey 1998-99 reported that items such as rice, tea, spices, iron ore, leather manufacturer, gems and jewellery had a share of more than3.25/- and the share of these items in the total exports of India for the year 1996 was 22.8% which means 77% of Indias exports are

mot affected by the clause on removal of subsidies.

2. Trade Related Intellectual Property Rights Under the agreement on TRIPs patents are made available for both product and process

inventions in the field of industrial technology. The industrial, agricultural and the bio-technology sectors are covered under the patents

provision. The patent regime is feared to affect the drugs and the pharmaceutical industry in India. It is estimated that about 70% of the

drugs will be covered by the new patent laws. This will entail royalty payment to the patent holders resulting in a steep rise in prices of

drugs in India. However there are conflicting estimates if the percentage of the drugs that will be covered by the new patent laws. For

instance, Bibek Debroy, Director, Rajiv Gandhi Institute for Contemporary Studies observed that only less than 10% of the drugs are

covered by the patents worldwide. The rest of the drugs i.e. more than 90% of them have become generic i.e. they need no protection.

TRIPs also extends patent like protection to agriculture. Accordingly protection is sought to be extended to micro-organisms, non-

biological and micro-biological processes and plant varieties. Article 27 of the text on TRIPs states that India may provide for protection of

plant varieties either by patents or by an effective sui generic system or by a combination of the two. This system shall come into

existence after the expiry of the transitional period of 10yrs i.e. after 2005. India needs to work hard on documenting its traditional

knowledge on Ayurvedic and herbal plants and obtain patent protection or a sui genesis system in order to prevent bio-piracy.

3. Trade Related Investment Measures (TRIMs) The text on TRIMs provides that governments shall not discriminate against foreign

capital i.e. foreign capital should be given national treatment. The main features of the text on TRIMs are as follows

a) All restrictions on foreign capital, investors and companies should be abandoned.

b) National treatment to foreign investors i.e. they will be given the same rights as a national investor has with regard to investment.c) Unrestricted investment in all spheres of economic activities.

d) No limitation on the extent of foreign investment in any economic entity.

e) Free imports of raw materials and components.

f) Local content clause will not be imposed on foreign investors.

g) No mandatory export obligations on foreign investors.

h) Elimination of restrictions on repatriation of dividend, interest and royalty income.

i) Complete exclusion of provisions such as phased manufacturing programmes which is intended to increase the indigenous content in

manufacture.

Restrictions on foreign capital investment both portfolio and direct have been progressively reduced and more and more industries and

sectors of national economy have been thrown open to foreign investment. The opening of the insurance sector to foreign direct

investment has been the latest in the league with international airlines industry very much on the block.

4.Textiles and Clothing The GATT agreement proposes to abandon the Multi Fibre Agreement by 2003 and fully liberalize the textile

sector. The Multi Fibre agreement is a comprehensive agreement on quota restrictions imposed by the rich countries over the textile

exports of developing countries. These quotas will be phased out under the WTO Act in three phases. In the 1st phase (1993-96), 16% of

the textile exports to the developed countries will be liberalized. It will be followed by 17% in the 2nd phase (1996-2000) and 18% in the

3rd phase (2000-2003). Thus by 2003 51% of the textiles market will be liberalized.