wto issues and impact

8/11/2019 WTO Issues and Impact

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Understanding WTO ssues


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Modules

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I. WTO Issues

II. Hong Kong MinisterialThe Road Ahead


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Bretton Woods System, 1944

- IMF, 1945

- World Bank, 1946

- ITO-GATT, 1948-94

- WTO, 1995Evaluation of InternationalTrade

- Adversarially CompetitiveOperating Environment


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WTO: What is it?

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WTO is the only globalorganisation dealing with the

rules of trade (in goods, services and

trade related issues) between the nations

based on the WTO agreements ashave already been negotiated and

signed by the member countries and ratified

by their parliaments.


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WTO: Perception

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Theoretically, there is no alternative other than

being within the WTO

WTO will Impact Every Business and Every Aspectof the Value Chain of Every Business

There is an Advantage of Time to initiate reform

measures to be globally competitive

Post Doha - Road Map for Globalization Failure of Cancun - Breakdown of Multilateral

Trade Agenda?

Growth of FTAs - Over 43% of world trade, could

rise to 55% in the near future

Hope for healthy growth of multilateral trade in the

mid-term


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153 Members, 28 Observers, 76 Institutional

Observers to the General Council as on January2007 (as on May 16th 08)

Over90% of World Exports

38 Agreements Signed, all of which areBinding on all the Members

Decision by Consensus - One Member One

Vote- Reality is Different - The QuadsDominate

- Failure of WTO will create more Problems

WTO: Reality


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WTO: Objectives

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To Establish a Fair, Equitable, Rule-

Based, Transparent and MultilateralTrading System

Progressive Liberalisation and

Elimination of Tariff & Non-Tariff

Barriers to Trade in Goods andServices

Rejection of Protectionism

Elimination of Discrimination Integration of Developing Countries

in the Multilateral System


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URUGUAY ROUND

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16 Articles

- Scope, Functions, Structure, Relations , Decision Making

Increasing Market Access through

- Reduction& of Tariff Rates

Binding

- Elimination of Quantitative Restrictions (QRs)&

Non-Tariff Barriers (NTBs)

Practising Non-Discrimination through- Most Favoured Nations (MFNs)

&- National Treatment

Improve Multilateral Trading System

Wider Coverage of World Trade under Agreed, Effective &Enforceable Multilateral Disciplines

Enhancing Relations with International organisations(UNCTAD, ILO, IMF-WB)

National - International Co-operation

Coherent Economic & Trade Policies

WTO M h i


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WTO: Mechanisms

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Increasing Market Access Through:

Reduction of Tariff Rates

Binding of Tariff Rates

Elimination of QuantitativeRestrictions & Non-Tariff Barriers

Practicing Non-Discrimination:

Most Favored Nations (MFN)

National Treatment


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WTO Covers

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- Trade in Goods & Services

- General Agreement on Trade in Services (GATs)

- Agreement on Agriculture (AoA)

- Trade Related Investment Measures (TRIMS)

- Trade Related Intellectual Property Rights (TRIPS)

- Dispute Settlement Mechanisms

- Non-Tariff Barriers (NTBs) and Technical Barriers to

Trade (TBT)

- Dumping/Anti-Dumping Measures

- Safeguards, Subsidies and Countervailing Measures, etc.

- Increasing Number of New Issues


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New (Singapore) Issues

Trade & Investment

Trade & Competition Policy

Transparency in Government Procurement

Trade FacilitationTrade & Environment

E-Commerce

Trade & Labour Standards, (with ILO)

----------------------------------* Expl ic i t con sensus on establ ishing the modal i t ies for

nego tiat ion s - Doha; delayed after Cancun b reakdown ...


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WTO: Ministerial Meet

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Policy Making Body, Meets Once in Two Yrs.

Singapore - Dec. 1996, Geneva - 1998,Seattle - Nov. 1999 (Suspended)

The Fourth Ministerial, Doha, November 9-14,2001

- Doha Development Agenda

Fifth Ministerial - Cancun, Mexico, Sept. 2003 - afailure

Sixth Ministerial in Hong KongDecember 1318, 2005

ra e e a e n e ec ua roper y g s s


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ra e e a e n e ec ua roper y g s s

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Intellectual Property (IP) refers to a Creation of Human Mind that isof Value to the Society, while Intellectual Property Rights (IPRs) areRights Granted by the State to Persons Over Creation of TheirMind.

The TRIPs Agreement of WTO covers Nine Categories of IPs:

- Copy Rights and Related Rights

- Trademarks including Service Marks

- Geographical Indications

- Industrial Designs

- Layout Designs of Integrated Circuits

- Trade Secrets

- Patents

- Patenting of Micro-Organisms and

- New Plant Varieties (i.e. seeds, and other propagating materialsincl. Bio-Diversity)

Minimum Levels of Substantive Norms and Standards to be followedby Member Countries for the Protection of the IPRs as well as theirEnforcement.

(Contd.)


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India has Agreed to Accept Applications from January 1, 1995

Onwards. The Applications will be Received in the Mailbox and

will be Examined only with Effect from January 1, 2005. Further,

the TRIPs Agreement also makes it Obligatory for India to Grant

Exclusive Marketing Rights (EMRs) to Pharmaceuticals andAgro-Chemicals, which have been given Product Patents and

Marketing Approval in another Member Country of the WTO.

Indias Concern w.r.t. TRIPs :

- Granting of Product Patents to Pharma and Agro Chemicals;- Patenting of Micro-Organisms or Life Forms, including

Patenting of Products Based on our Bio-Diversity and

Traditional Knowledge in other parts of the World;

- Establishing an Effective sui-gener issystem for the

Protection of New Plant Varieties, Plant Breeders

Rights, which Recognises and Rewards the Traditional

Contribution of Rural Communities to the Conservation of

Bio-Diversity;


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Trade Related Intellectual Property Rights (TRIPs)

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Indian Patent Act 1970

- First Amendment 1999

- Second Amendment 2002

- Third Amendment, March 2005

WTO Compatible Product Patent Regime- Chemicals, Drugs, Medicines and Food Products

- ImplicationsDoha Development Agenda on TRIPs

T d R l t d I t t M (TRIM )


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Trade Related Investment Measures (TRIMs)

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India has to Remove all Trade Related Investment Measures, w.e.f.

January 1, 2000. TRIMs Seeks to Regulated National Investment

Policies having a bearing on Trade; Members can apply TRIMs

Consistent with National Treatment (Article III), an Obligation onElimination of QRs (Article XI). National Policy should

accordingly be framed considering the withdrawal of:

- Local Content Requirement

- Foreign Exchange Control Requirement

- Trade Balancing and Export and

- Import and Export Restrictions HK Ministerial : Trade & Investment Issues : certain key issues to

be worked out in 06


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Anti-Dumping Measures

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USA, EU, India & China are frequent users

As on 30thJune,07: 1,274;

- US: 229 (1st), India 162 (2nd), EU: 149(3rd), China 103 (4th).

HK Ministerial: Negotiations to continue

- Several issues to be streamlined

Spate of anti dumping measures in the recentmonths as a fall out of global meltdown / recession.

WTO A t A i lt (A A)


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WTO: Agreement on Agriculture (AoA)

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* Applies to:

- Market Access

Tariffs Only- Aggregate Measurement of Support (AMS)

- Export Subsidies

- Limits on Spending and Quantities

- Regulations for Animal & Plant Products

* AMS:- Product Specific (Market Prices Support)

- Non-Product Specific

(eg. Fertilisers, Irrigation, Electricity, Credit Seeds, etc.)

- Exemptions: Direct Payments

- Green Box(eg. R & D, Pest & Disease Control, Extension, Domestic Food,Environment Assistance, Disaster Relief, etc.)

- Blue Box:

(eg. Income Support to Producers, Structural AdjustmentAssistance, Safety Net, )

(Contd.)

WTO A t A i lt (A A)


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WTO: Agreement on Agriculture (AoA)

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AMS should Not Exceed 10% of the Total Value ofAgricultural Production in Case of Developing Countries and 5%

for Developed Countries

Exceeding Such Limits, a 20% cut In Support Price in 6Years for Developed Countries and 13.3% in 10 yrs. forDeveloping Countries

In India:Product Specific AMS is Negative: - 23% ofTotal Value of Agricultural Product in the early 1990s

- Non-Product Specific AMS is Positive: 5.5%

- Total AMS is Negative: -17.5%

AMS is Negative Due to the Fixing of Support Prices Lowerthan International Prices - Many Issues

HK Ministerial : several key decisions towards reducingagri subsidies by DCs.Details being worked out.


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General Agreement on Trade in Services (GATS)

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12 Categories of Services, with 161 Sub-Groups Mandated Renegotiation is on ... New Commitments

to be Made Multilateral Agreement to Provide Legally Enforceable

Rights to Trade in Services No Tariff or Generalised Protection Mechanism Four Principle Modes:

- Cross Border Supply- Consumption Abroad

- Commercial Presence- Presence of Natural Persons

Market Access & National Treatment One Time MFN Exemptions for 10 Years HK Ministerial : several key decisions towards

reducing agri subsidies by DCs.Details being worked out.


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GATS: India to Open Services under UR

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Cabinet Committee on WTO has put in place (on June 5,03) a roadmap for services negotiations

Opening of services:

- Business Services (engineering, R & D,technical testing and analysis services) financialservices, construction & engineering,

computer & related services, architecture,telecom, health, accounting, tourism, & maritimeservices.

Not to be opened now:

- Audit, legal, postal & courier services, retail &wholesale trading

Commerce Ministry to work out the details

25 Requests received and 62 made by India

------------------

* Indias Commitments are skewed and not


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Indian Industry/Firms will have to Playthe Global Game by the Global

Rules in an AdversariallyCompetitive Environment

The Imperative: Recognition &Acceptance of the Liberal

(Market) Economic Philosophy

- Excelling in Competition is the Name of

the Game

Domestic Industry - Comparative Disadvantages in Being


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Domestic Industry - Comparative Disadvantages in Being

Globally Competitive

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- High Input Cost - 30% higher than Chinas

- Infra. Bottlenecks

- Technology and R & D Gap

- Lack of Economies of Scale

- Absence of Right Product

- Quality Deficiency

- Delivery Problems

- Historical Baggage

- System Rigidities

- Old World Mind-Set

* Some of them gett ing removed, a number of indus tr ies are becom ingcom etit ive


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II.Hong Kong Ministerial

Declaration

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The Road Ahead

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F S ttl t D h t


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From Seattle to Doha to

Cancun

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Seattle failed due to uncompromising negotiatingposition of the Quads, particularly US vs.developing countries.

US made it a failure for its political interest !

DohaMorasali Maron, former CommerceMinister, India stood firm

Doha Development Agenda was compromisedlargely based on India voicing the points of

interest for all developing countries. Voice of developing countries were also heard,

but in isolation.


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We renew our resolve to complete the Doha Work

programme fully and to conclude the negotiations

launched at Doha successfully in 2006.

_________________________________

* Dif f icul t p ath ahead- mu lt i lateraism marches on in m icro

steps

HK Ministerial Declaration


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Hong Kong Declaration

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Limited successMicro steps- No specific group won or lost

Successful negotiating stance by 115developing countries.

Doha to Hong Kong : consolidation of 2/3rdofthe world population in 115 developingcountries ( G-20, G-33, ACP)

No longer signing on the dotted line

In principal approval of July 31, 2004Framework.


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HK Ministerial could have been a failure ifboth developed &developing countries could

not have negotiated properly

The failure would have led to adding problemsparticularly for developing countries.

_______________________________

Loss of rule based mult i lateral framework -were

prob lem for developing coun tr ies.


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The Quads first tried to protect their position butthey finally accepted developing countries

demand in various areas.

More collective & cooperative strength will be

needed to work by the first half of 2006

Tough negotiations ahead.

greemen on


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greemen onAgriculture(AOA)

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Removal of Export Subsidy by 2013

Reducing Domestic Subsidy Market Access4 Bands of tariff cuts

But no agreement on the threshold of the cuts

in the bounds. Face saving clause: substantial part of the

cuts will be during the first half of the agreed

implementation deadline 2013

Front loading : EU pushed for 20% ; Brazil80%

Compromise on substantial part as

above.

( O )


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Agreement on Agriculture (AOA)

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Agreement on the reduction of Domestic Support& Product Specific Support

Review of the criteria for the Green box support( R&D, food aid for the poor, etc),

But no clear roadmaps.

Inclusion of Special Products ( food, livelihood

security) where tariff could be high. Special Safeguard Measuresprotecting

developing countries farmers from uncertaintiesof agriculture mkt like sudden import surge & dropof price

Price based triggers to work


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(NAMA)

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July, 2004 framework -flexibility Swiss Formula: Certain tariff cuts will be stiffer,

while certain tariff lines to be kept unbound.

Countries with higher tariff will have stiffer cuts

improved mkt access for developing countriesexports ,

But thecoefficient ( = the no. determining thetariff cuts to be finalized)

Developing counties demand : coefficients to be10 implying a 77% tariff cut by developingcountries , FICCI desired coefficient to be 30%,means a cut by 53%.


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NAMA

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Some selected items to be exempted. Next round of negotiation will be tough

Arithmetics of tariff peaks & escalation to be

agreed upon.

_________________________

Wait & Watch

G l A T d i


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General Agreement on Trade in

Services (GATS)

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Mode 1 ( Cross Border Supply) &

Mode 4 ( Movement of Natural Persons)

Two other modes ( consumption abroad (Mode 2) &commercial Presence( mode 3) to be taken up later.

Kamal Nath, Indias Commerce Minister, pressed forthe demand of developing countries2 (above) gotaccepted.


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GATS

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General agreement on :

Mode I : better scope for supply of say; BPO& ITES from India

Mode 4: Better prospects for supplyingservice providers to developed countries for

temporary visa. Flexibility of Economic Needs test.

Only assurance received from developedcountries in opening modes 1 & 4

Further liberalization of services trade ofdeveloping countries will be demanded bydeveloping countries.

I l t ti & th


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Implementation & other

Issues

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General agreement on addressing issuesregarding

Anti dumping duties

Non Tariff Barriers Dispute Settlement Negotiations

E Commerce , Trade Facilitation etc

IPRrecognition of the need for a balancebetween private IPR and the rights of the

communities over genetic materials &

traditional knowledge, etc..etc

Hong Kong Ministerial


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Hong Kong Ministerial

Declaration

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Pined down & number of rule based tradingnorms ( gains for developing countries like India)but left open for detailed negotiations

Indian trade industry and govt. will have to sit

together to work out the details Many vital numbers/ reduction schedule will have

to be worked out soon, but at the same timebased on a liberal economic share in a globlisedworld vis a vis the protection of economic interest.

___________________________ Intense multilateralism, with ups & downs will

determine intl b/s envt.


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All issues are presently being/ to be discussed at the levelof General Council / various committees, with the office ofthe Director General playing the role of a facilitator.

Discussions to be completed by April/July 2006

But July 06 meeting failed no arithmetic on subsidy cut

particularly by US was offered, while EU offered somereduction Not acceptable to developing countries Stalemate continue still date (February 2007)

Talks broke down on July 06 on US shallow offer on

cutting domestic support

Developing countries like India are concerned


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Developing countries like India are concerned

because

US, EU & Japan maintain high tariff on products of export

interest to developing countries like India

(eg. Japan: 140% on leather products, US: 35% on farm

products etc.)

US incidence of subsidies for rice: 39%, cotton 48%US has increased trade distorted farm subsidy further from $

19 bn to $ 22 bnpost July 05 summit

US strategizing to sift actionable subsidies (Blue & Amber

Boxes) to Green Box, which is non actionableG20 wants this subsidies to be cut to 12.8 bn $

We are not averse to giving market access to US farm

products provided the subsidies are whittled down -India

Twilight of Doha Development Agenda ?


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Twilight of Doha Development Agenda?

DDA Negotiations bogged over 8 years

USA & EU unwilling to make political compromise

Rapid growth of Bilateralism & Regional Trade Groups

Mini-ministerial meet, July 08/Dec 08

Global downturnr ising protectionism/ trade war

Will Multilateralism eventually triumph in a world facing climate

change, f inancial crisis ,deep recession in DCs, r ising protectionism,

shrinking global trade & I nvest, a divide between developed and

developing countries ? Yet business/ competition is increasing fast

(Read links for detail s)


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Thank You

wto issues and impact

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