World Trade Organisation




(i) World Trade Organisation
(ii) GATT and India


          Globalization concept came into actual reality when on 15th April, 1994 in all 124 countries gave approval to GATT (General Agreement on Tariffs & Trade) proposals. These proposals lay down certain set of norms in the field of global trade. Between 1947 and the final rounds of negotiations there were 8 rounds. And the final result was the emergence of Word Trade Organization.
          India signed these proposals in April, 1994. The 8th round of GATT popularly known as Uruguay round started in September 1986 and ended on 15th December, 1993. On this day the globalization was given a final shape in the form of WTO, though the formality was completed on 15th April, 1994. However, it came into existence on 1st Jan, 1995. Uruguay round contained the mandate to have negotiations in 14 areas as mentioned in Part I. Part II of the declaration re-classified the areas of Part I into VII as below :
(i) Market access
(ii) Textiles
(iii) TRIMS
(iv) TRIPS
(v) Agriculture
(vi) Institutional matters
(vii) Trade in services
          GATT was an informal organization which regulated world trade since 1948. However, WTO is a permanent Organization which has been established on the basis of an international treaty. It is not an agency of the UNO but has achieved international status like IMF and IBRD.
          Globalization of trade was the basic purpose for which GATT was set up to reduce and finally remove all tariff and non tariff (subsidies and quotas) barriers. These barriers were considered as hindrance to the free flow of international trade. Therefore, WTO has taken over from GATT and act as a perma¬¨nent watchdog of global trade with Headquarters at Geneva.
          The objectives of WTO are high sounding on paper. It would aim at improving standard of living of people in the member countries. It would provide facilities for increasing production and trade of goods. It has pledged to ensure optimum utilization of world resources with increased opportunities for employment. The list of objectives is endless.
          Globalization of Trade is now a reality. The third world countries are not expected to be benefitted. As the 'Wall street Journal' has put it "while the Europeans are taking the best pieces, they are getting the crumbs." No doubt America & other developed nations have ensured benefits for themselves. Not surprisingly, there have been loud protest in India over the acceptance of the globalization concept under new GATT agreement.
          The opposition parties in India termed it as 'death warrant' 'compromising of economic sovereignty', 'a new kind of economic aggression' etc. Despite this Uproar they concede that India cannot reject the GATT accord because that would mean staying out of international trade. It is true that there are bound to be some red areas in the agreement for India. Yet we have to make the best of the unavoidable situation.




          A detailed examination of the issues at stake will bring out the advantages of GATT agreement to India.
(i) The Uruguay Final Act (UFA) is not for a free-for-all as is generally feared. There is no question of invasion of Indian market by MNCS. Policy guidelines already laid down by the Govt will continue to regulate their entry. On the other hand India will benefit from im¬proved technology, foreign capital and opportunities for employment.
(ii) Phasing out of Multi Fibre Agreement will help India. The USA and European countries have prescribed quotas for textile imports which have to be phased out over ten years.
(iii) In the field of agriculture production and export, subsidies are to be cut down by 24 and 36 percent. Further every country has to open its markets to imports of agricultural products equal to 3.3 percent of its total annual production. Since India's farm subsidies is limited to 5.2 percent already less than the prescribed limit, we need not fear on this account. As for compulsory import of agricultural products we car skip it under the clause which provides exemption to the country with adverse balance of payments. However, there may be a problem in the procurement prices of food grains. For Public Distribution System Govt is required to procure food grains at market rates. Thought we have not agreed to this clause, the constant pressure of IMF and World Bank to reduce fiscal deficit is a matter of concern.
(iv) For the first time the services sector has been brought with in purview of GATT. However India & other developing countries succeeded in keeping out sectors like shipping, life insurance, basic tele communications and certain aspect of banking.
(v) The most controversial aspect of the GATT accord is the one relating to Intellectual Property Rights (TRIPS). India has not so for recognized 'product' patents but has a law of its own. The 1970 Indian patents Act provides for seven year process patent. This means that an Indian manufacturer can produce a new drug by a different process. Under new arrangement Indian manufacturer will have to pay royalty and medicines in India will become costlier. It is, however, argued that patented drugs will not be more than 10 to 15 percent of all the medicines sold in the Indian markets. Moreover Govt has assured to safeguard the interests of the public. The problem of TRIPS is quite acute in the field of agriculture. Patented seeds or plant varieties will become the property of the foreign individual concern which first developed them.
          In fact new GATT accord is a mixed blessing for India. At the same time one must remember that no single country can boast of being a total beneficiary from GATT. It is hoped that GATT agreement will be beneficial to India in the long run. As for now, India has done the right thing by signing UFA. Isolationism is no solution to economic & political pressures. India has to learn to play its cards well in WTO.