IMPLICATIONS OF WTO IN INDIA

WTO
The World Trade Organisation (WTO) was created on January 1, 1995 to promote world trade. The
multilateral trade agreements include the General Agreement on Tariffs and Trade (GATT) 1994 and its
related agreements; the General Agreement on Trade in Services (GATS); and the Trade-related
Intellectual Property Rights (TRIPS).

IMPLICATIONS FOR INDIA

India did not gain much by raising issue of agriculture reforms in developed countries because the
overall tariff is lower in those countries.
India will have to start major reforms in agriculture sector in India to make Agriculture globally
competitive.
Same way it is questionable if India is major beneficiary in dismantling of quotas, which were available
under MFA for market access in US and some EU countries.

How Does it Affect India?

India is a founder member of World Trade Organization, and also treated as the part of
developing countries group for accessing the concessions granted by the organization. As
a result, there are several implications for India for the various agreements that are
signed under WTO. Let us understand each agreement in general, what it means and its
implications for India in specific.

1. India was a signatory of the General Agreement on Tariffs & Trade (GATT), and
as a part of the commitment had to change several laws and policies; the major changes
that were incorporated were as a follows
 Reduction of peak and average tariffs on manufactured products
 Commitments to phase out the quantitative restrictions over a period as these
were considered non-transparent measure in any countries policy structure.

2. Trade Related Investment Measures (TRIMS)

The agreement relates to investments originating from one country to another. The
agreement prohibits the host country to discriminate the investment from abroad with
domestic investment, which implies that it favors national treatment of foreign
investment.

3. Trade Related Intellectual Property Rights (TRIPS)

This agreement includes several categories of property such as
Patents, Copyrights, Trademarks, Geographical indications, Designs, Industrial circuits
and Trade secrets.
Since the law for these intangibles vastly varied between countries, goods and services
traded between countries which incorporated these intangibles faced severe risk of
infringement.
PATENTS

The purpose of patent is to provide a form of protection for technological advances.

Patents are intended for breakthroughs in technology, but they are also intended for small
technological increments.
The advantage of taking out a patent are that the owner of a patent can exclude all others in the territory
covered by the patent from making, using, selling or importing the invention.
When the patent rights expire, the technology becomes public property, and the public is free to use it
for their own good.

4. Agreement on Agriculture (AOA): The Agriculture happens to be one of the most

protected sectors in all the countries without any exceptions, and therefore an
agreement on the agricultural issues have always been evading and debated strongly by
all the countries involved in trade in agriculture.
5. Agreement on Sanitary and psyto-sanitary measures (SPM): this agreement
refers to restricting exports of a country if they do not comply with the international
standards of germs/bacteria etc… if the country suspects that allowing of such products
inside the country would result in spread of disease and pest, then there is every right
given to the authorities to block the imports.

6. Multi-Fiber Agreement (MFA): This agreement is dismantled with effect from 1

January 2005.
As a consequence a huge textile market is opened up for developing countries
textile industry as well as for other countries that have competitive advantage in this
area. The immediate impact is on the garment and textile manufacturers and exporters.

There are other agreements that call for direct reduction of Subsidies on Exports, which are not
permissible, and phasing it out over a period of time. Besides these there are other Counter-Veiling
Duties (CVD) that are permitted to be used in certain conditions. These are supposed to have an impact
positive if they help the industries and negative if they reduce the cost competitiveness.
The trading countries are allowed to impose an Anti-Dumping Duty (ADD) against
imported products if the charge of Dumping is claimed against them. The requirement is
to prove that the product is being sold at a price, which results in material injury to the
domestic industries. There are several cases in which the duty is imposed but it still
remains to be proven by the Dispute settlement tribunal in case the other trading party
opposes the duty imposed as "unfair". However, the proposal always should come from
the representatives of the industries affected; this may result in a problem, as small
industries voice may remain unheard in the process.

Agricultural sector
The provisions of W.T.O offered ample opportunities to India to expand its export market.
International price of agricultural commodities have since then plummeted, because of which domestic
price turned higher than international price, which made India an attractive market for import of most
agricultural commodities.
 This situation resulted in a wide spread decline in agricultural export and had also pressure on domestic
value.
The impact of W.T.O on agriculture was severely felt by India as cheap imports have frequently hit the
Indian market, causing shock waves among the agriculture producers.
The changes in agricultural exports reveal that during pre W.T.O period the increase was significant and
could not be sustained in the post W.T.O period whereas imports remarkable than post W.T.O period
and the rising export trend rose steadily.

PHARMA SECTOR

In Pharma-sector there is need for major investments in R &D and mergers and restructuring of
companies to make them world class to take advantage. India has already amended patent Act and both
product and Process are now patented in India.

However, the large number of patents going off in USA recently, gives the Indian Drug companies
windfall opportunities, if tapped intelligently. The Indian generics business boom has lured Western drug
makers that want to raise exposure in fast-growing emerging markets.

The dispute over seizures has rumbled in the backdrop of negotiations between India and the 27-nation
EU bloc for a free trade deal which both sides aim to seal by October.

Trade between India and the EU stood at 78 billion euros ($105 billion) as on 31st March, 2010.

TELECOM SECTOR

The General Agreement on Trade in Services (the “GATS”) was one of the most important
achievements of the Uruguay Round of negotiations that led to the creation of the World Trade
Organization (the “WTO”). In 2001, international trade in services constituted approximately $1.450
trillion which represents almost 20% of total global trade in goods and services combined.
Telecommunication services are important not just because annual telecommunications revenues run
into hundreds of billions of dollars a year and a significant proportion of global GDP but also because
they enable the supply of other types of services as well as the production of goods.

PROBLEMS FACING INDIA IN WTO AND ITS IMPLEMENTATIONS

Predominance of developed nations in negotiations extracting more benefits from developing and least
developed countries.
Resource and skill limitations of smaller countries to understand and negotiate under rules of various
agreements under WTO.

Incompatibility of developed and developing countries resource sizes thereby causing distortions in
implementing various decisions.
 Non-tariff barriers being created by developed nations.

Under TRIPS question of high cost of Technology transfer, Bio Diversity protection, protection of
Traditional Knowledge and Folk arts, protection of Bio Diversities and geographical Indications of
origin, for example Basmati, Mysore Dosa or Champagne. The protection has been given so far in
wines and spirits that suit US and European countries.

WHAT INDIA SHOULD DO?

The most important things for India to address are speed up internal reforms in building up world-class
infrastructure like roads, ports and electricity supply. India should also focus on original knowledge
generation in important fields like Pharmaceutical molecules, textiles, IT high end products, processed
food, installation of cold chain and agricultural logistics.
India's ranking in recent Global Competitiveness report is not very encouraging due to infrastructure
problems, poor governance, poor legal system and poor market access provided by India.

Our tariffs are still high compared to Developed countries and there will be pressure to reduce them
further and faster.
India must improve legal and administrative infrastructure, improve trade facilitation through cutting
down bureaucracy and delays and further ease its financial markets.
Corruption will also have to be checked by bringing in fast remedial public grievance system, legal
system and information dissemination by using e-governance.
The petroleum sector has to be boosted to tap crude oil and gas resources within Indian boundaries and
entering into multinational contracts to source oil reserves.

India has amended many of its laws and policies, such as on patents and quantitative restrictions, in order
to make them WTO-compatible. In the case of investment, the international regulatory framework, of
which India is a part, is contained partly in the WTO in the form of the Trade Related Investment
Measures (TRIMS) agreement (which bars imposition of conditions such as mandatory export
requirements on foreign investors) and mainly in the numerous Bilateral Investment Promotion
Agreements (BIPAs), or Bilateral Investment Treaties (BITs), as they are popularly called.

BITs are international agreements signed between two countries to provide a framework for regulating
investments made by one BIT country into another. Thus, BITs contain legal promises made by two
countries to each other, at the international level, on how to regulate investments of the other country
once they enter their territories.

The offshoot of these promises is that each BIT-signing country has to develop its domestic regulations as
per these international legal promises. Thus, if a BIT has a national treatment provision, then the two
BIT-signing countries cannot adopt a national regulation that favours domestic investments over foreign
investments.