PROJECT REPORT ON INTERNATIONAL TRADE ORGANIZATIONS

SUBMITTED TO PROF. VIJU NAVRE

SUBMITTED BY GROUP 9 HITESH BAMBLANI (10) SHAMLI BHOJWANI (17) KISHORE CHUGH (24) SAMITA HARWANI (34)

NEHA KHANDELWAL (41) HEENA KUKREJA (44)

International Trade
International trade is exchange of capital, goods, and services across international borders or territories. In most countries, it represents a significant share of gross domestic product (GDP). While international trade has been present throughout much of history (see Silk Road, Amber Road), its economic, social, and political importance has been on the rise in recent centuries. Industrialization, advanced transportation, globalization, multinational corporations, and outsourcing are all having a major impact on the international trade system. Increasing international trade is crucial to the continuance of globalization. Without international trade, nations would be limited to the goods and services produced within their own borders. Traditionally trade was regulated through bilateral treaties between two nations. For centuries under the belief in mercantilism most nations had high tariffs and many restrictions on international trade. In the 19th century, especially in the United Kingdom, a belief in free trade became paramount This belief became the dominant thinking among western nations since then. In the years since the Second World War, controversial multilateral treaties like the General Agreement on Tariffs and Trade (GATT) and World Trade Organization have attempted to promote free trade while creating a globally regulated trade structure. These trade agreements have often resulted in discontent and protest with claims of unfair trade that is not beneficial to developing countries. Free trade is usually most strongly supported by the most economically powerful nations, though they often engage in selective protectionism for those industries which are strategically important such as the protective tariffs applied to agriculture by the United States and Europe. The Netherlands and the United Kingdom were both strong advocates of free trade when they were economically dominant, today the United States, the United Kingdom, Australia and Japan are its greatest proponents. However, many other countries (such as India, China and Russia) are increasingly becoming advocates of free trade as they become more economically powerful themselves. As tariff levels fall there is also an increasing willingness to negotiate non tariff measures, including foreign direct investment, procurement and trade facilitation The latter looks at the transaction cost associated with meeting trade and customs procedures.

International Trade Organizations

The Bretton Woods Conference of 1944 recognized the need for a comparable international institution for trade (the later proposed International Trade Organization, ITO) to complement the International Monetary Fund and the World Bank Probably because Bretton Woods was attended only by representatives of finance ministries and not by representatives of trade ministries, an agreement covering trade was not negotiated there In early December 1945, the United States invited its war-time allies to enter into negotiations to conclude a multilateral agreement for the reciprocal reduction of tariffs on trade in goods. In July 1945 the United States Congress had granted President Harry S. Truman the authority to negotiate and conclude such an agreement. At the proposal of the United States, the United

Nations Economic and Social Committee adopted a resolution, in February 1946, calling for a conference to draft a charter for an International Trade Organization (ITO). A Preparatory Committee was established in February 1946, and met for the first time in London in October 1946 to work on the charter of an international organization for trade; the work was continued from April to November 1947. At the same time, the negotiations on the General Agreement on Tariffs and Trade (GATT) in Geneva advanced well and by October 1947 an agreement was reached: on October 30, 1947 eight of the twenty-three countries that had negotiated the GATT signed the "Protocol of Provisional Application of the General Agreement on Tariffs and Trade".[4] In March 1948, the negotiations on the ITO Charter were successfully completed in Havana. The Charter provided for the establishment of the ITO, and set out the basic rules for international trade and other international economic matters. The ITO Charter, however, never entered into force; while repeatedly submitted to the US Congress, it was never approved. The most usual argument against the new organization was that it would be involved into internal economic issues.[5] On December 6, 1950 President Truman announced that he would no longer seek Congressional approval of the ITO Charter.

Introduction of GATT:
The General Agreement on Tariffs and Trade (typically abbreviated GATT) was negotiated during the UN Conference on Trade and Employment and was the outcome of the failure of negotiating governments to create the International Trade Organization (ITO). GATT was signed in 1947 and lasted until 1993, when it was replaced by the World Trade Organization in 1995. It was signed by 23 countries. The original GATT text (GATT 1947) is still in effect under the WTO framework, subject to the modifications of GATT 1994. Achievements of GATT: In July 1995, 128 countries joined the WTO and later in Mid 2006 WTO had 149 members China-founder-quit in 1944 and rejoined in 1 Jan 2002 Exceptional growth in world trade Merchandise exports grew on average by 6% annually Total trade in 2000 was 22 times the level of 1950 Creation of forum for continuing consultations Average tariff of manufactured products in industrial countries ere brought down from 40% in 1947 to nearly 3% in UR

Objectives of GATT:
The objectives of GATT are as follows Raising standard of living Developing full use of resources of the world Ensuring full employment and a large and steadily growing volume of real income and effective demand Expansion of production and international trade.

Rules of GATT:
Any proposed change in tariff or other type of commercial policy of a member country should not be undertaken without consultation of other parties to the agreement Countries that adhere to GATT should work towards reduction of tariffs and other barriers in framework of GATT

Uruguay Round 1986 - 1994:

The Uruguay Round began in 1986. It was the most ambitious round to date, hoping to expand the competence of the GATT to important new areas such as services, capital, intellectual property, textiles, and agriculture. 123 countries took part in the round. The Uruguay Round was also the first set of multilateral trade negotiations in which developing countries had played an active role.

Limitation:
GATT was a set of rules agreed upon by nations, whereas the WTO is an institutional body. It was dominated by the developed countries and even the under developed countries were neglected.

World Trade Organization (WTO)

WTO born out of the GATT Created by: UR (1986-94) Headquarters : Geneva, Switzerland Formation : 1 January 1995

Membership : 153 countries Budget : 163 million USD (Approx).

WTO cooperate closely with - IMF &World Bank

Functions of WTO:
WTO administers the 28 agreements contained in the final act and the number plurilateral agreements and governments procurement through various counsels and committees. WTO examines regularly in the trade regimes individual member countries. Thus, it acts as a watch dog of international trade. WTO provides for disputes settlement court in order to adjudicate the trade disputes which could not be solved through bilateral talks between member countries . the disputes are examined by the panel of Independent experts in view of WTO rules and provided ruling. This procedure is laid down in order to provide equal treatment for all trading partners and to encourage member countries to live up to their obligations. WTO act as a management consultant for world trade. The economist of WTO observed the pulse of the global economy and provided studies on the main trade issues. Technical co-operation and training division is established in the WTOs Secretariat in order to help the developing countries in the implementation of UR results.

Structure of WTO

India and WTO

Increase in the level of merchandise trade. Ex: clothing(60%), agriculture(20%), forest & fishery(20%), food & beverages(19%)

Increase in the export of agricultural products Favorable environment for international business: India will become a favorable country for disputes settlements and can export various machinery and technologies worldwide. India with other developing countries has the Market access to number of advanced countries concerning to trade without discrimination Impact of abolition of textile quota system (Increase in export of textiles) In line with WTO obligations, India has adopted of product patents regime for food, drugs and chemicals from 1st jan 2005

Difference between GATT and WTO

GATT It is a set of rules and multilateral agreement It was designed with an attempt to establish International Trade Organization It was applied on a provisional basis Its rules are applicable to trade in merchandise goods GATT was originally a multilateral instrument, but plurilateral agreements were added at later stage Its dispute settlement system was not faster and automatic WTO It is a permanent institution It is established to serve its own purpose Its activities are full and permanent Its rules are applicable to trade in merchandise and trade in service and trade in related aspects of intellectual property Its agreements are almost multilateral

Its dispute settlement system is fast and automatic

International Monetary Fund (IMF)

The International Monetary Fund (IMF) is an intergovernmental organization that oversees the global financial system by taking part in the macroeconomic policies of its established members, in particular those with an impact on exchange rate and the balance of payments. The organization's stated objectives are to stabilize international exchange rates and facilitate development through the influence of neoliberal economic policies in other countries as a condition of loans, debt relief, and aid. It also offers loans with varying levels of conditionality, mainly to poorer countries. Its headquarters is in Washington, D.C. The IMFs relatively high influence in world affairs and development has drawn heavy criticism from some sources. The International Monetary Fund was conceived in July 1944 originally with 45 members and came

into existence in December 1945 when 29 countries signed the agreement, with a goal to stabilize exchange rates and assist the reconstruction of the worlds international payment system. Countries contributed to a pool which could be borrowed from, on a temporary basis, by countries with payment imbalances. The IMF was important when it was first created because it helped the world stabilize the economic system. The IMF works to improve the economies of its member countries. The IMF describes itself as an organization of 187 countries (as of July 2010), working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty.

IMF and India Relations

India is among one of the developing economies that effectively employed the various Fund programmes to fortify its fiscal structure. Through productive engagement with the IMF, India formulated a consistent approach to expand domestic and global assistance for economic reforms. Whenever India underwent balance of payments crises, it sought the help of IMF and in turn the internationally recognized reserve willingly helped India to overcome the difficulties. Recently, India purchased IMF gold to lend money to developing countries. This proves that the fiscal reforms set in motion by the previous finance ministers have finally started gaining momentum, transforming India from fiscal borrower to major lender. The speed at which the gold was purchased by India on September 18, 2009 astonished the market observers, who later considered it as a smart move towards shoring its bullion funds and steadily trying to stake on the US dollar. Some analysts predict that India is purchasing gold to move forward for higher voting share in the IMF. India is also seeking for a considerable say in global fiscal affairs and greater account in the IMF. The Reserve Bank of India forfeited USD 1,045/ ounce of yellow metal paying the amount in hard exchange and not in the IMF's internal division of account. The history of India's engagement with IMF illustrates that with premeditated planning it is possible to alleviate a macroeconomic calamity and sustain the rights of reform package without negotiating on democratic organizations or international policy autonomy.

IMF 2010-11 prediction of Indian Economy

The International Monetary Fund (IMF) predicted 8% expansion during 2010-11. However, the growth will be affected by high inflation and increasing monetary deficit in the concerned fiscal year. India's long term economic prospects will continue to remain sturdy in 2010-11 followed by lower growth rate at 7.7% for the FY 2011-12. Other than high inflation and rising financial deficit, the major areas of concern are rise in asset cost and the prospects of an unanticipated slowdown in the influx of foreign investment in India caused due by the chaos in worldwide financial markets.

The International Bank for Reconstruction and Development (IBRD) or the World Bank
IBRD is popularly known as the World Bank. It is an inter-governmental institution, corporate in form. Its capital is entirely owned by its member-governments.

Functions:
According to the article 1 of the agreement, the functions of the World Bank are: 1. To assist in the reconstruction and development of territories of its members 2. To promote private foreign investment. 3. To promote the long-range balanced growth of international trade and the maintenance of equilibrium in the balance of payments of member countries 4. To arrange the loans or guarantees

Funding Objectives of the Bank:

IBRD has the following funding objectives: To make sure of availability of funds in the market To provide funds to the borrowers at the possible lowest cost through manipulating the currency mix and opting the time when the interest rate in the market is low To control volatility in net income and overall charges of the loan To provide an appropriate degree of maturity transformation between borrowings and lending Banks borrowing: It borrows in the international capital market both on medium term and long term basis It also borrows on currency swap agreements It borrows under the discount net programme

Banks Lending Activities:

Bank grants loans to the member countries as follows: Granting loans from its own funds Granting loans from the funds borrowed by the bank in the market of the member countries Guaranteeing the loans raised by the member countries from various other sources

Conditions for granting loans:

If the borrower is unable to raise a loan under reasonable circumstances If the loan is for reconstruction and/or development When the member country or its central bank guarantees the repayment of the loan raised by a company or a local government of a member country If a competent committee recommends a loan in the form of a written project report In addition to providing direct loans, indirect loans and guaranteeing the loans, IBRD provides the following facilities to its member countries.

Technical and Advisory Assistance:

IBRD provides technical and advisory assistance to its member countries in addition to financial assistance. Technical assistance includes: Assessing the economic resources of the members and set up priorities to be followed in developmental programmes Sending survey missions to member countries to conduct intensive studies of national resources with a view to formulate policies for long term development of the country

Case Study- Darjeeling Tea

HISTORY OF THE TRIPS PROVISIONS ON GI India remained a cautious and somewhat passive player during the initial years of the Uruguay Round negotiations, given its long legacy of inward looking development strategy and protectionist trade policy regime. However, at Doha India wanted to extend protection under geographical indication (GI) beyond wine and spirit, to other products. A number of countries wanted to negotiate extending this higher level of protection to other products as they see a higher level of protection as a way to improve marketing their products by differentiating them more effectively from their competitors and they object to other countries usurping their terms. Some others opposed the move, and the debate has included the question of whether the Doha Declaration provides a mandate for negotiations. India, along with a host of other likeminded countries pressed an extension of the ambit of Article 23 to cover all categories of goods. However, countries such as the United States, Australia, New Zealand, Canada, Argentina, Chile, Guatemala and Uruguay are strongly opposed to any extension. The extension issue formed an integral part of the Doha Work Programme (2001). However, as a result of the wide divergence of views among WTO members, not much progress has been achieved in the negotiations and the same remains as an outstanding implementation issue.

THE INDIAN GI ACT India has put in place a sui generis system of protection for GI with enactment of a law exclusively dealing with protection of GIs. The legislations which deals with protection of GIs in India are The Geographical Indications of Goods (Registration & Protection) Act, 1999 (GI Act), and the Geographical Indications of Goods (Registration and Protection) Rules, 2002 (GI Rules). India enacted its GI legislations for the country to put in place national intellectual property laws in compliance with Indias obligations under TRIPS. Under the purview of the GI Act, which came into force, along with the GI Rules, with effect from 15 September 2003, the central government has established the Geographical Indications Registry with all-India jurisdiction, at Chennai, where right-holders can register their GI. Unlike TRIPS, in the GI Act does not restrict itself to wines and spirits. Rather, it has been left to the discretion of the central government to decide which products should be accorded higher levels of protection. This approach has deliberately been taken by the drafters of the Indian Act with the aim of providing stringent protection as guaranteed under the TRIPS Agreement to GI of Indian origin. However, other WTO members are not obligated to ensure Article 23-type protection to all Indian GI, thereby leaving room for their misappropriation in the international arena. The definition of GI included in Section 1(3) (e) of the Indian GI Act clarifies that for the purposes of this clause, any name which is not the name of a country, region or locality of that country shall also be considered as a GI if it relates to a specific geographical area and is used upon or in relation to particular goods originating from that country, region or locality, as the case may be. This provision enables the providing protection to symbols other than geographical names, such as Basmati. STATUS OF GI REGISTRATIONS IN INDIA Around 65 GIs of Indian origin have already been registered with the GI Registry. These include GI like Darjeeling (tea), Pochampalli, Ikat (textiles), Chanderi (sarees), Kancheepuram silk (textiles), Kashmir Pashmina (shawls), Kondapalli (toys), and Mysore (agarbattis). GIs registered during 2007-08 include Muga Silk from Assam, Madhubani paintings from Bihar, Malabar pepper and Alleppey Green Cardamom from Kerala, Cora Cotton from Tamil Nadu, Allahabad Surkha from Uttar Pradesh, Nakshi Kantha from West Bengal, Monsooned Malabar Coffees from Karnataka and Kerala. There is many more Indian GI in the pipeline for registration under the GI Act. CASE STUDY DARJEELING TEA Tea is Indias oldest industry in the organized manufacturing sector and has retained its position as the single largest employer in this sector. Around 30 per cent of the worlds tea is produced in the country. India is also the worlds largest consumer of tea. However, on the export front India is facing huge competition from other key tea producing countries, such as Kenya, Sri Lanka and China. Darjeeling tea is a premium quality tea produced in the hilly regions of the Darjeeling district West Bengala state in the eastern province of India. Among the teas grown in India, Darjeeling tea offers distinctive characteristics of quality and flavour, and also a global reputation for more than a century. Broadly speaking there are two factors which have

contributed to such an exceptional and distinctive taste, namely geographical origin and processing. The tea gardens are located at elevations of over 2000 meters above sea level. Even after the Indian independence from British rule in 1947, the British ownership continued in many tea gardens of Darjeeling. By the end of the 1970s, most of the tea gardens of Darjeeling were in the hands of Indian owners. The major portion of the annual production of Darjeeling tea is exported, the key buyers being Japan, Russia, the United States, and theUnited Kingdom and other European Union (EU) countries such as France, Germany and the Netherlands. In order to ensure the supply of genuine Darjeeling tea in February 2000, a compulsory system of certifying the authenticity of exported Darjeeling tea was incorporated into the Indian Tea Act of 1953. The system makes it compulsory for all the dealers in Darjeeling tea to enter into a license agreement with the Tea Board of India on payment of an annual license fee. Why Protect Darjeeling Tea as Geographical Indication. An adequate legal protection is necessary for the protection of legitimate right holders of Darjeeling tea from the dishonest business practices of various commercial entities. For instance, tea produced in countries like Kenya, Sri Lanka or even Nepal has often been passed off around the world as Darjeeling tea. Appropriate legal protection of this GI can go a long way in preventing such misuse. CONCLUSION While the Tea Board has made strides in its quest for international recognition of Darjeeling tea as a trademark, recognition of Darjeeling Tea as a Geographical Indicator in the international arena is still to be achieved, primarily due to the fact that Article 23 of TRIPS gives good protection to Wines and Spirits, but currently not for other products. The lack of a multilateral system of notification and registration for products like Darjeeling Tea which is available for wines and spirits, is jeopardizing the international protection that would offer adequate protection. It is there important for India i to seek extension of GI protection to other products by amending Article 23 of the TRIPS. The Indian governments application for a geographical indication mark for Darjeeling Tea came to close, with the European Commission expected to recognize it. Geographical indication marks are a type of intellectual property mark that recognizes a specific region only as the name for a particular product. Champagne, Napa Valley and Roquefort Cheese are just three examples. The goods should be from a defined geographical region and possess distinct qualities linked to that area. Currently, statistics demonstrate that about 70 percent of all tea sold as Darjeeling does not in fact originate from the area. The granting of the mark will ensure that tea falsely claiming the Darjeeling name cannot be sold within the EU.