IMPACT OF WTO

ON
INDIAN INDUSTRY
AND SERVICES
 GROUP MEMBERS
Mihir Goradia 6054
Mayank Rajyagor 6138
Harshit Shah 6154
Roshni Shah 6163
Shradha Dandekar IN0618
Nirav Parikh IN0645
Mandar Patkar IN0647
Gaurav Shah IN0655
History Behind
WTO?
 Fact File
 Location: Geneva, Switzerland.
 Established:1st Jan, 1995.
 Created by: Uruguay Round
Negotiation(1986-1994)
 Membership: 151countries.
 Secretarial Staff: 635.
 Head: Pascal Lamy
 Functions of WTO
 Administering WTO trade agreements.
 Forum for trade negotiation
 Handling trade disputes
 Monitoring national trade policies.
 Technical assistance & training for
developing countries.
 Cooperation with other international
Organization.
 Important Agreements under
WTO
 General Agreement on trade in Services

 Trade Related Intellectual Property Rights

 Trade Related Investment Measures

 Agreement on Anti-Dumping
GATS & its
Existence
 Services were considered to offer less potential for
trade expansion than goods

 Development of new transmission technologies

facilitating the supply of services

 Opening of monopolies in many countries

 Gradual liberalization of regulated sectors like

transport, banking and insurance combined with
changes in consumer preferences, enhanced the
“tradability” of services

 Developments increased international services flows

and created a similar need for multilateral
disciplines
 Main purpose of GATS was to create a credible and
reliable system of international trade rules, which
ensured fair and equitable treatment of all countries
on the principles of non-discrimination

 It aims at stimulating trade and development by

seeking to create a predictable policy environment
wherein the member countries voluntarily undertake
to bind their policy regimes relating to trade in
services
 Existence of GATS

 GATS came into existence as a result of the

Uruguay Round of negotiations and entered into
force on 1 January 1995, with the establishment
of the WTO

 The multilateral legal instruments resulting from

the Uruguay Round were treated as a single
undertaking

 India also signed all the WTO agreements under

the single undertaking rule and GATS is a part of
this whole package
 Importance of services sector to the Economy

 Economic performance

 Development

 Employment Opportunities

 Consumer Choice

 Technology transfer
 Services covered & excluded under
GATS
 GATS covers all internationally traded
services with two exceptions :

* Services provided to the public in the

exercise of governmental authority, and
* In the air transport sector, traffic rights
and all services directly related to the
exercise of traffic rights
1. Business services (including professional and computer services)

2. Communication services

3. Construction and Engineering services

4. Distribution services (e.g. . . Commission agents, wholesal & retail

trade )

5. Education services

6. Environment services

7. Finance (including insurance and banking) services

8. Health services

9. Tourism and Travel services

10. Recreation, Cultural and Sporting Services

11.Transportation Services, and

12. Other services not elsewhere classified.

 Supply of services categorized under
GATS

 Mode 1: Cross-border supply

 Mode 2: Consumption abroad

 Mode 3: Commercial presence

 Mode 4: Presence or movement of natural

persons
 Obligations in GATS
 General obligation
• MFN
• Transparency
• Other obligations (Appeal, procedure etc.)
 Conditional obligation
• Market access
• National treatment

Modification
 Impact on financial services
 Insurance :
• Indian party Indian insurance company
• 26% foreign equity
• Auxiliary services:- JV 51% FP with FIPB
approval
 Banking:
• Applicability of mode 3 (Opening of
branch)
• Max 20 license per year
• No license if asset (on& off B/s) >15% of total

• FB participation for IPO, FPO up to 74%

• Venture capital:- no cap

• Restriction on PSE for surplus fund

• FB investment in PVT SEC Bank (49%)

• Financial information & data processing:- full

commitment

• Asset mngt, trust services, pension fund,

invest mngt 26 % cap
 Architectural services
• Mode 1 & 2
• Mode 3:- partnership firm allowed
• Mode 4:- horizontal section

 Construction & engineering services

• Mode 1 & 2
• Mode 4:- horizontal section
 Telecommunication

• Licensing requirement

• Wired communication:- 25%

• Mode 2:- full commitment

• Mode 3:- FDI 49%

• Mode 4:- horizontal section

IMPACT OF DUMPING
ON INDIAN INDUSTRY
 DEFINATION
Dumping is defined –
“As the practice of selling a good in
other country at a lower price than in
the domestic market or for a lower
price than its cost of production.”
 TOY INDUSTRY
 Chinese manufacturers

 80 per cent of the toys

 Indian manufacturers have been selling the

Chinese toys

 A Big toy car

Chinese Toy - Rs 80
Indian Toy - Rs 250
Advantage for Chinese Manufacturers

 Price sensitive

 Competitive Prices
 Impact
 Two million workers are in serious trouble

 Indian manufacturers have already closed their

units

 Mr. Vishnu Swaroop Agarwal says,

“ More than 50 per cent of Indian toy
manufacturers have now turned into importers
and distributors of imported toys.”
 ELECTRONICS INDUSTRY
 Chinese dry batteries

 Exported to India below its normal value

 5.37 mn pieces in 1997-98 to 36.60 mn pieces in

1998-99

 Chinese batteries - Rs 1.5 to Rs 2

 In Indian batteries - Rs 8 – Rs 10
 Impact
 The damage was not permanent

 Quality problems

 Imposition of Anti-dumping duty

WTO Initiatives on Anti-Dumping
 Agreement on Implementation of
Article VI of GATT

 Agreement on Subsidies and

Countervailing Measures

 Agreements on Safeguards
Agreement on Implementation of
Article VI of GATT
 Imposition of a specific anti-dumping duty
on imports from a particular source
 Pre-requisites –
• determine the extent of the ‘dumping margin’
• show that dumping is causing material injury
in the domestic market
 Detailed procedural rules for the initiation
and conduct
 Duties imposed are subject to reviews
every 5 years
 Agreement on Subsidies and
Countervailing Measures
 Subsidies which directly or indirectly
affect trade flows
 2 Types of subsidies
• Prohibited subsidies
• Actionable subsidies
 More concerned with Agricultural
trade
 Agreements on Safeguards
 “Emergency” actions with respect to
unexpected increased imports of particular
products

 measures can consist of

• quantitative import restrictions or
• duty increases

 costly for the country applying them

 TRIMS Agreement
 Agreement in 1995

 Applicable to goods only

 Prohibition of inconsistent TRIMS

Article III (National treatment), or
Article XI (General elimination of
quantitative restrictions
 TRIMS Agreement
 Notification of inconsistency

 Transition period

 Extension

 Illustrative list
 Illustrative list

 Local Content regulation

 Trade Balancing requirements.

 Foreign Exchange balancing

requirements.
 Illustrative list (Contd..)

 Domestic sales requirements.

 Technology transfer requirements.

 Local Equity requirement.

 Impact
 Industrialization.

 Encourages domestic investment.

 Conservation of foreign exchange

reserve.
 Criticism

 No self reliant growth

 Restrictive business practices

 Agreement on T.R.I.P.S
 Came into effect from 1st April,2005

 Sets Minimum standard for I.P regulation

 Deals with Copyright & related rights,

Patents, Trademarks, Industrial designs

 Most Comprehensive agreement on I.P.R

 T.R.I.P.S Agreement
 Copyrights and related rights
 Trademarks
 Geographical Indications
 Industrial Designs
 Patents
 Lay out designs of integrated circuits
 Protection of undisclosed
information (trade secrets)
 T.R.I.P.S Impact
 Closure of industries on large scale
 Indian firms concentration on generic
products
 Opening research and development
by foreign Multi national company
 Standardization of product
 Current Issues
 International organization and traties
 Mashlekar committee
 Modernization of IP offices
 Modernization of IP administration
THANK YOU