GATT & WTO - Their Impact on India

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This presentation was a part of my group project study at M S Ramaiah Institute Of Management, Bangalore. Co-Developed by : Shashank M.A, Prasad E. Prabhu, Binit chouraria, Koushik Basak & Uma Maheshwar Rao (MSRIM Bangalore)

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Aniruddh Tiwari
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  • GATT & WTO - Their Impact on India

    1. 1. GATT & WTO Its Impact on Indian Foreign TradeBy:-• Aniruddh Tiwari• Binit Chouraria• Kaushik Basak• Prasad E. Prabhu• Shashank M.A.• Umamaheshwar Rao
    2. 2. Objective & Hypothesis• Objective:1) To study the benefits of WTO & GATT on Indian Foreign Trade.2) Analysis of three sectors namely Agriculture, Textile & Service.• Hypothesis(H0):Indian foreign trade unaffected by WTO Policies
    3. 3. Indian foreign trade:•Indian economic policy after independence was influenced by the colonialexperience, which was seen by Indian leaders as exploitative,and by thoseleaders exposure to democratic socialism as well as the progress achievedby the economy of the Soviet Union.•Domestic policy tended towards protectionism, with a strong emphasis onimport substitution, industrialization, state intervention, a large publicsector, business regulation, and central planning,while trade and foreigninvestment policies were relatively liberal.•Indias economy was mostly dependent on its large internal market withexternal trade accounting for just 20% of the countrys GDP.Until the liberalization of 1991, India was largely and intentionally isolatedfrom the world markets, to protect its economy and to achieve self-reliance. Foreign trade was subject to import tariffs, export taxes andquantitative restrictions.
    4. 4. •Indias exports were stagnant for the first 15 years after independence, due tothe predominance of tea, jute and cotton manufactures, demand for which wasgenerally inelastic. Imports in the same period consisted predominantly ofmachinery, equipment and raw materials, due to nascent industrialization.•Since liberalization, the value of Indias international trade has increased sharply.Indias major trading partners are the European Union, China, the United Statesand the United Arab Emirates.•In 2009–10, major export commodities included engineering goods, petroleumproducts, chemicals and pharmaceuticals, gems and jewellery, textiles andgarments, agricultural products, iron ore and other minerals. Major importcommodities included crude oil and related products, machinery, electronic goods,gold and silver.•Its September 2010 exports were reported to have increased 23% year-on-yearto US $18.02bn, while its imports were up 26.1% at $27.14bn. At US$13.06bnAugusts trade gap was the highest in 23 months but the economy is well on theroad to cross $200 billion mark in exports for the financial year 2010–11.
    5. 5. GATTThe General Agreement on Tariffs and Trade (typicallyabbreviated GATT) was negotiated during the UN Conferenceon Trade and Employment and was the outcome of the failureof negotiating governments to create the International TradeOrganization (ITO).GATT was formed in 1948 and lasted until 1993, when it wasreplaced by the World Trade Organization in 1995.
    6. 6. GATT and WTO trade rounds Name Start Duration Countries Subjects covered Achievements Signing of GATT, 45,000Geneva April 1947 7 months 23 Tariffs tariff concessions affecting $10 billion of trade Countries exchanged someAnnecy April 1949 5 months 13 Tariffs 5,000 tariff concessions Countries exchanged some September 8,700 tariff concessions,Torquay 8 months 38 Tariffs 1950 cutting the 1948 tariff levels by 25%Geneva $2.5 billion in tariff January 1956 5 months 26 Tariffs, admission of Japan II reductions September Tariff concessions worthDillon 11 months 26 Tariffs 1960 $4.9 billion of world trade
    7. 7. Tariff concessionsKennedy May 1964 37 months 62 Tariffs, Anti-dumping worth $40 billion of world trade Tariffs, non-tariff Tariff reductions worth Tokyo September 1973 74 months 102 measures, "framework" more than $300 billion agreements dollars achieved The round led to the creation of WTO, and extended the range of trade negotiations, Tariffs, non-tariff leading to major measures, rules, reductions in tariffs services, intellectual (about 40%) andUruguay September 1986 87 months 123 property, dispute agricultural subsidies, settlement, textiles, an agreement to allow agriculture, creation of full access WTO, etc for textiles and clothing from developing countries, and an extension of intellectual property rights. Tariffs, non-tariff measures, agriculture, labor standards, environment, The round is not yet Doha November 2001 ? 141 competition, concluded. investment, transparency, patents etc
    8. 8. WTO:•The World Trade Organization (WTO) is an organization that intends to superviseand liberalize international trade. The organization officially commenced on January1, 1995 under the Marrakech Agreement, replacing the General Agreement onTariffs and Trade (GATT), which commenced in 1948.•The organization deals with regulation of trade between participating countries; itprovides a framework for negotiating and formalizing trade agreements, and adispute resolution process aimed at enforcing participants adherence to WTOagreements which are signed by representatives of member governments andratified by their parliaments.• The WTO has 153 members representing more than 97% of total world trade and30 observers, most seeking membership. The WTO is governed by a ministerialconference, meeting every two years; a general council, which implements theconferences policy decisions and is responsible for day-to-day administration; anda director-general, who is appointed by the ministerial conference. The WTOsheadquarters is at the Centre William Rappard, Geneva, Switzerland.
    9. 9. INDIA AND WTO:•India is one of the founding members of WTO along with 134 other countries.Indias participation in an increasingly rule based system in governance ofInternational trade, would ultimately lead to better prosperity for the nation.•Various trade disputes of India with other nations have been settled throughWTO.•India has also played an important part in the effective formulation of majortrade policies. By being a member of WTO several countries are now trading withIndia, thus giving a boost to production, employment, standard of living and anopportunity to maximize the use of the world resources.•According to the WTO Secretariat Report, along with the policy statement by theGovernment of India, India is expected to snatch most of the business deals thatare presently catering the developed nations which includes major service basedindustries like telecom, financial services, infrastructure services such as transportand power.•The increase in availability and reduction in tariffs has prompted many developednations to go for business with India especially in IT and ITeS industry. If thetrend continues then by 2025, India is expected to cater to the software andservices demands of major giants of the business world.
    10. 10. India’s ImpEx Before Liberalization
    11. 11. Year to Exports(Rs in million) Imports(Rs in million) Trade Balance Rate of Exchange (including re-exports) Export Import1949-50 485 617 -132 na na1950-51 606 608 -2 24.9 -1.51951-52 716 890 -174 18.2 46.41952-53 578 702 -124 -19.3 -21.11953-54 531 610 -79 -8.1 -13.11954-55 593 700 -107 11.7 14.81955-56 609 774 -165 2.7 10.61956-57 605 841 -236 -0.7 8.71957-58 561 1035 -474 -7.3 23.11958-59 581 906 -325 3.6 -12.51959-60 640 961 -321 10.2 6.11960-61 642 1122 -480 0.3 16.81961-62 660 1090 -430 2.8 -2.91962-63 685 1131 -446 3.8 3.81963-64 793 1223 -430 15.8 8.11964-65 816 1349 -533 2.9 10.31965-66 810 1409 -599 -0.7 4.41966-67 1157 2078 -921 42.8 47.51967-68 1199 2008 -809 3.6 -3.41968-69 1358 1909 -551 13.3 -4.91969-70 1413 1582 -169 4.1 -17.11970-71 1535 1634 -99 8.6 3.31971-72 1608 1825 -217 4.8 11.7
    12. 12. 1971-72 1608 1825 -217 4.8 11.71972-73 1971 1867 104 22.6 2.31973-74 2523 2955 -432 28 58.31974-75 3329 4519 -1190 31.9 52.91975-76 4036 5265 -1229 21.2 16.51976-77 5142 5074 68 27.4 -3.61977-78 5408 6020 -612 5.2 18.61978-79 5726 6811 -1085 5.9 13.11979-80 6418 9143 -2725 12.1 34.21980-81 6711 12549 -5838 4.6 37.31981-82 7806 13608 -5802 16.3 8.41982-83 8803 14293 -5490 12.8 5.01983-84 9771 15831 -6060 11 10.81984-85 11744 17134 -5390 20.2 8.21985-86 10895 19658 -8763 -7.2 14.71986-87 12452 20096 -7644 14.3 2.21987-88 15674 22244 -6570 25.9 10.71988-89 20232 28235 -8003 29.1 26.91989-90 27658 35328 -7670 36.7 25.11990-91 32553 43198 -10645 17.7 22.31991-92 44041 47851 -3810 35.3 10.8
    13. 13. 35000 30000 25000 20000 15000 10000 5000 0 1949-50 1951-52 1953-54 1955-56 1957-58 1959-60 1961-62 1963-64 1965-66 1967-68 1969-70 1971-72 Exports 1973-74 1975-76 1977-78 1979-80 1981-82 1983-841985-861987-881989-90 Exports
    14. 14. 50000 40000 30000 20000 10000 0 1951-52 1954-55 1957-58 1960-61 1963-64 1966-67 1969-70 1972-73 Imports 1975-76 1978-79 1981-82 1984-851987-881990-91 Imports, 43198 Imports
    15. 15. Imports 96-97 Imports in 2009-10
    16. 16. Exports in 1996-97 Exports in 2009-10
    17. 17. EXPORT OF PRIMARY PRODUCTS IN 96-97 TOTAL: Quantity 7551913.8 mts Value 7915.12 Crs
    18. 18. EXPORT OF PRIMARY PRODUCTS IN 06-07 TOTAL: Quantity 12099516 mts Value 21150.4 Crs
    19. 19. India’s Import & Export post reform
    20. 20. Exports 90000000 80000000 70000000 60000000 50000000Axis Title 40000000 30000000 20000000 10000000 0 96-97 97-98 98-99 99-00 00-01 01-02 02-03 03-04 04-05 05-06 06-07 07-08 08-09 09-10 Misc 491786. 542339. 634678. 760504. 1059732 1298387 1458327 1641057 2102620 2291527 2936350 2881001 4635817 5145480 Heavy Machinery 1020479 1105266 1068740 1164457 1725802 1838017 2183550 2923169 3688139 4993196 6402877 7715493 1315179 1150345 Metals & Minerals 2501785 2854353 3382247 4449691 5015199 5104759 6745573 7873023 1069805 1171765 1441698 1547364 2157145 2055089 Clothings 3377284 3581165 3936673 4451564 5428601 5113270 5885493 6367888 6649403 8161378 9155048 9444544 1037309 1164236 Animal products 421799. 480361. 513899. 480811. 664479. 660121. 668932. 742848. 790823. 857798. 925515 955183. 1119179 1041673 Silk 43655.6 65145.6 71,269. 93,106. 129,057 119,470 131,757 156,617 164,802 173,742 175,312 139,386 152,205 131,922 Books 15177.1 13401.5 19,072. 21,732. 27,725. 26,428. 32,751. 43,161. 46,798. 63,304. 114,637 80,241. 103,287 96,190. Pharmaceutical Products 238563. 290071. 307,016 370,893 431,767 503,510 677,911 744,452 926,341 1,082,1 1,438,0 1,671,1 2,337,9 2,456,6 Chemicals & Fertilizers 1278728 1381286 1296788 1488770 2801145 3040993 4003845 4901120 8062470 1130831 1561985 1979715 2185771 2354145 Agriculture 1620932 1713561 1830246 1614840 1746625 1924899 2203363 2362842 2595746 2855848 3555954 4955973 5790702 5209213 Forest produce (inc paper) 302982. 278919. 306218. 329928. 403318. 431101. 568470. 643361. 727188. 906797. 1061449 1049879 1305277 1236233 Dairy Products 11760.1 11676.8 9,320.2 11,761. 20,815. 35,248. 35,670. 40,970. 73,586. 110,677 80,739. 138,739 154,242 91,470. Meat & Fish 556863. 610223 599146. 718116. 902834. 805590. 918082. 896163. 1007977 1119418 1295180 1283942 1522802 1906390
    21. 21. Imports 16000000 14000000 12000000 10000000Axis Title 80000000 60000000 40000000 20000000 0 96-97 97-98 98-99 99-00 00-01 01-02 02-03 03-04 04-05 05-06 06-07 07-08 08-09 09-10 Misc 1332359 1305645 1909798 1288421 1240788 1342513 1557509 1695868 2336424 3298797 4285852 4903597 7119393 8353609 Heavy Machinery 2606570 2798193 2844808 3167283 3594954 4093160 5854089 7686343 1030197 1534642 1929104 2636574 2971295 2739916 Metals & Minerals 2676229 3716564 4918830 5585666 5523520 5790809 6476033 8456905 1239603 1382341 1652018 1829517 2887502 3018426 Clothings 187396. 224371. 283312. 401916. 442888. 594962. 618071. 718012. 778700. 935612. 1024550 1082960 1364188 1374673 Animal products 122529. 127132 119895. 121204. 141697. 176273. 198721. 222627. 242667. 266310 318932. 339937. 383124. 356197. Silk 29,717. 28,350. 32,967. 47,978. 56,795. 80,653. 95,041. 117,336 144,928 176,235 158,589 158,377 172,846 182,042 Books 30,468. 55,674. 71,225. 62,323. 88,122. 108,715 100,355 135,556 165,823 210,346 257,205 279,878 201,625 208,192 Pharmaceutical Products 22,834. 45,698. 57,004. 60,051. 68,789. 79,434. 115,210 114,987 130,277 194,913 291,382 281,855 426,218 519,663 Chemicals & Fertilizers 5796032 5774513 5621652 8795789 1023483 1015458 1236369 1385179 2037209 2838556 3733608 4481971 6337455 5951109 Agriculture 309645. 473690. 567231. 508839. 329967. 597032. 654686. 638426. 803308. 925123. 1655600 1482958 1577401 2740416 Forest produce (inc paper) 466621. 566385. 588012. 639185. 703485. 780028. 762226 1061992 1278007 1441674 1852447 2075746 2580588 2803725 Dairy Products 561.45 3,003.2 4,247.5 18,113. 5,357.5 3,930.7 8,469.2 13,307. 6,655.4 4,108.0 11,531. 7,100.1 11,892. 33,235. Meat & Fish 311003. 298407. 814199. 856072. 656077. 717869. 916476. 1197607 1149552 1032367 1047221 1138130 1643743 2707283
    22. 22. Consolidated Exports 96-97 97-98 98-99 99-00 00-01 01-02 02-03 03-04 04-05 05-06 Exports 06-07 07-08 08-09 09-10 96-97 97-98 98-99 99-00 00-01 01-02 02-03 03-04 04-05 05-06 06-07 07-08 08-09 09-10Exports 11881797 12927770 13975316 15956178 20357101 20901797 25513728 29336675 37533953 45641786 57177929 65586352 84075506 84553364
    23. 23. Consolidated Imports Exports 96-97 97-98 98-99 99-00 00-01 01-02 02-03 Exports 03-04 04-05 05-06 Imports 06-07 07-08 08-09 09-10 96-97 97-98 98-99 99-00 00-01 01-02 02-03 03-04 04-05 05-06 06-07 07-08 08-09 09-10Imports 13891967 15417629 17833185 21552844 23087276 24519972 29720587 35910766 50106454 66040890 84050631 10123117 13744355 13637355Exports 11881797 12927770 13975316 15956178 20357101 20901797 25513728 29336675 37533953 45641786 57177929 65586352 84075506 84553364
    24. 24. 3000000025000000200000001500000010000000 5000000 0 Standard Deviation
    25. 25. Further Work• To project the increase in imports and exports over the next 10 years• To study the non trade barriers to trade and its effect on India• Analysis of WTO provisions on three sectors namely agriculture , textile and services.
    26. 26. References• Dhar, Biswajit and Kallummal, Murali (2007), Non Trade Barriers in Doha Round- Is a Solution In Sight?• Acharyya, Rajat (2006), Trade Liberalization, Poverty and Income Inequality in India• Mehta, Rajesh (2006), Nontrade Barriers Affecting India’s Exports• Singh, S.P. (2004), Post WTO Era: Impact on Export Prospects of Livestock Products• Kathuria, Monika (2010), Doha Round of Multilateral Trade Negotiations- Critical Issues in Trade Development Pertaining to India• Pathak, Shubhangi (2006), Liberalization of Financial Services Under The WTO• Sachs, Jeffrey D., Bajpai, Nirupam and Ramiah, Ananthi (2001), Understanding Regional Economic Growth in India• Srinivasan, T.N., (2002), Economic Reforms and Global Integration• Goldar, Bishwanath (2005), Impact on India of Tariff and Quantitative Restrictions Under WTO• Gupta, R.K., (2005), WTO and Implications for Indian Economy- A Review• Ministry of Commerce website (http://commerce.nic.in)• Indian Statistical Institute (http://isical.ac.in)• Reserve Bank of India website (http://rbi.org.in)• Miscellaneous sources from the internet

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