World Trade OrganizationWorld Trade Organization
Special Reference to India
History of WTOHistory of WTO
•1946-47: 50 countries under the aegis of the United Nations agreed to form
an International Trade Organization
•1948: GATT formed with 23 members of which 11 (including India) were
•1948 -95: GATT remained a provisional agreement with no dispute
settlement mechanism. 7 rounds of GATT completed during 1948-86.
•1986: Uruguay Round of GATT launched. Biggest ever mandate to include
tariff & non-tariff barriers as well as trade in services.Also decided to form an
ITO to include dispute settlement as well as to replace the provisional
•1993:The Uruguay Round completed after 8 rounds, with 23,000 pages of
legal text and national commitments on goods and services
•1995:WTO comes into agreement with the Marrakesh Agreement
History of WTO (contd)History of WTO (contd)
•1995-2005: Most of the Uruguay Round agreements on
agriculture, textiles, intellectual property, customs valuation
and non-tariff barriers implemented
•1997:Additional agreements on financial services and
•2001: Doha Round begins
The WTO SystemThe WTO System
•There are about 60 individual agreements and decisions by 150
•Nature of agreements specified
•Ceilings, e.g on tariffs fixed but not actual rates
•Phased agreements; no big bang
•Promises may be broken but in a disciplined manner, e.g in times of
food crisis, dumping
•In the Uruguay Round of GATT, developing countries found
policies lopsided (e.g agriculture and fishery subsidies), in the Doha
Round beginning from 2001, developing countries more assertive
Organization of WTOOrganization of WTO
(every 2 years)
(regular formal & informal sessions)
Trade Policy review (6-8
countries each year)
Trade Negotiation Committee
(overseas the Doha Round)
Council for Trade in Goods Council for Trade in
Council for Trade-Related
Aspects of Intellectual
Agriculture, Market access,
Technical barriers, sanitary &
customs valuation, Rules of
Origin, Anti-dumping measures
Primary WTO PrinciplesPrimary WTO Principles
•Transparency – member countries are required to publish laws,
regulations and practices regularly
•Non-discrimination – At the first level, this refers to “Most Favored
Nation” treatment, i.e member’s exports treated in the destination
country no differently from the exports from other countries. At
the second level,“national treatment” refers to safeguards against
exports made uncompetitive due to special taxes, charges,
administrative practices that are not applied to local producers
•Progressive tariff liberalization – tariff bindings (maximum ceilings
on tariff rates), reduction of tariff peaks (tariff rates above 20%) and
tariff escalation (when an importing country imposes lower tariff
rates on raw materials & components and higher on finished
•No quantitative restrictions
Agreement on AgricultureAgreement on Agriculture
•Market Access – “tariffication”: all non-tariff barriers like
import ban, import quota or quantitative restrictions on
imports to be replaced by bound tariffs
•Domestic Support:Amber Box (trade-distorting measures
like price support and input subsidies affecting production to
be reduced), Green Box (not trade-distorting but affects
production, like R&D, marketing assistance, etc. acceptable),
Blue Box (direct payments to farmers to limit production
•Export competitiveness – export subsidies to be reduced
Critique of AoACritique of AoA
•Skewed in favor of developing countries
•From the producers’ perspective rather than
•Subsidies under Amber Box decreased but those under
Green Box and Blue Box increased
•Food imports in developing countries increased
•WTO addresses food security issues through imports
Non-Agricultural Market AccessNon-Agricultural Market Access
•Refers to all products not covered by the Agreement on
Agriculture. In practice, it includes manufacturing products,
fuels and mining products, fish and fish products, and forestry
products.They are sometimes referred to as industrial
products or manufactured goods.
•During the Uruguay Round, tariff averages were reduced
from 6.3% to 3.8%. Binding coverage for NAMA products in
developing countries increased from 21% to 73%, which has
considerably increased the predictability of trade.
•A tariff binding is a ceiling level above which a Member
cannot apply a tariff. Difference between bound tariff and
applied rate is called ‘water’.
•Reduced tariffication is aimed to provide market access in
developed as well as developing countries
Doha Round ControversyDoha Round Controversy
•Negotiations on bound tariffs – develop formula for
reduction of bound tariffs
•Agriculture – India defensive in agriculture (not opening up
markets), offensive in tropical products like rice (India wants
•Special safeguard mechanism
•G33 (Indonesia is the leader, India included) seeking flexibility
in safeguard mechanism
•Doha Round free-trade talks collapsed in 2006, especially on
agricultural domestic support and market access.
Export competitionExport competition
•Export subsidy will be phased out by 2013
•Specific attention to cotton, especially concerning small
•India is offensive with respect to services as it wants
market access and discipline of domestic producers
•Regulation of financial services
•Mode 1:Transborder exchange through
telecommunication; Mode 4: People exchange (the
India’s participationIndia’s participation
•India was not active in the GATT till the 1980s because
of import substitution policies. It also had assured
markets in the Soviet bloc. Opening up the domestic
market to foreign competition was thought to be
harmful. Instead discussed trade-related issues at
•In the first two rounds of WTO ministerial meetings
(Singapore 1996 and Geneva 1998), new agreements on
IT and Global E-Commerce were signed.These were in
favor of India as it began to increase exports in IT.
India’s participation – 2India’s participation – 2ndnd
half of 1990shalf of 1990s
•Export growth rate slowed down, especially with the East
Asian crisis, and the service sector emerged as the main
foreign exchange earner.
•India became offensive in services, especially in Mode 4, i.e
movement of professionals.
•Tariff barriers decreased in developed countries but WTO-
compatible non-tariff barriers like labor and technical
standards and contingency provisions like anti-dumping
measures, safeguard provisions, were increasingly been used.
•India victim of a number of dispute settlement cases at the
WTO about WTO-compatibility of Indian policies.
India’s participation since 1999India’s participation since 1999
•India became most vocal at the Seattle Ministerial in
1999 against developed countries’ attempt to
incorporate labor and environmental standards.There
was no decision.
•At the Doha ministerial in 2001, India was concerned
with i) non-realisation of benefits from Agreement on
Textiles & Clothing and AoA, ii) non-binding nature of
provisions like market access, iii) inequities and
imbalances in TRIPS, Subsidies, anti-dumping
India’s participation since 1999 (contd)India’s participation since 1999 (contd)
•At Cancun in 2003, India and other developing
countries protested against EU-US draft on agriculture.
The ministerial decided to take stock of the Doha
Round Agenda. It has not yet been resolved.
•Since then, India has given submissions at various WTO
forums on both export promotion (enhancement of
market access) and domestic protection (provisions of
special products, special safeguard mechanism in
•Geneva, 2004, Hong Kong, December 2007 have been
continuation of the Doha Round Agenda
G-20 Achievements at Hong KongG-20 Achievements at Hong Kong
•Development programs in developing countries that have the least
trade distorting effects will be incorporated in the Green Box.
•The heaviest subsidisers, EU, US and Japan, will attract the highest
levels of cuts in trade-distorting domestic support entitlements.
•All developed countries and developing countries that declare
themselves capable will provide duty-free and quota-free market
access on a lasting basis to all products originating from LDCs.
•Call for intensification of consultation on TRIPS especially to
address public health concerns in developing countries.
•In cotton, export subsidies eliminated in 2006 and trade-distorting
domestic subsidies to be reduced over time.
•To eliminate all export subsidies by 2013.
India’s stand on AgricultureIndia’s stand on Agriculture
•Overall tariff reduction on bound rates for developing
countries of not more than 36%.
•Threshold of bound tariff should be higher for developing
•Self-designation of special products based on criteria of food
security, livelihood security and rural development. No tariff
cuts in these.
•Special Safeguard Mechanism to check against price dips and
•Substantial and effective cuts in overall trade-distorting
domestic support by the US, EU
India’s stand on NAMAIndia’s stand on NAMA
•A fair markup in the unbound tariff lines
•Flexibilities that are adequate and appropriate to
address sensitivities of developing countries.
•Percentage reduction commitments from bound rates
India’s stand on ServicesIndia’s stand on Services
•Commitments by developed countries on substantial
openings for India’s contractual service suppliers and
independent professionals in Mode 4 related movement
•Development of disciplines in Domestic Regulations in
Mode 4 involving qualifications and licensing
requirements and procedures
India’s stand on RulesIndia’s stand on Rules
•Strengthening of disciplines in anti-dumping include
mandatory application of lesser duty rule, prohibition of
zeroing in, stronger rules on reviews including sunset reviews.
•Against the enlargement of the scope of the Agreement on
Subsidies and Counterveiling Measures and limit existing
flexibilities for the developing countries.
•Special and differential treatment in any disciplines on fishery
subsidies as there are employment and livelihood concerns
for small, artisanal fishing communities.
Anti-dumping rulesAnti-dumping rules
•A company is dumping if it is exporting a product to the EU at
prices lower than the normal value of the product (the domestic
prices of the product or the cost of production) on its own
•Anti-dumping investigation has to be conducted within 6 months.
•Anti dumping duty usually take the form of an ad valorem duty, but
could also be specific duties or price undertakings.The duties are paid
by the importer and collected by the national customs authorities.
•By a lesser duty rule, an assessment is made of the level of duty
needed to remove the injurious effects of dumping. Measures are
imposed at the level of dumping or injury whichever is the lower.
Zeroing in of anti-dumpingZeroing in of anti-dumping
•In a typical antidumping investigation, the US calculates weighted-
average net prices for each product sold in the United States. It
then compares each of those U.S. prices to the product's normal
value, which can be calculated a number of different ways but is
ideally the weighted-average net price of the most similar product
sold in the home market. Zeroing is introduced after the
comparison of the U.S. price and normal value.
•When normal value is higher than the U.S. price, the difference is
treated as the dumping amount.When, however, the U.S. price is
higher, the dumping amount is set to zero rather than its calculated
•All dumping amounts are then added and divided by the aggregate
export sales amount to yield the company's overall dumping
margin. Zeroing thus eliminates "negative dumping margins" from
the dumping calculation.
Learning from WTO negotiationsLearning from WTO negotiations
•From being a victim of anti-dumping in the 1990s, India
has become proactive in anti-dumping investigations.
•India largest user of anti-dumping duties, China has the
largest number of anti-dumping legislation against it.
•Move towards regional trade agreements.
•Made Indian exporters WTO-compatible and also more
efficient in the domestic market.
Heterogeneity of developing countriesHeterogeneity of developing countries
•Consists of advanced developing countries, small & vulnerable
economies, landlocked countries and least developed countries
(LDCs). Each have different agenda.
•77 African, Caribbean and Pacific (ACP) countries, which are
beneficiaries of trade with the EU, have interests around preference
items like sugar and banana.
•G-20 evolved in the Cancun Ministerial, including Brazil, China ,
South Africa and India.
•G-33 has defensive interests in agriculture, through special
safeguard mechanism and special products.
•G-90 comprises ACP and some more LDCs.
•NAMA-11 evolved in the Hong Kong ministerial focusing on non-
agricultural market access.