INTERNATIONAL TRADE AGREEMENTSOriginally GATT 1948 23 CountriesUNDER ONE UMBRELLA WTO HQ Geneva ( Switzerland )145 Countries As On 31st March - 2006GATT / GATS TRIPS TRIMSGeneral Agreement On Trade In ServicesTrade Related Aspects Of Intellectual Property RightsTrade Related Investment Management System

GATT - GATSLiberalisation of trade in goods & servicesIncreases competition from foreign goods / servicesFacilitates global sourcingOpportunity for Indian firms to exportThreat to Domestic FirmsBenefits consumersIncreases competitiveness of domestic firms

TRIMSLiberalisation of International investmentsIncreases foreign investments and competition from foreign firmsFacilitates joint ventures and technology acquisitionFacilitates foreign investment by Indian Firms including joint venturesThreat to domestic firmsBenefits the economyBenefits domestic firms

TRIPS PROVIDES MONOPOLY POWER TO OWNERS OF INTELLECTUAL PROPERTY----------------------------------------------------------------------------------------------- THE WTO IMPACT IN TOTAL IB AND INDIA - Encourages Globalisation Of Indian Firms MFN CLAUSE - Most Favoured Nation Clause - No Discrimination Among Member Countries But WTO is Biased towards India regarding agricultural farm products like vegetables and fruits THE FIGHT/ ATTEMPT IS ON

NAFTA The North American Free Trade AgreementLaunched during - Jan 1994 : Canada USA MexicoWorlds largest FTA Free Trade AreaTo foster increased trade & investment among partnersAmbitious schedule for tariff elimination & reduction of non-tariff barriersComprehensive provisions on the conduct of business in the free trade area(i.e) Disciplines on the regulations of investment, services, intellectual property, competition and the temporary entry of business persons

SOME GOALS OF NAFTATo act as a catalyst for international co-operation To create, expand and secure future marketsTo ensure a predictable framework for business planningTo ensure firms competitiveness in foreign marketsTo foster creativity and innovation

SOME CHARACTERISTICS & BENEFITS OF NAFTAJob creation in its member countries so that demand for local products increasesExpanding the trade liberalisation process in the region Providing an adjustment period for local manufacturers because tariffs on certain products will be eliminated after 15 years

Contd.Certain products that were excluded under the agreement with USA and the Caribbean Agreement with CANADA will be permitted duty-free entry to the US market under NAFTA : These are :Textiles, Petroleum & Petroleum products, Footwear, Certain leather goods, Canned Tuna, Certain Brands of watches, luggage, handbags, Rubber & Plastic Gloves

CLASSIFICATION OF TARIFFS / NON TARIFFS ( EXAMPLES ) TARIFFS : Basic Customs Duty, CounterVailing Duty, Advalorem Duty, Anti-dumping Duty, etc. NON-TARIFFS : Licensings, Quantitative Restrictions, Certifications like Origin, Consulate Approvals, etc. HS : Harmonisation of documentations in foreign trade and valuation of goods and services

NAFTA AND THE WTOEUROPEAN UNION Sustained economic growth and political stabilityMajor World Monetary Crisis and Costly Reunification of Germany REGIONAL INTEGRATION HAS NOT HARMED THE GLOBAL ECONOMY *** BUSINESS BETWEEN NAFTA COUNTRIES AND INDIA ***Since 2003-2004, the maximum funds have started flowing towards India from USAUS - MNCs are now operating in India & likewise Indian Cos such as M&M have set up Mfg. Units in USA TRACTOR DIVISION & EARTH MOVING EQUIPMENTSThe US is Indias largest partner & a strategic market for many of Indias leading export Cos especially in apparels, gems & jwellery, leather goods, sea food, IT PRODUCTS, KPOS, BPOS, etc

Coming Back to WTO8 Arguments for WTO :

The system helps to promote peaceDisputes are handled constructivelyRules make life easier for allFreer trade cuts the costs of livingIt provides more choice of products and qualitiesTrade raises incomesTrade stimulates economic growthThe basic principles make life more efficient

Contd..8 Criticisms Against WTO :

1. WTO dictates policyWTO is for free trade at any costCommercial Interests take priority over developmentCommercial Interests take priority over health and safetyThe WTO destroys jobs and worsens povertySmall countries are powerless in the WTOThe WTO is the tool of powerful lobbies

AOA Agreement on AgricultureFairer Markets for FarmersGATT LoopholesEarlier had allowed non-tariff measures to subsidizeHigh Distortion effectUruguay Round : Discipline Orderly form, fair competition, Less DistortionsBegan during 1995 : 6 year period ( for developing countries 10 year period ) India : Negotiations under progressIndia already fighting towards biased decisions of WTO regarding fruits, vegetables and other farm products : to get opportunities for exports to various advanced and developed countries in terms of quantity, price, etc. Tariffs and Non-tariffs in various countries preventing Indian Exports of Farm ProductsMarket Access : An important element of IB environment

AGREEMENT ON ANTI-DUMPINGExporting a product at a price lower than the price normally charged in home market is said to be dumping the productWTO disciplines anti-dumping actions and is known as anti-dumping agreementWTO agreement allows governments to act against dumping where there is genuine ( material ) injury to the competing domestic industryEXAMPLES : 1. During 1997-98 China had started dumping coking coal in the Indian market General varieties of coal which were already produced in India at various coal mines. Hence Indian Government had to impose anti-dumping duty on Imports from Chinese Market Mines 2. Few years back, Indian steel manufacturers started dumping steel products in the US market and US Government had imposed anti-dumping duty on Indian Steel*** However things become easier if manufacturing bases are distributed through out the world ( of an organisation ) which could change the origin of the country even if you are an Indian and allows you to continue exporting and importing through various matrix and logistical opportunities without getting into various restrictions and balance in terms of quantity and profitablities

CONTD.The WTO anti-dumping agreement introduced the following modifications :More detailed rules for calculating the amount of dumpingMore elaborate procedures for initiating and conducting anti-dumping investigationsRules on the implementation and duration ( normally five years ) of anti-dumping measuresParticular standards for dispute settlement panels to apply in anti-dumping disputes

WTO Intellectual Property Rights & Industrial SectorPatents. Industrial Designs, Copyright, Trade Marks, Know-how & Confidential informationAll the above are used for identifying quality & nature of products and hence to be considered as different types of Industrial PropertyWhen a copyright & confidential information are included, the term Intellectual Property though a little high sounding is a more appropriate description for this class of propertyIn the information age, IPRs protection takes on a pivotal roleIn a world linked by a digital framework, empowered by software and where innovations of the mind, derived through massive expenditure of intellect and resources, are the key products, the strength of IPR regimes can mark the difference between a flourishing and a depressing marketIPR policies will play a key role in developing some of Indias most exciting growth areas, including software development, bio-technology, entertainment and pharmaceutical development- Intellectual property rights are supposed to help protect investments into research and development and stimulate innovation by providing incentives to invent, progress, develop, etc.

TARIFFSA Tariff refers mainly to a schedule of import duties or customs duties levied on goods imported in a country from foreign countriesIn a Broad sense, tariffs include import duties of various nature, export duties and transit duties which are levied on goods passing through the national frontiers of a country

COMMON MARKETThis is a Customs Union where internal non-tariff barriers have also been removedIt allows free movements of goods, services and capital among member countriesA common market implies that there is an internal market, comprising of all the member nations, which is common to the all firms trading within that market

DUMPINGA PRODUCT IS REGARDED AS DUMPED IN HOST COUNTRY WHEN ITS EXPORT PRICE IS LESS THAN THE NORMAL PRICE IN THE EXPORTING COUNTRY HOME COUNTRY OR ITS COST OF PRODUCTION PLUS A REASONABLE AMOUNT FOR ADMINISTRATIVE, SELLING AND ANY OTHER COSTS AND FOR PROFITSANTI-DUMPING MEASURES CAN BE EMPLOYED ONLY IF DUMPED IMPORTS ARE SHOWN TO CAUSE SERIOUS DAMAGE TO THE DOMESTIC INDUSTRY IN THE IMPORTING COUNTRY

COUNTER TRADEDue to BOP difficulties, many countries encourage Counter Trade as a means of financing ImportsUnder this, imports are paid in the form of goods and services and not in terms of convertible currencyExample : India was engaged in Counter Trade with erstwhile Soviet Union and some East European countriesImports By India from these countries were paid for by way of purchase of goods/services by those countries

PATENTSThis is related to Intellectual Property Rights and WTO Agreements on Trade issues which came into effect for developed countries on 01.01.1996The Agreement sets out the minimum standards of protection to be adopted by the parties in respect of :Copy rights and related rightsTrade MarksGeographical IndicationsIndustrial DesignsLayout Designs & Integrated CircuitsProtection of Undisclosed Information ( Trade Secrets)

FORMS OF ECONOMIC INTEGRATIONPTA - Preferential Trade Agreement

Simplest from of economic integrationA group of countries have formal agreement to allow each others goods to be traded on preferential termsThe preferential treatment may be in the form of Reduced Tariff or Special Quota for the goods of the countries

ContdFTA - Free Trade AreaIt is a permanent arrangement between neighbouring countries USA / Canada / Mexico ( example )There is a complete removal of tariffs on goods traded between the members of the FTAIt involves tariff free trade among the member countriesThe members are free to impose their own trade restrictions on imports from countries outside FTAAs a result of this, the goods from outside FTA may enter into the Free Trade Area through the member country levying the Lowest TariffsTo overcome this problem, the members have to maintain Customs Points at their Common Borders to make sure that imports do not enter into the FTA through the member levying the lowest tariff on each itemThey should also agree on rules of origin to establish when a good is manufactured in a member country and therefore it is able to pass duty free across their borders

Contd .CUSTOMS UNIONS

This is a FTA plus an Agreement to establish common barriers to trade with the Rest of the World(b) They have common tariff against the outside world , therefore the members need not have their customs control on goods moving among themselves or rules of the origin(c) Agreement is needed on the level of the common external tariff and on the administration of the Tariff Revenues

Contd..COMMON MARKET :

Common market is a customs union where internal non-tariff barriers have also been removedIt allows free movement of goods, services and capital among the member countriesA common market implies that there is an internal market, comprising of all the member nations, which is common to all firms trading within that market

Contd.ECONOMIC UNION :

EU is the most complete form of economic integration between countries - EU ties up its members economies closely so that in effect, they function as a single economyThis involves common market and also the harmonisation of economic policies in particular Monetary Union and the Co-ordination of Fiscal PoliciesMonetary Union may involve a Fixed Exchange Rate system between the Member Countries with a Single or Common Currency and Control over Interest Rates and other Instruments of Monetary PolicyFiscal Policy co-ordination involves rationalisation of TAX Rates and some Degree of control over Government Budgets and Budget DeficitsThere is also likely co-ordination of other economic policies such as agricultural, industrial and other policies