Вы находитесь на странице: 1из 10

Abstract: One of the most dramatic events that have taken place in later part of 20th century was

culmination of GATT 1947 into WTO (The world Trade organization), which came into being on 1st January 2005. This WTO has set expectations high in various member countries (by now 149 including latest addition of Saudi Arabia) regarding spurt in world trade where India has insignificant share in the pie-Only 0.75% at the most. Even in IT exports the share of Indian exporters is just peanuts in view of overall world market. Since formation of WTO there have been regular meetings of Ministerial Conferences (Highest Policy level body of WTO) religiously every 2 years and 5 such meetings have taken place while world prepares for the Hong Kong meeting to take place shortly, the sixth one. While 5th meet at Cancun, Mexico was more or less failure, the earlier one at Seattle, USA was received with brickbats from environmentalist and Labor union Groups protesting against WTO regime. It is statistical fact that world trade has definitely grown since 1995 thereby giving indicators that international trade reforms do play important role in boosting economic development of various countries. Problems facing India in WTO & its Implementation: But there are several problems facing these Multilateral Trade agreements: - Predominance of developed nations in negotiations extracting more benefits from developing and least developed countries - Resource and skill limitations of smaller countries to understand and negotiate under rules of various agreements under WTO - Incompatibility of developed and developing countries resource sizes thereby causing distortions in implementing various decisions - Questionable effectiveness in implementation of agreements reached in past and sincerity - Non-tariff barriers being created by developed nations. - Regional cooperation groups posing threat to utility of WTO agreement itself, which is multilateral encompassing all member countries - Poor implementation of Doha Development Agenda - Agriculture seems to be bone of contention for all types of countries where France, Japan and some countries are just not willing to budge downwards in matter of domestic support and export assistance to farmers and exporters of agriculture produce.

- Dismantling of MFA (Multi Fiber Agreement) and its likely impact on countries like India - Under TRIPS question of high cost of Technology transfer, Bio Diversity protection, protection of Traditional Knowledge and Folk arts, protection of Bio Diversities and geographical Indications of origin, for example Basmati, Mysore Dosa or Champagne. The protection has been given so far in wines and spirits that suit US and European countries. Implications for India It appears that India does not stand to gain much by shouting for agriculture reforms in developed countries because the overall tariff is lower in those countries. India will have to tart major reforms in agriculture sector in India to make Agriculture globally competitive. Same way it is questionable if India will be major beneficiary in dismantling of quotas, which were available under MFA for market access in US and some EU countries. It is likely that China, Germany, North African countries, Mexico and such others may reap benefit in textiles and Clothing areas unless India embarks upon major reforms in modernization and up gradation of textile sector including apparels. Some of Singapore issues are also important like Government procure, Trade and Investment, Trade facilitation and market access mechanism. In Pharma-sector there is need for major investments in R &D and mergers and restructuring of companies to make them world class to take advantage. India has already amended patent Act and both product and Process are now patented in India. However, the large number of patents going off in USA recently, gives the Indian Drug companies windfall opportunities, if tapped intelligently. Some companies in India have organized themselves for this. Excerpts from Speech of Ramkrishna Hegde, the then Minister, at Geneva in 1998"In order to make WTO an effective multilateral body, which serves the objectives for which it was set up, it is necessary to go back to the basic principles. The Uruguay Round negotiators had stated their intentions quite clearly in the Preamble to the Marrakesh Agreement establishing the WTO. They recognised "that their relations in the field of trade and economic endeavour should be conducted with a view to raising standards of living, ensuring full employment and a large and steadily growing volume of real income and effective demand, and expanding the production of and trade in goods and services, while allowing for the optimal use of the world's resources in accordance with the objective of sustainable development, seeking both to protect and preserve the environment and to enhance the means for doing so in a manner consistent with their respective needs and concerns at different levels of economic development. They recognized also "that there is need for positive efforts designed to ensure that developing countries, and especially the least developed among them, secure a share in the growth in international trade commensurate with the needs of their economic development". The Objective of WTO Reiterated:

It is very clear that the intention of the negotiators was to use trade as an instrument for development, to raise standards of living, expand production, keeping in view, particularly, the needs of developing countries and least-developed countries. The WTO must never lose sight of this basic principle. Every act of implementation and of negotiation, every legal decision, has to be viewed in this context. Trade, as an instrument for development, should be the cornerstone of all our deliberations, decisions and actions. Besides, the system should be seen to be equitable and fair. It must be used in such a manner that the letter and spirit of the Agreements is fully observed. The WTO Members must mutually support and encourage each other to achieve the final goal. It must be recognized that all Members should assume a negotiating rather than an adversarial posture. It should also be recognized that different economies have different features and structures, different problems, different cultures. The pace of change must be carefully calibrated to take into account such differences. All Members should guard against unilateral action that cuts at the root of multilateral agreement and consensus. Developing countries have generally been apprehensive in particular about the implementation of special and differential treatment provisions (S&D) in various Uruguay Round Agreements. Full benefits of these provisions have not accrued to the developing countries, as clear guidelines have not been laid down on how these are to be implemented. " The first Ministerial Conference held in 1996 in Singapore saw the commencement of pressures to enlarge the agenda of WTO. Pressures were generated to introduce new Agreements on Investment, Competition Policy, Transparency in Government Procurement and Trade Facilitation. The concept of Core Labor Standards was also taken up for introduction. India and the developing countries, which were already under the burden of fulfilling the commitments undertaken through the Uruguay Round Agreements, and who also perceived many of the new issues to be non-trade issues, resisted the introduction of these new subjects into WTO. They were partly successful. The Singapore Ministerial Conference (SMC) set up open-ended Work Program to study the relationship between Trade and Investment; Trade and Competition Policy; to conduct a study on Transparency in Government Procurement practices; and do analytical work on simplification of trade procedures (Trade Facilitation). Most importantly the SMC clearly declared on the Trade-Labor linkage as follows: " We reject the use of labor standards for protectionist purposes, and agree that the comparative advantage of countries, particularly low-wage developing countries, must in no way be put into question. In this regard we note that the WTO and ILO Secretariat will continue their existing collaboration". Not many people in this country are aware that there is a dispute settlement system in the WTO. This is at the heart of the WTO and sets it apart from the earlier GATT. Countries like the USA and the European Union have brought cases against us and won these cases like in pharmaceutical patents. India too has complained against the US and Europe and it too has won its fair share of disputes in areas like textiles. India must effectively use this mechanism to extract fair share in world markets.

It would be advantageous for India to give concrete shape to SAARC economic forum or Free market and align itself with ASEAN. What India should do? The most important things for India to address are speed up internal reforms in building up world-class infrastructure like roads, ports and electricity supply. India should also focus on original knowledge generation in important fields like Pharmaceutical molecules, textiles, IT high end products, processed food, installation of cold chain and agricultural logistics to tap opportunities of globalization under WTO regime. India's ranking in recent Global Competitiveness report is not very encouraging due to infrastructure problems, poor governance, poor legal system and poor market access provided by India. Our tariffs are still high compared to Developed countries and there will be pressure to reduce them further and faster. India has solid strength, at least for mid term (5-7 years) in services sector primarily in IT sector, which should be tapped and further strengthened. India would do well to reorganize its Protective Agricultural policy in name of rural poverty and Food security and try to capitalize on globalization of agriculture markets. It should rather focus on Textile industry modernization and developing international Marketing muscle and expertise, developing of Brand India image, use its traditional arts and designs intelligently to give competitive edge, capitalize on drug sector opportunities, and develop selective engineering sector industries like automobiles & forgings & castings, processed foods industry and the high end outsourcing services. India must improve legal and administrative infrastructure, improve trade facilitation through cutting down bureaucracy and delays and further ease its financial markets. India has to downsize non-plan expenditure in Subsidies (which are highly ineffective and wrongly applied) and Government salaries and perquisites like pensions and administrative expenditures. Corruption will also have to be checked by bringing in fast remedial public grievance system, legal system and information dissemination by using e-governance. The petroleum sector has to be boosted to tap crude oil and gas resources within Indian boundaries and entering into multinational contracts to source oil reserves. It wont be a bad idea if Indian textile and garment Industry go multinational setting their foot in western Europe, North Africa, Mexico and other such strategically located areas for large US and European markets. The performance of India in attracting major FDI has also been poor and certainly needs boost up, if India has to develop globally competitive

World Trade Organization (WTO) Agreement and India

- By Dr.C.Lakshmanan
The negative repercussion of the world trade organization (WTO) agreement on India farming community is well published and has become a major concern of wide spectrum of people and organizations in India. (Refer to February 2, 2001 cover story of FRONTLINE, a publication of The Hindu news paper). The drastic erosion of the price of farm produce and the dumping of cheap agriculture commodities by other countries are allegedly undermining the welfare of Indian farmers who form over seventy percent of the nations population. Various theoretical solutions based on political leanings and financial considerations are offered by a wide spectra of Indian media, public and national intelligentia. However, a solution based on a sound and practical scientific approach has yet to be emerge. Underlying all the problems is the inability of the country to compete with the other nations in pricing and quality of Indian farm produce and agriculture commodities. Most other nations can produce at lower cost than India, agriculture items traded in the international market. An attempt is made here to evolve a scientific dimension for solving the WTO related negative impacts on Indian agriculture in general and the economics of the farming community in particular. India has one of the lowest agriculture productivity or crop productions per acre in the world. This is responsible for most of the maladies associated with WTO considerations. Adoption of modern agriculture production practices and putting tools of state-of- the-art production technologies in the hands of Indian farmers would make them competitive with the farmers of the other countries. This will open the way for Indian farmers to significantly reduce unit cost of agriculture produce, which is fundamental to successful competition in the world market. The first step to wards attaining this goal would be to evolve a systematic approach in understanding the pros and cons of WTO agreement as it applies to the interest of India as a whole and the economics its states and their cropping systems in particular. In order to achieve this, the formation of a higher-level adhoc commission consisting of agricultural professional experts with practical experience in the science of international production agriculture involving economics of cropping system and farming communities and professional consultants including international personnel capable of analyzing and providing remedial measures, is necessary. This commission will conduct a time-bound in depth investigation of the problems of Indian agriculture through discussions with a wide spectrum of farmers, farm leader, agriculture scientists and economists to come up with a comprehensive report containing recommendations that will meet the challenges and provide solutions to problems posed by the WTO agreements and their repercussions on Indian agriculture. The recommendations of the adhoc committee will be studied by an appropriate policy making team of the government of India. A goal oriented time bound action plan will be developed in collaboration with the adhoc committee. The implementations of the plan will we carried out under

the guidance of the adhoc committee by nominated technocrats well versed in cutting edge technologies in crop production, agriculture economics and international marketing. Since the success of the plan depends on achieving the goal of each phase of the plan on a timely basis, Provisions for close and periodic reviews will be built into the implementation schedule of the plan.

Indian Capital Market

The financial market in India is growing rapidly and is expected to emerge as one of the leaders in the international arena very soon. This booming financial market is stimulating the growth of the Indian capital market. The investors are also encouraged to make huge investment in the securities market. All these of positive changes are responsible for the recent record set by the Bombay Stock Exchange when it touched 18,000 points. The Indian capital market is looking very promising in the present times. The policies regarding the capital market have been revised and the factor of transparency and investor's security is considered as the most important aspect of the market. Along with these, the introduction of the T + 3 settlement system, has changed modernized the settlement procedures and also reduced the necessary time needed for the settlements. Because of these positive efforts, the Indian capital market is gaining pace instead of several shocks in form of scams. Several new sectors including the services sector, are adding new edges in the Indian capital market. Along with these, there are the sunrise industries which are also playing a major role in this development. The growth of these sectors are caused mainly by the industrial growth in the country. Indian economy was an agriculture based economy in the past. But now, the country is following the path of industrial economy and this is a major change. This has not only helped to increase the export revenues but also helped the Indian capital markets to become self sufficient. There are some other factors that are behind the progress of the Indian capital market. The system of administered interest rate was followed in India. But according to the new policies, this system has been demolished. Because of this, the organizations like Provident Fund Organization are looking for new areas where they can invest the accumulated money so that it can grow quickly. The search is destined to end in the Indian stock markets. Although there are some risk factors, but the promises of the Indian capital market are much larger.

Labor Market In India

The Indian labor market can be categorized into three sectors: Rural workers , who constitute about 60% of the workforce Organized of the formal sector, that constitutes about 8% of the workforce; and Urban unorganized or informal structure which represents the 32% of the workforce.

The chart below describes the estimated increase in the number of labors from 1977-78 to 2004-05. The labor force has grown from 276.3 million to 385.5 million between 1977-78 and1993-94 showing an annual growth rate of 2.1%. During the year 1999-2000, the workforce was estimated to be 407 million. In 2004-05 the labor market consisted of 430 million workers and has grown up to 500 million in 2006.

Two-third of Indias workforce is employed in agriculture and rural industries. One-third of rural households are agricultural labor households, subsisting on wage employment. Only about 9 percent of the total workforce is in the organized sector; the remaining 91 percent are in the unorganized sector, self-employed, or employed as casual wage laborers. The labor force in year 2006 has grown up to 509.3 million out of which 60% are in agriculture, 12% are employed in industries and the residual 28% are in services.

Labor force can be divided into four categories: self employed workers, wage and salary earners, casual workers and unemployed. Of these, self-employed are most loosely connected to labor market because of the possibilities of work-sharing and work spreading in a selfemployed enterprise. Non-contractual casual laborers have the closest connection to labor market on almost day-to day basis. Same is the case with those unemployed who are actively seeking work. Contractual and hence stable hired employment (with the same employer and/or in the same job) on a regular basis is covered in the description wage and salary workers. Persons who are engaged in their own farm or non- farm enterprises are defined as self employed. The employees in an enterprise can be either regular salaried/ wage employees or casual wage employees who are normally engaged on a day today basis. The casual wage workers both in public work and other types of work dont have any job security or social security. These workers, either in formal or informal sector or in private households, are informal workers. The regular salaried/wage employees are those working in others farm or non- farm enterprises and getting in return salary or wages on a regular basis and not on the basis of daily or periodic renewal of work contract. This category includes those getting time wage as well as those receiving piece wage or salary and paid apprentices, both full time and part time. This category of persons may, therefore, include persons engaged regularly on an hourly basis, temporary workers, out- workers, etc. The table given below classifies labor force across male-female and rural-urban dimensions. It is clear that

Self-employment and casual labor statuses are more prevalent among rural than urban labor force and among female than male workers. The Incidence of unemployment is higher in the urban than in the rural labor force with nearly 48 per cent of the total unemployed persons coming from aggregate urban labor force whose share in total (rural plus urban) work force is 22 per cent. Those reporting wage and salary earning dominate in the urban labor force, their share being around 62 per cent (lines 10 to 12 of Table).