stract:

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 infrastructure and facilities in its sectors of
interest for world trade.