International Trade Agreements Etc

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INTERNATIONAL TRADE  AGREEMENTS  AGREEME NTS Originally GATT – GATT – 1948 23 Countries UNDER ONE UMBRELLA – UMBRELLA – WTO HQ Geneva ( Switzerland ) 145 Countries As On 31st March - 2006 GATT / GATS – GATS – TRIPS TRIPS –  – TRIMS General Agreement On Trade In Services Trade Related Aspects Of Intellectual Property Rights Trade Related Investment Management System

 

GATT - GATS • Liberalisa Liberalisation tion of trade in goods & services • Increases competition from foreign goods / services • Facilitates global sourcing • Opportunity for Indian firms to export • Threat to Domestic Firms • Benefits consumers • Increases competitiveness competitiveness of domestic firms

 

TRIMS - Libe Libera ralilisa sati tion on of In Inte tern rnat atio iona nall inves investm tmen ents ts - Increa Increase ses s fore foreig ign n inve investm stment ents sa and nd compet competiti ition on from from foreign firms - Facil Facilita itates tes joi joint nt vent venture ures s and and tec techno hnolog logy y acqui acquisi sitio tion n - Facil Facilita itates tes fore foreign ign in inves vestme tment nt by by India Indian n Firms Firms incl includi uding ng  joint ventures - Thre Threat at to dom domesti estic c fi firm rms s - Benefits the economy - Ben Benef efiits dome domes sti tic c fi firm rms s

 

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

 

NAFTA – NAFTA  – The North American Free Trade Agreement •

Launched during - Jan 1994 : Canada – Canada – USA USA –  – Mexico



World’ World’s s lar larges gestt FTA – Free Trade Area



To foster increased trade & investment among partners

•  Ambitious elimination & reduction of non-tariff  barriers schedule for tariff elimination •

Comprehensive 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 NAFTA •

To act as a catalyst for international co-operation



To create, expand and and secure future markets



To ensure a predictable framework for business planning

• •

To ensure ensure firm’s firm’s compe competitiv titiveness eness in foreign foreign markets markets  To foster creativity and innovation SOME CHARACTERISTICS & BENEFITS OF NAFTA

-

Job creati creation on in its its memb member er countr countries ies so that that demand demand for local local products increases

-

Expand Expanding ing the trade trade libera liberalis lisati ation on process process in the region region

-

Provid Providing ing an adju adjustm stment ent period period for local local manu manufac factur turers ers becaus because e tariffs on certain products will be eliminated after 15 years

 

Contd…….   Contd……. • • -

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

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CLASSIFICATION OF TARIFFS / NON – NON – TARIFFS ( EXAMPLES ) TARIFFS : Basic Cust Customs oms Duty 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 service services s

 

NAFTA AND THE WTO • EUROPEAN UNION – UNION –  Sustained economic growth -

-

-

and political stability Major 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 USA US - MNC’s are now operating in India Indi a & likewise Indian Co’s such as M&M have set up Mfg. Units in USA – USA – TRACTOR DIVISION & EARTH MOVING EQUIPMENTS The US is India’s largest l argest partner & a strategic market for many of  India’s leading export Co’s especially in apparels, gems & jwellery, leather goods, sea food, IT PRODUCTS, KPO’S, BPO’S, etc  etc  

 

Coming Back to WTO •

8 Arguments for WTO :

1.

The sy system he helps to to pr promote pe peace

2. 3.

Dispu sputes ar are ha handled co constructively Rules make life easier for all

4.

Freer trade cuts the costs of living

5.

It prov provid ides es more more choi choice ce of prod produc ucts ts and and qua quali liti ties es

6. 7.

Trade raises incomes Trade stimulates econ conomic growth

8.

The The bas basic ic prin princi cip ples les mak make e lif life e mor more e eff effic icie ien nt

 

Contd………..   Contd……….. •

8 Criticisms Against WTO :

1.

WTO dictates policy

2. 3.

WTO is for free trade at any cost Comm Commer erci cial al Inte Intere rest sts s tak take e pri prior orit ity y ove overr dev devel elop opme ment nt

4.

Comm Commer erci cial al Inte Intere rest sts s tak take e pri prior orit ity y ove overr hea healt lth h and and saf safet ety y

5.

The The WTO WTO dest destro roy ys jobs jobs and and wors worsen ens s pove poverrty

6. 7.

Smal Smalll coun countr trie ies s are are powe powerl rles ess s in the WTO The WT WTO is is th the to tool of of po powerful llo obbies

 

 AOA –  AOA  – Agreement on Agriculture • • • • • -

-

Fairer Markets for Farmers GATT – GATT  – Loopholes Earlier had allowed non-tariff measures to subsidize High Distortion effect Uruguay Round : Discipline – Discipline – Orderly form, fair competition, Less Distortions Began during 1995 : 6 y year ear pe period riod ( for dev developing eloping countries 10 year period ) India : Negotiations under progress India already fighting towards biased decisions of WTO regarding fruits, vegetables other farm : to get opportunities for  exports to variousand advanced and products developed countries in terms of  quantity, price, etc. Tariffs and Non-tariffs in various countries preventing Indian Exports of Farm Products Market Access Access : An important element of IB environment environment

 

 AGREEMENT  AGREEME NT ON ANTI-DUMPIN ANTI-DUMPING G -

-

Exp Export orting ing a pro produc ductt at a p price rice low lower er th than an tthe he pr price ice n norm ormall ally y charge charged d in h home ome m mark arket et is said to be dumping the product WTO d disc iscipli iplines nes ant anti-d i-dump umping ing a acti ctions ons a and nd is k know nown n as an antiti-dum dumpin ping g agr agreem eement ent WTO a agre greeme ement nt al allow lows s go gover vernme nments nts tto o act aga agains instt dumpi dumping ng w wher here e the there re is g genu enuine ine ( material ) injury to the competing domestic industry EXAMPLES : 1. During 1997-98 1997-98 –  – China had started dumping coking coal in the Indian market – 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 – Market – Mines 2. Few years back, Indian steel man manufacturers ufacturers started dumping steel

products in the US market and US Government had imposed anti-dumping duty on Indian Steel *** However things become easier if man manufacturing ufacturing bases a are re distributed through 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………………….   CONTD…………………. •

The WTO anti-dumping agreement introduced the following modifications :

1.

More More deta detail iled ed rule rules s for for calc calcul ulat atin ing g the the amou amount nt of dump dumpin ing g

2.

More More elab elabor orat ate e proc proced edur ures es for for init initia iati ting ng and and con condu duct ctin ing g antiantidumping investigations

3.

Rule Rules so on n the the impl implem emen enta tati tion on and and dur durat atio ion n ( nor norma malllly y fiv five e yea years rs ) of anti-dumping measures

4.

Part Partic icul ular ar stan standa dard rds s for for dis dispu pute te sett settle leme ment nt pane panels ls to appl apply y in in anti-dumping disputes

 

WTO – WTO  – Intellectual Property Rights & Industrial Sector  •

• •

-

-

-

Patents. Industrial Designs, Copyright, Trade Marks, Know-how & Confidential information All the above are used for identifying quality & nature of products and hence to be considered as different types of Industrial Property When a copyright & confidential information are included, the term “ Intellectual Property ” though a little high sounding is a more appropriate description for this class of property In the information age, IPRs protection takes on a pivotal role In 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 aa flourishing a depressing IPR policies will play key role inand developing somemarket of India’s 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.

 

TARIFFS •  A Tariff refers mainly mainly to a schedule schedule of import import duties or  customs duties levied on goods imported in a country from foreign countries • In 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 MARKET • This is a Customs Union where internal non-tariff  barriers have also been removed • It allows free movements of goods, services and capital among member countries •  A common market market implies implies that there is an internal market, comprising of all the member nations, which is common to the all firms trading within that market

 

DUMPING •  A PRODUCT IS REGARDED AS DUMPED IN HOST 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,  ADMINISTRAT IVE, SELLING AND ANY OTHE OTHER R COSTS AND FOR PROFITS •  ANTI-DUMPING MEASURE MEASURES S CAN BE EMPLOYED EMPLOYED ONLY IF DUMPED IMPORTS ARE SHOWN TO CAUSE SERIOUS DAMAGE TO THE DOMESTIC INDUSTRY IN THE IMPORTING COUNTRY

 

COUNTER TRADE • Due to BOP difficulties, many countries encourage Counter Trade as a means of financing Imports • Under this, imports are paid in the form of goods and services and not in terms of convertible currency • Example : - India India was was enga engage ged d in in Cou Counte nterr Tr Trade ade with with erstwh erstwhilile e Soviet Union and some East European countries - Import Imports sB By y Indi India a from from these these countr countries ies were were paid paid for by way of purchase of goods/services by those countries

 

PATENTS •

This is related to Intellectual Property Rights and WTO  Agreements on Trade Trade issues wh which ich came into effect for developed countries on 01.01.1996

• 1. 2.

The Agreement out the minimum protection to be sets adopted by the partiesstandards in respectof  of : Copy rights and related rights Trade Marks

3. 4. 5. 6.

Geographical IIn ndications Industrial Designs Lay Layout out D De esig signs & Int Inte egr grat ate ed C Ciircu rcuit its s Prot Protec ecti tion on of Undi Undisc sclo lose sed d Info Inform rmat atio ion n ( Trad Trade e Sec Secre rets ts))

 

FORMS OF ECONOMIC INTEGRATION •

PTA - Preferential Trade Agreement

(a) Simp (a) Simple lest st from from o off eco econo nomi mic c inte integr grat atio ion n (b) A group group of cou countr ntrie ies s have have formal formal agree agreemen mentt to allow allow each others goods to be traded on preferential terms (c)) Th (c The e pref prefer eren enti tial al tre treat atme ment nt m may ay b be e in the the form form of  of  Reduced Tariff or Special Quota for the goods of the countries

 

Contd……………   Contd…………… •

FTA - Free Trade Area

(a)) (a

It is a pe perm rman anen entt ar arra range ngeme ment nt betwe between en neigh neighbo bour uring ing countries – countries  – USA / Canada / Mexico ( example ) Th Ther ere e is a com comple plete te rem remov oval al of tar tarif iffs fs o on n go good ods s trad traded ed b bet etwee ween n th the e members of the FTA It in invo volv lves es ttar arif ifff ffre ree e trad trade ea amo mong ng the the membe memberr c cou ount ntri ries es Th The e memb member ers s are are free free tto o impo impose se the their ir o own wn ttra rade de res restr tric icti tion ons s on imports from countries outside FTA As a resu result lt o off this this,, th the eg goo oods ds fro from m outs outsid ide e FTA FTA may may ente enterr in into to tthe he Free Trade Area through the member country levying the Lowest Tariffs To over overco come me tthis his prob proble lem, m, the the mem membe bers rs ha hav ve tto om mai aint ntai ain nC Cus usto toms ms Points at their Common Borders to make sure that imports do not enter into the FTA through the member levying the lowest low est tariff on each item Th They ey sho shoul uld d al also so agr agree ee on on rule rules s of ori origin gin to est estab ablis lish h when when a g goo ood d is manufactured in a member country and therefore it is able to

(b)) (b (c) (c) (d)) (d (e)) (e (f (f))

(g)) (g

pass duty free across their borders

 

Contd ……….  ……….  •

CUSTOMS UNIONS

(a)) (a

This This is a FTA FTA plus plus an an Agr Agree eeme ment nt to es esta tabl blis ish h com commo mon n

(b)

(c)

barriers to trade with the Rest of the World 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 Agreement is needed on the level of the common external tariff and on the administration of the Tariff Revenues

 

Contd…………..   Contd………….. •

COMMON MARKET :

(a) Common Common mar market ket is a cust customs oms union union where where inte interna rnall non-tariff barriers have also been removed (b) It all allows ows fre free e mo movem vement ent of good goods, s, serv servic ices es a and nd capi capital tal among the member countries (c) A comm common on mar market ket impli implies es that that tther here e is is an an inte interna rnall market, comprising of all the member nations, which is common to all firms trading within that market

 

Contd…………….   Contd……………. •

ECONOMIC UNION :

(a)) (a

EU is the the mo most st co comp mple lete te fo form rm of econ econom omic ic integ integra rati tion on between countries - EU ties up its members economies closely so

(b)) (b

(c)) (c

(d) (e)) (e

that in effect, they function as a single economy Th This is invol involve ves s com commo mon n mar marke kett and and also also the the ha harm rmoni onisa sati tion on of  economic policies in particular Monetary Union and the Co-ordination of Fiscal Policies Mone Moneta tary ry Union Union ma may y inv involv olve e a Fixe Fixed d Exch Exchan ange ge R Rat ate es sys yste tem m between the Member Countries with a Single or Common Currency and Control over Interest Rates and other Instruments of Monetary Policy Fis Fiscal cal Pol Policy icy coco-ord ordina inatio tion n inv involv olves es rationa rationalisa lisation tion of TAX TAX Rat Rates es and some Degree of control over Government Budgets and Budget Deficits Ther There e is als also o likel likely y co-o co-ord rdina inati tion on o off othe otherr ec econ onom omic ic polic policie ies s such such a as s agricultural, industrial and other policies

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