Skirting the Spirit of GATT and WTO

Unfortunately, as is probably true of every law or agreement, since its inception there have been those who look for loopholes and ways to get around the provisions of the WTO. For example, China was asked to become a member of the WTO but to be accepted it had to show good faith in reducing tariffs and other restrictions on trade. To fulfill the requirements to join the WTO, China reduced tariffs on 5,000 product liens and laminated a range of traditional non-tariff barriers, including quotas, licenses, and foreign exchange controls. At the same time, US companies began to notice an increase in the number and scope of technical standards and inspection requirements. As a case in point, China recently applied safety and quality inspection requirements on such seemingly benign imported goods as jigsaw puzzles. It also has been insisting that a long list of electrical and mechanical imports undergo an expensive certification process that requires foreign companies but not domestic companies to pay for on-site visits by Chinese inspection officials. Under WTO rules, China now must justify the decision to impose certain standards and provide a rationale for the inspection criteria. However, the foreign companies will have to request a review before the WTO will investigate. The WTO recognizes the need for standards (safety, health, and so on) and it advocates worldwide harmonization of product standards.

The previously mentioned antidumping duties are becoming a favorite way for nations to impose new duties. Indeed, following the example of the United States, the region’s most prolific user of antidumping cases, Mexico and other Latin American countries have increased their use as well. The WTO continues to fight these new creative barriers to trade.

Finally, frustrated with the slow progress of the most recent round of WTO trade negotiations, several countries are negotiating bilateral trade agreements. For example, the US is currently negotiating free trade agreements with Singapore, Morocco, Australia and the remainder of the Americas. The European Union is engaged in similar activities with Albania and South America countries. To the extent that the bilateral talks ultimately lead to multilateral concessions, such activities are not inconsistent with WTO goals and aspirations.

India and WTO:

Increase of India’s Share in World Trade>

Once upon a time India had 26.5% of the world trade. Now this trade is in single digit but still India’s share in world trade is increasing tremendously. India’s share in total world trade, including trade in merchandise and services sectors was 1.1% in 2004 and 1.5% in 2006.

Based on the current rate of growth merchandise and services trade, it is expected that India’s share in world trade covering merchandise plus services sector may double from the level of 2004 to cross 2% in 2009.

Projections show that Indian global merchandise trade will increase from 1.2% in 2006 to 1.5% in 2009 and in trade in the services sector the India the India share in trade in services increased from 2% in 2004 to 3.0% in 2008.

According to the World Trade statistics of the WTO in 2006, India’s total merchandise trade (export and import) was valued at $294 billion in 2006 and trade in the services sector inclusive of export and import was $ 143 billion.

The WTO report in 2006 said the least developed countries trade grew 30% fuelled by higher prices for petroleum and other primary commodities. Developing countries share of world merchandise exports reached an all time record of 36%.

Trade in Goods – Agriculture:

The WTO agreement on agriculture was one of the any agreements which were arrived at during the Uruguay. As per the provisions of the agreements, the developed countries would complete their commitments for reduction of subsidies within six years i.e. by the year 2000, whereas the reduction commitments of the developing countries would be completed within 10 years i.e. by the year 2004. The least developed countries were required to make any reductions.

The products which are included within the purview of this agreement are what are normally considered as part of agriculture except that they exclude fishery and forestry products as well as rubber, jute, sisal, abaca and coir.