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WTO GENESIS
The General Agreement on Trade and Tariff (GATT) came into existence in 1947 It sought substantial reduction in tariff and other barriers to trade and to eliminate discriminatory treatment in international commerce. commerce. India signatory to GATT 1947 along with twenty two other countries Eight rounds of negotiations had taken place during five decades of its existence
Contd.
WTO GENESIS
WTO Came into existence on 1-1-1995 with the conclusion of Uruguay Round Multilateral Trade Negotiations at Marrakesh on 15th April 1994, to : 1994, Transparent, free and rule-based trading system ruleProvide common institutional framework for conduct of trade relations among members Facilitate the implementation, Multilateral Trade Agreements administration and operation of
Rules and Procedures Governing Dispute Settlement Trade Policy Review Mechanism Concern for LDCs Concern on Non-trade issues such as Food Security, environment, Nonhealth, etc. etc.
BASIC PRINCIPLES
Over three quarters of WTO members are developing or least-developed countries. All WTO agreements contain special provision for them, including longer time periods to implement agreements and commitments, measures to increase their trading opportunities and support to help them build the infrastructure for WTO work, handle disputes, and implement technical standards.
The 2001 Ministerial Conference in Doha set out tasks, including negotiations, for a wide range of issues concerning developing countries. Some people call the new negotiations the Doha Development Round.
BASIC PRINCIPLES
Before that, in 1997, a high-level meeting on trade initiatives and technical assistance for least-developed countries resulted in an integrated framework involving six intergovernmental agencies, to help least-developed countries increase their ability to trade, and some additional preferential market access agreements.
A WTO committee on trade and development, assisted by a sub-committee on least-developed countries, looks at developing countries special needs. Its responsibility includes implementation of the agreements, technical
cooperation, and the increased participation of developing countries in the global trading system
BASIC PRINCIPLES
The WTO organizes around 100 technical cooperation missions to developing countries annually. It holds on average three trade policy courses each year in Geneva for government officials. Regional seminars are held regularly in all regions of the world with a special emphasis on African countries. Training courses are also organized in Geneva for officials from countries in transition from central planning to market economies.
The WTO s key principles, such as non-discrimination and transparency. By joining the WTO, even a small country automatically enjoys the benefits that all WTO members grant to each other. And small countries have won dispute cases against rich countries WTO. they would not have been able to do so outside the
BASIC PRINCIPLES
The alternative would be to negotiate bilateral trade agreements with each trading partner. That could even include regularly negotiating the renewal of commitments to treat trading partners as equals. For this, governments would need more resources, a serious problem for small countries. And in bilateral negotiations smaller countries are weaker. By joining the WTO, small countries can also increase their bargaining power by forming alliances with other countries that have common interests.
India Seeks
Protecting our food and livelihood security by having sufficient flexibility for domestic policy measures. Protecting domestic producers from the surge in imports or significant decline in import prices. Substantial reduction in export subsidies and domestic support to agriculture in the developed countries for greater market access to products of developing countries. Finally, a more equitable & fair trading framework for agricultural commodities
Market Access
The negotiations on market access should include the following issues: Comprehensive binding of tariffs Reduction of peak tariffs and removal of tariff escalations Reduction in the number of tariff rate quotas (TRQs) in a progressive manner
Volume of imports allowed under quotas to be substantially expanded till TRQs are eventually eliminated Transparent administration of TRQs
Export Subsidies
The negotiations on export subsidies should include the following issues: Countries using export subsides should phase out this form of farm support within two years of implementation of the revised disciplines to be followed by countries in the agricultural sector. sector. Export subsidies discipline should include all forms of spending that enhances the capacities of exporters to increase trade, e.g. export credit, guarantees and insurance programmes. programmes.
NonNon-Trade Concerns
The issue of non-trade concerns should be articulated as under: nonunder: NonNon-trade concerns should be adequately reflected in the decisions, particularly those related to market access and domestic support. support. It needs to provide an enabling environment for the countries to address the concerns relating to food security and livelihoods. livelihoods. The relevant decisions of the World Food Summit on food security and livelihoods need to be integral part of the negotiations. negotiations.
Whatever the reason for their decline, the reduction in demand for these products fed through to markets that supply inputs for their production, particularly iron and steel. Falling demand for iron and steel was also linked to the slump in building construction in countries where property markets had been booming before the crisis (e.g. the United States, the United Kingdom, Ireland and Spain).
The principal aim of India's negotiating strategy in agriculture negotiations has been to protect the interests of farmers particularly with regard to their food and livelihood security. Substantial and effective reductions in domestic support and customs tariffs by developed countries, while enabling developing countries to protect and promote the interests of their low income and resource poor farmers, is a key priority for India and other developing countries in the agriculture negotiations.
India is a net exporter of cotton. Textile industry imports cotton mainly of extra long staple variety such as Savin and Pima which is not grown domestically.
Tariff simplification
ending the use of complex tariffs so that most or all end up as straight
percentages of the price, with some possibly left as specific duties (dollars, euros etc, per tonne, litre, etc).
tariff cuts than normal, can only be products that already have tariff quotas (where imports inside the quotas have low duties). If other products can be sensitive, then new tariff quotas would have to be created.
Dumping is said to occur when the goods are exported by a country to another country at a price lower than its normal value. This is an unfair trade practice which can have a distortive effect on international trade. Anti dumping is a measure to rectify the situation arising out of the dumping of goods and its trade distortive effect. Thus, the purpose of anti dumping duty is to rectify the trade distortive effect of dumping and re-establish fair trade.
AntiAnti-Dumping Issues
The use of anti dumping measure as an instrument of fair competition is permitted by the WTO. In fact, anti dumping is an instrument for ensuring fair trade and is not a measure of protection per se for the domestic industry. It provides relief to the domestic industry against the injury caused by dumping. Note: Import of cheap products through illegal trade channels like smuggling do not fall within the purview of anti-dumping measures. Anti dumping, in common parlance, is understood as a measure of protection for domestic industry. However, anti dumping measures do not provide protection per se to the domestic industry. It only serves the purpose of providing remedy to the domestic industry against the injury caused by the unfair trade practice of dumping. In fact, anti dumping is a trade remedial measure to counteract the trade distortion caused by dumping and the consequential injury to the domestic industry. Only in this sense, it can be seen as a protective measure. It can never be regarded as a protectionist measure.
Customs duties fall in the realm of trade and fiscal policies of the Government while anti dumping and anti subsidy measures are there as trade remedial measures. The object of anti dumping and allied duties is to offset the injurious effect of international price discrimination while customs duties have implications for the government revenue and for overall development of the economy.
Anti dumping and anti subsidy duties are levied against exporter / country inasmuch as they are country specific and exporter specific as against the customs duties which are general and universally applicable to all imports irrespective of the country of origin and the exporter. Thus, there are basic conceptual and operational differences between the customs duty and the anti dumping duty. The anti dumping duty is levied over and above the normal customs duty chargeable on the import of goods in question.
Dumping Parameters
Dumping means export of goods by one country / territory to the market of another country territory at a price lower than the normal value. If the export price is lower than the normal value, it constitutes dumping. Thus, there are two fundamental parameters used for determination of dumping, namely, the normal value and the export price. Both these elements have to be compared at the same level of trade, generally at ex-factory level, for assessment of dumping. Normal Value: Normal value is the comparable price at which the goods under complaint are sold, in the ordinary course of trade, in the domestic market of the exporting country. If the normal value can not be determined by means of the domestic sales, the following two alternative methods may be employed to determine the normal value: Comparable representative export price to an appropriate third country. Constructed normal value, i.e. the cost of production in the country of origin with reasonable addition for administrative, selling and general costs and reasonable profits. Export price: The Export price of the goods allegedly dumped into India means the price at which it is exported to India. It is generally the CIF value minus the adjustments on account of ocean freight, insurance, commission, etc. so as to arrive at the value at ex-factory level.
Dumping Parameters
Dumping Margin: The margin of dumping is the difference between the Normal value and the export price of the goods under complaint. It is generally expressed as a percentage of the export price. Illustration: Normal value US$ 110 per kg. Export price US$ 100 per kg. There is dumping in this case as export price is lower than normal value and dumping margin in this case is US$ 10 per kg., i.e. 10% of the export price. Dumping is a function of two variables, namely Normal Value and Export Price, which must be compared at the same level of trade i.e. at the ex-factory level.
Essentials of Anti-Dumping Investigation AntiThe domestic producers expressly supporting the anti dumping application must account for not less than 25% of the total production of the like article by the domestic industry. The application is deemed to have been made by or on behalf of the domestic industry, if it is supported by those domestic producers whose collective output constitute more than 50% of the total production of the like article produced by that portion of the domestic industry expressing either support for or opposition as the case may be, to the application. Note: This is to further clarify that a domestic industry, which seeks relief, should give sufficient evidence with respect to the above parameters. Unless the above parameters are satisfied, it will not be possible for the Authority to initiate an anti-dumping investigation.
Essentials of Anti-Dumping Investigation AntiThe following are essential for initiating an anti dumping investigation: Sufficient evidence to the effect that ; there is dumping there is injury to the domestic industry; and there is a causal link between the dumping and the injury, that is to say, that the dumped imports have caused the alleged injury.
Essentials of Anti-Dumping Investigation AntiThe domestic producers expressly supporting the anti dumping application must account for not less than 25% of the total production of the like article by the domestic industry. The application is deemed to have been made by or on behalf of the domestic industry, if it is supported by those domestic producers whose collective output constitute more than 50% of the total production of the like article produced by that portion of the domestic industry expressing either support for or opposition as the case may be, to the application. Note: This is to further clarify that a domestic industry, which seeks relief, should give sufficient evidence with respect to the above parameters. Unless the above parameters are satisfied, it will not be possible for the Authority to initiate an anti-dumping investigation.
Essentials of Anti-Dumping Investigation AntiBroadly, injury may be analyzed in terms of the volume effect and price effect of the dumped imports. The parameters by which injury to the domestic industry is to be assessed in the anti dumping proceedings are such economic indicators having a bearing upon the state of industry as the magnitude of dumping, and the decline in sales, selling price, profits, market share, production, utilization of capacity etc. Besides the calculation of the margin of dumping, the Designated Authority also calculates the Injury Margin for the Domestic Industry. The Injury Margin is the difference between the Non-Injurious Price due to the Domestic Industry and the Landed Value of the dumped imports. Landed Value for this purpose is taken as the assessable value under the Customs Act and the applicable basic Customs duties except special duties. For calculating Non-Injurious Price, the Authority calls for costing information from the domestic industry in the prescribed Performa for the period of investigations and for three previous years.
Essentials of Anti-Dumping Investigation AntiIn the anti dumping proceedings, it is imperative to prove that the dumping has caused injury to the domestic industry. No anti dumping duty shall be recommended without a finding of this causal relationship. That is to say, Dumping should lead to Injury The causal link is to be established generally in terms of the following effects of dumped imports on domestic industry: volume effect price effect The volume effect of dumping relates to the market share of the domestic industry vis--vis the dumped imports from the subject country/ies while with regard to the price effect, the Designated Authority shall consider whether there has been a significant price under cutting by the dumped imports as compared with the price of the like product in India, or whether the effect of such imports is otherwise to depress prices to a significant degree or prevent price increase which otherwise would have occurred to a significant degree.