| I have known him, and I have greatly profited both from reading him and knowing him. He is a true liberal in the best sense of that term. I do think the great contribution of western intellectual thought to modern society has been the idea of liberalism. Amartya has reminded us in his book “The Argumentative Indian” that the idea of “pluralism” has its roots not just in western liberal thought but in Indian philosophy as well. It is true that debate and disagreement was a part of our intellectual tradition for centuries. However, the essence of liberalism captured by Voltaire’s famous aphorism, “I may disapprove of what you say, but I will defend to the death your right to say it", is an idea we owe to the rise of liberal philosophy. Dr Stiglitz epitomizes this tradition and I am, therefore, delighted to be here at a seminar that will discuss his work. The debate on his earlier book on “Globalisation and Its Discontents” generated both light and heat. I have not seen any controversy being generated as yet by his new book! Perhaps, the debate on globalisation is now more balanced and nuanced, encouraging participants to be less shrill. However, we should expect this debate to be at times contentious, since the process of globalisation in the 21st Century is going to be a contentious process. The challenge before scholars and political leaders is to minimize the disruptive and contentious aspects of globalisation, and maximize its benefits, especially for those who are as yet outside the pale of development. I agree with Dr Stiglitz that neither the developed economies nor the developing can afford to either ignore or reject globalisation. These are not realistic options. Rather, we must learn to deal with it, cope with it and manage it. We have to manage both the economics of globalisation and the politics of globalisation. I would go one step ahead and say that we must also manage its cultural and intellectual consequences. These have to be managed in a democratic manner. And, when we talk of democratizing global governance, we must also accept the obligation of democratizing national and local governance. Dr Stiglitz has put forward several interesting ideas on each of these issues, especially on bridging the “democracy deficit” in global governance. These ideas deserve careful consideration. I would like to know the considered view of your seminar on these proposals. Some of these ideas were proposed in the Report of the South Commission. But, so far they remain proposals because the political and intellectual leadership of the developed world has not yet shown a willingness to grapple with them. Competition is a double-edged sword. Left to itself it helps the strong and can hurt the weak. In social and economic phenomena, the biblical saying "to him that hath shall be given" has a wide applicability. Hence, the role for state intervention and the need for “rules of the game” that ensure that the costs and benefits of competition and of globalisation are spread out as evenly as possible. I do believe that even in a wholly globalised and integrated world, States have a role to play. People in democratic societies expect Governments to deliver on their basic needs, both economic and social needs. While the private sector will increase its role and bring prosperity to newer generations of entrepreneurs, professionals and workers, the Government will be expected to step in and provide a range of services. These include, apart from law and order and internal and external security, the provision of basic education, public health and basic medical care, the protection of the environment and such like. If the Government has to provide such services then the Nation State must be able to mobilize and deploy both financial and administrative resources. Thus, even in a “borderless world”, to use Fukuyama’s evocative concept, Governments will have a role to play and will be expected by the people to play that role. Moreover, private capital flows will go only where risk is quantifiable and reward is tangible. While globalisation has enabled increased flows of capital from the developed to the developing world, States will continue to have a role. People expect governments to invest in public goods. Official development assistance must be extended to bridge the development gap between the world’s haves and have-nots. When we talk of “globalisation” and of a “borderless world”, the focus so far has largely been on the movement of goods, capital and, largely, financial and logistical services. There is as yet no framework for the movement of people. On the other hand, developed economies are becoming more restrictive with respect to immigration and the movement of labour. Even economic theory has largely focused on merchandise trade and capital flows, paying little attention to the economics and politics of managing migration in the uncertain world that we live in. Even in the area of trade, we have still not been able to find an acceptable basis for making globalisation more development oriented. This was the great mission of the Doha Development Round of multilateral trade negotiations. The Doha Round was explicitly called a “Development Round” because of the anxieties generated by the globalisation process. In fact Dr Stiglitz’s work played an important role in shaping this global debate. If the Doha Round has to have a successful outcome, and we sincerely wish this, then it must remain true to its original mandate of being a Development Round. We can not continue to live in a world of 'butter mountains' and “rivers of milk”, liberally funded by government subsidies, when the poor starve in the villages of the Third World. We all know subsidies distort trade. In the case of the agricultural subsidies offered by developed industrial economies, these not only distort trade but destroy lives. We must find ways in which trade aids development to ensure that globalisation works for all. This is the challenge before the leadership of the developed world. While economists have paid some attention to the economic consequences of globalisation and the management of economic globalisation, not much attention has been paid to the politics of globalisation and its political management. The United Nations could have been a political instrument of managing globalisation, but so far it has not succeeded. Indeed, it will not be able to succeed unless it reforms itself as an institution and its own management is more democratic and more representative. Globalisation in an increasingly multipolar world requires global “rules of the game” not just for trade and capital flows, but for the management of peace and security, the management of the environment and of resource use. Just as Nation States are unable to command the forces of economic globalisation, Nation States are also proving ineffective in dealing with the social, cultural, political and environmental aspects of globalisation. Be it HIV AIDS or Avian Flu, be it global warming or terrorism, governments find themselves constrained in dealing with these “cross-border” threats. When such threats emanate from non-State actors, governments are even less equipped to deal with them. In Asia too we need regional institutions that will enable us to deal with regional challenges and opportunities. While regional associations and arrangements are here to stay, we cannot neglect the need to strengthen global institutions and multilateral arrangements. We are at a crossroads once again in the evolution of human history. The world in the 21st Century cannot be managed in the way we have tried to manage it in, what Eric Hobsbawm dubbed, “The Short 20th Century”. Both in the first half and in the second half. The rise of Asia, the rise of other new nations and political movements, the emergence of new technologies, especially information, communication and entertainment technologies, global pandemics and global environmental challenges. All these present new challenges. We need new responses. Old ways of managing global affairs, wherein single digit “Group of Nations” could constitute themselves into a global board of management, are over. There are, of course, a few Big Powers, and these will continue to exercise global influence. But we must learn to work with nations big and small. That is the challenge and the opportunity before us. The sooner we learn to deal with this challenge the easier would it be for us to turn globalisation into an opportunity. I hope the wisdom of scholars gathered here can guide those of us charged with the responsibility of managing governments in these challenging times. I wish your seminar all success.” |
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| NATIONAL SEMINAR ON MAKING GLOBALISATION WORK: |
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I remember that ‘The Economist’ declared a couple of months ago that India, China, and other developing countries are set to give the world economy the biggest boost in the whole of history. And reading that, and similar forecasts elsewhere, I questioned to myself whether that was not inevitable.
(a) Last year, for the first time, the combined output of emerging economies accounted for more than half of the world GDP (in PPP), with India and China alone accounting for nearly 1/4th. (b) The share of world exports of the emerging economies was 43% against a mere 20% in 1970. (c) They consumed over half of the world’s energy. (d) They hold 70% of the world’s foreign exchange reserves. And, as they integrate further into the global economy, obviously they would dominate the global economy. Importantly, since the emerging economies provide livelihood to 85% of the world’s population, we could expect the spread of global gains to be more widespread than in any previous bouts of economic reforms. |
| 2. | However, I am fairly clear in my mind that what was not inevitable was pro-poor development of the developing countries, and that a multitude of changes need to be made – in policies as well as in economic institutions. The interface between national economies and the international environment or globalisation, which is now seeking to replace the discredited ‘Washington Consensus’, does not hold within its palm any magic solution. In order not to discredit itself, globalisation would have to squarely address sustainable development and poverty reduction. The “discontent with [such] globalisation”, which has been very credibly brought out by Prof. Stiglitz in his earlier book (Globalisation and its Discontents) in 2002, would now have to be addressed, and globalisation would have to be made to deliver on its promises to the poor, the vulnerable, and the disadvantaged peoples, most of who live in the developing world. |
| 3. | Prof Amartya Sen has correctly posed the dilemma to finding the solution as well as the means to reach the solution. Firstly, Prof. Sen has advised that there must be an attempt to link the strategies of development to something more fundamental, in particular, the ends of economic and social development. The second basic departure would take us beyond the ends to the means to achieve those ends felicitously. |
| 4. | Economic reforms undertaken by India since 1991 have been broad-faceted and calibrated to embody India’s heterogeneity in economic and social character. Macro-economic policies and institutional reform have been balanced out against globalisation in order to achieve the complementarities which unleash the growth potential of an economy. However, while we have been able to utilise most of the opportunities thrown up as a result of our increasing integration with the global economy, we have no hesitation in acknowledging that the benefits of growth have not reached all segments of our population in equal measure. Obviously, reforms, which are a continual exercise, need to be carried out with undiminished vigour, but we have to simultaneously ensure that the growth achieved is ‘inclusive growth’ and the gap which exists between the rich and the poor does not become a “chasm”, as described by Prof. Stiglitz. |
| 5. | The international trading environment has been beset with avoidable conflicts, largely because the international trade rules are underpinned by an insufficient appreciation of the adverse impact of rapid liberalization, if it does not pay adequate attention to the need to reduce asset and income inequalities. Market liberalization within countries will deliver faster growth and poverty reduction, provided markets exist and market institutions are in place. Where these conditions are not met, such as because of subsistence agriculture which supports the bulk of the rural poor in India, prior investments are needed and liberalization would have to be very carefully calibrated. |
| 6. | Moreover, investments in the productive sectors, especially in the rural economy which benefit vast number of the poor, would need to be dovetailed with marked improvements in the systems of health and education delivery, which themselves contribute significantly to the achievement of economic and social development goals. |
| 7. | Considered in the aggregate, developing countries, and the poor within them, can only gain from a long-term increase in trade, especially in manufactures and services, while promoting sustainable agriculture. Without substantial investment in the capacity to supply and, equally important, a guaranteed safety net against falling prices and import surges, sudden liberalization would expose the constituents to unbearable risk. For India, these aspects lie at the core of the Doha Development Round, coupled with the need to usher in fair trade by achieving substantial and effective reductions in trade-distorting agricultural support and protection provided by the developed countries. Full liberalisation through the WTO only will secure the economic and commercial gains necessary in the goods and services sectors and modes of supply of interest to developing countries. We are happy that the normal process of negotiations has commenced in the WTO. It remains India’s firm hope that the Doha Round will deliver on its development promises and dispel to a degree the discontent that prevails against globalization. |
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DOHA AND TRADE NEGOTIATIONS AFTER THE US ELECTIONS |
Address by Shri Kamal Nath, Minister of Commerce & Industry
Organized by Columbia University Business School and CII
19th January, 2007
India welcomes the resumption of work in the Negotiating Groups across all areas of the Doha Round on 16 November 2006. The suspension of talks in July this year was an avoidable delay to realise the development dimension of the Round. India has continued to attach importance to strengthen the multilateral trading system in other areas such as NAMA, Services, and Rules, to secure both ambition and distributional balance in the welfare gains for WTO Members.
The Doha Development Agenda is one of the most ambitious attempts in ensuring that the issue of development is firmly at the core of the multilateral trading system. The fundamental principles of the multilateral trading system, namely, non-discrimination, predictability, stability and transparency are fully supportive of development.
Before proceeding on the road map for getting the Round back on track, it is important to appreciate that this is the first negotiating Round premised on development. The success of the Round could perhaps for the first time usher in welfare gains percolating down horizontally. Even those in the lowest strata of economic development can jostle for space in this incremental global growth. Most importantly, it would address maladies such as unemployment, low purchasing power, poverty thereby attenuating the economic inequity and ushering in social harmony.
Since development issues lie at the heart of the current Round of Negotiations, the key to the Negotiations, therefore, should be, firstly, to ensure that this Round delivers for development and secondly, helps developing countries to integrate into the world trading system and thereby take advantage of opportunities.
It is in this perspective that the negotiators must approach the key modalities. It is but natural that agriculture would remain at the heart of the negotiations since the livelihood concerns of more than a billion resource poor farmers depend on it. On the other hand, it is the manufacturing and the services sectors that would contribute to the bulk of GDP growth in the post liberalized economic order. Therefore there has to a delicate balance between the defensive agenda on agriculture and the relatively offensive agenda on Services and NAMA.
India continues to believe in fair and strengthened multilateral trade rules of the WTO. We cannot foresee the elimination of distortions in agriculture through any other option, including through any other rigorous pursuit of regionalism. The full liberalisation through the WTO secure the economic and commercial gains necessary in the goods and services sectors and modes of supply of interest to developing countries. We are happy that the normal process of negotiations has commenced in the WTO and hope that this would lead to a successful completion of Doha Round, especially to secure our development imperatives.
For globalization to entail win-win scenarios, the comparative advantage of developing countries should not be stifled by protectionism in their developed partners. While we are all getting ready to go back to the negotiating table, our hope and expectation would be that there will be substantially more to offer on achieving a fairer world trade order.
The current approach of the Chairmen of the Working Groups to restarting the negotiations by tackling the peripheral issues before transiting to the core modalities seems to be a prudent path. It would give a good perspective of areas of divergences which could then be effectively plugged or negotiated upon. The next step for resolution of the core modalities such as domestic support and market access in agriculture, market access in the manufacturing sector and ambition on offers under Services would be the key to putting the stalled Doha Round back into acceleration mode. This is by no means an easy task but is well doable if all of us get down to seriously tackling the divergences.
I believe there can be no looking back at this point of time since any faltering now will derail the whole round and most importantly put a spanner in the wheels of real global growth. “Real” not from an economic point of view but from the perspective of percolating welfare gains down to the nations at the lowest end of the economic stratum, a feat sadly unachieved in any of the earlier Rounds.
Therefore, it is very important to appreciate the centrality of development in the current round and see the negotiating elements from that horizon. Any move to scuttle the round on the rationale of higher ambitions not having been agreed to would be a gross injustice to the billions of resource poor farmers and workers around the developing world. Expectations are high from the Doha mandate for these vulnerable sections of the population who are looking at welfare gains from this round to steer them clear of economic deprivation and provide succor. Letting them down at this juncture would run the risk of the entire multilateral trade institution being branded as a coterie of the rich nations.
Notwithstanding this developing countries would not shirk from setting reasonable and in some sectors even high ambitions so that the developed nations can also go back home from the Round without worrying about the salability to the stakeholders. Therefore domestic sensitivities and market access can go hand in hand and be part of a comprehensive successful package.
I am sure that all the WTO members would have reassessed their positions and flexibilities in the hiatus after the stalling of the Round in July last year. A fresh thrust to close the gaps in positions and look at the whole Round in a more holistic perspective of “participatory welfare gains” is in order.
Failure of the Doha Round would send exactly the opposite signal – it would weaken the WTO’s role as the anchor of the global trading system and lead to weakening the momentum of multilateralism. The only beneficiaries will be protectionism and unilateralism. Clearly, we cannot afford that and it is our combined responsibility to ensure that does not happen. There is no option before us but to get back to the negotiating table and resume our labours. At the same time, it is important that we do not get stalemated again. It is necessary, therefore, that the resumption of negotiations is based on a shared understanding of clear principles that should guide our efforts, namely, (i) being firmly faithful to the Doha mandate, as further elaborated by the July 2004 Framework and the Hong Kong Ministerial Declaration; (ii) taking on board whatever has been agreed to by Members since the commencement of negotiations; and (iii) focus on negotiations without any rhetoric.
For India, it is important that the Doha Round negotiations are brought to a successful conclusion. Such a conclusion can only be possible if we are faithful to the mandate and the outcome reflects a clear balance between market opening and the development needs of the majority of the membership. India will obviously show flexibility to achieve such an outcome but the onus for movement is clearly with the large developed countries.
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IMPACT OF WTO AGREEMENT |
With a view to improving the awareness about the rights and obligations arising from the WTO agreements and to evolve the position of India in the negotiations under the Doha Work Programme, the Government has been holding periodic consultations with the concerned Ministries/ Departments of the Central Government, Governments of States and Union Territories, industry associations, export promotion councils, farmers groups, Civil societies, consumer organizations, research institutions, and other stakeholders. The Government has instituted Expert Groups consisting of persons of eminence in the respective area for providing advice and guidance, and research studies have been commissioned to examine the implications for stakeholders. Periodically, seminars, workshops and symposia are held with interested parties with the cooperation of the WTO Secretariat, the UNCTAD, ESCAP and other multilateral bodies, universities, and industry associations. The Department of Commerce website has a separate webpage on "India and WTO", which explains the provisions of the agreements and updates the stakeholders on the status of the negotiations. Enquiry points required by specific agreements, such as on technical barriers to trade and sanitary and phytosanitary measures, have been established. In the light of the above, the Government does not feel the need to set up separate information / consultation centres with regard to dissemination of information on WTO issues.
Since the establishment of the WTO, India's trade, including the pharmaceutical products, has been growing continuously, both in the merchandise goods category as well as commercial services. The total merchandise goods exports of India have increased from US$ 26.33 billion in 1994-95 to US$ 102.7 billion in 2005-06 (provisional), whereas total merchandise imports (excluding petroleum products) grew from US$ 22.72 billion to US$ 105.1 billion (provisional) during the same period. The export of pharmaceutical products has increased from over US$ 854.51 million in 1999-2000 to US$ to 2444.06 million in 2005-06. Similarly, India's total commercial services trade increased from US$ 14.06 billion in 1994 to US$ 80.58 billion in 2004.
India has been engaged in the WTO negotiations to ensure that its core concerns and interests continue to be adequately addressed at each stage of the negotiations. As required by the exigencies of the ongoing negotiations, India has been submitting proposals in the various negotiating bodies of the WTO with a view to pursuing its national interests and to protect the interests of the farmers, industry, service providers and trading entities. Our negotiating objectives have been developed based on analytical work and an intensive process of dialogue with the stakeholders. India has been pursuing its national interests by forging coalitions of developing countries on various negotiating issues such as G-20 on Agriculture, G-33 on Special Products and Special Safeguard Mechanism under Agriculture negotiations, NAMA-11 in respect of Non-Agricultural Market Access negotiations, 'Friends of Mode 4' in services and 'Friends of Geographical indications' in trade-related intellectual property rights. India has also been playing an active role in strengthening various developing country coalitions by bringing together G-20, G-33 and G-90 groups of countries in a broad alliance to reinforce each others' positions on issues of mutual interest. On the domestic front, the Government is continuously monitoring the surge in import of sensitive items and it is committed to intervene in a WTO compatible manner to protect the interests of all domestic stakeholders.
(Statement in Parliament by Mr. Kamal Nath, Commerce & Industry Minister,
in reply to question in Lok Shabha on 28th November, 2006.)
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PARLIAMENT
BRIEFS |
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• MINISTERIAL LEVEL MEETING ON THE TASKS OF DOHA ROUND
An informal meeting of 31 Trade Ministers, including of India, was convened by the Director General (DG), WTO between 29th June and and 1st July 2006. Domestic Support and Market Access in Agriculture and Non-Agricultural Market Access (NAMA) were discussed by the Ministers. Convergence could not be achieved. A meeting of the Trade Negotiations Committee (TNC) of the WTO was also held on 1st July 2006 wherein the DG, WTO was requested to conduct intensive and wide-ranging consultations with a view to facilitating the establishment of modalities in Agriculture and NAMA. These consultation were to be based on the draft texts prepared by the Chairs of the respective Negotiating Groups. The DG was requested to report back to the TNC as soon as possible.
A meeting of the Trade Ministers from G-6 countries of the WTO (Australia, Brazil, the European Communities, India, Japan and the United States of America) was held at Geneva on 23rd and 24th July 2006 and there was no convergence on the core issue of substantial reduction of trade distorting support in agriculture and other development issues. At the informal meeting of the TNC held on 24th July 2006, the Director General who is its Chairman, reported that "it remained clear that the gaps remain too wides", and recommended that the only course of action would be to suspend the negotiations across the Round as a whole to enable the serious reflection by participants which was clearly necessary and time-out to review the situation, examine available options and review positions, particularly in respect of divergences in agricultural domestic support and market access issues. The members, therefore agreed to suspend the negotiations across all areas of the Doha Work Programme. The WTO general council, at its meeting held on 27th July 2006, took note of the report of the TNC Chairman, and supported the suspension of the negotiations.
Subsequent to the suspensions of negotiations under the Doha Work Programme, the WTO members have been holding informal consultations on how to resume the negotiations. At the informal meeting of the trade negotiations committee (TNC) held on 16th Nov. 2006, a consensus has emerged on resumption of the negotiation process in the negotiating groups of the TNC, with the chairs of the groups having the responsibility to determine the rhythm of there work in consultation with the WTO member delegations.
The G-20 and the G-33 alliances on negotiations in Agriculture, of which India is a Member, have been emphasizing that the livelihood and standards of living of the poor farmer in developing countries are seriously jeopardised by the subsidies and market access barriers prevailing international agricultural Trade and that any Round that would be faithful to its development dimension must urgently redress this situation.
Towards safeguarding the interests of Indian agriculture and farmers, India has also been playing a key role in further strengthening the developing country coalitions by bringing together the G-20, the G-33, the Africa-Carribbean-Pacific countries and the Least Development Countries to reinforce each others positions on issues of mutual interest. India has been emphasizing that the specific and detailed proposals that have been made in domestic support and market access by the G-20, and on special Products (SPs) and the Special Safeguard Mechanism (SSM) by the G-33, should ensure a final outcome consistent with the agreed negotiating mandate for substantial and effective reductions in trade-distorting domestic support, and substantial improvements in market access particularly for products of export interest to developing countries. India has taken the position that the self-designation of an appropriate number of SPs and an effective and operable SSM for safeguarding the vulnerable farm communities and proportionately lower tariff reduction commitments should be integral to the final outcome on agriculture. The Government has also been holding stakeholder consultations to protect and pursue our national interest, in particular the interests of our farmers.
Government is committed to intervene in a WTO-compatible manner, including by calibrating the applied tariffs within the bound duties, to protect their interests. The Government has introduced a number of initiatives and interventions, for enhancement of production and productivity of agricultural products so as to increase the competitiveness of Indian agriculture. The schemes implemented by the Government in this regard, interalia, include the Integrated Scheme for Oilseeds, Pulses, Oilpalm and Maize (ISOPOM),
National Horticulture Mission and Integrated Cereal Development Programmes. Further, to provide a level playing field for exports of agricultural products, the Government implements schemes such as the Transport Assistance Scheme and Vishesh Krishi Upaj Yojana to ensure that the farmers get remunerative prices for their exports as well as increased access to the international market.
• CONDITIONS OF WTO
All Members of the WTO, including India, have undertaken to subscribe to the Marrakesh Agreement establishing the WTO along with the annexed Agreements in Annex 1A relating to the Multilateral Agreements on Trade in Goods; Annex 1 B relating to the General Agreement on Trade in Services and Annexes (GATS); Annex 1C relating to the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS); Annex 2 relating to the Understanding on Rules and Procedures governing the Settlement of Disputes (DSU); and Annex 3 relating to the Trade Policy Review Mechanism (TPRM), in the form of a Single Undertaking. The range of WTO Agreements, which constitute a rule based system for the governance of international trade, represent a balance of rights, concessions, commitments and obligations on the part of all Member countries of the WTO.
While decision making in the WTO is governed by Areticle IX of the Marrakesh Agreement establishing the WTO all decision have so far been taken by consensus among the WTO Members.
In accordance with the mandate given in the Doha Ministerial Declaration and the July Framework Agreement Decision of the General council dated 1 August 2004 and the Hong Kong Ministerial Declaration of December 2005 negotiations are going on under The Doha Work Programme on a wide range of issues.
WTO is not meant to control the agricultural sector of any of its Member countries. Under the ongoing negotiations of the Doha Work Programme, Members are aiming to bring about reforms in the international trade in agriculture, through inter-alia reduction of trade distorting domestic support and phasing out of export subsidies provided by developed countries. As part of these negotiations, Members are also negotiating the provisions relating to special and differential treatment for developing countries. Hence it would not be in the interest of developing countries, including India, to keep agriculture out of the Doha Round negotiations of the WTO.
Under the existing provisions of the WTO agreement on Agriculture, India's domestic policy for the agriculture sector has by and large not been constrained India has not been required to reduce its domestic subsidies in the agricultural sector, since its total Aggregate Measurement of Support (AMS) is negative and remains well within the de minimis level. Subsequent to the removal of quantitative restrictions on imports in 2001 by India, the Government has put in place a mechanism for monitoring the import of sensitive items. Protection to the domestic producers, including farmers, is provided by applying WTO compatible measures, which include appropriate calibration of applied tariff within bound levels and safeguard action under specified circumstances.
The Government has introduced a number of initiatives and interventions for enhancement of production and productivity of agricultural products, so as to increase the competitiveness of Indian agriculture. The scheme implemented by the Government in this regard, inter alia, include the Integrated Scheme for Oilseeds, Pulses, Oilpalm and Maize (ISOPOM), National Horticulture Mission and Integrated cereal Development Programmes. Further, to provide a level playing field for exports of agricultural products, the Government implements schemes such as the Transport Assistance Scheme and Vishesh Krishi Upaj Yojana to ensure that the farmers get remunerative prices for their exports as well as increased access to the international market.
During April-May 2006, the total exports of agricultural products amounted to Rs. 83,786.71 crore, while imports of agricultural products during the same period amounted to Rs. 1,23,244.65 crore.
• ELIMINATION OF DOMESTIC TRADE SUBSIDIES
The G-20 group on agriculture, which currently has 23 Members, was formed in August 2003 prior to the Cancun Ministrial Conference of the World Trade Organisation (WTO). In view of the skewed nature of the proposals contained in the EU-US joint text of 13 August 2003 for developing a framework for modalities for negotiations on domestic support, export competition and market access in agriculture, the G-20, which includes India, Argentina, Brazil, China, Egypt, Indonesia, Philippines, South Africa and Zimbabwe, had maintained that the offers of these developed countries for the reform of their farm sector did not meet the objectives of the Doha mandate on the negotiations in agriculture.
The G-20, emphasizes achieving substantial and effective reductions in trade-distorting domestic support, the early phasing out of all forms of export subsidies, and substantial improvements in market access, while ensuring that special and differential treatment for developing countries enables them to effectively address their development needs, including food security, livelihood security and rural development. The G-20 proposals have found widespread recognition among developed and developing country Members as being technically sound and representing the middle ground. The G-20 has also coordinated with other developing countries in order to secure their common interests in the negotiations.
• DOHA-WTO TALKS
At the meeting of the Development Committee of the IMF held in Singapore on 19 September 2006, the Committee felt that the de-facto suspension of the Doha Round negotiations of the World Trade Organisation (WTO) represented a setback in the common efforts to make more rapid progress towards achieving the Millennium Development Goals. The Committee reemphasized the importance of the multilateral trading system and called upon all WTO members to avoid backsliding and to provide trade ministers with the necessary flexibility to resume the negotiations by the end of 2006.
At the informal meeting of the Trade Negotiations Committee (TNC) of the WTO held on 16 November 2006, a consensus has emerged on resumption of the negotiation process in the Negotiating Groups of the TNC, with the Chairpersons of the respective Groups having the responsibility to determine the rhythm of their work in consultation with the WTO Member delegations.
• WTO
The suspension of negotiations in the World Trade Organisation (WTO) across all areas of the Doha Work Programme in July 2006 was to enable the serious reflection by Members and time-out to review the situation, examine available options and review positions, particularly in respect of the divergences in agricultural domestic support and market access issues.
Since then formal consultations have been held among Members of the WTO with a view to gauging the flexibilities in the previously held positions of all Members, including the G-20 and G-33 alliances of which India is a Member. The G-20 Ministerial Meeting held at Rio de Janeiro in September 2006, along with country-coordinators of the G33, the African-Caribbean-Pacific countries, the Least Developed Countries, the African Group, the Small Vulnerable Economies, the Cotton-4, and NAMA-II, emphasized that the livelihood and standards of living of the poor farmers in developing countries are seriously jeopardized by the subsidies and market access barriers prevailing in international agricultural trade, and that any Round that would be faithful to its development dimension must urgently redress this situation. This position has been reiterated since then by India and others. On 16 November 2006 it has been agreed to resume work in all the negotiating groups across all areas of the Doha Work Programme.
Through the WTO General Council Decision of August 2004, certain principles and elements to guide further negotiations towards establishing modalities, inter alia, in agriculture were agreed upon by all WTO Members, including the developed countries. These included harmonization of overall trade-distorting domestic support and the Amber Box support, and agreement on a ceiling on the payments made under the Blue Box provisions of five per cent of the agricultural production value in a historic base period. A Declaration was adopted at the conclusion of the Sixth Ministerial Conference of the WTO held at Hong Kong in December 2005, whose key outcomes included a decision to eliminate export subsidies by 2013, with the substantial part in the first half of the implementation period, and to eliminate cotton export subsidies by developed countries by 2006. On trade-distorting domestic support, the three heaviest subsidizers would attract higher linear cuts, and trade-distorting domestic subsidies provided to cotton have to be reduced more ambitiously and over a shorter period of time.
• WORLD TRADE LIBERALISATION TALKS
The suspension of negotiations under the Doha Work Programme in the World Trade Organisation (WTO) in July 2006 was to enable the serious reflection by Members and time-out to review the situation, examine available options and review positions, particularly in respect of the divergences in agricultural domestic support and market access issues. On 16 November 2006 it has been agreed by all WTO Members to resume work in all the negotiating groups across all areas of the Doha Work Programme Including agriculture.
Thorough the General Council Decision of August 2004 certain principles an elements to guide the further negotiations towards establishing modalities, inter alia, in agriculture were agreed by all WTO Members, including the developed countries. At the six Ministerial Conference of the WTO held at Hong Kong, a Declaration was adopted at its conclusion, whose key outcomes have included a decision to enable developing countries to self-designation of an appropriate number of Special Products guided by indicators based on the three fundamental criteria of food security, livelihood security and rural development needs. These Special Products will be eligible for more flexible treatment.
In respect of sensitive products, it was agreed that developed and developing Members may designate an appropriate number, to be negotiated, of tariff lines to be treated as sensitive, and that substantial improvement in market access will be achieved through combinations of tariff quota commitments and tariff reductions applying to each sensitive product.
In order to break the Impasse in the negotiations, various Members are seeking steeper commitments to substantially and effectively reduce the trade-distorting support provided by the main subsidizing developed countries. Various other Members are seeking improvements in the offers on additional market access, including from developing countries.
The G-20 Ministerial Meeting held at Rio de Janeiro in September 2006, along with country-coordinators of the G-33, the African-Caribbean-Pacific countries, the Least Developed Countries, the African Group, the Small Vulnerable Economies, the Cotton-4, and NAMA-II, emphasized that the livelihood and standards of living of the poor farmers in developing countries are seriously jeopardized by the subsidies and market access barriers prevailing in international agricultural trade, and that any Round that would be faithful to its development dimension must urgently redress this situation. This position has been reiterated since then by India and others. Government has elaborated that the progress made so far in the negotiations must be carried forward.
• TRADE AGREEMENT BETWEEN INDIA AND EU
The trade between European Union (EU) and India grew by 23% during the ear 2005-06 to US $ 45.79 billion. India-EU Summit was held in Helsinki on 13 October, 2006. The Summit was co-chaired by our Prime Minister and by the Prime Minister of Finland which currently holds the Presidency of the European Union. Leaders on both sides encouraged an expansion and deepening of trade and investment linkages. Recognising that stronger economic engagement is mutually advantageous and would buttress the Strategic Partnership, the leaders decided to advance their bilateral trade relations. The Summit welcomed the work done by the High Level Trade Group and endorsed the case made for a future broad-based bilateral trade and investment agreement. The Summit agreed that both sides move towards negotiations tor such an agreement. The Summit reiterated the commitment of India and EU to the rules-based multilateral trading system. The Summit stated that "the successful outcome of the Doha Development agenda multilateral trade negotiations remains their foremost trade policy priority, and they agreed to ensure that the deepening of bilateral trade relations supports the larger multilateral trading regime.
• DIALOGUE WITH US AND EURO COUNTRIES ON VISA FOR INDIAN EXPERTS
India's core objectives in the Doha Round negotiations in services are in Mode-1 (Cross Border Supply) and Mode 4 (Movement of Natural Persons). India is the coordinator of the plurilateral request group on Mode 4. Apart from actively negotiating with all Member countries of the WTO, specially the EC and the USA for gaining effective market access in Mode 4, India has submitted several negotiating proposals on Mode 4 covering issues such as removal of the Economic Needs Test, clear prescription of the duration of stay, provisions of extension, creation of a separate category of visas namely-Service Provider Visas for professionals both for Contractual Service Suppliers (CSS) as well as Independent Professionals (IP). In the Revised Offers tabled by the important trading partners of India, like the EC and Australia, some improvements in Mode 4 have been offered.
• PRESSURE EXERTED BY DEVELOPED COUNTRIES ON AGRICULTURAL ISSUE
The suspension of negotiations in the World Trade Organisation (WTO) across all areas of the Doha Work Programm in July 2006 was to enable the serious reflection by Members and time-out to review the situation, examine available options and review positions, particularly in respect of the divergences in agricultural domestic support and market access issue. Since then, informal consultations have been held among Members of the World Trade Organisation (WTO) with a view to gauging that fexibilities in the previously held positions of all Members, including the G-20 and G-33 alliances, of which India is a Member. The G-20 Ministerial Meeting held at Rio de Janeiro in September 2006, along with country coordinators of the G-33, the African-Caribbean-Pacific countries, the Least Developed Countries, the African Group, the Small Vulnerable Economies, the Cotton-4, and NAMAII, emphasized that the livelihood and standards of living of the poor farmers in developing countries are seriously jeopardized by the subsidies and market access barriers prevailing in international agricultural trade, and that any Round that would be faithful to its development dimension must urgently redress this situation. This position has been reiterated since then by India, and others. On 16 November 2006 it has been agreed to resume work in all the negotiating groups across all areas of the Doha Work programme.
Membership of the World Trade Organisation (WTO) results in rights and obligations for its Members, including India. Such rights and obligations accruing to a Member of WTO, include national treatment and most favoured nation treatment for a Member's goods and services in other WTO Member countries. Each Member is also expected to undertake specific commitments under different agreements of the WTO. WTO Agreements have benefitted India and other developing countries in as much as a rule based, transparent and predictable multilateral trading system facilitates trade. The rule-based system provided by WTO also protects Members from unilateral action by stronger trading partners. Specific commitments had to be implemented in a phased manner by India. In respect of agricultural products, reduction of tariffs to agreed levels was to be effected in a phased manner ending in 2004. For non-agricultural products-(other than textiles and clothing products), the tariff reduction commitments were to be completed over a six year period ending 2000. In respect of textiles and clothing products, the implementation was over a ten year period ending 31st December 2004.
WTO is a forum for continuos negotiations and recognizing the need to achieve progressive trade liberalization, broad-based negotiations were launched through the Doha Ministerial Declaration of November 2001. Although these negotiations under the Doha Work Programme were suspended in July 2006, in accordance with the decision of the Trade Negotiations Committee (TNC) of the WTO of 16 November 2006, the work in the various negotiating groups under the TNC has resumed across all areas of the Doha Work Programme. India has been participating actively in these negotiations with a view to secure its national interests at each stage of the negotiations.
In view of the phased implementation of the commitments in WTO and in view of the fact that trade reforms were implemented in India to a great extent on autonomous basis along with other economic reforms, based on felt need, it is not possible to isolate the specific benefits or losses on account of liberalization based on India's membership of the WTO. However, the impact of various agreements/commitments undertaken in the WTO by India on its trade is continuously factored in by the Government in adapting its trade policy regime. Since the establishment of the WTO, India's trade has been going up continuously, both in the merchandise goods category as well as commercial services. Total merchandise goods exports of India have increased from US$ 26.33 billion in 1994-95 to US$ 102.7 billion in 2005-06 (provisional) whereas total merchandise imports (excluding petroleum products) grew from US$ 22.72 billion to US$ 105.1 billion (provisional) during the same period. Similarly, India's total commercial services trade increased from US$ 14.06 billion in 1994 to US$ 80.58 billion in 2004.
The WTO World Trade Report 2006 does not give country-wise ranking of leading exporters of commercial, services. However as per WTO Press Release dated 11.4.2006, india has improved its ranking as, a leading exporter in world trade commercial services from the 16th rank in 2004 to the 10th rank in 2005. According to the report, India's services trade has expanded at a faster rate than that of other Asian countries.
The government provides continuous support and incentives through various schemes under the Foreign Trade Policy and other related policies. to enhance India's share in global trade. create an enabling environment to promote trade and industry and to facilitate them to face global challenges.
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INDIA AND CHINA TO WORK TOGETHER FOR SUCCESSFUL |
JOINT STATEMENT BY BO XILAI, MINISTER FOR COMMERCE OF CHINA AND KAMAL NATH, MINISTER FOR COMMERCE & INDUSTRY OF INDIA
PRESS STATEMENT
India and China will work together for a successful development outcome of the current Doha Round of multilateral trade negotiations of the World Trade Organisation (WTO). This is indicated in a joint statement by Mr. Bo Xilai, Chinese Commerce Minister, and Shri Kamal Nath, Union Minister of Commerce & Industry, which was released in Mumbai today.
The full text of the joint statement issued by the two Ministers is given below:
Chinese Commerce Minister, Mr. Bo Xilai, and Commerce & Industry Minister, Shri Kamal Nath, have called for an early substantive resumption of and successful conclusion to the Doha Round of multilateral trade negotiations. The Ministers stated that there was a lot at stake for the developing countries, especially so as this was a Development Round. Failure just cannot be countenanced. Both Ministers observed that inflexible stances had led to the suspension of the talks in July 2006. Flexibilities must be displayed before negotiations resume to ensure that success does not remain elusive. The Ministers resolved that they were willing to engage constructively with other trading partners to ensure a successful conclusion to the Round. The outcome must expand trade opportunities for all; but it must also achieve development objectives and safeguard crucial developing country interests such as livelihood security which are the avowed objectives of the Round .
Mumbai, 23rd November, 2006
THE DOHA ROUND?
The mandate and the principles of the Doha Round hold the promise of the most ambitious interface between national economies and the international environment ever undertaken by governments across the globe. But, you could then ask the question – what is holding up the conclusion of the talks? The answer is nothing new. It is the age-old dilemma of what should be the distribution of the gains from the Round – what I have for long called the “content” of the deal. Should the balance of advantage go to the vast poor and vulnerable populations, who eke out a miserable livelihood in developing countries? Or, should we continue to work to address the protectionist interests and unrealistic ambition of a few powerful corporates in the developed countries, whose organisational prowess and lobbying abilities have historically swung deals to simply serve their self-interest. The talks are frozen at its final stages primarily because the debate has tragically shifted from unconditional delivery on the development dimension to conditionalities which have two objectives pushing them: |
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a. |
Firstly, in what best manner can the protectionist concerns of corporate agriculture be met? These concerns rest on two instruments: huge subsidies and border protection through high tariffs, TRQs (tariff rate quotas), tariff escalation, non-ad valorem duties, etc. Here too, the question is not one of which one of these instruments could be provided for a temporary period of adjustments, but rather how to continue to retain a multiplicity of instruments at the disposal of the developed country governments. |
b. |
Through the Doha mandate, complemented by the July Framework and the Hong Kong Ministerial we have agreed upon a series of principles and elements across Agriculture, NAMA and Services. The moment we concede to the calls that are now being made to redefine these objectives, we would be oversetting the very linkages to the strategies of development of the developing countries. |
a. |
In agriculture, it remains acknowledged by all research and analyses that the distortions caused by the huge amounts of subsidies that are paid to their producers in developed countries have to be urgently eliminated in order to provide a level playing field to developing country agricultural producers and to make trade fair. Equally, the high levels of protection on products of export interest to developing countries have to be addressed to meet their growth and development imperatives. |
b. |
On the defensive front, we had agreed in the July Framework and at Hong Kong that we must collectively design instruments that would enable developing country governments to address externally generated shocks that could disrupt incomes and food security, particularly for poor households and vulnerable agricultural producers. Special Products and the Special Safeguard Mechanism, which have been agreed to be provided, have now to be designed to safeguard these disruptions in incomes and food security. The role of agriculture as a major source of livelihoods in our countries makes it imperative that governments be able to mitigate risks that include the well-known volatility of agricultural prices and market imperfections arising from sources such as trade-distorting subsidies and concentration and other imperfections in global agricultural production and trade. Low-income or resource-poor households have little ability to absorb or insure against these risks. Developing country governments must also be able to foster stable and remunerative prices for domestic producers in order to increase productivity and gradually move away from dependence on low-productivity agriculture. We can not now ignore the reality of price declines, price volatility and predatory competition which have exposed developing countries that open their agricultural sectors without meaningful and effective instruments to insure their vulnerable agricultural sectors. Therefore, these objectives can not now be re-written. Moreover, India is convinced, and this conviction is backed by historical experience, that the use of these instruments would be judicious. It would be facetious to suggest that the developing country intent is to secure protective instruments or a “Black Box” to deny legitimate market access to developed country agri-business. The developed countries now need to take the initiative to ensure that this is a Development Round in content. If that happens, India will be a part of the solution and make its contribution. |
c. |
Even as agriculture is at the heart of the multilateral negotiations, the manufacturing sector, which holds the potential to contribute substantially to a developing country GDP and to create vast employment opportunities, remains crucial to delivering on the development mandate of the Doha Round. The ambition under NAMA is embodied in the commitment of developing countries to apply a non-linear Swiss formula that would entail large reductions, especially on tariff peaks and tariff highs. India has not been averse to higher ambition levels, provided the mandate of less than full reciprocity in percentage reduction commitments is met. Therefore, the choice of Swiss coefficients must be such that the developing countries undertake lower reduction commitments than developed countries. It would indeed be difficult to justify proposals on the table that invert this well entrenched mandate. |
d. |
Flexibilities remain an inviolable tool to carve out or lower the ambition on sensitive tariff lines from the application of the Swiss formula cuts. Tariff liberalization can have disastrous effects on such sectors which employ resource-poor and vulnerable workforce like women and artisans; those run on a small scale by local entrepreneurs, which denies them the financial or economic muscle; and those that are located in geographically and economically disadvantaged pockets of the country. For balanced regional development and to redress social and economic inequities adequate tariff protection for these sectors is essential. For developing countries like India, it is important that the welfare gains percolate down to the vulnerable sections of the population. |
e. |
Top-up modalities such as sectorals can not be thrust upon unwilling members since tariff elimination has wider repercussions especially for developing members. The issues of inverted duty structures and absence of any fiscal flexibility can have detrimental effect on the nascent industries in these economies. Developing countries over time have been unilaterally liberalizing their customs duties despite tremendous apprehensions and pressure from domestic constituencies. Ever higher ambitions under NAMA must therefore be tempered in the light of these unilateral initiatives which have already substantially closed the gap between the applicable tariffs of developing and developed countries. India will not shirk from any ambitious outcome on NAMA provided the elements of the mandate are respected and the package from Agriculture and Services fulfils its expectations. |
f. |
In services, to achieve trade gains for developing countries like India, improvements in offers in Modes 1 and 4 from developed countries are essential. India agrees that there should be an ambitious package in services. However, it is important to take into account the existing asymmetries in commitments and revised offers of members, particularly, in Mode 4 (movement of natural persons) and Mode 1 (Cross Border Supply). Since such asymmetries exist from the Uruguay Round, without considering them, we will not achieve the desired balance and ambitions in market access for the services sector. |
g. |
Without appropriate disciplines in domestic regulations, the barriers to market access would remain, undermining any Mode 4 offer. India wants to strike a balance between the right to regulate and regulations becoming unnecessary barriers to trade. |
Before proceeding on the road map for getting the round back on track, it is vital to appreciate that this is the first negotiating round premised on development. The success of the Round could perhaps for the first time usher in welfare gains that percolate horizontally. Even those in the lowest strata of economic development could be enabled to jostle for space in the resulting incremental global growth. Most crucially, it would address maladies such as unemployment, low purchasing power, poverty thereby attenuating the economic inequity and ushering in social harmony. It is in this perspective that the battle lines need to be redrawn and negotiators must approach the key modalities. It is but natural that agriculture would remain at the heart of the negotiations since the livelihood concerns of more than a billion resource poor farmers depend on it. Manufacturing and the services sectors would contribute to the bulk of GDP growth in the post-liberalized economic order. Therefore, the development imperatives lie in serving the defensive and offensive agendas across agriculture, NAMA and Services for a diverse set of developing countries, and to balance out their needs through ambition, fairness, and equity in the distribution of welfare gains. The resolution of the core modalities such as domestic support and market access in agriculture, the formula and flexibilities in the manufacturing sector and the ambition of the offers under services would be the key to putting the stalled Doha Round back into acceleration mode. This is by no means an easy task but is well doable if all of us get down to seriously tackling the divergences. The balance would ultimately lie in the entirety of the issues being dealt with in tandem. I believe there can be no looking back at this point of time since any faltering now will derail the whole round and most importantly put a spanner in the wheels of real global growth – “real”, not from an economic point of view alone, but from the perspective of percolating welfare gains down to the nations at the lowest end of the economic stratum, a feat sadly unachieved in any of the earlier rounds. Therefore, it is very important to appreciate the centrality of development in the current round and see the negotiating elements from that horizon. Any moves to scuttle the round on the rationale of higher ambitions not having been agreed to would be a gross injustice to the billions of resource poor farmers and workers around the developing world. Expectations are high from the Doha mandate for these vulnerable sections of the population who are looking at welfare gains from this round to steer them clear of economic deprivation and provide succor. Letting them down at this juncture would run the risk of the entire multilateral trade institution being branded as a coterie of the rich nations. Notwithstanding this, developing countries would not shirk from setting reasonable and in some sectors even high ambitions so that the developed nations can also go back home from the round without worrying about the salability to the stakeholders. Therefore domestic sensitivities and market access can go hand in hand and be part of a comprehensive successful package. I am sure that all the WTO members would have reassessed their positions and flexibilities in the hiatus after the stalling of the round in July last year. A fresh thrust to close the gaps in positions and look at the whole Round in a more holistic perspective of “participatory welfare gains” is in order. (Speech of Kamal Nath, Commerce & Industry Minister at World Economic Forum, Davos on |
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G-33 Ministerial Press Statement Davos, 26 January 2007 |
2. Ministers noted some recent developments that foreshadow strengthening of the political will to bridge the divergences among Members on the modalities concerning effective reductions in trade-distorting domestic support and improvements in agricultural market access. They urged that these developments be brought into the multilateral process as soon as possible. The onus of movement lies squarely on the developed countries as this Round is premised on development. Ministers expressed their readiness to further take the necessary decisions to achieve a fair and balanced outcome in agriculture in a transparent, bottom up approach and inclusive manner.
3. G-33 Ministers on their part emphasised the need to secure early convergence on the critical development instruments of Special Products (SPs) and Special Safeguard Mechanism (SSM) without subverting the development goals and aspirations of the vast bulk of small, poor and vulnerable producers of developing countries. Noting further that the development imperatives of the Doha Round are centred in the crucial role that agriculture plays in the economic and social fabric of the developing countries, Ministers emphasised that it was vital to ensure that the modalities for SPs and the SSM are designed to effectively address their food security, livelihood security and rural development needs, while at the same time ensuring predictability and transparency.
4. Ministers reiterated that the Group’s comprehensive and constructive contributions on modalities, with full legal drafts, on SPs and SSM are fully consistent with, and respect the integrity of, the Doha and Hong Kong Ministerial Declarations, and the General Council Decision of 1st August 2004.
5. Ministers particularly noted that the G-33 proposals embody within them deeplyconsidered solutions to the heterogeneous interests of WTO Members. Studies show that there is no close relationship between agricultural imports and applied tariff rates. Moreover, low tariffs do not cause imports to rise when income levels are very low. On the contrary, the main drivers of agricultural imports in developing countries are income levels and variations in domestic harvests, not tariff levels. In this context, they underscored that developing countries need time and policy space to improve their poor farmers’ productivity and incomes, and to curtail the risk of dislocation from agriculture from unmanageable agricultural trade liberalisation.
6. The G-33 remains committed to engage constructively with all WTO Members to secure their development concerns in the Doha outcomes, while specifically addressing the livelihood concerns of small, poor and vulnerable farmers worldwide.
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• TRADE STATISTICS
Rise in fuel prices during 2005 lifts shares of oil-exporters in world trade while US trade deficit reaches record level
The 110-page report gives a detailed overview of trade developments by region and product in 2005. Information on current trade flows is complemented by a number of tables providing data on longer term trends in world trade.
"2005 saw a deceleration of world trade caused by a lower economic activity. At a time of uncertainty, a strong, rules-based multilateral trading system is the best insurance policy for the world economy,” said WTO Director-General Pascal Lamy today on the publication of the WTO annual report 'International Trade Statistics 2006'. “The lingering indecisiveness of the Doha Round further saps the confidence in the multilateral trading system as an engine of economic growth and development. It’s time for political action to bring the Round to a successful conclusion” added Mr. Lamy.
Key features of world trade developments in 2005 highlighted in the report include:
• Lower economic activity at the global level caused a deceleration in the expansion of world trade in 2005. Real merchandise exports slowed to 6 per cent (from 9.5 per cent in 2004), but continued to rise significantly faster than global merchandise output.
• In real terms, trade in manufactured goods was again the most dynamic product sector expanding by 7 per cent while trade in fuels and mining products increased by only 2.5 per cent, the smallest gain of all sectors in 2005. Exports of agricultural products expanded in real terms by 5.5 per cent and contrary to the two other sectors faster than in the preceding year. Among the three sectors, agriculture recorded also the largest excess margin of trade over output growth.
• Price developments exerted a strong influence on global trade patterns in 2005. The further rise in prices of fuels and mining products contrasted with the deceleration in export prices for agricultural products and manufactured goods. Prices of all manufactured goods were held down by the price decline in electronic goods.
• The impact of the highly divergent price developments by sector in 2005 is such that trade flows in real or volume terms summarized above differed sharply from the nominal trade developments recorded in current dollar values reported below.
• Largely due to price developments, merchandise trade expanded faster than commercial services trade for the third year in a row. The dollar value of world merchandise exports rose by 13 per cent to $10.16 trillion and commercial services exports rose by 10 per cent to $2.41 trillion in 2005.
• Among the world's fifty leading merchandise exporters, the major suppliers of fuels and mining products increased their merchandise exports in dollar terms by at least one third: Russian Federation (33 per cent), Saudi Arabia (44 per cent), Iran (35 per cent), Venezuela (43 per cent), Algeria (47 per cent), Kuwait (57 per cent) and Nigeria (36 per cent). Among the major traders exporting manufactured goods, China stands out with an increase of its merchandise exports of 28 per cent in 2005.
• Among the leading commercial services traders, the most dynamic exporters with a value increase of 15 per cent or more in 2005 include China, India, Luxembourg, the Russian Federation, Poland, Mexico, Brazil and Hungary.
• The higher fuels prices contributed to changes in regional trade flows, boosting oil exporting economies and stimulating their import growth of goods and services. The Middle East, Africa, the Commonwealth of Independent States and South and Central America, which export primarily fuels and other mining products, recorded a merchandise export growth between 35 and 25 per cent in 2005. Imports into these four regions also rose much faster than the global average (between 25 and 17 per cent).
• World exports of fuels rose by 41 per cent to $1.4 trillion in 2005. Its share in world merchandise exports reached 13.8 per cent, its highest level in almost two decades.
• Among the manufactured goods, iron and steel and chemicals showed an above average trade growth in dollar values while automotive products, clothing and textiles experienced a below average growth in 2005.
• The phase-out of the WTO Agreement on Textiles and Clothing had a major impact on trade flows in these product groups in 2005. China, India and Pakistan enhanced their role in global exports of textiles and clothing while suppliers from South and Central America and Africa lost market shares.
• Oil-exporting economies and regions further increased their trade surplus while the United States' trade deficit rose to $793 billion equivalent to nearly 8 per cent of world merchandise exports.
• ANTI DUMPING
WTO Secretariat reports that new anti-dumping investigations continue to decline, while new final measures show increase
The WTO Secretariat reported, based on the latest available figures, that in the period 1 January — 30 June 2006, the number of initiations of new anti-dumping investigations continued its recently-reported declining trend, while the number of new final measures increased relative to the corresponding period of 2005. During January-June 2006, 20 Members reported initiating a total of 87 new investigations, down from 105 initiations in the corresponding period of 2005. A total of 15 Members reported applying 71 new final anti-dumping measures during January-June 2006, compared with 55 new measures applied during January-June 2005 (a 29 per cent increase). Thirty-one of the 87 new initiations were opened by developed Members, and nine of the 71 new final measures were applied by developed Members, during the first half of 2006. This compares with 22 new initiations opened and 20 new measures applied by developed Members during the first half of 2005.
The Members reporting the most new initiations during January-June 2006 were, in descending order: India, with 20 new initiations, up from 14 during the corresponding period of 2005; the European Communities (17); Australia (9); and Argentina, Indonesia and Turkey (5 each). These figures compare with 16 initiations by the European Communities, 2 by Australia, 1 by Argentina, zero by Indonesia, and 8 by Turkey, during the corresponding period of 2005. Thus, the numbers of initiations reported by India, the EC, Australia, Indonesia, and Argentina increased, while the number reported by Turkey declined. Other Members reporting new initiations in January-June 2006 were Canada (4); Brazil, China and Mexico (3 each); Egypt, Peru and South Africa (2 each); and Chinese Taipei, Colombia, Costa Rica, Jordan, Korea, New Zealand, and Pakistan (1 each). Israel and the United States, which had reported new initiations in the first half of 2005, reported initiating no new investigations during the first half of 2006.
China remains the most frequent subject of anti-dumping inquiries, accounting for 32 of the 87 new initiations during January-June 2006 compared with 23 out of 105 during the corresponding period of 2005. The United States and Chinese Taipei were distant seconds, with six new investigations each directed at their exports, followed by Thailand (5), and the European Communities and Member states, Japan, Korea, and Malaysia, each of which was the subject of four new investigations. During the corresponding period of 2005, the comparable figures were: United States (7), Chinese Taipei (9), Thailand (7), European Communities and Member states (3), Japan (4), Korea (6), and Malaysia (6). The countries affected by fewer than four new investigations each during January-June 2006 were: Brazil, Canada, Chile, Egypt, Hong Kong China, India, Indonesia, Philippines, Russia, Singapore, Switzerland, Turkey, Ukraine, and Viet Nam.
The products that were most frequently subject to the reported new investigations during January-June 2006 were in the base metals sector (19 initiations), followed by machinery (16 initiations), plastics (13 initiations), and chemicals (11 initiations). Of the 19 initiations reported in respect of base metals, five each were reported by Australia and Indonesia, three by Canada, two each by the European Communities and India, and one each by Colombia and Mexico.
Concerning new final anti-dumping measures, China reported applying the largest number (15) during the first half of 2006, up from 10 reported for January-June 2005. Following China was Turkey, reporting 11 new measures, compared with four for the first half of 2005. India reported applying eight new measures and Egypt reported applying seven, during the first half of 2006, compared with seven and zero, respectively, during the corresponding period of 2005. The European Communities, Mexico and Pakistan each reported applying five new measures during January-June 2006, while, Argentina, Australia, Colombia, Indonesia, Korea, Peru, South Africa and the United States each reported applying three or fewer new measures.
Products exported from China continued as the most frequent subject of new measures, accounting for 15 of the new measures reported for the first half of 2006, down from 18 one year earlier. India and Korea were in second place, with six measures each in respect of their exports during January-June 2006, compared with one and four measures, respectively, during the first half of 2005. Next were Brazil, the European Communities and Member states, Japan, and the United States, each of which was subject to five new measures during January-June 2006, compared with two, four, four, and six new measures during the corresponding period of 2005. Argentina, Chile, Chinese Taipei, Indonesia, Malaysia, Mexico, Norway, Romania, Russia, Thailand, Ukraine, and United Arab Emirates each was subject to four or fewer new measures during the first half of 2006.
Concerning the sectors affected by the new anti-dumping measures, products in the chemicals sector were the most frequent subject of new measures during January-June 2006, accounting for 23 of the 71 total new measures reported. The plastics sector was next, with 14 new measures affecting products in this sector. Third was the textiles sector, with nine measures, followed by base metals with seven measures. Of the 23 reported new measures on products in the chemicals sector, China applied 15, followed by India (3), Argentina (2), and Egypt, the European Communities, and Pakistan (1 each).
The data reported above are taken from the semi-annual reports of Members to the ADP Committee. The statistics are based on information from Members having submitted semi-annual reports for the relevant periods, and are incomplete to the extent that Members have not submitted reports or have submitted incomplete reports. For the purpose of these statistics, each investigation or measure reported covers one product imported from one country or customs territory.
• ACCESSIONS
General Council approves Viet Nam’s membership
The General Council approved Viet Nam’s membership on 7 November 2006. Viet Nam will become the WTO’s 150th member 30 days after it has informed the WTO that it has ratified the accession package domestically.
The decision ends over 11 years of preparation, including eight years of negotiation. The working party of members negotiating with Viet Nam was set up on 31 January 1995 and met 14 times between July 1998 and October 2006.
According to the latest WTO data, Viet Nam’s merchandise exports were US$26.5 billion in 2004, and its imports were US$32.0 billion.
What Viet Nam has committed
• The package of Viet Nam’s accession documents consists of:
• Viet Nam’s commitments on goods — the 560-page list (or “schedule”) of tariffs, quotas and ceilings on agricultural subsidies, and in some cases the timetable for phasing in the cuts.
• Viet Nam’s commitments on services — the 60-page document (also a “schedule”) describing in which services it is giving access to foreign service providers and any additional conditions, including limits on foreign ownership
• The working party’s 260-page report — describing Viet Nam’s legal and institutional set up for trade, along with commitments it has made in many of these areas.
These are some highlights:
Goods :
"Schedule of Concessions and commitments on Goods"
For the majority of agricultural and non-agricultural goods, Viet Nam is promising ceilings (or “bound” rates) on duties ranging between zero and 35%. Some of these involve reductions phased over periods up to 2014, the precise end date varying from product to product.
Among products with higher ceilings are: alcoholic drinks, tobacco products, instant coffee and some related products, new and used motor vehicles and components, and roof tiles. Used vehicles less than five years old can be charged additional flat-rate duties up to specified limits.
These “bound” rates are legal ceilings. The actual duties that Viet Nam can charge (the “applied” rates) can be lower than the committed rates. Among the details of Viet Nam’s commitments is a promise not to charge higher applied rates on rapeseed (also known as colza or canola) and derived meal, oil and other products than the duties actually charged on soy products — allowing the oilseed products to compete with soy.
In the separate working party report, Viet Nam has also reserved the right to charge applied duties in the form of specific duties (e.g. dollars per tonne) instead of percentages of the price (“ad valorem”) so long as the result stays below the committed ceilings.
A handful of products are going to be protected with tariff quotas (higher duties for quantities outside the quotas, and lower duties for quantities within the quotas): eggs, tobacco, sugar, and salt (which Viet Nam says is the main income source for 100,000 poor farmers in coastal areas). But Viet Nam will expand the quotas until they disappear according to agreed timetables.
Viet Nam has also signed the “plurilateral” Information Technology Agreement (“plurilateral” meaning only some WTO members have signed). For these products, Viet Nam has agreed to allow imports in duty-free. In some cases, the zero duty will apply immediately; in others it will be achieved gradually over periods ending in 2010 to 2014.
In agriculture, Viet Nam has promised not to subsidize exports. It will be allowed to support its farmers domestically with trade-distorting supports (“Amber Box” or “Aggregate Measurement of Support”, i.e. supports that have a direct impact on prices or quantities produced) of up to 3,961.5 billion Vietnamese dong (currently about US$246 million) in addition to the usual allowance for developing countries (known as “de minimis”) of up to 10% of the value of domestic agricultural production. As with all WTO members, Viet Nam can also spend unlimited amounts on supports that do not distort trade (“Green Box” supports).
SERVICES :
'Schedule of Specific Commitments on Trade in Service'
Viet Nam has made commitments on a range of services. In some cases Viet Nam reserves the right to limit foreign ownership of service companies operating in Viet Nam — for example in some telecommunications services the eventual limits can be 49% or 65%, depending on the service. In a few cases, permitted foreign ownership is immediately 100% (for example accountancy). In many cases, the permitted foreign ownership is phased in to reach 100% after a few years (for example express delivery courier services after five years).
As is normal in this sector, the effect of the commitments depends also on complex relationships with domestic regulations — for example in the first two years, 100%-foreign-owned architectural firms can only serve foreign companies. The commitments and some of the regulations are in the “schedule” (lists) of commitments; other information on the regulations is in the working party report.
| Schedule of Meetings at WTO/GENEVA* | |||
DATE |
MEETING | ||
| December | |||
| 5 | Committee on Budget, Finance and Administration | ||
| 6 | Working Party on the Accession of Serbia | ||
| 8 | Committee on Government Procurement | ||
| 11 | Dispute Settlement Body | ||
| 13 | Trade Policy Review Body - Hong Kong, China | ||
| 13 | Integrated Framework Steering Committee | ||
| 14-15 | GENERAL COUNCIL | ||
| 15 | Trade Policy Review Body - Hong Kong, China | ||
| 18 | Committee on Trade and Environment | ||
| 19 | Dispute Settlement Body | ||
| 25 | CHRISTMAS DAY (WTO non-working day) | ||
| January | |||
| 15 | Trade Policy Review Body | ||
| 18 | Workshop on Information Technology Products | ||
| 19 | Committee on Market Access | ||
| 22 | Trade Policy Review Body | ||
| 23 | Dispute Settlement Body | ||
| 24 | Trade Policy Review Body | ||
| 31 | Trade Policy Review Body - Japan | ||
| FEBRUARY | |||
| 2 | Trade Policy Review Body - Japan | ||
| 7-8 | GENERAL COUNCIL | ||
| 12-16 | Committee on Government Procurement | ||
| 12 | Trade Policy Review Body - Argentina | ||
| 13-14 | Council for Trade-Related Aspects of Intellectual Property Rights | ||
| 13 | Committee on Budget, Finance and Administration | ||
| 14 | Trade Policy Review Body - Argentina | ||
| 20 | Dispute Settlement Body | ||
| 26 | Trade Policy Review Body - European Communities | ||
| 28 | Committee on Sanitary and Phytosanitary Measures | ||
| 28 | Trade Policy Review Body - European Communities | ||
| Meetings of the Trade Negotiation Committee and other Special Meetings will also be convened throughout the year 2006 as and when necessary. | |||
| Published by MINISTRY OF COMMERCE & INDUSTRY Government of India Udyog Bhawan, New Delhi - 110 011 We welcome your comments and suggestions at : Telefax : 23063622 E-Mail : sbiswas@nic.in Website : http://commerce.nic.in |
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