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Unit 29 : Functions of WTO/GATT

QRS on all items were removed. This has opened the floodgates for foreign consumer goods to Notes
enter the Indian market, thereby seriously damaging Indian industry.
Impact of import of Second Hand Cars in India : The Government of India allowed the import
of second hand cars into India. This policy has seriously hit Indian automobile industry. Mr.
Rahul Bajaj described this as “anti-national and anti-India Act”. In fact, experience the world
over has shown that wherever second hand imported cars are allowed, they seriously damage
domestic industry. Japanese used cars virtually destroyed New Zealand car industry. Even Mr.
Phil Spender, Managing Director, Ford India reacting to the policy of permitting used cars said:
“If the government asks us what to do (about the used cars), I’ll be the first to volunteer ways to
keep used cars imports out of India”. Even other CEOs of MNCs who have invested in the
Indian automobile market expressed similar sentiments. Mr. Richard Swano, M.D. General
Motors is of the opinion that the import tariff on used cars should be 100% and not 40-50 per
cent.
Similarly, if India allowed the import of used machine tools, it is likely to have serious
repercussions on capital equipment manufactures.
Import of Chinese Goods : In recent years, Chinese goods are flooding the Indian markets.
They include battery cells, cigarette lighters, locks, car stereos, energy saving lamps, VCD players,
wrist watches, toys, fans, electric ovens and a large variety of consumer articles. Since China
has become a member of the WTO, this is going to create another problem because action against
Chinese dumping of goods can be taken only within WTO provisions. Not only that, Chinese
goods are coming through normal channels of trade, they are also being smuggled via Nepal at
zero duty. A very porous border from Nepal has increased clandestine imports from China.
Both regular and clandestine imports from China are making serious forays into the Indian
markets, thus hurting quite a large range of consumer goods industries. It is very difficult to
prepare an anti-dumping case against China, since it is virtually impossible to obtain information
required from Chinese sources due to non-transparent nature of Chinese economy.
Dr. B .R. Sabade is of the view. “It is extremely difficult to make a case about dumping of
Chinese goods. Government can impose a preliminary duty, introduce a trigger price mechanism
or declare China as a non-market economy”.
2. Impact of WTO on SSI Units
WTO agreements do not discriminate on the basis of size of industries or enterprises. In the
WTO regime, reservations may have to be withdrawn, preferential purchase and other support
measures may not be available and thus SSIs have to compete not only with the large units
within the country, but also with cheap imported products. SSIs are thus losing their markets to
cheap imported products. Consequently, a very large number of SSI units are becoming sick or
have closed down. Thus, the SSI sector which accounts for 40 per cent of manufacturing output,
50 per cent of employment and over 33 per cent of exports is in jeopardy. Next to agriculture,
this sector is the principal source of employment accommodating 18 million persons. The rule
of survival of the fittest is being applied to this sector and in their game, only a few able ones
will be able to survive. Dumping of Chinese goods has seriously affected SSI sector. The real
difficultly with the SSI sector is that it does not have adequate resources to prepare the case for
anti-dumping duties in view of the prohibitive costs of anti-dumping investigation. The SSIs
can not collect detailed information on individual products required by the anti-dumping
directorate to establish a complete case. Consequently, small industries continue to suffer due
to such dumping policy.
Not only that, the entry of multinationals in ordinary consumer goods like ice cream, agarbatti
manufacture, food processing, mineral water etc. is also adversely affecting the SSI sector since
these were the traditional areas of this sector. In soft drinks, the entry of powerful Coca Cola
and Pepsi have eliminated practically all small units engaged in the manufacture of aerated
water. MNCs are not interested in hi-tech products. Rather they prefer low technology, quick
profit yielding and large volume products with regular demand throughout the year. In the
name of consumer interests, MNCs continue to swallow SSIs and eliminate them from the market.

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