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Unit 29 : Functions of WTO/GATT

Another area which is very important for India is the non-agricultural market access (NAMA) which Notes
has a high potential to increase our share in exports to US and EU. The broad modalities proposed in
the framework have not been accepted by members. In the area of services in which India has strong
interest, there is total absence of specificity. This is very disappointing.
Lastly, it has to be noted that two stalwarts among G-20 who spearheaded the interests of the
developing countries at Doha and later at Cancun, joined “by invitation” the FIPs groups (Five
Interested Parties) which included US and EU representing the developed countries, Australia
representing the Cairns group of agricultural exporters with India and Brazil representing the
developing countries. All this was intended with the clear objective that if India and Brazil can be
softened, then it would become much easier to make inroads into the G-20 group. Chandrasekhar
and Jayati Ghosh lament : “These claims of success not withstanding, the creation of FIPs, the inclusion
of India along with Brazil, in the grouping and the nature of the framework agreement that FIPs was
instrumental in forging, has weakened the developing country camp, which G-20 was expected to
strengthen.” (Business Line, August 10, 2004) This explains why India and Brazil did not take up the
specific cause of African nations related with the elimination of cotton subsidies. It is really amazing
that US supports its 25,000 cotton growers to the extent of $ 3.7 billion. Average subsidy per grower
works out to be $ 1,48,000 which in 2002 is more than 4 times the per capita GDP in United States. The
Cancun talks were deadlocked on this issue. The EU has withdrawn aid to Kenya, the most vocal of
the African countries to the tune of $ 60.2 million on July 21,2004 on the pretext of ’bad governance’
Although the framework pays lip sympathy and “recognises the vital importance of this sector to
certain LDC members” but instead of taking specific decision on the issue “promises to work to
achieve results expeditiously.”
To conclude, it may be pointed out that though developed countries have agreed to reduce subsidies,
yet when the issue is probed in detail, it comes out very clearly that the developed countries have
been successful in creating an illusion, without conceding anything substantial. The Framework
Agreement leaves several vital issues for further negotiations. By creating FIPs, the developed countries
have been able to break the resistance of two most powerful advocates of the interests of developing
countries, thereby weakening the G-20 camp. In the light of all these developments, there is no cause
for jubilation over the achievement of WTO Framework Agreement at Geneva.
Bilateral and Regional Cooperation
We understand that WTO continues to be at the center of India’s trade negotiation. Given the fact that
it is difficult to arrive at a consensus on contentious issues related to trade in goods, services and
investment, and regional cooperation would continue to feature for a long time in world trade, India
has been active in regional and bilateral trading arrangements in recent years. RTAs, which help in
expanding India’s export market, are considered as “building blocks” towards the overall objective
of trade liberalization and multilateral negotiations.
Some of the recent developments with regard to Bilateral and Regional Trade Agreements (whether
concluded or under negotiations) are listed as follows :
1. Indian-ASEAN CECA (FTA) : A Framework Agreement on Comprehensive Economic
Cooperation between ASEAN and India was signed by the Prime Minister of India and the
Heads of Nations/Governments of ASEAN members during the Second ASEAN-India Summit
on October 8, 2003 in Bali, Indonesia. The agreement on Trade in Goods was signed on August
13, 2009. The India-ASEAN Trade in Goods Agreement has come into effect on January 1, 2010.
The Agreements provides for elimination of basic customs duty on 80 per cent of the tariff lines
accounting for 75 per cent of the trade in a gradual manner. Negotiations towards trade in a
services and investment are expected to conclude by August 2010.
The signing of the ASEAN-India Trade in Goods Agreement paves the way for the creation of
one of the world’s largest free trade areas (FTA) – market of almost 1.8 billion people with a
combined GDP of US$ 2.75 trillion. The ASEAN-India FTA will see tariff liberalization of over
90 percent of products traded between the two dynamic regions, including the so-called “special
products,” Such as palm oil (crude and refined), coffee, black tea and pepper. Tariffs on over
4,000 product lines will be eliminated by 2016, at the earliest.

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