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Unit 29 : Functions of WTO/GATT

(vi) Why are international negotiations important in order to reduce tariff rates worldwide? Notes
(a) Large countries can impose policy restriction on smaller countries.
(b) Special-interest groups cannot affect international negotiations.
(c) They help avoid trade wars.
(d) The world as a whole gains from free trade.
29.6 Summary

• A survey of the globalisation policies followed in India reveals that the promised benefits of
globalisation in the form of sharp increase in GDP, exports, foreign direct investment, reduction
of poverty, deceleration of unemployment could not be realised by India during the 1990s.
Globalisation has adversely affected Indian industry, it has enabled the developed countries to
push their exports to India at a much faster rate, but did not facilitate the process of access to
international markets; small scale industry has suffered due to the policy of dumping practised
by developed countries, more especially in consumer goods. The most distressing part of the
story is the double standards practised by the developed countries which manifest in the form
of unfair agreement on textiles; a policy marked by a bias in favour of the farmers of developed
countries as against the poor farmers in India. Developed countries brought forth spurious
environmental and social issues to prevent the exports from India of such commodities in which
the country possessed comparative advantage Mr VS Vyas rightly points out : “The international
agreements, particularly under World Trade Organisation (WTO) have not helped the
developing countries as was professed at the time of the establishment of WTO”. All these
factors have resulted in an erosion of faith in globalisation as the new “mantra” for stimulating
development in India.
• There is no doubt that in a world of unequal partners, multilateratism is superior to bilateralism
and if some concessions are to be extracted from strong partners belonging to US and European
Community, then the combined strength of the developing countries can exercise a stronger
pull in their favour. One redeeming feature of the GATT is that there is the principle of one
country, one vote. However, the developed countries are able to pressurise the developing
countries by various new devices, more especially through intellectual property rights and
TRIMs. Although the Government of India is claiming that very substantial benefits are likely
to accrue as a consequence of GATT agreement, but it is premature to reach any definite
conclusion. The Final Act is such a big document that it has wheels-within-wheels and the
thrust of the Act is to toe the line of developed nations. Mr. R.K. Khurana of the India International
Centre has rightly summed up the position : “The consensus, however, is that the Uruguay
Round has been a game in which the more powerful nations lay down the rules. Unfortunately,
India is not one among the powerful trading nations and it is, therefore, doubtful if the country
could have achieved anything significantly more than what our negotiations have managed.”
• The history of GATT reveals that whenever newly industrialised nations have challenged the
competitive strength of the developed Countries, they have immediately retaliated by imposing
both tariff and non-tariff barriers. They have now enlarged these in the form of TRIPs and
TRIMs. The innovation of the social clause was also conceived with the same intention of blunting
the competitive advantage of developing nations. This game will continue. The solution lies in
the fact that the developing nations should take advantage of the multi-lateral trade organisations
and show their combined strength by closing their ranks, rather than surrender their sovereignty
one after another. To say that there is no alternative is a defeatist solution. Now that China has
also been admitted to WTO, both China and India should work together to assert a fair and just
treaty among the trading partners of WTO, rather than pushing down the throat of the weak,
the will of the strong partner(s).

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