Transcript Slide 1
Presentation by: R.S.Ratna
Director Department of Commerce Government of India
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TRADE LIBERALISATION
Trade liberalisation is widely recognised Global greatest as gains a multilateral cornerstone economic development and growth, and , ultimately poverty reduction.
trading offers the best prospect for reducing barriers to trade & achieving the from of system trade liberalisation.
Preferential Trade Agreements (PTAs) are the second-best means of trade liberalisation.
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WTO RULES
Permitted under Article XXIV of GATT 1994.
Exception to MFN treatment within the Rules subject to fulfillment of conditions:
– items on which there is
substantial trade to be covered
– the phase out of duties should be
within a reasonable period of time
– it should
not have trade distorting effect
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M.F.N. EXCEPTIONS
Exception Clause to MFN available under the accord Decision” differential of is also “Enabling 1979 wherein the WTO members may and more favourable developing treatment countries, to without according such treatment other Contracting Parties.
to
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The Global Context
Regional Trading Arrangements
RTAs are viewed by most countries as building blocks towards eventual global free trade.
Nearly all the members of WTO are participating in one or another RTA (PTA or FTA).
More than 200 RTAs have been notified to GATT/WTO.
150 of these are still in force.
250 RTAs are expected by 2005.
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Regional Trading Arrangements
RTAs can be used as a tool for –
Material management
Cheaper imports – domestic prices in control
Better quality products at competitive price
Better market access
Investments flow - JVs
Coverage of Services
Mutual recognition of standards & laboratories
Trade facilitation, Harmonisation of Customs procedures etc.
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The Regional Context
• • • • •
South Asian countries are exchanging tariff preferences under SAPTA.
China, RoK, preferences.
India, Sri Lanka and Bangladesh are members of the Bangkok Agreement and are exchanging tariff G-77 countries are preferences under GSTP (Global System of Trade Preferences).
also exchanging Bangladesh, Bhutan, India, Nepal, Sri Lanka and Thailand are also members of other economic groupings like BIMST-EC.
India has signed Framework agreements for PTAs/FTAs ASEAN, BIMST-EC, MERCOSUR, SAFTA, Singapore and Thailand.
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Rules of Origin
Objectives: to prevent trade deflection, transshipment enhance intra-regional trade & investment transparent
Classification of products Wholly obtained or produced Not wholly obtained or produced Products obtained through regional cumulation
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Rules of Origin
Components: Local content / value addition Insufficient manufacturing processes Substantial transformation TRADE CREATION TRADE DISTORTION COST OF ISSUANCE ?
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Bilateral Trade
The trade value for 2003 is approximately US $ 1.3 billion.
India has favourable balance of trade.
Main items that India exports are: natural or cultured pearls, precious or semiprecious stones, copper and articles thereof, iron & steel, organic chemicals, minerals fuels etc.
Main and items that semi-precious India imports are: electronic goods, machinery, textiles, plastic materials, transport equipments, precious stones, metals, chemicals.
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INDIA THAILAND FA
The Agreement was signed by the Trade Ministers during Indian PM’s visit to Thailand on 9 The key elements of the Framework Agreement 1.9.2006.
th cover October 2003.
FTA in Areas of Economic Cooperation.
Goods, Services and Investment, as well as The Agreement also provides for an Early Harvest Programme with a common list of 82 items on which tariff will be gradually eliminated by 11
INDIA THAILAND FA
FTA in Goods
Negotiations March 2005.
to commence from January, 2004 and to be concluded by
The tariff reductions will start in 2005/2006 and MFN tariff rates to be gradually reduced/eliminated by 2010.
Normal track
Sensitive track
Provisions for Safeguards, Disputes etc.
Substantial coverage of trade.
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INDIA THAILAND FA
FTA in Services
Negotiations to commence in January 2004 and concluded by January 2006.
The identification, liberalisation etc. of the substantial sectors of services to be finalised for implementation subsequently.
FTA in Investments
Negotiations to commence in January 2004 and concluded by January 2006.
BIPA signed on 10 th July 2000.
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Multiple membership to RTAs
When a country is a member of more than one RTA it creates some advantages to such a country at times.
“ Hub and Spoke investments – ” – If one country has RTAs with a number of countries that maintain barriers between each other, this ‘hub’ country becomes the preferred location for hub.
firms But it can also create a “ can reach more markets tariff-free than they can from any other locations – and this will tend to bid up factor prices and raise real income in the Spaghetti bowl ” – a complex scenario.
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CHALLENGES AHEAD
The industries must compete with each other so that they are efficient and cost effective.
Improving the internal policies & taxes.
Our (in)efficiencies and dependence on external factors.
Presence of major players.
Transfer of technology.
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STEPS AHEAD ……
Promotion of technology transfers Joint ventures, Consider devising means for having industrial linkages regional investments.
(backward forward linkages) to promote intra Mergers and acquisitions – timely.
Act as a hub for some sectors.
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Future plans
FTAs are a reality now.
Play a pro-active role.
Make concrete Government.
suggestions Harmonisation of standards.
to Utilise the trade facilitation measures.
Harmonisation of customs documents, procedures and regulations.
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Thank You
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