CHP 3internationaleconomicinstitutions 110908013830 Phpapp01

Chapter No. Page No.
International Business Environment

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INTERNATIONAL ECONOMIC INSTITUTIONS / INTERNATIONAL MONETARY FUND
REPRESENTATIVES OF A LARGE NUMBER OF NATIONS MET
IN 1944, IN BRETTON WOOD, NEW HAMPSHIRE, USA, TO
DISCUSS THE MAJOR INTERNATIONAL ECONOMIC
PROBLEMS AND TO EVOLVE PRACTICAL SOLUTIONS. THE
BRETTON WOODS CONFERENCE PROPOSED THE SETTING
UP OF :
INTERNATIONAL MONETARY FUND (IMF) TO ALLEVIATE THE
PROBLEMS OF INTERNATIONAL LIQUIDITY AND TO ACHIEVE
INTERNATIONAL MONETARY STABILITY.
THE INTERNATIONAL BANK FOR RECONSTRUCTION AND
DEVELOPMENT (IBRD) TO HELP THE RECONSTRUCTION
AND DEVELOPMENT OF VARIOUS NATIONAL ECONOMIES
BY PROVIDING LONG-TERM CAPITAL ASSISTANCE.
THE INTERNATIONAL TRADE ORGANIZATION (ITO) TO
WORK TOWARDS THE LIBERALIZATION OF INTERNATIONAL
TRADE.
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INETRNATIONAL MONETARY FUND ( IMF)
THE INTERNATIONAL MONETARY FUND (IMF) WHICH WAS
ESTABLISHED ON DECEMBER 27, 1945 WITH 29 COUNTRIES.
BEGAN FINANCIAL OPERATIONS ON MARCH 1. 1947.
MEMBERSHIP IN THE IMF IS OPEN TO EVERY COUNTRY
THAT CONTROLS ITS FOREIGN RELATIONS AND IS ABLE
AND PREPARED TO FULFILL THE OBLIGATIONS OF
MEMBERS.
MEMBERSHIP OF IMF IS A PREREQUISITE FOR MEMBERSHIP
IN THE WORLD BANK (IBRD).
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PRIMARY PURPOSES OF IMF
PROMOTE INTERNATIONAL MONETARY COOPERATION.
FACILITATE THE EXPANSION AND BALANCED GROWTH
OF INTERNATIONAL TRADE.
PROMOTE EXCHANGE STABILITY AND MAINTAIN
ORDERLY EXCHANGE ARRANGEMENTS AMONG
MEMBERS.
CONT.
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PRIMARY PURPOSES OF IMF
ASSIST IN ESTABLISHING A MULTILATERAL SYSTEM OF
PAYMENTS IN RESPECT OF CURRENT TRANSACTIONS AND
ASSIST IN ELIMINATING FOREIGN EXCHANGE
RESTRICTIONS.
MAKE AVAILABLE TO MEMBERS THE IMF'S GENERAL
RESOURCES ON A TEMPORARY BASIS TO ENABLE THEM
TO CORRECT BALANCE OF PAYMENTS PROBLEMS.
SHORTEN THE DURATION AND LESSEN THE DEGREE OF
DISEQUILIBRIUM IN THE INTERNATIONAL BALANCE OF
PAYMENTS OF MEMBERS.
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ORGANIZATION AND MANAGEMENT
THE BOARD OF GOVERNORS IS THE HIGHEST DECISION MAKING
BODY, CONSISTS OF ONE GOVERNOR AND ONE ALTERNATE FOR
EACH MEMBER COUNTRY. THE GOVERNOR, APPOINTED BY THE
MEMBER COUNTRY IS USUALLY THE MINISTER OF FINANCE OR
THE CENTRAL BANK GOVERNOR.
THE EXECUTIVE BOARD IS RESPONSIBLE FOR CONDUCTING THE
BUSINESS, THERE ARE 24 DIRECTORS, WHO ARE APPOINTED OR
ELECTED BY MEMBER COUNTRIES. THE MANAGING DIRECTOR
SERVES AS A CHAIRMAN (HEAD OF THE ORGANIZATION).
THE INTERNATIONAL MONETARY AND FINANCIAL COMMITTEE OF
THE BOARD OF GOVERNORS IS AN ADVISORY BODY COMPOSED
OF 24 IMF GOVERNORS, MINISTERS, OR OTHER OFFICIALS OF
THE SIMILAR RANK.
THE DEVELOPMENT COMMITTEE ALSO HAS 24 MEMBERS.
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RESOURCES
1. SUBSCRIPTION BY MEMBERS 2. BORROWINGS.
QUOTAS AND SUBSCRIPTIONS: EVERY MEMBER IS
REQUIRED TO SUBSCRIBE AN AMOUNT EQUIVALENT TO ITS
QUOTA. EACH MEMBER IS ASSIGNED A QUOTA EXPRESSED
IN SPECIAL DRAWING RIGHTS (SDRs). QUOTAS ARE USE TO
DETERMINE THE VOTING POWER OF MEMBERS, AND THEIR
SHARE IN ALLOCATIONS OF SDRs. A MEMBERS QUOTA
REFLECTS ITS ECONOMIC SIZE IN RELATION TO THE TOTAL
MEMBERSHIP OF THE FUND.
BORROWING: THE FUND MAY SEEK THE AMOUNT IT NEEDS
IN ANY CURRENCY AND FROM ANY SOURCE. THEY ARE THE
1.GENERAL ARRANGEMENT TO BORROW (GAB), AND THE
2.NEW ARRANGEMENT TO BORROW (NAB).
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FINANCING FACILITIES AND POLICIES
THE IMF PROVIDES FINANCIAL ASSISTANCE TO
MEMBERS TO HELP THEM CORRECT BALANCE OF
PAYMENT PROBLEMS.
UNDER REGULAR IMF FACILITIES, A MEMBER CAN
GENERALLY BORROW UP TO 300 PER CENT OF ITS
QUOTA.
TWO OF THE IMFS SPECIAL FACILITIES ARE
THE SUPPLEMENTAL RESERVE FACILITY.
THE CONTINGENT CREDIT LINES (CCL) ---DO NOT
SPECIFY THE LIMIT.
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REGULAR LENDING FACILITIES
STAND BY ARRANGEMENT: UNDER A STAND BY
ARRANGEMENT, WHICH IS TYPICALLY ONE TO TWO YEARS
LONG BUT CAN BE AS LONG AS THREE YEARS, A COUNTRY
CARRIES OUT A PROGRAM THAT IT HAS DESIGNED IN
CONSULTATION WITH THE IMF STAFF TO RESOLVE
BALANCE OF PAYMENTS PROBLEMS OF A LARGELY
CYCLICAL NATURE. THE COUNTRY REPAYS THE MONEY IT
HAS BORROWED OVER 3 TO 5 YEARS.
EXTENDED FUND FACILITY: (EFF) THE IMF PROVIDES
FINANCIAL SUPPORT TO ITS MEMBERS FOR LONGER
PERIOD UNDER THE EFF. A MEMBER REQUESTING AN
EXTENDED ARRANGEMENT OUTLINES ITS GOALS AND
POLICIES FOR THE PERIOD OF THE ARRANGEMENT WHICH
NORMALLY RUNS FOR THREE YEARS BUT CAN BE
EXTENDED.THE REPAYMENT PERIOD IS 4 TO 10 YEARS.
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SPECIAL LENDING FACILITIES
SUPPLEMETAL RESERVE FACILITY (SRF): ASSISTANCE IS
AVAILABLE WHEN THERE IS A REASONABLE EXPECTATION
THAT STRONG ADJUSTMENT POLICIES AND ADEQUATE
SUPPORT WILL ENABLE A COUNTRY TO CORRECT ITS
BALANCE OF PAYMENTS DIFFICULTIES IN A SHORT TIME.
REPAYMENT MUST BE MADE NOT LATER THAN 2 TO 2
YEARS.
CONTINGENT CREDIT LINES (CCL) :THE CCL IS INTENDED
TO BE A PREVENTIVE MEASURE SOLELY FOR MEMBERS
CONCERNED ABOUT THEIR POTENTIAL VULNERABILITY TO
CONTAGION BUT NOT FACING A CRISIS AT THE TIME OF
THE COMMITMENT.
COMPENSATORY FINANCING FACILITY (CFF): PROVIDES
TIMELY FINANCING TO MEMBERS EXPERIENCING A
TEMPORARY SHORTFALL BEYOND THEIR CONTROL.
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CONCESSIONAL LENDING FACILITIES
POVERTY REDUCTION AND GROWTH FACILITY (PRGF) :
THE IMFS CONCESSIONAL FINANCING FACILITY TO ASSIST
POOR COUNTRIES FACING PERSISTENT BALANCE OF
PAYMENTS PROBLEMS. PROGRAMS SUPORTED UNDER THE
PRGF ARE EXPECTED TO BE BASED ON A STRATEGY
DESIGNED BY THE BORROWING COUNTRY TO REDUCE
POVERTY AND ARE FORMULATED WITH THE
PARTICIPATION OF CIVIL SOCIETY AND DEVELOPMENTAL
PARTNERS.
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OTHER IMF POLICIES AND PROCEDURE
EMERGENCY ASSISTANCE: THE IMF PROVIDES
EMERGENCY ASSISTANCE TO MEMBERS FACING BALANCE
OF PAYMENTS DIFFICULTIES CAUSED BY A NATURAL
DISASTER. THE ASSISTANCE IS AVAILABLE THROUGH
OUTRIGHT PURCHASES, USUALLY LIMITED TO 25 PERCENT
OF QUOTA.
EMERGENCY FINANCING MECHANISM (EFM) : PROCEDURES
ALLOW QUICK EXECUTIVE BOARD APPROVAL OF IMF
FINANCIAL SUPPORT UNDER USUAL FACILITIES. THE EMF
IS TO BE USED IN RARE CIRCUMSTANCES REPRESENTING
OR THREATENING, A CRISIS IN A MEMBERS EXTERNAL
ACCOUNTS THAT REQUIRES AN IMMEDIATE RESPONSE
FROM THE IMF.
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CONDITIONALITY
WHEN THE IMF PROVIDES FINANCIAL SUPPORT TO
MEMBER COUNTRIES, IT MUST BE SURE THAT THE
MEMBERS ARE PURSUING POLICIES THAT WILL IMPROVE
OR ELIMINATE THEIR EXTERNAL PAYMENT PROBLEMS.
THE EXPLICIT COMMITMENT THAT MEMBERS MAKE TO
IMPLEMENT CORRECTIVE MEASURES IN RETURN FOR
THE IMFs SUPPORT IS KNOWN AS CONDITIONALITY.
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CONDITIONALITY
CONDITIONALITY IS FLEXIBLE.
THE EXECUTIVE BOARDS GUIDELINES ON
CONDITIONALITY.
ENCOURAGE MEMBERS TO ADOPT CORRECTIVE
MEASURES AT AN EARLY STAGE,STRESS THAT THE IMF
SHOULD TAKE INTO CONSIDERATION MEMBERS
DOMESTIC, SOCIAL AND POLITICAL OBJECTIVES, AS WELL
AS THEIR ECONOMIC PRIORITIES AND CIRCUMSTANCES.
PERMIT FLEXIBILITY IN DETERMINING THE NUMBER AND
CONTENT OF PERFORMANCE CRITERIA.
EMPHASIZE THAT IMF ARRANGEMENTS ARE DECISIONS OF
THE IMF THAT SET OUT, IN CONSULTATION WITH MEMBERS,
THE CONDITIONS FOR ITS FINANCIAL ASSISTANCE.
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CONDITIONALITY
DURING A STAND-BY ARRANGEMENT, AN EXTENDED
ARRANGEMENT, OR AN ARRANGEMENT UNDER THE PRGF,
THE IMF MONITORS A MEMBERS REFORM PROGRAM
THROUGH:
PERFORMANCE CRITERIA SELECTED ACCORDING TO THE
ECONOMIC AND INSTITUTIONAL STRUCTURE OF THE
COUNTRY.
THE AVAILABILITY OF DATA.
DESIRABILITY OF FOCUSING ON BROAD MACROECONOMIC
VARIABLES.
PERFORMANCE UNDER IMF-SUPPORTED REFORM
PROGRAMS IS ALSO MONITORED THROUGH PERIODIC
REVIEWS BY THE IMF EXECUTIVE BOARD.
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TECHNICAL ASSISTANCE
THE IMF PROVIDES TECHNICAL ASSISTANCE IN:
DESIGNING AND IMPLEMENTING FISCAL AND MONETARY
POLICIES.
DRAFTING AND REVIEWING ECONOMIC AND FINANCIAL
LEGISLATION, REGULATIONS, AND PROCEDURES,
THEREBY HELPING TO RESOLVE DIFFICULTIES THAT
OFTEN LIE AT THE HEART OF MACROECONOMIC
IMBALANCES.
INSTITUTION AND CAPACITY BUILDING, SUCH AS IN
CENTRAL BANKS, TREASURIES, TAX AND CUSTOMS
DEPARTMENTS, AND STATISTICAL SERVICES.
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SPECIAL DRAWING RIGHTS (SDRs)
THE SDR IS AN INTERNATIONAL RESERVE ASSET CREATED
BY THE IMF IN 1969 TO SUPPLEMENT MEMBERS EXISTING
RESERVE ASSETS--- OFFICIAL HOLDINGS OF GOLD,
FOREIGN EXCHANGE, AND RESERVE POSITIONS IN IMF.
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USE OF SDRs
TRANSACTIONS ARE FACILITATED BY ARRANGEMENTS
BETWEEN THE IMF AND 12 MEMBER COUNTRIES THAT ARE
PREPARED TO BUY OR SELL SDRs FOR ONE OR MORE
FREELY USABLE CURRENCIES, PROVIDED THAT THEIR SDR
HOLDINGS REMAIN WITHIN CERTAIN LIMITS.
SDRs CAN BE USED IN OPERATIONS SUCH AS FORWARD
PURCHASE AND SALES AND IN SWAPS.
TO SETTLE FINANCIAL OBLIGATIONS.
TO MAKE LOANS AND DONATIONS.
AS SECURITY FOR THE SETTLEMENT OF FINANCIAL
OBLIGATIONS.
TO DISCHARGE THEIR FINANCIAL OBLIGATIONS TO THE IMF
IN THE GENERAL RESOURCES ACCOUNT.
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INTERNATIONAL ECONOMIC INSTITUTIONS / WORLD BANK
WORLD BANK
THE INTERNATIONAL BANK FOR RECONSTRUCTION AND
DEVELOPMENT (IBRD) OR THE WORLD BANK , ONE OF THE
BRETTON WOODS TWINS, WAS ESTABLISHED IN 1945.
THE IBRD HAS TWO AFFILIATES.
THE INTERNATIONAL DEVELOPMENT ASSOCIATION (IDA)
INTERNATIONAL FINANCE CORPORATION (IFC)
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WORLD BANK
CAPITAL OF IBRD IS SUBSCRIBED BY ITS MEMBER
COUNTRIES.
FINANCES ITS LENDING OPERATIONS PRIMARILY FROM ITS
OWN BORROWINGS IN THE WORLD CAPITAL MARKETS.
A SUBSTANTIAL CONTRIBUTION TO THE BANK'S
RESOURCES ALSO COMES FROM ITS RETAINED EARNINGS
AND THE FLOW OF REPAYMENTS ON ITS LOANS.
IBRD LOANS GENERALLY HAVE A GRACE PERIOD OF FIVE
YEARS AND ARE REPAYABLE OVER TWENTY FIVE YEARS
OR LESS.
THE INTEREST RATE THE IBRD CHARGES ON ITS LOANS IS
CALCULATED IN ACCORDANCE WITH THE GUIDELINES
RELATED TO ITS COST OF BORROWINGS.
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GUIDING PRINCIPLES
THE BANK SHOULD PROPERLY ASSESS THE REPAYMENT
PROSPECTS OF THE LOAN.
THE BANK SHOULD LEND ONLY FOR SPECIFIC PROJECTS
WHICH ARE ECONOMICALLY AND TECHNICALLY SOUND
AND OF HIGH PRIORITY.
THE BANK LENDS ONLY TO ENABLE A COUNTRY TO MEET
THE FOREIGN EXCHANGE CONTENT OF PROJECT COST.
THE BANK DOES NOT EXPECT THE BORROWING COUNTRY
TO SPEND THE LOAN IN A PARTICULAR COUNTRY.
TO MAINTAIN CONTINUING RELATIONS WITH BORROWERS
TO CHECK THE PROGRESS OF PROJECTS.
BANK INDIRECTLY ATTACHES SPECIAL IMPORTANCE TO
THE PROMOTION OF LOCAL PRIVATE ENTERPRISE.
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INTERNATIONAL DEVELOPMENT ASSOCIATION
IT IS AN AFFILIATE OF IBRD, WAS ESTABLISHED IN 1960.
TO PROVIDE ASSISTANCE FOR THE SAME PURPOSE AS
THAT OF IBRD, BUT PRIMARILY IN THE POORER
DEVELOPING COUNTRIES AND ON TERMS THAT WOULD
BEAR LESS HEAVILY ON THEIR BALANCE OF PAYMENTS
THAN IBRD LOANS.
IDAS ASSISTANCE IS CONCENTRATED ON THE VERY POOR
COUNTRIES.
THE FUNDS USED BY THE IDA IS CALLED CREDITS, WHICH
ARE MADE TO GOVERNMENTS ONLY, ARE TEN YEAR
GRACE PERIODS, FIFTY YEAR MATURITIES, AND NO
INTEREST.
IDA LOANS CAN BE REPAID IN THE CURRENCY OF THE
MEMBER COUNTRY.
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INTERNATIONAL DEVELOPMENT ASSOCIATION
CRITERIA IN APPROVING IDA CREDIT:
POVERTY TEST.
PERFORMANCE TEST.
PROJECT TEST.
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WORLD BANK ASSISTANCE TO INDIA
INDIA IS ONE OF THE FOUNDER MEMBER OF THE IBRD AND
IS ONE OF THE LARGEST BENEFICIARY OF THE IBRD - IDA
ASSISTANCE.
UNTIL CHINA BECAME A MEMBER OF THE WORLD BANK IN
1980, INDIA WAS THE LARGEST BENEFICIARY OF THE
WORLD BANK.
NOW THERE ARE A NUMBER OF LARGER BENEFICIARIES
THAN INDIA.
IN 1997, THE TOTAL WORLD BANK ASSISTANCE TO INDIA
AMOUNTED ABOUT FIVE PER CENT OF THE TOTAL BANK
ASSISTANCE.
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AN EVALUATION OF IMF WORLD BANK
AT THE TIME OF ESTABLISHMENT OF THESE INSTITUTIONS,
MOST OF THE COUNTRIES WERE COLONIES , THEREFORE
NOT REPRESENTED AT THE BRETTON WOODS.
THE MAJOR CONCERN OF THESE INSTITUTION WAS THE
MAJOR PROBLEMS OF THESE DEVELOPED COUNTRIES.
EVEN AFTER THE DEVELOPING COUNTRIES HAVE
OUTNUMBERED THE DEVELOPED ONES IN THE TOTAL
MEMBERSHIP OF THESE INSTITUTIONS, THE DOMINANCE
OF THE DEVELOPED COUNTRIES CONTINUES BECAUSE OF
THE VOTING SYSTEM WHICH GIVES CLEAR CONTROL TO
THE LARGER CONTRIBUTORS.
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IN THE EARLY POST WAR YEARS, MUCH MORE ATTENTION
WAS PAID FOR THE RECONSTRUCTION OF WAR DIVESTED
EUROPE AND JAPAN THAN THE CRYING DEVELOPMENT
NEEDS OF THE DEVELOPING COUNTRIES.
THE PROPOSAL FOR A SPECIAL UNITED NATIONS FUND
FOR ECONOMIC DEVELOPMENT (SUNFED) WHICH WOULD
OFFER LARGE-SCALE AID ON EASY TERM TO DEVELOPING
COUNTRIES, WAS REJECTED IN THE 1950s MAINLY
BECAUSE DEVELOPED COUNTRIES OBJECTED TO THE
UNITED NATIONS BECOMING INVOLVED IN FINANCIAL AID
TO DEVELOPING COUNTRIES.
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IN THE EARLY 1990s WHEN INDIA'S FOREIGN EXCHANGE
RESERVES POSITION BECAME VERY CRITICAL, THE
SOURCES OF SHORT-TERM COMMERCIAL BORROWINGS
DRIED UP DUE TO THE FALL IN THE CREDIT RATING.
BECAUSE OF THE POOR CREDIT RATING THE DEVELOPING
COUNTRIES HAVE HAD TO PAY AN AVERAGE RATE OF
INTEREST WHICH WAS ABOUT FOUR TIMES THE RATE
APPLIED TO THE DEVELOPED COUNTRIES ON COMMERCIAL
BORROWINGS.
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ONE PROBLEM AS FAR AS THE PROPER FUNCTIONING OF
THE IMF HAS BEEN THAT IT HAS NOT HAD ANY CONTROL
OVER THE RICH NATIONS, AND COULD NOT AVERT THE
BREAKDOWN OF THE BRETTON WOODS MONETARY
SYSTEM.
IT HAS BEEN RIGHTLY OBSERVED THAT THE WORLD BANK
IS NO CLOSER TO MEETING ITS MANDATE.
IT WAS ESTABLISHED TO BORROW THE SAVINGS OF THE
RICH NATIONS AND TO LEND THEM TO POOR NATIONS, TO
FINANCE SOUND DEVELOPMENT PROJECTS AND
PROGRAMS, PARTICULARLY WHERE PRIVATE INVESTMENT
FAILED OR WAS INADEQUATE.
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THE IBRD LENDING RATES NOW FLOAT IN LINE WITH THE
WORLD MARKET RATES.
THERE IS A SHIFT FROM THE BANKS ORIGINAL ROLE OF
CUSHIONING DEVELOPING COUNTRIES AGAINST
FLUCTUATIONS IN MARKET INTEREST RATE.
THE BANK WAS SUPPOSED TO RAISE CAPITAL AND LEND IT
AT RATE THAT COULD AFFORD TO SUBSIDIES BECAUSE OF
ITS OWN STRENGTH AND THAT OF ITS INDUSTRIAL
COUNTRY PARTNERS.
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SUGGESTIONS:
DISMANTLING THE DOMINANCE OF THE DEVELOPED COUNTRIES
IN THE MANAGEMENT OF THESE INSTITUTIONS.
AN INCREASE IN THE INTERNATIONAL LIQUIDITY OF THE
DEVELOPING COUNTRIES BROOKS NO DELAY. THERE SHOULD
BE A SUBSTANTIAL REVIEW OF SDRs, AND THE ADDITIONAL SDR
SHOULD BE ALLOCATED TO DEVELOPING COUNTRIES ONLY.
THE IMF SHOULD EVOLVE INTO A WORLD CENTRAL BANK.
THE DEVELOPING COUNTRIES TAKING WORLD BANK LOANS
HAVE NOW TO FALL INTO ONE OF THE TWO CATEGORIES:
DEVELOPED ENOUGH TO AFFORD THE STIFF TERMS DEMANDED
BY THE IBRD, OR POOR ENOUGH TO QUALIFY FOR
CONCESSIONARY FUNDS FROM IDA.
BRETTON WOODS INSTITUTIONS NOW NEED TO REFOCUS THEIR
WORK ON HUMAN DEVELOPMENT.
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MAIN FEATURES AND ASSISTANCE:
ITS INVESTMENTS ARE IN PARTNERSHIP WITH PRIVATE
INVESTORS FROM THE CAPITAL-EXPORTING COUNTRY OR
THE COUNTRY IN WHICH THE ENTERPRISE IS LOCATED.
ITS INVESTMENT WILL NEVER BE MORE THAN HALF OF
THE CAPITAL REQUIREMENTS OF THE ENTERPRISE.
THE MINIMUM INVESTMENT WILL BE $1,00,000, WITH NO
UPPER LIMIT. ELIGIBILITY OF THE ENTERPRISE FOR LOAN
IS, IT SHOULD BE A PREDOMINANTLY AN INDUSTRIAL AND
SHOULD CONTRIBUTE TO THE DEVELOPMENT.
THE RATE OF INTEREST IS A MATTER OF NEGOTIATIONS.
IT NEITHER SEEK NOR ACCEPT A GOVERNMENT
GUARANTEE FOR THE REPAYMENT OF ANY OF ITS
INVESTMENT.
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IFC AND INDIA
THE CORPORATION HAS IDENTIFIED FIVE PRIORITY AREAS,
WHERE IT PLANS TO BEEF UP ITS ACTIVITIES.
CAPITAL MARKET DEVELOPMENT.
DIRECT FOREIGN INVESTMENT.
ACCESS TO FOREIGN MARKETS.
EQUITY INVESTMENT IN NEW COMPANIES AND EXPANDING
COMPANIES TO FINANCE CAPITAL INVESTMENTS
INFRASTRUCTURE.
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INTERNATIONAL ECONOMIC INSTITUTIONS / ASIAN DEVELOPMENT BANK
ASIAN DEVELOPMENT BANK
ASIAN DEVELOPMENT BANK (ADB) WAS SET UP IN
DECEMBER 1966 UNDER UNITED NATIONS ECONOMIC
COMMISSION FOR ASIA AND FAR EAST (ECAFE) TO FOSTER
ECONOMIC DEVELOPMENT OF ASIAN COUNTRIES, WITH ITS
HEADQUARTERS AT MANILA.
OBJECTIVES:
TO PROMOTE INVESTMENT IN THE ESCAP REGION OF
PUBLIC AND PRIVATE CAPITAL FOR DEVELOPMENT.
TO UTILIZE THE AVAILABLE RESOURCES FOR FINANCING
DEVELOPMENT, GIVING PRIORITY TO THOSE REGIONAL,
SUB REGIONAL AS WELL AS NATIONAL PROJECTS AND
PROGRAMS WHICH CONTRIBUTE MORE EFFECTIVELY TO
THE HARMONIOUS ECONOMIC GROWTH OF THE REGION AS
A WHOLE.
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INTERNATIONAL ECONOMIC INSTITUTIONS / UNCTAD
UNCTAD
THE UNITED NATIONS CONFERENCE ON TRADE AND
DEVELOPMENT (UNCTAD) WAS CREATED IN 1964 AS AN
EXPRESSION OF THE BELIEF THAT A COOPERATIVE
EFFORT OF THE INTERNATIONAL COMMUNITY WAS
REQUIRED TO INTEGRATE DEVELOPING COUNTRIES
SUCCESSFULLY IN THE WORLD.
FUNCTIONS:
TO PROMOTE INTERNATIONAL TRADE WITH A VIEW TO
ACCELERATE ECONOMIC DEVELOPMENT.
TO FORMULATE POLICIES ON INTERNATIONAL TRADE AND
RELATED PROBLEMS OF ECONOMIC DEVELOPMENT.
TO NEGOTIATE MULTINATIONAL TRADE AGREEMENTS.
TO MAKE PROPOSALS FOR PUTTING ITS PRINCIPLES AND
POLICIES INTO EFFECT.
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UNCTAD XI
UNCTAD XI, THE LATEST SESSION OF UNCTAD HELD IN
SAO PAULO IN JUNE 2004.
IT FOCUSED ON ENHANCING THE COHERENCE BETWEEN
NATIONAL DEVELOPMENT STRATEGIES AND GLOBAL
ECONOMIC PROCESSES TOWARDS ECONOMIC GROWTH
AND DEVELOPMENT, PARTICULARLY FOR DEVELOPING
COUNTRIES.
UNCTAD XI ADOPTED A DECLARATION
SPIRIT OF SAO PAULO AND SAO PAULO CONSENSUS. A
NEGOTIATED DOCUMENT PROVIDING MORE DETAIL ON THE
ROLE OF UNCTAD IN A GLOBALIZING WORLD.
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UNCTAD XI
SAO PAULO CONSENSUS FOCUSES ON :
DEVELOPMENT STRATEGIES IN A GLOBALIZING WORLD.
BUILDING PRODUCTIVE CAPACITIES AND INTERNATIONAL
COMPETITIVENESS.
ASSURING DEVELOPMENT GAINS FROM THE
INTERNATIONAL TRADING SYSTEM AND TRADE
NEGOTIATIONS.
PARTNERSHIP FOR DEVELOPMENT.
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INTERNATIONAL ECONOMIC INSTITUTIONS / UNIDO
UNIDO
THE UNITED NATIONS INDUSTRIAL DEVELOPMENT
ORGANIZATION (UNIDO), IS AN ORGAN OF THE
U N GENERAL ASSEMBLY.
THE PRIMARY FUNCTION OF UNIDO IS TO PROMOTE
INDUSTRIALIZATION IN DEVELOPING COUNTRIES BY
ENCOURAGING THE MOBILIZATION OF NATIONAL AND
INTERNATIONAL RESOURCES.
PARTICULAR ATTENTION IS GIVEN TO MANUFACTURING
INDUSTRIES.
UNLIKE UNCTAD, UNIDO WORKS DIRECTLY WITH
BUSINESS FIRMS, GENERALLY ON AN INDUSTRY BASIS.
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INTERNATIONAL ECONOMIC INSTITUTIONS / INTERNATIONAL TRADE CENTRE
INTERNATIONAL TRADE CENTRE (ITC)
THE INTERNATIONAL TRADE CENTRE (ITC) IS THE FOCAL
POINT IN THE UNITED NATIONS SYSTEM FOR TECHNICAL
COOPERATION WITH DEVELOPING COUNTRIES IN TRADE
PROMOTION.
ITC WAS CREATED BY THE GENERAL AGREEMENTS ON
TARIFFS AND TRADE (GATT) IN 1964 AND SINCE 1968 HAS
BEEN OPERATED JOINTLY BY GATT (NOW WTO) AND THE
U N.
AS AN EXECUTING AGENCY OF THE UNITED NATIONS
DEVELOPMENT PROGRAMME (UNDP), ITC IS DIRECTLY
RESPONSIBLE FOR IMPLEMENTING UNDP FINANCED
PROJECTS IN DEVELOPING COUNTRIES RELATED TO
TRADE PROMOTION.
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INTERNATIONAL ECONOMIC INSTITUTIONS / INTERNATIONAL TRADE CENTRE
INTERNATIONAL TRADE CENTRE (ITC)
ITC ASSISTS THE DEVELOPING COUNTRIES BY:
DEVELOPING A NATIONAL TRADE PROMOTION STRATEGY.
ESTABLISHING APPROPRIATE GOVERNMENT INSTITUTIONS
AND SERVICES, SUCH AS CENTRAL TRADE PROMOTION
ORGANIZATION AND SERVICES FOR EXPORTERS IN TRADE
INFORMATION.
EXPORT FINANCING, EXPORT QUALITY, EXPORT COSTING
AND PRICING, EXPORT PACKAGING, TRADE FAIRS AND
COMMERCIAL PUBLICITY.
THE LEGAL ASPECTS OF FOREIGN TRADE.
INTERNATIONAL PHYSICAL DISTRIBUTION OF GOODS.
TRADE PROMOTION SERVICES FOR SMALL AND MEDIUM
SIZE ENTERPRISES.
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INTERNATIONAL ECONOMIC INSTITUTIONS / WORLD TRADE ORGANISATION (WTO)
WORLD TRADE ORGANIZATION (WTO)
WTO PRINCIPLES AND AGREEMENTS AFFECT THE
DOMESTIC ENVIRONMENT.
INDIA HAS HAD TO SUBSTANTIALLY LIBERALIZE
IMPORTS, AND COMPLETE REMOVAL OF RESTRICTIONS
ON QUANTITATIVE IMPORTS.
DUE TO LIBERALIZATION OF IMPORTS DOMESTIC FIRMS
HAVE TO FACE AN INCREASED COMPETITION FROM
FOREIGN GOODS.
LIBERALIZATION PROVIDE NEW OPPORTUNITIES AS
FOREIGN MARKETS ARE OPEN FOR EXPORTS.
INDIAN FIRMS CAN SEEK FOREIGN EQUITY
PARTICIPATION AND FOREIGN TECHNOLOGY.
FIRMS WILL HAVE TO BE EFFICIENT AND DYNAMIC TO
SURVIVE THE GLOBAL COMPETITION.
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INTERNATIONAL ECONOMIC INSTITUTIONS / GATT
GATT
THE GENERAL AGREEMENT ON TARIFFS AND TRADE
(GATT), THE PREDECESSOR OF WTO, A RESULT OF THE
INTERNATIONAL DESIRE TO LIBERALIZE TRADE.
THE ESTABLISHMENT OF AN INTERNATIONAL TRADE
ORGANIZATION (ITO) HAS ALSO BEEN RECOMMENDED
BY THE BRETTON WOODS CONFERENCE WHICH HAD
RECOMMENDED IMF AND WORLD BANK.
BECAUSE OF OBJECTIONS THAT ITS ENFORCEMENT
PROVISIONS WOULD INTERFERE WITH THE AUTONOMY
OF DOMESTIC POLICY MAKING, THE ITO CHARTER WAS
NEVER RATIFIED.
GATT WHICH HAD BEEN DRAWN UP ONLY AS AN INTERIM
AGREEMENT TO FILL THE GAP UNTIL THE ITO CHARTER
WAS RATIFIED, BECAME THE FRAME WORK FOR
INTERNATIONAL TRADING SYSTEM SINCE 1948.
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GATT
THE GATT WAS TRANSFORMED INTO A WORLD TRADE
ORGANIZATION (WTO) WITH EFFECT FROM JANUARY
1995.THUS AFTER FIVE DECADES, THE ORIGINAL
PROPOSAL OF AN INTERNATIONAL TRADE
ORGANIZATION HAS TAKEN SHAPE AS THE WTO. THE
WTO WHICH IS AMORE POWERFUL BODY THAN THE
GATT HAS AN ENLARGED ROLE THAN THE GATT.
INDIA IS ONE OF THE FOUNDER MEMBER OF THE IMF,
WORLD BANK, GATT AND THE WTO.
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OBJECTIVES
THE PREAMBLE OF THE GATT CONTAINS THE FOLLOWING
IMPORTANT OBJECTIVES:
1. RAISING STANDARD OF LIVING.
2. ENSURING FULL EMPLOYMENT AND A LARGE AND
STEADILY GROWING VOLUME OF REAL INCOME AND
EFFECTIVE DEMAND.
3. DEVELOPING FULL USE OF THE RESOURCES OF THE
WORLD.
4. EXPANSION OF PRODUCTION AND INTERNATIONAL TRADE.
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AN EVALUATION OF GATT
THE GROWING ACCEPTANCE OF GATT / WTO, DESPITE THEIR
SHORTCOMINGS, IS EVINCED BY THE INCREASE IN THE NUMBER
OF SIGNATORIES.
AUGUST END 2006, 149 COUNTRIES WERE MEMBERS, AND ABOUT
TWO DOZEN NATIONS WERE NEGOTIATING MEMBERSHIP.
TOTAL TRADE IN 2000 WAS 22 TIMES THE LEVEL OF 1950.
GATT AND THE WTO HAVE HELPED TO CREATE A MORE LIBERAL
TRADING SYSTEM CONTRIBUTING TO UNPRECEDENTED
GROWTH.
ESTABLISHMENT OF A FORUM FOR CONTINUING
CONSULTATIONS.
BESIDES AGRICULTURE AND TEXTILES, TWO EXCEPTIONS TO
THE GENERAL TREND OF TRADE LIBERALIZATION HAVE BEEN
TRADE OF DEVELOPING COUNTRIES AND ECONOMIC
INTEGRATION.
CONT.
3 167
AN EVALUATION OF GATT
THE EXPORTS OF DEVELOPING COUNTRIES GAINED
SIGNIFICANTLY LESS FROM GATT ROUNDS THAN DID
EXPORTS OF THE INDUSTRIAL NATIONS.
THE TRADE LIBERALIZATION HAS BEEN CONFINED MOSTLY
TO GOODS OF INTEREST TO THE DEVELOPED COUNTRIES.
IN CASE OF AGRICULTURAL COMMODITIES NOT ONLY WAS
THAT THERE WAS NO LIBERALIZATION, BUT ALSO THERE
WAS AN INCREASE IN PROTECTION.
MANUFACTURED PRODUCTS OF INTEREST TO DEVELOPING
COUNTRIES LIKE TEXTILES AND CLOTHING , FOOTWEAR
etc. HAVE BEEN SUBJECT TO INCREASE NON-TARIFF
BARRIERS.
GROWING NTBs HAVE BEEN SEVERELY AFFECTING THE
EXPORTS OF DEVELOPING COUNTRIES.
3 168
THE URUGUAY ROUND
URUGUAY ROUND (UR) IS THE NAME BY WHICH THE
EIGHTH AND THE LATEST ROUND OF THE
MULTILATERAL TRADE NEGOTIATIONS (MTNs) HELD
UNDER THE AUSPICES OF THE GATT IS POPULARLY
KNOWN BECAUSE IT WAS LAUNCHED IN
PUNTA DEL ESTE IN URUGUAY, A DEVELOPING
COUNTRY IN SEPTEMBER 1986.
3 168
THE URUGUAY ROUND
THE URUGUAY ROUND TOOK UP THREE BASIC SUBJECTS
FOR DISCUSSION:
REDUCING SPECIFIC TRADE BARRIERS AND IMPROVING
MARKET ACCESS.
STRENGTHENING GATT DISCIPLINES.
PROBLEMS OF LIBERALIZATION OF TRADE IN SERVICES,
TRADE RELATED ASPECTS OF INTELLECTUAL PROPERTY
RIGHTS (TRIPs) AND TRADE RELATED INVESTMENT
MEASURES (TRIMs).
3 169
GATT AND WTO
UNDER THE OLD SYSTEM THERE WERE TWO GATTS:
1. GATT THE AGREEMENT THE AGREEMENT BETWEEN
CONTRACTING PARTIES (GOVERNMENT) SETTING
OUT THE RULES FOR CONDUCTING INTERNATIONAL
TRADE.
2. GATT THE ORGANIZATION AN INTERNATIONAL
ORGANIZATION CREATED TO FACILITATE
DISCUSSION AND ADMINISTRATION RELATED TO THE
AGREEMENT.
3 169
GATT AND WTO
GATT THE ORGANIZATION CEASED TO EXIST WITH THE
ESTABLISHMENT OF WTO.
GATT THE AGREEMENT WHICH ALWAYS DEALT WITH
TRADE IN GOODS, CONTINUE TO EXIST IN AMENDED FORM,
AS PART OF WTO ALONGSIDE TWO NEW AGREEMENTS.
1. GENERAL AGREEMENT ON TRADE IN SERVICES (GATS).
2. GENERAL AGREEMENT ON TRADE RELATED ASPECTS OF
INTELLECTUAL PROPERTY RIGHTS (TRIPS) .
THE OLD TEXT IN NOW CALLED GATT 1947.
THE UPDATED VERSION IS CALLED GATT1994.
3 171
WTO PRINCIPLES
MAIN OBJECTIVES OF WTO AGREEMENTS:
TO HELP TRADE FLOW AS FREELY AS POSSIBLE.
TO ACHIEVE FURTHER LIBERALISATION GRADUALLY
THROUGH NEGOTIATIONS.
TO SET UP AN IMPARTIAL MEANS OF SETTING DISPUTS.
FUNDAMENTAL PRINCIPLES:
NON DISCRIMINATION ( MOST FAVOURED NATION
TREATMENT AND NATIONAL TREATMENT ).
FREER TRADE, PREDICTABLE POLICIES, ENCOURAGING
COMPETITION.
EXTRA PROVISIONS FOR LESS DEVELOPED COUNTRIES.
3 171
ORGANISATIONAL STRUCTURE
MINISTERIAL CONFERENCE
(DECISION MAKING BODY)
GENERAL COUNCIL
(NORMALLY AMBASSADORS AND
HEADS OF DELEGATION IN GENEVA)
GOODS COUNCIL, SERVICE COUNCIL
INTELLECTUAL PROPERTY COUNCIL
NUMEROUS SPECIALIZED COMMITTEES,
WORKING GROUPS AND WORKING PARTIES
3 174
SALIENT FEATURE OF U R AGREEMENT
LIBERALIZATION OF TRADE IN MANUFACTURES
LIBERALIZATION OF TRADE IN MANUFACTURE IS
OUGHT TO BE ACHIEVED MOSTLY BY
REDUCTION OF TARIFFS
AND
PHASING OUT OF NON-TARIFF BARRIERS
3 174
TARIFF BARRIERS
THE MAJOR LIBERALIZATION IN RESPECT OF TRADE IN
MANUFACTURES, REGARDING TARIFFS ARE:
1. EXPANSION OF TARIFF BINDING.
2. REDUCTION IN THE TARIFF RATES.
3. EXPANSION OF DUTY-FREE ACCESS.
NON TARIFF BARRIERS
THE AGREEMENT TO ABOLISH VOLUNTARY EXPORT
RESTRAINTS (VERS) AND TO PHASE OUT THE MULTIFIBRE
ARRANGEMENTS (MFA) ARE REGARDED AS LANDMARK
ACHIEVEMENTS FOR DEVELOPING COUNTRIES.
3 175
LIBERALIZATION OF AGRICULTURAL TRADE
INCLUSION FOR THE FIRST TIME OF AGRICULTURE IN THE MTN.
EXCLUSION OF AGRICULTURE FROM THE PREVIOUS ROUNDS
AND ITS EFFECTIVE EXEMPTION FROM GATT MADE IT A HIGHLY
PROTECTED SECTOR IN THE DEVELOPING COUNTRIES.
IMPACT OF THIS ON WORLD PRICES PREVENTED EFFICIENT
PRODUCERS FROM REALIZING THE BENEFITS OF THEIR
COMPARATIVE ADVANTAGE.
THE IMPORTANT ASPECTS OF THE U R AGREEMENT ON
AGRICULTURE INCLUDE:
1. TARIFFICATION.
2. TARIFF BINDING.
3. TARIFF CUTS.
4. REDUCTION IN SUBSIDIES AND DOMESTIC SUPPORT.
3 177
GATS
THE GENERAL AGREEMENT ON TRADE IN SERVICES (GATS)
WHICH EXTENDS MULTILATERAL RULES AND DISCIPLINES
TO SERVICES IS REGARDED AS A LANDMARK
ACHIEVEMENT OF THE U R, ALTHOUGH IT ACHIEVED ONLY
LITTLE IN TERMS OF IMMEDIATE LIBERALIZATION.
MODES OF INTERNATIONAL DELIVERY OF SERVICES:
1. CROSS BORDER SUPPLY ( TRANSBORDER DATA FLOWS,
TRANSPORTATION SERVICES )
2. COMMERCIAL PRESENCE ( PROVISION OF SERVICES
ABROAD THROUGH FDI OR
REPRESENTATIVE OFFICES )
3. CONSUMPTION ABROAD ( TOURISM )
4. MOVEMENT OF PERSONNEL ( ENTRY AND TEMPORARY STAY
OF FOREIGN CONSULTANTS )
3 179
TRIMs
TRADE RELATED INVESTMENT MEASURES (TRIMs)
REFERS TO CERTAIN CONDITIONS OR RESTRICTIONS
IMPOSED BY A GOVERNMENT IN RESPECT OF
FOREIGN INVESTMENT IN THE COUNTRY. TRIMS WERE
WIDELY EMPLOYED BY DEVELOPING COUNTRIES.
3 180
TRIPs
ACCORDING TO THE WTO, INTELLECTUAL PROPERTY
RIGHTS ARE THE RIGHTS GIVEN TO PERSONS OVER
THE CREATIONS OF THEIR MINDS. THEY USUALLY
GIVE THE CREATOR AN EXCLUSIVE RIGHT OVER THE
USE OF HIS / HER CREATION FOR A CERTAIN PERIOD
OF TIME.
3 180
COPYRIGHT
AND RIGHTS RELATED TO COPYRIGHT
THE RIGHTS OF AUTHORS OF LITERARY AND ARTISTIC
WORKS (SUCH AS BOOKS AND OTHER WRITINGS,
MUSICAL COMPOSITIONS, PAINTINGS, SCULPTURE,
COMPUTER PROGRAMS AND FILMS) ARE PROTECTED
BY COPYRIGHT, FOR A MINIMUM PERIOD OF 50 YEARS
AFTER THE DEATH OF THE AUTHOR.
3 181
THE U R AGREEMENT ON TRIPS, COVERS SEVEN
INTELLECTUAL PROPERTIES
1. COPYRIGHT AND RELATED RIGHTS
(i.e. RIGHTS OF PERFORMERS, PRODUCERS OF SOUND
RECORDINGS AND BROADCASTING ORGANIZATIONS.)
2. TRADEMARKS INCLUDING SERVICE MARKS.
3. GEOGRAPHICAL INDICATIONS INCLUDING APPELLATIONS
OF ORIGIN.
CONT.
3 181
THE U R AGREEMENT ON TRIPS, COVERS SEVEN
INTELLECTUAL PROPERTIES
4. INDUSTRIAL DESIGNS.
5. PATENTS INCLUDING THE PROTECTION OF NEW VARIETIES
OF PLANTS.
6. THE LAYOUT-DESIGNS OF INTEGRATED CIRCUITS.
7. UNDISCLOSED INFORMATION, INCLUDING TRADE SECRETS
AND TEST DATA.
3 182
OBJECTIVES OF PROTECTION OF INTELLECTUAL PROPERTY
ENCOURAGE AND REWARD CREATIVE WORK.
TECHNOLOGICAL INNOVATION.
FAIR COMPETITION.
CONSUMER PROTECTION.
TRANSFER OF TECHNOLOGY.
BALANCE OF RIGHTS AND OBLIGATIONS.
3 186
PATENTS
A PATENT IS A LEGAL PROTECTION GRANTED FOR AN
INNOVATION THAT IS NEW, NON OBVIOUS AND USEFUL.
THE PATENT GRANTS THE PATENT HOLDER THE
EXCLUSIVE RIGHT TO MAKE USE OR SELL THE PATENTED
PRODUCTS OR PROCESS.
THE MAIN PURPOSE OF THE PATENT SYSTEM IS TO
BENEFIT THE SOCIETY.
PATENTS, BY PROVIDING AN OPPORTUNITY TO RECOUP
THE COST OF INVENTION AND TO MAKE PROFIT OUT OF
THE INVENTION.
ENCOURAGE RESEARCH AND DEVELOPMENT AND
THEREBY CONTRIBUTE TO THE WELL BEING OF THE
SOCIETY.
3 186
PATENTS
AN INVENTION TO BE PATENTABLE, MUST SATISFY THREE
CONDITIONS.
1. IT IS NEW.
2. IT IS USEFUL TO THE SOCIETY.
3. IT IS NON-OBVIOUS TO A PERSON POSSESSED OF
AVERAGE SKILL IN THE ART.
3 186
PATENTS
THE INDIAN PATENTS ACT,1970, AS AMENDED AND
EFFECTIVE FROM JANUARY1, 2005, LAYS DOWN:
THE ELIGIBILITY, PROCEDURES, AND CONDITIONS FOR
GRANT OF PATENTS.
INVENTIONS AND OTHER SUBJECTS NOT PATENTABLE.
RIGHTS AND OBLIGATIONS OF PATENTEE.
GROUNDS FOR REVOCATION OF PATENTS.
MATTERS RELATED TO WORKING OF THE PATENT AND
COMPULSORY LICENSING.
RIGHTS OF GOVERNMENT REGARDING PATENTED
PRODUCTS.
3 187
PATENTS
1. GRANT AND REVOCATION OF PATENT: A PATENT MAY BE
GRANTED TO AN INVENTION, INVENTION MEANS A NEW
PRODUCT OR PROCESS INVOLVING INVENTIVE STEP WHICH
MEANS A FEATURE INVOLVING TECHNICAL ADVANCE AS
COMPARED TO THE EXISTING KNOWLEDGE OR ECONOMIC
SIGNIFICANT.
THERE IS PROVISION FOR GRANT OF PATENTS OF
ADDITION TO THE PATENTEE i.e. WHEN THERE IS A
MODIFICATION OR IMPROVEMENT TO A PATENTED
PRODUCT.
THE ACT ALSO PROVIDES FOR THE REVOCATION OF
PATENTS ON CERTAIN GROUNDS.
2. ITEM NOT PATENTABLE: A LIST OF INVENTIONS AND OTHER
SUBJECTS NOT PATENTABLE IS PROVIDED IN THE
PATENTS ACT.
3 187
PATENTS
3. PRODUCT PATENT: THE AMENDED ACT PROVIDES FOR
GRANT OF PRODUCT PATENT. PREVIOUSLY, FOR FOOD,
PHARMACEUTICAL AND CHEMICAL PRODUCTS ONLY
PROCESS PATENT WAS GRANTED. ANY BODY WAS FREE
TO MANUFACTURE THE SAME PRODUCT BY DIFFERENT
PROCESS. THIS IS NO MORE ALLOWED.
4. PATENT PERIOD: FOR FOOD , PHARMACEUTICAL AND
CHEMICAL PRODUCTS, PREVIOUSLY THE PATENT PERIOD
WAS 14 YEARS, NOW FOR ALL PRODUCTS IT IS 20 YEARS.
5. RIGHTS AND OBLIGATION OF PATENTEE: A PATENT
GRANTED UNDER THIS ACT CONFERS ON THE PATENTEE
THE EXCLUSIVE RIGHT TO USE, MAKE, SELL OR IMPORT
THE PATENTED PRODUCT / PROCESS. THE ACT NORMALLY
PREVENTS THIRD PARTIES .
3 188
PATENTS
6. WORKING OF THE PATENT: IT MEANS THAT THE PATENTED
PRODUCT IS PRODUCED IN INDIA AND MADE AVAILABLE
SUFFICIENTLY AT REASONABLE PRICE WITHIN REASONABLE
TIME.
7. COMPULSORY LICENSING: THE COMPULSORY LICENSING
SECTIONS OF THE ACT ARE INTENDED TO CHECK THE ABUSE OF
PATENT RIGHT.
8. PARALLEL IMPORT: THE ACT ALSO PROVIDES FOR PARALLEL
IMPORT SO THAT PATENTED PRODUCT CAN BECOME AVAILABLE
AT THE LOWEST INTERNATIONAL PRICE.
9. EXCEPTIONS: THE ACT ALSO LAYS DOWN CERTAIN EXCEPTIONS
TO THE RIGHTS OF THE PATENTEE.
ANY PATENTED PRODUCT OR PROCESS MAY BE MADE,
IMPORTED OR USED BY OR ON BEHALF OF THE GOVERNMENT
FOR ITS USE OR PURPOSE. THE CENTRAL GOVERNMENT MAY
ALSO ACQUIRE A PATENT FOR PUBLIC PURPOSE.
3 190
DISPUTES SETTLEMENT
WTO MEMBERS HAVE AGREED THAT IF THEY BELIEVE
FELLOW- MEMBERS ARE VIOLATING TRADE RULES,
THEY WILL USE THE MULTILATERAL SYSTEM OF
SETTLING DISPUTES INSTEAD OF TAKING ACTION
UNILATERALLY. THAT MEANS ABIDING BY THE
AGREED PROCEDURES, AND RESPECTING JUDGMENT.
3 191
ANTI-DUMPING MEASURES
IN INDIA ANTI-DUMPING ACTIONS ARE TAKEN BY THE
DIRECTORATE OF ANTI-DUMPING AND ALLIED DUTIES,
MINISTRY OF COMMERCE.
FOR THE GOVERNMENT TO INITIATE ANTI-DUMPING
ACTION, THE INDIAN INDUSTRY MUST BE ABLE TO SHOW
THAT DUMPED IMPORTS ARE CAUSING OR THREATENING
TO CAUSE MATERIAL INJURY TO THE INDIAN DOMESTIC
INDUSTRY.
ANTI DUMPING ACTIONS MAY BE SUSPENDED OR
TERMINATED IF THE EXPORTER CONCERNED FURNISHES
AN UNDERTAKING TO REVISE THE PRICE TO REMOVE THE
DUMPING OR THE INJURIOUS EFFECT OF DUMPING.
3 193
AN EVALUATION OF THE UR AGREEMENT
THE SUCCESS OF THE U R AGREEMENT WILL DEPEND
UPON THE SPIRIT WITH WHICH IT WILL BE
TRANSLATED INTO PRACTICE.
MOST OF THE GAINS WILL ACCRUE TO THE
DEVELOPED COUNTRIES.
SOME DEVELOPING COUNTRIES IN THE CATEGORY OF
LDCs AND NET FOOD IMPORTERS ARE EXPECTED TO
LOSE.
AS A SINGLE COUNTRY THE LARGEST GAIN IN
ABSOLUTE TERMS WILL ACCRUE TO THE U. S.
CONT.
3 193
AN EVALUATION OF THE UR AGREEMENT
ACCORDING TO GATT ESTIMATES, WORLD TRADE
WOULD INCREASE BY 12 PER CENT, IF THE U R
PACKAGE IS COMPLETELY IMPLEMENTED.
THE VALUE OF WORLD EXPORTS (INCLUDING
SERVICES) WILL INCREASE BY AROUND 10 PER CENT.
ACCORDING TO THE ESTIMATES MADE BY THE WORLD
BANK, OECD AND THE GATT SECRETARIAT THE
INCOME EFFECTS OF THE IMPLEMENTATION OF U R
PACKAGE WILL ADD BETWEEN $213 TO 274 BILLION
ANNUALLY TO WORLD INCOME.
3 194
AN EVALUATION OF WTO ( BENEFITS)
IT HAS MADE SIGNIFICANT ACHIEVEMENT IN REDUCING THE
TARIFF AND NON TARIFF BARRIERS TO TRADE.
THE LIBERALIZATION OF INVESTMENT HAS BEEN
FOSTERING ECONOMIC GROWTH OF A NUMBER OF
COUNTRIES.
THE LIBERALIZATION RESULTED IN INCREASE IN
COMPETITION, EFFICIENCY OF RESOURCE UTILIZATION,
IMPROVEMENT IN QUALITY AND PRODUCTIVITY AND FALL
IN PRICES.
IT HAS A SYSTEM IN PLACE TO SETTLE TRADE DISPUTES
BETWEEN NATIONS.
IT HAS A MECHANISM TO DEAL WITH VIOLATION OF TRADE
AGREEMENT.
3 195
AN EVALUATION OF WTO ( DRAWBACKS)
NEGOTIATIONS AND DECISIONS MAKING IS DOMINATED BY
THE DEVELOPED COUNTRIES.
BECAUSE OF THE DEPENDENCE OF DEVELOPING
COUNTRIES ON DEVELOPED ONES, THE DEVELOPED
COUNTRIES ARE ABLE TO RESORT TO ARM-TWISTING
TACTICS.
MANY OF THE POLICY LIBERALIZATIONS ARE DONE
WITHOUT CONSIDERING THE VULNERABILITY OF THE
DEVELOPING COUNTRIES AND THE POSSIBLE ADVERSE
EFFECT ON THEM.
THE DEVELOPING COUNTRIES HAVE BEEN GETTING A RAW
DEAL FROM THE WTO.
3 196
WTO AND DEVELOPING COUNTRIES
THE LIBERALIZATION OF AGRICULTURAL TRADE AND
THE INCREASE IN AGRICULTURAL PRICES DUE TO CUT
IN PRODUCER SUBSIDIES IN THE DEVELOPED
COUNTRIES WOULD BENEFIT AGRICULTURAL
EXPORTERS, THE INCREASE IN FOOD PRICES DUE TO
CUT IN SUBSIDIES MAY ADVERSELY AFFECT THE
FOOD IMPORTERS.
3 196
ONE OF THE MAJOR AREAS OF DISAPPOINTMENT FOR
MANY DEVELOPING COUNTRIES IS TRADE IN TEXTILES.
TEXTILES IS ONE OF THEIR MOST IMPORTANT EXPORT
ITEMS BUT DEVELOPED COUNTRIES HAVE BEEN
FOLLOWING A VERY RESTRICTIVE IMPORT POLICY.
THE DEVELOPING COUNTRIES WANTED A FAST PHASING
OUT OF THE MULTIFIBRE ARRANGEMENT (MFA) UNDER
WHICH THE TEXTILE IMPORTS HAVE BEEN RESTRICTED.
THE MFA WILL BE PHASED OUT,IN STAGES OVER A PERIOD
OF 10 YEARS.
MAJOR PART OF THE LIBERALIZATION WILL TAKE PLACE
ONLY TOWARDS THE END OF THE TRANSITIONAL PERIOD
3 197
THE EFFECT OF THE U R IS NOT THE SAME ON ALL
COUNTRIES.
A MEASURE WHICH FAVOURABLE AFFECTS ONE
DEVELOPED COUNTRY MAY UNFAVORABLY AFFECT
ANOTHER DEVELOPED COUNTRY.
THE CONFLICTS OF INTEREST HAVE OCCURRED BOTH
AMONG DEVELOPED COUNTRIES AND DEVELOPING
COUNTRIES.
DIFFERENCES OF OPINION BETWEEN THE U S AND E C ON
THE TRADE IN SERVICES LEFT THIS SECTOR LARGELY
UNAFFECTED.
3 197
THE SUREST PROOF OF THE SUCCESS OF THE
URUGUAY ROUND IS THAT NO COUNTRY IS ENTIRELY
HAPPY AT THE OUTCOME.
INDIA IS QUITE DISSATISFIED THAT THE TEXTILE
TRADE IS NOT ADEQUATELY LIBERALIZED .
SOME PEOPLE IN THE U S ARE ANGRY OVER THE
LIBERALIZATION MOVE, ALLEGING THAT TWO
MILLION JOBS IN THE U S WOULD NOW HANG IN
BALANCE.
3 198
UNEQUAL PARTICIPATION
THE DEVELOPING COUNTRIES ARE DISADVANTAGED IN
THE WTO SYSTEM BECAUSE OF THEIR INABILITY TO
EFFECTIVELY PARTICIPATE IN THE NEGOTIATIONS.
THEY SUFFER FROM THE LACK OF INTELLECTUAL AND
FINANCIAL CAPABILITIES TO MEANINGFULLY PARTICIPATE.
THEY ARE NOT ABLE TO UNDERSTAND THE IMPLICATIONS
AND POSSIBLE IMPACTS OF DIFFERENT PROPOSALS AND
AGREEMENTS BECAUSE OF THEIR ANALYTICAL
DEFICIENCIES, WEAK BARGAINING POSITIONS, GENERAL
STATE OF UNPREPAREDNESS FOR THE NEGOTIATIONS.
LACK OF TRANSPARENCY IN THE NEGOTIATING PROCESS.
3 199
IMPLMENTATION ISSUES
DEVELOPING COUNTRIES HAVE IDENTIFIED VARIOUS
INSTANCES OF INEQUALITIES AND IMBALANCES IN THE
URUGUAY ROUND AGREEMENTS AND SUBMITTED A LARGE
NUMBER OF FORMAL PROPOSALS FOR RECTIFYING THEM.
THE PROPOSALS HAVE BEEN KNOWN AS THE
IMPLEMENTATION ISSUES.
3 199
IMPLMENTATION ISSUES
IT IS ARGUED THAT THE IMPLEMENTATION ISSUES SHOULD
BE URGENTLY RESOLVED AND ANY NEW ROUND OF MTN
SHALL BE TAKEN UP ONLY AFTER THAT. HOWEVER, THE
DEVELOPED COUNTRIES WANT THE NEW ROUND OF MTN
SOON.
RESOLUTION OF THE IMPLANTATION ISSUES IS THE ONLY
WAY TO RESTORE CREDIBILITY OF THE INTERNATIONAL
TRADING SYSTEM.
3 200
THE DOHA DECLARATION
THE DOHA MINISTERIAL ADOPTED THREE MAJOR
DECLARATION.
1. ON THE NEGOTIATING AGENDA FOR THE NEW WTO
ROUND.
2. ON SOME 40 IMPLEMENTATION CONCERNS OF THE
DEVELOPING COUNTRIES.
3. ON THE POLITICAL STATEMENT DEALING WITH PATENTS
AND PUBLIC HEALTH.
3 200
THE DOHA DECLARATION
THE REMARKABLE ACHIEVEMENT OF THE DOHA
MINISTERIAL FOR DEVELOPING COUNTRIES IS THAT IN
THE CASE OF TRIPS AND PUBLIC HEALTH, IT ALLOWED
WAIVER OF THE PATENT LAW TO FACE A NATIONAL
EMERGENCY.
NOW IT WILL BE POSSIBLE FOR THE DEVELOPING
COUNTRIES TO SET ASIDE THE PATENT LAWS IF THEY
HAVE TO FACE EPIDEMICS SUCH AS MALARIA,
TUBERCULOSIS AND AIDS.
EACH COUNTRY HAS BEEN GIVEN THE FREEDOM TO
DEFINE THE NATIONAL EMERGENCY.
3 201
U R AGREEMENT AND INDIA
THE URUGUAY ROUND AGREEMENTS HAVE COME IN FOR
SCATHING CRITICISMS IN INDIA.
MANY POLITICIANS AND OTHERS HAVE ARGUED THAT
INDIA SHOULD WITHDRAW FROM GATT.
MOST OF THE CRITICISMS ARE EITHER BASELESS OR DUE
TO LACK OF KNOWLEDGE OF THE INTERNATIONAL
TRADING ENVIRONMENT, AND MISINFORMATION, OR ARE
JUST MEANT TO OPPOSE THE GOVERNMENT BY THE
OPPOSITION PARTIES.
BY BEING A PART OF THE WTO INDIA ENJOYS THE MOST
FAVORED NATION (MFN) STATUS WITH ALL THE OTHER
MEMBERS OF WTO.
3 202
U R AGREEMENT AND INDIA
ACCORDING TO GOVERNMENT OF INDIA, THE MARKET
ACCESS AGREEMENTS SIGNED BY INDIA WITH THE USA
AND EU WILL RESULT IN ADDITIONAL EXPORT EARNINGS
OF AROUND Rs. 1100 CRORES IN THE INITIAL YEARS AND
THE ADDITIONAL ACCESS ACHIEVED WILL GET MAGNIFIED
IN THE SECOND AND THIRD PHASES OF INTEGRATION OF
THE TEXTILE TRADE WITH THE MULTINATIONAL TRADE
SYSTEM AND WILL PROVIDE LARGER EARNINGS DURING
THESE PERIODS.
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