International economics
1. Bretton woods development:
In the wake of the unprecedented destruction caused to the global economic structure by the Second World War, and the accompanying instabilities and uncertainties that arose in the economies world over, a group of nations met at Bretton-woods for a conference in 1944.
Their principal objective was to prepare a framework for economic cooperation and co-ordination between sovereign nations having the right to pursue independent policies. The Bretton-woods conference, as it has since come to be known as, addressed itself to three broad issues of interest in international economic relations, viz. (i) trade in goods, (ii)Flow of capital for development, and (iii) stability of exchange rates andprovision for assistance to members who get confronted with shorttermimbalance in their balance of payments.
In seeking to find a solutionto the problems arising out of these, the Bretton-woods conferencereached an agreement to set up three multilateral institutions, viz. International Monetary Fund, (b) International Bank for Reconstruction and Development (IBRD), and (c) International Trade Organization (ITO).
The two institutions, IMF and the IBRD(is part of World Bank today) which were set up and started functioning since 1946 came to be identified as Bretton-woods twins.
The agreement relating to the setting up of the ITO was not ratified bythe US and hence the ITO could not be established. Instead, the US, UKand a few other countries, set up in 1947 an interim organization calledGeneral Agreement on Tariffs and Trade (GATT – discussed later in this article).
2. International Monetary Fund:
The International Monetary Fund(IMF) came in to force on the December 27, 1945. The main functions of the IMF as given below:
1. To facilitate international monetary cooperation;
2. To promote exchange rate stability and orderly exchange arrangements;
3. To assist in the establishment of a multilateral system payment and the elimination of foreign exchange restriction ; and
4. To assist member countries by temporarily providing financial resources to correct maladjustment of their balance of payment (BoP).
The Board of Governors of the IMF consists of one Governor and one Alternate Governor from each member country. For India, Finance Minister is the Ex-officio Governor While the RBI governor is the Alternate Governor on the Board.
The day-to-day management of the IMF is carried out by the Managing Director who is Chairman (currently, Ms. Christine Lagarde) of the Board of Executive Directors. Board of Executive Directors consists of 24 directors appointed / elected by member countries/group of countries – is the executive body of the IMF. India is represented at the IMF by an Executive Director (currently ArvindVirmani), who also represent three other countries in India’s constituency – Bangladesh, Sri Lanka, and Bhutan.
2. World Bank:
The World Bank group today consist of five closely associated institutions propitiating the role of development in member nations in in different areas. A brief account as follows:
1. IBRD
The International Bank for Reconstruction and Development is the oldest of the the World Bank institutions which started functioning (1945) in the area of reconstruction of the war-ravaged regions (WW2) and later for the development of the middle-income and creditworthy poorer economies of the world. Human development was the main focus of the developmental lending with a very low interest rate (1.55 % per annum) – the areas of focus being agriculture, irrigation, urban development, healthcare etc. It commenced lending for India in 1949.
2. IDA
The International Development Agency which is also known as the soft window of the WB was set up in 1960 with the basic aim of developing infrastructural support among the member nations, long term lending for the development of economic services.
3. IFC
The International Finance Corporationwas set up in 1956 which is also known as private arm of WB. It lends money to the private sector companies of its member nations. The interest rate charged is commercial but comparatively low.
4. MIGA
The Multilateral Investment Guarantee Agency, set up in1988 encourages foreign investment in developing economies by offering insurance (guarantee) to foreign private investor against loss caused by non-commercial (i.e. political) risk , such as currency transfer, expropriation, war and civil disturbance.
5. ICID
The International Centre for Settlement of Investment Dispute, set up in 1966 is an investment settlement body whose decision is binding on the parties.
3. General Agreement on Tariff and Trade(GATT):
23 nations did an agreement at Geneva on October 23, 1947 for decrease tax on import trade.
This agreement is known as GATT.
This agreement came in force on January 1, 1948.
GATT washeadquartered at Geneva.
But GATT was temporary arragment.
Objective of GATT:
1. Expansion of international trade;
2. Increase of world production by ensuring full employment in the participating nations;
3. Development and full utilisation of world resources; and
4. Raising standard of living of the world community as a whole.
4. WTO:
The WTO was born out of negotiations, and everything the WTO does is the result of negotiations. The bulk of the WTO’s current work comes from the 1986–94 negotiations called the Uruguay Round and earlier negotiations under the General Agreement on Tariffs and Trade (GATT).
It established on January 1, 1995. It replaced GATT and it is permanent organization. But is not specialized organization UN.
Headquarter : Geneva
Objective of WTO:
1. to set and enforce rules for international trade,
2. to provide a forum for negotiating and monitoring further trade liberalization,
3. to resolve trade disputes,
4. to increase the transparency of decision-making processes,
5. to cooperate with other major international economic institutions involved in global economic management, and
6. to help developing countries benefit fully from the global trading system.
Rounds of GATT negotiations:
The meeting of GATT conducted between 1947 to 1993 is called Rounds. The 8 rounds completed under the GATT. First six rounds were about to reduce the tariff. 7th round was about tariff and other barriers and 8th round was different from earlier rounds. This was started at Punta del Este city of Uruguay. Everything was discussed during this round i.e. from item thing to aircraft, bank to telecommunication, medicines to textile. But, member nations were not agreed- therefore no agreement. Therefore the Director General of GATT then Arthur Dunkel made a broad proposal. This proposal is called Dunkel Proposal. This proposal transformed into final agreement on December 15, 1993. 124 countries including India signed this proposal. GATT came to end on December 12, 1995.
Function of WTO:
• Administering WTO trade agreements
• Forum for trade negotiations
• Handling trade disputes
• Monitoring national trade policies
• Technical assistance and training for developing countries
• Cooperation with other international organizations.
Structure of WTO:
The WTO secretariat is headed by a Director General with a three-tier system of decision making. The decisions are made at three levels: (i) Ministerial Conference, (ii) General Council and other councils, and(iii) Heads of Delegations.
Ministerial conferences’ of WTO:The ministerial conference of WTO is the highest decision making body of WTO. It meets once in two years. The Finance minister of every member nation participates in it.
The General Council of the WTO, togetherwith the other councils for Trade in Goods, Trade in Services andIntellectual Property, performs the WTO functions. These councils areresponsible for overseeing the implementation of the WTO agreementsin their respective areas of specialization.
The third-tier of decision-making, at the Heads of Delegation level, is most effective in overcoming inherent impediments for reachingconsensus on a trade-related issue.
The current Director-General of the WTO is Roberto Azevêdo.
Ministerial Conferences of WTO:
1st ministerial conferences at Singapore: 1996 – December 9 to 13. This conference created controversy between developed and developing countries. There were two controversial issue in this conference: (1) Social clause. (2) Singapore issue.
(1) Social clause: according to USA there is more child labour in developing countries (including India). There might be tariff on import in USA from developing countries, as long as they solve problem child labour. For this USA referred article of GATT. Developing countries opposed vigorously for this.
(2) Singapore issue: this conference discussed four issue , this known as Singapore issue. These are Investment, Competition, Collection by government, and straitening the trade
2nd conference at Geneva: 1998 -18 to 20 May. It discussed Uruguay round and Singapore issue.
3rd conference at Seattle: 1999 – November 30 to December 3. There was much protest during this conference. The view of protesters was that ‘WTO will effect badly on human development and environment.’
4thconference at Doha: 2001 – November 9 to 14. This round has been temporarily named as the Doha Development Round. This round beganin January 2002 and was expected to end by January 1, 2007. It has,however, not concluded till today.The Doha round of trade negotiations mandated negotiations onagriculture, industrial products, services, intellectual property, WTO rules,trade and environment. The negotiations at WTO reached a dead-end inJuly 2006 and were temporarily suspended. Since then, some attemptshave been made to revive them, but these have not been successful.
5th conference at Cancun: 2003 – September 10 to 14. There was much protest against Globalization in this conference. The controversy created between developed and developing countries about Agreement on Agriculture (discussed late in this article) and Singapore issue. Unity between developing countries was an important incidence inthis conference. Developing countries created a group under the leadership of Brazil (called G-20) for put points of ‘Agreement on Agriculture’ on table. Another group also created under the leadership of Malaysia for cross out Singapore issue.
6th conferences at Hon Kong: 2005 – December 13 to 18. Decision taken for complete Doha round by 2006. Decision taken to end subsidy on agricultural exportation of developed countries. Decision taken to end the subsidy on cotton exportation of developed countries.
7th conference at Geneva: 2009 – November 30 to December 2. The result of Doha did not come.
8th conference at Geneva: 2011 – December 15 to 17. Decision take to give a membership for Russia, Samoa, Montenegro and Vanuatu. Three issue discussed – trade and development, importance of multiparty trade, and Doha Development Agenda.
9th conference at Bali: 2013 – December 3 to 6.
Important points:
Agreement on anti-dumping (ADA):
The objective of this agreement is to provide the right to the contractingparties to applyanti-dumping measures. These are measures againstimports of a product if such imports cause injury to a domestic industryin the territory of the contracting party.The ADA allows member-nations to apply anti-dumping measures on aunilateral basis after elaborate investigations. The anti-dumpinginvestigation determines whether:
an imported product has been dumped;
it has caused material injury to the domestic industry of a like product;
there is a causal link between dumped imports and the injury.
If the investigations establish these three factors, the government is allowed to levy anti-dumping duty on imports. This duty could be levied on imports either from a specific country or a group of countries.
Agreement on Agriculture (AOA):
Agreement on Agriculture (AOA):
The approach adopted here is to encourage gradual reduction of trade distorting subsidies. The AOA specifically deals with: (i) providing market access, (ii) containing of export subsidies, and (iii) regulatingdomestic support.
1).Market Access:
The AOA requires tariffication of all NTBs, and a reduction of those tariffs by an average of 36 percent for developed countries and 24 percent for UDCs. Developed countries were given 6 years to bring about these reductions, while developing countriesare given 10 years. The time counting has begun from 1995.
2). Export Subsidies:
Export subsidies have to be reduced by 36 percent in budgetary terms and 21 percent in volume over a six-year period. The developing countries have been given lower reduction targets of 24 and 14 percent respectively over a longer period of 10 years.
3). Domestic support:
A distinction has been made between subsidies that did not distort trade and those that do. Only the trade distortingsubsidies have to be reduced, if they are above the permissible level.The following have been exempted from this provision.
Green Box: Subsidies with no, or minimally trade distorting, effecthave been put in this box. These are not subject to any reductioncommitments. It includes all government service programmes.
Blue box: It contains those subsidies whose continuation is subject to a limitation on production.
Whit box: It includes such subsidy practices in developingcountries like investment subsidies, agricultural input subsidiesavailable to low-income or resource-poor farmers and measuresto encourage diversification from growing illicit narcotic crops.
5. South Asian Association Regional Cooperation (SAARC):The SAARC, is an economic and political organization of eight countries in southern Asia. In terms of population, its sphere of influence is thelargest of any regional organization: almost 1.5 billion combinedpopulation of its member states. It was established on December 8,1985 by India, Pakistan, Bangladesh, Sri Lanka, Nepal, Maldives andBhutan. In April 2007, Afghanistan became its eighth member.
It is headquartered at Kathmandu (Nepal).
Objective of SAARC:
Promote the welfare of the peoples of South Asia and improve their quality of life;
Accelerate economic growth, social progress and cultural developmentin the region by providing all individuals the opportunity to live indignity and realize their full potential;
Promote and strengthen collective self-reliance among the countriesof South Asia;
Contribute to mutual trust, understanding and appreciation of oneanother’s problems;
Promote active collaboration and mutual assistance in the economic, social, cultural, technical and scientific fields;
Strengthen co-operation with other developing countries;
strengthen co-operation among themselves in international forumson matters of common interest; and
Co-operate with international and regional organizations with similaraims and purposes.
SAARC Preferential Trade Agreement (SAPTA):
The 6th summit of SAARC finished at Colombo in 1991. Member nations established one action group for doing trade agreement between themselves. According to this group, SAARC countries did an agreement for specific reduction of tariff on December 7, 1993, this agreement is known as SAPTA. This agreement signed in Delhi during 8th summit of SAARC. It came in to force on December 7, 1995. SAARC countries completed 4 round under this agreement.
It (SAPTA) concretizes the first step towards creation of a trade bloc in the South Asian Region.Under the SAPTA mechanism, the SAARC countries, to begin with, haveidentified 226 items for exchange on tariff concessions ranging from10 percent to 100 percent. Member nation may change tariff step by step but, it caninclude all items gradually.India has agreed to extend tariff concessions on 106 items.
SAARC Free Trade Agreement (SAFTA):
This historic agreement signed at Islamabad during 12th SAARC summit (January 2 to 4, 2004)by member countries. The decision was taken to create free trade area in South Asia according to this agreement. It came into force on January 1, 2006. And SAPTA is replaced by SAFTA.
Difference between SAPTA and SAFTA: Member countries accepted to give some concession to each other under SAPTA. While, they decided to destroy all barriers of trade and tariff under SAFTA. There is expectation of common market and common currency in South Asia under SAFTA in future.
Features of SAFTA:
Member nations agreed to reduce tariff to 0-5% by 2016.
Any member can leave this agreement at any time.
List of sensitive items about trade will be available.
If tariff on some item will not reduce, such items will be reviewed.
Comparatively developed countries (India, Pakistan, and Sri Lanka) will give compensation to less developed countries for reduction of revenue.
6. Asian Development Bank:
The Asian Development Bank (ADB), with an international partnership of 63 countries, was established in 1966 and has headquartered at Manila (Philippines). Bank started its work on January 1, 1967. India is founding member of ADB. The chairman of ADB is always from Japan.
Total members: 67 countries (48 are from Asia-Pacific region and 19 are non-Asian)
The principal Function of ADB:
to make loans and equity investment for the economic and social advancement of its developing member countries:
to provide technical assistance for the preparation and execution of development project and programmes and advisory services:
to respond to the request for assistance in coordinating development policies and plans in developing member countries;
7. United Nations Conference on Trade and Development (UNCTAD):
Owing to the persistent insistence of the developing countries for setting up the ITO, which move was continually opposed by the US, the United Nations (UN) appointed a committee in 1963 to resolve the issue. The committee recommended the alternative of setting up a United Nations Conference on Trade and Development (UNCTAD). The UNCTAD was thus set up in 1964. It is specialized and permanent institute of UN for regulate investment and development. Its membership is completely voluntarily. It is headquartered at Geneva.
Its principal functions outlined as follows:
promote international trade with a view to accelerate economic development;
formulate principles and policies on international trade and relatedproblems of economic development;
assist developing countries in the negotiations in the international fora and facilitate market access for the goods of developing countries andencourage technology transfer to them;
assist developing countries to improve their terms of trade vis-à-visthe developed countries;
negotiate multilateral trade agreements; and
make proposals for putting its principles and policies into effect.
9. OECD
The Organization for Economic Co-operation and Development (OECD) celebrated its 50th anniversary, but its roots go back to the rubble of Europe after World War II. Determined to avoid the mistakes of their predecessors in the wake of World War I, European leaders realized that the best way to ensure lasting peace was to encourage co-operation and reconstruction, rather than punish the defeated.
The Organization for European Economic Cooperation (OEEC) was established in 1948 to run the US-financed Marshall Plan (George Catlett Marshall was finance minister of USA then) for reconstruction of a continent ravaged by war. By making individual governments recognize the interdependence of their economies, it paved the way for a new era of cooperation that was to change the face of Europe. Encouraged by its success and the prospect of carrying its work forward on a global stage, Canada and the US joined OEEC members in signing the new OECD Convention on 14 December 1960. The Organization for Economic Co-operation and Development (OECD) was officially born on 30 September 1961, when the Convention entered into force.
Other countries joined in, starting with Japan in 1964. Today, 34 OECD member countries worldwide regularly turn to one another to identify problems, discuss and analyze them, and promote policies to solve them.
The mission of the Organization for Economic Co-operation and Development (OECD) is to promote policies that will improve the economic and social well-being of people around the world.
Main working Areas of OECD:
First and foremost, governments need to restore confidence in markets and the institutions and companies that make them function. That will require improved regulation and more effective governance at all levels of political and business life.
Secondly, governments must re-establish healthy public finances as a basis for future sustainable economic growth.
In parallel, we are looking for ways to foster and support new sources of growth through innovation, environmentally friendly ‘green growth’ strategies and the development of emerging economies.
Finally, to underpin innovation and growth, we need to ensure that people of all ages can develop the skills to work productively and satisfyingly in the jobs of tomorrow.
Headquarters – Paris.
By -Dashrath Hembade
References:
1. http://www.oecd.org
2. http://unctad.org
3. http://www.worldbank.org/
4. http://www.wto.org/
5. www.saarc-sec.org/
6. http://www.imf.org/external/index.htm
7. IGNOU-Indian Economic Development_Issues and Perspectives –unit 22 and 23.
8. Indian Economy by Ramesh Singh.
1. Bretton woods development:
In the wake of the unprecedented destruction caused to the global economic structure by the Second World War, and the accompanying instabilities and uncertainties that arose in the economies world over, a group of nations met at Bretton-woods for a conference in 1944.
Their principal objective was to prepare a framework for economic cooperation and co-ordination between sovereign nations having the right to pursue independent policies. The Bretton-woods conference, as it has since come to be known as, addressed itself to three broad issues of interest in international economic relations, viz. (i) trade in goods, (ii)Flow of capital for development, and (iii) stability of exchange rates andprovision for assistance to members who get confronted with shorttermimbalance in their balance of payments.
In seeking to find a solutionto the problems arising out of these, the Bretton-woods conferencereached an agreement to set up three multilateral institutions, viz. International Monetary Fund, (b) International Bank for Reconstruction and Development (IBRD), and (c) International Trade Organization (ITO).
The two institutions, IMF and the IBRD(is part of World Bank today) which were set up and started functioning since 1946 came to be identified as Bretton-woods twins.
The agreement relating to the setting up of the ITO was not ratified bythe US and hence the ITO could not be established. Instead, the US, UKand a few other countries, set up in 1947 an interim organization calledGeneral Agreement on Tariffs and Trade (GATT – discussed later in this article).
2. International Monetary Fund:
The International Monetary Fund(IMF) came in to force on the December 27, 1945. The main functions of the IMF as given below:
1. To facilitate international monetary cooperation;
2. To promote exchange rate stability and orderly exchange arrangements;
3. To assist in the establishment of a multilateral system payment and the elimination of foreign exchange restriction ; and
4. To assist member countries by temporarily providing financial resources to correct maladjustment of their balance of payment (BoP).
The Board of Governors of the IMF consists of one Governor and one Alternate Governor from each member country. For India, Finance Minister is the Ex-officio Governor While the RBI governor is the Alternate Governor on the Board.
The day-to-day management of the IMF is carried out by the Managing Director who is Chairman (currently, Ms. Christine Lagarde) of the Board of Executive Directors. Board of Executive Directors consists of 24 directors appointed / elected by member countries/group of countries – is the executive body of the IMF. India is represented at the IMF by an Executive Director (currently ArvindVirmani), who also represent three other countries in India’s constituency – Bangladesh, Sri Lanka, and Bhutan.
2. World Bank:
The World Bank group today consist of five closely associated institutions propitiating the role of development in member nations in in different areas. A brief account as follows:
1. IBRD
The International Bank for Reconstruction and Development is the oldest of the the World Bank institutions which started functioning (1945) in the area of reconstruction of the war-ravaged regions (WW2) and later for the development of the middle-income and creditworthy poorer economies of the world. Human development was the main focus of the developmental lending with a very low interest rate (1.55 % per annum) – the areas of focus being agriculture, irrigation, urban development, healthcare etc. It commenced lending for India in 1949.
2. IDA
The International Development Agency which is also known as the soft window of the WB was set up in 1960 with the basic aim of developing infrastructural support among the member nations, long term lending for the development of economic services.
3. IFC
The International Finance Corporationwas set up in 1956 which is also known as private arm of WB. It lends money to the private sector companies of its member nations. The interest rate charged is commercial but comparatively low.
4. MIGA
The Multilateral Investment Guarantee Agency, set up in1988 encourages foreign investment in developing economies by offering insurance (guarantee) to foreign private investor against loss caused by non-commercial (i.e. political) risk , such as currency transfer, expropriation, war and civil disturbance.
5. ICID
The International Centre for Settlement of Investment Dispute, set up in 1966 is an investment settlement body whose decision is binding on the parties.
3. General Agreement on Tariff and Trade(GATT):
23 nations did an agreement at Geneva on October 23, 1947 for decrease tax on import trade.
This agreement is known as GATT.
This agreement came in force on January 1, 1948.
GATT washeadquartered at Geneva.
But GATT was temporary arragment.
Objective of GATT:
1. Expansion of international trade;
2. Increase of world production by ensuring full employment in the participating nations;
3. Development and full utilisation of world resources; and
4. Raising standard of living of the world community as a whole.
4. WTO:
The WTO was born out of negotiations, and everything the WTO does is the result of negotiations. The bulk of the WTO’s current work comes from the 1986–94 negotiations called the Uruguay Round and earlier negotiations under the General Agreement on Tariffs and Trade (GATT).
It established on January 1, 1995. It replaced GATT and it is permanent organization. But is not specialized organization UN.
Headquarter : Geneva
Objective of WTO:
1. to set and enforce rules for international trade,
2. to provide a forum for negotiating and monitoring further trade liberalization,
3. to resolve trade disputes,
4. to increase the transparency of decision-making processes,
5. to cooperate with other major international economic institutions involved in global economic management, and
6. to help developing countries benefit fully from the global trading system.
Rounds of GATT negotiations:
The meeting of GATT conducted between 1947 to 1993 is called Rounds. The 8 rounds completed under the GATT. First six rounds were about to reduce the tariff. 7th round was about tariff and other barriers and 8th round was different from earlier rounds. This was started at Punta del Este city of Uruguay. Everything was discussed during this round i.e. from item thing to aircraft, bank to telecommunication, medicines to textile. But, member nations were not agreed- therefore no agreement. Therefore the Director General of GATT then Arthur Dunkel made a broad proposal. This proposal is called Dunkel Proposal. This proposal transformed into final agreement on December 15, 1993. 124 countries including India signed this proposal. GATT came to end on December 12, 1995.
Function of WTO:
• Administering WTO trade agreements
• Forum for trade negotiations
• Handling trade disputes
• Monitoring national trade policies
• Technical assistance and training for developing countries
• Cooperation with other international organizations.
Structure of WTO:
The WTO secretariat is headed by a Director General with a three-tier system of decision making. The decisions are made at three levels: (i) Ministerial Conference, (ii) General Council and other councils, and(iii) Heads of Delegations.
Ministerial conferences’ of WTO:The ministerial conference of WTO is the highest decision making body of WTO. It meets once in two years. The Finance minister of every member nation participates in it.
The General Council of the WTO, togetherwith the other councils for Trade in Goods, Trade in Services andIntellectual Property, performs the WTO functions. These councils areresponsible for overseeing the implementation of the WTO agreementsin their respective areas of specialization.
The third-tier of decision-making, at the Heads of Delegation level, is most effective in overcoming inherent impediments for reachingconsensus on a trade-related issue.
The current Director-General of the WTO is Roberto Azevêdo.
Ministerial Conferences of WTO:
1st ministerial conferences at Singapore: 1996 – December 9 to 13. This conference created controversy between developed and developing countries. There were two controversial issue in this conference: (1) Social clause. (2) Singapore issue.
(1) Social clause: according to USA there is more child labour in developing countries (including India). There might be tariff on import in USA from developing countries, as long as they solve problem child labour. For this USA referred article of GATT. Developing countries opposed vigorously for this.
(2) Singapore issue: this conference discussed four issue , this known as Singapore issue. These are Investment, Competition, Collection by government, and straitening the trade
2nd conference at Geneva: 1998 -18 to 20 May. It discussed Uruguay round and Singapore issue.
3rd conference at Seattle: 1999 – November 30 to December 3. There was much protest during this conference. The view of protesters was that ‘WTO will effect badly on human development and environment.’
4thconference at Doha: 2001 – November 9 to 14. This round has been temporarily named as the Doha Development Round. This round beganin January 2002 and was expected to end by January 1, 2007. It has,however, not concluded till today.The Doha round of trade negotiations mandated negotiations onagriculture, industrial products, services, intellectual property, WTO rules,trade and environment. The negotiations at WTO reached a dead-end inJuly 2006 and were temporarily suspended. Since then, some attemptshave been made to revive them, but these have not been successful.
5th conference at Cancun: 2003 – September 10 to 14. There was much protest against Globalization in this conference. The controversy created between developed and developing countries about Agreement on Agriculture (discussed late in this article) and Singapore issue. Unity between developing countries was an important incidence inthis conference. Developing countries created a group under the leadership of Brazil (called G-20) for put points of ‘Agreement on Agriculture’ on table. Another group also created under the leadership of Malaysia for cross out Singapore issue.
6th conferences at Hon Kong: 2005 – December 13 to 18. Decision taken for complete Doha round by 2006. Decision taken to end subsidy on agricultural exportation of developed countries. Decision taken to end the subsidy on cotton exportation of developed countries.
7th conference at Geneva: 2009 – November 30 to December 2. The result of Doha did not come.
8th conference at Geneva: 2011 – December 15 to 17. Decision take to give a membership for Russia, Samoa, Montenegro and Vanuatu. Three issue discussed – trade and development, importance of multiparty trade, and Doha Development Agenda.
9th conference at Bali: 2013 – December 3 to 6.
Important points:
Agreement on anti-dumping (ADA):
The objective of this agreement is to provide the right to the contractingparties to applyanti-dumping measures. These are measures againstimports of a product if such imports cause injury to a domestic industryin the territory of the contracting party.The ADA allows member-nations to apply anti-dumping measures on aunilateral basis after elaborate investigations. The anti-dumpinginvestigation determines whether:
an imported product has been dumped;
it has caused material injury to the domestic industry of a like product;
there is a causal link between dumped imports and the injury.
If the investigations establish these three factors, the government is allowed to levy anti-dumping duty on imports. This duty could be levied on imports either from a specific country or a group of countries.
Agreement on Agriculture (AOA):
Agreement on Agriculture (AOA):
The approach adopted here is to encourage gradual reduction of trade distorting subsidies. The AOA specifically deals with: (i) providing market access, (ii) containing of export subsidies, and (iii) regulatingdomestic support.
1).Market Access:
The AOA requires tariffication of all NTBs, and a reduction of those tariffs by an average of 36 percent for developed countries and 24 percent for UDCs. Developed countries were given 6 years to bring about these reductions, while developing countriesare given 10 years. The time counting has begun from 1995.
2). Export Subsidies:
Export subsidies have to be reduced by 36 percent in budgetary terms and 21 percent in volume over a six-year period. The developing countries have been given lower reduction targets of 24 and 14 percent respectively over a longer period of 10 years.
3). Domestic support:
A distinction has been made between subsidies that did not distort trade and those that do. Only the trade distortingsubsidies have to be reduced, if they are above the permissible level.The following have been exempted from this provision.
Green Box: Subsidies with no, or minimally trade distorting, effecthave been put in this box. These are not subject to any reductioncommitments. It includes all government service programmes.
Blue box: It contains those subsidies whose continuation is subject to a limitation on production.
Whit box: It includes such subsidy practices in developingcountries like investment subsidies, agricultural input subsidiesavailable to low-income or resource-poor farmers and measuresto encourage diversification from growing illicit narcotic crops.
5. South Asian Association Regional Cooperation (SAARC):The SAARC, is an economic and political organization of eight countries in southern Asia. In terms of population, its sphere of influence is thelargest of any regional organization: almost 1.5 billion combinedpopulation of its member states. It was established on December 8,1985 by India, Pakistan, Bangladesh, Sri Lanka, Nepal, Maldives andBhutan. In April 2007, Afghanistan became its eighth member.
It is headquartered at Kathmandu (Nepal).
Objective of SAARC:
Promote the welfare of the peoples of South Asia and improve their quality of life;
Accelerate economic growth, social progress and cultural developmentin the region by providing all individuals the opportunity to live indignity and realize their full potential;
Promote and strengthen collective self-reliance among the countriesof South Asia;
Contribute to mutual trust, understanding and appreciation of oneanother’s problems;
Promote active collaboration and mutual assistance in the economic, social, cultural, technical and scientific fields;
Strengthen co-operation with other developing countries;
strengthen co-operation among themselves in international forumson matters of common interest; and
Co-operate with international and regional organizations with similaraims and purposes.
SAARC Preferential Trade Agreement (SAPTA):
The 6th summit of SAARC finished at Colombo in 1991. Member nations established one action group for doing trade agreement between themselves. According to this group, SAARC countries did an agreement for specific reduction of tariff on December 7, 1993, this agreement is known as SAPTA. This agreement signed in Delhi during 8th summit of SAARC. It came in to force on December 7, 1995. SAARC countries completed 4 round under this agreement.
It (SAPTA) concretizes the first step towards creation of a trade bloc in the South Asian Region.Under the SAPTA mechanism, the SAARC countries, to begin with, haveidentified 226 items for exchange on tariff concessions ranging from10 percent to 100 percent. Member nation may change tariff step by step but, it caninclude all items gradually.India has agreed to extend tariff concessions on 106 items.
SAARC Free Trade Agreement (SAFTA):
This historic agreement signed at Islamabad during 12th SAARC summit (January 2 to 4, 2004)by member countries. The decision was taken to create free trade area in South Asia according to this agreement. It came into force on January 1, 2006. And SAPTA is replaced by SAFTA.
Difference between SAPTA and SAFTA: Member countries accepted to give some concession to each other under SAPTA. While, they decided to destroy all barriers of trade and tariff under SAFTA. There is expectation of common market and common currency in South Asia under SAFTA in future.
Features of SAFTA:
Member nations agreed to reduce tariff to 0-5% by 2016.
Any member can leave this agreement at any time.
List of sensitive items about trade will be available.
If tariff on some item will not reduce, such items will be reviewed.
Comparatively developed countries (India, Pakistan, and Sri Lanka) will give compensation to less developed countries for reduction of revenue.
6. Asian Development Bank:
The Asian Development Bank (ADB), with an international partnership of 63 countries, was established in 1966 and has headquartered at Manila (Philippines). Bank started its work on January 1, 1967. India is founding member of ADB. The chairman of ADB is always from Japan.
Total members: 67 countries (48 are from Asia-Pacific region and 19 are non-Asian)
The principal Function of ADB:
to make loans and equity investment for the economic and social advancement of its developing member countries:
to provide technical assistance for the preparation and execution of development project and programmes and advisory services:
to respond to the request for assistance in coordinating development policies and plans in developing member countries;
7. United Nations Conference on Trade and Development (UNCTAD):
Owing to the persistent insistence of the developing countries for setting up the ITO, which move was continually opposed by the US, the United Nations (UN) appointed a committee in 1963 to resolve the issue. The committee recommended the alternative of setting up a United Nations Conference on Trade and Development (UNCTAD). The UNCTAD was thus set up in 1964. It is specialized and permanent institute of UN for regulate investment and development. Its membership is completely voluntarily. It is headquartered at Geneva.
Its principal functions outlined as follows:
promote international trade with a view to accelerate economic development;
formulate principles and policies on international trade and relatedproblems of economic development;
assist developing countries in the negotiations in the international fora and facilitate market access for the goods of developing countries andencourage technology transfer to them;
assist developing countries to improve their terms of trade vis-à-visthe developed countries;
negotiate multilateral trade agreements; and
make proposals for putting its principles and policies into effect.
9. OECD
The Organization for Economic Co-operation and Development (OECD) celebrated its 50th anniversary, but its roots go back to the rubble of Europe after World War II. Determined to avoid the mistakes of their predecessors in the wake of World War I, European leaders realized that the best way to ensure lasting peace was to encourage co-operation and reconstruction, rather than punish the defeated.
The Organization for European Economic Cooperation (OEEC) was established in 1948 to run the US-financed Marshall Plan (George Catlett Marshall was finance minister of USA then) for reconstruction of a continent ravaged by war. By making individual governments recognize the interdependence of their economies, it paved the way for a new era of cooperation that was to change the face of Europe. Encouraged by its success and the prospect of carrying its work forward on a global stage, Canada and the US joined OEEC members in signing the new OECD Convention on 14 December 1960. The Organization for Economic Co-operation and Development (OECD) was officially born on 30 September 1961, when the Convention entered into force.
Other countries joined in, starting with Japan in 1964. Today, 34 OECD member countries worldwide regularly turn to one another to identify problems, discuss and analyze them, and promote policies to solve them.
The mission of the Organization for Economic Co-operation and Development (OECD) is to promote policies that will improve the economic and social well-being of people around the world.
Main working Areas of OECD:
First and foremost, governments need to restore confidence in markets and the institutions and companies that make them function. That will require improved regulation and more effective governance at all levels of political and business life.
Secondly, governments must re-establish healthy public finances as a basis for future sustainable economic growth.
In parallel, we are looking for ways to foster and support new sources of growth through innovation, environmentally friendly ‘green growth’ strategies and the development of emerging economies.
Finally, to underpin innovation and growth, we need to ensure that people of all ages can develop the skills to work productively and satisfyingly in the jobs of tomorrow.
Headquarters – Paris.
By -Dashrath Hembade
References:
1. http://www.oecd.org
2. http://unctad.org
3. http://www.worldbank.org/
4. http://www.wto.org/
5. www.saarc-sec.org/
6. http://www.imf.org/external/index.htm
7. IGNOU-Indian Economic Development_Issues and Perspectives –unit 22 and 23.
8. Indian Economy by Ramesh Singh.
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