The General Agreement on Tariffs and Trade (GATT), an institution subscribed to by 121 countries, has successfully completed seven rounds of multilateral trade negotiations since it was set up in 1947.
The first six rounds were devoted to reduction of tariffs while the seventh round (Tokyo round) included non-tariff measures also. The GATT is the principal body negotiating on the basis of few fundamental principles like trade without discrimination, free basis of trade and protection through tariffs if needed.
The Uruguay Round of Multilateral Trade Negotiations (eighth round) was launched at Punta Del Este in 1986. The draft proposals put up by Arthur Dunkel, Director-General of GATT for discussion among the 108 member countries meant to expand the scope of GATT.
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Apart from tariff and non-tariff measures regulating trade in goods, agenda in the Uruguay round included trade in services, Trade Related aspects of Intellectual Property Rights (TRIPS) and Trade Related Investment Measures (TRIMS).
Its aim is to demolish all hurdles to an open world trading system and usher in international economic renaissance because the world trade is an effective instrument to foster faster economic growth by releasing competitive spirit which not only benefits consumers but also helps in global integration.
Background:
Industrialised nations have been putting pressure upon India to liberalise its policies especially with regard to Intellectual Property Rights and Trade Related Investment Measures as a precondition to improve bilateral economic relations.
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Having failed to get the desired results, USA resorted to pressure tactics by naming India under Super 301 Act and Special 301 Act of US Omnibus Trade Laws.
While the Super 301 Act aimed at getting our policies regarding TRIMS liberalised, the Special 301 Act demanded amendment of the Indian Patent Act, 1970, in line with the Paris Convention.
Market Access:
Negotiations have been taking place for reductions of tariffs. Mr. Dunkel has not made any concrete suggestion in this context. The matter has to be resolved through bilateral and multilateral negations. India has offered a reduction by 30 per cent of its basic customs duty on raw materials, intermediates and capital goods with a few exceptions.
Agricultural Trade:
Dunkel Draft Text (DDT) imposes discipline on three areas in agriculture—domestic support which provides assistance to production, export competition and market access relating to measures taken at the border.
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But the text does not prohibit the use of subsidies. All countries have to reduce domestic support if it is in excess of 5 per cent of the total value of production but in case of developing countries, it is for values greater than 10 per cent. Since India’s subsidy support is far lower than the ceiling, the proposal with regard to reduction of export subsidy is not applicable in our case.
Textiles and Clothing:
The textiles and clothing trade is governed by Multi-Fibre Agreement (MFA) also known as International arrangement on Trade in Textiles. The Dunkel proposals aim at integrating trade in textiles and clothing by phasing out Multi-Fibre Arrangement.
Considering the existing quota restriction, its removal may help India to enhance textile export. In fact, this is the only area under the Dunkel proposals which appear to be in favour of India.
GATT Rules:
In this area the need was widely felt to strengthen and preserve the multilateral trading system by reaffirming the principle of non-discrimination and by removing ambiguities and scope for arbitrary action in the administration of rules governing non-tariff measures.
One of the major proposals made by Mr. Dunkel in this context was anti-dumping measures. But countries with a per capita income of less than US $ 1000 per annum have been exempted from obligation to phase out export subsidy in general industrial products.