World Trade Organization (WTO) is today the most powerful organization in the world of commerce and business.
It has brought most countries of the world on a common platform for their economic prosperity through mutual co-operation and certain commitments to ground rules of conducting trade.
India is a member of WTO and is bound to follow its rules. However, many people and nationalist organizations in the country are opposed to WTO regime, which they denounce as sell out of the country’s interests.
ROLE OF GLOBAL ORGANIZATIONS IN WORLD TRADE
There are many international Organizations like World Trade Organization (WTO), International Monetary Fund (IMF/ World Bank, United Nations Conference on Trade and Development (UNCTAD),
Asian Development Bank (ADB), Economic and Social Commission for Asia and the Pacific (ESCAP), United Nations Industrial Development Organization (UNIDO), Food and Agriculture Organization (FAO),
Organization of the Petroleum Exporting Countries (OPEC), Organization for Economic Cooperation and Development (OECD), International Chamber of Commerce (ICC), etc., which are directly or indirectly involved in the promotion of world trade.
Besides these international organizations, there are also a large number of regional economic groups, which are part of efforts for the advancement of world trade.
Important ones among these are the European Union (EU), North America Free Trade Area (NAFTA), Association of South-East Asian Nations (ASEAN), South Asian Association of Regional Cooperation (SAARC), etc.
Among all these organisations, World Trade Organization is the only international organization dealing with the rules and regulations of trade between nations. It came into existence in 1995.
One of the youngest of the international organizations, the WTO is the successor to the General Agreement on Tariffs and Trade (GATT) set up after the Second World-War.
GATT and the WTO have helped to create strong and prosperous trading systems contributing to extraordinary growth in world trade.
WTO’S main function is to ensure that trade flows smoothly, freely, fairly and predictably. This is achieved by
(V) Assisting developing countries in trade policy issues, through technical assistance and training programmes
(vi) Co-operating with other international organizations. Today, WTO has more than 140 members, accounting for over 90 percent of the world trade. Many other nations are negotiating for its membership.
STRATEGY FOR INTEGRATING INDIA WITH WORLD TRADE
India adopted an all-inclusive programme of macro-economic stabilization and structural adjustment in June, 1991.
The objective was to remove controls on industry, external trade and foreign investments and allow a free atmosphere for growth trade.
However, due to various problems and opposition faced within the country, these reforms could not be immediate 31 implemented to their logical end in different spheres of economic activity.
At best it is still a half-hearted effort. The result is India is not yet able to reach desired goals in its external trade and foreign direct investment.
A sustained rapid growth in exports is the most critical need if the country wants to ensure lasting external viability, Vigorous efforts are, therefore, necessary to achieve a hasty expansion of exports, especially when one or other difficult international trading environment is brought about by succeeding economic and financial crisis like those in East Asia or in post-Iraq war Middle East.
There is also the apprehension that East Asian countries may reorient their economic activities away from capital-intensive industries and move towards labor-intensive ones.
Such a move is bound to intensify competition in markets that are crucial for Indian exports.
It is therefore, imperative that as early as possible various transaction costs incurred by our exporters are cut to a minimum.
Transaction costs originating from enforcement of various rules and regulations for obtaining licenses, customs clearances, refund of duties, infrastructure constraints, etc., are some such unnecessary costs.
These affect export performance adversely. Although export transactions are being simplified and rule and regulations are being cut down, the pace is very slow.
Petroleum and allied products have a comparatively large share of India’s total import bill. Global prices of these goods keep on fluctuating, reflecting general world reversionary conditions.
There is much uncertainty about the future movements of international prices of petroleum. Under such uncertain trends, there are always significant downside risks to country’s balance of payments.
Therefore, efficient use of these products is to be encouraged on war-footing while removing all distorting policies in remaining energy sectors.
Tourism was a major source of buoyant invisible earnings in the past. However, in last few years, growth of tour arrivals and earnings has not been satisfactory.
This is in spite intense efforts by the Centre and State Governments to accelerate expansion of tourism in India.
Priority needs to be given to banishing irritants like delayed air and rail travels, unclean hotels, lack of quick and cheap international communication.
The entire tourist industry needs a complete overhaul if we want to attract foreign tourists and increase our dollar earnings. Airport systems, entry and exit procedures also need to be greatly improved.
There is certainly great potential for higher direct foreign investment from major companies of the world. What is needed is our having a studied positive stance towards FDI.
For this, government must give the highest priority to get rid of red tape at every stage of FDI process. The red tape continues to be cited as the main culprit and deterrent for many potential foreign investors.
Also, all policy impediments in the infrastructure sectors, which can absorb large FDI, need to be put to an end on a priority basis.
To succeed in international arena and to become a foremost market player at global level, India must bring to perfection every type of basis infrastructure to match them to the world standards.
The financial crisis in East Asia and post Iraq-war Middle East has brought into focus the challenges and risks involved in getting involved into free global capital movements.
Such crises clearly show that capital account liberalization has to be carefully calibrated to minimize the risks of disruption against increased uncertainty.
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