Indian Economy, 5th edition (79 page)

The TPR offers an opportunity to other WTO members to ask questions and raise concerns on different aspects of policies and practices of the country under review. The Fifth TPR of India was held on 14 and 16 September 2011 in the WTO. Before the meeting, the WTO Secretariat circulated a compilation of India’s written replies to 886 advance questions raised by 26 WTO members.

During the review, most of the members
commended
the resilience of the Indian economy that smoothly withstood the adverse effects of global financial crisis without taking recourse to protectionist measures. Members appreciated India for using its trade policy to promote sustainable development and inclusive growth. Members also noted India’s positive engagement in
Doha Round negotiations.
Some of the members, notably the US, raised concerns in certain areas, namely tariffs and duties, licensing and restrictions, trade defence measures (anti-dumping), government procurement, incentive schemes to promote investments and exports and protect agriculture, tariff protection on agriculture, services and investments. Responses to the issues raised were provided in India’s
Closing Statement
on September 16, 2011 which are as follows:

Openness of India’s Trade Regime

Questions were asked about the openness of India’s trading regime. In response India pointed out that year after year, India’s imports had outpaced exports. In terms of percentage of GDP, the countryfs merchandise trade deficit is one of the highest in the world. India has been autonomously reducing its tariffs over the years. The simple average most favoured nation (MFN) tariff rate declined from 15.1 per cent in 2006-7 to 12 per cent in 2010-11. Both the average agricultural and industrial average tariffs have declined over time. The tariffs on 71 per cent of Indiafs tariff lines are between 5 and 10 per cent.

Gap between Rates on Agri Products

Some members mentioned the large gap between India’s bound and applied rates on agricultural products. India responded that the large gap reflected India’s steady and continued autonomous tariff liberalization. During the four years since the last TPR, the tariffs on some agricultural commodities had to be adjusted in the face of high volatility in food prices. In most cases, tariffs have been brought down and have stayed down. In a few instances, they have been raised again but never above their original levels.

Export Incentives

Questions were asked about export promotion schemes. It was explained that India’s export promotion schemes are based on the concept of duty neutralization and providing a level playing field. These schemes are reviewed regularly.

FDI Policy

To a number of questions on FDI policy, India explained that the continuing thrust, during the period since India’s last TPR in 2007, has been on making the FDI policy more liberal and investment friendly. The FDI guidelines have been significantly rationalized, simplified, and consolidated, with the aim of providing a single policy platform for reference of foreign investors. Several new sectors, such as petroleum and natural gas and civil aviation were either opened up to foreign investment or significantly liberalised during this period. Efforts were also being made to streamline and simplify the business environment and make regulations conducive to business.

IPRs

On questions related to India’s IP policies, India replied that a number of initiatives have been taken to enhance IP protection and enforcement. The changes proposed in the Copyright and Trademark Acts would enhance protection to intellectual property rights (IPRs) in digital technology particularly with regard to the dissemination of protected material over digital networks. These have been supplemented by administrative as well as judicial measures to strengthen the IPR regime. The provisions on IP protection in these laws are further supplemented by broader measures to prevent the import of goods involving copyright piracy and counterfeit trademarks. Another initiative taken by Indian customs is the facility for online registration by the right holders through the web-based Automatic Recordation and Targeting for IPR Protection System.

Government Procurement

On this subject, India explained that the procurement of high tech items and high value tenders, above US$ 50,000 is generally open to international bidders. Major reforms are on the anvil for increasing coverage, improving transparency and efficiency, and better enforcement, which are triggered by domestic concerns relating to enhancing the value for money. An omnibus procurement law applicable to the entire country and to all procuring entities, including public-sector enterprises, is being deliberated upon.

Sanitary & Phyto-sanitary (SPS) and Technical Barriers to Trade (TBT)

In response to question on India’s SPS and TBT measures, India explained that specific trade concerns raised against India have been largely addressed. Regulations adopted in the past have been on the basis of scientific risk analysis.

Export Restrictions

There were some questions on India’s use of export restrictions. India responded that export restrictions have been used on some occasions for purposes of domestic supply management, but these have been purely on a temporary basis. The ban on the export of rice and wheat had to be extended in 2009 due to a dislocation in production and again in 2010 due to the severest drought in the country in the last forty years. However, the export of wheat and non-basmati rice is now completely free. The export of basmati rice is and has always been free. Restrictions on cotton exports were imposed for only a brief period last year. Cotton yarn exports have been made completely free. Similarly, cotton is also freely exportable.

LOOKING BEYOND DOHA

At the Eighth Ministerial Conference (MC8) of the WTO in Geneva, December 15–17 , 2011 three Working Sessions were held in parallel (the NGOs were not allowed to take part in it), directed to
three
topics:

i.
Importance of the Multilateral Trading System and the WTO;

ii.
Trade and Development; and

iii.
The Doha Development Agenda negotiations.

As had been expressly stated in the run-up to the
MC8
both from the WTO, from capitals, and in media reports, the
Doha Round
negotiations generally had come to an impasse.
The impasse was made especially clear from the outcome of the so-called
Easter Package
in April 2011 – which comprised the collected reports of the WTO negotiating bodies in all the different areas involved in the Doha Round negotiations.
Pascal Lamy
, Director General of the WTO, said in a statement March 29, 2011, that the
‘biggest stumbling block’ was what is called ‘NAMA sectorals’
. This is about proposals for major trading countries, including emerging economies, to allow duty-free or lower-than-normal duty on imports in particular sectors within the non-agricultural market access (NAMA), negotiations.

That assessment was also made very clear in the statement by the US Trade Representative at the MC8, ‘
… the current impasse in many ways comes down to one single, vexing quandary: the WTO has not come to terms over core questions of shared responsibilities among its biggest and most successful Members. The world has changed profoundly since the negotiations began a decade ago, most obviously in the rise of the emerging economies. The results of our negotiations thus far do not reflect this change, and yet they must if we are to be successful.’

TRIPS issues had already earlier in 2011 been placed in what was called a ‘slow lane’ in the negotiations. For the ‘Easter package’ in April 2011, the status of the
GI
(Geographic Indication) issues and of the TRIPS/CBD issue was reported by the Director-General, document TN/C/W/61 dated April 21, 2011. On the TRIPS/CBD issue a submission was made in the context of the Easter Package from a number of WTO Members including
Brazil, India
, and
China
in April 2011, requesting a revised version of the TRIPS Agreement calling for
disclosure of origin of genetic resources
and/or associated
Traditional Knowledge
involved in patent applications. Noteworthy in that this submission was not sponsored by the EU and Switzerland, two of the original sponsors of the 2008 ‘mini-ministerial’ proposal for a TRIPS package on GIs and disclosure of origin of genetic resources. Nevertheless, of the decisions taken at the MC8, two are TRIPS-related:

(i)
extending until the next Ministerial Conference, to be held in 2013, the moratorium on what is called “non-violation omplaints” under the TRIPS Agreement; and

(ii)
instructing the TRIPS Council to extend, under TRIPS Article 66.1, the transition period expiring June 30, 2013, for LDCs, for implementing the TRIPS Agreement.

Future Directions

At the MC8 the WTO members acknowledged the concerns on the global economic climate and agreed that:

(i)
There is no credible alternative to the rules based multilateral trading system; and

(ii)
Protectionist trade measures must be avoided.

The Chairman, in his summary report, stressed that the
future work
of the WTO must give priority to the development issues of LDCs, in particular cotton. Further, that the WTO needs to take into account the views of all its members. Despite the uncertainty surrounding the Doha negotiations, the MC8 has sent a clear message that the WTO remains relevant and important to world trade, as illustrated by the accessions of the Russian Federation, Montenegro, Samoa and Vanuatu. In his concluding remarks, Pascal Lamy stressed that despite these worrying economic times,
‘don’t chop off the branch you’re sitting on…’
(a Russian proverb). The multilateral trading system is vital to world economic stability.
Finally
, the Doha negotiation impasse has led to members exploring new approaches to negotiating. Members were urged to have political courage and goodwill in concluding the DOHA round. The world is waiting for the next and the
Ninth Ministerial Coneference
of the WTO, scheduled to take place in
Bali
(December 3–6 , 2013).

Bilateral and Regional
Cooperation

India has always stood for an open, equitable, predictable, non-discriminatory, and rule-based international trading system. Considering that regional and bilateral trade and economic cooperation agreements serve as building blocks towards achieving the multilateral trade liberalisation objective, India is actively engaging in regional and bilateral negotiations with her trading partner countries/blocs to diversify and expand the markets for its exports. Some of the recent developments related to major
Free Trade Agreements (FTAs)
are the following:

(i)
India-Japan Comprehensive Economic Partnership Agreement (CEPA)

(ii)
India-Malaysia Comprehensive Economic Cooperation Agreement (CECA)

(iii)
India-ASEAN Trade in Goods Agreement

(iv)
India-EU Trade and Investment Agreement Negotiations

(v)
India-European Free Trade Association (EFTA)

(vi)
BTIA (Iceland, Norway, Liechtenstein, and Switzerland)

(vii)
India-New Zealand FTA/CECA

(viii)
India-Australia CECA