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SBI PO Exam 2017: Vocab Quiz: 'Time for India to outline offensive interest at the WTO'

Mar 31, 2017 16:22 IST

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Article: Trade Facilitation Agreement: Time for India to outline offensive interest at the WTO

On March 2, the Trade Facilitation Agreement (TFA) of the World Trade Organisation (WTO) came into force. The TFA’s importance stems from the fact that it is the first multilateral agreement that has been agreed to in the WTO after the Doha Round of 2001. And one that evolved with a rare consensus. While individual countries will have to get the TFA ratified by their respective legislatures—and this could take a few years—the agreement will come into force soon.

Contrast this with the discussion around public stock-holding of foodgrains, where only the ‘peace clause’ has prevented cross-sector retaliation as some developed countries view foodgrain public procurement policies (as in India, for example) as ‘trade restricting’. Presumably, this issue will once again come up in the next WTO Ministerial in Argentina later this year. However, let me focus on what the TFA means for India in terms of implementation and strategic negotiations at the WTO?

While the media has highlighted the issue of services in the TFA, this was not the only intended goal of the agreement. To understand this, it is necessary to look at the history of WTO.

One must note that, in 1995, the WTO extended trade liberalisation to all the sectors apart from commodity trade in industrial goods, which was already covered under the General Agreement on Tariffs and Trade (GATT). However, while tariff reduction commitments under the WTO now cover all commodities (with limited exceptions), in the case of services trade, the relevant agreement (the General Agreement on Trade in Services; GATS) only implied discussion on trade restrictions in sectors where countries made ‘positive’ commitments unilaterally. Herein lies an implementation issue.

In the case of commodity trade, the TFA implies that many non-tariff barriers (NTBs) will now be systematically reduced over time. In fact, most of these NTBs concern border measures such as customs regulations and inland transport issues, which economists have argued increase ‘trade costs’. This development was a natural extension of border tariff reduction commitments made by all countries since around 1995. However, for services, it is not clear whether the TFA would automatically apply across all sectors where countries have not made unilateral commitments under the GATS?

India’s concerns on what the TFA means for services trade is warranted. In commodity trade, India’s share of world exports has inched up from around 0.5% in the 1950s to 1.5% today. On the other hand, its share in global exports of commercial services is almost 3.5%. Of this, software exports, while not the largest in terms of value, is the fastest growing segment. Yet, in the US (one of India’s largest destinations for services exports), the existing commitments are limited by exclusions under immigration laws, internal state laws, etc. So, in negotiations, these limitations will serve the same protectionist purpose as ‘exclusions’ in the case of commodity trade. Yet while ‘exclusions’ under commodity trade are on a standstill due to the ‘grandfather’ clause of 1995 (no new exclusions could be introduced), no such limitation applies in services trade since many of the NTBs here can be traced to internal legislation.

Nor is this problem restricted to the US. Closer home, none of the members of the ASEAN (with the exception of Singapore) have been willing to extend the FTA to services trade despite an explicit understanding on this when the FTA was inked in 2009. In other agreements, the Regional Comprehensive Economic Partnership (RCEP) being negotiated with ASEAN and six other Asian countries including China was limited to commodity trade. It was also reported that India has asked for expansion of the agreement to services trade. There is no news (other agreements being negotiated under the RCEP) if any of the responses are positive.

This is one implementation issue. How does one negotiate areas of interest in services trade since there is no ‘negative list’ of services and many of the barriers are related to internal legislative issues in member countries? How would negotiations be extended in many areas where countries have made no unilateral submissions under the GATS and which are of interest to India? Indian negotiators need to look at all this.

The other issue relates to India’s readiness with a classification of services necessary when negotiating tariff and other issues. It is imperative for the commerce ministry to start preparing such a list in line with the harmonised system (HS) classification used in commodity trade negotiations. One is not aware if such an exercise is on.
Yet all is not lost and the TFA can be a legitimate strategic instrument. To understand this, one needs to go back to India’s negotiating strategy at the WTO.

Till recently, India’s stand at the WTO has been largely defensive. Over the last 20 years or so, Indian negotiators have had one major ‘red line’—stall any further commitments under agricultural tariffs beyond the levels bound in 1995. This was probably sensible given the politically sensitive nature of this sector and the operation of India’s public distribution system. It was also not too difficult at that time, as the US and the EU were struggling with their own systems of domestic subsidies. Yet, starting from the Tenth Ministerial in Kenya in December 2015, the process of challenge to the ‘peace clause’ and the establishment of a new Special Safeguard Agreement (SSG) for developing countries has begun, which will involve staggered commitment by developing countries to tariff reductions in the agricultural sector.

It is time for India to outline offensive interests at the WTO, and the TFA in services is a good starting point. To see what country commitments in services can be obtained can be an offensive strategy at the WTO (and in other regional agreements). This is a legitimate strategy since the TFA is a multilateral agreement, unlike the plurilateral Trade in Services Agreement (TiSA) currently being negotiated. The ‘single undertaking’ clause of 1995 has been used to make many developing countries commit to politically sensitive issues on patents and copyright. Maybe the TFA as applied to services can be India’s bargaining counter at the WTO. Are our negotiators ready? Only time will tell.

 1.     Multilateral (adjective) (बहु-पक्षीय): Multilateral refers to involve two groups or countries.

Synonym: Multi-faceted, international, bilateral, interracial

Antonym: Unilateral, aslope, biased, lopsided

Sentence: India has signed many multilateral agreements for trade and negotiations with BRICS countries.

 2.     Consensus (noun) (आम सहमति): Consensus refers to an opinion or position reached by a group as a whole.

Synonym: Accord, consent, harmony, unanimity

Antonym: Denial, disagreement, dissension, refusal

Sentence: There is a growing consensus with respect to the policies and methodologies of our Prime Minister.

 3.     Facilitation (noun) (सहूलियत): Facilitation is any activity that makes tasks for others easy, or tasks that are assisted.

 Synonym: Abetment, assistance, backing, benefit

 Antonym: Blockage, damage, delay, discouragement

Sentence: Facilitation of trade and labour laws are some of the glaring topics of an Indian economy.

 4.     Ratified (verb) (पुष्टि करना): Ratify is to confirm something by expressing consent, approval, or formal sanction.

Synonym: Affirm, establish, endorse, uphold

Antonym: Deny, destroy, disagree, disapprove

Sentence: The government ratified the extension of maternity leave by passing a law.

 5.     Retaliation (noun) (प्रतिशोध): Retaliation is to hurt someone or to do something harmful to someone since that person has also done or said something harmful to you.

 Synonym: Vengeance, punishment, retribution, revenge

 Antonym: Forgiveness, pardon, sympathy, apology

Sentence: The cross-border retaliation should be taken care of in order to avoid the loss of our soldiers.

 6.     Presumably (adverb) (संभवतः): Presumably is something which is very likely to occur.

 Synonym: Apparently, doubtless, probably, seemingly

 Antonym: Uncertain, unlikely, improbably, doubtfully

Sentence: It is not even past midnight so presumably, he might be awake to take my call.

7.     Liberalisation (noun) (उदारीकरण): Liberalisation refers to the process of liberating the economy from various regulatory and control mechanisms of the state.            

 Synonym: Relaxation, ease, loosening, repose

 Antonym: Arduousness, drudgery, slog, strain

Sentence: With liberalization and globalization, the entire world has squeeze into a global village.

 8.     Protectionist (noun/adjective) (संरक्षण वादी): Protectionist refers to governmental actions and policies that restrain or restrict international trade, often done in intent to protect local business.

Synonym: Defensor, hedger, shielder, guarder

Antonym: Attacker

Sentence: Laws should be made to provide protectionistmeasureagainst foreign imports.

 9.     Legitimate (adjective/verb) (उचित): Legitimate is something which is acceptable according to the law.

 Synonym: Appropriate, consistent, justifiable, lawful

 Antonym: Abnormal, affected, counterfeit, deceptive

Sentence: The teacher asked a legitimate reason for being late in the class.

 10.Staggered (verb) (हिचकिचाना): Staggered refers to walk or move with difficulty as if you are going to fall.

Synonym: Careen, falter, lurch, reel

 Antonym: Carry on, continue, stay, comfort

Sentence: He staggered from bed to find that he was late for work.

 Question (1-5): Answer the following as directed.

 1. Find out the words which mean the same as ‘offensive’ (आक्रमण)

1         Agreeable

2         Defensive

3         Assaulting

4         Pleasing

5         Other than those given in options

 Solution: Option (3)

 Explanation: The given word is used to describe something that upsets or embarrass people since it is rude or insulting. So, from theabove-given options, option (3) is a right choice as the synonym of the word.

 2.       Find out the words which mean the same as ‘explicit’ (प्रकट)

    1. Ambiguous
    2. Doubtful
    3. Imprecise
    4. Unequivocal
    5. Other than those given in options

 Solution: Option (4)

 Explanation: The given word is defined as something which is clear and exact. Hence, from the given options, option (4) is the correct choice as the synonym of the word.

 3.       Find out the words which mean the same as ‘immigration’ (प्रवास)

  1. Exodus
  2. Entrance
  3. Expulsion
  4. Exile
  5. Other than those given in options

 Solution: Option (1)

 Explanation: The given word refers to the act of someone coming to live in a different country. So, from the given options, option (1) is an apt choice as the synonym of the word given in the options.

 4.       Find out the words which mean the same as ‘intended’ (विचार करना)

  1. Accidental
  2. Casual
  3. Designed
  4. Spontaneous
  5. Other than those given in options

 Solution: Option (3)

 Explanation: The given word refers tohave in mind something to be done or brought about. Hence, from the given options, option (3) is the right choice as the synonym of the word given in the options.

 5.       Find out the words which mean the same as ‘stems(पैदाहोना)

    1. Cease
    2. Emanate
    3. Lessen
    4. Repress
    5. Other than those given in options


Solution: Option (2)

 Explanation: The given word is often defined asa central part of something from which other parts can develop or grow. Therefore, from all the above options, option (2) is the right choice as the synonym of the word given in the options.


Word of the Day


Meaning (English) – is a trend that is so cool everyone wants to get in or follow.

Meaning (Hindi) – अंधानुकरण

Synonyms – Fad, craze

Antonyms – Departure, disorganization

Example – There is something in Louis Vuitton bags that everyone wants to have it and be a part of the bandwagon.

उदाहरण – लुइस विटोन बैग में कुछ तो बात है जो हर कोई इसे पाना चाहता है और इस अंधानुकरण का एक हिस्सा बनना चाहता है।


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