Indian Economy for IAS by Pratik Gupta

WTO

WHY DOHA IS NOT WORKING?

Its goal was to finish up by January 2005, but the deadline was then pushed back to 2006. The
talks were finally suspended in June 2006. That's because the United States and the European
Union refused to reduce agricultural subsidies.

Why Doha is an ambitious round?

• First, all WTO members (almost every country in the world) participated.
• Second, decisions must be settled by consensus, as opposed to majority rule. That
means every country must sign off.
• Third, there are no piecemeal sub-agreements. That means there is either an entire
agreement or none at all. In other words, unless every country agrees with the whole
deal, it's off.

In total Doha consist of 21 main points but that can be classified into Agriculture, NAMA,
Services, Rules, IPR, Trade and Investment, Trade Facilitation, S and D Treatment, Dispute
Settlement and E-Commerce.

Broadly:
1. Agriculture - Reduce subsidies to 2.5% of the value of production for developed
countries. That would only be 6.7% for developing countries. Reduce tariffs on food
imports. End subsidies for exports.
2. Non-agricultural market access (NAMA) - Reduce tariffs for non-food imports.
3. Services - Clarify rules and regulations on foreign-provided services. Developed
countries want to export financial services, telecoms, energy services, express delivery
and distribution services. Developing countries want to export tourism, healthcare,
and professional service. Countries can decide which services they want to allow. They
can also decide whether to allow foreign ownership.
4. Rules - Tighten the rules on anti-dumping. Strengthen prohibitions against launching
subsidies to retaliate against another country's subsidies. Focus on commercial
vessels, regional aircraft, large civil aircraft, and cotton. Reduce fishery subsidies to
cut down on overfishing.
5. Intellectual property - Create a register to control country-of-origin for wine and
liquor. Protect product names, such as Champagne, Tequila or Roquefort, that are
only authentic if they come from that region. Inventors must reveal the country of
origin for any genetic material used.
6. Trade and environment - Coordinate trade rules with other agreements to protect
natural resources in developing countries.
7. Trade facilitation - Clarify and improve custom fees, documentation, and regulations.
That will cut bureaucracy and corruption in customs procedures. That became an
important feature of the Trans-Pacific Partnership
8. Special and differential treatment - Give special treatment to help developing
countries. That includes longer time periods for implementing agreements. It requires
that all WTO countries safeguard the trade interests of developing countries. It also
Indian Economy for IAS by Pratik Gupta

provides financial support to developing countries to build the infrastructure needed

to handle disputes and implement technical standards.
9. Dispute settlement - Install recommendations to better settle trade disputes.
10. E-commerce - Countries won't impose customs duties or taxes on internet products
or services.

NAIROBI ROUND OF NEGOTIATION

The WTO's Tenth Ministerial Conference was held in Nairobi, Kenya, from 15 to 19 December
2015, the first such meeting hosted by an African nation.
Major decisions taken at WTO, 10th round of negotiations:
1. Elimination of export subsidies: A number of countries are currently using export
subsidies to support agriculture exports (developed and developing both). The legally-
binding decision would eliminate these subsidies and prevent governments from
reverting to trade-distorting export support in the future.
Under this
• developed members have committed to remove export subsidies immediately,
except for a handful of agriculture products,
• Developing countries will do so by 2018. Developing members will keep the
flexibility to cover marketing and transport costs for agriculture exports until
the end of 2023,
• And the poorest and food-importing countries would enjoy additional time to
cut export subsidies.
2. Public Stockholdings: Ministers also adopted a Ministerial Decision on Public
Stockholding for Food Security Purposes. The final decision will be taken up in the next
round of meeting in 2017.
3. SSM: A Ministerial Decision on a Special Safeguard Mechanism (SSM) for Developing
Countries recognizes that developing members will have the right to temporarily
increase tariffs in face of import surges by using an SSM. Members will continue to
negotiate the mechanism in dedicated sessions of the Agriculture Committee.
4. Market access in cotton export: the decision calls for cotton from LDCs to be given
duty-free and quota-free access to the markets of developed countries — and to those
of developing countries declaring that they are able to do so — from 1 January 2016.
The domestic support part of the cotton decision acknowledges members' reforms in
their domestic cotton policies and stresses that more efforts remain to be made. On
export competition for cotton, the decision mandates that developed countries
prohibit cotton export subsidies immediately and developing countries do so at a later
date.
5. Preferential rules of origin for LDCs: The Ministerial Conference adopted a decision
that will facilitate opportunities for least-developed countries' export of goods to both
developed and developing countries under unilateral preferential trade arrangements
in favour of LDCs.
Indian Economy for IAS by Pratik Gupta

The Nairobi Decision expands upon this by providing more detailed directions on
specific issues such as methods for determining when a product qualifies as “made in
an LDC,” and when inputs from other sources can be “cumulated” — or combined
together — into the consideration of origin. It calls on preference-granting members
to consider allowing the use of non-originating materials up to 75% of the final value
of the product. (Means even when the 75% of the value of the product is gathered from
RoW and just 25% Value addition is done in LDCs)
6. $1.3 trillion IT trade deal:, a landmark deal to eliminate tariffs on 201 information
technology products valued at over $1.3 trillion per year concluded between 53 WTO
members.
However, all WTO members will benefit from the agreement, as they will all enjoy
duty-free market access to the markets of the members eliminating tariffs on these
products.

BUENOS AIRES – ARGENTINA ROUND OF NEGOTIATION

The Buenos Aires Ministerial Conference, held in December 2017, was a pivotal gathering of
WTO member countries. While not officially referred to as a "round" of negotiations like
previous meetings, it was a critical event for assessing the progress of ongoing trade talks and
addressing key issues facing the multilateral trading system.
During the conference, discussions centered on various topics, including agriculture, fisheries
subsidies, electronic commerce, and development issues. However, significant progress on
substantive issues was limited, reflecting ongoing challenges in reaching consensus among
WTO members.
One notable outcome of the Buenos Aires Conference was the adoption of the Joint
Declaration on Trade and Women's Economic Empowerment, emphasizing the importance of
gender equality and women's participation in trade. Additionally, the conference highlighted
the growing importance of plurilateral initiatives, with discussions on e-commerce and
investment facilitation gaining prominence.
Overall, while the Buenos Aires Ministerial Conference did not result in major breakthroughs
in trade negotiations, it served as an important platform for dialogue and engagement among
WTO members, reaffirming their commitment to the multilateral trading system amidst
evolving global challenges.

Geneva Round of Negotiation-12th Ministerial Conference

Curtailing harmful fishing subsidies

The WTO passed a multilateral agreement that would curb ‘harmful’ subsidies on illegal,
unreported and unregulated fishing for the next four years, to better protect global fish
stocks. Since 2001, member states have been negotiating the banning of subsidies that
promote overfishing.

The current agreement, which establishes new trading rules, is the second multilateral
agreement in WTO’s history.
Indian Economy for IAS by Pratik Gupta

“WTO members have for the first time, concluded an agreement with environmental
sustainability at its heart,” Okonjo-Iweala said. “This is also about the livelihoods of the 260
million people who depend directly or indirectly on marine fisheries.”

Global Food Security

Members agreed to a binding decision to exempt food purchased by the UN’s World Food
Programme (WFP) for humanitarian purposes, from any export restrictions.

In light of the global food shortages and rising prices caused by the war between Ukraine and
Russia, the group’s members issued a declaration on the importance of trade in global food
security and that they would avoid bans on food exports. However, countries would be
allowed to restrict food supplies to ensure domestic food security needs.
India’s key demand to allow it to export food from its public stockholdings to other countries
will reportedly be discussed in the next Ministerial Conference in 2023.

Covid-19 vaccine production

WTO members agreed to temporarily waive intellectual property patents on Covid-19

vaccines without the consent of the patent holder for 5 years, so that they can more easily
manufacture them domestically.

WORLD BANK and WORLD BANK GROUP

The World Bank is an international financial institution that provides loans and grants to the
governments of low- and middle-income countries for the purpose of pursuing capital
projects. It comprises two institutions: the International Bank for Reconstruction and
Development (IBRD), and the International Development Association (IDA). The World Bank
is a component of the World Bank Group.

The World Bank's most recently stated goals are ending extreme poverty and boosting shared
prosperity.

World Bank Group

The World Bank Group is an extended family of five international organizations, and the
parent organization of the World Bank, the collective name given to the first two listed
organizations, the IBRD and the IDA:

• International Bank for Reconstruction and Development (IBRD)

• International Development Association (IDA)
• International Finance Corporation (IFC)
• Multilateral Investment Guarantee Agency (MIGA)
• International Centre for Settlement of Investment Disputes (ICSID)

The World Bank was created at the 1944 Bretton Woods Conference, along with the
International Monetary Fund (IMF). The president of the World Bank is traditionally an
Indian Economy for IAS by Pratik Gupta

American. The World Bank and the IMF are both based in Washington, D.C., and work closely
with each other.

Although many countries were represented at the Bretton Woods Conference, the United
States and United Kingdom were the most powerful in attendance and dominated the
negotiations. The intention behind the founding of the World Bank was to provide temporary
loans to low-income countries that could not obtain loans commercially. The Bank may also
make loans and demand policy reforms from recipients.

IBRD

The International Bank for Reconstruction and Development (IBRD) is an international

financial institution, established in 1944 and headquartered in Washington, D.C., United
States, that is the lending arm of World Bank Group. The IBRD offers loans to middle-income
developing countries. The IBRD is the first of five member institutions that compose the World
Bank Group. The initial mission of the IBRD in 1944, was to finance the reconstruction of
European nations devastated by World War II. The IBRD and its concessional lending arm, the
International Development Association (IDA), are collectively known as the World Bank as
they share the same leadership and staff.

The IBRD is owned and governed by its 189 member states, with each country represented
on the Board of Governors.
IDA

The International Development Association (IDA) is an international financial institution

which offers concessional loans and grants to the world's poorest developing countries. The
IDA is a member of the World Bank Group and is headquartered in Washington, D.C. in the
United States. It was established in 1960 to complement the existing International Bank for
Reconstruction and Development by lending to developing countries which suffer from the
lowest gross national income, from troubled creditworthiness, or from the lowest per capita
income.

The association shares the World Bank's mission of reducing poverty and aims to provide
affordable development financing to countries whose credit risk is so prohibitive that they
cannot afford to borrow commercially or from the Bank's other programs. (174 Members)

IFC

The International Finance Corporation (IFC) is an international financial institution that offers
investment, advisory, and asset-management services to encourage private-sector
development in less developed countries. The IFC is a member of the World Bank Group and
is headquartered in Washington, D.C. in the United States.

It was established in 1956, as the private-sector arm of the World Bank Group, to advance
economic development by investing in for-profit and commercial projects for poverty
reduction and promoting development. The IFC's stated aim is to create opportunities for
people to escape poverty and achieve better living standards by mobilizing financial resources
 Indian Economy for IAS by Pratik Gupta

for private enterprise, promoting accessible and competitive markets, supporting businesses
and other private-sector entities, and creating jobs and delivering necessary services to those
who are poverty stricken or otherwise vulnerable. (186 Members)

MIGA

The Multilateral Investment Guarantee Agency (MIGA) is an international financial institution

which offers political risk insurance and credit enhancement guarantees. These guarantees
help investors protect foreign direct investments against political and non-commercial risks
in developing countries. MIGA is a member of the World Bank Group and is headquartered in
Washington, D.C. in the United States.

MIGA was established in 1988 as an investment insurance facility to encourage confident

investment in developing countries. MIGA is owned and governed by its member states, but
has its own executive leadership and staff which carry out its daily operations. Its
shareholders are member governments that provide paid-in capital and have the right to vote
on its matters. It insures long-term debt and equity investments as well as other assets and
contracts with long-term periods. The agency is assessed by the World Bank's Independent
Evaluation Group each year. (182 Members)

ICSID

The International Centre for Settlement of Investment Disputes (ICSID) is an international

arbitration institution established in 1966 for legal dispute resolution and conciliation
between international investors and States. ICSID is part of and funded by the World Bank
Group, headquartered in Washington, D.C., in the United States. It is an autonomous,
multilateral specialized institution to encourage international flow of investment and mitigate
non-commercial risks by a treaty drafted by the International Bank for Reconstruction and
Development's executive directors and signed by member countries. Currently, 163
contracting member states agreed to enforce and uphold arbitral awards in accordance with
the ICSID Convention.

The International Monetary Fund and the World Bank at a Glance

International Monetary Fund World Bank

• oversees the international monetary • seeks to promote the economic

system development of the world's poorer
• promotes exchange stability and orderly countries
exchange relations among its member • assists developing countries through long-
countries term financing of development projects
• assists all members--both industrial and and programs
developing countries--that find • provides to the poorest developing
themselves in temporary balance of countries whose per capita GNP is less than
payments difficulties by providing short- $865 a year special financial assistance
to medium-term credits through the International Development
Association (IDA)
Indian Economy for IAS by Pratik Gupta

• supplements the currency reserves of its • encourages private enterprises in

members through the allocation of SDRs developing countries through its affiliate,
(special drawing rights); to date SDR 21.4 the International Finance Corporation (IFC)
billion has been issued to member • acquires most of its financial resources by
countries in proportion to their quotas borrowing on the international bond
• draws its financial resources principally market
from the quota subscriptions of its • has an authorized capital of $184 billion, of
member countries which members pay in about 10 percent
• has at its disposal fully paid-in quotas • has a staff of 7,000 drawn from 180
now totaling SDR 145 billion (about $215 member countries
billion)
• has a staff of 2,300 drawn from 182
member countries

Special Drawing Rights

The SDR was created as a supplementary international reserve asset in the context of the
Bretton Woods fixed exchange rate system. The collapse of the Bretton Woods system in
1973 and the shift of major currencies to floating exchange rate regimes lessened the reliance
on the SDR as a global reserve asset. Nonetheless, SDR allocations can play a role in providing
liquidity and supplementing member countries’ official reserves, as was the case amid the
global financial crisis.

The SDR serves as the unit of account of the IMF and other international organizations.

The SDR is neither a currency nor a claim on the IMF. Rather, it is a potential claim on the
freely usable currencies of IMF members. SDRs can be exchanged for these currencies.

The SDR was initially defined as equivalent to 0.888671 grams of fine gold—which, at the
time, was also equivalent to one U.S. dollar. After the collapse of the Bretton Woods system,
the SDR was redefined as a basket of currencies.

Currencies included in the SDR basket have to meet two criteria: the export criterion and the
freely usable criterion. A currency meets the export criterion if its issuer is an IMF member or
a monetary union that includes IMF members, and is also one of the top five world exporters.
For a currency to be determined “freely usable” by the IMF, it has to be widely used to make
payments for international transactions and widely traded in the principal exchange markets.
Freely usable currencies can be used in Fund financial transactions.

The SDR basket is reviewed every five years, or earlier if warranted, to ensure that the basket
reflects the relative importance of currencies in the world’s trading and financial systems. The
reviews cover the key elements of the SDR method of valuation, including criteria and
indicators used in selecting SDR basket currencies and the initial currency weights used in
determining the amounts (number of units) of each currency in the SDR basket.

These currency amounts remain fixed over the five-year SDR valuation period but the actual
weights of currencies in the basket fluctuate as cross-exchange rates among the basket
Indian Economy for IAS by Pratik Gupta

currencies move. The value of the SDR is determined daily based on market exchange rates.
The reviews are also used to assess the appropriateness of the financial instruments
comprising the SDR interest rate (SDRi) basket.

During the last review concluded in November 2015, Fixed Number of

Weights
the Board decided that the Chinese renminbi (RMB) determined in
Units of Currency
Currency for a 5-year
met the criteria for SDR basket inclusion. Following the 2015
period Starting
Review
this decision, the Chinese RMB joined the US dollar, Oct 1, 2016

euro, Japanese yen, and British pound sterling in the U.S. Dollar 41.73 0.58252
SDR basket, effective October 1, 2016 and the three-
month benchmark yield for China Treasury bonds Euro 30.93 0.38671

was included in the SDRi basket. During the 2015 Chinese

review, the Board also approved a new formula— Yuan 10.92 1.0174

assigning equal shares to the currency issuer’s

Japanese
exports and a composite financial indicator—to Yen 8.33 11.900

determine the weights of currencies in the SDR

basket. Pound
Sterling
8.09 0.085946

In March 2021, the Executive Board delayed the next review of the SDR valuation basket to
July 31, 2022 effectively resetting the five-year cycle of SDR valuation reviews. With the next
review to be completed by mid-2022, the new basket will become effective on August 1, 2022

Recently Revised SDR Basket

Weights Fixed Number of Units of
Currency determined in Currency for a 5-year period
the 2022 Review Starting Aug 1, 2022

U.S. Dollar 43.38 0.57813

Euro 29.31 0.37379

Chinese Yuan 12.28 1.0993

Japanese Yen 7.59 13.452

Pound Sterling 7.44 0.080870