Publications
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INDIA & WTO
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Open to the possibility of bringing Indian private banks
in Pakistan:
Anand Sharma |
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The Union Minister for Commerce & Industry and Textiles, Shri Anand Sharma with the members of Pakistan Business Council, at a meeting, in New Delhi on November 29, 2012.
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Expressing satisfaction over the trade normalisation between India and Pakistan, Union Minister for Commerce, Industry and Textiles Shri Anand Sharma said that both countries need to continue moving forward towards a non-discriminatory trade regime. “Pakistan government has taken some steps to move towards |
| Shri Anand Sharma said that a modern Integrated Check Post (ICP) has been set up by India at India-Pakistan border at Attari, Amritsar for trade facilitation between the two countries. |
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full normalisation of trade relations with India by making the transition from a ‘Positive list’ to a ‘Negative list’ for imports from India. This process must be taken to its logical end by phasing out the negative list and eventually according MFN status to India,” said Shri Sharma in a meeting with the members of the Pakistan Business Council headed by Mr. Ali S Habib in New Delhi on November 29, 2012. The Minister further added that whatever perceptions that are coming in the way of moving towards further improvement should be addressed by more information and better understanding of the benefits of the normalisation. |
The members of the delegation briefed the Minister regarding the issues being faced by them in their business transactions with India. On demand for more bank branches, the Minister said: “Let both the countries quickly establish the first two branches and we may also look at the possibility of expanding and bringing in some of our private sector banks. We are open to that.”
The Minister reiterated the decision taken during the meeting between the Commerce Ministers of both the countries in New Delhi on April 13, 2012 to constitute a Joint Business Council. He further added that India has already conveyed its list of prominent businessmen to Pakistan side. The Indian side has proposed Shri Sunil Munjal as
Co-Chair.
On the issue of more trade routes, the Minister informed that a modern Integrated Check Post (ICP) has been set up by India at India-Pakistan border at Attari, Amritsar for trade facilitation. The ICP was operationalised on April 13, 2012. “It would be beneficial to the business communities of both sides if Pakistan allows all items not in the Negative List to be traded across the land border at Attari-Wagah,” added Shri Sharma. He also said: “We are keen on Khokhrapar – Munabao. A Joint Working Group was agreed to be set up. In our state of Punjab, they want to open more border points and also in Rajasthan connecting Sindh. |
| The Indian Minister conveyed to the members of the Pakistan Business Council that whatever perceptions are coming in way of moving towards further improvement should be addressed by more information and better understanding of the benefits of the normalisation. |
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I believe there is a similar desire from the Pakistan side so that other states of Pakistan are also connected.”India and Pakistan have signed a new Visa Agreement on September 8, 2012 in Islamabad during the visit of External Affairs Minister to Pakistan. Once implemented, the new Visa Agreement will liberalise the bilateral visa regime and introduce a number of measures aimed at easing travel, including travel for business purposes. The new Visa Agreement has still not come into force. Pakistan needs to indicate its readiness to bring into force the new Visa Agreement. Shri Sharma emphasised the early operationalisation of visa regime and requested the delegation to convey that Pakistan should finish the process as early as possible. |
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Anand Sharma asks EU to declare India Data Secure |
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In a bilateral meeting with the European Commissioner for Taxation and Customs Union, Audit and Anti-Fraud Mr. Algirdas Semeta, in New Delhi on October 17, 2012, the Union Minister for Commerce, Industry & Textiles Shri Anand Sharma, highlighted the need for an early conclusion of ambitious and balanced Bilateral Trade and Investment Agreement (BTIA) between India and EU. Shri Sharma stressed the agreement needs to be balanced and should address areas of core interest to India such as services through Mode 1 and Mode 4, agricultural market access and disciplining of Sanitary and Phyto-sanitary (SPS) and Technical Barriers to Trade (TBT) for translating concessions into effective market access. He said that this is important both in terms of optics as well as for obtaining the requisite balance in the India-EU BTIA. |
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Shri Sharma emphasised that in mode-1, India would need to be declared as data secure in order to provide access. The European Union is in the process of undertaking a study to assess whether India’s laws meet the EU directive. “It is our clear analysis that our existing law does meet the required EU standards. We would urge that this issue is sorted out quickly and necessary comfort in declaring India data secure in overall sense needs to be given as almost all the major Fortune -500 companies have trusted India with their critical data”, said Shri Sharma.
With a number of recent reform measures in India, which includes, opening of multi-brand retail trading sector to foreign investors; introducing flexibility in conditions for FDI in single brand product retail trading; allowing FDI in power exchanges; increasing the limit of FDI in Broadcasting sector; allowing FDI through foreign airlines in Civil Aviation sector, Shri Sharma emphasised India’s attractiveness as investment destination in a whole range of sectors from infrastructure to food processing, renewable energy, clean technology, bio-technology, health care, among others. He also highlighted that EU being a union of over 20 countries has strengths in almost all areas in which India needs investment. “Many countries of the EU are particularly strong in state-of-art technology development including green and clean technology for manufacturing industry. Although, the EU accounts for close to 50% of the technical collaborations approved but there is scope for enhancing technology transfer in a range of manufacturing activities,” said Shri Sharma. The cumulative FDI inflows from EU to India are around USD 44.31 billion (April 2000 to July 2012), while on the other hand, the Indian direct investments in EU are of the order of about USD 20 billion (April 2004 –October 2009). It should also be noted that the FDI inflows from April 2011- March 2012, which stood at USD 46.8 billion, showed an increase of around 35 per cent over the last year.
Shri Sharma also expressed happiness at the growing bilateral relations with the European Union, which is bound by common values based on a commitment to democracy, individual rights and sustainable development. While in 2010, the total trade between India and EU was USD 83.372 billion, it rose to to USD 110.268 billion in 2011. During January-September 2012 the bilateral trade stood at USD 76.511 billion. |
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Anand Sharma raises Visa issues, fate of Indian students at
LMU in a meeting with Lord Mayor of London |
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The Union Minister of Commerce, Industry and Textiles Shri Anand Sharma raised issues pertaining to visa and post - study work visa with the visiting Lord Mayor of London Mr. David Wootton, in New Delhi on October 8, 2012. Shri Sharma explained that Indian companies are using United Kingdom as a base to service their investment in Europe. Indian IT personnel come and leave after short deputations. However, the new measures that the UK Government has proposed for are likely to affect the profitability and competitiveness of Indian companies. “While we appreciate that UK may have reasons for introducing a cap on non-EU economic immigrants, our concern is to ensure that these measures do not adversely affect the growing trade and economic partnership between our two countries,” said Shri Sharma. Likewise, the recent measures over student visas by the British Government, including on post-study work visas may make it difficult for Indian students to pursue university education in UK, emphasised Shri Sharma. The Lord Mayor and the UK side expressed the appreciation for Indian understanding and informed the Indian Minister about UK’s commitment to encourage people-to-people contact between the two countries and work towards removing hindrances.
Shri Sharma also conveyed the Government’s concerns regarding the fate of Indian students affected by UK Border Agency’s (UKBA) decision to revoke London Metropolitan University (LMU)’s licence to admit non-EU international students. Lord Mayor and his officials assured the Minister of their determination to help Indian students in all possible ways as it also involves the reputation of UK as reliable education destination. |
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The Union Minister for Commerce & Industry and Textiles, Shri Anand Sharma meeting the Lord Mayor of London,
Mr. David Wootton, in New Delhi on October 08, 2012. |
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They said they would strive to ensure that all the valid students are suitably accommodated.
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Shri Sharma briefed the visiting dignitary about the recent reforms in FDI and explained the opportunities for foreign investors in the new regime. The Lord Mayor raised the issue of opening of legal and accountancy sectors. Shri Sharma explained to him that India is governed by self-regulatory professional bodies like the Bar Council of India and the Institute of Chartered Accountants. Consultations with the professional bodies and the stakeholders are underway. Further movement in the matter will be possible as and when consensus emerges among all the stakeholders. Both the leaders also discussed the ongoing negotiations in India-EU Broad based Trade and Investment agreement (BTIA). Shri Sharma requested the Lord Mayor to convey India’s commitment to ambitious and balanced agreement to the EU partners. |
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Need to take specific measures to enhance trade between
India and Belarus, says Dr. D. Purandeswari |
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The Minister of State for Commerce & Industry, Dr. (Smt.) D. Purandeswari addressing at the Business Luncheon meeting by Confederation of Indian Industry (CII), Federation of Indian Chambers of Commerce and Industry (FCCI) & Associated Chambers of Commerce and Industry in India (ASSOCHAM), in New Delhi on November 14, 2012. The Prime Minister of the Republic of Belarus,
Dr. Mikhail Myasnikovich is also seen. |
In a business meeting with Dr. Mikhail Myasnikovich, Prime Minister of the Republic of Belarus, in New Delhi on November 14, 2012, the Minister of State for Commerce & Industry, Dr. D Purandeswari said that both India and Belarus need to take sincere and concerted efforts as the bilateral trade and investment between the two countries remains below potential. “Specific measures should be taken to enhance trade between the two countries…a number of new bilateral documents are in the process of elaboration,” said Dr. D Purandeswari. |
Highlighting the sectors where both the countries can look forward to boost trade, Dr. Purandeswari said that since Belarus is well-known as a major supplier of potash fertiliser, “India is interested in long-term off-take, besides her interest in investing in the potash sector in Belarus.” She further said that she “believes talks between the two sides are on-going. We need to make efforts to take this dialogue forward.” |
| Dr. D Purandeswari expressed happiness that Belarus is participating as the partner country in this year’s India International Trade Fair, with as many as 57 major companies from the country participating in the event. |
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She further noted that the pharmaceutical sector is another area of “promising cooperation and we feel that Joint Ventures in Belarus would be to mutual benefit.” Minister Dr. Purandeswari also added that India’s leading public sector undertaking Bharat Heavy Electricals Limited is working on the up gradation of the power plant in Grodno Region including a GOI credit line. “I understand the commissioning of the plant is to take place in December 2012,” said Dr. Purandeswari. |
Speaking on the occasion, Dr. Mikhail Myasnikovich said that both the sides should increase engagement in various sectors like pharmaceutical, biotechnology and information technology. He said: “The bilateral trade between the two countries is considerably lower than the existing potential. We can establish joint ventures for production of agriculture equipment and increase cooperation in exploring hydrocarbon energy and modernisation of petrochemical set ups.” |
| Minister Dr. Purandeswari said that India’s leading public sector undertaking Bharat Heavy Electricals Limited is working on the upgradation of the power plant in Grodno Region including a GOI credit line. |
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Minister Dr. Purandeswari expressed happiness that Belarus is participating as the partner country in this year’s India International Trade Fair. As many as 57 major companies from the country, covering a gamut of sectors ranging from infrastructure development, automobiles, integrated circuits, optical devices, food products, beverages, leather and rubber products and petro chemicals are participating in the event. |
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Need of an ambitious agreement on services and investment,
says Shri Anand Sharma to Dr. Vu Huy Hoang |
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The Minister of Industry and Trade, Vietnam Mr. Vu Huy Hoang meeting the Union Minister for Commerce & Industry and Textiles, Shri Anand Sharma, in New Delhi on November 01, 2012.
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| Shri Anand Sharma expressed the keenness of the Indian banks to open their branches in Vietnam, which in turn will facilitate increased trade and investment between both the countries. |
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The Union Minister for Commerce, Industry and Textiles Shri Anand Sharma, expressed confidence that a target of USD 7 billion for bilateral trade between India and Vietnam can be achieved by 2015, if the present rates of growth of trade are maintained. “It is a matter of satisfaction that our bilateral trade has witnessed a sustained and healthy growth over the years,” said Shri Sharma in a bilateral meeting with Dr.Vu Huy Hoang, Vietnamese Minister of Trade and Industry, in New Delhi on November 1, 2012. Shri Sharma feeling optimistic further added: “With the implementation of India-ASEAN FTA by India and Vietnam since 1st June 2010, bilateral trade would maintain the present growth momentum and would achieve the target.” The bilateral trade between India and Vietnam was USD 3.451 billion in 2010, which rose to USD 5.017 billion in 2011. From the period of January-September 2012, the bilateral trade between the two countries has been marked at USD 3.886 billion. |
| The Indian Minister raised the problems related to land acquisition issues in Vietnam which is hampering the pace with which manufacturing industry can set up their bases in Vietnam. |
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Highlighting the fact that the signing of the India-ASEAN Free Trade Agreement is a landmark in the bilateral relations with the ASEAN countries and the ‘Look East’ policy, Shri Sharma was confident that FTA will further strengthen the bilateral relationship between the two countries. Shri Sharma also thanked Vietnam for ratifying the Agreement and bringing it into effect from 1st June 2010. |
Shri Sharma conveyed to the Vietnamese Minister the need of an ambitious Agreement on Services & Investment, after the Comprehensive Trade in Goods Agreement. “We look forward to flexibility from Vietnam in concluding this Agreement by the targeted timeline of early 2012,” said Shri Sharma.
Shri Sharma also expressed the keenness of the Indian banks to open their branches in Vietnam, which in turn will facilitate increased trade and investment between both the countries. |
Shri Sharma also expressed that he was glad that that air companies from both the countries have expressed interest in starting air operations. During the visit of President Sang in October 2011, Vietnam Airlines and Jet Airways had signed a MoU for comprehensive cooperation, including commencing direct flights in the near future.
Shri Sharma also raised problems related to land acquisition issues in Vietnam which is hampering the pace with which manufacturing industry can set up their bases in Vietnam. Shri Sharma also highlighted that the renewal of licenses in the pharmaceutical industry is lengthy, as the renewal can only be done when the old one expires. |
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India Show in Beijing showcases recent developments
in Indian
auto component industry |
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The Ministry of Commerce & Industry, Government of India in association with the Confederation of Indian Industry (CII) and the Embassy of India, Beijing organized the “India Show” concurrently with 6th China International Auto parts Expo from 26-28 October, 2012 in Beijing.
The event was supported by the India Brand Equity Foundation (IBEF), Auto Component Manufacturers’ Association (ACMA) of India, China Chamber of Commerce for Import and Export for Machinery and Electronic Products (CCCME), Trade Development Bureau of Ministry of Commerce of the People`s Republic of China and Genertec.
The “India Show” in Beijing assumes greater significance in the context of enhanced economic and strategic cooperation between the two nations. The Show set the tone for strengthening the bilateral economic and trade cooperation between the two countries. The event organized during this year which has been announced as the "Year of India-China Friendship and Cooperation", pledges to push the Sino-Indian strategic cooperative partnership to a new level.
As part of India Show, CII led a high-powered 19 member CEOs/ Business delegation led by Mr S Gopalakrishnan, President Designate CII & Executive Co-Chairman Infosys Technologies Ltd from 25-26 October 2012. During their visit, the delegation called on senior Chinese Government leaders and had discussions on new areas for collaboration for enhancing trade and investment between the two countries. In 2011, bilateral trade stood at around D74 billion and the leaders from both the countries have set a trade target of $100 billion by 2015.
More than 80 companies participated in the three day exhibition. The India Pavilion showcased the wide variety of top class Indian auto parts relating to engine, body and chassis systems, high technology equipment and parts, innovative |
| The India Pavilion showcased wide variety of top class Indian auto parts relating to engine, body and chassis systems, high technology equipment and parts, innovative hybrid energy parts in The India Show in Beijing. |
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hybrid energy parts etc along with maintenance and tuning equipment and general components. The Expo was a platform to explore multiple collaboration opportunities and share the progressive and future-ready component industry of India.
CII also organized the India China Business Seminar on 26th October 2012 coinciding with the inauguration of India Show. Leading Indian companies like Tata, Aditya Birla, Reliance Industries, Infosys, Mahindra, Larsen & Toubro, NIIT etc. participated and provided a good opportunity for the local companies to interact with them and explored new areas of cooperation. |
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Saudi business delegation keen to invest in India
USD 750 Million Saudi – Indo Investment Fund in offing |
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| A High Level Business Delegation from Saudi Arabia led by the President of Saudi Indian Business Network, Dr. Ghazi Binzagar meeting the Minister of State for Commerce and Industry, Dr. S. Jagathrakshakan, in New Delhi on November 22, 2012. |
A delegation of Saudi – India Business Network (SIBN) which called on the Minister of State for Commerce and Industry Dr. S Jagathrakshakan in New Delhi on November 22, 2012, showed keen interest on investing in India and forming joint ventures with Indian companies. The 15 member ISBN delegation was led by its President Dr. Ghazi Binzagar. The Saudi delegation showed particular interest in petroleum, petrochemicals, fertilizers, infrastructure, food processing, health care, herbal and medicinal sectors.
Addressing the delegation, Dr Jagathrakshakan detailed the vast investment potential available in India following the spate of new initiatives and liberalisation. He said the proposed USD 750 million Saudi – Indo Investment Fund, jointly set up by the Public Investment Fund of Saudi Arabia and the Infrastructure Development Finance Corporation (IDFC) will start in the near future. The fund focuses on channelising Saudi investments into Indian infrastructure projects.
The Minister called upon the delegation to utilise the services of ‘India Invest’ a joint venture special purpose vehicle of the Department of Industrial Policy & Promotion with FICCI and the State governments. ‘Invest India’ gives a fillip to investment promotion and handholding services to foreign investors particularly to the Small and Marginal Enterprises (SMEs) and family owned overseas enterprises in a structured manner.
Dr. Jagathrakshakan also invited the Saudi business community to participate in the oncoming 4th GCC-India Industrial Conference (IGIC) to be held in Jeddah, Saudi Arabia from 19th to 21st February 2013. |
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Eight Lakh e-BRCs issued in first three months
DGFT writes to heads of banks to address e-BRC issues |
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As nearly eight lakh Electronic Bank Realisation Certificates (eBRCs) have been issued in the first three months since the introduction of eBRC on August 17, 2012, Director General of Foreign Trade (DGFT) Dr. Anup K Pujari has written to Chairpersons of all the banks to address the issues pertaining to eBRC. “We are trying to bring down the transaction cost for everyone involved - exporters, government and banks...effort is to make available all the relevant information to the stakeholders without compromising the privacy,” said Dr. Pujari who reviewed the progress of eBRC with banks in New Delhi on November 20, 2012. |
| The eBRC module developed by DGFT enables electronic transmission of foreign exchange realisation from banks to DGFT server. |
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Bank Realisation Certificate (BRC) is issued by a bank after realisation of export proceeds in the country. It is an important document required for claiming benefits under various FTP schemes. In addition, BRC data is used by VAT, Income tax and Drawback departments. Moving towards paperless trade and with a view to reduce transaction cost, DGFT, with effect from August 17 this year, has introduced eBRC and stopped accepting physical copy of BRC. The eBRC module developed by DGFT enables electronic transmission of foreign exchange realisation from banks to DGFT server. This process is made secure by use of digital certificate.
Claiming that the scheme is running successfully, Dr. Pujari informed that 104 bank have been issued user ID code by DGFT. Out of this 62 banks have been registered with DGFT and they have transmitted 7,87,874 e-BRC to DGFT server.
eBRC is available for Chapter 3, DEPB and DFIA. It will be extended to Export Obligation Discharge Certificate (EODC) within a month. “DGFT is aiming to be the most digital friendly department in the government and adoption of electronic means will strengthen transparency, speed and responsiveness of the department while bringing down the transaction cost for everyone,” said Dr. Pujari. |
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Anand Sharma invites Canadian pension funds to invest
in Indian
infrastructure projects |
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In a bilateral meeting with Canadian Minister of International Trade and Minister for Asia – Pacific Gateway Mr Edward Fast, Union Minister of Commerce, Industry & Textiles, Shri Anand Sharma suggested that substantial pension funds in Canada – private and public – could be usefully channeled through the Infrastructure Debt Fund. It is to be noted that both the sides have finalised a tripartite agreement for an infrastructure debt funding mechanism linking both lenders and borrowers through the IDF. The IDF would source most of its funding from pension funds, insurance funds and sovereign wealth funds. Shri Sharma also highlighted the need to address the investment asymmetry. Indian investment in Canada is estimated at USD 14.2 billion and Canadian investment in India at nearly USD 4.3 billion. Owing to Canada’s healthy banking sector and private equity funds, Shri Sharma also encouraged greater Canadian investment into India.
Shri Sharma expressed satisfaction over the negotiations on Comprehensive Economic Partnership Agreement (CEPA). “The negotiations on CEPA are proceeding smoothly, and we hope that it would be finalised by 2013,” said Shri Sharma. The sixth round of CEPA negotiations are going to be held in Ottawa from November 14-16, 2012. The fifth round of CEPA negotiations between India and Canada was held recently in New Delhi from 24th to 26th July, 2012. |
Shri Sharma hoped that an early conclusion of Foreign Investment Promotion & Protection Agreement (FIPPA) between India and Canada would help in providing a fair and equitable treatment to bilateral foreign investments on a reciprocal basis. |
The issue of Social Security Agreement was also discussed between Shri Sharma and Mr. Fast. Shri Sharma was also optimistic that the SSA is signed at the earliest. “This step would reinforce faith in the bilateral negotiation process,” said Shri Sharma. |
| Shri Anand Sharma hoped that an early conclusion of Foreign Investment Promotion & Protection Agreement between India and Canada would help in providing a fair and equitable treatment to bilateral foreign investments on a reciprocal basis. |
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The bilateral trade between India and Canada during 2011 stood at USD 5.216 billion as against USD 4.088 billion in 2010, registering an increase of 28.35% over the year 2010. In 2011, India’s exports to Canada showed an increase of 25%, while the imports from Canada registered an increase of 31.7%, over 2010. The total bilateral trade for the first eight months of this year stood at USD 3.640 billion – a 16.4% increase as compared to the same period for last year.
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The Union Minister of Commerce, Industry and Textiles Shri Anand Sharma has said that India and Germany will achieve the trade target of Euro 20 billion (USD 26.16 billion) this year. The trade between the two countries stood at USD 23.566 in 2011. “India and Germany have set a trade target of Euro 20 billion (USD 26.16 billion) to be achieved by 2012 and I am sure that we will be able to reach this target if not cross it with efforts from both sides,” said Shri Sharma after the meeting with Dr. Phillipp Roesler, Minister of Economic and Technology and Vice Chancellor of the Federal Republic of Germany, in New Delhi on November 1, 2012.
Both the leaders also reviewed the progress of India-EU BTIA and expressed the desire that a balanced and ambitious agreement be reached soon. The Chief negotiators are meeting in Brussels on 8th November and a delegation will come to pursue the issue of declaring India Data Secure which is an important demand from Indian side. "We have proposed the principal of incremental approach so that what may not happen now can be included later. But what we have on the table from both the sides, it is fairly robust. We will now leave it to negotiators to bring it to its early conclusion... We will have a ministerial scheduled either for December or January, depends on how fast they (Chief Negotiators) work. That time, hopefully, we will announce the conclusion of the negotiations," Minister Sharma told reporters after the meeting. |
| The Minister of Economic and Technology and Vice Chancellor of the Federal Republic of Germany, Dr. Phillipp Roesler meeting the Union Minister for Commerce & Industry and Textiles, Shri Anand Sharma, in New Delhi on November 01, 2012. |
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Dr. Roseler underlined the concerns of their pharmaceutical industry in the wake of granting of compulsory licence of a cancer medicine to Natco recently. Shri Sharma assured the visiting Minister that India’s action was well within the parameters of TRIPS commitments and the flexibility of compulsory licensing has been used more than 50 times by the developed countries while this was the first time India resorted to this. He said India’s IP structure is fully compliant with its international commitments.
In 2011 Indian export to Germany stood at USD 8.25 billion and import was USD 15.31 billion. FDI inflows from Germany into India is around USD 4.9 billion and it ranks 8th among investors in India. FDI flow from India into Germany is USD 5.9 billion in 2011. |
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Sourcing Norms for Single/Multi Brand Retail Vide Press Note 4 (2012 series) issued on 20.09.2012 certain conditions relating to FDI in single brand product retail trading have been amended. The amended policy, inter-alia, includes the following condition in respect of proposals involving FDI beyond 51% in single brand product retail trading:-
“In respect of proposals involving FDI beyond 51%, sourcing of 30% of the value of goods purchased will be done from India, preferably from MSMEs, village and cottage industries, artisans and craftsmen, in all sectors. The quantum of domestic sourcing will be self-certified by the company, to be subsequently checked, by statutory auditors, from the duly certified accounts which the company will be required to maintain. This procurement requirement would have to be met, in the first instance, as an average of five years` total value of the goods purchased, beginning 1st April of the year during which the first tranche of FDI is received. Thereafter, it would have to be met on an annual basis. For the purpose of ascertaining the sourcing requirement, the relevant entity would be the company, incorporated in India, which is the recipient of FDI for the purpose of carrying out single brand product retail trading”
The above amended condition is expected to benefit Indian producers, including the Indian handicrafts sector, which provides livelihood to millions and is important from the point of low capital investment, high value-addition and high potential for export, as also to meet the critical need to integrate Indian producers with the domestic and global markets. Skill integration with craftsmen abroad is likely to help develop synergies with international brands and generate more employment. The consequential benefits, arising from the integration of global best practices in management, along with global standards in quality, design, packaging and production, are expected to assist in building capacities of local producers, by making it worthwhile for them to scale-up their production, thereby creating a multiplier effect on employment and income generation.
In respect of Government’s decision to permit 51% FDI in multi brand retail trading, vide Press Note 5 (2012 series) dated 20.09.12, the following condition has interalia been prescribed:
“At least 30% of the value of procurement of manufactured/ processed products purchased shall be sourced from Indian `small industries` which have a total investment in plant & machinery not exceeding USD 1.00 million. This valuation refers to the value at the time of installation, without providing for depreciation. Further, if at any point in time, this valuation is exceeded, the industry shall not qualify as a `small industry` for this purpose. This procurement requirement would have to be met, in the first instance, as an average of five years’ total value of the manufactured/ processed products purchased, beginning 1st April of the year during which the first tranche of FDI is received. Thereafter, it would have to be met on an annual basis”
The 30% mandatory sourcing condition for permitting 51% FDI in multi brand retail trading, is expected to encourage local value addition and manufacturing and thereby benefit small scale industries. |
FDI from Pakistan
The Department of Industrial Policy and Promotion (DIPP) vide Press Note No. 3 (2012 Series) dated 1st August, 2012 permitted investments from Pakistan in sectors/activities other than defence, space and atomic energy. Subsequently RBI issued a Notification amending the FEMA regulations [RBI/2012-13/173 a.p. (D/R Series) Circular No.16 dated 22.08.2012].
RBI issued a Circular No. “RBI/2012-13/198 A.P. (DIR Series) Circular No. 25” dated 7th September, 2012. According to this, overseas direct investment by Indian Parties in Pakistan shall be considered under the government approval route. |
Business delegations from both countries have been regularly undertaking bilateral visits. Inter-alia, these include the business delegations which accompanied the Commerce Minister of Pakistan on his visits to India (September 2011, April 2012) and the Indian business delegation which accompanied the Commerce, Industry and Textiles Minister on his visit to Pakistan in February 2012. Visa regime between India and Pakistan has been liberalized to facilitate greater economic engagement.
The Commerce Ministers of India and Pakistan took a decision in April, 2012 to constitute a Joint Business Council (with prominent business persons to be nominated by each country) as an additional institutional framework for regular and sustained dialogue between the business communities.
Bilateral trade dialogue with Pakistan was re-initiated with the 5th round of India-Pakistan talks on Commercial and Economic Co-operation Commerce Secretary level talks in April 2011. This was followed by further rounds of talks held in November 2011 at Delhi and September, 2012 at Islamabad. Three Ministerial level dialogues were also held in September 2011, February 2012 and April 2012. The first ever bilateral visit of Commerce Minister of India to Pakistan was undertaken in February 2012.
Both sides have made considerable progress in improving bilateral trade ties. Pakistan has moved from a Positive List regime to a Negative List regime, which substantially increases the tradable items with India. India has similarly liberalized its earlier restrictions on inward/outward investment flows to Pakistan. Both sides have agreed on a detailed roadmap for Preferential Trading Arrangements under the SAFTA (South Asia Free Trade Area) process.
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Import of Cheap Chinese Goods
Import of any good presupposes that its domestic price is higher than foreign price. Hence, invariably imported goods will be cheaper than their domestic counterparts. Government have policies in place to ensure that interest of both domestic consumer and domestic producer of such goods are not severely jeopardized. To protect the consumers, quality/safety standards applicable to domestic goods are made equally applicable to imported goods. To protect the domestic producers, Trade Defense Measures like Anti-dumping & Safeguard measures are available to the domestic industry to seek relief against unfair trade practices by exporters of goods from other countries.
In case of electrical goods, safety is ensured through Electrical Wires, Cables, Appliances and Protection Devices and Accessories (Quality Control) Order, 2003. Import of fireworks (crackers) is restricted and subject to licensing under Import Policy.
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FDI in Various Sectors
As per extant FDI policy, FDI, up to 26% is permitted, in the defence sector, with prior Government approval. Government has, further, interalia announced the following decisions:-
(i) Amendment of certain conditions relating to FDI, up to 100%, in single brand retail trading, vide Press Note No. 4(2012 Series) dated 20.9.2012
(ii) Permitting FDI, up to 51%, in multi-brand retail trading, subject to specified conditions, vide Press Note No. 5 (2012 Series) dated 20.9.2012
(iii) Permitting foreign airlines to invest, in the capital of Indian companies, operating scheduled and nonscheduled air transport services, up to the limit of 49% of their paid-up capital, vide Press Note No.6 (2012 Series) dated 20.9.2012
(iv) Permitting FDI, up to 49%, in power exchanges, vide Press Note No. 8 (2012 Series) dated 20.9.2012
The above mentioned decisions have been incorporated in the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2000 vide Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) (Sixth Amendment) Regulations, 2012 notified in the Gazette of India: Extraordinary vide G.S.R.795(E) dated 19.10.2012.
It is the Government’s assessment that implementation of the policy is likely to facilitate greater FDI inflows into front and back-end infrastructure; technologies and efficiencies to unlock the potential of the agricultural value chain; additional and quality employment; and global best practices. This, in turn, is expected to benefit consumers and farmers in the long run, in terms of quality and price. The 30% mandatory sourcing condition has been incorporated to encourage local value addition and manufacturing. The increased level of activity, in the front-end, as well as in the back-end, resulting from greater FDI inflows, is expected to create additional employment opportunities for rural and urban youth. It is, further, expected to encourage existing traders and retail outlets to upgrade and become more efficient, thereby providing better services to consumers and better remuneration to the producers from whom they source their products.
The consultations with key stakeholders regarding FDI in multi-brand retail trading brought out views both for and against FDI in multi brand retail trading. On balance, however, the discussions generally indicated support for the policy, subject to the introduction of adequate safeguards. The necessary safeguards have, accordingly, been incorporated in the policy and are expected to protect the interests of various stakeholders. Government has also decided to constitute a high-level group to make recommendations on internal trade reforms, with a view to ensuring distributional efficiencies and also that the benefits from trade are available to all sections of society. |
Two proposals have been received for FDI up to 100% in single brand retail trading (from M/s Ingka Holding Overseas B.V, Netherlands and M/s Fossil India Private Limited). Further, seven proposals have been received, for single brand product retail trading, with foreign equity participation up to 51% (from M/s Fapa Company Ltd., Samoa; M/s Promod S.A.S, France; M/s Tommy Hillfiger B.V, The Netherlands; M/s NA Pali Europe SARL; M/s The Semex Alliance, Canada; M/s Le Cruset SAS France and M/s Sketchers South Asia Private Limited). No proposal has been received for FDI in multi-brand retail trading.
The proposals require in-depth examination with reference to the policy parameters and safeguards. As such, no timeframe can be specified for a decision on these proposals.
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Treaty between Tea Board and European Tea committee
The ‘Darjeeling’ tea mark has been registered as a Protected Geographical Indication (PGI), by the European Commission. To implement the PGI registration for Darjeeling in letter and spirit and towards this end a Joint Communiqué was released which covers the following:
(i) Both European Tea Committee (ETC) and Tea Board, India jointly support the PGI registration in respect of Darjeeling Tea with the European Union (EU);
(ii) Both ETC and Tea Board jointly agreed that they would co-operate and work together in disseminating information about the PGI registration and its implication in local language in Germany and other tea consuming countries within the EU;
(iii) Tea Board of India and ETC would jointly approach EU for any financial assistance to take necessary steps towards informing EU consumers and citizens about Darjeeling PGI and its implications;
(iv) If there is any information with Tea Board of India about infringement or violation of the PGI registration in the EU, the same would be shared with the ETC for any remedial action;
(v) Both ETC and Tea Board, India would evolve a joint working relationship to implement the PGI registration for Darjeeling in letter and spirit. |
Trade of Generic Drugs
The exports of pharmaceutical products from India during last 3 years have been as under:- |
| |
2009-10 |
2010-11 |
2011-2012 |
| US (MILLIONS) |
8955 |
10,711 |
13,221 |
| Indian Rupees (crores) |
42,455 |
48,810 |
63,347 |
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Pharmaceutical industry is highly regulated and most of the countries allow exports only after the companies comply with their registration requirements. 55% of Indian pharmaceutical exports are to highly regulated markets like USA (25%), European Union and other European countries (21%), Canada (1.92%), Australia (1.31%).
As mentioned above, authorisations for exports into a country is given to the individual company once it complies with their regulatory requirements. Indian exports to Africa and Latin American nations during 2010-11 were 17% and 7% respectively of the total Indian pharmaceutical exports. |
Export of Dairy Products
The details of total quantity of dairy products exported and imported during each of the last three years, value-wise, are as under: |
| (Rs in crores) |
| Year |
2009-10 |
2010-11 |
2011-2012 |
| Imports |
8955 |
10,711 |
13,221 |
| Exports |
42,455 |
48,810 |
63,347 |
|
| Source: DGCI&S |
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The Government has taken following steps to increase exports of dairy products:
(i) The Government has notified standards for export of milk products under EIC Act. Export Inspection Council (EIC) is registering the milk and milk products manufacturing units for export. EIC’s Inter Departmental Panel helps exporters improve in terms of good hygiene practices, good manufacturing practices, infrastructure development etc.
(ii) The Government has allowed incentive on export of Skimmed Milk Powder (SMP) under Vishesh Kriski and Gram Udyog Yojna (VKGUY) with a Duty Credit Scrip equivalent to 5% of FOB value of exports through Public Notice No. 4 (RE-2012)/2009-14 dated 8th June 2012.
(iii) APEDA provides assistance to its registered exporters, which includes the exporters of milk and milk products, under the following Financial Assistance Schemes:
a. Scheme for Quality Development
b. Scheme for Market Development
c. Scheme for infrastructure Development
d. Scheme for Transport Assistance |
National Productivity Council
National Productivity Council (NPC) organises programmes, seminars, workshops and conferences for training public and private sector managers & Central/State Government Officials and offers consultancy services in the areas of Process Management, Strategic Productivity, Technology Management, Energy Management, Human resources Management, Environment Management, Pollution Control, Information Technology, Economic Services, Agri-Business, Total Quality Management (TQM), Benchmarking, Informal Sector Productivity etc., apart from undertaking research in productivity related areas.
The Government of India provides plan funds to National Productivity Council for implementing the schemes for enhancing productivity. During the financial year 2011-12 a sum of Rs.2.00 crore as plan fund was sanctioned to NPC by the Government for the said purpose. National Productivity Council in turn provides financial assistance to Local Productivity Councils (LPC) for implementing the programmes at grass root level. During the year 2011-12 a sum of Rs.6.3 lakhs was provided to LPCs. No loans are provided for the said purpose. |
Spices Park at Guntur
The Government has approved establishment of a Spice park at Guntur, Andhra Pradesh at a cost of Rs 23 crores to empower the chilli farmers to have better price realisation and wider markets for their produce. The Government of Andhra Pradesh had allocated 124.78 acres of land in Venkayalapadu and Maidavolu village, Edlapadu Mandal in Guntur district in favour of Spice Board, for setting up of this Spices Park. Currently the civil works and electrical works are almost completed. The installation of the plant & machinery for processing of Chilli is in progress and are as per schedule. 38 acres of land has been allotted to exporters for developing their own processing Units in the Park. So far an expenditure of Rs. 14.62 crores has been incurred on establishment of the Spice Park. Target for completion of the project is December 2012. |
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Asian economies discuss best practices for dispute settlement
Trade diplomats and practitioners from 13 Asian economies participated in a workshop on WTO dispute settlement in New Delhi. Hosted by the Centre for WTO Studies at the Indian Institute of Foreign Trade in New Delhi, the workshop united practical WTO litigation training and exchanges of experiences on the domestic needs and challenges that often characterise engagement in WTO dispute settlement.
The event, co-organised by the World Trade Organization, the Advisory Centre on WTO Law (ACWL) and the International Centre for Trade and Sustainable Development (ICTSD), in collaboration with the CWS/IIFT, was the first of its kind in the Asian region and builded upon an earlier Tripartite Specialised Training on WTO Litigation that was organised in Geneva in
May 2012.
“The WTO Dispute Settlement system has proved to be an important tool to Asian economies, including many developing countries. Nonetheless, challenges remain as countries can only take advantage of the system if they have domestic legal capacity to identify and prepare cases - whether it is with the assistance of outside counsel or on its own,” Valerie Hughes, Director of Legal Affairs at the WTO said when welcoming the trainees on 26 November 2012. “It is these practical skills that we hope to build with this innovative training programme,” she added.
Senior legal experts from the WTO and ACWL provided a 2.5 day training course to 20 junior officials, which ended at noon on 28 November with an interactive Moot Court.
“Training is an important element of the ACWL’s activities. In addition to providing legal advice and litigation services to developing countries, we are committed to sharing our own experience and expertise to further strengthen the legal capacity in our Member States’ capitals,” Cherise Valles, Deputy Director at ACWL, commented on the course.
With a shared belief that advanced learning can be enhanced with the exchange of experiences and best-practices on the real life challenges that countries face when managing trade disputes, the workshop was joined by 11 high-level experts from within the region. On 28 and 29 November, the senior experts participated in two roundtable debates on intra-governmental coordination and on private sector engagement, coordinated by ICTSD.
“I am very glad that the organisers have chosen this subject for the discussions,” Ambassador Narayanan, former Ambassador of India to the WTO, said when opening the first roundtable session. “Governmental coordination is not only of pivotal importance, but one also cannot find any guidance on this in books or other literature. It has to come from practice and experience and this is a perfect forum for such discussions”.
As pointed out by Miguel Rodriguez Mendoza, Senior Fellow from ICTSD, by 2012, Asian economies have accounted for 20% of all WTO complaints, reflecting a similar figure for their share of world merchandise exports; by comparison, the Latin American countries have initiated 24% of all cases, despite accounting for only 4% of world merchandise exports. Also, despite the overwhelming importance of intra-regional trade, Asian economies rarely engage in intra-regional disputes, perhaps due to value chains in the region, he noted.
Following the intra-regional component, two dozen Indian representatives from industry, civil society, academia and private counsel gathered to discuss Indian opportunities and challenges on 30 November. High-level representatives introduced the mechanisms that are in place in India for intra-governmental coordination and private sector outreach.
WTO launches new “International Trade and Market Access” interactive tool
The “International Trade and Market Access” interactive tool, launched by the WTO on 19 November 2012, provides a new dynamic presentation for all WTO data on merchandise and commercial services trade as well as selected market access indicators from World Tariff Profiles, a WTO, ITC and UNCTAD co-publication. The tool is accessed through the WTO’s website www.wto.org/stats.
The tool consists of four elements:
1. The Trade Dashboard reveals the leading traders by commodity group, sector and year. Data can be shown by country, by region or by economic grouping. The dashboard also shows the leading partners of selected countries.
2. The Trends Dashboard shows the evolution of trade between the selected country/ region/economic grouping and a particular partner.
3. The Tariffs Dashboard displays statistics on market access for goods by country or customs territory, using data from the latest edition of the World Tariff Profiles.
4. Made in the World provides information on the WTO's participation in projects aimed at measuring and analysing trade in terms of value added.
The data is presented in the form of interactive maps, charts and data tables, using arrows and pop-up boxes to depict trade flows and to provide supplementary information. Users are able to export the data underlying the graphics.
WTO-related information for the countries, such as accession and membership status, is also included. A search function is provided in the data table of the Trade Dashboard to allow users to search by specific countries.
Trade growth to modestly rebound in 2013 but world still in “tailwinds of the crisis”: Lamy Director-General Pascal Lamy, in his address to the Research Institute of Economy, Trade and Industry in Tokyo on 12 October 2012, said that “based on current information, and holding a number of assumptions to task, the WTO expects trade growth to modestly rebound to 4.5% in 2013 with exports of developed and developing economies increasing by 3.3% and 5.7%, respectively and imports increasing by 3.4% and 6.1%, it is clear that the world is still working its way out of the crisis”. This is what he said:
I am very pleased to be addressing you this morning and I look forward to a healthy debate afterwards.
We are living in a world undergoing profound transformation. The old theories and hypotheses which governed the way we looked at trade in the twentieth century require better calibration with the new reality of trade in the twenty-first century. Research institutes such as the RIETI are crucial in leading and encouraging an evidenced-based debate on the role that trade can play in the global rebalancing effort.
The global economic picture remains one marked by extreme turbulence. Growth rates remain sluggish and global unemployment still remains far too high. New threats to food security are growing and questions about how to effectively address climate change remain. Just last month the WTO revised downwards its projections for trade growth in volumes from the Spring forecast of 3.7 per cent growth to 2.5 per cent which is a larger than expected downgrade.
There have been some recent positive signals regarding measures to reinforce the euro and boost growth in the United States. But the fact remains that the European sovereign debt crisis has not yet retreated and this continues to have implications for fiscal adjustment in the peripheral euro area economies and in the developing country markets, particularly those in Africa, given their strong trade links with Europe. Output and employment data coming out of the United States continues to be below expectation while and industrial production figures in China point to slower growth in that economy. Given that China is the world’s largest exporter this has far reaching implications for the global economic landscape.
Even though based on current information, and holding a number of assumptions to task, the WTO expects trade growth to modestly rebound to 4.5% in 2013 with exports of developed and developing economies increasing by 3.3% and 5.7%, respectively and imports increasing by 3.4% and 6.1%, it is clear that the world is still working its way out of the crisis.
This all confirms what we have intuitively known for some time. We remain caught in the tailwinds of the crisis and it may be many more years before we can safely say that we are in a sustained recovery mode. Global realities also confirm that we have never been more interdependent. Like the mythical butterfly that flaps its wings off the coast of Africa and causes hurricane force winds across the Atlantic — actions taken in one country or region has implications — negative or positive — on all other countries and regions.
This knowledge of our growing interdependence must govern how we, collectively, craft global trade and economic policies going forward. Our approach to global governance must be better attuned to these intricate economic webs which characterise twenty-first century trade and country policies. Instead of being inward looking, we need to be global in outlook.
The topography of the world is changing. It is no longer a simple equation of North and South. The rise in influence and economic weight of the emerging economies has shifted the balance of power — some would say from West to East, others from the West to the rest. We are truly in a twenty first century multi-polar world. Existentialists would call this an ‘age of transition’. Ricardians would see this as a natural progression of comparative advantage while the Westphalian model would see this as a breakdown of the order of the nation state. I see this as the contemporary form of multilateralism with notions of sovereignty being challenged by realities of interdependence. I see this as an opportunity. Opportunities for policy makers and researchers to take a new look at the forces moving trade and politico-economic discourse.
For many years scholars and economists have highlighted the role of ‘factory Asia’. The dexterity which Asian markets showed at the beginning of the crisis cannot be denied. The central role given to trade to energise growth in the global slowdown was successful and proved that keeping markets open and goods and services flowing was the correct recipe. However, this does not make Asia, and indeed Japan, exempt from the continued global turmoil. Japanese exports have been mostly flat since mid-2010, but recorded an 8.5% year-on-year increase in the second quarter of 2012 with imports also holding up relatively well. For China, although there has been year-on-year growth in China’s merchandise trade flows in volume terms, export growth dropped to 2.9% and import growth fell to 2.8% in the first quarter of 2012 before rebounding slightly in the second quarter. Provisional data suggests that third quarter results may be weaker still.
One element, which if not sufficiently arrested, will continue to impact on growth in Asia — protectionist policies in Asia’s export markets. Earlier this year the UNCTAD-WTO-OECD report on trade and investment protectionism by G-20 economies found that governments were continuing to introduce new trade restrictions, without stepping up the removal of older trade-restricting measures. Hence, restrictions have continued to accumulate since October 2008. The danger is that the benefits of trade openness will be slowly and incrementally undermined. Some argue that this resort to protectionism is understandable in an environment where, as reported by the ILO, ‘there is a backlog of global unemployment of 200 million — with an increase of 27 million since the start of the crisis’. But we know from experience that one protectionist move invites others and we also know that protectionism does not protect jobs. The ultimate result would be even weaker overall global demand, exacerbating everyone’s employment problem.
In a world where interdependence is the norm and no longer the exception and where Global and Regional Value Chains are increasing in breadth and in depth, restricting the flow of goods and services is counter-productive and with limited economic rationale in the medium to long-term.
It is not just the flows of trade which are changing, but it is also the very nature of trade which is transforming. The world is increasingly trading in tasks and in value-added and the way that goods and services are produced and traded has implications for the policies that we develop to best maximise trade’s contribution to growth and development. The WTO has been working closely with academics, research institutes and policy makers, including in Japan, and with other organisations such as the OECD to better present the true picture of trade in the twenty-first century. With trade in intermediate products accounting for more than half of world merchandise exports, with the import content of exported goods at 40 per cent — double the level from twenty years ago — and with decreasing transport and communication costs, and with greater fragmentation of production across the globe — our narrative on trade must change.
Japan has also been at the forefront of this new narrative. Global value chains and trade in tasks has underpinned your automobile industry for decades. In fact, trade in tasks has certainly enabled the emergence of “Factory Asia.” There is now limited utility and questionable accuracy in declaring many things ‘made in country X or in country Y’. For many products, value addition occurs in several countries, not just one or two and these can only accurately be described as “Made in the World.”
This replacement of “trade in goods” with “trade in tasks” has concrete implications for how we think about trade and offers important opportunities for research and analysis by institutes such as RIETI. To provide you with an example, traditional measurements would assign the total commercial value of an import to a single country of origin. But when applied to the new ‘made in the world’ platform, this methodology can unduly exaggerate bilateral trade balances and under-state where value addition occurs. This incongruence has two main impacts: one, inflated bilateral trade numbers which can inflame anti-trade sentiment and two, lead to policies which are not aligned with the pace, direction and reality of world production and trade.
What can policy makers and you as policy researchers do to address some of these challenges?
Of particular interest to countries at all levels of development and also to the business community, is Trade Facilitation. The broad consensus is that trade facilitation is a crucial element in helping countries to trade cheaper and faster and to allow developing countries in particular, to become more attractive destinations for investment and for accessing value chains. For business, effective trade facilitation and behind the border procedures are non-negotiable. A research focus on the linkages between trade facilitation, FDI and global value chains in the Asia-Pacific region would be a concrete deliverable from RIETI to the international dialogue on this subject.
Japan, and in fact many countries in the region, have created the blueprint for effectively using value chains. The knowledge and expertise that you have developed in this region needs to be shared with countries in Africa, Latin America and the Caribbean and in the Pacific. Asia can be a leading knowledge provider in this area and I urge institutes such as yours to broaden this form of cross regional knowledge sharing.
Research and policies must work together. One often informs the other. Sometimes research comes after policies are already in place but as one of the issues that I know is of particular interest to you is how to get businesses more interested in trade policy, I suggest that your research must remain ahead of the curve and should inform policy. Providing evidence-based research on value chains, non-tariff measures, regulatory frameworks, and developing business friendly analyses of the opportunities and challenges in global and regional trade agreements are important to ensure research remains fresh and relevant.
At the multilateral level we must ensure that protectionism is held in check. At the global policy level, Governments need to continue to give due attention to the Doha Development Agenda. Completing these negotiations would be an important stimulus to spreading the spoils of Global Value Chains while ironing out some of the distortions in global farm trade would set the stage for greater investment in value chains in agriculture. We have had incremental success with issues outside of the DDA such Aid for Trade, the Government Procurement Agreement and the continued discussion on the ITA2 — and I commend Japan for its role in these processes — but there are many other issues related to market access, services, and rules which also necessitate collective attention and energy.
I hope that these brief words today would have provided you with some insight into the current global environment that we are operating under, but also the opportunities there for policy makers and researchers to contribute to broadening and deepening the comprehension of this new colloquium of international trade.
Thank you.
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WTO adopts ruling on electrical steel
At a meeting on 16 November 2012, the Dispute Settlement Body adopted the Appellate Body Report and the Panel Report, as upheld by the Appellate Body Report, pertaining to the dispute over anti-dumping duties applied by China on grain oriented flat-rolled electric steel from the United States.
The United States welcomed the adoption of the Panel Report and Appellate Body Report which had found serious and pervasive deficiencies with China's measures. The US highlighted the key findings of the Panel, which had found China in breach of several provisions of the Subsidies and Countervailing Measures Agreement and the Anti-Dumping Agreement. The US welcomed the fact that the Appellate Body upheld the Panel's findings, in particular the findings that China's price effects analysis was flawed, that China failed to disclose essential facts and that China failed to explain its determination. The US noted that the problems identified in this dispute were also present in other investigations that were also subject to dispute settlement.
China noted that the anti-dumping margins determined by its investigating authority had been upheld. While appreciating the need for the Appellate Body to clarify certain issues concerning an authority's findings of price effects, China had some concerns regarding other aspects of the Appellate Body's review of the Panel Report. In its view, it was important that the Appellate Body pay particular attention to the findings of the authority, and how the Panel viewed those findings. China believed that, like the Panel, the Appellate Body should base its findings and conclusions on the determination of the authority, not on a characterisation of that determination. Despite not agreeing with all the findings of the Appellate Body and the Panel, China said it respected the conclusions and would work towards implementing the findings.
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Members discuss role of intellectual property in innovation and development
Innovation is essential for raising living standards, and intellectual property has an important role to play provided an appropriate balance is struck and governments act to help smaller players, the WTO council on intellectual property heard on 7 November 2012.
The two-hour exchange of information and ideas was the first time the council discussed the topic since it was set up with the WTO’s creation in 1995. It was on the agenda of the 6–7 November meeting at the request of the US and Brazil. They offered different perspectives on the subject but agreed that the council should broaden its deliberations into this important subject.
Other members agreed. Altogether, 18 delegations and two observer organizations shared with the Council for Trade-Related Aspects of Intellectual Property Rights (TRIPS) — which comprises all WTO members — their views on the role of intellectual property in innovation and development, and in some cases the policies they have introduced to promote innovation.
Meanwhile, some countries sought ways of moving talks on two issues forward despite the hiatus in the Doha Round negotiations: proposals to amend the TRIPS Agreement to help protect biodiversity, and to give all products the same enhanced protection for geographical indications — names identifying the origin and quality of products — as wines and spirits.
On the proposed “disclosure” amendment (details below), they suggested that the Secretariat be asked to compile all the ideas produced so far into new documents and to organise an information session. On biodiversity and geographical indications, they organised their own roundtable discussion after the TRIPS Council meeting.
But countries opposing both proposals said their positions were unchanged. Some said the roundtable meeting on biodiversity and geographical indications violated the spirit of the “balanced” and “inclusive” nature of talks among ambassadors and other negotiators on reviving the Doha Round because it was organised by one side, the “W52” group.
A substantial amount of time was devoted to various aspects of technical assistance for least developed countries in events before the meeting and during the council meeting itself.
Among other topics, least developed countries also proposed postponing their deadline for protecting intellectual property under the TRIPS Agreement, a decision that has to be taken before the deadline expires on 1 July 2013.
The council also reviewed how the “Paragraph 6” system on intellectual property and public health is functioning — an annual event.
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Lamy urges “smart policies” to maintain European competitiveness
Director-General Pascal Lamy, in a speech at the European Industry Forum in Berlin on 20 October 2012 said “I believe that a big part of the answer to maintaining the competitiveness of European industry in world markets relates to the need for smart domestic but also European policies”. He expressed the hope that “what we saw in Europe for the last six months, including at this week’s European Council, are the first steps towards exiting the euro crisis and restoring a much needed credibility”. This is what he said:
Ladies and Gentlemen,
Dear friends,
I want to thank you for your invitation to speak to you today on the subject of industrial renewal in Europe. Europe’s industrial future is crucial to its growth, reforms, innovation and job creation.
There is a strong external dimension of the European industry’s competiveness and today I would like to outline for you four very simple and yet powerful facts on which the industrial future of this continent will hinge.
Fact number one: in 2012, it will be trade which will powerfully offset weak domestic demand that threatens to push the EU economy into recession.
Fact number two: 90% of global economic growth by 2015 is expected to be generated outside Europe, a third of it in China alone.
Fact number three: countries with large industrial sectors export more than those which do not. In central European countries, industry represents more than 30% of GDP and the export to GDP
ratio is more than 50%. In France and Spain it is only 30%.
Fact number four: countries which export more import more. Germany itself accounts for 25% of the EU’s imports whereas German GDP is 20% of the EU.
The picture these few figures paint is clear: there cannot be a successful European internal industrial agenda without a coherent and complementary external agenda and vice versa.
In the last decades, we have seen exponential trade growth resulting in a shifting geo-economic balance between the West and the East and between the North and the South. The rapidity of such changes is unprecedented and has impacted traditional production processes and social structures. In many advanced economies, these changes have triggered legitimate questions regarding the benefits and losses due to globalization.
The important trade growth we observed before the crisis is the outcome of three factors.
First, trade is the conveyor belt between demand and supply and reflects complementarities between countries, whether developed or developing countries. It also underscores differences in the rate of economic growth
and the differences in needs among these countries.
Second, trade growth is proof of the progress in trade opening. Multilateral, bilateral and unilateral initiatives have progressively reduced barriers to trade both in goods and in services although much remains to be done.
Third, the decrease in transports costs and the power of new information technologies has generated more opportunity for specialization of production and of trade in tasks. Intermediate products today account for 60% of total trade in manufactures. These tasks are often spread across regions and even continents in global value chains. Specialization happens at the level of the tasks and not necessarily at the level of final products. The distance to foreign markets has been substantially shortened, offering great opportunities for small and medium-sized enterprises which constitute a big part of the European industrial landscape. Imports nowadays matter as much as exports. In fact, the average world import content of exports has grown from 20% twenty years ago to 40% today.
Global value chains call for revisiting the manner in which we compute trade flows, the manner in which we calculate jobs associated to trade and even the manner in which we calculate bilateral trade balances. Traditionally, we have looked at flows of goods and services across borders. Today, we need to look at the value added in each country. We are working with the OECD and other research institutes to produce new trade data reflecting value added trade and the first evidence of this will be available publicly by mid-December. This breakthrough should help business and policy makers better understand and therefore better focus on what matters at the end of the day — jobs!
Levelling the playing field in a world of value chains also requires that we pay more attention to non-tariff barriers which take the form of regulations, standards or norms. One such barrier relates to the cost of customs procedures, which on average represent the equivalent to a 10% tariff on imports.
Contrary to public perception in many European quarters, the EU has remained resilient on trade performance in recent decades. Its world market share has remained stable at around 20%, while that of similar economies such as the United States and Japan has decreased. This resilience can be attributed to a comparative advantage in certain critical sectors, such as civil aviation, chemistry or machinery.
This increase in trade correlates with an increase in employment. In Europe today, more than 30 million jobs, that is more than 10% of its total workforce, depend on sales to the rest of the world. This is an increase of 50% compared to twenty years ago. But it is also clear that the gains flowing from the benefits of trade have not been evenly distributed and that behind overall positive employment figures lie also job destruction in certain sectors and regions. The paradox is that despite a common trade policy for all 27 EU member states, some are doing much better than others in benefiting from external markets.
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Take the example of Germany and France. Despite sharing the same trade policy, France has been doing less well than Germany outside Europe. But more importantly, it has also lost market share inside Europe. What are the reasons for such a decline on the European market? In 2008, hourly wages were similar in France and Germany: 26/33 €/h in France and 30/33€/h in Germany. Same for the average number of hours worked per year: around 1,500 in both countries. Social and environmental rules are also similar in France and in the rest of the EU member states which constitute two-thirds of French exports.
The essential explanation is the weakening of the non-price competitiveness. Among other reasons, private sector investment in research and development is too weak. This leads to insufficient product differentiation and less quality on average. The number of French exporting firms is now three times less than in Germany.
If I bring these facts to the table, it is because I believe that a big part of the answer to maintaining the competitiveness of European industry in world markets relates to the need for smart domestic but also European policies. Let me outline a few examples.
First, Europe needs to pay closer attention to education, training, qualifications, skills transfer and innovation.
Second, Europe has an untapped potential to improve productivity through the deepening of the single market on services. We can no longer easily separate industry and services. In a world of global supply chains, the competitiveness of services has become a major component of the competitiveness of industry.
Third, considering the importance of energy prices for the location of industrial firms, energy policies can greatly influence the competitiveness of a region. Hence, the importance of proper management of energy transition in the future.
Fourth, an efficient social security system is an element of competitiveness insofar as it can play the role of a buffer against a temporary crisis affecting employment or insofar as it can help adapt job skills in sectors affected by competition.
In short, the external dimension of the European economy cannot be dissociated from a strong internal dimension. It cannot be dissociated from “more Europe”. And both require a stable environment in which to operate.
Let me conclude in hoping that what we saw in Europe for the last six months, including at this week’s European Council, are the first steps towards exiting the euro crisis and restoring a much needed credibility.
Thank you for your attention.
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WTO starts preparations for fourth Aid for Trade Global Review
The Committee on Trade and Development, on 7 November 2012, discussed preparations for the fourth Aid for Trade Global Review and reported progress in implementing Aid for Trade projects on the ground.
WTO Director-General Pascal Lamy announced that the fourth Global Review of Aid for Trade, entitled “Connecting to Value Chains”, will take place from 8 to 10 July 2013.
The Global Review, a biennial monitoring exercise conducted in collaboration with the Organisation for Economic Cooperation and Development (OECD), examines how support has been mobilized to help developing countries, in particular least-developed countries (LDCs), integrate into the international trading system and monitors the associated impact on development. The Review provides strong incentives to both donors and recipients to advance the Aid for Trade agenda, by highlighting ongoing needs and best practice.
The fourth Global Review will focus on how developing countries and LDCs are participating in global value chains and the barriers they face. It will also aim to determine how Aid for Trade can best be used to help developing countries enter and establish their own value chains.
“Looking through the prism of value chains challenges our preconceptions about trade and development,” said Pascal Lamy, noting that the splintering of networks opens many different possibilities for developing countries. “Much of the past 50 years of development assistance and policy has been built on helping countries move to the first production link in the processing chain. Production sharing networks challenge this automatic assumption. They open a range of possibilities, of which this is only one.” He added that value chains at a national, regional and global level could provide opportunities not only in industrial goods but also in services, agriculture and intellectual property.
Japan, the United States, the European Union, the Economic Commission for Africa and the Economic Commission for Europe welcomed the statement and expressed their willingness to participate in the Global Review. Some members expressed concern about the theme.
The meeting heard reports from members and organisations on their Aid for Trade implementation activities.
The European Union presented an overview of its accountability report on improving support in mobilizing financing for development. Dr Waleed Al-Wohaib, Chief Executive Officer of the International Islamic Trade Finance Corporation, presented an update on the Aid for Trade initiative for the Arab states. China, India and Morocco also stated their continued commitment to Aid for Trade.
Bangladesh, Singapore and Korea shared their experience in implementing their Aid for Trade work programme. The Enhanced Integrated Framework and Comoros also provided an update on their activities, notably a “Vision 2015 and Aid for Trade” round table meeting taking place on 8 November 2012. The Caribbean and the Pacific Islands Forum shared experiences on their regional Aid for Trade strategy. The International Trade Centre presented a report on the World Export Development Forum held in Jakarta, Indonesia, on 15-17 October 2012.
On monitoring and evaluation, Dr Tatsufumi Yamagata of the Japan External Trade Organization reported on Japan's evaluation of its Aid for Trade policies and programme. Mr Frans Lammersen of the OECD provided an update on the joint meeting of the Trade Committee on Aid for Trade held in September and OECD’s other Aid for Trade related activities. Mr Michael Roberts, Aid for Trade Coordinator at the WTO Secretariat, outlined the Aid for Trade monitoring exercise and highlighted the end of year deadline for members’ submissions. |
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