Negotiations under Article XXVIII of the GATT 1994

Under Article II of GATT 1994, each WTO member country has a separate schedule of tariff concessions which have been agreed upon in the negotiations as well as the other commitments assumed by countries from time to time. The rates of tariffs -- known as "bound rates" -- are listed in the schedule of concessions. Each member country is obliged not to impose tariffs or other duties or charges, which are in excess of the bound rates set forth in its schedule.

Prior to the Uruguay Round negotiations, India had bound some 6 per cent of its tariff lines. As a result of the Uruguay Round, India now has bound about 67 per cent of its tariff lines, with all agricultural lines bound and some 62 per cent of lines for imports of industrial goods. Lines remaining unbound include those on consumer products and some industrial items. For non-agricultural goods, India undertook, with a few exceptions, ceiling bindings of 40 per cent ad valorem on finished goods and 25 per cent on intermediate goods, machinery and equipment. In agriculture, tariffs have generally been bound at 100 per cent for primary products, 150 per cent for processed products and 300 per cent for edible oils. However, there were certain agricultural products including rice, maize, milk powder, sorghum, millet and mustard oil which were bound during the previous rounds of GATT negotiations at zero or low level of tariffs.

India initiated the process of negotiations in September, 1996 for upward revision of these tariff bindings under Article XXVIII of GATT 1994. A series of negotiations were held with US, European Communities (EC) and Australia in consultation with the concerned administrative ministries. Compensation packages were worked out on the basis of an objective analysis with a view to arrive at a negotiated settlement.

Negotiations with the EC were concluded in September 1999, while negotiations with Australia and USA were concluded in November-December 1999. All the revised bindings agreed upon have received the concurrence of the concerned administrative ministries after taking into account the level of protection required, domestic sensitivities, current trade flows, international prices and India's overall competitiveness for the specific items. The results of the negotiations were conveyed to WTO on 29 December 1999 and the revised tariffs have been incorporated in the Budget for 2000-2001 in the form of enabling provisions.

Changes in customs duty rates were notified by the Ministry of Finance (Department of Revenue), indicating increase in basic customs duty on the following agro items with effect from 5/4/2000:

President Clinton on INDO-US Partnership, Globalisation and the WTO

"The truth is, no single image can possibly do justice to your great nation. But beyond the complexities and the apparent contradictions, I believe India teaches us some very basic lessons….

A third lesson India teaches is about globalisation and what may be the central debate of our time. Many people believe the forces of globalisation are inherently divisive; that they can only widen the gap between rich and poor. That is a valid fear, but I believe wrong.

As the distance between producers large and small, and customers near and far becomes less relevant, developing countries will have opportunities not only to succeed, but to lead in lifting more people out of poverty more quickly than at any time in human history. In the old economy, location was everything. In the new economy, information, education and motivation are everything -- and India is proving it.

You liberated your markets and now you have one of the 10 fastest growing economies in the world. At the rate of growth within your grasp, India's standard of living could rise by 500 per cent in just 20 years. You embraced information technology and now, when Americans and other big software companies call for consumer and customer support, they're just as likely to find themselves talking to an expert in Bangalore as one in Seattle….

To succeed, I believe there are four large challenges India and the US must meet together-challenges that should define our partnership in the years ahead. The first of these challenges is to get our own economic relationship right. Americans have applauded your efforts to open your economy, your commitment to a new wave of economic reform; your determination to bring the fruits of growth to all your people. We are proud to support India's growth as your largest partner in trade and investment. And we want to see more Indians and more Americans benefit from our economic ties, especially in the cutting edge fields of information technology, biotechnology and clean energy. The private sector will drive this progress, but our job as governments is to create the conditions that will allow them to succeed in doing so, and to reduce the remaining impediments to trade and investment between us.

Our second challenge is to sustain global economic growth in a way that lifts the lives of rich and poor alike, both across and within national borders. Part of the world today lives at the cutting edge of change, while a big part still exists at the bare edge of survival. Part of the world lives in the information age. Part of the world does not even reach the clean water age. And often the two live side by side. It is unacceptable, it is intolerable; thankfully, it is unnecessary and it is far more than a regional crisis. Whether around the corner or around the world, abject poverty in this new economy is an affront to our common humanity and a threat to our common prosperity.

The problem is truly immense, as you know far better than I. But perhaps for the first time in all history, few would dispute that we know the solutions.

We know we need to invest in education and literacy, so that children can have soaring dreams and the tools to realise them. We know we need to make a special commitment in developing nations to the education of young girls, as well as young boys. Everything we have learned about development tells us that when women have access to knowledge, to health, to economic opportunity and to civil rights, children thrive, families succeed and countries prosper. Here again, we see how a problem and its answers can be found side by side in India….

To promote development, we know we must conquer the diseases that kill people and progress. To promote development, we know we must also stand with those struggling for human rights and freedom around the world and in the region. For as the economist Amartya Sen has said, no system of government has done a better job in easing human want, in averting human catastrophes, than democracy. I am proud, America and India will stand together on the right side of history when we launch the Community of Democracies in Warsaw this summer….

All of these steps are essential to lifting people's lives.But there is yet another. With greater trade and the growth it brings, we can multiply the gains of education, better health and democratic empowerment. That is why I hope we will work together to launch a new global trade round that will promote economic development for all.

One of the benefits of the World Trade Organisation (WTO) is that it has given developing countries a bigger voice in global trade policy. Developing countries have used that voice to urge richer nations to open their markets further so that all can have a chance to grow. That is something the opponents of the WTO don't fully appreciate yet. We need to remind them that when Indians and Brazilians and Indonesians speak up for open trade, they are not speaking for some narrow corporate interest, but for a huge part of humanity that has no interest in being saved from development. Of course, trade should not be a race to the bottom in environmental and labour standards, but neither should fears about trade keep part of our global community forever at the bottom.

Yet we must also remember that those who are concerned about the impact of globalisation in terms of inequality, the environmental degradation do speak for a large part of humanity. Those who believe that trade should contribute not just to the wealth, but also to the fairness of societies; those who share Nehru's dream of a structure for living that fulfils our material needs, and at the same time sustains our mind and spirit.

We can advance these values without engaging in rich-country protectionism. Indeed, to sustain a consensus for open trade, we must find a way to advance these values as well. That is my motivation,and my only motivation in seeking a dialogue about the connections between labour, the environment,and trade & development. I would remind you -- and I want to emphasise this -- the United States has the most open markets of any wealthy country in the world. We have the largest trade deficit. We also have had a strong economy, because we have welcomed the products and the services from the labour of people throughout the world. I am for an open global trading system. But we must do it in a way that advances the cause of social justice around the world."

( Excerpted from President Clinton's address to the Joint Session of the Indian Parliament on March 22, 2000 )

Point Counter- Point

EU issues and India's concerns

Mr. Pascal Lamy, Trade Commissioner of the European Commission (EC), visited India from March 2 to 8, 2000. During the visit, he had a meeting in the Ministry of Commerce & Industry where he emphasised the importance attached by European Union (EU) to further improving and strengthening the bilateral economic relations and understanding with India. During the discussions, though Mr. Lamy sought the support of India to the EC's proposal for the launch of a new round of negotiations in this year, India reiterated her concerns and exchanged views on various multilateral and bilateral trade issues.

In his response on the key multilateral issues raised at his interaction with Mr. Lamy, the Commerce & Industry Minister, Mr. Murasoli Maran, said that India appreciated and welcomed the initiatives taken by the EC for the integration of the development philosophy by way of capacity building, technical assistance and special and differential treatment, but emphasised that WTO disciplines should also allow sufficient freedom and flexibility to the developing countries to pursue their development strategy and must make a distinction between developed and developing countries where such distinction is warranted, particularly in respect of subsidies, IPRs and trade-related investment measures.

He assured Mr. Lamy that despite the disappointment at Seattle, "we are ready to participate in the mandated negotiations and mandated reviews. I would like to add that food security and livelihood are extremely important for populated countries like India. The rationale for our commitment to self-sufficiency in food is self-evident. Thus, a large agrarian economy like India would need enough flexibility under the Agreement on Agriculture to take care of its food security and rural employment concerns. In the Services sector, movement of natural persons is critical without which the progress in Service sector is likely to be tardy. Only through this, the objective of the GATS* and in particular, of Article-IV of increasing the participation of developing countries, can be achieved. Under the rubric of mandated reviews, we favour resolution of many of the issues we have already mentioned under implementation".

Non-trade related issues, he said, need to be eschewed. Developing countries are apprehensive of the new trade barriers sought to be erected through reintroduction of core labour standards. "The tendency to link trade with issues unrelated with trade, to our mind, is protectionist and would blunt the comparative advantages of the developing countries. India is fully committed to observance of labour standards and has ratified most ILO Conventions but is against any linkage of trade with labour standards….. India joins the EU in its concern for the environment and sustainable development. However, as I stated in the plenary session at the Seattle Ministerial Conference, we are strongly opposed to any attempt to either bypass or change the structure or mandate of the Committee on Trade and Environment set up at Marrakesh. Such attempts, in the name of 'mainstreaming', can be used for legitimising unilateral trade restrictive measures", he said. He reiterated that the ambit of the WTO should be confined to trade in goods and trade in services. Other issues, like investment and intellectual property rights were relevant only in so far as they relate to trade and for this, there are already Agreements negotiated in the Uruguay Round. He requested the EU to keep in view these concerns which are basic to India's approach on trade. "We are also of the view that the resumption of the Ministerial Conference should take place only after there is a near convergence of views on most of the items and which we sincerely feel will take place only if the contentious non-trade issues are kept out of the agenda", the Minister stated, while re-emphasising India's commitment to free trade and multilateral trade negotiations as a founder member both of GATT and the WTO. The multilateral system would, in the long run, stand to gain from a process of review and introspection and frank and objective discussions amongst member States, he said, so that implementation issues could be addressed and the WTO could truly become an instrument for trade-driven economic growth in all parts of the world.