United Nations Conference on Trade And Development (UNCTAD), India with the financial assistance of the Department for International Development (DFID), UK has launched of a new project to assess the impact and opportunities for India of trade and globalization. Entitled "Strategies and Preparedness for Trade and Globalization in India", the project has two main objectives. First it assists Indian trade negotiators, policy makers and other stakeholders in understanding the development dimension of key trade issues, particularly related to the WTO agenda. Secondly, it intends to strengthen the country’s human and institutional capacities for analysis of globalization–related issues and facilitate a policy environment that supports and sustain a more equitable process of globalization. In the process, the project should help India derive the greatest possible benefits from the multilateral trading system and influence international trade rule making. The project implemented with the active participation of the stakeholders of the industry and civil society organisations. It will focus on institutions and sectors with the greatest potential to affect the poor in their roles as producers, workers, consumers and citizens.

Component I of the Project, intends to assist negotiators and policy makers, in enhancing understanding of the development and pro-poor dimension of key trade issues relating to the Doha work programme whereas the Component II of the programme aims to strengthen human and institutional capacities among the stakeholders, as well as a policy environment that will support and sustain a more equitable process of globalisation. Component II will facilitate building capacities on trade competitiveness in selected sectors/regions.

Component I focuses on ‘upstream’ activities (assisting trade negotiators and policy makers), while Component II engages in ‘downstream’ actions, to build stakeholder capacities for understanding and managing the impact of globalisation on their respective constituencies. The activities under both these components are interlinked, for instance, when research and analysis of negotiating issues (a Component I activity) is disseminated to stakeholders and their responses fed back to the negotiators ( a Component II activity)..

The prioritization of the sectors of the industry for implementation of the programme is based on the viewpoint of external trade policy on the basis of the sector’s link to the poor (i.e. impact of trade liberalization in a sector, especially on poor people as producers, consumers and employees and their ability to take advantage of the opportunities from globalization) and trade impact. UNCTAD in consultation with Ministry of Industries & Commerce, Govt. of India and DFID has selected five sectors for Trade Related Capacity Building (TRCB) activities. These sectors are textiles and clothing (including handlooms); agriculture; fisheries; small & cottage sector (including handicrafts and leather footwear); and retail services. The sectors chosen for the programme have a significant pro-poor thrust.

The programme implemented through a network of stakeholders, including private sector, Governments at all levels, civil society organisations, sector bodies and institutions dealing with trade related issues. The success of the programme hinges on the formation and functioning of the sector network, with active participation of various stakeholders. The factors in favour of this happening are:
1) the programme addresses the real and practical needs of the stakeholders
2) the programme activities are strictly demand driven
3) stakeholder participation in the sector network on a voluntary basis
The involvement of UNCTAD and Ministry of Commerce & Industry, make the sector network a neutral and credible forum.

The Programme envisages to facilitate the formation of a (virtual) Sector Network of existing national, regional and state level trade related institutions dealing with the respective sectors. The programme also focuses to facilitate help build networks of existing trade related institutions capable of providing essential support services to exporters i.e. trade policy information and commercial intelligence. It would also help establish links with existing institutions which provide export promotion, marketing, product development and training services. Since no single institution or firm can provide all these services effectively, national and sub-national networks of trade support institutions, each focused on providing a limited range of specialized services can be an essential element of building trade related capacities.

The programme intends that Tier 1 partners would be able to put the sector network in place, and they, along with Tier 2 partners, would undertake TRCB and other activities, on a demand driven basis. It would provide such organizations a credible platform to network with all stakeholders, and also access to technical expertise. It is expected that Tier 1 partners would be able to effectively coordinate with the Tier 2 partners and other stakeholder bodies. UNCTAD coordinates with sector partners on a regular basis, and take on a more pro-active role, in partnership with Government, to mobilize the sector stakeholders, should the Tier 1 partner be not able to put the network in place.

The Sector Network will be a forum of existing organisations or institutions, housed in the premises of one of the member organisations designated as the Network Coordinator or Sector Tier 1 partner. There may be more than one Tier I partners for some of the sectors, depending upon the size and relative importance of subsectors. Textiles Committee, a statutory body under the Ministry of Textiles, Government of India, is the major Tier-I partner for the Textiles & Clothing Sector

The Tier 2 partners includes all such institutions, associations that have links with trade issues in that sector and have the potential to represent the interests of the poor. All institutions identified as potential Tier I partners under the Programme, automatically qualify as Tier II partners if not selected as a Tier I partner. In addition, other regional/state institutions, either having sector-specific mandate, or having been engaged in relevant research studies, be associated with the Programme as Tier II partners, for development as Centres of Excellence. These Centres of Excellence would include reputed national level institutions engaged in research and/ or capacity building pertaining to trade related activities. Their roles and responsibilities would be determined by UNCTAD and Tier 1 partner keeping in view the needs of the stakeholders articulated in sector workshops. For instance, in respect of research/ content generation, the Tier I partner and UNCTAD could commission a few studies to be carried out by either by the Centres of Excellence or identified Tier 2 partners, or any other appropriate organisations/ experts to the extent that the studies would help in increasing the level of awareness and building the capacities of the stakeholders at various levels to meet the opportunities and challenges of globalization.

The Tier I partner(s) are selected by UNCTAD on the basis of a competitive bidding/expression of interests. But wherever possible, every thing else being equal, preference will be given to regional and state-level players/actors. The criteria for selection of the Tier I partner(s) are:

- an existing organisation, as the programme does not intend to create any new institutions
- a leading/representative organisation in the sector (direct stake in the sector, outreach, credibility among the stakeholders etc.)
- preference to member-driven organizations over aid-driven organizations
- willingness to provide the physical infrastructure as well as a suitably experienced person for the programme, to coordinate the various activities in the sector.
- willingness to sign an agreement with UNCTAD
- willingness to provide evidence of past experiences and membership profiles; audited accounts relating to last three years , Memorandum of Association/Article of association/Trust Deed and other documents registered with statutory authorities which gives details about their constitution, capital fund, main goals, etc. This would enable scrutiny of the revenue generation pattern of the organisation.

The Tier 2 partners are identified both by the selected Tier 1 partner and UNCTAD, taking into account the core competence and expertise, credibility among the stakeholders, its level of interest in the sector, previous experience and the needs expressed by the stakeholders in the inception workshop. These institutions would be selected on the basis of relevant experience in the key trade issues that concern the sector, ability to mentor other institutions in India, and availability of adequate persons to undertake activities under the Programme. That is, in the Textiles & Clothing sector, a Tier 2 partner could be Industry associations, Institutions, Export Promotion Councils, State Government departments, Media, Civil Society Organisations etc.

There would be a close working relationship between Tier 1 and Tier 2 partners. All decisions in regard to programme deliverables, time lines and actionable items will get implemented in a mutually consultative process between the Tier 1 and Tier 2 partners. It is expected that while the broad contours of the activities to be undertaken would be agreed between UNCTAD and Tier I partners, the Tier 1 and Tier 2 partners would be jointly responsible for the implementation of these deliverables. Tier 1 partners would keep UNCTAD informed of the progress in the activities, at least on a monthly basis.

• Allocating suitably qualified and experienced personnel to function as the main coordinator of the Sector Network and the contact point for UNCTAD and stakeholders. Putting in place a virtual sector network and Sector Website.
• Assisting UNCTAD in identifying Tier II partners / Centres of Excellence for the sector/sub-sector. Organising the Inception Workshop for the sector, as well as the six monthly Stock-taking Workshops, where the views of the sector would be articulated.
• Undertaking TRCB activities throughout the country, particularly in the poorer states/ regions and the poorer areas in more developed states
• Conducting or facilitating trade-related studies for filling information gaps at state/regional and local levels in various sub-sectors, as per prioritization of needs articulated by stakeholders. Organising, in association with UNCTAD, technical assistance and other programme activities (including training programme, provision of experts and consultancy inputs etc.)
• Ensuring wide dissemination of relevant information to stakeholders, through dedicated website, newsletter and media reports. Organising the Government- Private Sector Interaction.
• Conducting, through an independent consultancy organisation, the annual sample survey of stakeholders to ascertain the impact of the programme interventions.
• Providing office space & facilities, such as computers, telephone, internet connectivity, furniture etc. as may be required.

The role and responsibility are determined by UNCTAD and Tier 1 partner keeping in view the needs of the stakeholders articulated in sector workshops. For instance, in respect of research/ content generation, the Tier I partner and UNCTAD could commission a few studies to be carried out by either by the Centres of Excellence or identified Tier II partners, or any other appropriate organisations/ experts to the extent that the studies would help in increasing the level of awareness and building the capacities of the stakeholders at various levels to meet the opportunities and challenges of globalization.

i) New EU GSP: Implications on Indian Textiles & Clothing sector
ii) Geographical Indications Act under TRIPS: Protecting Traditional Knowledge in the Globalised Era
iii) Tariff & Non-Tariff Barriers in the Textiles & Clothing sector

In 1968, the UNCTAD recommended the creation of Generalised System of Preferences (GSP), under which industrialized countries granted trade preferences to all developing countries. The European Union granted unilateral tariff preferences to 178 countries, including India. The EU’s GSP scheme granted benefits for certain products of the beneficiary countries either through the duty-free access or through tariff reduction. The European Community first implemented the GSP scheme in 1971 and since then, the scheme has changed considerably. The main features of the early scheme were quotas and ceilings for individual countries and products. From 1995, the EU’s GSP abolished quantitative limitations and instead provided tariff preferences, which varied according to the sensitivity of the products in the EU market. A modified GSP scheme called New EU-GSP Scheme has become operational from 1st January 2006. A majority of the stakeholders were unaware of the provisions of the scheme as well as the implications to the textiles & clothing sector.

The tariff preferences available under GSP apply to normal MFN duty rates without any quantitative restrictions. The extent of tariff preferences depends on the arrangements. The arrangements available under the GSP scheme during the period have been grouped as under

(i) The general arrangement
(ii) The special incentive arrangements for protection of labour rights
(iii) The special incentive arrangement for protection of environment.
(iv) Special arrangement for LDCs and
(v) Special arrangements to combat drug production and trafficking.

The general arrangements are available to all beneficiary countries under the scheme roughly covered 7000 products of which 3300 were classified as nonsensitive and rest sensitive. Non-sensitive products enjoyed duty free access while the sensitive products were provided 3.5 reduction in percentage points in MFN tariffs. The sensitivity of the products is determined by the situation of the sector manufacturing the same products in the EU. Sensitive products are those of sectors which still require a higher boarder protection while non-sensitive products are those which can compete with the duty free imports from the developing countries. Under the general arrangements, duties on imports of non-sensitive products are exempted while duties on imports of sensitive products are reduced. This is commonly referred to as "tariff modulation".

Though the customs duties have steadily fallen to an all time low, they are still an issue for some products. In the globalised markets, there are a number of industries, such as textiles and clothing, where competition is becoming increasingly fierce and a reduction of customs duties on those products will provide an incentive for companies to buy from the beneficiary country rather than others. In accordance with objectives of the GSP for poverty reduction through increase trade and diversification of economies, the earlier GSP scheme has been modified and become in force for a period of ten years from 2006 to 2015.

The new EU-GSP scheme has three major arrangements
(i) the general arrangement
(ii) the arrangement for LDCs (EBA); and
(iii) GSP plus.

Under the general arrangement, the beneficiary countries receive 20 percent concession on the MFN tariffs and under the EBA scheme; the LDCs will continue to receive 100 percent tariff concession. As regards to the GSP plus, the country, which encourages protection of basic rights, protects environment for a sustainable growth and provides good governance will be eligible for the scheme and will receive a 100 percent tariff concession. The scheme became operational from 1st July 2005 on fast track basis. Some beneficiary countries have preferred not to have the content and implementation of their social legislation subject to the rigours of scrutiny. The length and the relative complexity of the evaluation procedures have probably made the arrangements even less attractive. The new sustainable development incentive will replace prior evaluations carried out under the current incentive arrangements with a system that encourages ratification and implementation of international conventions. The GSP plus scheme in particular introduced a single arrangement in place of three separate types of incentives to encourage the protection of labour rights, to encourage the protection of environment and to combat illegal drug production and trafficking. Thus, in place of five arrangements earlier, the new GSP brought in three arrangements in total. Sri Lanka is one of the Asian countries, which has been the beneficiary of the GSP plus scheme.

Under the new GSP scheme, a new graduation formula included essential changes to make the graduation arrangement simpler. Under the scheme, a sector in a particular country would be graduated out from the scheme if it reaches a defined level of imports to EU from the total import from the beneficiary countries. In the earlier graduation method, the sector was out from the preferential tariff arrangement if total imports to EU including the beneficiary countries import reached a defined level (say 15 percent of the sector share in EU market). As a consequence of this, the base has been shrunk giving rise to faster removal of those countries, which have accelerated growth rates of exports to EU. The present level has been fixed at 15 percent of the total EU imports of the product of that sector from the beneficiary countries alone. India has since been out from GSP scheme in textiles and the apparel sector is likely to be out since the growth rates of apparel exports have been quite significant in recent years, hovering around 9-10 percent. The percent change has reached to 23.1 percent and 14.7 percent in value and volume terms respectively during Jan-Sept 2005 as compared to the same period in 2004 (EC, 2005). LDCs and GSP plus countries will of course, will not be considered for the purpose of graduation.

The GSP does not erect any quantitative restrictions of products of the beneficiary countries unless otherwise the imports to EU under the scheme seriously affect the products manufactured and traded in EU market. In case of such a situation EU will apply safeguard measures by reintroducing the common customs tariffs duties. EU also applies temporary withdrawal of preferences in an exceptional measures adopted only in case of fraud or failure to provide administrative co-operation as required for the verification of certificate of origin and otherwise.

Trade Related Intellectual property Rights (TRIPS) agreement was signed under the framework of WTO. The objectives of the TRIPS agreement are to protect the rights of the creators / inventors from unauthorised use of their creation / invention. In the year 1999, the Government of India, in compliance with its obligation under TRIPS Agreement, enacted the Geographical Indications of Goods (Registration and Protection) Act, 1999. Geographical Indications (GIs) means an indication which identifies goods as agricultural goods, natural goods or manufactured goods as originated or manufactured in the territory of a country or a region or locality in that territory where a given quality, reputation or other characteristics of such goods is essentially attributable to its geographical origin. That is, a GI point to a specific place or region of production that determines the characteristic qualities of the product that originates therein. The GI Act 1999 seeks to provide the registration and protection of GI designated goods from unauthorised persons misusing it. The act protects the interest of the producers, manufacturers and thereby the consumers from being deceived by the falsity of geographical origin to economic prosperity of the producer of such goods and promote goods bearing GIs in the export market.

The awareness level about the GI Act was very low amongst the stakeholders of the textile industry and hence knowledge transfer about the Act, its importance, the registration procedures etc. to the manufacturers of traditional products was inevitable.

Geographical Indication (GI) is the newest addition to Intellectual Property Rights and are defined as Indications, which identify a good as originating in the territory of a member, or a region or locality in that territory, where a given quality, reputation or other characteristics of a good is essentially attributable to its geographical origin. In other words, some geographical regions acquire a reputation for origin of a product with some specific quality and uniqueness. It is the quality or reputation that distinguishes the product from others all over the world. When a geographical Indication acquires such reputation, there may be attempts by others to utilise it for their known advantage. Such actions by others harm both innovators and consumers of the products. The original producer is supposed to loose a part of the market share of his product and the consumer will not be able to get the original product from the market due to presence of similar type of products without original quality and uniqueness. Keeping these aspects in mind, geographical Indications are included as an important part of Trade Related Intellectual Property Rights (TRIPS) agreement, 1994.

(i) GI confers legal protection to the products, safeguards unauthorised use of the product by other countries/products,
(ii) Promotes economic prosperity of the producer of goods or idea,
(iii) a form of "collective monopoly right" assigned to the producer either within or outside the relevant geographical area,
(iv) allows registered proprietor to initiate legal action against unauthorised users; and,
(v) reduces/eliminates such unfair competition for the benefit of both genuine producers and consumers.

The TRIPS Agreement on GI provides two level of protection such as (a) basic protection and (b) additional protection.

(i) Basic Protection:
Article 22 of TRIPS agreement stipulates the general standard of protection that must be available for all GIs against deceptive or misleading business practices and other sorts of unfair competition. In the second clause the agreement provides that "the member must have legal means to prevent use of Geographical Indications which mislead the public with regard to the geographical origin of the product, which constitute as a set of unfair competition within the meaning of Article 10 of the Paris Convention".

(ii) Additional Protection: Article 23 of TRIPS agreement stipulates on additional protection for the GIs designated wines and spirits only, it states that the member countries should prevent any abusive application of such GIs irrespective of whether the consumer are misled or whether it constitutes an act of unfair competition. There are three elements of enhanced protection provided to wines and spirits as under TRIPS: (i) A Geographical Indication can''t be used even when the true origin is indicated, or the geographical indication is used in translation or is accompanied by words such as "imitation", type, style or kind,
(ii) at the request of the interested party or ex officio, if the law so provides, the registration of the trademarks containing a geographical indication must be refused or invalidated if it concerns wines or spirits, and, (iii) the TRIPS Agreement calls for negotiations aimed at providing increased protection for individual geographical indications concerning wines and spirits.

In other words, using a GI Identifying wines/spirits not originating in the place indicated is prohibited, even where the true origin of the wine/spirit concerned is indicated and/or a translation is used and/or the indication is accompanied by expression such as "kind, type, style, and imitation" or a line competition. Further the wines and spirits not produced in the geographical region purported in a GI associated with are also not allowed to use such an indication in their trademarks. In sharp contrast, the refusal or invalidation of registration of a trademark for any other goods (other than wines and spirits) on similar ground is conditional in the "misleading test".

Initially the products having geographical Indications in India are protected through some existing laws (i) under consumer protection Act, (ii) Through passing off actions in courts, and, (iii) Through certification marks. Such legal provisions were not sufficient to protect the geographical indications of India in the changing world scenario as innumerable foreign companies and traders are free ridings on the goodwill and reputation associated with such renowned geographical names of Indian product for years. India being a signatory of WTO and TRIPS requires protection of its different products originated in India with specific quality and geographical origin so that other countries for their own advantage cannot replicate the products manufacturing. If not protected in time, the producer of some other countries can use these quality and uniqueness for exploiting the market condition for their own advantage. For example, the tea producers of Kenya can use the world famous appellation of "Darjeeling" on the package of their tea with the aim of free riding on the renown associated with it, and to capture the market acquired by the producer of Darjeeling tea. Ultimately, the producer of the Darjeeling tea will be the looser.

These products if allowed to produce by other countries will become generic name over time and ultimately these important products, which give a specific identity to India in the world, can loose their own identities.

The Indian parliament passed the Geographical Indications Act (Registration and Protection) Act 1999 in December 1999. The act has come into force with effect from 15th September 2003. Under this act, the Union Government has established a "Geographical Indications Registry" with all India jurisdictions at Chennai, where the right-holders can register their respective GIs. The GI Act is to be administered by the Controller General of Patents, Designs and Trade Marks who is the Registrar of Geographical Indications. Though Article 23 of TRIPS provides a higher level of protection to GIs denominating wines and spirits only, the corresponding provisions in the Indian Act does not restrict themselves to wines and spirits alone. Rather it has been left in the discretion of the central government to decide which goods or classes of goods should be granted such a higher level of protection. This discrepancy has deliberately been maintained by Indian Lawmakers with the aim of ensuring the 'absolute' protection of Article 23 for the GIs associated with products of India's export interest.

As on July 2009, there are about 180 applications filed in the GI registry. Out of which 112 products have already been registered under GI. Darjeeling tea, Pochampally Ikat and Chanderi Sarees are among the first few applications, which have been granted.

In the post MFA trade regime, when the Indian Textile Industry poised to do well in the globalised market, the government as well as non-government measures other than tariffs imposed by the developed nations, which restrict or distort international trade are called Non-Tariff Barriers (NTBs). Some of the NTBs being restrictive import policies, market access restrictions, environmental restrictions are acting as hidden trade controls. Since the developed countries have increasingly resorted to NTBs as a tool to protect their domestic industry and there has been a remarkable increase in the incidence of NTBs in the world trade, it has become necessary to get the feed back of the stakeholders especially the exporters on this issue.

The framework adopted for modalities for negotiations for Non-Agricultural Market Access (NAMA), stipulates reduction of industrial tariffs in both developed and developing countries according to an agreed formula. There are several proposals on the table, including linear and non-linear formulae. Almost all the formulae so far proposed would entail deep cuts in bound and/or applied industrial tariffs of countries.

In the debate on the consequences of cuts in industrial tariffs for developing countries, attention has focused on two issues; their impact on imports, exports, overall economic welfare and implications on government revenues. Less attention has been paid to the implication of tariff cuts for industrialisation in developing countries and their participation in the international pool of labour. While it is generally agreed that there may be temporary costs, there is also a widespread belief, in accordance with the prevailing orthodoxy that proposed tariff reductions would be beneficial to developing countries when adjustment to a more liberal trade regime is completed and existing resources are fully redeployed and utilised according to new incentives. For developing countries, what matters is not one-off gains or losses from various tariff cuts but the longer term implications of proposed tariff cuts on capital accumulation, technical progress and growth which hold the key to narrowing income gaps with richer countries. Even if there could be a costless adjustment to a new set of incentives allowing developing countries to fully realise the benefits of their comparative advantages as determined by their existing endowments and capabilities, an irreversible commitment to low tariffs across a whole range of sectors would carry the risk of locking them into the prevailing international division of labour. This risk may now be greater since many of the alternative policy options successfully used during the for industrialisation by today’s mature and newly-industrialised countries are no longer available to developing countries because of their multilateral commitments in the WTO, notably in agreements on subsidies, TRIMs and TRIPs.

The Doha declaration has adopted a formula approach as the best solution for arriving at a mutual acceptable agreement on tariff cut. Initially there was a debate on the proposed numerous formulae for tariff cut and on the acceptability of a linear or non-linear formula approach. The July framework which brought the Doha development round back into the track had special emphasis on Swiss and Girard as the two most promising approaches for negotiations on tariff cut. In the Hong Kong ministerial conference, the member countries have agreed in principle for applying a Swiss formula for tariff cut. The final ministerial declaration adopted on 18th December, 2006 has categorically mentioned that “we adopt a Swiss formula with coefficients at levels which shall inter-alia, reduce or as appropriate eliminate tariffs, including the reduction or elimination of tariff peaks, high tariffs and tariff escalation in particular on products of export interest for developing countries, take fully into account the special needs and interests of developing countries, including through less than full reciprocity in reduction commitments.”

Keeping the importance of the level of co-efficients in mind, the declaration has also tried to put forth the modalities of the co-efficient to be adopted for tariff reduction. The text also highlighted two variations on the table i.e. “(a) a formula with a limited number of negotiated coefficients (b) a formula where the value of each country’s co-efficient would be based essentially on the tariff average of bound rates of that member, resulting in multiple coefficients”, Even though members are debating the different co-efficients to be adopted, it appears the formula with limited number of coefficients seems to be more appropriate in comparison to latter one. However, it is evident that the formula approach should precisely address the issues which always hinder the export interest of developing countries like tariff peak, tariff escalation, and high tariffs so as to bring harmonisation of tariff across the countries on the one hand and safeguarding the export interest of the developing and less developed countries on the other hand.

During the informal discussions, many countries expressed their views for two co-efficients. In the context of such debates, the coefficients which were mentioned by developed members fall generally within the range of 5 to 10 and for developing countries within the range of 15 to 30. Though the debate on the coefficients is wide and likely to converge to some positive outcome, it needs deeper analysis how different coefficients serve the purpose of bringing uniform tariff cuts along with free flow of trade across the countries.

The developing countries mostly depend on labour intensive sectors like textiles and clothing, leather etc. The sectors like Textiles & Clothing are contributing enormously for the economic development along bringing socio-economic equality in developing countries including India. Hence, there is a need to analyse the impact of tariff cut under Swiss approach on these sectors. In this context, an effort is being made to analyse the impact of tariff cut by using Swiss formula using different coefficients as proposed by different countries in Hong Kong Ministerial context. Apparel sector has been taken into consideration for the purpose of analysis. 57 apparel products at eight digits H.S. line have been taken into consideration. Since the real battle is fought among the developed countries on one hand and developing countries on the other, four developing countries of the SAARC region, India, Pakistan, Bangladesh and Sri Lanka and four developed countries US, EU, Japan and Canada has been taken for analysing the impact of tariff cut.

t1 = c * to / c + to to = initial rate, t1 = final rate c = coefficient that determines the level of ambition.

The above non-linear Swiss formula harmonised the tariffs by cutting higher tariffs by a higher percentage, where the level of ambition is determined by a co-efficient c. The level of ambition in the Swiss approach stipulates the level of tariff cut envisaged and also higher is the co-efficient, the lower is the tariff cut and vice-versa, and provides for reduction of high tariffs, tariff peaks and tariff escalation. The coefficient c is a cap i.e. no new tariff will be higher than maximum tariff which is equal to the co-efficient. The formula is applicable on applied tariff lines only with a mark up of prices over applied rates for the developing countries.

Though the market access would improve on account of the reduction of import duties, it may be thwarted due to the application of barriers such as non-tariff measures. Any restriction imposed on the free flow of trade is a trade barrier. Trade barriers can either be tariff barriers, that is levy of ordinary customs duties within the binding commitments undertaken by the concerned country in accordance with Article II of GATT or non tariff barriers that is any trade barriers other than the tariff barriers. Non-tariff barriers can take various forms. Some of these measures include import quotas, licensing, exchange and other financial controls, prohibitions, discriminatory bilateral agreements, variable levies, advance deposit requirements, anti-dumping duties, subsidies and other aids, government procurement policies, government industrial policy and regional development measures, competition policies, immigration policies, customs procedures and administrative practices, technical barriers to trade, and sanitary and phyto-sanitary measures. Broadly these can be categorised as (i) Import Policy Barriers, (ii) Standards, Testing, Labeling and Certification requirements, (iii) Anti-dumping & Countervailing Measures, (iv) Export Subsidies and Domestic Support, and (v) Government procurement.

One of the most commonly known non-tariff barriers is the prohibition or restrictions on imports maintained through the import licensing requirements. Article XI of the GATT Agreement requires members not to impose any prohibitions or restrictions other than duties, taxes or other charges, whether made effective through quotas, import or export licenses or other measures. Any form of import licensing (other than an automatic license) is, therefore, to be considered as an import restriction. Certain restrictions on imports, however, can be imposed in accordance with various provisions of the GATT. Article XX of the GATT Agreement provides for certain general exceptions on grounds of protection of (i) Public morals, (ii) Human, animal or plant life or health, and (iii) National treasures of artistic, historic or archaeological value etc.

These are however subject to the requirement that such measures are not applied in a manner which would constitute a means of arbitrary or unjustifiable discrimination between countries where the same conditions prevail, or a disguised restriction on international trade. Similarly Article XXI of the GATT Agreement provides for certain security exceptions. All the countries are maintaining import restrictions on some items on grounds of safety and security, and perhaps these cannot be considered as non-tariff barriers looking to the purpose for which the restrictions are imposed. Article XVIII (B) of the GATT allows import restrictions to be maintained on grounds of ‘Balance of Payment’ (BOP) problems. Besides import licensing, import charges other than the customs tariffs and quantitative restrictions are the other forms in which import restrictions can be imposed through import policy. MFA quotas are one such example. Some of the textiles and clothing products are also facing these barriers.

Prima-facie Standards, Testing, Labeling and Certification requirements are insisted upon for ensuring quality of goods seeking an access to some of the markets, but many countries use them as protectionist measures. The impact of these requirements is felt more by the purpose and the way in which these are used to regulate trade. Two of the covered agreements under the WTO namely the Agreement on the application of Sanitary & Phytosanitary Measures (SPM) and the agreement on Technical Barriers to Trade (TBT), specifically deal with the trade related measures necessary to protect human, animal or plant life or health, to protect environment and to ensure quality of goods. The SPM Agreement gives a right to take sanitary and phytosanitary measures necessary for the protection of human, animal or plant life or health, provided (i) such measures are not inconsistent with the provisions of the Agreement, (ii) They are applied only to the extent necessary, (iii) They are based on scientific principles and are not maintained without sufficient scientific evidence, (iv) They do not arbitrarily or unjustifiably discriminate between Members where identical or similar conditions prevail including between their own territory and that of other Members, and (v) they are not applied in a manner which would constitute a restriction on international trade.

In regard to the determination of appropriate level of sanitary or phytosanitary protection, the agreement requires the objective of minimising negative trade effects to be taken into account. Further, it permits introduction or maintenance of sanitary and phytosanitary measures resulting in higher level of sanitary and phytosanitary protection that would be achieved by measures based on the relevant international standards, guidelines or recommendations only if there is a scientific justification. However, where no such international standards, guidelines or recommendations exist or the content of a proposed sanitary or phytosanitary regulation is not substantially the same as the content of an international standard, guideline or recommendation and if the regulation is likely to have a significant effect on trade of other Members a notice needs to be published at an early stage and a notification is required to be made of the products to be covered with an indication of the objective and rationale of the proposed regulation. The TBT Agreement also contains similar provisions with regard to preparation, adoption and application of technical regulations for human, animal or plant safety, protection of environment and to ensure quality of goods. Both these agreements also envisage special and differential treatment to the developing country members taking into account their special needs. However, the trade of developing country Members has often faced more restrictive treatment in the developed countries that have often raised barriers against developing countries on one pretext or the other. Some of the non-tariff barriers falling in this category are ban on import of goods (textiles and leather) treated with azo-dyes and pentachlorophenol, ban on use of all hormones, natural and synthetic in livestock production for export of meat and meat products, stipulation regarding pesticides and chemicals residues in tea, rice and wheat etc., and requirement of on-board cold treatment for fruits and vegetables exports.

Anti-dumping and countervailing measures are permitted to be taken under the WTO Agreements in specified situations to protect the domestic industry from serious injury arising from dumped or subsidised imports. The way these measures are used may, however, have a great impact on the exports from the targeted countries. If used as protectionist measures, they may act as some of the most effective nontariff barriers. The number of anti-dumping investigations in the recent past has increased manifolds. Not every investigation results in the finding of dumping and/or injury to the domestic industry. But the period for which the investigations are on, and this period may be upto 18 months; the exports from the country investigated suffer severely. Anti dumping and countervailing duties being product specific and source specific, the importers will prefer switching over to other sources of supply. In some cases the authorities apply innovative methods to prolong the investigation. Another aspect concerns the quantum of duty levied. The WTO Agreements on Antidumping and countervailing duties permit the importing countries to impose full margin of dumping and subsidisation as anti-dumping duty or countervailing duties but recommends levy of lesser amount as duty if such lesser amount is adequate to remove the injury to the domestic industry. In other words, the Agreements recommend that the amount of duty imposed should be such it is adequate to remove the injury to the domestic industry as any amount in excess of that would only provide an undue protection to the domestic industry.

Both export subsidies and domestic support have a great bearing on the trade of other countries. While export subsidies tend to displace exports from other countries into the third country markets, the domestic support acts as a direct barrier against access to the domestic market. Generally the developing countries hardly find resources to grant subsidies or domestic support. But developed countries like the European Union, US and Japan have been heavily subsidising their agricultural sector through schemes like export refunds, production support system and other intervention measures.