Globalisation

Globalisation:

India before 1990 and India after 1990 are much apart. It adopted liberal economic policies in 1990 and many things changed.

General Agreement on Tariffs and Trade (GATT):

During the times of the Second World War, many countries had adopted the policy of imposing various duties and taxes on imported goods, with a view to protecting their home markets. It resulted in declining in trade. A meeting was called in Cuba to discuss this problem, which was attended by 56 nations. It was decided to establish a permanent organisation to resolve the problems related to international trade. A legal agreement was signed in Geneva by 23 nations on 30th October 1947, which is known as GATT. This agreement was the first multinational trade agreement. GATT gave priority to economic development through production and trade, to treat the member countries as 'most favoured nations'.

An annual meeting of the member countries of GATT used to be held at Geneva. It was attended by the representatives of the member countries. Each country was entitled to one vote. Problems faced by individual nations regarding the difficulties in international trade were discussed in the meeting and the decisions were based on these discussions. Later GATT became a part of a more encompassing organisation known as ‘World Trade Orgnisation’ - WTO.

The GATT 1947 is a defunct international treaty predating the WTO Agreement.  Originally, the GATT 1947 was to become part of the Havana Charter for an International Trade Organization that was negotiated during the United Nations Conference on Trade and Employment held in Cuba from 21 November 1947 to 24 March 1948.  As of 1 January 1948, the GATT 1947 was applied through a Protocol of Provisional Application.  As the Havana Charter never came into force, the GATT 1947 remained provisionally in force until its provisions became part of the GATT 1994, itself a component of the WTO Agreement.

In December 1994 - i.e. following the adoption, but preceding the entry into force of, the WTO Agreement - the GATT CONTRACTING PARTIES decided that "the legal instruments through which the contracting parties apply the GATT 1947 are herewith terminated one year after the date of entry into force of the WTO Agreement", i.e. on 1 January 1996 (document PC/12, L/7583).

The WTO Agreement, which established the World Trade Organization, entered into force on 1 January 1995.  Annex 1A of the WTO Agreement contains the GATT 1994, which incorporates by reference (and with a few adjustments to reflect the fact that, contrary to the GATT 1947, the WTO is an authentic international organization) "the provisions of the GATT 1947"; the GATT 1994 also includes six Understandings on Articles of the GATT 1947, tariffs and accession Protocols, and GATT decisions adopted between 1948 and 1994 as part of what is often called the “GATT acquis”.   The GATT 1994 and the GATT 1947 are "legally distinct”, as confirmed by Article II: 4 of the WTO Agreement.

The provisions of the GATT 1947, incorporated into the GATT 1994, continue to have legal effect as part of the GATT 1994, itself a component of the WTO Agreement.

World Trade Organisation (WTO):

On 1st January 1995, 123 nations together founded an organisation with the objective of opening the world for free trade. It was called the World Trade Organisation (WTO). It’s a global trade organisation and India is a member of it.

Arthur Dunkel, the Director-General of WTO prepared a draft that has been fundamental to the establishment of the organisation. This draft is known as ‘Dunkel Draft’. The crux of this draft emphasises trade, free from governmental customs duty and other restrictions. This approach is known as ‘liberalisation’. All participating countries agreed upon a set of rules and a premise common to all that would promote international trade. Initially, provisions were made in the spheres of grants, exports- imports, foreign investments, reserved sectors, agriculture, technology, and service sectors.

After becoming a member of the WTO, India put a thrust on economic progress. In this aspect, the contribution of the then Prime Minister of India, Narsimha Rao, and Finance Minister Manmohan Singh is very important. Prime Ministers Atal Bihari Vajpayee and Manmohan Singh took ahead of the policy of liberlisation. The report published by WTO in 2006 has made a special mention of the increasing economic growth rate of India. Growth in investments, fall in the ratio of the population below the poverty line, fall in infant mortality rate, increasing availability of facilities for literacy, potable water, and drainage system in India, are also mentioned in this report. By adopting ways like simplifying import rules, modifying laws regarding rights on intellectual property, modifying patent laws, India entered the global economy.