Aishwarya VM
With globalized business being the talk of the town, it is pertinent to know the basic concepts of world trade. From time immemorial human civilizations have engaged in cross-civilizational trading through sea routes and land routes. Exports and imports were also based on the barter system, which with the advent of coins became goods and services in return for money. With the globalization effect permeating into all walks of life, the most significant impact is on trade.
The following points are note-worthy for taking the first baby-step in World Trade:
World Trade Organization: The most important organization that regulates international trade is the World Trade Organization. It is a voluntary organization based on the Marrakesh Agreementand was formed on January 1st, 1995 as a resultant of the Uruguay round of trade negotiations. The WTO regulates:
Trade in Goods [GATT];
Trade in Services [GATS];
Trade in Intellectual Property Rights [TRIPS].
In addition, it has several other Agreements relating to anti-dumping, subsidiary and countervailing measures, agriculture, investment measures, non-trade barriers etc. Most importantly, the WTO has a Dispute Settlement Body(DSB) and a prescribed route is mandated by the WTO to resolve conflicts between its member countries.. The WTO also has the power to impose sanctions and penalties. It is very important to bear in mind that WTO is not a part of the UN.
United Nations Commission on Trade and Development: The UNCTAD was established under the aegis of the UN in 1964 with its headquarters at Geneva, Switzerland. It reports to the UN General Assembly and the ECOSOC. The UNCTAD is said to serve the interests of the Developing Nations. However, it directly does not have the power to resolve disputes like the WTO.
Regional Organizations: Today, regionalism has severely changed the geo-political dynamics and world trade is no exception to the all-encompassing regionalism. Organizations like South Asian Association for Regional Cooperation (SAARC), Association of Southeast Asia Nations (ASEAN), North American Free Trade Agreement (NAFTA), South Asian Free Trade Area (SAFTA), European Union (EU), Brazil, Russia, India, China and South Africa (BRICS) etc. also contribute to world trade.
Main Principles of International Trade: The fundamental principles on which international trade evolve include:
-Most Favored Nation (MFN)
-National Treatment.
By MFN, we mean there is no single nation most favored by another for the purpose of trade. All trading partners are treated equally.
By National Treatment, we mean all foreign traders are treated on par with Indian traders.
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