B K Reddy sir --------Rau’s IAS

WORLD BANK GROUP

Set up along with the IMF in 1945 following the Bretton Woods agreements. Institutions under
World Bank:
International Bank for Reconstruction and Development (IBRD): Loans to middle-income &
creditworthy low-income countries.
International Development Association (IDA): Interest-free loans & grants to governments of
poorest countries.
International Finance Corporation (IFC): Lends money to private sector companies of its
member countries thereby promoting economic development
Note: IFC has enabled investments into India through launch of Masala Bonds.
Multilateral Investment Guarantee Agency (MIGA): Promotes FDI into developing countries
by offering political risk insurance (guarantees) to investors & lenders.
International Centre for Settlement of Investment Disputes (ICSID): Provides international
facilities for conciliation and arbitration of investment disputes.
Note: India is a member of all these institutions except ICSID.
World Bank: IBRD + IDA.
World Bank Group: IBRD+ IDA+ IFC+ ICSID+ MIGA.
STRUCTURE OF WORLD BANK
Board of Governors: Comprises of 189 member countries represented by their Minister for
Finance; Highest decision-making body.
Board of Executive Directors: 25 Executive Directors responsible for day-to-day management.
Five largest shareholders of World Bank appoint an executive director, while other member
countries are represented by elected executive directors.
World Bank President: Selected by Board of Executive Directors for a five-year. As per the
convention followed so far, World Bank President has been an American Citizen, while IMF
President has been a European.
Reports published by World Bank: Human Capital Index (HCI); World Development Report;
Global Economic Prospects; Logistics Performance Index; Women, Business and Law; Global
Financial Development Report.
INTERNATIONAL MONETARY FUND
Multilateral institution which promotes international financial stability and monetary cooperation
and facilitates international trade. 3 Main roles of IMF
 Economic Surveillance of member countries to achieve macroeconomic stability.
 Lending to member countries which are facing BoP Crisis
 Capacity development of the member countries
SOURCES OF THE IMF'S FUNDS
Presently, the lending capacity of the IMF is around $ 1 trillion. The IMF raises money in the
following manner:
Quota: Financial Contribution made by the member countries.
New Arrangements to Borrow (NAB): Number of member countries and institutions stand
ready to lend additional resources to the IMF; second line of defence to supplement IMF
resources.
Bilateral Borrowing Agreements: Third line of defence; IMF has entered into bilateral
borrowing agreements with certain member countries to ensure that it could meet the financing
needs of its members.
IMF- QUOTA, SDR AND REFORMS
QUOTA: Quotas determine the maximum amount of financial resources a member is obliged to
provide to IMF. Determined based on 4 indicators: Size of GDP (50%), Openness (30%),
Economic Variability (15%) and International Reserves (5%). Quotas are denominated in Special
Drawing rights (SDRs). Quotas also determine:
 Voting Power
 Borrowing Limit: Presently member countries are allowed to borrow up to 145% of its quota
on annual basis and 435% cumulatively.
 SDR allocations to member countries.
SPECIAL DRAWING RIGHTS (SDR): Interest bearing international reserve asset to
supplement its member countries’ official reserves. Allocated to member countries in proportion
to their IMF quotas.
The value of the SDR is based on a basket of five currencies—the U.S. dollar, the Euro, the
Chinese Renminbi, the Japanese Yen, and the British Pound Sterling. (Criteria to be included in
the basket- (a) Export Criteria- Among Top 5 Exporters (b) Freely convertible currency)
The value of SDR is set daily by the IMF based on exchange rates between the currencies included
in SDR. The value of SDR is denominated in terms of dollars.
Uses of SDRs (also called as Paper Gold)
 Held as part of Forex Reserves
 SDRs can be exchanged into other freely usable currencies among themselves. (This signifies
that SDR is neither claim nor currency of IMF Rather, it is potential claim on freely usable
currencies of IMF members)
 Use SDRs in their transactions with IMF such as repayment of loans, payment of interest,
payment for increasing their IMF quota and so on.
 Members can sell a part or all their SDR allocations.
RESERVE POSITION IN THE IMF: The subscription of the quota consists of two
components: (i) foreign exchange component and (ii) domestic currency component. Under the
foreign exchange component, a member is required to pay 25 per cent of its quota in SDRs or in
foreign currencies. This is termed as “reserve position in the IMF or reserve tranche” and is part
of the member country’s reserve assets.
QUOTA REVIEW: In 2010, India's quota and voting rights have increased to 2.76% and 2.64%
respectively.
Top 10 Countries in Quota (Descending order): USA, Japan, China, Germany, France, UK, Italy,
India, Russia and Brazil
India’s demand for an increase in its quota and voting shares has been opposed by the developed
economies led by USA.
The quota changes can be approved only through 85% of the votes and since USA enjoys 16% of
the voting rights, it can exercise a virtual veto over the decisions of the IMF.
LATEST DEVELOPMENT: Andorra has become the 190th IMF member country in 2020.
RECENT DECISION OF BOARD OF GOVERNORS
The IMF has decided to increase the general allocation of Special Drawing Rights (SDRs)
equivalent to US$650 billion (about SDR 456 billion). The recent allocation takes the total SDRs
issued by the IMF to $ 940 bn (about SDR 650 billion).
Principle of allocation of SDRs: The newly created SDRs will be credited to IMF member
countries in proportion to their existing quotas in the Fund. Out of US $650 billion SDR
allocation, $274 billion would go to emerging and developing countries.
How much did India get? Special Drawing Rights (SDR) of 12.5 billion (equivalent to around
$ 18 billion). The total SDR holdings of India now stands at SDR 13.66 billion.
Rationale for increasing SDR Allocation: Help economies affected by Covid-19 pandemic +
Enable poor countries to import vaccines + Enhance global liquidity.
STRUCTURE OF IMF
Board of Governors: Representatives of 190 Member countries. Consists of one governor and
one alternate governor for each member country. The Governor is appointed by the member
country and is usually the minister of finance or the head of the central bank. Meets once in a year
and take broad policy decisions.
Ministerial committee: IMF Board of Governors is advised by two ministerial committees-
International Monetary and
Finance Committee (IMFC) and Development committee.
 IMFC Committee: Advises and reports to the IMF Board of Governors on the supervision and
management of the international monetary and financial system. A number of international
institutions, including the World Bank, participate as observers in the IMFC’s meetings.
 Development Committee: Joint committee, tasked with advising the Boards of Governors of
the IMF and the World Bank on issues related to economic development in emerging and
developing countries. The committee has 24 members (usually ministers of finance or
development).
Executive Board: Responsible for conducting the day-to-day; Composed of 24 directors elected
by member countries.
President: Appointed by the Executive Board for a period of 5 years.
Reports published by IMF: World Economic Outlook, Global Financial Stability Report, Fiscal
Monitor Report
WORLD TRADE ORGANISATION
International organisation established in 1995 through Marrakesh Treaty to promote free and fair
international trade. It is successor to the General Agreement on Tariffs and Trade (GATT), a
multilateral agreement which came into being in 1947 to promote trade in Goods.
Under GATT, 8 rounds of negotiations took place. The 8th Round of Negotiations are referred to
as Uruguay Round (1986-94), which ultimately led to establishment of WTO in 1995. The WTO
is based at Geneva, Switzerland. Presently, it has more than 160 member countries.

DIFFERENCE BETWEEN GATT AND WTO

1. GATT: Agreement; WTO: International organisation.
2. GATT covers only Goods while WTO covers Goods, Services, IPRs etc.
3. Dispute Settlement Mechanism under WTO is much stronger than that under GATT.

PRINCIPLES OF INTERNATIONAL TRADE

Most Favoured Nation Clause: Each of the WTO member countries should “treat all the other
members equally as ‘most-favored’ trading partners.”. "Grant someone a special favor (such as a
lower customs duty rate) and you have to do the same for all other WTO members". However,
some exceptions such as FTAs are allowed.
National Treatment: Imported and locally produced goods should be treated equally. The same
should apply to foreign and domestic services, and to foreign and local trademarks, copyrights,
and patents. National treatment only applies once a product, service or item of intellectual
property has entered the market. Therefore, charging customs duty on an import is not a violation
of national treatment even if locally produced products are not charged an equivalent tax.
Special and Differential Treatment: Give developing countries special rights such as include
longer time periods for implementing agreements and commitments, support to help developing
countries to build the infrastructure to undertake WTO work etc.
STRUCTURE OF WTO
 Ministerial Conference comprising of all member countries and meets at least once every 2
years.
 General Council oversees the operation of the agreements and ministerial decisions on a regular
basis. It also acts as a Dispute Settlement Body and a Trade Policy Review Body, each with
its own chairman.
 Director General (DG), appointed for period of four years by the Ministerial Conference,
heads the Secretariat of the WTO.

1. THE AGREEMENT ON AGRICULTURE (AoA)

 It is to establish a fair, transparent and market oriented agricultural trading system and bring
agricultural subsidies/domestic support under international disciplines.
 AOA was entered into force with the establishment of the WTO in 1995 itself.
 The agreement does allow governments to support their rural economies, but preferably
through policies that cause less distortion to trade.
 It also allows some flexibility in the way commitments are implemented. Developing countries
do not have to cut their subsidies or lower their tariffs as much as developed countries, and they
are given extra time to complete their obligations.
 The main pillars of AoA are domestic support (classification of agriculture subsidies into
amber box, blue box and green box), market access (reduction of tariff and non-tariff barriers
by members of WTO) and export subsidies (prohibits export subsidies on agri products).

GREEN BOX AMBER BOX BLUE BOX

Subsidies that do not distort Broad range of subsidies. Broad range of subsidies allowed
trade, or cause minimal Limited to 5% of agricultural but must be designed to minimise
disruption. production (10% for trade distortion.
No limit. developing countries)*. No limit
 Special Safeguard Mechanism/ special agricultural safeguards (SSGs): It
empowers developing countries to levy additional safeguard duties in the event
of an abnormal surge in imports of the entry of unusually cheap imports.
 Peace clause: Under Bali package (2013), the WTO agreed to allow
developing countries to provide subsidy on food crops without any punitive
action via a so called Peace Clause, which offered four years of immunity
against penalties imposed for breaching the farm subsidy cap of 10 per cent
under the WTO AoA.

TRIPS AGREEMENT
Protection of IPRs under different treaties: Paris Convention (Industrial
Property); Berne Convention (Copyrights); TRIPS Agreement: Certain Minimum
Standards for IPRs applicable to all member parties.
IPRs covered under TRIPS: Patents; Copyrights; Trademarks; GI Tags;
Industrial Designs; Layout Design of Integrated Circuits; Trade Secrets.
Criteria for issuing patents: Three criteria for issuing patents are: Novel;
Inventive step; Capable of industrial application.
Not patentable: Frivolous invention; invention that harms public
order/morality/health of animals, plants & humans; a method of agriculture or
horticulture; traditional knowledge; computer program; inventions related to
atomic energy; plants and animals; mere discovery of scientific principle.
Validity of international patents in India: Patent filed in India are effective
only within India; Under Patent Cooperation Treaty, single international patent
application applicable in all member countries.
Types of patents: Product patent: Exclusive monopoly to manufacture the
product; Process patent: Exclusive monopoly over the process to manufacture the
product. Possibility of multiple manufacturers of same product using different
processes.
PATENTS AMENDMENT ACT, 2005
Prior to 2005: Process patent on pharmaceutical drugs--> enabled Indian pharma
companies to manufacture generic drugs at lower prices more profits for Indian
companies
Patents Amendment Act 2005 (After adoption of TRIPS agreement): Adoption
of product patent on pharmaceutical drugs No scope for manufacturing
patented drugs.
EXCEPTIONS UNDER TRIPS AGREEMENT
Compulsory licensing: It is issued when the government allows someone else to
produce the patented drug without the consent of the patent owner. India has
exercised the Compulsory licensing option in 2013 for Bayer’s Nexavar, a
patented kidney cancer drug. It authorized NATCO Pharma to manufacture and
sell Nexavar in India. Subsequently, the price of the Nexavar drug got reduced to
4% of its original price.
Parallel or Grey Imports: These are products marketed by the patent owner in
one country and imported into another country without the approval of the patent
owner.
Bolar Exception: Allows potential competitors to use a patented invention
during the patent term without the consent of the patent owner for the purpose of
obtaining marketing approval for a prospective generic product.

UNDERSTANDING PATENT WAIVER

In Dec 2020, India and South Africa had asked for patent waiver to deal with
CoVID-19. Supporters of the proposal say the waiver will allow for the faster
manufacturing of COVID-19 vaccines for use by developing countries. On the
other hand, pharmaceutical companies claim that granting the waiver could hurt
future innovation and will not lead to the quick production of coronavirus
vaccines.
Waiver on Patents: Any pharmaceutical company would be allowed to
manufacture the vaccines, medicines without having patents or without entering
into voluntary licensing agreements with the patent holder. The company would
have complete freedom in fixing the prices and more importantly, the company
would not be liable to pay any compensation to the patent holder.
Mechanism for Waivers under WTO Agreements: Marrakesh Agreement
which led to establishment of WTO provides that a waiver under WTO treaties,
such as TRIPS, can be decided at the WTO Ministerial Conference through
consensus among all the member countries. The waiver needs to contain a
justification based on the exceptional circumstances. Waivers are reviewed by the
Ministerial Conference annually until its termination.
EU's Proposal: Compromise formula which rejects waiver on Patents and
instead put forward the idea of "Compulsory licensing" of Vaccines. The EU
Proposal provides that WTO members would be able to issue compulsory
licences even if they do not currently have the provisions to issue them under
their national patent laws.
Legal Framework: Laws governing different kinds of IPRs in India are Patents
Act, 1970; Trademarks Act, 1999; Designs Act, 2000; Geographical Indications
of Goods (Registration and Protection) Act, 1999; Copyright Act, 1957;
Protection of Plant Varieties and Farmers’ Rights Act, 2001; Semiconductor
Integrated Circuits Layout-Design Act, 2000 and Biological Diversity Act, 2002.

IPRs Administrative
Ministry

Patents, Ministry of
Copyrights, Commerce and
Designs, Industry
Trademarks and
Geographical
Indications

Protection of Plant Ministry of

Varieties and Agriculture
Farmers’ Rights
Act, 2001

Semiconductor Ministry of
Integrated Circuits Electronics and
Layout-Design Information
Act, 2000 technology

Note: Copyrights were earlier administered by the Ministry of Human Resource

Development. In 2016, it was transferred to Department for Promotion of
Industry and Internal Trade under Ministry of Commerce and Industry.

GEOGRAPHICAL INDICATION (GI) TAG

Definition: A GI is primarily an agricultural, natural or a manufactured product
(handicrafts and industrial goods) originating from a definite geographical
territory.
International Framework: WTO’s Agreement on Trade-Related Aspects of
Intellectual Property Rights (TRIPS).
Legal Framework: Geographical Indications of Goods (Registration and
Protection) Act, 1999.
Benefits: Legal Protection to GI Tag; Prevent unauthorised use of GI tag by third
party; Boost Exports
Application: Filed by association of persons, producers, organisation or
authority established by or under the law.
Validity: 10 years. Renewed from time to time.
Issued by: Controller-General of Patents, Designs and Trademarks issues the GI
tags. The Geographical Indications registry maintain the registry of all GI tags
issued in India.
Difference between GI tag and Trademark: Trademark- associated with
enterprise; GI Tag- Associated with territory
Products issued with GI Tag recently: Dalle Khursani (Sikkim and West
Bengal); Hathei Chilli (Manipur); Mau saree (Uttar Pradesh), Tamenglong
orange (Manipur), Rataul Mango (Uttar Pradesh), Chamba Chappal (Himachal
Pradesh), Myndoli Banana (Goa), Munsyari Razma (Uttarakhand) etc.

WTO’S AGREEMENT ON SUBSIDIES AND COUNTERVAILING

MEASURES (SCM AGREEMENT)
In 2019, in a case filed by USA, the WTO dispute settlement panel has concluded
that the export incentive schemes of the Indian Government are against the
provisions of the WTO's agreement on SCM.
ABOUT THE SCM AGREEMENT: Provides a definition of subsidies,
categorises of such subsidies and lays down rules by which governments may
grant the subsidies. Certain types of subsidies are allowed, others are prohibited
A Government's measure is treated as subsidy based on the principle of
Specificity i.e., only when the subsidies are given to specific Industry or
Specific Sector or Specific Region in a country.

CATEGORIES OF SUBSIDIES
Prohibited Subsidies includes two sub-categories- Export Subsidies and Local
Content Subsidies.
Actionable Subsidies: Given to enhance the production of goods and services;
includes loans at concessional rates, cheaper land, tax benefits etc. Not prohibited.
However, an importing country can impose countervailing duty or challenge such
subsidies at WTO.
 HOST CITY

11 9–13 DECEMBER 1996 SINGAPORE

22 18–20 MAY 1998 GENEVA, SWITZERLAND

30 NOVEMBER – 3
33 SEATTLE, UNITED STATES
DECEMBER 1999

44 9–14 NOVEMBER 2001 DOHA, QATAR

55 10–14 SEPTEMBER 2003 CANCÚN, MEXICO

56 13–18 DECEMBER 2005 HONG KONG

30 NOVEMBER – 2
77 GENEVA, SWITZERLAND
DECEMBER 2009

88 15–17 DECEMBER 2011 GENEVA, SWITZERLAND

99 3–6 DECEMBER 2013 BALI, INDONESIA

010 15–18 DECEMBER 2015 NAIROBI, KENYA

BUENOS
111 10–13 DECEMBER 2017
AIRES, ARGENTINA
The 12th WTO Ministerial Conference
outcome (vv important)

Introduction
Between the 12th and 16th of June 2022 the World Trade
Organization held its twelfth Ministerial Conference at the
WTO’s headquarters in Geneva, Switzerland. It has been
almost five years since the eleventh Ministerial Conference
due to delays associated with the COVID-19 pandemic.
Expectations were low but the stakes were high. At a time
when globalisation and trade are under threat due to
increased geopolitical tensions, a rise of protectionist trade
policies and stressed global supply-chains, the conference
was a test of the WTO’s future relevance.
Despite lack of consensus leading to a day’s extension to
the meeting, an important package was agreed. We set out
the main outcomes below, together with our own
assessment.
Food safety and agriculture
COVID-19, trade disruptions, rising inflationary pressures
and excess market volatility have catalysed the issue of
food security across the world. Members at the conference
agreed that any emergency food security measures should
be reported to the WTO and that they would need to cause
minimal distortion to trade by being “temporary, targeted
and transparent”. WTO members also agreed not to prohibit
or restrict any exports purchased by the World Food
Programme for non-commercial humanitarian purposes;
however, this will not supersede existing exceptions in
trade agreements for measures taken on domestic food
security grounds.
Waiver of certain patent rights relating to COVID-19
Members also agreed to limit the scope of patent rights
relating to COVID-19 vaccines to allow developing countries
to produce their own vaccines. It will allow them to waive
intellectual property protections on the vaccines without the
patent holder’s permission. The waiver will last until 2027.
The decision on extending this waiver to COVID-19
therapeutics and diagnostics has been delayed for six
months.
A footnote in the text of the decision has been interpreted
as meaning that China, a developing country in WTO terms,
will not seek to use this waiver as they already have their
own patents and strong production capacity. This
concession by China was a pre-condition for US support for
the waiver and was negotiated between the two countries.
Fisheries subsidies
In 2001 the United Nations General Assembly requested that
the WTO co-ordinate negotiations between its members to
deliver on an agreement which would prohibit fishing
subsidies being provided to those engaged in overfishing
practices. After 21 years an agreement – albeit a diluted
version – has been reached which prevents members from
providing subsidies to those who engage in illegal,
unreported and unregulated (IUU) fishing or the fishing of
overfished species. No nation will be permitted to provide
subsidies for fishing in the high seas except where
regulated by a fisheries management organization. The deal
includes notification requirements for each nation to
demonstrate compliance with the new rules, and
establishes a voluntary funding mechanism for the
developing countries
The negotiations did, however, lead to some carve-outs.
Developing country members are to be granted a two-year
exemption for subsidies which are granted within their
exclusive economic zones (up to 200 nautical miles from the
coast).
Importantly, this is the second multilateral agreement
between all members in the WTO’s 27-year existence and is
also the first agreement that puts environmental
sustainability at the core
E-commerce
Businesses had been voicing strong concerns that the
conference would lead to the end of the moratorium on
tariffs on electronic transmissions adopted in 1998.
Discussions on this issue did not lead to a permanent deal,
disappointingly; instead, WTO members agreed to renew
the moratorium in its current state until the next Ministerial
Council, currently expected to take place from 31 March
2024. IN parallel, the WTO’s General Council will be required
to hold periodic reviews based on the scope, definition and
impact of the moratorium on global trade.
WTO reform
The WTO’s director-general, Ngozi Okonjo-Iweala, stated
that “the widespread recognition that the WTO's core
functions need to be updated and improved.” Members
agreed, reaffirming the fundamental principles of the WTO
and committing to an “open and inclusive process” to
reform all of its functions – from deliberation to negotiation
to monitoring. Members also committed to having a well-
functioning dispute resolution system accessible to all
members no later than 2024, not least due to the dormancy
of the appellate body since 2020 due to the US refusal to
agree to appoint new judges.
Comments
Undoubtedly, this twelfth Ministerial Conference helped to
return some credibility to the WTO. Following tense
negotiations multiple deals were agreed relating to
important issues such as food security, fisheries and
vaccinations. It would have been a missed opportunity for
governments not to use trade collaboration to tackle the
pandemic, the food crisis or the depletion of fish stocks.
Failure to extend the moratorium on the imposition of
customs duties on electronic transmissions would have
been a setback for the continued expansion of the digital
economy and the growing number of small and medium
businesses and consumers in both advanced and
developing economies that rely on it
The WTO’s director-general, Ngozi Okonjo-Iweala, is
credited with breathing energy back into the multilateral
organisation. In her concluding remarks she said that:
“the package of agreements you have reached will make
a difference to the lives of people around the world. The
outcomes demonstrate that the WTO is, in fact, capable
of responding to the emergencies of our time. They show
the world that WTO members can come together, across
geopolitical fault lines, to address problems of the global
commons, and to reinforce and reinvigorate this
institution. They give us cause to hope that strategic
cooperation will be able to exist alongside growing
strategic competition.”
However, many will argue that these deals did not go far
enough to address the actual issues looming over
international trade, such as supply-chain bottlenecks and
the rise of protectionism in spite of globalisation. Despite
this renewed optimism, the WTO’s relevance and its ability
to lean on national governments, particularly the US and
China, will be subject to the test of time between now and
the next Ministerial Conference.

INDIA QUESTIONS CHINA'S DEVELOPING COUNTRY STATUS

Despite being the world's second largest economy, China claims itself to be a
"Developing country" under the WTO. In this regard, during the latest round of
China’s trade policy review, India has questioned China’s claim of being a
developing country.
WTO Classification of Countries: There are no WTO definitions of
“developed” and “developing” countries. Members announce for themselves
whether they are “developed” or “developing” countries. However, it can be
challenges by other members. About two thirds of the WTO’s around 164
members are developing countries.
BENEFITS FOR THE DEVELOPING COUNTRIES IN WTO
More time and better terms: The WTO agreements include provisions giving
developing and least-developed countries special rights - “special and
differential treatment”. It can include:
 Extra time for developing countries to fulfil their commitments in many of the
WTO agreements
 Provisions designed to increase developing countries’ trading
opportunities through greater market access
 Provisions requiring WTO members to safeguard the interests of developing
countries when adopting some domestic or international measures. For
example, GATT includes provisions on the concept of non-reciprocity in trade
negotiations between developed and developing countries. Under concept of
non-Reciprocity, when developed countries grant trade concessions to
developing countries, they should not expect the developing countries to make
matching offers in return.
 Provisions for helping developing countries (e.g., to deal with commitments
on animal and plant health standards)
Legal assistance: The WTO Secretariat has special legal advisers for assisting
developing countries in any WTO dispute and for giving them legal counsel.
RECENT CONTROVERSY
In the recent past, developed economies led by US have been demanding that
countries like China and India should voluntarily give up the benefits given to
developing countries on account of their rapid economic progress. However, both
India and China have opposed such a move.
India's stand: India has questioned China’s claim of being a developing country.
As per the Per-income level, China belongs to "Upper-Middle" Income category
and hence should not claim the benefits of developing country.
China's counterargument: The concept of developing countries is relative to
developed countries. China lags far behind the developed economies in terms of
per capita income, poverty, rural-urban divide etc.
DIFFERENT STAGES OF TRADE INTEGRATION
 Trade integration refers to the mechanism in which there is free movement of
goods, services, investment and people across the countries.

 Such trade integration may take place through multiple phases whereby the
economies of the countries get integrated.
PREFERENTIAL TRADE AGREEMENT (PTA)
 It is agreement whereby the countries may decide to reduce the customs duty
on commonly agreed goods.
 Usually, the list of goods on which the customs duty is to be reduced is part of
Positive List.
 In general PTAs do not cover substantially all trade. Example: India-
Afghanistan PTA (2003)

FREE TRADE AGREEMENT (FTA)

 It is a bilateral agreement whereby the countries may decide to reduce or
eliminate the customs duty on commonly agreed goods.
 Usually, the list of goods on which the customs duty is to be reduced is part of
negative list.
 Normally, the FTAs cover trade in goods or trade in services.
 FTAs can also cover other areas such as intellectual property rights (IPRs),
investment, government procurement and competition policy, etc.
The key difference between an FTA and a PTA is that while in a PTA there is a
positive list of products on which duty is to be reduced; in an FTA there is a
negative list on which duty is reduced or eliminated. Hence, the FTA can be
considered to be more broad-based in terms of its coverage of goods as compared
to PTA. Example: India-ASEAN FTA in Goods

CUSTOM UNION
 In a Customs union, member countries may decide to trade at zero duty among
themselves, however they maintain common customs duty against rest of the
world.
 An example is Southern African Customs Union (SACU) amongst South
Africa, Lesotho, Namibia, Botswana and Swaziland.

COMMON MARKET
Integration provided by a Common market is one step deeper than that by a
Customs Union. A common market is a Customs Union with provisions to
facilitate free movements of labour and capital.

ECONOMIC UNION
Economic Union is a Common Market extended through further harmonization
of fiscal/monetary policies and shared executive, judicial & legislative
institutions among the member countries. European Union (EU) is an example.

COMPREHENSIVE ECONOMIC COOPERATION AGREEMENT

(CECA)
 CECA involves only “tariff reduction/elimination in a phased manner on
listed / all items except the negative list and tariff rate quota (TRQ) items.
 In a comparable economic standing, CECA is considered as the first step or a
stepping stone to accomplish CEPA.

COMPREHENSIVE ECONOMIC PARTNERSHIP AGREEMENT

(CEPA)
 It has the same components of CECA with an additional focus and options in
the terms of trade investments and services. It is a wider term than CECA and
has the widest coverage.
 The India Japan CEPA is one such example and it covers a broad range of other
areas like trade facilitation and customs cooperation, investment, competition,
IPR etc.
GENERALISED SYSTEM OF PREFERENCES (GSP)
USA revoked India’s preferential trade Status under GSP Status in 2019-20. In
2021, US has said that it would consider restoring GSP concessions to India.
ABOUT GSP: Instituted in 1971 under the aegis of UNCTAD. Aims to reduce
trade barriers; Enables the countries to give special preference to developing and
poor countries by importing Goods and services at zero customs duty.
GSP PROGRAM OF USA: Largest and oldest trade preference program of
USA. It is designed to promote economic development in developing and poor
countries by allowing duty-free entry for certain products from designated
beneficiary countries. India was the largest beneficiary of the program in 2017
with $5.17 billion in imports to the US. USA revoked GSP status to India as it
alleged that India failed to give US companies equitable and reasonable access to
its markets.

INTERNATIONAL LABOUR ORGANIZATION (ILO)

Establishment and its Role: Created in 1919 as part of the Treaty of Versailles
after the end of First World War. United Nations agency that sets international
labour standards and promotes social protection and work opportunities for all. It
is headquartered in Geneva, Switzerland.
Unique Structure of ILO: Unlike other UN specialized agencies, the ILO has a
tripartite governing structure that brings together governments, employers, and
workers to set labour standards.
How ILO Works? The ILO accomplishes its work through three main bodies
which comprise governments, employers and workers' representatives:
 International labour Conference: It sets the international labour standards
and the broad policies of the ILO. It meets annually in Geneva, and it is also as
international Parliament of labour.
 Governing body: It is the executive council of the ILO.
 International Labour Office: It is the permanent secretariat of the
International Labour Organization.
Supervision of Labour Standards: The ILO regularly examines the application
of standards in member states and points out areas where they could be better
applied. If there are any problems in the application of standards, the ILO seeks
to assist countries through social dialogue and technical assistance.
REPORTS PUBLISHED BY ILO
 World Employment and Social Outlook
 Global Wage Report
 World Social Protection Report
International Labour Standards: Legal instruments setting out basic principles
and rights at work. They are either Conventions (or Protocols), which are legally
binding international treaties that may be ratified by member states,
or Recommendations, which serve as non-binding guidelines.
8 FUNDAMENTAL ILO CONVENTIONS ARE
Conventio
ILO Convention Name
n Number
Freedom of Association and 87
Protection of the Right to
Organise
Right to Organise and 98
Collective Bargaining
Convention
Forced Labour Convention 29
Abolition of Forced Labour 105
Convention
Minimum Age for 138
Admission to Employment
Worst Forms of Child 182
Labour Convention
Equal Remuneration 100
Convention
Discrimination in Respect of 111
Employment and Occupation
India and ILO: India is a founding member of ILO. India has so far ratified 47
ILO Conventions. Out of the 8 Fundamental Conventions highlighted above,
India has ratified 6. The Conventions which are not ratified by India are- Freedom
of Association and Protection of the Right to Organise Convention, 1948 (No. 87)
and Right to Organise and Collective Bargaining Convention (No. 98).

WIPO
UN agency charged with protecting intellectual property (IP) through an
international system that promotes and sustains creativity and innovation and
helps develop international economies.
Treaties administered by WIPO: Administers almost 26 treaties – Paris
Convention (Industrial Property), Berne Convention (Artistic and literary works);
Washington treaty (Layout design of IC chips), Patent Cooperation Treaty.
NICE Agreement: Mechanism for the classification of goods and services for
the purposes of registering trademarks and service marks.
Vienna Convention: International Classification of the Figurative Elements
Locarno Agreements: International classification system used to classify goods
for the purposes of the registration of industrial designs.
GLOBALLY IMPORTANT INNOVATION INDICES
 Global Innovation Index (GII) and World Intellectual Property Report:
Published by WIPO
 Global Competitiveness Report: Published by World Economic Forum
 International IP Index: Published by US Chamber of Commerce's Global
Innovation Policy center.

NDB VS AIIB
New
Criteria Development Asian Infrastructure Investment bank
Bank

BRICS China-led multilateral Bank in 2016

Countries
through
Establishment
Fortaleza
declaration in
2014

BRICS Around 80 members

Number of
member Approved: Additional 23 members
Members
countries

All UN All members of IBRD or Asian Development

Membership Members Bank
open to? (Voting rights (Non-regional Members from outside Asia can
of BRICS also join)
 countries
shall not
reduce below
55%

$ 100 bn. $ 100 bn

The Initial
capital of $ 50
Total
bn has been
Authorised
contributed
Capital
by BRICS
countries
equally.

Same Voting depends upon the share capital

contribution provided.
by BRICS Countries with highest voting rights: China
countries--> (26.64%); India (7.6%); Russia (6%)
Voting
all countries
Weightage
given equal
voting
weightage
(20%)

INTERNATIONAL ENERGY AGENCY

Set up in 1973-74 against the backdrop of Global oil crisis through the
“Agreement on an International Energy Program". Acts as main international
forum related to various aspects of Energy such as Energy cooperation, energy
efficiency, sustainability, R&D etc.
The IEA is made up of 30 member countries. In addition, it also includes eight
association countries.
Criteria for membership:
 Emergency oil reserves equivalent to at least 90 days of net imports
 A demand restraint program to reduce national oil consumption by up to 10%
 Legislation and organisation to operate the Co-ordinated Emergency Response
Measures (CERM) on a national basis
 Legislation and measures to ensure that all oil companies under its jurisdiction
report information upon request
Note: India is not a member country of IEA. However, India is one among the
associate countries.

FINANCIAL STABILITY BOARD (FSB)

Global organization that regulates and makes recommendations regarding the
global financial system. It is hosted and funded by Bank for International
Settlements (BIS) and is in Basel, Switzerland.
Membership:
 24 member countries (G20 + 4 Key Financial Centres- Hongkong, Singapore,
Spain and Switzerland)
 International organisations (such as IMF, World Bank, Bank for International
Settlements, OECD etc.)
 Standard Setting Bodies such as Basel Committee on Banking Supervision.
Role: The FSB is not a treaty-based organisation. Policies agreed by the FSB are
not legally binding. Instead, the FSB acts as a coordinating body to strengthen
financial stability of member countries.
Relationship with G-20: The FSB regularly reports to the G20 which supports
implementation of agreed international standards. However, FSB is not run by
G20.
Relationship with India: India is one of the members of FSB. India is
represented in the FSB by (a) Secretary, Department of Economic Affairs,
Ministry of Finance (b) Chairman of SEBI (c) Dy. Governor of RBI.

G-33
G-33 is a grouping of 47 developing countries dominated by India and has
common. It has been at the forefront in taking forward issues affecting food
security and livelihood of farmers.
 It presses for flexibility for developing countries to undertake limited market
opening in agriculture
 Also called “Friends of Special Products” in agriculture.

Partnership for Global Infrastructure and Investment (PGII)

• . The goal now is to rustle up $600 billion in the next five years through
public and private resources of the G7 countries, narrow the global
investment gap in infrastructure and compete with China’s Belt and Road
Initiative, especially in the cordon from West Africa to the Indo-Pacific via
South Asia.
• Finally, there was a clear indication that following the successful model of
cooperation with South Africa, the G7 plans to build new Just Energy
Transition Partnerships (JETP) with several other countries like Indonesia,
India, Senegal, and Vietnam.