Economics (NTSE/Olympiad)  

4. Globalisation and the Indian Economy

World Trade Organisation WTO

World Trade Organisation :
GATT (General Agreement on Tariffs and Trade) is a multilateral treaty or arrangement which was instituted in 1948 by 102 contries with the objective of bringing down tariff and non-tariff barriers to international trade by providing a multilaterally accepted framework of principles and norms to govern the trade relations among member countries of GATT. Until 1994, the main concerns countries. India was of the original members of GATT were to regulate 'dumping' and unfair business practises and to ensure that member nations gradually reduce protectionist measures. Moreover, it is only now (1994) that GATT members have accepted the commitment establish an international organization to implement the objectives and provisions of GATT. Then original GATT agreements were revised several times through the Kennedy Round in 1960s and the? Tokyo Round in 1970s.The latest round of talks for wide rang revision started in Uruguay in of talks for wide ranging revision started in Uruguay in 1986. The prolonged talks and negotiations under the Uruguay Rond has resulted in a comprehensive, radical revision of GATT. The draft for this comprehensive revision was prepared by the exchairman of GATT, Arther Dunkel. Hence, it is popularly known as the Dunkel Draft. The Uruguay Round Agreements envisages the establishment of an institution called the World Trade Organisation (WTO) to provide a common institutional framework to conduct trade relations among member nations in accordance with the provisions of these agreements.
(a) Expectations of WTO from its member countries :
Bilateral agreements is held between two countries for the smooth flow of trade.
Import Quotas : Government put restrictions on imports to protect their local manufactures.
Export Quotas : Government put restrictions on exports to protect their local consumers.
WTO wants to abolish import and export quota, and to have multinational agreement instead of bilateral agreements.
(b) Impact of WTO on Indian economy :
Positive Impact :
(i) Increased opportunities to have trade with other countries.
(ii) Availability of modern technology at reduced rates.
Negative impacts :
(i) Benefits to developing countries are very limited.
(ii) Companies of developing countries would not be able to complete with international companies, can face closure, reducing employment opportunities.
(iii) Developed countries will interfere in the domestic economy of developing countries.
(iv) Price of many essential and life saving drugs may go up.

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