The
European Union as an economic union of European countries came into existence
on 1st January, 1956 by the member nations signing the ‘Treaty of
Rome’. Initially it was called European
Economic Community (EEC) with 6
member countries (France, Italy, Germany, Belgium, Netherlands, Luxembourg). In
due course, new members were admitted in EU. At present, its membership is 27
nations including Denmark, Ireland, UK, Greece, Spain, Portugal, etc. Bulgaria
& Romania joined on 1/1/2007.
The
‘Treaty of Rome’ required every member country to:
1. Eliminate
tariffs, quotas & other barriers on intra-community trade,
2. Devise
a common internal tariff on imports from the rest of the world,
3. Allow
the free movement of factors of production within the community,
4. Harmonise
their taxation & monetary policies & social security policies, and
5. Adopt
a common policy on agriculture, transport & competition in industry.
EU
is a powerful trade bloc of highly industrialised & rich nations of Western
Europe. It is the world’s largest
exporter. EU is the most powerful politico-economic as well as progressive
& successful trade bloc in the world. The bloc has now created ‘Europe without frontiers’. From
January 99 a common currency ‘EURO’ is introduced by the countries
of EU.
EU is
working smoothly & acts as a strong trade bloc in the world. EU has
converted Europe as one united market for member countries. There is expansion
of trade among European countries but EU has put certain restrictions on
non-members. As a result, it restricts free trade among countries of the world.
It acts as an obstacle to the growth of free & fair global trade.
EU
occupies a commanding position in global trade. It puts pressure on WTO
negotiations & makes efforts to make WTO agreements favourable to European
countries at the cost of developing countries. EU is not favourable to giving
special concessions to developing countries under WTO, it only expects new
concessions from the developing countries.
India & EU:
India
has special interest in EU because nearly 20 percent of our exports move to
this trading bloc & 17 percent of our imports are from EU. However, India
ranks 14th as EU’s overseas trading partner for their exports &
13th for their imports. Countries of EU are significant overseas
investors in India, especially in the core/infrastructure sectors &
technology dominated fields. EU is
India’s largest source of FDI. However, India attracts only 1.3 percent of
the EU’s world-wide investments. India desires to establish mutually gainful
trade relations with the EU. Since 2007,
India & EU have been negotiating a Free Trade Agreement covering trade in
goods & services, investments, Intellectual Property Rights &
government procurements.
INTERNATIONAL
ENVIRONMENT W.R.T. OPEC:
OPEC means Organisation of Petroleum Exporting
Countries. OPEC was founded in Baghdad in 1960. At present, the membership is of 12 countries including Iran, Iraq,
Kuwait, Venezuela, Saudi Arabia & UAE. Gabon left in 1994 & Indonesia in
2008 since they had fewer oil fields left. Now they are net importers of oil.
The objectives of OPEC are:
a) To
unify the petroleum policies of member countries & determine the best means
for safeguarding their interest, individually & collectively.
b) To device
ways & means of ensuring the stabilization of prices in international oil
markets with a view to eliminating harmful & unnecessary fluctuations.
c) To
secure a steady income for the producing countries, an efficient, economic
& regular supply of petroleum to consuming nations & a fair return on
their capital to those investing in the petroleum industry.
It is
estimated that OPEC members possess 75 percent of the world’s known reserves of
crude petroleum.
These
countries collectively decide the petroleum prices & the quantity to be
released from time to time. The general policy of OPEC is to charge higher
prices for petroleum exports & earn huge foreign exchange. These countries
use their monopolistic position to their benefit.
Due
to continuous rising prices of petroleum products, all countries, particularly
developing countries like India suffer. They have to pay huge money for
importing petroleum products. In addition, this leads to inflation within the
country & other undesirable effects. As a result international environment
is very much affected. Industrial production, cost of production, etc. are
adversely affected due to rising prices of Petroleum products. Rise in
petroleum prices affects all countries (particularly developing countries) in a
serious manner. This may even lead to global recession.
India & OPEC:
India is not self-sufficient as regards
its POL (Petroleum, Oil & Lubricants) needs. We have to
import these products at higher prices, leading to rise in the import
expenditure on POL.
SHARE OF OPEC IN INDIA’S IMPORTS & EXPORTS
|
YEAR
|
SHARE IN IMPORTS
|
SHARE IN EXPORTS
|
|
1960-61
|
4.6%
|
4.1%
|
|
2005-06
|
7.5%
|
14.8%
|
|
2006-07
|
29.4%
|
16.4%
|
POL
imports accounted for only 6.1 percent of import expenditure in 1960-61 &
increased dramatically to 41.9 percent in 1980-81. This was due to hikes in oil
prices. OPEC countries constitute one major trading partner of India. The share
of OPEC countries in our imports increased considerably from 4.6 percent in
1960-61 to 27.8 percent in 1980-81 & then to 22.5 percent in 1999-2000.
This was due to heavy dependence on this group of countries & rising prices
of POL. The situation has changed in
2001-02 as India started purchasing petroleum products from ‘other countries’
(the residual category). The OPEC group accounted for 4.1 percent of our
exports in 1960-61 & it rose to 12.0 percent in 2001-02. During 2005-06,
our imports from OPEC group amounted to Rs. 49,458 crores (7.5% of total
imports) & exports to OPEC group amounted to Rs. 67,483 crores (14.8% of
total exports). The balance of trade was favourable to India by
Rs. 18,024 crores. However during 2006-07, our imports from OPEC
countries reached to Rs. 2,53,780 crores (29.4%) & exports to OPEC group
comes to Rs.93,521 crores (16.4% of total exports). This has resulted into huge
trade deficit of Rs. 1,60,259 crores. Rising prices of petroleum products is
harming Indian economy to a considerable extent. The same is the position of
many developing countries.
INTERNATIONAL
ENVIRONMENT W.R.T. ASEAN:
· Association
of South East Asian Nations
· 1967,
Bangkok through Bangkok Declaration
· Malaysia,
Philippines, Indonesia, Thailand & Singapore. Later on another 5 members
joined Brunei, Vietnam, Laos, Myanmar & Cambodia)
· Headquarters
at Jakarta, Indonesia
· Initially
group was formed to fight Chinese aggression - Political focus.
Economic focus in 1976 by 1st
ASEAN Summit in Bali. Member nations signed ASEAN accord for economic
cooperation.
· Objectives:
1. Economic
growth, social progress & cultural development of member nations.
2. Collaboration
& mutual assistance in matters of common interest.
3. Cooperation
with existing international & regional organisations with similar aims.
4. Stability
of South – East Asian region.
· India
& ASEAN:
-
In 2008:
Share
to total ASEAN trade Share in Percentage
Exports 2.0
Imports 3.6
-
In 2009, India signed Free Trade
Agreement with ASEAN nations to promote free trade between India & ASEAN
nations in respect of a number of items such as tea, coffee, rubber, spices,
etc. This came into effect on 1/1/2010
-
ASEAN has decided to invite India &
China as “guest country”
-
India is a full dialogue partner of
ASEAN. Participated for the first time at the post Ministerial Conference in
Jakarta, July 1996
-
ASEAN – India working group on Trade
& Investment
-
Looking towards a single currency for
Asian markets = Asian Currency unit
-
Asian Development Bank
-
India & ASEAN signed Free Trade
agreement in services sector. Now more professionals can get job opportunities
in ASEAN nations.
INTERNATIONAL
ENVIRONMENT W.R.T. W.T.O.:
-
WORLD TRADE ORGANISATION (W.T.O.)
-
1st January 1995
-
GATT (General Agreement on Tariffs
& Trade) came into existence in 1947 with 23 countries including India. The
main purpose of GATT was to increase trade & development of member nations
by reducing trade barriers. W.T.O. is the result of the Uruguay round of
negotiations of GATT.
-
In 2002, W.T.O. had 144
countries as member nations.
-
W.T.O. is based in Geneva, Switzerland
-
Member nations have signed a number of
agreements. Among the more important ones are TRIPs, TRIMs, GATS & AoA.
( TRIPs: Trade Related Intellectual
Property Rights – protection of IPRs including patents, copyright, etc.
TRIMs: Trade Related Investment
Measures – foreign investments at par with domestic investments
GATS: General Agreement on Trade in
Services – liberalisation & privatization of service sectors
AoA: Agreement on Agriculture - lower
tariff barriers on agricultural inputs, reduce export subsidies, increase
market access, lower domestic support to farmers)
-
In 1997, India also joined the global
Information technology agreement under W.T.O.
-
India being a founder member gets
benefit of non-discrimination & treatment of MFN (Most Favoured Nation) in
exports to other W.T.O. members
-
Objectives:
1. Free
trade
2. Growth
of LDCs
3. Protection
of the environment
4. Optimum
utilisation of the world resources
5. Increase
standard of living of member nations
6. Settlement
of trade disputes
7. Development
of integrated & durable multilateral trading system
-
Functions:
1. Trade
without discrimination
2. Administer
& implement trade agreements that have been signed
3. Act
as forum for multilateral trade negotiations
4. Resolve
trade disputes through dispute settlement mechanism
5. Implement
tariff cuts & lower Non Tariff Barriers by member nations
6. Cooperate
with other international institutions involved in global economic policy making
7. Monitor
developments in the world economy
8. Consultant
to member nations
9. Examine
foreign trade policies of member nations
10. Collect
trade statistics of member nations
-
Critical assessment;
1. Only
negotiations but no concrete results
2. No
fair treatment to all member nations – more favour shown to developed countries
3. Developed
countries hardly abide by the terms of the agreement
-
4th Ministerial Conference
at Doha in Nov 2001. Here India opposed contentious issues like child labour
issues & insisted on implementation of resolution relating to market access
in AoA, clarity in TRIPs for public health policies, etc.
