UNIT 9 WORLD TRADE AND HUMAN RIGHTS

Structure

Objectives
Globalization and World Trade
9.1.1 Drawbacks of TNCs
9.1.2 World Trade: (3-7 dominance
Mismatch between Global Economy and Global Society
Agencies and instruments of World Trade
9.3.1 World Bank and IMF
9.3.2 GATT
9.3.3 Uruguay Round
9.3.4 WTO
9.3.5 TRIPS,
9.3.6 TRIMS
9.3.7 Social Clauses
9.3.8 MA1
An Evaluation of WTO Efforts
9.4.1 Evaluation of TRIPS
An Alternative approach to World Trade
Growing Powers of TNCs
Human Rights Standards
Indian Response
9.8.1 Cautious to WTO measures
Let Us Sum Up
Key Words and Phrases
Answers to Check Your Progress Exercises

9.0 OBJECTIVES

This unit discusses:

1) the trend towards global trade, the role of Transnational Corporations (TNCs) and the current
mismatch between global economy and global society;
2) the role of international agencies for channelizing international trade and investment;
3) a critical assessment of world trade, TRIPS & TRIMS and
4) the Indian efforts to respond to the global trade in economy.

After going through this Unit, you should be able to:

1, analyse the impact of global market on underdeveloped and developing economies and the
role of TNCs,
2, know about the emergence of the World Trade Organization (WTO),
3, critically review the role of different international agencies in chanrielizing trade in global
market,
4. understand how the global market seeks profit while eroding the sovereignty, human rights
and freedom of the people in developing societies,
5, assess India's opportunities and risks in the new global trade.
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9.1 GLOBALIZATION AND WORLD TRADE

Globalization refers to a constellation of forces: economic, technological, ecological and cultural
structures that are emerging on a global scale. Whether it is political events or economic
decisions, commercial or economic activity, computer technology or space exploration, food and
dress habits or the universal musical beat. All of these have crossed their traditional national
boundaries and, have become global. The economy has changed dramatically to transform into
a global economy characterized not only by flee trade iiz goods and services but even more, by
free movement of labour, capital, skill and entrepreneurship.

Globalization of economy has been made possible by improvements in transportation (bigger

trucks, jet-powered air freighter, containerized cargo, superhighways) and spectacular advances
in computing and telecommunications (digital systems, satellites, fiber optics) technology.

No doubt, global trade is beneficial to all the trading partners but it is more beneficial to some.
The industrial revolution increased the importance of trade in local economies and made long
distance trade economical. But it also created a new system of global inequality based on uneven
deployment of industrial technologies. Such inequalities made regions, nations and regions within
nations different and unequd, among each other.

Globalization process has disciplined the so-called sovereign states now to become managerial,
allowing TNCs to make and take charge of, economic and financial transactions.

9.1.1 Drawbacks of TNCs

From the ways they work in global trade, it may be noted that TNCs have at least the following
drawbacks:
(i) Their technology is designed for world-wide profit maximization:
(ii) They do not necessarily cater to the developmental needs of the developing countries.
(iii) Through their power and flexibility, TNCs can evade or undermine national economic
autonomy and control. Their activities may be inimical to the national interests of particular
countries.
(iv) MNCs can have an unfavourable effect on balance of payments of a country. By
repatriating profits, they may deplete the foreign exchange resources of a country. For
instance, coca cola, until 1978, had remitted abroad nearly Rs.6 crores on an initial
3 investment of Rs.6.6 lakhs in India.
(v) TNCs may destroy competition and acquire monopoly, laying waste hundreds of thousands
of workers in similar industries.
(vi) They may threaten the sovereignty of the nation in which they do business.
(vii) They use highly skilled workers laying olf unskilled and semi skilled workers retarding the
growth of employment.
(viii) They cause a rapid depletion of some of the non-renewable natural resources.

Hence, unrestricted entry of TNCs is seen with fear and suspicion in the developing countries
because of a bad track record. They have not fulfilsledtheir social responsibilities properly. In host
countries they have not been fair to the employees and consumers and neither have they shown
respect for the community and its values. These issues, however, .were never considered
important in world trade. UN Secretary-General Kofi Annan admitted recently that "globalization
is under intense pressure. And business is in the line of fire, seen by many as not doing enough
in areas of environment, labour standards and human rights".
 Some of these corporations have gross incomes greater than the Gross Domestic Product (GDP)
of most nation states. General Motors is bigger than Denmark and at least hundred largest
corporations are larger than most member States of the United Nations. Nearly 70 percent of
world trade is controlled by just 500 largest corporations, rightly known as the Global 500 or
Fortune 500. The annual revenues of the Global 500 are twice the size of the gross domestic
product of the United States, the largest economy in the world.

9.1.2 World Trade: 6 - 7 dominance

In the period following the Second World War, the bulk of world trade is accounted for by the
high income group economies known as developed countries. The core of the high-income group
countries is made up of the G-7 economies consisting of USA, Japan, Germany, France, Italy, 'the
UK and Canada. It is actually G-8 with the inclusion of Russia. The low-income and middle-
income economies together are sometimes referred to as developing economies. Most of these are
countries of ~ s i a , ' ~ f r i cLatin
a , America. Which were under colonial subjugation in the past and
under neo-colonial domination at present.

Twenty percent of the worlds' population requires 80% of the world's resources to maintain its
living standards. It needs to exploit even those resources of the developing countries which were
traditionally considered non tradeable, through their superior technology and knowledge. You
must have heard about Neem and Basmati rice getting patented by American multinationals.

1
-.-r
t:l~eck Piour Progress 1
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2.
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Why sl~oulilthere be no unrestsictccl entry of 'ii'N(.'s into developing countl~ic:~.
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3. Name the G-7 countries.

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9.2 MISMATCH BETWEEN GLOBAL ECONOMY AND
GLOBAL SOCIETY
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Instead of "globalization with a human face", grotesque inequalities have overshadowed world
trade. UNCTAD Secretary General Rubens Recupero stated before ECOSOC in July 1997 that
"the world economy is in some respects polarizing more than it is converging".

The development of a global economy has not been matched by the development of a global
society. The basic unit for social and political life remains the nation-state International law and
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international institutions are not strong enough to prevent war or large scale abuse of human
rights in individual countries where TNCs are operating and they can exploit the situation for their
profit motives. They can also exploit the bio-diversity and environment, ruining both in the long
run. Global financial markets being largely beyond the. control of national or international
authorities, the TNCs and financial markets have grown so very powerful that they can impinge
upon, human rights of individuals in the society and sovereignty of the State in actual practice.

No doubt the States remain sovereign. They wield legal powers that no individual or corporation
can possess. They can interfere in the economy but they are increasingly being subjected to the
forces of global competition. If a government imposes conditions that are unfavourable to the
capital, capital will seek to escape. Conversely, if a government keeps down wages, permits child
labour, bonded labour, cheap prison labour etc., it can foster the accumulation of capital both for
TNCs as well as the rulers of the country.

Globalization has, thus, led to the weakening of State and rendered the relationship between the
community, the State and the corporation totally fluid. It has entrenched the powers and widened
the freedoms of corporations eroding the powers and freedoms of people in their diverse
community settings. Social scientists have begun to talk of 'reinventing government' because the
State is turning more one-sided in representing corporate interest and failing to represent citizen
and community interest.

For citizens and communities, the erosion of State power implies withdrawal of two protective
unzbrellas: to the individual citizens and the community. The first is the protection available
through the regulation of (cornnlercial) profit-seeking behaviour so that destruction of livelihoods,
environment and people's health, can be prevented. The second is the protection built into
traditional environmental rights and rights to knowledge and culture, rights which are often
customary, indigenous and not written in law, but which are central to secure livelihood and
survival options, especially of marginal groups such as women, tribals, landless and small
peasants, farmers, traditional healers and craftsmen etc.

In view of the alarming situation created by the power and reach of the TNCs, it has become
imperative to re-examine the efforts of agencies and instruments promoting world trade and
global economic system, Rubens Recupero is right in warning that if "globalization is to deserve
its name, it has to include and not to exclude, to integrate and not to rnarginalise". TNCs must
generate enough jobs with adequate pay and must help reduce poverty of host and home
countries. They should not rush headlong into heady philosophy of market profitability and
economic efjciciency but must bring about human developmetzt and social protection into equation.
After all, the United Nations which drew up the Charter of Human Rights also created World
Bank and IMF to help revamp the war ravaged economies of its member countries. The denial
of these rights and fundamental freedoms is not only an individual and personal tragedy, but also
creates conditions of social and political unrest sowing the seeds of violence and conflict within
and between societies and nations. In a global society regional and local conflicts threaten to
engulf the world community. But 1MF.and World Bank in their haste to create a new world
economic order failed to take notice of the activities of TNCs. However their role in promoting
international trade and reducing trade barriers cannot be discounted.

9.3 AGENCIES AND INSTRUMENTS OF WORLD TRADE

9.3.1 World Bank and IMF

There were no international agencies and instruments to control, supervise and promote international

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 trade before the Second World War, World Bank and IMF have helped Third World countries
to integrate their economies in th; new world econonly through three measures:

I) incre,ase in exchange of good and services;

11) raising transnational production, and
111) helping in financial and exchange rate transactions.

The World Bank and IMF have induced, and sometimes forced through sanctions, the third World
developing countries to change their planning and development policies, reduce the role of
government to allow market forces greater freedom and promoted monetary tightening through
structural adjustment policies. As many of these countries were caught in the "debt trap" and were
not able to pay back the IMF and World Bank loans, structural adjustment of these economies
was suggested by them in 1980s. Structural adjustment was a package of various policy efforts
to get out of the debt trap and to rehabilitate them to resume growth in the coming decades.
Structural adjustment can be seen as a measure by World Bank - IMF to bring thejeveloping
'

countries in the mainstream of global economy through:

I. new fiscal, monetary and trade policies,

2. reduction in government expenditure,
3. elimination of subsidies on domestic products, reduction in import duties and tariffs,
4. control of internal money supply,
5. opening of trade and production to private industry,
6. raising agricultural production through improved technology and quality inputs and
7. Stimulating export of agriculture commodities.

9.3.2 GATT

Besides World Bank anal IMF, General Agreement on Trade and Tariff (GATT) was set up in
1948 as an instrument to regulate world trade. It was a complement to the IMF and World Bank,
The original signatories of GATT desired to facilitate free trade by encouraging removal of any
unnecessary barriers ta trade.

The initiative to set up GATT came from the United States khich wanted to extend the US
economic model of high volume, standardized production and open market to the rest of the
world. The US has dominated the working of this organization since its inception but it could not
develop as an International Trade organization following disagreement by the US Senate in 1950
to pass its Charter. It has, thus, remained a Voluntary Contractual Agreement.

9.3.3 Uruguay Round

The 108 member countries of GATT met' eight times since 1948. The purpose of the first seven
rounds had been to set up a code of conduct regulating world export and import and reducing
tariff and other trade bariiers in order to promote free trade. The formation of trade blocks like
(North American Free Trade Agreement) NAFTA in North America and the European common
Market (later European Union) gave a fillip to its activities.

The eighth round of discussions by GATT called the Uruguay Round was held at Punta del Esta
in Uruguay in September 1986. The earlier regulations related mainly to general production and
price policy while conceding the freedom of each country to design its own economic policy. This
round not only aimed at increasing the scope and power of GATT but also prepared deta:,ed
regulations of domestic policies through measures like TRIMS and TRIPS and creating a new
body called World Trade Organization (WTO).
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9.3.4 WTO

The WTO was set up in January 1995 with a coinprehensive mandate covering economic
governance, trade and investment of member countries. It is to monitor trends in global
production, trade and flow of capital from one country to another and devise reforms and
regulations from time to time. WTO has now replaced GATT and has an independent machinery
for consultation, evaluation, negotiation and enforcement of trade decisions. It has a greater reach
than the World Bank and the IMF in terms of its rules and regulations covering taxation, import,
export, industrial and agricultural production of member countries.

The WTO has a mandate to reduce and eliminate trade distortions, to issue (wherever necessary)
directives on tariff and non tariff measures taken by countries to raise exports, and to reduce
imports. It prohibits incentives and subsidies to boost output of selected industries in a country.
In agriculture, the major WTO provisions are:

a) reduction in domestic subsidies,

b) access to foreign trade,
c) trade related intellectual property rights (TRIPS) and
d) sanitary and phytosanitary regulation for products free of health hazards.

Countries which fail to implement WTO policies and structural adjustments suggested by World
Bank will have to face sanctions and restrictions which may destroy their economies, They will
also be disqualified for loans from World Bank and other foreign investors except in certain
conditions.
 9.3.5 Trade Related Intellectual Property T h t s (TRIPS)

TRIPS clauses aim at regulating the patenting of all products and not just their processes (which
was the usual practice earlier) which enter international trade. The clause covers drugs,
pharmaceuticals, processed foods and chemicals. A ten-year transition period has been given to
countries to implement TRIPS. Some major steps suggested are:

i) National patent laws to be changed to include product patenting along with process
patenting.
ii) All indigenous agricultural species to be conserved immediately by setting up gene banks
and bio-tech research and data centres.
iii) If countries do not have patents in agro-chemicals or pharmaceuticals, the present (read
foreign here) patent holders have exclusive marketing rights for 5 years.
iv) Restrict transfer of seeds and plants breeding among farmers. .
v) Set up monitoring centers for safeguarding the interests of products, users and traders of
seeds.
vi) Disputes between member couotries on food safety., and plant health will be settled by the
I
World Intellectual Properties organization (WIPO), Geneva, whose decision will be final.

9.3.6 Trade Related Investment Measures (TRIMS)

The TRIMS agreement brings into being a new investment regime in the financial market. It
replaces all existing restrictions on foreign investors imposed in developing c o u d e s and stresses'
right of investment of funds by one country in another as a legal right. It empowers foreign
investors or industries to start retaliatory measures against governments which impose restrictions. '

Time period is given to developing countries to implement TRIMS and exception is made in
favour of countries with serious balance of payment problems.

9.3.7 Social Clauses

Inclusion of social flauses linking trade to standards of labour and environment which are binding
on all member countries, gives WTO immense power to fix rates and parameters for all economic
transactions. Under these clauses, a country can refuse to trade with another on the ground that
it does not observe international labour standards,'allows child labour and coercive labour, does
not enforce minimum wages, permits discrimination in wages of men and women, and allows
pollution and environment damage.

These clauses prevent developing countries from having trade advantages due to lower costs of I
labour and gain competitive advantage against firms in rich countries. This also does not take into
account the,unequal social and economic structures and barriers in countries, where uniform
labour standards would take a long time to implement. These clauses not only militate against t
democratic norms and sovereign rights of countries to pursue goals of social justice and equality
but also force out semi-skilled and unorganized workers from export industries and deprive them
, of livelihood.
9.3.8 Multilateral Agreement on Investment (MAI)

In continuation of its policy of liberalization and globalization in the financial sector, the WTO
in a high level meeting at Seattle, USA in November 1999 concluded a Multilateral Agreement
on Investment(MAI).Countries which entir into MA1 will have to give free access to foreign
funds and investments, MA1 allows investing firms to retaliate and file a suit against 8 country
which discriminates in any way either by imposing a quota of domestic labour, keeping a local
partner, or placing restrictions on areas like media.

Such clauses are a direct intervention in the sovereignty of a country without any respect for its
values, culture, tradition and history, In fact,' the 'Super state' system of the World Bank, IMF
and WTO, and TNCs, reach for the resources and knowledge that developing countries have so
far controlled and conserved. Conflicts over economic value1of nature and knowledge have
become reflections of globalized conflicts now.

................................................................................................................

9.4 An Evaluation of WTO Efforts

The new era of global trade heralded on January, 1995 by the inauguration of WTO which
dramatically changed the whole concept of trade. Global economy now is to be legislated by the
WTO which is armed with the power to make legal judgements in international trade relations
and enforce the implementation of the Uruguay Round agreements. It has in fact replaced the
GATT and its primary objective is to ensure a' free trade environment. However, looked closely,
these institutions are imposing interests of a handful of TNCs in all economic aspects -
irrespective of their 'shocking environmental and social impact especially in the developing
countries. They not only intend to draw all domestic issues into global economy, they want to
extend their control on all matters related to life - ethics, values, ecology, food, culture,
knowledge, democracy - as trade commodities. It is a secretive organization with poor accountability
and less openness. Tlie structure of WTO is supposed to be like the UN General Assembly - one
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member one vote but in five years of its existence there has not been a single vote taken. Instead,
b#
 decision is made by so called consensus, whereby smaller and less powerful nations are
browbeaten into accepting the position already decided upon by strong members like the US.

Environmental crisis has made it amply clear that 'growth' in global economy has led to the
destruction of nature's economy which is the only renewable source of environmental regeneration.
This has also snatched from the people their source of sustenance economy which provided them
food and fuel free of cost. When these goods would be turned into trade commodities it will
destroy people's freedom as wkll as basic needs. More trade and more cash may mean less life:
in nature through ecological destruction, and in society through denial of basic needs.

For example, the World Bank policy paper on trade liberalization for India's agriculture sector
recommends creation of 'markets in tradeable water rights.' It argued that "if rights to the delivery
of water can be freely bought and sold, farmers with new crops or in new areas will be able to
obtain water provided they are willing to pay more than its value to existing users. And
established users will take account of its sale value in deciding on what and how much to
produce".

Such a measure in tradeable water rights will divert water from small farmers to large corporate
'super farms' and lead to water monopolies. Taking the logic of the market into account, tradeable
rights have a tendency to be sold to the highest bidder. Consequently, the wealthier you are, the
more power you will have over access of even such resources which are considered free gifts
of nature. This will lead not only to misuse of resources and their overexploitation, it would also
lead to their depletion. The commodification and privatization of land and water resources are
based and promoted by international trade organizations on the flawed belief that prices equal
value. To prevent ecological abuse of land and water, the people in the developing world,
consequently, are asking for the opposite - the inalienable right to resources like water.

The two central impacts of GATT Uruguay Round and WTO are the removal of national barriers
in trade flows and the introduction of hitherto domestic concerns like agriculture and intellectual
property rights into the arena of international trade. Assessing the impact of domination of market
forces in the Indian food sector, one must not be surprised to learn that due to this policy food
prices increased by 63 percent between 1989 - 90 and 1993 - 94. This has led to a decline in per
capita food consumption in the last three years. When as demanded by WTO, food is available
only at world market prices, starvation soon will be the likely certainly for the majority of the
poor.

The liberalization of agricultural exports have led to exports of cotton and yarn shooting the
prices three times. This has resulted in large-scale unemployment of weavers. Likewise, foreign
import of grains and millets with various hidden subsidies, have put local farmers at disadvantage.
Vandana Shiva, an active champion of human rights, points one that food "security is destroyed
by 'liberalization of both exports and imports."'

9.4.1 Evaluation of TRIPS

An analysis of TRIPS Agreement, likewise, would reveal that it has bro[lght for the first time into
global trade the areas of ideas, knowledge and innovation. The clauses that refer to intellectual
property rights (IPR) in the areas of bio-diversity and agriculture are of particular interest. The
agreements covering IPRs and clauses supporting the patenting'of life forms and processes are
heavily weighted in favour of TNCs which will acquire exclusive marketing rights even in the
areas of traditional knowledge of the developing countries. For example, if an TNC manages to
obtain a patent on genetically transformed Haldi, Neem or Soyabean, it will own all forms of
these for generations and all those using them would have to pay for their use.
 In most of the developing societies, their patent laws and cultures forbid patenting of life forms
because they cannot be owned and manufactured. The GATT' and WTO will force us to give up
our moral values, economic priorities and autonomy to a handful of Fortune 500 companies.

The GATT-TRIPS is, therefore, not about trade. It is politics through other means to build up a
neo-colonial society in the developing world. Environmentalists and labour unions have opposed
these moves and have criticized GATT because it destroys jobs and the environment. To placate
them "trade-related" social clauses and "trade-related" environmental clauses were offered.

9.5 AN ALTERNATIVE APPROACH TO WORLD TRADE

Realizing the impact of the GA'iTNTO policies, the active negotiators of the trade work group
of Non Governmental Organizations drafted an Alternative ~ r e k yon Trade and Sustainable
Development in June 1997 at the Global woForum in Rio de Janeirio. This viewpoint of World
trade declares:

International trade should be conducted with the objective of improving the well being of
the people, whilst recognizing the need to promote socially just and ecologically
sustainable development and prudent resource management.
International trade should guarantee the fair distribution of wealth, the self-determination
of people, and participatory democracy.
Compensation, working conditions, land use, and exploitation of natural resources must be
directed towards sustaining socially and ecologically balanced communities. Comparative
advantage must not be pursued by exploiting people and nature in an inhuman and
unsustainable way.
Debt cancellation and the retrieval of national sovereignty based on democratic principles
is indispensable to socially just and ecologically sustainable development.
Improving terms of trade of developing countries, eliminating distortions caused by unfair
trade practices and preserving the right to enact fair policies including health, other social
and environmental standards are important.
People have the right to full access to all scientific information, financial and independent
technical assistance must be available to enable all the countries to meet minimum
international health, other social and environmental standards.
Conflicts between the provisions of international trade and environmental agreements must
be settled on the basis of maximum protection to the environment.
Trade in armaments should be prohibited.

When third world developing countries began to face difficulties on home front in their
liberalization efforts, various international forums came forward to voice their concern on eroding
! human values and rights in the face of interventions by TNCs.

9.6 GROWING POWERS OF TNCs

Proponents of market capitalism and liberalism who claim that free market is the essential
foundation of political democracy-a guarantor of the rights of the people against the abuse of
State power, have replaced a known devil that the State was with an unknown and unpredictable
monster of the market. Market is never a friend and is an undemocratfc institution, Dominated
by global mega-corporations, stronger than majority of States in economic power and armed with
unfettered powers through GATT/WTO pose a serious threat to economic and political rights of
people everywhere. With most fundamental of all human rights - the rights to a means of living
 - literally the rights to live - and the right to participation in making the decisions that affects our
lives, in the hands of the TNCs people of the developing world can very well visualize their future
life. The growing unaccountable powers of these corporations, has naturally turned out to be a
cause of concern for most developing nations.

It is an internationally recognized principle that economic rights and civil and political rights are
universal, indivisible, interdependent and interrelated. With roots in a distant country, no
particular love for host people and society and profit as their only motive, TNCs are going to let
loose neo-colonialism of a different nature. They may seem to pay lip service to the UN
Declaration on the Right to Development, Vienna Declaration and Programme of Action;
Amnesty International's Human Rights Principles for Companies etc. and national and international
institutions may talk tirelessly of efforts being taken to make business responsible to society and
to respect human rights and social development, there is no binding force in these declarations.

9.7 HUMAN RIGHTS STANDARDS

UN Secretary Genera1 Kofi Annan, speaking at the Davos World Economic Forum in January
1999 called on TNCs to promote universal values in their dealings and to 'uphold human rights
and decent labour and environmental standards directly by your own conduct of your own
I business' challenging business leaders to abide by nine principles derived from internationally
1 recognized standards. These are:
1
I
1 Human Rights
I . . 1. Business should support and respect the protection of internationally proclaimed human
1
I .. rights within their sphere of influence and
j 2. Make sure they are not complicit in human rights abuses.
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,
Labour
3. Business should uphold the freedom of association and the effective recognition of the right
to collective bargaining;
4. The elimination of all forms of forced and compulsory labour;
5. The effective abolition of ckild labour; and
6. Eliminate discrimination in respect of employment and occupation.

Environment
7. Business should support a precautionary approach to environmental challenges;
8. Undertake initiatives to promote greater environmental responsibility; and
9. Encourage the development and diffusion environmental friendly technologies.

But these standards are neither binding nor enforceable through a court of law. If an TNC violates
it, nothing can be done. Human rights, therefore, are under constant threat of violation and there
is no traditional institution to protect individual from the threats of business and trade. It is amply
clear that through trade and trade policies World Bank-IMP-GATT have played a high level
politics with the developing countries and their poor people. These international organizations
have turned out to be the mouth pieces of the TNCs and have thrust unacceptable conditions upon
the developing countries. It may be sometime later that they would be able to see through the
whole game plan of these institutions.
9.8 INDIAN RESPONSE
Third World developing communities which have evolved, adapted and survived adversity for
centuries of oppression, suppression and economic exploitation find themselves suddenly deprived
of their natural strength to offset these new engines of growth. The anti-poor, anti-human rights
posture of TNCs threaten individuals and communities in a manner that requires to redraft
international policies to secure a minimum of social equality, gender justice, human rights and
freedoms for their people. The degree to which each nation captures opportunities or copes with
threats depends upon its capabilities: Such capabilities include:
the nation's culture, attitudes and values;
e Its social cohesion;
Its factor endowments;
Its industrial organizations; and
Its government leadership.
Global international trade is both an opportunity and a risk for countr&s like India and they have
to show a cautious approach. The fledgling economies can be ruined, their environment destroyed,
their people embeggered. A nationts capabilities have, therefore, to be analysed not just in terms
of the scope and intensity of each elerilent noted above but also in terms of the interactive effect
J&J

among these elements over time.

India has adopted a cautious approach to the global integration in trade and investment and has
seen it as both an opportunity and a risk.

After having remained outside the global trade system for forty long years, India responded to the
realities of international trade in 1990s. Under the structural adjustment policies of World Bank,
India adopted a New Economic Policy in 1991 and took the following measures to open up to the
call of globalization of trade:

(i) opening all but six industries (in strategic sectors) to domestic and foreign investors.
(ii) Reforming trade policies.
(iii) Opening up capital market to foreign direct investments.
(iv) Removing restrictions on hiring foreign experts etc.

India realises that the time has come to enter the world trade scenario because in trade there are
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no losers everyone who plays the game wins. India joined the WTO since it was not a party to
any trading block like NAFTA or EU. WTO membership has paved its access to world markets
without having to negotiate with each of the 135 members separately. According to WTO
requirements, India is concerned about child labour and environmental protection. With a large
GDP,a great pool of scientists, engineers, business managers and skilled workers wit11 large
surplus horticultural production, India is determined to make the best use of the global trade
opportunities.

9.8.1 Cautious to WTO measures

While availing of the opportunities presented by free market economy in global tradp, India has
not closed its eyes to the threats of fundamental freedoms, human rights and a positive role of the
State in the welfare of the society. It has taken up the cudgels against the inequitable terms of trade
imposed by WTO, TRIPS, TRIMS and social clauses. India is in the forefront of the developing
countries preparing long-&awn negotiations for securing quitable terms of trade in the global
market and fights for the righh of the poor, the unskilled, and all those whose rights and existence
are threatened by the WTO policies. It has not abandoned its implementation of internal
 iii) Its factor endowments
iv) Its industrial organizations
v) Its government leadership and
vi) Peoples morale.
4. i) Opening its market to domestic and foreign investors.
ii) Reforming trade polices.
iii) Reducing farm subsidies etc.