Are You Craving For Knowledge?

***Are You Craving For Knowledge?***

We will discuss something new today. Sidhi Baat,No Bakwas.

Free Trade Agreements(FTAs) are signed between nations for giving favourable treatment to trade in Goods & Services & Investment. We have already discussed that all WTO (World Trade Organisation) members have to give each other MFN(Most Favoured Nation) status i.e. equal treatment to one another. So FTAs are violation of MFN status but they are compliant of WTO rules.

Recently there was much uproar over withdrawal of GSP(Generalised System of Preference) status of India by USA. By this GSP status,developing countries can export products to USA's markets at a lower tariff(tax). Bangladesh & India are not current beneficiaries of GSP.

**Customs Union: It is a type of trade block which is composed of a(one) free trade area with a(one) common external tariff. E.g. European Union is a free trade area(consisting of many countries) and it has common rules & regulations(for many countries) to deal with an external country.

Q) Do you think that this is the reason why BREXIT happened?

**More examples of Customs Union are- East African Community,Mercosur,Gulf Cooperation Council,Caribbean Community(CARICOM) etc.

**Now you search internet to know the name of countries available in each grouping.(Very Important)

**As per WTO & its MFN status,India has to keep uniform tariffs for all mangoes imported from all foreign countries. But India already has lots of mango producers. So to protect domestic mango producers,India can i) Increase import duty on mangoes(tariff barrier) or ii) impose strict pest  control rules,alleging that child labour is used in producing those mangoes,delay in custom clearance etc(non-tariff barriers). Affected countries can raise a case against India in WTO. E.g. India's agricultural subsidy was under scanner of WTO due to a case by USA. 

**Agri subsidy---->Price of agricultural commodities produced by India is less---->Export competitiveness increases----->Domestic producers of USA suffer as import from India is less costly than homegrown production----->USA can impose COUNTERVAILING DUTY on Indian Agri products to negate subsidy & to protect domestic producers. 

***Home work: What is Anti dumping duty?

By,Hemen Sarma