1.UNIDO is the specialized agency of the United Nations that promotes industrial development for poverty reduction, inclusive globalization and environmental sustainability.The mission of the United Nations Industrial Development Organization (UNIDO), as described in theLima Declaration adopted at the fifteenth session of the UNIDO General Conference in 2013, is to promote and accelerate inclusive and sustainable industrial development (ISID) in developing countries and economies in transition.The relevance of ISID as an integrated approach to all three pillars of sustainable development is recognized by the recently adopted 2030 Agenda for Sustainable Development and the related Sustainable Development Goals (SDGs), which will frame United Nations and country efforts towards sustainable development in the next fifteen years. UNIDO’s mandate is fully recognized in SDG-9, which calls to “Build resilient infrastructure, promote inclusive and sustainable industrialization and foster innovation”. The relevance of ISID, however, applies in greater or lesser extent to all SDGs.Accordingly, the Organization’s programmatic focus is structured in three thematic priorities, each of which represents different aspects of ISID:

Creating shared prosperity Advancing economic competitiveness Safeguarding the environment

Each of these programmatic fields of activity contains a number of individual programmes, which are implemented in a holistic manner to achieve effective outcomes and impacts through UNIDO’s four enabling functions: (i) technical cooperation; (ii) analytical and research functions and policy advisory services; (iii) normative functions and standards and quality-related activities; and (iv) convening and partnerships for knowledge transfer, networking and industrial cooperation.In carrying out the core requirements of its mission, UNIDO has considerably increased its technical services over the past ten years. At the same time, it has also substantially increased its mobilization of financial resources, testifying to the growing international recognition of the Organization as an effective provider of catalytic industrial development services.

2. In finance, an exchange rate (also known as a foreign-exchange rate, forex rate, FX rate or Agio) between two currencies is the rate at which one currency will be exchanged for another. It is also regarded as the value of one country’s currency in terms of another currency.[1] For example, an interbank exchange rate of 119 Japanese yen (JPY, ¥) to the United States dollar (US$) means that ¥119 will be exchanged for each US$1 or that US$1 will be exchanged for each ¥119. In this case it is said that the price of a dollar in terms of yen is ¥119, or equivalently that the price of a yen in terms of dollars is $1/119.

Exchange rates are determined in the foreign exchange market,[2] which is open to a wide range of different types of buyers and sellers where currency trading is continuous: 24 hours a day except weekends, i.e. trading from 20:15 GMTon Sunday until 22:00 GMT Friday. The spot exchange rate refers to the current exchange rate. The forward exchange rate refers to an exchange rate that is quoted and traded today but for delivery and payment on a specific future date.

In the retail currency exchange market, a different buying rate and selling rate will be quoted by money dealers. Most trades are to or from the local currency. The buying

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rate is the rate at which money dealers will buy foreign currency, and the selling rate is the rate at which they will sell the currency. The quoted rates will incorporate an allowance for a dealer's margin (or profit) in trading, or else the margin may be recovered in the form of a commission or in some other way. Different rates may also be quoted for cash (usually notes only), a documentary form (such as traveler's cheques) or electronically (such as a credit card purchase). The higher rate on documentary transactions has been justified to compensate for the additional time and cost of clearing the document, while the cash is available for resale immediately. Some dealers on the other hand prefer documentary transactions because of the security concerns with cash.

3. The United Nations Conference on Trade and Development (UNCTAD) promotes the development-friendly integration of developing countries into the world economy. The Organization aims to help shape current policy debates and thinking on development, with a particular focus on ensuring that domestic policies and international action are mutually supportive in bringing about sustainable development. Established in 1964, UNCTAD is the principal organ of the General Assembly in the field of trade and development.UNCTAD undertakes its mandate through three key functions: (i) as a forum for intergovernmental deliberations, supported by discussions with experts and exchanges of experience, aimed at consensus building; (ii) undertaking research, policy analysis and data collection; and (iii) providing technical assistance tailored to the specific requirements of developing countries, with special attention to the needs of the least developed countries (LDCs) and of economies in transition. When appropriate, UNCTAD cooperates with other organizations and donor countries in the delivery of technical assistance. It also cooperates with civil society and the business sector. UNCTAD has 193 Member States. Its annual operational budget is approximately US$50 million, which is drawn from the United Nations regular budget. Technical cooperation activities, which have developed as a result of UNCTAD’s sectoral expertise and are financed from extra-budgetary resources, amount to approximately US$31,5 million in 2007

5. The IMF provides various types of loans to member governments. Concessional loans are granted to low-income countries at a concessional interest rate through the Poverty Reduction and Growth Facility (PRGF) while non-concessional loans are provided with a market-based interest rate through five mechanisms: the Stand-By Arrangements (SBA); Extended Fund Facility (EFF); Supplemental Reserve Facility (SRF); Contingent Credit Lines (CCL); and the Compensatory Financing Facility (CCF).Members facing a balance of payments problem can immediately withdraw up to 25 per cent of its quota in gold or convertible currency. If this is insufficient, a member country may borrow up to three times its paid-in quota.Two frequently used mechanisms for IMF loans are the Standby Arrangements and the Extended Fund Facility. Under the Standby Arrangements, member countries are allowed to borrow over a period of one to two years to support macroeconomic stabilisation programmes and repayments are made within three to five years. Under the Extended Fund Facility, countries borrow for a period of three to four years and repayments are not due until five to ten years down the line.Member countries can also avail themselves of the Fund’s short-term financing facilities. The Supplemental Reserve Facility provides very short-term financing on

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a large scale to emerging market economies experiencing sudden loss of market confidence as a result of massive outflows of capital while the Contingent Credit Lines finances national economic policies aimed at averting an economic crisis precipitated by crisis elsewhere in the world. Both types of financing require repayment within one to two years and carry a surcharge. The Compensatory and Contingency Financing Fund provides loans to countries experiencing shortfalls in export earnings due to unforeseen circumstances, such as natural disasters affecting crop yields. Repayments are made in three and quarter to five years.6.Components of Balance of Payments: (1) Current Account; (2) Capital Account!(1) Current Account:Current account refers to an account which records all the transactions relating to export and import of goods and services and unilateral transfers during a given period of time.Current account contains the receipts and payments relating to all the transactions of visible items, invisible items and unilateral transfers.Components of Current Account:The main components of Current Account are:1. Export and Import of Goods (Merchandise Transactions or Visible Trade):A major part of transactions in foreign trade is in the form of export and import of goods (visible items). Payment for import of goods is written on the negative side (debit items) and receipt from exports is shown on the positive side (credit items). Balance of these visible exports and imports is known as balance of trade (or trade balance).2. Export and Import of Services (Invisible Trade):It includes a large variety of non- factor services (known as invisible items) sold and purchased by the residents of a country, to and from the rest of the world. Payments are either received or made to the other countries for use of these services.Services are generally of three kinds:(a) Shipping,(b) Banking, and(c) Insurance.Payments for these services are recorded on the negative side and receipts on the positive side.3. Unilateral or Unrequited Transfers to and from abroad (One sided Transactions):Unilateral transfers include gifts, donations, personal remittances and other ‘one-way’ transactions. These refer to those receipts and payments, which take place without any service in return. Receipt of unilateral transfers from rest of the world is shown on the credit side and unilateral transfers to rest of the world on the debit side.4. Income receipts and payments to and from abroad:It includes statement income in the form of interest, rent and profits.7. World TradeIMPACT OF THE World Trade Organisation ON THE INDIAN ECONOMYINTRODUCTION:The World Trade organization wasestablished to deal with all the major aspectsof international trade and it had far reachingeffects not only on India’s foreign trade butalso on its internal economy.The impact of the WTO on the Indianeconomy can be analysed on the basis andgeneralconcepts.IMPACT:The WTO has both favourable and non-favourable impact on the Indian economy.FAVOURABLE IMPACT:1) Increase in export earnings:Increase in export

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earnings can be viewed from growth in merchandise exports and growthin service exports:• Growth in merchandise exports:The establishment of the WTO has increased the exports of developing countries because ofreduction in tariff and non-tariff trade barriers. India’s merchandise exports have increasedfrom 32 billion us $ (1995) to 185 billion u $ (2008-09).• Growth in service exports:The WTO introduced the GATS (general Agreement on Trade in Services) that provedbeneficial for countries like India. India’s service exports increased from 5 billion us $ (1995)to 102 billion us $ (2008-09) (software services accounted) for 45% of India’s serviceexports)2) Agricultural exports :Reduction of trade barriers and domestic subsidies raise the price of agricultural products ininternational market, India hopes to benefit from this in the form of higher export earningsfrom agriculture3) Textiles and Clothing :The phasing out of the MFA will largely benefit the textiles sector. It will help the developingcountries like India to increase the export of textiles and clothing.4) Foreign Direct Investment:As per the TRIMs agreement, restrictions on foreign investment have been withdrawn bythe member nations of the WTO. This has benefited developing countries by way of foreigndirect investment, euro equities and portfolio investment. In 2008-09, the net foreign directinvestment in India was 35 billion us $.5) Multi-lateral rules and discipline:It is expected that fair trade conditions will be created, due to rules and discipline related topractices like anti-dumping, subsidies and countervailing measure, safeguards and disputesettlements. Such conditions will benefit India in its attempt to globalise its economy

4th. The Fourth Ministerial Conference of the World Trade Organization, also known as the WTO Fourth Ministerial Conference, was held at the Sheraton Doha Hotel and Resort, Doha, Qatar from November 9–13, 2001. At this conference, ministers from all WTO members launched the Doha Development Agenda.

At the conference, trade ministers agreed to undertake a new round of multilateral trade negotiations.[1] The ministers passed two declarations. The first, the main declaration folded the ongoing negotiations in agriculture and services into a broader agenda, which is commonly known as the Doha Development Round. In addition.the Doha agenda included the topic of industrial tariffs, topics of interest to developing countries, changes to WTO rules, and other provisions. The second declaration dealt with the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) and allow government to be flexible of TRIPS to deal with health problems.[2]

The meeting took place just two months after the World Trade Center attack. As a result, some government officials called for greater political cohesion and saw the trade negotiations as a means toward that end. Some officials thought that a new round of multilateral trade negotiations could help a world economy weakened by recession and terrorism-related uncertainty.[3]

Ministerial Declaration[edit]

The Doha Ministerial Declaration mandate for agriculture calls for comprehensive negotiations aimed at substantial improvements in market access; reductions of, with a view to phasing out, all forms of export subsidies; and substantial reductions in trade-distorting domestic support. These topics — domestic support, export subsidies, and market access — have become known as the three pillars of the agricultural negotiations. The Declaration also provides that special and differential

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treatment for developing countries would be an integral part of all elements of the negotiations. The Declaration took note of non-trade concerns reflected in negotiating proposals of various member countries and confirmed that they would be taken into account in the negotiations. March 31, 2003 was set as the deadline for reaching agreement on “modalities” (targets, formulas, timetables, etc.) for achieving the mandated objectives, but that deadline was missed. During the rest of 2003, negotiations on modalities continued in preparation for the fifth WTO Ministerial Conference held in Cancun, Mexico September 10–14, 2003

Absolute AdvantageIn order to begin thinking about gains from trade, we need to understand two concepts about productivity and cost. The first of these is known as absolute advantage, and it refers to a country being more productive or efficient in producing a particular good or service. In other words, a country has an absolute advantage in producing a good or service if it can produce more of them with a given amount of inputs (labor, time, and otherfactors of production) than other countries can.This concept is easily illustrated via an example. Let's say that the United States and China are both making rice. A person in China can (hypothetically) produce 2 pounds of rice per hour, but a person in the United States can only produce 1 pound of rice per hour. It can then be said that China has an absolute advantage in producing rice, since it can produce more of it per person per hour.3 of 7

Features of Absolute AdvantageAbsolute advantage is a pretty straightforward concept, since it's what we usually think of when we think about being "better" at producing something. Note, however, that absolute advantage only considers productivity and doesn't take any measure of cost into account. Therefore, one can't conclude that having an absolute advantage in production means that a country can produce a good at lower cost. 

In the previous example, the Chinese worker had an absolute advantage in producing rice because he could produce twice as much per hour as the worker in the United States. If the Chinese worker was three times as expensive as the U.S. worker, however, it wouldn't actually be cheaper to produce rice in China.

It's useful to note that it's entirely possible for a country to have an absolute advantage in multiple goods or services, or even in all of the goods and services, if it happens to be the case that one country is more productive than all other countries at producing everything. (This is unlikely in practice, but it's at least a theoretical possibility.)4 of 7

Comparative AdvantageBecause the concept of absolute advantage doesn't take cost into account, it's useful to also have a measure that considers economic costs. Economic costs are known asopportunity cost, which is simply the total amount that one must give up in order to get something. A comparative advantage occurs when one country can produce a good or service at a lower opportunity cost than other countries.There are two ways to analyze opportunity costs.

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The first is to look at them directly- if it costs China 50 cents to make a pound of rice, and it costs the United States 1 dollar to make a pound of rice, for example, then China has a comparative advantage in rice production because it can produce at a lower opportunity cost. This is true as long as the costs reported are in fact true opportunity costs.5 of 7

Opportunity Cost in a Two-Good EconomyThe other way of analyzing comparative advantage is to consider a simple world that consists of two countries that can produce two goods or services. This analysis takes money out of the picture entirely and considers opportunity costs as the tradeoffs between producing one good versus the other.For example, let's say that a worker in China can produce either 2 pounds of rice or 3 bananas in an hour.

Given these levels of productivity, the worker would have to give up 2 pounds of rice in order to produce 3 more bananas. This is the same as saying that the opportunity cost of 3 bananas is 2 pounds of rice, or that the opportunity cost of 1 banana is 2/3 of a pound of rice. (Notice that this conclusion was obtained by dividing through by 3.) Similarly, because the worker would have to give up 3 bananas in order to produce 2 pounds of rice, the opportunity cost of 2 pounds of rice is 3 bananas, and the opportunity cost of 1 pound of rice is 3/2 bananas.

It's helpful to notice that, by definition, the opportunity cost of one good is the reciprocal of the opportunity cost of the other good. In this example, the opportunity cost of 1 banana = 2/3 pound of rice, which is the reciprocal of the opportunity cost of 1 pound of rice = 3/2 bananas.6 of 7

Comparative Advantage in a Two-Good EconomyWe can now examine comparative advantage by introducing opportunity costs for a second country, such as the United States. Let's say that a worker in the Unites States can produce either 1 pound of rice or 2 bananas per hour. Therefore, the worker has to give up 2 bananas in order to produce 1 pound of rice, and the opportunity cost of a pound of rice is 2 bananas. Similarly, the worker must give up 1 pound of rice to produce 2 bananas, or must give up 1/2 pound of rice to produce 1 banana. 

The opportunity cost of a banana is thus 1/2 pound of rice.

We are now ready to investigate comparative advantage. The opportunity cost of a pound of rice is 3/2 bananas in China and 2 bananas in the United States. China therefore has a comparative advantage in producing rice. On the other hand, the opportunity cost of a banana is 2/3 of a pound of rice in China and 1/2 of a pound of rice in the United States, and the United States has a comparative advantage in producing bananas.7 of 7

Features of Comparative AdvantageThere are a couple of helpful features to note about comparative advantage. First, although a country may be able to have an absolute advantage in producing every

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good, it's not possible for a country to have a comparative advantage in producing every good. In the previous example, China had an absolute advantage in both goods- 2 pounds of rice versus 1 pound of rice per hour and 3 bananas versus 2 bananas per hour- but only had a comparative advantage in producing rice. 

Unless both countries face exactly the same opportunity costs, it will always be the case in this sort of two-good economy that one country has a comparative advantage in one good and the other country has a comparative advantage in the other.

Second, comparative advantage is not to be confused with the concept of "competitive advantage," which may or may not mean the same thing, depending on context. That said, we will learn that it is comparative advantage that ultimately matters when deciding what countries should produce what goods and services so that they can enjoy mutual gains from trade.

GgattThe Second World War ended in Europe in May 1945. After its end, some countries in the world soon realised the importance and need of international trade. Later, after a period of two years, these countries finally came together and started discussing important plans with an intension to promote global trade. As a result, the General Agreement On Tariff and Trade (i.e GATT) was first signed by 23 countries, in April 1947, at Geneva, Switzerland.

India was one of the founding members of GATT. In 1994, the membership of GATT rose to 118 countries. In 1995, its membership rose even further, and 123 countries were in the GATT list. By December 2010, the total membership of WTO reached its peak value of 153.

gatt rounds emergence of world trade organisation wto

The primary objective of the GATT was to promote world trade through co-operation of its member countries. GATT provided for reduction of high tariff rates and even eased out numerous trade restrictions. GATT's plan was to promote global trade in a gradual fashion or step-by-step manner over a period of time. This was supposed to be accomplished through different rounds of trade negotiations to be held from time to time. So far, eight rounds have been held. The guiding principle of GATT was the MFN (Most Favoured Nation) clause. The purpose of this clause was to discourage Bilateralism and encourage Multilateralism for the expansion of world trade. In the various rounds of trade negotiations, member nations agreed on tariff reduction over a large number of traded goods.

The most significant round of trade negotiation began in Punta del Este, Uruguay in September 1986. Uruguay's round, the eighth round of Multilateral Trade Negotiations (MTN) was conducted within the framework of GATT. Uruguay Round spanned from 1986 to 1994 and took more than eight years of complex negotiations to complete.

Differences existed among member nations on various issues like agriculture subsidies, multi-fiber agreement, trade in services, anti-dumping, intellectual property rights, etc. These differences resulted in a sharp division of opinions between the developed and developing nations. Due to the existence of these differences, the

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Director-General of GATT, Arthur Dunkel prepared a Draft of Final Act, which was known as Dunkel Draft. The Dunkel Draft was intensely discussed and debated and was initially opposed by developing nations, labour unions and other right groups. Eventually, after a lot of intense discussion, the Final Act was signed by all member nations on April 1994. With the signing of the Final Act, the World Trade Organisation (WTO) was born and set up.

The WTO Agreement came into force on 1st January, 1995. India became a founder member of WTO by ratifying (i.e by approving and giving formal sanction to) WTO Agreement on 30th December, 1994.

So, GATT was not an organisation at all, else, it was only a legal arrangement that paved the way for the establishment of WTO.

WTO is a new international organisation set up as a permanent body. It is designed to play an important role in various spheres like trade in goods and services, foreign investment, intellectual property rights, anti-dumping laws, etc. Its main objective is to promote free and fair trade.

UNCTAD 1964

In the early 1960s, growing concerns about the place of developing countries in international trade led many of these countries to call for the convening of a full-fledged conference specifically devoted to tackling these problems and identifying appropriate international actions.

The first United Nations Conference on Trade and Development (UNCTAD) was held in Geneva in 1964. 

Given the magnitude of the problems at stake and the need to address them, the conference was institutionalized to meet every four years, with intergovernmental bodies meeting between sessions and a permanent secretariat providing the necessary substantive and logistical support.

Simultaneously, the developing countries established the Group of 77 to voice their concerns. (Today, the G77 has 131 members.)

The prominent Argentinian economist Raúl Prebisch, who had headed the United Nations Economic Commission for Latin America and the Caribbean, became the organization's first Secretary-General.

Phase 1: The 1960s and 1970s

In its early decades of operation, UNCTAD gained authoritative standing:o as an intergovernmental forum for North-South dialogue and negotiations on

issues of interest to developing countries, including debates on the "New International Economic Order".

o for its analytical research and policy advice on development issues. Agreements launched by UNCTAD during this time include:o the Generalized System of Preferences (1968), whereby developed economies

grant improved market access to exports from developing countries.o a number of International Commodities Agreements, which aimed at stabilizing

the prices of export products crucial for developing countries.

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o the Convention on a Code of Conduct for Liner Conferences, which strengthened the ability of developing countries to maintain national merchant fleets.

o the adoption of a Set of Multilaterally Agreed Equitable Principles and Rules for the Control of Restrictive Business Practices. This work later evolved into what is today known as "Trade and Competition Policies".

Furthermore, UNCTAD was a key contributor to:o the definition of the target of 0.7% of gross domestic product (GDP) to be given as

official development aid by developed countries to the poorest countries, as adopted by the United Nations General Assembly in 1970.

o the identification of the Group of Least Developed Countries (LDCs) as early as 1971, which drew attention to the particular needs of these poorest countries. UNCTAD became the focal point within the UN system for tackling LDC-related economic development issues.

Phase 2: The 1980s

In the 1980s, UNCTAD was faced with a changing economic and political environment:

o There was a significant transformation in economic thinking. Development strategies became more market-oriented, focusing on trade liberalization and privatization of state enterprises.

o A number of developing countries were plunged into severe debt crises. Despite structural adjustment programs by the World Bank and the International Monetary Fund, most developing countries affected were not able to recover quickly. In many cases, they experienced negative growth and high rates of inflation. For this reason, the 1980s become known as the "lost decade", particularly in Latin America.

o Economic interdependence in the world increased greatly. In the light of these developments, UNCTAD multiplied efforts aimed at:o strengthening the analytical content of its intergovernmental debate, particularly

regarding macroeconomic management and international financial and monetary issues.

o broadening the scope of its activities to assist developing countries in their efforts to integrate into the world trading system. In this context,

the technical assistance provided by UNCTAD to developing countries was particularly important in the Uruguay Round of trade negotiations, which had begun under the General Agreement on Tariffs and Trade (GATT) in 1986. UNCTAD played a key role in supporting the negotiations for the General Agreement on Trade in Services (GATS).

UNCTAD's work on trade efficiency (customs facilitation, multimodal transport) made an important contribution to enabling developing economies to reap greater gains from trade.

UNCTAD assisted developing countries in the rescheduling of official debt in the Paris Club negotiations.

o promoting South-South cooperation. In 1989, the Agreement on the Global System of Trade Preferences among Developing Countries (GSTP) came into force. It provided for the granting of tariff as well as non-tariff preferences among its members. To date, the Agreement has been ratified by 44 countries.

o addressing the concerns of the poorest nations by organizing the first UN Conference on Least Developed Countries in 1981. Since then, two other international conferences have been held at 10-year intervals.

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Phase 3: From the 1990s until today

Key developments in the international context:o The conclusion of the Uruguay Round of trade negotiations under the GATT

resulted in the establishment of the World Trade Organizationin 1995, which led to a strengthening of the legal framework governing international trade.

o A spectacular increase in international financial flows led to increasing financial instability and volatility.

o Against this background, UNCTAD's analysis gave early warning concerning the risks and the destructive impact offinancial crises on development. Consequently, UNCTAD emphasized the need for a more development-oriented "international financial architecture".

o Foreign direct investment flows became a major component of globalization.o UNCTAD highlighted the need for a differentiated approach to the problems of

developing countries. Its tenth conference, held in Bangkok in February 2000, adopted a political declaration – "The Spirit of Bangkok" – as a strategy to address the development agenda in a globalizing world.

In recent years, UNCTAD haso further focused its analytical research on the linkages between trade, investment,

technology and enterprise development.o put forward a "positive agenda" for developing countries in international trade

negotiations, designed to assist developing countries in better understanding the complexity of the multilateral trade negotiations and in formulating their positions.

o Expanded work on international investment issues, following the merger into UNCTAD of the New York–based United Nations Centre on Transnational Corporations in 1993.

o expanded and diversified its technical assistance, which today covers a wide range of areas, including training trade negotiators and addressing trade-related issues; debt management, investment policy reviews and the promotion of entrepreneurship; commodities; competition law and policy; and trade and environment.

Evaluate arguments for and against free tradeAdvantages of free trade: It increases total production, productivity and efficiency.

If another country can produce a commodity cheaper than us,we should import from them.

Reversely, if we can produce a commodity cheaper than others, they import from us.

Countries that specialize in goods and services where they have the comparative advantage will produce more.

Free trade increases people's consumption basket.

It increases a country's gross domestic product (GDP)

Free trade leads to increased competition and innovation.

Every country gains from free trade, because it is mutually advantageous.

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Example: The United States buys goods and services from China, paying with US dollars.

China uses the same money to buy goods and services from the USA.

The consumption basket of both country's increase, benefitting both.

If we extend this logic to the hundreds of countries around the world, we can see how everyone will benefit.

Empirical evidence: Has shown that countries practicing free trade grow three times faster than countries with restricted trade policies.

Trade restrictions cause reciprocity from other countries.

There are political, cultural and social benefits of trade openness also.

As countries trade, knowledge of each other's customs and cultures increase.

Fears and prejudices go down,

Chances of conflicts are also diminished.

It benefits everyone.

Disadvantages of free trade:Free trade and the political establishment: Free trade policies could end up endangering the economic and political independence of the underdeveloped world.

Free trade policy is based on the assumption of laissez-faire (government non-intervention), which is only possible in a developed and strong political system.

Free trade and the marketplace: Free trade policies need perfectly competitive markets.

Very few economies have perfect competition.

Free trade needs countries to cooperate, not a very practical expectation.

Free trade and economic independence: Free trade leads to increased economic dependence, which could be cause for concern during wartime.

At an ideological level, for political freedom a country needs to have economic independence.

Free trade may lead to political subservience.

Free trade and balanced economic growth: Too much emphasis on specialization could lead to unbalanced economic development.

It could result in lop-sided and unbalanced economic development.

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Free trade could kill the import substitution industries

Free trade could lead todumping.

Free trade and export of harmful products: Under free trade, harmful products could be exported.

Free trade and monopoly: Free trade leads to increased competition and lower cost of production.

This is good in itself, but can be achieved through economies of scale.

This could lead to the creation of monopolies.

Free trade and the less developed world: Free trade is highly beneficial to the developed countries, but less so to the developing and under developed countries.

The latter are less economically advanced, and hence are not able to exploit comparative advantage.

The playing field is not level between developed and the underdeveloped world.

Under free trade, the less developed countries cannot protect their infant industries................In 1982, the GATT parties issued a Ministerial Declaration which laid out a number of problems that the GATT was unable to regulate in the world economic structure. Chief among these were the impacts of the policies of some member countries on world-wide trade, and certain structural deficiencies in the GATT itself. As a result, a new, much more comprehensive set of agreements was seen as being needed. Member countries came together in Uruguay to begin laying out completely new structures, reviewing all of the existing forms of the GATT, and looking towards a much more cohesive future accord.

Four years were originally planned for the Uruguay Round to take place over, with members discussing and arguing over implementation during that time, and finally signing an agreement in 1990. Negotiations occurred in Geneva, Montreal, Washington, D.C., Brussels, and Tokyo, with countries trying to come to compromises in their different positions. By 1990, it was apparent that at least one major sticking point, between the European Union and the United States overagricultural trade reforms, was not going to be resolve in time.So the Uruguay Round was extended for another four years. In late 1992 the two parties came to an agreement, in what would come to be called the Blair House Accord, and in April of 1994 the new deal was signed by representatives from nearly all of the participating 123 countries, in Marakesh, Morocco. One of the major creations of the Uruguay Round was the World Trade Organization, which replaced the GATT, and came into effect on 1 January 1995.

The Uruguay Round was, without a doubt, the largest trade negotiation ever, and may very well have been the largest negotiation ever. It set out rules and principles to cover all global trade, from banking to consumer products. Many people leveled criticisms at the Uruguay Round, with the harshest being that the agreement paid

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scant attention to the developing nations that had little voice in the meeting, and gave preferential treatment to the industrialized nations most represented by ministers there. In spite of this, the Uruguay Round remained the dominant force dictating global trade until the Doha Development Round of 2001......................The WTO is committed to improving free trade amongst its member countries. However, its role has been very controversial –  creating polarised views.

These are some of the criticisms of the WTO

1. Free Trade benefits developed countries more than developing countries. It is argued, developing countries need some trade protection to be able to develop new industries. The WTO have sought to maintain the same rules for developing countries preventing them from protecting new industries. (This is known as the infant industry argument)

2. Diversification. Arguably developing countries who specialise in primary products (e.g. agricultural products) need to diversify into other sectors. To diversify they may need some tariff protection, at least in the short term. Many of the existing industrialised nations used tariff protection when they were developing. Therefore, the WTO has been criticised for being unfair and ignoring the needs of developing countries.

3. Environment. Free trade has often ignored environmental considerations. e.g. Free trade has enabled imports to be made from countries with the least environmental protection. Many criticise the WTO’s philosophy that the most important economic objective is the maximisation of GDP. In an era of global warming and potential environmental disaster, increasing GDP may be the least important. Arguably the WTO should do more to promote environmental considerations.

4. Free trade ignores cultural and social factors. Arguably a reasonable argument for restricting free trade is that it enables countries to maintain cultural diversity. Some criticise the WTO for enabling the domination of multinational companies which reduce cultural diversity and tend to swamp local industries and firms.

5. The WTO is criticised for being undemocratic. It is argued that its structure enables the richer countries to win what they desire; arguably they  benefit the most.

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

ndia: Foreign Trade Policy

Although India has steadily opened up its economy, its tariffs continue to be high when compared with other countries, and its investment norms are still restrictive. This leads some to see India as a ‘rapid globalizer’ while others still see it as a ‘highly protectionist’ economy.

Till the early 1990s, India was a closed economy: average tariffs exceeded 200 percent, quantitative restrictions on imports were extensive, and there were stringent restrictions on foreign investment. The country began to cautiously reform in the 1990s, liberalizing only under conditions of extreme necessity.  

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Since that time, trade reforms have produced remarkable results. India’s trade to GDP ratio has increased from 15 percent to 35 percent of GDP between 1990 and 2005, and the economy is now among the fastest growing in the world.

Average non-agricultural tariffs have fallen below 15 percent, quantitative restrictions on imports have been eliminated, and foreign investments norms have been relaxed for a number of sectors.

India however retains its right to protect when need arises. Agricultural tariffs average between 30-40 percent, anti-dumping measures have been liberally used to protect trade, and the country is among the few in the world that continue to ban foreign investment in retail trade. Although this policy has been somewhat relaxed recently, it remains considerably restrictive.

Nonetheless, in recent years, the government’s stand on trade and investment policy has displayed a marked shift from protecting ‘producers’ to benefiting ‘consumers’. This is reflected in itsForeign Trade Policy for 2004/09 which states that, "For India to become a major player in world trade ...we have also to facilitate those imports which are required to stimulate our economy."

India is now aggressively pushing for a more liberal global trade regime, especially in services. It has assumed a leadership role among developing nations in global trade negotiations, and played a critical part in the Doha negotiations.

Regional and Bilateral Trade Agreements

India has recently signed trade agreements with its neighbors and is seeking new ones with the East Asian countries and the United States. Its regional and bilateral trade agreements - or variants of them - are at different stages of development: 

India-Sri Lanka Free Trade Agreement, Trade Agreements with Bangladesh, Bhutan, Sri Lanka, Maldives, China, and

South Korea. India-Nepal Trade Treaty, Comprehensive Economic Cooperation Agreement (CECA) with Singapore.  Framework Agreements with the Association of Southeast Asian Nations

(ASEAN), Thailand and Chile.  

Preferential Trade Agreements with  Afghanista, Chile, and Mercosur (the latter is a trading zone between Brazil, Argentina, Uruguay, and Paraguay).

The Doha Round

The Doha Round is the latest round of trade negotiations among the WTO membership. Its aim is to achieve major reform of the international trading system through the introduction of lower trade barriers and revised trade rules. The work programme covers about 20 areas of trade. The Round is also known semi-officially as the Doha Development Agenda as a fundamental objective is to improve the trading prospects of developing countries.

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The Round was officially launched at the WTO’s Fourth Ministerial Conference in Doha, Qatar, in November 2001. The Doha Ministerial Declaration provided the mandate for the negotiations, including on agriculture, services and an intellectual property topic, which began earlier.

In Doha, ministers also approved a decision on how to address the problems developing countries face inimplementing the current WTO agreements

....What is the 'Bretton Woods Agreement'The World Trade Organization (WTO) is an international trade institution. The WTO superseded and replaced the GATT. The GATT was a provisional, multilateral agreement governing international trade from 1947 until January 1, 1995. The creation of the WTO was negotiated in the final GATT round, the Uruguay Round. The WTO inherited a number of core principles from the GATT. These principles include:

Non-discrimination, which in practice means two things. The first principle is MFN - most favored nation treatment. Any trade concession a nation offers to one member, it must offer to all. The second principle is national treatment. This means that imported products must be treated the same as domestic goods.

Reciprocity of Trade Concessions. Trade Liberalization. Transparency and predictability in import and export rules and regulations. Favorable treatment to less developed countries.

Although built on the GATT legacy, the Uruguay Round and WTO added many new issues and features. To begin with, many older agreements were replaced by new, stronger agreements. For example, the Agreement on Textiles and Clothing established a time-table to liberalize textile trade, while the Agreement on Sanitary and Phytosanitary Measures established a more transparent regime for trade in agricultural goods and ensures plant and animal health standards are followed. The WTO also broke new ground, adding a number of trade sectors and issues not addressed by the GATT:

The General Agreement on Trade in Services (GATS) adds services. Trade in Intellectual Property Rights (TRIPs) adds copyrights, trademarks and

patents. Trade Related Investment Measures (TRIMs) sets rules for Foreign Direct

Investment. Government Procurement (GPA) & the Information Technologies (ITA) agreements

also international rules on new product areas.These new agreements are ambitious issues additions to the rule governing the world trading system. However, at this stage there are significant enforcement problems and numerous loopholes that countries use to evade their obligations. It is not yet clear if these agreements will benefit the US in the long run.The WTO differs from the GATT not only in scope, but in institutional functioning. The WTO has two significant functions that the GATT did not. First, the WTO has a Trade Policy Review Mechanism. This process periodically accesses a country's trade policies and notes any changes. It is a non-judgmental, non-confrontational process.

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More controversial is the Dispute Settlement Body and its dispute settlement panels. These panels, composed of economists, hand down binding judgments in trade disputes.Several cases have already gone against the US, raising concerns among some Americans that the WTO is eroding US sovereignty. As the world's largest economy and export market, however, the US maintains considerable influence on the shape of the world trading system.The WTO currently has 132 members, and 31 nations are actively seeking to join. The US plays an important role in all accession negotiations, ensuring that US economic interests are well represented.  

The Bretton Woods agreement is the landmark system for monetary and exchange rate management established in 1944. The Bretton Woods Agreement was developed at the United Nations Monetary and Financial Conference held in Bretton Woods, New Hampshire, from July 1 to July 22, 1944.

Major outcomes of the Bretton Woods conference included the formation of the International Monetary Fund and the International Bank for Reconstruction and Development and, most importantly, the proposed introduction of an adjustable pegged foreign exchange rate system. Currencies were pegged to gold and the IMF was given the authority to intervene when an imbalance of payments arose.

BREAKING DOWN 'Bretton Woods Agreement'One of the proposals of the Bretton Woods conference was that currencies should be convertible for trade and other current account transactions.

Following the end of World War II in 1945, Europe and the rest of the world embarked on a lengthy period of reconstruction and economic development to recover from the devastation inflicted by the war. Although gold initially served as the base reserve currency, the U.S dollar gained momentum as an international reserve currency that was linked to the price of gold.

What is the 'International Monetary Fund - IMF'The International Monetary Fund (IMF) is an international organization created for the purpose of standardizing global financial relations andexchange rates. The IMF generally monitors the global economy, and its core goal is to economically strengthen its member countries. Specifically, the IMF was created with the intention of:

1. Promoting global monetary and exchange stability.

2. Facilitating the expansion and balanced growth of international trade.

3. Assisting in the establishment of a multilateral system of payments for current transactions.

BREAKING DOWN 'International Monetary Fund - IMF'Fixed exchange rates, also known as the Bretton   Woods system  (named after the original UNconference at which the IMF was conceived), refer to the value of a currency being tied to the value of another currency, or to gold. The system of fixed

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exchange rates was established by the IMF as a way to bolster the global economy after the Great Depression and World War II. This system was abolished in 1971, and ever since, the IMF has promoted the system offloating exchange rates, which means that the value of a currency can change in relation to the value of another. This is the familiar system today. For example, when the U.S. economy suffers, the dollar's value goes down in relation to that of, say, the euro of the European Union, and the opposite is also true. The exchange rates established by the IMF allow countries to better manage economic growth and trade relations. These exchange rates are set in order to prevent economic collapse, which can occur with runaway exchange rates, which occurs when the rates continue to rise.

The IMF vs. the World BankThe IMF works hand-in-hand with the World Bank, and although they are two separate entities, their interests are aligned, and they were created together. While the IMF provides only shorter-term loans that are funded by member quotas, the World Bank focuses on long-term economic solutions and the reduction of poverty and is funded by both member contributions and bonds. The IMF is more focused on economic policy solutions, while the World Bank offers assistance in such programs as building necessary public facilities and preventing disease.

History of the IMFThe IMF has completely reshaped the global economy and redefined the ways in which countries trade with and take loans from other countries. The IMF was first conceived at a UN conference in 1944, among the 44 attending countries, before it was officially created in 1945. These countries wanted to globally stabilize exchange rates and financial communication between countries, especially following the disastrous Great Depression and World War II. Goals included international cooperation and trade, the reduction of poverty and financial crises, and economic growth. Although the Fund has evolved over the years to become what it is today and adapt to changing times, it still operates around the same guiding principles.

The IMF played a large role in the economic restructurization of the post-World War II world. After the war, some countries were in economic distress, and others were reluctant to trade with certain countries after the fighting. The Fund helped smooth over the economic post-war transition period and restabilize the global economy so it could move toward prosperity, using systems such as fixed exchange rates.

The IMF TodayCurrently, there are 188 member countries in the IMF, which is based out of Washington, D.C. Each country or region is represented by a member on the Fund's Executive Board and numerous staff members. The ratio of board members from each country is based on the country's global financial position, so that the most powerful countries in the global economy have the heaviest representation. The United States has the highest voting power, followed by Asian countries such as Japan and China and Western European countries such as Britain, Germany, France, and Italy.

While the IMF sets standards for the global economy and monitors the financial communications between countries, it also helps those countries in need by lending them the money necessary to turn their economy around and rebuild their financial

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structure. Countries contribute to a pool from which countries in need can borrow as a short-term loan. The IMF also assists countries in developing sustainable financial policies, provides economic advice, helps countries maximize their financial effectiveness, and works to help developing countries stabilize and sustain themselves in the global economy.

The IMF plays three major roles in the global monetary system. The Fund surveys and monitors economic and financial developments, lends funds to countries with balance-of-payment difficulties, and provides technical assistance and training for countries requesting it.

What is a 'Balance Of Payments (BOP)'A statement that summarizes an economy’s transactions with the rest of the world for a specified time period. The balance of payments, also known as balance of international payments, encompasses all transactions between a country’s residents and its nonresidents involving goods, services and income; financial claims on and liabilitiesto the rest of the world; and transfers such as gifts. The balance ofpayments classifies these transactions in two accounts – the current account and the capital account. The current account includes transactions in goods, services, investment income and current transfers, while the capital account mainly includes transactions infinancial instruments. An economy’s balance of payments transactions and international investment position (IIP) together constitute its set of international accounts.

Despite its name, the “balance of payments” data is not concerned with actual payments made and received by an economy, but rather with transactions. Since many international transactions included in the balance of payments do not involve the payment of money, this figure may differ significantly from net payments made to foreign entities over a period of time.

Does the “balance of payments” actually balance? In theory, a current account deficit would have to be financed by a net inflow in the capital and financial account, while a current account surplus should correspond to an outflow in the capital and financial account for a net figure of zero. In actual practice, however, the fact that data are compiled from multiple sources gives rise to some degree of measurement error.

Balance of payments and international investment position data are critical in formulating national and international economic policy. Certain aspects of the balance of payments data, such as payment imbalances and foreign direct investment, are key issues that a nation’s economic policies seek to address.

Economic policies are often targeted at specific objectives that, in turn, impact the balance of payments. For example, a country may adopt policies specifically designed to attract foreign investment in a particular sector. Another nation may attempt to keep its currency at an artificially depressed level to stimulate exports and build up its currency reserves. The impact of these policies is ultimately captured in the balance of payments data.

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