WTO & its implications on International Marketing

The positive impact of WTO on developing countries can be viewed from the following aspects:

1.      Growth in Merchandise Exports: The exports of developing countries like India, China, Brazil, etc., have increased since the setting up of WTO. The increase in exports of developing countries is due to reduction in trade barriers — tariff and non-tariff. For instance, India’s merchandise exports have increased by 5.8 times since 1995 as shown in the table:

India‘s Merchandise Exports

2.      Growth in Services Exports: The WTO has also introduced an agreement on services called GATS. Under this agreement, the member nations have to liberalise the services sector. Certain developing countries like India would benefit from such an agreement. For instance, India’s services exports have increased from about 5 billion US $ in 1995 to 102 billion US $ in 2008- 09. The software services accounted for about 45% of the services exports of India.

3.      Foreign Direct Investment: As per the TRIMs agreement, restrictions on foreign investment have been withdrawn by member nations of WTO including developing countries. Therefore, the developing countries like Brazil, India, China, etc., have been benefited by way of foreign direct investment as well as by Euro equities and portfolio investment. In 2008-09, foreign direct investment (net) in India was 35 US $ billion.

4.      Textiles and Clothing: It is estimated that the textiles sector would be one of the major beneficiaries of the impact of Uruguay Round. At the Uruguay Round, it was agreed upon by member countries to phase out MFA by 2005. Under MFA, the developed countries like France, USA, UK, Canada, etc. used to import quotas on textile exporting countries. The MFA has been withdrawn w.e.f. 1.1.2005, and therefore, it would benefit the developing countries including India by way of increase in export of textiles and clothing.

5.      Benefits of TRIPs Agreement: The TRIPs agreement has benefited the developing countries like Brazil, India, China, and others. The firms in developing countries have also developed new products and got them patented. Developing countries have also benefited by way of GIS status. For instance, India has obtained GIS for products like Darjeeling Tea, Goa Feni, and so on.

Therefore, it can be concluded that the WTO has created both a positive and negative impact on developing countries. It is expected that the developing countries like Brazil, India, China, South Korea, would greatly benefit from WTO agreements in the coming years, provided they make efforts to improve efficiency and international competitiveness.