From UPSC perspective, the following things are important :
Prelims level : Trade Policy Review (TPR)
Mains level : WTO and India
India’s seventh Trade Policy Review (TPR) has begun at the World Trade Organization in Geneva.
Q.In the wake of the global economic fallout of the COVID-19 pandemic, discuss the challenges ahead of WTO.
Trade Policy Review (TPR)
- The TPR is an important mechanism under the WTO’s monitoring function and involves a comprehensive peer-review of the Member’s national trade policies.
- India’s last TPR took place in 2015.
Why need a TPR?
- To increase the transparency and understanding of countries’ trade policies and practices, through regular monitoring
- To improve the quality of public and intergovernmental debate on the issues
- To enable a multilateral assessment of the effects of policies on the world trading system
- Since previous TPR, India has worked diligently to reform and transform the entire economic eco-system to meet the socio-economic aspirations of a billion-plus Indians.
- The introduction of the GST, the IBC, labour sector reforms, an enabling and investor-friendly FDI Policy, and various national programmes like Make in India, Digital India, Startup India and Skill were the path-breakers.
- The improvement in the economic and business environment, on account of the wide-ranging reforms, has enabled India to better its position in the World Bank’s Doing Business ranking from 142 in 2015 to 63 in 2019.
- This improvement is also endorsed by investors who continue to view India as a desirable investment destination even during the testing time of the pandemic.
- In 2019-20, India received highest ever FDI inflow of USD 74.39 billion.
A note of caution
- India’s trade policy remained largely unchanged since the previous review.
- India continues to rely on trade policy instruments such as the tariff, export taxes, minimum import prices, import and export restrictions, and licensing, WTO said.
- These are used to manage domestic demand and supply requirements, protect the economy from wide domestic price fluctuations, and ensure conservation and proper utilization of natural resources.
- As a result, frequent changes are made to tariff rates and other trade policy instruments, which create uncertainty for traders.