What is the news-
- India is strongly pursuing its proposal for lowering the cost of cross-border remittances, which it presented at the WTO’s 13th Ministerial Conference in Abu Dhabi last month.
- It has now requested the WTO’s general council (GC) to initiate a work program to make recommendations for reducing remittance costs.
Why discuss this?
- In 2023, India witnessed the highest remittance inflows globally, amounting to USD 125 billion.
- Lowering the costs of remittances would primarily benefit low and middle-income countries, which accounted for 78% of remittances flow in 2023, according to estimates.
- India’s draft proposal at MC13 highlighted that the global average cost for sending remittances remained high at 6.18%, more than twice the SDG target.
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What is Cost of Remittances?
- Remittances are financial transfers sent by migrant workers to their families or relatives in their home countries.
- The cost of remittances refers to the expenses incurred by individuals or businesses when sending money from one location to another, typically across international borders.
- The cost components of cross-border payments can include:
- Bank fees,
- Intermediary fees,
- Compliance fees,
- Operational costs, and
- FX (foreign exchange) rate margin
- Innovative technologies like DeFi payment rails are emerging to reduce the total cost of payments for cross-border transactions.
About World Trade Organization (WTO)
|
Details |
| Establishment |
1995, replacing GATT |
| Objective |
To regulate international trade |
| Headquarters |
Geneva, Switzerland |
| Members |
- 164
- India is a Founding Member.
|
| Objectives |
- Formulate rules for trade
- Negotiate further liberalization
- Settle disputes
- Assist developing countries
- Cooperate with major economic institutions
|
| Principles |
- Non-Discrimination
- Most Favored Nation
- National Treatment
- Reciprocity
- Predictability through Binding Commitments
- Transparency
- Encourage Development and Reforms
|
| Important Trade Agreements |
- Agreement on Agriculture (AoA),
- Agreement on TRIPS (Trade-Related Aspects of Intellectual Property Rights),
- Agreement on the Application of Sanitary and Phytosanitary Measures (SPS),
- Agreement on Technical Barriers to Trade (TBT),
- Agreement on Trade-Related Investment Measures (TRIMS),
- General Agreement on Trade in Services (GATS) etc.
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| WTO Agreement on Agriculture (AoA) |
- Negotiated during Uruguay Round (1995)
- Aims to reform trade in agriculture
- Allows support for rural economies with fewer trade “distortions”
- Focuses on improving market access, reducing subsidies, and eliminating export subsidies
Subsidies Types:
- Green Box – No distortion in trade
- Amber Box – Can distort production and trade (subject to limits)
- Blue Box – Subsidies linked to production-limiting programs
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| Most Favoured Nation Clause |
- Ensures non-discriminatory trade
- Prevents discrimination among trade partners
- First clause in GATT
- Special trade statuses extended to all WTO members
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PYQ:
Q.The terms ‘Agreement on Agriculture’, ‘Agreement on the Application of Sanitary and Phytosanitary Measures’ and Peace Clause’ appear in the news frequently in the context of the affairs of the: (2015)
- Food and Agriculture Organization
- United Nations Framework Conference on Climate Change
- World Trade Organization
- United Nations Environment Programme
Q.Which of the following constitute Capital Account? (2013)
- Foreign Loans
- Foreign Direct Investment
- Private Remittances
- Portfolio Investment
Select the correct answer using the codes given below.
- 1, 2 and 3
- 1, 2 and 4
- 2, 3 and 4
- 1, 3 and 4
Practice MCQ:
Consider the following statements:
- India is the highest recipient of remittances globally.
- UAE is the largest source of remittances to India.
- The current cost of remittances meets the SDG target.
How many of the given statements is/are correct?
- One
- Two
- Three
- None