World Trade Organisation (WTO) Current Affairs - 2020

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Sale of Darjeeling Tea affected by illegal influx of Nepal Tea

The prices of Darjeeling Tea that recently received GI tag has fell by 20% to 25% due to unchecked flow of Nepal Tea into the country.

Highlights

Nepal Tea also known as Himalayan Tea is very similar to that of Darjeeling Tea in aroma, flavor and taste. But Nepal Tea is 50% cheaper than that of Darjeeling Tea. This is being misused by many traders. Nepal tea can be imported by anyone freely under Free Trade Agreement between India and Nepal.

Around 16 million kg of Nepal Tea is entering India every year.

Issue

Most of the Nepal Tea is uncertified. On the other hand, 70% of 87 estates growing Darjeeling Tea are certified organic. The annual export of Darjeeling Tea was Rs 600 crores. Experts believe that it would have touched Rs 700 crores if Nepal Tea hadn’t played its role.

GI Tag

The Darjeeling Tea and White Tea received GI Tag recently in November 2019. The GI tag is provided to fetch an identity for the product international market and increase its exports. When such products develop fake, their exports get affected greatly.

India enacted Geographical Indications of Goods (Registration and Protection) Act, 1999 under Article 22 of World Trade Organization.

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India finds OECD’s STR Index faulty

India has found problems with the current methodology adopted by the Organisation for Economic Cooperation and Development (OECD) under its Services Trade Restrictiveness Index (STRI) to rank countries.

Key Highlights

  • About: A study commissioned by Indian Ministry of Commerce found that OECD index, the STRI has a several problems associated with it, which also includes some significant design issues that render the index impractical for use.
  • Issues: As per India the outcomes of STRI are biased and counter-intuitive.
  • The initial work suggests that there are both empirical and theoretical inconsistencies in STRI’s methodology.
  • The data generated by OECD’s methodology seems to have been through arbitrary procedures and reflects being bias towards developed country.
  • It shows Indian services sector as highly restrictive in areas such as FDI.
  • Impractical: For instance, STRI seems to show the services sector in India as one of the most restrictive in world, particularly in policy areas like foreign entry, FDI etc. This is astonishing as since 1991, following the LPG reforms the one area that has seen maximum liberalisation in India is Foreign Direct Investment (FDI).
  • India’s Approach: India is trying to build a consensus around adopting a new method of measuring trade restrictiveness in services sector. For this India approached several developing countries during recently-concluded WTO Ministerial talks held in New Delhi. It has also approached South Africa, Indonesia, China, Turkey and Brazil.
  • India’s Argument: Unlike manufacturing trade which has a well-documented system of classification of commodities, the problem in services, is that for a long time there was not any way to find that whether a country’s service trade policies were restrictive.
  • Also, even if it was ascertain as restrictive it was not known that what to do about it since services trade is usually regulated by domestic regulations and not border tariffs.

About STRI

  • It was launched in 2014, by The Organisation for Economic Cooperation and Development (OECD).
  • It purpose is to rank countries based on their services trade policies.
  • STRI (computed by OECD) is now available for year 2018. It includes a total of 45 economies (with 36 OECD and the rest non-OECD) and 22 sectors. These countries and sectors undertaken represent more than 80% of global trade in services.

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