Rationale
of International Trade
Every country
has to import and export goods and services. We have to import petroleum
products, edible oils, pulses, electronics goods, gold, machinery, etc.
To pay for imports we have to earn foreign exchange through export of
goods and services - tea to tobacco, rice to yarn, garments, diamonds,
engineering goods, leather and tourism to IT services etc. Exports provide
substantial employment opportunities. In fact, there will be severe
setback to employment if exports of many of the items are affected.
The rationale
of international trade is comparative advantage. Hence, all countries
benefit through open and fair international trade. Many South East Asian
countries have prospered through exports.
In international
trade, predictability of rules and regulations governing import, standards,
tariff, customs procedures etc, are absolutely necessary if there is
to be orderly growth of trade. If there is no stability, trade will
suffer.
To ensure
such orderly, fair and transparent international trade, leading trading
nations including India entered into the General Agreement on Tariffs
and Trade (GATT) in 1947.
The fundamental
principles of such an Agreement are: (i) Most Favoured Nation (MFN)
– every signatory will extend to every other signatory member, the same
and equal treatment in a non-discriminatory manner. This is of great
benefit as all countries – rich or poor, strong or weak – will have
to be given the same treatment by all signatory members and (ii) The
second principle is National Treatment – that imported goods and domestically
produced goods will be treated alike, except for payment of customs
duty at the time of import.
The Agreement
stipulates that members will not restrict imports into each others’
countries, though they may levy tariffs. Restrictions are permitted
only under certain conditions. Such restrictions or limits set by countries
on imports (or exports) are called Quantitative Restrictions.
1.QRs: Some facts
2.From Uruguay To Seattle A Chronology
Of Multilateral Trade Events
3.About QRs
4.Highlights
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