Question

what is the SWAT analysis of the World Trade Organization (WTO) ?

Answer 1

The approach towards W TO Issues should be based on SWOT analysis. Under each of the following heads, the discussion is thus grouped under

Strength
Weakness
Opportunities
Threats

The groupings are meant for an orderly discussion and in many instances there will be overlapping.

The groupings under which the discussion is organized are;

Trade in Goods-Non-tariff barriers
Trade in Services-Restrictions on movement of Natural Persons
Intellectual Property Rights
Trade & Environment
Trade & Labor
Trade & Investment
Regional Trade Agreements & Plurilateral Agreements
Dispute Resolution-training of negotiators

Implementation Issues
Attitudinal
1.Trade in Goods-Non-tariff barriers

The signatories to the WTO have all made commitments to reduce and in many cases do away with import restrictions in a time frame. However, this is fraught with many obstacles, mainly opposition from strong groups within each country. This aspect applies to all categories of members-Developed, Developing and Least Developed. The Non tariff barriers then become a necessity to overcome the political situation at home. These normally take the form of Sanitary & Phytosanitary Standards.

Strengths-India has a strong R&D facility and has evolved into a nation with surplus food production. It has a large manpower, which is capable of developing new products. This will facilitate India to capture new markets for its products.

Weakness-Years of foreign domination had killed the spirit of enquiry, which will have to be rekindled in a big way. Shortage of funds for R&D is also a point.

Opportunities-The WTO has opened up a huge market fro products. India should look at newer markets rather than concentrate on the traditional ones. This will provide a huge opportunity. Development of trade with other Developing and least developed nations will offer a great opportunity for India. India has to actively perform in all International standard setting bodies and this again will give Indian products a definite edge.

Threats-With the reduction/rationalization of Tariffs, foreign products made with cheaper technology and mass produced, can flood the market. But this again will peter off as has been evidenced by the demise of the threat from cheap Chinese products.

2.Trade in Services-Restrictions on movement of Natural Persons

The Trade in services is a significant one since the growth of the Services sector far outstrips the trade in goods.

Strengths -India has a strong services sector, which is growth, oriented. It has well-established bodies like the Institute of Chartered Accountants of India who regulate the profession. In all services the country has evolved norms that are in many instances better than internationally accepted ones. The high quality of Indian professionals have to be highlighted which will then provide new vistas.

Weakness-In high technology areas, India requires the technology transfer, until domestic R&D catches up. The Visa regime in many countries is a weakness that hampers movement of natural persons. This will have to be taken up at the WTO.

Opportunities-As has been seen in the case of Software, India has a huge talent pool. It also has a large English speaking population. This coupled with the lower cost of living, offers India, a big opportunity to tap newer markets.

Threats-As seen recently, there can be retaliation by way of new measures taken to curb outsourcing of jobs to India. This can be countered by effective intermediation at the WTO fora. Foreign firms, like the ones in the Accountancy area, can offer threat to local firms because of their reach worldwide.

3.Intellectual Property Rights

India has long been under a slumber and this has affected its development of IPR. However we do have our strengths.

Strengths -The knowledge base of India in the fields of Agriculture & Medicine is very vast. This can help in reaching newer markets. The Pharmaceutical Industry has been concentrating on R&D and the effort in the Agri and other sectors are also very advanced. We have a very good R&D in thearea of Space and Defense technology.

Weakness-The Indian system of medicine and Agriculture lack the extensive documentation that is practiced in the developed countries. This has to be overcome. Process patent also has to be substituted by product patents.

Opportunities-Development of newer varieties of Agricultural products and new products that are needed in other developing countries offers India a great opportunity. Its traditional medicine sector, which can offer cures to many illnesses otherwise considered incurable, is also an opportunity. Sale of technology and services in sectors like Space & Remote sensing provide many opportunities. So do the areas related to Information Technology.

Threats-Unless constant vigil is maintained, other countries may try to patent/protect Indian products as in the case of Basmathy. To overcome this, India should step up its activity in the WTO and document all possible products with geographical indications as also linkages to the ancient Indian texts. Mass produced goods with latest technology are a definite threat.

4.Trade & Environment

These are newer areas, which have evolved mainly as a ruse by the bigger trading parties to stifle exports by others.

Strengths-In many areas, India has a good system of concern for the environment .This has to be strengthened further by streamlining with International standards.Weakness-Being a vast country that lacks many products, it will have to set up newer facilities, which may be deemed to be harmful to the environment. This will have to be tackled by developing newer norms.

Opportunities-India can afford to spend on environment friendly procedures since another component of cost namely labor is still cheaper. It will also help India have a healthier environment and avoid Bhopals in future.

Threats-The Developed countries that have developed the technology for safer environment oriented processes can prove to be a big threat to India, till India catches up.

5.Trade & Labor

India and many other countries have been consistently opposing the linkage since there is another UN body, ILO for the purpose. However, it remains an issue.

Strengths -Labor laws in India are very progressive and in addition to protecting labor rights, it also offers safeguards to the employers. The cost of living in India is cheap and this again reflects on the wages paid. This definitely is strength to compete internationally.

Weakness-Proper raining facilities are still lacking in India. Also, a vast majority of the population is in the village that subsists on low wages. Social unrest due to such continued neglect of the majority is real threat.

Opportunities-As has been evidenced by the Software sector, excellent quality coupled with low wages can help India in many areas.

Threats-Countries like China and the Last Developed economies can offer cheaper labor. At that juncture, quality will be the answer.

6.Trade & Investment

Investment and Trade are interrelated especially in technology driven ones. It has resulted in a lot of disagreement among member nations.

Strengths -India has a huge market for Goods and Services that remain to be tapped. It also has a growing middle class and the real income of the villagers is slated to grow exponentially. These are great strengths for the nation.

Weakness-Comparison with countries like China deters investment in India. For high technology products wherein others hold patents, India has to depend on imports.

Opportunities-By liberalizing investment norms(which has been done to a large extent already) India is capable of attracting FDI in all sectors. This again will result in employment generation and reduction of poverty.

Threats-The decision making process, steeped in red tape is a real threat to investment. This will have to be tackled politically. Internationally, India offers good investment opportunities and it has to have tight regulations to ward off another East India Company experience. India cannot afford to forget the historical fact that the British and many others who came to trade, ended up as the rulers.

7.Regional Trade Agreements& Plurilaterals

In the age of Multilateralism represented by WTO, RTAs are a misfit. But increasingly nations are joining trade blocks.

Strengths -India as on now is member of only one arrangement with Sri Lanka. It is not a member of any other RTA. This offers a big bargaining ground at the WTO against others who are.

Weakness-The very fact that the country is not a member of any RTA can limit its trade as increasingly members trade with members of the RTA wherein they are members. India is also geographically a distinct identity that has made it aloof.

Opportunities-By being not a member of any block, India can bargain for better terms at the WTO.

Threats-The RTAs, by undermining the WTO system eat into the opportunities otherwise available to ndia.

8.Dispute Resolution

WTO has well-established Dispute Resolution Mechanism in place. India has to utilize the opportunities.

Strengths India has a higher pool of educated, trained manpower especially Chartered Accountants, Lawyers and Technologists. This can be an advantage for India in presenting disputes.

Weakness-India has not yet put in place a mechanism to make awareness of WTO issues widely known and understood. The country being large, this needs special effort.

Opportunities-The bodies like ICAI, Bar Council and others can offer Training facilities along with the Training division of the WTO. This can open up new vistas for professionals like CAs.

Threats-The highly trained professionals from developed nations offer threats, but only in the short run.