WTO and India

India pursues Lowering Cost of Cross Border Remittances at WTO

IOCR | International Relations | Mains Paper 2: Important International Institutions
Note4Students

From UPSC perspective, the following things are important :

Prelims level: Cost of Remittances, Remittances Inflows, WTO

Mains level: NA

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.

 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:
  1. Bank fees,
  2. Intermediary fees,
  3. Compliance fees,
  4. Operational costs, and
  5. 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.
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:

  1. Green Box – No distortion in trade
  2. Amber Box – Can distort production and trade (subject to limits)
  3. Blue Box – Subsidies linked to production-limiting programs
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

 

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)

  1. Food and Agriculture Organization
  2. United Nations Framework Conference on Climate Change
  3. World Trade Organization
  4. United Nations Environment Programme

 

Q.Which of the following constitute Capital Account? (2013)

  1. Foreign Loans
  2. Foreign Direct Investment
  3. Private Remittances
  4. Portfolio Investment

Select the correct answer using the codes given below.

  1. 1, 2 and 3
  2. 1, 2 and 4
  3. 2, 3 and 4
  4. 1, 3 and 4

 

Practice MCQ:

Consider the following statements:

  1. India is the highest recipient of remittances globally.
  2. UAE is the largest source of remittances to India.
  3. The current cost of remittances meets the SDG target.

How many of the given statements is/are correct?

  1. One
  2. Two
  3. Three
  4. None

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