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Multilateral Trading System

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During the six decades of existence of the multilateral trading system under
the aegis of GATT (General Agreement on Tariffs and Trade) and now under
its new avatar WTO (World Trade Organisation), the support for the
multilateral trading system has not waned but multiplied. The Uruguay
Round (1986-1994) of the GATT proved to be a turning point in the history of
multilateral trading system. The implementation phase of the Uruguay Round
agreements under the WTO was associated with some striking changes in the
global economic landscape. As regards India the unilateral reforms initiated
in the early 1990s and its WTO-triggered trade policy changes have had a
positive impact on exports and in turn resulted in higher economic growth.
One important feature of this high export growth is that it has been realised
primarily through an increase in India's export to its traditional trading
partners, USA and the EU and a huge expansion in its trade with China. In
recent years, though India has signed free trade agreements with Singapore,
MERCOSUR, Sri Lanka and other South Asian countries under SAFTA
(South Asian Free Trade Agreement), their combined share in India's total
export is still only 10-11 percent. In other words, almost 90 percent of India's
export is through the multilateral channel. Therefore, this Working Paper
argues that given the existing trends of India's trade and the continuing
problems in cementing FTAs, the multilateral option is best suited for it.

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