I (Meaning and importance of Exports) Unit Structure

3. Impact of GATS- 
 
The Uruguay round included trade in services under WTO. 
Under the GATs agreement, the member nations have to open up 
the services sector for foreign companies. The developing countries 
including India have opened up the services sector in respect of 
banking, insurance, communication, telecom, transport, etc. to 
foreign firms. The domestic firms of developing countries may find it 
difficult to compete with giant foreign firms due to lack of resources 
and professional skills. 
4. Impact of reduction of tariffs- 
 
As per the WTO agreement, the developing countries have 
to reduce the tariff barriers. As on result of this, the developing 
countries have resorted to reduce tariff years in a phased manner. 
For example, India has reduced the peak customs duty on non-
agricultural goods to 10% . As the protection to domestic industry 
gradually disappears, the firms in developing nations have to face 
increasing competition from foreign goods. 
5. Impact on small sector- 
 

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WTO does not discriminate industries on the basis of size. 
Small sector has to compete with large sector. Therefore, as per 
WTO agreement, India has greed to withdraw reservation of items 
of small scale sector in a phased manner since 2000. By February 
2008, India has withdrawn reservation for small sector of over 700 
items. Only 35 items are reserved for small scale sector as on 5
th
Feb., 2008. 
Due to dereservation, the small units have to compete with 
large industries and also from cheaper imports. As a result, several 
small firms have become weak or sick during the past couple of 
years. 
6. Impact on agriculture- 
 
The developing countries India and China are among the 
largest producers of agricultural items like vegetables, fruits, food 
grains, etc. However, the agricultural productivity is low as 
compared to other countries. Due to low productivity, the farmers 
from developing counties stand to lose in the world markets. The 
WTO agreement on agriculture has only in theory favoured the 
developing countries, but in practice, its implication have seriously 
affected agricultural exports to world markets, as the developed 
countries provide lot of subsidies to their farmers.