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India's Entanglement in the Global Economy

 

2). The explicit exclusion of "primary products", otherwise known as agricultural goods, highlights another fundamental inequality which GATT imposes on developing countries. As Kele Onyejekwe explains, to cater to the Agricultural Adjustment Act-which authorized the subsidy, price support, and crop insurance of U.S agriculture-the United States strategically allowed for agriculture products to be excluded from GATT's sweeping denial of the use of subsidies. This aspect of GATT is to the detriment of India and other less developed countries because it creates a comparative advantage of agriculture within the United States, which disincentivizes developing countries from building up their agricultural sector in favor of importing; thus creating a dependency on those imported goods which the United States has bankrolled (Onyejekwe, 1993, p. 35). Moreover Onyejekwe notes that "out of the 44,000 tariff concessions made in the Dillon Round, only 160 concessions concerned developing countries." (Onyejekwe, 1993, p. 26). This troubling lack of preference for developing countries is not the only problem that arises from the current agreement.
             In addition to the inherent inequalities ingrained in GATT's framework, the inability of the agreement to enforce its policies has led to circumvention of the established rules, mostly by developed countries. Exclusions defined in GATT allow for countries to take anti-dumping measures and countervailing duties in order to neutralize the negative effects which arise when countries disregard the agreed upon concessions (Lorenzini, 2014). The increased use of escape clauses is a result of a lack of enforcement power and harken back to a time more prone to protectionism than the liberal policies now being sought. Similar protectionist policies include the Multifibre Arrangement which allows for developed countries to adjust to increased imports of developing countries ("TMB", 2014).


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