Duty-Free Quota-Free (DFQF) Scheme

Duty-Free Quota-Free (DFQF) Scheme

News Analysis   /   Duty-Free Quota-Free (DFQF) Scheme

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Published on: June 06, 2023

Source: The Hindu


According to a report by the least developed countries Group at the World Trade Organisation (WTO), the Duty-free quota-free (DFQF) scheme remains unutilized by the LDC nations.

About the Duty-free quota-free (DFQF) scheme:

  • The Duty-free quota-free (DFQF) scheme was initially established during the WTO Hong Kong Ministerial Meeting in 2005.
  • In 2008, India became the first developing country to implement this initiative, granting LDCs access to 85% of its total tariff lines.
  • Subsequently, in 2014, the scheme was expanded to provide preferential market access on approximately 98.2% of India’s tariff lines to LDCs.

World Trade Organization (WTO)

  1. The World Trade Organization (WTO) is an intergovernmental organization that is concerned with the regulation of international trade between nations.
  2. It is the largest international economic organization in the world.
  3. The headquarters of the World Trade Organization is in Geneva, Switzerland.
  4. The WTO deals with regulation of trade in goods, services and intellectual property between participating countries by providing a framework for negotiating trade agreements and a dispute resolution process aimed at enforcing participants’ adherence to WTO agreements, which are signed by representatives of member governments.
  5. The WTO prohibits discrimination between trading partners, but provides exceptions for environmental protection, national security, and other important goals.
  6. Trade-related disputes are resolved by independent judges at the WTO through a dispute resolution process.
  7. The WTO has 164 members (including European Union) and 23 observer governments (like Iran, Iraq, Bhutan, Libya etc.)
  8. India is a founder member of the 1947 GATT and its successor, the WTO.

Functions of WTO

Trade negotiations: The WTO agreements cover goods, services and intellectual property. They spell out the principles of liberalization, and the permitted exceptions. They set procedures for settling disputes.

Implementation and monitoring: WTO agreements require governments to make their trade policies transparent by notifying the WTO about laws in force and measures adopted. Various WTO councils and committees seek to ensure that these requirements are being followed and that WTO agreements are being properly implemented.

Dispute settlement: The WTO’s procedure for resolving trade quarrels under the Dispute Settlement Understanding is vital for enforcing the rules and therefore for ensuring that trade flows smoothly.

Building trade capacity: WTO agreements contain special provision for developing countries, including longer time periods to implement agreements and commitments, measures to increase their trading opportunities, and support to help them build their trade capacity, to handle disputes and to implement technical standards.

Outreach: The WTO maintains regular dialogue with non-governmental organizations, parliamentarians, other international organizations, the media and the general public on various aspects of the WTO and the ongoing Doha negotiations, with the aim of enhancing cooperation and increasing awareness of WTO activities.

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