DGFT is responsible for implementing the Foreign Trade Policy or Exim Policy with the main

objective of promoting Indian exports.

DGFT or Directorate General of Foreign Trade is a government organization in India responsible

for the formulation of exim guidelines and principles for indian importers and indian
exporters of the country. Before 1991, DGFT was known as the Chief Controller of Imports &
Exports (CCI&E).

Functions of DGFT

Some of the major functions of DGFT and its regional offices through out the country are as
follows:

• To implement the Exim Policy or Foreign Trade Policy of India by introducing various
schemes and guidelines through its network of dgft regional offices thought-out the country.
DGFT perform its functions in coordination with state governments and all the other departments
of Ministry of Commerce and Industry, Government of India.
• To Grant Exporter Importer Code Number to Indian Exporter and Importers. IEC Number
is a unique 10 digit code required by the traders or manufacturers for the purpose of import and
export in India. DGFT IEC Codes are mandatory for carrying out import export trade operations
and enable companies to acquire benefits on their imports/exports, indian customs, export
promotion councils council etc in India.
• DGFT permits or regulate Transit of Goods from India or to countries adjacent to India in
accordance with the bilateral treaties between India and other countries.
• To promote trade with neighboring countries.
• To grant the permission of free export in Export Policy Schedule 2.
• DGFT also play an important role in controlling DEPB Rates.
• Setting standard input-output norms is also controlled by the DGFT.
• Any changes or formulation or addition of new codes in ITC-HS Codes are also carried out
by DGFT (Directorate General of Foreign Trade).
Apart from the above, DGFT also acts as a trade facilitator. It also deals with the quality
complaints of the foreign buyers. Officials DGFT works in close coordination with other related
economic offices like Customs Commissionerates, Central Excise authorities, DRI authorities and
Enforcement Directorate.
Globalisation and Significance of Foreign Direct Investment

Globalisation of developing countries is seen by many as the key economic trend of

recent times. In a liberalising and globalising world economy, a growing number of

countries have received significant capital flows, mainly in form of foreign direct

investment. As the remarkable growth of cross-border foreign direct investment

flows

has been associated with the general trends in globalisation, this section reviews
the

relevant key issues, such as the salient features of financial liberalisation, forces 2

driving globalisation or integration of developing countries into the global economy,

and the significance of foreign direct investment flows on the recipient countries.

A. Globalisation and Financial Liberalisation in Developing Countries

The international financial liberalisation

(which involves opening the capital account)

has increased over the last three decades, and the industrial countries have been

liberalising their capital accounts early on. However, in developing countries, the
shift

toward capital account liberalisation in general was slow, and many countries’
private

international financial transactions did not increase substantially until the early
1990s

PRIMARY WTO PRINCIPLES

A small number of relatively simple principles

underlie the rules of the WTO as they affect

Cambodia and, all other members:

1. LAWS ANDREGULATIONS MUSTBE TRANSPARENT

Transparency is the primary principle of the WTO.

Nothing is more important to business people than

knowing and having confidence in the regulatory

environment in which they operate, at home and

overseas. WTO agreements usually have some form

of transparency requirement included that requires

governments and other authorities to publish all

laws, regulations, and practices that can impact trade

or investment. This is discussed in more detail in the

next chapter.

Such provisions are as important to

companies operating within the domestic economy

as those seeking to enter it. All firms operating in

Cambodia should experience an opening of the

regulatory framework for business. Without these

changes, hidden costs and informal payments would

increasingly hinder development, particularly if large

international companies, who are traditionally

unwilling to accept such practices, plan to increase their

presence in Cambodia. Open markets within the

WTO require open regulation and the rule of law.

As a WTO member, Cambodia has committed

itself to provide at least 30 days for comment on all

proposed new measures affecting trade in goods,

services, or the protection of IP. New measures will

not become effective until they have appeared in the

Official Journal. The body of all current laws,

regulations, and decrees, as well as administrative and

judicial rulings, relating to trade must be available on

official websites: [Link] (trade regulations)

and [Link] (general laws and

regulations).

Three WTO agreements require specific

enquiry points to be established by Cambodia in

order that overseas suppliers, or domestic firms, can

seek information on current laws, regulations and

practices. These are for regulations affecting services,

TBT (see Box 13 in chapter 8), and food safety (see

Box A1.1 in Annex A1).

Cambodia is required to notify the WTO

directly of measures that fall within WTO

agreements. These, and the notifications of all other

WTO members, can often be found on the WTO

website: [Link].

2. NON-DISCRIMINATION

A second key principle of the WTO rulebook is

non-discrimination. The principle applies at two levels.

At the first level, non-discrimination means that

Cambodian goods cannot be discriminated against

in export markets with respect to the same goods

arriving from competing countries. At the second

level, once they enter those export markets,

Cambodian goods cannot be treated differently than

the same goods produced locally.

The first form of non-discrimination is referred

to as “most favoured nation” (MFN) treatment. In

other words, Cambodian goods must be treated no

differently in the markets of a WTO member than

the best treatment available to any other member.

This principle is often breached, however, through

regional and preferential trade deals (see Box 4)

The second form of non-discrimination is

known as “national treatment”. It is an important

safeguard against situations in which goods can

enter a market, but are then made uncompetitive

because they are subjected to special taxes, charges, or

administrative practices that are not applied to locally

produced products of the same kind. The guarantee

of national treatment will help Cambodian goods

succeed in export markets. At the same time,

national treatment must operate within Cambodia

too, which might restrict domestic businesses’

ability to cope with import competition.

3. PROGRESSIVETRADELIBERALIZATION

A third principle is progressive trade liberalization through

negotiation. The WTO is not a free-trade agreement.

As the following chapters will outline, there is scope

for the legal protection of markets from import

competition. However, the underlying goal of the

WTO is to create trade and investment through

increasingly open markets.

Governments are free to open their markets

independently of the WTO. After accession,

Cambodia can liberalize further to the extent, and at

the speed, the government thinks is appropriate.

Roughly once every ten years, GATT and WTO

have traditionally launched multilateral trade rounds

in which member countries engage in broad, general

negotiations to open each other’s markets or extend

the coverage of the rules. The WTO was established

as a result of the Uruguay Round, which lasted from

1986 until 1994.

Cambodia will have the opportunity to

participate fully in the current Doha Round, which

has a broad agenda for negotiations. It is continuing

the process of liberalizing markets for industrial and

agricultural goods, as well as services. It is

expected to lead to a new WTO agreement on trade

facilitation. This may be of particular interest to

Cambodia, especially if funding is made available to

support the customs reforms that are the main

objective of the initiative. The Doha Round may

also lead to further additions to WTO rules (see the

issue of fish subsidies in Annex B for an example),

and to strengthening of the conditions applied to

developing countries.

The Doha Round has been severely delayed

because of differences over agriculture. It is most

likely to be concluded in 2006/2007. This means that

the private sector in Cambodia still has a chance to

determine objectives for negotiation, or, at least, to

consult with the government on the strategy being

pursued.

4. SPECIAL ANDDIFFERENTIAL TREATMENT

A fourth principle is of “special and differential

treatment” for developing countries. In practice, this

permits easier conditions for poorer countries. This

can mean not applying certain provisions of new

agreements to developing countries. It can also mean

Capital Account Convertibility is a feature of a nation's financial regime that centers around the ability to
conduct transactions of local financial assets into foreign financial assets freely and at market determined
exchange rates.[1] It is sometimes referred to as Capital Asset Liberation or CAC.

In layman's terms, it is basically a policy that allows the easy exchange of local currency (cash) for foreign
currency at low rates.[citation needed] This is so local merchants can easily conduct transnational business without
needing foreign currency exchanges to handle small transactions.[citation needed] CAC is mostly a guideline to
changes of ownership in foreign or domestic financial assets and liabilities. Tangentially, it covers and extends
the framework of the creation and liquidation of claims on, or by the rest of the world, on local asset
and currency markets.[
UNCTAD HIGHLIGHTS KEY ROLE OF TRADE IN PROMOTING SUSTAINABLE

Reducing poverty and promoting sustainable development through international

trade

will be the focus of special Roundtable discussions on 17 June 2004 at UNCTAD XI.

Dr. Klaus Toepfer, Executive Director of the United Nations Environment

Programme

(UNEP), will be the keynote speaker. A High-Level Ministerial Panel (Mauritius,

Angola,

Kingdom of Cambodia and Brazil) will highlight issues of national importance and

related capacity building needs.

The key challenge for policy makers is to find ways of maximizing the positive
impacts

of trade on the core issues of development relating to the environment and poverty.

Trade and environment raise complex issues that cut across almost all economic

activities. Interests can differ so widely that trade and environment policies may

sometimes clash.

International trade is a catalyst for improved environmental performance across

countries as product standards often converge to the higher standards of major

import

markets. But economic, social and environmental benefits may not appear without

international cooperation and proactive adjustment policies in developing countries.

There is a need for specific measures to avoid adverse trade and competitiveness

effects, particularly for the least developed countries (LDCs) and small island

developing states (SIDS).

Key issues addressed at the Roundtable will include:

• Opportunities for export diversification, poverty alleviation and rural community

development offered by environmentally preferable products (EPPs), such as

organic agriculture;

• Opportunities for competitiveness gains and other benefits from improved

resource efficiency, occupational safety, health and environmental conditions that

can be derived from pro-active adjustment policies to environmental requirements

in the international marketplace;

• The role of environmental goods and services in sustainable development;

• The abilities of developing country companies, particularly small and

mediumsized enterprises, to respond to environmental requirements;

• Opportunities to harness traditional knowledge for trade and development.

ASEAN Free Trade Area (AFTA)[1] is a trade bloc agreement by the Association of Southeast Asian
Nations supporting local manufacturing in all ASEAN countries.

The AFTA agreement was signed on 28 January 1992 in Singapore. When the AFTA agreement was originally
signed, ASEAN had six members,
namely, Brunei, Indonesia, Malaysia, Philippines, Singapore and Thailand. Vietnam joined in
1995, Laos and Myanmar in 1997 and Cambodia in 1999. AFTA now comprises ten countries of ASEAN. All
the four latecomers were required to sign the AFTA agreement in order to join ASEAN, but were given longer
time frames in which to meet AFTA's tariff reduction obligations.

The primary goals of AFTA seek to:

 Increase ASEAN's competitive edge as a production base in the world market through the elimination,
within ASEAN, of tariffs and non-tariff barriers; and

 Attract more foreign direct investment to ASEAN.

Agreement on South Asia Free Trade Area (SAFTA)

The Agreement on South Asian Free Trade Area (SAFTA) came into force from 1st
January,

2006. India, Pakistan and Sri Lanka are categorized as Non-Least Developed
Contracting

States (NLDCS) and Bangladesh, Bhutan, Maldives and Nepal are categorized as
Least
Developed Contracting States (LDCS).

Afghanistan which became the eighth member of SAARC during the 14th SAARC
Summit

held on 3-4 April 2007 in New Delhi is due to become a party to the SAFTA
Agreement as

an LDC member.

Article 7 of the SAFTA Agreement provides for a phased tariff liberalization

programme

(TLP) under which, in two years, NLDCS would bring down tariffs to 20%, while
LDCS

will bring them down to 30%. Non-LDCS will then bring down tariffs from 20% to 0-
5% in

5 years (Sri Lanka 6 years), while LDCS will do so in 8 years. NLDCs will reduce
their

tariffs for L.D.C. products to 0-5% in 3 years. This TLP would cover all tariff lines
except

those kept in the sensitive list (negative list) by the member states.

The salient features of the four Annexes of SAFTA Agreement are as under:

i. Rules of Origin:

a. For giving preferential access to the Member Countries under SAFTA, the goods

shall have undergone substantial manufacturing process in the exporting

countries. The substantial manufacturing process are defined in terms of twin

criteria of Change of Tariff Heading (CTH) at four-digit Harmonized Coding

System (HS) and value content of 40% (30% for LDCSs).

b. Apart from the general rules, to provide for Products-Specific Rules (PSR) for 191

tariff lines to accommodate the interest of LDCSs given their limited base for

natural resources and undiversified industrial structure. The Products Specific

Rules have been provided clearly on technical grounds i.e. where both inputs and
outputs are at the same four-digit HS level.