World Trade Organization

What Is the WTO?

The World Trade Organization (WTO) is the only international organization dealing with the global rules of trade between nations. Its main function is to ensure that trade flows as smoothly, predictably and freely as possible.

GATT
Predecessor of WTO The General Agreement on Trade and Tariff (GATT) came into existence in 1947. It sought substantial reduction in tariff and other barriers to trade and to eliminate discriminatory treatment in international commerce. Original intention behind the GATT was to create a third institution to supervise international trade, other two being the World Bank and IMF. India signatory to GATT 1947 along with twenty two other countries GATT was not an organization but was a multilateral treaty, it had no legal status. It provided a platform to its member nations to negotiate and enlarge their trade

OBJECTIVES OF GATT The primary objective of GATT was to expand international

trade by liberalizing trade to bring economic prosperity. Raising standard of living of the member countries. Ensuring full employment through a steady growth of effective demand and real income. Developing optimum utilization of resources of the world. Expansion in production exchange of goods and services on a global level.

The agreement consists of two main themes:1) The agreement formulated some regulations which were to be observed by the member countries.

2) The member countries were to comply with the most favored nation (MFN) clause. .

URUGUAY ROUND
Held in September 1986 in Pantadel Este in Uruguay. The major highlights were: a) b) c) d) Expansion in the sphere of activities from international trade to services, investment and information. Liberalization of trade in Agriculture and Textile goods. Patents & Subsidies Tariff cut- Developing countries have to cut tariffs by 24% over next 10 years while developed countries by 36% for 6 years.

Why there was need for the establishment of WTO?

 Following the Uruguay Round Agreement, the General Agreement on Tariff and Trade (GATT) was converted from a provisional agreement into a Formal Organisation known today as the World Trade Organisation (WTO), with effect from January 1, 1995. There were 128 member countries in 1995, which has increased to 153 at present, with India as one of the important member. According to the current status WTO now accounts for about 97 per-cent of international trade.

INTRODUCTION
The World Trade Organization (WTO) deals with the rules of trade between nations at a global or nearglobal level. Its an organization for liberalizing trade. Above all, its a negotiating forum Its a set of rules And it helps to settle disputes

Time Line

WTO Structure

Ministerial con erence

Trade Policy Review Body

General council

Dispute Settlement Body(DSB)

Committ ees/work ing Parties

Council or trade in goods

Council o r T RIP S

Council or Trade in services

Plurilatera ls

Trade Negotiatio ns Committe e

Objectives of WTO
1) To raise the standard of living in member countries by ensuring full employment and by expanding production and trade in goods and services. 2) To develop an integrated, viable and durable multilateral trading system.
3) To promote sustainable development in member countries by the optimal use of resources.

4) To help the developing countries to get a share in the growth in the international trade. 5) To reduce tariffs and other trade barriers among member countries and to eliminate discriminatory treatment in international trade relations. 6) To insure linkages between trade policies, environmental policies and sustainable development.

Function of WTO
The basic functions of WTO are as follows: 1) It facilitates the implementation, administration and operation of the trade agreements. 2) It provides the forum for further negotiations among member countries on matters covered by the agreement as well as the new issues falling within its mandate. 3) It is responsible for the settlement of the differences and dispute among its member countries.

4) It is responsible for carrying out periodic reviews of the trade policies of its member countries. 5) It assists developing countries in trade policies issues through technical assistance and training programme. 6) It encourages co-operation within international organizations.

PRINCIPLES OF TRADING SYSTEM

Without discrimination- giving countries equally most favored - nation or MFN status; and it should not discriminate between its own and foreign products, services or nationals. Freer barriers coming down through negotiation. Predictable foreign companies, investors and governments should be confident that trade barriers should not be raised arbitrarily; tariff rates and market-opening commitments are bound in the WTO. More competitive discouraging unfair practices such as export subsidies and dumping products at below cost to gain market share. More beneficial for less developed countries giving them more time to adjust, greater flexibility, and special privileges.

DEVELOPING COUNTRIES
The WTO agreements contain special provisions on developing countries The Committee on Trade and Development is the main body focusing on work in this area in the WTO, with some others dealing with specific topics such as trade and debt, and technology transfer The WTO Secretariat provides technical assistance (mainly training of various kinds) for developing countries. Least-developed countries: special focus

The WTO Secretariat

The WTO Secretariat is located in Geneva. It has around 630 staff and is headed by a director-general. Its responsibilities include: Administrative and technical support for WTO delegate bodies (councils, committees, working parties, negotiating groups) for negotiations and the implementation of agreements. Technical support for developing countries, and especially the leastdeveloped. Assistance from legal staff in the resolution of trade disputes involving the interpretation of WTO rules and precedents. Dealing with accession negotiations for new members and providing advice to governments considering membership.

Doha Round
The Doha Development Agenda (DDA), launched at the fourth WTO Ministerial Conference in Doha, Qatar, in November 2001. The agenda adds negotiations and other work on non-agricultural tariffs, trade and environment, WTO rules such as anti-dumping and subsidies, investment, competition policy, trade facilitation, transparency in government procurement, intellectual property, and a range of issues raised by developing countries as difficulties they face in implementing the present WTO agreements
Doha 2009
NO negotiations Ministers re affirmed the need to conclude the Round in 2010 Ministers want to finish Doha Round so that they may concentrate on urgent issues like climate change

WTO AGREEMENTS
AOA (Agreement on Agriculture) SUBSIDIES ANTIDUMPING SPS (Sanitary and Phytosanitary Measures) TBT (Technical barriers to Trade) TRIPs (Trade Related Aspects of Intellectual Property Rights) GATS (General Agreement on Trade & Services) TEXTILE AND CLOTHING CUSTOMS VALUATION

AGREEMENT ON AGRICULTURE (AOA) AOA and the Agreement on Application on Sanitary & Phytosanitary Measures were negotiated in parallel Decisions on measures concerning the possible negative effects of the reform programme on least developed and net food importing developing countries also part of the package.

WTO- AoA Aims at

Fair and market oriented trading system Commitments on support and protection Operationally effective GATT Rules & Disciplines Equitable Trade Reform process Greater opportunities and Terms of Access to developing countries Concern on Non-trade issues such as Food Security, environment, health, etc.

THREE MAIN ELEMENTS OF THE AGREEMENT

Market Access Domestic Subsidies Export Subsidies

In addition, special concerns of developing countries and net food importing countries are also addressed.

MARKET ACCESS
Tariffication Reduction of Tariffs
By a simple average of 36% over 6 years for developed countries By a simple average of 24% over 10 years for developing countries

Minimum Access
Not less than 3%, rising to 5% by 2001 for developed countries Not less than 3%, rising to 5% by 2005 for developing countries

DOMESTIC SUPPORT
Aggregate Measurement of Support (AMS)
Product Specific Non-Product Specific De Minimis Provisions(level at which support is regarded as having minimal effect are defined,for developed countries,as support not exceeding than 5% of the value of production of individual products of the value of total agri.production)

Three Categories of Domestic Support

Green

Box Measures Blue Box Measures Amber Box Measures

DOMESTIC SUPPORT
Green Box measures include all publically funded government programmes which do not provide price support to producers. For example, research, pest and disease control, marketing and promotion services, infrastructure, public stock holding, payments under environment programmes etc. These measures are considered least trade distorting and hence are exempt from reduction.

DOMESTIC SUPPORT
Blue Box measures refer to direct payments under production limiting programmes, which are also not subject to reduction commitments. Amber Box measures include product specific support as well as non-product specific support extended to the farm sector. These are subject to reduction above the de minimis level.

Subsidies and Domestic Support Policies The UR agreement deals with three categories of subsidies 1) Prohibited subsidies: those contingent upon export performance or the use of domestic instead of imported goods 2) Actionable subsidies: those that have demonstrably adverse effects on other member countries 3) Non- actionable subsidies: including those provided to industrial research and procompetitive development activity to disadvantaged regions, or to existing facilities to adapt themselves to new environmental requirements.

Export subsidies: limits on spending and quantities

The Agriculture Agreement prohibits export subsidies on agricultural products unless the subsidies are specified in a member s lists of commitments. Where they are listed, the agreement requires WTO members to cut both the amount of money they spend on export subsidies and the quantities of exports that receive subsidies.

Reduction Commitments in WTOWTO -AoA

NEGOTIATED REDUCTION Implementation Period
Developed Countries (1995-2000) Developing Countries (1995-2004)

% Market Access
Average tariff cuts for all ag.products Minimum tariff cuts per product

% -24 -10

-36 -15

Domestic Support
Total cuts in aggregate measurement of support

-20

-13

Export Subsidies
Value cut Volume Cut

-36 -21

-24 -14

INDIAS COMMITMENTS Market Access

No tariffication; ceiling bindings of
 100% for primary commodities  150% for processed agricultural products  300% for edible oils

INDIAS COMMITMENT Domestic Support

Price Support for 19 products AMS is negative by a large margin and below De Minimis

Export subsidy
India does not have these. No commitments

ANTI-DUMPING
WHAT IS DUMPING Where export price is below normal domestic price. Or Where excess unsalable domestic good is sold in foreign lands e.g. brazils sugar in India.

PROVISION AGAINST DUMPING

Article VI of GATT penalizes dumping action of a country, if it causes any material injury to an established industry in member country.

ANTIDUMPING PROVISIONS
1.HOW TO ESTABLISH DUMPING If export price of product is less than comparable price in normal course 2. HOW TO ESTABLISH INJURY Govt. investigators to look whether there is significant increase in volume relative to production or consumption in importing country.

ANTIDUMPING PROVISIONS
PROCEDURE FOR INVESTIGATIONS, DATA COLLECTION. They divide handling of antidumping cases into sucessive stages Investigative process Imposition of antidumping Possible judicial review Final termination of duty

1. 2. 3. 4.

 SPS stands for Sanitary & Phytosanitary Measures

What does the agreement says?

The SPS Agreement under the WTO explicitly recognizes the right of governments to take measures to protect human, animal and plant health. It seeks to lay down the minimum sanitary and phyto- sanitary standards that the member countries must achieve. The protection of fish and wild fauna, forests and wild flora are included in this definition while the protection of environment per se and animal welfare are excluded

SPS Measures
to protect: human or animal life from: risks arising from additives, contaminants, toxins or diseasecausing organisms in their food, beverages, feedstuffs; plant- or animal-carried diseases ; pests, diseases, or diseasecausing organisms; damage caused by the entry, establishment or spread of pests.

human life animal or plant life a country

Rights & Obligations

Countries have right to take SPS measures necessary for the protection of human, animal or plant life or health. To be applied only to the extent necessary to protect life or health and not be more trade restrictive than required. Shall not arbitrarily or unjustifiably discriminate between countries or act as disguised restriction on international trade. be based on scientific principles and not maintained without sufficient scientific evidence

Key features
the use of international standards (harmonisation) risk assessment transparency technical assistance for developing countries dispute settlement

Harmonization
Standard-setting organizations

food safety CODEX

animal health OIE

plant health IPPC

Codex = Joint FAO/WHO Codex Alimentarius Commission OIE = World Organization for Animal Health IPPC = International Plant Protection Convention (FAO)

Risk Assessment
Where relevant international standards do not exist or a WTO Member country wishes to maintain a higher level of protection than provided by an international standard, Member countries must base their SPS measures on scientific assessment of the risks. A risk assessment under the SPS Agreement must take into account the risk assessment techniques developed by the three sisters (IPPC, OIE and Codex).

Transparency and SPS notifications

First, the Agreement requires governments to publish all of their SPS measures so that they can be known by trading partners to ensure transparency in the development and application of SPS measures Second, SPS notifications are posted on the WTO website to inform other WTO Member countries of changes to SPS measures that may have a significant effect on trade. A third transparency obligation is for each WTO Member to establish an "enquiry point" with the responsibility of providing information regarding SPS measures.

Technical assistance for developing countries

WTO Members should assist developing countries to receive the technical assistance they may need to implement the SPS Agreement . The assistance may take the form of training, credit, donations, etc. and can be provided either directly by countries or through the relevant international organizations.
Dispute settlement The WTO procedures for resolving trade disputes apply to disputes arising from the application of SPS measures .

Problems in implementing SPS Provisions

 Lack of adequate time to adapt to SPS measures and adequate advance warning about the new measures  High cost of adaptation.  Unwillingness on the part of the developed countries to accept equivalent measures of developing countries  Lack of adequate technical assistance to developing countries particularly for infrastructure necessary for ensuring quality testing standards  Ineffective participation in the activities of the international standardizing bodies leading to standards getting fixed by default

Areas Where India Faces Problems

Peanuts, other nuts and milk- Level of aflatoxin presence Mangoes and Grapes- presence of certain flies Coffee- level of Ochratoxin Tobacco- level of DDT residue Pesticides residue problem in various products such as Egg Products, grapes, gherkins, honey, meat and milk products and tea and spices

Cereals and Cereal Products-presence of impurities

TBT- AGREEMENT ON TECHNICAL BARRIERS TO TRADE

Technical regulations and industrial standards may vary from country to country. Having too many different standards makes life difficult for producers and exporters. The Agreement on Technical Barriers to Trade (TBT) tries to ensure that regulations, standards, testing, and certification procedures do not create unnecessary obstacles.

TBT measures
The TBT Agreement defines a technical regulation as a document which lays down product characteristics or their related processes and production methods, including the applicable administrative provisions, with which compliance is mandatory. It may also include or deal exclusively with terminology, symbols, packaging, marking or labelling requirements as they apply to a product, process or production method.

 A standard is defined as a document approved by a recognized body, that provides, for common and repeated use, rules, guidelines or characteristics for products or related processes and production methods, with which compliance is not mandatory. It may also include or deal exclusively with terminology, symbols, packaging, marking or labelling requirements as they apply to a product, process or production method.
All products, including industrial and agricultural products, shall be subject to the provisions of this Agreement.

Key Features
Objective - Protection of human safety or health Protection of animal and plant life or health Protection of the environment Prevention of deceptive practices National Treatment Shall not create unnecessary obstacles to international trade Shall not be more trade restrictive than necessary As far as possible international standards should be used

Main Products Affected

Type of Costs for Indian Producer Direct Costs Implementation of Standards (technology) Auditing of standards Training & education staff Food safety/quality staff Export health certificate Indirect costs Quality system Laboratory Maintenance of systems Relationship management Risk Rejection of shipment Diminished chance of export due to problems with a country

Hidden costs Trial & error Lack of innovation Loss during transport

Difference between SPS and TBT

SPS measures typically deal with: additives in food or drink contaminants in food or drink toxic substances in food or drink residues of veterinary drugs or pesticides in food or drink certification: food safety, animal or plant health processing methods with implications for food safety labelling requirements directly related to food safety plant/animal quarantine declaring areas free from pests or disease preventing disease or pests spreading to or in a country other sanitary requirements for imports (e.g. imported pallets used to transport animals)

 TBT measures typically deal with:

labelling of composition or quality of food, drink and drugs quality requirements for fresh food volume, shape and appearance of packaging packaging and labelling for dangerous chemicals and toxic substances, pesticides and fertilizer regulations for electrical appliances regulations for cordless phones, radio equipment etc. textiles and garments labelling testing vehicles and accessories regulations for ships and ship equipment safety regulations for toys

Agreement on Trade rade-Related Aspects of Intellectual Property Rights (TRIPS)

The WTOs Agreement on Trade Trade-Related Aspects of Intellectual Property Rights (TRIPS), introduced intellectual property rules into the multilateral trading system for the first time in the 19861986-94 Uruguay Round, IPRs have been characterized as a composite of ideas, inventions and creative expressions plus the public willingness to bestow the status of property on them and give their owners the right to exclude others from access to or use of protected subject matter.

The agreement covers five broad issues: how basic principles of the trading system and other international intellectual property agreements should be applied how to give adequate protection to intellectual property rights how countries should enforce those rights adequately in their own territories how to settle disputes on intellectual property between members of the WTO special transitional arrangements during the period when the new system is being introduced.

The UR Agreement on TRIPs covers seven IPs, viz., 1) Copyright and related rights 2) Trademark 3) Geographical indications 4) Industrial designs 5) Layout designs (typographies) of integrated circuits 6) Undisclosed information, including the trade secrets

 Copyright Copyright is the set of exclusive rights granted to the author or creator of an original work, including the right to copy, distribute and adapt the work. work. Copyright lasts for a certain time period after which the work is said to enter the public domain. domain. The kinds of works covered by copyright include : literary works such as novels, poems, plays, reference works, newspapers and computer programs; programs; databases; databases ; films, musical compositions, and choreography; choreography ; artistic works such as paintings, drawings, photographs and sculpture; sculpture; architecture; architecture; and advertisements, maps and technical drawings. drawings.

 Trademarks A trademark or trade mark is a distinctive sign or indicator used by an individual, business organization, or other legal entity to identify that the products or services to consumers with which the trademark appears originate from a unique source, and to distinguish its products or services from those of other entities. entities. The agreement defines what types of signs must be eligible for protection as trademarks. trademarks. It says that service marks must be protected in the same way as trademarks used for goods goods. .

 Geographical indications A geographical indication (GI) is a name or sign used on certain products which corresponds to a specific geographical location or origin (e.g. a town, region, or country). The use of a GI may act as a certification that the product possesses certain qualities, or enjoys a certain reputation, due to its geographical origin. More importantly, it identifies the products special characteristics, which are the result of the products origins.

 Examples of possible Indian Geographical Indications Basmati Rice Darjeeling Tea Kanchipuram Silk Saree Alphanso Mango Nagpur Orange Kolhapuri Chappal Bikaneri Bhujia Agra Petha Goa Feni

 Industrial designs An Industrial design right protects the visual design of objects that are not purely utilitarian. An industrial design consists of the creation of a shape, configuration or composition of pattern or color, or combination of pattern and color in two or three dimensional form containing aesthetic value. Under the TRIPS Agreement, industrial designs must be protected for at least 10 years. Owners of protected designs must be able to prevent the manufacture, sale or importation of articles bearing or embodying a design which is a copy of the protected design.

 Patents A patent is a set of exclusive rights granted by a state (national government) to an inventor or their assignee for a limited period of time in exchange for a public disclosure of an invention. The agreement says patent protection must be available for inventions for at least 20 years. Patent protection must be available for both products and processes, in almost all fields of technology.

 Layout designs (typographies) of integrated circuits A layout design or mask work is a two or threedimensional layout or topography of an integrated circuit (IC or "chip"), i.e. the arrangement on a chip of semiconductor devices such as transistors and passive electronic components such as resistors and interconnections.

 Undisclosed information, including trade secrets A trade secret is a formula, practice, process, design, instrument, pattern, or compilation of information which is not generally known or reasonably ascertainable, by which a business can obtain an economic advantage over competitors or customers. In some jurisdictions, such secrets are referred to as "confidential information" or "classified information".

 It has mainly implications on two sectors of India

PHARMACEUTICAL INDUSTRY

AGRICULTURE

Implications on Pharmaceutical Industry

Indian scenario before TRIPS

Indian pharmaceutical industry ranks very high in the third world, in terms of technology, quality and range of generics manufactured. Due to Indian Patent Act 1970 that abolished product patents and allowed only process patents. Less than 2 per cent of industry sales spent on research and development (R&D) a few years ago.

Challenges
TRIPS would strike at the industry's ability to engage in a sustainable development in self reliant way. As companies may have to increase their R&D spending and allocations to almost double, It is feared that a number of medium and small pharma companies are forced to pull down their shutters.

 Companies which do not have enough R&D competence and orientation and who want to be in the race and survive may be forced to go in for mergers, joint ventures etc. Prices of basic drugs will rise and only 10% of Indian population will have access to modern drugs. So, it is opined that TRIPS in fact violates the
human rights

Opportunities
It is predicated that by 1 January, 2005, drugs worth around US $ 30 billion would be going off the patent. This would mean a very good opportunity for the industry to sell formulations and bulk drugs through out the world. Out sourcing by MNCs in areas of bulk drugs, formulations, for patented and off-patent products. This would mean serious strategic alliances and bringing in of foreign exchange. Indian pharma could also be an important sourcing platforms well as contract manufacturing for many multinational in new drug research.

 Now leading Indian firms can not only set research lab of global standards but also by increasing their R&D expenditure can increase innovative activity significantly. This in turn will enhance its export competitiveness not only in third World but also in US and European markets as well. Once a new product is developed the inventor would secure monopolistic rights of production and marketing for a period of 20 years, which is very substantial.

TRIPS and Agriculture

The TRIPS Agreement of the WTO includes three items related to agriculture: Geographical indications Patent protection of agricultural chemical products Plant Variety Protection (PVP)

Plant Variety Protection (PVP)

Patents and Plant Variety Protection (PVP) are two different forms of IPRs. Both provide exclusive monopoly rights over the creation (such as new plant variety) for commercial purposes over a period of time. PVP provides patent like rights to plant breeders. In this case is the genetic makeup of a specific plant variety gets protected .

 The criteria for protection are: novelty, distinctness, uniformity and stability. PVP laws can provide some exemptions for breeders, allowing them to use protected varieties for further breeding, and for farmers, allowing them to save seeds from their harvest.

sui generis system

The sui generis system is a milder/diluted form of a patent and it provides a framework of plant breeders rights (PBR) through which protection is accorded to the breeders, researchers and farmers with regard to use and exchange of seeds and plant genetic material. Crucially, this framework has two important clauses viz., "Farmers' Privilege" and "Researchers' Rights". The (PVP) legislation will give PBR legal status/statutory rights in the country.

 The recent legislative attempts have been started to become TRIPS compliant by the Indian Government viz., Patent Amendment Act, 2005, Protection of Plant Varieties and Farmers Rights Act, 2002, Geographical Indications of Goods (Registration & Protection) Act, 1999 Seed Act, 2004

Impact on Agriculture sector

 TRIPS is a clearly anti-developing country treaty. Its provisions seriously threaten self reliance in agriculture and the livelihoods of farmers, by seeking to establish a monopoly for the Life Science Corporations on seed production and sale. TRIPS does not allow for the exercise of national sovereignty over biodiversity because it obliges countries to enact intellectual property rights on plant varieties which are a part of biodiversity. TRIPS does not contain any elements of equity or benefit sharing.

 It does not allow countries to claim a share of benefits from companies who breed new varieties using farmers varieties as the base, since there is no provision requiring disclosure of the country of origin from where base materials have been taken. TRIPS does not require users of biodiversity like traditional plant varieties and land races to fulfil access obligations. It therefore facilitates bio-piracy, respecting neither the ownership of communities over bio-resources nor the indigenous knowledge that goes into maintaining and refining biological resources.

 By implementing sui generis system there will be exacerbated genetic erosion, limited the growth of research and farmers will be hurt economically. It introduces legal and economic restrictions on farmers livelihood practices. Farmers rights are reduced by law to a mere exemption which will be subject to compliance of the seed company. Farmers are responsible for 80-90% of the seed supply in the countries of the South like India, this will massively shift to private control under plant variety rights regimes.

 Corporations are actively pursuing more powerful means such as contract law governing purchase agreements, terminator type sterile seed technologies and hybridisation to prevent farmers from saving seed out of their harvests for another planting. By allowing companies to collect royalties on seed sales, sui generis stimulates the corporate take-over of plant breeding which means fewer actors supplying the market.

General agreement on trade in services

GATS
GATS has been modeled with a view to remove all barriers to trade in services It is the first and only set of international rules governing the international trade in services. GATS rules in general apply to all sectors except services supplied in exercise of govt. authority i.e neither supplied on commercial basis nor in competition.

GATS
The agreement in all has six parts Part I -scope and definition Part II -general obligations Part III rules governing specific commitments Part IV future negotiations Part V & Part VI -institutional and financial provisions

GATS
Four modes of supply define how service is delivered M1-cross border- Both service provider & consumer are in diff. country e.g. Business process outsourcing(BPO), service provider in INDIA assists clients in USA. M2- Consumption abroad- e.g. British tourist stays in India and consumes hospitality service.

GATS
M3- Commercial presence Service provided by an operator based abroad to consumers in that country e.g. US bank in India M4- Movement of natural person i.e skilled persons going abroad for work e.g. software engineers going abroad.

GATS
General obligations and disciplines Most favored nation treatment(mfn):All countries get equal treatment Exemption lists:Lists are governed by conditions set out in separate annex to GATS. Non-MFN treatment can only be met through the WTO waiver.

o
Qualifications,Standards,Licensing Barriers:To ensure that measures relating to qualification requirements and procedures, technical standards and licensing requirements do not obstruct trade flow, the council for trade in services will seek formulation of necessary disciplines. These are based on competency and ability to supply the service.

GATS
Specific commitments in schedule i. Market access- prohibited measures:limitation on no. of service provider limitation on value of services II. National treatment Each member shall give no less favor to foreign players as it give to domestic players

GATS
BARRIERS IN SERVICE SECTOR TRADE Quantitative restrictions-apllied to service provider e.g. bilateral agreement regulating international air transport. Price based instrument- i.e entry or exit taxes Licensing or certification requirement Govt. policies- Barriers on foreign players

GATS
Weakness in GATS Request and offer- each country draws a wish list as to what kind of market access it wants e.g. India wants access in health and education services then the host country gives offer list i.e what kind of acess it will provide. But this has a problem: Free rider problem- other countries get benefit of one countries negotiations(MFN)

GATS
Main Implication: Security of access to foreign market 1. Right of exporter- They have right to expect that restrictions on foreign suppliers will not be more than terms and conditions given in countries schedule. 2. Right of the importers- right to expect that domestic service industry will be permitted to enter into joint venture if the conditions in schedule of commitments are complied with

AGREEMENT ON TEXTILE AND CLOTHING

AGREEMENT ON TEXTILE AND CLOTHING

2 main agreements MULTI FIBRE AGREEMENT-came into force in 1974 . It is a framework for bilateral agreement that proposes quota limits on imports into country whose domestic industry face serious problem from rapidly increasing imports. In this case it imposed restrictions on developing countries exports to developed countries.

AGREEMENT ON TEXTILE AND CLOTHING

Agreement on textile and clothing(ATC) It came into force in 1995 and expired on jan. 2005. It was a blueprint for removal of restrictions on textile exports mainly from developed countries. It was to be implemented in 4 phases. At the end of 4th phase all products of textile and clothing would be governed under GATT principles.

AGREEMENT ON TEXTILE AND CLOTHING

1st phase- at the end at least 16% of all product under textile and clothing exports to be included under GATT. 2nd phase- additional 17% to be added 3rd phase- add. 18% to be added 4th phase- 49% max.

AGREEMENT ON TEXTILE AND CLOTHING

IMPLICATIONS Developed countries followed double standards for Indian textile industry, they followed protectionism policy for their industry to protect it from our industry. US even used excuse of child labor to ban some textile export items. Agreement on textile and clothing(ATC ) has freed India from major quantitative restrictions it faced from USA , EU & CANADA. But India will now face stiff competition from china, Korea, Taiwan &Hong kong .

Agreement on custom valuation

Agreement on custom valuation

Value definition in trade ? It depends on person concerned buyer or seller(controvercial subject) In Agreement on custom valuation it is defined as the price at which the contract is concluded b/w 2 parties. No bearing of prevailing market price.

Agreement on custom valuation

GATT article VII determines how custom officials should value imported goods and thus apply appropriate custom duty and taxes. It proposes 6 valuation methods Transaction value- base custom value on the price actually paid for goods when sold. (With certain adjustments)

Agreement on custom valuation

Transaction value of identical goods- here transaction price is not used but price of identical goods is used. Transaction value of similar goods- in this case on similar goods Deductive value- in country of import , commission & transport cost etc. is adjusted . Computed value-adding profit , expenses, transport to cost of materials, fabrication and processing costs of production .

Agreement on custom valuation

Fall-back method :If no other method can be applied then this is used. Article VII of GATT states use reasonable means consistent with i.e arbitrary or fictitious values not allowed.

Agreement on custom valuation

Implications
Marketing implications- Assurance that value declared by importer will be considered as basis for determining its value. Right of importers1) To expect that they will be consulted at all stages 2) To justify declared value where custom express doubt 3) To require the custom authorities to give in writing reason for rejecting declared value.

Agreement on safeguards
Safeguard is the safety valve which permits emergency action to be taken against imports of a particular product when there is a sudden increase in imports which causes serious injury (a significant overall impairment in the position of industry and requires the authority to evaluate all relevant factors having a bearing on the situation of that industry) to domestic producers of competing products.

Application of safeguard measures

Quantitative restrictions as safeguard measures- the
volume of import cannot be less than average for the past 3 yrs. Quotas have to be allocated between the countries with principal supplying interest either on the basis of mutual agreement or on strength of past share.

Provisional safeguard measures- S.M can be applied

provisionally in critical circumstances where delay would cause damage which it would be difficult to repair.

Duration of safeguard measures- the std. limit on

duration is 4 yrs which may be extended to a maximum of 8 yrs. Developing countries have 2 yr longer duration than developed countries.

Compensation
Any safeguard action had to be paid for in the first instance through negotiated compensation. If no agreement was reached, the exporters affected by the measure were free to retaliate by suspending concessions substantially equivalent to the measure.

Grey Area Measure

For the future there is an absolute ban on any voluntary export restraints, orderly marketing arrangements on any other similar measures, unilateral, bilateral or plurilateral on the export or import side. G.A.M in existence when the WTO came into force must be brought into conformity with the agreement on safeguards or removed according to a notified timetable, ending not later than 31 december 1998.

PRESHIPMENT INSPECTION
Deputing private companies to inspect consignments with a view to ensure that contractual obligations have been fulfilled before consignments are shipped. About 40 Govts. Use PSI companies of which 35 are WTO members. These companies are contracted to examine and report on the quantity, quality and unit prices of exports before shipment. Additional services include verification of origin, monitoring and control of tariff exemptions etc.

 Most of the agreement provisions carry obligations (nondiscrimination transparency protection of confidential business info., avoidance of unreasonable delay,use of specific guidelines for conducting price verification and the avoidance of conflicts of interest by PSI agencies)

for user members who are expected to ensure fulfillment of the obligations through their contractual agreements with the inspection agencies. The obligation of exporting members towards PSI users include discrimination in the application of domestic laws and regulations and the provision of technical assistance where required.

 Exporters concern arise from the fears that PI can block trade by increasing their costs and causing delays. Exporters also view the imposed changes in valuation as an interference in the contract between buyer and seller. The sensitive point of PI is that it is carried out in the exporting country on behalf of the importing country. The aim of PI is to establish a framework of rights and obligations, based on non-discrimination and transparency that provides guidelines for the use of inspection firms by Govts.

AGREEMENT ON RULES OF ORIGIN

Based on the guiding principle which states that rules of origin should be objective, predictable, coherent and based on positive standards; and that the originating status of a particular good should be either the country where it has been wholly obtained or, when more than one country has been concerned in the production, the country where the last substantial transformation was carried out.

Rules of origin
Paternity Stances The final resolution Current status of Harmonization work programme.

INFORMATION TECHNOLOGY AGREEMENT

ITA stipulates tariff reduction at 4 stages for 6 main product categories,
o o o o o o Computers Telecom equipment Semi-condustors Semi-conductor manufacturing equipment Software and Scientific instruments

ITA II Talks
The committee of participants of trade in IT products agreed to resume negotiations on expanding the coverage of WTO ITA in the week of 22 feb,1999. Participants supporting the ITA II proposal were Australia, Canada, Czech republic, Japan and few others. They urged the rapid completion of ITA II work so that the committee could move ahead on other aspects including non tariff measures on IT products. Several participants signalled they would need an extended time period for eliminating tariffs on certain proposed products.

 The committee will continue its efforts to ensure that that non-tariff measures will not impede the free flow of IT products. The committee will continue consultations regarding divergences in classifying IT products, noting work already undertaken on semi-conductor manufacturing and testing equipment etc. It noted that participants have undertaken consultations regarding implementation.

DISPUTE SETTLEMENT
The dispute settlement system is designed to provide security and predictability to the multilateral trading system. It serves to preserve as well as clarify rights and obligations under the agreements. The other main elements of the dispute settlement principle areo Prompt settlement o Balancing of rights and obligations o Objective of satisfactory settlement o Requests for consultations and dispute settlement procedures are not, in themselves, a matter of contention.

 There are 3 possible outcomes of the dispute settlement processo Withdrawl of the measure violation of WTO o Continuation of the measure with compensation for the loss suffered by affected country o Continuation of the measure with retaliation by the affected country to make good the loss suffered by the affected country are also special to the developing countries.

Main elements Dispute settlement body Retaliation in dispute settlement Arbitration, good offices, conciliation and mediation Non-violation complaints Special arrangements under SCM and ATC Special provision for developing countries Review of dispute settlement

DISPUTE SETTLEMENT PROCESS

The Panel Process Consultation Adoption Of the Report

Thanks
Submitted by: Rohin Arora(MBA-19) Sahil Jagan(MBA-22) Manpreet singh(ABM-12) Bharti kalia(ABM-6) Ajayvir singh(ABM-2) Prabhpreet Dhanoa(ABM13)