General Agreement on Tariffs and Trade

The General Agreement on Tariffs and Trade (GATT) was an international agreement that
promoted international trade and the reduction of trade barriers among member states from 1947-
1994.

This version of the GATT is as amended through 1986. It contains the complete text of the
General Agreement together with all amendments which have become effective since its entry
into force. GATT 1947 is now incorporated in GATT 1994.

The GATT functioned de facto as an organization, conducting eight rounds of talks addressing
various trade issues and resolving international trade disputes. The Uruguay Round, which was
completed on December 15, 1993 after seven years of negotiations, resulted in an agreement
among 117 countries (including the U.S.) to reduce trade barriers and to create more
comprehensive and enforceable world trade rules. The agreement coming out of this round, the
Final Act Embodying the Results of the Uruguay Round of Multilateral Trade Negotiations, was
signed in April 1994. The Uruguay Round agreement was approved and implemented by the
U.S. Congress in December 1994, and went into effect on January 1, 1995.

This agreement also created the World Trade Organization (WTO), which came into being on
January 1, 1995. The WTO implements the agreement, provides a forum for negotiating
additional reductions of trade barriers and for settling policy disputes, and enforces trade rules.
The WTO launched the ninth round of multilateral trade negotiations under the "Doha
Development Agenda" (DDA or Doha Round) in 2001. The WTO's website provides
information about the Doha Round, including links to texts that have been generated by the
negotiations and information regarding upcoming meetings.
General Agreement on Trade in Services - GATS

What is the main purpose of the GATS?

The creation of the GATS was one of the landmark achievements of the Uruguay Round, whose
results entered into force in January 1995. The GATS was inspired by essentially the same
objectives as its counterpart in merchandise trade, the General Agreement on Tariffs and Trade
(GATT): creating a credible and reliable system of international trade rules; ensuring fair and
equitable treatment of all participants (principle of non-discrimination); stimulating economic
activity through guaranteed policy bindings; and promoting trade and development through
progressive liberalization.

While services currently account for over 60 percent of global production and employment, they
represent no more than 20 per cent of total trade (BOP basis). This — seemingly modest — share
should not be underestimated, however. Many services, which have long been considered
genuine domestic activities, have increasingly become internationally mobile. This trend is likely
to continue, owing to the introduction of new transmission technologies, the opening up in many
countries of long-entrenched monopolies (e.g. voice telephony and postal services), and
regulatory reforms in hitherto tightly regulated sectors such as transport. Combined with
changing consumer preferences, such technical and regulatory innovations have enhanced the
“tradability” of services and, thus, created a need for multilateral disciplines.

What services are covered?

The GATS applies in principle to all service sectors, with two exceptions.

Article I(3) of the GATS excludes “services supplied in the exercise of governmental authority”.
These are services that are supplied neither on a commercial basis nor in competition with other
suppliers. Cases in point are social security schemes and any other public service, such as health
or education, that is provided at non-market conditions.

Further, the Annex on Air Transport Services exempts from coverage measures affecting air
traffic rights and services directly related to the exercise of such rights.

What are the basic obligations under the GATS?

Obligations contained in the GATS may be categorized into two broad groups: General
obligations, which apply directly and automatically to all Members and services sectors, as well
as commitments concerning market access and national treatment in specifically designated
sectors. Such commitments are laid down in individual country schedules whose scope may vary
widely between Members. The relevant terms and concepts are similar, but not necessarily
identical to those used in the GATT; for example, national treatment is a general obligation in
goods trade and not negotiable as under the GATS.  

(a) General obligations

MFN Treatment: Under Article II of the GATS, Members are held to extend immediately and
unconditionally to services or services suppliers of all other Members “treatment no less
favourable than that accorded to like services and services suppliers of any other country”. This
amounts to a prohibition, in principle, of preferential arrangements among groups of Members in
individual sectors or of reciprocity provisions which confine access benefits to trading partners
granting similar treatment.

Derogations are possible in the form of so-called Article II-Exemptions. Members were allowed
to seek such exemptions before the Agreement entered into force. New exemptions can only be
granted to new Members at the time of accession or, in the case of current Members, by way of a
waiver under Article IX:3 of the WTO Agreement. All exemptions are subject to review; they
should in principle not last longer than 10 years. Further, the GATS allows groups of Members
to enter into economic integration agreements or to mutually recognize regulatory standards,
certificates and the like if certain conditions are met.

Transparency: GATS Members are required, inter alia, to publish all measures of general
application and establish national enquiry points mandated to respond to other Member's
information requests.

Other generally applicable obligations include the establishment of administrative review and
appeals procedures and disciplines on the operation of monopolies and exclusive suppliers.

  
(b) Specific Commitments

Market Access: Market access is a negotiated commitment in specified sectors. It may be made
subject to various types of limitations that are enumerated in Article XVI(2). For example,
limitations may be imposed on the number of services suppliers, service operations or employees
in the sector; the value of transactions; the legal form of the service supplier; or the participation
of foreign capital.

National Treatment: A commitment to national treatment implies that the Member concerned
does not operate discriminatory measures benefiting domestic services or service suppliers. The
key requirement is not to modify, in law or in fact, the conditions of competition in favour of the
Member's own service industry. Again, the extension of national treatment in any particular
sector may be made subject to conditions and qualifications.

Members are free to tailor the sector coverage and substantive content of such commitments as
they see fit. The commitments thus tend to reflect national policy objectives and constraints,
overall and in individual sectors. While some Members have scheduled less than a handful of
services, others have assumed market access and national treatment disciplines in over 120 out of
a total of 160-odd services.

The existence of specific commitments triggers further obligations concerning, inter alia, the
notification of new measures that have a significant impact on trade and the avoidance of
restrictions on international payments and transfers.

Trade-Related Aspects of Intellectual Property Rights (TRIPS)

The WTO’s Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS),

negotiated in the 1986-94 Uruguay Round, introduced intellectual property rules into the
multilateral trading system for the first time.

The WTO’s TRIPS Agreement is an attempt to narrow the gaps in the way these rights are
protected around the world, and to bring them under common international rules. It establishes
minimum levels of protection that each government has to give to the intellectual property of
fellow WTO members. In doing so, it strikes a balance between the long term benefits and
possible short term costs to society. Society benefits in the long term when intellectual property
protection encourages creation and invention, especially when the period of protection expires
and the creations and inventions enter the public domain. Governments are allowed to reduce
any short term costs through various exceptions, for example to tackle public health problems.
And, when there are trade disputes over intellectual property rights, the WTO’s dispute
settlement system is now available.

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.

Basic principles: national treatment, MFN, and balanced protection

As in GATT and GATS, the starting point of the intellectual property agreement is basic
principles. And as in the two other agreements, non-discrimination features prominently:
national treatment (treating one’s own nationals and foreigners equally), and most-favoured-
nation treatment (equal treatment for nationals of all trading partners in the WTO). National
treatment is also a key principle in other intellectual property agreements outside the WTO.

The TRIPS Agreement has an additional important principle: intellectual property protection
should contribute to technical innovation and the transfer of technology. Both producers and
users should benefit, and economic and social welfare should be enhanced, the agreement says.

How to protect intellectual property: common ground-rules

The second part of the TRIPS agreement looks at different kinds of intellectual property rights
and how to protect them. The purpose is to ensure that adequate standards of protection exist in
all member countries. Here the starting point is the obligations of the main international
agreements of the World Intellectual Property Organization (WIPO) that already existed before
the WTO was created:

 the Paris Convention for the Protection of Industrial Property (patents, industrial designs,
etc)

 the Berne Convention for the Protection of Literary and Artistic Works (copyright).

Some areas are not covered by these conventions. In some cases, the standards of protection
prescribed were thought inadequate. So the TRIPS agreement adds a significant number of new
or higher standards.

Copyright

The TRIPS agreement ensures that computer programs will be protected as literary works under
the Berne Convention and outlines how databases should be protected.

It also expands international copyright rules to cover rental rights. Authors of computer programs
and producers of sound recordings must have the right to prohibit the commercial rental of their
works to the public. A similar exclusive right applies to films where commercial rental has led to
widespread copying, affecting copyright-owners’ potential earnings from their films.
Trademarks

The agreement defines what types of signs must be eligible for protection as trademarks, and
what the minimum rights conferred on their owners must be. It says that service marks must be
protected in the same way as trademarks used for goods. Marks that have become well-known in
a particular country enjoy additional protection.

Geographical indications

A place name is sometimes used to identify a product. This “geographical indication” does not
only say where the product was made. More importantly, it identifies the product’s special
characteristics, which are the result of the product’s origins.

Well-known examples include “Champagne”, “Scotch”, “Tequila”, and “Roquefort” cheese.

Wine and spirits makers are particularly concerned about the use of place-names to identify
products, and the TRIPS Agreement contains special provisions for these products. But the issue
is also important for other types of goods.

Using the place name when the product was made elsewhere or when it does not have the usual
characteristics can mislead consumers, and it can lead to unfair competition. The TRIPS
Agreement says countries have to prevent this misuse of place names.

Industrial designs

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

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. Governments can refuse to issue a patent for an invention if its commercial
exploitation is prohibited for reasons of public order or morality. They can also exclude
diagnostic, therapeutic and surgical methods, plants and animals (other than microorganisms),
and biological processes for the production of plants or animals (other than microbiological
processes).

The agreement describes the minimum rights that a patent owner must enjoy. But it also allows
certain exceptions. A patent owner could abuse his rights, for example by failing to supply the
product on the market. To deal with that possibility, the agreement says governments can issue
“compulsory licenses”, allowing a competitor to produce the product or use the process under
license. But this can only be done under certain conditions aimed at safeguarding the legitimate
interests of the patent-holder.