INTERNATIONAL TRADE LAW

BACK PAPER PROJECT ON:

ORGANIZATIONJALSTRUCTURE OF WTO

SUBMITTED TO:

DR. SHEELA RAI PROFESSOR OF LAW)

MS. ELUCKIAA (ASST. PROF OF LAW)

SUBMITTED BY:

HEMANT PRAJAPATI

2014(R)/ BA.LLB./017

SEMESTER – VIII

FOURTH (IV) YEAR

 TABLE OF CONTENTS

INRODUCTION ............................................................................................................................. 3
INTRODUCTION TO THE STUDY OF THE PROJECT ............................................................ 4
Trade & Inequalities: ...................................................................................................................... 5
Trade & Structural Adjustment:...................................................................................................... 5
GATT: ............................................................................................................................................. 5
OBJECTIVES OF GATT: .............................................................................................................. 6
THE URUGUAY ROUND: ........................................................................................................... 6
OBJECTIVES OF WTO: ................................................................................................................ 8
STRUCTURE OF WTO: ................................................................................................................ 9
INDIA’S ROLE IN THE WTO: ................................................................................................... 12
IMPORT: ...................................................................................................................................... 16
EXPORT: ...................................................................................................................................... 17
BIBLIOGRAPHY ......................................................................................................................... 19
 INTRODUCTION

...In brief, 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. The World Trade Organization...The result is
assurance. Consumers and producers know that they can enjoy secure supplies and greater choice
of the finished products, components, raw materials and services that they use. Producers and
exporters know that foreign markets will remain open to them.

The result is also a more prosperous, peaceful and accountable economic world. Decisions in the
WTO are typically taken by consensus among all member countries and they are ratified by
members’ parliaments. Trade friction is channeled into the WTO’s dispute settlement process
where the focus is on interpreting agreements and commitments, and how to ensure that
countries’ trade policies conform with them. That way, the risk of disputes spilling over into
political or military conflict is reduced. By lowering trade barriers, the WTO’s system also
breaks down other barriers between peoples and nations. At the heart of the system – known as
the multilateral trading system – are the WTO’s agreements, negotiated and signed by a large
majority of the world’s trading nations, and ratified in their parliaments. These agreements are
the legal ground-rules for international commerce. Essentially, they are contracts, guaranteeing
member countries important trade rights. They also bind governments to keep their trade policies
within agreed limits to everybody’s benefit. The agreements were negotiated and signed by
governments. But their purpose is to help producers of goods and services, exporters, and
importers conduct their business. The goal is to improve the welfare of the peoples of the
member countries.
 INTRODUCTION TO THE STUDY OF THE PROJECT

The Project describes all about the World Trade Organization (WTO), its Introduction in the
World Economy, the Objectives laid for the Organization, Functions that operates, EXIM Trade
Policies, and Scenarios occurred with India Before the formation of WTO & the Benefits gained
by India from the organization.

The topic discussed in this project has a long history with India as one of the powerful member
attached to it. Following the Uruguay Round Agreement, the General Agreement on Tariff and
Trade (GATT) was converted from a provisional agreement into a Formal Organization known
today as the World Trade Organization (WTO), with effect from January 1, 1995. There were
128 member countries in 1995, which has increased to 144, with India as one of the important
member. The Secretariat of the WTO is based in Geneva, Switzerland. According to the current
status WTO now accounts for about 97 per-cent of international trade.
 TRADE & INEQUALITIES:
Where trade has contributed to increased inequality, its impact has generally being minor to
others factors, most notably Technological Change.

TRADE & STRUCTURAL ADJUSTMENT:

If Trade reforms are introduced, economic changes need to be made. Import-competing firms
appear to adjust by reducing mark-offs, increasing efficiency & often by reducing firm size.

TRADE & POVERTY:

One of the biggest challenges facing the world community is to how to address poverty.

INTRODUCTION:
Simply put: “The World Trade Organization (WTO) deals with the rules of trade between
nations at a global or near-global level. But there is more to it than that.”

GATT:

In 1947, 23 countries came into an agreement in Geneva on multilateral Trade. This agreement
was termed as The General Agreement on Tariffs and Trade (GATT) which came into effect on
1st of Jan. 1948. These countries sought to expand multilateral trade among them. India was one
of the founder members of GATT. Many countries signed this agreement in 1994 which resulted
no. of members of GATT to 124.

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 was the Most Favoured Nation (MFN) clause.
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 liberalising trade to bring
economic prosperity. GATT mentions the fallowing important objectives.

1) Raising standard of living of the member countries.

2) Ensuring full employment through a steady growth of effective demand and real
income.

3) Developing optimum utilization of resources of the world.

4) Expansion in production exchange of goods and services on a global level.

PRINCIPLES:

1) Follow the Most Favored Nation (MFN) clause.

2) Carry on trade in a non discriminatory way.

3) Grant protection to domestic industries.

4) Condemn the use of quantitative restrictions or quotas.

5) Liberalize tariff and non-tariff measures through multilateral negotiations.

THE URUGUAY ROUND:

Uruguay Round (UR) is the name by which the 8th and the latest round of Multilateral Trade
Negotiations (MTNs) held under the auspices of the GATT popularly known in Punta Del Este
in Uruguay launched in September 1986. The main issues in this round discussed were of
Agricultural Subsidies, Multi Fiber Agreement (MFA), Trade in Services, Anti Dumping etc.

These discussions were resolved by the then Director General of GATT, Arthur Dunkel. Who
came up or Draft of the Uruguay Round consisted of 28 agreements which spelt out the results of
Multilateral Trade Negotiations (MTN).
Some of the main agreements of the Uruguay Round were as follows:-

1) Anti-Dumping Code: Dumping is to be condemned if it causes or threatens material

injuries to an established domestic industry. A committee on anti-dumping practices should look
into such matters related to dumping.

2) Trade Related Investment Measures (TRIMs): Refers to certain conditions or restrictions

imposed by a Government in respect of foreign investment in the country. TRIM is widely
employed by developing countries.

The agreement on TRIMs provides that no contracting party shall apply any TRIM which is
inconsistent with GATT articles. An illustrative list identifies the fallowing TRIMS as
inconsistent:-

WORLD TRADE ORGANISATION

i. Local content requirement.

ii. Trade balancing requirement

iii. Trade and foreign exchange balancing requirements.

iv. Domestic sales requirements.

3) Trade related aspects of Intellectual Property Rights (TRIPs) - One of the most
controversial outcomes of Uruguay Round is the agreement on Trade Related aspects of
Intellectual Property Rights (TRIPs) including Trade in counterfeit Goods. According to GATT
“Intellectual Property Rights” are the rights given to persons over the creations of their minds.
They usually give the creator an exclusive right over the use of individual’s creation for a certain
period of time.

4) Trade in services - Bank, Insurance, Transport and Communication, etc. are trade related
services. The draft agreement proposed that all restrictions on such services should be waived.

Conclusion: Following the Uruguay Round (UR) Agreement GATT was converted from a
provisional agreement into a formal international organisation known as World Trade
Organisation (WTO). The organisation began its function from 1st Jan. 1995. It serves as a single
institutional framework directed by a Ministerial Conference once every two years and its
regular business is overseen by a general council. The WTO secretariat is based in Geneva,
Switzerland. The membership of the WTO increased from 128 in July 1995 to 144 countries by
Jan. 1st 2002. The WTO members now accounts for over 97 percent of the international trade.

FROM GATT TO WTO:

After World War II over 50 countries came together to create the International Trade
Organization (ITO) as specialize agency of the UN to manage the business aspect of
international economic co-operation. The combined package of trade rules and tariff concessions
negotiated and agreed by 23 countries out of the 50 participating countries came to be known
as the General

Agreement on Tariffs and Trade: It came into force in 1948; well the WTO charter was still
being negotiated. WTO came into effect from 1 January, 1995.

The GATT was provisional for almost half a century but it succeeded in promoting and securing
liberalization of world trade. Its membership increased from 23 countries in 1947 to 123
countries in 1994. The membership of WTO increased from 128 in July, 1995 to 144 countries as
of 1 January, 2002. During its existence from 1948 to 1994 the average tariffs on manufacture
good on developed countries declined from about 40% to a mere 4%. GATT focused on tariff
reduction till 1973. It was only during Tokyo and Uruguay Rounds that non-tariff barriers were
discussed under GATT. With increasing use of non tariff barriers and the increasing significance
of service sector in the economy the need was felt to bring non-tariff barriers and intellectual
property under the preview of multilateral trade.

OBJECTIVES OF WTO:
The WTO has the fallowing objectives:

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

WORLD TRADE ORGANISATION:

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 organisations

STRUCTURE OF WTO:
1. To know about the structure, function and objective of WTO.

2. GATT and how it changed to WTO

3. Uruguay Round and its resolution

4. How WTO had its impact of India

5. India and WTO- India’s role in WTO, India’s commitment

6. How India was benefited before and after joining WTO

7. EXIM policy

WTO policies impact agriculture principally through the following agreements:

1. Agreement on Agriculture (AOA)

2. Agreement on Application of Sanitary and Phytosanitary Standards (SPS):

(Dealing with Health and disease related issues)

3. Agreement on Technical Barriers to Trade (TBT):

(Dealing with Regulations, standards, testing and certification procedures, packaging, marking
and labeling requirements, etc)

4. Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPs):

(Dealing with Patents and copyrights, plant breeders’ rights etc).

Activists cry foul that Indian agriculture, already reeling under severe drought and fall in cash
crop prices, will die once the import curbs are removed and free flow of food items are allowed
into India.

"There is going to be 'madness' in the agriculture sector. Farmers will be hit hard by the WTO
regime. What happens to our vegetable oils, rice, rubber, coconuts and fruits, if similar items can
be imported cheaply from other countries," asks K Sundaran, a social activist espousing farmers
causes in South India.
He says currently there is a massive distortion in the international trade in agriculture.
Industrialised countries have been giving huge domestic subsidies to their agricultural sector that
there is excessive production, import restrictions and dumping of agri-products in international
markets.

But despite the concerns of farmers, many believe the WTO rules will not adversely affect the
Indian agriculture as it is made out.

Developed nations have committed to the WTO that they would reduce subsidies and tariff. So
then better overseas markets will be available for Indian agricultural products.

THE SERVICE SECTOR:

As per the WTO rules, two obligations apply to all services. They are the Most Favoured Nation
(MFN) treatment and transparency by way of publication of all laws and regulations. Which in
other words means that areas like banking, insurance, investment banking, health, and many
other professional services that are opened up will be bound by the WTO commitments? India
will have to open up its services sector to other WTO member countries. The result: many
overseas service providers will enter into the services sectors in the country, thereby reducing the
chances of domestic enterprises.

But experts believe India need not be frightened of the WTO rules on services because the
country at present has a distinct competitive advantage in many areas that include health,
engineering construction, computer software and other professional services.

TRIPS (TRADE RELATED INTELLECTUAL PROPERTY RIGHTS):

TRIPS Article 27.3(b), which requires all WTO countries to provide some kind of intellectual
property rights (IPR) on plant varieties, was up for review in 1999. TRIPS are a clearly anti-
developing country treaty. Its provisions seriously threaten self-reliance in agriculture and the
livelihoods of farmers. TRIPS do not contain any elements of equity or benefit sharing. It does
not allow countries to claim a share of benefits 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. The Trade Related Aspects of Intellectual
Rights (TRIPS) agreement set minimum standards for protection of IPRs, a standard that is
closer to the level of protection provided in the developed world.

INDIA’S ROLE IN THE WTO:

India is a founding member of the GATT (1947), it actively participated in the Uruguay Round
Negotiations, and is a founding member of the WTO. India strongly favours the multilateral
approach to trade relations and grants MFN treatment to all its trading partners, including some
who are not members of WTO. Within the WTO, India is committed to ensuring that the sectors
in which the developing countries enjoy a comparative advantage are adequately opened up to
international trade. It also has to see that the different WTO Agreements are translated into
specific enforceable dispensations, in order that developing countries are facilitated in their
developmental efforts. India feels that the multilateral system would itself gain if it adequately
reflected these concerns of the developing countries, so as to create the necessary impetus to
enable developing country members to catch up with their developed country counterparts.

INTELLECTUAL PROPERTY:

India is availing itself of the transition periods due to her under Article 65 of the TRIPS
Agreement to meet her obligations under the seven areas covered by the Agreement.

India's achievements in this field have been in the passing of TRIPS plus legislation in the field
of Copyright Law. The 1994 amendments to the Act of 1957 provides protection to all original
literary, dramatic, musical and artistic works, cinematographic films and sound recordings. The
most recent changes bring sectors such as satellite broadcasting, computer software and digital
technology under Indian copyright protection.
TRADES RELATED INVESTMENT MEASURES:

Substantial modifications have already been made to the foreign investment regime, increasing
the number of sector where foreign investment can take place and also increasing the foreign
equity limit on these investments. India has already notified the trade-related investment
measures maintained by it in terms of Articles 2 and 5 of the TRIMs Agreement and the
illustrative list annexed to the TRIMs Agreement.

ANTI-DUMPING:

Anti-dumping and countervailing duties are imposed under the Customs Tariff Act 1975 and the
Rules made there under. The Act and Rules are on the lines of the respective GATT Agreement
on anti-dumping and countervailing duties. The time limits and the procedures prescribed under
the Indian laws/GATT Agreement is strictly followed by the designated authority. With the
increasing number of cases, the Government of India proposes to set up a Directorate General of
Anti-dumping and Allied Duties for expeditious disposal of anti-dumping and countervailing
duty cases.

SERVICE SECTOR:

The services sector accounts for about 40% of India's GDP, 25% of employment and 30% of
export earnings. Recognizing the importance of the services sector in achieving higher economic
growth, the government is giving added emphasis to improving services such as
telecommunications, shipping, roads, ports and air transport. The foreign direct investment
regime has been liberalized to attract foreign investment in the services sector.India actively
participated in the Uruguay Round services negotiations and made commitments in 33 activities
as compared to an average of 23 for developing countries. India also participated in the spill-over
negotiations. In basic telecommunication services, India has undertaken commitments in the
areas of voice telephone service for local and long-distance (within the service area), cellular
mobile services and other services such as circuit switched data transmission sources, facsimile
services, private leased circuit services as per details given in the schedule of commitments.

While developed countries have surplus capital to invest, most of the developing countries have
surplus of skilled, semi-skilled and unskilled workers. We have a large pool of well-qualified
professionals capable of providing services abroad. As developed countries have a comparative
advantage in exporting capital intensive services, similarly developing countries have a
comparative advantage in exporting labor intensive services involving movement of persons.

INFORMATION TECHNOLOGY:

India participated in the negotiations on the Agreement from the early stages and after
examination of the implications of the proposed agreement and extensive discussions with
trading partners joined as a participant on 1 April 1997. India is committed to phasing out the
import tariffs on the products covered by the ITA as scheduled.

REGIONAL TRADE AGREEMENTS:

India attaches significance to her participation in regional agreements within the framework of
multilateral rules. India has been instrumental in setting up the South Asian Association for
Regional Cooperation (SAARC), whose major achievement in 1995 was the conclusion of the
negotiations on trade preferences within the framework of the SAARC Preferential Trading
Arrangement (SAPTA). SAPTA became operational on 7 December 1995 and includes
preferential tariff concessions on 226 items and product groups. A second round of SAPTA trade
negotiations was launched in January 1996 to broaden tariff concessions. India granted
concessions on 902 tariff lines, effective 1 March 1997.

BEFORE BECOMING THE MEMBER OF WTO:

It’s agreed that India was one of the founder member of WTO; it faced problems in Foreign
Trade grounds. The problems that India faced before the formation of WTO were the following:

(1) Absence of Anti – dumping

(2) No Subsidy Facilities

(3) Absence of TRIMs & TRIPs

(4) Lac of Market Scenario & Strategies

AFTER BECOMING THE MEMBER OF WTO:

(1) Anti-Dumping - Dumping is condemned if it causes or threatens material injury to an

established industry. A product is considered as dumped when its export price becomes less as
compared to the normal price in the exporting country plus a reasonable amount for
administrative, selling and any other costs and for profits.

Anti dumping measures can be employed only if dumped imports are shown to cause serious
damage to the domestic industry in the import industry. The measures are not allowed if the
margin of dumping is de minimize.

(2) Subsidies - The draft agreement defined certain specific subsidies which would be
subjects to various disciplines. Certain other types of subsidies would fall under” prohibited”
category.

(3) Technical barriers to trade - Technical regulation and standards along with testing and
certification procedures should not create unnecessary obstacles to trade.

(4) Right of market-The main issue is to reduce tariff and other trade restriction in case of
commodities like agricultural goods, textiles etc.

(5) TRIMs (Trade related investment measures) - Widely employed by developing countries.
Refers to certain conditions imposed by government in respect of foreign investment. The
agreement of TRIM provides the following inconsistent TRIMs.
a) Local content requirement

b) Trade balancing requirement

c) Trade and foreign exchange balancing requirement.

d) Domestic sales requirements.

(6) TRIPs (Trade Related Aspects of Intellectual Property Rights-It is defined as “information
with commercial value”. Intellectual Property Rights have been characterized as a composite of
“ideas, inventions and creative expression”.

IMPORT:

Indian Import Policy:

Import is the antonym of export. In the terms of economics, import is any commodity brought
into one country from another country in a legal way. The economic needs of the country,
effective use of foreign currency are the basic factors which influence India's import policy.
There are mainly 3 basic objectives of the import policy of India:

• To make the goods easily available.

• To simplify importing license.

• To promote efficient import substitution.

EXIM POLICY:

Major Indian Imports:

There are facilities available for the service industries to enjoy the facility of zero import duty
under EPCG scheme. Some of the major imports of India are edible oil, newsprint, petroleum
and crude products, crude rubber, fabrics, electronic goods etc.
Problems due to Large Import of Products:

The recent trend of imports is of some concern. The regular imports of oil reflect upon the fact
that India is not able to produce the quantity of oil required in India. Moreover the increase in the
imports of products also highlights the fact that the Indian domestic industries need to be
developed. It also creates pressure on the economy as the money ultimately has to be bearded by
the people.

EXPORT:
Export means the transferring of any good from one country to another country in a legal way for
the purpose of trade. Export goods are provided to the foreign consumers by the domestic
producers.

Indian Exports: A History:

The history of Indian exports id very old. During prehistoric times India exported spices to the
other parts of the world. India was also famous for its textiles which were a chief item for export
in the 16th century. Textiles and cotton were exported to the Arab countries from Gujarat.
During the Mughal era India exported various precious stones such as ivory, pearls, tortoise
stones etc. But during the British era, Indian exports declined as the East India Company foreign
trade of India.

Indian Exports: Current Scenario:

Every year India earns billion of dollars by exporting various goods and items. The Indian
government has outlined certain export policies. The export policies tell about the products to be
exported and the countries to whom exports are to be done. The government of India works with
the Federation of Indian Export Organization, the leading export promotion organization of
India. Exports are the major focus of India's trade policy and most of the items can be freely
exported from India. A few items are subject to export control to prevent their shortage. The
profits from exports are exempted from income tax. Indian exports contribute nearly 12.4% in
the GDP.

Leading Export Items of India:

In the past ten years, exports have grown at a rate of nearly 22%. Some commodities have
enjoyed faster export growth than others. Some of India's main export items are cotton, textiles,
jute goods, tea, coffee, cocoa products, rice, wheat, pickles, mango pulp, juices, jams, preserved
vegetables etc. India exports its goods to some of leading countries of the world such as UK,
Belgium, USA, China, Russia etc.

Restriction on the Exports of Items:

However there are some restrictions on the export of goods. Under sub section (d) of section 111
and sub section (d) of section 113, any good exported or attempted to be exported, contrary to
any prohibition imposed by or under the customs act or any other law is liable for confiscation.

Problems of the Indian Export Sector:

But there are few problems which need to be solved before India makes a mark for itself in the
export sector. The Indian goods have to be of superior quality. The packaging and branding such
be such that countries are interested to export from India. At the same time India must look for
potential market to sell their goods. The government should frame policies which gives boost to
the exports. The developed countries want that the underdeveloped countries observe some
restrictions relating to labor employment and ecological balance. Their argument is that the
underdeveloped countries use child labors or their social security measures are very poor.
Further, these countries do not take measures to control pollution or to maintain ecological
balance. As a result, cost of production in such countries is low. So, the developed countries
should be allowed to impose tariffs or imports from underdeveloped countries until the
developing countries improve the condition of labor and do not employ child labor. Thus, the
developed countries tried to impose many restrictions on the production process of the
underdeveloped countries. Thus, if the developing countries try to protect their interest as a
group, they may stand to gain from the WTO system.

If we consider both sides of a coin then we can conclude that if the developed countries liberalize
their import of agricultural goods, India’s export of agricultural goods will increase. India has a
comparative cost advantage in the production of agricultural commodities. Hence India’s of such
commodity is expected to increase.

On the other side according to the agreement of Trade Related Investment Measure’s (TRIMs),
there should not be any discrimination between foreign and domestic investments. As a result, it
will very difficult to control the restrictive activities of the following investors. This agreement
will also favor the investors of the developed countries.

BIBLIOGRAPHY
(1) Business Economics & Business Environment – Jaydeb Sarkhel.

(2) International Business - Francis Cherunilam

(3) International Marketing – Rakesh Mohan Joshi

(4) www.wikipedia.org

(5) www.exprasspharma.com

(6) www.wto.org