ITL Notes

Shivani Rathore

History of WTO or International Trade:

Introduction:

In recent world, where “Trade” is known as a root for nurturing economic system across the
world. In literal words, Trade simply means “the transfer of goods or services from one to
another in exchange for money”1. Where there are 2 traders involving in trade t3hat is
Bilateral Trade, while Trade where more than two traders are playing their role is called
Multilateral Trade. In early time period people used to trade in merchandises and
amenities for exchange of other goods and services instead of money. Besides, Trade is also
an initiative part in the history of global world. If we talk about the international
interconnectedness in our daily life today, we need to understand and think about the time
through which our world where (with lot of facilities of technologies, commodities,
healthcare institutes, knowledge, money and many more) has emerged. Besides, it also has
its impact on Huphilosman societies.

Trade in goods and services, has its footprints from as early as three thousands BCE where
an active sea-coastal trade connected the Indus valley civilizations to west Asia. From
ancient times, travelers, pilgrims and traders travelled immense distances for knowledge,
money and spiritual fulfillment they used to carry goods, values, money, ideas, innovations,
skills and even diseases and viruses. For the very first time disease carrying germs got
transferred were traced far back in 7th century.

GATT (1947) to 4th negotiating round:

1. Round 1: Geneva-GATT 1947:

For the time being, an agreement came into force to minimize tariffs and barriers in
trade and also to make efforts to focus on import quotas and 23 countries negotiated on

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 it. Such agreement is known as GATT which is basically was a free trade agreement
which covers provisions and a number of explanatory notes to eliminate tariffs and boost
international trade. The Agreement was negotiated in 1947 and first come into play on
January 1, 1948. This vary first agreement came into force at the same time when ITO
charter (International Trade Organization) was in process to come into play but due to
refusal of U.S and some other country’s legislation could not come into force. This time
only, 15 countries were agreed to negotiate a simple trade agreement known as GATT,
focusing to eliminate trade restrictions and got signed on October 30 in 1947 by the
virtue of 23 principle member countries.

Round 2: Kennedy Round- Anti-dumping: By the mid nineteenth century, an Anti-

Dumping Agreement was added by Kennedy Round. It took place in Geneva and set up with
the scope of GATT agreements. By 62 countries participation got signed in June 1967
wherein Concessions contained around $40 billion of trade value.

Purpose: it explains definition of Dumping is, in general, a situation of international price

discrimination, where the price of a product when sold in the importing country is less than
the price of that product in the market of the exporting country. Thus, in the simplest of
cases, one identifies dumping simply by comparing prices in two markets. However, the
situation is rarely, if ever, that simple, and in most cases it is necessary to undertake a
series of complex analytical steps in order to determine the appropriate price in the market
of the exporting country (known as the “normal value”) and the appropriate price in the
market of the importing country (known as the “export price”) so as to be able to undertake
an appropriate comparison. The Agreement on Implementation of Article VI of GATT 1994,
commonly known as the Anti-Dumping Agreement, provides further elaboration on the basic
principles set forth in Article VI itself, to govern the investigation, determination, and
application, of anti-dumping duties.

Basic principle: Under Article VI of GATT 1994, and the Anti-Dumping Agreement, WTO
Members can impose anti-dumping measures, if, after investigation in accordance with the
Agreement, a determination is made (a) that dumping is occurring, (b) that the domestic
industry producing the like product in the importing country is suffering material injury, and
(c) that there is a causal link between the two.

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Its committee meets twice a year and gives opportunities to members of WTO to discuss
matters related Anti-dumping agreement(article 16) alike questions concerning the
operation of national anti-dumping laws and regulations, and also of the consistency of
national practice with the Anti-Dumping Agreement. It also includes reviewing notification of
Anti-dumping actions taken by members and to discuss alike cases.

Dispute settlement: all the disputes goes before Dispute settlement body of WTO, works
in accordance with Dispute settlement Understandings ( Article 17)

Notifications: all members are required to bring their Anti-dumping legislation to the
committee on anti-dumping practices. Twice a year, members are required to notify about
all anti-dumping investigations, measures, and actions taken. Besides, also requires to
notify final anti-dumping actions taken including notifications required by guidelines.

Round 3: Tokyo Round- Non Tariff Measures: In 1973 at GATT headquarter located in
Geneva at the ministerial level in Tokyo this round commenced with the approval of 102
party countries negotiated on the issue of both tariff and non-tariff and In November,1979 it
decided to reduce tariffs and adhered to not let current tariffs increased. It happened to be
consisted of more than $300 billion of trade. Besides, it also included government
procurement, trade in dairy products and civil aircraft.

Round 4: Uruguay Round: WTO, Services, IPR, Dispute Settlement, Agriculture,

Textiles ect: Uruguay Round which took place in 1986 known to be GATT's most
pioneering and progressive round where focus of negotiation was on trade in areas of
agriculture and services. Those two appeared through this round for the first time. Though,
it was supposed to be accomplished by the December, 1990 but delayed by three years.
This round was negotiated with presence of 115 countries.

This Uruguay Round was the eighth round of multilateral trade negotiations. The Uruguay
Round also altered GATT status. It was the only multilateral trade and covered trade in
goods only. Round led to formation of the World Trade Organization. It covers those area’s
trade rules which was previously exempted from GATT (area of agriculture and textiles) due
to which liberalizing in trade was very difficult and also included some important areas (like
intellectual property, services and investment policy trade distortions) which were not
existed in previous agreement(GATT).

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To eliminate agricultural subsidies, protect intellectual property, lift foreign investment limits
and begin the operation of starting trade in services such as banking and insurance were
the Uruguay Round’s key objectives.

On the two main trade areas which are Goods and Services, the WTO agreement is centered
primarily. The bulk of the Uruguay Round dealt with the first two parts-general concepts for
different sectors. Following the Uruguay Round, discussions centered primarily on market
access commitments which contained basic telecommunications and maritime transport
(under GATS), financial services, and information technology equipment (under GATT).

The WTO's third trade agreement relating to intellectual property on which the basic concept
has been clarified (e.g. on copyright, patents, trademarks, geographical indications) is
handled under this agreement. The dispute resolution arrangements and evaluations of
trade policy are also generally at the level of key principles. Vital areas too like civil aircraft,
government procurement were not signed by members.

Doha Round:

The Doha Round is the latest round of trade negotiations among the WTO membership. Its
aim is to achieve major reform of the international trading system through the introduction
of lower trade barriers and revised trade rules. The work programme covers about 20 areas
of trade. The Round is also known semi-officially as the Doha Development Agenda as a
fundamental objective is to improve the trading prospects of developing countries.

The Round was officially launched at the WTO’s Fourth Ministerial Conference in Doha,
Qatar, in November 2001. The Doha Ministerial Declaration provided the mandate for
the negotiations, including on agriculture, services and an intellectual property topic, which
began earlier.

In Doha, ministers also approved a decision on how to address the problems developing
countries face in implementing the current WTO agreements. It’s the ninth round since the
Second World War and the first since the WTO inherited the multilateral trading system in
1995.

Functions and objectives of WTO:

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Objectives:

To furnish full competitive opportunity in trade among the member countries is the main
objective of the WTO. To give surety of that trade should run freely, smoothly, fairly and
according to rules and regulations as much as possible are the basic objectives of WTO.
Some of these objectives are:

1. To minimize the barriers among member countries and their citizens, in order to provide
effective trade system.

2. To aid and encourage producers of goods, service providers, importer and exporters in
regard to develop their businesses.

3. To boost and maintain the standard of livelihood of people of countries party to WTO.

4. To make effective provisions and their affectivity in order to maximize trade in services.

5. To maintain sustainable development of world economy.

6. To maximum the employment and rapid work toward fulfilling the demand of seeking
employment.

7. To improve the rate of production and trade in goods.

8. To make provisions and measures to preserve environment.

9. To guarantee most favourable usage of world resources.

10. To promote and obtain sustainable development’s notion.

11. To guarantee equal treatment or promotion of equality to all countries party to WTO.

The Key Functions:

Main functions of WTO include:

1. To operate all trade related agreements.

2. To form rules and procedures to deal with settlements of issues related to trade.

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3. Aiding in trade policy issues to developing countries by ensuring their training
programmes and technical help.

4. To function as a trade negotiation forum.

5. To work with other international organisations for eg., IMF and IBRD to get to know basic
requirements for consistency of world economy policy recognition in recent and future time
also.

6. To assess national trade policies to maintain a sustainable development in economies and

trade free from barriers or restrictions in accessibility to other nations.

7. Functions as to enforce rules and regulations in relation to trade policy review body
machine to continue with making laws and provisions with emerging time as per the
requirements.

8. To facilitate a platform for discussing plans, criterias and fixing issues of trade and tariffs
by countries party to WTO.

9. To facilitate all member countries with benefits of administration, operation and

implementation of multilateral and bilateral agreements of the world trade.

Principles of WTO: WTO provides some basic norms or principle on which commercial
business is depended. One of the fundamental principles of equitableness needs every
member countries to adopt and to be granted the MFN treatment. Most National Treatment
requires that all member countries should nurse other country’s producers and traders same
as their own country’s firm and businesses.

Principles of WTO: The WTO agreements deal with: agriculture, textiles and clothing,
banking, telecommunications, government purchases, industrial standards and product
safety, food sanitation regulations, intellectuall property, and much more. These principles
are the foundation of the multilateral trading system.

Trade without discrimination –1. Most-favored-nation (MFN): treating other people

equally Under the WTO agreements, countries cannot normally discriminate between their
trading partners. Grant someone a special favour (such as a lower customs duty rate for
one of their products) and you have to do the same for all other WTO members.

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Some exceptions are allowed. For example,

(i) Countries can set up a free trade agreement that applies only to goods traded within the
group -- discriminating against goods from outside.

(ii) They can give developing countries special access to their markets.

(iii) A country can raise barriers against products that are considered to be traded unfairly
from specific countries.

(iv) And in services, countries are allowed, in limited circumstances, to discriminate.

But the agreements only permit these exceptions under strict conditions. In general, MFN
means that every time a country lowers a trade barrier or opens up a market, it has to do
so for the same goods or services from all its trading partners — whether rich or poor, weak
or strong. 1

2. National treatment: Treating foreigners and locals equally- Imported and locally-
produced goods should be treated equally — at least after the foreign goods have entered
the market. The same should apply to foreign and domestic services, and to foreign and
local trademarks, copyrights and patents.

This principle of “national treatment” (giving others the same treatment as one’s own
nationals) is also found in all the three main WTO agreements (Article 3 of GATT, Article 17
of GATS and Article 3of TRIPS), although once again the principle is handled slightly
differently in each of these.

National treatment only applies once a product, service or item of intellectual property has
entered the market. Therefore, charging customs duty on an import is not a violation of
national treatment even if locally-produced products are not charged an equivalent tax.

Freer trade: gradually, through negotiation –Lowering trade barriers is one of the most
obvious means of encouraging trade. The barriers concerned include customs duties
(ortariffs) and measures such as import bans or quotas that restrictquantities selectively.

Predictability: through binding and transparency: Sometimes, promising not to raise a

trade barrier can be as important as lowering one, because the promise gives businesses a
clearer viewof their future opportunities. With stability and predictability, investment is
encouraged, jobs are created and consumers can fully enjoy the benefits of competition —

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choice and lower prices. The multilateral trading system is an attempt by governments to
make the business environment stable and predictable. Many WTO agreements require
governments to disclose their policies and practices publicly within the country or by
notifying the WTO. The regular surveillance of national trade policies through the Trade
Policy Review Mechanism provides a further means of encouraging transparency both
domestically and at the multilateral level.

Promoting fair competition: The WTO is sometimes described as a “free trade”

institution, but that is not entirely accurate. The system does allow tariffs and, in limited
circumstances, other forms of protection. More accurately, it is a system of rules dedicated
to open, fair and undistorted competition. The rules on non-discrimination — MFN and
national treatment — are designed to secure fair conditions of trade. So too are those on
dumping (exporting at below cost to gain market share) and subsidies. The issues are
complex, and the rules try to establish what is fair or unfair, and how governments can
respond, in particular by charging additional import duties calculated to compensate for
damage caused by unfair trade.

Encouraging development and economic reform: Countries should accelerate

implementing market access commitments on goods exported by the least-developed
countries, and it seeks increased technical assistance for them. The current Doha
Development Agenda includes developing countries’ concerns about the difficulties they face
in implementing the Uruguay Round agreements:

• Absolute Advantage and

• Comparative Advantage

Organization Structure:

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Ministeral Conference:

So, its members belong to the World Trade Organization. Through various councils and
commissions, the countries make their decisions with the assistance of all members of the
World Trade Organization. Top of all is the ministerial conference which has to meet at least
once in every 2 years. The Ministerial Conference will adopt all resolutions on all affairs
under any of the agreements on multilateral trade.

The three bodies are responsible for the regular work between the Ministerial Conferences:

• General Council;

• Trade Policy Review Body; and

• Dispute Settlement Body. These three bodies are composed with all WTO members.

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In fact, all of these three bodies are the same, an agreement states that they are all same
Still work under various standards. All three bodies communicate to the Conference of
Ministers.

General Council:

The General Council that is the decision-making body which is considered as the highest
standard in the WTO. It is situated in Geneva. The body gathers annually to carry out WTO
functions. It has its members from all the member nations, it also has the supremacy to
work in the name of ministerial conference which meets only once in the period of two
years. The current chair person is Sunanta Kangvalkulij (Thailand).

The Dispute Settlement Body:

 The Dispute Settlement Body: As the Dispute Resolution Body, the General Council
convenes to deal with disputes between members of the World Trade Organisation. Such
disputes can occur with regard to any agreement found in the Uruguay Round Final Act
underneath the Protocol on Rules and Procedures Concerning Dispute Resolution. on certain
dispute settlement panels, the DSB has right to force, alludes matters to make concessions,
complainant body, compromises bulletins, embrace a panel and maintains transparency
over the implementation of the suggestions and decisions encapsulated in such findings,
and authorizes the suspension of concessions in the event of non-compliance with both
recommendations and decisions.

The“Trade Policy Review Body:”

The General Council of the World Trade Organization serves as the Trade Policy Review
Body to discuss Members' trade policy assessments under the TPRM and to reflect about the
daily reports of the Director-General on the implementation of trade policy. TPRB is
therefore receptive all World Trade Organization Members. Manuel A.J. TEEHANKEE
Ambassador of Philippines is the current chair.

The third level- Council for each broad area of Trade:

• Council for Services

• Council for Goods

•Council for TRIPS

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Additional six bodies refer to the General Council. Therefore their scopes are narrower
and they are called commissions. The following are the issues addressed by such
committees:

 Trade and Environment

 Trade and Development
 Regional Trading Agreements
 Committees on Least Development
 Other Administrative topics

=> GATS (The General Agreement on Trade in Services):

As provided under Article 1(3) (b) “services” includes any service in any sector except
services supplied in the exercise of governmental authority;

(c) “a service supplied in the exercise of governmental authority” means any service
which is supplied neither on a commercial basis, nor in competition with one or more service
suppliers.

It has three elements: The main text containing general obligations and disciplines;
Annexes dealing with rules for specific sectors; and individual countries’ specific
commitments to provide access to their markets, including indications of where countries
are temporarily not applying the “most-favoured-nation” principle of non-discrimination.

General obligations and disciplines Total coverage The agreement covers all internationally-
traded services — for example, banking, telecommunications, tourism, professional
services, etc. It also defines four ways or modes of trading services:

-Services supplied from one country to another (e.g. international telephone calls), officially
known as “cross-border supply”.

-Consumers or firms making use of a service in another country (e.g. tourism), officially
“consumption abroad”.

-A foreign company setting up subsidiaries or branches to provide services in another

country (e.g. foreign banks setting up operations ina country) officially “commercial
presence”.

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 -Individuals traveling from their own country to supply services in another (e.g. fashion
models or consultants), officially “presence of natural persons”

Most-favoured-nation (MFN) treatment In GATS:

The agreement contains a number of general obligations for all services, the most important
of which is the Most Favoured Nation (MFN) rule. Apart from these obligations each member
state defines its own obligations through the commitments undertaken in its schedule.
Market access and national treatment obligations for instance apply only to the sectors in
which a country chooses to make commitments.

Most-favoured-nation (MFN) treatment: MFN means treating one’s trading partners

equally. Under GATS, if a country allows foreign competition in a given sector, equal
opportunities in that sector should be given to service providers from all other WTO
members. This applies even if the country has made no specific commitment to provide
foreign companies access to its markets under the WTO and it applies moreover to mutual
exclusion treatment. E.g. if one country chooses to exclude another country from providing
a certain service, all WTO members should be excluded.

 MFN applies to all services, but some special temporary exemptions have been allowed.

When GATS came into force, a number of countries already had preferential agreements in
services that they had signed with trading partners, either bilaterally or in small groups.
WTO members felt it was necessary to maintain these preferences temporarily. They gave
themselves the right to continue giving more favourable treatment to particular countries in
particular services activities by listing “MFN exemptions” alongside their first sets of
commitments. In order to protect the general MFN principle, the exemptions could only be
made once; nothing can be added to the lists. They are currently being reviewed as
mandated, and will normally last no more than ten years.

GATS ARTICLES:

Article II- about MFN Treatment:

Member is required to accord immediately and unconditionally to services and service

suppliers of any other member treatment no less favourable then that it is accords to like
services and service suppliers of any other country. It generally applies to all modes of
supplies: except where it has been inscribed in a member’s list of MFN exceptions.

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Exceptions not exceeding a period of 10 years in a principles. Currently such exceptions are
maintained by 90 members. The sectors predominantly concerned are road transport and
audiovisual services, followed by maritime transport and banking services.

General Transparency and Good Governance obligations: (Art III):

Each Member should publish promptly all measures pertaining to or affecting the
operation of the GATS.

Members also required to notify the Council for Trade in Services promptly or at least
annually-

 Regarding introduction of any new, or any changes to existing, laws, regulations

or administrative guidelines

No requirement to disclose confidential information (Article III bis)

Members have an obligation to establish an enquiry point to respond to requests from

other Members.

Article VIII: Monopolies and Exclusive Service Suppliers:

1.   Each Member shall ensure that any monopoly supplier of a service in its territory does
not, in the supply of the monopoly service in the relevant market, act in a manner
inconsistent with that Member’s obligations under Article II and specific commitments.

2.   Where a Member’s monopoly supplier competes, either directly or through an affiliated

company, in the supply of a service outside the scope of its monopoly rights and which is
subject to that Member’s specific commitments, the Member shall ensure that such a
supplier does not abuse its monopoly position to act in its territory in a manner inconsistent
with such commitments.

3.   The Council for Trade in Services may, at the request of a Member which has a reason
to believe that a monopoly supplier of a service of any other Member is acting in a manner
inconsistent with paragraph 1 or 2, request the Member establishing, maintaining or
authorizing such supplier to provide specific information concerning the relevant operations.

4.   If, after the date of entry into force of the WTO Agreement, a Member grants monopoly
rights regarding the supply of a service covered by its specific commitments, that Member

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shall notify the Council for Trade in Services no later than three months before the intended
implementation of the grant of monopoly rights and the provisions of paragraphs 2, 3 and 4
of Article XXI shall apply.

5.   The provisions of this Article shall also apply to cases of exclusive service suppliers,
where a Member, formally or in effect, (a) authorizes or establishes a small number of
service suppliers and (b) substantially prevents competition among those suppliers in its
territory.

Article IX: Business Practices:

1.   Members recognize that certain business practices of service suppliers, other than those
falling under Article VIII, may restrain competition and thereby restrict trade in services.

2.   Each Member shall, at the request of any other Member, enter into consultations with a
view to eliminating practices referred to in paragraph 1. The Member addressed shall accord
full and sympathetic consideration to such a request and shall cooperate through the supply
of publicly available non-confidential information of relevance to the matter in question. The
Member addressed shall also provide other information available to the requesting Member,
subject to its domestic law and to the conclusion of satisfactory agreement concerning the
safeguarding of its confidentiality by the requesting Member.

Article XIII

Government Procurement:

1.   Articles II, XVI and XVII shall not apply to laws, regulations or requirements governing
the procurement by governmental agencies of services purchased for governmental
purposes and not with a view to commercial resale or with a view to use in the supply of
services for commercial sale.

2.   There shall be multilateral negotiations on government procurement in services under

this Agreement within two years from the date of entry into force of the WTO Agreement.

Article XIV: General Exceptions:

Subject to the requirement that such measures are not applied in a manner which would
constitute a means of arbitrary or unjustifiable discrimination between countries where like
conditions prevail, or a disguised restriction on trade in services, nothing in this Agreement
shall be construed to prevent the adoption or enforcement by any Member of measures:

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(a) necessary to protect public morals or to maintain public order,

(b) necessary to protect human, animal or plant life or health;

(c) necessary to secure compliance with laws or regulations which are not inconsistent with
the provisions of this agreement including those relating to:

(i)  the prevention of deceptive and fraudulent practices or to deal with the effects of a
default on services contracts;

(ii)   the protection of the privacy of individuals in relation to the processing and

dissemination of personal data and the protection of confidentiality of individual records and
accounts;
(iii)  safety;
(d)  inconsistent with Article XVII, provided that the difference in treatment is aimed at
ensuring the equitable or effective imposition or collection of direct taxes in respect of
services or service suppliers of other members;

(e)  inconsistent with Article II, provided that the difference in treatment is the result of an
agreement on the avoidance of double taxation or provisions on the avoidance of double
taxation in any other international agreement or arrangement by which the Member is
bound.

Article XIV bis: Security Exceptions:

1.   Nothing in this Agreement shall be construed:

(a)  to require any Member to furnish any information, the disclosure of which it considers
contrary to its essential security interests or

(b) to prevent any member from taking any action which it considers necessary for the
protection of its essential security interests:

(i) relating to the supply of services as carried out directly or indirectly for the purpose of
provisioning a military establishment;

(ii)   relating to fissionable and fusionable materials or the materials from which they are
derived;
(iii)  taken in time of war or other emergency in international relations; or

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(c)  to prevent any Member from taking any action in pursuance of its obligations under the
United Nations Charter for the maintenance of international peace and security.

2.   The Council for Trade in Services shall be informed to the fullest extent possible of
measures taken under paragraphs 1(b) and (c) and of their termination.

Article XVII: National Treatment:

1.   In the sectors inscribed in its Schedule, and subject to any conditions and qualifications
set out therein, each Member shall accord to services and service suppliers of any other
Member, in respect of all measures affecting the supply of services, treatment no less
favourable than that it accords to its own like services and service suppliers.

2.   A Member may meet the requirement of paragraph 1 by according to services and
service suppliers of any other Member, either formally identical treatment or formally
different treatment to that it accords to its own like services and service suppliers.

3.   Formally identical or formally different treatment shall be considered to be less

favourable if it modifies the conditions of competition in favour of services or service
suppliers of the Member compared to like services or service suppliers of any
other member.

From Article 22 to 26 Comes under Part V that is Institutional Provisions:

Article XXII: Consultation:

1.   Each Member shall accord sympathetic consideration to, and shall afford adequate
opportunity for, consultation regarding such representations as may be made by any other
Member with respect to any matter affecting the operation of this Agreement.  The DSU
shall apply to such consultations.

2.   The Council for Trade in Services or the DSB may, at the request of a Member, consult
with any Member or Members in respect of any matter for which it has not been possible to
find a satisfactory solution through consultation under paragraph 1.

3.   A Member may not invoke Article XVII, either under this Article or Article XXIII, with
respect to a measure of another Member that falls within the scope of an international
agreement between them relating to the avoidance of double taxation.  In case of
disagreement between Members as to whether a measure falls within the scope of such an
agreement between them, it shall be open to either Member to bring this matter before the

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Council for Trade in Services. The Council shall refer the matter to arbitration.  The decision
of the arbitrator shall be final and binding on the Members.

Article XXIII: Dispute Settlement and Enforcement:

1.   If any Member should consider that any other Member fails to carry out its obligations
or specific commitments under this Agreement, it may with a view to reaching a mutually
satisfactory resolution of the matter have recourse to the DSU.

2.   If the DSB considers that the circumstances are serious enough to justify such action, it
may authorize a Member or Members to suspend the application to any other Member or
Members of obligations and specific commitments in accordance with Article 22 of the DSU.

3.   If any Member considers that any benefit it could reasonably have expected to accrue to
it under a specific commitment of another Member under Part III of this Agreement is being
nullified or impaired as a result of the application of any measure which does not conflict
with the provisions of this Agreement, it may have recourse to the DSU.  If the measure is
determined by the DSB to have nullified or impaired such a benefit, the Member affected
shall be entitled to a mutually satisfactory adjustment on the basis of paragraph 2 of
Article XXI, which may include the modification or withdrawal of the measure.  In the event
an agreement cannot be reached between the Members concerned, Article 22 of the DSU
shall apply.

Article XXIV: Council for Trade in Services:

1.   The Council for Trade in Services shall carry out such functions as may be assigned to it
to facilitate the operation of this Agreement and further its objectives.  The Council may
establish such subsidiary bodies as it considers appropriate for the effective discharge of its
functions.

2.   The Council and, unless the Council decides otherwise, its subsidiary bodies shall be
open to participation by representatives of all Members.

3.   The Chairman of the Council shall be elected by the Members.

The WTO’s Agreement on Trade-Related Aspects of Intellectual Property Rights

(TRIPS):

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

The agreement basically introduced the global minimum standards for protecting and
enforcing nearly all forms of intellectual property rights (IPR) but unfortunately failed to
specify the global minimum standards for patent.

Features of the TRIPS Agreement

There are three main features of TRIPS agreement which are discussed below:

• Standards: The main elements of protection is defined, namely the subject-matter to be

protected, the rights to be conferred and permissible exceptions to those rights, and the
minimum duration of protection.
• Enforcement: The second main set of provisions deals with domestic procedures and
remedies for the enforcement of intellectual property rights. It contains provisions on civil
and administrative procedures and remedies, provisional measures, special requirements
related to border measures and criminal procedures, which specify, in a certain amount of
detail, the procedures and remedies.
• Dispute Settlement: The Agreement makes disputes between WTO Members about the
respect of the TRIPS obligations subject to the WTO's dispute settlement procedures.

Issues covered by the TRIPS

• 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.

Copyright under TRIPS: The TRIPS agreement ensures that computer programs will be
protected as literary works under the Berne Convention and outline show databases should
be protected.

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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-owner’s potential
earnings from their films.

The agreement says performers must also have the right to prevent unauthorized recording,
reproduction and broadcast of live performances (bootlegging) for no less than 50 years.

Producers of sound recordings must have the right to prevent the unauthorized reproduction
of recordings for a period of 50 years.

Other Related Types Under TRIPS:

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.

For wines and spirits, the agreement provides higher levels of protection, i.e. even where
there is no danger of the public being misled.

Some exceptions are allowed, for example if the name is already protected as a trademark
or if it has become a generic term. For example, “cheddar” now refers to a particular type of
cheese not necessarily made in Cheddar, in the UK. But any country wanting to make an

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exception for these reasons must be willing to negotiate with the country which wants to
protect the geographical indication in question.

The agreement provides for further negotiations in the WTO to establish a multilateral
system of notification and registration of geographical indications for wines. These are now
part of the Doha Development Agenda and they include spirits. Also debated in the WTO is
whether to negotiate extending this higher level of protection beyond wines and spirits.

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).

Plant varieties, however, must be protectable by patents or by a special system (such as the
breeder’s rights provided in the conventions of UPOV — the International Union for the
Protection of New Varieties of Plants ).

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.

If a patent is issued for a production process, then the rights must extend to the product
directly obtained from the process. Under certain conditions alleged infringers may be
ordered by a court to prove that they have not used the patented process.

An issue that has arisen recently is how to ensure patent protection for pharmaceutical
products does not prevent people in poor countries from having access to medicines —

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while at the same time maintaining the patent system’s role in providing incentives for
research and development into new medicines. Flexibilities such as compulsory licensing are
written into the TRIPS Agreement, but some governments were unsure of how these would
be interpreted, and how far their right to use them would be respected.

A large part of this was settled when WTO ministers issued a special declaration at the Doha
Ministerial Conference in November 2001. They agreed that the TRIPS Agreement does not
and should not prevent members from taking measures to protect public health . They
underscored countries’ ability to use the flexibilities that are built into the TRIPS Agreement.
And they agreed to extend exemptions on pharmaceutical patent protection for least-
developed countries until2016. On one remaining question, they assigned further work to
the TRIPS Council — to sort out how to provide extra flexibility, so that countries unable to
produce pharmaceuticals domestically can import patented drugs made under compulsory
licensing. A waiver providing this flexibility was agreed on 30 August 2003.

Integrated circuits layout designs: The basis for protecting integrated circuit designs
(“topographies”) in the TRIPS agreement is the Washington Treaty on Intellectual Property
in Respect of Integrated Circuits, which comes under the World Intellectual Property
Organization. This was adopted in 1989 but has not yet entered into force. The TRIPS
agreement adds a number of provisions: for example, protection must be available for at
least 10years.

TRIMS Agreement:

WTO members have agreed not to apply certain investment measures related to trade in
goods that restrict or distort trade. The TRIMs Agreement prohibits certain measures that
violate the national treatment and quantitative restrictions requirements of the General
Agreement on Tariffs and Trade (GATT).

The agreement on the Trade Related Investment measures (TRIMS) calls for introducing
national treatment of foreign investment and removal of quantities restrictions.

It identifies five investment measures which are inconsistent with the General Agreement
on Trade and Tariff (GATT) on according national treatment and on general elimination of
quantitative restrictions. These are measure which are imposed on the foreign investors the
obligation to use local inputs, to produce for export as a condition to obtain imported goods
as inputs, to balance foreign exchange outgo on importing inputs with foreign exchange

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earnings through export and not to export more than a specified proportion of the local
production.

It is one of the four principal legal agreements of the World Trade Organization (WTO),
trade treaty. TRIMs are rules that restrict preference of domestic firms and thereby enable
international firms to operate more easily within foreign markets.

TRIMs may include requirements to:

I. Achieve a certain level of local content;

II. Produce locally;

III. Export a given level/percentage of goods;

IV. Balance the amount/percentage of imports with the amount/percentage of exports;

V. Transfer of technology or proprietary business information to local persons;

These requirements may be mandatory conditions for investment, or can be attached to

fiscal or other incentives. This Agreement does not cover services. All WTO member
countries are parties to this. This Agreement came into effect on January 1, 1995.

The Agreement requires all WTO Members to notify the TRIMs that are inconsistent with the
provisions of the Agreement, and to eliminate them after the expiry of the transition period
provided in the Agreement. Transition periods of two years in the case of developed
countries, five years in the case of developing countries and seven years in the case of
LDCs.

Conclusion:

The TRIMs Agreement has been found by the developing countries to be standing in the way
of sustained industrialization of developing countries, without exposing them to balance of
payment shocks, by reducing substantially the policy space available to these countries.
Developed countries, on the other hand, have been arguing for a further expansion in the
list of prohibited TRIM. India does not have any outstanding obligations under the TRIMs
agreement. But India should be careful while giving its node to the expansion of TRIMS

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because it may make Indian manufacture more vulnerable against the cheap products of
developed countries.

Article 2 National Treatment and Quantitative Restrictions: 1. Without prejudice to

other rights and obligations under GATT 1994, no Member shall apply any TRIM that is
inconsistent with the provisions of Article III or Article XI of GATT 1994.

2. An illustrative list of TRIMs that are inconsistent with the obligation of national treatment
provided for in paragraph 4 of Article III of GATT 1994 and the obligation of general
elimination of quantitative restrictions provided for in paragraph 1 of Article XI of GATT
1994 is contained in the Annex to this Agreement.

Article 6: Transparency:

1.   Members reaffirm, with respect to TRIMs, their commitment to obligations on

transparency and notification in Article X of GATT 1994, in the undertaking on “Notification”
contained in the Understanding Regarding Notification, Consultation, Dispute Settlement
and Surveillance adopted on 28 November 1979 and in the Ministerial Decision on
Notification Procedures adopted on 15 April 1994.

2.   Each Member shall notify the Secretariat of the publications in which TRIMs may be
found, including those applied by regional and local governments and authorities within
their territories.

3.   Each Member shall accord sympathetic consideration to requests for information, and
afford adequate opportunity for consultation, on any matter arising from this Agreement
raised by another Member.  In conformity with Article X of GATT 1994 no Member is
required to disclose information the disclosure of which would impede law enforcement or
otherwise be contrary to the public interest or would prejudice the legitimate commercial
interests of particular enterprises, public or private.

Article 7: Committee on Trade-Related Investment Measures:

1.   A Committee on Trade-Related Investment Measures (referred to in this Agreement as

the “Committee”) is hereby established, and shall be open to all Members.  The Committee
shall elect its own Chairman and Vice-Chairman, and shall meet not less than once a year
and otherwise at the request of any Member.

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2.   The Committee shall carry out responsibilities assigned to it by the Council for Trade in
Goods and shall afford Members the opportunity to consult on any matters relating to the
operation and implementation of this Agreement.

3.   The Committee shall monitor the operation and implementation of this Agreement and
shall report thereon annually to the Council for Trade in Goods.

Article 8: Consultation and Dispute Settlement:

The provisions of Articles XXII and XXIII of GATT 1994, as elaborated and applied by the
Dispute Settlement Understanding, shall apply to consultations and the settlement of
disputes under this Agreement.

LEGAL REGIME OF WTO:

Multilateral trade agreements are commerce treaties among three or more nations. The

agreements reduce tariffs and make it easier for businesses to import and export. Since
they are among many countries, they are difficult to negotiate. 

That same broad scope makes them more robust than other types
of trade agreements once all parties sign. 

 Multilateral trade agreements strengthen the global economy by making developing

countries competitive. 
 They standardize import and export procedures giving economic benefits to all
member nations. 
 Their complexity helps those that can take advantage of globalization, while those
who cannot often face hardships.

Multilateral negotiations are the most effective way of liberalizing trade in an interdependent
global economy, because concessions in one bilateral or regional deal may undermine
concessions made to another trading partner in an earlier deal. It is also important to
mention that under multilateral trade agreements, regional trade arrangements take place
and examples of this are the North American Free trade Agreement (NAFTA) and the
European Union (EU).

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Pros

 Treats all member nations equally.

 Makes international trading easier.

 Trade regulations are the same for everyone.

 Helps emerging markets.

 Multiple nations are covered by one treaty.

Cons

 Negotiations can be lengthy, risk breaking down.

 Easily misunderstood by the public

 Removing trade borders affects businesses.

 Benefits large corporations, but not small businesses.

Examples

Some regional trade agreements are multilateral. The largest is the North American Free

Trade Agreement which was ratified on January 1, 1994. NAFTA is between the United
States, Canada, and Mexico. It quadrupled trade between 1993 and 2018.

Bilateral agreements are easier to negotiate but these are only between two countries.

They don't have as big an impact on economic growth as does a multilateral agreement.

The bilateral trade liberalisation effects the displacement of higher cost goods and services
and also disadvantages of diverting goods and services from countries which this seems to
be more advantageous than multilateral trade liberalisation. As seen on the actual problem
in WTO negotiations related to multilateral agreements, many development nations are
discriminated and protective tariffs are quite necessary for their economic success. But
through liberalisation the tariffs should decrease in the near future. 

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The main difference between multilateral and bilateral free trade agreements (FTA)
is the number of participants. “Multilateral trade agreements” involve three or more
countries without discrimination between those involved, whereas “bilateral trade
agreements” consist between two countries. Both countries have certain privileges for
example; they have favourable import quotas which are not available for other trading
partners and only for the two nations which have the bilateral contract. Examples for
bilateral free trade agreements are the Australian - New Zealand FTA and the Canada –
United States FTA.

regional trade agreement: is one made between two or more contracting parties that
share some common denomination known conceptually as “region.”

PLURILATERAL AGREEMENTS:

1. Information Technology Agreement

Ministeral Conference in December 1996 took place in Singapore. There the
Information Technology Agreement (ITA) was concluded by 29 members. After that
these members increased to 82. The current chair is Mr. Kazunori FUKUDA
Ambassador of Japan.

2. Agreement In Respect To Trade In Civil Aircraft

“The Civil Aircraft Trade Agreement” is one of two plurilateral agreements which a
smaller number of WTO members have signed. It excludes“import duties on all
aircraft, expect for military aircraft, as well as on all other products covered by the
agreement — civil aircraft engines and their parts and components, all components
and sub assemblies of civil aircraft, and flight simulators and their parts and
components.”
This agreement came into existence on January 1980. The current chair is Ms.
Damaris Carnal (Switzerland).
3. Government Procurement Agreement:

This Agreement was designed to make sure that the government procurement (GPA)
generated open, equal and clear standards for business. The GPA is a plurilateral
negotiation within the WTO, indicating that not all WTO countries are parties to it.

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When did GATT came into effect-

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