GATT and WTO notes for IAS Exam

Result of Uruguay Round of GATT.
Dunkel Draft led to Marrakesh Treaty (1994), WTO established in 1995.
India: Founding member, China: Joined in 2001.
WTO membership: Can be a customs territory with autonomy in commercial relations, not necessarily a full sovereign country.
Not part of the UN.

Structure

Ministerial Conference: Highest decision-making body, meets every 2 years (commerce ministers).
General Council: Acts on behalf of the Ministerial Conference.
Dispute Resolution Body: Governing Council.
Trade Policy Review Board (TPRB): General Council functions as TPRB.
Council for Trade: Under General Council, has 3 councils:

Goods
TRIPS
Services

Subsidiary Bodies: Support the work of the councils.

Dispute Settlement

Consultation: Requires 60 days of consultation; if unsuccessful, a dispute panel is set up, and General Council (GC) works as the Dispute Settlement Body (DSB).
Appeal: Can be made to the Appellate Body (7 members). The Appellate Body’s report is adopted by the DSB.
Principle of Reverse Consensus: A proposal from the Appellate Body is assumed accepted unless opposed by any member country.
Post-Ruling: The erring nation must comply with the ruling; if not, the complainant country may retaliate. No punishment for the erring nation.

Principles in WTO

National Treatment (NT): Prohibits discrimination between imported and domestic goods. Does not apply to customs duties.
Most-Favored-Nation (MFN): Requires equal treatment for all trading partners, ensuring non-discrimination.
Obligation for WTO members to grant MFN.
Exceptions:
1. Generalized System of Preferences (GSP)
2. Preferential trade agreements (FTA)
3. Regional trade blocs for economic integration
4. Article 24: India-Pakistan allowed to deviate from certain provisions to establish trade ties.
Special and Differential (S&D) Provisions: Allow developed countries to treat developing countries more favorably.

Different WTO Agreements

GATT: General Agreement on Tariffs and Trade.
GATS: General Agreement on Trade in Services.
TRIPS: Trade-Related Aspects of Intellectual Property Rights.

Agreement on Agriculture (AoA)

Established: 1994, with a ceiling on farm subsidies (both direct and indirect).
3 Pillars:

Domestic Support: Subsidies given to farmers.
- Green Box: Non-distorting subsidies (e.g., publicly funded government programs, R&D).
- Amber Box: Trade-distorting subsidies (e.g., Aggregate Measurement of Support or AMS).
- Blue Box: Production-limiting programs, with no limits.
Export Subsidy:
- Limited by developed countries in value or volume.
- Nairobi MC 2015: Decided to phase them out.
Market Access:
- Tariffication: Converting non-tariff barriers into tariffs.
- Bound tariff rate: Tariffs are set at a fixed rate.

Special Products

Part of the Special and Differential (S&D) provisions.
Hong Kong MC 2005: Identified agricultural products important for food security, livelihood, and rural development.
Doha Development Round: Special Products attract lower tariff reduction commitments.

Special Safeguard Mechanism

Allows developing and LDC members to temporarily raise tariffs on agricultural products in case of a sudden surge in imports.
Nairobi 2015: Allowed this provision.

SPS and TBT Agreements

TBT: WTO administers the Agreement on Technical Barriers to Trade (AoTBT) to prevent unnecessary trade obstacles due to technical requirements.
SPS Agreement: Set rules for food safety, animal, and plant health standards (Uruguay Round, 1995). Countries can set standards based on science.

General Agreement on Trade in Services (GATS)

In Force: 1995, from the Uruguay Round, legally binding for all WTO members.
W/120 List: Sectors that can be negotiated under GATS.
Positive List Approach: Commitments listed on members’ commitment lists.
Extends Multilateral Trading System to services for the first time.
MFN Status: Members offer Most-Favored-Nation status, as in goods.
Negotiations: Conducted bilaterally on request and offers.
4 Modes of Supply:

Mode 1 (Cross-border supply): Service delivered within a member’s territory from another member’s territory.
Mode 2 (Consumption abroad): Service provided outside a member’s territory to its consumer.
Mode 3 (Commercial presence): Service delivered through a commercial presence in the territory of a member.
Mode 4 (Presence of natural persons): Service delivered within a member’s territory through the presence of the supplier as a natural person.

TRIPS (Trade-Related Aspects of Intellectual Property Rights)

Established: 1995, at the end of the Uruguay Round. All WTO members must ratify TRIPS to join the WTO.
Key Provisions:
Patents: 20 years.
Copyright: 50 years (automatically granted).
MFN Clause: Applies to all WTO members.
Sources:
- Copyright provisions from the Berne Convention.
- Trademark and patent provisions from the Paris Convention for protection of industrial property.
Computer Programs: Treated as literary works under copyright law.
Protection: Includes copyright, geographical indications (GIs), industrial designs, patents, monopolies, integrated circuit layout designs, trademarks.
Dispute Resolution: Regulated by TRIPS, including enforcement procedures.
Doha Development Round (2001): Allowed compulsory licensing in health crises.
Product Patents: Only for food, pharma, and chemicals.
Sui Generis System: Members can choose between protecting inventions under TRIPS or domestic law.

TRIPS Plus

Higher Protection Norms: Demanded by developed countries, not formally part of TRIPS, but promoted through FTAs.
Data Exclusivity: Protects data from clinical trials for a certain period.
Opposition: India opposes TRIPS Plus, blocking negotiations in CEPA with the EU and Japan.

Patents (Amendment) Act, 2005

Product Patents: Introduced for food, drugs, and chemicals. Replaced the process patent system (Patents Act, 1970).
Incremental Innovation: Innovations lacking enhanced therapeutic efficacy do not qualify for new patents.
Compulsory Licensing & Parallel Imports: To address public health crises.

Key Mechanisms

Compulsory Licensing (CL): Allows production of generic drugs by a third party during a health crisis, with compensation paid to the patent holder.
Example: In 2012, Natco Pharma was granted CL to produce Bayer’s Nexavar for liver and kidney cancer.
Parallel Imports: Importing drugs from countries where they are sold at lower prices to address health crises.
Voluntary Licensing: The patent holder grants permission to another company to manufacture the product in exchange for royalty payments.

Copyright Act, 1957

Protection: Grants rights to creators of literary, dramatic, musical, and artistic works, as well as producers of cinematograph films and sound recordings.
Scope: Protects the expression of ideas, not the ideas themselves.
Automatic Acquisition: Copyright is automatic and doesn’t require registration or formalities. It comes into existence as soon as the work is created.
Administered by: Department for Promotion of Industry and Internal Trade (DPIIT), Ministry of Commerce.

Agreement on Subsidies and Countervailing Measures (SCM)

Actionable Subsidies: Countries can take countervailing measures (CVD) or approach the WTO’s Dispute Resolution Body.
Countervailing Duties (CVD): Anti-subsidy duties imposed on imports benefiting from subsidies.
India’s Role:
DGAD (Directorate General of Anti-Dumping and Allied Duties) investigates and recommends countervailing measures.
Ministry of Finance imposes the duties.

Anti-Dumping Duty

WTO Rules: Anti-dumping duties are only allowed if they cause or threaten material injury to the domestic industry of the importing country.
India’s Role:
The Ministry of Commerce (via DGAD) recommends anti-dumping duties.
The Ministry of Finance imposes them under the Customs and Tariffs Act, 1975.

TRIMS (Trade-Related Investment Measures)

Established: 1994 under GATT, agreed upon by all WTO members.
Purpose: Recognizes that certain investment measures can distort trade and need regulation.

India and Solar Panel Issue

Domestic Content Requirement: India required a certain percentage of domestic content in solar panels.
WTO Dispute: The United States filed a complaint, and the WTO upheld the national treatment clause of the WTO charter, rejecting India’s claim.

Anti-Counterfeiting Trade Agreement (ACTA)

Purpose: Multinational treaty for strengthening IPR enforcement.
Signatories: EU, Canada, Australia, Japan, South Korea, USA, and others.
Status: Not in force.
Context: Seen as a response to India’s Compulsory Licensing (CL) and Parallel Imports (PI) provisions.

G-33 (Friends of Special Products in Agriculture)

Members: 48 developing countries, including India and China.
Established: At Cancun Ministerial Conference (MC), 2003.
Key Interests in Agriculture:

Market Access: Limiting access of developed countries to developing markets.
Special Safeguard Mechanism (SSM): Against import surges.
Special Products: Exemptions for certain products from tariff reduction commitments.

Geographical Indication (GI)

Legislation: GI of Goods Act, 1999, a sui generis law in India.
Protection Period: 10 years, renewable every 10 years.
Administration: Controller General of Patents, Designs, and Trademarks (Registrar of GI).
APEDA Role: The only institution qualified to be an applicant under the GI Act, 1999.
IPR Policy, 2016: Department for Promotion of Industry and Internal Trade (DPIIT) as the nodal department for IPR implementation.
PPVFR Act, 2001: Provides IPR to plant breeders or farmers developing new plant varieties. Rights are heritable and assignable.

State-Wise GI Tag Products in India

Andhra Pradesh

Handicraft: Srikalahasti Kalamkari, Kondapalli Bommallu, Budithi Bell and Brass Metal Craft, Uppada Jamdani Sarees, Bobbili Veena, Durgi Stone Carvings, Etikoppaka Toys.
Food Stuff: Tirupati Laddu, Bandar Laddu.
Agricultural: Guntur Sannam Chilli, Banaganapalle Mangoes.

Arunachal Pradesh

Handicraft: Idu Mishmi Textiles.
Agricultural: Khaw Tai (Khamti Rice), Yak Churpi.

Assam

Handicraft: Muga Silk.
Manufactured: Judima.

Bihar

Handicraft: Madhubani Paintings, Sujini Embroidery.
Manufactured: Bhagalpuri Zardalu, Katarni Rice.
Food Stuff: Silao Khaja.

Chhattisgarh

Handicraft: Bastar Dhokra, Champa Silk Saree and Fabrics.

Goa

Manufactured: Feni.
Agricultural: Khola Chilli.

Gujarat

Handicraft: Sankheda Furniture, Tangaliya Shawl, Jamnagari Bandhani, Mata ni Pachhedi.
Agricultural: Bhalia Wheat.

Himachal Pradesh

Handicraft: Kullu Shawl.
Agricultural: Kangra Tea.

Jharkhand

Handicraft: Sohrai – Khovar Painting.

Karnataka

Handicraft: Mysore Silk, Kasuti Embroidery, Molakalmuru Sarees, Sandur Lambani Embroidery, Kinhal Toys, Kolhapuri Chappal.
Manufactured: Mysore Sandal Soap, Mysore Agarbathi.
Agricultural: Coorg Orange, Coorg Green Cardamom, Devanahalli Pomello, Appemidi Mango, Byadagi Chilli, Indi Limbe, Monsooned Malabar Robusta Coffee, Monsooned Malabar Arabica Coffee.

Kerala

Handicraft: Aranmula Kannadi, Alleppey Coil.
Agricultural: Navara Rice, Pokkali Rice, Kaipad Rice, Chengalikodan Nendran Banana, Nilambur Teak, Tirur Betel Leaf (Tirur Vettila), Attappady Thuvara.

Madhya Pradesh

Handicraft: Chanderi Sarees, Maheshwar Sarees and Fabrics.
Agricultural: Sharbati Gehu.
Food Stuff: Jhabua Kadaknath Black Chicken Meat, Ratlami Sev.

Maharashtra

Agricultural: Nashik Grapes, Ajara Ghansal Rice, Mangalwedha Jowar, Navapur Tur Dal, Lasalgaon Onion, Sangli Raisins, Ambemohar Rice, Alphonso.
Handicraft: Kolhapuri Chappal.

Manipur

Handicraft: Shaphee Lanphee, Wangkhei Phee.

Mizoram

Handicraft: Pawndum, Tawlhlohpuan.

Odisha

Handicraft: Konark Stone Carving, Khandua Saree and Fabrics, Gopalpur Tussar Fabrics, Dungaria Kondh Embroidered Shawl.
Agricultural: Kandhamal Haladi, Koraput Kalajeera Rice.

Rajasthan

Handicraft: Thewa Art Work, Molela Clay Work, Sanganeri Hand Block Printing, Bagru Hand Block Print, Pokaran Pottery.
Natural: Makrana Marble.

Tamil Nadu

Handicraft: Salem Fabric, Kancheepuram Silk, Madurai Sungudi, Thanjavur Paintings, Salem Silk, Kovai Kora Cotton Sarees, Arani Silk, Pattamadai Mat, Toda Embroidery, Mahabalipuram Stone Sculpture, Thirubuvanam Silk Sarees, Dindigul Locks, Kandangi Sarees.
Manufactured: East India Leather.
Agricultural: Madurai Malli, Erode Manjal (Erode Turmeric).
Food Stuff: Kovilpatti Kadalai Mittai, Salem Sago.
Natural: Marthandam Honey.

Telangana

Handicraft: Pochampalli Ikat, Nirmal Toys and Craft, Gadwal Sarees, Cheriyal Paintings, Pembarthi Metal Craft, Adilabad Dokra, Telia Rumal.

Uttar Pradesh

Handicraft: Khurja Pottery, Mahoba Gaura Patthar Hastashlip, Mainpuri Tarkashi, Sambhal Horn Craft.
Agricultural: Mango Malihabadi Dusseheri, Kalanamak Rice.

West Bengal

Handicraft: Nakshi Kantha, Baluchari Saree, Dhaniakhali Saree, Purulia Chau Mask.
Agricultural: Darjeeling Tea, Tulapanji Rice, Gobindobhog Rice.
Food Stuff: Joynagar Moa, Bardhaman Sitabhog.

Union Territories

Jammu & Kashmir: Kani Shawl, Ramban Sulai Honey, Mushqbudji Rice, Bhaderwah Rajmash, Kashmir Saffron.
Pondicherry: Villianur Terracotta Works, Tirukanur Papier Mache Craft.
Ladakh: Pashmina Wool, Ladakh Raktsey Karpo Apricot.

Joint GI Tag Products

Karnataka & Kerala: Monsooned Malabar Robusta Coffee, Monsooned Malabar Arabica Coffee.
Kerala & Tamil Nadu: Alleppey Green Cardamom.
Maharashtra, Gujarat, Dadra & Nagar Haveli, and Daman Diu: Warli Painting.
Punjab / Haryana / Himachal Pradesh / Delhi / Uttarakhand / Uttar Pradesh / Jammu & Kashmir: Basmati Rice.
Punjab, Rajasthan, and Haryana: Phulkari.
Manipur & Nagaland: Chak-Hao (Black Rice).

Safeguard Duty in WTO

Purpose: Imposed to protect domestic industries from serious injury or threat of injury due to increased imports.
Duration: Temporary measure, limited to 200 days.
Common Uses: Typically applied against dumping or subsidies that attract countervailing duties (CVD).

WTO Ministerial Conferences (MC) and Key Agreements

1. Singapore MC (1996)

First WTO MC.
Introduced Singapore Issues:

Transparency in government procurement.
Trade facilitation (customs issues) — Treaty adopted in 2017.
Trade and investment.
Trade and competition.

Conflict: Developed nations pushed for these, while developing nations opposed.
Outcome: Trade facilitation was accepted during the Cancun MC, 2003.

2. Doha MC and Doha Development Round (2001)

Main Issues:

A. Agriculture:
Called for final agreements on market access.
Reduction in all forms of subsidies and trade-distorting support.
Developing nations emphasized “Special Products” exemptions.
B. Access to Patented Medicines:
Agreement reached on TRIPS and medicines.
Interim waiver in TRIPS allowed export of medicines made under compulsory licenses to Least Developed Countries (LDCs) and others.
Agreement to prevent “evergreening” of patents.
C. Special & Differential (S&D) Treatment:
At the 2005 Hong Kong MC, five S&D provisions were agreed upon for LDCs.

3. Cancun MC (2003)

Marked the abandonment of Singapore Issues, except trade facilitation.
Creation of G-33, focusing on the interests of developing nations in agriculture.

4. Geneva Talks (2004)

Formal decision to drop Singapore Issues from the Doha Agenda, apart from trade facilitation.

5. Bali MC and Bali Package (2013)

Agriculture: Provisions to reduce import tariffs and agricultural subsidies.
Peace Clause:
Allowed countries time (4 years) to adjust to agricultural subsidy limits under AoA (Agreement on Agriculture).
India initially refused to ratify unless a permanent solution was reached.
A deal between India and the USA removed the time limit for adjustment, allowing India to ratify.
Trade Facilitation Agreement (TFA):
Aim: Simplify customs procedures, improve infrastructure, and remove non-tariff barriers.
Components:
- Fiscal: Customs and excise.
- Safety and Security: Immigration and visas.
- Environment and Health: Sanitary and Phytosanitary (SPS) measures.
- Consumer Protection: Testing, labeling, and conformity checks.
Entered into force in 2017.

Nairobi MC (2015)

Key Highlights:

Doha Development Agenda (DDA):

Divisions persisted between developed and developing countries.
Developed nations sought to move away from DDA and focus on the Trade Facilitation Agreement (TFA).
Push to introduce new issues like e-commerce, government procurement, and competition policy.

Agreement on Export Subsidies:

Commitment to Eliminate Farm Export Subsidies:
- Developed countries: Immediately.
- Developing countries: By 2018, but allowed to retain marketing and transport cost subsidies for exports until 2023.

Temporary Special Safeguard Mechanism (SSM):

Temporary measures to protect domestic agriculture from import surges.

Information Technology Agreement-II (ITA-II, 2015):

53 members agreed to eliminate tariffs on 201 IT products over 7 years.
India’s Status:
- Member of ITA-I (1996).
- Not a member of ITA-II.

WTO and E-Commerce

India’s Position:
Opposes formal inclusion of e-commerce in Doha Development Round.
Concerns about unrestricted global data transfers harming developing nations’ interests.

India and Bilateral Investment Treaties (BITs)

Definition:
BITs outline terms for private investments by nationals and companies of one country in another.
Includes dispute resolution mechanisms, often under the International Centre for Settlement of Investment Disputes (ICSID).
India’s Approach:
New Model BIT mandates exhausting local judicial remedies before pursuing international arbitration.
B.N. Srikrishna Committee recommendations aim to make India a hub for international arbitration.

H1B Visa Fee Hike and WTO Compatibility

India filed a complaint under the General Agreement on Trade in Services (GATS), claiming violation of Most Favored Nation (MFN) principles.

Generalized System of Preferences (GSP) and India

Established: 1971 by UNCTAD.
Offers preferential tariff treatment to exports from developing countries.

Rules of Origin (RoO)

Purpose:
Determines the “economic nationality” of a product.
Used to enforce anti-dumping duties, safeguard measures, and assess eligibility for MFN or preferential treatment.
Administered By:
World Customs Organization (WCO) under WTO.

Regional Trade Agreements (RTAs) and WTO

RTAs are allowed under WTO, promoting “open regionalism”, i.e., reducing tariffs among members while extending liberalization to non-members.

Beggar-Thy-Neighbor Policy

Economic policy where one country grows at the expense of others, often through protectionist measures or currency devaluation.

Asian Clearing Union (ACU)

Established By: UNESCAP.
Headquarters: Tehran, Iran.
Purpose:
Facilitate regional cooperation for settling eligible monetary transactions among members.
Provides a system for clearing payments on a multilateral basis.
Members: SAARC countries + Iran.
Asian Monetary Unit: Common accounting unit of ACU.

Non-Agricultural Market Access (NAMA)

Focus:
Trade negotiations on industrial (non-agricultural) products.
Doha Declaration calls for eliminating tariff (T) and non-tariff (NT) barriers.
NAMA 11 Coalition:
Strong developing nations advocating for balanced negotiations, including India, Pakistan, Indonesia, Brazil, South Africa, and others.

Global System of Trade Preferences (GSTP)

Established: 1988.
Purpose: Promote trade among developing countries through exchange of trade preferences.
Administered By: UNCTAD.
Membership: 44 countries, including India.
Reserved for Group of 77 and China members.