Class-9 WTO

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What is the WTO?

Wellwhat is it??? A place?

Today at the WTO

A law?

Based on the WTO Regulation A group of people?

Members of the WTO agreed

A meeting? The WTO meeting was held in

The idea of the WTO can seem a bit

abstract

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What is the WTO?

The WTO is an organization thatdeals with rules of trade betweennations

Functions include acting as:

An organization for liberalizing

trade

A forum for trade negotiations

A set of rules

A system to settle disputes

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An Organization forLiberalizing Trade

Liberalism in economics refers to anideology that supports the individualrights of property and free contract

In the context of the WTO it means theremoval of trade barriers

Goes with the idea that the hands-off approach to

markets is the most efficient in the long-run

WTOs Stated Aim:

Promote Free Trade

Stimulate Economic Growth

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A Forum for TradeNegotiations

A place where membergovernments go to try to sort outtrade problems

Members start by talking it out

WTO acts as a mediating body

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The WTO as a Set ofRules

WTO Agreements

Signed by most of the worlds trading nations

The legal framework for international commerce Contracts for governments to maintain certain

trading policies

Purpose is to help exporters and importers, whilemaking sure governments meet social objectives

The WTO oversees the implementation, administrationand operation of the covered agreements

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A System to SettleDisputes

Conflict of interests exists intrade relations

Trade agreements need interpreting

WTO is meant to be a neutralparty to help settle trade disputes

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History

After World War II many nationshad adopted a protectioniststance on trade

Many felt closed-protectionistpositions was a cause of WWII

Victor nations set up economicinstitutions to prevent this fromhappening again

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History

GATT: main purpose was toreduce barriers to internationaltrade

GATT was an agreement, not an

organization

Became the de facto organizationfor international trade

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History - GATT

Trade Rounds negotiation meetings First 6 rounds reduced tariffs from ~50% to

~12%

7th, the Tokyo Round of the early 70s wasfirst major effort at trade reform

Mainly about non-tariff barriers to trade, such as:

Subsidies

Quotas

Foreign exchange controls

Import bans

Restrictive licensing

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History GATT

The 1986 Uruguay Rounds of tradenegotiations covered new trade topics Trade in services and intellectual property

Sensitive subjects, like textiles and

agriculture GATT was expanded by adding:

General Agreement on Trade in Services(GATS)

Agreement on Trade Related Aspects ofIntellectual Property (TRIPS)

Complexities of globalization strained the

effectiveness of GATT

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History

Current Round Doha

Began November 2001

Ambitious agenda to makeglobalization more inclusive ofthe worlds poor

Talks have been contentious

No agreements have been reached

July 2006 talks were suspended byDirector General, Pacel Lamy, but

may go forward at anytime

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Principles of the TradingSystem

1. Nondiscrimination

2. Reciprocity

Meant to prevent Free-riders3. Binding and Enforceable Commitments

Ensures predictability

4. Transparency

Member nations are required to publish trade regulationsand report changes

5. Safety Valves

Governments can prevent trade for, say, health reasons

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orma ruc ure g esLevel

-Ministerial Conference Meets at least every two years

Brings together all members ofWTO

Can make decisions on allmatters under any multilateraltrade agreement

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orma ruc ure rLevel

-Councils for Trade Works under the GeneralCouncil

Made up of three councils

1. GATT Council

2. TRIPS Council

3. GATS Council

These councils are charged withoverseeing the functioning oftheir various trade agreements

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orma ruc ure ourLevel

-Subsidiary Bodies These are sub-councils under thethree councils for trade

Examples include:

Textiles Monitoring Body, under theGATT Council

Information Technology Agreement

Committee, under the TRIPSCouncil

The Services Council, under theGATS Council

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Benefits from the WTO1. The system promotes peace

2. Disputes are handled constructively

3. Rules make life easier for all

4. Freer trade cuts the costs of living

5. It provides more choices of products

6. Trade raises incomes

7. Trade stimulates economic growth

8. The basic principals make life more efficient

9. Governments are shielded from lobbying

10. The system encourages good government

Source: www.wto.org

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It is the central pillar of the multilateral

trading system

It is a unique contribution to the stability

of the global economy

It makes the trading system more secure

and predictable

Dispute Settlement

- A Unique Contribution

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Principle of DisputeSettlement

Equitable

Fast

Effective

Mutually acceptable

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How Long to Settle aDispute?

60 days-Consultations, mediation, etc

45 days-Panel set up and panelists appointed

6 months-Final panel report to parties

3 weeks-Final panel report to WTO members

60 days-Dispute Settlement Body adopts report (ifno appeal)

Total = 1 year (without appeal)

60-90 days-Appeals report

30 days-Dispute Settlement Body adopts appealsreport

Total = 1y 3m(with appeal)

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Case of Venezuela

On 23 January 1995, Venezuela complained to theDispute Settlement Body that the United States wasapplying rules that discriminated against gasolineimports, and formally requested consultations with theUnited States.

Just over a year later the dispute panel completed itsfinal report.

The United States appealed. The Appellate Bodycompleted its report, and the Dispute Settlement Bodyadopted the report on 20 May 1996, one year and four

months after the complaint was first lodged. The United States agreed with Venezuela that it would

amend its regulations within 15 months and on 26August 1997 it reported to the Dispute Settlement Bodythat a new regulation had been signed on 19 August.

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Effectiveness of DisputeSettlement

By July 2005, only about 130 ofthe nearly 332 cases had reachedthe full panel process. Most of the

rest have either been notified assettled out of court or remain in

a prolonged consultation

phase some since 1995.

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United States RequestsConsultations The thresholds that must be met in order for certain acts

of trademark counterfeiting and copyright piracy to besubject to criminal procedures and penalties;

Goods that infringe intellectual property rights that areconfiscated by Chinese customs authorities, in particularthe disposal of such goods following removal of theirinfringing features;

The scope of coverage of criminal procedures andpenalties for unauthorized reproduction or unauthorized

distribution of copyrighted works;

The denial of copyright and related rights protection andenforcement to creative works of authorship, soundrecordings and performances that have not beenauthorized for publication or distribution within China.

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Summary of Chineseintellectual property violations

Nearly 90 percent of all Americansoftware is pirated at an annual costof more than $2 billion to the US

economy.

Total copyright losses reach nearly $3billion per year.

The U.S. automobile industry loses$12 billion each year due tocounterfeit automotive partsproduction, of which China is a

leading violator.

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Response from China

"The United States Trade Representative, the USTR,has totally ignored the massive strides China hasmade," Premier Wu told an intellectual propertyforum in Beijing.

"The Chinese government is extremely dissatisfiedabout this, but we will proactively respond accordingto the related WTO rules and see it through to the

end, Wu added.

Source: www.reuters.com

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Reasons to Oppose the WTO

1. The WTO Is fundamentallyundemocratic

2. The WTO will not make us safer

3. The WTO tramples labor and humanrights

4. The WTO would privatize essentialservices

5. The WTO is destroying theenvironment

6. The WTO is killing people

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Reasons to Oppose the WTO

7. The WTO is increasing inequality

8. The WTO is increasing hunger

9. The WTO hurts poor, small countries in favor of richpowerful nations

10. The WTO undermines local level decision-makingand national sovereignty

11. There are alternatives to the WTO

12. The tide is turning against free trade and the WTO!

Source: www.globalexchange.org

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INTELLECTUAL PROPERTY RIGHTS

& TRIPS

Intellectual property is economicallyvaluable information

Intellectual Property Right is the legally

enforceable power to exclude others fromusing the information created, or to set theterms on which it can be used

TRIPS prescribes minimum standards ofprotection to different intellectual propertyrights

Members are free to have higher standardsat the national level

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THE SEVEN IPRs IN THE TRIPSUNIVERSE

Patents (for plant varieties, the protection canbe given either through patents or a sui generissystem or a combination of both);

Copyright and related rights;

Trademarks;

Industrial designs;

Layout-designs of integrated circuits;Undisclosed information, including trade

secrets

Geographical indications, including appellation

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PATENTS Subject matter any invention, whether of

products or processes, in all fields of technology,provided they are new, non-obvious and useful.

Exceptions to subject matter (1)Medical Use (2)Plants and animals other than micro-organisms

(but not plant varieties). (3) Essentially biologicalprocesses for the production of plants andanimals.

Rights conferred

Patents give owners exclusive property rights Assignment allowed. (Compulsory Licensing

allowed subject to conditions)

Term of protection Twenty years counted from

filing date.

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Plant Variety Protection TRIPS mandates that protection of plant

varieties shall be provided either bypatents or by an effective sui generis

system or by any combination thereof PVP Bill, passed by Parliament in August,

2001

Provides 15/18 years protection for plant

varieties provisions for Farmers Rights,Benefit Sharing, Community Rights

Farmers right to save, exchange, use andsell farms saved seeds has been

preserved

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GI Protection for other products India along with many other

countries has proposed that thehigher level of protection as available

to wines and spirits should madeavailable to other products also.

Doha Declaration mandates TRIPSCouncil to examine this issue and

report by end of 2002 for appropriateaction

COMPLIANCE WITH

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COMPLIANCE WITHTRIPS

The Patents (Second Amendment)Bill, 1999 has now been passed byParliament

The Protection of Plant Varieties andFarmers Rights Bill, 1999 was passedby Parliament in August 2001

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DIFFICULTIES IN COMPLIANCE

The most important concernsrelated to patents and plant

variety protection. It was felt that- our pharmaceutical industry will

be adversely affected,

- drug prices will go up,- our biological materials will be

pirated,

- our farmers will no longer be

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DIFFICULTIES IN COMPLIANCE

The Government has taken account of allthese fears in the proposed Bills on thesubjects. Some of the preventivemeasures in the Bills are

- Farmers right to save, exchange and usefarm saved seeds has been preserved

- Wide range of inventions that are notpatentable have been kept (Section 3)

- Strong Government use, R&D, revocationprovisions have been introduced (Chapter XVII and Sections 47, 66)

- Strong compulsory licensing provisionshave been retained (Chapter XVI)

- Vast powers retained for the Security of

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DOHA MANDATE ON TRIPS Negotiations to establish a multilateralsystem of notification and registration for GIfor wines and spirits;

Extension of higher order of protection to

items like Basmati rice will be addressed bythe Council for TRIPS; and

TRIPS Council to examine relationship

between TRIPS and CBD, the protection oftraditional knowledge and folklore

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A government policy that limits imports of aproduct to a certain number of units.

It is banned by the WTO but it still exists.

What are Quotas?

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How common is quota?

In 1955 Ireland suspended its import quota onfertilizers.

China's Grain and sugar import quotas remainunchanged in 2008

In 2002 the European Commission announcedplans to impose a wheat import quota of 2.3million tones a year

In 2005 the European Union decided to increasequotas for Chinese textiles

In 1989 we learned that the sugar importrestrictions and the quota regime for imports,maintained by the United States since 1982, hasbeen held by a three-member GATT panel to beillegal in terms of U.S. obligations in GATT.

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1. Not all countries are members of theWTO

2. Members of WTO are allowed tomaintain quotas for a specifiedperiod of time.

Transition period

3. How much power does WTO have? Some countries implement quotas

defying WTO rules.

Facts

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Quota on textile

Uruguay Round negotiations of GATThave led to phasing out of the MFA.

What are Multifibre

Arrangements?

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1. Industrial Policy

Domestic regulations can distort

international trade. Regulations sometimes have the intent of

directly impacting trade.

Regulation effects difficult to quantify. Examples:

Guaranteed low interest government loans fordomestic producers

Tax advantage to exporting industries

Other Nontariff Distortions

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2. Government Procurement

Laws that direct a government to buy

domestically-made products unlesscomparable foreign products aresubstantially cheaper.

Spending of public funds places restrictionson funds.

Justification that buying domestic is betterfor the country.

Similar to Mercantilists view


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In countries where government ownsindustry and has government procurement,

trade is severely restricted.


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3. Technical Barriers to Trade

Laws that apply technical standards to goods

or services that may distort trade. Domestic countrys national standards for safety,

health, and product labeling

They may require firms to produce twodifferent goods or packages to allow exports.

Some goods must meet technical standardslike cars from the U.S. to the Ireland.


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4. Subsidies

Governments subsidies distort trade flows.

Such subsidies can be directly tied to exports, or morecommonly they are domestic subsidies that indirectlyinfluence trade.


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5. Labor and Environmental Standards

Countries differ in regulations for workers

with respect to safety and work conditions. Developed countries argue they cannot

compete with wages in countries with lessstrict labor laws.

Empirical evidence has not shown significanteffects on trade.


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Labor standards

Laws that apply labor standards to

manufactured products that may restrictimports.

Pollution intensive industry feelsdisadvantaged in countries with highpollution regulations.

Little of no empirical evidence of effects

WTO ruled countries cannot imposestandards b limitin im orts.


Transportation Costs and

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Transportation Costs andTrade

Transportation costs tend toreduce the quantity of tradebetween countries by raising the

price of imported goods. A good will be traded internationally

if transportation costs are lowenough so that it is profitable tointernational trade the goodsbetween countries.

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I di S k

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India Seeks

Protecting our food and livelihood security by having sufficient

flexibility for domestic policy measures.

Protecting domestic producers from the surge in imports or

significant decline in import prices.

Substantial reduction in export subsidies and domestic support to

agriculture in the developed countries for greater market access to

products of developing countries.

Finally, a more equitable & fair trading framework for

agricultural commodities

Issues of Export Competitiveness of Select

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Agro-productsRice:

The rice export is projected to increase to 2.7 million tonnes in 2005 fromcurrent level of 1.8 million tonnes.

In spite of much favourable domestic resource cost, the nominal protection co-efficient is marginal which is due to volatile international prices.

The domestic supply gap, quality, processing, marketing, transportation etc.,are going to be key factors for sustainingIndias rice export potential.

Spices:

Owing to expanding global demand of spices, there is potential foraccelerating Indian spice export but the rising competition would requireconcerted efforts.

The problem of aflotoxin, pesticide residue and low yields are to be tackled.


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p p S

Agro-productsTea:

The Indian tea export is projected to increase marginally from 159 thousandtonnes during 1993-95 to 165 thousand tonnes in 2005.

Indias export competitiveness as well as share in export of tea is declining.

The strategies include promotional measures, joint ventures for tea blendingand marketing and support for importing machinery and packaging materials.

Coffee:

The coffee export is projected to reach to 180 thousand tonnes in 2005 from

the level of 160 thousand tonnes in 90s.

There is emergence of new markets in Asia and Eastern Europe and henceIndia has to focus on this aspect as well.

The quality, R&D and post-harvest methods are important to sustain the

growth.

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Emerging Markets becoming MoreFeisty in Economic Terms too

The Rise of Agriculture in Brazil

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Other Issues in Market Access

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Other Issues in Market Access

Tariff escalation Erosion of preferences

Specific tariffs

Tariff rate import quotas (expand tocompensate for Sensitive Products?)

Special Safeguards, countervailing andanti-dumping, and other contingent

measures Rationalizing product regulations (SPS,

labeling etc.)

S&DT for developing countries to

protect against instability and food

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What for the Future?

We are in a period of significant change in agriculturaltrade relations Developing countries are overriding the traditional

gladiatorial contest between the EU and US Yet developing countries may resist trade liberalization

in other sectors if no significant progress made in

agriculture Regional/bilateral trade deals may be the major source

of trade liberalization Litigation under the WTO may put pressure on

domestic support programs Other issues are also becoming important like IPRs

(GIs etc.), SPS and TBT relating to standards andhealth restrictions, biotech such as GMOs, invasivespecies, etc.

Class-9 WTO

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