Presentation

RAHULKUMAR HARPREET SINGH 12PU and 34 DBU M.B.A Ist

WORLD TRADE ORGANISATION

WTO (the successor to the General Agreement on Tariffs and Trade - GATT established in 1948), came into being on January 1,1995. is the only international organisation dealing with the rules of trade between nations. The goal is to help producers of goods and services, exporters, and importers conduct their business fairly.
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GATT
GATT, the predecessor of WTO was born in 1948 as a result of the international desire to liberalise trade. History: One of the 3 instns recommended by the Bretton Woods Conference of 1944 IMF and World Bank. set up in 1946, but the 3rdITO (International Trade Organisation) could not be set up: --because of objections that its provisions would interfere with the autonomy of domestic policy making. So, the ITO charter was never ratified. Instead the GATT, which had been drawn up only as an interim agreement to fill the gap, became the framework for international trading system since 1948.
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The GATT was transformed into a World Trade Organisation (WTO) with effect from January, 1995. (after about five decades.) India is a founder member of the IMF, World Bank, GATT and the WTO.

Evaluation of GATT
The growing number of the signatories of GATT & WTO show its popularity. In 1947, only 23 nations were party to it. By the time of Uruguay Round there were 117 and in July 1995, there were 128 signatories. Wef 1-1-2002 China rejoined WTO In the earlier rounds: only tariff reductions discussed but later also other areas such as anti-dumping and NTBs. In the Uruguay Round(1986-1994) : with the creation of WTO also Trade in Services, TRIPS, TRIMS.
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WORLD TRADE ORGANISATION

Following the UR Agreement, GATT was converted from a provisional agreement into a formal international organisation called WTO w.e.f. 1-1-1995. The membership of the WTO increased from 128 in July 1995 to 148 countries at the beginning of 2005 and about two dozen nations more were negotiating membership. The WTO members now account for over 97 per cent of the international trade.
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Functions
The WTOs overriding objective is to help trade flow smoothly, freely, fairly and predictably. It does this by: 1. Administering the WTO trade agreements. 2. Providing the forum for negotiations among its members concerning their multilateral trade relations 3. Administering the mechanism for settling trade disputes between the member countries. 4. Monitoring national trade policies. 5. Providing technical assistance and training for developing countries. 6. Cooperating with other international organizations like the IMF and IBRD and its affiliated agencies to achieve greater coherence in global economic policy making. 6

The WTO Agreements A Birds Eye View

The WTO endeavours to ensure that trade is as fair as possible and as free as practicable by negotiating rules and abiding by them.

1. Goods :
Trade in goods was the concentration of GATT until the Uruguay Round negotiations. Since 1995, the updated GATT has become the WTOs umbrella agreement for trade in goods. It has annexures dealing with specific sectors such as agriculture and textiles, and with specific issues such as state trading, product standards, subsidies and actions taken against dumping.
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2. Services:

Banks, insurance firms, telecommunications cos., tour operators, hotel chains and transport companies looking to do business abroad can now enjoy the same principles of freer and fairer trade that originally only applied to trade in goods. These principles appear in the new General Agreement on Trade in Services (GATS). WTO members have also made individual commitments under GATS stating which of their services sectors they are willing to open to foreign competition, and how open those markets are.

3. Intellectual Property:

The WTOs intellectual property agreement amounts to rules for trade and investment in ideas and creativity. The rules state how copyrights, patents, trademarks, geographical names used to identify products, industrial designs, i.c.s, layout-designs and undisclosed information such as trade secrets intellectual property should be protected when trade is involved.
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4. Dispute Settlement: Countries bring disputes to

the WTO if they think their rights under the agreements are being infringed. The system encourages countries to settle their differences through consultation. Failing that, they can follow a carefully mapped out, stage-by-stage procedure that includes the possibility of a ruling by a panel of experts, and the chance to appeal the ruling on legal grounds. Confidence in the system is borne out by the number of cases brought to the WTO almost 250 cases in seven years compared to some 300 disputes dealt with during the entire life of GATT (194794).
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5. Policy Review: The Trade Policy Review

Mechanisms purpose is to improve transparency, to create a greater understanding of the policies that countries are adopting, and to assess their impact. All members must undergo periodic scrutiny. 6. Development and Trade Over three quarters of WTO members are developing or LDCs. All WTO agreements contain special provision for them, including longer time periods to implement agreements and commitments, measures to increase their trading opportunities and support to help them build the infrastructure for WTO work, handle disputes, and implement technical standards.
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7. Technical Assistance and Training

The WTO organizes around 100 technical cooperation missions to developing countries annually. It holds on an average three trade policy courses each year in Geneva for government officials. Regional seminars are held regularly in all regions of the world with a special emphasis on African countries. Training courses are also organized in Geneva for officials from countries in transition from central planning to market economies.

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TRIMs
Trade Related Investment Measures (TRIMs) refers to certain conditions or restrictions imposed by a government in respect of foreign investment in the country. TRIMs were widely employed by developing countries. The Agreement on TRIMs provides that no contracting party shall apply any TRIM which is inconsistent with the WTO Articles.

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TRIPs (Trade Related Aspects of Intellectual Property Rights)

Intellectual property rights may be defined as information with commercial value. IPRs have been characterised as a composite of ideas, inventions and creative expression plus the public willingness to bestow the status of property on them and give their owners the right to exclude others from access to or use of protected subject matter.

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According to the WTO, intellectual property rights are the rights given to persons over the creations of their minds. They usually give the creator an exclusive right over the use of his/her creation for a certain period of time. IPRs include patents, trademarks, copyrights, geographic indications, undisclosed information (such as trade secrets), industrial designs, and layout designs of integrated circuits, and plant variety protection. 14

Objectives of Protection of Intellectual Property Encourage and reward creative work Technological innovation incentive and means to finance R&D activities. Fair competition The protection of distinctive signs and other IPRs aims to stimulate and ensure fair competition among producers. Consumer protection by enabling them to make informed choices Transfer of technology facilitated in the form of foreign direct investment, joint ventures and licensing. Balance of rights and obligations The exclusive rights given are generally subject to a number of limitations and exceptions, aimed at fine-tuning the balance that has to be found between the legitimate interests of right holders and of users. 15

IPRS AND DEVELOPING COUNTRIES

Although the IPRs are intended to encourage R&D, they often provide an opportunity for the developed country firms an opportunity to exploit the developing countries. Disadvantages/Limitations The developing countries, particularly the very poor among them, are ill equipped for significant R&D. In a world order where developing countries heavily depend on imports of technology, IPRs turn out to be more beneficial to industrial countries than to developing countries. A strong IPRs regime without adequate safeguards to protect interests of weaker sections can create very serious problems in developing countries, e.g.exorbitant prices. Developing countries, generally, dont have adequate institutional mechanism and resources to properly 16 administer IPRs regime.

Benefits
Protection of IPRs is not without gains to DCs . Stronger IPR protection may encourage investment, both foreign and domestic.
Stronger IPR protection could be expected to give a boost to R&D in countries like India whose potential intellectual capital may be expected to grow in great width and in depth.

IPR systems provides a great opportunity to developing countries to benefit from protection of indigenous property rights and traditional knowledge.
Developing countries hold approximately 90 % of world biological resources, which are particularly important in the development of new pharmaceuticals.
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PATENTS
A patent is a legal protection granted for an invention that is new, non-obvious and useful. The patent grants the patent holder the exclusive right to make use or sell the patented products or process. Patents, by providing an opportunity to recoup the cost of invention and to make profit out of the invention, encourage R&D. An invention, to be patentable, must satisfy the following three conditions : It is new. It is useful to the society. It is non-obvious to a person possessed of average skill.
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 Exclusion of an invention from patentability for commercial exploitation is permitted if it is necessary to protect public order or morality, including to protect human, animal or plant life or health or to avoid serious prejudice to the environment. A nation may also exclude from patentability (a) diagnostic, therapeutic and surgical methods for the treatment of humans or animals; (b) plants and animals other than micro organisms and essentially biological process for the production of plants or animals other than non-biological and micro-biological process.

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Indian Patent Law and the UR Agreement The UR Agreement on patents is in substantial variance with the Indian Patent Act of 1970. Under the Indian Patent Act, 1970, only process patent (and no product patent) is applicable in respect of inventions relating to substances intended for use as food, drug or medicines, or substances produced by chemical processes is limited to the methods or processes of manufacture only. This means that one can make and market a product similar to the patented product through a different process or method than the patented one. This practice has been very prevalent in the Indian pharmaceutical industry. The UR Agreement requires both product and process patents. Under the 1970 Act, patent expiry period is 5 to 7 years for some products and 14 years for other products, whereas the UR Agreement stipulates 20 years for all products. 20

 Anti-dumping measures can be employed only if dumped imports are shown to cause serious damage to the domestic industry in the importing country. Further, antidumping measures are not allowed if the margin of dumping (i.e., the price differences) is de minimis (defined as 2 percent of the export price of the product) or the volume of dumped imports is negligible (less than 3 per cent of imports of the product in question). E.g.: Dumping occurs when the price at which the goods are exported to India is lower than their normal value. The difference between this export price and the normalvalue is known as the margin of dumping. It is generally expressed as a percentage of the export price.
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THE DOHA DECLARATION

The fourth ministerial meeting of the WTO was held in Doha in November 2001 in which Ministers from the 142 member countries participated. The ministerial had attracted a lot of attention because of the conflict of interests of the developed and developing countries. The developed countries wanted a new round of multilateral trade negotiation to be launched soon, covering what are known as the Singapore Issues (a list of 7 items which were proposed at the meeting in Singapore in 1996 for future negotiations.
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 Developing countries like India on the other hand held that the Implementation Issues should be resolved before a new Round. India had to almost single handedly fight. The Doha meet concluded by drawing up the Doha Development Agenda for new trade liberalisation talks; with India approving the ministerial declaration only after it was satisfied that the conference had addressed the countrys concerns in the four Singapore issues of foreign investment, competition policies, transparency in government procurement and trade facilitation. Although , the developed nations, won the upper hand, Indias bold stand has had a commendable impact. 23

WTO AND INDIA

The Uruguay Round Agreements and WTO have come in for scathing criticisms in India. Many politicians and others have argued that India should withdraw from the WTO. Many of the criticisms are either baseless or due to lack of knowledge of the international trading environment, and misinformation, or are just meant to oppose the government by the opposition parties.

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It is true that the Uruguay Round mostly benefits the developed countries. (Participation gap). That does not mean that developing countries like India are losing their gain is limited as compared to that of the
developed countries. also liberalization by developed countries is needed for the developing countries to take advantage of globalisation.

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 Accepting the demand of some of the critics, that India should withdraw from the WTO will be a great blunder. By being a part of WTO India enjoys the most favoured nation (MFN) status with all the other members of the WTO. Opting out of the system would mean an infinitely laborious task of entering into bilateral negotiations with each and every one of the trading partners which would amount to having ones arms twisted bilaterally by the US, the EC and Japan, turn by turn, on everything from intellectual property rights to NPT, human rights and environmentally clean technologies for packaging. 26

One major controversy pertains to the agricultural subsidies.

Much hue and cry However, it needs to be mentioned that the Agreement would not adversely affect Indias agricultural subsidies and its agriculture exports. However Indias gain will be much less than those of several other developing countries like China and the newly industrialised economies because : (i) Indias
share in the world trade is very low (ii) The foreign tradeGDP ratio of India is low. The gain will also depend on the rate of growth of Indias exports.
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 India has taken several measures to comply with the TRIPs Agreement. For the protection of Geographical Indications of Goods, a sui generis legislation, viz., the Geographical Indications of Goods (Registration & Protection) Act, 1999 has been enacted in order to comply with the requirements under the TRIPS and to protect products of Indian origin as well. The Act primarily intends to protect the valuable geographical indications of our country. The protection under the Act is available only to the geographical indication registered under the Act and to the authorized users.
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 Various suggestions have been advanced in India to extend protection to knowledge, innovations and practices. These include: (i) documentation of Traditional Knowledge (TK); (ii) registration and innovation patent system; and (iii) development of a sui generis system. Proper documentation of associated TK could help in checking bio-piracy. Documentation could be a double-edged sword.
It is assumed that if the material/knowledge is documented, it can be made available to patent examiners the world over. But..
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