Chapter 56 India and the Wto – Indian Economy

56

India and the Wto

Introduction

The World Trade Organization (WTO) is one amongst the three international organizations that oversee the economic and commercial relations between nations; the other two being the International Monetary Fund (IMF) and the International Bank for Reconstruction and Development (IBRD), generally referred to as the World Bank. The WTO has its headquarters in Geneva, Switzerland. The WTO deals with regulation of trade between participating countries which number 160 at present; WTO ‘provides a framework for negotiating and formalizing trade agreements, and a dispute resolution process aimed at enforcing participants’ adherence to WTO agreements which are signed by representatives of member governments and ratified by their Parliaments.’1

Emergence

THE WTO came into being on 1 January 1995, the day on which the collective decision of the member nations who participated in the Uruguay Round (UR) took effect resulting in the General Agreement on Tariffs and Trade (GATT) being transformed into an international organization that oversees the operation of the rules-based multilateral trading system. The WTO is the outcome of a series of trade agreements negotiated during the Uruguay Round (UR) (1986–94), the eighth and final trade round conducted under the GATT. The Treaty of Marrakesh established the WTO at the close of the UR in 1994, which began operations with a strength of 148 members.

GATT: WTO’s Predecessor

The WTO is a successor global trade organization to the GATT which came into being on 1  January, 1948 as a result of an agreement among 23 proponent countries to have a multilateral trade regulating organization in place of an International Trading Organization (ITO) which all of them voted for, but could not be set up because the American Senate voted against it. The objective of the GATT was to ensure a ‘Substantial reduction of tariffs and other barriers and the elimination of preferences, on a reciprocal and mutually advantageous basis’. GATT was governed by the following principles: (i) Non-discrimination implying that no member of GATT can discriminate against other nations or show favouritism or give any special privilege to any nation; (ii) Tariff Protection implying that GATT favoured the use of tariffs as an ideal means of protecting domestic industries, rather than using non-tariff measures such as import quotas and (iii) Stable basis of trade so as to avoid volatility in global trade. The GATT carried out its functions between 1947 and 1994 over eight rounds of negotiations addressing various trade issues. These rounds of negotiations can be divided into three distinct phases. During the first phase, from 1947 to until the Torquay Round, GATT was concerned largely on the commodities that would be covered by the agreement and freezing existing tariff levels. The second phase, covering three rounds, between 1959 and 1979 focused on reducing tariffs. The third phase consisting only of the prolonged Uruguay Round between 1986 and 1994 extended the agreements fully to new areas such as intellectual property, services, investment measures, and agriculture. The WTO was born of this round. The functions of the GATT were taken over by the WTO which was established during the final round of negotiations in early 1995.

The Formation of UNCTAD

During the course of the working, GATT earned the dubious distinction of serving the interests of developed nations and was nicknamed as the ‘Rich men’s club’. The developing countries constituting a majority of the GATT’s members wanted to revive the idea of setting up the ITO, while the USA, that had scuttled it earlier, opposed the idea. To find a solution to the deadlock, the UN appointed a committee that suggested a sort of via media—UNCTAD (United Nations’ Conference on Trade and Development). Accordingly, the UNCTAD was established in 1964 to perform the following functions:

  • To promote international trade with a view to accelerating economic development.
  • To formulate principles and policies on international trade and related problems of economic development.
  • To negotiate multinational trade agreements.
  • • To make proposals for putting its principle and policies into effect.

The major activities of UNCTAD include undertaking research and extending support for negotiations for commodity agreements, technical elaborations of new trade activities designed to assist low-income countries in the areas of trade and capital.

The UNCTAD managed to obtain some concessions for the developing countries, more important among them being the General Scheme for Trade Preferences (GSTP). The GATT was also progressively made more liberal. The Uruguay Round of the GATT also found ways and means to expand the scope of the organization by including services, investment and intellectual property rights. The UR proposals were accepted by all the members of the GATT in December 1993 at the official level and in March 1994 at the ministerial level. The UR agreement thus called for the establishment of the WTO. Table 56.1 provides a chronological development of the WTO.

Table 56.1 Dateline in the Evolution of the WTO

The Distinction between WTO and GATT

How does WTO differ from the old GATT from which it got transformed itself into its new avatar? The following are the distinctions between the two organizations: (i) WTO is a full-fledged international organization, while GATT was essentially a provisional multilateral treaty between negotiating member countries serviced by an ad hoc secretariat; (ii) The GATT did not have any legal status, while the WTO is a legally constituted body, its status emanating from an international treaty ratified by member governments and their legislatures; (iii) WTO is an international trade organization with a far wider scope than the erstwhile GATT, encompassing into the multilateral trading system, trade in services, intellectual property and investment for the first time; (iv) The WTO administers a unified package of agreements to which all members are committed; in contrast, the GATT framework included many side agreements as in anti-dumping measures and subsidies, and its membership limited to a few nations. Moreover, the WTO reverses policies of protection in ‘sensitive areas’2 such as in agriculture and textiles that were more or less acceptable to the GATT; (v) The GATT system of dispute settlement was archaic and not binding on the parties to the dispute. For instance, the Dispute Settlement Board of the WTO in its very first decision made the omnipotent United States accept its verdict. Thus, the WTO has teeth while the GATT was ineffectual; (vi) The GATT member countries met once in a decade or so to debate and find solutions to world trade problems. There used to be prolonged and protracted negotiating rounds which took long years to complete. The WTO, on the other hand, is a rule-based global trade organization wherein decisions on agreements are time bound. Even in contrary situations, the dateline can be lengthened only by consensus, and (vii) The GATT rules applied only to trade in goods although at the Uruguay Round trade in services was discussed but no agreement could be reached on its inclusion. The WTO deals in not only trade in goods and services, but also trade-oriented aspects of intellectual property rights and a number of related agreements.

Objectives

The Agreement entered into between the members establishing the WTO lays down in its preamble the following objectives of the WTO:

  1. Its relations in trade and economics shall be conducted in a manner so as to raise standards of living, ensure full employment and large and steadily growing volume of real income and effective demand, and expand the production and trade in goods and services.
  2. It shall bring about the optimal use of the world’s resources within the framework of sustainable development, seeking both (a) to protect and preserve the environment, and (b) to improve the means for doing so in a manner consistent with the respective needs and concerns of member nations which are at different levels of economic development.
  3. It shall make concerted efforts to ensure that developing countries, primarily the least developed amongst them, secure a share in the growth in international trade consistent with the requirements of their economic growth.
  4. It shall realize these objectives by negotiating reciprocal and mutually beneficial agreements so as to bring about a substantial reduction of tariffs and other barriers to trade and the eradication of discriminatory treatment in international trade relations.
  5. It shall move towards an integrated, viable and durable multilateral trading system covering the GATT, the benefits accruing from past liberalization efforts and all the results of the Uruguay Round of multilateral trade negotiations (MTNs).
  6. It shall bring about the linkage between policies and practices relating to trade, environment and sustainable development.

Core Principles

The WTO is the only international organization that deals with the global rules of trade between nations. Its main function, as we have seen, is to ensure that trade flows smoothly, predictably and as freely as possible.

Being a successor organization to the GATT and following the same mandate, the WTO has inherited several of the principles that the GATT had followed. These basic principles that govern world trade are wrapped up in the large number of agreements that constitute the agreement establishing the WTO. While elucidating its core principles in its publication, ‘Understanding the WTO (2003)’, the World Trade Organization has highlighted five core principles.

These five core principles are explained below briefly:

  1. Principle of trade without discrimination: This principle implies that the WTO follows the most-favoured-nation (MFN) status and national treatment. As per this principle, ‘any advantage, favour, privilege, or immunity granted by any contracting party to any product originating or destined for any other country shall be accorded immediately or unconditionally to the like product originating in or destined for the territories of all other contracting parties’. The MFN implies, in simple terms, that a trade concession granted to one member-country of WTO is automatically extended to all other members. National treatment implies that equal treatment is extended to imported goods in a member’s market as are granted to its domestically produced goods.
  2. Freer trade through progressive liberalization of trade regimes: The very objective of setting up a global organization like the WTO is to ensure free trade between countries by removing tariff and non-tariff barriers and other hindrances to the free flow of goods and services. As per this second principle, WTO would ensure freer trade through progressive liberalization of trade regimes.
  3. Predictability of trade rules: Predictability of trade rules is a sine qua non for free and smooth flow of goods and services between countries. In this context, predictability would imply that the WTO ensures that governments of member countries do not raise arbitrarily existing tariffs or non-tariff barriers. This is the third principle of the WTO.
  4. Fair competition: This principle emphasizes fair competition in international trade that ensures level-playing field between trading partners. Fair competition will minimize market distortions caused by export subsidies, dumping and similar disruptive trade practices.
  5. Economic development through trade: Developing countries attempt to enact trade policies to suit their requirements of increasing the levels of income and standard of living. The fifth principle of the WTO endeavours to promote the economic growth of poor and developing countries through trade assistance and enhanced market access by enabling them enter into preferential trade arrangements.

Functions

The primary functions of the WTO are as follows:

  1. It helps in the implementation, administration and realization of the objectives for which it was established.
  2. It lays down the framework for the implementation, administration and operation of the trade agreements concerning the trade in civil aircraft, government procurement, trade in dairy products and bovine meat.
  3. It provides the meeting place for negotiations amongst its members relating to their multinational trade relations in matters concerning the agreements and framework for the implementation of the results of such negotiations, as determined by the Ministerial Conference.
  4. It puts into practice the understanding on rules and procedure governing the Settlement of Disputes of the Agreement.
  5. It seeks to cooperate with the IMF and the World Bank and its affiliates with a view to realizing greater coherence in global economic policy making.

The WTO’s major function is to supervise and implement trade rules in the worldwide economy. The WTO administers the multifaceted trade agreements scheduled in the WTO agreement. For instance, Article 1 of the WTO agreement, the GATT, deals with rules of merchandize trade. This Agreement is often referred to as GATT 1994 to differentiate it from the original GATT Agreement of 1947. Article 2, the General Agreement on Trade in Services (GATS), refers to the trade of commercial services. Article 4, covering the Agreement on Trade-related Aspect of Intellectual Property Rights (TRIPS), offers ‘uniform legal protections for scientific, technological, and artistic achievements. Additionally, the WTO is a platform for trade negotiations, a mechanism for dispute settlement, a source of technical expertise on trade and development for the world’s low-income countries and a sister organization to the World Bank and IMF. But the WTO does not, unlike the other two, lend money to the needy members.’

Organizational Structure

Decisions in the WTO are consensus based and made by the entire membership. It is possible to arrive at a majority vote, but this process has never been used at the WTO as a method of arriving at decisions, as was the practice under its predecessor, GATT. The WTO’s agreements have to be ratified by the Parliaments of all member countries.

The WTO’s supreme decision-making body is the Ministerial Conference which meets at least once in 2 years.

One layer below the Ministerial Conference is the General Council (normally consists of ambassadors and heads of delegation in Geneva, but sometimes officials sent from members’ capitals) which meets several times a year at the Geneva headquarters. The General Council also doubles as the Trade Policy Review Body and the Dispute Settlement Body.

At the next level, the Goods Council, Services Council and Intellectual Property (TRIPS) Council which report to the General Council.

Apart from these, a large number of specialized committees, working groups and working parties deal with the individual agreements and other areas such as the environment, development, membership applications and regional trade agreements.

All WTO members are eligible to participate in all councils, committees, etc., save the Appellate Body, Dispute Settlement panels, Textiles Monitoring Body and plurilateral committees.

There are function-specific committees on Trade and Development, Balance of Payments, Restrictions and on Budget, Finance and Administration. These committees carry out the functions assigned to them by the WTO Agreement, the Multilateral Trade Agreements and any additional function allocated to them by the General Council.

The Secretariat of the WTO is headed by the Director General. The Ministerial Conference appoints the Director General and also outlines the official’s powers, duties, and conditions of service and terms of office. The Director General is appointed for a 4-year term and is supported in his functions by four deputies selected from different member states.

The Director General appoints the members of staff of the Secretariat and he outlines their duties and terms of service as per the regulations adopted by the Ministerial Conference.

The Director General presents to the Committee on Budget, Finance and Administration, the yearly budget estimates and financial statement of the WTO. The Committee, in turn, reviews these estimates and the financial statements and recommends to the General Council for final approval. The General Council then adopts the annual budget estimates and financial statements by a two-third majority consisting of more than half the members of the WTO. The financial regulations relating to members’ contributions and the budget are based on the rules and practices of the GATT.

The WTO follows the practice of decision making by consensus, as was the practice under the GATT 1947. Where a decision cannot be arrived at by consensus, the matter at issue is decided by a two–third majority voting on the basis of ‘one country, one vote’. But in the case of interpretation of the provisions of the agreements and waiver of a member’s obligations, the majority required is three-fourths of the members. Amendments relating to general principles, such as MFN treatment must be approved by all members.

Figure 56.1 clearly illustrates the structure of the WTO.

Figure 56.1 The Organization Structure of the WTO

Note: The WTO is aided by the WTO Secretariat, currently headed by the Director-General Mr Pascal Lamy

Ministerial Conferences

The Ministerial Conference (MC) as we have seen is the highest authority of WTO and comprises representatives of all the WTO members. It is required to meet at least once in 2 years and is clothed with the authority to take decisions on all matters under any of the multilateral trade agreements. The first WTO Ministerial Conference was held in Singapore between 9 and 13 December, 1996.

The routine work of the WTO is handled primarily by the General Council which is also composed of all the WTO members. The General council that reports to the Ministerial Conference also convenes the Dispute Settlement Body (DSB) and the Trade Policy Review Body (TPRB). The DSB, on which all members are eligible to be represented, usually meets twice a month to hear complaints of violations of WTO rules and agreements, and sets up expert panels to study disputes and to decide if the rules were violated. The DSB’s final decisions cannot be blocked. The TPRB is a forum for the entire membership to review the trade policies of all WTO member countries. Major trading powers’ trade policies are reviewed once in 2 years while the trade policies of the other individual members are reviewed once in 4 years.

The three other bodies established by the Ministerial Conference and which report to the General Council are the Committee on Trade and Development, the Committee on Balance of Payments and the Committee on budget. While the Committee on Trade and Development is concerned with issues relating to the developing countries and, especially, to the ‘least developed’ among them, the Committee on Balance of Payments is responsible for consultations between the WTO members and countries which take trade restrictive measures under Articles XII and XVIII of GATT in order to cope with their balance-of-payments difficulties. The Committee on Budget, Finance and Administration deals with issues relating to the WTO’s financing and budget. Beside these bodies, there is the Council for Trade in Goods which is assisted by 12 committees with each being concerned with separate subject. The Council for Trade in Services is assisted by six separate groups. Finally, there is the Council for Trade-related Aspects of Intellectual Property Rights.

The First Ministerial Conference (Singapore, 1996)

The Ministerial Conference is the cornerstone of the global trading system. The Singapore Ministerial Conference had been an outstanding event in all respects having been attended by all the WTO members and representing a pivotal point on a continuum in the growth and evolution of the multilateral trading system.

The inaugural ministerial conference was held in Singapore in 1996. Disagreements between largely developed and developing economies emerged during this conference over issues initiated by this conference, which led to them being collectively referred to as the ‘Singapore issues’.

The developed countries wanted a new round of multilateral trade negotiation to be launched early, covering what are known as the Singapore Issues which comprised a list of seven items which were proposed at the meeting for future negotiations. These included: transparency in government procurement, competition policy, trade facilitation, environment, investment, agriculture and Trade-Related Aspects of intellectual Property Rights (TRIPS). Developing countries like India, on the other hand, held that the implementation issues should be properly addressed before a new round. India had to almost single-handedly fight against the developed countries in this meet.

The Second Ministerial Conference (Geneva, 1998)

The second WTO ministerial conference of 1998 was held in Geneva, Switzerland. During this conference, Global E-commerce Agreement was signed. Members also discussed implementation issues.

The Third Ministerial Conference (Seattle, 1999)

The third WTO ministerial conference of 1999 that was held in Seattle, Washington ended in failure, with massive demonstrations with police and National Guard crowding control efforts drawing worldwide attention. The negotiations failed as several developed countries wanted to incorporate issues relating to environment and labour-standard under the wings of WTO. The move was strongly opposed by developing countries. India was vocal against the introduction of issues relating to environment and labour-standards.

The Fourth Ministerial Conference (Doha, 2001)

The fourth WTO ministerial conference of 2001 was held in Doha, Qatar. The Doha Development Round was launched at the conference. The conference also approved the entry of China, as the 143rd member of ITO.

The Doha Development Agenda (DDA) or known briefly as the Doha Round was a controversial and inconclusive conference in which ministers from the 142 member countries participated. The Doha Round was to be an ambitious effort to make globalization more inclusive and help the world’s poor, particularly by slashing barriers and subsidies in farming. The agenda consisted of (i)  continued trade liberalization and (ii) new rule-making, underscored by commitments to strengthen substantial assistance to developing countries.3 The meeting had attracted a lot of attention because of the conflict of interests between the developed and the developing countries. The negotiations have been highly contentious and no agreement has been reached, notwithstanding intense negotiations at several follow-up MCs and at other sessions. Disagreements still continue over several key areas including subsidies on agriculture.4 The Doha Ministerial adopted three major declarations: (i) on the negotiating agenda for the new WTO Round, (ii) on 40 implementation concerns of the developing countries; and (iii) on the political statement dealing with patents and public health.

The Doha meet concluded by drawing up the ‘Doha Development Agenda’ for new trade liberalization talks; with India approving the ministerial declaration only after it was satisfied that the conference had addressed the country’s concerns on the four Singapore issues of foreign investment, competition policies, transparency in government procurement and trade facilitation.

Although, as usual, the developed nations won the game, India’s bold stand has had a considerable impact. On India’s refusal to approve the agenda unless it was modified to the satisfaction of developing countries, the Chairman of the meeting announced that an explicit consensus would be required at the fifth ministerial conference in 2003, before negotiations could begin on the highly contentious Singapore issues. It was also revealed during the Doha Round that when a single developing country takes a strong position it can have such positive effects, collective action by the entire block of developing countries can have profound impact on WTO’s decision-making process.

One remarkable achievement for developing countries at the Doha Ministerial is that in the case of TRIPs and public health, it provided for waiver of the patent law to face a national emergency. Each country has the freedom to define its national emergency. Thus, it is possible now for the developing countries to set aside the patent laws if they have to face epidemics such as an outbreak of malaria, tuberculosis and AIDS.

The Doha Declaration on TRIPS and public health clearly stated that the TRIPS Agreement does not and should not prevent members from taking measures to protect public health. It was thus a milestone in that it recognized that intellectual property rights were subservient to public health concerns. It specifically recognized the flexibility that countries have to use compulsory licensing for local production. The declaration also set a timetable of December 2002 to find a solution for countries that did not have adequate manufacturing capacity. But negotiations ran aground and reopening them is urgent.5

India’s Negotiating the Doha Round

With the new US and Indian administrations taking the reins of their respective governments, and Pascal Lamy re-appointed the Director General of the WTO, the stage was set for re-engagement in the Doha Round. Momentum is gaining for negotiations. A meeting was scheduled in Delhi in early September 2009, a meeting of the G-20 in Pittsburgh in late September 2009 and a ministerial in Geneva in November 2009.

Notwithstanding all the appealing pro-developing country wording of the agenda of the round, the reality was the continuity of the attitude of the developed countries that want to take as much as possible and give as little. It is because developing countries have formed themselves into vocal groups, in G-4, G-20, G-33, NAMA-11, etc., that their interests have been upheld in this round.

The 2008–09 downbeat economic situations in the developed countries was not conducive to their really opening their markets. Americans had apprehensions on the round, especially with respect to liberalization in the services sector.

With 1995 Uruguay Round having dismantled most trade barriers, the gains in trade from Doha are likely to be less and skewed in favour of the United States and China. This has made many countries aware of the risks involved in the further liberalization. As a result, a modest, balanced round, negotiated in a transparent manner, is more likely to succeed than the high expectations in certain quarters.

With regard to the benefits or losses India faces, other than the issue of special safeguards, the agriculture discussions have been balanced. There is not much real reduction in the domestic subsidies of developed countries, but no real anxieties on the tariffs front for developing countries. Of course, the Special Safeguard Mechanism which India had fought so hard for is essential to protect the interests and livelihood of our farmers.

It is in NAMA where we have needlessly given away a great deal without getting much in return. And the developed countries still ‘manage more’, making it look like we have given little. We have agreed to reduce our bound tariffs, even in the best case scenario, almost doubly as sharply, by about 54 per cent, compared to a 27 per cent reduction by the United States.

In services, nothing substantial has been offered so far by anyone. Presumably, they want to see what they have got in NAMA and agriculture. However, we would like to know what benefits we will get in services before we confirm what we have already offered in NAMA and agriculture.6

In agriculture, the fact that trade talks have been in a state of ‘suspended animation’ for long has much to do with the insistence of the United States and the European Union on continued massive domestic support for agri-produce. It’s all hugely distorting. India and Brazil are only justified in trying to protect their farmers from the prospect of surging agri-imports.

To break the logjam, what is necessary is building of trust between members by addressing domestic concerns that vital interests of food security are not in any way being compromised or even neglected. What cannot be gainsaid is that phasing out export subsidies and domestic support in the high-income economies is essential to make agriculture more open and globally traded.

The speedy completion of the Doha Round—with the focus on development and genuine scope for market access for developing economies—would considerably benefit world trade and the global economy generally albeit later, and perhaps not sooner. Such a positive development would belie once and for all the lingering perception that the WTO rather exclusively serves the interests of the rich economies.

The Fifth Ministerial Conference (Cancun, 2003)

The fifth ministerial conference held in Cancun, Mexico aimed at forging agreement on the Doha Round. An alliance of 22 southern States, the G-20 developing nations which were jointly led by India, China and Brazil, resisted demands from the industrial countries for agreements on the so-called Singapore issues and called for an end to agricultural subsidies within the EU and the United States. The talks broke down without progress.

The Sixth Ministerial Conference (Hong Kong, 2005)

The sixth WTO ministerial conference was held in Hong Kong between 13 and 18 December, 2005. In this Hong Kong meeting, countries agreed to phase out all their agricultural export subsidies by the end of 2013, and put an end to cotton export subsidies by the end of 2006. Further, more concessions were extended to developing countries in the form of agreement to introduce duty-free, tariff-free access for goods from the LDCs. Other important issues were left for further negotiation to be completed by the end of the year 2010. The failure of Cancun Round and the subsequent hard-line stand taken by the developing countries left many doubtful about the success of the Hong Kong Ministerial. However, after 6 days of tough negotiations, a compromise deal was worked out by the 149 members of WTO.

The following are the highlights of the conference:

  1. In agriculture: Agricultural export subsidies to be phased out by the developed countries by 2013. However, domestic support would continue implying that the developed countries would still be subsidizing agricultural output. A Special Safeguard Mechanism (SSM) was provided for developing countries.
  2. Non-agricultural market access (NAMA): Focus was placed on tariff peaks and escalations rather than on average tariffs. It has been agreed that tariffs would be brought down.
  3. Less than full reciprocity: Developing countries in the WTO sacrifice less than the developed countries. All cuts and concessions offered by developed nations shall be reciprocated by developing countries in a lesser measure. This clause would also give the developing countries a longer phase-out time to integrate themselves into the multilateral trading system.
  4. Services: On the services front not much progress was made.

The takeout of the sixth ministerial was that it established the fact that the developing countries are a force to reckon with and no more they can be taken for granted. Although it was felt that certain aspects of Doha Development Agenda would be fulfilled post the ministerial, but little success was reached during the Hong Kong meet. The developing countries refused to make further cuts in subsidies unless the developed world made substantial cuts in theirs. This has led to a deadlock.

The Seventh Ministerial Conference (Geneva, 2009)

The WTO General Council, on 26 May, 2009 agreed to have a seventh WTO ministerial conference session in Geneva between 30 November and December 2009. The prime objective of the meet was to rectify a breach of protocol requiring a ‘regular’ meeting once in 2 years. But it had lapsed with the failure of the Doha Round in 2005, and that the ‘scaled-down’ meeting would not be a negotiating session, but a platform wherein ‘emphasis will be on transparency and open discussion rather than on small group processes and informal negotiating structures’.7

In agriculture, it was conceded by all countries that subsidies need to be reduced and should be eventually phased out. However, in the case of food security concerns, exception was allowed. All forms of export subsidies were to be phased out. This is big problem for the developed countries which have been offering huge subsidies to their farmers.

The Dispute Settlement Mechanism (DSM)

In a multilateral commercial activity such as international trade, innumerable disputes are bound to occur. Every country, be it developed or developing, tries to protect its own turf and interests. Even highly developed countries like the United States, United Kingdom and Germany, which pontificate to the whole world about the virtues of free trade and liberal commerce, do not yield an iota of space when it comes to relaxing their trade policies such as agricultural subsidies when they want developing countries to carry reforms that are inimical to their interests. In such a scenario, an effective mechanism for settling disputes is indispensable for ensuring an efficient and smooth functioning of an organization like the WTO. The WTO’s system of administration is based on the rule of law, which makes the system secure, predictable and to a great extent dependable. It is based on clearly well-defined rules, with pre-fixed timetables for completing each case.

Members of the WTO agree that where they believe a trade dispute exists between them and their trading partners, and they have violated trade rules, they will abide by the decisions of WTO’s dispute settlement system and will not resort to taking action unilaterally. This means following agreed procedures, and respecting judgements.

‘Typically, a dispute arises when one country adopts a trade policy measure or takes some action that one or more fellow-WTO members considers to be breaking the WTO agreements, or a failure to live up to obligations. A third group of countries can declare that they have an interest in the case and enjoy some rights’.8

The Differences between GATT and WTO in Settling Disputes

Settling innumerable trade disputes amongst member countries arising out of practices followed by them while trying to protect their national interests that violate the core principles for which world trade organizations such as GATT and WTO have been created is one of the major tasks confronting them. There was a procedure for settling disputes under the GATT, but it had no fixed timetables, rulings were easily disobeyed and many cases were dragged on endlessly causing inconvenience to the affected parties. The agreement arrived at the UR brought in not only a more structured process, but also clearly defined stages in the procedure. The agreement emphasizes that prompt settlement is very important if the WTO is to function effectively. It sets out in detail the procedures and the timetable to be adopted in resolving disputes even while following flexible deadlines set in various stages of the procedure. As per the new agreement, even in a case which runs its full course to a first ruling, it should not generally take more than 12–15 months, if the case is appealed. The agreed time limits are flexible, and if the case is required to be completed early, where for instance, perishable goods are involved, then the case should take lesser time, say not more than 9–12 months.

The UR Agreement also made it difficult for the country that lost its case to block the execution of the ruling. Earlier under the GATT procedure, rulings were adopted by consensus, wherein an affected member’s objection could block the ruling. Now, under the UR Agreement, rulings are automatically adopted except when all parties agree to reject a ruling to enable the country wanting to block a ruling to persuade all other WTO members to share its view.

Almost the entire dispute settlement process resembles procedures in courts or tribunals, and the preferred solution in the WTO Agreement is for the countries concerned to discuss their problems and settle the dispute by consensus. The first stage is consultations between the Governments concerned, and even when the case has progressed to advanced stages, consultation and mediation are still play a role.

The Performance of DSB in Setting Disputes

In the initial 2 years of WTO’s working, the Dispute Settlement Body (DSB) had handled as many as 60 disputes brought before it. In the perception of WTO members, the DSB delivered fair and more or less enforceable rulings. Developing countries consider it as a strong line of defence against more powerful economies of Europe and the USA. In its very first ruling, the DSB gave a judgement against a US gasoline tax and as a result Washington agreed to amend its law. The United States too took Japan to the DSB in a dispute over the Japanese Photographic film market rather than impose unilateral sanctions against the country which it might have done earlier before the DSB was set up.

Figure 56.2 illustrates the dispute settlement process at the WTO.

Figure 56.2 The Dispute Settlement Process at the WTO

Courtesy: Tata Services Limited, Tata Statistical Outline of India, Mumbai, India: Tata Services Limited., 2005 and 2012–13.

WTO Agreements

The WTO oversees about 60 different agreements which have the status of international legal texts. Member countries must sign and ratify all WTO agreements on accession.9 Some of the most important agreements and the sum and substance of these are discussed below:

The Agreement on Agriculture

The Agreement on Agriculture (AoA) provides a framework for bringing in a long-term reform of agricultural trade and domestic policies relating to it so as to introduce over the years increased market orientation of agrarian produce. Members are expected to remove non-tariff barriers to agricultural trade and substitute them with equivalent tariff measures. The tariffs resulting from this change, as well as other tariffs on agricultural produce, are to be reduced on average by 36 per cent in the case of industrialized countries and 24 per cent in the case of low-income countries. The reductions were required to be undertaken over a period of 6 years in the case of the former and 10 years in the case of the latter. In the case of the least developed countries, there is no requirement for them to make any commitment for reduction of tariffs.

The AoA became operational after the establishment of the WTO at the beginning of 1995. The AoA has three pivotal concepts, or ‘pillars’ namely, (i) domestic support, (ii) market access and (iii) export subsidies. The Agreement provides for opening national markets to international competition with gradually reduced customs duties replacing non-tariff measures. It also seeks to restrain overproduction by increasingly reducing government support that encourages overproduction by which measure surpluses are either disposed off through export subsidies or destroyed. Moreover, it seeks new disciplines on export competition and reduction in subsidies along with the volume of subsidized exports.

The Agreement on Textiles and Clothing (ATC)

The GATT–WTO Agreement on ATC provides for phasing out over a period of 10 years the import quotas on textiles that were in force since 1974 under the Multi-Fibre Arrangement (MFA) by the end of the transition period. The objective of this Agreement was to ensure the integration of the textiles and clothing sector into the GATT 1994. Integration implies that trade in tops and yarns, fabrics, made-up textiles products and clothing will be governed by the General Rules of the GATT. It was envisaged that the integration of this sector would take place in four phases. (i) Each party was integrated on 1 January, 1995 into the GATT products from the specific list in the Agreement, accounting for 16 per cent of its total volume of imports in 1990. From 1 January, 1998, constituting the second phase, products accounting for 17 per cent of 1990 imports were to be integrated. From 1 January, 2002, constituting the third phase, products accounting for 18 per cent of 1990 imports were to be integrated. All remaining products had to be integrated at the end of the transition period on 1 January, 2005 in the fourth phase. All MFA restrictions existing on 31 December, 1994 had been carried over into the new Agreement and were to be maintained until such time the restrictions were removed for the products integrated into the GATT. In the case of non-MFA restrictions maintained by some members, they would also be brought within the purview of the GATT 1994 within one year of the coming of the Agreement into force or progressively phased out by 2005.

There was a specific transitional safeguard mechanism for products not integrated into the GATT 1994 at any phase. Action could be initiated against an individual exporting country if it was found by the importing country that overall imports of a product that had been entering the country in such huge quantities as to cause serious damage to the concerned domestic industry. Action under the safeguard mechanism can be taken either by mutual agreement following consultations or unilaterally but subject to the review of the Textile Monitoring Body (TMB). Safeguard restraints can be in operation for up to 3 years without extension or until the product is integrated into the GATT.

As part of the integration process, all members should take such actions in the area of textiles and clothing as might be necessary with a view to following the GATT rules and improving market access; ensuring the application of policies relating to fair and equitable trading conditions; and avoiding discrimination against imports.

As a result of the ATC, quotas on textiles and clothing have been abolished since 1 January, 2005.

The Agreement on Market Access (AMA)

According to the Agreement on Market Access, the member countries will cut tariffs on both industrial goods and farm produce by an average of about 37 per cent. The European Union and the USA will cut tariff between them by one-half.

The Agreement on Trade-related Investment Measures (TRIMs)

The Agreement on Trade-related Investment Measures (TRIMs) refers to certain conditions or restrictions imposed by a Government in respect of foreign investment in the country, especially by developing countries, and calls upon member countries to introduce national treatment of foreign investments and removal of quantitative restrictions.

The Agreement on TRIMs provides that no contracting party shall apply any TRIM which is inconsistent with the WTO Articles. TRIMs Agreement identifies five investment measures that are inconsistent with the GATT provisions in respect of national treatment and removal of quantitative restrictions. ‘These are measures which impose on the foreign investors the obligation to use local inputs, to produce for exports as a condition to obtain imported goods as inputs, to balance foreign exchange outgo on importing inputs with foreign exchange earnings through export, and not to export more than a specified proportion of the local production.’10

The Agreement on TRIMs prevents the imposition of any performance clauses on foreign investors regarding earnings of foreign exchange, foreign equity participation and transfer of technology. It requires foreign investment companies to be treated at par with national companies. It prevents the imposition of restrictions on areas of investment. It requires free import of raw materials, components and intermediates. The Agreement lays down that the notification of all WTO-inconsistent TRIMs and their phasing out should be carried out within a specific time limit.

The Agreement takes cognizance of the fact that some investment measures restrict and distort trade. It therefore, requires mandatory notification of all non-confining TRIMs and their removal within 2 years for developed countries, within 5 years for developing countries and within 7 years for the least developed countries. However, the transition period can be extended for developing and least developed countries if they confront difficulties in removing TRIMs. It establishes a Committee on TRIMs which will monitor the implementation of these commitments and report to the Council of Trade in Goods annually.

In India, a number of TRIMs were used prior to the liberalization that commenced in 1991, and many of them had been phased out since then.

The Agreement on Trade-related Aspects of Intellectual Property Rights (TRIPS)

Prior to the TRIPs Agreement of WTO, the IPRs related to trade such as patents and trademarks were governed by the Paris Convention, revised up to 1967 which was fairly liberal and left the terms to be decided by the respective national governments. A great deal of divergence was witnessed in the pharmaceutical sector wherein some countries protected the end product while many others like India protected only the process of production and some protected neither. With this kind of flexible patent regime, developed countries found that their interests were jeopardized. Therefore, these advanced Western nations forced the adoption of stringent conditions for the protection of IPRs at the UR that was negotiated at the end of the Uruguay Round of the GATT in 1994. The Agreement on Trade Related Aspects of Intellectual Property Rights sets down minimum standards for many forms of intellectual property (IP) regulation.

The TRIPs Agreement covers seven categories of intellectual property: (1) copyright and related rights; (2) trademarks; (3) geographical indications; (4) industrial designs; (5) patents which also include micro-organism and plant varieties; (6) integrated circuits, and (7) trade secrets. The TRIPs Agreement provides for granting product patents as opposed to process granted under the Paris Convention. The product patents would be for 20 years, whereas for copyrights and related categories of rights, the protection would be available for 50 years. Provisions of the TRIPs Agreement were operationalized by developing countries with effect from January 2005.

The following are the main objectives of protection of IPRs:

  1. To encourage and reward creative work: The main social purpose of protection of patents, industrial design, copyright and other IPRs is to encourage and reward creative work.
  2. To encourage innovation: IPRs are meant to provide protection for the results of investment in the development of new technology, thus giving the incentive and resources to find future R&D activities.
  3. To promote fair competition: The protection granted for distinctive signs and other IPRs aims at stimulating and ensuring fair competition among producers.
  4. To help consumer protection: The protection granted for distinctive signs should also protect consumers, by enabling them to choose wisely between various goods and services.
  5. To facilitate transfer of technology: A well-administered IPR regime should help the transfer of technology in the form of foreign direct investment, joint ventures and licensing.

Apart from all these factors behind the promotion of an IPR regime, it needs to be stressed that the exclusive rights given to the IPR owners are generally subject to a number of limitations and exceptions, aimed at fine-tuning the balance that has to be achieved between the legitimate interests of rights holders and users.

Lastly, this Agreement refers to the controls of anti-competitive practices in contractual licenses pertaining to intellectual property rights. It provides for consultations between governments in order to protect IPRs from being abused.

The Agreement lays down a 1-year transition period for industrialized countries to ensure their legislation and practices in conformity with the implementation of TRIPs. Developing countries and the erstwhile East-European and the USSR countries have been granted a 5-year transition period, while the least developed countries 11 years. Those low-income countries which do not have product patent protection have been given 10 years.

The Agreement also provides for the setting up of a Council for Trade-Related Aspects of Intellectual Property Rights to ensure the operations of the Agreements and governments’ compliance with it.

The General Agreement on Trade in Services (GATS)

The GATS was instituted to extend the multilateral trading system to the services sector, just as the GATT provided a system for trade in merchandize. The Agreement came into force at the same time WTO became operational.

GATS include four modes of international delivery of services:

  1. Cross-border supply such as data flows and transportation services across nations as in the case of international telephone calls.
  2. Commercial presence such as provision of services abroad through FDI or representative offices; this will include setting up subsidiaries or opening up branches in a foreign country as in cases of operating foreign bank branches.
  3. Consumption abroad where consumers or firms making use of a service in a foreign country such as tourism.
  4. Movement of personnel as in the case of entry and temporary stay of foreign consultants or fashion models, are generally referred to as the ‘presence of natural persons’. Some unique characteristics and the socio-economic and political implications of certain services have necessitated various types of national restrictions, such as visa requirements, investment regulations, restrictions on repatriation, marketing regulations, restrictions on employment of foreigners, compulsions to use local facilities, etc. Such highly protected services in different nations include banking, insurance and such other financial services; transportation; and telecommunications including television, radio, film, audio-visual and other forms of communication, tourism, professional services, and the migration of workers.

While developed countries have provided market access commitment of some kind or the other on 54 per cent of their service activities, developing countries did so only on 17 per cent of their service categories. Tourism and travel-oriented services are the only activities in which a substantial number of developing countries made commitments.

GATS that applies multilateral rules and disciplines to services is regarded as a landmark achievement of the UR, although it achieved only little in terms of immediate liberalization, and it became fully operational only under the WTO.

The framework of GATS incorporates the basic obligation of all member countries on world trade in services. The Agreement lays down special conditions pertaining to individual sectors. With regard to the movement of natural persons, it allows governments to negotiate specific commitments for the temporary stay of people for providing a service. The Agreement does not apply to persons who seek permanent employment or residence in a country. The GATS covers aircraft repair and maintenance services, marketing of air transport services and computer reservation services apart from consultations and dispute settlement and the establishment of a Council on Services.

In the case of financial services, it accepts the right of governments to take suitable measures for the protection of investors, depositors and policy holders, and to ensure the integrity and stability of the financial system. They came into effect in June 1995.

With regard to telecommunications, the Agreement lays down that a member should establish, construct, acquire, lease, operate or supply telecommunications, transport networks and services and make it available to the public. In case of a developing country, however, it may place reasonable conditions on access to and use of public telecommunications, transport networks and services with a view to strengthening its domestic telecommunications infrastructure and service capacity and to increase its participation in international trade in telecommunication services with the cooperation of the International Telecommunication Union and the International Organization for Standardization.

The member governments have agreed to have working parties on: (i) trade in services and environment to study and report, with suitable recommendations, on the relationship between services, trade and environment, including the issue of sustainable development; (ii) professional services to examine and report, with recommendations, on the disciplines necessary to ensure that measures relating to qualification requirements and procedure, technical standards and licensing requirements in the field of professional services do not constitute unnecessary barriers to trade.

The Agreement on Technical Barriers to Trade (ATBT)

The Agreement on TBT is an international treaty of the WTO. ‘It was negotiated during the Uruguay Round of the GATT, and came into force with the setting up of the WTO at the end of 1994. The object ensures that technical negotiations and standards, as well as testing and certification procedures, do not create unnecessary obstacles to trade.’11

This Agreement extends and clarifies the Agreement on TBT reached in the Tokyo Round of the GATT. It is meant to ensure that technical negotiations and standards, and testing and certification procedures do not create unnecessary bottlenecks to trade. However, it accepts the fact that countries have the right to establish protection on human, animal or plant life or health or the environment. A Code of Good Practice for the Preparation, Adoption and Application of Standards by standardizing bodies has been factored into the Agreement.

Plurilateral Trade Agreements (PTA)

The PTA consists of a set of four agreements: (i) The Agreement on Trade in Civil Aircraft, (ii)  Agreement on Government Procurement, (iii) International Dairy Agreement and (iv) International Bovine Meat Agreement. The first Agreement was signed at Geneva in April 1979, and was modified subsequently, rectified or amended. The remaining three Agreements were signed at Marrakesh, Uruguay on 15 April 1994.

The Agreement on Anti-dumping (AOA)

Dumping takes place when the price at which the goods are exported to the importer country is quoted lower than their normal value. The difference between this export price and the normal-value is known as the ‘margin of dumping’, which is generally expressed as a percentage of the export price. Generally, the normal value is the comparable price at which goods under dispute are sold in the domestic market of the exporting country or territory.

The GATT rules provide for the right of contracting parties to apply anti-dumping measures if dumped imports cause injury to a domestic industry in the importing member country. The revised GATT Agreement is an improvement over the Agreement in the Tokyo Round. It offers greater clarity, more detailed rules and the criteria to be forced in the determination of the injury caused by dumped imports to domestic industry, the procedure to be followed in every aspect of anti-dumping investigations, and the implementation and duration of antidumping measures, and the dispute settlement process concerning anti-dumping actions taken by domestic authorities. Under the new rules, anti-dumping measures can be used only if dumped imports are shown to be injurious to domestic industry and if any anti-dumping investigation is in process, it should be immediately terminated if the ‘margin of dumping’ is less than 2 per cent of the export price or the volume of dumped imports from a particular country is less than 30 per cent of the total imports of that product subject to a ceiling of 7 per cent of all such dumped imports.

In India, anti-dumping measures are under the purview of the Directorate of Anti-Dumping and Allied Duties, Ministry of Commerce. The Indian industry must be able to probe that dumped imports are causing or threatening to cause material damage to the Indian domestic industry for the government to initiate antidumping action. Material retardation to the setting up of an industry is also considered as injury. A causal link between the material injury being suffered by the Indian industry and the dumped imports has to be established for initiating anti-dumping actions. This would very much depend on proper environmental monitoring, database and procedural familiarity.

The adverse economic and financial consequence of the dumped imports on the concerned Indian industry can be proved among other things by decline in output, loss of sales, loss of market share, reduced profits, decline in productivity, decline in capacity utilization, reduced return on investments, price effects, and adverse effects on cash flow, inventories, employment, wages, growth, investments, ability to raise capital, etc.

Anti-dumping duty imposed by the affected country shall not exceed the margin of dumping. The government of India has accepted the principle that as a case of anti-dumping measure authorities can impose a lesser duty which is adequate to remove the injury caused to the domestic industry. Moreover, anti-dumping actions may be suspended or terminated if the concerned exporter gives an undertaking to revise the price to remove the dumping or the injurious effect of dumping. The rules also provide for retrospective measures in certain cases.

Members may resort to safeguard actions, i.e., import restrictions to protect a domestic industry from the adverse effects of an unforeseen import surge, if any domestic industry is threatened with serious injury. The Anti-dumping Agreement, however, prohibits the use of such actions where they constitute grey-area measures, such as voluntary export restraints, orderly marketing arrangements or other similar measures applied on either exports or imports. Moreover, the Agreement provides for discipline on the use of all safeguard measures, such as time limits, requirements for safeguard investigation, and non-discrimination among sources of supply. Safeguard measures would not be applicable to low-income countries where their share in the member country’s imports of the product concerned is comparatively small.

The Trade Policy Review Mechanism

‘The TPRM aims to carry out reviews of the trade policies and practices under the Multilateral Trade Agreements and the Plurilateral Trade Agreements for the smoother functioning of the multilateral trading system. For this purpose, it envisages the establishment of the Trade Policy Review Body (TPRB).’12 Under the TPRM, each member shall report regularly to the TPRB about the trade policies and practices pursued by it in order to achieve full transparency. TPRB shall undertake an annual overview of developments in the international trading environment having an impact on the multilateral trading system. This exercise shall be assisted by the Director General’s Annual Report listing out major activities of the WTO and highlighting significant policy issues affecting the multilateral trading system.

WTO and the Most Favoured Nation (Mfn) Clause

The key provisions of the GATT ensured for almost half a century the elimination of any discrimination among members and between imported and domestic goods. Article I of the GATT that contains details the Most Favoured Nation (MFN) clause enjoins members to grant to the products of other members treatment no less favourable than the treatment accorded to the products of any other country. As per this clause, no country will give any special trading facility to another country or discriminate against it. This means that all members of the WTO are equals and shall share benefits of any move towards lowering of tariff barriers. Once WTO came into existence, it automatically guarantees implementation of MFN clause by all the WTO members since Article I of the GATT was incorporated as Article I of the WTO. While using the MFN clause, countries would face some exceptions, especially those covering customs unions and free trade areas. At the same time, developing countries and LDCs get benefitted more from the best trading conditions in almost all multilateral trade negotiations. Another clause relating to non-discrimination under the WTO is referred to as ‘national treatment’ covered in Article III of the GATT, which states that once imported goods enter a domestic market, they must be treated on par with domestically produced goods.

It is not only in Articles I and III that MFN and national treatment are referred to in WTO documents. For instance, the Agreement on TRIPS contains, with certain exceptions, MFN and national treatment requirements with regard to the provision of intellectual property protection by the WTO members. Similarly, the Agreement on Trade in Services mandates the WTO members to offer, with some given exemptions, the MFN treatment to services and service vendors of other members. In those cases in which exemptions are taken, they should be reviewed after 5 years and should not be maintained for more than 2 years. The other WTO agreements with non-discrimination provision include those on rules of origin; pre-shipment inspection; TRIMs and the application of sanitary and photo-sanitary measures.

The Wto, The Imf and the World Bank

A widespread integration of economic activity on a global scale has led to an ever-increasing interdependence amongst different areas of economic policy. Economic development, trade and financial policies are increasingly intertwined within countries and in a way they impact activities and policies of other countries. As a result, given their commitments and responsibilities in these areas, the International Monetary Fund (IMF) and the WTO agreed in Singapore on 9 December, 1996 to cement their ties and relations when the then WTO Director-General Renato Ruggiero and the then IMF Managing Director Michel Camdessus signed an Agreement for future cooperation and collaboration between the two international institutions.

The Agreement lays down the basis for executing the WTO Ministerial Mandate to realize greater coherence in global economic policy through cooperation with the IMF and the World Bank. An agreement of cooperation between the WTO and the World Bank was also signed. The  Agreement highlighting the synergies in the work and responsibilities of the IMF and the WTO provides channels of communication to ensure that the rights and obligations of members are germane to the thinking of each organization. The Agreement also accords observer status to the IMF and WTO in certain of each other’s decision-making bodies in keeping with enhanced cooperation.

The Agreement brings to the fore benefits such as easy access for both organizations to each other’s information and data. As the institutional framework has now been put in place, better coherence can be realized in global economic policy-making with the WTO, the IMF and the World Bank. Even while each of them will be playing their individual distinctive roles in global economic affairs, their roles will reflect their collective will, objectives and commitment to the cause of orderly trade and economic developments of the comity of nations.

The Wto and Developing Countries

Today, the WTO has 153 members, and another in the process of succession. Of the 132, 98 are developing and 48 least developing countries (LDCs).

The developing countries account for more than four-fifths of WTO’s total strength. The Committee on Trade and Development (CTD), helped by the Sub-Committee on Least-Developed Countries, monitors all aspects of the participation of these countries in the multilateral system. The developing countries especially the least-developed among them are assisted with trade and tariff data relating to their own export interests and to their participation in the WTO bodies. The WTO secretariat has also continued the GATT’s training programme that are conducted twice a year for the officials of developing countries. Since their inception in 1955, and up to the end of 1997, nearly 1,600 trade officials have been benefited by these courses.

It is true that the share of developing countries in international trade has almost doubled in 35 years, and they have also diversified their exports, but at the same time participation by WTO’s 29 least developed members (LLDCs) in world trade has fallen from about 1.4 per cent in 1960 to below 0.3 per cent in 2008. Apart from trade, this ‘marginalization’ is also evident in foreign investment for the LDCs receive less than 2 per cent whereas developing countries as a whole attract 37 per cent. The LLDCs have also fared very badly in diversifying their exports since that depends on exports of a few commodities, minerals or tropical products. Besides, they trade mainly under regional preferential arrangements or generalized systems of preferences extended to them by the developed countries.

Some of the problems faced by developing countries with regard to WTO are given below:

  1. Overall dissatisfaction amongst developing countries: Just as in the previous rounds, the developing countries were much dissatisfied with the outcome of the Uruguay Round. The Wall Street Journal wryly commented that while the US and the EC were getting the best pieces of the world trade pie, the low-income countries were getting only the crumbs. Some of the agreements such as TRIPs, TRIMs and services have been very sensitive issues to the developing countries as these poor countries have to lower the protection against competition from the powerful developed economies which enjoy economies of large-scale production and cheaper prices. However, as in the previous rounds, the UR also provided special considerations to developing countries, particularly to the LDCs and to those with balance of payments problems. However, a condition was imposed that member countries resorting to trade restrictions for balance of payment purposes should do so in a way that causes minimum disruption to global trade and quantitative restrictions should be avoided as far as possible.
  2. Issues regarding liberalization of the agricultural sector: If we look at the issue objectively, the developed countries would suffer most by liberalization of the agricultural sector. Such being the case, the argument these countries should completely liberalize agriculture without any reciprocity on part of the developing countries does not stand to reason. As a matter of fact, the UR proposals in respect of agriculture, as in several other cases, give special consideration to the developing countries. It will be the developed countries that would be hit hard, agricultural subsidies in the European countries have been very high, say 30–50 per cent. If agricultural trade liberalization and the enhanced agricultural prices due to cut in producer subsidies in the developed countries benefit the agricultural exporters, the hike in food prices due to cut in subsidies may adversely impact the food importers. It is reported that more than 100 of the developing nations are reported to be net importers of food. If the food prices go up, it would make food production in these countries more competitive, incentivize the farmers and lead to an increase in production.
  3. Issues relating to textile trade: International trade in textiles has been estimated to be worth USD 240 billion a year. After the phasing out of MFA, world exports of textiles are estimated to go up by USD 25 billion a year. With a 2.2 per cent share in the world textile trade, India’s share in the additional exports could exceed half a billion dollars. But the country’s actual gain would depend on its ability to compete with countries which are considered emerging leaders in the textile trade such as China, Hong Kong, Taiwan and South Korea.
  4. Issues relating to the liberalization of trade in services: Developing countries are apprehensive about the proposal to liberalize trade in services just as much as developed countries. Fortunately for them, rift between the US and EU on this issue has left the service sector largely unaffected.
  5. Conflicts of interest among countries relating to UR agreements: The impact of the UR is not uniformly felt by all countries. A measure which favourably impacts one developed country may unfavourably affect another developed country, and even the extent of the favourable or unfavourable impact may also vary. It is, therefore, quite natural that conflicts of interest have arisen both among the developing and developed countries. Latin American countries are said to be not very interested in liberalizing the trade in textiles as they feel that if they could gain a direct entry to the NAFTA through some regional arrangement, it could give them an edge over competitors like India, Pakistan and Bangladesh.
  6. Some studies have shown that sub-Saharan Africa, Indonesia and some Caribbean islands will be poorer as a result of the UR Agreement. However, they would stand to gain if liberalization leads to higher productivity.
  7. A sense of shared dissatisfaction: Therefore, no country is entirely satisfied with all the UR proposals. ‘The surest proof of the success of the Uruguay Round is that no country is entirely happy at the outcome.’ Although India is quite dissatisfied that the textile trade is not completely freed, some in the United States are angry over the liberalization move, alleging that 2 million jobs in the United States would now hang in balance.
  8. Developing countries at the receiving end: The unequal participation by members and lack of bargaining power on the part of poor countries have resulted in the developing countries not getting a fair deal from the WTO as also was the case with the GATT. To make it worse, while the developing countries have been true to their commitment to WTO and increasingly opening up their markets, the developed countries have gone into a protective shell and have been denying justice in several respects to the developing countries.
  9. There are some benefits too: The UR negotiations have made the rules and regulations more transparent than before. It has thus made trade easy and unilateral actions more difficult. Since the outcome of the UR is being implemented by the WTO it has made dispute settlement and arbitration easier.
  10. Problem lies in the domination of developed countries: The major source of the problem for the developing countries arises from the fact that the WTO is dominated by the leading industrialized countries and corporations of these countries. Developing countries have little power within the WTO due to the fact (a) they do not stand together collectively; (b) since most of them depend on developed countries for imports, exports, aid, security, etc., they feel threatened when they have to object; (c) since trade negotiations are based on the principle of reciprocity or ‘trade-offs’ such a system of bartering only benefits large and diversified economies and not the smaller and poor ones; (d) with fewer human and technical resources, poor nations cannot cope with 40–50 meetings held in Geneva every week. Besides, they often enter negotiations less prepared than their counterparts from developed countries; (e) developing countries find the WTO’s dispute settlement system costly and also they lack the level of legal expertise, and (f) the basis on which the system is run, namely whether a country is violating free trade rules or not, is not the most appropriate for their development needs. These are some of the practical problems from which the developing countries suffer from and thus are unable to wrest the maximum benefit from the WTO system of trading. Nelson Mandela commenting on the Uruguay Round observed: ‘The developing countries were not able to ensure that the rules accommodated their realities... it was mainly their preoccupations and problems of the advanced industrial economies that shaped the agreement’. He opined incisively that rules applied uniformly are not necessarily fair because of the different circumstances of members.

Taking cognizance of the fact that special urgent measures were needed to help the LLDCs develop and diversify their trade, if they were to draw benefit from the WTO trade system and to join the world economy on the eve of twenty-first century, the Singapore Ministerial Conference adopted the Plan of Action for the LLDC’s which mandates the WTO, in coordination with other international organizations, to take an active role in assisting them to remove bottlenecks in their production capacity and diversify exports. It also called on the developed countries, and also the better-off developing countries, to explore the possibilities of granting duty-free access to the LLDC’s exports.

The Wto and India

India was one of the 23 contracting parties that gave birth to the GATT that was concluded in October 1947. India has been one of the leaders amongst developing countries during the rounds of MTNs under the aegis of the GATT.

In the last and the eighth round of the MTN under the GATT, the WTO was created to subsume the GATT in 1995. Even after the inception of WTO in 1995, till the Doha Ministerial (2001), the developing countries were not found to be pro-active at the negotiating table even though their interests were not being upheld by the powerful lobby of developed countries. ‘It is indeed ironic, as free trade is much more favourable for a developing country than its developed counterparts. However, a new trend emerged from Cancun (2003) onwards, and since then the former group has become much more vocal at the multilateral trade forums on the protectionist policies of the latter.’13

Notwithstanding the fact of being a founder member of GATT, India was never very active in various negotiating rounds until late 1980s. Since the Indian economy followed the import substitution led growth strategy during 1960s and 1970s, gaining from the import liberalization at principal export markets of the European countries and the USA was never our principal objective. Moreover, a considerable proportion of India’s trade during this period was bound for the Soviet bloc countries, and the presence of this secure market undermined the motivation to search for newer outlets elsewhere. On the other hand, letting the domestic market open to foreign competition through reduced tariffs was considered injurious for the domestic industries. In its place, the country preferred to discuss trade and development-related issues at UNCTAD forums in association with other developing countries such as Brazil. Even with a new-found following of a positive approach at the WTO, India still feels comfortable to discuss trade-related issues at UNCTAD forums for coalition building among developing countries on areas pertaining to mutual interest.

The setting up of the WTO is a step forward towards establishing a globalized set-up dedicated to promote free worldwide exchange of goods and services. Efforts have been made to remove prohibitive restrictions of various kinds in the arena of international trade within the framework of WTO. India having signed the WTO declaration has to fulfil its obligations in shaping its future macroeconomic policies. While the withdrawal of tariffs on imports will facilitate India’s access to cheaper inputs of production, domestic producers of identical goods will face tougher competition. Industries that do not have appropriate technology to match the product quality of their foreign counterparts will have to face adverse consequences of well-entrenched foreign competition.

Moreover, the phasing out of subsidies on exports will render India’s exports globally more expensive. Subsidies are levied primarily on those exports which do not have an inbuilt cost advantage, and withdrawal of export subsidies will amount to taking away the existing cost advantage and putting domestic producers to great loss and hardship.

With quotas made to exit, exports cannot be welcomed into any country. With rising cost of living and wages, the low-wage advantage which India has at present will also be nullified sooner than later. India’s interests at present rest in adopting a go-slow policy before pledging herself to a total free trade decision. India should analyze the situation carefully in the immediate, short and medium terms because if industrial growth, export performance and other domestic macroeconomic parameters do not revive in the coming few years, due to continued impact of the global financial meltdown, it is high time, we protect our home turf from invasion of foreign goods from advanced nations lest our industries get maimed badly.

The Uruguay Round Agreements and the WTO have come in for severe adverse criticisms in India. It was argued by many that India should quit the WTO on the ground these agreements are inimical to the national interest. The IPR Act permits any association of persons or producers or any organization or authority established by law representing the interest of the producers of goods to register a geographical indication. It may be possible to argue that the holders of the traditional knowledge in goods produced and sold using geographical indication can register and protect their traditional knowledge under this law. But it is not found to be happening.

Evaluation of the Wto

The WTO has come to play a very important role in both the global and national economies. National economic policies and activities are significantly impacted both positively and negatively by the principles, policies and agreements of WTO. The growing acceptance of WTO agreements in spite of their shortcomings is clearly seen by the increase in the number of member countries. When the GATT came into existence in 1947, only 23 nations were signatories to it. The WTO’s membership has increased to 151 countries at the beginning of 2008 and several more nations are negotiating for its membership. It is of great interest to learn that China, which was one of the original signatories of the GATT, quit it in the late 1940s following the assumption of power by the Communist Party, but got admitted to the WTO, after prolonged negotiations, with effect from 1 January, 2002. The WTO members now account for over 97 per cent of the international trade showing the increasing importance of the organization in bringing about an orderly growth and diversity of international trade.

The setting up of the WTO as first major global institution in the aftermath of the financial turbulence adversely impacting economies worldwide is an epoch-making event. Its establishment has brought in several important advantages for all concerned. The biggest gain of the post-UR era is the creation and expansion of a trading system based on internationally agreed and enforceable rules and disciplines to oversee as well as to guarantee progress in international trade. The establishment of the WTO is seen for obvious reasons as the single most outstanding international achievement of the decade made possible by substantial contributions of all member countries.

The implementation of ‘the epoch-making zero-tariff’ Information Technology Agreement (ITA) that aimed at completely doing away with tariffs in the USD 500-billion trade in computer products by the year 2000 by 42 members accounting for more than 95 per cent of the world market in the sunrise industry products including computers and software was a singular achievement of the fledgling world trade body. Likewise, the liberalization of trade in financial services sector when the landmark agreement on financial services was implemented on 12 December, 1997 is a sterling achievement of the WTO. One hundred and two member countries representing 95 per cent of trade in banking, insurance, securities and financial information have brought financial services within the framework of international rules.

Implementation Issues

The developing countries by and large and developed countries to some extent feel aggrieved that though they are several agreements covering almost the entire gamut of goods and services that are traded across borders, many of them have not been adequately implemented. The issue is discussed below:

  1. Non-implementation of trade liberalization: It is not only important that organizations have a framework of rules and regulations, but it is equally important that they ensure that these are implemented in both the letter and spirit so as to achieve the objectives. It has been seen that developing countries have been taken for a ride in several cases as the UR Agreements have not been implemented in the letter and spirit by the developed countries. They have been resorting to covert measures to deny these poor countries the legitimate benefits of the proposed trade liberalizations, which they have agreed to implement.
  2. Non-implementation of curtailment of subsidies: It has been found that subsidies given by developed countries to recipients have been made non-actionable, while several of those given by developing countries to boost their exports so as to ensure their development have either been prohibited or put in the actionable category. Subsidies to farmers extended by developed countries such as the USA and EU have, instead of coming down, gone up primarily because these countries were able to switch over to subsidies permissible under the Agreement on Agriculture, before the commencement of its implementation. Liberalization of textiles trade that has been hailed as a boon for the developing countries has also been thwarted because developed importing countries try to comply with the targets of liberalization set out in the Agreement on Textiles and Clothing (ATC) by taking credit for the items outside restriction retrospectively.
  3. Rich countries tilt the playing field for trade in varying degrees by paying huge subsidies to their domestic farmers. These subsidies are as large as USD 311 billion a year and they adversely impact world market prices of farm goods, causing losses to poor countries, For  instance, EU subsidized exports have contributed to the decline of the dairy industries in Brazil and Jamaica and the sugar industry in South Africa. West African cotton producers have improved the efficiency of their cotton sector, achieving competitive production costs, and yet they can in no way compete against subsidized farmers in rich countries. Annual agricultural subsidies in rich countries considerably exceed the annual incomes of all of Sub-Saharan African countries.
  4. Non-implementation of agreement on technology transfers: Rich countries, notwithstanding their commitment in the TRIPS agreement, have not taken any genuine measure to share their technology in the interests of reducing poverty, as pointed out by an UNCTAD Report. The TRIPS agreement too though provides for technology transfers, has few details on it and does not discuss policies for implementation. The TRIPS Agreement also does not provide any protection for intellectual property arising from indigenous knowledge such as those used in traditional medicine. The TRIPs Agreement calls for a global minimum standard for promoting invention. Intellectual property regimes are meant to balance the two social goals of promoting inventions as well as the use of inventions. The TRIPS Agreement, thus, incorporates provisions in the interests of users, such as compulsory licensing or parallel imports that give governments flexibility to allow local manufacturing or imports of goods under patents. But the language in which the provisions are expressed is so vague that they are difficult to apply.

Developing countries have noted several instances of inequities and imbalances in the Uruguay Round Agreements and have given a large number of formal proposals on these implementation issues for correcting them. They want implementation issues to be urgently resolved and any new round of MTN should be taken up only after these issues are resolved. But the developed countries do not want to wait any further and want the newly formulated MTN soon.

Benefits

Thanks to the meaningful objectives for which WTO was established and the administrative machinery it has put in place, member countries are able to realize a number of benefits as listed below:

  1. The GATT/WTO has contributed significantly in reducing the tariff and non-tariff barriers to trade both by developed and developing countries. As a result, this has ensured tremendous expansion of global trade and the advantages it brings with it, such as modernization of industries, greater employment and better standard of living for people of member countries.
  2. The liberalization of investments has been boosting the economic growth of a number of countries, especially of the developing ones.
  3. The WTO has helped in increase in competition, efficiency of resource utilization, enhancement in quality and productivity and fall in prices, and acceleration of economic development by means of the liberalization of trade and investment.
  4. By providing a forum for multilateral discussion of economic relations between nations, the WTO has helped foster better political and social relations.
  5. WTO has a trade disputes settlement system between nations which otherwise used to create ill will and bad blood amongst them.
  6. The WTO has a mechanism to deal with violation of trade agreements, and also how to deal with them effectively and efficiently.
  7. The WTO carries out research related to global trade and disseminates a wealth of information to member countries which are very useful to them.

Criticisms

Even while the benefits that accrue to member nations cannot be belittled, the WTO has been subjected to a number of criticisms, such as the following:

  1. In the negotiations and decision making, the WTO is dominated by the developed countries who ensure that they benefit by these processes at the cost of the more deserving low-income countries.
  2. Many developing countries do not have the financial strengths and the required expertise to effectively participate in the WTO discussions and negotiations.
  3. The developed countries are able to resort to arms-twisting tactics due to their combined strength and because of the dependence of developing countries on the developed nations.
  4. Many of the liberalizations policies are carried on without considering the vulnerability of the developing countries and the potential adverse effects they impose on them.
  5. One of the most worrying impacts of the WTO concerns the links between trade and the environment. Environmentalists want that the WTO should play a positive and productive role in promoting environmental friendly trade. But trade liberalization measures initiated by WTO promote environmental degradation, widespread global pollution, killing of animals and dolphins, clearing off ancient dense forests and so on. ‘Environmentalists have been outraged by some decisions of the WTO. They maintain that too often the WTO is blindly for free trade at any cost.’14 Indeed, these concerns were voiced when thousands of environmentalists descended on the World Trade Organization summit in Seattle in 1999. They protested the WTO’s influence on everything from marine destruction to global warming.15
  6. The WTO being dominated by developed countries has not been successful in ensuring the organization’s disciplines on the developed countries. On the other hand, the developing countries have, in general, been getting a raw deal from the WTO.
  7. Many opponents of the WTO in the USA and elsewhere hold the view that the WTO rules, especially dispute settlement mechanism reduce the sovereignty of nations. But a proper analysis of the WTO rules and dispute settlements show that the cost of the sovereignty concerns are more than outweighed by the economic benefits enjoyed by citizens from free trade.

It is also true that it has become a fashion to blame the WTO even for matters for which it is not even remotely responsible. It is also found that the developing countries do not do their homework adequately before they go to the negotiating table, do not fight adverse trade issues together to protect their common interests, work out and implement strategies to combat the threats and to take advantage of the opportunities of the emerging world order.

A balanced analysis of the functioning of the WTO clearly shows that though the organization has helped the global trade grow to unprecedented heights; it suffers from a great deal of inadequacies, basically because of its flawed organizational structure and non-implementation issues. By owning a larger share in the subscription to the membership at the WTO, the Western and industrialized countries dominate the administration and ensure their interests are protected at the cost of the more deserving low-income countries. Moreover, promoting economic development of poor nations which was one of the core principles of the WTO has not been given the thrust in policies and in matters of implementation it richly deserves. ‘If one looks at the history of world trade, development has always been somewhere between the backburner and back of the stove.’16 This confrontation between the developed and developing countries arising out of conflicts of interests has made the WTO almost inactive most of the time. To unlock the deadlock, a series of meets have been arranged, some at the behest of India and it is hoped the outcome will be fruitful.

Case 56.1: WTO’s Mini-Ministerial in New Delhi

India Initiative

In a bid to end the impasse of the Doha Round, India—often accused of intransigence in reaching a settlement by raising the so-called Singapore issues and demanding vociferously that the developed countries bring down substantially farm subsidies—took the initiative and convened a mini-ministerial conference in New Delhi on 3 and 4 September, 2009. A group of 35 countries, including some of the leaders of blocs who opposed one another on the various contentious issues participated. Union Commerce Minister, Anand Sharma who hosted the meet presided over the 2-day meet. The Delhi meet went beyond earlier meetings of this kind organized by India, which were more often than not an effort at coalition building amongst the like-minded developing countries as in the case of the SAARC Trade Ministers’ meet in 2001.

The Doha Round and its vexed issues

The Doha Round which commenced in 2001, seeking to open up global markets in goods and services, broke down in July 2008 when a number of countries, with the United States and India at the forefront, refused to come to a consensus on issues related to safeguards for poor farmers and sectoral negotiations for tariff elimination in select industrial goods sectors. The negotiations got log-jammed on three basic and contentious issues: (i) in agriculture, while developing countries insist that the US, EU and Japan slash farm subsidies, and establish a safeguard mechanism wherein import duties can be hiked to guard against import surges, and special products that would not attract tariff cuts, developed nations have problems with extent of both; (ii) In services, some countries like India with relatively well-developed services sectors desire more access to others’ markets, and insist negotiations in services proceed alongside those in other areas. Many others want that done only after dealing with agriculture and NAMA; (iii)  In non-agricultural market access (NAMA), an in-principle agreement has been reached that tariffs should be cut and that developed nations must cut more sharply than the poor nations. Disagreement on how much the differential should be and how it should be linked to flexibility for developing nations in keeping some of the products out of the cuts. These conflicts of interests and the resulting disagreements could not be resolved in several protracted negotiations.

The objective of the Delhi mini-ministerial meet

The objective of the Delhi meet was to develop a broad-based consensus to remove the impediments in multilateral discussions and to provide clear directions to negotiators to reenergize the multilateral process at the WTO. We can place the threefold aim of India convening the meet as follows: (i) India desired to get the negotiations, stalled since another meet in Geneva in July 2008, moving again. This was realized when the trade ministers from 35 countries including all major negotiating blocs attended the Delhi meet; (ii) India did not hope to thrash out issues, but agree that negotiations must be resumed and a deal concluded by late-2010. This was accepted in principle by all participants; and (iii) India wanted that the takeout of Delhi mini-ministerial should be the appreciation of the fact that the greater flexibility is needed if a deal is to be struck. The Delhi meet was never meant to debate, let alone settle specific issues. It was only intended to organize a round of trade talks that had gone into a limbo and at one stage looked dangerously close to remaining that way. The Delhi meet has changed all that. It has rekindled the interest in the multilateral process as a time when protectionist tendencies are on the rise and free trade agreements are proliferating by the day.

What transpired at the Delhi Meet?

The two-day ministerial engagement witnessed ‘informal talks’ between India and various regional blocks on how to cater to the interests of the poor and developing countries and ensure that their issues and concerns are addressed without any compromise. India has emerged as the focal point in this whole affair1 where food security and livelihood are the twin issues of prime importance to both India and other developed and poor nations. Given the Doha Round’s chequered history over almost 8 years, it would be naïve to expect an early wrap up the talks. But then, trade negotiations involving more than 150 countries are bound to be a tortuous process. Stumbling blocks are unavoidable. But a ‘development round’ that fails to take on board the concerns of developing countries is a non-starter. It is time the developed world woke up to that.3 Unlike earlier occasions, the participants were conscious that mere reaffirming of commitment is not enough unless that is converted into effective instructions to negotiators to re-engage, so as to conclude the round successfully by 2010.

Does it mean the ‘end game’ has been reached?

Brazil’s External Affairs Minister, Celso Amorim supported India’s stand that the vexed Doha trade talks have not really reached the ‘end game’ as was being made out by the rich nations and the WTO chief Pascal Lamy, Developed Countries, he added, have been paying only a mere ‘lip service’ for development dimension of the round which has been in discussion for past 8 years without any breakthrough. He argued that the developing countries have already made enough concessions and new demands should not be made on them. The rich countries have brought nothing substantive on the table. He cited the example of their insistence on having zero duties on specific sectors such as automobile, textile and chemicals. ‘India has taken the initiative of hosting the meeting of the important trade ministers and kick-starting the WTO negotiations which were stalled in July last year on the issue of protection to farmers of developing countries’.4

A serious step towards ending of the impasse has been taken

Notwithstanding the arguments for and against, it cannot be denied that the impasse over WTO Doha Development round with the representatives deciding to take the negotiations further ahead by the chief negotiator and senior officials resuming the talks on 14 September in Geneva. The text issued by WTO chief Pascal Lamy in December 2008 will be the basis of the negotiations. The issue of advancing the negotiations on services along with that in agriculture and NAMA will also be considered in Geneva. The Ministers also agreed that chairs of the negotiating groups on agriculture and NAMA would be requested to evolve issue-based work plans in consultation with chief negotiators or senior officials to intensify the engagement for completing the negotiations.5

Differences do persist

However, the meeting also admitted that differences persist on main issues. Countries such as Brazil, China and the United States raised various issues of substantive nature that need to be resolved in Geneva. At the talks in Geneva in July 2008, India and others opposed to agriculture subsidies offered by rich nations to their farmers on the ground that it distorted trade by making the produce of the developing countries costly. ‘The Special Safeguard Measure (SSM) was one of the issues which led to the collapse of the talks last year. While the US, backed by some agriculture exporting developing countries was pushing for a less effective SSM (with higher trigger points and a ceiling on the increase in import duties),’6 developing countries including India desired the mechanism to be easy to put into practice. ‘Considering the fact that 60 per cent of the world economic growth will come from emerging economies like India, Brazil, China, South Africa and the ASEAN region, the US asked these nations to take up more responsibilities and give market access to the products of the developed world. Those countries that can make contributions to the world have added responsibility to make decisions in order to make Doha round successful’, the US Trade Representative Ron Kirk said.

Lamy’s fond hopes!

Lamy, even while hoping that the Delhi meet could be the beginning of the end game for closing the Doha talks, said that the key differences still remain between rich economies like the United States and advanced developing nations like India, China and Brazil. ‘The fact that we are in the middle game does not mean it (Doha Round) will finish’, he said. The WTO chief added further: ‘One of the difficulties in concluding the Doha Rounds of talks is that there have been three times more topics that what we had in the previous round and five times more active members’. The deadlock between the major trading blocs, centered on serious differences over farm subsidies in developed countries and tariffs on industrial goods in developing ones, put paid to repeated attempts to forge a new pact.7 To ensure that the negotiations on services—which is of utmost importance to India especially in the context of extracting commitments in outsourcing and movement of professionals and workers—progress simultaneously, the ministers also agreed to have work plans on services.8 Yet, despite the hurdles, 153 WTO member countries will doubtless face in building unity, there’s room for cautious optimism. By all indications, the world’s major trading blocs are back to thinking that, pitfalls notwithstanding, dodged multilateral engagement is the only way to achieve it. That’s encouraging in itself.9

India’s growing stature as the leader of the Third Bloc!

India has to use its rising clout to keep on providing constructive leadership to the Third World countries in the WTO negotiations. There are highly complex negotiations and require a great deal of technical expertise which missions of smaller countries in Geneva lack and as such look up to India to take a position which will protect the larger interest of all of them. Under such circumstances, though it is ‘premature to call the Delhi meet as the beginning of the end game, but it definitely signals a new readiness of the WTO members to give a big push to the goal of early conclusion of the Doha negotiations, where India should play a role suitable to its new stature’.10

Sources:

1. Special Correspondent (2009), ‘Re-engaging Doha Round, India Leads the Way’, The Hindu, 5 September.

2. Editorial (2009), ‘Breaking the Deadlock?’, The Hindu, 8 September.

3. Editorial (2009), ‘Doha Door Ast. Now to Build on Progress to Delhi’, The Economic Times, 7 September.

4. Press Trust of India (2009), ‘End Game’ May Be Long for Reaching Trade Pact, Says Brazil’, Business Standard, 5/6 September.

5. Medudia, S. (2009), ‘WTO Meet Ends Impasse; Talks to Resume on Sep. 14’, The Hindu, 5 September.

6. Sen, A. (2009), ‘WTO Geneva Meet to Identify Causes for Trade Talk Collapse’, The Economic Times, 8 September.

7. Narang, K. (2008), ‘Delhi Meeting Re-opens Doors on Doha Round, Trade Talks to be Resumed in Geneva from September 14’, The Hindu Business Line, 5 September.

8. Sen, A., ET Bureau (2009), ‘WTO Impasse over, Talks to ‘Restart’ Soon’, The Economic Times, 5 September.

9. Editorial (2009), ‘Comment Destination Doha’, The Times of India, 7 September.

10. Priya, Shashank (2009), ‘Doha Round Progress Insight?’, The Economic Times, 9 September.

Key Terms

Dispute settlement 879

Doha Development Agenda 876

GATT 868

IPRs 884

MFN Clause 888

Ministerial Conference 876

Organizational structure 873

Singapore issues 876

TRIMs 883

TRIPs 884

UNCTAD 869

Uruguay Round 868

WTO 868

Discussion Questions

56.1. What is World Trade Organization? Explain its objectives and functions.

56.2. Explain the main features of the Trade Related Intellectual Property Rights (TRIPs) Agreement under the Uruguay Round. What will be its effects on the developing countries?

56.3. Write notes on any two of the following agreements with their effects on developing countries under the Uruguay Round: (i) Agreement on Agriculture; (ii) Agreement on Textiles and Clothing; and (iii) General Agreement on Trade in Services (GATS).

56.4. Explain the main features of the WTO. How does it differ from GATT?

56.5. Discuss the WTO Agreement embodying the results of the GATT Uruguay Round.

References

1. Encyclopaedia Britannica, s.v. World Trade Organization (WTO).

2. Carbaugh, Robert J. (2002), International Economics (Singapore: South Western/Thomson Learning).

3. ‘The Doha Development Agenda’, http://ec.europa.eu/trade/ issues/newround/doha _ da/index _ en.htm.

4. Fergusson, Ian F. (2008), ‘World Trade Organization Negotiations: The Doha Development Agenda’ (PDF). Congressional Research Service, 18 January, http://www.nationalaglawcenter.org/ assets/crs/RL32060.pdf.

5. Cherunilam, F. (2007), International Business: Text and Cases, Fourth edition (Prentice-Hall of India).

6. Rahul Bajaj, (2009), ‘Negotiating the Doha Round’, The Economic Times, 17 August.

7. ‘WTO to Hold 7th Ministerial Conference on 30 November–2 December 2009’, http://www.wto.org/english/news_e/news09 _ e/gc _chair _stat_ 26may09 _ e.htm.

8. Cherunilam, F. (2008), International Economics (New Delhi: Tata McGraw-Hill Publishing Company Limited).

9. ‘WTO Legal Texts’, http://www.wto.org/english/docs_e/legal _ e/legal_ e.htm.

10. Dubey, M. (1966), An Unequal Treaty: World Order After GATT (New Delhi: New Age International Publishers).

11. ‘A Summary of the Final Act of the Uruguay Round’, http://www. wto.org/english/docs _ e/legal_ e/ursum _ e.htm#dAgreement.

12. Jhingan, M. L. (2003), International Economics (Delhi: Vrinda Publications (Pvt) Ltd).

13. Kapila, U. (2006), Indian Economy: Performance and Policies (New Delhi: Academic Foundation).

14. Carbaugh, R. (2002), International Economics (Bangalore: Thomson/South Western).

15. World Trade Organization, Annual Report, Geneva, Switzerland, 1998; cited by Robert Carbaugh, ‘Green Target WTO’s Plan for Lumber,’ The Wall Street Journal, 24 November 1999, pp. A2 and A4.

16. Pradeep S. Mehta (2009), ‘Who Does Not Want to Conclude the Doha Round?, The Economic Times, 1 September.

Suggested Readings

56.1. Bernstein, William J. (2008), A Splendid Exchange, How Trade Shaped the World (New York, NY: Atlantic Monthly Press).

56.2. Carbaugh, Robert J. (2008), International Economics (New Delhi: South Western, Cengage Learning India Private Limited).

56.3. Khor, M. (1998), ‘How the South Is Getting a Raw Deal at the WTO’, in Anderson A. (ed), Views from the South: The Effects of Globalization and the WTO on Third World Countries (San Francisco, CA: International Forum on Globalization (IFG)).

56.4. Krugman, Paul R. and Obstfeld, M. (2004), International EconomicsTheory and Policy (New Delhi: Pearson Education).

56.5. Mannur, H. G. (1993), International Economics (New Delhi, India: Vikas Publishing Houses Pvt. Ltd.).

56.6. Members and Observers WTO official site.

56.7. Mithani, D. M. (2005), International Economics (Mumbai: Himalaya Publishing Houses).

56.8. Salvatore, D. (2006), Introduction to International Trade (Singapore: John Wiley).

56.9. Sawyer, W. Charles and Sprinkle, Richard L. (2003), International Economics (New Delhi: Prentice Hall of Private Limited).

56.10. Steinberg, Richard H. (2002), ‘In the Shadow of Law or Power? Consensus based Bargaining and Outcomes in the GATT/WTO.’ International Organization Spring (2002): 339–374.

56.11. BBC (2010), ‘Timeline: World Trade Organization—A Chronology of Key Events’, BBC News, 21 January , http://news.bbc.co.uk/2/hi/europe/country_profiles/2430089.stm.

56.12. Vaish, M. C. (2001), International Economics (New Delhi: Oxford and IBH Publishing Co. Pvt Ltd).

56.13. World Trade Organization. ‘The GATT Years: From Havana to Marrakesh’, http://www.wto.org/english/thewto_e/whatis_e/tif_e/fact4_e.htm.

56.14. World Trade Organization. ‘The Services Council, Its Committees and Other Subsidiary Bodies’, http://www.wto.org/english/tratop_e/serv_els_coun_e.htm.

56.15. World Trade Organization. ‘The Trade Negotiations Committee’, http://www.wto.org/english/tratop_e/dda_e/tnc_e.htm.

56.16. World Trade Organization. ‘Understanding the WTO: The Agreements’, ‘Overview: A Navigational Guide’, http://www.wto.org/ english/thewto _e/whatis _e/tif_ e/agrml_e.htm.

56.17. World Trade Organization. ‘Understanding the WTO—What Is the World Trade Organization?’, http://www.wto.org/english/thewto_e/ whatis _ e/tif_ e/fact1_e.htm.

56.18. World Trade Organization. ‘WTO Organization Chart’, http://www. wto.org/english/thewto_e/whatis_e/tif_e/org2_e.htm.

56.19. World Trade Organization. ‘WTO Secretariat Budget for 2008’, http:// www.wto.org/english/thewto_e/secre_e/budget08_e.htm.

56.20. WTO to Hold 7th Ministerial Conference on 30 November–2 December, 2009, WTO Official Website, http://www.wto.org/english/news_e/ news09_e/gc_chair _stat_ 26may09_e.htm.