WTO Came into existence on 1-1-1995 with the conclusion of Uruguay
Round Multilateral Trade Negotiations at Marrakesh on 15th April 1994, to
:
• Administering Trade Agreements
• Acting as a forum for trade negotiation
• Settling trade disputes
• Reviewing National Trade Policies
• Assisting Developing Countries in Trade
Policy issues, through technical assistance
and training programmes
• Cooperating with other international
organizations
BASIC PRINCIPLES
Protecting the domestic industry by tariffs
only
Tariffs should be reduced and bound against
further increases
Trade according to the “most favoured-
nation” clause
National Treatment
Promoting Fair Competition
Protecting the domestic industry by
tariffs only
No quantitative restrictions on imports
QR, quota etc. for BOP problems
Tariffs should be reduced and
bound against further increases
Reduction in “protectionist” tariffs through
negotiations
Schedules of concessions for Bounded rates
of tariffs
Binding against further increases
“Concept of Graduation” for under-
developed and developing countries
Trade according to the “most favoured-
nation” clause
Trade must not be discriminatory bet. countries in terms of :
Tariffs
Concessions
Charges
Methods of levying tariffs and charges
Rules and Formalities for Trade
Internal Taxes and Charges
Laws, Regulation and Requirements affecting their sales
Administration of QRs
Exceptions to MFN : Regional Trade Blocks I.e, EEC, NAFTA, SAFTA ,
etc.,
NATIONAL TREATMENT
Products once enter the country after
paying customs duties, must be
treated at par with domestic
products in all sense.
Promoting Fair Competition
• Open and healthy competition
• Creates level playing field
between local and foreign goods
• Encourages competition and
fosters efficiency
Organization handles the following aspects
Agriculture
Due to huge subsidy component in agriculture and support
by the developed countries and its influence on the
developing countries stretched the negotiation long
Agreement on Agriculture - helps to balance the terms of
trade between countries in agricultural commodities
Sanitary and Phyto-Sanitary Measures
(SPS)
• Agreement concerns the application of sanitary
and Phyto-sanitary measures for food safety
and animal & plant health regulations
• Organization encourages the member countries
to set their own standards based on
international standards
• The Agreement includes provisions on control,
inspection and approval procedures
• SPS standards to be followed in the future are
to be notified well in advance
Market Access
• Tariffication of all non-tariff measures
• Reduction of tariffs by 36% and 24%
• Current Access (Import as % of consumption in
base year)
• Minimum Access Commitment (3 to 5% 2 to 3 %
• Exemption under National Security Clause, BOP
clause and Special Safe Guards
• Quantity Restriction to be phased out
• LDC exempt from any commitment
Export Subsidies
• Export subsidies to be brought down by 36 %
(Dd) and 25 % (Dg) in 6 years
• Quantities subsidized to be by 21 % (Dd) and
14 % (Dg)
• Countries not giving export subsidies in the
base year should not give the later
• Developing countries can give individual or
external freight and market subsidies
Contd….. (TBT)
• Packaging requirement
• Safety Regulation (Eg. Toys)
• Regulations of Testing (Medical Equipments)
• Quality and Efficacy of the product or health
risk to the handlers
Anti-dumping, safeguards and
Countervailing Duties
• WTO members can restrict imports to protect
their domestic industry by imposing dumping
margin on imported products
• Countervailing duties are imposed on
subsidized imports
Customs Valuation
The agreement on customs valuation
obligate member countries to follow
certain rules, while calculating the
duty on imports
Rules of Origin
• Rules of origin are the criteria used to
define where the product is from
• It is linked to the application of trade
measures
TRADE-RELATED INTELLECTUAL
PROPERTY RIGHTS (TRIPS)
• Agreement recognises the widely varying standards in
the protection and enforcement of intellectual property
rights.
• The most contentious form of intellectual property
rights is patent.
• Agreement requires that patent should be available for
any inventions, whether products or processes.
Dispute Settlement
• Organization acts as dispute settlement
body in the international trade
• Country brings disputes, if their rights
are being infringed
• All the disputes are settled based on the
legal grounds
Trade Related Investment Measures
(TRIMS)
• TRIMS mainly deals with foreign
investment in terms of trading activities.
• Developing countries retains the
flexibility to choose investment promotion
polices, if feels necessary
AGREEMENT ON AGRICULTURE
* The objective of the AOA is to reform trade in
the sector and to make policies more market-
oriented. This would improve predictability
and security for importing and exporting
countries alike.
The new rules and commitments
• Market Access
• Domestic Support
• Export Subsidies
How is WTO different from GATT?
WTO, unlike GATT, has expanded into areas other
than trade in industrial goods such as textiles,
agricultural goods, services, intellectual property
and trade related investment measures.
WTO, unlike GATT, is more intrusive as detailed
rules, such as those on agriculture, subsidies
including domestic subsidies, intellectual property
and investment measures impact the industry and
economy on the whole, and not just exporters or
importers.
DECISION MAKING IN WTO
Practice of consensus decision
By majority vote - each country has one vote
Special voting requirements in specific cases
2/3rd majority for amendments, 3/4th for interpretation
and consensus for changing basic provisions like MFN
Consensus required for rejection of a
panel/appellate body decision instead of the
negative consensus rule in GATT
Because of strong DSU, pressure to bring even non
trade subject matters into WTO.
Benefits of WTO
Predictability
Stability
Rule based
Democratic
Strong Dispute resolution
Permanent forum for negotiation
India’s Commitments at WTO
MFN/ NT to Members
All agricultural items bound
Primary- 100%
Processed food 150%
Edible Oil 300%
Historical exceptions
Removal of QRs on BOP grounds
What are QRs?
QRs or Quantitative Restrictions are
limits set by countries on quantity of
imports.
The restrictions may be imposed
through quotas, licensing requirements,
canalization and other discretionary
methods.
How did the QR Issue Originate?
Under the GATT imports are to be controlled
only through customs duties. High duties
would restrict and low or zero duties allow
freer imports.
There are exceptions e.g. for balance of
payments (BOP) problems, national security,
protection of human, animal or plant life etc.
allowed under WTO Agreements
Tariff Protection
India has bound agricultural tariffs at
100% for primary agricultural commodities;
150% for processed foods; and
300% for edible oils
Tariff bindings on some agricultural products
bound at low rates of duty in previous GATT
Rounds were re-negotiated under Art. XXVIII
in 2000
Tariff Protection
Items Tariff - from Tariff – to
Rice 0% 70-80%
Maize (TRQ) 0% 50%
Sorghum / Millet 0% 50%
Apples 35% 50%
SMP/WMP (TRQ) 0% 60%
Edible Oils 35-55% 75%
Refined Oils 45-65% 85%
Tea/ Coffee 35% 70%
Coconuts/ copra 35% 70%
Trade Trend Analysis
No imports of 249 items of the 714 opened.No overall
increase in imports of items on which QR removed in 2000.
Increase observed in items needed for export
production like precious/ semi stones, PCB’s etc.
Others include pulses to offset supply set-backs.
High imports of betel nut, coconut oil, ball-point pens, cloves,
electric inverters etc. observed. Direct impact on prices.
Monitoring of consumer goods like agricultural & plantation
products,glassware, micro-wave ovens, knives, lactose syrup,
other films etc.needed.
Benefits of QR removal
- Wider choice of goods and services at
competitive prices for consumers
- Free trade allows reduction in prices and hence
inflation
- Improvement of quality and competitiveness of
domestic industry
- Promotes industrial growth by providing raw
material and capital goods at competitive prices.
What is dumping ?
If the export price of the product from the
country of export is less than its normal
value in the ordinary course of trade
Anti-dumping Duties:
Essential Features
- Deals with the price behaviour of
exporters and not the exporting country as
a whole
- Dumping exists when Export Price is
less than the Normal Value
- Injury to domestic industry & Causal
link are required to be proved
Countervailing Duties
To deal with the problem of direct and
indirect Government Subsidies
Export subsidies main target but also
deals with domestic subsidies that will
cause serious prejudice
Injury to domestic industry and Casual
link must necessarily be proved
Agreement on Subsidies and
Countervailing Measures deals with
- Disciplines regulating whether a subsidy
may be provide by a member
- Use of CVD to offset injury caused by
subsidisation
CHRONOLOGY OF REMOVAL OF QRs
Tariff line wise import policy announced on 31.3.96
Position of QR removal after 1.4.96
Tariff lines as on 1.4.96 – 10202 (10 digit)
Year Removal of Tariff lines
As on 1.4.96 6161 (10 digit)
1.4.96-31.3.97 488 (10 digit)
1.1.98 132 (10 digit)
13.4.98 391 (8 digit)
1.4.1999 894 (8 digit)
1.4.2000 714 (8 digit)
1.4.2001 715 ( 8 digit)
EXIM Policy 2001
All QRs removed with effect from
1.4.2001 as per India’s commitment.
Import of selected items (wheat, rice,maize,
coarse cereals, copra & coconut oil)
through State Trading Enterprises.
Quarantine Regulation for import of agricultural
products
Secretaries to monitor import export promotion
surges of 300 sensitive products.
AREAS OF COMMITMENTS
Domestic Support i.e. subsidies by
Governments to domestic producers;
Market Access i.e. the disciplines on
import restraints and tariffs; and
Export Competition i.e. export
subsidies and other forms of export
subsidisation.
Domestic Support
Green Box - Research, Extension, PDS, Decoupled
Payments etc;
Blue Box - Production Limiting Subsidies ;
Amber Box - AMS-subject to reduction commitments viz
- Product specific (MSP)
- Non product specific (input subsidies-fert.
Power, irrigation) ;
Total Agricultural support reduction (Base period :
1986-88)
- Developed countries 20 % (1995 - 2000)
- Developing countries 14% (1995 - 2004)
De-minimis level
Developed countries 5% ;
Developing countries 10%
Market Access
Removal of all remaining QRs by 1st April
2001. All non-tariff barriers(Quantitative
Restrictions) to be abolished
Tariff cuts :
Developed countries - Average 36%
- Minimum 15% (1995 - 2000)
Developing countries - Average 24 %
- Minimum 10% (1995 - 2004)
TRIPS - INTELLECTUAL PROPERTY RIGHTS
Intellectual property is economically valuable
information
Intellectual Property Right is the legally
enforceable right to exclude others from using the
information created, or to set the terms on which
it can be used.
TRIPS prescribes uniform minimum standards
and periods for which protection should be
granted to different intellectual property rights
Most Favoured Nation and National Treatment to
be applied
BUSINESS IMPLICATIONS
Transparency : Tariffs are transparent, incidences on
prices is predictable
Quantitative restrictions : This will also eliminate
licensing system in trade. Therefore encourages the
competitive spirit
Bound Rate : This will promote investments in
business and will also improve global trading activities
National Treatment : This will check improper
Tariffication in the name of Health, Safety,
Environment, etc., on non-discriminatory basis
