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