MOOCS ASSIGNMENT
SUBMITTED BY:
SUBMITTED TO:
MILLIND ARORA DR.
MANYA GUPTA
[Link].B (H.)
ASSISTANT PROFESSOR
VIII SEM
SCHOOL OF LAW
Topic- international trade law graphic era hill
university
World Trading System
Week 1:
Introduction to World Trading
System
Introduction to World Trading System
The world trading system refers to the global
framework of rules, agreements, and institutions that
govern international trade. It facilitates the exchange of
goods, services, and intellectual property across
borders, aiming to promote economic growth, reduce
trade barriers, and ensure fair competition. The
cornerstone of this system is the World Trade
Organization (WTO), established in 1995, which
succeeded the General Agreement on Tariffs and Trade
(GATT). The system is built on principles such as non-
discrimination, transparency, and predictability,
ensuring that member countries adhere to agreed-upon
rules.
The History of the Indian Trade and Formation of
GATT
India has a rich history of trade dating back to ancient
times, with the Indus Valley Civilization engaging in
commerce with Mesopotamia. During the colonial
period, India’s trade was controlled by European
powers, particularly the British, who exploited
resources and restricted indigenous industries. Post-
independence, India adopted protectionist policies to
foster domestic growth but gradually liberalized its
economy in the 1990s.
The General Agreement on Tariffs and Trade (GATT) was
established in 1947 to regulate international trade and
reduce trade barriers after World War II. It was a
response to the economic instability of the interwar
period, where protectionist policies like high tariffs
exacerbated the Great Depression. India was one of the
23 founding members of GATT, advocating for the
interests of developing nations. GATT aimed to promote
trade through tariff reductions and non-discriminatory
policies, laying the foundation for the modern
multilateral trading system.
The GATT to WTO
GATT operated successfully for nearly five decades,
facilitating multiple rounds of trade negotiations, such
as the Kennedy Round and Tokyo Round, which reduced
tariffs and addressed non-tariff barriers. However, GATT
had limitations, including its lack of enforceability and
limited scope in areas like services and intellectual
property. These shortcomings led to the Uruguay Round
(1986–1994), which culminated in the creation of the
World Trade Organization (WTO) in 1995.
The WTO expanded the scope of GATT by including
trade in services, intellectual property, and agriculture,
and introduced a robust dispute settlement mechanism.
Unlike GATT, the WTO is a formal international
organization with a legal framework, binding
commitments, and a broader mandate to oversee
global trade.
Uruguay Round and The World Trade
Organization
The Uruguay Round was the most comprehensive trade
negotiation under GATT, involving 123 countries. It
addressed new areas such as agriculture, textiles,
services, and intellectual property, resulting in the
establishment of the WTO. Key outcomes included the
Agreement on Agriculture, the General Agreement on
Trade in Services (GATS), and the Agreement on Trade-
Related Aspects of Intellectual Property Rights (TRIPS).
The WTO, headquartered in Geneva, Switzerland,
serves as a forum for trade negotiations, dispute
resolution, and monitoring national trade policies. It
operates on principles like most-favored-nation (MFN)
treatment, national treatment, and transparency. India
played a significant role in the Uruguay Round,
advocating for special and differential treatment for
developing countries.
Week 2: World Agriculture Trade
World Agriculture Trade
Agriculture trade is a critical component of global
commerce, involving the exchange of crops, livestock,
and processed food products. It is influenced by factors
like subsidies, tariffs, and non-tariff barriers. Developing
countries, including India, rely heavily on agriculture for
economic growth and food security, but face challenges
due to market access restrictions and subsidies in
developed nations.
GATT and Agriculture
Under GATT, agriculture was initially exempt from many
trade rules due to its sensitivity and the prevalence of
domestic subsidies. The Kennedy and Tokyo Rounds
attempted to address agricultural trade but made
limited progress due to resistance from developed
countries. GATT’s focus was primarily on industrial
goods, leaving agriculture subject to high tariffs and
subsidies.
The WTO Agriculture Agreement Objectives,
Domestic Support, and Different Boxes
The WTO Agreement on Agriculture, established during
the Uruguay Round, aims to liberalize agricultural trade
through three pillars: market access, domestic support,
and export subsidies. Market access involves reducing
tariffs and non-tariff barriers. Domestic support refers
to subsidies provided to farmers, categorized into three
“boxes”:
Green Box: Subsidies with minimal trade distortion,
such as research and development or environmental
programs, are permitted without limits.
Amber Box: Trade-distorting subsidies, such as price
supports, are subject to reduction commitments.
Blue Box: Subsidies tied to production-limiting
programs are allowed under certain conditions.
India has advocated for flexibility in domestic support
to ensure food security and support small-scale
farmers, often using Green Box measures like public
stockholding programs.
Food Security Concerns at WTO
Food security is a priority for developing countries like
India, where public stockholding programs provide
subsidized food to vulnerable populations. These
programs, however, can be classified as Amber Box
subsidies, leading to conflicts with WTO rules. The 2013
Bali Ministerial Conference introduced a “peace
clause,” allowing developing countries to maintain such
programs without facing legal challenges until a
permanent solution is reached. India continues to push
for reforms to balance trade liberalization with food
security needs.
Week 3: Rules of Dumping and
Anti-Dumping
Rules of Dumping and Anti-
Dumping
Dumping occurs when a company exports goods at a
price lower than their domestic market price or
production cost, potentially harming the importing
country’s industries. The WTO’s Anti-Dumping
Agreement (ADA) allows countries to impose anti-
dumping duties to counteract such practices, provided
they follow specific rules.
Determination of Injury, Definition of Industry,
Domestic Industry, Casual Link
To impose anti-dumping duties, a country must prove:
Dumping: The exported product is sold below its
normal value.
Injury: The domestic industry suffers material injury or
threat thereof.
Causal Link: The injury is directly caused by the
dumped imports.
The “domestic industry” refers to producers of a like
product in the importing country. Injury is assessed
based on factors like declining sales, profits, or market
share. India’s anti-dumping investigations often involve
industries like steel and chemicals.
Procedural Aspects and Indian Laws on Anti-
Dumping
The WTO outlines procedural requirements for anti-
dumping investigations, including transparency,
opportunity for defense, and time-bound processes. In
India, the Directorate General of Trade Remedies
(DGTR) conducts anti-dumping investigations under the
Customs Tariff Act, 1975, and the Anti-Dumping Rules,
1995. The process involves filing a complaint,
preliminary findings, public hearings, and final
determination, followed by the imposition of duties if
warranted.
Week 4: Agreement on
Sanitary and Phytosanitary
Measures (SPS) and Technical
Barriers to Trade (TBT)
Agreement on Sanitary and
Phytosanitary Measures (SPS)
The SPS Agreement governs measures to protect
human, animal, and plant health while ensuring they do
not unjustifiably restrict trade. It requires measures to
be based on scientific evidence and international
standards, such as those set by the Codex Alimentarius
Commission.
Assessment of Risks, Codex, and Standards
Risk assessment under the SPS Agreement involves
evaluating the likelihood and severity of health risks.
The Codex Alimentarius, established by the FAO and
WHO, sets global food safety standards. For example,
maximum residue limits for pesticides are based on
Codex standards. India aligns its food safety regulations
with Codex to facilitate trade.
SPS vs. TBT Agreement
The SPS Agreement focuses on health-related
measures, while the Technical Barriers to Trade (TBT)
Agreement addresses technical regulations, standards,
and labeling requirements that affect trade. For
instance, an SPS measure might regulate pesticide
residues, while a TBT measure could involve packaging
standards. Both aim to balance trade facilitation with
consumer protection.
Technical Barriers to Trade Agreement (TBT) and
Indian Institutions
The TBT Agreement ensures technical regulations do
not create unnecessary trade barriers. In India,
institutions like the Bureau of Indian Standards (BIS)
and the Food Safety and Standards Authority of India
(FSSAI) develop and enforce TBT-related regulations.
For example, BIS sets standards for industrial products,
while FSSAI regulates food packaging and labeling.
Basic TBT Commitments, Indian Laws, Rules, and
Regulations, and FSSAI Packaging Standards
TBT commitments include transparency, non-
discrimination, and the use of international standards.
India’s TBT compliance is governed by laws like the
Food Safety and Standards Act, 2006. FSSAI’s
packaging regulations mandate clear labeling, material
safety, and compliance with environmental standards,
ensuring consumer safety and trade compatibility.
Week 5: General Agreement
on Trade in Services (GATS)
and Trade-Related Investment
Measures (TRIMs)
General Agreement on Trade in Services (GATS)
GATS governs international trade in services, covering
sectors like banking, telecommunications, and legal
services. It operates on four modes of supply:
Cross-border supply: Services provided remotely (e.g.,
online consulting).
Consumption abroad: Consumers traveling to access
services (e.g., tourism).
Commercial presence: Establishing a business in
another country (e.g., foreign bank branches).
Movement of natural persons: Professionals working
abroad temporarily.
India has liberalized sectors like IT and
telecommunications under GATS but retains restrictions
in sensitive areas like legal services.
Opening of Legal Service Sector in India
India has been cautious about opening its legal services
sector to foreign firms due to concerns about
reciprocity and domestic capacity. Limited reforms
allow foreign lawyers to provide advisory services on
international law, but practicing Indian law remains
restricted to Indian citizens.
Trade-Related Investment Measures Agreement
(TRIMs)
The TRIMs Agreement prohibits investment measures
that distort trade, such as local content requirements
mandating the use of domestic inputs. It aims to ensure
fair treatment of foreign investors. India has faced WTO
disputes over TRIMs, particularly in sectors like
automobiles and renewable energy.
Local Content Provisions and WTO Disputes
Local content requirements, common in developing
countries, aim to boost domestic industries but often
violate TRIMs. For example, India’s solar energy policies
requiring local components led to a WTO dispute with
the United States, which ruled against India in 2016.
Week 6: Trade-Related
Aspects of Intellectual
Property Rights (TRIPs)
Trade-Related Aspects of Intellectual Property Rights
(TRIPs)
The TRIPs Agreement sets minimum standards for
intellectual property (IP) protection, covering patents,
trademarks, copyrights, and more. It balances IP
protection with public interest, particularly in areas like
health and technology transfer.
Patents and Trade Marks
Patents protect inventions, while trademarks safeguard
brand identities. India’s Patents Act, 1970, was
amended in 2005 to comply with TRIPs, introducing
product patents for pharmaceuticals. The Trademarks
Act, 1999, aligns with TRIPs by protecting distinctive
marks.
Copyright, Industrial Design, and Integrated
Circuits
Copyright protects creative works, such as books and
software, while industrial designs cover product
aesthetics. The TRIPs Agreement also includes
protection for integrated circuit layouts. India’s
Copyright Act, 1957, and Designs Act, 2000, comply
with these provisions.
Geographical Indications and Trade Secrets
Geographical indications (GIs) protect products tied to
specific regions, like Darjeeling tea. India’s
Geographical Indications Act, 1999, safeguards such
products. Trade secrets, though not formally regulated,
are protected through contractual agreements and
judicial precedents.
Doha Declaration and Post-TRIPs Scenario
The 2001 Doha Declaration addressed public health
concerns, allowing countries to issue compulsory
licenses for patented drugs during health emergencies.
India has leveraged this flexibility to ensure access to
affordable medicines, notably in cases like the Natco-
Bayer dispute over cancer drugs.
Week 7: Agreement on
Customs Valuation (CV)
Agreement on Customs
Valuation (CV)
The CV Agreement standardizes methods for
determining the customs value of imported goods,
ensuring fair and transparent valuation. It helps prevent
under- or over-invoicing, which can distort trade.
Different Methods of Calculating Customs
Valuation
The CV Agreement outlines six methods, applied
sequentially:
Transaction Value: The price actually paid for the
goods.
Transaction Value of Identical Goods: Value of
similar goods imported at the same time.
Transaction Value of Similar Goods: Value of
comparable goods.
Deductive Value: Based on the resale price in the
importing country.
Computed Value: Based on production costs and
profits.
Fallback Method: A reasonable value based on
available data.
Indian Laws on Customs Valuation
India’s Customs Act, 1962, and Customs Valuation
Rules, 2007, align with the CV Agreement. The Central
Board of Indirect Taxes and Customs (CBIC) oversees
implementation, ensuring consistency with WTO
standards.
The Agreement on Pre-Shipment Inspection
The Pre-Shipment Inspection Agreement ensures that
inspections by private agencies in exporting countries
are transparent and non-discriminatory. India uses pre-
shipment inspections for certain imports to verify
quality and value.
Week 8: GATT and WTO
Dispute Settlement
GATT Dispute Settlement
The General Agreement on Tariffs and Trade (GATT) had
a dispute settlement mechanism, but it was considered
relatively weak and less effective compared to the
system established under the WTO.
Key characteristics and limitations of GATT dispute
settlement:
Political Process: The process was often
characterized by political considerations and
consensus-based decision-making. This meant that
any member could block the establishment of a
panel to examine a dispute or the adoption of a
panel report.
Lack of Automaticity: There was no automatic right
to the establishment of a panel or the adoption of
its findings. The agreement of the defending party
was often required.
Slow and Inefficient: The process could be lengthy
and subject to significant delays.
Weak Enforcement: There was no strong
mechanism to ensure that countries complied with
the recommendations of panel reports. Retaliation
was possible but often difficult to implement
effectively, especially for smaller economies
against larger trading partners.
Focus on Conciliation: While panels could be
established, the emphasis was often on finding
mutually agreed solutions through consultations
and conciliation.
Despite these limitations, the GATT dispute settlement
mechanism did play a role in resolving trade disputes
and establishing some precedents for international
trade law. However, the need for a more rules-based,
automatic, and enforceable system became
increasingly apparent, leading to the significant reforms
under the WTO.
Dispute Settlement in WTO
The Dispute Settlement Body (DSB)of the World Trade
Organization (WTO) oversees a more robust and
effective dispute settlement system, governed by the
Dispute Settlement Understanding (DSU). This is
considered one of the key pillars of the WTO and a
significant improvement over the GATT system.
Key features and principles of the WTO dispute
settlement system:
The WTO dispute settlement system aims to:
Secure a positive solution to a dispute.
Preserve the rights and obligations of members under
the covered agreements.
Clarify the existing provisions of those agreements.
Panel Proceedings
If consultations fail to resolve a dispute, the
complaining member can request the establishment of
a panel by the DSB.
Key aspects of panel proceedings:
Composition of the Panel: A panel typically consists
of three (and sometimes five) independent experts
in trade law and related fields who are not
nationals of the disputing parties (unless the
parties agree otherwise).
Terms of Reference: The DSB agrees on the terms
of reference for the panel, which define the specific
issues to be examined.
Submission of Arguments and Evidence:Both the
complaining and the defending members, as well
as third parties with a substantial interest in the
matter, submit written arguments and supporting
evidence to the panel.
Panel Meetings: The panel holds meetings with the
parties to hear their arguments and ask questions.
Deliberation and Drafting of Report: After reviewing
the submissions and holding meetings, the panel
deliberates and drafts a report containing its
findings of fact, its legal interpretations of the
relevant WTO agreements, and its
recommendations for resolving the dispute.
Interim Review: The panel usually provides an
interim report to the parties, allowing them to
comment on specific aspects before the final report
is issued.
Circulation of Final Report: The final panel report is
circulated to all WTO members.
Adoption by the DSB: The panel report is adopted
by the DSB within 60 days of its circulation unless
there is a consensus against its adoption.
The role of the panel is to make an objective
assessment of the facts of the case and the
applicability of and conformity with the relevant
covered agreements.
Appellate Body Proceedings
A party to a dispute that is not satisfied with the legal
interpretations in a panel report can appeal the report
to the Appellate Body.
Key aspects of Appellate Body proceedings:
Standing Appellate Body:The Appellate Body is a
permanent body composed of seven individuals
who are recognized authorities in law and
international trade. Three members typically hear
each appeal.
Scope of Review: The Appellate Body can only
review issues of law covered in the panel report
and the legal interpretations developed by the
panel. It cannot review findings of fact made by the
panel.
Submission of Arguments: The parties to the
appeal submit written arguments outlining the
legal errors they believe the panel made.
Appellate Body Hearing: The Appellate Body holds
a hearing where the parties can present their
arguments.
Appellate Body Report: The Appellate Body issues
a report upholding, modifying, or reversing the
legal findings and conclusions of the panel.
Adoption by the DSB: The Appellate Body report is
adopted by the DSB within 30 days of its
circulation unless there is a consensus against its
adoption.
The Appellate Body plays a crucial role in ensuring the
legal consistency and coherence of WTO jurisprudence.
However, it is important to note that the Appellate Body
has faced challenges in recent years, including a lack of
sufficient members to hear appeals, which has led to a
backlog of cases and concerns about the functioning of
the WTO dispute settlement system. Efforts are
currently underway to address these issues.
Post-Adoption:
Once a panel or Appellate Body report is adopted, the
member found to be in violation of WTO rules is
expected to bring its measures into conformity with the
recommendations within a "reasonable period of time"
determined through agreement or arbitration. If the
member fails to do so, it may negotiate compensation
with the complaining party. If no agreement on
compensation is reached, the complaining party can
request authorization from the DSB to suspend
concessions or other obligations towards the non-
complying member. This is the final stage of the
enforcement mechanism in the WTO dispute settlement
system.
In summary, the WTO dispute settlement system, with
its automaticity and binding rulings, represents a
significant advancement over the GATT system. The
panel and Appellate Body proceedings provide a
structured and legalistic framework for resolving trade
disputes, contributing to the stability and predictability
of the multilateral trading system. However, the system
also faces ongoing challenges that need to be
addressed to ensure its continued effectiveness.
Conclusion
The World Trade Organization and its foundational
agreements have profoundly shaped global trade,
transforming it from a fragmented landscape into a
more predictable and rules-based system. The
evolution from GATT to the WTO marked a significant
step towards greater liberalization and
institutionalization of international trade, extending
disciplines to goods, services, and intellectual property.
For India, a country with a rich trading heritage and a
rapidly growing economy, the WTO has been a crucial
platform. It has provided opportunities for India to
integrate further into the global economy, leverage its
comparative advantages in areas like services, and
seek redress for unfair trade practices. While India has
actively participated in WTO negotiations and
embraced many of its principles, it has also consistently
raised concerns about issues vital to its development,
such as food security, special and differential treatment
for developing countries, and the flexibility to
implement policies that support its domestic industries.
However, the world trading system faces significant
challenges today. The paralysis of the Appellate Body in
the WTO dispute settlement system is a critical
concern, undermining the enforceability of rulings and
potentially leading to a return to unilateral trade
actions. Debates surrounding food security and public
stockholding continue to be contentious, reflecting the
differing priorities of developed and developing nations.
Furthermore, the rise of digital trade, environmental
sustainability concerns, and the increasing use of non-
tariff barriers present new complexities that require
concerted multilateral cooperation and reform efforts
within the WTO framework.
Moving forward, effective multilateral cooperation and
a renewed commitment from all member states are
essential to address these challenges and ensure that
the WTO remains a relevant and effective institution for
fostering a fair, open, and equitable global trading
system for the 21st century. India, with its growing
economic influence, is expected to play an even more
prominent role in shaping the future trajectory of the
world trading system.