ITL

Unit-1
Mercantilsm theory
 Strive to be economicaaly self sufficient
 Should reduce food improts
 Value of exports greater than imports
 Gocernment regulation over all of nations commercial interests
 Promoted theory of protectionism
Adam smith- absolute cost advantage theory
 Trade should flow naturally
 Exchanges in market is to determine the value of goods by measuing the labour
incoporaged in them
 Assumption that two countries two products and one factor of production
 Nation’s wealth shouldn’t be judged by gold and silver but by living standards of
its people
David Ricardo- comparitive advantage theory
 when country cant produce product more efficiently than other country but it
can produce one good more effciently than it produces other goods
 Assumes labour as the only factor of production
 Assumes zero trasnport cost and no trade barriers
 Focuses on the relative productivity
 Opportunity cost
 Assumes that factors can be transferred freely
 Takes into account opportunity cost
 Assumes all countries have similar economies
 Assumes constant retruens and availibvility of resouerces
 Assumes existence of free trade
 doesn’t take into account dyanmic advantage through investments
Hecksher-ohlins: product endownment theory
 Based on factors of production cost of any factor or resoruce was a function of
supply and demand
 Required countries to prodice goods that required respurces that were in great
supply and therefore cheaper cost of production
 Countries with cheap labour will export labour intensive goods and import
capital intensive and vice versa
 Assumes that all countries have similar technologies for production
 Assumes if factors of produciton are increased the output will increase in the
same ratio.
 Assumes labour and capital cant be transferred freely between countries
 Assumes static prices of goods everywhere
 labour is not transferrable / mobile within different industries internally
Raymond vernon- product life cycle
 Introduction, growth, maturity and decline
Micheal portels- national competitive theory
 Four determinants- resources and capabilities, local market demand conditions,
local supply and local firm characterstics
 Two other determinants are government and chance
 Unlike classical trade theories, it includes innovation, strategy, and policy,
making it relevant in modern economies.
 Explains Why Some Countries Dominate Specific Industrie. Helps understand
why the U.S. leads in tech, Germany in automobiles, and China in
manufacturing.
 Useful for Policymakers and Business Leaders. Helps governments and
corporations identify how to improve competitiveness through investment and
reforms.
 Ignores the Role of Multinational Corporations (MNCs). In today’s globalized
economy, companies operate across borders, making national advantages less
relevant.
 Overlooks Low-Cost Labor and Resource-Based Advantages. The model focuses
on innovation and competition, but many industries succeed due to cheap labor
or resource abundance.
 Limited Application in Small or Emerging Economies
 Countries with small domestic markets (e.g., Switzerland, Singapore) succeed
despite lacking strong demand conditions.
 Fails to Address Global Supply Chains
 Many industries rely on international trade and outsourcing, making national

Lex mercatoria is defined as a body of rules of internatioanl commerce which have

been developed by customs. Mercantile law.
 It is an autonomous legal order
 An alternative to an otherwise applicable national law
 A conglomerate of usages and expectations in international trade which may
compliment the otherwise applicable law.
 Article 13(1)a of charter of United nations
 Codification is process of translating into statues or conventipns, customary law
and rules arising from judicial decisions and Process of securing by means of a
general convention, agreement among states upon certain topics of
international law. It also includes harmonization of various municpal laws.

 Decelration of Paris 1856, 7 members- first codified international law

 Hague convention 1899 on pacific settlement of international disputes and
second hague convention of 1907 on laws of customs of war on land
 Thereafter league of nations started codifications since 1908
 Advantages of codifcation
 Certainity
 Simplicity
 Logical agreement
 Stability
 Planned development
 Unity
  Promotes development
 Wider dsitrubtuion
 Provides higher chances of settlign disputes in a judiical manner
 Disaddvantages
 Rigidity
 Time consuming to make amendments
 Incomptence- may not be able to think of all scenarios
 Restricted acceptance and hardships

Principles of international trade law

 Freedom of contract
 Pacta sunservanda
 Settlement of dusputes through arbitration
 Freedom of communication
 Trade without discimination
 Fair compeititon
 Development and economic reform
 Market access
 National treatment
 Transparency

Unit-2
General agreement on trade and tariff 1947. purpose is substainial reduction of
tariffs and other trade barriers and elimination of preferences on a reciprocal and a
mutually advantagenous basis.

History:
 November 1945, US issued a document proposal for exapnsion of world trade
and employment which called for a code related to government restraints on
trade including MFN principle and prohibiion of quantative restrictions
 Later invited 15 countries to enter into negotiations
 UK and US submitted proposlas to UN regarding formation of international trade
organisation.
 committee drafted ITO charter and approved in 1948 in Havana. Became part of
GATT in 1947 as countries were anxious for trade liberalization
 However ITO was never ratified by the US and thus it was discarded and only left
being part of GATT.
 After 8 rounds of MTNs the uruguay round 8th round concluded with the signing
in 1994 in Morrocco and produced WTO. With 123 count
 Mararakesh agreement in april 1994
 objectives:
  To extend GATT trade rules to areas previously exempted and include new
trade areas
 To reduce agrivultiural subisides
 To lift restrictions on foreign investments
 To begin opening teade in services like banking and insurance
 To include protection of intellectual property
 Incorpoated following things:
 Established WTO and its scope
 Defined functions of wto, reviewing operation and implementation,
adminsterting dispute settlement process, providing forum for further trade
negotiations and working with other organisations such IMF & world bank
 Required WTO to hold ministerial conference at least once every 2 years
 Established WTO general council
 Provided that WTO decisions to be made with a general rule of consensus
otherwise voting
 Allowed general coucnil the excluvive authority to adopt interpretations of
this agreement and allow for it to do ammendments
 Stated that any country may join WTO on agreed upon terms

Art 1- most favoured clause- non discrimination and Most favoured nation-
exception to MFN for free trade areass and existing preferential arrangements
Canada-Autos case- pricniple of non- discrimination the cornerstone of GATT and
serves as an incentive. Only limited number of manufacturers allowed to import and
sell and sistribute at retail prices without import duties. Held violationn of MFN and
nationa treatment pricniple.
Turkey-textiles case- custom, unions, etc are exception to MFN only if formation of
those would have been prevented if the measure in question could not have been
adopted.
EC-Bananas III- MFN clause regarding licensing procedures ofr import of bananas
were inconsitent with African, Carribean and pracific group of states , Trarriff quota
shares were also inconsistent from national treatment and non discrimiantory
provisions.

Article 3- national treatment

Japan Alcoholic Benevrages case- interpretation of article 3 - shochua and vodka
similar rpoducts and all other alcohol are comeptitive and no reason to tax one
higher than the other.

India – Autos (2002), the European Communities and the United States challenged
Indian policies related to the automotive sector, particularly the 1997–2002 Export
and Import Policy and MoUs with automobile manufacturers. The complainants
alleged that these measures violated Articles I and XI of GATT 1994 and Article 2 of
the TRIMs Agreement, as they required firms to achieve specific levels of local
content, neutralize foreign exchange by balancing imports and exports, and limit
imports based on the prior year's exports. The WTO panel found India’s measures
inconsistent with GATT obligations, holding that the local content requirement
violated Article III:4, the trade balancing condition breached Article XI:1, and the
foreign exchange offset condition violated Article III:4. India initially appealed but
later withdrew its appeal in March 2002 following the introduction of a new auto
policy. The Dispute Settlement Body (DSB) adopted the panel and Appellate Body
reports in full. India subsequently notified the DSB of its full compliance by removing
the indigenization requirement through Public Notice No. 30 (2001) and the trade
balancing requirement through Public Notice No. 31 (2002).

In US – Shrimp (1998), India, Malaysia, Pakistan, and Thailand challenged a U.S.

import ban on shrimp and shrimp products imposed under Section 609 of U.S. Public
Law 101-162, alleging violations of Articles I, XI, and XIII of GATT 1994. The ban
required foreign shrimp producers to adopt turtle-excluder devices equivalent to U.S.
standards. The WTO panel found that the U.S. measure violated Article XI:1 and was
not justifiable under Article XX. On appeal, the Appellate Body reversed the panel's
conclusion that the measure was outside Article XX but still held that the U.S.
application of Section 609 was inconsistent with the chapeau of Article XX due to
unjustifiable discrimination. The DSB adopted the modified reports in November
1998. In 2000, Malaysia invoked Article 21.5 of the DSU, arguing the U.S. failed to
implement the ruling properly. The compliance panel concluded in June 2001 that
while the U.S. measure still violated Article XI:1, it could be justified under Article
XX if applied fairly and in good faith, particularly through efforts to reach a
multilateral agreement. The Appellate Body upheld these findings in October 2001,
and the DSB adopted the compliance report and the Appellate Body report in
November 2001.

Article 6- unfair trade practices

Article 10- publication and transparency
US- Shrimp Case-
Article 20,21- general and national security
Article 22 and 23- provisions for consultation and dispute settlement

Stages of dispute settlement process:

1. Consultations article 4- with another member within 30 days . if not resolved
panel can be formed in 60 days
2. Establishing a panel article 6- should identify specific measures at issue and
provide a brief summary of legal basis for the complaint. DSB must establish a
agenda if panel requested. Members to be decided tpyically three and can be
appointed by WTO director General
3. Good offices, concilliation article 5 - undertaken voluntarily and no requirements
on time or procedure exist. Panel can be created if these processes fail to resolve
issue.
4. Panel proceedings aritcle 16- panel issues a descriptive rports on facts and
arguments. A final report is later issued to all WTO memebers after a review period.
5. Apallete body review article 17- conifential rpoceedings usually of seven members
and only considers issues of law and legal interprrtations. DSB and parties shall be
bound to accept such decision except if DSB rejects it by consenus.
6. Adoption of judgement - within 60 days of the panel report if not rejected by DSB
7. Implementation- violative member must inform DSB about its plan for
implementation within 30 days. If impracticable to comply withi 30 days then
reasonable amount of time
8. Compliance panels- when disagreement regading whether a member has
complied or not. Compliance panel must issue report within 90 days. Report to be
given in 90 days after dispute is referred and these may be appealed. Remedies may
include sanctions and suspension of concessions

Objectives and functions

 Provide security and predictability
 Preserve rights of members
 Clarify provisions through agreements
 Facour moutually agreed solutions
 Prompt settlement of disputes

Canada – Term of Patent Protection (1999), the United States initiated a complaint
on May 6, 1999, challenging Canada’s Patent Act for granting a 17-year term of
protection to patents filed before October 1, 1989. The U.S. argued that, under TRIPS
Articles 33, 65, and 70, all WTO Members must grant patents a term of at least 20
years from the filing date, and that this requirement applies retroactively to patents in
force as of January 1, 1996; Canada’s statutory 17-year term, it contended,
contravened these obligations . Canada countered that, although the statute specified a
17-year term from grant, average pendency delays effectively extended protection to
roughly 20 years, and that this de facto equivalence satisfied TRIPS. The panel,
however, rejected Canada’s “average pendency” argument, reasoning that Article 33’s
clear language mandates a term of 20 years measured from filing; administrative
delays could not substitute for the legally defined term . Upon appeal, the Appellate
Body upheld these findings, affirming that Canada’s Patent Act failed to meet the
minimum term requirement. After the DSU process—including arbitration to fix a
reasonable period of ten months for implementation—Canada amended its Patent Act
via Bill S-17, bringing domestic law into compliance by July 12, 2001 .

In India – Solar Cells (2016), the United States requested consultations on February
6, 2013, contesting India’s domestic content requirements (DCRs) under the
Jawaharlal Nehru National Solar Mission for solar cells and modules. The U.S.
maintained that these measures violated GATT 1994 Article III:4 (national treatment),
TRIMs Article 2.1 (prohibition on trade‐related investment measures that
discriminate), and various provisions of the SCM Agreement (including Articles
3.1(b), 3.2, 5(c), and 6.3 concerning prohibited subsidies) because they mandated
preferential treatment for locally manufactured solar cells and modules, effectively
disadvantaging imports . India argued that the DCRs were essential to achieve
technology transfer, reduce dependence on imports, and spur domestic industry
development, and that they fell within the scope of legitimate public policy objectives
rather than constituting prohibited discrimination. The panel, after examining
evidence of differential treatment and lack of adequate justification, found the DCRs
inconsistent with national treatment obligations under GATT and the prohibitions in
TRIMs, and held that India’s subsidies were specific and de jure contingent upon the
use of domestic over imported goods, contrary to SCM disciplines. India appealed
certain legal interpretations to the Appellate Body, which largely upheld the panel’s
reasoning on September 16, 2016 . Following these rulings, India agreed to a 14-
month reasonable period of implementation and ceased the offending measures by
December 14, 2017; subsequent arbitration and compliance proceedings focused on
compensation timelines and India’s timely withdrawal of inconsistent provisions

UNIT-3
Agreement on agriculture (AoA) in 1994 under gatt.
 To achieve greater liberalisation
 To initiate reform and establish a fair market
 Increase market access and domestic support and export competition
 Allows governments to support economies but preferably through policies that
cause less disruption
 Develo[ing countries don’t have to cut their subsidies as much as DCs.
 For market access means to reduce tarriffs and import quotas. DCs need to
do 36% average reduction with a minimum of 15% to reach over six years
while LessDCs 24% average production with minimum line of 10% over ten
years. LeastDC were expemted but had to create non tariff barriers into
tarrifs
 Incorporation of concessions and commitments- members shall not provide
subisdies in excess of budgetary outlay on certain agricultural products
 Members to set out the export subisides in scheudles and such subsidies
were required to be reduced in a period of six years
 Precludes a country drom providing domestic support for agricultural
products from excess to levels provided in scheuled. Blue box, green box
subsidies and red box also probably
 Export competition- don’t provide export subsidies
 Case law:
Korea- Various Measures on Beef, 2001- beef case. Korea had different sections
for imported beefs and imposed mark ups on it. Also rpovides domestic support
to cattle industry in excedence of its schedules. Panel held in favour of korea
however appelate body reversed decision holding that korea acted inconsistenly
with the provisions of the act by exceeding its commitemnt levels. Also held that
korea dual retail ssystem violated National treatment and MFN principle and
held korea to be violative fo the article fo GATT.

The Agreement on Subsidies and Countervailing Measures (SCM) agreement ;

 Multilateral disciplines regulating the provision of subsidies
 Use of counteravailing measures to offset the subsidy injury (can be done only
against specific subsidy)
 To count as subsidy
 Must be a financial contribution
 Government or public body within its territory
 Which confers a benefit specifically
 Red light subsidies (art 3)- can either be export subisides or subsidies contigent
upon export performance. These are prohibited subsiides except with
preferential treatmne tgiven to underdeveloped countries and transitional
economies. May invoke counteravialing meausres. (India Solar cell case is a
good example for subsidy given for use of domestic product)
 Yellow light subsidies (art 7)- not prohibited per say unless they cause serious
injury or adverse effects to other countries. May invite countervailijg measures
or other such remidies.
 Green light subsidies (art 8)- neither prohibited nor subject to countervailign
measures.
 Actionable subsidies three reasons- injury to doemsttic industry caused by
imports in the complainant country, serious prejudice in exportation,
nullification of imparinment benefits under GATT 1994.
 Part V countervailing measures
 Susbstansive rules- cannot set unless casual link established
 Procedural rules - transparent investigations anf full right to be heard-
preliminary investigation, undertakings, sunsets after 5 years and judicial
review
 Case law:
US- Upland Cotton 2005- Brazil wanted consultations on export, grants and
other prohivited subsisdies provided to US cotton farmers. Zimbabwe and India
joined consultations. Found US guilty of provifind porhibited export subsidies
which harmed the exporting interests of other indudsutries and don’t have
peace clause or green box potection. Appelate board upheld the findings of the
panel.
Canada- aircraft 1999- export credits, loan garautnees in excess provided and
canada held guilty

UNIT-4

South Asian Association for Regional Cooperation- (SAARC) formed in 1985

bangladesh

 South Asian Preferential Trade Arrangement (SAPTA) in 1997 in Sri Lanka. A

preferential trade agreement aimed at promoting and sustaining mutual trade
and economic cooperation through exchange of of concessions.
 SAPTA was the first step towards south asian free trade area (SAFTA) planned to
be in 2004 january 6. enforced in 2006.
 Purpose of safta to encourage and elevate free trade and medium and long
contracts brtween cuntries and ensure economic co-operation among members.
 Principles
 Overall recicprocity
 Periodiic reviews to increase performance
 Inclusion of all proiducts and commodities and processes
 Special and favourable treatment to least developed countries.
 Functions:
  To establish free trade
 Elimination of tarrifs
 To ensure product manufacturing is widely distributed in cost effective
manner
 Allow countries to resrrict imports for national interest
 Form compensations schemes for losses of revenue
 Provide technical and fiscal support to underdeveloped countries.
 NLDCs to reduce tarrif to 20% in first two years of enforcement and to 0-5% in
next five years
 LDC countries to 30& in first two years and 0-5% In next 8 years.
 Importance
 Free trade areas basic steps towards a greater economy
 First step towards greater economic interaction and [Link]
market predicitibilty through instituinal harmonization
 increases market access for importers and exporters nad consumers
 Reduces overall costs for products batteling inflation since export of raw
materials and finsihed products become cheaper
 Can smoothen political relations between countries and can lead to more
cooperative deals
 Large asian markets may incrwase foreign investments as firms seek to
capitalize on more integrated regional tarriff system

Fourth Ministerial Conference in Doha, Qatar in November 2001 known as the DOHA
Development Agenda (DDA)
 Came after urugay round
 Objective to lower trade barriers and facilitate increased global trade. Put the
needs of less developed ocuntries first
 Issues discussed
 Agriculture- since 75% of population in developing countries was in rural
areas aimed to increase market access for such countries and substranital
reduction in trade-distorting subsidies. Reduce tarrifs on food and end
subsidies for exports
 Reduced tarrifs for non agricultural imports
 Clarify rules and regulations on foreign provided services such as telecom,
energy, delivery etc. Also developing countries export of services on
tourism, health care etc.
 Anti dumping rules tightening
 Intelluctual property
 Trade and enviorment concerns for sustainable developent
 Trade facilitation
 Dispute settlement mechanism
 E commerce development for goofs imoported to exported
 Access to patended medicines- Discussed TRIPS IPR agreement to increase
access to such medicines especially in emergencies
 Special and differential treatment- to underdevloped countries
 Implementation issues-
  Failed because of divide between developed and developing countries on
WTO, IMF and WOrd bank
 developing countries claimed that benefits of earlier Uruguay round were
not given such as and due to limited capacity and technical issues \ no extra
support for access to foreign markets \ . institiions favoured developed
countiries
 Developed countries claimed that no tarrifs and subsidies on agriculture
were not ahdered by the developing countries.
 Developing countries aimed for more transparency in rules and removing
the cap on food and agriculutral subsidies and developed countries
pressurized developing countries to open their markets through Trade
FAcilitation agreement
 Nairobi package (unsure) in 2015 10th ministerial confierence of WTO.
Disscussed issues and negotiations on
 Agricukture
 Cotton
 LDC countries to be given protection
 Expanded information technology agreement (ITA)
 Special safegaurd mechanisms for import surges
 Public stock holdings for food security

Trade and Environment

 Negative impactrs of trade lieralization
 Amplication of international consumption of polluting priducts
 Using exahs=ustible natural resources
 Facilitation of trade with hazardous substances and waste
 Relocation of firms with lower environmental standards to avoid penalties
 lack of internationally enforceable mechanisms to provide sanctions
 Increased cash crop exports - however sometimes can protect soil erosion
like cocoa
 Product and process issue- genertically engineered crops’ pollen effects cant be
regulated- tuna dolphin case
 Trade and domestic poicy- nations reduce enviornemntal standards to gain
compeititve advantage
 WTO and GATT- wto discourages green protectionism- the use of trade barriers
to portect domestic industry from comeptition under guise of enviormental
regulation. Responsibility of enviornment protection should be national issue anf
therefore violates the specficity rule.
However such argument suffers from infirmities as it fails to consider
competitive pressures, inadequate national mechanisms to actually cause
penalties and doesn’t allow to deal with environemntal problems which are
global and transboundaried.
 Articles: XX(B)- Intl trade can be restricted I interest of plant animal life or
health and
 Article XX(g)- conservation of natural resources- only allowed if do not
discriminatr between countries with similar conditions (Article 1 &3), can be
 considered necessary if no other less trade- intrusive measures are available
and if equivalent domestic restrictions are imposed

 NAFTA signed in north america from lowering trade barriers. Enviornmental
groups protested agaisnt because negative enviornmental impacts.
As a result side agreeement of North America agreement on eviornmental
cooperation set up commission for enviornmental cooperation. CEC can
respond to country’s failure to protect enviornment however can only write up
reports and reccomednations. Has not been really effective in agriculltural and
industrial pollution control.
 Europian union better since it has binding enviormental obligations which can be
imposed on countries. Creation of supranational authority to set enviornmental
standards.
 Multilateral Environemtal Agreements (MEAs)
 Phylloxera agreement- first international agreement to prevent the spread
of pests in grapevines
 Montreal protocol on Ozone layer
 Basel convention on hazardous waste
 Antartica treaty
 Kyoto protocol on climate change
 Tuna dolphin case- us ban on tuna imprts ot protect dolphins against dolphin-
safe fishing methods under the MArine mammal protection act MMPA. Mexcio
filed a compalint against GATT that such abn was illegal as it focused on process
rather product. GATT panel decided in mexico’s favour but ruling neve rbecame
legally binding. HELD that us could not embargo tuna imports simply because
mexican regulations didn’t not satisfy US regulations. It didn’t allow one country
to take action for purpose of attmepting to enforce its own domestic laws even
to protect animal health and natural resources
 Shrimp turtles case- india malaysia pakistan filed compalints with WTO agaisnr
US decision to enforce foreign shrimp sellers to use turtle exdluder devices.
Threatned trade ban if they didn’t comply. Held that ban was a legitimate policy
under article XX related to exhaustibel natural resouces. However held that the
way US had negotiated previous treaties on protection of sea turtles constituited
arbitrary and unjustiifable discriminations bwteeen WTO countries.