World Trade Organization

Contents

What is WTO? Structure? Agreeements?
Rounds of WTO
Doha Development Round
India’s role in WTO
India’s proposals to WTO
Trade in Goods
- Agriculture
- NAMA
- Rules
- SPS
- TBT
Trade in Services
- GATS
Intellectual Property (TRIPS)
TRIMS
Dispute settlement
Development
- Trade and Development
- Aid for Trade
- Special & Differential Treatment
Environment
- Trade and Environment
Trade facilitation
Other issues
- E-Commerce
- Competition policy
- Investment
- Government Procurement
- Accession

Intellectual Property Rights

Why is IPR becoming important?

Increasing dominance of the new knowledge economy
Exponential growth of scientific knowledge
Increasing demand for new forms of intellectual property protection as well as access to IP related information
Address the emerging complexities linked to IP in traditional knowledge, community knowledge and animate objects
All these pose a challenge in setting up the new 21^st century IP agenda, especially for a country like India

TRIPS

The WTO’s TRIPS Agreement is an attempt to narrow the gaps in the way these rights are protected around the world, and to bring them under common international rules. It establishes minimum levels of protection that each government has to give to the intellectual property of fellow WTO members. In doing so, it strikes a balance between the long term benefits and possible short term costs to society. Society benefits in the long term when intellectual property protection encourages creation and invention, especially when the period of protection expires and the creations and inventions enter the public domain. Governments are allowed to reduce any short term costs through various exceptions, for example to tackle public health problems. And, when there are trade disputes over intellectual property rights, the WTO’s dispute settlement system is now available.

The agreement covers five broad issues:

how basic principles of the trading system and other international intellectual property agreements should be applied
how to give adequate protection to intellectual property rights
how countries should enforce those rights adequately in their own territories
how to settle disputes on intellectual property between members of the WTO
special transitional arrangements during the period when the new system is being introduced.

Entailed significant changes for the protection of pharmaceutical products and processes
Made product patent protection binding on all member countries
Strengthened process patents.
Narrowly defined the conditions for establishing exceptions to patent rights
Limited the possibility of applying special modalities of compulsory licences to pharmaceuticals

India and IPRs

India has enacted several laws to protect IPR
- Copyright Act
- Trademark Act
- Designs Act
- Patent Act, 1970
- Geographical Indications Act

India and TRIPS

India has met its entire TRIPS obligations in various stages starting from providing mailbox applications in 1999 with retrospective effect
Amendment to the Patent Act in 2003
- This amendment brought the Indian Patent Act more or less on a par with the developed countries by providing a 20 year patent term
- Safeguarded national interest by remodelling compulsory licence provisions by introducing Bolar and Import Provisions
3^rd amendment to Patents act in 2005 provided product patenting in pharmaceuticals, food, and chemicals, rationalising and reducing timelines for processing of patent applications and doing away with Exclusive Marketing Rights

Issues & Resolutions

Effect on India’s pharmaceutical industry
- Resolution: the industry is taking steps to cope with the challenge. It is increasing its investment in R&D. Moving from imitative research to innovative research
Effect on other knowledge based industries in India, such as the IT industry, biotechnology, and microelectronics
Effect on limiting monopolies
- Resolution: there is voluntary licensing and compulsory licensing. For important drugs the government can resort to compulsory licensing.
The grant of patents on non-original innovations (particularly those linked to traditional medicines) which are based on what is already a part of the traditional knowledge of the developing world is a cause of concern
- CSIR successfully challenged the US Patent on the wound healing properties of turmeric. Similarly patent on Neem was quashed.
- These issues need to be addressed jointly by the developing and the developed worlds
- CSIR has created a Traditional Knowledge Digital Library (TKDL)

Way Forward

India should nurture a strong innovation base through a balanced system of recognition and rewards
India will have to invest liberally to enhance the skills and knowledge base of scientists and on understanding, interpreting and analysing the techno-legal business information contained in IP documents and in drafting of IP documents
We must properly protect our inventions

TRIMS

This Agreement, negotiated during the Uruguay Round, applies only to measures that affect trade in goods. Recognizing that certain investment measures can have trade-restrictive and distorting effects, it states that no Member shall apply a measure that is prohibited by the provisions of GATT Article III (national treatment) or Article XI (quantitative restrictions). Examples of inconsistent measures, as spelled out in the Annex’s Illustrative List, include local content or trade balancing requirements. The Agreement contains transitional arrangements allowing Members to maintain notified TRIMs for a limited time following the entry into force of the WTO (two years in the case of developed country Members, five years for developing country Members, and seven years for least-developed country Members). The Agreement also establishes a Committee on TRIMs to monitor the operation and implementation of these commitments.

The Agreement requires all WTO Members to notify the TRIMs that are inconsistent with the provisions of the Agreement, and to eliminate them after the expiry of the transition period provided in the Agreement. Transition periods of two years in the case of developed countries, five years in the case of developing countries and seven years in the case of LDCs, from the date of entry into force of the Agreement (i.e. 1^stJanuary 1995) are provided in the Agreement.

The Agreement allows developing countries to deviate temporarily from its provisions on balance of payments (BOP) grounds

TRIMS has been in force from 1995. Due to pressure from Developing countries investment was dropped from the Doha negotiations.

GATS

The General Agreement on Trade in Services (GATS) is the first and only set of multilateral rules governing international trade in services. Negotiated in the Uruguay Round, it was developed in response to the huge growth of the services economy over the past 30 years and the greater potential for trading services brought about by the communications revolution.

Features

Total coverage: The agreement covers all internationally-traded services
It defines four modes of trading services
- Mode 1 (Cross Border Supply) – services supplied from one country to another (eg international telephone calls)
- Mode 2 (Consumption abroad) – consumers or firms making use of a services in another country (eg tourism)
- Mode 3 (Commercial presence) – a foreign company setting up subsidiaries or branches to provided services in another country (eg. Foreign banks setting up operations in a country)
- Mode 4 (Presence of natural persons) – individuals travelling from their own country to supply services in another (eg. Fashion models or consultants)
MFN: favour one, favour all.
Commitments on market access and national treatment: Individual countries’ commitments to open markets in specific sectors and how open those markets will be are the outcome of negotiations. For example, if a government commits itself to allow foreign banks to operate in its domestic market, that is a market-access commitment. And if the government limits the number of licences it will issue, then that is amarket-access limitation. If it also says foreign banks are only allowed one branch while domestic banks are allowed numerous branches, that is an exception to the national treatment
- Government services are not subject to GATS disciplines
Other provisions relate to transparency, regulations, recognition, international payments and transfers and progressive liberalisation.

A new round of services negotiations, termed GATS 2000 was launched in January 2000
- The guidelines for these negotiations had two mandates
  - Market Access
  - Rule Making
- The GATS 2000 negotiations were subsequently subsumed by the Doha Development Agenda in 2001

Read pp 45 in GATS and India

India’s negotiating position on services has

undergone a paradigm shift since the Uruguay

Round (UR). From being a leading opponent

of the GATS in the early stages, India has now

emerged as one of the forerunners of the services

trade liberalisation under the GATS. This more

recent negotiating stance of India on services is

partly attributable to the growing importance of

the services sector in its economy. With a vast pool

of educated and skilled workers in its workforce,

the country also has a huge offensive interest in

the export of Mode 1 and Mode 4-based services.

Hence India is aggressively participating in the

ongoing GATS 2000 negotiations predominantly

with the aim of securing its offensive interests in the

aforesaid two modes of the services trade. Although

India’s ‘Initial Offer’, submitted in January 2004,

was rather conservative, India came out with an

ambitious ‘Revised Offer’ in August 2005.

In the post-Hong Kong Ministerial period, India has

received plurilateral requests in a range of services. It

is learnt that the expectation from India would be to

meet the requests primarily in telecommunications,

ﬁnance, parts of energy, distribution (retail),

and courier including express delivery. India has

indicated that it can meet requests substantially in

sectors like construction and related engineering

services, maritime transport services, etc. Requests

are likely to be fulﬁlled partially in energy and

telecommunications also. However, as it stands now,

it would be difﬁcult for India to meet the requests

in legal services, retailing services, private education

and audio-visual services, owing to the domestic

sensitivities associated with these areas.

India needs to

take advantage of the current Doha impasse to

reconsider and reassess its aggressive policy stance

on services. It would be a better strategy on the

part of India to hold back any further ambitious

offers in services for the time being so that those

offers may be used as a bargaining chip in future

negotiations to push through its aggressive agenda

in Modes 1 and 4. India should also refrain from

considering any compromise on its interests in

agriculture and Non Agricultural Market Access

(NAMA) for pushing through its offensive

interests in services. Given the pessimistic scenario

in Modes 1 and 4, there are not enough grounds

for India to compromise on the livelihood of

millions of vulnerable farmers of the country or

to put the survival of many a domestic industry

at stake.

Non Agricultural Market Access (NAMA)

NAMA refers to all products not covered by the Agreement on Agriculture. In other words, in practice, it includes manufacturing products, fuels and mining products, fish and fish products, and forestry products. They are sometimes referred to as industrial products or manufactured goods.

Why is NAMA so important?

Over the past years, NAMA products have accounted for almost 90% of the world merchandise exports.
What did the Uruguay Round achieve on tariffs for NAMA products?

The Uruguay Round produced significant improvements in market access for NAMA products in the developed country markets, as tariff averages were reduced from 6.3% to 3.8%. In the case of developing countries, the most important contribution was made in the form of new tariff bindings. Binding coverage for NAMA products in developing countries increased from 21% to 73%, which has considerably increased the predictability of trade.

What do tariff bindings mean and how do they work?

A tariff binding is a ceiling level above which a Member cannot apply a tariff. In other words, it is the maximum tariff that may be applied by a Member. However, such rates are not cast in stone. They may be increased or withdrawn subject to compensation being provided to the WTO Members affected by such action.

The applied tariff is the tariff effectively applied. It can be lower than the bound rate and the difference has been called “water” or the “binding overhang”.

Why are there NAMA negotiations in the DDA?

Despite the significant improvements in market access for NAMA products that previous GATT rounds and the Uruguay Round produced, tariffs continue to be an important barrier to world trade, as tariff peaks, high tariffs, and tariff escalation remain.

How were tariffs cut in the previous Rounds?

In the first GATT rounds, tariffs were cut on a selective product-by-product basis through requests and offers made between participants. However, subsequently contracting parties decided to use formulas to cut tariffs across-the-board. For example, during the Kennedy Round (linear cut formula) and in the Tokyo Round (Swiss formula) developed countries applied formulas, but with several exceptions. In the Uruguay Round developing and developed participants negotiated their tariff cuts using a variety of methods to reach a reduction average target comparable to that of the Tokyo Round (1/3 cut).

Why has a formula approach been agreed to in the NAMA negotiations?

Following intensive discussions, participants recognized the advantages of the formula approach. A formula approach provides transparency (every Member will know how the other will reduce its tariffs); efficiency (simpler process than request/offer approach), equity (tariff reduction depends on rules rather then “bargaining power”); predictability (easy to foresee the results of the negotiations).

How will flexibilities will be applied to developing countries and LDCs?

Flexibility provisions for developing countries: According to the July 2004 Framework, developing countries would enjoy longer implementation periods for their tariff reductions; and choose between : 1) less than formula cuts for up to [10%] of their tariff lines representing up to [10%] of their import value; or 2) not apply formula cuts, or leave unbound tariff lines, for up to [5%] of their tariff lines representing up to [5%] of their import value.

Least Developed Countries: The least-developed country participants are not required to apply the formula or participate in the sectorial approach, their contribution being to substantially increase their binding coverage at levels in accordance with their needs and development.

Other S & D treatment: developing countries with a binding coverage of less than [35%] would be exempt from formula reductions, but instead would contribute by binding their tariffs at an average level that does not exceed the overall average of the post-Uruguay Round bound tariffs for all developing countries.

Newly Acceded members: These members will also be provided with special tariff reduction provisions.

What is a non-tariff barrier?

There is no official definition but, in general terms, it refers to any measure other than a tariff which protects domestic industry. Many non-tariff measures are based on a legitimate goal (such as the protection of human health) and can be introduced in a WTO consistent manner. Agreements such as the SPS and TBT aim at allowing governments to take due care of these legitimate goals while minimizing the impact on trade and avoiding the temptation to use them as disguised protectionism.

How are NTBs being addressed in the NAMA negotiations?

The negotiating group has been identifying, categorizing and examining the various NTBs. Many NTBs are being resolved bilaterally, others are being addressed on a sectoral basis. Some are also part of other existing multilateral NTB Agreements. Results on NTBs are also expected from other Negotiating Groups such as Trade Facilitation. NTB outcomes will have multilateral effect and therefore benefit all Members.

How will the Doha NAMA result improve the market access conditions for products of export interest to developing countries?

Important to note that developing Members have a diverse export base. As a result of the formula, tariff peaks, high tariffs and tariff escalation will diminish or disappear altogether. Consequently, market access opportunities will open up both in the markets of developed Members, but also of other developing Members. Such access will be further improved through the sectorial initiatives which will be implemented on an MFN basis by those Members joining such initiatives. Addressing NTBs in this Round is also expected to improve the access into the markets of Members. Market access for LDC products has improved and is expected to improve both into developed as well as developing country markets. In this regard, the Doha mandate calls on developed Members as well as others in a position to do so to grant duty free and quota free access to LDC products on a date to be determined. Additionally, through increased binding coverage and reduction of the binding overhang, market access conditions will be made more secure.

India is a member of NAMA-11, a lobby of 11 developing countries within WTO with two main objectives:

Supporting flexibilities for developing countries
Balancing between NAMA and other areas under negotiation

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