MODULE 1 - WTO ( IT’S BIRTH AND BACKGROUND )

International relations before second world war

Prior to the establishment of wto 1995 , the regulation of international trade was structured
within the General agreement on tariffs and trade which happened to come into existence by
accident rather than choice . By the end of the nineteenth century the then independent
countris had moved away from free trade to protectionisit policies .

After the first world war , the international economic relations were subjected to high trade
barriers . Duing 1920-30 , the legaue of nations contributed immensely in developing new
principles and doctrines for free trade at international level .

After the end of the first world war , from 1919-1930 the world witnessed a steep rise in
tariffs despite all the efforts the league of nation made for the free international trade . With
the general depression in 1930 the world’s leading trading nations were deep in recesssion .

The league of nation witnessed from 1930-1939 an unprecedented world economic crisis .
However USA decided to liberalise the trade by a reciprocal trade agreement . The brucee
committee recommendations led to the establishment of United nations economic and social
council..

AFTER WORLD WAR 2

Usa took the initiative which culminated in the atlantic confrence of 1941 which released the
Atlantic charter regarded as the statement of the basic idea that are universal in their
application that means every nation has a right to expect that its legitimate trade willl not be
diverted or suppressed by imposing tariffs , preferences and discriminations or narrow
bilateral practices .

The charter was followed by the mutual aid agreement between USA nd Uk of 1942 ,
containing an undertaking to promote mutually advantageous economic relations . The
objective of this agreement was elimination of all discriminatory treatment in international
commerce and reduction of other trade barriers

By the beginning of 1943 , anglo american financial collaboration progressed further taking
shape of white and keynes plans which were designed to facilitate the achievement of balance
of payments equilibrium in an international environment of multilateral trade
From 1944 it progressed further and produced kand w plan which became public in 1944 as
joint statement of experts on the establishment of International Monetary fund . The second
financial instituion as an offshot of the bretton woods confrence was the establishment of
International bank for reconsruction and development commonly known as the world bank .

HAVANA CHARTER

As imf and ibrd were established as the outcome of the brettonwoods confrence they were
only financial in nature and there was no organisation which could have worked on the
commercial side , to collaborate on commercial policies the UNESC established primarly to
coordinate initiavties in international economic cooperation by appointing a preparatory
committee to draft a convention for consideration of international confrence on trade and
emploement . In first meeting of committee , the usa published a suggested charter for
international trade organisation of united nations . this very charter led to the Havana Charter
in 1948 .

The charter was based on the principles

1. To distort normal flows of trade should be removed and preferences eliminated .

2. Internal taxes and regulations should be imposed in a non discriminatory manner
3. All types of subsidies should be subjected to international consultation

GATT

The birth of gatt was essentially a historical accident when the president of us refused to
submit the havana charter to congress for ratification , the havan charter and ito collapsed and
there was a virtual head of collision , gatt was born out of this crisis .

As already described the participants at the geneva confrence has separately initiated tariff
negotiations in 1947 , while the Havana Charter was being drafted these tariff negotiations
culminated in the signing of general agreement on tariffs and trade 1947.

Gatt 1947 applied provisionally not requiring legislative approval of the contracting parties ,
and it remained so in effect from January 1948 to January 1995 for almost five decades
weaving international economic law jurisprudence . Finally with the establishment of wto in
january 1995 , the GATT 1947 was rectified , amended and modified as GATT 1994 which is
legally distinct from GATT 1947 and is a part of WTO dispensation .

MODULE 2
MOST FAVORED NATION AND NATIONAL TREATMENT

INTRODUCTION

Non discrimination is a fundamental principle of the World trade organistion and is embodied
in the

1. Most favoured nation

2. National treatment

After the great development in the uruguary round which leads the marrakesh
agreement and the established WTO on 1 January 1995, the basic principle of non
discrimination principle formed in 1947 is consisitently same to the latest organisation
between the member nations . the only things which are amended in these principles
were the scope and objectivve of these principles in same as of framed in 1947 .
Article 1 and 3 of the gatt 1948 deals with the most favoured nation principle and the
national treatment principle with the further development in the scope of these
principles , now these principles not only deal with the trage in goods practices rather
they now also govern the trade inservices and trade in IPR .

Definition of MFN
A most favoured nation principle explains the concept where a country has to grant
some privileges related in a trade agreement to any o fthe member states of the world
trade organization . the concept not only ends here the main principles of the mfn
ssays that if any privileges are granted to any member nation by another memmber
nation of wto then the same privilege of like products has to be given to all the other
member nations of the WTO .
The main objective of this principle is to promote trade and provide equal opportunity
to get the best bernefit of any member nations resources .

HISTORY OF MFN
The concept of MFN has a long history , prior to the GATT an MFN clause was
included in bilateral trade agreements and contributed greatly to the trade
liberalization .
However in 1930’s countries around the world took protectionist measures because of
the impact of the world depression , various systems to limit MFN treatment ,
including trade restrictive measures by british commonwealth nations and french bloc
were introduced .
It is generally believed that these limits divided the world economy into trade blocs
and eventually led to world war II .
Lessons were learned from this mistake and in the wake of the world war II an
unconditional MFN clause was included in GATT on a multilateral basis, contributing
to global trade stability .

ARTICLE 1 OF THE GATT , 1994

MFN principle with respect to custom duties and charges of any kind imposed or in
connection with importattion or exportattion or imposed on the international transfer
on payment for import or export and with respect to the method of levying such duties
and charges , and with respect to all rules and formalities in connection with
importattion and exportattion any advantage , any favour privilege or immunity
granted by any contracting party to any product originating in or destined for any
other countyry shall be accorded immediately and unconditionally to the like product
originating in or destined for the territories of all other contracting parties .

RATIONALE BEHIND MFN

The mfn principle works to
1. Maximise efficiency
2. Minimize transaction costs
 3. Promote further reciprocal liberalization
4. Minimize the costs of trade negotiations

SCOPE OF APPLICATION OF MFN RULE ( DE JURE AND DE FACTO

DISCRIMINATION )

The mfn principle of GATT has been interpreted that a mesure may be discriminatory not
only in law ( de jure ) but also in fact ( de facto ) .

De jure means when the extra advantage or benefit is given to the any of the nation or
member nation which can be recognised by the legal value or thorugh legal instruments and
that too without extending such adavantage of like products to all WTO members .

When the discrimination cannot be recognised directly through words or face of the legal
instrument , then it can still be de facto and discriminatory . de facto discrimination occurs
where there can or cannot be an isssue of a legal instrument but the discrimiantion can be
found in the material facts . to establish de facto discrimination , all facts relating to the
application of measure must be reviewed.

For example – if india a wto member frame a policy which has different tax policies like a
bike which are manufactured automatically or through robotic plants will be taxed 10% of
their marketing value and on the other hand bikes which are manufactured manually will
attract 7% of tax of their marketing value . In this case the companies using capital intensive
technique for manufacturing bike will have an advantage of 3% compared to those countries
which utilise capital intensive techniques , therefore in both the cases the tax slabs has
different persepctive for taxing bikes and the discrimination cannot be found through de jure
aspect as both manufacturing are of different nature but the discrimination can be recognised
capital intensive concept o de jure and it can be understood that discrimination is recognised
by considering facts of the case and not only by considering legal aspects .

THE MFN PRINCIPLE – three tier test or the essentials considering mfn principles
One needs to check these three elements to find an inconsistency with MFN principles

• Any advantage or favour or privilege or immunity covered by article 1 of the GATT

1994
• Like products
• The advantage issued to a specific nation Is not granted immediately and
uncondiitonally to the like products of every member nation .
The like products are determined the following three factors :
1. Physical characteristics of the product
2. Their end users
3. Tariff regimes of other members
4. The customs classification of the product
The concept of the like products has been interpreted by the GATT in the spanish coffee case
, where the GATT panel concluded that various types of unroasted coffee cannot be classified
differently and comes under the same cateogry which makes all the types of coffee a like
product . the panel applied the test of recognising like products and catogrised all the types of
unroasted coffee as like product . when the panel recognised it as a like product, the panel
explained that there could be no chances of imposong tariff diffrently as all the types of
coffee are like product . the panel also examined the matter that being unroasted coffee beans
of different physical characteristics but the blends of that coffee are its end use and the only
reason it is used fo is drinking

The third test in the three tier test is granting of the advantage immediately and
unconditionally to all the member nations , this means that once a wto member has granted an
advantage or any privilege to imports from any country than that wto member must
immediately and unconditionally grant that advantage to all the other member nations with
respect to imports of all the like products from all WTO members .

EXCEPTION OF MFN

• Regional trade agreements are permitted for custom unions or free trade areas
under certain conditions . ( with two conditions
1. Tariffs and other barrier to trade must be eliminated with respect to substantially
all trade wihtin the region
2. The tariffs and other barriers to trade applied to outside countries must not be
higher or more restrictive than they were prior to regional integration .

• Enabling clause
The generalised sysytem of preferences is a system that grants certain products
originating in eligible developing countries preferetial tariff treatment ver
those normally granted under mfn status . it is a special measure designed to
help the developing countries .

• Historical preferences that were in force at the signing of the GATT .

• Protection of public morals , life and health
• Obtaining a waiver from the mfn principle
• Security exceptions
• Frontier traffic to neighbouring countries means certain trade advantages to
adjacent nations .

NATIONAL TREATMENT POLICY

INTRODUCTION

The ntp prohibits any of the member nations from favouring or giving any advantages or
raising any benefits to their domestic products goods over imported products of other
member nations . Article 3 of gatt 1994 specifically deals with theNTP and explains the
secondary need of NTP after MFN principles to fight against any discrimination of imported
products . NTP has been well defined under article 3 . NTP deals with the products of any
member imported by any other member shall not be treated less favourable than that to like
products of national or domestic product in respect of all laws , regulations , requirements
affecting their internal sales etc which means that domestic country should not make any
rules or law which protects its domestic products over imported products . So reading NTP
with MFN gives a brief difference between both of the principles that one deals with
protectionism and MFN deals with favourable treatment to all nations .

REASON BEHIND NTP

The main reason why gatt / wto drafter has proposed NTP was after imposing so much
restriction with regard to MFN principles , the drafter considered that the member nation can
discriminate the imported product indirectly and to prevent such indirect acts of member
nations NTP was introduced to prevent and restrict the domestic government from imposing
any internal regulation that msy create scope for discrimination tio imported [roducts over
domestic product .

NTP can be classified into three cateogries

1. To avoid protectionism
2. To maintain equality between imported and domestic products
3. To protect the imported products from unjust tariffs .

SCOPE OF NTP

Just like the MFN principle , the scope of the NTP also covers the scope of de jure and de
facto discrimination of imported products . A stance is de jure discriminatory when
discrimination can clearly be seen between imported and domestic like products in teerm
of a legl manner and when the discrimination is very much clear on the face of a legal
instrument that it doesn’t have any complexity to understand , then it can be de facto
discrimination . the most important part of NTP is that it only applies to internal measures
, and it does not apply at the border on imported goods .

ARTICLE 3

GENERAL INTERNAL TAXATION

 OBLIGATION
It talks about the general obligation it tells about the non discriminatory princip
Of article 3 and lays tells about
The concept of NTP that how it works
And essentials of it .

TWO TIER TEST

If the action of importing nation is discriminatory for testing such action a two tier
test has to be passed to check the consistency of importing nation with NTP which are
• If imported and domestic products are like products
• If the imported products are taxed in excess of the domestic products
THREE TIER TEST

• If the imported and domestic products are directly competitive or

substitutive -tea coffee
• If the domestic and imported products are not similarly taxed or if the
imported products are taxed excessively over domestic products
• If the importing nation is doing anything which causes protectionisn of
their domestic products over imported products .

EXCEPTION

1. Government procurement – when government hire or purchases goods for their

benefit
2. Subsidies to domestic producers
3. Internal maximum price control
4. Cinematograph films

MODULE 3
DISPUTE RESOLUTION MECHANISM
Intrroduction

In the havan charter the concept of balancing rights and duties was incroporated by providing
for compensatory adjustments after the failure of the ITO almost similar provisions were
embodied in article 22 and 23 of Gatt 1947 . The management of disputes in the wto is
structured on the same basis of articles of GATT and the rules and procedures are modified .

GATT 1947

1. Did not conceive any soecific procedure or provision for the settlement of disputes
2. Did not provide for any legal norm as to when a breach would amount to violation of
a rule as to give rise to dispute .
 3. Silent for the establishment of a tribunal .
4. Contracting parties acting jointly exercised the functions of tribunal

ARTICLE 22 AND THE ROLES OF PANELS

22 ; 1 – Consultation requires each contracting parties to afford other contracting party

adequate opportunity for consultation with respect to any matter affecting the operation of
gatt

22;2 – authorises the contracting parties at the request of contracting party to consult with
other parties on matters which were not resolved by the article 22;1
The consultations have become a basis for the generation of GaTT’s settlement procedures
which was grounded in Article 23

Article 23 ;1 ( nullification or impairment ) a complaint must show that either

1. Benefits accruing to him under the GATT are being nullified or impaired
2. Attainment of any objective of the GATT is being impeded
In addition the complainant must also shoe that such nullification and impairment Is a
result of
a. Breach of obligations by responding contracting party
b. The application of any measure by the respondant contracting party whether it
conflicts with gatt or not
c. The existence of any other situation

No settlement made within the prescribed time period complaining party is authorised to refer
the matter to contracting party under article 22;2 who are requires to investigate the matter
and make appropriate recommendations .

• Formal mechanism system wa sdeveloped by evolving asystem of panels for

redressing greivances of complaining contracting parties
• Formality was added to settlemnt disputes in 1979 when tokyo round adopted an
undersatnding on notification , consultation , dispute settlement and surveillance .
• Panel system resolved 140 cases by 1990
• It is an independent body of experts with three main task
1. Inquire into facts of case
2. Assess all the relevant elements for a decision of the matters
3. Submit proposal for decision

Problem in panel settlement – blocking of panel decision which was overcome by Montreal
Rules adopted by contracting parties in april 1989

The montreal rule became the basis of negotiating wto’s understanding on rules and
procedures governing the settlement of disputes .
The montreal rule placed time limits on the consultations and provided for the automatic
establishment of a panel
WTO , GATT 1994 and the Dipute Settlement Understanding

• Settlement of disputes should be rule oriented rather than power oriented ,.

• Rule based system has been introduced in a big way in WTO in the dispute settlement
understanding
• DSU contains 27 articles and is the most significant achievement of uruguary round
reffered as jewel in the crown of WTO .
• DSU confers compulsory jurisdiction on DSB for resolving disputes
• Articlw 3(2) DSU , the appellate body of the DSB in its various decisions has
depended on vienna convention on law of treaties specially its article 31 as a rule of
interpreting the DSU ..
• Appellate body has interpreted the wto agreements with reference to ordinary
meaning of the words in the context of objects and purpose of treaty .
• Interpretation from the general principle of international law .

DISPUTE SETTLEMENT MECHANISMS

i. DISPUTE SETTLEMENT BODY

• DSU created three institutions to administer WTO dispute settlement
mechanism ;DSB established under art 2 of dsu
• DSB has power to establish panels , adopt panel reports , appellate bofy
reports , suprevise the implementation of recommendations and rulings
and authorise sanction for failure to comply with dispute settlement
decisions .
• DSB = General Council ; has its own chairman , follow separate
procedures
• Power to establish appellate body to review panel rulings
• Appellate body = 7 persons appointed by dsb for 4 years ;expertise in int
law and interna trade
• WTO continues panel system of GATT 1947 ; 3 persons ;well qualified
governmental or non govrnmental individuals ; panel member serve in
their individual capacity not as representative of WTO member .
ii. DISPUTE SETTLEMENT PROCEDURES (GENERAL PROVISIONS )

Article 3 of DSU sets out the general provisions outlining mainly the objectives of the dispute
settlement mechanism as enshrined in the DSU .

1. Adherence to management principles under article 22 and 23 of gatt 1947

2. DSU is menat for security , serves and preserve the rights and obligations of members
;recommendation of DSB should not be odd
3. Maintaining proper balance between rights and obligations
4. DSB should be achieving satisfactory settlemnt of disputes
5. Consultattions consisitent with covered agreements
6. Matters raised under consulation should be notified to DSB
 7. Mutually agreed solutions ; in case of no mutual solution -1. Secure withdrawal of
measures concerned if found to be inconsistent with provisions of covered agreements
, compensation should be resorted if the immediate withdrawal of the measure is
impracticable ., the last resort is the possibility of suspending the application of
concession or other obligation under the covered agreements .

iii. CONSULTATIONS
1. WTO , DSU affirms in the effectiveness of the consulation and provides that
each member undertakes to accord sympathetic consideration to and afford
adequate opportunity for consultations .
2. Such consultations occur regularly at the official level and can be raised at the
ministerial level as appropriate .
3. The request for the consulation is to be notified to DSB and to relevant
councils and committees .
4. The request for consultations should specify the articles of the relevant WTO
agreements under which consultations are sought .
5. The complaining party should give reasons for the request including
identification of measures at issue and the identification of legal basis for
complaint .
6. Measure that is not subject of consultations cannot be reffered to a panel .
7. DSU in art 4;3 sets deadlines for consultation procedures
8. Member receiving request for consultation must respond within 10 days >must
agree to enter with consulattion within 30 days > member requesting
consulation may proceed to DSB to establish a panel > complaining party may
also request to establish panel within 60 days
9. Consulations essentially are bilateral , confidential and without the
involvement of DSB , panel or secretariat of WTO .

NON- VIOLATION

Under article 23 , non violation complains has been sucessful only if the infringement of
tariffs were proved , the dsu has embodied the non violation principles

FLAWS IN DSU

1. Contradiction that exists between transparency , participation and the prompt

settlement of disputes
2. Non existence of integrated mechanisms for the application of panel and appellate
body decisions
3. Provisions for least least developed counteris in the DSU are too general to promote
effective enforcement
4. Due to it’s strict rule based system , the performance of DSB functions has been
limited .
GATS ( General Agreement on trade in Services )

BACKGROUND

1. It was a major step under the general GATT Uruguary Round for liberalising the
economy .
2. The treaty of Rome which estbalihsed the EEC was the first international agreement
dealing with liberalisation of trade in goods as well as services .
3. In GATT ministerial meeting of 1982 the issue of services was for the first time
placed on agenda to consider .
4. Developed counteries USA AND EUUROPEAN community favoured the inclusion
of services in GATT system , the developing countries opposed the inclusion of
services .
5. Several reasons for difficulty in negotiating about barriers to trade in services
• The very nature of the subject as the issue of services in the international trade
was very new one .
• Service sector was never on agenda of any previous round negotiations .
• Barriers were difficult to identify , to clarify and to negotiate on traditional
basis of reciprocity .
• The basis of regulating services is provider rather tha the product .
• Mny cases like banking , inusrance , travek agencies and other professional
service requires investment permannently or for extended period of times

The plan that began to emerge mainly through efforts of USA had two aspects
1. First, the GATS would set out a few general principles ;non discrimination
, national treatment , transparency for national rules and regulations and
dispute settlement
2. Secondly the propose agreement would contain a listy of particular service
sectors to which states could subscribe , specifying which services they are
prepared to submit for negotiations .

GATS – ANALYSIS

• Contain 29 articles and agreement contains 5 components

1. Concepts , general obligations and disciplines that apply across the board to
measures affecting trade in services
2. Sepcific commitments on market acess and national treatment that apply only to
sectors inscribed in a member’s schedule
3. Commitment by members to enter into successive round of negotiations aimed ta
progressive liberalisation
4. Institutional provision and final provisions
PREAMBLE – acknowledges growing importance of trade for growth and development of
world economy

Promoting the interests of all participants on a mutually advantageous basis .

Ack , need of developing countries to regulate supply of services to meet national policy
objectives .

Promises help to developing countries in strengtheing the capacity efficiency and

competitiveness of their own domestic services .

SCOPE AND COVERAGE OF GATS

1. Art 1.1 – Applies to measure by members affecting trade in services
2. Services include service in any sector except services supplied in the exrcise of
governmental authority .
3. Service supplied in the exercise of governmental authority ex any service which is
supplied neither on a comercial basis , nor in competition with one or more service
suppliers has been specifically excluded from the scope of agreement .

MODES OF SUPPLY

These modes helps in undertanding

• Special problem and regulatory issue arise in inter trade in service

• Spcific commitments that members have undertaken in their schedules

MODE 1 – CROSS BORDER SUPPLY

From the territory of one member into territory of another .
Most straightforward form of trade in service
Neither service supplier nor service commander has to travel
Only the service itself crosses national froniers

MODE 2 – CONSUMPTION ABROAD

In the territory of one member to service consumer of any other member.
The consumer travels to supplying country for tourism or other purpose .
Unlike mode 1 , it does not require the service supplier to be admitted to consuming
country .
MODE 3- COMERCIAL PRESENCE
By a service supplier on one member , through the commercial presence in the
territory of any other member .
Establishment of branch offices or agencies to deliver such banking services , legal
services or communications .
This mode is important in terms of future development .

MODE 4 – PRESENCE OF NATURAL PERSONS

By a service supplier of one member through presence of natura persons of a
member in the territory of any other member .
 Also means admissions of foreign nationals to another country to provide services
there , when the supplier employ some foreign managers or specialists to the mode
3 and mode 4 combined together .

GENERAL OBLIGATIONS AND DISCIPLINES

The second part of the agreement lays down the agreement’s general
obligations and disciplines . these constitute basic rules that apply to all
members and services .
A. MOST FAVOURED NATION
• Article 2 provide for this principle
• It requires that members accord immediately and unconditionally
to services and service suppliers or any other member , treatment
no less favourable than it accords to like services and service
suppliers of any other country .
• All countries whether they have state owned or privatised
infrastructures , should allow access to their market on a non
discriminatory basis between service providers from different
countries .
• Three issues were raised in banana and Canada Automobile
Industry disputes .
a. What is the scope of MFN
b. What constitutes less favourable treatment
c. To what extent likeness of service suppliers is affected by mode
of supply
The panel report in EC Bananas confirmed that MFN
obligation applies to all service sectors and suppliers regardless
of whether specific commitments have been undertaken .
The panel affirmed that this provision prohibits both de jure
and de facto discrimination .
• Article 2 Exemptions of Gats laid down some formal conditions for making of the
exemptions
• Apart from services specified in individual MFN exemption list , the only
departure from it under GATS is among the other countries that are members of
regional trading agreements .
• Members are permitted to maintain measure inconsistent with the MFN obligation
simply by listing them
• While the MFN obligation is meant to be general one , this approach to exemptions
allow a member by choosing to make no commitments , to continue to operate
exclusively on a regional basis .
B. TRANSPARENCY AND FAIR PROCEDURES
 • Article 3 of GATS contains number of obligations aimed at
ensuring a certain level of transparency with regard to member’s
measure .
• Transaprency is a core principle of gats
• The transparency principle operates on three principles
1. Obligates each wto member to promptly publish all relevant
measures
2. Wto members must annually inform the council for trade in
services of the introduction of any new laws or changes to
existing laws which saffect trade in services covered by their
specific commitments under agreement .

GATS EXCEPTIONS TO GENERAL OBLIGATIONS

1. Permits the adoption or enforcement of measures necessary to prtotect public morals ,
maintain public order , protect human , animal or plant life .
2. Measure that are necessary to ensure compliance with rules or regulations relating to
prevention of deceptive and fraudulent practices to deal with effect of default service
contracts
3. Allows member to withhold information or take actions that are necessary to its
essential security interests .
4. Allow member state to take any action for maintenance of international peace and
security .

SPECIFIC COMMITMENTS (PART 3 )

• Sets out obligation related to market access and national treatment

• Apply only where a member has taken sc in a given specific sector
• Member will not be subject to these disciplines if specific service is not included in any
schedule .
A. MARKET ACCESS
Access by service providers of one state to the markets of other state is the central
focus of GATS
Under gats this accses is not granted automatically
The gats adopt an opt in or positive list approach whereby members are only bound
with respect to the specific commitments by sector .
It is a kind of foreign investment code , more extensive than any obligation but its
applicabiltiy depends to the extent a member state agrees to be bound .

B. NATIONAL TREATMENT
• It creates both a goal and an obligation
• It carries different implications for service sectors
• In the sectors inscribed in its schedule each member shall accord to service
or service suppliers of any other member in respect of all measures affecting
 the supply of service , treatment no less favourable than it accords to its own
like service and service suppiers .
• This commitment is only limited to specific items mentioned in the schedule
of particular country .
• WTO members are obliged to meet requirement of nt by according foreign
services and service suppliers wither formally identical or different
treatment which it accords to it’s own like services .
• The test if realistic one >the foreigner should enjoy equivalent opportunities
to compete .
• Specific commitment under gats does not require any member to
compensate for any inherent competitive disadvantages which results from
the foreign character of the relevant services or suppliers .

DISPUTE RESOLUTIONS UNDER GATS

Article 22 and 23 link gats to wto understanding on rules and procedures governing settlement
of disputes .

22.1 – support for consultations

22.2 – empower DSB to suspend application of a member’s obligation or sc if circumstances

are justified

22.3 – if there is nullification or impairement member will be entitled to mutually satisfactory

adjustment .
Council for trade in services has been established under gats to establish subsidiary bodies as
it thinks necessary for discharge of functions .

TRIMS ; ANALYSIS

• TRIMS agreement acknowledges explicitly that certain measures governing the

treatment of investments have restrictive or distortive effects on trade .
• These rules apply to a country’s domestic regulations regarding foreign investors .
• These rules were set up as part of an industrial policy .
• They aim to facilitate the operation of international firms in foreign markets
• TRIMS were negotiated under the General Agreement On tariifs and trade
• It came into force in 1995 as part of WTO

HISTORY OF TRIMS
• In late 1980’s , there was significant increase in foreign direct investment worldwide .
• Some countries receiving foreign investment imposed restrictions to protect their
domestic industries and prevent the outflow of foreign exchange reserves .
 • These restrictions included requirement such as local content , manufacturing , trade
balancing , domestic sales , technology transfer , export performance , local equity ,
foreign excahnge and employement .
• These meausre violated GATT Articles III and XI
• The trims agreement concluded during the uruguay round negotiations .

OBJECTIVES
• To ensure that foreign investors are treated no less favorably than domestic investors in
terms of laws , regulations and other measures affecting investmet
• It seeks to prevent wto members from using TRIMS to create unnecessary trade barriers
or competition between domestic and foreign firms .
• To require WTO members to publish information rgearding their investment laws
• Providing investors with a stable , predictable and transparent environment
• To allow WTO member to take measure to safeguard their balance of payments .

NATIONAL TREATMENT AND QUANTITIATIVE RESTRICTIONS

• The preamble of the agreement recognised that fact in order to liberalise the worl dtrade
require facilitation of the investment across world including less developed countries .
• There was need to balance the investement measure which have the restrictive effects
wihtin GATT .
• Trims agreement is not limited to measures taken specifically in regard of the foreign
investment
• It is not concerned with subsidies and internal taxes as such .
• Article 3 of GATT 1994 and obligations of general elimination of quantitiative
restrictions provided under Article 11 of GATT 1994

WORLD TRADE ORGANISATIONS

OBJECTIVE

• To help its members to use trade as a means to raise living standrads , create jobs and
imporve lives of people
• Operate global system of trade rules and helps developing economies build trade
capacity .
• More prosperous peaceful and accountable economic world
• Mulitaleral trading system known as the heart of the WTO’s agreement are legal
foundation for global trade .

HISTORY
• Came into existence in 19195
• Sucessor of GATT established in the wake of second world war
 • The system was developed with the series of trade negotiations or rounds held under
GATT .
• First round dealt with the tariff reductions
• Later negotiations included other areas such as anti-dumping and non tariff measures .
• The 1986-1994 round (uruguay round led to the creation of WTO )

WTO AGREEMENTS

1. GOODS
It all began with trade in goods from 1947-1994 , the GATT was the forum for
negotiating lower tariffs and other barriers . Since 1995 , the marrakesh agreem
establishing the WTO including the GATT has become WTO’S umbrella agreement . it
has dealing with specific sectors including agriculture .

2. SERVICES
Bank , insurance , films , telecommunications companies , hotel chains and transport
companies enjoy the same principles of more open trade that originally only applied to
trade in goods .
3. DISPUTE SETTLEMENT
The WTO’S procedure for resolving trade conflicts under DSU is vital for enforcing
the rules and for ensuring that trade flows smoothly . Govt bring disputes to WTO if
they think their rights under WTO agreements are being infringed .

4. TRADE MONITORING
The WTO’S trade policy review mechanism is designed to improve the transparency ,
to create a greater understanding of the trade policies adopted by WTO members and
to assess their impact .

BUILDING TRADE CAPACITY IN DEVELOPING ECONOMIES A

1. A WTO committee on trade and development looks at developing economies
special needs .
Its responsbility includes implementation of WTO agreements , technical cooperation
and the increased participation of developing economies in global trading system

2. The aid for trade initiative launched by WTO members in 2005 is designed tto help
the developing economies build trade capacity , enhance their infrastructure and
improve their benefit from trade opening .
3. The enhanced integrated framework is the only multilateral partnership dedicated
exclusively to assist least developed countries in their use of trade as an engine for
growth , sustainable development and poverty reduction
4. The standards and trade development facility set up to help developing economies
meet international standards for food safety plant and animal health .
 5. The WTO organizes hundreds of technical cooperation missions to developing
economies annually .

FUNCTIONS

1. Administering trade agreements

2. Acting as forum for trade negotiations
3. Settling trade disputes
4. Reviewing national trade policies
5. Buliding trade capacity of developing economies
6. Cooperate with other international organizations .

STRUCTURE

1. Has 164 members

2. Decisions are taken by membership and consensus
3. Ministerial confrence – top level decision making bodies > meets every two years
4. General council – meets several times in a year >also meets as trade policy review body
5. Goods council , service council and TRIPS council – report to general council

DIFFERENCE BETWEEN GATT 1947 AND 1994

1. Legal nature
• Gatt 1947 was a provisional agreement design to promote trade liberalization
after world war 2 , had contracting parties instead of members .
• GATT 1995 became a permanent legal agreement as part of WTO
2. Instituional framework
• Gatt 1947 – interim commission
• Gatt 1994 – permanent dispute resolution commission , binding enforcement
mechanism
3. Coverage
• Focused primarily on goods , reducing tariffs and non tariff barriers
• Excluded key sectors like agriculture and textiles
• Gatt 1994 – Broader in scope , covering sectors like agriculture and textiles ,
incorporated new rules on trade related aspects of trade (TRIPS ) , (GATS)
4. Dispute resolutions
• Through negotiations and consultations
• Establishment of DSB
5. Focus on development
• Gatt 1947 – focus more on developed nations
• GATT 1995 – included provisions for special and differential treatment for
developing and least developed countries .
 TRIPS

Trade related aspects of intellectual property rights is an agreement on international ip

rights .
• TRIPS came into force in 1995 , as part of the agreement that established the
WTO..
• It establishes the minimum standards for the availability , scope , and use of
seven form of IP namely trademarks , copyrights , gi , patensts and designs
• It applies basic international trade principles regarding intellectual property to
member states .
• It is applicable to all WTO members
• Trips agreements lays down permissible exceptions and limitations for
balancing interests of intellectual property
• It has a major role in enabling a trade in creativity and knowledge
• The trips council is responsible for administering and monitoring opeartion of
TRIPS agreement .
• The trips agreement is also described as Berne and Paris Plus agreement .

DIFFERENCE BETWEEN GATT AND WTO

GATT WTO
1. An agreement established in 1947 to An international organization created in 1995
promote international trade to regulate and liberalize global trade

2. A set of rules governing international An institution with legal authority to enforce

trade among member countries . trade agreements and resolve disputes

3. Focused primarily on reducing tariffs Expands the scope to include services , ip and
on goods agricultural products
4. Does not have a permanent screteriat Has a permanent secreteraiat
5. Relied on consensus based decision Adopts decision through majority voting
making
6. Applied to limited number of Encompasses a broad membership
countries
7. Did not have a formal dispute Establish a robust dispute settlement system
settlement mechanism system to adress trade dispurtes