WTO (World Trade Organisation)1.
1 Historical Developments1.2 Principles and Structure1.3 Trade Agreements1.
4 TRIPS1.5 TRIMS1.6 India at the WTOWTO was established in 1995 and its predecessor organizationthe GATT has helped to create a strong and prosperous international tradingsystem thereby contributing to unprecedented global economic growth.
GATT: Established in 1948 as the global tradeorganisation to administer all multilateral trade agreements by providing equalopportunities to all countries in the international market for trading purposes.About World Trade Organisation · World Trade Organization (WTO) is the onlyglobal international organization dealing with the rules of trade betweennations. · The goalof the WTO is to help producers of goods and services, exporters and importersconduct their business. · WTO currently has 164 members.· WTO activities are supported by a Secretariat(situated at Geneva, Switzerland) led by the WTO Director-General.
Decision Making at WTO· Decisions in the WTO are generally taken byconsensus of the entire membership. · The highest institutional body is theMinisterial Conference which meets roughly every two years. · A General Council conducts the organization’sbusiness in the intervals between Ministerial Conferences. Both of these bodiescomprise all members. · Specialised subsidiary bodies (Councils,Committees, Sub-committees) also comprising all members, administer and monitorthe implementation by members TheAgreement on Agriculture (AoA)Agriculture has created the highest number of deliberationsin the WTO.
Simultaneously WTO has a great prospect for agriculture as maximumgoods fell in the agriculture sector.· AoA is an international treaty of the WorldTrade Organization. · It was negotiated during the Uruguay Round ofthe General Agreement on Tariffs and Trade, and entered into force with theestablishment of the WTO on January 1, 1995. · The Agreement on Agriculture has three pillars 1.Domestic support.2.Market Access 3.Export SubsidiesIssues with AoA· There are many provisions of AoA which haveaffected the developing nations negatively relative to developed nations: · The Agreement has been criticised by civilsociety groups for reducing tariff protections for small farmers.
This was akey source of income in developing countries, while simultaneously allowingrich countries to continue subsidizing agriculture at home. · Variousstudies have demonstrated that how green box subsidies distorted trade,affecting developing country farmers and harming the environment. · Official WTO shows that the United States hasprovided $76 billion (more than 90% of total spending) in green box payments in2007 and the European Union has notified $91 billion in 2005 (around half ofall support). India & AoAAoA has brought opportunity to make our masses have betterincome and standard of living via profitable trade in agriculture. Butsimultaneously India should focus on various issues too that may affect thelivelihood situations in India like-· Issue of food security · Viability of Agriculture: The major challenge,posed by WTO is the viability of agriculture of most developing countries,including India.
· Developed countries’ high domestic support,export subsidies, and denial of market access through various tariff andnon-tariff barriers has presented many challenges to India. The WTO Subsidies The three box subsidies pertain to domestic support clauseof Agreement on Agriculture, concluded in 1993. 1. Green Box Subsidies: · The subsidies which cause no, or at most minimal,trade distorting effects.· These subsidies are permitted under WTO regime,for instance; Government services such as research, disease control, andinfrastructure and food security.2. Amber Box Subsidies or AMS: · All domestic support measures considered todistort production and trade (with some exceptions) fall into the amber box. · For instance, MSP, Procurement Price, sum totalof subsidies on inputs like fertilizer, water, credit, power, etc.
3.Blue Box Subsidies:· It contains direct payment subsidies which canbe increased without limit, so long as payments are linked toproduction-limiting programs. · This is the “amber box with conditions”,conditions designed to reduce distortion. Any support that would normally be inthe amber box, is placed in the blue box if the support also requires farmersto limit production. 4.Special and Differential Treatment Box (S&DT):· The S&DT measures generally comprises of 1.Investment subsidies like tractors and pump sets to farmers 2.Agricultural input services like fertilizers to farmers.
TRIPS Agreement The TRIPS (Trade-Related Aspects of Intellectual PropertyRights) Agreement under the World Trade Organisation (WTO), which entered intoforce on January 1, 1995, is the most comprehensive multilateral agreement todate on IPRs. This agreement sets down minimum standards for IP regulation forWTO member nations. This Treaty requires member states to make patents availablefor any invention, whether product or process, in all fields of technologywithout discrimination.
Members may exclude plants and animals (other thanmicroorganisms) and essential biological processes for the production of plantsor animals (other than nonbiological and microbiological processes). India has amended its Patents Act, 1970 to permit patentingof products (and also of micro-organisms) and enacted the Protection of PlantVarieties and Farmers’ Rights Act, 2001 to meet its national obligations. TheUnion Ministry of Commerce & Industry is the nodal ministry forimplementing this Treaty.
Anti-dumping Measures · Anti-dumping Agreement of WTO that an importedproduct is “dumped” and that the dumped imports are causing material injury toa domestic industry producing the like product. · The cases against India regarding anti-dumpingmeasures are: Anti-Dumping Duties on USB Flash Drives from the Separate CustomsTerritory of Taiwan, Penghu, Kinmen and Matsu by the complainant China. Sanitary and Phyto-Sanitary Measures · This agreement was one of the results of UruguayRound of negotiation entered into force with the establishment of the WorldTrade Organization on 1 January 1995. · The Agreement sets out the basic rules for foodsafety and animal and plant health standards. · It allows countries to set their own standards. Negotiation of AgricultureIndia, along with other like-minded countries, was able toget some temporary relief in the form of a peace clause on food security issueduring the Bali Ministerial Conference in 2013.Bali Ministerial Conference (Peace Clause)· Under it, if India breaches the 10% limit, othermember countries will not take legal action under the WTO dispute settlementmechanism.
· However, there was confusion over whether thetemporary reprieve would continue after four years.· The Present government after coming to power in 2014 forced developed countries toclarify that the peace clause will continue indefinitely if a permanentsolution on the matter cannot be found by MC11.Nairobi Package In 2015 WTO Nairobi Ministerial Conference concluded that exportsubsidies will be eliminated by developed countries immediately, except fora handful of agriculture products, while developing countries have no timeperiod to do so. WTO’s Trade Facilitation Pact · The WTO’s trade facilitation agreement (TFA),which seeks to ease customs norms, has come into effect with its two-thirdsmembers ratifying the pact in February 2017. · The TFA has been ratified by India. Importance of TFA · The main significance of TFA is that this is theonly meaningful multilateral agreement the WTO members have brought into forcesince the launch of the Doha Development Round in 2001. · It will give a boost to the global trade, whichhas been impacted due to slowdown in the world economy.
· TFA on goods would simplify trade processes,bring down barriers to trade and also enhance the capacity of the developingworld to engage better with the global trading network. · The trade facilitation agreement will also leadto reduction in transaction costs. Issues with Trade Facilitation Agreement · Rising protectionism may dent the success of TFANational Trade Facilitation Action Plan (NTFAP)The NTFAP plan was released with an aim to ensure compliancewith WTO’s Trade Facilitation Agreement (TFA) signed by India in February 2017.This Action Plan gives a time bound map, not only for implementing TFA, butalso for India’s initiatives for trade facilitation and Ease of Doing Businesswhich goes beyond TFA.
GLOBAL INVESTMENT AGREEMENT· India, along with Brazil, Argentina and someother countries, has rejected an informal attempt by the European Union (EU)and Canada to work towards a global investment agreement at the WTO. · The EU and Canada have inked an investment pactthat has incorporated the contentious Investor-State Dispute Settlement (ISDS)mechanism. What is Investor-State Dispute Settlement (ISDS) mechanism? · The ISDS mechanism has become contentious as itpermits companies to drag governments to international arbitration withoutexhausting the local remedies. · It alsoallows companies to claim huge amounts as compensation citing losses theysuffered due to reasons, including policy changes. India’s Stand· International arbitration tribunals can only beused when all local options have been exhausted for settling disputes between acorporate and a government. · India also held that ISDS mechanism could be a part of bilateral agreementsbut they can’t be allowed in a multilateral agreement. WTO Related Issues And India’s PositionDebate In WTO on E-commerce · In 2015, as per the WTO, global e-commerce ingoods and services was worth about $22 trillion, and has grown the fastest inemerging economies. · The ICC (International Chamber of Commerce) andB20 (The business associations from G20 members) proposed a holistic package oftrade disciplines, rules and assistance to boost MSME e-commerce with anoverriding objective to promote inclusive growth.
Fear of Indian MNCs:· Indian companies expressed reservationsregarding a global, regional or bilateral pact on e-commerce fearing it wouldfavour multinational firms. · India don’t have an e-commerce policy to take astand regarding a global e-commerce pact. Various Concerns wrt WTO MeasuresA WTO report says G20 economies Introduced newtrade-restrictive measures at the fastest pace since 2008 recession.Rising Protectionism· The rising protectionist measures and growingvoices against trade had resulted in slower international trade growth. Opposition to Protectionist measures from BRICS· BRICS leaders while firmly opposingprotectionism emphasized the importance of an open and inclusive world economyenabling all countries and peoples to share in the benefits of globalization. · BRICS leaders remain firmly committed to arules-based, transparent, non-discriminatory, open and inclusive multilateraltrading system as embodied in the WTO.India- China Joint Initiative against AMS· India and China had jointly submitted a proposalto the WTO, calling for the elimination of total ‘Aggregate Measurement ofSupport’ (AMS) or ‘Amber Box’ subsidy.
· It reveals that developed members are providingsubsidies, which, at times, exceed 200 per cent of the production value, despitethe 5 per cent de minimis prescribed. · The WTO rules make it possible for richcountries to get away with such high subsidies as their historical bound AMSlevels are high.Disputes involving India in WTODomestic Content Requirement (DCR) in Solar Panel · India had lost the case of DCR in solar panel toUS in WTO’s dispute resolution body.· India has prescribed ‘domestic contentrequirement’ for procurement of Solar cells/panels for its target of installing100 GW of solar power by 2022. · Under this about 5% procurement was reserved tobe bought from Indian vendors to promote indigenous industry.
· US alleged that this is against principles ofNon Discrimination and National Treatment.WTO ruling · India’s domestic content requirements wereinconsistent with Article 2.1 of the TRIMs Agreement. Import of poultry · The U.
S. had filed the case against India’sprohibition on importation of various agricultural products (including poultry)from the U.S. purportedly because of concerns related to Avian Influenza (birdflu). · The U.
S. had claimed that the ban was againstWTO norms and had hurt its poultry exports to India. · The WTO Appellate Body had found that India’simport prohibition on poultry and poultry products was ‘discriminatory’ and’more trade-restrictive than required’, and therefore violated WTO norms. IPR concerns shown by US· US is a big critique of India’s IPR environmentand has put her on “Priority watch list” of special 301 report. · US accuse India of doing minimum to protectpatent laws on global level.
India’s Stand· Indian patent laws are compliant with TRIPS(Trade Related Aspects of Intellectual Property Rights). · It allowsflexibilities to governments to issue compulsory licensing in case the originalmanufacturer reverts to anti-competition policy or in the interest of publichealth. Solutions suggested by India1.On Bali Peace Clauseo Fora permanent solution, India had proposed either amending the formula tocalculate the food subsidy cap of 10 per cent, which is based on thereference price of 1986-88, or allowing such schemes outside the purview ofsubsidy caps .2. On Tarde in Services· India had proposed Trade Facilitation inServices (TFS) Agreement at the WTO-level which aims to ease norms relating tomovement of foreign skilled workers/professionals across borders for short-termwork as well as reducing transaction costs in services. · The TFSagreement could be based on TFA in goods, with suitable modification andadaptation for services. Why This Push By India ?· World Bank data shows the growing share ofservices in the world economy, despite the fact that global trade flows inservices remain subject to numerous border and behind-the-border barriers.
· Since the services sector accounted for morethan 60 % of GDP and 28 % of employment, there is a need to boost servicetrade. · Making sure fees or charges for immigration orvisas are as reasonable, transparent, and non-restrictive (or impairing thesupply of services) in nature. · To ensure cross-border insurance coverage toboost medical tourism, publication of measures impacting services trade andtimely availability of relevant information in all the WTO official languagesas well as free flow of data/information for cross-border supply of services. Buenos Aires ministerial conference (MC11) of the World Trade Organisation(WTO)· Buenos Aires ministerial conference (MC11) ofthe World Trade Organisation (WTO) held between 10-13 December 2017.· India made it very clear that it will not accept an inferior permanentsolution at WTO’s MC11 on public stockholding for food security purposes.
India’s stand in MC11 · India wants a permanent solution on publicstockholding for food security .· India also sought more transparency innegotiations and has opposed attempts to take decisions in small groups at theMC11 drawing from its sour experience from the Nairobi ministerial in 2015.Impact on Developing Countries· The restrictions on new food programmes is alsolikely to impact other developing countries like Kenya, Zimbabwe.India’s stand on E- Commerce at MC11· On setting global e-commerce rules, India’sstand is that discussions should continue at various working groups and whendiscussions mature to a certain level they can be taken up by the generalcouncil of the WTO for further action. · Developed countries are pushing for acceleratedwork programme on e-commerce to be finalized at MC11 · China wants discussions on e-commerce to happenin a single body instead of the various working groups going on at present.Major Decision/Works form MC11 Decisions on fish subsidies,e-commerce duties; ongoing work continues· A commitment from members to secure a deal onfisheries subsidies which delivers on Sustainable Development Goal 14.6 by theend of 2019. · They also committed to improve the reporting ofexisting fisheries subsidy programmes.
· Memberstook a number of other ministerial decisions, including extending the practiceof not imposing customs duties on electronic transmissions for another twoyears, and they committed to continue negotiations in all areas.EU gives EUR 1 million to enhance trading skills of developing countries· This will help them play a more active role intrade negotiations.New initiatives on electronic commerce, investment facilitation and MSMEsUK pledges US$ 21.
3 million to innovative trade programme forleast-developed countries· Funds will help the least developed countries(LDCs) develop the tools, skills and economic capacity they need to becomecompetitive in targeting new markets for their goods and services.Buenos Aires Declaration on Women and Trade outlines actions to empowerwomen· For the first time in the history of the WorldTrade Organization, WTO members and observers have endorsed a collectiveinitiative to increase the participation of women in trade. · In order to help women reach their fullpotential in the world economy, 118 WTO members and observers agreed to supportthe Buenos Aires Declaration on Women and Trade, which seeks to remove barriersto, and foster, women’s economic empowerment.Public and private sector leaders exchange best practices to implementTrade Facilitation Agreement· Theevent, entitled “Trade Facilitation on Track”, highlighted the importance oflocal ownership of reform plans, multi-stakeholder cooperation, and capacitybuilding to successfully implement the Agreement.WTO and ICC announce third successful proposal under “Small BusinessChampions” initiative· The WTO and the International Chamber ofCommerce (ICC) announced “Small Business Champions ” initiative. This proposalis to develop a training programme for small and medium-sized enterprises(SMEs) so that that they can better access global markets.Other Issues Related to WTO’Market economy’ status to ChinaUnder WTO norms, once a country gets MES status, exportsfrom it are to be accepted at the production costs and selling price as thebenchmark.
As per the 2001 agreement (Protocol on accession of China to theWTO), WTO member countries had then decided to deem China as a ‘market economy’from December 2016.India’s stand to china’s MES (Market Economy Status)India is not inclined to automatically grant the ‘MarketEconomy Status’ (MES) to China under World Trade Organisation (WTO) norms. Themain reason India is reluctant to grant MES to China is that it will severelycurb India’s ability to impose antidumping Duties on “unfairly priced” Chineseimports.Fumigation with the banned chemical (MBr) Vs Sanitary and Phyto-Sanitary Clauseof WTOIndia, issued a notification making Methyl Bromide (MBr) Fumigation(sterilization)mandatory for all agro produce imported into the country. Russia and sixAfrican countries raised concerns at a WTO meet over such insistence.India took the decision as per the Sanitary andPhytosanitary (SPS) agreement of the World Trade Organization (WTO), whichallows member nations to take quarantine measures to safeguard against foreigninvasive species or pests.
MBr, which was introduced in 1970, several countries haveditched the pesticide because of its toxicity and its impact on the ozonelayer. So why is India continuing with the toxic chemical? It is the most effective and cheap way to kill all pests,insects and nematodes. Other Alternative like aluminium phosphide take 3 daysto fumigate the amount of area which MBr can fumigate in just 16 hours.Aluminium Phosphate is also three times more expensive than MBr.InternationalScenario: All the countries have similar import protocols, andIndian exporters follow them.
India, for example, exports mangoes to the USafter treating them through the irradiation process because MBr is banned.While, Indian agro exporters to Japan treat their products using a vapour heattechnique.