Project Report on

WTO And Contentious Issues

In partial fulfillment of requirement for the

Award of Degree of M.Com

Subject:
Economics of Global Trade And Finance

Submitted By:
Mr. Vicky Singh
Roll No. 08
M.Com. Part I, Semester - I

Under the Guidance of:

Prof. Mr. Shyam Lilani

SMT. CHANDIBAI HIMATHMAL MANSUKHANI COLLEGE

ULHASNAGAR 421003

UNIVERSITY OF MUMBAI
2014 2015

This is to certify that, Mr. Vicky Singh of M.Com Part I, has successfully
completed the project in Economics of Global Trade and Finance titled WTO
And Contentious Issues under my guidance for the academic year 2014-15. The
information submitted is true and original as per my knowledge.

Mr. Shyam Lilani

(Internal Guide)
Prof. Gopi Shamnani
(Coordinator, M.Com)

Dr. Padma V. Deshmukh

(I/C Principal)
________________
External Examiner

DECLARATION

I, Mr. Vicky Singh student of SMT. CHANDIBAI HIMATMAL MANSUKHANI COLLEGE,

ULHASNAGAR studying in M.Com Part I, Semester I, hereby declare that I have completed
this project on WTO And Contentious Issues for the subject Economics Of Global Trade
And Finance in the academic year 2014-15.The information submitted is true and original to
the best of my knowledge.

WORLD TRADE ORGANIZATION

AND
CONTENTIOUS ISSUES

ACKNOWLEDGEMENT

Concentration, dedication and application are necessary but not sufficient to achieve any goal.
They must be awarded by guidance, assistant and cooperation of some people to make it enable.
Gratitude is short lived but when put in black and white; one hopes it to enjoy a longer life.
Many people have given their valuable time and ideas to enable me to complete my project
report.
I am deeply indebted to all for their ideas and assistance, and I bear the entire responsibility for
weakness in the project if any. I am highly obliged to express my praise and profound thanks to
Prof. Shyam Lilani for his supervision, encouragement, and valuable advice.
Lastly I would like to thank all those who have directly and indirectly helped me in making the
project.

INDEX

Sr.No

TOPIC

Introduction - WTO

History

Functions

Principles of Trading System

Organizational Structure

Members and Observers

Objectives Of WTO

Agreements

General Agreement on Tariffs and Trade

10

Contentious issues on WTO and Globalization

11

Dispute settlement in the World Trade Organization

12

Developing Countries

13

Summary

14

Conclusion

15

Bibliography

INTRODUCTION

The World Trade Organization (WTO) is an organization that intends to supervise and liberalize
international trade. The organization officially commenced on January 1, 1995 under
the Marrakech Agreement, replacing the General Agreement on Tariffs and Trade (GATT),
which commenced in 1948. The organization deals with regulation of trade between participating
countries; it provides a framework for negotiating and formalizing trade agreements, and a
dispute resolution process aimed at enforcing participants' adherence to WTO agreements which
are signed by representatives of member governments and ratified by their parliaments. Most of
the issues that the WTO focuses on derive from previous trade negotiations, especially from
the Uruguay Round (19861994).
The organization is attempting to complete negotiations on the Doha Development Round, which
was launched in 2001 with an explicit focus on addressing the needs of developing countries. As
of June 2012, the future of the Doha Round remains uncertain: The work programmed lists 21
subjects in which the original deadline of 1 January 2005 was missed (So was the next unofficial
target

of

the

end

of

2006.)

The

further

imposition

of

free

trade

on

industrial goods and services and the protectionism on farm subsidies to domestic agricultural
sector requested from the developed countries, and the substantiation of the international

liberalization of fair trade on agricultural products from developing countries remain the major
obstacles. These points of contention have hindered any progress to launch new WTO
negotiation(s) beyond the Doha Development Round. As a result of this impasse, there has been
an increasing amount of bilateral free trade agreements

WTO's current Director-General is Pascal Lamy, who leads a staff of over 600 people in Geneva,
Switzer the Uruguay Round of multilateral trade negotiations under the auspices of GATT
(General Agreement on Tariffs and Trade, based on a 1947 agreement) established the World
Trade Organization. Upon ratification of the Round's Final Act by members, the WTO replaced
GATT as the global multilateral trade organization, and a series of agreements associated with
but legally distinct from GATT were also placed under the WTO umbrella (such as the GATS,
the Agreement on Agriculture, on Textiles and Clothing, on Rules of Origin, etc.).
The 1947 General Agreement on Tariffs and Trade (GATT) emerged from wartime and postwar negotiations to establish a stable, multilateral economic order. The lengthy negotiating
process (1944-7) reflected the controversial nature of the politics of international trade at
domestic and international levels of bargaining: changing patterns of international trade could
have dramatic and fairly immediate effects on domestic employment and income levels within
and among national economies. While it has never proved possible to gain broad agreement on
the extent of liberalization in most domains of international trade, it was accepted that the
unilateralist and discriminatory practices of the inter-war period had had particularly negative
consequences for all concerned

GATT itself was an interim accord which sought to codify the rules of the emerging trade regime
and to proceed with important reductions in national barriers to trade. The US delegation was
determined to press other countries to reduce their discriminatory trade practices (particularly the
British Imperial Preference) and in exchange the United States was willing to reduce its
traditionally high tariffs. The USSR and its allies remained outside GATT, only considering
membership at the end of the Cold War in 1989. Following the signature of the Havana Charter
in 1948, the GATT was supposed to form the rule book of the newly established International
Trade Organization (ITO). The ITO charter prescribed a far more ambitious multilateral

institution than the eventual WTO, but this was in part its eventual downfall. When the US failed
to ratify the ITO charter, the institution was dead and only the interim GATT survived.

The GATT agreement enunciated the principles of reciprocity and non-discrimination,

encapsulated in the Most Favored Nation (MFN) and National Treatment concepts. National
Treatment implies that governments cannot treat foreign exporting firms any less favorably than
domestic producers. Reciprocity meant that any negotiations among trading partners were to
yield roughly reciprocal concessions and/or benefits in the eyes of the parties. Nondiscrimination meant that any trade concession advanced by a country to one GATT trading
partner had to be extended to all others simultaneously. In this way, bilateral negotiations among
trading parties would be multilateral zed, leading to the establishment of a liberal trading order.
GATT negotiating Rounds were difficult due to the weak state of most post-war economies,
and the extraordinary competitive edge of American industry at the time. Most economies would
have experienced severe balance-of-payments difficulties had they removed barriers to imports,
and domestic employment would have been adversely affected as well. As post-war recovery
rendered more liberal trading policies acceptable, the American government sought to replace
the piecemeal approach with reciprocal across-the-board tariff cuts by all participating parties on
a wide range of traded products. This initiative developed into the Kennedy Round agreements
of June 1967 which stands as a watershed in post-war trade liberalization. Tariffs on
manufactured goods were reduced by 36 per cent on average, and this progress was continued in
the later Tokyo Round (1974-9).

The United States had originally taken unilateral measures to keep agricultural trade out of the
GATT process in 1955, but had reversed this position in the Kennedy Round. This led to a longrunning conflict with the EU (with its Common Agricultural Policy, which represented a delicate
internal compromise difficult to disturb) and Japan, both with protected agricultural markets.
Agriculture is still central to conflict over the trade regime, and held up the Uruguay Round of
negotiations (completed in December 1993).

As tariffs were lowered, so-called non-tariff barriers (NTBs) became the remaining instruments
of trade policy. Examples were voluntary export restraint agreements and Orderly Marketing

Arrangements, running against the spirit of GATT non-discrimination. As these were

voluntary, GATT rules theoretically did not apply. Furthermore, the principles of liberalization
called into question many economic policy measures associated with successful national
economic development strategies in the post-war period, particularly in Japan, Europe, and the
developing world. Finally, the Less Developed Countries sought exemption from many of
GATT's rules, pointing out that their weak economies benefited little from free trade
arrangements. All governments abused the escape clauses in GATT (e.g. through anti-dumping
measures) and attempts have been made to tighten up the rules over time. None of these disputes
is likely to be resolved in any permanent fashion; it is the nature of the eventual compromise
which will be crucial to the continued success of the WTO as GATT's successor. There none the
less remains broad agreement on the need to continue the momentum of the liberalization
process through further rounds of WTO negotiations.

The Uruguay Round negotiations successfully expanded the scope of GATT. It now includes
multilateral rules applied to the services sector (see GATS), intellectual property, investment
measures, and some aspects of agricultural trade. The Round also ended the provisional status of
GATT by establishing the World Trade Organization with an enhanced institutional framework
and dispute settlement procedure. The WTO's judgments on trade disputes now bind member
countries to change their trade practices, though the US Congress formally refuses this
implication and asserts the superiority of US laws.

The new WTO is not without tensions among its members and their societies, as its history
would suggest is likely to be the case. Developing countries argue strongly that the WTO as
constituted does not adequately take into account the difficulties and asymmetries of economic
development under conditions of liberalization. Developed countries and the international
organizations they control such as the IMF have put strong pressure on developing countries to
liberalize their trade laws despite uncertain consequences for long-run development prospects.
Developed countries are often less than generous in opening their markets to developing country
exports,

especially

in

the

domain

of

agriculture

and

garment

production.

Perhaps the biggest challenge to the WTO comes not from member states but from civil society

groups such as non-governmental organizations. Many social activists in the anti-globalization

movement draw attention to the difficulties of liberalization in both developed and developing
countries, especially for the weaker members of society and less market-competitive forms of
economic organization which may none the less be crucial to local identities and cultures.
Organized labor maintains an uneasy relationship with the liberalization process, for fear of job
losses. Finally, the emergence of the European Union (EU), the NAFTA, and other nascent
regional arrangements such as MERCOSUR or the Asia Pacific Economic Co-operation Forum
(APEC), are also potential challenges to young WTO. So far these regional arrangements have
not emerged as discriminatory trading blocs, and the WTO expressly permits regional economic
integration if compatible with its rules. Despite the ultimate success of the long Uruguay Round,
regional arrangements and indeed bilateral/unilateral solutions (especially on the part of the
United States) may become the order of the day if ongoing agreement cannot be reached on
outstanding issues. However, global companies would be likely to put up stiff resistance to any
attempt to substantially restrict the liberal or global nature of the trade regime. In short, conflict
in the WTO continues to mirror socio-political tensions across its member economies and is
intimately related to the tensions of global economic integration largely driven by liberalization
policies.

HISTORY

The WTO's predecessor, the General Agreement on Tariffs and Trade (GATT), was established
after World War II in the wake of other new multilateral institutions dedicated to international
economic cooperation notably the Bretton Woods institutions known as the World Bank and
the International Monetary Fund.
A comparable international institution for trade, named the International Trade Organization was
successfully negotiated. The ITO was to be a United Nations specialized agency and would
address not only trade barriers but other issues indirectly related to trade, including employment,
investment, restrictive business practices, and commodity agreements.
But the ITO treaty was not approved by the U.S. and a few other signatories and never went into
effect.
In the absence of an international organization for trade, the GATT would over the years
"transform itself" into a de facto international organization.

From Geneva to Tokyo:

Seven rounds of negotiations occurred under GATT. The first real GATT trade rounds
concentrated on further reducing tariffs. Then, the Kennedy Round in the mid-sixties brought
about a GATT anti-dumping Agreement and a section on development.
The Tokyo Round during the seventies was the first major attempt to tackle trade barriers that do
not take the form of tariffs, and to improve the system, adopting a series of agreements on nontariff barriers, which in some cases interpreted existing GATT rules, and in others broke entirely
new ground. Because these plurilateral agreements were not accepted by the full GATT
membership, they were often informally called "codes".
Several of these codes were amended in the Uruguay Round, and turned into multilateral
commitments accepted by all WTO members. Only four remained plurilateral (those on

government procurement, bovine meat, civil aircraft and dairy products), but in 1997 WTO
members agreed to terminate the bovine meat and dairy agreements, leaving only two.

Uruguay Round:
Well before GATT's 40th anniversary, its members concluded that the GATT system was
straining to adapt to a new globalizing world economy In response to the problems identified in
the 1982 Ministerial Declaration (structural deficiencies, spill-over impacts of certain countries'
policies on world trade GATT could not manage etc.), the eighth GATT round known as the
Uruguay Round was launched in September 1986, in Punta del Este, Uruguay.
It was the biggest negotiating mandate on trade ever agreed: the talks were going to extend the
trading system into several new areas, notably trade in services and intellectual property, and to
reform trade in the sensitive sectors of agriculture and textiles; all the original GATT articles
were up for review. The Final Act concluding the Uruguay Round and officially establishing the
WTO regime was signed April 15, 1994, during the ministerial meeting at Marrakesh, Morocco,
and hence is known as the Marrakesh Agreement.
The GATT still exists as the WTO's umbrella treaty for trade in goods, updated as a result of the
Uruguay Round negotiations (a distinction is made between GATT 1994, the updated parts of
GATT, and GATT 1947, the original agreement which is still the heart of GATT 1994). GATT
1994 is not however the only legally binding agreement included via the Final Act at Marrakesh;
a long list of about 60 agreements, annexes, decisions and understandings was adopted.
The agreements fall into a structure with six main parts:
The Agreement Establishing the WTO
Goods and investment the Multilateral Agreements on Trade in Goods including the
GATT 1994 and the Trade Related Investment Measures (TRIMS)
Services the General Agreement on Trade in Services
Intellectual property the Agreement on Trade-Related Aspects of Intellectual Property
Rights (TRIPS)
Dispute settlement (DSU)
Reviews of governments' trade policies (TPRM)

In terms of the WTO's principle relating to tariff "ceiling-binding" (No. 3), the Uruguay Round
has been successful in increasing binding commitments by both developed and developing
countries, as may be seen in the percentages of tariffs bound before and after the 1986-1994
talks.

Ministerial Conferences:
The topmost decision-making body of the WTO is the Ministerial Conference, which usually
meets every two years. It brings together all members of the WTO, all of which are countries or
customs unions. The Ministerial Conference can take decisions on all matters under any of the
multilateral trade agreements. The inaugural ministerial conference was held in Singapore in
1996. Disagreements between largely developed and developing economies emerged during this
conference over four issues initiated by this conference, which led to them being collectively
referred to as the "Singapore issues".
The second ministerial conference was held in Geneva in Switzerland. The third conference in
Seattle, Washington ended in failure, with massive demonstrations and police and National
Guard crowd control efforts drawing worldwide attention. The fourth ministerial conference was
held in Doha in the Persian Gulf nation of Qatar. The Doha Development Round was launched at
the conference. The conference also approved the joining of China, which became the 143rd
member to join.
The fifth ministerial conference was held in Cancun, Mexico, aiming at forging agreement on the
Doha round. An alliance of 22 southern states, theG20 developing nations (led by India, China,
Brazil, ASEAN led by the Philippines), resisted demands from the North for agreements on the
so-called "Singapore issues" and called for an end to agricultural subsidies within the EU and the
US. The talks broke down without progress.
The sixth WTO ministerial conference was held in Hong Kong from 1318 December 2005. It
was considered vital if the four-year-old Doha Development Round negotiations were to move
forward sufficiently to conclude the round in 2006. In this meeting, countries agreed to phase out
all their agricultural export subsidies by the end of 2013, and terminate any cotton export
subsidies by the end of 2006. Further concessions to developing countries included an agreement
to introduce duty free, tariff free access for goods from the Least Developed Countries, following

the Everything but Arms initiative of the European Union but with up to 3% of tariff lines
exempted. Other major issues were left for further negotiation to be completed by the end of
2010.
The WTO General Council, on 26 May 2009, agreed to hold a seventh WTO ministerial
conference session in Geneva from 30 November-3 December 2009.A statement by chairman
Amb. Mario Matus acknowledged that the prime purpose was to remedy a breach of protocol
requiring two-yearly regular meetings, which had lapsed with the Doha Round failure in 2005,
and that the scaled-down meeting would not be a negotiating session, but emphasis will be on
transparency and open discussion rather than on small group processes and informal negotiating
structures. The general theme for discussion was The WTO, the Multilateral Trading System
and the Current Global Economic Environment

Doha Round (The Doha Agenda):

The WTO launched the current round of negotiations, the Doha Development Round, at the
fourth ministerial conference in Doha, Qatarin November 2001. This was to be an ambitious
effort to make globalization more inclusive and help the world's poor, particularly by slashing
barriers and subsidies in farming. The initial agenda comprised both further trade liberalization
and new rule-making, underpinned by commitments to strengthen substantial assistance to
developing countries.
The negotiations have been highly contentious. Disagreements still continue over several key
areas including agriculture subsidies, which emerged as critical in July 2006.

FUNCTIONS:
Among the various functions of the WTO, these are regarded by analysts as the most important:
It oversees the implementation, administration and operation of the covered agreements.
It provides a forum for negotiations and for settling disputes.

Functions of WTO:

Oversees the implementation, administration, and operation of the covered agreements.

Provides a forum for negotiations and for settling disputes.
Reviews and propagates national TRADE policies.
Ensures the coherence and transparency of TRADE policies through surveillance in
global economic policy-making.
Assists in developing, least-developed, and low-income countries in transition to adjust to
WTO rules and disciplines through technical cooperation and training.
Regularly assesses the global trade picture in its annual publications and research reports.
Cooperates closely with the IMF and the World Bank.

Additionally, it is the WTO's duty to review and propagate the national trade policies, and to
ensure the coherence and transparency of trade policies through surveillance in global economic
policy-making. Another priority of the WTO is the assistance of developing, least-developed and
low-income countries in transition to adjust to WTO rules and disciplines through technical
cooperation and training.

PRINCIPLES OF TRADING SYSTEM

The WTO establishes a framework for trade policies; it does not define or specify outcomes.
That is, it is concerned with setting the rules of the trade policy games. Five principles are of
particular importance in understanding both the pre-1994 GATT and the WTO:
1. Non-discrimination- It has two major components: the most favored nation (MFN) rule,
and the national treatment policy. Both are embedded in the main WTO rules on goods,
services, and intellectual property, but their precise scope and nature differ across these
areas. The MFN rule requires that a WTO member must apply the same conditions on all
trade with other WTO members, i.e. a WTO member has to grant the most favorable
conditions under which it allows trade in a certain product type to all other WTO
members. "Grant someone a special favor and you have to do the same for all other WTO
members." National treatment means that imported goods should be treated no less
favorably than domestically produced goods (at least after the foreign goods have entered
the market) and was introduced to tackle non-tariff barriers to trade (e.g. technical
standards, security standards et al. discriminating against imported goods).

2. Reciprocity-. It reflects both a desire to limit the scope of free-riding that may arise
because of the MFN rule, and a desire to obtain better access to foreign markets. A
related point is that for a nation to negotiate, it is necessary that the gain from doing so be
greater than the gain available from unilateral liberalization; reciprocal concessions
intend to ensure that such gains will materialize.

3. Binding And Enforceable Commitments- The tariff commitments made by WTO

members in a multilateral trade negotiation and on accession are enumerated in a
schedule (list) of concessions. These schedules establish "ceiling bindings": a country can
change its bindings, but only after negotiating with its trading partners, which could mean
compensating them for loss of trade. If satisfaction is not obtained, the complaining
country may invoke the WTO dispute settlement procedures.

4. Transparency- The WTO members are required to publish their trade regulations, to
maintain institutions allowing for the review of administrative decisions affecting trade,
to respond to requests for information by other members, and to notify changes in trade
policies to the WTO. These internal transparency requirements are supplemented and
facilitated by periodic country-specific reports (trade policy reviews) through the Trade
Policy Review Mechanism (TPRM). The WTO system tries also to improve
predictability and stability, discouraging the use of quotas and other measures used to set
limits on quantities of imports.

5. Safety Valves- In specific circumstances, governments are able to restrict trade. The
WTOs agreements permit members to take measures to protect not only the environment
but also public health, animal health and plant health.

There are three types of provision in this direction:

articles allowing for the use of trade measures to attain non-economic objectives;

Articles aimed at ensuring "fair competition"; members must not use environmental
protection measures as a means of disguising protectionist policies.

Provisions permitting intervention in trade for economic reasons.

Exceptions to the MFN principle also allow for preferential treatment of developing countries,
regional free trade areas and customs unions.

ORGANIZATIONAL STRUCTURE

Council for Trade in Goods:

There are 11 committees under the jurisdiction of the Goods Council each with a specific task.
All members of the WTO participate in the committees. The Textiles Monitoring Body is
separate from the other committees but still under the jurisdiction of Goods Council. The body
has its own chairman and only 10 members. The body also has several groups relating to textiles.

Council for Trade-Related Aspects of Intellectual Property Rights:

Information on intellectual property in the WTO, news and official records of the activities of the
TRIPS Council, and details of the WTO's work with other international organizations in the
field.

Council for Trade in Services:

The Council for Trade in Services operates under the guidance of the General Council and is
responsible for overseeing the functioning of the General Agreement on Trade in Services
(GATS). It is open to all WTO members, and can create subsidiary bodies as required.

Trade Negotiations Committee:

The Trade Negotiations Committee (TNC) is the committee that deals with the current trade talks
round. The chair is WTO's director-general. As of June 2012 the committee was tasked with the
Doha Development Round.
The Service Council has three subsidiary bodies: financial services, domestic regulations, GATS
rules and specific commitments. The General council has several different committees, working
groups, and working parties. There are committees on the following: Trade and Environment;
Trade and Development (Subcommittee on Least-Developed Countries); Regional Trade
Agreements; Balance of Payments Restrictions; and Budget, Finance and Administration. There
are working parties on the following: Accession. There are working groups on the following:
Trade, debt and finance; and Trade and technology transfer.

MEMBERS AND OBSERVERS:

The WTO has 157 members and 27 observer governments. WTO members do not have to be full
sovereign nation-members. Instead, they must be a customs territory with full autonomy in the
conduct of their external commercial relations. Iran is the biggest economy outside the WTO.
Most observers must start accession negotiations within five years of becoming observers.
Fourteen states and two territories so far have no official interaction with the WTO.
The former GATT was not really an organization; it was merely a legal arrangement. On the
other hand, the WTO is a new international organization set up as a permanent body. It is
designed to play the role of a watchdog in the spheres of TRADE in goods, TRADE in services,
foreign investment, intellectual property rights, etc. Article III has set out the following five
functions of WTO;
The WTO shall facilitate the implementation, administration and operation and further
the objec-tives of this Agreement and of the Multilateral TRADE Agreements, and shall
also provide the frame work for the implementation, administration and operation of the
plurilateral Trade Agreements.
The WTO shall provide the forum for negotiations among its members concerning their
multilateral trade relations in matters dealt with under the Agreement in the Annexes to
this Agreement.
The WTO shall administer the Understanding on Rules and Procedures Governing the
Settlement of Disputes.
The WTO shall administer TRADE Policy Review Mechanism.
With a view to achieving greater coherence in global economic policy making, the WTO
shall cooperate, as appropriate, with the international Monetary FUND (IMF) and with
the International Bank for Reconstruction and Development (IBRD) and its affiliated
agencies.

OBJECTIVES OF WTO:

Important objectives of WTO are mentioned below:

To implement the new world TRADE system as visualized in the Agreement;

To promote World TRADE in a manner that benefits every country;

To ensure that developing countries secure a better balance in the sharing of the
advantages resulting from the expansion of international trade corresponding to their
developmental needs;
To demolish all hurdles to an open world TRADING system and usher in international
economic renaissance because the world trade is an effective instrument to foster
economic growth;
To enhance competitiveness among all trading partners so as to benefit consumers and
help in global integration;
To increase the level of production and productivity with a view to ensuring level of
employment in the world;

To expand and utilize world resources to the best;

To improve the level of living for the global population and speed up economic
development of the member nations.

AGREEMENTS

The WTO oversees about 60 different agreements which have the status of international legal
texts. Member countries must sign and ratify all WTO agreements on accession. A discussion of
some of the most important agreements follows. The Agreement on Agriculture came into effect
with the establishment of the WTO at the beginning of 1995. The Ana has three central concepts,
or "pillars": domestic support, market access and export subsidies. The General Agreement on
Trade in Services was created to extend the multilateral trading system to service sector, in the
same way as the General Agreement on Tariffs and Trade (GATT) provided such a system for
merchandise trade. The agreement entered into force in January 1995. The Agreement on TradeRelated Aspects of Intellectual Property Rights sets down minimum standards for many forms
of intellectual property (IP) regulation. It was negotiated at the end of the Uruguay Round of the
General Agreement on Tariffs and Trade (GATT) in 1994.

The Agreement on the Application of Sanitary and Phytosanitary Measuresalso known

as the SPS Agreementwas negotiated during the Round of GATT, and entered into
force with the establishment of the WTO at the beginning of 1995. Under the SPS
agreement, the WTO sets constraints on members' policies relating to food safety
(bacterial contaminants, pesticides, inspection and labeling) as well as animal and plant
health (imported pests and diseases). The Agreement on Technical Barriers to Trade is an
international treaty of the World Trade Organization. It was negotiated during
the Uruguay Round of the General Agreement on Tariffs and Trade, and entered into
force with the establishment of the WTO at the end of 1994. The object ensures that
technical negotiations and standards, as well as testing and certification procedures, do
not create unnecessary obstacles to trade" The Agreement on Customs Valuation,
formally known as the Agreement on Implementation of Article VII of GATT, prescribes
methods of customs valuation that Members are to follow. Chiefly, it adopts the
"transaction value" approach.

AGREEMENT ON TRADE RELATED INVESTMENT MEASURES

The Agreement on Trade Related Investment Measures (TRIMs) are rules that apply to the
domestic regulations a country applies to foreign investors, often as part of an industrial policy.
The agreement was agreed upon by all members of the World Trade Organization. (The WTO
wasn't established at that time, it was its predecessor, the GATT (General Agreement on Trade
and Tariffs). The WTO came about in 1994-1995.

Policies such as local content requirements and trade balancing rules that have traditionally been
used to both promote the interests of domestic industries and combat restrictive business
practices are now banned.

Trade Related Investment Measures is the name of one of the four principal legal agreements of
the WTO trade treaty.

TRIMs are rules that restrict preference of domestic firms and thereby enable international firms
to operate more easily within foreign markets.

AGREEMENT ON TRADE RELATED ASPECTS OF INTELLECTUAL

PROPERTY RIGHTS

The Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS) is

an international agreement administered by the World Trade Organization (WTO) that sets down
minimum standards for many forms of intellectual property (IP) regulation as applied to
nationals of other WTO Members.[2] It was negotiated at the end of the Uruguay Round of
the General Agreement on Tariffs and Trade (GATT) in 1994.

The TRIPS agreement introduced intellectual property law into the international trading system
for the first time and remains the most comprehensive international agreement on intellectual
property to date. In 2001, developing countries, concerned that developed countries were
insisting on an overly narrow reading of TRIPS, initiated a round of talks that resulted in
the Doha Declaration. The Doha declaration is a WTO statement that clarifies the scope of
TRIPS, stating for example that TRIPS can and should be interpreted in light of the goal "to
promote access to medicines for all."

Specifically, TRIPS contains requirements that nations' laws must meet for copyright rights,
including the rights of performers, producers of sound recordings and broadcasting
organizations; geographical

indications,

including

appellations

of

origin; industrial

designs; integrated circuit layout-designs; patents; monopolies for the developers of new plant
varieties; trademarks; trade dress; and undisclosed or confidential information. TRIPS also
specify enforcement procedures, remedies, and dispute resolution procedures. Protection and
enforcement of all intellectual property rights shall meet the objectives to contribute to the
promotion of technological innovation and to the transfer and dissemination of technology, to the
mutual advantage of producers and users of technological knowledge and in a manner conducive
to social and economic welfare, and to a balance of rights and obligations.

GENERAL AGREEMENT ON TARIFFS AND TRADE

The General
Trade (GATT)

Agreement
is

on

Tariffs

multilateral

and

agreement

regulating international trade. According to its

preamble, its purpose is the "substantial reduction
of tariffs and other trade barriers and the
elimination of preferences, on a reciprocal and
mutually advantageous basis."

It was negotiated during the UN Conference on Trade and Employment and was the outcome of
the failure of negotiating governments to create the International (ITO). GATT was signed in
1948 and lasted until 1993, when it was replaced by the World Trade Organization in 1995. The
original GATT text (GATT 1958) is still in effect under the WTO framework, subject to the
modifications of GATT 1994.

In 1993, the GATT was updated (GATT 1994) to include new obligations upon its signatories.
One of the most significant changes was the creation of the World (WTO). The 75 existing
GATT members and the European Communities became the founding members of the WTO on
1 January 1995. The other 52 GATT members rejoined the WTO in the following two years (the
last being Congo in 1997). Since the founding of the WTO, 21 new non-GATT members have
joined and 29 are currently negotiating membership. There are a total of 157 member countries
in the WTO, with Russia and Vanuatu being new members as of 2012.

Of the original GATT members, Syria and the SFR Yugoslavia have not rejoined the WTO.
Since FR Yugoslavia, (renamed to Serbia and Montenegro and with membership negotiations
later split in two), is not recognized as a direct SFRY successor state; therefore, its application is
considered a new (non-GATT) one. The General Council of WTO, on 4 May 2010, agreed to

establish a working party to examine the request of Syria for WTO membership. The contracting
parties who founded the WTO ended official agreement of the "GATT 1947" terms on 31
December 1995. Serbia and Montenegro are in the decision stage of the negotiations and are
expected to become the newest members of the WTO in 2012 or in near future.

Whilst GATT was a set of rules agreed upon by nations, the WTO is an institutional body. The
WTO expanded its scope from traded goods to include trade within the service
sector and intellectual property rights. Although it was designed to serve multilateral agreements,
during

several

rounds

of

GATT

negotiations

(particularly

the Tokyo Round) plurilateral agreements created selective trading and caused fragmentation
among members. WTO arrangements are generally a multilateral agreement settlement
mechanism of GATT.

CONTENTIOUS ISSUES ON WTO AND GLOBALIZATION

Environmental groups argue that globalization harms the environment; they want the
WTO to change its rules so that trade sanctions can be used to enforce environmental
goals.

They blame global corporations for global warming, depletion of natural resources,
production of harmful chemicals and destruction of organic agriculture.

They have particular criticism against global investment, which they argue takes
advantage of the lack of regulation in poorer developing countries. Hence, global
companies may locate polluting industries in poor countries, log tropical forests, or
develop mines with inadequate controls.

They oppose production, use and global trade in toxic chemicals, nuclear materials and
other products of which they do not approve, such as GM foods, or endangered wildlife,
including fish.

They oppose the existing rules of the WTO, which do not allow countries to ban imports
of goods just because their production may have damaged the environment in the country
of origin.

Environmental groups argue that WTO rules are unacceptable from the environmental
perspective and they want the rules amended to give them the right to present arguments
in its appeals court.

Other groups share a concern that global financial institutions, such as the IMF and the
WB, are not doing enough to alleviate poverty and, indeed, may be contributing to it.
They argue that poor countries should have their debts to international banks excused.

Some are critical of the WTO saying that its rules favor companies from wealthy
countries. They argue that by making it difficult for countries to protect their own

industries with discriminatory tariffs, it is hard for poor countries to build domestic
industries.

Allegation as the spread of capitalism, in which the labor of the poor is exploited for the
benefit of the rich.

Leftist organizations have mounted a series of 'global action days' starting with the WTO
Summit in Seattle in September 1999, and targeting meetings of the World Bank, the
IMF and the private business conference organization, the World Economic Forum.

CONTROVERSIES IN TRADE POLICY WITH ENVIRONMENT

World trade expansion has raised the issue of the relationship between trade and the
environment. Is trade good or bad for the environment? The answer is not obvious. The
production of goods that are imported and exported, like other production, will often have
environmental effects. But will these effects increase or decrease with expanded trade? Will they
affect the exporting nation, the importing nation, or the world as a whole? And whose
responsibility is it to respond to environmental problems associated with trade? Questions such
as these have received increasing attention in recent years.
International attention was first focused on these issues in 1991, when the Mexican government
challenged a United States law banning imports of tuna from Mexico. The U.S. Marine Mammal
Protection Act prohibited tuna fishing methods that killed large numbers of dolphins, and banned
tuna imports from countries that used such fishing methods. The Mexican government argued
that this U.S. law was in violation of the rules of the General Agreement on Tariffs and Trade
(GATT).
According to the free trade principles that provided the basis for GATT and for its successor, the
World Trade Organization (WTO), countries cannot restrict imports except in very limited cases
such as protection of the health and safety of their own citizens. A GATT dispute panel ruled that
the U.S. could not use domestic legislation to protect dolphins outside its own territorial limits.

Although Mexico did not press for enforcement of this decision, the tuna/dolphin decision
opened a major controversy over issues of trade and environment. In a similar case in 1999, the
World Trade Organization ruled that the U.S. could not prohibit shrimp imports from countries
using fishing methods that killed endangered sea turtles.

The implications of this and the earlier tuna/dolphin decision could affect many other
international environmental issues, such as forest protection, ozone depletion, hazardous wastes,
and global climate change. All these issues are linked to international trade.

To address these questions, we need to examine the theory and practice of international trade.
Most economists believe that expanded trade is generally beneficial, promoting increased
efficiency and greater wealth among trading nations. But what if expanded trade causes
environmental damage?

At the national level, the standard economic policy response to environmental impacts is to
implement policies that internalize externalities. At the international level, however, the picture
is more confused. The burden of environmental externalities associated with trade may be borne
by importers, exporters, or by others not directly involved in the production or consumption of
traded goods. The authority to formulate and enforce environmental policies usually exists only
at the national level. This can create significant problems when environmental impacts are
transnational, since most international trade agreements do not include any provisions for
environmental protection.

CONTROVERSIES IN TRADE POLICY WITH LABOUR POLICY

Labour standards. In some extreme cases, such as the use of slave labour, restrictions on trade
are usually considered permissible. But should countries be allowed to use trade restrictions to
punish unfair labor practices? Some poorer countries have accused richer countries of imposing
unreasonably high labor standards. Under the pretext of trying to protect global workers, they
say, the richer countries are just trying to protect their workers from fair competition.
At the 1996 Singapore Ministerial Conference, members defined the WTOs role on this issue,
identifying the International Labour Organization (ILO) as the competent body to negotiate
labour standards. There is no work on this subject in the WTOs Councils and Committees.
However the secretariats of the two organizations work together on technical issues under the
banner of coherence in global economic policymaking.

However, beyond that it is not easy for them to agree, and the question of international
enforcement is a minefield.

The WTO agreements do not deal with labour standards as such.

On the one hand, some countries would like to change this. WTO rules and disciplines, they
argue, would provide a powerful incentive for member nations to improve workplace conditions
and international coherence (the phrase used to describe efforts to ensure policies move in
the same direction).

On the other hand, many developing countries believe the issue has no place in the WTO
framework. They argue that the campaign to bring labour issues into the WTO is actually a bid
by industrial nations to undermine the comparative advantage of lower wage trading partners,
and could undermine their ability to raise standards through economic development, particularly
if it hampers their ability to trade. They also argue that proposed standards can be too high for
them to meet at their level of development. These nations argue that efforts to bring labour

standards into the arena of multilateral trade negotiations are little more than a smokescreen for
protectionism.

At a more complex legal level is the question of the relationship between the International
Labour Organizations standards and the WTO agreements for example whether or how the
ILOs standards can be applied in a way that is consistent with WTO rules.

In the WTO, the debate has been hard-fought, particularly in 1996 and 1999. It was at the 1996
Singapore conference that members agreed they were committed to recognized core labour
standards, but these should not be used for protectionism. The economic advantage of low-wage
countries should not be questioned, but the WTO and ILO secretariats would continue their
existing collaboration, the declaration said. The concluding remarks of the chairman, Singapores
trade and industry minister, Mr Yeo Cheow Tong, added that the declaration does not put labour
on the WTOs agenda. The countries concerned might continue their pressure for more work to
be done in the WTO, but for the time being there are no committees or working parties dealing
with the issue.

The issue was also raised at the Seattle Ministerial Conference in 1999, but with no agreement
reached. The 2001 Doha Ministerial Conference reaffirmed the Singapore declaration on labour
without any specific discussion.

This issue was also indirectly mentioned in the Appellate Body Report on the dispute initiated by
India against the European Communities concerning the conditions for granting of tariff
preferences to developing countries.

DISPUTE SETTLEMENT IN THE WORLD TRADE ORGANIZATION

Dispute settlement is the central pillar of the multilateral trading system, and the WTOs unique
contribution to the stability of the global economy. Without a means of settling disputes, the
rules-based system would be less effective because the rules could not be enforced. The WTOs
procedure underscores the rule of law, and it makes the trading system more secure and
predictable. The system is based on clearly defined rules, with timetables for completing a case.
First rulings are made by a panel and endorsed (or rejected) by the WTOs full membership.
Appeals based on points of law are possible. However, the point is not to pass judgment. The
priority is to settle disputes, through consultations if possible. By July 2005, only about 130 of
the nearly 332 cases had reached the full panel process. Most of the rest have either been notified
as settled out of court or remain in a prolonged consultation phase some since 1995
Disputes in the WTO are essentially about broken promises. WTO members have agreed that if
they believe fellow-members are violating trade rules, they will use the multilateral system of
settling disputes instead of taking action unilaterally. That means abiding by the agreed
procedures, and respecting judgments. A dispute arises when one country adopts a trade policy
measure or takes some action that one or more fellow-WTO members considers to be breaking
the WTO agreements, or to be a failure to live up to obligations. A third group of countries can
declare that they have an interest in the case and enjoy some rights. A procedure for settling
disputes existed under the old GATT, but it had no fixed timetables, rulings were easier to block,
and many cases dragged on for a long time inconclusively. The Uruguay Round agreement
introduced a more structured process with more clearly defined stages in the procedure. It
introduced greater discipline for the length of time a case should take to be settled, with flexible
deadlines set in various stages of the procedure. The agreement emphasizes that prompt
settlement is essential if the WTO is to function effectively. It sets out in considerable detail the
procedures and the timetable to be followed in resolving disputes. If a case runs its full course to
a first ruling, it should not normally take more than about one year 15 months if the case is
appealed. The agreed time limits are flexible, and if the case is considered urgent (e.g. if
perishable goods are involved), it is accelerated as much as possible. The Uruguay Round
agreement also made it impossible for the country losing a case to block the adoption of the

ruling. Under the previous GATT procedure, rulings could only be adopted by consensus,
meaning that a single objection could block the ruling. Now, rulings are automatically adopted
unless there is a consensus to reject a ruling any country wanting to block a ruling has to
persuade all other WTO members (including its adversary in the case) to share its view.
Although much of the procedure does resemble a court or tribunal, the preferred solution is for
the countries concerned to discuss their problems and settle the dispute by themselves. The first
stage is therefore consultations between the governments concerned, and even when the case has
progressed to other stages, consultation and mediation are still always possible.

PROCEDURE TO SETTLE DISPUTE:

Settling disputes is the responsibility of the Dispute Settlement Body (the General Council in
another guise), which consists of all WTO members. The Dispute Settlement Body has the sole
authority to establish panels of experts to consider the case, and to accept or reject the panels
findings or the results of an appeal. It monitors the implementation of the rulings and
recommendations, and has the power to authorize retaliation when a country does not comply
with a ruling.

First stage: consultation (up to 60 days). Before taking any other actions the countries in dispute
have to talk to each other to see if they can settle their differences by themselves. If that fails,
they can also ask the WTO director-general to mediate or try to help in any other way.

Second stage: the panel (up to 45 days for a panel to be appointed, plus 6 months for the panel
to conclude). If consultations fail, the complaining country can ask for a panel to be appointed.
The country in the dock can block the creation of a panel once, but when the Dispute
Settlement Body meets for a second time, the appointment can no longer be blocked (unless
there is a consensus against appointing the panel).

Officially, the panel is helping the Dispute Settlement Body make rulings or recommendations.
But because the panels report can only be rejected by consensus in the Dispute Settlement Body,

its conclusions are difficult to overturn. The panels findings have to be based on the agreements
cited.
The panels final report should normally be given to the parties to the dispute within six months.
In cases of urgency, including those concerning perishable goods, the deadline is shortened to
three months.

The agreement describes in some detail how the panels are to work. The main stages are:

Before the first hearing: each side in the dispute presents its case in writing to the panel.

First hearing: the case for the complaining country and defence: the complaining country (or
countries), the responding country, and those that have announced they have an interest in the
dispute, make their case at the panels first hearing.

Rebuttals: the countries involved submit written rebuttals and present oral arguments at the
panels second meeting.

Experts: if one side raises scientific or other technical matters, the panel may consult experts or
appoint an expert review group to prepare an advisory report.

First draft: the panel submits the descriptive (factual and argument) sections of its report to the
two sides, giving them two weeks to comment. This report does not include findings and
conclusions.

Interim report: The panel then submits an interim report, including its findings and
conclusions, to the two sides, giving them one week to ask for a review. Review: The period of
review must not exceed two weeks. During that time, the panel may hold additional meetings
with the two sides.

Final report: A final report is submitted to the two sides and three weeks later, it is circulated to
all WTO members. If the panel decides that the disputed trade measure does break a WTO
agreement or an obligation, it recommends that the measure be made to conform with WTO
rules. The panel may suggest how this could be done.
The report becomes a ruling: The report becomes the Dispute Settlement Bodys ruling or
recommendation within 60 days unless a consensus rejects it. Both sides can appeal the report
(and in some cases both sides do).

DEVELOPING COUNTRIES

Developing countries have never had a decisive role in the General Agreement on Tariffs and
Trade (GATT)/World Trade Organization (WTO) system; but their weakness may be much more
damaging now than ever before, because of three newly emerging features. First, the WTO is
increasingly spreading its coverage to new areas. Second, the impact of the agreements of the
WTO (as compared to the GATT) and their operation is much wider and deeper for the
economies of countries, particularly the developing countries. Third and perhaps the most
important, the economies of the developing countries are much more vulnerable at present than
before because of their own weakness and also exposure to the uncertain external environment.
Earlier, the rules of the GATT had their impact principally on the imports and exports of a
country; but now the WTO agreements have much wider implications for a countrys economy.
The disciplines on services and intellectual property rights (IPRs), which are the new additions to
the system as a result of the Uruguay Round of Multilateral Trade Negotiations (MTNs), have a
significant impact on the production process, technological development, financial institutions
like banks and the insurance sector, inflow and outflow of funds on the so-called invisible
account, vital modern infrastructure like telecommunications, etc.
With so much at stake, one would expect the developing countries to strengthen their capacity in
respect of the negotiations in the WTO. Indeed, some of them are now better prepared. The
concluding phase of the Uruguay Round did bring about some awareness in a number of
developing countries about the implications of the negotiations. In some of the developing
countries, one noticed even large-scale national debates on the various issues. But even among
the few developing countries that are better prepared now than before, the level of preparation
falls far short of what is needed. And the vast range of the other developing countries has hardly
made any preparation even at this stage.
The WTO, where the developing countries comprise a very large number and the voting pattern
is based on one country one vote, provides a good setting for the developing countries to be
effective. They can in fact turn it into an institution to serve their interests and make it an

example of an international or multilateral institution working for their benefit. But unfortunately
they have not been able to take the initiative nor have they succeeded in defending themselves
effectively in this institution.
This exercise is aimed at exploring the reasons for the weak participation of the developing
countries in the GATT/WTO, the ways of strengthening their participation and the need for
effective backup support for this purpose. All this is discussed in the context of the opportunities
for the developing countries and the challenges confronting them in the GATT/WTO system.

SUMMARY

The World Trade Organization (WTO) is among the most powerful, and one of the most
secretive international bodies on earth. It is rapidly assuming the role of global government, as
149 nation-states, including the U.S., have ceded to its vast authority and powers. The WTO
represents the rules-based regime of the policy of economic globalization. The central operating
principal of the WTO is that commercial interests should supersede all others. Any obstacles in
the path of operations and expansion of global business enterprise must be subordinated. In
practice these "obstacles" are usually policies or democratic processes that act on behalf of
working people, labor rights, environmental protection, human rights, consumer rights, social
justice, local culture,
For the WTO Ministerial in Cancun, Mexico (10-14 September 2003), the IFG hosted a twoday, Teach-In that helped unite a robust movement. Our event helped to identify and provided
analyses of the critical issues and how they affect communities and impact the work of existing
movements; the event also provided capacity to plan joint strategies and programs. Foremost
among the events was a focus on Alternatives to Globalization [A Better World Is Possible], our
report released November 2002, that provides a framework and principles for an alternative
agenda to the current global economic model. The report helped form the basis for discussion
and action in Cancun and national sovereignty.
The dispute settlement mechanism played a key role in the WTO'S 1999 Ministerial in Settle,
and focused its efforts throughout most of 1999 on the WTO and its relation to the larger issue of
economic globalization.

CONCLUSION:

The WTO agreements and their operation are and will be having a profound impact on the
economies of the developing countries. Hence it is imperative that they do not remain indifferent
and handicapped, but actively participate in the negotiations and other activities in this forum
and make themselves effective in its decision-making and operations.

BIBLIOGRAPHY

www.Wikipedia.com
http://worldtradereview.com/webpage.asp?wID=1509#
http://www.wto.org/english/thewto_e/thewto_e.htm
http://www.wto.org/english/tratop_e/dispu_e/dispu_e.htm