Organizational Structure:
The World Trade Organisation (WTO) is the successor organisation to the GATT. It came into effect on 1.1.1995 after the conclusion of the Uruguay Round of Multilateral Trade Negotiations.
India was a founder member of both GATT, in 1947, and the WTO in 1995. As on 31st August 1998, the membership of the WTO stood at 132. The mandate of the WTO covers Trade in Goods, Trade in Services, Trade-related Investment Measures and Trade- related Intellectual Property Rights (TRIPS).
The WTO is headed by a Ministerial Conference consisting of the Trade Ministers of all the members. This is the highest policy making body of the WTO and is required to meet once every two years. In the interregnum, its functions are carried out by the General Council, consisting of the representatives of all the members.
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The General Council is assisted in its work by three Sectoral Councils, viz, (i) the Council for Trade in Goods (ii) The Council for Trade in Services (iii) and the Council for Trade Related Aspects of Intellectual Property Rights (TRIPs) and by large number of Committees, Working Groups/ Parties and other bodies dealing with specific agreements or subjects.
All these bodies are serviced by the Secretariat headed by the Director General of the WTO. In addition to such functions as may be assigned to the General Council under various agreements, the General Council also acts as the Dispute Settlement Body (DSB).
Trade in Services:
The General Agreement on Trade in Services (GATS), negotiated during the Uruguay Round, is the first set of multilaterally agreed and legally enforceable rules and disciplines ever negotiated to cover international trade in service to oversee the operation of the agreement.
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The negotiations on basic telecommunications were resumed after the Singapore Ministerial Conference and were concluded on 15th February, 1997. The negotiations resulted in the tabling of 55 offers, covering 69 participating governments and submission of MFN exemption lists by 9 participating governments.
This represented a substantial improvement over the April 1996 results, which produced 34 offers covering 48 governments. India also participated in these negotiations and filed a schedule of specific commitments and list of MFN exemptions.
As decided in the Singapore Ministerial Conference, the financial services negotiations resumed in Geneva from 10th April 1997 and were concluded on 12th December 1997. During the current round of negotiations, 56 offers representing 70 countries were filed.
India also filed an improved offer during these negotiations. India withdrew MFN exemptions relating to banking services and other financial services, including insurance. In case of foreign bank branches, the annual limit per year (both for new entrants and existing banks) has been increased from 8 to 12.
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The Working Party on Professional Services finalised guidelines for Mutual Recognition Agreements of Arrangements in the accountancy sector, on 15th May 1997.
The objective of these guidelines is to make it easier for the parties to negotiate Recognition Agreements and for third parties to negotiate their accession to such agreements or to negotiate comparable ones.
The Working Party is presently involved in the process of finalising the multilateral disciplines on domestic regulation in the accountancy sector, to ensure that domestic regulatory requirements are based on objective and transparent criteria and are not more burdensome than necessary.
The Working Party on GATS rules is working on the following areas:-
(i) Negotiations on Safeguards under Article X of GATS
(ii) Negotiations on Subsidies under Article XV of GATS
(iii) Negotiations on Government Procurement under Article XIII of GATS
The Working Party has taken the work relating to negotiations on safeguards under Article X of GATS as its priority work. These negotiations were scheduled to be completed before the end of the year (1997), deadline as specified in Article X of GATS.
As it was not possible to conclude the negotiations by the specified target date, the deadline for conclusion of these negotiations had been extended till the end of June, 1999.
Article XIX of GATS stipulates that members shall enter into successive rounds of negotiations, beginning not later than five years from the date in which the WTO agreement comes into force and periodically thereafter, with a view to achieve a progressively higher level of liberalisation.
Thus the deadline for the next round for service negotiations is 01.01.2000. In the Singapore Ministerial Declaration, the Ministers agreed to a process of analysis and exchange of information in the Service sector, to better understand the issues involved and identify their interest before commencing the negotiations in the years 2000. The Geneva Ministerial Conference has merely reiterated the decisions taken at the SMC.
It is in this perspective that the Information Exchange Programme (IEP) has been started in the Council for Trade in Services (CTS) as a preparatory work to the forthcoming negotiations. Under this, individual sectors as per the sectoral classification followed in the WTO, are being taken up for detailed discussion in the CTS.
A number of meetings of the CTS have been held so far. India has been highlighting certain general points regarding the IEP.
(a) IEP should cover all the services sectors to the extent feasible. This has largely been followed.
(b) The WTO Secretariat should be actively involved in this exercise.
(c) The developing countries have specific interests in movement of natural persons, i.e. mode 4 deliveries of Services. India’s position has been that, apart from sectors, modes of delivery must be an integral part of the IEP.
India has repeatedly held that the developed countries had not provided adequate market access in the area of movement of natural persons. Whatever specific commitments have been undertaken by the developing countries have not been of great benefit to the developed countries. The system needs to be corrected.
(d) IEP should not pre-judge the scope of future negotiations. However, at the same time availability of relevant information would be essential, for undertaking preparatory work in connection with these negotiations.
(e) India has reiterated that there is a need to analyse the impact of the existing liberalisation in the services on developing countries, especially in the sectors where further negotiations have taken place since the Uruguay Round like Financial services and Basic telecommunications.
Dispute Settlement Body:
The state of play of the Dispute Settlement Body reveals that, the WTO received over two hundred trade disputes for resolution in just a little more than four years of its existence, that is over 55 (fifty-five) disputes a year, in contrast to about six disputes a year under WTO’s predecessor, the GATT 1947.
The record so far would suggest, that about twenty five percent of the disputes are resolved by the parties themselves at the initial, consultations stage, and that the appellate procedure is being used with respect to all panel reports issued so far for a final ruling.
India has filed eight complaints and has been the subject of twelve complaints. In respect to India’s dispute with Poland on the import regime of Poland for automobiles, a bilateral solution was reached in July, 1996.
Similarly the dispute between India and the United States of America on the import restrictions introduced by the United States of America on imports from India of women’s and girl’s wool coats, was resolved with the removal of these measures by US in April, 1996.
Following the adoption by the Dispute Settlement Body in May 1997 that the safeguard measures imposed by US on imports from India of woven wool shirts and blouses violated the provisions of the WTO agreement of textiles of clothing, and so US removed this measure thereby concluding this dispute between India and US.
The dispute between India and Turkey with regards to the restrictions on imports by Turkey on Textiles and clothing products is underway.
Regarding the dispute between India (along with Malaysia, Thailand and Pakistan) and US regarding the prohibition on import by US of certain shrimp and other shrimp products from India and other countries mentioned above, the Dispute Settlement Panel as well as the Appellate Body of the WTO have made a ruling against the US in favour of India and the other complainants.
US and the European Community, in separate requests, have alleged that India’s patent protection for pharmaceutical and agricultural chemical products is inconsistent with India’s obligations under the Agreement on TRIPS.
As regards the dispute raised by the US, India had filed an appeal against the ruling of the panel to the Appellate Body. The Appellate Body upheld the major findings of the panel. The panel report, as modified by the Appellate Body Report has been adopted by the Dispute Settlement Body of the WTO.
It has now been mutually agreed between India and the US that India will implement the DSB decision by 19th April, 1999. In respect of the complaint by the EC, the panel has made a similar ruling as in the case of India’s dispute with US on patents.
In the matter of six separate disputes initiated against India by Australia, Canada, the EC, New Zealand, Switzerland and US, as regards the Quantitative Restrictions on imports maintained by India for balance of payments purpose, mutually agreed solutions were reached with Australia, Canada, the EC, New Zealand and Switzerland in November, 1997 and with Japan also which was a third party in these disputes.
Since no mutually agreed solution could be reached with the US, on the basis of a request by the US, a Dispute Settlement Panel was established to examine the US allegation that the continued maintenance of Quantitative Restrictions on imports for balance of payments purpose by India is inconsistent with India’s obligations under the WTO Agreement.
The panel has sent its interim report and the final report will be made available shortly. In November, 1997, the EC has also initiated Dispute Settlement proceedings against India as regards the negative list for the export of several commodities and in particular raw hides and skins, in India’s Exim Policy (1997-2002), alleging that the restrictions violate the obligation of India under GATT 1994.
The first round of consultation has taken place. The EC requested proceedings against India regarding India’s Auto Policy, India’s Import Restrictions under Article XX and XXI of GATT and India’s measures affecting customs duties Special Additional Duties (SAD). The first round of consultation with the EC, with regard to all the three disputes has been held recently in Geneva.
Safeguard Measures:
The Agreement on Safeguards permits restrictions on import for a temporary period, by either increasing tariffs or imposing QRs (Quantitative Restrictions).
Safeguard action can be taken only when it is established by a properly conducted investigation, that there is a sudden increase in imposed Quantitative Restrictions (both absolute and relative to domestic production) which has caused or threatens to cause serious injury to the domestic Industry.
Safeguard measures are designed basically to give preparatory time to the domestic Industry, to adjust and to prepare for increased competition impending removal of such temporary restrictions on import of a particular product.
Under Indian Customs Tariff Act, 1975, a new Section 8B was introduced by Finance Act, 1997, giving power to Central Government to impose the Safeguard Duty. The duty chargeable under this section is in addition to any other duty imposed under this act or under any other law which is in force at that time.
India has imposed Safeguard Duty on import of acetylene black (including conductive carbons), propylene glycol and flexible slab stock foam of molecular weight 3000-4000.
(i) The rate of Safeguard Duty on import of acetylene black (including conductive carbons) as imposed is (a) 18% subject to a maximum of Rs 12,950 PMT, when imported upto and inclusive of 9th day of December, 1999 and (b) 5% subject to a maximum of Rs 8,830 PMT when imported from 10th December 1999 to 9th December 2000 (both days inclusive).
(ii) The rate of Safeguard Duty on Propylene Glycol as imposed is 16% when imported upto and inclusive of 23rd day of December, 1999 and 11% when imported from 24th of December, 1999 and 23rd of day of June, 2000 (both days inclusive).
(iii) On flexible slab stock foam the rate of Safeguard Duty is 20% when imported upto and inclusive of 23rd day of December, 1999 and 5% when imported from 24th day of December, 1999 and 23rd day of June, 2000 (both days inclusive).
Trade-related Aspects of Intellectual Property Rights (TRIPS):
The Council of Trade Related Aspects of Intellectual Property Rights (TRIPs) has held several meetings during the years 1997-98, to review Intellectual Property Rights laws of the developed countries and their enforcement.
India has actively participated in these meetings and asked questions on these laws to understand their implications for India’s trade interests. Separately, India is also in the process of examining the need for updating or amending India’s Intellectual Property Rights Laws to meet its obligations under the agreement.
The Indian Copyright Law already meets the TRIPs standards. For examining the need for updating or amending the other laws, the Ministry of Industry has constituted an Inter-Ministerial Committee.
The committee, through its sub-groups, is examining the existing laws with a view to recommend whether any changes are required in them to meet India’s obligations under the TRIPs agreement.
A bill proposing some limited amendments to the Indian Patents Act 1970, has been passed in the Rajya Sabha in December, 1998.
These amendments provide for filing of applications for patents on inventions which are not patentable under the law at present and for grant of exclusive marketing rights, subject to certain conditions providing safeguards in public interest.
The Ministry of Commerce is separately processing a draft bill for enacting a law on protection of geographical indications.
This bill, when enacted, would protect India’s export products with geographical indications such as Darjeeling tea and basmati rice. Currently such marks can be protected as certification under common law, under passing off action.
Technical Barriers to Trade (TBT):
The WTO Agreement on Technical Barriers to Trade held its first triennial review of the implementation of the agreement during the year 1997.
The triennial review has recommended inter-alia that the provisions relating to technical assistance and special and differential treatment for developing countries should be more effectively implemented and has drawn-up a plan for this purpose.
The plan would be implemented in the next three years and the progress reviewed in the next triennial review, in the year 2000. In 1998, the Bureau of Indian Standards (BIS) presented a paper on country experience in the Committee of Technical Barriers to Trade, on implementing voluntary Quality Standards.
Investment and Competition Policy:
Taking into account the existing WTO provisions on matters related to investment and competition policy and the built-in agenda in these areas included under the TRIMS Agreement and on the understanding that the work undertaken shall not pre-judge whether negotiations will be initiated in the future.
The SMC agreed to establish a Working Group to study issues relating to the interaction between trade and competition policy, including anticompetitive practices, in order to identify any areas that may merit further consideration in the WTO framework.
Both the Working Groups have drawn up check lists of issues to be discussed. Some of the issues in these check lists have been discussed extensively and papers have been submitted by various WTO Members, including India, on these issues.
In addition, International Intergovernmental Organisations like UNCTAD, OECD, IMF and the World Bank have also given their contributions to this educative process.
While this educative process is continuing in the WTO Working Groups, an expert group was set up to study on both the Trade in Investment and Trade in Competition Policy in depth and to give a report to the government, along with recommendations on the stand that should be taken by India in the WTO to defend the national interest.
The reports of the expert group on Trade and Investment has been received, while that of the expert Group on Trade and Competition Policy is awaited.