ON
PREPARED BY
REGISTRATION NO.:
Preface:
In this present time where the competition becomes very high and trade becomes very tougher. Its become compulsory for every countriy to reduce the custom barriers. The trade which emerges from the Barter system when the people exchange goods for goods now becomes more complicated and the customer becomes more aware about the quality of product, market condition, and brand image. There is lots of technological advancement in the field of trade from that Barter system of trade to the current position of trade. In present time many countries open there hands for the international trade. The international trade which emerge from the Mercantilism System the first reasonably systematic body of thought devoted to international trade which main motto was to spread the freer trade in world. It also achieved its motto up to some extent. The countries decided to form a systematic body for dealing with the international trade, they decided to form the International Trade Organization (ITO) but the countries failed to achieve their goal as its charter was finally agreed at a UN Conference on Trade and Employment in Havana in March 1948, its ratification proved impossible in some cases. The General Agreement on Tariff and Trade (GATT) which comes in the time after the Second World War in the year 1946, for those 23 members countries agree for the tariff reduction between them. After the death of ITO, and despite of the provisional nature of the GATT, the GATT remained the only multilateral instrument governing international trade from 1948 until the establishment of WTO. Before the establishment of the WTO, GATT members countries negotiated with each other for the reduction of tariff and lots of other issues in the trade rounds, but the largest round of the GATT which started in 1986 and end on 1993 give birth to the WTO. My project report is for the same WTO. What kind of body it is and how it works. My approach is not to go in very detail about it but to present it as per my understanding. I have made my sincere efforts to familiarize my readers with the WTO. I would like to say thanks sincerely to all my friends and the seniors who helped me for the successfully completion of this project report. Although care has been taken in preparing this report but the possibility of errors cannot be denied.
ii. When it comes___________________________________________ iii. WTO Secretarial and Budget________________________________ iv. Constitutional Body of WTO_________________________________
2. History
i. What is GATT____________________________________________ 11 Some important things to know A Mercantilism______________________________________ 11 B Argument for Free Trade____________________________ 12 C Comparative Advantage_____________________________ 12 D Institutionalization of International Trade________________ 13 ii. Trade Rounds of GATT in Nut Shell___________________________ 14 iii. What happen with GATT, did it succeed________________________ 15 iv. If GATT not succeed and WTO adopted the charter of GATT, Are they both same? No_______________ 16 v. If both GATT and WTO are not similar then what us the difference between the both._________________ 17
3. Uruguay Round
i. Uruguay Round___________________________________________ 18
iii. Some major subjects for Uruguay Round_______________________ 20 iv. The post- Uruguay round build-in agenda_______________________ 21
ii.
Free Trade____________________________________________________ 28
6. Ministerial Conferences WTO______________________________ a. Place and dates of the conferences b. Details view about it in brief
7. Two more common topics in WTO: Anti-Dumping and Countervailing Duty_________________________________________ 36 to 49 8. Settling Dispute a. Settling Dispute_________________________________________ b. A Unique Contribution____________________________________ c. Principles: Equitable, Fast, Effective, Mutually Acceptable________ d. Main feature of the DSU___________________________________ 50 50 50 51
e. How long it take to settle a dispute____________________________ 52 f. How are dispute settled_____________________________________ 52 i. ii. iii. iv. v. vi. Appeal____________________________________________ 53 The case has been decided: What next?__________________ 54 More case can be good news__________________________ 55 Panels____________________________________________ 55 The Panel Process__________________________________ 55 Case study: The Timetable practice_____________________ 56
9. The Environment: A Specific Concern_______________________________ 58 10. The Committee: broad- based responsibility___________________________ 58 11. WTO and environmental agreements: How are they related?_____________ 59 12. Disputes: Where should they be handled?____________________________ 60 13. International Commercial Arbitration_________________________________ 60 14. Case studies: a. A WTO Dispute: The Shrimp Turtle case____________________ b. A GATT dispute: The Tuna- Dolphin dispute___________________ 15. Developing Countries a. Development and trade_____________________________________ 71 b. Technical Assistance and training_____________________________ 71 66 68
16. List for Members, observers and least developed countries _______________ 72 17. Abbreviations___________________________________________________ 78 18. Conclusion of Appraisal Aspect_____________________________________ 80 19. Bibliography___________________________________________________ 81
It is an organization for trade opening between nations. It is a forum for governments to negotiate trade agreements and try to sort out the trade problems they face with each other. Everything which the WTO does is the result of negotiation. The WTO is currently the host to new negotiations, under the Doha Development Agenda launched in 2001. It is a set of rules which provide the legal ground-rules for international commerce. They are essentially contracts, binding governments to keep their trade policies within agreed limits. It is a place where trade dispute is settled. The WTO is a place where member governments try to sort out the trade problems they face with each other.
The WTO's founding and guiding principles remain the pursuit of open borders, the guarantee of most-favored-nation principle and non-discriminatory treatment by and among members, and a commitment to transparency in the conduct of its activities. The opening of national markets to international trade, with justifiable exceptions or with adequate flexibilities, will encourage and contribute to sustainable development, raise people's welfare, reduce poverty, and foster peace and stability. At the same time, such market opening must be accompanied by sound domestic and international policies that contribute to economic growth and development according to each member's needs and aspirations.
Third level: councils for each broad area of trade, and more
Three more councils, each handling a different broad area of trade, report to the General Council: The Council for Trade in Goods (Goods Council) The Council for Trade in Services (Services Council) The Council for Trade-Related Aspects of Intellectual Property Rights (TRIPS Council) As their names indicate, the three are responsible for the workings of the WTO agreements dealing with their respective areas of trade. Again they consist of all WTO members. The three also have subsidiary bodies Six other bodies report to the General Council. The scope of their coverage is smaller, so they are committees. But they still consist of all WTO members. They cover issues such as trade and development, the environment, regional trading arrangements, and administrative issues. The Singapore Ministerial Conference in December 1996 decided to create new working groups to look at investment and competition policy, transparency in government procurement, and trade facilitation. Two more subsidiary bodies dealing with the plurilateral agreements (which are not signed by all WTO members) keep the General Council informed of their activities regularly.
director-generals conference room. It is used to refer to meetings of 2040 delegations, usually at the level of heads of delegations. These meetings can take place elsewhere, such as at Ministerial Conferences, and can be called by the minister chairing the conference as well as the director-general. Similar smaller group consultations can be organized by the chairs of committees negotiating individual subjects, although the term Green Room is not usually used for these. In the past delegations have sometimes felt that Green Room meetings could lead to compromises being struck behind their backs. So, extra efforts are made to ensure that the process is handled correctly, with regular reports back to the full membership. The way countries now negotiate has helped somewhat. In order to increase their bargaining power, countries have formed coalitions. In some subjects such as agriculture virtually all countries are members of at least one coalition and in many cases, several coalitions. This means that all countries can be represented in the process if the coordinators and other key players are present. The coordinators also take responsibility for both transparency and inclusiveness by keeping their coalitions informed and by taking the positions negotiated within their alliances. In the end, decisions have to be taken by all members and by consensus. The membership as a whole would resist attempts to impose the will of a small group. No one has been able to find an alternative way of achieving consensus on difficult issues, because it is virtually impossible for members to change their positions voluntarily in meetings of the full membership. Market access negotiations also involve small groups, but for a completely different reason. The final outcome is a multilateral package of individual countries commitments, but those commitments are the result of numerous bilateral, informal bargaining sessions, which depend on individual countries interests. (Examples include the traditional tariff negotiations, and market access talks in services.) So, informal consultations in various forms play a vital role in allowing consensus to be reached, but they do not appear in organization charts, precisely because they are informal. They are not separate from the formal meetings, however. They are necessary for making formal decisions in the councils and committees. Nor are the formal meetings unimportant. They are the forums for exchanging views, putting countries positions on the record, and ultimately for confirming decisions. The art of achieving agreement among all WTO members is to strike an appropriate balance, so that a breakthrough achieved among only a few countries can be acceptable to the rest of the membership.
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2 History of WTO:
Uruguay Round which was the biggest GATT round. It took seven and half years, almost double the original schedule. By the end, 123 countries were taking part. This round covered almost all trade, from toothbrushes to pleasure boats, from banking to telecommunications, from the genes to wild rice to AIDS treatments. It was quite simply the largest trade negotiation ever, and most probably the largest negotiation of any kind in history. The GATT was created at the end of the Second World War. At time it seemed doomed to fail. But at the end, the Uruguay Round brought about the biggest reform of the worlds trading system. And yet, despite its troubled progress, the Uruguay Round did see some early results. By the end of the Uruguay Round, 123 countries were taking part and after discussion and negotiation the GATT changed to WTO. That is how WTO comes. Its charter is adopted from GATT. So we can say that WTO is the updated form of GATT.
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For example:
Suppose that the United States can produce both Shirts and Automobiles more efficiently then Mexico. But if it can produce shirts twice efficiently as Mexico and can produce automobiles three time more efficiently than Mexico, the United States has an absolute productive advantage over Mexico in both the goods but a relative advantage in producing automobiles. In this case, the United States might export automobiles in exchange for imports of shirts even though it can produce shirts more efficiently than Mexico. The practical import of the doctrine is that a country may export a good even if a foreign country could produce it more efficiently if that is where its relative advantage lies; similarly, a country may import a good even if it could produce that good more efficiently than the country from which it is importing the good. From Mexicos standpoint, it lacks an absolute productive advantage in either commodity, but has a relative advantage in producing shirts (where its relative disadvantage is least). This trade is beneficial for both the United States and Mexico. The comparative advantage proposition is incredibly counterintuitive. It states that a less developed country that lacks an absolute advantage in any goods can still engage in mutually beneficial trade, and that an advanced country whose domestic industries are
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more efficient than those in any country can still benefit from trade even as some of its industries face intense import competition.
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GATT provisional for almost the half a century from 1948 to 1994, the General Agreement on Tariff and Trade (GATT) provided the rules for much of world trade and presided over periods that saw some of the highest growth rates in international commerce. It seemed well-established, but throughout those 47 years, it was a provisional agreement and organization. The original intention was to create a third institution to handle the trade side of international economic cooperation, joining the two Bretton Woods institutions, the World Bank and the International Monetary Fund. Over 50 countries participated in negotiations to create an International Trade Organization (ITO) as a specialized agency of the United Nations. The draft ITO Charter was ambitious. It extended beyond world trade disciplines, to include rules on employment, commodity agreements, restrictive business practices, international investment, and services. The aim was to create the ITO at a UN Conference on Trade and Employment in Havana, Cuba in 1947.
Place/name Geneva Annecy Torquay Geneva Geneva Dillon Round Geneva Kennedy Round Geneva Tokyo Round Geneva Uruguay Round
Subjects covered Tariffs Tariffs Tariffs Tariffs Tariffs Tariffs and anti-dumping measures
Countries 23 13 38 26 26 62
1986-1994
Tariffs, non-tariff measures, 102 framework agreements Tariffs, non-tariff measures, rules, 123 services, intellectual property, dispute settlement, textiles, agriculture, creation of WTO, etc
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respects, GATT had been found wanting. For instance, in agriculture, loopholes in the multilateral system were heavily exploited, and efforts at liberalizing agricultural trade met with little success. In the textiles and clothing sector, an exception to GATTs normal disciplines was negotiated in the 1960s and early 1970s, leading to the Multifiber Arrangement. Even GATTs institutional structure and its dispute settlement system were causing concern. These and other factors convinced GATT members that a new effort to reinforce and extend the multilateral system should be attempted. That effort resulted in the Uruguay Round, the Marrakesh Declaration, and the creation of the WTO.
2.4 If GATT did not succeed and WTO adopted the charter of GATT, Are they both the same? No.
They are different the WTO is GATT plus lot more. It is probably best to be clear from the start that the General Agreement on Tariffs and Trade (GATT) contained: (1) an international agreement, i.e. a document setting out the rules for conducting international trade, and (2) an international organization created later to support the agreement. The text of the agreement could be compared to law, the organization was like parliament and the courts combined in a single body. GATT, the international agency, no longer exists. The World Trade Organization has now replaced it. GATT, the agreement, does still exist, but it is no longer the main set of rules for international trade. And it has been updated. What happened? When GATT was created after the Second World War, trade in goods dominated international commerce. Since then, trade in services transport, travel, banking, insurance, telecommunications transport, and consultancy and so on has become much more important. So has trade in ideas inventions and designs, and goods and services incorporating this intellectual property. The General Agreement on Tariff and Trade always dealt with trade goods, and it still does. It has been amended and incorporated into the new WTO agreements. The updated GATT lives alongside the new General Agreement on Trade in Services (GATS) and Agreement on TradeRelated Aspect of Intellectual Property Right (TRIPS). The WTO brings system for resolving disputes. In short, the WTO is not a simple extension of GATT. It is much more in existence. While GATT no longer exists as an international organization, the GATT agreement lives on. The old text is now called GATT 1947. The updated version is called GATT; ONE COULD SAY THAT THE CHILD IS THE FATHER OF THE MAN.
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2.5 If both GATT and WTO are not similar then what is the difference between the both:
1. GATT was ad hoc, and provisional. The General Agreement was never ratified in members parliaments, and it contained no provisions for the creation of an organization. The WTO and its agreements are permanent. As an international organization, the WTO has a sound legal basis because members have ratified the WTO agreements, and the agreements themselves describe how the WTO is to function. 2. The WTO has members. GATT had contracting parties, underscoring the fact that officially GATT was a legal text. 3. GATT dealt with trade in goods. WTO covers services and intellectual property as well. 4. The WTO dispute settlement system is faster, more automatic than the old GATT system. Its ruling cannot be blocked.
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3. Uruguay Round
3.1 Uruguay Round in Brief
It took seven and a half years, almost twice the original schedule. By the end, 123 countries were taking part. It covered almost all trade, from toothbrushes to pleasure boats, from banking to telecommunications, from the genes of wild rice to AIDS treatments. It was quite simply the largest trade negotiation ever, and most probably the largest negotiation of any kind in history. At times it seemed doomed to fail. But in the end, the Uruguay Round brought about the biggest reform of the worlds trading system since GATT was created at the end of the Second World War. And yet, despite its troubled progress, the Uruguay Round did see some early results. Within only two years, participants had agreed on a package of cuts in import duties on tropical products which are mainly exported by developing countries. They had also revised the rules for settling disputes, with some measures implemented on the spot. And they called for regular reports on GATT members trade policies, a move considered important for making trade regimes transparent around the world. A round to end all rounds? The seeds of the Uruguay Round were sown in November 1982 at a ministerial meeting of GATT members in Geneva. Although the ministers intended to launch a major new negotiation, the conference stalled on agriculture and was widely regarded as a failure. In fact, the work programme that the ministers agreed formed the basis for what was to become the Uruguay Round negotiating agenda. Nevertheless, it took four more years of exploring, clarifying issues and painstaking consensus-building, before ministers agreed to launch the new round. They did so in September 1986, in Punta del Este, Uruguay. They eventually accepted a negotiating agenda that covered virtually every outstanding trade policy issue. 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. It was the biggest negotiating mandate on trade ever agreed, and the ministers gave themselves four years to complete it. Two years later, in December 1988, ministers met again in Montreal, Canada, for what was supposed to be an assessment of progress at the rounds half-way point. The purpose was to clarify the agenda for the remaining two years, but the talks ended in a deadlock that was not resolved until officials met more quietly in Geneva the following April. Despite the difficulty, during the Montreal meeting, ministers did agree a package of early results. These included some concessions on market access for tropical products aimed at assisting developing countries as well as a streamlined dispute settlement system, and the Trade Policy Review Mechanism which provided for the first comprehensive, systematic and regular reviews of national trade policies and practices of GATT members. The round was supposed to end when ministers met once more in
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Brussels, in December 1990. But they disagreed on how to reform agricultural trade and decided to extend the talks. The Uruguay Round entered its bleakest period. Despite the poor political outlook, a considerable amount of technical work continued, leading to the first draft of a final legal agreement. This draft Final Act was compiled by the then GATT director-general, Arthur Dunkel, who chaired the negotiations at officials level. It was put on the table in Geneva in December 1991. The text fulfilled every part of the Punta del Este mandate, with one exception it did not contain the participating countries lists of commitments for cutting import duties and opening their services markets. The draft became the basis for the final agreement. Over the following two years, the negotiations lurched between impending failure, to predictions of imminent success. Several deadlines came and went. New points of major conflict emerged to join agriculture: services, market access, anti-dumping rules, and the proposed creation of a new institution. Differences between the United States and European Union became central to hopes for a final, successful conclusion. In November 1992, the US and EU settled most of their differences on agriculture in a deal known informally as the Blair House accord. By July 1993 the Quad (US, EU, Japan and Canada) announced significant progress in negotiations on tariffs and related subjects (market access). It took until 15 December 1993 for every issue to be finally resolved and for negotiations on market access for goods and services to be concluded (although some final touches was completed in talks on market access a few weeks later). On 15 April 1994, the deal was signed by ministers from most of the 123 participating governments at a meeting in Marrakesh, Morocco. The delay had some merits. It allowed some negotiations to progress further than would have been possible in 1990: for example some aspects of services and intellectual property, and the creation of the WTO itself. But the task had been immense, and negotiation-fatigue was felt in trade bureaucracies around the world. The difficulty of reaching agreement on a complete package containing almost the entire range of current trade issues led some to conclude that a negotiation on this scale would never again be possible. Yet, the Uruguay Round agreements contain timetables for new negotiations on a number of topics. And by 1996, some countries were openly calling for a new round early in the next century. The response was mixed; but the Marrakesh agreement did already include commitments to reopen negotiations on agriculture and services at the turn of the century. These began in early 2000 and were incorporated into the Doha Development Agenda in late 2001.
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Sep 86 Dec 88 Apr 89 Dec 90 Dec 91 Nov 92 Jul 93 Dec 93 Apr 94 Jan 95
Punta del Este: Montreal: Geneva: Brussels: Geneva: Washington: Tokyo: Geneva: Marrakesh: Geneva:
launch ministerial mid-term review mid-term review completed closing ministerial meeting ends in deadlock first draft of Final Act completed US and EU achieve Blair House breakthrough on agriculture Quad achieve market access breakthrough at G7 summit most negotiations end (some market access talks remain) agreements signed WTO created, agreements take effect
3.3 Some Major subjects for Uruguay Round (Uruguay Round Agenda 1986):
1. Tariffs 2. Non-tariff barriers 3. Natural resource products 4. Textiles and clothing 5. Agriculture 6. Tropical products 7. GATT articles 8. Tokyo Round codes 9. Anti-dumping 10. Subsidies 11. Intellectual property 12. Investment measures 13. Dispute settlement 14. The GATT system 15. Services
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Maritime services: market access negotiations to end (30 June 1996, suspended to 2000, now part of Doha Development Agenda) Services and environment: deadline for working party report (ministerial conference, December 1996) Government procurement of services: negotiations start
1997
Basic telecoms: negotiations end (15 February) Financial services: negotiations end (30 December) Intellectual property, creating a multilateral system of notification and registration of geographical indications for wines: negotiations start, now part of Doha Development Agenda
1998
Textiles and clothing: new phase begins 1 January Services (emergency safeguards): results of negotiations on emergency safeguards to take effect (by 1 January 1998, deadline now March 2004) Rules of origin: Work programme on harmonization of rules of origin to be completed (20 July 1998) Government procurement: further negotiations start, for improving rules and procedures (by end of 1998) Dispute settlement: full review of rules and procedures (to start by end of 1998)
1999
Intellectual property: certain exceptions to patentability and protection of plant varieties: review starts
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2000
Agriculture: negotiations start, now part of Doha Development Agenda Services: new round of negotiations start, now part of Doha Development Agenda Tariff bindings: review of definition of principle supplier having negotiating rights under GATT Art 28 on modifying bindings Intellectual property: first of two-yearly reviews of the implementation of the agreement
2002
2005
Textiles and clothing: full integration into GATT and agreement expires 1 January
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AGREEMENT ESTABLISHING WTO Goods GATT Services GATS Intellectual property TRIPS
Other goods Services annexes agreements and annexes Countries of schedules of commitments(and MFN exemptions)
There are two more agreements which were not signed by all the member countries of the WTO and that are also important agreements: the two plurilateral agreements: civil aircraft and government procurement.
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Through these agreements, WTO members operate a non-discriminatory trading system that spells out their rights and their obligations. Each country receives guarantees that its exports will be treated fairly and consistently in other countries markets. Each promises to do the same for imports into its own market. The system also gives developing countries some flexibility in implementing their commitments. 4.1 (1) Goods It all began with trade in goods. From 1947 to 1994, GATT was the forum for negotiating lower customs duty rates and other trade barriers; the text of the General Agreement spelt out important rules, particularly non-discrimination. Since 1995, the updated GATT has become the WTOs umbrella agreement for trade in goods. It has annexes dealing with specific sectors such as agriculture and textiles, and with specific issues such as state trading, product standards, subsidies and actions taken against dumping. For goods (under GATT) Agriculture Health regulations for farm products (SPS) Textiles and clothing Product standards (TBT) Investment measures Anti-dumping measures Customs valuation methods Preshipment inspection Rules of origin Import licensing Subsidies and counter-measures Safeguards 4.1 (2) Services Banks, insurance firms, telecommunications companies, tour operators, hotel chains and transport companies looking to do business abroad can now enjoy the same principles of freer and fairer trade that originally only applied to trade in goods. These principles appear in the new General Agreement on Trade in Services (GATS). WTO members have also made individual commitments under GATS stating which of their services sectors they are willing to open to foreign competition, and how open those markets are. For services (the GATS annexes) Movement of natural persons Air transport Financial services Shipping Telecommunications 4.1 (3) Intellectual property The WTOs intellectual property agreement amounts to rules for trade and investment in ideas and creativity. The rules state how copyrights, patents, trademarks, geographical
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names used to identify products, industrial designs, integrated circuit layout-designs and undisclosed information such as trade secrets intellectual property should be protected when trade is involved. 4.1 (4) Dispute settlement The WTOs procedure for resolving trade quarrels under the Dispute Settlement Understanding is vital for enforcing the rules and therefore for ensuring that trade flows smoothly. Countries bring disputes to the WTO if they think their rights under the agreements are being infringed. Judgements by specially-appointed independent experts are based on interpretations of the agreements and individual countries commitments. The system encourages countries to settle their differences through consultation. Failing that, they can follow a carefully mapped out, stage-by-stage procedure that includes the possibility of a ruling by a panel of experts, and the chance to appeal the ruling on legal grounds. Confidence in the system is borne out by the number of cases brought to the WTO around 300 cases in eight years compared to the 300 disputes dealt with during the entire life of GATT (194794). 4.1 (5) Policy review The Trade Policy Review Mechanisms purpose is to improve transparency, to create a greater understanding of the policies that countries are adopting, and to assess their impact. Many members also see the reviews as constructive feedback on their policies. All WTO members must undergo periodic scrutiny, each review containing reports by the country concerned and the WTO Secretariat.
4.2 Plurilaterals For the most part, all WTO members subscribe to all WTO agreements. After the Uruguay Round, however, there remained four agreements, originally negotiated in the Tokyo Round, which have a narrower group of signatories and are known as obligations (i.e. obligations for all WTO members) when the World Trade Organization was established in 1995. The four were:
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4.2 (1) The Agreement on Trade in Civil Aircraft entered into force on 1 January 1980. It now has 24 signatories. The agreement eliminates import duties on all aircraft, other than military aircraft, as well as on all other products covered by the agreement civil aircraft engines and their parts and components, all components and sub- assemblies of civil aircraft, and flight simulators and their parts and components. It contains disciplines on government directed procurement of civil aircraft and inducements to purchase, as well as on government financial support for the civil aircraft sector.
4.2 (2) Government Procurement: opening up for competition. In most countries the government, and the agencies it controls are, together, the biggest purchaser of goods of all kinds, ranging from basic commodities to high-technology equipment. At the same time, the political pressure to favour domestic suppliers over their foreign competitors can be very strong. The Bovine meat and dairy agreements were terminated in 1997. An Agreement on Government Procurement was first negotiated during the Tokyo Round and entered into force on 1st January 1981. Its purpose is to open up as much of this business as possible to international competition. It is designed to make laws, regulations, procedures and practices regarding government procurement more transparent and to ensure they do not protect domestic products or suppliers, or discriminate against foreign products or suppliers. The agreement has 25 members. It has two elements general rules and obligations concern tendering procedures. The present agreement and commitments were negotiated in the Uruguay Round. These negotiations achieved a 10- fold expansion of coverage, extending international competition to include national and local government entities whose collective purchases are worth several hundred billion dollars each year. The new agreement also extends coverage to services (including construction services), procurement at the sub-central level (for example, states, provinces, departments and prefectures), and procurement by public utilities. The new agreement took effect on 1 January 1996. It also reinforces rules guaranteeing fair and non-discriminatory conditions of international competition. For example, governments will be required to put in place domestic procedures by which aggrieved private bidders can challenge procurement decisions and obtain redress in the event of the agreement.
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The WTO agreements are lengthy and complex because they are legal texts covering a wide range of activities. They deal with: agriculture, textiles and clothing, banking, telecommunications, government purchases, industrial standards and product safety, food sanitation regulations, intellectual property, and much more. But a number of simple, fundamental principles run throughout all of these documents. These principles are the foundation of the multilateral trading system. A closer look at these principles:
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of TRIPS), although once again the principle is handled slightly differently in each of these. National treatment only applies once a product, service or item of intellectual property has entered the market. Therefore, charging customs duty on an import is not a violation of national treatment even if locally-produced products are not charged an equivalent tax. 5.2 Freer trade: gradually, through negotiation: Lowering trade barriers is one of the most obvious means of encouraging trade. The barriers concerned include customs duties (or tariffs) and measures such as import bans or quotas that restrict quantities selectively. From time to time other issues such as red tape and exchange rate policies have also been discussed. Since GATTs creation in 1947-48 there have been eight rounds of trade negotiations. A ninth round, under the Doha Development Agenda, is now underway. At first these focused on lowering tariffs (customs duties) on imported goods. As a result of the negotiations, by the mid-1990s industrial countries tariff rates on industrial goods had fallen steadily to less than 4%. But by the 1980s, the negotiations had expanded to cover non-tariff barriers on goods, and to the new areas such as services and intellectual property. Opening markets can be beneficial, but it also requires adjustment. The WTO agreements allow countries to introduce changes gradually, through progressive liberalization. Developing countries are usually given longer to fulfil their obligations. 5.3 Predictability: through binding and transparency: Sometimes, promising not to raise a trade barrier can be as important as lowering one, because the promise gives businesses a clearer view of their future opportunities. With stability and predictability, investment is encouraged, jobs are created and consumers can fully enjoy the benefits of competition choice and lower prices. The multilateral trading system is an attempt by governments to make the business environment stable and predictable. 5.4 Promoting fair competition The WTO is sometimes described as a free trade institution, but that is not entirely accurate. The system does allow tariffs and, in limited circumstances, other forms of protection. More accurately, it is a system of rules dedicated to open, fair and undistorted competition. The rules on non-discrimination MFN and national treatment are designed to secure fair conditions of trade. So too are those on dumping (exporting at below cost to gain market share) and subsidies. The issues are complex, and the rules try to establish what is fair or unfair, and how governments can respond, in particular by charging additional import duties calculated to compensate for damage caused by unfair trade. Many of the other WTO agreements aim to support fair competition: in agriculture, intellectual property, services, for example. The agreement on government procurement
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(a plurilateral agreement because it is signed by only a few WTO members) extends competition rules to purchases by thousands of government entities in many countries. And so on.
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The major provisions of Declarations adopted at the Ministerial Conferences held so far are given below:
I.
Ministerial Declaration adopted on December 13, 1996 In terms of Article IV of the Agreement establishing the World Trade Organization the Ministers met in Singapore from 9 to 13 December, 1996 for the first regular biennial meeting of the WTO, to further strengthen the WTO as a forum for negotiation, the continuing liberalization of trade within a rule- based system, and the multilateral review and assessment of trade policies, and in particular to:
Assess the implementation of commitments under the WTO Agreements and decisions; Review the ongoing negotiation and Work Programme; Examine developments in world trade; and Address the challenges of an evolving world economy.
Integration of Economies Opportunities and Challenges. Core Labour Standards. Marginalization Regional Agreement Dispute Settlement Implementation Developing Countries Least Developed Countries
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Textile and Clothing Trade and Environment Services Negotiations ITA and Pharmaceuticals Work Programme and Built- in Agenda Investment and Competition Transparency in Government Procurement
In this meeting the main things which were discussed is written above. The main aim of the WTO was to encourage the free trade and maintain sustainable growth. In pursuit if the goal of sustainable growth and development for the common goods, the Ministers envisaged a world where trade flows freely and renewed their commitment to:
A fair, equitable and more open rule based system; Progressive liberalization and elimination of tariff and non- tariff barriers to trade in goods; Progressive liberalization of trade in services; Elimination of discriminatory treatment in international trade relations; Integration of developing and least developed countries and economies in transition into the multilateral system; and The maximum possible level of transparency.
This ministerial meeting also declared on Trade in Information Technology Products and which account for well over 80 percent of world trade in these products(parties) declared that each partys trade regime should evolve in a manner that enhances market access opportunities for information technology products, each party shall bind and eliminate customs duties and other duties and charges of any kind, within the meaning of Article II : 1(b) of the GATT 1994, with respect to the following:
a. All products classified (or classifiable) with Harmonized System (1996) (HS) heading listed in Attachment A to the Annex to the declaration; and b. All products specified in Attachment B to the Annex to the Declaration, whether or not they are included in Attachment A;
Through equal rate reductions of customs duties beginning in 1997 and concluding in 2000, recognizing that extended staging of reductions and, before implementation, expansion of product coverage may be necessary in limited circumstances. Ministers expressed satisfaction about the large product coverage and instructed their respective official to make good faith efforts to finalize plurilateral technical discussions in Geneva on the basis of these modalities, and to complete this work by Janury 31, 1997, so as to ensure the implementation of this Declaration by the largest number of participants.
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Minister also invited the Ministers of other Members of the WTO, and States or separate customs territories in the process of acceding to the WTO, to provide similar instructions to their respective officials, so that they may participate in the technical discussions and participate fully in the expansion of world trade in information technology products.
II.
In this meeting the Ministers welcomed the successful conclusion of the negotiations on basic telecommunication and financial services; Took note of the implementation of the Information Technology Agreement and renewed their commitment to achieve progressive liberalization of trade in goods and services. Ministers underlined the crucial importance of the multilateral rule-based trading system, reaffirmed the commitments and assessments made at Singapore. Ministers renewing their commitment to ensuring that the benefits of the multilateral trading system are extended as widely as possible, Ministers recognized the need for the system to make its own contribution in response to the particular trade interests and development needs of developing- country Members.
Geneva Ministerial Declaration on Global Electronic Commerce May 20, 1998 Recognizing that global electronic commerce is growing and creating new opportunities for trade, the Ministers declared that the General Council shall, by its next meeting in special session, establish a comprehensive work programme to examine all trade-related issues relating to global electronic commerce, including those identified by Members. The work programme will involve the relevant World Trade Organization (WTO) bodies, take into account the economic, financial and work programme or the rights and obligations of Members under the WTO Agreements, Ministers also declared that Members will continue their current practice of not imposing customs duties on electronic transmissions.
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III.
The Third WTO Ministerial Conferences was held in Seattle, Washington, USA between November 30 and December 3, 1999. The meeting was suspended without adopting any declaration. The suspension of talks, however, was not un-precedented in the history of multilaterial trading system. The previous illustrations of Ministerial talks which were suspended include the Uruguay Round Mid Term Review, Montreal, December 1988; and the Brussel Ministerial Meeting, December 1990. Mike Moore, the then Director General of WTO said that despite the temporary setback in Seattle, objectives remain unchanged
To continue to negotiate the progressive liberalization of international trade; To put trade to work more effectively for economic development and poverty alleviation; To confirm the Central role that the rule based trading system plays for member Governments in managing their economic affairs cooperatively; and To organize the WTO on lines that more truly represents the needs of all members.
IV.
Before the commencement of this meeting there was the period of the global economic slowdown and in this phase it seemed that the international trade facing difficulties. So, Ministerial expressed determination to maintain the process of reform and liberalization of trade policies, thus ensuring that the system plays its full part in promoting recovery, growth and development and reaffirmed the principles and objectives set out in the Marrakesh Agreement Establishing the World Trade Organisation, and pledged to reject the use of protectionism. The Ministers also recognized that the majority of the member countries of the WTO are developing and least developed countries, Ministers urged to place their needs and interests at the heart of the Work Programme adopted in Declaration and continue to make positive efforts designed to ensure that developing countries, and especially the least-developed among them, secure a share in the growth of world trade commensurate with the needs of their economic development. Ministers also recognize the particular vulnerability of the least-developed countries and the special structural difficulties they face in the global economy, Ministers expressed their commitment to addressing the marginalization of least developed
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countries in international trade and to improving their effective participation in the multilateral trading system. Ministers stressed their commitment to the WTO as the unique forum for global trade rule- making and liberalization, while also recognizing that regional trade agreements can play an important role in promoting the liberalization and expansion of trade and in forcasting development. Ministers welcomed the WTOs continued cooperation with UNEP and other intergovernmental environmental organizations and encouraged efforts to promote cooperation between the WTO and relevant international environmental and developmental organization. Recognizing the challenges posed by an expanding WTO membership, Ministers confirmed their collective responsibility to ensure internal transparency and effective participation of all members. While emphasizing the intergovernmental character of the organization, Ministers committed themselves to making the WTOs operations and to improve dialogue with the public.
Implementation related issues and concerns Agriculture Market access for non-agricultural products Relationship between trade and investment Interaction between trade and competition policy Transparency in government procurement Trade facilitation WTO rules Trade and environment Small Economies Trade, debts and finance and Trade and transfer of technology Technical cooperation and capacity building Least-developed countries Special and differential treatment Supervision of Negotiations
V.
Cancun Ministerial Conference, 2003 (The following text was distributed at the Cancun Ministerial Conference on 13 September, 2003) Reaffirming declarations made and the decisions taken at Doha; the progress made towerds carrying out the Work Programme agreed at Doha and recommitting
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themselves to completing it fully, Ministers renewed their determination to conclude the negotiations launched at Doha successfully by the agreed date of 1 January, 2005. In pursuance of these objectives, Ministers welcomed the decisions on implementation of Doha Declaration on the TRIPS Agreement and Public Health.
Following are the main issues which were discussed in the meeting:
Agriculture Negotiations NAMA Negotiations Services Negotiations Rules Negotiations S & D Negotiations Investment Competition Small Economies TRIP non- violation Least Developed Countries Sectoral Initiation on Cotton Commodity Issues
VI.
The Ministers renewed their resolve to complete the Doha Work Programme fully and to conclude the negotiations launched at Doha successfully in 2006. The main areas for negotiation in this meeting are as follows:
Agricultural Negotiations Cotton NAMA Negotiations Services Negotiations TRIPS Negotiations Integrated Framework (IF)
In this meeting the Ministerial declaration also includes progress on negotiations and further actions in the areas of environment, trade facilitation, Dispute Settlement Understanding, Special & Differential Treatment, matters relating to implementation, TRIPs & Public Health, small economies, trade, debt and finance, trade & transfer of technology, E- Commerce and Least Developed Countries.
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7 Two more common topics in WTO is Anti Dumping and Countervailing Duty: Detailed study for the same
The concept of dumping marginal costs helps to explain the three customary subdivisions of dumping sporadic, intermittent and continuous (or persistent).
The key benefit for the importing country is the lower prices that the dumped goods bring to its consumers. When dumping is sporadic, the benefit of the lower prices would outweight the marginal harm suffered by the domestic producer. When the dumping is intermittent or predatory the substantial injury suffered by domestic continuous dumping may or may not be economically desirable. This would depend on whether the importing country has a smoothly functioning system of adjustment from import- impacted industries.
Types of Dumping
Price Discrimination Predatory Pricing Intermittent Dumping
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Price Discrimination means charging of significantly different product prices to two or more customers when there are no significant difference between the costs to the sellers for supplying to those customers. Predatory Pricing is the second characterization of dumping that gives rise to an economic rationale for antidumping laws. It consists of systematically pricing below cost with a view to intimidating and eliminating rivals in an effort to bring about a market price higher than otherwise would prevail. Intermittent Dumping, it is a situation in which one country oversupplies to another country of perishable goods. Agriculture producers often make planning decisions long before selling their produce. Because of cyclical nature of supply in agriculture markets, producers often find they have excess produce and rather than allowing it to rot they sell it at low prices. For these agricultural producers the relevant cost at the time of selling is the cost of packaging and marketing.
The antidumping laws are justified politically because they address the perceived unfairness of low priced foreign imports. Dumping is characterized as and unfair trade practice. The global increase in antidumping actions may, therefore, reflect growing domestic political objections to the unfairness of the low priced foreign imports. Fairness us a vague concept and is reflective of the psychological mood of a nation loosing competitiveness or hegemony in the world economy. Actually the perceived unfairness results from the disruptive impact of cheaper imports on domestic industry and workforce, and could force the domestic industry to loose market share and the shareholders may loose capital. This creates a political situation where it is not generally possible to withhold pressure for some sort of commercial defense, justified or unjustified, to eliminate the injury caused by low priced imports.
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Conventional wisdom holds that the antidumping and the countervailing duty laws are cornerstones of international trade regulatory system designed to combat unfair trade practices. They are said to provide a custom remedy in the form of additional duty to offset price discrimination and subsidies. The reality is quite different. These are overly legalistic trade law remedies that have lost their original purpose.
Indian laws were amended with effect from 01.01.95 to bring them in line with the antidumping provisions in WTO agreement. Anti-Dumping duty investigations are carried out under Sections 9A of the Customs Tariff Act, 1975 read with Section 9B ibid and the rules made there under.
Legal Framework
Sections 9A, 9B and 9C of the Custom Tariff Act, 1975 as amended in 1995 and the Customs Tariff (Identification, Assessment and Collection of Anti-dumping Duty on Dumped Article and for Determination of Injury) Rules, 1995 framed there under from the legal basis for anti-dumping investigations and for the levy of anti-dumping duties. These laws are based on the Agreement in Anti-Dumping, which is in pursuance of Article VI of GATT 1994.
Dumping
Dumping occurs when the export price of goods imported into India is less than the Normal Value of like articles sold in the domestic market of the exporter. Imports at cheap or low prices do not per se indicate dumping. The price at which like articles are sold in the domestic market of the exporter is referred to as the Normal Value of those articles.
Normal Value
The Normal value is the comparable price at which the goods under complaint are sold, in the ordinary course of trade, in the domestic market of the exporting country or territory. If the normal value cannot be determined by means of domestic sales, the Act provides for the following two alternative methods: i. Comparable representative export price to an appropriate third country.
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ii.
Cost of production in the country of origin with reasonable addition for administrative, selling and general costs and for profits.
Export Price
The export price of goods imported into India is the price paid or payable for the goods by the first independent buyer.
Determination of Dumping
For determining that the given price of the product exported is dumped or not the following things have to be verified:
Constructed Export price Margin of Dumping Factors Affecting Comparison of Normal value and Export Price
Like articles
Anti-dumping action can be taken only when there is an Indian industry which produces like articles when compared to the allegedly dumped imported goods. The article produced in India must either be identical to the dumped goods in all respects or in the absence of such an article, another article that has characteristics closely resembling those goods
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Casual Link
A causal link must exist between the material injury being suffered by the Indian industry and the dumped imports. In addition, other injury causes have to be investigated so that they are not attributed to dumping. Some of these are volume and volume and prices of imports not sold at dumped prices, contraction in demand or charges in the pattern of consumption, export performance, productivity of the domestic industry etc.
Dumping Investigation
A dumping investigation can normally be initiated only upon receipt of a written application by or on behalf of the Domestic Industry. In order to constitute a valid application, the following two conditions have to be satisfied: The domestic procedures expressly supporting the application must account fir not less than 25% of the total production of the like article by the domestic industry in India; and The domestic producers expressly supporting the application must account for more than 50% of the total production of the like article by those expressly supporting and those opposing the application.
Domestic Industry
Domestic Industry means the Indian producers of like articles as a whole or those producers whose collective output constitutes a major proportion of total Indian production. Producers who are related to the exporters or importers or are themselves importers of the allegedly dumped goods shall be deemed not to form part of the domestic industry.
De Minimis Margins
Any exporter whose margin of dumping is less than 2% of the export price shall be excluded from the purview of anti-dumping duties even if the existence of dumping, injury as well as the causal link is established. Further, investigations against any country are required to be terminated if the volume of the dumped imports from that particular source is found to be below 3% of the total imports, provided the cumulative imports from all those countries who individually account for less than 3%, are not more than 7%.
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Price Undertakings
The Designated Authority may suspend or terminated investigation if the exporter concerned furnished an undertaking to revise his price to remove the dumping or the injurious effect of dumping as the case may be. No undertaking can however be accepted before preliminary determination is made. No anti-dumping duties are recommended on such exporters from whom price undertaking has been accepted. No price undertaking may, however, be accepted in case it is found that acceptance of such undertaking is impracticable for any reason.
In common parlance, the term subsidy means money granted by the State or a Public Body to keep the prices of commodities under control. Subsidy may make the form of direct or indirect government grants on production or exportation of goods including any special subsidy on transportation of any product. Subsidy on exports in the exporting country may translate into what is known as Countervailing duty in importing country which is simply a duty on subsidized imports that are found to be hurting domestic producers.
The Agreement on Subsidies and Countervailing Measures (SCM Agreement) addresses two separate but closely related topics: multilateral disciplines regulating the provision of subsidies, and the use of countervailing measures of offset injury caused by subsidized imports. This agreement does two things- it disciplines the use of subsidies, and it regulates the actions countries can take to counter the effects of subsidies. It says a country can use the WTOs dispute settlement procedure to seek the withdrawal of the subsidy or the removal of its adverse effect.
The agreement builds on the Tokyo Round Subsidy Code. Unlike its predecessor, the present agreement contains a definition of subsidy. It also introduces the concept of a specific subsidy i.e. a subsidy available only to an enterprises, or group of industries in the country (or state, etc.) that gives the subsidy. The disciplines set out in the agreement only apply to specific subsidies .They can be domestic or export subsidies.
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Part I provides that the SCM Agreement applies only to subsidies that are specifically provided to an enterprise or industry or group of enterprise or industries, and defines both the term subsidy and the concept of specifically. Part II, III and IV divide all specific subsidies into one of three categories- prohibited, actionable, and nonactionable, and establish certain rules and procedures with respect to each category. Part V establishes the substantive and procedural requirements that must be fulfilled before a Member may apply a countervailing measure against subsidize imports. Parts VI and VII establish the institutional structure and notification/ surveillance modalities for implementation of the SCM Agreement. Part VIII contains special and differential treatment rules for various categories of developing country Members. Part IX contains transition rules for developed country and former centrally planned economy Members. Parts X and XI contain dispute settlement and final provisions.
Part I of the Agreement defines the coverage of the Agreement. Specifically, it establishes a definition of the term subsidy and an explanation of the concept of specificity. Only a measure, which is a specific subsidy within the meaning of Part, I is subject to multilateral disciplines and can be subject to countervailing measures.
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the guarantee pays on a loan guaranteed by the government and the amount that the firm would pay on a comparable commercial loan bans the government guarantee. In this case the benefit shall be the difference between these two amounts adjusted for any differences in fees. d. The provisions of goods or services or purchase of goods by a government shall not be considered as conferring a benefit unless the provision is made for less than adequate remuneration, or the purchase is made for more than adequate remuneration. The adequacy of remuneration shall be determined in relation to prevailing market conditions for the good or service in question in the country of provision or purchase (including price, quality, availability, marketability, transportation and other conditions of purchase or sale).
Specificity
Assuming that a measure is a subsidy within the meaning of the SCM Agreement, it nevertheless is not subject to the SCM Agreement unless it has been specifically provided to an enterprise or industry or group of enterprises or industries. The basic principles is that a subsidy that distorts the allocation of resources within an economy should be subject discipline. Where a subsidy is widely available within an economy, such a distortion in the allocation of resources if presumed not to occur. Thus, only specific subsidies are subject to the SCM Agreement disciplines. There are four types of specificity within the meaning of the SCM Agreement:
Enterprise-specificity. A government targets a particular company or companies for subsidization; Industry-specificity. A government targets a particular sector or sectors for subsidization. Regional specificity - A government targets producers in specified parts of its territory for subsidization. Prohibited subsidies A government targets export goods or goods using domestic inputs for subsidization.
Prohibited subsidies: subsidies that require recipients to meet certain export targets, or to use domestic goods instead of imported goods. They are prohibited because they are specifically designed to distort international trade, and are therefore likely to hurt other countries trade. They can be challenged in the WTO dispute settlement procedure where they are handled under an accelerated timetable. If the dispute settlement procedure confirms that the subsidy is prohibited, it must be withdrawn immediately. Otherwise, the complaining country can take counter measures. If domestic producers are hurt by imports of subsidized products, countervailing duty can be imposed.
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Actionable subsidies: in this category the complaining country has to show that the subsidy has an adverse effect on its interests. Otherwise the subsidy is permitted. The agreement defines three types of damage they can cause. One countrys subsidies can hurt a domestic industry in an importing country. They can hurt rival exporters from another country when the two compete in third markets. And domestic subsidies in one country can hurt exporters trying to compete in the subsidizing countrys domestic market. If the Dispute Settlement Body rules that the subsidy does have an adverse effect, the subsidy must be withdrawn or its adverse effect must be removed. Again, if domestic producers are hurt by imports of subsidized products, countervailing duty can be imposed. Non- Actionable subsidies: The SCM Agreement creates three narrowly defined categories of subsidies, which are non-actionable, i.e. which cannot be challenged multilaterally, or is subject to countervailing action. These subsidies presumable are protected either because they are considered extremely unlikely to cause adverse effects or because they are considered to be of particular value and not to be discouraged. The three categories are:
Basic research and pre-competitive development subsidies. These subsidies cannot exceed a designated proportion of project costs and can only be used for certain expenditures in order to be non-actionable. Research and development subsidies in the civil aircraft sector do not benefit from non-actionable status. Assistance to disadvantaged regions. Regional aids are non-actionable provided that they are not limited to specific enterprises or industries within the region, that they are given pursuant to a general scheme of regional development, and that the region is disadvantaged by comparison with the Member as a whole in terms of objective criteria such as GNP per capita and unemployment. Assistance to adapt existing facilities to new environment requirements. Such assistance must be on a one-time basis, be limited to 20 per cent of adaption costs, and be available to all firms, which can adopt the new equipment and processes.
Subsidy programmes, which are notified to the Committee before they are implemented, are protected unless and until the Committee or arbitration body determines that they do not qualify for non-actionable status. Procedures for arbitration in this area were approved in June 1998. Subsidy programmes which have not been notified before implementation may be investigated by a panel or an investigation authority (in a CVD case) but if found to meet the criteria for non-actionability, shall be treated as nonactionable. Agricultural Subsidies: The agreement on Agricultural contains special rules regarding subsidies for agricultural products. The SCM Agreement does not prohibit export subsidies, which are consistent with the reduction commitments in the Agriculture Agreement, although they remain countervailable. Domestic supports consistent with the reduction commitments in the Agriculture Agreement are not actionable multilaterally, although they also may be subject to countervailing duties. Finally, domestic support within the green box of the Agricultural Agreement are neither actionable mutually nor are they subject to countervailing measures.
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Some of the disciplines are similar to those of the Anti-Dumping Agreement. Countervailing duty (the parallel of anti-dumping duty) can only be charged after the importing country has conducted a detailed investigation similar to that required for antidumping action. There are detailed rules for deciding whether a product is being subsidized (not always an easy calculation), criteria for determining whether imports of subsidized products are hurting (causing injury to) domestic industry, procedures for initiating and conducting investigations, and rules on the implementation and duration (normally five years) of countervailing measures. The subsidized exporter can also agree to raise its export prices as an alternative to its exports being charged countervailing duty. Subsidies may play an important role in developing countries and in the transformation of centrally-planned economies to market economies. Least-developed countries and developing countries with less than $1,000 per capita GNP are exempted from disciplines on prohibited export subsidies. Other developing countries are given until 2003 to get rid of their export subsidies. Least-developed countries must eliminate import-substitution subsidies (i.e. subsidies designed to help domestic production and avoid importing) by 2003 for other developing countries the deadline was 2000. Developing countries also receive preferential treatment if their exports are subject to countervailing duty investigations. For transition economies, prohibited subsidies had to be phased out by 2002.
Procedural rules:
Part V of the SCM Agreement contains detailed rules regarding the initiation and conduct of countervailing investigations, the imposition of preliminary and final measures, the use of undertakings, and the duration of measures. A key objective of these rules is to ensure that investigations are conducted in a transparent manner, that all interested parties have a full opportunity to defend their interests, and that investigating authorities adequately explain the bases for their determinations. A few of the more important innovations in the WTO SCM Agreement are identified below:
Standing The agreement defines in numeric terms the circumstances under which there is sufficient support from a domestic industry to justify initiation of an investigation. Preliminary Investigation: The Agreement ensures the conduct of a preliminary investigation before a preliminary measure can be imposed. Undertakings: The Agreements places limitations on the use of undertakings to settle CVD investigations, in order to avoid Voluntary Restraint Agreements or similar measures masquerading as undertakings. Sunset: The Agreement requires that a countervailing measure be terminated after five years unless it is determines that continuation of the measure is necessary to avoid the continuation or recurrence of subsidization and injury. Judicial review: The Agreement requires that Members create an independent tribunal to review the consistency of determination of the investigating authority with domestic law.
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Dumping and subsidies together with anti-dumping (AD) measures and countervailing duties (CVD) are often linked. An expert speaks of AD-CVD in one breath. Many countries handle the two issues under a single law, apply similar process to deal with them and give a single authority responsibility for investigations. Occasionally, the two WTO committees responsible for these issues meet jointly.
There are a number of similarities. The reaction to dumping and subsidies is often a special offsetting import tax (countervailing duty in the case of a subsidy). Like antidumping duty, countervailing duty is charged on products from specific countries and therefore it breaks the GATT principles of binding a tariff and treating trading partners equally (MFN). The agreements provide an escape clause, but they both also say that before imposing a duty, the importing country must conduct a detailed investigation that shows properly that domestic industry is hurt.
But there are also fundamental differences, and these are reflected in the agreements.
Dumping is an action by a company. With subsidies, it is the government or a government agency that acts, either by paying out subsidies directly or by requiring companies to subsidize certain customers.
But the WTO is an organization of countries and their governments. The WTO does not deal with companies and cannot regulate companies actions such as dumping. Therefore the Anti-Dumping Agreement only concerns the actions governments may take against dumping. With subsidies, governments act on both sides: they subsidize and they act against each others subsidies. Therefore the subsidies agreement disciplines both the subsidies and reactions.
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Issue Common to the Agreement on Subsidies and Countervailing Measures and the Anti Dumping Activities:
Industry Support Requirements: Currently, the ADA and ASCM require that an application for an investigation must: a) be supported by domestic producers whose collective output constitutes more than 50 percent of the total production of like products produced by that portion of the domestic industry expressing either support for or opposition to the application; and b) represent at least 25 percent of the total production of the like product produced by the domestic industry. There has been controversy over the past several years regarding whether the current industry support requirements as reflected in both the ADA and ASCM, are adequate. Certain countries will likely propose changes to the level to industry support required for an application to initiate a countervail or anti-dumping investigation. Proposals will likely also be made for new rules to ensure that the level of industry support for an application is objectively determined, free of direct or indirect government discretion.
Insignificant Margin of Dumping or Amount of Subsidy: The ASCM and the ADA require that an investigation be terminated with respect to certain goods, if the amount of subsidy or the margin of dumping is de minimis (i.e., insignificant). De minimis is defined in the Agreements as a subsidy of less than 1% of the export price, or a margin of dumping of less than 2% of the export price. In countervail investigations, for imports from developing country Members; de minimis is defined to be less than 2%, expressed as a percentage of the export price. Members will likely consider whether existing thresholds are appropriate both from a development and generic perspective.
Negligible volume level: The ADA requires that investigations be terminated with respect to goods of a country when the dumped imports from that country represent less than 3% of the total imports of the like products in the importing country, unless countries, whose dumped imports that individually account for less than 3%, collectively account for more than 7% of the total imports of like products in the importing country. The ASCM requires that an investigation be terminated if the volume of subsidized imports or the injury if negligible; however the ASCM does not define the term negligible, except in relation to imports from developing country Members, for which the volume of subsidized imports is negligible if they individually account for less than 4%, or collectively account for less than 9% of the total imports of like products in the importing country. Members will likely consider whether existing thresholds are appropriate both from a development and generic perspective.
Injury Issues: The provisions of Article 3 of the ADA and Article 15 of the ASCM, which concern the determination of injury and whether dumping or subsidizing caused such injury, have been the subject of numerous disputes. A range of issues are likely to be proposed for clarification or improvement including: the factors to be considered in determining whether an industry has suffered material injury and whether there are factors that must always be considered; the circumstances justifying a cumulative
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assessment of the effects of dumped or subsidized imports from more than one exporting country; the conditions of competition that are relevant to a determination of whether a cumulative injury assessment would be appropriate; the factors to be considered in determining whether a threat of material injury exists; and more detailed factors to be considered when establishing a causal linkage requirement between the dumped/ subsidized imports and material injury.
Public Interest and Lesser Duty: Articles 9.1 of the ADA and 19.2 of the ASCM establish the general principle that imposition of anti-dumping or countervailing duties is optional, even if all the requirements for imposition have been met, and establishes the desirability of the application of a lesser duty, i.e., less than the full margin of dumping or amount of subsidy. Several WTO Members, including Canada, have experience with lesser duty provisions. In Canada this has been done in the context of public interest considerations and we will be looking for other WTO members to adopt similar practices.
Duty Enforcement Methodologies: The ADA and ASCM provide for two basic approaches to duty assessment. In general terms, prospective enforcement involves the assessment of final duties when the goods are accounted for upon importation. Retrospective Assessment, on the other hand, involves the posting of deposits to cover estimated duties on individual import entries, with final duties being assessed in a subsequent review of those entries. The Agreements do not, however, provide detailed rules respecting how these methods are to be applied. Most Members employ a prospective system, which provides a measure of predictability for exporters and importers be affording them with the opportunity to sell the exported goods at a price that will not create a margin of dumping. The United States uses a retrospective approach, which assesses an estimated amount of duties at the time of importation, with final duty liability only being established in a subsequent administrative review, which is usually conducted on a yearly basis. The review can result in additional, unforeseen duty liability. As such, it may be useful to examine greater convergence between duty enforcement methodologies or the adoption of a single prospective method of duty assessment.
With regard to the Agreement on Subsidies and Countervailing Measures in the WTO, Venezuela had put forth a proposal that the subsidy measures implemented by developing countries to achieve legitimate goals such as regional growth, technology research and development funding, production diversification and development and implementation of environmentally sound methods of production be treated as nonactionable. The Doha Decision takes note off this proposal and places it among outstanding implementation issues on which the subsidies and countervailing Measures Committee must report to the Trade Negotiating Committee by the end of 2002. It urges members to exercise due restraint with respect to challenging such a measures in the interim.
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History for Dumping and anti-dumping measure Antidumping legislation arose at the end of the nineteenth century as a policy alternative to permanent rising of the tariffs and to meet special and temporary cases of dumping. Canada was the first country to initiate antidumping measures in 1904 against American firms dumping steel. Several commonwealth countries followed the example in the next ten years. The Sherman Act was a popular measure intended to curb price-fixing and monopolization by the emergent capitalists in the United States.
Between the two world wars League of National struggled unsuccessfully with questions regarding dumping and differential pricing. Therefore, in the post war efforts for devising rules for international trade through International Trade Organization and GATT the antidumping provisions found a place. Thus, the first multinational rules on antidumping were laid out, including the conditions under which individual countries were justified in taking defensive measures. These were finally incorporated in Article VI of GATT.
Article VI specifically condemned dumping, which it defined as the practice whereby the products of one country are introduced into the commerce of another country at less than the normal value of the product, if such action materially injured a domestic industry. In the event of dumping, a contracting party was given specific authorization to assess an antidumping duty of an amount not greater than the difference between the price in the importing country and the normal value of the product, in the ordinary course of trade in the exporter home market.
The dumping question came into life in Kennedy Round. United States, having introduced the subject of non-tariff barriers into the negotiations, was chagrined to find that the non-tariff barrier most often singled out by other countries was the US antidumping action. The Kennedy Round Antidumping Code was negotiated without advance authority by the Congress and in fact of strict reprimand from the Senate not to change the antidumping legislation in any way. It is settled law in United States that when an international agreement has the effect of changing existing domestic law, either directly, or by indirection through giving the law a meaning and a result, which Congress never intended, the agreement cannot be given effect unless it has been submitted to Congress for implementing legislation.
Antidumping duties have been described a curious hybrid of tariff ideas and price discrimination theories of antitrust laws. The provisions of GATT are designed to allow governments to take defensive actions to unfair merchant or governments practices in an exporting country. But if the defensive measure is overly large, it becomes a protectionist device in its own right. The problem of ascertaining the dividing line between fair and unfair actions in exporting countries, and defensive and protectionist retaliation in importing countries is not an easy one.
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8. Settling Dispute
8.1 Settling Dispute
Settling dispute in the fastest and effective way is often seen as one of the most important achievement of the WTO Agreement. While the GATT also contained provisions for conflict resolution, the DSU contains a number of innovations. In particular, it is generally seen as being superior to its predecessors in terms of the clarity of its provisions concerning procedural matters, and its provisions establishing a monitoring scheme to overview implementation. Recently, however, criticism has been voiced concerning the possibilities for poorer countries to take full advantages of the system.
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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.
It played the Central Role in the Security and Predictability of WTO Multilateral Trading System Rule- Based System Exclusive Application of WTO Rules on Dispute Settlements Uniform application to all WTO Agreements Preserving the Rights and Obligations of WTO Members The Central Concept of Nullification or impairment
For settlement of dispute only WTO members can take part in dispute settlement. WTO dispute settlement is not open to the WTO observers, other international organizations, non-governmental organizations, local governments or private persons. For the case related to the same matter two or more members may request the establishment of a panel relate to the same matter, in which case a single panel may be establishes to examine these complaints.
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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 to 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).
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The appeal can uphold, modify or reverse the panels legal findings and conclusions. Normally appeals should not last more than 60 days, with an absolute maximum of 90 days. The Dispute Settlement Body has to accept or reject the appeals report within 30 days and rejection is only possible by consensus.
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Note: some specified times are maximums, some are minimums, some binding, some not
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Time (0 = start of case) -5 years -4 months 0 +1 month +2 months +2 months +3 months +6 months +11 months
Date
Action
1990 September 1994 23 January 1995 60 days 24 February 1995 25 March 1995 10 April 1995 30 days 28 April 1995 9 months (target is 10-12 July and 13-15 6-9) July 1995 11 December 1995
US Clean Air Act amended US restricts gasoline imports under Clean Air Act Venezuela complains to Dispute Settlement Body, asks for consultation with US Consultations take place. Fail. Venezuela asks Dispute Settlement Body for a panel Dispute Settlement Body agrees to appoint panel. US does not block. (Brazil starts complaint, requests consultation with US.) Panel appointed. (31 May, panel assigned to Brazilian complaint as well) Panel meets Panel gives interim report to US, Venezuela and Brazil for comment
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+1 year +1 year, 1 month +1 year, 3 months +1 year, 4 months +1 year, 10 months +1 year, 11 months +2 years, 7 months 60 days 30 days
29 January 1996 21 February 1996 29 April 1996 20 May 1996 3 December 1996 9 January 1997 19-20 August 1997
Panel circulates final report to members US appeals Appellate Body submits report Dispute Settlement Body adopts panel and appeal reports US and Venezuela agree on what US should do (implementation period is 15 months from 20 May) US makes first of monthly reports to Dispute Settlement Body on status of implementation US signs new regulation (19th). End of agreed implementation period (20th)
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Unlike mediation, which attempts to help parties voluntarily resolve their disputes; international commercial arbitration is a binding dispute resolution mechanism. The parties must agree it to, either at the time of drafting of a contract or something thereafter, usually after a dispute has arisen. With the exception of International Centre for the Settlement of Investment Disputes (ICSID) arbitration, which always involves a sovereign entity or constituent subdivision or agency thereof, international commercial arbitration takes place between parties(including, perhaps, state-owned companies acting in a non-sovereign capacity).
In its basic structure, international commercial arbitration resembles the usual litigation process. Parties make claims and defenses, submit written pleadings, and call witnesses or submit their statements. Upon the completion of the arbitration, the arbitral tribunal issues its award. With the notable exception of ICSID arbitration awards, which may be annulled by a special ICSID ad hoc committee, most arbitral awards, which may be annulled by a special ICSID ad hoc committee, most arbitral awards are considered final and binding on the parties. Whether and on what extent the award is reasoned (i.e., contains a doctrinal justification of the result) and whether dissenting opinions are
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rendered very according to the arbitral rules used and the advantages or disadvantages of having a reasoned award in the jurisdiction(s) where the award may be enforced. The awards need not be made public, and, technically at least, are not binding precedent for future arbitral tribunals.
International arbitration differs from international litigation in that arbitrating parties determine to a large extent what procedural rules will govern the resolution of their dispute, and who will decide the dispute. In the context of international trade in commodities, disputes are often resolved within the context of trade organizations and their standards. In ad hoc arbitration, the parties negotiate procedural rules directly, either before or after a dispute have arisen, then conduct the arbitration pursuant to those rules. Alternatively, the parties may adopt the arbitration rules developed by the United Nations Commission on International Trade Law (UNCITRAL). The UNCITRAL rules address many of the same issues, as do the institutional rules discussed below, yet, by them, do not provide the administrative apparatus (and resulting expense) connected with institutional arbitration.
Probably more common than ad hoc arbitrations are those run under the auspices of an arbitral institution. The oldest and perhaps best known of these institutions is the International Chember of Commerce (ICC), located in Paris. The American Arbitration Association (AAA), based in New York but with affiliates throughout the United States, also has become increasingly active in administering international arbitration. It has concluded agreements with many foreign arbitral institutions, created supplementary rules for international arbitrations, and has allowed parties to conduct AAA arbitration under the UNCITRAL rules. Over well-established institutions include the London Court of International Arbitration and the Arbitration Institute of the Stockholm Chamber of Commerce; newer institutions include those in Singapore and Vancouver. The Permanent Court of International Arbitration has recently updated its rules and prepared to act more along the lines of the ICC and AAA.
These institutions do not themselves decide arbitration cases. The arbitrations often take place not in the home city of the institution, but at a location designated by the parties or arbitrators. Rather, for a fee, arbitral institutions administer arbitrations including receiving and distributing pleadings, and perhaps appointing arbitrators or reviewing an award for technical accuracy usually in connection with a decision by the parties to use the arbitration rules of the institution. These rules regulate such issues as the choice of arbitrators, the process of replacing an ill or deceased arbitrator, challenges to arbitrators for lack of independence, how and when parties file their pleadings, provisional remedies, the power of the arbitrators to hear witnesses, language(s) of the proceeding, evidentiary issues, and the drafting and signing of the arbitral award. Most institutional rules allow the parties to modify the rules to some extent, and to fill the gaps where the rules are silent. Parties thus look to the institution and its rules to resolve issues that are often not negotiated by the parties before they sign a contract.
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While the rules of the various arbitral institutions contain similar provisions on many issues, there are important differences among the various institutional rules. Take, for example, the situation in which two parties have agreed that arbitration is to be before a three- arbitrator tribunal. The ICC rules generally provide that each party nominates an arbitrator, with the third arbitrator being chosen by an ICC body unless the parties have provided that the party- appointed arbitrators agree on a third arbitrator within a fixed time- period. The UNCITRAL rules provide for a similar procedure, except that when the party- appointed arbitrators cannot agree either on the third, presiding arbitrator or on an institution to appoint that arbitrator, the Secretary- General of the Permanent Court of Arbitration at The Hague, upon application by a party, chooses the appointing authority for that arbitrators.
By contrast, the AAA International Arbitrations Rules provide that the parties may agree on any procedure for appointing arbitrators. However, if within sixty days after the commencement of the arbitration the parties have not agreed on the procedure for or the designation of the arbitrators, the AAA administrator may, upon written request by a party, appoint the arbitrator(s) or perform all functions provided for in a procedure agree to by the parties. Interestingly, the standard AAA Commercial Arbitration Rules, in cases in which the parties have not agreed on the tribunal or its method of selection, contain somewhat different default procedures for the choice of arbitrators. In such cases, the AAA provides the parties with a list of potential arbitrators. The parties may then strike names from the list and rank remaining names in order of preference, with the AAA choosing from the list any arbitrators on which the parties cannot agree.
The various institutional rules also differ in their regulation of the arbitral proceedings, ICC arbitrations must proceed within the framework of a document, drawn up by the arbitrator(s), knows as the Terms of Reference. The ICC rules also contain voluntary procedures for the appointment of a referee empowered to grant provisional or conservatory measures in advance of the constitution of a tribunal. No similar procedures exist case under the AAA International or the UNCITRAL rules.
Regardless of whether arbitration is governed by ad hoc or institutional arbitration rules, it is also subject to municipal law. Since international arbitration is a creature of contract, an arbitration agreement may specify which jurisdictions substantive law will govern the rights and duties of the parties in connection with the agreement, or it may allow the arbitrators to act as amiable compositors or to decide disputed matters ex aequo et bono (according to justice and fairness, rather than specific legal rules). Of course, as with any contractual clause, an arbitral choice-of-law clause may not be used to avoid otherwiseapplicable mandatory municipal law. In addition, virtually all jurisdictions consider disputes in some subject areas of the law inappropriate for resolution by arbitration. Those subject areas vary greatly from country to country, and often reflect the countrys
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sense of what is particularly vital to its national legal interests. For example, under French law, bankruptcy matters are inarbitrable.
Municipal procedural law governs international arbitrations also, most frequently by the law of the jurisdiction in which the arbitral tribunal sits. This law, knows as the lex loci arbitri, may be crucial in resolving procedural issues that arise. Thus, arbitral tribunals often meet in a jurisdiction with an arbitration law that is both developed and supportive of arbitration as a dispute resolution mechanism.
In the United States, both state and federal law govern international arbitration. Many states have their own state statutes on arbitration generally. Whereas a few states, such as New York, drafted original arbitration laws, many states have adopted arbitration laws based on the Uniform Arbitration Act, itself modeled on the Federal Arbitration Act. In addition, several states, including Florida, California, Georgia, Texas and Connecticut have adopted special statues for international arbitration. The passage of these statutes, which are based in whole or in part on the UNCITRAL arbitration rules, often was motivated by a desire to attract international arbitration, and the business and revenue connected with it, to the state. The Federal Arbitration Act (FAA) governs arbitrations involving transactions in interstate or foreign commerce. It is relatively narrow statute that focuses on the relationship of the courts to the arbitral process. Chapter 1 of the FAA defines the maritime and commerce transactions to which the FAA applies, addresses such issues as stays of litigation during arbitration and proceedings to compel arbitration, court appointment of arbitrators and enforcement of arbitrators subpoenas, and enforcement, modification, correction, or vacatur of arbitral awards.
In overcoming legislative and judicial hostility to arbitration agreements, the FAA and interpretative jurisprudence have established a broad principle of enforceability of arbitration clauses. The FAA is applicable in both state and federal courts; its reach is as expansive as that of the Commerce Clause. The recent United States Supreme Court decisions of Allied-Bruce Terminix Companies, Inc. v. Dobson and Doctors Associates, Inc. v. Casarotto have emphasized that in all cases involving interstate commerce, the FAA preempts conflicting state law. Thus, while the FAA allows applicable state-law contract defenses such as fraud, duress, or unconscionability to be used to invalidate arbitration agreements, courts are precluded from invalidating those agreements under state law that required that an arbitration provision be in large print on the first page of a contract would conflict with and thus be preempted by the FAA.
Upon the completion of an arbitration, the winning party often seeks judicial enforcement of the arbitral award. In the context of international arbitration, enforcement frequently occurs within the framework of a bilateral or multilateral treaty. The most important of
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these is the 1958 United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards, frequently known as the New York Convention. In force for some 109 countries, including the United States increased the ease of enforcing international arbitral awards, thus strengthening the international arbitral regime. Chapter 2 of the FAA provides U.S. implementing legislation for the Convention.
The basic feature of the Convention is that signatory states agree to recognize and enforce agreements in writing to submit issues to arbitration, and to enforce arbitral awards based upon those agreements. A party need not go to the court at the seat of the arbitral tribunal in order to have an arbitral awards recognized in a judgment. Rather, the moving party need supply only the award and the agreement upon which it was based, and fulfill certain authentication and translation requirements for those documents, in the jurisdiction in which recognition or enforcement is sought.
The Convention also severely limits the reasons for which recognition and enforcement of an arbitral award may be refused. These reasons include: a party lacked capacity under applicable law, the agreement to arbitrate was invalid under the law chosen by the parties or the law of the country where the award was made, parties were not given proper notification of the arbitral proceeding, the arbitration was not conducted in accordance with the arbitration agreement or with applicable law, the award addressed matters beyond the scope of the agreement to arbitrate, the subject matter of the dispute was not capable of settlement by arbitration in the enforcing country, or the recognition and enforcement of the award would violate the enforcing countrys public policy.
Three aspects of the scope of the Convention must be mentioned. First, the Convention, as implemented by the United States, applies both to (a) arbitral awards made outside of the United States, and (b) awards made in the United States, but which either do not arise out of a relationship involving property located abroad or performance abroad, or which has some other reasonable relation to one or more foreign countries.
Second, many countries, including the United States, have made both the commercial and reciprocity reservations to the Convention, meaning that the Convention applies only to awards defined as commercial by the enforcing state, and made in another state party.
Finally, the Convention applies to both recognition and enforcement of foreign arbitral awards, Enforcement of an award involves the taking of an award by a successful claimant into national courts, whereas a successful defendant in an arbitration proceeding may have the arbitral award recognized in other jurisdictions in order to prevent further court claims by the losing arbitration claimant.
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U.S. Courts generally have interpreted the Covention in keeping with the Conventions goals, thus making the enforcement of international arbitral awards quicker and easier than before. The very ratification of the Convention by the United States has played a role in the development of the ever-more-favorable stance of the U.S. courts vis--vis international arbitration.
The strengthening of the international arbitral system has created many reasons for parties to choose international arbitration over court litigation. Parties often prefer a neutral dispute resolution forum, such that no party need submit to the jurisdiction of the courts of another partys home nation. In many cases, the parties may choose their own judge(s), who may come from a neutral jurisdiction, who often have expertise in the field in question, and who, barring illness or death, virtually always decide a case from beginning to end (thus eliminating the possibility of having different judges hearing different motions or other aspects of a complex lawsuit). Independent of court backlogs, the parties, in conjunction with the arbitrators, set their own schedule, and follow their own procedural rules. The arbitration proceedings are, at least in principle, non-public, thus allowing parties, especially those with long-standing relationships, to resolve their disputes away from public scrutiny.
Whether international arbitration is cheaper than international litigation is a hotly debated issue, and depends upon a number of factors. Whereas judges are paid by the state, and a single arbitrator in a smaller matter may serve gratuitously, each arbitrator of the three-arbitrator panel typical of a large arbitration may demand relatively high fees for all time spent in connection with the arbitration, including reading pleadings and documents, traveling to the site of the arbitration, writing the awards, etc. The number of parties involved, the amount in controversy, and the willingness of the parties to accept the arbitral award immediately, rather than attempting to challenge it in the courts, may also determine the ultimate cost-effectiveness of international arbitration vis-avis international litigation.
Some observers find that the increase in popularity in international arbitration carries with it seeds of the systems own demise. The claim is that as international arbitration has moved beyond those parties that traditionally used it, viz., parties to trade in commodities, parties with long-standing relationships, etc. arbitration has become simply litigation before a different type of tribunal. As a result, the process has become more litigious and less a true alternative to national court litigation. The future of international arbitration may well depend, at least in part, on the ability of arbitrators, signatories to arbitration agreements, and courts to maintain the integrity of the international arbitral process.
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life and health) and endangered species and exhaustible resources). The WTO does not have to allow them this right. It also said measures to protect sea turtles would be legitimate under GATT Article 20 which deals with various exceptions to the WTOs trade rules, provided certain criteria such as non-discrimination were met. The US lost the case, not because it sought to protect the environment but because it discriminated between WTO members. It provided countries in the western hemisphere mainly in the Caribbean technical and financial assistance and longer transition periods for their fishermen to start using turtle-excluder devices. It did not give the same advantages, however, to the four Asian countries (India, Malaysia, Pakistan and Thailand) that filed the complaint with the WTO. The ruling also said WTO panels may accept amicus briefs (friends-of-the-court submissions) from NGOs or other interested parties. What we have not decided ... This is part of what the Appellate Body said: 185. In reaching these conclusions, we wish to underscore what we have not decided in this appeal. We have not decided that the protection and preservation of the environment is of no significance to the Members of the WTO. Clearly, it is. We have not decided that the sovereign nations that are Members of the WTO cannot adopt effective measures to protect endangered species, such as sea turtles. Clearly, they can and should. And we have not decided that sovereign states should not act together bilaterally, plurilaterally or multilaterally, either within the WTO or in other international fora, to protect endangered species or to otherwise protect the environment. Clearly, they should and do. 186. What we have decided in this appeal is simply this: although the measure of the United States in dispute in this appeal serves an environmental objective that is recognized as legitimate under paragraph (g) of Article XX [i.e. 20] of the GATT 1994, this measure has been applied by the United States in a manner which constitutes arbitrary and unjustifiable discrimination between Members of the WTO, contrary to the requirements of the chapeau of Article XX. For all of the specific reasons outlined in this Report, this measure does not qualify for the exemption that Article XX of the GATT 1994 affords to measures which serve certain recognized, legitimate environmental purposes but which, at the same time, are not applied in a manner that constitutes a means of arbitrary or unjustifiable discrimination between countries where the same conditions prevail or a disguised restriction on international trade. As we emphasized in United States Gasoline [adopted 20 May 1996, WT/DS2/AB/R, p. 30], WTO Members are free to adopt their own policies aimed at protecting the environment as long as, in so doing, they fulfill their obligations and respect the rights of other Members under the WTO Agreement.
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The panel
Mexico asked for a panel in February 1991. A number of intermediary countries also expressed an interest. The panel reported to GATT members in September 1991. It concluded: That the US could not embargo imports of tuna products from Mexico simply because Mexican regulations on the way tuna was produced did not satisfy US regulations. (But the US could apply its regulations on the quality or content of the tuna imported.) This has become known as a product versus process issue.
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that GATT rules did not allow one country to take trade action for the purpose of attempting to enforce its own domestic laws in another country even to protect animal health or exhaustible natural resources. The term used here is extra-territoriality. What was the reasoning behind this ruling? If the US arguments were accepted, then any country could ban imports of a product from another country merely because the exporting country has different environmental, health and social policies from its own. This would create a virtually open-ended route for any country to apply trade restrictions unilaterally and to do so not just to enforce its own laws domestically, but to impose its own standards on other countries. The door would be opened to a possible flood of protectionist abuses. This would conflict with the main purpose of the multilateral trading system to achieve predictability through trade rules. The panels task was restricted to examining how GATT rules applied to the issue. It was not asked whether the policy was environmentally correct or not. It suggested that the US policy could be made compatible with GATT rules if members agreed on amendments or reached a decision to waive the rules specially for this issue. That way, the members could negotiate the specific issues, and could set limits that would prevent protectionist abuse. The panel was also asked to labelled dolphin-safe (leaving product). It concluded that this prevent deceptive advertising domestically produced. judge the US policy of requiring tuna products to be to consumers the choice of whether or not to buy the did not violate GATT rules because it was designed to practices on all tuna products, whether imported or
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They should do this by notifying the WTO, but the task should not be more of a burden than is normally required for other policies affecting trade. The Trade and Environment Committee says WTO rules do not need changing for this purpose. The WTO Secretariat is to compile from its Central Registry of Notifications all information on trade-related environmental measures that members have submitted. These are to be put in a single database which all WTO members can access
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Albania Angola Antigua and Barbuda Argentina Armenia Australia Austria Bahrain, Kingdom of Bangladesh Barbados Belgium Belize Benin Bolivia, Plurinational State of Botswana Brazil Brunei Darussalam Bulgaria Burkina Faso Burundi Cambodia Cameroon Canada Cape Verde Central African Republic Chad Chile China Colombia Congo Costa Rica Cte d'Ivoire Croatia Cuba Cyprus Czech Republic Democratic Republic of the Congo Denmark Djibouti Dominica
8 September 2000 23 November 1996 1 January 1995 1 January 1995 5 February 2003 1 January 1995 1 January 1995 1 January 1995 1 January 1995 1 January 1995 1 January 1995 1 January 1995 22 February 1996 12 September 1995 31 May 1995 1 January 1995 1 January 1995 1 December 1996 3 June 1995 23 July 1995 13 October 2004 13 December 1995 1 January 1995 23 July 2008 31 May 1995 19 October 1996 1 January 1995 11 December 2001 30 April 1995 27 March 1997 1 January 1995 1 January 1995 30 November 2000 20 April 1995 30 July 1995 1 January 1995 1 January 1997 1 January 1995 31 May 1995 1 January 1995
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Dominican Republic Ecuador Egypt El Salvador Estonia European Union (formerly European Communities) Fiji Finland France Gabon The Gambia Georgia Germany Ghana Greece Grenada Guatemala Guinea Guinea-Bissau Guyana Haiti Honduras Hong Kong, China Hungary Iceland India Indonesia Ireland Israel Italy Jamaica Japan Jordan Kenya Korea, Republic of Kuwait, the State of Kyrgyz Republic Latvia Lesotho Liechtenstein Lithuania Luxembourg Macao, China Madagascar Malawi Malaysia
9 March 1995 21 January 1996 30 June 1995 7 May 1995 13 November 1999 1 January 1995 14 January 1996 1 January 1995 1 January 1995 1 January 1995 23 October 1996 14 June 2000 1 January 1995 1 January 1995 1 January 1995 22 February 1996 21 July 1995 25 October 1995 31 May 1995 1 January 1995 30 January 1996 1 January 1995 1 January 1995 1 January 1995 1 January 1995 1 January 1995 1 January 1995 1 January 1995 21 April 1995 1 January 1995 9 March 1995 1 January 1995 11 April 2000 1 January 1995 1 January 1995 1 January 1995 20 December 1998 10 February 1999 31 May 1995 1 September 1995 31 May 2001 1 January 1995 1 January 1995 17 November 1995 31 May 1995 1 January 1995
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Maldives Mali Malta Mauritania Mauritius Mexico Moldova, Republic of Mongolia Morocco Mozambique Myanmar Namibia Nepal Netherlands New Zealand Nicaragua Niger Nigeria Norway Oman Pakistan Panama Papua New Guinea Paraguay Peru Philippines Poland Portugal Qatar Romania Rwanda Saint Kitts and Nevis Saint Lucia Saint Vincent & the Grenadines Saudi Arabia, Kingdom of Senegal Sierra Leone Singapore Slovak Republic Slovenia Solomon Islands South Africa Spain Sri Lanka Suriname Swaziland
31 May 1995 31 May 1995 1 January 1995 31 May 1995 1 January 1995 1 January 1995 26 July 2001 29 January 1997 1 January 1995 26 August 1995 1 January 1995 1 January 1995 23 April 2004 1 January 1995 1 January 1995 3 September 1995 13 December 1996 1 January 1995 1 January 1995 9 November 2000 1 January 1995 6 September 1997 9 June 1996 1 January 1995 1 January 1995 1 January 1995 1 July 1995 1 January 1995 13 January 1996 1 January 1995 22 May 1996 21 February 1996 1 January 1995 1 January 1995 11 December 2005 1 January 1995 23 July 1995 1 January 1995 1 January 1995 30 July 1995 26 July 1996 1 January 1995 1 January 1995 1 January 1995 1 January 1995 1 January 1995
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Sweden Switzerland Chinese Taipei Tanzania Thailand The former Yugoslav Republic of Macedonia (FYROM) Togo Tonga Trinidad and Tobago Tunisia Turkey Uganda Ukraine United Arab Emirates United Kingdom United States of America Uruguay Venezuela, Bolivarian Republic of Viet Nam Zambia Zimbabwe
Observer governments
1 January 1995 1 July 1995 1 January 2002 1 January 1995 1 January 1995 4 April 2003 31 May 1995 27 July 2007 1 March 1995 29 March 1995 26 March 1995 1 January 1995 16 May 2008 10 April 1996 1 January 1995 1 January 1995 1 January 1995 1 January 1995 11 January 2007 1 January 1995 5 March 1995
Afghanistan Algeria Andorra Azerbaijan Bahamas Belarus Bhutan Bosnia and Herzegovina Comoros Equatorial Guinea Ethiopia Holy See (Vatican) Iran Iraq Kazakhstan Lao People's Democratic Republic Lebanese Republic Liberia, Republic of Libya Montenegro Russian Federation Samoa
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Sao Tom and Principe Serbia Seychelles Sudan Syrian Arab Republic Tajikistan Uzbekistan Vanuatu Yemen
Note: With the exception of the Holy See, observers must start accession negotiations within five years of becoming observers. Least-developed countries The WTO recognizes as least-developed countries (LDCs) those countries which have been designated as such by the United Nations. There are currently 48 least-developed countries on the UN list, 31 of which to date have become WTO members.
These are:
Angola Bangladesh Benin Burkina Faso Burundi Cambodia Central African Republic Chad Congo, Democratic Republic of the Djibouti Gambia Guinea Guinea Bissau Haiti Lesotho Madagascar Malawi Mali Mauritania Mozambique Myanmar Nepal Niger Rwanda
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Twelve more least-developed countries are negotiating to join the WTO. They are: Afghanistan, Bhutan, Comoros, Equatorial Guinea, Ethiopia, Laos,Liberia, Sao Tom & Principe, Samoa, Sudan, Vanuatu, and Yemen. There are no WTO definitions of developed or developing countries. Developing countries in the WTO are designated on the basis of self-selection although this is not necessarily automatically accepted in all WTO bodies.
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17. Abbreviations
Some of the abbreviations and acronyms used in the WTO: ACP AD, A-D AFTA AMS APEC ASEAN ATC CBD CCC CER COMESA CTD CTE CVD DDA DSB DSU EC EFTA EU FAO GATS GATT GSP HS ICITO ILO IMF ITC African, Caribbean and Pacific Group (Lom Conventionand Cotonu Agreement) Anti-dumping measures ASEAN Free Trade Area Aggregate measurement of support (agriculture) Asia-Pacific Economic Cooperation Association of Southeast Asian Nations Agreement on Textiles and Clothing Convention on Biological Diversity (former) Customs Co-operation Council (now WCO) [Australia New Zealand] Closer Economic Relations [Trade Agreement] (also ANCERTA) Common Market for Eastern and Southern Africa Committee on Trade and Development Committee on Trade and Environment Countervailing duty (subsidies) Doha Development Agenda Dispute Settlement Body Dispute Settlement Understanding European Communities European Free Trade Association European Union Food and Agriculture Organization General Agreement on Trade in Services General Agreement on Tariffs and Trade Generalized System of Preferences Harmonized Commodity Description and Coding System Interim Commission for the International Trade Organization International Labour Organization International Monetary Fund International Trade Centre
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ITO MEA MERCOSUR MFA MFN MTN NAFTA PSE PSI S&D, SDT SAARC SDR SELA SPS TBT TMB TNC TPRB TPRM TRIMs TRIPS UN UNCTAD UNDP UNEP UPOV UR VER VRA WCO WIPO WTO
International Trade Organization Multilateral environmental agreement Southern Common Market Multifibre Arrangement (replaced by ATC) Most-favoured-nation Multilateral trade negotiations North American Free Trade Agreement Producer subsidy equivalent (agriculture) Pre-shipment inspection Special and differential treatment (for developing countries) South Asian Association for Regional Cooperation Special Drawing Rights (IMF) Latin American Economic System Sanitary and phytosanitary measures Technical barriers to trade Textiles Monitoring Body Trade Negotiations Committee Trade Policy Review Body Trade Policy Review Mechanism Trade-related investment measures Trade-related aspects of intellectual property rights United Nations UN Conference on Trade and Development UN Development Programme UN Environment Programme International Union for the Protection of New Varieties of Plants Uruguay Round Voluntary export restraint Voluntary restraint agreement World Customs Organization World Intellectual Property Organization World Trade Organization
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As per the discussion above about the WTO, we can say that the WTO is an institutional body which comes after the dissolution of GATT and its charter was mainly adopted from GATT. WTO is working for the global trade and reduction of trade barrier on boarders. It achieved its target in some areas. WTO main activity is for tariff reduction. In its early years it facing difficulty but after the Tokyo Round members countries come to the conclusion that most the members countries in the WTO are developing countries so they make different rule and regulation for the developing countries so that they can survive in the global trade to facilitate the participating countries. WTO also working for GATS and TRIPs these are the two other main areas of trade, that is service and intellectual property on which its previous body was not working. WTO is working upon for many other things. Its main motto is to reduce the trade barriers among the nations. In simple terms we can say that the World Trade Organisation deals with the rule of trade between nations at a global or near-global level. Its a place where member governments try to sort out the trade problems they face with each others. Its cover many areas from the date of its formation and still working on many areas.
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19. BIBLIOGRAPHY
Study Material of Financial Management - ICSI World Trade Organization Web Site
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