Regionalism vs.

multilateralism debate THE proliferation of regional trading blocs during the second half of the last century and their real impact on the multilateral trading system is emerging as a key issue for discussion at both the intellectual and policy levels. The emergence of the Eur opean Union, the North American Free Trade Agreement (NAFTA), the common market of the South American Southern Cone (MERCOSUR), the ASEAN Free Trade Area (AFTA), the Asia Pacific Economic Cooperation (APEC), the South Asian Free Trade Agreement (SAFTA), among others, have led to fears of fragmentation of the world economy into trading blocs, in antithesis to the multilateral free trade system represented by the World Trade Organisation (WTO). Has the recent regionalism or the wave of `new regionalism', as it has been termed, hindered multilateral trade, is the crucial question confronting economists and political scientists studying contemporary trends in world trade. Over the last 50 years, when the world emerged from the ravages of the Second World War, the challenge was to establish economic stability and strengthen the basis for future growth and prosperity. Contemporary history, however, points to a new set of ch allenges -- the need to manage a world of deepening integration. The growth of trade, investments, technology and communication increasingly link a world of countries at different levels of development and this, in turn, has expanded the frontiers of the multilateral trading system. The establishment of the WTO in January 1995 was symbol of the emergence of a more global economic order. If the international trading system saw the reinforcement of multilateralism in the conclusion of the Uruguay Round of Multilateral Trade Negotiations in 1994 and the establishment of the WTO, it also witnessed an almost parallel trend towards regionalis ation of the world economy. There has been a surge in regional trade agreements (RTAs) notified to the former General Agreement on Tariffs and Trade (GATT) and subsequently to the WTO. Till 1970, 77 RTAs were notified to the GATT and the number of notifications to the WTO grew to more than 160. Over the last decade, RTAs have proliferated, new pacts covering large geographical created, and established regional groups revitalised. More than 60 per cent of the world trade is now covered by regional pacts, and almost all major trading nations are now members of at least one regional trade agreement. This lends credence to the theory that regionalism is emerging as a parallel force to mul tilateralism in the international economic system. The multilateral trading system, as embodied in the GATT-47 and now the WTO, has completed more than 50 years of existence. The basic philosophy behind multilateralism is that open markets, non-discrimination and global competition in international trade are conducive to the national welfare of all countries. The key guiding principles of this system is `nondiscrimination', which is embodied in `Unconditional Most-Favoured Nation' (MFN) clause and `National Treatment' (Article 1 of the GATT).

With the successful conclusion of the Uruguay Round, resulting in the Marrakesh Agreement as a `single undertaking', multilateralism was given a fresh lease of life. The present system, as has been carried over to the WTO, is more far-reaching than the G ATT-47's mandate. Subjects such as agriculture, intellectual property rights, investment measures and services were brought under the umbrella of multilateral regulations. The history of post-World War regionalism can be categorised into two distinct phases -the pre-Cold War or the first phase, and the post-Cold War or the second phase. The first phase continued up to the 1960s and was largely confined to Western Europe (the European Economic Community EEC) in the developed world; and Latin America in the developing. In North America, regionalism remained virtually non-existent, with th e key economic power -- the US -- showing a strong commitment to the multilateral approach to trade policy. Curiously, though itself not supportive of regionalism, the US did act as an external federator to the process of integration in Western Europe be cause of the compulsions of Cold War politics. Except Europe, this phase of regionalism ebbed in the 1970s primarily because the attempts that had been made to liberalise trade among the members of various regional blocs had generally failed. In the following years, unilateral non-discriminatory trad e liberalisation became the order of the day and regionalism was relegated to the background. The second emergence of regionalism came about in the latter half of 1980s and had its starting ground in North America, wherein the most important development was the change in the approach of the US towards regionalism. Thus followed the US-Israel Free Trade Area, NAFTA, MERCOSUR, Australia-New Zealand Closer Economic Relations Agreement (ANZCERTA), AFTA, APEC, SAFTA, the Free Trade Area of the Americas (FTAA) and of course, the European Union which is also a case of near complete integration -- econo mic, political and strategic. A number of factors led countries to seek regional integration. Some looked for traditional trade gains through reciprocal exchange of concessions; others tried to increase their bargaining powers with third countries by entering into an RTA with common external barriers. Market access to a larger partner also emerged as a key motivating factor. The new wave of regionalism has engulfed all the major players in the world economy (to a lesser extent Japan); and the importance of trade blocs in increasing the bargaining potential of its members is gaining credibility. This poses challenges at both the intellectual and policy levels: Do RTAs stimulate growth and investments, facilitate technology transfer, induce political stability and cooperation in the concerned regions or do they divert trade in inefficient directions? Most important, do they c ontribute to or detract from the multilateral process? The answer, probably, includes all of these things, in different proportions and according to particular circumstances of each RTA.

The integration efforts, now underway in Europe, North and South America and the AsiaPacific, are likely to have a net positive impact on the pace of international economic integration. Not only does extra regional trade continue to be a priority for co untries in these trading blocs, the differences between what is happening in each of these groups are fundamental in defining their existing cross-border relationships and their future. Moreover, peer pressure is a key enforcement mechanism in the WTO an d countries generally forestall future conflicts by keeping their multilateral obligations in mind when administering RTAS. Economic integration within an area comprising several countries may not be inherently discriminatory or otherwise, but would rather depend on their orientation, which is guided by their provisions and influence on the trade policies of Third countries. An analysis of the history of post-war international trade reveals that RTAs are only one of several factors that propelled cross-border economic integration. Outside Western Europe, the story of regional economic integration (and disintegration at times) can be told with little reference to RTAs. While post-war RTAs have almost certainly made a net positive contribution to broader global economic integration, the record is much less favourable when it comes to careful observance of multilateral rules and efficient functioning of multilateral surv eillance procedures. This is a cause for concern because in absence of improved compliance to multilateral rules, one cannot be confident that RTAs will continue to play a supportive role. The perceived neglect of rules and procedures for RTAs not only s ets questionable precedents but also has an adverse impact on the credibility of the WTO. It is a monumental task to decisively resolve the regionalism versus multilateralism issue. Analysts of contemporary economic history generally agree that regional and global liberalisation have proceeded together and that they have tended to reinforce e ach other. The balance of evidence suggests that the interactions have largely been positive throughout the post-war period.

Trade Blocks and Treaties N.A.M Non Aligned Movement N.A.T.O North Atlantic Treaty Organization S.A.A.R.C South Asian Association for Regional Cooperation E.U European Union A.S.E.A.N Associates of Southeast Asian Nations W.T.O World Trade Organization W.H.O World Health Organization Non Aligned Movement

The Non-Aligned Movement (NAM) is an international organization of states considering themselves not formally aligned with or against any major power bloc. The movement is largely the brainchild of the first Indian Prime Minister Jawaharlal Nehru and Yugoslav president Josip Broz Tito. It was founded in April 1955; as of 2007, it has 118 members. The purpose of the organization as stated in the Havana Declaration of 1979 is to ensure "the national independence, sovereignty, territorial integrity and security of non-aligned countries" in their "struggle against imperialism, colonialism, neo-colonialism, racism, and all forms of foreign aggression, occupation, domination, interference or hegemony as well as against great power and bloc politics. They represent nearly two-thirds of the United Nations members and comprise 55 percent of the world population, particularly countries considered to be developing or part of the third world.

Since the end of the Cold War and the formal end of colonialism, the Non-aligned movement has been forced to redefine itself and reinvent its purpose in the current world system. A major question has been whether many of its foundational ideologies, principally national independence, territorial integrity, and the struggle against colonialism and imperialism, can be applied to contemporary issues. The movement has

emphasized its principles of multilateralism, equality, and mutual non-aggression in attempting to become a stronger voice for the global South, and an instrument that can be utilized to promote the needs of member nations at the international level and strengthen their political leverage when negotiating with developed nations.

In its efforts to advance Southern interests, the movement has stressed the importance of cooperation and unity amongst member states, but as in the past, cohesion remains a problem since the size of the organization and the divergence of agendas and allegiances present the ongoing potential for fragmentation. While agreement on basic principles has been smooth, taking definitive action vis--vis particular international issues has been rare, with the movement preferring to assert its criticism or support rather than pass hardline resolutions. The movement continues to see a role for itself, as in its view, the worlds poorest nations remain exploited and marginalized, no longer by opposing superpowers, but rather in a uni-polar world, and it is Western hegemony and neocolonialism that that the movement has really re-aligned itself against. It opposes foreign occupation, interference in internal affairs, and aggressive unilateral measures, but it has also shifted to focus on the socio-economic challenges facing member states, especially the inequalities manifested by globalization and the implications of neo-liberal policies. The non-aligned movement has identified economic underdevelopment, poverty, and social injustices as growing threats to peace and security. N.A.T.O North Atlantic Treaty Organization

The North Atlantic Treaty Organization (NATO) also called the (North) Atlantic Alliance, is a military alliance established by the signing of the North Atlantic Treaty on 4 April 1949. The NATO headquarters are in Brussels, Belgium, and the organization constitutes a system of collective defense whereby its member states agree to mutual defense in response to an attack by any external party.

For its first few years, NATO was not much more than a political association. However, the Korean War galvanized the member states, and an integrated military structure was

built up under the direction of two U.S. supreme commanders. The first NATO Secretary General, Lord Ismay, famously stated the organization's goal was "to keep the Russians out, the Americans in, and the Germans down". Doubts over the strength of the relationship between the European states and the United States ebbed and flowed, along with doubts over the credibility of the NATO defence against a prospective Soviet invasion - doubts that led to the development of the independent French nuclear deterrent and the withdrawal of the French from NATO's military structure from 1966.

After the fall of the Berlin Wall in 1989, the organization became drawn into the Balkans while building better links with former potential enemies to the east, which culminated With several former Warsaw Pact states joining the alliance in 1999 and 2004. Since the September 11, 2001 terrorist attacks, NATO has attempted to refocus itself to new challenges and has deployed troops to Pakistan and Afghanistan and trainers to Iraq.

The Berlin Plus agreement is a comprehensive package of agreements made between NATO and the EU on 16 December 2002. With this agreement the EU was given the possibility to use NATO assets in case it wanted to act independently in an international crisis, on the condition that NATO itself did not want to act the so-called "right of first refusal". Only if NATO refused to act would the EU have the option to act. The combined military spending of all NATO members constitutes over 70% of the world's defense spending, with the United States alone accounting for about half the total military spending of the world and the United Kingdom and France accounting for a further 10%.

S.A.A.R.C South Asian Association for Regional Cooperation

The South Asian Association for Regional Cooperation (SAARC) is an economic and political organization of eight countries in Southern Asia. In terms of population, its sphere of influence is the largest of any regional organization: almost 1.5 billion people, the combined population of its member states. It was established on December 8, 1985 by

India, Pakistan, Bangladesh, Sri Lanka, Nepal, Maldives and Bhutan. In April 2007, at the Association's 14th summit, Afghanistan became its eighth member. The Agreement on SAARC Preferential Trading Arrangement (SAPTA)[26] was signed on 11 April 1993 and entered into force on 7 December 1995, with the desire of the Member States of SAARC (India, Pakistan, Nepal, Sri Lanka, Bangladesh, Bhutan and the Maldives) to promote and sustain mutual trade and economic cooperation within the SAARC region through the exchange of concessions. The establishment of an InterGovernmental Group (IGG) to formulate an agreement to establish a SAPTA by 1997 was approved in the Sixth Summit of SAARC held in Colombo in December 1991. The basic principles underlying SAPTA are: 1. Overall reciprocity and mutuality of advantages so as to benefit equitably all Contracting States, taking into account their respective level of economic and industrial development, the pattern of their external trade, and trade and tariff policies and systems; 2. Negotiation of tariff reform step by step, improved and extended in successive stages through periodic reviews; 3. Recognition of the special needs of the Least Developed Contracting States and agreement on concrete preferential measures in their favor. 4. Inclusion of all products, manufactures and commodities in their raw, semiprocessed and processed forms. So far, four rounds of trade negotiations have been concluded under SAPTA covering over 5000 commodities.

E.U European Union

The European Union (EU) is an economic and political union of 27 member states, located primarily in Europe. It was established by the Treaty of Maastricht on 1 November 1993 upon the foundations of the pre-existing European Economic Community. With almost 500 million citizens, the EU combined generates an estimated 30% share (US$16.8 trillion in 2007) of the nominal gross world product.

The EU has developed a single market through a standardized system of laws which apply in all member states, guaranteeing the freedom of movement of people, goods, services and capital. It maintains a common trade policy, agricultural and fisheries policies, and a regional development policy. Sixteen member states have adopted a common currency, the euro. It has developed a role in foreign policy, representing its members in the World Trade Organization, at G8 summits, and at the United Nations. Twenty-one EU countries are members of NATO. The EU has developed a role in justice and home affairs, including the abolition of passport controls between many member states under the Schengen Agreement, which incorporates also non-EU states.

The EU operates through a hybrid system of intergovernmental and supranational. In certain areas it depends upon agreement between the member states. However, it also has supranational bodies, able to make decisions without unanimity between all national governments. Important institutions and bodies of the EU include the European Commission, the European Parliament, the Council of the European Union, the European Council, the European Court of Justice and the European Central Bank. EU citizens elect the Parliament every five years. A.S.E.A.N Associates of Southeast Asian Nations

The Association of Southeast Asian Nations is a geo-political and economic organization of 10 countries located in Southeast Asia, which was formed on 8 August 1967 by Indonesia, Malaysia, the Philippines, Singapore and Thailand. Since then, membership has expanded to include Brunei, Cambodia, Laos, Myanmar, and Vietnam. Its aims include the acceleration of economic growth, social progress, cultural development among its members, the protection of the peace and stability of the region, and to provide opportunities for member countries to discuss differences peacefully.

Western countries have criticized ASEAN for being too soft in its approach to promoting human rights and democracy in the junta-led Myanmar. Despite global outrage at the

military crack-down on peaceful protesters in Yangon, ASEAN has refused to suspend Myanmar as a member and also rejects proposals for economic sanctions. This has caused concern as the European Union, a potential trade partner, has refused to conduct free trade negotiations at a regional level for these political reasons. International observers view it as a "talk shop", which implies that the organization is "big on words but small on action". During the 12th ASEAN Summit in Cebu, several activist groups staged anti-globalization and anti-Arroyo rallies. According to the activists, the agenda of economic integration would negatively affect industries in the Philippines and would cause thousands of Filipinos to lose their jobs. They also viewed the organization as imperialistic that threatens the country's sovereignty. A human rights lawyer from New Zealand was also present to protest about the human rights situation in the region in general.

ASEAN has agreed to an ASEAN human rights body which will come into force in 2009. The Philippines, Malaysia, Indonesia and Thailand want this body to have an enforcement capacity; however Singapore, Vietnam, Burma, Laos and Cambodia do not. W.T.O World Trade Organization

The World Trade Organization (WTO) is an international organization designed to supervise and liberalize international trade. The WTO came into being on 1 January 1995, and is the successor to the General Agreement on Tariffs and Trade (GATT), which was created in 1947, and continued to operate for almost five decades as a de facto international organization.

The World Trade Organization deals with the rules of trade between nations at a nearglobal level; it is responsible for negotiating and implementing new trade agreements, and is in charge of policing member countries' adherence to all the WTO agreements, signed by the majority of the world's trading nations and ratified in their parliaments. Most of the issues that the WTO focuses on derive from previous trade negotiations, especially from the Uruguay Round. The organization is currently working with its

members on a new trade negotiation called the Doha Development Agenda (Doha round), launched in 2001.

The WTO has 153 members, which represents more than 95% of total world trade. The WTO is governed by a Ministerial Conference, which meets every two years; a General Council, which implements the conference's policy decisions and is responsible for dayto-day administration; and a director-general, who is appointed by the Ministerial Conference. The WTO's headquarters is in Geneva, Switzerland.

The stated aim of the WTO is to promote free trade and stimulate economic growth. Critics argue that free trade leads to a divergence instead of convergence of income levels within rich and poor countries (the rich get richer and the poor get poorer). Martin Khor, Director of the Third World Network, argues that the WTO does not manage the global economy impartially, but in its operation has a systematic bias toward rich countries and multinational corporations, harming smaller countries which have less negotiation power. He argues that developing countries have not benefited from the WTO Agreements of the Uruguay Round, because (among other reasons): market access in industry has not improved; these countries have had no gains yet from the phasing out of textiles quotas; non-tariff barriers such as anti-dumping measures have increased; and domestic support and export subsidies for agricultural products in the rich countries remain high. Jagdish Bhagwati asserts however that there is greater tariff protection on manufacturers in the poor countries, which are also overtaking the rich nations in the number of anti-dumping filings.

Study of worlds institutions fostering international trade: United Nations Organizations UNDP, UNCTAD, World Bank, IMF, GATT and GATS

UNDP The United Nations Development Programme (UNDP) is the United Nations' global development network. The UNDP is an executive board within the United Nations General Assembly. The UNDP Administrator is the third highest ranking member of the United Nations after the United Nations Secretary-General and Deputy SecretaryGeneral. The position of Administrator is chosen by the Secretary-General of the UN. Headquartered in New York City, the UNDP is funded entirely by voluntary contributions from member nations. The organization has country offices in 166 countries, where it works with local governments to meet development challenges and develop local capacity. Additionally, the UNDP works internationally to help countries achieve the Millennium Development Goals (MDGs). UNDP provides expert advice, training, and grant support to developing countries, with increasing emphasis on assistance to the least developed countries. To accomplish the MDGs and encourage global development, UNDP focuses on poverty reduction, HIV/AIDS, democratic governance, energy and environment, and crisis prevention and recovery. UNDP also encourages the protection of human rights and the empowerment of women in all of its programs. Furthermore, UNDP publishes an annual Human Development Report to measure and analyze developmental progress. In addition to a global Report, UNDP publishes regional, national, and local Human Development Reports. UNDP plays a significant co-ordination role for the UNs activities in the field of development. This is mainly executed through its leadership of the UN Development Group and through the Resident Co-ordinator System UNDP was founded in 1965 to combine the Expanded Programme of Technical Assistance and the United Nations Special Fund. In 1971, the two organizations were fully combined into the UNDP. In 2005, UNDPs entire budget was approximately $4.44 billion. Of that total, core, unrestricted financing reached approximately $921 million. Non-core, earmarked contributions grew to over $2.5 billion, and resources to support countries own development programs totaled $1.02 billion.

UNDPs offices and staff are on the ground in 166 countries, working with governments and local communities to help them find solutions to global and national development challenges. UNDP links and coordinates global and national efforts to achieve the goals and national development priorities laid out by host countries. UNDP focuses primarily on five developmental challenges: 1. Democratic governance - UNDP supports national democratic transitions by providing policy advice and technical support, improving institutional and individual capacity within countries, educating populations about and advocating for democratic reforms, promoting negotiation and dialogue, and sharing successful experiences from other countries and locations. UNDP also supports existing democratic institutions by increasing dialogue, enhancing national debate, and facilitating consensus on national governance programs. 2. Poverty reduction - UNDP helps countries develop strategies to combat poverty by expanding access to economic opportunities and resources, linking poverty programs with countries larger goals and policies, and ensuring a greater voice for the poor. UNDP also works at the macro level to reform trade, encourage debt relief and foreign investment, and ensure the poorest of the poor benefit from globalisation. On the ground, UNDP sponsors developmental pilot projects, promotes the role of women in development, and coordinates efforts between governments, NGOs, and outside donors. In this way, UNDP works with local leaders and governments to provide opportunities for impoverished people to create businesses and improve their economic condition. 3. Crisis prevention and recovery UNDP works to reduce the risk of armed conflicts or disasters, and promote early recovery after crises have occurred. UNDP works through its country offices to support local government in needs assessment, capacity development, coordinated planning, and policy and standard setting. Examples of UNDP risk reduction programs include efforts to control small arms proliferation, strategies to reduce the impact of natural disasters, and programs to encourage use of diplomacy and prevent violence. Recovery programs include disarmament, demobilization and reintegration of excombatants, demining efforts, programs to reintegrate displaced persons, restoration of basic services, and transitional justice systems for countries recovering from warfare. 4. Environment and Energy - As the poor are disproportionately affected by environmental degradation and lack of access to clean, affordable energy services, UNDP seeks to address environmental issues in order to improve developing countries abilities to develop sustainably. UNDP works with countries to strengthen their capacity to address global environmental issues by providing innovative policy advice and linking partners through environmentally sensitive

development projects that help poor people build sustainable livelihoods. UNDPs environmental strategy focuses on effective water governance, access to sustainable energy services, Sustainable land management to combat desertification and land degradation, conservation and sustainable use of biodiversity, and policies to control emissions of harmful pollutants and ozonedepleting substances. 5. HIV/AIDS - HIV/AIDS is a big issue in today's society and UNDP works to help countries prevent further spreading and reduce its impact. The United Nations Development Group (UNDG) was created by the Secretary General in 1997, to improve the effectiveness of UN development at the country level. The UNDG brings together the operational agencies working on development. The Group is chaired by the Administrator of UNDP. UNDP also provides the Secretariat to the Group. The UNDP has been criticized by members of its staff and the Government of the USA for irregularities in its finances in North Korea. Artjon Shkurtaj claimed that he had found forged US dollars in the Programmes safe while the staff was paid in Euros. The UNDP denied any wrongdoing, and keeping improper accounts. On 5 May 2005, the United Nations General Assembly unanimously confirmed Kemal Dervi, a former finance minister of Turkey and senior World Bank official, as UNDP Administrator. Dervi started his four-year term on 15 August 2005.

UNCTAD

The United Nations Conference on Trade and Development (UNCTAD) was established in 1964 as a permanent intergovernmental body. It is the principal organ of the United Nations General Assembly dealing with trade, investment and development issues. The organization's goals are to "maximize the trade, investment and development opportunities of developing countries and assist them in their efforts to integrate into the world economy on an equitable basis." The creation of the conference was based on concerns of developing countries over the international market, multi-national corporations, and great disparity between developed nations and developing nations. UNCTAD has progressively evolved into an authoritative knowledge-based institution whose work aims to help shape current policy debates and thinking on development, with a particular focus on ensuring that domestic policies and international action are mutually supportive in bringing about sustainable development. The organization works to fulfill this mandate by carrying out three key functions:

It functions as a forum for intergovernmental deliberations, supported by discussions with experts and exchanges of experience, aimed at consensus building. It undertakes research, policy analysis and data collection for the debates of government representatives and experts. It provides technical assistance tailored to the specific requirements of developing countries, with special attention to the needs of the least developed countries and of economies in transition. When appropriate, UNCTAD cooperates with other organizations and donor countries in the delivery of technical assistance.

The Secretary-General of UNCTAD is Dr. Supachai Panitchpakdi (Thailand), who took office on 1 September 2005. In performing its functions, the secretariat works together with member Governments and interacts with organizations of the United Nations system and regional commissions, as well as with governmental institutions, non-governmental organizations, the private sector, including trade and industry associations, research institutes and universities worldwide In the 1970s and 1980s, UNCTAD was closely associated with the idea of a New International Economic Order (NIEO). Currently, UNCTAD has 193 member States and is headquartered in Geneva, Switzerland. UNCTAD has 400 staff members and an annual regular budget of approximately US$50 million and US$25 million of extra budgetary technical assistance funds. The inter-governmental work is done at 5 levels of meetings:

The UNCTAD Conference - held every 4 years The UNCTAD Trade and Development Board - the Board manages the work of UNCTAD in between two Conferences and meets up to three times every year Four UNCTAD Commissions and one Working Party - these meet more often than the Board in order to take up policy, programme and budgetary issues Expert Meetings - the Commissions will convene expert meetings on selected topics in order to provide substantive and expert input for Commission policy discussions.

UNCTAD produces a number of topical reports, including: the Trade and Development Report, the Trade and Environment Review, the World Investment Report, the Economic Development in Africa Report, the Least Developed Countries Report, UNCTAD Statistics, the Information Economy Report, the Review of Maritime Transport and the International Accounting and Reporting Issues Annual Review

In October 2005, UNCTAD created the Panel of Eminent Persons "to enhance the development role and impact of UNCTAD." The panel had eight eminent persons who were "knowledgeable of development issues and with international standing in the field." It advised the UNCTAD Secretary-General and examined the best strategies for UNCTAD to meet its development mission and mandates. UNCTAD also conducts various technical cooperation programmes such as ASYCUDA, DMFAS, EMPRETEC and WAIPA. In addition, UNCTAD conducts certain technical cooperation in collaboration with the World Trade Organization through the joint International Trade Centre (ITC), a technical cooperation agency targeting operational and enterprise-oriented aspects of trade development. UNCTAD also hosts the Intergovernmental Working Group of Experts on International Standards of Accounting and Reporting (ISAR).

World Bank

The World Bank is a bank that provides financial and technical assistance to developing countries for development programs (e.g. bridges, roads, schools, etc.) with the stated goal of reducing poverty. The World Bank comprises only two institutions:

International Bank for Reconstruction and Development (IBRD) International Development Association (IDA)

The World Bank was created following the ratification of the United Nations Monetary and Financial Conference of the Bretton Woods agreement. The concept was originally conceived in July 1944 at the United Nations Monetary and Financial Conference. Two years later, the Bank issued its first loan: US$250 million to France for post-war reconstruction, the main focus of the Bank's work in the early post-World War II years. Over time, the "development" side of the Bank's work has assumed a larger share of its lending, although it is still involved in post-conflict reconstruction, together with reconstruction after natural disasters, response to humanitarian emergencies and postconflict rehabilitation needs affecting developing and transition economies. There were criticisms of the results of the World Bank's "development schemes" leading to corruption and widespread exploitation by the corporations who are given monopolies of developing nations' resources. The World Bank is one of the two Bretton Woods Institutions which were created in 1944 to rebuild a war-torn Europe after World War II. Later, largely due to the contributions of the Marshall Plan, the World Bank was forced to find a new area in which to focus its efforts. Subsequently, it began attempting to rebuild the infrastructure of Europe's former colonies. Since then it has made a variety of changes regarding its

focus and goals. From 1968-1981 it focused largely on poverty alleviation. In the 1980s and 1990s its main focus was both debt management and structural adjustment. The World Bank's current focus is on the achievement of the Millennium Development Goals (MDGs), lending primarily to "middle-income countries" at interest rates which reflect a small mark-up over its own (AAA-rated) borrowings from capital markets; while the IDA provides low or no interest loans and grants to low income countries with little or no access to international credit markets. The IBRD is a market based non-profit organization, using its high credit rating to make up for the relatively low interest rate on its loans, while the IDA is funded primarily by periodic "replenishments" (grants) voted to the institution by its more affluent member countries. The Banks mission is to aid developing countries and their inhabitants to achieve development and the reduction of poverty, including achievement of the MDGs, by helping countries develop an environment for investment, jobs and sustainable growth, thus promoting economic growth through investment and enabling the poor to share the fruits of economic growth. The World Bank sees the five key factors necessary for economic growth and the creation of an enabling business environment as: 1. Build capacity - Strengthening governments and educating government officials. 2. Infrastructure creation - implementation of legal and judicial systems for the encouragement of business, the protection of individual and property rights and the honoring of contracts. 3. Development of Financial Systems - the establishment of strong systems capable of supporting endeavors from micro credit to the financing of larger corporate ventures. 4. Combating corruption - Support for countries' efforts at eradicating corruption. 5. Research, Consultancy and Training - the World Bank provides platform for research on development issues, consultancy and conduct training programs (web based, on line, tele/video conferencing and class room based) open for those who are interested from academia, students, government and non-governmental organization (NGO) officers etc. The Bank obtains funding for its operations primarily through the IBRDs sale of AAArated bonds in the worlds financial markets. The IBRDs income is generated from its lending activities, with its borrowings leveraging its own paid-in capital, plus the investment of its "float". The IDA obtains the majority of its funds from forty donor countries who replenish the banks funds every three years, and from loan repayments, which then become available for re-lending. The Bank offers two basic types of loans: investment loans and development policy loans. The former are made for the support of economic and social development projects, whereas the latter provide quick disbursing finance to support countries policy and institutional reforms. While the IBRD provides loans with a relatively low interest rate, the IDAs "credits" are interest free. The project proposals of borrow ers are evaluated for their economical, financial, social and environmental aspects prior to their approval.

The Bank also distributes grants for the facilitation of development projects through the encouragement of innovation, cooperation between organizations and the participation of local stakeholders in projects. The Bank not only provides financial support to its member states, but also analytical and advisory services to facilitate the implementation of the lasting economic and social improvements that are needed in many under-developed countries, as well as educating members with the knowledge necessary to resolve their development problems while promoting. The President of the Bank, currently Robert B. Zoellick, is responsible for chairing the meetings of the Boards of Directors and for overall management of the Bank. The Executive Directors make up the Board of Directors, usually meeting twice a week to oversee activities such as the approval of loans and guarantees, new policies, the administrative budget, country assistance strategies and borrowing and financing decisions. International Bank for Reconstruction and Development (IBRD) has 185 member countries, while the International Development Association (IDA) has 168 members. Each member state of IBRD should be also a member of the International Monetary Fund (IMF) and only members of IBRD are allowed to join other institutions within the Bank (such as IDA). Since 1999, it has followed a set of philosophies known as the Comprehensive Development Framework. These philosophies state that:

Development strategies should be comprehensive and shaped by a long-term vision Development goals and strategies should be owned by the country, based on local stakeholder participation in shaping them Countries receiving assistance should lead the management and coordination of aid programs through stakeholder partnerships Development performance should be evaluated through measurable results on the ground in order to adjust the strategy to outcomes and a changing world

For the poorest developing countries in the world the Banks assistance plans are based on Poverty Reduction Strategies; by combining a cross-section of local groups with an extensive analysis of the countrys financial and economical situation the World Bank develops a strategy pertaining uniquely to the country in question. The government then identifies the countrys priorities and targets for the reduction of poverty, and the World Bank aligns its aid efforts correspondingly. The Bank supports certain kinds of poor people's organizations such as the Self-Employed Women's Union and Shack/Slum Dwellers International. The World Bank has been assigned temporary management responsibility of the Clean Technology Fund (CTF), focused on making renewable energy cost-competitive with

coal-fired power as quickly as possible, but this may not continue after UN's Copenhagen climate change conference in December, 2009, because of its continued investment in coal-fired power plants. The World Bank Institute (WBI) creates learning opportunities for countries, World Bank staff and clients, and people committed to poverty reduction and sustainable development. WBI's work program includes training, policy consultations, and the creation and support of knowledge networks related to international economic and social development. The Global Development Learning Network (GDLN) is a partnership of over 120 learning centers (GDLN Affiliates) in nearly 80 countries around the world. GDLN Affiliates collaborate in holding events that connect people across countries and regions for learning and dialogue on development issues. Offering a combination of distance learning tools such as interactive videoconferencing and the internet, and expert facilitation and learning techniques, GDLN Affiliates enable individuals, teams, and organizations working in development around the world to communicate, share knowledge, and learn from each others experiences in a timely and cost-effective manner. As a guideline to the World Bank's operations in any particular country, a Country Assistance Strategy is produced, in cooperation with the local government and any interested stakeholders and may rely on analytical work performed by the Bank or other parties. In the case of low income countries, the Country Assistance Strategy is derived from the countrys Poverty Reduction Some critics of the World Bank believe that the institution was not started in order to reduce poverty but rather to support United States' business interests, and argue that the bank has actually increased poverty and been detrimental to the environment, public health, and cultural diversity. Some critics also claim that the World Bank has consistently pushed a "neo-liberal" agenda, imposing policies on developing countries which have been damaging, destructive and anti-developmental. Some intellectuals in developing countries have argued that the World Bank is deeply implicated in contemporary modes of donor and NGO driven imperialism and that its intellectual output functions to blame the poor for their condition. The World Bank supported from the beginning the Brazilian Castello Brancos authoritarian-rightist government, supplying it with a $80 million loan for power projects. It has also been suggested that the World Bank is an instrument for the promotion of U.S. or Western interests in certain regions of the world. Consequently, seven South American nations have established the Bank of the South in order to minimize U.S. influence in the region. Criticisms of the structure of the World Bank refer to the fact that the President of the Bank is always a citizen of the United States, nominated by the President of the United States (though subject to the approval of the other member countries). There have been accusations that the decision-making structure is undemocratic, as the U.S. effectively has a veto on some constitutional decisions with just over 16% of the shares in

the bank; moreover, decisions can only be passed with votes from countries whose shares total more than 85% of the bank's shares. A further criticism concerns internal governance and the manner in which the World Bank is alleged to lack transparency to external publics. In 2008, a World Bank report which found that biofuels had driven food prices up 75% was not published. Officials confided that they believed it was withheld from publication to avoid embarrassing for the former President of the United States, George W. Bush. The World Bank also plays an important role in many conspiracy theories such as the New World Order, where it is accused to be a catalyst for the growing global social disparity aiming at the financial enslavement of the western world, matching conditions with the third world, through the control of global monetary policies.

IMF

The International Monetary Fund (IMF) is an international organization of 185 countries that oversees the global financial system by following the macroeconomic policies of its member countries, in particular those with an impact on exchange rates and the balance of payments. It is an organization formed to stabilize international exchange rates and facilitate development. It also offers financial and technical assistance to its members, making it an international lender of last resort. Its headquarters are located in Washington, D.C., USA. The IMF is working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world. The IMF was created in 1944 during the United Nations Monetary and Financial Conference, with a goal to stabilize exchange rates and assist the reconstruction of the world's international payment system. Countries contributed to a pool which could be borrowed from, on a temporary basis, by countries with payment imbalances. With the exception of Taiwan, North Korea, Cuba, Andorra, Monaco, Liechtenstein, Tuvalu, and Nauru, all UN member states participate directly in the IMF. Most are represented by other member states on a 24-member Executive Board but all member countries belong to the IMF's Board of Governors. The IMF's influence in the global economy steadily increased as it accumulated more members. The number of IMF member countries has more than quadrupled from the 44 states involved in its establishment, reflecting in particular the attainment of political independence by many developing countries and more recently the collapse of the Soviet bloc. The expansion of the IMF's membership, together with the changes in the world economy, have required the IMF to adapt in a variety of ways to continue serving its purposes effectively.

In 1995, the International Monetary Fund began work on data dissemination standards with the view of guiding IMF member countries to disseminate their economic and financial data to the public. The International Monetary and Financial Committee (IMFC) endorsed the guidelines for the dissemination standards and they were split into two tiers: The General Data Dissemination System (GDDS) and the Special Data Dissemination Standard (SDDS). The primary objective of the GDDS is to encourage IMF member countries to build a framework to improve data quality and increase statistical capacity building. This will involve the preparation of metadata describing current statistical collection practices and setting improvement plans. Upon building a framework, a country can evaluate statistical needs, set priorities in improving the timeliness, transparency, reliability and accessibility of financial and economic data.Some countries initially used the GDDS, but lately upgraded to SDDS. Any country may apply for membership to the IMF. The application will be considered first by the IMF's Executive Board. After its consideration, the Executive Board will submit a report to the Board of Governors of the IMF with recommendations in the form of a "Membership Resolution." Similarly, any member country can withdraw from the Fund, although that is rare. A member's quota in the IMF determines the amount of its subscription, its voting weight, its access to IMF financing, and its allocation of Special Drawing Rights (SDRs). The United States has exclusive veto power. A member state cannot unilaterally increase its quota increases must be approved by the Executive Board and are linked to formulas that include many variables such as the size of a country in the world economy. Two criticisms from economists of IMF have been that financial aid is always bound to so-called "Conditionalities", including Structural Adjustment Programs. Conditionalities, which are the economic performance targets established as a precondition for IMF loans, it is claimed, retard social stability and hence inhibit the stated goals of the IMF, while Structural Adjustment Programs lead to an increase in poverty in recipient countries. The IMF sometimes advocates "austerity programmes," increasing taxes even when the economy is weak, in order to generate government revenue and balance budget deficits, which is the opposite of Keynesian policy. Overall the IMF success record is perceived as limited. While it was created to help stabilize the global economy, since 1980 critics claim over 100 countries (or reputedly most of the Fund's membership) have experienced a banking collapse that they claim have reduced GDP by four percent or more, far more than at any time in Post-Depression history. The considerable delay in the IMF's response to any crisis, and the fact that it tends to only respond to them or even create them rather than prevent them, has led many economists to argue for reform.

The IMF frequently advocates currency devaluation, criticized by proponents of supplyside economics as inflationary. Secondly they link higher taxes under "austerity programmes" with economic contraction. Currency devaluation is recommended by the IMF to the governments of poor nations with struggling economies. Some economists claim these IMF policies are destructive to economic prosperity. Complaints are also directed toward International Monetary Fund gold reserve being undervalued. Whatever the feelings people in the Western world have for the IMF, research by the Pew Research Center shows that more than 60 percent of Asians and 70 percent of Africans feel that the IMF and the World Bank have a positive effect on their country. However it is pertinent to note that the survey aggregated international organizations including the World Trade Organization. Also, a similar percentage of people in the Western world believed that these international organizations had a positive effect on their countries. In 2005, the IMF was the first multilateral financial institution to implement a sweeping debt-relief program for the world's poorest countries known as the Multilateral Debt Relief Initiative. By year-end 2006, 23 countries mostly in sub-Saharan Africa and Central America had received total relief of debts owed the IMF.

GATT The General Agreement on Tariffs and Trade (GATT) was the outcome of the failure of negotiating governments to create the International Trade Organization (ITO). GATT was formed in 1947 and lasted until 1994, when it was replaced by the World Trade Organization. The Bretton Woods Conference had introduced the idea for an organization to regulate trade as part of a larger plan for economic recovery after World War II. As governments negotiated the ITO, 15 negotiating states began parallel negotiations for the GATT as a way to attain early tariff reductions. Once the ITO failed in 1950, only the GATT agreement was left. GATT's main objective was the reduction of barriers to international trade. This was achieved through the reduction of tariff barriers, quantitative restrictions and subsidies on trade through a series of agreements. The GATT was a treaty, not an organization. The functions of the GATT were taken over by the World Trade Organization which was established during the final round of negotiations in early 1990s. The history of the GATT can be divided into three phases: the first, from 1947 until the Torquay Round, largely concerned which commodities would be covered by the agreement and freezing existing tariff levels. A second phase, encompassing three rounds, from 1959 to 1979, focused on reducing tariffs. The third phase, consisting only of the Uruguay Round from 1986 to 1994, extended the agreement fully to new areas such as intellectual property, services, capital, and agriculture. Out of this round the WTO was born. GATT signatories occasionally negotiated new trade agreements that all countries would enter into. Each set of agreements was called a round. In general, each agreement bound

members to reduce certain tariffs. Usually this would include many special-case treatments of individual products, with exceptions or modifications for each country. GATT held a total of 8 rounds. 1. Geneva Round 1948 The first round took place in 1947 when the GATT was signed. It achieved 45,000 tariff concessions affecting $10 billion of trade. 23 countries took part in it. 2. Annecy Round - 1950 The second round took place in 1949 in Annecy, France. 13 countries took part in the round. The main focus of the talks was more tariff reductions, around 5000 total. 3. Torquay Round - 1951 The third round occurred in Torquay, England in 1951. 38 countries took part in the round. 8,700 tariff concessions were made totaling the remaining amount of tariffs to three-fourths of the tariffs which were in effect in 1948. The contemporaneous rejection by the United States of the Havana Charter signified the establishment of the GATT as a governing world body.[4] 4. Geneva Round - 1955-1956 The fourth round returned to Geneva in 1955 and lasted until May 1956. 26 countries took part in the round. $2.5 billion in tariffs were eliminated or reduced. 5. Dillon Round - 1960-1962 The fifth round occurred once more in Geneva and lasted from 1960 to 1962. The talks were named after U.S. Treasury Secretary and former Under Secretary of State, Douglas Dillon, who first proposed the talks. 26 countries took part in the round. Along with reducing over $4.9 billion in tariffs, it also yielded discussion relating to the creation of the European Economic Community (EEC). 6. Kennedy Round - 1964-1967 The sixth round was the last to take place in Geneva from 1964 until 1967 and was named after the late US President Kennedy in his memory. 66 countries[5] took part in the round. Concessions were made on $40 billion worth of tariffs. Some of the GATT negotiation rules were also more clearly defined.

7. Tokyo Round - 1973-1979 Reduced tariffs and established new regulations aimed at controlling the proliferation of non-tariff barriers and voluntary export restrictions. 102 countries countries took part in the round. Concessions were made on $190 billion worth. 8. Uruguay Round - 1986-1993 The Uruguay Round began in 1986. It was the most ambitious round to date, hoping to expand the competence of the GATT to important new areas such as services, capital, intellectual property, textiles, and agriculture. 123 countries took part in the round. Agriculture was essentially exempted from previous agreements as it was given special status in the areas of import quotas and export subsidies, with only mild caveats. However, by the time of the Uruguay round, many countries considered the exception of agriculture to be sufficiently glaring that they refused to sign a new deal without some movement on agricultural products. These fourteen countries came to be known as the "Cairns Group", and included mostly small and medium sized agricultural exporters such as Australia, Brazil, Canada, Indonesia, and New Zealand. The Agreement on Agriculture of the Uruguay Round continues to be the most substantial trade liberalization agreement in agricultural products in the history of trade negotiations. The goals of the agreement were to improve market access for agricultural products, reduce domestic support of agriculture in the form of price-distorting subsidies and quotas, and eliminate over time export subsidies on agricultural products and to harmonize to the extent possible sanitary and phystosanitary measures between member countries.

GATS

The General Agreement on Trade in Services (GATS) is a treaty of the World Trade Organization (WTO) that entered into force in January 1995 as a result of the Uruguay Round negotiations. The treaty was created to extend the multilateral trading system to service sector, in the same way the General Agreement on Tariffs and Trade (GATT) provides such a system for merchandise trade. All members of the WTO are signatories to the GATS. The basic WTO principle of most favoured nation (MFN) applies to GATS as well. However, upon accession, members may introduce temporary exemptions to this rule. Before the WTO's Uruguay Round negotiations began in 1986, public services such as healthcare, postal services, education, etc. were not included in international trade agreements. Most such services have traditionally been classed as domestic activities, difficult to trade across borders, notwithstanding the fact that for example educational

services have been "exported" for as long as universities have been open to international students. By definition, given their infrastructural and social importance, public services have been the domain of public (government) ownership, funding, and control. Moreover such sectors - health, education, water supply, etc. - being funded by the taxpayer, in most countries have been considered as the responsibility of government and not to be left to the vagaries of markets and private companies running them for profit rather than in the public interest. Nevertheless, some service sectors in particular, international finance and maritime transport has been largely open for centuries, as necessary components of merchandise trade. Other large sectors have undergone fundamental technical and regulatory changes in recent decades, opening them to private commercial participation and reducing barriers to entry. The development of information technologies and the internet have expanded the range of internationally tradable service products to include a range of commercial activities such as medicine, distance learning, engineering, architecture, advertising and freight forwarding. While the overall goal of the GATS is to remove barriers to trade, members are free to choose which sectors are to be progressively liberalised, under which mode of supply a particular sector would be covered under, and to what extent to which liberalisation will occur over a given period of time. Members' commitments are governed by a "ratchet effect", meaning that commitments are one-way and should not be wound back once entered into. Article XXI allows Members to withdraw commitments and so far two members have used this option (USA and EU). In November 2008, Bolivia notified that it will withdraw its health services commitments. Some activist groups consider that the GATS risks undermining the ability and authority of governments to regulate commercial activities within their boundaries, with the effect of ceding power to business interests over the interests of citizens. The GATS agreement covers four modes of supply for the delivery of services in crossborder trade:

Criteria

Supplier Presence

Service delivered within the territory of the Service supplier not Mode1: CrossMember, from the territory of another present within the border supply Member territory of the member

Mode2: Consumption abroad

Service delivered outside the territory of the Member, in the territory of another Member, to a service consumer of the Member

Mode3: Commercial presence

Service delivered within the territory of the Member, through the commercial presence of the supplier

Service delivered within the territory of the Mode4: Presence Member, with supplier present as a natural of a natural person person

Service supplier present within the territory of the Member

The GATS document has been criticized for tending to substitute the authority of national legislation and judiciary with that of a GATS Disputes Panel conducting closed hearings. WTO member-government spokespersons are obliged to dismiss such criticism because of prior commitment to perceived benefits of prevailing commercial principles of competition and 'liberalisation'. While national governments have an option to exclude any specific service from liberalisation under the GATS, they are also under international pressure, from business interests, to refrain from so excluding any service "provided on a commercial basis". However, important public utilities including water and electricity supply most commonly involve purchase by consumers and are thus demonstrably "provided on a commercial basis". The same may be said of many health and education services which are sought to be 'exported' by some countries as profitable industries.

WTO: History, cause, concept and mission

World Trade Organization The World Trade Organization (WTO) is an international organization designed to supervise and liberalize international trade. The WTO came into being on 1 January 1995, and is the successor to the General Agreement on Tariffs and Trade (GATT), which was created in 1947, and continued to operate for almost five decades as a de facto international organization. The World Trade Organization deals with the rules of trade between nations at a nearglobal level; it is responsible for negotiating and implementing new trade agreements, and is in charge of policing member countries' adherence to all the WTO agreements, signed by the majority of the world's trading nations and ratified in their parliaments Most of the issues that the WTO focuses on derive from previous trade negotiations, especially from the Uruguay Round. The organization is currently working with its members on a new trade negotiation called the Doha Development Agenda (Doha round), launched in 2001. The WTO has 153 members, which represents more than 95% of total world trade. The WTO is governed by a Ministerial Conference, which meets every two years; a General Council, which implements the conference's policy decisions and is responsible for dayto-day administration; and a director-general, who is appointed by the Ministerial Conference. The WTO's headquarters is in Geneva, Switzerland. History (GATT covered in earlier pages) Ministerial conferences First ministerial conference The inaugural ministerial conference was held in Singapore in 1996. Disagreements between largely developed and developing economies emerged during this conference

over four issues initiated by this conference, which led to them being collectively referred to as the "Singapore issues". Second ministerial conference This was held in Geneva in Switzerland. Third ministerial conference The third conference in Seattle, Washington ended in failure, with massive demonstrations and police and National Guard crowd control efforts drawing worldwide attention. Fourth ministerial conference This was held in Doha in Persian Gulf nation of Qatar. The Doha Development Round was launched at the conference. The conference also approved the joining of China, which became the 143rd member to join. Fifth ministerial conference The ministerial conference was held in Cancn, Mexico, aiming at forging agreement on the Doha round. An alliance of 22 southern states, the G20 developing nations (led by India, China and Brazil), resisted demands from the North for agreements on the socalled "Singapore issues" and called for an end to agricultural subsidies within the EU and the US. The talks broke down without progress. Sixth ministerial conference The sixth WTO Ministerial Conference was held in Hong Kong from 13 December 18 December 2005. It was considered vital if the four-year-old Doha Development Agenda negotiations were to move forward sufficiently to conclude the round in 2006. In this meeting, countries agreed to phase out all their agricultural export subsidies by the end of 2013, and terminate any cotton export subsidies by the end of 2006. Further concessions to developing countries included an agreement to introduce duty free, tariff free access for goods from the Least Developed Countries, following the Everything But Arms initiative of the European Union but with up to 3% of tariff lines exempted. Other major issues were left for further negotiation to be completed by the end of 2006.

Doha Round The Doha Development Round started in 2001 and continues today. The WTO launched the current round of negotiations, the Doha Development Agenda (DDA) or Doha Round, at the Fourth Ministerial Conference in Doha, Qatar in November 2001. The Doha round was to be an ambitious effort to make globalization more inclusive and help the world's poor, particularly by slashing barriers and subsidies in farming. The initial agenda comprised both further trade liberalization and new rule-making, underpinned by commitments to strengthen substantial assistance to developing countries. The negotiations have been highly contentious and agreement has not been reached, despite the intense negotiations at several Ministerial Conferences and at other sessions. Disagreements still continue over several key areas including agriculture subsidies.

Cause

The WTO deals with the rules of trade between nations at a global or near-global level. But there is more to it than that. There are a number of ways of looking at the WTO. Its an organization for liberalizing trade. Its a forum for governments to negotiate trade agreements. Its a place for them to settle trade disputes. It operates a system of trade rules. Essentially, the WTO is a place where member governments go, to try to sort out the trade problems they face with each other. The first step is to talk. The WTO was born out of negotiations, and everything the WTO does is the result of negotiations. The bulk of the WTOs current work comes from the 198694 negotiations called the Uruguay Round and earlier negotiations under the General Agreement on Tariffs and Trade (GATT). The WTO is currently the host to new negotiations, under the Doha Development Agenda launched in 2001.

Where countries have faced trade barriers and wanted them lowered, the negotiations have helped to liberalize trade. But the WTO is not just about liberalizing trade, and in some circumstances its rules support maintaining trade barriers for example to protect consumers or prevent the spread of disease.

At its heart are the WTO agreements, negotiated and signed by the bulk of the worlds trading nations. These documents provide the legal ground-rules for international commerce. They are essentially contracts, binding governments to keep their trade policies within agreed limits. Although negotiated and signed by governments, the goal is to help producers of goods and services, exporters, and importers conduct their business, while allowing governments to meet social and environmental objectives.

Mission statement The mission of the WTO aims to encourage smooth and free trade by promoting lower trade barriers and providing a platform for the negotiation of trade and it resolve disputes between member nations, when they arise. The goal is to help producers of goods and services, exporters, and importers conduct their business.

Concept The WTO establishes a framework for trade policies; it does not define or specify outcomes. That is, it is concerned with setting the rules of the trade policy games. Five principles are of particular importance in understanding both the pre-1994 GATT and the WTO: 1. Non-Discrimination. It has two major components: the most favoured nation (MFN) rule, and the national treatment policy. Both are embedded in the main WTO rules on goods, services, and intellectual property, but their precise scope and nature differ across these areas. The MFN rule requires that a WTO member must apply the same conditions on all trade with other WTO members, i.e. a WTO member has to grant the most favorable conditions under which it allows trade in a certain product type to all other WTO members. "Grant someone a special favour and you have to do the same for all other WTO members." National treatment means that imported and locally-produced goods should be treated equally (at least after the foreign goods have entered the market) and was

introduced to tackle non-tariff barriers to trade (e.g. technical standards, security standards et al. discriminating against imported goods). 2. Reciprocity. It reflects both a desire to limit the scope of free-riding that may arise because of the MFN rule, and a desire to obtain better access to foreign markets. A related point is that for a nation to negotiate, it is necessary that the gain from doing so be greater than the gain available from unilateral liberalization; reciprocal concessions intend to ensure that such gains will materialise. 3. Binding and enforceable commitments. The tariff commitments made by WTO members in a multilateral trade negotiation and on accession are enumerated in a schedule (list) of concessions. These schedules establish "ceiling bindings": a country can change its bindings, but only after negotiating with its trading partners, which could mean compensating them for loss of trade. If satisfaction is not obtained, the complaining country may invoke the WTO dispute settlement procedures. 4. Transparency. The WTO members are required to publish their trade regulations, to maintain institutions allowing for the review of administrative decisions affecting trade, to respond to requests for information by other members, and to notify changes in trade policies to the WTO. These internal transparency requirements are supplemented and facilitated by periodic countryspecific reports (trade policy reviews) through the Trade Policy Review Mechanism (TPRM). The WTO system tries also to improve predictability and stability, discouraging the use of and other measures used to set limits on quantities of imports. 5. Safety valves. In specific circumstances, governments are able to restrict trade. There are three types of provisions in this direction: articles allowing for the use of trade measures to attain non-economic objectives; articles aimed at ensuring "fair competition"; and provisions permitting intervention in trade for economic reasons.

There are 11 committees under the jurisdiction of the Goods Council each with a specific task. All members of the WTO participate in the committees. The Textiles Monitoring Body is separate from the other committees but still under the jurisdiction of Goods Council. The body has its own chairman and only ten members. The body also has several groups relating to textiles. WTO THE AGREEMENTS The WTO is rules-based; its rules are negotiated agreements. 1. Overview: a navigational guide The WTO agreements cover goods, services and intellectual property. They spell out the principles of liberalization, and the permitted exceptions. They include individual countries commitments to lower customs tariffs and other trade barriers, and to open and keep open services markets. They set procedures for settling disputes. They prescribe special treatment for developing countries. They require governments to make their trade policies transparent by notifying the WTO about laws in force and measures adopted, and through regular reports by the secretariat on countries trade policies. These agreements are often called the WTOs trade rules, and the WTO is often described as rules-based, a system based on rules. But its important to remember that the rules are actually agreements that governments negotiated. Six-part broad outline The table of contents of The Results of the Uruguay Round of Multilateral Trade Negotiations: The Legal Texts is a daunting list of about 60 agreements, annexes, decisions and understandings. In fact, the agreements fall into a simple structure with six main parts: an umbrella agreement (the Agreement Establishing the WTO); agreements for each of the three broad areas of trade that the WTO covers (goods, services and intellectual property); dispute settlement; and reviews of governments trade policies. The agreements for the two largest areas goods and services share a common threepart outline, even though the detail is sometimes quite different. They start with broad principles: the General Agreement on Tariffs and trade (GATT) (for goods), and the General Agreement on Trade in Services (GATT) (The third area, Trade-Related Aspects of Intellectual Property Rights (TRIPS), also falls into this category although at present it has no additional parts.) Then come the extra agreements and annexes dealing with the special requirements of specific sectors or issues. Finally, there are the detailed and lengthy schedules (or lists) of commitments made by individual countries allowing specific foreign products or service providers access to

their markets. For GATT, these take the form of binding commitments on tariffs for goods in general, and combinations of tariffs and quotas for some agricultural goods. For GATS, the commitments state how much access foreign service providers are allowed for specific sectors, and they include lists of types of services where individual countries say they are not applying the most-favoured-nation principle of non-discrimination. Underpinning these are dispute settlement, which is based on the agreements and commitments, and trade policy reviews, an exercise in transparency. 2. Tariffs: more bindings and closer to zero The bulkiest results of Uruguay Round are the 22,500 pages listing individual countries commitments on specific categories of goods and services. These include commitments to cut and bind their customs duty rates on imports of goods. In some cases, tariffs are being cut to zero. There is also a significant increase in the number of bound tariffs duty rates that are committed in the WTO and are difficult to raise. Binding tariffs The market access schedules are not simply announcements of tariff rates. They represent commitments not to increase tariffs above the listed rates the rates are bound. For developed countries, the bound rates are generally the rates actually charged. Most developing countries have bound the rates somewhat higher than the actual rates charged, so the bound rates serve as ceilings. Countries can break a commitment (i.e. raise a tariff above the bound rate), but only with difficulty. To do so they have to negotiate with the countries most concerned and that could result in compensation for trading partners loss of trade. Tariff cuts Developed countries tariff cuts were for the most part phased in over five years from 1 January 1995. The result is a 40% cut in their tariffs on industrial products, from an average of 6.3% to 3.8%. The value of imported industrial products that receive duty-free treatment in developed countries will jump from 20% to 44%. There will also be fewer products charged high duty rates. The proportion of imports into developed countries from all sources facing tariffs rates of more than 15% will decline from 7% to 5%. The proportion of developing country exports facing tariffs above 15% in industrial countries will fall from 9% to 5%. The Uruguay Round package has been improved. On 26 March 1997, 40 countries accounting for more than 92% of world trade in information technology products, agreed to eliminate import duties and other charges on these products by 2000 (by 2005 in a handful of cases). As with other tariff commitments, each participating country is applying its commitments equally to exports from all WTO members (i.e. on a most favoured nation basis), even from members that did not make commitments. More bindings

Developed countries increased the number of imports whose tariff rates are bound (committed and difficult to increase) from 78% of product lines to 99%. For developing countries, the increase was considerable: from 21% to 73%. Economies in transition from central planning increased their bindings from 73% to 98%. This all means a substantially higher degree of market security for traders and investors.

And agriculture Tariffs on all agricultural products are now bound. Almost all import restrictions that did not take the form of tariffs, such as quotas, have been converted to tariffs a process known as tariffication. This has made markets substantially more predictable for agriculture. Previously more than 30% of agricultural produce had faced quotas or import restrictions. The first step in tariffication was to replace these restrictions with tariffs that represented about the same level of protection. Then, over six years from 19952000, these tariffs were gradually reduced (the reduction period for developing countries ends in 2005). The market access commitments on agriculture also eliminate previous import bans on certain products. In addition, the lists include countries commitments to reduce domestic support and export subsidies for agricultural products. 3. Agriculture: fairer markets for farmers The original GATT did apply to agricultural trade, but it contained loopholes. For example, it allowed countries to use some non-tariff measures such as import quotas, and to subsidize. Agricultural trade became highly distorted, especially with the use of export subsidies which would not normally have been allowed for industrial products. The Uruguay Round produced the first multilateral agreement dedicated to the sector. It was a significant first step towards order, fair competition and a less distorted sector. What is distortion? This a key issue. Trade is distorted if prices are higher or lower than normal, and if quantities produced, bought, and sold are also higher or lower than norma i.e. than the levels that would usually exist in a competitive market. The Agriculture Agreement: new rules and commitments The objective is to reform trade in the sector and to make policies more market-oriented. This would improve predictability and security for importing and exporting countries alike. The new rules and commitments apply to: market access various trade restrictions confronting imports

domestic support subsidies and other programmes, including those that raise or guarantee farm gate prices and farmers incomes export subsidies and other methods used to make exports artificially competitive. The agreement does allow governments to support their rural economies, but preferably through policies that cause less distortion to trade. It also allows some flexibility in the way commitments are implemented. Developing countries do not have to cut their subsidies or lower their tariffs as much as developed countries, and they are given extra time to complete their obligations. Least-developed countries dont have to do this at all. Special provisions deal with the interests of countries that rely on imports for their food supplies, and the concerns of least-developed economies. Market access: tariffs only, please The new rule for market access in agricultural products is tariffs only. Before the Uruguay Round, some agricultural imports were restricted by quotas and other non tariff measures. These have been replaced by tariffs that provide more-or-less equivalent levels of protection if the previous policy meant domestic prices were 75% higher than world prices, then the new tariff could be around 75%. (Converting the quotas and other types of measures to tariffs in this way was called tariffication.) The tariffication package contained more. It ensured that quantities imported before the agreement took effect could continue to be imported, and it guaranteed that some new quantities were charged duty rates that were not prohibitive. This was achieved by a system of tariff-quotas lower tariff rates for specified quantities, higher (sometimes much higher) rates for quantities that exceed the quota. Domestic support: some you can, some you cant The main complaint about policies which support domestic prices, or subsidize production in some other way, is that they encourage over-production. This squeezes out imports or leads to export subsidies and low-priced dumping on world markets. The Agriculture Agreement distinguishes between support programmes that stimulate production directly, and those that are considered to have no direct effect. Domestic policies that do have a direct effect on production and trade have to be cut back. WTO members calculated how much support of this kind they were providing per year for the agricultural sector (using calculations known as total aggregate measurement of support or Total AMS) in the base years of 198688. Developed countries agreed to reduce these figures by 20% over six years starting in 1995. Developing countries agreed to make 13% cuts over 10 years. Least-developed countries do not need to make any cuts. (This category of domestic support is sometimes called the amber box, a reference to the amber colour of traffic lights,which means slow down.)

Export subsidies: limits on spending and quantities The Agriculture Agreement prohibits export subsidies on agricultural products unless the subsidies are specified in a members lists of commitments. Where they are listed, the agreement requires WTO members to cut both the amount of money they spend on export subsidies and the quantities of exports that receive subsidies. Under the Agriculture Agreement, WTO members have to reduce their subsidized exports. But some importing countries depend on supplies of cheap, subsidizedfood from the major industrialized nations. They include some of the poorest countries, and although their farming sectors might receive a boost from higher prices caused by reduced export subsidies, they might need temporary assistance to make the necessary adjustments to deal with higher priced imports, and eventually to export. 4. Standards and safety Article 20 of the General Agreement on Tariffs and Trade (GATT) allows governments to act on trade in order to protect human, animal or plant life or health, provided they do not discriminate or use this as disguised protectionism. In addition, there are two specific WTO agreements dealing with food safety and animal and plant health and safety, and with product standards in general. Both try to identify how to meet the need to apply standards and at the same time avoid protectionism in disguise. These issues are becoming more important as tariff barriers fall some compare this to seabed rocks appearing when the tide goes down. In both cases, if a country applies international standards, it is less likely to be challenged legally in the WTO than if it sets its own standards. Technical regulations and standards The Technical Barriers to Trade Agreement (TBT) tries to ensure that regulations, standards, testing and certification procedures do not create unnecessary obstacles. However, the agreement also recognizes countries rights to adopt the standards they consider appropriate for example, for human, animal or plant life or health, for the protection of the environment or to meet other consumer interests. Moreover, members are not prevented from taking measures necessary to ensure their standards are met. But that is counterbalanced with disciplines. A myriad of regulations can be a nightmare for manufacturers and exporters. Life can be simpler if governments apply international standards, and the agreement encourages them to do so. The agreement also sets out a code of good practice for both governments and or industry bodies to prepare, adopt and apply voluntary standards. Over 200 standards-setting bodies apply the code.

The agreement says the procedures used to decide whether a product conforms with relevant standards have to be fair and equitable. It discourages any methods that would give domestically produced goods an unfair advantage. The agreement also encourages countries to recognize each others procedures for assessing whether a product conforms.

Without recognition, products might have to be tested twice, first by the exporting country and then by the importing country. Manufacturers and exporters need to know what the standards are in their prospective markets. To help ensure that this information is made available conveniently, all WTO member governments are required to establish national enquiry points and to keep each other informed through the WTO around 900 new or changed regulations are notified each year. The Technical Barriers to Trade Committee is the major clearing house for members to share the information and the major forum to discuss concerns about the regulations and their implementation.

5. Textiles: back in the mainstream Textiles, like agriculture, was one of the hardest-fought issues in the WTO, as it was in the former GATT system. It has now completed fundamental change under a 10-year schedule agreed in the Uruguay Round. The system of import quotas that dominated the trade since the early 1960s has now been phased out. The quotas were the most visible feature. They conflicted with GATTs general preference for customs tariffs instead of measures that restrict quantities. They were also exceptions to the GATT principle of treating all trading partners equally because they specified how much the importing country was going to accept from individual exporting countries. Since 1995, the WTOs Agreement on Textiles and Clothing (ATC) took over from the Mulltifibre Arrangement. By 1 January 2005, the sector was fully integrated into normal GATT rules. In particular, the quotas came to an end, and importing countries are no longer able to discriminate between exporters. The Agreement on Textiles and Clothing no longer exists: its the only WTO agreement that had self-destruction built in. 6. Services: rules for growth and investment The General Agreement on Trade in Services has three elements: the main text containing general obligations and disciplines; annexes dealing with rules for specific sectors; and individual countries specific commitments to provide access to their markets, including indications of where countries are temporarily not applying the most-favoured-nation principle of non-discrimination.

Most-favoured-nation (MFN) treatment Favour one, favour all. MFN means treatingones trading partners equally on the principle of non-discrimination. Under GATS, if a country allows foreign competition in a sector, equal opportunities in that sector should be given to service providers from all other WTO members.

Transparency GATS says governments must publish all relevant laws and regulations, and set up enquiry points within their bureaucracies. Foreign companies and governments can then use these inquiry points to obtain information about regulations in any service sector. And they have to notify the WTO of any changes in regulations that apply to the services that come under specific commitments. Since domestic regulations are the most significant means of exercising influence or control over services trade, the agreement says governments should regulate services reasonably, objectively and impartially. When a government makes an administrative decision that affects a service, it should also provide an impartial means for reviewing the decision (for example a tribunal). GATS does not require any service to be deregulated. Commitments to liberalize do not affect governments right to set levels of quality, safety, or price, or to introduce regulations to pursue any other policy objective they see fit. A commitment to national treatment, for example, would only mean that the same regulations would apply to foreign suppliers as to nationals. Governments naturally retain their right to set qualification requirements for doctors or lawyers, and to set standards to ensure consumer health and safety. Recognition When two (or more) governments have agreements recognizing each others qualifications (for example, the licensing or certification of service suppliers), GATS says other members must also be given a chance to negotiate comparable pacts. The recognition of other countries qualifications must not be discriminatory, and it must not amount to protectionism in disguise. These recognition agreements have to be notified to the WTO. International payments and transfers Once a government has made a commitment to open a service sector to foreign competition, it must not normally restrict money being transferred out of the country as payment for services supplied (current transactions) in that sector. The only exception is when there are balance-of payments difficulties, and even then the restrictions must be temporary and subject to other limits and conditions. Progressive liberalization The Uruguay Round was only the beginning. GATS requires more negotiations, which began in early 2000 and are now part of the Doha Development Agenda. The goal is to take the liberalization process further by increasing the level of commitments in schedules. Services are not all the same Financial services Instability in the banking system affects the whole economy. The financial services annex gives governments very wide latitude to take prudential measures, such as those for the protection of investors, depositors and insurance policy holders, and to ensure the integrity and stability of the financial system. Telecommunications The telecommunications sector has a dual role: it is a distinct sector of economic activity; and it is an underlying means of supplying other economic activities (for example electronic money transfers). The governments must ensure that

foreign service suppliers are given access to the public telecommunications networks without discrimination. Air transport services traffic rights and directly related activities are excluded from GATSs coverage. They are handled by other bilateral agreements. GATS will apply to aircraft repair and maintenance services, marketing of air transport services and computer-reservation services. Members are currently reviewing the annex. Current work GATS sets a heavy work programme covering a wide range of subjects. Work on some of the subjects started in 1995, as required, soon after GATS came into force in January 1995. Negotiations to further liberalize international trade in services started in 2000, along with other work involving study and review. Negotiations (Article 19) Negotiations to further liberalize international trade in services started in early 2000 as mandated by GATS (Article 19). The first phase of the negotiations ended successfully in March 2001 when members agreed on the guidelines and procedures for the negotiations, a key element in the negotiating mandate. By agreeing these guidelines, members set the objectives, scope and method for the negotiations in a clear and balanced manner. 7. Intellectual property: protection and enforcement The WTOs Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), negotiated in the 198694 Uruguay Round, introduced intellectual property rules into the multilateral trading system for the first time. The agreement covers five broad issues: how basic principles of the trading system and other international intellectual property agreements should be applied how to give adequate protection to intellectual property rights how countries should enforce those rights adequately in their own territories how to settle disputes on intellectual property between members of the WTO special transitional arrangements during the period when the new system is being introduced. How to protect intellectual property: common ground-rules Copyright The TRIPS agreement ensures that computer programs will be protected as literary works under the Berne Convention and outlines how databases should be protected. It also expands international copyright rules to cover rental rights. Authors of computer programs and producers of sound recordings must have the right to prohibit the commercial rental of their works to the public. A similar exclusive right applies to films

where commercial rental has led to widespread copying, affecting copyrightowners potential earnings from their films. The agreement says performers must also have the right to prevent unauthorized recording, reproduction and broadcast of live performances (bootlegging) for no less than 50 years. Producers of sound recordings must have the right to prevent the unauthorized reproduction of recordings for a period of 50 years.

Trademarks The agreement defines what types of signs must be eligible for protection as trademarks, and what the minimum rights conferred on their owners must be. It says that service marks must be protected in the same way as trademarks used for goods. Marks that have become well-known in a particular country enjoy additional protection. Geographical indications The TRIPS Agreement says countries have to prevent this misuse of place names. For wines and spirits, the agreement provides higher levels of protection, i.e. even where there is no danger of the public being misled. Some exceptions are allowed, for example if the name is already protected as a trademark or if it has become a generic term. For example, cheddar now refers to a particular type of cheese not necessarily made in Cheddar, in the UK. But any country wanting to make an exception for these reasons must be willing to negotiate with the country which wants to protect the geographical indication in question. The agreement provides for further negotiations in the WTO to establish a multilateral system of notification and registration of geographical indications for wines. These are now part of the Doha Development Agenda and they include spirits. Also debated in WTO, is whether to negotiate extending this higher level of protection beyond wines and spirits.

Industrial designs Under the TRIPS Agreement, industrial designs must be protected for at least 10 years. Owners of protected designs must be able to prevent the manufacture, sale or importation of articles bearing or embodying a design which is a copy of the protected design. Patents The agreement says patent protection must be available for inventions for at least 20 years. Patent protection must be available for both products and processes, in almost all fields of technology. Governments can refuse to issue a patent for an invention if its commercial exploitation is prohibited for reasons of public order or morality. They can

also exclude diagnostic, therapeutic and surgical methods, plants and animals (other than microorganisms), and biological processes for the production of plants or animals (other than microbiological processes). Plant varieties, however, must be protectable by patents or by a special system (such as the breeders rights provided in the conventions of UPOV the International Union for the Protection of New Varieties of Plants). Integrated circuits layout designs The basis for protecting integrated circuit designs (topographies) in the TRIPS agreement is the Washington Treaty on Intellectual Property in Respect of Integrated Circuits, which comes under the World Intellectual Property Organization. This was adopted in 1989 but has not yet entered into force. The TRIPS agreement adds a number of provisions: for example, protection must be available for at least 10 years. Undisclosed information and trade secrets Trade secrets and other types of undisclosed information which have commercial value must be protected against breach of confidence and other acts contrary to honest commercial practices. But reasonable steps must have been taken to keep the information secret. Test data submitted to governments in order to obtain marketing approval for new pharmaceutical or agricultural chemicals must also be protected against unfair commercial use. Curbing anti-competitive licensing contracts The owner of a copyright, patent or other form of intellectual property right can issue a licence for someone else to produce or copy the protected trademark, work, invention, design, etc. The agreement recognizes that the terms of a licensing contract could restrict competition or impede technology transfer. It says that under certain conditions, governments have the right to take action to prevent anti-competitive licensing that abuses intellectual property rights. It also says governments must be prepared to consult each other on controlling anti-competitive licensing.

8. Anti-dumping, subsidies, safeguards: contingencies, etc Binding tariffs, and applying them equally to all trading partners (most-favoured-nation treatment, or MFN) are key to the smooth flow of trade in goods. The WTO agreements uphold the principles, but they also allow exceptions in some circumstances. Three of these issues are: actions taken against dumping (selling at an unfairly low price) subsidies and special countervailing duties to offset the subsidies emergency measures to limit imports temporarily, designed to safeguard

domestic industries. Anti-dumping actions If a company exports a product at a price lower than the price it normally charges on its own home market, it is said to be dumping the product. Is this unfair competition? Opinions differ, but many governments take action against dumping in order to defend their domestic industries. The WTO agreement does not pass judgement. Its focus is on how governments can or cannot react to dumping it disciplines anti-dumping actions, and it is often called the Anti- Dumping Agreement. (This focus only on the reaction to dumping contrasts with the approach of the Subsidies and Countervailing Measures Agreement.) The legal definitions are more precise, but broadly speaking the WTO agreement allows governments to act against dumping where there is genuine (material) injury to the competing domestic industry. In order to do that the government has to be able to show that dumping is taking place, calculate the extent of dumping (how much lower the export price is compared to the exporters home market price), and show that the dumping is causing injury or threatening to do so. GATT (Article 6) allows countries to take action against dumping. The Anti- Dumping Agreement clarifies and expands Article 6, and the two operate together. They allow countries to act in a way that would normally break the GATT principles of binding a tariff and not discriminating between trading partners typically antidumping action means charging extra import duty on the particular product from the particular exporting country in order to bring its price closer to the normal value or to remove the injury to domestic industry in the importing country. Subsidies and countervailing measures 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 effects. Or the country can launch its own investigation and ultimately charge extra duty (known as countervailing duty) on subsidized imports that are found to be hurting domestic producers. The agreement contains a definition of subsidy. It also introduces the concept of a specific subsidy i.e. a subsidy available only to an enterprise, industry, group of 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. The agreement defines two categories of subsidies: prohibited and actionable. It originally contained a third category: non-actionable subsidies. This category existed for five years, ending on 31 December 1999, and was not extended. The agreement applies to

agricultural goods as well as industrial products, except when the subsidies are exempt under the Agriculture Agreements peace clause, due to expire at the end of 2003. 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. 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. Safeguards: emergency protection from imports A WTO member may restrict imports of a product temporarily (take safeguard actions) if its domestic industry is injured or threatened with injury caused by a surge in imports. Here, the injury has to be serious. Safeguard measures were always available under GATT (Article 19). However, they were infrequently used, some governments preferring to protect their domestic industries through grey area measures using bilateral negotiations outside GATTs auspices, they persuaded exporting countries to restrain exports voluntarily or to agree to other means of sharing markets. Agreements of this kind were reached for a wide range of products: automobiles, steel, and semiconductors, for example. The WTO agreement broke new ground. It prohibits grey-area measures, and it sets time limits (a sunset clause) on all safeguard actions. The agreement says members must not seek, take or maintain any voluntary export restraints, orderly marketing arrangements or any other similar measures on the export or the import side. The bilateral measures that were not modified to conform with the agreement were phased out at the end of 1998. Countries were allowed to keep one of these measures an extra year (until the end of 1999), but only the European Union for restrictions on imports of cars from Japan made use of this provision. An import surge justifying safeguard action can be a real increase in imports (an absolute increase); or it can be an increase in the imports share of a shrinking market, even if the import quantity has not increased (relative increase). Industries or companies may request safeguard action by their

government. The WTO agreement sets out requirements for safeguard investigations by national authorities. The emphasis is on transparency and on following established rules and practices avoiding arbitrary methods. The authorities conducting investigations have to announce publicly when hearings are to take place and provide other appropriate means for interested parties to present evidence. The evidence must include arguments on whether a measure is in the public interest. The agreement sets out criteria for assessing whether serious injury is being caused or threatened, and the factors which must be considered in determining the impact of imports on the domestic industry. When imposed, a safeguard measure should be applied only to the extent necessary to prevent or remedy serious injury and to help the industry concerned to adjust. Where quantitative restrictions (quotas) are imposed, they normally should not reduce the quantities of imports below the annual average for the last three representative years for which statistics are available, unless clear justification is given that a different level is necessary to prevent or remedy serious injury. In principle, safeguard measures cannot be targeted at imports from a particular country. However, the agreement does describe how quotas can be allocated among supplying countries, including in the exceptional circumstance where imports from certain countries have increased disproportionately quickly. A safeguard measure should not last more than four years, although this can be extended up to eight years, subject to a determination by competent national authorities that the measure is needed and that there is evidence the industry is adjusting. Measures imposed for more than a year must be progressively liberalized.

9. Non-tariff barriers: red tape, etc A number of agreements deal with various bureaucratic or legal issues that could involve hindrances to trade. import licensing rules for the valuation of goods at customs preshipment inspection: further checks on imports rules of origin: made in ... where? investment measures Import licensing: keeping procedures clear Although less widely used now than in the past, import licensing systems are subject to disciplines in the WTO. The Agreement on Import Licensing Procedures says import licensing should be simple, transparent and predictable. For example, the agreement requires governments to publish sufficient information for traders to know how and why the licences are granted. It also describes how countries should notify the WTO when they introduce new import licensing procedures or change existing procedures. The agreement offers guidance on how governments should assess applications for licences.

Some licences are issued automatically if certain conditions are met. The agreement sets criteria for automatic licensing so that the procedures used do not restrict trade. Other licences are not issued automatically. Here, the agreement tries to minimize the importers burden in applying for licences, so that the administrative work does not in itself restrict or distort imports. The agreement says the agencies handling licensing should not normally take more than 30 days to deal with an application 60 days when all applications are considered at the same time.

Rules for the valuation of goods at customs For importers, the process of estimating the value of a product at customs presents problems that can be just as serious as the actual duty rate charged. The WTO agreement on customs valuation aims for a fair, uniform and neutral system for the valuation of goods for customs purposes a system that conforms to commercial realities, and which outlaws the use of arbitrary or fictitious customs values. The agreement provides a set of valuation rules, expanding and giving greater precision to the provisions on customs valuation in the original GATT. A related Uruguay Round ministerial decision gives customs administrations the right to request further information in cases where they have reason to doubt the accuracy of the declared value of imported goods. If the administration maintains a reasonable doubt, despite any additional information, it may be deemed that the customs value of the imported goods cannot be determined on the basis of the declared value. Preshipment inspection: a further check on imports Preshipment inspection is the practice of employing specialized private companies (or independent entities) to check shipment details essentially price, quantity and quality of goods ordered overseas. Used by governments of developing countries, the purpose is to safeguard national financial interests (preventing capital flight, commercial fraud, and customs duty evasion, for instance) and to compensate for inadequacies in administrative infrastructures.

Rules of origin: made in ... where? Rules of origin are the criteria used to define where a product was made. They are an essential part of trade rules because a number of policies discriminate between exporting countries: quotas, preferential tariffs, anti-dumping actions, countervailing duty (charged to counter export subsidies), and more. Rules of origin are also used to compile trade statistics, and for made in ... labels that are attached to products. This is complicated by globalization and the way a product can be processed in several countries before it is ready for the market.

10. Plurilaterals: of minority interest 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 had a narrower group of signatories and are known as plurilateral agreements. Fair trade in civil aircraft The Agreement on Trade in Civil Aircraft entered into force on 1 January 1980. It now has 30 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 subassemblies 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. Government procurement: opening up for competition In most countries the government, and the agencies it controls, are together the biggest purchasers 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. An Agreement on Government Procurement was first negotiated during the Tokyo Round and entered into force on 1 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 28 members. It has two elements general rules and obligations, and schedules of national entities in each member country whose procurement is subject to the agreement. A large part of the 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 such decisions were made inconsistently with the rules of the agreement. 11. Trade policy reviews: ensuring transparency

Individuals and companies involved in trade have to know as much as possible about the conditions of trade. It is therefore fundamentally important that regulations and policies are transparent. In the WTO, this is achieved in two ways: governments have to inform the WTO and fellow-members of specific measures, policies or laws through regular notifications; and the WTO conducts regular reviews of individual countries trade policies the trade policy reviews. These reviews are part of the Uruguay Round agreement, but they began several years before the round ended they were an early result of the negotiations. Participants agreed to set up the reviews at the December 1988 ministerial meeting that was intended to be the midway assessment of the Uruguay Round. The first review took place the following year. Initially they operated under GATT and, like GATT, they focused on goods trade. With the creation of the WTO in 1995, their scope was extended, like the WTO, to include services and intellectual property. The importance countries attach to the process is reflected in the seniority of the Trade Policy Review Body it is the WTO General Council in another guise.

WTO AGREEMENTS-IMPLICATIONS AND IMBALANCES The following is a critique of some of the imbalances existing in the Uruguay Round agreements, for the South countries. Since these agreements were targetted to obtain commitments and concessions from the South, severe imbalances with adverse effects have resulted for the South. Thus, the South should aim to correct these imbalances and allow the WTO system to work for them. As one of the main objectives of the proponents of the Uruguay Round was to obtain commitments and concessions from developing countries, it is no surprise that the final result is heavily weighted towards fulfilment of that objective. Consequently, the contents of the agreements have severe imbalances with adverse implications for the interest of developing countries. Hence, an important aim of developing countries in the WTO should naturally be to try to correct these imbalances and make the WTO system more useful to them. Without going into any deep analysis because of the limitations of space, this paper aims at listing out some of the obvious imbalances which may hinder full utilization of the system by the developing countries. The listing starts with the mechanism of enforcement of rights and obligations which has been hailed as a big achievement of the Uruguay Round, and then it goes on to the market access and the systemic issues of contingency actions and further, to sectoral issues and the "new" areas of services and intellectual property rights. Towards the end, an attempt has been made to list out fresh efforts at introducing new imbalances.

Enforcement of rights and obligations Effective enforcement of rights and obligations, through an improved dispute settlement understanding, has been considered to be one of the major achievements of the Uruguay Round. Effectiveness has been enhanced and dilatory tactics have been curtailed by prescribing specific time schedules for various stages of the dispute settlement process and by near-automatic establishment of panels and adoption of panel reports. The process is ideally suitable for disputes between the partners that are almost equally powerful. The system may prove less effective when a weak trading partner is to get redress against the omissions and commissions of strong trading partners. Some of the general deficiencies of the system as well as those arising from the weakness of a trading partner are being mentioned below: (i) Under normal situations a Member with a grievance may have to wait for nearly two years to get any redress. Seven to nine months may pass before the report of the panel or the Appellate Body is available and is adopted. Thereafter, the Member that has been found to have done something wrong will have nearly fifteen months to implement the recommendations fully. To get full relief in two years after having raised the issue would be considered a case of justice delayed by any standard. For weak trading partners like developing countries, such delayed relief may be sometimes totally infructous as their trade and economy would have suffered irreparable damage. Resilience of their industry and trade is comparatively low, therefore they may not be able to sustain the adverse impact of the wrong action of powerful trading partners for such a long time. (ii) Even this delayed relief could be illusory for weak trading partners in some cases. The ultimate means of getting relief in the WTO framework is through retaliation against the erring trading partner. Normally, of course, the moral and political pressure would work to persuade the erring Member to take corrective action in accordance with the recommendations of the Dispute Settlement Body, but in real difficult cases, where the domestic compulsions of the erring Member renders the implementation of the recommendations difficult or inconvenient, it may drag its feet or even totally refuse to take corrective action. Considering the importance of such cases, these may be of great relevance to the affected Member. In such a situation, the erring Member takes the risk of retaliatory action by the affected Member. Naturally, there will be more willingness to take such risks if the affected Member is not a strong or important trading partner. Clearly, developing countries are more likely to be exposed to such risks. For an affected developing country it may be difficult for various reasons to take retaliatory measures. Politically, it may not be prudent to take action against a strong partner. Economically too, retaliation may not be convenient, as it has a cost.

Hence a weak trading partner, particularly a developing country, may sometimes find that the relief through the dispute settlement mechanism is not real and effective. (iii) Time limits have been prescribed for the various stages of the dispute settlement process. Obligations in this regard have been laid on the Members, and in some cases on the panels and the Appellate Body. But, in respect of panels and Appellate Body, apart from these provisions of time schedules being strongly persuasive and acting as a moral pressure, there is really no relief if these bodies fail to adhere to these schedules. (iv) The most serious weakness introduced in the dispute settlement system, which has often remained unemphasized, is the severe curtailment of the role of panels in the disputes relating to anti-dumping. In such cases, the panels have been specifically restrained from pronouncing whether or not a measure is consistent with the obligations of the Member under the Agreement on Anti-dumping. The panels have merely to determine whether the establishment of the facts by the authorities has been proper and whether the evaluation of the facts has been unbiased and objective. Once these conditions have been established to exist, the actual evaluation of the authorities will not be challenged, even if the panel comes to a conclusion different from that of the authorities. Further, if the relevant provisions of the Agreement admit of more than one permissible interpretation, the panels must declare the measure in conformity with the Agreement, if it rests upon one of these permissible interpretations. The curtailment of the role of panels in anti-dumping cases is particularly harmful to the developing countries, as these are the cases most predominant in the disputes involving them. Further, a decision of the Ministerial Meeting in Marrakesh, says that this provision must be reviewed after a period of three years, with a view to considering the question whether it is capable of general application. Thus, there is a possibility of this provision being extended to other areas as well. If it actually takes place, it will make the whole dispute settlement process almost totally ineffective and infructous. (v) For the past few years, the work of the panels has tended to be intensely technical. The panels have started going into fine points of law. It is fast becoming difficult for the authorities of developing countries to prepare their cases and make presentations before the panels with their own technical resources. This is particularly so when the other party involved is a developed country and information on details from that country is required to be collected and analyzed. Often, the authorities of the developing countries have to employ lawyers and other experts from developed countries, which proves very costly. In the case of very poor developing countries, the cost of taking a case to the panels may be totally prohibitive. These problems suggest their own solutions. For example:

(i) There should be a provision for quicker relief against the encroachment of the rights of others and failure to meet one's obligations. Besides, there should also be a provision for compensation to the affected Member, by the erring Member for losses based on the duration for which the measure in question has remained operative. For calculating the quantum of compensation, the duration of the measure causing loss is relevant, rather than the time of initiating the dispute settlement process or the adoption of the panel report. The compensation could be in the form of some trade benefit or even in the form of cash payment. (ii) If the erring Member fails to take the corrective action, the retaliation should not be left solely to be undertaken by the affected Member; rather there should be a joint action by all Members. Modalities for this purpose may be worked out. After all, GATT 1994 does provide for joint action by Members in certain circumstances. Alternatively, there may be a provision for financial compensation by the erring Member to the affected Member. (iii) There should be some built in disincentive for the panel members to delay the process beyond the stipulated time limits. For example, one criterion for selecting the panel members could be the timeliness with which the panel gave its report. (iv) The curtailment of the role of the panel in the anti-dumping cases should be completely eliminated. And there should be no question of extending this process to any other fields. (v) The panels have the discretion to call for materials on their own. There should be a practice that in case a developing country, party to a dispute, makes out a case for the need of some materials relevant to the case, the panels should collect these materials and take them into consideration. Besides, there could also be a provision for the panels awarding costs to the affected developing countries which should be paid by the erring developed country. Market access It has been repeatedly emphasized on various occasions, that developed countries have reduced their tariffs significantly during the Uruguay Round. They have been credited with having reduced their trade weighted average tariff on industrial products by nearly 39 percent. As a matter of fact their trade weighted average tariff on industrial products has been reduced from 6.3 percent to 3.9 percent. From the angle of its impact on market access, all it means is that a product with a unit price of $100, will now cost $103.9, whereas it was costing $106.3 earlier. This is a more realistic description of the reduction than the assertion that the tariffs have been reduced by 39% on an average. It is not only the developed countries that have reduced their tariffs. Some developing countries which had very high tariffs earlier, have significantly reduced their tariffs. For example, the trade weighted average tariff on industrial products has been reduced from

71.4% to 32.4% by India, from 40.7% to 27% by Brazil, from 34.9% to 24.9% by Chile, from 46.1% to 33.7% by Mexico, from 50% to 31.1% by Venezuela,and so on. In respect of the developed countries, two points have to be particularly noted. First, their average tariff on goods from developing countries is relatively higher than those from developed countries. Besides, their tariffs are relatively high in products of export interest to developing countries, for example, textiles, clothing, leather goods and so on. Second, their tariff escalation continues to be high in spite of the commitments on various occasions to eliminate or reduce it. Justification is often given by arguing that developing countries have too long enjoyed the fruits of the Most Favoured Nation (MFN) treatment given to them by the developing countries. But this is clearly a partial view. It cannot be overlooked that developing countries, in their development process, have absorbed vast quantities of the products of developed countries and have thereby supported their industrial production. This has been particularly evident during the periods of recession in the developed world. In all fairness, due credit has to be given to developing countries on this account. And thus, less attention to the products of their interest in the process of tariff reduction in developed countries is not justified. Instead of putting the developing countries on the defensive in respect of the tariff reduction exercise, developed countries should indeed recognize their contribution and concentrate on further reducing the tariffs on the products of their interest. Besides, there is a need for significantly reducing the tariff escalation in the product chains of interest to developing countries. These countries are fully justified in asking for such action on the part of developed countries. Contingency trade measures We cover three areas under this heading, viz, safeguard, subsidies and dumping. In these areas, significant improvements have been made, particularly by enhancing objectivity and by introducing de minimis clauses. However, it is clear that in the area of subsidies, it is the developing countries that have made significant concessions. Earlier, their subsidization was recognized as a tool in their development process: now, except for a few types of measures like freight subsidy, they are generally debarred from using subsidy as a tool of development. In these three areas some of the points needing further improvements are listed below: Safeguard It is clear that the new Agreement on Safeguard does not permit targeting a country or a set of countries for safeguard action; any such action has to be taken on a global basis. However, in respect of allocation of the share of the global quota, there is a provision for deviation from the normal practice in special circumstances. There is a fear that this

enabling provision may be used to reduce the quota of developing countries. Special care needs being exercised to ensure that this provision is not used in a discriminatory manner, putting developing countries to disadvantage. One has to be careful, particularly in the initial period when practices develop into accepted interpretations. It may be desirable to develop some clear criteria for the conditions and extent of departure from the normal practice of allocation of the share of the global quota. In safeguard, developing countries have the benefit of some de minimis provisions. However, it is not clear how it will operate. For example, if a Member takes to tariff type measures as safeguard, it is not clear how a developing country falling within the de minimis provision will be excluded from the higher tariff or charge. On the other hand, if quantitative restriction is adopted as a safeguard measure, again it is not clear whether a developing country falling within the de minimis provision will be totally excluded from the restrictions of export of that product into that Member country. Considering that the de minimis provision excludes developing countries falling within such provision from the safeguard action, it is desirable to stipulate clearly that neither the higher tariff nor any limits to export will apply to such countries. Subsidies Subsidies which are commonly practised in developed countries, for example, those for research and development, for development of comparatively more backward regions and for adoption of environmental-friendly technologies, have all been included in the list of non-actionable subsidies. However, those types of subsidies which developing countries generally apply in the process of industrialization and development, have been generally excluded. The industrial and trading firms of developing countries suffer from natural handicaps, as very often they do not have the advantage of large scale operations, availability of technology and finance, entry into international networking in the relevant sector and similar other facilities which their competitors in the developed world have. Therefore, it is sometimes necessary for developing countries to provide subsidies to them so that there is diversification and upgradation of production and entry into new markets. These needs have been almost totally ignored in the Agreement on Subsidies. It appears desirable to recognize these needs, as it had been done earlier and as it has been done in the case of the subsidy practices of developed countries. Subsidies in developing countries for upgradation and diversification of production, for absorption and adaptation of higher technologies and for entry into new markets should be treated as non-actionable.

Of course, some special provisions have been made for countries having per capita income up to US$1,000. But in this case, too, some improvements need being done. For example, a country crossing this limit is excluded from the benefit almost immediately. The rise in income might in some cases be a temporary phenomenon and not a structural feature. Hence, there should be a provision for exclusion, only when a country has higher per capita income over a few years. There is a provision of exclusion when a country achieves export competitiveness continuously for two years, but there is no provision for automatic inclusion of a country in this category once the per capita income goes down below this critical level. The automatic inclusion should be provided for. Dumping The provisions of the Agreement on Anti-dumping have become very complex in the process of this agreement, adopting the practices followed by major developed countries in this area. Very often, the calculation of the cost of production and other expenses is involved in preparing the case on either side. For a developing country, it is very difficult to collect this information from developed countries. The authorities and the trade and industry in developing countries are not well equipped to locate the sources of such information in developed countries and collect them. Very often the services of law firms of these developed countries have to be employed and it becomes a very costly process. In fact, considering the vast difference in the resources of the developed countries and developing countries, the process of anti-dumping enquiries, both at the importing end and the exporting end, becomes very much tilted against the developing countries, except if they are prepared to send enormous amounts for collection of materials from developed countries and engaging some law firms of those countries. The only way out is to have very simple procedures, of course taking care that the process does not become too subjective. The most serious problem in the area of anti-dumping, is the exclusion of this subject from the normal dispute settlement process as it has been explained above while discussing the enforcement of rights and obligations. There is a need to bring this subject into the folds of the common dispute settlement process. Specific sectors We take up for consideration two specific sectors for which there are specific agreements, viz., agriculture and textiles. There has been a significant progress in bringing agriculture within the general discipline of GATT 1994. Specific commitments have been undertaken by governments in respect of reducing their import restraints, domestic support and export subsidy. In textiles, an important commitment has been to end the Multi-Fibre Agreement (MFA) with the coming into force of the WTO Agreement and thereafter, to bring this sector in the folds of general rules of GATT 1994 by the

beginning of 2005. The special arrangement in this sector, in derogation to general rules of GATT 1994, had continued for nearly a quarter of a century; hence its final demise is an important event in international relations. However, these two agreements have left in their trail a number of problems, some of which are described below. Agriculture (i) The countries which have been maintaining import restraints, domestic support and export subsidy have been obliged to reduce these measures to some extent during the implementation period. Substantial portions of the measures will, however, continue in these countries. But the countries which did not have such measures in the past are prohibited from introducing such measures beyond the de minimis levels. This appears patently unfair in the sense that those maintaining import restraint, domestic support and export subsidy in the past, are allowed to continue with them although at reduced levels, but others are prohibited from undertaking such measures in future. (ii) The agreement is naturally based on the assumption that totally free movement of agricultural products across borders is the most ideal condition. The underlying influence is that it is desirable for a country to import food from other countries if it is cheap compared to its own cost of production. This principle may perhaps be valid for most of the developed countries which have enough of foreign exchange all the time to import whatever they want. But most of the developing countries are short of foreign exchange most of the time. If they depend for their food on import, their population may have to starve sometimes, as they may not have enough foreign exchange to buy food abroad. Such countries may consider it wise to grow their own food as far as possible, even if it is more costly than the food available in some other countries. The food production has too much social and human compulsions associated with it than can be tackled by pure economic considerations. And yet the agreement in this sector aims at abolishing all support for food production and all restraints on the import of food items from outside. This will particularly affect the developing countries with chronic problems of availability of adequate foreign exchange for their imports. (iii) Another special feature in many developing countries is that agriculture is not considered a commercial activity. Farmers take to agriculture sometimes because they have land and there is nothing else for them to do. Some of them take to agriculture as purely a subsistence exercise. It will be extremely difficult to harmonize these special characteristics with purely commercial and price considerations which are the underlying principles in this agreement. (iv) The problems of net food importing countries have been recognized, and yet there is no concrete mechanism for tackling this problem in the agreement.

(v) In the process of tariffication, several countries, particularly some major trading countries have overvalued the tariff equivalents of their non-tariff measures, with the result that their base levels of total tariffs have been recorded at very high levels. These problems have to be given serious consideration. Of course, these may be raised during the review process; but it may be preferable to start with some of them even before that time. Textiles The main problem here is the process of liberalization in accordance with the provisions of the agreement. Several major developed countries have claimed to fulfil their obligation of liberalization without actually liberalizing the items under restraint. They have taken shelter under strictly technical interpretation of the agreement without giving any consideration to the spirit of the agreement. An immediate review of the implementation is needed to decide on a revised schedule of liberalization by major importing developed countries. Recent experience has shown that the Textile Monitoring Body (TMB) has not proved quite effective in checking unreasonable use of the transitional safeguard mechanism. In one case the TMB failed to make its conclusion, even though the agreement makes it obligatory on this body to give its finding on the measures undertaken by Members and brought before this body for examination. This agreement has an unusual clause of sectoral balance of rights and obligations. Generally, GATT 1994 works on the principle of overall balance, but an exception to this principle has found its place in this agreement. And there again, measures in the nature of penalty have been prescribed hitting only developing exporting countries. There is no mention of any explicit penalty for importing developed countries if they fail to abide by their obligations. Services It is basically a framework agreement within which countries undertake obligations for liberalizing their services sectors. One obvious imbalance in this agreement is the treatment of labour and capital. There is a specific provision for allowing cross-border movement of capital, if such movement is an essential part of the market access commitment or if a commercial presence is involved. However, there is no explicit provision on the movement of persons on similar lines. In respect of developing countries, the agreement makes it clear that their participation in the world trade must be facilitated through appropriate negotiated specific commitments. However, in actual practice, this provision has not been much respected. For example, in the negotiations on financial services, some major developed countries insisted on very

high levels of commitments from some developing countries which they were in no position to offer. In fact, the process of sector by sector negotiation is basically flawed. The interests of various countries may not converge in the same sector. The process of give and take will be much smoother if negotiations are undertaken in a large number of sectors at the same time, so that a country may be able to offer concession in some sector for receiving concessions in some other sectors. Based on the difficulties experienced in the sectoral negotiations so far, there is a clear case for a rethinking on this issue. TRIPs The basic imbalance in this agreement lies in the fact that it provides for minimum protection levels for the holders of intellectual property rights (IPRs). There is hardly much concern explicitly shown in the agreement for the users of the intellectual property. A balance can be attempted by countries in their legislations within the limits of the discretion allowed in the agreement. New Issues Further imbalances are likely to occur in the WTO Agreements through the introduction of new issues. For example: (i) the proposed agreement on investment seeks to ensure free entry of investors in a country without any concern for the needs and priorities of the host countries; (ii) some proposals in the area of environment seek to justify trade restrictions without adequate objective examination in the framework of GATT 1994; (iii) the proposals on social clauses are thinly veiled attempts to neutralize the advantage of developing countries in respect of their low labour costs, totally forgetting that there is no means of neutralizing the advantages of the developed countries in the form of cheaper and easier availability of capital, access to high technology and highly developed infrastructure and networks; (iv) the consideration of competition policies may be targeted at clipping the wings of comparatively stronger firms in developing countries so that they do not stand in competition with the well established firms of developed countries; (v) the consideration of corruption may be aimed at attacking the credibility of the authorities and institutions of developing countries.

WTO agreements and their implications on India

Agreements The WTO oversees about 60 different agreements which have the status of international legal texts. Member countries must sign and ratify all WTO agreements on accession. A list of WTO agreements can be found here. A discussion of some of the most important agreements follows. Agreement on Agriculture (AoA) The Agreement on Agriculture came into effect with the establishment of the WTO at the beginning of 1995. The AoA has three central concepts, or "pillars": domestic support, market access and export subsidies. General Agreement on Trade in Services (GATS) The General Agreement on Trade in Services was created to extend the multilateral trading system to service sector, in the same way the General Agreement on Tariffs and Trade (GATT) provides such a system for merchandise trade. The Agreement entered into force in January 1995 Trade-Related Aspects of Intellectual Property Rights Agreement (TRIPs) The Agreement on Trade-Related Aspects of Intellectual Property Rights sets down minimum standards for many forms of intellectual property (IP) regulation. It was negotiated at the end of the Uruguay Round of the General Agreement on Tariffs and Trade (GATT) in 1994. Sanitary and Phyto-Sanitary (SPS) Agreement The Agreement on the Application of Sanitary and Phytosanitary Measures - also known as the SPS Agreement was negotiated during the Uruguay Round of the General Agreement on Tariffs and Trade, and entered into force with the establishment of the WTO at the beginning of 1995. Under the SPS agreement, the WTO sets constraints on members' policies relating to food safety (bacterial contaminants, pesticides, inspection and labelling) as well as animal and plant health (imported pests and diseases). Agreement on Technical Barriers to Trade (TBT) The Agreement on Technical Barriers to Trade is an international treaty of the World Trade Organization. It was negotiated during the Uruguay Round of the General

Agreement on Tariffs and Trade, and entered into force with the establishment of the WTO at the end of 1994. The object of the TBT Agreement is to "to ensure that technical negotiations and standards, as well as testing and certification procedures, do not create unnecessary obstacles to trade". Criticism Protestors clashing with Hong Kong police in Wan Chai (area of Waterfront) during the WTO Ministerial Conference of 2005. The stated aim of the WTO is to promote free trade and stimulate economic growth. Some people argue that free trade leads to a divergence instead of convergence of income levels within rich and poor countries (the rich get richer and the poor get poorer). Martin Khor, Director of the Third World Network, argues that the WTO does not manage the global economy impartially, but in its operation has a systematic bias toward rich countries and multinational corporations, harming smaller countries which have less negotiation power. He argues that developing countries have not benefited from the WTO Agreements of the Uruguay Round, because (among other reasons): market access in industry has not improved; these countries have had no gains yet from the phasing out of textiles quotas; non-tariff barriers such as anti-dumping measures have increased; and domestic support and export subsidies for agricultural products in the rich countries remain high. Jagdish Bhagwati asserts however that there is greater tariff protection on manufacturers in the poor countries, which are also overtaking the rich nations in the number of anti-dumping filings. Other critics claim that the issues of labor relations and environment are steadfastly ignored. Steve Charnovitz, former Director of the Global Environment and Trade Study (GETS), believes that the WTO "should begin to address the link between trade and labor and environmental concerns." Further, labor unions condemn the labor rights record of developing countries, arguing that to the extent the WTO succeeds at promoting globalization, then in equal measure do the environment and labor rights suffer. On the other side, Khor responds that "if environment and labor were to enter the WTO system it would be conceptually difficult to argue why other social and cultural issues should also not enter. Bhagwati is also critical towards "rich-country lobbies seeking on imposing their unrelated agendas on trade agreements." Therefore, both Bhagwati and Arvind Panagariya. Professor at Columbia University, have criticized the introduction of TRIPs into the WTO framework, fearing that such non-trade agendas might overwhelm the organization's function. Other critics have characterized the decision making in the WTO as complicated, ineffective, unrepresentative and non-inclusive, and they have proposed the establishment of a small, informal steering committee (a "consultative board") that can be delegated responsibility for developing consensus on trade issues among the member countries. The Third World Network has called the WTO "the most non-transparent of international organisations", because "the vast majority of developing countries have very little real say in the WTO system"; the Network stresses that "civil

society groups and institutions must be given genuine opportunities to express their views and to influence the outcome of policies and decisions." Certain non-governmental organizations, such as the World Federalist Movement, argue that democratic participation in the WTO could be enhanced through the creation of a parliamentary assembly, although other analysts have characterized this proposal as ineffective. How Does it Affect India? India is a founder member of World Trade Organization, and also treated as the part of developing countries group for accessing the concessions granted by the organization. As a result, there are several implications for India for the various agreements that are signed under WTO. Let us understand each agreement in general, what it means and its implications for India in specific. 1. India was a signatory of the General Agreement on Tariffs & Trade (GATT), and as a part of the commitment had to change several laws and policies; the major changes that were incorporated were as a follows

Reduction of peak and average tariffs on manufactured products Commitments to phase out the quantitative restrictions over a period as these were considered non-transparent measure in any countries policy structure.

The result of this agreement as mentioned earlier was limited as, GATT was only an agreement and there was no enforcing agency to strictly implement the clauses and punish the country which breaks the clauses. Thus the impact was partial. However, with WTO coming into effect, the competition from imports for the domestic firms has increased. WTO had the deadline till 2005, for the domestic policy was supposed to phase out the QR's; for those countries which face severe balance of payments problems special concession period was given. Thus it is very clear that only those firms that have competitive advantage would be able to survive in the long run, and those firms which are weak would fade into history in the process. 2. Trade Related Investment Measures (TRIMS) The agreement relates to investments originating from one country to another. The agreement prohibits the host country to discriminate the investment from abroad with domestic investment, which implies that it favours national treatment of foreign investment. Besides this, there are several other clauses of the agreement totaling to 5 in this segment, one agreement requires investment to be freely allowed within domestic borders without any maximum cap on it. Another restricts to impose any kind of export obligation or import cap on the investment. Another requires that there should not be any domestic content requirement on foreign firms operating and manufacturing in other countries. These agreements have a direct impact on our Trade, Investment and foreign exchange policy, domestic annual budgetary proposals and also on the industrial policy.

Implementation process for the above requires proper preparation by the industries and policy makers, as sudden change may result in loss of revenue and decline of foreign exchange for the government and economy, and it may result in decline of market share and profitability of businesses, decline in employment opportunities and over all decline in growth. 3. Trade Related Intellectual Property Rights (TRIPS) An intellectual property right refers to any creation of human mind which gets legal recognition and protection such that the creator of the intangible is protected from illegal use of his creation. This agreement includes several categories of property such as Patents, Copyrights, Trademarks, Geographical indications, Designs, Industrial circuits and Trade secrets. Since the law for these intangibles vastly varied between countries, goods and services traded between countries which incorporated these intangibles faced severe risk of infringement. Therefore the agreement stipulated some basic uniformity of law among all trading partners. This required suitable amendment in the domestic IPR laws of each country. Since this process is not a simple one, a time period of 10 years was given to the developing countries. As a result, in India there was a requirement to change the patents act, Trade and merchandise mark act and the copyright right act. Besides these main laws, other related laws also required changes. The main impact of this is on industries such as pharma and bio-technology, because now with the law in place, it is not possible to reverse engineer the existing drugs and formulas, change the process and produce the same product. Now new investment in fresh research is required. This is quite a burden for small industries and there is a possibility that they are thrown out of business due to competition. Besides these, the technology transfer from abroad is expected to become costly and difficult. Strict implementation of law is very important in India, otherwise there could be disastrous affect on the revenue of industries which invest millions of rupees in Research and development if their products get infringed. 4. Agreement on Agriculture (AOA): The Agriculture happens to be one of the most protected sectors in all the countries without any exceptions, and therefore an agreement on the agricultural issues have always been evading and debated strongly by all the countries involved in trade in agriculture. The agreement on agreement deals with market access, Export subsidies and government subsidies. Broadly, as of now the requirement is to open up the markets in specific products in market access and incase of subsidies, it is to go for tarrification and phase it

out eventually or reduce it to bound limits. The immediate impact of the agreement would be on the policy makers to scrutinize all the items under subsidy, QRs and tariffs. However, the calculation of AMS reveals that the subsidy given to Indian farmers are much below the acceptable levels and therefore need not be changed. Looking from other perspective, the reduction of tariffs and subsidy in export and import items would open up competition and give a better access to Indian products abroad. However, the concern is on the competitiveness and sustainability that the Indian farmer would be able to prove in the long run once the markets open up. Thus there is a requirement to change policy support to meet the changing needs of Indian agriculture to gear it up for future. 5. Agreement on Sanitary and psyto-sanitary measures (SPM): this agreement refers to restricting exports of a country if they do not comply with the international standards of germs/bacteria etc if the country suspects that allowing of such products inside the country would result in spread of disease and pest, then there is every right given to the authorities to block the imports. Indian standards in this area are already mentioned and therefore there is no need to change the law, but the problem is that of strictly implementing the laws. There is an urgent need to educate the exporters regarding the changing scenario and standards at the international arena, and look at the possible consequence and losses to be incurred if the stipulations are not followed. Therefore, to meet the standards certain operational changes are required in the industries such as food processing, marine food and other packed food that is being currently exported from India. 6. Multi-Fiber Agreement (MFA): This agreement is dismantled with effect from 1 January 2005. The result was removal of QR on the textile imports in several European countries. As a consequence a huge textile market is opened up for developing countries textile industry as well as for other countries that have competitive advantage in this area. The immediate impact is on the garment and textile manufacturers and exporters. However, it still needs to be seen whether the industry is able and ready to take advantage of the large markets. This requires quite an amount of modernization, standardization, cost efficiency, and customization and frequent up gradation of designs to meet the changing need of global customers. The dismantling of QR also mean more competition to Indian textile exporters and therefore, it becomes imperative to enhance the competitiveness in niche areas. Besides these major agreements there are several other agreements such as agreement on Market Access , which propagates free market access to products and reduction of tariff and non-tariff barriers; agreement to have Safeguard Measures if there is an import surge and it is liable to affect the domestic industries in the transition economies. These measures can include imposing QR for a certain period and also imposing tariffs on the concerned products. There are other agreements that call for direct reduction of S ubsidies on Exports, which are not permissible, and phasing it out over a period of time. Besides these there are other Counter-Veiling Duties (CVD) that are permitted to be used in certain conditions. These are supposed to have an impact positive if they help the industries and negative if they reduce the cost competitiveness.

The trading countries are allowed to impose an Anti-Dumping Duty (ADD) against imported products if the charge of Dumping is claimed against them. The requirement is to prove that the product is being sold at a price, which results in material injury to the domestic industries. There are several cases in which the duty is imposed but it still remains to be proven by the Dispute settlement tribunal in case the other trading party opposes the duty imposed as "unfair". However, the proposal always should come from the representatives of the industries affected; this may result in a problem, as small industries voice may remain unheard in the process. Certain Other Unresolved Issues: There are several clauses in each of the above agreements; where there has been no consensus arrived. Besides that there are several other cases where there is no consensus on the entire agreement itself, which means that these are still in their conceptual and drafting stages. Some of such agreements are on Labour Standards and core social clauses, which intend to impose a labour standard and certain norm against exploitation of labour by the organization where they work. Such standards are likely to result in banning of certain items exports to developed world causing severe damage to industries such as Carpet manufacturing, crackers, leather, handicrafts and sports goods. There is another agreement, which is still under discussion by member countries; this is on Trade and Environment. Some countries wish to impose restrictions on trade on environmental grounds. The agreement revolves around protecting global environment by enforcing standards on production and consumption. The ranges of clauses are from production, packaging to transportation of the goods as specified by norms. The main impact of this clause would be on industries such as seafood, food processing and drugs and chemical manufacturing. There would also be a overall impact on the export business as the rules related to packaging would be very stringent. Another agreement where the consensus is yet to be reached is on Trade and Investment. The main objective of this agreement is to enable a free operating environment for foreign investment in host countries such that there is minimum interference and equal rights. There would be a direct impact on the foreign investment policy and trade policy of the government with a long-term impact on balance of payment and foreign exchange position of the country. This agreement would affect almost all industries and services without an exception. However the specific impact is expected on auto components and small retailers. Trade and Competition is another agreement on which the discussions are going on to reach a consensus. The main aim of this is to stop the business practices that distort competition in any way and to curb monopolistic growth in trade. The agreement would have an impact on the MRTP act, which needs to be replaced by the new competition law, the process for which has already started. These changes would result in a more competitive environment and it would also be a deterrent for big business houses if they

wish to expand further in the same area. Thus, the formation of cartels and mergers and acquisitions would be restricted to a great extent. Transparency in Procurements made by the Government is one such clause where it is being debated to a large extent. This is particularly of concern to developing countries as the role played by the government in a countries development is much higher than what it is in other developed countries. This would have a serious impact on the way the government and other public sector units approach the domestic procurement. This would imply that no special preference would be given to the domestic suppliers and they also need to compete on a price basis for getting orders from domestic government. This clearly can mean that many government suppliers may lose out in competition with efficient and low cost foreign suppliers. Major Conclusions The Indian economy has experienced a major transformation during the decade of the 1990s. Apart from the impact of various unilateral economic reforms undertaken since 1991, the economy also had to reorient itself to the changing multilateral trade discipline within the newly written GATT/WTO framework. The unilateral trade policy measures have encompassed exchange-rate policy, foreign investment, external borrowing, import licensing, custom tariffs, and export subsidies. The multilateral aspect of India's WTO commitments is regarding trade in goods and services, trade-related investment measures, and intellectual property rights. After analyzes of the economic effects on India and other major trading countries/regions of the Uruguay Round (UR) trade liberalization and the liberalization that might be undertaken in a new WTO negotiating round. India's welfare gain is expected to be 1.1% ($4.7 billion over its 2005 GDP) when the UR scenarios get fully implemented. The additional welfare gain is an estimated 2.7% ($11.4 billion) when the assumed future WTO round of multilateral trade liberalization is achieved. It is expected that Resources would be allocated in India to the labor-intensive sectors such as textiles, clothing, leather and leather products, and food, beverages, and tobacco. These sectors would also experience growth in output and exports. Real returns to both labor and capital would increase in the economy. However as mentioned above in the analysis of each agreement there is a serious and urgent need to re-look the strategies followed by individual firms in the changing context of increasing competition and opened markets. As said time and again there is no reversal of agreements, so what is required is to make internal policy changes at macro, meso and micro level to suit the changed external environment. Abstract: One of the most dramatic events that have taken place in later part of 20 th century was culmination of GATT 1947 into WTO (The world Trade organization), which came into being on 1st January 2005. This WTO has set expectations high in various member

countries (by now 149 including latest addition of Saudi Arabia) regarding spurt in world trade where India has insignificant share in the pie-Only 0.75% at the most. Even in IT exports the share of Indian exporters is just peanuts in view of overall world market. Since formation of WTO there have been regular meetings of Ministerial Conferences (Highest Policy level body of WTO) religiously every 2 years and 5 such meetings have taken place while world prepares for the Hong Kong meeting to take place shortly, the sixth one. While 5th meet at Cancun, Mexico was more or less failure, the earlier one at Seattle, USA was received with brickbats from environmentalist and Labor union Groups protesting against WTO regime. It is statistical fact that world trade has definitely grown since 1995 thereby giving indicators that international trade reforms do play important role in boosting economic development of various countries. Problems facing India in WTO & its Implementation: But there are several problems facing these Multilateral Trade agreements: - Predominance of developed nations in negotiations extracting more benefits from developing and least developed countries - Resource and skill limitations of smaller countries to understand and negotiate under rules of various agreements under WTO - Incompatibility of developed and developing countries resource sizes thereby causing distortions in implementing various decisions - Questionable effectiveness in implementation of agreements reached in past and sincerity - Non-tariff barriers being created by developed nations. - Regional cooperation groups posing threat to utility of WTO agreement itself, which is multilateral encompassing all member countries - Poor implementation of Doha Development Agenda - Agriculture seems to be bone of contention for all types of countries where France, Japan and some countries are just not willing to budge downwards in matter of domestic support and export assistance to farmers and exporters of agriculture produce. - Dismantling of MFA (Multi Fiber Agreement) and its likely impact on countries like India

- Under TRIPS question of high cost of Technology transfer, Bio Diversity protection, protection of Traditional Knowledge and Folk arts, protection of Bio Diversities and geographical Indications of origin, for example Basmati, Mysore Dosa or Champagne. The protection has been given so far in wines and spirits that suit US and European countries. Implications for India It appears that India does not stand to gain much by shouting for agriculture reforms in developed countries because the overall tariff is lower in those countries. India will have to tart major reforms in agriculture sector in India to make Agriculture globally competitive. Same way it is questionable if India will be major beneficiary in dismantling of quotas, which were available under MFA for market access in US and some EU countries. It is likely that China, Germany, North African countries, Mexico and such others may reap benefit in textiles and Clothing areas unless India embarks upon major reforms in modernization and up gradation of textile sector including apparels. Some of Singapore issues are also important like Government procure, Trade and Investment, Trade facilitation and market access mechanism. In Pharma-sector there is need for major investments in R &D and mergers and restructuring of companies to make them world class to take advantage. India has already amended patent Act and both product and Process are now patented in India. However, the large number of patents going off in USA recently, gives the Indian Drug companies windfall opportunities, if tapped intelligently. Some companies in India have organized themselves for this. Excerpts from Speech of Ramkrishna Hegde, the then Minister, at Geneva in 1998"In order to make WTO an effective multilateral body, which serves the objectives for which it was set up, it is necessary to go back to the basic principles. The Uruguay Round negotiators had stated their intentions quite clearly in the Preamble to the Marrakesh Agreement establishing the WTO. They recognised "that their relations in the field of trade and economic endeavour should be conducted with a view to raising standards of living, ensuring full employment and a large and steadily growing volume of real income and effective demand, and expanding the production of and trade in goods and services, while allowing for the optimal use of the world's resources in accordance with the objective of sustainable development, seeking both to protect and preserve the environment and to enhance the means for doing so in a manner consistent with their respective needs and concerns at different levels of economic development. They recognized also "that there is need for positive efforts designed to ensure that developing countries, and especially the least developed among them, secure a share in the growth in international trade commensurate with the needs of their economic development". The Objective of WTO Reiterated:

It is very clear that the intention of the negotiators was to use trade as an instrument for development, to raise standards of living, expand production, keeping in view, particularly, the needs of developing countries and least-developed countries. The WTO must never lose sight of this basic principle. Every act of implementation and of negotiation, every legal decision, has to be viewed in this context. Trade, as an instrument for development, should be the cornerstone of all our deliberations, decisions and actions. Besides, the system should be seen to be equitable and fair. It must be used in such a manner that the letter and spirit of the Agreements is fully observed. The WTO Members must mutually support and encourage each other to achieve the final goal. It must be recognized that all Members should assume a negotiating rather than an adversarial posture. It should also be recognized that different economies have different features and structures, different problems, different cultures. The pace of change must be carefully calibrated to take into account such differences. All Members should guard against unilateral action that cuts at the root of multilateral agreement and consensus. Developing countries have generally been apprehensive in particular about the implementation of special and differential treatment provisions (S&D) in various Uruguay Round Agreements. Full benefits of these provisions have not accrued to the developing countries, as clear guidelines have not been laid down on how these are to be implemented. " The first Ministerial Conference held in 1996 in Singapore saw the commencement of pressures to enlarge the agenda of WTO. Pressures were generated to introduce new Agreements on Investment, Competition Policy, Transparency in Government Procurement and Trade Facilitation. The concept of Core Labor Standards was also taken up for introduction. India and the developing countries, which were already under the burden of fulfilling the commitments undertaken through the Uruguay Round Agreements, and who also perceived many of the new issues to be non-trade issues, resisted the introduction of these new subjects into WTO. They were partly successful. The Singapore Ministerial Conference (SMC) set up open-ended Work Program to study the relationship between Trade and Investment; Trade and Competition Policy; to conduct a study on Transparency in Government Procurement practices; and do analytical work on simplification of trade procedures (Trade Facilitation). Most importantly the SMC clearly declared on the Trade-Labor linkage as follows: " We reject the use of labor standards for protectionist purposes, and agree that the comparative advantage of countries, particularly low-wage developing countries, must in no way be put into question. In this regard we note that the WTO and ILO Secretariat will continue their existing collaboration". Not many people in this country are aware that there is a dispute settlement system in the WTO. This is at the heart of the WTO and sets it apart from the earlier GATT. Countries like the USA and the European Union have brought cases against us and won these cases

like in pharmaceutical patents. India too has complained against the US and Europe and it too has won its fair share of disputes in areas like textiles. India must effectively use this mechanism to extract fair share in world markets. It would be advantageous for India to give concrete shape to SAARC economic forum or Free market and align itself with ASEAN. What India should do? The most important things for India to address are speed up internal reforms in building up world-class infrastructure like roads, ports and electricity supply. India should also focus on original knowledge generation in important fields like Pharmaceutical molecules, textiles, IT high end products, processed food, installation of cold chain and agricultural logistics to tap opportunities of globalization under WTO regime. India's ranking in recent Global Competitiveness report is not very encouraging due to infrastructure problems, poor governance, poor legal system and poor market access provided by India. Our tariffs are still high compared to Developed countries and there will be pressure to reduce them further and faster. India has solid strength, at least for mid term (5-7 years) in services sector primarily in IT sector, which should be tapped and further strengthened. India would do well to reorganize its Protective Agricultural policy in name of rural poverty and Food security and try to capitalize on globalization of agriculture markets. It should rather focus on Textile industry modernization and developing international Marketing muscle and expertise, developing of Brand India image, use its traditional arts and designs intelligently to give competitive edge, capitalize on drug sector opportunities, and develop selective engineering sector industries like automobiles & forgings & castings, processed foods industry and the high end outsourcing services. India must improve legal and administrative infrastructure, improve trade facilitation through cutting down bureaucracy and delays and further ease its financial markets. India has to downsize non-plan expenditure in Subsidies (which are highly ineffective and wrongly applied) and Government salaries and perquisites like pensions and administrative expenditures. Corruption will also have to be checked by bringing in fast remedial public grievance system, legal system and information dissemination by using e-governance. The petroleum sector has to be boosted to tap crude oil and gas resources within Indian boundaries and entering into multinational contracts to source oil reserves.

It wont be a bad idea if Indian textile and garment Industry go multinational setting their foot in western Europe, North Africa, Mexico and other such strategically located areas for large US and European markets. The performance of India in attracting major FDI has also been poor and certainly needs boost up, if India has to develop globally competitive infrastructure and facilities in its sectors of interest for world trade.

Case studies on response and actions by various countries.

Rock n Roll in Bangladesh: Protecting Intellectual Property Rights in Music Abdul Kalam Azaad I. Problem in Context Its daylight robbery in Murder, screamed a cult Bangladeshi rock band, and its plea has been heard, writes the Telegraph of Calcutta in its front-page story on tune-lift in the Hindi movie Murder (Telegraph, 20 May 2004). Miles, a very popular Bangladeshi music band (see box) has accused music director Anu Malik, a music-mogul of the Mumbai movie world, of committing pure piracy of one of its original compositions. On receiving messages from fans in the United States, the United Kingdom, Australia and India that their song Phiriye Dao Amar Prem (Give me back my love) had been copied in the soundtrack of Murder, Manam, Hamin and other members of Miles collected a copy of the movie and sat down to watch it themselves. When the song Jana Jane Jana was being played, the band members could hardly believe their ears. Only the language was different Hindi. Otherwise, the lyrics are a shadow of ours, the tune is the same. Even the beat break-ups, the use of guitar and filler notes are the same. How could Anu do such thing? wondered Hamin, one of the guitarists and vocalists of Miles. Even when a musician is inspired by a song, he can only copy eight measures. But this is a complete copy of Phiriye Dao, added Hamin (Bombay Times, 18 July 2004). The Bengali song Phiriye Dao was composed by Miles for its music album Prathasa (Hope) in 1993. It was released in Bangladesh and Pakistan. In 1997 this same song was included in a music album named Best of Miles, Vol. 1 released by the Asha Audio Co. of Calcutta, and it became very popular in both Bangladesh and West Bengal, India. Now the song has been used in the soundtrack of the Hindi block-buster movie Murder without, of course, the permission of its original composers. The Mumbai (previously Bombay) movie world known as Bollywood, in imitation of the United States Hollywood, earns millions of dollars by producing and exporting its films, typically including music and dance, romance and comedy, all over the world, including Bangladesh. Compared with Indias, Bangladeshs movie/music production is

just a dwarf. Bangladesh runs a huge trade deficit with India, and the import of movies/music from India contributes significantly to it. Under such circumstances, copying and reproducing a Bangladeshi song without any payment of royalties is not only unethical but also a blatant violation of the intellectual property rights recognized by the World Trade Organization. It hurts, in this particular case, the business interests of the Bangladeshi rock band Miles. Just as Santana cannot leave a concert without performing Black Magic Woman, we cannot conclude a concert without performing Phiriye Dao. Our songs have a huge potential for the non-Bengali audience. We had planned to release their Hindi versions. Our plans to go Hindi are in jeopardy. We are open to singing for Hindi films too. The offer should have come to us, said Hamin in a description of how the copying of their song had hampered Miles prospects, including, of course, business prospects (Bombay Times, 18 July 2004). And it goes without saying that since Bangl adesh is the home of Miles, so when its business interests are hurt, Bangladeshs business interests also are hurt.

II. The players involved The decision to seek redress and preparations The members of Miles discussed among themselves the possibility of seeking and getting compensation for the injury caused to their business prospects. It was decided that they should contact lawyers, people well versed in matters relating to the WTO, and the Ministry of Commerce. The relevant people in the Ministry of Commerce showed keen interest in the case. They contacted their counterparts in the Ministry of Commerce in India, who suggested that Miles should seek redress to the problem by taking the violators of copyright to court. The Bangladesh Ministry of Commerce advised the members of Miles accordingly, and asked the Commercial Counsellor and others in the Calcutta office of the Bangladesh deputy high commission to extend all possible co-operation to the band members in this regard. By approaching some individuals well-versed in WTO matters, the band members learned that they can claim protection for their work under the copyright and related rights provisions of the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS). The main provisions on copyright and related rights in the TRIPS Agreement are contained in the Berne and Rome Conventions. In addition, the TRIPS Agreement contains provisions related to

a. computer b. rental c. rights rights of to

programs computer programs, and

and sound recordings of

databases; and films; and

performers

producers

phonograms;

d. rights of broadcasting organizations. In the case of Miles, Article 11 and Article 14 of the TRIPS Agreement are the most relevant ones. According to Article 11, member countries are required to provide authors of computer programs, sound recordings and cinematographic films the right to authorize or to prohibit the commercial rental of their copyright works. In addition, Article 14 provides that the performers shall have, in respect of a fixation of their performance on a phonogram, the right to prevent the reproduction of such fixation. On being advised by the Ministry of Commerce and bolstered by the knowledge of the rules of WTO, members of Miles finally decided to go to the court of law. By going to court, we are registering our protest against such an unethical deed, said Hamin to the Bombay Times (18 July 2004).

Preparations for a legal suit Sinha and Company, a Calcutta law firm, was contacted on behalf of Miles for filing suit against the violators of copyright. Accordingly, lawyers of the firm served notices on the offenders, prepared relevant documents including notations of the original and copied songs, collected audio-cassettes of the two songs and so on. Finally, after the expiry of the notice period, a writ petition was filed on behalf of Miles in the Calcutta High Court on 17 May 2004 against the producer Mahesh Bhat and the music director Anu Malik of the film Murder, the singer of the song, Amir Jamal, the recording firm Saregama (India) Ltd and the audio company RPG Global Music (London). In the writ petition it was claimed that the defendants had collaborated on copying core elements from the petitioners song Phiriye Dao Amar Prem in the soundtrack Jana Jane Jana of the movie Murder. It was further claimed that the themes of the two songs had been similar and their melodies identical. Even the use of chords was the same in both the songs. This is gross infringement of the International (Intellectual) Property Rights as well as the Copyright Act, stated Pratap Chatterjee, the lawyer for the petitioners (Telegraph, Calcutta, 20 May 2004). As compensation for the injury caused to the business interests of the petitioners, 50 million rupees were demanded from Anu Malik, Mahesh Bhat, Saregama India Ltd and RPG Global Music; in addition, total reimbursement for the expenditure incurred in filing the case also was demanded. A court order was also sought for appointing a receiver or special officer to seize the entire lot of soundtrack software from Saregamas

Dum Dum studio. Besides this, the bands lawyers demanded that the respondents should be directed to disclose upon oath details of cassettes and CDs distributed by them to various vendors and retails.

III. The outcome and challenges The verdict On hearing the petition, the Hon. Justice S. K. Mukherjee took prima faciecognizance of the matter and passed an interim order on 19 May 2004. In his learned judgment, the justice ordered the respondents to remove the song from the soundtrack of the movie Murder. The court order further barred the respondents from manufacturing, selling, distributing or marketing any music cassette or disc containing the song.

Triumph of the rule-based international trade regime The verdict of the Calcutta High Court in the Miles case was a triumph of the rule-based international trade regime. Previously, intellectual property right (IPR) laws were applicable mainly within national boundaries, and only the nationals of a country could benefit from such laws; India was no exception to such practice. The Indian Copyright Act empowered the government to extend the benefits of the Act to the nationals of other countries (i) if India had entered a bilateral treaty with that country; (ii) if India and the country concerned had been parties to a common international convention guaranteeing protection to intellectual property rights; or (iii) if the Indian government was satisfied that the country concerned had adopted measures to reciprocate similar protection to the works of Indian nationals. But Bangladesh and India had neither signed any bilateral agreement nor been parties to any common international convention related to the protection of property rights in literary and artistic works before 1995. So, according to the provisions of the Indian Copyright Act, Bangladesh would not have the right to claim IPR protection for its citizens works in India before 1995. However, both Bangladesh and India became members of the WTO on its formation in 1995, and the Indian Copyright Act was amended accordingly to make it compatible with the TRIPS Agreement. The amendment to Chapter IX of the Act, entitled International Copyright: power to extend copyright to foreign works, inserted a new section after s. 40 which reads as follows: 40A (1) If the Central Government is satisfied that a foreign country (other than a country with which India has entered into a treaty or which is a party to a

convention relating to rights of broadcasting organizations and performers to which India is also a party) has made or has undertaken to make such provisions, if any, as required for the protection in that foreign country, of rights of broadcasting organizations and performers as is available under this Act, it may, by order published in the Official Gazette, direct that the provisions of Chapter VIII shall apply . (c) to performances that are incorporated in a sound recording published in a country to which the order relates as if it was published in India. In addition to making necessary amendments to the Copyright Act of 1957, the Indian government also issued the International Copyright Order 1999, extending the benefits of the provisions of the Indian Copyright Act to nationals of all WTO member countries. This automatically granted Bangladesh, as a member of the WTO, the status of receiving copyright protection in India for its citizens works. In the present case, both India and Bangladesh as members of the WTO are bound by its rules. When some nationals or business firms of India infringed the copyright (included in the IPR) of the Bangladesh nationals members of the band Miles it was possible for the latter to seek legal redress for the injury caused by such infringement of copyright. And this was particularly provided for in the WTO rules (National Treatment Principle of TRIPS). Thus although the TRIPS Agreement was not the first of its kind to enable copyright owners to defend their rights in foreign countries, because of the variations in standards of protection and eligibility criteria, it was previously possible for someone to violate the intellectual property rights of nationals of other countries and exploit it for commercial purposes both within and outside the country, that is for both domestic supply and export. The TRIPS Agreement, by ensuring a minimum standard of protection and eligibility criteria, was intended to put an end to such violations of intellectual property rights beyond national boundaries. The case described here serves as a concrete proof of such an intention. The present case is a further proof of the fact that Bangladesh was a special beneficiary of the provisions of the TRIPS Agreement. Prior to amendment to make it TRIPScompatible, the Indian Copyright Act provided for the extension of copyright protection to the works of nationals of other countries provided that that country also granted reciprocal treatment to the works of Indian nationals. But in this case, the Bangladesh band Miles obtained National Treatment although Bangladesh still has until 2006 (an allowance of grace period for Bangladesh as a least developed country (LDC)) to accord similar treatment to the nationals of India (or any other country, for that matter). But availing themselves of the benefits of the provisions laid down in the WTO rules involved costs and challenges for the copyright owners of Bangladesh. These were in terms of money, time, lack of information and uncertainty about the outcome, compensation and the amount thereof. In this particular case, the band has won only the first round of the battle. It is yet to secure a verdict on the nature and amount of monetary compensation commensurate with the damage caused to the bands business prospects.

IV. Lessons for others Reactions to the court order Nevertheless, the members of Miles were very happy with the decision of the court. In particular they were pleased because not only did they get their copyright recognized, the recognition came promptly too. We were impressed by the promptness with which the first hearing in the Calcutta High Court was completed and the injunction order was passed. Normally, it does not happen so quickly. We proceeded systematically, organizing everything very carefully. Particularly, we submitted the technical notations of our song and that of the copied song, said the members of the Miles (Prothom Alo, 26 May 2004). Mahesh Bhat, the producer of Murder, responded to the injunction order by removing the song from the soundtrack of the movie. However, in his defence he said that the song had been bought from the Jeddah-based Pakistani singer Amir Jamal. We had bought the song from Amir Jamal. and it was only recreated by Anu, Mahesh Bhat told a Telegraph reporter when contacted on his cell phone (Telegraph, Calcutta, 20 May 2004). But the most interesting and vindicating confession came from Anu Malik, the music director of Murder. Recording his reactions for the first time since the controversy over the song Jana Jane Jana surfaced, Malik confirmed that This song, as well as Kaho Na Kaho (another song fromMurder) were taken from a Pakistani singer by the producers and the music company. I have not even recorded that song, leave alone composed it (Telegraph, Calcutta, 26 May 2004). Malik said that he had been shocked to be dragged into this controversy: The people who bought the song from the Pakistani singer must also clarify that I had nothing to do with it. Manam Ahmed, the Miles keyboard player, was asked in an interview about the statements made by both Mahesh Bhat and Anu Malik that the controversial song was purchased from the Pakistani singer Amir Jamal. In reply, Manam Ahmed mentioned that this song had been composed in 1993 for their album Prothasa, which had even become popular in Pakistan. It was released in India again in 1997 by the Asha audio company of Calcutta. If Amir Jamal was the original composer of the song, why did not he come up with a complaint during the last ten-year period? asked Manam (Prothom Alo, 10 June 2004). Manam Ahmeds contention was confirmed by the audio company Asha of Calcutta. S. D. Lahiri, the proprietor of Asha, said, The song appears in our 1997 release Best of Miles Vol. 1. The Murder track has reproduced ditto the entire musical arrangement of the Miles number, including the specific guitar parts (Telegraph, Calcutta, 20 May 2004). On the other hand, shrugging off their responsibility in the whole episode, S. F.

Karim, business manager for Saregama India Ltd, said, We have little role in this, except reproducing and printing what the producer and music director have given us. Had it been non-film music, we would have had a more proactive part in the composition (Telegraph, Calcutta, 20 May 2004). In short, the members of Miles are very happy with the outcome. They are happy to see that their rights have been established. On the other hand, the violators of copyright have also learned that they cannot get away scot-free after perpetrating such infringement of others copyright. They can be expected to be more cautious in future. But above all, this case upholds the fact that intellectual property rights, like other property rights, are inviolable. This will simultaneously serve as a warning to would-be violators of intellectual property rights and as an encouragement to creative people all over the world by reassuring them that their creative works will not be pirated. And all of these follow from the TRIPS Agreement one of the three major instruments that constitute the legal rights and obligations of the WTO.

Kenyas Participation in the WTO: Lessons Learned Walter Odhiambo, Paul Kamau and Dorothy McCormick I. The problem in context

Kenya was among the founding members of the World Trade Organization (WTO) when the Marrakesh Agreement was signed in Morocco on 15 April 1994. The notification process was completed by 31 December 1994, when accession to the WTO was completed. As a member, Kenya is signatory to all WTO agreements including the General Agreement on Tariffs and Trade (GATT), the Agreement on Agriculture (AOA), the General Agreement on Trade in Services (GATS), the Agreement on Textiles and Clothing (ATC) and the Agreement on Trade-Related Intellectual Property Rights (TRIPS). As in many other countries, trade issues in Kenya involve a large number of stakeholders with diverse interests. For effective policy formulation, it is important that all the stakeholders are effectively involved in the decision-making process. This is because not only are trade matters, particularly WTO-related ones, complex, but they also overlap and have far-reaching consequences. While there have been bold attempts in Kenya to engage all the stakeholders in the decision-making process, the pursuit of high-level strategic objectives in trade is undermined by the lack of any effective mechanism for coordination and consultation. This may have undermined the countrys policy stance. It may also have resulted in poor participation by some stakeholders. Like other developing countries, Kenya also lacks capacity in the formulation of trade policy.

II. The local and external players and their roles WTO trade-related matters in Kenya involve a number of stakeholders. These include the government, the private sector and civil society organizations. These stakeholders not only have varied interests, but also have varying capacities to engage in WTO matters. What follows is a brief overview of the different stakeholders and their roles. The government The government is obviously one of the main stakeholders in trade matters. Overall responsibility for trade matters lies with the Ministry of Trade and Industry (MTI), although other ministries handle some trade-related matters. The MTI is responsible for the WTO and Common Market for East and Southern Africa (COMESA) issues, while the Ministry of Planning is responsible for ACP-EU Cotonou matters and the Ministry of Foreign Affairs for East African Community (EAC) matters. This fragmentation of trade responsibility has undermined the development of synergies of the WTO and other trade arrangements in Kenya. Within the MTI, the WTO Division in the Department of External Trade is responsible for co-ordinating action within government on the Doha Round of trade negotiations as well as all other WTO matters. The WTO Division has a number of professional staff both within Kenya and at the Kenyan mission in Geneva, which deals exclusively with WTO matters. Although a crucial division on trade matters, it lacks the requisite capacity to undertake analysis of trade policy issues and the implications of tariff reduction. This, in turn, has limited the countrys capacity to negotiate at the WTO. The private sector The private sector in Kenya is becoming an increasingly important actor on trade matters, including WTO issues. It has shown a keen interest in engaging the government on trade policy issues. For long time the private sector in Kenya was not organized and was rarely represented in important policy formulation processes. However, a number of privatesector organizations have recently emerged to present and articulate the views of the private sector, and have been active on WTO trade-related matters. These include labour unions, trade associations, the Kenya National Chamber of Commerce and Industry (KNCCI), and a number of producer associations. However, the capacity of the private sector to participate varies. Most private-sector organizations lack the analytical capacity to comprehend the implications of trade measures. They also lack information on trade issues, which prevents a full understanding of trade agreements and measures. The other problem with the private sector organizations is that they tend to have different interests and do not in most cases have a common position on economic and trade issues. The private sector in Kenya generally tends to have enclave interests.

Civil society, research and academic institutions

A remarkable development of the trade policy formulation process in Kenya has been the emergence and participation of civil society organizations (CSOs), some of which include a mix of various livelihood groups, including the poor. In most cases they have sought to represent the poor in WTO issues, and a number have been active in such issues, including the Kenya National Federation of Agricultural Producers (KENFAP), ActionAid (Kenya), Oxfam, EcoNews, Consumer Information Network, RODI, SEATINI, the Institute for Economic Affairs, the Heinrich Bll Foundation and the Kenya Human Rights Commission. The participation of the CSOs has again been constrained by a limited capacity to undertake analytical studies on the impact of trade issues. A lack of financial resources has also limited the participation of some CSOs, especially community-based organizations (CBOs). As discussed in the next section, CSOs are better organized than the private sector in finding common ground on which to engage government. Academic and research institutions Academic and research institutions have been the main organizations carrying out research on trade issues in Kenya. As such they have provided an important resource to government, the private sector and civil society. They also, however, face a number of challenges including lack of resources for research. Co-ordination of WTO matters in Kenya On acceding to the Marrakech Agreement, Kenya established the Permanent InterMinisterial Committee (PIMC) in May 1995 to advise the government on all matters pertaining to the WTO. However, being an inter-ministerial committee, it excluded some key stakeholders, particularly those from the private sector and civil society. In recognition of the important role these actors could play in trade, in 1997 the government restructured the PIMC by including the private sector and civil society. Subsequently the PIMC was re-branded as the National Committee on WTO (NCWTO). Thus the NCWTO is the body through which the government consults with the private sector and civil society on WTO matters, and it is also the main trade co-ordinating body. The NCWTO was established with a mandate to:

study and analyze the provisions of the WTO agreements and their likely effects on the Kenyan economy; monitor the implementation of WTO agreements by other members and recommend appropriate action for Kenya; provide modalities for implementation of the WTO agreements by Kenya so as to ensure maximum gains from multilateral trade; provide government and the private sector with the necessary analysis of new market access conditions to enable identification of immediate and potential

trading

opportunities

created

within

the

multilateral

trade

system;

provide government with adequate information on the sectoral impact of the various agreements in order to enable it to review current and future trade policies; increase the governments awareness level regarding the institutional and legislative means by which it could safeguard its trade rights and obligations in multilateral trading systems; enhance awareness among various stakeholders through fora and training; and promote a dialogue between the public and private sector and build a consensus on WTO issues in Kenya.

The NCWTO is the forum in which the government, private sector and civil society engage in WTO matters. Within the government arena, the Attorney General, the Office of the President and the ministries of Trade and Industry, Finance, Planning and National Development, Health, Agriculture, Foreign Affairs, Labour and Human Resources, Environment and Natural Resources, Information and Communications, and Transport all participate actively in the NCWTO. The ministries act as the focal points for subcommittees handling relevant WTO issues, the Ministry of Health thus being the focal point for all health issues and the Ministry of Agriculture the focal point for all agricultural-related issues, and so on. A number of state corporations and parastatals such as the Kenya Revenue Authority (KRA), the Kenya Bureau of Standards (KEBS), the Kenya Plant Health Inspectorate Service (KEPHIS) and the Kenya Sugar Board (KSB) are members of the NCWTO. Others include the Central Bank of Kenya (CBK), the Export Promotion Council (EPC), the National Environment Management Authority (NEMA), the Kenya Industrial Property Institute (KIPI) and the Capital Market Authority (CMA). Membership of the NCWTO is by invitation only. As national co-ordinator the MTI identifies the relevant stakeholders who are then invited to become members of the NCWTO. In a few instances, members of the sub-committee can identify other relevant stakeholders that could be co-opted. A few organizations or individuals have expressed interest in joining; there are no other formalities for becoming a member, as new members are simply entered into a list and invited to attend subsequent meetings. There is no limit to the number of stakeholders that can be members of the NCWTO, although preference has been given to organizations rather than individuals. There are currently around forty-five members of the NCWTO representing different umbrella organizations and institutions. Around twenty-five CSOs are members of the NCWTO, although only seven are active. Outside the NCWTO, CSOs have organized themselves into a loose network coordinated by EcoNews (a Kenyan NGO). This network of NGOs provides a forum for civil society to consolidate their deliberations, which are then passed on to the

government. In the recently concluded Cancn talks, Kenyan civil society played a pivotal role not only in developing the countrys position but also in facilitating attendance for some delegates. According to one interviewee, the civil society organizations have been commissioning research projects on various trade issues whose findings feed into strengthening deliberations for the Kenyan trade position. Civil society also sponsors some of the activities of the NCWTO and recently sponsored the participation of a substantial number of delegates to Cancn including parliamentarians. As indicated earlier, the NCWTO is an advisory body for the government on WTO issues. The advice given to the government is generated through deliberations and consultation within the national committee. Because of the number and technical nature of the issues coming from Geneva, the NCWTO formed sub-committees with specific expertise to handle different issues. There are currently around ten sub-committees dealing with diverse issues. They include:

the Agriculture Sub-committee, chaired by the Ministry of Agriculture; the Services Sub-committee, chaired by the Ministry of Transport and Communications; the Market Access Sub-committee, chaired by the Department of Industry, ULI; the Trade and Environment Sub-committee, chaired by the National Environmental Management Authority (NEMA); the Trade Facilitation Sub-committee, chaired by the Department of Internal Trade, ULI; the Trade and Competition Sub-committee, chaired by the Monopoly and Price Commission; the Trade and Investment Sub-committee, chaired jointly by the Investment Promotion Council (IPC) and the Ministry of Finance; the Transparency and Government Procurement Sub-committee, chaired by the Ministry of Finance; the E-Commerce sub-Committee, chaired jointly by the Ministry of Transport and Communication and the ULI; and the Trade-related Intellectual Property Rights Sub-committee, chaired jointly by KIPI and the MTI.

Membership of sub-committees is much more open than is the case with the NCWTO, as it depends on the subject being handled and the stakeholders interests. Whenever an issue arises, relevant sub-committees will call a meeting to deliberate on the issue and

forward its deliberations to the NCWTO. Each sub-committee would get most of their inputs from the focal points (see Appendix, p. 298), which have the capacity to handle technical issues. Once the sub-committees submit their guidelines to the NCWTO, a meeting of the NCWTO is called for further deliberations on these guidelines. The NCWTO then mandates the Secretariat (Department of External Trade MTI) to submit the deliberations to the Kenyan mission in Geneva. There are, however, cases when immediate responses are of the essence and sub-committees communicate directly with the Geneva team. This is allowed within the NCWTO. Our survey revealed that NCWTO meetings are seldom convened, except to prepare for major conferences such as the Cancn Ministerial Meeting in 2003. Afterwards, very few meetings are called. Most of our respondents felt that the NCWTO should hold regular meetings for discussions, even in the absence of any WTO issues, in order to keep members abreast of the issues and enable the committee to be proactive. Decision-making in the NCWTO is by consensus. However, when decisions cannot be reached by consensus, voting may be used. At the sub-committee level, the decisionmaking process begins with the focal point which will make proposals on WTO issues coming from Geneva. However, before these proposals are presented to the subcommittee, they must be ratified by either the ministries or the organizations where the focal point is based. When the sub-committee meeting is held, members consider the position taken by the focal point for further deliberations. The decision taken by the subcommittee is then forwarded to the NCWTO, where all members deliberate on the position and adopt or amend it. At this level, decisions are made by consensus. There are cases where the national committee has vetoed a position taken at the sub-committee level and adopted a completely different position. Once the national committee has ratified a position, it is passed over to the MTI, which then passes it on to the negotiating team in Geneva through the Permanent Secretary (PS). To ensure full implementation of all WTO agreements, particularly the Sanitary and Phytosanitary Standards (SPS) and Technical Barriers to Trade (TBT) Agreements, Kenya identified a number of focal points, which are organizations with expertise and competence in particular WTO issues. These focal points serve as the nerve centre for the relevant sub-committees by providing technical input on the specific issues handled by the sub-committee. Similarly, there are national enquiry points (NEPs) established to help disseminate crucial information related to trade issues. For instance, the Kenya Bureau of Standards (KEBS) is a focal point and also the NEP on matters relating to standards of or technical barriers to trade. Likewise, the Kenya Plant Health Inspectorate Service (KEPHIS) and the Kenya Intellectual Property Institute (KIPI) are the enquiry points on issues on the SPS and Intellectual Property Rights, respectively. There are also a number of reference points that store and disseminate WTO-related reference materials. They include the Department of External Trade within the MTI, which is the reference point for the public sector; the Centre for Business Information in Kenya (CIBK) within the Export Promotion Council, for the business community; and the Kenya Institute for Business Training for academia. Recently, the National Assembly has been identified as a reference point for parliamentarians.

Negotiations in agriculture: some insights into Kenyas WTO participation To demonstrate how Kenya participates in the WTO, Kenyas experiences in agricultural trade negotiations are presented below. Kenyas participation in the WTO largely revolves around agriculture; it forms the backbone of the economy and produces the countrys major exports. This is not to say, however, that other issues are less important. Kenya has also been very active in issues related to trade in services and intellectual property rights. Agriculture-related issues are negotiated on two main fronts. First, there are the regular responses on issues from Geneva on which members are expected to take positions. The positions members take are presented as proposals which are then defended in Geneva. The second front is during inter-ministerial meetings like the recently concluded talks in Cancn. This is where countries make major decisions on trade matters within the WTO framework. Members have tended to form groups around particular interests and to take common positions during ministerial meetings; in Cancn, there were three main groups, G20, G90 and the European Union (EU)/US axis. Kenya was in the G90 group. The positions a country takes will, therefore, to a large extent be influenced by the position of other countries. This section seeks to provide some insights into the former case where positions are largely taken internally. The focus is on the processes involved, the actors and outcomes. As indicated earlier, Kenya maintains a negotiating team in Geneva to present Kenyas positions on various issues, as well as to monitor and relay information on a daily basis on WTO events. These include notifications by other countries. Where situations arise and Kenya needs to respond, the Geneva team relays the information to the Ministry of Trade and Industry, which also act as the secretariat to the NCWTO. Once the information is received at the ministry, the ministry contacts the relevant sub-committee, in this case the sub-committee on agriculture, which is headed by the Ministry of Agriculture. At the same time, the information is passed on to the other stakeholders awaiting deliberations in the sub-committee. At the Ministry of Agriculture the contact is usually the WTO desk officer. There is currently one officer in the ministry handling WTO issues. The current desk officer has been in the position for the last six months after his predecessor left to work for an NGO. This epitomizes the inconsistency and lack of continuity in the ministries. The desk officers role is essentially that of providing technical inputs into the issues from Geneva and formulating a position. Once this is done, the officer presents the position to the head of division, who may or may not moderate the position taken. The next step is then to present the position to the Director of Agriculture who is in charge of all technical matters in the Ministry. Again, the Director of Agriculture may moderate or alter the position, although no examples of this could be found. The Director of Agriculture is then expected to brief the Permanent Secretary on the position. Once the Permanent Secretary accepts the position it becomes the position of the Ministry of Agriculture. Only in a few cases is the minister involved. This happens whenever the issues are weighty and are considered to be crucial.

As the focal point, the Ministry of Agriculture then convenes the Sub-committee on Agriculture to solicit the views of the other stakeholders. At the sub-committee, it is the responsibility of the focal point, in this case, the Ministry of Agriculture, to explain the issues and lead by presenting the position of the ministry. The members are then free to deliberate on the position taken and finally reach a consensus. So far there has been no voting on any of the agricultural issues. Although members may initially differ on issues a consensus has always been reached. The position taken is often a negotiated position. One of the reasons why it has been easy to reach a consensus within the sub-committee is because the issues under discussion at the sub-committee are often too technical for most members to understand. In other instances, the position of the Ministry of Agriculture prevails. The other reason is that members are ill-prepared for the deliberations because they receive documents from Geneva either during the meeting or a few days before. In most cases, these documents are voluminous and technical. According to one of our respondents only a few people can understand the issues and the sessions quickly become a boring lecture. Once the sub-committee takes a position on an issue, it is then required to present this to the national committee. At the NCWTO the issue is opened for further discussion by all the WTO stakeholders and a position is taken through consensus. The position taken is then passed on to the Ministry of Trade and Industry who then sends it to the negotiating team in Geneva, either as it is or with amendments depending on the governments position. III. Challenges faced and the outcome As a founder member of the WTO, Kenya has made commendable progress in WTO matters, and has been able to build the structures necessary for the implementation of the WTO agreements. Kenyas success is reflected in the countrys participation in all major WTO trade talks and the maintenance of a strong negotiating team in Geneva. Kenya has also been able to prepare position papers on a number of issues, even taking the lead at regional level in a number of cases. However, Kenya still faces a number of challenges related to its WTO participation. We discuss here some of the challenges and outcomes. Effectiveness of the NCWTO As earlier indicated, the NCWTO is the body through which the government consults both the private sector and civil society. However, the committees effectiveness has been compromised by a number of factors. As constituted the NCWTO is not a legal entity, and this has compromised both its operational and financial autonomy. For example, it does not have a chief executive officer or a board of management. The Department of External Trade in the MTI provides the secretariat for the NCWTO, while the Permanent Secretary in the same ministry assumes chairmanship. Although there have been some efforts to give the NCWTO legal status, this has not been successful. It therefore remains an informal advisory body until it is legally constituted.

The fact that the NCWTO has no legal mandate has meant that the government is under no obligation to adopt its advice and recommendations. According to a programme officer for an agriculture-based organization that is a member of the NCWTO, the MTI downplays the submissions presented to it by the NCWTO on agriculture because it is has no obligations whatsoever to accept them. During negotiations the Minister of Trade and Industry can overturn positions developed through the NCWTO. A case in point according to this respondent took place during the Ministerial Meeting in Cancn: Prior to our departure to Cancn, we held a delegates meeting at the Safari Park Hotel. We agreed that Kenya would not negotiate on any of the four Singapore Issues until the Agreement on Agriculture was resolved. The Minister for Trade and Industry was to uphold this decision. However, in Cancn the minister allegedly changed position and was willing to negotiate on trade facilitation contrary to the earlier position we had taken in Kenya. This did not please most of us delegates and other developing countries who viewed Kenya as a torchbearer. Functionally, the NCWTO is incapacitated because of its weak legal status. The organization has no chief executive and lacks the requisite capacity to handle some of its activities. For one, the NCWTO lacks the financial capacity to operate effectively. The Treasury has no obligation to allocate funds to the NCWTO because it is not by law a government agency, and the NCWTO does not have its own budget from the government. Other than the funding provided by the Joint Integrated Technical Assistance Programme (JITAP), which played a key role in its establishment, the NCWTO has relied on donors and well-wishers. According to a respondent, since JITAP I [1998-2002] ended, activities of the NCWTO have came to a standstill. It is only through the financial support of civil society organizations that a few activities have been going on. This has led to irregular meetings, poor information flow and poor coordination among members. Lack of human resources makes the NCWTO rely on members of staff from the MTI, who are also required to perform other ministerial duties. Participation in NCWTO meetings by stakeholders Attendance at NCWTO meetings has generally been considered to be poor; attendance is relatively higher among government officials than among the private sector or civil society. It is important to note at this point that members have no obligation to attend the NCWTO meetings. The relatively high participation by public officials is because, in most cases, they play a facilitating role. The participation of public officials is, however, affected by the fact that they are transferred from one ministry to another. Participation by the private and civil society organizations is driven more by self-interest, for example profit maximization in the case of private-sector organizations. The survey revealed that private-sector organizations are more interested in the East African Community (EAC) and the Market for Eastern and Southern Africa (COMESA), since they are their major markets. Private-sector organizations are not very interested in WTO issues: a respondent in one of these organizations concurred with this position, saying that WTO is far off and our members concentrate on COMESA issues; the NCWTO calls too many meetings, which sometimes coincide with EAC or COMESA trade meetings in which we

have direct interest. We also do not have many officers who like government. Anot her respondent had this to say: The notices for WTO meetings are never sent on time and this demotivates us. The transfer of officials from one ministry to another impedes the smooth running of activities in the NCWTO. There is generally more consistency within the civil society than government. The NCWTO is supposed to organize meetings for members on a regular basis. However, the survey revealed that there are spells when the NCWTO does not convene meetings; for instance it has called only one meeting since the Cancn Ministerial Meeting in 2003. This could be associated with the costs involved, so that active stakeholders felt that there is a need to look for alternative venues so that meetings can be held more regularly, otherwise interest may wane. Even though the NCWTO has been involved in training, some respondents complained that only government officials received any training; capacity development should extend to other members. Participants should be allowed to sponsor themselves if they are able. Similarly, the calendar of NCWTO events should be less closely linked to ongoing business in Geneva. Currently, the Department of External Trade in the MTI has been the main facilitator of NCWTO activities. This has been done with the support of the JITAP. Through the JITAP, a consultant was hired to work hand in hand with the MTI in co-ordinating NCWTO matters (many respondents referred us to this consultant). Although we were not able to get this persons terms of reference or obtain an interview, we were informally told that the consultant is charged with the responsibility of organizing NCWTO activities and ensuring that the members receive communications on time. While some respondents felt that this was a good effort and should be strengthened, others said that the consultant was making the NCWTO work unnecessarily complicated. Inclusiveness and awareness A primary reason for the establishment of the NCWTO was to ensure that all stakeholders are brought on board. Although this has to a large extent been achieved, a number of actors are still out of the loop. For example, the Kenya Fish Processors and Exporters Association (AFIPEK) is not a member of the NCWTO, and yet fish is an important export subject in WTO regulations. Asked whether they were members of the NCWTO, the respondent in AFIPEK said, We have never attended a single meeting organized by the NCWTO. We have never been invited. The NCWTO is purely a group of government officials. The private sector, including ourselves, have never been invited. This comment illustrates a feeling of exclusion and a low level of awareness on WTO matters. We did not interview the Kenya Textile Manufacturers and Exporters Association, but indications were that they are not members of the NCWTO, despite the importance of textiles in external trade. As the supreme body for the formulation of laws in the country, parliament has an important role to play in the formulation of trade policies. As an institution, parliament is not represented in the NCWTO, neither does it have direct links. Parliaments involvement in WTO issues has generally been weak, due to lack of awareness and interest. According to an interviewee, in 1998, the NCWTO invited all the members of

parliament to an awareness breakfast session to inform them of the importance of WTO issues. To the surprise of the NCWTO only ten out of 210 MPs that were invited turned up. It is no a secret that most MPs are not conversant with WTO issues. Involving MPs in the NCWTO meetings has not been easy even when MPs attend WTO meetings, they hardly sit after tea break. To increase awareness of the WTO among parliamentarians, the National Assembly has been turned into a reference point. Another interview with a member of civil society revealed that the inclusion of five MPs in the Kenyan delegation to Cancn (2003) was also a significant step towards creating awareness among the parliamentarians. Some civil society organizations, particularly EcoNews, ActionAid and SEATINI, are working directly with the Parliamentary Trade and Finance Select Committee. General public awareness of WTO issues also remains low in Kenya. Although general awareness has been increasing in the last few years, a huge segment of the population, especially those in the rural areas, remains ignorant. The NCWTO has not been very successful in its public awareness programme. A statement by a farmer in one of the awareness workshop highlights this fact: The WTO seems to be a very good organization. When is it coming here to build us a market? (a respondent involved in an NCWTO sensitization seminar narrated this to us). Notifications Kenya has been unable to respond through the NCWTO to a single notification since 1997.(1) Even after NEPs and focal points were set up to issue notifications, performance has been poor. We found that NEPs are not interlinked and worked more or less independently of each other. A recent case in point is when the government through the Ministry of Transport and Communication introduced measures for speed governors and safety belts to be fitted in all public transport vehicles. Ideally, Kenya should have issued a notification through the NCWTO to all WTO members who may have an interest in undertaking such activity in Kenya, but this was not done. According to one of the respondents, there are so many things that we need to issue notifications on but we have failed to do so. We have the format to do it but the channel of notification is clogged by the ineffectiveness of the NCWTO. There are no formal structures to handle notifications in Kenya. The effectiveness of the NCWTO has also been impaired by the fact that trade issues are addressed by different ministries. For instance, EAC affairs are handled in the Ministry of Foreign Affairs, COMESA by the Ministry of Trade and Industry, and ACP-EU by the Ministry of Planning and National Development. The problem is that there is no linkage between different offices. Kenya ends up making different commitments in different trade initiatives; an example of this is the tariff commitment under the EAC, which is different from the WTO commitment on the tariffs. Implementation of such agreements becomes not only difficult but also expensive for the country. IV. Lessons for other players

Kenyas participation in the WTO provides a number of lessons for other players. These are 1. The need for an effective co-ordination and consultation mechanism. Benefits accruing to countries from the multilateral trading systems depend on, among other things, the extent to which trade policy issues are co-ordinated at the national level and the subsequent capacity to negotiate in Geneva. Kenyas experience shows that co-ordination of WTO matters has been weak and that this could have undermined the countrys position. Co-ordination at international level requires adequate legal and resource backing, something which has been missing in the Kenyan case. Lack of financial and human capacity seriously impedes Kenyas capacity to participate effectively in trade negotiations. The survey revealed that a lack of skills at NCWTO and sub-committee levels seriously affects deliberations on WTO issues. 2. The need for analytical capacity. The Kenyan experience indicates a lack of analytical capacity in government, the private sector and civil society. Although some of the key institutions are staffed with personnel to carry out impact assessments, their capacity is largely inadequate. the case of Kenya, there is a need to strengthen the analytical skills of civil society organizations that are involved in trade matters and government ministries. Training in policy analysis is a necessary condition for effective policy-making by enabling policy-makers to understand the full implications of various trade proposals and agreements.

Fig 1: Structure of Kenyas participation in the WTO.

3. Fragmentation of responsibilities on trade matters. Apart from being a member of the WTO, Kenya, like many other countries, is a member of other trading

arrangements, in this case the EAC and COMESA. In Kenya, the responsibility for co-ordinating these activities is with different ministries and departments and this has undermined unity in decision-making. Kenya has also not been able to exploit synergies that would be experienced through the joint and simultaneous implementation of WTO and regional trade arrangements.

Protecting the Geographical Indication for Darjeeling Tea S. C. Srivastava This case study relates to the geographical indication (GI) protection of Darjeeling tea. It tells the story of the unauthorized use and registration of Darjeeling and Darjeeling logo by Japanese companies already registered in Japan by the Tea Board of India. The study also refers to the unauthorized use and attempted registration of the words Darjeeling and Darjeeling logo by some other developed countries. I. The problem in context India is the worlds largest producer of tea, with a total production of 846 million kg in the year 2002, supplying about 31 per cent of the worlds favourite hot drink. Among the teas grown in India, Darjeeling tea offers distinctive characteristics of quality and flavour, and also a global reputation for more than a century. Broadly speaking there are two factors which have contributed to such an exceptional and distinctive taste, namely geographical origin and processing. Thus Darjeeling tea has been cultivated, grown and produced in tea gardens in a well-known geographical area the Darjeeling district in the Indian state of West Bengal for over one and a half centuries. The tea gardens are located at elevations of over 2000 metres above sea level. Even though the tea industry in India lies in the private sector, it has been statutorily regulated and controlled by the Ministry of Commerce since 1933 under various enactments culminating in the Tea Act, 1953. The Tea Board was set up under this Act. A major portion of the annual production of Darjeeling tea is exported, the key buyers being Japan, Russia, the United States, and the United Kingdom and other European Union (EU) countries such as France, Germany and the Netherlands. Efforts made by the Tea Board to ensure the supply of genuine Darjeeling tea In order to ensure the supply of genuine Darjeeling tea, a compulsory system of certifying the authenticity of exported Darjeeling tea was incorporated into the 1953 Tea Act in February 2000. The system makes it compulsory for all the dealers in Darjeeling tea to enter into a licence agreement with the Tea Board of India on payment of an annual licence fee. The terms and conditions of the agreement provide, inter alia, that the licensees must furnish information relating to the production and manufacture of Darjeeling tea and its sale, through auction or otherwise. The Tea Board is thus able to

compute and compile the total volume of Darjeeling tea produced and sold in the given period. No blending with teas of other origin is permitted. Certificates of origin are then issued for export consignments under the Tea (Marketing and Distribution Control) Order, 2000, read with the Tea Act, 1953. Data is entered from the garden invoices (the first point of movement outside the factory) into a database, and the issue of the certificate of origin authenticates the export of each consignment of Darjeeling tea by cross-checking the details. The customs authorities in India have instructed, by circular, all customs checkpoints to check for the certificates of origin accompanying the Darjeeling tea consignments and not to allow the export of any tea as Darjeeling without this certificate. This ensures the sale-chain integrity of Darjeeling tea until consignments leave the country. Legal protection at domestic level CTM Registration In order to provide legal protection in India the Tea Board of India registered the Darjeeling logo and also the word Darjeeling as certification trade marks (CTMs) under the (Indian) Trade and Merchandise Marks Act, 1958 (now the Trade Marks Act, 1999).

GI registration The Tea Board of India has also applied for the registration of the words Darjeeling and Darjeeling logo under the Geographical Indications of Goods (Registration and Protection) Act, 1999 (the Act) which came into force with effect from 15 September 2003, in addition to the CTMs mentioned above. Under the Act: a. No person shall be entitled to institute any proceeding to prevent or recover damages for the infringement of unregistered geographical indications. b. A registration of geographical indications shall give to the registered proprietor and all authorized users whose names have been entered in the register the right to obtain relief in respect of infringement of the geographical indications. However, authorized users alone shall have the exclusive right to the use of the geographical indications in relation to the goods in respect of which the geographical indications are registered. c. A registered geographical indication is infringed by a person who, not being an authorized user thereof,

i. uses such geographical indications by any means in the designation or presentation of goods that indicates or suggests that such goods originate in some other geographical area other than the true place of origin of the goods in a manner which misleads the public; or ii. uses any geographical indications in such a manner which constitutes an act of unfair competition including passing off in respect of registered geographical indications; or iii. uses another geographical indication to the goods which, although literally true as to the territory, region or locality in which the goods originate, falsely represents to the public that the goods originate in the region, territory or locality in respect of which such registered geographical indications relate. d. The purpose of the GI Act is to create a public register, and

e. The GI Act confers public rights. Status of registration of GI The registration of the marks applied for by the Tea Board of India has not yet been granted. The Registrar has, however, after examining the application for registration filed by the Tea Board of India advertised for any expression of opposition. It is only after considering opposition, if any, that the Registrar may decide to register the GI of the Tea Board. Advantages of GI protection at domestic level and export markets The reasons for the need for additional protection for GI over and above the CTM has been set out by the chair of the Tea Board of India as follows.

When CTM registration is not accepted in a jurisdiction where protection is sought, for example, France for Darjeeling; because GI registration is necessary to obtain reciprocal protection of a mark mandate under EU Regulation 2081/92; and registration gives clear status to a GI, indicating a direct link with geographical origin.(1)

Quite apart from the aforesaid reasons the GI Act in India has also been enacted in order to comply with its obligation under the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), which requires WTO members to enact appropriate implementation legislation for GI. Steps taken at international level

Registration of Darjeeling tea and logo In order to protect Darjeeling and Darjeeling logo as GI, the Tea Board of India registered the marks in various countries, including the United States, Canada, Japan, Egypt, and the United Kingdom and some other European countries, as a trade mark/CTM. In this context it is relevant to note that on 3 August 2001 the UK Trade Registry granted registration of the word Darjeeling as of 30 March 1998 under the UK Trade Marks Act 1994. The United States has also accepted the application of the Tea Board for the registration of Darjeeling as a CTM in October 2002. The appointment of the International Watch Agency In order to prevent the misuse of Darjeeling and the logo, the Tea Board has since 1998 hired the services of Compumark, a World Wide Watch agency. Compumark is required to monitor and report to the Tea Board all cases of unauthorized use and attempted registration. Pursuant to Compumarks appointment, several cases of attempted registrations and unauthorized use of Darjeeling and Darjeeling Logo have been reported.

The assistance of overseas buyers In order to ensure the supply of genuine Darjeeling tea, the Tea Board has sought the help of all overseas buyers, sellers and Tea Council and Associations in so far as they should insist on certificates of origin to accompany all export consignments of Darjeeling tea.

II. Local and external players and their roles The Tea Board of India, the sole representative of tea producers in India, is responsible for the implementation of the governments regulations and policies. It is vested with the authority to administer all stages of tea cultivation, processing and sale (including the Darjeeling segment) through various orders issued by the government. It works in close co-operation with the Darjeeling Planters Association, which is the sole producers forum for Darjeeling tea. Both the Tea Board and the Darjeeling Planters Association (DPA) have been involved at various levels in protecting and defending the Darjeeling tea and Darjeeling logo. The primary objects are (i) to prevent misuse of the word Darjeeling for tea sold worldwide; (ii) to deliver the correct product to the consumer; (iii) to enable the commercial benefit of the equity of the brand to reach the Indian tea industry and ultimately the plantation worker; (iv) to achieve international status similar to champagne or Scotch whisky in terms of both brand and equity and governance/administration.

The Tea Board of India assumed the role of complainant in making and filing opposition or other legal measures whenever cases of unauthorized use or attempted or actual registration of Darjeeling and Darjeeling logo were brought to its notice. Such legal measures are generally taken where negotiation failed. For instance, in February 2000 in Japan the Tea Board of India filed an opposition against Yutaka Sang yo Kabushiki Kaisa of Japan for registration of the trade mark Darjeeling Tea with the map of India, the International Tea KK of Japan for registration of Darjeeling Women device in Japan under class 30/42 (tea, coffee and cocoa) and against Mitsui Norin KK for the use in advertising of the Divine Darjeeling logo. These opposing parties defended the invalidation action filed against them. Some disputes relating to Darjeeling tea have been settled through negotiation undertaken by the Tea Board of India with the foreign companies concerned with the help of their respective governments. Thus, the Tea Board with the help of the Indian government continues to negotiate with France at various levels over the activities of the French trademark authorities. Moreover BULGARI, Switzerland agreed to withdraw the legend Darjeeling Tea fragrance for men pursuant to legal notice and negotiations.(2) In one of the cases in France, the Tea Board of India put the applicant Comptoir des Parfums (which advertised in March 1999) on notice, and drew its attention to the prior rights and goodwill in the name of Darjeeling as the GI for tea, requiring it to withdraw its application voluntarily. Based on the correspondence the applicant consented to the amendment of all specifications of goods by the addition of all those goods being made of Darjeeling tea or recalling the scent of Darjeeling tea. The amendment proposed by the applicant was found by the examiner to be descriptive of the goods in question. The Tea Board of India feels that a partnership with the buyers in the major consuming countries such as Germany, Japan and the United Kingdom would be the only long term solution to the problem of possible passing off. However, it strongly opposes any attempt at individual registration in the case of private labels or its misuse in specific overseas jurisdictions. III. Challenges faced and the outcome The Tea Board of India has faced a series of hurdles, challenges and difficulties in the protection and enforcement of the word Darjeeling and of the Darjeeling logo. Some of the major challenges faced by the Tea Boards effort to protect Darjeeling and the Darjeeling logo in Japan, France, Russia, the United States and other countries are given below. Unauthorized use and registration of Darjeeling Tea and logo in Japan In the first case the Tea Board filed an invalidation action against International Tea KK, a Japanese Company, over the registration of the Darjeeling logo mark, namely, Darjeeling women serving tea/coffee/coca/soft drinks/fruit juice in the Japanese Patent Office (JPO) on 29 November 1996 with the trademark registration number 3221237. The

impugned registration was made notwithstanding the registration in Japan of the identical Darjeeling logo mark by the Tea Board of India, with the trademark registration number 2153713, dated 31 July 1987. The Tea Board also filed a non-use cancellation action. On 28 August 2002 the JPO Board of Appeal held that the pirate registration was invalid because it was contrary to public order and morality. With regard to the Tea Boards non use cancellation action, the JPO decided that International Tea KK had not furnished sufficient evidence to substantiate its use of registration and thereby allowed the appeal of the Tea Board. In the second case, the Tea Board of India opposed the application for Divine Darjeeling in class 30 (Darjeeling tea, coffee and cocoa produced in Darjeeling, India) filed by Mitsui Norin KK of Japan advertised on 29 February 2000. The opposition was mainly on three grounds, namely (i) divine is a laudatory term and accordingly the mark for which protection is sought is merely Darjeeling, which is clearly non -distinctive; (ii) Divine Darjeeling is misleading in so far as coffee and cocoa produced in Darjeeling are concerned, all the more so because the district of Darjeeling does not produce coffee or cocoa; (iii) Darjeeling tea qualifies as a geographical indication under international conventions including TRIPS and ought to be protected as such in Japan, a member of TRIPS. The JPO Opposition Board dismissed the invalidation action filed by the Tea Board of India primarily on the ground that the mark Divine Darjeeling as a whole was not misleading or descriptive of the quality of goods. However, the non-use cancellation action succeeded, because the registered proprietor was not able to place on record adequate evidence to prove the use of the mark in Japan. In yet another case the Tea Board of India brought an invalidation action against Japanese trade mark registration of Darjeeling tea with a map of India in class 30 by Yutaka Sangyo Kabushiki Kaisa, on the ground that the registration was contrary to public order and morality. This action was rejected on the ground that the written English characters Darjeeling tea and the map of India for the goods of Darjeeling tea are used as an indication of the origin and quality of Darjeeling tea and will not harm the feelings of the Indian people. However, the non-use cancellation action filed by the Tea Board succeeded, because the registered proprietor was not able to place on record sufficient evidence to prove the use of the mark in Japan. A perusal of these decisions reveals that the JPO did not decide the contention of the Tea Board of India relating to the TRIPS Agreement, which requires WTO members to provide the legal means to prevent the use of a GI for goods originating in a geographical area other than the true place of origin in a manner which misleads the public to constitute an act of unfair competition. Indeed, non-disposal of the argument that the procedural guidelines of WTO be followed dilutes the effect of the TRIPS Agreement. Other instances of defending GI against developed countries

France. While the Indian system protects French GIs, France on the other hand does not extend similar or reciprocal protection to Indian GIs. Thus French law does not permit any opposition to an application for a trademark similar or identical to a GI if the goods covered are different from those represented by the GI. The owner of the GI can take appropriate judicial proceedings only after the impugned application has proceeded to registration. The net effect of such a provision has been that despite Indias protests, Darjeeling has been misappropriated as a trade mark in respect of several goods in class 25, namely, clothing, shoes and headgear. The French Examiner even though he found evidence in favour of the Tea Board of India (i) on sufficient proof of use of Darjeeling tea in France, and (ii) that the applicant had slavishly copied the name Darjeeling in its application held that the respective goods clothing, shoes, headgear and tea are not of the same nature, function and intended use, produced in different places and sold through different networks. The Examiner also held that even if the applicant has slavishly copied the Tea Boards Darjeeling logo (being the prior mark), the difference in the nature of the respective goods is sufficient to hold that the applicants mark may be adopted without prejudicing the Tea Boards rights in the name Darjeeling. In another case the Tea Board opposed the application against the advertised marks for Darjeeling in classes 5, 12 and 28 by Dor Franois Marie in France. The French Examiner rejected the Tea Boards opposition and held that the respective goods did not (i) have the same nature, function and intended use; and (ii) share the same distribution circuits. However, he held that although the applicants mark constituted a partial reproduction of the Tea Boards prior figurative registration for the Darjeeling logo, the designated goods lacked similarity to that of the Tea Boards prior marks and the logo, therefore, may be used as a trade mark without prejudicing the prior rights of the Tea Board. Russia. The Tea Board filed an application for unauthorized use by a company of the word Darjeeling. This application was objected to on the ground of conflict with an earlier registration of the identical word by a company named Akorus. The Russian Patent Office overruled the objection and accepted the application of Tea Board of India for the word Darjeeling. United States. The Tea Board is opposing an application filed by its licensee in United States to register Darjeeling nouveau (nouveau is the French for new) relating to diverse goods and service such as clothing, lingerie, Internet services, coffee, cocoa and so on in respect of first flush Darjeeling tea. The registration application is under consideration even though Darjeeling is already registered under US CTM law. Other countries. Quite apart from the above, in several cases the Tea Board of India opposed attempted registration and unauthorized use of the word Darjeeling in Germany, Israel, Norway and Sri Lanka before the Patent Office of the country concerned. Costs of protection and enforcement for the industry and the government

Another major challenge faced by the Tea Board of India relates to legal and registration expenses, costs of hiring an international watch agency and fighting infringements in overseas jurisdictions. Thus during the last four years the Tea Board of India has spent approximately US$200, 000 for these purposes. This amount does not include administrative expenses including the relevant personnel working for the Tea Board, the cost of setting up monitoring mechanisms, software development costs and so forth. It is not possible for every geographical indication right holder to incur such expenses for protection. Further, like overseeing, monitoring and implementing GI protection, the high cost of taking legal action can prevent a country from engaging a lawyer to contest the case, however genuine and strong the case may be. Moreover, a lack of expertise in the proper handling of highly complex legal language is another challenge to be met. IV. Lessons for others The Tea Board of India appears to be not satisfied with the policy as well as the approach of the patent authority in Japan and France. In order to deal with the situations described above, India, along with several other member countries of the WTO, wants to extend the proposed register for GI to include products or goods, other than wines and spirits, which may be distinguished by the quality, reputation or other characteristics essentially attributable to their geographical origin. The main advantage would be to develop a multilateral system of notification and registration of all geographical indications. In this connection, a joint paper has recently been submitted to the Twos TRIPS Council. The Doha Ministerial Declaration under paragraphs 12 and 18 also provides a mandate for the issue of providing a higher level of protection to GIs to products other than wines and spirits to be addressed by the TRIPS Council. According to the Tea Board, (i) extension of protection under Article 23 for products other than wines and spirits is required where no legal platform exists to register a GI or a CTM which is a TRIPS obligation, for example Japan; (ii) once the scope of protection is extended it would not be necessary to establish the credentials/reputation of a GI before fighting the infringement of similar types, styles, or look-alikes; and (iii) additional protection would rectify the imbalance created by the special protection of wines and spirits.(4) The experience in defending GI in France, the United States and Japan further strengthens the Tea Boards perspective on the subject. Despite a registration of Darjeeling as a GI in France, the Tea Board was unsuccessful in defending it because French law does not permit any opposition to an application for a trade mark, similar or identical to a GI. Likewise, Indias efforts to protect Darjeeling in Japan did not succeed because the prefix Divine has not gained currency in the Japanese language.(5) From the experiences described above it is felt that it is high time to evolve a rule that no application for registration of a GI of the same or similar goods or products or even similar type, style or look-alike already registered in that country be ordinarily entertained by the competent authority of the country concerned. Further, the GI status and apprehended or actual violation of GI should be published at both domestic and international levels. Moreover, adequate steps should be taken to evolve rules and procedures for GI or CTM registration in all the member countries of the WTO. This

would prevent conflict to a great extent. Finally, a vigilance cell should be established to check the violation and misuse of the GI of any product.

Pakistan: The Consequences of a Change in the EC Rice Regime Amir Muhammed and Wajid H. Pirzada I. The problem in context Pakistans is primarily an agro-based economy, with the agriculture sector contributing around 25% towards GDP. Rice is the third-largest crop in terms of area in Pakistan after wheat and cotton, and in 2003-4 was grown on 2.46 million hectares.(1) It is one of the key non-traditional export commodities of Pakistan. Basmati and irri are the two main types of rice cultivated, consumed in and exported from Pakistan. Basmati is a traditional, long-grain (indica), aromatic variety especially suited to the Kalar tract of Punjab province. Although its grain yield is lower than the coarse-grained, short-statured irri rice, the net income per unit area to the growers is about equal from both types, for the market price of basmati is two to three times higher than the irri varieties. Pakistan enjoys a natural comparative advantage in basmati rice production, which has an assured market in several foreign countries where aromatic, long-grain rice is preferred. Pakistans annual rice exports average 1.5-2 million tonnes. During 2003-4, they were valued at US$627 million, registering a growth of 12.8% over the preceding year. Pakistani basmati has a market niche because of its characteristic aroma and cooking qualities. Super basmati, which is an extra-long-grain aromatic rice evolved from a cross between basmati 370 and basmati 320, with almost double the yield potential of basmati 370, remains the key export commodity. The European Union (EU) is one of the leading export destinations, partly because a sizable population from the subcontinent lives in the EU and relishes basmati rice. Pakistan exports basmati rice worth US$531 million to the EU, 80% of which is super basmati. The performance of this crop, on both production and export counts, therefore has long-term implications for both a sizable number of small farmers and the national economy. In the recent past Pakistan has faced trade restrictions on its super basmati because of recent changes in the EU rice trade regime, resulting in the withdrawal of a duty abatement of 250 a tonne, an import duty derogation earlier allowed against normal duty of 264. This study, in the context of the WTO regime on agriculture, examines the need for and aims of such a restriction, and also its possible implications for various stakeholders, including farmers, processors, traders and of course the overall national economy. The EU agricultural imports policy

The legislative text of the agreement on reforms of the much disputed EU Common Agricultural Policy (CAP) was finally adopted by EU Agriculture Ministers on 29 September 2003. This agreement stipulates inter alia a 50% reduction in the intervention support price for paddy rice (to 150 a tonne), and an annual purchasing limit of 75, 000 tonnes on the volume of rice that could be imported into the EU (100, 000 tonnes in 2003-4) under this intervention. EU rice farmers are to be compensated by the provision of area-based support payments, to be paid at a rate based on national/regional reference yields multiplied by 177 a tonne. Accordingly, the subsidy payable to EU rice producers is to be increased from 52.65 a tonne to 177 a tonne, of which 102 a tonne will be included in the single payment scheme. Council Regulation No. 1785/2003 of 29 September 2003 identifies in paragraphs 3, 5, 10 and 11 the reasons for and the form of such a change: Having regard to the Treaty establishing the European Community

(3) The European rice market is in serious unbalance. The volume of rice stored in public intervention is very large, equivalent to about a quarter of Community output, and is likely to increase in the long run. The imbalance has been caused by the combined effect of an increase in domestic output, which has stabilized in recent marketing years, the continuing growth of imports and by the restrictions on exports with refunds in accordance with the Agriculture Agreement. The present imbalance is to be exacerbated even further and probably to reach an unsustainable level, in the course of the years to come as a result of increasing imports from third countries due to the implementation of EBA [Everything but Arms] Agreement. (5) It appears that the most suitable solution is to decrease strongly the intervention price and to create, as compensation, an income payment per farm and a crop-specific aid reflecting the role of rice production in traditional production areas. The latter two instruments are incorporated in Council Regulation (EC) No. 1782/2003 of 29 September 2003 on establishing common rules for direct support schemes under the common agricultural policy and establishing support schemes for the farmers. (10) In order to prevent or counteract adverse effects on the Community market, which could result from the imports of certain agricultural products, imports of one or more of such products should be subject to payment of an additional import duty, if certain conditions are fulfilled. (11) It is appropriate, under certain conditions, to confer on the Commission the power to open and administer tariff quotas resulting from international

agreements concluded in accordance with the Treaty or from other acts of the Council. Under Article XXVIII of GATT1994 it was obligatory on the part of the EU to undertake negotiations with the WTO member countries expected to be affected, before making such a change in the rice import regime. The CAP reforms therefore mandated the Commission to open negotiations about modifying import arrangements, so as to modify existing variable levy arrangements for rice and replace them with a new system of tariff rate quotas (TRQs). The aim of these negotiations with EU trading partners, to be carried out under Article XVIII of GATT, was to modify the mechanism for setting EU rice import duties, and thereby restrict the import of rice into the EU markets. The Commission in fact wanted to end the current mechanism, based on the link between the intervention support price for rice and a maximum duty paid on import price (head Note 7 of the WTO Schedule), for setting EU rice import duties. This mechanism would, under the agreed rice regime changes (WTO Schedule for implementation from 2004-5), result in a significant reduction in the level of import duty applicable to both husked and milled rice imports. Council Regulation (EC) #3072/95 of 22 December 1995 on the Common Organization of the Market in Rice (Article 3 stating, the reduction in the custom duties must be accompanied by a fall in the Community prices to enable the competitiveness of the Community products) substantiates this argument. In so notifying the WTO of its intention to modify the import duty mechanism, the Commission indicated its intention to negotiate with the main supplier countries of rice some form of proportionate compensation for abandoning the import duty setting mechanism inherent in Head Note 7 of the WTO Schedule. Drawing on the precedent of how the similar import duty mechanism for cereals was amended in 2002, it was understood that the EC would try to limit the flow of rice imports into EU member countries by providing additional tariff-free or reduced tariff access to the EU market subject to TRQs. In respect of EU rice imports, there are currently TRQs applicable to imports principally from Thailand and the United States (and also Australia), that compensate for the impact of Austria, Finland and Sweden the joining EU in 1995, plus a number of bilateral/multilateral quota-restricted preferential access agreements with African, Caribbean and Pacific (ACP) countries and overseas territories of EU countries, Bangladesh and Egypt. Lastly, within the existing import duty mechanism, unlimited imports of husked basmati from India and Pakistan could enter the EU, at an import duty concession of 250 a tonne, reducing the net import duty from 264 a tonne to 14 a tonne. To offset the likely surge of imports from India and Pakistan, because of substantial reduction in tariff from 264 a tonne to 14 a tonne because of duty abatement, the EU regime on rice was modified on the approval of the Cereal Experts Committee (CEC) of the EU in a meeting held in Brussels on 20 November 2003. The proposal of the

withdrawal of abatement of duty concession was presented by EU Farm Commissioner Franz Fischer and the import arrangements for basmati rice were amended; the abatement concession of 250 a tonne on the import of Pakistans super basmati was withdrawn from 1 January 2004. In so doing the EU maintained that Pakistans super basmati was not a pure basmati and that the action was taken to counter alleged abuse and fraud in relation to the duty abatement. Consequently Pakistans export of super basmati was subjected to the total import duty of 264 a tonne. The abatement concession, however, was allowed, through a subsequent derogation, on the import of kernel basmati and basmati 370 from Pakistan (and India), the two varieties that did not command a significant export share, for three months starting 1 January 2004 (to 31 March 2004), provided that

sales contracts were concluded (signed) between the suppliers from those countries and the European Community traders by 31 December 2003; certificates of authenticity, to be issued in the case of Pakistan by the Trading Corporation of Pakistan, valid for 90 days, were already issued for the relevant contracts before 31 December 2003 or were so issued no later than 31 March 2004; the consignments should land before 30 June 2004.

In the sections that follow we discuss the factors that prompted the EU to review the duty abatement for rice and to put pressure on Pakistan to institute such measures as DNA testing and the protection of super basmati under geographical indications (GIs). Reason for the withdrawal of the abatement and its likely impact The duty abatement was allowed earlier inter alia to help EU millers to polish imported brown rice in their modern mills and thus compete with white basmati in the market. The intended effect of any mechanism to reduce the level of EU import duty applying to imports from a specific source of supply is to reduce the entry price and thus improve the competitive position of supplies from the beneficiary suppliers. Also, with mounting pressure for steep cuts on tariffs and the removal of other (trade) distorting and restrictive measures by countries in the North, it is tempting for them to use (higher) health and hygiene and ecological and environmental standards, coupled with regulations such as those on intellectual property and investment rights, to protect their industry and especially their agriculture, which had enjoyed preferential protection and support for several decades. Super basmati constitutes 80% of Pakistani rice exports to the EU. Pakistan used to export 50-60 thousand tonnes of husked basmati rice annually under the EU abatement scheme. Consequent upon withdrawal of abatement, a bound tariff rate of 264 a tonne as against 14 a tonne under the abatement concession would be applicable to Pakistani husked super basmati, making it uncompetitive. Such a restriction could potentially lead

to the ousting of Pakistan from the European rice market, inflicting heavy losses on Pakistans economy and depriving poor farmers of their livelihood. It is worth pointing out that Pakistan had earlier accepted conditions imposed by the EU on the export of brown rice from Pakistan that included (i) fixing a quota ceiling, (ii) fixing a minimum export price, and (iii) strict quality checks. Despite these preconditions Pakistan competed effectively and (for example) utilized its full quota of 9, 000 tonnes of brown rice in 1996-7, with an increase in foreign exchange earnings of US$2 million compared with the previous year. Linking geographical indications with trade in basmati rice It is not clear why the EU was pressing so hard for the protection of basmati under GIs except that the EU was interested in the expansion of GIs, currently limited to wines and spirits, to agricultural products to win over more supporters for the EU within the WTO system. Section 3 of the WTO Agreement on Trade-Related Intellectual Property Rights (TRIPS) is dedicated to geographical indications (GIs). It is the first multilateral agreement dealing with GIs as such. The TRIPS Agreement contains a clear triple distinction in the level of protection for (i) GIs related to all products; (ii) wines and spirits; and (iii) wines only. Article 22 of TRIPS defines GIs as indications which identify a good as originating in the territory of a Member, or a region or a locality in that territory, where a given quality, reputation or other characteristic of the good is essentially attributable to its geographical origin. India and Pakistan experienced the need for and the importance of the protection of GIs in the basmati rice case. The problem arose when the US Patent Office issued patents in 1997 for three new strains of rice. These strains could be sold under the name basmati, referring to a particular form of long-grained and aromatic rice associated with the plains of Punjab. In 1998 the US Rice Federation submitted that the term basmati was generic and referred to a specific type of aromatic rice. In response, Pakistan and India jointly filed a petition seeking to prevent US-grown rice from being labelled or advertised as basmati. The US Department of Agriculture and Federal Trade Commission rejected the petition in May 2001, maintaining that labelling rice as American-grown basmati was not misleading, and deemed basmati to be a generic term. After India and Pakistans protest against the use of the name basmati, the US Patent Office barred the patent holder from using the generic name basmati. This rice can now be only sold as Texmati or any other name that clearly informs the consumer that the rice is not from the Punjab region. In this regard it is worth mentioning that some multinationals have succeeded in securing patents on basmati rice, which is tantamount to a violation of GIs, as thousands of years ago Aryans developed this unique variety of rice with its special aroma, and named it basmati fragrance of a virgin. The origin of basmati has been traced back to the Kalar tract of Punjab, Pakistan, where it has been grown for centuries. As such, it is a classic example of a GI, qualifying on the basis of both traditional knowledge and place,

being highly localized in character. The very name basmati, because of its origin, identifies the product, for which provision has been made under TRIPS. DNA testing In 1998 the UK government started a project, DNA Testing of Basmati Rice for Purity. For the first time, Indian rice multinational trade companies proposed the strains basmati 370, Type 3 Dehraduni, Haryana 19 (HBC19), Tarori and Karnaal as pure line basmati rice: basmati 370 and Dehradun basmati are a common heritage of both India and Pakistan, and there has been no issue over them.However, because of inadequacies in analytical and human resource capacity, coupled with financial limitations, developing countries such as Pakistan face difficulty in carrying out high-tech certification based on DNA testing.

II. Local and external players and their roles The change in the rice import regime made unilaterally by the EU understandably generated strong protests from the affected stakeholders and governments in the developing countries. The most vigorous protests were made by the government and the rice exporting community of Pakistan, who estimated an annual loss of US$45 million to Pakistani exporters as a consequence.

The Pakistan government The Commerce Minister, Humayoon Akhtar Khan, assured Pakistans rice exporters that Pakistan would oppose any unilateral amendment in the rice import regime that would affect Pakistans export of super basmati to EU member countries. Pakistans mission to the WTO took the position during negotiations with the EU of not accepting any unfavourable deal, particularly one including TRQs. It maintained that TRQs not only were trade distorting in nature but could never compensate for the loss of Pakistans current unlimited access to the EU market. During his visit to Brussels after the withdrawal of the duty abatement, Pakistans Commerce Minister asked the EU Trade Commissioner, Pascal Lamy, to seek Pakistans opinion before making any changes in the rice import regime. Lamy was reported as assuring the Pakistani minister that the EU would further consult Pakistan in the matter before any final decision was taken. Consultations on this issue continued until September 2004, when a mutually acceptable deal on the issue was reportedly struck through an exchange of letters. The private sector

The Rice Exporters Association of Pakistan (REAP) in its formal reaction said that the change in the EU regime on rice imports would affect Pakistans exports to the EU and asked for the status quo to be maintained until Pakistani traders were to be adequately compensated. REAP deemed the proposal a violation of the code approved by the UK Grain and Food Trade Association (GAFTA) at a meeting where the Pakistani basmati variety was declared to be pure rice. They were of the view that Pakistan would not be in a position to receive substantial quota under the TRQs system worked out on the basis of previous export performance, which in Pakistans case stood at 20-30% only. Barrister Syed Najaf Hussain Shah, the chairman of REAP, while detailing the official stance of REAP, said that the government was fully supporting rice exporters and REAP had been assured that it would protest at the highest forum against the decision of the EU Cereal Experts Committee (CEC). He said that the withdrawal of the concession would continue till September 2004, and after that all rice exports to EU member countries would be free from any duty. Shah added that the withdrawal of the concession, while a shock to rice growers and exporters in the short term, would serve as a blessing in disguise in the longer run with the possibility of more value added and as the rice exporters gradually switched to the export of polished rice, which would not only add profit but also increase employment opportunities in the country. Mr Shah went on to say that Pakistan would not lose any of its market for super basmati because it would not be substituted by Indian Pusa basmati, a similar quality rice which has been given the same treatment for import purposes. As against the above stance, the convenor of the Rice Export Committee of Lahore Chamber of Commerce and Industries, Agha Javed, said that the country could face a shortfall of 90,000 tonnes of rice export after the ECs decision. He said that the Commerce Minister had already lodged a protest with the EC and promised that the government would take precautionary measures. The co-convenor of the Committee, Zahid Khawja, said that Pakistan should not take any hasty decision in this regard and should continue to maintain that the EC decision to withdraw the concession in import duty on basmati rice was unjustified. Leading Pakistani rice exporters too, while showing their serious concern over the change in the EU rice import regime, expressed the hope that the CEC would set aside the draft proposing the new definition of basmati rice and that the old system would continue, since India too had decided to oppose the draft. III. Challenges faced and the outcome It had been suggested that if the outcome of the ECs WTO negotiations to modify the current rice import duty mechanism focused on the additional use of TRQs to replace the current import duty setting mechanism inherent in Head Note 7 of the WTO Schedule, this would inevitably result in a reduced level of the market and of economic efficiency, to the detriment of established suppliers like Pakistan and consumers in the EU market. It was further suggested that any alternative form of agreement (including the current mechanism) that at least maintained the current level of market access outside TRQs (e.g.

reduced import duty market access for basmati that was unrestricted by volume) was preferable, because it would avoid adding further losses and inefficiencies associated with TRQs. A non-tariff solution was therefore to be commended as an approach to take in the WTO negotiations between the EU and the third-country suppliers. On a bilateral basis, both the EU and Pakistan continued interacting both formally and informally, and it was reported formally in August 2004 that exports of Pakistans super basmati would resume from the beginning of the EU fiscal year in September 2004, as the EU had decided through an exchange of letters to re-include super basmati in its duty rebatement list with the condition of DNA testing, and had agreed as follows:

the tariff rate for husked rice (CN code 1006 20) shall be 65 a tonne; with respect to the import regime for husked rice (CN codes 1006 20 17 and 1006 20 98) of the varieties kernel (basmati), basmati 370, Pusa basmati and super basmati, the ECs specific bound rate of duty shall be zero.

The following measures have been agreed to implement this agreement.

A Community control system based on DNA analysis at the border shall be created. Pakistan shall actively co-operate with the EC to set up such a control system and the EC shall provide the appropriate technical assistance in this matter. Pakistan will protect basmati rice as a geographical indication. The EC would welcome an application for protection as a GI of basmati rice under Council Regulation (ECC) No. 2081/92 of 14 July 1992 on the protection of geographical indications and designation of origin for agricultural products and foodstuff.The EC shall process any such application as expeditiously as possible. The EC shall provide any necessary technical assistance in the matter.

As a transitional arrangement, the following has also been agreed to by both the parties.

As from 1 September 2004 and until the date of entry into force of the abovementioned Community control system, the EC would put in place a transitional regime with regard to husked rice (CN codes 1006 20 17 and 1006 20 98) of the varieties described above based on the following elements: The ECs autonomous applied rate of duty shall be zero. However, if market disturbance occurs, the EC will consult with Pakistans competent authorities to agree to an appropriate solution. If no agreement is reached, the EC reserves the right to revert to the bound rate of 65 a tonne for husked rice (CN code 1006 20).

The EC shall establish separate tariff lines for basmati rice of the varieties indicated in the agreements with India and Pakistan. The competent Pakistani authorities shall continue to issue the authenticity certificates prior to the issuance of import licences, meaning that the current system of administration of the certificates of authenticity shall be maintained.

Consequently, free access for Pakistani basmati rice was allowed with effect from September 2004, partially endorsing the viewpoint of the Chairman REAP, who is on record as stating that the present restriction would cease to be effective after September 2004, when full access to Pakistani rice would be provided. The EU, however, has not yet withdrawn the condition of DNA testing nor has the issue of GIs so far been settled. Meanwhile, the EU has clarified to the Pakistani authorities that should the imports from Pakistan increase to a level of disturbance, then imports beyond certain limits would be subject to the normal tariff applicable to rice in the EU. Commission Regulation (EC) No. 1549/2004 of 30 August 2004, derogating from Regulation No. 1785/2003, indicates in paragraphs 1-5 the arrangements for importing rice and laying down separate transitional rules for import of basmati rice: Having regard to the Treaty establishing the European Community,

Having regard to Council Decision 2004/618/EC of 11 August 2004 on the conclusion of an Agreement in the form of an Exchange of Letters between the European Community and Pakistan pursuant to Article XXVIII of GATT 1994 relating to the modification of concessions with respect to rice provided for in Schedule CXL annexed to the GATT 1994, and in particular Article 2 thereof, Whereas

1. Decision 2004/619/EC modifies the import regime for husked rice and milled rice in the Community. Decisions 2004/617/EC and 2004/618/EC lay down conditions for importing basmati rice. This change in regime makes it necessary to amend Regulation No. 1758/2003. In order to enable those Decisions to be applied on 1 September 2004, as provided for in the Agreements approved by those Decisions, it is necessary to derogate from Regulation (EC) No. 1785/2003 for a transitional period expiring on the date of entry in to force of the amendment to that Regulation, and no later than 30 June 2005. 2. Decisions 2004/617/EC and 2004/618/EC also provide for a transitional import regime for basmati rice to be set in place until the entry into force of a definitive import regime for this type of rice. Specific transitional rules should be laid down.

3. In order to be eligible for zero import duty, basmati rice must belong to a variety specified in the Agreements. In order to ascertain that basmati rice imported at zero rate of duty meets those characteristics, it should be covered by an authenticity certificate drawn up by the competent authorities. 4. In order to prevent fraud, provision should be made for measures to check the variety of basmati rice declared. 5. The transitional import regime for basmati rice provides for a procedure for consulting the exporting country in the event of disturbance on the market and possibly applying the full rate of duty if a satisfactory solution has not been found at the end of the consultations. It would be appropriate to define from what point the market may be considered to be disturbed. IV. Lessons for others Despite the inflated claims by key players since the inception of trade liberalization under the WTO in 1995, trade distortions and restrictions continue to be rampant in the global market. A country like Pakistan, with limited exports, can hardly afford to adjust to sudden shocks because of changes like the one imposed by the EU through reforms in its rice trade policy. Trade and economic superpowers such as the EU also use their economic and trade weight to influence in their favour negotiations with developing countries such as Pakistan. In this case too, a year-long restriction on Pakistans super basmati inflicted heavy losses on both the national economy and the farmers. Nevertheless, the proactive engagement on the part of the public and private sectors helped resolve the issue temporarily. The temporary solution, however, will result in a quota-restricted preferential treatment in terms of duty-free market access. Such solutions are not sustainable, for trade preferences are bound to erode in the long run under the WTO regime. The strategic advantage that Pakistan currently enjoys after the events of 9/11 will also not last for too long. Moreover, the TRQs system does not augur well for trade liberalization under the WTO; in fact developing countries have already been protesting aboutnon-transparency in the administration of TRQs. As a measure for contributing to the liberalization of trade and improving market efficiency TRQs have several weaknesses. It would be in the best interest of developing countries such as Pakistan to

strive for reduced import duty market access, rather than quota-restricted, duty free (preferential access) import for basmati rice; develop legal, trade and economic analyses and research capacity to face squarely issues like trade restrictions; develop quality infrastructure that will help realign with the standard economy; undertake proactive legislation on GIs that can potentially benefit Pakistan, with the ability to sell basmati rice with confidence and certainty since GIs promote

consumer

confidence;

diversify, in terms of both agricultural production and processing, which will give the country economic resilience and farmers a more dependable source of income; and vertically integrate agricultural production in general and of high-value crops in particular, rather than depend on mono-crop culture.

Such initiatives in turn will help to counter technical barriers to trade such as DNA testing and linking trade with issues such as GIs, as such issues will continue to surface in future. Pakistan should also avail itself of the offer of the EU in developing a DNA testing service and also towards legislation on GIs in this regard. Moreover, the present agreement between Pakistan and the EU is not definitive, and there is every likelihood that after June 2005 Pakistan may have to face a similar situation. Efforts therefore need to be directed at resolving such issues proactively on a bilateral basis. The Dispute Settlement Mechanism (DSM) under the WTO is a time-consuming and costly proposition, besides the fact that resorting to the DSM needs legal and technical capacity which most developing countries including Pakistan lack at present. It would be in the long-term interest of these countries to build such capacity, pooling their human and material resources. Kyoto, Doha and Cancun - issues that could not be resolved: Military-Political agendas and future perspectives

Trade and the Environment Debate: WTO, Kyoto and Beyond The traditional trade-environment argument For the last ten years or so, environmentalists and the trade policy community have engaged in a heated debate over the environmental consequences of liberalized trade. It has been intensified by the creation of the World Trade Organization and proposals for future rounds of trade negotiations. The debate initially was quite contentious and unproductive as both parties differed greatly in their trust of market forces and typically value the environment differently. Free traders feared that talk about environmental protection will be used as an excuse by some economic sectors to gain protection for themselves against competition from abroad. Environmentalists feared that free trade will be used as an excuse to give inadequate weight to environmental goals and excessive weight to maximization of market-measured GDP. The importance of establishing coherent relationships between the trade obligations set out in various bilateral/multilateral trade agreements and environmental policies of countries is increasingly being recognized.

The concerns with environmental implications of trade involve both the domestic implications of policy reforms as well as the global environmental dimension of bilateral and multilateral trade agreements. Although liberalizing reforms generally promote more efficient resource use (including use of environmental resources), in practice there is no clear-cut reason to expect that trade liberalization will be either good or bad for the environment. The reason is that trade reforms undertaken in the presence of pre-existing market, policy or institutional imperfections in the environment or natural resource sector may lead to adverse environmental impacts. Some of the common concerns include: Reducing barriers to trade will reinforce the tendency for countries to export commodities that make use of resource-intensive production factors. As a result of weak environmental policies, trade liberalization in developing countries may result in shifts in the composition of production, exports, and FDI to more pollution or resource intensive sectors. Trade liberalization may directly affect environmental standards. Intensified competition could lead to a race to the bottom as governments lower standards in the hope of giving domestic firms a competitive edge in world markets or attracting foreign investment. Environmental tariffs may be employed against trading partners deemed to have inadequate environmental standards. The risk being is that these will be used as disguised protection for the protection of domestic firms. In practice, however, the opposite often seems to have been the case: countries that are more open to trade adopt cleaner technologies more quickly and increased real income is often associated with increased demand for environmental quality (WTO, 1999). Greater openness to trade also encourages cleaner manufacturing because protectionist countries tend to shelter pollution-intensive heavy industries. It is often the case that pressures on the environment and natural resourcesincentives to over-exploit or deplete resources, however, are more directly related to policies and institutions within the sector than to trade openness per se (World Bank, 1999). Thus increased trade and growth without appropriate environmental policies in place may have unwanted effects on the environment. Scale, composition and technique effects. To understand the net effects of trade on the use of environment and natural resources it is useful to break-up the effects into scale, composition, and technique effects. The scale effect refers to the fact that more open trade creates greater economic activity, thus raising the demand for inputs such as raw materials, transportation services, and energy. The composition effect stems from changes in the relative size of the economic sectors following a reduction in trade barriers. Countries tend to specialize production in sectors in which they have a comparative advantage; this tendency becomes more pronounced with freer trade. The technique effect refers to the changes in production methods that follow trade liberalization. Since trade liberalization generates increased income levels, demand for environmental quality is also likely to increase. This is often referred to as the income

effect. The net impact of the trade liberalization will thus depend on which one of these effects will dominate. WTO and the Environment Environmental provisions under the WTO are limited to the adoption of product-related measures as necessary to protect human, animal or plant life or health, or relating to the conservation of exhaustible natural resources. Process-related requirements continue to remain outside the scope of the WTO. The most important provisions governing the operations of the WTO affecting the environment are in Article XX of GATT, the Agreement on Sanitary and Phytosanitary (SPS) Measures and the Agreement on Technical Barriers to Trade (TBT). For example, restrictions can be applied to trade in toxic and hazardous substances, potential disease vectors etc. Any tendency to use the provisions as a means of securing economic advantages rather than environmental or health benefits is protected through two subsidiary agreements. The SPS provides that when restrictions on trade are applied they must be consistent with recognized international standards. Any other standards applied (i.e. standards for which there may be no international standard) must be based on solid scientific evidence and supported by a risk assessment process and provisions created for affected parties to require presentation of the supporting justification. The TBT is intended to reduce the potential for countries to use technical standards as hidden barriers to trade. Technical standards which are restrictive of trade may only be applied, subject to some caveats, for certain legitimate purposesprotecting the environment; national security; prevention of deceptive practices; and protecting human health and safety and animal and plant health and life. However, in the absence of agreed international standards (e.g. fisheries), the fear of disguised protectionism is paramount in many developing countries. Long-standing disputes between the US and other countries on tuna fishing, dolphin or turtle protection are case in point. WTO, Kyoto, and the Environment Commonalities Just as WTO recognizes the importance of seeking to protect and preserve the environment, the Kyoto Protocol states that parties should strive to implement policies and measures in such a way as to minimize adverse effect on international trade. The Framework Convention on Climate Change features similar language in several places (Frankel, 2004) and the Doha Communiqu specifically states that ..the aims of upholding and safeguarding an open and non-discriminatory multilateral trading system, and acting for the protection of the environment and promotion of sustainable development can and must be mutually supportive. There is thus a general recognition by both treaties to respect each others mandate. Further, there are specific provisions in the Doha round that could promote Kyoto objectives. For example, a multilateral liberalization of capital equipment and services used in environmental efforts such as air quality improvement and climate policy (e.g. windmill turbines) would serve both kinds of goals, economic and environmental. While not very explicit in WTO, a ban on

subsidies to fossil fuels would achieve both the environmental goal of reducing carbon emissions and the goal of removing an economic distortion. The Kyoto Protocol includes language that specifically mentions as one of the measures that parties could adopt to help achieve their emission targets progressive reduction or phasing out of market imperfections and subsidies in all greenhouse gas emitting sectors.. This is very much consistent with multilateral trading arrangements. Potential conflicts Border tax/environmental tariff: Unlike some other multilateral environmental agreements (e.g. Montreal Protocol), Kyoto Protocol does not trigger trade sanctions against non-participating countries. In fact it could conceivably have been more effective had trade sanctions been used either to encourage participation or to enforce compliance by members. It would still not be in violation of WTO provisions as a number of other MEAs (e.g. Montreal Protocol) have such provisions. However, even without trade sanctions or controls, complaints about violations of the WTO non-discrimination rules are likely to arise if a member country seeks to impose border tax adjustments to offset the effects of specific domestic GHG taxes on the competitiveness of its own industry vis--vis foreigners. Although nothing is being contemplated at present, pressure from industry groups worried about higher energy costs that burden them domestically, and that give competitors in non-member countries (especially in the U.S.) an unfair advantage could tilt the political balance. Theoretically, there is a justification for using trade measures (the only justification in fact) to promote environmental objectives in case of transboundary environmental externalities. A trade restriction, it is argued, in the form of a tariff can play somewhat the same role for transnational externalities that a pigouvian tax (A Pigouvian tax is a tax levied on each unit of a polluters output in an amount just equal to the marginal damage it inflicts at the efficient level of output) performs within a single jurisdiction. only if there transboundary pollution and no environmental regulation in the exporting country as weapons to persuade the exporting country to introduce measures of pollution control So far no such regime exists anywhere in the world. However, by applying this logic, one can argue that barriers against import of dirty products or any product resulting from a dirty production process (e.g. greenhouse gases) on welfare grounds would be justified. Leakage: The main goal of the Kyoto Protocol will be subverted if all carbon-producing activities such as coal-burning and aluminium smelting simply relocate to non-member countries, thus offsetting the reduction in emission among members. Under WTO it is still much less clear that a country can in the name of the environment target others PPM than others export products. But the precedent set by shrimp-turtle case could change things. One can make a case for PPMs that create global externalities such as ozonedepleting chemicals or greenhouse gases. Thus discouraging leakage of emissions to non-members is essential to the goals of the Protocol, and the WTO could recognize the

legitimacy of such goals. As of now, there is no clear cut dispute settlement mechanism in case of a conflict between the two treaties. Subsidies and Counter veiling measures: The other area of potential conflict is under the WTO agreement on Subsidies and Counter veiling measures. When Kyoto parties exempt particular favoured industries from an energy tax, or give out domestic emission permits in a non-neutral way, or reward their companies with credits for CDM and JI projects, they might be liable to complaints under the subsidies agreement. In agriculture, payments under environmental programs are exempt from restrictions on subsidies. For example, subsidies for carbon sequestration in forestry or for reduction of methane emissions in agriculture should be permitted under WTO. Technical Barriers to Trade: There could be intersection with WTO Technical Barriers to Trade (TBT) if ecolabelling issues were to arise in the context of greenhouse gas content in production process. Similarly, trade in emission permits are currently classified neither as goods nor as services. However, if emission permits/credits are defined as services to which the General Agreement on Trade in Services (GATS) applies, then there is a question about whether the most favoured nation (MFN) principle of non-discrimination would be violated. Limiting the trading of emission permits to Kyoto Protocol parties would be in violation of GATS. In the same vein JIs and CDMs could be considered in violation of MFN depending on whether the project involves trade and/or FDI and whether it involves goods and/or services. Conclusions Both the climate change regime and trade-investment regime will hopefully evolve to accommodate new economic and political circumstances. It is therefore important to continue to monitor and analyze the relationships between the two regimes. Within the Kyoto Protocol, the most important priority regarding the linkage to trade should be to facilitate a uniform approach to taxation of energy and greenhouse gas emissions, particularly with respect to border adjustments for exports and imports. This will help avoid the perception and reality that climate measures might be used as an excuse for protectionist discrimination. WTO can do its part by should seriously considering fossil fuel subsidy issue to support Kyoto. Negotiations to liberalize trade in climate-friendly goods and services would be another. In these and other ways, trade and climate regimes can be made to work in harmony. Both the WTO and Kyoto Protocol are two of the most important economic agreements of the century designed to expand economic and human welfare. To ensure that a country captures substantial benefits that both these confer, within a country, there should be increased understanding of the issues and potential conflicts/problems in order to formulate the necessary legal and regulatory framework. The Ministries of Finance/Trade and Environment must consider ways/means to elaborate coordination of policies/measures taking national circumstances and potential effects into account. WHAT IS THE DDA?

The World Trade Organization (WTO) Doha Development Agenda (DDA) has been at the center of the Administrations trade policy since this multilateral negotiating round was launched in Doha, Qatar in 2001. The DDA is the ninth successive round of multilateral trade negotiations to be carried out since 1948. The goal of the DDA is to reduce trade barriers in order to expand global economic growth, development, and opportunity. The main focus of the negotiations under the DDA is in the following areas: agriculture; industrial market access; services; trade facilitation; WTO rules (i.e., trade remedies, fish subsidies, and regional trade agreements); and development. WTO: IMPORTANT EVENTS IN THE DDA November 9, 2001 Doha Ministerial WTO Members launched the Doha Round, with the goal of incorporating developing countries into the international trading system. September 10, 2003 Cancun Ministerial At the Cancun Ministerial, Members were unable to reach a consensus on the way forward on the main issues negotiated under the Doha Round. July 13, 2004 Geneva Mini-Ministerial As a result of U.S. efforts to reinvigorate the negotiations, Members reached a Framework-Agreement, which addressed issues such as NAMA flexibilities and the elimination of agricultural export subsidies. October 10, 2005 U.S. proposal for Agriculture Negotiations The United States tabled a comprehensive proposal for the agriculture negotiations to eliminate all tariffs and subsidies in a two-phase process. The proposal was contingent on others adopting these bold reforms. December 13, 2005 Hong Kong Ministerial At the Hong Kong Ministerial, limited progress was made. In NAMA, the Swiss formula to calculate NAMA tariff cuts was agreed to by WTO Members as the standard formula. July 27, 2006 Suspension of Negotiations A July 2006 gathering of trade ministers in Geneva highlighted the wide gap that existed on fundamental questions about securing a meaningful market opening DDA outcome. Director-General Lamy recommended to the WTO General Council on July 27, 2006, that the Doha Round negotiations be suspended. July 2006 July 2007 Resuming Negotiations After the July 2006 suspension, the United States led the way over the following months to revive the DDA negotiations. This resulted in an informal resumption of negotiations in Geneva before the close of the year. On January 31, 2007, Director-General Lamy called for a full resumption of negotiations. Agriculture and NAMA Negotiating Texts The Chairs of the Agriculture and NAMA negotiating groups circulated initial draft texts for the modalities (the frameworks and formalities needed to be agreed upon in order to move the negotiations into the final phase) on July 17, 2007. Revised draft texts were issued on February 8, 2008, May 19, 2008, and July 10, 2008. Elements of a Services Negotiating Text

The Chair of the Services negotiating group circulated an initial report on the elements required for the completion of the services negotiations on February 13, 2008. A revision was issued on May 26, 2008. Draft Rules Negotiating Text The Chair of the Rules negotiating group issued texts on antidumping, subsidies and countervailing measures, and fisheries subsidies on November 30, 2007. July 21, 2008 Geneva Ministers Meetings On July 21, 2008, negotiations started again at the WTO's HQ in Geneva on the Doha round but stalled after nine days of negotiations over the refusal to compromise over the special safeguard mechanism. Negotiations had continued since the last conference in June 2007. Pascal Lamy, WTOs director-general, said before the start of the conference, the odds of success were over 50%. Around 40 ministers attended the negotiations, which were only expected to last five days but instead lasted nine days. Kamal Nath, India's Commerce Minister, was absent from the first few days of the conference due to a vote of confidence being conducted in India's Parliament. On the second day of the conference, U.S. Trade Representative Susan Schwab announced that the U.S. would cap its farm subsidies at $15 billion a year, from $18.2 billion in 2006. The proposal was on the condition that countries such as Brazil and India drop their objections to various aspects of the round. The U.S. and the EU also offered an increase in the number of temporary work visas for professional workers. After one week of negotiations, many considered agreement to be 'within reach'. However, there were disagreements on issues including special protection for Chinese and Indian farmers and African and Caribbean banana imports to the EU. India and China's hard stance regarding tariffs and subsidies was severely criticized by the United States. In response, India's Commerce Minister said "I'm not risking the livelihood of millions of farmers." Summary The World Trade Organizations (WTO) Doha Development Round of multilateral trade negotiations resumed in 2007 after being suspended in July 2006 after key negotiating groups failed to break a deadlock on agricultural tariffs and subsidies. The negotiations, which were launched at the 4th WTO Ministerial in 2001 at Doha, Qatar, have been characterized by persistent differences between the United States, the European Union, and developing countries on major issues, such as agriculture, industrial tariffs and nontariff barriers, services, and trade remedies. Depending on the outcome, some U.S. industries may gain access to foreign markets, and others may see increased competition from imports. Likewise, some U.S. workers may be helped through increased access to foreign markets, but others may be hurt by import competition. The negotiating impasse put negotiators beyond the reach of agreement under U.S. trade promotion authority (TPA), which expired on July 1, 2007. With the deadline passed, the parties are now attempting to make progress in the negotiations in the hope that the 110th Congress will extend TPA. During the second half of 2007, the chairmen of the agriculture, industrial, and rules negotiating groups released new draft texts. While elements of each of these texts have proved controversial, they have served to continue the engagement of the various parties in Geneva at a time when many

have predicted the demise of the round. Agriculture has become the linchpin of the Doha Development Agenda. U.S. goals are substantial reduction of trade-distorting domestic support; elimination of export subsidies, and improved market access. Some had looked to a potential Doha Round agreement to curb trade-distorting domestic support as a catalyst to change U.S. farm subsidies in the 2007 farm bill, but this source of pressure for change has dissipated with the Doha impasse. In addition, Members of Congress likely will carefully scrutinize any agreement that may require changes to U.S. trade remedy laws. Three issues are among the most important to developing countries, in addition to concessions on agriculture. One issue, now resolved, pertained to compulsory licensing of medicines and patent protection. A second deals with a review of provisions giving special and differential treatment to developing countries. A third addresses problems that developing countries are having in implementing current trade obligations. What Began at Doha? On November 9-14, 2001, trade ministers from member countries met in Doha, Qatar for the fourth WTO Ministerial Conference. At that meeting, they agreed to undertake a new round of multilateral trade negotiations. Before the Doha Ministerial, negotiations had already been underway on trade in agriculture and trade in services. These on-going negotiations had been required under the last round of multilateral trade negotiations (the Uruguay Round, 1986-1994). However, some countries, including the United States, wanted to expand the agriculture and services talks to allow trade-offs and thus achieve greater trade liberalization. There were additional reasons for the negotiations. Just months before the Doha Ministerial, the United States had been attacked by terrorists on September 11, 2001. Some government officials called for greater political cohesion and saw the trade negotiations as a means toward that end. Some officials thought that a new round of multilateral trade negotiations could help a world economy weakened by recession and terrorism-related uncertainty. According to the WTO, the year 2001 showed ...the lowest growth in output in more than two decades, and world trade actually contracted that year. In addition, countries increasingly have been seeking bilateral or regional trade agreements. As of October 15, 2006, 366 regional trade agreements have been notified to the GATT/WTO, 214 of which are currently in force. There is disagreement on whether these more limited trade agreements help or hurt the multilateral system. Some experts say that regional agreements are easier to negotiate, allow a greater degree of liberalization, and thus are effective in opening markets. Others, however, argue that the regional agreements violate the general non-discrimination principle of the WTO (which allows some exceptions), deny benefits to many poor countries that are often not party to the arrangements, and distract resources away from the WTO negotiations. With the backdrop of a sagging world economy, terrorist action, and a growing number of regional

trade arrangements, trade ministers met in Doha. At that meeting, they adopted three documents that provided guidance for future actions. Especially worth noting is how the role of developing countries changed at the Doha Ministerial. Since the beginning of the GATT, the major decision-makers were almost exclusively developed countries. At the preceding Ministerial Conference (Seattle, 1999), developing countries became more forceful in demanding that their interests be addressed. Some developing countries insisted that they would not support another round of multilateral negotiations unless they realized some concessions up-front and the agenda included their interests. Because of the greater influence of developing countries in setting the plan of action at Doha, the new round became known as the Doha Development Agenda. At the Doha meeting, trade ministers agreed that the 5th Ministerial, to be held in 2003, would take stock of progress, provide any necessary political guidance, and take decisions as necessary, and that negotiations would be concluded not later than January 1, 2005. With the exception of actions on the Dispute Settlement Understanding, trade ministers agreed that the outcome of the negotiations would be a single undertaking, which means that nothing is finally agreed until everything is agreed. Thus, countries agreed they would reach a single, comprehensive agreement containing a balance of concessions at the end of the negotiations. Progress of the Negotiations: The Search for Modalities Negotiations have proceeded at a slow pace and have been characterized by lack of progress on significant issues, and persistent disagreement on nearly every aspect of the agenda. A few issues have been resolved, notably in agriculture. However, the first order of business for the round, the negotiation of modalities, or the methods and formulas by which negotiations are conducted, still remain elusive four years after the beginning of the round. The Cancun Ministerial An important milepost in the Doha Development Agenda round was the 5th Ministerial Conference, which was held in Cancn, Mexico on September 10-14, 2003. The Cancn Ministerial ended without agreement on a framework to guide future negotiations, and this failure to advance the round resulted in a serious loss of momentum and brought into question whether the January 1, 2005 deadline would be met. The Cancun Ministerial collapsed for several reasons. First, differences over the Singapore issues seemed irresolvable. The EU had retreated on some of its demands, but several developing countries refused any consideration of these issues at all. Second, it was questioned whether some countries had come to Cancun with a serious intention to negotiate. In the view of some observers, a few countries showed no flexibility in their positions and only repeated their demands rather than talk about trade-offs. Third, the wide difference between developing and developed countries across virtually all topics was a major obstacle. The U.S.-EU agricultural proposal and that of the Group of 21, for

example, show strikingly different approaches to special and differential treatment. Fourth, there was some criticism of procedure. Some claimed the agenda was too complicated. Also, Cancun Ministerial chairman, Mexicos Foreign Minister Luis Ernesto Derbez, was faulted for ending the meeting when he did, instead of trying to move the talks into areas where some progress could have been made. At the end of their meeting in Cancun, trade ministers issued a declaration instructing their officials to continue working on outstanding issues. They asked the General Council chair, working with the Director-General, to convene a meeting of the General Council at senior official level no later than December 15, 2003, ...to take the action necessary at that stage to enable us to move towards a successful and timely conclusion of the negotiations. The Cancun Ministerial did result in the creation of the so-called Derbez text. Ministerial chairman Derbez invited trade ministers to act as facilitators in Cancun and help with negotiations in five groups: agriculture, non-agricultural market access, development issues, Singapore issues, and other issues. The WTO Director-General served as a facilitator for a sixth group on cotton. The facilitators consulted with trade ministers and produced draft texts from their group consultations. The Ministerial chairman compiled the texts into a draft Ministerial Declaration and circulated the revised draft among participants for comment. The WTO Framework Agreement The aftermath of Cancun was one of standstill and stocktaking. Negotiations were suspended for the remainder of 2003. However, in early 2004, then-U.S. Trade Representative (USTR) Robert Zoellick offered proposals on how to move the round forward. The USTR called for a focus on market access, including an elimination of agricultural export subsidies. He also said that the Singapore issues could progress by negotiating on trade facilitation, considering further action on government procurement, and possibly dropping investment and competition. This intervention was credited at the time with reviving interest in the negotiations, and negotiations resumed in March 2004. On July 31, 2004, WTO members approved a Framework Agreement that includes major developments in the most contentious and crucial issue agriculture. Because of the importance of agriculture to the Round, the Framework, which provides guidelines but not specific concessions, was regarded as a major achievement. With a broad agreement on agriculture and on other issues, negotiators were given a clearer direction for future discussions. However, the talks settled back into a driftless stalemate, where few but the most technical issues were resolved. The Hong Kong Ministerial The stalemate in 2005 increased the perceived importance of the 6th Ministerial in Hong Kong as potentially the last opportunity to settle key negotiating issues that could produce an agreement by 2007, the de facto deadline resulting from the expiration of U.S.

trade promotion authority. Although a flurry of negotiations took place in the fall of 2005, WTO Director-General Pascal Lamy announced in November 2005 that a comprehensive agreement on modalities would not be forthcoming in Hong Kong, and that the talks would take stock of the negotiations and would try to reach agreements in negotiating sectors where convergence was reported. The final Ministerial Declaration of December 18, 2005, reflected areas of agreement in agriculture, industrial tariffs, and duty-free and tariff free access for least developed countries. Generally, these convergences reflect a step beyond the July Framework Agreement, but fall short of full negotiating modalities. Deadlines were established at Hong Kong for concluding negotiations by the end of 2006. A seeking to reduce the incidence of non-tariff barriers, which include import licensing, quotas and other quantitative import restrictions, conformity assessment procedures, and technical barriers to trade. The sectoral elimination of tariffs for specific groups has also be forwarded as an area of negotiation. Negotiators accepted the concept of less than full reciprocity in reductions for developing and least-developed countries. Doha negotiators agreed to reach modalities for the reduction or elimination of tariffs and non-tariff barriers by the end of May 2003. This deadline was, as were subsequent ones, not met. NAMA issues were not discussed at Cancun, and there was no agreement on the draft texts proposed for consideration at that Ministerial. The July 2004 Framework Agreement adopted the use of a non-linear tariff reduction formula applied on a line-by-line basis, (i.e. one that it can work towards evening out or harmonizing tariff levels), and the Hong Kong Ministerial did agreed to use a Swiss formula. The Ministerial did not agree on the specific equation or coefficients, but negotiators did agree on an April 30, 2006 deadline to resolve these modalities. The Framework Agreement also agreed that tariff reductions would be calculated from bound, rather than the applied, tariff rates. Development Issues Three development issues are most noteworthy. One pertains to compulsory licensing of medicines and patent protection. A second deals with a review of provisions giving special and differential treatment to developing countries. A third addresses problems that developing countries were having in implementing current trade obligations. Access to Patented Medicines A major topic at the Doha Ministerial regarded the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS). The issue involves the balance of interests between the pharmaceutical companies in developed countries that held patents on medicines and the public health needs in developing countries. Before the Doha meeting, the United States claimed that the current language in TRIPS was flexible enough to address health emergencies, but other countries insisted on new language. Section 6 of the Doha document Declaration on the TRIPS Agreement and

Public Health (TRIPS Declaration), recognized that ...WTO Members with insufficient or no manufacturing capabilities in the pharmaceutical sector could face difficulties in making effective use of compulsory licensing under the TRIPS Agreement. On December 16, 2002, then-TRIPS Council chairman Eduardo Perez Motta produced a draft that would allow countries that lack the manufacturing capacity to produce medicines to issue compulsory licenses for imports of the medicines. All WTO members approved of the chairmans draft except the United States. The U.S. position, representing the interests of the pharmaceutical industry, was that the chairmans draft did not include enough protections against possible misuse of compulsory licenses. The United States sought a limit on the diseases that would be covered by the chairmans text, but other countries refused this initiative. The United States decided to oppose the chairmans draft and unilaterally promised not to bring a dispute against any least developed country that issued compulsory licenses for certain medicines. One concern of the pharmaceutical industry was that the medicines sent to the developing country might be diverted instead to another country. To address this problem, it was suggested that the medicines be marked so that they can be tracked. Another concern was that more advanced developing countries might use the generic medicines to develop their own industries. For this problem, it was proposed that countries voluntarily optout, or promise not to use compulsory licensing. The negotiations have been split along a developing-country/developed-country divide. Developing countries wanted to negotiate on changes to S&D provisions, keep proposals together in the Committee on Trade and Development, and set shorter deadlines. Developed countries wanted to study S&D provisions, send some proposals to negotiating groups, and leave deadlines open. Developing countries claimed that the developed countries were not negotiating in good faith, while developed countries argued that the developing countries were unreasonable in their proposals. At the December 2005 Hong Kong Ministerial, members agreed to five S&D provisions for LDCs, including the tariff-free and quota-free access for LDC goods described in the NAMA section. Implementation Issues Developing countries claim that they have had problems with the implementation of the agreements reached in the earlier Uruguay Round because of limited capacity or lack of technical assistance. They also claim that they have not realized certain benefits that they expected from the Round, such as increased access for their textiles and apparel in developed-country markets. They seek a clarification of language relating to their interests in existing agreements. Before the Doha Ministerial, WTO Members resolved a small number of these implementation issues. At the Doha meeting, the Ministerial Declaration directed a twopath approach for the large number of remaining issues: (a) where a specific negotiating mandate is provided, the relevant implementation issues will be addressed under that mandate; and (b) the other outstanding implementation and who has issues will be addressed as a matter of priority by the relevant WTO bodies. Outstanding implementation issues are found in the area of market access, investment measures, safeguards, rules of origin, and subsidies and countervailing measures, among others.

Trade Facilitation The first WTO Ministerial Conference, which was held in Singapore in 1996, established permanent working groups on four issues: transparency in government procurement, trade facilitation (customs issues), trade and investment, and trade and competition. These became known as the Singapore issues. These issues were pushed at successive Ministerials by the European Union, Japan and Korea, and opposed by most developing countries. The United States was lukewarm about the inclusion of these issues, indicating that it could accept some or all of them at various times, but preferring to focus on market access. Trade facilitation aims to improve the efficiency of international trade by harmonizing and streamlining customs procedures such as duplicative documentation requirements, customs processing delays, and non transparent or unequally enforced importation rules and requirements. Although negotiations are still in their infancy, the talks have thus far revolved around the scope and obligations of the new disciplines. The scope has thus far revolved around proposals dealing with freedom of transit, fees and formalities, and administrative transparency. Discussions have also occurred concerning the technical assistance and trade capacity building needed by developing countries to implement any subsequent agreement. Developed countries, including the United States and the European Union, favour the negotiation of a concrete rules-based system with appropriate accountability, while some developing countries prefer optional guidelines with policy flexibility. Although negotiations have proceeded in a constructive manner, no major breakthroughs in trade facilitation were announced in Hong Kong and the Ministerial declaration did not agree on a date for beginning text-based negotiations. No negotiating document has, thus far, been tendered. WTO Rules Rules Negotiations The Doha Round negotiations included an objective of clarifying and improving disciplines under the WTO Agreements on Antidumping (AD) and on Subsidies and Countervailing Measures (ASCM). The United States sought to keep negotiations on trade remedies outside of the Doha Round, but found many WTO partners insistent on including them for discussion. U.S. negotiators did manage to insert language asserting that ...basic concepts, principles and effectiveness of these Agreements and their instruments and objectives would be preserved. The Doha Ministerial Declaration also calls for clarifying and improving disciplines on fisheries subsidies, and both the Ministerial Declaration and the Implementation Decision have special provisions on trade remedies and developing countries. In addition to trade remedies, the Declaration calls for clarifying and improving WTO disciplines and procedures on regional trade agreements. The Declaration identified two phases for the work on trade remedies: In the initial phase of the negotiations, participants will indicate the provisions, including disciplines on trade distorting practices that they seek to clarify

and improve in the subsequent phase. No deadlines were set for these phases. So far, countries are still essentially in the first phase. The United States has primarily been on the defensive in the rules talks. Many countries have attacked the use of antidumping actions by the United States and other developed nations as disguised protectionism. However, many developing countries are now using antidumping actions themselves, which may goad some countries to re-examine the necessity for discipline. The leading proponents of such changes have been a group of 15 developed and developing countries known as the Friends of Antidumping (Brazil, Chile, Colombia, Costa Rica, Hong Kong, Israel, Japan, Mexico, Norway, Singapore, South Korea, Switzerland, Taiwan, Thailand, and Turkey; though not all countries sign onto every proposal). They have made numerous proposals, and in essence their proposals would reduce the incidence and amount of duties. Many of their proposals would require a change in U.S. laws. Although the EU is a major user of trade remedies and not a member of the Friends group, it has agreed with some of the groups proposals. In determining dumping margins, zeroing refers to a calculation whereby only goods sold in the export market at less than the domestic market price are counted; goods sold in the export market at higher than domestic price are assigned a value of zero, thus tending to increase the dumping margin. Dispute Settlement At the end of the Uruguay Round, trade ministers called for a full review of WTO dispute settlement rules and procedures within four years after entry into force of the agreement establishing the WTO. That deadline, January 1, 1999, passed without a review being completed. At Doha, trade ministers continued to call for a review of dispute rules. The Ministerial Declaration directed that negotiations be held on improvements and clarifications of the Dispute Settlement Understanding (DSU). They stated that the negotiations should be based on work done so far and on any additional proposals. They set a deadline of May 2003. They directed that these DSU negotiations would be separate from the rest of the negotiations and would not be a part of the single undertaking. Members are examining nearly all of the 27 Articles in the DSU. There was some dissatisfaction that the document needed more focus. On May 16, 2003, the chair issued another text that was accepted by most countries. The United States and the EU favoured additional reforms that were not a part of the text. For example, the United States has called for open public access to proceedings, and the EU had sought a roster of permanent dispute panellists. Environment The Ministerial Declaration included several provisions on trade and environment. Among the provisions, the trade ministers agreed to the following: (1) Negotiations on the relationship between existing WTO rules and trade obligations in multilateral environmental agreements (MEAs); (2) procedures for the exchange of information between MEA Secretariats and WTO committees, and the criteria for granting observer status; and (3) the reduction or elimination of trade barriers to environmental goods and services.

On November 30, 2007, the United States and the European Union unveiled a two-tiered tariff elimination proposal. The first tier would be the elimination of tariffs on 43 goods and services directly related to climate change mitigation such as wind-turbine parts, solar collectors, and hydrogen fuel cells. All countries would be obliged to take on this mandate, although certain phase-in periods are contemplated for developing and leastdeveloped countries. The second phase would be the creation of a plurilateral Environmental Goods and Services Agreement (EGSA) that would liberalise 153 additional environmental-related goods and services among developed and advanced developing countries. However, this proposal has been criticized by several developing countries. Brazil has decried the omission of bio fuels from the list, as well as bio fuel production equipment. India has questioned the inclusion of dual-use goods, those that also have non-environmental uses.

The Political and Military Structures of the WTO The political structures and institutions Quite in accordance with the nature of the Warsaw Pact as a military alliance and the ethics of Soviet information spread, little was or still today is known about the structures and processes governing the decision-making in the organization. The Treaty text however stipulated that as its chief organ a Political Consultative Committee (PCC) was to be framed. The PCC should consist of members of cabinet of the signatory states and convene at a minimum twice annually. In practise the representatives sent by the partner states to the Committee meetings were, except for the very onset, high-ranking communist party functionaries rather than cabinet ministers proper. Since the size of the national legations was in no way limited, the intraparty character of the PCC soon became further emphasized. The twice-a-year rule for PCC full sessions was neither taken very literally; between 1955 and 1982 there were only 19 publicized meetings, of which many seem to have been convened on an ad hoc basis. During the Gorbachev reign they became annual and were rotated around the various WTO capital cities. The role of the PCC was never defined in concrete terms. It was usually described as a "co-ordinating" body whose task was to ensure the "fraternal cooperation of its members, and who should examine general political problems and international issues" and issue communiqus. If this really was so, it would give the Committee merely rubber-stamping authority over decisions actually taken elsewhere. The long intervals between sessions underline the very general function the PCC must have had instead of any practical purpose on a military level. The PCC appears to have made its decisions on the principle of unanimity, since the documents it agreed upon were intended to bear the signatures of the delegates of each state. This became a problem at an early stage, since Albania boycotted all PCC sessions from 1961 onwards and also because of the Romanian obstructing of the decision-making process of the Pact since the country's initial rift with Moscow in 1964. It looks as if the other East European countries were likewise at times involved in horse-trading at the

PCC for their consent to Russian proposals: economic aid channelled through COMECON was demanded as compensation for having to go along Russian claims. Partly because of the Soviet resentment at such uncalled-for developments the powers of this the chief organ of the WTO were in later years severely circumscribed in favour of other, more dynamic bodies. The role of the Political Consultative Committee was much that of a smokescreen to give the impression of equal rights for the member countries. The former Commander-in Chief of the Warsaw Pact, Soviet Marshal A.A. Grechko stated that "the principle of States is clearly expressed in the composition, powers and procedures of the Political Consultative Committee of the Warsaw Treaty Organization". As far as the formal composition was concerned this admittedly was true, but the vague and ultimately only ratifying quality of its powers as well as the obscurity and frequently changed nature of its procedures for reaching decisions does not render this statement much credibility. The Warsaw Treaty of 1955 gave the PCC authorities the right to create auxiliary organs when needed. At the first session of the Committee in Prague, January 1956, two such additional bodies were set up: the Joint Secretariat and the Permanent Commission. Neither seems to have been functioning well or on a regular basis; curiously enough a PCC communiqu from 1976 actually claimed to have framed a Joint Secretariat the same year with no reference whatsoever to an earlier body by the same name. The Permanent Committee was credited with providing recommendations on a common foreign policy, whereas the Joint Secretariat presumably prepared the agendas for PCC meetings. The last known political component of the WTO was the Committee of Foreign Ministers (CFM). Though the ministers were known to have met unofficially on summer holidays (not very surprisingly in Crimea, Russia) for several years, the meetings were given formal status only in 1976 with the establishing of the CFM, which had the broadly stated aim of "further perfectioning the mechanisms of political co-operation within the framework of the Treaty". As a conclusion, it appears that there was some relaxation of WTO bloc discipline in its political institutions over the years. Strict discipline to be imposed on the junior member states became increasingly undesirable for the Soviets in principle as well as impossible in practice with the re-emergence of dtente in the early seventies. The raison dtre of the WTO political organs was that "they provided form for reaching agreement within a predetermined set of assumptions". The set was, of course, predetermined chiefly in Moscow.

The Military Structures At the same time as the Warsaw Treaty was parafied, there was also a second document issued announcing the establishment of a Joint Command of the Pact's armed forces which was to be headed by a Commander-in-Chief (C-in-C). In the pursuit of his tasks

the C-in-C would be assisted by his deputies, who were the Ministers of Defence of the state-participants to the Treaty. The right to appointment of the Commander-in-Chief as well as that of the Chief of the Joint Staff was declared to be vested with the PCC; not that it looks like the PCC ever did commission the holders of these posts. From all accounts it appears as if they were rather one-sidedly appointed by the Soviet government, which only ex post facto sought the assent of the partner states. In any case, the posts of C-in-C and of Chief of Staff were never filled by nationals of other states than the Soviet Union during the Pact's existence (Holloway-Sharp (ed.), p. 95.) Interestingly enough the Soviet Generals commissioned to these duties never saw it fit to give up their concurrent postings in the Soviet army; the Cin-C actually served as a Soviet Deputy Minister of Defence on the side. The Joint Staff was to be located in Moscow, and the Soviet government was given the right to appoint additional personnel to it for performing its tasks. This in effect meant that the USSR had a virtual monopoly in the supervision of the Staff's day-to-day functioning. Furthermore, all the permanent representatives the Staff stationed in WTO capital cities were Soviet officers enjoying extensive extraterritorial concessions. For the first few years the Joint Staff actually seems to have been an integral part of the Soviet General Staff. At some point it however became an independent element in the Soviet Ministry of Defence. As with so many organizational matters in the WTO, the date of this is somewhat shrouded in clouds but the bet (made i.e. by John Erickson) seems to be 1969. Still, the Soviet General Staff continued to have overlapping functions with the WTO Staff, which must have severely restricted its independent, multilateral authorities. This raises serious doubts as to the potential wartime functions of the Staff and thus of the entire Warsaw Pact. Malcolm Mackintosh has pointed out that the WTO Staff appears to have had no access to, neither any commanding authority over any operations, signals, transportation or supply services, each of which naturally is a basic need for the conduct of war. This leads us to question whether the WTO ever even was supposed to have an independent wartime mission. Few of the western writers on the subject think that the Cin-C's peacetime lead of the joint armed forces would have extended to any significant wartime operational command. The traditionally painted picture implies that if war broke out, East European WTO divisions would have been integrated automatically into Soviet forces on East European soil under Soviet supreme lead. The Commander-in- Chief would presumably have been involved in some capacity, but certainly without the kind of pre-eminence his title suggests. The Navy or Air defence commands of the Warsaw Pact would hardly have fared much better; according to a widespread view the unimportance of the East European navies submitted them to the Commander-in-Chief Soviet Naval Forces even in time of peace, whereas the entire air defence system was centralized to Moscow at all times.(ibid.). In times of peace the duties of the Staff were fairly clear, though. The by far most essential of these was the managing of troop training, the manoeuvres and the military exercises of multilateral forces spanning over multinational territories. In 1969 there was a major reorganization of the military structures of the Warsaw Pact, in part because of East European criticism concerning the uneven treatment of the member-

states in the wake of the Prague spring. The East Europeans, first and foremost hardly surprising the Czechs, explicitly complained that their nationals served as mere liaisons for the Staff, only conveying orders issued by Soviet superiors. As an answer several new bodies that were supposed to enhance the equality of the partners were created. Such were the Committee of Defence Ministers and the Military Council. Others have argued that these measures in fact were no concessions from Moscow's part, but simply a highly apt means to circumvent the powers vested with the PCC. In the PCC, boycotted as it was by Albania and Romania, unanimity in decisions was required but seldom reached; this was not the case with the new bodies. The Committee of Defence Ministers was to be composed of 9 members; the seven ministers of the state-participants plus the C-in-C and his deputy, the Chief of Staff. The Committee met annually, with its location and Chair rotating. It was specified as a supervising body of the Joint Command of the armies. The Military Council, whose membership rather confusingly appears to have been identical with that of the Joint Command, was in turn supposed to serve as an advisory body to the Committee of Defence Ministers. International Monetary Fund (IMF)

With its near-global membership of 188 countries, the IMF is uniquely placed to help member governments take advantage of the opportunitiesand manage the challenges posed by globalization and economic development more generally. The IMF tracks global economic trends and performance, alerts its member countries when it sees problems on the horizon, provides a forum for policy dialogue, and passes on know-how to governments on how to tackle economic difficulties. The IMF provides policy advice and financing to members in economic difficulties and also works with developing nations to help them achieve macroeconomic stability and reduce poverty. Marked by massive movements of capital and abrupt shifts in comparative advantage, globalization affects countries' policy choices in many areas, including labor, trade, and tax policies. Helping a country benefit from globalization while avoiding potential downsides is an important task for the IMF. The global economic crisis has highlighted just how interconnected countries have become in todays world economy. Key IMF activities The IMF supports its membership by providing

policy advice to governments and central banks based on analysis of economic trends and cross-country experiences; research, statistics, forecasts, and analysis based on tracking of global, regional, and individual economies and markets;

loans to help countries overcome economic difficulties; concessional loans to help fight poverty in developing countries; and technical assistance and training to help countries improve the management of their economies.

Original aims The IMF was founded more than 60 years ago toward the end of World War II (see History). The founders aimed to build a framework for economic cooperation that would avoid a repetition of the disastrous economic policies that had contributed to the Great Depression of the 1930s and the global conflict that followed. Since then the world has changed dramatically, bringing extensive prosperity and lifting millions out of poverty, especially in Asia. In many ways the IMF's main purposeto provide the global public good of financial stabilityis the same today as it was when the organization was established. More specifically, the IMF continues to

provide a forum for cooperation on international monetary problems facilitate the growth of international trade, thus promoting job creation, economic growth, and poverty reduction; promote exchange rate stability and an open system of international payments; and lend countries foreign exchange when needed, on a temporary basis and under adequate safeguards, to help them address balance of payments problems.

An adapting IMF The IMF has evolved along with the global economy throughout its 65-year history, allowing the organization to retain its central role within the international financial architecture As the world economy struggles to restore growth and jobs after the worst crisis since the Great Depression, the IMF has emerged as a very different institution. During the crisis, it mobilized on many fronts to support its member countries. It increased its lending, used its cross-country experience to advise on policy solutions, supported global policy coordination, and reformed the way it makes decisions. The result is an institution that is more in tune with the needs of its 188 member countries.

Stepping up crisis lending. The IMF responded quickly to the global economic crisis, with lending commitments reaching a record level of more than US$250 billion in 2010. This figure includes a sharp increase in concessional lending (thats to say, subsidized lending at rates below those being charged by the market) to the worlds poorest nations. Greater lending flexibility. The IMF has overhauled its lending framework to make it better suited to countries individual needs. It is also working with other

regional institutions to create a broader financial safety net, which could help prevent new crises. Providing analysis and advice. The IMFs monitoring, forecasts, and policy advice, informed by a global perspective and by experience from previous crises, have been in high demand and have been used by the G-20. Drawing lessons from the crisis. The IMF is contributing to the ongoing effort to draw lessons from the crisis for policy, regulation, and reform of the global financial architecture. Historic reform of governance. The IMFs member countries also agreed to a significant increase in the voice of dynamic emerging and developing economies in the decision making of the institution, while preserving the voice of the lowincome members.