Page |1

“BARRIERS TO WTO REFORMS”

FINAL DRAFT SUBMITTED IN THE PARTIAL FULFILMENT OF THE

COURSE TITLED –

INTERNATIONAL TRADE LAW

SUBMITTED TO: DR. P.P. RAO

FACULTY OF INTERNATIONAL TRADE LAW

SUBMITTED BY:

NAME: DIGVIJAYA SRIVASTAVA

COURSE: B.A., LL.B (Hons.)

ROLL NO: 1525

SEMESTER: 6TH

CHANAKYA NATIONAL LAW UNIVERSITY, NYAYA NAGAR,

MITHAPUR, PATNA – 800001
 Page |2

DECLARATION BY THE CANDIDATE

I hereby declare that the work reported in the B.A., LL.B (Hons.) Project Report entitled
“BARRIERS TO WTO REFORMS” submitted at Chanakya National Law University is an
authentic record of my work carried out under the supervision of Dr. P.P.Rao. I have not
submitted this work elsewhere for any other degree or diploma. I am fully responsible for the
contents of my Project Report.

SIGNATURE OF CANDIDATE

NAME OF CANDIDATE: Digvijaya Srivastava

CHANAKYA NATIONAL LAW UNIVERSITY, PATNA.

 Page |3

ACKNOWLEDGEMENT

I would like to thank my faculty Dr. P.P.Rao whose guidance helped me a lot with structuring
my project.

I owe the present accomplishment of my project to my friends, who helped me immensely with
materials throughout the project and without whom I couldn’t have completed it in the present
way.

I would also like to extend my gratitude to my parents and all those unseen hands that helped me
out at every stage of my project.

THANK YOU,

NAME: Digvijaya Srivastava

COURSE: B.A., LL.B. (Hons.)
ROLL NO: 1525
SEMESTER – 6th
 Page |4

AIMS AND OBJECTIVES:

1. The researcher tends to study the policies of WTO in General.

2. The researcher tends to study the impact of the WTO policies on International trade.

3. The researcher tends to examine the various reforms and improvements brought by the WTO.

4. The researcher tends to study the various barriers to these reforms brought by the WTO.

RESEARCH METHODOLOGY:

The researcher has relied on Doctrinal method of research to complete the project.

SOURCES OF DATA:

The researcher has relied on both primary and secondary sources to complete the project.

1. Primary Sources: Conventions.

2. Secondary Sources: Books and Websites.

LIMITATIONS OF THE STUDY:

The researcher had territorial, monetary and time limitations in completing the project.
 Page |5

CHAPTERIZATION

1. INTRODUCTION

1.1 Emergence and Functions of WTO

1.2 Doha Ministerial Declaration

2. WTO AND LEAST DEVELOPED COUNTRIES.

3. REFORMS BROUGHT BY THE WTO

4.BARRIERS TO REFORMS BROUGHT BY THE WTO

5. CONCLUSION AND SUGGESTIONS

 Page |6

1. INTRODUCTION

The Uruguay Round of Multilateral Trade Negotiations was completed in 1994 with the signing
of the Uruguay Round Agreements at Marrakech. The Round produced a number of important
achievements, including replacing the General Agreement on Tariffs and Trade (GATT) as an
institutional framework for overseeing trade negotiations and adjudicating trade disputes, with
the World Trade Organization, and extending GATT/WTO rules of trade to new areas such as
intellectual property and services. Among the most significant accomplishments of the Uruguay
Round were its focus on the treatment of agricultural trade under the GATT and the resulting
new disciplines on agricultural trade policy.1

Until the Uruguay Round, agriculture received special treatment under GATT trade rules through
loopholes, exceptions, and exemptions from most of the disciplines applying to manufactured
goods. As a result, the GATT allowed countries to use measures disallowed for other sectors
(e.g., export subsidies), and enabled countries to maintain a multitude of non-tariff barriers that
restricted trade in agricultural products. Participants in the Uruguay Round continued the
GATT’s special treatment of agricultural trade by agreeing to separate disciplines on agriculture
in the Agreement on Agriculture (URAA), but initiated a process aimed at reducing or limiting
the exemptions and bringing agriculture more fully under GATT disciplines.

Under the Agreement, countries agreed to substantially reduce agricultural support and
protection by establishing disciplines in the areas of market access, domestic support, and export
subsidies. Under market access, countries agreed to open markets by prohibiting non-tariff
barriers (including quantitative import restrictions, variable import levies, discretionary import
licensing, and voluntary export restraints), converting existing non-tariff barriers to tariffs, and
reducing tariffs. URAA signatory countries also agreed to reduce expenditures on export
subsidies and the quantity of agricultural products exported with subsidies, and prohibits the
introduction of new export subsidies for agricultural products.2 Domestic support reductions
were realized through commitments to reduce an aggregate measure of support (AMS), a
numerical measure of the value of most trade distorting domestic policies. The agreement was

1
The Uruguay Round, WTO (March 3, 2019, 9:00 p.m.),
https://www.wto.org/english/thewto_e/whatis_e/tif_e/fact5_e.htm
2
Implications of TRIPS to Indian Agricultural Research, Naarm (March 3, 2019, 9:10 p.m.),
https://naarm.org.in/VirtualLearning/vlc/iprimplications.htm
 Page |7

implemented over a 6-year period, 1995-2000. This is a major challenge and opportunity as
positive results would rectify some of the development shortfalls of the Uruguay Round,
mainstream development into the WTO as a central principle, and provide development-
enhancing rights and obligations that would enable the entire membership to use multilateral
trade liberalization (MTL) and rules as a facilitating engine of trade as well as of development
and poverty reduction.

1.1 Emergence and Functions of WTO

The World Trade Organization (WTO) is an organization that intends to supervise and liberalize
international trade. The organization officially commenced on January 1, 1995 under the
Marrakech Agreement, replacing the General Agreement on Tariffs and Trade (GATT), which
commenced in 1948. The organization deals with regulation of trade between participating
countries; it provides a framework for negotiating and formalizing trade agreements, and a
dispute resolution process aimed at enforcing participants' adherence to WTO agreements which
are signed by representatives of member governments and ratified by their parliaments. Most of
the issues that the WTO focuses on derive from previous trade negotiations, especially from the
Uruguay Round (1986–1994).3

The organization is attempting to complete negotiations on the Doha Development Round, which
was launched in 2001 with an explicit focus on addressing the needs of developing countries.
According to a European Union statement, "The 2008 Ministerial meeting broke down over a
disagreement between exporters of agricultural bulk commodities and countries with large
numbers of subsistence farmers on the precise terms of a 'special safeguard measure' to protect
farmers from surges in imports." The position of the European Commission is that "The
successful conclusion of the Doha negotiations would confirm the central role of multilateral
liberalisation and rule-making. It would confirm the WTO as a powerful shield against
protectionist backsliding." Among the various functions of the WTO, these are regarded by
analysts as the most important: the WTO oversees the implementation, administration and
operation of the covered agreements. It provides a forum for negotiations and for settling
disputes.

3
Supra note 1.
 Page |8

Additionally, it is the WTO's duty to review and propagate the national trade policies, and to
ensure the coherence and transparency of trade policies through surveillance in global economic
policy-making. Another priority of the WTO is the assistance of developing, least-developed and
low-income countries in transition to adjust to WTO rules and disciplines through technical
cooperation and training. The WTO is also a center of economic research and analysis: regular
assessments of the global trade picture in its annual publications and research reports on specific
topics are produced by the organization. Finally, the WTO cooperates closely with the two other
components of the Bretton Woods system, the IMF and the World Bank.4

1.2 Doha Ministerial Declaration:

The WTO launched the current round of negotiations, the Doha Development Round (DDR), at
the fourth ministerial conference in Doha, Qatar in November 2001. The “Doha Ministerial
Declaration”, adopted on November 14, 2001, Para 13 stated that member-countries commit
themselves to “substantial improvements in market access, reductions of, with a view to phasing
out, all forms of export subsidies, and substantial reductions in trade-distorting domestic support.
We can agree that a special and differential treatment for developing countries shall be an
integral part of all elements of the negotiations and shall be embodied in the schedules of
concessions and commitments and as appropriate in the rules and disciplines to be negotiated, so
as to be operationally effective and to enable developing countries like China and India and their
development needs, including food security and rural development.5

This was to be an ambitious effort to make globalization more inclusive and help the world's
poor, particularly by slashing barriers and subsidies in farming. The initial agenda comprised
both further trade liberalization and new rule-making, underpinned by commitments to
strengthen substantial assistance to developing countries. However, the negotiations have been
highly contentious. Disagreements still continue over several key areas including agriculture

4
Understanding the WTO, WTO (March 3, 2019, 9:50 p.m.),
https://www.wto.org/english/thewto_e/whatis_e/tif_e/tif_e.htm
5
The Doha Agenda, WTO (March 3, 2019, 10:00 p.m.),
https://www.wto.org/english/thewto_e/whatis_e/tif_e/doha1_e.htm
 Page |9

subsidies, which emerged as critical in July 2006. As of April 2012, agreement has not been
reached, despite intense negotiations at several ministerial conferences and at other sessions.

Negotiations on agriculture began in early 2000, under Article 20 of the WTO Agriculture
Agreement. By November 2001 and the Doha Ministerial Conference, 121 governments had
submitted a large number of negotiating proposals. These negotiations will continue, but now
with the mandate given by the Doha Declaration, which also includes a series of deadlines. The
declaration builds on the work already undertaken, confirms and elaborates the objectives, and
sets a timetable. Agriculture is now part of the single undertaking in which virtually all the
linked negotiations are to end by 1 January 2005.6

The declaration reconfirmed the long-term objective already agreed in the present WTO
Agreement: to establish a fair and market-oriented trading system through a programme of
fundamental reform. The programme encompasses strengthened rules, and specific commitments
on government support and protection for agriculture. The purpose is to correct and prevent
restrictions and distortions in world agricultural markets. Without prejudging the outcome,
member governments commit themselves to comprehensive negotiations aimed at:

1. Market access: substantial reductions

2. Exports subsidies: reductions of, with a view to phasing out, all forms of these

3. Domestic support: substantial reductions for supports that distort trade

The declaration makes special and differential treatment for developing countries integral
throughout the negotiations, both in countries' new commitments and in any relevant new or
revised rules and disciplines. It says the outcome should be effective in practice and should
enable developing countries meet their needs, in particular in food security and rural
development. The ministers also take note of the non-trade concerns (such as environmental
protection, food security, rural development, etc) reflected in the negotiating proposals already
submitted. They confirm that the negotiations will take these into account, as provided for in the
Agriculture Agreement (WTO, 2012).7

6
Id.
7
Id.
 P a g e | 10

Small and/or developing economies face specific challenges in their participation in world trade,
for example lack of economy of scale or limited natural resources. The Doha Declaration
mandates the General Council to examine these problems and to make recommendations to the
next Ministerial Conference as to what trade-related measures could improve the integration of
small and/or developing economies.
 P a g e | 11

2. REFORMS USHERED IN BY THE WTO

The WTO was undoubtedly an improvement upon the GATT Agreement of 1947 since it has
brought various reforms to it. As we are already aware that the ITO was to be the body or the
institution of the world trading regime and GATT was to be the agreement of the same , but as
United States of America opposed the ITO in Torquay rounds, it got terminated. But in 1995 the
need for an institution to regulate the world trading regime was felt by the nation states and thus
WTO was formed. WTO through its various systems has brought various reforms upon the
existing system of the GATT it proved itself to be worthy in front of the nation states it brought
reforms at 3 levels which have been mentioned as under:

1.) Reforms at Normative level:

Various binding norms and various legislative instruments were evolved so that various aspects
of International trade and economic transaction could be managed.

2.) Reforms at Institutional Level:

Various new Instituitions for different purposes were created and the existing ones were
restructured.

3.) Reforms at Behavioral Level:

Actual exchange of money , goods and various ideas.

At adjudicatory level, the WTO is a much better equipped entity compared to GATT. Article III
of WTO provides that WTO shall administer the proceedures governing settlement of disputes
(referred to as dispute settlement Understanding (DSU) as given in Annexture 2 to this
agreement.

This is an improvement in GATT. The dispute resolving mechanism of WTO gives it the teeth to
take action against the defaulting member under certain circumtances.

Through this mechanism, the WTO can ensure that all members who have joined this agreement
must conform to the provision and in case of their inability to follow all provisions , appropriate
action will be taken. However, all this is contingent upon complaint and existence of a dispute.
 P a g e | 12

So far , the general experience is that the dispute panel has been faithfully discharging its duty
and it is not influenced by either developed country’s interest or the decveloping country’s
interest. Its efficience has earned it confidence of the nation states,.

About two thirds of the WTO consists of developing countries. These developing nations play an
increasingly important and active role in the WTO because of their numbers, because they are
becoming more important in the global economy, and because they increasingly look to trade as
a vital tool in their development efforts. Developing countries are a highly diverse group often
with very different views and concerns.8 The WTO thus deals with the special needs of
developing countries in three ways:

i. The WTO agreements contain special provisions on developing countries.

The WTO agreements include numerous provisions giving developing and least-
developed countries special rights or extra leniency — “special and differential treatment”.
Among these are provisions that allow developed countries to treat developing countries more
favourably than other WTO members. The General Agreement on Tariffs and Trade (GATT,
which deals with trade in goods) has a special section (Part 4) on Trade and Development which
includes provisions on the concept of non-reciprocity in trade negotiations between developed
and developing countries — when developed countries grant trade concessions to developing
countries they should not expect the developing countries to make matching offers in return.

Both GATT and the General Agreement on Trade in Services (GATS) allow developing
countries some preferential treatment. Other measures concerning developing countries in the
WTO agreements include:

a. Extra time for developing countries to fulfil their commitments (in many of the WTO
agreements).

b. Provisions designed to increase developing countries’ trading opportunities through greater

market access (e.g. in textiles, services, technical barriers to trade).

8
Understanding the WTO: Developing Countries, WTO (March 3, 2019, 1:00 a.m.),
https://www.wto.org/english/thewto_e/whatis_e/tif_e/dev1_e.htm
 P a g e | 13

c. Provisions requiring WTO members to safeguard the interests of developing countries when
adopting some domestic or international measures (e.g. in anti-dumping, safeguards, technical
barriers to trade)

d. Provisions for various means of helping developing countries (e.g. to deal with commitments
on animal and plant health standards, technical standards, and in strengthening their domestic
telecommunications sectors).9

ii. Legal assistance: a Secretariat service

The WTO Secretariat has special legal advisers for assisting developing countries in any WTO
dispute and for giving them legal counsel. The service is offered by the WTO’s Training and
Technical Cooperation Institute. Developing countries regularly make use of it.

Furthermore, in 2001, 32 WTO governments set up an Advisory Centre on WTO law. Its
members consist of countries contributing to the funding, and those receiving legal advice. All
least-developed countries are automatically eligible for advice. Other developing countries and
transition economies have to be fee-paying members in order to receive advice.

iii. Least-developed countries: special focus

The least-developed countries receive extra attention in the WTO. All the WTO agreements
recognize that they must benefit from the greatest possible flexibility, and better-off members
must make extra efforts to lower import barriers on least-developed countries’ exports. Since the
Uruguay Round agreements were signed in 1994, several decisions in favour of least-developed
countries have been taken.

Meeting in Singapore in 1996, WTO ministers agreed on a “Plan of Action for Least-Developed
Countries”. This included technical assistance to enable them to participate better in the
multilateral system and a pledge from developed countries to improved market access for least-
developed countries’ products. A year later, in October 1997, six international organizations —
the International Monetary Fund, the International Trade Centre, the United Nations Conference
for Trade and Development, the United Nations Development Programme, the World Bank and

9
Id.
 P a g e | 14

the WTO — launched the “Integrated Framework”, a joint technical assistance programme
exclusively for least-developed countries.

In 2002, the WTO adopted a work programme for least-developed countries. It contains several
broad elements: improved market access; more technical assistance; support for agencies
working on the diversification of least-developed countries’ economies; help in following the
work of the WTO; and a speedier membership process for least-developed countries negotiating
to join the WTO. At the same time, more and more member governments have unilaterally
scrapped import duties and import quotas on all exports from least-developed countries.10

Apart from that WTO’s official business takes place mainly in Geneva. But having a permanent
office of representatives in Geneva can be expensive. Only about one third of the 30 or so least-
developed countries in the WTO have permanent offices in Geneva, and they cover all United
Nations activities as well as the WTO. As a result of the negotiations to locate the WTO
headquarters in Geneva, the Swiss government has agreed to provide subsidized office space for
delegations from least-developed countries. A number of WTO members also provide financial
support for ministers and accompanying officials from least-developed countries to help them
attend WTO ministerial conferences.11

10
Id.
11
Id.
 P a g e | 15

3. BARRIERS TO REFORMS BROUGHT BY WTO

Although WTO is an improvement upon the existing model of GATT and Nation states have
created it in order to make it a tool for efficient international trade and ultimately development of
the world economy, there are certain barriers to the reforms brought by WTO. These barriers
have proved to be lacunas in the developmental process of the WTO regime.

1.) Various Social Clauses induced in the WTO regime by the United States of America have
been criticized by the developing nations. Clauses like Trade and Environment, Trade and
Labour Standard, Trade and Human Rights. The developing nations think of this as an aim of the
developed nations to rob them of their comparative advantage that they have recently gotten.

2.)Deviation from MFN Principle- Basically In international economic relations and

international politics, "most favoured nation" (MFN) is a status or level of treatment accorded
by one state to another in international trade. The term means the country which is the recipient
of this treatment must nominally receive equal trade advantages as the "most favoured nation" by
the country granting such treatment. (Trade advantages include low tariffs or high import
quotas.) In effect, a country that has been accorded MFN status may not be treated less
advantageously than any other country with MFN status by the promising country. There is a
debate in legal circles whether MFN clauses in bilateral investment treaties include only
substantive rules or also procedural protections.

The members of the World Trade Organization (WTO) agree to accord MFN status to each
other. Exceptions allow for preferential treatment of developing countries, regional free trade
areas and customs unions. Together with the principle of national treatment, MFN is one of the
cornerstones of WTO trade law.

"Most favoured nation" relationships extend reciprocal bilateral relationships following both
GATT and WTO norms of reciprocity and non-discrimination. In bilateral reciprocal
relationships a particular privilege granted by one party only extends to other parties who
reciprocate that privilege, while in a multilateral reciprocal relationship the same privilege would
be extended to the group that negotiated a particular privilege. The non-discriminatory
 P a g e | 16

component of the GATT/WTO applies a reciprocally negotiated privilege to all members of the
GATT/WTO without respect to their status in negotiating the privilege. Most Favoured Nation
status is given to an international trade partner to ensure non-discriminatory trade between all
partner countries of the WTO.

The developing nation states have recently been demanding a deviation from this principle since
they believe that this principle leaves them at a great disadvantage in international trade. It is
noteworthy that if preference is given to these nations, their inefficiency will only increase and
they will ask more deviaition rather than ending it.

3.) Concepts like Technical Barriers to Trade and Sanitary and Psytosanitary are being misused
by the developed nations. Technical barriers to trade (TBTs), a category of nontariff barriers to
trade, are the widely divergent measures that countries use to regulate markets, protect their
consumers, or preserve their natural resources (among other objectives), but they also can be
used (or perceived by foreign countries) to discriminate against imports in order to protect
domestic industries.

The 2012 classification of non-tariff measures (NTMs) developed by the Multi-Agency Support
Team (MAST), a working group of eight international organisations, classifies TBTs as one of
16 non-tariff measures (NTMs) chapters. In this classification, TBTs are classified as chapter B
and defined as "Measures referring to technical regulations, and procedures for assessment of
conformity with technical regulations and standards, excluding measures covered by the SPS
Agreement". Here, technical barriers to trade refer to measures such as labelling requirements,
standards on technical specifications and quality standards, and other measures protecting the
environment. Chapter B also includes all conformity-assessment measures related to technical
requirements, such as certification, testing and inspection. Other examples of TBTs are rules for
product weight, size, or packaging; ingredient or identity standards; shelf-life restrictions; and
import testing and certification procedures.

The Agreement on Technical Barriers to Trade gives rules for the use of such barriers. However,
trade experts widely view TBTs as having great potential for being misused by importing
countries as nontransparent (disguised or unclear) obstacles to trade.
 P a g e | 17

The OECD has been working to make common standardization easier with the ISTR Template
allowing common standards to aid in the implementation of the WTO Agreement.

4.) The Adjudicatory system which has been mentioned in the Article 3 of WTO has on several
occasions been misused by the nation states especially by the developed nations since the whole
process of adjudication is very costly and the least developed nation states are unable to keep up
with the cost.
5.) Trade Rivalry between various developed countries have been proved to be one of the
greatest barriers to the reforms brought by the WTO, countries like US and China, European
countries and US, Australia and European Union.

6.) Various other dimensions and developmental issues concerning the International trading
regime.

7.) Expected results have yet to come out in the international trading regime, even though so
many aspects of International trade have been efficiently covered by the provisions of WTO, still
expected results are yet to be seen given that there are so any barriers to those expected results.
 P a g e | 18

5. CONCLUSION AND SUGGESTIONS

The WTO has failed to live up to its promises over the past decade, which reveals a wider
systemic problem in the global community. True and lasting solutions to global economic
problems can only come when the model of global competitiveness between countries becomes
one of genuine cooperation. However, the journey so far in redeeming the development promise
of Doha has been full of broken promises.12

Thus, certain practices and rules in the WTO need to be changed in order to incorporate the
realities and broader development agenda of the Southern members. Some of the changes which
need to be done in order to improve the scenario are as follows:

i. All members should be equipped with the technical expertise and human resources to
participate fully in the multilateral negotiations. Liberalization on the “fast track” must be
stopped. Instead changes should be made to rules that effectively disadvantage the economies of
developing countries.13

ii. Decision making in the WTO must involve all members. This has not been the case to date;
instead the “quad” (U.S., EU, Japan, and Canada) has made many decisions on behalf of all.

iii. The dispute settlement system must consider the development needs of countries (especially
the most vulnerable), not just whether free trade rules have been violated. For instance, in the
recent dispute over the banana trade, the WTO ruled in favor of the U.S. over the EU’s
traditional arrangement of preferential access for Caribbean banana exporting countries–a ruling
that may have devastating economic consequences for Caribbean economies that depend solely
on banana exports.14

12
Ravinder Rena (2012), Impact of WTO policies on developing countries: issues and perspectives,
TRANSNATIONAL CORPORATIONS REVIEW (CANADA), 4(3):77-88.
13
Aileen Kwa, WTO and Developing Countries, FPIF (March 3, 2019, 6:00 p.m.),
http://fpif.org/wto_and_developing_countries/
14
Id.
 P a g e | 19

Undoubtedly, there are several barriers to the Reforms brought in by the WTO but yet it is
functioning quiet well, but due to these barriers like Technical Barriers to trade, Social Clauses
put by the United States Of America, Preferential treatment demanded by the developing
countries, costly adjudicatory system, trade rivalry between the developed nations, other
developmental issues and dimensions in International trade, etc, the expected results are not seen
by the world trading regime.
 P a g e | 20

BIBLIOGRAPHY

The researcher consulted following sources to complete the project:

CONVENTIONS:

1. Uruguay Round of Agreements.

2. Doha Declaration.

NEWSPAPER ARTICLE

1. Walker Aurelie, The WTO has failed developing nations, The Guardian [14 November, 2011].

JOURNAL ARTICLES

1. Rena Ravinder (2012), Impact of WTO policies on developing countries: issues and
perspectives, TRANSNATIONAL CORPORATIONS REVIEW (CANADA), 4(3):77-88.

WEBSITES

1. https://www.wto.org/english/thewto_e/whatis_e/tif_e/fact5_e.htm

2. https://naarm.org.in/VirtualLearning/vlc/iprimplications.htm

3. https://www.wto.org/english/thewto_e/whatis_e/tif_e/tif_e.htm

4. https://www.wto.org/english/thewto_e/whatis_e/tif_e/dev1_e.htm

5. http://fpif.org/wto_and_developing_countries/

6. https://www.wto.org/english/tratop_e/devel_e/hlm_minutes.htm

7. https://www.moneycontrol.com/news/trends/current-affairs-trends/-2049525.html
 P a g e | 21

8.https://www.ictsd.org/themes/trade-law/events/the-challenge-of-participating-in-wto-dispute-
settlement-presentation-to-the

9. https://www.wto.org/english/thewto_e/minist_e/min03_e/brief_e/brief21_e.htm

10. http://www.who.int/medicines/areas/policy/doha_declaration/en/

11. https://www.wto.org/english/thewto_e/whatis_e/tif_e/doha1_e.htm