Trade Law II

04.01.2023
INTRODUCTION TO INTERNATIONAL TRADE
The rules of trade are framed by state. Country never does trade; only states. Trade of what?
Goods and services and IPR. In international trade, 3 things are getting transacted:
- Goods
- Services and
- IPR
Trade is done mainly by the businesspeople. There have to be rules. How trade is conducted?
“International trade law cannot be read in clinical isolation from Public International Law” –
who said this?
If there is a conflict between the two, which one will prevail?
International trade law
Where is this written?
Latin maxim. Are there any international regulations which provide? Or is this a customary
principle of international law?
There are many actors of international law. Is individual an actor?
There is no clear answer.
These things are provided in the VCLT
Whether WTO law recognizes VCLT?
The answer is no.
India is not a party to the VCLT. US also is not a party to the VCLT. Why?
Because of referendum. VCLT recognizes referendum or plebiscite.
NAM- newly independent countries. In the Bandung conference, 3 leaders met. We are the
third group. We do not want to remain in either of the groups.
Does it still exist? USSR is not in existence, how will we support?
Can we say that world has become unipolar or multipolar?
LPG- Liberalisation, Privatisation and Globalisation
Liberalisation- removal of trade barriers.
Privatisation- letting go of government control of industries. Disinvestment also.
Globalisation- integration of your economy with the world economy
That integration is done through:
1) Bilateralism
2) RTA/ FTA/ PTA/ CEPA/ CECA
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In political sense, regionalism is considered bad but in trade sense, it is considered to be

pragmatic.
MFN treatment is providing each and every country favourable treatment. It is a misnomer.
No discriminatory treatment. If no discrimination is the rule, why have they named it MFN?

Only two countries have civil aviation ministry- one is Jyotiraditya Scindia
The other is Bangladesh.
Italy has nationalized its civil aviation. Is that regulated by WTO?
Yes.
Trade in goods has been regulated by GATT
Trade in services has been regulated by GATS
Trade in IPR has been regulated by TRIPS
It is GATT 1994. Earlier, we had GATT 1947.
Which law establishes WTO?
Marrakesh Agreement- establishes a multilateral institution with headquarters at Geneva.
How many members? 164.
Emphasis on the term Agreement establishing WTO. Is it an agreement or treaty?
What is the difference between the terms agreement and treaty?
Agreements and treaty are law or soft law?
Why is it Marrakesh Agreement and not treaty?
Article 3.2 of the DSU has some issues which we will discuss.
Bare Act of WTO Agreements get it xeroxed from library. It is known as purple book.
Earlier, it was known as green book.
Whether WTO can “examine” our laws? If yes, there is a concept known as Westphalian
sovereignty. Do we lose sovereignty after joining WTO?
Date at which Marrakesh Agreement came into force- 1st January, 1995.
Founder member of the WTO. Whatever rules or regulations that are provided by the WTO
are binding on us. If it is violated, any member can challenge us. WTO Panel or Appellate
Body can strike down our law. In this case, can we say that we have lost sovereignty?
Whether WTO provides sanctions? Whether countries can provide sanctions?
Whatever report the Panel or AB provides is binding on all the countries and if you do not
respect it, the victorious country, as per the report, can strike down.
Our QRs we had in 2004 were struck down by the Panel. Our solar panel rules which were
struck down, we have amended. Our MSP policy was challenged and we lost the case.
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Two books in the library:

1) Written by an Indian teaching in the US- Jagdish Bhagwati- 9 times recommended for
Nobel Prize- Cheerleader of globalization- book called “In defence of Globalization”
2) Joseph Stiglis- wrote against globalization- Discontents of Globalisation
3) Understanding Globalisation- Thomas Friedman- this is more neutral.

Best book- Peter Van Dan Bossche – WTI, Geneva. He is AB member. He has headed panels
and is a reputed author.
Another author who is equally good is Simon Lester.
There is an easy book to read for 7 CGPA- AK Koul
Earlier, it was MTO. John H Jackson said that it does not reflect world organization and thus,
he named it WTO.

Fragmentation of International law- who brought the report?

UNGA.

Which ministry deals with trade matters? Ministry of Commerce. Primarily, they deal with it.
Whether all matters are dealt? No.
Investments are dealt with by the Ministry of Finance.
Is WTO law the law of the land?
Three schools:
1) Monist- US. They have passed URAA in which they declared that WTO law is not the
law of the land.
2) Dualist-
3) Hybrid

Is Marrakesh Agreement a treaty or agreement?

Whatever constitutional mechanism you have, if you are a signatory to Marrakesh
Agreement, WTO is binding.

05.01.2023

Brettonwoods Institution: IMF, World Bank, IBD

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Washington Consensus:
GATT (General Agreement on Tariffs and Trade) 1947 & WTO (World Trade Organization):
GATT is over (the 1947), long live the GATT (has been replaced by 1994 which provides the
basic rules of WTO – this came through PPA (protocol of provisional application which was
ad hoc)).

Tariff is a duty, charge etc of manfucatured goods in the country. It is charged at the border
which is fixed in nature, of all the products. Whatever comes in my country will be charged
at customs. This is governed by Customs Tariff Act, 1975. At the international level it is
governed by WCO (world customs organization). This is provided in schedule of
concessions, it is provided under

GATT has been replaced by Marrakesh agreement which brought upon the WTO. It was an
arrangement between contracting parties which was regulating international trade on the basis
of non-discrimination.

What are the requirements to be considered an international organization?

1. Inter State basis

2. Voluntaristic basis
3. Permanent system of organs
4. Autonomy
5. Function of inter-State co-operation
___________________________________________________________________________

There are four elements each necessary to have an organization, they are four cumulative
elements, the last one rather in modern law and not in the law of 1945.

1)  The international organization is always based on a treaty

The United Nations from a legal point of view is based on the Charter of the United
Nations. There is no organization to date that is not treaty-based.

2)  The international organization is an association of States

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This is the interstate element, the members of the organization are States, this does not mean
that organizations cannot open up to other entities.

It is possible that, depending on their status, a particular entity may be a member, but the
essential thing is that the organization is an organization of States, the other entities may be
national liberation movements. These States are always represented in an assembly, in all
international organizations there is a plenary body.

Chapter II of the Charter in Articles 3 and 4 deals with members. Each time it is a question of
States. In the United Nations, they are only States, the process of creating a State can be
gradual in some cases.

3)  The international organization has its own organizational structure

From the point of view of its organs, the organization has its own existence, it is organized,
which distinguishes it from a conference of States. In an international organization, certain
tasks are delegated, which gives it an organizational structure.

4)  the legal personality

It is now considered that an international organization has its own legal personality, is subject
to international law and has rights and duties under international law.

An international organization could not be liable if it was not subject to law. Without legal
personality, one cannot commit an unlawful act.

___________________________________________________________________________

What are the criteria to be a developing or developed country? What are the implications?
(Doha Negotiations)

1. World Economic Situation and Prospects of the UN

2. Income per capita for developed countries
3. For WTO, countries just declare on their own if they are developed or developing and
countries can choose to challenge the decision of a member to make use of provisions
available to developing countries.
https://www.wto.org/english/tratop_e/devel_e/d1who_e.htm
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*reservation is a statement of non-compliance which may be oral or written. It is a

customary principle of international law, which allows countries to not follow certain
obligations in any international treaty. No international treaty can make a country follow
those obligations completely. All rules and regulations may not be complied with-this is
reservations. This is provided in VCLT.

Difference between WTO and GATT 47:

1. GATT 47 was ad hoc, provisional, wherease WTO was a more stable, permanent
body.
2. GATT had contracting parties, they had an overwhelming number of reservations,
WTO was a member driven organization did not have any reservations. They had to
follow, comply in entirety all obligations. Nature of contracting parties was such
which allowed countries to follow it through. In built exceptions are there, for
example disease is getting spread, then you can choose to not get those product.
If you have a problem, then you have to bring if the WTO secretariats and then get it
approved by all and only then can it be approved.
06.01.2023
3. GATT was dealing only with trading goods, wherease WTO was dealing with trade in
IPR, trade facilities and agreement, agreement on civil aircraft, customs valuation,
investment, subsidies, dumping, safeguards. The latest agreement to Marrakesh
agreement is a fisheries agreement. Fisheries agreement, implications for India.
*Indian Government can ban movies on GATT 20(a)*
ASCM – Subsidies: (Customs Duty + Punishment – so that domestic industries
are not injured) Countervailing duty – Tariff so that you do not have harm te
domestic trade.
a. It is a financial contribution by the government to the public.
b. It is that financial contribution providing certain benefits.
c. It must be specific.
d. Not having adverse effect on international trade.
4. GATT 47 was not having a proper judicial mechanism for redressing trade disputes.
This provides legitimacy to those certain international organization. There was the
need for positive consensus. GATT Article 22& 23 created positive consensus and
this won’t be accepted. However, under WTO we have time precise manner for
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settling disputes. And for WTO it is based on negative consensus. Earlier the
aggravator was having the power to hijack, now whoever wants the report to be
published. This could be a theoretical possibility.
WTO DSU three ways to settle dispsutes:
a. Consultation Negative – 4 months
b. Panel - 12 months
c. Appellate body - 3 months
So, in no way under DSU, can post 18 months disputes be resolved. Countries irrespective of
power structure are requested to follow. Every country irrespective of power. There is
arbitration (Article 25 DSU) and there is a laac (Article 27 DSU).
5. GATT 47 has never worked as an organization, it did not have organizational
backing, there was a lack of organizational structure. WTO functions as an
organization.
6. GATT was having grandfather clause. WTO does not have grandfather clause.
Grandfather clause – Even if you are a GATT contracting clause, you do need to have
GATT complying laws in the country. You can have laws that do not comply with
laws. Marrakesh Agreement Article 16 + VCLT Article 41.
Just Palwyn in AGL – Role of PIL in WTO (read the article)
7. Under GATT 47, there was no external auditing system of the compliance of the
contracting parties. There was no external agency looking if there were parties
complying. Under WTO there is a treaty TPRM (Trade policy review mechanism)
which provides external auditing of the compliance of that particular member. Based
on your report, Secretariat will check if you are complying with those obligations.
You are required to reply in writing as to why you are not complying with WTO
clauses. Developed countries – 2 years. Developing countries – 4 years and least
developed countries – 6 years.
8. Accession to GATT 47 was very easy, joining GATT 47 was very easy, it was
requiring a declaration by the particular country. Accession to WTO is very difficult,
it requires collectively and separelty negotiations with all the adjusting members of
WTO. If all the members agree, then only can a member join the WTO. An example
is China and Russia.
9. Withdrawal under GATT was very easy, however under WTO it required 60 days
notice.
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___________________________________________________________________________
Whether joining WTO was beneficial for India or not?

4. https://mfa.gov.by/kcfinder/upload/files/DVD/20.05.14_wto_info2_eng.jpg
5. https://www.yourarticlelibrary.com/economics/the-gains-india-has-achieved-by-
joining-wto/38227
6. https://byjus.com/question-answer/how-did-india-benefit-from-being-a-member-of-
the-world-trade-organization-wto/
7. https://www.wto.org/english/thewto_e/countries_e/india_e.htm

WTO is a single undertaking:

Countries are joining Marrakesh agreement only, accession to WTO is there. There is no a la
carte system. You are not permitted to pick and choose. There is one exception plurilateral
agreements, optional agreements. You can choose to join these agreements. This is under
page 14 of textbook. What is GPA – In India we had GPA bill in 2017, general finance act
which provides rules for government procurement – defence and railways. India did not join
the trade in civil aircraft.

WTO is a stand-alone organization:

In terms of Security – GATT 14 – the finality will be determined by the country themselves.
There is some coherence, cooperation between WTO and ILO since there is a certain
responsibility shared between both. Brettonwoods conference – WTO is a standalone not
having any influence with any other multilateral organization – it is having a secretariat.
Having regular meetings – highest body of WTO.
Counter arguments: Article 3(5) and Article 5 – Marrakesh Agreement.

What is WTO?
It is not prescribed in any of the charters of WTO. There is. No article clearly indicating what
is WTO. It is the legal and institutional (Article 1 Marrakesh) foundation (rule based system)
of the multilateral (effectively covering the world – 164 countries are part of it and 29
countries are waiting to join it + 99% of the total world trade is taking place through this
route only, through this WTO regulations. So essentially the volume of countries and volume
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of trade is overwhelming which is the true essence of the term multilateral) trading system. It
provides the principal contractual obligations determining how governments frame and
implement domestic trade legislation and regulation it contains a set of principles. It contains
a set of disciplines that affect the ability of the governments to impose trade restrictions and
increased expansion of international trade. It is the platform on which trade relations among
countries evolve through collective debate, negotiation and adjudication (Article 3(2) the
forum means those agreements covered by WTO will be implemented inbuilt trade agenda –
a forum for matters that are outside the WTO agreements, in order to achieve further trade
liberalization.  International obligation, how so ever honourable it is will have less value if it
is not implemented properly. That is why they say international law is positive morality. John
H. Jackson said DSU is the crown jewel of DSU – brevity and simplicity combined with
adjudication is what the WTO is getting helped by DSU).

DSU is the manner in which effective dispute resolution takes place. More than 600 disputes
have been resolved at WTO. The per capita availability of lawyers is having developmental
growth.
It is located on Lake Geneva which is the headquarters of WTO.

Article 60, 61 – third party participation in ICJ

Article 10 – third party rights for WTO dispute resolution.
DSU – Available at three instances. If a country thinks A can have a futuristic right in that
particular dispute, they are allowed to participate in those disputes. EC Bananas case
discusses enhancement of third party rights. The question is should third party rights be
enhanced?

ICJ is binding on third parties. WTO is not binding on third party. There is a study for the
enhancement of third party rights.

Sovereignty is of 2 types. Countries are having absolute freedom of external matters. Ability
of the government to regulate internal matters and to regulate external matters. Countries are
construed to be independent have been lost or not.

Readings for Monday:

Question on whether sovereignty has been lost or not?
1. Sovereignty modern a new approach to an outdated concept – John H.
Jackson AJIL Vol 97 (2003) pg 782 – 802
2. Great Sovereignty Debate. Book – GATT and WTO Jurisprudence by
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Sovereignty Debate:
1. Article 16(4) – the use of the term shall indicates there is no option. Irrespective of
other factors. If you join WTO all the procedures, agreement etc. Shall be in
conformity with WTO.
2. Article 16(5) – No reservation is allowed. Neither modification of this treaty is
admitted.
3. Accession and withdrawal is very cumbersome. It is a club where they might not
allow a new member to join the WTO.
4. TPRM mechanism – WTO secretariat is asking and examining the compliance with
WTO regulations.
5. Complete binding nature of DSU – if your laws are not in compliance with WTO
obligations then they will be struck down. Domestic laws are getting examined with
WTO platform. Indian patent case 2004 – our patent act was examined. In 2018 – was
examined and agriculture laws.
6. Tariffs – There are two types of tariffs i.e bound or actual tariff charge – bound is the
range declared by government, actual is the tariff country must give– if any country
wants to raise the tariff, they have to renegotiate with each and every member of the
WTO. At the time of joining they have to declare their tariffs and if they want to
change it later they must enter into negotiations with each and every member as
provided in Article 2 of GATT 1994.
7. Subject matter of WTO is too much. The areas that WTO is regulating is too much.
09.01.2023

2.1. What is a Ministerial Conference?

The Ministerial Conference is the apex body of the WTO attended by the ministers of the
members. The aim is to outline the futuristic framework where the negotiations take place.
MC is the apex body of the WTO on the further liberalisation of international trade.
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* Rounds- meetings that took place time to time where the nations deliberated upon further
liberalizations of international trade. 8 rounds that led to the formulation of Marrakesh
Agreement.

2.1. Historic Development of the WTO

1. The great depression

The genesis for the formulation of a multilateral framework arose from the exaggerated
increase in tariffs by countries and this increment was reciprocated progressively by nations.
This was in order to protect the domestic market. There was a need to reduce tariffs and form
a multilateral framework.

In 1934 there was already a treaty between the UK and France. They did not feel the need to
have an additonal framework. Hence, there was a delayed calling in the Bretton woods
conference.

2. Bretton woods conference, 1944 [“BWC”]

The BWC got called by the ECOSOC of the UN for the formation of the three pillars of
international finance. The US then called for the formation of the International Trade
Organization [“ITO”] because it realised that even though it had emerged victorious in the
WWII, Britain then was getting all the benefits so they felt the need to remove their dominant
force. Keneth W. Dam, said that in the BWC only finance ministers participated and trade
concerns took a back seat.
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3. Developments that have taken place from 1947 to 1950

This era marked the accidental birth of GATT. Although the framework wasn’t formed
meetings took place simultaneously for liberalization of international trade. This led to the
formation of the Havana Charter–

The founding document of the ITO was negotiated in Cuba from November 1947 to March
1948. The Havana Charter (formally the "Final Act of the United Nations Conference on
Trade and Employment") provided for the establishment of the ITO, and set out the basic
rules for international trade and other international economic matters. It was signed by 56
countries on March 24, 1948. It allowed for international cooperation and rules against anti-
competitive business practices.

The Charter, proposed by John Maynard Keynes, was to establish the ITO and a financial
institution called the International Clearing Union (ICU), and an international currency; the
bancor.

There was an immediate need to reduce tariff. Everything can wait except tariff which meant
that all further discussions of international trade should wait. The world was devastated and
through the imposition of tariff and this urgent need to reduce tariff came in the form of
GATT. The GATT 47 came into force through– PPA. The aim was to abolish GATT post
establishment of the ITO. The Havana charter was failed to be ratified by the US and 23
countries hence,

ITO was ablished.

4. The aborted ITO

5. The 8 negotiation rounds

During the GATT (General Agreement on Tariffs and Trade) years, eight rounds of tariff
negotiations were held between 1947 and 1994:
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1. Geneva (1947) [23 nations],

2. Annecy (1949) [33 nations],

3. Torquay (1950-51)[34 countries],

4. Geneva (1956)[22 countries] ,

5. Geneva (1960-61) - also known as the Dillon Round[the under sec of the US proposed
the round hence, the name]

• 45 countries. Three aims–

a. reduction of tariff;

b. European committee (customs Union) more than 1 country should be the member and The
internal tariff should be similar or the same and external tariff or external relationship must
be similar. The EC got recognition as a customs union in this round but customs union were
always there.

• The term Multifibre Arrangement (MFA) referred to an international trade agreement

involving clothing and textiles. The MFA was established in 1974 and imposed quotas on the
amount of clothing and textile that developing countries could export to developed nations.
The agreement was managed under the General Agreement of Tariffs and Trade (GATT) in
Switzerland. Meant as a temporary agreement, the MFA ended on Jan. 1, 1995, and was
replaced by the Agreement on Textiles and Clothing under the World Trade Organization
(WTO) this then merged with the AOA- agreement on agriculture.

Vi. the Kennedy Round (1964-67)

1. Anti dumping

2. origination of ala carte system

3. MFA

4. Non-tariff barriers,
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7. the Tokyo Round (1973-79)

The Tokyo Round was a multi-year multilateral trade negotiation (MTN) between 102
nation-states that were parties to the GATT. The negotiations resulted in reduced tariffs and
established new regulations aimed at controlling the proliferation of non-tariff barriers
(NTBs) and voluntary export restrictions. The aim was further to harmonise government
policies. Concessions were made on $19 billion worth of trade, and were scheduled to enter
effect over eight years from 1980. The Tokyo Round concluded in April 1979.[1]

The Tokyo Round was held to be "the most comprehensive of all the seven rounds of
negotiations held within the GATT since its founding in 1948." One novelty was that it
covered bovine meat and dairy products. The agricultural sector was a focus. Developing
countries were given more say in this round than had been the case in past MTNs.[2] many
codes like the subsidies code, civil aircraft code and it was a pre cursser to the merakkesh
agreement. Failure: has not brough any instituional framewlrk. TBT ]

8. the Uruguay Round (1986-94).

The Uruguay Round was the 8th round of multilateral trade negotiations (MTN) conducted
within the framework of the General Agreement on Tariffs and Trade (GATT), spanning
from 1986 to 1993 and embracing 123 countries as "contracting parties". The Round led to
the creation of the World Trade Organization, with GATT remaining as an integral part of the
WTO agreements. The broad mandate of the Round had been to extend GATT trade rules to
areas previously exempted as too difficult to liberalize (agriculture, textiles) and increasingly
important new areas previously not included (trade in services, intellectual property,
investment policy trade distortions).[1] The Round came into effect in 1995 with deadlines
ending in 2000 (2004 in the case of developing country contracting parties) under the
administrative direction of the newly created World Trade Organization (WTO).[2]

The Doha Development Round was the next trade round, beginning in 2001 and still
unresolved after missing its official deadline of 2005.[3]

biggest round max participation. Resulted in the formation of the WTO. Punta del este-
merakke
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In the first rounds, negotiations were conducted on a product-by-product basis (known as the
"request/offer" approach), whereby GATT contracting parties exchanged lists of requests and
offers on products of interest to them in order to reach agreement on tariff concessions.

23 countries participated in the negotiations and the main aim was to reduce tariffs.

Doha round- started in 2001 and still not completed. Why is it taking too much time and why
all the countries are taking diff standards?
10.01.2023
Diplomatic form of settling disputes consultation.[PS1]

What is the difference between Tariff and NTBs? Non-tariff barriers are trade barriers that
restrict the import or export of goods through means other than tariffs. The World Trade
Organization (WTO) identifies various non-tariff barriers to trade, including import licensing,
pre-shipment inspections, rules of origin, custom delayers, and other mechanisms that prevent
or restrict trade [Corporate Finance Institute]. The latter takes hidden, subtle forms. For
instance, India enacted the FSSAI Regulations (Labelling), 2021 could potentially violate the
principle of non-discrimination under TBT Agreement[PS2] .

Is environment[PS3] regulated by WTO? Yes. Preamble to WTO Agreement states that

“[t]he parties to this Agreement. Recognising that their relations in the field of trade and
economic endeavour should be conducted with a view . . . to protect and preserve the
environment” (emphasis supplied). Other relevant provisions: Arts. XIV, XX of GATT 1994;
Arts. VII, VIII, XXVII of …; Art. 5.6 of SPS Agreement. Then, there is the Committee on
Trade and Environment (CTE) present as well within the WTO. Recently, the WTO is
working on something involving regulation of environmental goods.
WTO also has an indirect relationship with Paris Convention. Furthermore, some
academicians argue that States’ obligations under the Paris Convention could be enforced
best through the WTO. This is because of the DSU; they see this as an (potentially) effective
mechanism.

WTO and IP. The primary body that regulates IP is WIPO (established in 1968 through the
Stockholm Conference). How does TRIPS come under WTO’s ambit? So, WIPO has
multiple treaties. However, WTO only recognises four of WIPO’s treaties arising out of —
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first, Paris Convention; second, Rome Convention; third, Berne Convention; and fourth,
Washington Convention. This is known as ‘doctrine of incorporation by reference’. At the
same time, WTO has incorporated these treaties subject to its own reservations. For instance,
Rome Convention includes something known as the ‘moral right’ of an author; WTO has not
incorporated this part.

Historical Background (Contd.)

VI. Kennedy Round (contd.).

Discussed the Al-katara[PS4] system. This system originated in this round. This means that
one can be a GATT party but will need to separately become a party to other agreements (like
the Anti-Dumping Agreement, which was new). Scholars argue that this system came into
being in Tokyo Rounds; the nuance is that this system originated in this round but became
conspicuous during Tokyo Rounds.

VII. Tokyo Round (1974 – 1979)

This is the precursor of modern day WTO. Many new agreements were both devised and
signed. For instance, on subsidies, TBT, customs valuation, and strengthening of Anti-
Dumping. At this stage, these were called ‘codes’ (like TBT Code, and not agreement). These
new agreements are the genesis of the WTO Agreement.

There were primarily two issues with this Round: first, agreements were fragmented. Again,
they had to be signed separately (single undertaking system did not exist). Moreover, the
grandfather clause was there in cases of inconsistencies. Therefore, there were differing
amount of contracting states for each code (or, now, agreements); second, no governing
institution (like the envisaged ITO or the present WTO) was established.

How was GATT ‘almost’ an institution? The requirements [PS5] of an international

organisation are — having members; charter/constituting document; HQ; decision making
powers; regular meetings; legal personality. GATT almost had all these characteristics except
first, a charter/constituting documents and second, legal personality.
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Was GATT successful? Yes, GATT was largely successful because: first, it promoted trade
globalisation, and second, it provided a platform to developing and LDCs to assert their
interests.

VIII. Uruguay Rounds (1986 – 94)

There were 123 countries now. This led to the establishment of the ‘Multilateral Trading
System’ and WTO. A bunch of agreements were signed on: pre-shipment, investment,
subsidiaries, services, IP, safeguards, SPS, etc.

Regional Trade Agreements and WTO. Art. XXIV GATT 1994 provides an exception to
RTAs from WTO principles (such as national treatement). In this regard, read ‘Understanding
on the Interpretation of Art. XXIV of the GATT 1994 [Purple Book, p 98]. This declaration
is binding and provides for DSU for RTAs’ disputes. Moreover, members have to notify the
Committee on Regional Trade Agreements (CTRA) when they enter into RTAs. Important
question is whether RTAs can deviate from DSU? (because my enthu ass said they will do
arbitration).

Is India obligated to give MFN status to Pakistan? Answer lies in Art. 1 GATT 1994.

11.01.2023
How countries behave in international economic setup?
1. Concept of isolation: Eg. China, India (pre 1991)
a. Think they are very superior:
b. Think they are very inferior
c. On certain aspects they think are much better
2. Concept of bilateral:
3. Concept of Regionalism: Formation of blocs with more than two countries,
commonly known as regional trade agreements, it is not that two countries are of the
same region, two countries of any region, they come together to do trade, this is
commonly known as …
4. Concept of Multilateral:

India – Certain aspects we have combination of all these 4. For eg. in isolation we have
fisheries, cotton, some parts of Automobiles.
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In terms of doing trade, there are two theories:

1. First best theory – Doing trade multilaterally

2. Second best theory – Doing trade on the basis of regionalism. This theory was
proposed by Jacob Viner. The purpose of WTO is liberalization, the purpose of RTA
(regional trade agreement) is liberalization.

WTO is most favoured nations (MFN) trade, Article 1 GATT 1994 and Article XVIV.

There is also RTA trade in WTO (this is an exception to MFN).

RTA has to be in accordance with WTO guidelines and this is checked by CRTA. Because
you have to conduct trade relations among countries, you will not be having something that is
complying with Article 24.

Case – Turkey Textile Case DS34.

https://www.wto.org/english/tratop_e/dispu_e/cases_e/ds34_e.htm.

More recently, there is US poultry case (Indian government made sure India lost this case).
Harming to Indian economy.

Both policy and regulations are part of WTO.

According to Peter Van Dilt Botshik:

1. Restraint countries from taking trade restrictive measures - Making sure that
countries do adopt rule based system
2. To ensure security and predictability to trading system – Security refers to
protecting the interests of the countries and the institutional manner in which interests
are followed through, rule based security where the laws are such that the institution
is allowing everyone to take part in the decision making process. We are allowing all
the countries to participate in the decision making process. Predictability means
whatever the rules of trade today will continue to be the rules tomorrow as well. Even
if the countries are changing, they are required to notify to the secretariat. WTO rules
are not changing. The countries ability to do trade as per the regulations must be there
today
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The panel and appellate body power is to clarify the rules and regulations in
accordance with customary rules. The interpretation can only be given by Ministerial
Conference and Appellate Body.
Compilation of 27 judgements – in practice all the laws and all the reports creates the
precedent value, de facto it is applying in any case law the previous case laws are
applying. The case laws are binding on the countries only. It is not binding on all the
members. The interpretation will continue to be there tomorrow. The panel report and
appellate body report create legitimate expectations on the part of the country. Most
of the time, the jduegemtns do not get changed, when the similar things are
challenged.
3. Protection and Preservation of Societal and Economic Values – Societal values
are morality, cultural values are protected. If a country is doing things like dumping,
the country can allow you to protect your domestic values.

WTO allow protection but does not allow protectionist

4. Greater awareness or greater measure for achieving equatorial principles in

international economic affairs

Competition Law & Trade Law:

8. Raghav Commission Report in 1999 and in 2002, we have the second competition act.
India lobeyed at multiple platforms that competition law should not be there and 137
countries have passed.
9. Competition Law of India has 4 aspects:
a. Anti competitive agreements (sec 3)
b. Abuse of dominant position
c. Regulation of Combination (Merger Acquisition) – Sec 5 & 6
d. Competition Advocacy

The first law that discusses competition is Indian Contract Act 1872 – restraint of trade. We
are having the matter of domestic law. This is regarding the inclusion of competition law.
India’s competition policy got announced in 1991 – based on demand and supply. Nobody is
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having dominant position, least interference by the State – these kind of policies that have
been announced in 1991.

PROJECT:

1. Dr. Bipin Kumar: Labour Standards for WTO read the papers
2. Rajasthan model of labour standards
3. U.S Guaetmala case labour standards is not WTO matter and if that has been
incorporated into
4. Panel
5. U.S Guaetmala Labour Standards: Jurisdictional Analysis

Who has the power to interpret?

Article 9.2 of the Marrakesh Agreement Establishing WTO and Article 3.2 of the
Understanding on Rules and Procedures Governing the Settlement of Disputes.
Article 3.2 – clarify as per customary rules of interpretation of public international law.
Article 26, 31 and 32 of the VCLT.

When the panel reports is circulated to all WTO members and DSB chairperson asks if the
particular report is adopted. It is determined if it has been adopted or not, once it is adopted it
will be determined whether it be binding on all the parties or not? Panel reports have to be
adopted and once such a panel report is adopted it is binding.

Article 9.2 provides the member the right to move a resolution MCGC that they need
clarification, then DSU enters. Upon points that they require interpretation, they then confer
with 3.2 DSU to interpret. The purpose of 3.2 is to examine the disputes, the panel is having
the power of clarification.

13.01.2023
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Article 2 – Marrakesh Agreement:

- Article 2(1) Marrakesh Agreement – the mission of the WTO is to provide a common
institutional framework on the basis of annexed agreement.

- All covered agreements are binding and multilateral on all WTO members

- Annex 2/3 is providing the role of pluritateral agreements in WTO. The countries are having
the total freedom to join or not to join it.

What are the legal implications of covered agreements?

1. It covers the basic principles of WTO laws and policies, it provides exclusive rights
and obligations of the members of the WTO. Marrakesh agreement provides the
institutional aspect, who will get the rights and obligations etc. However the very
rights and obligations are only in the covered agreements.
2. These agreements provide special manner in the functioning of the WTO, exclusive
rights such as right to review are mentioned in these covered agreements only. So
these covered agreements are having certain institutional framework, certain
committees have been established to oversee the day to day functioning of these
agreement. There are special committees to check the day to day working of the
WTO.For eg. CTE (committee on trade and enciroment), CRTA (Commi..), CTD.
3. Also make it clear the clarifications between covered agreements and plutiratealy
agreements.

GATT 1994:

10. Amended, rectified and modified from the previous GATT.

11. It consists of 47 GATT and certain amendments which were given from previous
rounds. This is clearly provided by Article 2(4) of Marrakesh Agreement. Wherever
deviations are taking place, it is pointed out in TRIPS and other agreements.
12. Under TRIPS, it is talked about non-discriminiation. General exceptions are not
covered under TRIPS. They are having security exceptions, they are having
transparency, so all other agreements are based on all covered agreements with little
bit exceptions.
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13. If there is a conflict between GATT 1994 and other covered agreements, then the
other covered agreement will prevail.
14. Articles by Somnath Chatterjee in Hindu he discussed the role of parliament in the
implementation of international treaty.
15. As per Article 253, parliament will provide a procedure for the implementation of
international treaty in India, so far this has not been done. Through enabling
legislatures, we decide who signs and ratifies treaties in India. As per Article 73, it
provides the power, right and authority to the Union of India to sign international
treaty.
16. Article 1(1) DSU – harmoniously construed - will cover disputes between two
covered agreement.
17. DS67 Brazil Upland Cotton Case.
18. Can a country bring a change in domestic legislations and after acceding to WTO
obligations, the country will alter its laws. This is known as temporal aspect of
international obligation.

Article 3 Marrakesh Agreement:

Functions:

1. Facilitations, implementation, administration and operation

2. WTO will function as negotiating forum
3. WTO is one of the main function is Dispute Settlement Mechanism. DSU is the
central element in bringing predictability and security to the multilateral trading
system.
4. To work as an external audit through TPRM. WTO works as an external audit to see
the compliance of WTO members rules and regulations on periodical basis. 2 years
for developed, 4 years for Developing and 6 for underdeveloped.
5. To bring in coherence with global policy making to establish relationship with other
muliteral forums.
6. Technical assistance to developing and undeveloped countries. (It is added by Doha
Development Round 2011).

17.01.2023

§ Basic Principles of WTO

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The basic principles on which the WTO operates / basic rules of WTO law and policy are:

1. The principle of non-discrimination, which has two elements:

The most favoured nation (MFN) principle, which entails treating all members equally at the
border. This provision applies under the Article I of GATT, Article II of GATS, and Article
IV of TRIPS. MFN is easy to apply. MFN is less used.
NT is altogether different. National treatment principle, which entails treating foreigners and
locals equally. Once the goods have been taxed at the border, domestically-produced goods
and imported goods will be treated equally. This applies to goods, services and IPR. This has
been provided for under Article III of GATT, Article II of GATS and Article IV of TRIPS.
Article III of GATT is a general clause. Even though the Appellate body accepts this is
general in nature, a specific prohibition in 3(2) and (4) has no value. More disputes of NT
than MFN.
Free riders are those who get all benefits and no accountability. Whatever treatment a
member gives a non-member, the members can ask for similar treatment from the member
who gave preferential treatment.

Understanding on WTO is available on WTO website.

India, Switzerland, USA, Australia, and Canada are federal countries. The question is WTO
law should not violate the basic principles of federalism. For the purposes of the Constitution,
there is only one list. WTO encompasses everything and nothing is left with states. WTO
standards become our standards; therefore, it cannot be said that WTO law is distinct from
our own. There is a Kiran Nivedita case.

The world is heading towards ‘Made in World’ which is uniform taxation. Therefore, double
taxation will be avoided. Transactional costs will get diminished. Trade Facilitation
Agreement (TFA) has been signed by WTO members.

2. Market access
In loose sense of the term, “tariff only please”. Tariff is fixed. That fixation of tariff is
mentioned under schedule of concessions. Access to markets of all countries are available to
market players, as under Article II of GATT 1994. Tariff is done in three manners:
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- Goods schedule: Article II of GATT 1994

- Special schedule: Agriculture products have been scheduled differently
- Service schedule: Separate schedule for services. There are 12 categories of
services, broadly divided into 161 services.
There will be no quota system. Goods will be exported and imported in terms of the market.
Government will not fix any numerical value. There are also rules concerning quantitative
restrictions (QRs) for market access. The WTO regulating provision for this is Article XI of
GATT 1994. The exceptional circumstances in which QRs can apply are: One is a BOP
restriction, and critical food shortage. Tariff rate quota (TRQ) is permitted only for
agriculture.
VER is voluntary export restrictions. [SB1] They are not permitted anymore. Rules
concerning non-tariff barriers are:
- Import licensing. The procedure for import licensing should be clear, and should
be the same for all. It is regulated by Article VIII of the GATT and the Agreement
on Import Licensing Procedure. In India, DGFT is created and in Jodhpur, they
have FTDO.
- Free shipment inspection regulations. Private entities have been appointed to
look into the price aspect of the goods so that the business people should not
charge. Whatever BOP the country has should not go into the hands of business
people. This entails further checks on imports. This should be non-discriminatory.
- Rules of origin. In simple terms, what is the source of that particular product? It
is regulated by Article IX of the GATT 1994 and the Agreement on Rules of
Origin.
- Regulating technical aspects of importation and exportation. This is regulated
by TBT. Regulations on the manufacture of any product should be non-
discriminatory in nature.
- Regulating public, animal health and plant varieties. This is regulated by SPS.

Certain scholars include two more things:

- Investment measures. The aim is to reduce trade distortions in terms of
investment matters. It is regulated by the TRIMS, the aim of which is to reduce
trade distortions.
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- Government procurement. That is aim of certain developed countries or the aim

of the GPA which is multilateral of opening up for competition.

1. Transparency and Justiciability

Transparency: The aim is to achieve security and predictability to the multilateral trading
system. The relevant provision is Article X of the GATT 1994. It is considered to be the
mother or father of transparency obligation in the WTO. It is also regulated by the TPRM
mechanism, which ensures transparency subsequently, when the nation is a WTO member.
As per TPRM, every country is required to submit reports and other countries will put a
check and question. This talks about external transparency. All rules, regulations,
administrative procedures must be published and notified to the WTO. Examination is to be
done to check if there is compliance with WTO obligations by WTO members only as it is a
member driven organisation.

Justiciability: It is achieved via:

- Articles XXII and XXIII of GATT 1994 and the Understanding on Rules and
Procedure Governing the Settlement of Disputes (DSU). Articles XXII and XXIII
are the starting point for the DSU. How many types of complaints a country can
have? And the regulation of those complaints. There are three complaints:
1. Violation complaint
2. Non violation complaint
3. Situational complaint
Because of this justiciability, John H Jackson had branded the DSU as the ‘crown jewel’ of
the WTO. As per Article III:2 of the DSU, the DSU is the central pillar for bringing security
and justiciability to the multilateral trading system. It also entails a positive integration of all
the covered agreements.
Special provisions for dispute resolution are also there in all covered agreements, which will
prevail in case of conflict with the DSU. For instance – there is a provision under the ASCM,
under which consultations must be undertaken within 30 days, but the period is 60 days under
the WTO. Thus, the ASCM provision will prevail.

2. Protection against unfair trade

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It is popularly known as trade contingencies. Article VI of GATT 1994 and Agreement on

Implementation of Article VI of GATT 1994. In India, it is Customs and Tariffs Act, 1975.
India adopted bifurcated measure of dealing with anti-dumping: Ministry of Commerce does
investigation and recommendation of anti-dumping duty and collection is done by Ministry of
Revenue, which is submitted to Ministry of Finance. Sunset review is five years.
If a country implements any such measures, which injure importing countries domestically,
action can be taken. The countries can submit an application to the DGTR (Director-General
for Trade Remedies), who can investigate and take action. This is principle is understood in
terms of ‘trade contingencies’. Dumping is considered to be international application of
predatory pricing. In order to protect domestic industries, two duties are permitted over and
above customs duty.
Some scholars have the opinion that there is no need to have an anti-dumping law.
- Anti-dumping: More than 2% dumping is prohibited. Less than that is considered to
be ‘de minimis’ dumping. Customs duty + injury margin = anti-dumping duty. AD duty is
imposed against companies, and not countries. Dumping margin is the difference between
two prices: the export price and normal value of the product. Normal value is more and
export price is less.
- Anti-subsidisation: If a countries provides subsidies to a particular sector, the
importing country is permitted to impose anti-subsidisation duty, i.e.,
countervailing duty. CV duty is imposed against countries, and not companies.
Legal framework is Article VI of GATT 1996 and Article XVI of GATT 1994 and
Agreement on Subsidies and Countervailing Measures. In India, the law that
governs is Customs and Tariffs Act, 1975. It creates trade distortions as the
government provides financial contribution. Because of that, the prices of the
goods is artificially reduced. The level playing field is getting distorted. The
conditions of competition are getting distorted.

Requirements of subsidies
Subsidy- The definition contains three basic elements:
(i) a financial contribution- e.g., grants, loans, equity infusions, loan guarantees, fiscal
incentives, the provision of goods or services, the purchase of goods.
(ii) by a government or any public body within the territory of a Member- not only to
measures of national governments, but also to measures of sub-national governments and of
such public bodies as state-owned companies.
Trade Law II

(iii) which confers a benefit- to be determined by comparison with the market-place (i.e., on
the basis of what the recipient could have received in the market).
All three of these elements must be satisfied in order for a subsidy to exist.

Specific subsidy- 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.
Only a measure which is a “specific subsidy” within the meaning of Part I is subject to
multilateral disciplines and can be subject to countervailing measures. The basic principle
is that a subsidy that distorts the allocation of resources within an economy should be subject
to discipline. Where a subsidy is widely available within an economy, such a distortion in the
allocation of resources is presumed not to occur.

Normal practise is 3 classes:

1) Prohibited- red light
2) Permitted yet actionable- yellow light: They are actionable if proved to be distortion.
3) Permitted non-actionable- green light: This expired

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.
Two categories:
1) Export Subsidies- subsidies contingent, in law or in fact, whether wholly or as one of
several conditions, on export performance. Export subsidies which are in full conformity with
the Agriculture Agreement are not prohibited by the SCM Agreement, although they remain
countervailable.
Trade Law II

They are tied to actual or anticipated exportation or export earnings. The mere fact that a
subsidy is granted to enterprises which export shall not for that reason alone be considered to
be an export subsidy within the meaning of this provision.
2) Local content subsidies- subsidies contingent, whether solely or as one of several other
conditions, upon the use of domestic over imported goods.

- Safeguards duty: All of a sudden, so many goods have come into my country.
Imposed against all existing members of the WTO, on MFN basis.
India is considered to be one of the misusers of anti-dumping legislation.

1. Recognition of Trade and Competing Interests and Values

- Societal values: Article XIV of GATS and Article XX of GATT provide certain
exceptions. Article XX has a two tier test: (i) the measure of a country must be
there in any of the lists and (ii) Chapeau test is a non-discriminatory test. EC —
Seals and DS577 laid down this test.
- Economic values: Article XIX of GATT 1994 along with Agreement on
Safeguards deal with unforeseen circumstances, too much importation, serious
material injury to domestic industry, written application from domestic industry
for the imposition of safeguard duty, importation of duty will be done on MFN
basis. [SB1]
- Security values: Article XXI of GATT 1994 deals with security exceptions. It
allows for countermeasures. The finality, if challenged, the country is required to
prove the threat to security.

2. Special and Differential Treatment to Developing Countries and LDCs

Articles 35-38 of GATT 1994. No special agreement. But all covered agreements include
provisions in this respect. Doha Round passed a document titled ‘Implementation Related
Issues and Concers’ to that end as well. Bali ministerial conference had identified 145
provisions of the WTO which help LDCs and DCs.

3. Cross Cutting and New Issues

- Regionalism: Regional trade agreements are a spaghetti bowl.
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- Environment: It is a specific concern. The GATT is often branded as the

‘GATTazilla’ because it is believed that the WTO has not protected the
environment effectively. EC — Asbestos case recognised the environmental
values.
- Investment, competition, and procurement: The main aim is to simplify the
procedure for these.
- E-commerce: India introduced in 1997 the legal framework for e-commerce.
- Trade and gender
- Labour Standards: Consensus, coherence and controversy.

Article: RACIEL, Non Discrimination in the WTO

[SB1]Take stuff from Priyanshu

Why is agriculture not included in goods?

Agriculture is not fully integrated with the WTO. Developing countries were not in
agreement about if WTO should include agriculture. Agreement on Agriculture is considered
to be a work in progress. Under this, three things are there:
- Market access
- Domestic subsidies
- Export subsidies

Threshold
1. Injury has taken place
2. Threat to material injury
3. Material retardation is grave

India (and some developed countries) falls under this category

Anti-dumping measures
- Provisional duty imposition
- Final definite anti-dumping duty
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- Price undertaking: This is nothing but assurance of not to repeat the act of
dumping and for some time, paying extra duty

Types of review
- Sunset review
- Midterm review is also known as changed circumstances review. Duration is 2.5
years.
- New shippers review: Rule 22 of the Indian Anti-Dumping Rules provides that
the Authority shall carry out a new shipper review to determine individual margin
of dumping for a new producer or exporter if (i) the producer or exporter has not
exported the product to India during the period of original investigation and (ii)
the exporter or producer is not related to any of the exporters or producers in the
exporting country who are subject to the anti-dumping duties on the product.
Thus, the legal requirements for a new shipper to obtain an individual dumping
margin are limited and clear. The Designated Authority in India has consistently
carried out new shipper reviews in alignment with Rule 22 of the Indian Anti-
Dumping Rules, and in pursuance of its commitment in terms of Article 9.5 of the
WTO AD Agreement.
- Price undertaking review

18.01.2023

July Package/ Geneva Package

1. Regulating fisheries subsidies and decisions to do trips waiver (waiver to implement

and enforce patents).
2. Removal of restrictions to allow exports to those countries which do not produce
pharmaceutical products under compulsory license (India and South Africa moved the
resolution – has not been accepted by developed countries.
3. Focus on trade restrictiveness: After Pandemic, lots of countries started putting trade
restrictiveness, if the revival of protectiveness is there how will WTO will survive,
how can trade restrictivness be removed?
a. Food security
b. Regulatory corporation
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c. Service trade
d. Technology transfer
e. Transparency
f. Reduction of transactional costs (based on procedures and those procedures relate
to documentation) – Currently WTO is focusing on how the documentary
transaction can be reduced further. If transactional cost is reduced, the cost of that
particular product will be reduced and export cost of that cost will be reduced. For
eg. floriculture – India is No. 1 in the world. T3 is considered to be the third best
in terms of product clearance. It takes 10 day to clear flowers. Many countries are
focusing on protectionist measures. How to tackle the the probem of trade
restrictivness.
4. Diversification of vaccine production: Vaccine nationalism, TRIPS, pharmaceuticals.
In order to tackle pandemic type situations, the WTO said there is a need to cooperate
with other organization to gather technical support WHO, WTO and WIPO.
5. Food insecurity: WTO negotiated.
6. Reforms: WTO wants things to be reformed and new challengers are required.
7. Application of SPS measures

Singapore Package:

It is the first ministerial conference (apex body of the WTO) of WTO taken place in
1995-96 in Singapore. WTO MC can decide how to further liberalise trade. Under this
conference, there are four issues:

1. Trade and competition – Under current regulation of WTO, competition is not a

matter. WTO proposed TRAMS (trade related anti trust measures), however
developing countries said no there is no need, competition will be regulated on a
domestic matter. It is a domestic matter, there is no need to have multilateral
agreements on such matters.
2. Trade and Investment – Establishment of the working party on trade and investment.
Trade related investment measures (local content requirement are prohibited). Under
TRIMS – Article 3 and Article 11 – quantitative restrictions are not permitted. There
is no restriction… Under TRIMS , there is only mild arrangement considering. BIPA
(india calls BITS) – whatever the existing TRIMS are there, it should be regulating,
Trade Law II

no need for further regulation. Developed countries had raised but developing
countries did not allow for it to happen.
3. Transparency in government procurement – Export subsidies are provided under
WTO. Transparency means all rules and regulations are published. In government
procurement, the rules must be transparent. Developing countries said GPA itself it
not applicable to them.
4. Trade facilitation agreement – Only issue which has been neogitated and negotiated
effectively, which led to the establishment of an agreement, under this trade in goods
category, known as trade facilitation agreement. TFA eventually came to be formed in
the WTO.

The first three issues were negotiated, ad developing countries this was an attack on the
sovereignty of the country. India has the general finance act 2017, that brought our rules to
the forward. Two centre were opened, defence and railways. In India, there is an industries
regulation agreement in which there are only 4-5 areas that is complete sovereign functions of
the state, otherwise the economy has been fully opened up. In these government procurement
matters, they believe that these private players must be allowed. The WTO do not want to
interfere on GP matters.

EU is trying to make India agree on GPA. This particular country is asking for access to trade
and goods.

In 2004 in July, there will be no negotiations of Singapore issue unless Doha is completed,
there will be no revival of Singapore issue. In 2014, Bali Ministerial Conference there is an
urgent need to tacklet the transactional costs related matter. WTO is currently not dealing
with transactional costs related matter and they chose to facilitate this trade facilitations
agreement as a separate agreement under trade in goods category. This agreement addresses
the issues with transactional costs, so less corruption and trade should increase

19.01.2023

 Why MFN is preferred? [Non-Discrimination of WTO Resell 2011]:

In case of language conflict – Analytical index is the WTO published bare acts: How
languages have been used, cases have determined in case of conflict which will prevail. In
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one case the preferred English, in one case they preferred French, in another case, they
preferred Spanish.

For eg. Bangalore is considered to be the wine capital of India, but Bangalore is also having
the maximum number of suicides, it is also known as the suicide capital of India. There was
one government which has been replaced completely, earlier Yajurappa was coming from a
traditional political party. One policy change in case of language, he said along with English,
it will be printed in Kannada.

Can language be a barrier to International trade or not?

Why WTO prefers Tariff as a method of trade liberalization?

- Local content requirement is not permitted.

1. Tariff is transparent and secure and at the time of joining, this time tariff will be
very clear at the time of imposing. If it is beneficial then it will be implemented.
2. Security and predictability to the multilateral trading system.
3. Tariff is a welfare measure, it is a duty that is charged when the goods are coming
to the country, to my own country. It is a welfare enhancement mode but it cannot
be considered here. Through Tariff welfare enhancement mechanism is imposed,
every country will be interested to have more and more tariff. Tariff will be
protected.
4. Countries will be willing to reduce tariff if one country will reduce tariff as it will
be protected by WTO. Tariff is an assurance.

TRQ – Tariff Rate Quota. You are allowed to

1. fix your tariff which will be high

2. QR will be allowed
3. Promise will be given as to how you can reduce the tariff in the future
4. Only used for agriculture.
5. It is a slow process of tarrification into the WTO matter. Slowly and gradually,
agriculture will be the subject matter of international trade matters.
6. VER – Voluntary export restriction. Non transparent, non declaring bilateralism.
There is a high chance it will lead to activities in international trade. The country will
lead to not increase in international trade.
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If there is trade liberalization, agriculture is integrated, milk production will increase, the
consumption of milk will also increase, price will be reduced. Should we join RCEP
(regional comprehensive economic partnership).

Protection against unfair trade:

Companies do dumping, exporting the goods below the cost of production, doing injury in the
domestic market.

I. Anti Dumping
1. Dumping has taken place – Dumping margin is the difference between normal value
and export price of that particular product. Normal value means the cost of the
particular goods in that country where the goods have been produced. Export price is
where the goods have been exported. Normal value is more and export price is less.
The difference is the dumping margin. In order to protect the domestic industry, anti
dumping is allowed.
2. Injury to domestic market – Injuries are of three times:
a. Injury has taken place
b. Threat to material injury
c. Material retardation so grave so that domestic industry cannot be established

Because of these three, the anti dumping measures are regulated. Indian law for anti
dumping – Customs Tariff Act 1995 read with Customs rules 1995 and the afency that
deals with this is DGTR (director general for trade remedies). Investigation will be
done by ministry of commerce and collection of anti dumping duty will be done by
ministry of revenue which cimes under ministry . Investigation wing is DGTR.

Anti Dumping actions: Imposition of provisional duty, imposition of final definitive

duty. After this investigation it has been proved that dumping has taken place, there
has been injury. Price undertaking is the undertaking you are saying you will be doing
the acts of dumping and for some time you will pay extra taxes.

Anti Dumping duty: Customs duty + Injury margin.

The maximum duration on which anti dumping duty is imposed till the time acts of
dumping is there in my company. Once imposed, then 5 years. Thee 5 years are
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known as sunset review. If DGTR recognizes the conditions of dumping, then

recognition for the likelihood of dumping. 4 reviews are permitted for the purposes of
anti dumping:

a. Sunset review
b. Mid term review/ Changed circumstances review
c. New Shippers review: If a country is exporting to another country for the same
time, they will say there is no possibility I can dump it in that country and it is
reviewed. Application by exporters which have never exported goods into the
market but the similar product or like product which has been brought to the
country. The like product which is getting imported from another country is
subjected to anti dumping duty.
d. Price undertaking review
3. Causal relationship between dumping and injury

20.01.2023

II. Requirement of Subsidies

1. Subsidy:
a. Financial contribution eg. direct, indirect, goods, services
b. Which confers some benefit – to be determined by comparison with the market
place (i.e on the basis of which the reciepent could have received in market place.
c. Specificity - given by agencies by government or any public body (establishment
test and functionality test) – recognised more effectively for the purpose of
financial contribution DS 379) (regulator) within the territory of a member. This
could include specific sector, specific individual etc.
d. Must cause distortions to international trade: Traffic light approach to
regulating subsidies which WTO ASCM has adopted:
i. Red Light: Export subsidies and import substitutions, local content
requirement (LCR) these are examples of export subsidies which are
prohibited subsidies.
ii. Yellow Light: Actionable subsidies meaning thereby the complaining
country is required to prove that your price depression or price suppression
has resulted in negative impact in imports.
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iii. Green Light: Permitted subsidies, there are only two types of subsidies i.e
prohibited and actionable. These green light subsidies are expired in WTO
(ASM Agreement Article 8 &9 – they did not extend it).
There are certain developing countries which will be permitted to
have export subsidies which is Annex VII in WTO Agreement.
However, India has gone over this limit as our current GNP is 1400 GNP.

RECOGNITION OF TRADE AND COMPETING SOCIETAL , ECONOMICAL AND

SECURITIES INTERESTS:

a. Societal Values: Protected as per Article 14, and 20 GATT 1994. There are two tests
(i) the measure of a country must be there in any of the lists and (ii) non
discrimination test – Chapeau test or good faith test. Case EC Seals and DS577 laid
down this test. You must be having weighing and balancing test, necessity test,
chapeau test. All those measures which are there, are not equal, out of necessity, there
could be weighing and balancing. Out of that a-z any of the categories.
b. Economic Values: Recognised in Article 19 of GATT 1994 and agreement on
safeguards and customs tariff act of 1975 India 1) which is imposition which deal
with unforeseen circumstances 2) excessive importation 3) domestic industry, serious
material injury. 4) Application by domestic injury for investigation and Imposition of
safeguard duty (initially for 4 years, then again 4 years and in case of developing
country then 2 years) 5) impostition fo duty on an MFN basis. There are two distinct
things , a) the investigation agency will give prescription to the developing country
for the domestic industry for having structural reforms so that this kind of injury can
never be considered unforseen circumstances. Domestic industry will be completely
protected – this is known as structural change, you cannot claim this is in fact serious
material injury, this is in a way serious economic values.
c. Security Values: If a country things and proves that their security interests are
threatened, they can have first sanctions, then they can improve sanctions, the finality
of security interests, is no longer there. Article 21 of GATT 1994 it was considered it
cannot be challenged, the finality of the measure was decided by the country
themselves, but now it can be alleged by any country, you have to prove you had your
security threatened. On that country which got your security interest threatened, it
cannot be considered for judicial review.
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Cases: DS521 and DS597 ( December 2022 – Article 21 can be questioned but you
cannot say the country did not allow for the particular importation for steel or
technology and is causing threat to the domestic industry.
*CHECK THE READING*

SPECIAL AND DIFFERENTIAL TREATMENT TO DEVELOPING COUNTRIES

AND LDC’s

Non Reciprocal trade concessions are given to developing and lease developing
countries.
Part IV was added to GATT 47 in 1967 and is now a part of GATT 1994. Non
Reciprocal has been given to DC’s and LDC’s – with the enabling clause of 1979
which promises non reciprocal trade concessions to DC’s and LDC’s.
All covered agreements of WTO are having special provisions for these countries.
Even dispute settlement is having special provision for these countries. All
agreements of WTO is having exclusive clauses.
Doha negotiations which started in 2001 states that there is a need to upgrade the
provisions of DC’s and LDC’s. There is a need for more exclusion, more upgrades.
Doha rounds ensures that more positive steps that DC’s and LDC’s take must increase
in real terms.
They are having the proper capacity to stick to this,
GSP: Generalized System of Preferences
Trade concessions provided by Developed countries to DC’s and LDC’s and certain
beneficial aspects to least developed countries. If a countries share is more than
3.25% of the total world trade. This includes cottons, milk, textiles, gems & jewels
and coffee.
India was continuously demanding GSP, however U.S was still thinking on the
matter. India is also an observer of OECD. There is India, China and Brazil.

The chief negotiator from India to the WTO is through Mr. Piyush Goyal the
commerce secretary. Now India creates a situation where if India is not liking then
that will not take place, such as TFA negotiations.
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CROSS CUTTING AND NEW ISSUES

1. Regionalism – Regionalism is considered to be friends or rivals. Jagdish Bhagwati

have said that RTA are termites eating mulitateralism. He also calls it a spaghetti
Bowl because the sources of the products are difficult to find. The biggest problem
with SARP is that every country is having Veto problem. There is an allergic
relationship. However in some international platforms, India and Pakistan is led by
Pakistani. They come together to fight against U.S.
There is a prime minister in 1991 (Narasimha Rao Govt) he started changing the
manner in which trade is done, he established look east policy. There is an
organisation ASEAN, India is still an observer. Within the blocs there will be trade,
however outside the blocs there will be friction.
India – RCEP came into force.
RCEP is mega regional, it will be led by one i.e. China. It is inherently contradictory.
There is also TPP and TPIP. There is a difference between TPP and TPIP.
There is talks of establishing an American Union that would potentially have 34
countries. Similarly African union also has 53 countries in talks.
2. Environment – Specific concerns is getting raised, it should cater to the needs to
environment. So the focus environment should be there. There is a need to have
substantive obligations for environment.
3. Investment, Competition & Procurement – The aim of the WTO is to ensure that
there are simpler procedures for these three issues.
4. E-Commerce – Regulating electronic commerce and similar communication. In
matters of IT, country which was the leading player IT regulations started at WTO by
India in 1997. India proposed to have IT agreements at the WTO. In Bali MC the
villain country not to have IT2 was India. They should not be having multilateral rules
for the purpose of e-commerce.
5. Trade and Gender: WTO is trying to regulate the impact of trade on gender. In
2017, Argentian ministerial conference highlighted the need to have trade and gender
interactions so that the policy pertaining to gender and trade needs to be integretaed.
The gender related issues in the WTO has some declaration which recognised trade
and gender as having positive discussions. Thus, it was brought that gender needs to
be considerd with one WTO
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6. Labour Standards: Consensus, Coherence, Controversy in terms of labour standards.

There is no provision for labour standards in WTO, the matters which pertain to DSU
article 23, WTO can still negotiate on these matters in order to obtain a better
understanding. Developed countries will coerce developing and underdeveloped
countries to ensure labour standards in WTO. They are doing backroom negotiations.

23.01.2023

The role of GATT in WTO

The success of GATT 47

1st Success: The first success was trade liberalization – reduction of tariff, and non-tariff
barrier. The flow of import/export increased. This is the meaning of trade liberalization and
increase of import at the border.
2nd Success: The rules of trade started getting codified. The GATT has provided the
legislative framework through which the trade games be played. The legislative framework to
conduct trade relations between countries. The creation of trade liberalization framework.
More specific legislative framework.
3rd Success: It has provided a dispute a dispute settlement mechanism, however it has power
oriented system of disputes. The role of parties/background of the parties were playing a role
in settling disputes. The positive is that it led to the establishment of the present day DSU.

Role:
1. Basic Principles in WTO
2. GATT is one of the covered agreements under this trading goods
3. Role of GATT 47 (Article XVI (1))- GATT 47 has continuity with change, it is the
amended modified version of 47.

What is Decisions:
Stare Decisis: It only has de facto stare decisis. It does not have de facto stare decisis. De
facto means which includes 27 past judgements. The jurisprudence creates legitimate
expectation on the part of the country. WTO is creating de facto and not de jure stare
decisis.
The decisions which has been taken at GATT platform such enabling clause etc. not the
the panel judgements of the previous GATT. It is referring to those decisions which
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GATT has taken for the purpose of trade liberalization and it does not refer to the
previous judgements by the panel system GATT 47 is still continuing by 1994.

What is the role of previous GATT judgements?

In U.S Gasoline, they said they are acquas. It is upon the appellate body to accept it or not
accept it. Acquas means guidelines which shall be guiding. There is discretion to accept it
or not accept it.
There is a presumption that each case is considered to be unique in itself, it is considered
to be new in itself. The countries should realise that whether the redressal to the DSU
should be recognised or be used as a tool to test others. The cases are for the purpose of
clarification to the parties. It is a world trade body and not a world court, so in case any
disagreements are there then as per the DSU the problems are getting rectified.

De Novo Review:
These are the facts, these are the laws, you have to clarify. It would have been if there are
some other clauses also, the factual matrix ix prepared by the parties. The legality of
which the factual matrix will be recognized. Whatever that is given to them, the review
will be done on those things only. Who is having the power of review, the power of
review is vested with the members. Panel and Appellate body is having the power to just
check.

Preamble:
The Marrakesh agreement preamble will be more powerful, than other covered
agreements. In case of conflict between covered agreement and preamble, then Marrakesh
agreement will preamble will prevail. In case of conflict between preamble of two
covered agreements, then there will be harmonious construction.
What is the source of Preamble?
It is twofold:
 The template of GATT 1947.
 Punta del este declaration: This was a declaration that took place for initiation of
Uruguay rounds.
The Preamble is having a five recitals:
Cases:
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1. US – Shrimp: The Appellate body in this case has held that the preamble helps give
“colour, texture and shading to the rights and obligations of the WTO members”
2. US – Gasoline: The second case where Premable has been resorted to in
environmental issue. The appellate body in this case used the term environment to
highlight the policies between trade and and environment in terms of WTO principles.
The interpretation for the protection of preamble has not come. The coherent
coherency which the trade policy is having for the protection fo environment.
3. US – Shrimp II: While interpreting the phrase “exhaustible natural resources,”, the
AB used Preamble. According to the AB, the founding fathers were fully aware of the
importance and legitimacy of environmental protection as the goal of national and
international policies.
4. EC Tariff Preferences: The AB used the last paragraph of the Preamble (“positive
steps to ensure…”) in order to highlight that positive steps that is designed to ensure
that developing and least developed countries are able to secure a share in the growth
of international trade commensurate with the needs of their economic development. In
this regard, the AB said that the Preamble provides that the developed countries are
required to take positive steps so that the developing countries’ interests are better
protected.
5. Brazil Aircraft case: The preamble was used to understand the implications of
subsidy. It was used to interpret.
The preamble is used as interpretative tool. The Preamble serves as an interpretative tool and
interpretation based on the Preamble is to be considered to be contextual in nature. As per
Article 32 of the VCLT, any interpretation given with the use of the Preamble is contextual.
24.01.2023

Four Aims/Objectives of WTO

1. Trade contributes to growth and employment

2. Trade liberalisation is to be achieved through reduction of tariff and non-tariff barriers

3. Predictability and Security through binding committee increases trade. Trade law provides
sanctity to international law itself, because the latter had problems of absence of
enforceability.
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4. Well defined rules relating to tradematters will have a positive impact on overall growth of
trade. This is rule based system.

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Advantages of MFN

1. Economically Efficienct: It allows the buyers and sellers to increase their efficiency, both
in terms of production and consumption. Comparative advantages, better prices, better
quality, etc.

2. Multilateral Trade Liberalisation: MFN is a cyclical process, leading to reduction of tariff

at a multilateral level.

3. Promotes Sovereign Equality:

4. Efficient Administration:

5. Control Rent Seeking in the Domestic Political System:

6. Ensures the Removal of Distortions

7. Ensures Free and Fair Competition

8. Protects the values of trade concessions granted to all, not to few

9. Protects against Corruption and ability to buy special favours

10. It fosters simplicity

11. Prevents Retaliaory Cycles of Discrimination

12. Multiplier Effect through its operations, negotiated trade concessions

13. Minimises Transactional Cost

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The sole problem is the concept of free riders. Small countries are unable to contribute to
tariff reduction. Many economists argue that MFN encourages free riders, who benefit from
the principle but don’t do anything in return. This is gaming with the system. However, this
argument has been critiqued. If a member grants more concessions to a non-member, another
member state can, as a matter of right, claim the same concessions. Thus, this effectively
eliminates the concept of free riders. Economists do not understand this. For instance as in
India, as per the concept of critical mass, whoever has maximum stare in IT will liberalise
trade first. This also minimises the concept of free riders.

Suggestions — Reductions

1. Formula Cut: Tariff would be cut by 10%. This is participation by all.

2. Critical Mass

Draft articles on MFN 1978. MFN is treaty based. On the other hand, national treatement is a
principle of customary law. FET is pari materia to national treatement.

25.01.2023
GOVERNING STRUCTURE OF WTO
WTO treats everyone equally, it is considered to be member driven organisation. If member
wants then certain decisions will be taken. If member wants, then they can take decisions in
accordance with that.

Article IV of Marrakesh Agreement:

a. Ministerial Conference (highest body of WTO) – Decision Making. The meeting
takes place every 2 years. 12 Ministerial Conferences have taken place so far. The
primary task is to carry out the major function of the WTO and take necessary actions
to this effect as per Article IV of Marrakesh Agreement. MC is the only forum where
ministers shall meet and in Uruguay round table, it was proposed regular meetings of
ministers to discuss. There are certain specific tasks which the MC carries out. It is
the highest body to decide the trade liberalization process.
i. The power to appoint DG
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ii. To adopt regulations setting out the power, duties, conditions of service and
terms of the director general. The regulations will govern the duties and
conditions of service of WTO secretariat. The DG appoints deputy DG. We
confer minister of state protocol to DG of state.
iii. The MC has the exclusive authority to adopt authoritative interpretations of
the WTO agreements. The MC and GC has the power to to interpret as per
Article IX in Marrakesh Agreement.
iv. The power to waive or set aside obligations imposed on the WTO members in
exceptional circumstances
v. The power to adopt amendments to WTO agreements- Article X of Marrakesh
Agreement.
vi. The authority to approve accession of new members – If any unit is having
autonomy to decide how much tax it will impose on when goods are coming to
India when goods go out of the country irrespective of it being a member of
the country. Another term is one country two systems. If a country is having
this kind of system, then nothing prevents them from joining WTO. Customs
territory having the power of evaluation. Third round – has led to European
Union to being recognised as a separate territory.
There are 12 ministerial conferences:
i. Singapore Conference
ii. Geneva Conference 18 – 28th May 1998: Only development was the IT1
agreement on India’s insistence only. So the trade in IT that has been
identified as a an agreement to govern informational technology in
international trade.
iii. Seattle Conference 30 November – 3rd December 1999: The new round of
trade liberalization will start, after listening to this streets were filled with
farmers lobby across the world. They started beating WTO members. The first
round was not started because of the protest, movie: battle of Seattle. The
Seattle conference was aborted, it was not successful enough to even bring a
negotiation.
iv. Doha Conference 2001: Indicative of the fact that WTO started shifting
towards the demand of developing countries. Pertaining to those issues which
are the issues of developing countries. WTO tries to change its course by
following developing and least developing countries interest.
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v. Cancun Conference: Failed. It did not bring any declaration because of

demands and protests developing and least developing countries.
vi. Geneva Conference 2005: Reaffirm, Reassurance, reiterate the doha round
issues. It shifted its focus to least developing countries.
Read book: Globalization in trade law.
b. General Council (second highest) –