Major Wto Agreements And Their Implications For India

Major WTO Agreements And Their Implications For India

As a WTO member, India is subject to a number of significant agreements, including the Agreement on Subsidies and Countervailing Measures, GATS, SPS, TRIPS, TRIMS, Agreement on Agriculture, and the Agreement on Textiles.
 

Agreement On Scm (Subsidies And Countervailing Measures)

The term "subsidy" is defined in the SCM Agreement as a monetary contribution made by a government or other public entity inside the territory of a member that gives a benefit. The SCM Agreement disciplines are only applicable to 4 "particular" subsidies.
 

a.    Enterprise-specificity:

A nation's government targets one or more particular businesses for subsidies.
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b.    Industry-specificity:

The government targets certain sector or sectors for subsidies. 
 

c.    Regional specificity:

Governments subsidize producers in specific regions of their territories.
 

d.    Prohibited subsidies:

A government uses native inputs to subsidize export goods or products.
 
There are two types of prohibited Subsidies based on export performance and those requiring the use of domestically produced goods rather than imported ones. Additionally, there are "actionable subsidies" that are not prohibited but to which governments may apply "countervailing measures." As an alternative, they might be contested in the WTO's "dispute settlement body." However, three requirements must be met for a subsidy to be actionable:
 
•    Damage to domestic industry brought on by foreign imports that have received subsidies. 
 
•    There are significant discriminatory consequences (such as export displacement) on the market of the subsidized member or a market in a third nation. For instance, if India begins heavily subsidizing its textile industry, China could argue that this subsidy is seriously harming its own textile industry.
 
•    Increased subsidies nullify or weaken gains arising under the GATT of 1994.
 
Members may implement countervailing measures to combat such subsidies, such as the imposition of countervailing tariffs or anti-dumping duties. These can only be carried out openly, and a sunset period ought to be mentioned. A countervailing measure must be terminated under the agreement's sunset clause after five years unless it is found that its continuation is required to prevent the persistence or repetition of subsidization and harm.
 

(i)Countervailing Duty:

This tax is applied to imported goods to balance out exporter-country subsidies.
 
For instance, the Ministry of Commerce & Industry of the Government of India suggested in March 2019 that countervailing duties be imposed on imported Chinese pneumatic tyres.
 

(ii) Anti-Dumping Duty -

Occasionally, nations will heavily subsidize production or exports, allowing exporters to sell products below domestic prices or even at cost in foreign markets. Anti-Dumping Duty seeks to prevent this subsidization and safeguard the domestic industry of the importing nation.
 
For instance, India levied anti-dumping taxes on 99 Chinese imports in January 2019 including chemicals and petrochemicals, pharmaceuticals, fibres and yarn, rubber, and steel products. Similar to this, it levied anti-dumping duties on solar cell component imports from China, Malaysia, Saudi Arabia, and Thailand in April 2019. 
 

Gats: Stands For General Agreement On Trade In Services.

The creation of a reliable set of international trade standards, the nondiscrimination principle, the promotion of economic activity by clear policy commitments, and the gradual liberalization of trade were the inspirations behind GATS.
 
The WTO's talks of the 'positive list approach' and 'negative list approach' are followed by negotiations on services. Members identify all of the services where they promise to lower tariff or non-tariff barriers in the former. It involves opening up markets and giving national treatment to Foreign Service providers in relation to the things on the list. 
 
The latter strategy, in contrast, relates to the services where trade barriers are still in place. Moving from a positive list approach to a negative list approach is something that the West is vehemently supporting. India opposes this concept because it would subject practically the entire Indian services industry to the whims of powerful western multinational corporations.
 
Under GATS, service-related negotiations can take one of four forms:
(i)    The provision of services across borders without the movement of natural persons. Business process outsourcing (BPO), KPO, or LPO services are a few examples. India can strive for mode 1 liberalization by utilizing its vast pool of human resources and competitive IT sector.
 
(ii)    The provision of a service, such as telecommunications, by one country to a consumer in another. 
 
(iii)    Commercial presence, which includes services offered on the soil of any other country by a service provider from another country, opening up opportunities for foreign investment. So it makes sense for the West to advocate for liberalization in this area such as higher education, insurance, health care, etc.
 
(iv)    The presence of natural persons, which refers to facilities that a service provider of one country provides through the presence of natural persons in the territory of any other country; for example, a corporation sending its engineers to work on-site in the US, Europe, or Australia. 
 

Trips: Stands For Trade-Related Aspects Of Intellectual Property Rights.

The World Trade Organization (WTO) oversees the international agreement known as the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), which establishes minimum requirements for many kinds of intellectual property (IP).
 

(I)Copyright -

This term refers to the legal authority to regulate the creation and distribution of a book, play, film, photograph, or musical composition. However, expressions are covered by the copyright; ideas, processes, operational methods, or other mathematical notions are not. 
 

(ii) Geographical indications -

Geographical indications are defined as indications that place a good's origin in the territory of a Member, or a particular area or locality within that territory, where the good's quality, reputation, or other characteristics can primarily be attributed to its geographic origin (Article 22.1). Some of the exclusions to the application of GI are listed in Article 24. Members are not required to preserve a GI, for instance, if it has become a general word for the product in question.
 

(iii) Industrial designs -

Under Article 25.1 of the agreement, members are required to offer protection (for at least 10 years) for independently conceived, novel, or unique industrial designs. 
 

(iv) Designs for integrated circuit layouts -

The World Trade Organization (WTO) defines layout designs as the three-dimensional arrangement, however expressed, of the components of an integrated circuit, at least one of which is an active component, and some or all of their interconnections. It also refers to such a three-dimensional arrangement prepared for an integrated circuit intended for manufacture.
 

(v) Patents -

According to the agreement, members must make patents available for all inventions, including products and methods, across all technological sectors, without exception, and subject to the requirements of novelty, creativity, and industrial usefulness. This generalization is subject to some exceptions. Members may, for instance, disqualify from patentability discoveries that are immoral or against the public good, as well as surgical, medicinal, and diagnostic procedures used to treat people or animals. 
 

(vi) Trademarks -

According to Article 15's fundamental rule, any sign or combination of signs that can distinguish one company's goods and services from those of other companies must be visually discernible in order to qualify for trademark registration.
 
As part of the Doha development strategy, the TRIPS agreement was updated in 2003 to benefit developing nations when all of the participants decided that compulsory licensing in certain circumstances was appropriate. The US and Europe are still not content with the TRIPS's present strict patent terms, though. 
 
Developing nations, particularly India, have repeatedly proposed in the WTO adding a new clause to the TRIPS agreement to prevent the theft of traditional knowledge like naturopathy and Ayurveda. In order to prevent bio-piracy, it has demanded that patent applicants provide mandatory disclosure of the source or origin of the biological resource, proof of prior informed permission, and benefit sharing before any patent is granted to a corporation.
 

1. TRIMS, or Trade-Related Investment Measures

TRIMS, which was negotiated during the Uruguay Round, applies to policies that have an impact on trade in products. No Member shall implement any measure that is in violation of GATT Article III (national treatment) or Article XI, according to this agreement (quantitative restrictions). 
 

2. The Agriculture Agreement (AoA)

AoA is built on three pillars that are intended to remove trade obstacles, promote transparent market access, and integrate global markets:
 

(i) Domestic Support,

also known as direct and product-specific input subsidies or guaranteed minimum prices. These categories are:
 

a) Green Box -

Subsidies that do not or do not significantly distort the market. It consists of policies like income-support payments, safety-net programs, payments for environmental projects, and subsidies for agricultural R&D. For developing nations, particular consideration is given in the form of government stockholding plans for the goal of ensuring food security and subsidized food prices for the underprivileged in both urban and rural areas. 
 
The US has taken advantage of this opportunity by funding agricultural R&D and decoupling subsidies (non-trade distorting subsidies) from outputs.
(b) Blue box- Payments based on area, yield, or the quantity of livestock in a base year are covered by the production-limiting subsidies in the Blue Box.
 
If "market prices" are lower than farm prices, the government is permitted to set "target prices." This strategy has been aggressively employed by EU.
 

Major WTO Agreements And Their Implications For India

c) Amber Box:

These subsidies need to be reduced because they distort commerce. They include a section of domestic support that will be cut based on the "Aggregate Measure of Support" methodology (AMS). This refers to all government expenditures on agricultural output, excluding those that fall under the definitions of "de minimis," "blue box," and "green box."
 
According to an established schedule, member nations were required to disclose their total AMS for the years 1986 to 1988 and lower it by 20% for rich nations over a period of six years beginning in 1995 and by 13% for developing nations over a period of ten years. There is no necessity for reduction for the least developed nations.
 
In addition to these subsidies, there is a "de-minimis provision" that permits members to continue "Amber box" or trade-distorting subsidies. In industrialised countries, it represents 5% of overall agricultural output, whereas in developing countries, it represents 10% of total agricultural output. 
 

Peace Clause

The Bali Summit produced the Peace Clause. The "reasonable restraint" or "peace clause" in Article 13 of the AoA governs how other WTO accords will be applied to subsidies. The regulations state that domestic assistance measures included in the Green Box are exempt from countervailing duty or other subsidy actions. Additionally, they are exempt from measures based on the GATT's non-violation nullification or degradation of tariff concessions.
 

Market Access

Market Access mandates that tariffs that have been set (like customs duties) by certain nations be gradually reduced to encourage free commerce. It also includes removing non-tariff obstacles (e.g. quotas on import). India, a party to this pact, has significantly lowered its tariffs. It solely controls items that are exempt. 
 

Export Subsidies

They are only permitted in the following four circumstances: (i) product-specific reduction commitments that are within the WTO Member's schedule, (ii) any excess of budgetary outlays for export subsidies; (iii) export subsidies that are consistent with the special and differential treatment provision for developing countries; and (iv) export subsidies other than those subject to reduction commitments as long as they are in compliance with the anti-circumvention disclaimer.
 

Special Safeguard Mechanism

As a safety valve, a Special Safeguard Mechanism (SSM) was created to allow developing nations to impose additional (temporary) safeguard levies in the case of an exceptional import surge or the arrival of imports that are unusually cheap. India voiced a number of concerns about agricultural trade during the Mini-Ministerial meeting of WTO members in March 2018. 
 
India is concerned since a major portion of developing WTO members still rely heavily on agriculture for their primary means of subsistence and are currently debating the issue of food security. India has often emphasized the need to address the uneven structure of this global trade, along with other poor countries. India agrees that the developed countries should stop using the aggregate measure of support. 
 
It has stated a desire to identify a selection of special goods that are essential to their way of life, food security, and rural development. They also viewed SSM as a crucial defensive strategy against soaring imports. However, when it comes to the specifics of these problems, there are disparities across the emerging nations. 
 

Agreement On Textiles And Clothing (Atc)

Up until the Uruguay Round, the Multi-Fibre Agreement dominated international textile commerce. This framework was used to set import quotas through bilateral agreements or unilateral acts for nations whose domestic sectors were being seriously harmed by imports that were rising quickly. The MFA was replaced by the Agreement on Textiles on January 1st, 1995 since it did not adhere to the GATT norms. These essential components form the foundation of the ATC: 
 
(a)    The product coverage, which includes apparel, yarns, textiles, and other made-up textile products.
 
(b)    A plan for including these textile and apparel items within GATT regulations.
 
(c)    A liberalization procedure that increases annual growth rates at each stage to increase current quotas (until they are reduced);
 
(d)    During the transitional period, a unique safety system to handle fresh instances of substantial harm (or threat) to local producers;
 
(e)    The creation of a Textiles Monitoring Body to supervise the Agreement's implementation and guarantee that the rules are adhered to;
 
(f)    Other clauses, such as guidelines for dodging quotas, how they are implemented, how non-MFA limits are handled, etc.
 

Phyto-Sanitary & Sanitary Measures

The Uruguay Round's SPS agreement lays forth the fundamental guidelines for food safety as well as criteria for the health of animals and plants. It enables nations to establish their own standards based on scientific norms. However, they should only stay in effect as long as it's required to preserve the health or well-being of people, animals, or plants. 
 
Additionally, they must refrain from arbitrarily or unjustifiably discriminating against nations with the same or comparable situations. Regulations, standards, testing, and certification processes should not obstruct commerce in an unnecessary way, according to the TBT agreement. 
 
Concerning SPS & TBT measures, the most frequent grievances are that importing nations do not adhere to international norms. For instance, industrialized regions like the USA & EU recently lowered the maximum allowable use of pesticides in agriculture. The export of Indian agricultural items like tea and basmati rice has been impacted by this. Long delays in completing risk evaluations or approving imports are another common complaint.

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