I. THE WTO DISPUTE RESOLUTION SYSTEM
1. Dispute Settlement under GATT GATT and WTO Understanding on Rules and Procedures Governing the Settlement of Disputes .
The main components of the WTO dispute settlement system are as follows: 1. Dispute Settlement Body (DSB) 2. !ood Offices" of the Director !eneral #. $%pert &e'iew !roup ($&!) . Disputes anel *. The +ppellate Body. Dispute Settlement od!
The DSB is the ,ody that has o'erall char-e of the dispute settlement mechanism. t is in effect the !eneral /ouncil in a different -uise0 and consists of a representati'e from each mem,er. t is the DSB which must ultimately decide whether or not a em,er has ,roen any rules -o'ernin- the WTO +-reement or one of the ultilateral Trade Trade +-reements. n carryin- out this role0 the DSB is 'ariously ' ariously assisted ,y the -ood offices of the Director !eneral0 the Disputes anel and the +ppellate Body. "Good Offices "of the Director General
The disputin- parties can as for his inter'ention. But0 the ad'ice of the Director !eneral and his assistants is not ,indin- and cannot ,e cited in a later Disputes anel report. Disputes Panel
The Dispute anel is esta,lished ,y the DSB0 and consists of three to fi'e independent panellists0 with a sufficiently di'erse ,ac-round and a wide spectrum of e%perience."( they could ,e -o'ernment or non3‐ -o'ernment indi'iduals) The tas of the Disputes anel is to in'esti-ate thorou-hly the facts of the dispute0 tain- in to account the terms of the particular a-reement alle-ed to ,e ,reached. t must consult with ,oth parties to the dispute in order to -ain the fullest understandin- possi,le of the pro,lem and should encoura-e them to reach a mutually accepta,le solution0 if at all possi,le. Where the two parties to a dispute ha'e failed to reach an accepta,le a-reement durin- the in'esti-ation0 the Disputes anel will present a written report to the DSB settin- out its findin-s of fact ,ased on rele'ant a-reement pro'isions and its reasonin- ,ehind its recommendations. #$pert Revie% Group
Where a Dispute anel is considerin- a matter of a particularly technical nature it may0 with the consent of ,oth parties to the dispute0 esta,lish an $&! to pro'ide it with assistance. The $&!4s report is of an ad'isory nature only0 althou-h it will o,'iously carry considera,le wei-ht when it comes to the Dispute anel presentin- its o'erall findin-s to the DSB.
The Appellate od!
Where a party to a dispute disa-rees with a Dispute anel recommendation0 it can appeal to a standin+ppellate Body0 esta,lished ,y the DSB. The appeal0 howe'er0 is limited to issues of law co'ered in the Disputes anel report and the le-al interpretation de'eloped ,y the Disputes anel. The +ppellate Body is composed of se'en people who will ser'e for a four year term. Only three of the se'en will ser'e on any one case. The +ppellate representati'es must ,e people of reco-ni5ed standin- in the field of law and international trade and not ,e affiliated to any -o'ernment. They are appointed on the ,asis of a 6oint proposal forwarded ,y the Director !eneral0 the DSB /hairman and the /hairman of the !eneral /ouncil and the Trade /ouncils. ts proceedin-s will ,e confidential0 ,ased on information already pro'ided in the dispute and without the presence of either party. +fter ha'in- re'iewed the e'idence0 the +ppellate Body reports to the DSB. ts findin-s must ,e accepted ,y the parties to the dispute unless the DSB decides0 ,y consensus0 not to adopt the report. Procedures of WTO disputes mechanism Step1
The a--rie'ed em,er should mae a re7uest for consultation with the offendin- em,er. The re7uest must ,e sent to the DSB in writin-. Step&
+ reply should ,e made ,y the offendin- em,er within 18 days unless otherwise mutually a-reed. /onsultations should commence within #8daysof the ori-inal re7uest. n ur-ent situation in'ol'in- perisha,le -oods the reply and commencement of consultations should tae place within18days of the ori-inal re7uest. Step'
Where ,oth parties a-ree the case can ,e ,rou-ht ,efore the Director !eneral and the -ood offices procedure may continue while the Disputes anel process is in pro-ress0 pro'ided ,oth parties a-ree to it. Step(
f no response to a re7uest for consultations is recei'ed within 18days or0 if the /onsultations fail to achie'e a solution after 98days0 the complainant can as the DSB to esta,lish a Disputes anel to e%amine the case. Step)
+ Dispute anel is to ,e constituted within 28 days of the DSB4s decision to esta,lish it. Where the parties to the dispute cannot a-ree0 within 28days0 on the panel lists nominated ,y the Secretariat0 the Director !eneral in con6unction with the /hairman of the rele'ant /ouncil/ommittee0 will decide the appointments. Step*
The D should complete its e%amination of the case and produce a final report within si% months and for ur-ent cases such as those relatin- to perisha,le -oods0 within three months. t should ne'er tae more than nine months.
t shall throu-hout the course of its in'esti-ations0 to encoura-e the parties to the dispute to settle the matter 'oluntarily. Step+
+fter the D has considered the written and oral e'idence of ,oth parties to the dispute it will distri,ute the factual and ar-ument sections of its report to the parties for their perusal. The parties will then su,mit their written comments within a prescri,ed time period set ,y the pan el. Step ,
The D shall pro'ide the nterim report of its findin-s and conclusions to the parties and the parties can respond to the interim report. f no response0 then it will ,e considered as the final report. Step -
The final report is su,mitted to the DSB who should adopt it within 98days of issuance unless either one of the parties to the dispute indicates that it intends to appeal or a consensus emer-es in the DSB a-ainst adoption. t in'ol'es circulation of report to the other em,ers0 discussed and adopted. Step1
ro'ided no appeal has ,een lod-ed a-ainst the D report and that there is no consensus a-ainst adoption0 the DSB will automatically appro'e the anel4s recommendations at the adoption meetin-. Step11
+ppeal to the standin- +ppellate Body. The +ppellate Body will re'iew the e%istin- e'idence and should aim to report to the DSB with its findin-s within 98 days and not more than ;8days. Step1&
The DSB must adopt the +ppellate Body report within #8days of issuance0 unless there is consensus a-ainst adoption. Both parties to the dispute are ,ound to accept0 unconditionally0 the recommendations of the +ppellate Body. Step1'
+fter the adoption of the +ppellate Body4s recommendation0 the offendin- party must state its intentions in respect of the implementation of the DSB4s recommendation. Step1(
The DSB will allow the offendin- party a reasona,le period of time" to implement the recommendations0 which should not normally e%ceed 1*months. Step1)
f a party fails to comply with the recommendation within the set time0 it must enter in to ne-otiations with the complainant in order to decide on a mutually accepta,le le'el of compensation. Step1* /retaliator! action0
f no accepta,le le'el of compensation has ,een a-reed0 the complainant may re7uest authori5ation from the DSB to suspend concessions or o,li-ations due to the offendin- party under the particular a-reement in 7uestion. Step1+
The DSB should -rant the re7uest for suspension of concessions or o,li-ations0 within #8days unless there is a consensus a-ainst doin- so. Step1, /Aritration0
f the offendin- party o,6ects to the le'el of suspension -ranted ,y the DSB0 it can re7uest that the matter ,e sent to ar,itration (consistin- of ori-inal Dispute anels mem,ers or an ar,itrator appointed ,y Director !eneral). The ar,itration process should ,e completed within 98days and its decision is final. Step1-
On re7uest from the complainant0 the DSB will then authori5e the suspension of concessions as recommended ,y the ar,itration ,oard0 unless there is a consensus a-ainst so doin-. n principle0 the DSB (or ar,itration ,ody) should authori5e or recommend the suspension of concessions0 in the same sector of an a-reement.
One of the most remara,le and successful aspects of the WTO is its automatic and compulsory dispute settlement system. t is one thin- for countries to a-ree to a treaty and 7uite another to enforce compliance with that treaty. =nder international law0 states can only ,e ,rou-ht ,efore an international court or tri,unal if they ha'e consented to the 6urisdiction of that court or tri,unal. n many cases0 this implies that ,reach of a treaty cannot ,e challen-ed in third3party ad6udication0 or that when a d ispute arises it can ,e settled in a 6udicial fashion only with the e%plicit consent of ,oth parties. n the WTO0 the situation is dramatically different. Whene'er a WTO mem,er has a complaint a-ainst another WTO mem,er for any matter fallin- under any WTO co'ered a-reement (as defined in DS= +rticle 1)0 it can in'oe the WTO4s dispute settlement system0 without needin- the appro'al of the defendin- party. This remains the case e'en if the matter raised not only in'ol'es trade ,ut also more sensiti'e 7uestions such as health or en'ironmental protection0 pu,lic morals0 or national security. +s compared to most other international ad6udication re-imes0 WTO dispute settlement has detailed procedural rules0 an appellate process0 and ,ac3up ar,itration mechanisms to deal with non3implementation and the calculation of trade sanctions in response to continued non3compliance. ost important0 WTO mem,ers ha'e fre7uently used the dispute settlement system (,etween 1;;* and +pril 28110 2 disputes ha'e ,een filed) and in the lar-e ma6ority of cases (with some nota,le e%ceptions) the system has man a-ed to resol'e the dispute. + ,etter understandin- of the WTO dispute settlement system not only allows one to formulate and -uide complaints throu-h the multiple sta-es of enforcin- trade a-reements at the WTO0 ,e it in pursuit of
-o'ernment or pri'ate client interests0 ,ut it also offers a fascinatin- study of state3to3state ad6udication and international law enforcement more ,roadly. &. The World Trade Organisation /WTO02 3eatures4 Structures4 O5ective and 3unction of the WTO6 7ntroduction2
The esta,lishment of the World Trade Or-anisation (WTO) as the successor to 0the !+TT on 1 >anuary 1;;* under the arraesh +-reement places the -lo,al tradin- system on a firm constitutional footin- with the e'olution of international economic le-islation resulted throu-h the =ru-uay &ound of !+TT ne-otiations. + remara,le feature of the =ru-uay &ound was that it pa'ed the way for further li,eralisation of international trade with the fundamental shift from the ne-otiation approach to the institutional framewor en'isa-ed throu-h transition from !+TT to WTO +-reement. The !+TT 1;? and the WTO co3e%isted for the transitional period of one year in 1;;. n >anuary 1;;*0 howe'er0 the WTO completely replaced the !+TT. The mem,ership of the WTO increased from ?? in 1;;* to 12? ,y the end of 1;;9. 3eatures of the WTO2
The distincti'e features of the WTO are: i. =nlie the !+TT0 it is a le-al entity. ii. =nlie the nternational onetary @und (@) and the World Ban (WB) it is not an a-ent of the =nited Aations. iii. =nlie the @ and the World Ban0 there is no wei-hted 'otin-0 ,ut all the WTO mem,ers ha'e e7ual ri-hts. i'. =nlie the !+TT0 the a-reements under the WTO are permanent and ,indin- to the mem,er countries. '. =nlie the !+TT0 the WTO dispute settlement system is ,ased not on dilatory ,ut automatic mechanism. t is also 7uicer and ,indin- on the mem,ers. +s such0 the WTO is a powerful ,ody. 'i. =nlie the !+TT0 the WTOs approach is rule3 ,ased and time3,ound. 'ii. =nlie the !+TT0 the WTOs ha'e a wider co'era-e. t co'ers trade in -oods as well as ser'ices. 'iii. =nlie the !+TT0 the WTOs ha'e a focus on trade3related aspects of intellectual property ri-hts and se'eral other issues of a-reements. i%. +,o'e all0 the WTO is a hu-e or-anisational ,ody with a lar-e secretariat. Structure of the WTO2
The or-anisational structure of the WTO is outlined in the /hart *8.1. The inisterial /onference (/) is at the top of the structural or-anisation of the WTO. t is the supreme -o'ernin- ,ody which taes ultimate decisions on all matters. t is constituted ,y representati'es of (usually0 inisters of Trade) all the mem,er countries.
The !eneral /ouncil (!/) is composed of the representati'es of all the mem,ers. t is the real en-ine of the WTO which acts on ,ehalf of the /. t also acts as the Dispute Settlement Body as well as the Trade olicy &e'iew Body. There are three councils0 'i5.: the /ouncil for Trade in Ser'ices and the /ouncil for Trade3&elated +spects of ntellectual roperty &i-hts (T&S) operatin- under the !/. These councils with their su,sidiary ,odies carry out their specific responsi,ilities @urther0 there are three committees0 'i5.0 the /ommittee on Trade and De'elopment (/TD)0 the /ommittee on Balance of ayments &estrictions (/BO&)0 and the /ommittee on Bud-et0 @inance and +dministration (/@ +) which e%ecute the functions assi-ned to them ,y e WTO +-reement and the !/. The administration of the WTO is conducted ,y the Secretariat which is headed ,y the Director !eneral (D!) appointed ,y the / for the tenure of four years.
O5ectives of the WTO2
The purposes and o,6ecti'es of the WTO are spelled out in the pream,le to the arraesh +-reement.
n a nutshell0 these are: 1. To ensure the reduction of tariffs and other ,arriers to trade. 2. To eliminate discriminatory treatment in international trade relations. #. To facilitate hi-her standards of li'in-0 full employment0 a -rowin- 'olume of real income and effecti'e demand0 and an increase in production and trade in -oods and ser'ices of the mem,er nations. . To mae positi'e effect0 which ensures de'elopin- countries0 especially the least de'eloped secure a le'el of share in the -rowth of international trade that reflects the need s of their economic de'elopment. *. To facilitate the optimal use of the world4s resources for sustaina,le de'elopment. 9. To promote an inte-rated0 more 'ia,le and dura,le tradin- system incorporatin- all the resolutions of the =ru-uay &ound4s multilateral trade ne-otiations. +,o'e all0 to ensure that lina-es trade policies0 en'ironmental policies with sustaina,le -rowth and de'elopment are taen care of ,y the mem,er countries in e'ol'in- a new economic order. 3unctions of the WTO2
The WTO consistin- a multi3faced normati'e framewor: comprisin- institutional su,stanti'e and implementation aspects. The ma6or functions of the WTO are as follows: 1. To lay3down a su,stanti'e code of conduct aimin- at reducin- trade ,arriers includin- tariffs and eliminatindiscrimination in international trade relations. 2. To pro'ide the institutional framewor for the administration of the su,stanti'e code which encompasses a spectrum of norms -o'ernin- the conduct of mem,er countries in the arena of -lo,al trade. #. To pro'ide an inte-rated structure of the administration0 thus0 to facilitate the implementation0 administration and fulfillment of the o,6ecti'es of the WTO +-reement and other ultilateral Trade +-reements. . To ensure the implementation of the su,stanti'e code. *. To act as a forum for the ne-otiation of further trade li,eralisation. 9. To cooperate with the @ and WB and its associates for esta,lishin- a coherence in trade policy3main-. ?. To settle the trade3related disputes. What is a WTO trade round8
WTO (!+TT) ne-otiations often process multilaterally ,y paca-es. That means0 WTO mem,ers ne-otiate on se'eral trade3related issues simultaneously in a certain period of time. The a-reements0 which constitute the WTO rules0 are typically reached ,y consensus amon- all mem,ers. Such a period of ne-otiations forms a WTO trade round.
+ new trade round is often launched when WTO mem,ers reali5e limits of e%istin- rules in protectin- their ri-hts and facilitatin- trades. These limits may ,ecome apparent when new pro,lems stem from the e%istintrade or when international trade de'elops into new areas. @or e%ample0 the early !+TT trade rounds dealt mainly with tariff reductions. /onse7uently0 only few tariff ,arriers are left ,y the start of Toyo &ound. eople then saw the influence of non3tariff ,arriers a-ainst trade and launched the Toyo &ound (1;?#31;?;) to discuss non3tariff measures. Then with the de'elopment of trade into ser'ice and intellectual property ri-hts0 the =ru-uay &ound from 1;9 to 1;; further included issues in ser'ices and intellectual property ri-hts. +ware that !+TT rules are limited to trade in -oods0 the =ru-uay &ound also co'ered the topic of WTOCs creation. The current set of WTO rules was the outcome of =ru-uay &ound ne-otiations. What are the advantages and disadvantages of negotiation through trade round8 7. Advantages2
The si5e of the paca-e can mean more ,enefits ,ecause participants can see and secure ad'anta-es across a wide ran-e of issues. n a paca-e0 the a,ility to trade3off different issues can mae a-reement easier to reach ,ecause somewhere in the paca-e there is somethin- for e'eryone. De'elopin- countries and other less powerful participants ha'e a -reater chance of influencin- the multilateral system in a trade round than in ,ilateral relationships with ma6or tradin- nations. 77. Disadvantages2
The simultaneous ne-otiation in different areas necessarily includes issues that certain ne-otiator countries are reluctant to address. These issues ser'e actually as conditions for the process of other issues ,eneficial to those countries. This situation can put the de'elopin- countries at a disad'anta-e. The de'elopin- ones are an%ious to impro'e their economies throu-h international trade.
Because tariff was widely used as a tool to protect domestic industries and -enerate re'enue0 the early trade rounds of !+TT mainly focused on tariff issues. ain trade rounds include: . The @irst &ound at !ene'a0 Swit5erland0 from +pril to Octo,er 1;?0 where the participants completed 12# ne-otiations and esta,lished 28 schedules containin- the tariff reductions and ,indin-s that ,ecame an inte-ral part of !+TT. . The Second &ound at +nnecy0 @rance0 from +pril to +u-ust 1;;0 which led to *0888 tariff concession and the accession of ten more countries. . The Third &ound at Tor7uay0 $n-land from Septem,er 1;*8 to +pril 1;*10 which lead to 0?88 tariff concessions and accession of four more countries. . The @ourth &ound at !ene'a in ay 1;*90 which led to some E2.* ,illion worth of tariff reductionsF . The Dillon &ound from Septem,er 1;98 to >uly 1;920 which led to a,out 088 tariff concessions co'erinE.; ,illion of trade.
. The Gennedy &ound from ay 1;9 to >une 1;9?0 which lead to concessions co'erin- an estimated total 'alue of trade of a,out E8 ,illion. . The Toyo &ound from Septem,er 1;?# to Ao'em,er 1;?; was a transitional period0 co'erin- ,oth tariff and non3tariff matters. n tariff issues0 it taled a,out tariff reduction and ,indin-s that co'ered more than E#88 ,illion of trade in almost * years. t also resulted in a n um,er of a-reements in such non3tariff issues as su,sidy0 dumpin-0 -o'ernment procurement0 technical ,arriers to trade0 customs 'aluation0 import licensin-0 ci'il aircraft0 dairy and ,o'ine meat. . The =ru-uay &ound from Septem,er 280 1;9 to +pril 1*0 1;;0 further included tariffs and non3tariffs measures0 rules0 ser'ices0 intellectual property0 dispute settlement0 te%tiles0 and a-riculture. +t the conclusion of the =ru-uay &ound on +pril 1*0 1;;0 !+TT mem,ers si-ned the arraesh +-reement $sta,lishin- the WTO in arraesh0 orocco. This +-reement defines the scope0 functions and structure of the World Trade Or-ani5ation (WTO). GATT
The international conference of 1; which recommended the esta,lishment of @(nternational onetary @und) and World Ban and also recommended the esta,lishment of TO(nternational Trade Or-anisation) ,ut did not materiali5e0 ,ut in the year 1; !+TT was esta,lished. nternational tradin- system0 since 1; was at least in principles0 -uided ,y the rules and procedures a-reed to the si-natories to the !+TT which was an a-reement si-n ,y the mem,er nations0 which where admitted on the ,asis of there willin-ness to accept the !+TT disciplines. The primary o,6ecti'es of !+TT was to e%pand international trade ,y li,erali5in- so as to ,rin- a,out all round economic prosperity0 the important o,6ecti'e are as follows as:31) &aisin- standards of li'in-.2) $nsurin- full employment and lar-e and steady -rowin- 'olume of real income and effecti'e demand.#) De'elopin- full use of resources of the world.) $%pansion of production and international trade. !+TT has certain con'entions and -eneral principles -o'ernin- international trade amon- countries that follows the !+TT a-reement:3 •
•
+ny proposed chan-e in the tariff or any type of commercial policy of a mem,er country should not ,e undertaen without the consultation with the other parties to the a-reement. The countries that adhear to -et wor towards the reduction of tariff and other ,arriers to the international trade should ,e ne-otiated within the frame wor of !+TT.
B+&&$&S 33 a) T+&@@ (/han-e in monetary 'alue Huality ) ,) AOA T+&@@ (Huantity of product and ser'ices) 3or the realisation of the o5ective GATT adopted the follo%ing29 a0 :O: D7S;R7<7:AT7O:9 The principle of non3discrimination re7uires that no mem,er country shall discriminate ,etween in the conduct of international trade0 to ensure non3discrimination the mem,ers of !+TT to apply the principle of @A(most fa'oured nation) status to all import and e%port duties. The !+TT also permit to mem,er to adopt step to counter dumpin- and e%port su,sidies.
0 PRO=77T7O: O3 >UA:T7TAT7?# R#STR7;T7O:S 3 !+TT see to prohi,it 7uantitati'e restrictions as far as possi,le and limit restrictions on trade to the less ri-id tariffs0 howe'er certain e%ceptions to this prohi,ition are -ranted to countries0 confronted with ,alance of payment difficulties and to the de'elopincountries. c0 ;O:SU@TAT7O: 3 By pro'idin- a forum for continuin- consultation0 !+TT has pro'ided to resol'e disa-reements throu-h consultation. #valuation of GATT
When !+TT was si-ned in the year 1;? only 2# nations were party to it. n the 1;90 there were 11? were mem,ers. One of the principle achie'ement of !+TT was the esta,lishment of forum for continuinconsultation. !+TT achie'ed considera,le li,erali5ation0 few e%ception are as follow as:3 •
•
•
+-ricultural trade was an e%ception to the li,erali5ations. Trade in a-ricultural ,ecame pro-ressi'ely more distorted ,y the support -i'en to the farmers in a-ricultural sectors. +nother e%ception was te%tile: trade in te%tile was restricted ,y @+. under @+ import of te%tile items0 to num,er of de'eloped countries was restricted ,y 7uota. De'elopin- countries with ,alance of payment pro,lem ha'e ,een -enerally e%empted from li,erali5ation.
The a'era-e le'el of tariff on manufactured products in industrial countries was ,rou-ht down from 8I in 1;? to #I in 1;9. The e%port of de'elopin- countries -ained si-nificantly less from the !+TT a-reement then did the e%port of de'eloped countries. 1-,* urugua! round agreement of
This was th round of multilateral trade or-ani5ation which was held in Septem,er 1;9. The first 9 round of TA(ulti Jateral Trade Ae-otiation) concentrated almost e%clusi'ely on reducin- tariffs while the ?th round which was the Toyo round (1;?#3?;). o'ed on to tacle the non tariff ,arriers. The =ru-uay round a-reement ,roaden the scope of TA ,y includin- new areas. 1) !eneral +-reement on Trade n Ser'ices (!+TS). 2) Trade &elated +spects Of ntellectual roperty and ser'ices. (T&S) #) Trade &elated n'estment easures (T&S) GATT
WTO
1) !+TT was adhoc and pro'isional.
1) WTO is permanent.
2) !+TT has contractin- parties.
2) WTO has mem,ers.
#) !+TT system allows e%istin- domestic0 to continue e'en if it 'iolated !+TT a-reement. permit this.
#) WTO does not
) !+TT was less powerful and dispute settlement mechanism was less efficient. and dispute settlement mechanism was more efficient.
) WTO is more powerful
3ollo%ing the urugua! round agreement GATT %as converted from a provisional agreement into a formal international organisation called World Trade Organisation %ith effects from 1st 5an 1--)4 under the old s!stem there %ere t%o GATTS29
1) !+TT as an or-anisation. 2) !+TT as an a-reement. 7
Ji,erali5ation of trade and manufactured is achie'ed mostly ,y reduction of tariff and remo'in- and steps non tariff ,arriers. a0 Tariff arriers2 3 $%pansion of tariff ,arriers. • &eduction in tariff rates. • $%pansion of duty free access. • 0 :on9 Tariff arriers29
n the area of non3tariff ,arriers remo'al of $& (oluntary $%port &estraint) and @+ (ulti3 @i,re a-reement) are considered as land mar achie'ement. &0 @ieraliBation of agricultural trade29
One of the important feature of uru-uay round a-reement was the inclusion of a-ricultural in TA. The e%clusion of a-riculture from the pre'ious round and its effecti'e e%emptions from the !+TT discipline made a-riculture a hi-hly protected centre. n the de'eloped countries the important aspects of uru-uay round a-reement on a-riculture include:3 • • • •
Tariffication . Tariff Bindin-. Tariff cuts. &eduction in Su,sidies. rohi,ited su,sidy. +ctiona,le Su,sidy. Aon3 +ctiona,le Su,sidy.
The -eneral a-reement on trade and ser'ice which e%tends multi3lateral rules and disciplines to ser'ices is re-arded as the land mar achie'ement of uru-uay round . The GATS defines4 services as the suppl! of service from29 K The territory of one mem,er into the territory of other mem,er. (Transport) K n the territory of one mem,er0 to the ser'ice consumer of any other mem,er.(@ranchisee)
K By a ser'ice supplier of one mem,er throu-h the commercial presence in the territory of any other mem,er. (Tourism) K By a ser'ice supplier of one mem,er throu-h the presence of natural persons of a mem,er0 in the territory of any other mem,er. (@orei-n /onsultant) +mon- the most important o,li-ation0 is a most fa'oured nation o,li-ation that essentially pre'ent countries from discriminatin- amon- forei-n suppliers of ser'ices. +nother o,li-ation is a transparency re7uirement accordin- to which each mem,er country will pu,lish all its rele'ant laws and re-ulations0 pertainin- to ser'ices. TR7<
Trade related in'estment measures refers to certain conditions or restrictions imposed ,y a -o'ernment in respect of forei-n in'estment of the country. The a-reement on T&S pro'ide that no contractin- party shall apply any T&0 which is in consistence with WTO0 article. 3ollo%ing TR7< are considered as in9consistence29
1) Jocal content re7uirements. 2) Trade ,alancin- re7uirement. #) @orei-n e%chan-e ,alancin- re7uirements. ) Domestic sale re7uirements The urugua! round agreement on TR7PS /trade related intellectual propert!0 covers seven intellectual propert!29
/opy &i-ht. atents rocess. o roducts. o Trade ars. !eo-raphical ndicators. ndustrial Jayouts nte-rated /ircuits. =ndisclosed nformation ncludin- trade Secrets.
ntellectual property ri-hts has ,een defined as information with commercial 'alue. They ha'e ,een characteristics as the composite of ideas0 in'entin- and creati'e e%pression plus pu,lic willin-ness to ,estowe the status of the property on them and -i'e their owners to e%clude others from the use of protected su,6ect matter.
'. United :ations ;ommission on 7nternational Trade @a% /U:;7TRA@0
Origin
n an increasin-ly economically interdependent world0 the importance of an impro'ed le-al framewor for the facilitation of international trade and in'estment is widely acnowled-ed. The =nited Aations /ommission on nternational Trade Jaw (=A/T&+J)0 esta,lished ,y the =nited Aations !eneral +ssem,ly ,y its resolution 228* (LL) of 1? Decem,er 1;990 plays an important role in de'elopin- that framewor in pursuance of its mandate to further the pro-ressi'e harmoni5ation and moderni5ation of the law of international trade ,y preparin- and promotin- the use and adoption of le-islati'e and non3le-islati'e instruments in a num,er of ey areas of commercial law. Those areas include dispute resolution0 international contract practices0 transport0 insol'ency0 electronic commerce0 international payments0 secured transactions0 procurement and sale of -oods. These instruments are ne-otiated throu-h an international process in'ol'in- a 'ariety of participants0 includinmem,er States of =A/T&+J0 which represent different le-al traditions and le'els of economic de'elopmentF non3mem,er StatesF inter-o'ernmental or-ani5ationsF and non-o'ernmental or-ani5ations. Thus0 these te%ts are widely accepta,le as offerin- solutions appropriate to different le-al traditions and to countries at different sta-es of economic de'elopment. n the years since its esta,lishment0 =A/T&+J has ,een reco-ni5ed as the core le-al ,ody of the =nited Aations system in the field of international trade law.
em,ers are selected from amon- States em,ers of the =nited Aations. =A/T&+J4s ori-inal mem,ership comprised 2; States and was e%panded ,y the !eneral +ssem,ly of the =nited Aations in 1;?# to #9 States and a-ain in 2882 to 98 States. The e%pansion reflected the ,roader participation and contri,ution ,y States ,eyond the then e%istin- mem,er States and stimulated interest in =A/T&+J4s e%pandin- wor pro-ramme. Structured to ensure that the 'arious -eo-raphic re-ions and the principal economic and le-al systems of the world are represented0 the 98 mem,er States include 1 +frican States0 1 +sian States0 $astern $uropean States0 18 Jatin +merican and /ari,,ean States and 1 Western $uropean and other States. The !eneral +ssem,ly elects mem,ers for terms of si% yearsF e'ery three years the terms of half of the mem,ers e%pire. =ncitral is: M
/oordinatin- the wor of or-ani5ations acti'e and encoura-in- cooperation amon- them.
M romotin- wider participation in e%istin- international con'entions and wider acceptance of e%istinmodel and uniform laws. M reparin- or promotin- the adoption of new international con'entions0 model laws and uniform laws and promotin- the codification and wider acceptance of international trade terms0 pro'isions0 customs and practice0 in colla,oration0 where appropriate0 with the or-ani5ations operatin- in this field. M romotin- ways and means of ensurin- a uniform interpretation and application of international con'entions and uniform laws in the field of the law of international trade. M /ollectin- and disseminatin- information on national le-islation and modern le-al de'elopments0 includin- case law0 in the field of the law of international trade. M
$sta,lishin- and maintainin- a close colla,oration with the =A /onference on Trade and de'elopment.
M
aintainin- liaison with other =A or-ans and speciali5ed a-encies concerned with international trade.
;onvention
The /on'ention is an a-reement amon- participatin- states esta,lishin- o,li-ations ,indin- upon those States that ratify or accede to it. + con'ention is desi-ned to unify law ,y esta,lishin- ,indin- le-al o,li-ations. To ,ecome a party to a con'ention0 States are re7uired formally to deposit a ,indin- instrument of ratification or accession with the depository. The entry into force of a con'ention is usually dependent upon the deposit of a minimum num,er of instruments of ratification. U:;7TRA@ te$ts
M /on'ention on the Jimitation eriod in the nternational Sale of !oods0 1;? (Aew Nor) M =A/T&+J +r,itration &ules (1;?9) M =nited Aations /on'ention on the /arria-e of !oods ,y Sea0 1;? (
M =A/T&+J odel Jaw on /ross3Border nsol'ency with !uide to $nactment (1;;?) M =A/T&+J Je-islati'e !uide on ri'ately @inanced nfrastructure ro6ects (2888) M =A/T&+J odel Jaw on $lectronic Si-natures with !uide to $nactment (2881) M =nited Aations /on'ention on the +ssi-nment of &ecei'a,les in nternational Trade (2881) M =A/T&+J odel Jaw on nternational /ommercial /onciliation with !uide to $nactment (2882) M =A/T&+J odel Je-islati'e ro'isions on ri'ately @inanced nfrastructure ro6ects (288#) M =A/T&+J Je-islati'e !uide on nsol'ency Jaw (288) M =nited Aations /on'ention on the =se of $lectronic /ommunications in nternational /ontracts (288*) Short notes 1. 3oreign direct investment
@orei-n direct in'estment (@D) refers to an in'estment in or the ac7uisition of forei-n assets with the intent to control and mana-e them. /ompanies can mae an @D in se'eral ways0 includin- purchasin- the assets of a forei-n companyF in'estin- in the company or in new property0 plants0 or e7uipmentF or participatin- in a 6oint 'enture with a forei-n company0 which typically in'ol'es an in'estment of capital or now3how. @D is primarily a lon-3term strate-y. /ompanies usually e%pect to ,enefit throu-h access to local marets and resources0 often in e%chan-e for e%pertise0 technical now3how0 and capital. + country4s @D can ,e ,oth inward and outward. +s the terms would su--est0 in%ard 3D7 refers to in'estments comin- into the country and out%ard 3D7 are in'estments made ,y companies from that country into forei-n companies in other countries. The difference ,etween inward and outward is called the net @D inflow0 which can ,e either positi'e or ne-ati'e. !o'ernments want to ,e a,le to control and re-ulate the flow of @D so that local political and economic concerns are addressed. !lo,al ,usinesses are most interested in usin- @D to ,enefit their companies. +s a result0 these two players-o'ernments and companiescan at times ,e at odds. t4s important to understand why companies use @D as a ,usiness strate-y and how -o'ernments re-ulate and mana-e @D. There are t%o forms of 3D7ChoriBontal and vertical. =oriBontal 3D7 occurs when a company is tryin- to open up a new mareta retailer0 for e%ample0 that ,uilds a store in a new country to sell to the local maret. ?ertical 3D7 is when a company in'ests internationally to pro'ide input into its core operationsusually in its home country. + firm may in'est in production facilities in another country.
When a firm ,rin-s the -oods or components ,ac to its home country (i.e.0 actin- as a supplier)0 this is referred to as ac%ard vertical 3D7. When a firm sells the -oods into the local or re-ional maret (i.e.0 actin- as a distri,utor)0 this is termed for%ard vertical 3D7 . The lar-est -lo,al companies often en-a-e in ,oth ,acward and forward 'ertical @D dependin- on their industry.
any firms en-a-e in ,acward 'ertical @D. The auto0 oil0 and infrastructure (which includes industries related to enhancin- the infrastructure of a countrythat is0 ener-y0 communications0 and transportation) industries are -ood e%amples of this. @irms from these industries in'est in production or plant facilities in a country in order to supply raw materials0 parts0 or finished products to their home country. n recent years0 these same industries ha'e also started to pro'ide forward @D ,y supplyin- raw materials0 parts0 or finished products to newly emer-in- local or re-ional marets. There are different inds of 3D74 t%o of %hich greenfield and ro%nfield are increasin-ly applica,le to -lo,al firms. Greenfield 3D7s occur when multinational corporations enter into de'elopin- countries to ,uild new factories or stores. These new facilities are ,uilt from scratchusually in an area where no pre'ious facilities e%isted. The name ori-inates from the idea of ,uildin- a facility on a -reen field0 such as farmland or a forested area. n addition to ,uildin- new facilities that ,est meet their needs0 the firms also create new lon-3term 6o,s in the forei-n country ,y hirin- new employees. /ountries often offer prospecti'e companies ta% ,reas0 su,sidies0 and other incenti'es to set up -reenfield in'estments.
+ ro%nfield 3D7 is when a company or -o'ernment entity purchases or leases e%istin- production facilities to launch a new production acti'ity. One application of this strate-y is where a commercial site used for an unclean" ,usiness purpose0 such as a steel mill or oil refinery0 is cleaned up and used for a less pollutin purpose0 such as commercial office space or a residential area. Brownfield in'estment is usually less e%pensi'e and can ,e implemented fasterF howe'er0 a company may ha'e to deal with many challen-es0 includin- e%istinemployees0 outdated e7uipment0 entrenched processes0 and cultural differences.
&. ill of @ading + ,ill of ladin- is a type of documentreceipt issued ,y the ship3owner or ,y the master0 captain of the ship or other a-ent after the -oods ha'e ,een placed on ,oard for ,ein- carried to a specific destination. The term deri'es from the noun ,ill"0 a schedule of costs for ser'ices supplied or to ,e supplied0 and from the 'er, to lade" which means to load a car-o onto a ship or other form of transport. +lthou-h ,ill of ladin- in'ol'es the use of at least two different modes of transport from road0 rail0 air0 and sea. + ,ill of ladin- is used when the -oods shipped from only a part of the car-o of a -eneral ship. t must ,e stamped and si-ned ,y ship3owner or his a-ent. PThe +n >an- (288#) * SJ& #Q. There are t%o asic t!pes of ill of lading.
1. The strai-ht ,ill. 2. The order ,ill. A straight ill of lading is a non3ne-otia,le document0 made out to a specifically named consi-nee0 from which the shippin- company acnowled-es receipt of the frei-ht and a-rees to mo'e it to its destination. An Order ill of lading is a document that is made out to the order of the forei-n importer or its ,an0 or the order of the e%port firm0 its ,an0 or another desi-nated party. The ill of lading must contain the follo%ing information.
M
Aame of the shippin- company
M M M M M M
@la- of nationality ShipperCs name Order and notify party Description of !oods !rossnettare wei-ht0and @rei-ht rateeasurements and total frei-ht of -oods.
The ill of lading has three characteristics2
(1) &eceipt for the -oods shipped. (2) $'idence of the terms of the contract of affrei-htment. (#) Document of title to the -oods specified in the Bill of Jadin-. '. D#37:7T7O: O3 EDU
n international trade0 the e%port ,y a country or company of a product at a price that is lower in the forei-n maret than the price char-ed in the domestic maret. +s dumpin- usually in'ol'es su,stantial e%port 'olumes of the product0 it often has the effect of endan-erin- the financial 'ia,ility of manufacturers or producers of the product in the importin- nation. Dumpin- is also a collo7uial term that refers to the act of offloadin- a stoc with little re-ard for its price. What is anti dumping8 What is its purpose in 7nternational Trade8
Dumpin- is said to occur when the -oods are e%ported ,y a country to another country at a price lower than its normal 'alue. This is an unfair trade practice which can ha'e a distorti'e effect on international trade. +nti dumpin- is a measure to rectify the situation arisin- out of the dumpin- of -oods and its trade distorti'e effect. The purpose of anti dumpin- duty is to rectify the trade distorti'e effect of dumpin- and re3esta,lish fair trade. The use of anti dumpin- measure as an instrument of fair competition is permitted ,y the WTO. n fact0 anti dumpin- is an instrument for ensurin- fair trade and is not a measure of protection per se for the domestic industry. t pro'ides relief to the domestic industry a-ainst the in6ury caused ,y dumpin-. RDumpin-R is defined as a situation in which the e%port price of a product is lower than its sellin- price in the e%portin- country. + ,ar-ain sale0 in the sense of ordinary trade0 is not dumpin-. Where it is demonstrated that the dumped imports are causin- in6ury to the importin- country within the meanin- of the WTO +-reement on mplementation of +rticle of the !eneral +-reement on Tariffs and Trade 1;; (R+nti3dumpin+-reementR)0 pursuant to and ,y in'esti-ation under that +-reement0 the importin- country can impose anti3 dumpin- measures to pro'ide relief to domestic industries in6ured ,y imports.1 The countryCs imposition of an anti3dumpin- duty is determined ,y the dumpin- mar-in33the difference ,etween the e%port price and the domestic sellin- price in the e%portin- country. By addin- dumpin- mar-in to e%port price0 the dumped price can ,e rendered a RfairR trade price. When it is impossi,le to o,tain a compara,le domestic price ,ecause there are none or low 'olume sales in the ordinary course of trade in the domestic maret0 either e%port prices to third countries or a Rconstructed 'alueR is used in price comparison. + Rconstructed 'alueR is the cost of production in the country of ori-in plus a reasona,le amount for administrati'e0 sellin- and -eneral costs and for p rofits.
Similarly0 when the e%port price is found to ,e unrelia,le0 the price at which the product is first resold to independent ,uyers0 or another price accordin- to a reasona,le ,asis determined ,y the authorities may ,e used in price comparison.
(.
). #uropean Union The $uropean =nion ($=) is an economic and political federation consistin- of twenty3se'en mem,er countries that mae common policy in se'eral areas.
The $= was created in 1;;# with the si-nin- of the Treaty on $uropean =nion0 commonly referred to as the aastricht Treaty0 ,ut it was preceded ,y 'arious $uropean or-ani5ations that contri,uted to the de'elopment of the $=. The $= represents the latest and most successful in a series of efforts to unify $urope0 includin- many attempts to achie'e unity throu-h force of arms0 such as those seen in the campai-ns of Aapoleon Bonaparte and World War . The field of international trade is one in which the $uropean =nion has an important position in the world. While there are0 of course0 other aspects of international relations in which the =nion is acti'e the common forei-n and security policy and de'elopment policy come 7uicly to mind0 those fields are still dominated ,y the em,er States actin- indi'idually (e'en if in a somewhat coordinated manner). The =nion is responsi,le for the common commercial policy and as such it is the ey player on the world sta-e when $uropean trade interests are in play. That is not to say that the em,er States are unin'ol'ed. The /ommission is re7uired to consult them re-ularly0 ,ut it is the /ommission that is the international ne-otiator. t deals with three cate-ories0 (i) the e%ternal relations power of the /ommunityF (ii) ey issues facin- the =nion4s attempt to launch a new round of trade ne-otiationsF and (iii) matters related to $=3=.S. trade relations. There are two aspects of the =nion4s in'ol'ement in international trade matters that are pa rticularly important at this moment. 3irst4 the =nion is currently the principal proponent for a new ,road3,ased round of international trade ne-otiations under the auspices of the WTO. Second4 its tradin- relationship with the =nited States has under-one considera,le stress as a result of a series of disputes0 most of which ha'e ended up ,efore the WTO4s dispute settlement system.
). #lectronic transactions +n electronic transaction is the sale or purchase of -oods or ser'ices0 whether ,etween ,usinesses0 households0 indi'iduals0 -o'ernments0 and other pu,lic or pri'ate or-anisations0 conducted o'er computer3mediated networs. The -oods and ser'ices are ordered o'er those networs0 ,ut the payment and the ultimate deli'ery of the -ood or ser'ice may ,e conducted on or off3line. $3transactions include a wide 'ariety of corporate acti'ities0 ran-in- from intranet document3sharin- systems to online purchases of physical -oods. /ompanies should ha'e compliance procedures in place to a'oid disruption ,y re-ulatory a-encies and to minimi5e potential lia,ility for noncompliance. @or ,usinesses that want to set up a process to implement any type of electronic transaction on a repetiti'e ,asis0 whether 'ia a We, site0 ,y e3mail0 ,y traditional electronic data interchan-e0 or e'en in person0 a 'ariety of fundamental issues must ,e addressed to ensure that the resultin- process is le-ally 'alid and enforcea,le. #lectronic ReFuirements • • • • •
+-reement to $n-a-e in $lectronic Transactions /onsumer /onsent to &ecei'e /ertain nformation in $lectronic @orm Transaction nformation Disclosure &e7uirements. Transaction &ecord +ccessi,ility &e7uirements Si-nature &e7uirements
• • •
ethod of $lectronic Deli'ery $lectronic &ecord @ormat &e7uirements $lectronic &ecord &etention &e7uirements
The =A/T&+J odel Jaw on $lectronic /ommerce (J$/) is intended to facilitate commerce 'ia the use of modern means of communications and stora-e of information. The J$/ is ,ased on the esta,lishment of a functional e7ui'alence in electronic media for paper3,ased concepts such as Rwritin-R0 Rsi-natureR and Rori-inalR. The J$/ esta,lished rules for the formation and 'alidity of contracts concluded with electronic means and for the attri,ution and retention of data messa-es. 3undamental principles of U:;7TRA@ te$ts on electronic transactions :on9discrimination 3 + communication shall not ,e denied 'alidity on the sole -round that it is in electronic form. 3unctional eFuivalence 3 urposes and functions of paper3,ased re7uirements may ,e satisfied with electronic communications0 pro'ided certain criteria are met. Technological neutralit! 3 $7ual treatment of different technolo-ies ($D0 e3mail0 nternet0 instant messa-in-0 fa%0 etc.) ossi,ility to ha'e detailed pro'isions on technolo-y re7uirement in the re-ulations implementin- e3 commerce le-islation.
