ANJUMAN-I-ISLAM’S AKBAR PEERBHOY COLLEGE OF COMMERCE AND COMMERCE Shaikh Afreen Iqbal S.Y.BMS. 35. IMPORT EXPORT DOCUMENTATION. Report on: TRIPS and TRIMS AGREEMENTS OF WTO
WTO TRIPS Agreement The Uruguay Round TRIPS Agreement is one of four new agreements negotiated during the UR Round that deal with a substantive area totally new & not previously governed by any part of the GATT’47 (the others being Agriculture, Services, & Trade-Related Investment Measures (TRIMS)). It incorporates by reference a number of other essentially unenforceable international agreements or conventions on aspects of IPR. TRIPS Agreement is the most comprehensive international agreement on intellectual property rights & the only one actually enforceable (under GATT Arts. XXI & XXII & the WTO dispute settlement understanding). The TRIPS Agreement establishes enforceable minimum standards for the protection & enforcement of IPR by WTO Members. The TRIPS Agreement provides a transitional period for developing Members until 01 January 2005 and for “least-developed” Members of 11 years from date of entry into effect of the WTO (until 01 January 2006) for implementation of the TRIPS Agreement. (Extended since to 2016).
TRIPS Agreement: Main Provisions on Patents Section 5, Part II contains the following standards: 1)
Patents shall be granted for any inventions, whether products or processes, provided they are new, involve an inventive step, & are capable of industrial application.
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Patents shall be granted in all fields of technology. No discrimination is allowed with respect to the place of invention, or based on whether the products are locally-produced or imported.
TRIPS Agreement: Main Provisions on Copyright 1) Protection of works covered by the Berne Convention, excluding moral rights to the expression but not the ideas, procedures, methods of operation, or mathematical concepts as such. 2) Protection of computer programs as literary works & of compilations of data.
TRIPS Agreement: Provisions on Trademarks 1) Definition of protected signs, e.g., those capable of distinguishing the goods or services of one undertaking from those of other under-takings. Service marks receive protection equivalent to that for marks for goods. 2) Registrability, but not filing of an application, can be dependent on use.
TRIPS Agreement: Provisions on Industrial Designs 1) Protection should be conferred on designs which are new or original. 2) Requirements for protection of textile designs should not impair the opportunity to obtain such protection. 3) Exclusive rights can be exercised against acts for commercial purposes, including importation. 4) The minimum term of protection is 10 years .
TRIPS Agreement: Provisions for Trade Secrets 1)Undisclosed information is to be protected against unfair commercial practices, if the information is secret, has commercial value, & is subject to steps to keep it secret. 2) Secret data submitted for the approval of new chemical entities for pharmaceutical & agrochemical products should be protected against unfair commercial use & disclosure by governments.
TRIPS Agreement: Provisions for Geographical Indications 1) WTO Members are obligated under TRIPS Art. 22.2 to provide legal means for interested parties to prevent: * use of any means in the designation or presentation of a good that indicates or suggests that the good in question originates in a geographical area other than the true place of origin in a manner that misleads the public as to its true origin; or * any use that constitutes an act of unfair competition within the meaning of Paris Convention of 1967.
2) Members are also required to refuse or invalidate registration of a TM that contains or consists of a geographical indication with respect to goods not originating in the territory indicated, if it would mislead the public as to the true place of origin.
WTO TRIMS Agreement
History of TRIMS Agreement •
Prior to the GATT Uruguay Round, there were several efforts to develop a multilateral, enforceable Code of Conduct Regulating Cross-Border Investment:
- Efforts after WWII including investment-related provisions of the Havana Charter for an International Trade Organization found no agreement & was never ratified. - U.N. resolution on Permanent Sovereignty over Natural Resources (1962) & Charter of Economic Rights & Duties of States (1974) foundered. - U.N. Draft Code of Conduct on Transnational Corporations opposed by developed nations went nowhere. - OECD Declaration & Decisions on International Investment & Multinational Enterprises & its Codes on Liberalization of Current Invisible Operations & Capital Movements, likewise found little support beyond developed nations. •
During preparatory process for the GATT Uruguay Round, U.S.A. proposed that the multilateral trade negotiations should:
- seek to increase disciplines over national investment measures that divert trade flows at expense of other GATT parties - explore a broad range of investment issues including National & MFN treatment & right of establishment - examine various types of trade-related investment measures which are inconsistent with GATT trade provisions. •
Two basic issues were encountered:
- should disciplines in this area be limited by existing GATT rules or expanded to develop a multilateral investment regime? & - whether some or all actionable trade-related investment measures should be prohibited outright or dealt with on a case-bycase basis demonstration of direct & significant restrictions & their adverse effects on trade – e.g., via dispute settlement
What’s the problem? - Ancient Maxim: Investment follows trade & trade follows investment – they are inextricably interrelated in modern business. - This interrelationship raises 2 issues: > Trade restrictions can hinder Foreign Direct Investment (FDI) & > Investment regulations can hinder Trade. •
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The UR Agreement on Trade-Related Investment Measures (TRIMS) is a very limited effort to achieve multilateral disciplines on investment regulation but only to the extent it directly relates to GATT/WTO trade rules & principles & doesn’t act to restrict international trade in Goods. The General Agreement on Trade in Services (GATS) and the Agreement on Trade-Related Intellectual Property Rights (TRIPS) contain limited provisions relating to investment in those areas. The TRIMS Agreement does not regulate FDI as such but only addresses measures resulting in discriminatory treatment of imports & exports by foreign firms of other WTO Members. “Investment” (for purposes of TRIMS) is not defined as such but relates generally in the context of the TRIMS to Foreign Direct Investment (FDI). Note: FDI is generally defined (by the IMF, OECD, others) as “ownership by a foreign firm or individual of 10% or more of the shares or voting power of an incorporated entity or the right to 10% or more of the profits of an unincorporated entity. The TRIMS Agreement essentially forbids (e.g., requires the elimination or dismantling of) FDI-related measures as conditions for either:
- admission or treatment of FDI in a WTO Member - qualification for FDI incentives by a WTO Member
TRIMS: Basic Substantive Obligations: •
No WTO Member may apply an investment-related measure that is prohibited by or inconsistent with the provisions of:
- GATT Art. III (National Treatment of imported products) or -
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GATT Art. XI (Prohibition of quantitative restrictions on imports or exports) except as permitted under provisions of the TRIMS Agreement. An Illustrative list of prohibited TRIMS is annexed to the TRIMS Agreement.
But, generally, they include: - Local Content measures •
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Trade Balancing measures. “Local Content” measures are measures setting out minimum levels of locally-made components that must be incorporated in goods or services produced domestically. “Trade Balancing” measures are measures requiring an investor to use earnings from its exports to pay for imported inputs or other imports.
TRIMS: Basic Substantive Obligations (2): •
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Members must notify to the WTO any investment measure that is inconsistent with the GATT (Arts. III, XI). Members must eliminate any TRIM that is inconsistent with Arts. III, XI on a schedule of 2 years from entry into effect of the WTO for developed countries, 5 years for developing countries, & 7 years for least-developed ones. But, note: the WTO Council for Trade-in-Goods may, upon request, extend the transition period for developing or LDC countries subject to conditions imposed on them
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Also, note, that Viet Nam may be required to eliminate any TRIMS sooner by reason of requirements imposed under its bilateral WTO accession agreements.
* Members may not institute any new TRIMS or amend any existing measures that would result in, or increase, their inconsistency with GATT Arts. III, XI (“Standstill” Clause).
TRIMS: Basic Substantive Obligations (3): •
Special & Differential Treatment:
- Developing Members that can demonstrate particular difficulties in implementing the provisions of the TRIMS Agreement may request extension of the transition period from the Council on Goods. More than 30 Members have requested such an extension. -
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The Agreement allows developing countries to deviate temporarily from TRIMS requirements as permitted under GATT Art. XVIII & related WTO provisions authorizing safeguards for balance of payments purposes. TRIMS: Transparency Provisions:
- The TRIMS Agreement requires Members to notify to the WTO Secretariat lists of publications in which their TRIMS may be found. - The TRIMS Agreement established the WTO Committee on TradeRelated Investment Measures to review notifications & serve as a forum to examine Member implementation of the Agreement.
Illustrative List of TRIMS: •
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Local Content – impose some certain amount or value of domestic inputs Trade Balancing – volume or value of imports tied to levels of exports Foreign Exchange Balancing – requires that foreign exchange made available for imports must be a certain proportion of the value of foreign exchange realized from exports Foreign Exchange Restrictions – restricts access to foreign exchange in order to constrain the volume of imported inputs
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Manufacturing Requirements – requires certain products to be produced locally Manufacturing Limitations – prevents firms from manufacturing certain products or product lines in the host country Technology Transfer – requires specified technology to be transferred to host country for use locally or certain types of R&D to be conducted locally Licensing of Technology – requires investor to license technology for use in the host country
Illustrative List of TRIMS (2): •
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Domestic Sales – requires an investor to sell a certain proportion of its output in the host country Export Performance – requires that a minimum proportion or value of production in host country be exported Export Controls – certain products may not be exported Product Mandating – requires investor to supply certain markets with designated products or products manufactured in a specified facility or operation or some products may be exported only from host country Remittance Restrictions – restricts the right of the investor to repatriate returns from its investment Local Equity – requires that a certain percentage of a firm’s equity must be held by local investors in the host country. Market Reserve Policy – some markets reserved for local production
Other GATT/WTO Agreements Re: TRIMS General Agreement on Trade in Services (GATS): - The
TRIMS Agreement applies only to trade in goods.
- Under GATS, trade in services is defined by 4 modes of supply, Mode 3 of which is “supply of services through commercial presence in the territory of another Member”.
- Although GATS is not an investment agreement as such, it does address the terms & conditions upon which an investor may establish itself through “commercial presence”. - With regard to “establishment”, the GATS defines national treatment as an obligation that relates only to a Member’s scheduled service commitments & not as a principle of general application. - So, the GATS provides for national treatment to be granted only partially (in those Services sectors or sub-sectors it permits foreigners to participate in) or subject to specified conditions on their participation.
Other GATT/WTO Agreements Re: TRIMS (2) •
Agreement on Trade-Related Intellectual Property (TRIPS):
- the working definition of “investment” or “foreign direct investment” (FDI) in many inter-governmental investment agreements includes Intellectual Property. - Although the TRIPS Agreement does not govern FDI directly, it has provisions establishing standards for protection & enforcement of IP rights. - This raises a question, for example, as to whether a TRIMs requiring transfer of IP-protected technology or use of such technology in the host country as a condition for admission of investment or incentives could be held to violate the TRIPS Agreement as well as the TRIMS Agreement. •
Subsidies & Countervailing Measures Agreement (SCM)
- Certain fiscal, financial or indirect investment incentives designed to attract FDI could fall under the definition of “Subsidy” under the SCM Agreement, e.g., tax credits, export-related incentives, etc. They are prohibited if granted contingent upon exportation of goods by the investor or use of domestic over imported goods, and could, therefore, violate the SCM Agreement as well as the TRIMS Agreement.
