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A study of WTO Trade & Dispute

Submitted To:
Sumitted By: Submitted By:
Dr.Y.C.Joshi Aditya Kolambkar(16F01)
Dr.Mitesh Jayswal Akshay Soni(16F02)
Ankit Patel(16M03)
Introduction to dispute settlement in the WTO
• Dispute settlement is the central pillar of the multilateral trading system, and the
WTO’s unique contribution to the stability of the global economy. Without a
means of settling disputes, the rules-based system would be less effective
because the rules could not be enforced.
• The WTO’s procedure underscores the rule of law, and it makes the trading
system more secure and predictable. The system is based on clearly-defined
rules, with timetables for completing a case.
• First rulings are made by a panel and endorsed (or rejected) by the WTO’s full
membership. Appeals based on points of law are possible.
How long to settle a dispute?
How are disputes settled?
• Settling disputes is the responsibility of the Dispute Settlement Body (the General Council in
another guise), which consists of all WTO members. The Dispute Settlement Body has the sole
authority to establish “panels” of experts to consider the case, and to accept or reject the panels’
findings or the results of an appeal. It monitors the implementation of the rulings and
recommendations, and has the power to authorize retaliation when a country does not comply
with a ruling.
• First stage: consultation (up to 60 days). Before taking any other actions the countries in dispute
have to talk to each other to see if they can settle their differences by themselves. If that fails,
they can also ask the WTO director-general to mediate or try to help in any other way.
• Second stage: the panel (up to 45 days for a panel to be appointed, plus 6 months for the panel
to conclude). If consultations fail, the complaining country can ask for a panel to be appointed.
The country “in the dock” can block the creation of a panel once, but when the Dispute
Settlement Body meets for a second time, the appointment can no longer be blocked (unless
there is a consensus against appointing the panel).
• Officially, the panel is helping the Dispute Settlement Body make rulings or recommendations.
But because the panel’s report can only be rejected by consensus in the Dispute Settlement Body,
its conclusions are difficult to overturn. The panel’s findings have to be based on the agreements
cited.
• The agreement describes in some detail how the panels are to work.
• The main stages are:
• Before the first hearing: each side in the dispute presents its case in writing to the panel.
• First hearing: the case for the complaining country and defence: the complaining country (or
countries), the responding country, and those that have announced they have an interest in the
dispute, make their case at the panel’s first hearing.
• Rebuttals: the countries involved submit written rebuttals and present oral arguments at the
panel’s second meeting.
• Experts: if one side raises scientific or other technical matters, the panel may consult experts or
appoint an expert review group to prepare an advisory report.
• First draft: the panel submits the descriptive (factual and argument) sections of its report to the
two sides, giving them two weeks to comment. This report does not include findings and
conclusions.
• Interim report: The panel then submits an interim report, including its findings and conclusions,
to the two sides, giving them one week to ask for a review.
• Review: The period of review must not exceed two weeks. During that time, the panel may hold
additional meetings with the two sides.
• Final report: A final report is submitted to the two sides and three weeks later, it is circulated to
all WTO members. If the panel decides that the disputed trade measure does break a WTO
agreement or an obligation, it recommends that the measure be made to conform with WTO
rules. The panel may suggest how this could be done.
• The report becomes a ruling: The report becomes the Dispute Settlement Body’s ruling or
recommendation within 60 days unless a consensus rejects it. Both sides can appeal the report
(and in some cases both sides do).
Dispute Settlement Body
• The General Council convenes as the Dispute Settlement Body (DSB)
to deal with disputes between WTO members.
• Such disputes may arise with respect to any agreement contained in
the Final Act of the Uruguay Round that is subject to the
Understanding on Rules and Procedures Governing the Settlement of
Disputes (DSU).
• The DSB has authority to establish dispute settlement panels, refer
matters to arbitration, adopt panel, Appellate Body and arbitration
reports, maintain surveillance over the implementation of
recommendations and rulings contained in such reports, and
authorize suspension of concessions in the event of non-compliance
with those recommendations and rulings.
Appellate Body

• The Appellate Body was established in 1995 under Article 17 of the


Understanding on Rules and Procedures Governing the Settlement of
Disputes (DSU). It is a standing body of seven persons that hears
appeals from reports issued by panels in disputes brought by WTO
Members. The Appellate Body can uphold, modify or reverse the legal
findings and conclusions of a panel, and Appellate Body Reports, once
adopted by the Dispute Settlement Body (DSB), must be accepted by
the parties to the dispute. The Appellate Body has its seat in Geneva,
Switzerland.
Objectives

• To know the role of WTO in Settlement of Trade and Dispute

• To Understand WTO’s Dispute settlement body.

• To study Anti-Dumping Action


India And WTO
• India is a founder member of the General Agreement on Tariffs and
Trade (GATT) 1947 and its successor, the World Trade Organization
(WTO), which came into effect on 1/1/1995 after the conclusion of
the Uruguay Round.
• India's participation in an increasingly rule based system in the
governance of international trade is to ensure more stability and
predictability, which ultimately would lead to more trade and
prosperity for itself and the 149 other nations which now comprise
the WTO.
• India also automatically avails of MFN and national treatment for its
exports to all WTO members.
Impact Of WTO Agreements On Indian
Economy
• The signing of WTO agreements will have far reaching effects not only
on India’s foreign trade but also on its internal economy.

• Although the ultimate goal of WTO is to free world trade in the


interest of all nations of the world, yet in reality the WTO agreements
has benefitted the developed nations more as compared to
developing ones.
Positive Impacts/Benefits /Advantages /Gains from WTO

• Increase in Export Earnings:


• Estimates made by World Bank, International
Monetary Fund (IMF) and the WTO Secretariat,
shows that the income effects of the implementation
of the Bali Round package will be an increase in
traded merchandise goods. It is expected that
India’s share in world exports would improve.
CNTD…
• Agricultural Exports:
• Reduction of trade barriers and domestic subsidies
in agriculture is likely to raise international prices
of agricultural products. India hopes to benefit from
this in form of higher export earnings from
agriculture. This seems to be possible because all
major agriculture development programmes in India
will be exempted from the provisions of WTO
Agreement.
CNTD…
• Export of Textiles and Clothing:
• With the phasing out of MFA (Multi - Fibre Arrangement),
exports of textiles and clothing increased and this will be
beneficial for India. The developed countries demanded a 15
year period of phasing out of MFA, the developing
countries, including India, insisted that it should be done in
10 years. The Uruguay Round accepted the demand of the
latter. But the phasing out Schedule favoured the developed
countries because a major portion of quota regime was
removed only in the tenth year, i.e. 2005. The removal of
quotas benefited not only India but also every other country.
CNTD…
• Multilateral Rules and Disciplines:
• The Uruguay Round Agreement has strengthened
multilateral rules and disciplines. The most
important of these relate to anti - dumping,
subsidies and countervailing measures, safeguards
and disputes settlement. This is likely to ensure
greater security and predictability of the
international trading system and thus create a more
favourable environment for India in the New
World Economic Order.
CNTD…
• Growth to Services Exports:
• Under GATS agreement, member nations have liberalised service
sector. India benefits from this agreement.
• E.g. India’s services exports have increased from about 5 billion
US $ in 1995 to 143.5 billion US $ in 2012-13.
CNTD…
• Foreign Investment:
• India has withdrawn a number of measures against
foreign investment, as per the commitments made
to WTO. As a result of this, foreign investment and
FDI has increased over the years. A number of
initiatives have been taken to attract FDI in India
between 2000 and 2002. In 2012-13, the net FDI
in India was US $ 24 billion.
Negative Impacts / Problems /Disadvantages of
WTO Agreements on Indian Economy

• TRIPs:
• The Agreement on TRIPs at Uruguay Round
weighs heavily in favour of Multinational
Corporations and developed countries as they
hold a very large number of patents. Agreement
on TRIPs will work against India in several ways
and led to monopoly of patent holding MNCs. As
a member of WTO, India has to comply with
standards of TRIPs.
CNTD…
• Trade Facilitation:
• The Bali package includes provisions for lowering
import tariffs and agricultural subsidies, which
some expect will make it easier for developing
countries to compete with the developed world in
global markets.
• Developed countries would abolish hard import
caps on agricultural products from the developing
world, instead being only allowed to charge tariffs
on amount of agricultural imports exceeding
specific limits.
• Another important target is reforming customs
bureaucracies and formalities to facilitate trade.
The Negative Impact Of Agreement
On Trips On Indian Economy
• Pharmaceutical Sector:
• Under the Patents Act, 1970, only process patents were granted
to chemicals, drugs and medicines.
• This means an Indian pharmaceutical company only needed to
develop and patent a process to produce and sell that drug.
• This proved beneficial to Indian pharmaceutical companies as
they were in a position to sell quality medicines at low prices
both in domestic as well as in international markets.
• However, under the agreement on TRIPs, product patents needs
to be granted.
• This will benefit the MNCs and it is feared that they will
increase the prices of medicines heavily, keeping them out of
reach of poor.
• Again many Indian pharmaceutical companies may be closed
down or taken over by large MNCs.
CNTD…
• Agriculture:
• The Agreement on TRIPs extends to agriculture through the
patenting of plant varieties.
• This may have serious implications for Indian agriculture.
• Patenting of plant varieties may transfer all gains in the
hands of MNCs which will be in a position to develop
almost all new varieties with the help of their huge financial
resources and expertise.
CNTD…
• Microorganisms:
• The Agreement on TRIPs also extends to
Microorganisms as well.
• Research in microorganisms is closely linked with
the development of agriculture, pharmaceuticals
and industrial biotechnology.
• Patenting of microorganisms will again benefit
large MNCs as they already have patents in several
areas and will acquire more at a much faster rate.
CNTD…
• TRIMs:
• Agreement on TRIMs provides for treatment of foreign
investment on par with domestic investment.
• This Agreement too weighs in favour of developed countries.
• There are no provisions in Agreement to formulate
international rules for controlling restrictive business
practices of foreign investors.
• In case of developing countries like India, complying with
Agreement on TRIMs would mean giving up any plan or
strategy of self reliant growth based on locally available
technology and resources.
CNTD…
• GATS:
• One of the main features of Uruguay Round was the
inclusion of trade in services in negotiations.
• This too will go in favour of developed countries.
• Under GATS agreements, the member nations have to open
up services sector for foreign companies.
• The developing countries including India have opened up
services sector in respect of banking, insurance,
communication, telecom, transport etc. to foreign firms.
• The domestic firms of developing countries may find it
difficult to compete with giant foreign firms due to lack of
resources & professional skills.
CNTD…
• Non - Tariff Barriers:
• Several countries have put up trade barriers and non- tariff
barriers following the formation of WTO.
• This has affected the exports from developing countries.
• The Union Commerce Ministry has identified 13 different
non - tariff barriers put up by 16 countries against India.
• E.g. MFA (Multi - fibre arrangements) put by USA and
European Union is a major barrier for Indian textile
exports.
CNTD…
• Agreement on Agriculture (AoA):
• The AoA is biased in favour of developed
countries.
• The issue of food security to developing countries
is not addressed adequately in AoA.
• The existence of global surplus of food grains does
not imply that the poor countries can afford to buy.
• The dependence on necessary item like food grains
would adversely affect the Balance of Payment
position.
CNTD…
• Inequality within the Structure of WTO:
• There is inequality within the structure of WTO
because the agreements and amendments are in
favour of developed countries.
• The member countries have to accept all WTO
agreements irrespective of their level of economic
development.
CNTD…
• LDC Exports:
• The 6th Ministerial Conference took place at Hong Kong in
December 2005.
• In this Conference, it was agreed that all developed country
members and all developing countries declaring themselves
in a position to do so, would provide duty - free and quota-
free market access on a lasting basis to all products
originating from all Least Developed Countries (LDCs).
• India has agreed to this. Now, India's export will have to
compete with cheap LDC exports internationally. Not only
this, the cheap LDC exports will come to Indian market and
compete with domestically produced goods.
CNTD…
• Agricultural Subsidy Programme
• According to Agreement of Agriculture (AoA)
proposed by WTO, the member countries are
required to maintain the price-support-based food
subsidy de minimis 10% of the agri-GDP.
• However, if the Indian Government implements the
Food Security Act, 2013, its agri-subsidies will
certainly increase above 10%.
• Because the subsidies level was fixed on prices
prevailing in 1986-88 and thus, need to reflect the
current prices that have gone up substantially since
then.
CNTD…
• India will face several problems in the process of
complying with WTO agreements, but it can also reap
benefits by taking advantage of changing international
business environment.
• For this, it needs to develop and concentrate on its
areas of core competencies.
Disputes of last years
India — Certain Measures Relating to Solar Cells and Solar Modules
Current status
Authorization to retaliate requested (including 22.6 arbitration) on 12 January 2018
Compliance proceedings ongoing on 28 February 2018
• Key facts
• Short title: India — Solar Cells
• Complainant: United States
• Respondent: India
• Third Parties: Brazil; Canada; China; European Union; Japan; Korea, Republic of; Malaysia;
Norway; Russian Federation; Turkey; Ecuador; Saudi Arabia, Kingdom of; Chinese Taipei
• Agreements cited:(as cited in request for consultations) :GATT 1994: Art. III:4 Trade-Related
Investment Measures (TRIMs): Art. 2.1Subsidies and Countervailing Measures: Art. 3.1(b), 3.2, 5(c),
6.3(a), 6.3(c), 25
• Request for Consultations received: 6 February 2013
India — Measures Concerning the Importation of Certain
Agricultural Products
Current status
Authorization to retaliate requested (including 22.6 arbitration) on 19 July 2016
• Compliance proceedings ongoing on 22 May 2017
• Key facts
• Short title: India — Agricultural Products
• Complainant: United States
• Respondent: India
• Third Parties: China; Colombia; Ecuador; European Union; Guatemala; Japan; Viet Nam; Argentina; Australia;
Brazil
• Agreements cited: (as cited in request for consultations) Sanitary and Phytosanitary Measures (SPS): Art. 2, 2.2,
2.3, 3.1, 5, 5.1, 5.2, 5.5, 5.6, 5.7, 6, 6.1, 6.2, 7, Annex B
• GATT 1994: Art. I, XI

• Request for Consultations received: 6 March 2012


• Panel Report circulated: 14 October 2014
• Appellate Body Report circulated: 4 June 2015
India — Anti-Dumping Duties on USB Flash Drives from the Separate Customs
Territory of Taiwan, Penghu, Kinmen and Matsu

• Current status
In consultations on 24 September 2015(Complaint requests consultation with respondent,
no dispute channel established and no withdrawal or mutually agreed solution notified)

• Key facts
• Complainant: Chinese Taipei
• Respondent: India
• Third Parties: China; Colombia; Ecuador,Taiwan,Penghu
• Agreements cited:(as cited in request for consultations) GATT 1994: Art. X:2
• Anti-dumping (Article VI of GATT 1994): Art. 2.2, 2.4, 2.6, 3.1, 3.2, 3.3, 3.4, 3.5, 3.6, 5.10,
6.1, 6.2, 6.4, 6.5, 6.6, 6.9, 6.10, 6.11, 9.3, 12.2.2, Annex II

• Request for Consultations received:


24 September 2015
United States — Measures Affecting the Production and Sale
of Clove Cigarettes
• Current status
• Mutually acceptable solution on implementation notified on 3 October 2014
• Key facts
• Short title: US — Clove Cigarettes
• Complainant: Indonesia
• Respondent: United States
• Third Parties: Brazil; Colombia; Dominican Republic; European Union; Guatemala; Mexico;
Norway; Turkey
• Agreements cited: (as cited in request for consultations) GATT 1994: Art. III:4, XX, XXIII:1(a)
• Sanitary and Phytosanitary Measures (SPS): Art. 2, 3, 5, 7
• Technical Barriers to Trade (TBT): Art. 2, 2.1, 2.2, 2.3, 2.5, 2.8, 2.9, 2.10, 2.12, 12

• Request for Consultations received:7 April 2010


• Panel Report circulated: 2 September 2011
• Appellate Body Report circulated: 4 April 2012
China — Anti-Dumping and Countervailing Duty Measures on Broiler Products from
the United States
• Current status
• Compliance proceedings completed with finding(s) of non-compliance on 28 February 2018
• Key facts
• Short title: China — Broiler Products
• Complainant: United States
• Respondent: China
• Third Parties: European Union; Japan; Norway; Thailand; Saudi Arabia, Kingdom of; Chile; Mexico
• Agreements cited: (as cited in request for consultations) Anti-dumping (Article VI of GATT 1994): Art. 1, 2.2,
2.2.1.1, 2.4, 3.1, 3.2, 3.4, 3.5, 4.1, 5.1, 6.2, 6.4, 6.5.1, 6.8, 6.9, 12.2, 12.2.1, 12.2.2, 12.7, Annex II
• GATT 1994: Art. VI, VI:3
• Subsidies and Countervailing Measures: Art. 10, 11.1, 12.3, 12.4.1, 12.7, 12.8, 15.1, 15.2, 15.4, 15.5, 16.1,
19.4, 22.3, 22.4, 22.5

• Request for Consultations received: 20 September 2011


• Panel Report circulated: 2 August 2013
• Article 21.5 Panel Report circulated: 18 January 2018
Conclusion
• Trade is an engine for growth. In the past this engine has sputtered due to
India’s policies rather than its geography.
• The challenges ahead for India now lie in implementing sound domestic
policies that increase competition in, and improve the contestability of,
domestic markets.
• However, active multilateral engagement can be incrementally helpful in
facilitating domestic reform and gaining access for India’s exports of goods
and labor services.
• India needs to develop a proactive approach rather than a defensive
approach to benefit from the changing environment under WTO.
• The voice of the developing countries needs to be heard so that the benefits
and the risks associated with increased trade are clear and there is no
undermining of national efforts to develop.