Crystal Sangma, Jyotish, Kartikey, Kunal, LalitIB- Section A

Introduction Provisions under TRIPS Provisions under TRIMS Provisions under GATS Issues concerning India Conclusion

WTO is the only global international organization dealing with the rules of trade between nations.

Its main function is to ensure that trade flows as smoothly, predictably and freely as possible.

At its heart are the WTO agreements, negotiated and signed by the bulk of the world’s trading nations and ratified in their parliaments.

It is alleged that WTO’s policies and functioning are influenced by industrial countries and MNC’s to the detriment of developing countries

There are several criticisms against WTO particularly in the developing countries

In 2001, developing countries, concerned that developed countries were insisting on an overly narrow reading of TRIPS, initiated a round of talks that resulted in the Doha Declaration.

TRIPS is a WTO agreement that was negotiated in the Uruguay Round of negotiations from 1986 to 1994 by the members of the WTO that sets out certain rules regarding intellectual property rights

The purpose of the TRIPS agreement is to establish a uniform set of rules across the globe that would provide adequate standards of protection for intellectual property and provide greater predictability and stability in international economic relations.

The areas covered by the TRIPS Agreement are:Part II (sec. 1-7)

Copyright and related rights

Trademarks, including service marks

Geographical indications

Industrial designs

Patents

Layout-designs (topographies) of integrated circuits

Undisclosed information, including trade secrets

Part-ll Section 36: Geographical indication

Article 22: Protection of Geographical Indications Using the name of the place when the product was made elsewhere or when it does not have the usual characteristics can mislead consumers, and it can lead to unfair competition. The TRIPS Agreement says countries have to prevent this misuse of place names.

Article 23 provides a higher or enhanced level of protection for geographical indications for wines and spirits: subject to a number of exceptions, they have to be protected even if misuse would not cause the public to be misled.

(for example, “Champagne”, “Tequila” or “Roquefort”)

Section 4: Industrial designs

Up until the 1970s most developing countries had a policy of Import Substitution Industrialization. This had the effect of closing off markets to better designed imported products.

Product design was often perceived as an exercise in aesthetics or fashion, therefore, product design was seen as being irrelevant to developing countries

Section 5: Patents

Article-28 : Rights conféred

Innovation: hard to ensure that integrated circuits and processus are not copied

Process patent: competitor may reverse engineer end product and réassemble it through different process

Product patent: no ré-assembly of product throughdifferent process, as substance itsef is protected

INDIAN PATENT ACT OF 1970

Only process not product patents in food, medicines, chemicals

Term of patents 14 years; 5-7 in chemicals, drugs

Compulsory licensing and license of right

Several areas excluded from patents (method of agriculture, any process for medicinal surgical or other treatment of humans, or similar treatment of animals and plants to render them free of disease or increase economic value of products)

Government allowed to use patented invention to prevent scarcity

TRIPS

Process and product patents in almost all fields of technology

Term of patents 20 years Limited compulsory licensing, no

license of right Almost all fields of technology

patentable. Only area conclusively excluded from patentability is plant varieties; debate regarding some areas in agriculture and biotechnology

Very limited scope for governments to use patented inventions

Section 7: Protection of Undisclosed information (Trade secrets)

Article 39

Source code of Windows kept as a trade secret by Microsoft.

Coca-cola formula kept locked in a Bank Vault

No provisions of compulsory licensing in case of trade Secrets.

Some other provisions

Developing countries have been a lucrative market for the developed world to sell their outdated technologies.

The desire to further restrict the possibility of compulsory licenses for patents has led to provisions in recent bilateral US trade agreements.

Access to essential medicines: The most visible conflict has been over AIDS drugs in Africa. Despite the role that patents have played in maintaining higher drug costs for public health programs across Africa, this controversy has not led to a revision of TRIPs.

The Agreement on Trade Related Investment Measures (TRIMs) is one of Agreements covered under Annex IA to the Marrakech Agreement, signed at the end of the Uruguay Round (UR) negotiations.

Although there is no agreed definition of TRIMS, the following measures are considered to be TRIMS: local content requirement export performance requirement local manufacturing requirement trade balancing requirement production mandates foreign exchange restrictions mandatory technology transfers limits on equity participation and on remittances

A country might impose TRIMS for a number of reasons but the main reason is to increase their country’s earning of FDI or to ensure that the country realises their desired gains

FDI inflows to developing countries have increased more than 20 times. However, these inflows are concentrated only in a few developing countries.

TRIMS preaches the openness of the world economy the US, EU and Japan are the principle sources and

hosts of FDI the main reason is that much of the FDI flows in the

1900s were due to cross border mergers and acquisitions, much of which took place in tertiary industries such as banking, finance and related services, which are conducted almost exclusively among the developed nations

over 70% of the FDI inflows goes to developed nations and only about a quarter goes to developing nations

Provision of technology transfer requirements only for non – commercial use .

Provision allowing developed countries to set up manufacturing units in developing countries .

Article Vlll - Monopolies and Exclusive Service providers -“Corporate takeover” of services

The most commonly voiced criticism is that the GATS would force countries to open up their services to trade and investment due to pressures from lobbyism in developed countries

This would result in a corporate takeover of their services by the foreign MNCs and forced privatization of the private sector

The concern is greatest in case of public services such as water supply, environment, health care, transport, education where the government has important public policies that suit the needs of developing countries

Article X - Emergency Safeguard Measures-

Asymmetric liberalization Developing country service firms do not get enough

time to adjust to foreign competition

Given the apparent imbalance in supply capacity of developed and developing countries in the service sector, the thrust for liberalization and market opening measures is likely to be on the developed countries, thereby serving the export interests of the developed countries

Ambiguities in scope

Article 1 of GATS states that “services provided in the exercise of government authority” are excluded from the agreement

The latter is further defined as those services which are neither provided on a commercial basis nor in competition with other suppliers

The main problem lies in the interpretation of this carve out clause

Extensive coverage of services

GATS includes a list of about 160 threatened services including elder and child care, sewage, garbage, park maintenance, telecommunications, construction, banking, insurance, transportation, shipping, postal services, and tourism.

In some countries, privatization is already occurring. Those least able to pay for vital services from developing countries are the ones who suffer the most while developed nations reap the benefits

India one of members of General Agreement onTariffs and Trade (GATT) since 1948.

After Marrakesh Agreement, India joined WTOsince inception in 1995.

Developing countries like India availed of greatertrade opportunities and also challenged certainpolicies of developed countries

Developmental issues increasingly focused alongwith trade issues

Special & Differential(S&D) treatment fordeveloping and LDCs incorporated

In spite of special provisions for developingcountries, certain imbalances and inequitiesexperienced.

A number of Developed Countries did notfulfill some obligations for trade liberalizationwhile developing countries were asked toreduce import duties and provide greatermarket access.

India has reduced tariffs to bring them to thebound levels. Even lower for a large numberof commodities as part of the reformsprocess.

Customs duties important source of revenuefor developing countries like India.

The industrial sector faces several constraintseven though some protection is warranted forspecific industries.

1991-92 2004-05

Simple Avg.

Agriculture 108.0 32.5

All Coms. 128.0 22.4

Wtd Avg. *

Agriculture 47.0 27.5

All Coms. 72.5 18.2

Tot duty includes basic, surcharge, SAD & excludes CVD.

* For 1991-92 imports of 1992-93 are taken as weights, while

for 2004-05 of 2002-03

Average Import Duty Rates in India

Non-agricultural tariffs were graduallyreduced but agricultural tariffs require greatercaution due to following reasons: India and other developing countries have argued

that agriculture is way of life and employs largeproportion of workforce while contributingsignificantly to GDP.

Exposure to volatile international market wouldaffect not only domestic prices but also incomes ofpoor.

Some Developed Countries did not fullyimplement the required reduction of domesticsupport to farmers, export subsidies and tariffs.

WTO permits non-distortionary subsidies.Experience shows that these can be tradedistorting and Developed Countries have steadilyincreased such subsidies leading to excessiveglobal production.

Disadvantage to developing countries since suchsubsidies are unaffordable. Get less competitive inworld market.

Technical barriers to trade and stringentrestrictions on grounds of SPS regulations to berelaxed to prevent protectionist measures byDeveloped Countries on this plea.

Grant of patents on non-originalinnovations, particularly linked to traditionalmedicines is an issue of concern.

India has the advantage in movement of highlyskilled and experienced professionals.

International institutions like the WTO must undertake the perhaps painful changes that will enable them to play the role they should be playing to make globalization work, and work not just for the well of and industrialized countries, but for the poor and the developing nations.

The developed world needs to do its part to reform the international institutions that govern globalization.