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World Trade Organization (WTO) Agreement

WTO Agreement

WTO Agreement establishing the WTO consists of the following which embody the result of the Urugvay round of the Multilateral Trade Negotiations.

  1. Agreement on Agriculture (AOA) –

    As far as agriculture is concerned, the Agreement on Agriculture provides framework for the long-term reform of agricultural trade and domestic policies over the years to come with the objective of introducing increased market orientation in agricultural trade. AOA deals specially with the following:

  1. Reduction in Domestic Subsidies:

    Domestic subsides fall into two categories: (a) Non-product specific subsidies given for all crops which include subsidies given for fertilizers, water, electrical goods, seeds and credit, and (b) Product-specific subsidies given for specific crops, as in India in the member nations to reduce both these types of domestic subsidies. However, developing countries can give a maximum of 10% agriculture subsidy on the market price of crop.

  2. Reduction in Export Subsidies:

    As for as export subsidies are concerned the developed countries are required to reduce the volume of subsidized export by 21% over 6 years and the budgetary outlays for export subsidies by 36% with respect to the base period 1986-90. Developing countries are required to reduce the volume by 10% and budgetary outlays 24 per cent over a period of 10 Years.

  3. Improvement in Market Access:

    The improve market access for international trade following suggestions were made by WTO:

    • Reducing in tariff on agricultural products.
    • Non-tariff barriers will be abolished.
    • Developing and least developed countries are given some concessions regarding removal of tariff and non-tariff barriers.
  1. Trade in Textile and Clothing (Multi-Fiber Arrangement) –

    This provides for phasing out the import quotas on textiles and clothing which was in force under the Multi-Fiber arrangement since 1974, over a span of 10 years i.e. by the end of the transition period on January 1, 2005. As a result, quotas on textiles and clothing have now been abolished.

  2. Trade Related Intellectual property Rights (TRIPRS) –

    The WTO agreement on trade-related aspects of Intellectual Property Rights (TRIPRS) is an international treaty which sets done minimum standards for most forms of intellectual property regulation within all member countries of the WTO.

The TRIPRs agreement pertains to the protection of the following categories of intellectual property rights: (i) Copyright; (ii) Trademarks; (iii) Geographical indications; (iv) Industrial designs; (v) Patents; (vi) Integrated circuits and (vii) Trade secrets.

Whereas earlier on process patents were granted to food, medicines, drugs and chemical products, the TRIPRs agreement now provides or granting product patents also in all these areas. Protection will be available for 20 years for patents and 50 years for copyrights.

A transition period was allowed to all developing countries to give effect to the provisions for the TRIPRs agreement. This period has expired on January 1, 2005. Thus, the regime of product, patents has now been introduced.

  1. Trade Related Investment Measures (TRIMS) –

    The agreement on Trade Related Investment Measures (TRIMs) calls for introducing national treatment of foreign investments and removal of quantitative restrictions. It identifies five investment measures which are inconsistent with the GATT provisions on according national treatment and on general elimination of qualitative.

  2. General Agreement on Trade and Services (GATs) –

    The General Agreement on Trade and Services (GATs) is the first multilateral agreement in services whose objective is progressive liberalization of trade in services. The treaty was created to extend to multilateral trading system to services, in the same way the General Agreement on Tariffs and Trade (GATT) provides such a system for merchandise trade. All members of the WTO are signatories to the GATS.

Trade in services includes insurance, travel tourism, hotel, banking, shipping, telecommunication, media services etc. Trade in services have been brought within the purview of WTO for the first time. Now foreign service will be treated at part with domestic services.

  1. Dispute Settlement:

    The WTO dispute settlement mechanism is faster and binding on the parties. WTO has set-up Dispute Settlement Body (DSB). The first stage in the settlement of disputes is the holding of consultations between the members concerned. If consolations fail and if both parties agree, the Director General of WTO offers his good offices for conciliations and mediation. The complainant member can ask the DSB to establish a panel of three experts within 30 days. This panel will have to give its report within 60-90 days. The DSB will adopt the report within 30 days.

  2. Agreement on Antidumping –

    The term “dumping’, describes the practice of selling a product in one national market at a lower price than it is sold in another national market. Therefore, ‘dumping’ is price discrimination between national markets. Haberler defines as, “The sale of goods abroad at a price which is lower than the selling price of the same goods at the same time in the same circumstances at home, taking account of difference in transport costs.” The WTO agreement stipulates that dumping measures will be curbed and no country will be allowed to dump products in another country but if volume of dumped imports from a particular country is less than 1% of domestic markets sale of the product, then this dumping will be treated as insignificant and WTO will not entertain such complaint of dumping.

  3. Trade Policy Review Mechanism (TPRM) –

    The TPRM aims to carry out reviews of the trade policies and practices under the Multilateral Trading Agreements and PTAs for the smooth functioning of Multilateral Trading System. Trade Policy Review Mechanism (TPRM) was established for the purpose.

In order to achieve full transparency, each member shall report regularly to the TPRB about the policies and practices pursued by it, An annual overview of developments in the international trading environment having an impact on the multilateral trading system shall also bee undertaken by the TPRM.

The overview shall be assisted by an Annual Report by the Director General setting about major activities of the WTO and highlighting significant policy issues often affecting the multilateral trading system.

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