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Annual Report 2010-2011
International Trade Organizations

A. The World Trade Organization (WTO)

The Doha Round of trade negotiations at the World Trade Organisation (WTO) has been underway since 2001. The negotiations cover several areas such as agriculture, market access for non-agricultural products, trade-related intellectual property rights (TRIPS), rules (covering anti-dumping and subsidies), trade facilitation etc. The conduct, conclusion and entry into force of the outcome of the negotiations are parts of a single undertaking, i.e. “nothing is agreed until everything is agreed”.

Discussions were slow to resume after they paused in December 2008. Going by the political commitments expressed by WTO Members in internal fora, India hosted a Ministerial Conference on ‘Re-Energising Doha: A Commitment to Development’ in New Delhi during 3-4 September, 2009. Following this, talks began in Geneva but all through the last quarter of 2009 and 2010, there was no progress. A stock taking exercise at the level of senior officials took place in the WTO during the week of 22-26 March 2010, where Members agreed to take the discussions ahead based on the work already done while maintaining the focus on the development dimension of the Round. Small group of Ambassadors had several rounds of discussions on all important issues.
The positive signals given by world leaders at the G-20 leaders’ Summit held in Seoul in November 2010, has provided an impetus and a sense of urgency amongst Members regarding the Geneva process that resumed in January 2011. The small groups have now given way to a Chair-led process within the negotiating groups and bilateral contacts, both within specific areas and at the horizontal level.

India has been working closely with the coalition groups in the WTO towards an early conclusion of the Doha Round. India’s principled stand has been unwavering that keeps development at the heart of the round and thus prioritizes protection of poor and subsistence farmers and the vulnerable industries in the developing and least developed countries.

The state of play of multilateral negotiations in the 153 member strong WTO on various issues covered by the Doha Work Programme is elaborated in the subsequent paragraphs.

I. Agriculture

The Chair of the Committee on Agriculture (Special Session) brought out a fourth revision of Draft Modalities for Agriculture on 6th December 2008. Discussions on this text began in September 2009.

The agriculture negotiations apply to the products covered under the Agreement on Agriculture (AOA) of the World Trade Organization (WTO), namely, all basic agricultural products, the products derived from them and all processed agricultural products. This also includes wines, spirits, tobacco products, fibres such as cotton, wool and silk and raw animal skins for leather production. Fish and fish products and forestry products are not included.

The three main elements or “pillars” of the Agreement on Agriculture (AOA) and the negotiations are: (i) market access, (ii) domestic support and (iii) export competition. The Doha Ministerial Declaration of November, 2001 committed Members to comprehensive negotiations aimed at substantial improvements in market access; reductions of, with a view to phasing out, all forms of export subsidies; and substantial reductions in trade-distorting domestic support. Special and differential treatment for developing Members is also intended to be an integral part of the modalities.

(a) Market Access

The customs tariff is the duty charged on the import of any good into the domestic territory of a country. The negotiations at the WTO are on bound customs tariffs, which are the ceiling rates notified to the WTO, while the tariffs which are actually applied by the customs authorities on imports into a country are the applied customs tariffs. The applied tariffs cannot ordinarily exceed the bound customs tariffs in the WTO Member countries.

The draft modalities envisages the following:

Reduction of Bound Tariffs: Developed countries are required to reduce their bound tariffs in equal annual installments over five years with an overall minimum average cut of 54%. Developing countries, on the other hand would have to reduce their final bound tariffs in equal annual installments over ten years effecting a maximum overall average cut of 36%.

Both developed and developing Members would have the flexibility to designate an appropriate number of tariff lines as Sensitive Products (SEPs), on which they can undertake lower tariff cuts. While this flexibility is available to both developing and developed countries, developing countries will obtain 1/3rd more flexibility.

Special Products (SP): Special and Differential (S&D) treatment provisions allow developing countries flexibility in tariff cuts which is critical for countries such as India to meet their food and livelihood security concerns and rural development needs. ‘Self-designation’ is a fundamental aspect of the mandate on SPs which gives every member the liberty to choose the products they wish to keep out of tariff cuts.

Special Safeguard Mechanism (SSM): This is another Special & Differential (S&D) treatment provision of the WTO exclusively for developing countries that gives them the right to have recourse to a Special Safeguard Mechanism (SSM) based on import quantity and price triggers. The SSM is important for developing countries in order to protect their poor and vulnerable farmers from the adverse effects of an import surge or price fall.

India has argued against unreasonable restrictions on the SSM as very high triggers and inadequate remedies defeat the very objective of protecting poor, vulnerable farmers in developing countries. Given its objectives, it must be a simple and effective mechanism. The exporting countries on the other hand are seeking to ensure market access into developing countries by trying to limit such provisions. India and its coalition parties in G-33 have been striving to ensure an effective safeguard instrument.

(b) Domestic Support

The Agreement on Agriculture (AOA) distinguishes between support programmes that stimulate production directly, and those that are considered to have no direct effect. Domestic support that has a direct effect on production and trade has to be cut back. The Draft Modalities propose cuts in the Overall Trade-distorting Domestic Support (OTDS) as well as cuts or caps on the individual categories of domestic support, referred to as Amber Box, Blue Box and Green Box support.

The proposals presently under discussion refer to a 70% cut in OTDS by the US and 80% by the EU. A 70% cut would actually bring US OTDS to about US$ 14.5 billion, down from their current ceiling of US$ 48.2 billion. This is still well above their estimated applied level of US$ 7 billion in 2007.

Cotton: This issue is of prime importance to Burkina Faso, Benin, Mali and Chad (the Cotton 4). The Cotton-4 proposal on the table implies an 82.2% cut in domestic support for cotton by the US. Apart from the C-4, it is of significance to Brazil and India which are both major exporters of cotton. This issue has seen very little multilateral discussion at the WTO.

(c) Export Competition

In terms of the draft proposals, developed countries are required to eliminate all forms of export subsidies by 2013. Developing countries could have to do so by 2016. In terms of the AOA, developing countries had the flexibility to provide certain subsidies, on export marketing costs, internal and international transport, freight charges etc. According to the current proposals, this provision would continue to be available to developing countries till 2021 i.e. 5 years beyond the year 2016 when they would be required to phase out all other forms of export subsidies.

Box: 8.1
India’s Priorities in the Agriculture Negotiations

Safeguarding the interests of low income and resource poor agricultural producers remains paramount for India. In this context, the following issues are vital:

  • Overall tariff reductions on bound rates of not more than 36%;
  • Self-designation of an appropriate number of Special Products guided by indicators based on the three fundamental and agreed criteria of food security, livelihood security, and rural development needs;
  • An operational and effective Special Safeguard Mechanism to check against global price dips and import surges, which is more flexible than the existing special safeguard available mainly to developed countries; and
  • Substantial and effective cuts in OTDS by the US and the European Commission (EC) and tighter disciplines on product-specific limits on AMS and the Blue Box.

India has been working constructively with its coalition partners in developing country groupings such as the G-20 and the G-33 in order to achieve an outcome in the agricultural negotiations that would fully reflect the level of ambition of the Doha mandate and the interests of developing countries.

II. Non Agricultural Market Access (NAMA)

Non Agricultural Market Access (NAMA) relates to trade negotiations on non-agricultural or industrial products. In the NAMA negotiations, WTO Members discuss the terms or modalities for reducing or eliminating customs tariff and non tariff barriers on trade in industrial products. The product coverage under NAMA includes marine products, chemicals, rubber products, wood products, textiles and clothing, leather, ceramics, glassware, engineering products, electronics, automobiles, instruments, sports goods and toys.

On tariffs, the negotiations take place on bound tariffs which are the bindings taken during the negotiations at the WTO. In the NAMA negotiations there are tariffs on which no bindings have been taken and these are known as the unbound tariff lines. Based on the commitments taken by India, at the commencement of the Doha Round in 2001, India has more than 31% of its NAMA tariff lines as unbound.

Box: 8.2
India’s priorities in NAMA
  • Formula reductions that respect the principle of less than full reciprocity in reduction commitments
  • Appropriate and adequate flexibilities to protect the sensitive tariff lines
  • Participation in sectoral agreements to be on a non mandatory basis on a good faith basis without any pre-judgment of the final outcome.

The main elements of the NAMA negotiations

(a) Formula for tariff reductions

At the WTO Ministerial Meeting at Hong Kong during December, 2005, the Trade Ministers adopted a Swiss formula with coefficients that would reduce or eliminate tariff peaks, high tariffs and tariff escalation. The simple Swiss formula with coefficients is as under:

Tf = (Ti x A)/(Ti + A)

where Tf is the final bound customs tariff , Ti is the initial bound customs tariff and A is the Swiss coefficient.

The Swiss formula is a non linear formula. Since most developing countries have higher average bound customs tariff than developed countries, the same Swiss coefficient would lead to higher percentage reductions for developing countries than developed countries. All the final bound customs tariffs would be below the Swiss coefficient “A”.

The Ministerial Mandate also mention the need to take into account the special needs and interests of developing countries, including through less than full reciprocity (LTFR) in reduction commitments. This is a clear indication that developing countries would not undertake the same reduction commitments as developed countries. Therefore, the issue of two coefficients, the lower for developed countries and the higher for developing countries has been proposed in the negotiations.

During the WTO Mini Ministerial Meeting from 21-29 July, 2008 at Geneva, Mr. Pascal Lamy, Director General of the WTO had brought out an informal text on 25 July, 2008 proposing a coefficient of 8 for developed countries and a 3 tiered coefficient of 20, 22 and 25 linked to flexibilities for developing countries. These numbers are also reflected in the NAMA modalities of 6th December, 2008.

(b) Flexibilities

Flexibilities under NAMA are intended to protect the sensitive industrial products of the developing countries both from the Swiss formula cuts and from taking a binding commitment. In the Doha Round negotiations, one of the options for the developing countries is to take at least half the formula cuts on a specified percentage of tariff lines subject to a limitation of imports. The other option is take no formula cuts or binding commitments on a specific percentage of tariff lines subject to a limitation on imports.

Flexibilities are integral to the concept of Special & Differential treatment for developing countries in all WTO Agreements. For India, flexibilities are important for protecting its infant and vulnerable industries. These include the micro, small and medium enterprises (MSMEs), employment intensive sectors, industries employing socially and economically vulnerable sections such as women, traditional artisans and fishermen, as well as industries in the rural, semi urban, economically disadvantaged and geographically inaccessible regions of the country.

The Director General, World Trade Organisation (WTO), Mr. Pascal Lamy meeting the Union Minister for Commerce and Industry, Shri Anand Sharma, in New Delhi on November 19, 2010.

The Ministerial mandate was reflected in paragraph 8 of the July, 2004 Framework Agreement where developing countries were given the flexibility to ‘apply at least half the formula cuts on up to [10] percent of the tariff lines provided these tariff lines did not exceed [10] percent of the total value of a Member’s imports during 1999-2001; or keep, as an exception, tariff lines unbound, or not apply formula cuts for up to [5] percent of tariff lines provided they do not exceed [5] percent of the total value of a Member’s imports during 1999-2001.’

(c) Sectoral Initiatives

Sectoral Initiatives refer to the proposals for the elimination of customs tariffs in specific NAMA sectors by WTO Members who comprise a specific percentage of total trade in that sector (also known as the critical mass). Sectoral initiatives allow Members to focus on specific sectors of their interest and ensure greater market opening than that achieved through the formula approach.

The participation in sectoral initiatives is on a non-mandatory basis without pre-judging the outcome. However, United States and some other developed countries have been insisting that large developing countries like Brazil, China and India participate in sectoral initiatives of their interest namely chemicals, industrial machinery, health care products (medical devices), electrical and electronics. There is still no agreement on this issue.

(d) Non-tariff barriers

Non Tariff Measures (NTMs) refer to those measures on international trade that are not in the form of a tariff or a tax. These measures include trade related procedures such as documentation, certification and inspections; technical regulations; standards; import related measures such as restrictions, prohibitions, seasonal duties; tariff rate quotas; foreign exchange controls including artificial exchange rates; public procurement practices etc. Certain NTMs such as imposition of anti-dumping and safeguard duties do have the effect of imposition of tariffs. Of course, countries tend to impose some restrictions on imports that some measures are intended to protect human, animal and plant life and health. These are known as Sanitary and Phytosanitary (SPS) measures. Non Tariff Barriers (NTBs) are a sub-set of NTMs. NTBs are considered unfair measures discriminating against imports and therefore violative of the obligations under the Agreements of the WTO. Currently, 14 NTB proposals are under discussions in the WTO.

Box: 8.3
NTM related proposals under intense discussion at WTO
  • “Ministerial Decision on Procedures for the Facilitation of Solutions to NTBs” known as the Horizontal Mechanism: This Horizontal Mechanism was originally mooted by the NAMA 11 (of which India is a Member) and European Communities (EC) with the support of more than 100 Members namely the African Group, Canada, LDCs, New Zealand, Norway, Pakistan and Switzerland. The Mechanism is an informal dispute resolution mechanism that explores trade solutions without affecting the rights and obligations under the WTO Agreements. It operates through the existing WTO Committee’s, takes the help of an expert in the respective field and enables faster and more economical resolution of NTBs especially those on products of export interest for developing countries.
  • Ministerial Decision on Trade in Remanufactured Goods: The salient features of the proposal driven by the US are that it seeks to enhance market access opportunities for remanufactured goods, it seeks a review of the non tariff measures on importation of remanufactured goods so that they are in compliance with multilateral obligations and putting in place an institutional framework for consultations as well as discussing progress in reduction or elimination of non tariff barriers on remanufactured goods.
  • TBT related proposals: Nine out of the 14 NTB proposals are vertical in nature relating to specific NAMA sectors. They would also have a legal relationship with the Agreement on Technical Barriers to Trade (TBT Agreement) and would affect some of the provisions of the latter. It was in this context that India took a decision to seek a horizontal solution to specific NTB in NAMA sectors while retaining some elements of the vertical solutions wherever it was applicable. This was to ensure that specific carve outs for sectors did not create a cobweb of provisions that could otherwise be addressed through a horizontal treatment. The EC later joined India and a joint submission on a “Framework for Industry Specific proposals” was made in September, 2009. Work is now going on to convert this into a negotiating text.

(f) Preference Erosion

An issue affecting smaller developing countries is the erosion of their market access due to the reduction in MFN tariff levels. All developed countries have established schemes that allow smaller developing countries duty free or low duty access for their export products. These schemes are largely responsible for the export performance of these countries, despite their lack of a general competitive industry. To allow these small developing countries time to restructure and improve their competitiveness, developed countries will be granted a longer period to phase in their tariff commitments on such products. On the other hand, there is also recognition that some developing countries would be disproportionately affected since some of these affected tariff lines are of export interest to them. The tariff cuts would be accelerated for these disproportionately affected countries for the specific lines of export interest for them.

The Decision to provide Duty Free Quota Free (DFQF) access for LDCs is one of the significant outcomes of the WTO Hong King Ministerial Meeting, held in December, 2005. This decision requires all developed-country Members, and developing-country Members declaring themselves in a position to do so, to provide duty-free and quota-free market access on a lasting basis, for all products originating from all LDCs by 2008 or no later than the start of the implementation period in a manner that ensures stability, security and predictability. The developing-country members were permitted to phase in their commitments and were given flexibility in product coverage. The declaration also stipulated that the preferential rules of origin applicable to imports from LDCs are required to be transparent and simple, and contribute to facilitating market access. Accordingly, India became the first developing country to announce a Duty Free Tariff Preference Scheme for LDCs, which is open to all the 49 LDC Members. Details of the Scheme are in the Box 8.4

Box: 8.4
Duty Free Tariff Preference Scheme For LDCs
  • The Government of India announced the Duty Free Tariff Preference (DFTP) Scheme for the Least Developed Countries (LDCs) on the occasion of the India-Africa Forum Summit of African Heads of States/Governments and their official representatives in New Delhi on April 8, 2008.
  • The DFTP Scheme provides for: Duty-free market access on 85% of India’s total tariff lines to be implemented over a 5 year period with 20% cut in each year; Margins of preference (MOP) on 9% tariff lines – the MOP would come into force from the date the Scheme becomes effective; an Exclusion List of 6% of India’s total tariff lines; preferential market access on tariff lines that comprise 92.5% of global exports of all LDCs; products of immediate interest to Africa which are covered include cotton, cocoa, aluminum ores, copper ores, cashew nuts, cane-sugar, ready-made garments, fish fillets and non-industrial diamonds.
  • The Scheme is open to all 49 LDC members including 33 LDCs in Africa. The Scheme provides that in order to avail benefits under this Scheme, individual LDC members submit a Letter of Intent to the Government of India. The Scheme further provides that in order to enjoy tariff preference, the beneficiary country submits a Certificate of Origin along with the consignment.
  • The Positive List (items having MOP) and the Exclusion List (items having no tariff preference) are available at Indian Customs website (http://www.cbec.gov.in/customs/cs-act/notifications/notfns-2k8/cs-notfns-tarr08.htm)
  • As on December, 2010; 26 LDCs (Bangladesh, Benin, Burundi, Burkina Faso, Cambodia, East Timor (Timor de l’Est), Eritrea, Ethiopia, Gambia, Lao PDR, Lesotho, Madagascar, Maldives, Malawi, Mali, Mozambique, Myanmar, Rwanda, Samoa, Senegal, Somalia, Sudan, Tanzania, Uganda, Zambia and Central African Republic have submitted letters of intent. However, only 19 LDCs (Bangladesh, Benin, Burkina Faso, Cambodia, Ethiopia, Gambia, Lao PDR, Madagascar, Malawi, Maldives, Mozambique, Myanmar, Rwanda, Samoa, Senegal, Somalia, Sudan, Tanzania and Uganda) have submitted details of agencies which would be responsible for issuing Certificates of Origin as required under the Scheme.”

III. Services

The services negotiations at the WTO have been rejuvenated after the G-20 meeting of November, 2010 in Seoul. Substantive interest has been evinced by all Members to intensify the negotiations to make use of the limited window of opportunity (2011) to conclude the negotiations.

India has strengths in services Sector and has made substantial offers in 2008 and hopes to receive satisfaction from other WTO Members. As a part of the plurilateral (where more than two countries are involved) process, 22 plurilateral groups have been formed at the WTO in service sectors/modes. India is the coordinator of the plurilateral requests on Mode 1 (cross border supply) and Mode 4 (Movement of Natural Persons) - the core areas of its interest in the services negotiations. India is also a co-sponsor of plurilateral requests in Computer and Related Services (CRS) and Architectural, Engineering and Integrated Engineering Services. The bilateral and plurilateral process in Services under the Doha Round has not moved fast enough not due to the approach of negotiations but because of lack of political will, inadequate response from developed countries in sectors and areas of export interest to developing countries and very little movement in Agriculture and NAMA.

One of the areas of crucial interest to India is development of disciplines in Domestic Regulations involving qualifications and licensing requirements and procedures, without which Mode 4 access gets severely impeded. Negotiations on this subject are proceeding on the basis of the Chairman’s text of March, 2009. Development of disciplines on Domestic Regulations is a very crucial area of negotiations, since as per the Hong Kong Ministerial Declaration Members should develop disciplines on domestic regulation pursuant to the mandate under Article VI: 4 of the GATS, before the end of the current round of negotiations.

In order to take the negotiations forward, a fresh round of Offers would need to be tabled at the WTO by Member countries. A timeline for the submission of the Second Revised Offers in Services would be decided after a breakthrough is achieved in Agriculture and NAMA. An ambitious proposal in Services has to be an essential part of any breakthrough package. India has stated repeatedly that any future work in Services must be anchored in Annex C of the Hong Kong Ministerial Declaration. Members need to spell out clearly how they intend to meet the modal objectives outlined in Annex C. In particular, developed countries need to provide clear signals of market openings in sectors and modes of interest to developing countries, particularly in Modes 1 and 4.

Box: 8.5
India’s major interests in Services
  • Increased market access in Mode 4 (Movement of natural persons) and disciplines on Domestic Regulations;
  • Increased market access in Mode 1 (Cross Border supply); and
  • Sectoral interests in Computer and related services, Architecture, Engineering and Integrated Engineering Services.

IV. Rules Negotiations

As per the mandate of the Doha Declaration in para 28, Members are engaged in negotiations aimed at clarifying and improving disciplines under the Anti Dumping Agreement and the Agreement on Subsidies and Countervailing Measures (ASCM), while preserving the basic concepts, principles and effectiveness of these agreements and their instruments and objectives. Members are also discussing the new disciplines on fisheries subsidies.

The Chair of the Negotiating Group on Rules (NGR) had issued first draft texts of the Anti dumping Agreement and the Subsidies and Countervailing Measures Agreement including the fisheries subsidies on 30 November 2007. Thereafter, a new draft text was issued on 18 December 2008 on anti dumping and subsidies issues. In view of strong divergence of views of Members on several issues in the Anti Dumping Agreement and in the Subsidies and Countervailing Measures Agreement, the Chair has put such issues in brackets in the new text. In the Anti Dumping Agreement such issues were: the prohibition on use of zeroing in dumping margin calculations, strengthening the sunset review provisions, new rules on anti circumvention, non-attribution analysis for causal link, lesser duty rule, public interest examination, etc. In the Subsidies Agreement, the issues in brackets were certain types of financing by loss making institutions, calculation methodology for determining export competitiveness, market benchmarks for export credits and overseeing of successor undertakings under the OECD Export Credit Arrangement, by the WTO. In addition, the unbracketed text on amendment proposed to subsidies in the case of provision of goods or services at regulated prices met with stiff resistance from several Members.

India has been asking for strengthening of rules in Anti Dumping so as to prohibit the use of zeroing in dumping margin calculation, strengthening of the Rules for Conduct of sunset reviews including automatic sunset after certain agreed period. India had also moved proposal for mandatory application of lesser duty. In the Subsidies Agreement, India has not been supportive of proposals to expand the prohibited subsidies with a view to retain the policy space for the development objectives of the national economic policy. In view of these considerations, India did not support the proposal related to using external bench marks for calculation of subsidies in the case of inputs provided at regulated prices. During the negotiations held in 2010 consensus has continued to elude on most of the bracketed issues of Chair’s text.

In negotiations on Fisheries Subsidies, India has been seeking effective S&D treatment for the developing countries in the light of employment and livelihood concerns for small, artisanal fishing communities and for retaining sufficient policy space. India maintained its position aimed at safeguarding the interests of fish workers in the coastal regions as well as at encouraging fishing operations in the EEZ, and keeping in view these objectives sought exception from prohibition of subsidies meant to support the fishing operations in coastal regions and EEZ. India along with Brazil, China and Mexico submitted a new proposal in February 2010 seeking effective special and differential (S&D) treatment for developing countries in the fisheries subsidies disciplines. During the negotiations held in 2010, consensus has eluded on important issues such as what type of fisheries subsidies should be included in the prohibited list, what should be the coverage of general exceptions and the provisions relating to general disciplines. On special and differential treatment for developing countries, consensus eludes on the extent and scope of the S&D.

Box: 8.6
India’s stand on Rules Negotiations
  • Strengthening of disciplines in anti-dumping including prohibition of zeroing, stronger rules on reviews- including sunset reviews, mandatory application of lesser duty rule.
  • India is opposed to the enlargement of the scope of prohibited subsidies in the Agreement on Subsidies and Countervailing Measures (ASCM) and /or limit the existing flexibilities for the developing countries.
  • India is seeking effective special and differential treatment (S&D) for the developing countries in the new disciplines on fisheries subsidies, particularly in the light of employment and livelihood concerns for small, artisanal fishing communities and for retaining sufficient “policy space” so as to enable it to develop its infrastructure.

V. TRIPS Related Issues

The WTO’s Agreement on Trade Related aspects of Intellectual Property Rights (TRIPS) introduced IPR Rules into the multilateral trading system among the WTO member countries for the first time when the WTO came into being on January 1, 1995. The WTO’s TRIPS Agreement is an attempt to narrow the gaps in the way these rights are protected around the world and to bring them under common international rules. It establishes minimum levels of protection that each Government has to give to intellectual property to fellow WTO members. The Governments are allowed to use flexibilities enshrined in TRIPS for public interest reasons, e.g. to tackle public health problems.

The UN Convention on Biological Diversity (CBD) has three goals: promoting the conservation of biodiversity, using its components sustainably, and sharing benefits that arise out of the utilization of genetic resources in a fair and equitable manner. India is a party to the Convention. CBD recognises sovereign rights over biological/ genetic resources (BR/ GR) and traditional knowledge (TK), and obliges all its signatories to ensure prior informed consent (PIC) for access to these resources, on mutually agreed terms and to ensure that access to and benefit sharing (ABS) of the commercial utilisation of these resources is fair and equitable.

TK refers to knowledge, innovations and practices of indigenous and local communities around the world. The knowledge belongs to the community as a whole and unauthorized use of GR/ TK is referred to as Biopiracy. India has a rich content of GR/ TK and more than once, the abundant wealth in this area, has attracted bio-pirates. Hence, India along with other developing countries has taken up this issue in the Doha round of WTO.

The Doha Negotiations

The Doha Ministerial Declaration, 2001 provided a mandate to the TRIPS Council to examine, inter alia the relationship between the TRIPS Agreement and the CBD. The objective of ongoing efforts in WTO is to establish adequate procedural norms within the TRIPS Agreement so as to prevent erroneous patents being granted and prohibit misappropriation of BR/ TK as well as to ensure that private rights created through the TRIPS Agreement do not trump the benefit sharing mechanisms set up by Government in implementing the CBD obligations.

In the Hong Kong Ministerial Conference, 2005, the Ministers reiterated that the negotiating bodies and other WTO bodies should re-double their efforts to find appropriate solutions to outstanding implementation issues, including that on the relationship between the TRIPS Agreement and the CBD.

TRIPS contains no provisions preventing a person to claim patent rights in one country over GRs that are under the sovereignty of another country. Moreover, there are no provisions in the TRIPS Agreement on ABS and PIC of the country of origin and owner of the biological raw material or TK meant for use in a patentable invention. This results in contradictions between TRIPS and CBD and it is impossible to implement them in mutually supportive ways. TRIPS Agreement does not prevent acts of biopiracy and thus results in systemic conflicts with the CBD.

Many developing countries, including India, have has been demanding incorporation of three disclosure norms in the TRIPS Agreement so as to make it obligatory for an applicant seeking a patent, based on some genetic resource (GR) and/or traditional knowledge (TK), to disclose (i) Source and the country of origin of the genetic resource/traditional knowledge used in the patent; (ii) Prior Informed Consent and (iii) Benefit sharing arrangement.

The group also holds that the user of GRs and TKs should also provide access to and transfer of technologies, based on those resources, to the source country. Any violation, if discovered after the grant of a patent, would invite legal sanctions including revocation of a patent.

The opponents of these proposals, including US, Australia, Canada, Argentina, South Africa, feel that there is no conflict between the TRIPS Agreement and the CBD and the two can be implemented in a mutually supportive manner, without the need to amend the TRIPS Agreement. A new disclosure requirement will not prevent the issuance of erroneous patents. The national ABS regimes (outside the patent system) could better guarantee PIC and equitable benefit sharing for all commercially traded GRs, whether patented or not. The disclosure requirement could generate burdensome procedures and additional costs on patent offices. They suggest that countries develop their own database for GRs and TK and use this to track and challenge any patents that may be erroneously granted on the basis of existing knowledge.

Over the last two years, the proponents of the mandatory ‘disclosure’ requirement have been able to garner support of 108 WTO members (2/3 majority of WTO) including the EU who have agreed to amend the TRIPS Agreement to include a mandatory requirement for the disclosure of the country providing/source of GR, and/or associated TK (for which a definition will be agreed later) and that applications seeking patent will not be processed without completion of disclosure requirement. Further, these Members have agreed to define the nature and extent of a reference to PIC and ABS also.

Geographical Indications (GI) Extension

The TRIPS Agreement of WTO allows for protecting the quality, reputation or other characteristics of a good that are essentially attributable to its geographic origin. The GIs not only indicate where a product is made, but more importantly it identifies the products’ special characteristics which are result of the geographical origins. The GIs, unlike other IPRs, are generally protected in perpetuity. Well known examples include ‘Champagne’, ‘Scotch’, ‘Darjeeling’ tea ‘Roquefort’ cheese. GIs impart a unique brand image to a product and thereby help in improving its marketability and price realisation, while also preventing any misappropriation of its name. Article 22 of TRIPS defines a standard level of protection and prescribes that GIs have to be protected in order to avoid misleading the public and to prevent unfair competition through use of place name when the product is made elsewhere.

Special protection for Wines & Spirits

Article 23 of the TRIPS Agreement, however, provides a higher or enhanced level of protection to GIs for wines and spirits. This means they should be protected even if there is no risk of misleading consumers/ public or unfair protection, and a different level of protection is granted, according to product categories, by the TRIPS Agreement in case of GIs in spite of the fact that GIs stand on an equal footing with that of any other IPR.
Many developed and developing countries, including India have been demanding the removal of the disparity under the TRIPS Agreement. They have been demanding an expansion of the scope of protection available under Article 23 of the TRIPS Agreement to products other than wines and spirits also.

Establishment of Multilateral Register for wines & spirits

TRIPS Provision

According to Article 23(4) of the TRIPS Agreement, negotiations shall be undertaken in the TRIPS Council on the establishment of a multilateral system of notification and registration of GI for wines. This is again a measure that will facilitate the protection of GIs on wines. The Agreement provides that the participation in the system will be strictly voluntary. The issue is now also part of the Doha Development Agenda (Para 18) and includes spirits also. Thus the TRIPS provision essentially calls for a multilateral system for the notification and registration of GIs for wines and spirits.

India along with 108 members including EU in a joint submission TN/C/W/52 dated 19.7.2008 has agreed to accept the obligation of a Multilateral Register in respect of Geographical Indications for wines and spirits protected and notified to WTO by any of the WTO members.

The Group of 108 Members have proposed that text based negotiations be intensified in Special Sessions of the TRIPS Council in order to establish the Register accordingly and be an integral part of the Single Undertaking with TRIPS-CBD and GI extension issues.

Overall Position of Indian TRIPS Issues

India’s stand is that the issues of GIs and CBD are inextricably linked. We expect that outcomes on GI Extension and TRIPS-CBD issues be put on same footing as multilateral register on wines and spirits. Hence, India wants to negotiate a package deal on the three TRIPS issues. India also wants that Special and Differential treatment (S&DT) be an integral part of negotiations in the three areas above and include special measures in favour of developing and least-developed countries.

VI. Trade and Environment

Doha Ministerial Declaration has provided a negotiating mandate on the relationship between existing WTO rules and specific trade obligations(STOs) set out in Multilateral Environment Agreements (MEAs) [Para 31(i)]; procedures for regular information exchange between MEA Secretariats and the relevant WTO Committee [Para 31(ii]); Market access negotiations for environmental goods and services [Para 31(iii)] and the effect of environmental measures on market access, especially in relation to developing countries, in particular the least-developed [Para 32]. Of all the above issues, the negotiation on Para 31(iii) is a subject matter of intense debate. The basic objective of this proposal is to liberalise tariffs on environmental goods (EGs) with a view to promote trade.

Most of the developed countries including US, Canada, the EU, Japan, Korea, New Zealand, Norway etc. are advocating a list based approach for elimination of tariffs on EGs that offer a potential for high degree of convergence among Members (they have come up with a list of 153 EGs at HS 6 digit for this purpose). The Saudi Arabia and Japan have also come up with their own list of EGs. In absence of an agreed definition for EGs, it is difficult to work out the list of EGs. India and many other developing countries do not support list approach due to multiple end-uses of most products as it will open up imports without much improvement in the environment. The List Approach will adversely impact the growth of EGs in developing countries as most of the goods in the list floated so far have dual or multiple uses and could very well be diverted for non-environmental purposes. For example, pipes could be used in solar water heater or in oil and natural gas transportation; pumps could be used for sewage & wastewater treatment or for any other purpose. Such diversion would certainly affect our domestic industry adversely. These negotiations basically call for mutual supportiveness of trade and environment. While the developed countries have not been forthcoming on technology and finance transfer to developing countries to help them deal with environment problems, they are trying to seek elimination of tariffs on goods in the name of environment friendliness. Naturally, the approach has been viewed as a Non Agricultural Market Access (NAMA) backdoor by the developing countries.

India and Argentina have been advocating the project/ integrated approach of temporary liberalisation of all goods and services for designated projects, such as water and waste water management, environmental monitoring and renewable energy, etc. However, this approach has not found support among the Members for the fear that it will create administrative burden and usher in a license raj. Brazil has come up with a ‘request and offer’ approach in which negotiations would be on the basis of bilateral or plurilateral requests on products of interest. The result of the negotiations would then be multilateralised and made available to all Members on MFN basis. A number of developing countries have supported the Brazilian proposal. However, the request and offer approach is close to the list based approach and hence suffers from similar disadvantages.

VII. Non–Tariff Measures

Over the last two decades the world has witnessed a rapid expansion of global trade and reduction in tariff rates both through the multilateral arrangement under the WTO as well as the Free Trade Agreements (FTAs). At the same time, developed countries are increasingly resorting to the use of Non-Tariff Measures (NTMs) to deny market access to imports with a view to protect their domestic industries.

NTMs are measures on international trade that are not in the form of a tariff or a tax. These measures include inter alia trade related procedures, technical regulations, standards, import or export licensing systems, etc.

In view of the above, India has adopted a multi-pronged plan and strategy to deal with issues relating to Non-Tariff Measures (NTMs). We have set-up an online database on the SPS/TBT notification (which may result into NTMs) notified to the WTO by the Members of the WTO. This is to provide information to our exporters about the regulatory regime of other countries. Besides, we have requested the concerned Departments/Ministries/Organizations to upgrade their infrastructure and surveillance system at the major ports and airports to ensure due compliance of India’s standards and technical regulations.

In addition to above, wherever our export interest is affected, the Department of Commerce raises these issues in Regular SPS and TBT Committee Meetings of the WTO to get suitable redressal. For example, the Department of Commerce has been raising Specific Trade Concerns (STCs) in the TBT Committee of WTO on the issue of EU’S Regulation, Evaluation, Authorization and Restriction of Chemicals (REACH), EU’s Traditional Herbal Medicine Product Directive 2004/27/EC (THMPD), EU’s legislation on animal welfare and health etc.

VIII. Disputes in the WTO and negotiations under the Dispute Settlement Understanding (DSU)

Dispute Settlement is the central pillar of the rules based multilateral trading system and the WTO’s unique contribution to the stability of the global economy. It underscores the rule of law and makes the trading system more secure and predictable. The salient features of the system are:

  • It is based on clearly-defined rules,
  • There are timelines for completing a case,
  • Provisions exist for consultations, good offices, conciliation and mediation.
  • Rulings are first made by a panel and endorsed (or rejected) by the WTO’s full membership.
  • Appeals based on points of law are possible.

As per the mandate of the Doha Declaration, the WTO Members are engaged in negotiations aimed at improvements and clarifications of the Dispute Settlement Understanding (DSU). The negotiations are taking place in the Special Session of the Dispute Settlement Body (DSB). The discussions in the Special Session are primarily based on Members’ experience with the Dispute Settlement System and efforts by Members to develop areas of convergence, while maintaining the respective policy objectives. India and other developing countries have been reiterating their objective for a development oriented review of the Dispute Settlement Procedures under the Doha Development Agenda (DDA).

Keeping this objective in mind India is negotiating important reforms including the litigation costs to mitigate the rising transaction costs of settling the WTO Disputes, S&D changes in the process to make the system more inclusive, and cross retaliation that allows the developing countries to retaliate in any sector/Agreement against the losing developed country, in the WTO self enforcing dispute settlement decisions. On these issues India has succeeded in enlisting the support of many developing countries. India and other developing countries could successfully convince the Chairman of the Special Session to reflect these proposals in the draft Legal Text of July 2008. This text is the basis for the current round of discussions among the Members.

Box 8.8
India and the DSU
  • DS 408 – On 11 May 2010, India requested consultations with the EU and the Netherlands under the Dispute Settlement Understanding (DSU) of the WTO regarding repeated seizures of Indian generic medicines while in transit through the EU ports on alleged patent infringements. Thereafter consultations were held with EU through video conference on 28 October 2010, 10 November 2010 and 16 November 2010. EU has shown willingness to resolve this dispute without resorting to the need to go the WTO dispute panel stage.
  • India has also been participating as a third party in several disputes and expressing its systemic concerns and seeking to protect its trade interests from non-compliance of negotiated multilateral rules at the WTO by some Members.
  • DS 395 – China- Measures Related to the Exportation of Various Raw Materials (Complainant: European Communities).
  • DS 396 – Philippines — Taxes on Distilled Spirits (Complainant: European Communities).
  • DS 397 – European Communities — Definitive Anti-Dumping Measures on Certain Iron or Steel Fasteners from China (Complainant: China).
  • DS 398- China — Measures Related to the Exportation of Various Raw Materials (Complainant: Mexico).
  • DS 403 - Philippines – Measures related to tax on distilled spirits (Complainant: United Stated of America).
  • DS 404 - United States — Anti-dumping Measures on Certain Shrimp from Vietnam (Complainant: Vietnam).

B. Economic and Social Commission for Asia and the Pacific (ESCAP)

India is one of the founding Members of ESCAP, the regional development arm of the United Nations, which serves as the main economic and social development center for the United Nations in Asia and the Pacific. Its mandate is to foster cooperation between its 53 members and 9 associate members. ESCAP provides the strategic link between global and country-level programmes and issues. It supports Governments of the region in consolidating regional positions and advocates regional approaches to meet the region’s unique socio-economic challenges in a globalizing world. The major areas of work of ESCAP include:

  • Macroeconomic Policy and Development
  • Trade and Investment
  • Transport
  • Environment and Development
  • Information and Communications Technology and Disaster Risk Reduction
  • Social Development
  • Statistics
  • Sub-regional activities for development

The 66th Annual Session of ESCAP was held in Incheon, Republic of Korea during 13 – 19 May, 2010. The theme topic for the Session was “Addressing challenges in the achievement of the Millennium Development Goals: Promoting a stable and supportive financial system; and Green Growth or environmentally sustainable economic growth, including through technology and financing”.

Box 8.9
India and ESCAP
  • India has continued to work in close cooperation with ESCAP during the year. Government of India committed continued financial support to the following four regional institutions of ESCAP:
  • Asian and Pacific Centre for Transfer of Technology (APCTT), New Delhi, India;
  • Asian and Pacific Training Centre for Information and Communication Technology for Development (APCICT), Incheon, Republic of Korea.
  • Statistical Institute for Asia and Pacific (SIAP), Chiba, Japan; and
  • Asia and Pacific Centre for Agriculture and Engineering Machinery (APCAEM), Beijing, China.
  • India has sanctioned an amount of $ 2,50,000 as contribution to UNESCAP for “Promoting renewables for energy security and sustainable development in Asia and the Pacific” adopted during the 64th Annual Session of UNESCAP held in Bangkok in April, 2008. To this effect “Technical Cooperation Trust Fund Agreement” has been signed between the Ministry of New & Renewable Energy and UNESCAP.

Establishment of a Sub Regional Office in India

ESCAP has decided to establish a Sub-Regional Office (SRO) for South & South-West Asia in New Delhi. India has accepted the same and approved financial support for the office. The office is expected to become functional in 2011.The main activities of SRO will be to (i) implement the Commission’s agenda at the sub regional level by serving as a link between the sub region and Commission headquarters; (ii) promote and support specific sub regional priorities and programmes concentrating on the priority sectors of member States within the sub region; (iii) operate as sub regional nodes for knowledge management and networking; (iv) spearhead the delivery of technical assistance activities and act as the Commission’s implementing arm in the sub region; (v) establish close working relationship with United Nations country teams within the sub region and promote the coordination of United Nations systems activities at the sub regional level. The SRO can build synergies and cooperation at the level between United Nations agencies while drawing from the strong regional presence of the Commission, including its wide-ranging technical skills and convening power; (vi) build strong partnerships and network with other relevant actors in the sub region, including other sub regional intergovernmental bodies, to promote sub regional cooperation within a regional framework.

C. United Nations Conference on Trade and Development (UNCTAD)

United Nations Conference on Trade and Development (UNCTAD) aims at integration of developing countries into the world economy. UNCTAD serves as the focal point within United Nation for the integrated treatment of trade and development and the interrelated issues in the areas of finance, technology, investment and sustainable development. Three pillars of UNCTAD’s existing mandate are: a) independent policy analysis; b) consensus building; and c) technical assistance.

The Ministerial Conference, which meets every four years, is UNCTAD’s highest decision making body and sets priorities and guidelines for the organization and provides an opportunity to debate and evolve policy consensus on key economic and development issues. The UNCTAD XII Ministerial Conference Meeting was held in Accra, Ghana from 20-25 April, 2008. The Indian delegation was led by the Commerce & Industry Minister (CIM). The UNCTAD XII Ministerial Conference included the High-level Segment Meeting which discussed the issue of “Trade and Development for Africa’s Prosperity”. This meeting was attended by several Heads of State/ Governments. The theme of UNCTAD XII was “Addressing the Opportunities and Challenges of Globalization for Development”. CIM’s intervention focused largely on India-Africa relationship, status of current Doha Round of trade talks and the relevance of UNCTAD in the present globalized world.

D. Global System of Trade Preferences (GSTP)

The Agreement establishing the Global System of Trade Preferences (GSTP) among Developing countries was signed on April 13, 1988 at Belgrade following the conclusion of the First Round of Negotiations. The GSTP came into being after a long process of negotiations during the Ministerial Meeting of the Group of 77, notably at Mexico City in 1976, Arusha in 1979 and Caracas in 1981. The Ministers of Foreign Affairs of the Group of 77 in New York set up the GSTP Negotiating Committee in 1982. The New Delhi Ministerial meetings, held in July 1985, gave further impetus to the GSTP negotiation process. The Brasilia Ministerial Meeting held in May 1986 launched the First Round of GSTP Negotiations. At the conclusion of the First Round in April 1988 in Belgrade, the GSTP Agreement was signed on April 13, 1988 it entered into force on 19th April 1989. Forty-four countries have ratified the Agreement and have become participants. The GSTP establishes a framework for the exchange of trade concessions among the members of the Group of 77. It lays down rules, principles and procedures for conduct of negotiations and for implementation of the results of the negotiations. The coverage of the GSTP extends to arrangements in the area of tariffs, para-tariff, non-tariff measures, direct trade measures including medium and long-term contracts and sectoral agreements. One of the basic principles of the Agreement is that it is to be negotiated step by step improved upon and extended in successive stages.

The current round of GSTP negotiations, also known as “São Paulo Round” was launched in 2004 with 22 participating countries, on the occasion of the UNCTAD XI Quadrennial Conference in Sao Paulo in Brazil.   At the end of the negotiations, Ministerial Modalities were adopted on 2 December, 2009 wherein Ministers agreed to modalities based on a tariff reduction of at least 20 percent on at least 70 percent of all dutiable tariff-lines.  Members who were in the process of their WTO accession namely, Algeria and Iran were to be given specific flexibilities.

Based on these modalities, intensive negotiations were held in 2010 for finalisation of the schedules of Members. During this period, Cuba, Egypt, India, Indonesia, Korea, Malaysia, Mercosur and Morocco submitted their schedules and bilateral negotiations were held to finalise the schedule. It is significant to note that India unilaterally offered a tariff reduction of 25 percent on 77 percent of its tariff lines for Least Developed Countries (LDCs).

A Ministerial Meeting of the GSTP Negotiating Committee was held on 15 December, 2010 in Foz do Iguacu, Brazil for signing of the “Final Act Embodying the Results of the Sao Paulo Round” and the “Sao Paulo Round Protocol on the Agreement on GSTP”. The Ministers or Heads of the Delegations of Members who have submitted their final schedules namely Cuba, Egypt, India, Indonesia, Korea, Malaysia, Mercosur and Morocco signed the two documents. India was represented by its Ambassador in Brazil.

E. Asia Pacific Trade Agreement (APTA)

The Asia-Pacific Trade Agreement (APTA), previously named the Bangkok Agreement, signed in 1975 as an initiative of ESCAP, is a preferential tariff arrangement that aims at promoting intra-regional trade through exchange of mutually agreed concessions by member countries. APTA has six members namely Bangladesh, China, India, Republic of Korea, Lao People’s Democratic Republic and Sri Lanka. ESCAP functions as the secretariat for the Agreement.

During the Second Session of the Ministerial Council at Goa on October 26, 2007 the following important decisions were taken:

  • To launch the 4th Round of Negotiations
  • To adopt modalities for extension of negotiations in other areas such as non-tariff measures, trade facilitation, services, and investment
  • A common set of Operational Procedures for the Certificate and Verification of the Origin of Goods for APTA was approved and it was decided that the same would be implemented w.e.f. January 1, 2008; and
  • To explore the possibilities of expanding the membership of the Agreement

The 4th Round of Negotiations, the 35th Session of the Standing Committee and the 3rd Session of the Ministerial Council, were held in Seoul Republic of Korea on December 13-14, 2009 and December 15, 2009 respectively. The Indian delegation was led by Shri Jyotiraditya M. Scindia, Hon’ble Minister of State for Commerce and Industry.

Under the 4th Round, the Standing Committee of Participating States has finalised framework agreements in the areas of (i) trade facilitation, (ii) trade in services and (iii) promotion and liberalisation of investments. Offers of further tariff liberalisation in goods have also been exchanged. The Standing Committee is also considering a framework agreement on non-tariff measures and a revision of the APTA rules of origin.

F. Bay of Bengal Initiative on Multi- Sectoral Technical and Economic Cooperation (BIMSTEC)

The initiative to establish Bangladesh-India-Sri Lanka-Thailand Economic Cooperation (BIST-EC) was taken by Thailand in 1994 to explore economic cooperation on a sub regional basis involving contiguous countries of South East & South Asia grouped around the Bay of Bengal. Myanmar was admitted in December, 1997 and the initiative was renamed as BIMST-EC. It may be mentioned that the initiative involves 5 members of SAARC (India, Bangladesh, Bhutan, Nepal & Sri Lanka) and 2 members of ASEAN (Thailand, Myanmar). BIMST-EC is visualized as a ‘bridging link’ between two major regional groupings i.e. ASEAN and SAARC. BIMST-EC is an important element in India’s “Look East” strategy and adds a new dimension to our economic cooperation with South East Asian countries.
A Free Trade Agreement among the member states of BIMSTEC is being negotiated. The BIMSTEC Trade Negotiating Committee (TNC) has had 18 sessions of negotiations. The negotiations are spread over the areas of (i) tariff concessions on trade in goods, (ii) customs cooperation, (iii) services and (iv) investments. At the 18th meeting of the TNC parties reached agreement on the text of the Agreement on Trade in Goods as well as the text of the Rules of Origin and the Operational Certification Procedures. The 19th TNC was held in Bangkok on 21-23 February 2011. Negotiations continue on finalizing the schedules of concessions and on the agreements on services and investment.

G. Kimberley Process

The Kimberley Process (KP) is a joint government, industry and civil society initiative to stem the flow of conflict diamonds (rough diamonds used by rebel movements to finance wars against legitimate governments). Kimberley Process Certification Scheme (KPCS) is an UN mandated (UNGA Resolution 55/56 of 2000 and UNSC Resolution 1459 (2003)) international certification scheme. It requires each participant to impose internal control over production and trade of rough diamonds. Trading in rough diamonds with a non-participant is not allowed. All exports of rough diamonds have to be accompanied by a valid KP Certificate stating that diamonds are conflict free.

India is one of the founding members of KPCS. KPCS currently has 49 member states including the European Community representing 27 member states. Thus, it has a membership of 75 countries. All major diamond producing, trading and polishing centres are members of KP. Civil Society and industry groups also actively participate in the KP. Chairmanship of KP is rotated on annual basis. India was KP Chair in 2008, followed by Namibia in 2009. Democratic Republic of Congo is the KP Chair for the year 2011.

 

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