As part of the ongoing preparations for the next Ministerial Conference of the WTO to be held in Seattle, USA, in November-December 1999, the 4th Inter-Sessional meeting of the WTO General Council was held on 27 January and 2 February 1999 in Geneva. The meeting considered (a) issues under para 9:b of the Geneva Ministerial Declaration (GMD) relating to recommendations concerning possible future work on the basis of the work programme initiated at Singapore; (b) issues under para 9:d of the GMD relating to recommendations agreed to by members concerning their multilateral trade relations; (c) revisiting issues raised at previous inter-sessional meetings; and (d) organisation of future work.

We feel that WTO already has an overloaded agenda and developing countries like India are finding it difficult to fulfil even their existing obligations. Therefore, increasing the load without adequately first addressing all existing asymmetries and imbalances in the various Agreements would be inappropriate. In the context of Singapore issues, developed countries particularly the EU, Japan and Canada have been pressing for an unfettered right to flow of capital and favour a multilateral agreement on investment. On the other hand, countries like India feel that there are no indications that such a Multilateral Agreement on Investment would enhance the total investment flows or would significantly change the existing pattern of investment flows. Similarly, in the area of Trade and Competition the developing countries feel that the work done in the concerned Working Group has only reinforced the view that issues relating to trade and competition are complex and that they would require further in-depth analysis. On transparency in Government Procurement also we feel that it is too early to draw any conclusion towards framing multilateral disciplines in this area and that the Working Group should first fully understand the concerns of the developing countries and address them before considering the need for developing such disciplines.

Some delegations have been attempting to raise certain non-trade issues in particular that of core labour standards. Most of the developing countries feel that the Singapore Ministerial Declaration while dealing with core labour standards, made it abundantly clear that the International Labour Organisation was the competent body to deal with the subject of core labour standards.

The Committee on Regional Trading Arrangements (CRTA) met both informally and formally during this period to continue its examination of the various regional trading arrangements notified to the Committee. There are currently 34 Regional Trading Arrangements (RTAs) whose draft reports are under examination. The para on the conclusions of these reports continues to attract divergent views. While the friends of the Primacy of the Multilateral Trading System (MTS) -- Australia, New Zealand, Korea, Japan, HKC, Pakistan and India -- feel that any conclusions regarding the consistency of these Agreements with the concerned Articles of GATT and GATS (General Agreement on Trade and Services) is not possible since the discussion on the systemic issues is still not complete. These Members accordingly favour an open ended conclusion which brings out these shortcomings in the review process. On the other hand the major players who have entered into the regional arrangements, the NAFTA parties, EC and other European countries feel that the conclusions of the review process cannot be held hostage to the systemic debate. The Chairman is endeavouring to find a compromise by the introduction of a chapeau to the para on conclusions which would bring in these generic concerns.

In the working group on the interaction between trade and competition policy members decided to continue the analytical work and to take up the following issues in its future meetings, namely, (a) the relevance of WTO principles of national treatment, transparency and most favoured nation treatment and competition policy and vice-versa; (b) approaches to promoting cooperation and communication among members including in the field of technical cooperation; (c) the contribution of competition policy to achieving the objectives of the WTO including promotion of international trade; and (d) other issues that members wish to raise relating to trade and competition policy, including anti-competitive practices. It was also agreed that the WTO secretariat would be asked to prepare a short factual paper, setting out the principles referred to above.

The period between January 15, 1999 and February 15, 1999 saw the Dispute Settlement Body (DSB) reconvene twice in formal sessions on January 29 and February 17 respectively. The subject which dominated both meetings was the Banana dispute between the US and the EC. The crux of the question was whether the American request for suspending concessions against the EC under Article 22 of the Dispute Settlement Understanding (DSU) was justified since a multilateral determination of EC

non-compliance had not yet been undertaken under Article 21.5 of the DSU. In the meetings of the DSB, there was an overwhelming opinion not to grant the American request for retaliation since doing so would amount to multilateral endorsement of the US unilateral action. Finally, as a compromise, it was decided that the matter of whether or not the new Banana regime put in place by the EC is WTO consistent or not will be referred to an Arbitrator, in this case the Chairman of the original panel. The decision of the arbitrator should be available on 1st March. Meanwhile, the US and EC are also consulting with a view to reaching mutually satisfactory solution.

The Council for Trade in Services decided on 15 February, 1999 that WTO Financial Services Agreement will enter into force on 1 March, 1999. Also, the 52 governments which have accepted the financial services protocol (including India) decided that time would be given till 15 June 1999 for another 18 governments to accept the protocol.

It will be recalled that the Dispute Settlement Body adopted in November 1998 the Panel and the Appellate Body Reports on the dispute relating to the US prohibition on import of certain shrimp and shrimp products from India, Thailand, Malaysia and Pakistan. As per the Dispute Settlement Procedures of the WTO, India and the other countries agreed with the United States on 21 January, 1999 that the latter would have time till December 1999 to bring itself into conformity with WTO Agreements.

-- From the Permanent Mission of India,

(PMI)/Geneva

India, Pakistan to coordinate position on WTO :

• India and Pakistan will undertake consultations on WTO related issues with a view to coordinating their respective positions.

Advisory Committee on International Trade set up :

• Government have decided to set up a 18-member Advisory Committee on International Trade under the chairmanship of the Commerce Minister, to, inter alia, advise the government on the formulation of international trade policy with specific reference to discussions and negotiations in the WTO. (The first meeting of the Advisory Committee was held in New Delhi on 29 January, 1999).

National Bio-resources Board proposed :

Among the 18 hot spots of bio-diversity in the world, two happen to be in India, in the Eastern Himalayas and the Western Ghats respectively. To coordinate policies, research, documentation and legal protection of the country's rights in this important area, a National Bio-resources Board (NBB) will be set up under the chairmanship of the Minister of Science and Technology.

US for farm trade at centre of new round :

• The US has called for radical liberalisation of international trade in agriculture to be made a centre piece of a comprehensive new round of world trade negotiations, which seems increasingly likely to be launched at the end of this year. Mr.Al Gore, US Vice President said the US wanted broad and deep reductions in agricultural tariffs, which averaged 40 per cent, and the outright elimination of farm export subsidies. He made clear that these demands were directed primarily at the European Union, where farm subsidies cost the average family $1,500 per year.

- Meeting of the world business leaders at Davos, as reported in Financial Times of London, 1 February, 1999.

The General Agreement on Tariffs and Trade (GATT) lays down the principles to be followed by the member countries for imposition of anti- dumping duties, countervailing duties and safeguard measures. Article VI of GATT 1994* allows members to apply anti-dumping measures. Such measures can be imposed by WTO member countries on imports of a product with an export price below its normal value (usually the comparable price of the product in the domestic market of the exporting country) if such dumped imports cause injury to a domestic industry in the territory of the importing members. Pursuant to GATT 1994, detailed guidelines have been prescribed under the specific agreements which have also been incorporated in the national legislations of the member countries of the WTO. Indian laws were amended with effect from 1-1-95 to bring them in line with the provisions of the respective GATT agreements. While the power for recommending anti-dumping duties and countervailing duties is vested in the Designated Authority in the Ministry of Commerce, the power to recommend safeguards is vested in he Authority in the Ministry of Finance.

The anti-dumping rules in India are hence based on the Agreement on implementation of Article VI of GATT 1994. The rules clearly require prima-facie evidence of dumping, injury and a causal link to be available before initiation of investigations. Investigations are normally initiated on the written request by or on behalf of the domestic industry and on the basis of a fully documented petition to sustain the charge of dumping and injury. The procedures and due processes are carried within certain prescribed time limits. On the basis of investigations and information provided by the domestic industry and the exporters, the authority takes a view on the existence of dumping, injury and causal link to levy provisional and/or final duties.

The Directorate General of Anti-Dumping and Allied Duties in the Ministry of Commerce was inaugurated on the 13th April, 1998 with a view to expediting the investigations of dumping as well as subsidy cases. While the existing system, prior to the creation of the Directorate, had been able to effectively deal with the applications filed, it was felt that the creation of a Directorate General would expedite the process. The last four years have seen an increase in the number of applications filed by the domestic industry. The increase in the number of applications could be attributed to the fact that in the last four years, along with the removal of quantitative restrictions in a large number of products, there has been a considerable decline in customs duties.

The Anti-Dumping Directorate is headed by the Designated Authority, who is a Quasi-Judicial Authority notified under the Customs Act. The Designated Authority is assisted by eight Investigating Officers, which includes technical personnel, such as Cost Accountants. Since 1994 till date, imposition of final duties or definitive anti-dumping duties has been recommended in as many as 29 cases. In fact, between 1998 and till 22/1/99, the Designated Authority has recommended imposition of final duties in 14 cases and reviewed two cases. Provisional duties have been recommended in five cases and action has been initiated for anti-dumping investigation in 11 cases and review of four cases. Detailed position is given in the attached tables overleaf.

It is not true that the time taken in completing anti-dumping cases in India is unduly high in comparison with the time taken in countries like the US or EU. Under the anti-dumping rules, once investigations are initiated, the Designated Authority should submit its findings to the government within one year from the date of initiation of the proceedings. In exceptional circumstances, the period of one year may be extended by a further 6 months. Certain procedures have to be followed so as to make the whole exercise transparent. The normal time taken to impose provisional duties in India is around 7 months, which compares favourably with the time taken in Europe. The Anti-dumping Directorate under the Ministry of Commerce has now also been strengthened and the effort is to further reduce the time taken.

* "GATT 1994" is the amended and updated version of "GATT 1947" and is an integral part of the WTO Agreement. GATT 1994 continues to provide the key disciplines governing international trade in goods, even though GATT 1947 ceased to exist in 1995 being replaced by the WTO.

The 9th Summit of the Heads of State and Governments of the Group of Fifteen (G-15), held at Montego Bay, Jamaica on 10-12 February 1999, underlined the soldarity and commitment of G-15 member countries to promoting growth, employment and general welfare. In a Joint Communique issued at the end of the Summit, the participants recognised that only through a community of interests between the developed and developning countries could this be achieved so as to shape a just and equitable global economy. The Communique underlined a common perspective among member countries on WTO-related issues.

Excerpts relating to WTO from the G-15 Joint Communique, issued at Montego Bay, Jamaica on 12th February 1999 :

"We reaffirm the importance of a transparent, fair and equitable rule-based multilateral trading system under the WTO, effectively integrating all countries and leading to the realisation of the objectives of raising standards of living, ensuring full employment and steadily growing volume of real income and effective demand, and expanding trade in goods and services. To this end, we reiterate again, that unilateral measures with extra-territorial effects are incompatible with the multilateral trading system and threaten to undermine it.

We agree to continue our participation in the WTO in the implementation of its current work programme and the ongoing discussions and consultations leading up to the Third MinisteriaI Conference later this year, when we will join in deciding on its future work programme, including further liberalisation sufficiently broad-based to respond to the concerns and interests of developing countries. We will consult with our trading partners in the WTO, as the preparatory process unfolds, keeping the following principles in mind, inter-alia:

— the legitimacy of the development objectives of developing countries and consequently, the need to preserve economic spaces within the multilateral trading system to implement market-oriented development policies, as well as the need for the full implementation of the special and differential provisions in all spheres provided for in the Agreements, as deliberated at the recent G-15 Symposium on Special and Differential Treatment for Developing Countries in the Uruguay Round Agreements;

— the importance of redressing the difficulties faced by developing countries in the implementation of the WTO Agreements to enable them to participate more effectively in the multilateral trading system;

— the lack of implementation or non-fulfilment of obligations of the Uruguay Round Agreements by developed countries cannot be used by them as bargaining instruments for obtaining further concessions from developing countries.

Labour standards shall continue to be set and dealt with within the ILO. We reaffirm our opposition to its inclusion in the WTO work programme. The label "trade-related" shall not be used as pretext for the establishment of standards in one institution and their enforcement in the WTO or any other institutional framework.

The relationship between trade and environment is an important and complex issue that requires further anaIysis. We support the ongoing analytical work on clarifying the relationship between trade and environment in several institutions. This work should continue. We oppose the use of trade measures for achieving environmental objectives and vice-versa, and disguised protectionist measures by developed countries on the grounds of "multifunctionality" in trade sectors.

We welcome India’s offer to host a meeting of G-15 countries, at an appropriate level, in preparation for the Third WTO Ministerial Conference. We welcome the further proposals taken to strengthen cooperation among developing countries, particularly the projects being implemented among G-15 countries".

Since the coming into force of the SAPTA (SAARC Preferential Trade Arrangement) Agreement in December 1995, three Rounds of Negotiations have been concluded. The negotiations are aimed at gradual progress in elimination of tariffs with the objective of reaching SAFTA (SAARC Free Trade Area) as soon as possible. The SAARC Summit held in July 1998 in Colombo affirmed the commitment to conclude the Agreement for SAFTA by 2001 AD.

In his speech in the July 1998 Summit of SAARC, the Prime Minister, Atal Behari Vajpayee had indicated that India would be willing to consider entering into bilateral free trade agreements with SAARC countries which were interested in moving faster towards trade liberalisation. There was a quick response from Sri Lanka to this offer and the negotiations led to the signing of the Free Trade Agreement between India and Sri Lanka on 28th December 1998.

The Agreement provides for exchange of tariff concessions with an agreed phase out schedule of three years for India and eight years for Sri Lanka. The two sides will maintain Negative Lists of items on which no tariff concessions will be exchanged for the present. The Agreement also provides for 100% tariff concessions upfront on some items by both sides.

Separate Rules of Origin have been negotiated and these form an integral part of the Agreement. The domestic value-addition requirement has been kept at 35% with the provision that in case the raw material is sourced from each other’s country, the domestic value addition requirement will be 25% within the overall limit of 35%. The goods imported must satisfy the criterion of ‘Substantial Transformation’ .

A Joint Committee has been established at the Ministerial level to review the implementation of the Agreement. The Agreement also provides for establishment of a Working Group of Customs to facilitate cooperation in custom matters. Disputes of a commercial nature are to be settled through designated business chambers and by an Arbitral Tribunal.

The Agreement is proposed to be notified to the WTO under the Enabling Clause. The lists of items on which concessions are to be exchanged as well as the Negative Lists are to be exchanged within 60 days of the signing of the Agreement. The Agreement shall enter into force 30 days after the Contracting Parties have notified to each other regarding the completion of the respective constitutional requirements.

"The expectations raised by the Uruguay Round have unfortunately not been realised. Meaningful market access is still to accrue in areas like textiles or agriculture, to name only two areas. We, however, see a resurgence in protectionism in the form of anti-dumping, safeguards and other actions. There are also some unilateral trade measures which are hurting us. For the services negotiations our objective should be to achieve substantial liberalisation in sectors of interest to developing countries as also regarding movement of natural persons. All these and other issues could also be looked at in the preparatory meeting that we have offered to host before the Third WTO Ministerial meeting".

"The Marrakesh agreements by themselves are one sided. Because of the superior economic might of the developed world, the developed world through these agreements have managed to have the right to retain quotas for textiles and clothing items and to maintain huge subsidies for agricultural items thus effectively shutting out competition and fair market access to the developing countries in these two sectors in which developing countries could be somewhat competitive. Because of today’s tough competitive situation, if further obstructions are placed on world trade, the developing world will lose whatever little confidence they have in the multilateral trading system, especially in the equality of the system. There is, therefore, great responsibility on part of the developed world to ensure that fairness and transparency of multilateral trading system is not sullied and jeopardised".

 (Commerce Minister Ramakrishna Hegde, at the 6th India-Australia Joint

"Leaving aside the magnitude of the Emr problem, the question still remains whether it is better to go in for the product patent system straight away as we are required to accept product patent applications from 1 January 1995 and grant patents on that basis. Thailand and China preferred this option and amended their laws in 1992 itself to allow product patents in food, pharmaceutical and chemical sectors. (China also allowed patenting of micro-organisms). The Latin American countries also have followed this route. Since they had amended their laws in this manner prior to the coming into force of the TRIPs Agreement (i.e 1 January 1995), they do not have to apply Articles 70.8 and 70.9. This does not mean that they do not give exclusive marketing rights to patent owners. The patent rights would automatically include EMR and all the other rights associated with a product patent".

 (Excerpts from the discussion paper by A.V.Ganesan on the implications of the Patents (Amendment)

"We should renegotiate the tariff-bindings and the use of Special Safeguards, and push aggressively for the liberalisation of agricultural trade. Imports, if at all, can be handled through anti-dumping duties, countervailing duties (for subsidised exports), and safeguards... that is our optimal strategy."

* (Source : WTO as on 26/02/99)