The World Trade Organization (WTO)

Chapter-1

Introduction:

The World Trade Organization (WTO) is an organization that intends to supervise and liberalize international trade. The World Trade Organization (WTO) is the only global international organization whichdealing with the rules of trade between nations. It has 157 member states. At its heart are the WTO agreements, negotiated and signed by the majority of the world’s trading nations and ratified in their parliaments. The goal is to help producers of goods and services, exporters, and importers conduct their business. Among the various functions of the WTO, (1) it manages the implementation, administration and operation of the covered agreements. (2) It provides a forum for negotiations and for settling disputes is regarded by analysts as the most important. It is the WTO's duty to review and circulate the national trade policies, and to ensure the coherence and transparency of trade policies through surveillance in global economic policy-making. The WTO cooperates closely with the twoother components of the Bretton Woods system, the IMF and the World Bank.

The organization officially commenced on January 1, 1995 under the Marrakech Agreement, replacing the General Agreement on Tariffs and Trade (GATT), which commenced in 1948. The organization deals with regulation of trade between participating countries; it provides a framework for negotiating and formalizing trade agreements, and a dispute resolution process aimed at enforcing participants' adherence to WTO agreements which are signed by representatives of member governments and ratified by their parliaments. Most of the issues thatthe WTO focuses on derive from previous trade negotiations, especiallyfrom the Uruguay Round (1986–1994).

The World Trade Organization (WTO) is the most powerful legislative and judicial body in the world. By promoting the free trade agenda of multinational corporations above the interests of local communities,

working families, and the environment, the WTO has systematically undermined democracy around the world.

Members: The WTO has 157 members and 26 observers. In addition to states, the European Union is also a member. WTO members do not have to be full sovereign nation-members. Instead, they must be a customs territory with full autonomy in the conduct of their external commercial relations. Iran is the biggest economy outside the WTO. With the exception of the Holy See, observers must start accession negotiations within five years of becoming observers.

Some international intergovernmental organizations are also granted observer status to WTO bodies. 14 states and two territories so far have no official interaction with the WTO.

Functions: WTO play very important role in international trade and commerce beside it run various functions. Among the various functions of the WTO, these are regarded by analysts as the most important:

• It oversees the implementation, administration and operation of the covered agreements.

• It provides a forum for negotiations and for settling disputes.

Additionally, it is the WTO's duty to review and propagate the national trade policies, and to ensure the coherence and transparency of trade policies through surveillance in global economic policy-making. Another priority of the WTO is the assistance of developing, least-developed and low-income countries in transition to adjust to WTO rules and disciplines through technical cooperation and training.

The WTO is also a center of economic research and analysis: regular assessments of the global trade picture in its annual publications andresearch reports on specific topics are produced by the organization. Finally, the WTO cooperates closely with the two other components of the Bretton Woods system, the IMF and the World Bank.

WTO has some Principles of the trading system. The WTO establishes a framework for trade policies; it does not define or specify outcomes. That is, it is concerned with setting the rules of the trade policy games. Five principles are of particular importance in understanding both the pre-1994 GATT and the WTO:

1. Non-Discrimination: It has two major components: the most favorednation (MFN) rule, and the national treatment policy. Both are embedded in the main WTO rules on goods, services, and intellectual property, but their precise scope and nature differ across these areas. The MFN rule requires that a WTO member must apply the same conditions on all trade with other WTO members, i.e. a WTO member has to grant the most favorable conditions under which it allows trade in a certain product type to all other WTO members. "Grant someone a special favor and you have to do the same for all other WTO members." National treatment means that imported goods should be treated no lessfavorably than domestically produced goods (at least after the foreigngoods have entered the market) and was introduced to tackle non-tariffbarriers to trade (technical standards, security standards et al. discriminating against imported goods).

2. Reciprocity: It reflects both a desire to limit the scope of free-riding that may arise because of the MFN rule, and a desire to obtain better access to foreign markets. A related point is that for anation to negotiate, it is necessary that the gain from doing so be greater than the gain available from unilateral liberalization; reciprocal concessions intend to ensure that such gains will materialize.

3. Binding and enforceable commitments: The tariff commitments made by WTO members in a multilateral trade negotiation and on accession are enumerated in a schedule (list) of concessions. These schedules establish "ceiling bindings": a country can change its bindings, but only after negotiating with its trading partners, which could mean compensating them for loss of trade. If satisfaction is not obtained, the complaining country may invoke the WTO dispute settlement procedures.

4. Transparency: The WTO members are required to publish their traderegulations, to maintain institutions allowing for the review of administrative decisions affecting trade, to respond to requests for information by other members, and to notify changes in trade policies to the WTO. These internal transparency requirements are supplemented and facilitated by periodic country-specific reports (trade policy reviews) through the Trade Policy Review Mechanism (TPRM). The WTO system tries also to improve predictability and stability, discouraging the use of quotas and other measures used to set limits on quantities of imports.

5. Safety valves: In specific circumstances, governments are able torestrict trade. There are three types of provision in this direction:

• Articles allowing for the use of trade measures to attain non-economic objectives;

• Articles aimed at ensuring "fair competition"; and

• Provisions permitting intervention in trade for economic reasons.

Exceptions to the MFN principle also allow for preferential treatment of developing countries, regional free trade areas and customs unions.

Structure: Every international organization has its own structure. Likely WTO has a strong organizational structure. The General Council has multiple bodies which oversee committees in different areas, re the following:

Council for Trade in Goods- There is 11 committees under the jurisdiction of the Goods Council each with a specific task. All members of the WTO participate in the committees. The Textiles Monitoring Body is separate from the other committees but still under the jurisdiction of Goods Council. The body has its own chairman and only 10 members. The body also has several groups relating to textiles.

Council for Trade-Related Aspects of Intellectual Property Rights-Information on intellectual property in the WTO, news and official records of the activities of the TRIPS Council, and details of the WTO's work with other international organizations in the field.

Council for Trade in Services-the Council for Trade in Services operates under the guidance of the General Council and is responsible for overseeing the functioning of the General Agreement on Trade in Services (GATS). It is open to all WTO members, and can create subsidiary bodies as required.

Trade Negotiations Committee-The Trade Negotiations Committee (TNC) isthe committee that deals with the current trade talks round. The chairis WTO's director-general. As of April 2012 the committee was tasked with the Doha Development Round.

The Service Council has three subsidiary bodies: financial services, domestic regulations, GATS rules and specific commitments. The Generalcouncil has several different committees, working groups, and working parties. There are committees on the following: Trade and Environment;Trade and Development (Subcommittee on Least-Developed Countries); Regional Trade Agreements; Balance of Payments Restrictions; and Budget, Finance and Administration. There are working parties on the following: Accession. There are working groups on the following: Trade, debt and finance; and Trade and technology transfer.

The WTO describes itself as "a rules-based, member-driven organization. All decisions are made by the member governments, and the rules are the outcome of negotiations among members”. The WTO Agreement foresees votes where consensus cannot be reached, but the practice of consensus dominates the process of decision-making.

In 1994, the WTO members agreed on the Understanding on Rules and Procedures Governing the Settlement of Disputes (DSU) annexed to the "Final Act" signed in Marrakesh in 1994.Dispute settlement is regardedby the WTO as the central pillar of the multilateral trading system, and as a "unique contribution to the stability of the global economy".WTO members have agreed that, if they believe fellow-members are violating trade rules, they will use the multilateral system of settling disputes instead of taking action unilaterally.

Chapter-2

Literature review:

It is agreed that opening for trade may not increase welfare. Trade can increase the depletion of the resource, which in the long run could lead to lower welfare. Also, institutions can affect welfare through their effect on trade. If institutions are not functioning correctly it is likely that trade will reduce welfare. Property rights, corruption and resource management regimes are deeply studied within the role of trade. Few empirical works try to address the magnitudes of the effects in resource extraction but certainly more empirical research in this direction is needed.*

Researchers are still discussing whether trade sanctions can be used for various purposes. Some argue that this can help global economic efforts but other say that this can generate perverse incentives by reducing the value of the stock of the resource, which could lead to depletion. Certainly, the amount of conservational clauses has increased significantly in trade agreements.

After many failed Ministerial meetings and nearly ten years of negotiations, the Doha Round of WTO expansion is at a crossroads. Increasingly, developed countries have tried to push aside agreements to negotiate on key developing country issues intended to correct the imbalances within the existing WTO, which formed the basis of the development mandate of Doha. Instead, rich-country governments appear to be re-packaging the old liberalization and market access demands oftheir corporate interests as so-called “21st century” issues. This Ministerial will determine the future path of WTO negotiations, and the global Our World Is Not for Sale (OWINFS) network is calling for afundamental transformation. November 30 marked the 12th anniversary ofthe massive protests against the World Trade Organization (WTO) in Seattle, Washington, which succeeded in preventing the launch of the so-called “Millennium Round” of WTO expansion negotiations. Developingcountries, led by African ministers and buoyed by massive street protests, opposed the launching of a new round of liberalization, focusing instead on their demands to fix the problems left over from the last round. Two years later, after receiving promises from rich countries that the next round would focus on development; these same countries acquiesced to a new “Doha Round.”

Throughout the last ten years, negotiations have collapsed several times, but have always been re-started. Unfortunately, the developmentmandate has been all but abandoned, with negotiations shifting to focus on the desires of corporations in rich countries, in services, agriculture, and manufactured goods, to achieve greater access to markets in developing countries. Nevertheless, they came perilously close to concluding in the summer of 2008. Since then, the emergence of the economic crises has resulted in a global re-think of the neoliberal economic model by citizens around the world, with resultingdomestic pressure against governments to further entrench such a calamitous economic paradigm.*

In many countries – such as Brazil, India, South Africa, and China – leaders are no longer willing to roll over to U.S. and EU demands, as their geopolitical power has grown along with their economies. A key demand of the United States, roiling under the surface of the negotiations, is that these countries should no longer be treated as developing countries – although they have far more poor people than all of the Least Developed Countries (LDCs) combined. The Obama administration decided that since it could not get much of a stimulus package through the Republican-controlled House, the U.S. would focus on increasing exports to these “emerging markets” as a way to boost U.S. economic recovery. But since many of these countries did enact stimulus programs adequate to the size of their economies, and were thus faster on the road to recovery after the crisis than the United States, they are understandably reluctant to bail out the U.S. economyat the expense of their own jobs and development potential. (Unfortunately, past experience with WTO and bilateral trade agreements demonstrates that they are net job losers, thus exposing the jobs claim as a cover-up for pushing the trade agenda of corporatedonors.)

Thus, no one expects the Doha Round will be concluded when negotiatorsmeet December 15-17 in Geneva for the 8th Ministerial Conference of the WTO. This surely is a victory of monumental scale for the trade unions, farmers, consumer groups, and development advocates who have worked against the conclusion of the Round for a decade. Although the WTO has receded from the headlines, these groups – organized together

in the Our World Is Not for Sale (OWINFS) global network – have maintained a focus on increasing accountability of their respective governments to their democratic demands, and their victory should be celebrated by the 99% who benefit from avoiding a potential de-regulatory and economic catastrophe.

Given the current Doha stalemate, the keystones of the Round – Services, Agriculture, and trade in goods (called Non-Agricultural Market Access, or NAMA, in WTO parlance) are on hold for now.*

Criticisms of WTO

The WTO is committed to improving free trade amongst its member countries. However, its role has been very controversial - creating polarized views.

These are some of the criticisms of the WTO

1. Free Trade benefits developed countries more than developing countries- It is argued, developing countries need some trade protection to be able to develop new industries. The WTO has sought tomaintain the same rules for developing countries preventing them from protecting new industries. This is known as the infant industry argument.

2. Diversification. Arguably developing countries that specialize inprimary products (agricultural products) need to diversify into other sectors. To diversify they may need some tariff protection, at least in the short term. Many of the existing industrialized nations used tariff protection when they were developing. Therefore, the WTO has been criticized for being unfair and ignoring the needs of developing countries.

3. Environment. Free trade has often ignored environmental considerations. Free trade has enabled imports to be made from countries with the least environmental protection. Many criticize the WTO’s philosophy that the most important economic objective is the

maximization of GDP. In an era of global warming and potential environmental disaster, increasing GDP may be the least important. Arguably the WTO should do more to promote environmental considerations.

4. Free trade ignores cultural and social factors. Arguably a reasonable argument for restricting free trade is that it enables countries to maintain cultural diversity. Some criticize the WTO for enabling the domination of multinational companies which reduce cultural diversity and tend to swamp local industries and firms.

The WTO is criticized for being undemocratic. It is argued that its structure enables the richer countries to win what they desire; arguably they benefit the most.*

Criticism of the WTO fall into two broad categories:

1. Criticism of WTO aims - The WTO is very strongly committed to trade liberalization which means a movement towards free trade both inthe reduction and elimination of tariffs and a removal of non-tariff barriers such as quotas. In fact the first four of the WTO's principles are all explicitly or implicitly about this. This position (pro free trade) is firmly grounded in main stream trade economics - particularly comparative advantage theory - which implies that free trade is an optimal system. Importantly it is even good for poor undeveloped countries, hence the WTO's fifth principle about development.

This, however, is controversial. There are some, particularly in development studies and development economics, who are doubtful that free trade and deregulation are in fact good for developing countries or the best development paradigm. In fact it is often felt that free trade is actually bad in a variety of ways for poorer countries and beneficial mainly to richer ones. If this is so then the WTO's philosophy has serious problems (its own principles are mutually contradictory) and the WTO is at its very basic level biased towards the rich countries.

The other main criticism of the WTO's philosophy comes from environmental circles. It is felt that the free trade/deregulatory

paradigm are detrimental to the environmental protection and preservation. In fact some environmentalists would argue that the ideaof the ultimate economic good being material improvement (GDP growth) which is implicit in the WTO's philosophy is fundamentally misguided in that it neglects and fails to take into account the (negative) environmental effects of pursuit of this economic goal (global warming).

2. Criticism of WTO practices - Criticism of WTO practices and structure focus on the democratic or undemocratic nature of the organization. The points tend to separate into two related arguments. First that the structure and personnel of the WTO is undemocratic in various ways that lead to developed richer countries winning out over less developed poorer countries. Second that while not actively biasedor undemocratic the WTO facilitates and permits powerful groups to dominate the others (these groups being either the richer developed countries or TNCs-transnational corporations).

Apart from this, the other main criticism of WTO practices would be that it does not implement its philosophy evenhandedly; in particular free trade arguments are used to open up the markets of third world countries while the developed world retains all kind of protectionist measures. In this view the WTO has just been a method of institutionalizing the accumulated advantage of developed countries. *

The first step is to talk; essentially, the WTO is a place where member governments go, to try to sort out the trade problems they facewith each other. At its heart are the WTO agreements, negotiated and signed by the bulk of the world’s trading nations.

But the WTO is not just about liberalizing trade, and in some circumstances its rules support maintaining trade barriers — for example to protect consumers, prevent the spread of disease or protectthe environment.*

The WTO describes itself as a rules-based, member-driven organization — all decisions are made by the member governments, and the rules are the outcome of negotiations among members. The WTO Agreement foresees

votes where consensus cannot be reached, but the practice of consensusdominates the process of decision-making.

Richard Harold Steinberg (2002) argues that although the WTO's consensus governance model provides law-based initial bargaining, trading rounds close through power-based bargaining favoring Europe and the U.S., and may not lead to Pareto improvement.

The World Trade Organization (WTO) was created January 1, 1995, and ithas been a source of controversy ever since. The birth of the WTO was more of a continuation than a truly new creation. Its predecessor, theGeneral Agreement on Tariffs and Trade (GATT), shared its lineage withBretton Woods-inspired bodies like the International Monetary Fund (IMF) and the World Bank. The idea behind these organizations is that impartial politicians could create a more efficient global economy than the chaotic interaction of free market forces.

In theory, members of the WTO gain access to each other's markets on even terms. This means that no two nations can have sweetheart trade pacts without granting the same terms to every other nation, or at least every other nation in the WTO. However, some critics argue that in practice, the WTO has become a way to force politics into trade causing long-term problems. One problem that many WTO critics point tois apparent concessions the organization has made to its charters. Themost striking example is the system of tariff brokering that takes place through an organization designed to reduce barriers to trade. The WTO rules allow a nation to protect certain industries if the removal of tariffs would have undesirable side effects, which include the loss of vital domestic industries. Food production is one of the most common, but steel production, auto production and many others canbe added at the discretion of the nation. More worrisome is a push by developed nations to have labor effects – job loss, reduced hours or wages – added to the list of reasons for justified tariffs.

There is a dark side to the WTO. For years, critics protested that theWTO was a way for nations to engage in trade, wars and raids on underdeveloped nations, and considered it an unnecessary and expensivelayer to the natural market forces of international trade. While it's debatable whether the organization is useful economically, the WTO is

very important politically. Subsequently, governments - with or without citizen support - will likely continue to support the organization.

In the end, the countries using the WTO to protect their own industries may only hurt themselves if it causes their own industries to become more inefficient without true international competition. According to economic theory, a lack of competition takes away the incentives to invest in new technology, keep costs under control and continually improve production because the domestic company will simply be able to inflate prices to just under the tariff-set price offoreign goods. In the meantime, the international competitors will only get leaner, hungrier and better at succeeding in spite of barriers. If this cycle continues, the international competitors couldemerge as the stronger companies, and consumers may choose their products on the basis of quality, perhaps even paying a premium over domestic goods.

Many critics of the WTO also contend that the organization has struggled with one of the basic goals it set for itself: transparency.Even in one of its main functions - settling disputes through negotiation - the WTO is infamously opaque when it comes to revealing how settlements were reached. Whether settling disputes or negotiatingnew trade relations, it's rarely clear which nations are in on the decision-making processes. The WTO has been attacked from both the left and right because of this reticence.

The left sees the WTO as the henchman of a shadowy clique of stronger nations forcing agreements that allow them to exploit less developed nations. This clique uses the WTO to crack open developing nations as markets to sell, while protecting their own markets against weaker nations' products. This view has its points, as the most economically powerful nations seem to set the WTO agenda and were the first to passanti-dumping acts to protect favored domestic industries while also opposing similar actions by less powerful nations. Now we would like to add some critical opinion about WTO.

The policies of the WTO impact all aspects of society and the planet, but it is not a democratic, transparent institution. The WTO rules are

written by and for corporations with inside access to the negotiations. For example, the US Trade Representative gets heavy input for negotiations from 17 “Industry Sector Advisory Committees.” Citizen input by consumer, environmental, human rights and labor organizations is consistently ignored. Even simple requests for information are denied, and the proceedings are held in secret. The WTO is fundamentally undemocratic.

The WTO would like you to believe that creating a world of “free trade” will promote global understanding and peace. On the contrary, the domination of international trade by rich countries for the benefit of their individual interests fuels anger and resentment that make us less safe. To build real global security, we need international agreements that respect people’s rights to democracy andtrade systems that promote global justice. The WTO will not make us safer.

WTO rules put the “rights” of corporations to profit over human and labor rights. The WTO encourages a ‘race to the bottom’ in wages by pitting workers against each other rather than promoting internationally recognized labor standards. The WTO has ruled that it is illegal for a government to ban a product based on the way it is produced, such as with child labor. It has also ruled that governmentscannot take into account “noncommercial values” such as human rights, or the behavior of companies that do business with vicious dictatorships such as Burma when making purchasing decisions. The WTO tramples labor and human rights.

The WTO is being used by corporations to dismantle hard-won local and national environmental protections, which are attacked as “barriers totrade.” The very first WTO panel ruled that a provision of the US Clean Air Act, requiring both domestic and foreign producers alike to produce cleaner gasoline, was illegal. The WTO declared illegal a provision of the Endangered Species Act that requires shrimp sold in the US to be caught with an inexpensive device allowing endangered seaturtles to escape. The WTO is attempting to deregulate industries including logging, fishing, water utilities, and energy distribution,

which will lead to further exploitation of these natural resources. The WTO is destroying the environment.

The WTO’s fierce defense of ‘Trade Related Intellectual Property’ rights (TRIPs)—patents, copyrights and trademarks—comes at the expenseof health and human lives. The WTO has protected for pharmaceutical companies’ ‘right to profit’ against governments seeking to protect their people’s health by providing lifesaving medicines in countries in areas like sub-Saharan Africa, where thousands die every day from HIV/AIDS. Developing countries won an important victory in 2001 when they affirmed the right to produce generic drugs (or import them if they lacked production capacity), so that they could provide essentiallifesaving medicines to their populations less expensively. Unfortunately, in September 2003, many new conditions were agreed to that will make it more difficult for countries to produce those drugs.Once again, the WTO demonstrates that it favors corporate profit over saving human lives. The WTO is killing People.

Free trade is not working for the majority of the world. During the most recent period of rapid growth in global trade and investment (1960 to 1998) inequality worsened both internationally and within countries. The UN Development Program reports that the richest 20 percent of the world’s population consume 86 percent of the world’s resources while the poorest 80 percent consume just 14 percent. WTO rules have hastened these trends by opening up countries to foreign investment and thereby making it easier for production to go where thelabor is cheapest and most easily exploited and environmental costs are low. The WTO is increasing inequality.

Farmers produce enough food in the world to feed everyone – yet because of corporate control of food distribution, as many as 800 million people worldwide suffer from chronic malnutrition. According to the Universal Declaration of Human Rights, food is a human right. In developing countries, as many as four out of every five people maketheir living from the land. But the leading principle in the WTO’s Agreement on Agriculture is that market forces should control agricultural policies-rather than a national commitment to guarantee

food security and maintain decent family farmer incomes. WTO policies have allowed dumping of heavily subsidized industrially produced food into poor countries, undermining local production and increasing hunger. The WTO is increasing hunger.

The given opinions are the top reasons to oppose the WTO.*

Participants in a recent radio discussion on the WTO were full of ideas. One of them finally interjected: The WTO is a table. People sitround the table and negotiate. The system operated by the WTO. Most nations — including almost all the main trading nations are members ofthe system. But some are not, so “multilateral” is used to describe the system instead of “global” or “world”. In WTO affairs, “multilateral” also contrasts with actions taken regionally or by other smaller groups of countries.*

The WTO agreements are lengthy and complex because they are legal texts covering a wide range of activities. But a number of simple, fundamental principles run throughout all of these documents. These principles are the foundation of the multilateral trading system.

Chapter-3

Case studies:

(1)Afghanistan’s accession to the World Trade Organization (WTO):

Currently there are 157 member countries in the WTO and in the nearestfuture this number will increase. This means that almost every nation aspiring to create a modern and effective economy and to participate in the world trade equally strives for WTO membership. Afghanistan is not an exception. Islamic Republic of Afghanistan renewed request for WTO membership on 21 November 2004. Shortly thereafter, a WTO Working Party was established at the General Council meeting on 13 December 2004, and Afghanistan was granted an observer status. Currently, Afghanistan would like to apply for permanent membership to the WTO. Towards this goal, the Memorandum on Afghanistan’s Foreign Trade Regime has been drafted. Afghanistan has a relatively open trade regime, and yet some trade policy and legal amendments are needed to bring it into compliance with WTO standards. However, it does need a greater degree of implementing the trade laws, and increasing political, administrative capacity. Accession to the World Trade Organization requires a wide-range of commitments from both governmentand private sector in the mastery and implementation of a wide range of technical standards and procedures.

Formal WTO requirements include:

• Conformity of national legislation with obligations under all WTOagreements;

• Negotiating schedules on market access concessions for industrialand agricultural goods;

• Negotiating schedules on agricultural support;

• Negotiating schedules on specific commitments for market access and national treatment for services;

• Implementing the notifications and transparency requirements under WTO agreements.

Accession to the WTO will help consolidate commercial and economic reform and the rule of law in Afghanistan. The WTO membership offers arange of benefits. Enjoying these benefits is, pragmatically, the goal

of joining the WTO. By acceding to the WTO Afghanistan pursues the following goals:

• Improvement of existing conditions for access of Afghanistan’s products to foreign markets and provision of non-discriminatory treatment for Afghan exporters;

• Access to the international dispute settlement mechanism;

• Creation of a more favorable climate for foreign investments as aresult of legal system change in accordance with the WTO standards;

• Expansion of opportunities for Afghan investors in the WTO member-countries

• Creation of conditions for growth of domestic production, qualityand competitiveness as a result of increased flows of foreign goods, services and investments to the Afghanistan’s market;

• Participation in negotiations of the international trade agreements taking into account national interests

• Improvement of the image of Afghanistan as a competent international trade participant.

The objective of the accession negotiations is to achieve the most favorable conditions for Afghanistan joining the WTO, the best balancepossible between the benefits of accession and the concessions in forms of tariffs reduction and domestic market opening. The balance ofrights and obligations of Afghanistan during its accession to the WTO should contribute to its economic growth and fair trade - not vice versa.

(2) US and Caribbean Banana Farmers:

The US successfully challenged an EU rule protecting the banana exports of their former colonies in the Caribbean.

The European Union has for many years provided preferential tariffs toformer colonies in Africa, the Caribbean and the Pacific. The so called Lomé Convention favored some of the poorest countries in the world, the Caribbean Island producers, which produce just 3 percent of

the world's bananas and hold only 8 percent of the EU market. The Loméagreement favored these countries by providing them with a 7 percent guaranteed market access license at a lower tariff rate. The convention was designed to benefit poor farmers in countries dependenton banana exports. In many Caribbean countries, it is small farmers rather than large corporations which harvest bananas for export, ekingout a tiny profit. These nations are heavily dependent on banana exports, which account for upward of 50 percent--and sometimes as highas 91 percent--of export earnings. In order to support their former colonies, the EU created a two-tier tariff quota--essentially guaranteeing that Caribbean bananas would be cheaper than their competitors in the European market.

In 1996, the United States challenged the EU, claiming the Lomé bananaregime was WTO-illegal. The US itself does not produce a single bananafor trade, but it acted on behalf of Chiquita Brands International, a massive and powerful company that controls half of the EU banana market. Although the WTO had previously granted the EU a waiver for its banana policy, the WTO ruled with the US. The EU appealed the decision. A WTO appellate body later sustained the earlier decision and clarified: the special tariff quotas that the EU provided to Caribbean banana producers had to be applied to all countries or eliminated. Of course, that would make convention meaningless.

The EU, bolstered by the 74 percent of its citizens that say they would pay more for Fair Trade bananas as opposed to standard bananas, stood firm. In 1998, the Union announced that it would remedy some of the challenged policies, but that it would maintain the quota. The US responded with punitive tariffs against the EU. The result: the EU hasrecently announced it has no choice but to rescind the preferences, although the US and the Europeans continue to dispute the exact terms of the settlement. However it turns out, the small banana farmers of the Caribbean are expected to be the losers.

(3) Gerber in Guatemala:

Gerber Food successfully threatened WTO action to force Guatemala to withdraw restrictions on the marketing of infant formula. In 1983, Guatemala passed legislation to encourage breastfeeding and limit the

use, and abuse, of infant formula, which has been linked to high infant mortality rates in developing nations. Guatemala's legislature followed the World Health Organization in developing guidelines that would be useful for illiterate consumers. One restriction prohibited the use of images of bottle-feeding babies in advertising or marketing. After the law went into effect in 1988, all of Guatemala's domestic and foreign suppliers of made the necessary changes to their packaging, and infant mortality rates dropped significantly. UNICEF held up Guatemala as a model in regulating the use of infant formula.

But one company, Gerber Food, refused to comply with the new regulations. The company continued to use a picture of a pudgy baby inits packaging and marketing. Gerber allegedly violated the labeling law in several other ways as well. The Guatemalan government for five years sought to compel Gerber to modify its labeling. In 1993, shortlybefore the Uruguay round of trade talks that would create the WTO, Gerber threatened the country with some sort of trade sanctions based on trademark infringement. Though only nation-states that are members of the WTO can file challenges in the organization's trade court, challenges are usually prompted by companies in member countries. By 1995, successfully intimidated, the Guatemalan government backed down and exempted Gerber from its infant food labeling policy.

Assuming Gerber had been able to persuade the US government to bring aWTO challenge--which is not at all certain--Guatemala's law might wellhave withstood such a complaint. The WTO intellectual property agreements contain a public health exception, and an epidemic of marketing-created infant mortality certainly could be considered an exception. But developing countries like Guatemala often lack the technical and financial means to defend themselves in international trade tribunals, and so can be successfully threatened by powerful corporate interests. Consequently, Guatemala was forced to sacrifice the well-being of its most vulnerable citizens to meet the demands of a multinational corporation.

(4) Protecting Intellectual Property Rights in Music in Bangladesh:

The Bengali song ‘Phiriye Dao’ was composed by Miles for its music album ‘Prathasa’ (Hope) in 1993. It was released in Bangladesh and

Pakistan. In 1997 this same song was included in a music album named ‘Best of Miles, Vol. 1’ released by the Asha Audio Co. of Calcutta, and it became very popular in both Bangladesh and West Bengal, India.

Now the song has been used in the soundtrack of the Hindi block-bustermovie Murder without, of course, the permission of its original composers.

Under such circumstances, copying and reproducing a Bangladeshi song without any payment of royalties is not only unethical but also a blatant violation of the intellectual property rights recognized by the World Trade Organization. It hurts, in this particular case, the business interests of the Bangladeshi rock band Miles.

The members of Miles discussed among themselves the possibility of seeking and getting compensation for the injury caused to their business prospects. It was decided that they should contact lawyers, people well versed in matters relating to the WTO, and the Ministry ofCommerce.

The relevant people in the Ministry of Commerce showed keen interest in the case. They contacted their counterparts in the Ministry of Commerce in India, who suggested that Miles should seek redress to theproblem by taking the violators of copyright to court. The Bangladesh Ministry of Commerce advised the members of Miles accordingly, and asked the Commercial Counselor and others in the Calcutta office of the Bangladesh deputy high commission to extend all possible co-operation to the band members in this regard.

By approaching some individuals well-versed in WTO matters, the band members learned that they can claim protection for their work under the copyright and related rights provisions of the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS). The main provisions on copyright and related rights in the TRIPS Agreement are contained in the Berne and Rome Conventions. In addition, the TRIPS Agreement contains provisions related to

a. Computer programs and databases;

b. Rental rights to computer programs, sound recordings and films;

c. Rights of performers and producers of phonograms; and

d. Rights of broadcasting organizations.

In the case of Miles, Article 11 and Article 14 of the TRIPS Agreementare the most relevant ones. According to Article 11, member countries are required to provide authors of computer programs, sound recordingsand cinematographic films the right to authorize or to prohibit the commercial rental of their copyright works. In addition, Article 14 provides that the performers shall have, ‘in respect of a fixation of their performance on a phonogram’, the right to prevent the reproduction of such fixation.

On being advised by the Ministry of Commerce and bolstered by the knowledge of the rules of WTO, members of Miles finally decided to go to the court of law. ‘By going to court, we are registering our protest against such an unethical deed’, said Hamin to the Bombay Times.

The verdict of the Calcutta High Court in the Miles case was a triumphof the rule-based international trade regime. Previously, intellectualproperty right (IPR) laws were applicable mainly within national boundaries, and only the nationals of a country could benefit from such laws; India was no exception to such practice. The Indian Copyright Act empowered the government to extend the benefits of the Act to the nationals of other countries (i) if India had entered a bilateral treaty with that country; (ii) if India and the country concerned had been parties to a common international convention guaranteeing protection to intellectual property rights; or (iii) if the Indian government was satisfied that the country concerned had adopted measures to reciprocate similar protection to the works of Indian nationals.

But Bangladesh and India had neither signed any bilateral agreement nor been parties to any common international convention related to theprotection of property rights in literary and artistic works before 1995. So, according to the provisions of the Indian Copyright Act, Bangladesh would not have the right to claim IPR protection for its citizens’ works in India before 1995.

However, both Bangladesh and India became members of the WTO on its formation in 1995, and the Indian Copyright Act was amended accordingly to make it compatible with the TRIPS Agreement. The amendment to Chapter IX of the Act, entitled ‘International Copyright:power to extend copyright to foreign works’, inserted a new section after section 40.

In short, the members of Miles are very happy with the outcome. They are happy to see that their rights have been established. On the otherhand, the violators of copyright have also learned that they cannot get away scot-free after perpetrating such infringement of others’ copyright. They can be expected to be more cautious in future. But above all, this case upholds the fact that intellectual property rights, like other property rights, are inviolable. This will simultaneously serve as a warning to would-be violators of intellectual property rights and as an encouragement to creative people all over the world by reassuring them that their creative workswill not be pirated. And all of these follow from the TRIPS Agreement one of the three major instruments that constitutes the legal rights and obligations of the WTO.

(5) The services sector in Malaysia: a brief update:

The tradability of services is set to be enhanced further by the development of new transmission technologies facilitating the supply of services (electronic banking, tale-education, and tale-medicine), the deregulation of monopolies, and the gradual liberalization of hitherto regulated sectors such as financial services and transport combined with changes in consumer preferences. The share of services in the Malaysian gross domestic product (GDP) has expanded from 48.8% in 1987 to 60.8% in 2003, if construction services are included. This simple picture of services growth, painted by existing statistics, canonly become more vivid in the near future.

In terms of WTO commitments, Malaysia has signed the agreement under the single undertaking rule and General Agreement on Trade in Services(GATS) as part of the whole package. Under GATS, which follows a positive list approach, Malaysia is expected to identify services sectors or sub-sectors and the modes of supply in which it is willing

to make commitments through the process of ‘scheduling’, as well as toindicate any limitations on market access and national treatment.

As of mid-2005, Malaysia had received requests from twenty-one countries. Generally, the requests received covered a wide range of professional services, advertising, news agency services, telecommunications and computer-related services, and focused on areassuch as the liberalization of additional sectors not committed under GATS, for example further liberalization or the elimination of restrictions placed under the current commitments (for example, limitson foreign equity and intra-corporate transferees) and transparency ofpolicies and domestic regulatory procedures (visa approval, incentives, licensing). On the other hand, Malaysia has also forwardedits own list of requests for market access to forty-five countries covering architecture, engineering, accountancy, construction and telecommunication services. These are areas where Malaysian services providers have demonstrated the capacity to export.

In terms of sectorial commitments, foreign companies in the field of accounting, auditing, bookkeeping and taxation, as well as engineeringservices (joint ventures only) could enter through local partnerships or joint ventures, and their equity in the company should not exceed 30%. The same goes for distributive services such as the wholesale andretail trades, which Malaysia has yet to list in its national scheduleof offers under GATS. Regarding legal services, foreign lawyers are not allowed to provide services in Malaysia. However, foreign legal firms can do so through companies incorporated in Labuan. Foreigners in the medical field can practice in private hospitals controlled by Malaysian companies. In the realm of information, communications and technologies (ICT), a Multimedia Super Corridor (MSC)-registered company can be fully owned by a foreign company.

This compilation of five case studies disparate experiences among economies in addressing the challenges of participating in the WTO. Itdemonstrates that success or failure is strongly influenced by how governments and private-sector stakeholders organize themselves at home. The contributors, mainly from developing countries, give examples of participation with lessons for others. They show that when

the system is accessed and employed effectively, it can serve the interests of poor and rich countries alike. However, a failure to communicate among interested parties at home often contributes to negative outcomes on the international front. Above all, these case studies demonstrate that the WTO creates a framework within which sovereign decision-making can unleash important opportunities or undermine the potential benefits flowing from a rules-based international environment that promotes open trade.

Chapter-4

Conventional understanding:

The WTO is a body designed to promote free trade through organizing trade negotiations and act as an independent arbiter in settling tradedisputes. To some extent the WTO has been successful in promoting greater free trade.

Free trade has many advantages, such as:

1. Lower prices for consumers. Removing tariffs enables us to buy cheaper imports

2. Free trade encourages greater competitiveness. Firms face a higher incentive to cut costs. For example, a domestic monopoly may now face competition from foreign firms.

3. Law of comparative advantage states that free trade will enable an increase in economic welfare. This is because countries can specialize in producing goods where they have a lower opportunity cost.

4. Economies of scale. By encouraging free trade, firms can specialize and produce a higher quantity. This enables more economies of scale, this is important for industries with high fixed costs, suchas car and airplane manufacture.

5. Free trade can help increase global economic growth.

10 benefits of the WTO trading system-

1. The system helps promote peace.

2. Disputes are handled constructively.

3. Rules make life easier for all.

4. Freer trade cuts the costs of living.

5. It provides more choice of products and qualities.

6. Trade raises incomes.

7. Trade stimulates economic growth.

8. The basic principles make life more efficient.

9. Governments are shielded from lobbying.

10. The system encourages good government.

There also some disadvantages and misunderstanding about WTO. However,the WTO has often been criticized for ignoring the plight of the

developing world. It is argued the benefits of free trade accrue mostly to the developed world. Free trade may prevent developing economies develop their infant industries. For example, if a developing economy was trying to diversify their economy to develop a new manufacturing industry, they may be unable to do it without some tariff protection.

10 common misunderstandings about the WTO

1. The WTO dictates policy

2. The WTO is for free trade at any cost

3. Commercial interests take priority over development …

4. over the environment

5. Over health and safety

6. The WTO destroys jobs, worsens poverty

7. Small countries are powerless in the WTO

8. The WTO is the tool of powerful lobbies

9. Weaker countries are forced to join the WTO

10. The WTO is undemocratic

As negotiations for further expansion of WTO disciplines falter, casesbeing brought up by governments have increased. Many of these cases strike down popular consumer information, health, and safety laws thatwere passed by legislative bodies after consumer activism. Just in thelast two months, the WTO ruled that American labeling of tuna as dolphin-safe was a violation of the WTO; that some U.S. rules designedto curb teen smoking are WTO-illegal; and that Country of Origin Labeling (COOL) of meat in the United States, passed by Congress to reduce exposure to contaminated food, is illegal under WTO rules. And these are just cases against the United States, the largest and most powerful economy in the world. Across the globe, research has showed that the WTO rules against challenged policies, including public interest regulations, 90 percent of the time. And now, both China and

the United States are using the WTO to bring cases against each other’s green energy subsidies, at a time when human survival on this planet seems to depend on both countries radically transforming energyproduction.

And whatever the future of WTO expansion talks, it is the current WTO that still governs world trade. The emergence of the global financial,food, economic, climate, and other crises – which the WTO’s privatization and liberalization rules contributed to, and failed to prevent – provides an opportunity to reflect on the serious problems endemic to the particular model of globalization that the WTO has consolidated globally.

Thus, the OWINFS network has asserted that the global trade framework should provide countries sufficient policy space to pursue a positive agenda for development and job-creation, and that trade rules must facilitate, rather than hinder, global efforts to ensure food security, sustainable economic development, global access to health and medicines, and global financial stability.

In order to achieve these goals, many current WTO policies must be corrected and many aspects of any future negotiations agenda must be completely transformed. The network brought many of these proposals together in a Call to Action that was released in advance of the Ministerial meeting. The document calls on governments to protect jobsand industrial policy space by focusing on expanding employment ratherthan just cutting tariffs; to ensure that LDCs are able to utilize trade in pursuit of their development; to ensure greater flexibility within TRIPS for developing countries to address public health needs and access to sustainable technologies; to assess and then modify existing restrictions on financial regulation to ensure financial stability, and to forego demands for increased financial liberalization; to ensure that trade rules support food security and sovereignty, rather than continuing to treat food as a commodity to bemanipulated by speculators; and many other demands.

These proposals would amount to a fundamental transformation of the WTO from an institution focused on codifying corporate “rights” to profit from trade, deregulation, and patent/copyright monopolies, to a

rules-based system that disciplines corporate activity, in which countries would have the right and the ability to harness the benefitsof trade for their own sustainable development. Of course, this fundamental transformation of the framework of rules to discipline global trading corporations is a long way off in the current politicalclimate. But the decision about whether the WTO will adopt a package of changes to help the poorest countries, move towards removing some WTO constraints on financial regulation, and begin to reflect on a transformed role for trade rules in the context of the global economiccrises – or merely continue its 16-year agenda of consolidating a global corporate rights regime – will depend on the outcome of the decisions made by governments during this Ministerial. Civil society should help ensure that they make the right choice.

To ensure that governments understand the seriousness of the issues atstake, and the opportunity for alternatives to the narrow range of policy options currently being considered, a delegation of about 60 different trade unionists, farmers, church leaders, and consumer advocates from Argentina and Peru to South Africa and Zambia; from Belgium and the United States and Russia, to India and the Philippines, and yes, even Vanuatu, will travel to Geneva next week towork together through OWINFS and with the African Trade Network and the International Trade Union Confederation. They will be joined by local activists who will be setting up an Occupy the WTO tent during the conference, highlighting the importance of the negotiations for the 99% of the global population.

Chapter-5

Conclusion:

The World Trade Organization (WTO) deals with the global rules of trade between nations. Its main function is to ensure that trade flowsas smoothly, predictably and freely as possible.

Open trade makes it possible for consumers to enjoy goods that are produced or manufactured in countries other than their own, giving them a wider, better and, often, less expensive choice. Open trade also benefits producers, as it provides them with wider market opportunities to sell their products.

There are a number of ways of looking at the WTO. It’s an organizationfor liberalizing trade. It’s a forum for governments to negotiate trade agreements. It’s a place for them to settle trade disputes. It operates a system of trade rules. Essentially, the WTO is a place where member governments go, to try to sort out the trade problems they face with each other. The first step is to talk. The WTO was bornout of negotiations, and everything the WTO does is the result of negotiations. The bulk of the WTO's current work comes from the 1986-94 negotiations called the Uruguay Round and earlier negotiations under the General Agreement on Tariffs and Trade (GATT). The WTO is currently the host to new negotiations, under the “Doha Development Agenda” launched in 2001.Where countries have faced trade barriers andwanted them lowered, the negotiations have helped to liberalize trade.But the WTO is not just about liberalizing trade, and in some circumstances its rules support maintaining trade barriers — for example to protect consumers or prevent the spread of disease. The system’s overriding purpose is to help trade flow as freely as possible — so long as there are no undesirable side-effects — because this is important for economic development and well-being.

It helps to settle disputes this is a third important side to the WTO’s work. Trade relations often involve conflicting interests. Agreements, including those painstakingly negotiated in the WTO system, often need interpreting. The most harmonious way to settle these differences is through some neutral procedure based on an agreedlegal foundation. That is the purpose behind the dispute settlement process written into the WTO agreements.

Although negotiated and signed by governments, the goal is to help producers of goods and services, exporters, and importers conduct their business, while allowing governments to meet social and environmental objectives.