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GATS (General Agreements on Trade in Services)

It is a known fact that trade in services is the rapidl growing field in the glo!al scenario"
According to #T$, in the ear %&&', services constit(ted a!o(t )&* of the world+s o(tp(t
(in G,P)" The trade in services has partic(larl increased in developing co(ntries" The total
trade in services occ(pied more than -&* in the e.ports of the developing co(ntries" The
rapid growth and change has prompted the mem!ers of the #T$ to !ring in changes in
r(les and reg(lations on trade in services and GATS was introd(ced on 'st /an(ar '00-"
This is one of the important agreements of #T$ which contains two main parts1 the frame
work of agreement containing r(les and reg(lations and the sched(le of 2ations who gave
the commitment on access to their domestic markets ! foreign s(ppliers" 2ow #T$ has
'34 mem!er co(ntries"
5ach #T$ mem!er lists in its national sched(le those services, which it wished to
g(arantee access to foreign s(ppliers" All mem!er co(ntries are considered as M62s (Most
6avo(red 2ations) i"e, all commitments appl on non 7 discriminator !asis to all mem!er
8overage of GATS1
The GATS covers all internationall traded services with two e.ceptions1 services provided
! the Government and services in Air transport sector" The GATS defines that trade in
services can !e made in fo(r was, the are1
'" Services s(pplied from one co(ntr to another (e"g" International telephone calls)
%" 8ons(mers from one co(ntr making (se of another co(ntr (e"g" To(rism)
9" A compan from one co(ntr setting (p s(!sidiaries or !ranch to provide services in
another co(ntr (e"g" :anking)
3" Individ(al travelling from their own co(ntr to s(ppl services in other co(ntr (e"g"
Actress or constr(ction worker)
:enefits of Services ;i!erali<ation1
'" An efficient services infrastr(ct(re provides a !ase for economic s(ccess" Services s(ch
as telecomm(nications, !anking, ins(rance and transport s(ppl strategicall important
inp(ts for all sectors"
%" People can have access to world=class services"
9" Trade li!eralisation in services leads to low cost" The !est e"g" telecomm(nications"
3" 6aster innovation takes place with li!eralised services e"g" ATM, Phone !anking, Internet
!anking etc"
-" Greater transparenc and predicta!ilit !enefit is there for c(stomers" This makes
possi!le for the people to make their investments in service sector"
)" More 6,Is are attracted in the co(ntries, which will !ring the new skills and technologies
into the co(ntr" The domestic emploees can learn the new skills from the M28s"
Service sector in India1
In the line with the glo!al trend, the services sector in India is growing rapidl and the
contri!(tion of services in India+s G,P increased to -3"%* in %&&&=&' from -'"-* in '004=
00" The total trade in services from India is acco(nting to '"9* in the total world trade in
services" India e.hi!its a strong revealed comparative advantage in services related goods"
The importance in service sectors in India are telecomm(nications, IT, IT5S, :P$ and
:anking and financial services" India has permitted '&&* 6,I in IT and IT5S and more than
-'* in telecomm(nications"
Trade Related Investment Meas(res (TRIMs)
It refers to certain condition or restrictions imposed ! a Government in respect of foreign
investment in the co(ntr" The TRIM te.t provides that the foreign capital wo(ld not !e
discriminated ! the mem!er Governments"
6eat(res of TRIMs
'" A!olition of restriction imposed on foreign capital
%" $ffering e>(al rights to the foreign investor on par with the domestic investor
9" 2o restrictions on an area of investment
3" 2o limitation or ceiling on the >(ant(m of foreign investment
-" Granting of permission of witho(t restrictions to import raw material and other
)" 2o force on the foreign investors to (se the total prod(cts and or materials
?" 5.port of the part of the final prod(ct will not !e mandator
4" Restriction on repatriation of dividend interest and roalt will !e removed
0" Phased man(fact(ring programming will !e introd(ced to increase the domestic content
of man(fact(rer
Trade Related Intellect(al Propert Rights (TRIPs)
Intellect(al propert rights ma !e defined as @Information with commercial val(eA" IPR have
!een characterised as a composite of @ideas and creative e.pressionA" Pl(s @ the p(!lic
willingness to !estow the stat(s of propert" It incl(de
a" Protection of patent
!" 8opright
c" Ind(strial design
d" Geographical indication
e" Trademarks
f" Trade secrets
g" ;ao(t design (topographies of integral circ(its)
The #orld Trade $rgani<ation (#T$), which was esta!lished in '00- as a s(ccessor to the
General Agreement on Tariffs and Trade='03? (GATT '03?), is the principal international
organi<ation governing m(ltilateral trade among Mem!ers" The #T$ em!races the principle
of non=discrimination, !ased on the twin concepts of Most 6avo(red 2ation (M62) and
national treatment !etween Mem!ers"
The #T$ administers the implementation of a set of agreements, which incl(de the General
Agreement on Tariffs and Trade, other agreements in the goods sector (e"g", agric(lt(re,
te.tiles, sanitar and pscho=sanitar meas(res, Trade Related Investment Meas(res=
TRIMs, anti=d(mping, etc"), and in addition, agreements in two other areas, vi<", trade in
services, and Trade Related Intellect(al Propert Rights (TRIPs)"
Trade Related Intellect(al Propert Rights (TRIPs) was added to the General Agreement on
Tariffs and Trade (GATT) treat at the end of the Br(g(a Ro(nd of trade negotiations in
'003" After the Br(g(a ro(nd, the GATT !ecame the !asis for the esta!lishment of the
#orld Trade $rgani<ation" Therefore, when GATT was s(cceeded ! #T$ in '00-, and all
the mem!ers of #T$ had to sign an agreement related to Intellect(al Propert Rights if it
was interested in m(lti=lateral trading and also enact mandatoril some reg(lations related
to it in the domestic sstem" The TRIPs agreement is a special agreement which introd(ced
intellect(al propert law into the international trading sstem for the first time, and it remains
the most comprehensive and all incl(sive international agreement on intellect(al propert to
The TRIPs Agreement tries to !ring in (niformit in the standards of intellect(al propert
rights among the #T$ irrespective of their development stat(s" #hile this is e.pected to
res(lt in technolog transfer and flow of investment among the Mem!ers, the e.tent of
!enefits accr(ing will depend on domestic ind(stries and the stat(s of development of the
This article is intended to !ring o(t the meaning of intellect(al propert and its component
and the details of the Agreement on TRIPs (nder the aegis of #T$ and finall wo(ld
disc(ss in !rief the possi!le impact of it on vario(s sectors in developing co(ntries with
specific reference to India"
What is IPR?
Intellect(al Propert Rights (IPRs) refers to the legal ownership of ! a person or !(siness
of an inventionC discover attached to a partic(lar prod(ctC process which protects the owner
against (na(thori<ed coping or limitation"
Intellect(al propert rights are the rights given to persons over the creations of their minds"
The (s(all give the creator an right over the (se of hisCher creation for a certain
period of time" Therefore, one important feat(re that re>(ires note is that the right is not
The #orld Trade $rgani<ation classifies the IP !roadl into two main parts namel copright
and rights related to copright and ind(strial propert" ;et (s (nderstand each one in greater
(i) Copyright and rights related to copyright:
The rights of a(thors of literar and artistic works (s(ch as !ooks and other writings, m(sical
compositions, paintings, sc(lpt(re, comp(ter programs and films) are protected !
copright, for a minim(m period of -& ears after the death of the a(thor"
Also protected thro(gh copright and related (sometimes referred to as Dneigh!o(ringD)
rights are the rights of performers (e"g" actors, singers and m(sicians), prod(cers of
phonograms (so(nd recordings) and !roadcasting organi<ations" The main social p(rpose
of protection of copright and related rights is to enco(rage and reward creative work"
(ii) Industrial property:
Ind(strial propert can (sef(ll !e divided into two main areas1
$ne area can !e characteri<ed as the protection of distinctive signs, in
partic(lar Trademarks(which disting(ish the goods or services of one (ndertaking
from those of other (ndertakings) andGeographical Indications (which identif a
good as originating in a place where a given characteristic of the good is essentiall
attri!(ta!le to its geographical origin)"
According to #T$, the protection of s(ch distinctive signs aims to stim(late and ens(re fair
competition and to protect cons(mers, ! ena!ling them to make informed choices
!etween vario(s goods and services" The protection ma last indefinitel, provided the sign
in >(estion contin(es to !e distinctive"
$ther tpes of ind(strial propert are protected primaril to stim(late innovation,
design and the creation of technolog" In this categor fall inventions (protected
! Patents), Industrial esigns and Trade secrets!
The social p(rpose is to provide protection for the res(lts of investment in the development
of new technolog, th(s giving the incentive and means to finance research and
development activities"
A f(nctioning intellect(al propert regime sho(ld also facilitate the transfer of technolog in
the form of foreign direct investment, Eoint vent(res and licensing"
The protection is (s(all given for a finite term (tpicall %& ears in the case of patents)"
#T$ claims that the rights given are generall s(!Eect to a n(m!er of limitations
and e.ceptions, aimed at fine=t(ning the !alance that has to !e fo(nd !etween the
legitimate interests of right holders and of (sers, s(ch that the social o!Eectives are kept in
mind !esides the economic interests"
What is TRIPs?
Faving defined and classified IP, let (s now look at TRIPs1 The Agreement on Trade=
Related Aspects of Intellect(al Propert Rights (TRIPs) is an international treat
administered ! the #orld Trade $rgani<ation (#T$) which sets down minim(m standards
for most forms of intellect(al propert (IP) reg(lation within all mem!er co(ntries of the
#orld Trade $rgani<ation"
TRIPs deals with the following IPRs
8opright and related rightsG
Geographical indications, incl(ding appellations of originG
Ind(strial designsG
Integrated circ(it lao(t=designsG
Protection of (ndisclosed information
8ontrol of anti=competitive practices in contract(al licenses
TRIPs also specifies enforcement proced(res, remedies, and disp(te resol(tion proced(res"
#T$ specifies the three main feat(res of the Agreement asG
"tandards: In respect of each of the main areas of intellect(al propert covered !
the TRIPS Agreement, the Agreement sets o(t the minim(m standards of protection
to !e provided ! each Mem!er" 5ach of the main elements of protection is defined,
namel the s(!Eect=matter to !e protected, the rights to !e conferred and permissi!le
e.ceptions to those rights, and the minim(m d(ration of protection"
#n$orcement: The second main set of provisions deals with domestic proced(res
and remedies for the enforcement of intellect(al propert rights" The Agreement las
down certain general principles applica!le to all IPR enforcement proced(res"
ispute settlement: The Agreement makes disp(tes !etween #T$ Mem!ers a!o(t
the respect of the TRIPS o!ligations s(!Eect to the #T$Hs disp(te settlement
Bnder TRIPs, all co(ntries have to provide for protection of prod(ct patents from /an(ar ',
'00-" :(t developing co(ntries like India, which did not have a regime of prod(ct patents,
had a transition period of ten ears=(ntil /an(ar ', %&&-, to affect the switch over" ,(ring
this transition period, it was decided that these economies wo(ld accept applications for
patents (which wo(ld !e considered and granted after /an(ar %&&-) and provide 5MR
( Marketing Rights) for the prod(cers of patented dr(gs (in the pharmace(tical
ind(str) and agrochemicals"
The transition period for least developed co(ntries was e.tended to %&'), and co(ld !e
e.tended !eond that"
The TRIPS Agreement is a minim(m standards agreement, which allows mem!ers to
provide more e.tensive protection of intellect(al propert if the so wish" Mem!ers are left
free to determine the appropriate method of implementing the provisions of the Agreement
within their own legal sstem and practice"
Why TRIPs?
Art"? defines the main o!Eectives and principles, which mentions that Intellect(al
Propert Rights sho(ld contri!(te to social and economic welfare and to a !alance of
rights and o!ligations of the mem!ers"
Art"4 stip(lates prevention of a!(se of IPR that will restrain trade or adversel affect
international transfer of technolog" A li!eral and permissi!le interpretation of these
Articles will ens(re e>(it in the application of TRIPS to the !enefit of the co(ntrHs
econom and social welfare"
A weak IPR regime in developing co(ntries leads to losses from Dre=engineered
prod(ctsD for the original innovators, namel the #estern m(ltinationals and lowers
the incentives for local developing co(ntr firms to (ndertake !asic RI, themselves"
Th(s, the co(ntries of the triad, the B"S"A", 5(rope and /apan, have !een working
towards the glo!al harmoni<ation of IPR regimes since the last two decades" TRIPs
is one of the c(lminations of their efforts"
The co(ntries initiating TRIPS !ased their actions on the pres(mption that a strong
IPR regime is a critical pre=condition for private investment in research and
development, and hence economic growth"
It is contended that an e.panded and strengthened protection of IPRs wo(ld !ring
a!o(t increased flows of foreign direct investment and technolog transfer to
developing co(ntries" It wo(ld also stim(late local innovation"
6inall, it wo(ld also ena!le the m(ltinationals of the developed co(ntries to
rec(perate markets from local imitators" The developing world is, on the other hand,
not so confident a!o(t reaping !enefits from this glo!al IPR regime, since having
access to technological knowledge is perceived as !eing cr(cial for economic
The Contro%ersy:
Since TRIPs came into force it has received a growing level of criticism from developing
co(ntries, academics, and 2on=governmental organi<ations" Some of this criticism is
against the #T$ as a whole, !(t man advocates of trade li!eralisation also regard TRIPS
as !ad polic" TRIPSH wealth redistri!(tion effects (moving mone from people in developing
co(ntries to copright and patent owners in developed co(ntries) and its imposition of
artificial scarcit on the citi<ens of co(ntries that wo(ld otherwise have had weaker
intellect(al propert laws, are a common !asis for s(ch criticisms
There e.ists an e.tensive literat(re on the possi!le impact of TRIPs on developing
co(ntries" The deal with this pro!lem along different lines, e.amining the impact on1 RI,,
foreign direct investment, technolog transfer, market demand and prices that cons(mers
wo(ld !e paing"
Indian "cenario:
As a signator to the Br(g(a ro(nd of GATT, and the fo(nder mem!er of the #T$, India
was o!liged to meet all provisions of the Trade Related Aspects of Intellect(al Propert
Rights (TRIPs)" A transition period was accorded to developing co(ntries depending on their
state of development" India has completed the complete term of this transition period i"e" '&
ears, to set (p an IPR sstem in compliance with TRIPS" The main elements of change in
the Indian patent sstem are1
5nforcement of prod(ct patent protection in all !ranches of technolog, incl(ding
%& ears of protection instead of '3 or ? in the case of the Indian patent Act"
2o discrimination !etween imported and domestic prod(cts"
Accommodate comp(lsor licensing (tho(gh no co(ntr so(th of the e>(ator has et
(sed this cla(se)"
A !rief comparison is given in Ta&le ' indicating the main changes that are warranted in the
Indian patents Act of '0?&
Ta&le '
Comparison o$ India(s Patent )ct and TRIPs
Indian Patent )ct o$ '*+, TRIPs
$nl process not prod(ct patents in food,
medicines, chemicals
Process and prod(ct patents in almost all
fields of technolog
Term of patents '3 earsG -=? in
chemicals, dr(gs
Term of patents %& ears
8omp(lsor licensing and license of right ;imited comp(lsor licensing, no license
of right
Several areas from patents
(method of agric(lt(re, an process for
medicinal s(rgical or other treatment of
h(mans, or similar treatment of animals
and plants to render them free of disease
or increase economic val(e of prod(cts)
Almost all fields of technolog patenta!le"
$nl area concl(sivel from
patenta!ilit is plant varietiesG de!ate
regarding some areas in agric(lt(re and
Government allowed to (se patented
invention to prevent scarcit
Jer limited scope for governments to
(se patented inventions
"ource: Adapted from Patent $ffice Technical Societ, Indian Patent Act, '0?& and R(les,
'00' and MJIR,8, GATT Agreements1 Res(lts of the Br(g(a Ro(nd, #orld Trade 8entre,
/an(ar '00-
Impact on -a.or "ectors:
The MaEor sectors and ind(stries that wo(ld !e affected with the TRIPs agreement wo(ld !e
Aric(lt(re, Pharmace(tical and :iotechnolog Ind(stries"
The greatest impact is e.pected to !e on the Pharmaceutical industry as itHs a knowledge
!ased and research oriented ind(str" Fere are some challenges and opportunities that
can !e noted specificall arising o(t of this agreement" India toda has !ecome one of the
maEor e.porters of cheap dr(gs not onl to developed co(ntries !(t also to other developing
co(ntries, the advantage India has is lower prices d(e to low la!o(r costs and
comparativel lower e.pendit(re on Research and development" #ith the significant change
in the IPR regime, there are concerns regarding the e.port earnings diminishing" Another
concern is that compliance with the TRIPs is e.pected to create a monopol of the patented
dr(gs and lead to a crisis in the p(!lic health iss(es"
$n the other hand, some feel that it is e>(all pla(si!le that the Indian national sstem of
innovative has evolved s(fficientl to take advantage of the strengthening of the IPR
sstem" This view is partic(larl s(pported ! the clear s(ccess of India, in market !ased,
high=tech domains, s(ch as generics and software"
Fowever the protagonists claim that DThe fear that prices of medicines will spiral are
(nfo(nded""""#e m(st reali<e the fact that 0?* of all dr(gs man(fact(red in India are off=
patent, and so will remain (naffected"D$n the other hand, protection of innovation thro(gh
patents is also E(stified on the front that patent protection will stim(late investment into RI,
that will !enefit Indian cons(mers and will reward India with increased foreign investment"
The worst impact of TRIPS that the pharmace(tical ind(str e.pects is the end of the
reverse engineeringG the ind(str now has to emphasi<e and concentrate on !asic research"
It is also feared that n(m!er of (nits in the ind(str ma close down and onl few h(ndreds
ma s(rvive this onsla(ght of imposition of conditions ! the TRIPS" This ma res(lt in
(nemploment on large scale"
To p(t it in a n(t=shell, the prescription ! TRIPS for prod(ct patent implies the following for
the ind(str1
The ind(str has to now emphasis on !asic research" The das of core competence
of the ind(str in reverse engineering seems to move towards nat(ral death" The
firms in the ind(str now have to offer newer dr(gs to the c(stomers to !reak the
competitive forces"
F(ge investments are re>(ired ! the pharmace(tical ind(stries on Research and
development infrastr(ct(re"
5ver ind(str has to develop a strategic o(tlook and have a internal polic for
innovation if it is looking for s(staina!ilit in the long r(n"
IPR sstem re>(ires f(rther strengthening for enco(raging real o(tp(ts in innovation
and creativit"
$verall, the ind(str feels that the TRIPS in its present form, is !ent in favor of developed
nations and its M28Hs and that there is nothing trade related a!o(t TRIPS and that the right
to trade is !eing e.ploited ! developed co(ntries" :esides these, the imports are e.pected
to increase leading to a serio(s >(estion on self=reliance of these ind(stries and overall it
ma have a dampening impact on the growth of this ind(str"
Fowever, there is a light at the end of ever t(nnel, and there is an opport(nit hidden in the
agreement" The first opport(nit is (sing the off patent dr(gs to capt(re markets across the
glo!e" The strong process re=engineering skills and lower cost of development is another
competitive advantage" As predicted ! the different analsts, the o(t so(rcing ! M28s
wo(ld mean serio(s strategic alliances, contract man(fact(ring and !ringing in of foreign
e.change" The ind(str wo(ld (se its technical and man power skills for research and
innovation" Fowever the ind(str wo(ld still !e a!le to market older dr(gs which are not
incl(ded in the patents list"
Impact on &iotech1 Most of the research orients towards the impact of TRIPs on
pharmace(tical ind(str and agric(lt(re" Fowever, little research that has !een cond(cted
has concl(ded that the impact of TRIPs will !e restricted to an elimination of the prod(ction
of patented prod(cts" It will not have a deleterio(s or a positive impact on their levels of
inventive activit" 5ven more importantl, TRIPs is not likel to create an incentive to
increase technological knowledge or create innovations other than that provided ! the
national sstem of innovation" TRIPs is not going to have a significant impact on !iotech in
India or on the other preocc(pations of Indian pharmace(tical firms" Fence, the maEor effect
of TRIPS wo(ld seem to !e to force Indian firms to p(t their re=engineered prod(cts on the
market onl when the get off patent
Impact on )griculture: The TRIPS Agreement of the #T$ incl(des three items related to
agric(lt(re1 Geographical indications (Art %%=%3)G Patent protection of agric(lt(ral chemical
prod(cts (Arts" ?&"4 and ?&"0)G Plant Jariet Protection (Art %?"9(!))" $(t of which the plant
variet protection is of great importance for the c(rrent scenario"
TRIPS is a clearl anti=developing co(ntr agreement contend the critics" Its provisions
serio(sl threaten self reliance in agric(lt(re and the livelihoods of farmers, ! seeking to
esta!lish a monopol !eca(se it em!odies the philosoph of the ind(striali<ed nations
where it was developed and where the primar goal is to protect their interests"
Therefore, when a >(estion is raised as to what wo(ld !e the impact of compliance to
agreement TRIPs on developing economies like India, a repl pops (p that wo(ld !e a clear
compromise with national sec(rit" 6ood sec(rit, as we are all aware, is a criticall
important part of national sec(rit" A nation that does not prod(ce its own seed and its own
food can not !e a sec(re nation" The agric(lt(re remains a cr(cial as well as a controversial
s(!Eect in #T$ negotiations" 2o clear negotiations have worked o(t so far, as the
developing co(ntries are tring to p(sh their interests in these negotiations to which the
developed co(ntries have serio(s o!Eections to implementing them as it wo(ld have
adverse impact on their agric(lt(ral sector"
World Trade /rgani0ation came into f(nction on 'C'C'00- with an o!Eective to increase
world trade and emploment" India is also a mem!er of #orld Trade $rgani<ation" The
feat(res of #orld Trade $rgani<ation are as follows1
(') #orld Trade $rgani<ation is a separate legal entit"
(%) It has a legal and instit(tional fo(ndation of the m(lti trading sstem"
(9 All its agreements are permanent and !inding to all mem!er co(ntries"
(3) #orld Trade $rgani<ation has glo!al stat(s like IM6, !(t it is not an agent of B2"
(-) All its mem!ers enEos e>(al voting rights, irrespective of tpe and vol(me of trade"
()) It has an a(tomatic disp(te settlement sstem"
(?) #T$ has a r(le !ased and time !o(nd approach"
(4) It has a wide coverage of not onl trade !(t also service"
(0) #T$ foc(ses an trade related aspects of intellect(al propert rights"
('&) #orld Trade organi<ation is a h(ge organi<ational !od having a large secretariat"
After IM6 and #orld :ank, #orld Trade $rgani<ation is the third largest organi<ation which
has its own f(nctioning sstem" It is managed on democratic principles and it is managed !
,irector General" Fe is overall in charge of #orld Trade $rgani<ation" Fe is assisted ! fo(r
dep(t director generals" 5ach director is appointed for a period of fo(r ears" This director
is elected ! mem!er co(ntries"
Mr" Renato G(g(rio was the first ,"G" of #orld Trade $rgani<ation" It is a legal !od" All
mem!er co(ntries enEo world privileges and each mem!er enEos one vote onl" #orld
Trade $rgani<ation has two co(ncils i"e" the ministerial co(ncil and the general co(ncil"
Ministr co(ncil is the highest a(thorit" It is s(pported ! general co(ncil" The Ministerial
co(ncil meets at least once in ever two ears" General co(ncil is the lower !od which is
consisting representatives from mem!er co(ntries" #orld Trade $rgani<ation also has other
co(ncil committees, working parties and negotiating gro(ps for respective iss(es" The
decisions are taken ! maEorit of votes" An decision relating to admission of a new
mem!er or an amendment in m(ltilateral agreement re>(ires at least %C9rd maEorit"
#orld Trade $rgani<ation has its own disp(te settlement machiner" It has a disp(te
settlement panel to settle disp(tes" The complaints or o!Eections raised ! an co(ntr are
referred to disp(te settlement !od , and then the disp(te settlement !od refer that
complaint to disp(te settlement panel for >(ick redressal"
,isc(ss the o!Eectives and f(nctions of #T$"
)) #-#RG#1C# /2 WT/ :3
After the Second #orld #ar, man co(ntries got down together to work on was and
means to promote international trade" The res(lt was signing of General Agreement on
Tariffs and Trade (GATT) ! %9 co(ntries in '03?" India was one of the fo(nder mem!ers of
GATT was created to red(ce glo!al depression and to li!eralise and reg(late the
world trade ! red(cing tariff !arriers" GATT has !een replaced ! #T$ in '00-" #T$ is
wider in scope as it reg(lates world trade in goods, as well as in services intellect(al
propert rights, and investment" In /an(ar %&'&, the mem!ership of #T$ was '-9
co(ntries" Its r(les and policies are the o(tcome of negotiations among #T$ mem!ers"
Th(s #T$ is a mem!er driven, consens(s !ased organisation"
4! PRI1CIP)5 /46#CTI7#" /2 WT/
') Trade #itho(t ,iscrimination 1=
Trade witho(t discrimination thro(gh the application of Most 6avo(red 2ation (M62)
Principle" As per M62 cla(se, a mem!er nation of #T$ m(st accord (give) the same
preferential treatment to other mem!er nations which it gives to an other mem!er nation"
%) Raising The Standard $f ;iving 1=
Raising the standard of living and incomes and ens(ring f(ll emploment of the
citi<ens of its mem!er nations"
9) $ptim(m Bse $f #orldHs Reso(rces 1=
5ns(ring optim(m (se of worldHs reso(rces and, there!, e.panding world
prod(ction and trade of goods as well as services"
3) Settlement $f ,isp(tes 1=
Settlement of disp(tes among mem!ers thro(gh cons(ltation, conciliation, and as a
last resort thro(gh disp(te settlement proced(res"
-) Growth $f ;ess ,eveloped 8o(ntries (;,8s) 1=
It recognises the need for positive efforts designed to ens(re that developing
co(ntries especiall the ;,8s, sec(re a !etter share of growth in international trade"

)) Protection $f 5nvironment
Preserving and protecting the environment of the world so as to !enefit all the nations of
the world"
?) 5nlargement $f Prod(ction And Trade
#T$ aims to enlarge prod(ction and trade of goods as well as services"
4) 5mploment
#T$ aims at generating f(ll emploment and increase in effective demand"
C) 281CTI/1" /2 WT/
#T$ has following f(nctions
') Implementation $f Red(ction In Trade :arriers
#T$ shall check the implementation of tariff c(ts and red(ction of non=tariff
meas(res agreed (pon the mem!er nations at the concl(sion of Br(g(a Ro(nd"
%) 6or(m 6or 2egotiation
#T$ shall provide the for(m of negotiations among its mem!ers concerning their
m(ltilateral trade relations"
9) Settlement $f ,isp(tes
#T$ shall administer the (nderstanding on r(les and proced(res governing the
settlement of disp(tes"
3) Assistance To IM6 And I:R,
#T$ shall co=operate with IM6, I:R, and its affiliated agencies to achieve greater
coherence in glo!al economic polic"
-) Administration $f Agreements
#T$ shall look after the administration of %0 agreements (signed at the concl(sion of
Br(g(a Ro(nd in '003), pl(s a n(m!er of other agreements, entered into after Br(g(a
)) 5.amination $f Trade Policies
#T$ shall reg(larl e.amine the foreign trade policies of mem!er nations, to see that
s(ch policies are in line with #T$+s g(idelines"
?) 8ons(ltanc Services
#T$ shall keep a watch on the developments in the world econom and it provides
cons(ltanc services to its mem!er nations"
4) 8ollection $f 6oreign Trade Information
#T$ shall collect information on import = e.port trade and on vario(s trade meas(res
and other trade statistics of mem!er nations"
K"% 1 5.plain the Salient 6eat(res of #T$ Agreements reached on the !asis
of Br(g(a Ro(nds" $R
5.plain the main #T$ Agreements"
Ans" A) SA;I52T 65ATBR5S $6 BRBGBAL R$B2, I #T$ AGR55M52TS
The main agreements of #T$ are
') Agreement $n Agric(lt(re (A$A) 1=
The main o!Eective is to increase market orientation in agric(lt(re trade" It provides
for commitments in the area of market access, domestic s(pport and e.port competition"
The mem!ers have to transform their non=tarrif !arriers like >(otas into e>(ivalent tariff
meas(res" The tariffs are to !e red(ced ! 9)* within ) ears in case of developed
co(ntries and ! %3* within '& ears in case of developed co(ntries" The least developed
co(ntries need not make an commitment for red(ction"
%) Agreement $n Trade In Te.tiles And 8lothing (M(lti = 6i!re Arrangement) 1=
This provides for phasing o(t the import >(otas on te.tiles and clothing in force
(nder the M(lti = 6i!re Arrangement since '0?3, over aM span of '& ears i"e" ! 'st
/an(ar, %&&-" #ith this agreement >(ota on te.tile and clothing has now !een a!olished"
9) Agreement $n Man(fact(red Goods
The developed co(ntries agreed to red(ce tariffs on man(fact(red goods other than
te.tiles ! 3&*" The tariffs wo(ld now !e !ro(ght down to an average of 9"4* from earlier
3) Agreement $n TRIMs
An Agreement on Trade Related Investment Meas(res (TRIMs) calls for introd(cing
national treatment of foreign investments and removal of >(antitative restrictions" It
identifies - investment meas(res which are inconsistent with the GATT provisions on
national treatment and on general elimination of >(alitative restrictions"
-) Agreement $n TRIPs
Trade Related Intellect(al Propert Rights (TRIPs) pertain to Patents and
8oprights" #hereas earlier on process patents were granted to food, medicines, dr(gs and
chemical prod(cts, the TRIPs Agreement now provides for granting prod(ct patents also in
all these areas" Protection will !e availa!le for %& ears for patents and -& ears for
)) General Agreement $n Trade And Services (GATS)
6or the first time, trade in services like !anking, ins(rance, travel, maritime
transportation, mo!ilit of la!o(r etc" has !een !ro(ght within the am!it of negotiations" The
General Agreement on Trade in Services (GATS) provides a m(ltilateral framework of
principles and services which sho(ld govern trade in services (nder conditions of
transparenc and progressive li!eralisation"
?) ,isp(tes Settlement :od
Settllement of disp(tes (nder GATT was a never ending process" The ,isp(tes
Settlement :od (,S:) set (p (nder #T$ seeks to pl(g the loopholes and provide sec(rit
and predicta!ilit to the m(ltilateral trading sstem" It has now !een made mandator to
settle a disp(te within '4 months" The findings of disp(tes settlement panels will !e final
and !inding on all parties concerned"
In addition to the a!ove, the Br(g(a Ro(nd also reached agreements on the
(nderstanding and implications of certain articles of GATT '03?, vi<, pre=shipment
inspection, r(les of origin, import licensing, anti = d(mping meas(res and co(ntervailing
d(ties, safeg(ards, s(!sidies etc"
K"91 5.plain TRIPs Agreement and implication of TRIPs Agreement
of #T$ on mem!er nations" $R
#rite note on TRIPs Agreement" (M" %&'')
)ns! )! )GR##-#1T /1 TR)# R#5)T# I1T#55#CT8)5 PR/P#RT9 RIG:T"
(TRIPs) :3
Intellect(al propert Rights seek to protect the interest of inventors and developers of
prod(cts and processes from !eing copied ! others" The main feat(res of TRIPs
agreements 1=
N Minim(m Standards of protection to !e provided ! each mem!er"
N ,omestic proced(res m(st !e p(t in place for enforcement of IPRs ! each mem!er nation"
N ,isp(te Settlement !etween #T$ mem!ers"
Agreement on TRIPs cover the following areas 8opright and related rights, trade
marks incl(ding services marks, ind(strial designs, geographical indications, patents, lao(t
designs of integrated circ(its and protection of (ndisclosed information or trade secrets"
#T$Hs TRIPs agreement is an attempt to narrow down the gaps in the wa these
rights are protected aro(nd the world" ,isp(tes over TRIPs agreement are to !e governed
! #T$ disp(te settlement proced(res" TRIPs agreement desires to red(ce distortions and
impediments to international trade while protecting intellect(al propert rights"
4! P/"ITI7# I-P5IC)TI/1" /2 TRIPs )GR##-#1T :3
') Patents :3
Bnder Agreement on TRIPs, protection is given to patents, coprights, lao(t designs
etc" 6or 5g"1= when patented dr(gs get marketing rights for certain period, and if
some other firm wants H to (se that prod(cts name, the have to take permission from
patent holder" Permission ma !e given onl after signing agreement for roalt or fees"
TRIPs agreement has also given a !oost to Research and ,evelopment in the field
of pharmace(ticals, engineering, electronics etc" Th(s agreement on TRIPs have !enefited
the mem!er nations of #T$"
;) Pu&lic :ealth :3
The ,oha 8onference held in ,oha, Katar in 2ov" %&&', recognised the need to
protect p(!lic health and to provide medicines to all" Fere the developing co(ntries need not
so(rce their essential medicines at high cost from M28s from developed co(ntries, which
have patents" 8o(ntries like India, 8hina and :ra<il wo(ld !enefit as the possess the
reso(rces and technolog to man(fact(re essential medicines and e.port these witho(t
having to sec(re comp(lsor licensing from patent holders"
<) Geographic Indication "tatus (GIS)1=
#T$ also provides GIS for certain items" $nce a co(ntr gets GIS, the firms from
onl that co(ntr can (se the generic !rand name" 6or 5g" 1= India has o!tained GIS for
,arEeeling Tea and also for other prod(cts" This means, onl Indian firms can (se ,arEeeling
Tea !rand, which shows ,arEeeling Tea prod(ced in India is (ni>(e"
4) 1#G)TI7# I-P5IC)TI/1" /2 TRIPs )GR##-#1T
') 2a%ours e%eloped 1ations
Agreement on TRIPs favo(rs developed co(ntries as (nder TRIPs protection "is
given to IPRs s(ch as patents, trade marks, lao(t designs etc" Th(s it favo(rs developed
nations as the have large n(m!er of patents"
;) Agric(lt(re
In Agric(lt(re patenting of plant varieties is done thro(gh TRIPs" This ma have
serio(s implications for developing co(ntries" M28s are in a position to develop almost all
new varieties with the help of their financial reso(rces and e.pertise" This ma transfer all
gains in the hands of M28s"
<) Micro = $rganisms
Research in Micro=organisms is closel linked with the development of agric(lt(re,
pharmace(ticals and ind(strial !iotechnolog" Patenting of Micro=organisms again will
!enefit M28s"
K"3 1 5.plain the implications of TRIMs Agreement of #T$ on mem!er nations" $R
#rite note on TRIMs" (M"%&'')
Ans" A) AGR55M52T $2 TRA,5 R5;AT5, I2J5STM52T M5ASBR5S (TRIMs)
Agreement on Trade Related Investment Meas(res (TRIMs) incl(de introd(ction of
meas(res to !e adopted ! mem!er co(ntries to treat foreign investments on par with
domestic investments and also removal of >(antitative restrictions on imports" It is an
attempt ! a national government to place conditions on foreign compan that wishes to
operate within its !orders"
8ertain investment meas(res that discriminate against foreign investment were to !e
withdrawn s(ch as
a) $!ligation on foreign investors to (se local inp(ts"
&) To prod(ce for e.ports as a condition to o!tain imported inp(ts"
c) To meet e.port o!ligation"
d) 5mploment of local people"
e) Technolog Transfer re>(irements"
$) Bse of specific prod(ction technolog"
g) ;ocal e>(it re>(irement"
h) 8ontrol on (se of imported inp(ts"
The mem!er nations of #T$ incl(ding India have withdrawn the a!ove meas(res to
enco(rage trade related investment"
TRIMs are of two tpes1=
N Positive TRIMs 1=
These incl(de investment incentive to move to the co(ntr in >(estion or to move to
a specific place within that co(ntr"
N 2egative TRIMs 1O
These incl(de local e>(it re>(irements, licensing re>(irements, foreign e.change
restrictions, transfer of technolog re>(irements, trade !alancing re>(irements, import =
e.port re>(irements etc"
:) P$SITIJ5 IMPA8T $6 TRIMs 1=
TRIMs agreement have positive impact on developing co(ntries as foreign
investment is treated at par with domestic investment" 6or 5g" TRIMs agreement will
enco(rage foreign firms to invest in India" This will generate a good amo(nt of competition"
In order to s(rvive, Indian firms will have to !e proactive with competitive strategies, which
not onl wo(ld improve their performance, !(t also wo(ld provide !etter service to
8) 25GATIJ5 IMPA8T $6 TRIMs 1=
,eveloping co(ntries (incl(ding India) have withdrawn a n(m!er of meas(res that
restricts foreign investments" TRIMs agreement also favo(rs developed nations" M28s from
developed co(ntries with their h(ge financial and technological reso(rces can displace
Indian ind(str and pla a dominant role" :esides foreign firms will !e free to remit profits,
dividends, etc" to parent compan" This will ca(se foreign e.change drain on developing
K" - 1 ,isc(ss the implications of GATS Agreement of #T$ on mem!er nations" $R
#rite note on GATS"
Ans" A) G525RA; AGR55M52T $2 TRA,5 I2 S5RJI85S (GATS)
6or the first time, in Br(g(a Ro(nd, trade in services like !anking, ins(rance, travel,
transport etc" was !ro(ght (nder negotiations" The General Agreement on Trade in Services
(GATS) is the first m(ltilateral agreement on trade in services" All mem!er nations are
!o(nd to open their services sector to domestic private and foreign competition"
GATS has two maEor re>(irements
') To grant the Stat(s of Most 6avo(red 2ation (M62) to other mem!er nations on non=
discriminate !asis with regard to trade in services and
;) Maintenance of transparenc" There is also commitment for progressive
The inc(lsion of Services in agreement shows their growing importance in world
econom" Bnder GATS, India has made commitment for 99 activities where foreigners are
allowed to enter" The choice of activities have !een !ased on national !enefit like impact on
capital inflows, technolog, emploment etc"
Improvements in the >(alit of service that will emerge from li!eralisation and
increased competition will contri!(te to increase in efficienc, prod(ctivit, cons(mer welfare
and growth in developing co(ntries" 2o do(!t there is a wide difference in the >(alit of
services rendered !etween the developed and developing co(ntries" The incl(sion of trade
in service sector is likel to !e more !eneficial to developed co(ntries than to developing
GATS provide an opport(nit not onl to avail services from other mem!er co(ntries
!(t also to increase the >(alit of its own services d(e to competition" 6oreign firms are
allowed in n(m!er of service sectors" Thro(gh Eoint vent(res or partnership foreign firms
ma enter in India" This will ena!le Indian firms to e.pand and diversif their service
activities with professional e.pertise and foreign s(pport"
In man developing co(ntries, sectors like travel and to(rism, hotels, retail trading,
!anking, ins(rance, ed(cation and comm(nication are open for international competition"
8" 25GATIJ5 IMPA8T $6 GATS 1=
In GATS agreement mem!er nations have to open (p the services sector for foreign
companies" ,eveloping co(ntries incl(ding India have opened (p the services sector in
respect of !anking, ins(rance, comm(nication, telecom, transport etc" to foreign firms"
,eveloping co(ntries ma find it diffic(lt to compete with giant foreign firms d(e to lack of
reso(rces and professional skills"
K")1 5.plain the impact of #T$ Agreements on Indian 5conom" $R
Analse the impact of #T$ agreements on India" #hat are its Pros and 8oinsP
Ans" A) IMPA8T $6 #T$ AGR55M52TS $2 I2,IA2 58$2$ML 1=
The signing of #T$ agreements will have far reaching effects not onl on India+s
foreign trade !(t also on its internal econom" Altho(gh the (ltimate goal of #T$ is to free
world trade in the interest of all nations of the world, et in realit the #T$ agreements has
!enefitted the developed nations more as compared to developing ones" The impact of
#T$ on India+s econom is staged as follows 1=
I! Positi%e Impact I 4ene$its I )d%antages I Gains $rom WT/ :3
The Positive impact of #T$ on IndiaHs econom can !e viewed from the following
') Increase In #=port #arnings :3
5stimates made ! #orld :ank, $rganisation for 5conomic 8o=operation and
,evelopment ($58,) and the GATT Secretariat, shows that the income effects of the
implementation of Br(g(a Ro(nd package will !e an increase in traded merchandise
goods" It is e.pected that India+s share in world e.ports wo(ld improve"
;) )gricultural #=ports :3
Red(ction of trade !arriers and domestic s(!sidies in agric(lt(re is likel to raise
international prices of agric(lt(ral prod(cts" India hopes to !enefit from this in form of higher
e.port earnings from agric(lt(re" This seems to !e possi!le !eca(se all maEor agric(lt(re
development programmes in India will !e e.empted from the provisions of #T$ Agreement"
<) #=port /$ Te=tiles )nd Clothing :3
#ith the phasing o(t of M6A (M(lti = 6i!re Arrangement), e.ports of te.tiles and
clothing will increase and this will !e !eneficial for India" The developed co(ntries
demanded a '- ear period of phasing o(t of M6A, the developing co(ntries, incl(ding
India, insisted that it !e done in '& ears" The Br(g(a Ro(nd accepted the demand of the
latter" :(t the phasing o(t Sched(le favo(rs the developed co(ntries !eca(se a maEor
portion of >(ota regime is going to !e removed onl in the tenth ear, i"e" %&&-" The removal
of >(otas will !enefit not onl India !(t also ever other co(ntrH"
>) -ultilateral Rules )nd isciplines :3
The Br(g(a Ro(nd Agreement has strengthened M(ltilateral r(les and disciplines"
The most important of these relate to anti = d(mping, s(!sidies and co(ntervailing
meas(res, safeg(ards and disp(tes settlement" This is likel to ens(re greater sec(rit and
predicta!ilit of the international trading sstem and th(s create a more favo(ra!le
environment for India in the 2ew #orld 5conomic $rder"
?) Gro@th To "er%ices #=ports :3
Bnder GATS agreement, mem!er nations have li!eralised service sector" India
wo(ld !enefit from this agreement" 6or 5g1= India+s services e.ports have increased from
a!o(t - !illion BS Q in '00- to 0) !illion BS Q in %&&0='&" Software services acco(nted for
a!o(t 3-* of service e.ports"
A) 2oreign In%estment :3
India has withdrawn a n(m!er of meas(res against foreign investment, as er the
commitments made to #T$" As a res(lt of this, foreign investment and 6,I has increased
over the ears" A n(m!er of initiatives has !een taken to attract 6,I in India !etween %&&&
and %&&%" In %&&0='&, the net 6,I in India was BS Q '4"4 !illion"
II! 2egative Impact C Pro!lems I ,isadvantages $f #T$ Agreements on Indian 5conom 1=
') TRIPs 1=
The Agreement on TRIPs at Br(g(a Ro(nd weights heavil in favo(r of
M(ltinational 8orporations and developed co(ntries as the hold a ver large n(m!er of
patents" Agreement on TRIPs will work against India in several was and will lead to
rponopol of patent holding M28s" As a mem!er of #T$, India has to compl with
standards of TRIPs"
The negative impact of agreement on TRIPs on Indian econom can !e stated as
a) Pharmace(tical Sector 1=
Bnder the Patents Act, '0?&, onl process patents were granted to chemicals, dr(gs
and medicines" This means an Indian pharmace(tical compan onl needed to develop and
patent a process to prod(ce and sell that dr(g" This proved !eneficial to Indian
pharmace(tical companies as the were in a position to sell >(alit medicines at low prices
!oth in domestic as well as in international markets" Fowever, (nder the agreement on
TRIPs, prod(ct patents needs to !e granted" This will !enefit the M28s and it is feared that
the will increase the prices of medicines heavil, keeping them o(t of reach of poor" Again
man Indian pharmace(tical companies ma !e closed down or taken over ! large M28s"
!) Agric(lt(re 1=
The Agreement on TRIPs e.tends to agric(lt(re thro(gh the patenting of plant
varieties" This ma have serio(s implications for Indian agric(lt(re" Patenting of plant
varieties ma transfer all gains in the hands of M28s who will !e in a position to develop
almost all new varieties with the help of their h(ge financial reso(rces and e.pertise"
c) Microorganisms 1=
The Agreement on TRIPs also e.tends to Microorganisms as well" Research in micro
= organisms is closel linked with the development of agric(lt(re, pharmace(ticals and
ind(strial !iotechnolog" Patenting of micro = organisms will again !enefit large M28s as
the alread have patents in several areas and will ac>(ire more at a m(ch faster rate"
;) TRIMs 1=
Agreement on TRIMs provide for treatment of foreign investment on par with
domestic investment" This Agreement too weights in favo(r of developed co(ntries" There
are no provisions in Agreement to form(late international r(les for controlling restrictive
!(siness practices of foreign investors" /n case of developing co(ntries like India,
compling with Agreement on TRIMs wo(ld mean giving (p an plan or strateg of self =
reliant growth !ased on locall availa!le technolog and reso(rces"
<) G)T" :3
$ne of the main feat(res of Br(g(a Ro(nd was the incl(sion of trade in services in
negotiations" This too will go in favo(r of developed co(ntries" Bnder GATS agreements, the
mem!er nations have to open(p services sector for foreign companies" The developing
co(ntries incl(ding India have opened (p services sector in respect of !anking, ins(rance,
comm(nication, telecom, transport etc" to foreign firms" The domestic firms of developing
co(ntries ma find it diffic(lt to compete with giant foreign firms d(e to lack of reso(rces I
professional skills"
>) 2on = Tariff :arriers 1=
Several co(ntries have p(t (p trade !arriers and non = tariff !arriers following the
formation of #T$" This has affected the e.ports from developing co(ntries" The Bnion
8ommerce Ministr has identified '9 different non = tariff !arriers p(t (p ! ') co(ntries
against India" 6or eg" M6A (M(lti = fi!re arrangements) p(t ! BSA and 5(ropean Bnion is a
maEor !arrier for Indian te.tile e.ports"
?) Agreement $n Agric(lt(re (A$A)
The A$A is !iased in favo(r of developed co(ntries" The iss(e of food sec(rit to
developing co(ntries is not addressed ade>(atel in A$A" The e.istence of glo!al s(rpl(ses
of food grains does not impl that the poor co(ntries can afford to !(" The dependence on
necessar item like foodgrains wo(ld adversel affect the :alance of Pament position"
A) Ine>(alit #ithin The Str(ct(re $f #T$
There is ine>(alit within the str(ct(re of #T$ !eca(se the agreements and
amendments are in favo(r of developed co(ntries" The mem!er co(ntries have to accept all
#T$ agreements irrespective of their level of economic development"
+) ;,8 5.ports
The )th Ministerial 8onference took place at Fong Rong in ,ecem!er %&&-" In this
8onference, it was agreed that all developed co(ntr mem!ers and all developing co(ntries
declaring themselves in a position to do so, will provide d(t = free and >(ota = free market
access on a lasting !asis to all prod(cts originating from all ;east ,eveloped 8o(ntries
(;,8)" India has agreed to this" 2ow IndiaHs e.port will have to compete with cheap ;,8
e.ports internationall" 2ot onl this, the cheap ;,8 e.ports will come to Indian market and
compete with domesticall prod(ced goods"
India will face several pro!lems in the process of compling with #T$ agreements,
!(t it can also reap !enefits ! taking advantage of changing international !(siness
environment" 6or this it needs to develop and concentrate on its areas of core