TABLE OF CONTENTS

Project Synopsis Submission for the Subject of Public International Law................................1

1. Topic..................................................................................................................................1

2. About the Topic..................................................................................................................1

3. Research Questions............................................................................................................2

4. Target Audience/ Implications for Readership..................................................................2

5. Specific Areas....................................................................................................................2

1. Mega-regional trade agreements..............................................................................2

2. Competition Law and Taxation problems................................................................3

3. The E-commerce rules.............................................................................................3

4. The Appellate Body Crisis.......................................................................................4

INDEX OF AUTHORITIES....................................................................................................III

ABSTRACT.............................................................................................................................VI

INTRODUCTION..................................................................................................................VII

Concept behind the WTO multilateralism........................................................................VIII

MEGA-REGIONAL TRADE AGREEMENTS......................................................................IX

Non-Discrimination and the exception under Article XXIV..............................................IX

5. Complexity in Rules of Origins..............................................................................X

6. RTAs go against the Purpose of GATT..................................................................X

7. They create an unlevelled playing field.................................................................XI

8. RTAs incur high costs for companies and nations................................................XI

COMPETITION LAW AND TAXATION PROBLEMS.......................................................XI

Sources of conflict in the absence of such a global regime................................................XII

1. Difficulty to enforce laws against companies registered and operating abroad. .

XII 2. Cross border mergers and takeovers...................................................................XIII

3. Extraterritoriality.................................................................................................XIII

4. Anti-Competitive behaviour of state owned companies.....................................XIII

Page|I
 The rationale behind having a global competition regime................................................XIV

1. Inadequacy of WTO law on Anti-trust issues.....................................................XIV

2. RTAs are good building blocks but not the ultimate objective..........................XIV

3. Prosecution of players indulging in global anti-competitive practices has not been

possible..........................................................................................................................XIV

4. Domination of Developed Countries can be countered.......................................XV

The Integrated Policy of the European Union and its application to our case...................XV

Taxation............................................................................................................................XVI

RISKS TO THE GLOBAL MULTILATERAL SYSTEM.................................................XVII

Protectionism is not the way forward..............................................................................XVII

Better Review of Regional Trade Agreements...............................................................XVIII

Politicization happening irrespective of Multilateralism...............................................XVIII

REASONS FOR PREFERENCE OF RTAs OVER MULTILATERALISM......................XIX

No requirement of consensus-based mechanisms like the WTO......................................XIX

Stepping stones for domestic policies...............................................................................XIX

Politicization of trade can be curbed via the RTAs:...........................................................XX

Suggestions for Review of RTAs.......................................................................................XX

1. Division into WTO-Plus and WTO-beyond commitments..................................XX

2. Identification of common policy areas.................................................................XX

3. Set of best practices created.................................................................................XX

P a g e | II
 INDEX OF AUTHORITIES

CASES
Hartford Fire Ins. Co. v. California, 509 U.S. 764...................................................................14

OTHER AUTHORITIES
Multilateral Competition Policy and Economic Development: A Developing Country
Perspective on the European Community Proposals, United Nations Conference on Trade
and Development, UNCTAD/DITC/CLP/2003/10,
https://unctad.org/en/Docs/ditcclp200310_en.pdf...............................................................16
WORLD TRADE ORGANIZATION, REGIONAL TRADE AGREEMENT DATABASE,
http://rtais.wto.org/UI/PublicSearchByMemberResult.aspx?MemberCode=918&lang=1&r
edirect=1...............................................................................................................................11

BOOKS
BEREND R. PAASMAN, MULTILATERAL RULES ON COMPETITION POLICY: AN OVERVIEW OF
THE DEBATE, (1999).............................................................................................................13
BEREND R. PAASMAN, MULTILATERAL RULES ON COMPETITION POLICY: AN OVERVIEW OF

THE DEBATE, (December 1999)............................................................................................14

Francesco Ducci, Competition Law and Policy Issues in the Sharing Economy, in LAW AND
THE "SHARING ECONOMY" REGULATING ONLINE MARKET PLATFORMS 295, 318 (Derek
McKee et al., ed., 2018).......................................................................................................13
KYLE BAGWELL & ROBERT W. STAIGER, THE ECONOMICS OF THE WORLD TRADING SYSTEM
40 (2002)................................................................................................................................9

ARTICLES
Amit Ranjan Mishra, India seeks solution on taxing digital firms, LIVEMINT (June 9, 2019)
https://www.livemint.com/politics/news/india-seeks-solution-on-taxing-digital-firms-
1560103831772.html...........................................................................................................17
BCCL, WTO ministerial meet aims at re-energising multilateral trading system: India,
ECONOMIC TIMES, (May 14, 2019)
//economictimes.indiatimes.com/articleshow/69325297.cms?from=mdr&utm_source=cont
entofinterest&utm_medium=text&utm_campaign=cppst....................................................18
EU and 47 nations revive e-commerce talks, ARÊTE NEWS, (Jan. 25, 2019),
https://aretenews.com/eu-and-47-nations-revive-e-commerce-talks/..................................18

P a g e | III
India is one of the latest countries to ratify the same. Prabhakar KS, India ratifies multilateral
tax convention, MNE TAX (June 13, 2019), https://mnetax.com/india-ratifies-multilateral-
convention-34322.................................................................................................................17
Jeff Cox, Trade Gap Widens more than expected to $54.9 Billion, CNBC NEWS, (Oct. 4,
2019), https://www.cnbc.com/2019/10/04/us-trade-deficit---august-2019.html.................19
Kirtika Suneja, India To Oppose Global Rules On E-Commerce At G-20 Meet, ECONOMIC
TIMES, (June 19, 2019), https://economictimes.indiatimes.com/news/economy/foreign-
trade/india-south-africa-asks-wto-to-revisit-moratorium-on-customs-duties-on-e-
commerce-trade/articleshow/69655080.cms........................................................................18
Press Trust of India, Collapse of WTO's dispute system, imbalance in reform agenda to
impact developing nations: India, ECONOMIC TIMES, (May 13, 2019)
economictimes.indiatimes.com/articleshow/69306056.cms?from=mdr&utm_source=conte
ntofinterest&utm_medium=text&utm_campaign=cppst.......................................................9
U.S. intellectual property complaints a 'political tool': China state media, REUTERS
(SHANGHAI), (May 20, 2019), https://www.reuters.com/article/us-china-ip/u-s-intellectual-
property-complaints-a-political-tool-china-state-media-idUSKCN1SQ03G.......................19

CONVENTIONS
Marrakesh Agreement Establishing the World Trade Agreements Organization, Apr. 15,
1994, 1867 U.N.T.S. 154, art. I [“GATT”]..........................................................................10

JOURNALS
Jagdish Bhagwati, US Trade Policy: The Infatuation with FTAs, COLUMBIA UNIV.
DISCUSSION PAPER SERIES NO. 726, (Apr. 1995),
https://core.ac.uk/download/pdf/161436448.pdf.................................................................11
Prof. Ernst-Ulrich Petersmann, The 2018 Trade Wars as a Threat to the World Trading
System and Constitutional Democracies, 10(2) TRADE L. & DEV. 1, 3 (2018)...................20
Robert D. Anderson & Anna Caroline Muller, Competition Law/Policy and the Multilateral
Trading System: A Possible Agenda for the Future, THE E15 INITIATIVE (Sept. 2015),
http://e15initiative.org/publications/competition-lawpolicy-and-the-multilateral-trading-
system-a-possible-agenda-for-the-future.............................................................................12
William E. Kovacic and Marianela Lopez-Galdos, Lifecycles of Competition Systems:
Explaining Variation in the Implementation of New Regimes (2016) 79 L. CONTEMP.
PROBLEMS 86, https://scholarship.law.duke.edu/lcp/vol79/iss4/4.......................................13

P a g e | IV
Youri Devuyst, Toward a Multilateral Competition Law Regime? 6(3) GLOBAL
GOVERNANCE, 319-338 (2000)............................................................................................13

REPORTS
60 Years Of The New York Convention: A Triumph Of Trans-National Legal Co-Operation,
Or A Product Of Its Time And In Need Of Revision?, HERBERT SMITH FREEHILLS, (July 27,
2018), https://www.herbertsmithfreehills.com/latest-thinking/60-years-of-the-new-york-
convention-a-triumph-of-trans-national-legal-co-operation................................................19
Lejárraga, I., Deep Provisions in Regional Trade Agreements: How Multilateral-friendly?:
An Overview of OECD Findings, 168 OECD TRADE POLICY PAPERS, 5 (2014)
http://dx.doi.org/10.1787/5jxvgfn4bjf0-en...........................................................................19
OFF. U.S. TRADE REP., 2018 TRADE POL‟Y AGENDA & 2017 ANN. REP. ON TRADE
AGREEMENTS PROG. 22-28 (Mar. 2018),
https:/ustr.gov/sites/default/files/files/Press/Reports/2018/AR/2018%20Annual%20Report
%20FINAL.PDF (last visited Dec. 9, 2018)........................................................................20

SPEECHES
Press Release, World Trade Organization News, Multilateralism is fundamental to US-LED
strategy for Global stability and prosperity - WTO Director-General (Oct. 13, 1995)
https://www.wto.org/english/news_e/pres95_e/pr024_e.htm................................................8

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 ABSTRACT

There is a threat to multilateralism all across the globe: with the US backing out of the Paris
Agreement, the UK withdrawing from the EU, India and South Africa blocking the e-
commerce rules being some recent examples. The reluctance towards multilateral
agreements seems to be based out of an ideological shift to the right, i.e. a shift towards
nationalistic tendencies and due to spate of unilateral measures by some countries. Such
tendencies, however, are antithetical to the existence of any multilateral framework,
especially the global trade framework of the WTO. The authors have tried to explore the
political and legal reasons which have led to a threat to the system and the probable
opportunities for the WTO to redeem itself as the frontrunner in the global trade
negotiations.

P a g e | VI
 INTRODUCTION

There are three levels at which trade takes place at the global level amongst the WTO
members:

1. The Bilateral level,

2. An expanding Regional level and
3. The Multilateral level.

Mr. Renato Ruggiero, the Director General of the WTO in 1995, addressed the threat posed
by bilateralism and regionalism to International Trade at the inception of the organization
itself. He stated that although trade obviously can‟t be regulated only at the multilateral level,
the primacy of the same should be maintained. The other two levels shouldn‟t become
possible alternatives to the multilateral system.4

He stated that international trade couldn‟t happen only at the multilateral level. Thus, there
would be a need to strike a balance between the bilateral/regional approaches and the
multilateral system. However, the natural complementarity under primacy of multilateralism,
he said, was quintessential to global trade.5

He gave six reasons which are crucial to understand the reason multilateral approach is the
most preferred approach for trade6:

1. It allows any business to trade on the most favourable terms globally. It allows a
reduction in the costs and gives countries market access.
2. It reduces transaction costs. Doing business across frontiers would become much
more difficult if there are complex and time-consuming mechanisms.
3. Developing nations had recently adopted the market-based trade and thus, these
transition economies needed to remain within the multilateral system with fair rules.
4. It curbs politicization of trade unlike the bilateral approach. Power-based relations
become the basis for coming to decisions rather than rules-based relations. This is

4
Press Release, World Trade Organization News, Multilateralism is fundamental to US-LED strategy for
Global stability and prosperity - WTO Director-General (Oct. 13, 1995)
https://www.wto.org/english/news_e/pres95_e/pr024_e.htm.
5
Id.
6
Id.

P a g e | VII
 being dealt with by “multilateralized regionalism”7 to some extent with countries
bargaining power against singular powerful countries like the US.
5. Reciprocity-based bargaining can harm the countries more than help them. A case in
point is the US-China Trade war. There is just imposition of retaliatory measures one
after another.
6. A multilateral system provides an impartial dispute settlement system. The DSB of
the WTO has been quite often claimed to be a crown jewel of the WTO.

This sums up wonderfully the advantages posed by the multilateral system over other forms
of systems.

CONCEPT BEHIND THE WTO MULTILATERALISM

The government of US has domestic pressure from domestic producers belonging to an

import-competing sector. It can easily increase tariffs to protect the domestic industries which
serve as its revenue.

The nations can provide import relief to these domestic industries at the expense of shifting
the burden to the other trading partners as there is no “world jail” to which government
officials can be sent. The reason for not doing it and having a successful multilateral system
at the WTO is a “balance of terror”: fear that if countries resort to trade restrictions- that
would have a far worse long term impact than the short term benefits derived from the
imposition of customs duties.8

Part II deals with Mega-Regional Trade Agreements and how they are posing a significant
threat to this system of multilateralism under the WTO. Part III deals with competition-
related issues globally and how the WTO members couldn‟t tackle such issues. It also
discusses how other organizations like OECD have been able to exploit the same
opportunities like coming up with a framework for taxation issues. Lastly, it discusses the
opportunity in the form of negotiations in e-commerce rules which can be negotiated by the
parties.9 Part IV deals with the flaws in the present system are analyzed and how do RTAs

7
The term basically means regionalism leading to a more effective multilateral system.
8
The entire analogy is borrowed from KYLE BAGWELL & ROBERT W. STAIGER, THE ECONOMICS OF THE WORLD
TRADING SYSTEM 40 (2002).
9
Press Trust of India, Collapse of WTO's dispute system, imbalance in reform agenda to impact developing
nations: India, ECONOMIC TIMES, (May 13, 2019)
economictimes.indiatimes.com/articleshow/69306056.cms?from=mdr&utm_source=contentofinterest&utm_me
dium=text&utm_campaign=cppst.

P a g e | VIII
address them. Part V is the conclusion which deals with some reasons of the complementarity
of the multilateral system with the RTAs.

MEGA-REGIONAL TRADE AGREEMENTS

NON-DISCRIMINATION AND THE EXCEPTION UNDER ARTICLE XXIV

Non-discrimination among trading partners is one of the most important concepts of the
General Agreement on Tariffs and Trade (GATT), the agreement governing trade in goods
across the globe. The very first article of the agreement speaks of the Most Favored Nation
Treatment (MFN)10.

However, an exception has been provided for customs unions and free trade areas under
Article XXIV:5 of the GATT as it is stated to actually benefit trade via the reduction in
barriers.11

Article XXIV:4 states that the members recognize the true purpose of the regional
agreements is to facilitate trade and not raise barriers to trade for other contracting parties.
The condition which needs to be fulfilled for establishing such a customs union is that the
duties and regulations should not be higher or more restrictive than the general incidence of
duties and regulations of commerce prior to formation of such union.12

There are 2 types of agreements which promote regionalism and preferentialism respectively:
Regional Trade Agreements (RTAs) and Preferential Trade Agreements (PTAs). The focus of
this paper is on RTAs.

RTAs are emerging as a new way of the “globalized” trade where countries are entering into
agreements like Transatlantic Trade and Investment Partnership (TTIP), EU-Canada
Comprehensive Economic and Trade Agreement (CETA), African Continental Free Trade
Area (AfCFTA), et cetera.

Although Article XXIV of the GATT recognizes the RTAs, their benefits to international
trade need to be analyzed. The RTAs will have a significant impact on IPR protection,
healthcare issues, environment, food safety et cetera.

10
Marrakesh Agreement Establishing the World Trade Agreements Organization, Apr. 15, 1994, 1867 U.N.T.S.
154, art. I [“GATT”].
11
GATT, art. XXIV:5.
12
GATT, art. XXIV:4.

P a g e | IX
There is an ideological inclination of the right to align with policies which are not in
compliance with the multilateral frameworks. Multilateralism was based around the U.S. to a
great extent and since Donald Trump has taken over the office of the President, the country
has been withdrawing form a number of international obligations. The same can be logically
concluded from the growth of regional agreements elsewhere around the globe.

THE SPAGHETTI BOWL EFFECT

The phenomenon was defined by Jagdish Bhagwati for the Asian markets. Bhagwati has
mentioned that regional agreements are certainly beneficial to the global trading system.
However, they become counter-productive to free trade due to their proliferation on a
massive scale and the internal complexity.13 They are not supportive of international trade at a
multilateral system due to the following reasons:

5. Complexity in Rules of Origins

Rules of Origins (RoO) define the goods‟ eligibility under the FTAs‟ preferential tariffs
regimes. Each FTA defines its own geographical conditions of production for concerned
goods. Because of the increase in production complexity and the development of global
supply chains, rules under these RTAs fail to actually depict the goods‟ complex origins in
the international market and thus, become incredibly difficult to enforce.

6. RTAs go against the Purpose of GATT

The EU has led the way in a lot of these agreements (the MERCOSUR and EU are also
deliberating on the negotiations).14

This erodes trust in the WTO and the goal of helping the Least Developed Countries with
their development process as a lot of developed nations are entering into RTAs. One of the
objectives stated in the Preamble of the GATT clearly states that there should be economic
inclusion of the developing and especially the least developed countries in the global trading
system.15

13
Jagdish Bhagwati, US Trade Policy: The Infatuation with FTAs, COLUMBIA UNIV. DISCUSSION PAPER SERIES
NO. 726, (Apr. 1995), https://core.ac.uk/download/pdf/161436448.pdf.
14
For a visual, map-based comparison, see WORLD TRADE ORGANIZATION, REGIONAL TRADE AGREEMENT
DATABASE, http://rtais.wto.org/UI/PublicSearchByMemberResult.aspx?
MemberCode=918&lang=1&redirect=1.
15
GATT, Preamble.

Page|X
Although MERCOSUR is also entering into a number of RTAs, it still lags behind a lot. The
AfCFTA has been brought into force recently with the Regional Comprehensive Economic
Partnership (RCEP) in Asia still undergoing negotiations. Thus, the pecking order clearly
seems to be inverted in comparison to the preamble. The developing and least developed
countries haven‟t entered into a lot of RTAs and the developed countries, on the other hand,
have.16

7. They create an unlevelled playing field.

With the EU and the US entering into the negotiations with smaller nations, they are bound to
have an upper hand in their regional agreements. Thus, the developed nations abuse their
positions of dominance into strong-arming the weaker ones to favourable trading terms.

8. RTAs incur high costs for companies and nations.

RTAs make the process of expansion difficult for the companies. They are associated with
high costs for both governments and firms. There needs to be compliance with the regulations
of the RTAs‟ rules and regulations like proving goods‟ origins. They prevent the smaller
firms from global expansion, further depleting member-countries‟ overall competitiveness.

COMPETITION LAW AND TAXATION PROBLEMS

Globally, there has been an increase in anti-trust activism. Amazon and other e-commerce
based retailers have been accused of predatory pricing. Cases have been filed before the
Competition Commission of India as well. There are issues like the abuse of dominant
position in the market, denial of market access by selling goods below the manufacturing
price, etc. It is one of the few issues that the parties from both sides of the aisle in the US
Congress agree to.

The interaction between trade and competition were an important topic of discussion in the
Doha Rounds of Negotiation, which are a multilateral trade negotiation conference on a
Global Level.17 The WTO had planned on dealing with the competition law related problems

16
For a comparison of the number of RTAs, see supra note 11.
17
Robert D. Anderson & Anna Caroline Muller, Competition Law/Policy and the Multilateral Trading System:
A Possible Agenda for the Future, THE E15 INITIATIVE (Sept. 2015),
http://e15initiative.org/publications/competition-lawpolicy-and-the-multilateral-trading-system-a-possible-
agenda-for-the-future/

P a g e | XI
in 1999. However, the same couldn‟t bear fruit and the negotiations were cancelled in 2004
when it was decided that no further discussions would take place.

The reasons why the negotiations had failed and for the negotiations about global competition
law are:

1. At the time, most of the countries did not have their domestic competition regimes
established. Around 135 countries now have competition regimes.18
2. Inter-connection of the global trade and moreover e-commerce has a huge impact on
all nations and the cross-border effects of deciding on the cases brought before the
judiciary of any 1 nation.

The multilateral economic system does not create any trade barriers for the private companies
that face competition in the global marketplace even though they have managed to create a
system that regulates the governments at a global level. 19 Therefore, despite the several
opportunities that the opening up and the liberalisation of the global market has, it reports
increasing amount of risk of subjecting the smaller firms to a growing number of anti-
competitive practices.20

The increasing number of cases and instances can be used to corroborate the fact and hence it
gives rise to the need for a global mechanism for the regulation of these activities. 21 Given
the nature and the complexity of the transactions involved in the liberal market, this may
require some amount of deliberation that can be done using the WTO as a platform.

SOURCES OF CONFLICT IN THE ABSENCE OF SUCH A GLOBAL REGIME

1. Difficulty to enforce laws against companies registered and operating abroad.

The companies may operate in a country by exporting their goods or by setting up a

subsidiary in that country.22 It may be difficult to prosecute such a company as it may have

18
William E. Kovacic and Marianela Lopez-Galdos, Lifecycles of Competition Systems: Explaining Variation in
the Implementation of New Regimes (2016) 79 L. CONTEMP. PROBLEMS 86,
https://scholarship.law.duke.edu/lcp/vol79/iss4/4.
19
Youri Devuyst, Toward a Multilateral Competition Law Regime? 6(3) GLOBAL GOVERNANCE, 319-338
(2000).
20
Francesco Ducci, Competition Law and Policy Issues in the Sharing Economy, in LAW AND THE "SHARING
ECONOMY" REGULATING ONLINE MARKET PLATFORMS 295, 318 (Derek McKee et al., ed., 2018).
21
Id.
22
See generally BEREND R. PAASMAN, MULTILATERAL RULES ON COMPETITION POLICY: AN OVERVIEW OF THE
DEBATE, (1999).

P a g e | XII
information in a third country. Moreover, it is futile to only restrict the scope of the action on
the assets that are present in the new country as it may own very few assets through the
subsidiary. The brunt of this is generally borne by developing countries that lack resources
and experience to prosecute such firms.23

2. Cross border mergers and takeovers.

There have been several cases of mergers in the past. This leads to the development of
corporations which are of a great size both in terms of resources an in the terms of the market
that they cover. Now, the mergers may be viewed differently across different regulatory
regimes and hence the acceptability may also vary. This can be seen in the airspace industry
through the DeHavillad Case where the merger was allowed by the Canadian regime but it
was denied by the European Commission. The merger of Gillette with Wilkinson Sword had
to be approved in 14 different regimes. This led to incurring huge amount of costs for the
parties.24

3. Extraterritoriality.

In the case of operation in two different national markets, the activities of the company will
be judged in accordance with the regime of the stricter country. This can be seen in the case
of Hatford Fire Insurance Company v. California25 where a practice that was acceptable
under the UK law, where the act was to be undertaken, but it was restricted by the American
Sherman Act and the activity of the firm had a remote impact on the American market, the
California District Court conducted a proceeding against this activity. This precedent could
serve as a source for more active prosecution of the firms outside the US.26

4. Anti-Competitive behaviour of state owned companies.

In certain markets it can be seen that the sector is dominated by the state owned companies.
In the current scenario, the US and the EU companies follow the policy under which they do
not prosecute the state owned companies for their acts. This can be seen through the

23
Id.
24
Id.
25
Hartford Fire Ins. Co. v. California, 509 U.S. 764, as cited in BEREND R. PAASMAN, MULTILATERAL RULES
ON COMPETITION POLICY: AN OVERVIEW OF THE DEBATE, (December 1999).
26
Supra Note 17.

P a g e | XIII
operation of the oil cartel OPEC. However, the future of this is uncertain and hence the
course of action of these policies is unknown.27

THE RATIONALE BEHIND HAVING A GLOBAL COMPETITION REGIME

The logic for pursuing a more systematic attempt to establish a multilateral competition
framework can be based on the following four arguments:

1. Inadequacy of WTO law on Anti-trust issues.

The primary reason for this can be seen as the fact that the WTO agreements merely consist
of bits and pieces of the competition policy and it does not have any substantial legislation on
competition law. This does not give it a general coherence which would only be possible
through a substantial multilateral framework on competition law.28

2. RTAs are good building blocks but not the ultimate objective.

Another reason is the fact that the global community has seen the need to develop to
formulate a worldwide trading system which is beyond regional and bilateral agreements.
This has seen its manifestations through the global application of the Trade Law regime.
Therefore, it gives rise to the need of having a global regime that can regulate anti-
competitive practices.

The rationale behind this is that if there is an effort to remove the trade barriers that local
governments create, it would not make sense if individual players would re-introduce those
restrictions through other forms and practices. The EU has been continually vocal about the
need to have a global competitive regulation through the WTO regime and it has faced
several attempts by the local markets to restrict the consumers from benefiting from a
competitive market by promoting horizontal cartels. This was the reason why there was an
initial inclusion of the competitive regulations in the initial ITO draft.29

3. Prosecution of players indulging in global anti-competitive practices has not been

possible.

27
Id.
28
Supra Note 16.
29
Id.

P a g e | XIV
Thirdly, under the current WTO mechanism, prosecution of anti-competitive activities
against private market barriers created by the deliberate activities of the individual players,
has not been possible. The Fuji-Kodak panel Report of 1998 is an example of the same. The
dispute brought before the WTO panel was that Fuji, a Japanese layer was not allowing
Kodak, its US rival, market access for photographic film paper. The WTO panel refused to
rule in this regard. 30

4. Domination of Developed Countries can be countered.

One of the most important reasons for the development of a global multilateral regime is that
the current regime is dominated by the US and the EU bilateral and treaties and RTA‟s.
Therefore, there is no proper mechanism to include and protect those nations that have not
entered into one of these treaties.

This would lead to the exposure of these countries to the anti-competitive practices of these
nations. Thus the major interest in the development of this system is for the developing
countries so as to protect their consumers and local players from abuses of dominance by the
powerful transnational corporations.31

THE INTEGRATED POLICY OF THE EUROPEAN UNION AND ITS APPLICATION TO OUR CASE

The European law is a supranational law. It goes above the national laws of the members of
the European Union. Therefore, the practice of the firms are regulated on the basis of the
European Law as well as the local laws of each nation.32

Therefore, the European Competition policy encompasses a two-tier system. In addition to

this each country has its own antitrust laws. The reason for this is that the perspective of both
the laws is different. The European law is based on the ideals of Trade and involves the
promotion of a free market economy. To the contrary, the national laws take into
consideration the minute details that their economy entails.33

30
Id.
31
Id.
32
Multilateral Competition Policy and Economic Development: A Developing Country Perspective on the
European Community Proposals, United Nations Conference on Trade and Development,
UNCTAD/DITC/CLP/2003/10, https://unctad.org/en/Docs/ditcclp200310_en.pdf.
33
Id.

P a g e | XV
The European law is largely based on the concept of dominance. Prosecution is initiated
against activities only in case if there is an abuse of dominance in the market by a player.
Through this they seek to protect the long term interest of the suppliers and the competitors
and their main aim is not to focus on the short term welfare and the protection of the
consumers.34

The rules that are developed in this policy have a uniform application across the board for all
the companies with an exception of only a few. They also include under its sweep the
government companies and private companies alike.35

This European law can be used as a model to develop a general multilateral law. The law will
seek to curb the abuse of dominance by the global players. It will also help to reduce the
uncertainty in the application of the law and make it easier for the firms to avoid the
extraterritorial application of laws. This will in turn benefit the firms as they will be able to
undertake mergers and also be able to consolidate their activities with ease without needing to
validate it under the various regulatory regimes. Moreover, the problem that the developing
nations face of a lack of competitive regimes can also be overcome through such a
multilateral framework.

TAXATION

On the other hand, organizations like OECD, UNCTAD, et cetera have undertaken the task to
come up with multilateral frameworks for dealing with global corporate taxation issues.

Although there has been a lot of discussion on the corporate tax evasion, the Multilateral
Convention to to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit
Shifting (BEPS) is still being ratified by countries. 36 Finance Minister Nirmala Sitharaman
drew the attention of G20 members to fix the issue of taxing profits made by the digital
economy companies.37

The WTO‟s role, thus, can be deliberated as to why it wasn‟t able to come up with the tax
convention and what can it do with anti-trust claims against companies globally. Clearly, the

34
Id.
35
Id.
36
India is one of the latest countries to ratify the same. Prabhakar KS, India ratifies multilateral tax convention,
MNE TAX (June 13, 2019), https://mnetax.com/india-ratifies-multilateral-convention-34322.
37
Amit Ranjan Mishra, India seeks solution on taxing digital firms, LIVEMINT (June 9, 2019)
https://www.livemint.com/politics/news/india-seeks-solution-on-taxing-digital-firms-1560103831772.html.

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framework for the same is needed but the WTO shrugs its shoulders on these key issues like
tax evasion and competition law. It brings out a structural weakness in the WTO-version of
multilateralism which needs to be fixed.

E-COMMERCE RULES

Like the competition negotiations, the negotiations for e-commerce rules were also stalled
after the EU had come up with the European initiative in e-commerce in 1997. They were
revived this year in January at the Wold Economic Forum‟s meeting in the Swiss town of
Davos. There were 47 nations along with the EU who agreed to negotiations on e-commerce
guidelines and cross-border data flows.38

India has been a front runner in the countries opposing changes to the e-commerce rules with
the major reason being a loss of revenue loss of $500 million due to the moratorium on
charging customs duties on electronic transmissions. The opposition by India and South
Africa brings the consensus-based decision making into question.39

Suresh Prabhu, in the recently concluded WTO Ministerial Meeting of Developing Countries,
stated that when trade tensions show no signs of abating and protectionist tendencies are on
the rise which makes it very essential to collectively debate and discuss the way forward in a
multilateral framework.40

They are indeed great opportunities for India to exploit the negotiations. India is coming up
with its own cryptocurrency and digital signature and the resultant smart contracts would be
dependent on a global e-commerce network. It would be advantageous to India‟s ICO
markets and help it raise capital.

RISKS TO THE GLOBAL MULTILATERAL SYSTEM

PROTECTIONISM IS NOT THE WAY FORWARD

38
EU and 47 nations revive e-commerce talks, ARÊTE NEWS, (Jan. 25, 2019), https://aretenews.com/eu-and-47-
nations-revive-e-commerce-talks/.
39
Kirtika Suneja, India To Oppose Global Rules On E-Commerce At G-20 Meet, ECONOMIC TIMES, (June 19,
2019), https://economictimes.indiatimes.com/news/economy/foreign-trade/india-south-africa-asks-wto-to-
revisit-moratorium-on-customs-duties-on-e-commerce-trade/articleshow/69655080.cms.
40
BCCL, WTO ministerial meet aims at re-energising multilateral trading system: India, ECONOMIC TIMES,
(May 14, 2019)
//economictimes.indiatimes.com/articleshow/69325297.cms?from=mdr&utm_source=contentofinterest&utm_m
edium=text&utm_campaign=cppst..

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Resolving trade asymmetries unilaterally can prove to be an uphill task. This has been
considered by the US administration and they have entered into talks with China for the
reduction of the trade deficit. The US trade deficit, resulting from the tariffs on China and
EU, stood at more than $54.5 billion.41

There are issues which need to be addressed on part of China as well like the protection of
intellectual property rights of US Companies operating in China. However, even after the
imposition of sanctions, China was not willing to give authorization to an external body to
review its domestic policy. Thus, there was nothing effectively achieved out of the entire
process. It just became a blame game.42

As can be demonstrated by the manner in which arbitration has evolved, cosmopolitan laws
are more efficient in bringing about changes on a global level as well as within each nation‟s
system like the New York Convention for enforcement of foreign arbitral awards.43

BETTER REVIEW OF REGIONAL TRADE AGREEMENTS

The Committee on Regional Trade Agreements (CRTA) has been made as per the
requirements under Article XXIV of GATT to monitor regional agreements and it holds
discussions on the impact of the agreements on the multilateral trading system of WTO.

Thus, the committees “regionalize multilateralism” which is oxymoronic and yet, that is what
is really happening as ground reality. A study based on the political economy underlying
RTAs on services negotiations of Chile, Japan, the EU and the US finds support for their
multilateral-friendliness44.

Thus, the best way forward seems to be via regulation of the RTAs in a manner that they are
in strict compliance with the WTO requirements.

POLITICIZATION HAPPENING IRRESPECTIVE OF MULTILATERALISM

41
Jeff Cox, Trade Gap Widens more than expected to $54.9 Billion, CNBC NEWS, (Oct. 4, 2019),
https://www.cnbc.com/2019/10/04/us-trade-deficit---august-2019.html.
42
U.S. intellectual property complaints a 'political tool': China state media, REUTERS (SHANGHAI), (May 20,
2019), https://www.reuters.com/article/us-china-ip/u-s-intellectual-property-complaints-a-political-tool-china-
state-media-idUSKCN1SQ03G.
43
60 Years Of The New York Convention: A Triumph Of Trans-National Legal Co-Operation, Or A Product Of
Its Time And In Need Of Revision?, HERBERT SMITH FREEHILLS, (July 27, 2018),
https://www.herbertsmithfreehills.com/latest-thinking/60-years-of-the-new-york-convention-a-triumph-of-trans-
national-legal-co-operation.
44
Lejárraga, I., Deep Provisions in Regional Trade Agreements: How Multilateral-friendly?: An Overview of
OECD Findings, 168 OECD TRADE POLICY PAPERS, 5 (2014) http://dx.doi.org/10.1787/5jxvgfn4bjf0-en.

P a g e | XVIII
US has adopted the approach of dealing with political problems via economic retaliation in
the case of Turkey as well when the US imposed trade restrictions in response to Turkey‟s
detainment of an American evangelist pastor on charges of terrorism. 45 This is politicization
of economic disputes which shouldn‟t be done by the US, exploiting its bargaining power.

The US resorts to these measures and then in the Trade Policy Agenda, Mr. Trump claims
that the US has been portrayed in the WTO Disputes as a nation exploiting its power and has
a prevalent bias against itself, which is unfair.46

If Mr. Trump goes on imposing such restrictions, exiting from international agreements like
the Trans-Pacific Partnership, threatening to renegotiate the NAFTA with Canada and
Mexico and applying his vision of achieving a balance in global trade to the world, the results
might turn out to be catastrophic not just for the US but for the entire world.

REASONS FOR PREFERENCE OF RTAS OVER MULTILATERALISM

Regional Trade Agreements are a really attractive alternative to the negotiations at the global
level due to the following reasons:

NO REQUIREMENT OF CONSENSUS-BASED MECHANISMS LIKE THE WTO

The decisions can be achieved faster and thus, guaranteeing efficiency. Even if the RTAs do
have the consensus-based mechanisms, the number of nations wanting to reach an agreement
is much less in comparison to WTO, making the process easier. While the WTO‟s single
undertaking mechanism has proven to be a huge success in the Uruguay Rounds where it
made sure that all the nations‟ needs were discussed. It faces its acid test in the Doha Rounds
of negotiations right now.

STEPPING STONES FOR DOMESTIC POLICIES

It has been stated by a lot of countries that domestic policies should be implemented first
before a global framework (like India with the e-commerce guidelines). The same can be

45
Prof. Ernst-Ulrich Petersmann, The 2018 Trade Wars as a Threat to the World Trading System and
Constitutional Democracies, 10(2) TRADE L. & DEV. 1, 3 (2018).
46
OFF. U.S. TRADE REP., 2018 TRADE POL‟Y AGENDA & 2017 ANN. REP. ON TRADE AGREEMENTS PROG. 22-
28 (Mar. 2018),
https:/ustr.gov/sites/default/files/files/Press/Reports/2018/AR/2018%20Annual%20Report%20FINAL.PDF (last
visited Dec. 9, 2018).

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easily refuted by allowing these plurilateral agreements to exist which would give the nations
a testing phase and place before having global commitments.

POLITICIZATION OF TRADE CAN BE CURBED VIA THE RTAS:

The customs unions or the trade blocs gain bargaining power against other powerful players
at the WTO. Poland in the EU against the US by virtue of its membership of the EU has a
better negotiating stand. Politics getting involved in Trade negotiations is more or less,
inevitable. Regionalism ensures more of a level playing field for all members with the
requisite bargaining power.

SUGGESTIONS FOR REVIEW OF RTAS

However, even after these reasons, the countries just can‟t escape the practicality of the
global production chains, market access, resources, services, labour, etc. Thus, neither system
will die down. Multilateralism can easily foster along with regionalism and the only need is
better regulation of RTAs to be in compliance with the WTO principles.

1. Division into WTO-Plus and WTO-beyond commitments

Like OECD has approached the analysis of RTAs from several angles, the RTAs‟
frameworks can be reviewed with the inventory of provisions that deepen (WTO-plus) and
expand (WTO-beyond) multilateral commitments.

2. Identification of common policy areas.

There are bound to be common policy areas like competition law, IPR protection, health-
related issues, national security interests, etc. They can be analyzed via the CTRA for
maintaining harmony with the WTO.

3. Set of best practices created.

Having a set of rules with the best practices would be beneficial after thorough analysis of the
provisions of RTAs all across the globe. Then co-efficient of similarity and the deviations can
be easily calculated. The same can be done for the GATS as well.

Finally, the 3 step model of Parallelism, Alignment and Replacement (PAR) can be followed
to merge the commitments into Mega-Initiatives, finally resulting in an efficient Multilateral

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system. Exempli Gratia: The Chile-Mexico agreement, subscribed in 1991 went on to become
a comprehensive FTA with deep coverage in 1999 and finally, transformed into an
association agreement.

Other ways of harmonizing can be the scope of further research.

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