World trade law


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Lectures by Dr. Tabrez Ahmad

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World trade law

  1. 1. Dr. Tabrez Ahmad Professor of Law technolexindia.blogspot.comDr. Tabrez Ahmad,
  2. 2. Dr. Tabrez Ahmad,
  3. 3. Agenda What is WTO Tariff and non-tariff barriers What is meant by DUMPING ? How is dumping measured ? The role of material injury and de-menimis in AD The steps in an AD investigation and duty imposition A brief history of AD Various minuses of the AD measurement laws. AD Duties and their IMPACT. Increasing use of AD in WTO Top 10 users of AD in the world. Subsidies and countervailing measures Principles of Non-discrimination under WTO GATT Exceptions Case study Conclusions & Recommendations Dr. Tabrez Ahmad,
  4. 4. Members (148) Applied Countries (28) WTO Members Dr. Tabrez Ahmad,
  6. 6. GENESIS WTO Came into existence on 1-1-1995 with the conclusion of Uruguay Round Multilateral Trade Negotiations at Marrakesh on 15th April 1994, to :  Provide common institutional framework for conduct of trade relations among members  Facilitate the implementation, administration and operation of Multilateral Trade Agreements  Lay down Rules and Procedures Governing Dispute Settlement  Provide Trade Policy Review Mechanism
  7. 7. Dr. Tabrez Ahmad,
  8. 8. GATT WTOGATT was ad hoc and WTO and its agreements areprovisional permanent.GATT had contracting parties WTO has member countriesGATT system allowed existing WTO does not permit this.domestic legislation tocontinue even if it violated aGATT agreement.GATT was less powerful, WTO is more powerful, disputedispute settlement system was settlement mechanism is fastslow and less efficient. Its and more efficient. It is veryruling could be easily blocked. difficult to block the rulings. Dr. Tabrez Ahmad,
  9. 9. OBJECTIVES Raising Standards of livingMarrakesh Agreement establishing the WTO Ensuring full employment Ensuring large and steadily growing volume of real income and effective demand Expanding the production of and trade in goods and services, while allowing for the optimal use of the world’s resources (sustainable development) … seeking both to protect and preserve the environment and to enhance the means for doing so in a a manner consistent with their (the Parties to the Agreement) respective needs and concerns at different levels of economic development. Dr. Tabrez Ahmad,
  10. 10. FUNCTIONS (1) Framework to facilitate the implementation, administration and operation of WTO AgreementsMarrakesh Agreement establishing the WTO Framework to further the objectives of the WTO Agreements Forum for negotiations in matters dealt with under the WTO Agreements Dr. Tabrez Ahmad,
  11. 11. FUNCTIONS (2) Forum for further negotiations (new rules and disciplines) Framework to facilitate the implementation, administration and operation of newMarrakesh Agreement establishing the WTO agreements Dr. Tabrez Ahmad,
  12. 12. FUNCTIONS (3) Framework to administer the Understanding on Rules and Procedures Governing the Settlement of Dispute (DSU)Marrakesh Agreement establishing the WTO Framework to administer the Trade Policy Review Mechanism (TPRM) Dr. Tabrez Ahmad,
  14. 14. The WTO Principles TransparencyEnvironment MFN Protection TreatmentCompetition On BoP National Principles Treatment Of Treatment WTO For LDCsRule Based Free Trading Trade System Principle Dismantling Trade Barriers Dr. Tabrez Ahmad,
  15. 15. Background: Period between the First and Second World Wars: – 1920s: Attempt to organize world trade on a liberal basis. – at the beginning of the 1930s, the monetary system broke down – Reciprocal Trade Agreements and trade restrictions were introduced – Many countries retreated towards an autarkic pattern of production France Germany Spain Italy USA 1913 20% 13% 41% 18% 44% 1925 21% 20% 41% 22% 37% 1931 30% 21% 63% 46% 48%Table: Average tariff rates in selected countries on manufacturedproducts Dr. Tabrez Ahmad,
  16. 16. Period following the Second World War (WW II):1– Memories of the pre-war period: economic reason asmajor cause from World War-II• High reparations from WW I• High inflation rate• High unemployment rate2– Victorious countries (US, Britain) were determined tolearn from mistakes:• Economic success• Strong trade relation• Economic interdependency Dr. Tabrez Ahmad,
  17. 17. Bretton Woods conference (1944) as starting point for a neworder of then world economy with the cornerstones: International Monetary Fund (IMF) International Bank for Reconstruction and Development(IBRD) International Trade Organization (ITO)• IMF was designed to take care of short term problems inconnection with international liquidity• IBRD is one of 5 institutions that comprise the World BankGroup• During negotiations on the ITO in 1946, some countries saw aneed for immediate tariff reductions :-  US took the initiative in preparing a document on a ―general agreement on tariffs and trade‖  Subsequent negotiations in Geneva between a group of 23 countries resulted in a set of mutual tariff reductions (GATT) Dr. Tabrez Ahmad,
  18. 18. 1. Foundation of the GATTThe GATT was signed by its 23 founding members on 30October 1947 and entered into force on 1 January 194823 Founding member countries of the GATT:United States, Canada, Cuba, Brazil,Chile, Australia, New Zealand, China,India, Myanmar, Sri Lanka, Pakistan,Syria, Lebanon, South Africa, Zimbabwe,United Kingdom, France, Belgium, Luxembourg,Netherlands, Norway, Czechoslovakia GATT was introduced as a stepping stonetowards the establishment of the ITO and embodied manyprinciples of the proposed ITO. Dr. Tabrez Ahmad,
  19. 19. Conference in Havana (1947/48):1. What should be the authority of the proposed ITO?2. Disagreement between the US and the UK prevented the ratification of the charter by the USThat is why ITO never came into existence and GATT wasleft as the framework for trade relations (though it was aless ambitious organization than would have been the ITO) Dr. Tabrez Ahmad,
  20. 20. 2. Geneva Round (1947)Time - April 1947 – October1947Duration – 7 monthsCountries – 23Negotiations in this and the succeeding 4 Rounds were on abilateral basis -: ―product-by-product, request-offer‖• members completed 123 negotiations and established 20schedules containing the tariff reductions. which became anintegral part of GATT.• The Agreement covered some 45,000 tariff concessions andabout $10 billion in trade.• First Round was successful since the US was ..– enthusiastic for free trade– was willing to cut its tariffs on imports from Europe– did not put pressure on European countries to abandon theirtrade restrictions Dr. Tabrez Ahmad,
  21. 21. Development of average tariffs in the US from 1865-1967 Geneva round Dr. Tabrez Ahmad,
  22. 22. 3. Annecy Round (1949) Time - April 1949 – August1949 Duration – 5 months Countries –Accession of ten more country (From 23 to 33 ) Denmark, Finland, Sweden, Greece, Nicaragua, Uruguay Haiti, Liberia, Dominican Republic, Italy, All Members negotiated an additional 13,000 tariff reductions from last round. Agreement that the accession of a new member country does only two-third majority of all existing member countries If a member votes again accession it does not need to extend trade policy concessions to this country Denmar USA France Austria UK Italy Germany k1950 3% 11% 14% 18% 18% 23% 25% 26%Table: Average tariff rates in selected countries onmanufactured products Ahmad, Dr. Tabrez
  23. 23. 4. Torquay Round (1950/51)Time - September 1950 – April1951Duration – 8 monthsCountries – Accession of five more countries (33+5 = 38)Austria, Germany, Turkey, Philippines, Peru• Participants completed some 500 negotiations• Additional tariff reductions emerging from thesenegotiations were modest: Negotiations were not consideredto be a ―success―• Major problem of that Round: Dispute between the US andthe UK ―no bilateral tariff cuts on US—UK trade‖• Contracting parties exchanged some 8,700 tariff reductionsof about 25% in relation to the 1948 level.• During the Torquay Round, the US indicated that the ITOCharter would not be re-submitted to the US Congress: Endof ITO. Dr. Tabrez Ahmad,
  24. 24. 5. Geneva Round (1955/56)Time - January 1956 – May 1956Duration – 5 monthsFrom 1951 to 1955, GATT membership increased by onlyone country on net, with the withdrawal of Libeia beingbalanced by the accession of Japan• The momentum toward lower tariffs was lost• Important factor behind the passivity during this period:Growing protectionism in the US (Feeling that the US hadgiven away concessions, while European countries werereluctant in eliminating their trade barriers)• Low-tariff countries were frustrated by their inability tobargain effectively with high-tariff countries.• Fourth Round produced similarly not sufficient results($2.5 billion worth of tariff reductions) Dr. Tabrez Ahmad,
  25. 25. 6. Dillon Round (1960-62) Time - September 1960 – July 1962 Duration – 11 months Background (late 50s): Average tariff rates differed sharply within the European Economic Community (EEC), ranging from 6% for Germany to 19% for Italy:Table: Average tariff rates in European countries on manufacturedproductsDenmar France Austria UK Italy Germany k 1950 3% 11% 18% 18% 23% 25% 26% 1958 6% 10% 17% 15% 17% 19% 6%The Round was divided into two phases:– First phase was concerned for negotiations with EEC memberstates for the creation of a single schedule of concessions for theEEC based on its Common External Tariff (CET)– Second phase was a further general round of tariff negotiations Dr. Tabrez Ahmad,
  26. 26. • Round resulted in 4,400 tariff concessions covering $4.9billion of trade.• Last round of negotiations which were undertaken on abilateral basis:I. Participants came up with lists demanding tariff reductions from their main trading partners.II. These list were the basis for bilateral trade negotiations.III. The Most favored nation principle ensured that all member countries were granted with all trade advantages. In effect, that means no nation will be treated worse than another.• As a result of Dillon Round, tariff rates on manufacturedgoods came down sharply (e.g. common external tariff ofthe EEC fell to 10.4% in 1968)• Agricultural and textile sectors were still not considered Dr. Tabrez Ahmad,
  27. 27. 7. Kennedy Round (1964-67)Time - May 1964 – June1967Duration – 37 monthsCountries – 66•A very ambitious round. It had 4 major goals:  To slash tariffs by half with minimum number of exceptions.  To break down farm trade restrictions.  To strip off non tariff regulations.  To aid developing nations.• The participating countries presented 80% of world trade.• Round named after President John F Kennedy who died the year before the round.• It aimed to increase trade between the US and the European Economic Commission(EEC). Dr. Tabrez Ahmad,
  28. 28. •The round had introduced the linear tariff reduction oracross- the-board which was a formula based approach.Problems:• Tariff reduction in agricultural products was the main bone of contention for US and EEC. Agriculture was by an large left out from tariff cuts.• Disagreement on the linear tariff reductions which resulted in agriculture being treated separately.Achievements:• Industrial tariffs were reduced by 35 percent across the board over a period of 5 years. Tariff concessions were worth $40 billion of world trade. Dr. Tabrez Ahmad,
  29. 29. • An Anti-Dumping code was agreed upon however US never agreed upon it so it had little practical implications. American Selling Price had also been eliminated.• A short lived International Wheat Agreement was intended to stabilize world wheat prices.• Large reductions in grains and chemical products.• Reduction of tariff in tropical products, primary materials and manufactured goods of interest to the less developed countries.• Food aid programme totaling 4.5 million tons a year for developing countries.• As a result of Kennedy Round, the Common External Tariff of the European Community fell to 6.6%.• Kennedy round agreement was signed on June 30,1967; last day of the US negotiating authority under the Trade Expansion Act. Dr. Tabrez Ahmad,
  30. 30. Multilateral Tariff Reductions(Simple Average MFN Tariff Rates, Industrial products)1958 Dillon Round 1968 Ext. Tariff Kennedy Round-------------------------------------------------------------------------------------------------- --------Belgium 9.7 8.7 10.4 6.6France 17.0 15.3 10.4 6.6Germany 6.4 5.8 10.4 6.6Italy 18.7 16.8 10.4 6.6Netherlands 9.7 8.7 10.4 6.6UK 16.5 14.9 14.9 9.2Denmark 5.6 5.2 5.2 3.2Austria 14.9 11.4 11.4 8.2Sweden 6.5 6.3 6.3 4.2Norway 10.3 10.3 10.3 6.4 Dr. Tabrez Ahmad,
  31. 31. 8. Tokyo Round (1973-79)Time - September 1973 – November1979Duration – 74 monthsCountries – 102• Discouraging economic climate during Tokyo Round :– Oil crisis (1973); World-wide ―stagflation‖(Crisis)– Proliferation of non-tariff barriers during the early 1970s.– Strained trade relations between the US, the EC andJapan Dr. Tabrez Ahmad,
  32. 32. Main agreements, understandings,decisions & declarations of Tokyo Round: Agreement on Govt. Procurement, Agreement on Anti-dumping Code, Agreement on Customs Valuation Code, Agreement on Import Licensing procedures, Agreement on Subsidies Code, Agreement on Trade in Civil Aircraft, Declaration on Trade measures taken for Balance of payment purposes, International Dairy Agreement, International Bovine meat agreement, Safeguard Action for development purposes. Dr. Tabrez Ahmad,
  33. 33. US argued for further linear tariff cuts– EC sought greater harmonization of tariffs• After 4 years, an agreement was reached: The ―Swissformula‖t1 = c*t0/(c+t0) – where t0= original tariff and t1 = final tariff (both inpercentage terms)Negotiations resulted in the value of c being set at 16Table: Tariff changes in the Tokyo Round; averages,weighted by MFN imports Pre-Tokyo (%) Post-Tokyo (%) ReductionFinished manufactures 10.3 6.9 33%Semi-manufatures 5.8 4.1 30%Raw materials 0.8 0.4 52%Total industrial products 7.2 4.9 33% Dr. Tabrez Ahmad,
  34. 34. 9. Uruguay Round (1986-94)Time - September 1986 – December1993Duration – 87 monthsCountries – 123• Period following the Tokyo Round– World-wide recession– Trade conflicts between three major trading blocs: US, EC,Japan– US-EC trade disputes centered on agricultural issues (ECbecame exporter)– US wanted Japan to open its domestic market for US exports– EC wanted to limit Japanese export growth• GATT ministerial meeting (1982): Attempt to meet problemsleft by the Tokyo Round failed in ―Resurgence of protectionism‖• US reacted to protectionist pressure and considered theinitiation of a new round of negotiations Dr. Tabrez Ahmad,
  35. 35. • Japan favored a new GATT round: Multilateral negotiationswere preferred to bilateral pressure from the US and the EC• Other countries were mostly in favor of new round:– Smaller industrial countries wished to curtail the tendency ofthe ‗big three‘ to ignore GATT principles– Agricultural-exporting countries were concerned about USproducer subsidies and EC export subsidies– Developing countries wanted to secure greater tariffpreferences• A committee was established to determine the objectives ofa new round of negotiations to be launched in 1986• There was little agreement between the ‗big three‘• Initiative was taken by G9 group of mid-sized industrialnations and G10 group of developing countries led by Indiaand Brazil Dr. Tabrez Ahmad,
  36. 36. Negotiating groups in the Uruguay Rounda) Trade barriers and related matters1) Subsidies and countervailing measures2) Non-tariff measures3) Safeguards4) Tariffsb) Sector specific matters5) Agriculture6) Natural resource products7) Services8) Textiles and clothing9) Tropical products Dr. Tabrez Ahmad,
  37. 37. c) Procedures10) Dispute settlement11) GATT articles12) Functioning of the GATT13) Multilateral Trade Negotiationsd) Others14) Trade related aspects of intellectual property(TRIP‗s)15) Trade related investment measures (TRIMs) Dr. Tabrez Ahmad,
  38. 38. • The goals set at the Uruguay Round were ambitious:– Inclusion of services and intellectual property rights– Better integration of agriculture, textiles and clothing intothe system• The prominence given to agriculture reflected the interestsof the US and the Cairns Group (agricultural net-exportingcountries)• The objectives for agricultural commodities were:– Improved market access for imports– Discipline in direct and indirect producer subsidies– Bringing of all measures affecting import access and exportcompetition within GATT rules and disciplines• Meeting of trade ministers in Montreal in 1988: Fournegotiating groups faced serious problems to find anagreement (Textiles and clothing, safeguards, agriculture,TRIP‘s) Dr. Tabrez Ahmad,
  39. 39. • An agreement on agriculture seemed out of reach:– US wanted abolition of all trade distorting subsidies inagriculture– EC was unwilling to negotiate on the substance of the CAP– Cairns Group threatened to leave all negotiations if anagreement on agriculture was not found• The failure of the US and the EC to reach an agreement ledto the suspension of the Round in December1990 which wasthe intended date for its completion• At the end of 1991 the Secretary General of the GATT,Arthur Dunkel, tabled a Draft Final Act (Dunkel Text):– Reduction of specific agricultural tariffs– Ratification of non-tariff barriers– Cuts in domestic support– Reductions in export subsidy expenditures and the volumeof subsidized exports Dr. Tabrez Ahmad,
  40. 40. • US and Cairns Group were willing to accept the DunkelText• EC was reluctant and had an internal debate over reform ofits agricultural policy (MacSharry Reform of the CAP)• In November 1992 the US and the EC reached finally abilateral agreement on agriculture (Blair House Accord)which led to the final agreement of the Uruguay Round on15 December 1993• The Uruguay Round Agreements was signed on 15 April1994 in Marrakesh• The delay of the Uruguay Round allowed somenegotiations to progress further than would have beenpossible in 1990:It allowed the replacement of the GATT by the World TradeOrganization (WTO) Dr. Tabrez Ahmad,
  41. 41. MinisterialGeneral Council meeting as Conference General Council meeting asDispute Settlement Body Trade Policy Review Body General Appellate Body Council Dispute Settlement panelsCommittees on Council for Council for Council for•Trade and Environment•Trade and Development Trade in TRIPS Trade in Services•Subcommittee on Goods Least-Developed Countries Committees on Committees on•Regional Trade Agreements •Trade in Financial•Balance of Payments Restrictions •Market Access services•Budget, Finance and •Agriculture •Specific CommitmentsAdministration •Sanitary and Phytosanitary Measures •Technical Barriers to TradeWorking parties on Working parties on •Subsidies and Countervailing•Accession •Domestic Regulation Measures •GATS RulesWorking groups on •Anti-Dumping Practices•Trade, debt and finance •Customs Valuation•Trade and technology transfer •Rules of Origin•(Inactive: •Import Licensing (Relationship between Trade •Trade-Related Investment Measures and Investment, (Interaction between Trade •Safeguards and Competition Policy (Transparency in Government Working party on Procurement) •State-Trading Enterprises Dr. Tabrez Ahmad,
  42. 42. Year Name Sub. Countri Achievements Covered es1947 Geneva Tariffs 23 Signing of GATT, 45,000 tariff concessions affecting $10 billion of trade1949 Annecy Tariffs 13 Countries exchanged some 5,000 tariff concessions1950 Torquay Tariffs 38 Countries exchanged some 8,700 tariff concessions, cutting the 1948 tariff levels by 25% Dr. Tabrez Ahmad,
  43. 43. Year Name Sub. Countri Achievements Covered es1956 Geneva Tariffs, 23 $2.5 billion in tariff admission of Japan reductions1960 Dillon Tariffs 26 Tariff concessions worth $4.9 billion of world trade1964 Kennedy Tariffs, 66 Tariff concessions anti- worth $40 billion dumping of world trade Dr. Tabrez Ahmad,
  44. 44. year Name Sub. Covered coun Achievements tries1973 Tokyo Tariff, non-tariff 102 Tariff reductions worth measures, more than $300 billion "framework" dollars achieved1986 Uruguay Tariffs, non-tariff 123 the creation of WTO, measures, rules, and extended the services, range of trade intellectual negotiations, leading property, dispute to major reductions in settlement, tariffs & agricultural textiles, subsidies, to allow full agriculture, access for textiles creation of WTO, from developing etc countries, and an extension of intellectual property Dr. Tabrez Ahmad, rights.
  45. 45. Uruguay round versus Earlier rounds• The spirit of opposition.• The agenda was made very heavy and oppressive for the developing country.• Major focus of negotiations shifted from tariff cutting to reduction in non-tariff barriers.• It covered every outstanding policy issue.• Developing countries were required to actively participate in negotiation, meaning that they were to give concession in order to receive additional concessions, something which they had not done before.• Rush of new members in the last round had showed that multilateral trade agreement was considered an anchor for development. Dr. Tabrez Ahmad,
  46. 46. • Streamlined dispute settlement mechanism and Trade Review Policy Mechanism.• Proposed creation of a new institution WTO.• More transparent rules for dumping investigation and rules for determining the injury to the industry.• The coverage of government procurement widened.• It appeared that developing countries may have made more concessions. Dr. Tabrez Ahmad,
  47. 47. Agreement on Agriculture (AoA) To establish a fair and market oriented agricultural trading system through substantial progressive reduction in agricultural support and protection resulting in correcting and preventing restrictions and distortions in world agricultural markets
  48. 48. AREAS OF COMMITMENTS  Domestic Support  Market Access  Export subsidies
  49. 49. Dr. Tabrez Ahmad,
  50. 50. Introduction: International Trade policies deals with the policies of the national governments relating to exports of various goods and services in various countries either on equal terms and conditions or on discriminatory terms and conditions. Trade policies also aim at protecting the domestic industry from the competition of the advanced countries through imposing quotas and build competencies by providing subsidies. Dr. Tabrez Ahmad,
  51. 51. Instruments of Trade Policy: Broadly classified into…..  Tariff  Non-Tariff Dr. Tabrez Ahmad,
  52. 52. Tariff Barriers What are tariff barriers?  Refers to the tax imposed on the goods when they enter or leave the national frontier or boundary. What is the purpose of tariffs?  To protect the domestic industry by increasing the cost of imported goods.  Example: GoI imposed tariffs to protect domestic automobile industry, sugar industry, cement industry and steel industry. Dr. Tabrez Ahmad,
  53. 53. Types of Tariffs: On the basis of Purpose:  Revenue Tariff:  To provide state with the revenue.  Levied on luxury goods.  Protective Tariff:  To maintain and encourage those branches of home industry protected by the duties. Dr. Tabrez Ahmad,
  54. 54.  On the Basis of Origin and Destination:  Ad Valorem Duty: Levied as the percentage of the total value of the imported common duty.  Specific Duty:  Levied per physical unit of the imported commodity.  Compound Duty:  Levied a percentage ad valorem duty plus a specific duty on each unit of the commodity. Eg. 1 lac + 10% of the price. Dr. Tabrez Ahmad,
  55. 55.  On the Basis of Country-wise Discrimination:  Single Column Tariff:  A uniform rate of duty is imposed on all similar commodities irrespective of the country from which they are imported.  Double Column Tariff:  Two different rates of duty have been imposed.  Triple Column Tariff:  Two or more tariff rates are levied on each category of commodity. Dr. Tabrez Ahmad,
  56. 56. Who Gain from Tariff? Government of the importing country earns in the form of the revenue. Industries of the importing country would find market for their products as the imported goods will be expensive. Jobs in the domestic markets are saved. Business for the ancillary industry, servicing, market intermediation etc. is also protected. Dr. Tabrez Ahmad,
  57. 57. Who are adversely affected? Consumers Industries of the exporting country. Dr. Tabrez Ahmad,
  58. 58. Other Impacts of Tariff Barriers Tariff Barriers tend to Increase: 1. Inflationary pressures 2. Special interests’ privileges 3. Government control and political considerations in economic matters. Tariff Barriers tend to Weaken: 1. Balance-of-payments positions 2. Supply-and-demand patterns 3. International relations (they can start trade wars)Tariff Barriers tend to Restrict:1. Manufacturer’ supply sources2. Choices available to consumers3. Competition Dr. Tabrez Ahmad,
  59. 59. Non- Tariff Barriers Non-Tariff measures include all measures, other than tariffs, the effect of which is to restrict imports, or to significantly distort trade. Dr. Tabrez Ahmad,
  60. 60. Different Types of Non-Tariff Barriers:(1) Specific Limitations on Trade:1. Quotas2. Import Licensing requirements3. Proportion restrictions of foreign to domestic goods (local content requirements) Dr. Tabrez Ahmad,
  61. 61. (2) Customs and Administrative Entry Procedures:1. Valuation systems2. Antidumping practices3. Documentation requirements4. Fees (3) Government Participation in Trade: 1. Government procurement policies 2. Export subsidies 3. Countervailing duties 4. Domestic assistance programs Dr. Tabrez Ahmad,
  62. 62. (4) Charges on imports:1. Prior import deposit subsidies2. Administrative fees3. Special supplementary duties4. Import credit discriminations5. Border taxes (5) Others: 1. Voluntary export restraints 2. Monetary Barriers Dr. Tabrez Ahmad,
  63. 63. Impact of NTBs: Have emerged as potent Protectionist tool. It being less transparent, its difficult to identify and quantify its impact. Dr. Tabrez Ahmad,
  64. 64. Dr. Tabrez Ahmad,
  65. 65. The Meaning of Dumping? “Dumping is a situation of international price discrimination, where the price of a product when sold to the importing country is less than the price of the same product when sold in the market of the exporting country.” Dr. Tabrez Ahmad,
  66. 66. Why does dumping take place? As a short-term predatory pricing strategy to drive competitors out of the market As a result of market intervention or state subsidies that enable companies to artificially lower their prices Dr. Tabrez Ahmad,
  67. 67. But there is something MORE! When the price causes or threatens to cause material injury to the domestic industry of the importing country can there be an action against dumping. An anti-dumping investigation can be started only if there is a written complaint on behalf of the domestic industry.(a significant share of the domestic producers have to support the complaint). Dr. Tabrez Ahmad,
  68. 68. Certain terms to be defined Normal Value: The comparable price at which the goods under complaint are sold in the domestic market of the exporting country.Can be determined by:• domestic sales• comparable representative export price to an appropriate third country.• constructed normal value, i.e. the cost of production in the country of origin with reasonable addition for administrative, selling and general costs and reasonable profits. Dr. Tabrez Ahmad,
  69. 69.  Export price: The price at which it is exported to the importing country. Dumping Margin: The margin of dumping is the difference between the Normal value and the export price of the goods under complaint. It is generally expressed as a percentage of the export price. Dr. Tabrez Ahmad,
  70. 70. Dumping Margin Calculation Compare Exporter Price to Normal ValueExporters Price Normal Value Normal Value $110.00 Exporter Price $90.00 Difference Attributable $20.00 to DumpingDumping Difference Attributable = to Dumping/exporter price $20.00 / $90.00=22.22% Margin Dr. Tabrez Ahmad,
  71. 71. How is Dumping Measured? fundamental parameters are determined.a) Normal domestic selling price of the product or similar products in the exporting country.b) Export price being offered in the importing country. Both these elements have to be compared at the same level of trade, generally at ex-factory level, for assessment of dumping. Dr. Tabrez Ahmad,
  72. 72.  Domestic price of exporter > export price Dumping = price discrimination between national markets Dr. Tabrez Ahmad,
  73. 73. what is Injury? Injury parameters include factors such as:o Actual or potential decline in saleso Loss of profitso Market shareo Capacity utilizationo Employmento Wageso Ability to raise capitalo Lost contracts Dr. Tabrez Ahmad,
  74. 74. Non-injurious Price NIP is that level of price, which the industry is, expected to have charged under normal circumstances in the exporter market during the period defined. The Injury Margin is the difference between the Non- Injurious Price due to the Domestic Industry and the Landed Value of the dumped imports. Dr. Tabrez Ahmad,
  75. 75. Anti-dumping (Article VI of GATT 1994)Dr. TabrezAhmad,
  76. 76. Legal framework Based on article VI of GATT, 1994 Customs tariff act, 1975 sec 9A, 9B (as amended in 1995) Investigations by designated authority, Ministry of Commerce Imposition and collection by Ministry of Finance Dr. Tabrez Ahmad,
  77. 77. Factors affecting Comparison ofnormal value and export price Export price and normal value must be compared at he same level of trade, such as at the ex-factory level allowance made for differences that effect price comparability. These are Physical characteristics Taxation Quantities etc.. Dr. Tabrez Ahmad,
  78. 78. How did it all begin? In the 19th century European Sugar Industries appealed to their respective governments for protection against sugar being dumped at unfairly low prices. In 1902, there was a formal agreement on anti-dumping. Canada adopted the first anti-dumping law in 1904 followed by the European countries and then the US in 1916. Formed the basis for the original GATT article (Article VI of GATT) on anti-dumping in 1947. Dr. Tabrez Ahmad,
  79. 79.  Subsequently, codes on anti dumping were developed during the Kennedy Round (1962-67) and Tokyo Round (1973-79). However, these were not binding on all GATT members; they were open to signature by those countries that wished to do so. But the Uruguay Round, (1986-94) anti-dumping agreement is an agreement binding on all GATT or WTO members. Dr. Tabrez Ahmad,
  80. 80. What is anti dumping ?? It is a measure to rectify the situation arising out of the dumping of goods and its trade distortive effect. Re-establish fair trade. The use of anti dumping measure as an instrument of fair competition is permitted by the WTO. It provides relief to the domestic industry against the injury caused by dumping. Dr. Tabrez Ahmad,
  81. 81. difference between anti dumpingduty and Normal Customs dutyAntidumping duty Normal customs duty To guard against unfair trade  means of raising revenue and practices for overall development of the trade remedial measures. economy. not necessary in the nature  trade and fiscal policies of the levied against exporter / Government country in as much as they  Necessary in nature are country specific and  universally applicable to all exporter specific. imports irrespective of the country of origin and the exporter. Dr. Tabrez Ahmad,
  82. 82. Imposition of duty If there is dumping but no injury then no duty can be imposed.  Duty remains in force for 5 years.  Re-determination at a “sunset review”.  Yearly administrative reviews if requested by domestic industry or exporter. Dr. Tabrez Ahmad,
  83. 83. Essentials for initiating an antidumping investigationSufficient evidence to the effect that ; there is dumping there is injury to the domestic industry; and there is a causal link between the dumping and the injury, that is to say, that the dumped imports have caused the alleged injury. Dr. Tabrez Ahmad,
  84. 84. Link between dumping and injury No anti dumping duty shall be recommended without a finding of this causal relationship. That is to say, Dumping should lead to Injury The causal link is to be established generally in terms of the following effects of dumped imports on domestic industry: - volume effect price effect Dr. Tabrez Ahmad,
  85. 85.  The volume effect of dumping relates to the market share of the domestic industry. for price effect, significant price under cutting by the dumped imports as compared with the price of the like product in the importer country. Dr. Tabrez Ahmad,
  86. 86. Stakeholders Against In Favour Consumers  Importing country Exporters currently protected Economists industries  Importing country Labor Regional Agreements (NAFTA) Unions Dr. Tabrez Ahmad,
  87. 87. Relief under Anti Dumpingmechanism  anti dumping duty imposed against those countries, which could go up to the dumping margin.  may terminate investigation if the exporter concerned furnished an undertaking to revise his price Dr. Tabrez Ahmad,
  88. 88. ALSO !!!de-minims margin Any exporter whose margin of dumping is less than 2% of the export price shall be excluded Investigation is terminated if the volume of the dumped imports from a particular country accounts for less than 3% of the total imports of the like product. The cumulative imports of the like product from all these countries who individually account for less than 3%, should not exceed 7% of the import of the like product. Dr. Tabrez Ahmad,
  89. 89. Suo-Motu cases Rule 5(4) of the Anti Dumping Rules provides for suo- motu initiation of anti dumping proceedings by the Designated Authority. The Authority can initiate the anti dumping investigation on its own without any complaint/petition filed in this regard Dr. Tabrez Ahmad,
  90. 90. Period of Investigation Should not be less than six months and not more than eighteen months. The most desirable period of investigation is a financial year. (period should be as representative a possible) For the purposes of injury analysis, the domestic industry has to furnish the relevant data for the past three years. Dr. Tabrez Ahmad,
  91. 91. Analysis of Lodging of complaint complaint 45 days Preparation and Initiation sending of questionnaires Sending of Analysis of questionnaires questionnaire 9 responses Steps in an months On-spot verification visits Anti-Dumping Internal decision + consultation of MS + Imposition of investigation translation provisional measures if warranted and Analysis of disclosure disclosure of reactions decision to interested AD 6 months Additional on-spot parties verification visits if AS 4 months needed Internal decision + consultation of Final disclosure to MS + translation interested parties Imposition ofTotal Duration Measures Measures are definitive measuresAS 13 months normally normally if warrantedAD 15 months imposed for 5 imposed for 5 years Tabrez Ahmad, Dr.
  92. 92. Stages of the investigation processA. Preliminary Screening: The application is scrutinized to ensure that it is fully documented provides sufficient evidence for initiating an investigation. If evidence not adequate, then a deficiency letter is issued. Till then cannot be considered as application pending before authority. Dr. Tabrez Ahmad,
  93. 93. B. Initiation: Designated Authority determines that the application has been made by or on behalf of the Domestic Industry. It also examines the accuracy and adequacy of the evidence provided The Initiation notice will be issued normally within 5 days from the date of receipt of a properly documented application. Dr. Tabrez Ahmad,
  94. 94. C. Access to Information: The Authority provides access to the non-confidential evidence available for inspection to all interested parties on request after receipt of the responses.D. Preliminary Findings: The Designated Authority will proceed expeditiously with the conduct of the investigation It makes a preliminary finding containing the detailed information on the main reasons behind the determination. Dr. Tabrez Ahmad,
  95. 95. E. Provisional Duty: A provisional duty not exceeding the margin of dumping may be imposed by the Central Government on the basis of the preliminary finding Can be imposed only after the expiry of 60 days from the date of initiation of investigation. The provisional duty will remain in force only for a period not exceeding 6 months, extendable to 9 months under certain circumstances. Dr. Tabrez Ahmad,
  96. 96. F. Oral Evidence Interested parties can request the Designated Authority for an opportunity to present the relevant information orally. Such information shall be taken into consideration only when it is subsequently reproduced in writing.G. Disclosure of information: Based on these submissions and evidence gathered the Authority will determine the basis of its final findings. Dr. Tabrez Ahmad,
  97. 97.  the Designated Authority will inform all interested parties of the essential facts, which form the basis for its decision before the final finding is made.H. Final Determination: The interested parties submit their response to the disclosure and The Authority examines these final submissions of the parties and comes out with final findings. Dr. Tabrez Ahmad,
  98. 98. Where does Anti-dumping standtoday ? Anti-dumping measures taken by WTO members have increased from 129 in 1994 to 208 in 2008; 83%. New users: Argentina, India, Brazil, South Africa. Traditional users: Canada, U.S., European Union, Australia, Mexico. Most affected industries: Metal, Chemical, plastic, textiles, machinery and equipment, agriculture and food. Dr. Tabrez Ahmad,
  99. 99. Anti-Dumping Measures Who used them more? Dr. Tabrez Ahmad,
  100. 100. Most Affected Sectors 17% 4% 39% 7% 9% 11% 13% METAL CHEMICAL PLASTIC TEXTILES M&E A&F OTHERSource: WTO Secretariat, Rules Division Anti-dumping Dr. Tabrez Ahmad,Database
  101. 101. ANTI–DUMPING INITIATIONS BY SECTOR 1995 - 2006160140120100 80 60 40 20 0 95 96 97 98 99 00 01 02 03 04 05 06 19 19 19 19 19 20 20 20 20 20 20 20 Metals Chemicals Plas Tex/ClothSource: WTO Secretariat, Rules Division Anti-dumping Dr. TabrezDatabase Ahmad,
  102. 102. ANTI–DUMPING NUMBER OF CASES 1979 - 2008Source: WTO Secretariat, Rules Division Anti-dumping Dr. Tabrez Ahmad,Database
  103. 103. ANTI–DUMPING NUMBER OF MEASURES 1979 - 2008Source: WTO Secretariat, Rules Division Anti-dumping Dr. Tabrez Ahmad,Database
  104. 104. Who makes the most USE ? Developing Countries Use Antidumping more intensely than developed countries. Dr. Tabrez Ahmad,
  105. 105. ANTI-DUMPING MEASURES 1995 - 2006 Developed / Developing Members Total 1 400 MEASURES:1 900 Developing 75% Developing 75% Total 500 Developed Developed 25% Developing 80% 25%Source: WTO Secretariat, DevelopedRules Division Anti- 20%dumping Database Developed Members Developing Members Dr. Tabrez Ahmad,
  106. 106. Top 10 Users of AD Law (byinitiations) 1995 - 2006 Source: WTO Secretariat, Rules Division Anti-dumping Database Dr. Tabrez Ahmad,
  107. 107. ANTI–DUMPING Initiations by Importing Member 1995 – 2000 218 Total 1 529 181 173 150 139 116 77 79 43 44 a i co da il Aust r nt S Af r India US EC Kor e Mex Cana Braz ArgeSource: WTO Secretariat, Tabrez Dr. Rules Division Anti-dumpingDatabase Ahmad, 107
  108. 108. ANTI–DUMPING Initiations by Importing Member 2001 – 2006 284 Total 1 516 192 144 127 89 80 73 65 55 il da Aust r nt ey a EC US Inda Braz Cana Arge Turk Chi nSource: WTO Secretariat, Tabrez Ahmad, Dr. Rules Division Anti-dumpingDatabase 108
  109. 109. DISPUTE SETTLEMENT Trade Remedy Disputes (Panels Established, 1995 - 2006) Total 55 Countervailing Measures Safeguards 11 11 Anti-Dumping 33Source: WTO Secretariat, Tabrez Ahmad, Dr. RulesDivision Anti-dumping Database 109
  110. 110. Impact of Anti-Dumping Laws Pros Cons Prevents Monopolies  Against Free Trade Protects Vulnerable Concept Industries  Trade Barrier – Lowers Allows Firms to Compete Economic Growth Preserves Jobs  Distorts the Market  Protects Firms from Competition  Hurts Consumers Dr. Tabrez Ahmad,
  111. 111. Notice INDIA’s proportion Proportion of AD cases initiated by the countries 0.3 0.25 0.2 0.15 0.1 0.05 0 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 India United States Canada China European CommunitySource: WTO Secretariat, Rules Division Anti-dumpingDatabase Dr. Tabrez Ahmad,
  112. 112. Anti-Dumping Related Disputes Panels Established 1995 - 2006 6 6 Total 33 5 5 2 2 2 2 2 1 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006Source: WTO Secretariat, Rules Division Anti-dumpingDatabase 112
  113. 113. Various minuses of ADmeasurement law Unclear concept of “ordinary course of trade”. For computation of the normal value complicated cost calculations and allocations Arbitrariness steps in especially when there is a conflict between accounting practices in the exporting country and the importing country. This is so because investigating authorities typically follow accounting practices of the importing country Dr. Tabrez Ahmad,
  114. 114. Business Standard - 15 December, 2009Dr. Tabrez Ahmad,
  115. 115.  India to impose antidumping duties on some equipment imported from China. Chinese companies entered the Indian telecom market, offering products and services at prices about a third cheaper than that of global competitors. Indian manufacturers hurt as well Dr. Tabrez Ahmad,
  116. 116.  Fibrehome Telecommunication Technologies Ltd. will have to pay a duty of 236%, Alcatel-Lucent Shanghai Bell Co. 29% and Israels ECI Telecom Ltd. 93% on equipment imported from China Dr. Tabrez Ahmad,
  117. 117. The Indian Shrimp Industry Organizes toFight the Threat of Anti- Dumping Action (CASE STUDY) Dr. Tabrez Ahmad,
  118. 118. History The Ad Hoc Shrimp Trade Action Committee (ASTAC), an association of shrimp farmers in eight southern states of the United States, filed an anti- dumping petition against six countries — Brazil, China, Ecuador, India, Thailand and Vietnam. The petition alleged that these countries had dumped their shrimps in the US market. Dr. Tabrez Ahmad,
  119. 119. History on 21 January 2004 the US Department of Commerce (DOC) announced the initiation of anti-dumping investigations against the six countries. The Department notified the International Trade Commission (ITC) of its decision on initiation. On 17 February 2004 the International Trade Commission announced its decision that there was a reasonable indication that the US shrimp industry was affected due to Anti-dumping. Dr. Tabrez Ahmad,
  120. 120.  The Department of Commerce continued with its investigations and gave its preliminary determination on 28 July 2004. The ratio of preliminary duty varies between 3.56% and 27.49% by the DOC. Dr. Tabrez Ahmad,
  121. 121.  The weighted average rate for India is 14.2%, The average rate for  China is 49.09%,  Brazil 36.91%,  Vietnam 16.01%,  Ecuador 7.3%  Thailand 6.39%. Dr. Tabrez Ahmad,
  122. 122. II. The National and International context On 26 February 2002, Reggie Dupre, a Louisiana state senator, alleged that tainted farm-raised Asian shrimp was being diverted from Europe and dumped on the US market. Dr. Tabrez Ahmad,
  123. 123. The national and international context Vietnam, one of the countries identified almost at the beginning of the SSA(South America Shrimp Association) exercises and also highly dependent on the US market for shrimp exports, was the first to protest. Foreign Ministry spokeperson Phan Thuy Thanh said in a statement on 12 September 2002 that ‘I can say with certainty that Vietnam has never dumped its shrimp, and its shrimp have been sold at market prices.’ Dr. Tabrez Ahmad,
  124. 124. Source: WTO Secretariat, RulesDivision Anti-dumping Database Dr. Tabrez Ahmad,
  125. 125. Indonesia protests as well Rokhmin Dahiri, the Indonesian Maritime and Fisheries Minister, denied allegations that the Indonesian government subsidized its shrimp farmers. He said that the price of shrimp on the domestic market was much lower than the export price. “The dumping charge was baseless and, therefore, the United States should exclude Indonesia from the proposed anti-dumping investigations. ” Dr. Tabrez Ahmad,
  126. 126.  The Indian government and the Indian shrimp industry were aware of the threat. Arun Jaitley, the then Minister for Commerce, made a statement in June 2003 after his official visit to the United States: ‘We are anticipating an action against our shrimp exports because our share in the US market is on the rise. Dr. Tabrez Ahmad,
  127. 127. The main contentions of the petitioners The six named countries accounted for 74% of shrimp imports in the US market. Imports from the six countries increased from 466 million lbs. in 2000 to 650 million lbs in 2002. Import prices of the targeted countries had dropped by 28% in the previous three years. The average unit value of the targeted countries in 2000 was $3.54; this had fallen to $2.55 in 2002, on a headless, shell-on equivalent basis. Dr. Tabrez Ahmad,
  128. 128. The main contentions of the petitioners The average dockside price for one count size of gulf shrimp dropped from $6.08 to $3.30 per pound from 2000 to 2002. The United States was the most open market in the world. High tariff rates in other large importing countries provided a powerful incentive for exporters to increase shrimp shipments to the United States. Dr. Tabrez Ahmad,
  129. 129. III. The Indian shrimp industry and its response The anti-dumping investigations against Indian shrimp imports might be initiated was hinted at during bilateral talks when the then Commerce and Industry Minister Arun Jaitley had met his counterpart in Washington at that time. The reason given was that India’s shrimp exports to the United States had been rising rapidly during the previous three years, from $255.93 million during 2000-1 to $299.05 million during 2002-3. Dr. Tabrez Ahmad,
  130. 130. III. The Indian shrimp industryresponse The United States, traditionally a buyer of small-sized shrimp from India, has now started buying many other varieties, including black tiger shrimp, resulting in its occupying the top slot in India’s export markets of marine products, replacing Japan in 2002-3. Dr. Tabrez Ahmad,
  131. 131.  Commerce Minister on the possible threat to Indian shrimp exports to the United States, SEAI(Seafood Exporters Association of India (Kochi, Kerala, India). and MPEDA(The Marine Products Export Development Authority) went into action. Dr. Tabrez Ahmad,
  132. 132.  The SEAI (Sea food export Association of India) has estimated a total budgetary requirement of Rs. 70 million to fight the case. Of this, SEAI would mobilize Rs. 40 million internally and the remaining Rs 30 million would be collected from its members, depending on the volume and value of their individual exports to the US market. Dr. Tabrez Ahmad,
  133. 133. Indian argument First, there are specific variations between the shrimp caught off the south-west coast of the United States and in Indian waters, so that prices are bound to be different. India’s shrimp exports are predominantly of black tiger and scampi varieties which are not cultivated in the United States’, according to the president of SEAI. Dr. Tabrez Ahmad,
  134. 134. Even more arguments… Second, while fishing in the United States is a capital- intensive activity calling for major investment, in India shrimp capture is carried out with a very low level of capital and requiring hardly any investment. This makes the cost of production considerably lower in India compared with that for shrimp sea-caught off the US coast. Dr. Tabrez Ahmad,
  135. 135. DOC is confident Department of Commerce observed that India had a strong case as India was exporting mainly ‘tiger shrimps which are not found there and that too, in unprocessed form’. Noting that 80% of shrimp consumption in the United States is met through imports. Dr. Tabrez Ahmad,
  136. 136.  Shrimp exports to the United States had come almost to a standstill due to the uncertainty regarding the contingent applicability and incidence of the anti- dumping duty. Dr. Tabrez Ahmad,
  137. 137. US Has Quarreled Before In 1976 US banned shrimps ,It was on the ground that trawling for shrimp by mechanized means had been adversely affecting certain varieties of sea turtles. The WTO ruled against the United States and asked it to make the regime WTO-compatible. However, since that had not yet happened, India’s exports to the United States of aqua-culture shrimp and shrimp caught by non-mechanized means were being made on the basis of certification by the MPEDA, as required under the law. Dr. Tabrez Ahmad,
  138. 138. IV. Lessons learnt Several visits by the representatives of those two bodies to Washington at critical points also helped to bring an understanding of the nature of the problem and how to face it. This resulted in the selection and appointment of the legal counsel, in September 2003. Dr. Tabrez Ahmad,
  139. 139. Lessons learnt The speedy resolution of the issue of financing helped Indian case. The shrimp industry in India shouldn’t have been focused on only one or two major markets for growth. Previously it was Japan and during the last few years, it has been the United States. Dr. Tabrez Ahmad,
  140. 140. Finally India learnt the importance of diversification. A. J. Tharakan, the SEAI president, has said that they are exploring alternative markets to make up for the loss of the lucrative US market. ‘But it will be a long drawn-out process. It is not easy to establish your presence.’ Dr. Tabrez Ahmad,
  141. 141. VICTORY for INDIA!!“On 27 th Jan exports to US were resumed.”Business line newspaper– 1st Feb, 2010 Dr. Tabrez Ahmad,
  142. 142. Export Subsidies• Cut in value of subsidies – Developed countries - 36 % (1995 - 2000) – Developing countries - 24 % (1995 - 2004)• Cut in subsidized quantities Developed countries - 21 % (1995 - 2000) Developing countries - 14 % (1995 - 2004) (Base Period : (1986 - 1990) To develop internationally agreed disciplines to govern export credits, guarantees or insurance programmes Dr. Tabrez Ahmad,
  143. 143. Domestic SupportIn WTO terminology, subsidies in general are identified by “boxes” whichare given the colours of traffic lights: green (permitted), Blue (slow down— i.e. be reduced),Amber -( Forbidden)  Green Box - Research, Extension, PDS, Decoupled Payments etc;  Blue Box - Production Limiting Subsidies ;  Amber Box - AMS-subject to reduction commitments , Viz.  Product specific (MSP)  Non product specific (input subsidies-fertilizer, Power, irrigation) Dr. Tabrez Ahmad,
  144. 144. Anomaly in WTO Provision•Developed countries still continue to heavilysubsidize their agriculture.•As per the World Trade Organisation provisionthese countries were required to reduce theirsubsidy considerably, so that the developingcountries could get a chance to export theirproducts to these countries. Dr. Tabrez Ahmad,
  145. 145. RESULTS OF THESE ANOMALIES There were three problems with the AoA –1. it ignored the realities of global agricultural markets,2. it reinforced industrial agriculture at the expense of sustainable agriculture, and3. It failed to acknowledge the widely differing needs of countries at different levels of development. Dr. Tabrez Ahmad,
  146. 146. Agricultural Subsidies •Agricultural subsidies have affected developing country farmers both by denying access to rich markets and allowing farmers from advanced countries to sell to developing countries at suppressed prices. •This is particularly relevant to India because agricultural products account for nearly 20% of Indian exports. Agricultural Support in the US ($US million) 1998 1999 2000 2001 2002Total value of production (at farm gate) 190,082 185,258 189,318 197,037 200,903Producer Support Estimate (PSE) 48,272 55,932 49,673 51,683 39,559Percentage of government support 25.4 30.2 26.2 26.2 19.7 Source: OECD Dr. Tabrez Ahmad,
  147. 147. INDIA SEEKS•Protecting our food and livelihood security by having sufficientflexibility for domestic policy measures.•Protecting domestic producers from the surge in imports orsignificant decline in import prices.•Substantial reduction in export subsidies and domestic supportto agriculture in the developed countries for greater marketaccess to products of developing countries.• Finally, a more equitable & fair trading framework foragricultural commoditiesMARKET ACCESS ISSUES CAN NOT BE SEEN IN ISOLATION TO SUBSIDY REGIME Dr. Tabrez Ahmad,
  148. 148. Domestic support•The negotiations on domestic support should include the followingelements:•Substantial reductions in all forms of domestic support should beundertaken by the developed countries.•Subsidies excluded from the discipline introduced by the AoA, i.e.those appearing in the “Blue Box” and the “Green Box”, need to bere-assessed, particularly from the point of view of their influence onproduction.• The Peace Clause “Article 13 (a) and 13 (b)” shall not be extendedbeyond implementation period. Dr. Tabrez Ahmad,
  149. 149. Export SubsidiesThe negotiations on export subsidies should include the followingissues: Countries using export subsides should phase out this form of farm support within two years of implementation of the revised disciplines to be followed by countries in the agricultural sector. Export subsidies discipline should include all forms of spending that enhances the capacities of exporters to increase trade, e.g. export credit, guarantees and insurance programmes. The Peace Clause “Article 13 (c)” shall not be extended beyond implementation period. Dr. Tabrez Ahmad,
  150. 150. Present Stage of Negotiations  The Cancun Ministerial failed to arrive at any agreement on modality for agriculture.  There was no willingness on part of developed countries to recognize the genuine concerns of the developing countries, especially in agriculture  The US & EU attempted to drive their own agenda, at the expense of Doha Declaration  The concerns of the developing countries were expressed by a group viz. G-20 at Cancun.
  151. 151. Why much of the focus must be on agriculture…•Even though it provides less than 4% of global GDP and 9% of int’l merchandise trade•OECD manufacturing tariffs have fallen by 9/10thsover the past 60 years to <4%, while agricultural protection hasrisen, Agric. applied (bound) tariffs now average nearly 5 (10)times manufactures tariffs globally•Also, the vast majority of the world’s poor rely on farming fora living, and may be hurt by agric protection policies of richcountries Dr. Tabrez Ahmad,
  152. 152. Why focus on agriculture• True, the harm to some DC farmers from rich-country agricultural protection is reduced via non-reciprocal preference schemes such as the ACP‘s Lome Agreement, EBA and AGOA• But those schemes contravene the core WTO rule of non-discrimination• In particular, they exclude numerous populous D.C‘s (e.g. Brazil, China, India, Indonesia, Pakistan, Vietnam)• Hence they may harm more poor farmers (through trade diversion) than they help. Dr. Tabrez Ahmad,
  153. 153. 1) Disputes in WTO: total 194 As complainant As defendant70605040302010 0 USA EU Japan Developing countries Dr. Tabrez Ahmad,
  154. 154. Which agreements are subject to disputes?Antal 30 25 20 15 10 5 0 SPS/TBT Agriculture Textiles TRIMS TRIPS GATS Dr. Tabrez Ahmad,
  155. 155. Basic Principles Non-Discrimination Principle  MFN treatment  National Treatment Security and predictability of market access Increasing the participation of developing countries in the multilateral trading system Fair trade – possibility to respond to unfair trading practices such as dumping and subsidization Transparency Dr. Tabrez Ahmad,
  156. 156. MFN Treatment No discrimination between like products / services originating in or destined for other WTO Members. Each trading partner gets immediately and unconditionally the best treatment given to any trading partner even if not a WTO Member Dr. Tabrez Ahmad,
  157. 157. MFN Treatment – a three-tier test Whether the governmental measure at issue confers a trade advantage of the kind covered by Article I:1 of the GATT 1994 Whether the products concerned are “like products” Whether the advantage at issue is granted immediately and unconditionally to all like products originating in other WTO Members Dr. Tabrez Ahmad,
  158. 158. MFN Treatment – Trade Advantage Panels and the Appellate Body have interpreted the term “advantage” broadly to encompass not only tax/customs advantages, but also laws, regulations and requirements that affect importation and exportation and alter the scales of competition Dr. Tabrez Ahmad,
  159. 159. MFN Treatment – “Like Products” Not defined in the GATT, but guidance provided by case law In Japan-Alcoholic Beverages, the Appellate Body likened the concept of “likeness” to an accord, as it “stretches and squeezes in different places” Among the factors which have been taken into account by panels are the following:  the properties, nature and quality of the products  the end-uses of the products  consumers tastes and habits  the (international) tariff classification of the products Dr. Tabrez Ahmad,
  160. 160. MFN Treatment – “Immediately and Unconditionally” The words “immediately “ and “unconditionally” have been interpreted broadly to mean that a Member cannot demand reciprocal treatment as a condition for extending MFN treatment Likewise, extension of MFN treatment cannot be made conditional on a Member having or passing a specific legislation or undertaking a certain action Dr. Tabrez Ahmad,
  161. 161. MFN Treatment-Exceptions GATT Art. I:2-4 (Historical Preferences) GATT Art. IV(c) (Cinematographic Films) GATT Art. XX (General Exception) GATT Art. XXIV:3 (Frontier Traffic) GATT Art. XXIV:5 (Free-Trade Area and Customs Unions) GATT Art. XXI (Security Exception) “Enabling Clause” (1979 Decision) Marrakesh Agreement Art. IX:3 (Waiver) Dr. Tabrez Ahmad,
  162. 162. MFN Treatment - GATS Art II:1 of the GATS For any measure covered by the GATS, each Member shall accord immediately and unconditionally to services and service suppliers of any other Member treatment no less favourable than that it accords to like services and service suppliers of any other country. The Appellate Body held in EC – Bananas III that the obligation imposed by Article II is unqualified, and does not exclude de facto discrimination. Dr. Tabrez Ahmad,
  163. 163. MFN Treatment – Exceptions under GATS  GATS Art. II:2 (Specific List of MFN Exemptions)  GATS Art. II:3 (Advantages to Adjacent Countries)  GATS Art. V (Economic Integration)  GATS Art. V bis (Labour Market Integration)  GATS Art. XIV (General Exception)  GATS Art. XIV bis (Security Exception)  Marrakesh Agreement Art. IX:3 (Waiver) Dr. Tabrez Ahmad,
  164. 164. MFN Treatment - TRIPS Art 4 of the TRIPS Agreement With regard to the protection of intellectual property, any advantage, favour, privilege or immunity granted by a member to the nationals of any other country shall be accorded immediately and unconditionally to the national of all other Members Exceptions: Art. 4(a)-(d) of the TRIPS Agreement; TRIPS Art. 73 (Security Exception) and Marrakesh Agreement Art. IX:3 (Waiver) Dr. Tabrez Ahmad,
  165. 165. National Treatment As a general rule, imported products must not be discriminated against vis-à-vis domestic products Members cannot impose higher internal taxes or more burdensome obligations on imported “like” products Determinants of likeness - the properties, nature and quality of the products; the end-uses of the products; consumers tastes and habits and the tariff classification of the products None of these elements is dispositive Dr. Tabrez Ahmad,
  166. 166. MFN Treatment v. National TreatmentNon- Discrimination Non-Discriminationat the Border: Inside Border:Equal Treatment between Equal TreatmentWTO Members’ Products between Imported and DomesticGoodsArticle I GATT Article III GATT(Article II GATS (Article XVII GATSArticle IV TRIPS) Article III TRIPS) Dr. Tabrez Ahmad,
  167. 167. Internal v. Border Measure Difficult at times to distinguish between the two: would an import ban enforced at the border be subject to Article III or XI of the GATT 1994? Basic rule Applied at the border Applied inside the borderArticle XI GATT Article III GATT orArticle III GATT Dr. Tabrez Ahmad,
  168. 168. Article III:2 of the GATT 1994 – First Sentence– tax discrimination of like products The products of the territory of any Member imported into the territory of any other Member shall not be subject, directly of indirectly, to internal taxes or other internal charges of any kind in excess of those applied, directly or indirectly, to like domestic products In Canada – Periodicals, it was held that the following conditions have to be satisfied: (i) whether the imported and domestic products are like products; and (ii) whether the imported products are taxed in excess of the domestic products Dr. Tabrez Ahmad,
  169. 169. Article III:2 of the GATT 1994 – Second Sentence –directly competitive or substitutable products Article III:2: Moreover, no Member shall otherwise apply internal taxes or other internal charges to imported or domestic products in a manner contrary to the principles set forth in paragraph 1. Ad Art. III:2: A tax conforming to the requirements of the first sentence of para. 2 would be considered to be inconsistent with the provision of the second sentence only in cases where competition was involved between, on the one hand, the taxed product and, on the other hand, a directly competitive or substitutable product which was not similarly taxed. Dr. Tabrez Ahmad,
  170. 170. Article III:2 of the GATT 1994 – Second Sentence –directly competitive or substitutable products Held in the Japan-Alcoholic Beverages II case that the following elements have to be satisfied:  Whether the imported and domestic products are directly competitive or substitutable  Whether these products are not similarly taxed  Whether dissimilar taxation is applied so as to afford protection to domestic producers Dr. Tabrez Ahmad,
  171. 171. Article III:4 of the GATT 1994 – Discriminatorydomestic rules/regulations“The products of the territory of any contracting partyimported the territory of any other contracting party shall be accorded treatment no less favourable than that accorded to like products of national origin in respect of all laws, regulations and requirements affecting their internal sale, offering for sale, purchase, transportation, distribution or use…”. Dr. Tabrez Ahmad,
  172. 172. Article III:4 of the GATT 1994 – Discriminatorydomestic rules/regulations Held in the Korea - Beef that the following elements have to be satisfied:  Whether the measure at issue is a law, regulation or requirement covered by Article III:4 GATT  Whether the imported and domestic products are ‘like products’  Whether the imported products are accorded less favourable treatment Dr. Tabrez Ahmad,
  173. 173. Exceptions to the National Treatment Principleunder GATT GATT Art. III:3 (“Grandfathering”) GATT Art. III:8(a) (Government Procurement) GATT Art. III:8(b) (Production Subsidies) GATT Art. III:9 (Prejudicial effect of internal price control measures) GATT Art. III:10 and Art. IV (Cinematographic films) GATT Art. XX (General Exception) GATT Art. XXI (Security Exception) Marrakesh Agreement Art. IX:3 (Waiver) Dr. Tabrez Ahmad,
  174. 174. National Treatment Principle under the GATS andTRIPS As a general rule, foreign goods, services and service providers, as well as IPR holders must not be discriminated against vis-à-vis domestic goods, services, and services providers, as well as IPR holders Unlike the GATT, NT principle flexible under GATS Article XVII:1 of the GATS: In the sectors inscribed in its Schedule, and subject to any conditions and qualifications set out therein, each Member shall accord to services and service suppliers of any other Member, in respect of all measures affecting the supply of services, treatment no less favourable than that it accord to its own like services and service suppliers . Dr. Tabrez Ahmad,
  175. 175. National Treatment Principleunder the GATS  Art XVII:2: A Member may meet the requirement of para.1 by according to services and service suppliers of any other Member, either formally identical treatment or formally different treatment to that it accords to its own like services and service suppliers  Article XVII:3 of the GATS: Formally identical or formally different treatment shall be considered to be less favourable if its modified the conditions of competition in favour of services or service suppliers of the Member compared to like services of service suppliers of any other Member Dr. Tabrez Ahmad,
  176. 176. Exceptions to the National Treatment Principleunder the GATS GATS Art. XIV (General Exception) GATS Art. XIV bis (Security Exception) GATS Art. XXI (Modifications of Commitments) Marrakesh Agreement Art. IX:3 (Waiver) Dr. Tabrez Ahmad,