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Premium member Presentation Transcript PowerPoint Presentation: Dr. Tabrez Ahmad Professor of Law www.technolexindia.com firstname.lastname@example.org technolexindia.blogspot.com Dr. Tabrez Ahmad, http://corpolexindia.blogspot.inPowerPoint Presentation: Dr. Tabrez Ahmad, http://corpolexindia.blogspot.in Agenda: 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, http://corpolexindia.blogspot.inPowerPoint Presentation: Members (148) Applied Countries (28) WTO Members Dr. Tabrez Ahmad, http://corpolexindia.blogspot.inPowerPoint Presentation: WTO-AoA NEGOTIATIONS CREATING WEALTH FROM FARM GATE TO FOOD PLATE Dr. Tabrez Ahmad, http://corpolexindia.blogspot.inGENESIS: 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 MechanismPowerPoint Presentation: GATT WTO Dr. Tabrez Ahmad, http://corpolexindia.blogspot.inDifference between GATT & WTO: Difference between GATT & WTO GATT WTO GATT was ad hoc and provisional WTO and its agreements are permanent. GATT had contracting parties WTO has member countries GATT system allowed existing domestic legislation to continue even if it violated a GATT agreement . WTO does not permit this. GATT was less powerful, dispute settlement system was slow and less efficient. Its ruling could be easily blocked. WTO is more powerful, dispute settlement mechanism is fast and more efficient. It is very difficult to block the rulings. Dr. Tabrez Ahmad, http://corpolexindia.blogspot.inPowerPoint Presentation: Marrakesh Agreement establishing the WTO OBJECTIVES Raising Standards of living 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, http://corpolexindia.blogspot.inPowerPoint Presentation: Marrakesh Agreement establishing the WTO FUNCTIONS (1) Framework to facilitate the implementation, administration and operation of WTO Agreements Framework to further the objectives of the WTO Agreements Forum for negotiations in matters dealt with under the WTO Agreements Dr. Tabrez Ahmad, http://corpolexindia.blogspot.inPowerPoint Presentation: Marrakesh Agreement establishing the WTO FUNCTIONS (2) Forum for further negotiations (new rules and disciplines) Framework to facilitate the implementation, administration and operation of new agreements Dr. Tabrez Ahmad, http://corpolexindia.blogspot.inPowerPoint Presentation: Marrakesh Agreement establishing the WTO FUNCTIONS (3) Framework to administer the Understanding on Rules and Procedures Governing the Settlement of Dispute (DSU) Framework to administer the Trade Policy Review Mechanism (TPRM) Dr. Tabrez Ahmad, http://corpolexindia.blogspot.inPowerPoint Presentation: MEMBERS OBSERVERS SECRETARIAT MINISTERIAL CONFERENCE GENERAL COUNCIL HORIZONTAL ISSUES GOODS SERVICES INTELLECTUAL PROPERTY PLURILATERAL AGREEMENTS Dr. Tabrez Ahmad, http://corpolexindia.blogspot.inThe WTO Principles : The WTO Principles Rule Based Trading System Treatment For LDCs Competition On BoP Environment Protection Transparency Dismantling Trade Barriers Principles Of WTO MFN Treatment National Treatment Free Trade Principle Dr. Tabrez Ahmad, http://corpolexindia.blogspot.inPowerPoint Presentation: 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 Table: Average tariff rates in selected countries on manufactured products France Germany Spain Italy USA 1913 20% 13% 41% 18% 44% 1925 21% 20% 41% 22% 37% 1931 30% 21% 63% 46% 48% Dr. Tabrez Ahmad, http://corpolexindia.blogspot.inPowerPoint Presentation: Period following the Second World War (WW II): 1– Memories of the pre-war period: economic reason as major cause from World War-II • High reparations from WW I • High inflation rate • High unemployment rate 2– Victorious countries (US, Britain) were determined to learn from mistakes: • Economic success • Strong trade relation • Economic interdependency Dr. Tabrez Ahmad, http://corpolexindia.blogspot.inPowerPoint Presentation: Bretton Woods conference (1944) as starting point for a new order 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 in connection with international liquidity • IBRD is one of 5 institutions that comprise the World Bank Group • During negotiations on the ITO in 1946, some countries saw a need 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, http://corpolexindia.blogspot.inPowerPoint Presentation: 1. Foundation of the GATT The GATT was signed by its 23 founding members on 30 October 1947 and entered into force on 1 January 1948 23 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 stone towards the establishment of the ITO and embodied many principles of the proposed ITO. Dr. Tabrez Ahmad, http://corpolexindia.blogspot.inPowerPoint Presentation: Conference in Havana (1947/48): What should be the authority of the proposed ITO? Disagreement between the US and the UK prevented the ratification of the charter by the US That is why ITO never came into existence and GATT was left as the framework for trade relations (though it was a less ambitious organization than would have been the ITO) Dr. Tabrez Ahmad, http://corpolexindia.blogspot.inPowerPoint Presentation: Time - April 1947 – October1947 Duration – 7 months Countries – 23 Negotiations in this and the succeeding 4 Rounds were on a bilateral basis -: “ product-by-product, request-offer ” • members completed 123 negotiations and established 20 schedules containing the tariff reductions . which became an integral part of GATT. • The Agreement covered some 45,000 tariff concessions and about $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 their trade restrictions 2. Geneva Round (1947) Dr. Tabrez Ahmad, http://corpolexindia.blogspot.inPowerPoint Presentation: Development of average tariffs in the US from 1865-1967 Geneva round Dr. Tabrez Ahmad, http://corpolexindia.blogspot.inPowerPoint Presentation: 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 3. Annecy Round (1949) Table: Average tariff rates in selected countries on manufactured products Denmark N. land USA France Austria UK Italy Germany 1950 3% 11% 14% 18% 18% 23% 25% 26% Dr. Tabrez Ahmad, http://corpolexindia.blogspot.inPowerPoint Presentation: Time - September 1950 – April1951 Duration – 8 months Countries – Accession of five more countries (33+5 = 38) Austria, Germany, Turkey, Philippines, Peru • Participants completed some 500 negotiations • Additional tariff reductions emerging from these negotiations were modest: Negotiations were not considered to be a “success“ • Major problem of that Round: Dispute between the US and the UK “no bilateral tariff cuts on US—UK trade” • Contracting parties exchanged some 8,700 tariff reductions of about 25% in relation to the 1948 level. • During the Torquay Round, the US indicated that the ITO Charter would not be re-submitted to the US Congress: End of ITO. 4. Torquay Round (1950/51) Dr. Tabrez Ahmad, http://corpolexindia.blogspot.inPowerPoint Presentation: Time - January 1956 – May 1956 Duration – 5 months From 1951 to 1955, GATT membership increased by only one country on net, with the withdrawal of Libeia being balanced 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 had given away concessions, while European countries were reluctant in eliminating their trade barriers) • Low-tariff countries were frustrated by their inability to bargain effectively with high-tariff countries. • Fourth Round produced similarly not sufficient results ($2.5 billion worth of tariff reductions) 5. Geneva Round (1955/56) Dr. Tabrez Ahmad, http://corpolexindia.blogspot.inPowerPoint Presentation: 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: 6. Dillon Round (1960-62) Table: Average tariff rates in European countries on manufactured products Denmark N. land France Austria UK Italy Germany 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 member states for the creation of a single schedule of concessions for the EEC based on its Common External Tariff (CET) – Second phase was a further general round of tariff negotiations Dr. Tabrez Ahmad, http://corpolexindia.blogspot.inPowerPoint Presentation: • Round resulted in 4,400 tariff concessions covering $4.9 billion of trade. • Last round of negotiations which were undertaken on a bilateral basis: Participants came up with lists demanding tariff reductions from their main trading partners. These list were the basis for bilateral trade negotiations. 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 manufactured goods came down sharply (e.g. common external tariff of the EEC fell to 10.4% in 1968) • Agricultural and textile sectors were still not considered Dr. Tabrez Ahmad, http://corpolexindia.blogspot.inPowerPoint Presentation: Time - May 1964 – June1967 Duration – 37 months Countries – 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). 7. Kennedy Round (1964-67) Dr. Tabrez Ahmad, http://corpolexindia.blogspot.inPowerPoint Presentation: •The round had introduced the linear tariff reduction or across- 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, http://corpolexindia.blogspot.inPowerPoint Presentation: 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, http://corpolexindia.blogspot.inPowerPoint Presentation: 1958 Dillon Round 1968 Ext. Tariff Kennedy Round ---------------------------------------------------------------------------------------------------------- Belgium 9.7 8.7 10.4 6.6 France 17.0 15.3 10.4 6.6 Germany 6.4 5.8 10.4 6.6 Italy 18.7 16.8 10.4 6.6 Netherlands 9.7 8.7 10.4 6.6 UK 16.5 14.9 14.9 9.2 Denmark 5.6 5.2 5.2 3.2 Austria 14.9 11.4 11.4 8.2 Sweden 6.5 6.3 6.3 4.2 Norway 10.3 10.3 10.3 6.4 Multilateral Tariff Reductions (Simple Average MFN Tariff Rates, Industrial products) Dr. Tabrez Ahmad, http://corpolexindia.blogspot.inPowerPoint Presentation: Time - September 1973 – November1979 Duration – 74 months Countries – 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 and Japan 8. Tokyo Round (1973-79) Dr. Tabrez Ahmad, http://corpolexindia.blogspot.inMain agreements, understandings, decisions & declarations of Tokyo Round:: 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, http://corpolexindia.blogspot.inPowerPoint Presentation: Pre-Tokyo (%) Post-Tokyo (%) Reduction Finished 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% Table: Tariff changes in the Tokyo Round; averages, weighted by MFN imports US argued for further linear tariff cuts – EC sought greater harmonization of tariffs • After 4 years, an agreement was reached: The “Swiss formula” t1 = c*t0/(c+t0) – where t0= original tariff and t1 = final tariff (both in percentage terms) Negotiations resulted in the value of c being set at 16 Dr. Tabrez Ahmad, http://corpolexindia.blogspot.inPowerPoint Presentation: Time - September 1986 – December1993 Duration – 87 months Countries – 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 (EC became 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 problems left by the Tokyo Round failed in “Resurgence of protectionism” • US reacted to protectionist pressure and considered the initiation of a new round of negotiations 9. Uruguay Round (1986-94) Dr. Tabrez Ahmad, http://corpolexindia.blogspot.inPowerPoint Presentation: • Japan favored a new GATT round: Multilateral negotiations were 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 of the ‘big three’ to ignore GATT principles – Agricultural-exporting countries were concerned about US producer subsidies and EC export subsidies – Developing countries wanted to secure greater tariff preferences • A committee was established to determine the objectives of a 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 industrial nations and G10 group of developing countries led by India and Brazil Dr. Tabrez Ahmad, http://corpolexindia.blogspot.inPowerPoint Presentation: Negotiating groups in the Uruguay Round a) Trade barriers and related matters 1) Subsidies and countervailing measures 2) Non-tariff measures 3) Safeguards 4) Tariffs b) Sector specific matters 5) Agriculture 6) Natural resource products 7) Services 8) Textiles and clothing 9) Tropical products Dr. Tabrez Ahmad, http://corpolexindia.blogspot.inPowerPoint Presentation: c) Procedures 10) Dispute settlement 11) GATT articles 12) Functioning of the GATT 13) Multilateral Trade Negotiations d) Others 14) Trade related aspects of intellectual property (TRIP‘s) 15) Trade related investment measures (TRIMs) Dr. Tabrez Ahmad, http://corpolexindia.blogspot.inPowerPoint Presentation: • The goals set at the Uruguay Round were ambitious: – Inclusion of services and intellectual property rights – Better integration of agriculture, textiles and clothing into the system • The prominence given to agriculture reflected the interests of the US and the Cairns Group (agricultural net-exporting countries) • 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 export competition within GATT rules and disciplines • Meeting of trade ministers in Montreal in 1988: Four negotiating groups faced serious problems to find an agreement (Textiles and clothing, safeguards, agriculture, TRIP’s) Dr. Tabrez Ahmad, http://corpolexindia.blogspot.inPowerPoint Presentation: • An agreement on agriculture seemed out of reach: – US wanted abolition of all trade distorting subsidies in agriculture – EC was unwilling to negotiate on the substance of the CAP – Cairns Group threatened to leave all negotiations if an agreement on agriculture was not found • The failure of the US and the EC to reach an agreement led to the suspension of the Round in December1990 which was the 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 volume of subsidized exports Dr. Tabrez Ahmad, http://corpolexindia.blogspot.inPowerPoint Presentation: • US and Cairns Group were willing to accept the Dunkel Text • EC was reluctant and had an internal debate over reform of its agricultural policy ( MacSharry Reform of the CAP) • In November 1992 the US and the EC reached finally a bilateral agreement on agriculture (Blair House Accord) which led to the final agreement of the Uruguay Round on 15 December 1993 • The Uruguay Round Agreements was signed on 15 April 1994 in Marrakesh • The delay of the Uruguay Round allowed some negotiations to progress further than would have been possible in 1990: It allowed the replacement of the GATT by the World Trade Organization (WTO) Dr. Tabrez Ahmad, http://corpolexindia.blogspot.inPowerPoint Presentation: Ministerial Conference Council for Trade in Goods General Council meeting as Trade Policy Review Body Council for TRIPS General Council meeting as Dispute Settlement Body General Council Council for Trade in Services Appellate Body Dispute Settlement panels Committees on Trade and Environment Trade and Development Subcommittee on Least-Developed Countries Regional Trade Agreements Balance of Payments Restrictions Budget, Finance and Administration Working parties on Accession Working groups on Trade, debt and finance Trade and technology transfer ( Inactive: (Relationship between Trade and Investment, (Interaction between Trade and Competition Policy (Transparency in Government Procurement) Committees on Market Access Agriculture Sanitary and Phytosanitary Measures Technical Barriers to Trade Subsidies and Countervailing Measures Anti-Dumping Practices Customs Valuation Rules of Origin Import Licensing Trade-Related Investment Measures Safeguards Working party on State-Trading Enterprises Committees on Trade in Financial services Specific Commitments Working parties on Domestic Regulation GATS Rules Dr. Tabrez Ahmad, http://corpolexindia.blogspot.inPowerPoint Presentation: Year Name Sub. Covered Countries Achievements 1947 Geneva Tariffs 23 Signing of GATT, 45,000 tariff concessions affecting $10 billion of trade 1949 Annecy Tariffs 13 Countries exchanged some 5,000 tariff concessions 1950 Torquay Tariffs 38 Countries exchanged some 8,700 tariff concessions, cutting the 1948 tariff levels by 25% Dr. Tabrez Ahmad, http://corpolexindia.blogspot.inPowerPoint Presentation: Year Name Sub. Covered Countries Achievements 1956 Geneva Tariffs, admission of Japan 23 $2.5 billion in tariff reductions 1960 Dillon Tariffs 26 Tariff concessions worth $4.9 billion of world trade 1964 Kennedy Tariffs, anti-dumping 66 Tariff concessions worth $40 billion of world trade Dr. Tabrez Ahmad, http://corpolexindia.blogspot.inPowerPoint Presentation: year Name Sub. Covered countries Achievements 1973 Tokyo Tariff, non-tariff measures, "framework" 102 Tariff reductions worth more than $300 billion dollars achieved 1986 Uruguay Tariffs, non-tariff measures, rules, services, intellectual property, dispute settlement, textiles, agriculture, creation of WTO, etc 123 the creation of WTO, and extended the range of trade negotiations, leading to major reductions in tariffs & agricultural subsidies, to allow full access for textiles from developing countries, and an extension of intellectual property rights. Dr. Tabrez Ahmad, http://corpolexindia.blogspot.inPowerPoint Presentation: 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, http://corpolexindia.blogspot.inPowerPoint Presentation: 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, http://corpolexindia.blogspot.inAgreement on Agriculture (AoA) : 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 marketsAREAS OF COMMITMENTS: AREAS OF COMMITMENTS Domestic Support Market Access Export subsidiesTariff & Non- Tariff barriers to Trade: Tariff & Non- Tariff barriers to Trade Dr. Tabrez Ahmad, http://corpolexindia.blogspot.inIntroduction:: 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, http://corpolexindia.blogspot.inInstruments of Trade Policy:: Instruments of Trade Policy: Broadly classified into….. Tariff Non-Tariff Dr. Tabrez Ahmad, http://corpolexindia.blogspot.inTariff Barriers: 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, http://corpolexindia.blogspot.inTypes of Tariffs:: 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, http://corpolexindia.blogspot.inPowerPoint Presentation: 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, http://corpolexindia.blogspot.inPowerPoint Presentation: 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, http://corpolexindia.blogspot.inWho Gain from Tariff?: 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, http://corpolexindia.blogspot.inWho are adversely affected?: Who are adversely affected? Consumers Industries of the exporting country. Dr. Tabrez Ahmad, http://corpolexindia.blogspot.inOther Impacts of Tariff Barriers: Other Impacts of Tariff Barriers Tariff Barriers tend to Increase : Inflationary pressures Special interests’ privileges Government control and political considerations in economic matters. Tariff Barriers tend to Weaken : Balance-of-payments positions Supply-and-demand patterns International relations (they can start trade wars) Tariff Barriers tend to Restrict : Manufacturer’ supply sources Choices available to consumers Competition Dr. Tabrez Ahmad, http://corpolexindia.blogspot.inNon- Tariff Barriers: 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, http://corpolexindia.blogspot.inDifferent Types of Non-Tariff Barriers:: (1) Specific Limitations on Trade: Quotas Import Licensing requirements Proportion restrictions of foreign to domestic goods (local content requirements) Different Types of Non-Tariff Barriers: Dr. Tabrez Ahmad, http://corpolexindia.blogspot.inPowerPoint Presentation: (3) Government Participation in Trade: Government procurement policies Export subsidies Countervailing duties Domestic assistance programs (2) Customs and Administrative Entry Procedures: Valuation systems Antidumping practices Documentation requirements Fees Dr. Tabrez Ahmad, http://corpolexindia.blogspot.inPowerPoint Presentation: (5) Others: Voluntary export restraints Monetary Barriers (4) Charges on imports: Prior import deposit subsidies Administrative fees Special supplementary duties Import credit discriminations Border taxes Dr. Tabrez Ahmad, http://corpolexindia.blogspot.inImpact of NTBs:: Impact of NTBs: Have emerged as potent Protectionist tool. It being less transparent, its difficult to identify and quantify its impact. Dr. Tabrez Ahmad, http://corpolexindia.blogspot.inDumping & anti dumping: Dumping & anti dumping Dr. Tabrez Ahmad, http://corpolexindia.blogspot.inThe Meaning of Dumping?: 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, http://corpolexindia.blogspot.inWhy does dumping take place?: 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, http://corpolexindia.blogspot.inBut there is something MORE!: 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, http://corpolexindia.blogspot.inCertain terms to be defined: 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, http://corpolexindia.blogspot.inPowerPoint Presentation: 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, http://corpolexindia.blogspot.inDumping Margin Calculation: Exporters Price Normal Value Compare Exporter Price to Normal Value Normal Value $110.00 Exporter Price $90.00 Difference Attributable to Dumping $20.00 Difference Attributable to Dumping/exporter price $20.00 / $90.00=22.22% Dumping Margin = Dumping Margin Calculation Dr. Tabrez Ahmad, http://corpolexindia.blogspot.inHow is Dumping Measured?: How is Dumping Measured? fundamental parameters are determined. Normal domestic selling price of the product or similar products in the exporting country. 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, http://corpolexindia.blogspot.inPowerPoint Presentation: Domestic price of exporter > export price Dumping = price discrimination between national markets Dr. Tabrez Ahmad, http://corpolexindia.blogspot.in what is Injury?: what is Injury? Injury parameters include factors such as: Actual or potential decline in sales Loss of profits Market share Capacity utilization Employment Wages Ability to raise capital Lost contracts Dr. Tabrez Ahmad, http://corpolexindia.blogspot.inNon-injurious Price : 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, http://corpolexindia.blogspot.inAnti-dumping (Article VI of GATT 1994) : Anti-dumping (Article VI of GATT 1994) Dr. Tabrez Ahmad, http://corpolexindia.blogspot.inLegal framework: 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, http://corpolexindia.blogspot.inFactors affecting Comparison of normal value and export price: Factors affecting Comparison of normal 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, http://corpolexindia.blogspot.inHow did it all begin?: How did it all begin? In the 19 th 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, http://corpolexindia.blogspot.inPowerPoint Presentation: 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, http://corpolexindia.blogspot.inWhat is anti dumping ??: 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, http://corpolexindia.blogspot.indifference between anti dumping duty and Normal Customs duty : difference between anti dumping duty and Normal Customs duty Antidumping duty Normal customs duty To guard against unfair trade practices trade remedial measures. not necessary in the nature levied against exporter / country in as much as they are country specific and exporter specific. means of raising revenue and for overall development of the economy . trade and fiscal policies of the Government Necessary in nature universally applicable to all imports irrespective of the country of origin and the exporter. Dr. Tabrez Ahmad, http://corpolexindia.blogspot.in Imposition of duty : 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, http://corpolexindia.blogspot.inEssentials for initiating an anti dumping investigation: Essentials for initiating an anti dumping investigation Sufficient 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, http://corpolexindia.blogspot.in Link between dumping and injury : 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, http://corpolexindia.blogspot.inPowerPoint Presentation: 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, http://corpolexindia.blogspot.inStakeholders: Stakeholders Against Consumers Exporters Economists Regional Agreements (NAFTA) In Favour Importing country currently protected industries Importing country Labor Unions Dr. Tabrez Ahmad, http://corpolexindia.blogspot.inRelief under Anti Dumping mechanism : Relief under Anti Dumping mechanism 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, http://corpolexindia.blogspot.inALSO !!! de-minims margin: 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, http://corpolexindia.blogspot.in Suo-Motu cases: 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, http://corpolexindia.blogspot.inPeriod of Investigation: 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, http://corpolexindia.blogspot.in Steps in an Anti-Dumping investigation: Steps in an Anti-Dumping investigation Lodging of complaint Initiation Analysis of complaint Preparation and sending of questionnaires Analysis of questionnaire responses On-spot verification visits Internal decision + consultation of MS + translation Imposition of provisional measures if warranted and disclosure of decision to interested parties Sending of questionnaires Analysis of disclosure reactions Additional on-spot verification visits if needed Internal decision + consultation of MS + translation Imposition of definitive measures if warranted Final disclosure to interested parties Measures normally imposed for 5 years 45 days 9 months AD 6 months AS 4 months Measures are normally imposed for 5 years Total Duration AS 13 months AD 15 months Dr. Tabrez Ahmad, http://corpolexindia.blogspot.inStages of the investigation process A. Preliminary Screening:: Stages of the investigation process A. 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, http://corpolexindia.blogspot.in B. Initiation:: 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, http://corpolexindia.blogspot.inPowerPoint Presentation: 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, http://corpolexindia.blogspot.inPowerPoint Presentation: 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, http://corpolexindia.blogspot.inPowerPoint Presentation: 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, http://corpolexindia.blogspot.inPowerPoint Presentation: 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, http://corpolexindia.blogspot.inWhere does Anti-dumping stand today ?: Where does Anti-dumping stand today ? 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, http://corpolexindia.blogspot.inAnti-Dumping Measures Who used them more?: Anti-Dumping Measures Who used them more? Dr. Tabrez Ahmad, http://corpolexindia.blogspot.inMost Affected Sectors: Most Affected Sectors Source: WTO Secretariat, Rules Division Anti-dumping Database Dr. Tabrez Ahmad, http://corpolexindia.blogspot.inANTI–DUMPING INITIATIONS BY SECTOR 1995 - 2006: ANTI–DUMPING INITIATIONS BY SECTOR 1995 - 2006 Source: WTO Secretariat, Rules Division Anti-dumping Database Dr. Tabrez Ahmad, http://corpolexindia.blogspot.inANTI–DUMPING NUMBER OF CASES 1979 - 2008: ANTI–DUMPING NUMBER OF CASES 1979 - 2008 Source: WTO Secretariat, Rules Division Anti-dumping Database Dr. Tabrez Ahmad, http://corpolexindia.blogspot.inANTI–DUMPING NUMBER OF MEASURES 1979 - 2008: ANTI–DUMPING NUMBER OF MEASURES 1979 - 2008 Source: WTO Secretariat, Rules Division Anti-dumping Database Dr. Tabrez Ahmad, http://corpolexindia.blogspot.inWho makes the most USE ?: Who makes the most USE ? Developing Countries Use Antidumping more intensely than developed countries. Dr. Tabrez Ahmad, http://corpolexindia.blogspot.inANTI-DUMPING MEASURES 1995 - 2006 Developed / Developing Members : ANTI-DUMPING MEASURES 1995 - 2006 Developed / Developing Members MEASURES:1 900 Developing 75% Developed 25% Developing 80% Developing 75% Developed 25% Developed 20% Total 500 Total 1 400 Source: WTO Secretariat, Rules Division Anti-dumping Database Dr. Tabrez Ahmad, http://corpolexindia.blogspot.inTop 10 Users of AD Law (by initiations) 1995 - 2006: Top 10 Users of AD Law (by initiations) 1995 - 2006 Source: WTO Secretariat, Rules Division Anti-dumping Database Dr. Tabrez Ahmad, http://corpolexindia.blogspot.inANTI–DUMPING Initiations by Importing Member 1995 – 2000 : ANTI–DUMPING Initiations by Importing Member 1995 – 2000 Total 1 529 107 Source: WTO Secretariat, Rules Division Anti-dumping Database Dr. Tabrez Ahmad, http://corpolexindia.blogspot.inANTI–DUMPING Initiations by Importing Member 2001 – 2006 : ANTI–DUMPING Initiations by Importing Member 2001 – 2006 Total 1 516 108 Source: WTO Secretariat, Rules Division Anti-dumping Database Dr. Tabrez Ahmad, http://corpolexindia.blogspot.inDISPUTE SETTLEMENT Trade Remedy Disputes (Panels Established, 1995 - 2006) : DISPUTE SETTLEMENT Trade Remedy Disputes (Panels Established, 1995 - 2006) Total 55 109 Source: WTO Secretariat, Rules Division Anti-dumping Database Dr. Tabrez Ahmad, http://corpolexindia.blogspot.inImpact of Anti-Dumping Laws: Impact of Anti-Dumping Laws Pros Prevents Monopolies Protects Vulnerable Industries Allows Firms to Compete Preserves Jobs Cons Against Free Trade Concept Trade Barrier – Lowers Economic Growth Distorts the Market Protects Firms from Competition Hurts Consumers Dr. Tabrez Ahmad, http://corpolexindia.blogspot.inNotice INDIA’s proportion: Notice INDIA’s proportion Source: WTO Secretariat, Rules Division Anti-dumping Database Dr. Tabrez Ahmad, http://corpolexindia.blogspot.inAnti-Dumping Related Disputes Panels Established 1995 - 2006 : Anti-Dumping Related Disputes Panels Established 1995 - 2006 Total 33 112 Source: WTO Secretariat, Rules Division Anti-dumping Database Various minuses of AD measurement law : Various minuses of AD measurement 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, http://corpolexindia.blogspot.in “India to levy antidumping duty on China telecom gear”- : “India to levy antidumping duty on China telecom gear”- Business Standard - 15 December, 2009 Dr. Tabrez Ahmad, http://corpolexindia.blogspot.inPowerPoint Presentation: 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, http://corpolexindia.blogspot.inPowerPoint Presentation: Fibrehome Telecommunication Technologies Ltd. will have to pay a duty of 236%, Alcatel-Lucent Shanghai Bell Co. 29% and Israel's ECI Telecom Ltd. 93% on equipment imported from China Dr. Tabrez Ahmad, http://corpolexindia.blogspot.inPowerPoint Presentation: The Indian Shrimp Industry Organizes to Fight the Threat of Anti-Dumping Action (CASE STUDY) Dr. Tabrez Ahmad, http://corpolexindia.blogspot.inHistory: 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, http://corpolexindia.blogspot.inHistory: 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, http://corpolexindia.blogspot.inPowerPoint Presentation: 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, http://corpolexindia.blogspot.inPowerPoint Presentation: 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, http://corpolexindia.blogspot.inII. The National and International context: 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, http://corpolexindia.blogspot.inThe national and international context: 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, http://corpolexindia.blogspot.inPowerPoint Presentation: Source: WTO Secretariat, Rules Division Anti-dumping Database Dr. Tabrez Ahmad, http://corpolexindia.blogspot.inIndonesia protests as well: 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, http://corpolexindia.blogspot.inPowerPoint Presentation: 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, http://corpolexindia.blogspot.inThe main contentions of the petitioners : 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, http://corpolexindia.blogspot.inThe main contentions of the petitioners : 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, http://corpolexindia.blogspot.inIII. The Indian shrimp industry and its response: 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, http://corpolexindia.blogspot.inIII. The Indian shrimp industry response: III. The Indian shrimp industry response 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, http://corpolexindia.blogspot.inPowerPoint Presentation: 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, http://corpolexindia.blogspot.inPowerPoint Presentation: 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, http://corpolexindia.blogspot.in Indian argument: 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, http://corpolexindia.blogspot.inEven more arguments…: 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, http://corpolexindia.blogspot.inDOC is confident: 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, http://corpolexindia.blogspot.inPowerPoint Presentation: 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, http://corpolexindia.blogspot.inUS Has Quarreled Before: 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, http://corpolexindia.blogspot.inIV. Lessons learnt: 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, http://corpolexindia.blogspot.inLessons learnt: 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, http://corpolexindia.blogspot.inFinally: 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, http://corpolexindia.blogspot.inVICTORY for INDIA!!: VICTORY for INDIA!! “ On 27 th Jan exports to US were resumed .” Business line newspaper– 1 st Feb, 2010 Dr. Tabrez Ahmad, http://corpolexindia.blogspot.inPowerPoint Presentation: 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, http://corpolexindia.blogspot.in Domestic Support In WTO terminology, subsidies in general are identified by “boxes” which are given the colours of traffic lights: green (permitted), Blue (slow down — i.e. be reduced), Amber -( Forbidden): Domestic Support In WTO terminology, subsidies in general are identified by “boxes” which are 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, http://corpolexindia.blogspot.inPowerPoint Presentation: Anomaly in WTO Provision Developed countries still continue to heavily subsidize their agriculture. As per the World Trade Organisation provision these countries were required to reduce their subsidy considerably, so that the developing countries could get a chance to export their products to these countries. Dr. Tabrez Ahmad, http://corpolexindia.blogspot.inPowerPoint Presentation: RESULTS OF THESE ANOMALIES There were three problems with the AoA – it ignored the realities of global agricultural markets, it reinforced industrial agriculture at the expense of sustainable agriculture, and It failed to acknowledge the widely differing needs of countries at different levels of development. Dr. Tabrez Ahmad, http://corpolexindia.blogspot.inPowerPoint Presentation: Agricultural Subsidies Source: OECD 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) Dr. Tabrez Ahmad, http://corpolexindia.blogspot.inPowerPoint Presentation: INDIA SEEKS Protecting our food and livelihood security by having sufficient flexibility for domestic policy measures. Protecting domestic producers from the surge in imports or significant decline in import prices. Substantial reduction in export subsidies and domestic support to agriculture in the developed countries for greater market access to products of developing countries. Finally, a more equitable & fair trading framework for agricultural commodities MARKET ACCESS ISSUES CAN NOT BE SEEN IN ISOLATION TO SUBSIDY REGIME Dr. Tabrez Ahmad, http://corpolexindia.blogspot.inPowerPoint Presentation: Domestic support The negotiations on domestic support should include the following elements: Substantial reductions in all forms of domestic support should be undertaken 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 be re-assessed, particularly from the point of view of their influence on production. The Peace Clause “Article 13 (a) and 13 (b)” shall not be extended beyond implementation period. Dr. Tabrez Ahmad, http://corpolexindia.blogspot.inPowerPoint Presentation: Export Subsidies The negotiations on export subsidies should include the following issues: 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, http://corpolexindia.blogspot.inPresent Stage of Negotiations : 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.PowerPoint Presentation: 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 9/10ths over the past 60 years to <4%, while agricultural protection has risen, 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 for a living, and may be hurt by agric protection policies of rich countries Dr. Tabrez Ahmad, http://corpolexindia.blogspot.inPowerPoint Presentation: 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, http://corpolexindia.blogspot.inPowerPoint Presentation: 0 10 20 30 40 50 60 70 USA EU Japan Developing countries Disputes in WTO: total 194 1) As complainant As defendant Dr. Tabrez Ahmad, http://corpolexindia.blogspot.inPowerPoint Presentation: 0 5 10 15 20 25 30 Antal SPS/TBT Agriculture Textiles TRIMS TRIPS GATS Which agreements are subject to disputes? Dr. Tabrez Ahmad, http://corpolexindia.blogspot.inBasic Principles: 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, http://corpolexindia.blogspot.inMFN Treatment: 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, http://corpolexindia.blogspot.inMFN Treatment – a three-tier test: 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, http://corpolexindia.blogspot.inMFN Treatment – Trade Advantage: 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, http://corpolexindia.blogspot.inMFN Treatment – “Like Products”: 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, http://corpolexindia.blogspot.inMFN Treatment – “Immediately and Unconditionally”: 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, http://corpolexindia.blogspot.inMFN Treatment-Exceptions: 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, http://corpolexindia.blogspot.inMFN Treatment - GATS: 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, http://corpolexindia.blogspot.inMFN Treatment – Exceptions under GATS: 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, http://corpolexindia.blogspot.inMFN Treatment - TRIPS: 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, http://corpolexindia.blogspot.inNational Treatment: 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, http://corpolexindia.blogspot.inMFN Treatment v. National Treatment: MFN Treatment v. National Treatment Non- Discrimination Non-Discrimination at the Border : Inside Border: Equal Treatment between Equal Treatment WTO Members’ Products between Imported and Domestic Goods Article I GATT Article III GATT (Article II GATS (Article XVII GATS Article IV TRIPS) Article III TRIPS) Dr. Tabrez Ahmad, http://corpolexindia.blogspot.inInternal v. Border Measure: 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 border Article XI GATT Article III GATT or Article III GATT Dr. Tabrez Ahmad, http://corpolexindia.blogspot.inArticle III:2 of the GATT 1994 – First Sentence – tax discrimination of like products: 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) w hether the imported and domestic products are like products; and (ii) w hether the imported products are taxed in excess of the domestic products Dr. Tabrez Ahmad, http://corpolexindia.blogspot.inArticle III:2 of the GATT 1994 – Second Sentence – directly competitive or substitutable products: 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, http://corpolexindia.blogspot.inArticle III:2 of the GATT 1994 – Second Sentence – directly competitive or substitutable products: 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, http://corpolexindia.blogspot.inArticle III:4 of the GATT 1994 – Discriminatory domestic rules/regulations: Article III:4 of the GATT 1994 – Discriminatory domestic rules/regulations “The products of the territory of any contracting party imported 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, http://corpolexindia.blogspot.inArticle III:4 of the GATT 1994 – Discriminatory domestic rules/regulations: Article III:4 of the GATT 1994 – Discriminatory domestic 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, http://corpolexindia.blogspot.inExceptions to the National Treatment Principle under GATT: Exceptions to the National Treatment Principle under 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, http://corpolexindia.blogspot.inNational Treatment Principle under the GATS and TRIPS: National Treatment Principle under the GATS and TRIPS 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, http://corpolexindia.blogspot.inNational Treatment Principle under the GATS: National Treatment Principle under 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, http://corpolexindia.blogspot.inExceptions to the National Treatment Principle under the GATS: Exceptions to the National Treatment Principle under 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, http://corpolexindia.blogspot.inBinding of Commitments / Concession: Binding of Commitments / Concession Members commit themselves not to raise duties or make concessions more restrictive than indicated in their schedules of commitments / concessions Art. II: 1(a) of the GATT : Each contracting party shall accord to the commerce of the other contracting parties treatment no less favourable than that provided for in the appropriate Part of the appropriate Schedule annexed to this Agreement Exceptions to the “binding” principle are the following: GATT Art. II:1(b) (Other Duties and Charges - ODCs) GATT Art. II:2 (Internal Tax, Anti-Dumping or Countervailing Duty, Customs Fees) GATT Art. XXVIII (Modifications of Concessions) Marrakesh Agreement Art. IX:3 (Waiver) Dr. Tabrez Ahmad, http://corpolexindia.blogspot.inBinding of Commitments / Concession: Binding of Commitments / Concession Art XX:1 of the GATS : Each Member shall set out in a Schedule the specific commitments it undertakes under Part III of this Agreement (GATS). With respect to sectors where such commitments are undertaken, each Schedule shall specify terms, limitations and conditions on market access … Art XX:3: Schedules of specific commitments shall be annexed to this Agreement and shall form an integral part thereof. Exceptions 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, http://corpolexindia.blogspot.inProhibition of Quantitative Restrictions: Prohibition of Quantitative Restrictions Art. XI:1of the GATT: No prohibitions or restrictions other than duties, taxes or other charges (regardless of form – quotas, import/export licenses, other measures) shall be instituted or maintained on imports/exports Art. XIII:1 : Limited exceptions permitted but Members must respect the non-discrimination principle in their imposition of QRs. They must be similarly applied to all third countries Art. XIII:2 Allocation of QRs or TRQ’s as close as possible to expected shares that would have been obtained in absence of restrictions. Dr. Tabrez Ahmad, http://corpolexindia.blogspot.inProhibition of Quantitative Restrictions - Exceptions: Prohibition of Quantitative Restrictions - Exceptions GATT Art. XIX (Safeguards) GATT Art. XI:2(a) (Critical Shortage of Foodstuffs or Other Essential Products) GATT Art. XI:2(b) (Removal of a Temporary Surplus of a Like Domestic Product for which the Imported Product can be Directly Substituted) GATT Art. XI:2(c) (Agricultural Products and Fish) -- Agreement on Agriculture ( Tariffication ) GATT Art. XX (General Exception) GATT Art. XXIV:5 (Free-Trade Area and Customs Unions) GATT Art. XXI (Security Exception) Marrakesh Agreement Art. IX:3 (Waiver) Agreement on Textiles and Clothing (Progressive Integration) Dr. Tabrez Ahmad, http://corpolexindia.blogspot.inProhibition of Quantitative Restrictions under the GATS: Prohibition of Quantitative Restrictions under the GATS The use of QRs (Quantitative Restrictions) is prohibited only for Sectors and Modes of supply covered in the Schedule of Specific Commitments. Art XVI:1: With respect to market access through the modes of supply identified in Article I (of GATS), each Member shall accord services and service suppliers of any other Member treatment no less favourable than that provided for under the terms, limitations and conditions agreed and specified in its Schedule. Dr. Tabrez Ahmad, http://corpolexindia.blogspot.inProhibition of Quantitative Restrictions under the GATS-Exceptions: Prohibition of Quantitative Restrictions under the GATS-Exceptions GATS Art. XIV (General Exception) GATS Art. XIV bis (Security Exception) GATS Art. XVI:2 (QRs Allowed if Scheduled) number of service suppliers total value of service transactions or assets total number of service operations or total quantity of service input total number of natural persons necessary for the supply of a service specific type of legal entity foreign capital participation Marrakesh Agreement Art. IX:3 (Waiver) Dr. Tabrez Ahmad, http://corpolexindia.blogspot.inExceptions to GATT/GATS obligations: Exceptions to GATT/GATS obligations Safeguards: GATT Art. XIX and Agreement on Safeguards “If, as a result of unforeseen developments and of the effect of the obligations incurred by a Member under this Agreement (GATT), including tariff concessions, any product is being imported into the territory of that Member in such increased quantities and under such conditions as to cause or threaten serious injury to domestic producers in that territory of like or directly competitive products , the Member shall be free, in respect of such product, and to the extent and for such time as may be necessary to prevent or remedy such injury , to suspend the obligation in whole or in part or to withdraw or modify the concession” Compensation –only after 3 yrs if absolute increase Dr. Tabrez Ahmad, http://corpolexindia.blogspot.inExceptions to GATT/GATS obligations: Exceptions to GATT/GATS obligations Safeguards: GATT Art. XII and Article XVIII:B – Measures to safeguard balance of payments Art. XII : Notwithstanding the provisions of para . 1 of Article XI (Prohibition of QRs), any Member, in order to safeguard its external financial position and its balance of payments, may restrict the quantity or value of merchandise permitted to be imported , subject to the provisions of the following para of this Art (GATT XII) Art. XVIII:B : In order to safeguard its external financial position and to ensure a level of reserves adequate for the implementation of its programme of economic development , a Member coming within the scope of para . 4 (a) of this Art. (XVIII) [developing countries] may, subject to the provisions of para . 10 to 13, control the general level of its imports by restricting the quantity or value of merchandise permitted to be imported ; provided that the import restrictions instituted, maintained or intensified shall not exceed those necessary..” Article XVIII:C – infant industry clause available to developing countries in the low stages of development Dr. Tabrez Ahmad, http://corpolexindia.blogspot.inExceptions to GATS obligations: Exceptions to GATS obligations Safeguards: GATS Art. X There shall be multilateral negotiations on the question of emergency safeguard measures based on the principle of non-discrimination. The results of such negotiations shall enter into effect on a date not later than three years from the date of entry into force of the WTO Agreement (--> 1.1.1998 ) Deadline not met. Dr. Tabrez Ahmad, http://corpolexindia.blogspot.inExceptions to GATT obligations: Exceptions to GATT obligations Special Safeguard Measures: Agreement on Agriculture Article 5: Notwithstanding the provisions of para . 1(b) of Art. II of GATT (Binding), any Member may take recourse to the provisions of para 4 and 5 below in connection with the importation of an agricultural product, in respect of which measures referred to in para 2 of Art. 4 of this Agreement have been converted into an ordinary customs duty ( tariffication ) and which is designated in its Schedule with the symbol “ SSG ” as being the subject of a concession in respect of which the provisions of this Art. May be invoked by Members which had undergone the tariffication exercise: volume and price triggers Possibility to impose a special safeguard measure existed under the now defunct Agreement on Textiles and Clothing (Art 6 of ATC). Cf. Chinese protocol of accession Dr. Tabrez Ahmad, http://corpolexindia.blogspot.inExceptions to GATT obligations: Exceptions to GATT obligations Imposition of antidumping duties irrespective of Article II of the GATT 1994 to offset unfair advantage Art. VI:1 of the GATT 1994: Members recognise that dumping by which products of one country are introduced into the commerce of another country at less than the normal value of the products, is to be condemned if it causes or threatens material injury to an established industry in the territory of a member or materially retards the establishment of a domestic industry. … Art. VI:2: In order to offset or prevent dumping , a Member impose an anti-dumping duty not greater in amount than the margin of dumping in respect of such product. ... Detailed provisions in the Agreement on Antidumping Dr. Tabrez Ahmad, http://corpolexindia.blogspot.inExceptions to GATT obligations: Exceptions to GATT obligations Imposition of countervailing duties irrespective of Article II of the GATT 1994 to offset unfair advantage Art. VI:3 of the GATT 1994: Subsidy defined in the SCM Agreement as a financial contribution by a government or a public body to an industry or group of industries which confers a benefit Members able to offset the benefit on the recipient through the imposition of a countervailing duty after conducting thorough investigations. Need to establish subsidization, material injury or threat thereof to a domestic industry ( Art. VI:6) Elaborate rules on agricultural subsidies in the Agreement on Agriculture. Other subsidies regulated under the SCM Agreement. In the event of conflict, the AoA prevails Under the SCM Agreement, subsidies distinguished on the basis of their effects: prohibited and actionable subsidies Dr. Tabrez Ahmad, http://corpolexindia.blogspot.inExceptions to GATT obligations- Art XX: Exceptions to GATT obligations- Art XX Chapeau: “Subject to the requirement that such measures are not applied in a manner which would constitute a means of arbitrary or unjustifiable discrimination between countries where the same conditions prevail, or a disguised restriction on international trade, nothing in this Agreement shall be construed to prevent the adoption or enforcement by any Member of measures ” List of ten exceptions ( a ) necessary to protect public morals; ( b ) necessary to protect human, animal or plant life or health; ( c ) relating to the importation or exportations of gold or Silver; ( d ) necessary to secure compliance with laws not inconsistent with GATT provisions; ( e ) relating to products of prison labour; ( f ) imposed for the protection of national treasures (artistic, historic or archaeological); ( g ) relating to conservation of exhaustible natural resources if such measures are made effective in conjunction with restrictions on domestic production or consumption; ( h ) undertaken in pursuance of an intergovernmental commodity agreement; ( i ) materials necessary to ensure essential quantities to a domestic processing industry …; ( j ) essential to the acquisition or distribution of products in general or local short supply. Dr. Tabrez Ahmad, http://corpolexindia.blogspot.inExceptions to GATT obligations- Art XX – A two-pronged test: Exceptions to GATT obligations- Art XX – A two-pronged test In US-Gasoline and US-Shrimp , the AB held that the following elements should be satisfied: Does the challenged measure fall within one of the exceptions listed in Article XX (a)-(j)?; and If yes, does it satisfy the requirements of ‘Article XX-chapeau’? As regards the first test , the cases below dealt with the following exceptions: (b) “measures necessary to protect human, animal, or plant life”: EC-Asbestos (d) “measures necessary to secure compliance with”: Korea-Various Measures on Beef (g) “ relating to the conservation of exhaustible natural resources”: US-Gasoline and US-Shrimp Dr. Tabrez Ahmad, http://corpolexindia.blogspot.inExceptions to GATT obligations- Art XX – A two-pronged test: Exceptions to GATT obligations- Art XX – A two-pronged test As regards the second test , the relevant questions to be answered are: Does the challenged measure arbitrarily or unjustifiably discriminate between countries where same conditions prevail? Does it constitute a “ disguised restriction on trade ”? In the Shrimp-Turtle case , it was held that whereas the US measure qualified for provisional justification under Article XX(g), it did not comply with the chapeau Dr. Tabrez Ahmad, http://corpolexindia.blogspot.inExceptions to GATS obligations- Art XIV: Exceptions to GATS obligations- Art XIV Chapeau: Subject to the requirement that such measures are not applied in a manner which would constitute a means of arbitrary or unjustifiable discrimination between countries where like conditions prevail, or a disguised restriction on trade in services, nothing in this Agreement shall be construed to prevent the adoption or enforcement by any Member of measures : List of exceptions ( a ) necessary to protect public morals or maintain public order; ( b ) necessary to protect human, animal or plant life or health protection; ( c ) necessary to comply with Laws or regulations not inconsistent with GATS provisions; (d) inconsistent with Article XVII (National treatment) - if aimed at equitable taxation; and ( e ) inconsistent with Article II (MFN) - to avoid double taxation. US – Gambling : Invocation of Art XIV (a) by the US Dr. Tabrez Ahmad, http://corpolexindia.blogspot.inExceptions to GATT/GATS/TRIPS obligations: Exceptions to GATT/GATS/TRIPS obligations Security Exception: Art. XXI of GATT; Art. XIV bis of GATS and Art. 73 of TRIPS) No Member required to furnish information contrary to security interests Member cannot be prevented from taking action considered necessary to protect essential security interests ... relating to fissionable materials, traffic in arms, ammunition, etc or taken in time of war or other emergency or to pursue obligations under United Nations Charter to maintain international peace and security Notification to the Council Dr. Tabrez Ahmad, http://corpolexindia.blogspot.inIncreasing Participation of Developing Countries: Increasing Participation of Developing Countries Part IV of the GATT; Non-reciprocity principle The Enabling Clause – Provides legal cover for preferences granted to developing countries by developed-country Members In the EC-GSP case, it was held by the Appellate Body that the Enabling Clause did not require preference-giving countries to extend the same benefits to all developing countries and that it was permissible to distinguish among developing countries on the basis of objective criteria Under para 2(c) of the Enabling Clause, developed countries can grant extensive and deeper preferences to LDCs – EC’s “Everything but Arms” initiative Paragraph 44 of the Doha Ministerial Declaration: Concern that SDT provisions are hortatory and not legally enforceable. Work proceeding in the CTD Special Session and other WTO bodies Dr. Tabrez Ahmad, http://corpolexindia.blogspot.inIncreasing Participation of Developing Countries: Increasing Participation of Developing Countries Doha Development Agenda – Concerns of developing countries placed at the heart of the negotiations LDCs exempted from undertaking obligations – exemption from tariff and subsidy reduction commitments. Not obliged to table offers in the services negotiations Less than full reciprocity in the NAMA negotiations Paragraph 6 countries – do not have to apply the formula but expected to increase the level of their bindings and also bind tariffs at an average rate of 28.5 per cent SDT provisions for SVEs, RAMS Dr. Tabrez Ahmad, http://corpolexindia.blogspot.inTransparency: Transparency GATT Article X and GATS Article III Publication of trade regulations (laws, regulations, judicial decisions and administrative rulings of general application) Uniform, impartial and reasonable administration of rules / regulations Independent legal review Enquiry points under GATS, SPS and TBT Agreements Dr. Tabrez Ahmad, http://corpolexindia.blogspot.inOther principles: Other principles Regional Trade Agreements GATT Art. XXIV: Free-Trade Areas and Customs Unions “substantially all trade” among Members; “not on the whole more trade-restrictive” measures against third countries; limited transition period – normally not to exceed 10 years GATS Art. V:Economic Integration Agreements “substantial sectoral coverage; absence or elimination of substantially all discrimination Enabling Clause: Regional/Global Trading Arrangements “purpose should be to create trade among participating countries and not raise barriers to the trade of third countries Dr. Tabrez Ahmad, http://corpolexindia.blogspot.inOther principles: Other principles State Trading Enterprises and Monopolies GATT Art. XVII: STEs Allowed to have STEs but they must respect the non-discrimination principles and operate in accordance with commercial considerations GATS Art. V: Monopolies Allowed but should not operate to undermine a Member’s specific commitments Dr. Tabrez Ahmad, http://corpolexindia.blogspot.inMeasures to be Taken: Measures to be Taken Developing countries cannot afford to be silent spectators. THE DEVELOPING COUNTRIES MUST COLLECTIVELY TAKE A STAND ON THE FOLLOWING:- "Zero-tolerance" on agricultural subsidies Restoration of Quantitative Restriction: Multilateral Agreement Against Hunger: Dr. Tabrez Ahmad, http://corpolexindia.blogspot.inWHAT WE ALL NEED TO REMEMBER IS THE FACT THAT : WHAT WE ALL NEED TO REMEMBER IS THE FACT THAT Pre-Independence India suffered repeated famines, drought and food shortages. But following the Green Revolution in the ’60s, yields and food stocks rose manifold. Now, 40 years later, Indian farmers have realised the follies of their tryst with intensive agriculture. Despite 70 per cent of the population being engaged in agriculture and allied activities, declining food grain production and access to food remain the two biggest problems confronting the country. Liberalisation has made things worse: commercial crops are eating into the fertile land tracts meant for essential food grains. And 16 years after the World Trade Organisation came into existence; the anticipated gains for India from the trade liberalisation process in agriculture are practically zero. Dr. Tabrez Ahmad, http://corpolexindia.blogspot.inConclusion & Recommendations: Conclusion & Recommendations India and China together constitute 1/3 rd of the total world population and 1/4 th of world’s skilled labour force. They are two future economies to reckon with! For a sustainable trade relationship between the two nations facilitated by their interaction with WTO, it’s imperative that they move from competition to cooperation. Some of our key recommendations are discussed in the following slides. Dr. Tabrez Ahmad, http://corpolexindia.blogspot.inPowerPoint Presentation: Reduction in shipping costs: The Government should try to provide an impetus to entrepreneurs by providing subsidized shipping/ freight costs while exporting or importing goods from either of these countries. Mutual Recognition Agreements (MRA) on standards: For a meaningful trade relationship between the two countries to flourish, all non-tariff barriers need to be done away with. Reduction in Tariffs: The markets in both these countries should be made freely or almost freely accessible to each other with a constant waive in tariff rates. This would not only encourage bilateral trade but also add to the competitiveness of the products by making them available at a cheaper price. Dr. Tabrez Ahmad, http://corpolexindia.blogspot.inPowerPoint Presentation: Emphasis on quality: Quality at an affordable price always creates a value proposition that’s difficult to challenge. So India should try to increase their competitiveness in the Chinese market by trying to provide an unparalleled value proposition. Increasing complementarities: There is a very clear mismatch between China’s requirements and India’s offerings. India should try to focus not only on resource based and low technology products but also move to medium and high technology products. With cheap and skilled labour, India would be able to take on all major economies if it can bring itself at par with their technologies. Penetrate deeper: Penetrate deeper into their markets and develop regional marketing strategies. Dr. Tabrez Ahmad, http://corpolexindia.blogspot.inPowerPoint Presentation: Product Diversification: Feed into each other’s supply chain. Increase the variety of products that are exchanged between the two countries. Unique comparative advantages: Both India and China have comparative advantages in similar sectors such as chemicals, metals, alloys, textile etc. This makes them highly competitive in third country markets. Try not to intrude too much into each other’s markets by splitting the booty! Foreign Direct Investments: Make themselves more attractive FDI destinations by means of further liberalization. Dr. Tabrez Ahmad, http://corpolexindia.blogspot.inPowerPoint Presentation: A politically diplomatic stance: The political scenario between two countries would always play a major role in their trade interactions. Hence a politically diplomatic stance is very necessary even if they have opposing views on tertiary issues such as their individual relation with USA, UNO etc. Also it may be crucial to resolve the long ongoing controversy regarding each of their claims on Arunachal Pradesh. Joint Ventures: To take trade cooperation to the next level and build a cemented relationship, it may be a great idea to create joint ventures in certain areas that could lead to mutual benefit. After all, it’s one common motive that both these countries are working towards; an inclusive growth and reduction in poverty while emerging as global economic superpowers by next decade. Dr. Tabrez Ahmad, http://corpolexindia.blogspot.inReferences: References Bhatt, T.P.: India and China in WTO, 2006,Planning Commission Govt. of India, Institute for Studies in Industrial Development, New Delhi- 110070 Rao , P.S (2008). International Business: Text and cases . 3rd ed. New Delhi: Himalaya Publication. p340-520. Goldhar , B. (2005). Impact on India of tariff and quantitative. ICRIER . 172 (1), p10-12. Anonymous. (2011). Tariff Rates: all products, China. Available: http://tradingeconomics.com/china/tariff-rate-applied-weighted-mean-all-products-percent-wb-data.html. Last accessed 24th Feb 2011. Anonymous. (2011). Tariff Rates: all products, India. Available: http://tradingeconomics.com/china/tariff-rate-applied-weighted-mean-all-products-percent-wb-data.html. Last accessed 24th Feb 2011. European commission trade. (2011). Economic Indicators, China. Available: http://trade.ec.europa.eu/doclib/docs/2006/september/tradoc_113366.pdf. Last accessed 24th Feb 2011. Min. of internal affairs, Japan. (2010). International Balance of Payment. Available: http://www.stat.go.jp/english/data/handbook/c11cont.htm. Last accessed 24th Feb 2011. UN Commodity Trade. (2010). Database Statistics. Available: www.comtrade.un.org. Last accessed 24th Feb 2011. PRC General Administration. (2010). US-China Trade Statistics. Available: http://www.uschina.org/statistics/tradetable.html. Last accessed 24th Feb 2011 Dr. Tabrez Ahmad, http://corpolexindia.blogspot.inDo you have any question?: Do you have any question? Dr. Tabrez Ahmad, http://corpolexindia.blogspot.inPowerPoint Presentation: Thanks Dr. Tabrez Ahmad, http://corpolexindia.blogspot.in You do not have the permission to view this presentation. In order to view it, please contact the author of the presentation.