Provisions of wto favouring developed nations
Transcript of Provisions of wto favouring developed nations
Crystal Sangma, Jyotish, Kartikey, Kunal, LalitIB- Section A
Introduction Provisions under TRIPS Provisions under TRIMS Provisions under GATS Issues concerning India Conclusion
WTO is the only global international organization dealing with the rules of trade between nations.
Its main function is to ensure that trade flows as smoothly, predictably and freely as possible.
At its heart are the WTO agreements, negotiated and signed by the bulk of the world’s trading nations and ratified in their parliaments.
It is alleged that WTO’s policies and functioning are influenced by industrial countries and MNC’s to the detriment of developing countries
There are several criticisms against WTO particularly in the developing countries
In 2001, developing countries, concerned that developed countries were insisting on an overly narrow reading of TRIPS, initiated a round of talks that resulted in the Doha Declaration.
TRIPS is a WTO agreement that was negotiated in the Uruguay Round of negotiations from 1986 to 1994 by the members of the WTO that sets out certain rules regarding intellectual property rights
The purpose of the TRIPS agreement is to establish a uniform set of rules across the globe that would provide adequate standards of protection for intellectual property and provide greater predictability and stability in international economic relations.
The areas covered by the TRIPS Agreement are:Part II (sec. 1-7)
Copyright and related rights
Trademarks, including service marks
Geographical indications
Industrial designs
Patents
Layout-designs (topographies) of integrated circuits
Undisclosed information, including trade secrets
Part-ll Section 36: Geographical indication
Article 22: Protection of Geographical Indications Using the name of the place when the product was made elsewhere or when it does not have the usual characteristics can mislead consumers, and it can lead to unfair competition. The TRIPS Agreement says countries have to prevent this misuse of place names.
Article 23 provides a higher or enhanced level of protection for geographical indications for wines and spirits: subject to a number of exceptions, they have to be protected even if misuse would not cause the public to be misled.
(for example, “Champagne”, “Tequila” or “Roquefort”)
Section 4: Industrial designs
Up until the 1970s most developing countries had a policy of Import Substitution Industrialization. This had the effect of closing off markets to better designed imported products.
Product design was often perceived as an exercise in aesthetics or fashion, therefore, product design was seen as being irrelevant to developing countries
Section 5: Patents
Article-28 : Rights conféred
Innovation: hard to ensure that integrated circuits and processus are not copied
Process patent: competitor may reverse engineer end product and réassemble it through different process
Product patent: no ré-assembly of product throughdifferent process, as substance itsef is protected
INDIAN PATENT ACT OF 1970
Only process not product patents in food, medicines, chemicals
Term of patents 14 years; 5-7 in chemicals, drugs
Compulsory licensing and license of right
Several areas excluded from patents (method of agriculture, any process for medicinal surgical or other treatment of humans, or similar treatment of animals and plants to render them free of disease or increase economic value of products)
Government allowed to use patented invention to prevent scarcity
TRIPS
Process and product patents in almost all fields of technology
Term of patents 20 years Limited compulsory licensing, no
license of right Almost all fields of technology
patentable. Only area conclusively excluded from patentability is plant varieties; debate regarding some areas in agriculture and biotechnology
Very limited scope for governments to use patented inventions
Section 7: Protection of Undisclosed information (Trade secrets)
Article 39
Source code of Windows kept as a trade secret by Microsoft.
Coca-cola formula kept locked in a Bank Vault
No provisions of compulsory licensing in case of trade Secrets.
Some other provisions
Developing countries have been a lucrative market for the developed world to sell their outdated technologies.
The desire to further restrict the possibility of compulsory licenses for patents has led to provisions in recent bilateral US trade agreements.
Access to essential medicines: The most visible conflict has been over AIDS drugs in Africa. Despite the role that patents have played in maintaining higher drug costs for public health programs across Africa, this controversy has not led to a revision of TRIPs.
The Agreement on Trade Related Investment Measures (TRIMs) is one of Agreements covered under Annex IA to the Marrakech Agreement, signed at the end of the Uruguay Round (UR) negotiations.
Although there is no agreed definition of TRIMS, the following measures are considered to be TRIMS: local content requirement export performance requirement local manufacturing requirement trade balancing requirement production mandates foreign exchange restrictions mandatory technology transfers limits on equity participation and on remittances
A country might impose TRIMS for a number of reasons but the main reason is to increase their country’s earning of FDI or to ensure that the country realises their desired gains
FDI inflows to developing countries have increased more than 20 times. However, these inflows are concentrated only in a few developing countries.
TRIMS preaches the openness of the world economy the US, EU and Japan are the principle sources and
hosts of FDI the main reason is that much of the FDI flows in the
1900s were due to cross border mergers and acquisitions, much of which took place in tertiary industries such as banking, finance and related services, which are conducted almost exclusively among the developed nations
over 70% of the FDI inflows goes to developed nations and only about a quarter goes to developing nations
Provision of technology transfer requirements only for non – commercial use .
Provision allowing developed countries to set up manufacturing units in developing countries .
Article Vlll - Monopolies and Exclusive Service providers -“Corporate takeover” of services
The most commonly voiced criticism is that the GATS would force countries to open up their services to trade and investment due to pressures from lobbyism in developed countries
This would result in a corporate takeover of their services by the foreign MNCs and forced privatization of the private sector
The concern is greatest in case of public services such as water supply, environment, health care, transport, education where the government has important public policies that suit the needs of developing countries
Article X - Emergency Safeguard Measures-
Asymmetric liberalization Developing country service firms do not get enough
time to adjust to foreign competition
Given the apparent imbalance in supply capacity of developed and developing countries in the service sector, the thrust for liberalization and market opening measures is likely to be on the developed countries, thereby serving the export interests of the developed countries
Ambiguities in scope
Article 1 of GATS states that “services provided in the exercise of government authority” are excluded from the agreement
The latter is further defined as those services which are neither provided on a commercial basis nor in competition with other suppliers
The main problem lies in the interpretation of this carve out clause
Extensive coverage of services
GATS includes a list of about 160 threatened services including elder and child care, sewage, garbage, park maintenance, telecommunications, construction, banking, insurance, transportation, shipping, postal services, and tourism.
In some countries, privatization is already occurring. Those least able to pay for vital services from developing countries are the ones who suffer the most while developed nations reap the benefits
India one of members of General Agreement onTariffs and Trade (GATT) since 1948.
After Marrakesh Agreement, India joined WTOsince inception in 1995.
Developing countries like India availed of greatertrade opportunities and also challenged certainpolicies of developed countries
Developmental issues increasingly focused alongwith trade issues
Special & Differential(S&D) treatment fordeveloping and LDCs incorporated
In spite of special provisions for developingcountries, certain imbalances and inequitiesexperienced.
A number of Developed Countries did notfulfill some obligations for trade liberalizationwhile developing countries were asked toreduce import duties and provide greatermarket access.
India has reduced tariffs to bring them to thebound levels. Even lower for a large numberof commodities as part of the reformsprocess.
Customs duties important source of revenuefor developing countries like India.
The industrial sector faces several constraintseven though some protection is warranted forspecific industries.
1991-92 2004-05
Simple Avg.
Agriculture 108.0 32.5
All Coms. 128.0 22.4
Wtd Avg. *
Agriculture 47.0 27.5
All Coms. 72.5 18.2
Tot duty includes basic, surcharge, SAD & excludes CVD.
* For 1991-92 imports of 1992-93 are taken as weights, while
for 2004-05 of 2002-03
Average Import Duty Rates in India
Non-agricultural tariffs were graduallyreduced but agricultural tariffs require greatercaution due to following reasons: India and other developing countries have argued
that agriculture is way of life and employs largeproportion of workforce while contributingsignificantly to GDP.
Exposure to volatile international market wouldaffect not only domestic prices but also incomes ofpoor.
Some Developed Countries did not fullyimplement the required reduction of domesticsupport to farmers, export subsidies and tariffs.
WTO permits non-distortionary subsidies.Experience shows that these can be tradedistorting and Developed Countries have steadilyincreased such subsidies leading to excessiveglobal production.
Disadvantage to developing countries since suchsubsidies are unaffordable. Get less competitive inworld market.
Technical barriers to trade and stringentrestrictions on grounds of SPS regulations to berelaxed to prevent protectionist measures byDeveloped Countries on this plea.
Grant of patents on non-originalinnovations, particularly linked to traditionalmedicines is an issue of concern.
India has the advantage in movement of highlyskilled and experienced professionals.
International institutions like the WTO must undertake the perhaps painful changes that will enable them to play the role they should be playing to make globalization work, and work not just for the well of and industrialized countries, but for the poor and the developing nations.
The developed world needs to do its part to reform the international institutions that govern globalization.