World Trade Organisation (WTO)

World Trade Organization, as an institution was established in 1995. It

replaced General Agreement on Trade and Tariffs (GATT) which was in
place since 1946.

About WTO: The World Trade Organization (WTO) is the only global
international organization dealing with the rules of trade between
nations. At its heart are the WTO agreements, negotiated and signed by
the bulk of the world’s trading nations and ratified in their parliaments.
The goal is to ensure that trade flows as smoothly, predictably and freely
as possible.

GATT vs WTO:
GATT WTO
To strengthen To govern GATT and
Purpose
international trade international trade practices.
No permanent structure Has a permanent structure
Framework
or framework with a permanent framework
Trade in goods; trade in
services and trade-related
Scope Trade in goods
aspects of intellectual property
rights
Has a permanent appellate Disputes are resolved faster as
Dispute
body to review findings settlement system has a select
resolution
and settle disputes time frame

Currently, WTO has 164 members. It is located in Geneva, Switzerland. It

was established on 1 January 1995 and its official languages are English,
French and Spanish.

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What is the WTO?
• Who we are: The WTO has many roles: it operates a global system of
trade rules, it acts as a forum for negotiating trade agreements, its
settles trade disputes between its members and it supports the needs
of developing countries.
• What we do: All major decisions are made by the WTO's member
governments: either by ministers (who usually meet at least every two
years) or by their ambassadors or delegates (who meet regularly in
Geneva).
• What we stand for: A number of simple, fundamental principles form
the foundation of the multilateral trading system.
• Overview: The primary purpose of the WTO is to open trade for the
benefit of all.

Objectives of WTO
• Raise living standards
• Ensure full employment
• Ensure a large and steadily growing volume of real income and
effective demand
• Expand the production of and trade in, goods and services, while
allowing for the optimal use of the world’s resources in accordance
with the objective of sustainable development.

Decision-making
• Organization chart: The WTO's top decision-making body is the
Ministerial Conference. Below this is the General Council and various
other councils and committees.
• Ministerial conferences: Ministerial conferences usually take place
every two years.

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• General Council: The General Council is the top day-to-day decision-
making body. It meets a number of times a year in Geneva.

Whose WTO is it any way?

The WTO is run by its member governments. All major decisions are
made by the membership as a whole, either by ministers (who meet at
least once every two years) or by their ambassadors or delegates (who
meet regularly in Geneva). Decisions are normally taken by consensus.
In this respect, the WTO is different from some other international
organizations such as the World Bank and International Monetary Fund.
In the WTO, power is not delegated to a board of directors or the
organization’s head. When WTO rules impose disciplines on countries’
policies, that is the outcome of negotiations among WTO members. The
rules are enforced by the members themselves under agreed procedures
that they negotiated, including the possibility of trade sanctions. But
those sanctions are imposed by member countries, and authorized by
the membership as a whole. This is quite different from other agencies
whose bureaucracies can, for example, influence a country’s policy by
threatening to withhold credit. Reaching decisions by consensus among
some 150 members can be difficult. Its main advantage is that decisions
made this way are more acceptable to all members. And despite the
difficulty, some remarkable agreements have been reached.
Nevertheless, proposals for the creation of a smaller executive body —
perhaps like a board of directors each representing different groups of
countries — are heard periodically. But for now, the WTO is a member-
driven, consensus-based organization.

Organizational hierarchy:

Highest authority: The Ministerial Conference: So, the WTO belongs to

its members. The countries make their decisions through various

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councils and committees, whose membership consists of all WTO
members. Topmost is the ministerial conference which has to meet at
least once every two years. The Ministerial Conference can take
decisions on all matters under any of the multilateral trade agreements.

Second level: General Council in three guises: Day-to-day work in

between the ministerial conferences is handled by three bodies:
• The General Council
• The Dispute Settlement Body
• The Trade Policy Review Body
All three are in fact the same — the Agreement Establishing the WTO
states they are all the General Council, although they meet under
different terms of reference. Again, all three consist of all WTO members.
They report to the Ministerial Conference. The General Council acts on
behalf of the Ministerial Conference on all WTO affairs. It meets as the
Dispute Settlement Body and the Trade Policy Review Body to oversee
procedures for settling disputes between members and to analyse
members’ trade policies.

Third level: councils for each broad area of trade, and more: Three more
councils, each handling a different broad area of trade, report to the
General Council:
• The Council for Trade in Goods (Goods Council)
• The Council for Trade in Services (Services Council)
• The Council for Trade-Related Aspects of Intellectual Property Rights
(TRIPS Council)
As their names indicate, the three are responsible for the workings of the
WTO agreements dealing with their respective areas of trade. Again they
consist of all WTO members. The three also have subsidiary bodies. Six
other bodies report to the General Council. The scope of their coverage
is smaller, so they are “committees”. But they still consist of all WTO

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members. They cover issues such as trade and development, the
environment, regional trading arrangements, and administrative issues.
Two more subsidiary bodies dealing with the plurilateral agreements
(which are not signed by all WTO members) keep the General Council
informed of their activities regularly.

Fourth level: down to the nitty-gritty: Each of the higher level councils
has subsidiary bodies. The Goods Council has 11 committees dealing with
specific subjects (such as agriculture, market access, subsidies, anti-
dumping measures and so on). Again, these consist of all member
countries. At the General Council level, the Dispute Settlement Body also
has two subsidiaries: the dispute settlement “panels” of experts
appointed to adjudicate on unresolved disputes, and the Appellate Body
that deals with appeals.

Who are the developing countries in the WTO? There are no WTO
definitions of “developed” and “developing” countries. Members
announce for themselves whether they are “developed” or “developing”
countries. However, other members can challenge the decision of a
member to make use of provisions available to developing countries.

What are the advantages of “developing country” status? Developing

country status in the WTO brings certain rights. There are for example,
provisions in some WTO Agreements which provide developing
countries with longer transition periods before they are required to fully
implement the agreement and developing countries can receive
technical assistance.

Least-developed countries: The WTO recognizes as least-developed

countries (LDCs) those countries which have been designated as such by

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the United Nations. There are currently 48 least-developed countries on
the UN list, 36 of which to date have become WTO members.

Developed countries: All the countries other than developing and least
developing countries are automatically considered as developing
countries.

Uruguay Ministerial Conference (1986 – 93)

The Uruguay Round, the eight and most ambitious Round of multilateral
trade negotiations under the auspicious of the GATT which involved 117
countries, concluded on December 15, 1993 after more than 7 years of
often contentions trade talks. The Final Act was signed at Marrakesh on
the fifteenth day of April, 1994. The major themes of the Final Act are as
follows:
• World Trade Organisation (WTO): GATT has been converted from a
provisional agreement into a formal international organisation called
WTO. The World Trade Organisation will serve as a single institutional
framework encompassing GATT and all the results of the Round.
• Industrial Products (Market Access): Under this agreement, tariffs on
industrial products are to be reduced by more than 1/3 on average. In
industrial countries, tariff would be eliminated in several sectors (for
example, steel, pharmaceuticals, and wood and wood products).
Developing countries would both lower their tariff barriers
significantly and increase the number of their ‘bound’ tariffs.
• Agricultural Products
• Services
• Textiles and Clothing
• Intellectual Property
• Subsidies
• Technical Barriers
• Anti-Dumping Rules

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• Trade-Related Investment Measures (TRIMs)
• Government Procurement
• Safeguard Actions
• Balance of Payments Provisions
• Dispute Settlement
• Coherence in Global Policy Making

Principles of WTO
The WTO Agreements are based on a number of simple and fundamental
principles such as:
• Non-discrimination: Non-discrimination is a fundamental principle
of the WTO. It has two components:
• The Most-Favoured Nation (MFN) principle: treating other WTO
members equally.
• The National Treatment Principle: treating foreigners and locals
equally
These two principles apply to trade in goods, trade in services as well as
trade related aspects of intellectual property rights.

Principle of Most Favoured Nation: If a WTO Member grants to a

country an advantage, it has to give such advantage to all WTO Members.
The MFN principles ensures that every time a WTO Member lowers a
trade barrier or opens up a market, it has to do so for the like goods or
services from all WTO Members – without regard of the Members’
economic size or level of development. However, there are exceptions
allowed for preferential treatment of developing countries, regional free
trade areas and customs unions.

If a country gives favourable treatment to one country (Member or Non-

Member) regarding a particular issue, it must handle all Members equally
regarding the same issue. A WTO Member could give an advantage to

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other WTO Members, without having to accord advantage to non-
Members (only WTO Members benefit from the most favourable
treatment).

Exceptions to MFN:
• A member may provide preferential treatment only to some countries
within a free trade area or customs union, without having to extend
such better treatment to all members.
• Developed members may give “unilaterally” preferential treatment to
goods imported from developing countries and least developed
countries (LDCs), without having to extend such better treatment to
other members.

Principle of National Treatment: Under the principle of national

treatment, a WTO member should not discriminate between imports and
like domestic products from a WTO member. This means that for trade
in goods, the national treatment principle prohibits a WTO Member from
favouring its domestic products over the imported like products of other
Members. The national treatment applies to only internal measures, as
opposed to border measures (e.g. tariffs).
It covers:
• Internal taxation (e.g. sales, value added tax), and
• Internal laws, regulations and requirements affecting the internal
sale, transportation, distribution or use of products
• The General Agreement on Trade in Services (GATS) and the TRIPS
Agreement have similar provisions.
In the area of services, the national treatment principle refers to non-
discrimination between, on the one hand, domestically produced
services or domestic service providers and, on the other hand, imported
services or foreign services providers.

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Exceptions to National Treatment Principle
• Government procurement
• Subsidies to domestic producers
• Internal maximum price control measures
• Cinematographic films

Transparency and predictability

• Traders and Members need to know what are the trade rules around
the world (transparency) and that trade measures will not be raised
arbitrarily (predictability).
• Special treatment for less developed Members: Least developed
Countries face more challenges before they start benefiting from
trade liberalization therefore, they have more time to adjust to the
rules, greater flexibility and other special rights.

Trade Policy Review Mechanisms WTO Members also review

periodically each Member’s trade policies and practices under the Trade
Policy Review Mechanism (TPRM). These reviews allow the evaluation of
individual Members’ trade policies and practices and their impact on the
Multilateral Trading System (MTS).

Settlement of Disputes The WTO is also a place for Member

governments to settle their trade disputes. The WTO’s procedure for
settling disputes is vital for enforcing the rules. A dispute commonly
arises when a Member adopts a trade measure that one or more
Members consider to be contrary to the obligations under the WTO
Agreements. When Members are unable to agree on a solution, they can
request a panel of independent experts to rule on the dispute. The
procedure for settling disputes is based on the rules contained in the
Understanding on Rules and Procedures Governing the Settlement of
Disputes (DSU).

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Building Trade Capacity Technical assistance and capacity building are
core elements of WTO’s work. More than two thirds of WTO Members
are developing countries. The WTO helps these Members to fully benefit
of the multilateral trading system (MTS) in various ways. Capacity
building also involves providing assistance to build the supply-side
capacity and infrastructure needed in these countries to expand their
trade.

WTO does not provide Financial Assistance to the LDC member

countries. However, there are ways via which developed countries
provide financial assistance to LDCs. Further, IMF and WTO in
collaboration have launched a Trade Integration Mechanism (TIM) in
April 2004. In this facility, funds are provided to those developing
countries which suffer temporary Balance of Payment problem as a
result of multilateral trade liberalization.

Major agreements of WTO

1. Agreement on Agriculture (AoA): Agreement on agriculture stands on

3 pillars viz.
Domestic Support, Market Access, and Export Subsidies.

Domestic Support – It refers to subsidies such guaranteed Minimum

Support Price (MSP) or Input subsidies which are direct and product
specific. Under this, Subsidies are categorized into 3 boxes –
• Green Box – Subsidies which are no or least market distorting
includes measures decoupled from output such as income-support
payments (decoupled income support), safety – net programs,
payments under environmental programs, and agricultural research
and-development subsidies. Such as Income Support which is not

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 product specific. Like in India farmer is supported for specific
products and separate support prices are there for rice, wheat etc. On
the other hand income support is uniformly available to farmers and
crop doesn’t matter. US has exploited this opportunity to fullest by
decoupling subsidies from outputs and as of now green box subsidies
are about 90% of its total subsidies. It was easy for USA because it
doesn’t have concern for food security. Further, it has prosperous
agro economy, and farmers can better respond to markets and shift
to other crops. But in India, domestic support regime provides
livelihood guarantee to farmers and also ensures food security and
sufficiency. For this MSP regime tries to promote production of
particular crop in demand. And this makes decoupling Support with
output very complicated. USA was also in position to subsidies R&D
expenditure in agriculture as almost all the farming in US is capitalist
and commercial. Big agriculturists spend substantial amount on
technology upgradations and R&D. But in India about 80% of farming
is subsistence and hence, India & other developing countries can use
this opportunity.
• Blue Box – Only ‘Production limiting Subsidies’ under this are allowed.
They cover payments based on acreage, yield, or number of livestock
in a base year. ‘Targets price’ are allowed to be fixed by government
and if ‘market prices’ are lower, then farmer will be compensated with
difference between target prices and market prices in cash. This cash
shall not be invested by farmer in expansion of production. Loophole
here is that there no limit on target prices that can be set and those
are often set far above market prices deliberately. USA currently isn’t
using this method, instead here EU is active.
• Amber Box – Those subsidies which are trade distorting and need to
be curbed. It contains category of domestic support that is scheduled
for reduction based on a formula called the “Aggregate Measure of
Support” (AMS).

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What is AMS: The AMS is the amount of money spent by governments
on agricultural production, except for those contained in the Blue Box,
Green Box. It required member countries to report their total AMS for
the period between 1986 and 1988, bind it, and reduce it according to an
agreed upon schedule. Developed countries agreed to reduce these
figures by 20% over six years starting in 1995. Developing countries
agreed to make 13% cuts over 10 years. Least – developed countries do
not need to make any cuts.

De-Minimis provision: Under this provision developed countries are

allowed to maintain trade distorting subsidies or ‘Amber box’ subsidies
to level of 5% of total value of agricultural output. For developing
countries this figure was 10%. So far India’s subsidies are below this limit,
but it is growing consistently. This is because MSP are always revised
upward whereas Market Prices have fluctuating trends. In recent times
when crash in international market prices of many crops is seen,
government doesn’t have much option to reduce MSP drastically. By this
analogy India’s amber box subsidies are likely to cross 10% level allowed
by de Minimis provision.

Market Access: The market access requires that tariffs fixed (like custom
duties) by individual countries be cut progressively to allow free trade. It
also required countries to remove non-tariff barriers and convert them
to Tariff duties. Earlier there were quotas for Imports under which only
certain quantities of particular commodities were allowed to Import.
This is an example of Non-tariff Barrier. India has agreed to this
agreement and substantially reduced tariffs. Only goods which are
exempted by the agreement are kept under control. Maximum tariff has
been bonded as required by WTO, under which a higher side of tariffs is
fixed in percentage that should never be surpassed. Generally actual
tariffs are far below this high limit. This makes custom policy transparent

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and tariffs can’t be fixed arbitrarily. If India is able to diversify its
production and add value by food processing, then this is a win-win deal
for India. A number of commodities are exported to West and low tariffs
in west will benefit Indian suppliers.

Export Subsidy: These can be in form of subsidy on inputs of agriculture,

making export cheaper or can be other incentives for exports such as
import duty remission etc. These can result in dumping of highly
subsidized (and cheap) products in other country. This can damage
domestic agriculture sector of other country.
These subsidies are aligned to 1986-1990 levels, when export subsidies
by developed countries were substantially higher and Developing
countries almost had no export subsidies at that time.

What are safeguards? In WTO’s terms, safeguards are contingency or

emergency restrictions on imports taken temporarily to deal with special
circumstances such as a surge in imports. Contingency restriction
means imposition of an import tax if the imports are causing injuries to
domestic agricultural sector. The original GATT itself allows such
restrictions to protect domestic economy. Following are the important
safeguards:

Anti-dumping actions: If a company exports a product at a price lower

than the price it normally charges on its own home market, it is said to
be “dumping” the product. The WTO agreement does not pass
judgement. Its focus is on how governments can or cannot react to
dumping — it disciplines anti-dumping actions, and it is often called the
“Anti-Dumping Agreement”. (This focus only on the reaction to dumping
contrasts with the approach of the Subsidies and Countervailing
Measures Agreement.) The WTO agreement allows governments to act
against dumping where there is genuine (“material”) injury to the

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competing domestic industry. In order to do that the government has to
be able to show that dumping is taking place, calculate the extent of
dumping (how much lower the export price is compared to the
exporter’s home market price), and show that the dumping is causing
injury or threatening to do so.

Countervailing duty (CVD): It is an additional import duty imposed on

imported products (by the importing country) when such products enjoy
benefits like export subsidies and tax concessions in the country of their
origin (i.e., where it is produced and exported). CVD is thus an import tax
by the importing country on imported products. It is an attempt to
ensure fair and market oriented pricing of imported products and
thereby protecting domestic industries and firms. The most popular
example for CVD is the imposition of additional duty by an importing
country when the product has given export subsidy by the
exporter/producer country. In India, the CVD is imposed as additional
duty of customs on imported products when such products are given tax
concession at the country of their origin. On the other hand, the Indian
goods have to give excise duties. The CVD effectively nullifies the low-
price advantage of the imported products (that doesn’t pay any excise
duties in the foreign country).

Special Safeguard Mechanism: It is a protection measure allowed for

developing countries to take contingency restrictions against
agricultural imports that are causing injuries to domestic farmers. The
contingency measure is imposition of tariff if the import surge causes
welfare loss to the domestic poor farmers. The design and use of the SSM
is an area of conflict under the WTO.

Doha Development Agenda and the origin of the SSM: At the Doha
Ministerial Conference, the developing countries were given a

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concession to adopt a Special Safeguard Mechanism (SSM) besides the
existing safeguards (like the Special Agricultural Safeguard or the SSG).
This SSM constituted an important part of the promises offered to the
developing world at Doha (known as Doha Development Agenda) and the
Doha MC became known as a development round. As mentioned, the
Special Safeguard Mechanism (SSM) allowed developing countries to
raise import duties on agricultural products in response to import
surges.

Difference between SSM and other safeguards under Agreement on

Agriculture: The SSG was available to all countries- both developing and
developed whereas the SSM is allowable only to the developing
countries. It is to be mentioned that the SSG was available as it was
inducted under the GATT agreement; whereas the SSM was the
invention of the Doha MC.

2. General Agreement on Trade in Services – GATS

Main purpose of the GATS: The GATS was inspired by essentially the
same objectives as its counterpart in merchandise trade, GATT: creating
a credible and reliable system of international trade rules; ensuring fair
and equitable treatment of all participants (principle of non-
discrimination); stimulating economic activity through guaranteed
policy bindings; and promoting trade and development through
progressive liberalization. While services currently account for over 60
percent of global production and employment, they represent no more
than 20 per cent of total trade (BOP basis).

Which products are allowed to trade under GATS: Services negotiations

in the WTO follow the so-called positive list approach countries
specifically list which products or services they agree to lower tariffs on

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(or decrease non-tariff barriers on). The other approach, as contained in
the General Agreement on Tariffs and Trade (GATT) treaty of the WTO,
is called a negative list approach. In this type of agreement, countries
specifically list which products or services they will maintain trade
barriers on. If a product is not listed, no restrictions exist and the
product is subject to be traded openly. West is pushing hard to move
from positive list approach to negative list approach. India is against
negative list approach as it will throw open almost whole Indian services
sector to western multinational giants. The positive list approach
discriminates against new products and services, which are not
protected under past commitments.

Is it true that the GATS not only applies to cross-border flows of services,
but additional modes of supply? The GATS distinguishes between four
modes of supplying services: cross-border trade, consumption abroad,
commercial presence, and presence of natural persons.

Mode 1: Cross-border supply is defined to cover services flows from the

territory of one Member into the territory of another Member (e.g.
banking or architectural services transmitted via telecommunications or
mail);

Mode 2: Consumption abroad refers to situations where a service

consumer (e.g. tourist or patient) moves into another Member's territory
to obtain a service;

Mode 3: Commercial presence implies that a service supplier of one

Member establishes a territorial presence, including through ownership
or lease of premises, in another Member's territory to provide a service
(e.g. domestic subsidiaries of foreign insurance companies or hotel
chains); and

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Mode 4: Presence of natural persons consists of persons of one Member
entering the territory of another Member to supply a service (e.g.
accountants, doctors or teachers). The Annex on Movement of Natural
Persons specifies, however, that Members remain free to operate
measures regarding citizenship, residence or access to the employment
market on a permanent basis.

How India’s stand differs when it comes to services?

From India’s point of view, services present a different picture from
agriculture and industrial tariffs. As an emerging global power in IT and
business services, the country is, in fact, a demander in the WTO talks
on services as it seeks more liberal commitments on the part of its
trading partners for cross-border supply of services, including the
movement of ‘natural persons’ (human beings) to developed countries,
or what is termed as Mode 4 for the supply of services. With respect to
Mode 2, which requires consumption of services abroad, India has an
offensive interest. In sharp contrast, the interest of the EU and the US is
more in Mode 3 of supply, which requires the establishment of a
commercial presence in developing countries. Accordingly, requests for
more liberal policies on foreign direct investment in sectors like
insurance have been received. These developed countries are lukewarm
to demands for a more liberal regime for the movement of natural
persons. Unlike many developing countries, India has taken offensive
positions in this area as it has export interests in information technology
(Mode 1). The country also seeks greater access to the EU and the US in
terms of the movement of natural persons, or what is termed as Mode 4
in cross-border supply of services. Lack of movement in Mode 4 due to
opposition by the US and the EU may affect India’s ability to offer much
in other modes of services.

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Some experts are of the view that under the Uruguay Round
commitments, developed countries already have a liberal trade regime
in Mode 1 (which covers Business Processing Outsourcing or BPOs) with
regard to some of the service sectors of interest to India. Further
research needs to done to assess the extent of autonomous liberalisation
undertaken by developed countries, which can be locked in during the
negotiations, and consequent gains that can accrue to India. Further,
even in the absence of additional liberalisation, India’s service exports
would continue to grow in view of its cost advantage and demography.
India could also explore the possibility of finalizing mutual recognition
agreements with the main importers of services, so that differences in
national regulatory systems do not act as barriers to its exports.

Trade-Related Aspects of Intellectual Property Rights (TRIPS): The

TRIPS is an international agreement administered by the World Trade
Organization (WTO) that sets down minimum standards for many forms
of intellectual property (IP) regulation as applied to nationals of other
WTO Members. It was negotiated at the end of the Uruguay Round of the
General Agreement on Tariffs and Trade (GATT) in 1994.
It remains an issue between Developed and developing countries. TRIPS
was fine tuned in favour of developing countries in 2003, as part of Doha
development agenda, when all members agreed to compulsory licensing
in certain cases. However, now U.S. and Europe remain unhappy about
current strict terms of patent allowed by TRIPS.

Trade-Related Investment Measures (TRIMS): The TRIMS recognizes

that certain investment measures can restrict and distort trade. It states
that WTO members may not apply any measure that discriminates
against foreign products or that leads to quantitative restrictions, both
of which violate basic WTO principles. A list of prohibited TRIMS, such
as local content requirements, is part of the Agreement. Recently India

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was dragged to WTO by U.S. over former’s specification of Domestic
Content Requirement in relation to procurement of Solar Energy cells
and equipment’s.

Agreement on subsidies and countervailing measures (SCM): The WTO

SCM Agreement contains a definition of the term “subsidy”. The
definition contains three basic elements: (i) a financial contribution (ii)
by a government or any public body within the territory of a Member (iii)
which confers a benefit. All three of these elements must be satisfied in
order for a subsidy to exist.
In order for a financial contribution to be a subsidy, it must be made by
or at the direction of a government or any public body within the
territory of a Member. Thus, the SCM Agreement applies not only to
measures of national governments, but also to measures of sub-national
governments and of such public bodies as state-owned companies.
Further, Such Financial contribution must also confer benefit to the
industry. Now, in cash grants, benefit will be straightforward to identify,
but in cases where there is loan or capital infusion from government/
Public body, it will not be that easy. Such issues are resolved by appellate
body of WTO.
Only “specific” subsidies are subject to the SCM Agreement disciplines.
There are four types of “specificity” within the meaning of the SCM
Agreement:
• Enterprise-specificity. A government targets a particular
company or companies for subsidization;
• Industry-specificity. A government targets a particular sector or

sectors for subsidization.

• Regional specificity. A government targets producers in specified

parts of its territory for subsidization.

• Prohibited subsidies. A government targets export goods or goods

using domestic inputs for subsidization.

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Hence there are two types of prohibited subsidies –
• Subsidies contingent upon export performance.
• Subsidies contingent upon use of domestic content over imported
goods.
Further, there is separate category of ‘Actionable subsidies’. These are
not prohibited but countries can take ‘Countervailing measures’ against
these subsidies or they can be challenged in ‘dispute resolution body’ of
WTO.

For a subsidy to be actionable, 3 conditions should be present –

• Injury to domestic industry due to subsidized imports of other
country.
• There is serious prejudice: Serious prejudice usually arises as a result
of adverse effects (e.g., export displacement) in the market of the
subsidizing Member or in a third country market. For e.g. If India
starts subsidizing its textile sector heavily, then China can claim that
this subsidy is causing serious prejudice to its textile industry.
• Nullification or impairment of benefits accruing under the GATT 1994.
It means when benefit to be accrued from reduction of tariffs (under
GATT) are nullified by increase in subsidies.

Against such subsidies members can take Countervailing Measures, such

as imposing countervailing duties or antidumping duty. These can only
be done in a transparent manner and a sunset period should be specified.
Recently, India imposed Anti- Dumping duty on imports of stainless steel
from China.

Countervailing Duty – It is imposed on imported goods to

counterbalance subsidy provided by the exporter country.

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Anti-Dumping Duty – At times countries resort to subsidize production
or exports so heavily that exporters are able to sell goods below domestic
price or even cost of production in foreign markets. It is aimed at wiping
out target country’s industry. Anti-Dumping Duty is aimed at
counterbalancing such subsidization.

Sanitary and Phyto- Sanitary Measures: This agreement was one of the
results of Uruguay Round of negotiation entered into force with the
establishment of the World Trade Organization on 1 January 1995. The
Agreement sets out the basic rules for food safety and animal and plant
health standards. It allows countries to set their own standards. But it
also says regulations must be based on science. They should be applied
only to the extent necessary to protect human, animal or plant life or
health. And they should not arbitrarily or unjustifiably discriminate
between countries where identical or similar conditions prevail.

Multifibre Arrangement and Agreement on Textiles and Clothing: The

most favored nation (MFA) was introduced in 1974 as a short-term
measure intended to allow developed countries to adjust to imports from
the developing world. Developing countries and countries without a
welfare state] have an absolute advantage in textile production because
it is labor-intensive and they have low labor costs. The Arrangement was
not negative for all developing countries. For example, the European
Union (EU) imposed no restrictions or duties on imports from the
emerging countries, such as Bangladesh, leading to a massive expansion
of the industry there. It was decided to bring the textile trade under the
jurisdiction of the World Trade Organization. The Agreement on Textiles
and Clothing provided for the gradual dismantling of the quotas that
existed under the MFA. This process was completed on 1 January 2005.
However, large tariffs remain in place on many textile products.

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Some Important Ministerial Meets
Singapore ministerial meet and ‘Singapore issues’ – 1996: The
‘Singapore issues’ term refers to areas of
• Trade and investment;
• Trade and competition policy;
• Trade facilitation; and
• Transparency in government procurement
These four issues have collectively come to be known as the Singapore
issues in the context of the WTO, because it was at the first ministerial
conference of the WTO in Singapore in 1996 that they were first brought
up as possible areas on which the multilateral body could initiate
negotiations.

What was India’s stand? On issues like investment and competition

policy, India feels that having a multilateral agreement would be a serious
impingement on the sovereign rights of countries. To an extent, of
course, this is inherent in any multilateral treaty, but investment is seen
as an area in which ceding sovereign rights would leave governments,
particularly developing country governments, with too little room for
manoeuvre in directing investments into areas of national priority.

Doha Ministerial meet and ‘Doha Development Agenda’ – 2001

Agriculture – First proposal in Qatar, in 2001, called for the end

agreement to commit to substantial improvements in market access;
reductions (and ultimate elimination) of all forms of export subsidies
(including under Green and blue box); and substantial reductions in
trade-distorting support.

Access to patented medicines – A major topic at the Doha ministerial

regarded the WTO Agreement on Trade-Related Aspects of Intellectual

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Property Rights (TRIPS). The issue involves the balance of interests
between the pharmaceutical companies in developed countries that held
patents on medicines and the public health needs in developing
countries. On 30 August 2003, WTO members reached agreement on the
TRIPS and medicines issue. Voting in the General Council, member
governments approved a decision that offered an interim waiver under
the TRIPS Agreement allowing a member country to export
pharmaceutical products made under compulsory licenses to least-
developed and certain other members. It also allows members to not to
allow evergreening of Patents.

Special and differential treatment (SDT) – SDT as a principle has been

there since 1970’s in multilateral negotiations under GATT. In Doha
round, members agreed that Developing and Least developed countries
will continue to be eligible for a favorable treatment. However, of late
developed countries are dragging their feet here too. They now claim
that big developing countries like India, China, Brazil and South Africa
are unreasonable in their demand and only least developed countries are
rightful claimant of differential treatment. Here it is inconceivable that
poor countries like India are to be treated at par with western developed
world. At the December 2005 Hong Kong ministerial, members agreed
to five S&D provisions for least developed countries(LDCs), including the
duty-free and quota-free access.

Implementation issue: Developing countries claim that they have had

problems with the implementation of the agreements reached in the
earlier Uruguay Round because of limited capacity or lack of technical
assistance. They also claim that they have not realized certain benefits
that they expected from the Round, such as increased access for their
textiles and apparel in developed-country markets. They seek a

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clarification of language relating to their interests in existing
agreements.

Bali Ministerial Meet and ‘Bali Package – Trade Facilitation and Peace
Clause’ – 2013: Bali Package includes following three agreements,

LDC exports: Exporters from Least developing countries, will get Duty
free, quota free (DFQF) access to markets in foreign countries.

Peace Clause: It was agreed that all nations for adjustments/adaptations

to limits under Agreement on Agriculture (de minimis provisions); a
‘Peace clause’ was agreed at. Peace clause gave countries 4 year times to
adjust to the limit and avoid sanctions.

What is peace clause: No member, can drag any developing country to

Dispute settlement mechanism of WTO, for violation of De-minimus
limits in Agreement on Agriculture (AoA). Provided that the said
developing country is paying subsidies for staple food crops, for public
stockholding program, for food security purpose is providing annual
information of its food security Program to WTO. Permanent solution
will be taken no later than 11th ministerial conference i.e. at December
2017.

Trade Facilitation: It aims to reduce red tapes and bureaucratic hassles

in customs clearance at ports and airports. It requires member countries
to invest in Infrastructure that facilitates Imports and exports, simplify
custom procedures and remove other non-tariff barriers. Date for
ratification of Bali agreement was 31 July, 2014, on which India declined
to ratify unless a ‘permanent solution’ is reached. After this, in
November, India – US reached understanding in which time limit of 4

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years was removed and in return Trade Facilitation was agreed to by
India.

It should be noted that development of Infrastructure is already a

priority for government and it is much desirable in agriculture too, as
India is net exporter of agri products. But issue was of 4 years of ‘peace
clause’, which now stands removed. ‘Trade facilitation deal’ was
marketed by developed countries as a progressive and much needed deal
for good of all type of countries. It is being said that it will boost up Global
GDP by $ 1 Trillion and will add millions of new job. This argument has a
little or no empirical backing and it is feared that western supplier will
invade domestic markets of developing and underdeveloped countries.
‘Trade facilitation’ along with ‘special package’ is like saying that gains of
developed countries will be so big, that losses of under-developed
countries will be lucratively compensated by them.

Latest – Nairobi Ministerial Meet – 2015: Recently concluded Nairobi

meet was a huge disappointment for the developing and under
developed world. Here, U.S. trade Representative unabashedly called
Doha Development Agenda a dead, outdated and undesirable course.
West is desperately trying to set aside development aspect of
negotiations, to which it had agreed in Doha. Its focus is now on Trade
Facilitation Agreement which was agreed to in Bali meet. Further, they
are trying to introduce new issues (including some Singapore issues)
such as Government Procurement, E-commerce, Investment,
Competition policy. To this India and other developing countries took
strong objection.

Highlights of Nairobi outcomes:

1. There was a commitment to completely eliminate subsidies for farm
exports: Under the decision, developed members have committed to

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 remove export subsidies immediately, except for a handful of
agriculture products, and developing countries will do so by 2018.
Developing members will keep the flexibility to cover marketing and
transport costs for agriculture exports until the end of 2023, and the
poorest and food-importing countries would enjoy additional time to
cut export subsidies.
2. Ministers also adopted a Ministerial Decision on Public Stockholding
for Food Security Purposes. The decision commits members to
engage constructively in finding a permanent solution to this issue.
Under the Bali Ministerial Decision of 2013, developing countries are
allowed to continue food stockpile programmes, which are otherwise
in risk of breaching the WTO’s domestic subsidy cap, until a
permanent solution is found by the 11th Ministerial Conference in
2017.
3. A Ministerial Decision on a Special Safeguard Mechanism (SSM) for
Developing Countries recognizes that developing members will have
the right to temporarily increase tariffs in face of import surges by
using an SSM. Members will continue to negotiate the mechanism in
dedicated sessions of the Agriculture Committee. (This means issue is
not closed and still under negotiation).
4. There were other decisions of particular interests of least developing
Countries. One of them is Preferential Rules of Origin. It entails that
‘Made in LDC’ products will get unrestricted access to markets of
non-LDCs.
5. There was affirmation that Regional Trade Agreements (RTAs) remain
complementary to, not a substitute for, the multilateral trading
system (WTO).
6. Ministers acknowledged that members “have different views” on how
to address the future of the Doha Round negotiations but noted the
“strong commitment of all Members to advance negotiations on the
remaining Doha issues.

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Impact of Reginal trade agreements on WTO

Regional Trade Agreement (RTA): In the WTO, regional trade

agreements (RTAs) are defined as reciprocal trade agreements between
two or more partners. They include free trade agreements and customs
unions.

Preferential Trade Arrangements (PTA): Preferential trade

arrangements (PTAs) in the WTO are unilateral trade preferences. They
include Generalized System of Preferences schemes (under which
developed countries grant preferential tariffs to imports from
developing countries), as well as other non-reciprocal preferential
schemes granted a waiver by the General Council.

Are RTA/PTA are allowed under WTO: Non-discrimination among

trading partners is one of the core principles of the WTO; however, RTAs
constitute one of the exemptions and are authorized under the WTO,
subject to a set of rules. In line with these rules, and also recognizing the
need to enhance transparency and increase understanding of RTAs'
impact on interests of WTO members, the WTO Secretariat was
instructed by WTO members to gather information on RTAs.

Their Impact: Association of South East Asian Countries (ASEAN),

European Union, North American Union etc. are some associations that
provide more liberal and seamless access of member’s markets to fellow
member countries. This runs counter to objectives of WTO which seeks
to establish a global rule based system of trading with minimal barriers.
However, for so many different countries at different stages of socio-
economic development, it is highly impossible to agree to a common
trading regime. Consequently, countries lobby with group of likeminded
countries and aim at arriving at a mutually symbiotic agreement which

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ensures a win-win deal for all participants. Entering into a free trade
agreement or formation of custom union may at times violate ‘Most
favorable Nation’ principle of WTO. Hence, most such agreements are
entered into keeping in mind exceptions allowed by MFN principle.
Agreements while giving preferential treatment to few members must
not create new trade barriers for non-members.

Recently, 12 nations led by United States concluded a Trans Pacific

Partnership Treaty (TPP). Treaty includes both developed and
developing nations (like Vietnam, Peru, and Chile). The contents of this
treaty are on the lines of stand taken by U.S. in WTO negotiations. It
provides stringent provisions for Labor Standards, Environment
Standards and Intellectual Property. Further, it gives power to private
corporations, to sue member countries for violation of terms of treaty.
US’s biggest trade partner China is not party to treaty. Negotiations led
by US are underway for a similar treaty with European countries, dubbed
as Trans-Atlantic partnership. On the other hand India and China are
participating in and leading negotiations of Regional Comprehensive
Economic partnership (RCEP) Agreement. This agreement is likely to
reflect interests of developing countries in its final draft.

It is said that when such strong regional agreement (TPP and RCEP) will
emerge reflecting different positions taken by different countries,
negotiations will start among these two groups and over time they will
be subsumed under WTO. However, it is feared that US is likely to use its
dollar muscle to lure developing and least developed countries to join
these not so fair treaties. It is best said that course of multilateralism is
evolving and only time will tell whether WTO will ever be able to provide
a common trading platform aimed towards development or not.

Cases of Complaints against India

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1. India — Certain Measures Relating to Solar Cells and Solar Modules
(Complainant: United States).
2. India — Anti-Dumping Duties on USB Flash Drives from the Separate
Customs Territory of Taiwan, Penghu, Kinmen and Matsu
(Complainant: Chinese Taipei).
3. India — Measures Concerning the Importation of Certain Agricultural
Products (Complainant: United States).
4. India — Certain Taxes and Other Measures on Imported Wines and
Spirits(Complainant: European Communities)

Cases of Complaints by India

1. United States —Countervailing Measures on Certain Hot-Rolled
Carbon Steel Flat Products from India (Complainant: India).
2. Turkey —Safeguard measures on imports of cotton yarn (other than
sewing thread)(Complainant: India).
3. European Union and a Member State —Seizure of Generic Drugs in
Transit(Complainant: India)
Hence, WTO is a body which provides opportunity to aggrieved country
to bring unfair trade practices to notice of Dispute Settlement body and
to bring an end to such unfair practice. This dimension of WTO makes it
a desirable and neutral body as it seeks to create a just global trading
system.

What is Indo – US’s WTO problem?

Since end of cold war both countries have witnessed a spectacular
improvement in bilateral relations in almost all spheres. However, at
WTO platform two countries remain arch rival and leaders of opposite
camps. U.S. has severe disliking for India’s position in at least two spheres
– Agriculture and Intellectual Property.

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Agriculture: We have already seen that Agreement on Agriculture which
was hatched in Uruguay round negotiations is heavily tilted in favor of
developed world. For balancing this India as part of Group of developing
and least developed nations (G-33) proposed amendment to AOA in
2008. Current quest of G-33, toward achieving permanent solution is
follow up story of this proposal only. As of now, Peace Clause agreed to
in 2013, allows us perpetually to continue our food stocking program at
administered prices, without being dragged into WTO for violation of
AOA.

Intellectual Property: Further, as part of Doha Development Agenda,

developing countries managed to tweak ‘Agreement on Trade related
aspects of Intellectual Property’ (TRIPS) in favor of developing countries
by allowing compulsory licensing in certain circumstances. First
compulsory license was granted by Indian Patent Office to NATCO for
‘nexavar’ drug produced originally by German firm Bayer AG. Since then
US pharma industry has been apprehensive of frequent evocation of this
principle in developing world. US not only want this concept to be done
away with, it also wants a liberal IPR regime which allows evergreening
of patents. Indian Patent Act as amended in 2005 allows protection of
both product and process, but it allows patent only when there is
enhanced efficacy of the substance. If a company re-invents a previously
known substance in to new form e.g. from Solid to Liquid, then
protection can’t be granted. India due to its promising pharmaceutical
industry exploits these powers religiously. Since India’s course is not
violative of TRIPS, question of India being challenged in WTO doesn’t
arise

Domestic Content Requirement in Solar Panel: Recently, India lost this

case to US in WTO’s dispute resolution body. India has prescribed
‘domestic content requirement’ for procurement of Solar cells/panels

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for its target of installing 100 GW of solar power by 2022. Under this
some (about 5%) procurement was reserved to be bought from Indian
vendors, to promote indigenous industry. US alleged that this is against
principles of Non Discrimination and National Treatment. India now has
appealed against this decision and can get 2 year reprieve from rolling
back of scheme. Earlier this year, WTO had ruled against the Indian ban
on import of poultry meat, eggs and live pigs from the US, stating that it
was not consistent with international norms.

Visa problem: Recently, U.S. has double the fees for certain categories
of H1B and L1 visas to $4,000 and $4,500 respectively. H1B and L1 visas
are temporary work visas for skilled professionals. India is the largest
user of H1B visas (67.4 per cent of the total 161,369 H1B visas issued in
FY14 went to Indians) and is also among the largest users of L1 visas
(Indians received 28.2 per cent of the 71,513 L1 visas issued in FY14). India
is likely to pursue bilateral discussions over the issue, but as last resort
it may head to WTO if nothing comes out.

WTO and TRIPS

There are different subject matters of intellectual property like Patents,
Copyright, Trademarks, Industrial design, Plant Varieties etc. Need for
protection in these different subjects arose in different periods. These
are reflected in different treaties. Agreement on TRIPS, under aegis of
WTO, remains most influential, comprehensive and inclusive of all. Other
treaties that are adopted before TRIPS Agreement is adopted are,

Paris Convention for Industrial Property, 1883 – Since it deals only with
Industrial property, it covered only Patents and Trademarks. The Paris
convention sets out a range of basic rules relating to patents, and
although the convention does have direct legal effect in all national
jurisdictions, the principles of the convention are incorporated into all

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notable current patent system. It was among first treaties to recognize
various principles of international trade like National Treatment, Right
of Priority, Common rules etc.

Berne convention for literary and artistic works, 1886 – deals with the
protection of works and the rights of their authors. It provides creators
such as authors, musicians, poets, painters etc. with the means to control
how their works are used, by whom, and on what terms. It is based on
three basic principles and contains a series of provisions determining the
minimum protection to be granted, as well as special provisions available
to developing countries that want to make use of them. It means that
your work, if original, is already protected. You can claim that you have
copyright.

Madrid Agreement, 1881 – concluded in 1891, and the Protocol relating

to that Agreement, concluded in 1989. The system makes it possible to
protect a mark in a large number of countries by obtaining an
international registration that has effect in each of the designated
Contracting Parties. Governs the international recognition of
trademarks. Made international fillings easy and cheap.

Patent co-operation treaty, 1970 – The Patent Cooperation Treaty (PCT)

assists applicants in seeking patent protection internationally for their
inventions, helps patent Offices with their patent granting decisions, and
facilitates public access to a wealth of technical information relating to
those inventions. By filing one international patent application under the
PCT, applicants can simultaneously seek protection for an invention in a
very large number of countries.

Budapest Treaty of 1980 – Adopted in 1977, the Budapest Treaty

concerns a specific topic in the international patent process: inventions

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involving microorganisms. All states party to the Treaty are obliged to
recognize microorganisms deposited as a part of the patent disclosure
procedure with an international Depositary Authority (IDA), irrespective
of where the depository authority is located. In practice this means that
the requirement to submit microorganisms to each and every national
authority in which patent protection is sought no longer exists.

Trademark Law Treaty, 1994 – Harmonized administrative procedures

and introduced ‘service marks’ in ambit of trade marks. Earlier
trademarks were accorded only to goods. The aim of the Trademark Law
Treaty (TLT) is to standardize and streamline national and regional
trademark registration procedures. This is achieved through the
simplification and harmonization of certain features of those
procedures, thus making trademark applications and the administration
of trademark registrations in multiple jurisdictions less complex and
more predictable.

The Hague agreement concerning the International Deposit of

‘Industrial Design’ 1925 – The Hague Agreement governs the
international registration of industrial designs. First adopted in 1925, the
Agreement effectively establishes an international system – the Hague
System – that allows industrial designs to be protected in multiple
countries or regions with minimal formalities. It created International
Design Bureau of WIPO. World Intellectual Property Organization
(WIPO) under UN administers 1-7 treaties mentioned above.

International Union for protection of new varieties of plants, 1961 –

This provides breeders and farmers right to new plant varieties. UPOV's
mission is to provide and promote an effective system of plant variety
protection, with the aim of encouraging the development of new

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varieties of plants, for the benefit of society. This treaty is independent
of any organization.

TRIPS Agreement
TRIPs is considered as a major achievement of the Uruguay Round as an
international trade agreement. At the trade negotiations, the developed
countries were succeeded in linking intellectual property rights with
trade. With TRIPs, the WTO also emerged as the institution for the
protection and promotion of intellectual property globally. The three
main features of the Agreement are:

Standards: In respect of each of the main areas of intellectual property

covered by the TRIPS Agreement, the Agreement sets out the minimum
standards of protection to be provided by each Member. Each of the
main elements of protection is defined, namely the subject-matter to be
protected, the rights to be conferred and permissible exceptions to
those rights, and the minimum duration of protection.

Enforcement: The second main set of provisions deals with domestic

procedures and remedies for the enforcement of intellectual property
rights. The Agreement lays down certain general principles applicable to
all IPR enforcement procedures.

Dispute settlement: The Agreement makes disputes between WTO

Members about the respect of the TRIPS obligations subject to the
WTO's dispute settlement procedures.
In addition the Agreement provides for certain basic principles, such as
national and most-favoured-nation treatment, and some general rules
to ensure that procedural difficulties in acquiring or maintaining IPRs do
not nullify the substantive benefits that should flow from the Agreement.
The obligations under the Agreement will apply equally to all Member

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countries, but developing countries will have a longer period to phase
them in. Special transition arrangements operate in the situation where
a developing country does not presently provide product patent
protection in the area of pharmaceuticals. The TRIPS Agreement is a
minimum standards agreement, which allows Members to provide more
extensive protection of intellectual property if they so wish. Members
are left free to determine the appropriate method of implementing the
provisions of the Agreement within their own legal system and practice.
The areas of intellectual property that it covers are copyright and related
rights (i.e. the rights of performers, producers of sound recordings and
broadcasting organizations); trademarks including service marks;
geographical indications including appellations of origin; industrial
designs; patents including the protection of new varieties of plants; the
layout-designs of integrated circuits; and undisclosed information
including trade secrets and test data.

Development of Intellectual property rights in India:

India has been a World Trade Organization (WTO) member since 1995.
WTO member nations must include some Intellectual Property (IP)
protection in their national laws. This means that if you are doing
business with India, you will find some similarity between local IP law
and enforcement procedures, and those enforce in the UK.

Chronological development of IPR in India:

• 1947: Patents & Designs Act, 1911
• 1995: India joins WTO
• 1998: India joins Paris Convention/PCT
• 1999: Patent amendment provided EMR retrospectively from 1/1/95
• 2003: 2nd amendment in Patents Act
• Term of Patent – 20 years after 18 months publication
• Patent Tribunal Set up at Chennai

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• 2005: Patents (Amendment) Act 2005
• 1999 - 2005: Plant Varieties and Farmers’ Rights Act & Biodiversity Act.
Designs, TM/Copyright Acts updated GI Registry set up at Chennai.
IP Acts TRIPS Compliant

Various subject matters of Intellectual Property in India

Copyrights
Law – Copyrights Act 1957, amended in 2012
Ministry – Copyright Office, Ministry of Human Recourse
Development
The TRIPS agreement ensures that computer programs will be protected
as literary works under the Berne Convention and outlines how
databases should be protected. It also expands international copyright
rules to cover rental rights. Authors of computer programs and
producers of sound recordings must have the right to prohibit the
commercial rental of their works to the public. A similar exclusive right
applies to films where commercial rental has led to widespread copying,
affecting copyright-owners’ potential earnings from their films.

The agreement says performers must also have the right to prevent
unauthorized recording, reproduction and broadcast of live
performances (bootlegging) for no less than 50 years. Producers of sound
recordings must have the right to prevent the unauthorized
reproduction of recordings for a period of 50 years. There have been
disagreements over the question whether Softwares are eligible for
copyrights or for patents. Copyright Office recently held that softwares,
if are not in conjuncture with novel hardware should be protected by
copyright. This is relief for software industry as Copyrights are cheap,
automatically recognised and protects for 60 years while patents are
only for 20 years.

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Future challenge: It is the enforcement of copyright in digital platforms
for which the statute has adequate provisions. Indian copyright owners
are also victims of copyright violations and piracy. Apart from Copyrights
Act, Information Technology Act, 2000 too has certain relevant
provisions for copyright in electronics and digital field.

Patents
Law – Patents Act, 1970, amended in 2006
Ministry – DIPP, Ministry of Commerce and industry
Patents are a long-established ways to motivate innovation. This
property right convenes to the holder the exclusive right of exploitation
and enables them to exploit the invention by manufacturing, using, or
selling products or processes incorporating the technology covered by
the patent. The owner may also allow the invention to be exploited by
others over a set period of time, in return for fair remuneration to
compensate them for the intellectual and material effort involved in its
conception and production. Patent protection provides the owner of the
right with the means to prevent unauthorised use of the protected
technology, to defend their rights in law and to initiate legal proceedings
against any persons fraudulently using the patented invention.

The agreement says patent protection must be available for inventions

for at least 20 years. Patent protection must be available for both
products and processes, in almost all fields of technology. Governments
can refuse to issue a patent for an invention if its commercial
exploitation is prohibited for reasons of public order or morality.

Evergreening of patent is not allowed: In order to be patentable, an

improvement on something known before or a combination of different
matters already known, should be something more than a mere
workshop improvement, and must independently satisfy the test of

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invention or an inventive step. It must produce a new result, or a new
article or a better or cheaper article than before. The new subject matter
must involve “invention” over what is old.

It allows Compulsory Licensing: TRIPS also allows for compulsory

licensing under certain circumstances. Specific situations in which
compulsory licenses may be issued are set out in the legislation of each
patent system and vary between systems. Some examples are –
• Unaffordable prices of particular drug for masses or inability of
patentee to fulfil demand in markets
• National emergency or extreme urgency or in cases of public non-
commercial use.
This strikes balance between two objectives – Rewarding patentees for
innovation and to make sure that patented products, particularly
Pharmaceutical ones, are available to public in developing and
underdeveloped countries at affordable prices. In March 2012, India
granted its first compulsory license ever. The license was granted to
Indian generic drug manufacturer Natco Pharma Ltd for Sorafenib
tosylate, a cancer drug patented by Bayer.

It allows both Product and Process patent: Prior to 2006 amendment of

Indian Patent Act, only process was allowed to be patented. It means that
if same product is manufactured using some process different than that
was patented, there shall be no infringement. But now product is also
allowed to be patented. It means patented product cannot be
reproduced by using any method.

System of pre-grant and post-grant oppositions: Introduced in 2005,

ensures that only deserving patents are granted. It is now possible to
raise objection both before and after the patent has been granted. India
has adopted a balanced approach towards patent law. It is committed to

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protect innovation while promoting the larger goal of welfare of its
citizens. Courts and tribunals have upheld key provisions of India’s
patent law by their authoritative pronouncements. The system of pre-
grant and post-grant oppositions introduced in 2005 ensures that only
deserving patents are granted. The progressive Act has been invoked in
several judgments recently in relation to pharmaceutical patents — for
example, the Supreme Court upheld the sale of a generic version of the
cancer drug Nexavar in December 2014, and upheld the Indian patent
office’s rejection of Novartis’s application for a patent for its anti-cancer
drug, Glivec.

Compulsory Licensing: What is compulsory licensing? Compulsory

licensing is when a government allows someone else to produce the
patented product or process without the consent of the patent owner. It
is one of the flexibilities on patent protection included in the WTO’s
agreement on intellectual property — the TRIPS (Trade-Related Aspects
of Intellectual Property Rights) Agreement.

Is this the same as tearing up the patent? No. The patent owner still has
rights over the patent, including a right to be paid for the authorized
copies of the products.

Does there have to be an emergency? Not necessarily. This is a common

misunderstanding. The TRIPS Agreement does not specifically list the
reasons that might be used to justify compulsory licensing. However, the
Doha Declaration on TRIPS and Public Health confirms that countries
are free to determine the grounds for granting compulsory licences.

Trademarks
Law – Trademark Act 1999
Ministry – DIPP, Ministry of Commerce and industry

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A trademark is typically a name, word, phrase, logo, symbol, design,
image, or a combination of these elements. There is also a range of non-
conventional trademarks comprising marks which do not fall into these
standard categories, such as those based on color, smell, or sound (like
jingles). A trademark cannot be offensive

India joins Madrid Protocol, 2013: The Madrid System for the
International Registration of Marks offers trademark owners a cost
effective, user friendly and streamlined means of protecting and
managing their trademark portfolio internationally.

Designs
Law – Designs Act, 2000
Ministry – DIPP, Ministry of Commerce and industry
As per WIPO – ‘In a legal sense, an industrial design constitutes the
ornamental or aesthetic aspect of an article. An industrial design may
consist of three dimensional features, such as the shape of an article, or
two dimensional features, such as patterns, lines or colour.’ In principle,
the owner of a registered industrial design or of a design patent has the
right to prevent third parties from making, selling or importing articles
bearing or embodying a design which is a copy, or substantially a copy,
of the protected design, when such acts are undertaken for commercial
purposes. Such rights are perpetual. Overall, the law of industrial designs
and enforcement thereof has been quite positive. At present,
approximately 8000 applications are filed annually. This is much below
India’s potential and there is scope for considerable improvement.
Concerted steps shall be taken particularly to increase sensitization to
this law especially in the MSMEs and the informal sector.

Geographical Indications
Law – Geographical Indications of Goods Act, 1999

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Ministry – DIPP, Ministry of Commerce and industry
A geographical indication (GI) is a sign used on products that have a
specific geographical origin and possess qualities or a reputation that are
due to that origin. In order to function as a GI, a sign must identify a
product as originating in a given place. In addition, the qualities,
characteristics or reputation of the product should be essentially due to
the place of origin. Since the qualities depend on the geographical place
of production, there is a clear link between the product and its original
place of production. For example, in the jurisdictions in which the
Darjeeling geographical indication is protected, producers of Darjeeling
tea can exclude use of the term “Darjeeling” for tea not grown in their
tea gardens or not produced according to the standards set out in the
code of practice for the geographical indication.

Well-known other examples include “Champagne”, “Scotch”, “Tequila”,

and “Roquefort” cheese. Wine and spirits makers are particularly
concerned about the use of place-names to identify products, and the
TRIPS Agreement contains special provisions for these products.
However, a protected geographical indication does not enable the holder
to prevent someone from making a product using the same techniques
as those set out in the standards for that indication. Protection for a
geographical indication is usually obtained by acquiring a right over the
sign that constitutes the indication.

Geographical indications are typically used for agricultural products,

foodstuffs, wine and spirit drinks, handicrafts, and industrial products.

How are geographical indications protected? There are three main

ways to protect a geographical indication:
• so-called sui generis systems (i.e. special regimes of protection):
refers to a sui generis system, it implies that it has to be a form of

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 intellectual property protection, an alternative (in relation to patents)
intellectual property right specifically applying to plant varieties.
• using collective or certification marks; and
• methods focusing on business practices, including administrative
product approval schemes.
Plant Varieties
Law – Protection of Plant varieties and farmers’ right Act, 2001
Ministry – Department of Agriculture and Cooperation, Ministry of
Agriculture
With the advent hybrid and genetically modified plants, it is possible to
create different quality of plants of same genus or species. There have
been unending quest of developing plant varieties that are more
productive, more fortified with nutrients, more resistant to vagaries of
nature and are reasonably priced. Such development demands lot of
expenditure and time just like any other patentable invention. TRIPS
agreement says that either a member should cover plant variety in
domestic patent law or it should be provided a sui- generis protection.
Accordingly, India’s patent law doesn’t cover plant varieties and PPVFR
act provides a sui-generis protection.

Protection of Plant Varieties and Farmers’ Rights (PPVFR) Act 2001

The basic objective of the Protection of Plant Varieties and Farmers’
Rights (PPVFR) Act 2001 us to recognize and protect the rights of the
breeders including farmers and stimulate investment for research and
development in the public and private sector for the development of new
plant varieties.
This act has nine specific rights; of which the most important are
summarized as follows:
• National Gene Fund: The PPVFR act makes provisions to establish a
National Gene Fund through which the conservation of varieties
developed can be done, recognized and rewarded. This fund is made

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 of the money as fees collected from plant breeders who are required
to pay for benefit sharing. This money is used to support and reward
the farmers who are engaged in plant verities conservation.
• Protection of Plant Varieties and Farmers’ Rights Authority: The act
makes provisions to establish Protection of Plant Varieties and
Farmers’ Rights Authority which oversees the implementation of this
act. This authority publishes the list of registered varieties and invites
claims for benefit sharing. Any person, firm, governmental
organization or NGO can submit claim to benefit sharing. The
Authority is to consist of a Chairperson and 15 members. One member
is to be a representative from a national or state level farmers’
organisation, while one member is to be a representative from a
national or state level women’s organisation working on agricultural
issues. The seed industry and various government institutions are also
to be represented. On the other hand, the farmers’ representative as
well as the seed industry representative and the women’s organisation
representative are to be nominated by the central government.

Analysis of the PPVFR Act: The Protection of Plant Varieties and

Farmers’ Rights Act 2001 not only gives intellectual property protection
to the plant breeders, but also upholds the legal space for farmers to
save, use, exchange and sell the farm saved seeds.

Semi-conductors and integrated Layouts

Law – Semi-conductors and integrated Layout design Act, 2000
Ministry – Department of Electronics and I.T, Ministry of
Communication and I.T.
A semiconductor layout design means a layout of transistors and other
circuitry elements and includes lead wires connecting such elements
and expressed in any manner in semiconductor integrated circuits.

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The first registration under the Semiconductor Integrated Circuits
Layout-Design Act, 2000 was granted in October 2014. It is expected that
the industry will make increased use of this right to protect integrated
circuit layout designs.

Under this, a SICLD registry has been created where layout designs of
integrated circuit chips can be registered. The Registrar will determine
the originality of the design based on the information available with him
as also through the mechanism of advertisement of the application for
registration of the layout-design and or any input he may receive. On
registration, protection is granted for 10 years.

Traditional Knowledge
Traditional Knowledge Digital Library
A collaboration – between the Council of Scientific and Industrial
Research (CSIR) and the Department of Ayurveda, Yoga and
Naturopathy, Unani, Siddha and Homoeopathy (Dept. of AYUSH),
Ministry of Health & Family Welfare, Government of India.
There is considerable unexplored potential for developing, promoting
and utilizing traditional knowledge, which is a unique endowment of
India. Create a sui generis system for protection of traditional knowledge
which will safeguard misappropriation of traditional knowledge as well
as promote further research and development in products and services
based on traditional knowledge.

The creation of the Traditional Knowledge Digital Library (TKDL) has

been a major achievement for India which has a vast pool of traditional
knowledge. India has been able to thwart attempts to misappropriate its
traditional knowledge. The next challenge is to use India’s strength in
traditional knowledge for its effective promotion, development and
utilization.

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It manages a database of knowledge that exists in various local languages
such as Sanskrit, Urdu, Arabic, Persian and Tamil. TKDL has also
converted the database into five international languages in patent
application formats.

So far, over 2 lakh medicinal formulations have been transcribed and the
database is present in 30 million A4-size pages.

A research council of AYUSH ministry has been implementing a Tribal

Health Care Research Programme (THCRP) which aims at collecting
information on folk medicines / traditional practices prevalent in
different parts of the country besides extending health care services to
tribal population.

Biological Diversity
Law –Biological Diversity Act, 2002 in pursuance of Convention on
Biological Diversity, 1993
The Convention on Biological Diversity (CBD) is a legally binding
multilateral environmental agreement that has 194 contracting Parties
(Countries) as its members with three objectives –
1. Conservation of biological diversity,
2. Sustainable use of the diversity and
3. Ensuring fair and equitable sharing of benefits of such use.

Indo-US IPR problem

Special 301 Report: This report is a part of an annual review of intellectual
property (IP) laws of the United States’ trading partners. India is among
the 11 countries put on a ‘watch list’ for harsh IP enforcement and could
result in sanctions.

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The report ranks countries depending on the inadequacy of IP
protection and enforcement into two categories –
• priority foreign country (PFC) and
• priority watch list (PWL).
While a PFC grading obligates the US Trade Representative (USTR) to
initiate unilateral measures like suspension of trade concessions in case
of failure of negotiation, the PWL increases “bilateral attention
concerning the problem areas.” India is in the PWL category for more
than 15 years.

The report notes the following reasons for India’s low rank:
• Patent protection in India remains outside of international best
practices.
• Indian law does not provide adequate enforcement mechanisms to
effectively combat online piracy.
• Among India’s key areas of weakness was the use of compulsory
licensing (CL) for commercial and non-emergency situations, and the
expanded use of CL being considered by the Indian government.
• Another area of weakness was poor application and enforcement of
civil remedies and criminal penalties.
• The fact that India was not party to major international treaties, like
the Trans-Pacific Partnership agreement, was also a consideration.
In backdrop of these concerns India has been placed under ‘Priority
watch list’ in USA. If India is put under ‘priority nations list’ then US will
impose trade sanctions on INDIA. But this is unlikely because India, so
far, has not violated any of the clauses of TRIPS. That’s why US has
negotiated ‘Trans – Pacific/Atlantic’ trade partnerships, which are
expected to be ‘WTO+’. It will include stringent provisions guarding
intellectual property by diluting flexibilities allowed by current TRIPS
agreement, among other things.

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