Sem-VIII&X T&I-International Trade Law
Sem-VIII&X T&I-International Trade Law
Sem-VIII&X T&I-International Trade Law
(Honours II)
COURSE MODULE
HONOURS COURSE
Course Objective:
Trade is one of the main driving forces behind the increasing globalization. While
trade exists since the inception of civilization, with the development of nation states
and the notion of sovereignty, governments have been asserting and exercising power
of regulating trade within and from their territory. This intervention by the
governments in the trading activity of private persons and firms have been opposed by
many economists who have been arguing in favour of liberalizing trade barriers which
means minimizing government intervention. After Second World War, a need for
unification of Private International laws in respect of trade was felt across the world.
Efforts started with the General Agreement on Tariff and Trade (GATT) 1947,
culminated in the establishment of the World Trade Organization (WTO) in 1994.
The WTO regulates the power of the sovereign states to regulate trade within their
jurisdiction. With its continuously expanding horizons, the Agreements contained in
the WTO Agreement have become the main legal framework within which trade can
be conducted by persons and firms. It would not be an exaggeration to say that the
WTO law defines the extent of rights against different governments of the world of
persons and firms to trade in goods and services.
Given the importance of the WTO as the framer of international law on trade policy
norms, this course would primarily focus on the WTO Agreements. The Agreements
would be studied in light of their historical background, decisions interpreting them
and the controversies that exist with regard to them. After making the student aware
of the international policy norms which affect trade in goods and services, students
would be introduced to the ground rules relating to international sale of goods. Unlike
the earlier part, this part does not deal with the power of the governments to regulate
international trade and limitation thereon. Instead, this part deals with rules that
govern international sale transaction between private persons and firms. Students
would also be acquainted with the relationship and balance between different
international organizations e.g. WTO, IMF, World Bank and UNCTAD.
COURSE STRUCTURE
PART I
In this module students would be introduced with the different views, theories and
issues relating to regulation of international trade. On the one hand there are free trade
economists, arguing for minimization of governmental intervention on the ground that
it leads to specialization and prosperity. On the other hand there are Marxists who feel
that the idea of free market and specialization leads to colonialism. The module would
also include discussion of reasons which induce or compel the governments to
intervene in the trading activity in their jurisdiction.
This module would trace the historical background of the present WTO covering the
resort to protectionism after first world war, great depression in 1930s, rise of
totalitarianism in Germany and Italy, realization of the mistakes by Allied powers and
birth of the idea of Bretton Woods institutions, failure of the idea of International
Trade Organization (ITO), inception of GATT 1947, different rounds of negotiations
between 1947 and 1994, and finally birth of the WTO. Further it will cover the
organizational structure of the WTO; its role in facilitating international trade and its
dispute settlement mechanism.
PART II
TRADE IN GOODS
GATT 1994 and 12 other agreements contained in Annex 1A of the WTO Agreement
regulate policies relating to international trade in goods. This part would deal with
major the principles / rules contained in GATT 1994.
The second main rule on which GATT is based is the rule of non discrimination.
Members of WTO cannot discriminate between like products of foreign origin and
national origin (National treatment) and products originating in any WTO Member
can not be discriminated against like products originating in any third country (MFN).
1. National Treatment:
Concept of Like products
Difference in treatment of like products and directly competitive and
substitutable products.
Exceptions to the rule
2. Most Favored Nation Treatment:
Advantages of the MFN rule
Exceptions to the rule
Regional Trade Agreements, Free Trade Areas, etc.
Growing phenomenon of RTAs and FTAs whether a threat to multilateralism?
While aiming at progressive reduction of barriers, the WTO recognizes the need of
the governments to protect their industries in certain circumstances. These
circumstances may arise due to unfair trade practice by the exporter (dumping) or the
government of the exporter (subsidies) or due to increase in import of goods to such
an extent that the domestic industry is not able to face the new competitive situation.
In all such circumstances GATT rules empower the government to take remedial
measures which gives certain amount of temporary respite to the domestic industry.
Subsidies and Countervailing Duties under Article VI and XVI of GATT 1994
and Agreement on Subsidies and Countervailing Measures
Safeguard Measures under Article XIX of GATT 1994 and the Safeguards
Agreement
The greatest challenge facing WTO and free trade today is how to combat non-tariff
barriers which are taken on various ground e.g. protection of environment, health of
the citizens of importing country, or providing rules which otherwise run counter to
the principle of liberal trade. Some attempt has been made in agreements of Annex IA
to combat some of the non-tariff barriers. The most important of them are the SPS
Agreement and the TBT Agreement.
PART III
TRADE IN SERVICES
MODULE VII: GENERAL AGREEMENT ON TRADE IN SERVICES (GATS)
By the time Uruguay Round negotiations started, trade in services had increased
significantly. Therefore, on the insistence of the USA, GATS was negotiated in this
round. However, due to resistance of the developing countries GATS follows a
structure that is different from that of GATT. Contained in Annex 1B of the WTO
Agreement, GATS is more of a framework Agreement for gradual liberalization of
trade in services.
PART IV
TRADE AND INTELLECTUAL PROPERTY RIGHTS
Again despite the opposition of the developing countries and insistence of the USA
TRIPS was included in the Uruguay Round Agreements. The TRIPS Agreement takes
on from the existing international agreements relating to IPR and in many cases adds
some additional obligations. The Module would not be given too much emphasis
considering the fact that there is already course on IPR in HNLU.
PART V
EXPANDING HORIZONS OF THE WTO
WTO has become a very effective international organization. Due its growing
significance and influence, there are efforts to expand its reach. One way is curbing
the powers of national governments by using trade measures as a tool for imposing
certain norms on countries which have comparatively less vigorous rules for them.
Therefore trade barriers are being advocated by different groups to enforce
environmental measures on countries, to strengthen labour laws, or to protect human
rights. Developing countries are opposing these efforts which they think unfair for
various reasons. Another way whereby attempts are being made to expand the
horizons of WTO is by bringing in new issues within the legal framework of the
WTO. Therefore proposals are being made to have agreement on trade and
competition, agreement on trade and investment trade facilitation etc.
MODULE IX: TRADE BARRIER AS A TOOL FOR DISCIPLINING STATES
PART VI
INTERNATIONAL SALE OF GOODS
GENERAL REFRENCES:
1. www. wto.org.
2. www. nic.in
3. www. worldtradelaw. net
4. www.centad.org