Chapter-8. International Trade Organisations

Transcription

1 Chapter-8 Activities relating to the World Trade Organisation (WTO) The membership of the WTO is now 153. The accession packages of Russia, Montenegro and two LDC Pacific Islands - Vanuatu and Samoa, were approved in On completion of a few more formalities, they will become members of the WTO in The Fifth Trade Policy Review of India took place in the WTO in September A number of questions raised by WTO members regarding India s Trade Policy were answered by an Indian team led by the Commerce Secretary. track and to build on the results already achieved in the negotiations. There have been constant attempts in the WTO and in other forums like the G20 to resolve the impasse. During the Ministerial Conference of the WTO held in December 2011, members once again reaffirmed their belief in rules based multilateral trade and their commitment to resolve the issues in a transparent way through consensus. In keeping with its commitment towards the legitimate interests of developing economies, LDCs and vulnerable economies, India has been working closely with various coalition groups in The Eighth Ministerial Conference of the WTO took place during December A. The World Trade Organization (WTO) The Doha Round of negotiations at the World Trade Organization, which began in 2001, is still underway. The scope of the negotiations includes agriculture, market access for non-agricultural products, services trade, trade-related aspects of intellectual property rights (TRIPS), rules (covering anti-dumping and subsidies), trade facilitation etc. The conduct, conclusion and entry into force of the outcome of the negotiations are parts of a single undertaking, i.e. nothing is agreed until everything is agreed. Progress has been very slow due to wide gaps in the expectations of the members. There have been several attempts to bring the talks back on The Union Minister for Commerce, Industry and Textiles, Shri Anand Sharma participating in the WEF discussion on South-South Cooperation, at Cape Town on May 05,

2 Annual Report The Union Minister for Commerce, Industry and Textiles Shri Anand Sharma with the Director General WTO, Mr. Pascal Lamy, in Paris on May 25, 2011 the WTO towards an early development-oriented conclusion of the Doha Round. The state of play of the multilateral negotiations under the Doha Work Programme is elaborated in the subsequent paragraphs. I. Agriculture Negotiations The Agreement on Agriculture (AOA) of the WTO covers all basic agricultural products, the products derived from them and all processed agricultural products. This also includes wines, spirits, tobacco products, fibers such as cotton, wool and silk and raw animal skins for leather production. Fish and fish products and forestry products are not included. The three pillars of the AOA and the negotiations are: (i) market access, (ii) domestic support and (iii) export competition. Members have committed to comprehensive negotiations in order to improve market access, reduce and ultimately phase out all forms of export subsidies and to achieve substantial reductions in trade-distorting domestic support. Special and differential treatment for developing Members is also intended to be an integral part of the modalities. Since 2008,there has been virtually no progress in the agriculture negotiations. A draft negotiating text containing the modalities for the commitments to be undertaken was issued in December This still remains on the table. 142

3 CHAPTER-8 The Secretary Commerce, Ministry of Commerce and Industry, Dr. Rahul Khullar addressing at the inauguration of a seminar on Agriculture related issues In his report of 21 April 2011, the then Chairman of the Committee on Agriculture in Special Session, Ambassador David Walker noted that the negotiations of more than two years could not lead to a situation where there could be a revision to the draft modalities text of December Since May 2011, there has been no substantive discussion on agriculture issues. A new Chairman, Ambassador John Adank took over in November However, no further meetings were held in the Committee as the focus by then was on work related to the Eighth WTO Ministerial Conference. II. Non Agricultural Market Access Negotiations Non Agricultural Market Access (NAMA) relates to trade negotiations on non-agricultural or industrial products. In the NAMA negotiations, WTO Members discuss the terms or modalities for reducing or eliminating customs tariffs and Non Tariff Barriers (NTBs) on trade in industrial products. The products covered under NAMA are marine products, chemicals, rubber products, wood products, textiles and clothing, leather, ceramics, glassware, engineering products, electronics, automobiles, instruments, sports goods, toys etc. In the WTO, the negotiations are on the bound tariffs which are the binding commitments undertaken by India in the WTO. The tariff lines on which no bindings have been taken are known as the unbound tariff lines. The Main Elements of the NAMA Negotiations (a) Formula for Tariff Reductions At the WTO Ministerial Meeting at Hong Kong during December, 2005, the Trade Ministers 143

4 Annual Report adopted a Swiss formula with coefficients that would reduce or eliminate tariff peaks, high tariffs and tariff escalation. The Ministerial Mandate also mentions the need to take into account the special needs and interests of developing countries, including through less than full reciprocity (LTFR) in reduction commitments, i.e. developing countries would not be required to undertake the same reduction commitments as developed countries. (b) Flexibilities Flexibilities under NAMA are intended to protect the sensitive industrial products of the developing countries both from the Swiss formula cuts and from taking a binding commitment. In the Doha Round negotiations, one of the options for the developing countries is to take at least half the formula cuts on a specified percentage of tariff lines subject to a limitation of imports. The other option is take no formula cuts or binding commitments on a specific percentage of tariff lines subject to a limitation on imports. Flexibilities are integral to the concept of Special & Differential treatment for developing countries in all WTO Agreements. For India, flexibilities are important for protecting its infant and vulnerable industries. These include the micro, small and medium enterprises (MSMEs), employment intensive sectors, industries employing socially and economically vulnerable sections such as women, traditional artisans and fishermen, as well as industries in the rural, semi urban, economically disadvantaged and geographically inaccessible regions of the country. (c) Sectoral Initiatives Sectoral Initiatives refer to the proposals for the elimination of customs tariffs in specific NAMA sectors by WTO Members who comprise a specific percentage of total trade in that sector (also known as the critical mass). Sectoral initiatives allow Members to focus on specific sectors of their interest and ensure greater market opening over and above that achieved through the formula approach. The US and some other developed countries have been insisting that emerging economies like Brazil, China and India participate in sectoral initiatives of their interest namely chemicals, industrial machinery, health care products (medical devices), electrical, electronics etc. India has strongly opposed any compulsion on this front. Participation in sectoral initiatives can only be on a non-mandatory basis without pre-judging the outcome. (d) Non-tariff Barriers Non Tariff Measures (NTMs) refer to those measures on international trade that are not in the form of a tariff or a tax. These measures include trade related procedures such as documentation, certification and inspections; technical regulations; standards; import related measures such as restrictions, prohibitions, seasonal duties; tariff rate quotas; foreign exchange controls including artificial exchange rates; public procurement practices etc. Non Tariff Barriers (NTBs) are a sub-set of NTMs. NTBs are considered as unfair measures discriminating against imports and therefore violative of the obligations under the Agreements of the WTO. Currently, 14 NTB proposals are under discussion in the WTO. India s priorities in the NAMA negotiations are as under:- Formula reductions that respect the principle of less than full reciprocity in reduction commitments; Appropriate and adequate flexibilities to protect sensitive tariff lines; and 144

5 CHAPTER-8 Participation in sectoral agreements must be non-mandatory and on a good faith basis without pre-judging the outcome. III. India s Duty Free Tariff Preference (DFTP) Scheme for Least Developed Countries (LDCS) One of the elements of the Hong Kong Ministerial Declaration of December 2005, was to extend Duty Free Quota Free (DFQF) access to the Least Developed Countries (LDCs). India became the first developing country to extend this facility to LDCs. India s Duty Free Tariff Preference (DFTP) Scheme for LDCs came into effect in August 2008 with tariff reductions spread over five years. The Scheme provides preferential market access on tariff lines that comprise 92.5% of global exports of all LDCs. IV. India and the Government Procurement Agreement (GPA) The Government Procurement Agreement (GPA) is a plurilateral agreement in the WTO. India obtained the status of an Observer to the GPA in WTO in February V. Services Negotiations Carrying forward from the intensive discussions in 2010, substantive interest was evinced by all Members to intensify negotiations in 2011 as well, to make use of the limited window of opportunity to conclude the negotiations. Members accordingly intensified their engagement in the negotiations in the first half of The efforts towards intensive engagement in all tracks including market access Box: 8.1 Duty Free Tariff Preference Scheme for Least Developed Countries (i) Duty Free items: On about 85% of India s total tariff lines, applied customs duty would be removed over a period of 5 years with 20% reduction each year. (ii) Positive List: In addition to the 85% duty free tariff lines, preferential market access as per Margin of Preference (MOP) is available on about 9% tariff lines (458 items). The MOP ranges from 10% to 100% on different items and is available on the applied rate of duty as on the date of imports. For (i) and (ii) above, four tranches of reductions have already been effected since August The reduction will be completed in (iii) Exclusion List: Contains only 6% of total tariff lines (326 items), on which no tariff preference is available and the imports are allowed at MFN rates. In order to avail of the benefits under the Scheme, individual LDC members would need submit to the Government of India, a Letter of Intent and details of officials who would be responsible for issuing Certificates of Origin. The current LDC beneficiaries under the Scheme are Tanzania, Cambodia, Ethiopia, Lao PDR, Mozambique, Samoa, Madagascar, Rwanda, Uganda, Benin, Eritrea, Malawi, Myanmar, Burkina Faso, Gambia, Sudan, Senegal, Lesotho, Mali, Somalia, Bangladesh, Burundi, East Timor (Timor Leste), Central African Republic, Afghanistan, Comoros and Liberia. and domestic regulations culminated into a report brought out on 21 April 2011 by the Chair of the Council for Trade in Services Special Session (CTS-SS) and all subsidiary bodies under the CTS. The report stated that limited progress had been achieved in the market access negotiations since July On market access the Chair s report brought out the different perspectives of members. Thus, it puts forth broadly two views, one presumably by the developed countries, as per which further 145

6 Annual Report progress on market access could include the binding of autonomous liberalization where possible, improved levels of access under mode * 3 (including restrictions on foreign equity participation and forms of commercial presence), as well as a robust and satisfactory outcome in mode 4. And the other is the developing country perspective as per which there was an imbalance in the market access negotiations, resulting from developing country flexibilities not being taken into account in other Members' requests, sectors of export interest of developing countries not being fully reflected in developed members offers; the fact that developing countries have already made a significant contribution to the Doha Round and the fact that some plurilateral requests and recent proposals embodied a level of ambition going beyond that agreed in Annex C of the Hong Kong Ministerial Declaration. On domestic regulations, the Chair s report stated that recent intensification of negotiations had produced notable progress, even if disagreement persisted on important and basic issues. On GATS rules, it stated that while technical work continued, there did not seem to be any convergence regarding the expected outcome in any of the three negotiating subjects (safeguards, government procurement and subsidies). On the implementation of LDC modalities, the report stated that while Members supported a waiver permitting preferential treatment to LDCs, disagreements continued, mainly regarding the scope of the waiver, and rules of origin for services and service suppliers. In the efforts towards finalisation of the agenda towards the 8 th Ministerial Conference, an LDC *This is a reference to the various ways in which international trade in services is supplied and consumed. Mode 1: cross border supply; mode 2: consumption abroad; mode 3: foreign commercial presence; and mode 4: movement of natural persons. waiver was agreed to with the collective support of the members in November This was adopted in the 8 th Ministerial Conference. This waiver will enable developing and developed-country Members to provide preferential treatment to services and service suppliers of LDC Members. The waiver, which will last for 15 years from the date of adoption, releases developing and developedcountry Members from their legal obligation to provide non-discriminatory treatment to all trading partners. After the Chair s Report in April, 2011 discussions continued in the regular services cluster meetings that were held in May 2011, July 2011, September 2011 and November However no progress on the substantive issues under the Doha Round was achieved. In order to achieve a breakthrough in the Doha Round different approaches such as the cluster approach under which some related sectors would be considered for commitments by some members have been proposed. Department of Commerce has not supported any of these proposals as they go against the agreed mandate. Any approach which tries to change the objectives of the agreed mandate is not helpful and will further complicate an already difficult situation. VI. Rules Negotiations Negotiations are taking place in the Negotiating Group on Rules (NGR) aimed at clarifying and improving disciplines under the Anti Dumping Agreement and the Agreement on Subsidies and Countervailing Measures (ASCM), while preserving the basic concepts, principles and effectiveness of these agreements and their instruments and objectives. Members are also discussing new disciplines for fisheries subsidies. The Chair of the Negotiating Group on Rules (NGR) had issued revised texts on Anti dumping and 146

7 CHAPTER-8 subsidies issues on 19 December An intense process of negotiations was held during February and March 2011 on all major contentious issues in Anti dumping, horizontal subsidies and fisheries subsidies. The Chair issued his report of negotiations held on 21 April 2011 on Anti Dumping Agreement, Subsidies Agreement and Fisheries Subsidies. In Anti dumping the text reflected convergence on some issues which relate mainly to transparency and due process. However, consensus remains elusive on 12 major issues including the prohibition on use of zeroing in dumping margin calculations, strengthening the sunset review provisions, new rules on anti circumvention, non-attribution analysis for causal link, lesser duty rule, public interest examination etc. In the Subsidies Agreement, considerable divergence remains in the proposals on specificity, subsidies in the case of inputs provided at regulated prices, certain financing by loss making institutions, calculation methodology for determining export competitiveness, market benchmarks for export credits and overseeing of successor undertakings under the OECD Export Credit Arrangement by the WTO. In Fisheries Subsidies, the negotiations remain wide open with the Chair having adopted a bottom-up approach in identifying subsidies to be covered under prohibition in the text issued on 30 November The issues of type of subsidies to be prohibited, general exceptions, special and differential treatment to developing countries, general disciplines and fisheries management have been extensively discussed. However, wide gaps remain in Members positions. VII. TRIPS Related Issues The WTO s Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS) introduced IPR Rules into the multilateral trading system for the first time when the WTO came into being on January 1, The WTO s TRIPS Agreement is an attempt to narrow the gaps in the way these rights are protected around the world and to bring them under common international rules. It establishes minimum levels of protection of intellectual property that each Government has to accord to fellow WTO members. The Governments are allowed to use flexibilities enshrined in TRIPS for public interest reasons, e.g. to tackle public health problems. The UN Convention on Biological Diversity (CBD) has three goals: promoting the conservation of biodiversity, using its components sustainably, and sharing benefits that arise out of the utilization of genetic resources in a fair and equitable manner. India is a party to the Convention. CBD recognises sovereign rights over biological/ genetic resources (BR/ GR) and traditional knowledge (TK), and obliges all its signatories to ensure prior informed consent (PIC) for access to these resources, on mutually agreed terms and to ensure that access to and benefit sharing (ABS) of the commercial utilisation of these resources is fair and equitable. TK refers to knowledge, innovations and practices of indigenous and local communities around the world. The knowledge belongs to the community as a whole and unauthorized use of GR/ TK is referred to as biopiracy. India has a rich content of GR/ TK and more than once, the abundant wealth in this area has attracted bio-pirates. Hence, India along with other developing countries has taken up this issue in the Doha Round of negotiations. The Doha Ministerial Declaration, 2001 provided a mandate to the TRIPS Council to examine, inter alia, the relationship between the TRIPS Agreement and the CBD. The objective of ongoing efforts in WTO is to establish adequate procedural norms within the TRIPS Agreement so as to prevent erroneous patents being granted and prohibit misappropriation of BR/ 147

8 Annual Report TK as well as to ensure that private rights created through the TRIPS Agreement do not trump the benefit sharing mechanisms set up by Government in implementing the CBD obligations. There are no provisions in the TRIPS Agreement that prevent a person from claiming patent rights in one country over GRs that are under the sovereignty of another country. Moreover, there are no provisions in the TRIPS Agreement on ABS and PIC of the country of origin and owner of the biological raw material or TK meant for use in a patentable invention. This results in contradictions between TRIPS and CBD and it is impossible to implement them in mutually supportive ways. The TRIPS Agreement does not prevent acts of biopiracy and thus results in systemic conflicts with the CBD. Many developing countries, including India, have been demanding incorporation of three disclosure norms in the TRIPS Agreement so as to make it obligatory for an applicant seeking a patent, based on some genetic resource (GR) and/or traditional knowledge (TK), to disclose (i) Source and the country of origin of the genetic resource/traditional knowledge used in the patent; (ii) Prior Informed Consent and (iii) Benefit sharing arrangement. The group holds that the user of GRs and TKs should also provide access to and transfer technologies, based on those resources, to the source country. Any violation, if discovered after the grant of a patent, would invite legal sanctions including revocation of a patent. The opponents of these proposals, including the US, Australia, Canada, Argentina and South Africa feel that there is no conflict between the TRIPS Agreement and the CBD and the two can be implemented in a mutually supportive manner, without the need to amend the TRIPS Agreement. A new disclosure requirement will not prevent the issuance of erroneous patents. The national ABS regimes (outside the patent system) could better guarantee PIC and equitable benefit sharing for all commercially traded GRs, whether patented or not. The disclosure requirement could generate burdensome procedures and additional costs on patent offices. They suggest that countries develop their own database for GRs and TK and use this to track and challenge any patents that may be erroneously granted on the basis of existing knowledge. Over the last two years, the proponents of the mandatory disclosure requirement have been able to garner support of 108 WTO members (2/3 majority of WTO) including the EU who have agreed to amend the TRIPS Agreement to include a mandatory requirement for the disclosure of the country providing/source of GR, and/or associated TK (for which a definition will be agreed later) and that applications seeking patent will not be processed without completion of disclosure requirement. Further, these Members have agreed to define the nature and extent of a reference to PIC and ABS also. Geographical Indications (GI) Extension The TRIPS Agreement of WTO allows for protecting the quality, reputation or other characteristics of a good that are essentially attributable to its geographic origin. The GIs not only indicate where a product is made, but more importantly it identifies the product s special characteristics which are the result of its geographical origins. The GIs, unlike other IPRs, are generally protected in perpetuity. Well known examples include Champagne, Scotch, Darjeeling tea Roquefort cheese. GIs impart a unique brand image to a product and thereby help in improving its marketability and price realisation, while also preventing any misappropriation of its name. Article 22 of TRIPS defines a standard level 148

9 CHAPTER-8 of protection and prescribes that GIs have to be protected in order to avoid misleading the public and to prevent unfair competition through use of place name when the product is made elsewhere. Special Protection for Wines & Spirits Article 23 of the TRIPS Agreement, however, provides a higher or enhanced level of protection to GIs for wines and spirits. This means they should be protected even if there is no risk of misleading consumers/ public or unfair protection, and a different level of protection is granted in spite of the fact that GIs stand on an equal footing with any other IPR. Many developed and developing countries, including India have been demanding the removal of the disparity under the TRIPS Agreement. They have been demanding an expansion of the scope of protection available under Article 23 of the TRIPS Agreement to products other than wines and spirits also. Establishment of a Multilateral Register for Wines & Spirits According to Article 23(4) of the TRIPS Agreement, negotiations shall be undertaken in the TRIPS Council on the establishment of a multilateral system of notification and registration of GI for wines. This is again a measure that will facilitate the protection of GIs on wines. The Agreement provides that participation in the system will be strictly voluntary. The issue is now also part of the Doha Development Agenda and includes spirits also. Thus, the TRIPS provision essentially calls for a multilateral system for the notification and registration of GIs for wines and spirits. India, along with 108 members including the EU, in a joint submission TN/C/W/52 dated , has agreed to accept the obligation of a Multilateral Register in respect of Geographical Indications for wines and spirits protected and notified to WTO by any of the WTO members. The Group of 108 Members have proposed that text based negotiations be intensified in Special Sessions of the TRIPS Council in order to establish the Register accordingly and be an integral part of the Single Undertaking with TRIPS-CBD and GI extension issues. Current State of Play Presently, the Group of 108 is demanding that the TRIPS-CBD issue, GI extension and GI Register should form an integral part of the Single Undertaking. The Group is making efforts to work out some compromise formula for bringing the opponents on board. A Trade Negotiation Committee submission on TRIPS-CBD was made by India on April 19, 2011 (Document No. TN/C/W/59). The submission marks a key development on the TRIPS-CBD issues and captures the significant technical and political progress since the first submission made in 2006 to the TRIPS Council (IP/C/W/474). The submission will also serve as a basis for further work on the TRIPS-CBD issues. Environmental Goods & Services (EGS) With a view to enhancing the mutual supportiveness of trade and environment, the Doha Ministerial Declaration provides a mandate to the Members of the WTO for negotiations on environmental goods and services and environmental issues including the relationship between existing WTO rules and specific trade obligations set out in Multilateral Environmental Agreements (MEAs); procedures for regular information exchange between MEA Secretariats and the relevant WTO committees; reduction or, as appropriate, elimination of tariff and non-tariff barriers to environmental goods and services; effect of environmental measures on market access, especially in relation to developing countries; importance of technical assistance and capacity building in the field of trade and 149

10 Annual Report environment to developing countries, in particular the least-developed and to identify and debate developmental and environmental aspects of negotiations, in order to help achieve the objective of having sustainable development appropriately reflected. Most of the developed countries including US, Canada, the EU, Japan, Korea, New Zealand, Norway etc. are advocating a list-based approach for elimination of tariffs on environmental goods (EGs) that offers a potential for high degree of convergence among members (they have come up with a list of 153 EGs at HS 6 digit for this purpose). Saudi Arabia and Japan have also come up with their own lists of EGs. In the absence of an agreed definition of EGs, it is difficult to work out the list of EGs. Hence, India and many developing countries do not support a list approach due to multiple end-uses of most products. It is also understood that the List Approach will adversely impact the growth of EGs in developing countries. In view of the drawbacks of a List Approach, India had floated Project Approach, which did not get much support. Therefore, India and Argentina jointly floated Integrated Approach for liberalisation of all goods and services for designated projects, such as water and waste water management, environmental monitoring and renewable energy, etc. VIII. Settlement of Disputes in the WTO Dispute Settlement is the central pillar of the rules based multilateral trading system and the WTO's unique contribution to the stability of the global economy. It underscores the rule of law and makes the trading system more secure and predictable. The salient features of the system are: It is based on clearly-defined rules. There are timelines for completing a case. Provisions exist for consultations, good offices, conciliation and mediation. Rulings are first made by a panel and endorsed or rejected by the WTO's full membership. Appeals based on points of law are possible. Dispute Settlement Understanding Reforms As per the mandate of the Doha negotiations, the WTO Members are engaged in negotiations aimed at improvements and clarifications of the Dispute Settlement Understanding (DSU). The negotiations take place in the Special Session of the Dispute Settlement Body (DSB). The discussions in the Special Session are primarily based on Members experience with the dispute settlement system and efforts by Members to develop areas of convergence, while maintaining the respective policy objectives. India and other developing countries have been reiterating their objective for a development oriented review of the dispute settlement procedures under the Doha Development Agenda (DDA). Keeping this objective in view, India and other developing countries have been pursuing some important reforms aimed at Special & Differential (S&D) treatment to developing countries. These include proposals for the litigation costs to mitigate the rising costs of settling the WTO Disputes, cross retaliation that may allow the developing countries to retaliate in any sector/agreement against the losing developed country. Some of these proposals are reflected in the draft legal text of July 2008 which is the basis for the current round of discussions among the Members. A round table discussion on the major issues being discussed in the DSU Reforms was held on 150

11 CHAPTER-8 9 July 2011, organized jointly by Department of Commerce and the Centre for WTO Studies, IIFT. Meetings of the Special Session of DSB were held regularly during the year 2011 to advance the negotiations on DSU reforms. The WTO Ministerial conference held during December 2011 underscored the importance of the multilateral trading system and the important asset that the WTO Dispute Settlement system represents and committed themselves to strengthening it through concluding the DSU review negotiations. India as Complainant Box: 8.2 India and the DSU DS On 11 May 2010, India requested consultations with the EU and the Netherlands under the Dispute Settlement Understanding (DSU) of the WTO regarding repeated seizures of Indian generic medicines while in transit through the EU ports on alleged patent infringements. The detentions by the customs authorities of these generic medicine consignments were in violation of the obligations of the EU and the Netherlands under Article V of GATT which enshrines freedom of transit of goods through the territory of each contracting party of GATT via the routes most convenient for international transit. The detentions were also inconsistent with the EU and its Member States obligations under Articles 41 and 42 of the TRIPS Agreement as these detentions created barriers to legitimate trade, led to abuse of the rights conferred on the owner of a patent, were unfair and inequitable, unnecessarily burdensome and complicated and created unwarranted delays. Consultations were held with EU during July and September 2010 in Geneva which were followed by several rounds of consultations through video conference. EU has shown willingness to resolve this dispute without resorting to the need to go to the WTO dispute panel stage. After several rounds of extensive consultations, India and EU reached an Understanding in July 2011 to guide border enforcement of intellectual property in the EU. This inter-alia, includes the core principle of the Understanding that the mere fact that medicines are in transit through EU territory, and that there is a patent title applicable to such medicines in the EU territory, does not in itself constitute enough grounds for customs authorities in any Member State of EU to suspect that the medicines at stake infringe patent rights. EU also agreed to issue guidelines to confirm the principles contained in the Understanding. India as Third Party in WTO Disputes India has also joined as a third party in several disputes taking into account our systemic concerns and to protect our trade interests from non-compliance of negotiated multilateral rules at the WTO by some Members. India has joined as third party in the following recent disputes: DS 394, 395 & China - Measures Related to the Exportation of Various Raw Materials (Complainant: United States, European Communities and Mexico). In this dispute the four types of export restraint maintained by China challenged by the complainants were: export duties, export quotas, export licensing and minimum export price requirements. The Panel in its report dated 5 July 2011 found several measures of China inconsistent with various provisions of GATT and with the provisions of paragraphs 1.2,5.1,5.2,8.2 and 11.3 of Part I of China s Protocol of Accession to WTO. In one of its key findings, the WTO Panel found that China s export duties 151

12 Annual Report were inconsistent with the commitments that China had agreed to in its Protocol of Accession. The Panel also made an important ruling on Article XI:2(a) of GATT 1994 which permits the exporting country to temporarily impose restrictions or prohibitions on exports to address critical shortages of foodstuffs or other essential products. China has appealed against the Panel s ruling. On 30 January 2012, the Appellate Body of the WTO, issued its reports in the case largely upholding the panel ruling. DS 396 & 403- Philippines - Taxes on Distilled Spirits (Complainant: European Communities & United States). The complainants have challenged the excise tax of Philippines on distilled spirits as inconsistent with the principle of national treatment contained in Article III.2 of GATT The Panel in its report issued on 15 August 2011 found that through its excise tax, the Philippines subjects imported distilled spirits made from raw materials other than those designated in its legislation to internal taxes in excess of those applied to like domestic spirits made from the designated raw materials, and was thus acting in a manner inconsistent with Article III:2 of the GATT The Appellate Body (AB) in its report dated 22 December, 2011 has largely upheld the panel ruling against Philippines for violating national treatment provisions by levying excessive internal duties on foreign distilled spirits made from non-designated raw materials in excess of those applied to like domestic distilled spirits of the same type made from designated raw materials. The AB upheld the Panel s finding that each type of imported distilled spirit at issue in this dispute gin, brandy, vodka, whisky, and tequila made from non designated raw materials is like the same type of domestic distilled spirit made from designated raw materials, within the meaning of Article III:2 of the GATT DS 397- European Communities - Definitive Anti-Dumping Measures on Certain Iron or Steel Fasteners from China (Complainant: China). China complained that Article 9(5) of the Basic Anti-Dumping (AD) Regulation of EU was inconsistent, as such, with Article XVI:4 of the WTO Agreement; Articles I:1, VI:1, and X:3(a) of the GATT 1994; and Articles 6.10, 9.2, 9.3, 9.4, and 18.4 of the Anti-Dumping Agreement. The Panel in its report dated 3rd December, 2010 concluded, inter-alia, that Article 9(5) of EU s basic AD Regulation is inconsistent with Article 6.10 of the AD Agreement as it conditions the calculation of individual margins for producers from NME on the fulfilment of the individual treatment test. th The Appellate Body in its report dated 15 July, 2011 has upheld inter-alia, Panel s findings, albeit for different reasons, that Article 9(5) of EU s Basic AD Regulation is inconsistent as such with Article 6.10 and Article 9.2 of the Anti dumping Agreement because it conditions the imposition of individual dumping margins/ individual duties on exporters or producers from NMEs on the fulfilment of the IT test. DS United States - Anti-dumping Measures on Certain Shrimp from Vietnam (Complainant: Vietnam). Vietnam had challenged US anti dumping measures as inconsistent with Articles 2.4, 2.4.2, 9.3, 9.5 and 11.3 of Anti Dumping Agreement (ADA). The Panel in its report dated 11 th July, 2011, upheld Viet Nam s claim that the USDOC s use of zeroing to calculate the dumping margins of respondents selected for individual examination in the second and third administrative reviews was inconsistent with Article 2.4 of the Anti- Dumping Agreement. 152

13 CHAPTER-8 In 2011, India has joined as third party in the following disputes :- DS 412 and DS 426 Canada: Certain measures affecting the renewable energy generation sector. (Complainant : Japan (DS 412) and EU (DS 426). The complainants have alleged that Canada s feed in tariff programme violate Articles III:4 and III:5, Article XIII:1 of the GATT 1994, Article 2.1 of the TRIMs Agreement, Articles 1.1, 3.1(b) and 3.2 of the SCM Agreement. Panel s ruling is awaited. DS China: Certain Measures Affecting Electronic Payment Services. (Complainant: United States). The United States has complained that China is imposing market access restrictions on service suppliers of other Members seeking to supply electronic payment services in China despite taking commitments under GATS and therefore the measures are inconsistent with Articles XVI:1 and XVI: 2 and Article XVII of the GATS. The Panel in this dispute was composed on 4 th July, Report of the Panel is awaited. DS 414 China: Countervailing and Anti-Dumping Duties on Grain Oriented flat Rolled Electrical Steel from United States. (Complainant: United States). The US has alleged that China s anti dumping and CVD measures are inconsistent with GATT article XXIII:1, SCM agreement and anti-dumping agreement. The measures imposed by China inter-alia include the subsidy determined to confer a benefit under the Buy America provisions of the American Recovery and Reinvestment Act of 2009 and also State government procurement laws. The panel was composed on 10 May Report of the Panel is awaited. IX. Recent Appointments to the Appellate body of the WTO The Appellate Body is a standing body composed of seven Members, appointed by the Dispute Settlement Body (DSB) of the WTO for a term of four years with the possibility of being reappointed once for another four-year term. On 18 November 2011, the DSB appointed Mr. Ujal Singh Bhatia and Mr. Thomas R. Graham as members of the Appellate Body for four years commencing on 11 December Mr. Ujal Singh Bhatia was India s Ambassador and Permanent Representative to the WTO during the period 2004 to X. Trade Facilitation An important area of the WTO Doha Round is Trade Facilitation. India places great importance on trade facilitation, which implies simplification, rationalization, harmonisation and modernization of trade procedures, with a view to promoting cross-border trade, reducing trading cost, bringing greater predictability to traders, and mitigating risk of major bottlenecks along transport chains and at national frontiers. The ongoing negotiations on trade facilitation aim to clarify and improve relevant aspects of Articles V, VIII and X of the GATT 1994 with a view to further expediting the movement, release and clearance of goods; enhancing technical assistance and support for capacity building in this area; and formulating provisions for effective cooperation between Customs or any other appropriate authorities on trade facilitation and customs compliance issues. A Draft Consolidated Negotiating Text on Trade Facilitation was worked out by the WTO Members on The draft text has since been revised eleven times (till November 2011) through discussions in the meetings of the Negotiating Group on Trade Facilitation (NGTF). India has been actively participating in these meetings and has also tabled a few proposals on Customs Cooperation, Rapid Alerts System of Customs Union and Appeal Mechanism. 153

14 Annual Report Presently WTO Members are not showing much flexibility. Developed countries do not want to change their trade procedures but expect others to do so. Developing countries have, by and large, adopted a defensive approach in the negotiations. Least Developed Countries (LDCs), in general, do not want to undertake any binding commitment. Capacity constraints and lack of resources are two major factors that prevent developing countries (and LDCs) from taking on binding commitments in trade facilitation. Current indications are that the developed countries and other donors may not invest to build physical infrastructure in these countries, although the July 2004 Framework Agreement clearly links commitments to support and assistance for infrastructure development. It is important that this linkage is respected by the entire WTO membership, particularly the developed countries and that adequate assistance is provided for implementation of commitments so that a high standards agreement on Trade Facilitation can be achieved. XI. Fifth Trade Policy Review of India (14 and 16 September 2011) In order to promote transparency and provide better understanding of the trade policies and practices of its Members, the WTO has a mechanism for regular review of their trade policies. The Trade Policy Reviews (TPR) provide the country under review a feedback on its performance in the WTO system. For this purpose, the WTO Secretariat prepares a detailed report on the trade policies and practices of the country under review ( the Secretariat Report ), which is supplemented by a policy statement of the Government under review ( the Government Report ). These two reports form the basis for the review, and are public documents, available on the WTO website. The TPR offers an opportunity for other WTO Members to ask questions and raise concerns on 154 different aspects of the policies and practices of the country under review. Depending upon its share in world trade, each Member s trade policy is reviewed by the WTO at fixed periodic intervals. India s Trade Policy Review is carried out every four years. The Fifth Trade Policy Review of India was held on 14 and 16 September, 2011 at WTO Geneva. Before the meeting, the WTO Secretariat circulated a compilation of India s written replies to 886 (eight hundred and eighty-six) advance questions raised by 26 (twenty-six) WTO Members. Replying to these questions required coordination involving almost 70 (seventy) Departments and Ministries of the Govt. of India. On 14 September 2011, the proceedings started with the introductory remarks of the Chairperson of the TPRB (Trade Policy Review Body). This was followed by the opening statement of the Commerce Secretary, who led the Indian delegation, providing an overview of policies and new developments. Thereafter, the Discussant spoke on the main issues covered in the WTO Secretariat Report and the Government Report. The subsequent proceedings witnessed oral interventions from 42 (fortytwo) WTO Members: Brazil, Mexico, China, US, Switzerland, Korea, Malaysia, Colombia, Pakistan, Sri Lanka, Australia, Singapore, Saudi Arabia, Hong Kong China, Indonesia, Costa Rica, Japan, Norway, EU, Chinese Taipei, Canada, Thailand, Argentina, Turkey, New Zealand, Ecuador, Chile, Peru, Zimbabwe, Uruguay, Bangladesh, Venezuela, South Africa, Oman, Morocco, El Salvador, Honduras, Dominican Republic, Jamaica, Zambia, Nigeria and Guinea. Most of the Members commended the resilience of Indian economy that smoothly withstood the adverse effects of global financial crisis without taking recourse to protectionist measures.

15 CHAPTER-8 Members appreciated India for using its trade policy to promote sustainable development and inclusive growth. Members also noted India s positive engagement in the Doha Round negotiations. Some of the Members, notably US, raised concerns in certain areas, viz. tariffs and duties; licensing and restrictions; trade defense measures (antidumping); SPS & TBT; Government Procurement; incentives schemes to promote investments & exports, and to protect agriculture; tariff protection on agriculture; services and investments. The issues raised in the first session were responded to in India s Closing Statement on 16 September The Fifth Trade Policy Review concluded with a wrap-up statement by the Chairperson of the TPRB. The Eighth Ministerial Conference of the WTO The Eighth Ministerial Conference of the WTO was held in Geneva from 15 to 17 December In parallel to the Plenary Session of the Conference, Working Sessions were held on three broad themes: Importance of the Multilateral Trading System and the WTO, Trade and Development and Doha Development Agenda (DDA). At the Plenary India expressed deep disappointment at the current impasse in the DDA negotiations. Urging respect for the DDA mandate, India cautioned against plurilateralism i.e. the suggestion to negotiate agreements amongst a critical mass of members. India appealed to members not to let the hard work of a decade be wasted and to build on the progress already achieved. India also made a strong pitch against all forms of protectionism. On the sidelines there were Ministerial meetings of various coalitions of developing countries. The BRICS 5 met formally in the WTO context for the first time. They issued a joint communiqué suggesting the way forward on the Doha Round that does not ignore the issues of development, and builds on the progress achieved so far. In an unprecedented display of unity, a coalition of more than a hundred developing countries, including India, Brazil, China and South Africa met on the sidelines of the Conference and issued a Declaration emphasizing the development agenda. They roundly criticized suggestions for plurilateral agreements to replace decision making by multilateral consensus. The Ministerial Conference approved the accessions of the Russian Federation, Samoa and Montenegro to the WTO. Ministers also adopted a number of decisions, including a services waiver for least developed countries (LDCs) and a decision on electronic commerce. One of the major decisions of the Conference is an agreement on the revised text of the Government Procurement Agreement (GPA). Under the revised GPA, forty two countries agreed to liberalise US$ 100 billion worth of public contracts per year, in addition to the US$ 500 billion already covered by the pact. India became an observer to the GPA in February 2010 and is examining the pros and cons of the recent developments in the GPA, in case we decide to join the GPA in future. The Chair of the Conference concluded with a statement in two parts: a consensus statement on elements for political guidance and a factual summary of points that Ministers made in the meeting. As far as the Doha Round of trade negotiations is concerned, a number of Members expressed strong reservations about plurilateral approaches, which many of the developed countries have been advocating in recent months. Many Members stressed that any different approaches in the work ahead should confirm to the Doha mandate, respect the single undertaking, and be truly multilateral, transparent and inclusive. In 155

16 Annual Report looking at future work, a large number of ministers stressed the centrality of development. Many, including India, underlined the need to give priority to issues of interest to LDCs, including cotton. XII. WTO S Regional Trade Policy course India hosted the WTO s Regional Trade Policy Course (RTPC) for the Asia Pacific Region in RTPCs are three-month courses for government officials from developing countries, LDCs etc. They are organized and run by the WTO in partnership with institutions of higher learning in different regions of the world. In India, the Course, which was inaugurated on 5 September 2011, was conducted jointly by the WTO and the Centre for WTO Studies, IIFT, New Delhi, during 5 September to 25 November participants from 19 countries of the Asia Pacific region participated in the RTPC. XIII. Trade Portal In order to facilitate trade between India and its major partners and help Indian exporters by providing essential information about the export destination countries, the Department of Commerce is developing a trade portal. This portal will include trade-related information about India s top 25 export destinations. It will include information on tariffs at HS 8-digit level, applicable SPS and TBT rules and regulations (tariff line-wise), preferential tariff rates (for countries with which India has trade agreements) and information about rules of origin. B. Economic and Social Commission for Asia and the Pacific (ESCAP) India is one of the founding members of ESCAP, the regional development arm of the United Nations, which serve as the main economic and social development centre for the United Nations in Asia and Pacific. With a membership of 62 Governments, 58 of which are in the region, and a geographical scope that stretches from Turkey in the west to the Pacific island nation of Kiribati in the east, and from the Russian Federation in the north to New Zealand in the south, ESCAP is the most comprehensive of the United Nations five regional commissions. It is also the largest United Nations body serving the Asia-Pacific region. Established in 1947 with its headquarters in Bangkok, Thailand, ESCAP seeks to overcome some of the region s greatest challenges. It carries out work in the following areas: Macroeconomic Policy and Development Statistics Sub-regional activities for development Trade and Investment Transport Environment and sustainable development Information and Communications Technology and Disaster Risk Reduction Social Development ESCAP focuses on issues that are most effectively addressed through regional cooperation, including: Issues that all or a group of countries in the region face, for which it is necessary to learn from each other; Issues that benefit from regional or multicountry involvement; Issues that are trans-boundary in nature, or that would benefit from collaborative inter-country approaches; Issues that are of a sensitive or emerging nature and require further advocacy and negotiation. Annual Session of ESCAP The Commission meets annually at the Ministerial level to discuss and decide on important issues 156