the world trade organization: evolution, structure and agreements dr. wybe th. douma tmc asser...
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The World Trade Organization:
Evolution, Structure and Agreements
Dr. Wybe Th. Douma
TMC Asser Instituut
The Hague, The Netherlands
WTO: Evolution, Structure and Agreements
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The WTO: Its evolution
The ITO and GATT 1947 Filling the gap left by still born ITO De facto international trade organisation Success and failure
Uruguay Round (1986-1993): the longest round ever Punta del Este Declaration Proposals for a MTO (1990) Marrakesh Agreement (1994) WTO since 1.1.1995
Differences between GATT’47 and WTO
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Economic Globalisation and WTO Law
Economic Globalisation and International Trade What is meant by economic globalisation?
Gradual integration of national economies into a global borderless economy
Influenced by (and their democratisation) forces of technology of finance of information
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Economic Globalisation and WTO Law
Why is it under critique? Reasons and reactions Globaphiles v.globaphobes Expansion of cross-border economic interaction: more
trade, more welfare Erosion of local control, autonomy and identity
WTO as vehicle of freer and open trade? Balancing of interests necessary Global economic governance
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Economic Globalisation and WTO Law
Figures on trade (last 50 years) show changes in trade developments General increase of world trade Increase of share of services in relations to goods Raise of trade in Europe Decline in Latin-America, Africa and Asia 48 ldc account to only 0.5 percent of world trade China, India and Mexico major suppliers of cutting/-
edge technologies and labour-intensive goods Increased trade with companies and foreign direct
investment
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Economic Globalisation and WTO Law
International trade rules: reasons Restraining protectionism More security and predictability Governance in globalised economy
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Economic Globalisation and WTO Law
Basic Rules and Principles of WTO Law WTO Agreement regulating institutional, decision-
making and procedural rules Multilateral agreements GATT, GATS, TRIPS contain
Principle of non-discrimination Principle of freer and fair trade Rules on conflicts between trade liberalization and other
societal values and interests Special rules and differential treatment for developing
countries
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Economic Globalisation and WTO Law
Sources of WTO Law: see WTO Legislation Agreement establishing the WTO Multilateral agreement on trade in goods
GATT 1994 Agreement on Agriculture Agreement on the Application of Sanitary and Phytosanitay
Measures Agreement on Textiles and Clothing
GATS TRIPS Dispute Settlement Understanding
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Economic Globalisation and WTO Law
Sources of WTO Law: see WTO Legislation Ministerial Decisions and Declarations: not enforcable
through DS WTO dispute settlement reports Acts of WTO bodies: authoritative interpretaitons and
waivers Customary international law General principles of law Other international agreements (WIPO agreements)
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Economic Globalisation and WTO Law
Sources of WTO Law: conflicts and effect Relationship: II WTO Agreement
Difference multilateral - plurilateral agreements Cases of conflict XVI:3 WTO Agreement Conflict between GATT’94 and other multilateral
agreements on goods? Other multilateral agreement prevails
Adopted panel and AB reports only binding on the parties but nonbinding precedent
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Economic Globalisation and WTO Law
Sources of WTO Law: conflicts and effect Customary international law: 3.2 DSU
Especially in procedural law used General principles of law Other international agreements
reference: 2 TRIPs Agreement WIPO ip agreements
No reference: dispute whether evocable Subsequent practice, Art.31(3) (b) Vienna
Convention
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The WTO organisation: Mandate of the WTO
Objectives (preamble WTO) Increase of standard of living Attainment of full employment Allowing optimal use of the world’s resources,
objective sustainable development Protect and preserve environment Share of growth for developing and least
developed countries Through reduction of trade barriers and
elimination of discrimination
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The WTO organisation: Mandate of the WTO
Functions (III WTO) Facilitate implementation of WTO agreements Forum for negotiations: Ministerial Conferences Settlement of trade disputes Review trade policies (TPRM): periodic reviews Cooperate with IOs and NGOs: IOs, working
arrangements (III:5, V WTO), ngos: V:2, guidelines
Give technical assistance developing countries: bilateral or multilateral
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WTO Membership Current membership
Quasi-universal: Dec.2005 149 members States and autonomous customs territories (Hong
Kong) European Communities and EU MS, IX, XI, XIV WTO Developing country Members (DCMs): ¾ , ldc:
designated as such by the UN Groupings and alliances: rta (ASEAN, NAFTA), Cairns
group (agriculture), G-20 (China, India, Brazil, Egypt, Argentina, South Africa), Quad (EC, Japan, USA)
Observers (Afghanistan, Laos), start accession n. within five years, ios
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WTO Membership
Membership obligations (XVI:4 WTO) Waivers (IX:3-4 WTO) Non-application (XIII WTO): when joining
Accession Original membership (XI WTO) until 1997 Accession (XII WTO)
Withdrawal and expulsion (XV WTO)
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WTO Membership
Accession: XII WTO: long and cumbersome Accept WTO Agreements and multilateral agreements Negotiating market access commitment and concessions Stages WTO working party on accession
Tell us about yourself Work out with us individually what you have to offer
(bilateral) Draft membership terms (protocol of accession and lists Decision phase Minsterial Conference or General Council
decides by consensus/two-thirds majority of WTO members Example China, 15 years of accession
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WTO Institutional Structure: member-driven
Ministerial Conference (IV:1 WTO) General Council, DSB, TPRB (IV:2-4 WTO) Specialized Councils (IV:5 WTO) Committees and working parties (IV:6 WTO) Quasi-judicial bodies (DSB) WTO Secretariat (VI WTO) Organs absent in the WTO
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WTO Institutional Structure
Ministerial Conferences Minister-level representatives Supreme decision-making functions
Adopt authoritative interpretations of the WTO agreements
Granting waivers Adopt amendments Decide accessions Appoint DG and staff regulations
Meets at least once every two years
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Ministerial Conferences and built-in agenda
Commitment in the Uruguay Round, negotiations in agriculture, services
Singapore 1996: new working groups (trade and investment, trade and competition policy)
Geneva, 1998: Millennium Round 2000? Seattle, 1999: the road to debacle, working
groups established agriculture
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Ministerial Conferences and Doha Development Round
Doha, 2001: Doha Development Round or Agenda (DDA) single undertaking approach (except DS and
geographical indications ) deadline 1.1.2005, then end of 2006
Cancun, 2003 Hong Kong, 2005 July 2006: negotiations suspended
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Areas of concern
Implementation-related issues and concerns Agriculture Services TRIPS and issues
And public health And geographical indications And biodiversity Protection of traditional knowledge and folkore
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WTO Institutional Structure
General Council, DSB, TPRB (IV:2-4 WTO) Ambassador-level diplomats Meets once every two months Day-to-day management
adopting annual budget, financial regulations Arrangements cooperations IOs and NGOs DSB (Dispute Settlement Body) and TPRB (Trade
Policy Review Body)
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WTO Institutional Structure
Specialized Councils (IV:5 WTO) Council for Trade in Goods Council for Trade in Services Council for TRIPS Tasks
delegated from the General Council Recommendations for authoritative interpretations Under TRIPS extend ten-year transition period for ldc
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WTO Institutional Structure
Committees and working parties (IV:6, 7 WTO) Committee on Trade and Development Committee on Regional Trade Agreements Working parties (temporary subsidiary bodies)
New institutions Trade Negotiations Committee (TNC)
Established by Doha Development Round
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WTO Institutional Structure
Quasi-judicial bodies (DSU) Dispute settlement bodies: ad hoc established
Panels, standing Appellate Bodies Textile Monitoring Body (TMB) 8:1 Agreement on
Textiles and Clothing
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WTO Institutional Structure
WTO Secretariat (VI WTO) headed by the Director-General (appointed by
MC) Renato Ruggiero Mike Moore Supachai Panitchpakdi Pascal Lamy
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WTO Institutional Structure
No decision-making powers of its own, member driven
Provide technical and professional support for WTO bodies
Provide technical assistance dc Provide information for media and public WTO Sekretariat organised in divisions
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WTO Decision-making
Normal procedure (IX:1 WTO) Decision-making by consensus; explicit objection Decision-making by majority voting EC special provision IX:1 WTO
Special procedures Dispute settlement (DSU) Authoritative interpretations (IX:2 WTO) Waivers (IX:3-4 WTO), practise by consensus Amendments (X WTO)
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WTO Decision-making
WTO decision-making in practice; consensus over voting Reasons for and against consensus Efficiency v. legitimacy
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Disputed matters: Decision-making
Involvement of Developing countries Involvement and role of NGOs in decision-
making and WTO Reforming and improving WTO structure
Enhance transparency of WTO decision-making Contribute to the democratic accountability WTO
Problem of secondary law and soft law and its inconsistencies
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Disputed matters - DC and LDC
Marginalisation? Internal transparency Decision-making with 149? Green Room meetings; major trading nations and
select group of developing countries
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Disputed Matters - Involvement of NGOs
Involvement of NGOs? V:2 WTO + guidelines As watchdog? Arguments for and against
NGOs with specialised knowledge enhance decision-making capacity
Increase legitimacy of WTO Special interest groups Lack of legitimacy Developing countries suspicious of NGOs
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WTO Status and Budget
Status (VIII WTO) International legal personality WTO and the UN: independent from UN
Budget (VII WTO) Increased budget for technical assistance and capacity-
building Contributions of members on the basis of share of
international trade services, goods last three years Management of trust funds Doha development Agenda
Global Trust Fund
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The WTO Agreements: An overview
Multilateral Agreement Trade in Goods: GATT’94
GATS (services) Agreement TRIPS (IP rights) Agreement Multilateral agreements
Agreement on Textiles and Clothing Agreement on Subsidies
See list P.van den Bossche, p.45.
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The WTO Agreements
Plurilateral Agreements Agreement on the Trade in civil aircrafts Agreement on Government Procurement
Dispute Settlement Understanding and WTO Dispute settlement reports
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GATT/GATS/TRIPS
Similarities and Differences Multilateral GATT and GATS: General principles – general
and specific obligations (list of annexes) TRIPS: transitional arrangements dc, ldc
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Fundamental Principles of the WTO Agreements
Principle of non-discrimination Mfn under GATT/GATS/TRIPS National treatment under GATT/GATS/TRIPS
Principle of freer and fair trade Rules on market access Rules on unfair trade
Exemptions to rules and principles
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Fundamental Principles of the WTO Agreements
Principle of non-discrimination Mfn under GATT/GATS/TRIPS
Art.I GATTArt.II GATSArt.4 TRIPS
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Fundamental Principles of the WTO Agreements
Principle of non-discrimination Mfn under GATT
Other provisions MFN: GATT III:7, V, IX:1, XIII, XVII
Prohibition of discrimination between like products originating in different countries
De jure and de facto discrimination covered
WTO: Evolution, Structure and Agreements
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MFN Treatment under GATT 1994
Nature of the MFN obligationAny advantage granted
Customs dutiesInternal tax Internal regulations affecting the sale,
distribution, use of the products
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MFN Treatment under GATT 1994
Test of consistency Measure confers a trade ‘advantage’ Products are ‘like’:
Similar or identical characteristics, indicators such as characteristics of the products, end-use and tariff regimes
Advantage granted ‘immediately and unconditionally’
WTO: Evolution, Structure and Agreements
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National Treatment under GATT 1994
Article III GATT 1994 Nature of the obligation
Purpose of Article III imported products treated alike to national products
Avoid protectionismRequire equality of competitive conditions
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National Treatment under GATT 1994
Internal measures versus border measuresInternal measures onlyArt.II and XI to border measures
Structure of Article IIIIII:1, general principle III:2, internal taxationIII:4 internal regulation:
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National Treatment under GATT 1994
III:2, internal taxation two non-discrimination principles1. Internal taxation of like products
Imported and domestic products like products Imported products are taxed in excess of the
domestic products2. Internal taxation of directly competitive or substitutable
products Consistency test:
imported and domestic p. directly competitive or substitutable
products not similarly taxed dissimilar taxation applied so as to afford
protection to domestic production
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Internal Regulations
Article III:4 GATT 1994 Test of consistency
Measure is ‘internal law, regulation or requirement affecting …’
Products are ‘like’ Imported products treated ‘no less favourable’
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Rules on market access: Barriers to Trade
Tariff barriers to trade in goods Customs duties, II Other duties and charges
Non-tariff barriers to trade in goods Quantitative restrictions, XI Other non-tariff barriers
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Customs Duties
Customs duties or tariffs Definition and types: financial charge imposed at the time
of importation Based on weight, volume, quantity value (ad valorem) mixed
Purpose: revenue for government, protect domestic industry
National tariffs such EC Common Customs Tariff EU Market Access Database mkaccdb.eu.int
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GATT‘1994
Negotiations on tariff reductions Tariffs as a lawful instrument of protection Call for and success of tariff negotiations, Art.XXVIIIbis High customs duties by developing countries Principles of tariff negotiations
Reciprocity and mutual advantage Mfn clause Except.: for developing countries
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Tariff Concessions
Results of tariff negotiations, Art.II Tariff concessions or tariff bindings Schedules of concessions
Protection of tariff concessions Art. II:1(a) GATT 1994 Art. II:1(b), first sentence, GATT 1994
Modification or withdrawal of tariff concessions
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Imposition of Customs Duties
Customs classification HS Convention classification rules
Customs valuation Art. VII GATT 1994 and WTO Customs Valuation
Agreement Determination of origin
WTO Agreement on Rules of Origin
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Other Duties and Charges
Definition and types: security deposit, statistical tax
GATT rule Art. II:1(b), second sentence, GATT 1994 and
WTO Understanding on Art. II:1(b) GATT 1994 Exceptions
Art. II:2 GATT 1994
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Quantitative Restrictions
Quantitative restrictionsDefinition and types: limits the quantity
ProhibitionBan QuotaLicensingVoluntary export restraint
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Quantitative Restrictions
QR versus CD (customs duties) preference for cds
Tariff quotas Prohibition of QRs
Art. XI GATT 1994 Administration of QRs
Art. XIII GATT 1994 and import licences
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Other Non-Tariff Barriers: National Treatment or discrimination
Technical barriers to trade (other non-tariff barriers) TBT Agreement (Technical Barriers to Trade) SPS Agreement (sanitary or phytosanitary measures)
Lack of transparency Publication, notification & enquiry points
Unfair and arbitrary application of trade rules Uniform, impartial and reasonable application Procedures for the objective and impartial review
Customs formalities
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Rules on unfair trade
Dumping, basic framework VI GATT, GATT Antidumping Agreement
not prohibited but condemned Main users: India, US and EC Biggest target: China, Korea, Malaysia,
Russia and Thailand
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Rules on unfair trade
Definition of dumping: international price discrimination
Definition of injury of importing industry Causal link between dumping and injury Procedural structure of antidumping
measures: framework set by WTO, detailed provisions by members in Anti-dumping laws
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Rules on unfair trade
Response to injurious dumping Definitive antidumping duties Provisional measures
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Rules on unfair trade
Subsidies, XVI Financial contribution by government conferring a
benefit Countervailing measures (VI), reaction to
prohibited subsidies Agreement on Subsidies and Countervailing
Measures
WTO: Evolution, Structure and Agreements
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System of exceptions
General exception, XX Escape clause Art.XIX Security exceptions Art.XXI Regional trade arrangement exception,
Art.XXIV Waiver Art.XXV:5
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Exceptions/preferential treatment for and against developing countries, Exceptions/preferential treatment developing
countries Since 1955 Art.XVIII (for) Waiver Art.XXV:5 (for) Introduced during Tokyo Round Enabling clause,
Part IV Trade and Development, Art.XXXVI (4) (5), Article XXXVII (for)
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Exceptions/preferential treatment for and against developing countries,
Voluntary restraint agreements (against them) under the old GATT system, now prohibited under WTO Agreement on Safeguards
Agriculture: US/EC „chicken war“Textiles and Clothing: Multifiber Arrangement
(MFA) under old GATT – bilateral restraint agreements
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The GATS Agreement
Now 60 percent of world GDP Global cross-border trade 20 % services General Principles
MFN – Art.II Transparency Art.III Proportionality, Art.VI
Specific obligations Market access regulation, Art.XVI National Treatment, Art.XVII
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MFN Treatment under GATS
Article II:1 GATS Nature of the obligation: prohibition of discrimination
between services and services suppliers from different countries Covers de jure and de facto discrimination
Test of consistency Measure covered by GATS Services & service suppliers are ‘like’ No less favourable treatment
WTO: Evolution, Structure and Agreements
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MFN Treatment under GATS
Test of consistency Measure covered by GATS
By MS (local authorities etc.)Affecting services
Except. Services supplied in the exercise of governmental authority: health care, police protection
Definition of supply of services (I:2) modes of supply Cross-border Consumption abroad Commercial presence Presence of natural persons
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MFN Treatment under GATS
Services & service suppliers are ‘like’ Characteristics of the service Classification and description of the service in the
UN Central Product Classification (CPC) system Consumer habits, preferences reg. services
No less favourable treatment Discrimination
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MFN Treatment under GATS
Exemptions (II:2) MS could list until 1.1.1995 MFN exemptions
Transport Communications (audiovisual) Financial and business services
Should not exceed ten years
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National Treatment under GATS
Article XVII GATS Nature of the obligations: Explicit commitment by
member in specific sector Listed in Schedule of Specific commitments
Such in regard to certain modes of supply Requirement to invest a certain amount of assets in local
currency
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National Treatment under GATS
Test of consistency Measure affects services Services and service suppliers are ‘like’ No less favourable treatment
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Barriers to Market Access for Services and Service Suppliers
GATS rules on market access barriers GATS rules on other barriers to trade in
services
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Barriers to Market Access for Services and Service Suppliers
Definition and types: market access Exhaustive list of Art. XVI:2 GATS
Four types of quantitative restrictionsLimitations on forms of legal entityLimitations on foreign equity participation
Discriminatory and non-discriminatory Not related to quality or qualifications
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Barriers to Market Access for Services and Service Suppliers
Negotiations on market access Market access commitments
Art. XIX GATS Art. XIX:2 GATS
Schedules of specific commitments, annexed to GATS Horizontal commitments: All sectors Sectoral commitments
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Progressive Liberalisation
Modification or withdrawal of commitments, Art.XXI GATS
Market access commitments agreed so far Modest and slowly Maritime transport Professional services Financial services
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Other Barriers to Trade in Services
Domestic regulation Disciplines on licensing, qualification requirements and
technical standards
Lack of transparency Publication, notification and enquiry points
Unfair and arbitrary application of trade rules Reasonable, objective and impartial application
WTO: Evolution, Structure and Agreements
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The TRIPS Agreement
Background of the agreement: WIPO (1967), no dispute settlement system
Importance of IP rights for developed countries Other international agreements on IP rights
Paris Convention Industrial Property (1967) Berne Convention Artists work (1971)
WTO: Evolution, Structure and Agreements
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TRIPS and its aims
Aims (preamble) Effective and adequate protection of ip rights Not become barriers to legitimate trade Ip as private rights Developmental and technological objectives Ldc members and flexibility
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The TRIPS Agreement Intellectual property
Owner principle Country principle
Incorporation of IP conventions Minimum standards of IP rights Objectives, Art.7 TRIPS Basic Principles
National Treatment, Art.3 MFN clause, Art.4 Basic Principles
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The TRIPS Agreement
Structure of the Agreement minimum standards IP rights incorporations of IP conventions, Art.2
Compliance with 1 to 12, 19 Paris Convention individuals holders of IP rights discretion and flexibility: certain exceptions
apply Example: patents Art.30, 31
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The TRIPS Agreement
Basic Principles National Treatment, Art.3 MFN clause, Art.4
Protection standards for IP
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The TRIPS Agreement
Protection standards for IP Exhaustion of rights, Art.6? Copyrights and related rights Trademark Geographical Indications Industrial Designs Patent Layout Design of Integrated circuits Undisclosed Information
WTO: Evolution, Structure and Agreements
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The TRIPS Agreement
National Treatment, Art.3 Not less favourable than IP conventions
MFN clause, Art.4 Any advantage, favour, privilege or immunity
granted Immediately and unconditionally to all other
members Exceptions
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The TRIPS Agreement
Enforcement of IP rights, Art.41-61 Members ensure effective remedies Fair equitable procedures, 42 Provisional measures, 50
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The TRIPS Agreement: dc and ldc Transitional Arrangements, 65, 66
Entry into force: one year Developing country: four years Centrally-planned economy: four years Ldc: ten years, 1.1.2006 Extra extension for ldc until 1.7.2013, until 2016 for
pharmaceutical patents First waiver, now proposal for amendment for TRIPS
agreement, 2/3 majority needed Doha declaration: public health and TRIPS
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WTO Law in the Context of International and national Law
WTO as International Law Overcame problems of the old GATT
(provisional and not ratified agreement) Not a closed and self-contained system Conflicts between WTO agreements and MEA
General principle of in conformity interpretation
WTO: Evolution, Structure and Agreements
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WTO Law in the Context of International and national Law
WTO and national Law XVI:4 WTO Agreement general rule of
international law No interpretation of national law Effect in national law
Treaty-consistent interpretation Collission between national and WTO law
Direct effect of WTO provisions in national law? Right of consumer to free trade?
WTO: Evolution, Structure and Agreements
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Conclusion: Balancing Interests
WTO Most effective global trade organisation “Secretive and medieval organisation”
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Conclusion: Balancing Interests
Sutherland Report 2005 on the Future of the WTO Restrain on preferential trade agreements Clear objectives for the WTO’s relation with civil
society Appropiate technical assistance and capacity
building for ldc Role of Director-General strengthened