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Overview of the WTO Agreements, Functions And Future Prospects

The World Trade Organization (WTO) was established on January 1, 1995, under an agreement reached during the Uruguay Round of multilateral trade negotiations. The Uruguay Round was the last of a series of periodic trade negotiations held under the auspices of the WTO's predecessor, the General Agreement on Tariffs and Trade (GATT).

The WTO is the most important international organization that governs world trade. Decisions are made by the member countries. The WTO has 151 members and 31 observer governments (most of which have applied for membership), and members represent over 95% of world trade. The highest-level decisions are made at the Ministerial Conference, which is the meeting of trade ministers from member countries. The Ministerial Conference must meet at least every two years.

The General Council is the body of national representatives that oversees the day-to-day operations of the WTO. The General Council meets approximately monthly. It also meets in two other capacities: it reviews national trade policies, and it oversees the dispute settlement process. Under the General Council are numerous committees, working groups, and other bodies.

Assisting the members is a WTO Secretariat that numbers about 635 and is located in Geneva, Switzerland. The top official of the Secretariat is Director-General Pascal Lamy of France, whose three-year term began on September 1, 2005.

Trade agreements administered by the WTO cover a broad range of goods and services trade and apply to virtually all government practices that directly relate to trade, for example tariffs, subsidies, government procurement, and trade-related intellectual property rights. The WTO agreements are based on the principle of non-discriminatory treatment among countries. Some exceptions however, such as preferential treatment for developing countries, are allowed. Other basic principles of the WTO are open information on rules and regulations, negotiated limits on trade barriers, and settlement of disputes under specific procedures.

The 110th Congress may examine the relationship between the United States and the WTO in two ways. Congress may consider implementing legislation for a potential Doha Round agreement. U.S. Trade Promotion Authority (TPA) expired on July 1, 2007; however, Congress may extend or reauthorize TPA to consider such an agreement. Secondly, Congress may consider changes to U.S. laws in response to WTO dispute settlement procedures.

Following World War II, nations throughout the world, led by the United States and several other developed countries, sought to establish an open and non-discriminatory trading system with the goal of raising the economic well-being of all countries. Aware of the role of trade barriers in contributing to the economic depression in the 1930s, and the military aggression that rose following the depression, the countries that met to discuss the new trading system saw open trade as essential for economic stability and peace.

The intent of these negotiators was to establish an International Trade Organization (ITO), which would address not only trade barriers but other issues indirectly related to trade, including employment, investment, restrictive business practices, and commodity agreements. The ITO was to be a United Nations specialized agency, but the ITO treaty was not approved by the United States and a few other signatories and never went into effect. Instead, a provisional agreement on tariffs and trade rules, called the General Agreement on Tariffs and Trade (GATT) was reached and went into effect in 1948.

This provisional GATT became the principal set of rules governing international trade for the next 47 years.

The GATT established trade principles that continue to be applied today. Among the most important of these principles was non-discrimination with regard to the treatment of trade in goods among countries.

The most-favored-nation principle, Article I of the GATT, states that any advantage given by a contracting party to a product of another country must be extended unconditionally to a like product of all other contracting parties. A second rule of non-discrimination is national treatment, the principle that imported and domestic goods should be treated equally. Although non-discrimination is a cornerstone of the GATT, some exceptions are allowed. For example, customs unions, free-trade areas, and special treatment for developing countries are permitted.

Another principle is the open and fair application of any trade barriers. Tariffs were the most common and visible form of trade barrier at the time the GATT was established. Tariffs are bound, or set at maximum levels, and not to increase above the negotiated level. In general, quantitative restrictions such as quotas were not allowed, since tariffs were much easier to identify and to eventually reduce.

The GATT also included a forum and process for countries to follow in trying to resolve disputes. The dispute process allowed countries to consult with each other and if that was not successful, a country could ask that a panel hear the complaint. Although the panel's decision was not enforceable, the panel report carried some force of opinion and encouraged countries to work toward an agreeable resolution.

One of the GATT's chief purposes was the reduction of barriers to trade. With this goal in mind, GATT contracting parties met periodically to negotiate further reduction of tariffs and other trade barriers and changes to GATT rules. These negotiations were called "rounds." Early rounds dealt only with tariff reductions, but later rounds also included nontariff barriers to trade. The most recent round, the Uruguay Round, lasted from 1986 to 1994 and included the most encompassing set of negotiations in the history of the GATT.

On the agenda was reform of the existing GATT system, as well as expansion of rules to cover new areas such as services trade and the trade aspects of intellectual property rights (copyrights, trademarks, and patents). The agreements that resulted from the Uruguay Round also contained a built-in agenda requiring that further negotiations on agriculture, services, intellectual property rights, and government procurement begin by the year 2000.

One of the most important changes that came about from the Uruguay Round was the establishment of a new trade structure, the World Trade Organization (WTO), which incorporated the many changes reached during the Uruguay Round: the former GATT with its newly negotiated reforms, bodies to oversee the new trade agreements, a stronger dispute resolution procedure, a regular review of members' trade policies, and many other committees and councils. In contrast to the GATT, the WTO was created as a permanent structure, with "members" instead of "contracting parties." The WTO went into effect on January 1, 1995.

sThe WTO Secretariat assists member countries and numbered 625 in 2007. The WTO budget for the year 2007 is 182.0 million Swiss Francs (CHF), or about $151.7 million (1.20 CHF = $1, average for 2007)[2]. Countries contribute according to their share of world trade, based on trade in goods, services and intellectual property rights.[3]

Countries contribute according to their share of world trade, based on trade in goods, services and intellectual property rights.The Ministerial Conference examines current programs and sets the agenda for future work. It must meet at least every two years. The WTO's Director-General is Pascal Lamy of France, whose three-year term began on September 1, 2005.[4]

The first meeting of the Ministerial Conference was held in Singapore on December 9-13, 1996. At that meeting, trade ministers reviewed the work of the WTO, since its establishment and agreed on a work schedule for the next few years. They also approved an action plan for least-developed countries, and many members entered into an agreement to eliminate tariffs on information technology products by the year 2000.

The second meeting of the Ministerial Conference was held in Geneva on May 18 and 20, 1998. Again, it reviewed the work of the WTO and approved a future work program. It called for an examination of issues related to global electronic commerce and started preparations for the next meeting.

The third Ministerial Conference was held in Seattle on November 29-December 3, 1999. That meeting was intended to review an agenda for a new round of trade negotiations, but trade ministers could not reach agreement and suspended their work. The WTO Director-General was directed to consult with delegations and discuss ways in which countries might bridge remaining differences. Known as the "Battle at Seattle," the Ministerial was characterized by street violence and anti-globalization protesters.

The fourth Ministerial Conference was held in Doha, Qatar on November 9-14, 2001. At that meeting, trade ministers agreed to launch a new round of multilateral trade negotiations, called the Doha Development Agenda, and set a deadline for final agreements of January 1, 2005. They established a work program for the new round and agreed to consider numerous developing-country issues.[5]

The fifth Ministerial Conference was held September 10-14, 2003, in Cancun, Mexico. According to the Ministerial Declaration released two years earlier in Doha, Qatar, the fifth Ministerial Conference was intended to "...take stock of progress in the negotiations, provide any necessary political guidance, and take decisions as necessary." Many trade ministers at the Cancun Ministerial attempted to reach a framework to guide the remaining negotiations of the new round, but they could not resolve major differences, and the negotiations stalled.

The sixth Ministerial Conference was held in Hong Kong on December 13-18,2005. Although an original goal of the Ministerial was to agree on a package of modalities for the ongoing Doha Development Agenda (DDA) round of trade negotiations, this aim was dropped and members agreed to some modest advancements in agriculture, industrial tariffs, and duty and quota-free access for least developed countries.

The body that oversees the day-to-day operations of the WTO is the General Council, which consists of a representative from each member country. The Council generally meets monthly and provides a forum for countries to discuss a range of trade matters. The U.S. delegate to the General Council is the Deputy U.S. Trade Representative in Geneva.

The General Council also meets in two other, unique capacities. One is the Trade Policy Review Mechanism (TPRM). The TPRM was established under the Uruguay Round agreements to allow closer monitoring of national trade policies of member countries. The four countries with the largest shares of world trade are reviewed every two years, the next 16 largest traders are reviewed every four years, and other countries are reviewed every six years, although least-developed countries might be reviewed less frequently. The trade reviews provide information on a country's trade policies and comment on whether a country is pursuing market-opening or market-restrictive policies. This public examination is a mild form of pressure for a country to avoid practices that discourage trade.

The General Council also meets in the capacity of the Dispute Settlement Body (DSB). The Uruguay Round agreements greatly strengthened the process for settlement of disputes. The first stage of the process is consultation between the governments involved. If consultation is not successful, the complainant may ask the DSB to establish a dispute panel.

The dispute panel hears the case and reports back to the DSB. If the complaint is upheld, the respondent must either change its practice or negotiate an agreeable resolution. Otherwise, the complainant may request that the DSB authorize suspension of obligations, thereby giving permission for the complainant to retaliate. For example, a complainant may receive permission to increase tariffs against a respondent country that disregards a decision by the DSB. Permission is automatic unless unanimously disapproved. Procedures are clearly set out with specific timetables at each stage.[6]

More specialized work is done in three major bodies under the General Council. One of these is the Council for Trade in Goods, under which committees work on a number of trade areas. One committee works on trade in agriculture. Another committee oversees the related topic of sanitary and phytosanitary measures, which are measures that pertain respectively to animal and plant health and safety. Some committees monitor practices that are considered "unfair" if not implemented in accordance with WTO rules (antidumping, subsidies and countervailing measures).

Other committees examine practices that are not necessarily "unfair" but could be trade-distorting nonetheless (rules of origin, safeguards, technical barriers, customs valuation, and import licensing). One committee works on the relatively new area of trade-related investment measures, and another addresses market access issues (tariffs and nontariff measures). Also under the Council for Trade in Goods is the Information Technology Agreement Committee.

A second major body under the General Council is the Council for Trade in Services, which oversees the Uruguay Round agreement on trade in services. The Uruguay Round services agreement has three parts. The first part lists basic principles that countries agree to observe, including national treatment, most-favored-nation treatment, and transparency (open information about relevant laws and regulations).

The Second Part Contains Four Annexes With Rules On:

  1. the movement of persons who provide services,
  2. financial services,
  3. telecommunications, and
  4. air transport services.
The third part is a schedule of country commitments. These commitments are bound and cannot be reduced in scope, much like the tariff levels on goods, which cannot be increased once they are bound. The service commitments may include exceptions to the national treatment and most-favored-nation principles, if countries included these exceptions when they originally negotiated the commitments.

The Council for Trade-Related Aspects of Intellectual Property Rights (TRIPS) is the third major body under the General Council. The TRIPS Council monitors the agreement on intellectual property rights reached during the Uruguay Round and supervises members' compliance. The TRIPS agreement has three parts. The first part outlines basic principles that countries must observe, including national treatment and most-favored-nation treatment.

The second part establishes standards for the different types of intellectual property rights such as patents, trademarks, copyrights, industrial designs, and geographical indications (e.g., "champagne" indicates a wine from a specific region), and ensures minimum lengths of time for protections. The third part of the agreement establishes enforcement processes.

In addition to the bodies discussed above, there are many other committees and working groups under the General Council. For example, there are working groups on trade, debt, and finance and on trade and transfer of technology. There are committees on plurilateral agreements, which are not signed by all WTO members, on civil aircraft and on government procurement.

The Committee on Trade and Development often works with other international institutions on special concerns of countries in development. Working parties on accession meet with applicant countries to identify changes that are necessary to bring the applicant's trade regime into line with WTO rules and principles. The Uruguay Round also established a committee on trade and environment.

GATT Rounds of Negotiations

The GATT was the only multilateral instrument governing international trade from 1946 until the WTO was established on 1 January 1995[7]. Despite attempts in the mid-1950s and 1960s to create some form of institutional mechanism for international trade, the GATT continued to operate for almost half a century as a semi-institutionalized multilateral treaty regime on a provisional basis[8].

From Geneva to Tokyo

Seven rounds of negotiations occurred under GATT. The first real GATT trade rounds concentrated on further reducing tariffs. Then, the Kennedy Round in the mid-sixties brought about a GATT anti-dumping Agreement and a section on development. The Tokyo Round during the seventies was the first major attempt to tackle trade barriers that do not take the form of tariffs, and to improve the system, adopting a series of agreements on non-tariff barriers, which in some cases interpreted existing GATT rules, and in others broke entirely new ground.

Because these plurilateral agreements were not accepted by the full GATT membership, they were often informally called codes. Several of these codes were amended in the Uruguay Round and turned into multilateral commitments accepted by all the WTO members. Only four remained plurilateral (those on government procurement, bovine meat, civil aircraft, and dairy products), but in 1997 WTO members agreed to terminate the bovine meat and dairy agreements, leaving only two[9].

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Uruguay Round

Well before GATT's 40th anniversary, its members concluded that the GATT system was straining to adapt to a new globalizing world economy[10],[11]. In response to the problems identified in the 1982 Ministerial Declaration (structural deficiencies, spill-over impacts of certain countries' policies on world trade GATT could not manage, etc.), the eighth GATT round - known as the Uruguay Round - was launched in September 1986, in Punta del Este, Uruguay[12].

It was the biggest negotiating mandate on trade ever agreed: the talks were going to extend the trading system into several new areas, notably trade in services and intellectual property, and reforming trade in the sensitive sectors of agriculture and textiles; all the original GATT articles were up for review[13]. The Final Act concluding the Uruguay Round and officially establishing the WTO regime was signed 15 April 1994, during the ministerial meeting at Marrakesh, Morocco, and hence is known as the Marrakesh Agreement[14].

The GATT still exists as the WTO's umbrella treaty for trade in goods, updated as a result of the Uruguay Round negotiations (a distinction is made between GATT 1994, the updated parts of GATT, and GATT 1947, the original agreement which is still the heart of GATT 1994)[15]. GATT 1994 is not, however, the only legally binding agreement included via the Final Act at Marrakesh; a long list of about 60 agreements, annexes, decisions, and understandings was adopted.

The Agreements Fall Into A Structure With Six Main Parts:

  • The Agreement Establishing the WTO
  • Goods and investment - the Multilateral Agreements on Trade in Goods including the GATT 1994 and the Trade Related Investment Measures (TRIMS)
  • Services - the General Agreement on Trade in Services (GATS)
  • Intellectual property - the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS)
  • Dispute settlement (DSU) [16]
  • Reviews of governments' trade policies (TPRM)[17]

In terms of the WTO's principle relating to tariff "ceiling-binding" (No. 3), the Uruguay Round has been successful in increasing binding commitments by both developed and developing countries, as may be seen in the percentages of tariffs bound before and after the 1986-1994 talks[18].

Ministerial Conferences

The highest decision-making body of the WTO is the Ministerial Conference, which usually meets every two years. It brings together all members of the WTO, all of which are countries or customs unions. The Ministerial Conference can take decisions on all matters under any of the multilateral trade agreements.
  • The inaugural ministerial conference (1996) was held in Singapore. Disagreements between largely developed and developing economies emerged during this conference over four issues initiated by this conference, which led to them being collectively referred to as the Singapore issues
  • The second ministerial conference (1998) was held in Geneva in Switzerland.
  • The third conference (1999) in Seattle, Washington ended in failure, with massive demonstrations and police and National Guard crowd-control efforts drawing worldwide attention.
  • The fourth ministerial conference (2001) was held in Doha in the Persian Gulf nation of Qatar. The Doha Development Round was launched at the conference. The conference also approved the joining of China, which became the 143rdmember to join.
  • The fifth ministerial conference (2003) was held in Canc´┐Żn, Mexico, aiming at forging agreement on the Doha round. An alliance of 22 southern states, the G20 developing nations (led by India, China[19], Brazil, ASEAN led by the Philippines), resisted demands from the North for agreements on the so-called "Singapore issues" and called for an end to agricultural subsidies within the EU and the US. The talks broke down without progress.
  • The sixth WTO ministerial conference (2005) was held in 13-18 December 2005 in Hong Kong. It was considered vital if the four-year-old Doha Development Round negotiations were to move forward sufficiently to conclude the round in 2006. In this meeting, countries agreed to phase out all their agricultural export subsidies by the end of 2013, and terminate any cotton export subsidies by the end of 2006.

    Further concessions to developing countries included an agreement to introduce duty-free, tariff-free access for goods from the Least Developed Countries, following the Everything but Arms initiative of the European Union-but with up to 3% of tariff lines exempted. Other major issues were left for further negotiation to be completed by the end of 2010.

The WTO General Council, on 26 May 2009, agreed to hold a seventh WTO ministerial conference session in Geneva from 30 November-3 December 2009. A statement by chairman Amb. Mario Matus acknowledged that the prime purpose was to remedy a breach of protocol requiring two-yearly regular meetings, which had lapsed with the Doha Round failure in 2005, and that the "scaled-down" meeting would not be a negotiating session, but "emphasis will be on transparency and open discussion rather than on small group processes and informal negotiating structures". The general theme for discussion was "The WTO, the Multilateral Trading System and the Current Global Economic Environment"[20]

Doha Round (Doha Agenda)

The WTO launched the current round of negotiations, the Doha Development Round, at the fourth ministerial conference in Doha, Qatar in November 2001. This was an ambitious effort to make globalization more inclusive and help the world's poor, particularly by slashing barriers and subsidies in farming[21]. The initial agenda comprised both further trade liberalization and new rule-making, underpinned by commitments to strengthen substantial assistance to developing countries[22].

The negotiations have been highly contentious. Disagreements continue over several key areas including agriculture subsidies, which emerged as critical in July 2006[23]. According to a European Union statement, "The 2008 Ministerial meeting broke down over a disagreement between exporters of agricultural bulk commodities and countries with large numbers of subsistence farmers on the precise terms of a 'special safeguard measure' to protect farmers from surges in imports.[24]"

The position of the European Commission is that "The successful conclusion of the Doha negotiations would confirm the central role of multilateral liberalisation and rule-making. It would confirm the WTO as a powerful shield against protectionist backsliding.[25]"

An impasse remains and, as of August 2013, agreement has not been reached, despite intense negotiations at several ministerial conferences and at other sessions. On 27 March 2013, the chairman of agriculture talks announced "a proposal to loosen price support disciplines for developing countries' public stocks and domestic food aid." He added: "...we are not yet close to agreement-in fact, the substantive discussion of the proposal is only beginning.[26]"

Objectives of WTO

  1. To improve the standard of living of people in the member countries.
  2. To ensure full employment and broad increase in effective demand.
  3. To enlarge production and trade of goods.
  4. To increase the trade of services.
  5. To ensure optimum utilization of world resources.
  6. To protect the environment.
  7. To accept the concept of sustainable development.

Functions and Structure of WTO

The WTO's overriding objective is to help trade flow smoothly, freely and predictably. It does this by:
  • Administering Trade Agreements
  • Acting As A Forum For Trade Negotiations
  • Settling Trade Disputes
  • Reviewing National Trade Policies
  • Building The Trade Capacity Of Developing Economies
  • Cooperating With Other International Organizations

The WTO's top level decision- making body is the Ministerial Conference, which meets usually every two years.The General Council (normally ambassadors and heads of delegation based in Geneva but sometimes officials sent from members' capitals) which meets several times a year in the Geneva headquarters. The General Council also meets as the Trade Policy Review Body and the Dispute Settlement Body.

At the next level, the Goods Council, Services Council and Intellectual Property (TRIPS) Council report to the General Council.

Numerous specialized committees, working groups and working parties deal with the individual agreements and other areas, such as the environment, development, membership applications and regional trade agreements.

WTO Agreements

The WTO's rules - the agreements - are the result of negotiations between the members. The current set is largely the outcome of the 1986- 94 Uruguay Round negotiations, which included a major revision of the original General Agreement on Tariffs and Trade (GATT).

The Uruguay Round created new rules for dealing with trade in services and intellectual property and new procedures for dispute settlement. The complete set runs to some 30,000 pages consisting of about 30 agreements and separate commitments (called schedules) made by individual members in specific areas, such as lower tariffs and services market-opening.

Through these agreements, WTO members operate a non- discriminatory trading system that spells out their rights and their obligations. Each member receives guarantees that its exports will be treated fairly and consistently in other members' markets. Each promises to do the same for imports into its own market. The system also gives developing economies some flexibility in implementing their commitments.

It all began with trade in goods. From 1947 to 1994, the GATT was the forum for negotiating lower tariffs and other trade barriers; the text of the GATT spelt out important rules, particularly non- discrimination. Since 1995, the Marrakesh Agreement Establishing the WTO and its annexes (including the updated GATT) has become the WTO's umbrella agreement.

It has annexes dealing with specific sectors relating to goods, such as agriculture, and with specific issues such as product standards, subsidies and actions taken against dumping. A recent significant addition was the Trade Facilitation Agreement, which entered into force in 2017.

Banks, insurance firms, telecommunications companies, tour operators, hotel chains and transport companies looking to do business abroad enjoy the same principles of more open trade that originally only applied to trade in goods. These principles appear in the General Agreement on Trade in Services (GATS). WTO members have also made individual commitments under the GATS stating which of their service sectors they are willing to open to foreign competition, and how open those markets are.

Intellectual Property
The WTO's Intellectual Property Agreement contains rules for trade in ideas and creativity. The rules state how copyrights, patents, trademarks, geographical names used to identify products, industrial designs and undisclosed information such as trade secrets - intellectual property - should be protected when trade is involved.

Dispute Settlement
The WTO's procedure for resolving trade conflicts under the Dispute Settlement Understanding is vital for enforcing the rules and therefore for ensuring that trade flows smoothly. Governments bring disputes to the WTO if they think their rights under the WTO agreements are being infringed. Judgements by specially appointed independent experts are based on interpretations of the agreements and individual members' commitments.

The system encourages members to settle their differences through consultation with each other. If this proves to be unsuccessful, they can follow a stage- by-stage procedure that includes the possibility of a ruling by a panel of experts and the chance to appeal the ruling on legal grounds. Confidence in the system is borne out by the number of cases brought to the WTO - more than 500 cases since the WTO was established compared with the 300 disputes dealt with during the entire life of the GATT (1947-94).

Trade Monitoring
The WTO's Trade Policy Review Mechanism is designed to improve transparency, to create a greater understanding of the trade policies adopted by WTO members and to assess their impact. Many members see the reviews as constructive feedback on their policies. All WTO members must undergo periodic scrutiny, each review containing reports by the member concerned and the WTO Secretariat.

In addition, the WTO undertakes regular monitoring of global trade measures. Initially launched in the wake of the financial crisis of 2008, this global trade monitoring exercise has become a regular function of the WTO, with the aim of highlighting WTO members' implementation of both trade- facilitating and trade-restricting measures.

World Trade Organization and Intellectual Property Rights
The WTO's Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), negotiated during the 1986-94 Uruguay Round, introduced intellectual property rules into the multilateral trading system for the first time[27].

The idea of trade, and what makes trade valuable for societies, has evolved beyond simply shipping goods across borders. Innovation, creativity and branding represent a large amount of the value that changes hands in international trade today. How to enhance this value and how to facilitate the flow of knowledge-rich goods and services across borders have become integral considerations in development and trade policy.

The TRIPS Agreement plays a critical role in facilitating trade in knowledge and creativity, in resolving trade disputes over intellectual property, and in assuring WTO members the latitude to achieve their domestic objectives. The Agreement is legal recognition of the significance of links between intellectual property and trade.

"Intellectual property" refers to creations of the mind. These creations can take many different forms, such as artistic expressions, signs, symbols and names used in commerce, designs and inventions. Governments grant creators the right to prevent others from using their inventions, designs or other creations - and to use that right to negotiate payment in return for others using them. These are intellectual property rights. They take a number of forms.

For example, books, paintings and films come under copyright; eligible inventions can be patented; brand names and product logos can be registered as trademarks; and so on. Governments grant creators these rights as an incentive to produce and spread ideas that will benefit society as a whole.

The extent of protection and enforcement of these rights varied widely around the world; and as intellectual property became more important in trade, these differences became a source of tension in international economic relations. New internationally-agreed trade rules for intellectual property rights were seen as a way to introduce more order and predictability, and to settle disputes more systematically.

The Uruguay Round achieved that. The WTO's TRIPS Agreement is an attempt to narrow the gaps in the way these rights are protected and enforced around the world, and to bring them under common international rules. It establishes minimum standards of protection and enforcement that each government has to give to the intellectual property held by nationals of fellow WTO members.

Under the TRIPS Agreement, WTO members have considerable scope to tailor their approaches to IP protection and enforcement in order to suit their needs and achieve public policy goals. The Agreement provides ample room for members to strike a balance between the long-term benefits of incentivizing innovation and the possible short term costs of limiting access to creations of the mind.

Members can reduce short term costs through various mechanisms allowed under TRIPS provisions, such as exclusions or exceptions to intellectual property rights. And, when there are trade disputes over the application of the TRIPS Agreement, the WTO's dispute settlement system is available.

The TRIPS Agreement covers five broad areas:
  • What general provisions and basic principles of the multilateral trading system apply to international intellectual property
  • What The Minimum Standards Of Protection Are For Intellectual Property Rights That Members Should Provide
  • Which Procedures Members Should Provide For The Enforcement Of Those Rights In Their Own Territories
  • How To Settle Disputes On Intellectual Property Between Members Of The WTO
  • Special Transitional Arrangements For The Implementation Of TRIPS Provisions.

Basic Principles: National Treatment, MFN, And Balanced Protection
As in the General Agreement on Tariffs and Trade (GATT) and the General Agreement on Trade in Services (GATS), the starting point of the TRIPS Agreement is basic principles. And as in the two other agreements, non-discrimination features prominently: national treatment (treating foreign nationals no less favourably than one's own nationals), and most-favoured-nation (MFN) treatment (not discriminating among nationals of trading partners). National treatment is also a key principle in other intellectual property agreements outside the WTO.

The TRIPS Agreement has an additional important general objective: intellectual property protection should contribute to technical innovation and the transfer of technology. Both producers and users should benefit, and economic and social welfare should be enhanced, the TRIPS Agreement says.

Protection of Intellectual Property
The second part of the TRIPS Agreement looks at different kinds of intellectual property rights and how to protect them. The purpose is to ensure that minimum standards of protection exist in all WTO members. Here the starting point is the obligations of the main international agreements of the World Intellectual Property Organization (WIPO) that already existed before the WTO was created:
  • The Paris Convention for the Protection of Industrial Property (patents, industrial designs, etc).
  • The Berne Convention for the Protection of Literary and Artistic Works (copyright).
Some areas are not covered by these agreements. In some cases, the standards of protection prescribed were thought inadequate. So the TRIPS Agreement adds significantly to existing international standards.

Intellectual Property Rights
Intellectual property (IP) refers to creations of the mind, such as inventions; literary and artistic works; designs; and symbols, names and images used in commerce.[28]
Intellectual property rights refer to the general term for the assignment of property rights through patents, copyrights and trademarks. These property rights allow the holder to exercise a monopoly on the use of the item for a specified period.By restricting imitation and duplication, monopoly power is conferred, but the social costs of monopoly power may be offset by the social benefits of higher levels of creative activity encouraged by the monopoly earnings.[29]

IP is protected in law by, for example, patents, copyright and trademarks, which enable people to earn recognition or financial benefit from what they invent or create. By striking the right balance between the interests of innovators and the wider public interest, the IP system aims to foster an environment in which creativity and innovation can flourish.

Copyright usually refers to the rights of authors in their literary and artistic works. In a wider sense, copyright also includes 'related rights': the rights of performers, producers of phonograms and broadcasting organizations.

During the Uruguay Round negotiations, members considered that the standards for copyright protection in the Berne Convention for the Protection of Literary and Artistic Works were largely satisfactory.

The TRIPS Agreement provisions on copyright and related rights clarify or add obligations on a number of points:
  • The TRIPS Agreement ensures that computer programs will be protected as literary works under the Berne Convention and outlines how databases must be protected under copyright;
  • 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; and
  • It 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.

A trademark is a sign or a combination of signs used to distinguish the goods or services of one enterprise from another.

The TRIPS Agreement defines what types of signs must be eligible for protection as trademarks, and what the minimum rights conferred on their owners must be. It says that service marks must be protected in the same way as trademarks used for goods. Marks that have become well-known in a particular country enjoy additional protection.

Geographical Indications
A name or indication associated with a place is sometimes used to identify a product. This geographical indication does not only say where the product comes from. More importantly, it identifies the product's special characteristics, which are the result of the product's origins.

Well-known examples include:
  • Champagne
  • Scotch Whiskey
  • Darjeeling and
  • Roquefort cheese.
Using the indication when the product was made elsewhere or when it does not have the usual characteristics can mislead consumers, and can lead to unfair competition. The TRIPS Agreement says members have to provide ways to prevent such misuse of geographical indications.

For wines and spirits, the TRIPS Agreement provides higher levels of protection, i.e. even where there is no danger of the public being misled.

Some exceptions are allowed, for example if the term in question is already protected as a trademark or if it has become a generic term.

The TRIPS Agreement provides for further negotiations in the WTO to establish a multilateral system of notification and registration of geographical indications for wines, which was subsequently extended to include spirits. The question of whether to negotiate extending this higher level of protection beyond wines and spirits is also being discussed in the WTO.

Industrial designs
Industrial design is generally understood to refer to the ornamental or aesthetic aspect of an article rather than its technical features.

Under the TRIPS Agreement, original or new industrial designs must be protected for at least 10 years. Owners of protected designs must be able to prevent the manufacture, sale or importation of articles bearing or embodying a design which is a copy or substantially a copy of the protected design for commercial purposes.

The TRIPS Agreement says patent protection must be available for eligible inventions in all fields of technology that are new, involve an inventive step and can be industrially applied. Eligible inventions includee both products and processes. They must be protected for at least 20 years. However, governments can refuse to issue a patent for an invention if its sale needs to be prohibited for reasons of public order or morality. They can also exclude diagnostic, therapeutic and surgical methods, plants and animals (other than micro-organisms), and biological processes for their production (other than microbiological processes) from patent protection.

Plant varieties, however, must be protectable by patents or by a special system (such as the breeder's rights provided in the conventions of UPOV - the International Union for the Protection of New Varieties of Plants) or by both.

The TRIPS Agreement describes the minimum rights that a patent owner must enjoy, and defines the conditions under which exceptions to these rights are permitted. The Agreement permits governments to issue compulsory licences, which allow a competitor to produce the product or use the process under licence without the owner's consent. But this can only be done under specific conditions set out in the TRIPS Agreement aimed at safeguarding the interests of the patent-holder.

If a patent is issued for a process invention, then the rights must extend to the product directly obtained from the process. Under certain conditions alleged infringers may be ordered by a court to prove that they have not used the patented process.

Layout Designs Of Integrated Circuits
An integrated circuit is an electronic device that incorporates individual electronic components within a single 'integrated' platform configured to perform an electronic function.
The protection of layout designs of integrated circuits (topographies) in the TRIPS Agreement is provided through the incorporation of the Washington Treaty on Intellectual Property in Respect of Integrated Circuits, a treaty that was concluded under the World Intellectual Property Organization in 1989, but has not yet entered into force. The TRIPS Agreement adds a number of provisions: for example, protection must be available for at least 10 years.

In practice, layout designs of integrated circuits are commonly protected under patents.

Undisclosed information
Undisclosed information includes trade secrets and test data. Trade secrets must be protected against unauthorized use, including through breach of contract or confidence or other acts contrary to honest commercial practices. Such protection is conditional upon the information being secret, having commercial value and reasonable steps having been taken by its owner to keep the information secret.

Test data submitted to governments in order to obtain marketing approval for new pharmaceutical or agricultural chemicals must also be protected against unfair commercial use and disclosure. Extended transition periods continue to apply to least developed country members (see section below on transitional arrangements).

Anti-Competitive Practices In Licensing

One way for a right holder to commercially exploit his or her intellectual property rights includes issuing a licence to someone else to use the rights. Recognizing the possibility that right holders might include conditions that are anti-competitive, the TRIPS Agreement says that under certain conditions, governments have the right to take action to prevent anti-competitive licensing practices. It also says governments must be prepared to consult each other on controlling anti-competitive licensing practices.

More generally, the TRIPS Agreement recognizes that right holders could use their rights to restrict competition or impede technology transfer. The Agreement gives governments the right to take action against anti-competitive practices. In certain situations, the TRIPS Agreement also waives some conditions required for the compulsory licence of a patent in cases where the government grants the compulsory licence in order to remedy a practice determined to be anti-competitive.

In order for the protection of intellectual property rights to be meaningful, WTO members must give right holders the tools to ensure that their intellectual property rights are respected. Enforcement procedures to do so are covered in part III of the TRIPS Agreement. The Agreement says governments have to ensure that intellectual property rights can be enforced to prevent or deter violations. The procedures must be fair and equitable, and not unnecessarily complicated or costly. They must not entail unreasonable time-limits or unwarranted delays. People involved must be able to ask a court to review an administrative decision or to appeal a lower court's ruling.

The TRIPS Agreement is the only international agreement that describes intellectual property rights enforcement in detail, including rules for obtaining evidence, provisional measures, injunctions, damages and other penalties. It says courts must have the right, under certain conditions, to order the disposal or destruction of goods infringing intellectual property rights. Wilful trademark counterfeiting or copyright piracy on a commercial scale must be subject to criminal offences. Governments also have to make sure that intellectual property rights owners can receive the assistance of customs authorities to prevent imports of counterfeit and pirated goods.

Transitional Arrangements: One Year, 5 Years Or More

While the WTO agreements entered into force on 1 January 1995, the TRIPS Agreement allowed WTO members certain transition periods before they were obliged to apply all of its provisions. Developed country members were given one year to ensure that their laws and practices conform to the TRIPS Agreement. Developing country members and (under certain conditions) transition economies were given five years, until 2000. Least-developed countries initially had 11 years, until 2006 - now extended to 1 July 2034 in general.

In November 2015, the TRIPS Council agreed to further extend exemptions on pharmaceutical patent and undisclosed information protection for least-developed countries until 1 January 2033 or until such date when they cease to be a least-developed country member, whichever date is earlier. They are also exempted from the otherwise applicable obligations to accept the filing of patent applications and to grant exclusive marketing rights during the transition period.

Technology Transfer

Developing country members in particular see technology transfer as part of the bargain in which they have agreed to protect intellectual property rights. The TRIPS Agreement aims for the transfer of technology (see above) and requires developed country members to provide incentives for their companies to promote the transfer of technology to least-developed countries in order to enable them to create a sound and viable technological base.

Institutional Arrangements

The main forum for work on the TRIPS Agreement is the Council for TRIPS, which was created by the WTO Agreement. The TRIPS Council is responsible for administering the TRIPS Agreement. In particular, it monitors the operation of the Agreement. In its regular sessions, the TRIPS Council mostly serves as a forum for discussion between WTO members on key issues. The TRIPS Council also meets in special sessions. These are for negotiations on a multilateral system for notifying and registering geographical indications for wines and spirits.

Cooperation With Other Intergovernmental Organizations

The preamble to the TRIPS Agreement calls for a mutually supportive relationship between the WTO and WIPO as well as other relevant international organizations. Cooperation between the WTO and WIPO covers notifications of laws, technical assistance and implementing the TRIPS obligations that stem from Article 6ter of the Paris Convention for the Protection of Industrial Property.

The WTO also coordinates with a wide range of other international organizations, in particular as regards the organization of symposia, training activities and other events on intellectual property and trade and how these relate to other policy dimensions, such as public health and climate change.

  1. The total WTO budget includes CHF176.9 million CHF for the WTO Secretariat and CHF 5.1 million for the Appellate Body and its Secretariat. See WTO Annual Report 2007, p. 112.
  2. In FY2007, the U.S. share was 14.9% of total contributions to the WTO budget, which came to CHF 26.8 million ($22.3 million) in 2007. Ibid, p. 118.
  3. The institution of the WTO is examined in a 2004 report by leading experts to Director-General Supachai Panitchpakdi. See, Consultative Board, Peter Sutherland (Chair). The Future of the WTO: Addressing Institutional Challenges in the New Millennium. World Trade Organization, 2004. 86 p. Available at the WTO website
  4. For more information on results of the Doha Ministerial Conference, see CRS Report RL31206, The WTO Doha Ministerial: Results and Agenda for a New Round of Negotiations, coordinated by [author name scrubbed] (pdf).
  5. For information on the WTO dispute process, see CRS Report RS20088, Dispute Settlement in the World Trade Organization: An Overview, by [author name scrubbed].
  6. The GATT Years: from Havana to Marrakesh, WTO official site, Available at
  7. M. E. Analysis of the World Trade Organization, 17
  8. Supra Note 6
  9. P. Gallagher, The First Ten Years of the WTO, 4, Available at
  10. The Uruguay Round, WTO official site, Available at
  11. Supra Note 9
  12. Supra Note 10
  13. Legal texts Marrakesh agreement. WTO. Retrieved 30 May2021, Available at
  14. CALDAS, Ricardo. Brazil in the Uruguay Round of the GATT: The Evolution of Brazil's Position in the Uruguay Round, with Emphasis on the Issue of Services.
  15. Erskine, Daniel (January 2004). ""Resolving Trade Disputes, the Mechanisms of GATT/WTO Dispute Resolution" by Daniel H. Erskine". Santa Clara Journal of International Law. 2 (1): 40.
  16. Overview: a Navigational Guide, WTO official site. For the complete list of "The Uruguay Round Agreements," see WTO legal texts, WTO official site, and Uruguay Round Agreements, Understandings, Decisions, and Declarations,
  17. Principles of the Trading System, WTO official site, Available at
  18. Farah, Paolo Davide (4 August 2006). "Five Years of China WTO Membership. EU and US Perspectives about China's Compliance with Transparency Commitments and the Transitional Review Mechanism". SSRN 916768
  19. WTO to hold 7th Ministerial Conference on 30 November-2 December 2009 WTO official website, Available at
  20. In the twilight of Doha. The Economist. The Economist: 65. 27 July 2006, Available at
  21. European Commission The Doha Round, Available at
  22. Fergusson, Ian F. (18 January 2008). "World Trade Organization Negotiations: The Doha Development Agenda" (PDF). Congressional Research Service. Retrieved 13 April 2021. p.8 9 (folio CRS-6)
  23. WTO trade negotiations: Doha Development Agenda Europa press release, 30May 2021, Available at
  24. Supra Note 20
  25. Members start negotiating proposal on poor countries' food stockholding. WTO official website. 27 March 2013. Retrieved 2 May 2021, Available at
  28. OECD, Definition of Intellectual Property Rights, Gloassary of Statistical Terms, Available at
Written By: Sayed Qudrat Hashimy - Student of LLM (International Law), Department of Studies in Law, University of Mysore
Email: [email protected]

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