TRIPS and WTO – its impact on Indian economy

Submitted by:
Jai Kapoor
Ravi jatav
Varshank Upadhyay
Swapnil Pal
Shweta
 World Trade Organization
⚫ It is an intergovernmental organization - concerned with the regulation of international trade
between nations.

⚫ The WTO is the successor to the  General Agreement on Tariffs and Trade (GATT), the
expectation that GATT would soon be replaced by a specialized agency of the United
Nations (UN) to be called the International Trade Organization (ITO). Although the ITO never
materialized, the GATT proved remarkably successful in liberalizing world trade over the next five
decades.
⚫ The Uruguay round of GATT (1986-93) gave birth to World Trade Organization. The members
of GATT singed on an agreement of Uruguay round in April 1994 in Morocco for establishing a
new organization named WTO.

⚫ The completion of the Uruguay Round (1986–94) of multilateral trade negotiations, the WTO
began operations on January 1, 1995.

⚫ (As per WTO website) The World Trade Organization (WTO) deals with the global rules of
trade between nations. Its main function is to ensure that trade flows as smoothly, predictably and
freely as possible.
Structure:
⚫ The WTO has nearly 153 members accounting for over 97% of world trade. Around 30 others
are negotiating membership. Decisions are made by the entire membership.

⚫ The WTO’s top level decision-making body is the Ministerial Conferences which meets at least
once in every two years.

⚫ Below this is the General Council which meets several times a year in the Geneva headquarters.
It is also known as the Trade Policy Review Body and the Disputes Settlement Body.
 Objectives:
WTO has six key objectives:

1. to set and enforce rules for international trade,

2. to provide a forum for negotiating and monitoring further trade liberalization,

3. to resolve trade disputes,

4. to increase the transparency of decision-making processes,

5. to cooperate with other major international economic institutions involved in global economic
management,

6. to help developing countries benefit fully from the global trading system.
 Some other objectives:
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.
⚫ The WTO secretariat, based in Geneva, has around 600 staff and is headed by a
Director-General. Its annual budget is roughly 160 million Swiss Francs.

⚫ 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 various other areas.
Principles of WTO
⚫ Trade Without Discrimination
a. Most-favored-nation (MFN): treating other people equally
It means that countries cannot discriminate between their trading partners.
b. National treatment: Treating foreigners and locals equally
All the imported and locally-produced goods should be treated equally.

⚫ Freer trade: gradually, through negotiation

Lowering trade barriers is one of the most obvious means of encouraging trade. The
barriers concerned include customs duties (or tariffs) and measures such as import bans or
quotas that restrict quantities selectively.
 Principles of WTO Continued..

⚫ Predictability: through binding and transparency

⚫ Promoting fair competition

WTO envisages a system of rules dedicated to open, fair and undistorted competition.

⚫ Encouraging development and economic reform.

WTO contributes to development of the nations by providing special assistance and

trade concessions for developing countries.
Functions of WTO
⚫ Administering WTO trade agreements

⚫ Forum for trade negotiations

⚫ Handling trade disputes

⚫ Monitoring national trade policies

⚫ Technical assistance and training for developing countries

⚫ Co-operation with other international organizations

Roles of WTO
⚫ The main goal of WTO is to help the trading industry to become smooth, fair, free and
predictable.

⚫ To become the administrator of multilateral trade and business agreements between its
member nations.

⚫ It supports all occurring negotiations for latest agreements for trade.

⚫ WTO also resolve trade disputes between member nations.

⚫ WTO investigates and check if there are violations based on the multi-lateral
agreements.
 TRIPS
TRADE RELATED ASPECTS OF INTELLECTUAL PROPERTY
RIGHTS
Intellectual Property Rights are the rights given to persons/agencies for their creativity/innovations.
These rights usually give the creator, an exclusive right over the use of his/her creation for a certain
period of time. The importance of intellectual property in India is well established at all levels-
statutory, administrative and judicial.

This Agreement contains an Agreement on Trade Related Aspects of Intellectual Property

Rights (TRIPS) which came into force from 1st January 1995. It lays down minimum
standards for protection and enforcement of intellectual property rights in member countries
which are required to promote effective and adequate protection of intellectual property rights
with a view to reducing distortions and impediments to international trade.
The Agreement provides for norms and standards in
respect of following areas of intellectual property:

• Patents
• Trade Marks
• Copyrights
• Geographical Indications
• Industrial Designs

The TRIPS Agreement provides for a minimum term of protection of 20

years counted from the date of filing.
 Key Provisions of TRIPS

⚫ Patent protection :- Patent protection The TRIPS Agreement requires WTO

Members to provide protection for a minimum term of 20 years from the filing
date of a patent application for any invention including for a pharmaceutical
product or process.

⚫ Protection of data submitted for the registration of pharmaceuticals :- As a

condition for permitting the sale or marketing of a pharmaceutical product, drug
regulatory authorities require pharmaceutical companies to submit data
demonstrating the safety, quality and efficacy of the product. The TRIPS
Agreement requires that WTO Members protect undisclosed test data, submitted
to drug regulatory authorities for the purposes of obtaining marketing approval,
against unfair commercial use
⚫ Transition periods :- The TRIPS Agreement provides for transition periods, permitting
developing countries additional time to bring national legislation and practices into conformity
with TRIPS provisions. There are three main transition periods. First was the 1995–2000
transition period, at the end of which countries were required to implement the TRIPS
Agreement. The 2000–2005 transition period allowed certain countries to delay providing
product patent protection in the areas of technology that had not been so protected at the time
of the TRIPS Agreement coming into operation in that country.

What TRIPs instructs to member countries?

As per the TRIPs provisions, the member countries are required to prepare the necessary legal
framework spelling out the scope and standards of protection for rights in regard to intellectual
property. Or in other words, the member countries have to adopt TRIPs provisions in their
domestic intellectual property legislations like Patent Act, Copyright Act etc.
Features of the TRIPS Agreement
• Standards: The main elements of protection is defined, namely the subject-matter to be
protected, the rights to be conferred and permissible exceptions to those rights, and the
minimum duration of protection.

• Enforcement: The second main set of provisions deals with domestic procedures and
remedies for the enforcement of intellectual property rights. It contains provisions on civil and
administrative procedures and remedies, provisional measures, special requirements related to
border measures and criminal procedures, which specify, in a certain amount of detail, the
procedures and remedies.

• Dispute Settlement: The Agreement makes disputes between WTO Members about the
respect of the TRIPS obligations subject to the WTO's dispute settlement procedures.
 FORMS OF INTELLECTUAL PROPERTY

The TRIPs Agreement covers

⚫ Copyright and related rights (i.e. The rights of performers, producers of sound recordings
and broadcasting organizations)
⚫ Trademarks including service marks
⚫ Geographical indications including appellations of origin
⚫ Industrial designs
⚫ Patents including the protection of new varieties of plants
⚫ The layout-designs of integrated circuits
⚫ Undisclosed information including trade secrets and test data.
Objectives of TRIPS

⚫ To encourage and reward creative work

⚫ To protect the investments in the development of technology
⚫ To stimulate and ensure fair competition
⚫ To protect consumer choices
⚫ To facilitate transfer of technology in the form of FDI, joint ventures and
licensing
⚫ To achieve the balance of rights and obligations
Impact of TRIPS on Indian economy
⚫ A number of multinational companies have started their research and
development process in India which has indirectly increased the economic
growth of the country with the increase in payment of taxes and providing
employment to the people of India.

⚫ The total revenue generated by intellectual property offices of India was Rs.
608.31 crore in the year 2016-17 while total expenditure was only Rs. 129.8
crore. Total revenue generated by patent office was Rs. 410.03 crore and
the remaining were generated by other intellectual property like
Trademark, Geographical Indication, Design and Copyright.
⚫ Structural changes has conjointly occurred in India's trade moving towards the
increasing share of producing product throughout the post world organization
era.

⚫ Underlying the WTO’s trading system is the fact that more open trade can
boost economic growth and help countries develop. In that sense, commerce
and development are good for each other. In addition, the WTO agreements
are full of provisions that take into account the interests of developing
countries.
⚫ The World Trade Organization Arrangements of 1995 was additionally
geared toward to change the planet trade and rectify the prevailing trade
barriers among the nations.

⚫ The GDP rate of growth below world organization is additionally not

unsatisfactory. From this it seems that the Indian economy has been
benefited a lot of from world organization.
 Trade Related Investment Measures

⚫ These measures assure free entry (competition) for foreign yet as Indian firms
on a similar terms and conditions. It suggests that Indian firms can ought to vie
with the MNCs on the idea of survival of fittest.
⚫ Foreign investment results in interchange earnings and higher technology within
the country.
⚫ On the other hand, it's clear that a lot of little scale firms can disappear in future
and large firms will select the strategy to survive with MNCs within the modified
international competitive atmosphere.
 Dispute Settlement System

⚫ The WTO’s procedure for resolving trade quarrels under the Dispute
Settlement Understanding is vital for enforcing the rules and therefore for
ensuring that trade flows smoothly. Countries bring disputes to the WTO if
they think their rights under the agreements are being infringed. Judgements by
specially- appointed independent experts are based on interpretations of the
agreements and individual countries’ commitments.
⚫ Under the DSU, a WTO Member may request consultations with another
Member regarding "measures affecting the operation of any covered agreement
taken within the territory" of the latter. If a WTO Member requests
consultations with another Member under a WTO agreement, the latter
Member must enter into consultations with the former within 30 days.
⚫ If the dispute is not resolved within 60 days, the complaining Member may
request a panel. A panel may be requested before this period ends if the
defending Member has failed to enter into consultations or if the disputants
agree that consultations have been unsuccessful.
 Trade Policy Review Mechanism
⚫ The Trade Policy Review Mechanism’s purpose is to improve transparency, to create a greater understanding of the policies that
countries are adopting, and to assess their impact. Many members also see the reviews as constructive feedback on their
policies. All WTO members must undergo periodic scrutiny, each review containing reports by the country concerned and the
WTO Secretariat.

⚫ The review process includes:

◦ A detailed report on the Member under review's trade policies and practices prepared by the WTO
Secretariat.

◦ A report by the government of the Member under review.

◦ A written question and answer process, whereby the Member under review must respond to detailed
questions from other Members regarding its trade policies and practices.

◦ A formal meeting in Geneva of the WTO Trade Policy Review Body (TPRB).
Impact on Agriculture
⚫ A shield is provided to the public research system by protecting the variety
developed by the Indian breeders. This in turn encourages agricultural
research in India. In India, given its agro-climatic regions, these protections
encourage better and mission-oriented research for development of new
plant varieties.
⚫ The Act provides for constitution of National Gene Fund in which inter alia,
the benefit sharing received from the breeder of a variety, by way of royalty,
will be credited. This in turn would facilitate for meeting any amount to be
paid by way of benefit sharing and other expenses.
Geographical indication
⚫ Geographical Indication corresponds to the needs of indigenous and local
communities, and also to the farmers. They are:
◦ Based on the entire traditions of the communities and community’s
decision making process
◦ Accelerating the evolution of these communities and also reward
the traditional approach
◦ Knit a close web of chains is intricately woven between human
efforts, culture, land resources and environment
◦ Not transferrable from one owner to another

⚫ They therefore are valuable property to the producers, i.e. additional protection
increases the value of GI as marketing tool.
Compulsory licensing
⚫ Compulsory licensing is when a government allows someone else to
produce the patented product or process without the consent of the patent
owner. It is one of the flexibilities on patent protection included in TRIPS.
⚫ Innovator companies will continue to feel insecure investing in a country
where their extensively researched products, incurring high R&D costs,
could be subject to compulsory licenses.
⚫ The limitation can weaken economic incentives to invent, and consequently
will significantly curtail future pharmaceutical research. A reduction in
research expenditure can lead to a reduction in new pharmaceutical
entities.
Anti-Dumping Duty (ADD)
⚫ The trading countries are allowed to impose an Anti-Dumping Duty
(ADD) against imported products if the charge of Dumping is claimed
against them. The requirement is to prove that the product is being sold at
a price, which results in material injury to the domestic industries.
⚫ There are several cases in which the duty is imposed but it still remains to
be proven by the Dispute settlement tribunal, in case the other trading
party opposes the duty imposed as "unfair". 
⚫ However, the proposal always should come from the representatives of the
industries affected; this may result in a problem, as small industries voice
may remain unheard in the process.
 Negative Impacts of WTO

⚫ The WTO is dominated by leading industrialized countries and by the

corporation of these countries. The developing countries have a less say In this
organization.
⚫ The developing countries have fewer human and technical resources and
therefore often enter negotiations less prepared than their developed
counterparts.
⚫ Through the various agreements signed under the WTO ,the developing nations
have actually foreclosed a wide range of development options.
⚫ The domestic economy supporters often face neglect because of global
competitive better goods.
⚫ The developing countries have discovered that finding resources in the dispute
settlement system is costly and requires a legal expertise which they may not
have.
References
⚫ http://www.ipindia.nic.in/history-of-indian-patent-system.htm
⚫  S.P. Shukla, “From GATT to WTO and beyond”, (UNU/World Institute for Development
Economics Research, Paper no. 195), available at
https://www.wider.unu.edu/sites/default/files/wp195.pdf.
⚫ http://nopr.niscair.res.in/bitstream/123456789/43423/1/ALIS%2064%284%29%20260-267.pdf
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