Regulation of international trade within the framework of the world trade organization (WTO)

of their obligations under the Agreement, including the MFN requirement or specific commitments. The relevant Article provides for measures necessary to:

· protect public morals or maintain public order;

· protect human, animal or plant life or health; or

· secure compliance with laws or regulations not inconsistent with the measures necessary to prevent deceptive or fraudulent practices or to protect privacy of individuals and safety.

Security exceptions: A Member has the flexibility to take measures which it considers necessary for the protection of its essential security interests and those which it takes in pursuance of its obligations under the UN Charter for the maintenance of international peace and security.

Government procurement: The obligations of MFN treatment, specific market access commitments and specific national treatment commitments will not apply to laws, regulations or requirements governing procurement by government agencies for governmental purposes. This exception does not extend to government procurement for commercial resale or for use in the supply of services for commercial sale.

Moreover, the Annex on Financial Services entitles Members, regardless of other provisions of the GATS, to take measures for prudential reasons, including for the protection of investors, depositors, policy holders or persons to whom a fiduciary duty is owed by a financial service supplier, or to ensure the integrity and stability of the financial system.

Finally, in the event of serious balance-of-payments difficulties Members are allowed to temporarily restrict trade, on a non-discriminatory basis, despite the existence of specific commitments.

Progressive Liberalization

In services, the Uruguay Round was only a first step in a longer-term process of multilateral rule-making and trade liberalization. Observers tend to agree that, while the negotiations succeeded in setting up the principle structure of the Agreement, the liberalizing effects have been relatively modest. Barring exceptions in financial and telecommunication services, most schedules have remained confined to confirming status quo market conditions in a relatively limited number of sectors. This may be explained in part by the novelty of the Agreement and the perceived need of Members to gather experience before considering wider and deeper commitments. Moreover, many administrations needed time to develop the necessary regulation — including quality standards, licensing and qualification requirements — that ensures that external liberalization is compatible with, and conducive to, core policy objectives (quality, equity, etc.) in socially or infrastructurally important services.

More than six years have passed since the Agreement's inception, and the economic importance of services — in terms of production, income, employment and trade — has continued to rise. There thus appears ample scope for new and/or improved commitments in new negotiations.

6. The Annexes: Services Are Not All The Same

International trade in goods is a relatively simple idea to grasp: a product is transported from one country to another. Trade in services is much more diverse. Telephone companies, banks, airlines and accountancy firms provide their services in quite different ways. The GATS annexes reflect some of the diversity.

Movement of natural persons

This annex deals with negotiations on individuals’ rights to stay temporarily in a country for the purpose of providing a service. It specifies that the agreement does not apply to people seeking permanent employment or to conditions for obtaining citizenship, permanent residence or permanent employment.

Financial services

Instability in the banking system affects the whole economy. The financial services annex says governments have the right to take prudential measures, such as those for the protection of investors, depositors and insurance policy holders, and to ensure the integrity and stability of the financial system. It also excludes from the agreement services provided when a government exercising its authority over the financial system, for example central banks’ services. Negotiations on specific commitments in financial services continued after the end of the Uruguay Round, ended in late 1997 and entered into force 1 March 1999.

Telecommunications

The telecommunications sector has a dual role: it is a distinct sector of economic activity; and it is an underlying means of supplying other economic activities (for example electronic money transfers). During the Uruguay Round, many governments made commitments in value-added telecommunication services, however very few offered commitments on basic telecommunications. The annex says governments must ensure that foreign service suppliers are given access to the public telecommunications networks without discrimination. Negotiations on specific commitments in telecommunications resumed after the end of the Uruguay Round. This led to a new liberalization package agreed in February 1997.

Air transport services

Under this annex, traffic rights and directly related activities such as the carriage of passengers or freight are excluded from GATS’s coverage. They are handled by other bilateral agreements. However, the annex establishes that the GATS will apply to aircraft repair and maintenance services, marketing of air transport services and computer-reservation services.

Maritime transport

Maritime transport negotiations were originally scheduled to end in June 1996, but participants failed to agree on a package of commitments. The talks have resumed with the new services round which started in 2000. Some commitments are already included in some countries’ schedules covering the three main areas in this sector: access to and use of port facilities; auxiliary services; and ocean transport.

Questions

1. Does the GATS define "service" as a legal term?

2. When is e-commerce a service, when is it trade in goods?

3. Consider the economic role of services in developed and developing countries as it evolved since the end of World War II. Why has the liberalization of trade in services not surfaced earlier?

4. What kind of services are tradables and non-tradables?

5. Why do you think there have never been tariffs levied on the cross-border provision of services? Consider reasons of historical coincidence, but also aspects of practicability.

6. Consider the nature of regulatory restrictions which impede the cross-border provision of services. Think of typical examples in professions you know where specific licenses, diplomas etc. are required for the lawful exercise of a professional activity

7. Look up those provisions of the GATS which relate to competition and investment. Are such rules more important in the context of services than in connection to goods?

8. Why does the GATS highlight the importance of “domestic regulation” so much?

References

1. John H. Jackson, The World Trading System: Law and Policy of International Economic Relations (2nd ed., Cambridge, MA: MIT Press, 1997). p. 247-277.

2. Jackson/Davey/Sykes, 666-756, 757-814, 815-843.

3. OECD Secretariat. 2004. “Services Trade Liberalisation Opportunities & AMP.”

4. Trading into the Future – WTO, 3rd edition, Revised August 2003

5. www.wto.org see Trade topics; Trade in Services; GATS

Lecture 7. TRIPS

World trade organization

Ideas and knowledge are an increasingly important part of trade. Most of the value of new medicines and other high technology products lies in the amount of invention, innovation, research, design and testing involved. Films, music recordings, books, computer software and on-line services are bought and sold because of the information and creativity they contain, not usually because of the plastic, metal or paper used to make them. Many products that used to be traded as low-technology goods or commodities now contain a higher proportion of invention and design in their value — for example brand-named clothing or new varieties of plants. Creators can be given the right to prevent others from using their inventions, designs or other creations. These rights are known as “intellectual property rights” (IPRs).

1. Intellectual property rights – basic concepts

Definition of IPRs

Intellectual property rights are the rights given to persons over the creations of their minds: inventions, literary and artistic works, symbols, names, images, and designs used in commerce. They usually encourage and reward creative work, and give the creator an exclusive right over the use of his/her creation for a certain period of time.

Types of intellectual property rights

Intellectual property rights play an important role in an increasingly broad range of areas, ranging from the Internet to health care to nearly all aspects of science and technology and literature and the arts. They take a number of forms. For example books, paintings and films come under copyright; inventions can be patented; brand names and product logos can be registered as trademarks. These forms can be classified as follows:

1. Copyright and related rights

2. Trademarks, including service marks

3. Geographical indications, including appellations of origin

4. Industrial designs

5. Patents, including the protection of new varieties of plants

6. Layout-designs (topographies) of integrated circuits

7. Undisclosed information, including trade secrets and test data

Intellectual property rights listed above are customarily divided into two main areas: 1) copyrights and related rights, 2) industrial property rights.

1) Copyright and rights related to copyright.

The rights of authors of literary and artistic works (such as books and other writings, novels, poems and plays, films, musical works, musical compositions, computer programs and films, drawings, paintings, photographs and sculptures, and architectural designs) are protected by copyright, for a minimum period of 50 years after the death of the author.

Also protected through copyright and related (sometimes referred to as “neighbouring”) rights are the rights of performers (e.g. actors, singers and musicians), producers of phonograms (sound recordings) and broadcasting organizations.

2) Industrial property, inventions (patents), trademarks, industrial designs, and geographic indications of source

Industrial property can usefully be divided into two main areas:

One area can be characterized as the protection of distinctive signs, in particular trademarks (which distinguish the goods or services of one undertaking from those of other undertakings) and geographical indications (which identify a good as originating in a place where a given characteristic of the good is essentially attributable to its geographical origin).

Other types of industrial property are protected primarily to stimulate innovation, design and the creation of technology. In this category fall inventions (protected by patents), industrial designs and trade secrets.

Objectives of IPRs

IPRs are intended to give the creators adequate returns so that there are enough incentives for creativity. For example, the social purpose of industrial property rights of the second area is to provide protection for the results of investment in the development of new technology, thus giving the incentive and means to finance research and development (R&D) activities.

IPRs can further ensure fair competition and protect consumers, by enabling them to make informed choices between various goods and services and to differentiate counterfeit commodities. This objective is particularly attributable to the protection of industrial property rights of the first area (distinctive signs). The protection may last indefinitely, provided the sign in question continues to be distinctive.

A functioning intellectual property regime should also facilitate the transfer of technology in the form of foreign direct investment, joint ventures and licensing.

To sum up, the protection and enforcement of intellectual property rights should contribute

- to the promotion of technological innovation,

- to the transfer and dissemination of technology,

- to the mutual advantage of producers and users of technological knowledge in a manner conducive to social and economic welfare, and

- to a balance of rights and obligations.

2. Trade related aspects of IPRs

Background for the Negotiation of the TRIPs Agreement.

So far, we have understood that creations should be accorded protection. However, the general public that benefits from such creations should not be expected to pay unreasonably high prices. The balance between the remuneration to the innovator and artist on the one hand, and the genuine interests of the public on the other, has been a subject of debate for a long time. Various countries tried to have their own balance. The extent of protection and enforcement of intellectual property 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. Although the World Intellectual Property Organization (WIPO) has laid down some rules for the protection of intellectual property, many developed countries feel that the protection of IPRs needs much more strengthening than what is possible through the WIPO agreements. In the wake of rapid technological development, reaping the full benefits of their technological innovations is important for them. In the emerging world economic and trade scene, their prospects lie mainly in knowledge-intensive, high technology sectors of industrial production and services. It is vital for them to provide strengthened and assured protection to their innovations, particularly in the sectors of pharmaceuticals and electronics where copy is much easier. New internationally-agreed trade rules for intellectual property rights were seen as a way to introduce more order and predictability, and for disputes to be settled more systematically.

The 1986-94 Uruguay Round achieved this goal in spite of the initial objection from a large number of countries participating in the negotiations to the inclusion of IPRs in GATT negotiations on the grounds that the subject was covered by another organization, i.e., the World Intellectual Property Organization, and that the GATT had jurisdiction only in the field of trade (As a compromise, the subject of the negotiations was termed trade-related intellectual property rights, and it was thought that it would cover only the matters related to trade. But finally, it was agreed that all issue relating to IPRs, including the standards of protection, would be negotiated, and the link with trade has almost vanished.). The TRIPS Agreement (Agreement on Trade-Related Aspects of Intellectual Property Rights), which came into effect on 1 January 1995, is to date the most comprehensive multilateral agreement on intellectual property.

Issues Covered by the TRIPs Agreement.

The agreement covers five broad issues:

- how basic principles of the trading system and other international intellectual property agreements should be applied

- how to give adequate protection to intellectual property rights

- how countries should enforce those rights adequately in their own territories

- how to settle disputes on intellectual property between members of the WTO

- special transitional arrangements during the period when the new system is being introduced.

Objectives of the TRIPs Agreement.

The TRIPS is an attempt (i) to narrow the gaps in the way these rights are protected around the world, (ii) to bring them under common international rules, and (iii) When there are trade disputes over intellectual property rights, the WTO’s dispute settlement system is available.

The general goals of the TRIPS Agreement are contained in the Preamble of the Agreement, which reproduces the basic Uruguay Round negotiating objectives established in the TRIPS area by the 1986 Punta del Este Declaration and the 1988/89 Mid-Term Review. These objectives include:

- the reduction of distortions and impediments to international trade,

- promotion of effective and adequate protection of intellectual property rights, and

- ensuring that measures and procedures to enforce intellectual property rights do not themselves become barriers to legitimate trade.

Main Features of the TRIPs Agreement.

The three main features of the Agreement are:

1) Standards. In respect of each of

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