FACT FILE

Location: Geneva, Switzerland

Established: 1 January 1995
Created by: Uruguay Round negotiations (1986-94)
Membership: 164 members representing 98 per cent of world trade
Budget: 197 million Swiss francs for 2020
Secretariat staff: 623
Head: Ngozi Okonjo-Iweala (Director-General)
Functions:
 Administering WTO trade agreements
 Forum for trade negotiations
 Handling trade disputes
 Monitoring national trade policies
 Technical assistance and training for developing countries
 Cooperation with other international organizations
What is the WTO?
The World Trade Organization (WTO) is the only global international organization dealing with
the rules of trade between nations. At its heart are the WTO agreements, negotiated and signed
by the bulk of the world’s trading nations and ratified in their parliaments. The goal is to help
producers of goods and services, exporters, and importers conduct their business. It is an
organization for trade opening. It is a forum for governments to negotiate trade agreements. It is
a place for them to settle trade disputes. It operates a system of trade rules. Essentially, the WTO
is a place where member governments try to sort out the trade problems they face with each
other.
What they do?
The WTO is run by its member governments. All major decisions are made by the membership
as a whole, either by ministers (who usually meet at least once every two years) or by their
ambassadors or delegates (who meet regularly in Geneva).
The WTO agreements are lengthy and complex because they are legal texts covering a wide
range of activities. But a number of simple, fundamental principles run throughout all of these
documents. These principles are the foundation of the multilateral trading system.
10 things the WTO can do
The world is complex. The World Trade Organization is complex. This booklet is brief, but it
tries to reflect the complex and dynamic nature of trade and the WTO’s trade rules. It highlights
benefits of the trading system, but it doesn’t claim that everything is perfect. Were it a perfect
system, there would be no need for further negotiations and for the system to evolve and reform
continually.
1. cut living costs and raise living standards
2 settle disputes and reduce trade tensions
3 stimulate economic growth and employment
4 cut the cost of doing business internationally
5 encourage good governance
6 help countries develop
7 give the weak a stronger voice
8 support the environment and health
 9 contribute to peace and stability
10 be effective without hitting the headlines
Principles of the trading system
The WTO agreements are lengthy and complex because they are legal texts covering a wide
range of activities. They deal with: agriculture, textiles and clothing, banking,
telecommunications, government purchases, industrial standards and product safety, food
sanitation regulations, intellectual property, and much more. But a number of simple,
fundamental principles run throughout all of these documents. These principles are the
foundation of the multilateral trading system. A closer look at these principles:
Principle-1-Trade without discrimination
1. Most-favoured-nation (MFN): treating other people equally Under the WTO agreements,
countries cannot normally discriminate between their trading partners. Grant someone a special
favour (such as a lower customs duty rate for one of their products) and you have to do the same
for all other WTO members. This principle is known as most-favoured-nation (MFN) treatment.
It is so important that it is the first article of the General Agreement on Tariffs and Trade
(GATT), which governs trade in goods. MFN is also a priority in the General Agreement on
Trade in Services (GATS) (Article 2) and the Agreement on Trade-Related Aspects of
Intellectual Property Rights (TRIPS) (Article 4), Agreement on Trade-Related Investment
Measures (TRIMs) although in each agreement the principle is handled slightly differently.
Together, those three agreements cover all three main areas of trade handled by the WTO.
Some exceptions are allowed. For example, countries can set up a free trade agreement that
applies only to goods traded within the group — discriminating against goods from outside. Or
they can give developing countries special access to their markets. Or a country can raise barriers
against products that are considered to be traded unfairly from specific countries. And in
services, countries are allowed, in limited circumstances, to discriminate. But the agreements
only permit these exceptions under strict conditions. In general, MFN means that every time a
country lowers a trade barrier or opens up a market, it has to do so for the same goods or services
from all its trading partners — whether rich or poor, weak or strong.
2. National treatment: Treating foreigners and locals equally Imported and locally-produced
goods should be treated equally — at least after the foreign goods have entered the market. The
same should apply to foreign and domestic services, and to foreign and local trademarks,
copyrights and patents. This principle of “national treatment” (giving others the same treatment
as one’s own nationals) is also found in all the three main WTO agreements (Article 3 of GATT,
Article 17 of GATS and Article 3 of TRIPS), although once again the principle is handled
slightly differently in each of these. National treatment only applies once a product, service or
item of intellectual property has entered the market. Therefore, charging customs duty on an
import is not a violation of national treatment even if locally-produced products are not charged
an equivalent tax.
Principle-2-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. From time to time other issues such as red tape and exchange rate
policies have also been discussed. Since GATT’s creation in 1947-48 there have been eight
rounds of trade negotiations. A ninth round, under the Doha Development Agenda, is now
underway. At first these focused on lowering tariffs (customs duties) on imported goods. As a
result of the negotiations, by the mid-1990s industrial countries’ tariff rates on industrial goods
had fallen steadily to less than 4%.But by the 1980s, the negotiations had expanded to cover non-
tariff barriers on goods, and to the new areas such as services and intellectual property.
Opening markets can be beneficial, but it also requires adjustment. The WTO agreements allow
countries to introduce changes gradually, through “progressive liberalization”. Developing
countries are usually given longer to fulfil their obligations.
Principle-3-Predictability: through binding and transparency
Sometimes, promising not to raise a trade barrier can be as important as lowering one, because
the promise gives businesses a clearer view of their future opportunities. With stability and
predictability, investment is encouraged, jobs are created and consumers can fully enjoy the
benefits of competition — choice and lower prices. The multilateral trading system is an attempt
by governments to make the business environment stable and predictable.
The Uruguay Round increased bindings
Percentages of tariffs bound before and after the 1986-94 talks
Type of country Before After
Developed 78 99
countries
Developing 21 73
countries
Transition 73 98
economies
(These are tariff lines, so percentages are not weighted according to trade volume or value)
In the WTO, when countries agree to open their markets for goods or services, they “bind” their
commitments. For goods, these bindings amount to ceilings on customs tariff rates. Sometimes
countries tax imports at rates that are lower than the bound rates. Frequently this is the case in
developing countries. In developed countries the rates actually charged and the bound rates tend
to be the same. A country can change its bindings, but only after negotiating with its trading
partners, which could mean compensating them for loss of trade. One of the achievements of the
Uruguay Round of multilateral trade talks was to increase the amount of trade under binding
commitments. In agriculture, 100% of products now have bound tariffs. The result of all this: a
substantially higher degree of market security for traders and investors.
The system tries to improve predictability and stability in other ways as well. One way is to
discourage the use of quotas and other measures used to set limits on quantities of imports —
administering quotas can lead to more red-tape and accusations of unfair play. Another is to
make countries’ trade rules as clear and public (“transparent”) as possible. Many WTO
agreements require governments to disclose their policies and practices publicly within the
country or by notifying the WTO. The regular surveillance of national trade policies through
the Trade Policy Review Mechanism provides a further means of encouraging transparency
both domestically and at the multilateral level.
Principle-4-Promoting fair competition
The WTO is sometimes described as a “free trade” institution, but that is not entirely accurate.
The system does allow tariffs and, in limited circumstances, other forms of protection. More
accurately, it is a system of rules dedicated to open, fair and undistorted competition.
The rules on non-discrimination — MFN and national treatment — are designed to secure fair
conditions of trade. So too are those on dumping (exporting at below cost to gain market share)
and subsidies. The issues are complex, and the rules try to establish what is fair or unfair, and
how governments can respond, in particular by charging additional import duties calculated to
compensate for damage caused by unfair trade.
Many of the other WTO agreements aim to support fair competition: in agriculture, intellectual
property, services, for example. The agreement on government procurement (a “plurilateral”
agreement because it is signed by only a few WTO members) extends competition rules to
purchases by thousands of government entities in many countries. And so on.
Principle-5-Encouraging development and economic reform
The WTO system contributes to development. On the other hand, developing countries need
flexibility in the time they take to implement the system’s agreements. And the agreements
themselves inherit the earlier provisions of GATT that allow for special assistance and trade
concessions for developing countries.
Over three quarters of WTO members are developing countries and countries in transition to
market economies. During the seven and a half years of the Uruguay Round, over 60 of these
countries implemented trade liberalization programmes autonomously. At the same time,
developing countries and transition economies were much more active and influential in the
Uruguay Round negotiations than in any previous round, and they are even more so in the
current Doha Development Agenda.
At the end of the Uruguay Round, developing countries were prepared to take on most of the
obligations that are required of developed countries. But the agreements did give them transition
periods to adjust to the more unfamiliar and, perhaps, difficult WTO provisions — particularly
so for the poorest, “least-developed” countries. A ministerial decision adopted at the end of the
round says better-off countries should accelerate implementing market access commitments on
goods exported by the least-developed countries, and it seeks increased technical assistance for
them. More recently, developed countries have started to allow duty-free and quota-free imports
for almost all products from least-developed countries. On all of this, the WTO and its members
are still going through a learning process. The current Doha Development Agenda includes
developing countries’ concerns about the difficulties they face in implementing the Uruguay
Round agreements.
WTO Agreements
There are about 60 agreements and decisions totalling 550 pages. Negotiations since then have
produced additional legal texts such as the Information Technology Agreement, services and
accession protocols. New negotiations were launched at the Doha Ministerial Conference in
November 2001.
BASIS FOR
GATT WTO
COMPARISON

Meaning GATT can be described as a set of rules, WTO is an international

multilateral trade agreement, that came organization, that came into
into force, to encourage international existence to oversee and
trade and remove cross-country trade liberalize trade between
barriers. countries.

Institution It does not have any institutional It has permanent institution

existence, but have a small secretariat. along with a secretariat.
BASIS FOR
GATT WTO
COMPARISON

Participant nations Contracting parties Members

Commitments Provisional Full and Permanent

Application The rules of GATT are only for trade in The rules of WTO includes
goods. services and aspects of
intellectual property along with
the goods.

Agreement Its agreement are originally multilateral, Its agreements are purely
but plurilateral agreement are added to it multilateral.
later.

Domestic Allowed to continue Not allowed to continue

Legislation

Dispute Settlement Slow and ineffective Fast and effective

System

The points given below explain the difference between GATT and WTO in detail:
1. GATT refers to an international multilateral treaty, signed by 23 nations to promote
international trade and remove cross-country trade barriers. On the contrary, WTO is a
global body, which superseded GATT and deals with the rules of international trade
between member nations.
2. While GATT is a simple agreement, there is no institutional existence, but have a small
secretariat. Conversely, WTO is a permanent institution along with a secretariat.
3. The participating nations are called as contracting parties in GATT, whereas for WTO,
they are called as member nations.
4. GATT commitments are provisional in nature, which after 47 years the government can
make a choice to treat it as a permanent commitment or not. On the other hand, WTO
commitments are permanent, since the very beginning.
5. The scope of WTO is wider than that of WTO in the sense that the rules of GATT are
applied only when the trade is made in goods. As opposed to, WTO whose rules are
applicable to services and aspects of intellectual property along with the goods.
6. GATT agreement is primarily multilateral, but plurilateral agreement is added to it later.
In contrast, WTO agreements are purely multilateral.
7. The domestic legislation is allowed to continue in GATT, while the same is not possible
in the case of WTO.
8. The dispute settlement system of GATT was slower, less automatic and susceptible to
blockages. Unlike WTO, whose dispute settlement system is very effective.
Provisions of the GATT
For the achievement of the principles and objectives of the GATT, the following provisions had
been made: 1. The ‘Most Favoured Nation’ Clause 2. Quantitative Restrictions on Imports 3.
Tariff Negotiations and Tariff Reduction 4. Subsidies and Counter-Veiling Duties 5. Complaints
and Waivers 6. Settlement of Disputes.
Provision # 1. The ‘Most Favoured Nation’ Clause:
The most significant provision of the GATT agreement was that of the Most Favoured Nation
(MFN) clause. The essence of this clause was that each contracting party of the agreement would
treat all other contracting parties as the most favoured nation. It meant that the whole
arrangement under the GATT agreement was based upon twin principles of nondiscrimination
and reciprocity.
Article I of the GATT agreement provided that “any advantage, or favour, privilege or immunity
granted by any contracting party to any product originating in or destined for any other country
shall be-accorded immediately and unconditionally to the like product originating in or destined
for the territories of all contracting parties.”
The MFN clause implied that the tariff preferences resulting from bilateral trade negotiations
between two member countries had to be extended on a non-discriminatory and reciprocal basis
to all the other member countries. In essence, this clause discouraged the member countries from
granting any new trade concessions unless those were multilaterally agreed.
The GATT agreement also made provision of Escape Clauses. The LDC’s, under certain
circumstances, were assured the right to discriminate. For instance, they could adopt appropriate
measures to counter dumping and export subsidies but only against the offending countries. The
developed Western countries were allowed to extend special concessions in trade to their former
colonies.
Provision # 2. Quantitative Restrictions on Imports:
The contracting parties were prohibited from imposing the quantitative restrictions on imports
such as import quotas and import licences, under Article XI of the GATT agreement.
The exceptions were, however allowed in certain defined circumstances:
(i) The countries could take recourse to them, if otherwise the balance of payments adjustments
were difficult. In this connection, it was specified that the import quota fixation should be limited
to the extent necessary to check a serious fall in the foreign exchange reserves. Even in such a
situation, the import quota fixation should be done after due consultation with the IMF.
(ii) The LDC’s could take resort to import quota restriction for protecting domestic industries
when the use of tariff was not possible or applicable. But even that could be attempted only
under the procedure laid down by the GATT.
(iii) In the case of agriculture and fisheries, quota restriction could be applied provided the
domestic production were subject to equally restrictive controls.
(iv) When a foreign country was exporting products at artificially low (dumped) prices or at the
subsidised prices, the affected country was allowed by the GATT to take suitable protective
action including the restriction of imports through quota.
(v) In the event of a sudden increase in imports, a member country was allowed to take resort to
temporary safeguard of import quota restriction for protecting domestic industry.
(vi) The import quota restrictions could be adopted by a country, if the imports were likely to
harm the domestic production control and price support programmes.
(vii) The countries were allowed to form customs union or free trade areas under Article XXIV
of the GATT agreement provided their aim was to promote trade among the constituent countries
and not to raise trade barriers against other contracting parties.
In any case if there were a resort to quantitative restrictions on imports, it should be non-
discriminatory. The GATT had emphasized upon the need of continuous consultation among the
contracting parties on the nature of the BOP problems, alternative corrective measures and the
possible effects of quantitative restrictions upon the economies of other contracting parties.
Those countries which continued to apply the quantitative restrictions were required to notify the
GATT. If those restrictions caused harm to the interests of another country, the latter could ask
for consultation with the country imposing restrictions under the GATT. If the consultations
failed to bear results, the complaining country could invoke the provisions of Article XVIII of
the GATT, under which the latter was authorised to suspend concessions or other obligations
towards the offending country.
Provision # 3. Tariff Negotiations and Tariff Reduction:
Since the GATT prohibited all non-tariff restrictions on trade, the countries were permitted to
resort to import tariffs as a means of protecting the domestic industries. But at the same time the
GATT recognised that tariffs were the major impediments in the smooth and orderly growth of
world trade.
The GATT contained an entrenched clause that sought to stabilise member countries’ tariffs. The
Article II of the GATT specified that all concessions granted by contracting parties, as a
consequence of negotiations under the GATT, must be entered in a ‘Schedule of Concessions’.
A concession might assume the form of a reduction in the rate of import tariff or an agreement to
bind, i.e., not to hike the existing rate of duty. Once a concession was included in the schedule of
concession, it could not be withdrawn except under certain specified circumstances, it meant that
provisions of schedule of concessions, binding clause and tariff negotiations created a strong in-
built bias towards the lowering down of rates of import tariff in the GATT.
It encouraged frequent negotiations among the contracting parties to reduce in a substantial
measure the rates of import tariffs. The negotiations for tariff reduction were to be conducted on
a reciprocal and mutually advantageous basis, keeping in consideration the varying needs of the
contracting parties. The GATT allowed the use of some measure of tariff protection to the LDC’s
in view of their special needs of industrial development and also for obtaining revenues.
The negotiation procedure concerning tariff reduction under the GATT was bilateral-multilateral.
It was bilateral as two contracting parties entered into negotiations for tariff reduction on a
selective commodity-to-commodity basis. The tariff reductions agreed between any two
negotiating parties were to be made applicable to all the contracting parties under the ‘Most
Favoured Nation’ clause. This was the multilateral aspect of tariff negotiations.
The bilateral-multilateral technique of negotiations had some drawbacks. First, the principle of
reciprocity was injurious to the interests of the LDC’s. These countries producing mainly
primary products had a weak bargaining power relative to the developed countries in bilateral
negotiations. As a consequence, the terms of trade turned unfavourable for them. Second, that
negotiations technique created uncertainty and instability in the tariff structures of many a
country.
Third, that negotiations procedure was not equitable for those countries which already had a low-
tariff structure. They had very little to offer in exchange of concessions offered by the other
contracting party. Thus the former was likely to have a low bargaining power compared with the
latter.
Fourth, this technique of tariff-reduction negotiations was very slow. The achievement in tariff
reduction had remained very small and not encouraging since the enactment of the GATT. That
resulted in the abandonment of bilateral commodity by commodity negotiations and emphasis
shifted to only multilateral tariff reduction.
Provision # 4. Subsidies and Counter-Veiling Duties:
It was recognised by the GATT that the subsidies were alternative to tariffs. The Tokyo Round
of the GATT in 1970’s considered it necessary to specify the code of conduct related to
subsidies. The industrial countries agreed to a complete ban on export subsidies in the case of
manufactured products.
The LDC’s were, however, exempted from this stipulation. The member countries were required
to avoid subsidies on the export of primary products in principle. In case they provided subsidies
on such products, that should be done in such a manner that the country employing them did not
acquire a more than equitable share in the world export of the concerned products.
In case the subsidies resulted in harm to the interests of importing countries, the agreement
authorized them to take resort to counter-veiling duties. As regards other subsidies such as the
production subsidies, the members were allowed to use them provided they notify other parties
of any subsidy that is likely to cause the exports of the latter to fall and imports to rise.
The former should also be prepared, on request to enter into consultation with the latter about the
possibility of reduction or limiting such subsidies. In case any country was found to take
recourse to dumping, i.e., the export price of a product was lower than its domestic price, the
affected country was allowed to impose the counter-veiling or antidumping duties to the extent
that the dumping got neutralised.
However, the country resorting to counter-veiling or anti-dumping duties should not impose
duties at a higher rate than was required to offset the margin of dumping and the affected
industry in the importing country should not acquire thereby a net additional protection.
Provision # 5. Complaints and Waivers:
Article XXII of the GATT made provision for dealing with any complaints from a contracting
party related to the operation of the Agreement. The complainant party could request for
consultation with the other contracting party, when the former felt that an action of the latter
nullified or impaired the benefits accruing to that country under the Agreement. If no satisfactory
solution was found, the matter could be referred to a group of experts to assist the two
contracting parties.
The complaints had been concerning the discriminatory incidence of internal taxes, anti-dumping
duties and special restrictions on imports. In this regard it had been noted with satisfaction that
the number of complaints had fallen during the recent years.
Article XXV of the GATT laid down the procedure for granting waiver to some contracting
parties from the application of the provisions of the GATT. Ordinarily the waivers were not
granted unless those were approved by two-thirds of the voting contracting parties.
Some instances of the grant of waivers included the waivers to the European Coal and Steel
Company (ECSC) at the eleventh session of the GATT in 1952 about the trade in products under
ECSC treaty, to Britain in respect of Commonwealth Trade Preferences and, to the United States
in respect of her Agricultural Adjustment Act.
Provision # 6. Settlement of Disputes:
The GATT had provided for the machinery for the settlement of any disputes among the
contracting parties. Initially the contracting parties were involved into bilateral negotiations for
resolving the matter. In case of failure, the matter could be referred to a panel of experts drawn
from countries having no direct interest in the matter. This panel or committee, after a careful
study, used to make a recommendation or ruling to be observed by the offending party.
In case the offending member either did not comply with the ruling or did not act upon the
recommendation of the panel, the aggrieved party was authorized to retaliate by withdrawing
some or all concessions offered to the offending country. Thus dispute settlement procedure of
the GATT rested upon direct consultations, conciliation and third party adjudication. GATT had
generally proved successful in resolving disputes among the contracting parties.
TRIPS — Trade-Related Aspects of Intellectual Property Rights
The WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) is the
most comprehensive multilateral agreement on intellectual property (IP). It plays a central role in
facilitating trade in knowledge and creativity, in resolving trade disputes over IP, and in assuring
WTO members the latitude to achieve their domestic policy objectives. It frames the IP system in
terms of innovation, technology transfer and public welfare. The Agreement is a legal
recognition of the significance of links between IP and trade and the need for a balanced IP
system.
What are intellectual property rights?
Intellectual property rights are the rights given to persons over the creations of their minds. They
usually give the creator an exclusive right over the use of his/her creation for a certain period of
time.Intellectual property rights are customarily divided into two main areas:
(i) Copyright and rights related to copyright.
The rights of authors of literary and artistic works (such as books and other writings, musical
compositions, paintings, sculpture, computer programs and films) 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. The main social purpose of protection of copyright
and related rights is to encourage and reward creative work.
(ii) Industrial property.
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).
 The protection of such distinctive signs aims to stimulate and ensure fair competition and
to protect consumers, by enabling them to make informed choices between various goods
and services. The protection may last indefinitely, provided the sign in question continues
to be distinctive.
 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.
 The social purpose 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 activities.
 A functioning intellectual property regime should also facilitate the transfer of technology in
the form of foreign direct investment, joint ventures and licensing.
The protection is usually given for a finite term (typically 20 years in the case of patents).
While the basic social objectives of intellectual property protection are as outlined above, it
should also be noted that the exclusive rights given are generally subject to a number of
limitations and exceptions, aimed at fine-tuning the balance that has to be found between the
legitimate interests of right holders and of users.
Copyright
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.
Trademarks
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”, “Tequila”, "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.
Patents
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. Compulsory licences
for export of medicines
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).
TRIPS Council
The TRIPS Council is responsible for administering and monitoring the operation of the TRIPS
Agreement. In its regular meetings, the TRIPS Council serves as a forum for discussion between
members on key issues. In its special sessions, the TRIPS Council serves as a forum for
negotiations on a multilateral system of notification and registration of geographical indications
(GIs) for wines and spirits.
TRIPS transparency
Transparency mechanisms help the TRIPS Council to monitor the operation of the TRIPS
Agreement and promote the understanding of members’ intellectual property policies and legal
systems. These mechanisms include WTO members' notifications, responses to checklists of
questions, reviews of implementing legislation, reports on technical assistance and technology
transfer, and contact points.
The Guide to Transparency under TRIPS provides further details about these mechanisms and
how members can provide and access the materials.
Access notifications, responses to checklists, and reports submitted by members and observers
through the e-TRIPS Gateway.
Members and observers may submit notifications, checklist responses, and reports online via
the e-TRIPS Submission System (restricted access).
Technical assistance
The main objective of the WTO's technical assistance activities is to help members and observers
implement an intellectual property regime that meets their developmental and other domestic
policy objectives. The activities take a holistic approach, recognizing that policy choices within
the TRIPS framework are integral to a broader policy context.
Cooperation with other intergovernmental organizations
The WTO Secretariat cooperates with WIPO, WHO, and many other intergovernmental and
regional organizations on matters of common interest. This cooperation includes participating as
an observer in other organizations’ meetings, collaborating on technical assistance, and
consulting on other topics upon request.
Origins: into the rules-based trading system....
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 incentivising 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:
how 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.
How to protect intellectual property: common ground-rules
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.
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.
Enforcement
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.
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.
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 2021 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.
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 6 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.
Agreement on Trade-Related Investment Measures (TRIMs)
The Agreement on Trade-Related Investment Measures (TRIMS) recognizes that certain
investment measures can restrict and distort trade. It states that WTO members may not apply
any measure that discriminates against foreign products or that leads to quantitative restrictions,
both of which violate basic WTO principles. A list of prohibited TRIMS, such as local content
requirements, is part of the Agreement. The TRIMS Committee monitors the operation and
implementation of the Agreement and allows members the opportunity to consult on any relevant
matters.
This Agreement, negotiated during the Uruguay Round, applies only to measures that affect
trade in goods. Recognizing that certain investment measures can have trade-restrictive and
distorting effects, it states that no Member shall apply a measure that is prohibited by the
provisions of GATT Article III (national treatment) or Article XI (quantitative restrictions).
There are three main areas of work in the WTO on trade and investment:
 A Working Group established in 1996 conducts analytical work on the relationship
between trade and investment.
 The Agreement on Trade-Related Investment Measures (“TRIMs Agreement”), one of
the Multilateral Agreements on Trade in Goods, prohibits trade-related investment
measures, such as local content requirements, that are inconsistent with basic provisions
of GATT 1994.
 The General Agreement on Trade in Services addresses foreign investment in services as
one of four modes of supply of services.
Historical background
GATT and Foreign Investment
Prior to the Uruguay Round negotiations, the linkage between trade and investment received
little attention in the framework of the GATT.
Havana Charter
The Charter for an International Trade Organization (1948) contained provisions on the
treatment of foreign investment as part of a chapter on economic development. This Charter was
never ratified and only its provisions on commercial policy were incorporated into the General
Agreement on Tariffs and Trade (GATT).
1955 Resolution on International Investment for Economic Development
In 1955, the GATT CONTRACTING PARTIES adopted a resolution on International
Investment for Economic Development in which they, inter alia, urged countries to conclude
bilateral agreements to provide protection and security for foreign investment.
The FIRA Panel
Perhaps the most significant development with respect to investment in the period before the
Uruguay round was a ruling by a panel in a dispute settlement proceeding between the
United States and Canada. In Canada — Administration of the Foreign Investment Review Act
(“FIRA”) (BISD 30S/140, 1984) a GATT dispute settlement panel considered a complaint by the
United States regarding certain types of undertakings or engagenments which were effectively
required from foreign investors by the Canadian authorities as conditions for the approval of
investment projects. These undertakings pertained to the purchase of certain products from
domestic sources (local content requirements) and to the export of a certain amount or
percentage of output (export performance requirements). The Panel concluded that the local
content requirements were inconsistent with the national treatment obligation of Article III:4 of
the GATT but that the export performance requirements were not inconsistent with GATT
obligations. The Panel emphasized that at issue in the dispute before it was the consistency with
the GATT of specific trade-related measures taken by Canada under its foreign investment
legislation and not Canada's right to regulate foreign investment per se.
The panel decision in the FIRA case was significant in that it confirmed that existing obligations
under the GATT were applicable to requirements imposed by governments in an investment
context in so far as such requirements discriminated between imported and domestic goods. At
the same time, the panel's conclusion that export performance requirements were not covered by
the GATT underscored the limited scope of existing GATT disciplines with respect to such
trade-related requirements.
Uruguay Round Negotiations on Trade-Related Investment Measures
The Punta del Este Ministerial Declaration which launched the Uruguay Round included the
subject of trade-related investment measures as a subject for the new round through a carefully
drafted compromise:
“Following an examination of the operation of GATT Articles related to the trade-restrictive and
trade-distorting effects of investment measures, negotiations should elaborate, as appropriate,
further provisions that may be necessary to avoid such adverse effects on trade.”
The emphasis placed in this mandate on trade effects made it clear that the negotiations were not
intended to deal with the regulation of investment as such.
The Uruguay Round negotiations on trade-related investment measures were marked by strong
disagreement among participants over the coverage and nature of possible new disciplines.
While some developed countries proposed provisions that would prohibit a wide range of
measures in addition to the local content requirements found to be inconsistent with Article III in
the FIRA panel case, many developing countries opposed this. The compromise that eventually
emerged from the negotiations is essentially limited to an interpretation and clarification of the
application to trade-related investment measures of GATT provisions on national treatment for
imported goods (Article III) and on quantitative restrictions on imports or exports (Article XI).
Thus, the TRIMs Agreement does not cover many of the measures that were discussed in the
Uruguay Round negotiations, such as export performance and transfer of technology
requirements.
The TRIMS Agreement
Objectives
The objectives of the Agreement, as defined in its preamble, include “the expansion and
progressive liberalization of world trade and to facilitate investment across international
frontiers so as to increase the economic growth of all trading partners, particularly developing
country members, while ensuring free competition”.
Limitation of Coverage to Trade in Goods
The coverage of the Agreement is defined in Article 1, which states that the Agreement applies
to investment measures related to trade in goods only. Thus, the TRIMs Agreement does not
apply to services.
What is a “Trade-Related Investment Measure”?
The term “trade-related investment measures” (“TRIMs”) is not defined in the Agreement.
However, the Agreement contains in an annex an Illustrative List of measures that are
inconsistent with GATT Article III:4 or Article XI:1 of GATT 1994.
The TRIMs Agreement and Regulation of Foreign Investment
As an agreement that is based on existing GATT disciplines on trade in goods, the Agreement is
not concerned with the regulation of foreign investment. The disciplines of the TRIMs
Agreement focus on investment measures that infringe GATT Articles III and XI, in other words,
that discriminate between imported and exported products and/or create import or export
restrictions. For example, a local content requirement imposed in a non-discriminatory manner
on domestic and foreign enterprises is inconsistent with the TRIMs Agreement because it
involves discriminatory treatment of imported products in favour of domestic products. The fact
that there is no discrimination between domestic and foreign investors in the imposition of the
requirement is irrelevant under the TRIMs Agreement.
Basic Substantive Obligations: Article 2 and the Illustrative List
Article 2.1 of the TRIMs Agreement requires Members not to apply any TRIM that is
inconsistent with the provisions of Article III (national treatment of imported products) or
Article XI (prohibition of quantitative restrictions on imports or exports) of GATT 1994. An
Illustrative List annexed to the TRIMs Agreement lists measures that are inconsistent with
paragraph 4 of Article III and paragraph 1 of Article XI.
Mandatory and Non-mandatory Measures
The Illustrative List covers both TRIMs which are mandatory or enforceable under domestic law
or under administrative rulings and TRIMs compliance with which is necessary to obtain an
advantage.
Distinction between Paragraphs 1 and 2 of the Illustrative List
TRIMs identified in paragraph 1 of the Illustrative List as being inconsistent with Article III:4
concern the purchase or use of products by an enterprise, while the TRIMs listed in paragraph 2
as inconsistent with Article XI:1 of GATT 1994 concern the importation or exportation of
products by an enterprise.
TRIMs which are inconsistent with the national treatment obligation of Article III:4 of
GATT 1994
Paragraph 1(a) of the Illustrative List covers local content TRIMs, which require the purchase or
use by an enterprise of products of domestic origin or domestic source (local content
requirements) while paragraph 1(b) covers trade-balancing TRIMs, which limit the purchase or
use of imported products by an enterprise to an amount related to the volume or value of local
products that it exports. In both cases, the inconsistency with Article III:4 of GATT 1994 results
from the fact that the measure subjects the imported products (to be purchased or used by an
enterprise) to less favourable conditions than domestic products (to be purchased or used by and
enterprise).
TRIMs which are inconsistent with the prohibition on imposition of quantitative
restrictions of Article XI:1 of GATT 1994
Paragraph 2(a) of the Illustrative List covers measures which limit the importation by an
enterprise of products used in its local production, generally or to an amount related to the
volume or value of local production exported by the enterprise. There is a conceptual similarity
between this paragraph and paragraph 1(b) in that they both cover trade-balancing measures. The
difference is that paragraph 1(b) deals with internal measures that affect products after they have
been imported, while paragraph 2(a) deals with border measures affecting the importation of
products.
Measures identified in paragraph 2(b) of the list involve a restriction of imports in the form of a
foreign exchange balancing requirement. Importation by an enterprise of products used in or
related to local production is limited by restricting the enterprise's access to foreign exchange to
an amount related to the foreign exchange inflows attributable to the enterprise.
Finally, paragraph 2(c) covers measures involving restrictions on the exportation of or sale for
export by an enterprise, whether specified in terms of particular products, volume or value of
products or in terms of a proportion of volume or value of its local production. Since paragraph 2
applies the provisions of Article XI:1 of GATT 1994, it deals only with measures that restrict
exports. Other measures relating to exports, such as export incentives and export performance
requirements, are therefore not covered by the TRIMs Agreement.
Exceptions
General exceptions
Article 3 of the TRIMs Agreement provides that all exceptions under GATT 1994 shall apply, as
appropriate, to the provisions of the TRIMs Agreement.
Developing countries
Article 4 allows developing countries to deviate temporarily from the obligations of the TRIMs
Agreement, as provided for in Article XVIII of GATT 1994 and related WTO provisions on
safeguard measures for balance-of-payments difficulties.
Notification requirements
Under Article 5.1 Members were required to notify to the Council for Trade in Goods, within 90
days after the date of entry into force of the WTO Agreement, any TRIMs that were not in
conformity with the Agreement. A decision adopted by the WTO General Council in April 1995
provided that governments that were not Members of the WTO on 1 January 1995, but were
entitled to become original Members within a period of two years after 1 January 1995, were to
notify under Article 5.1 within 90 days after the date of their acceptance of the WTO Agreement.
Countries that are not original Members of the WTO, in other words, newly acceding Members,
may be required to notify in accordance with any terms and conditions specified in their
Accession Protocols.
Notifications received under Article 5.1
Notifications under Article 5.1 were submitted by 27 Members. These notifications have been
circulated in the G/TRIMS/N/1/COUNTRY/—series of documents.
Transition period for the elimination of TRIMs which are inconsistent with the Agreement
Members were obliged under Article 5.2 of the TRIMs Agreement to eliminate TRIMs which
were notified under Article 5.1. Such elimination was to have taken place within two years after
the date of the entry into force of the WTO Agreement in the case of a developed country
Member, within five years in the case of developing countries and within seven years in the case
of a least developed country Member.
Limitation of the benefits of the transition period to existing measures
TRIMs introduced less than 180 days before the date of the entry into force of the WTO
Agreement did not benefit from these transition periods. Thus, the transition provisions of the
TRIMs Agreement did not permit the introduction of new TRIMs that are inconsistent with the
Agreement.
“Standstill” requirement during the transition period The Agreement precluded Members
from changing measures notified under Article 5.1 in a manner which would increase their
inconsistency with the Agreement (Article 5.4). However, if a Member had notified a TRIM
under Article 5.1, it could have applied, during the transition period, the same TRIM to a new
investment in order to avoid a distortion of competition between the new investment and existing
investments (Article 5.5).
Possible extension of the transition period Under Article 5.3, the Council for Trade in Goods
may, on request, extend the transition period for the elimination of TRIMs in the case of a
developing country which demonstrates particular difficulties in implementing the provisions of
the Agreement.
In August 2001, the Council for Trade in Goods adopted a series of Decision to extend the
transition period for eight Members to December 2001, with the possibility of a further extension
of two years. In November 2001, the CTG adopted another series of Decisions to extend the
transition period for these same members for another two years, to December 2003 (for one
Member the period was extended to May 2003 and for another to June 2003).
Transparency Provisions designed to ensure transparency with respect to the application of
TRIMs are contained in Article 6 of the TRIMs Agreement. This Article provides in particular
for the notification to the WTO Secretariat of lists of publications in which TRIMs may be
found. Notifications received under these provisions are listed in the document G/TRIMS/N/2/-
series.
Committee on Trade-Related Investment Measures
Article 7 of the TRIMs Agreement establishes a Committee on Trade-Related Investment
Measures as a forum to examine the implementation operation of the Agreement. The Committee
meets not less than once a year. Much of the early work of the Committee focused on the
notifications received under Article 5.1 of the Agreement. Today, the Committee's work is
mainly focused on discussing specific concerns raised by certain Members regarding other
Members' trade-related investment measures.
Dispute Settlement
The general WTO dispute settlement procedure, as laid down in the Dispute Settlement
Understanding, applies to disputes arising under the TRIMs Agreement (Article 8). Issues
relating to the alleged inconsistency of particular measures with the TRIMs Agreement have
been raised in 34 requests for consultations under the DSU. 16 of these cases have moved to the
establishment of a panel, while 6 have been settled or terminated through a mutually agreed
solution. The remainder are still in consultation phase.
Review of the TRIMs Agreement:
Investment Policy and Competition Policy as Subjects for Future Consideration
Article 9 stipulates that, not later than five years after the date of entry into force of the
Agreement, the Council for Trade in Goods shall review the operation of the TRIMs Agreement.
In this review, consideration is to be given as to whether the Agreement should be supplemented
with provisions on investment policy and competition policy. The CTG discussed the Article 9
Review at its meetings from October 1999 to November 2006. In October 2002, India and Brazil
proposed that a study on the impacts of TRIMS and their elimination be carried out under the
Review. At the November 2006 CTG meeting, the Chairman stated that members were unable
to reach a consensus on the desirability of conducting the proposed study. The CTG agreed to
revert to the Article 9 Review at a future meeting at the request of any interested Member. To
date, no such request has been made.
GATS
The General Agreement on Trade in Services (GATS) which extends multilateral rules and
disciplines to services is regarded as a landmark achievement of the UR, although it achieved
only little in terms of immediate liberalisation.
Because of the special characteristics and the socio-economic and political implications of
certain services, they have been generally subject to various types of national restrictions.
Protective measures include visa requirements, investment regulations, restrictions on
repatriation, marketing regulations, restrictions on employment of foreigners, compulsions to use
local facilities etc.
Heavily protected services in different countries include banking and insurance; transportation;
television, radio, film and other forms of communication; and so on.
The GATS defines services as the supply of a service from the territory of one member (country)
into the territory of any other member; in the territory of one member to the service
consumer of any other member; by a service supplier of one member, through commercial
presence in the territory of any other member; or by a service supplier of one member, through
presence of natural persons of a member in the territory of any other member. In short, the
GATS covers four modes of international delivery of services.
1. Cross-border supply (transborder data flows, transportation services)
2. Commercial presence (provision of services abroad through FDI or representative offices).
3. Consumption abroad (tourism)
4. Movement of personnel (entry and temporary stay of foreign consultants)
While industrial countries have offered market access commitment of some kind on over half
(about 54 per cent) of their service activities, developing countries did so only on less than one-
fifth (about 17 per cent) of their service categories. Tourism and travel-related services are the
only activities in which a substantial number of developing countries made commitments. The
framework of GATS includes basic obligation of all member countries on international trade in
services, including financial services, telecommunications, transport, audio-visual, tourism,
and professional services, as well as movement of workers.
Among the obligations is a most favoured nation (MFN) obligation that essentially prevents
countries from discriminating among foreign suppliers of services. Another obligation is the
transparency requirements according to which each member country shall promptly publish all
its relevant laws and regulations pertaining to services including international agreements
pertaining to trade in services to which the member is a signatory. Further, each member shall
also respond promptly to all requests for specific information, by any other member, pertaining
to any aspect of the service covered by the GATS. Each member shall also establish one or more
enquiry points to provide specific information to other members. However, no member needs to
provide any confidential information, the disclosure of which would impede law enforcement, or
otherwise be contrary to public interest, or which would prejudice legitimate commercial
interests of particular enterprise, public or private.
The GATS lays down that increasing participation of developing countries in world trade shall
be facilitated through negotiated commitments on access to technology, improvements in access
to distribution channels and information networks and the liberalisation of market access
in sectors and modes of supply of export interest to them.
With reference to domestic regulation, the Agreement lays down that all measures of general
application affecting trade in services are administered in a reasonable, objective and impartial
manner. There would be a requirement that parties establish ways and means for prompt reviews
of administrative decisions relating to the supply of services.
It is recognised that particular pressures on the balance of payments of a member in the process
of economic development or economic transition may necessitate the use of restrictions to
ensure, inter alia, the maintenance of a level of financial reserves adequate for the
implementation of its programme of economic development or economic transition.
A member country may, therefore, apply restrictions on international transfers and payments for
current transactions under certain circumstances envisaged under the GATS. In the event of
serious balance of payments and external financial difficulties or threat thereof, a member may
adopt or maintain restrictions on trade in services on which it has undertaken specific
commitments including on payments or transfers for transactions related to such commitments.
The commitments of member countries under the GATS also include national treatment (that
is, to treat foreign suppliers of services like domestic suppliers) and provision of market access.
The Agreement on Trade in Services also establishes the basis for progressive liberalisation
of trade in services through successive rounds of negotiations, which also applies to other
agreements under the Final Act.
As stated earlier, the fear of the developing countries is that the liberalisation of trade in services
will lead to the domination of the services sector of the developing countries by the
multinationals of the industrialised countries. As a matter of fact, the trade in services is already
dominated by the developed countries. The developing countries are net importers of services
and their deficit has been growing. The apprehension is that a liberalisation of trade in services
will accentuate the problem.
Although many services are labour-intensive and, therefore, the developing countries should be
expected to have an advantage here, there have been several constraints in benefiting from
this advantage. These include technical, organisational, financial and legal. Moreover,
immigration laws of developed countries restrict the manpower flow from the developing to
developed countries. This severely limits the scope of developing countries in benefiting from
their comparative advantage. It may be noted that the industrial countries did not like to bring
this issue in the Uruguay Round.
The General Agreement on Trade in Services (GATS): objectives, coverage and disciplines
1. What is the main purpose of the GATS?
The creation of the GATS was one of the landmark achievements of the Uruguay Round, whose
results entered into force in January 1995. The GATS was inspired by essentially the same
objectives as its counterpart in merchandise trade, the General Agreement on Tariffs and Trade
(GATT): creating a credible and reliable system of international trade rules; ensuring fair and
equitable treatment of all participants (principle of non-discrimination); stimulating economic
activity through guaranteed policy bindings; and promoting trade and development through
progressive liberalization.
While services currently account for over two-thirds of global production and employment, they
represent no more than 25 per cent of total trade, when measured on a balance-of-payments
basis. This — seemingly modest — share should not be underestimated, however. Indeed,
balance-of-payments statistics do not capture one of the modes of service supply defined in the
GATS, which is the supply through commercial presence in another country (mode 3).
Furthermore, even though services are increasingly traded in their own right, they also serve as
crucial inputs into the production of goods and, consequently, when assessed in value-added
terms, services account for about 50 per cent of world trade.
2. Who participates?
All WTO members are at the same time members of the GATS and, to varying degrees, have
assumed commitments in individual service sectors.
3. What services are covered?
The GATS applies in principle to all service sectors, with two exceptions.
Article I (3) of the GATS excludes “services supplied in the exercise of governmental
authority”. These are services that are supplied neither on a commercial basis nor in competition
with other suppliers. Cases in point are social security schemes and any other public service,
such as health or education, that is provided at non-market conditions.
Furthermore, the Annex on Air Transport Services exempts from coverage measures affecting
air traffic rights and services directly related to the exercise of such rights.
4. Is it true that the GATS not only applies to cross-border flows of services, but additional
modes of supply?
The GATS distinguishes between four modes of supplying services:
1. cross-border trade,
2. consumption abroad,
3. commercial presence, and
4. presence of natural persons.
1.Cross-border supply is defined to cover services flows from the territory of one member into
the territory of another member (e.g. banking or architectural services transmitted via
telecommunications or mail);
2.Consumption abroad refers to situations where a service consumer (e.g. tourist or patient)
moves into another member's territory to obtain a service;
3. Commercial presence implies that a service supplier of one member establishes a territorial
presence, including through ownership or lease of premises, in another member's territory to
provide a service (e.g. domestic subsidiaries of foreign insurance companies or hotel chains); and
4. Presence of natural persons consists of persons of one member entering the territory of another
member to supply a service (e.g. accountants, doctors or teachers). The Annex on Movement of
Natural Persons specifies, however, that members remain free to operate measures regarding
citizenship, residence or access to the employment market on a permanent basis.
5. Why was it necessary to introduce, apart from the traditional concept of cross-border
trade, three additional modes of supply?
The supply of many services often involves the simultaneous physical presence of both producer
and consumer. There are thus many instances in which, in order to be commercially meaningful,
trade commitments must extend to cross-border movements of the consumer, the establishment
of a commercial presence within a market, or the temporary movement of the service provider.
6. Does the GATS affect a member's ability to pursue national policy objectives and
priorities?
The GATS expressly recognizes the right of members to regulate the supply of services in
pursuit of their own policy objectives. However, the Agreement contains provisions ensuring that
services regulations are administered in a reasonable, objective and impartial manner.
7. What are the basic obligations under the GATS?
Obligations contained in the GATS may be categorized into two broad groups:
1. general obligations that apply to all members and services sectors, as well as
2. obligations that apply only to the sectors inscribed in a member's schedule of commitments.
Such commitments are laid down in individual schedules whose scope may vary widely
between members. The relevant terms and concepts are similar, but not necessarily identical
to those used in the GATT; for example, national treatment is a general obligation in goods
trade and not negotiable as under the GATS.
(a) General obligations
MFN treatment: Under Article II of the GATS, members are held to extend immediately and
unconditionally to services or services suppliers of all other members “treatment no less
favourable than that accorded to like services and services suppliers of any other country”. This
amounts to a prohibition, in principle, of preferential arrangements among groups of members in
individual sectors or of reciprocity provisions which confine access benefits to trading partners
granting similar treatment.
Derogations are possible in the form of so-called Article II-exemptions. Members were allowed
to seek such exemptions before the Agreement entered into force. New exemptions can only be
granted to new members at the time of accession or, in the case of current members, by way of a
waiver under Article IX:3 of the WTO Agreement. All exemptions are subject to review; they
should in principle not last longer than 10 years. Furthermore, the GATS allows groups of
members to enter into economic integration agreements or to mutually recognize regulatory
standards, certificates and the like if certain conditions are met.
Transparency: GATS members are required, among other things, to publish all measures of
general application and establish national enquiry points mandated to respond to other members'
information requests.
Other generally applicable obligations include the establishment of administrative review and
appeals procedures and disciplines on the operation of monopolies and exclusive suppliers.
(b) Specific commitments
Market access: Market access is a negotiated commitment in specified sectors. It may be made
subject to various types of limitations that are enumerated in Article XVI(2). For example,
limitations may be imposed on the number of services suppliers, service operations or employees
in the sector; the value of transactions; the legal form of the service supplier; or the participation
of foreign capital.
National treatment: A commitment to national treatment implies that the member concerned
does not operate discriminatory measures benefiting domestic services or service suppliers. The
key requirement is not to modify, in law or in fact, the conditions of competition in favour of the
member's own service industry. Again, the extension of national treatment in any particular
sector may be made subject to conditions and qualifications.
Members are free to tailor the sector coverage and substantive content of such commitments as
they see fit. The commitments thus tend to reflect national policy objectives and constraints,
overall and in individual sectors. While some members have scheduled less than a handful of
services, others have assumed market access and national treatment disciplines in over 120 out of
a total of 160-odd services.
The existence of specific commitments triggers further obligations concerning, among other
things, the notification of new measures that have a significant impact on trade and the avoidance
of restrictions on international payments and transfers.
8. What information is contained in services “schedules”?
Each WTO member is required to have a Schedule of Specific Commitments which identifies the
services for which the member guarantees market access and national treatment and any
limitations that may be attached. The Schedule may also be used to assume additional
commitments regarding, for example, the implementation of specified standards or regulatory
principles. Commitments are undertaken with respect to each of the four different modes of
service supply.
Most schedules consist of both sectoral and horizontal sections. The “Horizontal Section”
contains entries that apply across all sectors subsequently listed in the schedule. Horizontal
limitations often refer to a particular mode of supply, notably commercial presence and the
presence of natural persons. The “Sector-Specific Sections” contain entries that apply only to the
particular service.
9. When did members' specific commitments enter into force?
The majority of current commitments entered into force on 1 January 1995, i.e. the date of entry
into force of the WTO. New commitments have since been scheduled by participants in extended
negotiations and by new members that have joined the WTO.
10. Can commitments be introduced or improved outside the context of multilateral
negotiations?
Yes, any member is free to expand or upgrade its existing commitments at any time
11. Can specific commitments be withdrawn or modified?
Pursuant to Article XXI, specific commitments may be modified subject to certain procedures.
Countries which may be affected by such modifications can request the modifying member to
negotiate compensatory adjustments; these are to be granted on an MFN basis.
12. Are there any specific exemptions in the GATS to cater for important national policy
interests?
The GATS permits members in specified circumstances to introduce or maintain measures in
contravention of their obligations under the Agreement, including the MFN requirement or
specific commitments. The relevant article provides cover, among other things, 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 Agreement
including, among other things, measures necessary to prevent deceptive or fraudulent
practices.
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.
13. Are there special provisions for developing countries?
Developing country interests have inspired both the general structure of the Agreement as well as
individual articles. In particular, the objective of facilitating the increasing participation of
developing countries in services trade has been enshrined in the Preamble to the Agreement and
underlies the provisions of Article IV. This Article requires members, among other things, to
negotiate specific commitments relating to the strengthening of developing countries' domestic
services capacity; the improvement of developing countries' access to distribution channels and
information networks; and the liberalization of market access in areas of export interest to these
countries.
While the notion of progressive liberalization is one of the basic tenets of the GATS, Article XIX
provides that liberalization takes place with due respect for national policy objectives and
members' development levels, both overall and in individual sectors. Developing countries are
thus given flexibility for opening fewer sectors, liberalizing fewer types of transactions, and
progressively extending market access in line with their development situation. Other provisions
ensure that developing countries have more flexibility in pursuing economic integration policies,
maintaining restrictions on balance of payments grounds, and determining access to and use of
their telecommunications transport networks and services. In addition, developing countries are
entitled to receive technical assistance from the WTO Secretariat.
14. Are the results of the extended sectoral negotiations in telecommunications and
financial services legally different from other sector-specific commitments?
No. The results of sectoral negotiations are new specific commitments and/or MFN exemptions
related to the sector concerned. Thus, they are neither legally independent from other sector-
specific commitments nor constitute agreements different from the GATS. The new
commitments and MFN exemptions have been incorporated into the existing Schedules and
Exemption Lists by way of separate protocols to the GATS.
Functions of WTO
The WTO has the following five specific functions.
1. The WTO shall facilitate the implementation, administration and operation and further the
objectives of the Multilateral Trade Agreements and shall also provide the framework for the
implementation, administration and operation of Plurilateral Trade Agreements.
2. The WTO shall provide the forum for negotiations among its members concerning their
multilateral trade relations in matters dealt with under the Agreements.
3. The WTO shall administer the ‘Understanding on Rules and Procedures Governing the
Settlement of Disputes’.
4. The WTO shall administer the ‘Trade Review Mechanism’.
5. With a view to achieving greater coherence in global economic policy making, the WTO shall
cooperate, as appropriate, with the IMF and IBRD and its affiliated agencies.
The General Council will serve four main functions:
1. To supervise on a regular basis, the operations of the revised agreements and ministerial
declarations relating to: (a) goods, (b) services and (c) TRIPs;
2. To act as a Dispute Settlement Body;
3. To serve as a Trade Review Mechanism; and
4. To establish Goods Council, Services Council and TRIPs Council, as subsidiary bodies.
To become a member of the WTO, a country must completely accept the results of the Uruguay
Round.
The most important elements of the Agreement included those of:
non-discrimination: the Most Favoured Nation (MFN) principle;
reciprocity;
transparency;
tariff reduction
The major liberalisations in respect of trade in manufactures, regarding tariffs, are:
1. Expansion of tariff bindings
2. Reduction in the tariff rates
3. Expansion of duty-free access
NON TRADE BARRIERS AND TRADE BARRIERS

Tariff Barriers:
Tariffs are a type of trade barrier imposed by countries in order to raise the relative price of
imported products compared to domestic ones. Tariffs typically come in the form of taxes or
duties levied on importers and eventually passed on to end consumers. International trade
increases the number of goods that domestic consumers can choose from, decreases the cost of
those goods through increased competition, and allows domestic industries to ship their products
abroad. While all of these effects seem beneficial, it has been argued that free trade isn't
beneficial to all parties.
• Tariffs are a type of protectionist trade barrier that can come in several forms.
• While tariffs may benefit a few domestic sectors, economists agree that free trade policies
in a global market are ideal.
• Tariffs are paid by domestic consumers and not the exporting country, but they have the
effect of raising the relative prices of imported products.
Tariffs are taxes on imports. Tariffs are imposed to increase the price of imported products so
that they are not consumed. There are many types of tariff, including ad valorem tax or a specific
tax. A tariff diagram explains the effects of tariffs.
A tariff Barrier is imposed by the government of the country importing goods. It has two-fold
objectives, one to increase the government revenue and second, to raise the cost of foreign goods
so that domestic companies can compete with the foreign goods.
Common Types of Tariffs
There are several types of tariffs:
1. Specific tariffs
2. Ad valorem tariffs
3. Anti-Dumping Duty
4. Subsidies
5. Import tariff and
6. Retaliatory tariffs
Specific Tariffs
A fixed fee levied on one unit of an imported good is referred to as a specific tariff. This tariff
can vary according to the type of goods imported. For example, a country could levy a $15 tariff
on each pair of shoes imported, but levy a $300 tariff on each computer imported.
Ad Valorem Tariffs
The phrase "ad valorem" is Latin for "according to value," and this type of tariff is levied on a
good based on a percentage of that good's value. An example of an ad valorem tariff would be a
5% tariff levied by Japan on U.S. automobiles.The 15% is a price increase on the value of the
automobile, so a $10,000 vehicle now costs $11,500 to Japanese consumers. This price increase
protects domestic producers from being undercut but also keeps prices artificially high for
Japanese car shoppers.
Anti-Dumping Duty
Exporters, in order to earn more profit, sell their products below the actual cost in various
countries. It is known as dumping. The government, in order to protect the domestic market from
these dumped products, imposes the Antidumping Duty.
The Subsidy
Subsidies act as the support provided by the government to the firms manufacturing products to
lower their production cost and become more competitive.
Import Tariff
An import tariff is particularly imposed on the price of imported goods. Import tariff benefits the
country importing goods since it generates revenue for the government. Import tariff creates a
friendly competitive environment for domestic companies.
Retaliatory Tariff
A country imposes a retaliatory tariff in order to pressurise another country to remove its tariffs
or it may be imposed for the purpose of trade concessions.
Non-tariff barriers
Non-tariff barriers are defined as non-tax measures adopted by a nation's government to limit
imports from foreign countries. Non-tariff barriers are defined as non-tax measures adopted by a
nation's government to limit imports from foreign countries. These can be in the form of laws,
policies, practices, conditions, requirements, etc. and are specified by the government to restrict
imports. Examples of non-tariff barriers are
1. Import quotas and quantity restrictions on imports,
2. Voluntary Export Restraints (VERs),
3. Import licensing,
4. Technical barriers
5. administrative regulations,
6. Price control,
7. Foreign exchange regulations,
8. Consular formalities,
9. Pre-shipment inspection
10. Rules of origin,
11. Local content requirement
12. Regulatory trade barriers.
Import Quotas
Import quotas are a tool the government uses to target the quantity imported of a particular good.
In other words, when import quotas are applied, there is only a certain amount of quantity of a
good allowed to enter the domestic market. Quota restricts the quantity of a product that can be
imported into a country. This sort of barrier is often associated with the issuance of licenses. A
quota is a government-imposed trade restriction that limits the number or monetary value of
goods that a country can import or export during a particular period.
Voluntary Export Restraints (VERs)
In this type of trade barrier, a nation limits the amount of export and increases the price of the
goods and thus the revenue.
Import licencing
A license is granted to a business by the government and allows the business to import a certain
type of good into the country. For example, there could be a restriction on imported cheese, and
licenses would be granted to certain companies allowing them to act as importers. This creates a
restriction on competition and increases prices faced by consumers.
Technical barriers
A technical regulation is “a document which lays down product characteristics or their related
processes and production methods, including applicable administrative provisions, with which
compliance is mandatory” Technical Barriers to Trade result from legal requirements that
countries enact to ensure that products are safe, to protect the environment, and to inform
consumers, or for reasons of national security. If these legal requirements are used arbitrarily,
they may represent hidden restrictions to international trade.
Administrative barriers
Administrative barriers are rules, regulations, and standards applied to imports of goods and
services from foreign firms, in an effort to reduce the imports. It complicates and raises costs of
imports, and hence favors domestic producers.
Price Controls
Price controls can be used as a form of trade barrier, protecting domestic industries from foreign
competition. By artificially lowering the price of domestic products, governments can make
imports less attractive.
Foreign exchange regulations
Exchange controls act as a tax on the foreign currency required for purchasing foreign goods and
services and, by raising the domestic price of imports, they tend to reduce trade.
Consular formalities
Consular formalities are documents or procedures required by some countries before their
customs authorities will permit goods produced in other countries to enter their markets, such as
special invoices approved by a consul or other official of the importing country.
Pre-shipment inspection
Pre-shipment inspections (PSI) may be mandated by the government of the importing country to
determine the value of a shipment, to prevent the parties from under or over invoicing in an
attempt to pay lower customs duties or evade foreign exchange restrictions.
Rules of origin
Rules of origin are the criteria needed to determine the national source of a product. Their
importance is derived from the fact that duties and restrictions in several cases depend upon the
source of imports.
Local Content Requirement
Instead of placing a quota on the number of goods that can be imported, the government can
require that a certain percentage of a good be made domestically. The restriction can be a
percentage of the good itself or a percentage of the value of the good.For example, a restriction
on the import of computers might say that 25% of the pieces used to make the computer are
made domestically, or can say that 15% of the value of the good must come from domestically
produced components.
Regulatory Trade Barriers
The regulatory trade barriers are some legal barriers which hurdle the import of the products.
These regulatory barriers are set by the government and specifically include product, safety, and
pollution standards. For example, there are safety ratings for vehicles which need to be passed by
the manufacturers to sell their products in the importing country.
UNCTAD
The United Nations Conference on Trade and Development (UNCTAD) is an intergovernmental
organization within the United Nations Secretariat that promotes the interests of developing countries in
world trade. It was established in 1964 by the United Nations General Assembly (UNGA) and reports to
that body and the United Nations Economic and Social Council (ECOSOC). UNCTAD is composed of
195 member states and works with nongovernmental organizations worldwide;[3] its permanent
secretariat is in Geneva, Switzerland.
The primary objective of UNCTAD is to formulate policies relating to all aspects of development,
including trade, aid, transport, finance and technology. It was created in response to concerns among
developing countries that existing international institutions like GATT (now replaced by the World Trade
Organization), the International Monetary Fund (IMF), and the World Bank were not properly organized
to handle the particular problems of developing countries; UNCTAD would provide a forum where
developing nations could discuss and address problems relating to their economic development.
One of UNCTAD's principal achievements was conceiving and implementing the Generalized System of
Preferences (GSP), which promotes the export of manufactured goods from developing countries. In the
1970s and 1980s, UNCTAD was closely associated with the New International Economic Order (NIEO),
a set of proposals that sought to reduce economic dependency and inequality between developing and
developed countries.
UNCTAD conferences ordinarily take place every four years, with the first occurring in Geneva in 1964;
fifteen subsequent meetings have taken place worldwide, with the most recent held in Bridgetown,
Barbados from 3–8 October 2021 (albeit virtually, due to the COVID-19 pandemic).
UNCTAD has 400 staff members and a biannual (2010–2011) regular budget of $138 million in core
expenditures and $72 million in extra-budgetary technical assistance funds. It is a member of the United
Nations Sustainable Development Group, a consortium of UN entities that work to promote sustainable
socioeconomic development.
The UNCTAD Conference – held every four years:
UNCTAD XV Bridgetown Barbados 3-8 October 2021[8][9]
UNCTAD XIV Nairobi Kenya 17–22 July 2016[10]
UNCTAD XIII Doha Qatar 21–26 April 2012[11]
UNCTAD XII Accra Ghana 21–25 April 2008[12]
UNCTAD XI São Paulo Brazil 13–18 June 2004[13]
UNCTAD X Bangkok Thailand 12–19 February 2000[14]
UNCTAD IX Midrand South Africa 27 April – 11 May 1996
UNCTAD VIII Cartagena Colombia 8–25 February 1992
UNCTAD VII Geneva Switzerland 8 Jul-3 Aug 1987
UNCTAD VI Belgrade Yugoslavia 6–30 Jun 1983
UNCTAD V Manila Philippines 7 May-3 Jun 1979
UNCTAD IV Nairobi Kenya 5–31 May 1976
UNCTAD III Santiago Chile 13 Apr-21 May 1972
UNCTAD II New Delhi India 31 Jan-29 Mar 1968
UNCTAD I Geneva Switzerland 23 Mar-16 Jun 1964
The UNCTAD Trade and Development Board – the board manages the work of UNCTAD between two
conferences and meets up to three times every year;
Four UNCTAD Commissions and one Working Party – these meet more often than the board to take up
policy, programme and budgetary issues;
Expert Meetings – the commissions will convene expert meetings on selected topics to provide
substantive and expert input for Commission policy discussions.
The 15th quadrennial meeting is scheduled to take place in Bridgetown, Barbados, from 25 to 30 April
2021.About UNCTAD
Globalization, including a phenomenal expansion of trade, has helped lift millions out of poverty. But not
nearly enough people have benefited. And tremendous challenges remain.
UNCTAD support developing countries to access the benefits of a globalized economy more fairly and
effectively. And we help equip them to deal with the potential drawbacks of greater economic integration.
To do this, UNCTAD provide analysis, facilitate consensus-building, and offer technical assistance. This
helps them to use trade, investment, finance, and technology as vehicles for inclusive and sustainable
development. Working at the national, regional, and global level, our efforts help countries to:
1. Comprehend options to address macro-level development challenges
2. Achieve beneficial integration into the international trading system
3. Diversify economies to make them less dependent on commodities
4. Limit their exposure to financial volatility and debt
5. Attract investment and make it more development friendly
6. Increase access to digital technologies
7. Promote entrepreneurship and innovation
8. Help local firms move up value chains
9. Speed up the flow of goods across borders
10. Protect consumers from abuse
11. Curb regulations that stifle competition
 12. Adapt to climate change and use natural resources more effectively
Together with other UN departments and agencies, we measure progress by the Sustainable Development
Goals, as set out in Agenda 2030.
We also support implementation of Financing for Development, as mandated by the global community in
the 2015 Addis Ababa Agenda, together with four other major institutional stakeholders: the World Bank,
the International Monetary Fund, the World Trade Organization, and the United Nations Development
Programme.
While we work mainly with governments, to effectively deal with the magnitude and complexity of
meeting the Sustainable Development Goals, we believe that partnerships and closer cooperation with the
private sector and civil society are essential.
Ultimately, we are serving the citizens of the 195 countries that make up our organization. their goal is
prosperity for all.
What is UNCTAD and its function?
United Nations Conference on Trade and Development UNCTAD - DCED
The United Nations Conference on Trade and Development (UNCTAD) is the United Nations' focal point
for trade and development, and for interrelated issues in the areas of finance, technology, investment and
sustainable development.
What is the work of UNCTAD?
Working at the national, regional, and global level, our efforts help countries to: Comprehend options to
address macro-level development challenges. Achieve beneficial integration into the international trading
system. Diversify economies to make them less dependent on commodities.
Is UNCTAD part of WTO?
The WTO and UNCTAD are parties in a strategic partnership for the purpose of implementing the DDA,
cooperating to ensure that trade serves development goals, and for assisting the beneficial integration of
the developing and least developed countries (LDCs) into the global economy and the multilateral trading
system.
What is the structure of the UNCTAD?
In terms of structure, UNCTAD consists of the Conference, the Trade and Development Board (TDB)
and subsidiary intergovernmental bodies, together with the secretariat.
What are the objectives of UNCTAD?
It aims at enhancing the capacity of developing countries and countries in transition to strengthen their
institutions and development policies; helps them to acquire a better understanding of international
economic problems and to provide their own solutions; strengthens the negotiating capacities of
developing
Projects of UNCTAD
In 2022, UNCTAD had 225 ongoing projects with expenditures amounting to $52.7 million in 73
countries, many of them least developed. Through our assistance, developing countries can better
integrate into the global economy by transforming economies, tackling vulnerabilities, improving
competitiveness, and empowering people.

Trade Bloc
A trade bloc is a type of intergovernmental agreement, often part of a regional intergovernmental
organization, where barriers to trade (tariffs and others) are reduced or eliminated among the participating
states.
Trade blocs can be stand-alone agreements between several states (such as the USMCA) or part of a
regional organization (such as the European Union). Depending on the level of economic integration,
trade blocs can be classified as preferential trading areas, free-trade areas, customs unions, common
markets, or economic and monetary unions. A common market is seen as a stage of economic integration
towards an economic union or possibly towards the goal of a unified market.
A single market is a type of trade bloc in which most trade barriers have been removed (for goods) with
some common policies on product regulation, and freedom of movement of the factors of production
(capital and labour) and of enterprise and services. Trading blocs have historically been a key way of
promoting regional relations and economic prosperity.
Here we take a look at six of the world’s biggest trading blocs.
1. Regional Comprehensive Economic Partnership (RCEP)
The 15-nation Regional and Comprehensive Economic Partnership is likely to deliver significant benefits
for Cambodia, Vietnam and other low-middle-income countries in East Asia, the World Bank says. RCEP
entered into force in January 2022 and also includes China, Australia, Japan, Malaysia, New Zealand and
Singapore.
The agreement covers 30% of both global GDP and population, and the SwissRe Institute projects that it
will account for 35% of global GDP by 2030 as the economies of its member nations grow. It describes
the deal as “the most important new multilateral trade deal since the formation of the European Union
single market”.
2. United States-Mexico-Canada Agreement (USMCA)
USMCA is the successor to the North American Free Trade Agreement (NAFTA), which launched in
1994 linking the US, Canada and Mexico. The Trump administration sought to change NAFTA, arguing
that US jobs were being exported to lower-wage economies.
The US says the USMCA modernizes trade arrangements. It builds on NAFTA by adding new chapters
covering digital trade, fighting corruption and regulatory standards. The countries involved in the
USMCA account for 17% of global GDP.
3. Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP)
The CPTPP launched in 2018 with Japan, Malaysia, Vietnam, Australia, Singapore, Brunei Darussalam,
New Zealand, Canada, Mexico, Peru and Chile as members. The UK joined them in 2023 as part of a
move to strengthen trading links after Brexit, and together the member nations account for 15% of global
GDP.
The CPTPP started life as the Trans-Pacific Partnership and the United States was in talks to join. This
would have made it the world’s biggest free trade area, covering 40% of global GDP. However, the US
withdrew in 2017.
4. The European Union
The European single market embraces all 27 members of the European Union (EU). Iceland,
Liechtenstein and Norway are members of the European Economic Area with full access to the single
market, which was launched in 1993. Switzerland has partial access.
EU nations account for 14% of global trade and have a combined GDP of €14.5 trillion ($16 trillion),
making the EU the world’s third-largest economy after China and the United States.
5. African Continental Free Trade Area (AfCFTA)
Launched in 2020 to create a continent-wide market embracing 55 countries with 1.3 billion people, the
AfCFTA’s founders say it could increase trade within the continent by 52.3% by eliminating import
duties.
The free trade area is expected to expand Africa’s economy to $29 trillion by 2050. It also has the
potential to raise incomes by 9% by 2035 and lift 50 million people out of extreme poverty, the World
Bank says.
6. Southern Common Market (Mercosur)
Mercosur was set up in 1991 by Argentina, Brazil, Paraguay and Uruguay. Venezuela joined in 2012 but
was suspended in 2016 over its human rights record.
Suriname, Guyana, Colombia, Ecuador, Peru, Chile and Bolivia all have associate status. In 2021, the
combined GDP of the Mercosur nations was almost $2.2 trillion, according to World Bank figures,
making it the world’s fifth-largest economy.
The North American Free Trade Agreement (NAFTA) was an agreement signed by Canada, Mexico,
and the United States that created a trilateral trade bloc in North America. The agreement came into force
on January 1, 1994, and superseded the 1988 Canada–United States Free Trade Agreement between the
United States and Canada. The NAFTA trade bloc formed one of the largest trade blocs in the world by
gross domestic product.
The impetus for a North American free trade zone began with U.S. president Ronald Reagan, who made
the idea part of his 1980 presidential campaign. After the signing of the Canada–United States Free Trade
Agreement in 1988, the administrations of U.S. president George H. W. Bush, Mexican President Carlos
Salinas de Gortari, and Canadian prime minister Brian Mulroney agreed to negotiate what became
NAFTA. Each submitted the agreement for ratification in their respective capitals in December 1992, but
NAFTA faced significant opposition in both the United States and Canada. All three countries ratified
NAFTA in 1993 after the addition of two side agreements, the North American Agreement on Labor
Cooperation (NAALC) and the North American Agreement on Environmental Cooperation (NAAEC).
Passage of NAFTA resulted in the elimination or reduction of barriers to trade and investment between
the United States, Canada, and Mexico. The effects of the agreement regarding issues such as
employment, the environment, and economic growth have been the subject of political disputes. Most
economic analyses indicated that NAFTA was beneficial to the North American economies and the
average citizen, but harmed a small minority of workers in industries exposed to trade competition.
Economists held that withdrawing from NAFTA or renegotiating NAFTA in a way that reestablished
trade barriers would have adversely affected the U.S. economy and cost jobs.[7][8][9] However, Mexico
would have been much more severely affected by job loss and reduction of economic growth in both the
short term and long term.
After U.S. President Donald Trump took office in January 2017, he sought to replace NAFTA with a new
agreement, beginning negotiations with Canada and Mexico. In September 2018, the United States,
Mexico, and Canada reached an agreement to replace NAFTA with the United States–Mexico–Canada
Agreement (USMCA), and all three countries had ratified it by March 2020. NAFTA remained in force
until USMCA was implemented In April 2020, Canada and Mexico notified the U.S. that they were ready
to implement the agreement. The USMCA took effect on July 1, 2020, replacing NAFTA. The new law
involved only small changes.

A preferential trade area (also preferential trade agreement, PTA) is a trading bloc that gives
preferential access to certain products from the participating countries. This is done by reducing tariffs
but not by abolishing them completely. It is the first stage of economic integration. A preferential trade
area (also preferential trade agreement, PTA) is a trading bloc that gives preferential access to certain
products from the participating countries. This is done by reducing tariffs but not by abolishing them
completely. It is the first stage of economic integration.These tariff preferences have created numerous
departures from the normal trade relations principle, namely that World Trade Organization (WTO)
members should apply the same tariff to imports from other WTO members.With the recent
multiplication of bilateral PTAs and the emergence of Mega-PTAs (wide regional trade agreements such
as the Transatlantic Trade and Investment Partnership (TTIP) or Trans Pacific Partnership (TPP)), a
global trade system exclusively managed within the framework of the WTO now seems unrealistic and
the interactions between trade systems have to be taken into account. The increased complexity of the
international trade system generated by the multiplication of PTAs should be taken into account in the
study of the choice of fora used by countries or regions to promote their trade relations and environmental
agenda. PTAs have seen rapid growth; in the 1990s, there were slightly more than 100 PTAs. By 2014,
there were more than 700.
The European Free Trade Association (EFTA) is a regional trade organization and free trade area
consisting of four European states: Iceland, Liechtenstein, Norway and Switzerland.[4] The organization
operates in parallel with the European Union (EU), and all four member states participate in the European
Single Market and are part of the Schengen Area. They are not, however, party to the European Union
Customs Union.

EFTA was historically one of the two dominant western European trade blocs, but is now much smaller
and closely associated with its historical competitor, the European Union. It was established on 3 May
1960 to serve as an alternative trade bloc for those European states that were unable or unwilling to join
the then European Economic Community (EEC), the main predecessor of the EU. The Stockholm
Convention (1960), to establish the EFTA, was signed on 4 January 1960 in the Swedish capital by seven
countries (known as the "outer seven": Austria, Denmark, Norway, Portugal, Sweden, Switzerland and
the United Kingdom).[6] A revised Convention, the Vaduz Convention, was signed on 21 June 2001 and
entered into force on 1 June 2002.
After 1995 only two founding members remained, namely Norway and Switzerland. The other five,
Austria, Denmark, Portugal, Sweden and the United Kingdom, had joined the EU at some point in the
intervening years. The initial Stockholm Convention was superseded by the Vaduz Convention, which
aimed to provide a successful framework for continuing the expansion and liberalization of trade, both
among the organization's member states and with the rest of the world.
Whilst the EFTA is not a customs union and member states have full rights to enter into bilateral third-
country trade arrangements, it does have a coordinated trade policy.[4] As a result, its member states have
jointly concluded free trade agreements with the EU and a number of other countries.[4] To participate in
the EU's single market, Iceland, Liechtenstein, and Norway are parties to the Agreement on a European
Economic Area (EEA), with compliances regulated by the EFTA Surveillance Authority and the EFTA
Court. Switzerland has a set of multilateral agreements with the EU and its member states instead.
(CACM or ODECA) An economic organization comprising Guatemala, Honduras, El Salvador,
Nicaragua, and Costa Rica. Beginning with a treaty signed by all five countries in 1960 the CACM sought
to reduce trade barriers, stimulate exports, and encourage industrialization by means of regional
cooperation. The Central American Common Market (CACM) is an economic agreement among the five
Central American countries (Costa Rica, El Salvador, Guatemala, Honduras, and Nicaragua). This
movement toward regional economic integration commenced in 1951 with adoption of a resolution by the
United Nations Economic Commission for Latin America (ECLA). Years of study and negotiation
followed.
In 1958, the five countries, under the tutelage of ECLA, concluded two agreements: the Multilateral
Treaty on Central American Free Trade and Economic Integration and the Convention on the Regime of
Central American Integration Industries. The former, entered into force on 2 June 1959, provided for
limited intraregional free trade, with additional items to be made subject to free trade over a ten-year
period. The latter agreement provided for protected regional "integration industries" (those requiring free
access, without competition, to the entire Central American market in order to be economically viable).
The industries were to be allocated among the five countries. Costa Rica signed, but did not ratify, the
agreements. Its failure to do so rendered the convention inoperational.
In 1960, a three-country (El Salvador, Guatemala, and Honduras) agreement backed by the United States
—the Treaty of Economic Association—was signed. It created an expanded and accelerated movement
toward integration. Only fifty-five items were exempted from regional free trade. The treaty created a
development assistance fund and a set of regional institutions—neither were provided for in the earlier
protocols. The free-trade area would become a common market after five years, provided that the
signatories had equalized external tariffs. The treaty did not incorporate integration industries.
The Treaty of Economic Association created crisis in the regionwide movement toward economic
integration and prompted all five Central American countries to conclude yet another agreement, the
General Treaty of Central American Economic Integration, this time under ECLA tutelage, in December
1960. This treaty provided for immediate regional free trade for all except a very small number of
products. It stipulated that virtually all exempted products would be freely traded in five years. It also
provided for a uniform external tariff and a common market in five years. Integration industries were
incorporated. Additionally, the treaty established a set of institutions and provided for the establishment
of the Central American Bank for Economic Integration. The treaty was signed and ratified by all but
Costa Rica, which offered economic reasons for its refusal but in reality acted out of a sense of
distinctiveness from the rest of Central America. In 1963 it reversed its position.
Under the free-trade provisions, intra-Central American trade grew dramatically—from $8.3 million in
1950 to $32.7 million in 1960 to $213.6 million in 1967. Central America experienced considerable
economic growth in the 1960s and into the 1970s, averaging 5.8 percent per year. Most of the growth
took place in the urban industrial sector under the stimulus of the common market. The common market,
by creating a regional market free of most trade barriers, made feasible a greater degree of industrial
development than would have been possible in five separate markets.
The common market's impact was not entirely positive. It did nothing to promote development of the
agrarian sector. And because the common market adhered to free-market forces, the bulk of the industrial
development that followed its creation was concentrated in El Salvador and Guatemala, already the most
developed Central American countries. Much of the industrialization was capital-intensive rather than
labor-intensive. The opportunities created by the common market were mainly exploited by foreign
investors.
Operation of the common market was disrupted by the 1969 war between El Salvador and Honduras and
its aftermath. It was even more seriously disrupted by the economic-political crises of the 1970s and
1980s. In 2004, the Central American countries, along with the Dominican Republic, negotiated a new
economic agreement with the United States, called the Central American Free Trade Agreement
(CAFTA). Despite the opposition of numerous civil society organizations in the United States and Central
America, the treaty was ratified.

The Latin American Free Trade Association, LAFTA, (later transformed into the Latin American
Integration Association, Spanish: Asociación Latinoamericana de Integración, Portuguese: Associação
Latino-Americana de Integração) was created in the 1960 Treaty of Montevideo by Argentina, Brazil,
Chile, Mexico, Paraguay, Peru, and Uruguay. The signatories hoped to create a common market in Latin
America and offered tariff rebates among member nations. In 1980, LAFTA reorganized into the Latin
American Integration Association (ALADI) which now has 13 members: Argentina, Bolivia, Brazil,
Chile, Colombia, Cuba, Ecuador, Mexico, Panama, Paraguay, Peru, Uruguay, and Venezuela. LAFTA
brought many new positive changes to Latin America. With LAFTA in place existing productive capacity
could be used more fully to supply regional needs, industries could reduce costs as a result of potential
economies through expanded output and regional specialization, and attraction to new investment
occurred as a result of the regional market area.[3] Although LAFTA has brought many constructive
results, it has also brought problems to individual nations as well as to Latin America as a whole.
Some of the problems which the individual countries face are the way they are grouped together by their
economic strengths according to LAFTA. The grouping was originally Brazil and Argentina in one group,
Colombia, Chile, Peru, Uruguay, and Venezuela in the second group, and the last group which included
Bolivia, Ecuador, and Paraguay.[4] There is a problem in these classifications because these countries are
very different economically as well as in other aspects which the classification does not take into account.
Problems which Latin America faced as a whole had to deal with many of the nations in the continent
being underdeveloped. The Free Trade Agreement was seen as a way of the countries having greater
economic interactions amongst each other and thus improving the economic state of the poorer nations.

The Association of Southeast Asian Nations, commonly as ASEAN, is a political and economic union
of 10 states in Southeast Asia. Together, its member states represent a population of over 600 million over
a land area of 4.5 million km2 (1.7 million sq mi).[13] The bloc generated a purchasing power parity
(PPP) gross domestic product (GDP) of around US$10.2 trillion in 2022, constituting approximately 6.5%
of global GDP (PPP). ASEAN member states include some of the fastest growing economies in the
world.
The primary objectives as stated by the association are "to accelerate economic growth, social progress
and cultural development in the region", and "to promote regional peace and stability through abiding
respect for justice and the rule of law in the relationship among countries in the region and adherence to
the principles of the United Nations Charter." The bloc has broadened its objectives beyond economic and
social spheres, aiming to emulate the European Union by establishing a shared security regime.
ASEAN engages with other supranational entities in the Asia-Pacific region and beyond: it is a major
partner of the UN, SCO, PA, GCC, MERCOSUR, CELAC, and ECO, It hosts diplomatic missions
throughout the world, maintaining a global network of relationships, and is considered by many to be a
global powerhouse, and even the central forum for cooperation in the region. Its success has become the
driving force of some of the largest trade blocs in history, including APEC and RCEP.

The Global System of Trade Preferences (GSTP) was initiated by the UNCTAD to develop trading
opportunities among the developing countries. Through the framework of the GSTP, its Participants aim
to promote economic growth and development by capitalizing on South-South trade.
The origin of the GSTP can be traced back to the ministerial meeting of the Group of 77 in Mexico City
in 1976 where the GSTP first found its political expression. The idea was subsequently developed at
ministerial meetings of the Group of 77 in Arusha (1979) and in Caracas (1981). In 1982, the Ministers of
Foreign Affairs of the Group of 77 in New York defined the basic components of the Agreement and
established a framework for negotiations. The Group of 77 began preparatory work in Geneva in 1984
with Ministerial impetus provided in 1985 through the New Delhi ministerial meeting. The Ministerial
meeting in Brasilia in 1986 established the GSTP as a provisional legal framework and launched the first
round of negotiations on preferential trade concessions. In 1988, in Belgrade, participants completed the
negotiations on the text of the Agreement, as well as the first round of tariff reduction negotiations. The
42 GSTP members are; Algeria, Argentina, Bangladesh, Benin, Bolivia, Brazil, Cameroon, Chile, Cuba,
the Democratic People’s Republic of Korea, Ecuador, Egypt, Ghana, Guinea, Guyana, India, Indonesia,
the Islamic Republic of Iran, Iraq, Libya, Malaysia, Mexico, Morocco, Mozambique, Myanmar,
Nicaragua, Nigeria, Pakistan, Peru, Philippines, Republic of Korea, Singapore, Sri Lanka, Sudan,
Thailand, Trinidad and Tobago, Tunisia, the United Republic of Tanzania, Venezuela, Viet Nam,
Zimbabwe, and Mercosur (South American trade bloc incl. Argentina, Brazil, Paraguay and Uruguay).

The SAARC Preferential Trading Arrangement (SAPTA) reflected the desire of the Member States to
promote and sustain mutual trade and economic cooperation within the SAARC region through the
exchange of tariff concessions.
The idea of liberalizing trade among SAARC countries was first mooted by Sri Lanka at the sixth Summit
of the South Asian Association for Regional Co-operation (SAARC) held in Colombo in December 1991.
Four rounds of negotiations were held under SAPTA. SAPTA was envisaged primarily as the first step
towards the transition to a South Asian Free Trade Area (SAFTA) leading subsequently towards a
Customs Union. Accordingly SAPTA was superseded with the implementation of SAFTA. Product
coverage was limited under SAPTA and usage of tariff preferences under the SAPTA has been gradually
decreasing.
The South Asian Free Trade Area (SAFTA) is a 2004 agreement that created a free-trade area of 1.6
billion people in Afghanistan, Bangladesh, Bhutan, India, the Maldives, Nepal, Pakistan and Sri Lanka
with the vision of increasing economic cooperation and integration.[1]
One of the major goals was to reduce customs duties of all traded goods to zero by 2016. SAFTA
required the developing countries in South Asia (India, Pakistan and Sri Lanka) to bring their duties down
to 20 percent in the first phase of the two-year period ending in 2007. In the final five-year phase ending
in 2012, the 20-percent duty was reduced to zero in a series of annual cuts. The least developed countries
in the region had an additional three years to reduce tariffs to zero. India and Pakistan ratified the treaty in
2009, whereas Afghanistan, as the eighth member state of the SAARC, ratified the SAFTA protocol on 4
May 2011.

The Indian Ocean Rim Association (IORA), formerly known as the Indian Ocean Rim Initiative (IORI)
and the Indian Ocean Rim Association for Regional Cooperation (IOR-ARC), is an international
organisation consisting of 23 states bordering the Indian Ocean. The IORA is a regional forum, tripartite
in nature, bringing together representatives of Government, Business and Academia, for promoting co-
operation and closer interaction among them. It is based on the principles of for strengthening Economic
Cooperation particularly on Trade Facilitation and Investment, Promotion as well as Social Development
of the region. The Coordinating Secretariat of IORA is located at Ebene, Mauritius. The organisation was
first established as Indian Ocean Rim Initiative in Mauritius in March 1995 and formally launched on 6–7
March 1997 by the conclusion of a multilateral treaty known as the Charter of the Indian Ocean Rim
Association for Regional Co-operation.[5] The idea is said to have taken root during a visit of former
South African Foreign Minister, Pik Botha, to India in November 1993. It was cemented during the
subsequent presidential visit of Nelson Mandela to India in January 1995. Consequently, an Indian Ocean
Rim Initiative was formed by South Africa and India. Mauritius and Australia were subsequently brought
in. In March 1997, the IOR-ARC was formally launched, with seven additional countries as members:
Indonesia, Sri Lanka, Malaysia, Yemen, Tanzania, Madagascar and Mozambique. Indian Ocean Rim
Association (IORA) has identified six priority areas, namely:
1. maritime security,
2. trade and investment facilitation,
3. fisheries management,
4. disaster risk reduction,
5. academic and scientific cooperation and
6. tourism promotion and cultural exchanges.

The Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC)
is an international organisation of seven South Asian and Southeast Asian nations, housing 1.73 billion
people and having a combined gross domestic product of US$5.2 trillion (2023). The BIMSTEC member
states – Bangladesh, Bhutan, India, Myanmar, Nepal, Sri Lanka, and Thailand – are among the countries
dependent on the Bay of Bengal.
Fourteen priority sectors of cooperation have been identified and several BIMSTEC centres have been
established to focus on those sectors. A BIMSTEC free trade agreement is under negotiation (c. 2018),
also referred Similar to SAARC.
Leadership is rotated in alphabetical order of country names. The permanent secretariat is in Dhaka,
Bangladesh. On 6 June 1997, a new sub-regional grouping was formed in Bangkok under the name BIST-
EC (Bangladesh, India, Sri Lanka, and Thailand Economic Cooperation). Following the inclusion of
Myanmar on 22 December 1997 during a special Ministerial Meeting in Bangkok, the Group was
renamed ‘BIMST-EC’ (Bangladesh, India, Myanmar, Sri Lanka and Thailand Economic Cooperation). In
1998, Nepal became an observer. In February 2004, Nepal and Bhutan became full members.
On 31 July 2004, in the first Summit the grouping was renamed as BIMSTEC or the Bay of Bengal
Initiative for Multi-Sectoral Technical and Economic Cooperation.There are 14 main sectors of
BIMSTEC along technological and economic cooperation among South Asian and Southeast Asian
countries along the coast of the Bay of Bengal.
1. Trade & Investment
2. Transport & Communication
3. Energy
4. Tourism
5. Technology
6. Fisheries
7. Agriculture
8. Public Health
9. Poverty Alleviation
10. Counter-Terrorism & Transnational Crime
11. Environment & Disaster Management
12. People-to-People Contact
13. Cultural Cooperation
14. Climate Change
Sectors 7 to 13 were added at the 8th Ministerial Meeting in Dhaka in 2005 while the 14th sector was
added in 11th Ministerial Meeting in New Delhi in 2008.Member nations are denoted as Lead Countries
for each sector.
The Bretton Woods twins refers to the two multilateral organizations created at the Bretton Woods
Conference in 1944, namely the World Bank and the International Monetary Fund. Both twin
organizations functioned to enact and maintain the Bretton Woods system of prescribed international
currency exchange rates.
The Bretton Woods Conference, formally known as the United Nations Monetary and Financial
Conference, was the gathering of 730 delegates from all 44 allied nations at the Mount Washington Hotel,
in Bretton Woods, New Hampshire, United States, to regulate the international monetary and financial
order after the conclusion of World War II.
The conference was held from July 1 to 22, 1944. Agreements were signed that, after legislative
ratification by member governments, established the International Bank for Reconstruction and
Development (IBRD, later part of the World Bank group) and the International Monetary Fund (IMF).
This led to what was called the Bretton Woods system for international commercial and financial
relations.

The World Bank is an international financial institution that provides loans and grants to the
governments of low- and middle-income countries for the purpose of pursuing capital projects. The
World Bank is the collective name for the International Bank for Reconstruction and Development
(IBRD) and International Development Association (IDA), two of five international organizations owned
by the World Bank Group. It was established along with the International Monetary Fund at the 1944
Bretton Woods Conference. After a slow start, its first loan was to France in 1947. In the 1970s, it
focused on loans to developing world countries, shifting away from that mission in the 1980s. For the last
30 years, it has included NGOs and environmental groups in its loan portfolio. Its loan strategy is
influenced by the United Nations' Sustainable Development Goals, as well as environmental and social
safeguards.
As of 2022, the World Bank is run by a president and 25 executive directors, as well as 29 various vice
presidents. IBRD and IDA have 189 and 174 member countries, respectively. The U.S., Japan, China,
Germany and the U.K. have the most voting power. The bank aims loans at developing countries to help
reduce poverty. The bank is engaged in several global partnerships and initiatives, and takes a role in
working toward addressing climate change. The World Bank operates a number of training wings, and it
works with the Clean Air Initiative and the UN Development Business. It works within the Open Data
Initiative and hosts an Open Knowledge Repository.
The World Bank has been criticized as promoting inflation and harming economic development, causing
protests in 1988 and 2000. There has also been criticism of the bank's governance and response to the
COVID-19 pandemic. The president David Malpass faced strong criticism as he challenged the scientific
consensus on climate change. He was replaced by Ajay Banga, supporting climate action.

The International Monetary Fund (IMF) is a major financial agency of the United Nations, and an
international financial institution funded by 190 member countries, with headquarters in Washington,
D.C. It is regarded as the global lender of last resort to national governments, and a leading supporter of
exchange-rate stability. Its stated mission is "working to foster global monetary cooperation, secure
financial stability, facilitate international trade, promote high employment and sustainable economic
growth, and reduce poverty around the world." Established on December 27, 1945 at the Bretton Woods
Conference, primarily according to the ideas of Harry Dexter White and John Maynard Keynes, it started
with 29 member countries and the goal of reconstructing the international monetary system after World
War II. It now plays a central role in the management of balance of payments difficulties and
international financial crises. Through a quota system, countries contribute funds to a pool from which
countries can borrow if they experience balance of payments problems. As of 2016, the fund had SDR
477 billion (about US$667 billion).
The IMF works to stabilize and foster the economies of its member countries by its use of the fund, as
well as other activities such as gathering and analyzing economic statistics and surveillance of its
members' economies. IMF funds come from two major sources: quotas and loans. Quotas, which are
pooled funds from member nations, generate most IMF funds. The size of members' quotas increase
according to their economic and financial importance in the world. The quotas are increased periodically
as a means of boosting the IMF's resources in the form of special drawing rights.
The current managing director (MD) and chairwoman of the IMF is Bulgarian economist Kristalina
Georgieva, who has held the post since October 1, 2019. Indian-American economist Gita Gopinath,
previously the chief economist, was appointed as first deputy managing director, effective January 21,
2022. Pierre-Olivier Gourinchas was appointed chief economist on January 24, 2022.

The International Finance Corporation (IFC) is an international financial institution that offers
investment, advisory, and asset-management services to encourage private-sector development in less
developed countries. The IFC is a member of the World Bank Group and is headquartered in Washington,
D.C. in the United States.
It was established in 1956, as the private-sector arm of the World Bank Group, to advance economic
development by investing in for-profit and commercial projects for poverty reduction and promoting
development. The IFC's stated aim is to create opportunities for people to escape poverty and achieve
better living standards by mobilizing financial resources for private enterprise, promoting accessible and
competitive markets, supporting businesses and other private-sector entities, and creating jobs and
delivering necessary services to those who are poverty stricken or otherwise vulnerable.
Since 2009, the IFC has focused on a set of development goals that its projects are expected to target. Its
goals are to increase sustainable agriculture opportunities, improve healthcare and education, increase
access to financing for microfinance and business clients, advance infrastructure, help small businesses
grow revenues, and invest in climate health.
The IFC is owned and governed by its member countries but has its own executive leadership and staff
that conduct its normal business operations. It is a corporation whose shareholders are member
governments that provide paid-in capital and have the right to vote on its matters. Originally, it was more
financially integrated with the World Bank Group, but later, the IFC was established separately and
eventually became authorized to operate as a financially autonomous entity and make independent
investment decisions.
It offers an array of debt and equity financing services and helps companies face their risk exposures
while refraining from participating in a management capacity. The corporation also offers advice to
companies on making decisions, evaluating their impact on the environment and society, and being
responsible. It advises governments on building infrastructure and partnerships to further support private
sector development.
The corporation is assessed by an independent evaluator each year. In 2011, its evaluation report
recognized that its investments performed well and reduced poverty, but recommended that the
corporation define poverty and expected outcomes more explicitly to better-understand its effectiveness
and approach poverty reduction more strategically. The corporation's total investments in 2011 amounted
to $18.66 billion. It committed $820 million to advisory services for 642 projects in 2011, and held $24.5
billion worth of liquid assets. The IFC is in good financial standing and received the highest ratings from
two independent credit rating agencies in 2018.
IFC comes under frequent criticism from NGOs that it is not able to track its money because of its use of
financial intermediaries. For example, a report by Oxfam International and other NGOs in 2015, "The
Suffering of Others," found the IFC was not performing enough due diligence and managing risk in many
of its investments in third-party lenders.
Other criticism focuses on IFC working excessively with large companies or wealthy individuals already
able to finance their investments without help from public institutions such as IFC, and such investments
do not have an adequate positive development impact. An example often cited by NGOs and critical
journalists is IFC granting financing to a Saudi prince for a five-star hotel in Ghana.
The Multilateral Investment Guarantee Agency (MIGA) is an international financial institution which
offers political risk insurance and credit enhancement guarantees. These guarantees help investors protect
foreign direct investments against political and non-commercial risks in developing countries. MIGA is a
member of the World Bank Group and is headquartered in Washington, D.C. in the United States. The
Multilateral Investment Guarantee Agency MIGA was established in 1988 as an investment insurance
facility to encourage confident investment in developing countries. MIGA is owned and governed by its
member states, but has its own executive leadership and staff which carry out its daily operations. Its
shareholders are member governments that provide paid-in capital and have the right to vote on its
matters. It insures long-term debt and equity investments as well as other assets and contracts with long-
term periods. The agency is assessed by the World Bank's Independent Evaluation Group each year.
MIGA offers insurance to cover five types of non-commercial risks: currency inconvertibility and transfer
restriction; government expropriation; war, terrorism, and civil disturbance; breaches of contract; and the
non-honoring of financial obligations. MIGA will cover investments such as equity, loans, shareholder
loans, and shareholder loan guarantees. The agency may also insure investments such as management
contracts, asset securitization, bonds, leasing activities, franchise agreements, and license agreements.
The agency generally offers insurance coverage lasting up to 15 years with a possible five-year extension
depending on a given project's nature and circumstances. When an event occurs that is protected by the
insurance, MIGA can exercise the investor's rights against the host country through subrogation to
recover expenses associated with covering the claim. However, the agency's convention does not require
member governments to treat foreign investments in any special way. As a multilateral institution, MIGA
is also in a position to attempt to sort out potential disputes before they ever turn into insurance claims.