INDEX

SR. NO SUBJECT PAGE NO

INTRODUCTION WTO

1-10

WORKING OF WTO

11-15

DISPUTE SETTLEMENT MECHANISM

16-23

DISPUTE SETTLEMENT CASES

24-29

CONCLUSION

30-31

CHAPTER 1:- WTO INTRODUCTION

Location: Established: Created by: Membership: Budget:

Geneva, Switzerland 1 January 1995 Uruguay Round negotiations (1986-94) 159 countries on 2 March 2013 196 million Swiss francs for 2011

SecretariatStaff: 640 Head: Roberto Azevedo (Director-General)

The World Trade Organization came into being in 1995. One of the youngest of the international organizations, the WTO is the successor to the General Agreement on Tariffs and Trade (GATT) established in the wake of the Second World War. So while the WTO is still young, the multilateral trading system that was originally set up under GATT is well over 50 years old. The past 50 years have seen an exceptional growth in world trade. Merchandise exports grew on average by 6% annually. Total trade in 2000 was 22-times the level of 1950. GATT and the WTO have helped to create a strong and prosperous trading system contributing to unprecedented growth. The system was developed through a series of trade negotiations, or rounds, held under GATT. The first rounds dealt mainly with tariff reductions but later negotiations included other areas such as anti-dumping and non-tariff measures. The last round the 1986-94 Uruguay Round led to the WTOs creation. The negotiations did not end there. Some continued after the end of the Uruguay Round. In February 1997 agreement was reached on telecommunications services, with 69 governments agreeing to wide-ranging liberalization measures that went beyond those agreed in the Uruguay Round. In the same year 40 governments successfully concluded negotiations for tariff-free trade in information technology products, and 70 members concluded a financial services deal covering more than 95% of trade in banking, insurance, securities and financial information. In 2000, new talks started on agriculture and services. These have now been incorporated into a broader agenda launched at the fourth WTO Ministerial Conference in Doha, Qatar, in November 2001. The negotiations did not end there. Some continued after the end of the Uruguay Round. In February 1997 agreement was reached on telecommunications services, with 69 governments

agreeing to wide-ranging liberalization measures that went beyond those agreed in the Uruguay Round. In the same year 40 governments successfully concluded negotiations for tariff-free trade in information technology products, and 70 members concluded a financial services deal covering more than 95% of trade in banking, insurance, securities and financial information. In 2000, new talks started on agriculture and services. These have now been incorporated into a broader agenda launched at the fourth WTO Ministerial Conference in Doha, Qatar, in November 2001.

Developing countries are key players A key question now is how to take account of the increasing role of developing countries. These countries have become major participants in world trade: their share of global exports rose from 22 percent in 1980 to 32 percent in 2005 and is expected to reach 45 percent by 2030 (see Chart 1) (World Bank, 2006). About two-thirds of the WTO's members are developing countries.

WTO STRUCTURE The WTO has about 150 members, accounting for about 95% of world trade. Around 30 others are negotiating membership. Decisions are made by the entire membership. This is typically by consensus. A majority vote is also possible but it has never been used in the WTO, and was extremely rare under the WTOs predecessor, GATT. The WTOs agreements have been ratified in all members parliaments. The WTOs top level decision-making body is the Ministerial Conference which meets at least once every two years. Below this is the General Council (normally ambassadors and heads of delegation in Geneva, but sometimes officials sent from members capitals) which meets several times a year in the Geneva headquarters. The General Council also meets as the Trade Policy Review Body and the Dispute Settlement Body. At the next level, the Goods Council, Services Council and Intellectual Property (TRIPS) Council report to the General Council. Numerous specialized committees, working groups and working parties deal with the individual agreements and other areas such as the environment, development, membership applications and regional trade agreements.

WHO WTO IS The WTO was born out of negotiations, and everything the WTO does is the result of negotiations. The bulk of the WTOs current work comes from the 198694 negotiations called the Uruguay Round and earlier negotiations under the General Agreement on Tariffs and Trade (GATT). The WTO is currently the host to new negotiations, under the Doha Development Agenda launched in 2001. Where countries have faced trade barriers and wanted them lowered, the negotiations have helped to open markets for trade. But the WTO is not just about opening markets, and in some circumstances its rules support maintaining trade barriers for example, to protect consumers or prevent the spread of disease. At its heart are the WTO agreements, negotiated and signed by the bulk of the worlds trading nations. These documents provide the legal ground rules for international commerce. They are essentially contracts, binding governments to keep their trade policies within agreed limits. Although negotiated and signed by governments, the goal is to help producers of goods and services, exporters, and importers conduct their business, while allowing governments to meet social and environmental objectives. The systems overriding purpose is to help trade flow as freely as possible so long as there are no undesirable side effects because this is important for economic development and wellbeing. That partly means removing obstacles. It also means ensuring that individuals, companies and governments know what the trade rules are around the world, and giving them the confidence that there will be no sudden changes of policy. In other words, the rules have to be transparent and predictable. Trade relations often involve conflicting interests. Agreements, including those painstakingly negotiated in the WTO system, often need interpreting. The most harmonious way to settle these differences is through some neutral procedure based on an agreed legal foundation. That is the purpose behind the dispute settlement process written into the WTO agreements.

WHAT WTO STANDS FOR 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. Non-discrimination A country should not discriminate between its trading partners and it should not discriminate between its own and foreign products, services or nationals.

More open Lowering trade barriers is one of the most obvious ways of encouraging trade; these barriers include customs duties (or tariffs) and measure such as import bans or quotas that restrict quantities selectively. Predictable and transparent Foreign companies, investors and governments should be confident that trade barriers should not be raised arbitrarily. With stability and predictability, investment is encouraged, jobs are created and consumers can fully enjoy the benefits of competition choice and lower prices.
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More competitive Discouraging unfair practices, such as export subsidies and dumping products at below cost to gain market share; 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. More beneficial for less developed countries Giving them more time to adjust, greater flexibility and special privileges; over three-quarters of WTO members are developing countries and countries in transition to market economies. The WTO agreements give them transition periods to adjust to the more unfamiliar and, perhaps, difficult WTO provisions. Protect the environment The WTOs agreements permit members to take measures to protect not only the environment but also public health, animal health and plant health. However, these measures must be applied in the same way to both national and foreign businesses. In other words, members must not use environmental protection measures as a means of disguising protectionist policies.

WTO AND DEVELOPING COUNTRIES

Development and trade Over three quarters of WTO members are developing or least-developed countries. All WTO agreements contain special provision for them, including longer time periods to implement agreements and commitments, measures to increase their trading opportunities and support to help them build the infrastructure for WTO work, handle disputes, and implement technical standards. The 2001 Ministerial Conference in Doha set out tasks, including negotiations, for a wide range of issues concerning developing countries. Some people call the new negotiations the Doha Development Round. Before that, in 1997, a high-level meeting on trade initiatives and technical assistance for leastdeveloped countries resulted in an integrated framework involving six intergovernmental agencies, to help least-developed countries increase their ability to trade, and some additional preferential market access agreements. A WTO committee on trade and development, assisted by a sub-committee on least-developed countries, looks at developing countries special needs. Its responsibility includes implementation of the agreements, technical cooperation, and the increased participation of developing countries in the global trading system Technical assistance and training The WTO organizes around 100 technical cooperation missions to developing countries annually. It holds on average three trade policy courses each year in Geneva for government officials. Regional seminars are held regularly in all regions of the world with a special emphasis on African countries. Training courses are also organized in Geneva for officials from countries in transition from central planning to market economies. The WTO set up reference centers in over 100 trade ministries and regional organizations in capitals of developing and least-developed countries, providing computers and internet access to enable ministry officials to keep abreast of events in the WTO in Geneva through online access to the WTOs immense database of official documents and other material. Efforts are also being made to help countries that do not have permanent representatives in Geneva.

Number of WTO technical assistance activities per year

WTO MISSION STATEMENT The World Trade Organization the WTO is the international organization whose primary purpose is to open trade for the benefit of all. The WTO provides a forum for negotiating agreements aimed at reducing obstacles to international trade and ensuring a level playing field for all, thus contributing to economic growth and development. The WTO also provides a legal and institutional framework for the implementation and monitoring of these agreements, as well as for settling disputes arising from their interpretation and application. The current body of trade agreements comprising the WTO consists of 16 different multilateral agreements (to which all WTO members are parties) and two different plurilateral agreements (to which only some WTO members are parties). Over the past 60 years, the WTO, which was established in 1995, and its predecessor organization the GATT have helped to create a strong and prosperous international trading system, thereby contributing to unprecedented global economic growth. The WTO currently has 159 members, of which 117 are developing countries or separate customs territories. WTO activities are supported by a Secretariat of some 700 staff, led by the WTO Director-General. The Secretariat is located in Geneva, Switzerland, and has an annual budget of approximately CHF 200 million ($180 million, 130 million). The three official languages of the WTO are English, French and Spanish. Decisions in the WTO are generally taken by consensus of the entire membership. The highest institutional body is the Ministerial Conference, which meets roughly every two years. A General Council conducts the organization's business in the intervals between Ministerial Conferences. Both of these bodies comprise all members. Specialized subsidiary bodies (Councils, Committees, Sub-committees), also comprising all members, administer and monitor the implementation by members of the various WTO agreements.

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CHAPTER 2:- WORKING OF WTO

The WTO has a multiplicity of committees, sub-committees and working groups made up of trade diplomats from member-countries, a General Council of all member-countries which is ostensibly responsible for setting its agenda, and a Secretariat of administrators (currently headed by WTO director general Mike Moore, a former Labor PM of New Zealand). Many of these bodies meet every single day in WTO headquarters in Geneva. Officially, the WTO works on consensus; every country must agree for something to take effect. However, in most cases the Quad sets the agenda and works out the draft agreements between itself and selected other countries in what are known as "Green Room" negotiations. Once the Quad believes "sufficient" support for them is garnered, these drafts are then presented as accomplished facts to the other members. Corporations and corporate lobby groups also play a major role, sometimes behind the scenes through their country delegations, sometimes more officially through the observer status of such bodies as the International Chamber of Commerce. Many agreements are specifically tailored to corporate needs and suggest heavy corporate involvement in their drafting. It is widely believed, for example, that the Intellectual Property Council, a corporate lobby group, wrote the first draft of the agreement on intellectual property rights.

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WHAT WTO DOES 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).While the WTO is driven by its member states, it could not function without its Secretariat to coordinate the activities. The Secretariat employs over 600 staff and its experts lawyers, economists, statisticians and communications experts assist WTO members on a daily basis to ensure, among other things, that negotiations progress smoothly, and that the rules of international trade are correctly applied and enforced. Trade negotiations The WTO agreements cover goods, services and intellectual property. They spell out the principles of liberalization, and the permitted exceptions. They include individual countries commitments to lower customs tariffs and other trade barriers, and to open and keep open services markets. They set procedures for settling disputes. These agreements are not static; they are renegotiated from time to time and new agreements can be added to the package. Many are now being negotiated under the Doha Development Agenda, launched by WTO trade ministers in Doha, Qatar, in November 2001. Implementation and monitoring WTO agreements require governments to make their trade policies transparent by notifying the WTO about laws in force and measures adopted. Various WTO councils and committees seek to ensure that these requirements are being followed and that WTO agreements are being properly implemented. All WTO members must undergo periodic scrutiny of their trade policies and practices, each review containing reports by the country concerned and the WTO Secretariat. Dispute settlement The WTOs procedure for resolving trade quarrels under the Dispute Settlement Understanding is vital for enforcing the rules and therefore for ensuring that trade flows smoothly. Countries

12

bring disputes to the WTO if they think their rights under the agreements are being infringed. Judgments by specially appointed independent experts are based on interpretations of the agreements and individual countries commitments. Building trade capacity WTO agreements contain special provision for developing countries, including longer time periods to implement agreements and commitments, measures to increase their trading opportunities, and support to help them build their trade capacity, to handle disputes and to implement technical standards. The WTO organizes hundreds of technical cooperation missions to developing countries annually. It also holds numerous courses each year in Geneva for government officials. Aid for Trade aims to help developing countries develop the skills and infrastructure needed to expand their trade. Outreach The WTO maintains regular dialogue with non-governmental organizations, parliamentarians, other international organizations, the media and the general public on various aspects of the WTO and the ongoing Doha negotiations, with the aim of enhancing cooperation and increasing awareness of WTO activities.

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WTO WORKINGS ON AGREEMENTS The WTOs rules the agreements are the result of negotiations between the members. The current set were the outcome of the 198694 Uruguay Round negotiations which included a major revision of the original General Agreement on Tariffs and Trade (GATT). GATT is now the WTOs principal rule-book for trade in goods. The Uruguay Round also created new rules for dealing with trade in services, relevant aspects of intellectual property, dispute settlement, and trade policy reviews. The complete set runs to some 30,000 pages consisting of about 30 agreements and separate commitments (called schedules) made by individual members in specific areas such as lower customs duty rates and services marketopening. Through these agreements, WTO members operate a non-discriminatory trading system that spells out their rights and their obligations. Each country receives guarantees that its exports will be treated fairly and consistently in other countries markets. Each promises to do the same for imports into its own market. The system also gives developing countries some flexibility in implementing their commitments. Goods It all began with trade in goods. From 1947 to 1994, GATT was the forum for negotiating lower customs duty rates and other trade barriers; the text of the General Agreement spelt out important rules, particularly non-discrimination. Since 1995, the updated GATT has become the WTOs umbrella agreement for trade in goods. It has annexes dealing with specific sectors such as agriculture and textiles, and with specific issues such as state trading, product standards, subsidies and actions taken against dumping. Services Banks, insurance firms, telecommunications companies, tour operators, hotel chains and transport companies looking to do business abroad can now enjoy the same principles of freer and fairer trade that originally only applied to trade in goods.
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These principles appear in the new General Agreement on Trade in Services (GATS). WTO members have also made individual commitments under GATS stating which of their services sectors they are willing to open to foreign competition, and how open those markets are.\ Intellectual property The WTOs intellectual property agreement amounts to rules for trade and investment in ideas and creativity. The rules state how copyrights, patents, trademarks, geographical names used to identify products, industrial designs, integrated circuit layout-designs and undisclosed information such as trade secrets intellectual property should be protected when trade is involved. Dispute settlement The WTOs procedure for resolving trade quarrels under the Dispute Settlement Understanding is vital for enforcing the rules and therefore for ensuring that trade flows smoothly. Countries bring disputes to the WTO if they think their rights under the agreements are being infringed. Judgments by specially-appointed independent experts are based on interpretations of the agreements and individual countries commitments. The system encourages countries to settle their differences through consultation. Failing that, they can follow a carefully mapped out, stage-by-stage procedure that includes the possibility of a ruling by a panel of experts, and the chance to appeal the ruling on legal grounds. Confidence in the system is borne out by the number of cases brought to the WTO around 300 cases in eight years compared to the 300 disputes dealt with during the entire life of GATT (194794). Policy review The Trade Policy Review Mechanisms purpose is to improve transparency, to create a greater understanding of the policies that countries are adopting, and to assess their impact. Many members also see the reviews as constructive feedback on their policies. All WTO members must undergo periodic scrutiny, each review containing reports by the country concerned and the WTO Secretariat.
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CHAPTER 3:- DISPUTE SETTLEMENT MECHANISM OF WTO

Dispute settlement is regarded by the World Trade Organization (WTO) as the central pillar of the multilateral trading system, and as the organization's "unique contribution to the stability of the global economy". A dispute arises when one member country adopts a trade policy measure or takes some action that one or more fellow members considers to a breach of WTO agreements or to be a failure to live up to obligations. By joining the WTO, member countries have agreed that if they believe fellow members are in violation of trade rules, they will use the multilateral system of settling disputes instead of taking action unilaterally this entails abiding by agreed procedures (Dispute Settlement Understanding) and respecting judgments, primarily of the Dispute Settlement Body (DSB), the WTO organ responsible for adjudication of disputes. A former WTO Director-General characterized the WTO dispute settlement system as "the most active international adjudicative mechanism in the world today."

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DISPUTE SETTLEMENT UNDERSTANDING In 1994, the WTO members agreed on the Understanding on Rules and Procedures Governing the Settlement of Disputes or Dispute Settlement Understanding (DSU) (annexed to the "Final Act" signed in Marrakesh in 1994). Pursuant to the rules detailed in the DSU, member states can engage in consultations to resolve trade disputes pertaining to a "covered agreement" or, if unsuccessful, have a WTO panel hear the case. The priority, however, is to settle disputes, through consultations if possible. By January 2008, only about 136 of the nearly 369 cases had reached the full panel process. The operation of the WTO dispute settlement process involves the parties and third parties to a case and may also involve the DSB panels, the Appellate Body, the WTO Secretariat, arbitrators, independent experts, and several specialized institutions. The General Council discharges its responsibilities under the DSU through the Dispute Settlement Body (DSB). Like the General Council, the DSB is composed of representatives of all WTO Members. The DSB is responsible for administering the DSU, i.e. for overseeing the entire dispute settlement process. It also has the authority to establish panels, adopt panel and Appellate Body reports, maintain surveillance of implementation of rulings and recommendations, and authorize the suspension of obligations under the covered agreements. The DSB meets as often as necessary to adhere to the timeframes provided for in the DSU.

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FROM COMPLAINT TO FINAL REPORT These approximate periods for each stage of a dispute settlement procedure are target figures the agreement is flexible. In addition, the countries can settle their dispute themselves at any stage. Totals are also approximate. 60 days 45 days 6 months 3 weeks 60 days Consultations, mediation, etc Panel set up and panelists appointed Final panel report to parties Final panel report to WTO members Dispute Settlement Body adopts report (if no appeal) Total = 1 year 60-90 days 30 days (without appeal) Appeals report Dispute Settlement Body adopts appeals report

Total = 1y 3m

(with appeal)

1:- If a member state considers that a measure adopted by another member state has deprived it of a benefit accruing to it under one of the covered agreements, it may call for consultations with the other member state. 2:- If consultations fail to resolve the dispute within 60 days after receipt of the request for consultations, the complainant state may request the establishment of a Panel. It is not possible for the respondent state to prevent or delay the establishment of a Panel, unless the DSB by consensus decides otherwise. The panel, normally consisting of three members appointed ad hoc by the Secretariat, sits to receive written and oral submissions of the parties, on the basis of
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which it is expected to make findings and conclusions for presentation to the DSB. The proceedings are confidential, and even when private parties are directly concerned, they are not permitted to attend or make submissions separate from those of the state in question. Disputes can also arise under Non-violation nullification of benefits claims. 3:- The final version of the panel's report is distributed first to the parties; 4:- two weeks later it is circulated to all the members of the WTO. 5:- In sharp contrast with other systems, the report is required to be adopted at a meeting of the DSB within 60 days of its circulation, unless the DSB by consensus decides not to adopt the report or a party to the dispute gives notice of its intention to appeal. 6:- A party may appeal a panel report to the standing Appellate Body, but only on issues of law and legal interpretations developed by the panel. Each appeal is heard by three members of the permanent seven-member Appellate Body set up by the Dispute Settlement Body and broadly representing the range of WTO membership. Members of the Appellate Body have four-year terms. They must be individuals with recognized standing in the field of law and international trade, not affiliated with any government. The Appellate Body may uphold, modify or reverse the panel's legal findings and conclusions. Normally appeals should not last more than 60 days, with an absolute maximum of 90 days. The possibility for appeal makes the WTO dispute resolution system unique among the judicial processes of dispute settlement in general public international law. 7:- Members may express their views on the report of the Appellate Body, but they cannot derail it. The DSU states unequivocally that an Appellate Body report shall be adopted by the DSB and unconditionally accepted by the parties, unless the DSB decides by consensus within thirty days of its circulation not to adopt the report. Unless otherwise agreed by the parties to the dispute, the period from establishment of the panel to consideration of the report by the DSB shall as a general rule not exceed nine months if there is no appeal, and twelve months if there is an appeal.

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COMPLIANCE The DSU addresses the question of compliance and retaliation. Within thirty days of the adoption of the report, the member concerned is to inform the DSB of its intentions in respect of implementation of the recommendations and rulings. If the member explains that it is impracticable to comply immediately with the recommendations and rulings, it is to have a "reasonable period of time" in which to comply. This reasonable amount of time should not exceed 15 months. If no agreement is reached about the reasonable period for compliance, that issue is to be the subject of binding arbitration; the arbitrator is to be appointed by agreement of the parties. If there is a disagreement as to the satisfactory nature of the measures adopted by the respondent state to comply with the report, that disagreement is to be decided by a panel, if possible the same panel that heard the original dispute, but apparently without the possibility of appeal from its decision. The DSU provides that even if the respondent asserts that it has complied with the recommendation in a report, and even if the complainant party or the panel accepts that assertion, the DSB is supposed to keep the implementation of the recommendations under surveillance. WTO Complainants by Country

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COMPENSATION AND RETALIATION If all else fails, two more possibilities are set out in the DSU:

If a member fails within the "reasonable period" to carry out the recommendations and rulings, it may negotiate with the complaining state for a mutually acceptable compensation. Compensation is not defined, but may be expected to consist of the grant of a concession by the respondent state on a product or service of interest to the complainant state.

If no agreement on compensation is reached within twenty days of the expiry of the "reasonable period", the prevailing state may request authorization from the DSB to suspend application to the member concerned of concessions or other obligations under the covered agreements. The DSU makes clear that retaliation is not favored, and sets the criteria for retaliation. In contrast to prior GATT practice, authorization to suspend concessions in this context is semi-automatic, in that the DSB "shall grant the authorization within thirty days of the expiry of the reasonable period", unless it decides by consensus to reject the request. Any suspension or concession or other obligation is to be temporary. If the respondent state objects to the level of suspension proposed or to the consistency of the proposed suspension with the DSU principles, still another arbitration is provided for, if possible by the original panel members or by an arbitrator or arbitrators appointed by the Director-General, to be completed within sixty days from expiration of the reasonable period.

While such "retaliatory measures" are a strong mechanism when applied by economically powerful countries like the United States or the European Union, when applied by economically weak countries against stronger ones, they can often be ignored. Whether or not the complainant has taken a measure of retaliation, surveillance by the DSB is to continue, to see whether the recommendations of the panel or the Appellate Body have been implemented.

Panels: - Panels are like tribunals. But unlike in a normal tribunal, the panellists are usually chosen in consultation with the countries in dispute. Only if the two sides cannot agree does the WTO director-general appoint them.
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Panels consist of three (possibly five) experts from different countries who examine the evidence and decide who is right and who is wrong. The panels report is passed to the Dispute Settlement Body, which can only reject the report by consensus. Panelists for each case may be chosen from an indicative list of well-qualified candidates nominated by WTO Members, although others may be considered as well, including those who have formerly served as panelist. Panelists serve in their individual capacities. They cannot receive instructions from any government. The indicative list is maintained by the Secretariat and periodically revised according to any modifications or additions submitted by Members.

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DEVELOPING COUNTRIES AND DISPUTE SETTLEMENT UNDERSTANDING Like most of the agreements adopted in the Uruguay Round, the DSU contains several provisions directed to developing countries. The Understanding states that members should give "special attention" to the problems and interests of developing country members. Further, if one party to a dispute is a developing country, that party is entitled to have at least one panelist who comes from a developing country. If a complaint is brought against a developing country, the time for consultations (before a panel is convened) may be extended, and if the dispute goes to a panel, the deadlines for the developing country to make its submissions may be relaxed. Also, the Secretariat is authorized to make a qualified legal expert available to any developing country on request. Formal complaints against least developed countries are discouraged, and if consultations fail, the Director-General and the Chairman of the DSB stand ready to offer their good offices before a formal request for a panel is made. As to substance, the DSU provides that the report of panels shall "explicitly indicate" how account has been taken of the "differential and more favorable treatment" provisions of the agreement under which the complaint is brought. Whether or not a developing country is a party to a particular proceeding, "particular attention" is to be paid to the interests of the developing countries in the course of implementing recommendations and rulings of panels. In order to assist developing countries in overcoming their limited expertise in WTO law and assist them in managing complex trade disputes, an Advisory Centre on WTO Law was established in 2001. The aim is to level the playing field for these countries and customs territories in the WTO system by enabling them to have a full understanding of their rights and obligations under the WTO Agreement.

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CHAPTER 4:- WTO DISPUTE SETTTLEMNT CASES

UNITED STATES AND INDIA On 15 July 1997, the US requested consultations with India in respect of quantitative restrictions maintained by India on importation of a large number of agricultural, textile and industrial products. The US contended that these quantitative restrictions, including the more than 2,700 agricultural and industrial product tariff lines notified to the WTO, are inconsistent with Indias obligations under Articles XI:1 and XVIII:11 of GATT 1994, Article 4.2 of the Agreement on Agriculture, and Article 3 of the Agreement on Import Licensing Procedures. On 3 October 1997, the US requested the establishment of a panel. At its meeting on 16 October 1997, the DSB deferred the establishment of a panel. Panel and Appellate Body proceedings: Further to a second request to establish a panel, the DSB established a panel at its meeting on 18 November 1997. On 10 February 1998, the US requested the Director-General to determine the composition of the Panel. On 20 February 1998, the Panel was composed. The report of the Panel was circulated to Members on 6 April 1999. The panels found that the measures at issue were inconsistent with Indias obligations under Articles XI and XVIII11 of GATT 1994, and to the extent that the measures apply to products subject to the Agreement on Agriculture, are inconsistent with Article 4.2 of the Agreement on Agriculture. The panel also found the measures to be nullifying or impairing benefits accruing to the United States under GATT 1994, and the Agreement on Agriculture. On 26 May 1999, India notified its intention to appeal certain issues of law and legal interpretations developed by the Panel. The report of the Appellate Body was circulated to Members on 23 August 1999. The Appellate Body upheld all of the findings of the panel that were appealed from. The DSB adopted the Panel and Appellate Body reports at its meeting on 22 September 1999. Implementation of adopted reports: At the DSB meeting of 14 October 1999, India stated its intention to comply with the recommendations and rulings of the DSB, at the same time drawing attention to the Panels suggestion that the reasonable period of time for implementation in this case could be longer than 15 months in view of the practice of the IMF, the BOP Committee and

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GATT and WTO panels of granting longer phase-out periods for the elimination of BOP restrictions, and in view of Indias status as a developing country Member. On 28 December 1999, the parties informed the DSB that they had reached an agreement on the reasonable period of time for India to comply with the recommendations and rulings of the DSB. The reasonable period of time was to expire on 1 April 2000, except for some tariff items to be notified by India to the US for which the reasonable period of time was to expire on 1 April 2001. Pursuant to the agreement reached, India had to treat the US no less favorably than any other Member with respect to the elimination of or modification of quantitative restrictions affecting any product covered by the agreement. At the DSB meeting of 27 July 2000, India stated that it had notified to the United States those tariff items for which the reasonable period is to expire on 1 April 2001 and that for all other items India had implemented the recommendation of the DSB by 1 April 2000. At the DSB meeting of 5 April 2001, India announced that, with effect from 1 April 2001, it had removed the quantitative restrictions on imports in respect of the remaining 715 items and had thus implemented the DSBs recommendations in this case. The United States welcomed Indias action and said that it had some specific questions to ask India in the next few days.

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BRAZIL AND EC DS332 Measures affecting imports of retreaded tyres.

On 20 June 2005, the EC requested WTO consultations with Brazil on its measures affecting the importation of retreaded tyres from the EC. Brazil maintains an import ban on retreaded tyres and also applies financial fines on the importation as well as storage, transportation and sale of imported retreaded tyres. Imports from other Mercosur countries are exempted from these measures. The EC considers that these measures are inconsistent with Articles I:1, III:4, XI:1 and XIII:1 of the GATT 1994. Consultations were held on 20 July 2005. The DSB established the panel at its meeting on 20 January 2006. The panel publicly circulated its final report on 12 June 2007. Based on a procedural agreement with Brazil, the appeal was delayed so that it has started on 3 September 2007. The Appellate Body circulated its report on 3 December 2007. The Appellate Body has strengthened the previous panel ruling against Brazil's imports ban on retreaded tyres. The EC wins the dispute entirely on the chapeau of Article XX (arbitrary and unjustifiable discrimination, disguised restriction on international trade) because of both the MERCOSUR exception and the importation of casings. The Appellate Body confirms that these features of the import ban's application make the import ban illegal, no matter how few casings or MERCOSUR retreads are actually imported. The EC however loses on its claims that the import ban on retreaded tyres is not "necessary" to protect human health and life. Still, the reasoning of the Appellate Body on the "necessity" test is of significantly higher quality than that of the panel, and indirectly redeems certain of the EC's misgivings with the panel's reasoning. On 17 December 2007, the Dispute Settlement Body adopted the Appellate Body report. On 29 August 2008, a WTO arbitrator ruled that the reasonable period of time to implement ends on 17 December 2008. Brazil has failed to meet that deadline. The EC and Brazil have, on 5 January, concluded a sequencing agreement, under which the EC maintains its right to directly initiate retaliation procedures, but is obliged to first conduct a compliance review once Brazil adopts implementing measures.

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On 24 June 2009, the Brazilian Supreme Court (STF) confirmed the constitutionality of the Brazilian import prohibition against the import of retreaded tyres and declared that any decision to import retreaded tyres in Brazil (including the Mercosur exception) is unconstitutional. Brazils Secretary of Foreign Trade issued a new regulation, Portaria SECEX 24/2009, published on 28 August 2009. This regulation prohibits new licenses for the importation of used and retreaded tyres to be issued, irrespective of their origin (abolition of the Mercosur exception). In its seventh Status Report to the DSB, dated 15 September 2009, Brazil claimed to be in full compliance. The Commission is continuing to monitor Brazils claim of full compliance.

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VENEZUELA AND UNITED STATES

On 23 January 1995, Venezuela complained to the Dispute Settlement Body that the United States was applying rules that discriminated against gasoline imports, and formally requested consultations with the United States. Just over a year later (on 29 January 1996) the dispute panel completed its final report. (By then, Brazil had joined the case, lodging its own complaint in April 1996. The same panel considered both complaints.) The United States appealed. The Appellate Body completed its report, and the Dispute Settlement Body adopted the report on 20 May 1996, one year and four months after the complaint was first lodged. The United States and Venezuela then took six and a half months to agree on what the United States should do. The agreed period for implementing the solution was 15 months from the date the appeal was concluded (20 May 1996 to 20 August 1997). The case arose because the United States applied stricter rules on the chemical characteristics of imported gasoline than it did for domestically-refined gasoline. Venezuela (and later Brazil) said this was unfair because US gasoline did not have to meet the same standards it violated the national treatment principle and could not be justified under exceptions to normal WTO rules for health and environmental conservation measures. The dispute panel agreed with Venezuela and Brazil. The appeal report upheld the panels conclusions (making some changes to the panels legal interpretation). The United States agreed with Venezuela that it would amend its regulations within 15 months and on 26 August 1997 it reported to the Dispute Settlement Body that a new regulation had been signed on 19 August.

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WTO DISPUTE CASES BY INDUSTRY Industry Agricultural Products Alcoholic and other Beverages Textile and Clothing Animal Skin Products Electronics Telecommunications Automobiles Aircraft Satellite Systems Cement Products Chemical Products Pharmaceutical Products Other Industrial Products Number of cases 32 6 10 2 3 3 5 2 1 1 6 5 4

CASE CHARACTERISTICS BY COUNTRY Complainants Developed Country against Developing Country Developed Country against Developed Country Developing Country against Developed Country Developing Country against Developing Country Frequencies by matter 27 36 16 9

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CHAPTER 5:- CONCLUSION

The tension between rising demand for natural resources due to population and income growth on the one hand, and their scarcity and exhaustibility on the other, is a challenge facing modern society. This tension seems likely to increase, especially as the global economy recovers from recession and the circle of development and industrialization continues to widen. Fears of inadequate access to supplies in resource-scarce countries and of inappropriate exploitation in resource-rich regions could lead to trade conflict or worse. Adequately defined rules for international cooperation, built on a shared perception of gain, will contribute to the avoidance of such an outcome. In sum, the analysis in this report argues strongly for cooperation. The importance of natural resources to virtually every aspect of human activity, and the particular characteristics of these products, make it vital that governments work together to find common ground and appropriate trade-offs. Such cooperation should aim to ensure sound resource management, equity and mutual gain. The trade aspects of cooperation have been a particular focus of the report, and the case has been made for seeking accommodation through effective multilateral trade rules. Well-designed rules on trade are not only about securing the standard gains from trade; they are also a key component of cooperation in domains such as environmental protection and domestic policies to manage scarce resources.

As trade expands in volume, in the number of products traded, and in the numbers of countries and companies trading, there is a greater chance that disputes will arise. The WTO system helps resolve these disputes peacefully and constructively. There could be a down side to trade liberalization and expansion. More trade means more possibilities for disputes to arise. Left to themselves, those disputes could lead to serious conflict. But in reality, a lot of international trade tension is reduced because countries can turn to organizations, in particular the WTO, to settle their trade disputes.

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Before World War 2 that option was not available. After the war, the worlds community of trading nations negotiated trade rules which are now entrusted to the WTO. Those rules include an obligation for members to bring their disputes to the WTO and not to act unilaterally. When they bring disputes to the WTO, the WTOs procedure focuses their attention on the rules. Once a ruling has been made, countries concentrate on trying to comply with the rules, and perhaps later renegotiating the rules not on declaring war on each other. Around 300 disputes have been brought to the WTO since it was set up in 1995. Without a means of tackling these constructively and harmoniously, some could have led to more serious political conflict. The fact that the disputes are based on WTO agreements means that there is a clear basis for judging who is right or wrong. Once the judgment has been made, the agreements provide the focus for any further actions that need to be taken. The increasing number of disputes brought to GATT and its successor, the WTO, does not reflect increasing tension in the world. Rather, it reflects the closer economic ties throughout the world, the GATT/WTOs expanding membership and the fact that countries have faith in the system to solve their differences. Sometimes the exchanges between the countries in conflict can be acrimonious, but they always aim to conform to the agreements and commitments that they themselves negotiated. In conclusion, the World Trade Organization is the most important international organization governing trade. The WTO sets and enforces trade rules and promotes global economic cooperation. Poor countries are better able to compete in the world economy. Governments will hopefully take profits from trade and improve the health, education, and employment of their citizens. International business will undoubtedly continue to thrive under the supervision of the World Trade Organization.

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BIBLIOGRAPHY:
WEBSITES www.wikipedia.com www.investopedia.com www.wto.com

BOOK WTO and international trade by M.B. Rao WTO text and cases by Palle Krishna Rao

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