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WTO agreements : a comprehensive overview

February 28, 2022

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This article is authored by Anindita Deb, pursuing BBA LLB from Symbiosis Law School, NOIDA. This article briefly talks about the prominent WTO agreements which regulate international trade in present times. Provisions of the agreement and the principles behind them have also been described.

Table of Contents

Introduction

Following World War II, the global organisation in the development of the multilateral trading system, providing rules trading system adopted multilateralism. The World Trade Organisation has appeared as a model international or multilateral trade and assisting in the creation of an environment for global commercial interdependence.

Goods, services, and intellectual property are all covered by WTO agreements. They lay out the liberalisation principles as well as the permitted exceptions. Commitments made by individual countries to lower customs, tariffs and other trade barriers, as well as to open and maintain open services markets, are among them. They establish procedures for resolving disputes. They advise that developing countries receive special treatment. They require governments to make their trade policies transparent by notifying the WTO about laws in force and measures adopted, as well as reporting on countries’ trade policies on a regular basis by the Secretariat.

These agreements are known as the WTO’s trade rules, and the WTO is frequently referred to as a ‘rules-based’ system. It’s important to remember, however, that the rules are actually negotiated agreements between governments. The WTO currently has 60 agreements that are in force, and this article intends to cover exhaustively all the prominent agreements in which the WTO members are actively participating.

A brief overview of the WTO agreements

WTO agreements, also known as WTO trade rules, are the heart of the organisation. WTO is said to be rule-based, but these rules are nothing more than WTO negotiated agreements. The Uruguay Round updated the General Agreement on Tariffs and Trade, and GATT 1994 was established under the World Trade Organization to define rules for goods trade. The Uruguay Round also resulted in the creation of rules for trade-in-services (covered under GATS), relevant aspects of intellectual property (covered under TRIPS), dispute resolution, and trade policy review with the establishment of the WTO (TPRM). Although the three major components of WTO agreements are goods, services, and intellectual property, the structure of WTO agreements has four major areas, which are as follows:

The umbrella agreement (agreement establishing the WTO)

The umbrella agreement includes not only the WTO’s founding agreement but also its annexes. The Marrakesh Agreement led to the formation of the World Trade Organization (WTO) and established a framework for future negotiations among member countries. The agreement contains provisions pertaining to the WTO’s establishment, membership, framework, decision-making bodies, and so on.

WTO agreements for each of the three broad components (goods, services, intellectual property) of trade

The two largest areas of trade, goods and services, have three common outlines but differ in details.

To begin, there are broad (or fundamental) principles, which cover goods under the provisions of the General Agreement on Tariffs and Trade (GATT), and services under the provisions of the General Agreement on Trade-in-Services (GATS). TRIPs (Trade-Related Aspects of Intellectual Property Rights) are also included in this category only, and not in the other.
The second outline, the additional details, includes any additional agreements and/or annexes dealing with the specific needs of a particular industry or issue.
The commitments to market access are covered in the third outline. The number of specific foreign products or service providers who have access to a member nation’s market is defined as the extent of their market access. A detailed schedule or list of market access commitments can be provided to members. Commitments under the GATT can take the form of tariffs on goods in general or a combination of tariffs and quotas for certain agricultural goods. The commitments under GATS are defined in terms of how much access services providers will have to the foreign market for a particular service.

Dispute settlement in case of violation of WTO agreements

The World Trade Organization’s Dispute Settlement Mechanism ensures a smooth flow of trade while also enforcing WTO rules. Agreement and commitment are the foundations of dispute resolution. A dispute arises when one of the member nations violates the WTO’s agreements or commitments. Because an agreement is the result of negotiations among member nations, the member nation bears the ultimate responsibility for dispute resolution through dispute settlement.

Transparency-Trade Policy Review Mechanism (TPRM)

TPRM entails a periodic, collective, and in-depth assessment of all member countries’ trade policies and practises, as well as an assessment of their impact on the multilateral trading system’s operation. The goal of the TPRM is to improve all members’ adherence to rules and commitments made under the multilateral trading system, as well as to smoothen the operation of WTO agreements, in order to achieve greater transparency and understanding of member countries’ trade policies and practises.

The Marrakesh agreement establishing World Trade Organisation (WTO)

The World Trade Organization Agreement, also known as the “Marrakesh Agreement,” was signed on April 15, 1994, in Marrakesh, Morocco, at the conclusion of the Uruguay Round of Multilateral Trade Negotiations. The World Trade Organization’s scope, operations, and framework are defined by this agreement (WTO). The Marrakesh Agreement’s Annexes include agreements previously negotiated under the General Agreement on Tariffs and Trade (GATT), as well as agreements reached during the Uruguay Round. These agreements are now classified as World Trade Organization (WTO) agreements.

The Marrakesh Agreement is binding on all WTO members, including those that have joined since it was signed. This agreement became effective on January 1, 1995. It does not have an expiration date.

The nations that agreed to sign the Marrakesh Agreement wanted to create an integrated multilateral trading system that included the General Agreement on Tariffs and Trade (GATT) as well as the outcomes of all previous trade rounds (including the Uruguay Round) since the GATT was signed in 1947.

The Marrakesh agreement is known as the umbrella agreement for a reason; it establishes all the further WTO agreements, most of which have been covered below in the following sections.

Basic principles of the WTO agreements

As already stated earlier, the WTO Agreements are based on the idea of lowering trade barriers and enforcing non-discriminatory rules. These ideals are enshrined in the WTO’s basic principles, which are listed below.

Principle of Most-Favoured-Nation (MFN) Treatment

Article I of the GATT states that when it comes to tariffs, etc. on exports and imports, the most favourable treatment given to one country’s products must be given to the like products of all other members immediately and absolutely.

Principle of National Treatment

Article III of the GATT stipulates that all other members must receive treatment that is not less favourable than that given to similar domestic products when it comes to internal taxes, internal laws, and other regulations that apply to imports.

Principle of General Prohibition of Quantitative Restrictions

Article XI of the GATT states that “no prohibitions or restrictions other than duties, taxes, or other charges shall be instituted or maintained by any contracting party,” and quantitative restrictions are generally prohibited. The prohibition is based on the fact that quantitative restrictions are thought to have a greater preventive role than tariff measures and are more likely to distort the free flow of trade.

Principle regarding Tariffs as Legitimate Measures for the Protection of Domestic Industries

GATT accepts tariffs as the only means of trade control and attempts to gradually lower tariff rates for individual items through tariff negotiations. According to GATT Article XXVIII, member countries make ‘concessions’ (‘bind’ themselves to maximum rates), and the imposition of tariffs beyond such maximum rates (‘bound rates’) or the unilateral increase in bound rates is prohibited. Furthermore, GATT Article XXVIII requires tariff rates to be reduced “on a reciprocal and mutually advantageous basis” during negotiations.

Now that we’ve become familiar with the basic overview and the principles that govern the WTO agreements, this article further moves on to discuss the specific agreements in detail. Let’s find out which are the major WTO agreements in force that govern the international laws relating to import and export.

Multilateral Agreement on Trade in Goods

Through sector-specific or issue-specific agreements, the Multilateral Agreement on Trade in Goods establishes the rules for goods trade. Its core is the GATT 1994, which includes the GATT 1947, as well as the GATT 1947 amendments, understandings, protocols, and decisions from 1947 to 1994, collectively known as the GATT-acquis, and six Uruguay Round Understandings on Articles of the GATT 1947. Each agreement constitutes sector-specific or issue-specific rules and standards in addition to clarifying the core WTO principles. The schedule of commitments identifies each member’s specific binding commitments on tariffs in general and tariff-quota combinations for some agricultural goods. Members agreed to the current level of trade liberalisation after a series of negotiating rounds.

WTO members aimed at expanding international trade rules beyond tariff reductions in the last four rounds of negotiations to identify barriers in other areas. Technical Barriers to Trade (TBT) and Sanitary and Phytosanitary (SPS) agreements, for instance, seek to protect a country’s right to enforce domestic standards and regulations while making sure that they do not discriminate against trading partners or restrict trade unreasonably.

The agreements covered under the Multilateral Agreement on Trade in Goods

General Agreement on Tariffs and Trade 1994 (GATT)

The General Agreement on Tariffs and Trade (GATT), which was signed on October 30, 1947, by 23 countries, was a legal agreement that aimed to reduce trade barriers by eliminating or minimizing quotas, tariffs, and subsidies while retaining significant regulations. The GATT was created to help the world economy recover after World War II by revamping and liberalising global trade.

On January 1, 1948, the GATT came into effect. 2 It has been improved since then, culminating in the creation of the World Trade Organization (WTO) on January 1, 1995, which absorbed and expanded it. By this time, 125 countries had signed on to its agreements, which covered roughly 90% of global trade. The GATT is overseen by the Council for Trade in Goods (Goods Council), which is made up of representatives from all WTO member countries. Market access, agriculture, subsidies, and anti-dumping measures are among the topics addressed by the Council’s ten committees.

The GATT was established to establish rules to eliminate or limit the most costly and inefficient features of the prewar protectionist period, namely quantitative trade barriers like trade controls and quotas. The agreement also established a system for resolving international commercial disputes, as well as a framework for multilateral tariff reduction negotiations. In the postwar years, the GATT was considered a significant success.

The most-favoured-nation principle was one of the GATT’s major achievements (discussed above in this article). As a result, once a country had negotiated a tariff reduction with a few other countries (usually its most important trading partners), the same reduction would be applied to all GATT signatories. There were escape clauses in place, allowing countries to negotiate exceptions if tariff cuts would disproportionately harm domestic producers.

When it came to setting tariffs, most countries used the most-favoured-nation principle, which largely replaced quotas. Tariffs (which are preferable to quotas but are still a trade barrier) were gradually reduced in successive rounds of negotiations.

Agreement on Agriculture (AoA)

The Agreement on Agriculture (AoA) includes market access rules and commitments, as well as restrictions on certain domestic agricultural support programmes and export subsidies. Its goal was to give WTO members a framework for reforming certain aspects of agricultural trade and domestic farm policies so that more market-oriented and open trade could be achieved. In terms of market access, members agreed not to impose quotas or other non-tariff restrictions on agricultural imports, but instead convert them to tariff-equivalent levels of protection, such as tariff-rate quotas, a process known as ‘tariffication.’ Developed countries agreed to cut tariffs (or out-of-quota tariffs, which apply to any imports that exceed the agreed-upon quota threshold) by an average of 36 per cent over six years in equal increments while developing countries agreed to cut tariffs by 24 per cent over ten years. In certain circumstances, such as falling prices or a surge in imports, special safeguards to temporarily restrict imports were allowed for product lines considered sensitive by a member nation.

Members must submit notifications on the implementation of AoA commitments on market access, domestic subsidies, and export competition on a regular basis, though some countries, including the United States, have expressed concerns that these requirements are not followed consistently.

Further agricultural trade reform was a top priority for the Doha Development Round, but progress on major issues has been slow. Members have made progress in some areas of reform; for example, in 2015, members agreed to eliminate all agricultural export subsidies.

Agreement on the Application of Sanitary and Phytosanitary (SPS) Measures

The Sanitary and Phytosanitary Measures Agreement (SPS) lays out the groundwork for food safety as well as animal and plant health standards. It gives countries the freedom to establish their own standards. However, it also states that regulations must be based on scientific evidence. They should only be used to the extent that they are required to protect human, animal, or plant life or health. They should also not discriminate arbitrarily or unjustifiably between countries with similar or identical conditions.

Where international standards, recommendations, and guidelines exist, member countries are encouraged to use them. Members may, however, use scientifically justified measures that result in higher standards. They also set higher standards based on proper risk assessment, as long as the approach is consistent rather than arbitrary.

The agreement still allows states to use different product inspection standards and methods.

All countries take steps to ensure that food is safe for consumers and to keep pests and diseases from spreading to animals and plants. These sanitary and phytosanitary measures can take a variety of forms, including requiring products to come from a disease-free area, inspecting products, requiring specific treatment or processing of products, establishing optimum pesticide residue levels, or allowing the use of only selective additives in food. Sanitary (human and animal health) and phytosanitary (plant health) regulations apply to both domestically produced foods and local animal and plant diseases, as well as imported goods.

Agreement on Textiles and Clothing

On January 1, 2005, the Agreement on Textiles and Clothing (ATC) and all of its restrictions came to an end. The ten-year transition period for ATC implementation has ended, and trade in textile and clothing products is now governed by the general rules and disciplines embodied in the multilateral trading system, rather than quotas under a special regime outside of normal WTO/GATT rules.

Agreement on Technical Barriers to Trade (TBT)

One of the goals of the WTO Agreement on Technical Barriers to Trade (TBT) is to ensure that technical regulations, product quality standards, and “conformity assessment procedures” (testing and certification procedures) do not create unnecessary trade barriers.

The Uruguay Round of Multilateral Trade Negotiations ended in April 1994, and the TBT Agreement was negotiated during that time. It built on a more limited set of standards that had been adopted during a previous round of trade negotiations. The TBT Agreement, which went into effect on January 1, 1995, and has no expiration date, applies to all WTO members.

Certain provisions of the TBT Agreement can benefit any corporation in a WTO member country that engages in international trade. Transparency provisions in the Agreement work to minimize discriminatory or trade-restrictive measures at a preliminary phase in the regulatory process, so that businesses are not faced with unwarranted trade barriers. These provisions include notice and comment regulations that allow relevant stakeholders to request copies of proposed technical regulations, guidelines, and conformity assessment procedures that may have an impact on trade, as well as evaluate and comment on them.

Agreement on Trade-Related Investment Measures (TRIMs)

WTO members have agreed not to apply certain investment measures related to trade in goods that restrict or distort trade under the World Trade Organization’s Agreement on Trade-Related Investment Measures, also known as the TRIMs Agreement.

Certain initiatives that violate the General Agreement on Tariffs and Trade’s national treatment and quantification constraints requirements are prohibited under the TRIMs Agreement.

Prohibited TRIMs may include requirements to:

achieve a specific level of local content;
produce locally;
export a particular level/percentage of goods;
balance the amount/percentage of imports with the amount/percentage of exports;
transfer technology or proprietary business information to local persons; or
balance inflows and outflows of foreign exchange.

These requirements could be imposed as a condition of investment, or they could be linked to financial or other incentives. Services are not covered by the TRIMs Agreement.

This agreement is signed by all WTO member countries. On January 1, 1995, the Agreement went into effect. It does not have an expiration date.

All WTO member countries were required to notify their nonconforming trade-related investment measures when the TRIMs Agreement went into effect in 1995, and then to bring those measures into compliance with the Agreement after a transition period. The length of the transition period was determined by the Member’s individual development level. All transition periods have now ended, though a small number of nations have been granted extensions for specific programmes. These extensions normally ended in December 2003 or before.

Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994 (Anti-Dumping Agreement)

The Agreement on the Implementation of Article VI of the General Agreement on Tariffs and Trade (1994), famously referred to as the Antidumping Agreement, establishes stringent guidelines and disciplines for Members to follow in order to counteract injurious dumping of products imported from another Member. If a business exports a product at a lower price than it normally charges on its own market, or alternatively, lower than its cost of production or the price it charges in third-country markets, it is known as “dumping.” The Antidumping Agreement establishes the rules for Members to take antidumping intervention in order to protect their domestic industries.

The Council on Trade in Goods has a subsidiary body called the Committee on Antidumping Practices. The Committee meets twice a year to supervise the execution of the WTO Antidumping Agreement. Members can discuss antidumping measures and procedures that are deemed problematic, obtain information about specific issues of concern, and clarify and feasibly resolve issues before they become disputes at these biannual Committee meetings.

Agreement on Implementation of Article VII of the General Agreement on Tariffs and Trade 1994 (Customs Valuation Agreement)

The Uruguay Round of agreements includes the WTO Agreement on Implementation of Article VII of the GATT 1994, also known as the Custom Valuation Agreement. The agreement lays out the rules for determining the value of goods for the purposes of calculating customs duties and taxes that apply at the time of importation. The transaction value is the preferred method of valuation under the Valuation Agreement, which implies the value based on the price actually paid or payable for the goods.

Agreement on Pre-shipment Inspection (PSI)

The WTO Agreement on Preshipment Inspection (PSI) stipulates that the pre-shipment inspection process should not create undue delays or unequal treatment. It creates an independent, impartial review body to resolve disputes between importers and pre-shipment inspection companies by establishing an agreed set of transparent procedures, such as deadlines, for these inspections.

Many developing countries use pre-shipment inspections to inspect potential imports before they can be shipped from the exporting country. Inspections are carried out by private companies to ensure that the price, exchange rate, financial implications, quantity, quality, and customs classification of the transaction match what was ordered.

Agreement on Rules of Origin

The WTO Agreement on Rules of Origin (the ROO Agreement) aims to improve the transparency, predictability, and uniformity of rules of origin preparation and application.

The ROO Agreement establishes important guidelines for conducting preferential and non-preferential origin regimes, including the requirement to provide traders with binding origin rulings within 150 days of their request. The ROO Agreement not only establishes disciplines for the administration of rules of origin but also lays out a work plan for multilateral harmonisation of non-preferential trade rules of origin.

The Committee on Rules of Origin (the ROO Committee) oversees the ROO Agreement, which meets officially twice a year and for informal consultations throughout the year. The Committee also serves as a platform for Members to share their perspectives on notifications regarding their national rules of origin, as well as pertinent judicial decisions and administrative rulings of general application.

Agreement on Import Licensing Procedures

When granting import licences, members of the WTO have agreed to follow the procedures outlined in the Import Licensing Agreement. They’ve also agreed that these procedures should be carried out fairly and equally.

This agreement is ratified by all WTO members. On January 1, 1995, the Agreement went into effect. It does not have an expiration date.

WTO member countries can use the Licensing Agreement to implement either automatic or non-automatic import licensing systems. To collect trade data, origin statistical data, or other details, automatic licences, which are freely granted by a government and do not restrict imports, may be required. Non-automatic licences, on the other hand, are not always granted. They’re used to manage import quotas and other import restrictions. Non-automatic licences must not have trade-distorting effects on imports in addition to those induced by the restriction they impose, and they must be no more strenuous to administer than is absolutely necessary.

Agreement on Subsidies and Countervailing Measures

The Agreement on Subsidies and Countervailing Measures, or “SCM Agreement,” covers two distinct concepts. The importance of including both concepts in the same agreement is that they are closely related topics, with one involving the application of other fundamentals. Subsidies are multilateral disciplines governed by the WTO’s SCM Agreement, whereas countervailing measures are a type of solution for subsidy damage. Multilateral disciplines are international commercial rules that involve the rights and obligations of member countries.

Although the WTO’s system of regulations is connected to multilateral practise, countervailing duties are unilateral practises in which one nation imposes countervailing duties on another member who tries to influence the importer’s country market by offering subsidies to its domestic economy. The victim nation can conduct the investigation and file a complaint with the WTO Dispute Resolution Body (DSB) with their findings to either warn or impose countervailing duties on the accused country.

Agreement on Safeguards

The WTO Agreement on Safeguards establishes rules for the application of safeguard measures by WTO members. A safeguard is a temporary import restriction (such as a quota or a tariff increase) that a country may impose on a product if imports of that product are increasing to the point where they are causing or threatening to cause serious injury to a domestic industry that produces a similar or directly competitive product.

WTO member countries must investigate the matter before applying a safeguard measure, and they must make a formal commitment that imports of the product are significantly impeding or threatening to impede a domestic industry, according to the WTO rules outlined in this Agreement. Countries must also notify all interested parties of their intention to implement a safeguard measure as well as provide exporters with adequate opportunities to express their opinions.

This agreement is ratified by all WTO members. On January 1, 1995, the Agreement went into effect. It does not have an expiration date.

General Agreement on Trade in Services (GATS)

The Uruguay round of multilateral trade negotiations produced the General Agreement on Trade in Services (GATS). GATS is regarded as the first multilateral and legally enforceable set of rules governing international services trade. GATS covers a wide range of services, including business, communication, construction and engineering, distribution, education, the environment, financial services, health, tourism and travel, entertainment, sports and cultural activities, transportation, and so on. However, there are two exceptions to GATS coverage: services in the exercise of governmental authority and air traffic rights.

All of these services, including education, can be traded. Depending on the method of supply, the services can be traded in four different ways.

A customer of the service from country X travels to the supplier country (Y). For example, a patient undergoing treatment or a student pursuing studies at a foreign university.
X is a consumer country that receives supplies from across the border. Take, for example, country Y, which offers distance education in country X.
In consumer country X, the supplier is commercially available. For example, offshore foreign healthcare facilities, foreign universities, and so on.
In the consumer country X, the supply of service providers (in person). Doctors, researchers, professionals, and other skilled workers, for example, may travel to country X.

Under GATS, two major categories of WTO rules are covered. To begin with, the Most-Favoured-Nation treatment (MFN) ensures that all foreign trading partners are treated equally. Second, market access and national treatment are important considerations. GATS imposes some restrictions on market access, such as limiting the number of service providers, the value of transactions, and so on. National treatment, on the other hand, ensures that both foreign and domestic services (service providers) are treated equally.

Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS)

The TRIPS Agreement, which went into effect on January 1, 1995, is the most comprehensive multilateral intellectual property agreement to date. The TRIPS Agreement safeguards intellectual property to a significant degree in trade-related regions and is considered as a comprehensive framework for intellectual property standards protection. The TRIPs Agreement also has the distinction of being the first legal agreement to include a set of specific clauses that address all aspects of intellectual property.

The following are the three main issues covered by the agreement:

Standards

Each of the IP classifications covered by the Agreement requires all member states to provide a minimal level of requirements for the protection of IPRs. The critical components of protection, such as the subject matter to be protected, the rights to be allowed, and potential exceptions to such rights, as well as the minimum period of protection, are all explicitly stated in each area of IP.

Enforcement

The second set of clauses focuses on intellectual property enforcement processes and remedies on a national level. The Agreement establishes a set of broad guidelines for all IPR enforcement actions. It also provides rules on civil and administrative processes and remedial measures, interim measures, specific border requirements, and criminal prosecutions, all of which outline the guidelines and remedies that must be provided in order for right holders to satisfactorily exercise their rights.

Dispute settlement

Disputes between WTO Members over TRIPS obligations are subject to the WTO’s dispute resolution procedures, according to the agreement.

In addition, the Agreement establishes some basic principles, such as national and most-favoured-nation treatment, as well as some general rules to ensure that procedural difficulties in obtaining or maintaining IPRs do not negate the substantive benefits that the Agreement should bring. All Member countries will be bound by the Agreement’s obligations, but developing countries will have a longer time to implement them. If a developing country does not currently provide product patent protection in the pharmaceuticals sector, special transition arrangements are used.

TRIPS is a minimum standards agreement that allows members to have more extensive intellectual property protection if they so desire. Members are free to choose the best method for implementing the Agreement’s provisions within their own legal system and practice.

Plurilateral trade agreements

Agreement on Trade in Civil Aircraft

On January 1, 1980, this plurilateral agreement went into effect. There are 33 nations that have signed the agreement. The majority of WTO agreements are multilateral because all WTO members sign them. The Agreement on Civil Aviation Trade is one of the plurilateral agreements that a smaller number of WTO members have signed. It removes import tariffs on all aircraft, except military aircraft, as well as all other products covered by the agreement, such as civil aircraft engines and their parts and components, civil aircraft components and subassemblies, and flight simulators and their parts and components.

Concurrent with the Uruguay Round, talks were ongoing to revise the civil aircraft agreement (a Tokyo Round agreement) and enhance subsidy discipline. However, no agreement has yet been reached, and the Tokyo Round agreement is still in effect.

Agreement on Government Procurement

The Government Procurement Agreement (GPA), which was first developed as a code in the 1979 Tokyo Round, is an early example of a plurilateral agreement with limited WTO membership. The GPA currently has 48 WTO members (including EU members individually and the United States); non-GPA signatories do not have any rights under the agreement. The GPA gives its signatories access to the market for a variety of non-defence government projects. Each GPA member specifies which government entities, goods, and services (along with thresholds and limitations) are accessible to procurement bids from other GPA members’ foreign firms.

Information Technology Agreement

Participants in the Information Technology Agreement, or ITA, have removed all import duties on a wide range of information technology (IT) products. Below is a list of the current signatory countries, which account for roughly 95% of global trade in IT products, as well as a list of a few countries that were allowed to postpone duty reductions on a few products.

Computers, telecommunications equipment, semiconductors, semiconductor manufacturing equipment, software, and scientific equipment are the six main categories of goods that are duty-free.

The ITA was negotiated under the WTO and signed on December 13, 1996, in Singapore at a WTO Ministerial Conference. On March 13, 1997, it went into effect. It does not have an expiration date.

Any company wishing to export any of the information technology products listed in the Agreement to any of the signatory nations can benefit from this agreement. Reduced trading costs, enhanced access to markets, higher sales, and higher export revenues are all benefits of eliminating duties.

Trade Facilitation Agreement

The Trade Facilitation Agreement (TFA) is the latest WTO multilateral trade agreement, having come into force on February 22, 2017, and may be the Doha Round’s lasting legacy, as it is the only key element of the negotiations that have been completed. 70 By streamlining, modernising, and accelerating customs processes for cross-border trade, as well as making them more transparent, the TFA aims to address multiple barriers to trade faced by exporters and importers and decrease trade costs. Some experts see the TFA as proof that new multilateral agreements can be reached, and that the TFA’s design, which includes special and differential treatment provisions, could serve as a model for future agreements.

According to estimates, fully implementing the TFA could reduce trade costs by 14.3% on average and boost global trade by up to $1 trillion per year, with the poorest countries benefiting the most. For the first time in WTO history, the obligation to implement the Agreement is tied to a country’s capacity to do so. The Trade Facilitation Agreement Facility (TFAF) was established to ensure that developing and least-developed countries receive the assistance they need to fully benefit from the TFA.

Preferential Free Trade Agreements

This phrase can be interpreted in two ways. For starters, it’s one of the names given to Free Trade Agreements (FTAs) to shed more light upon their preferential characteristics over WTO-mandated trade liberalisation or unilateral reduction of trade barriers. Second, partial scope agreements can be referred to as “preferential trade agreements.” These agreements provide preferential market access for a limited number of goods by lowering import tariffs.

(FTAs) remove barriers to trade between member nations and provide reciprocal preferential access to markets. In addition to trade in goods, FTAs usually include provisions for trade in services and investment, as well as the removal of tariff and non-tariff trade barriers. They can also consist of a variety of provisions relating to customs cooperation and trade facilitation, as well as harmonisation standards and encourage regulatory cooperation in a range of aspects.

Conclusion

The WTO agreements lie at the very core of the management of international trade among member nations. These agreements have been constantly evolving since the inception of the WTO in order to accommodate the developing nations so that such nations do not face an undue disadvantage at the discretion of the developed countries. Their objective is to ensure equality and equal opportunity among the signatories of such agreements and negotiations rounds are held frequently to change the terms and conditions of the agreements.

The future of the multilateral trading system is a hot topic of discussion, as it faces serious challenges, some of which have existed for a long time and others that have only recently emerged. Some experts believe the system has been stagnant for a long time and is now in crisis, while others believe the current situation will spur new reforms and alternative negotiating approaches in the future. Several events are putting pressure on WTO members to resolve differences and assess progress. COVID-19’s challenges have put global cooperation to the test, disrupted global supply chains, and resulted in trade protectionism. In response to the problem, several nations have reaffirmed the trading system, lifted restrictions, and liberalised trade, and see the WTO as playing a critical role in addressing trade policy obstacles. While some proposed reforms have stalled and the WTO dispute settlement system has ceased to function completely, an alternative arbitration mechanism involving the EU, China, and a few other WTO members continues to operate in parallel with the WTO.

Despite divergent viewpoints, there is a broad consensus that the status quo is no longer sustainable, and that the framework must be improved and innovative compromises must be found if the WTO is to continue to stay the cornerstone of the trading system. The path forward is still being debated. Recent proposals for WTO reforms and potential new rules are being discussed, and they’ve sparked new ideas, though concrete solutions and the next steps have yet to be agreed upon among the nations involved in the discussions and the broader WTO membership.

References

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