WTO: Trade Rules and Intellectual Property Rights

The assignment provided is a comprehensive document that explains various trade rules and intellectual property rights within the framework of the World Trade Organization (WTO). It covers key agreements such as TRIMS, Anti-Dumping, and Dispute Settlement Body, highlighting their significance in international trade. Additionally, it delves into intellectual property rights like patents, trademarks, copyrights, and industrial designs, providing an overview of their importance in protecting creative works and innovations. The document also outlines the dispute settlement process within the WTO, including timelines for each stage. This detailed information is essential for students, scholars, and professionals seeking to understand the intricacies of international trade and intellectual property law.

INTRODUCTION TO INTERNATIONAL BUSINESS
UNIT-I
Business:-Business is an economic activity, which is related to continuous and
regular production and distribution of goods and services for satisfying
human wants.
• Stephenson Definition:- "The regular production or purchase and sale of
goods undertaken with an objective of earning profit and acquiring wealth
through the satisfaction of human wants."
• Dicksee Definition:- "Business refers to a form of activity conducted with
an objective of earning profits for the benefit of those on whose behalf
the activity is conducted."

Features of Business
 Exchange of goods and services
 Deals in numerous transactions
 Profit is the main objective
 Business skills for economic success
 Risks and Uncertainties

Goods and Services
Good is a commodity, or a physical, tangible item that satisfies some
human want or need, or something that people find useful or desirable
and make an effort to acquire it.
A service is an activity which has some element of intangibility associated
with it, which involves some interaction with customer or with property in
their possession, and does not result in a transfer of ownership.
Philip Kotler defines a service as, “Any act or performance that one party
offers to another that is essentially intangible and does not result in the
ownership of anything. Its production may or may not be tied to the
physical product.”

Characteristics of Services
 Intangibility
 Inseparability
 Perishability
 Variability

Meaning and Definition of International business
International business encompasses all commercial activities that take
place to promote the transfer of goods, services, resources, people, ideas,
and technologies across national boundaries.
Cambridge dictionary defines: international business as – “the activity of
trading goods and services between countries”.
However international business is beyond this definition, it has a very wider
scope.
Basically international business is a cross border transaction between
individuals, businesses, or government entities.

“InternationaIbusiness consists of transactions that are devised and carried
out across national borders to satisfy the objectives of the individuals,
companies and organizations. These transactions take on various forms which
are often interrelated.” – Michael R. Czinkota
“International business involves commercial activities that cross national
frontiers” – Roger Bennett

International business occurs in many different formats like:
 The movement of goods from country to another (exporting, importing,
trade)
 Contractual agreements that allow foreign firms to use products, services,
and processes from other nations (licensing, franchising)
 The formation and operations of sales, manufacturing, research and
development, and distribution facilities in foreign markets

TYPES /MODES OF INTERNATIONAL BUSINESSES
 IMPORTS AND EXPORTS
 LICENSING
 FRANCHISING
 OUTSOURCING
 JOINT VENTURES
 MULTINATIONAL COMPANIES

Motives for growth of International Business
 The formation of the World Trade Organization (WTO) in 1995
 The inception of electronic funds transfers
 The introduction of the euro to the European Union
 Technological innovation that facilitates global communication and
transportation
 The dissolution of a number of communist markets, thus opening up
many economies to private business
 Global competition

Factors considering in International Business
1. Culture
2. Economic system
3. Economic conditions
4. Exchange rates
5. Political risk and regulations

Differences between Domestic business and International business
 Approach
 Geographic scope
 Operating Style
 Environment
 Quotas
 Tariffs
 Foreign exchange rates
 Culture
 Export-import procedures
 Human Resources

Globalization
Globalization is a complex process by which the world is becoming a
highly interconnected world through economic, political and cultural
contracts.
In simple terms “Globalization is a process that encompasses the causes,
course and consequences of transnational and transcultural integration of
human and non-human activities”.

Dimensions of Globalization
 The Economic Dimension
 The Technological Dimension
 The Political Dimension
 The Cultural Dimension
 The Environmental Dimension

International Trade Theories
Trade is the concept of exchanging goods and services between two people or
entities.
International trade is the concept of this exchange between people
or entities in two different countries.
Key Ways
 International trade is the exchange of goods and services between countries.
 Trading globally gives consumers and countries the opportunity to be exposed
to goods and services not available in their own countries, or which would be
more expensive domestically.

International Trade Theories
 Mercantilism
 Theory of Absolute cost Advantage
 Theory of Comparative cost Advantage
 Country Similarity Theory
 Product Life Cycle Theory
 Global Strategic Rivalry Theory
 Porter’s National Competitive Advantage Theory

1.Mercantilism
The objective of each country was to have a trade surplus, or a situation
where the value of exports are greater than the value of imports, and to avoid
a trade deficit, or a situation where the value of imports is greater than the
value of exports.
This theory stated that a country’s wealth was determined by the amount of
its gold and silver holdings.
In it’s simplest sense, mercantilists believed that a country should increase its
holdings of gold and silver by promoting exports and discouraging imports.

2.ADAM SMITH: “THEORY OF ABSOLUTE COST ADVANTAGE”
According to Adam Smith, every country should specialize in producing those
products which it can produce at less cost than that of other countries and
exchange these products with their products produced cheaply by other
countries. Trade between two countries takes place when one country
produces one product at less cost than that of another country and the other
country has an absolute cost advantage over the first country in producing in
other product.

Countries have absolute cost advantage due to the following reasons
 Suitability of the skill of the labour of the country in producing certain products.
 Specialization of labour in producing certain products leads to higher productivity
and less labour cost per unit of output.
 Economies of scale would reduce the labour cost per unit of output.
 Natural advantages
Assumptions of the theory
 Adam Smith proposed the absolute cost advantage theory based in the
following assumptions:
 Trade is in between two countries.
 Only two commodities are traded.
 Free trade exists between the countries.
 The only element of cost of production is labour.

3. DAVID RICARDO’S - THEORY OF COMPARATIVE COST ADVANTAGES
Comparative cost advantage theory states that a country should
produce and export those products for which it is relatively more
productive than that of other countries and import those goods
for which other countries relatively more productive than it is.

Assumptions of the theory
The assumptions of the comparative cost advantage theory
include.
 There exists full employment.
 There are no trade barriers.
 Trade takes place is only between two countries.
 Only two products are traded.
 There are no costs of transport, etc.

GATT AND WTO
GATT (General Agreement on Tariffs and Trade) is established on 30th October
1947( effect on 1 st January 1948) is a legal agreement conference between
many countries, whose overall purpose was to promote international trade by
reducing the trade barriers such as tariffs and quotas. effect on 1 st January
1948.
The main objectives of GATT are
 To raise standard of living
 To ensure full employment and growing volume of real income.
 To develop the full use of the resources of the world
 To expand production and international trade

WTO (World Trade Organization)
According to final Act of Marrakesh the World Trade Organization came into force
from on 1st January 1995.
Functions of WTO
 WTO examines regularly the trade regime of industrial member countries.
Thus it acts as a watch dog of international trade.
 It provides a forum for negotiations and for settling disputes.
 WTO acts as a Management consultant for world trade.
 Technical co-operation and training to developing countries.
 WTO cooperates with other international institutions and like IMF, ILO, World
Bank involved in global economic policy making.

WTO: IMPORTANT PROVISIONS AND AGREEMENTS
1. AGREEMENT ON AGRICULTURE (AOA)
2. AGREEMENT ON TEXTILES AND CLOTHING (ATC)
3. GENERAL AGREEMENT ON TRADE IN SERVICES (GATS)
4. AGREEMENT ON RULES OF ORIGIN
5. AGREEMENT ON TRADE RELATED INVESTMENT MEASURES (TRIMS)
6. AGREEMENT ON ANTI – DUMPING

1. AGREEMENT ON AGRICULTURE (AOA)
The WTO Agreement on Agriculture contains provisions in three
broad areas of agriculture and trade policy
1.Market access
2.Domestic support
3.Export subsidies.

2) AGREEMENT ON TEXTILES AND CLOTHING (ATC)
The Multifiber Agreement was a major departure from the basic GATT rules.
On 1st January 1995, it was replaced by the WTO Agreement on Textiles and
Clothing.
The ATC built on the following Key elements
 a) The product coverage basically encompassing yarns, fabrics, made – up
textile products and clothing.
 b) A special safeguard mechanism to deal with new cases of serious
damage or threat there for domestic producers during the transition
period.
 c) Establishment of a textiles Monitoring Body (TMB) to supervise the
implementation of the Agreement and ensure that the rules are faithfully
followed.

3) GENERAL AGREEMENT ON TRADE IN SERVICES (GATS)
The GATS Distinguishes between four modes
1.Cross-boarder Supply
2.Consumption abroad
3.Commercial presence
4.Presence of Natural Persons

4) AGREEMENT ON RULES OF ORIGIN
“Rules of Origin” are the criteria used to define the where a product
was made. They are an essential part of trade rules because a number
of policies discriminate between exporting countries, quotas,
preferential tariffs, anti – dumping actions, countervailing duty and
more.

5) AGREEMENT ON TRADE RELATED INVESTMENT MEASURES (TRIMS)
The agreement on the Trade Related Investment Measures calls for
introducing national treatment of foreign investment and removal of
quantities restrictions.
TRIMS may include requirements to
1.Manufacturing Requirements
2. Technological Requirements
3.Export Performance Requirements
4. Foreign Exchange Requirements
The TRIMS agreement does not cover services.

6. AGREEMENT ON ANTI – DUMPING
If a company exports a product at a price lower than the price it normally
charges on its own home market, is said to be dumping the product.
The WTO Anti – dumping Agreement introduces the following modifications
 The detailed rules for calculating the amount of dumping.
 More elaborate procedures for initializing and conducting anti – dumping
investigations.
 Rules on the implementation and duration (normally five years) of anti –
dumping measures.
 Particular standards for dispute settlement panels to apply in ant –
dumping disputes.

WTO: Intellectual Property Right and Industrial Sector
Intellectual property refers to creations of the mind: inventions;
literary and artistic works; and symbols, names and images used
in commerce.
The term "Intellectual Property Rights" refers to the legal rights
granted with the aim to protect the creations of the intellect.
These rights are allow to creators, or owners, of patents,
trademarks or copyrighted works to benefit from their own work
or investment in a creation.

Different Intellectual Property Rights
 Patents
 Trade Marks
 Copy Rights
 Industrial Design

Patents
A patent is an exclusive right granted for an invention – a
product or process that provides a new way of doing
something, or that offers a new technical solution to a problem.
Why are Patents necessary?
What kind of protection do Patents offer?
What rights do patent owners have?
Who grants Patents?

Trademark
A trademark is a distinctive sign that identifies certain goods or
services produced or provided by an individual or a company.
Under modern business conditions, a trademark performs four
functions, viz., it
 Identifies the product and its origin
 Guarantees its unexchanged quality
 Advertises the product
 Creates an image for the product

Copyrights
Copyright means the exclusive right to do or authorize others to do certain
acts in relation to literacy, dramatic, musical and artistic works,
cinematography, and sound recordings etc.,
Basically, copyright is the right to copy or reproduce the work in which
copyright subsists.

Industrial Design
An Industrial design refers to the ornamental or aesthetic
aspects of an article. A design may consist of dimentional
features, such as shape or surface of an article,patterns,colours.

WTO: DISPUTE SETTLEMENT BODY (DSB)
Areas of Disputes
 Subsidies
 Customs Duties
 Patent Protection

Dispute Solving Process
The approximate periods for each stage of a dispute settlement procedure are target figures- the Agreement is
flexible. In addition, the countries can settle their disputes themselves at any stage.
60 days Consultations, meditation, etc.
45 days Panel set-up and panelists appointment
6 months Final panel report to parties
3 weeks Final panel report to WTO members
60 days Dispute Settlement Body adopts report (if no appeal)
Total = 1 year (without appeal)
60-90 days Appeals report
30 days Dispute Settlement Body adopts appeals report
Total = 1 year, 3 months (with appeal)