INTERNATIONAL TRADE LAW

B.A.LL.B. (Hons.) VIIth and IXth Semester

(Honours II)

COURSE MODULE

Hidayatullah National Law University, Raipur (C.G.), 2014

 INTERNATIONAL TRADE LAW

HONOURS COURSE

FACULTY: MR. ANKIT AWASTHI

Course Objective:

To develop the understanding of students about International Trade Law

To acquaint the Students about the basic aspects of International Trade Law
To discuss the origin and development of WTO and its different principles and
Agreements
To deals with United Nations Convention on Contracts for the International
Sale of Goods 1980 and some aspects related with it

INTRODUCTION TO THE COURSE

Trade is one of the main driving forces behind the increasing globalization. While
trade exists since the inception of civilization, with the development of nation states
and the notion of sovereignty, governments have been asserting and exercising power
of regulating trade within and from their territory. This intervention by the
governments in the trading activity of private persons and firms have been opposed by
many economists who have been arguing in favour of liberalizing trade barriers which
means minimizing government intervention. After Second World War, a need for
unification of Private International laws in respect of trade was felt across the world.
Efforts started with the General Agreement on Tariff and Trade (GATT) 1947,
culminated in the establishment of the World Trade Organization (WTO) in 1994.
The WTO regulates the power of the sovereign states to regulate trade within their
jurisdiction. With its continuously expanding horizons, the Agreements contained in
the WTO Agreement have become the main legal framework within which trade can
be conducted by persons and firms. It would not be an exaggeration to say that the
WTO law defines the extent of rights against different governments of the world of
persons and firms to trade in goods and services.

Given the importance of the WTO as the framer of international law on trade policy
norms, this course would primarily focus on the WTO Agreements. The Agreements
would be studied in light of their historical background, decisions interpreting them
and the controversies that exist with regard to them. After making the student aware
of the international policy norms which affect trade in goods and services, students
would be introduced to the ground rules relating to international sale of goods. Unlike
the earlier part, this part does not deal with the power of the governments to regulate
international trade and limitation thereon. Instead, this part deals with rules that
govern international sale transaction between private persons and firms. Students
would also be acquainted with the relationship and balance between different
international organizations e.g. WTO, IMF, World Bank and UNCTAD.
 COURSE STRUCTURE

PART I

THEORIES RELATED TO INTERNATIONAL TRADE AND WTO

MODULE I: THEORIES RELATED TO INTERNATIONAL TRADE

Class Hours: 4-5 classes

In this module students would be introduced with the different views, theories and
issues relating to regulation of international trade. On the one hand there are free trade
economists, arguing for minimization of governmental intervention on the ground that
it leads to specialization and prosperity. On the other hand there are Marxists who feel
that the idea of free market and specialization leads to colonialism. The module would
also include discussion of reasons which induce or compel the governments to
intervene in the trading activity in their jurisdiction.

1. The theories that would mainly be discussed would be:

Mercantilism,
Theory of absolute advantage of Adam Smith,
Theory of comparative advantage of David Ricardo and its developments
Marxist notions affecting International Trade

2. Why do governments intervene in the market?

MODULE II: HISTORICAL BACKGROUND, STRUCTURE AND ROLE OF

THE WORLD TRADE ORGANISATION (WTO) IN INTERNATIONAL
TRADE ALONGWITH DISPUTE SETTLEMENT MECHANISM

Class Hours: 6-8 classes

This module would trace the historical background of the present WTO covering the
resort to protectionism after first world war, great depression in 1930s, rise of
totalitarianism in Germany and Italy, realization of the mistakes by Allied powers and
birth of the idea of Bretton Woods institutions, failure of the idea of International
Trade Organization (ITO), inception of GATT 1947, different rounds of negotiations
between 1947 and 1994, and finally birth of the WTO. Further it will cover the
organizational structure of the WTO; its role in facilitating international trade and its
dispute settlement mechanism.

Historical background of WTO

WTO Agreement and other Uruguay Round Agreements
Organizational Structure of the WTO
Difference between GATT 1947 and GATT 1994
Role of the WTO in International Trade
 Dispute Settlement Mechanism within the WTO
Relationship of WTO with the other two Bretton Woods institutions i.e. IMF
and World Bank

PART II
TRADE IN GOODS

GATT 1994 AND ITS PILLARS (BASIC PRINCIPLES) FOR

INTERNATIONAL TRADE

GATT 1994 and 12 other agreements contained in Annex 1A of the WTO Agreement
regulate policies relating to international trade in goods. This part would deal with
major the principles / rules contained in GATT 1994.

MODULE III: ELIMINATION OF QUNATITATIVE RESTRICTIONS AND

TARIFFS AS PREFERRED MODE FOR REGULATING TRADE IN GOODS

Class Hours: 3-4 classes

Trade in goods can be regulated either by applying quantitative restriction or by tariff.

GATT 1994 has done away with quantitative restrictions as a tool for regulating trade
in goods. However, exceptions are provided to the rule of general elimination of
quantitative restrictions, the most important of which is situation of balance of
payment problem.

Why tariff is preferred over quantitative restrictions as a tool for regulation of

trade in goods?
General Elimination of quantitative restrictions under Article XI of GATT
1994
Exceptions to the rule in Article XI
Exception for Balance of Payment Purposes
Tariff bindings under Article II of GATT 1994

MODULE IV: NON-DISCRIMINATION

Class Hours: 4-5 classes

The second main rule on which GATT is based is the rule of non discrimination.
Members of WTO cannot discriminate between like products of foreign origin and
national origin (National treatment) and products originating in any WTO Member
can not be discriminated against like products originating in any third country (MFN).

1. National Treatment:
Concept of Like products
Difference in treatment of like products and directly competitive and
substitutable products.
Exceptions to the rule
2. Most Favored Nation Treatment:
Advantages of the MFN rule
Exceptions to the rule
Regional Trade Agreements, Free Trade Areas, etc.
Growing phenomenon of RTAs and FTAs whether a threat to multilateralism?

MODULE V: PROTECTION OF DOMESTIC INDUSTRY

Class Hours: 3-4 classes

While aiming at progressive reduction of barriers, the WTO recognizes the need of
the governments to protect their industries in certain circumstances. These
circumstances may arise due to unfair trade practice by the exporter (dumping) or the
government of the exporter (subsidies) or due to increase in import of goods to such
an extent that the domestic industry is not able to face the new competitive situation.
In all such circumstances GATT rules empower the government to take remedial
measures which gives certain amount of temporary respite to the domestic industry.

Antidumping Measures under Article VI of GATT 1994 and the Antidumping

Agreement

Subsidies and Countervailing Duties under Article VI and XVI of GATT 1994
and Agreement on Subsidies and Countervailing Measures

Safeguard Measures under Article XIX of GATT 1994 and the Safeguards
Agreement

MODULE VI: REGULATION OF NON-TARIFF BARRIERS

Class Hours: 4-5 classes

The greatest challenge facing WTO and free trade today is how to combat non-tariff
barriers which are taken on various ground e.g. protection of environment, health of
the citizens of importing country, or providing rules which otherwise run counter to
the principle of liberal trade. Some attempt has been made in agreements of Annex IA
to combat some of the non-tariff barriers. The most important of them are the SPS
Agreement and the TBT Agreement.

Agreement on Technical Barriers to Trade (TBT)

Agreement on Sanitary and Phytosanitary (SPS) Measures
Rules of Origin
Pre-shipment Inspection
Agreement on Import Licensing

PART III
TRADE IN SERVICES
MODULE VII: GENERAL AGREEMENT ON TRADE IN SERVICES (GATS)

By the time Uruguay Round negotiations started, trade in services had increased
significantly. Therefore, on the insistence of the USA, GATS was negotiated in this
round. However, due to resistance of the developing countries GATS follows a
structure that is different from that of GATT. Contained in Annex 1B of the WTO
Agreement, GATS is more of a framework Agreement for gradual liberalization of
trade in services.

Class Hours: 4-5 classes

Historical Background of inclusion of services in WTO

Definition of trade in services
Modes of Supply
MFN and exception to the rule
Transparency
Waivers and Withdrawal from the Agreement
Negotiations for liberalization of services in the Doha Round

PART IV
TRADE AND INTELLECTUAL PROPERTY RIGHTS

MODULE VIII: TRADE RELATED ASPECTS OF INTELLECTUAL

PROPERTY RIGHTS (TRIPS)

Class Hours: 2-3 class

Again despite the opposition of the developing countries and insistence of the USA
TRIPS was included in the Uruguay Round Agreements. The TRIPS Agreement takes
on from the existing international agreements relating to IPR and in many cases adds
some additional obligations. The Module would not be given too much emphasis
considering the fact that there is already course on IPR in HNLU.

PART V
EXPANDING HORIZONS OF THE WTO

WTO has become a very effective international organization. Due its growing
significance and influence, there are efforts to expand its reach. One way is curbing
the powers of national governments by using trade measures as a tool for imposing
certain norms on countries which have comparatively less vigorous rules for them.
Therefore trade barriers are being advocated by different groups to enforce
environmental measures on countries, to strengthen labour laws, or to protect human
rights. Developing countries are opposing these efforts which they think unfair for
various reasons. Another way whereby attempts are being made to expand the
horizons of WTO is by bringing in new issues within the legal framework of the
WTO. Therefore proposals are being made to have agreement on trade and
competition, agreement on trade and investment trade facilitation etc.
MODULE IX: TRADE BARRIER AS A TOOL FOR DISCIPLINING STATES

Class Hours: 2-4 class

Trade and Environment

Trade and Labour Rights
Trade and Human Rights

PART VI
INTERNATIONAL SALE OF GOODS

MODULE X: INTERNATIONAL TRADE TERMS, PAYMENT METHODS

AND AN OVERVIEW OF UNITED NATIONS CONVENTION ON
CONTRACTS FOR THE INTERNATIONAL SALE OF GOODS 1980

Class Hours: 12-14 classes

Most Common Terms of Sale derived from Common law

International Trade Terms: Cost, Insurance and Freight
International Trade Terms: Free on Board
Letter of credit
Overview of United Nations Convention on Contracts for the International
Sale of Goods 1980

GENERAL REFRENCES:

1. Bhala, Raj Modern GATT Law: A Treatise on the General Agreement on

Tariffs and Trade (Thompson, Sweet and Maxwell 2005)
2. Macrory, Patrick F.J. et al The World Trade Organization: Legal, Economic
and Political Analysis (Springer, 2005)
3. Matsushita, Mitsuo et al The World Trade Organization: Law Practice and
Policy ( OUP, 2006)
4. Mavroidis, Petros C. The General Agreement on Tariffs and Trade (OUP
2005)
5. Schnitzer, Simone Understanding International Trade Law (Law Matters
Publishing, 2006)

Important Web Sources:

1. www. wto.org.
2. www. nic.in
3. www. worldtradelaw. net
4. www.centad.org