Toolkit for WTO Rules on Regional Trade Integration Agreements or Economic Integration

Compliance to WTO Rules is a major requirement when dealing with regional trade integration agreements or econmic integration agreements. The Preamble to the WTO Agreement highlights “... the elimination of discriminatory treatment in international relations” as an objective of the Multilateral Trading System. The Most-Favoured-Nation (MFN) commitment by WTO Members is a fundamental instrument for achieving that aim. However the MFN treatment changes when dealing with regional economic integration.

When establishing a regional trade integration agreement(RTA), Members of WTO that are parties to the economic integration need some kind of derogation to avoid legal inconsistency with the MFN rule. The WTO Member has always the possibility of seeking a waiver. But, over time, the system itself has developed a series of conditional exceptions which Members can invoke when departing from their MFN commitment: These are in GATT Article XXIV, Enabling Clause, Understanding on GATT Article XXIV and GATS Article V.

Establishment of a regional trade integration requires that common principles of WTO be put into consideration. An economic integration or regional trade agreement  should facilitate trade among the parties, provide for mutual/reciprocal trade concessions and must not result in barriers towards third parties higher than those existing before the formation of the economic integration agreement. Read more about Regional Trade Integration Agreements and Compliance to WTO Rules

Why Countries Engage in International Trade-Analysis based on Trade theories

This article at explaining why countries engage in international trade. Now days it is not uncommon to find that the main objective of a trade policy of almost all countries is to promote international trade. Countries have gone ahead to engage in trade negotiations all in the interest of enabling international trade. But then, why do countries engage in international trade? Why are there global attempts to liberalize international trade rather than promote autarky-a situation of no international trade? Does engaging in international trade contribute to income distribution, factor employment and poverty reduction? In short, must a country engage in international trade in order to develop? This article delves into theories of international trade so as to understand why countries engage in international trade.

Economist believes that if countries engage in international trade, they can mostly benefit under a free international trade environment. To get a clear perspective to this claim, I will glance though five major main theories of international trade-the Ricardian theory of international trade- Comparative advantage Model on gains from specialization and opportunity cost theory, Heckscher-Ohlin model of international trade who believes that factor proficiency differences are the reasons why countries engage in international trade because of the gains from specialization and income distribution effects, the new international trade theory which examines the economies of scale and the Heterogeneous firms theory which explains why countries engage in international trade basing on a firm level perspective.

Read more on Ricardian Comparative advantage and Gains from Specialization and how it relates to why countries engage in international trade

Or Continue and find out what Heckscher-Ohlin says factor proficiency and how the model explains the reasons why countries engage in international trade

Or read how economies of scale according to New Trade Theory explain why Countries Engage in international trade

EAC Economic Integration Priorities: Minimising trade diversion and maximising trade creation

EAC economic integration priorities should be focused on minimising trade diversion and maximising trade creation through a single Customs territory, Monetary Union and infrastructure development.
While addressing his maiden press conference at the EAC Secretariat headquarters on May 10th 2011 in Arusha, the new Secretary General of the EAC Amb. Dr. Richard Sezibera identified the realization of a single Customs territory, making the Common Market work, achieving a Monetary Union, infrastructure development and industrialization as the priorities for his term. These priorities for EAC economic integration appear appealing on the face value. They are any not farfetched; they actually reflect the ambition of the Community. However, Amb Richard Sezibera will have to solve the challenges ahead of him if he is to achieve the listed priorities.Read more about EAC priorities on economic integration and trade in respect to maximising trade creation and minimising trade diversion

EAC and World Bank Sign $16m Grant for integration of the financial services sector

On 14 February 2011, the East African Community (EAC) and the World Bank signed a grant agreement worth USD 16 million to support a project that will transform the EAC integration of the financial services sector.

The EAC-World Bank supported project has six components on Financial Inclusion and Strengthening Market Participants, Harmonization of EAC Financial Laws and Regulations, Mutual Recognition of Supervisory Agencies, EAC Integration of Financial Market Infrastructure, Development of the Regional Bond Market and Capacity Building. Read more on EAC-World Bank, 16 million project support

Geographical indications-Negotiation text now has a second section on “Registration”

The second of six key areas has been added to an emerging single draft negotiating text on a geographical indications register for wines and spirits, and circulated to WTO intellectual property negotiators.
The section on “registration” has been added to a revised one on “notification” so as to have a more-or-less complete single text towards the end of March. It will contain opposing opinions but a single text, rather than having rival documents, so as tool to allow negotiators narrow down their differences more practically.
The latest addition was produced from drafting consultations he held earlier in the week involving representatives of the three groups that have submitted proposals in the talks.

Like the first draft text only on “notification”, which was circulated in the previous meeting on 13 January, this four-page draft reflects all three positions, leaving most of their differences unresolved.

The current chairperson of the 13-year-old negotiations on setting up the multilateral register, Zambia’s ambassador Darlington Mwape, while circulating the draft, said that the drafting “continues to be fragile and delicate,” with the consultations running “into a number of roadblocks”. He warned that the next issue, the legal effects or consequences of a term being registered could be doubly difficult when the drafting group resumes in the week of 8 February.

In order to help the drafting consultations progress smoothly, he set out some “rules of the road”, including deadlines for the participants to submit their drafts and an assurance that if the deadlines are missed participants can propose additions to the “composite” text during the consultations.

He also assured the whole membership that they would all have an opportunity to work on the draft “once sufficient substance is on the table”.

The new section on “registration” deals with the next steps after notification: how registration would proceed after a geographical indication has been notified, including what would be recorded or appear on the register and how the register would be updated to take account of changes to notifications or registrations — for example if a geographical indication is no longer used.


Meanwhile options in square brackets continue to reflect the different proposals of “W/52 coalition” (the EU, Switzerland and their allies), the “joint proposal group” (US, Australia, Canada, Chile, New Zealand, Japan, Argentina and others), and Hong Kong, China (whose proposal attempts to bridge the differences) — see “current proposals” below.

Some of the major differences reflected in square brackets are about the legal implications in other countries when a member registers a term, the subject that will be discussed next.

Members also differ over whether the register should only be for wines and spirits as prescribed under the present mandate, or whether the system should cover geographical indications for all products.

The chairperson told negotiators that their time “could be spent more usefully on issues that lie clearly within the mandate. In other words — and since we are in road metaphors anyway — in our group we should concentrate on building the road from Doha to Geneva as instructed by Members through the TNC, rather than worry about how many lanes the road is going to have.”

He also urged them to save time by working among themselves — both within and between their groups — to prepare for his consultations and to try and bridge their differences.


Negotiations on the proposed multilateral register for wines and spirits began in 1997, under Art.23.4 of the WTO intellectual property agreement (TRIPS) and were included in the Doha Round when it was launched in 2001.

The six main areas to be covered are:

 notification — eg, how a term would be notified and which member would do it (also related to “participation”)

 registration — eg, how the system would be run and the WTO Secretariat’s role

 legal effects/consequences of registration, in particular any commitments or obligations on members arising from a term’s registration (also related to “participation”)

 fees and costs — including who would bear these burdens

 special treatment for developing countries (officially, “special and differential treatment”)

 participation — whether the system is entirely voluntary, or whether a term’s registration would have some implications for all WTO members.


Source: WTO news items

WTO talks on Geographical indications as 2010 winds up

Last week WTO intellectual property talks, on geographical indications became the latest to aim for an endgame spurt in early 2011 and a conclusion to the whole Doha Round by the end of the year.

According to the WTO news item released on 10th Dec 2010, members in an informal meeting, supported chairperson Darlington Mwape’s plan to produce the negotiating group’s first draft text by the end of the first quarter following a six-point sequence point by point — described as “elements” of the procedure for the register:
• notification — eg, how a term would be notified and which member would do it (also related to “participation”)
• registration — eg, how the system would be run and the WTO Secretariat’s role
• legal effects/consequences of registration, in particular any commitments or obligations on members arising from a term’s registration (also related to “participation”)
• fees and costs — including who would bear these burdens
• special treatment for developing countries (officially, “special and differential treatment”)
• participation — whether the system is entirely voluntary, or whether a term’s registration would have some implications for all WTO members.
The plan had already been discussed with a small group of key members on both sides of the debate in earlier consultations.
The news item reports that the timetable is designed to synchronize with plans for all subjects in the Doha Round, as outlined by WTO Director-General Pascal Lamy’s statement to ambassadors at an informal meeting of the Trade Negotiations Committee, which he chairs, on 30 November. This, in turn, was based on political declarations from the G-20 summit in Seoul and APEC meeting in Yokohama.
Mr Lamy noted “a collective sense emerging that revised texts in all areas of the negotiation will have to be developed so that they appear towards the end of the first quarter of 2011.”
All delegations said their preference would be for a process that is based on a text with input from members, and driven by the members themselves.
Topic by topic. Amb.Mwape said each of the six topics will be discussed in sequence with the aim of producing a single negotiating text under each heading before moving on to the next one. The text could include “bracketed alternatives and options” if members cannot agree on a single set of provisions.
The first topic, notification, will be discussed in consultations in the week of 10 January, followed by a meeting of the full membership. The schedule will be tight if the end-of-March target is to be met, he said.
It is reported that Amb.Mwape urged members to help the drafting move ahead by focusing on each topic, avoiding getting distracted by related issues, and to try to work among themselves to produce suitable drafts.
Meanwhile the following are the current alternate proposals on the table that the Members will be discussing:
• The Joint Proposal TN/IP/W/10/Rev.2 from Argentina, Australia, Canada, Chile, Costa Rica, Dominican Republic, Ecuador, El Salvador, Guatemala, Honduras, Japan, Rep.Korea, Mexico, New Zealand, Nicaragua, Paraguay, Chinese Taipei, South Africa, the US. This envisages the register as a database. Members would choose whether or not to participate in the register. The intellectual property authorities of participating members would consult the database when considering protection for individual trademarks or geographical indications within their countries.

• TN/C/W/52 of 19 July 2008, from over 100 WTO members, which includes a modified and stripped-down version of the EU’s original proposal for the multilateral register. It is now in the form of proposed “modalities” or a blueprint of the final outcome, with details to be negotiated later. Described as a negotiated compromise among the sponsors, the proposal envisages a system applying to all members although members could choose whether or not to register their own geographical indications.

All members would have to take a term’s registration “into account” and treat it as “prima facie” evidence (first sight, or preliminary, before further investigation) that the term meets the definition of a geographical indication. Further procedures for that term within each country would be handled entirely within the country’s domestic legal system. These include confirmation that the term is an eligible geographical indication, possible challenges, and whether it is subject to exceptions such as because the term is generic.

(Previously the EU had proposed that if a term is registered the assumption — the legal phrase is “irrebuttable presumption” — would be that it should be protected in all WTO members except those that have successfully challenged the term.)

Opponents of this proposal also object to the link with two other intellectual property issues: “extending” to all products the enhanced protection currently given to wines and spirits; and requiring patent applicants to disclose the origin of genetic materials and related traditional knowledge used in their inventions.

• TN/IP/W/8 from Hong Kong, China: if a term is registered, this would be preliminary (“prima facie”) evidence — which could be rebutted — about who owns the term, that it is protected in the country of origin, etc, but only in those countries choosing to participate in the system. Hong Kong, China also proposes an initial period of four years for this system followed by a review.

Enforcement of the Leniency Program Against Hardcore Cartels

One of the tools in implementation competition policy and law is the enforcement of the leniency program against hardcore cartels. Indeed enforcement of the leniency program was one of the competition law tools reviewed at the Six United Nations Conference in 2010 Geneva. The Conference reviewed all aspects of the Set of Multilaterally agreed equitable principles and rules for the control of restrictive business practices. Enforcement of the leniency program came out  outstandingly as one the latest and effective tools for fighting against hardcore cartels.

According to UNCTAD, enforcement of the leniency program includes a system, publically announced, of, “partial or total exoneration from the penalties that would otherwise be applicable to a cartel member which reports its cartel membership to a competition law enforcement agency”. Enforcement of the leniency program against hardcore cartels can be effective if there is; a high probability of catching the cartel in question, high degree of the penalty to the parties reported in the cartel much more than that of the reporter, clear benefits to the reporter, track record of success, transparency and predictability of the response by the authority to the reporter and sufficient protection of the curtain raiser, among others. Read more on Enforcement of the Leniency Program againest hardcore cartels