KSLU Solved Question Papers
International Trade Economics
Previous Year Question Paper with Solution
B.A. LL.B. (Five Years) · Sem 10
2017 Jun Examination
munotes.in
Mumbai
B.A. LL.B. (Five Years) Sem 10 International Trade Economics 2017 Jun Question Paper with Solutions
First published on munotes.in on 21 October 2026.
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Contents
The questions below are the paper as Karnataka State Law University set it at the 2017 Jun examination, in the order it was set.
MarksPage
The Paper as Set
The questions in this volume are the questions asked at the 2017 Jun examination, reproduced as Karnataka State Law University set them, in the order it set them. Long reading passages are shortened to their first and last lines and our summary; the original paper prints them in full. Only the answers are ours. See the original question paper.
Duration 3 hours · Total marks 100 · 13 questions answered
How to use this volume
Solve the paper first, under exam conditions and against the clock. Then read the answers here and mark your own. Reading a solution before attempting the question feels productive and teaches very little, because recognising an answer is not the same as being able to write one.
Q1Critically evaluate the concept of State's-Sovereignty and International Trade Agreements.[16]
Answer
For full marks, cover: the concept of State sovereignty (internal and external; sovereign equality in Article 2(1) of the UN Charter) and its economic dimension (control over trade, tariffs, regulation); international trade agreements as an exercise of sovereignty (consent, pacta sunt servanda); how the WTO agreements limit sovereignty (bindings, non-discrimination, disciplines on regulation, subsidies and intellectual property, conformity of domestic law under Marrakesh Article XVI:4, compulsory dispute settlement), with India's experience (India: Patents, India: Solar Cells); how they preserve it (consent and withdrawal, consensus, the right to regulate, the exceptions including security, Russia: Traffic in Transit, flexibilities such as Novartis AG v. Union of India, the ban on additions to rights, no direct effect in domestic law, Gramophone Company of India Ltd. v. Birendra Bahadur Pandey); a critical evaluation, both sides; a conclusion.
The concept of sovereignty
Sovereignty is the supreme authority of a State within its territory and its independence from outside control. It has two faces:
- Internal sovereignty: the power to make and enforce laws for its people and territory.
- External sovereignty: independence in relations with other States, and sovereign equality among them (Article 2(1) of the UN Charter).
In the economic field, sovereignty traditionally meant a State's freedom to set tariffs, ban imports, subsidise its industries, regulate products and decide who may invest.
Trade agreements as an exercise of sovereignty
A State that signs a trade agreement does not lose sovereignty against its will. It uses its sovereignty to accept obligations in return for others' promises. Treaties bind because States consent to them. They must be performed in good faith (pacta sunt servanda), as Article 26 of the Vienna Convention on the Law of Treaties provides. In India, treaty-making is an executive act, and Article 253 of the Constitution lets Parliament legislate to implement a treaty.
How the WTO agreements limit sovereignty
1. Bound tariffs. A member cannot raise a tariff above its bound rate without negotiating compensation (GATT Articles II and XXVIII).
2. Non-discrimination. It must give all members MFN treatment and treat imports no worse than domestic goods (Articles I and III).
3. No quotas. Import bans and quotas are generally prohibited (Article XI).
4. Discipline on domestic regulation. Health and product rules must meet the SPS and TBT Agreements: science, risk assessment, international standards, least restriction.
5. Discipline on subsidies and investment measures. Export subsidies and local content requirements are banned (SCM Article 3; TRIMs Article 2).
6. Intellectual property. TRIPS requires minimum standards of protection, such as twenty-year patents in all fields of technology.
7. Conformity of domestic law. Each member must bring its laws, regulations and procedures into line with the agreements (Marrakesh Article XVI:4). No reservations may be made without consent (Article XVI:5).
8. Compulsory dispute settlement. Disputes go to panels whose reports are adopted by reverse consensus, and members may not act unilaterally (DSU Article 23).
India's experience.
India: Patents (WT/DS50/AB/R, adopted 16 January 1998). The United States complained that India had no proper "mailbox" for pharmaceutical patent applications during the transition period. The Appellate Body held that administrative instructions did not meet TRIPS Article 70.8. India had to amend the Patents Act in 1999.
India: Solar Cells (WT/DS456/AB/R, adopted 14 October 2016). India's National Solar Mission required developers selling power to government agencies to use Indian-made cells. The Appellate Body held this a breach of national treatment. India had to drop the requirement, a clear limit on its industrial policy.
How the agreements preserve sovereignty
1. Consent and withdrawal. Membership is voluntary. Any member may withdraw on six months' notice (Marrakesh Article XV).
2. Consensus. Decisions are taken by consensus, so no new obligation can be imposed on a member against its will (Article IX:1). Amendments to core rules need acceptance by all members (Article X:2).
3. The right to regulate. The SPS Agreement recognises each member's right to choose its own level of health protection (Article 2.1). The TBT Agreement's Preamble says no country should be prevented from protecting health, safety or the environment at the levels it considers appropriate.
4. Exceptions. Article XX allows measures to protect public morals, health and exhaustible natural resources, and Article XXI protects essential security interests.
Russia: Traffic in Transit (WT/DS512/R, adopted 26 April 2019). Ukraine challenged Russian restrictions on transit. The panel held that Article XXI is not wholly self-judging: a panel can examine whether there is objectively a war or emergency in international relations. Russia's measures met that test and Russia succeeded. The case shows both the reach of security and its limits.
5. Flexibilities. TRIPS leaves room for national choices, such as the standard of patentability and compulsory licences.
Novartis AG v. Union of India (2013) 6 SCC 1. Novartis sought a patent for a new form of its cancer drug. The Supreme Court upheld the rejection under section 3(d) of the Patents Act, which requires enhanced therapeutic efficacy for new forms of known substances. India used TRIPS flexibility to set its own patentability standard.
6. No additions to rights. Panels and the Appellate Body cannot add to or diminish the rights and obligations in the agreements (DSU Articles 3.2 and 19.2).
7. Compliance is a choice of means. A losing member decides how to comply. It may change its law, or, at the price of compensation or retaliation, keep it.
8. Domestic law remains supreme at home.
Gramophone Company of India Ltd. v. Birendra Bahadur Pandey AIR 1984 SC 667. Cassettes shipped from Singapore to Nepal through Calcutta were alleged to be pirated. The Supreme Court held that rules of international law are accommodated in Indian law if they do not conflict with an Act of Parliament. Where they conflict, the sovereignty of the Republic and the supremacy of Parliament prevail. Courts should interpret Indian law, where possible, to avoid conflict with international law.
Sovereignty defended inside the system: food security
India's stand on public stockholding for food security shows a member using the system to protect policy space. India buys grain at minimum support prices to feed its poor, and such support can exceed the limits of the Agreement on Agriculture. At the Bali Ministerial Conference of December 2013, members agreed an interim "peace clause": they would not challenge such programmes in dispute settlement, subject to conditions. A General Council decision of November 2014 kept it in place until a permanent solution is agreed. No permanent solution has yet been reached. Here consensus decision-making allowed India to defend a sovereign policy choice.
Critical evaluation
The case that trade agreements erode sovereignty.
- They restrict tools that today's developed countries once used, such as infant industry protection and local content rules.
- They reach deep into domestic regulation, health standards and intellectual property.
- Binding dispute settlement can force changes to national laws, as India experienced on patents and solar cells.
- Bargaining power is unequal: developing countries accepted TRIPS and other burdens in the Uruguay Round as a package.
The case that they protect and pool sovereignty.
- Obligations are accepted by consent and are reciprocal: each member gains rights against others.
- Rules protect small and developing countries from unilateral pressure by large ones, as DSU Article 23 shows.
- Members keep wide policy space through exceptions, flexibilities and consensus decision-making.
- Sovereignty is exercised jointly: States pool some freedom of action to gain stable market access, much as they do in other treaties.
An assessment. Trade agreements do limit what a State may do, but they are a voluntary and reciprocal limitation. The real questions are balance and fairness. Do the rules leave enough room for development and public policy, and can all members use the system effectively? The paralysis of the Appellate Body since 2019, and calls for "policy space", show that the balance is still contested.
Conclusion. State sovereignty includes the freedom to make trade policy. International trade agreements constrain that freedom through bindings, non-discrimination, disciplines on regulation and binding dispute settlement. Yet States accept these limits by consent and gain reciprocal rights. They keep the right to regulate for health, security and other public aims, and remain free to withdraw. Indian courts, as Gramophone shows, give effect to international law without surrendering parliamentary supremacy. Critically evaluated, trade agreements are best seen not as a loss of sovereignty but as its shared exercise. Their fairness depends on keeping enough policy space for every member.
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