KSLU Solved Question Papers
International Trade Economics
Previous Year Question Paper with Solution
B.A. LL.B. (Five Years) · Sem 10
2021 Oct Examination
munotes.in
Mumbai
B.A. LL.B. (Five Years) Sem 10 International Trade Economics 2021 Oct 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 2021 Oct examination, in the order it was set.
MarksPage
The Paper as Set
The questions in this volume are the questions asked at the 2021 Oct 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 · 15 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.
Q1Explain the role of GATT in establishing W.T.O. What are the principles of World Trade Organisation ?[16]
Answer
For full marks, cover: Part 1, the role of GATT in establishing the WTO: GATT's origin as a stopgap after the ITO failed; its five roles on the road to the WTO (rule-maker, negotiating forum, judge of disputes, working institution, and launcher of the Uruguay Round); the gaps that made a new organisation necessary; the link in law (GATT 1994 inside the WTO; Marrakesh Article XVI:1). Part 2, the principles of the WTO, each with its source and a case: non-discrimination (MFN, European Communities: Bananas III; national treatment, Korea: Alcoholic Beverages); freer trade by negotiation; predictability through bindings; tariffs only, no quotas; fair competition (United States: FSC); more benefit for less developed members; regional integration within limits (Turkey: Textiles); legitimate exceptions with a chapeau (Brazil: Retreaded Tyres); safeguards under discipline (United States: Steel Safeguards); transparency; multilateral dispute settlement (United States: Section 301); decision by consensus and the single undertaking; a table; a conclusion.
Part 1: The role of GATT in establishing the WTO
GATT's origin. After the war, the planned International Trade Organization was to sit beside the IMF and the World Bank. Its Havana Charter of 1948 never came into force, because the United States did not ratify it. What survived was the General Agreement on Tariffs and Trade, signed at Geneva on 30 October 1947 and applied provisionally from 1 January 1948. A temporary bargain among 23 countries became, for 47 years, the constitution of world trade.
GATT's five roles on the road to the WTO.
1. Rule-maker. GATT wrote the basic rules of the modern system: unconditional MFN, tariff bindings, national treatment, the ban on quotas, and the general and security exceptions. The WTO inherited them almost word for word.
2. Negotiating forum. Through eight rounds, GATT turned trade liberalisation into a routine. The Kennedy and Tokyo Rounds took negotiation beyond tariffs into anti-dumping, subsidies, standards and customs valuation. Those codes became the first drafts of the WTO agreements.
3. Judge of disputes. From the 1950s, GATT panels of independent experts decided complaints under Articles XXII and XXIII. Their reasoning built a body of trade law that the WTO's Dispute Settlement Understanding codified.
4. Working institution. GATT had no legal personality and its parties were only "contracting parties". Yet it built a Council, committees, a Secretariat in Geneva and a Director-General. The WTO took over that machinery.
5. Launcher of the Uruguay Round. The WTO was itself negotiated as a GATT round, launched at Punta del Este in September 1986. The Round ended with the Marrakesh Agreement of 15 April 1994, and the WTO began on 1 January 1995.
The gaps that made a new organisation necessary.
- GATT was provisional, with a grandfather clause protecting older inconsistent laws.
- Its codes bound only signatories, the so-called GATT a la carte.
- A respondent could block panel reports.
- Agriculture and textiles largely escaped its rules, and services and intellectual property were outside it.
The link in law. GATT survives inside the WTO as GATT 1994, part of the goods agreements in Annex 1A, legally distinct from GATT 1947 (Marrakesh Article II:4). Under Article XVI:1, the WTO is guided by the decisions, procedures and customary practices of the GATT contracting parties. GATT was thus both the parent of the WTO and part of its body.
Part 2: The principles of the WTO
1. Non-discrimination: most favoured nation (GATT Article I; GATS Article II; TRIPS Article 4). A member must give all other members the best treatment it gives any country.
European Communities: Bananas III (WT/DS27/AB/R, adopted 25 September 1997). The European banana regime gave quotas and licences on better terms to bananas from African, Caribbean and Pacific countries than to Latin American bananas. It breached GATT Articles I and XIII and GATS Articles II and XVII. The complainants won, and Ecuador later won the first authority to cross-retaliate under TRIPS.
2. Non-discrimination: national treatment (GATT Article III; GATS Article XVII; TRIPS Article 3). Imports, once inside, must be treated no less favourably than like domestic goods.
Korea: Alcoholic Beverages (WT/DS75/AB/R and WT/DS84/AB/R, adopted 17 February 1999). Korea taxed its spirit soju lightly and imported spirits heavily. It argued that imports were too few to compete with soju. The Appellate Body held that potential as well as actual competition counts, since a protective tax itself suppresses imports. The complainants won.
3. Freer trade through negotiation. Barriers come down step by step, through reciprocal bargaining in rounds and, since 1995, in the WTO as a standing forum (Marrakesh Article III:2).
4. Predictability through bindings (GATT Article II). Bound tariffs are ceilings a member cannot exceed without negotiating compensation under Article XXVIII. Traders can plan on stable conditions of access.
5. Tariffs only, no quotas (GATT Article XI). Protection must take the form of visible tariffs, not quotas, bans or restrictive licences, subject to listed exceptions.
6. Fair competition. Members may counter dumping and subsidies that injure their industries, but only under strict rules. Export subsidies are banned outright.
United States: FSC (WT/DS108/AB/R, adopted 20 March 2000). United States tax law exempted part of the export income of "foreign sales corporations". The Appellate Body held this revenue foregone, contingent on exports, and therefore a prohibited subsidy. The European Communities won and were later authorised to retaliate on a very large scale.
7. More benefit for less developed members. Developing members receive longer transition periods, technical assistance and preferences. Part IV of GATT and the Enabling Clause of 1979 are the main sources. Least developed members carry lighter obligations (Marrakesh Article XI:2).
8. Regional integration within limits (GATT Article XXIV; GATS Article V). Customs unions and free trade areas are allowed as an exception to MFN. They must cover substantially all trade and must not raise barriers against others.
Turkey: Textiles (WT/DS34/AB/R, adopted 19 November 1999). On forming a customs union with the European Communities, Turkey imposed quotas on Indian textiles. The Appellate Body held that Article XXIV justifies such a measure only if the union could not have been formed without it. India won.
9. Legitimate exceptions with a chapeau (Articles XX and XXI). Members may protect health, morals, the environment and security. But under the chapeau of Article XX, measures must not be applied as arbitrary or unjustifiable discrimination or disguised restriction.
Brazil: Retreaded Tyres (WT/DS332/AB/R, adopted 17 December 2008). Brazil banned imported retreaded tyres to reduce waste tyres and the disease and fires they cause. The ban could be justified under Article XX(b) as necessary to protect health. But exempting imports from its MERCOSUR partners was unjustifiable discrimination under the chapeau. The European Communities won.
10. Safeguards under discipline (Article XIX and the Safeguards Agreement). A member may temporarily restrict a sudden surge of imports causing serious injury. It must meet strict conditions.
United States: Steel Safeguards (WT/DS248/AB/R and related reports, adopted 10 December 2003). The United States imposed safeguards on ten categories of steel in 2002. The Appellate Body held them all inconsistent, mainly for failing to show unforeseen developments and causation. The measures were withdrawn in December 2003.
11. Transparency (GATT Article X; notifications; the TPRM). Trade rules must be published and fairly administered. Measures are notified to WTO committees, and each member's policy is reviewed regularly.
12. Multilateral dispute settlement (DSU). Disputes go to panels and the Appellate Body, with reports adopted by reverse consensus. Under DSU Article 23, members must not decide breaches or retaliate on their own.
United States: Section 301 (WT/DS152/R, adopted 27 January 2000). The European Communities challenged the United States law requiring determinations and retaliation within fixed deadlines. The panel found the deadlines prima facie inconsistent with Article 23.2(a). The law survived only because of United States undertakings to act consistently with WTO rules.
13. Consensus and the single undertaking (Marrakesh Articles IX:1 and II:2). Decisions are normally taken by consensus, so every member has a voice. All the multilateral agreements bind all members as one package.
Summary table
| Principle | Source | Case |
|---|---|---|
| MFN | GATT I; GATS II; TRIPS 4 | European Communities: Bananas III |
| National treatment | GATT III; GATS XVII; TRIPS 3 | Korea: Alcoholic Beverages |
| Bindings and no quotas | GATT II, XI | |
| Fair competition | Anti-dumping, SCM | United States: FSC |
| Regional integration | GATT XXIV | Turkey: Textiles |
| Exceptions with a chapeau | GATT XX | Brazil: Retreaded Tyres |
| Principle | Source | Case |
|---|---|---|
| Disciplined safeguards | GATT XIX | United States: Steel Safeguards |
| No unilateral action | DSU 23 | United States: Section 301 |
Conclusion. GATT built the WTO's foundations: its rules, its habit of negotiation, its dispute practice and its working machinery. Its last round created the WTO itself. Its weaknesses explain the WTO's new features, permanence, the single undertaking and binding dispute settlement. The principles of the WTO, non-discrimination, predictable and negotiated liberalisation, fair competition, development, disciplined exceptions and the rule of law, give that structure its purpose. The cases show the principles enforced against large and small members alike, including in India's favour.
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