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International Trade Economics
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B.A. LL.B. (Five Years) · Sem 10
2022 Oct (100 marks) Examination
munotes.in
Mumbai
B.A. LL.B. (Five Years) Sem 10 International Trade Economics 2022 Oct (100 marks) Question Paper with Solutions
First published on munotes.in on 21 October 2026.
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The question paper reproduced here is the paper as set by Karnataka State Law University at the 2022 Oct (100 marks) examination.
Contents
The questions below are the paper as Karnataka State Law University set it at the 2022 Oct (100 marks) examination, in the order it was set.
MarksPage
The Paper as Set
The questions in this volume are the questions asked at the 2022 Oct (100 marks) 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.
Q1Explain the principles of multilateral trading system as embodied in the WTO agreements.[16]
Answer
For full marks, cover: what the multilateral trading system is and where its principles are found (the Marrakesh Agreement and its Annexes; the Preamble); the principles one by one, each with its legal basis and a case: (1) non-discrimination, MFN (Article I, Canada: Autos) and national treatment (Article III, Japan: Alcoholic Beverages); (2) freer trade through negotiation and reciprocity; (3) predictability through binding (Article II, India: ICT Tariffs); (4) tariffs as the only lawful protection, the ban on quotas (Article XI, India: Quantitative Restrictions); (5) transparency (Article X, notifications, trade policy review); (6) fair competition (anti-dumping, subsidies); (7) development and special treatment (Part IV, the Enabling Clause, European Communities: Tariff Preferences); (8) flexibility through exceptions and safeguards (Articles XIX to XXI, United States: Gasoline); (9) sustainable development (United States: Shrimp); (10) the rule of law in disputes (DSU, Article 23); (11) the single undertaking and consensus; a table; a conclusion.
The multilateral trading system
The multilateral trading system is the set of trade rules that bind all WTO members together. It is called multilateral because the rules are agreed by and apply to all members, not to pairs of countries. Its legal texts are the Marrakesh Agreement Establishing the WTO and its Annexes. These include GATT 1994 and the other goods agreements, GATS and TRIPS. They also include the Dispute Settlement Understanding and the Trade Policy Review Mechanism.
The Preamble of the Marrakesh Agreement states the aims. They are higher living standards, full employment, growing trade in goods and services, and optimal use of the world's resources in line with sustainable development. It names two means: reduction of tariffs and other barriers, and elimination of discriminatory treatment. The WTO itself summarises the system in five principles: trade without discrimination, freer trade, predictability, fair competition, and development. The legal texts give each principle its rules.
Principle 1: Non-discrimination
Non-discrimination has two limbs.
(a) Most favoured nation treatment (GATT Article I; GATS Article II; TRIPS Article 4). Any advantage given to the goods of one country must be given immediately and unconditionally to like goods of all members.
Canada: Autos (WT/DS139/AB/R and WT/DS142/AB/R, adopted 19 June 2000). Canada's duty exemption for car imports, in practice, benefited only cars from certain countries. The Appellate Body held that Article I catches discrimination in fact as well as in law. Japan and the European Communities won.
(b) National treatment (GATT Article III; GATS Article XVII; TRIPS Article 3). Once inside the market, imports must be treated no less favourably than like domestic goods in taxes and regulations.
Japan: Alcoholic Beverages (WT/DS8/AB/R and related reports, adopted 1 November 1996). Japan taxed imported vodka, whisky and brandy more heavily than its own shochu. The Appellate Body held this a breach of Article III:2. The complainants won.
Principle 2: Freer trade through negotiation
Barriers come down gradually, through rounds of negotiation based on reciprocity. Members trade concessions of roughly equal value. Eight GATT rounds cut industrial tariffs sharply. The Uruguay Round added agriculture, textiles, services and intellectual property. The WTO is the permanent forum for further negotiation (Marrakesh Article III:2).
Principle 3: Predictability through binding
A member binds its tariff rates in its Schedule. It may not charge more than the bound rate (GATT Article II:1(b)). It may raise a binding only by negotiating compensation under Article XXVIII. Traders and investors can plan, because the ceiling is legally fixed.
India: ICT Tariffs (WT/DS582/R, circulated 17 April 2023). The European Union challenged Indian duties on mobile phones and other information technology goods. The panel found the duties above the rates bound in India's Schedule, in breach of Article II:1(a) and (b). India appealed into the inactive Appellate Body, so the report is not adopted.
Principle 4: Tariffs as the only lawful protection
Members may protect industry openly through tariffs, but not through quotas, import bans or restrictive licences (GATT Article XI:1). Tariffs are visible, non-discriminatory and negotiable; quotas are none of these. Article XI:2 allows only narrow exceptions, such as temporary export bans to relieve critical shortages of foodstuffs.
India: Quantitative Restrictions (WT/DS90/AB/R, adopted 22 September 1999). India kept import licensing on 2,714 tariff lines, citing balance of payments problems. The Appellate Body found India's reserves adequate, so the restrictions breached Article XI:1. India lost and removed them by 1 April 2001.
Principle 5: Transparency
- Publication (GATT Article X). Trade laws and rulings must be published promptly and administered in a uniform, impartial and reasonable way. Independent tribunals must review customs decisions.
- Notification. Members notify subsidies, SPS and TBT measures, licensing procedures and trade remedies to WTO committees.
- Trade policy review. Under the TPRM in Annex 3, each member's trade policies are examined regularly.
Principle 6: Fair competition
The system aims at open but fair competition. The Anti-Dumping Agreement lets members offset dumping that causes injury. The SCM Agreement bans export subsidies and allows countervailing duties. Both are tied to strict procedures, so they cannot become hidden protection. India applies these remedies through the Directorate General of Trade Remedies, under sections 9 and 9A of the Customs Tariff Act 1975.
Principle 7: Development and special treatment
The system gives developing members more time, flexibility and support.
- Part IV of GATT, added in 1965, on trade and development, with non-reciprocity.
- The Enabling Clause of 1979, the legal basis for the Generalized System of Preferences.
- Special and differential treatment provisions in nearly every agreement, such as longer transition periods.
European Communities: Tariff Preferences (WT/DS246/AB/R, adopted 20 April 2004). The European GSP gave extra preferences to some developing countries but not India. The Appellate Body held that such preferences must be open to all similarly placed countries, on objective criteria. India won.
Principle 8: Flexibility through exceptions and safeguards
Rules are firm but not rigid. Members may act to protect important interests within limits:
- Safeguards (GATT Article XIX and the Safeguards Agreement) against sudden import surges causing serious injury;
- General exceptions (Article XX) for health, conservation and other listed aims, subject to the chapeau against arbitrary discrimination;
- Security exceptions (Article XXI); and
- Balance of payments measures (Articles XII and XVIII:B) and waivers.
United States: Gasoline (WT/DS2/AB/R, adopted 20 May 1996). United States rules on imported gasoline treated foreign refiners less favourably. Clean air was an exhaustible natural resource under Article XX(g), but the rules failed the chapeau as unjustifiable discrimination. Venezuela and Brazil won.
Principle 9: Sustainable development
The Preamble's reference to sustainable development guides the reading of the rules.
United States: Shrimp (WT/DS58/AB/R, adopted 6 November 1998). India and others challenged a United States ban on shrimp caught without turtle excluder devices. Reading Article XX(g) in the light of the Preamble, the Appellate Body held that living species are exhaustible natural resources. But the ban was applied in an arbitrary and unjustifiable way. The complainants won.
Principle 10: The rule of law in disputes
Disputes are settled by panels and the Appellate Body under the DSU, not by power. Reports are adopted by reverse consensus. Under Article 23, members may not decide unilaterally that a breach occurred or retaliate without authority. Since December 2019, however, the vacant Appellate Body has weakened this principle.
Principle 11: The single undertaking and consensus
All the multilateral agreements bind every member as a single package (Marrakesh Article II:2). Decisions are normally taken by consensus (Article IX:1). Every member, large or small, thus has a voice and is bound by the same rules.
Summary table
| Principle | Legal basis | Case |
|---|---|---|
| MFN | GATT I; GATS II; TRIPS 4 | Canada: Autos |
| National treatment | GATT III; GATS XVII; TRIPS 3 | Japan: Alcoholic Beverages |
| Freer trade | Rounds; Marrakesh III:2 | Uruguay Round |
| Binding | GATT II, XXVIII | India: ICT Tariffs |
| No quotas | GATT XI | India: Quantitative Restrictions |
| Transparency | GATT X; TPRM | Notifications |
| Fair competition | Anti-dumping, SCM | Trade remedies |
| Development | Part IV; Enabling Clause | European Communities: Tariff Preferences |
| Flexibility | GATT XIX to XXI | United States: Gasoline |
| Principle | Legal basis | Case |
|---|---|---|
| Sustainable development | Preamble | United States: Shrimp |
| Rule of law | DSU; Article 23 | Reverse consensus |
Conclusion. The multilateral trading system rests on non-discrimination, gradual liberalisation, bound and predictable commitments, and tariffs as the only open protection. It adds transparency, fair competition, special treatment for development, and flexibility through exceptions. Binding dispute settlement and the single undertaking hold these principles together. The decided cases show each principle at work, and India's own disputes show the system both constraining and protecting a developing member.
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