International Trade Law

International Trade Law

Today’s global economy provides more products and services than ever before. Thanks to cutting-edge shipping methods and current technology, we are able to import and export goods and services of all kinds to every region of the world. The ramifications of international trade, of course, require the implementation of complex international trade agreements. This is especially true given the complicated, multi-party character of the majority of current international trade agreements. The North American Free Trade Agreement (NAFTA) and the South Asia Free Trade Agreement (SAFTA) are two notable examples of multilateral trade agreements. These treaties are signed by nations in these regions so that they can sell their own goods on global markets and take advantage of low prices on imported goods and services.

Generally speaking, international commerce law refers to the customs and regulations that need to be adhered to while doing business with other countries. Lex mercatoria, or the law for merchants on land, and lex marine, or the law for merchants on the sea, are two different medieval conceptions that form its foundation. The General Agreement on Tariffs and Trade, a convention that created a framework for trade-in products, led to an increase in international trade following World War II. International treaties and the activities of international intergovernmental bodies make up the majority of the corpus of international laws that make up international trade law today. Nowadays, a lot of laws governing international trade agreements are derived from GATT and traditional legal systems.

To aid in the negotiation and execution of multilateral trade agreements, the World Trade Organization (WTO) was established. Members of the WTO are nations that have ratified a global agreement. The goal of the World commerce Organization is to lower barriers to free commerce, such tariffs. Tariffs are tariffs imposed on imports to incentivize consumers to purchase items made in the country. The World Trade Organization mandates that member nations pledge to treat imports from other nations the same way they treat domestically produced goods and services in order to offset the impact of tariffs.

IThe WTO creates trade laws and regulations and provides a global forum for discussing and settling trade-related disputes. Nowadays, practically every nation is a WTO member. One of the WTO’s most noticeable features is its trade dispute resolution process. About 25% of the more than 350 cases that have been adjudicated via the WTO dispute settlement system since its start in 1995 have been settled amicably. The body of legislation passed by the WTO is known as WTO law.

The tax implications of international trade law are substantial. Any process that involves multiple countries is considered a cross-border transaction. Countries that participate in international trade and cross-border activities need to be knowledgeable about tax laws. Tax regulations for foreign business operations vary per country, and noncompliance with domestic tax laws can result in harsh fines.

World Trade Organisation (WTO)

The World Trade Organization (WTO) is an intergovernmental organization that regulates international trade. The WTO regulates trade between participating nations by providing a framework for trade agreement negotiations and a dispute resolution process designed to enforce participants’ adherence to WTO agreements, which are agreed to be signed by officials of signatory countries and approved by their parliaments. The Uruguay Round (1986–1994) and other past trade debates are the source of most of the WTO’s present issues. The General Agreement on Tariffs and Trade (GATT), the precursor to the World Trade Organization (WTO), was created in 1947 by a multilateral treaty of 23 nations (founded in 1944 or 1945). This came after the establishment of other new multilateral frameworks dedicated to global economic cooperation, such as the World Bank (founded in 1944) and the International Monetary Fund. The worldwide Trade Organization, a parallel worldwide organization for trade, was never created since the United States and other signatories rejected the founding treaty. Instead, GATT progressively developed into a de facto international organization.

World trade and intellectual property rights

The Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), which became operative in 1995, was a component of the World Trade Organization (WTO) Agreement. The TRIPS agreement incorporated and extended two important intellectual property treaties that date back to the 1880s and are overseen by the World Intellectual Property Organization (WIPO): the Paris Convention for the Safeguarding of Industrial Property and the Berne Convention for the Protection of Literary and Artistic Works. Since innovation has emerged as a crucial determinant of global competitiveness, the significance of intellectual property rights has grown on a global basis. In order to protect intellectual property rights, the Uruguay Round of trade negotiations produced the Agreement on Trade-Related Aspects of Intellectual Property Rights, or TRIPS Agreement.

For many other WTO members, the TRIPS Agreement established a minimal level of protection for their intellectual property. Secret information, architectural and structural concepts, geographical indications (GI), copyrights, trademarks, and patents (trade secrets) are among the subjects covered. The long-term objective of intellectual property rights protection was to encourage creativity and innovation. Intellectual property issues are also being discussed in the WTO Doha round of trade negotiations, which began in November 2001. Members are directed by the Doha mission to “interpret the TRIPS Agreement in a manner supportive of public health” and “discuss the implementation of a multilateral system of notification and registration of geographical indications for wines and spirits.”

TRIPS Agreement as a combination – Berne and Paris-plus agreement

The Conventions on Biological Diversity and the TRIPS Agreement are related. Additionally, the TRIPS Agreement enlarged the scope of GI protection granted to wines and spirits to include a wide range of products. It was now debatable whether the two remaining operational issues—both agricultural and non-agricultural—should be the focus of further negotiations. With the exception of those found in the Berne Convention for the Protection of Literary and Artistic Works, the main substantive provisions of each of these conventions were cited. It consists of obligations between TRIPS Member Nations under the TRIPS Agreement. The relevant provisions are included in Article 2.1 of the TRIPS Agreement, which makes reference to the Paris Convention, and Article 9.1 of the TRIPS Agreement, which makes reference to the Berne Convention. Second, the TRIPS Agreement adds a large number of additional obligations in areas where the previous treaties were either quiet or thought to be insufficient. Because of this, the TRIPS deal is sometimes called a Berne and Paris-plus deal.

Basic principles of International Trade Law

Most-Favoured Nation Treatment

One of the core tenets of the 1994 GATT is the most-favorable-nation (MFN) idea. MFN requires that each member state receive the same tariff treatment under all trade agreements. “National treatment,” which restricts favoring imported goods over domestically produced goods when it comes to internal taxation or other regulatory policy, is another essential declaration of the GATT of 1994. While the WTO and GATT mandate nondiscrimination and equitable treatment, the WTO Agreement permits the support of trade remedies programs. However, in order to provide exceptions, the WTO Agreement permits the use of trade remedy procedures.

Certain agreements contain specific concepts that have also been incorporated into the national laws of WTO members, according to the GATT. With effect from January 1st, 1995, a procedural set of principles was added to the Customs Tariff Act, 1975, read with the Customs Tariff (Identification, Assessment, and Collection of Anti-dumping Duty on Dumped Articles and for Determination of Injury) Rules, 1995, to govern the start and conduct of judicial review and trade remedial investigations. Under the direction of the Designated Authority (DA), the Directorate General of Trade Remedies (DGTR), a division of the Ministry of Commerce and Industry, conducts all trade remedial investigations in India. Between 1995 and 2019, India launched 938 anti-dumping investigations. In total, India launched about 53 anti-dumping investigations and 255 investigations related to anti-dumping duties between July 2018 and December 2019.

National treatment Principle

Treating citizens and foreigners with dignity through the import and export of goods and the establishment of a bilateral or multilateral commerce system free from restrictions and penalties. This should also apply to patents, copyrights, and trademarks both domestically and internationally. Each of the three primary WTO agreements—Article 3 of GATT, Article 17 of GATS, and Article 3 of TRIPS—contains the notion of “national treatment,” but the interpretations adopted by nations vary. National treatment occurs only when an intellectual property service or product has been put on the market. Therefore, imposing customs tariffs on imports does not violate national representation, even if locally produced goods are not subject to an equal levy.

Negotiation for free trade

Reducing trade barriers is one of the simplest methods to encourage business. The list of trade barriers includes limits on certain quantities, such as import bans or quotas, and customs levies, sometimes known as tariffs. Since the GATT was created in 1947–1948, there have been eight rounds of trade negotiations, spanning from 1947 to 1993. The ninth round of the Doha Development Agenda had begun. The initial goal of these was to lower import tariffs, or customs duties. The tariff rates on industrial nations and industrial goods have steadily dropped by the mid-1990s as a result of negotiations.

By the 1980s, however, the negotiations had expanded to encompass non-tariff barriers on commodities as well as new categories like services and intellectual property. While expanding into new markets can be beneficial, there are situations when changing tactics inside an existing market is required. Through “progressive liberalization,” the WTO agreements allow countries to make changes gradually. Generally speaking, developing countries are given extra time to accomplish their obligations and objectives.

Supporting the idea of fair competition

The World Trade Organization is sometimes described as a “free trade” organization, however that is not entirely true. In some circumstances, tariffs and other forms of protection are allowed. It is a collection of rules designed to encourage impartial, fair, and unbiased competition. The national treatment, MFN, and non-discrimination regulations guarantee fair trade conditions. Subsidies and those that supply goods by attempting to export below cost in an effort to gain market share are likewise legitimate. By directly imposing additional import charges calculated to compensate for loss caused by unfair trade, the regulations seek to specify what is fair or unfair and how governments should respond accordingly.

Fair competition is the goal of other WTO agreements, including those pertaining to intellectual property, agriculture, and other services. Because so few WTO members have ratified it, the government procurement agreement is referred to as a plurilateral agreement. It broadens the scope of competition laws to include purchases made by multiple government agencies in different countries.

General Agreement on Tariffs and Trade (GATT)

Global trade was increased and tariffs were lowered by the General pact on Tariffs and Trade (GATT), a free trade pact that involved 23 countries. GATT, the first global multilateral free trade agreement, governed a significant portion of international trade from January 1, 1948, to January 1, 1995. The pact ended when it was superseded by the World Trade Organization (WTO). After improvements, it was eventually replaced and enlarged by the World Trade Organization (WTO), which was founded on January 1, 1995. By this time, trade agreements had 125 signatories and accounted for 90% of global trade. The Council for Trade in Goods (Goods Council), which is composed of representatives from each WTO member state, oversaw the GATT. Ambassador Didier Chambovey of Switzerland is the current chair. The council has eleven committees that address topics like farming, market access, and anti-dumping legislation.

Objective

GATT was created to use trade barriers to end exploitation. This led to a 66% drop in international trade during the Great Depression. The GATT aided in the global economy’s recovery after the devastation caused by World War II and the Great Depression.

Cross-border transactions

A cross-border transaction is any activity where money is exchanged between two or more nations outside of a nation’s borders, or a transaction in which at least one participant is located on the other side of the globe. The following are the main categories of cross-border transactions:

Cross-border financing

Any financial arrangement that transcends national borders is referred to by this phrase. Loans, credit letters, banker’s acceptance, bank guarantees, depository receipts, and so forth are all included.

Buying or selling products or services

It is used to describe the purchasing and selling of goods and services. Infrastructure, establishment, product and service production outside of jurisdictional boundaries, cross-border trade, connecting local resources with external supply, etc., may differ between the two.

Combined research/shared services

Shared services are increasingly being made available to business entities. Joint research projects are being introduced as a single chamber of commerce or cartel for that purpose. If those shared service centers are dispersed across borders and address issues related to international trade, then those shared services are concerned with those issues.

Important aspects for entering a cross border transactions

Different nations should remember that, in accordance with international trade law, they must also abide by legal compliances, precedent rulings, and state contracts in the event that they have entered into reciprocating territories. Furthermore, for cross-border transactions to go smoothly, accounting, financial planning, corporate tax planning, indirect and direct taxation difficulties, and other factors must be taken into account. This will ensure that transactions are clear and contribute to the preservation of international harmony.

Corporate records necessarily to be maintained as a due diligence checklist

Details regarding the institution’s development before incorporation, as well as acquisitions, reorganizations, restructurings, bankruptcies, placements, buybacks, and modifications in other forms, should be included in some of the crucial documents that must be included with the due diligence report. It should be emphasized that the created due diligence report should also include information about the company’s articles of association (AOA), bylaws, and any revisions to them. A summary of panel sessions, including written consents, executive committee resolutions, and resolutions from shareholders and members, must be kept in order to carry out effective due diligence. Shareholders then receive more mailings, solicitations, financial statements, and registration documents. In order to facilitate and preserve transparency in cross-border transactions, contracts pertaining to option plans, securities issuance, securities purchase, and investment options are then further introduced.

All documents related to anti-takeover procedures must also be revealed, as must any agreement, plan, or documentation that includes clauses prohibiting a transfer of ownership. Finally, information about any organizational diagrams that show ownership and organizational structure, as well as information about subsidiaries, divisions, joint ventures, and a certificate of legal conformance from each relevant department in the jurisdiction of incorporation, must be disclosed for the purpose of effective legal compliance. Other parties must also be aware of some crucial information for additional formalities that must be completed when closing a deal.

India’s Foreign Trade Policies

As it opened up its economy to more foreign investment and expanded its foreign trade policies, India started to change in the 1990s. Since then, international trade has changed dramatically. India’s economy is currently one of the fastest growing in the world, and its GDP share increased dramatically. At the moment, India is actively advocating for a more transparent method of overseeing international trade. It now holds a prominent place among emerging nations in discussions on international commerce. India is a major importer of IT services, textiles, machinery, diamonds, chemicals, and other items, and the US and India now trade. Additionally, the US has made large investments in India’s ports, telecommunications, transportation, energy generating, mining, and petroleum processing industries.

Making India a major player in global markets and suggesting a major role in international trade organizations that aligns with the nation’s increasing importance are the goals of the Ministry of Commerce. The department is in charge of creating national and commodity strategies in the middle term, and it creates India’s foreign trade policy and a strategic plan or vision in the long run. The Department is responsible for export growth and trade clearance, state trading, special economic zones (SEZs), bilateral and multilateral company relations, and the creation and oversight of certain trade firms and materials.

The planning and strategy frameworks for promoting commerce and shipments are established under India’s Foreign commerce Policy (FTP). It is updated frequently to reflect changes in both the local and international context. In addition to finding new consumer items for the business sector, India’s Foreign Trade Policy (2015–20) seeks to improve India’s competitiveness in the commodities and market. India’s foreign trade policy also aims to help manufacturers maximize the positive effects of the goods and services tax (GST), closely monitor export performance, facilitate cross-border trade, increase revenue from export markets based on agriculture, and increase exports from labor-intensive industries and MSMEs.

India signatory to other countries for trade agreements

Even the United States and its neighbors have signed a number of trade agreements with India. Both its bilateral and regional trade agreements are in varying stages of development.

India – Sri Lanka Free Trade Agreement
Trade agreements with Bangladesh, Bhutan, Maldives, China, and South Korea.
India – Nepal Trade Treaty.
Comprehensive Economic Cooperation Agreements (CECA) with Singapore.
Framework Agreements with the Association of South East Asian Nations (ASEAN), Thailand and Chile.

When searching for instances pertaining to international trade, we find that nearly all of them deal with disputes between the relevant government business authority and any private sector company organization. The court decided in favor of the defendant in Suntec Industries v. United States because it believed that the defendants’ failure to provide evidence to support their position would result in the denial of their motion for summary judgment. Therefore, it will be evident that in situations involving global trade practices, Strong evidence must be presented against the parties in question in order for them to acknowledge their mistakes and for the appropriate procedure to be put in place.

Analysis of Foreign Trade Policy of 2015-2020

The goal of the 2015–2020 foreign trade policy is to increase the profitability of Indian exports while promoting international trade by reducing the costs and duration of money transfers. The administration has prioritized international commerce and taken action in this area through the provisions of this policy for the benefit of import and export trade stakeholders.

Enhancing the “Make in India” campaign: As part of the 2015–2020 foreign trade policy, the Export Promotion Capital Goods (EPCG) program was the first important step that was to be implemented. Its goal was to reduce Export Obligation (EO) for domestic purchases. The targeted export responsibility under the EPCG plan, which was supposedly 90% of the standard export obligation (six times the duty collected sum), was reduced to 75% in cases where capital goods were acquired from domestic builders in order to encourage the manufacture of capital goods domestically. Export goods with a higher household composition and improved quality are given preference under the Merchandise Exports from India Scheme (MEIS). Commodities with higher added value and domestic content are proposed to receive more generous rewards than goods with low added value and high import content.

Two new schemes have been introduced: the Services Exports from India Scheme (SEIS) to enhance the export of registered facilities and the Merchandise Exports from India Scheme (MEIS) to sell defined items to certain markets. Incentives from the MEIS program range from 2% to 5%. Under SEIS, the designated services would be given out at a rate of 3% and 5%, respectively. Initiatives have been put in place under the EPCG system to reduce certain export obligations by 25% in order to promote the acquisition of capital assets from domestic producers. Commodities used in agriculture and village industries will receive global subsidies of 3% and 5%, respectively, under the MEIS. Agriculture and food commodities that are processed and manufactured will get more money thanks to MEIS.

Scope of improvements

The main goal is to use manufacturing and innovation to improve India’s export performance.
Because of poor management and inadequate quality control, a large number of inexpensive, low-quality products, especially from China, have entered the market. These are detrimental to India’s ecosystem, economy, and trade balance.
Another significant obstacle for Indian exporters is logistical. Timeframes for India’s main ports of entry, such Kochi, are two to three times longer than those of Chinese ports.
India’s efforts to draw in foreign direct investment (FDI), which is essential for boosting exports, fall well short of their potential.

Modifications proposed in Foreign Trade Policy of 2021-2026

In light of the 60 percent decline in Indian exports and the 59 percent decline in imports brought on by COVID-19, the government has developed and is still updating a long-term plan that accounts for these situations. This is among the primary justifications for the inclusion of products delivery in the new Foreign Trade Policy 2021–2026. FTP 2021-2026 received feedback from exporters, merchants, officers, lawmakers, and others during its preparation stage.

Main objectives to be met from the FTP 2021-2026

Infrastructure upgrade

According to the FTP 2021–2026, the government must make advantageous investments in infrastructure development in order to enhance trade. Since China is highly regarded for its exports, India may also be able to benefit from it. This will aid India in expanding and improving its current ports, warehouses, certification centers, and other infrastructure. It is suggested that the 2017-approved Trade Infrastructure for Exports plan be further developed under this FTP.

More focus on increasing exports

According to Financial Year 2020, subsidies are not anticipated to have a major influence on boosting international trade. Innovation, manufacturing scale, and quality are going to be key components of this strategy. The majority of industry experts also agreed with this strategy. Likewise, benefits centered on research and development can also be included into trade policy. Other industries can now benefit from the Amended Technological Upgradation Fund Scheme, which was established to enhance industrial performance, export markets, investments, and production through technological advancements.

Tax benefits in compliance with world trade organization – RoDTEP

The MEIS (Merchandise Exports from India Scheme) was superseded by the Remission of Duties or Taxes on Export Products (RoDTEP) Scheme, which was recommended by the Directorate General of Foreign Trade (DGFT) and went into effect on January 1, 2021. Exporters would be guaranteed compensation for past non-recoverable underlying taxes and charges under the plan. The goal of the effort was to boost the previously low export volume.

E-Commerce and digitalization

Since COVID-19 disrupts established supply chains, India need better trade procedures. Digitization and e-commerce could be helpful in this regard. Since digitization removes the need for human labor in slow-moving import-export processes, it can be quite important. The highest government organization, Nasscom, suggests a web-based platform for holders of Import-Export Codes to update personal data, including phone numbers and email addresses. The entire import and export process is now automated and conducted online thanks to the digitization process. This helps make international trade more transparent.