1. Monika Singh
ID 5649246
Homework 1
1. Why would policy-makers sacrifice major international progress of minor
domestic policy gains? In terms. Prepare arguments for and against
protecting domestic industries.
- International benefits may hard to measure. Some foreign governments
are notoriously unreliable in their promises and some are likely to fall
making their agreements dubious or useless.
- The voters may not be as able to understand international gains as easily
as they do domestic gain.
- The domestic gains may be more immediate and the international gains
farther in the future.
- The international gains may more beneficial to special interests whereas
the domestic gains aid a larger group.
2. Discuss the impact of import restrictions on consumers in both home country
and international markets.
- Direct financial transfers - grants to consumers, grants to producers, low-interest
or preferential loans and government loan guarantees.
- Better tax treatment - tax credits, tax rebates, exemptions on royalties,
duties or tariffs, reduced tax rates, deferred tax liabilities and accelerated
depreciation on energy supply equipment.
- Trade restrictions - tariffs, tariff-rate import quotas and non-tariff trade
barriers.
- Energy-related services provided directly by government at less than full
cost - government-provided energy infrastructure, public research and
development.
- Regulation of the energy sector - demand guarantees, mandated
deployment rates, price controls, environmental regulations and market-access
restrictions.
3. Consider the conflict between industrialized and developing nations. What are
its root causes and how might international trade policies alleviate them?
- Developing countries experienced various difficulties and had increasing
conflicts with developed countries on different issues like anti-dumping,
intellectual property rights protection, market opening in services and in
the financial industries and restrictions on subsidies.
4. In the high-technology sector, governments have provided extensive
subsidies to aircraft manufacturers like Boeing and Airbus. The USA has even
filed a complaint in the WTO against Airbus and vice versa. Do you think

2. Monika Singh
ID 5649246
subsidies to high-technology sectors are different from subsidy to agricultural
sectors
- Yes, in aspect of agriculture. These subsidies have been a source of
distress for developing countries. Although farmers from the effects of the
weather and swings in world prices they may have a comparative
advantage in agricultural production, they have difficulty competing on the
world market against subsidized prices. Developing countries, therefore,
have also subsidized their agricultural sectors, further distorting the
market and creating the protectionist stand-off that has polarized
negotiations on the issue. Reasons that countries may instate export
subsidies in the agriculture sector include make sure that enough food is
produced to meet the country’s needs; shielding; or preserving rural
society.
5. Consider why manufacturer may wish to set up plants in foreign countries.
How do their foreign operations enhance their performance in both their own
country and the host nations? Research specific examples to support your
arguments
- They are and have been used by developed and developing countries
together with other policy instruments, such as trade policy, screening
mechanisms and incentives, to enhance various development objectives.
There are divergent views as regards the effectiveness of performance
requirements to achieve this end. While some experts regard them as an
essential instrument in a country’s FDI policy package, others tend to
argue that their impact on investments is at best limited and at worst
costly and counter-productive.
ON THE WEB
1. The WTO Dispute Settlement Gateway (at. www.wto.org) provides access to
all the decision made by the Dispute Settlement Body. One-page summaries
of each decision are also available. Report on the process of dispute
resolution in the WTO and its success or failure, using examples from some of
the individual decisions.
Key facts back to top
Short title:
Complainant: European Union
Respondent: Russian Federation

3. Monika Singh
ID 5649246
Third Parties: Australia; China; India; Japan; Korea, Republic of;
Norway; Chinese Taipei; United States; Brazil;
South Africa
Agreements
cited:
(as cited in
request for
consultations)
Sanitary and Phytosanitary Measures (SPS):
Art. 2.2, 2.3, 3.1, 3.2, 3.3, 5.1, 5.2, 5.3,5.4, 5.5, 5.6
, 5.7, 6.1, 6.2, 6.3, 7, 8, Annex B, Annex C
GATT 1994: Art. I:1, III:4, XI:1
Request for
Consultations
received:
8 April 2014
Summary of the dispute to date back to top
The summary below was up-to-date at 30 October 2014
Consultations
Complaint by the European Union
On 8 April 2014, the European Union requested consultations with
Russia concerning certain measures adopted by Russia affecting the
importation of live pigs and their genetic material, pork, pork
products and certain other commodities from the European Union,
purportedly because of concerns related to cases of African Swine
Fever.
The European Union claims that the measures at issue are
inconsistent with:
 Articles 2.2, 2.3, 3.1, 3.2, 3.3, 5.1, 5.2, 5.3, 5.4, 5.5, 5.6, 5.7,
6.1, 6.2, 6.3, 7, 8, Annex B, and Annex C of the SPS
Agreement; and
 Articles I: 1, III: 4 and XI: 1 of the GATT 1994.
On 27 June 2014, the European Union requested the establishment
of a panel. At its meeting on 10 July 2014, the DSB deferred the
establishment of a panel.

4. Monika Singh
ID 5649246
Panel and Appellate Body proceedings
At its meeting on 22 July 2014, the DSB established a panel.
Australia, China, India, Japan, Korea, Norway, Chinese Taipei and
the United States reserved their third-party rights. Subsequently,
Brazil and South Africa reserved their third-party rights. On 13
October 2014, the European Union requested the Director-General
to compose the panel. On 23 October 2014, the Director-General
composed the panel.
2. Go to the World Bank website (www.worldbank.org) and International
Monetary Fund website (www.imf.org) to obtain an overview of these
institutions’ purpose and programs. Search for criticism of bank and IMF
programs on other websites and prepare a two-page report on key issues.
- Criticism of the World Bank and the IMF encompasses a whole range of
issues but they generally center around concern about the approaches
adopted by the World Bank and the IMF in formulating their policies, and
the way they are governed. This includes the social and economic impact
these policies have on the population of countries who avail themselves of
financial assistance from these two institutions, and accountability for
these impacts.
- Critics of the World Bank and the IMF are concerned about the
‘conditionality’s’ imposed on borrower countries. The World Bank and the
IMF often attach loan conditionalities based on what is termed the
‘Washington Consensus’, focusing on liberalization—of trade, investment
and the financial sector—, deregulation and privatization of nationalized
industries. Often the conditionality’s are attached without due regard for
the borrower countries’ individual circumstances and the prescriptive
recommendations by the World Bank and IMF fail to resolve the economic
problems within the countries.
(Ref: http://www.brettonwoodsproject.org/2005/08/art-320869/)
Questions
1. Why do many countries negotiate trade agreement outside the World Trade
Organization?
- The conclusion of preferential trade agreements can create an incentive
for even further discrimination, which eventually will hurt all trading

5. Monika Singh
ID 5649246
partners. Countries outside an agreement will try to conclude agreements
with one of those that are inside to avoid exclusion.
- Bilateral agreements cannot solve systemic issues such as rules of origin,
antidumping, agricultural and fisheries subsidies. These issues simply
cannot be handled at the bilateral level. Take for instance, negotiations to
eliminate or reduce trade distorting agricultural subsidies, or fisheries
subsidies.
- The proliferation of regional trade agreements can greatly complicate the
trading environment, creating a web of incoherent rules. Take rules of
origin: an increasing number of WTO Members are party to ten or more
regional trade agreements, most of which for a given Member contain
agreement-specific rules of origin which are necessary to ensure that the
preferences go to your partner and not to others.
- To many small and weak developing countries, entering into a bilateral
agreement with a powerful big country means less leverage and a weaker
negotiating position as compared that in the multilateral talks.
2. Is the increase in bilateral and regional trade agreements a threat to the
effectiveness of the WTO? Justify your answer.
- Bilateral and regional agreements can have a positive, “domino effect”,
encouraging the pace of multilateral cooperation (and vice versa), and
where regional and multilateral agreements are becoming coherent, not
conflicting, approaches to managing a more complex and integrated world
trading order.
3. Why has the agricultural sector traditionally been a major stumbling block in
WTO negotiations?
- WTO has been trying to reduce these policies over some years now.
However, political pressures from some of the rich developed countries
have always ensured that sufficient leeway is given to developed countries
in reduction of subsidies. Even in this round of negotiations and in spite of
steep subsidy reduction commitments, the maximum subsidy limit
imposed by WTO on either EU or USA, is much more than these countries
plans to spend on their farmers. However, if sector specific commitments
on cotton subsidies were discussed, it was possible that it would have
required USA to cut down on the money they are spending on cotton
farmers now. Therefore, many feel that to avoid such a politically sensitive
issue in an election year, the SSM issue has been used by the USA to
derail the negotiations.