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Unit 24 : Multilateralism and WTO

attached to products. This is complicated by globalization and the way a product can be processed in Notes
several countries before it is ready for the market.
The Rules of Origin Agreement requires WTO members to ensure that their rules of origin are
transparent; that they do not have restricting, distorting, or disruptive effects on international trade.
The Rules are administered in a consistent, uniform, impartial, and reasonable manner. For the longer
term, the agreement aims for common (harmonized) rules of origin among all WTO members, except
in some kinds of preferential trade, e.g., countries setting up a free trade area are allowed to use
different rules of origin for products traded under their free trade agreement.
Agreement on Trade Related Investment Measures
When investment is the mode of international business expansion, the host governments often impose
conditions on foreign investors to encourage investments in accordance with certain national priorities.
The Agreement on Trade Related Investment Measures (TRIMs) recognizes that certain measures
can restrict and distort investment. It stipulates that no member shall apply any measure that
discriminates against foreigners or foreign products (i.e., violates ‘national treatment’ principles in
GATT). It also outlaws investment measures that lead to restrictions in quantities (violating another
principle in GATT) and measures requiring particular levels of local procurement by an enterprise
(‘local content requirements’). It also discourages measures which limit a company’s imports or set
targets for the company to export (‘trade balancing requirements’).
However, countries are not prevented from imposing export performance requirements as a condition
for investment. They are also not prohibited from insisting that a certain percentage of equity should
be held by local investors or that a foreign investor must bring in the most up-to-date technology or
must conduct a specific level or type of R&D locally. Under the agreement, countries must inform
fellow-members through the WTO of all investment measures that do not conform to the agreement.
Plurilateral Agreements
All WTO agreements except four agreements, originally negotiated under the Tokyo Round became
multilateral agreements. The four exceptions are known as plurilateral agreements as they had a
limited number of signatories.
Fair trade in civil aircraft

The Agreement on Trade in Civil Aircraft entered into force on 1 January 1980 which presently has 30
signatories. The agreement eliminates import duties on all aircrafts other than military aircrafts, and
their parts and components. The agreement also contains disciplines on government-directed
procurement of civil aircraft and inducements to purchase, as well as on governmental financial
support for the civil aircraft sector.
Opening up of competition in government procurement
In most countries, the government and its agencies together are the biggest purchasers of goods of all
kinds, ranging from basic commodities to high-technology equipment. At the same time, the political
pressure to favour domestic suppliers over their foreign competitors can be very strong. It poses
considerable barriers to international marketing firms in these countries.
An Agreement on Government Procurement was first negotiated during the Tokyo Round and entered
into force on 1 January 1981 with a view to open up as much of this business as possible to international
competition. The agreement was designed to make laws, regulations, procedures, and practices
regarding government procurement more transparent and to ensure that they do not protect domestic
products or suppliers, or discriminate against foreign products or suppliers. A large part of the general
rules and obligations concern tendering procedures.
The Agreement on Government Procurement under the WTO became effective on 1 January 1996
and extends coverage to services (including construction services), procurement at the sub-central
level (e.g., states, provinces, departments, and prefectures), and procurement by public utilities. It
also reinforces rules guaranteeing fair and non-discriminatory conditions of international competition.

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