International Trade Law

By S ylvine - January 26, 2023

In this blog post, Sreeraj K.V and Pranav Sethi studying at the NMIMS School of Law in Navi Mumbai. This
article explains international trade law’s general principles, cross-border transactions, dispute settlement
mechanisms, and India’s foreign trade policy.

This article has been published by Sneha Mahawar.​​

Table of Contents
 1. Introduction
2. United Nations Commission on International Trade Law (UNCITRAL)
2.1. UNCITRAL Model La w on Interna tiona l Com m ercia l Arbitra tion
2.1.1. Party Autonomy
2.1.2. Separability
2.1.3. Competence-Competence
2.1.4. Territorial Principle
2.1.5. Enforceability
3. GATT – the General Agreement on Tariffs and Trade
3.1. Objective
4. World Trade Organisation (WTO)
5. Basic principles of International Trade Law
5.1. Most-Favoured Na tion Trea tm ent
5.2. Na tiona l trea tm ent Principle
5.3. Negotia tion for free tra de
5.4. Supporting the idea of fa ir com petition
6. World trade and intellectual property rights
6.1. TRIPS Agreem ent a s a com bina tion – Berne a nd Pa ris-plus a greem ent
7. Cross-border transactions
7.1. Cross-border fina ncing
7.2. Buying or selling products or services
7.3. Com bined resea rch/sha red services etc.
7.4. Im porta nt a spects for entering a cross border tra nsa ctions
7.5. Corpora te records necessa rily to be m a inta ined a s a due diligence checklist
8. Dispute settlement
8.1. Negotia ting tra de a greem ents
8.2. Com plia nce
8.3. La w reform s
8.4. India’s Foreign Tra de Policies
8.5. Tra de disputes
8.5.1. Disputes filed by India in pursuance of trade remedy
8.5.2. Signatory Countries who have filed Disputes against India
9. India’s Foreign Trade Policies
10. India signatory to other countries for trade agreements
10.1. Ana lysis of Foreign Tra de Policy of 2015-2020
10.2. Scope of im provem ents
10.3. Modifica tions proposed in Foreign Tra de Policy of 2021-2026
10.3.1. Main objectives to be met from the FTP 2021-2026
10.3.1.1. Infrastructure upgrade
10.3.1.2. More focus on increasing exports
10.3.1.3. Tax benefits in compliance with world trade organiz ation – RoDTEP
10.3.1.4. Relaxation in credit access
10.3.1.5. E-Commerce and digitaliz ation
11. Conclusion
12. Frequently Asked Questions (FAQs)
12.1. Wha t is the m a in purpose of Interna tiona l tra de la w?
12.2. How does WTO enforce Interna tiona l tra de policy?
12.3. Wha t a re the m a in lega l ba rriers in Interna tiona l tra de la w?
13. References

Introduction
International trade laws are those areas of law that deal with certain rules and customs regarding the
handling of trade between countries. It is also used for trade between two private sector companies in
two countries. T his branch of law has now become independent as almost every country is now a
member of the World T rade Organisation (WT O). T he General Agreement on Tariff and T rade (GAT T )
has been the backbone of international trade laws since 1948. It contains a provision relating to rules
of ‘unfair’ trade practices, dumping and subsidies. In 1994, World T rade Organisation (WT O) was
established to take the place of GAT T. T his is because GAT T was meant to be a temporary fix to trade
issues and the founders needed something more which was concrete.

T he legislation governing global trade is known as International T rade Law (IT L). It has both public and
private components. T he public component of IT L, which is a subset of public international law, aims to
regulate state governments’ business policies. T he private part of IT L regulates cross-border business
dealings between citizens of various nations. T he majority of this is protected by private international
law. Additionally, organisations like the United Nations Commission on International T rade Law have
been working to create standard rules on a variety of topics related to international business
transactions. Also, governments are expected to adopt these laws into their legal frameworks.

IT L was established to promote international trade. In this context, “free trade” refers to the right of
individuals to freely exchange goods across international borders. In other words, a person should
have the freedom to purchase a good from wherever in the globe they can buy it for the best value.
Similarly, they ought to have the freedom to negotiate the maximum price for his goods wherever they
are sold. Article 301 of the Indian Constitution states that trade, commerce, and intercourse shall be
unrestricted within the boundaries of India.

United Nations Commission on International Trade

Law (UNCITRAL)
United Nations Commission on International T rade Law (UNCIT RAL) is the main legal body of the
United Nations in the area of international trade law and was founded in 1966. It is a legal organisation
with global participation working to improve the practice of commercial law. T he goals of UNCIT RAL are
to coordinate and standardise international trade laws.

It is important to distinguish UNCIT RAL from the World T rade Organization (WT O), which was
established in 1995 and continues the work of the GAT T (General Agreement on Tariffs and T rade). In
terms of international procedures, UNCIT RAL offers the legal principles relevant to private law topics
and is thus incapable of dealing with issues about relations between countries such as the fight
against dumping, countervailing duties, or import quotas. T he WT O deals with trade policy issues
such as trade liberalisation, the removal of trade barriers, and unfair business practices.

T he International Institute for the Unification of Private Law (UNIDROIT ), founded in 1926 and
headquartered in Rome, should not be confused with UNCIT RAL. UNIDROIT ’s mission is to research
ways and techniques to modernise, harmonise and keep a check on the practice of private law,
specifically commercial law among states and to achieve this goal by creating unified legal
mechanisms, and guidelines for the same. Each of these types does have a specific function to perform
in International trade law.

UNCITRAL Model Law on International Commercial

Arbitration
It was on June 21st, 1985, at the time when the Commission’s 18th annual session concluded and the
UNCIT RAL Model Law on International Commercial Arbitration was adopted. T he Model Law
encourages the parties to select the legal principles that will apply to the facts of the dispute, and they
are no longer required to select any particular legal framework of any nation. T he identified principles
overall make the Model Law more practical and flexible.

Due to the flexibility, it provides to states in developing new arbitration laws, the application of a model
law was selected as the driver for cooperation and improved performance. Following the model as
precisely as possible would represent the biggest contribution to the preferred seat of arbitration and be
in the best interests of international arbitration participants, which are mainly foreign participants and
their lawyers.

T he UNCIT RAL Model Law provides a useful foundation for dispute settlement because it contains all
of the essential and applicable regulations to make sure that arbitration proceedings run smoothly.
Model Law recognises 5 main principles under which international commercial arbitration is ruled. Party
Autonomy, Separability, Competence-Competence, T erritorial Principle, and Enforceability are the
aforementioned principles. T he following are explained below:
Party Autonomy
Arbitration provides a much more neutral forum for discussion in which each party thinks it will receive
a fair chance in the proceedings. Furthermore, the functionality of tailoring the dispute resolution
procedure to the requirements of the groups as well as the option to identify arbitrators who are
competent in the subject matter of the dispute makes the arbitral award so passed after hearing both
parties more convincing. Arbitration provides parties with independence and procedures that will be
used to settle their disputes. T his is especially meaningful in international commercial arbitration since
parties do not want to be subject to the rules of the opposing party’s court system. Each side is
concerned about the other’s “home court advantage.”

Parties are free to choose the arbitrators, who are generally one or three, i.e., selected by parties to the
dispute in odd numbers. Parties also determine whether the settlement will be managed by an
international arbitral institution or ad hoc, which implies no institution will be engaged. T he rules that
implement them are the rules of the arbitral institution. T he parties are free to select the applicable
substantive law. In general, international arbitral law allows parties to a contract comprising an
arbitration clause to select the substantive law that will enforce disputes. It is through this arbitration
clause that parties are further compelled by default to enter into an arbitration agreement.

Separability
T he UNCIT RAL Model Law considers the arbitration clause as separate from the main contract for the
objective of granting the arbitral tribunal the authority to determine its regulatory authority. Article 16(1)
provides mainly two interpretations. T he first interpretation states that the arbitration clause shall be
dealt with as a standalone agreement from the main agreement, and it must have the implication of
limiting a party from proceeding to court and challenging the applicability of the main agreement. Now,
this interpretation implies that any argument on the relevance of the main agreement would also be a
counter-argument to the arbitration clause.

T he agreement to arbitrate provided in an arbitration clause is considered a separate agreement from

the remaining portion of the contract among both parties under the autonomy doctrine of the arbitration
clause, and thus it may remain in force when the contract has come to an end for any other reason.
T he arbitration clause withstands the termination, void nature, or invalidity of the main contract. T he
principle of separability refers to this “staying alive” function of arbitration clauses. Many international
trade disputes are resolved through arbitration rather than approaching the court because it helps
create a win-win situation for both parties in the arbitration matter.

Competence-Competence
Competence is a commonly recognised principle in current international arbitration that enables the
arbitral tribunal to determine its jurisdiction, such as by asserting any arguments to the existence or
applicability of the arbitration agreement or requiring final assessment by a competent court of law. T he
competence-competence principle has the beneficial impact of allowing arbitrators to rule on their own
jurisdiction, as extensively recognised by international treaties and the latest statutory provisions on
international arbitration. Besides this, the negative impact is similarly relevant. It is to permit the
arbitrators to serve as first judges of their territory rather than the sole judges. In other words, it is to
allow them to decide on their jurisdiction before any court or other judicial power, limiting the function of
the judiciary to review the award.

Territorial Principle
T he territorial principle’s application only comes into relevance when Model law in a given State appears
to apply and only if the venue of arbitration would be in the territory of such a State as elaborated under
Article 1(2). Despite this, there are still some provisions that provide for exceptions. T here are crucial
exceptions to the rule that certain articles apply whether the arbitration takes place in the state that
enacted them, somewhere else, or even before the location of the arbitration is decided. According to
territorial principles, every jurisdiction has the authority to supervise the people and events that take
place inside its borders, but no jurisdiction has the right to restrict the people and events that take place
beyond its boundaries.

Enforceability
In cross-border transactions, it’s important to make sure that the decision to settle the dispute is
enforceable in all the nations involved in the exchange. T he decision should be enforceable to such an
extent that in all of the nations where the losing party has assets, those assets can be attached to
fulfill the credit of the winning party.

GATT – the General Agreement on Tariffs and

Trade
T he General Agreement on Tariffs and T rade (GAT T ), a free trade agreement involving 23 nations,
reduced tariffs and boosted global trade. Between January 1, 1948, and January 1, 1995, GAT T, the
first global multilateral free trade agreement, regulated a large amount of international trade. When the
World T rade Organization (WT O) replaced it, the agreement came to an end.

It has since been improved, finally leading to the World T rade Organization (WT O) being established on
January 1, 1995, which replaced and expanded it. T rade agreements at this point covered 90% of world
trade and had 125 signatories. T he GAT T was supervised by the Council for T rade in Goods (Goods
Council), which is made up of members from every WT O member state. T he current chair is
Ambassador Didier Chambovey (Switzerland). T here are ten committees on the council that deals with
issues like anti-dumping laws, access to the market, and farming.

Objective
GAT T was established to get rid of exploitation through trade restrictions. During the Great Depression,
this caused a 66% decline in international trade. Following the destruction of the Great Depression and
World War II, the GAT T helped the world’s economy recover.

World Trade Organisation (WTO)

International trade is governed by the World T rade Organization (WT O), an intergovernmental body. By
offering a foundation for negotiating trade agreements and a dispute resolution procedure intended to
enforce participants’ conformance to WT O agreements, which are agreed to be signed by officials of
signatory countries and approved by their parliaments, the WT O regulates trade between participating
nations. T he majority of the WT O’s current concerns originate from earlier trade discussions,
particularly the Uruguay Round (1986–1994).

Following the creation of other fresh multilateral frameworks devoted to global economic cooperation,
such as the World Bank (founded in 1944) and the International Monetary Fund, the General Agreement
on Tariffs and T rade (GAT T ), the forerunner of the World T rade Organization (WT O), was established
in 1947 by a multilateral treaty of 23 nations (founded in 1944 or 1945). Since the United States and
other signatories did not approve the founding treaty, the International T rade Organization, a parallel
international institution for trade, was never established, and GAT T gradually grew into a de facto
international organisation.

Basic principles of International Trade Law

Most-Favoured Nation Treatment

T he most-favoured-nation (MFN) concept is one of the fundamental principles of the GAT T of 1994.
MFN entails that all trade agreements must be subject to the same tariff treatment by each member
state. Another fundamental declaration of the GAT T of 1994 is “national treatment,” which limits
favouring imported goods over goods produced domestically when it comes to internal taxation or
other forms of regulatory policy. T he WT O Agreement allows the assistance of trade remedy policies,
although, on one hand, the GAT T and WT O require equal treatment and non-discrimination. On the
other hand, the WT O Agreement allows the application of trade remedy mechanisms to offer
exceptions.

According to the GAT T, particular agreements include precise principles that have also been
implemented into the national laws of the WT O members. With effect from January 1st, 1995, 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, was amended by
adding a procedural set of principles to the beginning and execution of trade remedial investigations
and judicial review. All trade remedial investigations in India are carried out by the Directorate General of
T rade Remedies (DGT R), which is part of the Ministry of Commerce and Industry and is led by the
Designated Authority (DA). India opened 938 anti-dumping investigations between 1995 and 2019.
Overall, from July 2018 to December 2019, India initiated around 53 anti-dumping investigations and
255 investigations pertaining to anti-dumping duties.

National treatment Principle

T reating both foreign nationals and residents respectfully by way of exchanging goods through
imports and exports and forming a system of bilateral or multilateral trade wherein trade is free from
any barriers and sanctions. T he same ought to hold for domestic and international trademarks,
copyrights, and patents. T he three main WT O agreements (Article 3 of GAT T, Article 17 of GAT S, and
Article 3 of T RIPS) all contain the concept of “national treatment,” however, each of these Articles differ
in terms of the interpretation taken up by countries.

Only when a service or a product of intellectual property has hit the market does national treatment take
place. T herefore, even if locally produced goods are not subject to an equal tax, the imposition of
customs duties on imports does not constitute an infringement on national representation.

Negotiation for free trade

One of the easiest ways to promote business is to lower restrictions on trading. Customs taxes, or
tariffs, and restrictions on certain quantities, like import bans or quotas, are included in the list of trade
barriers.

T rade negotiations have taken place from 1947 to 1993 in eight rounds total since the GAT T was
established in 1947–1948. T he Doha Development Agenda’s ninth round had started. T hese first
aimed to cut tariffs (customs duties) on imported goods. Due to discussions, in the middle of the
1990s, industrial countries’ and industrial products’ tariff rates had consistently decreased.

However, by the 1980s, non-tariff barriers on commodities as well as brand-new categories like services
and intellectual property were included in the negotiations. Opening new markets can be advantageous,
but modifying strategies in the same market is sometimes necessary. T he WT O agreements permit
nations to implement adjustments gradually through “progressive liberalisation.” Developing nations
typically receive more time to fulfill their responsibilities and goals.
Supporting the idea of fair competition
Although the WT O is commonly referred to as a “free trade” organisation, that description is not wholly
accurate. Tariffs and other types of protection are permitted under certain conditions. It is a set of
regulations intended to promote fair, impartial, and unbiased competition.

Fairtrade conditions are ensured by the non-discrimination, MFN, and national treatment rules. T hose
on providing goods supply by trying to export below cost to increase market share and subsidies are
also valid. T he rules attempt to define what is fair or unfair and how governments can react
appropriately by specifically levying additional import duties determined to make up for harm caused by
unfair trade.

Other WT O accords, such as those in the areas of agriculture, intellectual property, and other services,
all seek to promote the idea of fair competition. T he agreement on government procurement (known as
a plurilateral agreement because only a small number of WT O members have signed it) expands the
application of competition laws to purchases made by several government bodies across nations.

World trade and intellectual property rights

T he agreement establishing the World T rade Organization (WT O Agreement) included the Agreement
on T rade-Related Aspects of Intellectual Property Rights (T RIPS), which went into effect in 1995. T he
Paris Convention for the Safeguarding of Industrial Property and the Berne Convention for the
Protection of Literary and Artistic Works, two primary intellectual property treaties dating back to the
1880s that are monitored by the World Intellectual Property Organization (WIPO), were incorporated into
and expanded on by the T RIPS.

T he importance of intellectual property rights on a worldwide scale has increased as innovation has
become a key indicator of global competitiveness. T he Agreement on T rade-Related Aspects of
Intellectual Property Rights, sometimes known as the T RIPS Agreement, was established during the
Uruguay Round of the trade negotiation process to safeguard intellectual property rights.

T he T RIPS Agreement created a minimum standard of security for the intellectual property of many
other WT O members. It includes topics including secret information, architectural and structural ideas,
geographical indications (GI), copyrights, trademarks, and patents (trade secrets). T he long-term goal
of protecting intellectual property rights was to promote innovation and creativity. T he WT O Doha
round of trade negotiations discussion includes intellectual property problems as well (launched in
November 2001). T he Doha mission instructs members to “discuss the implementation of a multilateral
system of notification and registration of geographical indications for wines and spirits” and to “interpret
the TRIPS Agreement in a manner supportive of public health.”

TRIPS Agreement as a combination – Berne and Paris-plus

agreement
T here is a link between the T RIPS Agreement and the Conventions on Biological Diversity. Also, the
degree of GI protection provided to wines and spirits under the T RIPS Agreement was expanded to a
wide variety of items. T he two more unresolved operational difficulties (agricultural and non-agricultural
alike) were now in question as to whether these two topics should now be subject to negotiation.

All of these conventions’ major substantive clauses were included by reference, with the exception of
those in the Berne Convention for the Protection of Literary and Artistic Works. It constitutes duties
under the T RIPS Agreement between T RIPS Member Nations. Articles 2.1 and 9.1 of the T RIPS
Agreement, which refers to the Paris Convention and the Berne Convention, respectively, contain the
applicable clauses. Secondly, the T RIPS Agreement introduces a significant number of new duties in
areas where the earlier treaties are silent or were deemed insufficient. As a result, the T RIPS Agreement
is occasionally referred to as a Berne and Paris-plus agreement.

Cross-border transactions
A cross-border transaction is a transaction in which at least one party is situated across the world, or
an activity where the monetary exchange takes place in international trade between two or more
countries outside the geographical bounds of a country. Major types of cross-border transactions
include:

Cross-border financing
T he term refers to any financial arrangement that crosses national boundaries. It includes loans,
letters of credit, banker’s acceptance, bank guarantees, depository receipts, etc.
Buying or selling products or services
It refers to buying and selling of products and services. Both may have different features on
infrastructure, establishment, producing product service outside the jurisdictional limits, trading across
borders, bridging between local resources and outside supply, etc.

Combined research/shared services etc.

Business entities are now being equipped with shared services. For that, joint research programs are
being introduced as one cartel or chamber of commerce. Such shared services are concerned with
matters of international trade if those shared service centres are providing services across borders
scattered in different locations.

Important aspects for entering a cross border

transactions
While entering a cross-border transaction, different countries should keep in mind that as per
international trade law one should also follow legal compliances, any precedent rulings, and state
contracts in case of reciprocating territories they have entered into. Adding more to this, indirect and
direct taxation matters, corporate tax planning, accounting, and financial planning issues have also to
be considered for the smooth functioning of cross-border transactions. T his will help in maintaining
harmony between countries and ensuring that confusion in transactions is avoided.

Corporate records necessarily to be maintained as a due

diligence checklist
Some of the important documents required to be attached with the due diligence report should have
details about the institution’s formation prior to incorporation as well as about acquisitions,
reorganizations, restructurings, bankruptcies, placements, buybacks, and modifications in various
forms. It should also be noted that information pertaining to the company’s bylaws, articles of
association (AOA), and any revisions to them should also be mentioned in the due diligence report that
has been drafted. For conducting successful due diligence, it is required to maintain a summary of
panel sessions, which include written consents, executive committee resolutions, and resolutions from
shareholders and members. Further mailings, solicitations, financial statements, and registration
papers are then sent to shareholders. After this, contracts about option plans, securities issuance,
securities acquisition, and investment options are further introduced for the facilitation and
maintenance of transparency in cross-border transactions.

Any agreement, plan, or documentation that incorporates provisions preventing a transfer of ownership,
as well as all documents connected to anti-takeover procedures, are also required to be disclosed.
Lastly, details in case of any organisational diagrams displaying the ownership, organisational
structure, along with details on subsidiaries, divisions, joint ventures and a certificate of legal
conformity from each relevant department in the jurisdiction of incorporation have to be disclosed for
the effective legal compliance and taking into account other parties also know some very important
details for further formalities to be done while closing a transaction.

Dispute settlement
Under international trade law, there are different provisions for dispute settlement which is done with
the help of WT O and GAT T. It was governed by Articles XXII and XXIII of the GAT T, which set up a
system of consultation for the settlement of disputes among the member nations. T he dispute
settlement system evolved over time, and there were additional documents, and legal instruments were
created to incorporate changes. Even with certain changes, the dispute resolution mechanism was not
considered satisfactory.

Among the current international tribunals and bodies, the institution of the WT O’s dispute settlement
mechanism has evolved as one of the most reliable and enforceable systems. Its legitimacy is based
on several enhancements that were made possible by the approval of the Dispute Settlement
Understanding (DSU), which improved the prior dispute resolution system established under the GAT T.
T his element refers to ideas like reverse consensus to illustrate how the WT O’s current dispute
resolution mechanism has developed.

It is regarded as one of the most reliable and trustworthy methods of dispute resolution. T he system’s
awards have a binding nature, which is what makes them enforceable. But to claim that such a
structure just emerged in 1995. T he new WT O dispute resolution process has assimilated fifty years of
experience in resolving trade issues under the GAT T. Although the present system has made several
additions and improvements to the previous one, it is GAT T 1947 that is primarily responsible for its
inception. Article 3.1 of the Dispute Settlement Understanding (DSU) is relevant in this situation.

GAT T 1947 wasn’t intended to be a global trade organisation. It naturally did not include a
comprehensive dispute resolution system and only had two brief provisions—Articles XXII and XXIII—
relating to dispute resolution. T hese clauses allowed GAT T members to seek adjudication for three
types of claims: violations, non-violations and situational concerns. T he General Agreement on T rade
and Tariffs (GAT T ) is one such agreement that was adopted in 1947 by 100 nations to lessen trade
restrictions, lower tariffs, and promote international trade in the years following World War II.
Another outcome of trade negotiations under the GAT T is the World T rade Organization. T he WT O is
a global organisation with the responsibility to create effective trade laws, serve as a venue for further
discussions to lower trade restrictions, and serve as a forum for resolving disputes.

International T rade laws deal with certain subjects which are inclusive to all the member nations under
the WT O. It includes:

Negotiating trade agreements

Agreements of accession to the WT O, general trade agreements, and regional trade agreements.

Compliance
Tariffs and quotas

Administration of customs laws

Government subsidies, anti-dumping, countervailing duties and other trade remedies.

T echnical standards for industrial and agricultural products.

Intellectual property protection

Understanding and utilizing various provisions of the WT O for trade enhancement for developing
countries during domestic adjustments integrating into the rule-based trading system.

Law reforms
Laws regulating foreign investments

Government procurement laws and anti-corruption measures.

India’s Foreign Trade Policies

It will be clear when we look into India’s economy before the 90’s. T ill then, India was a closed economy
where average tariffs exceeded 200 percent, quantitative restrictions on imports were very extensive,
and there were strict regulations on foreign investments. India started to reform during the 1990’s as it
opened up the economy so that there will be a flow of foreign investments and an increase in the foreign
trade policies of the country as well. Since then, foreign trade showed a remarkable change. India’s
percentage of GDP increased drastically, and the economy is now one of the fastest-growing
economies in the world. India is now aggressively pushing for more liberal global trade management. It
has gained a leadership role among developing nations in global trade negotiations.

Recently, India has signed various trade agreements with neighbouring countries as well as the United
States. Its regional and bilateral trade agreements are at different levels of development.
 India – Sri Lanka Free T rade Agreement

T rade agreements with Bangladesh, Bhutan, Maldives, China, and South Korea.

India – Nepal T rade T reaty.

Comprehensive Economic Cooperation Agreements (CECA) with Singapore.

Framework Agreements with the Association of South East Asian Nations (ASEAN), T hailand and
Chile.

India is now, one of the largest trading partners with the US, which imports major items such as IT
services, textiles, machinery, gems, chemicals, etc. T he US have also made notable investments in
India’s power generation, telecommunication, ports, roads, petroleum exploration and processing, and
mining industries as well.

While looking for the cases involving international trade, we can see that almost all the cases deal with
issues involving any private sector business organization on one side and the concerned Government
business authority on the other. In the case of Suntec Industries v. the United States, the court was of the
opinion that the issue regarding granting of defendants motion for summary judgment would be
denied due to the failure of producing evidence for proving their part, and hence the court decided the
case for the defendant. Hence it will be clear that for cases involving international trade practices,
submission of strong evidence against the concerned parties must be necessary so that they realizes
the fault on their part and the correctional mechanism will be implemented accordingly. Or else the case
may likely lead to certain international trade disputes among the concerned nations. While looking
through India’s use of the WT O dispute resolution mechanism, we can see that the nation is actively
involved in all spheres including disputes and also in negotiations and reviews as well. India also had
many cases against its international trade partners and won many among them and even considered
to be a landmark in this field. T he majority of the cases are involved in measures regulating textiles
and clothing exports, which is one of the prime areas of India’s international trade. Mainly the United
States is the other party in many of such suits. Overall, India was able to make a consistent remark in
the field of dispute resolution mechanisms under WT O in order to pursue issues that matter to it.

Trade disputes
T he WT O’s Dispute Settlement Body (hereinafter referred to as the “DSB”) adjudicates problems
involving international commerce amongst its members. T he WT O’s dispute resolution mechanism,
as outlined in the Dispute Settlement Understanding, requires disputing members to first engage in
consultations targeted at peacefully settling problems. If this is not possible, then the complainant
country may seek the DSB to constitute a dispute settlement panel. Such professional panelists may
only be established by the DSB, which also has the sole right to accept or reject the panel’s decisions or
the outcomes of an appeal after they have considered a matter.

India has been a prominent real concern before the DSB and has so far brought up 24 disputes.
Additionally, India has been the target of 32 claims brought by other member countries. T hree of the
disputes out of the twenty-four WT O cases that India filed have already progressed at this stage.
Disputes filed by India in pursuance of trade remedy
Except for Canada, Mexico, Australia, Argentina, South Korea, Brazil, and countries in the European
Union, the US levied additional import taxes of 25% and 10% on specific steel commodities and metal
products from all other nations in 2018. India filed the case US – Steel and Aluminium Products (India) to
oppose the levying of an extra import tariff and asked the DSB to appoint a group. Eight other WT O
members, including Canada, China, the EU, Mexico, Norway, Russia, Switzerland, and T urkey, also
have filed disputes against the United States because the selective imposition of additional duties
distorts international trade, and nearly 30 other members have reserved their right to participate as
third parties.

T he panel was set up by the Director General in January 2019 to resolve the conflict. Due to the
complexities of the problems and the panelists’ commitments to numerous procedures, the panel
subsequently communicated in November 2019 that it would be unable to produce a panel report well
within a given timeframe.

Signatory Countries who have filed Disputes against India

T he United States brought the case of India – Solar Cells in 2013, and both the panel and the Appellate
Body determined that the government of India’s new policies violated both Article 2.1 of the T RIMs
Agreement and Article III of the GAT T of 1994. India informed the DSB of its intention to execute the
order by December 2017, but the United States asserted that India had disrespected the order and
asked for the termination of the concessions granted to India. India then asked the DSB to set up a
panel in 2018 to settle the dispute between India and the United States. T he government launched a
safeguard examination in 2015 into shipments of “hot rolled flat items” and levied a 20% excise tax
safeguard duty. Japan, which was offended by this decision, filed a dispute against India—Iron and
Steel Products with the DSB and claimed that the safeguard measures were implemented in breach of
several agreements on safeguard requirements as well as Article 2 of the GAT T 1994. T he DSB panel
came to the opinion that India’s approach violated Articles 3.1 and 4.2(c) of the Agreement on
Safeguards because it lacked reasoned opinions on all relevant factual and legal problems. Following
that, both India and Japan informed the Appellate Body that they would be appealing this decision. T he
Appellate Body hasn’t released its report yet since there aren’t enough members to make a decision.
India’s Foreign Trade Policies
India began to reform in the 1990s as it opened up its economy to allow for an increase in international
investment and the expansion of its foreign trade policy. Since then, there has been a noticeable change
in global trade. India’s GDP share expanded significantly, and the country’s economy is currently one of
the world’s most rapidly growing. India is currently making a strong push for a more open approach to
managing global commerce. In international trade discussions, it now has a leadership position
among emerging countries.

T he US now trades with India, which imports significant goods including IT services, textiles,
machinery, diamonds, chemicals, etc. T he US has also made significant investments in India’s mining,
petroleum processing, ports, telecommunications, electricity generation, and transportation sectors.

T he Ministry of Commerce is concerned with making India a prominent player in international markets
and implying a prominent function in global trade organisations that is compatible with the country’s
growing significance. In the mid-term, the department is responsible for making commodity and great
national strategies, and in the long term, it develops a strategic plan/vision and India’s Foreign T rade
Policy. Multilateral and bilateral corporate contacts, special economic zones (SEZs), state trading,
export growth and trade clearance, and the establishment and supervision of specific trade businesses
and materials are all responsibilities of the Department.

T he Foreign T rade Policy (FT P) of India establishes the planning and strategy frameworks for
encouraging shipments and trade. It is updated regularly to keep up with changes in the domestic and
foreign environment. India’s Foreign T rade Policy (2015-20) aims to increase India’s competitive
position in the marketplace and commodities while also discovering new consumer goods in the
business sector. In addition, India’s Foreign T rade Policy envisions assisting manufacturers in
maximising the beneficial effects of GST (goods and services tax), carefully monitoring export
performances, boosting cross-border trading ease, raising revenue from agriculture-based export
markets, and boosting exports from MSMEs and labour-intensive industries.

India signatory to other countries for trade

agreements
India had even signed various trade agreements with neighbouring countries as well as the United
States. Its regional and bilateral trade agreements are at different levels of development.

1. India – Sri Lanka Free T rade Agreement

2. T rade agreements with Bangladesh, Bhutan, Maldives, China, and South Korea.

3. India – Nepal T rade T reaty.

4. Comprehensive Economic Cooperation Agreements (CECA) with Singapore.

5. Framework Agreements with the Association of South East Asian Nations (ASEAN), T hailand and
Chile.
While looking for the cases involving international trade, we can see that almost all the cases deal with
issues involving any private sector business organization on one side and the concerned Government
business authority on the other. In the case of Suntec Industries v. the United States, the court was of the
opinion that the issue regarding granting of the defendants’ motion for summary judgment would be
denied due to the failure of producing evidence for proving their part, and hence the court decided the
case for the defendant. Hence it will be clear that for cases involving international trade practices,
submission of strong evidence against the concerned parties must be necessary so that they realise
the fault on their part and the correct mechanism will be implemented accordingly.

Analysis of Foreign Trade Policy of 2015-2020

T he foreign trade policy of 2015-2020 is a policy aimed at facilitating international trade by lowering
money transfer costs and times while also boosting the profitability of Indian exports. For the benefit of
import and export trade stakeholders, the administration has prioritised trade between countries and
implemented steps in this regard through the terms of this policy.

Strengthening the “Make in India” initiative – under the 2015 – 2020 foreign trade policy, the first key
step planned to be taken was under the Export Promotion Capital Goods (hereinafter referred to as
EPCG) scheme, where the aim was to decrease Export Obligation (EO) for domestic purchasing. In
promoting domestic capital goods production, the targeted export responsibility under the EPCG
scheme, which was reportedly 90 percent of the usual export obligation (six times the duty recovered
sum), was lowered to 75 percent in cases where capital goods were obtained from indigenous builders.
T he Merchandise Exports from India Scheme (MEIS) awards export commodities with an increased
household composition and quality enhancement at a superior stage. It is suggested that
commodities with increased domestic content and added value be rewarded more generously than
items with a high import content and little added value.

T wo new schemes have been introduced, namely the Merchandise Exports from India Scheme (MEIS)
for the sale of defined commodities to selected markets and the Services Exports from India Scheme
(SEIS) for the increased export of registered facilities. T he MEIS programme offers incentives ranging
from 2% to 5%. T he specified services would be awarded at 3% and 5%, respectively, under SEIS. Under
the EPCG system, initiatives have been implemented to encourage the purchase of capital assets from
indigenous producers by lowering specified export obligations by 25%. With the MEIS, agricultural and
village industry commodities will be subsidised at levels of 3% and 5% globally, respectively. With MEIS,
prepared and manufactured agriculture and food commodities will receive a better amount of funding.
Scope of improvements
1. T he primary objective is to enhance Indian export performance by utilising innovation and
manufacturing.

2. Numerous low-cost, low-quality goods, particularly from China, have entered the market as a result
of mismanagement and insufficient quality management. T hese are harmful to India’s economy,
ecosystem, and balance of trade.

3. Logistical challenges are another major hurdle to Indian exporters. India’s leading access points,
such as Kochi, have timeframes that are two to three times lengthier than Chinese ports.

4. India falls far short of its prospects in trying to attract foreign direct investment (FDI), which is
critical for increasing exports.

Modifications proposed in Foreign Trade Policy of 2021-

2026
With the 60 percent drop in Indian exports and the 59 percent drop in imports as a result of COVID-19,
the government established and continues to update a long-term strategy that takes such
circumstances into account. T his is one of the main reasons why the new Foreign T rade Policy 2021-
2026 should include goods delivery. Parliamentarians, officers, merchants, exporters, and others
provided input to the FT P 2021-2026 throughout its planning phase.

Main objectives to be met from the FTP 2021-2026

Inf rastructure upgrade

Under this, the government needs beneficial investments to be made in infrastructure development,
which will help improve trade as per the FT P 2021-2026. India may learn from China as well because
China is well-ranked for its exports, which will help India in the growth and development of its existing
ports, warehouses, certification centres, etc. Under this FT P, it is recommended that the T rade
Infrastructure for Exports plan that was approved in 2017 be expanded further.

More f ocus on increasing exports

As per Financial Year 2020, Subsidies are less expected to perform a significant impact on enhancing
global trade. In this approach, factors such as quality, manufacturing size, and innovation will be
game-changers. T his approach was likewise agreed upon by the majority of industry specialists.
Similarly, trade policy can also include benefits focused on research and development. T he Amended
T echnological Upgradation Fund Scheme, which was created to improve production, investments,
export markets, and performance in the manufacturing industry through technology modifications, can
now be applied to other industries.

Tax benefits in compliance with world trade organization – RoDTEP

T he DGFT (Directorate general of foreign trade) had proposed the Remission of Duties or Taxes on
Export Products (RoDT EP) Scheme that replaced the MEIS (Merchandise Exports from India Scheme),
and the scheme came into effect on January 1, 2021. T he scheme would guarantee that exporters
obtain reimbursements for previous non-recoverable underlying charges and taxes. T he initiative was
implemented to increase export volume, which had previously been low.

Relaxation in credit access

As per this, MSMEs (micro, small, and medium enterprises) will be offered easy access to credit under
the FT P of 2021 – 2026. Earlier, it was difficult for MSMEs to get loans from formal institutions.
Fortunately, the FT P of 2021 – 2026 will open Alternate Credit Avenues.

E- Commerce and digitalization

India needs improved trade procedures as Covid-19 hinders established supply channels. E-commerce
and digitization may be able to help in this direction. Digitization can play a key role since it eliminates
the need for manual operation in slow-moving import-export operations. Nasscom, an apex government
agency, proposes a web-based platform for Import-Export Code holders to update basic information
such as email addresses and phone numbers. T he digitalization procedure makes the entire import
and export procedure automated and online. T his contributes to increased transparency in global trade.

Conclusion
On the whole, international trade gives an opportunity for the buyers and the sellers to be exposed to a
new market environment as well as to new products. Industrialization, advanced technology,
globalization, multinational corporations, as well as outsourcing, receives a major impact on the area
of international trade and commerce. Hence, there lies utmost importance in the area of international
trade so that there are effective laws and statutes in this sector which are applicable and convincing to
each and every member nation under the WT O as well as various other international trade federations.
According to the World Bank, around twenty-four developing countries have gained higher income
growth, an increase in revenue and various other developmental aspects solely through the way of
increase in international trade relations among their member countries. Various economic theories
also state that international trade raises the standard of living and eventually, a drastic change from a
closed economy to an open economy will be visible then.

Globally speaking, trade provides opportunities for both buyers and sellers to experience new items and
market environments. Globalisation, multinational firms, industrialization, advanced technology, and
outsourcing are all significantly impacted by international trade and commerce. T herefore, there must
be efficient regulations and statutes in the sphere of international commerce that are relevant to and
persuasive to all members of the WT O as well as several other international business organisations.

T he FT Ps (Foreign T rade Policies) are updated every five years to set new objectives and take into
account developments that can be incorporated into the Policy for the betterment of the country. T hey
play a very important role in promoting trade and business in the country on a worldwide platform by
focusing on the most critical areas. By supporting export-related advantages and reimbursements of
duties and GST (Goods and Services Tax), the FT P for the period of 2015 to 2020 placed a strong
emphasis on increasing the Indian market share and adding new inclusive products to the Indian
market.
T here are high hopes for the FT P 2021–2016, which got delayed because of the COVID-19 pandemic.
But it appears that the government has adopted a highly comprehensive stance and has included all
relevant parties in the decision-making process. T he FT P 2021–2026, which became effective on
January 1, 2021, appears to exhibit encouraging development and results, particularly against the
framework of the recovery from the COVID–19 pandemic.

Frequently Asked Questions (FAQs)

What is the main purpose of International trade law?

T he main purpose for which international trade law has been formed is to regulate the trade system
among developed, developing, and transitional economies in the world. Export controls and sanctions
are two domestically imposed measures that affect international trade. T o remedy imports that are
seriously harming domestic industries due to unjustified foreign prices and/or foreign state subsidies,
the government may use trade measures. An illustration of a trade remedy is the imposition of
antidumping duties by the International T rade Commission (“IT C”) in response to dumping. T his
happens when a foreign company offers an item in the United States for less than it does in its “home
market,” harming American business.

T he transfer of protected hardware, software, and information for purposes associated with foreign
policy goals and national security is regulated by export control legislation. Every nation has its
department setup that is responsible for keeping a check on the exchange of material goods and
information with other countries. In India, we have the Ministry of Commerce and Industry, and under it,
two departments were formed. First is the Department of Commerce, and another one is the
Department for Promotion of Industry and Internal T rade. T hese departments have the power to impose
penalties for not complying with export control legislation that can be both civil and criminal.

On the subject of international treaties, businesses may want guidance regarding the World T rade
Organization’s (“WT O”) regulations, a formally recognised international body that governs trade. T he
North American Free T rade Agreement (“NAFT A”) and bilateral investment treaties are further important
agreements.

While some law firms have relatively limited practice groups that cover all facets of international
commerce, others have very broad practice groups that concentrate on all aspects of the law (such as
anti-dumping). Since what is legal varies widely across nations, the laws governing the transfer of data
and personal concerns are expected to grow in importance in the future.

How does WTO enforce International trade policy?

Actions at the WT O are “member-driven,” meaning that all participating states must agree on them.
T he membership, to its full extent, makes all significant judgments, either through ministers (who meet
at least once every two years) or through their ambassadors or delegates (who meet regularly in
Geneva). Consensus is typically used to make decisions.
T he WT O differs from certain other international institutions like the World Bank and International
Monetary Fund in this regard. T he leader of the organisation or a board of directors does not have any
authority in the WT O. T he result of discussions with WT O members is that regulations place
limitations on countries’ actions. T he members voluntarily enact the regulations following specified
procedures, which may include trade sanctions. However, those penalties are applied by member
nations and approved by the entire membership. T his is very unique to other organisations whose
bureaucrats, for instance, can affect a nation’s policies by threatening to reject credit.

It can be challenging to decide on the 150 members. T he biggest benefit is that everyone can agree on
the judgments made in this manner. And yet, some very spectacular deals have been struck despite the
challenges. However, there are occasionally calls for the formation of a more concentrated executive
structure, maybe along the lines of a board of directors with each member serving a different group of
nations. But at the moment, the WT O is a consensus-driven or member-driven organisation.

What are the main legal barriers in International trade law?

T he improvement of developing nations’ capacity for domestic services is one of the goals of the GAT S
as stated in Article IV (1) (a) and (b). Furthermore, this goal is hampered by a wide range of obstacles.
Stringent import licensing, widespread government contracting, stringent recruitment and foundation
standards, selective taxes, caps on equity involvement, and insufficient technological requirements are
a few of the general hurdles mentioned in the framework of finance as a whole. T he following are some
specific obstacles that affect the trade in banking activities, particularly in a rapidly developing
economy:

entry rules that forbid financial firms from having any kind of representation and impose strict
capital standards that are higher than those applicable to financial institutions;

equity involvement, which involves the authority of domestic authorities to assess whether foreign
capital in a small bank complies with the restrictions on the purchase of a majority interest by
foreigners working set forth by the country’s interest,

restrictions on domestic markets of firms under foreign ownership, including the prohibition of
foreign banks’ security-related operations (such as issuance);

prohibitions on cross-border transactions that prevent foreign banks from being accepted or restrict
taking out loans through foreign banks.