RAJALAKSHMI INSTITUTE OF TECHNOLOGY,

KUTHAMBAKKAM, CHENNAI – 600124.

Department of Artificial Intelligence and Data Science
UNIT-2

AGRIPRNEURSHIP IN GLOBAL ARENA: LEGAL PERSPECTIVE

1. Importance of agribusiness in Indian economy

Agribusiness

Definition of Agri-Business:

“Agri-business is a concept of economics which includes total sum of all activities involved in the
manufacturing and distribution of farm supplies production operations on the farm and the
storage processing and distribution of farm commodities and items made from them.”

Meaning:

Agriculture has evolved into agri-business and has become a vast and complex system that
reaches far beyond the farm to include all those who are involved in bringing food and fiber
to consumers . Agri-business include not only those that farm the land but also the people and
firms that provide the inputs ( for ex. Seed , chemicals , credit etc ), process the output ( for
ex. Milk , grain , meat etc ), manufacture the food products ( for ex. Ice cream , bread ,
breakfast cereals etc.), and transport and sell the food products to consumers ( for ex.
Restaurants , super markets).

A business can be defined as an organization that provides goods and services to others who
want or need them.

Agriculture: Art of cultivating various categories of crops including animal husbandry

finishing and other related activities.

Business: An economic unit that aims to sell goods and services to customers at prices that
will provide an adequate return to its owner.

Management : A set of activities ( planning and decision making , organizations, leading /

directing and controlling ) , directed at an organizations resources ( human , financial ,
physical , information ).With the aim of achieving organizations goals in an efficient and
effective manners.
Scope

1. Daily requirements of food and fiber products at Right (place , form and time ) come from
efficient and hardw orking of many business personnel in input, farm and food production
and also in marketing them.
 2. Agribusiness is combining the diverse commercial enterprises, using heterogeneous
combination of labour, materials, capital and technology.

3) It is a dynamic sector and continuously meets current demands of consumers in domestic

and world markets.
4) It strengthening of infrastructural facilities i.e. area, expansion of credit, raw materials
supply agencies, adoption of modern technology in production and marketing of
agricultural products.

5. Agri-business provides crucial forward and backward linkages.

6.Agri-business generates potential employment opportunities.
7.It adds value to products and thereby increases the net profits.

Agriculture business has got tremendous scope as it covers not only a widerange of activities but also a
multifarious magnitude of activities. like

1) The Resource Supply Sector:

Many industries can be started in resources supply sector e.g feed industries ,
financial , institution , fertilizer industries , agriculture chemicals and oiler services.
2) Product Marketing Sectors :
There is a tremendous scope in marketing of agricultural commodities. At out
rd
1/3 of the working population is engaged in the agricultural marketing . This sector
consists of market development , storage , warehousing , cold storage , pre-cooling
transportation etc .
3) The Processing Sector:-
Several food processing industries like sugar factories, dairy Industry, poultry,
fruit processing Industries , textiles Industries, wood paper Industries, can be started
which can adds the value to the product from 50 % to 300%
4) The Wholesale and retail sector:-
The Industries producing food, soaps, paints, leather, textiles etc. are agro based
industries. In this original farm of the product is altered prior to its sale to the
wholesaler or retailers.
Importance of Agribusiness in Indian Economy
1) Agro industries are considered an extended arm of agriculture but in India they have
not received as much attention as agriculture. While agriculture contributes about
17% of GDP of India, the value of added by processing industry is only 8 % of total
production. In India only 2% of horticulture products are processed and more than
only 30% is wasted due to lack of storage &processing facilities.
 2) The global market is enormous from sugar, cotton , tea &
processed foods sauce jelly & honey . The market meat spices and
fruits is equally large. Only with mass production aided by modern
technology & intensive marketing can the domestic market as well
as export market be exported to the fullest extent.
3) The size of food market is Rs. 3,50,000 crore. An average Indians
spends around 53% of income on food The domestic market for
processed foods is not only huge but is growing fast in tandem
with the country.
4) Agro based industries help in processing agri. Products field crop ,
tree crops , livestock , fisheries & conversing them to edible &
other usable forms.
5) The raw materials & commodities product and marketed in India
are wide range – paddy , wheat , rice , maize , sugarcane , potato ,
fruits , coffee , medicinal plants & honey . All these commodities
are processed & consumed in huge quantities within the country
& also exported . The domestic market for these items is growing
at fast pace .
6) For Indians women , cooking is the way of life & also a matter of
pride , different for urban women & particularly employed women
. It is therefore important for food processing industries to create
value addition in all processed food products to convenience the
majority of women folk.
7) Dairy products have enormous potential . Country has made
tremendous strides in last 20 years in production & processing of
milk produced is processed.
8) The focus of value addition in the agri. sector is vital for
comprehensive development of rural economy since food
processing industry creates jobs demand for agri raw materials
leads to diversification & commercialization of agriculture ,
enhancing the income of farmer’s & creating surpluses for export
of agro foods. The broad based development of food processing
industry will improve both the social & physical infrastructure of
rural India.

2. INTERNATIONAL TRADE

INTRODUCTION

International trade is referred to as the exchange or trade of goods and services between
different nations. This kind of trade contributes and increases the world economy. The most
commonly traded commodities are television sets, clothes, machinery, capital goods, food,
raw material, etc.
International trade has exceptionally increased, which includes services such as foreign
transportation, travel and tourism, banking, warehousing, communication, distribution, and
advertising. Other equally important developments are the increase in foreign investments
and production of foreign goods and services in an international country.

These foreign investments and productions help companies to come closer to their
international customers, thus serving them with goods and services at a very low rate.

All the mentioned activities are parts of international business. It can be concluded by saying
that international trade and production are two aspects of international business, which is
growing day by day across the globe.

Reasons for International Trade

(1) Production

 It is not possible for every single country to produce equally at a cheap cost.
 That is why international trade is taken into account.
(2) Factors of production

 Factors of production include labour, capital, and raw material for producing
goods and services that are available at different rates in different countries.
(3) Cost of production

 Each country finds it advantageous to produce only those goods and services that
can be produced efficiently.
 The rest of the activities are assigned to other countries at a lower cost.
(4) Resource distribution

 Many times, companies face problems due to the limitation of natural resources.
 There is an unequal distribution of the resources in the country.
(5) Examples

 Different countries are specialised in different sectors like in India, Maharashtra is

involved in textiles, West Bengal in jute products, Haryana and Punjab in food
products, Kerala in spices, etc.
 Same is categorised for other countries.

Importance of International Trade

International trade between various nations is an essential factor that is responsible for the
increase in the standard of living, creating employment, and empowering consumers to enjoy
different kinds of goods. Few other important factors that are influenced by international
trade are:
 Utilisation of raw materials: Some countries are naturally blessed with an abundance of
raw materials, like Qatar is for oil, Iceland for metals and fish, etc. Without international
trade, these countries would never benefit from their natural resources or raw materials.

Greater choice for consumers: More international trade results in more choices of products.

Specialisation and economies of scale – greater efficiency: This means that it does not
matter what a country is specialised in, and the essential thing is to pursue a specialisation
that allows companies to make a profit that outweighs most of the other factors.

Global growth and economic development: International trade influences the economic
growth of a country. This increase also leads to the reduction of poverty levels.

Scope of International Business

(1) Exports and Imports

 They include merchandise (tangible or having physical existence) of goods.

 Export merchandise means sending goods to other nations.
 Import merchandise means receiving goods from other nations.
 They include the trade of services.
(2) Service trade

 It is also known as invisible trade.

 It includes the trade of services (intangible or no physical existence).
 There is both export and import of services.
 It includes services like tourism, hotel, transportation, training, research, etc.
(3) Licensing and Franchising

 Under this, permission is given to the organisations of other countries.

 It includes selling the product of a particular company.
 Under its trademark, patents are given in return of some fees. Example: Pepsi and
Coca Cola are produced and sold through different sellers abroad.
 Franchising is similar to licensing, but franchising is associated with
services. Example: Dominos, Burger King, etc.
(4) Foreign investment

It includes the investment of available funds in foreign companies to get returns. It can be of
two types:

(1) Direct investment means investing funds in plant and machinery for marketing and
production, also known as a foreign direct investment (FDI). Sometimes, these investments
are done jointly and are known as joint ventures.
 (2) Portfolio investment means one company invests in another company by way of
investing in its securities and earning income in the form of interests and dividends.

Advantages of International Business

(1) Income

 It helps in earning foreign exchange to the organisations.

 Forex helps in paying off the cost of imports of capital goods, technologies,
fertilisers, etc., from abroad.
(2) Efficient resources

 Under international trade, countries produce what they can produce efficiently and
leave the other activities to nations in which they can work efficiently.
 This helps different nations to distribute the activities and work efficiently in their
areas.
(3) Growth and employment potentials

 International trade helps in faster growth of organisations as well as countries.

 Sometimes, organisations are not able to create employment in the market as they
produce on a small scale.
 Initially, countries like China, Japan, and South Korea took the whole world as a
single market for trade.
 This helped them in employment generation across the world.
(4) Standard of living

 People in one country are able to enjoy goods and services of other nations.
 This helps them in improving the standard of living.

Difference between Domestic and International Trade

Parameters Domestic trade International trade

Nationality of Under this, people of one nation work Under this, people from different nations
buyers and sellers in their respective domestic market. work in the international market.

Nationality of other Stakeholders like suppliers, Stakeholders like suppliers, producers,

stakeholders producers, employees, middlemen, employees, middlemen, etc., are of
etc., are of the same nation. different nations.

Mobility of factors Factors of production like capital and Factors of production like capital and
of production labour are mobile across one nation. labour are mobile across the different
nations.

Heterogeneous Usually, customers are homogeneous Customers are not homogeneous in the
customers in the domestic market. international market due to different
religion, caste, language, etc.

Risks Under this, a nation is subjected to the This may be a barrier to international trade
political risks within the nation. as different nations have different political
risks.

Policies It is subjected to different policies and It is subjected to different policies and

regulations, and laws of a single regulations, and laws of multiple nations.
nation.

Currency Only one currency is involved. There is involvement of more than one
currency.

3. WTO agreements
Basic Objectives of the WTO
As stated in the preamble of the Agreement Establishing the World Trade
Organization, the objectives of the WTO Agreements include “raising standards of living,
ensuring full employment and a large and steadily growing volume of real income and
effective demand, and expanding the production of and trade in goods and services”; in
other words, developing the world economy under market-economy principles. In order
to contribute to these objectives, the WTO Agreements are established for the purpose of
entering into reciprocal and mutually advantageous arrangements designed for “the
substantial reduction of tariffs and other barriers to trade and to the elimination of
discriminatory treatment in international trade relations.” This means that the WTO
Agreements are structured, for the purpose of introducing market- economy principles
into international trade, on the basis of the two ideals: (1) reducing trade barriers, and (2)
applying nondiscriminatory rules.
Basic Principles of the WTO Agreements
As explained above, the WTO Agreement is based on the concept of reducing trade
barriers and applying nondiscriminatory rules. These ideals are embodied in the
following basic principles of the WTO.

Principle of MFN (Most-Favored-Nation) Treatment

GATT Article I provides that with respect to tariffs, etc. on exports and imports, the
 most advantageous treatment accorded to the products of any country must be accorded
immediately and unconditionally to the like products of all other members

Principle of National Treatment

GATT Article III requires that with respect to internal taxes, internal laws, etc.
applied to imports, treatment not less favorable than that which is accorded to like
domestic products must be accorded to all other Members

Principle of General Prohibition of Quantitative Restrictions

GATT Article XI stipulates that “No prohibitions or restrictions other than duties,
taxes or other charges shall be instituted or maintained by any contracting party” and
generally prohibits quantitative restrictions. One reason for this prohibition is that
quantitative restrictions are considered to have a greater protective effect than tariff
measures and are more likely to distort the free flow of trade.

Overview of the WTO Agreements

The WTO Agreements comprise the Agreement Establishing the World Trade
Organization and its Annexes.
Agreement on Agriculture
The Agreement on Agriculture includes specific and binding commitments made
by WTO Member governments in the three areas of market access, domestic support and
export subsidization for strengthening GATT disciplines and improving agricultural trade.
These commitments were implemented over a six-year period. The Agreement also
includes provisions on the implementation of these commitments

Agreement on the Application of Sanitary and Phytosanitary (SPS) Measures

This agreement establishes multilateral frameworks for the planning, adoption
and implementation of sanitary and phytosanitary measures to prevent such measures
from being used for arbitrary or unjustifiable discrimination or for camouflaged restraint
on international trade and to minimize their adverse effects on trade.

Agreement on Textiles and Clothing

Textile trade was governed by the Multi-Fiber Arrangement (MFA) since 1974.
However, the GATT principles had been undermined by import protection policies, etc.
The agreement provides that textile trade should be deregulated by gradually integrating it
into GATT disciplines over a 10-year transition period, which expired at the end of 2004.

Agreement on Technical Barriers to Trade (TBT)

Standards and conformity assessment systems, such as industrial standards and
safety/environment regulations, may become trade barriers if they are excessive or
 abused. This agreement aims to prevent such systems from becoming unnecessary trade
barriers by securing their transparency and harmonization with international standards.

Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS)

This agreement stipulates most-favored-nation treatment and national treatment for

intellectual properties, such as copyright, trademarks, geographical indications, industrial
designs, patents, IC layout designs and undisclosed information. In addition, it requires
Member countries to maintain high levels of intellectual property protection and to
administer a system of enforcement of such rights. It also stipulates procedures for the
settlement of disputes related to the agreement.
4 Provisions related to agreements in agricultural and food commodities

Provisions related to agreements in agricultural and food commodities typically cover a

variety of aspects to ensure fair trade practices, quality control, and compliance with relevant
regulations. Here are some common provisions:

1. Quality Standards and Specifications

 Quality Grades: Agreements specify the quality grade of the commodity (e.g.,
USDA grades for fruits and vegetables).
 Inspection and Testing: Requirements for inspection and testing to ensure
compliance with specified quality standards.
 Certification: Certification requirements from recognized authorities or agencies.

2. Quantity and Delivery

 Quantities: Clearly defined quantities to be supplied, including tolerances for weight

and volume.
 Delivery Terms: Incoterms (International Commercial Terms) specifying delivery
points, responsibilities, and risk transfer.
 Packaging: Standards for packaging to ensure safe and secure transportation.

3. Pricing and Payment

 Price Determination: Methods for determining prices, such as fixed prices, market
prices, or formulas based on market indices.
 Payment Terms: Payment schedules, methods of payment, and conditions for
payment (e.g., advance payment, letter of credit).
 Penalties for Late Payment: Interest rates or penalties applicable for delayed
payments.
4. Risk Management

 Force Majeure: Provisions outlining circumstances under which parties are excused
from performance due to events beyond their control.
 Insurance: Requirements for insurance coverage to protect against loss or damage
during transportation.
 Warranties: Warranties related to the quality and safety of the commodities.

5. Regulatory Compliance

 Food Safety Standards: Compliance with national and international food safety
regulations (e.g., FDA, EU regulations).
 Environmental Regulations: Adherence to environmental laws and regulations
affecting agricultural practices.
 Trade Restrictions: Compliance with trade restrictions, tariffs, and import/export
regulations.

6. Contract Duration and Termination

 Contract Period: Start and end dates of the agreement.

 Renewal Options: Conditions under which the contract may be renewed or extended.
 Termination Clauses: Grounds for termination and procedures for handling early
termination.

7. Dispute Resolution

 Arbitration: Agreement to resolve disputes through arbitration rather than litigation.

 Jurisdiction: Specifying the legal jurisdiction governing the agreement.
 Mediation: Provisions for mediation as a step before arbitration or litigation.

8. Confidentiality and Intellectual Property

 Confidentiality Clauses: Obligations to maintain confidentiality of trade secrets and

sensitive information.
 Intellectual Property Rights: Rights related to proprietary agricultural methods or
branded products.

9. Sustainability and Ethical Practices

 Sustainability Requirements: Provisions encouraging or mandating sustainable

farming practices.
 Ethical Standards: Adherence to ethical labor practices and fair trade principles.
10. Other Provisions

 Amendments: Procedures for amending the agreement.

 Assignment: Conditions under which the agreement may be assigned to another
party.
 Notices: Methods and addresses for formal communications between parties.

5 Agreements on Agriculture (AOA)

The Agreement on Agriculture (AoA) is a World Trade Organisation treaty that focuses on
reducing the agricultural support and subsidies given to domestic producers by countries. It is
one of the most contentious agreements within the WTO.

Agreement on Agriculture

The Agreement on Agriculture (AoA) is a WTO treaty that was negotiated during the
Uruguay Round of the General Agreement on Tariffs and Trade (GATT) and formally
ratified in 1994 at Marrakesh, Morocco. The AoA came into effect in 1995.

 According to its provisions, developing countries were to complete their reduction

commitments by 2000 and developing countries by 2004.
 The Least Developed Countries were not required to make any reductions.
 The Agreement covers products that are normally considered part of agriculture but
excludes forestry and fishery products and also rubber, sisal, jute, coir and abaca.
 The focus of the AoA is the elimination of what are called “trade distorting”
agricultural subsidies.
 According to the WTO, the overall aim of the Agreement is “to establish a fairer
trading system that will increase market access and improve the livelihoods of
farmers around the world.”

Features of WTO Agreement on Agriculture

The provisions of the WTO Agreement on Agriculture relate mainly to three broad categories
of agriculture and trade policy, which are discussed below.

 Market Access
 This includes:
 Tariffication – implies all non-tariff barriers to be abolished and
converted to tariffs. Non-tariff barriers include variable levies,
minimum import prices, quotas, state trading measures, discretionary
licensing, etc.
 Tariff reduction – Developing countries were obligated to reduce
tariffs by 24% in 10 years.
  Access opportunities – Minimum access equal to 3% of domestic
consumption in 1986-88 will have to be established for the year 1995
rising to 5% at the end of the implementation period.
 This head includes improving access to markets by removing trade barriers.

 Domestic Support
 This concerns the policy support and subsidies given by countries to enhance
domestic production. WTO has classified agricultural subsidies and policies
into different boxes, which are explained in a section below in detail.
 Export Subsidies
 Here, there are provisions related to member countries’ commitments to
reduce export subsidies.
 Developed countries are mandated to reduce their export subsidy volume by
21% and expenditure by 36% in 6 years, in equal installment (from 1986 –
1990 levels).
 Developing countries need to reduce export subsidy volume by 14% and
expenditure by 24% over ten years in equal installments.

WTO Agricultural Subsidies Boxes

The domestic support subsidies are categorized into various boxes in the WTO. The various
boxes and their implications are discussed in this section.

The images below describe the subsidies classified according to the WTO Boxes.
 7 Market Access

Market access refers to the ability of a company or country to sell goods and services across
borders. Market access can be used to refer to domestic trade as well as international
trade, although the latter is the most common context. Market access is not the same as free
trade

The ability to sell in a market is often accompanied by tariffs, duties, or even quotas,
whereas free trade implies that goods and services flow across borders without any extra
costs imposed by governments. Even so, market access is seen as an early step toward
deepening trade ties. Market access is increasingly the stated goal of trade negotiations as
opposed to true free trade

Importance of Market Access

Market access in international trade is critically important for numerous reasons.

 Revenue and Growth. Access to foreign markets allows businesses to expand their
customer base and revenue streams. It provides opportunities for companies to grow,
especially when domestic markets may be saturated or limited in scope.
 Diversification. International trade enables businesses to diversify their sources of
income. Relying solely on domestic markets can make a company vulnerable to
economic downturns or changes in consumer preferences. This is especially true in
light of different economies having different conditions, health circumstances, and
long-term outlooks.
 Economic Development. For countries, market access is vital for economic
development. It can stimulate investment, job creation, and economic growth by
 facilitating the export of goods and services. Unless companies are able to
manufacture, trade, and reside in international markets, those benefits would
otherwise be confined to single markets.
 Supply Chain Capabilities. Businesses often rely on global supply chains to source
components or raw materials. Market access potentially ensures the flow of these
materials across borders as companies may have greater capabilities to receive
particular goods at specific times according to its manufacturing needs.
 Economies of Scale. Access to larger markets can lead to economies of scale,
enabling businesses to produce goods more efficiently and at lower costs. As
companies grow, it may become more financially efficient to incur costs and make
capital investments. All else being equal, greater market access may give companies
more potential to leverage growth.
 Cultural Exchange. International trade fosters cultural exchange and cross-cultural
understanding as products, ideas, and practices are shared across borders. This may
help spur innovation and creativity as consumers may gain access to goods they
otherwise would not have had access to.

Market Access and Trade Barriers

There are a number of ways that market access in international trade is not achieved. The
two main categories of restricting market access are related to tariff and non-tariff barriers,
and more specifics of each are discussed below.

Tariffs
Import tariffs are taxes or duties imposed on goods when they enter a country. These tariffs
increase the cost of foreign products, making them more expensive compared to
domestically produced goods. Alternatively, export tariffs are imposed by a country on
products leaving its borders. These tariffs can reduce the competitiveness of domestic goods
in international markets by raising their prices.

There are other types of tariffs that further restrict market access. Specific tariffs are set as a
fixed amount per unit of a product, regardless of its value. For example, a country might
impose a $5 tariff per kilogram of a specific imported item, disproportionately affecting
lower-value products.

Countries can also impose tariff rate quotas. Tariff rate quotas establish a two-tiered tariff
system. Below a certain import quantity, a lower tariff rate applies, encouraging imports.
However, once the quota is exceeded, a higher tariff rate is imposed, restricting further
imports. Tariff rate quotas can limit market access by effectively capping the volume of
imports, though it does make full market access more difficult, especially for those seeking
international trade.
Non-Tariff Barriers
There are also a number of non-tariff barriers a country can enact that restrict or prohibit
market access. Quotas are quantitative restrictions placed on the volume of a specific
product that can be imported within a given period. Once that cap is met, no further goods
can enter international markets for that given period.

Instead of restricting a quantity, countries can impose restrictions making it more difficult to
trade a specific good. Some countries require businesses to obtain licenses or permits to
import specific products. Others impose regulations and standards related to product safety,
quality, and technical specifications that make it harder to export a good.

Market Access and Trade Liberalization

Though it may feel obvious that market access to international trade can be enhanced by
simply avoiding the tariff and non-tariff barriers mentioned above, there are many steps a
country can take to promote market access. Many of the ways are listed below, though the
list is not meant to be exhaustive. Countries can:

 Participate in Trade Agreements. Engaging in trade agreements, whether bilateral,

regional, or multilateral, is a fundamental approach to liberalizing trade. These
agreements often involve the negotiation of reduced tariffs, harmonization of rules,
and commitments to eliminate various trade barriers.
 Reduce Tariffs. Countries can choose to unilaterally lower their import tariffs. By
doing so, they signal their commitment to free trade, which may encourage other
nations to reciprocate by reducing their own tariffs.
 Invest in Infrastructure. Investing in trade-related infrastructure such as ports,
roads, railways, and logistics centers helps streamline the movement of goods.
 Simplify Licensing and Permit Processes. Streamlining licensing and permit
procedures simplifies market access for foreign businesses. Reducing bureaucratic
hurdles and processing times can make it easier for companies to obtain the
necessary authorizations and gain access to foreign markets.
 Safeguard Intellectual Property. Strengthening intellectual property rights
protection and enforcement assures foreign investors and businesses that their
intellectual property will be safeguarded, encouraging investment and innovation
without fear of international competitors stealing valuable information.
 Strengthen Trade Finance. Ensuring access to trade finance instruments like letters
of credit and export credit insurance helps mitigate the risks associated with
international trade and facilitates cross-border transactions.
 Reform Regulation. Implementing transparent and predictable regulatory
frameworks reduces uncertainty for businesses and investors, making it easier for
them to plan and invest in international trade with confidence.

8 Export subsidies agreements on sanitary and phyto-sanitary (SPS)

INTRODUCTION

The Uruguay Round negotiations, which were the first to deal with the liberalization
of trade in agricultural products, also included negotiations on reducing non-tariff barriers to
international trade in agricultural products. It resulted in two binding Agreements: the Agreement
on the Application of Sanitary and Phyto-sanitary Measures (SPS Agreement) and the Agreement
on Technical Barriers to Trade (TBT Agreement). This module discusses the SPS Agreement in
some detail.

The SPS Agreement confirms the right of WTO Member countries to apply measures necessary to
protect human, animal and plant life and health. This right was included in the original 1947
General Agreement on Tariffs and Trade as a general exclusion from the other provisions of the
Agreement provided that "such measures are not applied in a manner which would constitute a
means of arbitrary or unjustifiable discrimination between countries where the same conditions
prevail, or a disguised restriction on international trade". Despite this general condition for the
application of national measures to protect human, animal and plant life and health, it had become
apparent by the time the Punta del Este Declaration was initiated that national sanitary and
phytosanitary measures had become, whether by design or accident, effective trade barriers.

As a result, the SPS Agreement came into being and set new rules in an area previously excluded
from GATT disciplines. The purpose of the SPS Agreement is to ensure that measures established
by governments to protect human, animal and plant life and health are consistent with obligations
prohibiting arbitrary or unjustifiable discrimination on trade between countries where the same
conditions prevail. Also, such measures shall not be applied in a manner that would constitute a
disguised restriction on international trade. It requires that, with regard to food safety measures,
WTO Members base their national measures on international standards, guidelines and other
recommendations adopted by the Codex Alimentarius Commission (CAC); for animal life and
health, measures should be based on those standards adopted and recommended by the
International Office of Epizootics (OIE), and, for plant life and health, those standards and
recommendations of the International Plant Protection Convention (IPPC) apply. These
Organizations are collectively referred to as the three sisters. The Agreement also allows for
countries to adopt stricter measures than those adopted by the three sisters if there is a scientific
justification for doing so or if the level of protection afforded by the recognized standard setting
organizations is inconsistent with the level of protection generally applied and deemed appropriate
by the country concerned.

In order to have a better understanding of what the Agreement requires and the importance
of the provisions of the Agreement a review will be made article by article

ARTICLE 1 - GENERAL PROVISIONS

This article provides the general provisions of the

Agreement and indicates that this Agreement applies to all sanitary and phyto-sanitary
measures which affect international trade. It informs us that definitions for terms used in the
Agreement are provided in Annex A and that the definitions shall apply to this Agreement
and that all the Annexes are an integral part of this Agreement. It further says that the rights
of Members under the TBT Agreement with respect to measures not within the scope of the
SPS Agreement are unaffected by the SPS Agreement.

Annex A - Definitions

The definitions for many of the terms used in this Agreement are contained in Annex A. To
have a clear understanding the definitions in Annex A will be discussed first and we will then
resume the review of the Agreement.

 Sanitary – Phyto-sanitary Measures

The definition of sanitary and phyto-sanitary measure is:

 Any measure applied to Protect Animal or Plant Life or Health within the territory
of the Member from risks related to the entry, establishment or spread of:

 pests or diseases;
 disease-carrying organisms; or
 disease-causing organisms.

 Any measure applied to Protect Human and Animal Life or Health within the
territory of the Member from risks arising from:

 food additives;
 contaminants;
 toxins; or
 disease-causing organisms in foods beverages, or feedstuffs.

 Any measure applied to Protect Human and Animal Life or Health within the
territory of the Member from diseases carried by:

 animals;
 plants;
 animal/plant products; or
 from the entry, establishment or spread of pests

 Harmonization

o The establishment, recognition and application of common sanitary and

phytosanitary measures by Members.

 International Standards, Guidelines, Recommendations

 For food safety, the terms international standards, guidelines and recommendations
refer to those established by the Codex Alimentarius Commission relating to:

o food additives;
o veterinary drug and pesticide
residues;
o contaminants;
o methods of analysis and
sampling; and\
o codes and guidelines of hygienic
practices.
 For matters not covered by these identified Organizations,

standards, guidelines, and recommendations promulgated by other international

organizations, open for membership to all WTO Members as identified by the SPS
Committee, may be applied.

 Risk assessment is defined as:

the evaluation of the adverse effects on human and animal health from additives,
contaminants, toxins and disease causing organisms in food, beverages and feed
stuffs, and/or the likelihood of entry, establishment or spread of a pest or disease and
any associated biological and economic consequences.

 Appropriate Level of Protection is defined as:

the level of protection deemed appropriate by the Member establishing the sanitary
and phytosanitary measures to protect human, animal or plant life or health in their
territory. This is also referred to as the "Acceptable Level of Risk".

 Pest or Disease Free Areas

An area (entire country, part of a country, or all or parts of several countries), as

identified by the competent authority, in which a specific pest or disease does not
occur.
 Areas of Low Pest/Disease Prevalence

An area (entire country, part of a country, or parts of several countries), as identified

by the competent authority, in which a specific pest or disease occurs at low levels
and which is subject to effective surveillance, control or eradication measures.

ARTICLE 3 - HARMONIZATION
This article requires Members to base their sanitary and phytosanitary measures on
international standards, guidelines and recommendations, where they exist and if sufficient to
provide the appropriate level of protection. Members can establish a higher level of protection
if scientific justification is provided in accordance with the requirements in Article 5 (Risk
Assessment). In addition, Members are to fully participate in the relevant international
organizations (Codex, IPPC and OIE), within the limits of their resources, to promote the
development of sanitary and phyto-sanitary standards.

Sanitary and phytosanitary measures that conform to international standards are presumed to
be in conformance with the requirements of this Agreement and GATT 1994. Finally, the
SPS Committee is to develop procedures to monitor the process of international
harmonization and coordinate efforts in this regard with the relevant international
organizations.

ARTICLE 4 - EQUIVALENCE

This article outlines the concept of equivalence related to sanitary and phyto-sanitary
measures. It states that Members shall accept the sanitary and phyto-sanitary measures of
other Members as equivalent, even when these measures differ from their own or from
those of other Members trading in the same products, if the exporting country objectively
demonstrates to the importing country that its measures achieve the importing country's
appropriate level of sanitary and phyto-sanitary protection. In other words, the important
factor is meeting the importing countries sanitary protection requirements rather than the
means by which this is achieved. This concept also serves as a basis for bilateral and
multilateral agreements among trading partners on the basis of equivalence referred to as
Mutual Recognition Agreements.

ARTICLE 5 - RISK ASSESSMENT

Sanitary and phytosanitary measures are to be based on an assessment of the risks to

human, animal and plant life and health using internationally accepted risk assessment
techniques.

 Sanitary and phytosanitary measures should minimize negative trade effects.

 Arbitrary or unjustified measures shall not be considered.
 Members may provisionally adopt international
standards.
 Protection levels shall not be more trade
restrictive than required to provide an
"Appropriate Level of Protection".
 Explanations of the reasons for measures may be
requested by Members.

ARTICLE 6 - ADAPTATION TO REGIONAL CONDITIONS

  Measures shall be adapted to specific areas of the country to minimize the impact on
trade.
 Pest/disease free areas shall be identified and recognized.
 Low prevalence pest/disease shall be identified.
 Exporting countries shall provide information on pest/disease free areas.

9. Trade related intellectual property rights (TRIPS).

TRIPS agreement (Trade-Related Aspects of Intellectual Property Rights) is established by

the World Trade Organization (WTO) to regulate the international trade of intellectual
property rights. The agreement sets out minimum standards for protecting and enforcing
intellectual property rights in different countries.

TRIPS Agreements

o The World Trade Organization (WTO), TRIPS Agreement is a significant

international agreement that establishes a minimum requirement for the protection and
enforcement of intellectual property rights.
o Its main aim is to create a uniform method for upholding the rights of intellectual
property owners and to give a guarantee to all member countries that they have
adequate protection for their intellectual property.
o The TRIPS Agreement is administered by the Council for TRIPS, which is open to all
Members and reports to the WTO General Council.
o It addresses many intellectual property issues like patents, copyright and related
rights, trademarks, geographical indications, industrial designs, layout designs for
integrated circuits, and undisclosed information (trade secrets).
o The TRIPS Agreement establishes minimum standards, but Members may choose to
provide greater intellectual property protection if they so choose.

Aim and Objectives of TRIPS

In the context of international trade, the Agreement on Trade-Related Aspects of Intellectual

Property Rights (TRIPS) establishes minimum requirements for intellectual property
regulation. The following are TRIPS's goals and objectives:

o To advance and defend intellectual property rights in a way that supports the transfer
and dissemination of technology along with the advancement of technological
innovation.
o To confirm that all member countries' intellectual property rights are upheld so as to
facilitate fair & equitable international trade in intellectual property.
o To make fundamental guidelines for the protection of intellectual property, like - trade
secrets, patents, and trademarks that are applicable to all the member countries.
o To establish min. requirements for civil and criminal procedures and remedies so that
it ensures the enforcement of intellectual property rights.
 o Developing nations should be allowed to adopt those policies that support access to
medicines and other essential goods and services. That would give them the flexibility
they need to address their unique needs and account for differences in their levels of
economic development.
o Try to motivate global cooperation on intellectual property issues. Also to offer
developing nations technical assistance & training too to assist in the implementation
and enforcement of intellectual property laws.
o To confirm that intellectual property rights don’t obstruct the dissemination of
innovations that are important for social & economic development or the transfer of
technology to developing countries.
o To see that intellectual property rights don't interfere with governments' ability to
protect the environment, public health, or other interests of the general people.
o Efficient and proper use of intellectual property rights should be promoted so that it
spurs innovation and economic growth while taking the general public's interest into
consideration too.

Importance of TRIPS

o The Trade-Related Aspects of Intellectual Property Rights or simply TRIPS is an

agreement between all WTO member countries having the same goal to safeguard
intellectual property rights.
o The agreement has put minimum requirements for the protection of intellectual
property rights, which includes those to patents, copyrights, trademarks, industrial
designs, trade secrets, and integrated circuits.
o All WTO member countries are required to offer protection under TRIPS that are of
comparable level. It also gives a framework for the enforcement of intellectual
property rights.
o As it guarantees that innovators, creators, and inventors receive the protection &
incentives they require to develop their concepts and inventions, the TRIPS
Agreement is of great importance.
o Due to this, promotes more innovation that can result in a rise in the economy and the
creation of many new jobs.
o The legal framework for the enforcement of intellectual property rights is given by
TRIPS too, helping in the protection of innovators, creators, and inventors from the
unauthorized use of their creations.
o This helps to fight against piracy and counterfeiting. This helps to safeguard the rights
of innovators and promote additional innovation.
o The TRIPS agreement helps to ensure a free and fair international trading system by
giving all members of WTO an even playing field in terms of intellectual property
rights.

Advantages of TRIPS
The Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) has several
advantages, including

o TRIPS provides incentives for businesses to spend money on R&D by giving

exclusive rights to those who own intellectual property, which promotes innovation.
o TRIPS ensures that all members have equal access to protection for their intellectual
property, which supports just and equitable global trade.
o TRIPS' robust intellectual property protection can draw in outside capital, spurring
economic expansion.
o Technology transfer is made easier by TRIPS, which gives incentives to technology
owners to licence their products and permits developing nations to use compulsory
licencing to meet their public health needs.
o Legal certainty is provided by TRIPS, which gives investors and owners of
intellectual property a clear legal framework for the protection and enforcement of
their rights.
o TRIPS permits the use of compulsory licencing to address public health needs, which
can increase access to affordable medicines in developing countries. This promotes
access to medicines.
o TRIPS recognises the value of traditional knowledge and provides for its protection
and preservation, which strengthens the protection it receives.
o Encourages international collaboration on intellectual property issues. TRIPS offers
technical assistance and training to developing nations to assist in the implementation
and enforcement of intellectual property laws.
o Therefore we can say that ‘TRIPS’ encourages creativity, trade, investment,
technology transfer, legal certainty, access to medicines, protection of traditional
knowledge, and international cooperation.

Intellectual Property Right

o Exclusive legal rights known as intellectual property rights (IPR) are given to the
person who creates a creative work or invention. These rights give the author the
ability to prevent unauthorized use, duplication, or distribution of their work.
o IPRs aim to give creators an incentive to produce new works and inventions, thereby
promoting economic development. They are protected by national laws and
international treaties. Copyright, patents, trademarks, and industrial designs are a few
IPR examples.
o The purpose of copyright law is to safeguard the originality of one's choice and
arrangement of words, musical notes, colours, and geometrical shapes. It gives the
author sole ownership of their creation, giving them control over how it is used and
distributed.
o Another IPR that gives an invention an exclusive right is a patent. By exercising this
right, the inventor is able to stop others from creating, utilising, or commercialising
their invention without their consent.
 o In order to protect the reputation of the company's products, trademarks are used to
separate the goods of one company from those of another. Industrial designs
safeguard a product's outward appearance, including its form, pattern, and
ornamentation

Categories of Rights under TRIPS

Rights under TRIPS (Trade-Related Aspects of Intellectual Property Rights) can be

categorized as below:

Trademarks

o Trademark-related rights are protected under the TRIPS Agreement. Any "sign or any
combination of signs, capable of differentiating the goods of one enterprise from
those of another enterprise" is referred to as a trademark in the Agreement.
o The Agreement allows for the registration of well-known trademarks in order to
safeguard them against infringement and stipulates that trademark protection must last
at least seven years.
o The Agreement also specifies guidelines for trademark usage, forbids the use of
imitation trademarks, and outlines procedures for the civil and criminal enforcement
of trademark rights.
o The TRIPS Agreement offers a thorough set of guidelines to safeguard trademarks
and guarantee their proper use.

Copyright

o Copyright rights are protected under the TRIPS Agreement. The exclusive right to
reproduce, publish, adapt, and distribute a creative work is referred to as copyright
under the Agreement.
o The Agreement lays out minimum requirements for protection, such as the right to
restrict the unpermitted distribution, adaptation, and reproduction of a work.
o Additionally, it establishes guidelines for the use of copyrighted works and forbids
their unauthorised use. The Agreement also allows for civil and criminal proceedings
to be used to enforce copyright rights.
o The TRIPS Agreement offers an extensive set of guidelines to safeguard copyright
and guarantee its proper usage.

Geographical Indications

o Geographical indications (GIs) are labels placed on products to indicate that they
come from a particular region, have certain characteristics, or have a particular
reputation related to that region.
o The TRIPS Agreement establishes minimum requirements for the protection of
geographical indications (GIs), including the right to control their unauthorised use
 and the right to prevent their use in ways that deceive consumers about the true origin
of a product.
o The Agreement also specifies guidelines for GI registration and GI rights
enforcement. Overall, the TRIPS Agreement offers a complete set of guidelines to
safeguard GIs and guarantee their appropriate use.

Patents

o A type of intellectual property right known as a patent grants its owner sole control
over how an invention is used.
o The TRIPS Agreement outlines minimum requirements for patent protection, such as
the right to restrict the unauthorised production, use, or sale of a patented invention.
o The Agreement also specifies procedures for submitting patent applications,
registering patents, and enforcing patent rights.
o The Agreement also allows for the exclusion of certain inventions from patent
protection, including those that are connected to plants and animals and those that
violate morality or public order.
o Overall, the TRIPS Agreement offers a complete set of guidelines to safeguard
patents and guarantee their appropriate use.

Trade Secrets

o Under the TRIPS Agreement, trade secrets fall under a significant category of rights.
These proprietary techniques and information, including formulas, designs, marketing
plans, and client lists, give the owner a competitive edge.
o The same protections that apply to other intellectual property rights also apply to trade
secrets against unauthorised use by third parties.
o Trade secrets must be kept confidential for an indefinite period of time in accordance
with the TRIPS Agreement, and those who do so without permission risk being held
responsible for any resulting harm.
o The Agreement also stipulates that trade secrets must be kept confidential and not
disclosed in court proceedings unless doing so would serve the public interest or
would be required for the protection of public health.

Integrated Circuits

o Under the TRIPS Agreement, integrated circuits (ICs) are a significant category of
rights. These are intricate electronic circuits that are created on a single silicon or
other semiconductor chip and are frequently used in consumer electronics like
computers and smartphones.
o As with other intellectual property rights, integrated circuits are protected under
TRIPS from unauthorised use by third parties. This covers safeguards against the
manufacture, sale, import, or use of integrated circuits without authorization as well
as safeguards against unauthorised reverse engineering and other circuit analyses.
 o Additionally, TRIPS mandates that ICs be safeguarded for at least 20 years.

Industrial designs

o A significant class of rights under the TRIPS Agreement are industrial designs.
o These are the decorative elements that give a product its distinctive appearances, such
as shape, pattern, or ornamentation. Industrial designs are required to be protected by
the TRIPS Agreement for a minimum of fifteen years, and it is forbidden to use a
protected design without permission.
o The Agreement also stipulates that industrial designs must be shielded from
disclosure in legal proceedings unless doing so would be in the public's best interest
or would be required for the protection of public health.
o The Agreement also specifies the number of prerequisites that must be met in order
for industrial designs to qualify for protection. The terms "novelty," "originality," and
"non-obviousness" are among them.