INTERNATIONAL TRADE LAW
LUẬT
TMQT
WTO – GATT 1994
WTO PRINCIPLES
NON - DISCRIMINATION
NON - DISCRIMINATION
- As the basic and essential principle of international trade law and
multilateral trading system (GATT/WTO);
- Consist of two crucial Treatments:
Most Favoured Nation Treatment – MFN;
Nation Treatment – NT.
MOST FAVOURED NATION
MFN
Concept:
- Is the nations’ most preferential treatment with its trading partners;
- Trade preferences are equivalent to those of a third country enjoyed
under reciprocal or unconditional conditions.
Reason?
- Prohibiting/eliminating discrimination in trade – preferences are
equivalent treatments between countries;
Small nations get the same advantages as strong nations giving to
each other.
-Reduce trade diversification, promote trade
liberalization;
-Simplify international rules and promote tariff
transparency.
LEGAL BASIC
- Article I GATT 1994;
- Article II GATS;
- Article IV TRIPS.
SCOPE OF REGULATION
Article I.1 GATT 1994:
“With respect to customs duties and charges of any kind imposed on or
in connection with importation or exportation or imposed on the
international transfer of payments for imports or exports, and with
respect to the method of levying such duties and charges, and with
respect to all rules and formalities in connection with importation and
exportation, and with respect to all matters referred to in paragraphs 2
and 4 of Article III,* any advantage, favour, privilege or immunity
granted by any contracting party to any product originating in or
destined for any other country shall be accorded immediately and
unconditionally to the like product originating in or destined for the
territories of all other contracting parties.”
SCOPE OF REGULATION
Article II.1 GATS:
“With respect to any measure covered by this Agreement, each
Member shall accord immediately and unconditionally to services and
service suppliers of any other Member treatment no less favourable
than that it accords to like services and service suppliers of any other
country.”
Article IV TRIPS:
“With regard to the protection of intellectual property, any advantage,
favour, privilege or immunity granted by a Member to the nationals of
any other country shall be accorded immediately and unconditionally
to the nationals of all other Members. …”
SCOPE OF REGULATION
All measures that directly or indirectly affect the trade
in goods, services and intellectual property.
Which factors need to be determined to apply MFN
regulation?
DETERMINATION OF “LIKENESS”
-To identify goods and services for the application of accorded treatment
regimes;
- The identification is complicated, therefore WTO has no specific
definition/procedures.
Provide theoretical criteria;
Analyzed through practical disputes (case by case) => depend on
the interpretation of the DSB/ Case law is essential.
(Japan – Taxes on Alcoholic Beverages, EC – Asbestos)
Determination of “likeness”
Panel’s Report, Japan – Taxes on Alcoholic Beverages:
“The concept of "likeness" is a relative one and evokes the image of an
accordion. The accordion of "likeness" stretches and squeezes in
different places as different provisions of the WTO Agreement are
applied. The width of the accordion in any one of those places must be
determined by the particular provision in which the term "like" is
encountered as well as by the context and the circumstances that prevail
in any given case to which that provision may apply.”
According to each WTO provisions (interpret), this “likeness” is
“stretches” or “squeezes”, and
Determination of elasticity depends on the provision itself and the
actual situation in each case.
Determination of “likeness”
Japan – Alcoholic Beverages: The Appellate Body agreed
with the DSB, that vodka and other alcoholic products are
like products, due to their consideration under Article III.2
GATT 1994, which requires “liked products” must be
understood in a narrow sense.
Spain – Unroasted Coffee: The Council agreed that coffee imported
from Brazil and coffee from other countries are like products,
because they both have the same purposes (for drink), same
characteristics (geographical conditions, farming, planting conditions
...are not the basis for determining the difference between two types
of coffee). In addition, there is no other country in the world levied a
tariff difference as the way Spain treats Brazilian coffee.
Determination of “likeness”
There are 4 criteria/factors to determine “likeness” :
- Physical/ chemical characteristics (with agricultural products
normally are genetic, farming factors…);
- Functional likeness (end – use);
- Consumer tastes and habits;
- Tariff applications.
(Aus – Subsidy on Ammonium Sulphate, Spain – Unroasted Coffee,
Japan – Alcoholic Beverages, EC – Asbestos, …)
The important of each criterion depends on each product
Advantages
- Any advantage in both de jure and de facto;
- Not limited to any measure;
Colombia – Ports of Entry (2009): Colombia stipulates that textiles,
embroidery and footwear originating from Panama must carry out custom
declaration before importing and pay import tariffs and other duties first.
The Panel concluded that Colombia had provided an ‘advantage’ within
Article I:1 GATT 1994 to countries other than Panama.
- Not limited to partners but with “any other country” (Canada – Autos);
- No compensation can be built between a less favourable and a favourable
treatment (US – MFN Footwear).
“Immediately and Unconditionally”
- The preference is applied unconditionally;
Panel’s Report, Indo – Autos:
“… whether the advantages accorded to National Cars and parts and
components thereof from Korea are unconditionally accorded to the
products of other Members, as required by Article I. …any such
advantage … cannot be made conditional on any criteria …”
The preferences – advantages are not reciprocal (when given an
advantage, there is no right to request, set other conditions for another
advantage in return)
(Indo – Autos, Canada – Autos, Belgium – Allowances)
- In case the proposed conditions do not create discrimination (or
advantage) for like products? (Canada – Autos)
de jure and de facto measures
- A measure is infringing upon creating trade affects or trade
discrimination whether expressed by writing or not;
- Considers consist of actual competitive of the products.
Appellate Report, Canada – Autos:
“… the words of Article I:1 do not restrict its scope only to cases in
which the failure to accord an "advantage" to like products of all other
Members appears on the face of the measure, or can be
demonstrated on the basis of the words of the measure. Neither the
words "de jure" nor "de facto" appear in Article I:1. Nevertheless, we
observe that Article I:1 does not cover only "in law", or de jure,
discrimination. As several GATT panel reports confirmed, Article I:1
covers also "in fact", or de facto, discrimination.”
(Spain – Unroasted Coffee, Canada/Japan – Dimension Lumber,
Belgium – Allowances, EEC – Beef Imports)
Conclusion
A measure that is a MFN violation needs to identify 4 factors:
- Determine the Scope of Regulation (any measures affecting
directly or indirectly to import and export);
- Determine the “likeness” of the products;
- Determine “Immediately and Unconditionally”;
- Determine the “advantage” of the measure.
MFN EXEMPTIONS
- Regional Trade Institutions (RTAs);
- Preference treatment for developing
countries (Enabling Clause).
Regional Trade Institution
- Are Regional or Bilateral international union trade agreements
alongside the WTO itself;
- Most countries are members of regional trade unions;
- Promoting trade liberalization and eliminating trade barriers.
- Consist of two groups:
Free trade areas;
Custom union/ common market.
Legal Basis
- Article XXIV GATT 1994;
- Understanding on the Interpretation of Article XXIV of
GATT 1994;
- Article V GATS;
- Enabling Clause.
Implementing conditions
- Regulation:
Notify and report on the establishment and operation of the
Agreements;
To be reviewed and monitored by the competent authority of
the WTO.
- Content: satisfaction of two conditions
Internal condition: regulating trade relations between the
members of the union with each other;
External condition: regulating trade relations between union
members and third parties.
Custom Union/ Common Market
- Internal condition (Article XXIV.8 (a)):
Members must substantially eliminate tariffs and other trade
restrictions;
Members must essentially apply the same tariffs and trade
restrictions to third parties.
- External condition (Article XXIV.5 (a)): tariffs or other trade
restrictions of members after the establishment of the union are not
applied to a higher or more restrictive level than the time before the
establishment.
(Turkey – Textiles and Clothing Products, Argentina – Footwear,
US – Carbon Pipe)
Free Trade Areas
- Internal condition (Article XXIV.8 (b)): Members must substantially
eliminate tariffs and other trade restrictions;
- External condition (Article XXIV.5 (b)): A member’s tariffs or trade
restrictions after the establishment of the agreement are not applied
higher or more restrictive level than the time before the establishment.
(Turkey – Textiles and Clothing Products, Argentina – Footwear, US –
Carbon Pipe)
Preference treatment for developing countries
(Enabling Clause)
According to Enabling Clause:
- Allow developed countries to give preferential treatment to
products of developing countries under the Generalized System of
Preferences (GSP);
- To be treated differently and favorably with provisions on non –
tariff measures;
- Preferential agreements on eliminating tariffs and non – tariffs
among under-developing countries for each other’s goods;
- The most special and preferential treatments for under-developing
countries of any preferential measures.
Conclusion:
Pros:
- Promoting regional trade connections between countries with
similar geographical conditions;
- Encourage nations to participate in international trade.
Cons:
- Unreliable internal and external regulations lead to overlap of PTAs;
- Occurrence of “trade escalation” and “trade transition”.
- Some issues that can not be solved bilaterally or regionally (non – tariff
barriers).
