OUTLINE

NOTES

Nguyên tắc nền tảng

1. Reduction & binding of tariffs

   1. Reciprocal & mutually advantageous

   2. MFN: chỉ được ưu đãi 1 quốc gia hơn nếu ký riêng FTA với nước đó (free rider)

   3. Tariff binding: make commitment not to raise the tariff above a specific level (registered in a schedule of concession) → bound tariff (in the schedule) ≥ actual applied tariff

      → Schedule of concession: annex of GATT

<aside> <img src="/icons/fish_gray.svg" alt="/icons/fish_gray.svg" width="40px" /> THEORIES

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Int. Trade Law = WTO Law + free trade agreements (FTAs)

A navigational guide to WTO Law

• The basic structure of WTO agreements
  • Multilateral trade agreements: compulsory for all members (all or nothing - must accept all or cannot become a WTO member): Annex 1 - 3 → ensure consistencies & same obligations
  • Plurilateral trade agreements: optional: Annex 4

<aside> ◾ WTO Law: the treaty establishing the WTO & its annexes

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<aside> ◾ Basic principles: established in all rules of law

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1/ Trade without discrimination (MFN & NT)

Most-favored-nation (MFN): “treating other people equally”

• Non-discriminatory treatment between products of WTO members

MFN treatment under GATT (General Agreement on Tariffs & Trade)

Legal provision: GATT Art. 1.1

• The Three-Tier test

  • Advantage, favor, privilege or immunity covered by GATT

    • Advantages, favors… granted by any contracting party to products from any other country shall be accorded to the like product of other contracting parties

      → Advantage: not only those granted by WTO members to other members, but also those granted by WTO members to non-WTO members

      • Examples

    • Measures

      • Border measures: custom duties, charges on export/import, quota, tariff quota… → the moment the product enter territory
      • Internal measures: internal taxes & internal regulations affecting sales/distribution/use of products (e.g. rules of marketing) → after the product has entered the territory

      → Only goods, not services

  • Granted immediately & unconditionally

    • Immediate: without delay, no time lapses between granting advantage to a product & all like products
    • Unconditional: without any condition/criteria unrelated to the product imported

  • Like products

    • Like product should be treated equally

    • Not defined in GATT

    • But clarified in GATT/WTO case law: Japan - Alcoholic beverages II, AB report (not a closed list)

      1. Product’s nature, properties & quality (physical characteristics)
      2. Product’s end uses (functions)
      3. Consumer’s tastes & habits (whether consumers consider the products substitutable)
      4. Tariff classification

      → No decisive criteria → the unmentioned key product: competitive relationship between the products in question

      → Unanswered question: are 2 products with the same physical characteristics but different production like or unlike?

    → Some products may be considered like in a certain marketplace & unlike in others

  → A measure that creates a more favorable competitive opportunity for some WTO members causes violation of MFN

• Purpose: to protect the equality of competitive opportunities for imports from/exports to all WTO members

• Scope of application

  • De jure (in law) discrimination: origin-based measures (discrimination based on the origin of the product, e.g. 5% tax for coffee from A, 10% tax for coffee from B) → uncommon
  • De facto (in fact) discrimination: origin-neutral measures but discriminatory in application
    • Origin-neutral measures (e.g. 5% tax for Arabica coffee, 10% for Robusta coffee)
    • Discriminatory in application (e.g. country A exports only Arabica, country B exports only Robusta)

• Irrelevant factors in determining MFN violation

  • Actual trade effects (harms, consequences)
  • Discriminatory intent: unreasonable burden of proof → impact > intent

• General exceptions to all provisions (including MFN): applicable for all obligations

  • General exceptions (Art XX GATT)
  • Security exceptions (Art XXI GATT)
  • Balance of payment exceptions & temporary application of quantitative restrictions in a discriminatory manner (Art XII, XVIII.B, XVI GATT)
  • Waivers (Art. IX.3 Marrakesh Agreement)
  • Special & differential treatment provisions in WTO agreements

• Particular exceptions

  • Regional integration (Art XXIV GATT): more favorable treatment to trading partners within a FTA/CU
  • Enabling Clause (1979 decision on differential & more favorable treatment, reciprocity & fuller participation of developing countries): preferential tariffs by developed members to imports from developing members only
  • Historical preferences (Art I.2 - I.4 GATT): tariff preferences among some members of GATT 1947 only
  • Frontier traffic (Art XXIV.3 GATT): advantages accorded to adjacent countries to facilitate frontier transactions

→ Exceptions = technically violations but excused

MFN treatment under GATS (General Agreement on Trade in Services)