critical analysis of WTO laws

1. Critical
Analysis of
WTO Laws
Adv. Rohan Raji Pillai
+917276819763 | rpillai62@gmail.com

2. Annex 1A
1. General Agreement on Tariffs and Trade
2. Agreement on Agriculture
3. SPS Measures
4. Agreement on Textile and clothing
5. TBT Agreement
6. Agreement on Trade related investment measures
(TRIMs)
7. Anti-dumping Agreement
8. Customs valuation Agreement
9. Agreement on Pre-shipment Inspection (PSI)
10. Agreement on Rules of Origin
11. Agreement on Import licensing Procedures
12. Agreement on Subsidies and Countervailing
Measures
13. Agreement on Safeguards
What do WTO laws comprise of?
The Marrakesh Agreement & its annexes form the basis of the laws establishing
the World Trade Organization

3. Annex 1B
14. General Agreement on Trade in Services
15. The Agreement on Trade-Related Aspects of
Intellectual Property Rights
ANNEX 2
16. Dispute Settlement Understanding
ANNEX 3
17. Trade Policy Review Mechanism
What do WTO laws Comprise of?
Coverage-
Trade in Goods
Trade in Services
Trade in Intellectual property
Annex 4
Plurilateral Trade Agreements
18. Agreement on trade in Civil Aircraft
19. Agreement on government
Procurement

4. Principles omnipresent in the WTO
Agreements
MFN Treatment
All “Like” products/services/ individuals of members are granted the Most favorable treatment
granted to any of them irrespective of their country of origin. Article 1 GATT, Article 2 of GATS
and Article 4 of TRIPS)
National treatment
Treatment of like non-domestic products must be consistent with treatment granted to the
domestic products. (Article 3 of GATT, Article 17 of GATS and Article 3 of TRIPS)
Elimination of Non-tariff
barriers
Quotas, embargoes, import deposits, sanctions and other Non trade barriers discouraged
Tariff binding
Commitment not to increase a rate of duty beyond an agreed level ensuring predictability on
international trade.
General obligations and
specific commitments
Whereas some principles like the national treatment are general obligations applicable all across
the board; market access and national treatment are specific commitments under the GATS,
meaning these principles are only applicable to services specified in a countries schedule.
Exceptions and safeguards
The obligations aren’t absolute and can be derogated for pursuance of legitimate policy
objectives. Art.XX of GATT, Art.XIV of GATS

5. Critique of “like” Product
Interpretation
● The entirety of the WTO law perhaps rests in the interpretation of the term “like”.
Obligations such as MFN and National Treatment are only applicable when the
treatment between two “like” products/services are under consideration.
● This requires clarity in the understanding of the meaning of the term “like”,
regrettably none of the agreements provide a definition or clarification of which
common characteristics or circumstances would enable classification of two products
as like products, this renders it difficult for the Member states to adhere to the WTO
obligations, leading to inevitable inter state disputes.
● Over time this uncertainty has lead to a number of disputes between members on the
grounds that like products have not been afforded favorable treatment and a defense
by the accused members that the products are not alike.

6. ● This has afforded the Dispute Settlement opportunity to interpret the agreements and evolve a
judicial interpretation of “like” products/services.
● The procedural law governing dispute resolution on violation of WTO law is the “Dispute
Settlement Understanding”, which establishes the Panel and its Appellate Body of the Dispute
Settlement Body.
● In SPAIN - TARIFF TREATMENT OF UNROASTED COFFEE (L/5135 - 28S/102) the Panel zeroed on
the following factors of a “like” product determination:
(1) physical characteristics of the products,
(2) their end-users, and
(3) tariff regimes of other Members
● However later on in Japan- Alcoholic Beverages the AB held that in a “like” product
interpretation "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.

7. ● Such a variable and vague interpretation ensures lack of judicial certainty, and lack
of predictability in international trade direct betrays the very ethos of GATT itself.
● This problem is compounded by the fact that there is no concept of precedent or
Stare Decisis in the WTO Law , meaning that any interpretation evolved by the DSB
is only as good as the next pronouncement ushering in further instability in the
“like” product interpretation.
● Panels have primarily reiled upon the characteristics, end uses, and consumers'
perception of it, which is too narrow and does not take into account all the relevant
factors, such as technological differences, that may affect the competitiveness of the
products in question.
● Whereas others consider the accordion test too broad and incentivizing protectionist
measures by the Member States.

8. Critique Of MFN Treatment
● The MFN principle can lead to a lack of differentiation between different
countries and their economic development levels. Developing countries may not
have the same capabilities or resources as developed countries, and thus may not
be able to benefit as much from the MFN principle. Some argue that the MFN
principle should be replaced with a more differentiated approach that takes into
account the economic development levels of different countries.
● The MFN principle can lead to a "race to the bottom" in terms of trade
agreements, as countries may be incentivized to negotiate better terms with one
trading partner in order to extend the same terms to all other WTO members.
This can lead to a dilution of labor and environmental standards, as countries
may feel pressure to lower standards in order to remain competitive.
● Additionally, the MFN principle is also criticized for being a source of legal
uncertainty, as it can be difficult to determine what constitutes "less favorable"
treatment in certain cases.

9. Critque of National Treatment
● One critique of the national treatment principle is that it may lead to a loss of policy
space for countries. This is because the principle requires that imported goods be
treated the same as domestic goods, which can limit a country's ability to implement
certain policies or regulations, such as those related to public health or the
environment.
● Another critique is that the principle is not always easy to implement, as it can be
difficult to determine what constitutes "treatment no less favorable" in certain cases.
This can lead to disputes and legal uncertainty.
● Furthermore, some critics argue that the national treatment principle does not take
into account the different development levels of countries, and may put developing
countries at a disadvantage. Developing countries may not have the same capabilities
or resources as developed countries, and may not be able to compete on equal terms.

10. Critique of the Dispute Settlement Mechanism
● The GATT 1994 contains “consultation and dispute settlement provisions” in both Articles
XXII and XXIII. However, it is Article XXIII:1(a) to (c) which sets out the specific
circumstances in which a (WTO) Member is entitled to a remedy. Article XXIII of GATT
1994 specifies the conditions under which a Member can invoke the dispute settlement
system. The trigger even for which is “nullification or impairment of benefit accruing” to
the Member.
● The cause of action thus under the GATT, can be Violation Complaint i.e., where an
obligation is violated and results in nullification or impairment of a benefit, or a Non-
Violation complaint where even though no obligation has been violated a measure has cause
nullification or impairment of a benefit.
● This standard however is subject to heavy criticism; on the ground that it raises the
standard of proof and burden on the complainant to make a claim, as they not only have to
establish violation of an obligation but also have to show its actual negative impact, which
is difficult to show where such impact is prospective or long term.

11. ● It bars complaint based on purely legal injury, as is the norm in the common law.
● The Panel’s and the Appellate Body main objective is to resolve the dispute and not
interpretation of the WTO Law, leading to the evolution of the principle of Judicial
economy, where even though multiple violations are alleged in an complaint, the
finding of one violation , or one conditions of a set of trigger condition, is deemed
enough for the DSB for recommendation of discontinuance of the measure, which lead
to a lack of illustrative judicial interpretation in most of the cases which could assist
Member state in operating in adherence to their obligations.
● Another criticism of the nullification and impairment clause of Article XXIII of GATT
is that it can be invoked by countries to justify trade measures that are not truly
necessary to protect a particular public policy or interest. This is because the clause is
based on a country's own assessment of whether its trade obligations would cause
"nullification or impairment" and does not require any independent verification or
review. This has led to concerns that the clause can be used as a pretext for trade
protectionism and can undermine the principle of non-discrimination in international
trade.

12. A Look at the Anti-dumping
Agreement
What is dumping?
Dumping is, in general, a situation of international price
discrimination, where the price of a product when sold in the
importing country is less than the price of that product in the
market of the exporting country.
What are Anti-dumping measures?
An anti-dumping duty is a protectionist tariff that a
domestic government imposes on foreign imports that
it believes are priced below fair market value.

13. The Anti-Dumping Agreement
The AD agreement itself is established for the application of Article VI of the GATT, for
determination of whether there has been dumping it prescribes consideration of the
following:
01
This occurs when a company exports a
product at a price lower than the price
it charges in its domestic market.
Dumping
02
There must be evidence that the dumped
imports have caused or are threatening
to cause material injury to a domestic
industry.
Material
Injury
03 A causal link must be established
between the dumped imports and the
injury suffered by the domestic industry.
Causation
Should AD Duty
be applied?

14. “
Critique of the Anti-Dumping
Agreement
● One critique of the agreement is that it is open to abuse by countries, who may use it as a
pretext for protectionism and impose anti-dumping duties on imports even when there is no
evidence of dumping or injury to the domestic industry.
● Another critique is that the agreement can be used to target developing countries, who may
not have the resources or capacity to defend themselves against anti-dumping investigations
and may be subject to disproportionately high anti-dumping duties.
● Furthermore, some argue that the agreement's criteria for determining dumping and injury can
be subject to manipulation and that the investigation process can be lengthy and costly for
companies and countries involved.
● Critics also argue that the agreement does not take into account the dynamic nature of
international trade and the changing comparative advantages of countries over time.

15. Exceptions to the Obligations
The Agreements does not expect an umbrella application of the WTO law and nor is
it desirable, factors such as national security, public welfare, development and
economic assistance of developing countries, balance of payments issues, and
special circumstances such as natural disasters or emergencies.
To address these situations and delineate circumstances for valid treaty obligations
deviation there are various exceptions present in the treaty system.
We see them in the various some some of which are listed below:
● Article XX of the General Agreement on Tariffs and Trade (GATT) 1994: This
article allows for exceptions to be made in the interest of national security,
public welfare, and the conservation of exhaustible natural resources. It also
allows for measures related to the protection of public morals, the protection
of human, animal or plant life or health, and the protection of intellectual
property rights.

16. ● Article XVIII B of GATT 1994: This article allows for exceptions to be made in cases
of balance of payments difficulties.
● Article XXI of GATT 1994: This article allows for exceptions to be made in the form
of emergency action.
● Article IX of the Agreement on Safeguards: This article allows for exceptions to be
made in the form of safeguard measures.
● Article XXVIII of the General Agreement on Trade in Services (GATS): This article
allows for exceptions to be made in the form of measures necessary to safeguard the
balance of payments.
● Regional Trade Agreements (RTAs): WTO allows for the formation of RTAs between
countries, as long as they are consistent with the organization's rules and do not
discriminate against other WTO members.
● Article IV of the Agreement on Textiles and Clothing (ATC): This article allows for a
transitional period for the phasing out of textile and clothing quotas.

17. ● Article XIII of GATT 1994: This article allows for the use of subsidies and
countervailing measures in certain circumstances.
● Article XXIV of GATT 1994: This article allows for the formation of customs unions
and free trade areas.
● Article XXV of GATT 1994: This article allows for the use of quantitative restrictions
in certain circumstances.
● Article XXVIII of GATT 1994: This article allows for the suspension of concessions
and other obligations in the event of a serious breach of the agreement.
● Article XXI of the Agreement on Technical Barriers to Trade (TBT): This article
allows for exceptions to be made in the form of measures necessary to protect
human, animal or plant life or health.
● Article 5.1 of the Agreement on Trade-Related Aspects of Intellectual Property
Rights (TRIPS): This article allows for exceptions to be made in the form of
measures necessary to protect public health or nutrition.
● Special and Differential Treatment for Developing Countries

18. WTO LAWS: A
Critical analysis of
the jurisprudence
A balancing of trade
liberalization and maintaining
regulatory autonomy
perspective

19. Using the exceptions as a lens
The overwhelming imperative incentivizing trade liberalization is made abundantly clear
in the WTO law, in the preamble of GATT and Article I GATT, Article IV,II,V GATS,
Article III, VI GATT. However at the same time the treaty also makes provision for
maintaining the Member states regulatory autonomy in its own domain.
Trade
Liberalization
Regulatory
autonomy
This difference is best made visible by the
examination of the provisions and judicial
interpretation of provisions immunizing certain
regulatory objectives from the ambit of the general
obligation, of the purposes of our examination we
therefore would focus on:
● Art. XX of GATT
● Art. 2.2 and Art. 5.1.2 of the TBT agreement
● Art. 2.1 & 2.2 of the SPS Agreement
● Art. XIV of the GATS

20. The balancing role of Nexus tools
These exception employ nexus tools to distinguish legitimate deviations from the
general obligations from illegitimate protectionist measures disguised as legitimate
exceptions . For example Art. XX(b) GATT states:
“Nothing in this Agreement shall be construed to prevent the adoption or
enforcement by any contracting party of measures:
(b) necessary to protect public morals”
Thus the term “necessary” is implemented as a nexus requirements, a measure which
might contribute but not be “necessary” to protect public moral, would fail the
requirement of the provision, and thus fall ultra vires to the GATT.
Similarly when there is only one measure available to achieve the objective of
protection of public morals, it would be deemed necessary and thus be upheld even if
it violates other provisions of the GATT.

21. Jurisprudential development
GATT & GATS
● The early approach adopted by the GATT panels were to employ a “least restrictive
alternative” test, where a measure was considered as “necessary” only when it was the least
trade restrictive alternative available.
● In the early cases such as US-Section 337 and Thailand-Cigarettes, where the traditional
LRM test was employed without much consideration paid to the securement of the level of
protection of the pursued objective. Thus measures were defeated by possible alternatives
which didn’t do the job to the same extent as the original measure.
● The traditional LRM test was significantly intrusive in the regulatory wisdom of the
Members without full consideration of factors which made those alternatives unfeasible or
ineffective.
● The text of the agreements which appears to grant balanced deference to the objective of
trade liberalization and regulatory autonomy thus received judicial interpretation which
tilted this balance in the favor of trade liberalization at the cost of regulatory autonomy.

22. ● The Korea-Beef dispute introduced the weighing and balancing of factors; it
established the ease of acceptance of necessity based on the importance of the policy
objective being pursued and emphasized the right of the Member to choose its level of
protection.
● Interestingly Korea, in its submissions, states the level of protection it sought to
achieve to be the ‘elimination’ of fraud in the retail beef market. The AB, however,
went on to consider the level of protection sought by Korea to not be “total
elimination” but “considerable reduction”, as total elimination would require a total
ban of imports. This lowering of the level of protection has a number of implications;
even though the DSB continues to assert that the Members have a right to determine
the level of protection, patently in deference to regulatory autonomy, in practice, what
exactly is this level in a particular dispute, is not left to the characterization of the
Member State.
● EC- Asbestos imported Korea-Beef’s interpretation of necessary under XX(d) to (b). In
this report, the AB clarified that the alternatives affording a lower level of protection
than the contested measure could not be considered as available alternatives.
● The AB here can be considered more regulator friendly as it stated that the regulators
need not be bounded by the prevailing scientific consensus while formulating its health
policy. Even though there were some exceptions in France’s ban, the AB accepted its
assertion of its pursued level of protection to be a ‘halt”.

23. ● China-Audiovisual Products, in undertaking a comprehensive analysis of the
measures together to adjudge their importance, allows for regulatory measures
which might individually be considered as not having sufficient effect to be
shown to collectively have greater impact, which is a regulator friend move.
● Columbia-Textiles report in asserting that the DSB would not limit itself to
analyzing whether the measure makes any contribution by also the extent of
such contribution, and asserting that a holistic analysis of all the factors is
required to make an overall “necessary” judgment, not only deepens the DSB
scrutiny on the regulatory measure but also makes the process of such
determination more ambiguous and tilted towards DSB’s discretion.

24. ● No report perhaps would be more apt to finally settle our discussion on the
exceptional form of “necessary” as seen in the GATT and GATS as US-Tariff
measures (China), It then enumerates the series of factors in this approach
which includes:
● 1. The relative importance of the pursued policy objective
● 2. Trade restricting impact of the measure.
● 3. Contribution of the measure in the realisation of the objective (in the form
of a genuine relationship of means and ends, i.e., the measure at issue and
the objective pursued).
● Finally, US-Tariff Measures (China) re-emphasizes the need for the necessary
analysis to be undertaken while keeping the needs and concerns of the
Member state whose measures are challenged.
TBT AGREEMENT & SPS MEASURES
● TBT agreement accords a degree of deference to the policy objectives that the
Member state chooses to pursue, which is evident in the non-exhaustive list of
objectives Article 2.2 of the TBT agreements allows. However, a lesser degree
of deference is paid to the means of achieving those objectives.

25. ● The Panel in US-Tuna II (Mexico), to determine the level of protection,
undertook a mixed consideration of the characterization of the measures of
all the parties to the dispute and its own assessment of the design, structure
and characteristics of the measure in the issue.
● The AB in Australia-Salmon in context of the SPS measures, emphasized
that generally, the DSB cannot substitute its own reasoning about the
implied level of protection and has to accept the Member’s expressed level
of protection, irrespective of the level of protection the measure actually
achieves. Only when the level of protection is not formulated with precision
can the panel venture into scrutinizing the actual level of protection of the
measure.

26. ● Thus, while the early GATT cases, especially the GATT panels, were significantly
titled in favour of trade liberalization, subsequent cases saw a shift towards a more
balanced approach. However, there wasn’t a uniform progression and often times
the Reports have ended up tilting the balance towards one of the two competing
interests. This struggle has been evident in the DSB treatment of issues on levels of
contribution, ascertaining the importance of objectives and determination of the
requisite level of contribution. Whereas the TBT cases appear to have maintained
stronger adherence to the original balance struck in the Agreements text right from
the beginning. Admittedly these original balances themselves are different between
the agreements inter se, with the SPS agreement being especially titled towards
maintaining regulatory autonomy and the sparse judicial attention to its iteration of
“necessary” appear to maintain the same.

27. Implications of varied Interpretations
● Most of the exceptions employ the term “necessary” or “essential to” as their nexus
requirements , however their meaning or standards of evaluations haven’t been detailed
in these agreements.
● A definition too broad, would essentially threaten the very foundations of the WTO laws
as most measures would be explained away to fit into the exception clause, making the
WTO law a paper tiger.
● A very narrow interpretation would betray deceit on part of the DSB, one ought to
remember that the WTO law is a product of negotiations, thus the obligations
committed to therein are the concessions granted by the sovereign member states,
whereas the exceptions are nothing but the area and extent to which the member states
have reserved their sovereign domain. A high standard would not only defeat legitimate
necessary measures, it would also hinder the securement of legitimate policy objectives.
To put it into perspective, some of these policy objectives are protection of life and
health of its citizen, not providing sufficient space for national regulators in these
domains could potentially spell doom for a Member state.

28. ● Further when one talks about interpretation, we are talking about the Dispute
Settlement Body of the WTO, thus it would be upto the DSB to determine which
measure would be necessary for , say, protection of the environment of a particular
member-state, a determination the DSB is wholly incompetent to make.
● The best judge of the socio-political needs of a Member State are always going to be
the specialized organs and regulators of the Member States themselves, the DSB from
an outside perspective might be able to make an objective determination of what is
necessary generally, but it lacks the specific perspective necessary in the context of a
specific nation-State.
● The specially gains significance given the fact that out of the total of 44 cases where
the general expectations under the GATT/GATS were invoked 43 failed. It was only
the early case of EC-Asbestos , where a member state was able to successfully
establish the Art. XX Defense.

29. 01 02
SUGGESTIONS
● The DSB must recognize that substantial
power of determination in relation to a
variety of areas has been reposed with the
Member State’s regulators under the
treaty texts, and the DSB must afford
honest deference to the regulators instead
of importing a strained interpretation to
substitute its own wisdom. This holds
true, especially in relation to the
determination of the level of protection
the Member States seek. Future
interpretation of the SPS agreement
especially needs to conform to the same
The DSB ought to, without bias toward
trade liberalization, make an honest
consideration of the Member’s interest at
stake when making an assessment of the
availability of alternatives, and avoid
judicial overreach into areas where
regulators are more competent. The
signatories have reserved their
competence in the regulatory domain in
those areas in making them protected
objectives, and the same ought to be
respected.

30. BIBLIOGRPAHY
● Mark E. Villiger, Commentary on the 1969 Vienna Convention on the Law of Treaties
● Ming du, The Necessity Test in World Trade Law: What Now?(Leiden: Martinus Nijhoff
Publishers, (2009)
● Niall Moran, The First Twenty Cases Under GATT Article XX: Tuna or Shrimp Dear?,
International Economic Law (2017)
● Peter Van Den Bossche & Werner Zdouc, The Law And Policy Of The World Trade
Organization,905 (2013)
● Panos Delimatsis, “The Principle of Necessity in the WTO – Lessons for the GATS
Negotiations On Domestic Regulation” SSRN Electronic Journal (2013)
● Rachel Harris and Gillian Moon, GATT Article XX And Human Rights: What Do We Know
From The First 20 Years, Melbourne Journal Of International Law [Vol 16]
● Sandeep Ravikumar, “The GATT Security Exception: Systemic Safeguards Against Its Misuse”
NUJS Law Review (2016)
● WTO Panel and Appellate Body Reports
● WTO-Analytical Index

31. BIBLIOGRPAHY
● Gisele Kapterian, “A Critique of The WTO Jurisprudence On’ Necessity’” The
International & Comparative Law Quarterly volume 59, (2010)
● Isabel Cristina Salinas Alcaraz, “The concept of necessity under the GATT and national
regulatory Autonomy” (2015)
● Isabelle Van Damme, “Treaty Interpretation by the WTO Appellate Body” European
Journal of International Law, Volume 21, Issue 3 (2010)
● Jay Manoj Sanklecha, The limitations on the invocation of self-judging clauses in the
context of WTO dispute settlement, Indian Journal of International Law(2019)
● Joel P. Trachtman, Trade and... Problems, Cost-Benefit Analysis and Subsidiarity,
European Journal of International Law 9 (1998)

32. CRÉDITOS: Esta plantilla para presentaciones es una
creación de Slidesgo, e incluye iconos de Flaticon, e
infografías e imágenes de Freepik
Thank you!
PPT by Adv. Rohan Raji Pillai
Further reading: “Interpreting Necessary: A
critical Exploration of evolving Jurisprudence”