Gatt.ppt

THE GATT/WTO SYSTEM
 History
- 1947/1948 GATT has « provisional » effect
- Series of rounds leading to supplementary treaties
(codes, side agreements)
- Following the Uruguay Round (1986-1994) it came under
the WTO; all agreements in principle integrated in a
single system (1994) (« package deal »), but …
- « Understandings » (interpretation rules) now part of
GATT (since 1994)
- In 2016: 163 members, 21 observers

WTO SYSTEM - GENERAL STRUCTURE
 Structure Marrakesh Agreement 1994
(http://www.wto.org/english/docs_e/legal_e/legal_e.htm):
- Agreement establishing the WTO
- Annex 1 A = Multilateral agreements on trade in goods (MATG)
- Annex 1 B = General agreement on trade in services (GATS)
- Annex 1 C = TRIPs (trade related aspects intellectual property)
- Annex 2 = Dispute Settlement Understanding (DSU)
- Annex 3 = TPRM (Trade policy review mechanism)
- Annex 4 = plurilateral trade agreements (outside the package deal, not obligatory
). I.a. Agreement on government procurement, Agreement on Trade in Civil
Aircraft, etc.
 Uruguay Round Ministerial Decisions and Declarations , ….
 Accession Protocols may contain additional obligations (WTO-Plus), eg China
 ‘Doha-Round’ led to a TFA (Trade Facilitation Agreement) amending the MATG
(‘Bali package’) open for ratification since Nov 2014 (not in force yet)
 Limited success of Doha Round leads to further attempts for particular Free
Trade Agreements (CETA, TTIP, etc.)

WTO ANN. 1 A: MATG (GATT+)
 Annex 1 A = multilateral agreements on trade in goods, includes:
- GATT 1994, i.e. GATT 1947 + incorporated « understandings »
(interpretation rules)
- Specific agreements on : customs valuation, rules of origin, import
licensing, SPS, TBT, Safeguards, ADA, SCM ... (see further)
- Agreements concerning specific sectors: Agriculture; Textiles &
clothing (terminated 1.1.2005)
- Not yet in force: Trade facilitation agreement 2014
 Institutional: Council for Trade in Goods
 In general no direct effect (but where possible harmonious
interpretation of EU secondary law with WTO and other treaties)
- also not in the EU: C-149/96, Portugal v. Council; C-377/02 Van
Parys (but effect in relation EU- Member States, C-66/18)
- ECJ will review conformity with WTO law of EU decisions only in
case a) a measure intends to implement WTO obligations (ECJ in C-
70/87 Fediol) or b) refers explicitly to specific provisions of WTO law
(ECJ in C-69/89 Nakajima)
 Direct effect has been accepted for some aspects of TRIPS

GATT BASIC PRINCIPLES
 Basic content and principles:
I. Non-discrimination rules:
- All countries are « most favoured nation » (art. I GATT)
- Principle of « national treatment » after import (non-discrimination)(art. III
GATT)
II. Market access rules
- Trade restrictions must be tariff restrictions only
- Tariff restrictions (customs duties) to be lowered gradually
- Quantitative restrictions in principle prohibited (art. XI)
- Barriers with equivalent effect (NTB) in principle prohibited (art. XI)
III. Taking into account other values and interests
- Exceptions and rules concerning these exceptions + promotion of
harmonisation of national regulation
- Waivers, i.a. a very wide waiver for developing countries
IV. Rules on unfair trade practices (dumping, subsidies)

MFN (MOST FAVOURED NATION)
 Art. 1 GATT:
 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.

MFN (MOST FAVOURED NATION)
 Art. 1: All countries are treated as « most favoured nation » in relation to:
- Customs duties and charges in connection with import/export ...
- & other trade policy measures
- for « like products »
- unconditionally, i.e. not based on reciprocity
 Waivers adopted with a qualified majority of member states,
i.a. a wide waiver for developing countries
 Art. XXIV: the MFN rules does not apply to customs unions and free trade areas
- stand-still (restrictions in respect of 3rd countries may not be greater than the
average individual measures before the establishment of the union)
- Procedure for recognition of RTA’s (CU/FTA) by the CRTA (committee on
regional trade agreements) (recent example: EU-Canada CETA, EU-Singapore
FTA concluded Oct 2014, EU Vietnam FTA concluded August 2015, EU-US
negotiations on TTIP, 2009 Asean-New Zealand FTA, ….)
- Exception requires that substantially all trade in goods is liberalised between the
member states
 Result: in relation to EU, the MFN principle applies in full only to ca. 9 countries

TARIFF RESTRICTIONS
 Art. XXVIIIbis GATT 1994: no prohibition of customs duties, but duty
to negotiate tariff concessions (lowering maximum tariffs)
- Doha-Round = 9th Round
- Reciprocity of concessions (all states concede advantages of the
same order)
- Maintaining the MFN principle: concessions apply to all contracting
states
- Technique of negotiations: linear tariff reductions
- Negotiating a formula for general reductions plus « negative lists » of
exceptions
- Resulting in schedules product by product, consisting of 3 parts
(customs duties for MFN countries; preferential duties for developing
countries; non-tariff concessions)

TARIFF RESTRICTIONS – HARMONISE
CUSTOMS REGULATIONS
Harmonise customs regulations by international rules for customs
duties :
 1° Proper classification of the goods
 2° Determination of the customs value of the goods
 3° Determination of the origin of the goods (where relevant)
 Simplification of customs procedures : Convention of Kyoto
1973/1999. Guidelines and recommendations concerning the
clearing, storage, rules of origin, goods in transit, inward and outward
processing, ..

HARMONISE CUSTOMS REGULATIONS –
CLASSIFICATION RULES
1° Classification
 Uniform product classification: « harmonised commodity description
and coding system » (HS Convention) of the WCO (World Customs
Organisation), ca. 5000 commodity groups with a 2 to 6 digit code,
e.g. 01.01.11. Is usually revised every 5 years.
 Rules for the interpretation of the harmonised system:
- Product description has precedence over headings of sections and
chapters
- Classification of unfinished products (as finished)
- Products covered by more than 1 category: most specific description
- Composite products or mixtures: most relevant characteristic
- Products not covered classifed according to the most likeness
- If unsettled: highest category

HARMONISE CUSTOMS REGULATIONS –
VALUATION RULES & ROO
2° Valuation rules
 Customs valuation rules : in 1981 a Valuation Code, now the WTO Valuation
agreement (art. VII GATT 1994 and 2 specific agreements). Customs duties
are in principle charged ad valorem
- The value used is the transaction value (net price at the border)
- Rules concerning evidence of the price (transaction value): normally the
invoice, otherwise the contract
- Adjustment and splitting up of the purchase price (to determine net price)
(deduction of the price of connected services, transport after importation,
discounts, etc.).
- Exceptionally the transaction value can be rejected (sale between connected
enterprises, artificial price) > question of transfer pricing (see OECD Transfer
Pricing Guideliens 2010 and WCO 2015 Guide to Customs Valuation and
Transfer Pricing)
3° WTO Agreement on rules of origin (ROO) (no harmonisation yet)

ART. XI (PROHIBITION OF)
NON-TARIF BARRIERS
 Art. XI GATT: prohibition of quantitative restrictions (QR) (quotas,
etc) on import or export and other non-tariff barriers (NTB) with
equivalent effect
 (See further) General exceptions of art. XX, protection of the
balance of payments (art. XII/XVIII), safeguards (art. XIX), ...
 Specific exceptions on this prohibition in Art. XI. Especially the
following are permitted if non-discriminatory:
- temporary export restrictions of essential products (shortage). See
e.g. dispute on Chinese restriction of export of raw materials 2011
- import restrictions on agricultural and fishery products as part of a
subsidising policy
- restrictions following from an international agreement on basic
products (commodities) (s. further)
 Prohibition implies that state trading enterprises may not circumvene
the prohibition by using an import monopoly

ANNEXED AGREEMENTS ON
NON-TARIF BARRIERS
 Simplification of import licensing procedures: Agreement on import
licensing procedures (1979/1994)
 Separate rules on Textile & Clothing : MFA (Multifibre arrangement
1974) replaced by the ATC 1994 (Agreement on Textile and
Clothing) and finally terminated 31 Dec. 2004; since 1 Jan. 2005 no
separate regime.
 Voluntary export restraints (negotiated bilaterally) since 1988
incompatible with GATT
 Specific agreements annexed to GATT (in the package deal): s.
further

PLURILATERAL AGREEMENTS
 Separate « plurilateral » agreements (outside the package deal):
- P.A. on government procurement (in 1994 in Annex 4): next slide
 Plurilateral Agreements with all WTO members as MFN:
- Plurilateral 1996 Information Technology Agreement ITA (70 states:
EU + circa 52) (merely tariff cutting agreement) (+ July 24 2015
agreement reached to extend the scope of the ITA)
- In 2014 negotiations started for a P.A. on trade in « environmental
goods » (mainly EU + Norway, Switzerland; USA & Canada; China,
Japan, Korea; Australia & New Zealand) (probably only tariff cutting)

GOVERNMENT PROCUREMENT AGREEMENT
 GATT itself makes an exception for government procurement : it is
expressly permitted to limit it to national products
 Annex 4 contains a separate « plurilateral » agreement – the GPA
going further and excluding discrimination based on nationality for
important government purchases (goods and services)
- Parties: EU Member states, USA, Canada, Japan, NZ, Singapore
and 10 other countries (no developing countries); China and
Australia may join
- NEW GPA agreed 2012 (« Protocol Amending the Agreement on
Government Procurement “), in force April 6, 2014.

GOVERNMENT PROCUREMENT AGREEMENT
- Scope of application: purchases above a treshold (generally 130.000
SDR (IMF drawing rights; higher tresholds for local governments and
certain utilities). New GPA Expanded scope of application ratione
personae (which governmental entities) (eg towards local
authorities); expanded scope as to products, lower tresholds.
- Rather an accumulation of bilateral agreements: based on reciprocity
- Detailed rules on tendering procedures in order to give foreign
enterprises a real chance (publicity, non-partisan description);
obligation to award the contract to the most advantageous tender.
Economic « compensation » may only be taken into account under
certain conditions .
- Rules on control and legal protection.
NB: Within the EU, USMCA (ex-NAFTA) etc. there are more specific
rules.

« NATIONAL » TREATMENT
 Principle of national treatment: once imported, foreign products have
to be treated as national products – receive « national treatment »
(art. III GATT, prohibition of discriminatory internal measures) as
regards:
- (direct or indirect) internal taxes or other fiscal charges (art. III: 2);
- other regulations affecting their internal sale and offering for sale,
transportation, distribution, use, etc. (art. III: 4).
 States often justify unequal treatment by invoking that the products
are different. But « like products » have to be treated equally.
 The Appellate Body of the WTO has developed criteria for likeness in
the case Asbestos (Appellate Body report of April 5, 2001).
 See also the US - Clove cigarettes dispute 2012 (likeness between
clove cigarettes and menthol cigarettes)

GENERAL EXCEPTIONS (ART. XX)
 Art. XX GATT deals with the exceptions states may
invoke.
 An exception requires:
- A relation to one of the grounds (aims or reasons) listed
in art. XX
- AND
- The general requirement that the measure does not
amount to an arbitrary or unjustifiable discrimination or
disguised restriction of international trade

GENERAL EXCEPTIONS (ART. XX)
 Main Grounds:
- (a) necessary to protect public morals (eg Seals products ban; Appellate
body reports 2014-1 & 2)
- (b) necessary to protect human, animal or plant life or health. E.g. restriction
on exportation of hazardous waste (incl. ships to be dismantled (beaching),
Hong Kong Convention 2009, implem. EU Reg. 1257/2013)
- (d) necessary to secure compliance with rules not inconsistent with GATT,
esp. intellectual property rights
- For the protection of national artistic, historical or archaeological treasures
(N.B. UNESCO Convention 1970 allows wider exceptions) (in the EU export
restrictions are uniformly regulated in Reg. 116/2009)
- (g) related to the conservation of exhaustible natural resources (NB.
environmental rules may constitute so-called « Green Barriers to Trade »)
- As already mentioned:
- - in pursuance of agreements on basic products (commodities)
- - temporary export restrictions for products indispensable for local industry
 UN Human Rights Council Guiding Principles on Business and Human
Rights 2011

HARMONISATION MEASURES RELATED TO
EXCEPTIONS - GENERAL
 Several distinct agreements to harmonise the rules concerning some
of the exceptions in order to diminish their impact.
 Mainly the SPS and the TBT Agreements.
 To some extent also TRIPS (see further)
They include stricter obligations for the states than generally under
GATT.

EXCEPTIONS: SPS
 SPS: Agreement on Sanitary and Phytosanitary Measures (1994)
- such measures may be taken to protect animal or plant life or health
- But « only to the extent necessary », based on scientific principles and
sufficient scientific evidence of the risk
- Either because the risk is proven or by application of the precautionary
principle: even in the absence of sufficient evidence, provisional measures
are allowed subject to an obligation to seek for additional information and
review the measure periodically
- Only non-discriminatory measures (no different treatment without
justification)
- Measures have in principle to be based on international standards,
guidelines end recommendations; if based there on they are presumed to be
necessary and thus allowed.

EXCEPTIONS: SPS
 Who sets the « international standards » presumed to be necessary and
thus allowed ?
 The « three sisters »:
- International Plant Protection Convention (IPPC), developing international
standards for phytosanitary measures (ISPMs)
- World Organisation for Animal health (OIE)
- the Codex Alimentarius Commission (FAO/WHO since 1963), developing
food (safety) standards.
 Actual disputes or concerns relate to e.g.
- The EU approval regime for Biotech products (GMO rules) (opposed by eg
Argentina, USA)

EXCEPTIONS: TBT
 TBT: Agreement on Technical Barriers to Trade (1980/1994)
- There are many possible technical barriers : provisions on quality,
composition, packaging, control of goods, etc.
- Justifications invoked : protection of public health and safety,
standardisation, etc. …

EXCEPTIONS: TBT
 TBT: Agreement on Technical Barriers to Trade (1980/1994)
- technical regulations (i.e. mandatory requirements) and standards (non-mandatory)
may not create unnecessary obstacles to international trade and may not be
discriminatory (principle of MFN and « national treatment »)
- Eg of a barrier: US Country-of-origin-labelling requirements (« COOL ») impose
burdens of verification and recordkeeping for imported parts (Appellate Body in 2012:
violation of 2.1 TBT; possibly consistent with 2.2. TBT). American COOL-rules
adapted in 2013. But another complaint by Canada and Mexico led to a new
condamnation of the US, upheld by the Appellate Body in May 2015 concerning beef
en pork labelling); US Congress gave in on Dec 18, 2015.
- Legitimate aims mentioned: protection of health and environment, prevention of
deceptive practices, national security
- Rules deviating from international standards (ISO) are presumed to be unnecessary
- Rules not based on international standards (incl. in the absence of such) need to
comply with procedural and substantive obligations (incl. prior publication) (code of
good practice annexed to the TBT)
- Particular rules for conformity examination of foreign products and for certification (in
country of export).

OTHER EXCEPTIONS :
NATIONAL SECURITY
 Security exception in Art. XXI GATT: protection of national
security
- i.a purchases for a military establishment
- no particular regulation of this exception

OTHER EXCEPTIONS: BALANCE OF PAYMENTS
 Art. XII GATT (+ understanding 1994): protection of the
balance of payments
- requires proportionality
- duty to confer with the IMF on the measures
- give preference to tariff measures; quantitative measures
require a specific justification.

OTHER EXCEPTIONS:
SAFEGUARD MEASURES (ART. XIX)
Economic emergency exception in Art. XIX: Safeguard
measures against large import :
- Temporary measures in case of unforeseen increase of
import of certain products causing serious injury to
domestic industry
- Conditions: temporary, non-discriminatory, procedural
requirements (investigation duties, etc.).
- More detailed rules in the Agreement on Safeguards (not
applicable to agricultural products). Measures directed
against a single country are only exceptionally permitted.

EXCEPTIONS FOR AGRICULTURE
 Exceptions for agricultural products, such as :
- no prohibition or restriction of export subsidies
- quantitative restrictions in principle permitted
- 1994: « Agreement on Agriculture » - merely a framework for
negotiations; the aim is « tariffication », i.e. to convert all quantitative
restrictions in tariff restrictions
- commitment to reduce export subsidies, starting with the listed ones;
decision to abolish them in 2015
- 3 categories (« boxes ») of domestic support measures: green box
(permitted), yellow (subject to reduction commitments) and blue
(permitted on production limitation conditions)
- further commitments 2004, .... .
- In Doha round disagreement concerning domestic support of food
(US ><India) (India questions the actual calculation of the
« Aggregate Measure of Support », i.e. allowed domestic subsidy)

WAIVERS
 Art. XXV GATT: Apart from the exceptions in GATT, the
WTO general council may (by 2/3 majority) waiver some
of the GATT obligations for a specific state.
- Important waivers in favour of developing countries (next
slide)
- Some waivers contain additional exceptions for
agricultural products.

EXC. FOR DEVELOPING COUNTRIES
 GATT in 1964/1966 supplemented with a « Part IV » on « trade and
development » (art. 36-38). Part IV has not really enforceable obligations, at
most duties of best efforts in favour of trade and development of developing
countries. An important rule is that there is no duty of reciprocity towards
developed countries
 Principles promoted by UNCTAD (since 1968):
- Non-reciprocal and non-discriminatory tariff preferences for the exportation
of manufactured and semi-finished products from developing countries
 Since 1971 (Tokyo round) a general waiver of provisions of GATT for
developing countries, enabling a « general system of preferences » (GSP)
(so-called « enabling clause »)
- Allowing preferential treatment of developing countries; reciprocal
preferences between developing countries. Some conditions: no new trade
restrictions vis-à-vis other contracting states; response to real needs;
notification to GATT/WTO.
- « Graduation rule »: aim to abolish gradually the preferential treatment

EXC. FOR DEVELOPING COUNTRIES
 Effect of the GSP is limited because of important exclusions: agricultural
products, steel, etc..
 Application of the graduation rule has already led to reduction of preferences
for «newly industrialised countries ». The system has become more
differentiated.
 Application 1: US GSP (general system of preferences)
- Trade Act 1974/1976: preferential treatment for certain products coming –
according to the rules of origin – from the beneficiary countries (the list of
beneficiaries is a political decision often conditioned by the policy of
countries in other matters)
- Supplementary measures in the African Growth & Opportunity Act 2000
(textile)
 Application 2: EU GSP
- GSP 1971/1995/2005/2008 (Reg. 732/2008) – GSP 2012 in force 1 Jan
2014 (Reg. 978/2012)
- Lomé/Cotonou Agreements for the « ACP countries »

EU GENERAL SYSTEM OF TARIFF PREFERENCES
(GSP)
 GSP (originally 1971, adapted 1995, 2005, 2008, 2012):
- Preferential tariffs (- 15 % to - 100 %) for 4 categories of goods
- GSP+ status (further reductions in exchange for commitments on
ecology and governance) in exchange for undertakings (incl.
implementing international conventions) of the exporting countries in
relation to combating drug production and trafficking, labour
standards, environmental protection, etc. Applications are examined
by the EU Commission.
- An emergency safeguard clause
- Graduation principle (for the least developed countries zero tariff on
« everything but arms » (EBA))
- GSP 2012/in force 2014: number of beneficiary countries lowered
from 176 > 89. Annual review. As from Jan 2015 also no longer for
China, Thailand etc.

EU PREFERENCES FOR
ACP COUNTRIES
 Agreements with « ACP countries »: Lomé, then Cotonou (2000, in force 2002)
 Principles: no tariffs on non-agricultural products; favourable treatment of agricultural
products
- No quantitative restrictions or equivalent measures except (1) measures for the
protection of safety, health, etc .. (2) safeguard measures
- Limited reciprocity: EU countries enjoy the same preferences as other developed
countries
- Strict « Rules of origin »
- Obligations in the field of human rights, rule of law, fighting corruption, etc.
- Financing instruments, esp. 2 kinds :
• Grant facility, on the basis of needs and performance
• Investment Facility, to stimulate investment (esp. development of the private sector)
 EU tries to limit the GSP to countries concluding an economic partnership agreement
(EPA) including trade in services, investments, government procurement and IP rights
protection. Somemore limited regional EPA’s finalised in 2014 (West Africa, Sout
African DC)

AGREEMENTS ON BASIC PRODUCTS
(COMMODITIES)
 Under certain conditions justifying an exception to the GATT rules under art.
XX (h) GATT.
 General: import- and export restrictions for the stabilisation of market
conditions in certain commodities
 Informal agreements: consultative bodies of representatives of producing
and consuming countries. Often organised by the FAO.
 Formal market regulation through a multilateral agreement between
producing and consuming countries. Content varies:
- Rules on (fair) competition
- Minimum prices (e.g. dairy)
- Export control, buffer stocks etc.
 UNCTAD aims at an « integrated program » for basic products agreements.
A « Common Fund » was established (in effect 1989, but limited financial
resources).

GATT & COMPETITION LAW (TRADE
DEFENCE)
 Liberalisation of trade also requires rules against anticompetitive
practices (unfair trade practices) - also called « trade defence »
 GATT & Codes: only indirect competition rules, concerning measures
against dumping and measures against state aids.
 Much more competition law in e.g. the EU (including prohibition of
State Aid, with exceptions)
Incl. rules on measures against foreign practices: Trade Barriers
Regulation (Reg. 3286/94) (under revision)
 Soft law: UNCTAD Code on Restrictive Business Practices:
Prohibition of cartels (esp. price agreements), of collusive tendering
(for public tenders), market or customer allocation arrangements,
collective sales refusal, abuse of dominant position,…
 Soft law: OECD Recommendations

GATT & ADA
(ANTI-DUMPING AGREEMENT)
 Rules: art. VI GATT + 1994 Anti-Dumping Agreement (ADA). Object:
determine under which conditions states may take anti-dumping
measures.
 Requirements:
- « dumping » : import below the price in ordinary course of trade for
like product. ADA contains criteria to determine normal price.
Difference = « dumping margin »
- Causing (threat of) material injury to domestic industry or retarding its
establishment
 Procedural requirements:
- Prior investigation of the alleged dumping and the resulting injury or
threat on the local market
- Rights of defense of interested parties and access to information

GATT & ADA
 GATT & Anti-Dumping Agreement - authorised sanctions :
- If dumping margin > 2 %: anti-dumping duties not exceeding the
dumping margin (« zeroing »); not for a longer period than necessary
(in principle max. 5 year – « sunset provision »)
- Provisional measures during the investigation (provisional duties,
security - usually mandatory deposits or bank guarantees)
 WTO Committee on Anti Dumping Practices
 Problem of retaliation threats against producers complaining

GATT & ADA
 EU has further restricted the authorised antidumping measures (« WTO+ elements »):
- May not be contrary to the overall interest of the EU (community interest test)
- Anti-dumping-duty not higher than necessary (« lesser duty rule »); but restriction is
under discussion (EP proposes to abolish the rule, at least in relation to countries not
respecting ILO labour standards)
- problem of determining dumping margin against enterprises from non-market
economies: no comparison with price level of that country but of a comparable country
recognised as market economy - Eg China compared with Brasil (plus discussion
whether esp. China obtains MES (market economy status) or not).
 Actual regulation: Reg. 1225/2009 (under revision)
- basically a competence of the EU Commission (under supervision of a (comitology
procedure’)
- rights of defence maybe not guaranteed due to very wide confidentiality claim by the
EC (see WTO Case on Iron & Steel Fasteners/China) (in part remedied by installation
of a ‘hearing officer’ guarding the procedural rights)
- control by courts is only marginal (either direct by EU courts or indirect via member
state courts)
 End 2012, EU had 102 anti-dumping measures in force and 10 anti-subsidy measures
(impact on only 0,25 % of imports)

GATT – SCM (SUBSIDIES AND
COUNTERVAILING MEASURES)
 Rules: art. VI & XVI GATT + 1994 SCM Agreement (Subsidies &
Countervailing Measures)
 Determines a) which subsidies are prohibited and b) in which cases
countervailing measures against subsidies are allowed
 Art. 1: Wide definition of subsidies (any state aid, domestic of for export;
benefit conferred by financial controbution or income or price support)
- Acceptable countervailing measures depend on the classification of the
subsidy. 3 categories:
- Red list (art. 3, prohibited subsidies, measures authorised): a) export
subsidies, b) local content (or import substitution) subsidies (Eg: Airbus /
Boeing dispute)
- Yellow list (art. 6-7, actionable subsidies, measures authorised if subsidy has
adverse effects)
- Green list (art. 8, no countervailing measures authorised, « non-
actionable »): if either not « specific » or relating to a) research and
development, b) regional development programmes or c) schemes to help
adaptation to new environmental standards

SCM- COUNTERVAILING MEASURES
 Authorised unilateral Countervailing Measures against subsidies (art. 10 ff)
 Additional duties (CVD’s: countervailing duties), when certain requirements
are met :
- Prior investigation (according to prescribed procedure) (art. 11)
- Injury or threat of injury is proven (art. 15)
- Level of duty may not exceed estimated level of subsidy (art. 19) (which
means in practice no combination with anti-dumping duties, s. Appellate
Body in US AD/CVD case)
- Applied in a non-discriminatory manner (no matter what origin)
- Duration in principle max. 5 year (art. 21)
 Provisional measures during the investigation (usually mandatory deposits or
bank guarantees) (art. 17)
 Multilateral dispute settlement (art. 24): ask advice of the SCM committee; or
dispute settlement according to the general DSU of the WTO with some
special or additional rules for SCM

TRADE DEFENCE INSTITUTIONS
 Anti-dumping measures, anti-subsidy measures and safeguards are decided
by « national » (in the EU: Union) bodies
 In the EU:
- Provisional measures and safeguards : by commission after advice by an
advisory committee (Anti-Dumping Committee – Regulation (EC) No
1225/2009 / Anti-Subsidy Committee – Regulation (EC) No 597/2009)
- Definitive anti-dumping or anti-subsidy measures require decision of the EU
Council (on the proposal of the EU Commission)
- Judicial review by ECJ possible
 In the USA:
- ITC (US International Trade Commission)
- US President has a veto
- Judicial review by the US Court of international trade

TRADE IN SERVICES: THE GATS SCOPE OF
APPLICATION
 General Agreement on Trade in Services 1993
 Scope of application:
- « service »: any service, except in the exercise of
governmental functions
- « trade »: 4 modes of supply activities :
- cross-border supply,
- consumption abroad,
- commercial presence (establishment),
- presence of natural persons (service supplier travels to
provide service).

GATS BASIC RULES
 Basis principles (comp. GATT)
- All member states are «most favoured nation» (Art. II); exception for regional
integration (custom unions and free trade areas); in Annex II a list of
exceptions (until 1-1-2005 allowed without any motivation)
- Prohibition in principle of 6 types of quantitative measures and similar
practices (Art. XVI)
- Principle of «national treatment» after import of « like services » and « like
service suppliers »
- But both principles are limited: only specific undertakings of member states
(Art. XVII)
- Duty of transparancy (duty to inform about rules affecting services)
- Progressive liberalisation through further negotiations .... (next slide)
- Exceptions & rules regarding exceptions (compare GATT) (Art. XIV)
- Special treatment for developing countries

GATS - ANNEXES
 General Agreement on Trade in Services 1993 – Main Annexes:
- Annex II: exemptions from MFN principle stipulated by member states
- Annex on the Movement of natural persons: GATS does not apply to
measures regarding migration, citizenship, etc.
- Annex Air transport services : GATS does not affect existing international
agreements (esp. Chicago Agreement 1944)
- Annex financial services: freedom to take prudential measures
- Annex telecommunications (does not cover radio & TV): access for foreign
service providers on reasonable and non-discriminatory terms & conditions
limitations enumerated restrictively
 Institutional: CTS (Council for Trade in Services)

GATS & DOHA ROUND
 Current commitments under GATS are very limited
 Doha Declaration 2001: “Doha Development Agenda” (DDA)
 Meanwhile many PTA’s are concluded (Preferential Trade Agreements), thus
undermining the MFN principle
 1998 Disciplines on Domestic Regulation in the Accountancy Sector
 Impasse since 2008, DDA collapsed
 2010 Draft “Disciplines on Domestic Regulation (of QLT requirements)”
(QLT = Qualifications, Licensing & Technical Standards)
 Ministerial Conference 2011 allowed negotiations for a “plurilateral
agreement”, negotiations for a Draft “International Trade in Services
Agreement” (TISA) started March 2013 by EU + ca. 22 other countries (incl.
US). Draft on financial services on Wikileaks 14 April 2014, further drafts
leaked June 2015.
 EU has internally harmonised its commitments and renegotiated the change
of the schedule with the states who raised objections (procedure of art. XXI
GATS in case of partial withdrawal of commitments). Result: agreements
with 18 states (ratification pending).

WTO DSU - GENERAL
 Apart from other dispute settlement procedures (conciliation,
mediation, « arbitration » within WTO), there is the:
 DSU 1994 - Most well-developed law enforcement mechanism in
international public law
 Jurisdiction is * compulsory and *exclusive
 Access to the procedure (« standing ») only for states and only in
case of dispute (contentious: no advisory opinion can be asked)
- private parties can only lobby their member state (in the EU the
European Commission) to lodge a complaint
- In several countries, an internal complaint procedure is organised
- – for the EU see the TBR (Trade Barrier Regulation))
- - for the US, see S. 301 Trade Act 1974

WTO DSU - PROCEDURE
 General characteristic: an integrated, i.e. largely uniform, system
(instead of different dispute settlement rules for different Codes)
 Stages:
- Consultation (duty to enter into consultations)
- Procedure before a panel; request for a panel; establishment of a
panel; terms of reference, intervening parties, decision
- Appellate review (standing Appellate Body of 7 members appointed
for 4 years, 1 x renewable): only « issues of law » (Body blocked by
the USA since 2019, some MS isinstalled an interim arbitration
« MPIA » in 2020)
- Adoption of report by the WTO Dispute settlement body (DSB):
adopted unless within 60 days DSB decides by consensus not to
adopt it (so-called reverse consensus). Effect: all adopted except 1
- Monitoring and follow-up by the DSB (whether state complies within
RPOT, reasonable period of time)

WTO DSU - SANCTIONS
 Sanctions / remedies for breach:
 The DSB may authorise the complainant, in case the other party fails
to comply with the decision, ‘retaliation’ – see art. 22 DSU:
 the retaliation must be proportional (not more than the damage
suffered by the complainant
 possible measures (in order of priority)
- suspension of trade concessions enjoyed by the non-compliant
member state in the same sector
- suspension of trade concessions in other sectors under the same
agreement
- suspend concession under another agreement, esp. TRIPS (i.e.
suspension of recognition of intellectual property rights of the non-
compliant member) (as TRIPS is a different agreement, this is called
cross-retaliation)

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