Basic Legal Principles of GATT/WTO

Prof. Gabrielle MarceauSenior Counsellor, Research Division,

WTO

Content

Basic legal principles:

Tariff bindings / specific commitments on services

Most-favoured-nation (MFN) treatment

National treatment

Prohibition on trade restrictions

Content

Rights of Members:

Waivers

General exceptions

Safeguards

Antidumping / Countervailing measures

Regional Trade Agreements

Content

Procedural aspects:

Transparency

Dispute settlement mechanism

Marrakech Agreement establishing the World

Trade Organization

Signed in Marrakech on 15 April 1994

Ratified following national procedures

Entered into force on 1st January 1995 (legally binding international instrument engaging the responsibility of States)

Marrakech Agreement establishing the World

Trade Organization

WTO: An international agreement

WTO: Trade Rules and Disciplines

1AMultilateral

agreements on trade in goods

1BGATS

1CTRIPS

2Dispute

Settlement Understanding

3Trade Policy

Review Mecanism

4Plurilateral

trade agreements

WTO Agreement

Marrakech Agreement Establishing the WTO

WTO

Understandings

Agreements on:Agriculture

Sanitary and phytosanitary measures

Safeguards

Technical barriers to trade

Trade-related investment measures (TRIMS)

Antidumping

Customs valuation

Preshipment inspection

Rules of origin

Import licensing

Subsidies and countervailing measures

Marrakech Protocol

GATT 1994 (General Agreement on Tariffs and Trade)

WTO: Trade Rules and Disciplines

1AMultilateral

trade agreement on trade in goods

Annex 1A

Multilateral agreements on trade in Goods

Goods

8

• Each Member commits to ensure an agreed level of access to its market for supplying countries, on a non-discriminatory basis

Article II, GATT

Article XVI, GATS

Binding / Commitments

9

• In goods, the use of trade restrictions (such as quotas) is prohibited

• In services, the use of quotas is prohibited for sectors and modes of supply covered in the Member’s Schedule of Specific Commitments

Article XI, GATT

Article XVI, GATS

Prohibition of Trade Restrictions

10

• No discrimination between like products / services originating in or destined for different countries (or nationals of different countries with regard to the protection of IP)

• Each Member gets immediately and unconditionally the best treatment given to any other trading partner

Article I, GATTArticle II, GATSArticle 4, TRIPS

Most Favoured Nation (MFN)

11

• Properties, nature and quality

• End use, substitutability

• Consumers’ perceptions

• Tariff classification

“Like” products

12

• Foreign goods, services and service providers, as well as IPR holders, must not be discriminated against vis-à-vis domestic goods, services, and services providers, as well as IPR holders

• In services, national treatment depends on the Member’s Schedule of Specific Commitments)

Article III, GATTArticle XVII, GATS

Article 3, TRIPS

National Treatment

13

In exceptional circumstances, Members can temporarily waive an obligation imposed on a Member by the WTO rules

Article IX.3-4Marrakech Agreement

Exceptions: Waivers

14

• In specific situations and under certain conditions, WTO rules and obligations do not prevent Members from taking some measures which otherwise would be illegal

• Such measures must not discriminate, nor constitute "disguised barriers to trade“

Article XX, GATTArticle XIV, GATS

General exceptions

15

WTO rules and obligations do not prevent Members from taking certain measures -otherwise contrary to certain basic principles-, to enter with other countries into some forms of economic integration compatible with the WTO "regional agreement" provisions

Article XXIV, GATT1979 Enabling Clause

Article V, GATS

Regional integration

16

In specific situations, measures -otherwise contrary to certain basic principles- are available to Members to protect, conditionally and temporarily, their domestic industry against surge of imports

Article XIX, GATT

Safeguard measures

17

Members may adopt measures to compensate for distortions created by certain trade practices

Article VI, GATT

Anti-dumping measures

18

• Subsidies may distort trade / Some subsidies are prohibited

• Other subsidies are permitted, but actions can be taken against any adverse effects

• Actions are either in the form of "direct actions" (Dispute Settlement) or "Additional duties" at the border (Countervailing duties)

Articles VI and XVI, GATT

Subsidies and countervailing measures

19

• Publication of trade regulations (Laws, Regulations, judicial decisions and administrative rulings of general application)

• Notification requirements

• Uniform, impartial and reasonable administration

• Independent legal review

• Trade policy review mechanism

Article X, GATTArticle III, GATS

Transparency andAdministration of trade measures

20

To preserve the rights and obligations of Members under the covered agreements, and to clarify the existing provisions of those agreements in accordance with customary rules of interpretation of public international law

Article 3.2, DSU

Functions of the WTO dispute settlement system

21

To secure a positive solution to disputes

Through a mutually agreed solution, if possible...

...If not, recourse to panel process

[...Or, alternative modes of dispute resolution]

Article 3.7, DSU

Object of the WTO dispute settlement system

22

• An "integrated mechanism" with a common set of rules

• "Members only" / Only "measures" may be challenged

• Panel and Appellate Body reports are adopted by the DSB

• Rules of Conduct for participants

WTO dispute settlement

23

• Consultations

• Panel review

• [Appellate Body review]

• Adoption of report by the DSB

• Implementation

WTO dispute settlement