GLC Treaty Appreciation.doc

7/30/2019 GLC Treaty Appreciation.doc

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A CRITIQUEONTHE AMENDMENTOFTHE

WTO

SUBJECT: INTERNATIONAL LAW

Submitted to: Dr. Balakista Reddy

Submitted by: Rishabh Shah

III Year-VI Semester

Roll no: 45


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THE WTO MINISTERIAL COUNCIL


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TABLE OF CONTENTS


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SYNOPSIS

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CRITIQUE

The final text of the proposed Article I:5 of the General Agreement on Tariffs and Trade,

19941has been settled but certain issues remain regarding the procedure for its incorporation.

This delegation has presented its perspectives on the issues raised therein for settlement in the

Final Round of Talks of the WTO Ministerial Council.

1. Does the final text come under the aegis of Article IX or of Article X of the Agreement

Establishing the WTO 1994 (hereinafter the Marrakesh Agreement)?

There are two different procedures prescribed under Article IX and Article X which are

indicative of the legal effect of both. It is submitted by this delegation that the more

appropriate understanding of Article I:5 will be as an amendment rather than an

interpretation. Because, it is an amendment of Article I of the GATT so Article I:2 of

Marrakesh Agreement shall apply.

2. Differences between Article IX:2 and Article X

While an amendment is a formal revision or addition proposed or made to a statute 2 an

interpretation is the ascertainment of meaning to be given to words or other manifestations of

intention.3 An interpretation must therefore be based on the acts concluded and behaviour

taken by the contracting parties before interpretation is given.4

With respect to procedure for an authoritative interpretation a majority of three fourths of the

members present is enough to adopt it (Article IX:2), however making an amendment to

GATT Article: I requires acceptance by all the members of the (Article X:2). This is in

consonance with the general rule of international law that no party can be bound by

something to which it has not consented.5

1 Hereinafter GATT

2 Black's Law Dictionary (9th ed. 2009).

3Ibid.

4 T-C Y, THE INTERPRETATION OF TREATIES (Columbia University Press, New

York, 1927) 136 (the essence of the principle of interpretation is to ascertain through all

sources of evidence what is the standard agreedupon, namely what is the sense which the

contracting parties mutually attachedto the terms of the agreement).5 Article 40 Vienna Convention on the Law of Treaties, 1969 (hereinafter VCLT).

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An Authoritative Interpretation is for clarifying or explaining the scope of any rule 6 and give

corrective value to the decision of adjudicatory bodies7 but it cannot undermine the

amendment provisions.8 Amendment and interpretation are both methods of implementing a

result of any negotiation but a key difference between them is the legal effect. An amendment

is a tool for changing a rule and thereby affecting rights and obligations of members. 9

However, whether an interpretation can lead to the same result or not is mired in legal

uncertainty.10

The main argument against it is that if authoritative interpretations are used to change rights

and obligations then this would be possible even without their consent and this would

frustrate the very purpose of such an elaborate procedure laid down for amendments.11

Further a textual interpretation of the DSU does not support the view that interpretations can

lead to modification of rights and obligations. This is because Article I of DSU and Appendix

1 to the DSU only talks about disputes regarding rights and obligations under the provisions

of the Marrakesh Agreement and this cannot be understood to include any decisions made

therein.12

6Felix Amerasinghe, PRINCIPLES OF THE LAW OF INTERNATIONAL ORGANISATIONS (Cambridge

University Press 2nd ed. 2005) 460.

7Tarcisio Gazzini, Can Authoritative Interpretation Under Article IX:2 of the Agreement Establishing the WTO

Modify the Rights and Obligations of Members , 2008 I.C.L.Q. 169; Claus Dieter Ehlermann and Lothar Ehring,The Authoritative Interpretation under Article 9:2 of the Agreement Establishing the World Trade

Organisation: Current Law, Practice and Possible Improvements, 2005 J.I.E.L. 803.

8 Claus Dieter Ehlermann and Lothar Ehring, The Authoritative Interpretation under Article 9:2 of the

Agreement Establishing the World Trade Organisation: Current Law, Practice and Possible Improvements, 2005

J.I.E.L. 803.

9Hunter Nottage and Thomas Sebastian, Giving Legal Effect to the Results of WTO Trade Negotiations: An

Analysis of the Methods of Changing WTO Law, 2006 J.I.E.L. 989.

10Tarcisio Gazzini, Can Authoritative Interpretation Under Article IX:2 of the Agreement Establishing the

WTO Modify the Rights and Obligations of Members , 2008 I.C.L.Q. 169.

11Background Paper for ACWL Members and LDCs, Giving Legal Effect to the Results of the Doha Round: An

Analysis of the Methods of Changing WTO Law, June 2006; Communication from the United States,

WT/GC/W/144, 5 February 1999, at 2; In a similar vein the members of the NAFTA were rather averse to theidea of their rights and obligations being modified through a decision adopted by a political body when the FTC

adopted the controversial interpretation of Article 110 of NAFTA. Free Trade Commission, Notes ofInterpretation of Certain Chapter 11 Provisions (31 July

2001). last visited on 13/10/2011.

12 Ibid.

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3. Why Article I:V is classified as an amendment

Article I:5 imposes an obligation upon the developed countries to strive towards providing

additional MFN cuts benefitting developing countries and a duty and quota free treatment for

LDCs and 0% tariff for goods originating in LDCs. This amounts to modifying the rights and

obligations as under Article I such preferential treatment is strictly prohibited under the MFN

clause. Accepting that authoritative interpretations adopted by a qualified majority can

modify the rights and obligations of all members would make the guarantees offered by

Article X ineffective and ultimately undermine this provision and would be against the single

undertaking principle of the WTO.13 Hence, the proposed Article I:5 should be classified as

an amendment rather than an interpretation.

There is a presumption in public international law that unless the Constitutions or Charter of

international institutions expressly provide that decisions of the bodies can alter rights and

obligations of the members and that decisions cannot do so and hence will not be taken as

binding upon all the members.14 It is submitted by this delegation that wherever such a right

has been given to a body it has clearly been specified (Article X). An absence of such explicit

conferral of right means that it cannot be assumed.

Article I:5 will operate as an exception to Article I of GATT much in the same way the

Enabling Clause operates.15But the difference is that the enabling clause was a substantive

source of rights and obligations.16 Any interpretation cannot go against the very provision it

purports to interpret and hence the amendment route will have to be utilized to introduce such

an exception.17

13 Procedures for Amendment and Interpretation of the DSU (5 Feb 1999) WT/GC/W/144.

14Henry Schemmers and Niels Blokker, INTERNATIONAL INSTITUTIONAL LAW (The Hague: Martinus

Nijhoff Publishers 2003) 1320.

15EC Tariff Preferences, WT/DS246/AB/R.

16Appellate Body Report, European Communities Conditions for the Granting of Tariff Preferences to

Developing Countries, WT/DS246/AB/R, adopted 20 April 2004 (it has been made a part of the treaty text of

GATT 1994 by virtue of paragraph 1(b)(iv).

17Felix Amerasinghe, PRINCIPLES OF THE LAW OF INTERNATIONAL ORGANISATIONS (Cambridge

University Press 2nd ed. 2005) 460.

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The enabling clause was meant to be a non-binding obligation for developed countries as the

GSP18 Scheme is only a voluntary one.19 However the proposed amendment changes that the

final text clearly obliges every country to not impose any tarrifs on goods originating in

LDCs. Given the shift in rights and obligations due the amendment each member must be

allowed to decide for itself. Furthermore in the event that the final text is construed as an

authoritative interpretation it will still be subject to the abuse the enabling clause was subject

to20, as no new rights or obligations will be created. As there is pressing need the non-binding

provisions of the Enabling clause mandatory and unconditional21 the final text cannot but be

an amendment.

Note

It is common knowledge that different treatment under trade law of differently situated

countries will be necessary, at least in the short term.22 The GSP schemes, in particular,

acknowledged that an approach based on formal equality in, say, tariff treatment would not

be sufficient to place all exporting member countries on an equal footing, given the

disadvantaged starting position of developing countries as exporters. 23

With this in mind the Enabling Clause was formulated. The enabling clause is seen as an

exception to GATT Article I. 24 However it must be noted that both the MFN clause and the

enabling cause are based on the principle of non-discrimination in International Trade law.

The only difference between the two is that while the former is based on the concept of

18 Generalized System of Preferences.

19 Gillian Moon, Trade and Equality: ARrelationship to Discover, 2009 J.I.E.L. 12.

20 T.N. Srinivasan,Nondiscrimination in GATT/WTOWas There Anything To Begin With And Is There Anything

Left?, World T.R. 2005, 4(1), the author in this article is of the view that considerations of national security andthey ability to enter into RTAs impede the development of any universal reforms for all developing nations.

Furthermore Special and differential treatment was largely reduced to extended transition periods with the time-

limited special treatment to be removed regardless of whether the inequality persisted and even, presumably, of

whether it worsened; See T Ademola Oyejide, SPECIAL AND DIFFERENTIAL TREATMENTDEVELOPMENT, TRADE AND THE WTO (The World Bank: Washington, DC 2002) 507.

21 Pascal Lamy, The Place of the WTO and its Law in the International Legal Order, 17 (2006) EJIL 969.

22 Alexander Keck and Patrick Low, Special and Differential Treatment in the WTO: Why, When and How?

(January 2004); WTO Staff Working Paper No. ERSD-2004-03.

23 Ibid.

24 Dr Rafael Leal-Arcas, Proliferation Of Regional Trade Agreements: Complementing Or SupplantingMultilateralism?, 11 Chi. J. Int'l L. 597.

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formal equality the latter is based on the concept of equality among equality. 25 Both these

provisions share the same object that of facilitating egalitarian trade.

Thus an authoritative interpretation under IX:2 must construe the enabling clause as a part of

GATT Article I. When this is done the non-binding provisions of the enabling clause become

justiciable part of WTOs non-discrimination policy and not a voluntary largess by developed

countries. Thus the may will be interpreted as shall and will becoming as binding as the

principle of non-reciprocity. The part of the final text regarding complete waiver of tariffs

for LDCs shall then be an authoritative interpretation of Clauses 2(c), 2(d), 3(c), 7 of the

Enabling clause. Clause 3(c) which imposes a binding obligation on developed countries to

design, modify and respond positively to the development, financial and trade needs of

developing countries, by use of the word shall can be interpreted to provide additionalMFN cuts and tariff reductions envisaged.26 Such an interpretation will be consistent with the

enabling clause and will not change any rights and obligations. Assuming but not conceding

the delegation submits that Appellate Body of the WTO in a footnote in US-FSC27has

implicitly endorsed the view that authoritative interpretations may add to or diminish

Members' rights and obligations under the WTO Agreement.28

4. If it comes under Art. IX, has it already entered into force?

The final text may be incorporated as an authoritative interpretation of Article I of the GATT.

Authoritative interpretations are adopted under Article IX:2. Since it talks about adoption and

not mere acceptance it is submitted that as soon as the three fourths majority is achieved the

interpretation becomes binding and immediately effective. However the Ministerial

Conference or General Council can specify a future date for decisions to enter into force. 29

25 Ibid

26 WTO Doc. WT/DEV/1.

27 US-FSC, AB Report (n 3) WT/DS108/R, footnote 127, The footnote reads: The distinction between an

authoritative interpretation and an interpretation made in dispute settlement proceedings is made clear in theWTO Agreement. Under the WTO Agreement, an authoritative interpretation by the Members of the WTO, under

Article IX:2 of that Agreement, is to be distinguished from the rulings and recommendations of the DSB, madeon the basis of panel and Appellate Body Reports. In terms of Article 3.2 of the DSU, the rulings and

recommendations of the DSB serve only to clarify the existing provisions of those agreements and cannot addto or diminish the rights and obligations provided in the covered agreements.

28 Japan-Alcoholic Beverages, WT/DS8/AB/R (WTO rules are not so rigid or so inflexible as not to leave roomfor reasoned judgements in confronting the endless and ever-changing ebb and flow of real facts in real cases in

the real world.

29Matthew Kennedy, Two Single Undertakings - Can the WTO Implement the Results of a Round? 2011 J.I.E.L.

77.

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The various ways in which Article IX can be used also leads to the inference that the use of

this means of implementation is in its immediate entering into force. It can be one of the

means for adopting results of the negotiations in Doha.30

It can be used to determine the scope

of the text in question.31 It is an important measure for maintaining a balance between the

legislative body and the dispute settlement system32 as any interpretation by the Appellate

Body which does not agree with the members can be corrected.33

In light of the above, once a three fourths majority is achieved regarding the adoption of

Article 1:5 of the GATT as an interpretation of Article 1 it will immediately come into force.

However, since such a majority has not yet been achieved it has not already entered into

force.

5. If it comes under Art. X has it entered into force?

If the text is understood to be an amendment, the procedure to be followed is laid down in

Article X:2 of the Marrakesh Agreement.34 An acceptance of the text is communicated by

depositing Instruments of Acceptance to the Director-General of the WTO as per Article

X:7.35 Upon deposit of an instrument of acceptance, the WTO treaty the WTO Director-

General circulates a notification informing Members as to which Member has accepted the

amendment and states the applicable procedure for entry into force of the amendment in

general. In the present case, the amended text has cannot come into force, unless all the 153

members submit their instruments of acceptance.36

30 Claus Dieter Ehlermann, Lothar Ehring, The authoritative interpretation under Article 9:2 of the Agreementestablishing the World Trade Organisation: current law, practice and possible improvements, 2005 J.I.E.L. 803

31US Wool Shirts and Blouses, WT/DS33/AB/R and Corr.1.

32Simon N. Lester, WTO Panel and Appellate Body Interpretations of the WTO Agreement in US Law, 35

Journal of World Trade (2001) 521.

33 Claus Dieter Ehlermann and Lothar Ehring, The Authoritative Interpretation under Article 9:2 of the

Agreement Establishing the World Trade Organisation: Current Law, Practice and Possible Improvements,2005 J.I.E.L. 803.

34 Mitsuo Matsushita, Thomas J. Schoenbaum and Petros C. Mavroidis, THE WORLD TRADE

ORGANIZATION: LAW, PRACTICE, AND POLICY (Oxford International Law Library 2nd ed. 2001).

35Matthew Kennedy, When Will the Protocol Amending the TRIPS Agreement Enter into Force ? 2010 J.I.E.L.

459.

36Ibid; IP/C/W/490/Rev.1, with the March 2008 Update; IP/C/W/490/Rev.2, and Subsequent Revisions;

WT/Let/607, Dated 5 December 2007.

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6. Which of the preparatory documents are relevant for establishing the objectives pursued

by its framers and why?

The Travaux Prepratorie is generally understood to include written materials such assuccessive drafts of treaty, conference records, and explanatory statements by an expert

consultant at a codification conference, interpretative statements by the Chairman of the

drafting committee reflecting the intention of the framers of a treaty.37 The following

preparatory documents reflect the objectives pursued by the framers especially in connection

with the Amendment Procedure and the view of the WTO regarding LDCs.

The decision creating the enabling clause38 enables WTO members to grant tariff

preferences to a subset of the WTO membership and it constitutes an exception to

Article I GATT. It requires that the developed countries absent a priori limitations and

must by virtue of the term non-discriminatory give identical tariff preferences under

GSP schemes to all developing countries without any differentiation. This is a very

important document as it shows the intent of the members to always have certain

special treatment towards LDCs. 39 In this document the rationale of the Enabling

Clause can be seen: early establishment of generalized, non-reciprocal, non-

discriminatory system of preferences which would be beneficial to developing

countries.40 This is relevant because the present amendment also purports to give

special benefits to developing countries with the same logic of the Enabling Clause.

Haberler Report41is the report of a panel appointed in 1958 which advocated greater

flexibility to use trade restrictions to promote infant industrial development.42 It

37 Anthony Aust, MODERN TREATY LAW AND PRACTICE (Cambridge University Press 2000) 198.

38 Decision of the CONTRACTING PARTIES of 28 November 1979 on Differential and More FavourableTreatment, Reciprocity and Fuller Participation of Developing Countries (the Enabling Clause), GATT

document L/4903, BISD 26S/203; Declaration on Trade Measures Taken for Balance-of-Payments Purposes,GATT document L/4904, adopted 28 November 1979, BISD 26S/205-209.

39 European Communities Conditions for granting Tariff preferences to Developing countries, WT/DS/ 246/R

of 1 December 2003 (Countries must give tariff preferences without any discrimination identical to all

developing countries).

40 (Resolution 21(II)) Second Session of UNCTAD 26 March 1968.

41Trends in International Trade, October 1958, Sales No. GATT/1958-3.

42Shanker Singham, A GENERAL THEORY OF TRADE AND COMPETITION: TRADE

LIBERALISATION AND COMPETITIVE MARKETS (Cameron May 2007) 62.

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started the discussion on preferences for LDCs and made a case for why existing

trade liberalization rules would not work to their advantage. It recommended

reduction of existing protectionism. This report is relevant as the issues it highlighted

are still being decided upon in the Doha Round. This advocates special preferences

which are being given in the proposed amendment.

GATT Committee Report from the Dillon Round where special needs of less

developed countries were recognized in relation to tariff negotiations under Article

XXVIIIbis of GATT.43

The Committee on Legal and Institutional Framework of GATT44 suggested the

principle of non-reciprocity. This document is relevant because the concept of giving

special benefits to LDCs and developing is reflected here. Article XXXVII:3 of

GATT 1947, for example, states that developed countries shall "give active

consideration to the adoption of other measures designed to provide greater scope for

the development of imports from less-developed contracting parties....".

Declaration on the Contribution of the World Trade Organization to Achieving

Greater Coherence in Global Economic Policymaking45 reiterated that a positive

outcome of the Uruguay Round is a major contribution towards more coherent and

complementary international economic policies. This document recognizes the need

of an overall strong world economy which means and includes a better economic

status of the LDCs also. This recognition paves the way for the provision of special

benefits for LDCs and developing countries as in the proposed Article I:5 of the

GATT.

43 Programme for Expansion of International Trade, Tariff Expansion, Second Report of Committee I, B.I.S.D.(8th Supp.) 110 (1960) (adopted 19 November 1959).

44 The Committee on Legal and Institutional Framework of GATT, L/2314/Rev.1.

45 http://www.wto.org/english/res_e/booksp_e/analytic_index_e/wto_agree_04_e.htm#contri (Oct. 13, 2011).

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Decision on Measures in Favour of Least-Developed Countries46 recognised that

least-developed countries need effective participation in the world trading system and

further measures are required to improve their trading opportunities, especially in the

area of market access. It was decided that LDCs while complying with the generalrules will only be required to undertake commitments and concessions to the extent

consistent capabilities. It was agreed that special and differential measures taken in

favour of least-developed countries shall be ensured and other schemes for products

of particular export interest to least-developed countries shall be further improved.

The intentions and expectations of the negotiators during the Uruguay Round when

they formulated the WTO agreement

Article XXX of the GATT 1947 inspired Article X of the WTO Agreement on

amendments. Decision-making by consensus became the increasingly prevalent

practice with the number of developing countries entering the international system

although the last decision recorded by voting was in 1959.

With the realization that developing countries outnumbered developed countries the

United States wanted to change the MTO (as WTO was known then) text and to make

it as difficult as possible to take decisions. The main concerns were (1) that

developing countries would try to use the decision-making voting rules to get out of

their obligations later on (note that Footnote 4 to Article IX:3 of the WTO Agreement

exceptionally requires consensus for waivers of transition periods) and (2) that the

United States' sovereignty would be undermined by amendments forced through by

quickly formed majorities. The latter was ultimately protected by a return to the

GATT approach for amendments with an impact on rights and obligations. Also, the

United States successfully fought for the combination of the three-quarters majority

rule and the prohibition to undermine the amendment procedure in the context of

authoritative interpretations. Such a decision-making structure contains an in-built

preference for the status quo. It is much easier to maintain the current legal situation

than to achieve change.47

46http://www.wto.org/english/res_e/booksp_e/analytic_index_e/wto_agree_04_e.htm#favour(Oct. 13, 2011).

47 GATT, ANALYTICAL INDEX: GUIDE TO GATT LAW AND PRACTICE (WTO and Bernan Press 6th ed.1995) 1099.

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7. What is their legal value?

The interpretation of the WTO covered agreements is governed by the same principles as

apply to the interpretation of other treaties.48Article 3.2 DSU provides that panels and the

Appellate Body are to clarify the existing provisions of those agreements in accordance with

customary rules of interpretation of public international law. 49Article 3.2 merely confirms

the principle ofjura novit curia i.e. the panels and the Appellate Body have to respect the

customary principles of treaty interpretation.50

It is the view of this delegation that The Preparatory work cannot be a primary means of

interpretation. They are evidence of will of the members who drafted the Agreements. 51

These are given less weight for practical reasons such as the frequent incompleteness orunavailability of preparatory work.52 However, it can be used as a supplementary tool for

interpretation as to confirm the application of the general rule in Article 31 of the VCLT or

when an interpretation under Article 31 is ambiguous or absurd. It can also be used in cases

where the ordinary meaning does not reflect the intention of the parties but it has to be

interpreted in good faith to correct the same. 53 As a supplementary means of interpretation

adjudicatory bodies usually accord weight to agreements between negotiating partners at the

stage of negotiations.

54

The DSU has relied upon reports by Chairmen of Committees

55

,Reports of Preparatory Committees56 and have used travaux preperatories to both confirm57

and clarify58 the meaning of certain provisions. Even Documents created after the

48 Isabelle Van Damme, Treaty interpretation by the WTO Appellate Body, 2010 E.J.I.L. 605.

49Ibid.

50 On the principle ofjura novit curia see European Communities - Conditions for the Granting of Tariff

Preferences to Developing Countries(EC - Tariff Preferences ), WT/DS246/AB/R.

51 Jeffrey Waincymer, WTO LITIGATION: PROCEDURAL ASPECTS OF FORMAL DISPUTE

SETTLEMENT, WORLD TRADE ORGANIZATION (Cameron May 2002) 481.52 Horn and Howse,European Communities - Customs Classification of Frozen Boneless Chicken Cuts, 7 World

Trade Rev (2008) 9; Petros C. Mavroidis,No Outsourcing of Law? WTO Law as Practiced by WTO Courts, 102

AJIL (2008) 421.

53 Schewelb,May Preparatory Work be Used to Correct Rather than Confirm the "Clear" Meaning of a TreatyProvision? International Law, TDM 5 (2005).



55 US- Softwood Lumber III, WT/DS236.

56US-Carbon Steel, WT/DS213/AB/R and Corr.1

57 India- Quantitative Restrictions, WT/DS90/AB/R.

58 US- Gambling, WT/DS285/AB/R.

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establishment of the WTO which summarize or clarify the intention of the framers are

considered a part of travaux preperatories 59

8. Does the fact that the text was negotiated by a sub-set of the WTO Membership

influence its classification under Art. IX or X of the Agreement Establishing the WTO?

This delegation believes that the answer to this issue is in the procedure for the amendment or

authoritative interpretation as the case may be. While any amendment requires the depositing

of instruments of acceptance by at least three-fourths of the members to be come into effect it

is not binding on members who have not deposited such instruments.60 This necessitates the

presence of all the members in the negotiations of any amendments.

However, under Article IX if three fourths of the members accept an interpretation of any text

it becomes binding on all the members irrespective of their accepting the interpretation. This

means that members need not even be present in the negotiations to be later bound by it.

Hence, while negotiations by a subset of the members may lead to the initial presumption of

classifying it as under Article IX but it may necessarily does not always need to be so.

As in the present case, all the members who were present in the negotiations decided on the

5+1 formula and formed a subset who conducted the negotiations. This is in conformity with

WTO practice as often negotiations on different specifics or issues are carried out by Trade

Negotiation Committee, special sessions, working groups, etc.61 However, this does not affect

the consensus requirement under Article X:2 as it is still an essential part of the amendment

coming into force.

59 H. Lauterpacht,Restrictive Interpretation and the Principle of Effectiveness in the Interpretation of Treaties ,26British Yrbk Int'l L(1949) 48.

60 Article X of the Marrakesh Agreement.

61 John H. Barton, Judith L. Goldstein, Timothy E. Josling and Richard H. Steinberg,

THE EVOLUTION OF THE TRADE REGIME: POLITICS, LAW, AND

ECONOMICS OF THE GATT (Princeton University Press 2006) 47.

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9. If only 6 members have ratified the final text can it enter into force as an agreement

inter se?

The final text cannot enter into force upon ratification by 6 members even for those six

members. This is because the procedure enumerated in Article X:2 is different from that inArticle X:3. In Article X:3 amendment may enter into force for a sub-set of the WTO

membership upon ratification(deposit of instrument of acceptance) by 3/4ths of the WTO

members. However no such procedure is provided under Article X:2 which when read with

Article X:5 categorically states that an agreement shall enter into force only upon ratification

by all members.

10. Does the Agreement Establishing the WTO make room for agreements between a

subset of the WTO Membership?

The agreement establishing the WTO does make room for agreements between a subset of

the WTO Membership. The reason the GATT provides for such agreements is because the

economic rationale of integration between several countries is analogous to process of

integration within a sovereign state.62 Hence PTAs are a permitted exception as they do not

pose an inherent threat to integration on a world-wide basis. Thus customs unions and free

trade areas can be formed between sub-sets of the WTO membership and are exceptions tothe Most Favoured Nation (MFN) obligation clause because by definition they involve

preferential treatment not granted to all WTO members.63

Members of the WTO can also obtain a waiver from their obligations under the General

Agreement under Article XXV for the purpose of promoting economic development. Only

the Ministerial Conference by consensus or through the vote of 3/4ths of members present

and voting can make a decision on the waiver of any obligation subject to a staged

implementation or transition period taken only by consensus.64

62 1Raj Bhalla, INTERNATIONAL TRADE LAW THEORY AND PRACTICE (LexisNexis 2 nd ed. 2001) 618.



64 Article IX of the Marrakesh Agreement.

12
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11. Has WTO case law acknowledged their legal relevance?

The WTO Appellate Body in Turkey Textiles65 held that to determine whether a PFA can

exist under the aegis of Article XXIV -:

The first level of analysis involves seeing whether a customs union or a free trade area isformed as per XXIV 8(a).

The internal Trade Requirement Duties and restrictions of commerce must be eliminated

with respect to internal trade.66

External Trade Requirement Whether duties and other regulations imposed on external

trade regulations are not higher than the general incidence of duties imposed by the

constituent member of the customs union before its formation. 67This is to be done as per the

procedure enumerated in the WTO Understanding on the Interpretation of Article XXIV of

the GATT 1994.68

Waivers were accepted to settle the Bananas Case allowing the European Community to give

preferential tariff treatment to developing countries including Latin Countries69, thus

maintaining the Lome Convention70which was otherwise incompatible with the WTO rules.71

The possibility of such a waiver was envisaged by the Arbitrators of the DSU who decided

the Bananas Case.72

CONCLUSION

65 Appellate Body Report, Turkey Restrictions on Imports of Textile and Clothing Products , WT/DS34/AB/R,Adopted on 19 November 1999.

66 Ibid. 49

67

Id. 50.68 Id. 53

69 See Ministerial Conference, 4th Session, Doha 9-14 November 2001, WT/MIN(01)/15, 14 November 2001.

70Cosmas Milton Obote Ochieng, The EU-ACP economic partnership agreements and the "development

question": constraints and opportunities posed by Article XXIV and special and differential treatment provisionsof the WTO, J.I.E.L. 2007, 10(2), 363-395. The Article sees the Lome Convention as EUs GSP for African

nations.

71 Jurgin Huber, Past-Present and Future of the AP-EC Trade Regime and the WTO, EJIL (2000) Vol No.

11(429). The waiver was made because the convention gave preferential treatment to only some developingcountries thus discriminating against others, without coming under the aegis of Article XXIV.

72

EC-Bananas III, Decision by the Arbitrators, WT/DS27/ARB; See World Trade Organization, EuropeanCommunities - Regime for the Importation, Sale and Distribution of Bananas , WT/DS27/AB/R, September 9,1997.

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14


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SOURCES

Articles Referred

Claus Dieter Ehlermann and Lothar Ehring, The Authoritative Interpretation under

Article 9:2 of the Agreement Establishing the World Trade Organisation: Current

Law, Practice and Possible Improvements, 2005 J.I.E.L. 803.

Tarcisio Gazzini, Can Authoritative Interpretation Under Article IX:2 of the

Agreement Establishing the WTO Modify the Rights and Obligations of Members,

2008 I.C.L.Q. 169.

Hunter Nottage and Thomas Sebastian, Giving Legal Effect to the Results of WTO

Trade Negotiations: An Analysis of the Methods of Changing WTO Law, 2006 J.I.E.L.

989.

Background Paper for ACWL Members and LDCs, Giving Legal Effect to the Results

of the Doha Round: An Analysis of the Methods of Changing WTO Law, June 2006.

Matthew Kennedy, Two Single Undertakings - Can the WTO Implement the Results

of a Round? 2011 J.I.E.L. 77.

Simon N. Lester, WTO Panel and Appellate Body Interpretations of the WTO

Agreement in US Law, 35 Journal of World Trade (2001) 521.

Matthew Kennedy, When Will the Protocol Amending the TRIPS Agreement Enter

into Force? 2010 J.I.E.L. 459.

Jurgin Huber, Past-Present and Future of the AP-EC Trade Regime and the WTO,

EJIL (2000) Vol No. 11(429).

Isabelle Van Damme, Treaty interpretation by the WTO Appellate Body, 2010 E.J.I.L.

605.

Horn and Howse, European Communities - Customs Classification of Frozen

Boneless Chicken Cuts, 7 World Trade Rev (2008) 9

Petros C. Mavroidis, No Outsourcing of Law? WTO Law as Practiced by WTO

Courts, 102 AJIL (2008) 421.

ii


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Schewelb, May Preparatory Work be Used to Correct Rather than Confirm the

"Clear" Meaning of a Treaty Provision? International Law, TDM 5 (2005).

H. Lauterpacht, Restrictive Interpretation and the Principle of Effectiveness in the

Interpretation of Treaties, 26 British Yrbk Int'l L (1949) 48.

Books Referred

Felix Amerasinghe, PRINCIPLES OF THE LAW OF INTERNATIONAL

ORGANISATIONS (Cambridge University Press 2nd ed. 2005).

Henry Schemmers and Niels Blokker, INTERNATIONAL INSTITUTIONAL LAW

(The Hague: Martinus Nijhoff Publishers 2003).

Mitsuo Matsushita, Thomas J. Schoenbaum and Petros C. Mavroidis, THE WORLD

TRADE ORGANIZATION: LAW, PRACTICE, AND POLICY (Oxford

International Law Library 2nd ed. 2001).

John H. Barton, Judith L. Goldstein, Timothy E. Josling and Richard H. Steinberg,

THE EVOLUTION OF THE TRADE REGIME: POLITICS, LAW, ANDECONOMICS OF THE GATT (Princeton University Press 2006).

Mary E. Footer, AN INSTITUTIONAL AND NORMATIVE ANALYSIS OF THE

WORLD TRADE ORGANIZATION (Martinus Nijhoff Publishers 2006).

1Raj Bhalla, INTERNATIONAL TRADE LAW THEORY AND PRACTICE

(LexisNexis 2nd ed. 2001).

Mitsuo Matsushita, Thomas J. Schoenbaum and Petros C. Mavroidis, THE WORLDTRADE ORGANIZATION: LAW, PRACTICE, AND POLICY (Oxford

International Law Library 2nd ed. 2001).

GATT, ANALYTICAL INDEX: GUIDE TO GATT LAW AND PRACTICE (WTO

and Bernan Press 6th ed. 1995) 1099.

Anthony Aust, MODERN TREATY LAW AND PRACTICE (Cambridge University

Press 2000) 198.Shanker Singham, A GENERAL THEORY OF TRADE AND

iii


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COMPETITION: TRADE LIBERALISATION AND COMPETITIVE MARKETS

(Cameron May 2007) 62.

Jeffrey Waincymer, WTO LITIGATION: PROCEDURAL ASPECTS OF FORMAL

DISPUTE SETTLEMENT, WORLD TRADE ORGANIZATION (Cameron May

2002) 481.

Cases Referred

EC-Bananas III, WT/DS27/ARB.

US -Wool Shirts and Blouses, WT/DS33/AB/R and Corr.1.

EC- Tariff Preferences, WT/DS246/AB/R.

US- Softwood Lumber III, WT/DS236.

US-Carbon Steel, WT/DS213/AB/R and Corr.1

India- Quantitative Restrictions, WT/DS90/AB/R.

US- Gambling, WT/DS285/AB/R.

Documents Referred

Appellate Body Report, European Communities Conditions for the Granting of

Tariff Preferences to Developing Countries, WT/DS246/AB/R, adopted 20 April

2004.

IP/C/W/490/Rev.1, with the March 2008 Update; IP/C/W/490/Rev.2, and Subsequent

Revisions; WT/Let/607, Dated 5 December 2007.

Communication from the United States, WT/GC/W/144, 5 February 1999.

WT/Let/607, Dated 5 December 2007.

Appellate Body Report, Turkey Restrictions on Imports of Textile and Clothing

Products, WT/DS34/AB/R, Adopted on 19 November 1999.

Ministerial Conference, 4th Session, Doha 9-14 November 2001, WT/MIN(01)/15, 14

November 2001.

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World Trade Organization, European Communities - Regime for the Importation, Sale

and Distribution of Bananas, WT/DS27/AB/R, September 9, 1997.

Decision of the CONTRACTING PARTIES of 28 November 1979 on Differential

and More Favourable Treatment, Reciprocity and Fuller Participation of Developing

Countries (the Enabling Clause), GATT document L/4903, BISD 26S/203.

Declaration on Trade Measures Taken for Balance-of-Payments Purposes, GATT

document L/4904, adopted 28 November 1979, BISD 26S/205-209.

European Communities Conditions for granting Tariff preferences to Developing

countries, WT/DS/ 246/R of 1 December 2003.

(Resolution 21(II)) Second Session of UNCTAD 26 March 1968.

Trends in International Trade, October 1958, Sales No. GATT/1958-3.

Programme for Expansion of International Trade, Tariff Expansion, Second Report of

Committee I, B.I.S.D. (8th Supp.) 110 (1960) (adopted 19 November 1959).

The Committee on Legal and Institutional Framework of GATT,

L/2314/Rev.1.

European Communities - Conditions for the Granting of Tariff Preferences to

Developing Countries (EC - Tariff Preferences ), WT/DS246/AB/R.