Transcript WTO Law

WTO Law - 4
Non - Discrimination
Non Discrimination
• ND
– Enhances the efficiency of allocation and use of
resources
– Avoids economically unjustified distortions of
competition
– Reduces possible disputes
• Two aspects
– ND between foreign goods, services and service
providers -> Most Favored Nation Principle (MFN)
– ND between these foreign factors and domestic
competitors -> National Treatment Priciple (NT)
MFN
• Formula
– Positive: I.1 GATT, 4 TRIPS
– Negative: II.1 GATS
– See also: III.7, IV (d), XVII and XX GATT, TBT, SPS,
Import Licensing Agreement
• Scope of Application
– Benefit for all WTO members
– Level of MFN relates to all trade relations of WTO
members, even outside the WTO
• Problem of the PTAs
– Beneficial treatment only between the PTA members?
Code Conditionality?
– General MFN in favor of all WTO members? Free rider
problem
Art. I GATT
• Border measures or internal measures of a WTO
member
• Advantageous treatment of goods imported from
or exported to any other country
• Have to be accorded immediately and
unconditionally
• To like products imported from or exported to
other WTO members
• If there is no justification under WTO law (e.g.
under art. XX, XI, XXIV, XXV)
Border measures
• Customs duties and charges of any kind
– Indonesia Autos
• The method of levying such charges
– Rates, valuation, classification, origin
– Also: prohibited self-help (US – Certain products from
the EC)
• All rules and formalities for imports and exports
– E.g. quotas – EC-Bananas III
• Discrimination prohibited on the basis of national
origin
– De facto or de jure
– But: Canada Autos (indirect discrimination)
Indonesia Autos Case
• Indonesia - Certain Measures Affecting the Automobile
Industry(WT/DS 54,55,59,64/R)
• National Car Companies (in reality only one) are exempted
from the luxury tax on sales of their cars and from import
duties on parts and components
– qualifiying cars made in Indonesia by Indonesians with
Indonesian content and Indonesian technology under an
indonesian trademark
• Same treatment for cars produced abroad by Indonesians
with 20 % Indonesian content
• Higher import duties violate Art. I:1 GATT
• Higher tax on other imported “like” cars violates III:2
GATT (national treatment)
Tariff bonding
• United States - Import Measures on Certain Products from
the European Communities (WT/DS165/R)
• Expecting the authorization for retaliation in the Bananas
case the US introduced an increased bonding requirement
for certain imports from the EU (now based on the
„entered value“)
• Imports became thereby considerably more expensive than
for goods from other countries
• The authorization was given about two weeks after the
entry into force of the new bonding rules
• The American measure violated Art. I:1 GATT
• No justification by the DSU (see 23)
Bananas
• European Communities - Regime for the Importation,
Sale and Distribution of Bananas (WT/DS27/AB/R)
• Banana imports from ACP countries
– Traditional imports
– Non-traditional Imports
– Third-Country Imports
• Third – country imports were restricted by tariff
quotas (art. XI)
• Export certificate requirements for imports from
Costa Rica, Colombia and Nicaragua: violation of art.
I.1
• Tariff preferences for non-traditional ACP Bananas as
compared to third country bananas violates Art. I.1
– However it is justified by the Waiver under art. XXV given for
the rules of the former convention of Lomé
Canadian Automotive Case
Canada - Certain Measures Affecting the Automotive
Industry(WT/DS139,142/AB/R)
• Duty free imports for cars produced by affiliates of
Canadian car producers from abroad
• De facto: only imports from US affiliates were favored
• The List of eligible enterprises was completely closed in
1989
• Canada: favor not according to national origin, but
granted to enterprises
• Panel & AB: Art. I prohibits formal and indirect
discriminations.
Internal measures
• “all matters referred to in paragraphs 2 and 4 of
Article III”,
– i.e. internal taxes or other internal charges
– as well as “all laws, regulations and requirements
affecting their internal sale, offering for sale,
purchase, transportation, distribution or use”
• Example: EC-Bananas III – internal distribution of
licenses
Like Products
• See Spain – Unroasted Coffee (GATT Panel)
• The Border Tax Adjustment Working Group Criteria
(1970, amended by the AB in Asbestos):
– (i) the physical properties of the products;
– (ii) the extent to which the products are capable of serving
the same or similar end-uses;
– (iii) the extent to which consumers perceive and treat the
products as alternative means of performing particular
functions in order to satisfy a particular want or demand;
and
– (iv) the international classification of the products for tariff
purposes.”
• PPMs (Process or Production Methods) influencing
likeness? (Tuna/Dolphin vs. Asbestos?)
Spain - Tariff Treatment of unroasted Coffee
BISD 28S/102
Until 1997:
Unroasted Coffee –
single tariff – 22,5 %
Columbian mild - 0
BRAZIL
Other mild - 0
Unwashed Arabica – 7 %
Robusta – 7 %
Other – 7 %
After 1979:
5 different
classifications: no
tariff / 7% tariff .
Art. II: 1 GATS
• No less favorable Treatment
– De facto or de jure
• Of like services and service providers
– No public services (art. I: 3 (b))
– Four service modes (art. I: 2)
– Characteristics, tastes and habits of the consumers and
classification in the UN Central Products Classification
(CPC)
• By members‘ measures
• Affecting trade
– Broad notion
• If services are not exempted in the schedules
National Treatment
• Art. III GATT
• TRIMS Agreement (Trade Related Investment)
• Art. XVII GATS
• Equal Treatment between foreign products,
services and service providers and their national
counterparts (and competitors)
• Obligation corroborating the tariff bindings under
art. II GATT
– All the arguments against discrimination are also valid
here
Art. III GATT
• Para. 1: the „chapeau“
– Principle and goal
– Informing the operative paragraphs
• Para. 2.1: discriminatory taxation of like products
• Para. 2.2: discriminatory taxation of competitive
products
• Para 4: all other forms of discrimination
• Not only between goods that are subject to a
concession, but generally
Art. III.1 GATT
• “The contracting parties recognize that internal
taxes and other internal charges, and laws,
regulations and requirements affecting the
internal sale, offering for sale, purchase,
transportation, distribution or use of products,
and internal quantitative regulations requiring the
mixture, processing or use of products in specified
amounts or proportions, should not be applied to
imported or domestic products so as to afford
protection to domestic production.*
• -> Only binding measures
Pertinent Measures
• Internal taxes and other charges
– Even if adjusted at the border
• Marketing requirements (sale, offering for sale,
purchase, transportation, distribution or use of
products
• Content requirements (internal quantitative
regulations requiring the mixture, processing or
use of products in specified amounts or
proportions)
• Not: public procurement (8 a, see the PTA) and
subsidies (8 b, see Art. XVI GATT and the SCMA)
• Etc.
Note to III:1 – Border Tax adjustment
• “Any internal tax or other internal charge, or any
law, regulation or requirement of the kind
referred to in paragraph 1 which applies to an
imported product and to the like domestic
product and is collected or enforced in the case of
the imported product at the time or point of
importation, is nevertheless to be regarded as an
internal tax or other internal charge, or a law,
regulation or requirement of the kind referred to
in paragraph 1, and is accordingly subject to the
provisions of Article III.“
Art. III: 2 Tax discrimination
• Internal taxes and charges
• Aims and effects of the measure are not relevant
• Formal discrimination (2.1)
– Per se prohibited
– Of like products (narrow)
– If taxation in excess (even if small amount)
• Factual protectionist discrimination (2.2)
– If real protectionism
– Of directly competitive or substitutable products
– If taxation in excess more than de minimis
Art. III. 4 – General NT Obligation
• Other laws, regulations and requirements
– Marketing requirements, but not necessarily aiming at
particular products
• treat imported like products as identified by
–
–
–
–
the properties, nature and quality of the products
the end-uses of the products
consumers' tastes and habits
tariff classification of the product
• less favorable than domestic products
– Protective effects have not to be proven by the
claimant
TRIMS
• MTA concerning TRIMS
• Violating arts. III: 4 (internal) or XI (at the
border). Examples in the TRIMS Annex
– Art. III: 4
• Local content rules
• Mandatory relations between imports or exports
– Art. XI
• Import performance
• Export performance
Decisions
• Italian discrimination against imported agricultural
machinery (23.10.1958), L/833, BISD 7S/60
• United States - Standards for Reformulated and
Conventional Gasoline (WT/DS2/R)
• United States - section 337 of the Tariff act of 1930,
decided by a GATT panel in 1989 L/6439, BISD
36S/345
• European Communities - Measures Affecting Asbestos
and Asbestos-Containing Products (WT/DS135/AB/R)
• Korea -- Measures affecting imports of fresh, chilled
and frozen beef, that was decided by the Appellate
Body in 2001 (Korea – Beef (WT/DS161,169/AB/R)
Art. XVII GATS
• Measures affecting trade in services (I: 3)
• Treatment less favorable of
• Like services or service providers
– According to the characteristics
– The classification
– The consumers‘ tastes and habits
• If a Member commits some services or sectors in
its schedule according to their modes (I: 2).
Conditions and restrictions admissible
• I.e. NT in GATS is only applicable with restrictions