Documentos de Académico
Documentos de Profesional
Documentos de Cultura
Introduction
“ (…)
Let me share a small secret with you. Our economists were largely inspired by your
work on the relationship between trade and growth in preparing our 2008 World Trade
Report on “Trade in a Globalizing World”. The Report looks into the role of trade in an
interconnected world and the challenges facing governments to ensure it results in greater
prosperity for its citizens. You may want to check the number of quotes of your faculty in this
now famous publication!
It will come as no surprise to you, therefore, that I shall focus my remarks this
evening on international trade, its economic underpinning and its political realities. Two
sides of the same coin.
I have recently read that the financial crisis and the economic downturn have
become such central preoccupations of policymakers and the public at large that there is no
room to worry about trade any more. This kind of compartmentalization, I think, reflects a
narrow view — one that disregards the inseparability of all aspects of international economic
governance.
We already see how financial difficulties are squeezing trade opportunities as trade
financing dries up in respect of far too many potential trade transactions. We can also see the
lay-offs of thousands of workers in factories in China as demand in developed countries
contracts.
The case for open trade has a long and rich intellectual history. David Ricardo's
intuition that the gains from international trade are rooted in the law of comparative
advantage2 has provided the backbone for 200 years of trade theory and practice.
Traditional theories taught us that countries — like people — gain from trade
because they are different, and that it is relative rather than absolute differences in
production costs that make trade profitable. This last insight provides the vital intellectual
underpinning for the argument that all countries can gain from trade — you only have to be
more competitive in relative, and not absolute, terms across production activities to gain
from trade. Understanding this reality has been indispensable to the efforts of many over the
last six decades and more to build a more open and inclusive multilateral trading system.
Even more recently, new data sets with information on production and trade
revealed considerable differences among firms, challenging the standard assumption that we
could treat producers as identical and think in terms of ‘the representative firm’. The
theoretical formulations resulting from these new insights demonstrate that opening up
to trade does not just offer new opportunities to specialize productively. It also raises
the average level of productivity of domestic industries. These insights have been dubbed
1
The Doha Development Round or Doha Development Agenda (DDA) is the current trade-negotiation round
of the World Trade Organization (WTO), which commenced in November 2001. Its objective is to lower trade
barriers around the world, which allows countries to increase trade globally. As of 2008, talks have stalled over a
divide on major issues, such as agriculture, industrial tariffs and non-tariff barriers, services, and trade remedies.
The most significant differences are between developed nations led by the European Union (EU), the United States
(USA), and Japan and the major developing countries led and represented mainly by India, Brazil, China, and South
Africa. There is also considerable contention against and between the EU and the U.S. over their maintenance of
agricultural subsidies—seen to operate effectively as trade barriers.
The Doha Round began with a ministerial-level meeting in Doha, Qatar in 2001. Subsequent ministerial meetings
took place in Cancun, Mexico (2003), and Hong Kong (2005). Related negotiations took place in Geneva,
Switzerland (2004, 2006, 2008); Paris, France (2005); and Potsdam, Germany (2007).
The most recent round of negotiations, July 23-29 2008, broke down after failing to reach a compromise on
agricultural import rules. After the breakdown, major negotiations were not expected to resume until 2009.
Nevertheless, intense negotiations, mostly between the USA, China, and India, were held in the end of 2008 in order
to agree on negotiation modalities. However, these negotiations did not result in any progress.
2
Ricardo argued that there is mutual benefit from trade (or exchange) even if one party (e.g. resource-rich country,
highly-skilled artisan) is more productive in every possible area than its trading counterpart (e.g. resource-poor
country, unskilled laborer), as long as each concentrates on the activities where it has a relative productivity
advantage
This rapid journey through the history of trade theory is a useful reminder of the
diverse sources of gains from trade, including increased efficiency, the realization of
economies of scale, greater product variety and higher productivity.
But trade theory, just like trade, is not much use as an end in itself. Theory is useful
if it informs policy and trade is useful if it enhances the human condition. And on both
these counts, realism and intellectual honesty require that we consider the costs and the
politics associated with trade. If the beginning and end of the story was that trade was
unconditionally beneficial to all and that the more we had of it the better, then governments
would surely embrace it unilaterally and without question. And there would certainly be no
need for the WTO Agreement to manage international trade relations!
➊ As far back as Ricardo, we have understood that trade creates winners and
losers. It affects the distribution of income within societies. For example, traditional
theories predict that when industrialized countries import labour-intensive goods from
emerging economies that are abundant in low-skill workers, the result is lower demand and
therefore lower wages for low-skill workers in the industrialized world.
While the recent literature appears to have converged to the view that other forces — most
prominently technological change — have been rather important in changing income
distribution, there is no doubt that trade can contribute to rising wage inequality. This does
not, however, offer an argument for protection, or for turning our backs on openness.
Rather, it makes a powerful case for attending to the social tensions arising from inequality,
be this through public provision of basic services, better education and training
opportunities or fiscal reform.
➋ A second political issue concerns a ‘collective action’ problem. The gains from
trade opening tend to be distributed widely within societies and individual gains from trade
opening may be relatively small. But the losses from trade reform tend to hit relatively small
groups, and are often heavily concentrated. The losers from greater trade opening have a
higher incentive to lobby against trade reforms than the winners. This may slow down
or reverse the process, even though overall gains exceed overall losses.
➌ A third issue relates to uncertainty. Voters tend to prefer the status quo — that is,
they will vote against trade reform — as they may not know in advance whether they will be
among the winners or losers from reform. The fragmentation of production implied by off-
shoring intensifies uncertainty and public reticence to embrace change that is beneficial
overall.
› Conclusions
The policy challenge I have outlined this evening is that of balancing the significant
economic — not to mention socio-political — advantages of international engagement
through trade with social justice and a perceived sense of legitimacy. This is not a new
challenge, it is just a more intense and pressing one.
For national policymakers in the industrialized world, disregard for rising public
concern about some aspects of globalization would threaten to undermine the legitimacy of
governments and imperil social support, as would neglect of the gains from trade. The
answer to this tension lies in a balance between open markets and complementary domestic
policies, along with international initiatives that manage the risks arising from globalization.
{ Since 94, theory of comparative advantages has grown up. There is a conviction
that international trade is normally for the benefit of everyone. It’s demonstrated that the
gain for society from trade outweighs the losses of competition. The conviction is the value
created by international trade through specialization and exchange in open markets is far
over the losses of competition. That’s why barriers are progressively deleted. This doctrine
has been announced by Adam Smith “it’s the maxim to every master of household never to
attempt to make at home what will cost him more than to buy. The shoemaker should not
have created his clothes but has to recruit a tailor”.
Pascal LAMY says Ricardo has been the base of international trades during 200
years. If Ricardo’s theory works in Europe, it’s not so true in Africa. If a lot of value has
been created, competition too, illustrating the cruelty of the system.
Only a temporary agreement on tariffs and trades has been signed in 47. Theses
institutions were put in force in order to preserve peace. Ahah. It was one the Bretton Woods
goals. The World Bank was devoted to financing the rebuilding of destroyed, at least
drained, economies, to avoid them to turn into communism. The IMF was supposed to
guarantee that the states should not use their currencies in a belligerent way. It was also
supposed to promote international exchanges between countries. GATT became an informal
institution as time past. Now, IMF has more a political aim than its economic one
Le nouvel ordre économique international, utopie, a été une revendication des PED
et ensuite des non-alignés, qui a fini par recevoir un écho devant l’ONU. Elle visait
principalement la possibilité de nationalisation d’activités sans préemption du Droit
international. De nombreux conflits ont apparu, avec par exemple des affaires devant les
tribunaux arbitraux. Les contours de ce nouvel ordre, d’abord flous, ont fini par être rejetés
peu à peu. Au début des années 80, ce n’était plus qu’une trace dans l’histoire.
The private banks became more powerful the IMF to lend international
currencies, dollars of course. Private banks became more influent. In fact, English and
American private banks considered banking regulation were too strict. In example, during
the 50’s, English banks couldn’t keep currencies in reserve. American banks started to
outsource their activities in Europe. Private banks end up by kept petrodollars from
petromonarchies and nowadays petroeuros.
The round was supposed to end in December 1990, but the US and EU
disagreed on how to reform agricultural trade and decided to extend the talks. Finally, In
November 1992, the US and EU settled most of their differences in a deal known informally
as “the Blair House accord”, and on April 15, 1994, the deal was signed by ministers from
most of the 123 participating governments at a meeting in Marrakesh, Morocco.
3
http://www.wto.org/english/thewto_e/whatis_e/tif_e/fact5_e.htm
---
En cadeau…
After all necessary background information has been acquired, the working party
focuses on issues of discrepancy between the WTO rules and the applicant's international
and domestic trade policies and laws. The working party determines the terms and
conditions of entry into the WTO for the applicant nation, and may consider transitional
periods to allow countries some leeway in complying with the WTO rules.
The final phase of accession involves bilateral negotiations between the applicant
nation and other working party members regarding the concessions and commitments on
tariff levels and market access for goods and services. The new member's commitments are
When the bilateral talks conclude, the working party sends to the general council
or ministerial conference an accession package, which includes a summary of all the working
party meetings, the Protocol of Accession (a draft membership treaty), and lists ("schedules")
of the member-to-be's commitments. Once the general council or ministerial conference
approves of the terms of accession, the applicant's parliament must ratify the Protocol of
Accession before it can become a member.
In the two dolphin Tuna cases, US amended the act to provide the importation of
tuna from other countries. It would be conditioned by a positive statement by us official4,
saying tuna has been fished under the respect5 of the same obligation that us fishermen.
Because Mexico and some other countries didn’t respect these obligations, us
declared an embargo on these countries. These countries revolt. Us justified the embargo
under the 20’ article, saying a state can adopt a measure to protect natural resources. Us
position were declared wrong. If they really want to protect dolphins, they should try to
protect a multilateral agreement in this matter. They prefer to adopt unilateral sanctions
against countries. And that’s against GATT. EU and Nederland have renewed the tuna
dolphin case. As in the first case, article 20 doesn’t permit the US to adopt unilateral
measures like these.
The WTO try to shift the debate on a political level towards environment. Opening
up trades and combating climate effects can have a positive impact of green house gazes,
including transfer of clean technologies. Rising incomes with trade opening can also have
social dynamics, particularly on developed economies.
4
http://www.patentstorm.us/patents/5575102/description.html
5
http://www.earthisland.org/dolphinSafeTuna/consumer/
6
http://www.wto.org/english/tratop_e/envir_e/edis08_e.htm
--
WTO Deal with the existent rules and so Implement WTO agreements. This is one
of its major functions. It involves a lot of bodies in WTO. In 1995, a committee has been
established, to deal to any question related to the market access. It has to supervise the
implementation of concessions by members on tariffs. It has also to oversee the application
of procedures for modifications or withdraw on tariffs concessions. Every agreement must be
managed.
WTO is also a Forum for trade negotiations. The Doha round has been launch in
2001. It was supposed to be concluded in 2005. It is still not up. The Doha round could be
concluded with a new Doha round.
WTO monitors trade policies. There is a trade policy mechanism. The Kennedy
round, strengthened by the Marrakech Uruguay Round made up this policy. It implies a
review system, a control system. Every 2 years for EU, USA, Japan and Canada members. For
the 60 other largest trading nations, reviews take place every 4 years. Other members have
been reviewed every 6 years. This review has to reveal the transparency mechanism of WTO.
It is not supposed to give arguments, to be a source of disputes, but to put some pressure on
countries. Each country write a report, explaining what’s relevant in WTO’s matters, and a
second report is release by the WTO Administration. The trade policy review body is the
general assembly of the WTO members to discuss trade policy reviews of members. They
take account of these reports and discuss it. EU was one of the last one. The next one:
Maldives’ Islands, followed by RSA, NIGER…
The article 7 of the WTO agreement explains that function. In fact, that’s derived
from a mandate released in 1993. The mandate has been implemented in the Doha final
version. Art 5 : WTO cooperates with IMF, doesn’t have to with UN. There are some
observers members, like OECD. Each body of the WTO has a list of accepted observers,
depending on the topic. The WTO can also have relationship with NGO. Art. 5 suggests it.
NGO can participate in or organize discussion sessions around a specific topic.
Cancún, 2003
Doha, 2001
Seattle, 1999
Geneva, 1998
Singapore, 1996
A · General Council
Ambassador-level diplomats and normally meets once every two months
The General Council, the DSB, and the TPRB are in fact the same body
although they each have their own chairperson and rules of procedure.
Appellate Body
D · WTO Secretariat
-- Seems highly neglected (!) --
A · Normal Procedure
Consensus, or Majority (one country, one vote)
B · Special Procedures
Interpretation: ¾ majority
7
http://www.wto.org/english/thewto_e/secre_e/budget08_e.htm
Section 1 Non-Discrimination
It has two major components: the most favoured nation (MFN) rule, and the
national treatment policy. Both are embedded in the main WTO rules on goods, services,
and intellectual property, but their precise scope and nature differ across these areas.
➋ The beneficiary of the MFN-T is not a country, but “like products”; art. 1 GATT:
The second one is the real beneficiary. Fact is there is no definition of liked
products. Liked products are supposed to be established case by case. A common point is
“We agree with the practice under the GATT 1947 of determining whether
imported and domestic products are “like” on a case-by-case basis” (Japan — Alcoholic
Beverages II, p. 19-20, DSR 1996:I, p. 97 at 112-113 (WT/DS8/AB/R, WT/DS10/AB/R,
WT/DS11/AB/R))
“There can be no one precise and absolute definition of what is “like”. The concept
of “likeness” is a relative one that 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. … (N.1.3.1.2 Japan — Alcoholic Beverages II, p. 21, DSR 1996:I, p. 97 at
114 (WT/DS8/AB/R, WT/DS10/AB/R, WT/DS11/AB/R))
The fourth aims the extension of advantages. And it’s unconditional, except social
ones, custom duties, non-unconditional advantages.
Does the term requests from the members to impose no conditions at all in the first
place, when they grand an advantage?
“(…) We observe that Article I:1 does not cover only “in law”, or de jure,
discrimination. As several GATT panel reports confirmed, Article I:1 covers also “in fact”, or de
facto, discrimination. Like the Panel, we cannot accept Canada’s argument that Article I:1
does not apply to measures which, on their face, are “origin-neutral”. (M.2.1.2 Canada —
Autos, para. 78 (WT/DS139/AB/R, WT/DS142/AB/R))
Market access for goods in the WTO means the conditions, tariff and non-tariff
measures, agreed by members for the entry of specific goods imported from abroad into
their markets
Market access for services means all the regulations, which are conditional on the
delivery of these services in the internal market.
The contracting parties recognize that customs duties often constitute serious
obstacles to trade; thus negotiations on a reciprocal and mutually advantageous basis,
directed to the substantial reduction of the general level of tariffs and other charges on
imports and exports and in particular to the reduction of such high tariffs as discourage the
Dixit Article XXVIII bis, “The contracting parties recognize that in general the
success of multilateral negotiations would depend on the participation of all contracting
parties which conduct a substantial proportion of their external trade with one another”.
2 · Principles
The principle of reciprocity and mutual advantages is central to trade
negotiations. No one should be injured, considered as loosing anything at the end of
the negotiations.
Dixit Annex 1, ad Article XXXVI : « It is understood that the phrase “do not
expect reciprocity” means, in accordance with the objectives set forth in this
Article, that the less-developed contracting parties should not be expected, in
the course of trade negotiations, to make contributions which are
inconsistent with their individual development, financial and trade needs,
taking into consideration past trade developments. »
They are set out in each Member’s « Schedule of concessions on goods ». These
tariffs are published. There is a permanent transparency in this regard. It is possible for
Member to modify or withdraw tariff concessions only after negotiation under specific
conditions (renegotiation). The Member seeking modification or withdrawal of concessions is
expected to give compensatory concessions on other products.
Under the GATT 1947, these negotiations have taken place in the context of
eight successive rounds (Geneva, Annecy, Torquay, Geneva, Dillon, Kennedy, Tokyo,
Uruguay). These negotiations have been successful: the rates passed from an average
B · Exceptions
Quantitative restrictions may be temporarily applied to prevent or relieve
critical shortages of foodstuffs or other essential products to the exporting contracting
party
Quotas have been authorized for certain products (textile, until 2005)
2 · Precision on QR’s
They are prohibited not only as regards importation, but also as regards
exportations.
It says that members must not seek, take or maintain any voluntary export
restraints, orderly marketing arrangements or any other similar measures on
the export or the import side. The bilateral measures that were not modified
to conform with the agreement were phased out at the end of 1998.
Countries were allowed to keep one of these measures an extra year (until
the end of 1999), but only the European Union — for restrictions on imports
of cars from Japan — made use of this provision.
Paragraphe 3rd Other Duties and Financial Charges (Art. II 1-A-b / Art. II 2-c / Art. VIII A-a)
Art. II A (b) of the GATT stipulates that regarding to products on which
there is a tariff concession, no other duties and financial charges may be
imposed in excess of those imposed in 1948 or at the moment of accession of
the Member concerned.
Art. II 2 (c) states that new fees or charges can be created, but only if they are
« commensurate with the cost of services rendered.
Art. VIII A (a) states that these fees and charges must be limited to the
approximate cost of services rendered.
Section 3 Exceptions
Art. XXXVI sets out the principle and objectives of the GATT 1994 in
contributing to the development of developing country Members. This article
incorporates the principle of non-reciprocity in trade negotiations
between developed and developing country Member.
This Decision allows developed country Members to depart from the MFN-T in their
trade relations with developing countries and to grant to these countries « differential and
more favourable treatment » « without according such treatment to other Members ».
Does the contested measure come under one of the specific exceptions?
Does the measure at issue satisfy the requirement of the chapeau of Art. XX?
In the United States-Tuna Dolphin Case, the Panel considered that the United States
measure, even if Article XX (b) were interpreted to permit extrajurisdictionnal protection of
life and health, would not meet the requirement of necessity set out in that provision.
D · Art. XX (g) › Conservation of exhaustible natural resources if such measures are made effective
in conjunction with restrictions on domestic production or consumption
This exception concerns measures « relating to the conservation of exhaustible
natural resources if such measure are made effective in conjunction with restrictions on
domestic production or consumption ».
The objective of the chapeau of Art. XX is not so much the measure itself, rather the
manner in which that measure is applied. Its purpose and object are to prevent abuse of
the exceptions of article XX that would result in defeating and frustrating the objectives of
GATT 1994
➌ Safety; (…)
Paragraphe 3rd Security Exceptions (GATT, Art. XXI / GATS, Art. XIV bis)
The security exceptions allow members to take measures, which depart from GATT
disciplines to achieve security objectives.
There is, first, the national security exception. It empowers Members with the
right to refuse the disclosure of information based on security grounds, but also to take
any action such as unilateral embargoes, as regards fissionable materials, relating to
traffic in weapons, or in time of war or other emergency in international relations.
There is also the exception relating to the actions under the UN Charter for the
maintenance of peace and security.
It has been the case in the 1980’s when sanctions have been taken again South
Africa.
§1. (a) If, as a result of unforeseen developments and of the effect of the
obligations incurred by a contracting party under this Agreement, including tariff
concessions, any product is being imported into the territory of that contracting party in
such increased quantities and under such conditions as to cause or threaten serious injury to
domestic producers in that territory of like or directly competitive products, the contracting
party shall be free, in respect of such product, and to the extent and for such time as may be
necessary to prevent or remedy such injury, to suspend the obligation in whole or in
part or to withdraw or modify the concession. The conditions to adopt safeguard
measures are very numerous, and difficult to meet.
§2 of the same article states that other WTO Member can request for
compensation from the State adopting the measures, if the safeguard measure cause them a
disadvantage.
To attain this objective, the importing Member may first negotiate trade
compensation with the affected Members for the adverse effects of the measure.
8
http://unctad.ch/en/docs/edmmise232add16_en.pdf
It was easier for Contracting Parties than to face the request for compensation from
the rest of the contracting parties, and could be “targeted”, contrary to safeguard measures
(principle of non discrimination).
Precisions are given concerning the interpretation that should be given to the
conditions enunciated by article XIX.
The agreement describes how quotas can be allocated among supplying countries,
including in the exceptional circumstance where imports from certain countries have
increased disproportionately quickly.
9
› http://unctad.ch/en/docs/edmmisc232add16_en.pdf
› The Safeguards Mess: A Critique of WTO Jurisprudence, Alan O. Sykes, Stanford Law School, June 2003, U
Chicago Law & Economics, Olin Working Paper No. 187
› http://papers.ssrn.com/sol3/papers.cfm?abstract_id=415800&rec=1&srcabs=415780
Dixit Art. XXIV, 8, b: « A free-trade area shall be understood to mean a group of two
or more customs territories in which the duties and other restrictive regulations of commerce
(except, where necessary, those permitted under Articles XI, XII, XIII, XIV, XV and XX) are
eliminated on substantially all the trade between the constituent territories in products
originating in such territories ».
For example, North American Free Trade Agreement (NAFTA), African Free Trade
Zone (AFTZ), Central European Free Trade Agreement (CEFTA), or the Southern Common
Market (MERCOSUR), and maybe too the Association of Southeast Asian Nations (ASEAN)
Free Trade Area (AFTA).
2 · Custom Union
A customs union, unlike a free trade area, requires its members to
adopt a common external tariff of customs duties. The objective is to enable goods
(NOT LABOUR OR CAPITAL) to move freely throughout the union.
Subject to the provisions of paragraph 9, substantially the same duties and other
regulations of commerce are applied by each of the members of the union to the
trade of territories not included in the union »
3 · Economic Integration
An economic integration is an agreement liberalizing trade in services between or
among the parties to such an agreement.
B · Are Preferential Trade Agreements coherent with WTO law? (Art. XXIV)
« Regional » agreements are considered to be beneficial to the development
of international trade.
The first condition is that the area cannot be less advantageous for non-members of
the area than was the situation before.
For a FTA, customs duties imposed by each member must not increase or be more
restrictive. For a CU, the duties cannot on the whole be higher or more restrictive.
There is no contestation if the overall balance is for the benefit of the other states
(tariffs are substantially lowered). But in the reverse situation, the Union has to offer
compensations to other states, in negotiations with a view to achieve a mutually satisfactory
compensatory adjustment. The negotiating process is the same than the normal procedure
for tariff renegotiation.
The second one is that an interim agreement must include a plan and a schedule
for the formation of a custom union of a free trade within a reasonable length of time, which
should not exceed 10 years except in exceptional circumstances.
The third condition is that the agreement must be notified to the WTO for review.
The committee on regional trade agreement has to determine their compatibility with the
WTO agreements.
The examination by the committee is conducted on the basis of information provided by the
parties to the PTA, through written replies to written questions posed by WTO members or
through oral replies to questions posed at CRTA meetings. Once the factual examination is
concluded, the Secretariat drafts the examination report. Thereafter, consultations are
conducted and once the report is agreed by the CRTA, it is submitted to the relevant superior
body for adoption.
Interpreting the wording of art. XXIV of the GATT and V of GATS has proved highly
controversial.
In the Doha declaration, members agreed to negotiate a solution, giving due regard to the
role that these agreement (x)
From 1948 until 1994, GATT has received 124 notification of PTA relating to trade in goods,
and since the creation of the WTO in 1995, almost 300 additional arrangements covering
trade in goods or services have been notified.
Between January 2004 and February 2005, 43 PTAs have been notified to the WTO. Between
October and June, 10 new regional trade agreements have been notified.
http://www.wto.org/english/res_e/booksp_e/discussion_papers8_e.pdf
It has been unsuccessful in developing new competition law rules. But it has some
rules that relate to specific forms of unfair trade. Those rules concern dumping and subsidies.
Normally, it is the responsibility of each State to decide if, and to what extent, it
wishes to grant subsidies
But subsidies might also have adverse effects on trading interests of other WTO
members.
Generally, subsidies allow to lower the prices of the products subsidized. In this
context, subsidies can undermine market access commitments by importing nations. If an
administration grants subsidies to its national undertakings, the products sold by these
undertakings on the national market will have a competitive and abnormal advantage
against imported products. Secondly, subsidies can divert customers from one exporting
nation to another. If A subsidizes the products it exports, when B does not, then the
consumers from C will prefer to buy products imported from A.
In the same way, if A grants subsidies to its exporting undertakings, the consumers
from B will prefer to buy imported products from A than to by national products that are not
subsidized.
10
http://unctad.ch/en/docs/edmmisc232add14_en.pdf
These laws have as their effect to increase the tariff paid for the importation of the
subsidized product, compared to the normal tariff. This if of course a “protection”, but
this is acceptable, as long as the duty is calculated in good faith.
C · WTO Law
1 · Overview
Current WTO law is contained in the agreement on subsidies and countervailing
measures adopted in Marrakech. This agreement is far more precise than what was in force
until then.
This agreement accepts that WTO Members protect themselves against subsidies,
but under certain conditions. It provides for two forms of relief:
2 · Definition
There must be a common definition of subsidies. Then the agreement contains
such a definition.
1.1 For the purpose of this Agreement, a subsidy shall be deemed to exist if:
11
http://www.wto.org/english/docs_e/legal_e/24-scm.pdf
The definition contains three basic elements: (➊) a financial contribution, (➋) by a
government or any public body within the territory of a Member, (➌) which confers a
benefit. All three of these elements must be satisfied in order for a subsidy to exist.
➀ Contribution
➁ Benefit
The disciplines set out in the agreement only apply to subsidies granting a
“benefit”. Canada — Aircraft, para. 157 (WT/DS70/AB/R)
(a) Where the granting authority, or the legislation pursuant to which the
granting authority operates, explicitly limits access to a subsidy to certain
enterprises, such subsidy shall be specific.
(b) Where the granting authority, or the legislation pursuant to which the
granting authority operates, establishes objective criteria or conditions
governing the eligibility for, and the amount of, a subsidy, specificity shall not
exist, provided that the eligibility is automatic and that such criteria and
conditions are strictly adhered to. The criteria or conditions must be clearly
spelled out in law, regulation, or other official document, so as to be capable
of verification.”
3 · Categories of subsidies
There can be “domestic” or “export” subsidies.
The agreement defines two categories of subsidies: prohibited (red box) and
actionable (orange box). It originally contained a third category: non-actionable
subsidies (green box). This category existed for five years, ending on 31 December 1999,
{Ce qui n’est une fois encore que le rappel craignos d’un article, ici le SCM}.
i) Prohibited subsidies
The prohibited subsidies are the one that require recipients to meet certain export targets, or to
use domestic goods instead of imported goods.
(a) Subsidies contingent, in law or in fact, whether solely or as one of several other conditions, upon
export performance, including those illustrated in Annex I;
(b) Subsidies contingent, whether solely or as one of several other conditions, upon the use of domestic
over imported goods.
They are prohibited “per se” because they are specifically designed to distort international trade, and are
therefore likely to hurt other countries’ trade.
They can be challenged in the WTO dispute settlement procedure where they are handled under an
accelerated timetable. If the dispute settlement procedure confirms that the subsidy is prohibited, it must be
withdrawn immediately. Otherwise, the complaining country can take counter measures. If domestic producers are
hurt by imports of subsidized products, countervailing duty can be imposed. There is no “compensation” for the
Members adversely affected by the subsidy.
In this category the complaining country has to show that the subsidy has an adverse effect on its
interests. Otherwise the subsidy is permitted. If the Dispute Settlement Body rules that the subsidy does have an
adverse effect, the subsidy must be withdrawn or its adverse effect must be removed. Again, if domestic producers
are hurt by imports of subsidized products, countervailing duty can be imposed.
Dixit 5 SCM, “No Member should cause, through the use of any subsidy referred to in
paragraphs 1 and 2 of Article 1, adverse effects to the interests of other Members, i.e.:
“16.1 : For the purposes of this Agreement, the term “domestic industry” shall, except as
provided in paragraph 2, be interpreted as referring to the domestic producers as a whole of the
like products or to those of them whose collective output of the products constitutes a major
proportion of the total domestic production of those products, except that when producers are
related to the exporters or importers or are themselves importers of the allegedly subsidized
product or a like product from other countries, the term “domestic industry” may be interpreted
as referring to the rest of the producers.”
Serious prejudice in the sense of paragraph (c) of Article 5 shall be deemed to exist in the case of:
4 · Countervailing Measures
The SCM Agreement sets forth certain substantive and procedural requirements
that must be fulfilled by any State planning to impose a countervailing measure.
i) subsidized imports,
Iii) a causal link between the subsidized imports and the injury.
Concerning the procedural rules, they are regarding the initiation and
conduct of countervailing investigations, the imposition of preliminary
and final measures, the use of undertakings, and the duration of
measures.
The principles are that the investigations must be conducted in a transparent and
“contradictory manner, and that investigating authorities adequately explain the bases for
their determinations.
At first sight, dumping is a good news for the consumers of the export market: they
can buy the product “dumped” at a lower price.
12
http://unctad.ch/en/docs/edmmisc232add14_en.pdf
Difference with SCM: Dumping is an action by a company, which sells its products
at a price under the price it charges on its own home market. In the context of subsidies, it is
the government or a government agency that acts.
WTO is an organization of countries and their governments. The WTO does not
deal with companies and cannot regulate companies’ actions such as dumping.
Therefore the Anti-Dumping Agreement only concerns the actions governments may
take against dumping.
B · National laws
A dumping that does not cause any injury to the domestic producers is normally
the object of no prohibition. But if such dumping injures the domestic producers in the
importing country will be conducted to impose anti-dumping duties to offset the effects of
the dumping.
National anti-dumping legislation dates back to the beginning of the 20th century.
In the US, the “old” law was promising jail for the dumpers.
C · The GATT
The GATT 1947 contained a special article on dumping and antidumping action.
Article VI of the GATT condemns dumping that causes injury, but it does not prohibit it.
GATT Art. VI-1 “The contracting parties recognize that dumping, by which
products of one country are introduced into the commerce of another
country at less than the normal value of the products, is to be condemned if
it causes or threatens material injury to an established industry in the territory
of a contracting party or Rather, Article VI authorizes, under certain
conditions, the importing Member to take measures to offset injurious
dumping.
GATT Art. VI-1 “The contracting parties recognize that dumping, by which
products of one country are introduced into the commerce of another
country at less than the normal value of the products, is to be condemned if
it causes or threatens material injury to an established industry in the territory
of a contracting party or materially retards the establishment of a domestic
industry.”
Lastly, it explains the WTO procedures that can be engaged by a States when
the requirements have not been respected.
1 · Determination of the Dumping margin (difference between the normal value and the export price)
In the current law, dumping of services is not covered. Indeed, the General
Agreement on Trade in Services, negotiated during the Uruguay Round, does not contain
provisions with respect to dumping or anti-dumping measures.
Neither Article VI (nor the ADA) cover exchange rate dumping, social dumping,
environmental dumping or freight dumping.
The major difficulty with the implementation of the dumping regulation is to draw
a comparison permitting to demonstrate the existence of a dumping. The WTO law gives the
relevant guidelines.
If the authorities find a pattern of export prices which differ significantly among
different purchasers, regions or time periods, and if an explanation is provided as to why
such differences cannot be taken into account appropriately by the use of one of the two
principal methods; In such a case, there can happen that some comparisons reveal a
dumping, while others do not, or even show a negative dumping.
The negative dumping occurs because the export price is actually higher than the
normal value. If the negative dumping for certain sales can be used to offset the positive
dumping amount of the other sales, no dumping will be found to exist.
However, it has been the practice of some WTO Members not to allow such offset
and to attribute a zero value to negatively dumped transactions. This is known as the
practice of zeroing.
Some WTO Members applied a new type of zeroing: inter-model zeroing. If, for
example, model A was dumped while model B was not dumped, the Members would not
allow the negative dumping of model B to offset the positive dumping of model A.
“we are also of the view that a comparison between export price and normal value
that does not take fully into account the prices of all comparable export transactions – such
as the practice of “zeroing” at issue in this dispute – is not a “fair comparison” between
export price and normal value, as required by Article 2.4 and by Article 2.4.2.;
“As regards, finally, the WTO Appellate Body’s reference at the end of paragraph 55
of the Bed linen report to the unfairness of a comparison that does not take into account all
comparable export transactions, the Court considers that this reference, despite its apparent
generality, cannot, in the light of the abovementioned considerations, be interpreted as
meaning that zeroing is wrong in every context.
It follows from the foregoing that, contrary to what the applicants claim, the Bed
linen report concerns only the model-zeroing technique in the context of the first
symmetrical method and cannot be considered to deal with this mechanism also when it is
used in the context of the asymmetrical method.
Therefore, even if, as the WTO Appellate Body found, it might indeed be contrary
to Article 2.4.2 of the 1994 Anti-dumping Code and unfair to employ the model-zeroing
technique in the context of the first symmetrical method, and especially in the absence of a
difference in the export price pattern, it is not contrary to that provision or to Article 2(11) of
the basic regulation, or unfair within the meaning of Article 2(10) of that regulation, to
employ the zeroing technique in the context of the asymmetrical method, where the two
conditions for applying that method are met. »
The Community appealed against a number of the Panel’s findings. The WTO
Appellate Body (‘the Appellate Body’), in its report of 1 March 2001, confirmed that the
practice of ‘zeroing’ applied by the Community was incompatible with Article 2.4.2 of the
Anti-Dumping Agreement and that the Community had acted in a manner incompatible
with Article 2.2.2(ii) of the Anti-Dumping Agreement in calculating the amounts
corresponding to administrative, selling and general costs and profits in the anti-dumping
investigation. In the light of those findings, the Appellate Body recommended that the DSB
request the Community to take the measures necessary to ensure the conformity of
Regulation No 2398/97 with its obligations under the Anti-Dumping Agreement.
On 12 March 2001, the DSB adopted the Appellate Body’s report and the report of
the Panel, as amended by the former’s report. …
It considered that the United States acts inconsistently with Articles 2.4 and
2.4.2 of the AD Agreement by maintaining zeroing procedures when
calculating margins of dumping on the basis of transaction-to-transaction
comparisons in original investigations.
There must be an evaluation of all the factors which can be the cause of the
injury, and which are not the attributable to the dumped product.
13
http://centers.law.nyu.edu/jeanmonnet/papers/08/documents/JMWP04-08Cho.doc
The authorities must also examine any other known factors, according to
article 3.5 ADA:
Art. 3.5 proposes a series of factors: the volume and prices of imports not sold
at dumping prices, contraction in demand or changes in the patterns of
consumption trade restrictive practices of and competition between the
foreign and domestic producers, developments in technology and the export
performance and productivity of the domestic industry.
“The text of Article 3.5 refers to “known” factors other than the dumped
imports which at the same time are injuring the domestic industry but does
not make clear how factors are “known” or are to become “known” to the
investigating authorities. We consider that other “known” factors would
include those causal factors that are clearly raised before the investigating
authorities by interested parties in the course of an AD investigation. We are
of the view that there is no express requirement in Article 3.5 that
investigating authorities seek out and examine in each case on their own
initiative the effects of all possible factors other than imports that may be
causing injury to the domestic industry under investigation”.
It may occur that a domestic industry alleges that it is not yet suffering material
injury, but is threatened with material injury, which will develop into material injury unless
anti-dumping measures are taken.
However, because such statements are easy to make, and because any
investigation based on threat of material injury will necessarily be speculative because it
involves analysis of events that have not yet happened, Article 3.7 offers special provisions for
a threat case.
3 · National procedures
a · Initiation (Art. 5 +)
An anti-dumping case normally starts with the official submission of a written
complaint by the domestic industry to the importing Member authorities that injurious
dumping is taking place.
Art. 5 ADA: “an investigation to determine the existence, degree and effect of
any alleged dumping shall be initiated upon a written application by or on
behalf of the domestic industry”.
It must “include evidence of (a) dumping, (b) injury within the meaning of
Article VI of GATT 1994 as interpreted by this Agreement and (c) a causal link
between the dumped imports and the alleged injury. Simple assertion,
unsubstantiated by relevant evidence, cannot be considered sufficient to
meet the requirements of this paragraph” (art. 5.2, ADA).
Article 5.3 imposes the obligation on the importing Member authorities to
examine, before initiation, the accuracy and the adequacy of the evidence in
the application.
The importing Member authorities must determine before initiation that the
application has been made by, or on behalf of, the domestic industry.
The failure to properly determine standing before initiation of the
proceedings renders it illegal.
“An application is made by, or on behalf of, the domestic industry of the
importing Member if it is supported by those domestic producers whose
collective output constitutes more than 50 per cent of the total production of
the like product produced by that portion of the domestic industry
expressing either support for or opposition to the application. However, no
investigation shall be initiated when domestic producers expressly
supporting the application account for less than 25 per cent of total
production of the like product produced by the domestic industry. These
tests are often called the 50 per cent and the 25 per cent test and the
following example may explain their operation” (art. 5.4 ADA).
c · Provisional Measures
Can a State protect itself immediately when the proceedings are engaged?
Provisional measures may take the form of a provisional duty or, preferably, a
security - by cash deposit or bond - equal to the amount of the anti-dumping duty
provisionally estimated .
Provisional measures shall not be applied sooner than 60 days from the date of
initiation of the investigation.
d · Price Undertakings
Can an enterprise recognize its fault and stop the proceedings?
Price undertakings shall not be sought or accepted from exporters unless the
authorities of the importing Member have made a preliminary affirmative determination
of dumping and injury caused by such dumping.
The authorities of the importing Member may suggest Price undertakings, but
no exporter shall be forced to enter into such undertakings.
Article 9.3 introduces the distinction between retrospective and prospective duty
collection systems and requires prompt refunds of over-payments in both cases.
Under the retrospective system, used mainly by the United States, the original
investigation ends with an estimate of future liability; however, the actual amount of
anti-dumping duties to be paid will be established in the course of annual reviews,
covering the preceding one-year period.
Under the prospective system, used by the EC and most other countries, on the
other hand, the findings made during the original investigation form the basis for the future
collection of anti-dumping duties, normally for the five years following the publication of
the final determination.
The retrospective system is more precise than the prospective system. On the
other hand, it is costly and time-consuming for all parties, including the importing
Member authorities.
10.2: Where a final determination of injury (but not for a threat there or a
material retardation of the establishment of an industry) is made or, in the
case of a final determination of a threat of injury, where the effect of the
dumped imports would, in the absence of the provisional measures, have led
to a determination of injury, anti-dumping duties may be levied
retroactively for the period for which provisional measures, if any, have
been applied.
10.3: If the definitive anti-dumping duty is higher than the provisional duty
paid or payable, or the amount estimated for the purpose of the security, the
difference shall not be collected. If the definitive duty is lower than the
provisional duty paid or payable, or the amount estimated for the purpose of
the security, the difference shall be reimbursed or the duty recalculated, as
the case may be”.
Where a final determination is negative, any cash deposit made during the
period of the application of provisional measures shall be refunded and any
bonds released in an expeditious manner.
g · Duration
Art. 11.1 ADA: “An anti-dumping duty shall remain in force only as long as
and to the extent necessary to counteract dumping which is causing
injury”.
“The aim of Article 11.3 of the WTO Anti-Dumping Agreement … is to provide for
the automatic lapse of the duties concerned five years after their imposition unless a review is
initiated. As was rightly pointed out by the Commission in its pleadings, in Article 11.3 of the
WTO Anti-Dumping Agreement …, the clause which provides for the possibility of
maintaining existing duties in force following the initiation of an expiry review of
anti-dumping and countervailing measures was introduced during the negotiations for the
Uruguay round in order to compensate for the introduction of the ‘sunset clause’ triggering
the automatic expiry of anti-dumping and countervailing measures five years after their
imposition.
In that context and regarding to the aim of Article 11.3 of the WTO Anti-Dumping
Agreement (…), it is necessary for the review to be initiated, at the latest, before the
automatic expiry of the anti-dumping and countervailing measures (…). It is apparent from
the foregoing that a review ,which is initiated before midnight on the last day of the normal
period for the application of measures must be regarded as being in conformity with Article
11.3 of the WTO Anti-Dumping Agreement and Article 21.3 of the WTO Anti-Subsidy
Agreement”.
It must be noted that this provision does not state the scope of review (facts?
Law?).
« The applicant claims that the institutions concerned infringed Article 2.4 of the
1994 Anti-dumping Code …
It must be recalled at the outset that, according to settled case-law, having regard
to their nature and structure, the WTO Agreements are not in principle among the rules
in the light of which the Community Courts are to review the legality of measures adopted
by the Community institutions (Case C-76/00 P Petrotub and Republica v Council [2003] ECR
I-79, paragraph 53; Case C-93/02 P Biret International v Council [2003] ECR I-10497,
paragraph 52; and Ikea Wholesale, paragraph 29).
In the present case, the Community adopted the basic regulation in order to meet
its international obligations arising from the 1994 Anti-dumping Code (Petrotuband
Republica v Council, paragraph 56). Furthermore, by means of Article 2(10) of the basic
regulation, it intended to implement the particular obligations laid down by Article 2.4 of
that code. To that extent, it is for the Court to review the legality of the contested regulation
in the light of that latter provision (see, to that effect, Petrotub and Republica v Council,
paragraph 56).
Dixit Part IV of the GATT, called “Trade and Development”: “There is a wide
gap between standards of living in less-developed countries and in other
countries »; « the CONTRACTING PARTIES may enable less-developed
contracting parties to use special measures to promote their trade and
development »; « The developed contracting parties do not expect reciprocity
for commitments made by them in trade negotiations to reduce or remove
tariffs and other barriers to the trade of less-developed contracting parties”;
“etc..” {Loll.}
Paragraphe 2nd Special and Differential Treatment for Developing Country Members
WTO law provides for many special provisions in favour of developing and
least-developed countries, taking into account their particular needs and interests. In
general, these provisions provide, in many areas, for fewer or less demanding
obligations, longer periods for implementation and technical assistance.
There are many reasons for that. The first of these reasons is probably the feeling
that there is a need to guarantee, over time, stable food supplies in a world of potential
famines. From that, it is not without merit to think that agricultural products are not
products « like the others ». Another reason has been the importance of the farms in the
economic activities of countries, and the difficulty in maintaining farm incomes and
populations. It is considered sometimes that the protection of the national farmers is
essential.
M. De SCHUTTER’s case
The UN rapporteur’s focus was on the dangers of trade, taking care that
countries are not too dependent on exporting a limited number of
products, and ensuring government have the freedom to choose their
policies without “these being dictated by the international trade
mechanism”.
M. LAMY’s response
The real obstacles to the right to food are: property ownership systems,
storage facilities, transport and distribution infrastructure, lack of credit,
shortage of water, etc, Mr Lamy said. “When I am in the field, in Burundi,
M. LAMY’s main concern with trade was not dependency but distortions
caused by very high import barriers and “absolutely massive” subsidies. The
WTO’s roles are both to liberalize and to regulate, through 600 pages of
agreed rules, and the two roles should not be confused, he said.
He said the present negotiations will lead to the steepest cuts on the highest
tariffs and “a very large reduction of around 80% in subsidies in countries of
the North” — the US, Europe and Japan.
But the US wanted more liberty as regards their agricultural policy. In 1951, the US
Congress stated that “no trade agreement could be applied in a manner inconsistent
with” Section 22 of the US Agricultural Adjustment Act. In 1955, the US insisted upon and
received a waiver, under the threat that it might otherwise be forced to leave the GATT. This
“temporary” waiver was in force for almost 40 years.
Concerning the subsidies, the original GATT had only a section that required the
contracting parties to report “any subsidy, including any form of income or price support,
which operates directly or indirectly to increase exports of any product from, or to reduce
imports of any product into its territory, to other parties”. Thus, there was originally no
prohibition on subsidies, domestic or export. This became what is now Article XVI , extended
in 1955.
Article XVI-3 says export subsidies shall not be applied in a manner resulting
in having more than an equitable share of world export trade in the aimed product.
“Contracting parties should seek to avoid the use of export subsidies on the
export of primary products. If, however, a contracting party grants directly or
indirectly any form of subsidy which operates to increase the export of the
primary product from its territory, such subsidy shall not be applied in a
manner which results in that contracting party having more than an
equitable share of world export trade in that product, account being taken of
the shares of the contracting parties in such trade in the product during a
previous representative period, and any such special factors which may have
affected or may be affecting such trade in the product”.
Article XVI-4 prohibits export subsides for other, non-primary products, that
means for products that are not agricultural products.
The exemption of agriculture, along with fishery and forestry products, can be
traced to the influence of the US farm lobby. The US position on the export subsidy issue
changed only when it became clear in the 1960s, after the establishment of the EC’s
common agricultural policy in 1962, so that the provisions would be used to the
detriment of the US agricultural sector.
BUT it was foreseen that the high tariff levels resulting from the price setting
process could turn out to be more protective than the previous situation.
This was likely to immediately disrupt existing trade. WTO Members were therefore
obliged to ensure that a certain amount of domestic consumption would continue to be
supplied by imports. All WTO Members agreed to open up their markets to imports for at
least 3 per cent of the domestic consumption in 1995, and for 5 per cent by 2000.
The maintenance of existing trade levels was ensured by means of current access
quotas. In addition, minimum access commitments were created to allow new import
opportunities for products previously covered by a nontariff barrier. Both of these
commitments were administered through the establishment of “tariff-rate quotas”
WTO Members also agreed in the Uruguay Round that once the tariffs were fixed,
they would agree to reduce these tariffs over time, i.e., over six to ten years starting on the
date of the coming into effect of the Marrakesh Agreement in 1995. This is the second step of
the process.
The tariff reductions were fixed at the time of the conclusion of the Uruguay Round
and are also set out in each WTO Member’s Country Schedule.
For developing countries, the cuts are 24 and 10 per cent respectively,
to be implemented over ten years.
But at the same time the Agreement seeks to ensure that agricultural trade is not
distorted through the use of subsidies.
Export subsidies
A · Export subsidies
The Agriculture Agreement prohibits export subsidies on agricultural products
unless the subsidies are specified in a member’s lists of commitments. Where they are listed,
the agreement requires WTO members to cut both the amount of money they spend on
export subsidies and the quantities of exports that receive subsidies. Taking averages for
1986-90 as the base level, developed countries agreed to cut the value of export subsidies by
36% over the six years starting in 1995 (24% over 10 years for developing countries).
Developed countries also agreed to reduce the quantities of subsidized exports by 21% over
the six years (14% over 10 years for developing countries). Least-developed countries do not
need to make any cuts.
B · Domestic support
The main complaint about policies, which support domestic prices or production is
that they encourage over-production. This squeezes out imports or leads to export subsidies
to lower the prices on world markets. But not all subsidies must be condemned: some have
no effect.
Domestic policies that do have a direct effect on production and trade have to be
cut back. WTO members calculated how much support of this kind they were providing per
year for the agricultural sector (using calculations known as “total aggregate measurement
of support” or “Total AMS”) in the base years of 1986-88. Developed countries agreed to
reduce these figures by 20% over six years starting in 1995. Developing countries agreed to
make 13% cuts over 10 years. Least-developed countries do not need to make any cuts.
Subsidies that do not have an impact on trade are for example certain direct
payments to farmers where the farmers are required to limit production, certain government
assistance programmes to encourage agricultural and rural development in developing
countries, and other support on a small scale (“de minimis”) when compared with the total
value of the product or products supported (5% or less in the case of developed countries
and 10% or less for developing countries).
C · Conclusion
The Agreement on Agriculture is an initial attempt at reforming agricultural
trade. WTO Members agreed that negotiations on agricultural trade reform would
continue and set a date for the recommencement of those negotiations.
STA provides that (i) countries already restricting cotton textile imports would
increase the access; (ii) to avoid market disruption in non-restricting
countries, the low cost countries would agree to control exports; and (iii) an
importing country may unilaterally impose restrictions if the exporting
country does not. STA also provides for the establishment of a Cotton Textiles
Committee charged with the task of negotiating a long-term arrangement.
Under the LTA, extensive use was made of bilaterally agreed restraints, as well
as unilateral safeguard actions.
Since both STA and LTA had dealt with only cotton textile products, this
development generated pressure for expanding the coverage to include wool and man-
made fiber products. US launched campaign to secure an agreement covering MMF and
wool products as well. It eventually leads to the conclusion of Multi-fiber Arrangement
(MFA) to go into effect from 1 January 1974. Modeled on the LTA, it expanded the product
coverage.
From 1974 until the end of the Uruguay Round, the textile and clothes sector
was governed not by the GATT but by the Multi-fiber arrangement.
The quotas were the most visible feature. They conflicted with GATT’s general
preference for customs tariffs instead of measures that restrict quantities. They were also
exceptions to the GATT principle of treating all trading partners equally because they
specified how much the importing country was going to accept from individual exporting
countries.
Since 1995, the WTO’s Agreement on textiles and clothes took over from the Multi-
fiber Arrangement. By 1 January 2005, the sector was fully integrated into normal GATT rules.
In particular, the quotas came to an end, and importing countries are no longer able to
discriminate between exporters. The Agreement on Textiles and Clothing no longer
exists: it’s the only WTO agreement that applies to textiles and clothes.
The fact is that the extent of protection and enforcement of these rights varies
widely around the world; and as intellectual property became more important in trade, these
differences became a source of tension in international economic relations. This is why an
agreement on this question has been adopted in Marrakech.
14
http://unctad.ch/en/docs/edmmisc232add18_en.pdf
Both the national and MFN principles are subject to certain limitations and
exceptions. The TRIPS Agreement has an additional principle:
The Berne Convention for the Protection fo Literary and Artistic Works
(copyright).
Some areas are not covered by these conventions and in some cases, the standards
of protection prescribed by these conventions were thought inadequate. So the TRIPS
agreement adds a significant number of new or higher standards. This method is unique:
the TRIPS Agreement is the only one to dictate substantive rules to WTO Members.
1 · Geographical indication
A place name is sometimes used to identify a product: “Champagne”,
“Scotch”,“Roquefort” cheese. Wine and spirits makers are particularly concerned about the
Using the place name when the product was made elsewhere or when it does
not have the usual characteristics can mislead consumers, and it can lead to unfair
competition. The TRIPS Agreement says countries have to prevent this misuse of place
names.
For wines and spirits, the agreement provides higher levels of protection, i.e. even
where there is no danger of the public being misled.
Some exceptions are allowed, for example if the name is already protected as a
trademark or if it has become a generic term. For example, “cheddar” now refers to a
particular type of cheese not necessarily made in Cheddar, in the UK. But any country
wanting to make an exception for these reasons must be willing to negotiate with the
country, which wants to protect the geographical indication in question.
In the public health sector, patent protection may restrict access to medicines
among a large segment of the population by preventing competition from generic
medicines, and it may be antithetical to a wide public interest to permit such a situation to
persist.
But
The licence should be granted predominantly for the supply of the local
market (Article 31(f))
Some members and public interest groups queried whether the flexibility written
into the TRIPS Agreement was sufficient to ensure that it supports public health, especially in
promoting affordable access to existing medicines while also promoting research and
development into new ones.
There has been a change with the Doha Round. What changes is the
provision that says that compulsory licences must be granted mainly to
supply the domestic market (paragraph (f) of Article 31). The 2001 Doha
Ministerial Conference decided that this should be changed so that
countries unable to manufacture the pharmaceuticals could obtain
cheaper copies elsewhere if necessary.
The legal means of making the change was agreed on 30 August 2003,
when the General Council decided to waive the provision, allowing generic
copies made under compulsory licences to be exported to countries that lack
production capacity, provided certain conditions and procedures are
followed.
Members are obligated to ensure that enforcement procedures are “fair and
equitable”, and “not unnecessarily complicated or costly, or entail unreasonable time limits
or unwarranted delays”. There is additional provision on written decisions, opportunities to
present evidence, and obligation to provide judicial review for administrative decision, etc
But Article 41:5 establishes two important principles. First, Members are not
required to establish separate judicial systems for the enforcement of IPRs, as
distinct from general law enforcement. Second, there is no “obligation with
respect to the distribution of resources as between enforcement of
intellectual property rights and the enforcement of law generally”.
The TRIPS Agreement establishes basic principles for the conduct of civil
proceedings, in the legal orders of the WTO member States, to enforce IPRs.
It obligates Members law to have provision for the ordering of “prompt and
effective provisional measures” to prevent entry of infringing goods into
channels of commerce and preserve evidence.
The initiative for including services in the Uruguay Round came from OECD
countries.
When it came into effect in 1995, the General Agreement on Trade in Services (the
“GATS”), negotiated and concluded as a result of the Uruguay Round of multilateral trade
negotiations, was the first multilateral agreement covering this important and growing area
of services trade.
The GATS consists of two main parts: The “General Framework” with its annexes,
on the one hand, and participating countries’ individual “Schedules of Commitment”, on the
other hand.
1 · Defined services
“Services” are defined in paragraph 3 b) of Article I as including any service in any
sector. All sectors are covered, including possible future services, but there are some sectors
where not all major players have made specific commitments, such as audiovisual services.
The GATT Secretariat has issued a services sectored classification list, which gives an
indication of what is generally considered as an existing service.
2 · Excluded services
A category of services is excluded from the range of the GATS: services supplied in
the exercise of government authority. This exception is, however, limited: where a
Government acts on a commercial basis and/or as competitor with other suppliers, its
activities are treated like those of any private supplier. This also includes State-owned
commercial enterprises, which are covered by GATS general obligations such as MFN, as well
as by specific commitments on market access and national treatment.
Mode 2, only the consumer (or his property, such as in ship repair) crosses
the border to consume the service abroad. This can apply to almost any
service, but is especially relevant in the tourism sector.
4 · Measure by a Member
Article XXVIII (a) on Definitions is the starting point for clarifying the meaning
of a “measure”.
According to article II, par. 3, the provisions of the GATS Agreement shall not
be so construed as to prevent any Member from conferring or according
advantages to adjacent countries in order to facilitate exchanges limited to
contiguous frontier zones of services that are both locally produced and
consumed.
Such recognition may provide the basis for selectively granting authorization,
licensing or certification of services suppliers, to service suppliers from these countries, but
not to service suppliers from other countries. In accordance with Article VII, Members may
recognize, for instance, a foreign law degree as equivalent, and therefore sufficient for
obtaining the authorization to practice, and they may discriminate between other Members
in pronouncing such recognition.
➂ Besides these exceptions to the MFN, one must add another more general
exception, which is provisioned at article II, paragraph 2, considered as future exceptional
measures to MFN
If a country want to introduce discriminatory measures after the entry into force,
and if they have not been envisaged in its MFN exemption list, they can only be admitted
under the heavy procedure set out in Article IX of the WTO Agreement: Approval by a
three-fourths majority of the Members of the WTO Ministerial Conference.
If a member has already granted access to its market to another, on the basis of
reciprocity, before the entry into force of the GATS, it would not be fair to extend this
commitment to the all other Members, with a retroactive mechanism, and without any
negotiation or reciprocity for the benefit of the said member. In this case, the options were,
for the member concerned, to withdraw from its preceding commitments, or to keep with it
EC exemptions examples:
MFN exemptions were to be reviewed after five years. “In principle”, they
should not be maintained for more than ten years. However, the addition of the words “in
principle” has been seen by many as eliminating most of the value of the ten year limitation.
Indeed, many countries have indicated in their lists that the duration of a given MFN
exemption was “indefinite”.
2 · Transparency
Transparency is considered, together with MFN, as a major accomplishment of the
GATS applicable to all. It is usually referred to as an obligation, which applies from the
outset, regardless of specific commitments. This is only partly true.
The only “transparency” requirement applicable from the outset is the obligation
to publish “all measures of general application” relevant to the GATS. But publication can
be anywhere or by any means, nationally, regionally or just locally. In particular, there is no
obligation for a Member to notify these measures to the GATS or to make them
otherwise known internationally. Excepting specific commitments inscribed in a
schedule by a Member. An effective notification requirement exists only for measures
concerning sectors or sub-sectors for which a Member has inscribed specific commitments in
its schedule.
3 · Progressive Liberalization
Members are free to decide in which sector they want to continue to liberalize
and to what extent.
In accordance with Article XIX, Members are also obliged at least to come and sit at
the negotiation table in successive rounds of negotiation, with the purpose of achieving
progressively a higher level of liberalization.
Paragraphe 3rd Obligations applying only where specific commitments have been undertaken
All other GATS obligations depend on the specific commitments each Member
has been willing to enter into. For these commitments to generate full liberalisation of
trade in services requires, beyond MFN and transparency, the presence of three elements is
needed:
Obligations in respect of these elements do not exist per se, but only where a
Member has chosen explicitly to make commitments in a specific services sector, and,
for market access and national treatment, subject to the conditions inscribed in its
schedule.
Members have the free choice through which mode of delivery they want to grant
market access and national treatment; they can make commitments only on one Mode and
may thereby effectively be encouraged to impose on foreign suppliers a particular mode of
delivery.
Mode of supply
Nature of limitation
The first four types of quantitative restrictions, listed in sub-paragraphs (a) to (d) all
take the form of an economic needs test, or can be expressed in absolute numbers. It is
recalled that they can, but do not have to, discriminate against foreigners. They concern:
The last two types of market access limitations listed refer more specifically to
foreign direct investment and establishment
The dispute settlement is the central pillar of the multilateral trading system
put in place by the WTO. Referring to article 3.2 of the DSU (Dispute Settlement
Understanding), the dispute settlement system of the WTO is a central element in providing
security and predictability to the multilateral trading system. However, the objective it
pursues is not necessarily to pass judgment. The priority is to settle disputes, through
consultations – that means negotiation – when possible. The DSU expresses a clear
preference for solutions mutually acceptable to the parties reached through negotiations,
rather than solutions resulting from adjudication.
Article 3.7 states “before bringing a case, a Member shall exercise its judgment as to
whether action under these procedures would be fruitful. The aim of the dispute settlement
mechanism is to secure a positive solution to a dispute. A solution mutually acceptable to
the parties to a dispute and consistent with the covered agreements is clearly to be
preferred”.
Un accord avait ainsi été trouvé, permettant à l’UE de financer son aviation civile,
jusqu’à un certain montant. Les Usa reconnaissaient expressément ce Droit, incompatible
pourtant avec l’OMC. En échange de quoi les européens reconnaissaient aux Usa le droit de
financer leur aviation mil… éventuellement civile, avec des limites. Bon au final, l’UE se faisait
entuber, mais ça évitait une guerre commerciale.
2 · Compulsory Jurisdiction
Art. 23 of the DSU reveals that when Members seek the redress of a violation of
obligations or other nullification or impairment of benefits under the covered agreements or
an impediment to the attainment of any objective of the covered agreements, they shall have
recourse to, and abide by, the rules and procedures of this understanding”.
In such cases, members shall (a) not make a determination to the effect that a
violation has occurred, that benefits have been nullified or impaired or that the attainment of
any objective of the covered agreements has been impeded, except through recourse to
dispute settlement in accordance with the rules and procedures of this understanding, and
shall make any such determination consistent with the findings contained in the panel or
Appellate Body report adopted by the DSB – Dispute Settlement Body – or an arbitration
award rendered under this understanding.
The WTO is supposed to be independent from UN. WTO has to work in a coherent
manner with IMF. WTO is a expert-like in commercial trade when UN is political. The
problem arises if WTO recognize ECHR (⋲), which is not possible for now.
This means that the jurisdiction of the DSU is compulsory. A complaining Member
is obliged to bring any dispute arising under the covered agreements to the WTO
dispute settlement system, and not to its own municipal judicial system, and not to any
other international jurisdiction.
This means also that unlike in other international dispute settlement systems, there
is no need for the parties to a dispute arising under the covered agreements to accept
in a separate declaration or separate agreement the jurisdiction of the WTO dispute
settlement system or adjudicate that dispute.
Following the US-Shrimp case, “it may be well stress at the outset that access to the
dispute settlement process of the WTO is limited to Members of the WTO. This access is not
available, under the WTO agreement and the covered agreements as they currently exist, to
individuals or international organizations, whether governmental or non-governmental.
Only Members may become parties to a dispute of which a panel may seized (x).
Unlike other international dispute settlement systems, the WTO system provides for
three types of complaints:
Violation complaints,
Non-violation complaints
Situation complaints
In fact, there can be complaint when there has been a “nullification or impairment
of a benefit or the impeding of the realization of an objective”. And this can be the result of
“application by another Member of any measure, whether or not it conflicts with the
provisions “ of a covered agreement, as said in the DSU.
--x--