10 & 11 - WTO and GATT

Question 1

GATT:

Answer 1

means… General Agreement on Tariffs and Trade
• most important part of WTO law
• part of international economic law

Question 2

Formal establishment of WTO

Answer 2

1995

Question 3

WTO Objectives (“Mission”)

Answer 3

• Raising standards of living
• Ensuring full employment
• A large and steadily growing volume of real income and
effective demand
• Expanding the production/trade of goods and services
• Optimal use of the world’s resources
• Sustainable development
• Protection and preservation of the environment
• Secure a share in the growth in international trade for
developing countries

Question 4

WTO means:

Answer 4

• liberalisation of international trade and creation of a viable and durable multilateral trading system
• Preventing protectionism

Question 5

Key issues the WTO focuses on:

Answer 5

>> Tariffs
>> Import quotas
>> Customs formalities
>> Intellectual property rights
>> Food safety
>> National security measures

Question 6

WTO Functions:

Answer 6

• promoting economic globalisation
• Encompasses both:
» (free) international trade
» (unrestricted) foreign direct investment (however, not part of GATT)

Question 7

definition of globalisation:

Answer 7

gradual integration of national economies into a borderless international economy

Question 8

Purpose of GATT:

Answer 8

Trade liberalisation by reducing trade barriers

Question 9

GATT is built on four pillars:

Answer 9

• most-favoured nation obligation, Article I GATT
• tariff bindings, Article II GATT
• national treatment obligations, Article III GATT
• elimination of quantitative restrictions (many exceptions)

Question 10

GAAT: Customs duties are, in principle, prohibited

TRUE OR FALSE?

Answer 10

FALSE!

Customs duties are, in principle, not prohibited (contrary to the EU internal market)!

Question 11

MFN =

Answer 11

Most favorable nation principle which requires non-discrimination between trading partners.

Question 12

Criteria for “likeness” (like products):

Answer 12

• substitutability (consumer perception: willingness to substitute one for the other)
• functional likeness (the extent to which two products perform the same function)
➢ cf. Commentaries on “likeness” and the national
treatment obligation

Question 13

de jure and de facto discrimination:

Answer 13

• de jure discrimination (discrimination by law) means that the provision itself discriminates against like products
• de facto discrimination occurs where a provision as such is neutral, but has discriminatory effects

note: This distinction parallels the distinction of direct and indirect discrimination in EU Law.

Question 14

National treatment obligations:

explain rationale.

Answer 14

Imports from any WTO Member State must be treated on an equal basis vis-a-vis like domestic products.

Rationale:
− Reap the benefits of trade through equality of competitive conditions between imported and like domestic products

− Protect the integrity of the tariff commitments under Article II GATT

Question 15

Like product:

Answer 15

− to be construed narrowly; competitive products under Sentence 2
− Wider policy purpose irrelevant (no aims and effects test)
− Production and Process Methods (PPMs) do not matter for assessing likeness

Question 16

Two-tiered test:

Answer 16

• like product - Whether the imported and the
domestic product are like products
• discriminating fiscal measure - Whether the imported product is taxed in excess of the domestic products

Question 17

Key elements of WTO:

Answer 17

o GATT General Agreement on Tariffs and Trade
o TRIPS (Agreement on) Trade-Related Aspects of Intellectual Property Rights
o TRIMS (Agreement on) Trade-Related Investment Measures)
o SPS (Agreement on) Sanitary and Phytosanitary Measures
o TBT (Agreement on) Technical Barriers to Trade

Question 18

Which of the four pillars requires non-discrimination between trading partners?

Answer 18

Most-favoured nation obligation, Article I GATT

Question 19

What constitutes „Like products“ is defined in:

Answer 19

Case LAW

Question 20

Exceptions for the MFN obligation are given in:

Answer 20

• Article XIV GATT

* Article XX GATT

Question 21

The two tiered test concists of the following questions:

a) Whether the nation where the good is from is part of the WTO
b) Whether imported and domestic products are alike
c) Wether Article XX GATT applies
d) whether the imported products are taxed in excess of the domestic products

Answer 21

B AND D

Question 22

Factors that GATT panel reports have relied on to determine like products:

Answer 22

• The product‘s physical properties , nature and quality
• The product‘s end use
• Consumer habits and preferences regarding the products
• Tariff classification (least important)

Question 23

Three tiered test

Answer 23

> > Hidden protectionism
• Three things to check to determine a violation
1. Whether the imported product is directly competitive or a substitutable to a domestic product (like product)
2. Affected by internal taxes or other internal charges see Article III:1) that
3. Put the imported product at a disadvantage compared to the domestic product