10 & 11 - WTO and GATT Flashcards
GATT:
means… General Agreement on Tariffs and Trade
• most important part of WTO law
• part of international economic law
Formal establishment of WTO
1995
WTO Objectives (“Mission”)
• 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
WTO means:
- liberalisation of international trade and creation of a viable and durable multilateral trading system
- Preventing protectionism
Key issues the WTO focuses on:
>> Tariffs >> Import quotas >> Customs formalities >> Intellectual property rights >> Food safety >> National security measures
WTO Functions:
• promoting economic globalisation
• Encompasses both:
» (free) international trade
» (unrestricted) foreign direct investment (however, not part of GATT)
definition of globalisation:
gradual integration of national economies into a borderless international economy
Purpose of GATT:
Trade liberalisation by reducing trade barriers
GATT is built on four pillars:
- most-favoured nation obligation, Article I GATT
- tariff bindings, Article II GATT
- national treatment obligations, Article III GATT
- elimination of quantitative restrictions (many exceptions)
GAAT: Customs duties are, in principle, prohibited
TRUE OR FALSE?
FALSE!
Customs duties are, in principle, not prohibited (contrary to the EU internal market)!
MFN =
Most favorable nation principle which requires non-discrimination between trading partners.
Criteria for “likeness” (like products):
• 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
de jure and de facto discrimination:
- 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.
National treatment obligations:
explain rationale.
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
Like product:
− 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
Two-tiered test:
• 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
Key elements of WTO:
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
Which of the four pillars requires non-discrimination between trading partners?
Most-favoured nation obligation, Article I GATT
What constitutes „Like products“ is defined in:
Case LAW
Exceptions for the MFN obligation are given in:
- Article XIV GATT
* Article XX GATT
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
B AND D
Factors that GATT panel reports have relied on to determine like products:
- The product‘s physical properties , nature and quality
- The product‘s end use
- Consumer habits and preferences regarding the products
- Tariff classification (least important)
Three tiered test
> > 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
