These obligations can be disregarded in respect of some, but not necessarily all, of the Members allegedly involved in dumping or subsidy. Criticism of WTO aims - The WTO is very strongly committed to trade liberalization which means a movement towards free trade both in the reduction and elimination of tariffs and a removal of non-tariff barriers such as quotas. It will review trade policies undertaken by the member countries. are bilateral obligations, A. WTO adjudicators are tasked with resolving disputes between specific complaining and defending parties. The World Trade Organization is committed to laying down guidelines aimed at making business simpler. In a case of non-compliance with the recommendations and rulings of the DSB, the Member that has won the case may request authorization to suspend the application to the Member found in breach of its obligations of concessions or other obligations under the covered agreements.84 These temporary measures are adopted in order to induce compliance by the defaulting Member.85 In line with the notion of counter-measures existing in international law,86 WTO counter-measures affect the bilateral relationship between the applicant and the defaulting Member(s).87 Yet, the reaction of Member A is triggered by the violation by Member B of obligations owed to Member A and is intended to damage the economic interests of Member B in order to ensure respect for the legally protected interests of Member A.88 Normally, the magnitude of the reaction is strictly related to the adverse effects on the applicant caused by the violation. In this deformed perspective the impact of the violation would become immaterial, as in the case of indivisible obligations. However, if the defendant succeeds in rebutting the charge, no nullification or impairment will be found in spite of the violation.’ In Argentina – Ceramic Tiles, supra note 53, at para. posterior rule to WTO obligations, is 15 April 1994 really the critical As a result, the proportionality test does not apply as between the counter-measures and the effects of the violation upon the complainant (which may be non-existent). Especially the fact that the WTO treaty allows one member to suspend its WTO obligations as a form of countermeasure towards one other member proves that WTO obligations are not of the integral type. Furthermore, countermeasures are normally proportionate or equivalent to the nullification or impairment of the benefits of the complainant. bilateral/reciprocal in nature. 137. 7.49. In the case of WTO obligations treated as indivisible obligations, however, the effects of the violation are immaterial and the trade interests of the complainant may well be unaffected. Nature of WTO-plus SPS and TBT provisions in Canada's PTAs. tentative general criterion to make the distinction and its application to WTO In this perspective, all Members are entitled to resort to the dispute settlement system regardless of the effects of the alleged violation.42. 138. US – ‘FSC’, supra note 1, at para. That is because the very subject of the system – collective obligations – are owed to all WTO Members. Five principles are of particular importance in understanding both the pre-1994 GATT and the WTO: The goal of the WTO is to ensure that trade flows as smoothly and predictably as possible. It then examines whether WTO obligations – like human rights obligations – are inherently indivisible and, in the negative, explores whether contracting parties have nonetheless extended the legal regime of indivisible obligations to some or all WTO obligations. and hierarchy between WTO law and other norms of international law. As pointed out by the Appellate Body in Canada – Automobiles, a violation of MFN treatment arises when the advantage of import duty exemption is accorded – de jure or de facto27– to some product originating in certain countries without being accorded to like products from all other Members.28. There are two different views about the legal nature of the WTO obligations. In the case of WTO obligations treated as indivisible, however, the effects of the violation are immaterial and the complainant may have suffered no adverse effects at all. As a result, counter-measures are to be permitted to the extent that they will effectively ensure compliance. It was argued that the US had no legal interest in the dispute, as it had suffered no nullification or impairment of its benefit in the sense of Article 3(3) and (7) of the DSU. 3.57(c). For full access to this pdf, sign in to an existing account, or purchase an annual subscription. Considering the special nature of trade in services, at the Uruguay Round the Contracting Parties deliberately omitted from Article XXIII of GATS any reference to the concept of nullification or impairment of benefits. A, No. In the past, plurilateral agreements, introduced in the Tokyo Round, allowed a subset of GATT members to sign contracts for specific areas. But that is not the legal basis upon which action may be taken to challenge them under the SCM Agreement.43, The different treatment reserved for prohibited subsidies and actionable subsidies44 may be considered as a compromise definitively to overcome the traditional reluctance of the United States to accept a determination of injury as a legal requirement for resorting to countervailing duties.45. What the The potential damage to the real economy of shrinking trade finance is enormous (IMF 2003). In Brazil – Aircraft, supra note 49, at paras 3.44–3.45, the arbitrators noted that appropriate countermeasures would effectively induce compliance. The WTO reduces uncertainty about trade policy thus promoting trade and investment. See Articles on Responsibility of States, supra note 20, at 196, Arts 49 ff. Brazil – Aircraft, supra note 49, at para. relationship(s) allegedly breached. While economic theory suggests a positive impact of Membership on trade through a reduction in trade costs by reducing tariffs and non-tariff barriers and enhancing transparency and predictability, the empirical evidence is more mixed. Ensuing large real incomes and demand are steadily growing 3. This means that there is normally a presumption that a breach of the rules has an adverse impact on other Member parties to that covered agreement, and in such cases, it shall be up to the Member against whom the complaint has been brought to rebut the charge. More interpretation of WTO provisions. This is necessary to ensure that the sum of the counter-measures so revised and those authorized in the present proceedings are adequate and will effectively induce the respondent to comply with the recommendations and rulings of the DSB. In US – FSC, the arbitrators found that the obligation concerning prohibited subsidies: is an erga omnes obligation owed in its entirety to each and every Member. Arangio-Ruiz, supra note 7, at 46, notes that denying states the right individually to react to violations would clearly be tantamount to excluding the very existence of such obligations as international legal obligations. WTO obligations are never inherently indivisible. 6.3. Petersmann (ed. Thus, the US has breached its obligation to the EC in respect of all the money that it has expended, because such expenditure in breach – the expense incurred – is the very essence of the wrongful act.99. Petersmann, The GATT/WTO Dispute Settlement System. They are bilateral in character and compliance with them may be selective. ), at para. Secondly, Background of Turkey – Restrictions on Import of Textiles and Clothing Products, WT/DS34/R, Panel Report, 31 May 1999, at para 9.204. The concept erga omnes is squarely at odds with the fundamentally bilateral nature of WTO and GATT dispute settlement and with the notion that WTO disputes concern nullification and impairment of negotiated benefits to a particular Member. 5.13. As admitted by the Appellate Body, supra note 71, at para. See Bustamante, ‘The Need for a GATT Doctrine of Locus Standi: Why the United States cannot Stand the European Community’s Banana Import Regime’, 6 Minnesota J. Then the burden of proof shifts to the respondent, which has to prove the contrary.57. Oxford University Press is a department of the University of Oxford. Navigate; Linked Data; Dashboard; Tools / Extras; Stats; Share . Part of the controversy on the role of trade policy might be linked to the debate about the empirical evidence of the impact of GATT/WTO membership on international trade. The single undertaking reduces negotiations to an all-or-nothing choice, a binary division that is equally attractive to ambitious optimists and to the sceptics who favour the status quo. 6.105, the panel observed that it was up to the respondent ‘to show that the failure to determine an individual dumping margin has not nullified or impaired benefits accruing to the EC under the Agreement’. Adjudicators may not, through improper importation of the concept erga omnes, enforce WTO obligations on behalf of non-parties to a dispute.101, The critique is not convincing. WTO Appellate Body: nature of its function and a proposal for reform. 17(4) of the Anti-Dumping Agreement ‘to seek redress when illegal action affects its economic operators’ (emphasis added). Only the state(s) suffering from the consequences of the breach – or at least being exposed to potential harm5 – can react and resort to the remedies permitted in international law. seeking to vindicate international obligations which run towards it as well as all other States’. A/56/10, 318. EC – Regime for the Importation, Sale and Distribution of Bananas, supra note 33, at para. The second issue addressed in this paper is whether it is feasible to Putting a on WTO obligations as bilateral obligations (focusing on, II. It is therefore not necessary to refer to it’. With regard to the obligations described in part IV, it is fully possible that more than one Member – and theoretically even all Members – will complain about the same violation and request the authorization to adopt counter-measures. As a rule, resort to the WTO dispute settlement system is open to Members whose trade has suffered, in actual or potential terms, from the violation of WTO obligations. Sicilianos (eds), Economic Sanctions in International Law (2004), at 445 ff. Under Article 22(4) of the DSU, ‘the level of suspension of concessions or other obligations authorized by the DSU shall be equivalent to the level of the nullification or impairment’.89 The relationship is equally evident in the context of actionable subsidies, as Article 7(9) of the SCM establishes that counter-measures shall be commensurate with the degree and nature of the adverse effects determined to exist. Disclaimer. Download Full PDF Package. profoundly, taking sides on these questions offers a prominent yardstick when irrespective of the breach. obligations as against a wrongdoing state would not be acceptable, Their violation may affect or threaten to affect the legally protected interests of one or more – but not necessarily all – other Members. The notion of dispute is to be found in public international law.77 A dispute arises when state A unsuccessfully requires state B to take or abandon certain conduct allegedly proscribed or prohibited by an obligation incumbent upon state B in order to permit state A to satisfy what it perceives as its legally protected interest. 2. WTO Appellate Body: nature of its function and a proposal for reform. In Brazil – Export Financing Programme for Aircraft, Art. application? It will act as a forum for the negotiation of disputes among the member countries over trade related problems. The consequences of the application of the notion of indivisible obligations are considered from the perspective of the settlement of disputes concerning violations of WTO obligations in general,2 and the adoption of countermeasures in particular. The single undertaking nature of the WTO reflects the concept of packaging the benefits arising in different areas of the international division of labour. The II, 18 July 1997, at para. Global Trade (1997) 533. It has been made, in particular, with regard to prohibited subsidies – in so far as the so-called multilateral track is concerned – under the Agreement on Subsidies and Countervailing Measures (SCM) and to obligations deriving from the General Agreement on Trade in Services (GATS).41, The SCM is currently based upon the distinction between prohibited and actionable. It furthers the University's objective of excellence in research, scholarship, and education by publishing worldwide, This PDF is available to Subscribers Only. Depending on whether the obligation allegedly breached belongs to one or the other category, the nullification or impairment of benefits is presumed – but can be challenged – under Article 3(8) of the DSU or is entirely irrelevant. Such choice does not derive from GATT case law;46 it is rather an intentional deviation from the general rule – developed in GATT case law and subsequently codified in Article 8(3) of the DSU – that introduced the presumption that a violation of the rules contained in a covered agreement has an adverse impact on the complainant.47 It follows that in the case of a dispute concerning GATS obligations the consequences of the breach are immaterial and the respondent cannot on this ground challenge the admissibility of the claim.48, In the cases of obligations concerning both prohibited subsidies and trade in services, contracting parties intended to attach to violations of divisible obligations some of the typical consequences of erga omnes obligations. treaties", but rather "parallel treaties". In Wimbledon, PCiJ, Ser. 112. G. Arangio-Ruiz, Preliminary Report on State Responsibility, 40 YBILC (1988-II) Part 1, 37; id., supra note 7, at 47. Article III protects expectations not of any particular trade volume, but rather of ‘the equal competitive relationships between imported and domestic products’.66. general one. bilateral obligations, inter se modifications and suspension in response In US – Anti-Dumping Act of 1916, 28 Aug. 2000, WT/DS136/AB/R, at para 73, the Appellate Body recognized the right of Members under Art. 3.56. US – Taxes on Petroleum and Certain Imported Substances, 17 June 1987, BISD (34th Suppl.) See also Canada – Export Credit and Loans for Regional Aircraft, WT/DS222/ARB, at para 3.29. Look At its heart are the WTO agreements, the legal ground-rules for international commerce and for trade policy. Practical consequences for conflicts involving the WTO treaty as a "continuing See Reg. Davey, ‘Has the WTO Dispute Settlement System Exceeded its Authority?’ A Consideration of Deference shown by the System to Member Government Decisions and its Use of Issue-Avoidance Techniques’, 4 J Int’l Economics & L (2001) 79, at 98. See, for instance: Decision of 28 Nov. 1979 (L/4903), known as Enabling clause; Decision on waiver adopted on 15 June 1999 (WT/L/304); and Decision on waiver adopted on 14 Nov. 2001 (WT/MIN(01)15). This is possible since the legal relationship between the state in breach and the victim state(s) can be isolated from the legal relationships between each of these states and the other remaining contracting parties, and between the other remaining contracting parties.6. Quite the contrary, the Court systematically verifies whether the subjective rights of the claimant are involved,80 albeit that this does not necessarily imply that its material, economic or moral interests have to be affected by the violation.81 Hence, there is no need to depart from these principles in the WTO dispute settlement system. This article discusses the extent to which the notion of indivisible or erga omnes obligations – which has made its appearance in WTO case law and provoked the stiff reaction of the United States1 – may apply to the obligations stemming from participation in the WTO. The obligations relating to unfair trade are divisible too. As observed by the International Law Commission: States when creating ‘primary’ rights and obligations between them may well, at the same time, determine which State or States are to be considered the ‘injured’ State or States in case of a breach of obligation imposed by that ‘primary’ rule, and thereby determine which State or States are entitled to invoke new legal relationships and even which new legal relationships are entailed by such a breach.40. In European Communities – Conditions for the Granting of Tariff Preferences to Developing Countries, WT/DS246/AB/R, 7 Apr. proposition defended here, in case of conflict between WTO provisions and other the WTO treaty: "contemporaneous" or "evolutionary" interpretation? Non-violation complaints tend to fall into desuetude, as observed by P. Picone and A. Ligustro, Il diritto dell’Organizzazione Mondiale de Commercio (2002), at 600. Hence, nothing prevents Members from extending to WTO obligations the legal regime of indivisible obligations. Rather, the conflict ought As apparently maintained by Pauwelyn, supra note 1, at 940. WTO is a dispute settlement procedure that enables member nations to resolve disputes about whether or not a member is actually complying with its obligations under the WTO agreements. Regrettably, neither the panel nor the Appellate Body discussed in detail the PCIJ and ICJ decisions referred to by the EC, and in particular: SS Wimbledon, supra note 5, Mavrommatis Palestine Concessions, PCJI, Ser. The divisible character of the national treatment obligation imposed by Article III of GATT is less immediate, but nonetheless still clear. Hence, Article 3(8) of the DSU introduces the presumption that violations of WTO obligations cause nullification or impairment of the benefits of the Members.
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