Search

INTRODUCTION In addition to the ‘general and security exceptions’ and the ‘economic emergency exceptions’ discussed in Chapters 8 and 9 respectively, WTO law also provides for ‘regional trade exceptions’. These exceptions allow Members to adopt measures that would otherwise be WTO-inconsistent, when they are in the pursuit of economic integration with other countries. While, in the past, the term ‘regional trade exceptions’ as well as the term ‘regional trade agreements’ (RTAs) described well the reality they referred to, in recent years these terms have given rise to some confusion. In the past, the term ‘regional trade agreements’ was used to refer to the economic integration efforts between adjacent countries or countries in the same region. Good examples of such regional economic integration efforts are the North American Free Trade Agreement , the Southern Common Market (MERCOSUR) Agreement and the ASEAN Free Trade Area (AFTA) Agreement . To the extent that these and other regional economic integration efforts involved GATT 1994 or GATS-inconsistent measures, these measures could – under specific conditions – be justified under the regional trade exceptions of the GATT 1994 and the GATS. In recent years, however, the countries involved in economic integration efforts are often countries or groups of countries from different regions . Consider, for example, the European Union–South Korea Free Trade Agreement , the United States–Colombia Trade Promotion Agreement and the India–MERCOSUR Preferential Trade Agreement . Instead of referring to these agreements as ‘regional trade agreements’, they are often referred to as ‘preferential trade agreements’ (PTAs). The WTO World Trade Report 2011 stated: One half of the PTAs currently in force are not strictly ‘regional’. The advent of cross-regional PTAs has been particularly pronounced in the last decade. The trend towards a broader geographical scope of PTAs is even more pronounced for those PTAs that are currently under negotiation or have recently been signed (but are not yet in force). Practically all of these are of the cross-regional type. However, as WTO Members and the WTO Secretariat continue to use the term ‘regional trade agreements’, this book also continues to use this term, and discusses in this chapter the ‘regional trade exceptions’, even though the word ‘regional’ is almost a misnomer because such economic integration agreements often no longer have the traditional geographical connotation. The ‘regional trade exceptions’ are set out in Article XXIV and the Enabling Clause of the GATT 1994, and Article V of the GATS.

If the primary goals of the AEC are to create a single production base and a single market, how well has ASEAN laid down the legal and institutional foundations (as described above) for pursuing those goals? An overview of how legal and institutional factors currently interact in ASEAN indicate that the regional bloc has major deficiencies in its operational infrastructure. Of note is the absence of certain policy areas from binding obligations by ASEAN treaties like the ATIGA, such as competition, government procurement, movement of unskilled labor, economic aspects of environmental policy, intellectual property, and the like. In any event, this survey of critical nexuses of law and policy covers areas where, in the authors' view, stronger obligations have been undertaken by the ASEAN member states with regard to the AEC. In conducting this survey, the authors compare the AEC with the most well-known regional economic integration projects, the EU and NAFTA. The EU represents an integration model with very strong and active regional institutions formulating and implementing policy in the bloc. On the other hand, NAFTA represents an integration model based on detailed agreements and robust dispute resolution processes that implement those agreements. The authors offer these comparisons with the EU and NAFTA to provide meaningful terms of reference, not necessarily to posit that the AEC should follow either of these examples. Indeed, the authors fully expect that ASEAN's leaders will choose a regional economic integration model that will follow the best interests of ASEAN's citizens, regardless of whether the foundational sources of that model come from the EU, NAFTA, or elsewhere. Since we need to start the discussion with common reference points, we start with the EU and NAFTA. The ASEAN Charter and ASEAN institutions The first mention of the objectives of economic integration in the ASEAN Charter is found in paragraph 5 of Article 1: Purposes of chapter 1 of the Charter: 5. To create a single market and production base which is stable, prosperous, highly competitive and economically integrated with effective facilitation for trade and investment in which there is free flow of goods, services and investment; facilitated movement of business persons, professionals, talents and labour; and freer flow of capital.

Least developed countries (LDCs) are faced with a suite of challenges to their effective participation in global trade governance. Global trade governance includes bilateral, regional and multilateral trade agreements, and intergovernmental institutions like the World Trade Organization (WTO) and United Nations Conference on Trade and Development (UNCTAD). This chapter focuses on the multilateral trading system and specifically the WTO. It explores the emerging role of LDCs in WTO decision-making processes for negotiating the rules of the multilateral trading system and makes concrete proposals for advancing their priorities. After a brief background on LDCs in WTO decision-making processes, this chapter reviews the historical role of developing countries in decision-making related to the General Agreement on Tariffs and Trade (GATT), the emergence of developing country coalitions in multilateral trade negotiations and the development of the LDC coalition in the WTO. It then sets out LDC priorities for improved global trade governance, emphasizing the role of Special and Differential Treatment (SDT) and the need for LDCs to take greater ownership of efforts to integrate them into the trading system. It continues by making the case for the creation of an institution for LDC-specific needs in Geneva. The chapter concludes with a summary of recommendations.

60 years ago, when the rules of the GATT were negotiated, world energy demand was a fraction of what it is today and so were energy prices. While energy has always been a crucial factor in geopolitics, at that time liberalising trade in energy was not a political priority. The industry was largely dominated by state run monopolies and thus governed by strict territorial allocation. International trade in energy resources and products was heavily concentrated, cartelised and controlled by a few multinational companies. This explains why the rules of the General Agreement on Tariffs and Trade (GATT), and now the World Trade Organization (WTO), do not deal with energy as a distinct sector. It was felt that general rules, including the disciplines on state trading, could adequately address trade in energy. Also, no special agreement on trade in energy has emerged in any of the sectorial agreements that have been drawn up since the Kennedy Round. Yet since basic WTO rules are applicable to all forms of trade, they also apply to trade in energy goods and services. Today, these rules

Introduction There is growing concern about preferential trade agreements (PTAs) and the role they should play within the multilateral trading system. This concern stems from both their increasing number and their ever-broader scope. During the period 1948–94, the General Agreement on Tariffs and Trade (GATT) received 124 notifications of PTAs, of which about 50 were active at the creation of the World Trade Organization (WTO) in 1995. Since then, more than 250 new arrangements have been notified to the WTO, and the number of arrangements active in 2008 was about 200. A large part of this expansion involves agreements where the European Community (EC) or the United States is a partner. As a result, the EC and the United States have become the two main “hubs” in the pattern of PTAs, with the “spokes” represented by agreements with the various partner countries. Modern PTAs exhibit features that earlier PTAs did not possess. In particular, PTAs formed before 1995 concerned only trade in goods and took the form of (mostly) free trade areas (FTAs) or (more rarely) customs unions (CUs), involving mainly tariff liberalization. Since the creation of the WTO and the extension of multilateral trade agreements to trade in services and trade-related aspects of intellectual property rights, new PTAs also tend to cover these two subjects, which revolve chiefly around regulatory issues.

INTRODUCTION The World Trade Organization (WTO) has been, and continues to be, shaped in its agreements and institutional foci in significant part by political pressures emanating from its members, particularly those able to wield the most influence. Rather than being an institution with the singular focus of achieving free trade among all members, the WTO comprises a complex set of agreements, many of which represent a politically driven compromise among members as to how to manage trade rather than to liberalize it. Although the state of WTO liberalization reflects positions agreed to in part as a result of political realities, the reach of politics is more significant in the context of bilateral trade negotiations. Indeed, what members cannot accomplish through the WTO they may try to achieve through free trade agreements (FTAs), particularly with politically or economically weaker trade partners. In the case of the United States, FTAs have been used as an opportunity to impose provisions favored by domestic constituents – such as strengthened intellectual property provisions and labor and environment clauses – that it has not been able to get WTO members to agree to collectively in the multilateral forum. A similar phenomenon has occurred with respect to the European Union (EU) and its FTA partners. For countries with less bargaining power, the WTO's multilateral setting provides some buffer from power politics in the form of the consensus decision-making practice and the disproportionate number of developing and least-developed countries.

This paper examines the provisions on antidumping, countervailing duties and safeguards in seventy-four regional trade agreements (RTAs). A number of RTAs have succeeded in abolishing contingent protection measures. In addition, about half of RTAs have adopted RTA-specific rules that tighten discipline on the application of contingent protection measures on RTA members. This is most especially the case for antidumping. There is less of an impact for countervailing duty; this is likely due to the fact that the economic impact of subsidies is global and also to the absence of commitments in RTAs on meaningful curbs on subsidies or state aid. It is very difficult to offer a simple summary characterization of the provisions in RTAs. RTAs vary in size, degree of integration, geographic scope, and the level of economic development of their members. Contingent protection provisions vary greatly from one RTA to the next. In fact, contingent protection provisions differ for the same country across different RTAs. Some RTAs have additional rules; some have no rules, and other prohibit the use of these actions. Even if we focus just on the RTAs that incorporate additional rules it is hard to characterize what happens; there is no consensus set of provisions that are found in all (or even most) RTAs. The results of the mappings suggest the need to be vigilant about increased discrimination arising from trade remedy rules in RTAs. If nothing else, the complicated pattern of inclusion of these provisions threatens the delicate “give and take” balancing of incentives that is at the crux of the GATT/WTO agreements. An ongoing policy concern is that the elastic and selective nature of trade remedies may lead to more discrimination, with reduced trade remedy actions against RTA partners, but a greater frequency of trade remedy actions against non-members. The adoption of RTA-specific trade remedy rules increases this risk of discrimination, with trade remedies against RTA members being abolished outright or being subjected to greater discipline. In turn, this makes it more difficult for nonRTA members to agree to WTO liberalization as the requisite quid-pro-quo from RTA members may not be realized. Said differently, RTAs may erode the market access that non-members thought they had secured in prior WTO rounds, not primarily because of the discriminatory tariffs but rather because of contingent protection rules.

The creation of the World Trade Organization (WTO) in the Uruguay Round of multilateral trade negotiations was a spectacular success. Within nine months of signing the Uruguay Round results, all of the major trading nations that took part in the General Agreement on Tariffs and Trade (GATT) had ratified those results and brought the WTO into existence as of January 1, 1995. This grand success appeared to usher into existence a new era of comprehensive multilateralism in world trade. Now, viewed a decade and a half later, the creation of the WTO seems to represent the high point of multilateralism. While the WTO's dispute settlement system has continued to function reasonably well, its other chief role – to serve as a forum for further negotiations on market liberalization – has not. For those interested in trade negotiations, the plodding, on-again, off-again WTO negotiations do not compare well in terms of effectiveness with the negotiating processes that have lead to a rapid expansion in the number of preferential trade agreements (PTAs) in recent years. This phenomenal growth in the number of PTAs has raised concerns about their relationship with and effect on the multilateral trading system embodied in the WTO. In principle, the interrelationship of PTAs and the multilateral trading system is governed by GATT Article XXIV. However, there is more or less universal agreement that Article XXIV has not functioned well.

1

Introduction Development has always played an important role in GATT/WTO. The Preamble to GATT 1947 recognised the objective of ‘raising standards of living’. The Preamble to the Marrakesh Agreement signed in 1994 reiterated and expanded this concept, recognising the ‘need for positive efforts designed to ensure that developing countries, and especially the least developed among them, secure a share in the growth in international trade commensurate with the needs of their economic development’. In 2001, upon the launch of the Doha Round, the Ministerial Conference stated: ‘The majority of WTO members are developing countries. We seek to place their needs and interests at the heart of the Work Programme adopted in this Declaration’. Hence the name ‘Doha Development Agenda’. Central to the recognition of development needs in the WTO is the notion of ‘special and differential treatment’ (S&D) for developing countries. In contrast to the strong thread of non-discrimination running through the WTO agreements, S&D involves discrimination in favour of developing countries. This discrimination takes the form of both differential rights or obligations mandated by the WTO agreements themselves, and differential treatment accorded to developing countries by other Members. An example of the former is a WTO provision providing longer transition times (that is, time to implement a particular WTO obligation) to developing than to developed country Members. An example of the latter is preferential tariff treatment accorded by a developed country Member to a developing country Member.

The principal aim of this reflection paper is to provide a critique of the Appellate Body's reasoning and its ultimate conclusion in the EC – Tariff Preferences dispute. Because this is a reflection paper , it briefly examines some of the problems with the Appellate Body's ruling on legal, economic, and political/systemic grounds against the backdrop of the Seminar on WTO Law participants who presented papers on this topic specifically, and those participants who offered more general comments on the soundness of special and differential treatment for developing countries in today's multilateral trading system. After putting forth the argument that the Appellate Body's ruling cannot be supported on either legal and economic grounds, the reflection paper advances the argument that the decision is also untenable on broader political/systemic grounds, primarily because it maintains the status quo and squanders an opportunity to give WTO Members the impetus to thoroughly review whether the Enabling Clause, in whole or in part, still fulfills its original mandate. Introduction Background to the Dispute On April 7, 2004, the Appellate Body of the World Trade Organization (WTO) issued its much anticipated report in the EC – Tariff Preferences dispute.

Introduction The Appellate Body rulings in the Shrimp–Turtle case created a new baseline for the trade and environment debate at the WTO. The Appellate Body held that Article XX GATT can be invoked to justify measures that condition market access on policies adopted by the exporting country, contrary to the approach taken by the unadopted GATT-era Tuna–Dolphin panels. Further, the Appellate Body explicitly noted that this holding applied not only to the environmental provision at issue in the case (Article XX(g)), but to most of the paragraphs of Article XX, including, significantly, XX(a) (inter alia), the “protection of public morals”(para. 121) – a rubric often claimed to encompass fundamental labor rights. Before Shrimp–Turtle , it was conventional wisdom that trade measures targeted at other countries' environmental (or for that matter, labor) policies could not be accommodated within the Article XX framework. But, equally, it was conventional wisdom that since preferences to developing countries granted under the Generalized System of Preferences (GSP) were voluntary and non-binding, they could be withdrawn or circumscribed on the basis of matters such as labor rights compliance, without running afoul of WTO law. In general, GSP preferences have been exempted from the Most Favored Nation (MFN) requirement in Article I of the GATT, first by a waiver, and then by a Tokyo Round Decision, called the “Enabling Clause.”