Trade on the agreements. Nevertheless the WTO

Trade with no discrimination is
the wider principle over the World Trade Organization sits and stablish its
regulation, Members are develop and developing countries both bringing
discussions to the dispute settlement body over negotiations on the agreements
created to run trade more freely and with the purpose of provide secure and
predictive multilateral trade, preserving rights and obligations for the
Member’s states and making clear the provisions on the agreements. Nevertheless
the WTO is highly criticized for not being able to commit to its purposes1

At the end of World War II the
United Nations (UN), the World Bank, the International Monetary Fund (IMF) and
the International Trade Organization (ITO) were formed but the latest
never became effective due to the opposition of the US statesman for fears of it
not being able to safeguard trade, development, employment standards and
domestic sovereignty. A provisional trade agreement was created in 1947, the
General Agreement on Tariffs and Trade (GATT). The original purpose of the GATT
was to abolish tariff protection but preserving the value of domestic tariffs
and eliminate preferences, discriminations and protectionism. This agreement
promoted successfully imports and exports among countries promoting trade
liberalization and boosting the economy (Goldstein, J., Rivers, D., & Tomz,
M. 2007).

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Decisions, procedures and
customary practice of the GATT 1947 still guide the WTO in its actions (Van den
Bossche and Zdouc. 2015). On 1986 took place the Uruguay Round where the
limitations of GATT where discussed recognizing the need of institutional
reforms, later on in April 1994 The Agreement Establishing the World Trade
Organization, commonly referred as the WTO Agreement was signed and became
operational on January the first 1995. The functions of the WTO in brief
is to ensure that trade flows smooth, predictable and as free as possible, out
of the Uruguay Round a series of agreements were made by negotiations between
the members, where GATT is the principal set of rules for trade in goods, to
this there were added agreements on trade in services, those comes in the new
General Agreement on Trade in Services (GATS), and also the intellectual
property agreement (TRIPS). In a nutshell the main functions of the WTO are
legislative, where it acts as a forum to reach trade agreements and judicial,
performed by the dispute settlement.

The dispute settlement system is the corner stone
for the WTO to keep rights and obligations for the members and it also serves
to clarify provisions on the agreements, it consist in five stages,
consultation, a panel, appellate review, arbitration and compensation. Since
1995 over 500 disputes have been brought to the WTO and over 350 rulings have
been issued (WTO, 2017).
We should note that developing countries as a group are bringing more disputes
to the system than the developed countries. To count some of the biggest users
of the WTO dispute settlement, Brazil has a total of twenty six complaints to
date, Mexico twenty three, and twenty on of India, along with Argentina,
Thailand, China and Chile.2

Is on the dispute settlement
panels where the disputes are firstly carried out, when the complainant party
request to establish a panel the scope and limits of the dispute are defined
and it also serves to notify the case to the respondent and third parties of
the nature of the complaint.

The Appellate body on its 23
years of existence counts with 146 adopted reports, more than 300 panel reports
covering a wide range of issues such as environmental protection, renewable
energy subsidies, tax evasion, money laundering, patent protection, animal
welfare, food safety, consumer information, dumping, so-called non-market economies,
and multilateral trade rules and RTAs. “The WTO dispute settlement system is
one of very few international dispute settlement mechanisms that provide for
appellate review and has an appellate court”3
It is composed by seven judges with base in Geneva, Switzerland. One of the
characteristics of the dispute settlement body process of the WTO is the short
timeframes for the procurements to be applied. The DSU Article 4.7 gives 60
days for the consultations procedure, after the complaining part must require
the establishment of a panel, to be completed on 45 days. The Dispute Settlement
Body should adopt a panel report within 60 days and an Appellate Body report
within 30 days, being the sum of the stages no more than 12 months from
consultations for panel procedures, and 15 months for panel that extended the
period.

TRADE INSTRUMENTS IN THE GATT
libro azul pag 56

The non-discrimination principle
has two components, the most favoured nation principle (MFN) and the national
treatment principle (NT). This principles are applied to trade in goods,
services and to aspects of intellectual property rights. 4

The Most Favoured Nation principle refers to the equal
treatment to all of the member states, meaning that if a member state favour in
any way to a country this favour has to be granted to others unconditionally5,
in GATT Art I.1 no member can be treated better than other in terms of rules
and formalities in connection with imports and exports, charges of any kind or
custom duties with importations or exportations, or internal measures.
According to Van der Bossche and Zdouc (2013) a total of eleven disputes have
acted erratic with the MFN treatment obligation of Article I: 1 of the GATT
1994 by WTO Members6.
On EC – Tariff Preferences (2004), this principle was stated as the
“cornerstone of the GATT” and also referred as a pillar of the WTO trading
system.7     

Casos outlawed esto en pag 145
libro azul                         

Whereas the National Treatment principle refers
to treating foreign and locals the same way, one country can’t offer preference
to domestic products over imported ones, this is explained on GATT Art. III.1
in which requires WTO Members serve national treatment to other Members by the
not application of taxes, other charges, laws or regulations that might affect
trade. Also Art. III.2 prohibits stablish higher standards on “like” imported
goods than on domestic goods, same with “like products”. As noted on the Japan-
Alcoholic Beverages II (1996) case “the Appellate Body stated with respect to
the purpose of the national treatment obligation of Article III”8

Article XX of the GATT 1994
states the general
exceptions to the principles of non-discrimination, these measurements
cannot be applied in a way that they will be considered as arbitrary or under
no justifiable discrimination among the countries trading; a WTO member can
appeal to one of the 10 exceptions, supported by the great amount of cases
issued we can state that the most popular of these exceptions are (b)
“necessary to protect human, animal or plant life or health” and (g)” relating
to the conservation of exhaustible natural resources if such measures are made
effective in conjunction with restrictions on domestic production or
consumption; …”                                                                                                                                        

One well known case connected to
the general exceptions to the principles of non-discrimination on Article XX of
the GATT 1994 is the Shrimp/Sea Turtle case DS58 where the complaining part was
India, Malaysia, Pakistan and Thailand against U.S., and the Tuna Dolphin case
DS21 Mexico complaining against U.S.

 
In the shrimp-turtle case the countries that issued the dispute are
considered developing countries, in this case the former Enabling Clause in
GATT, accepted as an exception of the MFN obligation by the Appellate Body and
becoming an elemental piece of the WTO Agreement, states that such countries
can benefit from a special treatment as for example, lower tariffs. 

Having this is mind we can argue that the US issued then ban
where they required shrimpers to use TEDs on their boats to protect the turtles
on certain shrimp and shrimp products not only for the cause they presented, in
order to follow the US Endangered Species Act of 1973, being this ban a
quantitative restriction in goods (QRs). Quantitative Restriction are the most
common but not the only trade instrument9,
to cite some cases we can observe: the Turkey — Restrictions on Imports of
Textile and Clothing Products case DS34, India pretested over the QRs applied
on imports from Turkey of a broad range of textile and clothing products, and
DS334 Turkey — Measures Affecting the Importation of Rice, in this case United
States requested consultations with Turkey concerning the latter’s import
restrictions on rice from the United States.

But also because of the fact that this mentioned countries
that issued the case are benefactors of certain advantages such as cheaper
labour cost, making the product cheaper to sell.  In addition to this statement that could be viewed as a preference of the
WTO, countries as Pakistan or India are benefactors of the same
treatment by the United Nations and the European Community’s General System of
Preferences  as formulated by the
European Union the GSP allows vulnerable developing countries to pay fewer or
no duties on exports to the EU, giving them vital access to the EU market and
contributing to their growth, therefore this countries are eligible to
preferential access for their products protected by several agreements to help
and grow their economies reaching to a point where the market for the shrimps
products to trade have a wider scoop globally. Also on the DSU we can find some
special rules for developing countries, this is included in Article3.12 on the
application of the 5 April 1966 Decision10
where a developing-country is allowed to bring a complaint against a developed country
member invoking this provision as an “alternative” to the provisions contained
on Articles 4,5,6 and 12 of the DSU.

Article 3.12 of the DSU allows a developing-country Member
that brings a complaint against a developed-country Member to invoke the provision
of the Decision of 5 April 1966 of the GATT contracting parties.

Therefore, the preferences for the shrimps products coming
from India, Malaysia, Pakistan and Thailand makes the local market of shrimp
products weaker given the fact that they might be less demanded , the consumer
prefers this type of shrimp, tropical shrimps. We can think about many more
economic interests to justify that ban from US, and the way for them to
rationalize it is throughout a presumable good cause like protecting the
environment, as Trebilclock, Howse and Eliason 2013 (p. 656) point out on the
regulation of international trade, and this really should be considered in all
aspects of trade, preserving the natural resources, endangered species and
protecting the environment but all in all this should not be a mask for certain
countries to protect their own economy and market.                                                                     

  
More cases involving GATT Art XX and environment are the US taxes on
automobiles and US – reformulated gasoline, on the latest ‘the AB agreed that
there was ‘abuse or illegitimate use’ of the exceptions available in art XX.’
(Trebilclock, Howse and Eliason 2013 (p. 670).                                               
It is noticeable that the US is involved in all the cases cited and to
back up the reasons discussed on why the US has been part of all this disputes
we can mention recent declarations to FOX News Network, LLC.  of the current US president Donald Trump on
the WTO “The WTO was set up for the benefit of everybody but us.?.?.?They
have taken advantage of this country like you wouldn’t believe,” (Financial
Times 2018).

To measure effectiveness on
international environmental regimen’s we should pay attention on what is
effectiveness, Oran Young and Marc Levy (1999) stablish different approaches to
it, being them as it follows: problem solving, legal, economic, normative and
political11.

According to Young and Levi the problem solving approach
present some difficulties yet is the more intuitive, the legal one is centred
on compliance, the economic effectiveness incorporate the cost of the
effectiveness to the legal dimension whereas the normative approach is focused
on values achieved, such as fairness , justice or participation and lastly the
political approach refers to the effectiveness “causing changes in the
behaviour of the actors, in the interest of actors, or in the policies and
performance of institutions in ways that contribute to positive management of
the targeted problem.”12.

This approaches can be helpful on understanding the
multifaceted spectrum of the effectiveness of an international regime, the WTO
focuses on trade concerns solving its problems on the fairest way hence, its closest
approach should be the normative and also political. One of the biggest success
of the WTO dispute settlement was, as Karen J. Alter points out in Resolving or
Exacerbating Disputes? The WTO’s New Dispute Resolution System  (2003) the end of the practice of states, to
improve the quality of the panel ruling, end the blocking of the decisions by
the states and make the retaliatory sanctioning mechanisms of the GATT usable13.
It was effective also in put out of use Section 301, a tool that gives the
United States the authority to enforce trade agreements, resolve trade
disputes, and open foreign markets to U.S. goods and services. Furthermore, a
special allowance was promised to developing countries to help them benefit
from the WTO system and its dispute resolution mechanism.

We can argue the meaning of the
statements, what does non-discriminatory mean? We can even discuss what
countries are developing countries.  Is
it true that Member states don’t acknowledge the principle? The devil is in the
detail and every law has its loophole so the parties involved are going to look
for the smallest detail to try to get to round them and justify its actions.
The rules might be in need of an upgrade as the time goes and the situation
evolves and develops new challenges related to trade that involves a lot of
peculiar and specific issues, this, for sure, will not be the solution to the
so many open cases we can find on the dispute settlement body members issue
complaining for the shortfall of other countries following the rules, but it
might help to the always present attempt of development of a well stablished
rules of a more free and fairer trade in the world. Are the principles of
non-discrimination effectively applied? Is the WTO meeting their goals and
executing their regulations?

To measure the success of the WTO
dispute settlement mechanism we should look at the compliance achieved from
members on the losing end of disputes14.
Under Article 22 one of the parties can request authorization to retaliate
within 20 days after a compliance period ends15,
while Article 21.516
states that disagreements over the existence or adequacy of compliance measures
are to be decided using WTO dispute procedures, including resort to panels.
Within 90 days after the dispute is referred a compliance panel’s report is due
and it may be appealled. Nevertheless, let’s highlight that the dispute settlement
understanding does not integrate the Article 21.5 procedure into the 30- day
Article 22 deadline, and it neither state how compliance has to be determined
so that a prevailing party may pursue retaliatory action under Article 22.

An example on non-compliance is
the Banana case17
between the European Union and the United States that begun in July 1993 and by
2000 it has not reach a satisfactory decision by the parties on how to
implement the ruling that the European Union is discriminating against some
Central America countries, on 2 of July 2001 a mutually agreed solution was
reached but further panels were requested on 2008. It was not until 8 November
2012 that the parties notified the DSB of a mutually agreed solution pursuant
to Article 3.6 of the DSU.

The case has raised serious
questions about the process by which the US decides which trade disputes to
pursue in the WTO: specifically, whether the system provides too much
discretion to the Administration and thereby favors the politically connected.
The effectiveness of the current procedures for determining retaliation are
also being questioned. Calls for more effective, that is, more onerous,
measures such as the carrousel approach are countered by fears of mirror
legislation in other countries. In the WTO, the unresolved question of
sequencing is generally considered the most important systemic problem of the
Dispute Settlement Understanding and one which must be addressed without delay.
The Dispute Settlement Understanding is considered by many to be a cornerstone
of the WTO. The enforceability of WTO obligations is what distinguishes it from
many other international agreements and what makes it a magnet for new issues
such as those relating to labor and the environment. Without its acclaimed
“teeth” the framework of rules likely would fall into disuse. The
effectiveness of those teeth depends heavily on the existence of procedures
that ensure that policies found to be WTO-inconsistent are brought into
compliance in a timely manner. Until the sequencing debate is resolved no such
assurance can be given.

 

There are current negotiations to improve dispute settlement
procedures and even though members express their conformity with the system
there is still some improvements to be made, this review of the Dispute
settlement understanding has a framework of twelve issues, being them third
party rights, panel composition, remand, mutually agreed solutions, strictly confidential
information, sequencing, post-retaliation, transparency and amicus curiae
briefs, timeframes, developing country interests, including special and
differential treatment, flexibility and Member control and effective compliance.

The WTO dispute settlement punish and also bring the measure
into conformity but measuring the effectiveness of the applications of the regulations of the World Trade
Organization is a challenge, a thorough analysis is required and also
how to measure and evaluate the effectiveness and outcomes of the results of
the dispute settlements is a hard task to achieve. The insights of this
effectiveness might serve as examples on what reforms of the law are required
on its structures, process and outcomes.

1Walker
A., ‘The WTO has failed developing nations’ The guardian, 14 November 2011

2
Bossche, P., Zdouc, W., (2013). The law and policy of the world trade
organization: Text, cases and materials (3rd edition). Cambridge
University Press, p. 299

3 Bossche,
P., Zdouc, W., (2013). The law and policy of the world trade
organization: Text, cases and materials (3rd edition). Cambridge
University Press, p. 231

4
Articles I and III of the GATT 1994

5 Mavroidis
P. C. (2013). Trade in Goods. United Kingdom: Oxford University Press,
p. 145

6
See EC – Bananas III (1997); Indonesia – Autos (1998); EC – Bananas III
(Article 21.5 – Ecuador) (1999) ; Canada – Autos (2000) ; US – Certain EC
Products (2001) : EC – Tariff Preferences (2004) ; EC – Bananas III( Article
21.5 – Ecuador II) (2008) ; EC – Bananas III (Article 21.5 – US) (2008) ;
Colombia – Ports of Entry (2009) ; US – Poultry (China) (2010) ; and EU –
Footwear (China) (2012).

7
Apellate Body Report, EC – Tariff Preferences (2004), para. 101 (quoting
Appellate Body Report, Canada – Autos (2000), para. 69).

8 Bossche,
P., Zdouc, W., (2013). The law and policy of the world trade
organization: Text, cases and materials (3rd edition). Cambridge
University Press, p. 352

9 Mavroidis
P. C. (2013). Trade in Goods. United Kingdom: Oxford University Press,
p.57

10
Decision of 5 April 1966 on Procedures under Article XXIII of the GATT, BISD
14S/ 18

11
Oran R. Young and Marc A. Levy, (1999) The effectiveness of International
Environmental Regimes in Oran R. Young, ed., The Effectiveness of International
Environmental regimens: Causal Connections and Behavioural Mechanism.
Cambridge: MIT Press. p. 4-5.

12
Oran R. Young and Marc A. Levy, (1999) The effectiveness of International
Environmental Regimes in Oran R. Young, ed., The Effectiveness of International
Environmental regimens: Causal Connections and Behavioural Mechanism.
Cambridge: MIT Press. P. 5.

13Karen
J. Alter. International Affairs (Royal Institute of International Affairs
1944-) Vol. 79, No. 4 (Jul., 2003), pp. 783-800.

14 Rief
T. and Florestal M. , Revenge of the Push-Me, Pull-you: The Implementation
Process under the WTO dispute settlement understanding (1998) . 755-88

15 DSU
Article 223

16 DSU
Article 21 (5)

17
See DS27: European Communities — Regime for the Importation, Sale and Distribution
of Bananas

 

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