International Trade Law Essay

A It is only once we take into account our surroundings can we fully appreciate the true impact of globalisation and the effect it has on our day-to-day lives. The clothes we wear, the laptops we use, and the chairs we sit on, are just a few simple examples of items that have been made available to us as a result of the continued integration of the world’s markets. However, as global markets continue to integrate, further compounded by tough economic conditions in an intense and competitive marketplace, the need to protect domestic production is deemed to be vital to a country’s economic success.

As a result of this self-preservation causes political conflict and strains international relations. To remove the possibility of such discrimination from taking place, the GATT and the WTO have been put in place to insure that the 156 members adhere to the various principles within the two agreements. Articles I and III of the GATT outline two of the most fundamental principles regarding non-discrimination in WTO law; the most-favoured-nation (MFN) treatment obligation and the national treatment obligation (NTO). The MFN treatment obligation, which is set out in Article I of the GATT, is described in the case of EC- Tariff Preferences as the ‘cornerstone of the GATT’ and ‘one of the pillars of the WTO trading system’ Its principle purpose is to ensure that WTO members have equal opportunities to import and export goods and services with other members. The MFN treatment obligation is applied using a three-tier test of consistency under Article I:1.

The test examines whether any unfair advantage exists between ‘like products’ and whether such an advantage is granted ‘ immediately and unconditionally’ to all ‘like products’ concerned. Such advantages include measures such as customs duties and internal taxes. Article I:1 also takes into account de facto as well as de jure discrimination as seen in the case of Canada-Autos. The scope of Article I:1 is relatively broad but it does have it’s limitations.

Under WTO law, there are still on-going debates as to the exact terminology of words such as ‘likeness’ and ‘unconditionally’. The current case-by-case basis approach the WTO take is probably the most effective method of counter-acting potential foul play by member nations. Article I plays a critical part of WTO law and should it crystalize its interpretation of such wording, the ramifications in terms of discriminatory action could result in political backlash. For these reasons alone, it is clear why Article I is deemed to be the cornerstone of the GATT.

However despite having a pivotal role in international trade, the significance of the MFN treatment obligation appears to be diminishing due to a recent surge in preferential trade agreements between Members. By July 2005, a total of 330 of these regional trade agreements had been notified to the WTO highlighting the fact that the principle now carries less weight when it comes to trade than it had done in previous years. The 2004 Sutherland report on the future of the WTO concluded that MFN is no longer the rule, but that it is almost becoming the “exception”.

Article III of the GATT outlines the National Treatment Obligation (NTO) principle. The purpose of NTO is to ensure that internal measures are not applied to imported products so as to afford protection to domestic production which is stated in article III:1. The scope of the NTO extends beyond preventing discriminatory measures being placed on imports as it also aims to eradicate potential ‘hidden’ domestic barriers to trade by WTO members that may appear legitimate at first instance. Akin to Article I, it also takes into account de facto discrimination.

Article III:4 ensures that imported goods and services which are ‘directly competitive or substitutable‘ to domestic products, are subject to the same quality standards as was seen in the case of Argentina- Hides and leather. This provision is further compounded later in Article III:4 whereby members of the WTO are to treat imported products in the same manner as domestic products. Similarly to Article I, Article III has also caused some degree of ambiguity with regards to clarifying what exactly qualifies as a ‘like product’ with panels of the WTO when deciding on such matters varying the elevant criteria over the years. From a personal perspective, this remains the most effective way for the WTO to govern international trade effectively and prevent unfair/discriminatory measures being put in place by WTO members. Part B * The primary role of Article II is to protect tariff concessions and bindings that already exist. Article II:1(a) provides that Members must not treat products imported from other Members less favorably than that provided for in their Schedule. Article II:1(b) further affirms what is established in Article II:1(a) by further stating that ‘any member shall, on importation, be exempt from ordinary customs duties in excess of those set out in the Schedule’. The enforcement of this provision is evident in the dispute of Argentina-Textiles and Apparel whereby the Panel held that Argentina had acted inconsistently with Article II:1(b) by subjecting imported goods to a higher duty than stated in their Schedule. Article II also has the capacity to resolve disputes that do not directly fall under duties and tariffs. The broad interpretation of the Article is apparent in the dispute of EC- Chicken Cuts. Here the Panel intervened where the European Communities were seeking to reclassify a form of chicken in order to impose higher duties on importing members outside the EU. * * Tariff barriers can also take the form of other duties and charges. These charges are financial, but fall outside the scope of ordinary customs duties.

This area of WTO law is ambiguous as the GATT does not elaborate and define what ordinary customs duties are which gives the WTO scope to extinguish any foul play from Members. The regulatory provisions for these other duties or charges are set out under Article II:1(b) second sentence with the aim to make sure that members cannot circumvent Article II:1(b) first sentence. It requires that no imported products that are already subject to a tariff binding shall be subjected to other duties and charges in excess of those duties or charges hat is already provided for in mandatory legislation that currently is in force. * Article II:1(b) thus requires increased transparency when it comes to tariff bindings. Members are obliged to record in their respective Schedules all ‘other duties or charges’ imposed on imported products. In the dispute of Chile- Price Band System the Panel concluded that if such ‘other duties and charges were not recorded but are nevertheless levied, they are inconsistent with the second sentence of Article II:1(b)’ and such duties or charges will be rendered void.

Once a member has recorded a duty or charge in their Schedule, it does not mean that the particular duty or charge in question has been legalized. * There are certain exceptions to this rule which Article II:2 provides for. Under this provision, members may impose charges that are not in excess of the internal tax which is imposed on the like domestic product, anti-dumping charges which are consistent with the WTO, and other charges that match the cost of services required such as quantitative restrictions and licensing. * Quantitative restrictions are measures that limit the quantity of a product that may be imported or exported. Under WTO law, Members are required to notify the WTO Secretariat should any variations of such restraints be in place. The WTO reluctantly accommodates such limitations and hence describes tariffs as their border protection ‘of choice’ in the dispute of Turkey- Textiles. Quantitative restrictions have the capacity to reduce market transparency and can prove to hinder the WTO’s objective with regards to removing barriers to market access. The scope of Article XI:1 was questioned in the dispute of India- Autos whereby India had contested the term ‘restrictions on importation’ applies solely to border measures which was subsequently quashed by the Panel who stated that ‘the nature of the measure’ played a pivotal role in determining whether or not the restrictions in place were inconsistent with Article XI:1. The broad scope of this Article is also apparent in EEC- Oilseeds where the Panel held that regardless as to whether or not a restriction impedes trade, such restrictions are prohibited under the Article. * Akin to most tariffs, quantitative restrictions have certain exceptions. However where such limitations do exist, the WTO ensures that market transparency does not suffer as a result. Under Article XIII:1 quantitative restrictions when applied must be administered in a non-discriminatory fashion. The WTO requires that if a Member is to impose a quantitative restriction on products being imported or exported from another Member, all other importing or exporting Members are subjected to the same prohibitions.

Other exceptions to Article XIII are rules on distribution of trade and import licensing procedures. * * The WTO focuses on preventing any uncertainty in relation to market transparency and removing any potential barriers that may arise and hinder such an important aspect of international trade. The WTO has incorporated four types of rules and procedures that help ensure market transparency is maintained. * * Article X establishes the publication requirement that Members must ‘promptly’ publish any administrative decision that has an effect on international trade.

The reasoning behind this rule is to allow for other Members to become accustomed to any change in fiscal or non-fiscal tariffs. The interpretation of this rule is quite broad. In the dispute of Dominican Republic- Import and Sales of Cigarettes, the Panel ruled that surveys taken to assess the tax determination for cigarettes, despite not being a law or regulation, fell under ‘ administrative rulings of general application’ and were found to be inconsistent with Article X as a result of failing to publish the results of the survey. * The second rule in place is the notification requirement.

A central registry of notifications has been established with the aim to maintain transparency and keep Members informed of any changes in measures. * * The first two rules under market transparency are complimented by a WTO requirement that Members establish national enquiry points where further information is readily available to parties looking to trade with other Members. * The fourth rule is that of a review process. This review process allows for the WTO to evaluate provisions and whether or not they help contribute to the optimum levels of market transparency. * It must be noted that when dissecting WTO law over time a pattern has seemingly emerged. Panels when ruling on disputes tend to have a broad interpretation of the various Articles within the GATT and have somewhat a narrow interpretation of the exceptions to these provisions. This pattern conveys the WTO’s objective in attempting to promote market access. * * Part C Trade liberalization provides Members with many economic advantages however when it comes to policy-making governments have to prioritize the welfare of their own citizens and the environment in which they live.

These measures can often prove hard to justify and as a result require legislative aid from the WTO. Article XX of the GATT entitled ‘General Exceptions’ provides this regulatory relaxant for Members. The Article enlists ten exhaustible and conditional exceptions, (a) to (j), whereby Members, subject to the approval of a WTO Panel, are permitted to implement such measures where in normal circumstances would be considered inconsistent with WTO law and discriminatory in nature. A two-tier test has been established to help determine whether a measure that would normally be rendered inconsistent, can be justified under the exceptions.

The relationship between the two tiers was clarified in the dispute of U. S-Shrimp where the structure of the test was set out. Once the measure meets the criteria of a particular exception, it is then assessed as to whether or not it is aligned with Chapeau of Article XX. Article XX:(b) focuses on ‘protecting human, animal, and plant life’. The first element considered is relatively straightforward. A Member must show that the purpose of the measure is designed for the protection of a party listed under section (b). The second component involves the interpretation of the term “necessity”.

This part of the test is pivotal as it is not the necessity of the policy objective, but the necessity of the disputed measure to achieve it’s objective which is at issue. In the dispute of Thailand-Cigarettes, the Panel found that a measure would only be considered ‘necessary’ once it is clear there is no alternative measure that is consistent, or less inconsistent, with the GATT. This second element of the test can be a vital tool for the WTO in unmasking any attempt by Members to circumvent the legislation in place. The Appellate Body in EC-Asbestos concluded that where a measure seeks to preserve an important societal value, Members would be given complete discretion in terms of assessing what level of protection they feel is appropriate. Opposing Members cannot challenge the course of action taken, but can only argue that the measure in question is not ‘necessary’ in order to achieve it’s objective. * The most notable interpretation of the term ‘necessity’ was given in the dispute of Brazil-Retreaded Tyres, where the Appellate Body identified three determining factors when deciding if a measure was necessary. . The importance of the value at stake. 2. The contribution the measure will make in attempting to achieve this directive. 3. Assessing the level of restriction placed on trade. Once all three factors are identified and are deemed to fall within the ambit of Article XX:(b), the measure will be deemed to be necessary. Article XX:(d) seeks to align measures that would normally conflict with WTO law in order to ‘secure compliance’ with national law that are not inconsistent with the GATT provisions.

Similar to the ‘necessity’ requirement in paragraph (b) the Body noted in the dispute of Korea- Various Measures on Beef, that there are various degrees of necessity that are dependent on the relative importance of the common interests. The various degrees range from ‘contributing’ to ‘indispensible’. Once the benefits of the measure outweigh the negative impact it has on trade, the more likely it will be deemed a ‘necessity’. Article XX:(g) concerns ‘measures relating to the conservation of exhaustible and natural resources’. A close and real relationship is required between the measure and objective in order for to be considered legitimate.

It is also required that there be a degree of ‘even-handedness’ between restrictions on both domestic and foreign trade. It does not however require for such restrictions to be equal. The chapeau of Article XX has been an important factor of consideration for the Appellate Body in trade disputes. Essentially it expresses the Bona Fide principle that lies within Article XX. It establishes the need to strike a balance between a Members right to invoke a measure into practice, and the substantive rights of other Members within the WTO.

In order to find this equilibrium, the chapeau examines the possibility of a measure leading to ‘arbitrary and unjustifiable discrimination between countries where the same conditions prevail’, or ‘a disguised restriction on international trade’. In disputes such as U. S-Shrimp, The Appellate Body determines whether a measure satisfies the requirements of the chapeau by assessing the objective of the measure, rather than looking at the effect of it’s discriminatory nature. In Brazil-Retreaded Tyres the effectiveness of this assessment was clear.

The Appellate Body explicitly stated that where a rationale is given with no direct relationship to the objective of a measure, the Member putting forward the rationale would have no leg to stand on. It is arguable that like any other exceptions of the GATT, Article XX should be interpreted narrowly. However due to the general nature of the exceptions listed under the Article, the Appellate body has endorsed a more pragmatic approach seen in the dispute of U. S-Shrimp. This case-by-case modus operandi seeks to strike a balance between the general rule and it’s exception.

As a result the Appellate Body has some flexibility that allows for sound decision-making and ultimately aides’ efforts of preserving transparency in global markets. Article XXIV provides Members with the opportunity to implement measures, otherwise inconsistent with WTO law, in order to pursue the objective of regional economic integration. The key characteristic of an RTA is that Members involved in such an agreement offer more favourable conditions to those also participating in the agreement despite being a blatant infringement of the MFN agreement.

As of January 2012, over three hundred regional trade agreements are in operation worldwide, with many of these falling within the ambit of Article XXIV. Customs Unions, and Free Trade Areas are the only forms of regional arrangements that are permitted by the WTO. The Appellate Body established two requirements that must be met in order to justify a measure looking to create a customs union in the dispute of Turkey-Textiles. A party looking to introduce the measure must meet the criteria set out in sub-paragraphs 8:(a) and 5:(a) as well as show that the measure is an integral part of the formation of the customs union.

Paragraph 8(a) requires that all members within the union remove any trade barriers that exist with respect to ‘substantially all the trade’ between them. This term ‘substantially has not been clarified by the WTO as commented by the Appellate Body in Turkey-Textiles but it has been accepted that it provides Members with some degree of flexibility when liberalizing internal trade. Paragraph 5(a) provides that duties and regulations must ‘not on the whole’ be higher resulting from the formation of the customs union.

Duties and regulations both prior and after the creation of the union are assessed economically to ensure Members do not exploit the legislative opportunities made available to them. This area of trade law is one of the most abused in terms of exploiting potential loopholes. Therefore permitting customs unions within what is meant to be a global free trade environment is quite a delicate issue for the WTO to manage. It has the potential to continue to liberalize trade on a global scale, but also runs the risk of heightening tensions between Members that in turn will have a negative-counter effect on removing barriers to trade.

As a result, WTO Members are obliged to notify all regional schemes to the Committee on Regional Trade Arrangements (CRTA) in order to get approval. The instructions given to the CRTA is to ensure that they carry out a thorough examination of agreements and report any issues to the relevant body, as well as considering the collateral effect such agreements may have on both regional and international trading systems. The introduction of the 2006 Transparency Mechanism has provided the CRTA with new procedures that strengthen the notification obligation of the WTO that ultimately helps to improve market transparency.

Other Members can contest such schemes through the Panel proceeding under the DSU. Part D The quasi-legal nature of dumping has resulted in it becoming one of the most controversial and politically sensitive areas of WTO law. It is notorious for being highly complex and ambiguous. Article VI:1 of the GATT, and Article 2. 1 of the Anti-Dumping Agreement (ADA) define ‘dumping’ as the introduction of a product into the commerce of another country at less than its ‘normal value’. According to Article VI of the GATT, a Member may introduce an anti-dumping measure if it satisfies the three basic requirements that; a) Dumping has occurred. (b) The domestic industry producing the like product in the importing Member is suffering injury as a result. (c) There is a causal link between the two. One of the most effective tools used to unravel these gradual and extensive investigations is the comparison between the normal value of the good in question against its export price. The calculation of these prices is a critical part of any anti-dumping application. The WTO has intelligently opted against limiting the possible influential factors affecting the normal value of a product.

This gives Article 2. 4 a broad scope to ensure the likelihood of a fair and accurate decision. One of the most effective techniques used in the calculation of the normal price is the assessment of prices for ‘like products’ in the ‘ordinary course of trade’ in the exporting market. In order to show injury caused to the domestic industry as a result of dumping, Article 3. 1 requires that investigatory authorities must present ‘positive evidence’ to the WTO followed by an ‘objective examination’ in relation to the alleged injury inflicted. These two requirements are then pplied to the facts surrounding a dumping investigation and assess; (a) The volume of dumped imports and the effect it has on the prices in the domestic market for like products and; (b) The subsequent impact these dumped imports have on domestic producers. The Panel in Mexico-Anti-Dumping Measures on Rice expressed the importance of good faith and fundamental fairness during the various stages of the inquest. The manipulation of information to achieve a favourable result, such as attempting to establish a causal link, will be held inconsistent with WTO legislation.

Establishing a causal link is the most crucial element in the investigatory process. Article 3. 5 of the ADA requires that the dumped imports contribute to the cause of injury rather than be the sole parasite to an industry. Other factors aside from dumping are also to be examined as to their role in causing harm to the industry in what is know as the ‘non-attribution requirement’. In U. S-Hot Rolled Steel the Appellate Body noted that investigatory authorities are ‘free to choose’ their method of choice when seeking to establish the vital causal link between dumped imports and injury.

The requirements concerned with commencing an anti-dumping investigation are set out in Article 5 of the ADA. In Guatemala- Cement II the Body noted that under Article 5, the validity and relevance of the information provided is assessed in such a way that ‘ an unbiased and objective investigating authority could determine that there was sufficient evidence of dumping within the meaning of Article 2 to justify initiation of an investigation’. This initiation process coincides with a general notification requirement listed under Article 6. 1.

These notifications are to ensure the balance of fairness is upheld by providing all interested parties the opportunity to suggest what factors they consider to be relevant in the investigation, as well as informing them what information they need to disclose. This helps increase the transparency of the investigation process for both interested parties and the public. Adjustments, allowances, and currency conversion are all taken into account. Once the investigating authority is convinced that illegal dumping has occurred, they can draw on the ADA and assess what measure is the most effective remedy.

Under the ADA, there are three different kinds of remedy available; * Provisional anti-dumping measures (Article 7) * Price Undertakings (Article 8) * Definitive anti-dumping duties (Article 9) These remedies have detailed rules and are subject to periodic review by the relevant authorities. Measures cease effect once the initial injury has been rectified. It is only in exceptional circumstances that a measure will remain in place beyond the rectification of an injury or the “sunset” provision of five years.

Finally, Article 12 requires investigating authorities to disclose non-confidential determinations with regards to anti-dumping measures to the general public. The aim of this requirement is to increase the transparency of determinations, and providing a more solid basis for future decisions in the field. The Agreement on Subsidies and Countervailing Measures (SCM) is another example of legislation put in place by the WTO to regulate the practice of unfair trade. A subsidy is considered to be a financial contribution; made by a government or public body; that confers a benefit to a particular party.

The SCM provides that both multilateral and unilateral remedial actions are available to Members in relation to subsidy disputes. A noticeable difference between the ADA and the SCM Agreement is that multi-lateral remedies are not available to Members in dumping cases, highlighting the WTO’s recognition of the potential wider impact subsidies can have on trade in comparison to dumping. One of the basic principals established under the Agreement is that subsidies are only subject to discipline where they have adversely affected the performance of a ‘specific’ industry.

To establish this requirement of ‘specificity’, the Agreement allows for either de jure or de facto findings. The Panel will assess a subsidy through the lens of fairness when determining what disciplinary action is most appropriate in the particular instance. This is evident through Article 27 and Annex VII so far as they categorise three different types of developing countries, providing special and differential treatment for each one. For example, lesser-developed countries or countries in economic transition will receive favourable treatment due to the importance of subsidies in the development of such economies.

Two different types of subsidies exist under the SCM Agreement; prohibited subsidies, and actionable subsidies. Non-actionable subsidies are no longer in effect. Prohibited “red” subsidies fall under Article 3. These competitive subsidies conflict with Article III of the GATT, as they are designed in such a way that give rise to adverse outcomes in relation to the interests of other trade Members. “Red” subsidies are sub-categorised into those that are contingent upon export performance and those that provide domestic goods with a competitive advantage over imported goods.

Most specific subsidies fall within the ambit of an actionable or “yellow” subsidy. These subsidies are subject to challenge either through the DSM or countervailing action, if it can be proven that it is adversely affecting another economy. Three types of adverse effects are listed under the SCM; injury; serious prejudice; and nullification or impairment, all of which are subject to special and differential treatment. Under the Agreement, injury is the only adverse effect that can be challenged on both a multilateral and unilateral level.

It is the sole basis for countervailing action under the Agreement. Serious prejudice and nullification can only be brought forward at the multilateral level. The presumption of serious prejudice has been a major advance in WTO law. Shifting the burden of proof from the complaining Member to the subsiding Member removes the detailed complexity of analysis, making the entire process fairer and more transparent. Part V of the SCM sets out the procedural requirements such as how to initiate and conduct an investigation; impose preliminary and final measures; and the use of undertakings.

The rules under the SCM Agreement are strikingly similar to those set out in the ADA with the themes of transparency and fairness reverberating throughout. In accordance with Article 24, the Committee has also established a professional group of experts to help improve the standard of surveillance in relation to the use of subsidies. In conjunction with the Agreement, Members are required to submit detailed notifications to the Committee on a regular basis in order to allow other Members effectively examine the potential trade effects of a particular subsidy.

Once again the need for transparency is noted by the WTO. Unique rules for the settlement of disputes involving subsidies are laid out under Article 4 of the SCM. For example, where a Panel has found a subsidy to be prohibited under the SCM, it will recommend its withdrawal. Failure to comply with recommendations issued by the DSU can result in the implementation of countermeasures that are deemed ‘appropriate’ to deal with the degree and nature of adversity that exists it the given circumstance. By and large, the SCM Agreement and the ADA are “cut from the same cloth”.

The measures available to Members under the Subsidies Agreement draw parallels to those measures available in anti-dumping disputes, with the only exception being the inclusion of multilateral measures under the SCM. The themes of fairness and transparency are apparent throughout both respective Agreements highlighting their importance in the cohesive operation of international trade. The WTO safeguards operate at the other end of the spectrum to other trade practices such as dumping and subsidization, so far as they are non-discriminatory in nature and are applied in reaction to fair trade.

Usually inconsistent with Article II or XI of the GATT, safeguards are justified under the economic emergency exception listed under Article XIX of the GATT, as well as the Agreement on Safeguards. They provide temporary ‘breathing space’ to Members in situations where an absolute or relative increase in imports poses a serious threat to the health of their domestic industry. As noted in the dispute of U. S-Pipeline safeguards are only attributable to increased imports, and those exporting Members that lose out are compensated accordingly.

Despite being included in the arsenal of Members, they are seldom used, subsequently making this area of WTO law remarkably quiet compared to the areas of subsidies and dumping. Part E The implementation of the Sanitary and Phytosanitary (SPS) Agreement and the Technical Barriers to Trade (TBT) Agreement illustrate a shift in focus by the WTO from domestic regulation to international regulation. Prior to the introduction of these Agreements, Article XX of the GATT was the only provision governing cross-border trade between Members.

In terms of stature within WTO law, the SPS Agreement is what is known as a ‘lex specialis’ and plays a significant part in regulating international trade measures, whereas the TBT Agreement has a more subordinate role. However, the Panel in EC-Asbestos noted that where a measure is applicable to the GATT and the TBT Agreement, the Panel will first examine whether the measure is consistent with the TBT Agreement as it deals ‘specifically and in detail’ with technical barriers to trade. Therefore, the TBT in certain instances can be of particular use.

Ultimately the rules set out under both Agreements reflect an attempt to find the delicate balance between the protection of health as well as other important societal values, and the liberalization of trade. By virtue of Article 1. 1, the Agreement applies to all SPS measures that “may directly or indirectly, affect international trade”. This broad definition ensures that effectively all sanitary measures fall within the Agreement, consequently helping to reduce the potential abuse of these protective measures.

The scope of the Agreement ranges across substantive, personal, and temporary situations, each having varying degrees of appliance. However, the three main factors the Panel takes into account when assessing whether or not a measure qualifies under the Agreement remains constant. The Panel in EC-Biotech identified the purpose, form, and nature of a measure as being the key determinants in establishing whether a measure falls within the scope of the SPS Agreement. Prior to this case, SPS measures were regarded as being mutually exclusive from other Agreements such as the TBT Agreement.

The Panel noted however that a measure could be simultaneously assessed under two Agreements in order to pursue different objectives. These factors are interpreted broadly to enable the WTO to be prudent when establishing rational relationships between the purpose of the measure and the risks involved. One point worth noting is the emergence of Article 13 of the SPS Agreement. Looking into the future, the decentralization of standard setting within Member states could prove problematic for the WTO in terms of maintaining market transparency.

The development of this area is one that the WTO must watch diligently in order to prevent giving Members the opportunity to implement disguised barriers to trade. SPS measures are also required to be congruent with the principle of fair trade. Measures that are considered to be unjustifiably discriminatory in nature will be rendered inconsistent with Article 2. 3 of the Agreement. In the dispute of Australia-Salmon the Panel identified three cumulative requirements that must be met in order for a measure to amount to a violation of Article 2. 3.

Interestingly these requirements are strikingly similar to the chapeau of Article XX of the GATT. Other Articles such as Article 5. 5 also provide for the prevention of discriminatory measures being implemented, but operate under the umbrella of Article 2. 3. The TBT Agreement addresses the issue of discrimination under Article 2. 2 in a way similar to that of the two other Agreements. Generally SPS and TBT measures tend to differ significantly from one country to another due to the varying social and economic conditions that each Member experiences.

These differences ultimately have a negative impact on trade. The Panel in E. C-Hormones identified the importance of Article 3 of the SPS Agreement in addressing this problem. It encourages Members to harmonize their SPS measures around international standards set by organisations such as The Codex Alimentarius Commission, to various degrees of compliance. Each degree of compliance holds a different weighting in relation to their consistency, a key factor in all WTO disputes.

While ‘basing’ measures on international standards is the least burdensome obligation placed on Members, it does not benefit from the presumption of consistency that the other, more onerous degrees of compliance enjoy. Measures that ‘conform’ to international standards, or measures that adopt a ‘higher level of protection’ enjoy this presumption, placing the burden on the complainant to show a prima facie case. This incentive provided by the WTO is an intelligent one as it induces Members to integrate its measures further with WTO law, making for a more transparent and open market.

Article 2. 4 of the TBT Agreement also illustrates the importance of international standards with regards to technical regulations. Under the Article, Members are obliged to base their technical regulations on international standards, an obligation that was recognised by the Appellate Body in EC-Sardines. Aligning SPS measures can be a difficult task due to the varying conditions from country to country. In situations where international standards are considered inadequate, Article 4 provides for the recognition of equivalent measures. Under Article 4. , Members are obliged to accept equivalent measures when the exporting Member can demonstrate to the importing Member, that its measures achieve the appropriate level of protection, in what is otherwise known as mutual recognition agreements. To improve the transparency of such situations, international standard-setting bodies such as the World Organisation for Animal Health are encouraged to elaborate and notify Members on existing guidelines to allow for a balanced decision to be reached. The TBT Agreement also provides for both equivalence and mutual recognition under Article 2. 7.

The area of mutual recognition agreements is ideal in theory, yet can difficult to put into practice, often due to the stubbornness of bureaucracy. The regionalization provision set out under Article 6 establishes the recognition of pest and disease-free zones within countries. Ultimately the Article combats the psychological barriers that exist within world trade i. e. once there has been an outbreak of disease in a particular country, importing Members are inclined to assume the entire nation has been affected. The Avian influenza outbreak in Chile is a good example of such a scenario. Article 6. provided Chile the opportunity to provide the necessary evidence that some regions within its territory were pest-free by allowing importing Members access to inspect such evidence. The positive nature of this Article is one that enables markets that were once temporarily closed, to open up once again and reap the benefits of international trade. SPS measures are subject to risk analysis, which is comprised of two basic elements; risk assessment, and risk management. Both are implicitly taken into account throughout Article 5. Risk assessment refers to the scientific process whereby the potential risk in question is realised.

Annex A offers two definitions in relation to this scientific process which are in turn applied to measures depending on their nature. A three-stage process has been established in relation to the assessment under Annex A, which was subsequently endorsed by the Panel in the dispute of Australia-Salmon. Similarly to SPS measures, TBT measures are also subject to a risk assessment, which is provided for under Article 2. 2 whereby three factors are taken into account; * Scientific and technical information * Related processing technology * The intended end-use of the product.

The manner in which the TBT assessment is carried out contrasts from the assessment of SPS measures. This is evident, as many of the standards listed under the TBT Agreement are not closely related to scientific considerations that SPS measures are subjected to such as the characteristics of the product. Risk management on the other hand refers to the policy making process. It is often contested this policy-making process is a tool of trade protectionism as it provides Members with the opportunity to implement ‘disguised trade restrictions’. In situations where a government is of the belief its economy is exposed to mminent danger, they may feel the need to take precautionary action to avoid any harm. This is also known as the precautionary principle. It is provided for under Article 5. 7 of the Agreement, whereby four cumulative requirements, confirmed by the Appellate Body in Japan-Agricultural Products, are identified as being necessary for the adoption of precautionary measures. They consist of; * The lack of scientific evidence; * The availability of pertinent information; * Members seeking to obtain additional information for a more objective assessment; * Being reviewed accordingly within a reasonable period of time.

Internationally, the principle was first recognised in the Biosafety Protocol under principal 15. However the overlapping of the Protocol with the SPS Agreement there resulted in some degree of confusion with regards to its position in International law. The Appellate Body in EC-Hormones refrained from ruling on the status of the principle with regard to being a general customary rule of international law by stating that it would be ‘unnecessary and probably imprudent’ to do so when it remains so unclear. Transparency is fast becoming an established principle within WTO law.

Throughout both respective Agreements, the need for clarity and fairness is emphasized consistently. The procedural requirements under both Agreements in relation to transparency bear a striking resemblance to one another. Article 7 of the SPS Agreement confers an obligation on Members to notify any changes to SPS measures in conjunction with Annex B. In relation to the TBT Agreement, these provisions are set out for technical regulations, standards, and conformity procedures under Articles 2, 10, and 5 respectively.

Under Annex B, Members are obliged to carry out three functions. Firstly, the SPS notification authority is responsible for ensuring that any new regulations, which may have a ‘significant effect on trade of other Members’, are published in reasonable time in order to allow the Secretariat to provide copies to potentially affected Members on request. Secondly, once the WTO has been notified, a Member must set up an enquiry point, usually government agencies, that answer any queries in relation to SPS measures.

Thirdly, the most fundamental part of transparency however is the publication of changes in regulations. This allows for interested Members to become ‘acquainted’ with the new measures in place, thus preventing any disturbances to trade between nations. Other measures such as Annex C also contain conditional additional transparency requirement in the form of a bona fide obligation. In EC-Biotech the Panel ruled that ‘undue delays’ fail to comply with Article 8 Annex C. Similarly, the TBT Agreement also contains a Code of Good Practice.

Once countries have been notified of any new measures implemented, the WTO recognises the difficulties developing economies can have in complying with these new technical requirements. Both Agreements provides for technical assistance in this regard that also provides for much needed preferential treatment. This assistance goes a long way to achieving a key WTO objective- a fair and transparent global market. Dispute settlement in relation to both SPS and TBT measures also bear striking similarities.

Due to the scientific and technical nature of such measures, the DSU plays an important role in the upkeep of standards within both the TBT and SPS Agreements respectively. After analyzing the various areas of international trade law, it is evident that non-discrimination and transparency are tantamount to the intentions of the WTO. These two principles effectively represent the spine of global trade, and without them, the concept of globalisation would quickly evaporate. The area of international trade law is relatively young, and as time passes, the WTO will have more opportunities to make international markets a more level playing field.

Until these opportunities arise however, the WTO’s governing bodies must remain prudent and ensure that commerce on a global level is conducted in a fair manner. ——————————————– [ 1 ]. WT/DS246/AB/R [ 2 ]. WT/DS340/AB/R [ 3 ]. WT/DS155/AB/R [ 4 ]. WT/DS56/AB/R [ 5 ]. WT/DS286/AB/R [ 6 ]. WT/DS207/AB/R [ 7 ]. WT/DS202/AB/R [ 8 ]. WT/DS34/AB/R [ 9 ]. WT/DS146/AB/R [ 10 ]. WT/DS86/AB/R [ 11 ]. WT/DS302/AB/R [ 12 ]. WT/DS58/AB/R [ 13 ]. DS10/R-37S/200 [ 14 ]. WT/DS135/AB/R [ 15 ]. WT/DS332/AB/R [ 16 ]. WT/DS169/AB/R 17 ]. WT/DS58/AB/R [ 18 ]. WT/DS332/AB/R [ 19 ]. WT/DS58/AB/R [ 20 ]. WT/DS34/AB/R [ 21 ]. WT/DS34/AB/R [ 22 ]. 2007-11 Sybil 133-140: Singapore Yearbook of International Law and Contributors [ 23 ]. Anti-Dumping Agreement-Article 2. 1 [ 24 ]. WT/DS295/AB/R [ 25 ]. WT/DS184/AB/R [ 26 ]. WT/DS184/AB/R [ 27 ]. WT/DS60/AB/R [ 28 ]. WT/DS60/AB/R [ 29 ]. WT/DS202/R [ 30 ]. WT/DS135/AB/R [ 31 ]. WT/DS293/R [ 32 ]. WT/DS18/AB/R [ 33 ]. WT/DS48/AB/R [ 34 ]. WT/DS231/R [ 35 ]. WT/DS18/AB/R [ 36 ]. WT/DS76/AB/R [ 37 ]. WT/DS48/AB/R [ 38 ]. WT/DS293/AB/R