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The promotion and protection of public health, consumer safety, the environment, employment, economic development, public morals, public order, and national security are core tasks of governments. Often, trade liberalisation and the resulting availability of better and cheaper products and services facilitate the promotion and protection of these and other societal values and interests. Through trade, environmentally friendly products, or life-saving medicines, that would not be available otherwise, become available to consumers and patients, respectively. At a more general level, trade generates the degree of economic activity and economic welfare that enables governments effectively to promote and protect the societal values and interests referred to above.
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. Examples of such regional economic integration efforts are 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.
Since the publication of its first edition, this textbook has been the prime choice of teachers and students alike, due to its clear and detailed explanation of the basic principles of the multilateral trading system and the law of the World Trade Organization (WTO). The fifth edition continues to explore the institutional and substantive law of the WTO. It has been updated to incorporate all new developments in the WTO's ever-growing body of case law. Moreover, each chapter includes a 'Further Readings' section to encourage and facilitate research and discussion on the topics addressed. As in previous editions, each chapter also features a summary to reinforce learning. Questions, assignments, and exercises on WTO law and policy are contained in an online supplement, updated regularly. This textbook is an essential tool for all WTO law students and will also serve as a practitioner's introductory guide to the WTO.
As mentioned in Chapter 8, apart from the ‘general exceptions’ and the ‘security exceptions’, discussed in that chapter, WTO law also provides for ‘economic emergency exceptions’. These exceptions allow Members to adopt two types of measures, otherwise WTO-inconsistent, namely, ‘safeguard measures’ and ‘balance-of-payments measures’. This chapter deals in turn with: (1) safeguard measures under the GATT 1994 and the Agreement on Safeguards; (2) safeguard measures under other WTO agreements; and (3) balance-of-payments measures under the GATT 1994 and the GATS.
While professing support for trade liberalisation, trade policymakers often insist that international trade should be ‘fair’. ‘Unfair’ trade comes in many forms and guises. Unfair trade practices may include cartel agreements, price fixing, and the abuse of a dominant position on the market.1 WTO law, at present, does not provide for rules on these and many other particular forms of unfair trade. This absence of rules partly reflects a lack of agreement on what are ‘fair’ and ‘unfair’ trade practices. WTO law provide for detailed rules with respect to dumping and certain types of subsidisation – two specific trade practices commonly considered to be ‘unfair’. Members differ in opinion as to what extent these trade practices are truly ‘unfair’. This difference in opinion among Members reflects differences in their societies in general and their economic systems in particular.
This chapter deals with the WTO rules applicable to sanitary and phytosanitary measures, commonly referred to as ‘SPS measures’. Generally speaking, SPS measures are measures aimed at the protection of human, animal, or plant life or health from certain specified risks. The negotiators of the WTO agreements considered that these measures merited special attention for two reasons: first, because the preservation of domestic regulatory autonomy was, and still is, considered of particular importance where health risks are at issue; and, second, because of the close link between SPS measures and agricultural trade, a sector that is notoriously difficult to liberalise. As a result, SPS measures are dealt with in a separate agreement, the Agreement on the Application of Sanitary and Phytosanitary Measures, commonly referred to as the ‘SPS Agreement’. This Agreement provides for rights and obligations, which, although broadly similar, differ in certain key respects from those provided in the GATT 1994 and the TBT Agreement.
While continued vigilance regarding customs duties and quantitative restrictions is increasingly important since the outbreak of the current trade wars, the importance of these traditional barriers to trade has gradually diminished over the past decades.1Regulatory measures affecting trade in goods now commonly raise a more pressing challenge for international trade and the multilateral trading system.2 As discussed in Chapter 7, such regulatory measures can take the form of technical barriers to trade. This chapter deals with the WTO rules applicable to technical barriers to trade (TBT). The next chapter, Chapter 14, will deal with the different WTO rules applicable to sanitary and phytosanitary (SPS) measures, which pose challenges to international trade similar to technical barriers to trade.
In addition to rules on dumping and anti-dumping measures, WTO law also includes rules on another practice that may or may not be considered unfair, namely, subsidisation. Subsidies are a very sensitive matter in international trade relations. On the one hand, subsidies are evidently used by governments to pursue and promote important and fully legitimate objectives of economic and social policy. On the other hand, subsidies may have adverse effects on the interests of trading partners whose industry may suffer, in its domestic or export markets, from unfair competition with subsidised products. Disputes about subsidies, and in particular subsidies to ‘strategic economic sectors’, have been prominent on the GATT/WTO agenda. Most noteworthy are the long-running disputes initiated by the European Union (EU) and the United States (US) in respect of subsidies to their respective civil aircraft industry.1 Agricultural subsidies promoting production and export of commodities such as cotton2 or sugar3 have also triggered much WTO litigation.
As stated in Chapter 1, there are two main non-discrimination obligations under WTO law: the most-favoured-nation (MFN) treatment obligation, discussed in Chapter 4; and the national treatment obligation, which is discussed in this chapter. In simple terms, a national treatment obligation relates to whether a country favours its products, services, or service suppliers over the like products, services, or service suppliers from other countries. A national treatment obligation prohibits a country to discriminate against other countries. The national treatment obligation under WTO law applies – albeit not in the same manner – to trade in goods as well as trade in services. The key provisions dealing with the national treatment obligation for measures affecting trade in goods are Articles III:2 and III:4 of the GATT 1994. The key provision dealing with the national treatment obligation for measures affecting trade in services is Article XVII:1 of the GATS. In this chapter, we will discuss these national treatment obligations in turn.1
The WTO dispute settlement system has been operational for more than two decades now. In that period, it has arguably been the most prolific of all international State-to-State dispute settlement systems. Between 1 January 1995 and 1 October 2020, a total of 596 disputes were brought to the WTO for resolution.5 In more than one-fifth of these disputes, the parties were able to reach an amicable solution through consultations, or the dispute was otherwise resolved without recourse to adjudication. In other disputes, parties have resorted to adjudication. Between 1 January 1995 and 1 October 2020, such adjudication resulted in 248 reports of dispute settlement panels and 170 reports of the Appellate Body,6 meaning that almost 70 per cent of circulated panel reports have been appealed.7 During the same period, the International Court of Justice (ICJ) in The Hague rendered seventy-eight judgments and seven advisory opinions, and the International Tribunal for the Law of the Sea (ITLOS) in Hamburg rendered fifteen judgments and two advisory opinions and issued orders in another fourteen cases.8 Also in comparison to its ‘predecessor’, the GATT dispute settlement system, the WTO dispute settlement system has been very active.
The Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS Agreement) imposes a positive regulatory obligation on Members to ensure a minimum level of protection and enforcement of intellectual property (IP) rights in their territories.
Part I of the TRIPS Agreement contains general provisions and basic principles that apply to all the IP rights falling within its coverage. Part II is subdivided into eight sections, each dealing with a different area of IP protection. Part III sets out the obligations of Members with regard to the enforcement of IP rights. The remainder of the TRIPS Agreement addresses issues relating to the acquisition and maintenance of IP rights, and contains institutional and procedural provisions.
As mentioned in Chapter 6, not only tariff barriers but also a wide range of non-tariff barriers restrict trade. While tariff barriers were systematically reduced since the late 1940s as a result of successive rounds of tariff negotiations, non-tariff barriers have in recent decades gradually become an ever more prominent instrument of protection. The recent increase in customs duties by some WTO Members in the context of trade wars or otherwise does not negate this trend of the heightened importance of non-tariff barriers as an instrument of protection.