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Transcript of 14-11-03WTO Regional Seminar1 RTA Regulatory Provisions: The Boundaries of GATT Article XXIV Dr....
14-11-03 WTO Regional Seminar 1
RTA Regulatory Provisions:The Boundaries of GATT Article XXIV
Dr. James H. Mathis
Department of International Law
Amsterdam Law School
University of Amsterdam, NL.
14-11-03 WTO Regional Seminar 2
Two Questions:
• Must an RTA member eliminate regulatory barriers to trade to form an Article XXIV compatible free trade area or customs union?
• Can an RTA member make a domestic regulatory requirement more restrictive as to other WTO Members?
14-11-03 WTO Regional Seminar 3
Governing Legal provisions:
• XXIV, para. 8 - “definitional” and “internal” - FTA or CU understood to mean a formation whereby “other restrictive regulations of commerce (ORRCs) are eliminated…”
• XXIV, para. 5 - “operational” and “external” - exception provided that “other regulations of commerce (ORCs) not on whole more restrictive than general incidence prior to the formation.
14-11-03 WTO Regional Seminar 4
Context of a legal test: (AB in Turkey-Textiles):
• Article XXIV is a conditional exception
– Part 1. Measure introduced on formation meeting the requirements of Article XXIV:8 and XXIV:5
– Part 2. Formation prevented if the party were not allowed to introduce the inconsistent measure.
14-11-03 WTO Regional Seminar 5
ORRCs in paragraph 8 context:
• Refers backward to “the elimination of duties and other RRCs”, – (duties plus ‘something else’)
• forward to Articles listing, “except where necessary, Arts. XI-XV and XX…”– (suggesting examples of ORRCs)
14-11-03 WTO Regional Seminar 6
Narrow view - ORRCs, limited to Article XI ‘Measures’
• GATT regime - internal and external
– N.T. III B QRs (XI)B Duties (II)
– TBT B– SPS B– MFN (I) B MFN (I)
14-11-03 WTO Regional Seminar 7
ORRCs - narrow view (pro)
• Places para. 8 within GATT context of “border” measures. Art. XI cases apply
• Avoids inventory of domestic regulations as to plan and schedule
• Lower barrier to formation, but no XXIV defence for regulatory measures (Art. I)
• Avoids XXIV preemption of TBT recognition provisions. (compare GATS VII)
14-11-03 WTO Regional Seminar 8
Problems with a narrow view:
• Why should ORRCs require elimination of what is already prohibited among all GATT parties by Article XI?
• Terminology. Art. XI does not use the term “regulation” nor “ORRCs”. – The term “regulation” is used by Article III for
internal treatment.
• CU practice, QR’s not eliminated (Benelux)
14-11-03 WTO Regional Seminar 9
Broader view - ORRCs include “restrictive” domestic regulations
• “restricting commerce” is an “affecting” or “hindering trade” standard
– Compare TBT Art. 2.2 “unnecessary obstacles to international trade”
– ORRC standard is even higher if “restrictive” is more like “affecting” then “unnecessary”
14-11-03 WTO Regional Seminar 10
Broader view: discussion
• What historical / state practice for elimination of regulatory ORRCs? – EC practice until Dassonville (1974)
• Viner - custom union is tariff removal• Havana - no regulatory mandates,
positive or negative • GATS V context. Non-discrimination
standard
14-11-03 WTO Regional Seminar 11
ORRCs - alternative approaches
• Trachtman - “unnecessary” and “discriminatory” to cover by ORRCs
• Against whom? Paragraph 8 is internal, not external– Suggests ORRCs to capture less
favourable treatment to an RTA member…
14-11-03 WTO Regional Seminar 12
“Protectionism” or commercial policy (Mathis approach)
• Articles listing: VI and XIX are not listed, IF these are ORRCs, then eliminate:
• 1. duties (legal but protectionist)• 2. Border measures of a protectionist
nature (not BOP, food shortages, Art. XX, etc)
• 3. Discriminatory regulations, dom/rta• 4. Rules of Origin?
14-11-03 WTO Regional Seminar 13
GATT Regime:
• GATT regime - internal and external
– N.T. III B QRs (XI)B Duties (II)
– TBT B A.D. (VI) – SPS B Safeguards (XIX)– MFN (I) B MFN (I)
14-11-03 WTO Regional Seminar 14
ORCs as in paragraph 5
• AB endorsed panel’s broad scope for this ORC term as,
• any trade or regulatory measure affecting the trade of other WTO Members. – regulations as covered by WTO (SPS,
valuation, A.D, technical barriers), and, – other trade related regulation, environment,
export credit schemes, and evolving.
14-11-03 WTO Regional Seminar 15
ORCs equal to ORRCs?Consider the context
• Paragraph 5 proviso, provided no raising of new trade barriers for an RTA– Any trade barrier should be considered
• Paragraph 8 context, threshold level of liberalisation to reach– separates CUs and FTAs from all other
preferential schemes
14-11-03 WTO Regional Seminar 16
Q: Single more restrictive ORC?
• Single ORC is more restrictive, but assessment of ORCs overall (on average) is not more restrictive? – Turkey test part 1 is met, measure upon
formation complying with paras. 8 and 5– Turkey test part 2 ? How could a formation
be prevented by non-introduction of a single measure?
14-11-03 WTO Regional Seminar 17
For CUs: para. 5 and para. 8 ORCs
• Applying para 5, then anything “affecting” trade of third parties would require harmonisation
• Note. ECJ granted external competence for technical barriers in Opinion 1/94,
• Same term, different context
14-11-03 WTO Regional Seminar 18
Conclusion
• XXIV and the ‘intricate’ draftmanship: Havana modifications with 29 subcommittee meetings
• XXIV purpose - not pure economic objective. “partial preferential systems”
• Distinct paragraph 8 and paragraph 5 analysis, in SEQUENCE