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International Trade Law Notes

International Trade Law (DePaul University)

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INTERNATIONAL TRADE LAW OUTLINE

I. Introduction to International Trade Law

▪ Chapter 1
▪ Chapter 2

II. WTO & Dispute Settlement Reading Assignment

▪ Chapter 4
▪ Chapter 5

III. Tariffs
▪ Chapter 7
▪ GATT articles II:1-2; VIII:1(a); XXVIII

IV. Quantitative Restrictions

▪ Chapter 8
▪ GATT articles XI:1-2, XIII

V. National Treatment – Tax & Regulation

▪ Chapter 9
▪ Chapter 10
▪ GATT articles III:1, 2, 4, 8

VI. Most Favored Nation/Preferential Trade Agreements

▪ Chapter 11
▪ Chapter 12
▪ GATT articles I:1; XIII:1, 2, 5; XXIV

VII. Exceptions Reading assignment

▪ Chapter 13
▪ Chapter 14
▪ GATT articles XX; XXI

VIII. Trade Remedies Reading assignment:

▪ Chapter 15
▪ Chapter 16
▪ Chapter 17
▪ GATT articles VI; XIX

IX. SPS & TBT Agreements

▪ Chapter 18
▪ Chapter 19
▪ SPS Agreement Articles 2, 3, & 5; Annex A
▪ TBT Agreement Articles 1, 2, Annex 1.1, 1.2

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X. GATS – Trade in Services Reading assignment

▪ Chapter 20
▪ GATS Articles I, II, III, XIV, XVI, XVII

XI. TRIPS Reading assignment.

▪ Chapter 21

XII. Developing Countries and Distribution

▪ Chapter 22
▪ GATT Article 1, XVIII, XXXVII

XIII. Negotiating Trade Agreements Reading Assignment:

Introduction to International Trade Law

Wednesday, August 28

Introduction
Comparative Advantage
▪ When a country produces a good or service for a lower opportunity cost than other
countries. Opportunity cost measures a trade-off. A nation with a comparative advantage
makes the trade-off worth it. The benefits of buying their good or service outweigh the
disadvantages. The country may not be the best at producing something. But the good or
service has a low opportunity cost for other countries to import.
▪ For example, oil-producing nations have a comparative advantage in chemicals. Their
locally-produced oil provides a cheap source of material for the chemicals when
compared to countries without it. A lot of the raw ingredients are produced in the oil
distillery process. As a result, Saudi Arabia, Kuwait, and Mexico are
competitive with U.S. chemical production firms. Their chemicals are inexpensive,
making their opportunity cost low.
▪ Another example is India’s call centers. U.S. companies buy this service because it is
cheaper than locating the call center in America. Indian call centers aren’t better than
U.S. call centers. Their workers don’t always speak English very clearly. But they
provide the service cheaply enough to make the tradeoff worth it.
▪ In the past, comparative advantages occurred more in goods and rarely in services. That’s
because products are easier to export. But telecommunication technology like the internet
is making services easier to export. Those services include call
centers, banking, and entertainment.
▪ Prices will drive the system. For example Ireland has a comparative advantage in cheese
and butter due to climate and a large amount of land suitable for dairy cows. China has a
comparative advantage in electronics because it has an abundance of labor. With the
removal of the milk quota and the opening of trade between China and Ireland, Irish dairy
farmers will experience higher milk prices and will expand diary production. Milk
products from Ireland will be sold to thousands of retail outlets in China. Irish consumers
will see inexpensive electronic products from China and will more electronics than would

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otherwise have been the case. The beauty of the system is that dairy is in surplus in
Ireland and trade allows it to move to an area where milk products are expensive and in
scarce supply. The opposite is true for electronics. Trade allows producers on both sides
to specialize in production of goods that use intensively factors that are in relative
abundance (grassland in Ireland and labor in China). Producers in the exporting country
see better prices and consumers in the importing country see lower prices. The net gains
are more than enough to compensate Irish electronic factory workers and Chinese dairy
workers. But these displaced workers may not be happy with the compensation they
receive.

Traditional Arguments Against Trade

1. Domestic Market Failure justification – US steel industry is collapsing due to cheap
steels from China
2. Distribution – unequal distribution of gains from trade, rich versus poor
3. Infant Industry – give companies opportunity to grow and strengthen, compete on world
markets
4. Optimal Tariffs – improve results for its own markets through protectionism
5. Strategic Trade Policy – government intervenes in market so that their firms capture more
of these imperfectively competitive industries
6. National Security – a nation must be self-sufficient in certain key materials or products to
maintain its ability to defend itself.

Arguments for Liberalized Trade Arguments for Trade Restrictions

Economic 1. Enhances overall welfare in 1. Protect well-organized and
Arguments both the importing and the politically influential (but inefficient)
exporting country (theory of domestic industries and the jobs they
competitive advantage) offer (a political economy argument)
2. Leads to a more efficient 2. Address domestic market failures
allocation of the world’s resources. 3. Correct distributional effects
3. Creates economies of scale 4. Protect infant industries
5. Improve terms of trade through
optimal tariffs
6. Adopt strategic trade policy
7. Collect tariff revenue
Non-Economi 1. Creates friendly relations and Protect against externalities that are
c Arguments reduces likelihood of armed seen as harmful to the importing
conflict country such as when imports pose a
2. Stimulates stability, freedom, health or environmental risk, or
and democratic values threaten national security, public
3. Fosters cultural exchange morals or national culture.
4. Enables transfer of technologies

Wednesday, June 4

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Class notes
▪ Externalities
o The cost or benefit that affects a party who did not choose to incur that cost or
benefit. Externalities often occur when a product or service’s price equilibrium
cannot reflect the true costs and benefits of that product or service
▪ Negative example
o Air pollution caused by manufacturing. Cost of air pollution (health and clean-up)
are not factored into the product or borne by manufacturers. Society must pay the
costs.
▪ Positive example
o A beekeeper who keeps the bees for their honey. A side effect or externality
associated with such activity is the pollination of surrounding crops by the bees.
The value generated by the pollination may be more important than the value of
the harvested honey. Benefits society.

▪ Distribution
o Benefits of trade may not be equal.
▪ Ex. China and United States, trade imbalance
▪ Ex. Amazon owners vs. Amazon workers, economic in
o How to ensure equal distribution of benefits?
▪ Tariffs, trade deals, subsidies for domestic companies
▪ Unemployment benefits, job training for laid-off workers.
▪ Taxing the most successful companies (Apple), or punishing companies
that outsource their jobs (GM, Ford)

▪ Exceptions to “Comparative Advantage”

o National Security – US tariffs on steel imports. We need to protect US
steelmakers because steel is used for weapons. Need to preserve our
manufacturing base for future conflicts.

Pros and Cons of International Trade Agreements

▪ Pros
o Economic integration means less war, costs of going to war include disrupting
markets. Not worth it in the long run. Also cheaper to trade for resources than
taking them by force
o Political leverage
▪ Trans-Pacific Trade Partnership – Proposed Obama-era free trade deal
between USA and Asia-Pacific countries. Fell through and never signed.
▪ TPT would have been major counterweight to China, but plan fell through.
▪ Cons
o Undermines domestic regulatory schemes

▪ Sources of International Law

1. Three sources are
i. Treaties

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ii. Customary international law

iii. Case law

Class Notes
▪ The WTO recognizes Taiwan and Hong Kong as independent members (from China)
▪ WTO obtains “political commitments” from members to not raise their tariffs for certain
goods beyond a certain level.
▪ Problems: Enforcement of agreements is difficult, a common trend in international law.

WTO Dispute Settlement (pg. 128)

▪ Is compulsory and automatic (with the move from the GATT to the WTO, countries
dropped their veto to block the process)
▪ Can only be initiated by a WTO member against acts of another WTO member
o State-to-state dispute settlement (United States v. China)
o Private companies cannot bring suit (Apple v. China. Nope)
▪ May be invoked when one party claims that a benefit accruing to it under the General
Agreement has been nullified or impaired by another party or any objective of the
General Agreement is being impeded as a result of:
o The failure of another contracting party to carry out its obligations under the
General Agreement
o The application by another contracting party of any measure, whether or not it
conflicts with the provisions of the General Agreement, or
o The existence of any other situation
▪ Is uniform across all WTO agreements (governed by the DSU albeit sometimes with
special overriding rules in other, substantive WTO agreements)

Dispute Settlement Body

▪ Representatives sent by member states to examine disputes. Can establish panels, collect
information, issue reports, and provide recommendation and ruling, and authorize
suspension of concessions.
▪ Analogous to the Discovery process

Dispute Settlement Process

▪ Consists of four broad steps:
o (i) Consultation
▪ 60 days to resolve issue

o (ii) Panel Process

▪ Consists of 3 members, suggested by the WTO Secretariat
▪ Plaintiff has to establish prima facie case.
▪ Plaintiff has the burden of proof for evidence
▪ Panel submits the final panel report
▪ DSB adopts the panel report
▪ Plaintiff can appeal

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o (iii) Appellate Body

▪ Consists of 7 individuals, appointed by the DSB
▪ Hears appeals of panel report

o (iv) Implementation
▪ Losing party has 15 months to comply
● Ex. Must remove tariffs, otherwise complainant can request damages.
● DSB may give complainant (temporary) right to retaliate and
implement tariffs against the offender.
o DSB usually says retaliation should be limited to tariffs to
same sector of trade.

Chapter 6, Special Topics in WTO Dispute Settlement

▪ Retaliation and the Level of Trade Suspension
o EC-Hormone Beef case (1999) (Pg 152)
▪ In 1989, European Union completely banned the import of hormone
treated beef in violation of WTO rules.
● Argued it was for “health reasons”
▪ WTO rules permit such bans, but only where a signatory presents valid
scientific evidence that the ban is a health and safety measure.
▪ Canada and the United States opposed this ban, taking the EU to the WTO
Dispute Settlement Body. In 1997, the WTO Dispute Settlement Body
ruled against the EU
▪ WTO gave EU fifteen months to lift the ban, but ultimately EU refused

o U.S. Response
▪ U.S. wants to retaliate and implement equivalent tariffs against the EU
worth around $200 million.
▪ EU issue – problem of how to calculate what constitutes “equivalent”
tariffs? EU doesn’t think it’s fair
▪ DSB calculated that the total nullification and impairment caused by the
EU hormone ban on U.S. exports of beef and beef products at U.S. $116.8
million.
● Damages were calculated starting from EU’s deadline to lift the
hormone ban. May 13, 1999 and onwards.

Problem: Antigua Gambling (Pg 148)

▪ 1. No, the government of Antigua must file the complaint on behalf of AGE, a private
company
▪ 2. No, all violations of agreements can be brought under one complaint in the WTO
▪ 3. After 60 days of failed consultations, Antigua should request for a panel.
▪ 4. US cannot prevent the panel from forming after 2 meetings.
▪ 5. After 20 days, Antigua can request the WTO Director-General to appoint the panel,
which he is required to do within ten days of the request.
▪ 6. U.S. cannot block the DSB’s adoption of the reports.

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▪ 7. Retaliation. Antigua can seek compensation, implement or resume retaliatory

concessions.
▪ 8. Antigua-US ruling is not a binding precedent. No common law in WTO. But future
panels may examine and be influenced by the reasoning of the decision.

o Unilateral vs. Multilateral Enforcement of GATT/WTO Agreements

Wednesday, Sept 11

GATT Trade Liberalization Strategy

1. Establish maximum tariff levels
2. Prohibit non-tariff barriers (quantitative restrictions)
3. Most Favored Nation – can’t discriminate between countries
a. Ex. USA can’t charge 10% tariff on lumber from Colombia, then 15% on
lumber from Cambodia.
4. National treatment – can’t favor domestic products

Tariffs (Pg 181)

▪ Tariffs are the most common and obvious way to restrict trade
▪ They amount to a tax on imports, collected by the importing country, and paid for by
foreign exporters or domestic importers, but ultimately, at least partly, carried forward
into higher consumer prices in the importing country itself.
▪ The WTO treaty does not prohibit the imposition of tariffs, actually prefers tariffs to most
other trade restrictive policies.

Who pays directly?

▪ Who pays directly?
o When the foreign good reaches the border, the domestic importer pays the tariff
when receiving them.

Types of Tariffs
▪ Bound tariffs (schedule)
▪ Applied tariffs (MFN tariff) – applied to the entire world.
▪ Preferential tariffs – free trade zones, NAFTA and EU.

Example
US tariffs on EC planes/clocks FOR EU tariffs on American Pharma/PC
160 for US and 160 for EU

GATT Articles
Part I
▪ Article I: General Most-Favored-Nation Treatment
o This outlines the concept of Most-Favored-Nation (MFN) treatment and states
that trade concessions granted to one Member are applied immediately and

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without conditions to all other Members.

▪ Article II: Schedules of Concessions

o (b) States must create a schedule and stick to it.
o All trade concessions made by Members must be stated and incorporated into the
legal agreement – ‘bound’ rates.
o Therefore, imported goods are exempt from ordinary customs duties in EXCESS
of those set forth and provided therein.
o (a) No other Member may be treated less favorably than any ‘bound’ rate.

Part II
▪ Article III: National Treatment on Internal Taxation & Regulation
o Members may not use internal measures to discriminate between domestic goods
and those imported from Members; that is to say that imports from Members are
accorded National Treatment.

▪ Article V: Freedom of Transit

o Apart from standard customs procedures, no trade measures or other regulations
to be applied by Members to goods in transit between other Members.

▪ Article VI: Anti-Dumping & Countervailing Duties

o Members may apply duties and other measures can be applied to goods
originating in other Members which are dumped and/or enjoy export subsidies
subject to specific conditions.

▪ Article VII: Valuation for Customs Purposes

o The fair valuation of imports from Members for customs purposes in determining
any liability for duties etc.

▪ Article VIII: Fees & Formalities Connected with Importation & Exportation
o These should be a fair reflection of cost and not be used as a means of protection.

▪ Article IX: Marks of Origin

o These should be applied no less favorably to Members than third countries. They
should be low cost and not materially damage the goods. Members should also
prevent their fraudulent use.

▪ Article X: Publication & Administration of Trade Regulations

o All trade measures of Members should be published and therefore transparent.

▪ Article XI: General Elimination of Quantitative Restrictions

o Trade restrictions should be in the form of duties, taxes and other charges whether
effective through quotas, import and export licenses and other measures,
ultimately requiring the tariffication of all quantitative restrictions. All new trade

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measures to be in the form of tariffs.

▪ Article XII: Restrictions to Safeguard the Balance of Payments

o Conditions relating to the use and subsequent removal of emergency trade
measures to safeguard the Balance of Payments position of Members.

▪ Article XIII: Non-Discriminatory Administration of Quantitative Restrictions

o No discrimination between Members in the application of quantitative restrictions
and the allocation of such restrictions should reflect their underlying trade shares.
Details of any restrictions should be transparent and negotiated with affected
Members.

▪ Article XIV: Exceptions to the Rule of Non-Discrimination

o Applies to Articles XII and XVIII.

▪ Article XVI: Subsidies

o Any subsidies affecting exports to and imports from Members should be notified
in writing. Members should recognize the deleterious impact of subsidies and
avoid their general and specific use.

▪ Article XVII: State Trading Enterprises

o Member should notify the operations of State Trading Enterprises (STEs),
including Marketing Boards. STEs should not be accorded favorable government
assistance in the form of discriminatory measures and they should act in a general
manner consistent with commercial considerations.

▪ Article XVIII: Governmental Assistance to Economic Development

o Recognition of the position of developing countries and their need for derogations
from some trade measures with respect to the GATT Articles, including the
support of Infant Industries and remedying Balance of Payments problems.

▪ Article XIX: Emergency Action on Imports of Particular Products

o Scope for remedial action, including the suspension of trade measures, if imports
of certain products increase in such a manner as to be injurious to like products,
domestic producers and competition.

▪ Article XX: General Exceptions

o Permission for non-arbitrary and non-discriminatory measures against certain
imports for reasons including public moral grounds; health; prison labor; and
national historic/cultural treasures.

▪ Article XXI: Security Exceptions

o Nothing in this Agreement is construed to commit Members to actions etc.
contrary to their national security.

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▪ Article XXIII: Nullification & Impairment

o Any Member whose benefits under the Agreement are being nullified or impaired
by the failure of other
o Members to fulfil their obligations may make representations and seek
satisfactory adjustment.

Part III
▪ Article XXIV: Territorial Application – Frontier Traffic – Customs Unions & Free Trade
Areas
o Conditions and measures relating to the formation of customs unions and free
trade areas by Members.

▪ Article XXVIII: Modification of Schedules & Tariff Negotiations

o Regulations concerning the modification of the schedule of trade regulations
(‘bound’ rates). The use of negotiations to further reduce tariffs and other trade
measures between Members on a reciprocal and mutually advantageous basis.

▪ Article XXXIII: Accession

o A non-Member may accede to the Agreement on terms agreed between itself and
other Members by a two-thirds majority.

Part IV Trade & Development

▪ Article XXXVI: Principles & Objectives
o That the facilitation of economic progress by developing country Members
requires more favorable access to world markets without reciprocity for
commitments made by developed Members. This is in the form of Special &
Differential (S&D) treatment for developing countries under the Generalized
System of Preferences (GSP).

▪ Article XXXVII: Commitments

o Commitments by developed Members to accord higher priority and have special
regard to the elimination of trade barriers on products of interest to developing
countries. Developing countries also undertake to do this with respect to other
developing Members.

▪ Article XXXVIII: Joint Action

o That Members should collaborate to improve the situation of developing
Members with respect to the latter’s problems, including those relating to trade.

Argentina Textiles Case (1998) (Pg 191)

▪ Parties
o United States v. Argentina
▪ Measure at issue:

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o (i) Argentina’s system of minimum specific import duties, known as “DIEM”, on

textiles and apparel (under which textiles and apparel were subject to either a 35
per cent ad valorem duty or a minimum specific duty, whichever was higher); and
o (ii) statistical services tax imposed on imports to finance “statistical services to
importers, exporters and the general public”.
▪ Product at issue
o Imported textiles and apparel.
▪ Legal question
o Can you set a type of duty than schedule of commitments? Appellate Body
reversed. Yes, as long as you stay within commitment

o Can you set statistical services tax? – Appellate Body, yes, as long 3% tax reflects
actual services cost. Here, Argentina violated the GATT because 3% flat tax
created huge sums of money, exceeding the cost of services.

▪ Summary of Key Panel/AB Findings

o GATT Art. II (schedule of concessions): The Appellate Body found Argentina’s
measure was, in fact, inconsistent with Art. II:1(b). It held that “the application of
a type of duty different from the type provided for in a Member’s Schedule is
inconsistent with GATT Art. II:1(b), first sentence, to the extent that it results in
ordinary customs duties being levied in excess of those provided for in that
Member’s Schedule.” In this case, the Appellate Body concluded that “the
structure and design of the Argentine system is such that for any DIEM ... the
possibility remains that there is a ‘break-even’ price below which the ad valorem
equivalent of the customs duty collected is in excess of the bound ad valorem rate
of 35 per cent.”
o GATT Art. VIII (fees and formalities): The Appellate Body upheld the Panel’s
findings that the statistical tax on imports violated Argentina’s obligations under
Art. VIII:1(a) “to the extent it results in charges being levied in excess of the
approximate costs of the services rendered as well as being a measure designated
for fiscal purposes”. The Appellate Body also rejected Argentina’s argument that
the Panel had violated DSU Arts. 11 and 12.7 based on the Panel’s failure to
consider Argentina’s IMF obligations as set forth in a “Memorandum of
Understanding” between Argentina and the IMF. The Appellate Body held, inter
alia, that Argentina failed to show “an irreconcilable conflict” between the
Understanding and GATT Art. VIII, and that no other international agreements or
understandings regarding the WTO and IMF justified a conclusion that a
Member’s IMF commitments prevail over its GATT Art. VIII obligations.
▪ AB overturned “less favorable treatment” ruling.
▪ Argentina could have avoided this problem by applying the lower of the two tariffs

EC Salted Chicken Case (Pg 2005) (Pg 199)

▪ Parties
o Thailand/Cambodia vs. European Community
▪ Measure at issue:

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o EC measures pertaining to the tariff reclassification from heading 02.10 (relating

to, inter alia, salted chicken) to heading 02.07 (relating to, inter alia, frozen
chicken) of certain frozen boneless chicken cuts impregnated with salt.
▪ Product at issue:
o Frozen boneless chicken cuts impregnated with salt, with a salt content of 1.2-3
per cent.
▪ Legal Question
o What is the definition of “salted’, for taste or preservation? How do we interpret
ambiguous provisions?
▪ Summary of Key Panel/AB Findings
o GATT Art. II: 1(schedules of concessions): The Appellate Body upheld the
Panel’s ultimate finding that the EC measures (relating to tariff classification)
imposed duties on the products at issue in excess of the relevant heading of the
EC tariff commitment because under the EC Schedule, tariffs on frozen meat
(02.07) are higher than on salted meat (02.10) and, thus, violated Arts. II:1(a) and
o The Brazilian and Thai chicken cuts, to which only limited amount of salt was
added, fall under the category of “salted meat” within the EC schedule. By not
applying the lower duty, EC was found to violate GATT Article II: 1(a) and
II:1(b)

How to interpret treaty provisions?

▪ Vienna Convention Arts 31/32,
▪ Step 1: Ordinary meaning in good faith
▪ Step 2: In context light of object and purpose
▪ Step 3: Define context
o Other terms under same heading
o Other headings in EC schedule
o Other countries schedule’s
o The Harmonized System Classification.

International Trade Negotiation Game

▪ US and EU had most to gain from opening their markets.
▪ Australia and Costa Rica did not possess much influence over US/EU to open markets
▪ However, Australia and Costa Rica indirectly benefitted since they are dropping of
EU/US tariffs affected some of their products too.

Chapter 8: Quantitative Restrictions

Non-tariff Barriers
● A nontariff barrier is a trade restriction, such as a quota, embargo or sanction, that
countries use to further their political and economic goals.
● Countries commonly use nontariff barriers in international trade.
● Nontariff barriers have a common basis on the availability of goods and services
and political alliances with trading countries.

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● Nontariff barriers often release countries from paying added tax on imported goods and
create other barriers that have a meaningful yet different monetary impact.
● Countries can use nontariff barriers in place of, or in conjunction with, standard tariff
barriers.

Examples
▪ Licenses
o Countries may use licenses to limit imported goods to specific businesses. If a
business is granted a trade license, it is permitted to import goods that would
otherwise be restricted for trade in the country.
▪ Quotas
o Countries often issue quotas for importing and exporting goods and services. With
quotas, countries agree on specified limits for products and services allowed for
importation to a country. In most cases, there are no restrictions on importing
these goods and services until a country reaches its quota, which it can set for a
specific time frame. Additionally, quotas are often used in international trade
licensing agreements.

▪ Embargoes
o Embargoes are when a country or several countries officially ban the trade of
specified goods and services with another country. Governments may take this
measure to support their specific political or economic goals.

▪ Sanctions
o Countries impose sanctions on other countries to limit their trade activity.
Sanctions can include increased administrative actions or additional customs and
trade procedures that slow or limit a country’s ability to trade.

▪ Voluntary Export Restraints

o Exporting countries sometimes use voluntary export restraints. Voluntary export
restraints set limits on the number of goods and services a country can export to
specified countries. These restraints are typically based on availability and
political alliances.

▪ Standard Tariffs
o Countries can use nontariff barriers in place of, or in conjunction with,
conventional tariff barriers, which are taxes that an exporting country pays to
an importing country for goods or services. Tariffs are the most common type of
trade barrier, and they increase the cost of products and services in an importing
country.

▪ Real World Example

o An example of nontariff barriers, as reported by Reuters, is the round of United
Nations sanctions against North Korea and the Kim Jong Un regime adopted in
December 2017. The sanctions cut exports of gasoline, diesel, and other refined

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oil products to the nation, and they prohibit the export of industrial equipment,
machinery, transport vehicles, and industrial metals to North Korea. The barriers
are designed to put economic pressure on the nation to stop its nuclear arms and
military exercises.

Japan Semi-Conductors Case (1988) (Pg 231)

▪ Parties
o European Community vs Japan/United States.
o Third-party complaint
▪ Measure at issue:
o U.S. pressured Japan to implement voluntary export restrictions on Japanese
exports. Japan voluntary agreed to limit number of semi-conductors exported to
U.S.
o A semiconductor pact was concluded on 30 July 1986 to settle a dispute between
the USA and Japan about Japanese exports of semiconductors. The Japanese
government undertook to try and increase imports of semiconductors while
monitoring the price of most exports not only to the United States but to other
countries as well, including the Community. The Community complained to
GATT, arguing that price maintenance on exports to other countries constituted
unprecedented interference in third markets, contrary to GATT rules.
▪ Legal question:
o How do you define government action?
▪ Product at issue
o Semi-conductors

▪ Summary of Key Panel/AB Findings

o Yes, Japanese government was responsible for fostering a complex of measures
which constituted a coherent system restricting the sale for export of monitored
semi-conductors at prices below company-specific costs to markets other than the
US, inconsistent with Article XI.1
o The panel upheld the Community’s argument that price monitoring of exports of
semiconductors to markets other than the United States contravenes Article XI(1)
of the GATT, and it recommended that the contracting parties should ask Japan to
bring its measures into line with GATT rules.
o The panel also held that the agreement would give US exporters privileged access
to the Japanese market, which constituted discrimination in contravention of
Article I of GATT.
o The panel has upheld the Community on the first of these points, the arbitrary
fixing of export prices, but failed to find sufficient evidence of discrimination
against Community exports to the Japanese market.

Argentina Bovine Hides (2000) (Pg 237)

▪ Measure at issue: (i) Argentine regulations by which representatives of the Argentine
leather tanning industry were present during the customs clearance process for bovine
hides export;

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▪ Product at issue: Argentine exports of bovine hides and calf skins, semi-finished and
finished leather.

▪ Summary of Key Panel/AB Findings.

o Panel found it was not unfair to have inspectors at the slaughterhouse, too tenuous
to amount to a restriction on trade.

Argentina – Import Measures (2015) (Pg 242)

▪ Measures at issue:
o (1) The imposition by Argentine authorities on economic operators of one or more
of the following trade-related requirements (TRRs), as a condition to import into
Argentina or to obtain certain benefits:
▪ (a) to offset the value of imports with, at least, an equivalent value of
exports;
▪ (b) to limit imports, either in volume or in value;
▪ I to reach a certain level of local content in domestic production;
▪ (d) to make investments in Argentina; and,
▪ I to refrain from repatriating profits; and
o (2) the procedures concerning an Advance Sworn Import Declaration
(Declaración Jurada Anticipada de Importación, DJAI), required for most imports
of goods into Argentina.
▪ Product at issue:
o Imports into Argentina .

▪ Legal Issue
o Whether government policy constitute quid pro quo between exports and corrupt
government officials?
o How to determine?
▪ Can restrictive measures be traced back to official government policy?

▪ Summary of Key Panel/AB Findings.

o The Appellate Body upheld the Panel’s finding that the Argentine authorities’
imposition on economic operators of one or more five trade-related requirements
(TRRs), as a condition to import or to obtain certain benefits, operated as a single
measure attributable to Argentina (a TRRs measure)

o DSU Art. 6.2 (requirements of panel request): The Appellate Body reversed the
Panel’s finding that 23 specific instances of application of the TRRs were not
properly identified in the European Union’s panel request as measures at issue and
were not within the Panel’s terms of reference. However, the Appellate Body
found it unnecessary to complete the analysis with respect to those 23 specific
instances of application of the TRRs, because the conditions on which the
European Union based its appeal were not met.

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o GATT Art. XI (prohibition on quantitative restrictions):The Appellate Body

upheld the Panel’s finding that the TRRs measure was a restriction on the
importation of goods, inconsistent with Art. XI:1.

o GATT Art. III:4 (national treatment – domestic laws and regulations): The
Appellate Body upheld the Panel’s finding that, with respect to the local content
requirement, the TRRs measure was inconsistent with Art. III:4 because it
modified the conditions of competition in the Argentine market so that imported
products were granted less favorable treatment than like domestic products
o DSU Art. 11 (standard of review): The Appellate Body found that the Panel had
not acted inconsistently with Art. 11 in finding that the TRRs measure as such
was inconsistent with Arts. XI:1 and III:4 of the GATT 1994.

o GATT Art. XI:1: The Appellate Body upheld the Panel’s finding that the DJAI
procedure, irrespective of whether it was an import license, constituted an import
restriction that was inconsistent with Art. XI:1

China Raw Materials (Pg 246)

▪ Critical shortages exception: Must show that
o Temporary to relieve
o A critical shortage of
o Essential product
▪ China failed the temporary test, bauxite ban was in effect for 10 years
▪ China failed the critical shortage test. Had 16 years of reserves.
▪ China passed the essential product test; bauxite is important for China’s steel industry.

Wednesday, Sept 18

Chapter 9 – National Treatment – Internal Taxation

▪ GATT Article III: 1
o The contracting parties recognize that internal taxes and other internal charges,
and laws, regulations and requirements affecting the internal sale, offering for
sale, purchase, transportation, distribution or use of products, and internal
quantitative regulations requiring the mixture, processing or use of products in
specified amounts or proportions, should not be applied to imported or domestic
products so as to afford protection to domestic production.

1. GATT Article III: 2

o The products of the territory of any contracting party imported into the territory of
any other contracting party shall not be subject, directly or indirectly, to internal
taxes or other internal charges of any kind in excess of those applied, directly or
indirectly, to like domestic products. Moreover, no contracting party shall
otherwise apply internal taxes or other internal charges to imported or domestic
products in a manner contrary to the principles set forth in paragraph 1.

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▪ Note: A tax conforming to the requirements of the first sentence of

paragraph 2 would be considered to be inconsistent with the provisions of
the second sentence only in cases where competition was involved
between, on the one hand, the taxed product and, on the other hand, a
directly competitive or substitutable product which was not similarly
taxed

Test for “like” products based upon:

1. Physical characteristics
o the greater the physical identity of two products the more likely it is that they are
interchangeable,
2. Functional likeness and end uses,
o The extent to which two products do in fact perform the same function,
3. Consumer taste and preferences
o Minor differences in taste and habits would not be enough to prevent a finding of
likeness,
4. Tariff headings (how are they classified on the Schedule?

Other relevant elements

▪ Substitutability
o the extent to which consumers perceive two products as functionally equivalent,
measured by the consumer’s willingness to substitute one for the other

Excluded criteria:
● Process and Production Methods
o A notable example is the Tuna-Dolphin GATT Case (I and II).

Three-step analysis for directly competitive or substitutable products that are “like”
1. Are they directly competitive or substitutable?
2. Are they not similarly taxed?
3. Is the dissimilar taxation applied to afford protection?

Analysis Example: Japan Alcohol Tax case

▪ Like Products?
a. Japanese shochu and vodka are like products because
i. they were both white/clean spirits
ii. made of similar raw materials, and
iii. the end-uses were virtually identical.
b. Both are also on the same tariff schedule. Shochu is unlike Gin which has
additives.
▪ Dissimilar taxation
a. Structure, criteria. Was it implemented to discriminate? Court – Yes

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▪ Test: If an internal tax on “like” products is higher on one product than the other,
the tax violates GAT Art III: 2

Japan – Taxes on Alcoholic Beverages (1995) (Pg 255)

▪ Parties
o European Community/Canada/USA vs Japan

▪ Measure at issue:
o Japanese Liquor Tax Law that established a system of internal taxes applicable to
all liquors at different tax rates depending on which category they fell within.
o The tax law at issue taxed shochu, a traditional Japanese drink at a lower rate than
the other (Western-style) products.

▪ Product at issue
o Vodka and other alcoholic beverages such as liqueurs, gin, genever, rum, whisky
and brandy, and domestic shochu

▪ Summary of Key Panel/AB Findings

o GATT Art. III:2 (national treatment – taxes and charges), first sentence (like
products):The Appellate Body upheld the Panel’s finding that vodka was taxed
in excess of shochu, in violation of Art. III:2, first sentence, accepting the
Panel’s interpretation that Art. III:2, first sentence requires an examination of the
conformity of an internal tax measures by determining two elements: (i) whether
the taxed imported and domestic products are like; and (ii) whether the taxes
applied to the imported products are in excess of those applied to the like
domestic products.•

o GATT Art. III:2 (national treatment – taxes and charge), second sentence (directly
competitive or substitutable products):The Appellate Body upheld the Panel’s
finding that shochu and whisky, brandy, rum, gin, genever, and liqueurs were not
similarly taxed so as to afford protection to domestic production, in violation of
Art. III:2, second sentence. Modifying some of the Panel’s reasoning, the
Appellate Body clarified three separate issues that must be addressed to determine
whether a certain measure is inconsistent with Art. III:2, second sentence: (i)
whether imported and domestic products are directly competitive or substitutable
products; (ii) whether the directly competitive or substitutable imported and
domestic products are not similarly taxed; and (iii) whether the dissimilar taxation
of the directly competitive or substitutable imported and domestic products is
applied so as to afford protection to domestic production.

o GATT Art. III:1 (national treatment – general principles): The Appellate Body
agreed with the Panel that Art. III:1, as a provision containing general principles,
informs the rest of Art. III, and further elaborated that, because of the textual
differences in the two sentences, Art. III:1 informs the first and second sentences

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of Art. III:2 in different ways.

Summary of Conditions for a National Treatment Violation by Internal Taxes

▪ GATT Article III: 2 First Sentence:
1. Internal tax or other charge
2. “Like products”
3. Imports taxes “in excess of” like domestic products

▪ GATT Article III: 2 Second Sentence:

1. Internal tax or other charge
2. “Directly competitive or substitutable” products
3. Imports and directly competitive or substitutable domestic products not “similarly
taxed” (contains a de minimis exception)
4. Dissimilar taxation is “applied so as to afford protection”

Chile – Taxes on Alcoholic Beverages (2000) (Pg 272)

▪ Parties
o European Community vs Chile

▪ Measure at issue:
o The EC brought suit regarding Chile’s tax measures that imposed an excise tax at
different rates – depending on the type of product (pisco, whisky, etc.) under the
“Transitional System” and according to the degree of alcohol content (35°, 36°, ...
39°) under the “New Chilean System” in violation of Article III:2 of GATT 1994.
o All distilled spirits falling within HS heading 2208, including pisco (Chile’s
domestic product) and imported distilled spirits such as whisky, vodka, rum, gin.

▪ Product at issue
o All distilled spirits falling within HS heading 2208, including pisco (Chile’s
domestic product) and imported distilled spirits such as whisky, vodka, rum, gin.

▪ Summary of Key Panel/AB Findings

o GATT Art. III:2 (national treatment – taxes and charges), second sentence
(directly competitive or substitutable products):The Appellate Body upheld the
Panel’s finding that Chile’s new tax regime for alcoholic beverages violated the
national treatment principle under Art. III:2, second sentence. (Chile’s appeal was
only in regard to the new regime.) The Panel found both Chile’s transitional and
new tax regimes inconsistent with Art. III:2, second sentence.

o (“not similarly taxed”): The Appellate Body agreed with the Panel that imported
distilled spirits and Chilean pisco, as directly competitive and substitutable
products, were not similarly taxed since the tax burden (47%) on most of
imported products (95%) would be heavier than the tax burden (27%) on most of
the domestic products (75%). The Appellate Body took the view that the relevant

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comparison between imported and domestic products had to be made based on a

comparison of the taxation on all imported and domestic products over the entire
range of categories, not simply a comparison of the products within each category.

o (“applied so as to afford protection”): The Appellate Body stated that an

examination of the design, architecture and structure of the New Chilean System
“tend[ed] to reveal” that the application of dissimilar taxation of directly
competitive or substitutable products would “afford protection to domestic
production”, as the magnitude of difference (20 per cent) between the tax rates –
27 per cent ad valorem for alcohol content of 35° or less (75 per cent of domestic
production) and 47 per cent ad valorem for alcohol content of over 39° (95 per
cent of imports) – was considerable. Also, the Appellate Body stated that a
measure’s purpose, objectively manifested in the design, architecture and
structure of the measure, was pertinent to the task of evaluating whether that
measure was applied so as to afford protection to domestic production. However,
the Appellate Body rejected the Panel’s consideration of the relationship (logical
connection) between Chile’s new measure and de jure discrimination (against
imports) found under its traditional system. In this regard, it further said that
“Members of the WTO should not be assumed, in any way, to have continued
previous protection or discrimination through the adoption of a new measure, as
this would come close to a ‘presumption of bad faith’”

Summary of “Other Developments”

▪ Directly competitive or substitutable (DCS) products may be analyzed with respect to
potential competition in the market, even if they are not currently considered substitutes
by consumers
▪ Evidence of consumer demand in other markets may be relevant, particularly when the
market at issue has been influenced by regulatory barriers
▪ In evaluating whether a measure has been applied so as to afford protection, the
subjective intentions of individual legislators are not relevant, but the statutory purposes
or objectives are pertinent
▪ For a charge to be considered an ordinary customs duty subject to Article II, the
obligation to pay must accrue as a result of importation. An obligation to pay falling
under Article II is triggered by some internal factor. The moment at which the charge is
collected is not determinative of whether Article II or III applies
▪ Border adjustable taxes, known as product taxes or indirect taxes, such as sales taxes,
value added taxes, and excise taxes can be imposed on imports. Producer taxes, also
known as factor or direct taxes, such as payroll taxes or income taxes, cannot be imposed
on imports.

Chapter 10 – National Treatment – Internal Regulations

Class notes

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▪ Very difficult for WTO to weed out. Very subjective. Best they can do stop blatantly
favorable treatment via internal taxation.

Three-step analysis for Article III 4: analysis

1. Law, regulation or requirement affecting sale, transportation, distribution of
products that:
2. Treats less favorably
3. Imported products as compared to domestic like products
GATT Article III: 4 Internal Regulation
5. The products of the territory of any contracting party imported into the territory of any
other contracting party shall be accorded treatment no less favorable than that
accorded to like products of national origin in respect of all laws, regulations and
requirements affecting their internal sale, offering for sale, purchase, transportation,
distribution or use. The provisions of this paragraph shall not prevent the application of
differential internal transportation charges which are based exclusively on the economic
operation of the means of transport and not on the nationality of the product.

EC- Asbestos Case “Like Products” (2001) (Pg 287)

▪ Question: How does “like” products under Art. III compare to the definition under Art II?
▪ EC implemented a ban on asbestos, not a regulation.
▪ Rule: The fact that two products are very similar except one will cause cancer and the
other does not, means they are not “similar/like” under the language of GATT Art. III: 4
▪ Court: The health risks inherent in asbestos meant that products containing asbestos were
judged not to be “similar/like” those products that did not contain asbestos, but that were
still used for similar products.
o Canada’s national treatment defense failed.

▪ Parties
o Canada vs. European Community

▪ Measure at issue:
o Canada requested consultations with the EC in respect of measures imposed by
France, in particular Decree of 24 December 1996, with respect to the prohibition
of asbestos and products containing asbestos, including a ban on imports of such
goods. Canada alleged that these measures violate Articles 2, 3 and 5 of the SPS
Agreement, Article 2 of the TBT Agreement, and Articles III, XI and XIII of
GATT 1994. Canada also alleged nullification and impairment of benefits
accruing to it under the various agreements cited.

▪ Product at issue
o Imported asbestos (and products containing asbestos) vs certain domestic
substitutes such as PVA, cellulose and glass (“PCG”) fibers (and products
containing such substitutes)

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▪ Summary of Key Panel/AB Findings

o TBT Annex 1.1 (technical regulation):The Appellate Body, having rejected the
Panel’s approach of separating the measure into the ban and the exceptions,
reversed the Panel and concluded that the ban as an “integrated whole” was a
“technical regulation” as defined in Annex 1.1 and thus covered by the TBT
Agreement, as (i) the products subject to the ban were identifiable (i.e. any
products containing asbestos); (ii) the measure was a whole laid down product
characteristics; and (iii) compliance with the measure was mandatory. However,
the Appellate Body did not complete the legal analysis of Canada’s TBT claims as
it did not have an “adequate basis” upon which to examine them.

o GATT Art. III:4 (national treatment – domestic laws and regulations): As the
Appellate Body found the Panel’s likeness analysis between asbestos and PCG
fibers and between cement-based products containing asbestos and those
containing PCG fibers insufficient, it reversed the Panel’s findings that the
products at issue were like and that the measure was inconsistent with Art. III:4.
(The Appellate Body emphasized a competitive relationship between products as
an important factor in determining likeness in the context of Art. III:4 (c.f.
separate concurring opinion by one Appellate Body Member.) Then, having
completed the like product analysis, the Appellate Body concluded that Canada
had failed to demonstrate the likeness between either set of products, and, thus, to
prove that the measure was inconsistent with Art. III:4.

o GATT Art. XX(b) (general exceptions – necessary to protect human life or

health): Having agreed with the Panel that the measure “protects human life
or health” and that “no reasonably available alternative measure” existed,
the Appellate Body upheld the Panel’s finding that the ban was justified as
an exception under Art. XX(b). The Panel also found that the measure
satisfied the conditions of the Art. XX chapeau, as the measure neither led to
arbitrary or unjustifiable discrimination, nor constituted a disguised
restriction on international trade.

▪ Other issues
o Scope of non-violation claim(Art.XXIII:1(b)):The Appellate Body, rejecting the
EC appeal, agreed with the Panel that Art. XXIII:1(b) (the non-violation
provision) applied to the measure at issue, as (i) even a measure that conflicts
with a substantive provision of the GATT falls within the scope of Art.
XXIII:1(b); and (ii) a health measure justified under Art. XX also falls within the
scope of Art. XXIII:1(b). The Panel, having applied Art. XXIII:1(b) to the
measure at issue, ultimately rejected Canada’s claim and found that the measure
did not result in non-violation nullification or impairment under Art.XXIII:1(b),
because Canada had had reason to anticipate a ban on asbestos. (Canada did not
appeal the Panel’s ultimate finding.

EC – Seals (Less Favorable Treatment) (Pg 300)

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▪ Question: Whether Canada’s ban on foreign seal products, while allowing domestic
seal products, is compatible with the GATT?
o Court: NO
▪ Rule: States that have public policy justifications for banning the import foreign
products (seal) must still abide by GATT rules that prohibit “less favorable
treatment”
▪ Parties
o Canada vs. European Community

▪ Measure at issue
o Canada brought suit regarding regulations of the European Union (“EU Seal
Regime”) generally prohibiting the importation and placing on the market of seal
products, with certain exceptions, including for seal products derived from hunts
conducted by Inuit or indigenous communities (IC exception) and hunts
conducted for marine resource management purposes (MRM exception).
o Canada claims that the above measures are inconsistent with the obligations of the
European Communities under Article 2.1 and 2.2 of the TBT Agreement; Articles
I:1, III:4 and XI:1 of the GATT 1994 and Article 4.2 of the Agriculture
Agreement.

▪ Product at issue
o Products, either processed or unprocessed, deriving or obtained from seals

▪ Summary of Key Panel/AB Findings

o TBTAnnex1.1(technical regulation):The Appellate Body reversed the Panel’s
intermediate finding that the EU Seal Regime lays down “product
characteristics”, and consequently reversed the Panel’s finding that the EU Seal
Regime was a “technical regulation” within the meaning of TBT Annex 1.1. The
Appellate Body was unable to complete the legal analysis and thus did not rule on
whether the EU Seal Regime lays down “related processes and production
methods” within the meaning of TBT Annex 1.1. The Appellate Body therefore
declared moot and of no legal effect the Panel’s conclusions under TBT Arts. 2.1,
2.2, 5.1.2, and 5.2.1.
o GATT Art. III:4 (national treatment – domestic laws and regulations): The
Appellate Body upheld the Panel’s finding that the legal standard for the
non-discrimination obligations under TBT Art. 2.1 does not apply equally to
claims under GATT Art. III:4. The European Union did not appeal the Panel’s
finding that the EU Seal Regime was inconsistent with GATT Art. III:4 in respect
of the MRM exception, as it accorded less favorable treatment to imported
Canadian and Norwegian seal products than that accorded to like domestic
products.
o GATT Art. XX(a) (general exceptions – necessary to protect public morals): The
Appellate Body upheld the Panel’s finding that the EU Seal Regime was
“necessary to protect public morals” within the meaning of GATT Art. XX(a).•

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Summary of Conditions for a National Treatment Violation by Internal Regulations

▪ GATT Article III: 4
o Internal regulation affecting products
o “Like Products”
o Imports accorded “less favorable treatment” than like domestic products

Tuna – Dolphin I (1991) (Pg 317)

▪ Question: Is the US law a legitimate ban on dolphin fishing or a regulation on
Mexican fishing?
▪ Rule: The United States improperly instituted its dolphin fishing ban, which
impacted Mexican fishing in violation of GATT Article III: 4

▪ Parties
o Mexico vs. United States

▪ Measure at issue
o The United States’ Marine Mammal Protection Act (MMPA) required U.S. boats
to employ measures that would reduce the incidental taking of dolphins while
fishing for tuna, or else be barred from selling in the U.S. market. Congress later
supplemented the MMPA with the requirement that foreign countries implement
comparable regulations as a condition of being able to import tuna into the U.S.
market. The United States (defendant) subsequently imposed a tuna embargo
against various countries, including Mexico (plaintiff). Mexico challenged the
embargo before a General Agreement on Tariffs and Trade (GATT) panel. GATT
Article XI forbids quotas, while Article III forbids discrimination in the
importation of products from GATT parties. GATT Article XX(b) includes an
exception to GATT limitations for measures implemented by a party that are
necessary to preserve human, animal, or plant life. Mexico argued that the U.S.
embargo violated Article XI’s quota prohibitions. The United States contended
that the MMPA’s application and the imposed embargos were not quotas, but
instead fit within and complied with Article III product guidelines. The United
States argued, alternatively, that notwithstanding potential violations, the
measures fell within the Article XX(b) exception. Mexico responded that Article
XX(b) was inapplicable to any protective measures that reached outside the
implementing party’s jurisdiction.

▪ Product at issue
o Products, either processed or unprocessed, deriving or obtained from seals

▪ Summary of Key Panel/AB Findings

o Under the General Agreement on Tariffs and Trade, a nation may not
implement measures to protect environmental resources outside the nation’s
jurisdiction.
o The U.S. embargo against Mexican tuna violates the GATT.

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o No. The provisions providing for exceptions to the GATT’s general rules do not
allow a nation to impose measures meant to protect the life or health of people,
animals, or plants beyond the nation’s jurisdiction. Because extra jurisdictional
application of Article XX(b) is not explicitly contemplated by the text of the
provision, other sources must be considered to settle the issue, including the
purpose of the Article and the potential consequences of any chosen
interpretation. According to a previous panel’s findings, the purpose of this
exception was to permit parties to impose measures that might be inconsistent
with the GATT, but that furthered other important policy goals. The measures
could only include GATT inconsistencies that were absolutely necessary to
achieve those goals. If Article XX(b) were interpreted to allow for the imposition
of protective measures reaching outside the implementing nation’s jurisdiction,
individual parties would be able to impose countless restrictions and obligations
upon other parties in the name of environmental protection under the GATT,
effectively destroying the multilateral trade structure established by the
agreement. Here, the MMPA aims to regulate the incidental taking of dolphins in
tuna fishing and therefore does not regulate “products” as contemplated by Article
III. Because the U.S. measures do not fit within Article III, they are instead quotas
that violate Article XI. Further, these measures are not excepted by Article XX(b),
because allowing such a broad interpretation of this provision would cause a
breakdown of the GATT framework. Even if Article XX(b) were read to allow
extra jurisdictional application of these measures, the United States would not be
able to avail itself of the exception under these facts. The United States did not
satisfy Article XX(b)’s requirement of necessity, because the nation did not
pursue all available avenues that would have allowed it to remain in compliance
with the GATT while working towards its goal of protecting dolphins.
Specifically, the United States did not attempt meaningful negotiations with other
parties to form international cooperative agreements addressing the subject.

Wednesday, Sept 25

Current Events
▪ 2019 US-Japan Trade Agreement, an example of a preferential trade agreement.

Chapter 11: Most Favored Nation Treatment (MFN)

▪ MFN Principal
o The obligation to offer imports from (and exports to) any WTO Member the
best-available treatment offered to any other country.
▪ Why?
o Pros
▪ MFN principal helps smaller countries, they would join the WTO.
▪ After WW2, strong U.S. pressure to dismantle European preferential trade
system with their colonies., to the advantage of the U.S.
▪ Customs are simpler and more predictable when based upon clear-cut
schedules.

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▪ Incentives countries to import from the cheapest supplier, resulting in

competitors to lower cost.
o Cons
▪ Loss of reciprocity, free rider problem. Smaller countries benefit when
larger countries lower tariffs across the board. Don’t have to do anything.
▪ Loss of sovereignty, countries feel they don’t have control over who and
how they trade with.

GATT Article I
1. With respect to customs duties and charges of any kind imposed on or in connection with
importation or exportation or imposed on the international transfer of payments for
imports or exports, and with respect to the method of levying such duties and charges,
and with respect to all rules and formalities in connection with importation and
exportation, and with respect to all matters referred to in paragraphs 2 and 4 of Article
III,* any advantage, favor, privilege or immunity granted by any contracting party to any
product originating in or destined for any other country shall be accorded immediately
and unconditionally to the like product originating in or destined for the territories of all
other contracting parties.

Summary of Conditions for Violation of MFN Article 1:1

▪ The action in question is a trade policy or measure listed in Article 1:1 (covers both
imports and exports)
▪ One country is accorded an “advantage” compared to others”
▪ The “advantage” is not accorded immediately and unconditionally to all WTO members
▪ The advantage relates to “like products”

SPF Lumber case (1989) (Pg 331)

▪ Canada (plaintiff)
o Claimed that certain types of softwood lumber were competitively equivalent
regardless of the particular species of evergreen tree from which they were made.
The background to the claim appears to have been a typical case of reciprocity
discrimination – the classification of lumber by species of tree, resulting in more
favorable treatment of United States origin lumber, in response to a tariff
concession granted by Japan to the United States in a trade agreement bargain in
which Canada did not participate.
▪ Panel Ruling
o No. The panel rejected the Canadian claim because the GATT leaves members
wide discretion in tariff classification, even after HTS. Tariff differentiation is a
legitimate tool to serve a party’s trade policy interest, “comprising both its
protection need and its requirements for the purposes of
tariff-and-trade-negotiations.”

Coffee case (1981) (Pg 331)

▪ Facts

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o Claim involving Spain’s tariff classification that distinguished between five

different types of unroasted coffee beans. Unlike Lumber case, the product
distinctions appeared to have far stronger commercial foundations, with
merchants, processors, and consumers noting the different tastes of each blend.
▪ Panel Ruling
o However, the panel ruled all five types of coffee to be “like products”
o They relied on the fact that coffee was always sold to consumers in blended form,
where it was impossible to distinguish between the various types of coffee in the
blend. (okay sure…)
o Secondly, the product distinctions made by Spain did not appear in the coffee
tariffs of other countries. This is strange because there are a large number of cases
in which nations have made unique product distinctions to deal with unique
negotiating needs.

EC Bananas Case (1997) (Pg 334)

▪ Parties
o EC vs. Ecuador; Guatemala; Honduras; Mexico; United States
o Actually one group of developing countries (ACP-Europe) and another group
(other Latin American countries – USA)
▪ Issue
o Complaints alleged that the European Communities’ regime for importation, sale
and distribution of bananas is inconsistent with Articles I, II, III, X, XI and XIII
of the GATT 1994 as well as provisions of the Import Licensing Agreement, the
Agreement on Agriculture, the TRIMs Agreement and the GATS.
▪ Products at issue
o Bananas imported from third-party countries
▪ Holding
o The panel found that
▪ No – while EC’s tariff’s preferences for ACP bananas violated GATT
Article 1:1 (MFN), they were justified by a GATT waiver (Lome Waiver)
which permitted the EC to deviated from Article I to the extent necessary
for the EC to comply with an earlier EC-ACP agreement (Lome
Convention).
▪ Yes – EC’s tariff rate quota for ACP bananas violated MFN under GATT
Article XIII.
▪ Yes – EC’s system of allocating licenses under tariff rate quotas violated
MFN under GATT article I, because it favored ACP bananas.

Canada Autos Case (2000) (Pg 339)

▪ Parties
o Japan vs. Canada
▪ Issue
o Japan contended that under Canadian legislation implementing an automotive
products agreement (Auto Pact) between the US and Canada, only a limited
number of motor vehicle manufacturers are eligible to import vehicles into

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Canada duty free and to distribute the motor vehicles in Canada at the wholesale
and retail distribution levels. Japan further contended that this duty-free treatment
is contingent on two requirements:
▪ a Canadian value-added (CVA) content requirement that applies to both
goods and services; and
▪ a manufacturing and sales requirement. Japan alleges that these measures
are inconsistent with Articles I:1, III:4 and XXIV of GATT 1994, Article 2
of the TRIMs Agreement, Article 3 of the SCM Agreement, and Articles
II, VI and XVII of GATS.
▪ Product at issue:
o Motor vehicle imports and imported motor vehicle parts and materials.
▪ Holdings

EC Seals (2014) (Most Favored Nation Status) (Pg 343)

▪ Any advantage must be accorded “immediately and unconditionally” to the Like
Product of All Other WTO Members.
▪ See Above
o GATT Art. I:1(most-favored-nation treatment): The Appellate Body upheld the
Panel’s finding that the legal standard for the non-discrimination obligations
under TBT Art. 2.1 does not apply equally to claims under GATT Art. I:1. The
Appellate Body therefore upheld the Panel’s finding that the EU Seal Regime was
inconsistent with GATT Art. I:1 in respect of the IC exception, as it did not
“immediately and unconditionally” extend the same market access advantage to
Canadian and Norwegian seal products that it accorded to seal products from
Greenland.

Belgian Family Allowances (1952) (Pg 345)

Cannot use tariff policy to incentivize or punish other county’s domestic policies
1. Complaint submitted by the Norwegian and Danish delegations regarding the application
of the Belgian law on the levy of a charge on foreign goods purchased by public bodies
when these goods originated in a country whose system of family allowances did not
meet specific requirements.
2. The Panel came to the conclusion that the 7.5% levy was collected only on products
purchased by public bodies for their own use and not on imports as such, and that the
levy was charged, not at the time of importation, but when the purchase price was paid by
the public body. In those circumstances, it would appear that the levy was to be treated as
an “internal charge” within the meaning of paragraph 2 of Article III, and not as an
import charge within the meaning of paragraph 2 of Article II.
3. According to the provisions of paragraph 1 of Article I, any advantage, favor, privilege or
immunity granted by Belgium to any product originating in the territory of any country
with respect to all matters referred to in paragraph 2 of Article III shall be granted
immediately and unconditionally to the like product originating in the territories of all
contracting parties. Belgium has granted exemption from the levy under consideration to
products purchased by public bodies when they originate in Luxemburg and the
Netherlands, as well as in France, Italy, Sweden and the United Kingdom. Per Article

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XXVI, it is clear that that exemption would have to be granted unconditionally to all
other contracting parties (including Denmark and Norway). The consistency or otherwise
of the system of family allowances in force in the territory of a given contracting party
with the requirements of the Belgian law would be irrelevant in this respect, and the
Belgian legislation would have to be amended in so far as it introduced a discrimination
between countries having a given system of family allowances and those which had a
different system or no system at all, and made the granting of the exemption dependent
on certain conditions

Process or production methods (PPM) (Pg 346)

▪ Ex. GATT prohibits putting tariffs on one country using inhumane fishing methods.
However, you can make a tariff on ALL fish caught a certain way: inhumanely.
o Tied to a PRODUCT, not the ACTOR.
▪ 3 Distinct Types
1. The how-produced standard
▪ Ex. Law banning importation of driftnet-caught fish
2. The government policy standard
▪ Ex. Law banning importation of fish from any country that permits driftnet
fishing.
3. The producer characteristics standard
▪ Ex. Law banning important of fish from North Korea b/c of its human
rights record.

Moralia Soccer Balls Problem (Pg 350

1. Is tariff on import of soccer balls made using child labor a violation of GATT Article 1:1
(MFN)
2. If one party or neither is members to the WTO, then its easier since GATT obligations don’t
apply.
3. Justified under government policy standard.

Chapter 12: Preferential Trade Agreement

▪ GATT Article XXIV permits preferential trade agreements to deviate (mainly) from the
MFN principle set out in GATT Article I.
o Allows for customs unions/free trade areas
▪ Ex. NAFTA, EU

Summary of Conditions for the Formation of a Preferential Trade Agreement (PTA)

▪ To be permitted, a PTA must satisfy both the definition of an FTA or Customs Union
(CU) found in paragraph 8 and the rules for formation found in paragraph 5. Thus, for an
FTA it is necessary that:
a) Internal Requirement – duties and restriction on trade be eliminated with respect
to substantially all trade among the FTA members ((paragraph 8(b))

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b) External Requirement – duties or other regulations of commerce of the FTA

members toward third countries must not increase at the time of the formation of
the FTA ((paragraph 5(b))
▪ For a CU it is necessary that:
a. Internal Requirement: duties and restrictions on trade be eliminated with respect
to substantially all trade among members of the CU ((paragraph 8(a));
b. External Requirement: substantially the same duties and other regulations of
commerce are applied by each of the CU members toward third countries
(paragraph 8(a)); and
c. External Requirement: External duties and other regulations of commerce must
not be on the whole higher than was the case prior to the formation of the CU
(Paragraph 5(a))

Turkey Textiles (1999) (Pg 360)

Rule
▪ When joining a customs union, a country must adjust their tariffs to be “in line”
with the other members EXCEPT if it would result in higher/more restrictive tariffs
for third-parties

▪ Parties

o India requested consultations with Turkey concerning Turkey’s imposition of

quantitative restrictions on imports of a broad range of textile and clothing
products. India claimed that those measures are inconsistent with Articles XI and
XIII of GATT 1994, as well as ATC Article 2. Earlier, India had requested to be
joined in the consultations between Hong Kong and Turkey on the same subject
matter
▪ Measure at issue:
o Turkey’s quantitative import restrictions pursuant to the Turkey-EC customs
union.
▪ Product at issue:
o Textiles and clothing from India.
▪ Summary of Findings
o GATT Arts. XI (prohibition on quantitative restrictions) and XIII
(non-discriminatory administration of quantitative restrictions):The Panel found
that the quantitative restrictions at issue were inconsistent with Arts. XI and XIII.
(Turkey did not deny this.)
o ATCArt.2.4 (prohibition on new restrictions):The Panel found that Turkey’s
measures were new restrictions, that did not exist at the time of the entry into
force of the ATC, and, thus, were prohibited by Art. 2.4.
o GATT Art. XXIV (regional trade agreements): The Appellate Body agreed with
the Panel’s ultimate conclusion that Turkey’s measures were not justified under
Art. XXIV because there were alternatives available to Turkey that would have
met the requirements of Art. XXIV:8(a), which were necessary to form the
customs union, other than the adoption of the quantitative restrictions. The

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Appellate Body, therefore, modified the Panel’s legal reasoning and concluded
that to determine whether a measure found inconsistent with certain other GATT
provisions can be justified under Art. XXIV, a panel should examine two
conditions: (i) whether a “customs union”, as defined in Art. XXIV:8 exists
(compatibility of a customs union with the provisions of Art. XXIV); and (ii)
whether the formation of a customs union would be prevented without the
inconsistent measure (i.e. whether the measure is necessary for the formation of a
customs union). (The Panel had assumed the existence of the customs union and
moved on to examine the necessity of the measures.

Summary of Lessons
▪ Article XXIV provides a defense for measures that are introduced upon formation of the
customs union that meets the requirements of XXIV:5(a) and 8(a) if the formation of the
customs union would have been prevented if the member were not allowed to introduce
the measure
▪ “Substantially the same duties” in XXIV:8(a)(ii) offers limited flexibility, requiring
something “closely approximating “sameness.” It is not enough that relevant trade
regulations be “comparable.”

Regionalism among developing countries

▪ In 1979, as part of the Tokyo Round of GATT the enabling clause was adopted in order to
permit trading preferences targeted at developing and least developed countries which
would otherwise violate Article I of the GATT.
▪ Paragraph 2(a) provides a legal basis for extending the Generalized System of
Preferences (GSP) beyond the original 10 years. In practice it gave a permanent validity
to the GSP.
▪ The enabling clause permits developed countries to discriminate between different
categories of trading partners (in particular, between developed, developing and least
developed countries) which would otherwise violate Article I of the GATT which
stipulates that no GATT contracting party must be treated worse than any other (this is
known as most favored nation treatment).
▪ In effect, this allows developed countries to give preferential treatment to poorer
countries, particularly to least developed countries. Paragraph 2I permits developing
countries to enter into preferential trade agreements which do not meet the strict criteria
laid out in GATT Article XXIV for regional free-trade agreements.
▪ It allows developing countries to enter into agreements which may be non-reciprocal, or
cover a very limited range of products (which would otherwise contravene the GATT)

Wednesday, Oct 2

US-EU dispute over airlines subsidies dispute.

▪ https://www.bbc.com/news/business-49906815
▪ Appellate body ruled in favor of US, US can implement retaliatory tariffs

Chapter 13: General Exceptions

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1. To what extent can WTO obligations to liberalize trade be trumped by non-economic

objectives such as the protection of the health or the environment?

GATT Article XX
Subject to the requirement that such measures are not applied in a manner which would
constitute a means of arbitrary or unjustifiable discrimination between countries where the same
conditions prevail, or a disguised restriction on international trade, nothing in this Agreement
shall be construed to prevent the adoption or enforcement by any contracting party of measures:

a) necessary to protect public morals;

b) necessary to protect human, animal or plant life or health;

c) relating to the importations or exportations of gold or silver;

d) necessary to secure compliance with laws or regulations which are not inconsistent with
the provisions of this Agreement, including those relating to customs enforcement, the
enforcement of monopolies operated under paragraph 4 of Article II and Article XVII,
the protection of patents, trademarks and copyrights, and the prevention of deceptive
practices;

e) relating to the products of prison labor;

f) imposed for the protection of national treasures of artistic, historic or archaeological

value;

g) relating to the conservation of exhaustible natural resources if such measures are made
effective in conjunction with restrictions on domestic production or consumption;

h) undertaken in pursuance of obligations under any intergovernmental commodity

agreement which conforms to criteria submitted to the CONTRACTING Parties and not
disapproved by them or which is itself so submitted and not so disapproved;*

i) involving restrictions on exports of domestic materials necessary to ensure essential

quantities of such materials to a domestic processing industry during periods when the
domestic price of such materials is held below the world price as part of a governmental
stabilization plan; Provided that such restrictions shall not operate to increase the exports
of or the protection afforded to such domestic industry, and shall not depart from the
provisions of this Agreement relating to non-discrimination;

j) essential to the acquisition or distribution of products in general or local short supply;

Provided that any such measures shall be consistent with the principle that all contracting
parties are entitled to an equitable share of the international supply of such products, and
that any such measures, which are inconsistent with the other provisions of the
Agreement shall be discontinued as soon as the conditions giving rise to them have

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ceased to exist. The CONTRACTING Parties shall review the need for this
sub-paragraph not later than 30 June 1960.

Art. XX 3-step analysis

1. Does the policy fall within range of policies designed to protect [human, animal & plant
life/public morals/etc])?
2. Are inconsistent trade measures necessary to fulfill policy objective?
3. Do measures conform to requirements of Art. XX chapeau

Chapeau analysis
▪ A measure must not
o Be applied to arbitrary discriminate between countries where same conditions
apply
o Be applied to unjustifiable discriminate between countries where same conditions
apply
o Be a disguised restriction on trade.

Art. XX Full Analysis

1. Does policy fall within range of policies designed to protect (human, animal & plant
life/public morals/etc)?
2. Are inconsistent trades measure necessary to fulfil; a policy objective?
a. Balancing Test
i. Importance of common interest or values protected by regulation
ii. Impact of law on imports or exports
iii. Contribution made by compliance measure to enforcement of law at issue
b. Consider alternatives (brought by complainant)
i. Alternative does not achieve objective to same level
ii. Alternative is not reasonably available
3. Do measures conform to requirements of Art. XX chapeau?
a. No arbitrary discrimination
b. No unjustifiable discrimination
c. Not a disguised restriction on trade.

Definition of “necessary” under GATT Article XX

▪ Brazil Tires (Pg 383)

o Brazil adopted a ban on the importation of retreaded tires. The European
Community complained that these Brazilian measures violated GATT obligations,
Article I (MFN), Article III (National treatment), and Article X (quantitative
restrictions).
o Brazil argued that its measures were justified under Article XX(b) as measures to
protect human and animal life or health.
▪ Argument that the transportation, accumulation, and disposal of tries
creates health risks (mosquitos) and toxic emissions. Ban on retreaded

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tires b/c they have shorter life spans and increases the number of waste
tires in Brazil
o AB
▪ The Appellate Body upheld the Panel’s finding that the Import Ban was
provisionally justified as “necessary” within the meaning of Art. XX(b).
The Panel “weighed and balanced” the contribution of the Import Ban to
its stated objective against its trade restrictiveness, taking into account the
importance of the underlying interests or values. The Panel correctly held
that none of the less trade-restrictive alternatives suggested by the
European Communities constituted “reasonably available” alternatives to
the Import Ban.

▪ EC- Asbestos (2001) (Pg 388)

o Canada protested France’s ban on the import/export of asbestos fibers. Canada
complained that the regulation violated GATT Article III:4 and XI, (which was
ultimately rejected by the AB.)
o In its defense, EC argued that the regulation qualified under the Article XX(b)
exception for measures “necessary to protect human, animal, or plant life or
health.
o AB Ruling
▪ WTO members have a right to determine the level of protection of
health that they consider appropriate in a given situation. Here France
wanted to “halt” the spread of asbestos-related health risks.
▪ It seems perfectly legitimate for a member to seek to halt the spread of a
highly risky product while allowing the use of a less risky product in its
place.

Summary of Meaning of “Necessary” under Article XX

▪ The word necessary is not limited to absolute necessity. Determination of whether a
non-indispensable measure is necessary involves a weighing and balancing of facts,
including:
o The contribution of the measure to the ends pursued (enforcement of law or
regulation, preservation of life, protection of public morals, etc).
o The importance of the common interests or values protected, and
o The impact of the measure on imports or exports
▪ Though an import ban is as trade restrictive as possible, it can nevertheless be
“necessary”. But where it produces effect as severe as those resulting, from an import ban
it must make a material contribution to the achievement of the objective (rather than a
marginal one)
▪ Once a preliminary conclusion that a measure is necessary has been reached, it must be
confirmed by comparing the measure with its possible alternative
o An alternative must be less trade restrictive than the measure at issue
o An alternative must preserve the responding member’s right to achieve its desired
level of protection with respect to the right pursued (health in the Brazil Tyres
case)

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o An alternative must be reasonably available, meaning it must be something the

member is capable of undertaking, and it must not be unduly burdensome.

Summary of the Meaning of “Public Morals” (Pg 398)

▪ Members should be given some scope to define and apply for themselves the concept of
public morals.
▪ A measure justified under the public morals exception must be aimed at protecting the
interests of the people within a community or a nation as a whole.
▪ The term “public morals” denotes standards of right and wrong conduct maintained by or
on behalf of a community or nation.

▪ Antigua – US Gambling (Public Morals)

o Were various US measures relating to gambling and betting services, including

federal laws such as the “Wire Act”, the “Travel Act” and the “Illegal Gambling
Business Act” (“IGBA”) compatible with the GATT?
o Yes. Reversed. The Appellate Body upheld the Panel’s finding that the US
measures were designed “to protect public morals or to maintain public order”
within the meaning of Art. XIV(a), but reversed the Panel’s finding that the
United States had not shown that its measures were “necessary” to do so because
the Panel had erred in considering consultations with Antigua to constitute a
“reasonably available” alternative measure. The Appellate Body found that the
measures were “necessary”: the United States had made a prima facie case
showing of “necessity” and Antigua had failed to identify any other alternative
measures that might be “reasonably available”. With respect to the Art. XIV(c)
defence, the Appellate Body reversed the Panel due to its erroneous “necessity”
analysis and declined to make its own findings on the issues

▪ EC – Seals (2014) (Public Morals)

o History of legislation and other protective actions by EU countries demonstrates
that animal welfare is an issue of ethical and moral nature in in the EU. Hence,
their ban on seal products was an issue of “public morals”.

▪ US – Tuna Dolphin (Protect animal, plant, human life)

o In the unadopted report, the panel ruled that GATT parties cannot implement
regulations to protect or care about life outside of its own territories. The AB
ruling left the question open.

▪ Korea – Beef (Pg 405)

o No, complaint over South Korea’s measures affecting the importation, distribution
and sale of beef, (ii) Korea’s “dual retail system” for sale of domestic imported
beef), and (iii) Korea’s agricultural domestic support programs were NOT
compatible with the GATT.
▪ Part of anti-fraud regulation
o If Korea desired level of fraud is 0, then that is unreasonable

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▪ -Follow the Art. XX Full Analysis

o The Appellate Body upheld the Panel’s finding that the dual retail system was not
justified as a measure necessary to secure compliance with Korea’s Unfair
Competition Act because the dual retail system was not “necessary” within the
meaning of Art. XX(d). “Necessary” requires the weighing and balancing of
regulations of factors such as the contribution made by the measure to the
enforcement of the law or regulation at issue, the relative importance of the
common interests or values protected and the impact of the law on trade. The
Appellate Body agreed with the Panel that Korea failed to demonstrate that it
could not achieve its desired level of enforcement using alternative measures.

▪ Colombia – Indicative Prices and Restriction (Pg 406)

o Article XX(d)
o Restricted the number of ports that certain imported goods could come into.
o No, the Panel found that Colombia failed to establish that the ports of entry
measure was necessary to ensure compliance with Colombian customs laws and
regulations under Art. XX(d).
o Restriction violation of Art 11 (limiting how a product gets into your company)
▪ Key takeaway
o Country domestic laws do not take place of GATT
o Country domestic law is a presumption that they are compliant

Summary of the Meaning of “Secure Compliance with Laws or Regulations which are not
inconsistent with “GATT Obligations”
▪ The measure(s) must enforce WTO-compatible laws and regulations. The respondent has
the burden of proof to demonstrate that the relevant laws and regulations satisfy this
requirement, but it is not necessary to show that every provision is WTO-compatible. A
respondent’s law will be treated as WTO-compatible unless proven otherwise.
▪ It is not enough that the measure(s) simply ensures the attainment of the objective of the
laws and regulations
▪ The timing of violations and the measure’s implementation is a relevant factor.

Summary of the meaning of Relating to the Conservation of Natural Resources (Pg 414)
▪ The meaning of “exhaustible natural resources”
o Exhaustible natural resources are not limited to non-living resources. Measures to
conserve exhaustible natural resources, whether living or non-living, may fall
within Article XX(g)
o The term “natural resource” is evolutionary and must be interpreted in the light of
contemporary concerns of the community of nations about the protection of the
environment.
o Recognition of a species as an endangered species appears to be sufficient for it to
be exhaustible.
▪ The meaning of “relating to”

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o This requirement is satisfied if the means (the measures at issue) are reasonably
related to the ends (the conservation objective).

▪ United States – Shrimp (Conservation)

o US restriction was NOT compatible with the GATT.
o The Appellate Body held that although the US import ban was related to the
conservation of exhaustible natural resources and, thus, covered by an Art. XX(g)
exception, it could not be justified under Art. XX because the ban constituted
“arbitrary and unjustifiable” discrimination under the chapeau of Art. XX. In
reaching this conclusion, the Appellate Body reasoned, inter alia, that in its
application the measure was “unjustifiably” discriminatory because of its intended
and actual coercive effect on the specific policy decisions made by foreign
governments that were Members of the WTO. The measure also constituted
“arbitrary” discrimination because of the rigidity and inflexibility in its
application, and the lack of transparency and procedural fairness in the
administration of trade regulations. While ultimately reaching the same finding on
Art. XX as the Panel, the Appellate Body, however, reversed the Panel’s legal
interpretation of Art. XX with respect to the proper sequence of steps in analyzing
Art. XX. The proper sequence of steps is to first assess whether a measure can be
provisionally justified as one of the categories under paras. (a)-(j), and, then, to
further appraise the same measure under the Art. XX chapeau.

▪ China – Raw Materials (Conservation)

o China’s restriction was NOT justified under the GATT
o The Appellate Body upheld the Panel’s finding that there is no basis in China’s
Accession Protocol to allow the application of Art. XX to China’s obligations
under para.11.3 of the Protocol. The Panel had concluded that China’s export
restraints were not justified pursuant to Arts. XX(b) and (g). These findings were
not appealed. In this context China only appealed the Panel’s interpretation of the
phrase “made effective in conjunction with” in Art. XX(g). The Appellate Body
concluded that the Panel erred and stated that these terms mean that the export
restrictions and the restrictions on domestic consumption or production “must
“work together”.

Chapter 14: General Exception: The Chapeau of GATT Article XX

▪ To qualify as an exception under Article XX, a measure must satisfy the Article XX
chapeau:
o Subject to the requirement that such measures are not applied in a manner which
would constitute a means of (1) arbitrary or (2) unjustifiable discrimination
between countries where the same conditions prevail, or a (3) disguised restriction
on international trade, nothing in this Agreement shall be construed to prevent the
adoption or enforcement by any contracting party of measure….
▪ United States – Gasoline (1996)
o “Disguised restriction”, whatever else it covers may properly be read as
embracing restrictions amounting to arbitrary or unjustifiable discrimination in

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international trade taken under the guise of a measure formally within the terms of
an exception in Article XX

▪ United States – Shrimp

o Restriction incompatible with the GATT. The Appellate Body held that although
the US import ban was related to the conservation of exhaustible natural resources
and, thus, covered by an Art. XX(g) exception, it could not be justified under Art.
XX because the ban constituted “arbitrary and unjustifiable” discrimination under
the chapeau of Art. XX. In reaching this conclusion, the Appellate Body reasoned,
inter alia, that in its application the measure was “unjustifiably” discriminatory
because of its intended and actual coercive effect on the specific policy decisions
made by foreign governments that were Members of the WTO. The measure also
constituted “arbitrary” discrimination because of the rigidity and inflexibility in
its application, and the lack of transparency and procedural fairness in the
administration of trade regulations

Summary of how to approach the Chapeau

Analysis of Article XX is two-tiered.
▪ First, it must be determined if the measure is provisionally justified under Article XX’s
listed exceptions.
▪ Second it must be determined if the chapeau is satisfied

Summary of United States – Shrimp’s Interpretation of the Chapeau (Pg 438)

▪ The chapeau prohibition of (i) arbitrary or unjustifiable discrimination (ii) between
countries where the same conditions prevail, and (iii) of disguised restrictions on trade
represent three distinct standards.
▪ The chapeau seeks to balance the right of a member to invoke an exception under Article
XX and the rights of other members under the substantive provisions of the GATT
▪ The chapeau focuses on how the challenged measure is “applied” or implemented
▪ Unjustifiable discrimination:
o Not only must similar treatment be given to countries where similar conditions
prevail, but a measure must also allow for differential treatment when countries
are in different situations.
o Access to the market of a country cannot be conditioned on adoption of a
regulatory program by the exporting country that is essentially the same as that of
the importing country. It is acceptable to condition market access on adoption of a
program that is comparable in effectiveness.
o There is an obligation to undertake comparable negotiations with all relevant
exporting countries; but this is limited to an obligation to negotiate in good faith.
It is not an obligation to complete an agreement.
o Different countries must be given comparable phase-in periods (at least in this
case)
o Comparable efforts must be made to transfer technology to different countries
(again, at least in this case)
▪ Arbitrary discrimination:

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o Rigidity and inflexibility may constitute arbitrary discrimination

o A lack of adequate due process can constitute arbitrary discrimination. In this
case, there was insufficient transparency, an unpredictable certification process,
no opportunity for an applicant country to be heard, no reasons given for denial of
an application, and no review or appeal of that decision.

Wednesday, Oct 9

Chapter 15 Dumping and Anti-Dumping Duties (Pg 457)

▪ WTO Anti-dumping agreement
o https://www.wto.org/english/res_e/booksp_e/gatt_ai_e/art6_e.pdf
▪ “Trade remedies” – Permitted trade measures that countries can justifiably use to restrict
imports. Three types
1. Anti-dumping duties (most common)
▪ Import duties imposed in response to a foreign producer “dumping”
certain goods at below the price charged in the foreign producer’s home
market, thus causing injury to the domestic producers of the same product.
o Why? Drive domestic competitors out of business with cheap
goods. Ex. Chinese solar panels
▪ ATT Article VI, paragraph 2 – In response to dumping, a state is permitted
to levy an anti-dumping duty in an amount up to the margin of dumping
▪ However, you cannot put an anti-dumping duty on a foreign product and
then simply give the money to domestic producers as a subsidy.

2. Countervailing duties
▪ Import duties imposed in response to certain subsidies provided to
exporters by their governments, when the latter cause or threaten
“material injury” to industries in the importing state.

3. Safeguards
▪ Importing measures (tariffs or quotas) imposed in response to a surge in
imports that causes or threatens “serious” injury to domestic industry.

Unfair Trade Practice (Exporting Remedy/Retaliatory measure (Importing

Country) Country)
Dumping Anti-Dumping Duties

Subsidies Countervailing Duties/File Claim before WTO

Surge in imports Safeguards

Elements necessary for Anti-Dumping Duties

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1. Dumping
a. Sale of product below normal value
2. Injury
a. Significant increase in volume of imports
b. Affected prices
c. Impact on domestic industry
3. Causation
a. Injury attributable to dumping
b. In jury not attributable to other factors.

Three different approaches to determine “normal value”

1. Compare export price vs. sale price in home market
a. Must be made in ordinary course of trade
b. Must be like product
c. Must be defined for consumption in exporting country
d. Must be fair market comparison
2. Compare sale price in relevant 3rd country
3. Compare cost of production + reasonable admin cost and profit

United States – Hot-Rolled Steel (2001) (Pg 461) (definition of “normal value”)
▪ Issue: Whether US practice of excluding (from the “normal value” calculation) market
sales by an exporter to an affiliated customer unless the price charged was at least 99.5%
of the average price charged to unaffiliated customers was permitted?
1. Definition of “in the ordinary course of trade” requirement
1. Sales made under conditions and practices, that for a reasonable period of time
prior to the date of sale of the subject merchandise, have been normal for sales of
the foreign like product.”
2. No, the Appellate Body concluded that the US Department of Commerce’s 99.5 per cent
test (i.e. arm’s-length test) was inconsistent with Art. 2.1 because the test did not properly
distinguish between high-priced sales and low-priced sales between affiliates. USDOC
lacked either standards, guidelines, or a systematic test to determine what constituted
“aberrationally high” prices.
3. AB held that Japanese sales were “in the ordinary course of trade” within the meaning of
Art. 2.1.

EC – Bed Linens (Zeroing and Fair Dumping Margins) (Pg 469)

o India brought complaint against EC’s use of “zeroing” to determine that Bed Linens were
being dumped in the EC, triggering EC’s anti-dumping measures.
o Zeroing Example
o The foreign domestic price (FDP) of the product is compared with its U.S. import
price (USIP) adjusted for transportation and handling costs. Under zeroing, the
United States sets at zero the negative differences (that is whenever FDP minus
USIP is less than zero).

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o Critics of this methodology charge that, because negative amounts are excluded,
zeroing results in the calculation of a margin and an antidumping duty in excess
of the actual dumping practiced by the countries concerned
o No, AB held that EC’s practice violated the AD Agreement. The Appellate Body upheld
the finding of the Panel that EC’s practice of “zeroing” when establishing “the existence
of margins of dumping”, in the anti-dumping investigation at issue in this dispute, is
inconsistent with Article 2.4.2 of the Anti-Dumping Agreement;

Summary of Determination of Injury (Pg 477)

In finding an injury, WTO importing members must conduct an “objective examination,”
considering:
▪ Volume of dumped imports
▪ Impact of dumped imports on prices, including price undercutting, or price depression of
suppression
▪ Impact on domestic producers, including the factors listed in Article 3.4
o Actual and potential decline in sales, profits, output, market share, productivity,
return on investments, or utilization of capacity;
o Factors affecting domestic prices;
o The magnitude of the margin of dumping
o Actual and potential negative effects on cash flow, inventories, employment,
wages, growth, and the ability to raise capital investment.
▪ Casual link between the dumped imports and the injury
▪ Foreseeable and imminent change in future circumstances
o A significant rate of increase of dumped imports
o Significant excess capacity to produce more of the product in the exporting
country;
o Import prices that are sufficiently low that they will depress domestic prices and
increase demand for imports;
o Whether there are large inventories of the good ready to be exported.

GATT Article 18.1 of the AD Agreement

o The AD agreement makes explicit that no other response to dumping is permitted aside
from (1) anti-dumping duties (2) countervailing duties (3) safeguards

US – Antidumping and countervailing duties (China) (Pg 480) (double remedies)

o Generally, Article VI: 5 provides that products cannot be subject to both anti-dumping
and countervailing duties to compensate for the same situation of dumping or export
subsidization.
o AB upheld this idea in the case, interpreted Article 19.3 as prohibiting “double remedies”
on China’s products, specifically AD duties calculated on the basis of both the
non-market economy (NME) methodology and CVDs to offset domestic subsidies
offered by China.

Chapter 16 – Subsidies and Countervailing Duties (Pg 503)

Subsidies analysis

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1. Is it a subsidy?
A. Financial contribution
▪ Direct transfer of funds (low-interest loans)
▪ Government revenue foregone (tax breaks)
▪ Government provision of goods and services (State resources to
manufacturers)
B. From a government body
C. Confers a benefit
2. Is it specific (10% tax break to oil exporting companies on the coast?)
3. Is it actionable or prohibited?
A. Prohibited: contingent upon export performance or domestic consumption
B. Actionable: causes injury, serious prejudice, nullification, or impairment of
benefits
4. Should you use CVDs or pursue DSU claim?

Types
1. Prohibited subsidies – which are export subsidies and subsidies contingent on the use of
domestic products;
2. Permitted subsidies – which are permitted for certain specific research activities or
disadvantaged regions or environmental adaptations but the authorization for which
expired on January 1, 2000, so these permitted subsidies have now become actionable:
and
3. Actionable subsidies – which can be countervailed or challenged directly at the DSU
when the applicable conditions are met (SCM Article 5, e.g., when they are “specific”
and have “adverse effects” on other WTO Members)

Summary of subsidies and how a state can respond?

▪ A subsidy exists if the requirement of SCM Article 1.1(a) (list of qualifying government
actions) and 1.1(b) (benefit is thereby conferred) are satisfied.
▪ An importing state can respond to a subsidy only if it is “specific” as defined in SCM
Article 2.
▪ An importing state can respond to a specific subsidy through CVD’s or through the
dispute settlement process. These may be pursued simultaneously but no double relief is
permitted.

US-China Off-Road Tires (Anti-Dumping & Countervailing investigation) (Pg 507)

▪ Whether countervailing and anti-dumping measures imposed concurrently by the United
States against the same products from China, following parallel anti-dumping (“AD”) and
countervailing duty (“CVD”) investigations by the United States Department of
Commerce (“USDOC”) were valid?
▪ No, the Appellate Body reversed the Panel’s interpretation and found that a “public body”
is an entity that possesses, exercises, or is vested with, governmental authority. The
Appellate Body completed the analysis and found that the United States had acted
inconsistently with ASCM Arts. 1.1(a)(1), 10, and 32.1 in finding that certain
State-owned enterprises (Rubber tire manufacturers) constituted public bodies. It also

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found that China did not establish that the USDOC had acted inconsistently with Art.
1.1(a) in determining that certain State-owned commercial banks (“SOCBs”) constituted
public bodies.

Canada Renewable Energy Case (Pg 513)

▪ Japan claimed that Canada was subsidizing electricity generation equipment in Canada’s
renewable energy sector at the disadvantage of foreign exporters of such equipment.
▪ ASCM Art. 1.1(a) (subsidy definition – financial contribution): Yes, the AB upheld the
Panel’s finding that the measures at issue constituted financial contributions in the form
of government purchases of goods within the meaning of Art. 1.1(a)(1)(iii).
▪ ASCM Art. 1.1(b) (subsidy definition – benefit): Undecided, the AB reversed the Panel
majority’s finding that the European Union and Japan failed to establish that the
challenged measures conferred a benefit. The Appellate Body found that the Panel was
mistaken in using the market for electricity generated from all sources of energy as the
relevant market for comparison in determining benefit. The Appellate Body considered
that, in defining the relevant market, the Panel should have undertaken an analysis of
demand-side and supply-side factors. Such an analysis would have shown that producers
of wind- and solar PV-generated electricity did not compete with other electricity
producers, because of differences in cost structures and operating costs. This would have
led the Panel to conclude that the relevant market for the benefit comparison was the
market for wind- and solar PV-generated electricity. The Appellate Body, however, was
unable to determine whether the challenged measures conferred a benefit within the
meaning of Art. 1.1(b), due to the lack of a sufficient factual basis to complete the
analysis. As a result, there was no finding as to whether the measures at issue were
prohibited subsidies under ASCM Arts. 3.1(b) and 3.2.

United States – Lumber CVDs Finals

▪ Issue of whether the provision of “cheap” stumpage rights (to cut trees) by Canadian
provinces was “specific” to a “group of enterprises or industries” pursuant to Article 2.1I.
▪ Canada argued that anyone can buy stumpage rights and many enterprises produce wood
products.
▪ Yes, Panel rejected Canada’s defense and held that “wood products industries” constitutes
at most only a limited number of industries: pulp, paper, lumber and lumber
manufacturing industries. Canada’s policy was an impermissible subsidy.
▪ Specificity under Article SCM 2 is to be determined at the enterprise or industry
level, not at the product level.

EC – Large Civil Aircraft (Pg 526) (Prohibited Subsidy)

▪ Whether EU’s launch aid for the Airbus 380 aircraft was a prohibited export subsidy
because it was granted in anticipation of exports performance?
o US argued there was not enough domestic demand for that many aircraft, so
launch aid was de facto export contingency.
▪ No, AB reversed Panel’s finding of de facto export contingency because it had been
based only on a showing that anticipated exportation was the reason for granting the
subsidy.

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▪ The AB found that a subsidy is de facto export contingent within the meaning of Art.
3.1(a) and footnote 4 if the granting of the subsidy “is geared to induce the promotion of
future export performance by the recipient”. The satisfaction of the standard must be
assessed by examining the measure granting the subsidy and the facts surrounding the
granting of the subsidy, including the design, structure, and modalities of operation of the
measure. The Appellate Body, having reversed the Panel’s legal standard, was unable to
complete the analysis as to whether the challenged LA/MSF measures were de facto
export contingent.

US – Cotton (Pg 533) (Adverse effects, serious prejudice)

▪ Whether the “effect” of US subsidies was “significant price suppression” in the sense of
Article 6.3I:
▪ Yes, the Appellate Body upheld the Panel’s finding that the effect of US subsidy program
at issue – i.e. marketing loan program payments, Step 2 (user marketing) payments,
market loss assistance payments, and counter-cyclical payments – is significant price
suppression within the meaning of Art. 6.3I, causing serious prejudice to Brazil’s
interests within the meaning of Art. 5I.
▪ Meanwhile, the Panel found that other US domestic support programs (i.e. production
flexibility contract payments, direct payments, and crop insurance payments) did not
cause serious prejudice to Brazil’s interests because Brazil failed to prove a necessary
causal link between these programs and significant price suppression.

Summary of Prohibited and Actionable Subsidies

▪ A prohibited subsidy is a subsidy contingent on either export performance or the use of
domestic over imported goods. This include exempting revenues from taxation schemes
where the exemption is predicated on exportation
▪ An actionable subsidy causes adverse effects on the interests of other members. Adverse
effects include material injury (or threat thereof, nullification or impairment of benefits,
or serious prejudice to the interests of another member
▪ Serious prejudice results when the effect of the subsidy is to displace or impede sales by
producers in other countries, or results in price undercutting or price depression or
suppression, or results in an increase in market share of a subsidized commodity product.

Chapter 17 – Safeguards (Pg 551)

Summary of Requirements for Application of Safeguard Measures

▪ As result of unforeseen developments and of the effect of obligations incurred under
GATT
▪ Absolute or relative increase in imports
▪ Increased imports cause or threaten serious injury to domestic producer of like or directly
competitive product
▪ Must have conducted an investigation and determined the above
▪ The safeguard measure must be applied to all imports of the product (with possible
exceptions for developing country imports, Article 9 of the Safeguard Agreement, and, a
question that remains open to date, for intra-regional imports, GATT Article XXIV).

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Another exception was found in China’s protocol of accession, which permitted for a
limited time a China-specific safeguard.

Argentina – Footwear (Pg 556)

▪ Argentina initiated a safeguard investigation and adopted safeguard measure in the form
of duties on certain footwear, after being condemned by the AB for its tariffs on footwear.
▪ The EC complained, alleged that the safeguard measures violated a variety of provisions
in the Agreement on Safeguards and GATT Article XIX:1(a). The panel agreed, but
relied on a general trend of increased of imports over 5 years.
▪ AB held that the phrase “is being imported” implies that the increase in imports must
have been sudden and recent, sharp enough, both quantitatively and qualitatively, to
cause or threaten to cause “serious injury”
▪ AB held that the definition of “serious injury” to mean significant overall impairment, as
evaluating the overall position of the domestic industry in light of all the relevant factors
having a bearing on a situation of that industry.
i. Sales, employment, and productivity
▪ Definition of “Causation” (pg 559)
i. Whether an upward trend in imports coincides with downward trends in the injury
factors, and if not, whether a reasoned explanation is provided as to why
nevertheless the data show causation
ii. Whether the conditions of competition in the Argentine footwear market between
imported and domestic footwear as analyzed demonstrate, on the basis of
objective evidence, a casual link of the imported to any injury; and
iii. Whether the other relevant factors have been analyzed and whether its established
that injury caused by factors other than imports has not been attributed to imports.

Definition of “domestic industry”

▪ Article 4.1I of the Agreement of safeguards
o Producers as a whole of the like or directly competitive products operating with
the territory of a Member, or those whose collective output…..constitutes a major
proportion of the total domestic production of those products.

US – Lamb (Safeguards, Domestic Industry) (Pg 566)

o Whether USTIC ‘s inclusion of both “packers and breakers of lamb meat” and “growers
and feeders of live lambs” in the definition of the US lamb meat “domestic industry” was
proper?
o Issue: Does “serious injury” include impact on ancillary industries related to lamb
market?
o No, the Appellate Body upheld the Panel’s finding that the measure was inconsistent with
Art. 4.1I, as the ITC based its serious injury analysis not only on the producers of lamb
meat but also in part on lamb growers and feeders. The Appellate Body stated that the
“domestic industry” under Art. 4.1I extends solely to the producers of the like or directly
competitive products, and thus only to the lamb meat producers in this case.

Summary of Some of the Jurisprudence on Safeguards

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▪ The increase in imports must be recent, sudden, and sharp enough to cause or threaten
serious injury.
▪ In evaluating injury, the competent authorities must evaluate each of the factors listed in
Article 4.2(a) as well as other relevant factors
▪ The relationship between movements in imports and movement in injury factors must be
central to the causation analysis.
▪ The relationship of cause and effect must be such that the increase in imports contributed
to bringing about the serious injury (no need that increased imports alone cause serious
injury)
▪ Other factor that also cause injury must be separated and distinguished to ensure that any
injury caused by such other factors is not attributed to increased imports
▪ The relevant “domestic industry” in a safeguards context must be one producing products
that are like or directly competitive with the imported product.

Form, Extent, and Duration of the Safeguard

▪ Form
o Increased customs duties, or
o Quantitative restrictions such as quotas.
▪ Extent
o “may be applied only to the extent that they address serious injury attributed to
increased imports” – US – Line Pipe Safeguards
▪ Duration
o Only as long as is necessary to prevent or remedy serious injury and to facilitate
adjustment (Article 7.1)
o Maximum duration is four (4) years if no improvements occur. Extension is
permitted to max of 8 years.
▪ Countervailing and anti-dumping duties are restricted to 5 years max.
▪ Compensation
o Owed to other WTO members affected by the safeguard, excluding private parties
injured by the safeguard measure.
o A member proposing to implement a safeguard measure is required to maintain
equivalent level of concessions between it and the [affected] exporting members.

Wed, Oct 17

Class Notes – Safeguards

▪ Safeguards are restricted to a minimum level and place to remedy the harm
▪ Duration is limited, 4 years

Article XIX – Emergency Action on Imports of Particular Products1.(a)

▪ If, as a result of unforeseen developments and of the effect of the obligations incurred by
a contracting party under this Agreement, including tariff concessions, any product is
being imported into the territory of that contracting party in such increased quantities and
under such conditions as to cause or threaten serious injury to domestic producers in that
territory of like or directly competitive products, the contracting party shall be free, in

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respect of such product, and to the extent and for such time as may be necessary to
prevent or remedy such injury, to suspend the obligation in whole or in part or to
withdraw or modify the concession.

Elements Necessary for imposing safeguards

1. Imports of such increased quantities
2. Serious injury
3. Causation

Wednesday, Oct 30

Understanding Agreement on SPS

1. When does agreement apply?
2. What is prohibited
3. How to analyze potential violations.

When does it apply?

Annex A defines SPS measures as:
▪ Measures intended to protect human, animal, plant life + health
▪ Within territory of Member State
▪ From risks associate with diseases, pests, or additives in food or feed stuffs.

Examples,
▪ Australia restricts NZ apples based on concerns regarding bacteria, fungus, and pests
▪ Korea imposes import bans and additional testing requirements for radionuclide content
on Japanese food products following Fukushima.

Key differences:
▪ Goes beyond discrimination
o Distinguish EC-Asbestos from EC-Hormones

▪ Self-Standing Agreement
o Can violate SPS without violating GATT
o Burden of proof rests with complaining party.

What is prohibited?
▪ Implementing an SPS that isn’t based on a risk Assessment 5.1/2.3
▪ Discrimination 5.7

How to determine if there was a violation

Was a risk assessment done?

International Standards
▪ Safe harbor (SPS 3.3) if you conform to the international standard
▪ Can go beyond internal standard if scientific justification

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▪ Be careful about relying on safe harbor if you measures does not accurately conform
(India-Agricultural Products,)

Chapter 18 – Agreement on Sanitary and Phytosanitary Measures

▪ Agreement on Sanitary and Phytosanitary Measures (SPS Agreement)
o Focuses on trade restrictions to protect human, animal, or plant life or health
against food-borne risks or pests or diseases
o SPS represents a more detailed and comprehensive system of rules to govern a
subset of the issues addressed by Art. XX(b)
o Advantages?
▪ SPS provisions are triggered even without a prior finding of another
GATT violation.
▪ The burden of proof under the SPS Agreement rests on the complaining
party, which clearly works in favor of defendants.
o Issues?
▪ Balancing Health & Safety vs. Market Access

Definition
1. Sanitary or phytosanitary measure – Any measure applied:
a. To protect animal or plant life or health within the territory of the Member from
risks arising from the entry, establishment or spread of pests, diseases,
disease-carrying organisms or disease-causing organisms;
b. to protect human or animal life or health within the territory of the Member from
risks arising from additives, contaminants, toxins or disease-causing organisms in
foods, beverages or feedstuffs;
c. to protect human life or health within the territory of the Member from risks
arising from diseases carried by animals, plants or products thereof, or from the
entry, establishment or spread of pests; or
d. to prevent or limit other damage within the territory of the Member from the
entry, establishment or spread of pests.

Sanitary or phytosanitary measures include all relevant laws, decrees, regulations,

requirements and procedures including, inter alia, end product criteria; processes and production
methods; testing, inspection, certification and approval procedures; quarantine treatments
including relevant requirements associated with the transport of animals or plants, or with the
materials necessary for their survival during transport; provisions on relevant statistical methods,
sampling procedures and methods of risk assessment; and packaging and labelling requirements
directly related to food safety.

EC-Biotech/GMO Case (broad definition of SPS measures)

▪ SPS measures must “be applied” to protect against certain enumerated risks. Include all
relevant laws, decrees [and] regulations. May take many legal forms, restrictions.

EC-Hormones (Pg 586) (Standard of Review) (Burden of Proof)

▪ Issue

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o Whether the European measures (ban on imports of hormone beef) met the
requirement of the SPS agreement?
o Who has the initial burden of proof in showing an SPS measure is inconsistent
with the GATT?
▪ Holding
o AB – An SPS measure is objectively justifiable if:
1. The measure is “based on” a risk assessment.
2. The risk assessment is supported by coherent reasoning and respectable
scientific evidence.
o Initial burden of proof is on the complaining party.

▪ Reasoning
o Reversed. Here, the Panel used the wrong standard of review. They failed to seek
assistance from scientific experts to determine whether the reasoning articulated
by the European Communities on the basis of the scientific evidence is objective
and coherent, so that conclusions reached in the risk assessment sufficiently
warrant the SPS measure.
o The complainant has the initial burden proof. P must establish a prima facie case
of inconsistency with a particular provision of the SPS agreement. Afterwards,
burden of proof shifts to the defending party, which must in turn counter or refute
the claimed inconsistency.

Harmonization and International Standards

▪ EC-Hormones case
o AB held that SPS measures must be “based on” international standards, guidelines
or recommendations under Art 31.
o SPS measures must “conform to” such standards, meaning they “embody the
standard completely” or “match it exactly.”
▪ Members may deviate from international standards to achieve a higher level of SPSs
protection and if there is scientific justification for that deviation.
▪ India-Agricultural Products case
o Panel adopted the same strict standard as the EC-Hormones case. US prevailed
over India’s ban on imported poultry by showing three discrepancies – three
failures “to match” exactly – between the OIE standard vs. India’s bird flu regime.
o AB upheld that India’s bird flu regime did not “conform” to the OIE standard.
Stuck down.

The “Rational Relationship” Requirement

▪ EC-Hormones case
1. The requirement that a SPS measure be “based on” a risk assessment is a
substantive requirement that there must be a rational relationship between the
measure and the risk assessment.

Article 5.5 (Consistency)

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▪ Prohibits WTO Members from imposing a very high level of protection for one situation
or product while at the same time it is very lenient in respect of another situation or
product, and this even though both situations are equally “dangerous.”
▪ Australia-Salmon case, the following 3 elements created an Article 5.5 violation
1. Member adopts different appropriate levels of sanitary protection in several
“different situations”
2. Those levels of protection exhibit differences that are “arbitrary or unjustifiable”;
and
3. The measure embodying those differences results in “discrimination or a
disguised restriction on international trade.”
▪ AB held that Australia violated Article 5.5 by banning imports of salmon products (based
on fears of introducing fish diseases) but allowing imports of herring used as bait and live
ornamental fish (which represent similar, if not higher, risks of disease introduction).

Article 5.7 (Precautionary Principle and the SPS Agreement)

▪ Is there relevant scientific evidence?
▪ Uncertainty can and should be considered in decision making.
▪ WTO will recognize situations where science unclear, but danger is apparent.

Summary of the SPS Agreement (Pg 615)

▪ Members have the right to take sanitary and phytosanitary measures.
▪ Measures that conform to international standards shall be deemed necessary for
human/animal/plant/ health
▪ SPS measures must be based on an assessment of risks and shall take into account
available scientific evidence.
▪ SPS measures must avoid arbitrary or unjustifiable distinctions in the levels (of SPS
protection) appropriate in different situations if they result in discrimination or disguised
restriction on trade.
▪ The precautionary principle: In cases where relevant scientific evidence is insufficient,
members may provisionally adopt SPS measures on the basis of available pertinent
information, including that form the relevant international organizations as well as from
SPS measures applied by other members.
▪ The panel or AB may appoint experts, but evidence coming from the experts advising the
panel can only be considered by a panel once the complaining party itself, (i.e. on the
basis of its own arguments and evidence) present a prima facie case.

Chapter 19: Agreement on Technical Barriers to Trade

TBT Agreement Articles 1, 2, Annex 1.1, 1.2

When does it apply?

▪ Regulations that lay down product characteristics or their related processes and
production methods, including the applicable administrative provision, with which
compliance is mandatory (TBT Annex 1)

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Examples
▪ Safety standards
▪ Voltage requirements
▪ Labeling requirements
▪ Recycling requirements

How to determine if TR was more restrictive than necessary?

▪ Was objective legitimate (TBT 2.2)
o Can include conditioning market access. See U.S. -Tuna II
o Examples, national security requirements; the prevention of deceptive practices;
protection of human health or safety, animal or plant life or health, or the
environment
▪ Was it necessary?
o Balance Trade restrictiveness with degree of contribution to objective and risks of
nonfulfillment
o Compare to reasonably available alternatives.

How to determine if TR failed to be based on international standard?

▪ Did member notify WTO (TBT 2.4)
▪ Just needs to be based on, not exact match – no safe harbor
▪ Can’t contradict the international standard
▪ See US-Tuna II case.

-TBT agreement covers a broader group of NTBs including safety standards, labelling
requirements, etc
● TBT 1.5 provides that TBT Agreement does “not apply to sanitary and phytosanitary
measures as defined in Annex A of the Agreement on the Application of Sanitary and
Phytosanitary Measures.”
● Technical regulations or standards subject to TBT include certain kinds of labeling
requirements, voltage requirements on electrical products, safety requirements for cars,
and recycling requirements on packaging
-Technical Regulations Definition:
● Lays down mandatory product characteristics or their related process and production
methods (Annex 1)
● A Standard as that term is used in the TBT Agreement, is voluntary

When does it apply US-Tuna II

▪ If you didn’t meet requirements, then you cannot say you’re “dolphin-safe.”

What is prohibited?
▪ Discrimination (Either national treatment or MFN) (TBT 2.1)
▪ Regulations more restrictive than necessary to fulfill legitimate objective (TBT 2.2)
▪ Not basing regulations on international standards when application (TBT 2.4)

How to determine if there has been discrimination?

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▪ Was there less favorable treatment of like products? (TBT 2.1)

o US -Clove Cigarettes
o Both de facto and de jure discrimination are prohibited
o Discrimination ok if it stems exclusively from regulatory distinction

Book’s Key Legal Provisions

TBT 1.5; 2.1; 2.2; 2.4
TBT Annex 1.1; 1.2

22. What is a Technical Regulation?

“Mandatory” Compliance”

▪ All other technical regulations, standards, and procedures allegedly imposed with
non-trade obebedcjtove (pg 581)

-US – Tuna II (Appellate Body Report, 20121) p. 620

● Facts:
o Mexico challenged a series of US measures that establish criteria that must be
satisfied before tuna can be labeled as “dolphin-safe.”
▪ Established Conditions:
● Regarding location in which tuna are caught;
● Equipment used to catch them; AND
● Level of dolphin mortality or injury
▪ Impacts of these measures:
● Mexican tuna caught in the Eastern Tropical Pacific Ocean (ETP)
could not be labeled “dolphin-safe” on the US market if purse
seine nets were intentionally deployed on or used to encircle
dolphins
o Practice known as “setting on dolphins”
● Mexico Complaint:
o Measures constitute (technical regulations” in violation of several provisions of
TBT Agreement Article 2
● Question Presented2:
o Whether a requirement that must be met in case one voluntarily decides to put a
“dolphin-safe” label on tuna (as opposed to an obligation to have a “dolphin-safe”
label on all tuna sold in the US) is a “technical regulation” as defined in Annex
1.1 of the TBT Agreement, in particular, a “[d]ocument. . . with which
compliance is mandatory.”
● Technical regulation was defined in previous cases EC – Asbestos and EC – Sardines
o However, Art. 1.2 of TBT Agreement stipulates:

1
AB Report, United States – Measures Concerning the Importation, Marketing and Sale of Tuna
and Tuna Products (adopted June 13, 2012)
2
For Tuna Case in Section A

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▪ “for the purposes of this Agreement the meaning of the terms given in
Annex 1 applies”
o Definition of Technical Regulation (full), on top of p. 621
● The US measure covers the entire field of what “dolphin-safe” means in relation to tuna
products in the United States
o Dolphin Protection Consumer Information Act (DPCIA), the implementing
regulations and the Hogarth ruling set out the requirements for when tuna
products sold in the US are “dolphin-safe”
● A determination of whether a particular measure constitutes a technical regulation must
be made in the light of the characteristics of the measure at issue and the circumstances of
the case
o US contends that compliance with a labelling requirement is “mandatory” within
the meaning of Annex 1.1 only “if there is also a requirement to use the label in
order to place the product for sale on the market”
▪ By contrast, in the US view, compliance with a labelling requirement is
not mandatory in situations where producers retain the option of not using
the label but nevertheless are able to sell the product on the market
● Holding:
o The panel did not err in characterizing the measure at issue as a “technical
regulation” within the meaning of Annex 1.1
▪ Reasons given in § 199 p. 622
▪ As consequence, US measure covers entire field of what “dolphin-safe”
means in relation to tuna products
● Note 1 p. 622-623 discusses a note one panelist disagreed and expressed a separate
opinion
● TBT Annex 1.1 (definition of Technical regulation):
o The Appellate Body found that “the US measure establishes a single and legally
mandated set of requirements for making any statement with respect to the broad
subject of ‘dolphin-safety’ of tuna products in the United States”. Thus, it upheld
the Panel’s ruling characterizing the measure at issue as a “technical regulation”
within the meaning of TBT Annex 1

-EC – Asbestos
● TBT Annex 1.1 (Technical Regulation):
o The Appellate Body, having rejected the Panel’s approach of separating the
measure into the ban and the exceptions, reversed the Panel and concluded that
the ban as an “integrated whole” was a “technical regulation” as defined in Annex
1.1 and thus covered by the TBT Agreement,
▪ as (i) the products subject to the ban were identifiable (i.e. any products
containing asbestos);
▪ (ii) the measure was a whole laid down product characteristics; AND
▪ (iii) compliance with the measure was mandatory.
o However, the Appellate Body did not complete the legal analysis of Canada’s
TBT claims as it did not have an “adequate basis” upon which to examine them.

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B. What is a Technical Regulation? Measures

Addressing Process or Production Methods (PPMs)

-The terms “product characteristics” as the AB interpreted in EC – Asbestos (p. 67) p. 624
-Panel in US – Tuna II had little problem finding that US requirements for labelling of tuna as
“dolphin-safe” – a classical example of a NON-PRODUCT related PPM – are, indeed, covered
by the definition of “technical regulation,” more specifically, “labelling requirements as they
apply to a product, process or production method” referenced in second sentence of Annex 1.1;
● 7.78 on p. 625
-Mexico’s argument of the Labelling Requirement
● §§ 335, 337, 338, and 339 p. 625-626
o Last sentence of § 337 “It thus appears to us that Mexico does not take issue with
the US’ dolphin protection objective per se, but with the means used in pursuance
of this objective
o § 338:
▪ Art. 2.2 of the TBT agreement recognizes that a technical regulation shall
not create “unnecessary obstacles” to int’l trade
▪ Provision thus envisages that some trade-restrictiveness may arise from a
technical regulation
● However, the technical regulation would not be inconsistent with
Art. 2.2 unless it is found to constitute an “unnecessary obstacle[]
to intl’l trade
o § 339:
▪ Discusses Mexico’s argument and how it is inconsistent with the 6th recital
of the preamble of TBT Agreement:
● According to the Sixth Recital, “what must not be applied in a
manner that would constitute a means of arbitrary or unjustifiable
discrimination between countries where the same conditions
prevail or a disguised restriction on int’l trade is a measure, and not
the objective pursued by the technical regulation”
● AB Rejected Mexico’s Argument
-EC – Seals (Appellate Body Report, 2014) p. 627
● Facts:
o EU seal Regime prohibited all seal products, whether they are made exclusively
of seal or contain seal as an input, but that it made an exception with regard to the
import and/or placing on the market of seal products in three situations:
▪ Namely when they result from certain hunts by indigenous communities
(IC),
▪ For marine resources management (MRM) purposes, OR
▪ In the case of travelers imports
● Case being discussed, the AB reversed the panel findings
o Panel’s findings are the two full paragraphs on the top of p. 627
● First sentence of Annex 1.1 refers to “product characteristics” or “their related process
and production methods
o EC – Asbestos meaning of “Product Characteristics:”

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▪ “Characteristics” of a product include “objectively definable ‘features’,

‘qualities’, ‘attributes’, or other ‘distinguishing mark’ or a product
● Such product characteristics might relate inter alia to “a product’s
composition, size, shape, colour, texture, hardness, tensile strength,
flammability, conductivity, density, or viscosity”
o Described these characteristics as “features and qualities
intrinsic to the product itself” adding that “product
characteristics” within the meaning of Annex 1.1 may also
include “related characteristics”
▪ A technical regulation may lay down “only one or a
few ‘product characteristics’
● Plain reading of Annex 1.1 thus suggests that a “related” PPM is one that is “connected”
or “has a relation” to the characteristics of a product
o The reference to “or their related processes and production methods” to indicate
that the subject matter of a technical regulation may consist of a process or
production method that is related to product characteristics
● § 5.13 and 5.14 explain the meaning of Annex 1.1 sentences 1 and 2
● Summary of Key Panel/AB Findings
o TBT Annex 1.1 (Technical Regulation):
▪ The Appellate Body reversed the Panel’s intermediate finding that the EU
Seal Regime lays down “product characteristics”, and consequently
reversed the Panel’s finding that the EU Seal Regime was a “technical
regulation” within the meaning of TBT Annex 1.1. The Appellate Body
was unable to complete the legal analysis and thus did not rule on whether
the EU Seal Regime lays down “related processes and production
methods” within the meaning of TBT Annex 1.1. The Appellate Body
therefore declared moot and of no legal effect the Panel’s conclusions
under TBT Arts. 2.1, 2.2, 5.1.2, and 5.2.1.
SUMMARY OF WHAT CONSTITUTES A TECHNICAL REGULATION:
● The TBT Agreement does not apply to SPS measures
● A technical regulation lays down mandatory product characteristics or their related
process and production methods
● To qualify as a technical regulation, a document must meet THREE Criteria:
o Apply to an identifiable product or group of products,
o Lay down the characteristics of the product, AND
o Compliance must be mandatory

C. National Treatment and MFN

-United States – Clove Cigarettes (AB Report, 2012) p. 633

▪ Clove and menthol are substitutable.
● For a violation of the national treatment obligation in Art. 2.1 to be established, 3
elements must be satisfied:
o (i) The measure at issue must be a technical regulation;
o (ii) The imported and domestic products at issue must be like products; AND

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o (iii) The treatment accorded to imported products must be less favourable than
that accorded to like domestic products
● TBT Art. 2.1 (No less favourable treatment):
o The Appellate Body upheld, although for different reasons, the Panel’s finding
that clove cigarettes imported from Indonesia and menthol cigarettes produced in
the United States were “like products” within the meaning of Art. 2.1.
o The Appellate Body disagreed with the Panel that the concept of “like products”
in Art. 2.1 should be interpreted based on the regulatory purpose of the technical
regulation at issue.
▪ Instead, the Appellate Body considered that the determination of whether
products are “like” within the meaning of Art. 2.1 is a determination about
the competitive relationship between the products, based on an analysis of
the traditional “likeness” criteria of physical characteristics, end use,
consumer tastes and habits, and tariff classification.
● i.e. young and potential young smokers perceive clove and
menthol cigarettes as sufficiently substitutable
o Are similar for purposes of starting to smoke
o The Appellate Body upheld, although for different reasons, the Panel’s finding
that, by banning clove cigarettes while exempting menthol cigarettes from the
ban, Section 907(a)(1)(A) accorded less favourable treatment to imported clove
cigarettes than it accorded to “like” domestic menthol cigarettes.
o The Appellate Body interpreted “treatment no less favourable” in Art. 2.1 as not
prohibiting a detrimental impact on imports when such impact stems exclusively
from a legitimate regulatory distinction.
o The Appellate Body found that the design, architecture, revealing structure,
operation and application of Section 907(a)(1)(A) strongly suggested that the
detrimental impact on competitive opportunities for clove cigarettes reflected
discrimination against the group of like products imported from Indonesia.
● § 175: “Accordingly, the context and object and purpose of the TBT Agreement weigh in
favour of reading the “treatment no less favourable” requirement of Article 2.1 as
prohibiting both de jure and de facto discrimination against imported products, while at
the same time permitting detrimental impact on competitive opportunities for imports that
stems exclusively from legitimate regulatory distinctions”
-US – Tuna II p. 639-641 Notes 3 & 4
● TBT Agreement 2.1 (National treatment – Technical Regulations):
o According to the Appellate Body, the measure at issue modified the competitive
conditions in the US market to the detriment of Mexican tuna products and the
United States did not demonstrate that this stemmed solely from “legitimate
regulatory distinctions”. The Appellate Body, therefore found that the US
“’dolphin-safe” labelling measure was inconsistent with Art. 2.1 and reversed the
Panel’s contrary finding.
● The Panel concluded:
o US labelling requirements for “dolphin-safe” tuna are technical regulations, but
“do not inherently discriminate on the basis of the origin of the products” and thus
comply with Art. 2.1

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-EC – Seals p. 641-642 Note 6

● GATT Art. I:1 (Most-Favored – Nation treatment):
o The Appellate Body upheld the Panel’s finding that the legal standard for the
non-discrimination obligations under TBT Art. 2.1 does not apply equally to
claims under GATT Art. I:1. The Appellate Body therefore upheld the Panel’s
finding that the EU Seal Regime was inconsistent with GATT Art. I:1 in respect
of the IC exception, as it did not “immediately and unconditionally” extend the
same market access advantage to Canadian and Norwegian seal products that it
accorded to seal products from Greenland.
● GATT Art. III:4 (National Treatment – Domestic Laws and Regulations:
o The Appellate Body upheld the Panel’s finding that the legal standard for the
non-discrimination obligations under TBT Art. 2.1 does not apply equally to
claims under GATT Art. III:4. The European Union did not appeal the Panel’s
finding that the EU Seal Regime was inconsistent with GATT Art. III:4 in respect
of the MRM exception, as it accorded less favorable treatment to imported
Canadian and Norwegian seal products than that accorded to like domestic
products.

D. Not More Trade Restrictive than Necessary

-US – Tuna II p. 642

● TBT Art. 2.2 (Not More Trade-Restrictive than Necessary):
o The Appellate Body disagreed with the Panel’s ruling that the measure at issue
was more trade-restrictive than necessary to fulfil US legitimate objectives, and
found instead that “the alternative measure proposed by Mexico [AIDCP ‘dolphin
safe’ labelling combined with the existing US standard] would contribute to both
the consumer information objective and the dolphin protection objective to a
lesser degree than the measure at issue”.
o The Appellate Body thus reversed the Panel’s finding that the measure was
inconsistent with Art. 2.2.
● Definition of Legitimate Objective in Art 2.2:
o An aim or target that is lawful, justifiable, or proper
o Use of the word inter alia in Art 2.2
▪ Suggests that the provision does not set out a closed list of legitimate
objectives, but rather lists several examples of legitimate examples
● Definition of Fulfil in the context of phrase “fulfil a legitimate objective”:
o Consider the question of whether a technical regulation “fulfils” an objective is
concerned with the degree of contribution that the technical regulation makes
toward the achievement of the legitimate objective
● Art 2.2 assessment of “necessity”
o Involves a relational analysis of the trade-restrictiveness of the technical
regulation,
o The degree of contribution that it makes to the achievement of a legitimate
objective, AND
o The risks non-fulfilment would create

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● Whether a technical regulation is “more trade-restrictive than necessary” within the

meaning of Art 2.2 involves an evaluation of a number of factors:
o (i) The degree of contribution made by the measure to the legitimate objective at
issue;
o (ii) The trade-restrictiveness of the measure; AND
o (ii) The nature of the risks at issue and the gravity of consequences that would
arise from non-fulfilment of the objective(s) pursued by the Member through the
measure
▪ A comparison of the challenged measure and possible alternative
measures should be undertaken
-Note 2 p. 647
● In no TBT case to date has the AB confirmed a violation of Art 2.2
-US – COOL Note 3 p. 647
● At issue were certain “Country of Origin Labeling” (COOL) requirements for meat
products entering the US especially from Mexico and Canada
● TBT Art 2.1 (National Treatment – Technical Regulations):
o The Appellate Body upheld, albeit for modified reasons, the Panel’s finding that
the COOL measure was inconsistent with Art. 2.1 because it accorded less
favourable treatment to imported livestock than to like domestic livestock.
o The Appellate Body concluded that the least costly way of complying with the
COOL measure was to rely exclusively on domestic livestock, creating an
incentive for US producers to use exclusively domestic livestock and thus causing
a detrimental impact on the competitive opportunities of imported livestock.
o The Appellate Body found further that the recordkeeping and verification
requirements imposed a disproportionate burden on upstream producers and
processors compared to origin information conveyed to consumers.
o This regulatory distinction drawn by the COOL measure was therefore not
legitimate within the meaning of Art. 2.1.

● TBT Art 2.2 (Not More Trade-Restrictive than Necessary):

o The Appellate Body reversed the Panel’s finding that the COOL measure violated
Art. 2.2 because it did not fulfil the objective of providing consumer information
on origin.
o The Appellate Body found that Art. 2.2 does not impose a minimum threshold
level at which the measure must fulfil its legitimate objective; rather, it is the
degree of the fulfilment that needs to be assessed against any reasonably available
less trade-restrictive alternative measures.
o The Appellate Body was however unable to complete the Panel’s analysis in order
to determine whether the COOL measure was more trade restrictive than
necessary to fulfil its legitimate objective.

E. International Standards

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-Annex 1 provides that in the absence of a specific definition in Annex 1, the term “international
standard” should be understood to have the same meaning in the TBT Agreement as in the
ISO/IEC Guide 2:
● A standard that is adopted by an international standardizing/standards organization and
made available to the public
-When a member is in the process of setting a technical regulation that is not in accordance with
int’l standards, the member must notify other members, through the WTO Secretariat, of the
products to be covered
● Must also provide the objective and rationale for the proposed regulation (Art. 2.9.2)
o Transparency requirement is useful to prevent abuse of the TBT agreement
▪ Because it will be more transparent to other members when a sham
justification is advanced AND
▪ Because this notification limits the range of justifications that can be
advanced before a panel if the measure is challenged (if not de jure, then
at least on the facts adding justifications ex post is made more difficult)
o Allows for other members to comment and influence technical regulations before
they are finalized
● Members must also allow a “reasonable interval” between publication and entry into
force of a measure “in order to allow time for producers . . . particularly in developing
country Members, to adapt their products or methods of production” (Art. 2.12)
● US – Clove Cigarettes p. 649
o TBT Art. 2.12, and Doha Ministerial Decision on Implementation-Related Issues
and Concerns, para. 5.2 (reasonable interval between publication of technical
regulations and their entry into force):
▪ The Appellate Body upheld, although for different reasons, the Panel’s
finding that, by failing to allow an interval of not less than six months
between the publication and the entry into force of Section 907(a)(1)(A),
the United States acted inconsistently with Art. 2.12.
▪ The Appellate Body upheld the Panel’s finding that para. 5.2 constitutes a
“subsequent agreement between the parties” within the meaning of Art.
31(3)(a) of the VCLT, on the interpretation of the term “reasonable
interval” in Art. 2.12.
▪ Moreover, the Appellate Body found that “reasonable interval” should
normally be interpreted to mean at least six months.
-US – Tuna II p. 649
● TBT Art. 2.4 (International Standard):
o The Appellate Body modified the Panel’s conclusion and ruled that the AIDCP
“dolphin-safe” definition and certification did not constitute a “relevant
international standard” within the meaning of Art. 2.4, since “the AIDCP is not
open to the relevant bodies of at least all Members and thus not an ‘international
standardizing body’ for purposes of the TBT Agreement”.
o It nonetheless upheld the Panel’s ultimate finding that the measure did not violate
Art. 2.4.
● Annex 1.2 defines Standard as follows:

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o Document approved by a recognized body, that provides, for common and

repeated use, rules, guidelines or characteristics for products or related processes
and production methods, with which compliance is not mandatory. It may also
include or deal exclusively with terminology, symbols, packaging, marking or
labelling requirements as they apply to a product, process or production method
▪ Look at explanatory notes in agreement
● Annex 1.4 defines “international body or system” as follows:
o Body or system whose membership is open to the relevant bodies of at least all
Members
● Introductory clause of Annex 1 stipulates: “for the purpose of this Agreement, however,
the following definitions shall apply” p. 651 § 354
o The word “however” indicates that the definitions contained in Annex 1 prevail to
the extent that they depart from the definitions set out in the ISO/IEC Guide 2:
1991
▪ A panel must therefore carefully scrutinize to what extent the definitions
in Annex 1 depart from the definitions in the ISO/IEC Guide 2: 1991

Wed, Nov 6

Chapter 20 – Trade in Services

▪ The General Agreement on Trade in Services (GATS) is a treaty of the World Trade
Organization (WTO) that entered into force in January 1995 as a result of the Uruguay
Round negotiations. The treaty was created to extend the multilateral trading system to
service sector.
▪ All members of the WTO are parties to the GATS. The basic WTO principle of most
favored nation (MFN) applies to GATS as well. However, upon accession, members may
introduce temporary exemptions to this rule.

Services Sectors
12 the sectors covered by the GATS, which are also subdivided.
▪ Business
▪ Communication
▪ Construction and Engineering
▪ Distribution
▪ Education
▪ Environment
▪ Financial
▪ Health
▪ Tourism and Travel
▪ Recreation
▪ Cultural,
▪ Sporting
▪ Transport
▪ Other

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Mode Criteria Supplier Presence

Service delivered within the territory of the
Member, from the territory of another Member
Ex. Software services supplied through mail or
1: Cross-border electronic means to consumers in another
supply country.
Ex. A user in Canada receives services from the
Service supplier
US through its telecommunications or postal
NOT present
infrastructure.
within the territory
Service delivered outside the territory of the
of the member
Member, in the territory of another Member, to
a service consumer of the Member.
2: Consumption
Ex. Tourism, ship repair abroad.
abroad
Ex. Canadian nationals have moved abroad as
tourists, students, or patients to consume the
respective services.
Service delivered within the territory of the
Member, through the commercial presence of
the supplier.
3: Commercial Ex. The service is provided within Canada by a
presence locally-established affiliate, subsidiary, or
representative office of a
foreign-owned-and-controlled company. Ex.
Service supplier
Holiday Inn, Chase Bank, insurance companies.
present within the
Service delivered within the territory of the
territory of the
Member, with supplier present as a natural
Member
person.
Ex. Doctors of one country supplying through
4: Presence of a
his physical presence, services in another
natural person
country, or the foreign employees of a foreign
bank.
Ex. A foreign national provides a service within
Canada as an independent supplier.

Required under GATS

▪ Equal treatment of other Member States (Art. II)
o MFN
▪ Transparency (Art. III)
o Publishing the kinds of things states need.

Exceptions (Article XIV)

a. Subject to the requirement that such measures are not applied in a manner which would
constitute a means of arbitrary or unjustifiable discrimination between countries where
like conditions prevail, or a disguised restriction on trade in services, nothing in this

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Agreement shall be construed to prevent the adoption or enforcement by any Member of

measures:
a. necessary to protect public morals or to maintain public order
b. necessary to protect human, animal or plant life or health;
c. necessary to secure compliance with laws or regulations which are not
inconsistent with the provisions of this Agreement including those relating to:
i. the prevention of deceptive and fraudulent practices or to deal with the
effects of a default on services contracts;
ii. the protection of the privacy of individuals in relation to the processing
and dissemination of personal data and the protection of confidentiality of
individual records and accounts
iii. safety
d. inconsistent with Article XVII, provided that the difference in treatment is aimed
at ensuring the equitable or effective6 imposition or collection of direct taxes in
respect of services or service suppliers of other Members;
e. inconsistent with Article II, provided that the difference in treatment is the result
fan agreement on the avoidance of double taxation or provisions on the avoidance
of double taxation in any other international agreement or arrangement by which
the Member is bound

Biggest issue is Market Access (Article XVI), limitations on letting foreign service providers into
your country. Examples:
a. Numerical restriction on total number of service providers
b. Total value of business assets employees
c. Number of operations, transactions, customers served.
d. measures which restrict or require specific types of legal entity or joint venture through
which a service supplier may supply a service;
e. limitations on the participation of foreign capital in terms of maximum percentage limit
on foreign shareholding or the total value of individual or aggregate foreign investment.

Limitation on market access is supreme

Market access commitments generally override national treatment commitments. Also the
analysis generally does not include tariffs.

United States – Gambling (Pg 677) (Interpretation)

▪ Facts
o Antigua brought claim that U.S. measure of “total prohibition” on cross-border
supplying of gambling and betting services was contrary to the GATS.

▪ Issues
o (1) Whether the US had made any “specific commitments” in its GATS schedule
to liberalize trade in gambling services?
o (2) If yes, whether the US ban on internet gambling amounted to a prohibited
“market access” restriction as defined in GATS Article XVI.

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o (3) If also yes, whether an exceptions in GATS Article XIV (public morals)
excused the U.S. restriction

▪ Summary of Findings
o The Appellate Body upheld, based on modified reasoning, the Panel’s finding that
the US GATS Schedule included specific commitments on gambling and betting
services. Resorting to “document W/120” and the “1993 Scheduling Guidelines”3
as “supplementary means of interpretation” under Art. 32 of the VCLT, rather
than context (Art. 31), the Appellate Body concluded that the entry, “other
recreational services (except sporting)”, in the US Schedule must be interpreted as
including “gambling and betting services” within its scope.
o Although justified to protect “public morals”, the ban did not meet the chapeau
because it was “applied in a manner which constitutes a means of arbitrary or
unjustifiable discrimination between countries.”
▪ US permitted online gambling on horse races from within the US but
prohibited the same type of gambling services which supplied from
outside the United States (e.g. from Antigua).

China – Audiovisuals Case (GATT or GATS?)

▪ Distinction between a good and service, via DVDs.
▪ AB interpreted services commitments in a technologically neutral way, but limited goods
commitments (old style DVD’s and over Internet) and the right to import goods to
restrictions affecting material or tangible products (thereby excluding films traded
intangibly over the Internet.
▪ China’s Accession Protocol (China’s trading rights commitments): The Panel found that
provisions in China’s measures that either limit to wholly State-owned enterprises
importation rights regarding, or prohibit foreign-invested enterprises in China from
importing, reading materials, AVHE products, sound recordings, and films, were
inconsistent with China’s obligation, under paras. 1.2 and 5.1 of China’s Accession
Protocol and paras. 83(d) and 84(a) of China’s Accession Working Party Report, to grant
the right to trade. The Panel also concluded that several provisions of the Chinese
measures at issue breached China’s obligation, under para. 1.2 of China’s Accession
Protocol and para. 84(b) of China’s Accession Working Party Report, to grant in a
non-discretionary manner the right to trade. Certain of these findings, relating to films for
theatrical release and unfinished audiovisual products, were appealed. The Appellate
Body upheld the Panel’s findings that the relevant provisions of the measures were
subject to, and inconsistent with, China’s trading rights commitments under its Accession
Protocol and Working Party Report

China – Electronic Payment Services

▪ Panel held that unbound commitment prevailed.
▪ China’s measures forced foreign suppliers to use CUP network, so all payments and
transactions were in foreign currency.
▪ Panel found that Chinese measures restricted market access of, and discriminated against,
foreign suppliers of “electronic payment services”

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o Violated specific commitments China made under GATS Articles XVI and XVII
▪ Panel found that Article XVI market access qualifications prevail over Article XVII
national treatment commitments.

Summary of GATS
▪ Members’ commitments to liberalize trade in services are set out in the GATS itself,
annexes thereto and, especially, number-specific schedules.
▪ To analyze a fact pattern under GATS, first identify the services “sector” then check
whether there is “trade in services” according to any of the four modes of supply
o Cross-border supply
o Consumption abroad
o Commercial presence
o Movement of natural persons
▪ Negative List approach – MFN applies across the board (unless a member explicitly
carved out a sector or measure)
▪ Positive List approach – Members cannot impose “market access” restrictions of the type
listed in GATS Article XVI nor discriminate in violation of national treatment (Article
XVII) but only in those sectors where a member made a specific commitment.
▪ Even where a member made commitments, a measure can be justified for legitimate
policy reasons (GATS Article XVI). Members can also renegotiate their specific
commitments subject to compensation (GATS Article XXI).

Difference between Goods and Services

Goods Services
▪ Tangible ▪ Intangible
▪ Ownership transferable ▪ Ownership not transferable
▪ Returnable ▪ Not returnable
▪ Storable ▪ Not storable
▪ Production and consumption separated ▪ Production/consumption simultaneous
by time

Wednesday, Nov 13

Copyright
▪ Applies to: every production in the literary, scientific, and artistic domain, whatever may
be the mode or form of its expression
▪ Examples: Books, Articles, Songs, Films, Computer Programs
▪ Gives holder exclusive right to:
o Reproduce the work
o Prepare the derivative works
o Distribute copies of the work by sale, lease, or other transfer of ownership
o Perform the work publicly
o Display the work publicly

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Trademark
▪ Applies to: Any sign, or any combination of signs capable of distinguishing the goods or
services of one undertaking from those of other undertakings, shall be abalb 3eof
constituting a trademark.
Holder has the right to prevent all third parties from
Using in the cours oe

Patents
▪ Applies to: any inventions, whether products or processes, in all fields of technology,
provided that they are new, involve an inventive step and are capable of industrial
application

What does TRIPS Agreement do?

▪ Positive as opposed to negative rights
▪ Protects not liberalizes
o Rather than limiting amount of protection a State can provide; sets a floor as to
what they must do while permitting States to go beyond:
▪ Attempts to loosely harmonize laws – similar to TBT
o Give lots of autonomy to States to set own IP regimes, as long as they have one
that meets minimum standards and treats foreign products equally (US – Havana
Club)
o Does not require mutual recognition (US – Havana Club)
▪ Integrates prior agreements

TRIPS structure
▪ Multi-part agreement
▪ Part I – Basic principles
o Art. 7 Objectives
o Art. 3 National Treatment
o Art. 4 MFN
o Art. 8 Principles

Part II: 1 Copyright

▪ Article 9 & 10 – eligible products including computer programs
▪ Article 12 – Term of protection – States must protect copyrights for at least 50 years
▪ Article 13 – Limitations and Exceptions
o Only special cases
o Can’t conflict with a normal exploitation of the work
o Can’t unreasonably prejudice the legitimate interest of the right holder.

Part II: 2 Trademark

▪ Article 15 – What is covered
o Need to make distinguishable marks trademarkable
o Nature of goods or services doesn’t matter

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▪ Article 16 – Rights to be provided

▪ Article 17 – Exceptions
o Must take account of the legitimate interests of the owner of the trademark and of
third parties
▪ Article 18 – Term no less than 7 years
▪ Article 19 & 20 – Requirements of Use
o Cancellation for non-use must be no shorter than 3 years
o No unjustifiable encumbrances.

Part II: 5 Patents

▪ Article 27 – What does a State have to grant patents to?
o Products and processes
o Can exclude plants, medical methods, inventions to protect morality, humans,
animals, environments.
▪ Article 28 – What rights must be conferred
▪ Article 30 – Limited Exceptions cannot
o Unreasonable conflict with a normal exploitation of the patent
o Unreasonable prejudice the legitimate interests of the patent owner
o Not consider the legitimate interest of third parties
▪ Article 33 – term must be at least 30 years.

Chapter 21 – Trade-Related Aspects of Intellectual Property Rights (TRIPS)

▪ Intellectual property is the most controversial topic so far. Ex. Patent protection and
access to essential medicines in developing countries.
▪ Intellectual property rights (IPRS) are legal and institutional devices to protect creation of
inventions, works of art and literature, and designs.

Summary of the TRIPS Agreement (Pg 714)

▪ The TRIPS Agreement covers copyright, trademarks, and patents. It uses both existing
international conventions and “plus elements” to achieve the level of protection sought by
the member countries
▪ Disputes between members under the TRIPS agreement are to be resolved using the
WTO’s dispute settlement system.
▪ The TRIPS Agreement sets out a minimum level of intellectual property protection, but
member countries are free to implement more extensive protection and determine the
most appropriate method of giving effect to its provisions
▪ Copyright – protection covers expressions (rather than ideas, procedures, etc.) for a
minimum prescribed term.
▪ Trademarks – relating to goods and services are protected; signs that count as a
trademark and the rights conferred by a trademark are defined. The minimum term of
registration and renewal is defined. TRIPS members may determine conditions for
licensing and assignment of trademarks, with certain qualifications.
▪ Geographical indications – are regulated, as TRIPS seeks to prevent use of geographical
indications

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a. In a way that would mislead the public as to the geographical origin of the good
b. And, in a way that is an act of unfair competition. Greater protection is provided
for wine and spirits.
▪ New or original industrial designs are protected, and the requirements for securing
textile protection must not unreasonably impair the opportunity to obtain such protection.
▪ Patents are to be available for any inventions, whether product or process, in any field of
technology. Patent rights must be for at least 20 years.
▪ Enforcement: Injunctions and damages against IP rights infringers must be authorized,
and criminal sanctions, must be available in certain circumstances. Enforcement
procedures must be “fair and equitable” including rights of access to civil judicial
procedures, representation by independent legal counsel, presentation of evidence,
discovery, decisions on the merits, and judicial review.

Core objectives of TRIPS

▪ Expand minimum IP standards to a broader universe of markets to include, in particular,
emerging economies;
▪ Add to existing WIPO conventions by strengthening the domestic enforcement of IP
rights; and
▪ Facilitate the international settlement of IP disputes in the face of moribund WIPO
mechanisms that, in practice, were or could not be relied on.

TRIPS require member states to provide strong protection for intellectual property rights. For
example, under TRIPS:
▪ Copyright terms must extend at least 50 years, unless based on the life of the author. (Art.
12 and 14)
▪ Copyright must be granted automatically, and not based upon any “formality,” such as
registrations, as specified in the Berne Convention. (Art. 9)
▪ Computer programs must be regarded as “literary works” under copyright law and
receive the same terms of protection.
▪ National exceptions to copyright (such as “fair use” in the United States) are constrained
by the Berne three-step test
▪ Patents must be granted for “inventions” in all “fields of technology” provided they meet
all other patentability requirements (although exceptions for certain public interests are
allowed (Art. 27.2 and 27.3) and must be enforceable for at least 20 years (Art 33).
▪ Exceptions to exclusive rights must be limited, provided that a normal exploitation of the
work (Art. 13) and normal exploitation of the patent (Art 30) is not in conflict.
▪ No unreasonable prejudice to the legitimate interests of the right holders of computer
programs and patents is allowed.
▪ Legitimate interests of third parties have to be considered by patent rights (Art 30).
▪ In each state, intellectual property laws may not offer any benefits to local citizens which
are not available to citizens of other TRIPS signatories under the principle of national
treatment (with certain limited exceptions, Art. 3 and 5). TRIPS also has a most favored
nation clause.

Indonesia – Autos (1998)

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▪ Court rejected trademark-related claims under TRIPS, but was centered on discrimination
under GATT and TRIMS in connection with tax and customs benefits enjoyed by certain
car producers within Indonesia.

India – Patents (1998)

▪ Court faulted India for not having certain minimum protection systems in place (mailbox
and exclusive marketing rights) before TRIPS entered into force for India, in violation of
TRIPS Articles 70(8) and (9)

Canada – Patents (2000)

▪ Canada was found to violate TRIPS Article 33 by not providing 20 years of patent
protection from the dating of filing for patents issued before 1989 but still running after
1996, the date of entry into force of TRIPS for Canada.
o The AB strictly confirmed that 17 years of protection from the date of issuance of
the patent is not good enough.

United States – Havana Club (2002)

▪ AB concluded that “extra hurdles” imposed by the US on rum trademarks and trade
names held by certain Cuban and other foreign nationals were discriminatory under
TRIPS
▪ AB also held that TRIPS also covers trade names
▪ TRIPS impose only very minimal harmonization in the field of trademarks. WTO
members have the right to determine the conditions for the filing and registration of
trademarks by domestic legislation except as regards the form of the trademark.
▪ Thus, US violations concerned traditional trade-related discrimination; not minimum
standards of IP protection or enforcement.

EC – Trademarks and Geographical Indications (2005) (Pg 716)

▪ The panel found that special EC conditions and procedures for Geographical Indications
(Gis) outside the territory of the EC were discriminatory under both GATT and TRIPS.
o Article 6(1) of the Paris Convention provides “The conditions for the filing and
registration of trademarks shall be determined in each country of the [EU] by its
domestic legislation.

Substantive IP Law
Canada – Pharmaceutical Patents (2000) (Exceptions)
Issue
▪ Whether the 20-year patent term should be “shortened” by limited exceptions to allow for
early preparation and screening of generics to comply with the increasingly burdensome
regulatory approval procedures for pharmaceutical products and whether or not such
“regulatory review” or “Bolar” exemption should be compensated with patent protection
that runs beyond 20 years?

Complaint

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▪ EC challenged exceptions under Canada’s patent law allowing for the use and production
of patented inventions by, for example, generic drug producers, before the end of the 20
years patent term to carry out experiments and tests so as to meet Canadian regulatory
requirements (regulatory review/Bolar exemption) or to manufacture and store products
for sale after the 20 years patent term eventually expires (the stockpiling provision)

Holding
▪ The panel excused the “regulatory review provision” under TRIPS Article 30, but
concluded that the “stockpiling provision” does not meet the three-step test exception of
Article 30 and violates TRIPS Article 27.
o Yes, you can manufacture drugs for the review process of generic drugs (3-5
years) before the 20-year patent is up.
▪ Panel held it was justified under Art. 30 by meeting all three cumulative
criteria: the exceptional measure (i) must be limited; (ii) must not
“unreasonably conflict with normal exploitation of the patent”; and (iii)
must not “unreasonably prejudice the legitimate interests of the patent
owner”, taking account of the legitimate interests of third parties.
▪ Manufacturer’s interest to saying no? Getting back the lost regulatory time
beyond 20 years. Not consistent with public policy
o No, you cannot manufacture and stockpile generic drugs six months before the
20-year patent is up. Strictly interpreted.
▪ Unfair entry into the market

United States – Copyright (2000) (Exceptions)

Complaint
▪ EC challenged exceptions under US copyright law permitting, under certain conditions,
the playing of radio and television music in public places without the paying of a royalty
under either the “homestyle exemption” or the much broader “business exemption”

Holding
▪ The panel excused the “homestyle exemption” under TRIPS Article 13 but concluded
that the “business exemption” does not meet the three-step test exception of Article 13
and violates TRIPS Article 9.
o “Homestyle exemption”: The Panel found that the homestyle exemption met the
requirements of Art. 13, and, thus, was consistent with Berne Convention Art.
11bis(1)(iii) and 11(1)(ii) as incorporated into the TRIPS Agreement (Art. 9.1): (i)
the exemption was confined to “certain special cases” as it was well-defined and
limited in its scope and reach (13-18 per cent of establishments covered); (ii) the
exemption did not conflict with a normal exploitation of the work, as there was
little or no direct licensing by individual right holders for “dramatic” musical
works (i.e. the only type of material covered by the homestyle exemption); and
(iii) the exemption did not cause unreasonable prejudice to the legitimate interests
of the right holders in light of its narrow scope and there was no evidence
showing that the right holders, if given opportunities, would exercise their
licensing rights.

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▪ Case was one between rights holders (composers) and users (bars and restaurants)
irrespective of their national location.
o “Business exemption”: The Panel found that the “business exemption” did not
meet the requirements of Art. 13: (i) the exemption did not qualify as a “certain
special case” under Art. 13, as its scope in respect of potential users covered
“restaurants” (70 per cent of eating and drinking establishments and 45 per cent of
retail establishments), which is one of the main types of establishments intended
to be covered by Art. 11bis(1)(iii); (ii) second, the exemption “conflicts with a
normal exploitation of the work” as the exemption deprived the right holders of
musical works of compensation, as appropriate, for the use of their work from
broadcasts of radio and television; and (iii) in light of statistics demonstrating that
45 to 73 per cent of the relevant establishments fell within the business
exemption, the United States failed to show that the business exemption did not
unreasonably prejudice the legitimate interests of the right holder. Thus, the
business exemption was found inconsistent with Berne Convention Art.
11bis(1)(iii) and 11(1)(ii).

China – IP Rights (2009)

United States filed WTO complaint against:
▪ (1) China’s denial of copyright to works that had not passed China’s censorship or
content review system
o Panel upheld the claim, which left China’s censorship system untouched, but
found that such systems offers no excuse to deny copyright in particular to
materials that have failed content review.
o Held that TRIPS rules on copyright do not prevent censorships. Governments
have broad right to control circulation.

▪ (2) China’s methods of disposal of goods confiscated by customs authorities for IP

infringement including donations to social welfare bodies, buy-back by the right holder,
and auction.
o Panel partially upheld in so far as China allows for the auctioning off of
confiscated goods after “the simple removal of the trademark “unlawfully
affixed” in violated of TRIPS Article 59.

▪ (3) China’s imposition of volume and value “thresholds” before criminal procedures and
penalties are triggered against willful trademark counterfeiting or copyright piracy.
o Panel rejected this claim on the ground that the US had not demonstrated that the
thresholds allow for counterfeiting or piracy “on a commercial scale” as required
in TRIPS Article 61.

Summary of the TRIPS Agreement and Essential Medicines (Pg 735)

▪ Traditional incentives under intellectual property regimes may fail to adequately
encourage the development of “essential medicines” in a manner that ensures access to
those who need but cannot pay for them.

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▪ TRIPS Articles 30 & 31, along with the 2001 Doha Declaration and the 2003 waiver,
provide mechanisms by which extremely poor countries might use compulsory licenses
to obtain medicines to address public health crises

Rwanda 2003 waiver for “Essential Medicines.” (Pg 723)

▪ Rwanda was the first country to inform the WTO that it would be using 2003 waiver
designed to ease the way for countries with public health problems to import cheaper
generics made under compulsory licensing elsewhere when they are unable to
manufacture the medicines themselves.
▪ Canada responded that it had authorized a company to make a generic version of a
patented medicine for export under the 2003 waiver decision.

Hypo Pg 658 (Warning packages on cigarette labels)

▪ TRIPS
o Violates Article 16, consumers can’t distinguish be products if they all look the
same.
o Violates Article 15, failure to extend recognition to trademarks.
o Article 20, special requirement that encumbers companies’ ability to use
trademark
▪ TBT
o Is it’s a technical regulation? Yes, similar to the US Tuna case
o It its more restrictive than necessary?
1. Does it legitimate purpose? Yes, human health and safety
2. Is it trade restrictive? Yes, aimed at limiting smoking
3. More than necessary? Yes, you can have both the warning labels and the
trademarks on the product.

Exceptions specific to medicines

Wed, Nov 20

Chapter 22 – The WTO & Developing Countries

▪ The WTO treaty pays special attentions to the situation of developing economics.

Developing vs. developed countries (2006)

▪ Based on gross national income (GNI) per capita
▪ Low income - $1,045 or less
▪ Lower middle income - $1,045 to $4,125
▪ Upper middle income - $4125 to $12,736
▪ High income - $12,736 or more

Summary of Issues Regarding Development and Developing Countries (Pg 768)

Provisions designed specifically for developing countries include:
1. Provisions aimed at increasing trade opportunities through market access
▪ Generalized System of Preferences (GSP)

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2. Provisions requiring WTO Members to safeguard the interest of developing countries

▪ Anti-dumping Agreement
▪ Article 12 of the TBT Agreement
3. Provisions allowing flexibility to developing countries in rules and disciplines governing
trade measures
▪ Article XVIII allowing for limited trade restrictions to promote infant industries
▪ Section A – para 7, a,b, provides that a developing country may modify or
withdraw concessions in an effort to promote a particular industry.
Appropriate compensation may be arrived at through negotiations or, if
those fail, by referring the matter of the General Council
▪ Section B
▪ Section C – Permits developing countries to subsidize domestic industries
with consent of the GC.
▪ Article 27:2(a) of the Subsidies Agreement allows countries with GNI under
$1,000 to be exempted from the prohibition on export subsidies.
4. Provisions allowing longer transitional periods to developing countries
▪ Article 65: 2 of TRIPS gave developing countries 5 years to comply with most
obligations set out in TRIPS Agreement.
▪ Article 27.3 ensured that the prohibition on subsidies contingent on the use of
domestic products did not apply for developing countries for the first five years of
the WTO treaty (i.e until 2000)
5. Provisions for technical assistance
▪ Article 27.2 of the DSU offers developing countries limited technical assistance
through the WTO Secretariat.
6. Provisions relating to the poorest of the poor – least-developed countries
▪ LDE Services Waiver – limited to market access measures under GATS Article
XVI and must be granted to all LDC members. Ex. Tourism, transportation, and
business.

EC – Tariff Preferences (2004) (Pg 753)

Measure at issue
▪ European Communities’ generalized tariff preferences (“GSP”) scheme for developing
countries and economies in transition. In particular, special arrangement under the
scheme to combat drug production and trafficking (the “Drug Arrangements”), the
benefits of which apply only to the listed 12 countries experiencing a certain gravity of
drug problems.
Product at issue
▪ Products imported from India vs products imported from the 12 countries benefiting from
the Drug Arrangements under the EC GSP scheme.

Summary of Key Panel/AB Findings

▪ GATT Art. I:1 (most-favored-nation treatment):The Panel found that the tariff advantages
under the Drug Arrangements were inconsistent with Art. I:1, as the tariff advantages
were accorded only to the products originating in the 12 beneficiary countries, and not to
the like products originating in all other Members, including those originating in India.

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▪ Developed countries providing specific tariff exceptions to certain countries.

o Court held that you don’t have to provide exception to ALL developing countries,
just similarly situated countries.
o Issue: There was a closed list: Didn’t give similarly situated countries the
opportunity to get on the list.

▪ Enabling Clause, para. 2(a): The Appellate Body agreed with the Panel that the
Enabling Clause is an “exception” to GATT Art. I:1, and concluded that the Drug
Arrangements were not justified under para. 2(a) of the Enabling Clause, as the measure,
inter alia, did not set out any objective criteria, that, if met, would allow for other
developing countries “that are similarly affected by the drug problem” to be included as
beneficiaries under the measure. In this regard, although upholding the Panel’s
conclusion, the Appellate Body disagreed with the Panel’s reasoning and found that not
every difference in tariff treatment of GSP beneficiaries necessarily constituted
discriminatory treatment. Granting different tariff preferences to products originating in
different GSP beneficiaries is allowed under the term ‘non-discriminatory’ in footnote 3
to para. 2, provided that the relevant tariff preferences respond positively to a particular
“development, financial or trade need” and are made available on the basis of an
objective standard to “all beneficiaries that share that need”.

Other Issues
▪ Burden of proof (Enabling Clause): The Appellate Body noted that, as a general rule,
the burden of proof for an “exception” falls on the respondent. Given “the vital role
played by the Enabling Clause in the WTO system as means of stimulating economic
growth and development”, however, when a measure taken pursuant to the Enabling
Clause is challenged, a complaining party must allege more than mere inconsistency
with Art. I:1 and must identify specific provisions of the Enabling Clause with which
the scheme is allegedly inconsistent so as to define the parameters within which the
responding party must make its defense under the requirements of the Enabling
Clause. The Appellate Body found that India in this case sufficiently raised para. 2(a)
of the Enabling Clause in making its claim of inconsistency with GATT Art. I:1.

Statistics on WTO Disputes

Who is party?
▪ Most frequent complaining party in WTO disputes; U.S;.
▪ Most frequent defending part in WTO disputes U.S.

Who wins?
▪ Nobody, approximately 60% of complaints settle
▪ Complaint is lucky to have friend

Chapter 3
▪ Trade Agreements are increasingly difficult because of Congress refusing to ratify
treaties.

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▪ Led to Senate Finance Committee passing fast track agreement via Trade Act of 1974
o Different from normal treaty, Congress can’t make amendments. Take it or leave
it. No changing wording after agreement is made. Good for negotiations.

Trump reading
Trump likes bilateral over multilateral agreement
Trump doesn’t like how WTO is restricting US anti-dumping and anti-subsidy measures
Trump likes pressuring countries into voluntary export restraints, notably over steel.
China is the bad guy, and countries taking advantage of the system

Wednesday, Dec 4

Safeguards measures
▪ When? When there is a surge of products that could threaten domestic products.

Three part test to safefguards

▪ Surge in imports (dramatic, sharp, sudden)
o 500% increase says Europe
o Argentina imports, gradual trend over 5 years wasn’t enough.

▪ Serious injury?
o 25 makers of U.S. solar cells. In 2015 only two companies left, one going into
bankruptcy. Clearly:
▪ Loss of productivity
▪ Loss of employment
▪ Loss of profits
▪ Foreseeability?

▪ Causation Test (from Argentina-Footwear)

o Whether an upward trend in imports coincides with downward trends in the injury
factors, and if not, whether a reasoned explanation is provided as to why
nevertheless the data show causation
o Whether the conditions of competition in the Argentine footwear market between
imported and domestic footwear as analyzed demonstrate, on the basis of
objective evidence, a casual link of the imported to any injury; and
o Whether the other relevant factors have been analyzed and whether its established
that injury caused by factors other than imports has not been attributed to imports.
▪ US has to provide compensation for affected goods that are not being
dumped.
▪ US – Lamb (Safeguards, Domestic Industry) (Pg 566) Not “like products”
meat packers are not the same as lamb growers. Didn’t justify safeguards.

▪ Causation
o 2010-2015

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o Steel example: Actual foreign practices? vs. US steel industry just sucks and
aren’t innovative, its their fault.

▪ Tariff rate quotas are not quantitative restrictions, 1.2 million washers allowed at 20%
tariff, anything passed that would be 50%.
▪ If it was a quantitative restriction, it would be okay as a safeguard.

Section 232 measures

▪ 10% ad valorum tariffs on aluminum, 25% on steel, and automotive parts.
▪ Argentina, Austria, Brazil Korea, exempted.
▪ Article 1 (MFN) issue. Countries who are not exempted are being disadvantaged
▪ Article 2 – Schedule of concessions
▪ Article 21 exception –protect national security, we need steel to make defense
o Counterargument: Trump didn’t go through proper procedures
o 21(b) country has a right to take any action is deems necessary. WTO can’t
o determine whether US has violated GATT, US has statutory discretion.
o Auto-parts are must harder to justify.
▪ China tires case: Currently, 10% of Chinese imports are subject to antidumping, 7% to
countervailing. 2013 ruling found in favor for China on some measures, government was
not subsidizing tires. U.S. was supposed to lift tariffs never did, 15 months later China
was authorized for countermeasures, $7 billion vs $1 billion. WTO held that $6.3 billion
was actual justified amount.
▪ Currently related to TRIPS, US accusing China of not allowing companies to protect their
IPs. Forcing US companies to enter into joint ventures with Chinese companies, hand
over IP, and still retaining IP after jv has ended
o US Retaliatory tariffs in response, 25% 10% in response
o Article I:1 of the GATT 1994, because it fails to extend to products of the United
States an advantage, favor, privilege or immunity granted by China with respect
to customs duties and charges of any kind imposed on or in connection with the
importation of products originating in the territory of other Members; and
o Article II:1(a) and (b) of the GATT 1994 because it accords less favorable
treatment to products originating in the United States than that provided for in
China's schedule of concessions.
▪ US response has good evidence that US is in violation of TRIPS. Does this trigger the
right to countervailing, anti-dumping duties? Is theft of intellectual property considered a
subsidy?
▪ 3 unilateral remedies are allowed under TRIPS without waiting for the dispute settlement
process
o Injunctions
o Compensation Damages
o Suspension of rights and obligations under TRIPS as a result of commercial
disputes before the WTO.
▪ Russia-Turkey measures
o Russia forbid its citizens from visiting Turkey in 2017. Political pressure

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o Was this a violation of GATS? Restricting Turkish resort services for Russian
oligarchs?
o We don’t know, Russia got what it wanted from Turkey, because Turkey is Putin’s
weak ass bitch.
▪ US-Africa market access provisions
o Rwanda fucked up and was restricting trade. U.S. didn’t like that, took measures.
US won cuz murica.

▪ Does Appellate Body suck?

o US doesn’t want to be part of their proceedings, ignore them
o What to do? Not show up, China wins automatically in WTO…
o System will fall apart
o Principles of the WTO still remain tho.

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