Course on WTO Law and Jurisprudence Part III: WTO Dispute Settlement Procedures. Which legal instruments can be invoked in a WTO dispute?
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1 Course on WTO Law and Jurisprudence Part III: WTO Dispute Settlement Procedures Which legal instruments can be invoked in a WTO dispute? Session 5 2 November 2017
2 AGENDA a) What instruments can be invoked as the basis for a challenge or a defence in WTO dispute settlement? Covered agreements o 13 multilateral agreements on goods (including pre-wto decisions incorporated into GATT 1994), GATS, TRIPS, DSU, and plurilateral trade agreements o Amendments Accession Protocols to the WTO Agreement and Accession Working Party Reports Waivers
3 AGENDA b) What other instruments could be relevant in WTO dispute settlement? Ministerial declarations Ministerial decisions Decisions of other WTO bodies Authoritative interpretations under Article IX:2 of the WTO Agreement Pre-WTO decisions not incorporated into the GATT 1994 Non-WTO instruments
4 (a) What instruments can be invoked as the basis for a challenge or a defence in WTO dispute settlement?
5 Covered Agreements
6 COVERED AGREEMENTS 13 agreements on trade in goods: GATT 1994, SPS Agreement, TBT Agreement, Anti-dumping Agreement, TFA, etc. GATS (services) TRIPS (intellectual property) Plurilateral agreements (e.g. government procurement)
7 GATT 1994 INCLUDES: OTHER DECISIONS OF THE PARTIES TO GATT 1947 GATT The General Agreement on Tariffs and Trade 1994 ("GATT 1994") shall consist of: GATT 1947 (a) the provisions of the General Agreements on Tariffs and Trade, dated 30 October 1947 [ ] (b) the provisions of the legal instruments set forth below that have entered into force under the GATT 1947 before the date of the entry into force of the WTO Agreement: Enabling Clause [ ] (1979 Decision) (iv) other decisions of the CONTRACTING PARTIES to the GATT 1947.
8 OTHER DECISIONS OF THE CONTRACTING PARTIES TO THE GATT 1947 Which "other decisions of the CONTRACTING PARTIES to GATT 1947"? Decisions by the CONTRACTING PARTIES, but not all. Depends on the specific language used (Panel Report, US FSC). 1. Decision by the CONTRACTING PARTIES 2. Decision must be a legal instrument o Formal legal text o Which represents a legally binding determination in respect of the rights and/or obligations generally applicable to all CONTRACTING PARTIES to GATT 1947 Not GATT panel reports (Appellate Body Report, Japan Alcoholic Beverages II)
9 Amendments (Article X of the WTO Agreement)
10 AMENDMENTS (ARTICLE X OF THE WTO AGREEMENT) Article X of the WTO Agreement establishes procedures for amending the covered agreements. In general terms, the process consists of: Initial proposal for an amendment Decision of WTO Members to adopt the amendment "Acceptance" (i.e. ratification) of WTO Members of the amendment Entry into force of the amendment Examples of amendments: 2006 Amendment to the TRIPS Agreement (Art. 31bis) on access to medicines Amendment of the Government Procurement Agreement (Annex 4) Trade Facilitation Agreement: amendment of Annex 1A of the WTO Agreement
11 Ordinary procedure for amendments under Art. X:1 of the WTO Agreement Proposal by: - Individual WTO Member; or - Goods Council, Services Council, or TRIPS Agreement Ministerial Conference has 90 days for adoption Consensus No consensus Voting: two thirds required WTO Members can "accept"
12 Entry into force of the amendment General rule: AMENDMENTS (ARTICLE X OF THE WTO AGREEMENT) the amendment takes effect for the Members that have accepted it only after the acceptance by two thirds of WTO Members. the amendment takes effect thereafter for each other WTO Member upon acceptance by it. (Article X:3 of WTO Agreement)
13 AMENDMENTS (ARTICLE X OF THE WTO AGREEMENT) Entry into force of the amendment (cont.) Exceptions to the rule: a) The following amendments take effect only after acceptance by all WTO Members (Art. X:2 of WTO Agreement): Amendments to MFN obligation in the GATT 1994, the GATS or in the TRIPS Agreement; Amendments to GATT 1994 tariff schedules; and Amendments to provisions on WTO-decision making and amendments.
14 AMENDMENTS (ARTICLE X OF THE WTO AGREEMENT) Entry into force of the amendment (cont.) b) Amendments that "do not alter the rights and obligations of the Members" take effect for all WTO Members upon acceptance by twothirds of Members (Art. X:4 of WTO Agreement). c) Other special rules for amendments to GATS, TRIPS, DSU and TPRM (Arts. X:5, X:6, X:7, X.8 of WTO Agreement).
15 Accession Protocols and Working Party Reports
16 ACCESSION PROTOCOLS Protocols of Accession are an integral part of the WTO Agreement Article XII:1 of the WTO Agreement: Any State or separate customs territory possessing full autonomy in the conduct of its external commercial relations and of the other matters provided for in this Agreement and the Multilateral Trade Agreements may accede to this Agreement, on terms to be agreed between it and the WTO. Such accession shall apply to this Agreement and the Multilateral Trade Agreements annexed thereto. This is confirmed by the text of the Protocols of Accession. For example, China s Protocol of Accession states: The WTO Agreement to which China accedes shall be the WTO Agreement as rectified, amended or otherwise modified by such legal instruments as may have entered into force before the date of accession. This Protocol, which shall include the commitments referred to in paragraph 342 of the Working Party Report, shall be an integral part of the WTO Agreement. (China s Protocol of Accession, para. 1.2 of Part I)
17 ACCESSION WORKING PARTY REPORTS Protocols of accession incorporate, by reference, several ad hoc commitments contained in the Working Party Report. This Protocol, which shall include the commitments referred to in paragraph 1450 of the Working Party Report, shall be an integral part of the WTO Agreement. (Paragraph 2 of Russia s Accession Protocol) Accession Protocols usually contain "WTO-plus obligations", i.e. obligations that are different from, and additional to, the obligations set out in the WTO covered agreements.
18 ACCESSION WORKING PARTY REPORTS Can acceding Members invoke the general exceptions of the covered agreements (i.e. GATT Art. XX or GATS Art. XIV) to justify a violation of a WTO-plus obligation of its Accession Protocol? Answer: only if the Accession Protocol clearly indicates this right and this is consistent with structure of the protocol (Appellate Body Report, China Rare Earths, paras ).
19 ACCESSION PROTOCOLS AND WORKING PARTY REPORTS 40 disputes involving Accession Protocols / WPRs, which include: EU Measures related to price comparison methodologies (DS516) US Measures related to price comparison methodologies (DS515). Russia Pigs (DS475) China Raw Materials (DS394, DS395, DS398) China Rare Earths (DS431, DS432, DS433)
20 Waivers (Article IX:3 of the WTO Agreement)
21 WAIVERS (ARTICLE IX:3 OF THE WTO AGREEMENT) Article IX:3 of the WTO Agreement contemplates the possibility to "waive an obligation" of the covered agreements "in exceptional circumstances". What is a "waiver"? Waivers are time-limited authorizations to depart from WTO law. Article IX:3 3. In exceptional circumstances, the Ministerial Conference may decide to waive an obligation imposed on a Member by this Agreement or any of the Multilateral Trade Agreements, provided that any such decision shall be taken by three fourths of the Members unless otherwise provided for in this paragraph. Special rule for waivers concerning the WTO Agreement: consensus, or three fourths if consensus is not reached within 90 days (Art. X:3(a))
22 WAIVERS (ARTICLE IX:3 OF THE WTO AGREEMENT) Article IX:4 4. A decision by the Ministerial Conference granting a waiver shall state the exceptional circumstances justifying the decision, the terms and conditions governing the application of the waiver, and the date on which the waiver shall terminate. Any waiver granted for a period of more than one year shall be reviewed by the Ministerial Conference not later than one year after it is granted, and thereafter annually until the waiver terminates. In each review, the Ministerial Conference shall examine whether the exceptional circumstances justifying the waiver still exist and whether the terms and conditions attached to the waiver have been met. The Ministerial Conference, on the basis of the annual review, may extend, modify or terminate the waiver.
23 WAIVERS (ARTICLE IX:3 OF THE WTO AGREEMENT) Examples of waivers There are a number of national preference programmes that do not qualify under the Enabling Clause, for which waivers of the MFN obligation of GATT Article I:1 have been granted: EU's historical Lomé preferences in favour of ACP Countries (discussed in the EC Bananas dispute) The US "Africa Growth and Opportunity Act" (AGOA) The US "Caribbean Basin Initiative" (CBI)
24 WAIVERS (ARTICLE IX:3 OF THE WTO AGREEMENT) Examples of waivers (2): 2011 "services waiver" (WT/L/847), enabling WTO Members to grant preferential treatment in services to LDCs for Article XVI GATS measures; granted for 15 years 2003/2005 TRIPS waiver for access to medicines Waiver for Article 31(f) of the TRIPS Agreement Temporary waiver until amendment entered into effect. On 23 January 2017, the amendment entered into effect and replaced the 2003 waiver. The 1999 Waiver regarding Preferential Tariff Treatment for Least-Developed Countries (WT/L/304) allows developing country Members to provide preferential tariff treatment to products of least developed countries. Granted for 10 years; in 2009 extended until 2019
25 WAIVERS (ARTICLE IX:3 OF THE WTO AGREEMENT) Examples (3): Kimberley Process Waiver (blood diamonds) Waiver from Articles I, XI and XIII of the GATT 1994 Purpose: sever the link between armed conflict and illegal diamonds trade Extended multiple times, currently valid until 2018
26 (b) What other instruments could be relevant in WTO dispute settlement?
27 Ministerial decisions
28 MINISTERIAL DECISIONS Legal basis in Article IX:1 of the WTO Agreement Decisions can be taken by consensus or voting What type of Decisions can the Ministerial Conference take? Authoritative interpretations (Article IX:2 of the WTO Agreement) Waivers (Article IX:3-4 of the WTO Agreement) Decision to submit proposed amendments to Members for multilateral agreement on trade in goods, GATS and TRIPS (Article X:1 of the of the WTO Agreement) Decision to make amendments to the DSU and the TPRM (Article X:8 of the WTO Agreement) Decision on accession of acceding governments (Article XII:2 of the WTO Agreement)
29 MINISTERIAL DECISIONS What is the legal value of Ministerial Decisions? "In a Ministerial Decision,. Ministers 'decide' that certain action shall be taken" (Panel Report, US Lead and Bismuth II) The Nairobi Ministerial Decision on Export Competition provides that: Developed Members shall immediately eliminate their remaining scheduled export subsidy entitlements as of the date of adoption of this Decision. Ministerial decisions do not create enforceable WTO obligations under the DSU, but may assist the interpretation and application of existing rules.
30 Ministerial declarations
31 MINISTERIAL DECLARATIONS No legal basis in the WTO Agreement Political statements Set out the way forward or an intended course of action "recognize", "stress", "reaffirm", "reiterate", "recall", "take note", "welcome", "acknowledge" mostly hortatory language "[A] Declaration lacks the mandatory authority" (Panel Report, US Lead and Bismuth II) "The Declaration is couched in hortatory language; it uses the words 'Ministers recognize'" (Appellate Body Report, US Lead and Bismuth II)
32 MINISTERIAL DECLARATIONS May "instruct" WTO Committees and Councils. For example, the Declaration on the TRIPS Agreement and Public Health provides: 6. We recognize that WTO members with insufficient or no manufacturing capacities in the pharmaceutical sector could face difficulties in making effective use of compulsory licensing under the TRIPS Agreement. We instruct the Council for TRIPS to find an expeditious solution to this problem and to report to the General Council before the end of Can be used as support for interpretation of WTO legal provisions (in 48 reports, have panels and/or the Appellate Body referred to Ministerial Declarations). Implementation of specific commitments in Ministerial Declarations is left to subsequent action (IT Ministerial Declaration): Each participant shall incorporate the measures described in paragraph 2 of the Declaration into its schedule to the General Agreement on Tariffs and Trade 1994.
33 Decisions of other WTO bodies
34 DECISIONS OF OTHER WTO BODIES Decisions of WTO committees may be relevant for the interpretation of existing obligations in the covered agreements. Decision of the SPS Committee on Article 4 ("Equivalence") Decision of the SPS Committee on Article 6 (regionalization, recognition of pest-free zones) TBT Committee Decision on Principles for the Development of International Standards, Guides and Recommendations with relation to Articles 2, 5 and Annex 3 of the Agreement o Annex 1.4 to the TBT Agreement defines an "international body" as a "[b]ody or system whose membership is open to the relevant bodies of at least all Members." Annex 1.2 to the TBT Agreement defines "standard" as a "Document approved by a recognised body ". o The Appellate Body in US Tuna II considered that the TBT Committee Decision provides additional guidance on whether a standardising body is "open" and has "recognised" activities in standardisation.
35 Authoritative interpretations under Article IX:2 of the WTO Agreement
36 AUTHORITATIVE INTERPRETATIONS UNDER ARTICLE IX:2 OF THE WTO AGREEMENT Article IX:2 of the WTO Agreement provides that: The Ministerial Conference and the General Council shall have the exclusive authority to adopt interpretations of this Agreement and of the Multilateral Trade Agreements. In the case of an interpretation of a Multilateral Trade Agreement in Annex 1, they shall exercise their authority on the basis of a recommendation by the Council overseeing the functioning of that Agreement. The decision to adopt an interpretation shall be taken by a three-fourths majority of the Members. This paragraph shall not be used in a manner that would undermine the amendment provisions in Article X.
37 AUTHORITATIVE INTERPRETATIONS UNDER ARTICLE IX:2 OF THE WTO AGREEMENT Article IX:2 establishes that an authoritative interpretation must: (i) be taken on the basis of a recommendation by the Council overseeing the functioning of that Agreement, (ii) by the Ministerial Conference or the General Council, and (iii) voted by a three-fourths majority of WTO Members. No authoritative interpretation has ever been adopted or recommended by any council. What is the relevance of authoritative interpretations under Article XI:2 of the WTO Agreement? They are binding on all WTO Members, they have a "pervasive legal effect." (Appellate Body Report, US Clove Cigarettes).
38 AUTHORITATIVE INTERPRETATIONS UNDER ARTICLE IX:2 OF THE WTO AGREEMENT US Clove Cigarettes: Article 2.12 of the TBT Agreement provides for a reasonable interval between the publication of technical regulations and their entry into force. Paragraph 5.2 of the Doha Ministerial Decision provides that "the phrase 'reasonable interval' in [article 2.12 of the TBT Agreement] shall be understood to mean normally a period of not less than 6 months". Indonesia argued that paragraph 5.2 of this decision was an authoritative interpretation of Article 2.12 of the TBT Agreement. The Appellate Body found that paragraph 5.2 of the Doha Ministerial Decision was not an authoritative interpretation of the term "reasonable interval" in Article 2.12 because the relevant procedures of Article IX:2 of the Marrakesh Agreement were not followed.
39 AUTHORITATIVE INTERPRETATIONS UNDER ARTICLE IX:2 OF THE WTO AGREEMENT How does "interpretation" differs from "amendment" of a provision? Interpretation: discerning what the drafters of a provision meant when they used particular words Amendment: modifying the content of a provision Appellate Body Report in EC Bananas III (Second recourse to Article 21.5): Interpretations under Article IX:2 "are meant to clarify the meaning of existing obligations, not to modify their content".
40 Pre-WTO decisions not incorporated into the GATT 1994
41 PRE-WTO DECISIONS NOT INCORPORATED INTO THE GATT 1994 Article XIV:1 of the WTO Agreement provides: Except as otherwise provided under this Agreement or the Multilateral Trade Agreements, the WTO shall be guided by the decisions, procedures and customary practices followed by the CONTRACTING PARTIES to GATT 1947 and the bodies established in the framework of GATT 1947.
42 PRE-WTO DECISIONS NOT INCORPORATED INTO THE GATT 1994 The Appellate Body stated in Japan Alcoholic Beverages II that: "Article XVI:1 of the WTO Agreement bring[s] the legal history and experience under the GATT 1947 into the new realm of the WTO in a way that ensures continuity and consistency in a smooth transition from the GATT 1947 system", and "acknowledges the continuing relevance of that experience to the new trading system served by the WTO". A "decision, procedure [or] customary practice" within the meaning of Article XVI:1 of the WTO Agreement serves as interpretative guidance to WTO adjudicatory bodies. (Appellate Body Report, US FSC). "Decisions, procedures and customary practices" include only those taken or followed by the CONTRACTING PARTIES to the GATT 1947 "acting jointly". (Appellate Body Report, EC Poultry).
43 PRE-WTO DECISIONS NOT INCORPORATED INTO THE GATT 1994 Recently, the panel in EU Poultry Meat (China) concluded that the 1980 Procedures for Negotiations under Article XXVIII and 1980 Procedures for Modification and Rectification of Schedules qualified as "decisions", "procedures" or "customary practices" within the meaning of Article XVI:1 of the WTO Agreement. Some of the elements considered by the Panel in its assessment of the procedures were: whether these procedures continue to apply under the WTO whether the WTO Agreement or the GATT 1994 made provision for any new procedures to supersede these procedures the parties' agreement that the procedures were covered under this provision
44 Non-WTO instruments
45 NON-WTO INSTRUMENTS Could non-wto instruments be the legal basis of a challenge before a WTO panel? Non-WTO instruments are not "covered agreements". Examples: Montreal Protocol on Substances that Deplete the Ozone Layer, the United Nations Convention on the Law of the Sea (UNCLOS), or Free Trade Agreements. Therefore, breaches of those international instruments cannot be redressed through WTO dispute settlement.
46 NON-WTO INSTRUMENTS Could non-wto instruments be relevant for other purposes? Interpretation: In US Shrimp, the Appellate Body interpreted the terms "exhaustible natural resources" of Article XX(g) of the GATT 1994 in light of non-wto legal instruments interpreting these terms: Agenda 21, the Convention on Biological Diversity, and the Convention on International Trade in Endangered Species of Wild Fauna and Flora. Factual evidence: in EC Seal Products, in the context of claims under Article 2.1 of the TBT Agreement, the panel considered that factual evidence, including a UN Declaration and an ILO Convention, demonstrated the "recognized interests of Inuit and indigenous peoples in preserving their traditions and cultures".
47 NON-WTO INSTRUMENTS Certain international conventions are incorporated by reference into the covered agreements and have the status of WTO law. For instance, Article 1.3 of the TRIPs Agreement incorporates: Paris Convention of 1967 Berne Convention of 1971 Rome Convention Treaty on IP in Respect of Integrated Circuits In circumstances specifically stated in the covered agreement, the evaluation of a WTO claim (including a defence) can depend on compliance with other agreements, or on determinations by other international organizations. For example: Action taken pursuant to Article XV:9(a) of the GATT 1994 (IMF and special agreements between original WTO Members). Article XV:2 of the GATT 1994 (IMF), and Article XXI(c) of the GATT 1994 (United Nations Security Council).
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