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Second, assuming that India no longer has balance of payments problems, the minimum market access clause will indeed be relevant. There are also disciplines on export prohibitions and restrictions, but these do not apply to developing countries Article Finally, none of the agricultural measures used by member countries, domestic or border, can be challenged before nine years, that is, before As the table shows, all tariff lines for agricultural products will now be subject to bindings.

The increase in the coverage of bindings is greatest for developing countries, particularly those in Asia and Latin America. Some idea of the tariff reductions involved can be seen from Table 2. As the table shows some tariff lines are already bound duty-free. For other tariff lines, there exist duties at the moment. Some of these will now be bound without reductions others will be bound with reductions.

Country Group. Sources: GATT. It is not easy to figure out what has been the magnitude of tariff reductions in the course of the Uruguay Round since prior to the Uruguay Round, many agricultural products were subjected to quantitative restrictions rather than tariffs. In addition, existing tariffs were often specific and not ad valorem.

Subject to this caveat, Table 3 gives some idea about the tariff reductions in developed countries for different product categories. Source: GATT. In contrast, export subsidies in developing countries are estimated to amount to only 1. In the period, developed countries are annually estimated to have subsidized exports of Table 4 shows the number of individual commitments that developed countries have made on export subsidization of agricultural products.

Agriculture and The World Trade Organisation

Base period export subsidies millions of US dollars. Number of individual quantitative commitments. This means around billion US dollars worth of additional exports beyond the year That means, around billion US dollars worth of additional agricultural exports per year. The estimates however show that the major beneficiaries of agricultural trade liberalization are going to be the Cairns Group of countries, a group of agricultural exporters, not all of which are developing countries.

As most such models concentrate on the agricultural sector, leaving other sectors of the economy unaccounted for, they generally abstract from the spillover effects to, and feedback from, other parts of the economy. They are therefore open to the possibility of theoretical inconsistencies.

The World Trading System at Risk

Some multi-sectoral models are also available 9. But they also consider one commodity market at a time, with an implicit adjustment for cross-price effects. Even when feedback from commodity markets to income growth or from agriculture to nonagricultural markets is incorporated, these models remain partial in the sense that they do not explicitly model factor markets, migration among sectors, and other possible interactions within the economy.

Therefore, these studies understate the consequences of trade liberalization for resource movement out of or into agriculture, aggregate supply responses, relative prices and hence income distribution and welfare changes. In addition, since these studies deal with reduced form supply-demand elasticities, it becomes difficult to trace back specific assumptions relating to consumer preferences, production technology and factor mobility, on which they are based.

In doing so, such studies close the model with respect to all other goods and hence remove the possibilities of theoretical inconsistencies present in partial equilibrium models. All five CGE studies 10 point out that agricultural trade liberalization will result in increases in world farm product prices, global GDP and trade volumes. The studies also indicate substantial factor reallocation and sectoral redistribution of GDP. However, the effect on individual countries is not uniform and depends on how fast industrialized countries liberalize relative to developing countries and how strong the supply response is, from various countries modelled.

Although it is difficult to pinpoint the reasons for differences in the results among models, it appears that the choice of key elasticities plays a significant role. Apart from the choice of key elasticities, assumed levels of protection considered by the studies, formulae used for quantifying the levels of protection, reference periods, periods of analysis, choice of countries liberalizing 11 , extent of liberalization 12 , assumptions regarding micro 13 and macro situations affect the results of the studies.

The paper by Goldin and Mensburgghe presented in a World Bank conference on the Uruguay Round and the Developing Countries, on the other hand, offers an ex post evaluation of the tariffication process. In contrast to earlier studies, this paper draws on the available evidence regarding the Uruguay Round agreement and the reference scenario incorporates the latest estimates of global protection measures.

Using the RUNS model, it evaluates the gains till the year The study is confined to tariffs in agriculture and manufacturing alone, and does not attempt to assess the impact of significant reforms in the area of non-tariff barriers. Simulation results of this study reiterate the results demonstrated in earlier studies. That is, the larger the reductions in protection levels, the higher the prices, world GNP, and TOT terms of trade for net exporting developing countries.

And countries which liberalize the most, gain the most. Such a long period for the average level of protection is justified on the ground that tariffs are inherently unstable reflecting world prices and domestic political considerations and an assumption that there has been no underlying trend in the level of tariffs. The exercise shows much more modest changes in prices in no case greater than 1. In contrast, in earlier studies using the same model, price changes varied from As this price change would occur over the period , simulation exercise I suggests that the Uruguay Round is unlikely to have any discernible impact on world prices.

The average protection level was higher in the recent period, as compared to the historical average level of protection. This implies that the application of the Uruguay Round submissions leads to greater liberalization in the second simulation exercise. Therefore, they record lower gains when a recent benchmark is used. As a result of modest reforms in the recent period in these developing countries, the supply response, accounting for declines in coffee, cocoa, tea, rice, sugar and other prices, is more muted.

In the OECD countries in contrast, a greater reform leads to a sharper supply response. This is demonstrated in the higher rise in prices of cereals. Against the reference scenario of Simulation II, Simulation III analyses the impact of input subsidy reduction in addition to the application of tariff reduction. Compared to Simulation 11, the reduction in input subsidy further lowered production and exports of OECD countries. The associated changes in world prices, particularly for wheat 6. Food importing regions such as Africa suffer heavy losses in their terms of trade due to higher prices of coarse grains, oils, rice and sugar.

The results of this scenario indicate that the results are sensitive to assumptions regarding reductions in domestic distortions. This more than doubles the gains anticipated in Simulation II. This simulation results in greater increases in world prices especially in the case of sugar, meat and dairy products, where tariffs have remained relatively untouched by the Uruguay Round agreement.

As a result of this significant increase in world agricultural prices, the terms of trade effect for agricultural exporters improves and hence, except net food importing countries of Africa and Middle East developing countries benefit. In all other respects, it is exactly like Simulation III. Rigidity of wage behaviour is introduced in this exercise. These rigidities and the potential for the expansion of employment alter the effects of trade reform.

As trade reform lowers domestic consumer prices for liberalizing countries, the pressure on real wages is reduced and this leads to higher employment and higher overall urban and total welfare in this simulation. These higher prices are transmitted to higher domestic consumer prices of countries in Africa, Latin America, and other low-income regions, including China and India.

This leads to upward pressure on wages and reduces competitiveness and employment in these countries. These results imply that the benefits, in response to liberalization by developed industrialized countries, to developing countries will be minimal if these countries do not liberalize their agricultural sectors.

THE WORLD TRADING SYSTEM: WHAT'S IN IT FOR BUSINESS?

However, changes in prices and production of various commodities, in the long run, are moderate when the impact of agricultural polices are analysed in a CGE framework. This is due to reallocation of resources between sectors in response to the initial price changes. Agricultural liberalization results in higher prices for wheat, sugar, meat, and dairy products. India can benefit by reallocating its resources from tea, rice, etc.

Source: Goldin and van der Mensbrugghe This results in diverse agro-climatic zones and makes it possible to grow a wide variety of agricultural products. For example, India ranks second only to Brazil in the production of fruits and second only to China in the production of vegetables. India also happens to be the second largest rice producer and the fifth largest wheat producer in the world. The green revolution has witnessed an increase in foodgrains production over the preceding years at an average annual rate of 2.

From being a net importer of foodgrains, India has become self-sufficient in foodgrains and is today an occasional exporter of foodgrains. For agriculture as a whole, India also enjoys the advantage that agriculture is relatively less import intensive and relatively more labour intensive. Included in agricultural exports are coffee, tea, oil cakes, tobacco, cashew kernels, spices, sugar and molasses, raw cotton, rice, fish and fish preparations, meat and meat products, fruits, vegetables and pulses and processed foods.

These tend to show that India is extremely competitive in cereals like rice, moderately competitive in cereals like wheat and not that competitive in cereals like maize and sorghum. In fruits, India is extremely competitive in products like bananas, grapes, sapotas and lychees, moderately competitive in products like mangoes and relatively uncompetitive in products like apples. In vegetables, India is extremely competitive in onions and tomatoes and moderately competitive in potatoes.

In processed fruits like mango pulp and apple juice, India is relatively uncompetitive. But India is extremely competitive in processed vegetables like mushrooms and moderately competitive in products like tomato paste. The answer again lies in supply-side constraints and the non-introduction of reforms in the domestic agricultural economy. There is canalisation of exports and imports.

There are levies and taxes. Industries like rice milling are reserved for the small-scale sector. There are all sorts of restrictions on inter-state movements and futures trading is generally not permitted. Excise and customs duties on capital goods and packaging also tend to be on the high side. In the food-processing sector, inadequate infrastructure and the lack of processing and refrigeration facilities are constraints.

The land ceiling legislation does not permit exploitation of economies of scale. Both public and private investments in agriculture need to be stepped up and the traditional dichotomy between agriculture and industry broken down, with a greater corporate involvement in the industrialization of Indian agriculture. Until that is done the Uruguay Round agreement on agriculture will merely represent an elusive potential that India is not in a position to tap. Abreu, M. Abrol, D.

Agarwal, A. Anderson, K. Goldin and O. Balassa B. Brandao, A. Burniaux, J. Martin, F. Delorme, I. Lienert and D. Chowdhry, N. Corsepius, U. Frohberg, K. Fisher and K. Ganesan, A. Overview of the Results. Goldin I. Knudsen and D. Gulati, A, J. Hanson and G. World Bank, Washington. Gulati, A. Sharma, K. Sharma, S. Das and V. Hathaway, D. Hertel, T. James W. Kilkenny, M. Krissoff B.

Has the World Trade Organisation failed poor countries? - Counting the Cost

Sullivan and J. Krueger, A. Schiff and A. Kumar, P. Menon, U. Moreddu C. Parris and B. Naya Seiji, Urrutia, M. Nguyen, T. Perroni and R. Porter M. Raghavan, C. Robinson, S. Sachdev S. Sahai, S. Shiva, V. Subramanian, A. Valdes, A. We have used crore figures, as that is how the Ministry of Commerce figures are expressed. There are also domestic reduction commitments. The final Uruguay Round package only became available in December Studies conducted before this date, therefore, needed to assume the nature of agricultural liberalization, as opposed to the actual liberalization that is going to take place.

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Cited by. Text Bibliography Notes Author. Full text. We have used crore figures, as that is how the Ministry of Commer The final Uruguay Round package only became available in December Bibliography Bibliography Abreu, M. Notes 1 Effectively, textiles and garments and agriculture are also new areas, since prior to the Uruguay Round, they were outside the purview of GATT liberalization.

Author Bibek Debroy. Consequences on French Agr A French Identit Read Open Access. Freemium Recommend to your library for acquisition. ISBN: DOI: Debroy, B. In Bhalla, G. After the Appellate Body held its ground in the second Shrimp—Turtle ruling, there was no further concerted effort to apply political or diplomatic pressure on the amicus or trade and environment issues.

For the Appellate Body, this decision was arguably an even more activist move than allowing amicus briefs, as the DSU stated that Appellate Body proceedings are to be confidential. Part of the reason must surely have been that any Member that was a party to a particular dispute could simply object to open hearings and this would be enough to ensure confidentiality.

However, something else was happening around the time of the second Shrimp—Turtle ruling. After failing to agree on the launch of a new round of negotiations at Seattle and then at Cancun, a declaration was achieved at the WTO ministerial in Doha Qatar on the outlines for a new round. One of the elements of this declaration was the stipulation of negotiations on the relationship of multilateral environmental agreements to existing WTO rules. Another was an agreement to negotiate reform of the dispute settlement system. The second Shrimp—Turtle ruling had been circulated just a week before the Doha Declaration.

The apparent will at Doha to break through the impasse led to at least a brief hope by some that the criticized aspects of Appellate Body judicial activism might be reversed through treaty amendment as part of the new round. In return, developing countries might receive some additional concessions in sensitive areas such as agriculture and the textile and clothing trade. Many developing countries, by contrast, as well as non-governmental constituencies, sought a rebalancing of the result of the Uruguay Round towards greater policy space and more meaningful special and differential treatment of developing countries.

As the Doha Round negotiations floundered, new issues were emerging such as the relationship of the WTO to climate change mitigation measures with trade dimensions, carbon border adjustment and so on. The WTO director-general insisted inflexibly that new subjects could not be added to the Doha agenda until a successful agreement on the existing items was achieved. This inflexibility and the dirigiste style of Lamy led to considerable frustration and acrimony in Geneva and a crisis of confidence in the WTO as an institution. The Members now had enough grievances with the WTO Secretariat, led by Lamy, and so many renewed or intensified differences among themselves that any sense of a common will to stand up to judicial activism largely atrophied.

In this setting, the Appellate Body was able to come to maturity as a judicial body, through twists and turns that moved to solidify and evolve a set of judicial policies that, overall, with some exceptions, have served reasonably well in meeting the legitimacy challenges articulated above. Once the Appellate Body recovered from its brief misstep in the EC—Asbestos amicus controversy, it became obvious that statements opposing Appellate Body rulings as excess of powers or illegitimate, no matter how numerous or vehement, would not be successful in swaying the Appellate Body to shift course.

It is at this point that the Appellate Body began to drop the artifice of a mechan ical application of the VCLT, whose first and primary recourse was to the dictionary. Some Appellate Body Members would even publicly admit, more or less, that it was an artifice. However, it was in the China—Publications case that it became clear that this kind of equilibrium was seen by the Appellate Body as being at the core of the WTO legal system as a whole or at least preserving it was the core of the task of the Appellate Body.

First, they may simply not contravene any WTO obligation. Secondly, even if they contravene a WTO obligation, they may be justified under an applicable exception. As participants in the WTO system, in other words, WTO Members have not subordinated their inherent right to regulate to the telos of deep or ever deepening integration but, rather, have agreed to limit the inherent right to regulate through specific legal disciplines, the contours of which have to be determined by reading the operative provisions and the exceptions as an inseparable whole to ascertain what is permitted and what is not.

The kind of equilibrium to be preserved in interpretation is to be ascertained through the holistic view of the interaction of obligations and exceptions in the WTO system, beginning from the notion of the system as a set of fixed, bargained constraints on an inherent plenary power to regulate. It almost goes without saying that one would not read a human rights treaty or the UN Charter in this way.

In the WTO, there is no general relativization of sovereignty to a community normative order held together by a particular shared telos or teloi or vision of right or good. If there is a community ethos, it is a Hobbesian one of the avoidance of the summum malum. In this instance, free fall into beggar-thy-neighbour protective discrimination.

A policed equilibrium of rights and obligations sustains enough confidence among Members generally in both the strength and flexibility of the disciplines to hedge effectively against a cascade of defection to unilateralist protectionism. If the dictionaries, the textualism and the mechanical use of the VCLT all seemed annoying to more elevated legal minds, at least they became eventually reassuring to panels and litigators, who made sure to arm themselves amply with dictionaries and to structure their pleadings around textual readings under all of the elements of the VCLT.

The relaxation of this artifice has cumulatively led to a new anxiety. On the other hand, the Appellate Body has been, through twists and turns, working out a number of what I will call judicial policies, which are fairly closely related to the legitimacy challenges described earlier. I now turn to the policies I see most frequently and powerfully at work in the jurisprudence. I do not claim to know to what extent these policies are pursued consciously or unconsciously by the Appellate Body, but they do seem to be at work in the manner in which it comes to its findings in many of the most important and sensitive disputes.

That outlook emphasized the progressive liberalization of trade and a suspicion that much regulation is captured by protectionist interests or a pretext for protectionism, if not simply irrational by some economic theory about first best instruments for correcting market failures. It would take many twists and turns in the case law, however, for the Appellate Body to work out the doctrinal edifice for its approach — one that is more sensitive to values that are external to the trade liberalization project at least in large measure and more respectful of the choices and constraints of domestic regulators, while sending signals that, at the same time, the protectionist abuse of flexibilities is being effectively identified and constrained.

This doctrinal edifice is what I call the non-discrimination regime. In the non-discrimination regime, the scrutiny of domestic policies is trifurcated. There is, first of all, typically an examination under the national treatment or most-favoured-nation MFN non-discrimination norms of whether the policies complained of result in less favourable treatment either of imported products national treatment or of imports from some particular WTO Member s MFN.

Consideration of regulatory intent or of evidence of purposeful discrimination plays no role in this analysis. In this disparate impact or de facto discrimination analysis, there is no apparent room for consideration of outside values or legitimate regulatory purposes. The approach in effect excuses the WTO litigator from having to make any substantive judgments about the legitimacy or justification of the policies in question.

The second stage of the trifurcated regime is what I call rationality review of policies that have been found to have a detrimental impact on competitive opportunities. Here, the Appellate Body applies a rather deferential standard of review to determine whether, given the impact on trade, the defending Member has acted reasonably in the choice of policy instrument for its chosen objective.

The rationality review is broadly deferential not only to the choice of policy objectives and the level or strictness of regulation but also to the general form of the regulation, the basic choice of the policy instrument. The third or final stage in the non-discrimination regime is the strict scrutiny of specific or special features of the policies complained of that may lead, again on a formalistic analysis, to a detrimental impact on imports in the way in which the regulatory scheme is applied or operationalized in practice.

Here, the Appellate Body may find a flawed procedure, some arcane or anomalous distinction in the fine print of the regulatory scheme, which may often lead to under-inclusiveness exceptions or limitations on the operation of the scheme that appear to give some advantage to domestic products over imports. This stage of analysis will likely result in the WTO Member being called on to fine-tune its regulatory intervention, without necessarily having to make major changes in the basic choice of policy instrument.

From the outset of its jurisprudence, the Appellate Body had veered away from an intent-based, or purpose-based, approach to national treatment, which would examine whether any market disadvantage to imports could ultimately be traced to legitimate public policies. If products were alike on the basis of such criteria, then discrimination — a violation of national treatment — occurred where the regulation produced some kind of detrimental impact or market disadvantage for the imported product. This analysis of detrimental impact could be based purely on a formal or hypothetical type analysis.

Product A is mostly produced by foreign producers; Product B is largely produced by domestic producers. They are alike based on physical characteristics. Product B is taxed at half the rate of Product A. Thus, there is a detrimental impact on Product A, the like imported product. No econometrical evidence is required, no proof of actual substitution by consumers. National treatment protects equality of competitive opportunities in principle, in the abstract. The simplicity of this approach — it has an advantage that it requires only minimal analysis of facts, given that it is the panels, which are not made up of professional adjudicators, who make the findings of fact — was challenged in the EC—Asbestos case.

The Appellate Body pulled a rabbit out of a hat, as it were. This was a brilliant improvization. The Appellate Body could say health was relevant, not for public policy considerations but, rather, for consumer behaviour considerations and, thus, strictly speaking, not alter its market-based framework of analysis in response to the legitimacy challenge posed in this case.

However, for years after EC—Asbestos , the Appellate Body in occasional decisions had been giving hints that, in appropriate cases, it would not find treatment less favourable of imports if the market disadvantage came from some extraneous factor unconnected to the foreign national origin of the imported group of products. In other words, there was an escape valve of sorts from the market disadvantage approach where in a particular case it might pose a legitimacy challenge.

With the recent EC—Seal Products decision, the Appellate Body appears to have largely closed these escape valves, apart from the specific one it invented in EC—Asbestos in relation to health, consumer behaviour and likeness. It is to this jurisprudential development that we now turn. Especially towards the end of the GATT era, when a kind of crude economistic ideology and strong deregulatory orientation had come to permeate the insider trade community, it was notoriously almost impossible to justify public policies under Article XX of the GATT.

Almost always an economist could think of a policy other than trade restrictions that might, in an ideal world, achieve a given policy goal. The Thai Cigarettes case is a clear illustration. Here, Thailand argued that, given the kind of marketing and advertising that were associated with the imported cigarettes, they posed a health risk in terms of attracting young people to cigarette addiction that did not exist in the case of domestic cigarettes.

Starting with some of its earliest decisions, the Appellate Body transformed Article XX step by step into an effective means of protecting legitimate policy space under the GATT non-discrimination regime. However, the Appellate Body also held that there is no need to quantify or measure the extent of the contribution. That a measure of the kind would address the problem in a meaningful way was a matter of common sense reasoning, not empirical proof.

As long as the defending Member, however, can provide a reasonable explanation of why it did not adopt such an alternative, its justification would stand. If the Appellate Body needed to make assurances of policy space to establish and enhance its legitimacy in an era where neo-liberal globalization is highly contested, it certainly also needed to show it could maintain meaningful constraints on protectionist abuse of public policies that undermined the value or integrity of the basic GATT-like commitments on border measures.

What typifies chapeau or chapeau-like strict scrutiny in the case of TBT is a focus on the fine print of the regulatory scheme and particularly on those features that raise concerns that the way the scheme is applied in practice may entail elements of discrimination — a detrimental impact on like imported products or in the case of MFN like imported products of particular WTO Members. Rationality review displays deference not only to the collective preferences of the society in question but also to the general form of intervention: a ban, a mandatory labelling scheme, a PPM, no matter.

However, under strict scrutiny of the fine detail, any distinction or classification that could give rise to a discriminatory impact in the actual operation of the scheme is suspect and must be explained as being, essentially, indispensable to the regulatory objective of the scheme as a whole. As with the preliminary analysis of discrimination under the national treatment or MFN operative provisions Articles I and III , there is no need for the complainant to show actual deleterious impact but only a formal analysis that the distinction or classification could operate in such a way as to disfavour imports or in the case of MFN imports from certain WTO Members.

A dramatic illustration of this scenario is the recent EC—Seal Products case. The theory would have to be that demand would be shifted from Canadian and Norwegian seal products banned to Greenland products EC origin that are permitted under the indigenous exception. There was certainly no empirical evidence that consumers were responding to a ban on commercially hunted seal products by buying more indigenous products. This was conveniently the case with the problems that the Appellate Body identified under the chapeau in Shrimp—Turtle.

Even if some legislative change is required, tweaking the details of a complex regulatory scheme may not raise the kinds of sensitive political problems involved in attempting a major overhaul. Perhaps most significantly in case after case where the Appellate Body has found discrimination at the stage of chapeau or chapeau-like strict scrutiny, the problem has been under-inclusiveness of one sort or another: in US—Clove Cigarettes , the problem under Article 2. When the EU closed or narrowed some of the exceptions in the seal ban that had been found by the Appellate Body to not meet the conditions of the chapeau, the animal welfare activists who pushed for the ban in the first place understandably cheered.

Their cause had actually benefited from strict scrutiny under the chapeau. Of course, it is always possible — and this is what the complainants count on perhaps — that the kinds of adjustments required by the Appellate Body would be unacceptable, given the alignment of domestic interest groups around the particular regulatory scheme, pro and con. However, this led to some additional issues for the Appellate Body upon review of US compliance.

In this instance, given the powerful US domestic interests that opposed country-of-origin labelling though it is enormously popular with consumers and the attitude of the Republican-dominated Congress, mandatory country-of-origin labelling may be abolished altogether, the existing law has been repealed. In this case, the WTO complainants may have succeeded in their objective, even though it was open in principle to the USA to respond to the chapeau problems identified by the Appellate Body by making the scheme tighter or stricter.

But consider the incentive effects of focusing chapeau strict scrutiny on features that are under-inclusive or can be modified by making the scheme tighter or stricter. A potential claimant runs the risk that it will spend millions of dollars and several years and receive a positive result from the Appellate Body, only to find out that it is a Pyrrhic victory or, worse, that the increasing strictness of the new scheme makes it even harder to achieve the market access that the claimant is seeking. To take the EC—Seal Products example, the concerns of the Appellate Body about the EU indigenous exception would obviously be irrelevant where a Member had no indigenous population and thus no need for this kind of exception.

As just discussed at some length, in the presence of a normative dissensus about the future direction of the WTO and under conditions of continuing contestation over the neo-liberal approach to trade liberalization, the Appellate Body has understandably shifted the focus of its scrutiny of domestic regulations from second-guessing substantive domestic policy choices to an emphasis on the prevention of protectionist abuse or the arbitrariness of domestic regulations, on process norms and, above all, on the examination of discriminatory elements in the detailed legal, regulatory and administrative provisions that operationalize the substantive policy choices.

However, the Appellate Body, of course, cannot simply wish away the existence of the Uruguay Round WTO agreements, which, to no small extent, are informed by a neo-liberal or Washington consensus outlook, and seek to go beyond the discrimination norm in disciplining purportedly irrational or inefficient domestic regulations that are viewed as barriers to market access while not necessarily having any features that discriminate against imports.

The Agreement on Sanitary and Phytosanitary Measures SPS Agreement and the TBT Agreement were clearly seen by their architects as moving well beyond the basic non-discrimination norms of the GATT — national treatment and MFN — towards spurring market-friendly regulatory reform or deregulation as well as global regulatory harmonization through the use of international standards.

This statement is remarkable. The text and structure of the TBT Agreement, taken on their own, suggest a greater limitation on policy space and more second guessing of domestic policy choices than in the case of the GATT. This is understandable because the spur for the TBT Agreement was the sense that the GATT was inadequate to address regulatory barriers to trade that were in the form of regulations that might not be discriminatory but were overly cumbersome or inefficient. Third, Article 2. This kind of regulatory harmonization is nowhere to be found in the GATT.

Now let us see how the Appellate Body has managed claims under these provisions so as to ensure that the balance between trade liberalization and regulatory autonomy remains unaltered from the GATT. First of all, the Appellate Body simply read into Article 2. A feature of a technical regulation found to provide less favourable treatment either to a like imported product national treatment or of some imported products MFN could nevertheless be found not to violate Article 2. With respect to Article 2.

In articulating what trade restrictive means, the Appellate Body refers to a previous ruling that interprets restrictions on trade in the context of Article XI of the GATT, which makes illegal quantitative restrictions that tend to be inherently discriminatory against imports. The Appellate Body has given no indication that it can conceive of a measure as being trade restrictive unless it has the kinds of effects on conditions of competition that would lead in any case to a finding of a violation of non-discrimination norms in the GATT. At the same time, overturning findings of violation of Article 2.

The Appellate Body has also underlined elements in Article 2. In light of this inquiry, it could be asked what other instruments might have been available that could make an equal contribution to this objective, while being less trade restrictive. Given these jurisprudential moves, it seems hard to conceive of an instance where a Member could make a successful claim under Article 2.

Now let us turn to Article 2. There is ample scope for the Appellate Body to resist demands for regulatory harmonization through Article 2. In sum, through its readings of Articles 2. At the very outset, the Appellate Body had established that the TBT and SPS Agreements were to be applied in parallel with, and not to the exclusion of, the GATT although both of the newer agreements should typically be considered first. After all, as the Appellate Body itself pronounced, the balance between trade liberalization and regulatory autonomy established by the GATT is to be maintained.

The route to this result under the SPS Agreement has been more tortuous. Article 2. Article 5. In the first case under the SPS Agreement, EC—Hormones , the Appellate Body rejected a proceduralist approach that would have interpreted the science requirements as obligatory inputs into the process of deliberation and decision, not substantive rationality standards against which the WTO judiciary would judge SPS regulations.


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However, the Appellate Body would have had to deal with the fact that there is no phase-in period for SPS obligations, and they clearly applied to existing, not just new, measures. Thus, interpreting the requirements in a procedural way would have produced a sort of retroactivity problem. Few developing countries have the capacity or resources to conduct scientific risk assessments of the kind seemingly intended by the SPS Agreement, and, thus, they would be penalized if the requirement of science were a requirement imposed on the domestic regulatory process, as opposed to an objective standard that could be fulfilled by pointing to a risk assessment conducted elsewhere or by an international body, which never was in fact part of the actual regulatory or political process that produced the measure.

Hence, the Appellate Body found more subtle and indirect ways of avoiding the WTO judiciary being turned into a science court for domestic regulations. First of all, the Appellate Body held that science did not necessarily mean mainstream or majority scientific opinion. It was a sovereign right of a WTO Member to choose among differing scientific opinions, as long as the scientists were competent and a methodology corresponding to the scientific method in the broadest sense was adopted.

Nor did risk need to be quantified. Fifth, even though the EU had not invoked a provision of Article 5. Finally, the Appellate Body had to reckon with a provision of the SPS Agreement that appears to be very intrusive in democratic decision making about risk. Indeed, as noted at the outset, the Appellate Body made a revealing statement that harmonization under the SPS Agreement is merely a means to achieving the goal of avoiding discrimination or disguised restrictions on international trade, conceptually distancing itself from a neo-liberal post-discriminatory agenda of imposing a notion of regulatory rationality or efficiency through the trading system.

After many years of non-compliance with the Appellate Body ruling, the EU finally produced some new scientific studies that indeed showed directly the risk from synthetic growth hormones. It is in revisiting the dispute in this context that the Appellate Body has been able to clarify and reinforce the elements of deference built into its approach to the SPS Agreement. This clarification was particularly necessary since in two cases in the intervening years the Appellate Body had appeared to accept intrusive approaches by panels that put risk assessments under a microscope — as if the panels themselves were equipped to determine what kinds of scientific inquiry or methodology were adequate to ascertain the nature or extent of the risk the defending Member was seeking to regulate Australia—Salmon ; Japan—Apples.

In that case, the Appellate Body failed to overturn a finding of the panel, which read a proportionality requirement into Article 2.


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The role of science in the adjudication of SPS claims is much more limited, and apart from the requirement that the defending Member invoke scientific evidence, essentially the same as a rationality review under the non-discrimination regime. Even under the GATT, a defending Member would likely present some kind of scientific evidence to support its regulation.

Thus, according to the Appellate Body:. Where a panel goes beyond this limited mandate and acts as a risk assessor it would be substituting its own scientific judgement for that of the risk assessor … and, consequently, would exceed its functions under Article 11 of the DSU.

Therefore the review power of a panel is not to determine whether a risk assessment is correct, but rather to determine whether that risk assessment is supported by coherent reasoning and respectable scientific evidence. The Appellate Body said clearly in EC—Hormones that all that a Member must do under the SPS Agreement is provide a report by some competent, respectable scientist who may well be expressing a minority or idiosyncratic point of view that is coherently reasoned and that supports the existence of the risk against which the Member is regulating.

The Member is then free to take measures against that risk that corresponds to the level of protection that it has a sovereign right to determine. The one case where the Appellate Body was faced with applying the substantive standards of the TRIPs Agreement, US—Havana Club raised the issue of whether the USA could deny trade market protection where the mark was originally owned by a business that had been confiscated during the Cuban revolution.

The mark was then acquired from the Castro regime by a major Europe-based drinks conglomerate, Pernod, but in the USA was used by the Bacardi group. Nowhere does this agreement specify the domestic regulation of who may own intellectual property; it only addresses the nature and scope of the rights that must be protected. In theory, governments could achieve very broad policy goals by placing conditions or restrictions on the ownership of intellectual property subject to discrimination disciplines.

The Appellate Body also engaged in chapeau-type strict scrutiny, finding a violation of the non-discrimination norms in the TRIPs Agreement because an arcane provision of the US trademark regime appeared to impose on foreign persons some kind of additional burden or regulatory step that did not apply to US persons. The USA had argued that in practice this could not lead to discrimination because US persons would not in any case have a route available to them for protection under the provisions in question, due to other aspects of US law.

However, exhibiting a typical formalism, the Appellate Body found a violation because this anomaly at least created an apparent hypothetical possibility of less favourable treatment. Perhaps this is one reason why pro-intellectual property interests have not pushed the USA or the EU to challenge the use of TRIPs flexibilities by developing countries in WTO dispute settlement, instead preferring pressures tactics such as threats of removal of the general system of preferences GSP one case was brought against Brazil concerning compulsory licensing and then withdrawn.

One of the few instances where WTO Members have succeeded through negotiation in re-adjusting the Uruguay Round result towards a more pro-South or less neo-liberal direction is with respect to issue of access to medicine, where patent rights under the TRIPs Agreement have been asserted to prevent licensing to provide low-cost medication to poor people in the South. The accord to adjust the TRIPs Agreement on this issue, which entails considerable administrative obstacles to a developing country compulsorily licensing an essential drug that is produced in a different country, may have been acceptable to the USA and the pharmaceutical lobbies in the shadow of the risk that the Appellate Body might have found even broader flexibilities in the existing text of the TRIPs Agreement or in the gaps in that text.

This deference extends to the intensity or strictness of regulation. Thus, as noted above, beginning with the EC—Hormones case, the Appellate Body affirmed the right of a WTO Member to determine its own level of protection against a given harm. In principle, a government could seek in its regulation to achieve a risk of zero. The implication of this level of respect for collective preferences is the rejection of the notion of proportionality in the evaluation of the relationship between means and ends, discussed in the last section on the rationality review.

Proportionality, at least in its strict version, could lead to the invalidation of a policy instrument that makes a contribution towards the achievement of a given level of protection, where that contribution appears small relative to the level of trade restrictiveness in question. In other words, with proportionality, the WTO Member is required to make some sacrifice of the achievement of its chosen level of protection in order to avoid trade restrictiveness.

This kind of trade off is not consistent with the respect for collective preferences, as the Appellate Body understands it. As discussed in the previous section, in one case under the SPS Agreement, Japan—Apples , the Appellate Body deviated from its otherwise consistent rejection of proportionality. Respect for collective preferences also goes to the relative weight or priority that a given society attaches to different regulatory objectives.

Here, the Appellate Body has on occasion deviated from its full respect for collective preferences but, notably, only in order to justify affording an additional margin of deference under rationality review in cases where human life or health is at stake EC—Hormones and EC—Asbestos. What the Appellate Body has never done is to apply explicitly a relatively higher level of scrutiny in a judgment in which the regulatory objective was less vital, or should be less vital, for a given society.

An apparent textual difficulty in operating the respect for collective preferences in a consistent manner is that, with respect to the exceptions in Article XX of the GATT, for example, only some regulatory objectives are listed but not all. One way of handling this issue, which is recommended by some scholars including myself, would be to build collective preferences into the determination of whether a measure is discriminatory and, thus, required to be justified in the first place under Article XX.

In EC—Seal Products , what was at issue was animal welfare, namely the prevention of cruelty to seals. While in fact, as Langille, Sykes and I have shown, regulations addressing animal cruelty have been an element of public morality for some time in many societies, in general, the tendency in the trade policy community has been to make light of the notion of opposing the seal hunt as a genuine moral matter as opposed to a sentimental fad stoked by fanatical NGOs and celebrities hungry for more publicity.

For the panel, which grasped properly the respect for collective preferences already evident in the Appellate Body jurisprudence, and for the Appellate Body itself, there was no place for an objective inquiry into whether concern for animal welfare generally, or, indeed, for the suffering of seals in particular, could or should be a matter of the fundamental beliefs or values of Europeans. This inquiry was essentially a matter of a declaration or assertion by the EU, speaking for its citizens, who were subject ultimately to an implicit condition of good faith — that is, that the declaration not be a sham or pretext for the protection of domestic commercial interests.

Many expected a kind of anti-hypocrisy condition to be put on the invocation of public morals — if you act against cruelty to seals, to show you are serious that animal cruelty is a serious moral matter, then you have to demonstrate that you are as concerned for the suffering of foxes, chickens or pigs.

The rejection of this kind of argument strongly urged by the claimants Canada and Norway illustrates the consistency of the respect for collective preferences by the WTO judicial system.


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Caring more about some animals than others, or prioritizing some animal welfare causes over others, is not a question of rationality or irrationality nor does it necessarily raise the spectre of hypocrisy; it is simply a function of the collective preferences of a particular society, which the WTO adjudicator has no business second-guessing. Overall, the approach to public morals in EC—Seal Products should allow the Appellate Body to be consistent in its respect for collective preferences, providing the possibility of justifying measures for objectives that are not explicitly stated in the other exceptions in Article XX.

In Canada—Renewable Energy , the Appellate Body was faced with an important challenge with legitimacy implications. In a competitive marketplace where consumers only care about the lowest price for a given amount of electricity, no renewable energy would be generated. Yet the SCM Agreement is indifferent to policy objectives, even those that are apparently imperative or vital as to mitigate climate change. In this context, the Appellate Body had to be extremely creative in finding a way of bringing in respect for collective preferences. The subsidies disciplines depend on a notion that a benefit has been provided, which is an advantage over the situation of a normal competitive market.

The Appellate Body hypothesized that a market could itself be the product of collective preferences. In Ontario, the government had constructed a renewable energy market and structured it to achieve certain policy objectives. If the government has created different markets for two products based upon collective preferences, is it proper to postulate a competitive relationship between the products as if there were a single market? Many observers were surprised by the result in Canada—Renewable Energy. However, Antonia Eliason and I had suggested years before the complexity of determining a market benchmark in subsidies disputes related to support for renewable energy.

The USA typically taxes on the basis of nationality rather than residency, and the result can be that US corporations are faced with double taxation, where their operations abroad are such that they attract tax liability in other jurisdictions, which typically tax on the basis of residency. The US foreign sales corporations FSC scheme was intended to address in part this problem, by exempting certain US entities with particular structures from US tax liability when operating offshore. In effect, the FSC scheme could be viewed as allowing the USA to preserve its sovereign choice for a different approach to tax liability over other countries, without penalizing its own industries and traders.

However, there is no necessity to structure a tax system such that differential treatment takes the form of a deviation from a default rule. To see how respect for collective preferences works, let us return to the example of renewable energy. A WTO Member can have a policy that taxes renewable energy industries much less than fossil fuels, which can be expressed simply as two tax rules, one for the renewables sector and a different one for the fossil fuels sector.

A different kind of question about respect for collective preferences is raised by the US—COOL case, where the Appellate Body considered under the TBT Agreement US regulations mandating that information be provided to consumers through labelling about the national origin of certain meat products.

The Appellate Body avoided an inquiry into the policy objectives in providing consumers with the information in question. Consumers might view national origin as a surrogate for the quality or safety of meat which could be rational or could be based on prejudice or misinformation or some of both. Or they might have preferences against certain countries. Could facilitating the latter preferences be intrinsically inconsistent with the concept of non-discrimination in WTO law?

A third question emerges from the way in which the Appellate Body has been operating its strict scrutiny of discrimination. As noted, the Appellate Body operates strict scrutiny of discrimination under the chapeau of Article XX by requiring a tight justification of any distinctions or exceptions in the way that a regulatory scheme is designed to be applied in practice against the stated objective. The EC—Seal Products judgment displays the difficulty the Appellate Body has had in imagining a situation where distinctions or exceptions reflect different objectives — each legitimate — that need to be traded off to some extent.

This seems to limit the extent to which the regulator can take into account the relative strength or intensity of different sets of collective preferences in determining how to make trade-offs within a given regulatory scheme. Where a substantive norm is ambiguous, seemingly not coherent or based on a delicate but elusive historical compromise, the Appellate Body has favoured, selectively, judicial minimalism.

Minimalism can consist of leaving open the meaning of the norm itself while emphasizing procedural or justificatory steps that Members must take in order to show they have had the norm somehow in their consideration. The Appellate Body faulted the USA for having negotiated with some WTO Members and not others about an agreement that would forestall a trade embargo, for rigid application of statutory criteria that did not take account of conditions in different countries and for the lack of reasons for decisions on individual importation applications.

Since the general focus of the chapeau analysis, also discussed earlier, is how the measure is, or will be, actually applied or operationalized, there is a large role for proceduralist judicial minimalism in that analysis. Strictness with respect to procedures seems legitimate where the defending Member has a highly developed legal system, a regulatory democracy that is similar to the US or EU type of model. At the limit, though, it can also produce a sense of legal incoherence that may erode trust in the system and its ability to provide clear guidance as to the meaning of legal rules.

An excellent example of the strengths and perhaps also of the risks of selective judicial minimalism as a means of avoiding controversy concerning the meaning of legal norms is the GSP dispute. One such kind of treatment has been the provision of tariff preferences to developing countries — that is, lower rates of tariff than the MFN rate for developing country exports to developed country WTO Members. A framework was created to allow for an MFN exception for these preferences and to encourage individual developed countries to grant them, but the developing nations failed in their demand that these preferences were binding.

However, the drafting of this instrument made it far from clear whether the criteria were of a legally binding nature or whether they reflected the ultimate aspiration for what would be achieved through a voluntary preference scheme. Meeting these conditions would allow a developing country to receive the highest margin of preferentiality for its imports into the EU.

A successful ruling for India might have given India and other developing countries a boost to negotiate greater legal security for this kind of special and differential treatment in the Doha Round, and this was perhaps the gambit. Yet striking down conditionality on GSP preferences would have undermined a very strong understanding, especially among legislators in the EU and the USA, that GSP is a voluntarily conferred benefit to which strings can be attached.

Being prohibited from attaching those strings might well have led to a loss of interest from legislators in supporting the GSP at all. Listing a country was an act of essentially unfettered bureaucratic discretion, with no requirement to give reasons or an explanation. This feature made the drug preferences fundamentally different from those related to environmental and labour conditionalities, which were rather precisely defined.

The panel below held for India that any conditionality in the granting of GSP preferences was incompatible with non-discrimination in the Enabling Clause. First of all, it agreed with India that the non-discrimination requirement in the Enabling Clause was a binding hard law commitment. Not to have done so, arguably, would have sent a very negative message about legal security in special and differential treatment and would have made the atmosphere of the Doha Round even more tense in terms of divisions between developing and developed countries.

Instead, the Appellate Body emphasized the importance of transparency and due process to the non-discrimination norm and relied heavily on the lack of objective criteria in the drug preferences. Drawing on the language in the Enabling Clause, the Appellate Body did impose one substantive discipline: to be non-discriminatory, the conditionality had to make a positive contribution to the development needs of the country concerned. According to Shaffer and Apea, many developing countries have been deeply disappointed by the Appellate Body ruling.

Shaffer and Apea themselves take the view that the Appellate Body was in fact placing a high hurdle in front of a preference-giving Member and regrets the unwillingness of developing country members to test this in further litigation. But by leaving the key substantive norm undertermined, the Appellate Body made any such effort inherently risky, for it could lead to a legal baseline unfavourable to efforts to secure greater legal security for preferences, which is the key objective of many developing countries.

Selective judicial minimalism has loomed large in another area of WTO law that has presented something of a political minefield — the constraints on unilateral trade measures that have been traditionally permitted under the multilateral trading order, including anti-dumping duties and countervailing duties in response to purportedly unfair trade practices of other Members and safeguard or emergency action in response to a crisis in a domestic industry due to a sudden increase in imports.

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Negotiations in the Uruguay Round to constrain these forms of unilateralism were intense and difficult — not only the USA but also the EU placed a considerable weight on being able to retain the ability to use these instruments, including in response implicitly to demands of protectionist domestic constituencies. Economists have generally seen the legal standards for imposition of unilateral fair trade remedies as having no sound economic basis though they can be explained in positive political economic terms of the demand of domestic interest groups for protectionism.

With the substantive standards for disciplining unilateral trade remedies lacking coherence, and the product of a rather brutal power-based negotiation, it is not surprising that the Appellate Body has tended to resort to selective judicial minimalism in these cases. In the early cases on safeguards — US—Lamb Meat and US—Steel Products — the Appellate Body tackled the substantive norms that required that to apply safeguards the sudden increases in imports must be due to unforeseen developments and that the increases in imports must have a causal relation to the injury in the domestic industry.

Giving an economics-based meaning to these norms is well nigh impossible, so the Appellate Body essentially faulted a lack of reasoning or inadequate consideration of the evidence or a failure to take into account all factors that might be contributing to the injury. It impugned the quality of the process by which the domestic agency imposed the safeguards while giving little guidance as to what the substantive norms that the agency was to apply actually do mean. At some point, the quantity and quality of reasons given for the decision, and evidence considered, would be sufficient, but to know at what point this was would require arguably some understanding of the substantive norm.

The safeguards cases strained the limits of judicial minimalism, although one can understand the logic of the Appellate Body in resorting to it. Another instance of judicial minimalism is a countervailing duties case, US—Softwood Lumber. The US lumber industry argued that this price was lower than that which would result from a market mechanism to determine prices for example, auctions of the kind often used in the USA.

The WTO SCM Agreement provides that the benchmark for determining whether the price at which the government sells a good or service is below market and, therefore, potentially a subsidy is the market condition in the defending Member — in this case, Canada. Thus, there was no genuine market benchmark in the Canada, and the US agency should therefore be able to use auction prices in the USA as the benchmark. So the Appellate Body simply said to the USA that it could use another benchmark, if it could justify that benchmark, without indicating what would or would not be acceptable.

The Appellate Body began with something like a judicial minimalist approach, avoiding a hard per se rule against zeroing in all circumstances and addressing the practice in a case-by-case, contextual manner. Significantly, the individual ultimately chosen was a consummate WTO insider.