International trade law on WTO, Study notes of International Law

Download International trade law on WTO and more Study notes International Law in PDF only on Docsity! GROUP 2 NAMES REGISTRATION NUMBER BABIRYE REHEMA AS19B11/038 YIGA ROY FRANCIS AS19B11/401 GIFT KISAKYE AS19B11/286 NAMIIRO BENITA AS19B11/339 NABUYONDO MERCY AS19B11/ 321 ARINAITWE JAMES AS19B11/015 BIRABWA FAITH LUCY AS19B11/ 040 ATUHEIRE GLORIA AS19B11/237 TUMUSIIME MARVIN AS19B11/393 KOBUSINGYE JACKLINE AJ21B11/001 International trade refers to the sale and purchase of goods and services across international borders, this trade is carried out through a contract between two or more states which is regulated by the world trade organization. The World Trade Organization (WTO) is an instrumental body in this respect as it has an obligation to supervise and liberalize international trade1. The World Trade Organization (WTO) was established on January 1, 1995 as a successor to the General Agreements on Trade and Tariffs which were created in 19482. The multilateral trade agreements annexed to a single document, named the Marrakesh Agreement establishes the World Trade Organization (WTO Agreement). It has 164 member countries. Article 1 of the WTO Agreement established the World Trade Organization. This Agreement is registered in accordance with Article 102 of the United Nations Charter3.The main objective of the WTO is to promote and regulate international trade by establishing a framework of rules and agreements that member countries agree to follow. The WTO plays a critical role in promoting Free trade and economic growth, and its importance has only increased in the era of globalization4. The WTO facilitates the implementation, administration and operation as well as further the objectives of the WTO Agreements.5 This enhances cooperation between states and non-state actors through remaining in constant touch with various non-governmental organizations, media, parliamentary members, other international organizations and the general public. This also facilitates states in getting opinions on various aspects of WTO and ongoing negotiations and maintain the cooperation in the international trading system, this helps to develop and smoothen the international trade affairs among different nations. The WTO facilitates commercial operations for exporters, importers, and producers of goods and services6. It has a responsibility to analyze, disseminate, and ensure the coherence and transparency of national trade policies through oversight of the formulation of international economic policy7. As a result of the existence of the WTO system, there is unprecedented multilateral reduction in tariffs on products in international trade. 1Sylvia Mercado Kierkegaard, International Law and Trade:Bridging the East-West Divide by Sylvia Mercado Kierkegaard Revised Edition (2007). P.73 2 The World Trade Organization Law, Practice and Policy, Michael Hahn J. 3 Ibid 4 WTO Agreement Art III 5 Ibid Article :1Ⅲ 6‘Understanding WTO: Who We Are’ <https://www.wto.org/english/thewto_e/whatis_e/who_we_are_e.htm#:~:text=The WTO operates the global,they face%29with each other>. 7ibid. 2. THE National Treatment obligation under the GATT stipulates that Members must not accord discriminatory treatment between imports and “like” domestic products (with the exception of the imposition of tariffs, which is a border measure). The purpose of the national treatment rule is to eliminate “hidden” domestic barriers to trade by WTO Members through according imported products treatment no less favorable than that accorded to products of national origin. The adherence to this principle is important to maintain the balance of rights and obligations, and is essential for the maintenance of the multilateral trading system. The Appellate body has stated in respect to the purpose of the national treatment objective of Article of the GATT 1994 as one to ensure internal measures not to be applied to imported orⅢ domestic products so as to afford protection to domestic production such that members are obliged to provide equality of competitive conditions for imported products in relation to domestic products.14 The national treatment obligation of Article of the GATT is an obligationⅢ of general application that applies both to measures affecting products with regard to which members have made tariff concessions and to measures affecting products with regard to which members have not done so.15 Article (1) lies down the general principle that internal measures should not be applied so asⅢ to afford protection to domestic production. According to the Appellate body in Japan- Alcoholic Beverages Ⅱ it stated that the general purpose of Article :1 is to establish the general principleⅢ as a guide to understanding and interpreting the specific obligations in Article :2 and in otherⅢ paragraphs of Article 3 while respecting, and not diminishing in any way, the meaning of the words actually used in the texts of other paragraphs. Article 3(2) stipulates a non-discrimination obligation relating to internal taxation of like products in the first sentence and the other set down in the second sentence relating to internal taxation of ‘directly competitive or substitutable products’. The legal test relating to internal tax or other internal charge of any kind relating within the meaning of Article 3(2) require examination of whether the measure at issue is an internal tax or other internal charge on products, whether the imported and domestic products are like products and whether the 14 Japan- Alcoholic Beverages (1996).Ⅱ 15Van den Bossche P, The Law and Policy of the World Trade Organization: Text, Cases and Materials (Cambridge University Press 2022) p.688. imported products are taxed in excess of the domestic products.16 The proceeding paragraphs will contain a brief analysis of certain individual aspects of the three tier test above. The first aspect relates to ‘internal taxes and other charges of any kind’. In Argentina-Hides and Leather (2001) noted that the term charge denotes inter alia a pecuniary burden and a liability to pay money laid on a person’ Examples of such internal taxes include value added taxes (VAT), sales taxes and excise duties.17 The panel in China-Auto parts (2009) noted that it is not because a charge is paid at the time of importation that it is a custom duty or other boarder charge within the meaning of Article 2(2) however the obligation must accrue at an internal event such as the distribution, sale use or transportation of the imported product.18 The second individual aspect drawn from the test above relates to ‘like products’ It is pertinent to note that it is only between ‘like’ imported and domestic products that the national treatment obligation applies and discrimination within the meaning of Article 3:2, first sentence may occur.19 In Japan- Alcoholic Beverages 2 (1996) the question was whether sochu and vodka should be considered like products. The Appellate body ruled that this concept should be construed narrowly a case by case basis. It further stated that the determination of likeness was about the nature and extent of a competitive relationship between and among products.20 The third individual aspect of consistency with the national obligation with the national treatment obligation under the first sentence of Article 3:2 relates to whether the imported products are taxed in excess of the domestic products. The Appellate body has ruled that even the smallest amount of “excess” is too much.21 Taxation in excess also requires a comparison of actual tax burdens rather than nominal tax rates.22 The non-discrimination obligation under Article 3:2 second sentence relates to products that are directly competitive or substitutable23 In Canada- Periodicals (1997), the Appellate body ruled 16 Van den Bossche P, The Law and Policy of the World Trade Organization: Text, Cases and Materials (Cambridge University Press 2022) p.697. 17 Ibid. 18 Appellate Body Reports, China-Auto Parts (2009) para 162. 19 Van den Bossche P, The Law and Policy of the World Trade Organization: Text, Cases and Materials (Cambridge University Press 2022) p.702. 20 Philippines- Distilled Spirits (2012) para 170. 21 Japan- Alcoholic Beverages 2 (1996) p.23. 22 Argentina-Hides and Leather (2001) para 11.182. 23Note Ad Article .Ⅲ that the scope of directly competitive products is broader than that of the likeness in the first sentence. These products offer alternative ways of satisfying a particular need or taste.24 Article III:4 provides that Members shall accord imported products treatment no less favorable than that accorded to “like products” of national origin. In determining the similarity of “like products,” GATT panel reports have relied on a number of criteria including tariff classifications, the product’s end uses in a given market, consumer tastes and habits, and the product’s properties, nature and quality. The same idea can be found in reports by WTO panels and the Appellate Body. The exceptions to the national treatment obligation include Government Procurement. Article III:8(a) permits governments to purchase domestic products preferentially, making government procurement one of the exceptions to the national treatment rule. This exception is permitted because WTO Members recognize the role of government procurement in national policy. While the GATT made government procurement an exception to the national treatment rule, the Agreement on Government Procurement resulting from the Uruguay Round mandates signatories to offer national treatment in their government procurement. However, WTO Members are under no obligation to join the Agreement on Government Procurement. Domestic Subsidies. GATT Article III:8(b) allows for the payment of subsidies exclusively to domestic producers as an exception to the national treatment rule, under the condition that it is not in violation of other provisions in Article III and the Agreement on Subsidies and Countervailing Measures. The reason for this exception is that subsidies are recognized to be an effective policy tool, and is recognized to be basically within the latitude of domestic policy authorities. However, because subsidies may have a negative effect on trade, the Agreement on Subsidies and Countervailing Measures imposes strict disciplines on the use of subsidies. In conclusion, all the provisions above can be seen to achieve the objective of avoiding protectionism in the application of internal taxation and regulation measures thus placing on al;l WTO members an obligation to provide equality of competitive opportunities for imported products. The national obligation is indeed met with some challenges including indiscriminate invocation of the national security exception to restrict imports. 24 Appellate Body Report, Korea-Alcoholic Beverages (1999), para 118.