Chapter 9

GATT Law and WTO:  Basic Principles

 

I. Import Barriers to Trade

        A. Anatomy of a trade war: auto parts to Japan

                1. US position

                2. Japanese position

                3. Breakdown in negotiations

                4. Last minute settlement

        B. Reasons for regulating imports

        C. Tariffs

        D. Nontariff barriers to trade

                1. Embargoes

                2. Quotas

                3. Auctioned quotas

                4. Tariff rate quotas

        E. Indirect nontariff barriers

                1. Japanese Large Scale Retail Stores Law

                2. Import licensing schemes and customs

                3. Procedures as trade barriers

        F. Transparency

        G. Impact of trade barriers on managerial decisions

 

II. GATT

        A. GATT Framework

        B. GATT and US Law

        C. GATT agreements as a basis of interpretation of US law

        D. Scope and coverage of GATT 1947

        E. Scope and coverage of GATT 1994

 

III. WTO

        A. Organization of WTO

 

IV. GATT/WTO Dispute Settlement Procedures

        A. WTO Dispute settlement procedures

European Communities—Regime for the Importation, Sale & Distribution of Bananas (Appellate Body of WTO)

Facts:  EC had tariffs and non tariff barriers favoring former colonies in Africa, Caribbean, and Pacific (ACP) over other producers, mostly in Latin America.  Non-ACP countries challenged the provisions and asked for consultation under WTO rules.  USA joined with Latin American countries, even though not a producer.  There were US wholesalers.

Issue: Can USA, as a non producer, bring a challenge under WTO?  Must USA demonstrate what would be called “standing” under US law?

Holding: No.  Standing is not required.  It is better to let each government judge for itself if it has an interest, and then let WTO decide the case.

NOTE: Court did point out USA has wholesalers in the industry, and also has an interest in the overall banana market as a consumer. USA probably would have had standing, if it were required, it seems.

        B. Precedential value

 

V. GATT 1994: Major Principles of Trade Law

        A. Multilateral Trade Negotiations

                1. Kennedy Round

                2. Tokyo Round

                3. Uruguay Round

                4. Doha Development Agenda

                5. Seattle and Cancun Meetings

        B. Tariffication

                1. Zero for zero tariff elimination

        C. Tariff concessions, bound rates, and tariff schedules

EEC—Import Regime for Bananas, 34 ILM 177 (1995)

Facts:  More on the banana wars.  Tariff schedule called for 20% ad valorem rate on bananas.  EEC took over from individual countries, and raised rates 20-180%.  EEC also set up complex licensing scheme.

Issue: Did EEC violate GATT obligation to meet scheduled rates?

Holding: Yes.  New tariff rates violated the schedule as previously agreed.

 

VI. Nondiscrimination, MFN, National Treatment

        A. MFN Trade

                1. Unconditional MFN trade

                2. Normalization of US trade relations with Russia and Vietnam

                3. Normal Trade Relations and Human Rights

                4. Normalization of trade relations with China

                        a. Other exceptions to NTR

        B. National Treatment (local law may not protect local companies)

Japan—Taxes on Alcoholic Beverages (1996)

Facts:  Japan taxed liquor based on ten categories.  Shochu is made from potatoes, buckwheat and other grains, and is a lot like vodka.  Tax on vodka, however, was 7-8 times tax on shochu.  GATT article III forbids discriminatory treatment for a “like product” that is “directly competitive and substitutable.”

Issue: Is Japan unfairly discriminating against foreign spirits?

Holding: Yes. Schochu is enough like other hard liquor that treatment must be the same.

NOTE:  US had to take Japan to arbitration because Japan was dragging its feet (1997).  Japan agreed to revise tariff system to comply by April 1, 2002.  US exports to Japan increased dramatically thereafter.

 

VII. GATT and the Elimination of Quotas

        A. Quantitative restrictions: balance of payments exception and developing countries

India—Quantitative Restrictions on Imports of Agricultural, Textile & Industrial Products (1999)

Facts: India had numerous quotas and licensing restrictions to prevent imports.  Indian government controlled imports to a large extent.  US brought WTO action, asking that restrictions on 2714 products be removed.  India claimed that its foreign exchange would all leave the country, upsetting its balance of payments.

Issue: Must India speed up the rate of removal of restrictions?

Holding: Yes.  Balance of payments situation was not bad enough to justify these restrictions.