1. GATT: Fundamental principles
The predecessor of WTO, GATT, aims at the reduction of tariffs and the
elimination of discriminatory treatment in international commerce
(Preamble GATT 1994). Note that parties to the WTO have given their
consent to be bound by the treaty; therefore, it is only logical that
GATT imposes obligations on these state parties.
Among the fundamental legal principles of GATT are the most-favoured
nation clause (MFN, Article I GATT), the National Treatment clause (NT,
Article III GATT), the General Elimination of Quantitative Restrictions
(Art. XI (1) GATT) and Anti-dumping and Countervailing Duties (Art. VI
GATT).
1.1. Non-discrimination
Taken together, the MFN (Art. I GATT) and NT (Art. III GATT) underlie the non-discrimination principle.
Art. I (1) GATT provides that any advantage granted by any contracting
party to any product originating or destined for any other country,
shall be accorded immediately and unconditionally to the like product originating or destined for the territories of all other contracting parties.
Art. III (2) GATT provides that the products of any other contracting
party shall not be subject, directly or indirectly, to internal taxes or
other internal charges of any kind in excess of those applied to like
domestic products; moreover, the products imported into the territory of
another contracting party shall be accorded treatment no less
favourable than that accorded to like products of national origin (only differential charges may be applied, based on the means of transport and not nationality of the product).
1.2. Market liberalization
Aiming at the liberalization of the global trade, tariffs need to be
reduced and consolidated, Article II GATT (Schedules of Concessions).
For the conditions of liberalization to be satisfied, Article III GATT
is as necessary as it is for realizing the non-discrimination principle.
Without the provisions of Art. III GATT, Article II GATT would be
rendered of its practical value.
An example to explain this. State Q. confines itself to the reduction
and consolidation of the tariff on imported cigarettes- the tariff is
10%. State R. imports cigarettes into the territory of State Q.
State Q. lower the tariff on domestic cigarettes (which would be considered like products by the Dispute Body) to 5%.
Should Article III GATT not be applicable, then it would be possible for
State Q. to ultimately render the Schedules of Consessions from their
effect; it could simply do so by favouring its internal market. From
this example, it should be clear that provisions on market
liberalization cannot do without the principle of non-discrimination
(not without reason, MFN and NT are fundamental principles).
1.3. Exceptions
A state member to the WTO, restricting the import of products by another
state member, could invoke exeptions to justify the application of
restrictive measures. General exceptions are found in Article XX GATT;
important exceptions are, for example, the protection of human, animal
and plant life or health (b) and the conservation of exhaustible natural
resources, if such measures are made effective in conjunction with
restrictions on domestic production or consumption.
Is the restrictive measure jusitified, the measure needs to meet the
requirements under the "Chapeau", the Introductory Clause to Article XX
GATT. Measures shall not be applied in a manner which would constitute a
means of arbitrary or unjustifiable discrimination between countries
where the same conditions prevail, or a disguised restriction on
international trade.
Thus, assuming that a measure is related to one of the purposes of the
general or specific exceptions, any discriminating application of the
measure is a violation of the exceptions provided.
2. WTO Dispute Settlement Understanding (WTO-DSU)
Before bringing a dispute before the Panel, Members should utilize
diplomatic means, the first of these being consultations (Article 4
DSU). If the consultations fail to settle a dispute within sixty days
after the date of receipt of the request for consultations, the
establishment of an ad hoc panel may be requested (Art. 4(7) DSU). The
Procedures before the Panel are set out in Article 12 DSU.
The Appellate Body hears appeals from panel cases (Appellate review,
Art. 17 DSU). Only parties to the dispute may appeal a panel report, but
third parties which have notified the DSB of a substantial interest in
the matter, pursuant to Article 10(2) DSU, may make submissions to and
be given an opportunity to be heard by the AB (Art. 17(4) DSU). The
appeal shall be limited to issues of law, covered in the panel report
and legal interpretations developed by the panel (Art. 17(6) DSU).
Both the panel procedure and appellate review work on a system of
negative consensus: the DSB panel report will be adopted, unless all
member decide by consensus not to adopt the report (Article 17 DSU).
Following the appellate review, an AB report shall be adopted by the
Dispute Settlement Body, consisting of all WTO Members. Again, the
report shall be adopted by negative consensus (Art. 14 DSU). This
mechanism is often referred to as "quasi-automatic", as a decision by
one or more, but not all Members, cannot affect the adoption of the
report.
