Lecture 1: The WTO Dispute Settlement – the Past, Present and Future
1. Dispute Settlement in the GATT
No detailed dispute mechanism;
De facto basis can be found in:
GATT Article XXII – ‘Consultation’;
‘…any matter affecting the operations of this Agreement”
GATT Article XXIII – ‘Nullification or Impairment’; 丧失或减损
“make written representations or proposals to the other contracting party or parties which it considers any benefit accruing to it directly or
indirectly under this Agreement is being nullified or impaired or that the attainment of any objective of the Agreement is being impeded.”
“If no satisfactory adjustment is effected between the contracting parties concerned within a reasonable time, the matter may be referred to the
contracting parties.”
“…they may authorize a contracting party or parties to suspend the application to any other contracting party or parties of such concessions or
other obligations under this Agreement as they determine to be appropriate in the circumstances.
What are the types of complaints?
‘Article XXIII: Nullification or Impairment 无效或减值
1. If any contracting party should consider that any benefit accruing to it directly or indirectly under this Agreement is being nullified or
impaired or that the attainment of any objective of the Agreement is being impeded as the result of
(a) the failure of another contracting party to carry out its obligations under this Agreement, or (Violation)
(b) the application by another contracting party of any measure, whether or not it conflicts with the provisions of this Agreement, or
(Non-violation)
(c) the existence of any other situation’ (Situation)
The Development of Dispute Settlement under the GATT

First case - GATT/CP.2/SR.11 (24 August 1948), the Chairman alone decided the case without discussion or explanation, the respondent
removed the offending measure; 在主席未经讨论或解释而单独决定案件后，被告取消了违法措施;

Working parties consisting of representatives from various contracting parties investigated disputes and recommended action where
agreement could be reached; 由各缔约方代表组成的工作组调查争端并在可达成协议时建议采取行动;

By the 1950s, an ad hoc panel of unbiased, neutral trade experts can take evidence, hear arguments, rule on the legal issues and merits
of the complaint and submit a written report; 一个由不偏不倚、中立的贸易专家组成的特别小组可以收集证据、听取辩论、就申诉
的法律问题和是非曲直作出裁决，并提交书面报告;

Additional procedurals were developed to make the system more rules-based
开发了额外的程序，使系统更加基于规则
The positive assessment of the dispute settlement under the GATT 积极评价
‘Governments understood the legal rulings implicit in its vaguely-worded decisions, and once these rulings were approved by the GATT
Contracting Parties, defendant governments almost always felt it necessary to comply. The reason these impressionistic half-decisions were
successful was that the early GATT of the 1950s was essentially a small "club" of likeminded trade policy officials who had been working
together since the 1946-1948 ITO negotiations. They all knew what they had meant to say in the General Agreement (even if they hadn’t always
said it clearly). Thus they did not need a very elaborate decision-making procedure to generate an effective consensus about what particular
governments were expected to do.’--Robert Hudec, ‘The New WTO Dispute Settlement Procedure: An Overview of the First Three Years’ (1999)
Minnesota Journal of International Law
Features and Deficiencies of Dispute Settlement under the GATT 关贸总协定争端解决的特点与不足
The preference for negotiated settlements;
132 GATT dispute settlement reports were issued (1948-1994);
Lack of explicit guidance;
The possible abuse of ‘veto’ power;
The frequent panel delays
and the uneven quality of the panel reports;
The lack of transparency in the decision-making process;
The formal process of DS developed very slowly.
Dispute Settlement in the WTO

Article 2.1 of the Dispute Settlement Understanding (DSU) establishes the Dispute Settlement Body (DSB) to administer the DSU’s rules
and procedures, including: to establish dispute settlement panels; to adopt panel and Appellate Body reports; to maintain surveillance of
implementation rulings; to authorize Members to suspend concessions and other obligations; 建立争端解决小组;通过专家组和上诉机
构的报告;维持对执行裁定的监督;授权各成员中止减让和其他义务;

Article 2.3 of the DSU mandates the DSB to meet ‘as often as necessary to carry out its functions’“在必要时经常开会以履行其职能”
Key Stages of the DSU Process
Consultations---panel---appellate review---Implementation---compliance and compensation or retaliation 服从和补偿或报复
Stage 1: consultation
When a Member requests consultations with another Member regarding ‘nullification or impairment’ of benefits;
Process is confidential; 当成员要求与另一成员就利益的“无效或减值”进行协商时; A large number of disputes are resolved at the
consultations stage either through a mutually agreed solution or through abandonment;
大量争端在协商阶段通过双方同意的解决办法或
通过放弃得到解决
60 days (maximum)
Upon a request for consultations, the member concerned must reply within ten days and must enter into good faith consultations within thirty
days after receiving the request.在提出协商请求时，有关成员必须在 10 天内作出答复，并必须在收到请求后 30 天内进行真诚协商
Stage 2: panel process
Panel set up and panelists appointed (45 days) --Final panel report to parties ( 6 months)--Final panel report to WTO Members ( 3 weeks)--DSB
adopts the panel report (60 days).
Stage 3: Appellate Review
The Appellate Body: seven members (four-year term, one-time reappointment for further four-year term);
Three members serve on any one case (on a rotating basis through random selection);
Appeals are limited to the issues of law covered in the panel report and legal interpretations; 限于小组报告和法律解释所涉及的法律问题
The Appellate Body has the authority to uphold, modify or reverse the legal findings and conclusions 上诉机构有权支持、修改或推翻法律调
查结果和结论
60-90 days for the appeal report --DSB adopts the appeal report (30 days)
Stage 4: implementation
Article 3.7 of the DSU: the primary objective of dispute settlement is to secure the modification or withdrawal of the offending measure 争端
解决的主要目标是确保违规措施的修改或撤销
Article 19.1 of the DSU: a Member found to be in violation ‘brings the measure into conformity with’ WTO rules
Article 21.1 of the DSU: ‘prompt compliance is essential’
Article 21.3 of the DSU outlines three ways of determining a reasonable period of time

The Member concerned proposes a period and the DSB approves the nominated timeline

The complaining party and implementing Member agree on an implementation period within 45 days following adoption of the
ruling

If neither of the first two methods occur, the period can be set by binding arbitration
有关成员提出一个期限，争端解决机构批准指定的时间表。申诉方和执行成员商定在裁决通过后 45 天内的执行期限。如果前两
种方法均未出现，期限可以通过具有约束力的仲裁来设定。
Article 21.6 of the DSU provides for monitoring of the implementation process 对实施过程进行监控
Stage 5: Compliance Review and Compensation/Retaliation
Article 21.5 of the DSU: ‘where there is disagreement as to the existence or consistency with a covered agreement of measures taken to
comply with the recommendations and rulings such dispute shall be decided through recourse to these dispute settlement procedures,
including wherever possible resort to the original panel.”
Article 22 of the DSU: If no compliance, complainant can seek authorization from the DSB to withdraw concessions (i.e., to impose sanctions)
如不遵守，投诉人可寻求 DSB 授权撤回让步(即:制裁)
Articles 21.5 and 22.6 lay out rules for the use of retaliatory measures:
The amount of retaliation should be equal to the amount of harm caused by the offending measure (an arbitrator can determine the amount)
报复的数量应该等于违规造成的伤害量测量(仲裁员可以确定)
The retaliatory measure will be in the same sector as the offending measure (but if ‘impractical’ or ‘not effective’ allows for
cross-retaliation)
Retaliatory measures remain in place until the losing party has complied. 在败诉一方遵守协议之前，报复措施将继续有效
Unilateral retaliation is prohibited 禁止单方面报复
Procedural Issues
Burden of proof---decision making ( objective assessment)---decision making (treaty interpretation)---stare decisis--standard of review--judicial
economy
DS152: United States — Sections 301–310 of the Trade Act 1974
Measure at issue: US legislation (i.e. Sections 301-310 of the Trade Act of 1974) authorizing certain actions by the Office of the United States
Trade Representative (‘USTR’), including the suspension or withdrawal of concessions or the imposition of duties or other import restrictions,
in response to trade barriers imposed by other countries.
Does legislation that gives national authorities the possibility, to act either consistently or inconsistently with their WTO obligations, violate
those obligations ?
Key Panel Findings:
DSU Art. 23.2(a) ‘prohibition on unilateral determinations’ – Section 304 and Section 306 禁止单方面决定
DSU Art. 23.2(c) ‘authorization of suspension’ – Sections 305 and 306(b) 暂停授权
DSU Art. 23
2. In such cases, Members shall:
(a) not make a determination to the effect that a violation has occurred, that benefits have been nullified or impaired or that the attainment of any
objective of the covered agreements has been impeded, except through recourse to dispute settlement in accordance with the rules and
procedures of this Understanding, and shall make any such determination consistent with the findings contained in the panel or Appellate Body
report adopted by the DSB or an arbitration award rendered under this Understanding;
(c) follow the procedures set forth in Article 22 to determine the level of suspension of concessions or other obligations and obtain DSB
authorization in accordance with those procedures before suspending concessions or other obligations under the covered agreements in response
to the failure of the Member concerned to implement the recommendations and rulings within that reasonable period of time.
The Appellate Body in Paralysis
Why does the US dismantle the dispute settlement system? 为什么美国要废除争端解决机制
Any solutions?
Solution One: European Union and 11 other WTO members including China, India, and Canada made proposals

Ensure the appeal proceedings can finish on time in line with the 90-day timeframe

Put in place new rules for outgoing Appellate Body Members which make clear in which cases they can stay on to complete the appeal
proceedings

Indicate that the Appellate Body should only address issues necessary to resolve the dispute

Introduce annual meetings between WTO Members and the Appellate Body to discuss in an open way systematic issues
Solution Two: the draft General Council Decision on the Functioning of the Appellate Body

Only WTO Members may appoint members of the Appellate Body

obligated to fill vacancies as they arise

90-days timeline
Solution Three: the multi-party interim appeal arbitration arrangement, or MPIA

based on existing WTO rules to hear appeals in disputes between them while the Appellate Body has fewer than three Members

appeals will be resolved by a division of three arbitrators made up of former Appellate Body Members

temporary and will cease to apply once the Appellate Body is operational
Importance of WTO dispute settlement system
The best international agreement is not worth very much if its obligations cannot be enforced when one of the signatories fails to comply with
such obligations. An effective mechanism to settle disputes thus increases the practical value of the commitments the signatories undertake in an
international agreement. The fact that the Members of the (WTO) established the current dispute settlement system during the Uruguay Round of
Multilateral Trade Negotiations underscores the high importance they attach to compliance by all Members with their obligations under the
WTO Agreement. Settling disputes in a timely and structured manner is important. It helps to prevent the detrimental effects of unresolved
international trade conflicts and to mitigate the imbalances between stronger and weaker players by having their disputes settled on the basis of
rules rather than having power determine the outcome. Most people consider the WTO dispute settlement system to be one of the major results
of the Uruguay Round. After the entry into force of the WTO Agreement in 1995, the dispute settlement system soon gained practical importance
as Members frequently resorted to using this system.
Functions, objectives and key features of the dispute settlement system
Providing security and predictability to the multilateral trading system 为多边贸易体系提供安全和可预测性
A central objective of the (WTO) dispute settlement system is to provide security and predictability to the multilateral trading system (Article 3.2
of the DSU). Although international trade is understood in the WTO as the flow of goods and services between Members, such trade is typically
not conducted by States, but rather by private economic operators. These market participants need stability and predictability in the government
laws, rules and regulations applying to their commercial activity, especially when they conduct trade on the basis of long-term transactions. In
light of this, the DSU aims to provide a fast, efficient, dependable and rule-oriented system to resolve disputes about the application of the
provisions of the WTO Agreement. By reinforcing the rule of law, the dispute settlement system makes the trading system more secure and
predictable. Where non-compliance with the WTO Agreement has been alleged by a WTO Member, the dispute settlement system provides for a
relatively rapid resolution of the matter through an independent ruling that must be implemented promptly, or the non-implementing Member
will face possible trade sanctions.DSU 旨在提供一个快速、高效、可靠和以规则为导向的系统，以解决有关适用《WTO 协定》条款的争
端。通过加强法治，争端解决体系使贸易体系更安全、更可预测。
Preserving the rights and obligations of WTO Members
维护世贸组织成员的权利和义务
Typically, a dispute arises when one WTO Member adopts a trade policy measure that one or more other Members consider to be inconsistent
with the obligations set out in the WTO Agreement. In such a case, any Member that feels aggrieved is entitled to invoke the procedures and
provisions of the dispute settlement system in order to challenge that measure.
If the parties to the dispute do not manage to reach a mutually agreed solution, the complainant is guaranteed a rules-based procedure in
which the merits of its claims will be examined by an independent body (panels and the Appellate Body). If the complainant prevails, the
desired outcome is to secure the withdrawal of the measure found to be inconsistent with the WTO Agreement. Compensation and
countermeasures (the suspension of obligations) are available only as secondary and temporary responses to a contravention of the WTO
Agreement (Article 3.7 of the DSU).
Thus, the dispute settlement system provides a mechanism through which WTO Members can ensure that their rights under the WTO
Agreement can be enforced. This system is equally important from the perspective of the respondent whose measure is under challenge, since
it provides a forum for the respondent to defend itself if it disagrees with the claims raised by the complainant. In this way, the dispute
settlement system serves to preserve the Members’ rights and obligations under the WTO Agreement (Article 3.2 of the DSU). The rulings of
the bodies involved (the DSB the Appellate Body, panels and arbitrations1) are intended to reflect and correctly apply the rights and obligations
as they are set out in the WTO Agreement. They must not change the WTO law that is applicable between the parties or, in the words of the
DSU, add to or diminish the rights and obligations provided in the WTO Agreements (Articles 3.2 and 19.2 of the DSU).争端解决制度提供了一
种机制，世贸组织成员可以通过该机制确保其根据《世贸组织协定》享有的权利能够得到执行。从其措施受到质疑的答辩人的角度来
看，这一制度同样重要，因为如果答辩人不同意申诉人提出的索赔，这一制度为答辩人提供了一个自我辩护的场所。通过这种方式，
争端解决机制有助于维护成员在《WTO 协定》(DSU 第 3.2 条)下的权利和义务。
Clarification of rights and obligations through interpretation
The precise scope of the rights and obligations contained in the WTO Agreement is not always evident from a mere reading of the legal texts.
Legal provisions are often drafted in general terms so as to be of general applicability and to cover a multitude of individual cases, not all of
which can be specifically regulated. Whether the existence of a certain set of facts gives rise to a violation of a legal requirement contained in a
particular provision is, therefore, a question that is not always easy to answer. In most cases, the answer can be found only after interpreting the
legal terms contained in the provision at issue.
In addition, legal provisions in international agreements often lack clarity because they are compromise formulations resulting from multilateral
negotiations. The various participants in a negotiating process often reconcile their diverging positions by agreeing to a text that can be
understood in more than one way so as to satisfy the demands of different domestic constituents. The negotiators may thus understand a
particular provision in different and opposing ways.
For those reasons, as in any legal setting, individual cases often require an interpretation of the pertinent provisions. One might think that such
an interpretation cannot occur in (WTO) dispute settlement proceedings because Article IX:2 of the WTO Agreement provides that the
Ministerial Conference and the General Council of the WTO have the “exclusive authority to adopt interpretations” of the WTO Agreement.
However, the DSU expressly states that the dispute settlement system is intended to clarify the provisions of the WTO Agreement “in accordance
with customary rules of interpretation of public international law” (Article 3.2 of the DSU).
The DSU, therefore, recognizes the need to clarify WTO rules and mandates that this clarification take place pursuant to customary rules of
interpretation. In addition, Article 17.6 of the DSU implicitly recognizes that panels may develop legal interpretations. The “exclusive authority”
of Article IX:2 of the WTO Agreement must therefore be understood as the possibility to adopt “authoritative” interpretations that are of general
validity for all WTO Members — unlike interpretations by panels and the Appellate Body, which are applicable only to the parties and to the
subject matter of a specific dispute. Accordingly, the DSU mandate to clarify WTO rules is without prejudice to the rights of Members to seek
authoritative interpretations under Article IX:2 of the WTO Agreement (Article 3.9 of the DSU).
As regards the methods of interpretation, the DSU refers to the “customary rules of interpretation of public international law” (Article 3.2 of the
DSU). While customary international law is normally unwritten, there is an international convention that has codified some of these customary
rules of treaty interpretation. Notably, Articles 31, 32 and 33 of the Vienna Convention on the Law of Treaties embody many of the customary
rules of interpretation of public international law. While the reference in Article 3.2 of the DSU does not refer directly to these Articles, the
Appellate Body has ruled that they can serve as a point of reference for discerning the applicable customary rules1.
“Mutually Agreed Solutions” as “Preferred Solution”
Although the dispute settlement system is intended to uphold the rights of aggrieved Members and to clarify the scope of the rights and
obligations, which gradually achieves higher levels of security and predictability, the primary objective of the system is not to make rulings or to
develop jurisprudence. Rather, like other judicial systems, the priority is to settle disputes, preferably through a mutually agreed solution that is
consistent with the WTO Agreement (Article 3.7 of the DSU). Adjudication is to be used only when the parties cannot work out a mutually
agreed solution. By requiring formal consultations as the first stage of any dispute, the DSU provides a framework in which the parties to a
dispute must always at least attempt to negotiate a settlement. Even when the case has progressed to the stage of adjudication, a bilateral
settlement always remains possible, and the parties are always encouraged to make efforts in that direction (Articles 3.7 and 11 of the DSU).
Prompt settlement of disputes
The DSU emphasizes that prompt settlement of disputes is essential if the (WTO) is to function effectively and the balance of rights and
obligations between the Members is to be maintained (Article 3.3 of the DSU). It is well known that, to be achieved, justice must not only
provide an equitable outcome but also be swift. Accordingly, the DSU sets out in considerable detail the procedures and corresponding
deadlines to be followed in resolving disputes. The detailed procedures are designed to achieve efficiency, including the right of a complainant
to move forward with a complaint even in the absence of agreement by the respondent (Articles 4.3 and 6.1 of the DSU). If a case is
adjudicated, it should normally take no more than one year for a panel ruling and no more than 16 months if the case is appealed (Article 20 of
the DSU). If the complainant deems the case urgent, consideration of the case should take even less time (Articles 4.9 and 12.8 of the DSU).
These time-frames might still appear long, considering that time for implementation will have to be added after the ruling. Also, for the entire
duration of the dispute, the complainant may still suffer economic harm from the challenged measure; and even after prevailing in dispute
settlement, the complainant will receive no compensation for the harm suffered before the time by which the respondent must implement the
ruling.
However, one must take into account that disputes in the WTO are usually very complex in both factual and legal terms. Parties generally
submit a considerable amount of data and documentation relating to the challenged measure, and they also put forward very detailed legal
arguments. The parties need time to prepare these factual and legal arguments and to respond to the arguments put forward by the opponent.
The panel (and the Appellate Body) assigned to deal with the matter needs to consider all the evidence and arguments, possibly hear experts,
and provide detailed reasoning in support of its conclusions. Considering all these aspects, the dispute settlement system of the WTO functions
relatively fast and, in any event, much faster than many domestic judicial systems or other international systems of adjudication.
Prohibition against unilateral determinations
WTO Members have agreed to use the multilateral system for settling their WTO trade disputes rather than resorting to unilateral action
(Article 23 of the DSU). That means abiding by the agreed procedures and respecting the rulings once they are issued — and not taking the law
into their own hands.
If Members were to act unilaterally, this would have obvious disadvantages that are well known from the history of the multilateral trading
system. Imagine that one Member accuses another Member of breaking WTO rules. As a unilateral response, the accusing Member could
decide to take a countermeasure, i.e. to infringe WTO obligations with regard to the other Member (by erecting trade barriers). Under
traditional international law, that Member could argue that it has acted lawfully because its own violation is justified as a countermeasure in
response to the other Member’s violation that had occurred first. If, however, the accused Member disagrees on whether its measure truly
infringes WTO obligations, it will not accept the argument of a justified countermeasure. On the contrary, it may assert that the
countermeasure is illegal and, on that basis, it may feel justified in taking a countermeasure against the first countermeasure. The original
complainant, based on its legal view on the matter, is likely to disagree and to consider that second countermeasure illegal. In response, it may
adopt a further countermeasure. This shows that, if the views differ, unilateral actions are not able to settle disputes harmoniously. Things may
spiral out of control and, unless one of the parties backs down, there is a risk of escalation of mutual trade restrictions, which may result in a
“trade war”.
To prevent such downward spirals, the DSU mandates the use of a multilateral system of dispute settlement to which WTO Members must have
recourse when they seek redress against another Member under the WTO Agreement (Article 23.1 of the DSU). This applies to situations in
which a Member believes that another Member violates the WTO Agreement or otherwise nullifies or impairs benefits under the WTO
Agreements or impedes the attainment of an objective of one of the agreements.1
In such cases, a Member cannot take action based on unilateral determinations that any of these situations exist, but may only act after
recourse to dispute settlement under the rules and procedures of the DSU. Whatever actions the complaining Member takes, it may only take
them based on the findings of an adopted panel or Appellate Body report or arbitration award (Article 23.2(a) of the DSU). The Member
concerned must also respect the procedures foreseen in the DSU for the determination of the time for implementation and impose
countermeasures only on the basis of an authorization by the DSB (Article 23.2(b) and (c) of the DSU). This excludes unilateral actions such as
those described above.
Exclusive jurisdiction
By mandating recourse to the multilateral system of the WTO for the settlement of disputes, Article 23 of the DSU not only excludes unilateral
action, it also precludes the use of other fora for the resolution of a WTO-related dispute.
Compulsory nature
The dispute settlement system is compulsory. All WTO Members are subject to it, as they have all signed and ratified the WTO Agreement as a
single undertaking2, of which the DSU is a part. The DSU subjects all WTO Members to the dispute settlement system for all disputes arising
under the WTO Agreement. Therefore, unlike other systems of international dispute resolution, there is no need for the parties to a dispute to
accept the jurisdiction of the WTO dispute settlement system in a separate declaration or agreement. This consent to accept the jurisdiction of
the WTO dispute settlement system is already contained in a Member’s accession to the WTO. As a result, every Member enjoys assured
access to the dispute settlement system and no responding Member may escape that jurisdiction.
Strengthens and weakness of WTO dispute settlement system.
The system has both strengthens and weaknesses. For example, with respect to its weaknesses, despite the deadlines, a full dispute settlement
procedure still takes a considerable amount of time, during which the complainant suffers continued economic harm if the challenged measure is
indeed (WTO)-inconsistent. No provisional measures (interim relief) are available to protect the economic and trade interests of the successful
complainant during the dispute settlement procedure. Moreover, even after prevailing in dispute settlement, a successful complainant will
receive no compensation for the harm suffered during the time given to the respondent to implement the ruling. Nor does the “winning party”
receive any reimbursement from the other side for its legal expenses. In the event of non-implementation, not all Members have the same
practical ability to resort to the suspension of obligations. Lastly, in a few cases, a suspension of concessions has been ineffective in bringing
about implementation. However, these cases are the exception rather than the rule.
How successful one considers the dispute settlement system to have been depends on the benchmark one applies. If one compares the WTO
dispute settlement system with the previous dispute settlement system of GATT 1947, the current system has been far more effective. Moreover,
its quasi-judicial and quasi-automatic character enables it to handle more difficult cases. These features also provide greater guarantees for
Members that wish to defend their rights. Compared with other multilateral systems of dispute resolution in international law, the compulsory
nature and the enforcement mechanism of the WTO dispute settlement system certainly stand out.
Key Differences Between GATT and WTO
The points given below explain the difference between GATT and WTO in detail:

GATT refers to an international multilateral treaty, signed by 23 nations to promote international trade and remove cross-country trade
barriers. On the contrary, WTO is a global body, which superseded GATT and deals with the rules of international trade between member
nations.

While GATT is a simple agreement, there is no institutional existence, but have a small secretariat. Conversely, WTO is a permanent
institution along with a secretariat.

The participating nations are called as contracting parties in GATT, whereas for WTO, they are called as member nations.

GATT commitments are provisional in nature, which after 47 years the government can make a choice to treat it as a permanent
commitment or not. On the other hand, WTO commitments are permanent, since the very beginning.

The scope of WTO is wider than that of WTO in the sense that the rules of GATT are applied only when the trade is made in goods. As
opposed to, WTO whose rules are applicable to services and aspects of intellectual property along with the goods.

GATT agreement is primarily multilateral, but plurilateral agreement is added to it later. In contrast, WTO agreements are purely
multilateral.

The domestic legislation is allowed to continue in GATT, while the same is not possible in the case of WTO.

The dispute settlement system of GATT was slower, less automatic and susceptible to blockages. Unlike WTO, whose dispute settlement
system is very effective.
Conclusion
The main purpose of the implementation of GATT was to increase cross-country trade in the world, so as to reinforce economic soundness,
after the second world war. It is the foundation of WTO, that made open trade between nations but also maintained some barriers for the
benefit of all.
Lecture 2: Border Measures : Tariffs and Quotas
Two types of market access barriers
Tariff Barriers: Customs duties, and other duties and charges on imports and exports, Particularly relevant for trade in goods;
of marginal importance for trade in services
Non-tariff barriers:Quantitative restrictions (quotas) 数量限制（配额），other non-tariff barriers (lack of transparency of trade regulations,
technical barrier to trade, government procurement, sanitary and phytosanitary measures)其他非关税壁垒(贸易法规缺乏透明度、技术性贸
易壁垒、政府采购、卫生和植物检疫措施)
The Preamble to the WTO Agreement
“Being desirous of contributing to these objectives by entering into reciprocal and mutually advantageous arrangements directed to the
substantial reduction of tariffs and other barriers to trade and to the eliminations of discriminatory treatment in international trade relations”
《世贸组织协定》序言“希望通过达成互惠互利的安排，大幅度降低关税和其他贸易壁垒，消除国际贸易关系中的歧视性待遇，从而为
实现这些目标作出贡献。”
Why are tariffs the preferred and acceptable form of protection? 为什么关税是首选和可接受的保护形式?
1. a source of revenue for governments. Especially crucial for many developing countries, less important for industrialized countries with a
well-developed system of direct and indirect taxation
2. To promote and protect domestic industries. To protect infant industries by many developing countries. To protect industries in decline by
many developed countries.保护许多发展中国家的新兴工业。保护许多发达国家正在衰退的工业。
Definition: a form of tax levied by governments on the importation or exportation of goods.
Categories of Tariffs:
ad valorem tariff (most common) an amount based on the value of the good that is being imported 一种基于进口商品价值的数量
Specific tariff: an amount based on a unit of quantity such as weight, length, area or numbers (pieces, pairs, dozens, or packs)
Mixed tariff: a duty that can be either ad valorem duty or a specific duty,subject to a upper and/or a lower limit.
Why ad valorem duties are preferable to non-ad valorem duties?
1. ad valorem duties are more transparent and it is easier to access the protectionist impact and the negative effect on consumer prices
2. ad valorem duties are index-linked and the level of protection will remain the same in times of inflation
3. non-ad valorem duties undermine economic efficiency
Tariff concessions and schedule of concessions
1. Tariff concessions or tariff bindings 关税减让或关税约束
A commitment not to raise the customs duty on a certain product above an agreed level 承诺不将某一产品的关税提高到商定的水平以上
2. Schedules of concessions
Each Member of the WTO has a schedule (except when the Member is part of a customs union)
The Schedules of concessions are annexed to the Marrakesh Protocol to the GATT 1994
GATT rules on Bound Tariffs --- Article II: Schedules of Concessions
Article II: 1(a): Each contracting party shall accord to the commerce of the other contracting parties treatment no less favourable than that
provided for in the appropriate Part of the appropriate Schedule annexed to this Agreement 一缔约国对其他缔约国贸易所给的待遇，不得低
于本协定所附这一缔约国的有关减让表中有关部分所列的待遇。
Article II: 1(b): The products described in Part I of the Schedule … shall, on their importation into the territory to which the Schedule relates,
and subject to the terms, conditions or qualifications set forth in that Schedule, be exempt from ordinary customs duties in excess of those set
forth and provided therein. Such products shall also be exempt from all other duties or charges of any kind imposed on or in connection with
the importation in excess of those imposed on the date of this Agreement or those directly and mandatorily required to be imposed thereafter
by legislation in force in the importing territory on that date.一缔约国领土的产品如在另一缔约国减让表的第一部分内列名，当这种产品输
入到这一减让表所适用的领土时，应依照减让表的规定、条件或限制，对它免征减让表所列普通关税的超出部分。对这种产品，也应
免征超过于本协定签订之日对输入或有关输入所征收的任何其他税费，或免征超过于本协定签订之日进口领土内现行法律规定以后要
直接或授权征收的任何其他税费。
DS 56: Argentina – Measures Affecting Imports of Footwear, Textiles, Apparel and other Items
Case Facts: On 4 October 1996, the US requested consultations with Argentina concerning the imposition of specific duties on these items in
excess of the bound rate and other measures by Argentina.
In Argentina’s Schedule of tariff concessions, its customs duties on textiles and apparel is bound to 35% ad valorem. In practice, however,
these products were subject to the higher of either a 35% ad valorem duty or a minimum specific import duty (the so-called ‘DIEM’).
The legal issue here is whether the application by any Member of a type of duty other than that provided for in its schedule is in itself
inconsistent.
The Appellate Body ruled‘A basic object and purpose of the GATT 1994, as reflected in Article II, is to preserve the value of tariff concessions
negotiated by a Member with its trading partners and bound in that Member's Schedule.’
Article II: 1(b) contains the more specific obligation:
The Argentine minimum specific duty system is an ordinary custom duty and can be in excess of the bound rate.
The structure and design of the Argentine system is such that for any DIEM, no matter what ad valorem rate is used as the multiplier of the
representative international price, the possibility remains that there is a "break-even" price below which the ad valorem equivalent of the
customs duty collected is in excess of the bound ad valorem rate of 35 per cent.
SUMMARY OF KEY PANEL/AB FINDINGS
• GATT Art. II (schedules of concessions): The Appellate Body found Argentina's measure was, in fact, inconsistent with Art. II:1(b). It held that
“the application of a type of duty different from the type provided for in a Member's Schedule is inconsistent with GATT Art. II:1(b), first
sentence, to the extent that it results in ordinary customs duties being levied in excess of those provided for in that Member's Schedule.” In this
case, the Appellate Body concluded that “the structure and design of the Argentine system is such that for any DIEM ... the possibility remains
that there is a ‘break-even’ price below which the ad valorem equivalent of the customs duty collected is in excess of the bound ad valorem rate
of 35 per cent.”
• GATT Art. VIII (fees and formalities): The Appellate Body upheld the Panel's findings that the statistical tax on imports violated Argentina's
obligations under Art. VIII:1(a) “to the extent it results in charges being levied in excess of the approximate costs of the services rendered as well
as being a measure designated for fiscal purposes”. The Appellate Body also rejected Argentina's argument that the Panel had violated DSU Arts.
11 and 12.7 based on the Panel's failure to consider Argentina's IMF obligations as set forth in a “Memorandum of Understanding” between
Argentina and the IMF. The Appellate Body held, inter alia, that Argentina failed to show “an irreconcilable conflict” between the Understanding
and GATT Art. VIII, and that no other international agreements or understandings regarding the WTO and IMF justified a conclusion that a
Member's IMF commitments prevail over its GATT Art. VIII obligations.
DS 269: European Communities – Customs Classification of Frozen Boneless Chicken Cuts
Case Facts: On 11 October 2002, Brazil requested consultations with the European Communities concerning EC Commission Regulation No.
1223/2002 (“Regulation No. 1223/2002”). This regulation provides a new description of frozen boneless chicken cuts under the EC Combined
Nomenclature code 0207.14.10 and subjects the imports of these products to a higher tariff than that applicable to salted meat in the EC’s
Schedules under the GATT 1994. Products that were subject to an ad valorem tariff rate of 15.4% have to be subject to a higher tariff rate of
102.4 €/100kg/net. This tariff rate of 102.4 €/100kg/net is in excess of the tariff rate for salted meat provided for in the EC’s Schedules
under the GATT 1994.，对冷冻无骨鸡肉切肉作出新的说明，并对该等产品的进口徵收高于 1994 年关税与贸易总协定(gatt1994)下欧洲
共同体附表内适用于腌肉的关税。
Case Rulings:
The panel and the Appellate Body concluded that ‘salted’ did not imply long-term preservation in any way and the EC acted inconsistently with
Article II: 1(a) and (b) by wrongfully classifying the chicken cuts, which resulted in treatment less favorable than that provided for in its
Schedule. 腌制”并不意味着以任何方式长期保存，欧委会的行为不符合第二条:1(a)和(b)，错误地对鸡肉切块进行分类，导致其待遇低
于附表规定的待遇。
DS 543: United States – Tariff Measures on Certain Goods from China
Measure at issue: the additional duties that the United States imposed on certain products from China pursuant to the findings of a Section
301 Report addressing China's practices related to technology transfer, intellectual property, and innovation, which the United States considers
to be unfair and distortive policies of ‘state-sanctioned theft’, misappropriation of US technology, intellectual property, and commercial secrets
The Panel decided
The challenged additional duties were prima facie inconsistent with Article I:1 of the GATT 1994 because they applied only to products from
China; and prima facie inconsistent with Article II of the GATT 1994, because they were applied in excess of the rates to which the United States
bound itself in its Schedule of Concessions
Export Duties
A financial charge or tax on exported products;
The WTO agreements do not specifically regulate export duties;
Some general GATT obligations can be applicable to export duties (such as Most Favored Nation);
The Members can make commitments in its Schedule not to impose an export tariff (for instance, Australia);
Some WTO accession protocols contain specific obligations;
A proliferation of the use of export duties in recent years
2001 Protocol on the Accession of the People’s Republic of China
Paragraph 11.3: ‘China shall eliminate all taxes and charges applied to exports unless specifically provided for in Annex 6 of this Protocol or
applied in conformity with the provisions of Article VIII of the GATT 1994.’ 2001 年《中华人民共和国加入议定书》第 11.3 款:“中国应取消
适用于出口的所有税费，除非本议定书附件 6 另有规定或按照 gatt1994 第 8 条的规定实施。”
Non-Tariff Barriers --- A quantitative restriction (QR)
A measure that limits the quantity of a product that may be imported or exported; 限制进口或出口产品数量的措施
An ever more prominent instrument of protection;
Types of QR: A prohibition/ban, An import or export quota , Import or export licensing, Other quantitative restrictions
WTO Rules on Quantitative Restrictions (Quotas)
Article XI:1 of the GATT 1994 – ‘General Eliminations of Quantitative Restrictions’数量限制的一般取消
‘No prohibitions or restrictions other than duties, taxes or other charges, whether made effective through quotas, import or export licenses
or other measures, shall be instituted or maintained by any Member on the importation of any product of the territory of any other Member or
on the exportation or sale for export of any product destined for the territory of any other Member’任何缔约国除征收税捐或其他费用以
外，不得设立或维持配额、进出口许可证或其他措施以限制或禁止其他缔约国领土的产品的输入，或向其他缔约国领土输出或销售出
口产品。
Some exceptions are included in Art. XI itself:
Critical Shortages (Art XI: 2(a)) 严重短缺，为防止或缓和输出缔约国的粮食或其他必需品的严重缺乏而临时实施的禁止出口或限制出口
Import/Export Restrictions with regard to Commodity Standards (Art XI: 2(b))关于商品标准的进出口限制，为实施国际贸易上商品分类、分级和
销售的标准及条例，而必需实施的禁止进出口或限制出口
Import Restrictions to enforce Agricultural Programs (Art XI: 2(c))为执行农业计划而执行的进口限制，对任何形式的农渔产品有必要实施的
进口限制
Balance of Payments (Arts. XII and XVIII (applying to developing countries) 国际收支平衡
DS 394: China – Measures Related to the Exportation of Various Raw Materials
Case Facts:
On 23 June 2009, the United States requested consultations with China with respect to China's restraints on the export from China of various
forms of raw materials. The United States cites 32 measures through which China allegedly imposes restraints on the exports in question and
note that there appear to be additional unpublished restrictive measures.美国要求与中国就中国限制从中国出口各种形式的原材料进行磋
商
The focus of the dispute was whether China can successfully avail itself of exceptions clause of Article XI:2.
争议的焦点是中国能否成功地利
用第十一条第二款的例外条款。
Case Rulings:
The panel and the Appellate Body ruled that China did not demonstrate that its export quota on bauxite was temporarily applied, within the
meaning of Article XI:2(a) of the GATT 1994, to either prevent or relieve a ‘critical shortage’.案例裁决:专家组和上诉机构裁定，中国没有证明
其铝土矿出口配额是在 gatt1994 第 11 条第 2 款(a)的含义范围内临时适用的，以防止或缓解“严重短缺”。
Are export restrictions imposed by WTO Members on personal protection equipment during the outbreak of COVID-19 compliant with the
WTO rules?
Lecture 4: Non Discrimination: National Treatment
Types of Discrimination
De jure discrimination: apparent on the face of the measure
De facto discrimination: measures that do not explicitly differentiate between imports and domestic goods but with a disparate impact on
imports
Why is the NT principle important and complex?
The effect on the scope of permissible domestic policy-making, including the ability of WTO Members to regulate in non-trade policy areas;
The existence of various competing conceptions;
The lack of clarity with which these conceptions have been expressed.
What is the purpose of NT?
“Article III obliges Members … to provide equality of competitive conditions for imported products in relation to domestic products. The
intention of the drafters of the Agreement was clearly to treat the imported products in the same way as like domestic products once they had
cleared through customs. Otherwise, indirect protection could be given.”
“Article III protects expectations not of any particular trade volume but rather of the equal competitive relationship between imported and
domestic products.”
(Appellate Body Report, Japan—Alcohol)
The GATT Article III--National Treatment on Internal Taxation and Regulation
1. The contracting parties recognize that internal taxes and other internal charges, and laws, regulations and requirements affecting the
internal sale, offering for sale, purchase, transportation, distribution or use of products, and internal quantitative regulations requiring the
mixture, processing or use of products in specified amounts or proportions, should not be applied to imported or domestic products so as to
afford protection to domestic production.*各缔约国认为：国内税和其他国内费用，影响产品的国内销售、兜售、购买、运输、分配或使
用的法令、条例和规定，以及对产品的混合、加工或使用须符合特定数量或比例要求的国内数量限制条例，在对进口产品或国产品实
施时，不应用来对国内生产提供保护。
2. The products of the territory of any contracting party imported into the territory 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, directly or indirectly, to like domestic products.
Moreover, no contracting party shall otherwise apply internal taxes or other internal charges to imported or domestic products in a manner
contrary to the principles set forth in paragraph 1.一缔约国领土的产品输入到另一缔约国领土时，不应对它直接或间接征收高于对相同的
国产品所直接或间接征收的国内税或其他国内费用。同时，缔约国不应对进口产品或国产品采用其他与本条第一款规定的原则有抵触
的办法来实施国内税或其他国内费用。
4. The products of the territory of any contracting party imported into the territory of any other contracting party shall be accorded treatment
no less favourable than that accorded to like products of national origin in respect of all laws, regulations and requirements affecting their
internal sale, offering for sale, purchase, transportation, distribution or use. The provisions of this paragraph shall not prevent the application
of differential internal transportation charges which are based exclusively on the economic operation of the means of transport and not on the
nationality of the product.
一缔约国领土的产品输入到另一缔约国领土时，在关于产品的国内销售、兜售、购买、运输、分配或使用的全部法令、条例和规定方
面，所享受的待遇应不低于相同的国产品所享受的待遇。但本款的规定不应妨碍国内差别运输费用的实施，如果实施这种差别运输费
用纯系基于运输工具的经济使用而与产品的国别无关。
Interpretative Note Ad Article III from Annex I: A tax conforming to the requirements of the first sentence of paragraph 2 would be considered
to be inconsistent with the provisions of the second sentence only in cases where competition was involved between, on the one hand, the
taxed product and, on the other hand, a directly competitive or substitutable product which was not similarly taxed.
The broad and fundamental purpose of Article III is to avoid protectionism in the application of internal tax and regulatory measures. More
specifically, the purpose of Article III “is to ensure that internal measures 'not be applied to imported or domestic products so as to afford
protection to domestic production'”.
税收国民待遇的实质是非歧视原则，又称税收无差别待遇。即一方面它要求在同等条件下，外国居民或产品所享受的税收待遇应不低
于本国居民或本国产品；另一方面规定外国居民不能要求享受任何高于本国国民的税收待遇。税收国民待遇原则并不限制一国政府对
外国居民或产品实施优惠，税收国民待遇原则与税收优惠待遇不相矛盾；但是否给予优惠，是完全由本国政府自主决定，外方本身无
权要求享受税收优惠待遇
How to conduct a NT test (Article III:2) for internal taxation on like products?
1. Whether the measure at issue is an internal tax or other internal charge on products;
2. Whether the imported and domestic products are like products;
3. Whether the imported products are taxed in excess of the domestic products
How to conduct a NT test (Article III:2) for internal taxation on directly competitive or substitutable products?
1. Whether the measure at issue is an internal tax or other internal charge on products;
2. Whether the imported and the domestic products are directly competitive or substitutable;
3. Whether the imported and domestic products are dissimilarly taxed;
4. Whether the dissimilar taxation is applied so as to afford protection to domestic production
DS8, Japan — Taxes on Alcoholic Beverages
1. MEASURE AND PRODUCT AT ISSUE
• Measure at issue: Japanese Liquor Tax Law that established a system of internal taxes applicable to all liquors at different tax rates depending
on which category they fell within. The tax law at issue taxed shochu at a lower rate than the other products.
• Product at issue: Vodka and other alcoholic beverages such as liqueurs, gin, genever, rum, whisky and brandy, and domestic shochu.
2. SUMMARY OF KEY PANEL/AB FINDINGS
• GATT Art. III:2 (national treatment – taxes and charges), first sentence (like products): The Appellate Body upheld the Panel's finding that
vodka was taxed in excess of shochu, in violation of Art. III:2, first sentence, accepting the Panel's interpretation that Art. III:2, first sentence
requires an examination of the conformity of an internal tax measures by determining two elements: (i) whether the taxed imported and
domestic products are like; and (ii) whether the taxes applied to the imported products are in excess of those applied to the like domestic
products.
• GATT Art. III:2 (national treatment – taxes and charge), second sentence (directly competitive or substitutable products): The Appellate
Body upheld the Panel's finding that shochu and whisky, brandy, rum, gin, genever, and liqueurs were not similarly taxed so as to afford
protection to domestic production, in violation of Art. III:2, second sentence. Modifying some of the Panel's reasoning, the Appellate Body
clarified three separate issues that must be addressed to determine whether a certain measure is inconsistent with Art. III:2, second sentence:
(i) whether imported and domestic products are directly competitive or substitutable products; (ii) whether the directly competitive or
substitutable imported and domestic products are not similarly taxed; and (iii) whether the dissimilar taxation of the directly competitive or
substitutable imported and domestic products is applied so as to afford protection to domestic production.
• GATT Art. III:1 (national treatment – general principles): The Appellate Body agreed with the Panel that Art. III:1, as a provision containing
general principles, informs the rest of Art. III, and further elaborated that, because of the textual differences in the two sentences, Art. III:1
informs the first and second sentences of Art. III:2 in different ways.
The WTO Rulings
1. Were various alcoholic beverages ‘like’ Shochu?

Both white/clean spirits, made of similar raw materials, and the end-uses were virtually identical’. The panel also found that traditional
Japanese consumer habits with regard to shochu provided no reason to not considering vodka to be a like product.

The Panel found shochu and a number of other alcoholic beverages were not ‘like products’ because of substantial noticeable differences in
physical characteristics. (For instance, ‘the use of additives’ in liqueurs, gin, and genever; ‘the use of ingredients’ in rum; ‘appearance’ in
whiskey and brandy).
The Appellate Body upheld the Panel’s finding and offered some general guidance on the issue of ‘likeness’ under Article III:2, first sentence.

determining whether imported and domestic products are ‘like’ on a case-by-case analysis

the following criteria:
The products’ properties, nature and quality, i.e their physical characteristics
The product’s end-uses in a given market
Consumers’ tastes and habits
The products’ tariff classifications
‘No one approach to exercising judgement will be appropriate for all cases. The criteria in Border Tax Adjustments should be examined, but
there can be no one precise and absolute definition of what is "like". The concept of "likeness" is a relative one that evokes the image of an
accordion. The accordion of "likeness" stretches and squeezes in different places as different provisions of the WTO Agreement are applied. The
width of the accordion in any one of those places must be determined by the particular provision in which the term "like" is encountered as well
as by the context and the circumstances that prevail in any given case to which that provision may apply. We believe that, in Article III:2, first
sentence of the GATT 1994, the accordion of "likeness" is meant to be narrowly squeezed.’ ---Appellate Body Report, Japan – Alcohol, para 21.
2. Were imported products taxed ‘in excess of’ domestic like products ?

The Panel found that vodka was taxed more heavily than shochu, concluding that the tax on vodka is ‘in excess of ’ that on shochu;

The Appellate Body upheld the decision and stated, ‘even the smallest amount of excess is too much. The prohibition of discriminatory
taxes in Article III: 2, first sentence, is not conditional on a trade effects test nor is it qualified by a de minimis standard.’
3. Were various alcoholic beverages ‘directly competitive or substitutable’ to Shochu?

The Appellate Body agreed with the Panel and noted that the category of DCS is broader than the category of like products, but exactly
how broad can only be determined on a case by case analysis.

The Appellate Body upheld the Panel’s approach that emphasized the need to look at the ‘market place’ and whether products at issue have
common end uses, as shown by elasticity of substitution for them to be deemed as directly competitive or substitutable. The Panel found
shucho and other products subject to dispute were directly competitive or substitutable according to Article III:2, second sentence;强调有
必要关注“市场”，以及争议产品是否具有共同的最终用途，这体现在它们被视为直接竞争或可替代的替代弹性上。根据第 3 条第
2 款第 2 句，专家组认为 shucho 和其他受争议的产品是直接竞争或可替代的
4. Were the imported products and domestic producers ‘not similarly taxed’?

The Panel ruled that that this amount of differential taxation must be more than de minimis to be deemed "not similarly taxed" in any given
case, whether any particular differential amount of taxation is de minimis or is not de minimis must be determined on a case-by-case basis.

The Appellate Body upheld the Panel’s reasoning but pointed out that the Panel erred in blurring the distinction between that issue and the
entirely separate issue of whether the tax measure in question was applied "so as to afford protection”.
5. Was the dissimilar tax applied so as to afford protection?

It is not subjective intent that is to be evaluated, but an objective analysis of the structure of the measure is required in order to infer a
protective aim;

The very magnitude of the dissimilar taxation may be evidence of its protective application.

Although it is true that the aim of a measure may not be easily ascertained, nevertheless its protective application can most often be
discerned from the design, the architecture, and the revealing structure of a measure.

The combination of customs duties and internal taxation in Japan has the following impacts: on the one hand, it makes it difficult for
foreign produced shochu to penetrate the Japanese market and, on the other, it does not guarantee equality of competitive conditions
between shochu and the rest of “white” and “brown” spirits.
DS 75: Korea – Taxes on Alcoholic Beverages
Measure at issue: Korea’s tax regime for alcoholic beverages – Liquor Tax Law divides alcoholic beverages into eleven categories, some of
which are further divided into sub-categories, and assigns to each of them a different tax rate. Under the Education Tax Law, Korea also assessed
a surtax on sales of these products, determined as a percentage of the rate established under the Liquor Tax Law.
Whether the products at issue were directly competitive or substitutable.
WTO Rulings
An examination of whether the domestic and imported products at issue are directly competitive or substitutable ‘requires evidence of the direct
competitive relationship between the products, including comparisons of their physical characteristics, end-uses, channels of distribution and
prices.’审查有争议的国内和进口产品是否具有直接竞争或可替代性，需要证明产品之间存在直接竞争关系，包括比较它们的物理特性、
最终用途、分销渠道和价格。
All the products have the essential feature of being ‘distilled alcoholic beverages; all are bottled and labelled in a similar manner; there are
‘fundamental physical similarities’;所有产品的基本特征都是“蒸馏酒精饮料;所有的产品都以相似的方式装瓶和贴上标签
All the products have ‘current and potential overlapping end-uses’;所有产品都有“当前和潜在的重叠最终用途
All the products have ‘considerable evidence of overlap in channels of distribution and points of sale of these products’;所有产品都有“相当多
的证据表明这些产品的分销渠道和销售点存在重叠”;
Although there are ‘significant price differences’…the differences ‘were not decisive’.
These tax differentials are clearly in excess of de minimis levels;
The design, architecture and structure of the Korean alcoholic beverage tax laws afford protection to domestic production.
Korean Tax Law ‘has very large differentials in levels of taxation, large enough…also to support a finding’.
The structure of the Law ‘itself is discriminatory’ as there is ‘virtually no’ imported soju, ‘the beneficiaries of this structure are almost
exclusively domestic producers’. 韩国酒精饮料税法的设计、建筑和结构为国内生产提供了保护。韩国税法“在税收水平上有非常大的差
异，大到足以支持一个发现”。“实际上没有‘进口烧酒’，这一结构的受益者几乎都是国内企业。
DS 87: Chile – Taxes on Alcoholic Beverages
Measure at issue: Chile's tax measures that imposed an excise tax at different rates – depending on the type of product (pisco, whisky, etc.)
under the “Transitional System” and according to the degree of alcohol content (35°, 36°, ... 39°) under the “New Chilean System”.
As a factual matter, ‘roughly 75% of domestic production can enjoy the lowest rate and over 95% of all current and potential imports will be
taxed at the highest rate’.
Chile argued that there was ‘similar taxation’ of domestic and imported production under the new system because all beverages with a specific
alcohol content were subject to identical ad valorem tax rates, irrespective of their origin. The tax differences applicable to alcoholic beverages
were aimed at reducing the consumption of alcoholic beverages with higher alcohol content.
WTO Rulings
The issue became: whether the imported beverages of a specific alcohol content were directly competitive or substitutable with other domestic
distilled alcoholic beverages of a different alcohol content. 进口的特定酒精含量的饮料是否与其他国产的不同酒精含量的蒸馏酒精饮料直
接竞争或替代。
Both the Panel and the Appellate Body stated that the group of directly competitive or substitutable domestic and imported products at issue was
not limited solely to beverages of a specific alcohol content but cover all distilled alcoholic beverages in each and every fiscal category under the
New Chilean System.小组和上诉机构都指出，有争议的直接竞争或可替代的国内和进口产品组不仅限于特定酒精含量的饮料，而且还
包括新智利制度下每一财政类别中的所有蒸馏酒精饮料。
Most imported products will face a heavier tax burden than most domestic products, and that the difference in tax rate is more than de minimis.
大多数进口产品将面临比大多数国内产品更重的税收负担，而且税率的差异非常小。
No attempt to examine the many reasons legislators or regulators often have. A measure’s purposes can be objectively manifested in the design,
architecture and structure of the measure, which is pertinent to the task of evaluating whether or not that measure is applied so as to afford
production to domestic production.
3. How to conduct a NT test (Article III:4)
for internal regulation?
1. Whether the measure at issue is a law, regulation or requirement covered by Article III: 4 that affect the internal sale, offering for sale,
purchase, transportation, distribution or use of imported products;
2. Whether the imported and domestic products are like products;
3. Whether the imported products are accorded less favorable treatment
DS 161: Korea – Beef
Measure at issue: (i) Korea's measures affecting the importation, distribution and sale of beef, (ii) Korea's “dual retail system” for sale of
domestic imported beef, and (iii) Korea's agricultural domestic support programmes.

a smaller retailer can either sell any meat except domestic beef or any meat except imported beef

a large retailer may sell both imported and domestic beef as long as the imported beef and domestic beef are sold in separate sales areas
The issue: whether the existence of two distinct retail distribution systems can result in the less favorable treatment to imported beef.问题是:两
种不同零售分销系统的存在是否会导致对进口牛肉的不利待遇。
The Appellate Body pointed out:
The Korean measure formally separates the selling of imported beef and domestic beef. However, that formal separation, in and of itself does not
necessarily compel the conclusion that the treatment accorded to imported beef is less favorable…To determine whether the treatment given to
imported beef is less favorable…we must inquire into whether or not the Korean dual retail system for beef modifies the conditions of
competition in the Korean beef market to the disadvantage of the imported product;
The dramatic reduction in number of retail outlets for imported beef followed the decisions of individual retailers who could choose freely to sell
the domestic product or the imported product. The choice given to the meat retailers was limited to selling domestic beef only or imported beef
only;
…the lack of equality of competitive conditions entailed by the dual retail system.
DS 135: EC – Asbestos
Measure at issue: France's ban on the manufacture, processing, sale, import on asbestos (Decree No. 96-1133). 法国禁止制造、加工、销售和
进口石棉
The issue: whether imported asbestos (and products containing asbestos) and certain domestic substitutes such as PVA, cellulose and glass
(“PCG”) fibres (and products containing such substitutes) are ‘like’. 进口石棉(和含有石棉的产品)和某些国内替代品，如 PVA、纤维素和玻
璃(“PCG”)纤维(和含有此类替代品的产品)是否“类似”。
Canada argued that imported Canadian asbestos is banned whereas domestic French alternative fibers are permitted and that this differentiation
between “like products” violates national treatment. 禁止进口加拿大石棉，而允许进口法国替代纤维，这种区分“同类产品”的做法违反了
国民待遇。
The panel found that, Chrysotile asbestos fibers and other fibers that can be substitute for asbestos fibers are ‘like products’ and ruled that France
accorded less favorable treatment to imports and violated Article III:4. 温石棉纤维和其他可替代石棉纤维的纤维是“同类产品”，并裁定法国
对进口产品给予较低的优惠待遇，违反了第 3 条第 4 款。
The Appellate Body,
reversed the Panel’s finding that the products at issue were ‘like’ and noted a distinction between the two ‘likeness’ standards under Article III:4
and Article III:2 – the former is broader than the latter, although it is not broader than the combined scope of ‘like’ and ‘directly competitive or
substitutable’ and involves an examination of the competitiveness between the products at issue. 推翻了专家组关于争议产品属于“相似”的结
论，并注意到第 3 条第 4 款和第 3 条第 2 款下的两个“相似”标准之间的区别——前者比后者更广泛。
“…the Panel should have examined the evidence relating to each of those four criteria and, then, weighed all of that evidence, along with any
other relevant evidence, in making an overall determination of whether the products at issue could be characterized as 'like’.”小组本应审查与
这四项标准中的每一项有关的证据，然后权衡所有这些证据以及任何其他有关证据，以便全面确定所涉产品是否可被定性为‘类似’
found the differences in terms of properties, nature and quality of asbestos products and fibers in this case.

Physical properties are a ‘useful indicator’ of likeness. They can also influence end-uses, consumer attitudes and tariff classification.

Physically, chrysotile asbestos and PCG fibres are very different in terms of carcinogenic effect

Even if end-use is identical, physical properties can remain different

Where physical difference exists, complainants have a "high burden" to show that there is a "competitive relationship and Canada did
not meet that burden
was not convinced that the products were “like,” so it did not need to examine the “less favourable treatment” condition.
Conclusions and General Observations
1. For Article III:2, the first sentence, some kind of ‘effect’ test will be used. However, its parameters are not clear.
2. For Article III:2, second sentence, discriminatory effect will be taken into account, as will objective intent. The standard of DCS products is
fairly broad, and relies heavily on whether the products at issue compete in the market.
3. For Article III:4, the discriminatory effect will play an important role. By contrast, intent will not be considered. The like products standard
here lies somewhere between likeness under Article III:2, first sentence and DCS in Article III:2, second sentence.
Lecture 5: Most-Favored-Nation Principle
1. Most-favoured-nation (MFN): treating other people equally Under the WTO agreements, countries cannot normally discriminate between
their trading partners. Grant someone a special favour (such as a lower customs duty rate for one of their products) and you have to do the same
for all other WTO members.
2. It applies both broader measures (tariff and quotas) and behind-the broader measures (taxes and regulations)
3. It applies to trade in goods and trade in service.
The Pros and Cons of MFN
Pros:
It eliminates distortions in production patterns, as companies will produce in the most efficient production location, allowing comparative
advantage to work.
It protects bilateral concessions and generalizes them as the basis for the multilateral trading system.
It produces domestic benefits in that it simplifies the administration of tariffs and other forms of protection (no origin rules are needed) and it
promotes more transparent policies.
It serves as a
constraint on the ability of special interests to obtain discriminatory trade measures.
It promotes better international relations since it avoids the bitterness and tensions that may result from discriminatory policies.
Cons:
The application of the MFN rule results in the “free-rider” problem.
The perceived lack of reciprocity in the unconditional MFN principle makes it more difficult for governments to commit to trade liberalization.
Pros Explained
Access to a larger market: The country's industries have a chance to improve their products as they service this large market. Their companies
will grow to meet increased demand. They receive the benefits of economies of scale. That, in turn, increases their exports and their country's
economic growth.
Reduces export costs: It also cuts down on red tape. Different tariffs and customs don't have to be calculated for each import since they are all
the same.
Increases competitiveness: The status reduces the ill effects of trade protectionism. Even though domestic industries may not like to lose their
protected status, they could become healthier and more competitive.
Cons Explained
All members receive the same benefits: The downside of MFN status is the country must also grant the same trade benefits to all other members
of the agreement or the World Trade Organization.
Can fall victim to shady trade practices: Countries sometimes subsidize their domestic industries. That allows subsidized companies to export at
incredibly low prices. This practice is known as dumping and can get a country in trouble with the WTO.
High tariffs for developing countries: Developing countries have reported to the WTO that they still face very high tariffs, called tariff peaks, on
products like fish, fish products, textiles, and clothing.
The GATT Article I ---General Most-Favoured-Nation Treatment
‘1. With respect to customs duties and charges of any kind imposed on or in connection with importation or exportation or imposed on the
international transfer of payments for imports or exports, and with respect to the method of levying such duties and charges, and with respect to
all rules and formalities in connection with importation and exportation, and with respect to all matters referred to in paragraphs 2 and 4 of
Article III,* any advantage, favour, privilege or immunity granted by any contracting party to any product originating in or destined for any other
country shall be accorded immediately and unconditionally to the like product originating in or destined for the territories of all other contracting
parties.’ 在对输出或输入、有关输出或输入及输出入货物的国际支付转帐所征收的关税和费用方面，在征收上述关税和费用的方法方
面，在输出和输入的规章手续方面，以及在本协定第三条第二款及第四款所述事项方面，一缔约国对来自或运往其他国家的产品所给
予的利益、优待、特权或豁免，应当立即无条件地给予来自或运往所有其他缔约国的相同产品。
How to conduct a MFN test on measures affecting trade in goods?
1. Whether the measure at issue is a measure covered by Article I:1;
2. Whether that measure grants an ‘advantage’;
3. Whether the products concerned are ‘like products’;
4. Whether the advantage at issue is accorded ‘immediately and unconditionally’ to all like products concerned, irrespective of their origin or
destination.
(GATT Case) Spain – Coffee
Measure at issue: Spanish Royal Decree No. 1764/79, by which the tariff treatment and the sub-tariff classification applied to imports of
unroasted, non-decaffeinated coffee were modified and amended
Brazil’s claim was that products it supplied that were subject to a 7% tariff were ‘like’ these which were subject to no tariff, and thus MFN
treatment had not been provided.
The GATT Panel decision
The differences put forward regarding the different types of coffee – geographical factors, cultivation methods, processing and genetic factors
were insufficient to allow for differential tariff treatment.
Coffee ‘in its end-use, was universally regarded as a well-defined and single product intended for drinking’.
No other GATT contracting party sets up its tariff schedule this way. Whether these products are like becomes an important issue in determining
whether a violation exists.
DS 139: Canada – Automotive Industry
Measure at issue: Canada's import duty exemption for imports by certain manufacturers, in conjunction with the Canadian Value Added (“CVA”)
requirements and the production to sales ratio requirements.
Zero-tariff: when the conditions were met
6.1% tariff: Motor vehicles imported by certain manufacturers meeting certain ratio requirements and CVA requirements
The complainants argued that their products were less likely to receive the duty free treatment than were the products of certain other countries,
such as the US
The panel ruled:
How to interpret ‘unconditionally’?
The term "unconditionally" in Article I:1 must be interpreted in its context and in the light of the object and purpose of Article I:1.
Panel's view, the word
In the
"unconditionally" does not pertain to the granting of an advantage per se, but must be considered in the context of
examining whether the measure involves discrimination between like products of different
"unconditionally" to the like products of all Members
countries.
Only advantages that are not granted
will be found to be inconsistent with Article I:1. “无条件”一词与给予利益本身无关，
但必须在审查该措施是否涉及不同国家同类产品之间的歧视时加以考虑。只有没有“无条件”给予所有成员的同类产品的优势才会被发
现不符合第一条:1
Is limitation on eligibility for the import duty exemption to certain motor vehicle manufacturers discriminatory?
The panel examined the structure of the Canadian automotive industry, and found that, in fact most imports of certain countries paid a zero tariff,
whereas most imports from certain other countries paid the 6.1% tariff. Motor vehicle imports are granted the duty exemption, in practice, only if
they originate in one of a small number of
manufacturers/importers
countries in which an exporter is affiliated with one of the eligible Canadian
designated to receive the duty exemption.
By reserving the import duty exemption to certain manufacturers, Canada accords an advantage to products originating in certain countries
which is not accorded immediately and unconditionally to like products originating in all other WTO Members, such that Canada’s measure is
inconsistent with GATT Article I:1.加拿大保留对某些制造商的进口关税豁免，使源自某些国家的产品获得优势，而这些产品并没有立即
无条件地获得与源自所有其他世贸组织成员的产品相同的优势，因此加拿大的措施不符合关贸总协定第 I:1 条。
The Appellate Body decided:

Article I:1 covers both de facto and de jure discrimination. It pointed out that the text of the provision is in no way limited to "on its face"
or "de jure" discrimination. Article I:1 may apply to measures which, on their face, are "origin-neutral.“

Broad scope of Article I, which applies to "any advantage," not just to "some advantage"; to "any product," not just to "some products";
and to the like products originating in "all other" Members, not just to the like products from "some" other Members.

In practice, the duty exemption is granted to imports from only a small number of countries in which the exporters are affiliated with
eligible Canadian manufacturers/importers.

From both the text of the measure and the Panel's conclusions about ‘the practical operation of the measure’, it is apparent to us that
"[w]ith respect to customs duties…imposed on or in connection with importation…," Canada has granted an "advantage" to some products
from some Members that Canada has not "accorded immediately and unconditionally" to "like" products "originating in or destined for the
territories of all other Members”, and is not consistent with Canada's obligations under Article I:1 of the GATT 1994.’
DS 401: EC – Seal Products
Measure at issue: Regulations of the European Union generally prohibiting the importation and placing on the market of seal products, with
certain exceptions, including for seal products derived from hunts conducted by Inuit or indigenous communities (IC exception) and hunts
conducted for marine resource management purposes (MRM exception).
The issue became whether through the IC exception, the EC granted a market access advantage to
certain seal products from Greenland
without extending such advantage 'immediately and unconditionally’ to 'like' seal products from Canada and Norway.’
The panel ruled:

“Three elements must be satisfied in order to demonstrate an inconsistency":
"(i) there must be an 'advantage, favour, privilege or
immunity' of the type covered by Article I:1; (ii) the advantage is not granted 'immediately and unconditionally'; (iii) to like products
originating in or destined for all other WTO Members."

Canadian seal products are "like" seal products of other origin (Greenland), irrespective of whether they conform or not to the
requirements under the EU Seal Regime.

The EU Seal regime is a 'law or regulation falls within the scope of Article I:1.
Moreover, the "advantage granted" is in the form of
market access.

In terms of its design, structure, and expected operation, the EU Seal Regime detrimentally affects the conditions of competition on the
market of Canadian and Norwegian origin as compared to seal products of Greenlandic origin. In other words, seal products must originate
in one of a limited number of countries inhabited by an indigenous community that meets the specific terms of the conditions.

The measure at issue does not 'immediately and unconditionally' extend the same market access advantage on the EU market to the
complainants' imports as they do to seal products originating from Greenland" and thus is inconsistent with GATT Article I:1.
海豹产品必须产自少数几个由符合特定条件的土著社区居住的国家之一。有争议的措施并没有“立即和无条件地”将欧盟市场上的市场
准入优势扩大到申诉人的进口，就像他们对来自格陵兰的产品所做的那样”，因此不符合关贸总协定第一条:1
Lecture 6: The GATT Article XX – ‘General Exceptions’
Article XX: General Exceptions
Subject to the requirement that such measures are not 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, nothing in this Agreement
shall be construed to prevent the adoption or enforcement by any contracting party of measures:
(a) necessary to protect public morals;
(b) necessary to protect human, animal or plant life or health;
(c) relating to the importations or exportations of gold or silver;
(d) necessary to secure compliance with laws or regulations which are not inconsistent with the provisions of this Agreement, including those
relating to customs enforcement, the enforcement of monopolies operated under paragraph 4 of Article II and Article XVII, the protection of
patents, trade marks and copyrights, and the prevention of deceptive practices;
(e) relating to the products of prison labour;
(f) imposed for the protection of national treasures of artistic, historic or archaeological value;
(g) relating to the conservation of exhaustible natural resources if such measures are made effective in conjunction with restrictions on domestic
production or consumption;在限制国内生产或消费的同时采取有效措施的情况下，养护可耗尽的自然资源;
(h) undertaken in pursuance of obligations under any intergovernmental commodity agreement which conforms to criteria submitted to the
CONTRACTING PARTIES and not disapproved by them or which is itself so submitted and not so disapproved;
(i) involving restrictions on exports of domestic materials necessary to ensure essential quantities of such materials to a domestic processing
industry during periods when the domestic price of such materials is held below the world price as part of a governmental stabilization plan;
Provided that such restrictions shall not operate to increase the exports of or the protection afforded to such domestic industry, and shall not
depart from the provisions of this Agreement relating to non-discrimination;
(j) essential to the acquisition or distribution of products in general or local short supply; Provided that any such measures shall be consistent
with the principle that all contracting parties are entitled to an equitable share of the international supply of such products, and that any such
measures, which are inconsistent with the other provisions of the Agreement shall be discontinued as soon as the conditions giving rise to them
have ceased to exist. The CONTRACTING PARTIES shall review the need for this sub-paragraph not later than 30 June 1960.
Requirements of Article XX: A Two-Step Analysis
1.The specific exceptions listed in paragraphs (a) to (j)---2.The introductory paragraph (the “Chapeau”)
The most frequently invoked exceptions
(a) necessary to protect public morals
(b) Necessary to protect human, animal or plant life or health
(d) Necessary to secure compliance with laws or regulations which are not inconsistent with the provisions of this agreement, including those
relating to customs enforcement, the enforcement of monopolies operated under paragraph 4 of Article II and Article XVII, the protection of
patents, trade marks and copyrights, and the prevention of deceptive practices.
(g) regulating to the conservation of exhaustible natural resources if such measures are made effective in conjunction with restrictions on
domestic production or consumption.
1. What is ‘Necessary’?
US – Section 337 (GATT Report)
A measure is not ‘necessary’ if there is a reasonably available alternative measure that leads to a lesser degree of inconsistency with GATT rules.
如果存在一种合理可行的替代措施，可以减少与关贸总协定规则的不一致程度，则该措施不是“必要的”。
Thailand – Restrictions on Importation of and Internal Taxes on Cigarettes (GATT Report)
A measure is considered ‘necessary’ only if there were no alternative measure consistent with GATT, or less inconsistent with it, which could
reasonably be expected to employ.
Korea – Beef (Appellate Body Report)
(1) ‘Necessary’ can have a range of meanings, from ‘indispensable’ to ‘making a contribution to’
(2) In the context of Article XX (d), the meaning is closer to ‘indispensable’
(3) Measures that are not ‘indispensable’ may be ‘necessary’ as well
(4) A process of weighing and balancing a series of factors (such as the contribution made by the compliance measure to the enforcement of the
law or regulation at issue, the importance of the common interests or values protected by that law or regulation, and the accompanying impact of
the law or regulation on imports or exports)
Brazil – Retreaded Tyres (Appellate Body Reports)
(1) To consider relevant factors, particularly the importance of the interests or values at stake, the extent of the contribution to the achievement of
the measure’s objective, and its trade restrictiveness
(2) To compare the measure with possible alternatives, which may be less trade restrictive while providing an equivalent contribution to the
achievement of the objective 将该措施与可能的替代措施进行比较，哪一种贸易限制可能较少，同时对实现这一目标作出同等贡献
2. What is ‘Relating to’?
Article XX(a): Public Morals
What constitute public morals?

Policies covered under this exception in the past disputes have addressed issues such as,

money laundering,

organized crime,

fraud,

underage gambling and pathological gambling,

content review to prevent the dissemination of cultural goods with a content that has a negative impact on a Member’s public morals,

Public concerns related to seal welfare.
DS 401: EC – Seal Products
Measure at issue: Regulations prohibiting the importation and placing on the market of seal products, with certain exceptions (IC exception and
MRM exception)
Can the respondent (the EU) successfully avail itself of Article XX (a) to justify the violation of GATT Articles I and III:4?
The panel ruled,
The Seal Regime was intended to address the moral concerns of the EU public with regard to the welfare of seals.
The Appellate Body decisions:
The principal objective is to address EU public moral concerns regarding seal welfare, while accommodating IC and other interests so as to
mitigate the impact of the measure on those interests;
Both the prohibitive and permissive aspects of the EU Seal Regime should be examined;
The WTO Members have the discretion (though not unlimited) to protect the same general moral concern about animal welfare at a higher level
for some animals compared to others;
The absence of a reasonably available alternative as identified by the complainants.
SUMMARY OF KEY PANEL/AB FINDINGS
• TBT Annex 1.1 (technical regulation): The Appellate Body reversed the Panel’s intermediate finding that the EU Seal Regime lays down
“product characteristics”, and consequently reversed the Panel’s finding that the EU Seal Regime was a “technical regulation” within the
meaning of TBT Annex 1.1. The Appellate Body was unable to complete the legal analysis and thus did not rule on whether the EU Seal Regime
lays down “related processes and production methods” within the meaning of TBT Annex 1.1. The Appellate Body therefore declared moot and
of no legal effect the Panel’s conclusions under TBT Arts. 2.1, 2.2, 5.1.2, and 5.2.1.
• GATT Art. I:1 (most-favoured-nation treatment): The Appellate Body upheld the Panel’s finding that the legal standard for the
non-discrimination obligations under TBT Art. 2.1 does not apply equally to claims under GATT Art. I:1. The Appellate Body therefore upheld
the Panel's finding that the EU Seal Regime was inconsistent with GATT Art. I:1 in respect of the IC exception, as it did not “immediately and
unconditionally” extend the same market access advantage to Canadian and Norwegian seal products that it accorded to seal products from
Greenland.
• GATT Art. III:4 (national treatment – domestic laws and regulations): The Appellate Body upheld the Panel's finding that the legal
standard for the non-discrimination obligations under TBT Art. 2.1 does not apply equally to claims under GATT Art. III:4. The European Union
did not appeal the Panel's finding that the EU Seal Regime was inconsistent with GATT Art. III:4 in respect of the MRM exception, as it
accorded less favourable treatment to imported Canadian and Norwegian seal products than that accorded to like domestic products.
• GATT Art. XX(a) (general exceptions – necessary to protect public morals): The Appellate Body upheld the Panel's finding that the EU
Seal Regime was “necessary to protect public morals” within the meaning of GATT Art. XX(a).
• The “chapeau” of GATT Art. XX (general exceptions): The Appellate Body found that the Panel erred in applying the same legal test to the
chapeau of GATT Art. XX as it applied to TBT Art. 2.1, instead of conducting an independent analysis of the consistency of the EU Seal Regime
with the specific terms and requirements of the chapeau. The Appellate Body therefore reversed the Panel's findings under the chapeau. However,
the Appellate Body completed the analysis and found, as did the Panel, that the European Union had not demonstrated that the EU Seal Regime,
in particular with respect to the IC exception, met the requirements of the chapeau of GATT Art. XX. Therefore, the Appellate Body found that
the European Union had not justified the EU Seal Regime under GATT Art. XX(a).
Article XX(b): Human, Animal or Plant Life or Health
To determine whether the measure at issue falls within the scope of this provision
To determine whether the measure is necessary to achieve
this policy
DS 135: EC – Asbestos
Can the France’s ban be justified as ‘necessary to protect human, animal or plant life or health’?
The Appellate Body found,
The more important the societal value pursued by the measure at issue, and the more this measure contributes to the protection or promotion of
this value, the more easily the measure at issue may be considered to be ‘necessary’. The preservation of human life or health by eliminating a
known and life-threatening risk is a value that is both ‘vital and important in the highest degree’;有争议的措施所追求的社会价值越重要，且
该措施对保护或促进该价值的贡献越大，有争议的措施就越容易被认为是“必要的”。
In determining whether a suggested alternative measure is ‘reasonably available’, several factors must be taken into account, alongside the
difficulty of implementation. One factor is the extent to which the alternative measure contributes to the realization of the end pursued. France
could not achieve its chosen level of health protection by employing ‘controlled use of asbestos’, such as proper handling and other safety
instruments. 在确定建议的替代措施是否“合理使用”,必须考虑几个因素,与实现的难度。一个因素是替代措施在多大程度上有助于实现
所追求的目标。法国无法通过"有控制地使用石棉"，如适当处理和其他安全手段，达到其所选择的健康保护水平。
It is for WTO Members to determine the level of protection of health or the environment they consider appropriate. Other Members cannot
challenge the level of protection chosen.应由世贸组织成员决定其认为适当的健康保护或环境保护水平。其他成员不能对所选择的保护级
别提出质疑。
SUMMARY OF KEY PANEL/AB FINDINGS
• TBT Annex 1.1 (technical regulation): The Appellate Body, having rejected the Panel's approach of separating the measure into the ban and
the exceptions, reversed the Panel and concluded that the ban as an “integrated whole” was a “technical regulation” as defined in Annex 1.1 and
thus covered by the TBT Agreement, as (i) the products subject to the ban were identifiable (i.e. any products containing asbestos); (ii) the
measure was a whole laid down product characteristics; and (iii) compliance with the measure was mandatory. However, the Appellate Body did
not complete the legal analysis of Canada's TBT claims as it did not have an “adequate basis” upon which to examine them.
• GATT Art. III:4 (national treatment – domestic laws and regulations): As the Appellate Body found the Panel's likeness analysis between
asbestos and PCG fibres and between cement-based products containing asbestos and those containing PCG fibres insufficient, it reversed the
Panel's findings that the products at issue were like and that the measure was inconsistent with Art. III:4. (The Appellate Body emphasized a
competitive relationship between products as an important factor in determining likeness in the context of Art. III:4 (c.f. separate concurring
opinion by one Appellate Body Member.) Then, having completed the like product analysis, the Appellate Body concluded that Canada had
failed to demonstrate the likeness between either set of products, and, thus, to prove that the measure was inconsistent with Art. III:4.
• GATT Art. XX(b) (general exceptions – necessary to protect human life or health): Having agreed with the Panel that the measure
“protects human life or health” and that “no reasonably available alternative measure” existed, the Appellate Body upheld the Panel's finding that
the ban was justified as an exception under Art. XX(b). The Panel also found that the measure satisfied the conditions of the Art. XX chapeau, as
the measure neither led to arbitrary or unjustifiable discrimination, nor constituted a disguised restriction on international trade.
Article XX(d): Compliance Measures
(1) There are in existence ‘laws or regulations’ that are ‘not inconsistent’ with the GATT
(2) The measure found to breach GATT is designed to ‘secure compliance’ with these ‘laws or regulations’
(3) The measure found to breach GATT is ‘necessary’ to secure such compliance
DS 161: Korea – Beef
Measure at issue: (i) Korea's measures affecting the importation, distribution and sale of beef, (ii) Korea's “dual retail system” for sale of
domestic imported beef, and (iii) Korea's agricultural domestic support programmes.韩国影响牛肉进口、分销和销售的措施，(ii)韩国国内进
口牛肉销售的“双重零售体系”，以及(iii)韩国国内农业支持计划
The defendant argued that the dual retail system was designed to secure compliance with a consumer protection law.双重零售系统的设计是为
了确保遵守消费者保护法。
The panel found that this measure, at least in part was put in place to secure compliance with Korean legislation against deceptive practices, in
particular to prevent passing cheaper imported beef off as domestic beef (this finding was not appealed);
The Appellate Body set out a new standard for necessity and found that the measure was not ‘necessary’ because,
Korea does not require a dual retail system in ‘related product areas’ where deceptive practices may occur, such as in restaurants where 45% of
imported beef is sold;
No dual retail system for pork;
Normal fraud prevention methods can accomplish the goal.
Article XX(g): Conservation of Exhaustible Natural Resources
What are exhaustible natural resources?---How to ensure restrictions on domestic production or consumption are made effective?
DS2: US – Gasoline
Measure at issue: The “Gasoline Rule” under the US Clean Air Act that set out the rules for establishing baseline figures for gasoline sold on
the US market (different methods for domestic and imported gasoline), with the purpose of regulating the composition and emission effects of
gasoline to prevent air pollution 制定的规则建立基线汽油在美国市场销售数据(不同的方法对国内和进口汽油),目的是调节汽油的组成和
发射效应,防止空气污染
The US defence: Article XX (g) (to improve air quality in the most polluted urban areas of the country)
The Appellate Body found,

Clean air can be considered as exhaustible natural resource;

The measure at issue as a whole had a substantial relationship with the policy goal;

The measure met the ‘even-handedness’ requirement as it applied to both imported and domestic products;

The measure at issue was ‘provisionally justified’ under Article XX(g)
DS 58: US – Shrimp
Measure at issue: US import prohibition of shrimp and shrimp products from non-certified countries (i.e. countries that had not used a certain
net in catching shrimp)美国禁止从非核证国家(即未使用某网捕虾的国家)进口虾及虾产品
Whether the US can justify the violation of GATT Article XI by means of Article XX(g)
The Appellate Body found,
Article XX(g) is not limited to the conservation of mineral or non-living natural resources and should be read in light of contemporary concerns
of the community of nations. The term ‘natural resources’ is not static but evolutionary. Sea turtles are a ‘natural resource’ and are ‘exhaustible’;
The means and ends relationship between the measure at issue and the legitimate policy of conserving an exhaustible and endangered species is
a close and real one. Section 609 is a measure relating to the conservation of an exhaustible natural resource;
The measure was made effective in conjunction with restrictions on domestic production or consumption since the US issued regulations
pursuant to the Endangered Species Act requiring all United States shrimp trawl vessels to use approved TEDs.
Can a government take measures to conserve resources outside its own territory or even within another country’s territory?
一国政府能否采取措施，在本国领土以外甚至在他国领土内保存资源?
The Appellate Body observed,
Sea turtles are highly migratory animals, passing in and out of waters subject to the rights of jurisdiction of various coastal states the high seas;
Sea turtles are all known to occur in waters over which the US exercises jurisdiction;
There is a sufficient nexus between the migratory and endangered marine populations involved and the US for the purposes of Article XX(g).
DS 394: China – Raw Materials
Measure at issue: Export restraints imposed on the different raw materials: (i) export duties; (ii) export quotas; (iii) export quotas management
(iv) minimum export price requirements; (v) export licensing requirements; and (vi) administration and publication of trade regulations.
Whether measures are made effective in conjunction with restrictions on domestic production or consumption within the meaning of Article
XX(g)
The Appellate Body found,
The challenged measures which affect imported products, and the restrictions on domestic production or consumption need to be closely related/
‘work together’ in in connection with preserving an exhaustible resource;
China’s measures were not made effective in conjunction with restrictions on domestic production and consumption 进口产品的措施，与限制
国内生产或消费的措施需要在保护可耗尽资源方面密切相关/“共同努力”;中国的措施没有与限制国内生产和消费相结合
DS 2: US – Gasoline--Whether the measure at issue met the terms of the Chapeau
The Appellate Body decided,
The Chapeau by its express terms addresses not so much the questioned measure or its specific contents as such, but rather the manner in which
the measure is applied. The specific contents are to be appraised under the subparagraphs of the general exceptions;
The US did not adequately explore ways to cooperate with the complainants to provide equal treatment to foreign refiners from the measures;
The US did not properly account for the costs to foreign refiners from the measure;
The omissions go well beyond what was necessary for the Article III:4 violation. The resulting discrimination must have been foreseen, and was
not merely inadvertent or unavoidable. 美国没有充分探索与申诉方合作的方式，为来自这些措施的外国炼油商提供平等待遇;
美国没有适当地计入来自这些措施的外国炼油商的成本;这些遗漏远远超出了违反第三条第 4 款的必要范围。由此产生的歧视必须是可
以预见到的，而不仅仅是无意的或不可避免的。
DS 58: US – Shrimp
(1) ‘Unjustifiable discrimination’
The measures’ intended and actual coercive effect on the specific policy decisions of other WTO Members, as these measures required these
governments to adopt ‘essentially the same policy’ that the US followed, without taking into account the different conditions in other countries;
The measure prohibits imports of shrimp caught using TEDs if they are from a non-certified country;
The US engaged in negotiations on these issues with some countries, but not others;
The complainants only had four months in which to implement the rules, whereas some other countries had a lot more time.
(2) ‘Arbitrary discrimination’
The rigidity and inflexibility in the application of the measure;
A lack of transparency and procedural fairness in the administration of trade regulations.
DS 401: EC – Seal Products
Whether the discrimination in the application of the EU Seal Regime within the meaning of the Chapeau results from the discriminatory impact
found in the IC and MRM exceptions under Articles I:1 and III:4.
The Appellate Body found,
(1) The discrimination between the Canadian and Norwegian commercial hunts and the Greenlandic IC hunts could not be sufficiently
reconciled with or related to the policy objective of EU public moral concern;不能充分地与欧盟公共道德关注的政策目标相协调或相关;
The EU did not establish for example, why the need to protect the economic and social interests of the Inuit and other indigenous people
necessarily implies that the EU cannot do anything further to ensure that the welfare of seas is addressed in the context of IC hunts, given that
the IC hunts can cause the very pain and suffering for seals that the EU publish is concerned about.
(2) The discriminatory treatment of ICs in different countries;
The Inuit in Greenland were the only beneficiaries of the IC exception;
The EU failed to pursue cooperative arrangements to facilitate the access of Canadian Inuit to the IC exception;
There was arbitrary or unjustifiable discrimination between Greenlandic and Canadian indigenous communities on the basis of imbalance in
efforts made by the EU to facilitate eligibility for the IC exception.
LECTURE 7-- Trade Remedies: Safeguards and Anti-dumping
Basics about Safeguards
What?
To shelter troubled industries from economic harm caused by unanticipated surges in imports via the raising of bound tariff levels, tariff quotas
or quantitative restrictions.通过提高约束关税水平、关税配额或数量限制，保护陷入困境的行业免受进口意外激增造成的经济损害。
Why?
To compensate some of the groups disadvantaged by trade concessions; 补偿一些因贸易优惠而处于不利地位的群体
To provide a ‘breathing space’ during which protected industry can improve its competitiveness and lower adjustment costs;为受保护产业提供
“喘息空间”，以提升竞争力及降低调整成本;
To facilitate the granting of trade concessions because trade negotiators are more able to enter into commitments when they understand these
commitments can be relaxed in the future should this unexpectedly prove to be necessary. 促进给予贸易减让，因为贸易谈判代表更容易作出
承诺，当他们明白，如果将来意外证明有必要，这些承诺可以放宽。
The Appellate Body in United States — Line Pipe Safeguards ruled,
‘[Safeguard measures] are remedies that are imposed in the form of import restrictions in the absence of any allegation of an unfair trade practice.
In this, safeguard measures differ from, for example, anti-dumping duties and countervailing duties to counter subsidies, which are both
measures taken in response to unfair trade practices.’“(保障措施)是在没有任何不公平贸易行为指控的情况下，以进口限制的形式实施的补
救措施。在这方面，保障措施不同于反倾销税、反补贴税和反补贴税，后者都是针对不公平贸易行为而采取的措施。
What are the procedural requirements to apply safeguards?
Safeguards Agreement：Article 3: Investigation---Article 12: Obligations of notification and consultation
What are the conditions to be satisfied in order to use safeguards?
GATT Article XIX – Emergency Action on Imports of Particular Products
1. (a) If, as a result of unforeseen developments and of the effect of the obligations incurred by a contracting party under this Agreement,
including tariff concessions, any product is being imported into the territory of that contracting party in such increased quantities and under such
conditions as to cause or threaten serious injury to domestic producers in that territory of like or directly competitive products, the contracting
party shall be free, in respect of such product, and to the extent and for such time as may be necessary to prevent or remedy such injury, to
suspend the obligation in whole or in part or to withdraw or modify the concession.如果由于不可预见的事态发展和一缔约方在本协定项下
承担的义务的影响，包括关税减让，缔约一方领土内进口的产品数量不断增加，并对该领土内的同类产品或直接竞争产品的国内生产
商造成严重损害或可能严重损害的，缔约一方对该产品有权自由进口，并在防止或补救该等损害所需的范围和时间内，全部或部分中
止该义务，或撤销或修改该等让步。
Safeguards Agreement Article 2.1 – Conditions
1. A Member may apply a safeguard measure to a product only if that Member has determined,
pursuant to the provisions set out below, that such product is being imported into its territory in such
increased quantities, absolute or relative to domestic production, and under such conditions as to
cause or threaten to cause serious injury to the domestic industry that produces like or directly
competitive products.
1. 一成员只有在根据下文规定确定该产品进口到其领土的绝对数量或相对于国内生产的数量
正在增加的情况下，才可对该产品实施保障措施。对生产同类产品或者与之直接竞争的产品的
国内产业造成严重损害或者产生严重损害威胁的。
1. ‘Increased Imports’
Article 2.1: ‘absolute or relative to domestic production’;
Relative increases in imports could occur when levels of domestic production decline;
The Appellate Body in Argentina – Footwear
‘…the determination of whether the requirement of imports “in such increased quantities” is met is not a merely mathematical or technical
determination. In other words, it is not enough for an investigation to show simply that imports of the product this year were more than last year,
or five years ago…There must be “such increased quantities” as to cause or threaten to cause serious injury to the domestic industry in order to
fulfil this requirement for applying a safeguard measure. And this language … we believe, requires that the increase in imports must have been
recent enough, sudden enough, sharp enough, and significant enough, both quantitatively and qualitatively, to cause or threaten to cause “serious
injury.'…对是否满足“如此大量”的进口要求的确定，不仅仅是数学或技术上的确定。换句话说,它是不够的一项调查显示,今年的进口产
品比去年多,或者五年前…一定有增加数量”“如造成或威胁造成严重伤害到国内产业为了实现这个应用保障措施要求。我们认为，这一
措辞要求进口的增加必须是近期的、突然的、急剧的、显著的，无论在数量上还是质量上，都必须造成或可能造成“严重损害”。
2. ‘Unforeseen Developments’
The GATT working party in Hatter’s Fur
“[t]he term ‘unforeseen development’ should be interpreted to mean developments occurring after the negotiation of the relevant tariff
concession which it would not be reasonable to expect that the negotiators of the country making the concession could and should have foreseen
at the time the concession was negotiated.”“‘不可预见的发展’一词应解释为:在有关关税减让的谈判之后发生的发展，如果期望作出减让的
国家的谈判代表在谈判减让时能够也应该预见到这种发展是不合理的。”
The Appellate Body in Korea — Dairy
‘As to the meaning of “unforeseen developments,” we note that the dictionary definition of “unforeseen,” particularly as it relates to the word
“developments,” is synonymous with “unexpected.” … Thus, it seems to us that the ordinary meaning of the phrase “as a result of unforeseen
developments” requires that the developments which led to a product being imported in such increased quantities and under such conditions as to
cause or threaten to cause serious injury to domestic producers must have been “unexpected.” With respect to the phrase “of the effect of the
obligations incurred by a Member under this Agreement, including tariff concessions,” we believe that this phrase simply means that it must be
demonstrated, as a matter of fact, that the importing Member has incurred obligations under the GATT 1994, including tariff concessions.’
3. ‘Serious Injury or Threat Thereof’
AS Article 4.1: “serious injury” shall be
understood to mean a significant overall
impairment in the position of a domestic
industry;“严重损害”应理解为国内产业
地位的重大总体损害
“threat
of
serious
injury”
shall
be
understood to mean serious injury that is
clearly imminent, in accordance with the
provisions of paragraph 2. A determination
of the existence of a threat of serious injury
shall be based on facts and not merely on
allegation, conjecture or remote possibility.
“严重损害的威胁”应理解为明显即将发
生的严重损害。对存在严重损害威胁的
认定应以事实为依据，而不应仅以指控、
猜测或极小的可能性为依据。
4. ‘Causation and Non-attribution’
AS Article 4.2 (b): ‘The determination referred to in subparagraph (a) shall not be made unless this investigation demonstrates, on the basis of
objective evidence, the existence of the causal link between increased imports of the product concerned and serious injury or threat thereof.
When factors other than increased imports are causing injury to the domestic industry at the same time, such injury shall not be attributed to
increased imports.’除非本调查以客观证据为基础，证明有关产品进口增加与严重损害或由此造成的威胁之间存在因果关系，否则不得
作出(a)项所述的决定。进口增加以外的其他因素同时对国内产业造成损害的，不应当归咎于进口增加。
The Appellate Body in US – Wheat Gluten
‘a relationship of cause and effect such that increased imports contribute to “bringing about,” “producing” or “inducing” the serious injury.
Although that contribution must be sufficiently clear as to establish the existence of “the causal link” required.’ 一种因果关系，使进口增加有
助于“带来”、“产生”或“诱发”严重损害。尽管这种贡献必须足够清晰，才能证明“因果关系”的存在。
‘whether this causal link involves a genuine and substantial relationship of cause and effect between increased imports and serious injury or
threat thereof.’这种因果关系是否涉及进口增加与由此造成的严重损害或威胁之间的真正和实质性因果关系。
‘ensuring that any injury to the domestic industry that was actually caused by other factors other than increased imports is not attributed to
increased imports and is not treated as if it were injury caused by increased imports, when it is not.’
Form, Extent, and Duration
AS Article 5.1 ‘A Member shall apply safeguard measures only to the extent necessary to prevent or remedy serious injury and to facilitate
adjustment. If a quantitative restriction is used, such a measure shall not reduce the quantity of imports below the level of a recent period which
shall be the average of imports in the last three representative years for which statistics are available, unless clear justification is given that a
different level is necessary to prevent or remedy serious injury. Members should choose measures most suitable for the achievement of these
objectives.’仅应在防止或补救严重损害和便利调整的必要程度上采取保障措施。”采取数量限制措施的，其进口数量不得低于最近一段
时期的水平，该时期为有统计数据的最近 3 个代表性年份的进口平均水平。除非有明确的理由说明预防或补救严重伤害需要不同的级
别。成员们应该选择最适合实现这些目标的措施。”
Form- safeguards can take the form of increased customs duties or quantitative restrictions such as quotas
By the increased imports, safeguards must, in principle, be imposed on all imports of the product concerned on an MFN-basis, irrespective of its
source.
Circumstances (the absolute maximum duration is 8 years for developed country members and 10 years for developing country members
Adjustment, Reduction and Review
Positive adjustment by the domestic industry;
Progressive liberalization of safeguard measure where the duration is over one year;
Mid-term review where the duration of safeguard measure exceeds three years;
Compensation and Retaliation
Compensation to maintain a substantially equivalent level of concessions and other obligations to that existing under GATT;
Members concerned may agree on any adequate means of trade compensation;
If no agreement reached on consultation, the affected exporting Members can retaliate.
Provisional Safeguard Measures
Existence of critical circumstances where delay would cause damage which it would be difficult to repair;
A preliminary determination that there is clear evidence that increased imports have caused or are threatening to cause serious injury;
They can be applied only in the form of duties;
The duration is restricted to 200 days.
DS 248: US – Steel Safeguards
Measure at issue: US definitive safeguard measures on a wide range of steel products
Case fact:
The US Trade Representative requested for an investigation to determine whether certain steel products were being imported into the US ‘in
such increased….to cause serious to…’
The US International Trade Commission initiated a safeguard investigation under Section 201 of the Trade Act of 1974 and made affirmative
determinations for numerous steel product categories and recommended that tariffs be increased on those products
The then US President Bush signed a proclamation imposing increased tariffs on imports of ten categories of steel products. The duties ranged
from 30% to 8% and for a period of three years
The Appellate Body Decisions:

USITC explanation in relation to ‘unforeseen developments’ was not sufficiently reasoned and adequate;

USITC failed to provide a reasoned and adequate explanation of how the facts supported its determination that the increase in imports had
been recent enough, sudden enough, sharp enough and significant enough to cause serious injury;

USITC did not consider any imports excluded from the application of the measure as an “other factor” in the causation and non-attribution
analysis or provide one single joint determination.
SUMMARY OF KEY PANEL/AB FINDINGS
United States – Definitive Safeguard Measures on Imports of Certain Steel Products
Specifically, these products included the following: CCFRS (certain carbon flat-rolled steel); tin mill products; hot-rolled bar; cold-finished bar;
welded pipe; FFTJ; stainless steel bar, stainless steel wire; and stainless steel rod.
GATT Art. XIX:1(a) (unforeseen developments): The Appellate Body upheld the Panel's findings (i) that an investigating authority must
provide a “reasoned conclusion” in relation to “unforeseen developments” for each specific safeguard measure at issue; and (ii) that the United
States International Trade Commission (ITC) relevant explanation was not sufficiently reasoned and adequate and thus inconsistent with GATT
Art. XIX:1(a).调查机构必须就每一项有争议的具体保障措施的“不可预见的发展”提供“合理的结论”;(ii)美国国际贸易委员会(ITC)的有
关解释不充分合理和充分，因此不符合关贸总协定
SA Arts. 2.1 and 3.1 (conditions for safeguard measures – increased imports): Recalling the relevant legal standard that it elaborated in
Argentina – Footwear Safeguards and rejecting the US argument (comparison of end-points), the Appellate Body upheld the Panel's conclusions
that the measures on CCFRS, hot-rolled bar and stainless steel rod were inconsistent with Arts. 2.1 and 3.1 because the United States failed to
provide a “reasoned and adequate” explanation of how the facts (i.e. downward trend at the end of the period of investigation) supported the
determination with respect to “increased imports” of these products. However, the Appellate Body, reversing the Panel's finding with respect to
“tin mill products and stainless steel wire”, found that the ITC determination containing “alternative explanations” was not inconsistent with Arts.
2.1 and 4, as the Safeguards Agreement does not necessarily “preclude the possibility of providing multiple findings instead of a single finding
in order to support a determination” under Arts. 2.1 and 4.
SA Arts. 2 and 4 (parallelism): The Appellate Body upheld the Panel's finding that the ITC did not satisfy the “parallelism” requirement, as it
should have considered any imports excluded from the application of the measure as an “other factor” in the causation and non-attribution
analysis under Art. 4.2(b) and it should have provided one single joint, rather than two separate, determination[s] (i.e. excluding either Canada
and Mexico, or, alternatively, Israel and Jordan) based on a reasoned and adequate explanation on whether imports from sources other than the
FTA partners (i.e. Canada, Israel, Jordan, and Mexico), per se, satisfied the conditions for the application of a safeguard measure.
SA Arts. 2.1, 3.1 and 4.2(b) (conditions for safeguard measures – causation): As regards the Panel's findings of violations for the ITC's
causation analyses concerning all products other than stainless steel rod, the Appellate Body (i) reversed the Panel's findings with respect to tin
mill and stainless steel wire based on its reversal of the Panel's decision on increased imports, and (ii) declined to rule on the issue of causation
for all the other seven products based on its findings of violations in respect of previous claims discussed above.因果分析存在违规行为
Dumping and Anti-dumping Measures
1) What is dumping?
The GATT 1994 Article VI defines, ‘products of one country are introduced into the commerce of another country at less than the normal value
of the products.’ “一国的产品以低于产品正常价值的价格进入另一国的商业活动
The Anti-Dumping Agreement (ADA) Article 2.1 adds, ‘if the export price of the product exported from one country to another is less than the
comparable price, in the ordinary course of trade, for the like product when destined for consumption in the exporting country.’
2) When does the WTO law regulate dumping?
The GATT 1994 Article VI states, ‘is to be condemned if it causes or threatens material injury to an established industry in the territory of a
contracting party or materially retards the establishment of a domestic industry.’ 如果它对缔约国境内的已建立的工业造成或威胁造成实质
性损害，或对国内工业的建立造成实质性阻碍，则应予以谴责。
3) What is the purpose of imposing Anti-dumping measure?
The GATT 1994 Article VI states, ‘in order to offset or prevent dumping, a contracting party may levy on any dumped product an anti-dumping
duty not greater in amount than the margin of dumping in respect of such product.’“为抵消或防止倾销，缔约方可以对任何倾销产品征收不超
过其倾销幅度的反倾销税。”
How to conduct anti-dumping investigations?
1. The domestic industry files a request with the relevant government agencies
2. The investigating authority must review the evidence and examine whether the evidence supports investigation
3. The investigating authority examines three core issues: (1) Is there dumping? (2) Is there injury? (3) Is there a causal link between the
dumping and the injury?
The application for the investigation must be by or on behalf of the domestic industry
The application must be rejected and the investigation terminated if there is insufficient evidence
How to determine dumping?
(1) ‘Normal Value’

The ADA Article 2.1: ‘the comparable price, in the ordinary course of trade, for the like product when destined for consumption in the
exporting country.’ (“home-market price”)在正常贸易过程中，同类产品在出口国用于消费时的可比价格。(“国内市场价格”)

What if the domestic price is not appropriate and cannot be used?

Third country price: sales by the producers in similar countries; The third country used should be ‘appropriate’ and that its normal
value price ‘representative’; 第三国价格:由生产厂家在同类国家销售;所使用的第三国应当是“适当的”，且其正常价值价格应
当是“具有代表性的”;

Constructed price: the cost of production in the country of origin plus a reasonable amount for administrative, selling and general
costs and for profits ; If possible, the constructed price must be based on actual data pertaining to production and sales in the ordinary
course of trade of the like product by the exporter under investigation.在原产国的生产成本加上合理的管理、销售和一般成本和
利润;如果可能，确定的价格必须以被调查的出口商在正常贸易过程中生产和销售同类产品的实际数据为基础。
(2) ‘Export Price’
Under normal circumstances, the export price is the transaction price at which the price is sold by the exporting producer to the importer in the
importing country;一般情况下，出口价格是出口生产商将价格卖给进口国进口商的交易价格
When the export price is unreliable;
The ADA Article 2.3 provides,
the export price may be constructed on the basis of the price at which the imported products are first resold to an independent buyer;
or if the products are not resold to an independent buyer, or not resold in the condition as imported, on such reasonable basis as the authorities
may determine.
(3) Compare the Export Price and the Normal Value: Calculating a Dumping Margin 比较出口价格和正常价值:计算倾销幅度
ADA Article 2.4 states,
‘A fair comparison shall be made between the export price and the normal value. This comparison shall be made at the same level of trade,
normally at the ex-factory level, and in respect of sales made at as nearly as possible the same time. Due allowance shall be made in each case,
on its merits, for differences which affect price comparability, including differences in conditions and terms of sale, taxation, levels of trade,
quantities, physical characteristics, and any other differences which are also demonstrated to affect price comparability.’
ADA Article 2.4.2: ‘The existence of margins of dumping during the investigation phase shall normally be established on the basis of a
comparison of a weighted average normal value with a weighted average of prices of all comparable export transactions or by a comparison of
normal value and export prices on a transaction-to-transaction basis. A normal value established on a weighted average basis may be compared
to prices of individual export transactions if the authorities find a pattern of export prices which differ significantly among different purchasers,
regions or time periods, and if an explanation is provided as to why such differences cannot be taken into account appropriately by the use of a
weighted average-to-weighted average or transaction-to-transaction comparison.’
1. a comparison of the weighted average of all normal values with the weighted average of all export prices (WA-WA)
2. a comparison of each individual transaction normal value (T) with each individual export price (T-T)
3. a comparison of the weighted average of normal values to individual export prices (WA-T) when targeted dumping occurs
DS 141 EC – Bed Linen
Measure at issue:
definitive anti-dumping duties imposed by the EC, including the EC’s zeroing method used in calculating the dumping
margin.
The Appellate Body decision,
Under this method, the investigating authorities are required to compare the weighted average normal value with the weighted average of prices
of all comparable export transactions…By "zeroing" the "negative dumping margins", the European Communities, therefore, did not take fully
into account the entirety of the prices of some export transactions, namely, those export transactions involving models of cotton-type bed linen
where "negative dumping margins" were found. Instead, the European Communities treated those export prices as if they were less than what
they were. This, in turn, inflated the result from the calculation of the margin of dumping…the practice of "zeroing" at issue in this dispute – is
not a "fair comparison“ between export price and normal value.’通过将“负倾销幅度”“归零”，欧洲共同体没有充分考虑部分出口交易的整体
价格，即涉及出现“负倾销幅度”的棉质床品和亚麻制品型号的出口交易。相反，欧洲共同体对待这些出口价格的态度，就好像它们低
于实际价格一样。这反过来又夸大了倾销幅度的计算结果……在这场争端中，将问题“归零”的做法不是出口价格与正常价值之间的“公
平比较”。
How to determine injury?
The basic guiding principle of an injury determination
The ADA Article 3.1:
‘shall be based on positive evidence and involve an objective examination
of both (a) the volume of the dumped imports and the effect of the dumped
imports on prices in the domestic market for like products, and (b) the
consequent impact of these imports on domestic producers of such
products.’“应当基于积极的证据,包括客观的检查(一)倾销进口产品的体
积和倾销进口产品的影响在同类产品的国内市场价格,和(b)会造成这些
进口对国内生产者的影响这样的产品。
The key substantive aspects of the injury standard
Article 3.2: With regard to the volume of the dumped imports, the investigating authorities shall consider whether there has been a significant
increase in dumped imports, either in absolute terms or relative to production or consumption in the importing Member. \With regard to the
effect of the dumped imports on prices, the investigating authorities shall consider whether there has been a significant price undercutting by
the dumped imports as compared with the price of a like product of the importing Member, or whether the effect of such imports is otherwise to
depress prices to a significant degree or prevent price increases, which otherwise would have occurred, to a significant degree. No one or
several of these factors can necessarily give decisive guidance.:关于倾销进口的数量，调查机构应考虑倾销进口是否在绝对数量上或相对于
进口成员的生产或消费有显著增加。倾销进口产品对价格的影响，调查机构应考虑倾销进口产品的价格与进口成员的同类产品的价格
相比是否存在显著的降价，或者这类进口的影响是否在其他方面对价格造成了很大程度的抑制，或者在其他方面对价格上涨造成了很
大程度的阻止。这些因素中的任何一个或几个都不一定能提供决定性的指导。
Article 3.4: The examination of the impact of the dumped imports on the domestic industry concerned shall include an evaluation of all relevant
economic factors and indices having a bearing on the state of the industry, including actual and potential decline in sales, profits, output, market
share, productivity, return on investments, or utilization of capacity; factors affecting domestic prices; the magnitude of the margin of
dumping; actual and potential negative effects on cash flow, inventories, employment, wages, growth, ability to raise capital or
investments. This list is not exhaustive, nor can one or several of these factors necessarily give decisive guidance.倾销进口产品对国内相关产
业影响的审查，应当包括对与该产业状况有关的所有经济因素和指标的评估，包括销售额、利润、产量、市场份额、生产率、投资回
报率、或对能力的利用;影响国内价格的因素;倾销幅度的大小;对现金流、库存、就业、工资、增长、筹集资本或投资能力的实际和潜
在负面影响。这份清单并非详尽无遗，这些因素中的一个或几个也不一定能提供决定性的指导。
Article 3.7: determination of a threat of material injury shall be based on facts and not merely on allegation, conjecture or remote
possibility. The change in circumstances which would create a situation in which the dumping would cause injury must be clearly foreseen and
imminent. 实质性损害威胁的确定应基于事实，而不应仅仅基于指控、猜测或极小的可能性。必须清楚预见到可能造成倾销造成损害的
情况的变化，而且这种变化迫在眉睫。
How to determine causation?
1. Establishing a casual link between the dumped imports and the injury to a domestic industry
2. Not Attributing injury to factors other than dumped imports
The ADA Article 3.5:
It must be demonstrated that the dumped imports are, through the effects of dumping, as set forth in paragraphs 2 and 4, causing injury within
the meaning of this Agreement. The demonstration of a causal relationship between the dumped imports and the injury to the domestic industry
shall be based on an examination of all relevant evidence before the authorities. The authorities shall also examine any known factors other
than the dumped imports which at the same time are injuring the domestic industry, and the injuries caused by these other factors must not be
attributed to the dumped imports. Factors which may be relevant in this respect include, inter alia, the volume and prices of imports not sold at
dumping prices, contraction in demand or changes in the patterns of consumption, trade restrictive practices of and competition between the
foreign and domestic producers, developments in technology and the export performance and productivity of the domestic industry.必须证明倾
销进口产品通过第 2 款和第 4 款所述的倾销影响，造成了本协定意义上的损害。倾销进口产品与国内产业损害之间的因果关系，应当
在审查有关部门提供的所有相关证据的基础上证明。倾销进口产品以外的已知因素同时对国内产业造成损害的，不得将其他因素造成
的损害归咎于倾销进口产品。在这方面可能有关的因素包括，除其他外，包括非以倾销价格出售的进口产品的数量和价格、需求的收
缩或消费形态的变化、外国和国内生产者的贸易限制做法和竞争，国内工业的技术发展、出口业绩和生产率。
Form, Extent, and Duration
AD measures can take the form of higher tariff duties;反倾销措施可以采取提高关税的形式
An AD duty shall remain in force only as long as and to the extent necessary to counteract dumping which is causing injury.反倾销税仅在抵消
造成损害的倾销所必需的时间和范围内继续有效。
Article 11.2: The authorities shall review the need for the continued imposition of the duty, where warranted, on their own initiative or, provided
that a reasonable period of time has elapsed since the imposition of the definitive anti-dumping duty, upon request by any interested party which
submits positive information substantiating the need for a review. Interested parties shall have the right to request the authorities to examine
whether the continued imposition of the duty is necessary to offset dumping, whether the injury would be likely to continue or recur if the duty
were removed or varied, or both. If, as a result of the review under this paragraph, the authorities determine that the anti-dumping duty is no
longer warranted, it shall be terminated immediately;:机关应当审查义务的持续实施的必要性,在必要的地方,主动,或者提供一个合理的时
间内运行以来实施的反倾销税,根据任何利害关系方提交要求积极充实需要审核的信息。利害关系方有权要求有关当局审查是否有必要
继续征收反倾销税以抵消倾销，或者如果取消或改变关税，损害是否可能继续或再次发生，或者两者兼有。根据本款的复审结果，反
倾销税应当立即终止;
Article 11.3: Notwithstanding the provisions of paragraphs 1 and 2, any definitive anti-dumping duty shall be terminated on a date not later than
five years from its imposition (or from the date of the most recent review under paragraph 2 if that review has covered both dumping and injury,
or under this paragraph), unless the authorities determine, in a review initiated before that date on their own initiative or upon a duly
substantiated request made by or on behalf of the domestic industry within a reasonable period of time prior to that date, that the expiry of the
duty would be likely to lead to continuation or recurrence of dumping and injury. The duty may remain in force pending the outcome of such a
review.尽管第 1 款和第 2 款的规定,任何确定的反倾销税应当终止日期不迟于五年的实施(或从最近的日期复习第二款如果下复习了倾销
和损害,或在这一段),除非当局决定,在审查发起主动在此日期之前或在正式证实请求由或代表国内产业在一个合理的时间内该日期之前,
责任期满将可能导致倾销和损害的继续或复发。在这种审查产生结果之前，该关税可继续有效。
What are the differences between safeguards measures and anti-dumping measures?

the difference of the degree of seriousness of injury: The degree of serious injury in the safeguard measure is enough to make the relevant
industry of the importing country in extremely difficult or close to bankruptcy, which is higher than the material injury in anti-dumping
measures. The important thing to understand about the damage in safeguard measures is the word 'serious'. Because safeguard measures
are measures to limit trade against trade under normal conditions. Unlike anti-dumping measures, which are justified for the purpose of
correcting unfair trade practices, safeguards are necessary purely to protect the survival of domestic industries. Under the condition of fair
competition, it is normal and inevitable for one party to be harmed. If members are allowed to take safeguard measures against such
damage, the normal order of international trade will be disrupted by a trade war. Therefore, the damage required by the safeguard measure
must be limited and must reach the degree of 'significant impairment of the domestic industry condition'. The degree of injury is higher
than that referred to as' material injury 'in the anti-dumping law.

The nature is different: anti-dumping is a countermeasure against unfair competition trade behavior, while safeguard measures are aimed at
the countermeasure against import behavior under fair trade competition and the protection of domestic industry

The scope of implementation is different: anti-dumping is aimed at the implementation of dumping import enterprises, safeguard measures
are the treatment of a product, regardless of its source

Different implementation conditions: Compared to the anti-dumping need to satisfy the conditions of safeguard measures for more than a
"development" of unforeseen, second, about the damage, safeguard measures no substantial obstacles to this one, the other for damage is
much more demanding, the requirements of the anti-dumping is a "substantial damage or substantial threat of injury", safeguard measure is
required "serious damage or threat of injury", "Serious" requires more degree than "substantial.

The implementation method is different, anti-dumping is a kind of countervailing additional tax, safeguard measures are used to terminate
tariff concessions or quantitative restrictions

Different revenge and compensation, anti-dumping against unfair trade practices, so there is no room for compensation, but is for normal
import trade, safeguard measures is a legal trade practices, so the parties shall have the right to make a consultation, demand compensation,
if not agree, the damage of the right to terminate the corresponding obligation of tariff concession concerned
Subsidies and Countervailing
Subsidies – a very sensitive matter in international trade relations
Subsidies can be used by governments to pursue and promote important and fully legitimate objectives of economic and social policy;
政府可以利用补贴来追求和促进经济和社会政策的重要和完全合法的目标;
Subsidies may have adverse effects on the interests of trading partners whose industry may suffer in its domestic or export markets.
补贴可能对贸易伙伴的利益产生不利影响，因为这些贸易伙伴的工业可能在其国内或出口市场受到损害。
The WTO Definition of Subsidy
The Agreement on Subsidies and Countervailing Measures (ASCM) Article 1.1 provides,

There must either be a financial contribution by a government or any public body or any form of income or price support.

A benefit must thereby be conferred.
The panel in US – FSC (2000) stated:
‘…one of the most important achievements of the Uruguay Round in the area of subsidy discipline.’
1. Government or Public Body
A government;
Any public body;
State-owned Enterprises (SOEs) = ‘public bodies’?
DS379: US – Anti-Dumping and Countervailing Duties
Measure at issue: Countervailing Duties (CVDs) and AD measures imposed concurrently by the US against the same products from China,
following parallel AD and CVD investigations by the United States Department of Commerce.
Whether certain state-owned enterprises supplying inputs, and certain State-owned commercial banks providing loans to investigated producers
were “public bodies” under Article 1.1 of the SCM Agreement.:在美国商务部展开平行反倾销和反补贴调查后，美国对来自中国的相同产品
同时实施反倾销和反补贴措施。某些提供投入的国有企业和某些向被调查生产商提供贷款的国有商业银行是否属于《SCM 协定》第 1.1
条规定的“公共机构”。
The Panel decided,
‘an entity controlled by a government and that government ownership is highly relevant and potentially dispositive evidence of government
control since the government can then direct the resources of the company in order to give, in this case, Chinese tire producers a competitive
advantage;’
The Appellate Body’s rulings,
‘a public body is an entity that possesses, exercises, or is vested with, governmental authority.’公共机构是拥有、行使或被赋予政府权力的实
体。
DS436: US – Carbon Steel
Measure at issue: Imposition by the United States of countervailing duties on imports of certain hot-rolled carbon steel flat products from India
Whether the National Mineral Development Corporation (NMDC) was a public body 国家矿产开发公司(NMDC)是否是一个公共机构
The Panel concluded,
An entity might be public when it was subject to meaningful control by the government and that government shareholding, when combined with
other factors, may well be indicative of the government’s meaning control of an entity; 当一个实体受到政府的实际控制时，它可能是上市
的，而政府持股，结合其他因素，很可能表明政府对一个实体的实际控制;
The Appellate Body’s rulings,

In determining whether or not a specific entity is a public body, it may be relevant to consider "whether the functions or conduct are of a
kind that are ordinarily classified as governmental in the legal order of the relevant Member.” 在确定某一特定实体是否为公共机构时，
可考虑“其职能或行为是否属于有关成员法律秩序中通常归为政府性质的一类”

Exercising governmental functions may serve as evidence that it possesses or has been vested with governmental authority“;行使政府职
能可以作为其拥有或被赋予政府权力的证据

The existence of mere formal links between an entity and government in the narrow sense is unlikely to suffice to establish the necessary
possession of governmental authority;在狭义上，一个实体与政府之间仅存在形式上的联系，不太可能足以确立对政府权力的必要占
有;

An investigating authority must, in making its determination, evaluate and give due consideration to all relevant characteristics of the
entity and, in reaching its ultimate determination as to how that entity should be characterized, avoid focusing exclusively or unduly on any
single characteristic without affording due consideration to others that may be relevant.”调查机关在作出决定时，必须评估并适当考虑
该实体的所有有关特征，并在就该实体应如何特征作出最终决定时，避免只关注或不恰当地关注任何单一特征，而不适当考虑其
他可能相关的特征。”
2. financial contribution
SCM Agreement article 1.1(a)(1)
(i) a government practice involves a direct transfer of funds (e.g. grants, loans, and equity infusion), potential direct transfers of funds or
liabilities (e.g. loan guarantees);政府行为涉及资金的直接转移(例如赠款、贷款和股权注入)、潜在的资金或债务的直接转移(例如贷款担
保);
(ii) government revenue that is otherwise due is foregone or not collected (e.g.fiscal incentives such as tax credits);本应获得的政府收入已被放
弃或未被收取(如税收抵免等财政激励措施);
(iii) a government provides goods or services other than general infrastructure, or purchases goods;政府提供一般基础设施以外的商品或服
务，或购买商品;
(iv) a government makes payments to a funding mechanism, or entrusts or directs a private body to carry out one or more of the type of functions
illustrated in (i) to (ii) above which would normally be vested in the government and the practice, in no real sense, differs from practice normally
followed by governments 政府支付资金机制,或委托或指示一个私人的身体进行一个或多个功能(i)所示的类型(ii)上面通常会赋予政府和
实践,在没有真正意义上,不同于实践通常政府紧随其后
DS 108: US – Tax Treatment for ‘FSC’
Measure at issue: US tax exemptions for Foreign Sales Corporations (“FSC”) in respect of their export-related foreign-source trade income
The Appellate Body decided,
The ‘foregoing’ of revenue ‘otherwise due’ implies that less revenue has been raised by the government than would have been raised in a
different situation, or, that is, ‘otherwise’;
The word “foregone” suggests that the government has given up an entitlement to raise revenue that it could “otherwise” have raised;
There must, therefore, be some defined, normative benchmark against which a comparison can be made between the revenue actually raised and
the revenue that would have been raised otherwise’;
The term “otherwise due” implies some kind of comparison between the revenues due under the contested measure and revenues that would be
due in some other situation;
The US tax exemptions constitute financial contribution.
DS 316: EC – Aircraft
Measure at issue: Subsidies allegedly granted by the European Communities and certain EC member States to Airbus large civil aircraft,
including (i) “Launch Aid”/”Member State Financing” (LA/MSF) contracts; (ii) European Investment Bank loans; (iii) infrastructure-related
measures; (iv) corporate restructuring measures (debt forgiveness, equity infusions and grants); and (v) research and development funding.据称
欧洲共同体和某些欧共体成员国向空中客车大型民用飞机提供补贴，包括(i)“发射援助”/“成员国融资”(LA/MSF)合同;欧洲投资银行贷
款;(3)基础设施有关的措施;公司重组措施(债务减免、股权注入和赠款);(五)研发资金
The complainant argued that ‘the main runway at Bremen airport was extended by German authorities in 1988-89 to accommodate transport
flights for Airbus wings manufactured in Bremen’ and it constituted ‘the provision of goods and services other than general infrastructure. 它构
成了“提供商品和服务，而不是一般基础设施”
The Panel decided,
It is clear from the evidence before us that the extension of the runway at Bremen airport, and the associated noise reduction measures, were
undertaken by the Bremen city authorities specifically for Airbus needs;
The entire project, extending the runway, the associated noise reduction measures, and the right of exclusive use, constitute a financial
contribution.整个项目,延长跑道,相关的降噪措施,和专用的权利,构成财政捐助
DS 299: EC – Countervailing Measures on DRAMS Chips
Measure at issue: EC definitive countervailing duties
The Panel decided,
The factors in assessing whether ‘entrustment’ or ‘direction’ exists include:
The extent of government ownership of the banks involved;
The weak financial situation of the recipient of the financing at the time;
The recognized public interest considerations of certain banks in deciding to participate in the programmes;
The fact that the restructuring took place in the framework of a formal government act;
The withholding of information in the subsidy investigation.
3. Income or Price Support

An alternative to a financial contribution;财务贡献的另一种选择;

A panel should scrutinize the measure both as to its design and operation and identify its principal characteristics;应该仔细审查该措施的
设计和操作，并确定其主要特征

Certain transactions may be complex and multifaceted. This may mean that different aspects of the same transaction may fall under
different types of financial contribution. 某些交易可能是复杂的和多方面的。这可能意味着同一交易的不同方面可能属于不同类型的
财务捐助。
4. Benefit

The determination of whether a ‘benefit’ exists implies some kind of comparison and that the ‘marketplace’ provides an appropriate basis
for comparison;

The trade distorting potential of a ‘financial contribution’ can be identified by determining whether the recipient has received a ‘financial
contribution’ on terms more favorable than those available in the market;

A determination will not always be straightforward and it applies to different types of financial contributions in different ways;
The Appellate Body in Canada — Aircraft stated,
‘[T]he word “benefit,” as used in Article 1.1(b), implies some kind of comparison. This must be so, for there can be no “benefit” to the recipient
unless the “financial contribution” makes the recipient “better off” than it would otherwise have been, absent that contribution. In our view, the
marketplace provides an appropriate basis for comparison in determining whether a “benefit” has been “conferred,” because the trade-distorting
potential of a “financial contribution” can be identified by determining whether the recipient has received a “financial contribution” on terms
more favourable than those available to the recipient in the market.’“利益”一词意味着某种比较。必须如此，因为除非“财政捐助”使受援国
比没有这种捐助时“富裕”，否则就不可能给受援国带来“好处”。在我们看来，市场为确定“利益”是否已“授予”提供了一个适当的比较基
础，因为通过确定受援国是否以比市场上对受援国更有利的条件获得了“财政捐助”，就可以确定“财政捐助”的贸易扭曲潜力。
DS412/426: Canada – Renewable Energy/Feed-in Tariff
Measures at issue: Feed-in Tariff (FIT) Program of the Province of Ontario (the FIT Programme), and all individual FIT and micro FIT
Contracts implementing the FIT Programme. The eligibility for FIT is linked to a local content requirement (LCR) - by 2012, the minimum
required domestic content be 50% for large wind installations and 60% for solar photovoltaic (PV).
The question arose whether the FIT conferred a benefit.
The Panel decided,

A financial contribution will confer a benefit within the meaning of Article 1.1(b) when it provides an advantage to its recipient, and that
the existence of any such advantage is to be determined by comparing the position of the recipient in the marketplace with and without the
financial contribution;

There is no effective competition in Ontario's current wholesale electricity market and Ontario's wholesale electricity market is better
characterized as a part of an electricity system that is defined by the Government of Ontario's policy decisions and regulations;

The Ontario prices on the basis of which the complainants had made their case of benefit could not serve as appropriate benchmarks for the
purpose of the benefit analysis;

Four benchmarks from out-of-province electricity markets submitted by the complainants as proxies for the wholesale electricity market
price in Ontario were rejected;

The information was not available for making a comparison in order to identify the existence of a benefit.没有资料可以进行比较，以确定
是否存在利益。
The Appellate Body decided,

The Panel’s the interpretation of the legal standard for the determination of benefit was upheld;

Both supply side factors such as wind power and solar PV producers of electricity cannot compete with other electricity producers because
of differences in cost structures and operating costs and characteristics and demand side factors such as the type of contract, the size of the
customer, and the type of electricity generated (base-load versus peak-load) may differentiate the market;

Markets for wind- and solar PV-generated electricity can only come into existence as a matter of government regulation. It is often the
government's choice of supply-mix of electricity generation technologies that creates markets for wind- and solar PV-generated electricity.
The definition of a certain supply-mix by the government cannot in and of itself be considered as conferring a benefit within the meaning
of Article 1.1(b) of the SCM Agreement.风能和太阳能光伏发电市场只能在政府监管的情况下才会存在。通常是政府对发电技术的供
应组合的选择，为风能和太阳能光伏发电创造了市场。政府对某种供应组合的定义本身不能被视为赋予《SCM 协定》第 1.1(b)
条含义内的利益。

The competitive wholesale electricity market is not an appropriate benchmark, given that government intervention is required to achieve
certain policy goals.
5. Specificity
Article 1.2 provides that subsidies are subject to the rules on prohibited and actionable subsidies, as well as the rules on CVDs, only if they are
‘specific’. 第 1.2 条规定，只有在补贴是“具体的”的情况下，补贴才受禁止的和可起诉的补贴以及 cvd 的规则的约束。
Article 2 – Specificity
De jure
Specificity--Article
‘the granting authority, or the legislation explicitly limits access to a subsidy to certain
enterprises’“授权机构，或立法明确限制某些企业获得补贴”
2.1(a)
De Facto
‘use of a subsidy programme by a limited number of certain enterprises; predominant use
Specificity--Article
by certain enterprises; the granting of disproportionately large amounts of subsidy to certain
2.1 (c)
enterprises; the manner in which discretion has been exercised by the granting authority in
the decision to grant a subsidy’“有限数量的某些企业使用补贴计划;主要由某些企业使
用;对部分企业给予不成比例的大额补贴;批出当局在决定批出津贴时所行使的酌情决
定权的方式
DS 257: US – Lumber IV
Measure at issue: US final countervailing duty determination imposed on softwood lumber imports from Canada. 美国最终决定对从加拿大
进口的软木木材征收反补贴税
The question arose whether the provision of “cheap” stumpage rights by Canadian provinces (that is, the right to cut standing timber) was
“specific” to a “group of enterprises or industries” pursuant to Article 2.1(c). 加拿大各省提供的“廉价”立木权(即砍伐林木的权利)是否根据
第 2.1(c)条“特定于”某一“企业或行业集团”
The Panel decided,
In the case of a good that is provided by the government — and not just money, which is fungible — and that has utility only for certain
enterprises (because of its inherent characteristics), it is all the more likely that a subsidy conferred via the provision of that good is specifically
provided to certain enterprises only. We do not consider that this would imply that any provision of a good in the form of a natural resource
automatically would be specific, precisely because in some cases, the goods provided (such as for example oil, gas, water, etc.) may be used by
an indefinite number of industries.
As Canada recognized, the stumpage programme can clearly only benefit certain enterprises in the wood product industries which can harvest
and/or process the good provided, standing timber. .… We consider that the “wood products industries” constitutes at most only a limited group
of industries — the pulp industry, the paper industry, the lumber industry and the lumber remanufacturing industry — under any definition of the
term “limited.” We do not consider determinative in this respect the fact that these industries may be producing many different end-products.…
Specificity under Article 2 SCM is to be determined at the enterprise or industry level, not at the product level.
Regulation of Specific Subsidies under the SCM Agreement
1. prohibited subsidies — which are export subsidies and subsidies contingent on the use of domestic products
2. permitted subsidies — which were permitted for certain specific research activities or disadvantaged regions or environmental adaptations but
the authorization for which expired on January 1, 2000, so these permitted subsidies have now become actionable
3. actionable subsidies — which can be countervailed or challenged directly at the DSU when the applicable conditions are met (SCM Article 5,
e.g., when they are “specific” and have “adverse effects” on other WTO Members).
Prohibited Subsidies
Article 3: Prohibition
3.1
Except as provided in the Agreement on Agriculture, the following subsidies, within the meaning of Article 1, shall be prohibited:
(a) subsidies contingent, in law or
in fact, whether solely or as one of
several other conditions, upon
export
performance,

De jure and de factor export subsidies;

The focus on the concept of export ‘contingency ’ – some degree of link or relationship between
export and the subsidy
including
those illustrated in Annex I;

The granting of a subsidy is tied to actual or anticipated exportation or export earnings

The mere fact that a subsidy is granted to enterprises which export shall not for that reason
alone be considered to be an export subsidy within the meaning of this provision
(b) subsidies contingent, whether
solely or as one of several other
conditions,
upon
the
use
of
De jure and de facto domestic content subsidies
Subsidies that violate this provision also violate Article III: 4 and paragraph 1(a) of the Illustrative List of
the TRIMs Agreement
domestic over imported goods.补
贴，无论是单独的还是作为其他
条件之一，取决于使用国内商品
而不是进口商品。
3.2
A Member shall neither grant nor maintain subsidies referred to in paragraph 1.
Actionable Subsidies
Subsidies are not prohibited outright under this provision, but an action can be brought challenging such subsidies as having certain adverse
trade effects 根据这一条款，补贴并不完全被禁止，但可以对此类补贴提起诉讼，称其具有某些不利的贸易影响

injury to the domestic industry of another Member;

nullification or impairment of benefits accruing directly or indirectly to other Members under GATT 1994 in particular the benefits of
concessions bound under Article II of GATT 1994；

serious prejudice to the interests of another Member
(a) the effect of the subsidy is to displace or impede the imports of a like product of another Member into the market of the subsidizing
Member;补贴的效果是取代或阻碍另一成员的类似产品进入该补贴成员的市场;
(b) the effect of the subsidy is to displace or impede the exports of a like product of another Member from a third country market;补贴的效
果是取代或阻碍另一成员的类似产品从第三国市场出口;
(c) the effect of the subsidy is a significant price undercutting by the subsidized product as compared with the price of a like product of
another Member in the same market or significant price suppression, price depression or lost sales in the same market;补贴的效果是受补贴
产品与另一成员在同一市场的同类产品的价格相比出现大幅降价，或在同一市场出现大幅价格抑制、价格下调或销售损失;
(d) the effect of the subsidy is an increase in the world market share of the subsidizing Member in a particular subsidized primary product or
commodity as compared to the average share it had during the previous period of three years and this increase follows a consistent trend over
a period when subsidies have been granted.补贴的效果是世界上市场份额的增加补贴的成员在一个特定的补贴主要产品或商品相比平
均分享了之前的三年,这期间增加遵循一个一致的趋势在一段时间内当已获得补贴。
DS 267: US – Cotton Subsidies
Measure at issue: US agricultural “domestic support” measures, export credit guarantees and other measures alleged to be export and domestic
content subsidies.
Whether there was a causal link between the subsidy and significant price suppression within meaning of the SCM Agreement Article 6.3(c).
The Panel decided,
The US exerts a substantial proportionate influence in the world upland cotton market;
Several of the US subsidies are directly linked to the world prices for upland cotton, thereby insulating US producers from low prices;
There is a discernable temporal coincidence of suppressed world market prices and the price-contingent US subsidies;
Credible evidence exists on the record concerning the divergence between US producers’ total costs of production and revenue from sales of
upland cotton since 1997.
Non-actionable Subsidies
1. Subsidies which are not specific within the meaning of Article;
2. Subsidies which meet one of the three sets of conditions described in Article 8.2;
Paragraph (a): Research and Development ( ‘assistance for research activities conducted by firms or by higher education or research
establishments on a contract basis with firms where certain conditions are met)研究和发展(对公司或高等教育或研究机构与符合某些条件的
公司签订合同进行的研究活动提供援助)
Paragraph (b): Regional Development (‘assistance to disadvantaged regions within the territory of a Member given pursuant to a general
framework of regional development and non-specific within eligible regions where certain conditions are met)区域发展(根据区域发展的一般
框架对成员国境内弱势地区提供的援助，以及在符合某些条件的合格地区内提供的非特定援助)
Paragraph (c) Environmental Protection (‘assistance to promote adaptation of existing facilities to new environmental requirements imposed by
law and/or regulations which result in greater constraints and financial burden on firms 环境保护(协助促进现有设施适应法律和/或条例所规
定的新的环境要求，这些要求对公司造成更大的限制和财政负担
Dispute Settlement and Remedies
Article 4.7: ‘withdraw the subsidies without delay’ (prohibited subsidies);及时收回补贴”(禁止补贴);
Article 7.8: where ‘adverse effects’ were found, the Member shall take appropriate steps to ‘remove the adverse effects’ or ‘withdraw the
subsidy’ (actionable subsidies);如发现“不利影响”，成员应采取适当步骤“消除不利影响”或“撤回补贴”(可起诉的补贴);
Article 7.9, In the event the Member has not taken appropriate steps to remove the adverse effects of the subsidy or withdraw the subsidy within
six months from the date when the DSB adopts the panel report or the Appellate Body report, and in the absence of agreement on compensation,
the DSB shall grant authorization to the complaining Member to take countermeasures, commensurate with the degree and nature of the adverse
effects determined to exist, unless the DSB decides by consensus to reject the request.如成员未在争端解决机构通过专家组报告或上诉机构
报告之日起 6 个月内采取适当步骤消除补贴的不利影响或撤回补贴，且在没有就赔偿达成协议的情况下，DSB 应授权投诉成员根据确
定存在的不利影响的程度和性质采取对应措施，除非 DSB 以协商一致的方式决定拒绝该请求。
Countervailing Duties (CVDs)
Lecture 9--Agreement on Sanitary and Phytosanitary (SPS) Measures 卫生和植物检疫措施协定
What is sanitary or phytosanitary measure (SPS)?
(Annex A of the SPS Agreement) Any measure applied:
(a) to protect animal or plant life or health within the territory of the Member from risks arising from the entry, establishment or spread of pests,
diseases, disease-carrying organisms or disease-causing organisms;保护成员领土内的动物或植物的生命或健康免受因害虫、疾病、携带疾
病的生物或致病生物的进入、定殖或传播而产生的风险
(b) to protect human or animal life or health within the territory of the Member from risks arising from additives, contaminants, toxins or
disease-causing organisms in foods, beverages or feedstuffs;保护成员领土内的人类或动物的生命或健康，使其免受食品、饮料或饲料中的
添加剂、污染物、毒素或致病微生物引起的风险
(c) to protect human life or health within the territory of the Member from risks arising from diseases carried by animals, plants or products
thereof, or from the entry, establishment or spread of pests; or 保护成员领土内的人类生命或健康免受由动物、植物或其产品携带的疾病或
有害生物的进入、定殖或传播引起的风险
(d) to prevent or limit other damage within the territory of the Member from the entry, establishment or spread of pests.防止或限制成员领土内
因有害生物的进入、定殖或传播而造成的其他损害。
Article 1.1, ‘this Agreement applies to all SPS measures which ‘may directly or indirectly affect international trade’.
The Appellate Body in Australia – Apples (2010) pointed out the fundamental element of this definition relates to the purpose or intention of
the measure, which ‘is to be ascertained on the basis of objective considerations’.
Basic Rights and Obligations --(Article 2)

The right to take SPS measures

The obligation to take or maintain SPS measures necessary to protect human, animal or plant life or health.

The obligation to take or maintain SPS measures based on scientific principles and on sufficient evidence

The obligation not to adopt or maintain SPS measures that arbitrarily or unjustifiably discriminate or constitute a disguised restriction on
international trade.
Article 2.1: ‘Members have the right to take sanitary and phytosanitary measures necessary for the protection of human, animal or plant life or
health, provided that such measures are not inconsistent with the provisions of this Agreement.’ 各成员有权采取为保护人类、动物或植物的
生命或健康所必需的卫生和植物卫生措施，只要这些措施不与本协定的规定相抵触。
Article 2.2: ‘Members shall ensure that any sanitary or phytosanitary measure is applied only to the extent necessary to protect human, animal
or plant life or health, is based on scientific principles and is not maintained without sufficient scientific evidence, except as provided for in
paragraph 7 of Article 5.’各成员应确保，除第 5 条第 7 款规定的情况外，任何卫生或植物卫生措施仅在保护人类、动物或植物生命或健
康所必需的范围内，以科学原则为基础，在没有充分科学证据的情况下不得予以维持。"
The Appellate Body in Japan – Agricultural Products stated,
‘there be a rational or objective relationship between the SPS measure and the scientific evidence.’
Whether there is a rational relationship ‘is to be determined on a case-by-case basis and will depend upon the particular circumstances of the
case, including the characteristics of the measure at issue and the quality and quantity of the scientific evidence’.
Article 2.3: Members shall ensure that their sanitary and phytosanitary measures do not arbitrarily or unjustifiably discriminate between
Members where identical or similar conditions prevail, including between their own territory and that of other Members. Sanitary and
phytosanitary measures shall not be applied in a manner which would constitute a disguised restriction on international trade.
各成员应确保其卫生和植物卫生措施不会在条件相同或类似的情况下任意或不公正地区别对待各成员，包括其本国领土与其他成员领
土之间。卫生和植物检疫措施的实施不得构成对国际贸易的变相限制。
Article 2.4: Sanitary or phytosanitary measures which conform to the relevant provisions of this Agreement shall be presumed to be in
accordance with the obligations of the Members under the provisions of GATT 1994 which relate to the use of sanitary or phytosanitary
measures, in particular the provisions of Article XX(b).符合本协定相关规定的卫生或植物检疫措施应被推定为符合 1994 年关贸总协定有
关使用卫生或植物检疫措施的规定，特别是第 XX 条规定的成员义务(b)。
Article 3: Harmonization
Members have three options with regard to international standards
(1) base their SPS measures on international standards under Article 3.1
(2) Conform their SPS measures to international standards under Article 3.2
(3) Formulate their SPS measures resulting in a higher level of protection than the international standards under Article 3.3.
The Appellate Body in EC – Hormones stated,
The term ‘based on’ is a looser standard than ‘conform to’;
A thing is commonly said to be ‘based on’ another thing when the former ‘stands’ or is ‘found’ or ‘built upon’ or ‘is supported by’ the latter.
Article 4: Equivalence
‘Members shall accept the sanitary or phytosanitary measures of other Members as equivalent, even if these measures differ from their own or
from those used by other Members trading in the same product, if the exporting Member objectively demonstrates to the importing Member that
its measures achieve the importing Member’s appropriate level of sanitary or phytosanitary protection. For this purpose, reasonable access shall
be given, upon request, to the importing Member for inspection, testing and other relevant procedure.’各成员应将其他成员的卫生或植物卫生
措施视为同等的，即使这些措施不同于其本身或不同于从事同一产品贸易的其他成员所使用的措施，出口成员客观地向进口成员证明
其措施达到进口成员适当的卫生或植物卫生保护水平。为此目的，应应请求给予进口成员进行检验、测试和其他相关程序的合理准入。”
Article 5 : Assessment of Risk and Determination of the Appropriate Level of Sanitary or Phytosanitary Protection 第 5 条:风险评估和适
当的卫生或植物卫生保护等级的确定
What is a risk assessment?
Annex A para. 4 provides,
‘The evaluation of the likelihood of entry, establishment or spread of a pest or disease within the territory of an importing Member according to
the sanitary or phytosanitary measures which might be applied, and of the associated potential biological and economic consequences;’ “根据可
能采取的卫生或植物卫生措施，对虫害或疾病在进口成员领土内进入、扎根或传播的可能性以及相关的潜在生物和经济后果进行评估;”
‘or the evaluation of the potential for adverse effects on human or animal health arising from the presence of additives, contaminants, toxins or
disease-causing organisms in food, beverages or feedstuffs.’或评估食品、饮料或饲料中的添加剂、污染物、毒素或致病微生物对人类或动
物健康的潜在不利影响。
Risk Management
(1) The level of protection
Annex A para. 5 ‘The level of protection deemed appropriate by the Member establishing a sanitary or phytosanitary measure to protect human,
animal or plant life or health within its territory’为在其领土内保护人类、动物或植物的生命或健康而制定卫生或植物卫生措施的成员认为
适当的保护级别"
Article 5.4 ‘Member should…take into account the objective of minimizing negative trade effects.’考虑将负面贸易影响降到最低的目标
Article 5.5 ‘Each Member shall avoid arbitrary or unjustifiable distinctions in the levels it considers to be appropriate in different situations, if
such distinctions result in discrimination or a disguised restriction on international trade.’ 果这种区分导致对国际贸易的歧视或变相限制，各
成员应避免在不同情况下按照其认为适当的级别进行任意或不合理的区分。”
(2) The measure it will use to achieve this level of protection
Article 5.6 ‘Members shall ensure that such measures are not more trade-restrictive than required to achieve their appropriate level of sanitary or
phytosanitary protection, taking into account technical and economic feasibility.’各成员应在考虑到技术和经济可行性的情况下，确保此类措
施的贸易限制程度不超过实现其适当的卫生或植物卫生保护水平所需的程度。
Article 5.7: Provisional Measures when Scientific Evidence is Insufficient 科学证据不足时的临时办法
Members are allowed to adopt a SPS measure provisionally if:
‘In cases where relevant scientific evidence is insufficient, a Member may provisionally adopt sanitary or phytosanitary measures on the basis of
available pertinent information, including that from the relevant international organizations as well as from sanitary or phytosanitary measures
applied by other Members. In such circumstances, Members shall seek to obtain the additional information necessary for a more objective
assessment of risk and review the sanitary or phytosanitary measure accordingly within a reasonable period of time.’在下列情况下，成员可暂
时采用卫生检疫措施:“在相关科学证据不足的情况下，一成员可根据现有的相关信息，包括有关国际组织的信息以及其他成员采取的
卫生或植物检疫措施，临时采取卫生或植物检疫措施。在这种情况下，各成员应设法获得对风险进行更客观评估所需的额外信息，并
在一段合理时间内相应地审查卫生或植物卫生措施。
Five Main Questions in SPS Cases
1. Has the Member conducted a proper ‘risk assessment’? --(Article 5.1 and Annex A)该成员有否进行适当的“风险评估”
2. Is the SPS measure ‘based on’ such a risk assessment? --(Article 5.1 and Article 2.2)措施是否“基于”这种风险评估
3. Is there ‘insufficient scientific evidence’, so that the defending member is permitted to take provisional SPS measures? (Article 5.7)是否有
“不充分的科学证据”，从而允许申辩国采取临时 SPS 措施?
4. Is the level of protection arbitrary or unjustifiable distinction? --(Article 5.5)保护水平是武断的还是不合理的区分
5. Is the level of protection more trade restrictive than required? --(Article 5.6)保护水平是否比要求的更具贸易限制性?
DS 76: Japan – Agricultural Products
Measure at issue: Varietal testing requirement (Japan's Plant Protection Law), under which the import of certain plants was prohibited because
of the possibility of their becoming potential hosts of codling moth.争议的措施:品种检测要求(日本的《植物保护法》)，根据该法律，某些
植物被禁止进口，因为它们有可能成为寄生蛾的潜在宿主。
The Appellate Body upheld the Panel's finding that Japan's varietal testing requirement was maintained without sufficient scientific evidence in
violation of Art. 2.2;即在没有充分科学证据的情况下维持了日本的品种测试要求，这违反了 Art 的规定
After failing to meet requirement set in Art. 2.2, Japan argued its testing requirement can be justified by 5.7;
Article 5.7 of the SPS Agreement sets out four requirements which must be met cumulatively in order to adopt and maintain a provisional SPS
measure; 5.7 条是关于科学证据不足时的临时办法
The Panel did not err in its application of Article 5.7 by first examining whether the varietal testing requirement meets the requirements of the
second sentence of Article 5.7 and found that Japan did not seek to obtain the additional information necessary for a more objective risk
assessment;
Having established that the requirements of the second sentence of Article 5.7 are not met, there was no need for the Panel to examine the
requirements of the first sentence.
DS
245: Japan – Apples
Measure at issue: Certain Japanese measures restricting imports of apples on the basis of concerns about the risk of transmission of fire blight
bacterium.日本采取了限制进口苹果的措施，理由是担心会传播火疫病菌。
Under these measures, apples could be imported in Japan, but only if a number of conditions were met,
Apples must come from designated fire blight free zones;
Area must be surrounded by 500 meter buffer zone;
Both areas must be inspected at least three times a year, and after heavy storm;
Apples must be treated by specific process after picking;
Apples destined for Japan must be kept separate from apples destined elsewhere.
One of the focal points - were Japan’s measures in line with SPS Article 5.7?
The panel ruled,

The measure was not imposed because of the insufficiency of the relevant scientific evidence;

Over 200 years of high quality and important relevant scientific and practical experience exist on the risk of transmission of fire blight
through apple fruit;

Article 5.7 was designed to be invoked in situations where little, or no, reliable evidence was available on the subject matter;

Having failed to meet the first requirement of Article 5.7, the Panel did not address the remaining three requirements.
DS 18: Australia – Salmon
Measure at issue: Australia's import prohibition of fresh, chilled and frozen salmon from Canada
One of the contentious issues – whether Australia’s SPS measure led to ‘arbitrary or unjustifiable distinctions in the levels it considers to be
appropriate in different situations, if such distinctions result in discrimination or a disguised restriction on international trade’ (Article 5.5)澳大
利亚的 SPS 措施是否导致了“在不同情况下对其认为适当的水平进行武断或不合理的区分，如果这种区别导致对国际贸易的歧视或变相
限制”(第 5.5 条)
The Panel found that the measure constituted a ‘disguised restriction’ since all the three conditions were fulfilled,
(1) Member concerned adopts different appropriate levels of sanitary protection in several ‘different situations’;有关成员在若干'不同情况'中采
取不同的适当级别的卫生保护;
(2) Those levels of protection exhibit differences which are ‘arbitrary or unjustifiable’;这些级别的保护表现出'任意或不合理'的差异;
(3) The measure embodying those differences results in ‘discrimination or a disguised restriction on international trade’.体现这些差异的措施导
致'对国际贸易的歧视或变相限制'。
The Appellate Body upheld the Panel’s decision and stated,
1．The import prohibition on fresh, chilled or frozen salmon for human consumption and the admission of imports of other fish and fish
products are different situations which can be compared under Article 5.5;
2．Australia determined explicitly that its appropriate level of protection with respect to salmon is ‘a high or very conservative’ level of
sanitary protection aimed at reducing risk to ‘very low levels’…while the level of protection reflected in Australia’s treatment of herring used as
bait and live ornamental finfish is definitely lower;
3．The distinction in levels of protection result in a disguised restriction on international trade – the ‘arbitrary character’ of the differences
in the levels protection; the ‘rather substantial difference’ in the different levels of protection; the measure at issue is not based on a risk
assessment under Article 5.1; possible domestic pressure to protect Australian salmon industry against import competition; Australia imposes
very strict standards for salmon imports to deal with a small potential risk, while at the same time it does not appear to apply similarly strict
standards to the internal movement of salmon products with Australia.
DS 26: EC – Beef Hormones
Measure at issue: EC prohibition on the placing on the market and the importation of meat and meat products treated with certain hormones.
1. Whether the measures at issue violated SPS Agreement Article 5.1
The Appellate Body upheld the Panel’s ruling that the EC measures were not ‘based on’ a risk assessment under Article 5.1.

The AB provided that Article 5.1 requires that the results of risk assessment must sufficiently warrant/reasonably support the SPS measure
at stake…there be a rational relationship between the measure and the risk assessment;

A risk assessment is not required to come to a ‘monolithic’ conclusion on an issue. Dissenting views on the issue do not necessarily
undermine a Member’s reliance on a risk assessment;

2.
The scientific reports presented by the EC do not rationally support the EC import prohibition;
Whether the measures at issue violated SPS Agreement Article 5.5
The Appellate Body stated that there are three required elements necessary for a finding of violation of Article 5.5.

The Member imposing the measure must have adopted its own appropriate levels of sanitary protection against risks to human life or
health in several "different situations."

Those levels of protection must exhibit "arbitrary or unjustifiable" differences in their treatment of the different situations.

The arbitrary or unjustifiable differences result in "discrimination or a disguised restriction of international trade."
After reviewing three elements, the Appellate Body upheld the Panel’s rulings that the measures at issue fulfilled the first two elements. However,
the Appellate Body disagreed with the Panel that the level of difference in treatment itself can be sufficient to demonstrate the third element.
Therefore, no violation could be found under Article 5.5.
‘We are unable to share the inference that the Panel apparently draws that the import ban on treated meat and the Community-wide probation of
the use of the hormones…were not really designed to protect its population from the risk of cancer, but rather to keep out US and Canadian
hormone-based beef and thereby to protect the domestic beef producers in the European Communities.’
3. Whether the measures at issue can be justified by the application of precautionary principle as reflected by Article 5.7

The Appellate Body considered the precautionary principle (PP) cannot override the explicit wording of Articles 5.1 and 5.2;

The status of PP in international law continues to be the subject of debate…whether it has been widely accepted by Members as a principle
of general or customary international law appears less than clear;

The Appellate Body did not attempt to decide whether the precautionary principle has been accepted as a principle of general or customary
international law.
SPS & GATT
What do they have in common?
The principles of non-discrimination
The prohibition of trade restrictions
The principle of transparency
What do they differ?
The requirement that SPS measures be based on sound science (Articles 2.2, 3.3, 5.1 and 5.7)
The provisions that encourage harmonization and equivalence
Lecture 10--The Agreement on Technical Barriers to Trade
What are technical barriers to trade examples?
Other examples of TBTs are rules for product weight, size, or packaging; ingredient or identity standards; shelf-life restrictions; and import
testing and certification procedures. The Agreement on Technical Barriers to Trade gives rules for the use of such barriers.
What is the relationship between SPS and TBT?
The TBT (Technical Barriers to Trade) Agreement covers all technical regulations, voluntary standards and the procedures to ensure that these
are met, except when these are sanitary or phytosanitary measures as defined by the SPS Agreement. The type of measure determines whether it
is covered by the TBT Agreement.
The Role of the TBT and SPS Agreements
Standards determine conditions that goods have to satisfy in order to be marketable. They ensure, first, safety and reliability for consumers (for
instance by determining what chemicals must not be found in children’s toys, or what bacteria must never be found in canned peanuts, etc.).
Secondly, they facilitate commerce to a considerable extent, both within a state and internationally: the printer industry appreciates that ordinary
consumers will use either paper that is (Deutsche Industrie Norm (DIN)) ‘A4’ size or ‘US letter’ size; the car manufacturer can ask for offers for
a specified and standardized component, so that every producer of relevant parts knows what the client wants and may hence submit an
custom-tailored offer. Thirdly, however, standards can prove to be market access impediments, and even be purposefully abused to serve that
function: A country that imposes unique technical standards, may create (willingly or unintentionally) a very significant market access
restriction.
As tariffs and other border measures have been successfully reduced since 1947, standards and other behind-the-border regulatory measures
receive much more attention. That is, on the one hand, an opportunist reaction to the (partial) disappearance of a major trade impediment, which
causes trade officials to address other problems for international trade. It is, however, also due to the fact that as it is no longer permissible to use
tariff measures to restrict market access; this leaves behind-the-border discriminatory measures as a preferred tool for undoing specific trade
liberalizations, thereby benefiting important domestic stakeholders which suffered from increased import competition. As a consequence, the
drafters of the WTO Agreement included the Agreement on the Application of Sanitary and Phytosanitary Measures (hereinafter referred to as
the SPS Agreement, or SPS) and the Agreement on Technical Barriers to Trade (hereinafter referred to as the TBT Agreement, or TBT) in Annex
1a of the WTO Agreement to deal with two different sub-sets of domestic regulatory measures. As a consequence, both Agreements form part of
the single undertaking that is the Marrakesh Agreement. It goes without saying that both the TBT and the SPS are covered agreements for the
purposes of the WTO dispute settlement mechanism. In substance, both Agreements represent a compromise ‘between, on the one hand, the
desire to avoid creating unnecessary obstacles to international trade and, on the other hand, the recognition of Members’ right to regulate’. This
is, in principle, not ‘different from the balance set out in the GATT 1994, where obligations such as national treatment in Article III are qualified
by the general exceptions provision of Article XX’.
The Legal Relationship between the GATT, TBT, and SPS
The General Agreement on Tariffs and Trade (GATT), the Agreement on the Application of Sanitary and Phytosanitary Measures (SPS), and the
Agreement on Technical Barriers to Trade (TBT) all address behind-the-border measures. ‘In light of the interpretive principle of effectiveness’,
it is consistent WTO jurisprudence to apply all provisions of the WTO Agreements harmoniously, provided there is no legal command to the
contrary. Such a situation exists with regard to the relationship between the SPS and the TBT. TBT Article 1.5 specifically excludes ‘sanitary
and phytosanitary measures as defined in Annex A of the Agreement on the Application of Sanitary and Phytosanitary Measures’ from its scope.
Likewise, SPS Article 1.4 provides that ‘[n]othing in this Agreement shall affect the rights of Members under the [TBT] with respect to
measures not within the scope of this Agreement’. The SPS and the TBT are thus mutually exclusive.5 However, a Panel has held that one state
measure may exceptionally be covered by both the TBT and the SPS, due to its serving two (or more) different purposes. With regard to the
relationship between the GATT and the SPS, SPS Article 2.4 establishes a rebuttable presumption that all measures compatible with the SPS
Agreement are GATT-compatible: Sanitary or phytosanitary measures which conform to the relevant provisions of this Agreement shall be
presumed to be in accordance with the obligations of the Members under the provisions of GATT 1994 which relate to the use of sanitary or
phytosanitary measures, in particular the provisions of Article XX(b).
With regard to the relationship between the SPS and the TBT, on the one hand, and the more general GATT, on the other hand, the starting point
is the General Interpretative Note to Annex 1A, which provides guidance as to how conflicts between the GATT and the other agreements
dealing with trade in goods, such as the SPS and the TBT, should be resolved:In the event of conflict between a provision of the General
Agreement on Tariffs and Trade 1994 and a provision of another agreement in Annex 1A to the Agreement Establishing the World Trade
Organization . . . , the provision of the other Agreement shall prevail to the extent of the conflict.
Accordingly, a measure falling under both the TBT and the GATT should ‘normally’ be considered first pursuant to the more specific agreement.
The Appellate Body continued:
[A]lthough the TBT Agreement is intended to “further the objectives of GATT 1994”, it does so through a specialized legal regime that applies
solely to a limited class of measures. For these measures, the TBT Agreement imposes obligations on Members that seem to be different from,
and additional to, the obligations imposed on Members under the GATT 1994.
In US—Tuna II, the Appellate Body found that a TBT-consistent measure could not automatically be considered GATT-consistent:
[T]he assumption that the obligations under Article 2.1 of the TBT Agreement and Articles I:1 and III:4 of the GATT 1994 are substantially the
same . . . is, in our view, incorrect. In fact, as we have found above, the scope and content of these provisions is not the same. Moreover, in our
view, the Panel should have made additional findings under the GATT 1994 in the event that the Appellate Body were to disagree with its view
that the measure at issue is a “technical regulation” within the meaning of the TBT Agreement.11 (Emphasis and italics in the original.)
Thus, consistency with the TBT would not per se assure compatibility with the GATT.
Can (Should) Article xx(b) GATT Be a Defense against Inconsistencies with the SPS and TBT Agreements
I. ARTICLE x x ( b ) AND THE SPS AGREEMENT
A. GENERAL OVERVIEW OF EXCEPTIONS TO GATT
The General Agreement on Tariffs and Trade (GATT) was designed to fornulate general principles that would govern the complex and highly
politicized subject of international trade law.' An infant agreement as it was, the GATT had to balance the myriad obligations it demands with
the sovereign independence of nations to structure their international trade relations under conditions that suit their individual wishes and
realities. To this end, the GATT was "riddled with exceptions" that relax the obligations of GATT Members in a number of situations. Of
relevance to the subject of this article is Article xx of GATT, which Professor Jackson puts in the third category of Universal Exceptions.
A relatively fewer number of disputes have arisen in the GATT/WTO years wherein issues of Article XX have arisen. Nevertheless, the World
Trade Organization has developed a three-step interpretation of the application of an Article xx defense:
first, determining whether the measure in dispute is in the scope of the policy or national interest represented in the relevant paragraph (for
example, protection of human, animal or plant life or health in paragraph b, or conservation of exhaustible natural resources in paragraph g
second, determining whether the measure is within the scope of the degree of proximity that it must have with the interest (policy) sought to be
protected in light of the words "necessary" and "relating to"; and
third, determining whether the elements of the introductory paragraph of Article XX (called the chapeau) are met.
Of the ten paragraphs contained in Article XX, three (b, d, and g) have been repeatedly used in GATT/WTo disputes.
B. THE SCOPE OF ARTICLE xx(b)
The drafting history of Article xx GATT shows that the provisions of this Article were not subjects of a deeper debated Of the paragraphs in
Article xx, paragraph b seems to have attracted the attention of the drafters during the Geneva Session that started on 10 April 1947.
Not a lot of cases have been decided by the GATT/WTO dispute settlement organs nor is the drafting history clear enough to define the scope of
paragraph b, i.e. whether it is limited only to sanitary and phytosanitary measures taken to protect human, animal or plant life or health or
includes other measures necessary to achieve the protective purpose. The drafters were only overtly concerned with the possible abuse of
paragraph b under the guise of protecting human, animal or plant life or health.
Nevertheless, it is now a settled understanding that sanitary and phytosanitary measures were the principal measures that occupied the minds of
the drafters, and the drafting history of the Agreement on the Application of Sanitary and Phytosanitary Measures (the Sps Agreement) would
confirm this (see the next Section of this article). The Sps Agreement was basically established to "elaborate" the provisions of Article xx(b)
(;ATT.1 The drafters of the Sps Agreement were careful in selecting the words of the relevant paragraph (paragraph 8) in the Preamble to the Sps
Agreement that refers to Article xx (b): "Desiring therefore to elaborate rules for the application of the provisions of GATT 1994 which relate to
the use of sanitary or phytosanitary measures, in particular the provisions of Article xx(b) ..." By the terms of this paragraph, the drafters of the
Sps Agreement meant, we can therefore infer, that:

the SPS Agreement was only meant to "elaborate" not to "give meaning" or "define" Article xx(b);

the phrase "... the provisions ... which relate to the use of sanitary or phytosanitary measures, in particular the provisions of Article
xx(b) ..." means that the provisions of Article xx(b) are not confined to sanitary and phytosanitary measures as contained in the SPS
Agreement, that they are only "related to" sanitary and phytosanitary measures; and

therefore, the scope of Article xx(b) can be extended beyond the SPS Agreement in the sphere of protection of human, animal or plant life
or health.
C. ARTICLE XX(b) AND THE Sps AGREEMENT
1. THE SPS AGREEMENT-AN OFFSHOOT OF ARTICLE xx(b)
As world trade exponentially increased in all dimensions during the four decades that followed the establishment of GATT, it became clear that
importing countries were becoming increasingly concerned about the impact of imported goods on their human, animal and/or plant life or
health and, thus, had started to take measures against such imports. The only provisions that addressed this issue were those contained in Article
xx(b), which provisions are "defensive", i.e. they can only be invoked to justify a measure that is found to be inconsistent with any one of the
GATT obligations, none among which fully govern the issue of protection of human, animal and/or plant life or health.9
It was the understanding of the world trade partners that sanitary and phytosanitary measures, crucial in international trade as they are, needed to
be elevated to becoming "substantive" obligations that apply to all WTO Members instead of remaining under Article xx(b) as a "justifiable
deviation" from GATT obligations. To that end, the second paragraph of the Preamble to the SPS Agreement, established for this purpose, was
made to read: "DesirinQ to improve the human health, animal health and phytosanitary situation in all Members ..." This was one of the reasons
that necessitated the establishment of the SPS Agreement.
Moreover, the grant of waivers to the agricultural sector, the lack of tariff bindings and the widespread use of some questionable non-tariff
barriers urged the negotiators in the Uruguay Round of multilateral trade negotiations to conclude that an agreement should be made to monitor
the use of sanitary or phytosanitary measures against imported goods.10 Thus, issues of sanitary and phytosanitary measures were finally
expounded beyond the cloudy provisions of Article xx(b) GATT into a separate, substantive part of the WTO Agreement: the St�s
Agreement,I .I The SPS Agreement, which is part of Annex 1A to the W'ro Agreement, has 14 Articles and three annexes. The Preamble and
some of the articles of the Sps Agreement clearly indicate the relationship between the SPS Agreement and Article XX GATT, paragraph b in
particular. The Preamble starts with a paragraph similar to the chapeau of Article xx and afterwards makes an explicit reference to paragraph b:

"Reaf/irming that no Member should be prevented from adopting or enforcing measures necessary to protect human, animal or plant life or
health, subject to the requirement that these measures are not applied in a manner which would constitute a means of arbitrary or
unjustifiable discrimination between Members where the same conditions prevail or a disguised restriction on international trade;

Desiring to improve the human health, animal health and phytosanitary situation in all Members ...

Desiring the establishment of a multilateral framework of rules and disciplines to guide the development, adoption and enforcement of
sanitary and phytosanitary measures in order to minimize their negative effects on trade ...

Desiring therefore to elaborate rules for the application of the provisions of GATT 1994 which relate to the use of sanitary or phytosanitary
measures, in particular the provisions of Article �c(b) ..." (emphases added).
The Preamble shows the desire of the drafters to build a whole set of obligations in the sensitive area of the application of sanitary and
phytosanitary measures based on a multilateral obligation under the GATT system. The principal relationship and difference between the Sps
Agreement and Article xx GATT is revealed in Article 2 of the Sps Agreement, which enumerates the "Basic Rights and Obligations" of all WTO
Members:
"1. Members have the right to take sanitary and phytosanitary measures necessary for the protection of human, animal or plant life or health,
provided that such measures are not inconsistent urith the provisions of this Agreement.
2. Members shall ensure that any sanitary and phytosanitary measure is applied only to the extent necessary to protect human, animal or plant
life or health, is based on scientific principles and is not maintained without sufficient scientific evidence, except as provided in paragraph 7 of
Article 5.
3. Members shall ensure that their sanitary and phytosanitary measures do not arbitrarily or unjustifiably discriminate between Members where
the same conditions prevail, including between their territory and that of other Members. Sanitary and phytosanitary measures shall not be
applied in a manner which would constitute a disguised restriction on international trade.
4. Sanitary and phytosanitary measures which conform to the relevant provisions of this Agreement shall be presumed to be in accordance with
the obligations of GATT 1994 which relate to the use of sanitary and phytosanitary measures, in particular the provisions of Article xx(b)."
(emphases added).
Article 3 of the SPS Agreement requires Members to harmonize their sanitary and phytosanitary measures with available international standards,
guidelines and recommendations. Article 4 requires importing Members to recognize the sanitary and phytosanitary measures applied on
imported products if the SPS Agreement measure of the importing Member on the same product is equivalent to that applicable in the exporting
Member. Article 5, the core Article of the Sps Agreement, requires all Members to base their measures upon a scientific assessment of risk,
taking a number of economic factors into consideration. Paragraph 5 of Article 5 reiterates a concept similar to that of the chapeau of Article xx
GATT. Paragraph 7 of Article 5, dubbed the "Precautionary Principle", allows Members to apply their own measures when scientific evidence is
insufficient. Article 7 requires Members to notify changes in their sanitary and phytosanitary measures; Article 11 subjects the Sps Agreement to
the dispute settlement proceedings under Articles xxn and xxni of GATT, with an instruction to seek expert advice; Article 12 establishes the Sps
Agreement Committee to administer the Agreement. Although the Sps Agreement is an offshoot of Article xx(b) GATT, it is important to note
the fundamental differences in the application of the two measures.
2. ARTICLE xx(b) vis-A-1,7S THE SPS AGREEMENT IN GENERAL
Firstly, the Sps Agreement establishes a set of substantive obligations for all Members, unlike Article xx(b) GATT, which applies only to
justify an inconsistency with any one of the respondent's GATT obligations. The SPS Agreement is not a defense for a GATT violation, and
any violation of the Sps Agreement is argued and defended within the Sps Agreement itself; i.e. the obligations of the Sps Agreement "stand
alone". For example, in the two similar cases European Communities-Measures Coruerning Meat and Meat Products (Hormones)
(EC-Hormones (Canada) and EC-Hormones (TJ.S.)), Canada and the United States claimed that the EC's prohibition of the import of meat from
Canada and the United States was not consistent with the SPS Agreement, and the EC defended its actions solely on the basis of the SPS
Agreement. Therefore, whereas the invocation of measures taken to protect human, animal or plant life or health under the SPS Agreement is
aimed at proving their compliance with the broad objectives of the Sps Agreement, invocation of these measures under Article xx(b) GATT is
aimed at justifying an inconsistency, in their application, with any GATT obligation.
Secondly, it is worth noting that Sps Agreement measures are more detailed than the provisions of Article xx(b) measures. The Preamble
to the SPS Agreement indicates that the Agreement was made to give meaning to Article xx(b). To quote Marceau and Trachtman: "The Sps
Agreement should be understood, to some extent, as an expansion of Article xx of GATT."14 It is for this reason that Article 2(5) of the SPS
Agreement states that an Sps Agreement measure is presumed to be an Article xx(b) measure. Therefore, a measure under the Sps Agreement is
most likely a measure under Article xx(b), while a measure under Article xx(b) may not be a measure consistent with the SPS Agreement. That is
why the SPS Agreement does not state that a measure taken under Article xx(b) is (or is presumed to be) part of its substantive obligations nor
does Article xx GATT claim that a measure taken under paragraph b is presumed to be an SPS Agreement measure.
The two differences discussed above were made an issue in the cases that discussed the Sps Agreement. In the EC-Hormones cases, the EC
argued that the "substantive" provisions of the SPS Agreement can only be addressed if recourse is made to Article xx(b) GATT, i.e. if, and only
if, a violation of another GATT provision is first established. In other words, the EC argued that since the SPS Agreement was set up to elaborate
Article xx(b) GATT, Sps Agreement measures can only be used as a defense in justifying a measure otherwise found to be inconsistent with the
respondent's GATT obligations. The Panel, in a finding not addressed by the Appellate Body, rejected the argument by stating: "According to
Article 1.1 of the SPS Agreement, two requirements need to be fulfilled for the SPS Agreement to apply: (i) the measure in dispute is a sanitary
or phytosanitary measure; and (ii) the measure in dispute may, directly or indirectly, affect international trade. There
are no additional requirements. The Sps Agreement contains, in particular, no explicit requirement of a prior violation of a provision of GATT
which would govern the applicability of the Sps Agreement, as asserted by the European Communities."
The Panel on EC-Hormones then added, with respect to the relationship between the Sps Agreement and Article xx(b) of GATT 1994, that:
"Many provisions of the SPS Agreement impose 'substantive' obligations which go significantly beyond and are additional to the requirements
for invocation of Article xx(b): [W]e find the EC claim that the Sps Agreement does not impose 'substantive' obligations additional to those
already contained in Article xx(b) of GATT not to be persuasive. It is clear that some provisions of the SPS Agreement elaborate on provisions
already contained in GATT, in particular Article xx(b). The final preambular paragraph of the Sps Agreement provides, indeed, that the Members
desired to 'elaborate rules for the application of the provisions of GATT 1994 which relate to the use of sanitary or phytosanitary measures, in
particular the provisions of Article xx(b)'. Examples of such rules are, arguably, some of the obligations contained in Article 2 of the Sps
Agreement. However, on this basis alone we cannot conclude that the Sps Agreement applies, if and only if, a prior violation of a GATT
obligation has been established. Many provisions of the Sps Agreement impose 'substantive' obligations which go significantly beyond and are
additional to the requirements for the invocation of Article xx(b). These obligations are, inter alia, imposed to 'further the use of harmonized
sanitary and phytosanitary measures between Members' and to 'improve the human health, animal health and phytosanitary situation in all
Members'. They are not imposed, as is the case of the obligations imposed by Article xx(b) of GATT, to justify a violation of another GATT
obligation such as a violation of the non-discrimination obligations of Articles I or m." (emphasis added).
4. ARTICLE xx(b): AN EXCEPTION TO THE SPS AGREEMENT?
An affirmative answer to this question becomes difficult to arrive at because of the special relationship between Article xx(b) GATT and the SPS
Agreement. I have earlier stated that the Sps Agreement was established "to elaborate rules for the application of the provisions of GATT 1994
which relate to the use of sanitary or phytosanitary measures, in particular the provisions ofArticle xx(b) ..." (emphasis added). Article 2(5) of the
Sps Agreement also states that measures found to be consistent with the Sps Agreement are presumed to be particularly in accordance with
Article xx(b) GATT. Thus, it gets difficult to use Article xx(b) against the very Agreement that was established to give the best possible meaning
to it. However, logic dictates, and Article 2(5) of the Sps Agreement provides on the other side of the coin, that the measures provided for in the
Sps Agreement do not define Article xx(b) GATT; they give the best possible explanation to the necessity provided for in Article xx(b) and they
are a presumption thereof. There is a possibility, however slight, for the necessity under Article xx(b) to go beyond the provisions of the Spas
Agreement when an Spas Agreement measure is not enough to protect human, animal or plant life or health. The SPS Agreement only provides
for a presumption, not a complete satisfaction of Article xx(b) GATT; the scope of the necessity requirement of Article xx(b) can go beyond the
boundaries of the SPS Agreement.
An analogous criminal law principle can be referred to in this instance. In criminal law, the doctrine of presumption of innocence only makes it
very difficult, not impossible, for the prosecutor to have the accused convicted by a court of law. If the prosecutor can, however, show that it is
"necessary" to go "beyond" (i.e. against) the "presumed" innocence of the accused and he can show a strong case and present sufficient evidence,
he can possibly win a conviction.
Similarly, when a Member believes that SPS Agreement-compliant measures which are presumed to protect its human, animal or plant life or
health are not adequate to accomplish the protection, it can, under Article xx(b) GATT, take a measure, possibly inconsistent with the SPS
Agreement, in accordance with the requirements of Article xx.
In this line of argument, the author would like to make reference to a statement made earlier. It was stated that the provisions of Article xx(b)
were best elaborated by the Sps Agreement. Paragraph 8 of the Preamble to the Sps Agreement reads: "... to elaborate the provisions ... which
relate to the use of sanitary or phytosanitary measures, in particular the provisions of Article xx(b)". This paragraph indicates the understanding
of the drafters of the Sps Agreement that there are provisions of Article xx(b) which are "related" to sanitary or phytosanitary measures and that
the SPS Agreement was created to "elaborate" these measures in a substantive way.
Thus there is a possibility37 whereby a protective measure under Article xx(b) GATT may go beyond the elaborative rules for sanitary or
phytosanitary measures provided for in the Sps Agreement.
With respect to the relationship between the SPS Agreement and Article xx(b) of GATT 1994, the Panel in the Hormones case stated that the Sps
Agreement has many substantive obligations which go significantly beyond those of Article xx(b):
" we find the EC claim that the Sps Agreement does not impose `substantive' obligations additional to those already contained in Article xx(b) of
GA 7T not to be persuasive. It is clear that some provisions of the Sps Agreement elaborate on provisions already contained in GATT, in
particular Article x x . The final preambular paragraph of the Sps Agreement provides, indeed, that the Members desired to 'elaborate rules for
the application of the provisions of GATT 1994 which relate to the use of sanitary or phytosanitary measures, in particular the provisions of
Article xx(b)'. Examples of such rules are, arguably, some of the obligations contained in Article 2 of the SPS Agreement. However, on this basis
alone we cannot conclude that the SPS Agreement applies, if and only if, a prior violation of a GATT obligation has been established. Many
provisions of the SPS Agreements impose `substantive' obligations which go significantly beyond and are additional to the reguirements for the
invocation of Article xx(b). These obligations are, inter alia, imposed to 'further the use of harmonized sanitary and phytosanitary measures
between Members' and to 'improve the human health, animal health and phytosanitary situation in all Members'. They are not imposed, as is the
case of the obligations imposed by Article xx(b) of GATT, to justify a violation of another GATT obligation such as a violation of the
non-discrimination obligations of Articles 1 or 11�." (emphases added).
This, however, is meant only to say that in the realm of application of sanitary and phytosanitary measures the SPS Agreement provides a more
detailed set of provisions and not that for the purpose of protecting human, animal or plant life or health the Sps Agreement is broader than
Article xx(b) GATT. Moreover, the Panel did not make the statement in the context of comparing the scopes of application of Article xx(b) and
the SPS Agreement but was only answering the question whether the SPS Agreement, as elaborative of Article xx(b) GATT, should be used in
the same way as Article xx(b) is used, i.e. to justify an inconsistency with a given GATT obligation. If the statement made by the Panel is,
however, understood to mean that the Sps Agreement incorporates the provisions of Article xx(b) GATT in toto and goes further in all aspects,
then:
- an Article xx(b) justification would not be possible for an Sps Agreement inconsistency; i.e. there would be an exception to the General
Exceptions clause stating, in effect: whereas all Article XX exceptions may be used to justify measures inconsistent with any one of the GATT
obligations, an Article xx(b) justification may not be applied against an inconsistency with the Sps Agreement; and
- the Panel would be understood to have negated the provision in Article 2(4) of the Sps Agreement which states that measures conforming to the
Agreement shall be presumed to be particularly in accordance with the provisions of Article xx(b) GATT; i.e. if we understand the Panel to have
meant that the SPS Agreement incorporates the provisions of Article xx(b) GATT and goes further, then measures conforming to the SPS
Agreement would be equal to and even beyond, not a presumption of, the requirements of Article xx(b)
Thus, in order to maintain the rationale behind the establishment of Article xx GATT, i.e. to allowmembers to deviate, in limited circumstances,
from their GATT obligations, Article xx(b) should also be applied to justify a measure found to be inconsistent with the SPS Agreement.
D. CONCLIJSION
The SPS Agreement was established to elaborate the provisions of Article xx(b) GATT, and thus a measure conforming to the Sps Agreement
creates a legal presumption of conformity with Article xx(b). A predominantly sanitary and/or phytosanitary measure may be disputed for its
inconsistency with the SPS Agreement and any other GATT obligation. In such cases, therefore, a positive SPS Agreement finding can be
employed to justify the measure under Article xx(b) GATT if the measure is found to be inconsistent with the other GATT obligation. This
establishes a prima_facie case in favor of the respondent and thus shifts the burden of proof from the respondent to the complaining party to
show that the respondent's measure did not conform to Article xx(b). In a negative Sps Agreement finding, Article xx(b) can be used to justify
the measure against its SI'S Agreement-inconsistency, though under a more stringent standard than that applied in using Article xx(b) against the
other GATT obligation.
ARTICLE xx(b) GATT AND THE TBT AGREEMENT
A. THE TBT AGREEMENT IN GENERAL,
One of the Agreements contained in Annex 1A to the WTO Agreement is the Agreement on Technical Barriers to Trade (the TBT Agreement),
one of the areas of
What measures does the TBT Agreement cover?
1. Technical regulations
Document which lays down product characteristics or their related processes and production methods, including the applicable administrative
provisions, with which compliance is mandatory. It may also include or deal exclusively with terminology, symbols, packaging, marking or
labelling requirements as they apply to a product, process or production method.
2. Standards
Document approved by a recognized body, that provides, for common and repeated use, rules, guidelines or characteristics for products or
related processes and production methods, with which compliance is not mandatory. It may also include or deal exclusively with terminology,
symbols, packaging, marking or labelling requirements as they apply to a product, process or production method.
3. Conformity assessment procedures
Any procedure used, directly or indirectly, to determine that relevant requirements in technical regulations or standards are fulfilled.
SPS or TBT measure?
Article 2: Preparation, Adoption and Application of Technical Regulations by Central Government Bodies
Article 2.1
Members shall ensure that in respect of technical regulations, products imported from the territory of any Member shall be
accorded treatment no less favourable than that accorded to like products of national origin and to like products originating in any other country.
各成员应确保在技术法规方面，对从任何成员领土进口的产品给予的待遇不低于对本国原产的同类产品和对原产于任何其他国家的同
类产品给予的待遇。
Article 2.2
Members shall ensure that technical regulations are not prepared, adopted or applied with a view to or with the effect of creating
unnecessary obstacles to international trade. For this purpose, technical regulations shall not be more trade-restrictive than necessary to fulfil a
legitimate objective, taking account of the risks non-fulfilment would create. Such legitimate objectives are, inter alia: national security
requirements; the prevention of deceptive practices; protection of human health or safety, animal or plant life or health, or the
environment. In assessing such risks, relevant elements of consideration are, inter alia: available scientific and technical information, related
processing technology or intended end-uses of products.各成员应确保技术条例的制定、通过或实施，不是为了或达到对国际贸易造成不必
要障碍的目的。为此目的，考虑到不履行规定将造成的风险，技术条例的贸易限制性不得超过实现合法目标所必需的程度。这些合法
目标包括:国家安全需要;防止欺诈行为;保护人类健康或安全、动物或植物的生命或健康或环境。在评估这些风险时，有关的考虑因素
除其他外是:现有的科学和技术资料、有关的加工技术或产品的预期最终用途。
Article 2.4
Where technical regulations are required and relevant international standards exist or their completion is imminent, Members shall
use them, or the relevant parts of them, as a basis for their technical regulations except when such international standards or relevant parts would
be an ineffective or inappropriate means for the fulfilment of the legitimate objectives pursued, for instance because of fundamental climatic or
geographical factors or fundamental technological problems.当需要技术法规且相关国际标准已经存在或即将完成时，成员应使用这些标准
或其有关部分，作为其技术条例的基础，除非这种国际标准或有关部分对实现所追求的合法目标无效或不适当，例如由于基本的气候
或地理因素或基本的技术问题。
TBT Annex 1: ‘a standard that is adopted by an international standardizing/standards organization and made available to the public.’
WTO DS 406: US – Cloves
Measure at issue: Section 907(a)(1)(A) of the Federal Food, Drug, and Cosmetic Act (“Section 907(a)(1)(A)”), a tobacco control measure
adopted by the United States to reduce youth smoking 美国为减少青少年吸烟而采取的烟草控制措施
Product at issue: Clove cigarettes from Indonesia
The complainant – Indonesia claimed that the measure was inconsistent with the National Treatment provisions of TBT Agreement Article 2.1
because the measure resulted in treatment that was less favourable to imported clove cigarettes than that accorded to a like domestic product,
menthol cigarettes. 申诉人-印度尼西亚声称，该措施不符合《TBT 协定》第 2.1 条的国民待遇规定，因为该措施导致对进口丁香香烟的
待遇低于对类似的国内产品薄荷香烟的待遇。
Two important issues need to be considered,
1. Whether the products at issue were ‘like’;
2. Whether there was ‘less favorable treatment’ for imports.
The Appellate Body decided,
(1) The clove and menthol cigarettes were ‘like’ products
The competition-oriented definition of ‘likeness’ in GATT also applies to ‘likeness’ in the TBT Agreement. i.e. clove and menthol are like
because they compete in the same marketplace.
The objective of the measure should not be considered.
(2) There was ‘less favorable treatment’ for imported clove cigarettes
Whether the technical regulation at issue modifies the conditions of competition in the market of the regulating Member to the detriment of the
group of imported products when compared to the group of like domestic products; 所涉技术法规是否与同类国内产品组相比，修改了监管
成员的市场竞争条件，从而损害了该进口产品组;
The context and purpose of the TBT Agreement weigh in favor of interpreting the ‘treatment no less favorable’ requirement of Article 2.1 as not
prohibiting detrimental impact on imports that stems exclusively from a legitimate regulatory distinction. TBT 协议的背景和目的倾向于将第
2.1 条的“待遇不低于”要求解释为不禁止仅源于合法监管区别的进口的不利影响
De facto discrimination through regulations that are origin neutral on their face and decides that ‘…must carefully scrutinize the particular
circumstances of the case, that is, the design, architecture, revealing structure, operation, and application of the technical regulation at issue, and,
in particular, whether that technical regulation is even-handed.’
Even though the measure at issue does not expressly distinguish between treatment accorded to the imported and domestic like products, it
operates in a manner that reflects discrimination against the group of like products imported from Indonesia. 尽管有争议的措施没有明确区分
给予进口同类产品和国内同类产品的待遇，但它的运作方式反映了对从印度尼西亚进口的同类产品的歧视。
WTO DS 381: US – Tuna II
Measure at issue: (1) United States Code, Title 16, Section 1385 – “Dolphin Protection Consumer Information Act”; (2) Code of Federal
Regulations, Title 50, Section 216.91 “Dolphin-safe labelling standards” and Section 216.92 “Dolphin-safe requirements for tuna harvested in
the Eastern Tropical Pacific Ocean by large purse seine vessels”; (3) the ruling by a US federal appeals court in Earth Island Institute v. Hogarth,
494 F.3d 757 (9th Cir. 2007). Together, these measures set out the conditions under which tuna products sold in the United States may be
labelled as “dolphin-safe”.
When tuna products sold in the US may be labelled as ‘dolphin-safe’?
Location (inside or outside the eastern tropical Pacific Ocean (ETP));
Fishing gear (with or without the use of purse seine nets);
Type of interaction between tuna and dolphins schools; and
The level of dolphin mortalities or injuries
(1) Was the measure inconsistent with TBT Article 2.1?

Whether the measure at issue modifies the conditions of competition in the US market to the detriment of Mexican tuna products;

Whether any detrimental impact reflects discrimination against the Mexican tuna products.

The lack of access to the ‘dolphin-safe’ label of tuna products (which has significant commercial value on the US market for tuna products)
containing tuna caught by setting on dolphins has detrimental impact on the competitive opportunities of Mexican tuna products in the US
market;

Whether any detrimental impact on Mexican tuna products results from the measure itself rather than from the actions of private parties;

The US has not justified as non-discriminatory the different requirements that it applies to tuna caught by setting on dolphins inside the
ETP and tuna caught by other fishing methods outside the ETP for access to the US 'dolphin-safe' label" and ‘the US has thus not
demonstrated that the detrimental impact of the US measure on Mexican tuna products stems exclusively from a legitimate regulatory
distinction.
(2) Was the measure inconsistent with TBT Article 2.2 – More trade-restrictive than necessary?
The panel ruled,
The objectives the US had were ‘legitimate’;
The measure at issue could only partially fulfill the consumer information objective and the dolphin protection objective.
While allowing the coexistence of the labelling requirements of the AIDCP and the US measure would be a less trade restrictive alternative that
would achieve a level of protection equivalent to that of the measure at issue;
The Appellate Body reversed the panel’s decision and stated,
The Panel's comparison of the degree to which the alternative measure contributes to the U.S. objectives ‘should have focused on conditions
inside the ETP’ and it should have "examined whether the labelling of tuna products complying with the requirements of the AIDCP label would
achieve the United States' objectives to an equivalent degree as the measure at issue;
The alternative measure proposed by Mexico would contribute to both the consumer information objective and the dolphin protection objective
to a lesser degree than the measure at issue, because, overall, it would allow more tuna harvested in conditions that adversely affect dolphins to
be labelled 'dolphin-safe
(3) Was the measure inconsistent with TBT Article 2.4 – Relevant International Standard?
Whether the “AIDCP dolphin-safe definition and certification” constitute a “relevant international standard” within the meaning of Article 2.4,
In order to constitute an 'international standard,' a standard has to be adopted by an 'international standardizing body' for the purposes of the TBT
Agreement;
‘A required element of the definition of an 'international' standard is the approval of the standard by an 'international standardizing body’;
‘The interpretation of the term 'international standardizing body' is therefore a holistic exercise in which the components of the definition are to
be considered together;
The Panel erred in finding that the AIDCP dolphin-safe definition and certification constitute a "relevant international standard" within the
meaning of TBT Agreement Article 2.4.
WTO DS 231: EC – Sardines
Measure at issue: EC Regulation establishing common marketing standards for preserved sardines, including a specification that only products
prepared from Sardina pichardus could be marketed/labelled as preserved sardines. 欧洲共同体法规建立了腌渍沙丁鱼的共同营销标准，包
括一项规范，即只有用沙丁鱼制成的产品才能作为腌渍沙丁鱼上市/贴上标签。
Case Facts: Sardina pilchardus is found mainly around the coasts of the Eastern North Atlantic, in the Mediterranean Sea and in the Black Sea,
while Sardinops sagax is found mainly in the Eastern Pacific along the coasts of Peru and Chile
The Codex Alimentarius Commission sets an international standard, maintaining that this species can be sold throughout the world under the
name ‘sardines’ provided that a modifying phrase proceeds the designation, specifying ‘a country, a geographic area, the species, or the common
name.’
Under Codex Standard 94, Peru should have been able to sell its product in EC markets under the designation ‘Pacific sardines’, ‘Peruvian
sardines’ or ‘sardines – Sardinops sagax.’
Both the panel and the Appellate Body found,
Codex Stan 94 is a ‘relevant international standard’ under Article 2.4;
The EC did not base its internal technical regulations on the Codex standard;
The EC failed to demonstrate that this international standard would not be ‘effective’ or ‘appropriate’ in fulfilling the EC’s ‘legitimate objectives’
of ensuring ‘market transparency, consumer protection, and fair competition.’欧共体未能证明该国际标准在实现欧共体确保“市场透明度、消
费者保护和公平竞争”的“合法目标”方面是“有效的”或“适当的”。
2.5 A Member preparing, adopting or applying a technical regulation which may have a significant effect on trade of other Members shall, upon
the request of another Member, explain the justification for that technical regulation in terms of the provisions of paragraphs 2 to 4. Whenever a
technical regulation is prepared, adopted or applied for one of the legitimate objectives explicitly mentioned in paragraph 2, and is in accordance
with relevant international standards, it shall be rebuttably presumed not to create an unnecessary obstacle to international trade.
2.6 With a view to harmonizing technical regulations on as wide a basis as possible, Members shall play a full part, within the limits of their
resources, in the preparation by appropriate international standardizing bodies of international standards for products for which they either have
adopted, or expect to adopt, technical regulations.
2.7 Members shall give positive consideration to accepting as equivalent technical regulations of other Members, even if these regulations
differ from their own, provided they are satisfied that these regulations adequately fulfil the objectives of their own regulations.
How to apply TBT Article 2.4?
1. Does a relevant international standards exist?
2. If so, has this standard been used as a basis for the measure at issue?
3. Was it a situation where the relevant standard would be and "ineffective or inappropriate means” of fulfilling the legitimate objective?
4. What was the nature of the "legitimate objective" pursed?
Lecture 11--Preferential Trade Agreements (PTAs)
Preferential Trade
Customs unions
To eliminate tariffs and other trade barriers within the CUs, and in addition establish
‘substantially the same duties and other regulations for external goods imported into the
Agreements
CU (GATT XXIV: 8(a))
Free Trade Areas (FTAs)
消除关税和其他贸易壁垒
To eliminate tariffs and other trade restrictions on ‘substantially all the trade’ within the FTA
(GATT XXIV: 8(b)). Each member maintains its own external tariff schedule applicable to
goods from third countries (these outside of the FTA)取消对“实质上所有贸易”的关税和其
他贸易限制。每个成员维持适用于来自第三国(自由贸易协定以外)货物的自己的对外关
税表
Why Preferential Trade Agreements?
1.
PTAs can ease trade between trading partners and encourage trade and investment in developing countries from developed countries;可以
放宽贸易伙伴之间的贸易，鼓励发达国家在发展中国家进行贸易和投资;
2.
PTAs can usually be negotiated much faster than the multilateral process and enable parties to liberalize beyond the levels achievable
through multilateral consensus;谈判速度通常比多边进程快得多，使各方的自由化超过多边协商一致意见所能达到的水平;
3.
PTAs can be viewed as laboratories for experimentation, as they often include issues not fully covered by the multilateral system and serve
an important building block for future multilateral liberalization.可视为试验的试验室，因为它们往往包括多边制度没有完全涵盖的问
题，是今后多边自由化的一个重要组成部分。
4.
Members negotiate PTAs so that they do not get left behind and become disadvantaged in the world trading system.成员国就自由贸易协
定进行谈判，这样他们就不会落在后面，在世界贸易体系中处于不利地位。
Why Not Preferential Trade Agreements?
1. PTAs have the potential to threaten the sustainability of the multilateral trading system;有可能威胁多边贸易体系的可持续性;
2.The economic benefits of PTAs are uncertain since they might lead to 'trade diversion, whereby trade is not created but is shifted from an
efficient producer outside the PTA to a less efficient producer inside it;经济利益是不确定的，因为它们可能导致“贸易转移”，即不创造贸易，
而是从自由贸易协定以外的高效率生产者转移到其内部效率较低的生产者;
3. The complexity resulting from multiple PTAs, which can lead to different conditions and obligations;多重 pta 带来的复杂性，可能导致不同
的条件和义务;
4.Overlapping jurisdictions can cause further distortions and confusion;管辖权重叠可能导致进一步的扭曲和混乱
5. Some issues cannot be easily negotiated bilaterally, such as inefficiency agricultural policies, discriminatory SPS measures, TBT, 有些问题
无法轻易进行双边谈判，如低效率的农业政策、歧视性的 SPS 措施、技术性贸易壁垒、
Pros and Cons of PTAs
Recent discussions in the financial press concerning trade policy developments and new proposals for PTAs in Asia have raised
several of these points as well as other issues. Much of the earlier discussion has tended to emphasize the dangers and negative
economic effects of PTAs, but has neglected some potentially beneficial effects that PTAs can have when properly focused and
structured. Economic theory provides various rationale for why PTAs may be beneficial or detrimental to the long-term economic
interests of members and nonmembers (see, for example, Baldwin and Venables 1995). While empirical estimates are not
conclusive, they do tend to show that PTA membership is generally associated with greater trade flows, both between PTA
members and between members and nonmembers (Frankel and Wei 1998, Robinson and Thierfelder 1999, Soloaga and Winters
2001). Estimates also indicate that the effects of PTAs depend crucially upon their particular characteristics.
While much of the academic debate over PTAs refers to PTA archetypes, it is important for policy purposes to look more carefully
at the details of the existing arrangements before making general recommendations. Whether PTAs are stumbling blocks or
constructive steps to eventual achievement of global free trade depends on the content and background conditions surrounding
the formation of PTAs. The Asian Development Outlook 2002 report (ADB 2002) contributes to this debate by taking an in-depth
look at PTAs in the region.1
In general, PTAs are not necessarily beneficial or harmful. It is important to consider PTAs both in terms of their narrow economic
effects on trade as well as their effects as broader multilateral arrangements capable of addressing a range of cross-border issues.
The economic advantages of PTAs stem from the greater ease of dealing with complex issues of trade and regional cooperation
among a smaller group of usually neighboring countries (Fruend 2000). For example, the Closer Economic Relations (CER)
agreement between Australia and New Zealand was path-breaking in addressing services trade liberalization. Like other forms of
trade liberalization, PTAs offer increasing competition in domestic industries that can spur productive efficiency gains among
domestic producers and improve the quality or quantity of inputs and goods available in the economy. Producers also benefit
from the greater market size created through the PTA, which can expand opportunities for exporting products and lead to
employment growth.
PTAs can provide an institutional vehicle for fostering regional cooperation in developing infrastructure and addressing
cross-border externalities. Through negotiation of PTAs, developing countries can gain experience and experiment with trade
liberalization on a limited scale. The commitments to liberalize trade contained in PTAs can provide policymakers an opportunity
to commit to future policy reforms or to cement past policy reforms. PTAs can be a forum for improved diplomatic relations and
increased nontrade economic integration to foster peace and stability.
Counterbalancing the potential benefits of PTAs are a host of possible negative consequences. There are fears that PTAs provide
policymakers reluctant to undertake serious trade liberalization with an easy way out. By entering a PTA without substance in
reducing trade barriers, such policymakers can appease domestic pressures pushing for liberalization without significantly
liberalizing their trade. There are also dangers that PTAs may augment intra-bloc trade by diverting trade away from nonmember
economies. Overlapping international and regional trading arrangements can create a spaghetti bowl of complex trade
regulations and commitments that are difficult to disentangle and make it difficult to proceed to broader trade liberalization. In a
similar vein, PTAs can create complex bureaucratic procedures that generate incentives for rent seeking. This is particularly the
case with complex rules of origin that underpin PTAs in which member countries maintain independent external tariffs.
PTAs and the Global Multilateral Trading System
While economists’ opinions regarding the effects of PTAs in practice differ sharply, there is consensus in the profession that a
global free trading arrangement offers the greatest economic benefits to economies worldwide and that PTAs offer—at best—a
less advantageous arrangement. The narrow economic benefits related to the increased trade brought about through PTAs are
generally less than the benefits that can be achieved from broader multilateral trading arrangements. Economists point out that
nonoptimal patterns of specialization can emerge from PTAs, especially when the composition of country members produce a set
of goods that differ greatly from the set of goods available globally. The patterns of specialization in PTAs are not necessarily those
that would occur if the country had opened its borders to the world economy, and thus are only second best. PTAs generally yield
less competition to domestic producers and lower efficiency gains than would be achieved through broader multilateral trade
liberalization. The extent to which a PTA falls short of broader multilateral trade liberalization in enhancing the efficiency of
resource use across economies depends crucially upon the composition of member economies and the degree of trade
liberalization agreed to in the PTA (Bhagwati and Panagariya 1996). In general, the greater the difference in the comparative
advantages of member economies in a PTA and the closer the agreement approaches open trade across members, the greater
the economic benefits of the agreement.
PTAs, the WTO, or Both?
Asian nations have historically placed greater emphasis on the pursuit of trade liberalization through the global multilateral trading
arrangement rather than through PTAs. While there are a number of PTAs in the Asian and Pacific region (e.g., ASEAN’s Asian Free
Trade Area or AFTA, and the South Asian Association for Regional Cooperation’s South Asian Preferential Trading Arrangement or
SAPTA), most of these have political roots and have tended to emphasize broader issues of regional cooperation over concrete
actions in trade liberalization (WTO 1995). Japan, until only recently, has favored continued expansion and deepening of the
existing multilateral trade arrangement to development of regional trading arrangements. In general, PTAs in the region are less
institutionalized than PTAs in other regions, and their tangible efforts in liberalizing member’s trade barriers have been more
muted—although this is changing, for example, as in current efforts to transform AFTA into a true free trade area. Dispute
settlement mechanisms tend to be based on bilateral negotiations, and agreements include few provisions for resolution of
disagreements. Much of the implementation of the PTA agreements, such as application of rules of origin, takes place according to
commonly agreed standards negotiated between members.
This stance has served the region well and its export-based economies have been able to achieve robust growth and to reduce
poverty substantially. Asian economies have been able to take advantage of the positive aspects of PTAs in fostering regional
cooperation and addressing shared concerns while avoiding many of the drawbacks. In considering future PTAs in the Asian
region, policymakers should remember this experience and focus efforts on more limited regional or bilateral trading
arrangements in areas where they can complement rather than compete with the WTO. In particular, countries should emphasize
action in areas where the broader multilateral arrangement has proven slow or ineffective, and in activities to further international
or regional cooperation in nontrade areas.
The limited utility of preferential trade agreements
A major disadvantage of free trade agreements is the administrative burden caused by rules of origin. In an entirely open world
economy with no restrictions on the flow of goods, these rules of origin would not matter because it would be irrelevant where
goods originate. Today, however, the origin of a product matters, in particular in preferential agreements. All free trade
agreements including bilaterals, require rules of origin to establish the ‘nationality’ of a product. The reason is that in FTAs,
participating countries continue to have diverging external tariffs. One country might have a high tariff on, say, cars in order to
protect domestic producers, whilst the other might have a low or no tariff on that product.
Since only goods produced within the free trade area qualify for duty free trade, there have to be procedures that differentiate
between goods produced within the FTA and goods from the rest of the world. Thus, the preferential system becomes
complicated and expensive. On average, the cost of issuing and administering certificates of origin is estimated to be five percent
of the value of a product
In the past forty years, the use of rules of origin has changed significantly. After decolonisation, many developing countries used
rules of origin as instruments to enhance their economic development. Rules of origin were used to increase the local content of
manufactured products and to protect the infant industries in those economies against competition from imports. This function of
rules of origin is of relatively minor importance today. Rather, developed countries use strict rules of origin to protect their aging
domestic industries.
Which way forward? Should Asian economies consider a customs union?
Ever since East Asian countries have been evaluating options for further integration, there has been debate on which form the
economic integration should take. In 1994, the APEC member countries agreed to create on open trading regime in the
Asia-Pacific by 2010 for the more advanced and 2020 for the less developed economies. It was, however, unclear what precisely
the ‘open regionalism’ advocated meant. Would the participating economies liberalise unilaterally and offer the reductions of
their levels of protection on a mostfavoured nation basis to all member countries of the WTO, including, say, the European Union?
Or would ‘open regionalism’ permit other economies to join a scheme which would only provide the benefits to its member
countries? Since Bogor, the discussion has moved on and there is now much less ambiguity about the avenues open to policy
makers. In essence, the creation of a discriminating preferential trade agreement is one option that is evaluated by policy makers.
For example, the East Asia Study Group (EASG), formed as an advisory body in the year 2000, has suggested the creation of an
East Asian Free Trade Area in its report, presented to the ASEAN Plus Three Summit in November
2002 in Cambodia (EASG 2002). Of course, the wave of preferential trade agreements that already have been created in the region
and the above named proposal raise the question whether there aren’t any more convincing alternatives, both from an economic
and from a political perspective. The current system of preferential trade agreements with their divergent rules of origin and little
economic utility are the third-best option. Bilateral PTAs do not contribute to the creation of a unified economic space, but instead
create an administratively complex trade regime. Moreover, from a political perspective they are even counterproductive since
PTAs contribute to the deepening of the rivalry between the two most important players in Asia rather than offering a possible
co-operative solution.6 An Asia-wide free trade agreement would constitute an improvement with regard to both the economic
and the political dimension. From an economic point of view, a region-wide PTA would at least reduce the complexity of the
administration of trade. There would be one set of rules of origin instead of dozens of them, and companies would potentially
benefit from the creation of the world’s largest PTA. At the same time, even a region-wide PTA would offer suboptimal results.
Whilst the need for certificates of origin would be reduced, it would still be necessary to establish origin of any product traded
duty-free in the region. Participating economies would continue to implement their own, country-specific trade policy and would
be free to engage in other PTAs with third economies, e.g. the USA or the EU. Given the complex nature of today’s international
production networks, the origin of inputs sourced from outside the PTA would still have to be subject to complicated
administrative processes. Politically, an Asia-wide FTA would eliminate the current competition between China and Japan with
regard to trade policy. Since there would be only one PTA, neither country could engage in a beauty contest with the aim of
demonstrating the attractiveness of its own scheme. However, an Asian PTA would still be suboptimal when compared with a
customs union in the region, which would both reduce transactions costs due to the lower requirements for rules of origin and
streamline the region’s foreign economic relations. A customs union constitutes a higher level of integration than a free trade
agreement and creates an economic space with a unified trade policy vis-à-vis the rest of the world. Thus, it is both more difficult
to agree on than an FTA, but also offers the greater benefits. By definition a customs union contributes to the elimination of trade
barriers, tariffs and quantitative restrictions on trade amongst partners and imposes a harmonised external tariff on trade with third
countries. This is the key difference with a free trade area; however technically different, in notion and purpose a customs union is
akin to a free trade area as they are both said to increase specialization and trade with welfare benefits for the parties involved. An
important benefit of a customs union is that it contributes directly to trade creation, i.e. more expensive domestic products are
replaced by cheaper imports from member countries.
In this context, it should be remembered that the European Economic Community never aimed at the creation of a free trade area,
but from 1957 aimed at the establishment of a customs union, which was achieved in 1968. Ever since there is only one trade policy,
and Europe’s weight in international trade has greatly risen since 1968. The economic utility is probably greater still: Once a
product from a third country has entered the economic space and the duty is paid, the product can be used in production without
requiring additional documentation
processes. The creation of a customs union in Asia, however defined, would certainly not be an easy task. The key stumbling bloc is
the creation of a joint external tariff, which would have to consider the diverging political preferences of all member countries. In
essence, most participating economies would have to liberalise trade in sectors they previously considered too problematic for
liberalisation; Japanese agriculture is a case in point. Even if the more advanced economies could politically accept the opening of
their hitherto protected agricultural sectors, the effects of a common external tariff on the less developed member countries of an
Asian customs union are to be considered. For these less developed economies, the creation of a customs union would result in a
dramatic increase in competition, and
most probably many industries would not survive such a shock. Nevertheless, given the disadvantages of the current mess in Asian
trade –
characterised by overlapping and inefficient preferential trade agreements on the one side and lukewarm support for the
multilateral system on the other – exploring the potential of an Asian customs union is a worthwhile endeavour. One potential
avenue for solving the obstacles outlined above would be a structured introduction of a customs union, with developed economies
including China taking the lead and
the poorer economies following five or ten years later. In the last decade, dynamic processes have emerged that may lead to the
creation of an integrated economic space in Asia. Of course, it is highly speculative to engage in a debate on the potential shape of
such a regime, its
membership and its relationship with non-participating economies. Nevertheless, given the high level of economic
interdependence that can be observed already, the interest in a formalised, de-jure integration project in Asia seems to be quite
high.
A potential venue for this pan-Asian project could be the ASEAN-China FTA (ACFTA), which has come into effect in 2010. This large
group, comprising more than 1.7 billion people, can over time alter the nature of economic relations in Asia and may possibly also
change political and security relations in the entire region
Whilst there are numerous bilateral preferential trade agreements either in force or currently negotiated in Asia, ACFTA has the
economic potential to serve as the nucleus of an Asian integration project. China has not only made sure that the FTA offers
sufficient rewards to the less-developed members of ASEAN (Vietnam, Cambodia, Laos, Burma), but has also succeeded in
attracting support of the more advanced economies, e.g. by providing so-called early harvest programmes for agricultural exports
from Thailand. Given the importance of China in Asian trade, the expansion of the existing preferential trade agreement into a
region-wide customs union would, from an economic perspective, be a sensible step forward.
However, from a political perspective it appears naïve to expect both Japan and South Korea as well as ASEAN to agree to such a
proposal. Suspicion of Beijing’s long-term goals continue to exist in the region, and given the recent assertiveness of Chinese
policy makers in international affairs this suspicion may even have grown of late. Rather than continuing to successfully portrait its
rise as an opportunity to Asian and other countries, China appears to be perceived more critically than, say, before 2010. Whilst it is
difficult to name a single incident that may have contributed the change in perception, the cumulative effect of the continuing
production of current account surpluses, the buying of agricultural land and other natural resources in Africa and elsewhere, the
unwillingness to consider a more robust appreciation of the exchange rate of the yuan vis-à-vis the dollar and the sabotaging the
Copenhagen climate have all contributed to a deteriorating image of China abroad. Considering the increasing bullishness of
Chinese foreign economic policy, the creation of an Asia-wide customs union appears to be a rather distant prospect.
The WTO Legal Framework -GATT Article XXIV: 4
‘The contracting parties recognize the desirability of increasing freedom of trade by the development, through voluntary agreements, of closer
integration between the economies of the countries parties to such agreements. They also recognize that the purpose of a customs union or of a
free-trade area should be to facilitate trade between the constituent territories and not to raise barriers to the trade of other contracting parties
with such territories.’“缔约双方认识到，通过自愿协议的发展，使签署这些协议的国家之间的经济更紧密地融合，从而增加贸易自由是
可取的。”他们还认识到，关税联盟或自由贸易区的目的应该是促进成员国之间的贸易，而不是对与这些地区的其他缔约方的贸易设置
壁垒。
GATT Article XXIV
Basic Rules
1. An obligation to notify the WTO of the PTA
2. An obligation not to raise the overall level of protection and market access for products and services from Members not participating in the
PTA more onerous
3. An obligation to liberalize substantially all trade among members of the PTA
1. The obligation to Notify to the WTO Committee on Regional Trade Agreements (CRTA)
‘Article XXIV: 7(a) Any contracting party deciding to enter into a customs union or free-trade area, or an interim agreement leading to the
formation of such a union or area, shall promptly notify the CONTRACTING PARTIES and shall make available to them such information
regarding the proposed union or area as will enable them to make such reports and recommendations to contracting parties as they may deem
appropriate.’任何缔约方决定加入关税联盟或自由贸易区，或缔结导致形成此种联盟或贸易区的临时协定，应及时通知缔约双方，并向
其提供有关拟议联盟或地区的资料，使其能够向缔约双方提出其认为适当的报告和建议。
2. External Trade Requirement
FTAs: Duties and other regulations of commerce of the FTA members toward third countries must not increase at the time of the formation of the
FTA (GATT XXIV: 5(b))
CUs:Substantially the same duties and other regulations of commerce are applied by each of the CU members toward third countries (GATT
XXIV: 8(a)) / External duties and other regulations of commerce must not be on the whole higher than was the case prior to the formation of the
CU (GATT XXIV: 5(a)) 对外关税及其他商业规例整体不得高于协定成立前的水平
3. Internal Trade Requirement
FTAs: Duties and restrictions on trade be eliminated with respect to substantially all trade among the FTA members (GATT XXIV: 8(b))
CUs: Duties and restrictions on trade be eliminated with respect to substantially all trade among members of the CU (GATT XXIV: 8(a))
WTO DS 34: Turkey – Textiles
Measure at issue: Turkey's quantitative import restrictions pursuant to the Turkey-EC customs union.
Product at issue: Textiles and clothing from India.
India argued that Turkey’s introduction of quantitative restrictions on 19 of its textile and clothing products was not necessary to comply with the
terms of the Turkey- EC Association Council.
Can Turkey successfully avail itself of the GATT Article XXIV:5(a)?
印度认为，土耳其对其 19 种纺织和服装产品实施数量限制，并不是
符合土耳其-欧盟协会理事会条款的必要条件。土耳其能否成功地利用关贸总协定第 24 条第 5(a)款?
The Appellate Body decisions
To determine whether a measure found inconsistent with certain other GATT provisions can be justified under Art. XXIV, two conditions should
be met,
(1) Whether a “customs union”, as defined in Art. XXIV:8 exists 是否是“关税联盟

Satisfy the internal trade requirements under Article XXIV:8;
The AB stated that the provision allows for ‘some flexibility’ and that ‘it is clear, though, that ‘substantially all the trade is not the same as all the
trade’….’is considerably more than merely some of the trade’; As to the external requirement,)

Satisfy the external trade requirements under Article XXIV:8;
The AB noted that ‘… does not require that each constituent member of customs union to apply the same duties and other regulations of
commerce as other constituent members with respect to trade with third countries; instead, it requires that substantially the same duties and other
regulations of commerce shall be applied.’
(2) Whether the formation of a customs union would be prevented without the inconsistent measure (i.e. whether the measure is necessary
for the formation of a customs union)
Article XXIV:5(a): Accordingly, the provisions of this Agreement shall not prevent, as between the territories of contracting parties, the
formation of a customs union or of a free-trade area or the adoption of an interim agreement necessary for the formation of a customs union or of
a free-trade area; Provided that:
(a) with respect to a customs union, or an interim agreement leading to a formation of a customs union, the duties and other regulations of
commerce imposed at the institution of any such union or interim agreement in respect of trade with contracting parties not parties to such union
or agreement shall not on the whole be higher or more restrictive than the general incidence of the duties and regulations of commerce applicable
in the constituent territories prior to the formation of such union or the adoption of such interim agreement, as the case may be;
The Appellate Body found that Turkey's measures were not justified under Art. XXIV because there were alternatives available to Turkey that
would have met the requirements of Art. XXIV:8(a), which were necessary to form the customs union, other than the adoption of the quantitative
restrictions.
WTO DS 202: US – Line Pipe Safeguards
Measure at issue: US safeguard measure on certain imports.
Product at issue: Circular-welded carbon quality line pipe imported from Korea.
Korea claimed that by excluding Mexico and Canada from the line pipe safeguard measure in the form of a tariff quota, the US violated the
MFN, the GATT Article XIX and Article 2.2 of the Safeguards Agreement.
The US contended that its differing treatment of Mexican and Canadian imports was justified under the ‘limited exception’ of Article XXIV of
the GATT.
The Appellate Body decided,
‘The question of whether Article XXIV of the GATT 1994 serves as an exception to Article 2.2 of the Agreement on Safeguards becomes
relevant in only two possible circumstances. One is when, in the investigation by the competent authorities of a WTO Member, the imports that
are exempted from the safeguard measure are not considered in the determination of serious injury. The other is when, in such an investigation,
the imports that are exempted from the safeguard measure are considered in the determination of serious injury, and the competent authorities
have also established explicitly, through a reasoned and adequate explanation, that imports from sources outside the free-trade area, alone,
satisfied the conditions for the application of a safeguard measure, as set out in Article 2.1 and elaborated in Article 4.2.’关于《1994 年关贸总协
定》第 24 条是否作为《保障措施协定》第 2.2 条的例外的问题，只有在两种可能的情况下才有意义。一是在世贸组织成员主管部门的
调查中，在确定严重损害时不考虑享受保障措施豁免的进口产品。另一种情况是，在这样的调查中，在确定严重损害时考虑免除保障
措施的进口，主管当局也已通过合理和充分的解释明确确定，仅从自由贸易区以外的来源进口，符合第 2.1 条规定、第 4.2 条阐述的实
施保障措施的条件。