WTO Law
Institution
Univ. - Prof. Dr. Werner Meng, Europa Institut, Saarland University, Germany
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International Organization
The WTO is
An international (intergovernmental)
organization
With Members (not only states) (Art. XI, XII
WTOA)
With its own legal personality (Art. VIII WTOA)
With organs (Art. IV, VI WTOA)
With mainly ancillary functions, that means:
No supervisory role (TPRM?)
Almost no lawmaking powers
Univ. - Prof. Dr. Werner Meng, Europa Institut, Saarland University, Germany
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International Economic Regime
Trade Pillar
Financial
Pillar
Normative
Pillar
WTO
1 state/
1 vote
EU, member
dominant actor
Bretton
Woods,
IFIs + BIS
1 dollar/
1 vote
EU indirect role
(MS on the board)
ILO, MEAs,
WHO, FAO,
Codex
Alimentarius
ITU, WIPO...
1 state/
1 vote
Univ. - Prof. Dr. Werner Meng, Europa Institut, Saarland University, Germany
EU Member,
participant or
observer
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Functions of the WTO (Art. III WTOA)
Facilitate the implementation, administration and operation,
and further the objectives, of this Agreement and of the
Multilateral Trade Agreements,
Framework for the implementation, administration and
operation of the Plurilateral Trade Agreements.
Forum for negotiations among its Members concerning their
multilateral trade relations in matters dealt with under the
MTAs and the PTAs
Forum for further negotiations among its Members concerning
their multilateral trade relations, and a framework for the
implementation of the results of such negotiations, as may be
decided by the Ministerial Conference.
Administration of the DSU and the TPRM
Cooperation with the International Monetary Fund and with
the International Bank for Reconstruction and Development
and its affiliated agendies with a view to achieving greater
coherence in global economic policy-making
Univ. - Prof. Dr. Werner Meng, Europa Institut, Saarland University, Germany
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Institutional Structure (Art. IV WTOA)
Marrakesh Agreement establishing the WTO
MINISTERIAL CONFERENCE
GENERAL COUNCIL
AB Secretariat
DSB
Appellate
Body
Panel
TPRB
Council for
Trade in
Goods
Council for
Trade in
Services
Committees
Committees
TRIPS
Council
Committees
Working
Groups
WTO Secretariat
Univ. - Prof. Dr. Werner Meng, Europa Institut, Saarland University, Germany
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Organs of the WTO
Council of Ministers
Superior Plenary
Organ
Council
Permanent Plenary
Organ
General Council
Subsidiary
Councils and
Committees
Director General
WTO Secretariate
Geneva
Dispute Settlement
Body
Appellate Body
Univ. - Prof. Dr. Werner Meng, Europa Institut, Saarland University, Germany
Trade Policy Review
Body
Panels
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Institutional Features in the WTOA
The Institutional Structure:
Art. IV (Council),
VI (Secretariat)
70 bodies, 34 standing bodies
The Relations with other intl. Organizations (Art. V)
The WTO as an institution in public international law, (Art.
VIII)
Voting (Art. IX.1)
Authentic interpretation (Art. IX.2)
Waivers (Art. IX.3, 4 WTOA/XXV GATT, Understanding)
Amendments (Art. X)
Membership (Art. XI, XII, XV)
Continuity with GATT (Art. XVI.1)
Univ. - Prof. Dr. Werner Meng, Europa Institut, Saarland University, Germany
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The Bretton Woods Link
Bringing together the two sides of international economic
exchange together
“With a view to achieving greater coherence in global economic
policymaking, the WTO shall cooperate, as appropriate, with the
International Monetary Fund and with the International Bank for
Reconstruction and Development and its affiliated agencies.” (Art. III.5
WTOA)
II.2 Marrakech Declaration:: "2. Ministers confirm their resolution to
strive for greater global coherence of policies in the fields of trade,
money and finance, including cooperation between the WTO, the IMF
and the World Bank for that purpose. "
Decision on achieving greater coherence in global economic policymaking
Declaration on the Relationship of the WTO with the IMF: same
provisions as in the old GATT times
Agreements between WTO and IMF and IBRD (1996)
Mutual observer status
Univ. - Prof. Dr. Werner Meng, Europa Institut, Saarland University, Germany
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Trade and Currency - 1
The crisis in the 1920s showed the explosiveness of
currency manipulations for protectionist reasons
Devaluation decreases the price of exports
Exchange rate may be manipulated
by buying foreign currencies with own money
by quotas for import and export of own or foreign
currencies (reducing demand or supply)
By pegging or fixing exchange rates
Danger of manipulations in 2010
Dispute about Chinas peg and later purchases of USD
October 2010: imminent currency war. G 20 in Korea
lukewarm promises
What is the limit between normal intervention and
protectionist manipulation?
Univ. - Prof. Dr. Werner Meng, Europa Institut, Saarland University, Germany
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Trade and Currency - 2
See
art. II.6, duties and charges
VII.4,
XIV.1, 3, 5,
XV: exchange
and notes nr. 2 ad art. VI paras. 2 and 3,
nr. 1 ad art. VIII,
ad art. XV.4 GATT
Are currency manipulations prohibited subsidies
or other protectionist non-tariff trade barriers
(NTBs)?
Who decides about a violation? WTO or IMF? See
art. XV GATT
Univ. - Prof. Dr. Werner Meng, Europa Institut, Saarland University, Germany
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Coordination with the IMF
Coordination (XV.1)
Exchange rate policy of the Fund
Trade measures in the jurisdiction of the WTO
Consultation in full (XV.2)
WTO has to accept
Factual findings of the IMF
Determination of lawfulness by the IMF
According to its own primary law
According to a special exchange arrangement within
the WTO
Determination of a reserve position of a MS
Under Art. XII.2 (a)
Under Art. XVIII.9
Agreement on the procedures for consultation
Report of Members exchange activities not justified
by GATT (XV.5)
Univ. - Prof. Dr. Werner Meng, Europa Institut, Saarland University, Germany
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Monetary duties of Members of the WTO
XV.4: no frustration
Of the intent of GATT by exchange action
Of the intent of the IMFA by trade action
WTO members that are not IMF members (XV.6)
Have either to join the IMF or
To enter into a special exchange arrangement with the WTO
Also if a member is leaving the IMF
Special exchange arrangements are part of the WTO
obligations (XV.6 and 7)
Securing that WTO obligations will not be frustrated by an
exchange action
Generally not more restrictive than IMF obligations
Duty of information of the WTO according to the
general scope of art. VIII.5 IMFA
Univ. - Prof. Dr. Werner Meng, Europa Institut, Saarland University, Germany
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Exchange arrangements
IMF exception (XV.9 GATT): exchange controls
that are always lawful
If in conformity with the IMF primary law or a special
agreement with the members of the WTO
WTO exception (XV.9 GATT): restrictions or
controls of exports or imports of goods are lawful
If they serve the exchange controls or restrictions
permitted under arts. XI, XII, XIII and XIV and only shall
make such controls or restrictions effective
Univ. - Prof. Dr. Werner Meng, Europa Institut, Saarland University, Germany
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Relations with other International
Organizations
Cooperation agreements with e.g. WIPO, UNCTAD
2003: Memorandum of understanding with UNCTAD
Integrated Framework for Trade-related Technical
Assistance (IF)
Joint Integrated Technical Assistance Programme
(JITAP)
International Trade Centre WTO/UNCTAD
Memoranda of Understanding with other Ios
Active and passive observation statuses
Guidelines for the relations with NGOs
Univ. - Prof. Dr. Werner Meng, Europa Institut, Saarland University, Germany
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Original Members of the WTO
Original Members (Art. XI WTOA)
New Members (Art. XII WTOA)
States and Customs territories (Art. XXIV GATT)
Application, Negotiations with all MS
Admission by 2/3 majority in the Ministerial
Conference
At present: 153 Members (2008)
Univ. - Prof. Dr. Werner Meng, Europa Institut, Saarland University, Germany
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New Members of the WTO
New Members (Accession, XII WTOA)
Any State
Or customs territory (XXIV 1,2 GATT) possessing full
autonomy in the conduct of its external commercial
relations and of the other matters regulated in WTOA and
the MTAs
On Terms agreed between it and the WTO
May accede to the WTO and the MTAs together (single
undertaking approach)
If admitted by the Ministerial Conference by 2/3rds majority
Univ. - Prof. Dr. Werner Meng, Europa Institut, Saarland University, Germany
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Accession Procedure
Application
Establishment of a working party
Examination of the foreign trade regime of the
applicant
Bilateral negotiations about tariff concessions et
al.
Agreement on the report of the Working Party
Admission by the Ministerial Conference by
2/3rds majority
Agreement on a Decision and a Protocol setting
out the terms of the acession
Entry into force
Univ. - Prof. Dr. Werner Meng, Europa Institut, Saarland University, Germany
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Divergent obligations
In acceding the WTO
Candidates may accept
more obligations (GATT
plus)
Or less (GATT minus)
Univ. - Prof. Dr. Werner Meng, Europa Institut, Saarland University, Germany
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WTO Plus / WTO Minus
Art. XII WTOA: conditions of accession are to be
negotiated
Obligations may go beyond or below the standard of
incumbent members of the same status of development
Because of the balance of obligations and rights
Not subject to the unilateral concessions in the schedule
WTO Plus, e.g.
Obligations to privatize enterprises
Obligations to join a PTA (Aircraft or GPA)
Obligation not to invoke special rules for developing
countries
WTO Minus
Extended periods of transition
Univ. - Prof. Dr. Werner Meng, Europa Institut, Saarland University, Germany
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Entry into Force of the Accession
Note by the Secretariat (WT/ACC/1 ) of March 24,
1995
“Following the General Council/Ministerial
Conference's adoption of the Report of the
working party and the approval of the draft
Decision by a two-thirds majority of the WTO
Members' positive vote, the Protocol of Accession
enters into force thirty days after acceptance by
the Applicant, either by signature or by deposit of
the Instrument of Ratification, if Parliamentary
approval is required.“
But in fact: Consensus – single exception: Ecuador
Different in the old GATT times (like for waivers)
Univ. - Prof. Dr. Werner Meng, Europa Institut, Saarland University, Germany
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Withdrawal
XV WTOA: Withdrawal
Written notice to be received by the DG of the
WTO
Effective 6 months thereafter
Applicable necessarily to the WTOA and all the
MTAs
Expulsion not foreseen, except for nonacceptance of an amendment (X.3 ?)
Univ. - Prof. Dr. Werner Meng, Europa Institut, Saarland University, Germany
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Membership Obligations
Objective obligations „Principles“
Subjective concessions (but extended trough MFN)
Pacta sunt servanda
Article 26 VCLT
“Every treaty in force is binding upon the parties
to it and must be performed by them in good
faith.”
Art. XVI.4 WTOA: Domestic law changes promised
“4. Each member shall ensure the conformity of its
laws, regulations and administrative procedures with
its obligations as provided in the annexed
Agreements.”
Financial Contributions (Art. VII.4 WTOA)
Univ. - Prof. Dr. Werner Meng, Europa Institut, Saarland University, Germany
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Membership Rights
Mirroring the obligations of the other MS
Counterpart for the „loss of their own
sovereignty“
Rule of Law brings relative security
Adjudication and enforcement
Participation
Decisionmaking
Negotiations, but:
Capacity Problems
Univ. - Prof. Dr. Werner Meng, Europa Institut, Saarland University, Germany
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Decisionmaking – Consensus, Majority
Art. IX WTOA
Rule: consensus (pros and cons ?): flexibility, democracy,
protection of minorities?
Not in the GATT for voting on waivers and accessions
On demand: majority voting, one state - one vote (EU 27)
Special procedures
DSB (Art. 2.4 DSU, but „reverse consensus“)
Authoritative interpretations (Art. IX.2 WTOA)
Waivers (Art. IX.3 WTOA, Art. XXV GATT)
Accessions (Art. XII.2 WTOA). Majority: Ecuador
Amendments (Art. X.1, 2 WTOA)
Budget (Art. VII.3 WTOA)
Except as otherwise provided, where a decision cannot be
arrived at by consensus, the matter at issue shall be decided
by majority voting. (exceptions, by Rules of Procedure)
Univ. - Prof. Dr. Werner Meng, Europa Institut, Saarland University, Germany
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The Consensus Principle
Art. IX WTOA
1.The WTO shall continue the practice of decision-making by
consensus followed under GATT 1947.[1] Except as otherwise
provided, where a decision cannot be arrived at by consensus,
the matter at issue shall be decided by voting. At meetings of the
Ministerial Conference and the General Council, each Member of
the WTO shall have one vote. …. . Decisions of the Ministerial
Conference and the General Council shall be taken by a majority
of the votes cast, unless otherwise provided in this Agreement or
in the relevant Multilateral Trade Agreement.
[1] The body concerned shall be deemed to have decided by
consensus on a matter submitted for its consideration, if no
Member, present at the meeting when the decision is taken,
formally objects to the proposed decision.
Univ. - Prof. Dr. Werner Meng, Europa Institut, Saarland University, Germany
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Non-attendance ?
DECISION-MAKING PROCEDURES UNDER ARTICLES IX AND XII OF THE WTO
AGREEMENT
Statement by the Chairman as agreed by the General Council on 15 November
1995
On occasions when the General Council deals with matters related to
requests for waivers or accessions to the WTO under Articles IX or XII of the
WTO Agreement respectively, the General Council will seek a decision in
accordance with Article IX:1. Except as otherwise provided, where a decision
cannot be arrived at by consensus, the matter at issue shall be decided by
voting under the relevant provisions of Articles IX or XII.
The above procedure does not preclude a Member from requesting a
vote at the time the decision is taken.
Consequently, if any Member has a particular problem with a proposed
decision regarding a request for a waiver or an accession to the WTO, it
should ensure its presence at the meeting in which this matter will be
considered. The absence of a Member will be assumed to imply that it has no
comments on or objections to the proposed decision on the matter
WT/L/93 of 24 November 1995
Univ. - Prof. Dr. Werner Meng, Europa Institut, Saarland University, Germany
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EU Membership
The "European Communities" are member of
the WTO (Art. IX WTOA) – succeeded by the
EU?
See art. I TEU last sentence
But in practice: identity assumed
•
WTO-Agreements are mixed agreements,
therefore parallel membership of EU and its
members
Univ. - Prof. Dr. Werner Meng, Europa Institut, Saarland University, Germany
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Voting - Art. XI WTOA:
Where the European Communities exercise their
right to vote, they shall have a number of votes
equal to the number of their member States[2]
which are Members of the WTO.
[2] The number of votes of the European
Communities and their member States shall in
no case exceed the number of the member
States of the European Communities.
Compare that e.g. with China and the US
Univ. - Prof. Dr. Werner Meng, Europa Institut, Saarland University, Germany
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EU as a „Major Player“ in the WTO
The „Quad“: USA, EC, Japan, Canada
The G-7, G-8, G-10, G-20: EU-MS + EU
EU is always among the biggest importers and
exporters in the world
Bundling the economic power of 27 (and soon
even more) MS
Economically the EU is the only entity with
capacity, influence and strength comparable
to the US and able to take the lead
- 29 -
Univ. - Prof. Dr. Werner Meng, Europa Institut, Saarland University, Germany
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Special Nature of the EU
The EU is – under GATT law – a customs union that
fulfils the requirement of Art. XXIV.8 a GATT (cf. the
understanding of the Uruguay Round)
But with a special membership status
Each accession to the EU brings the necessity to
compensate third states for the loss they suffer in
terms of MFN status (Art. I GATT) and possibly in the
bindings of Art. II GATT (see art. XXIV.6 GATT)
Preferential Agreements with developing countries
and association agreements with third countries,
especially the candidates for accession most often are
not covering „substantially all trade“ and thus need a
waiver under art. XXV GATT (and an understanding of
the Uruguay Round)
Cf. the Cotonou Agreement
- 30 -
Univ. - Prof. Dr. Werner Meng, Europa Institut, Saarland University, Germany
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Policy Concepts
Preamble no. 5
DESIRING to contribute, by means of a common commercial
policy, to the progressive abolition of restrictions on
international trade,
Art 206 TFEU
By establishing a customs union in accordance with Articles 28
to 32, the Union shall contribute, in the common interest, to
the harmonious development of world trade, the progressive
abolition of restrictions on international trade and on foreign
direct investment, and the lowering of customs and other
barriers.
Univ. - Prof. Dr. Werner Meng, Europa Institut, Saarland University, Germany
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WTO Agreements as mixed agreements
Common commercial policy was always an
exclusive power – now art. 3.1 e TFEU
Enlarged scope (art. 206/207)
Exclusive power to conclude international treaties
Before Lisbon: ERTA – doctrine (22/70 [1971] ECJ 263) –
mirroring power
Now 3.2 TFEU
Before Lisbon, the MS had shared competences in
most parts of GATS and TRIPS, therefore mixed
agreements (opinion 1/94, [1994] ECR I-5267)
"close cooperation between the Member States and
the Community institutions, both in the process of
negotiation and conclusion and in the fulfilment of the
commitments entered into.”
Univ. - Prof. Dr. Werner Meng, Europa Institut, Saarland University, Germany
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Sharing of competences in practice
Art. 133 – Committee (now Art. 207 TFEU): decision in
the EU Council if necessary – unitary representation
needs consensus (in all matters, irrespective of who
has the internal power)
Coordinated position of the EU and the member
states is represented by the Commission casting 27
votes
Joint and several liability – Commission represents
Member States in DS procedures
Univ. - Prof. Dr. Werner Meng, Europa Institut, Saarland University, Germany
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EC in the WTO Dispute Settlement
Since the WTO Agreement System has been joined by the ECs
and its Member States
And since they assume joint and several liability for compliance
with the rules of WTO law
the respondent parties of DS procedures are
Sometimes the ECs
Sometimes one member state (in areas of EC law or own national law),
e.g. DS 131 and DS 173 US vs. France
Sometimes several member states (in areas of EC law or own national
law) e.g. DS 316 EC and certain member States — Large Civil Aircraft, US
vs. European Communities; France; Germany; Spain; United Kingdom
(Airbus), parallel DS 347
With the Commission coordinating the Community (or: other Member
States‘) interests in the MS cases
Retaliation covers
Sometimes community wide branches
Sometimes economic sectors of particular importance for one or several
member states
- 34 -
Univ. - Prof. Dr. Werner Meng, Europa Institut, Saarland University, Germany
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Common Commercial Policy
Art. 207.1 TFEU
The common commercial policy shall be based on
uniform principles, particularly with regard to
changes in tariff rates,
the conclusion of tariff and trade agreements
relating to trade in goods and services, and
the trade related aspects of intellectual
property,
foreign direct investment,
the achievement of uniformity in measures of
liberalisation, export policy and measures to
protect trade such as those to be taken in the
event of dumping or subsidies.
……
Univ. - Prof. Dr. Werner Meng, Europa Institut, Saarland University, Germany
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Formalities
Art. 207.3 -> 218 TFEU
Exclusive competence
Conclusion: council decision (218.6) partly
together with the EP
Also: adoption in the legal order of the EU
MS remain members of the WTO if this is not
formally changed
Next amendment?
EU represents the Union and the members like
until now
Cf. Also art. 220 as representation of the EU
Univ. - Prof. Dr. Werner Meng, Europa Institut, Saarland University, Germany
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Free Trade Agreements/Customs Unions

Bilateral Agreements with Switzerland

Customs Unions e.g. with Andorra, San
Marino and Turkey

Free Trade Agreements with EEA,
Euromed, Mercosur (in negotiation),
Mexico, South Africa
Univ. - Prof. Dr. Werner Meng, Europa Institut, Saarland University, Germany
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Regional Agreements
EEA Agreement (European Economic Area)
Norway
Iceland
Liechtenstein
Univ. - Prof. Dr. Werner Meng, Europa Institut, Saarland University, Germany
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Third Country Trade Relations
Key EU bilateral agreements include:
• Economic Partnership Agreements in negotiation with ACP
countries (Cotonou)
•Partnership and Cooperation Agreements with Russia and
Ukraine
•EUROMED Agreements
•Particular relations to candidates for accession, e.g. Croatia
Univ. - Prof. Dr. Werner Meng, Europa Institut, Saarland University, Germany
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Unilateral Preference Systems
General System of
Preferences (GSP) - the
classical instrument for
fostering development is
by granting tariff
preferences. The EU's GSP
grants products imported
from GSP beneficiary
countries either duty-free
access or a tariff
reduction depending on
the sensitivity of the product
and the GSP arrangement
enjoyed by the country
concerned.
“Everything But Arms”
initiative (EBA) - EBA is a
special GSP arrangement for
the least developed
countries. EBA grants dutyfree access to imports of all
products from LDCs without
any quantitative restrictions,
except to arms and
munitions.
Asymmetrical
preferences e.g. for the
Balkans and Moldova, with
the aim of ensuring peace,
stability, freedom and
economic prosperity in the
region
(cf. “Wider Europe”).
Univ. - Prof. Dr. Werner Meng, Europa Institut, Saarland University, Germany
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