The WTO enabling clause and positive conditionally in the European community's GSP program

Journal of International Economic Law

Volumn 6, Issue 2, 2003, Pages 507-532

  Bartels, Lorand ^a  

^a UNIVERSITY OF EDINBURGH   (United Kingdom)

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EID: 0038434393     PISSN: 13693034     EISSN: None     Source Type: Journal    
DOI: 10.1093/jiel/6.2.507     Document Type: Review

References (110)

1. The WTO usually follows UN practice in allowing countries to 'self-elect' (or 'self-select') developing country status. However, for the purposes of GSP treatment, it is the developed countries that determine whether a country is 'developing'. See Report of the Special Group of the Organization for Economic Co-operation and Development (OECD) on Trade with Developing Countries, UNCTAD Document TD/56, at point A, p 5, that '[i]ndividual developed countries might, however, decline to accord special tariff treatment to a particular country claiming developing status on grounds which they hold to be compelling. Such ab initio exclusion of a particular country would not be based on competitive considerations'.
2. Council Regulation (EC) No 2501/2001 of 10 December 2001 applying a scheme of generalized tariff preferences for the period from 1 January 2002 to 31 December 2004 OJ 2001 L 346/1 ('GSP Regulation'). For the policy underlying these special incentive arrangements see the European Commission's Proposal for a Council Regulation (EC) applying the special incentive arrangements concerning labour rights and environmental protection provided for in Articles 7 and 8 of Council Regulations (EC) No 3281/94 and 1256/96 applying the scheme of generalized tariff preferences in respect of certain industrial and agricultural products originating in developing countries, COM (97) 534 final, 97/0293(CNS) OJ 1997 C 360/9, and also the Amended Proposal for a Council Regulation applying a scheme of generalised tariff preferences for the period 1 January 2002 to 31 December 2004, COM (2001) 688 final, 14 November 2001.
3. Article 7 of the GSP Regulation.
4. See below at Section I. In addition, Article 9 of the GSP Regulation provides for 'special arrangements' for least developed countries (incorporating the former 'Everything But Arms' initiative) and Article 10 provides for 'special arrangements to combat drug production and trafficking' in the form of reduced tariffs. Unlike the environment and labour incentives, these drugs incentives are applied to countries which the Commission determines are involved in efforts to combat drug production and trafficking. These preferential schemes are not discussed further in this article.
5. Negative conditionality also exists in the Community's GSP program (see Article 25(1) of the GSP Regulation) as well as in the GSP program of the United States (see Section 502 of the Trade Act of 1974) but it raises slightly different issues and will not be addressed in this article.
6. See WTO Document, Trade Policy Review - The European Union - Minutes of Meeting on 12 and 14 July 2000, WT/TPR/M/72, 26 October 2000 (India, p 10; Hong Kong, China, p 16; Brunei Darussalam, on behalf of ASEAN, at p 23; Mexico, at p 26), and WTO Document, Trade Policy Review The European Union - Minutes of Meeting on 12 and 14 July 2000, WT/TPR/M/72/Add. 1, 26 October 2000 (India, p 45).
7. See WTO Document, Trade Policy Review - The European Union - Minutes of Meeting on 12 and 14 July 2000, WT/TPR/M/72, 26 October 2000 (India, p 10; Hong Kong, China, p 16; Brunei Darussalam, on behalf of ASEAN, at p 23; Mexico, at p 26), and WTO Document, Trade Policy Review The European Union - Minutes of Meeting on 12 and 14 July 2000, WT/TPR/M/72/Add. 1, 26 October 2000 (India, p 45).
8. See WTO Document, European Communities - Generalized System of Preferences - Request for Consultations by Thailand, WT/DS242/1, 12 December 2001. Requests to join these consultations were made by Costa Rica (WT/DS242/2), Guatemala (WT/DS242/3), Nicaragua (WT/DS242/4), Honduras (WT/DS242/5), and Colombia (WT/DS242/6). Brazil also twice requested consultations with the EC on the grounds that its special preferences for drugs violated the terms of the Enabling Clause in WTO Document, European Communities - Measures Affecting Differential and Favourable Treatment of Coffee - Request for Consultations by Brazil, WT/DS154/1, 11 December 1998 and WTO Document, European Communities - Measures Affecting Soluble Coffee - Request for Consultations by Brazil, WT/DS209/1, 19 October 2000.
9. See WTO Document, European Communities - Generalized System of Preferences - Request for Consultations by Thailand, WT/DS242/1, 12 December 2001. Requests to join these consultations were made by Costa Rica (WT/DS242/2), Guatemala (WT/DS242/3), Nicaragua (WT/DS242/4), Honduras (WT/DS242/5), and Colombia (WT/DS242/6). Brazil also twice requested consultations with the EC on the grounds that its special preferences for drugs violated the terms of the Enabling Clause in WTO Document, European Communities - Measures Affecting Differential and Favourable Treatment of Coffee - Request for Consultations by Brazil, WT/DS154/1, 11 December 1998 and WTO Document, European Communities - Measures Affecting Soluble Coffee - Request for Consultations by Brazil, WT/DS209/1, 19 October 2000.
10. See WTO Document, European Communities - Generalized System of Preferences - Request for Consultations by Thailand, WT/DS242/1, 12 December 2001. Requests to join these consultations were made by Costa Rica (WT/DS242/2), Guatemala (WT/DS242/3), Nicaragua (WT/DS242/4), Honduras (WT/DS242/5), and Colombia (WT/DS242/6). Brazil also twice requested consultations with the EC on the grounds that its special preferences for drugs violated the terms of the Enabling Clause in WTO Document, European Communities - Measures Affecting Differential and Favourable Treatment of Coffee - Request for Consultations by Brazil, WT/DS154/1, 11 December 1998 and WTO Document, European Communities - Measures Affecting Soluble Coffee - Request for Consultations by Brazil, WT/DS209/1, 19 October 2000.
11. WTO Document, European Communities - Conditions for the Granting of Tariff Preferences to Developing Countries - Request for the Establishment of a Panel by India, WT/DS246/4, 9 December 2002. At its meeting on 27 January 2003, the WTO Dispute Settlement Body established a panel. See www.wto.org/english/news_e/news03_e/dsb_27jan03_e.htm (visited on 15 February 2003).
12. WTO Document, European Communities - Conditions for the Granting of Tariff Preferences to Developing Countries - Request for the Establishment of a Panel by India, WT/DS246/4, 9 December 2002. At its meeting on 27 January 2003, the WTO Dispute Settlement Body established a panel. See www.wto.org/english/news_e/news03_e/dsb_27jan03_e.htm (visited on 15 February 2003).
13. Third party status has been requested by Sri Lanka, Guatemala, Honduras, EI Salvador, Paraguay, United States, Venezuela, Brazil, Cuba, Ecuador, Peru, Costa Rica and Colombia. See www.wto.org/english/news_e/news03_e/dsb_27jan03_e.htm (visited on 15 February 2003).
14. GATT Contracting Parties, Generalized System of Preferences ('GSP Decision'), Decision of 25 June 1971, BISD 18S/24 annexed to this article.
15. GATT Contracting Parties, Differential and More Favourable Treatment, Reciprocity and Fuller Participation of Developing Countries ('Enabling Clause'), Decision of 28 November 1979, L/4903, BISD 26S/203, available at www.wto.org/english/docs_e/legal_e/prewto_legal_e.htm.
16. Articles 22 (environment) and 15 (labour) of the GSP Regulation.
17. The preferential rates for both Articles 21(2) and 14(2) are set out in Article 8 of the GSP Regulation.
18. Commission Regulation (EC) No 1649/2000 of 25 July 2000 granting the Republic of Moldova the benefit of the special incentive arrangements concerning labour rights OJ 2000 L 189/13, See also the Notice regarding the request submitted by the Republic of Moldova to take advantage of the special incentive arrangements concerning labour rights OJ 1999 C 176/13 and the List of criteria specifying cases of reasonable doubt within the meaning of Article 15 of the GSP Regulation OJ 2000 C 321/18.
19. Notice regarding request submitted by the Russian Federation to take advantage of the special incentive arrangements concerning labour rights OJ 1999 C 218/2. See also Commission Decision No 902/2002 of 13 November 2002 on postponing the decision on the request of the Russian Federation for the special incentive arrangements for the protection of labour rights OJ 2002 L 312/27.
20. Notice regarding the request submitted by Ukraine in order to benefit from the special incentive arrangements concerning labour rights OJ 2001 C 266/2.
21. Notice regarding the request submitted by the Republic of Georgia in order to benefit from the special incentive arrangements concerning labour rights OJ 2001 C 127/13.
22. Notice regarding the request submitted by the Democratic Socialist Republic of Sri Lanka in order to benefit from the special incentive arrangements concerning labour rights OJ 2002 C 95/14.
23. Notice regarding the request submitted by the Republic of Uzbekistan in order to benefit from the special incentive arrangements for the protection of labour rights OJ 2002 C 189/21.
24. Notice regarding the request submitted by the People's Republic of China in order to benefit from the special incentive arrangements for the protection of the environment OJ 2002 C 143/6.
25. Principle 8 of Recommendation A.I. 1 in Final Act of the First United Nations Conference on Trade and Development (Geneva: UNCTAD, Doc E/CONF.46/141, 1964), Vol 1, at 20.
26. See Abdulqawi A. Yusuf, Legal Aspects of Trade Preferences for Developing States (Kluwer: The Hague, 1982) 86.
27. The waiver was requested by Austria, Canada, Denmark, Finland, Ireland, Japan, New Zealand, Norway, Sweden, Switzerland, the United Kingdom, the United States, and the European Community and its Member States. See GATT Council, Minutes of Meeting held on 25 May 1971, C/M/ 69, 28 May 1971.
28. GSP Decision, see above at n 10. Emphasis added.
29. Article XXV:5 of the General Agreement on Tariffs and Trade 1947 ('GATT 1947') is now super-seded by Article IX:3 of the Agreement Establishing the World Trade Organization ('WTO Agreement').
30. GATT Document C/W/178.
31. It has also been argued that the GSP Decision did not meet the terms of Article XXV:5 because it was not granted in 'exceptional circumstances': see Hector Gros Espiell, 'GATT: Accommodating Generalized Preferences', 8 Journal of World Trade 341 (1974). This would raise questions about the legal status of an ultra vires decision made within the GATT system, but this question need not be addressed here.
32. See above at n 11.
33. See, eg, GATT Council, Minutes of Meeting held on 14 May 1987, C/M/209, 29 May 1987, where one developing country delegation stated that '[t]he fact that such schemes were of a voluntary character and did not constitute a binding obligation for the preference-giving countries did not, in his delegation's view, give those countries the right to ignore the legal GATT framework under which they had been authorized to implement such schemes. Developed countries were not obliged to grant GSP schemes to developing countries and could at any time revoke a decision to do so; however, as contracting parties they were bound to comply fully with the relevant Decisions of the CONTRACTING PARTIES while implementing a GSP scheme'. See also further, below, at n 50. For an academic contribution, see Frieder Roessler, 'Diverging Domestic Policies and Multilateral Trade Integration' in Jagdish Bhagwati and Robert E Hudec (eds), Fair Trade and Harmonization: Prerequisites for Free Trade? (Cambridge, MA: MIT Press, 1996) Vol'2, 39- 40. For a recent version of the argument in favour of an obligation to provide preferences, see Kele Onyejekwe, 'International Law of Trade Preferences: Emanations from the European Union and the United States', 26 St Mary's Law Journal 425 (1994), at 436. Cf Article 23 of the abandoned convention on the most-favoured-nation clause, prepared by the International Law Commission (International Law Commission, 'Draft Articles on Most-Favored-Nation Clauses and Commentary' II (Part 2) Yearbook of the International Law Commission (1979), at 8), discussed in Frieder Roessler, 'The International Law Commission and the New International Economic Order' in Frieder Roessler (ed), The Legal Structure, Functions and Limits of the World Trade Order (London: Cameron May, 2000) 51.
34. See, eg, GATT Council, Minutes of Meeting held on 14 May 1987, C/M/209, 29 May 1987, where one developing country delegation stated that '[t]he fact that such schemes were of a voluntary character and did not constitute a binding obligation for the preference-giving countries did not, in his delegation's view, give those countries the right to ignore the legal GATT framework under which they had been authorized to implement such schemes. Developed countries were not obliged to grant GSP schemes to developing countries and could at any time revoke a decision to do so; however, as contracting parties they were bound to comply fully with the relevant Decisions of the CONTRACTING PARTIES while implementing a GSP scheme'. See also further, below, at n 50. For an academic contribution, see Frieder Roessler, 'Diverging Domestic Policies and Multilateral Trade Integration' in Jagdish Bhagwati and Robert E Hudec (eds), Fair Trade and Harmonization: Prerequisites for Free Trade? (Cambridge, MA: MIT Press, 1996) Vol'2, 39- 40. For a recent version of the argument in favour of an obligation to provide preferences, see Kele Onyejekwe, 'International Law of Trade Preferences: Emanations from the European Union and the United States', 26 St Mary's Law Journal 425 (1994), at 436. Cf Article 23 of the abandoned convention on the most-favoured-nation clause, prepared by the International Law Commission (International Law Commission, 'Draft Articles on Most-Favored-Nation Clauses and Commentary' II (Part 2) Yearbook of the International Law Commission (1979), at 8), discussed in Frieder Roessler, 'The International Law Commission and the New International Economic Order' in Frieder Roessler (ed), The Legal Structure, Functions and Limits of the World Trade Order (London: Cameron May, 2000) 51.
35. See, eg, GATT Council, Minutes of Meeting held on 14 May 1987, C/M/209, 29 May 1987, where one developing country delegation stated that '[t]he fact that such schemes were of a voluntary character and did not constitute a binding obligation for the preference-giving countries did not, in his delegation's view, give those countries the right to ignore the legal GATT framework under which they had been authorized to implement such schemes. Developed countries were not obliged to grant GSP schemes to developing countries and could at any time revoke a decision to do so; however, as contracting parties they were bound to comply fully with the relevant Decisions of the CONTRACTING PARTIES while implementing a GSP scheme'. See also further, below, at n 50. For an academic contribution, see Frieder Roessler, 'Diverging Domestic Policies and Multilateral Trade Integration' in Jagdish Bhagwati and Robert E Hudec (eds), Fair Trade and Harmonization: Prerequisites for Free Trade? (Cambridge, MA: MIT Press, 1996) Vol'2, 39- 40. For a recent version of the argument in favour of an obligation to provide preferences, see Kele Onyejekwe, 'International Law of Trade Preferences: Emanations from the European Union and the United States', 26 St Mary's Law Journal 425 (1994), at 436. Cf Article 23 of the abandoned convention on the most-favoured-nation clause, prepared by the International Law Commission (International Law Commission, 'Draft Articles on Most-Favored-Nation Clauses and Commentary' II (Part 2) Yearbook of the International Law Commission (1979), at 8), discussed in Frieder Roessler, 'The International Law Commission and the New International Economic Order' in Frieder Roessler (ed), The Legal Structure, Functions and Limits of the World Trade Order (London: Cameron May, 2000) 51.
36. See, eg, GATT Council, Minutes of Meeting held on 14 May 1987, C/M/209, 29 May 1987, where one developing country delegation stated that '[t]he fact that such schemes were of a voluntary character and did not constitute a binding obligation for the preference-giving countries did not, in his delegation's view, give those countries the right to ignore the legal GATT framework under which they had been authorized to implement such schemes. Developed countries were not obliged to grant GSP schemes to developing countries and could at any time revoke a decision to do so; however, as contracting parties they were bound to comply fully with the relevant Decisions of the CONTRACTING PARTIES while implementing a GSP scheme'. See also further, below, at n 50. For an academic contribution, see Frieder Roessler, 'Diverging Domestic Policies and Multilateral Trade Integration' in Jagdish Bhagwati and Robert E Hudec (eds), Fair Trade and Harmonization: Prerequisites for Free Trade? (Cambridge, MA: MIT Press, 1996) Vol'2, 39- 40. For a recent version of the argument in favour of an obligation to provide preferences, see Kele Onyejekwe, 'International Law of Trade Preferences: Emanations from the European Union and the United States', 26 St Mary's Law Journal 425 (1994), at 436. Cf Article 23 of the abandoned convention on the most-favoured-nation clause, prepared by the International Law Commission (International Law Commission, 'Draft Articles on Most-Favored-Nation Clauses and Commentary' II (Part 2) Yearbook of the International Law Commission (1979), at 8), discussed in Frieder Roessler, 'The International Law Commission and the New International Economic Order' in Frieder Roessler (ed), The Legal Structure, Functions and Limits of the World Trade Order (London: Cameron May, 2000) 51.
37. See, eg, GATT Council, Minutes of Meeting held on 14 May 1987, C/M/209, 29 May 1987, where one developing country delegation stated that '[t]he fact that such schemes were of a voluntary character and did not constitute a binding obligation for the preference-giving countries did not, in his delegation's view, give those countries the right to ignore the legal GATT framework under which they had been authorized to implement such schemes. Developed countries were not obliged to grant GSP schemes to developing countries and could at any time revoke a decision to do so; however, as contracting parties they were bound to comply fully with the relevant Decisions of the CONTRACTING PARTIES while implementing a GSP scheme'. See also further, below, at n 50. For an academic contribution, see Frieder Roessler, 'Diverging Domestic Policies and Multilateral Trade Integration' in Jagdish Bhagwati and Robert E Hudec (eds), Fair Trade and Harmonization: Prerequisites for Free Trade? (Cambridge, MA: MIT Press, 1996) Vol'2, 39- 40. For a recent version of the argument in favour of an obligation to provide preferences, see Kele Onyejekwe, 'International Law of Trade Preferences: Emanations from the European Union and the United States', 26 St Mary's Law Journal 425 (1994), at 436. Cf Article 23 of the abandoned convention on the most-favoured-nation clause, prepared by the International Law Commission (International Law Commission, 'Draft Articles on Most-Favored-Nation Clauses and Commentary' II (Part 2) Yearbook of the International Law Commission (1979), at 8), discussed in Frieder Roessler, 'The International Law Commission and the New International Economic Order' in Frieder Roessler (ed), The Legal Structure, Functions and Limits of the World Trade Order (London: Cameron May, 2000) 51.
38. Article 22.1 of the WTO Understanding on Rules and Procedures Governing the Settlement of Disputes ('DSU') provides that '[c]ompensation is voluntary and, if granted, shall be consistent with the covered agreements.'
39. This principle was established in GATT Panel Report, United States - Restrictions on Imports of Sugar ('Sugar Headnote'), adopted on 22 June 1989, L/6514, BISD 36S/331, para 5.2, where the panel said that 'Article II permits contracting parties to incorporate into their Schedules acts yielding rights under the General Agreement but not acts diminishing obligations under that Agreement.' The principle was approved by the Appellate Body in WTO Appellate Body Report, European Communities - Regime for the Importation, Sale and Distribution of Bananas, WT/DS27/AB/R, adopted on 25 September 1997, para 154 (applied to concessions under the Agreement on Agriculture) and in WTO Appellate Body Report, European Communities - Measures Affecting the Importation of Certain Poultry Products, WT/DS69/AB/R, adopted on 23 July 1998, para 98 (applied to the obligation to provide compensation under Article XXVIII).
40. This principle was established in GATT Panel Report, United States - Restrictions on Imports of Sugar ('Sugar Headnote'), adopted on 22 June 1989, L/6514, BISD 36S/331, para 5.2, where the panel said that 'Article II permits contracting parties to incorporate into their Schedules acts yielding rights under the General Agreement but not acts diminishing obligations under that Agreement.' The principle was approved by the Appellate Body in WTO Appellate Body Report, European Communities - Regime for the Importation, Sale and Distribution of Bananas, WT/DS27/AB/R, adopted on 25 September 1997, para 154 (applied to concessions under the Agreement on Agriculture) and in WTO Appellate Body Report, European Communities - Measures Affecting the Importation of Certain Poultry Products, WT/DS69/AB/R, adopted on 23 July 1998, para 98 (applied to the obligation to provide compensation under Article XXVIII).
41. This principle was established in GATT Panel Report, United States - Restrictions on Imports of Sugar ('Sugar Headnote'), adopted on 22 June 1989, L/6514, BISD 36S/331, para 5.2, where the panel said that 'Article II permits contracting parties to incorporate into their Schedules acts yielding rights under the General Agreement but not acts diminishing obligations under that Agreement.' The principle was approved by the Appellate Body in WTO Appellate Body Report, European Communities - Regime for the Importation, Sale and Distribution of Bananas, WT/DS27/AB/R, adopted on 25 September 1997, para 154 (applied to concessions under the Agreement on Agriculture) and in WTO Appellate Body Report, European Communities - Measures Affecting the Importation of Certain Poultry Products, WT/DS69/AB/R, adopted on 23 July 1998, para 98 (applied to the obligation to provide compensation under Article XXVIII).
42. See John H. Jackson, The World Trading System: Law and Policy of International Economic Relations (2nd ed, Cambridge, MA, and London: MIT Press, 1999) 164.
43. The phrase 'the language of Annex 1A incorporating the GATT 1994 into the WTO Agreement' was twice adopted by the Appellate Body in Appellate Body Report, Japan - Taxes on Alcoholic Beverages ('Japan - Taxes'), WT/DS8/AB/R, WT/DS10/AB/R, WT/DS11/AB/R, adopted on 1 November 1996, p 15. The panel's use of the term 'Article 1(b) of GATT 1994' (para 6.10 of the panel report) should therefore be rejected, even though it follows more directly from the text of the agreement.
44. Paragraph 1 of the 'the language of Annex 1A incorporating the GATT 1994 into the WTO Agreement' states as follows: 1. The General Agreement on Tariffs and Trade 1994 ('GATT 1994') shall consist of: ... (b) the provisions of the legal instruments set forth below that have entered into force under . . . (iii) decisions on waivers granted under Article XXV of GATT 1947 and still in force on the date of entry into force of the WTO Agreement; (iv) other decisions of the CONTRACTING PARTIES to GATT 1947; ...
45. See above at n 35.
46. Appellate Body Report, Japan - Taxes, see above n 34, p 13.
47. Appellate Body Report, United States - Tax Treatment for 'Foreign Sales Corporations' ('US-FSC'), WT/DS108/AB/R, adopted on 20 March 2000, para 108.
48. Even instruments that do not have the formal status of an 'instrument' forming party of the GATT 1994 are not deprived of all legal effect. Under Article XVI:1 of the WTO Agreement, these decisions continue to 'guide' the WTO.
49. Appellate Body Report, US - FSC, see above n 30, para 112.
50. Incidentally, it was formerly contended by developed countries that preferences granted under GSP programs were immune from GATT dispute settlement proceedings. In 1981 the United States said that 'the GSP . . . was a unilateral, nonreciprocal and non-contractual programme and that, as such, specific actions taken thereunder were not subject to review by the CONTRACTING PARTIES, the Council or any other GATT body'. The European Community made a similar statement. See GATT Council, Minutes of Meeting held on 3 November 1981, C/M/152, 21 December 1981.
51. See Paragraph 6 of the Understanding on Article II.1 (b) of GATT, Paragraph 12 of the Understanding on Article XXIV of GATT, Footnote 1 of the Understanding on the Balance of Payments Provisions in GATT, and Paragraph 3 of the Understanding on Waivers.
52. The Understandings on Articles XVII and XXVIII of GATT 1947 are similar.
53. See the one WTO report to have considered a measure covered by a waiver, WTO Panel Report, European Communities - Regime for the Importation, Sale and Distribution of Bananas, WT/DS27/R/ USA, adopted as modified by the Appellate Body Report on 25 September 1997. On dispute settlement on waivers generally, see WTO Document, Paragraph 6 of the Doha Declaration on the TRIPS Agreement and Public Health: Information on Waivers - Note by the Secretariat, IP/C/W/387, 24 October 2002, pp 8-10. See also GATT Panel Report, United States - Denial of Most-Favoured-Nation Treatment as to Non-Rubber Footwear From Brazil, DS18/R, adopted on 19 June 1992, BISD 39S/128, where the Enabling Clause was raised as a defence to a claim of breach of Article I of GATT.
54. See the one WTO report to have considered a measure covered by a waiver, WTO Panel Report, European Communities - Regime for the Importation, Sale and Distribution of Bananas, WT/DS27/R/ USA, adopted as modified by the Appellate Body Report on 25 September 1997. On dispute settlement on waivers generally, see WTO Document, Paragraph 6 of the Doha Declaration on the TRIPS Agreement and Public Health: Information on Waivers - Note by the Secretariat, IP/C/W/387, 24 October 2002, pp 8-10. See also GATT Panel Report, United States - Denial of Most-Favoured-Nation Treatment as to Non-Rubber Footwear From Brazil, DS18/R, adopted on 19 June 1992, BISD 39S/128, where the Enabling Clause was raised as a defence to a claim of breach of Article I of GATT.
55. See the one WTO report to have considered a measure covered by a waiver, WTO Panel Report, European Communities - Regime for the Importation, Sale and Distribution of Bananas, WT/DS27/R/ USA, adopted as modified by the Appellate Body Report on 25 September 1997. On dispute settlement on waivers generally, see WTO Document, Paragraph 6 of the Doha Declaration on the TRIPS Agreement and Public Health: Information on Waivers - Note by the Secretariat, IP/C/W/387, 24 October 2002, pp 8-10. See also GATT Panel Report, United States - Denial of Most-Favoured-Nation Treatment as to Non-Rubber Footwear From Brazil, DS18/R, adopted on 19 June 1992, BISD 39S/128, where the Enabling Clause was raised as a defence to a claim of breach of Article I of GATT.
56. As part of GATT 1994, the Enabling Clause is a 'covered agreement' and there can be no disputing that a panel may apply the Enabling Clause as 'applicable law' in determining whether this exception to Article I has been satisfied: Lorand Bartels, 'Applicable Law in WTO Dispute Settlement Proceedings', 35(3) Journal of World Trade 499 (2001); Joost Pauwelyn, 'The Role of Public International Law in the WTO: How Far Can We Go?', 95 American Journal of International Law 535 (2001).
57. As part of GATT 1994, the Enabling Clause is a 'covered agreement' and there can be no disputing that a panel may apply the Enabling Clause as 'applicable law' in determining whether this exception to Article I has been satisfied: Lorand Bartels, 'Applicable Law in WTO Dispute Settlement Proceedings', 35(3) Journal of World Trade 499 (2001); Joost Pauwelyn, 'The Role of Public International Law in the WTO: How Far Can We Go?', 95 American Journal of International Law 535 (2001).
58. I would like to thank Barbara Eggers for alerting me to this issue.
59. WTO Appellate Body Report, US - Measure Affecting Imports of Woven Wool Shirts and Blouses from India, WT/DS33/AB/R, adopted on 23 May 1997, p 16.
60. See WTO Appellate Body Report, EC Measures Concerning Meat and Meat Products (Hormones), WT/DS26/AB/R, WT/DS48/AB/R, adopted on 13 February 1998, para 104.
61. See WTO Appellate Body Report, Brazil - Export Financing Program for Aircraft, WT/DS46/AB/R, adopted on 20 August 1999, para 140. See also the Oral Statement of the United States at the first meeting of the panel, in WTO Panel Report, European Communities - Anti- Dumping Duties on Imports of Cotton-Type Bed Linen from India, WT/DS141/R, Annex 3-6, para 36, describing the Appellate Body's findings as a rejection of 'the argument that the positive obligations in the transitional safe-guard mechanism were "exceptions" imposing the burden of proof on the party asserting their use. In doing so, the Appellate Body distinguished between affirmative defences, that is, limited exceptions from obligations under certain other provisions of the GATT 1994, and positive rules that establish obligations in and of themselves.'
62. See WTO Appellate Body Report, Brazil - Export Financing Program for Aircraft, WT/DS46/AB/R, adopted on 20 August 1999, para 140. See also the Oral Statement of the United States at the first meeting of the panel, in WTO Panel Report, European Communities - Anti- Dumping Duties on Imports of Cotton-Type Bed Linen from India, WT/DS141/R, Annex 3-6, para 36, describing the Appellate Body's findings as a rejection of 'the argument that the positive obligations in the transitional safe-guard mechanism were "exceptions" imposing the burden of proof on the party asserting their use. In doing so, the Appellate Body distinguished between affirmative defences, that is, limited exceptions from obligations under certain other provisions of the GATT 1994, and positive rules that establish obligations in and of themselves.'
63. For arguments that the Enabling Clause is limited in this way, see the requests by Thailand and India, see above at n 8. See also WTO Document, Unilateral Trade Measures by States - Communication from India, WT/GC/W/123, 16 December 1998, where India stated that 'there is an attempt to give concessions under their GSP scheme subject to recipient governments committing to comply with certain environmental/labour standard norms. This is in violation of the "enabling clause" of GATT relating to GSP which clearly sets out that GSP must be nondiscriminatory, non-reciprocal and generalised. But, by making the GSP selective in its application as mentioned above, it will be rendered both discriminatory and reciprocal. This falls foul of GATT.' For an earlier statement, see GATT Council, Minutes of Meeting held on 2 February 1988, C/M/217, 8 March 1988, where Chile said '[t]he 1979 Decision established the two basic characteristics of GSP schemes for GATT, namely, that they were unilateral and that they should be non-discriminatory; i.e., once a developed contracting party had unilaterally chosen to establish a GSF scheme, it could not apply it to some developing countries and not to others. These two principles had sometimes been erroneously confused by those contending that because the GSP was unilateral, it could be applied in a discriminatory way.'
64. For arguments that the Enabling Clause is limited in this way, see the requests by Thailand and India, see above at n 8. See also WTO Document, Unilateral Trade Measures by States - Communication from India, WT/GC/W/123, 16 December 1998, where India stated that 'there is an attempt to give concessions under their GSP scheme subject to recipient governments committing to comply with certain environmental/labour standard norms. This is in violation of the "enabling clause" of GATT relating to GSP which clearly sets out that GSP must be nondiscriminatory, non-reciprocal and generalised. But, by making the GSP selective in its application as mentioned above, it will be rendered both discriminatory and reciprocal. This falls foul of GATT.' For an earlier statement, see GATT Council, Minutes of Meeting held on 2 February 1988, C/M/217, 8 March 1988, where Chile said '[t]he 1979 Decision established the two basic characteristics of GSP schemes for GATT, namely, that they were unilateral and that they should be non-discriminatory; i.e., once a developed contracting party had unilaterally chosen to establish a GSF scheme, it could not apply it to some developing countries and not to others. These two principles had sometimes been erroneously confused by those contending that because the GSP was unilateral, it could be applied in a discriminatory way.'
65. WTO Ministerial Conference, Implementation-related Issues and Concerns, Decision of 14 November 2001, para 12.2, WT/MIN(01)/17 (emphasis added).
66. This argument is made by Robert Howse, 'Back to Court after Shrimp/Turtle: India's Challenge to Labor and Environmental Linkages in the EC Generalized System of Preferences', in Eyal Bevenisti and Moshe Hirsch (eds), The Impact of International Law on International Cooperation (Cambridge: Cambridge University Press, forthcoming).
67. See UN Security Council Resolution 1430 on the situation between Eritrea and Ethiopia, S/Res/ 1430 (2002), 14 August 2002, para 10, in which the Security Council '[c]alls again on the parties to release and return without further delay all remaining prisoners of war and civilian internees under the auspices of the International Committee of the Red Cross in accordance with the Geneva Conventions and the Algiers Agreements'.
68. For the sake of completeness, it should be pointed out that this provision is ambiguous in one respect. It is namely unclear whether the 'description' referred to in the footnote should be taken as applying to the term 'preferential tariff treatment' or to the term 'Generalized System of Preferences'. If one looks at the GSP Decision itself, it seems likely that the footnote refers to 'preferential tariff treatment'. In any case, the result is the same, as the 'system' is itself described in the GSP Decision in terms of a certain type of preferential tariff treatment.
69. It is interesting to note that the 'umbrella' waiver allowing developing countries to grant special preferences to least developed countries applies only to 'preferential tariff treatment . . . provided on a generalized: non-reciprocal and non-discriminatory basis.' See WTO Document, Preferential Tariff Treatment for Least-Developed Countries, Decision on Waiver, WT/L/304, adopted on 15 June 1999, para 2.
70. See Working Party Report on the United States Caribbean Basin Economic Recovery Act, BISD 31S/189 and the United States' reference to this footnote in its request for an Article XXV:5 waiver (L/5573) and its further explanation of this request (L/5620). These documents are all referred to in Negotiating Group on GATT Articles, Article XXV:5 (waiver power) - Note by the Secretariat, MTN.GNG/ NG7/W/18, 4 September 1987. See also GATT Council, Minutes of Meeting held on 1-2 November 1983, C/M/173, 16 November 1983. And Nicaragua's proposals for discriminatory preferential treatment applying only to Nicaragua as compensation for the trade embargo imposed by the United States in GATT Panel Report, United States - Trade Measures Affecting Nicaragua L/6053, circulated 13 October 1986, unadopted, para 4.10.
71. See Working Party Report on the United States Caribbean Basin Economic Recovery Act, BISD 31S/189 and the United States' reference to this footnote in its request for an Article XXV:5 waiver (L/5573) and its further explanation of this request (L/5620). These documents are all referred to in Negotiating Group on GATT Articles, Article XXV:5 (waiver power) - Note by the Secretariat, MTN.GNG/ NG7/W/18, 4 September 1987. See also GATT Council, Minutes of Meeting held on 1-2 November 1983, C/M/173, 16 November 1983. And Nicaragua's proposals for discriminatory preferential treatment applying only to Nicaragua as compensation for the trade embargo imposed by the United States in GATT Panel Report, United States - Trade Measures Affecting Nicaragua L/6053, circulated 13 October 1986, unadopted, para 4.10.
72. See Working Party Report on the United States Caribbean Basin Economic Recovery Act, BISD 31S/189 and the United States' reference to this footnote in its request for an Article XXV:5 waiver (L/5573) and its further explanation of this request (L/5620). These documents are all referred to in Negotiating Group on GATT Articles, Article XXV:5 (waiver power) - Note by the Secretariat, MTN.GNG/ NG7/W/18, 4 September 1987. See also GATT Council, Minutes of Meeting held on 1-2 November 1983, C/M/173, 16 November 1983. And Nicaragua's proposals for discriminatory preferential treatment applying only to Nicaragua as compensation for the trade embargo imposed by the United States in GATT Panel Report, United States - Trade Measures Affecting Nicaragua L/6053, circulated 13 October 1986, unadopted, para 4.10.
73. See Working Party Report on the United States Caribbean Basin Economic Recovery Act, BISD 31S/189 and the United States' reference to this footnote in its request for an Article XXV:5 waiver (L/5573) and its further explanation of this request (L/5620). These documents are all referred to in Negotiating Group on GATT Articles, Article XXV:5 (waiver power) - Note by the Secretariat, MTN.GNG/ NG7/W/18, 4 September 1987. See also GATT Council, Minutes of Meeting held on 1-2 November 1983, C/M/173, 16 November 1983. And Nicaragua's proposals for discriminatory preferential treatment applying only to Nicaragua as compensation for the trade embargo imposed by the United States in GATT Panel Report, United States - Trade Measures Affecting Nicaragua L/6053, circulated 13 October 1986, unadopted, para 4.10.
74. Special preferences for least developed countries from developed countries are permitted under paragraph 2(d) of the Enabling Clause and from other developing countries under the waiver noted above at n 55.
75. In some cases, the withdrawal of preferences may be justified under the general exceptions in Article XX or the security exceptions in Article XXI of GATT.
76. GATT Council, Minutes of Meeting held on 2 February 1988, C/M/217, 8 March 1988.
77. See WTO Document, Trade Policy Review - The European Union - Minutes of Meeting on 12 and 14 July 2000, WT/TPR/M/72, 26 October 2000, para 165.
78. WTO, 'News: Dispute Settlement Body 27 January 2003, DS246: European Communities - Conditions for the granting of tariff preferences to developing countries', available at www.wto.org/english/news_e/news03_e/dsb_27jan03_e.htm (visited on 15 February 2003).
79. Some recognition was given to the principle of estoppel in WTO law in WTO Panel Report, India Measures Affecting the Automotive Sector, WT/DS146/R, WT/DS175/R, adopted 5 April 2002, at n 364. An appeal on this report was withdrawn at the last minute.
80. R. Krishnamurti, 'The Agreement on Preferences: A Generalized System in Favour of Developing Countries' 5 Journal of World Trade Law 45 (1971), at 46 (noting a US proposal to this effect); Yusuf, see above n 22, at 84-85.
81. R. Krishnamurti, 'The Agreement on Preferences: A Generalized System in Favour of Developing Countries' 5 Journal of World Trade Law 45 (1971), at 46 (noting a US proposal to this effect); Yusuf, see above n 22, at 84-85.
82. See, e.g., the reference to 'special preferences' in the UNCTAD resolution quoted above at n 21.
83. R. Krishnamurti, 'Tariff Preferences in Favour of the Developing Countries', 1 Journal of World Trade Law 643 (1967), at 647 (describing the French and Belgian 'Brasseur Plan' for selective and reciprocal preferences), and at 663.
84. See quotations at text to n 59 and n 60 above, and also WTO Document, Trade Policy Review The European Union - Minutes of Meeting on 12 and 14 July 2000, WT/TPR/M/72/Add.1, 26 October 2000, p 88, where the Community claims that '[t]he EU in no way conditions the benefits of its GSP scheme to countries demonstrating adherence to certain internationally recognised core labour standards or to certain standards set by the ITTO. All developing countries are eligible to the benefits of the EU's GSP scheme. On the other hand, the EU remains deeply attached to these standards and wishes to provide incentives to those countries which share its attachment to them and ask for the special incentives.'
85. Howse, above at n 52, points out some of the difficulties in identifying a meaning to the term discrimination in this context.
86. E.g. ILC, Seventh Report on the Most-Favoured-Nation Clause, by Endre Ustor, Special Rapporteur, Document A/CN.4/293, (1976) II (Part 1) Yearbook of the International Law Commission 111, at 128.
87. In WTO Appellate Body Report, United States - Import Prohibition of Certain Shrimp and Shrimp Products, WT/DS58/AB/R, adopted on 6 November 1998, para 165, the Appellate Body recognised that the equal treatment of unequal situations may also amount to discrimination. It said, with regard to the Chapeau of Article XX of GATT, that '[w]e believe that discrimination results not only when countries in which the same conditions prevail are differently treated, but also when the application of the measure at issue does not allow for any inquiry into the appropriateness of the regulatory program for the conditions prevailing in those exporting countries'.
88. WTO Document, Trade Policy Review - The European Union - Minutes of Meeting on 12 and 14 July 2000, WT/TPR/M/72, 26 October 2000, para 173.
89. See Article 2 of the International Labor Organization's 1998 Declaration on Fundamental Principles and Rights at Work, available at www.ilo.org/public/english/standards/decl/declaration/text/index.htm.
90. Articles 1 (objectives) and Article 32 (General obligations of members) of the International Tropical Timber Agreement, available at www.itto.or.jp/inside/agreement.html.
91. See, e.g., Tracy Murray, Trade Preferences for Developing Countries (New York: Wiley, 1977) 36-38 and D. Hubbard, "The International Law Commission and the New International Economic Order', 22 German Yearbook of International Law 80 (1979), at 85-86 (both discussing non-trade conditions in the US GSP program).
92. e.g., Tracy Murray, Trade Preferences for Developing Countries (New York: Wiley, 1977) 36-38 and D. Hubbard, "The International Law Commission and the New International Economic Order', 22 German Yearbook of International Law 80 (1979), at 85-86 (both discussing non-trade conditions in the US GSP program).
93. Reciprocity' is defined as 'the practice of exchanging things with others for mutual benefit', in Judy Pearsall (ed), The Concise Oxford Dictionary (Oxford: Oxford University Press, 2001).
94. See the discussions on the difference between 'material' reciprocity and ordinary 'reciprocity' in International Law Commission, Fifth Report on the Most-Favoured-Nation Clause, by Endre Ustor, Special Rapporteur, Document A/CN.4/280, reprinted in Vol II (Part 1) Yearbook of the International Law Commission 117 (1974), at 118-19.
95. The authority for resorting to the travaux preparatoires for the interpretation of a treaty is Article 32 of the Vienna Convention on the Law of Treaties, 8 ILM 679 (1969), which states, relevantly, that recourse may be had to supplementary means of interpretation, including the preparatory work of the treaty and the circumstances of its conclusion, either in order to confirm the meaning resulting from the application of Article 31, or to determine the meaning when the interpretation according to Article 31 leaves the meaning ambiguous or obscure.
96. Interview in The Times (London), 16 February 1970; quoted in International Law Commission, Second Report on the Most-Favoured-Nation Clause, by Endre Ustor, Special Rapporteur, Document A/CN.4/228, reprinted in (1970) II Yearbook of the International Law Commission 199, at 233. See also Hector Gros Espiell, 'The Most-Favoured-Nation Clause: Its Present Significance in GATT', 5 Journal of World Trade Law 29 (1971), at 36-37.
97. Interview in The Times (London), 16 February 1970; quoted in International Law Commission, Second Report on the Most-Favoured-Nation Clause, by Endre Ustor, Special Rapporteur, Document A/CN.4/228, reprinted in (1970) II Yearbook of the International Law Commission 199, at 233. See also Hector Gros Espiell, 'The Most-Favoured-Nation Clause: Its Present Significance in GATT', 5 Journal of World Trade Law 29 (1971), at 36-37.
98. Interview in The Times (London), 16 February 1970; quoted in International Law Commission, Second Report on the Most-Favoured-Nation Clause, by Endre Ustor, Special Rapporteur, Document A/CN.4/228, reprinted in (1970) II Yearbook of the International Law Commission 199, at 233. See also Hector Gros Espiell, 'The Most-Favoured-Nation Clause: Its Present Significance in GATT', 5 Journal of World Trade Law 29 (1971), at 36-37.
99. References to 'reciprocity' appear in programmatic statements as to the basis of negotiations held to achieve the various objectives of the GATT. Thus, the Preamble to the GATT (and now also to the WTO Agreement) states the following objective: '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 elimination of discriminatory treatment in international commerce ...'. This general objective is given more specific form in the context of negotiations under Article XXVIII for the rebalancing of concessions, negotiations under Article XXVIIIbis for reductions in tariff concessions, and negotiations under Article XVII to limit or reduce the obstacles posed to international trade by state trading enterprises.
100. This is not to say that the principle of reciprocity is necessarily limited to concessions bound under Article II, which seems clear from the Note Ad Article XVII of GATT (state trading enterprises) and GATT Panel Report, Sugar Headnote, see above at n 32, para 5.4, and certainly it is not limited to tariff concessions (though contra, the Seventh Report on the Most- Favoured-Nation Clause, see above at n 68, at 128).
101. This is not to say that the principle of reciprocity is necessarily limited to concessions bound under Article II, which seems clear from the Note Ad Article XVII of GATT (state trading enterprises) and GATT Panel Report, Sugar Headnote, see above at n 32, para 5.4, and certainly it is not limited to tariff concessions (though contra, the Seventh Report on the Most- Favoured-Nation Clause, see above at n 68, at 128).
102. Ibid, para 5.3
103. Yusuf, see above at n 22, p 65. Developing country exports were concentrated on primary products which were largely excluded from the scope of negotiations; the import markets of developing countries were insufficiently large to create a bargaining power; developing countries relied more on quotas than tariffs for protection and felt that they could not abolish these quotas on balance of payments and infant industry grounds: Anonymous, 'Free Trade and Preferential Tariffs: The Evolution of International Trade Regulation in GATT and UNCTAD', 81 Harvard Law Review 1806 (1968), at 1808. Also regional integration among developing countries meant that they needed to protect the concessions granted by these countries against imports from other developed countries; and developing countries were more reliant than developed countries on tariffs as a source of revenue: Oswaldo de Rivero, New Economic Order and International Development Law (Oxford, New York: Pergamon Press, 1980) 35. These problems were compounded by the fact that developing countries were rarely the 'principal suppliers' of goods of interest to developed countries, and so as a procedural matter they were in practice excluded from trade negotiations within the GATT: see UNCTAD, Research Memorandum No 33/Rev.1, para 13-15; quoted in Second Report on the Most-Favoured-Nation Clause, see above at n 77, at 233.
104. Yusuf, see above at n 22, p 65. Developing country exports were concentrated on primary products which were largely excluded from the scope of negotiations; the import markets of developing countries were insufficiently large to create a bargaining power; developing countries relied more on quotas than tariffs for protection and felt that they could not abolish these quotas on balance of payments and infant industry grounds: Anonymous, 'Free Trade and Preferential Tariffs: The Evolution of International Trade Regulation in GATT and UNCTAD', 81 Harvard Law Review 1806 (1968), at 1808. Also regional integration among developing countries meant that they needed to protect the concessions granted by these countries against imports from other developed countries; and developing countries were more reliant than developed countries on tariffs as a source of revenue: Oswaldo de Rivero, New Economic Order and International Development Law (Oxford, New York: Pergamon Press, 1980) 35. These problems were compounded by the fact that developing countries were rarely the 'principal suppliers' of goods of interest to developed countries, and so as a procedural matter they were in practice excluded from trade negotiations within the GATT: see UNCTAD, Research Memorandum No 33/Rev.1, para 13-15; quoted in Second Report on the Most-Favoured-Nation Clause, see above at n 77, at 233.
105. Yusuf, see above at n 22, p 65. Developing country exports were concentrated on primary products which were largely excluded from the scope of negotiations; the import markets of developing countries were insufficiently large to create a bargaining power; developing countries relied more on quotas than tariffs for protection and felt that they could not abolish these quotas on balance of payments and infant industry grounds: Anonymous, 'Free Trade and Preferential Tariffs: The Evolution of International Trade Regulation in GATT and UNCTAD', 81 Harvard Law Review 1806 (1968), at 1808. Also regional integration among developing countries meant that they needed to protect the concessions granted by these countries against imports from other developed countries; and developing countries were more reliant than developed countries on tariffs as a source of revenue: Oswaldo de Rivero, New Economic Order and International Development Law (Oxford, New York: Pergamon Press, 1980) 35. These problems were compounded by the fact that developing countries were rarely the 'principal suppliers' of goods of interest to developed countries, and so as a procedural matter they were in practice excluded from trade negotiations within the GATT: see UNCTAD, Research Memorandum No 33/Rev.1, para 13-15; quoted in Second Report on the Most-Favoured-Nation Clause, see above at n 77, at 233.
106. Yusuf, see above at n 22, p 65. Developing country exports were concentrated on primary products which were largely excluded from the scope of negotiations; the import markets of developing countries were insufficiently large to create a bargaining power; developing countries relied more on quotas than tariffs for protection and felt that they could not abolish these quotas on balance of payments and infant industry grounds: Anonymous, 'Free Trade and Preferential Tariffs: The Evolution of International Trade Regulation in GATT and UNCTAD', 81 Harvard Law Review 1806 (1968), at 1808. Also regional integration among developing countries meant that they needed to protect the concessions granted by these countries against imports from other developed countries; and developing countries were more reliant than developed countries on tariffs as a source of revenue: Oswaldo de Rivero, New Economic Order and International Development Law (Oxford, New York: Pergamon Press, 1980) 35. These problems were compounded by the fact that developing countries were rarely the 'principal suppliers' of goods of interest to developed countries, and so as a procedural matter they were in practice excluded from trade negotiations within the GATT: see UNCTAD, Research Memorandum No 33/Rev.1, para 13-15; quoted in Second Report on the Most-Favoured-Nation Clause, see above at n 77, at 233.
107. Unlike the GATT, Article 17:2 of the Havana Charter (available at www.wto.org/english/docs_e/legal_e/prewto_legal_e.htm) imposed an obligation on the parties to negotiate at the request of any other party. By contrast, the GATT contains only Article XXVIII:2(b), which states that 'the Contracting Parties recognize that in general the success of multilateral negotiations would depend on the participation of all Contracting Parties which conduct a substantial portion of their external trade with one another'.
108. For those countries that adopted it, Part IV came into force as an amendment to GATT on 27 June 1966: Yusuf, see above at n 22, at 59.
109. Paragraph 5 of the Enabling Clause states, inter alia, that '[d]eveloped contracting parties shall therefore not seek, neither shall less-developed contracting parties be required to make, concessions that are inconsistent with the latter's development, financial and trade needs.'
110. It could be argued that this historical interpretation fails to take into account the fact that the type of non-trade conditions imposed in the GSP Regulation were simply not current at the time that the GSP Decision was adopted. In support of such an argument, one could point to the fact that it was only in 1974 that non-trade conditions were imposed on a GSP program (by the United States). But this is an argument from silence, and ignores the fact that the silence continued with the Enabling Clause. It cannot rebut the textual context of the principle of non- reciprocity, which clearly applies only to reductions in barriers to market access.