The GATT/WTO system

1. The GATT/WTO system • History • 1947/1948 GATT has « provisional » effect • Series of rounds leading to supplementary treaties (codes, side agreements) • Following the Uruguay Round (1986-1994) it came under the WTO; all agreements in principle integrated in a single system (1994) (« package deal »), but … • « Understandings » (interpretation rules) now part of GATT (since 1994) • In 2016: 163 members, 21 observers

2. WTO March 2013

3. WTO system - general structure • Structure Marrakesh Agreement 1994 (http://www.wto.org/english/docs_e/legal_e/legal_e.htm): • Agreement establishing the WTO • Annex 1 A = Multilateral agreements on trade in goods (MATG) • Annex 1 B = General agreement on trade in services (GATS) • Annex 1 C = TRIPs (trade related aspects intellectual property) • Annex 2 = Dispute Settlement Understanding  (DSU) • Annex 3 = TPRM (Trade policy review mechanism) • Annex 4 = plurilateral trade agreements (outside the package deal, not obligatory ). I.a. Agreement on government procurement, Agreement on Trade in Civil Aircraft, etc. • Uruguay Round Ministerial Decisions and Declarations , …. • Accession Protocols may contain additional obligations (WTO-Plus), eg China • ‘Doha-Round’ led to a TFA (Trade Facilitation Agreement) amending the MATG (‘Bali package’) open for ratification since Nov 2014 (not in force yet) • Limited success of Doha Round leads to further attempts for particular Free Trade Agreements (CETA, TTIP, etc.)

4. WTO Ann. 1 A: MATG (GATT+) • Annex 1 A = multilateral agreements on trade in goods, includes: • GATT 1994, i.e. GATT 1947 + incorporated « understandings » (interpretation rules) • Specific agreements on : customs valuation, rules of origin, import licensing, SPS, TBT, Safeguards, ADA, SCM ... (see further) • Agreements concerning specific sectors: Agriculture; Textiles & clothing (terminated 1.1.2005) • Not yet in force: Trade facilitation agreement 2014 • Institutional: Council for Trade in Goods • In general no direct effect • also not in the EU: C-149/96, Portugal v. Council; C-377/02 Van Parys • ECJ will review conformity with WTO law of EU decisions only in case a) a measure intends to implement WTO obligations (ECJ in C-70/87 Fediol) or b) refers explicitly to specific provisions of WTO law (ECJ in C-69/89 Nakajima) • Direct effect has been accepted for some aspects of TRIPS

5. GATT basic principles • Basic content and principles: • Non-discrimination rules: • All countries are « most favoured nation » (art. I GATT) • Principle of « national treatment » after import (non-discrimination)(art. III GATT) II. Market access rules • Trade restrictions must be tariff restrictions only • Tariff restrictions (customs duties) to be lowered gradually • Quantitative restrictions in principle prohibited (art. XI) • Barriers with equivalent effect (NTB) in principle prohibited (art. XI) III. Taking into account other values and interests • Exceptions and rules concerning these exceptions + promotion of harmonisation of national regulation • Waivers, i.a. a very wide waiver for developing countries IV. Rules on unfair trade practices (dumping, subsidies)

6. MFN (most favoured nation) • Art. 1 GATT: • 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.

7. MFN (most favoured nation) • Art. 1: All countries are treated as « most favoured nation » in relation to: • Customs duties and charges in connection with import/export ... • & other trade policy measures • for « like products » • unconditionally, i.e. not based on reciprocity • Waivers adopted with a qualified majority of member states, i.a. a wide waiver for developing countries • Art. XXIV: the MFN rules does not apply to customs unions and free trade areas - stand-still (restrictions in respect of 3rd countries may not be greater than the average individual measures before the establishment of the union) • Procedure for recognition of RTA’s (CU/FTA) by the CRTA (committee on regional trade agreements) (recent example: EU-Canada CETA, EU-Singapore FTA concluded Oct 2014, EU Vietnam FTA concluded August 2015, EU-US negotiations on TTIP, 2009 Asean-New Zealand FTA, ….) • Exception requires that substantially all trade in goods is liberalised between the member states • Result: in relation to EU, the MFN principle applies in full only to ca. 9 countries

8. Tariff restrictions • Art. XXVIIIbis GATT 1994: no prohibition of customs duties, but duty to negotiate tariff concessions (lowering maximum tariffs) - Doha-Round = 9th Round • Reciprocity of concessions (all states concede advantages of the same order) • Maintaining the MFN principle: concessions apply to all contracting states • Technique of negotiations: linear tariff reductions • Negotiating a formula for general reductions plus « negative lists » of exceptions • Resulting in schedules product by product, consisting of 3 parts (customs duties for MFN countries; preferential duties for developing countries; non-tariff concessions)

9. Tariff restrictions – Harmonise customs regulations Harmonise customs regulations by international rules for customs duties : • 1° Proper classification of the goods • 2° Determination of the customs value of the goods • 3° Determination of the origin of the goods (where relevant) • Simplification of customs procedures : Convention of Kyoto 1973/1999. Guidelines and recommendations concerning the clearing, storage, rules of origin, goods in transit, inward and outward processing, ..

10. Harmonise customs regulations – classification rules 1° Classification • Uniform product classification: « harmonised commodity description and coding system » (HS Convention) of the WCO (World Customs Organisation), ca. 5000 commodity groups with a 2 to 6 digit code, e.g. 01.01.11. Is usually revised every 5 years. • Rules for the interpretation of the harmonised system: • Product description has precedence over headings of sections and chapters • Classification of unfinished products (as finished) • Products covered by more than 1 category: most specific description • Composite products or mixtures: most relevant characteristic • Products not covered classifed according to the most likeness • If unsettled: highest category

11. Harmonise customs regulations – valuation rules & ROO 2° Valuation rules • Customs valuation rules : in 1981 a Valuation Code, now the WTO Valuation agreement (art. VII GATT 1994 and 2 specific agreements). Customs duties are in principle charged ad valorem • The value used is the transaction value (net price at the border) • Rules concerning evidence of the price (transaction value): normally the invoice, otherwise the contract • Adjustment and splitting up of the purchase price (to determine net price) (deduction of the price of connected services, transport after importation, discounts, etc.). • Exceptionally the transaction value can be rejected (sale between connected enterprises, artificial price) > question of transfer pricing (see OECD Transfer Pricing Guideliens 2010 and WCO 2015 Guide to Customs Valuation and Transfer Pricing) 3° WTO Agreement on rules of origin (ROO) (no harmonisation yet)

12. Art. XI (Prohibition of)Non-Tarif Barriers • Art. XI GATT: prohibition of quantitative restrictions (QR) (quotas, etc) on import or export and other non-tariff barriers (NTB) with equivalent effect • (See further) General exceptions of art. XX, protection of the balance of payments (art. XII/XVIII), safeguards (art. XIX), ... • Specific exceptions on this prohibition in Art. XI. Especially the following are permitted if non-discriminatory: • temporary export restrictions of essential products (shortage). See e.g. dispute on Chinese restriction of export of raw materials 2011 • import restrictions on agricultural and fishery products as part of a subsidising policy • restrictions following from an international agreement on basic products (commodities) (s. further) • Prohibition implies that state trading enterprises may not circumvene the prohibition by using an import monopoly

13. Annexed agreements on Non-Tarif Barriers • Simplification of import licensing procedures: Agreement on import licensing procedures (1979/1994) • Separate rules on Textile & Clothing : MFA (Multifibre arrangement 1974) replaced by the ATC 1994 (Agreement on Textile and Clothing) and finally terminated 31 Dec. 2004; since 1 Jan. 2005 no separate regime. • Voluntary export restraints (negotiated bilaterally) since 1988 incompatible with GATT • Specific agreements annexed to GATT (in the package deal): s. further

14. Plurilateral agreements • Separate « plurilateral » agreements (outside the package deal): - P.A. on government procurement (in 1994 in Annex 4): next slide • Plurilateral Agreements with all WTO members as MFN: • Plurilateral 1996 Information Technology Agreement ITA (70 states: EU + circa 52) (merely tariff cutting agreement) (+ July 24 2015 agreement reached to extend the scope of the ITA) • In 2014 negotiations started for a P.A. on trade in « environmental goods » (mainly EU + Norway, Switzerland; USA & Canada; China, Japan, Korea; Australia & New Zealand) (probably only tariff cutting)

15. Government Procurement agreement • GATT itselfmakes an exception for governmentprocurement : itisexpresslypermitted to limitit to national products • Annex 4 contains a separate « plurilateral » agreement – the GPA goingfurther and excluding discrimination based on nationality for important governmentpurchases (goods and services) • Parties: EU Member states, USA, Canada, Japan, NZ, Singapore and 10 other countries (no developing countries); China and Australiamayjoin • NEW GPA agreed 2012 (« Protocol Amending the Agreement on Government Procurement “), in force April 6, 2014.

16. Government Procurement agreement • Scope of application: purchases above a treshold (generally 130.000 SDR (IMF drawing rights; higher tresholds for local governments and certain utilities). New GPA Expanded scope of application ratione personae (which governmental entities) (eg towards local authorities); expanded scope as to products, lower tresholds. • Rather an accumulation of bilateral agreements: based on reciprocity • Detailed rules on tendering procedures in order to give foreign enterprises a real chance (publicity, non-partisan description); obligation to award the contract to the most advantageous tender. Economic « compensation » may only be taken into account under certain conditions . • Rules on control and legal protection. NB: Within the EU, NAFTA etc. there are more specific rules.

17. « National » treatment • Principle of national treatment: once imported, foreign products have to be treated as national products – receive « national treatment » (art. III GATT, prohibition of discriminatory internal measures) as regards: • (direct or indirect) internal taxes or other fiscal charges (art. III: 2); • other regulations affecting their internal sale and offering for sale, transportation, distribution, use, etc. (art. III: 4). • States often justify unequal treatment by invoking that the products are different. But « like products » have to be treated equally. • The Appellate Body of the WTO has developed criteria for likeness in the case Asbestos (Appellate Body report of April 5, 2001). • See also the US - Clove cigarettes dispute 2012 (likeness between clove cigarettes and menthol cigarettes)

18. General exceptions (art. XX) • Art. XX GATT deals with the exceptions states may invoke. • An exception requires: • A relation to one of the grounds (aims or reasons) listed in art. XX • AND • The general requirement that the measure does not amount to an arbitrary or unjustifiable discrimination or disguised restriction of international trade

19. General exceptions (art. XX) • Main Grounds: • (a) necessary to protect public morals (eg Seals products ban; Appellate body reports 2014-1 & 2) • (b) necessary to protect human, animal or plant life or health. E.g. restriction on exportation of hazardous waste (incl. ships to be dismantled (beaching), Hong Kong Convention 2009, implem. EU Reg. 1257/2013) • (d) necessary to secure compliance with rules not inconsistent with GATT, esp. intellectual property rights • For the protection of national artistic, historical or archaeological treasures (N.B. UNESCO Convention 1970 allows wider exceptions) (in the EU export restrictions are uniformly regulated in Reg. 116/2009) • (g) related to the conservation of exhaustible natural resources (NB. environmental rules may constitute so-called « Green Barriers to Trade ») • As already mentioned: • - in pursuance of agreements on basic products (commodities) • - temporary export restrictions for products indispensable for local industry • UN Human Rights Council Guiding Principles on Business and Human Rights 2011

20. Harmonisation measures related to exceptions - general • Several distinct agreements to harmonise the rules concerning some of the exceptions in order to diminish their impact. • Mainly the SPS and the TBT Agreements. • To some extent also TRIPS (see further) They include stricter obligations for the states than generally under GATT.

21. Harmonisation measures related to exceptions: SPS • SPS: Agreement on Sanitary and Phytosanitary Measures (1994) • such measures may be taken to protect animal or plant life or health • But « only to the extent necessary », based on scientific principles and sufficient scientific evidence of the risk • Either because the risk is proven or by application of the precautionary principle: even in the absence of sufficient evidence, provisional measures are allowed subject to an obligation to seek for additional information and review the measure periodically • Only non-discriminatory measures (no different treatment without justification) • Measures have in principle to be based on international standards, guidelines end recommendations; if based thereon they are presumed to be necessary and thus allowed.

22. Harmonisation measures related to exceptions: SPS • Who sets the « international standards » presumed to be necessary and thus allowed ? • The « three sisters »: • International Plant Protection Convention (IPPC), developing international standards for phytosanitary measures (ISPMs) • World Organisation for Animal health (OIE) • the Codex Alimentarius Commission (FAO/WHO since 1963), developing food (safety) standards. • Actual disputes or concerns relate to e.g. • The EU approval regime for Biotech products (GMO rules) (opposed by eg Argentina, USA)

23. Harmonisation measures related to exceptions: TBT • TBT: Agreement on Technical Barriers to Trade (1980/1994) • There are many possible technical barriers : provisions on quality, composition, packaging, control of goods, etc. • Justifications invoked : protection of public health and safety, standardisation, etc. …

24. Harmonisation measures related to exceptions: TBT • TBT: Agreement on Technical Barriers to Trade (1980/1994) • technical regulations (i.e. mandatory requirements) and standards (non-mandatory) may not create unnecessary obstacles to international trade and may not be discriminatory (principle of MFN and « national treatment ») • Eg of a barrier: US Country-of-origin-labelling requirements (« COOL ») impose burdens of verification and recordkeeping for imported parts (Appellate Body in 2012: violation of 2.1 TBT; possibly consistent with 2.2. TBT). American COOL-rules adapted in 2013. But another complaint by Canada and Mexico led to a new condamnation of the US, upheld by the Appellate Body in May 2015 concerning beef en pork labelling); US Congress gave in on Dec 18, 2015. • Legitimate aims mentioned: protection of health and environment, prevention of deceptive practices, national security • Rules deviating from international standards (ISO) are presumed to be unnecessary • Rules not based on international standards (incl. in the absence of such) need to comply with procedural and substantive obligations (incl. prior publication) (code of good practice annexed to the TBT) • Particular rules for conformity examination of foreign products and for certification (in country of export).

25. Other exceptions : National Security • Security exception in Art. XXI GATT: protection of national security • i.a purchases for a military establishment • no particular regulation of this exception

26. Other exceptions: Balance of payments • Art. XII GATT (+ understanding 1994): protection of the balance of payments • requires proportionality • duty to confer with the IMF on the measures • give preference to tariff measures; quantitative measures require a specific justification.

27. Other exceptions:Safeguard measures (art. XIX) Economic emergency exception in Art. XIX: Safeguard measures against large import : - Temporary measures in case of unforeseen increase of import of certain products causing serious injury to domestic industry - Conditions: temporary, non-discriminatory, procedural requirements (investigation duties, etc.). - More detailed rules in the Agreement on Safeguards (not applicable to agricultural products). Measures directed against a single country are only exceptionally permitted.

28. Exceptions for agriculture • Exceptions for agricultural products, such as : • no prohibition or restriction of export subsidies • quantitative restrictions in principle permitted • 1994: « Agreement on Agriculture » - merely a framework for negotiations; the aim is « tariffication », i.e. to convert all quantitative restrictions in tariff restrictions • commitment to reduce export subsidies, starting with the listed ones • 3 categories (« boxes ») of domestic support measures: green box (permitted), yellow (subject to reduction commitments) and blue (permitted on production limitation conditions) • further commitments 2004, .... . • In Doha round disagreement concerning domestic support of food (US ><India) (India questions the actual calculation of the « Aggregate Measure of Support », i.e. allowed domestic subsidy)

29. Waivers • Art. XXV GATT: Apart from the exceptions in GATT, the WTO general council may (by 2/3 majority) waiver some of the GATT obligations for a specific state. - Important waivers in favour of developing countries (next slide) - Some waivers contain additional exceptions for agricultural products.

30. Exc. for developing countries • GATT in 1964/1966 supplemented with a « Part IV » on « trade and development » (art. 36-38). Part IV has not really enforceable obligations, at most duties of best efforts in favour of trade and development of developing countries. An important rule is that there is no duty of reciprocity towards developed countries • Principles promoted by UNCTAD (since 1968): • Non-reciprocal and non-discriminatory tariff preferences for the exportation of manufactured and semi-finished products from developing countries • Since 1971 (Tokyo round) a general waiver of provisions of GATT for developing countries, enabling a « general system of preferences » (GSP) (so-called « enabling clause ») - Allowing preferential treatment of developing countries; reciprocal preferences between developing countries. Some conditions: no new trade restrictions vis-à-vis other contracting states; response to real needs; notification to GATT/WTO. • « Graduation rule »: aim to abolish gradually the preferential treatment

31. Exc. for developing countries • Effect of the GSP is limited because of important exclusions: agricultural products, steel, etc.. • Application of the graduation rule has already led to reduction of preferences for «newly industrialised countries ». The system has become more differentiated. • Application 1: US GSP (general system of preferences) - Trade Act 1974/1976: preferential treatment for certain products coming – according to the rules of origin – from the beneficiary countries (the list of beneficiaries is a political decision often conditioned by the policy of countries in other matters) • Supplementary measures in the African Growth & Opportunity Act 2000 (textile) • Application 2: EU GSP • GSP 1971/1995/2005/2008 (Reg. 732/2008) – GSP 2012 in force 1 Jan 2014 (Reg. 978/2012) • Lomé/Cotonou Agreements for the « ACP countries »

32. EU General system of tariff preferences (GSP) • GSP (originally 1971, adapted 1995, 2005, 2008, 2012): • Preferential tariffs (- 15 % to - 100 %) for 4 categories of goods • GSP+ status (further reductions in exchange for commitments on ecology and governance) in exchange for undertakings (incl. implementing international conventions) of the exporting countries in relation to combating drug production and trafficking, labour standards, environmental protection, etc. Applications are examined by the EU Commission. • An emergency safeguard clause • Graduation principle (for the least developed countries zero tariff on « everything but arms » (EBA)) • GSP 2012/in force 2014: number of beneficiary countries lowered from 176 > 89. Annual review. As from Jan 2015 also no longer for China, Thailand etc.

33. EU preferences for ACP countries • Agreements with « ACP countries »: Lomé, then Cotonou (2000, in force 2002) • Principles: no tariffs on non-agricultural products; favourable treatment of agricultural products • No quantitative restrictions or equivalent measures except (1) measures for the protection of safety, health, etc .. (2) safeguard measures • Limited reciprocity: EU countries enjoy the same preferences as other developed countries • Strict « Rules of origin » • Obligations in the field of human rights, rule of law, fighting corruption, etc. • Financing instruments, esp. 2 kinds : • Grant facility, on the basis of needs and performance • Investment Facility, to stimulate investment (esp. development of the private sector) • EU tries to limit the GSP to countries concluding an economic partnership agreement (EPA) including trade in services, investments, government procurement and IP rights protection. Somemore limited regional EPA’s finalised in 2014 (West Africa, Sout African DC)

34. Agreements on basic products (commodities) • Under certain conditions justifying an exception to the GATT rules under art. XX (h) GATT. • General: import- and export restrictions for the stabilisation of market conditions in certain commodities • Informal agreements: consultative bodies of representatives of producing and consuming countries. Often organised by the FAO. • Formal market regulation through a multilateral agreement between producing and consuming countries. Content varies: - Rules on (fair) competition • Minimum prices (e.g. dairy) • Export control, buffer stocks etc. • UNCTAD aims at an « integrated program » for basic products agreements. A « Common Fund » was established (in effect 1989, but limited financial resources).

35. GATT & Competition law (trade defence) • Liberalisation of trade also requires rules against anticompetitive practices (unfair trade practices) - also called « trade defence » • GATT & Codes: only indirect competition rules, concerning measures against dumping and measures against state aids. • Much more competition law in e.g. the EU (including prohibition of State Aid, with exceptions) Incl. rules on measures against foreign practices: Trade Barriers Regulation (Reg. 3286/94) (under revision) • Soft law: UNCTAD Code on Restrictive Business Practices: Prohibition of cartels (esp. price agreements), of collusive tendering (for public tenders), market or customer allocation arrangements, collective sales refusal, abuse of dominant position,… • Soft law: OECD Recommendations

36. GATT & ADA(Anti-Dumping Agreement) • Rules: art. VI GATT + 1994 Anti-Dumping Agreement (ADA). Object: determine under which conditions states may take anti-dumping measures. • Requirements: • « dumping » : import below the price in ordinary course of trade for like product. ADA contains criteria to determine normal price. Difference = « dumping margin » • Causing (threat of) material injury to domestic industry or retarding its establishment • Procedural requirements: • Prior investigation of the alleged dumping and the resulting injury or threat on the local market • Rights of defense of interested parties and access to information

37. GATT & ADA • GATT & Anti-Dumping Agreement - authorised sanctions : - If dumping margin > 2 %: anti-dumping duties not exceeding the dumping margin (« zeroing »); not for a longer period than necessary (in principle max. 5 year – « sunset provision ») • Provisional measures during the investigation (provisional duties, security - usually mandatory deposits or bank guarantees) • WTO Committee on Anti Dumping Practices • Problem of retaliation threats against producers complaining

38. GATT & ADA • EU has further restricted the authorised antidumping measures (« WTO+ elements »): • May not be contrary to the overall interest of the EU (community interest test) • Anti-dumping-duty not higher than necessary (« lesser duty rule »); but restriction is under discussion (EP proposes to abolish the rule, at least in relation to countries not respecting ILO labour standards) • problem of determining dumping margin against enterprises from non-market economies: no comparison with price level of that country but of a comparable country recognised as market economy - Eg China compared with Brasil (plus discussion whether esp. China obtains MES (market economy status) or not). • Actual regulation: Reg. 1225/2009 (under revision) • basically a competence of the EU Commission (under supervision of a (comitology procedure’) • rights of defence maybe not guaranteed due to very wide confidentiality claim by the EC (see WTO Case on Iron & Steel Fasteners/China) (in part remedied by installation of a ‘hearing officer’ guarding the procedural rights) • control by courts is only marginal (either direct by EU courts or indirect via member state courts) • End 2012, EU had 102 anti-dumping measures in force and 10 anti-subsidy measures (impact on only 0,25 % of imports)

39. GATT – SCM (subsidies and countervailing measures) • Rules: art. VI & XVI GATT + 1994 SCM Agreement (Subsidies & Countervailing Measures) • Determines a) which subsidies are prohibited and b) in which cases countervailing measures against subsidies are allowed • Art. 1: Wide definition of subsidies (any state aid, domestic of for export; benefit conferred by financial controbution or income or price support) • Acceptable countervailing measures depend on the classification of the subsidy. 3 categories: • Red list (art. 3, prohibited subsidies, measures authorised): a) export subsidies, b) local content (or import substitution) subsidies (Eg: Airbus / Boeing dispute) • Yellow list (art. 6-7, actionable subsidies, measures authorised if subsidy has adverse effects) • Green list (art. 8, no countervailing measures authorised, « non-actionable »): if either not « specific » or relating to a) research and development, b) regional development programmes or c) schemes to help adaptation to new environmental standards

40. SCM- countervailing measures • Authorised unilateral Countervailing Measures against subsidies (art. 10 ff) • Additional duties (CVD’s: countervailing duties), when certain requirements are met : • Prior investigation (according to prescribed procedure) (art. 11) • Injury or threat of injury is proven (art. 15) • Level of duty may not exceed estimated level of subsidy (art. 19) (which means in practice no combination with anti-dumping duties, s. Appellate Body in US AD/CVD case) • Applied in a non-discriminatory manner (no matter what origin) • Duration in principle max. 5 year (art. 21) • Provisional measures during the investigation (usually mandatory deposits or bank guarantees) (art. 17) • Multilateral dispute settlement (art. 24): ask advice of the SCM committee; or dispute settlement according to the general DSU of the WTO with some special or additional rules for SCM

41. Trade defence institutions • Anti-dumping measures, anti-subsidy measures and safeguards are decided by « national » (in the EU: Union) bodies • In the EU: • Provisional measures and safeguards : by commission after advice by an advisory committee (Anti-Dumping Committee – Regulation (EC) No 1225/2009 / Anti-Subsidy Committee – Regulation (EC) No 597/2009) • Definitive anti-dumping or anti-subsidy measures require decision of the EU Council (on the proposal of the EU Commission) • Judicial review by ECJ possible • In the USA: • ITC (US International Trade Commission) • US President has a veto • Judicial review by the US Court of international trade

42. Trade in services: the GATS scope of application • General Agreement on Trade in Services 1993 • Scope of application: • « service »: any service, except in the exercise of governmental functions • « trade »: 4 modes of supply activities : - cross-border supply, - consumption abroad, - commercial presence (establishment), - presence of natural persons (service supplier travels to provide service).

43. GATS basic rules • Basis principles (comp. GATT) • All member states are «most favoured nation» (Art. II); exception for regional integration (custom unions and free trade areas); in Annex II a list of exceptions (until 1-1-2005 allowed without any motivation) • Prohibition in principle of 6 types of quantitative measures and similar practices (Art. XVI) • Principle of «national treatment» after import of « like services » and « like service suppliers » • But both principles are limited: only specific undertakings of member states (Art. XVII) • Duty of transparancy (duty to inform about rules affecting services) • Progressive liberalisation through further negotiations .... (next slide) • Exceptions & rules regarding exceptions (compare GATT) (Art. XIV) • Special treatment for developing countries

44. GATS - Annexes • General Agreement on Trade in Services 1993 – Main Annexes: • Annex II: exemptions from MFN principle stipulated by member states • Annex on the Movement of natural persons: GATS does not apply to measures regarding migration, citizenship, etc. • Annex Air transport services : GATS does not affect existing international agreements (esp. Chicago Agreement 1944) • Annex financial services: freedom to take prudential measures • Annex telecommunications (does not cover radio & TV): access for foreign service providers on reasonable and non-discriminatory terms & conditions limitations enumerated restrictively • Institutional: CTS (Council for Trade in Services)

45. GATS & DOHA ROUND • Current commitments under GATS are very limited • Doha Declaration 2001: “Doha Development Agenda” (DDA) • Meanwhile many PTA’s are concluded (Preferential Trade Agreements), thus undermining the MFN principle • 1998 Disciplines on Domestic Regulation in the Accountancy Sector • Impasse since 2008, DDA collapsed • 2010 Draft “Disciplines on Domestic Regulation (of QLT requirements)” (QLT = Qualifications, Licensing & Technical Standards) • Ministerial Conference 2011 allowed negotiations for a “plurilateral agreement”, negotiations for a Draft “International Trade in Services Agreement” (TISA) started March 2013 by EU + ca. 22 other countries (incl. US). Draft on financial services on Wikileaks 14 April 2014, further drafts leaked June 2015. • EU has internally harmonised its commitments and renegotiated the change of the schedule with the states who raised objections (procedure of art. XXI GATS in case of partial withdrawal of commitments). Result: agreements with 18 states (ratification pending).

46. WTO DSU - general • Apart from other dispute settlement procedures (conciliation, mediation, « arbitration » within WTO), there is the: • DSU 1994 - Most well-developed law enforcement mechanism in international public law • Jurisdiction is * compulsory and *exclusive • Access to the procedure (« standing ») only for states and only in case of dispute (contentious: no advisory opinion can be asked) • private parties can only lobby their member state (in the EU the European Commission) to lodge a complaint • In several countries, an internal complaint procedure is organised • – for the EU see the TBR (Trade Barrier Regulation)) • - for the US, see S. 301 Trade Act 1974

47. WTO DSU - procedure • General characteristic: an integrated, i.e. largely uniform, system (instead of different dispute settlement rules for different Codes) • Stages: • Consultation (duty to enter into consultations) • Procedure before a panel; request for a panel; establishment of a panel; terms of reference, intervening parties, decision • Appellate review (standing Appellate Body of 7 members appointed for 4 years, 1 x renewable): only « issues of law » • Adoption of report by the WTO Dispute settlement body (DSB): adopted unless within 60 days DSB decides by consensus not to adopt it (so-called reverse consensus). Effect: all adopted except 1 • Monitoring and follow-up by the DSB (whether state complies within RPOT, reasonable period of time)

48. WTO DSU - sanctions • Sanctions / remedies for breach: • The DSB may authorise the complainant, in case the other party fails to comply with the decision, ‘retaliation’ – see art. 22 DSU: • the retaliation must be proportional (not more than the damage suffered by the complainant • possible measures (in order of priority) - suspension of trade concessions enjoyed by the non-compliant member state in the same sector - suspension of trade concessions in other sectors under the same agreement - suspend concession under another agreement, esp. TRIPS (i.e. suspension of recognition of intellectual property rights of the non-compliant member) (as TRIPS is a different agreement, this is called cross-retaliation)