WTO Law Fernando Piérola Exceptions OUTLINE General

WTO Law Fernando Piérola Exceptions

OUTLINE General exceptions (Art. XX) National security exceptions (Art. XXI) Regional agreements / Enabling clause

EXCEPTIONS (ARTS. XX - XXI) FUNCTION Allows a WTO Member to adopt a measure that is inconsistent with the GATT To pursue certain recognised objectives To protect an essential security interest Provided that the measure is applied in a non arbitrary or discriminatory fashion (Art. XX) e. g. : a prohibition on the importation of a product - which is per se inconsistent with Article XI: 1 of the GATT – - for health reasons (provided that the measure is not applied in a discriminatory or arbitrary fashion) (Art. XX(b) or - in pursuance of trade sanctions imposed by the Security Council of the UN (Art. XXI(c)).

GENERAL EXCEPTIONS (ART. XX) SUBPARAGRAPHS [Nothing in the GATT prevents the adoption of measures: ] “(a) necessary to protect public morals; (b) necessary to protect human, animal or plant life or health; … (d) necessary to secure compliance with laws or regulations which are not inconsistent with the provisions of [the GATT]… … (g) relating to the conservation of exhaustible natural resources if such measures are made effective in conjunction with restrictions on domestic production or consumption; “

GENERAL EXCEPTIONS (ART. XX) CHAPEAU The measure must be: - applied in a manner that discriminates between countries where the same conditions prevail; a disguised restriction on international trade. The Appellate Body has given significant weight to the chapeau. The chapeau is intended to avoid abuse of the exceptions in the sub-paragraphs.

General Exceptions Aspect of measure that was found illegal Coverage by paragraphs Morals Health Secure compliance Chapeau requirements Environment Design Necessity Related Conjunction with domestic action Other Discrimination Disguised restriction on international trade

NATIONAL SECURITY EXCEPTIONS (ART. XXI) SUBPARAGRAPHS Article XXI: Security Exceptions Nothing in this Agreement shall be construed (a) to require any contracting party to furnish any information the disclosure of which it considers contrary to its essential security interests; or (b) to prevent any contracting party from taking any action which it considers necessary for the protection of its essential security interests … (iii) taken in time of war or other emergency in international relations; or (c) to prevent any contracting party from taking any action in pursuance of its obligations under the United Nations Charter for the maintenance of international peace and security.

OUTLINE General exceptions (Art. XX) National security exceptions (Art. XXI) Regional agreements / Enabling clause

REGIONAL TRADE AGREEMENTS ENABLING CLAUSE Exceptions to the MFN clause: ◦ Article XXIV of the GATT 1994 ◦ Enabling Clause Two kinds of RTAs ◦ Customs Unions ◦ Free Trade Agreements

REGIONAL TRADE AGREEMENTS ENABLING CLAUSE Customs Union: The substitution of a single customs territory for two or more customs territories, so that: (i) internal barriers eliminated: duties and other restrictive regulations of commerce are eliminated with respect to substantially all the trade between the constituent territories of the union. (ii) common external policy: substantially the same duties and other regulations of commerce are applied by each of the members of the union to the trade of territories not included in the union. (Article XXIV: 8(a) of GATT 1994) (c) ACWL

REGIONAL TRADE AGREEMENTS ENABLING CLAUSE Free Trade Area: A group of two or more customs territories in which the duties and other restrictive regulations of commerce are eliminated on substantially all the trade between the constituent territories in products originating in such territories. (Article XXIV: 8(b) of GATT 1994) (c) ACWL

REGIONAL TRADE AGREEMENTS ENABLING CLAUSE Notification of RTAs n n (c) ACWL Article XXIV: 7 of GATT 1994 and Article V: 7 of GATS require WTO Members to notify their RTA’s (Council for Trade in Goods or Council for Trade in Services). Paragraph 7 of the Understanding on the Interpretation of Article XXIV of GATT 1994 states that all notifications shall be examined by a working party which will issue a report to the Council for Trade in Goods. A Committee for Regional Trade Agreements (CRTA) was established in 1996 as part of WTO institutional structure to, inter alia, review individual agreements consistency with WTO provisions. In 2006, the General Council adopted a "Transparency Mechanism for Regional Trade Agreements".

REGIONAL TRADE AGREEMENTS ENABLING CLAUSE The Enabling Clause: n n (c) ACWL exempts Members from complying with Article I. 1 of the GATT (and only Article I: 1) authorises (and encourages) Members to grant enhanced market access to products from developing countries/least-developed countries.

REGIONAL TRADE AGREEMENTS ENABLING CLAUSE Paragraph 2 of the Enabling Clause sets out in four subparagraphs, four kinds of preferential arrangements: (a) Preferential treatment from developed to developing countries under the GSP. (b) Differential treatment with respect to non-tariff measures under the auspices of the GATT. (c) Regional/global arrangements among developing countries for mutual reduction of tariffs. (d) Special treatment of the least developed countries in the context of general or specific measures in favour of developing countries. (c) ACWL

REGIONAL TRADE AGREEMENTS ENABLING CLAUSE Notified arrangements under the Enabling Clause include: § Common Market for Eastern and Southern Africa (COMESA) § Common Effective Preferential Tariff scheme (CEPT) of the ASEAN Free Trade Area Common Market of Eastern and Southern African Countries (COMESA): § Example of an agreement establishing a customs union between 18 African countries during a transitional period of 10 years. § Article 45 states that parties to the customs union will eliminate duties and other charges of equivalent effect imposed on imports. Furthermore, all forms of non-tariff barriers will be removed. A common external tariff in respect of all goods imported into the Member States from third countries shall be established and maintained. (c) ACWL

REGIONAL TRADE AGREEMENTS ENABLING CLAUSE As stated above, in December 2006, the General Council adopted the Transparency Mechanism for RTAs. The Transparency Mechanism applies equally to arrangements under Article XXIV and arrangements under Paragraph 2 (c) of the Enabling Clause. The transparency mechanism encourages countries involved in negotiating agreements to notify them to the WTO and, once signed, to convey to the WTO information on the RTA, including name, scope and date of signature, any foreseen timetable for entry into force and other technical information. (c) ACWL