Lecture Mock Exam 14.11.13 Dr. Juan C. Ochoa Postdoctoral Fellow, - - PowerPoint PPT Presentation

Lecture Mock Exam 14.11.13

• Dr. Juan C. Ochoa

Postdoctoral Fellow, University of Oslo Faculty of Law/Norwegian Centre for Human Rights

This outline is aimed at identifying the issues to be discussed and some guidance on how to address

• them. It does not seek to provide any definitive answer.

Part 1: General approach: Steps to analyze the legality of a restriction to market access for goods and services from other countries

• 1. Which type of measure is involved?
• 2. Which is the theme of the measure?
• 3. Whether an exception applies?

Which type of measure is involved? Types Border restrictions on imports Internal restrictions Sub-types tariffs: GATT, Art II Includes:  Customs duties,  Other duties and charges Taxes: GATT, Art. III:2 Non-tariffs barriers Include:  Quantitative restrictions: GATT, Art XI  Other non-tariff barriers Regulations and requirements: GATT, Art III:4

Relevant distinction as different rules apply to different types of restrictions. Bossche, at 347: “Not always easy to distinguish an internal measure from a boarder measure when the measure is applied to imported products at the time of importation.”

• the role of an attorney: the extent to which you shall take into account potential arguments of the

defendant

• present the case to a panel: burden of proof

The case of the exam: Ad 1) – tariff reclassification a) Violation of prohibition of de facto discrimination under the MFN clause (Art. I:1 of GATT 1994)  Reduced the tariff on one of the families of catfish while maintained the level of the tariff for the family mostly imported from Elbonia  Application to the case of the test to determine whether there is a violation of the MFN

• bligation under Art. I:1 of GATT 1994:
• Whether the measure at issue is covered by Art. I.1. of GATT 1994
• Yes, a custom duty
• Whether the measure at issue confers a trade ‘advantage’
• Yes, a custom duty reduction
• Whether the concerned products are ‘like products’
• General factors to assess this:

 Physical characteristics of the products

• Concerned catfish belong to different families; so, no identical physical

characteristics  End-uses of the products;

• Identical

 Consumers’ tastes and habits regarding the products in the defending State;

• Majorian consumers are the relevant to assess this
• Satisfied: according to the information provided, both families are

considered as substitutable by consumers

 tariff classification of the products by other member States to WTO

• No information available

What to do when the first general factor is not satisfied? AB: when the products have pronounced physical differences, the complaining member has a higher burden of proof to demonstrate the likeness of the products based on other relevant factors (EC- Asbestos).

• Fourth req.: whether the advantage granted by the measure at issue is accorded

‘immediately and unconditionally to all like products concerned.’

• The advantage is not accorded ‘immediately and unconditionally to all like products

concerned’ b) Violation of Article XXVIII entitled ‘modification of schedules’ Change of tariff classification

• JCO’s assessment: this article is not breached
• change of tariff could have been carried out without changing the schedule;
• tariff for sisoridae catfish remains at the level set in the schedule of concession.

c) Violation of Article II entitled schedules of concession?

• Art. II applies only in cases of “less favourable treatment” than the one set out in the schedule of

concession

• Not worth invoking this provision

Ad 2) - Change of name of the catfish family mostly imported from Elbonia to “mud river shark” by a law Type of measure is involved: a law affecting the internal sale of the product  Applicable provision: GATT 1994, Art. III:4 a) Violation of GATT 1994, Art. III:4 Application to the case of the relevant test

• Whether the measure at issue is covered by this provision:
• Yes, a law affecting the internal sale of the product
• Whether the imported product, Sisoridae, is ‘like’ other families of catfish, particularly local
• nes
• AB: concept of ‘like products’ in Art. III:4 of GATT 1994 is broader than the concept in Art.

III:2, first sentence, because of the textual differences btw. these provisions (EC- Asbestos, 2001)

• Four general factors to assess this: the same as under the MFN obligation in Art. I of

GATT discussed above  Physical characteristics of the products  End-uses of the products  Consumers’ tastes and habits regarding the products in the defending State; and  tariff classification of the products by other member States to WTO

• Stress, again, factors b) and c)
• Whether there is less favourable treatment to the imported good
• New designation not previously known to Majorian consumers
• Negative connotations of “mud” and “shark”

b) Violation of TBT Agre., Art. 2.1 – Discrimination Applicability of TBT Agre.:

• Rules regarding terminology and marking requirements fall within the definition of technical

regulation (TBT Agre., Annex 1) Application to the case of the relevant test:

• Whether the concerned measure is a ‘technical regulation’ within the meaning of Annex 1.1. to

TBT Agreement.

• Just analysed

• Whether the imported and domestic products at issue are ‘like products’
• AB: a competition-based approach must be adopted to the determination of ‘likeness’

under Art. 2.1 of TBT Agre.; rejected the Panel’s purpose-based approach to this.  However, noted that regulatory concerns underlying a measure may be relevant to an analysis of the ‘likeness’ criteria under Art. III:4 of GATT 1994 and under Art. 2.1.

• f TBT Agre. to the extent they have an impact on the competitive relationship btw.

and among the concerned products (US - Clove Cigarettes, 2012, para. 119).  Criteria to assess the ‘likeness’ of the imported and domestic products at issue under this provision are the same as those under Art. III of GATT 1994 (US - Clove Cigarettes, 2012).

• So, it is reasonable to argue that the imported and domestic products at issue

are ‘like products’

• Whether there is less favourable treatment to the imported good
• AB considered the case-law on the term ‘treatment no less favourable’ in Art. III:4 of

GATT 1994 to be ‘instructive’ in assessing the meaning of the same term in Art. 2.1. of TBT Agre. (US - Clove Cigarettes, 2012, para. 180)

• AB: there must be a genuine relationship btw. the measure at issue and the detrimental

impact of competitive opportunities for imported products (US – Tuna II (Mexico) (2012), footnote 457 to para. 214).

• Need to analyse whether the detrimental impact on imports stems exclusively from a

legitimate regulatory distinction (US - Clove Cigarettes, 2012, para. 182; also para. 215).

• Assessment:

 New designation not previously known to Majorian consumers  Negative connotations of “mud” and “shark”

 There is a genuine relationship btw. the measure at issue and the detrimental impact of competitive opportunities for imported products  Is there a legitimate regulatory distinction? Defending State has not demonstrated this. c) Violation of TBT Agre. Art. 2.2. – unnecessary obstacle to trade Application to the case of the relevant test:  Whether the measure at issue is ‘trade-restrictive’- i.e. ‘having a limiting effect’ on trade (AB, US – Tuna II (Mexico) (2012), para. 319).

• Satisfied

 New designation not previously known to Majorian consumers  Negative connotations of “mud” and “shark”  Whether the measure at issue fulfils a legitimate objective

• Note that the third sentence of TBT Agre. Art. 2.2. lists some examples of legitimate objectives
• Defending State has not demonstrated this

 Whether the measure at issue is ‘not more trade-restrictive than necessary’ to fulfil a legitimate

• bjective
• As defending State has not demonstrated that the measure fulfils a legitimate objective, not

need to analyse this requirement

Ad 3) – Countervailing duties (‘CVD’) CVD are unlawful under GATT Art. VI, paras. 3 and 6, and the Subsidies Countervailing Measures Agre. (‘SCM’) Requirements to impose CVD under Art. 11(2) of SCM  existence of (a) a subsidy  injury within the meaning of Article VI of GATT 1994 as interpreted by this Agreement, and  a causal link between the subsidized imports and the alleged injury The same requirements seem to apply under GATT, Art. VI, paras. 3 and 6 and the SCM provides guidance for the interpretation of relevant concepts Application to the case of the relevant test:

• Is there a subsidy?

Requirements for the existence of a ‘subsidy’ under SCM  “financial contribution” or “any form of income or price support”

• Actual or potential direct transfer of funds or even when there is a ‘government practice’

involving the transfer of funds (Panel, Brazil – Aircraft, para. 7.13)  “financial contribution” or ”any form of income or price support” by a government or any public body

• 1.1(a)(1)(iv): a financial contribution by a private body is considered to be a ‘financial

contribution by a government’ when the government entrusts or directs the private body to carry out one or more of the type of functions illustrated in Art. 1.1(a)(1)(i) to (iii).

• Re. the meaning of the terms ‘entrusts’ and ‘directs’, see AB, US – Countervailing Duty

Investigation on DRAMs, para. 116  A financial contribution conferring a “benefit”

• E.g. AB, Canada – Aircraft, para. 157: a ‘benefit’ arises if the recipient has received a ‘financial

contribution’ on terms more favourable than those available to any recipient in the market (for

• ther cases, see Bossche, at. 566, note 263).
• Re. some specific types of financial contributions, see Art. 14 of the SCM Agreement

Is there a subsidy in the circumstances of the case:

• Arrangement a) – free inland transportation for catfish caught in the rivers of Elbonia’s

northern provinces

• “financial contribution” or ”any form of income or price support”

 Satisfied

• by a government or any public body

 Satisfied

• A financial contribution conferring a ”benefit”

 Satisfied

• Conclusion: arrangement a) constitutes a subsidy.

• Arrangement b) – Elbonian fishers’ organization receives support from a project supported by

the World Bank to establish a web of storage facilities to ensure that the catfish to be exported is of a high quality

• It appears that there may be a financial contribution according to SCM Art. 1;
• It may be argued that World Bank support cannot be associated with the Elbonian

government;

• Because of the finding re. req. 2, no need to analyse req. 3.
• Conclusion: it can be argued that arrangement b) does not constitute a subsidy.
• Arrangement c) – government has offered grants and low-interest loans for the farming of

catfish in southern regions of Elbonia to decrease unemployment

• “financial contribution” or ”any form of income or price support”

 Satisfied

• by a government or any public body

 Satisfied

• A financial contribution conferring a ”benefit”

 Satisfied

• Conclusion: arrangement c) constitutes a subsidy (EC- Airbus: low-interest loans are

regarded as subsidies).

• If there is a subsidy, is it ‘specific’?
• Re. arrangement b), even if it is considered as a subsidy, it is not a specific one under Art. 2 of

SCM.

• Arrangements a) and c) are specific under art. 2.2 of SCM.

• Whether the subsidy caused or threatened material injury / retard materially the establishment of a

domestic industry (Article 6 of SCM)

• Does not fall under any of the categories of Art. 6.1
• re. Art. 6.1(a) no information available
• Art. 6.3(c) and 6.5: no significant price undercutting has been demonstrated – no evidence that

the alleged subsidies reduce the price of the products exported: steady increase in export regardless of the alleged subsidies: no sudden jump. Due to increased demand.

• Conclusion: the subsidy(ies) did not cause or threaten material injury / retard materially the

establishment of a domestic industry under Art. 6 of SCM Whether there is a causal link between the subsidized imports and the alleged injury

• Even if it is assumed the existence of material injury, this cannot be attributed to the subsidies (Art.

15.5 of SCM)

• Decrease of domestic production in Majoria has been due to other factors:
• Introduction of an environmental regulation.
• a parasite.
• The fact that the market has increased also counters this view.

Part 2: Discuss the importance of statements in the preamble of the WTO Agreement when interpreting provisions of GATT. Relationship between WTO Agree. and GATT 1994: WTO Agreement, Art. II:2: “The agreements … included in Annexes 1, 2 and 3 are integral parts of this Agreement.”  Annex 1A: includes GATT 1994.  Conclusion: GATT 1994 is an integral part of the WTO Agreement Which is the importance of the preamble of the WTO Agre. when interpreting this Agree., including the agreements in Annexes 1, 2 and 3?  Starting point VCLT, Art. 31

• Para. 1. A treaty shall be interpreted in good faith in accordance with the ordinary meaning to

be given to the terms of the treaty in their context and in the light of its object and purpose. The preamble is an element of the ‘context’ of a treaty for the purpose of its interpretation:

• Basis: Art. 31, para. 2:

• 2. The context for the purpose of the interpretation of a treaty shall comprise, in addition

to the text, including its preamble and annexes ….” AB, US – Shrimp:  The Preamble of the WTO Agreement informs the ‘covered agreements’ (para. 129).  [The preambular language of the WTO Agreement] must add colour, texture and shading to our interpretation of the agreements annexed to the WTO Agreement, in this case, the GATT 1994.” (para. 153)  In interpreting the general exceptions under Art. XX of GATT 1994, noted the addition in the preamble of the WTO Agreement of a reference to sustainable development and to environmental protection