Regional Trade Agreements in the GATT/WTO

239 Pages·2017·24.54 MB·English

UvA-DARE (Digital Academic Repository)
Regional Trade Agreements in the GATT/WTO: Article XXIV and the Internal
Trade Requirement
Mathis, J.H.
Publication date
2001
Document Version
Final published version
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Citation for published version (APA):
Mathis, J. H. (2001). Regional Trade Agreements in the GATT/WTO: Article XXIV and the
Internal Trade Requirement. [Thesis, fully internal, UvA/faculteit der rechtsgeleerdheid].
T.M.C. Asser Press.
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Download date:24 Feb 2023
Regionall Trade Agreements in the GATT/WTO:
GATTT Article XXIV and the Internal Trade Requirement
ACADEMISCHH PROEFSCHRIFT
terr verkrijging van de graad van doctor
aann de Universiteit van Asmterdam
opp gezag van de Rector Magnificus
Prof.. dr J. J. M. Franse
tenn overstaan van een door het college voor prorhoties ingestelde
commissee,, in het openbaar te verdedigen in de Aula der Universiteit
opp donderdag, 31 mei 2001, te 12:00 uur
doorr James Haley Mathis
geborenn te Peoria, Illinois, U.S.A
Regionall Trade Agreements in the GATT/WTO
GATTT Article XXIV and the Internal Trade Requirement
ACADEMISCHH PROEFSCHRIFT
terr verkrijging van de graad van doctor
aann de Universiteit van Asmterdam
opp gezag van de Rector Magnificus
Prof.. dr J. J. M. Franse
tenn overstaan van een door het college voor promoties ingestelde
commissee,, in het openbaar te verdedigen in de Aula der Universiteit
opp donderdag, 31 mei 2001, te 12:00 uur
doorr James Haley Mathis
geborenn te Peoria, Illinois, U.S.A
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UBA0020M5211 | 095460
Mathis||J.H.lmr|54701000 - Kegi
Promotiecornrnissie e
Promotor:: Prof. F.W. Weiss
Rechtsgeleerdheid d
Overigee Leden: Prof. J. Jans
Prof.. P.J. Kuijper
Prof.. P. Mavroidis
Prof.. A. Nollkaemper
Prof.. N. Schrijver
Dr.. E.L.M. Völker
TableTable of Contents by Chapters:
PARTT ONE: REGIONALISM BEFORE THE GATT - MFN FOUNDATIONS 7
11 THE INTER-WAR EXPERIENCE: MFN AND PREFERENCE 9
22 PROPOSALS FOR A REGIONAL EXCEPTION: GENEVA AND HAVANA 23
PARTT TWO: REGIONALISM IN THE GATT 39
33 THE OVERSEAS ASSOCIATION: ARTICLE XXTV IN PRACTICE 41
44 SYSTEMIC ISSUES PRESENTED BY GATT REVIEWS 53
55 ARTICLE XXIV GATT PANEL PRACTICE 63
66 INTERNAL TRADE AND ECONOMIC THEORY 75
77 PART THREE: REGIONALISM IN THE WTO ,. 91
88 ORIGIN REQUIREMENTS AND ARTICLE XXTV 105
99 INTERNAL MEASURES AND ARTICLE XXIV 125
100 GATT/WTO SAFEGUARDS AND ARTICLE XXIV 137
111 ARTICLE XXIV PANEL AND APPELLATE BODY PRACTICE IN THE WTO 151
122 PART FOUR: RESTRAINING REGIONALISM IN THE WTO 175
APPENDICESS 201
REFERENCESS 211
SAMENVATTINGG 221
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DetailedDetailed Table of Contents:
ACKNOWLEDGEMENTSS IX
NOTEE ON TERMINOLOGY XI
NOTEE ON SOURCES xn
INTRODUCTIONN 1
PARTT ONE: REGIONALISM BEFORE THE GATT - MFN FOUNDATIONS 7
11 THE INTER-WAR EXPERIENCE: MFN AND PREFERENCE 9
1.11 INTRODUCTION 9
1.22 THE PARIS CONVENTION (1916) AND INTER-WAR PREFERENCES 9
1.2.11.2.1 Provisions regarding MFN at Versailles 10
1.2.21.2.2 The effect of Versailles provisions on German diplomacy 11
1.2.31.2.3 The rise of "economic nationalism" 12
1.33 MFN ISSUES PRIOR TO GENEVA NEGOTIATIONS (1947) 12
1.3.11.3.1 Non-discrimination as the central objective 12
1.3.21.3.2 The rise of the colonial preference issue 13
1.3.31.3.3 The distinction between protectionism and preference 14
1.3.41.3.4 The Atlantic Charter debate (1941) 15
1.3.51.3.5 Why the U.S. policy shifted 16
1.3.61.3.6 Conclusion on the Commonwealth Preference 17
1.44 CATEGORISING INTER-WAR PREFERENTIAL SYSTEMS 17
1.4.11.4.1 Whidden's preferential categories 17
1.4.21.4.2 Viner's preferential categories 18
1.55 CHAPTER CONCLUSION 20
22 PROPOSALS FOR A REGIONAL EXCEPTION: GENEVA AND HAVANA 23
2.11 INTRODUCTION 23
2.1.12.1.1 Relating inter-war categories to the Geneva provisions 23
2.22 ARRANGEMENTS AND DISCUSSIONS IN HAVANA 24
2.2.12.2.1 Havana Charter, Chapter III, Article 15: Economic Development and Reconstruction 25
2.2.22.2.2 Havana's resulting hierarchy of preferences 26
2.2.32.2.3 The Havana debate regarding future preferences 27
2.2.42.2.4 The introduction of a free-trade area exception 30
2.2.52.2.5 Havana conclusion 30
2.33 THE EFFECT OF HAVANA PROVISIONS 31
2.3.12.3.1 Extending customs union requirements to free-trade areas 32
2.3.22.3.2 Conclusion on the Havana provisions 34
2.42.4 OVERVIEW OF ARTICLE XXIV REQUIREMENTS: SEQUENCE OF CONDITIONS 35
2.4.12.4.1 The first test: paragraph 8 definitional requirements 35
2.4.22.4.2 The second test: paragraph 5 requirements regarding external effects 37
2.55 CHAPTER CONCLUSION: OPPOSING VIEWS OF REGIONAL INTEGRATION 37
PARTT TWO: REGIONALISM IN THE GATT 39
33 THE OVERSEAS ASSOCIATION: ARTICLE XXIV IN PRACTICE 41
3.11 INTRODUCTION 41
iv v
3.22 OVERVIEW OF THE ASSOCIATION ISSUES 41
3.33 ISSUES REGARDING'PERMITTED EXCEPTIONS' 43
3.3.13.3.1 Permitted internal restrictions and the "exhaustive list" 43
3.44 ISSUES REGARDING "SUBSTANTIALLY-ALL TRADE" 47
3.4.13.4.1 Internal-duty adjustments 47
3.4.23.4.2 The scope of the requirement as to duties and/or measures 48
3.4.33.4.3 The extent of coverage required by "substantially-all trade" 49
3.4.43.4.4 Reverse flexibility 49
3.55 CHAPTER CONCLUSION: 'COMMITMENT' AS A STANDARD FOR REVIEW 50
SYSTEMICC ISSUES PRESENTED BY GATT REVIEWS 53
4.11 INTRODUCTION 53
4.22 COVERAGE ISSUES RAISED BY LATER REVIEWS 53
4.33 DEVELOPED-DEVELOPING TERRITORIES AND REVERSE PREFERENCES 55
4.44 INSTITUTIONAL FACTORS IN THE REVIEW PROCESS 58
4.4.14.4.1 The earliest decisions 58
4.4.24.4.2 The power to make decisions and the power to block 59
4.4.34.4.3 The requirement of consensus 60
4.55 CHAPTER CONCLUSION: THE ARTICLE XXTV PARADOX 61
ARTICLEE XXIV GATT PANEL PRACTICE „ 63
5.11 INTRODUCTION 63
5.22 EEC -MEMBER STATES' IMPORT REGIMES FOR BANANAS, DS32/R, 3 JUNE 1993 64
5.2.15.2.1 Factual elements and terms of reference 64
5.2.25.2.2 Party Arguments, Articles I, XXIV and Part IV 65
5.2.35.2.3 Panel findings on the Article XXIV Issues 67
5.33 THE SECOND CASE: "EEC-IMPORT REGIME FOR BANANAS", DS38/R, 11 FEB. 1994 68
5.3.15.3.1 Party arguments 68
5.3.25.3.2 Second Panel findings 69
5.44 CHAPTER CONCLUSION: THE LEGAL EFFECT OF NON-DECISIONS 71
INTERNALL TRADE AND ECONOMIC THEORY 75
6.11 INTRODUCTION 75
6.22 THE DIVERGENT VIEWS OF LAW AND ECONOMY 76
6.2.16.2.1 Viner's Customs Union Theory 76
6.2.26.2.2 Dam's interpretation of Article XXIV requirements 77
6.2.36.2.3 Implications for the review process and for MFN 78
6.2.46.2.4 The modern test 79
6.2.56.2.5 Does GATT Article XXIV accommodate an economic test? 80
6.2.66.2.6 Paragraph 8 requires a legal construction 81
6.2.76.2.7 Paragraph 5 accommodation of economic criteria 82
6.2.86.2.8 The implications of a flexible approach 82
6.33 JUSTIFYING INTERNAL TRADE 84
6.3.16.3.1 A first justification: avoiding trade-diverting preferences 84
6.3.26.3.2 A second justification: preventing proliferation 85
6.3.36.3.3 Challenging the traditional justifications 86
6.3.46.3.4 A third justification: containing national prerogative 86
6.3.56.3.5 Positive and negative regional preferences 87
V V
6.3.66.3.6 Preference and dependency 87
6.44 PART Two CONCLUSION: THE BASIS OF MFN LEGITIMACY 89
77 PART THREE: REGIONALISM IN THE WTO 91
7.11 INTRODUCTION: A QUESTION FOR MODERN REGIONALISM 91
7.1.17.1.1 The character of the new regionalism 91
7.1.27.1.2 Modern regional dependency 92
7.1.37.1.3 The influence of investment 93
7.1.47.1.4 The remaining trade barriers 93
7.1.57.1.5 The political factor 93
7.1.67.1.6 The factor of size 94
1212 A WTO 'WAKE-UP' CALL 94
7.2.17.2.1 Committee on Regional Trade Agreements (CRTA) 94
7.2.27.2.2 The focus on U.S. and E U regional activities 95
7.2.37.2.3 Large-country diplomacy: what constraints remain? 96
7.33 NEW-WORLD REGIONALISM 97
7.3.17.3.1 The focus on transition economies 98
7.3.27.3.2 EC initiatives 98
7.3.37.3.3 U.S. initiatives 99
7.3.47.3.4 Regional competitions 100
7.3.57.3.5 The question of "open regionalism" 101
7.44 EXTENDING GATT RULES TO REGIONAL MEMBERS 102
7.4.17.4.1 Chapter outlines for Part Three 103
88 ORIGIN REQUIREMENTS AND ARTICLE XXIV 105
8.11 INTRODUCTION: THE CHOICE OF A LEGAL FRAMEWORK 105
8.22 ORIGIN RULES IN PREFERENTIAL FORMATIONS, BILATERAL COVERAGE 107
8.2.18.2.1 The evolution of EEC preferential rules 108
8.2.28.2.2 Origin rules and effects upon internal trade 109
8.33 ORIGIN DESIGNATION AND AREA DEFINITION 112
8.3.18.3.1 Donor country (bilateral cumulation) 112
8.3.28.3.2 Area constructions, diagonal or full cumulation 113
8.3.38.3.3 The Multilateral European Area proposals (1957) 114
8.3.48.3.4 Diagonal forms in early European regional arrangements 116
8.3.58.3.5 The unveiling of the EEC-EFTA rules in the GATT 118
8.3.68.3.6 Development of the European diagonal area 119
8.44 CHAPTER CONCLUSION: AN ARTICLE XXIV REQUIREMENT FOR ORIGIN RULES AND CUMULATIVE
SYSTEMSS 121
99 INTERNAL MEASURES AND ARTICLE XXIV 125
9.11 INTRODUCTION 125
9.22 THE APPLICABILITY OF GATT ARTICLES TO REGIONAL MEMBERS 125
9.2.19.2.1 Two views of Article XXIV's exceptional nature 126
9.2.29.2.2 The example of sectoral agreements 127
9.33 BILATERAL MODIFICATIONS IN GATT (PRE-WTO) PRACTICE 127
9.3.19.3.1 bilateral safeguards 127
9.3.29.3.2 Article XI measures 128
9.44 VIENNA CONVENTION (VCLT) AND BILATERAL MODIFICATIONS IN WTO 129
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9.4.19.4.1 The Vienna Convention on Law of Treaties, Article 41 129
9.4.29.4.2 Permissive Inter se agreements in WTO and GATT 131
9.4.39.4.3 Conclusion on permissive modifications in the GATT. 133
9.59.5 THE SCOPE OF THE ARTICLE XXIV EXCEPTION 135
9.5.19.5.1 Article XXIV's stated objective 135
9.66 CHAPTER CONCLUSION 136
100 GATT/WTO SAFEGUARDS AND ARTICLE XXIV 137
10.11 INTRODUCTION 137
10.22 GATT-1947 ARTICLE XIX PROVISIONS 137
10.33 GATT-1994 AGREEMENT ON SAFEGUARDS 138
10.44 REGIONAL SAFEGUARD MEASURES 139
10.4.110.4.1 Introduction 139
10.55 EEC SAFEGUARD REGIMES-CENTRAL AND EASTERN EUROPE 140
10.5.110.5.1 CMEA and EEC safeguards in the GATT. 140
10.5.210.5.2 The general Community safeguards regime 141
10.5.310.5.3 Safeguards in (CEEC) Interim Agreements for Association 142
10.5.410.5.4 Procedural variations 143
10.5.510.5.5 Europe Agreement safeguards conclusion 144
10.66 NAFTA COUNTERVAILING DUTY ACTION: CANADIAN SOFTWOOD 145
10.6.110.6.1 Introduction 145
10.6.210.6.2 The U.S-Canada measure according to GATT rules 146
10.6.310.6.3 Article XIX notification of the measure 147
10.6.410.6.4 Conclusion on the Canada softwood safeguard measure 148
10.77 CHAPTER CONCLUSION: SAFEGUARDS AND REGIONALISM 149
111 ARTICLE XXTV PANEL AND APPELLATE BODY PRACTICE IN THE WTO 151
11.11 INTRODUCTION 151
11.22 TURKEY - RESTRICTIONS ON IMPORTS OF TEXTILE AND CLOTHING PRODUCTS 152
11.2.111.2.1 Association Agreement, Turkey-EC customs union 152
11.2.211.2.2 Measures undertaken 153
11.33 PRELIMINARY ISSUES BEFORE THE PANEL 153
11.3.111.3.1 Compelled joinder of parties, 153
11.3.211.3.2 Attribution of measures, customs union legal personality 153
11.3.311.3.3 Panel jurisdiction to investigate Article XXIVmeasures 154
11.44 VIOLATIONS OF GATT ARTICLE XI, XIII AND 2.4 ATC 155
11.55 PARTY ARGUMENTS AND PANEL TREATMENT OF ARTICLE XXTV 155
11.5.111.5.1 General interpretative framework 155
11.5.211.5.2 Panel overview of Article XXIV. 156
11.5.311.5.3 Treatment of Article XXIV: 5(a) 157
11.5.411.5.4 Treatment of ArticleXXIV.8 158
11.5.511.5.5 Additional considerations by the Panel 161
11.66 WTO, TURKEY - RESTRICTIONS ON IMPORTS OF TEXTILE AND CLOTHING PRODUCTS, REPORT OF THE
APPELLATEE BODY 162
11.6.111.6.1 Panel findings and issues appealed 162
11.77 APPELLATE BODY FINDINGS AND SUPPORTING ARGUMENT 163
11.7.111.7.1 The role of the chapeau of Article XXIV: 5 164
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11.7.211.7.2 The definitional requirements of Article XXIV: 8 164
11.7.311.7.3 The proviso requirements of Article XXIV:5(a) 165
11.7.411.7.4 The 'purposive' requirement of Article XXIV: 4 165
11.7.511.7.5 Appellate Body conclusion on the Article XXIV:5 chapeau 166
11.7.611.7.6 Turkey Appellate Body Ruling on the scope of review 166
11.88 COMMENT AND CONCLUSION ON THE TURKEY REPORTS 167
11.99 ARGENTINA - SAFEGUARD MEASURES ON IMPORTS OF FOOTWEAR, REPORT OF THE APPELLATE
BODYY 169
11.9.111.9.1 Introduction and factual background 169
11.9.211.9.2 Issues presented on appeal relating to Article XXIV 169
11.100 APPELLATE BODY TREATMENT OF ARTICLE XXIV ISSUES 171
11.10.111.10.1 Whether measures were attributable to Argentina Ï71
11.10.211.10.2 The application of Article XXIV to the Argentina measures 173
11.111 CONCLUSION ON THE ARGENTINA REPORT 174
122 PART FOUR: RESTRAINING REGIONALISM IN THE WTO 175
12.11 INTRODUCTION 175
12.22 CRTA SYSTEMIC ISSUES 176
12.2.112.2.1 Interaction between regional trade agreements and the multilateral rules - generally 177
12.2.212.2.2 Relationship between article XXIVprovisions 178
12.33 INDIVIDUAL ARTICLE PROVISIONS 181
12.3.112.3.1 ArticleXXIV:8 (a) and (b), "substantially-all trade" 181
12.3.212.3.2 Relationship oflisted-article exceptions as to the scope of SAT. 183
12.44 PARAGRAPH 8 AND THE EXHAUSTIVE LISTING ; 184
12.4.112.4.1 The permissive v. obligatory construction 188
12.4.212.4.2 Safeguards Conclusion-parallelism and the exhaustive list 190
12.55 ORCSANDORRCS 191
12.5.112.5.1 Overlapping regional systems 194
12.66 INSTITUTIONAL CONSIDERATIONS 195
12.77 CONCLUSION: EC REGIONALISM IN THE NEW MILLENNIUM 196
APPENDICESS 201
APPENDIXX ONE: GATT ARTICLE XXIV 201
APPENDIXX Two: GATT-1994 UNDERSTANDING ON THE INTERPRETATION OF ART. XXIV 204
APPENDIXX THREE: COMMITTEE ON REGIONAL TRADE AGREEMENTS ANNUAL (1999) REPORT (EXTRACTED)
207 7
REFERENCESS 211
BOOKSS AND JOURNALS: 211
EUROPEANN COMMUNITY DOCUMENTS: 217
GATT/WTOO DOCUMENTS AND PUBLICATIONS: 218
GATT-47GATT-47 Reviews of notified regional trade agreements: (listed by chronology) 218
OTHERR ORGANISATION DOCUMENTS AND PUBLICATIONS: 219
SAMENVATTINGG 221
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