ITLP - Notes2
ITLP - Notes2
ITLP - Notes2
How to identify if a foreign country is Dumping Developing Countries exempted from Prohibited
It provides three methods to calculate a product’s Subsidies (subsidizing exports)
“normal value”. Subsidies may play an important role in developing
1. The main one is based on the price in the countries and in the transformation of centrally-
exporter’s domestic market. When this planned economies to market economies. Least-
developed countries and developing countries with form regional agreements move to genuinely free
less than $1,000 per capita GNP are exempted trade among themselves and provide adequate
from disciplines on prohibited export subsidies. compensation for any damage done to the trade
interests of other WTO members.
Emergency Import Restriction
A WTO member may restrict imports of a product Example: North American free trade agreement
temporarily (take “safeguard” actions) if its (NAFTA), ASEAN, EU, PICTA )The Pacific Island
domestic industry is injured or threatened with Countries Trade Agreement)
injury caused by a surge in imports. Here, the injury
has to be serious. Safeguard measures were always Types/Levels of Reginal Trade Agreements
available under GATT (Article 19). 1. Preferential trade area – lowers trade
barriers but do not eliminate them. This is
Kimberley Process – example of a legitimate use not allowed by WTO since the trade barriers
of quantitative restriction to regulate conflict/blood are not eliminated
diamonds. 2. Free Trade Area – trade barriers are
eliminated between two countries.
Custom Duties/Tariff - Customs Duty is a tax 3. Customs Union – member countries in this
imposed on imports and exports of goods. Custom RTA adopt common trade barriers with non-
duties on merchandise imports are called tariffs. member countries (common external tariff)
4. Common Market -customs union in which
TARIFF – A tariff is a tax on imports or exports, labor and capital markets are integrated into
while it is a way by which a State can obtain a regional market. Any restrictions on
revenues, it also means to affect competition and movement of labor and capital removed.
trade. As an example, excess tariffs imposed solely
on foreign products would give the domestic Notification Requirement Members must notify
industry for that product an advantage. all quantitative restrictions in force to the WTO.
When a Member introduces or maintains a
Tariff Concessions/Bindings – result of the quantitative restriction, it must ensure that it
negotiations to reduce tariff rates. For those is administered in a non-discriminatory
products for which such a tariff binding exists, the manner, including the provisions of Article
custom duties applied may no longer exceed the XIII of the GATT. It must also notify them
level at which they were bound. to the WTO at regular intervals and indicate,
in its opinion, what WTO provision would
Quantitative Restrictions - Specific limits on the allow it to introduce or maintain such
quantity or value of goods that can be imported. It measure.
refers to limits, or quotas on the physical amounts
of commodities that can be imported or exported. Allowed Quantity Restrictions even w/o
Notification
Regional Trading Agreements – agreement 1. Sanitary and phytosanitary (SPS) are
among groups of countries where they have agreed measures which to protect human, animal or
to reduce trade barriers among themselves. By their plant life or health from risks arising from
very nature, such arrangements favor imports from from risks arising from additives, toxins and
members of the grouping, and discriminate against contaminants in food and feed.
imports from other countries. The rules of Article 2. Technical Barriers to Trade (TBT) (Old
XXIV are designed to ensure that countries which TBT’s don’t need QR Notification but
introduction of new TBT’s require domestic over imported products are, as a
Notification) - recognizes WTO members' rule, prohibited.
right to implement measures to achieve
legitimate policy objectives, such as the Other subsidies are not prohibited but when
protection of human health and safety, or they cause adverse effects to the interests
protection of the environment as long as the of other countries, the subsidizing country
procedures are non-discriminatory and do should withdraw the subsidy or take
not create unnecessary obstacles to trade. appropriate steps to remove the adverse
3. Technical Import Licensing - Import effects. If the subsidizing country fails to do
licensing can be defined as administrative so, countermeasures commensurate with the
procedures requiring the submission of an degree and nature of the adverse effect may
application or other documentation (other be authorized.
than those required for customs purposes) to
the relevant administrative body as a prior Non-discrimination is a key concept in WTO law
condition for importation of goods. that that requires a country to grant favorable
4. Tariff Rate Quota (TRQ) – Combines treatment not just to one country but to all other
import quota and tariff to regulate imports. countries that are members of WTO. It prohibits a
TRQ’s does not restrict the quantity of country from discriminating other countries;
imported products. It does not set any limit
on the quantity or value of a product that the national treatment requires a WTO Member to
may be imported, but instead applies a treat equally foreign and domestic products, It
different, normally higher, tariff rate to that prohibits a domestic country from discriminating
specific product. foreign countries in local trade.
Dumping, i.e., to bring a product onto the market of Non-discriminatory treatment between
another country at a price less than the normal value imported and domestic products
of that product, is condemned but not prohibited in
WTO law. Most favored nation (MFN): treating other
countries equally in trade. Under the WTO
However, when the dumping causes or agreements, countries cannot normally discriminate
threatens to cause material injury to the between their trading partners.
domestic industry of a country, WTO law
allows that country to impose anti-dumping Non-discriminatory treatment between
duties on the dumped products in order to products of WTO members
offset the dumping. The relevant rules are
set out in Article VI of the GATT 1994 and Market access means the set of rules regarding
the Anti-Dumping Agreement. tariffs, quantitative restrictions and non-tariff
barriers agreed by members for the entry of specific
Subsidies, i.e., a financial contribution by a goods into their markets.
government or public body that confers a benefit,
are subject to a complex set of rules. Principle of Transparency
The obligation of members to publish all trade laws,
Some subsidies, such as export subsidies regulations and judicial decisions in such a manner
and subsidies contingent upon the use of that it shall inform all governments and traders so
that they can familiarize themselves with it. The
principle is important for its main goal is to ensure
effective access to foreign markets.
Principle of Justiciability
The obligation of Members to maintain or institute
judicial, arbitral or administrative tribunals for the
purpose, inter alia, of the prompt, objective and
impartial review of administrative decisions
affecting trade in goods or services is essential to
guarantee security and predictability in international
trade. They must guarantee that all the measures of
general application that affect said goods and
services are to be handled in a reasonable, objective,
and impartial manner.
Categories of Subsidies
9. Prohibited Subsidies - subsidies that
require recipients to meet certain export
targets, or to use domestic goods instead of
imported goods. They are prohibited
because they are specifically designed to
distort international trade and are therefore
likely to hurt other countries’ trade. Two
kinds;
a. Export Subsidies
b. Local content Subsidies General Exceptions to key WTO law
principles.
The GATT itself contains many exceptions to XIV of the GATS, Members may take
the key principles. Some of the exceptions are measures that are “necessary”, for
general in nature such as those referring to example, to protect public health,
public morals, public health, currency provided the application of these
protection, products of prison labor, national measures does not constitute arbitrary
treasures of historic, artistic or archeological or unjustifiable discrimination or a
value, and protection of exhaustible natural disguised restriction on international
resources. There are also security exceptions trade. Article XXI of the GATT 1994 and
and regional trade exceptions. Of special Article XIV bis of the GATS allow
significance for the Philippines are the Members to take measures to protect
exceptions for developing nations. national security interests. It also allows
the taking of measures to give effect to
Exceptions to the Non-Discrimination UN mandated trade embargoes or
principle sanctions.