Institution

Univ. - Prof. Dr. Werner Meng, Europa Institut, Saarland University, Germany 1

Institution

WTO Law

http://127.0.0.1:81/BeckServer/bib/default.asp?typ=home


International Organization

The WTO isAn international (intergovernmental) organizationWith Members (not only states) (Art. XI, XII WTOA)With its own legal personality (Art. VIII WTOA)With organs (Art. IV, VI WTOA)With mainly ancillary functions, that means:

No supervisory role (TPRM?)Almost no lawmaking powers



International Economic Regime

Trade Pillar WTO 1 state/1 vote

EU, member dominant actor

Financial Pillar

Bretton Woods,

IFIs + BIS

1 dollar/1 vote

EU indirect role (MS on the board)

Normative Pillar

ILO, MEAs, WHO, FAO,

Codex Alimentarius ITU, WIPO...

1 state/1 vote

EU Member, participant or

observer



Functions of the WTO (Art. III WTOA)Facilitate the implementation, administration and operation, and further the objectives, of this Agreement and of the Multilateral Trade Agreements, Framework for the implementation, administration and operation of the Plurilateral Trade Agreements. Forum for negotiations among its Members concerning their multilateral trade relations in matters dealt with under the MTAs and the PTAsForum for further negotiations among its Members concerning their multilateral trade relations, and a framework for the implementation of the results of such negotiations, as may be decided by the Ministerial Conference. Administration of the DSU and the TPRMCooperation with the International Monetary Fund and with the International Bank for Reconstruction and Development and its affiliated agendies with a view to achieving greater coherence in global economic policy-making



Institutional Structure (Art. IV WTOA)

MINISTERIAL CONFERENCE

Committees Committees

Council for Trade in Goods

Council for Trade in Services

TRIPS Council

Committees

Working Groups

GENERAL COUNCILTPRB

DSB

Appellate Body

Panel

AB Secretariat

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WTO WTO Secretariat



Organs of the WTO

Council of MinistersSuperior Plenary

Organ

CouncilPermanent Plenary

Organ

General Council

SubsidiaryCouncils and Committees

Dispute Settlement Body

Appellate Body Panels

Trade Policy Review Body

Director GeneralWTO Secretariate

Geneva



Institutional Features in the WTOA

The Institutional Structure: Art. IV (Council), VI (Secretariat) 70 bodies, 34 standing bodies

The Relations with other intl. Organizations (Art. V)The WTO as an institution in public international law, (Art. VIII)Voting (Art. IX.1)Authentic interpretation (Art. IX.2)Waivers (Art. IX.3, 4 WTOA/XXV GATT, Understanding)Amendments (Art. X)Membership (Art. XI, XII, XV)Continuity with GATT (Art. XVI.1)



The Bretton Woods Link

Bringing together the two sides of international economic exchange together

“With a view to achieving greater coherence in global economic policymaking, the WTO shall cooperate, as appropriate, with the International Monetary Fund and with the International Bank for Reconstruction and Development and its affiliated agencies.” (Art. III.5 WTOA)

II.2 Marrakech Declaration:: "2. Ministers confirm their resolution to strive for greater global coherence of policies in the fields of trade, money and finance, including cooperation between the WTO, the IMF and the World Bank for that purpose. " Decision on achieving greater coherence in global economic policy-makingDeclaration on the Relationship of the WTO with the IMF: same provisions as in the old GATT times

Agreements between WTO and IMF and IBRD (1996)Mutual observer status



Trade and Currency - 1The crisis in the 1920s showed the explosiveness of currency manipulations for protectionist reasonsDevaluation decreases the price of exports

Exchange rate may be manipulated by buying foreign currencies with own money by quotas for import and export of own or foreign currencies (reducing demand or supply)By pegging or fixing exchange rates

Danger of manipulations in 2010Dispute about Chinas peg and later purchases of USDOctober 2010: imminent currency war. G 20 in Korea lukewarm promises

What is the limit between normal intervention and protectionist manipulation?



Trade and Currency - 2

See art. II.6, duties and chargesVII.4, XIV.1, 3, 5, XV: exchange and notes nr. 2 ad art. VI paras. 2 and 3, nr. 1 ad art. VIII, ad art. XV.4 GATT

Are currency manipulations prohibited subsidies or other protectionist non-tariff trade barriers (NTBs)?Who decides about a violation? WTO or IMF? See art. XV GATT



Coordination with the IMFCoordination (XV.1)

Exchange rate policy of the FundTrade measures in the jurisdiction of the WTO

Consultation in full (XV.2)WTO has to accept

Factual findings of the IMFDetermination of lawfulness by the IMF

According to its own primary lawAccording to a special exchange arrangement within the WTO

Determination of a reserve position of a MSUnder Art. XII.2 (a)Under Art. XVIII.9

Agreement on the procedures for consultation

Report of Members exchange activities not justified by GATT (XV.5)



Monetary duties of Members of the WTOXV.4: no frustration

Of the intent of GATT by exchange actionOf the intent of the IMFA by trade action

WTO members that are not IMF members (XV.6)Have either to join the IMF orTo enter into a special exchange arrangement with the WTO

Also if a member is leaving the IMF

Special exchange arrangements are part of the WTO obligations (XV.6 and 7)

Securing that WTO obligations will not be frustrated by an exchange actionGenerally not more restrictive than IMF obligations

Duty of information of the WTO according to the general scope of art. VIII.5 IMFA



Exchange arrangements

IMF exception (XV.9 GATT): exchange controls that are always lawful

If in conformity with the IMF primary law or a special agreement with the members of the WTO

WTO exception (XV.9 GATT): restrictions or controls of exports or imports of goods are lawful

If they serve the exchange controls or restrictions permitted under arts. XI, XII, XIII and XIV and only shall make such controls or restrictions effective



Relations with other International Organizations

Cooperation agreements with e.g. WIPO, UNCTAD2003: Memorandum of understanding with UNCTAD

Integrated Framework for Trade-related Technical Assistance (IF)Joint Integrated Technical Assistance Programme (JITAP)

International Trade Centre WTO/UNCTAD

Memoranda of Understanding with other IosActive and passive observation statusesGuidelines for the relations with NGOs



Original Members of the WTO

Original Members (Art. XI WTOA)New Members (Art. XII WTOA)

States and Customs territories (Art. XXIV GATT)Application, Negotiations with all MSAdmission by 2/3 majority in the Ministerial Conference

At present: 153 Members (2008)



New Members of the WTO

New Members (Accession, XII WTOA)Any StateOr customs territory (XXIV 1,2 GATT) possessing full autonomy in the conduct of its external commercial relations and of the other matters regulated in WTOA and the MTAsOn Terms agreed between it and the WTOMay accede to the WTO and the MTAs together (single undertaking approach)If admitted by the Ministerial Conference by 2/3rds majority



Accession Procedure

ApplicationEstablishment of a working partyExamination of the foreign trade regime of the applicantBilateral negotiations about tariff concessions et al.Agreement on the report of the Working PartyAdmission by the Ministerial Conference by 2/3rds majorityAgreement on a Decision and a Protocol setting out the terms of the acessionEntry into force



Divergent obligations

In acceding the WTO

Candidates may accept more obligations (GATT plus)

Or less (GATT minus)



WTO Plus / WTO MinusArt. XII WTOA: conditions of accession are to be negotiated

Obligations may go beyond or below the standard of incumbent members of the same status of development

Because of the balance of obligations and rightsNot subject to the unilateral concessions in the schedule

WTO Plus, e.g.Obligations to privatize enterprisesObligations to join a PTA (Aircraft or GPA)Obligation not to invoke special rules for developing countries

WTO MinusExtended periods of transition



Entry into Force of the AccessionNote by the Secretariat (WT/ACC/1 ) of March 24, 1995“Following the General Council/Ministerial Conference's adoption of the Report of the working party and the approval of the draft Decision by a two-thirds majority of the WTO Members' positive vote, the Protocol of Accession enters into force thirty days after acceptance by the Applicant, either by signature or by deposit of the Instrument of Ratification, if Parliamentary approval is required.“But in fact: Consensus – single exception: Ecuador

Different in the old GATT times (like for waivers)

http://docsonline.wto.org/GEN_highLightParent.asp?qu=&doc=D:/DDFDOCUMENTS/T/WT/ACC/1.WPF.HTM&curdoc=21&popTitle=WT/ACC/1http://docsonline.wto.org/GEN_highLightParent.asp?qu=&doc=D:/DDFDOCUMENTS/T/WT/ACC/1.WPF.HTM&curdoc=





Withdrawal

XV WTOA: WithdrawalWritten notice to be received by the DG of the WTOEffective 6 months thereafterApplicable necessarily to the WTOA and all the MTAs

Expulsion not foreseen, except for non-acceptance of an amendment (X.3 ?)



Membership Obligations

Objective obligations „Principles“Subjective concessions (but extended trough MFN)Pacta sunt servanda

Article 26 VCLT“Every treaty in force is binding upon the parties to it and must be performed by them in good faith.”

Art. XVI.4 WTOA: Domestic law changes promised“4. Each member shall ensure the conformity of its laws, regulations and administrative procedures with its obligations as provided in the annexed Agreements.”

Financial Contributions (Art. VII.4 WTOA)



Membership Rights

Mirroring the obligations of the other MSCounterpart for the „loss of their own sovereignty“Rule of Law brings relative securityAdjudication and enforcement

ParticipationDecisionmakingNegotiations, but:Capacity Problems



Decisionmaking – Consensus, MajorityArt. IX WTOA

Rule: consensus (pros and cons ?): flexibility, democracy, protection of minorities?

Not in the GATT for voting on waivers and accessionsOn demand: majority voting, one state - one vote (EU 27)Special procedures

DSB (Art. 2.4 DSU, but „reverse consensus“)Authoritative interpretations (Art. IX.2 WTOA)Waivers (Art. IX.3 WTOA, Art. XXV GATT)Accessions (Art. XII.2 WTOA). Majority: EcuadorAmendments (Art. X.1, 2 WTOA) Budget (Art. VII.3 WTOA)

Except as otherwise provided, where a decision cannot be arrived at by consensus, the matter at issue shall be decided by majority voting. (exceptions, by Rules of Procedure)



The Consensus Principle

Art. IX WTOA1.The WTO shall continue the practice of decision-making by consensus followed under GATT 1947.[1] Except as otherwise provided, where a decision cannot be arrived at by consensus, the matter at issue shall be decided by voting. At meetings of the Ministerial Conference and the General Council, each Member of the WTO shall have one vote. …. . Decisions of the Ministerial Conference and the General Council shall be taken by a majority of the votes cast, unless otherwise provided in this Agreement or in the relevant Multilateral Trade Agreement.

[1] The body concerned shall be deemed to have decided by consensus on a matter submitted for its consideration, if no Member, present at the meeting when the decision is taken, formally objects to the proposed decision.



Non-attendance ?DECISION-MAKING PROCEDURES UNDER ARTICLES IX AND XII OF THE WTO AGREEMENT Statement by the Chairman as agreed by the General Council on 15 November 1995 On occasions when the General Council deals with matters related to requests for waivers or accessions to the WTO under Articles IX or XII of the WTO Agreement respectively, the General Council will seek a decision in accordance with Article IX:1. Except as otherwise provided, where a decision cannot be arrived at by consensus, the matter at issue shall be decided by voting under the relevant provisions of Articles IX or XII. The above procedure does not preclude a Member from requesting a vote at the time the decision is taken. Consequently, if any Member has a particular problem with a proposed decision regarding a request for a waiver or an accession to the WTO, it should ensure its presence at the meeting in which this matter will be considered. The absence of a Member will be assumed to imply that it has no comments on or objections to the proposed decision on the matterWT/L/93 of 24 November 1995



EU Membership

The "European Communities" are member of the WTO (Art. IX WTOA) – succeeded by the EU?

See art. I TEU last sentenceBut in practice: identity assumed

• WTO-Agreements are mixed agreements, therefore parallel membership of EU and its members



Voting - Art. XI WTOA:Where the European Communities exercise their right to vote, they shall have a number of votes equal to the number of their member States[2] which are Members of the WTO.

[2] The number of votes of the European Communities and their member States shall in no case exceed the number of the member States of the European Communities.

Compare that e.g. with China and the US



EU as a „Major Player“ in the WTO

The „Quad“: USA, EC, Japan, CanadaThe G-7, G-8, G-10, G-20: EU-MS + EU EU is always among the biggest importers and exporters in the world

Bundling the economic power of 27 (and soon even more) MS

Economically the EU is the only entity with capacity, influence and strength comparable to the US and able to take the lead

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Special Nature of the EU

The EU is – under GATT law – a customs union that fulfils the requirement of Art. XXIV.8 a GATT (cf. the understanding of the Uruguay Round)

But with a special membership status

Each accession to the EU brings the necessity to compensate third states for the loss they suffer in terms of MFN status (Art. I GATT) and possibly in the bindings of Art. II GATT (see art. XXIV.6 GATT)Preferential Agreements with developing countries and association agreements with third countries, especially the candidates for accession most often are not covering „substantially all trade“ and thus need a waiver under art. XXV GATT (and an understanding of the Uruguay Round)

Cf. the Cotonou Agreement

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Policy Concepts

Preamble no. 5DESIRING to contribute, by means of a common commercial policy, to the progressive abolition of restrictions on international trade,

Art 206 TFEUBy establishing a customs union in accordance with Articles 28 to 32, the Union shall contribute, in the common interest, to the harmonious development of world trade, the progressive abolition of restrictions on international trade and on foreign direct investment, and the lowering of customs and other barriers.



WTO Agreements as mixed agreements

Common commercial policy was always an exclusive power – now art. 3.1 e TFEU

Enlarged scope (art. 206/207)

Exclusive power to conclude international treatiesBefore Lisbon: ERTA – doctrine (22/70 [1971] ECJ 263) – mirroring powerNow 3.2 TFEU

Before Lisbon, the MS had shared competences in most parts of GATS and TRIPS, therefore mixed agreements (opinion 1/94, [1994] ECR I-5267)

"close cooperation between the Member States and the Community institutions, both in the process of negotiation and conclusion and in the fulfilment of the commitments entered into.”



Sharing of competences in practice

Art. 133 – Committee (now Art. 207 TFEU): decision in

the EU Council if necessary – unitary representation

needs consensus (in all matters, irrespective of who

has the internal power)

Coordinated position of the EU and the member states

is represented by the Commission casting 27 votes

Joint and several liability – Commission represents

Member States in DS procedures



EC in the WTO Dispute Settlement

Since the WTO Agreement System has been joined by the ECs and its Member StatesAnd since they assume joint and several liability for compliance with the rules of WTO lawthe respondent parties of DS procedures are

Sometimes the ECsSometimes one member state (in areas of EC law or own national law), e.g. DS 131 and DS 173 US vs. FranceSometimes several member states (in areas of EC law or own national law) e.g. DS 316 EC and certain member States — Large Civil Aircraft, US vs. European Communities; France; Germany; Spain; United Kingdom (Airbus), parallel DS 347With the Commission coordinating the Community (or: other Member States‘) interests in the MS cases

Retaliation coversSometimes community wide branchesSometimes economic sectors of particular importance for one or several member states

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Common Commercial Policy

Art. 207.1 TFEUThe common commercial policy shall be based on uniform principles, particularly with regard to

changes in tariff rates, the conclusion of tariff and trade agreements relating to trade in goods and services, and the trade related aspects of intellectual property, foreign direct investment, the achievement of uniformity in measures of liberalisation, export policy and measures to protect trade such as those to be taken in the event of dumping or subsidies.

……



Formalities

Art. 207.3 -> 218 TFEUExclusive competence

Conclusion: council decision (218.6) partly together with the EP

Also: adoption in the legal order of the EU

MS remain members of the WTO if this is not formally changed

Next amendment?

EU represents the Union and the members like until now

Cf. Also art. 220 as representation of the EU



Free Trade Agreements/Customs Unions

Bilateral Agreements with Switzerland Customs Unions e.g. with Andorra, San

Marino and Turkey Free Trade Agreements with EEA,

Euromed, Mercosur (in negotiation), Mexico, South Africa



Regional Agreements

EEA Agreement (European Economic Area)NorwayIcelandLiechtenstein



Third Country Trade Relations

Key EU bilateral agreements include:

• Economic Partnership Agreements in negotiation with ACP

countries (Cotonou)

• Partnership and Cooperation Agreements with Russia and

Ukraine

• EUROMED Agreements

• Particular relations to candidates for accession, e.g. Croatia



Unilateral Preference SystemsGeneral System of Preferences (GSP) - the classical instrument for fostering development is by granting tariff preferences. The EU's GSP grants products imported from GSP beneficiary countries either duty-free access or a tariff reduction depending on the sensitivity of the product and the GSP arrangement enjoyed by the country concerned.

“Everything But Arms” initiative (EBA) - EBA is a special GSP arrangement for the least developed countries. EBA grants duty-free access to imports of all products from LDCs without any quantitative restrictions, except to arms and munitions.

Asymmetrical preferences e.g. for the Balkans and Moldova, with the aim of ensuring peace, stability, freedom and economic prosperity in the region (cf. “Wider Europe”).


Institution

Documents

iv council

saarland university

europa institut

werner meng

multilateral trade relations

multilateral trade agreements

plurilateral trade agreements

vthe wto