|
ON THIS PAGE:
> Paragraph 1. See also Burden of Proof,
Defences and Exceptions (B.3.3); Request for the Establishment of a Panel,
Article 6.2 of the DSU
— Claims and legal basis of the complaint (R.2.2)
> Paragraph 2(a)
> Paragraph 2(d)
> Paragraph 3(a)
> Paragraph 3(c)
|
E.1.1
Paragraph 1.
See also Burden of Proof, Defences and Exceptions (B.3.3);
Request for the Establishment of a Panel, Article 6.2 of the DSU —
Claims and legal basis of the complaint (R.2.2) back to top
E.1.1.1 EC — Tariff
Preferences, para. 90
(WT/DS246/AB/R)
… By using the word “notwithstanding”,
paragraph 1 of the Enabling Clause permits Members to provide “differential
and more favourable treatment” to developing countries “in spite
of” the MFN obligation of Article I:1. Such treatment would
otherwise be inconsistent with Article I:1 because that treatment is
not extended to all Members of the WTO “immediately and
unconditionally”. Paragraph 1 thus excepts Members from complying
with the obligation contained in Article I:1 for the purpose of
providing differential and more favourable treatment to developing
countries, provided that such treatment is in accordance with the
conditions set out in the Enabling Clause. As such, the Enabling
Clause operates as an “exception” to Article I:1.
E.1.1.2
EC — Tariff Preferences, paras. 101-102
(WT/DS246/AB/R)
… the text of paragraph 1
of the Enabling Clause ensures that, to the extent that there is a
conflict between measures under the Enabling Clause and the MFN
obligation in Article I:1, the Enabling Clause, as the more specific
rule, prevails over Article I:1. In order to determine whether such a
conflict exists, however, a dispute settlement panel should, as a
first step, examine the consistency of a challenged measure with
Article I:1, as the general rule. If the measure is considered at this
stage to be inconsistent with Article I:1, the panel should then
examine, as a second step, whether the measure is nevertheless
justified by the Enabling Clause. It is only at this latter stage that
a final determination of consistency with the Enabling Clause or
inconsistency with Article I:1 can be made.
In other words, the Enabling
Clause “does not exclude the applicability” of Article I:1 in the
sense that, as a matter of procedure (or “order of examination”,
as the Panel stated), the challenged measure is submitted successively
to the test of compatibility with the two provisions. But, as a matter
of final determination — or application rather than applicability
— it is clear that only one provision applies at a time. …
E.1.1.3 EC — Tariff
Preferences, para. 109
(WT/DS246/AB/R)
We thus understand that,
between the entry into force of the GATT and the adoption of the
Enabling Clause, the Contracting Parties determined that the MFN
obligation failed to secure adequate market access for developing
countries so as to stimulate their economic development. Overcoming
this required recognition by the multilateral trading system that
certain obligations, applied to all Contracting Parties, could impede
rather than facilitate the objective of ensuring that developing
countries secure a share in the growth of world trade. This
recognition came through an authorization for GSP schemes in the 1971
Waiver Decision and then in the broader authorization for preferential
treatment for developing countries in the Enabling Clause.
E.1.1.4 EC — Tariff
Preferences, para. 110
(WT/DS246/AB/R)
In our view, the special
status of the Enabling Clause in the WTO system has particular
implications for WTO dispute settlement. As we have explained,
paragraph 1 of the Enabling Clause enhances market access for
developing countries as a means of improving their economic
development by authorizing preferential treatment for those countries,
“notwithstanding” the obligations of Article I. It is evident that
a Member cannot implement a measure authorized by the Enabling Clause
without according an “advantage” to a developing country’s
products over those of a developed country. It follows, therefore,
that every measure undertaken pursuant to the Enabling Clause would
necessarily be inconsistent with Article I, if assessed on that basis
alone, but it would be exempted from compliance with Article I because
it meets the requirements of the Enabling Clause. Under these
circumstances, we are of the view that a complaining party challenging
a measure taken pursuant to the Enabling Clause must allege more than
mere inconsistency with Article I:1 of the GATT 1994, for to do only
that would not convey the “legal basis of the complaint sufficient
to present the problem clearly”. In other words, it is insufficient
in WTO dispute settlement for a complainant to allege inconsistency
with Article I:1 of the GATT 1994 if the complainant seeks also to
argue that the measure is not justified under the Enabling Clause.
This is especially so if the challenged measure, like that at issue
here, is plainly taken pursuant to the Enabling Clause, as we discuss infra.
E.1.2 Paragraph 2(a)
back to top
E.1.2.1 EC — Tariff Preferences, para. 145
(WT/DS246/AB/R)
Paragraph 2(a) of the Enabling Clause provides
… that, to be justified under that provision, preferential tariff
treatment must be “in accordance” with the GSP “as described” in
the Preamble to the 1971 Waiver Decision. “Accordance” being
defined in the dictionary as “conformity”, only preferential tariff
treatment that is in conformity with the description “generalized,
non-reciprocal and non-discriminatory” treatment can be justified
under paragraph 2(a).
E.1.2.2 EC — Tariff Preferences, paras. 152-153
(WT/DS246/AB/R)
… the ordinary meanings of “discriminate” point
in conflicting directions with respect to the propriety of according
differential treatment. Under India’s reading, any differential
treatment of GSP beneficiaries would be prohibited, because such
treatment necessarily makes a distinction between beneficiaries. In
contrast, under the European Communities’ reading, differential
treatment of GSP beneficiaries would not be prohibited per se.
Rather, distinctions would be impermissible only where the basis for
such distinctions was improper. Given these divergent meanings, we do
not regard the term “non-discriminatory”, on its own, as
determinative of the permissibility of a preference-granting country
according different tariff preferences to different beneficiaries of its
GSP scheme.
Nevertheless, at this stage of our analysis, we are
able to discern some of the content of the “non-discrimination”
obligation based on the ordinary meanings of that term. Whether the
drawing of distinctions is per se discriminatory, or whether it
is discriminatory only if done on an improper basis, the ordinary
meanings of “discriminate” converge in one important respect: they
both suggest that distinguishing among similarly-situated beneficiaries
is discriminatory. …
E.1.2.3 EC — Tariff Preferences, para. 154
(WT/DS246/AB/R)
Paragraph 2(a), on its face, does not explicitly
authorize or prohibit the granting of different tariff preferences to
different GSP beneficiaries. It is clear from the ordinary meanings of
“non-discriminatory”, however, that preference-granting countries
must make available identical tariff preferences to all
similarly-situated beneficiaries.
E.1.2.4 EC — Tariff Preferences,
para. 155
(WT/DS246/AB/R)
… footnote 3 to paragraph 2(a) stipulates that, in
addition to being “non-discriminatory”, tariff preferences provided
under GSP schemes must be “generalized”. According to the ordinary
meaning of that term, tariff preferences provided under GSP schemes must
be “generalized” in the sense that they “apply more generally;
[or] become extended in application”. However, this ordinary meaning
alone may not reflect the entire significance of the word “generalized”
in the context of footnote 3 of the Enabling Clause, particularly
because that word resulted from lengthy negotiations leading to the GSP.
In this regard, we note the Panel’s finding that, by requiring tariff
preferences under the GSP to be “generalized”, developed and
developing countries together sought to eliminate existing “special”
preferences that were granted only to certain designated developing
countries. Similarly, in response to our questioning at the oral
hearing, the participants agreed that one of the objectives of the 1971
Waiver Decision and the Enabling Clause was to eliminate the fragmented
system of special preferences that were, in general, based on historical
and political ties between developed countries and their former
colonies.
E.1.2.5 EC — Tariff Preferences, para. 169
(WT/DS246/AB/R)
… We are of the view that the objective of
improving developing countries’ “share in the growth in
international trade”, and their “trade and export earnings”, can
be fulfilled by promoting preferential policies aimed at those interests
that developing countries have in common, as well as at those
interests shared by sub-categories of developing countries based on
their particular needs. An interpretation of “non-discriminatory”
that does not require the granting of “identical tariff preferences”
allows not only for GSP schemes providing preferential market access to
all beneficiaries, but also the possibility of additional preferences
for developing countries with particular needs, provided that such
additional preferences are not inconsistent with other provisions of the
Enabling Clause, including the requirements that such preferences be “generalized”
and “non-reciprocal”. We therefore consider such an interpretation
to be consistent with the object and purpose of the WTO Agreement
and the Enabling Clause.
E.1.2.6 EC — Tariff Preferences, para. 173
(WT/DS246/AB/R)
Having examined the text and context of footnote 3 to
paragraph 2(a) of the Enabling Clause, and the object and purpose of the
WTO Agreement and the Enabling Clause, we conclude that
the term “non-discriminatory” in footnote 3 does not prohibit
developed-country Members from granting different tariffs to products
originating in different GSP beneficiaries, provided that such
differential tariff treatment meets the remaining conditions in the
Enabling Clause. In granting such differential tariff treatment,
however, preference-granting countries are required, by virtue of the
term “non-discriminatory”, to ensure that identical treatment is
available to all similarly-situated GSP beneficiaries, that is, to all
GSP beneficiaries that have the “development, financial and trade
needs” to which the treatment in question is intended to respond.
E.1.2.7 EC — Tariff Preferences, paras. 187-188
(WT/DS246/AB/R)
We recall our conclusion that the term “non-discriminatory”
in footnote 3 of the Enabling Clause requires that identical tariff
treatment be available to all similarly-situated GSP beneficiaries. We
find that the measure at issue fails to meet this requirement for the
following reasons. First, as the European Communities itself
acknowledges, according benefits under the Drug Arrangements to
countries other than the 12 identified beneficiaries would require an
amendment to the Regulation. Such a “closed list” of beneficiaries
cannot ensure that the preferences under the Drug Arrangements are
available to all GSP beneficiaries suffering from illicit drug
production and trafficking.
Secondly, the Regulation contains no criteria or
standards to provide a basis for distinguishing beneficiaries under the
Drug Arrangements from other GSP beneficiaries. Nor did the European
Communities point to any such criteria or standards anywhere else,
despite the Panel’s request to do so. As such, the European
Communities cannot justify the Regulation under paragraph 2(a), because
it does not provide a basis for establishing whether or not a developing
country qualifies for preferences under the Drug Arrangements. Thus,
although the European Communities claims that the Drug Arrangements are
available to all developing countries that are “similarly affected by
the drug problem”, because the Regulation does not define the criteria
or standards that a developing country must meet to qualify for
preferences under the Drug Arrangements, there is no basis to determine
whether those criteria or standards are discriminatory or not.
E.1.3 Paragraph 2(d)
back to top
E.1.3.1 EC — Tariff Preferences, para. 172
(WT/DS246/AB/R)
… The inclusion of paragraph 2(d), however, makes
clear that developed countries may accord preferential treatment to
least-developed countries distinct from the preferences granted to other
developing countries under paragraph 2(a). Thus, pursuant to paragraph
2(d), preference-granting countries need not establish that
differentiating between developing and least-developed countries is “non-discriminatory”.
This demonstrates that paragraph 2(d) does have an effect that is
different and independent from that of paragraph 2(a), even if the term
“non-discriminatory” does not require the granting of “identical
tariff preferences” to all GSP beneficiaries.
E.1.4 Paragraph 3(a)
back to top
E.1.4.1 EC — Tariff Preferences, para. 167
(WT/DS246/AB/R)
… we note that, pursuant to paragraph 3(a) of the
Enabling Clause, any “differential and more favourable treatment … shall be designed to facilitate and promote the trade of developing
countries and not to raise barriers to or create undue difficulties for
the trade of any other contracting parties.” This requirement applies,
a fortiori, to any preferential treatment granted to one GSP
beneficiary that is not granted to another. …
E.1.5 Paragraph 3(c)
back to top
E.1.5.1 EC — Tariff Preferences, para. 161
(WT/DS246/AB/R)
… the Preamble to the WTO Agreement,
which informs all the covered agreements including the GATT 1994 (and,
hence, the Enabling Clause), explicitly recognizes the “need for
positive efforts designed to ensure that developing countries, and
especially the least developed among them, secure a share in the growth
in international trade commensurate with the needs of their economic
development”. The word “commensurate” in this phrase appears to
leave open the possibility that developing countries may have different
needs according to their levels of development and particular
circumstances. The Preamble to the WTO Agreement further
recognizes that Members’ “respective needs and concerns at different
levels of economic development” may vary according to the different
stages of development of different Members.
E.1.5.2 EC — Tariff Preferences, paras. 162-164
(WT/DS246/AB/R)
… we read paragraph 3(c) as authorizing
preference-granting countries to “respond positively” to “needs”
that are not necessarily common or shared by all developing
countries. Responding to the “needs of developing countries” may
thus entail treating different developing-country beneficiaries
differently.
However, paragraph 3(c) does not authorize any
kind of response to any claimed need of developing countries.
First, we observe that the types of needs to which a response is
envisaged are limited to “development, financial and trade needs”.
In our view, a “need” cannot be characterized as one of the
specified “needs of developing countries” in the sense of paragraph
3(c) based merely on an assertion to that effect by, for instance, a
preference-granting country or a beneficiary country. Rather, when a
claim of inconsistency with paragraph 3(c) is made, the existence of a
“development, financial [or] trade need” must be assessed according
to an objective standard. Broad-based recognition of a particular
need, set out in the WTO Agreement or in multilateral
instruments adopted by international organizations, could serve as such
a standard.
Secondly, paragraph 3(c) mandates that the response
provided to the needs of developing countries be “positive”. “Positive”
is defined as “consisting in or characterized by constructive action
or attitudes”. This suggests that the response of a
preference-granting country must be taken with a view to improving
the development, financial or trade situation of a beneficiary country,
based on the particular need at issue. As such, in our view, the
expectation that developed countries will “respond positively” to
the “needs of developing countries” suggests that a sufficient nexus
should exist between, on the one hand, the preferential treatment
provided under the respective measure authorized by paragraph 2, and, on
the other hand, the likelihood of alleviating the relevant “development,
financial [or] trade need”. In the context of a GSP scheme, the
particular need at issue must, by its nature, be such that it can be
effectively addressed through tariff preferences. Therefore, only if a
preference-granting country acts in the “positive” manner suggested,
in “respon[se]” to a widely-recognized “development, financial
[or] trade need”, can such action satisfy the requirements of
paragraph 3(c).
|
The texts reproduced here do not have the legal standing of the original
documents which are entrusted and kept at the WTO Secretariat in Geneva.
|
