Law & the Practice of International Trade 98

Law & the Practice of International Trade ‘98

GATT...... 14 GATT – ARTICLE BY ARTICLE...... 2 GATT 1994 Dispute Settlement Procedures: Annex II...... 14 United States - Standards for Reformulated Gasoline and Conventional NAFTA...... 16 Gasoline (1996)...... 2 Softwood Lumber...... 17 European Economic Community Regulation on Parts and Components (1990)...... 2 SAFEGUARDS...... 17 EEC - Import Regime for Bananas (1994)...... 3 GATT Art. XIX and Uruguay Round Safeguard Agreement...... 17 Lobster Case (FTA Panel applying GATT law - 1990)...... 3 Hot-Forged Scissors and Shears (1991)...... 17 Japan - Taxes on Alcoholic Beverages (ABs) (1994)...... 3 NAFTA Chapter 11...... 18 Superfund Case...... 4 Herring and Salmon Case (1989)...... 5 ANTI-DUMPING...... 18 Thai Cigarettes...... 5 US - Standards for Reformulated and Conventional Gasoline (1996).....5 GATT Art VI, Tokyo Round Anti Dumping Code, and Uruguay GATT Panel Report - Canada - Administration of the Foreign Investment Round Anti-Dumping Agreement...... 18 Review Act (1984)...... 6 Canadian Tuna (1982)...... 6 SUBSIDIES AND COUNTERVEILING DUTIES...... 19 The Tuna Dolphin Case(1991)...... 6 GATT Art VI and Uruguay Round Subsidies Agreement...... 19 Shrimp Turtle Case (1994)...... 6 United States: Countervailing duties on fresh, chilled and frozen pork NAFTA...... 7 from Canada (1991)...... 20 Canadian Countervailing Duties on Grain Corn from the US (1992)...... 21 Canadian split-run periodicals case:...... 8 In the Matter of Tariffs Applied by Canada to Certain US - Origin NON-VIOLATION NULLIFICATION AND IMPAIRMENT...... 21 Agricultural Products (1996)...... 8 Payments and Subsidies paid to processors and producers of oilseeds GENERAL AGREEMENT ON TRADE IN SERVICES (GATS)...... 9 and related animal-feed proteins...... 22 NAFTA...... 9 EXPORT CONTROLS & EXTRATERRITORIALITY...... 22

TRADE-RELATED INTELLECTUAL PROPERTY (TRIPS)...... 10 NAFTA LABOR AND ENVIRONMENTAL SIDE AGREEMENTS...... 22 US - Section 337 of the Tariff Act (1989)...... 10 Uruguay Round TRIPS Agreement...... 11 LESS DEVELOPED COUNTRIES...... 23 NAFTA...... 12 Generalized System of preferences and the Lorné Convention...... 23 AGREEMENT ON TRADE RELATED INVESTMENT MEASURES (TRIMS)...... 12 NAFTA...... 12 STANDARDS...... 12 Beef Hormones Case...... 13 EPA standard and Gas-guzzler tax...... 14 NAFTA...... 14 DISPUTE RESOLUTION...... 14

1 Law & the Practice of International Trade ‘98

lower), British Preferential for Commonwealth nations, General Preferential for GATT-approved developing countries (based of GATT – Article by Article GSP), and miscellaneous status (NAFTA, Caribbean Commonwealth). Non-status goods are taxes at the General Tariff of Preamble: Commit member countries to enter into “reciprocal and 35% of value (s.46). mutually advantageous agreements directed to the substantial reduction of tariffs and other barriers to trade and to the elimination of The Customs Act empowers the Minister of National Revenue Customs discriminatory treatment in international commerce”. Tariffs distort both and Excise to enforce the custom system at the Canadian border. domestic production (by attracting resources into the protected sector) and consumption decisions (by raising prices to consumers above world Art III – National Treatment (NT) – designed to prevent discrimination in prices). favor of domestic producers Addresses discrimination where a CP adopts internal or domestic Art I – Most Favored Nation (MFN) – designed to constrain policies designed to favor its domestic producers vis-à-vis foreign discrimination among different foreign exporters . With respect to producers of a given product, even though the latter may be treated in a customs duties imposed by a country on any other country, any uniform way. advantage, favor, privilege or immunity granted by such a country to any Art III:4 – foreign producers “shall be accorded treatment no less product originating from any other country shall be accorded to a like favorable than that accorded to like products of national origin in respect product originating in the territories of all CPs. Art I grandfathers laws, regulations and requirements affecting their internal sale. preferences in force between member countries at the time of the Art III:8 – (NT exception) permits government agencies to favor local GATT’s inception (1947), subject to a rule that freezes the margin of producers in purchasing goods for governmental purposes and not with preference so that it cannot be subsequently increased. a view to commercial resale. Tokyo Round gave rise to a Government Procurement Code that requires government agencies to respect NT Once tariffs are agreed to in a particular to in a particular negotiation, principle with respect to government contracts over a certain size. these become “tariff bindings” which are set out in the member countries’ tariff schedules that constitute an Annex to the GATT. United States - Standards for Reformulated Gasoline and Conventional Gasoline (1996) Art II requires that all parties adhere to these tariff bindings by not GATT Article III's function and its guarantee of non-discriminatory imposing customs duties in excess of those set forth in the schedules. practice. Facts: Clean Air Act sets standards for gas quality intended to In Canada, the Customs Tariff Act sets the tariff that is to be levied on decrease air pollution. US employed statutory baseline for importers each category of imports and the rules of origin. to establish gasoline quality; domestic producters used an individual S. 13(1) states that ‘subject to any regulations, goods originate in a baseline. Venezuela and Brazil says this violates NT under article country if the whole of the value of the goods is produced in that III(1) & (4) and MFN standard in article I. country’. The regulations deal with rules to assist in determining the Held: Imported and domestic gasoline are like products, and imported origin of goods composed of parts from different sources. The basic treated less favourable. Violation of Article III. principle is that a minimum percentage of the costs of production of the goods must have been incurred in the country of origin and that European Economic Community Regulation on Parts and the goods must have been finished in a county that is the beneficiary Components (1990) of the status claimed. The different type of status are, according to Facts: Measures taken by the EEC under the regulation with respect s.13(2)b, MFN enjoyed by WTO members (low tariff – 4 to 5% or to certain products produced or assembled in the EEC by companies

2 Law & the Practice of International Trade ‘98 related to Japanese companies. Included a provision meant to Ratio: Can't substitute one type of tariff for another. Negotiations prevent the circumvention of anti-dumping duties on finished products must precede change - can't alter a commitment by notice alone even through the importation of parts or materials for use in the assembly or if change results in less onerous rules. TRQs are not in and of production of like finished products within the EEC. Investigations themselves a violation of GATT (not a quantitative restriction under this Regulation had resulted in the imposition of duties on forbidden by art. XI). By maintaining different tariff levels, EC not products produced or assembled in the EEC in 8 cases and in the giving uniform treatment. Once violation proven, burden shifted to EC acceptance of undertakings in 7 cases, all connected with Japanese to prove no harm. Failed to do so. manufacturers whose exports of finished products were subject to anti-dumping duties. Lobster Case (FTA Panel applying GATT law - 1990) Panel Decision: The Panel distinguished between import duties and FTA Panel considered whether US minimum size requirements to internal charges, which are regulated differently under GATT. imports of Canadian lobster should be considered as an Art. XI Ordinary customs duties allowed unless they exceed tariff bindings, prohibition on imports (banned by GATT unless justified under Art. but internal taxes discriminating against imported products prohibited. XX) or as part of an internal regime within the meaning of Art. III Noted that anti-circumvention duties are not produced conditional (aimed at both domestic and imported products and permitted by upon importation of product or at the time and point of importation. GATT subject to NT obligation). A problem is created by Canada’s Considered the policy purpose of a charge irrelevant in determining colder waters which produces mature lobster of smaller size meaning of in connection with importation for II(1)(b). Also, mere compared to the US. description of charge under domestic law of contracting party is The panel accepted the US position that the import ban was genuinely irrelevant. Found that the anti-circumvention duties were not levied an integral part of an internal regulatory regime applicable to both "on or in connection with importation. Found that the duties also foreign and domestic products (despite Salmon and Herring Landing subjected imported parts and materials indirectly to an internal charge case). in excess of that applied to like domestic products - therefore, contrary The authors of Tribilcock point out that the with respect to NT, one has to III(2). Also, decision of EEC to suspend proceedings conditional on to consider whether measures have “disparate impact” on foreign undertakings by EEC enterprises to limit the use of parts originating in producers who may have to adapt to requirements which domestic Japan was contrary to III(4). producers are already used to.

EEC - Import Regime for Bananas (1994) Japan - Taxes on Alcoholic Beverages (ABs) (1994) Facts: Untill 1990, Euro countries each had their own banana quotas. Facts: In Japan, imported ABs taxed differently than Japanese EC resulted in development of new banana system - a single regime beverage, Soki. Panel said Soki a "like" product to vodka and for all, based on the percentages of banana types that would be differential taxation was inappropriate. Also, Soki "like" to other types imported. 4 types: (1) EEC bananas, (2) traditional (colonial) African/ of alcohol and therefore equally inappropriate tax other types Caribbean/ Pacific (ACP) bananas, (3) non-colonial ACP bananas, differently (booze is booze) under GATT Art. III. and (4) 3rd country bananas. Issue: What's the appropriate interpretation for Art. III? 1 & 2 would enter duty free (preferential treatment), and 3 & 4 duty Held: The broad purpose is to avoid protectionism in the application of free up to 2 million tons and after that, TRQs. (3 - 750 ECUs/ton, 4 - internal tax and regulatory measures. Scope not limited to products 850 ECUs/ton). subject to tariff concessions under article II. NT obligation of article III Issue: Does this violate GATT principle of non-discrimination under is a general prohibitionary measure on the use of internal taxes and Articles I & III? regulatory measures to protect domestic production. Held: MFN standard of Article I violated. In an Article III violation analysis, ask yourselves:

1. Whether the taxed imported and domestic products are "like" Art VIII provides that all administrative fees and charges imposed in 2. Whether the taxes applied to imported products are "in excess of" connection with importation or exportation shall be limited in amount ant those applied to like domestic products. to the approximate cost of the services rendered. If yes, then the measure is inconsistent with Article III. Art X obligates each CP to publish in accessible form all laws, Superfund Case regulations, rulings, etc., pertaining to classification, valuation and US taxed petroleum and chemicals to establish an environmental customs administration and to institute a system of judicial or quasi- fund. The panel found a nullification and impairment of a GATT judicial review (In Canada, tariff schedules are set out in Customs Tariff cecession because the US charged a higher tax on imported Act). petroleum than domestic petroleum (11.7 cents as opposed to 8.2 cents a barrel). The discriminatory tax also violated Art. II NT Art XI prohibits the use of quotas or import or export licenses (i.e. obligation. quantitative restrictions) used to protect domestic producers. The The tax on chemicals was justified by Art II:2(a) as being “equivalent Agreement on Agriculture requires that all WTO members transform to an internal tax… in respect of an article from which the imported agricultural quotas into tariff rate quotas. product has been manufactured in whole or in part”. The tax was acceptable even though it was a US tax on pollution occurring outside Art XII (exception to XI) permits the imposition of quantitative the US as a result of the use of substances in the production of the restrictions if a country is facing serious balance of payment problems imported chemicals. It seems that environmental harm outside the country can be sanctioned by taxes which apply to imported (and Art XVI (subsides) requires CP that grants or maintains a subsidy which domestic) products. has the effect of increasing exports or reducing imports to notify the CPs of the nature and extent of the subsidization and its likely effects on trade, and where serious prejudice is caused or threatened to the Art VI (trade remedies) recognizes the right of CP to take unilateral interests of any CP to discuss with the CP the possibility of terminating action under domestic trade laws where domestic industries are being the subsidization. materially injured because of unfair foreign trading practices, specifically either dumping or subsidization Art XVII (state trading enterprises) – State trading enterprises shall act in a non-discriminatory manner and make purchases or sales solely in Art VII requires that the value for customs purposes of imported accordance with commercial considerations (does not apply to merchandise should by based on the “actual value” of imported government procurement for immediate or ultimate consumption in merchandise, defined as the price at which it is offered for sale in the government use and not otherwise for resale) ordinary course of trade under fully competitive conditions. Tokyo Round gave rise to a special Customs Valuation Code. Sates that actual Art XVIII (exception to XI) permits LDCs to impose quantitative transactional value as between the exporter and importer shall be the restrictions either for balance of payment or infant industry reasons. value for customs purposes. Most of the Contacting Parties have agreed to harmonize their systems of customs classification based on the Art XIX (Safeguard Provision) if as a result of unforeseen developments Brussels Nomenclature – by what they are, not how they are used. In and the effect of obligations incurred by the CP under GATT, any Canada, the Customs Act underwent a fundamental revision in 1986 product is being imported into the territory of that CP in such increased designed to implement the Tokyo Round Valuation Code. quantities or under such conditions as to cause or threaten serious injury to domestic producers in that territory, the CP is entitled to suspend or modify obligations or concessions on a temporary basis in

4 Law & the Practice of International Trade ‘98 order to alleviate the injury. Modified by Uruguay Round Safeguard not be used to achieve the objectives in question. The Panel noted Agreement. that restrictions on advertising and labeling requirements administered on a non-discriminatory basis would be a satisfactory alternative to the Art XX (General exception to GATT obligations) – CP’s to prove that import ban. their “regulation or law”: a) fits within the listed exceptions and are not a “disguised restriction US - Standards for Reformulated and Conventional Gasoline on international trade”. Art. XX allows CPs to enforce measures, for (1996) example, necessary to protect public morals (a), human or animal The facts, holding and ratio are in the case brief under "GATT and health (b). An exception is also made for measures necessary to non-discrimination". secure compliance with laws or regulations which are not The US tried to justify their gasoline rule on the basis of Article XX. inconsistent with the GATT (d); and measures imposed for the The burden of proof was on the US. protection of national treasures (f) or the conservation of exhaustible US had to show for article XX(b): natural resources (g). 1. The policy in respect of the measures for which the provision was b) is not “applied in a manner which would constitute a means of invoked fell within the range of policies designed to protect human, arbitrary or unjustifiable discrimination between countries where the animal or plant life or health (XX(b)). same conditions prevail, or a disguised restriction on international 2. The inconsistent measures were necessary to fulfull the policy trade” (introductory statement – chapeau). objective; and 3. Measures were in conformity with the requirements of the Herring and Salmon Case (1989) introductory clause of article XX. Addresses the application of Art. XX to trade restricting measures to 1 not in issue. Panel ruled that "necessary" test in 2. failed. protect the restricting county’s own environment. The US complained Other options available. Different scheme can be okay as long as that the Canadian requirements that salmon and herring caught in results don't differ. Canadian waters be landed and processed in Canada before export US had to show for XX(d): violated Art. XI of the GATT. Canada claimed that the measures 1. Measures necessary to secure compliance re: customs related to “conservation of exhaustible natural resourse” [Art. XX(g)] enforcement not inconsistent with GATT. and permitted accurate counting and catch control. 2. If inconsistent, necessary. GATT panel found that the Canadian export ban was “primarily aimed” 3. Measures applied in conformity with the introductory clause of XX. at conservation [required by Art. XX], but that other means less US out of luck here too. Baseline establishment methods restrictive of trade could equally serve the stated objective. didn't secure compliance with baseline system. Not an enforcement mechanism. Thai Cigarettes US had to show for XX(g): US challenged ban on imports of cigarettes to Thailand as a violation 1. Policy of the measures fell within range of policies related to the of Art. XI. Thailand defended the ban under Art. XX(b) as “necessary” conservation of exhaustible natural resources. for protection of public health. Thailand did not impose a ban on Thai 2. Measures, if inconsistent with GATT were related to the cigarettes but justified its decision arguing that American cigarettes conservation of exhaustible natural resources. were more addictive (no scientific evidence to that effect) and that 3. The measures for which the exception invoked were made effective sophisticated American advertising was more likely to induce women in conjunction with restrictions on domestic production/consumption. and young people to smoke. 4. The measures were applied in conformity with the requirements of GATT panel found that an import ban would be “necessary” for public the introductory clause of article XX. health reasons only if alternative non-trade restricting measures could

Clean air is an exhaustible natural resources. Measure only proportions of the product be exported). Argentina said these had to be primarily aimed at to be considered related - here, it was provisions were not necessarily those that could be invoked against not. less-developed countries which had rights to protect national industries. US Gasoline Case - Report of the Appellate Body Holding: The Panel found that purchase and export undertakings US still out of luck but for different reasons. excluded the possibility of purchasing available imported products - 1. Re: XX(g) requirement: The initial panel did not specify whether clearly, imported products received less favourable treatment, contrary the use of the phrase "direct connection" was a synonym for "primarily to III(4). Canada invoked the exception in XX(d) that these aimed at" or was a new and additional element. Erred in asking undertakings were "measures necessary to secure compliance" with whether less favorable treatment primarily aimed at conservation the FIRA. The panel rejected this. instead of whether the measure was aimed at that. 2. Rules of treaty interpretation: The panel screwed up (didn't Canadian Tuna (1982) comply with Article 31 of the Vienna Convention) by failing to take The US banned the import of Canadian tuna in the aim of inducing adequate account of the words actually used by XX. Use of different Canada to negotiate joint catch limits rather than enforcing the words makes it unreasonable to believe that the requirements under Canadian 200 mile zone. The US domestic tuna quotas did not cover each and every category were of the same quality. all species whose import was banned from Canada. Article XX(g) must be read in context so as to give effect to the Panel found a violation of Art. XI which could not be saved by Art. purpose and objecs of the GATT. Looked at question 2 & 3 again. XX(g) because not all species were covered. Similarly, Art XI(2) which Re: 2: was the measure primarily aimed at the policy? AB said yes permits quantitative restrictions where necessary to sustain a system because the rules were related to non-degradation requirements of domestic supply management for primary products does not allow needed to achieve policy objectives. Re: 3: Identical treatment is not for a total ban. Art. XI(2) would also require American domestic required, only equality of treatment. Both domestic and imported measures to cover the same species as the import ban. gasoline were subject to rules (albeit different rules) so this condition was met. Therefore, 4 had to be reexamined as well: were the The Tuna Dolphin Case(1991) requirements of the XX introductory clause satisfied? This clause is Facts: Pursuant to the Marine Mammal Protection Act (1972), the US meant to prevent abuses of exceptions. Exceptions may be invoked imposed an embargo on imports of commercial tuna with purse-seine as a matter of right but shouldn't be applied to defeat legal obs under nets in the Eastern Tropical Pacific Ocean, as these nets resulted in GATT. Burden on US to show that exception not abuse. Can't be the deaths of scores of dolphins. This law applied to US and other disguised restriction, unjustifiable discrimination or arbitrary vessels - everyone must use dolphin-friendly technology. US placed discrimination. US failed this test. an embargo on Mexican tuna due to fishing techniques. Mexico

complained that NT violated (III) and that this measure was a quota, GATT Panel Report - Canada - Administration of the Foreign violated XI. Investment Review Act (1984) Held: Import restrictions may not be imposed on products solely Facts: US alleged that C's government was entering into agreements because they were made or obtained in an environmentally unsound with foreign investors which were meant to give preference to purchase manner outside the jurisdiction of the importing countries. XX(d) of C goods over imported goods and meet certain export performance invoked, but the panel rejected it on the basis that this provision requirements. There was no investment agreement under GATT at this permits import restrictions for the protection of health or exhaustible time. So the panel limited itself to two trade-specific issues. natural resources only within the national jurisdiction of the importing Foreign investors were required to furnish purchase party. XX(d) and XX(g) must be read narrowly and don't except undertakings (preference to C goods to imported goods or in specific environmental measures aimed at extraterritorial activity. proportions) and export undertakings (required that specific

Note: The Panel upheld the system of eco-labelling as long as it is condition for Art. XXIV to apply is that the new union or free trade area applied in a non-discriminatory manner, as it speaks to the nature of be trade creative, and that in the aggregate, the new barriers are no the product itself. higher and preferably lower than those that existed before.

Shrimp Turtle Case (1994) Art XXX provides for amendments to GATT provisions. Part I of GATT, Under Endangered Species Act, US passed legislation requiring the containing MFN principle and tariff bindings can only be amended by use of turtle expulsion devices when netting for shrimp. Any shrimp consent of all contracting parties. Other provisions can be amended by brought into the US must be caught in waters where there are no 2/3 majority, but are only binding on those CPs who accept the turtles, or from countries that certify that the exact same technology amendment. was used. Panel held that Art XX(g) did not justify the measure and that it Art XXXIII provides for the accession of new members, if supported by undermined the multilateral process. a 2/3 majority of CPs Appelate body corrected the panel, saying that the whole point of Art. 20 is to allow certain exceptions to the multilateral nature of the GATT. Art XXV(5) provides that in exceptional circumstances, the CPs may US did not apply this measure in a non-discriminate way or chose the relieve a CP from an obligation provided that such a decision is measure of least impairment. approved by a 2/3 majority and that such majority comprises more than half of the CPs Art XXI (security exception) – permits CP to take any action which it Art XXVIII commits CPs to sponsor from time to time negotiations considers necessary for the protection of its essential security interests directed at the substantial reduction of the general level of tariffs. relating to fussionable materials, traffic in arms and munitions or which reflects exigencies of war or other emergency in international relations. Art XXIV permits the formation of regional trading blocks, subject to 2 If the Helms Burton Act were to be put before a panel, the U.S. would conditions: likely have to defend its extraterritorial application as a matter of national a) the general incidence of duties after the formation of such security. arrangements not be higher than the average level of duties beforehand Art XXIII (old dispute resolution mechanism) – if a CP considers that b) duties and other restrictions on trade must be eliminated with any benefits accruing to it directly or indirectly under the GATT is being respect to substantially all the trade between the constituent “nullified or impaired” by a policy of another CP, and Art XXII members and trading blocks discussions have failed, the complaining Party can refer its complaint This is the most important exception to MFN and make recommendations to the counsel of representatives for the resolution of the dispute. Panel comprises of 3 individuals, drawn from Art XXXVI:8 – developed CPs do not expect reciprocity from LDCs for countries other than the disputing Parties to ascertain the facts and commitments in trade negotiations to reduce or remove tariffs and other make recommendations to the Counsel of Representatives as to the barriers to trade. resolution of the matter. Counsel of Representatives makes decision on Panel recommendations on a consensus basis, which effectively Art XXXVII – developed CPs commit themselves to according high requires unanimity, including the support of the disputing Parties. (WTO priority to the reduction and elimination of barriers to producers currently has been created to oversee an integrated dispute settlement regime) or potentially of particular export interest to LDCs. Art XXIV (exception to MFN) expressly authorizes the creation of free trade areas or customs unions (like NAFTA and EEC). The basic

Special Cases: NAFTA  automobiles, annex 300-A Under NAFTA, the principle of non-discrimination as outlined in Art III  textiles, annex 300-B GATT is carried forward and expanded. While looking at the structure of  wine and spirits, annex 312.2 the GATT, one notices that the basic rule is MFN; only by accretion  natural resources, Chapter 6 (Mexico gets off easy) does it offer NT. NAFTA surpasses the guarantees primarily afforded by  agriculture, Chapter 7 the GATT (MFN) by offering NT. The fact that NT is the yardstick Safeguard Remedies: Chapter 8, see 1101 of FTA for Can-US measure reflects a desire of NAFTA members to move towards Standards: Chapter 9 economic integration. Government procurement: Chapter 10, goes further than GATT. NT is adopted by departments or agencies in bidding process (over $50,000 The FTA came into force in 1988. NAFTA came into force in 1994 with for goods and services; 6.5 million for construction). For Federal side agreements in Labor and the Environment. NAFTA is noted for government enterprises, thresholds are raised to $250,000 and $8 seeking positive integration, i.e. common standards, not just negative million respectively standards (like GATT). Cultural Exception: Chapter 20 - there is nothing comparable in the GATT. Presumptions of NAFTA: 1) text is paramount [art. 103.2] Canadian split-run periodicals case: 2) GATT compatibility Up until now, laws existed whereby tax breaks and write-offs were 3) NT, fully replaces MFN, therefore goes further than GATT given to companies advertising in Canadian magazines - but not for 4) Most tariffs will be eliminated within 10 years of coming into force. those that wished to advertise in US magazines. The US launched a Most export restrictions and import restrictions will be eliminated. complaint that this was tantamount to a quota and discriminatory Rules of origin will be applies (i.e. 62.5% NAFTA content). There (against NT of Article III). (This was a strategic decision because are some exceptions, contained trough a system of “Tariff Rate NAFTA contains a cultural exception provision under Article 2106) that Quotas” (TRQ) – there can be preferential treatment of exports up to would allow Canada to take measures to protect its cultural goods. an agreed upon ceiling even though the rules of origin are not met. The Canadian argument that these measures were aimed at Textile and clothing provisions also allow a country to impose trade promoting a service industry was rejected by the GATT panel, which sanctions for temporary relief. concluded instead that these cultural laws were discriminatory against 5) whole agreement subject to compulsory dispute settlement tangible goods. This was confirmed by the AB. Canada had to 6) applies to Governments, not private actors remove the tax breaks, but may make technical improvements in other 7) applies to Provinces and States, but with large exceptions ways through more direct subsidies. NAFTA almost always supercedes the FTA, but the FTA is still in force with respect to agriculture, wine and spirits and safeguards. It remains Most tariffs between the 3 countries will be eliminated over a 10 year in force or is incorporated by reference. period, in accordance with stipulated phase-out schedules. Most import and export restrictions, in particular quotas and import licenses will be Tariff Treatment: NAFTA put restrictions on duty drawback and referral eliminated. schemes under the GATT. Rules of Origin: covered extensively in Chapter 4, as it is the most Note that the one exception where GATT is more liberal than NAFTA is serious barrier to trade. with respect to Agriculture b/c Canada and the US never negotiated on Non-tariff barriers (NTB): Chapter 3, see particularly art. 309 and 315. this topic. Mexico and US have agreed to convert all NTBs to tariffs or TRQs. Canada and Mexico have agreed to eliminate all NTBs except

8 Law & the Practice of International Trade ‘98 those on poultry eggs and chicken. There is also a special safeguard provision that can be triggered within 10 years if imports exceed trigger General Agreement on Trade in levels. Services (GATS) The GATS, at least, creates a framework for continuing negotiations In the Matter of Tariffs Applied by Canada to Certain US - Origin (Part IV). The governing principle with respect to services is MFN and Agricultural Products (1996) transparency. Facts: US requested consultation (NAFTA, art. 2006(4)) with Canada regarding C's application of custom duties higher than those in GATS covers 4 main means of supplying service (listed in Part I): NAFTA to certain products (dairy, poultry, eggs, barley, margarine)- 1) trade from a territory of one member into the territory of another breach of NAFTA 302. US requested meeting of the FTC (art. 2007). member No resolution. US requested arbitral panel (art. 2008). 2) trade from the territory of one member to the service consumer of Issues: US didn't like C's application of over-quota tariffs higher than another country those agreed to under NAFTA. Said C had committed not to increase 3) trade by a service supplier of one member through commercial duties on those goods above the rates effective on Dec. 31, 1993, and presence in the territory of another member to progressively eliminate duties. Plus, US said that under NAFTA 4) trade by a service supplier of one member through presence of these goods are to be assessed import duties at a special natural persons of a member in the territory of any other member. concessionary rate. C did not dispute the fact that it imposed these tariff-rate quotas (TRQs). C said these TRQs had to be established Part II of the GATS requires WTO members to accord unconditional under GATT 1994 related Agreement on Agriculture and this ob MFN treatment to services and service suppliers in respect to any incorporated into NAFTA measures covered by the GATS. However, members may maintain The Mess of Agreements: Particular arrangements in FTA Chapter 7 inconsistent measures provided they are listed in the Annex. governed trade in agricultural goods. C & US agreed to prohibit with Domestic regulatory requirements must be applied in a transparent some exceptions the imposition of qualitative restrictions for some manner goods. But grain, poultry and eggs covered by specific arrangements. Art V encourages WTO members to recognize educational qualifications NAFTA 702 says that FTA 710 still applies and that parties through systems of harmonization of such standards. Such standards understand that 710 incorporates GATT rights and obs for this kind of cannot be used to discriminate against foreign service suppliers. There stuff including exemptions under GATT are exceptions for balance of payment (Art. XII), government XXV. US disputed this interpretation because TRQs not there at time procurement (Art. XIII) and national security (Art. XIV) reasons. of NAFTA signing. Also said no ob to impose TRQs. Panel: GATT law is an evolving system of law and you can't just look Part III is essentially an agreement to negotiate on the modes of supply at what was in GATT at the time NAFTA was signed. TRQs and sectors identified in Art. 2 of the GATS. If a service sector or supply (tariffication of NTBs) are inextricably tied up with ob to remove NTBs. mode is listed on the National Schedules, there is an obligation to grant NAFTA 302 doesn't beat out GATT - it is subject to other provisions. NT. Art. XVII – NT is only granted if specifically agreed upon by states in C wins the day. certain areas. There have been very dew commitments to date, with the exception of the successful Telecommunications Agreement. deMestral forecasts that commitments vis-à-vis the professional services (accounting, law) will be pursued through negotiations

Four sectoral annexes were appended to the GATS to deal with financial services, basic telecommunications, mobility of service Financial services are covered by NT, with Mexico provided with a right providers, and air transportation. to impose market share limits to foreign ownership until the year 2000.

By virtue of Art XXIII, interpretation and application of the GATS is subject to the general WTO. Trade-Related Intellectual Property NAFTA (TRIPS) Chapter 12 deals with services. NAFTA succeeds in making NT the basic standard. Intellectual Property – Developing countries often have shorter period f Coverage includes financial telecommunication, & other professional patent protection, resulting in a loss of potential foreign sales of the services. Chapter 12 applies to central and state governments. producer who financed the invention in the 1st place. IP debate really involves balancing the creator’s claims (maintaining adequate incentive Unlike FTA, NAFTA contains general MFN (art. 1406) & NT (art. 1405) for invention) against other social interests (consumer welfare and social obligations with respect to financial services, as well as the principle, development). though not the obligation, of Right of Establishment. Parties may make exemptions from MFN, NT, or the Right to Establishment under Art. IP was largely excluded from the ambit of GATT by virtue of Art XX 1408. As well, Art. 1410 exempts from the obligations “reasonable exceptions including: measures [taken] for prudential reasons.” “measures… necessary to secure compliance with laws or regulations which are not inconsistent with the provisions of this Agreement, With respect to telecommunications, Art 1302 requires that a party including those related to… the promotion of patents, trademarks and provide “persons of another party” access to basic telecommunications copyrights.” network “for the conduct of their business, on reasonable an non- discriminatory terms”. NT standard applicable to matters listed in Art. XX clearly prohibits extending generous IP protection to domestic inventors while providing In GATS, NT needs to be negotiated, whereas under NAFTA, NT is minimal protection to foreigners, but it does not require that non- something that is negotiated out of. Both NT (art. 1202) and MFN discriminate IP standards be as high in one country as another. obligations in NAFTA are not limited to specific service sectors, but are applicable to all services generally. There is a list of excluded services US - Section 337 of the Tariff Act (1989) e.g. those associated with energy and basic petrochemical goods and Facts: Japan complained that various US patent provisions were air services (see Annexes) discriminatory. US law said that stringent laws applied when goods thought to be in violation of US patent laws, and this applied only to NB: with respect to non-discrimination, where NAFTA and GATT imports and not alleged domestic violators. Japan said this hurdle conflict, the more liberal rule applies (art: 103). constituted less favourable treatment under III(4) and could not be justified under XX(d). With respect to licensing and certification of professionals, entry Held: US law was violation of III(4) not justified under XX(d). requirements should be related only to competence. Ratio: Conditions for XX(d) defense: 1. Laws or regulation are not inconsistent with GATT. Cross-border provision of bus and trucking services are to be phased in over a transitional period.

2. Measures are necessary to secure compliance with those laws or Part I sets out both: regulations.  NT standard (Art. 3) subject to the same exceptions as the Paris 3. Measures not applied in a manner which would constitute a means of and Berne Conventions arbitrary or unjustifiable discrimination, or a disguised restriction on  MFN standard (Art 4) – does not apply with respect to rights and international trade. privileges conferred on a reciprocal basis to certain GATT members No dispute on 1. Panel said that with 2, can't be justified if through bilateral or multilateral agreements in force prior to the there is another alternative reasonably available that would be less Uruguay TRIPS Agreement (so long as these agreements do not inconsistent with other GATT provisions. Didn't pass the "necessary" constitute an arbitrary or unjustifiable discrimination against the test. other members of the agreements). Also, when WIPO strikes new GATT panel found that s. 337 of the US Trade Tariff Act violated the NT multilateral agreements, neither the NT not the MFN obligations will obligation because it entailed a method of enforcement that provided apply. weaker procedural protection to foreigners than it accorded to American  Art. 2 requires that WTO members abide by specific articles of the Firms and individuals accused of violating American IP laws. Paris Convention; Art. 9 requires WTO members to comply with the first 21 articles of the Berne Convention. The Paris Convention (patents and trademarks – industrial property) Has 98 signatories representing 88% of the world trade in goods. Part II contains substantive obligations concerning copyright, Art II: NT standard is fundamental trademarks, geographical indications, industrial design, patents, and Minimum standards are set for patent (after you file a patent in one topographies of integrated circuits. member country, you have 12 months in which nothing can prevent you from filing in other countries – no-one else can file) and trademark Copyrights: (basic obligations of the Berne Convention ate protection (6 months). Also, member states are obliged to seize, upon incorporated) importation, all goods “unlawfully bearing” a trademark or trade name. Copyright will apply to protect the originality of a computer program as a whole, but won’t extend to preventing use of ideas or functions in The Berne Convention (author’s rights) the development of new programs. Has over 75 signatories (USA only joined in 1988) Copyright extends to databases if they merit the status of “intellectual Contains both a NT and an MFN obligation. Protection lasts for the creations” by virtue of the arrangement of their contents, but won’t author’s life + 50 years, during which time the author enjoys the protect the underlying data from which the database was generated. exclusive right of authorizing any reproduction or communication of the Minimum term of protection is 50 years from the date of authorized works. Special provisions extent to developing countries, permitting publication or alternatively 50 years from the making of the work (Art. them to substitute compulsory licensing for the minimum standard. 12)

The World Intellectual Property Organization (WIPO) Trademarks: Since 1974, has had the status of a specialized agency of the UN. Art 16.1 - The owner of a registered trade shall have exclusive right to Administers multilateral agreements on IP rights, including the Paris and prevent all 3rd parties not having his consent from using… identical or Berne Conventions. similar signs from goods or services which are identical or similar to those in respect to which the trademark is registered where such use would result in a likelihood of confusion. Uruguay Round TRIPS Agreement Parties can apply for revocation of a trademark after 3 years of its non-use, unless shown that non-use is due to obstacles out of the control of the trademark holder.

Patents Agreement on Trade Related Protection is for 20 years from the filing date. Applies to both product Investment Measures (TRIMS) and process patents. This changed Canada’s drug patent protection.

Art. 73 provides for security exceptions on a narrow range of matters. Foreign direct investment is defined as ownership and/or control of business or part of a business in another country. The investment Enforcement: Judicial authorities are empowered to issue injunctions, provisions of the Uruguay Round subject some investment measures award damages, dispose of goods that violate IP law outside ordinary with direct effects on trade (Trade Related Investment Measures) to channels of commerce, and grant interim or provisional injunctions more explicit scrutiny against existing GATT norms. where delay may cause irreparable harm to the right holder. TRIPS does not give rise to rights or obligations that occurred before entry into The essence of the TRIMS Agreement is to require all WTO members force of GATT 1994 (Art.70). not to apply TRIMS ‘inconsistent’ with the provisions of Art. III or Art. XI. Local content, sourcing and some trade balancing requirements (those Dispute Settlement: Council on Trade Related Aspects of IP rights is that limit the value of what a foreign investor is allowed to import into the created to monitor domestic compliance with TRIPS – CP’s are obliged host country to the value of exports) violate Art. III. Import and export to notify Council of domestic IP laws. The general GATT/WTO dispute restrictions violate the ban on Quantitative Restrictions (quotas) in Art. settlement procedure applies, but not until 5 years after entry into force XI. of the GATT 1994 (art. 64). Export requirements linked with a subsidy to the foreign investor may in some circumstances constitute an export subsidy, the only kind of subsidy explicitly banned by Art. XVI. Reinvestment requirements and NAFTA limitations on the repatriation of profits could constitute violations of Art Differences from TRIPS: XV which requires CPs to adhere to IMF (International Monetary Fund)  Doesn’t contain provisions on performer’s rights rules with respect to balance of payments and exchange arrangements.  Has a provision on decoding encrypted satellite signals (cable But, trade-balancing requirements or other investment measures that companies) would otherwise be in violation of Art. XI may nevertheless be saved by  Has no special provisions on Dispute Settlement Art. XII which allows some quantitative restrictions where necessary to Otherwise, Chapter 17 is very similar to TRIPS. address a balance of payment problem (LDCs)

In order to comply with NAFTA, Canada changed its law to provide 20 Note that these measures are relatively modest in comparison with years of patent protection to pharmaceutical producers (it used to be those found in NAFTA which include a NT obligation with respect to 10). However, compulsory licensing is still permissible, so this could foreign investors and a general right to invest. make the effect less harmful to Canadian companies. GATT provisions on IP are carried forward NAFTA According deMestral, NAFTA goes further than GATT in this area, and in the area of services. Chapter 11 is the investment chapter. Individuals can make claims. There is a right to establishment (i.e. right to enter and maintain permanent presence). Standard applied is NT or MFN, whichever is

12 Law & the Practice of International Trade ‘98 more favorable. Canada can continue to review foreign investments as 5) are not more-trade restrictive than required to achieve their provided under the FTA, and Mexico has committed itself to raising its appropriate level of protection [Art. 5(6)]; foreign review threshold to $150 million over 10 years. Moreoverm no 6) are based on a risk-assessment process “taking into account country is to lower environmental standards in order to attract available scientific evidence and economic factors, including the investment objective of minimizing negative trade effects” [Art. 5(3) & 5(4)]. Finally, there is an obligation at least to consider adopting international SPS standards where they exist in the interests of achieving harmonization (Art. 3). Yet the agreement explicitly permits maintenance Standards of higher standards if they are scientifically justified.

The issue of standards is closely tied to that of environmental protection, Beef Hormones Case as states are dealing here with process and production methods Facts: Appeal from certain issues of law and legal interpretations in 2 (PPMs), which often contain an environmental or health aspect. panel reports from August 1997 rendered by the same panel. The US Standards in essence deal with how a product has been produced, brought 1 complaint, Canada the other re: the EC prohibition of imports manufactured or obtained. of meat and meat products derived from cattle to which certain hormones had been administered for growth promotion purposes. Technical standards concerning the safety, condition, description, or Issues: EC appealed the Panel conclusion that by maintaining SPS packaging of products is an added cost of doing business. Sometimes it measures not based on a risk assessment, the EC acted inconsistently is alleged that standards are used deliberately by governments to keep with Article 5.1 of the SPS Agreement. The panel had concluded that out foreign goods. In addition to Articles I, II, III, XI, and XX of GATT, the EC regulation was contrary to the SPS agreement product import restrictions are subject to the disciplines of two new Appeal Body Findings: Standards Codes: The Agreement on the Application of Sanitary and In short: EC regulation okay. Phytosanitary Measures (SPS) and the Agreement on Technical 1. The Panel's effort to distinguish between "risk assessment" and "risk Barriers to Trade (TBT). The TBT and SPS agreements are mutually management" is problematic - only "risk assessment" is in the SPS exclusive; the SPS Agreement deals with additives, contaminants, Agreement. The panel's distinction which supports a restrictive notion toxins, and disease-carrying organisms in food, beverages and of risk assessment has no textual basis. The panel's interpretation of feedstuffs, while the TBT applies to all other product standards. risk assessment as a two-step process (i - identify adverse effects on human health arising from hormones in meat and ii - evaluate potential Under the SPS, states have the right to make their own standards or or probability of occurrence of effects) is not in itself problematic - take sanitary or phytosanitary measures that are necessary for the although using probability as an alternative to potential is. Panel's use protection of human and animal health [Art. 2(1)] provided that these of term "scientifically identified risk" was also argued as problematic, measures: but the AB didn't agree. Panel's job isn't to impose a quantitative 1) do not constitute a “means of arbitrary or unjustified discrimination” requirement of a minimum magnitude of risk, but is to determine and are not a “disguised restriction on international trade” [Art. 2(3)]; whether an SPS measure is sufficiently or reasonably warranted by risk 2) are “applied only to the extent necessary for the protection of assessment. human, animal or plant life or health” [Art. 2(2)] 2. Factors to consider in carrying out a risk assessment in Article 5.2 - 3) are based on scientific principles (see Beef Hormones Case on this assessment as per 5.1 is a scientific process aimed at establishing the point) scientific basis for the sanitary measure but note that Panel erred in 4) are not maintained without sufficient scientific evidence excluding all matters not susceptible of quantitative analysis by the empirical or experimental laboratory methods commonly associated

13 Law & the Practice of International Trade ‘98 with the phusical sciences. Some factors, like relevant processes and EPA standard and Gas-guzzler tax production methods, inspection, sampling and testing methods are not The US imposed a non-discriminate gas guzzler tax on all cars that susceptible to lab methods of biology or pharmacology. Further, 5.2 is delivered less than a certain Mpg. They also imposed a standard. A not a closed list. tax was levied on all cars made by a manufacturer if the average gas 3. EC argued that the panel had acted inconsistently with Article 5.5 in consumption of the manufacturer’s model line was above a certain adopting arbitrary distinctions in the levels of sanitary protection it Mpg. The stated objective of the standard was the protection of the considers appropriate in diferent situation. Rejected by AB because the environment panel was correct in stating that there was no legal obligation of US manufacturers, who built a full range of cars, could offset the poor consistency of levels - only arbitrary and unjustifiable inconsistencies gas milage of Lincoln and Cadillac cars against the good EPA ratings are to be avoided. 3 elements for 5.5: of their smaller cars. Foreign manufacturers like Mercedes, who only a) Member imposing measure has adopted it own appropriate levels of make larger cars, could not do this. In the result, a Cadillac was less sanitary protection in several different situations expensive to the consumer than a directly competitive Mercedes. b) Levels of protection exhibit arbitrary or unjustifiable differences in The Panel held that the gas guzzler tax was non-discriminate and their treatment of different situations. didn’t violate the NT standard. The Standard was found to violate the c) Results in a disguised restriction on international trade. GATT. The panel said that the US shouldn’t have tailored the With respect to 1, this is not an issue. With respect to 2, contrary to the Standard to their own manufacturer’s product lines. As designed, the Panel, AB determined that there is a fundamental distinction between Standard was an “unnecessary restriction on trade”. added hormones and naturally-occurring hormones in meat and other foods. Just because the EC rule doesn't prohibit any levels of naturally- NAFTA occuring hormones doesn't mean the prohibition on certain levels of added hormones is arbitrary. Differentiation between use of hormones The NAFTA provisions on sanitary and phytosanitary measures are very for growth purposes and hormones for therapeutic or zootechnical similar to those in the SPS Agreement. On Technical Barriers to Trade, purposes is also not an arbitrary distinction. With respect to 3, as in the the NAFTA parties expressly agree to adhere to the GATT/WTO TBT US Gas case and the Japan Alcohol case, "arbitrary discrimination", Agreement (Art. 903). NAFTA envisages an important role for scientific "unjustifiable discrimination" and "diguised restriction on trade" may all experts in the resolution of environmental disputes (Art. 2015). be read side by side and impart meaning to each other. The question is Note that Art. 904 is similar in wording to GATT Art. XX(b), thus whether EC is being protectionist. The issue of the difference in levels suggesting that a similar interpretation was reached under the Tuna of protection established in respect of hormones and what is used in Dolphin case. the EC. Found that this is not protectionism because EC producers can't use the hormones either and can't export hormone-treated meat. Dispute Resolution

Under the TBT, technical regulations cannot create “unnecessary obstacles to international trade” (Art. 2.2) and cannot be more restrictive GATT than necessary to fulfill its legitimate objective. Here again, the level of The main GATT Articles (GATT 1947): protection is up to the individual member state. The basic obligation of Article XXII: Imposes an obligation on the contracting parties to consilt the TBT is to grant NT and MFN treatment in applying national with one another in order to resolve the conflict. Usually used to rectify standards to foreign goods. Legitimate objectives include national the situation by removing the measures that caused the damage. security, prevention of deceptive practices, and the protection of public Article XXIII: Sets out the causes of action on which a complaint may health and the environment. be based. A GATT contracting party has recourse to the procedures under this article when any benefit accruing to it under the GATT is

14 Law & the Practice of International Trade ‘98 being nullified or impaired. This article also sets out the principle of place immediately prior to January 1, 1995 (art. 3.11). Some provisions reciprocity - contracting parties may agree to release party that has of 1966 agreement still cover disputes involving developing countries suffered material injury from some of its obligations. (art. 3.12).

Other Relevant GATT Articles (GATT 1994): Article 4 Article XI: Allows panels to employ expert panels on technical Parties may request panel if no solution found within 60 days. questions. Article VI: Anti-dumping provision has its own standard of assessment. Article 6.1 Article XVII.6: Where there is more than one permissible interpretation, A complaining party may request the establishment of a panel the panel can adopt any reasonable position. (establishment will take place at the latest at the DSB meeting following Article 64 (TRIPS): Violation of nullification will not be heard for 5 years; that at which the request was made) unless the DSB decides by dispute settlement will only hear specific violation complaints. consensus not to establish the panel.

Note: This is the principle of automaticity - a decision is taken GATT 1994 Dispute Settlement Procedures: Annex II automatically unless there is a consensus against it. This principle also applies to the adoption of panel (art. 16.4) and appellate body reports Codification of dispute settlement - not part of GATT 1947 (art. 17.14), decisions concerning the surveillance of implementation of General - Annex II of the Marrakesh Agreement (GATT 1994): recommendations and rulings (art. 21.6), and compensation and Codification and expansion of existing practices (from GATT 1947); a suspension of obligations (art. 22.6). Parties cannot block full appellate process was added. Applies to all GATT law, necessities establishment of a panel, the adoption of a report, or surveillance and that all parties agree to the substantive law as well as the dispute implementation of DSB rulings resulting from adoption of panel or settlement process and creates a standing body to administer the appellate body report. system with help from the legal secretariat. Consensus is needed to support any decision not to go before the panel. (Before, no state could Article 8 - Composition of Panels be forced to go against its will before a panel, nor accept a panel 8.1 - Panels shall be composed of well-qualified governmental/ non- decision.) governmental members. 8.2 - Panels selected with a view to ensuring independence of Article 2 - Administration members, diverse background and wide spectrum of experience. The DSB administers all dispute settlement rules and procedures, 8.3 - Citizens of member states that are parties to the dispute or third including: parties cannot serve on the panel dealing with that dispute, unless the -establishment of panels parties to the dispute agree otherwise. -consideration and adoption of panel and appellate reports 8.5 - Panels are composed of 3 panelists unless parties to the disupte -surveillance or implementation of ruling and recommendations agree, within 10 days from the establishment of the panel, to have 5 -authorization of suspension of concessions/other obligations panelists. (retaliatory measures) (2.1) 8.9 - Panelists serve in individual capcacities and not as government/organization representatives. Members are not allowed to Article 3 - General Provisions - Application of Dispute Settlement influence them as individuals. Understanding (DSU) 8.10 - When a dispute is between a developed and a developing The DSU applies only to requests for consultations made on or after country, the panel will include at least one panelist from a developing January 1, 1995. For those made under GATT 1947 or other country if the developing party to the dispute so requests. predecessor agreement prior to this date the relevant rules are those in

appeal and the circulation of the AB report is maximum 60 days. Where Article 15 - Interim Review Stage AB considers that it needs more time, it must formally notify the DSB of 15.1 - To ensure that a panel is fully aware of all issues and concerns in the reason for the delay, and the appeal process can never exceed 90 a dispute, the parties can comment during the panel process on the days. sections of the panel report summarizing the facts and arguments of the 17.4 - AB report will be adopted by the DSB and unconditionally parties. adopted by the parties to the dispute unless the DSB decides by 15.2 - Parties receive an "interim rport" (includes fact and argument consensus not to adopt the report within 30 days of its circulation to sections, panel's findings and conclusions). They may comment on the members. interim report and request revision by the panel on precise aspects of it, 17.6 - Appeal is limited to the issues of law covered in the panel reports or request a further panel meeting to discuss those precise aspects. If and legal interpretations developed by the panel. no comments are submitted within a period of time, the interim report is 17.10 - Written submissions and the proceedings of the AB are considered the final report and is circulated to WTO members. confidential. 15.3 - The final report must include arguments made at the interim 17.13 - AB may uphold, modify or reverse legal findings and review stage. conclusions of the panel.

Article 16 - Consideration and Adoption of Panel and Appellate Article 21 - Surveillance of implementation of Recommendations Body Reports and Rulings 16.1 - DSB waits 20 days after the circulation of the rport to consider it 21.3 - At a DSB meeting within 30 days of adoption of a panel or AB for adoption (time for members to consider reports). report, the member concerned myst inform the DSB of intention 16.2 - Objections by members will be submitted with written reasons at concerning the implementation of recommendations and rulings. If least 10 days before the DSB meeting where the report will be immediate compliance is not possible, there is a "reasonable period of considered. time" allowed for the adoption. This period is either the time proposed 16.3 - Parties to a dispute have the rights to participate fully in the by the member and approved by the DSB, or that agreed to by the consideration of the report by the DSB and their views will be fully parties to the dispute after the adoption of the rulings, or a period recorded. determined by binding arbitration 90 days after the issuance of the 16.4 - Within 60 days of circulation, the report will be adopted at a DSB report (DSB guideline for arbitrator is 15 months. meeting unless there is formal notice by a party to appeal or the DSB 21.5 - If parties disagree over whether a measure taken to comply with a decides by consensus not to adopt. report is consistent with the agreement in question, this may be referred to a dispute settlement panel, if possible the same panel that heard the Article 17 - Appellate Review original dispute. 17.1 - Appellate body (AB) is made up of 7 members of recognized authority with demonstrated expertise in law, international trade, and the Article 22 - Compensation and Suspension of Concessions subject matter of the covered agreements, and a division of 3 is If the recommendations have not been implemented after the established to hear and decide any one appeal. reasonable period of time has expired, these may be considered. 17.3 - The AB members are broadly representative of membership in 22.1 - These are temporary measures and are not preferred over full the WTO. Only parties to the dispute may appeal a panel report. The implementation of a recommendation. right to appeal is automatic. Third parties may make written 22.2 - If a member won't comply, if asked, they must enter into submissions to or be heard by the AB. negotiations with a view to developing mutually acceptable 17.5 - Stringent time limits for appeals are set. The period between compensation. If compensation is unpaid, a party can ask the DSB to circulation of the formal notification by one party of the decision to

16 Law & the Practice of International Trade ‘98 suspend the application to the member concerned of concessions or another subsidy complaint immediately. C called for bi-national panel other obligations under the covered agreements. review (FTA 1904) to determine if subsidy findings in accordance with 22.3 - Retaliation should occur in the sectors in which the panel or AB complainant's own US law. found violation, nullification or impairment. Where this is not practical, Issue: What is the standard of review? cross-retaliation in other sectors is permitted. Held: FTA 1904(3) says the panel must apply standard in 1991 and 22.4 - The amount of trade covered by the suspension must be the legal principles that a court of the importing country would apply equivalent to the level of nullification or impairment. upon reviewing the decision - i.e., look at US laws. 22.6 - Authorization to retaliate if given by the DSB unless there is Standard was substantial evidence, split decision (2C v. 2US), said consensus to the contrary. standard not met. Remand of decision back to agency. Said there 22.7 - If there is an objection to the level of retaliation or other problem, must be evidence of a market distortion (competitive advantage) the issue is refered to binding arbitration. before imposition of a countervailing duty. US challenged this panel decision under the extraordinary measures NAFTA under 1904(13). Also a split decision (2C v. 1US). Majority said this NAFTA has a greater variety of procedures, some of which are open to committee was not an appellate court byt a committee of limited private parties. Although the Extraordinary Challenge Procedure is inter- jurisdiction protecting the integrity of the system and had to assess governmental. whether the panel accurately articulated and conscientiously applied the standard for review. Said it had and dismissed the request for Unlike the FTA, panel review of AD and CV is permanent (i.e. extraordinary review. abandoned call for Code) Chapter 19 is restricted to Antidumping & Counterveiling Duties and is Panel roster is to have retired judges instead of academics/lawyers (art. specific to NAFTA. (Note: GATT remedies are broader). 1901.2) Art. 1904: process is aimed at examining the administrative process in each country. Party who contests a decision goes and asks for a bi- Where complaint proceedings are open to a NAFTA country either national panel. These panels are much more activist than national under GATT or NAFTA, a complainant country is entitled to choose appellate courts. Panel decisions are final, i.e. not subject to judicial which regime is pursues its complaint under (Art. 1801), except where review. (This is the main difference to the GATT, which are appealable) the complaint pertains to health, safety or environmental standards, where the respondent country can insist on dispute resolution under Safeguards NAFTA (Art. 2005).

Chapter 19 provides access to private parties to Anti-Dumping and GATT Art. XIX and Uruguay Round Safeguard Counterveiling Duties procedures. Agreement Chapter 11 provides the procedure for private foreign investors. Safeguard Provision (escape clause): allows the contracting party to avoid its obligations where the result would be serious injury to domestic Softwood Lumber industries due to increased imports Measures taken are meant to be Facts: Dispute arose during FTA negotiations. C could produce and temporary and to be applied in a non-discriminatory way. Envisages the export lumber cheaper than US. US producers complained that situation where a domestic industry is suddenly and irresistibly Canadian legislation and rules were tantamount to a subsidy. C threatened not by unfair trade practices, but be completely fair trade. agreed to impose tax on product, which ran out in 1991. US lodged

Hot-Forged Scissors and Shears (1991) Art 22 – all existing gray area measures must be brought in conformity Facts: CITT issued notice of expiry of an Order in Council which with Safeguard Agreement, and phased out within 4 years from the withdrew the benefits of the General Preferential Tariff (GPT) with coming into force of the agreement. respect to imports of Brazilian hot-forged scissors and shears. Action is taken by the executive branch of government (rather than Canada's sole scissor producer (ISL) entered a request for a administrative), so governments must justify their action to their safeguard action against the duty-free importation of Brazilian scissor, constituents and foreign governments (reason why other measures are proved that it had suffered injury and was faced with the threat of preferred) continuing injury. Tariff Board ruled that ISL would actually benefit from the withdrawal of the GPT, but ISL stopped producing scissors. Customs Tariff Act ss. 59.1, 60, 60.1 to 60.5 Rival importers then petitioned the CITT to extend the GPT safeguard CITT Act ss. 20 to 26 measure. Brazil wanted reinstatement of GPT benefit because C no A request for the implementation of a safeguard may be initiated either longer had a scissor industry to protect. by the Minister of Finance or Canadian Producers. In almost all cases, it Held: In light of the fact that Canada no longer had a scissors will require reference of the allegations to the CITT for a full hearing and industry, Order in Council was withdrawn. GPT was originally a recommendation of governmental action. If the CITT recommends a intended as part of an international effort to assist developing response, The Minister of Finance is authorized to impose a variety of countries increase their exports. remedies according to the circumstances, the type of goods, or the origin of the goods. The principle remedy is a temporary surtax

NAFTA Chapter 11 Uruguay Round Safeguard Agreement: Similar to GATT, but with several noteworthy differences Art 6 – serious injury defined as ‘a significant overall impairment of the  only allowed within the 10 year phase-in period domestic industry’  actions are limited to 3 years with no right to renew Art 5 – measures shall be applied to a product being imported  tariffs are the only allowable actions regardless of source  binding arbitration is mandatory for disputes Art 9 – where a quota is employed, shares shall be allocated amongst exports based on proportions from the previous representative period.  imports must be greater than 5-10% of total imports? Art 19 - Safeguard measures may not be applied against the exports of  both bilateral and multilateral safeguard provisions are included LDC’s unless exports from a given country exceed 3% of imports of products in question, and provided that countries with less than 3% import share collectively to not account for more than 9% of total Anti-dumping imports. Art 38 – general dispute resolution mechanism applies Art 13 – any measure lasting more than 1 year must be progressively GATT Art VI, Tokyo Round Anti Dumping Code, and liberalized Uruguay Round Anti-Dumping Agreement Art 18 – Right of exporters to suspend equivalent concessions is withheld for 3 years (so if safeguard lasts for less than 3 years, no right Dumping occurs where foreign producers sell goods into another to compensation) country’s market at prices below those which they would normally Art 19 – no safeguard action shall last for more than 4 years charge in their home market. When this pricing practice causes material Art 11 & 12 – 4 year extension is available where evidence is available injury to domestic producers of like products, anti-dumping duties in the that industry is adjusting and the measure is still necessary

18 Law & the Practice of International Trade ‘98 amount of the difference between the export market price and the home “significant” or “direct” cause of injury to the domestic industry market price may be imposed on the imported goods. (causal link). There are appeals to the Federal Court of Appeal, per Federal Court Act, s. 18(4), and the SCC on issues of law. GATT requires both dumping and injury. Current Canadian anti-dumping If the CITT makes a finding of material injury, anti-dumping duties are legislation is set out in the Special Import Measures Act (SIMA). imposed which reflect the margin of dumping determined by the DMNR. Separate institutional bodies are responsible for determining: Anti-dumping duties are imposed on an entry-by-entry basis, so 1) Dumping – Deputy Minister of National Revenue (DMNR) finds Canadian importers know the extent of their anti-dumping duty liability dumping when computed margin of dumping is positive and non- as it accrues negligent. SIMA s. 2(1) defines “margin of dumping” as “the amount by which the normal value of the goods exceeds the export price Standing - Canada follows GATT requirement that antidumping thereof”. The “normal value” benchmark can be measured in 3 complaints be initiated on behalf of the “industry affected”: domestic ways: producers whose collective output is over 50% of the total domestic a) Home Market Method (used when DMNR can identify buyers in production of like products. No investigation will be initiated where the exporting country who are at the same or similar trade level domestic producers supporting the application represent less than 25% to buyers in Canada– DMNR examines price charged for goods of total domestic production of like products. in the home market over a 60 day period, and makes adjustments for quality differences and differences in terms of Anti-dumping duties, like counterveiling duties are selective and sale and tax treatment (no allowances are made for advertising discriminatory (exception to the MFN principle) & promotional costs). b) Constructed Cost Method (used when sales in domestic market Tokyo Round: are an inappropriate basis of comparison) – DMNR examines all Factors to be used in the evaluating of impact of dumping are “actual costs including production & over-head. A profit margin is then and potential decline in output, sales, market share, profits, productivity, added to these costs based on the profit the exporter makes in return on investments, or utilization of capacity… effects on cash flow… the home market. wages… growth” c) Third-Country Method (used when home country is not a market economy) – DMNR approaches a 3rd party exporter in a Uruguay Round Antidumping Agreement: “surrogate” country and asks that exporter to volunteer its cost Art. 5.8 - An investigation should be terminated when the dumping & pricing information. margin is below 2% of the normal value (de minimus), or when the value The “export price” is the lower of the exporter’s sale price and the of the dumped goods is negligible importer’s purchase price. 2) Material Injury – Canadian International Trade Tribunal (CITT) Art 11 – “Sunset Review” clause – once imposed, duties only last 5 determines whether the dumping “causes or threatens material years (can be reviewed) – implemented in SIMA, s. 76(5). injury to an established industry or materially retards the establishment of an industry”. In determining whether the industry Art. 17.6 – Complaints over non-compliance with the Agreement may be (domestic producers, as a whole, of like products) is being injured, directed to the DSB. The panel shall determine whether the domestic the CITT will consider many indicators (see Tokyo Round). The agencies’ establishment of the facts was proper and whether the Director of Investigation & Research of the Canadian Competition evaluation was unbiased and objective. However, to assuage US fears, Policy Bureau may make submissions to the CITT on the extent to decisions will not be overturned if a different result could have been which domestic injury is caused by normal competitive forces. The come to without bias. CITT requires dumped imports to constitute an “important”,

days, they can refer to the WTO Dispute Settlement Body (DSB) to Subsidies and Counterveiling duties establish a panel. b) Permissible specific subsidies which are actionable under GATT Art VI and Uruguay Round Subsidies Agreement proceeding and counterveilable unilaterally if they cause adverse trade effects, in 3 forms: i) injury to another’s domestic industry The Special Import Measures Act (SIMA) was adopted in 1984 to ii) nullification or impairment of benefits accruing to another implement the Anti-Dumping and Subsidies Code negotiated during the member Tokyo Round. The same institutional procedure used to deterrmine and iii) serious prejudice to another’s interests impose Anti-dumping duties (CITT & DMNR) applies to subsidies (see If a member believes this is happening, they request consultation previous section) with another country. If no agreement is reached within 60 days, they can then go to the DSB to establish a panel. Where foreign government subsidization of foreign exports is causing c) subsidies which are non-actionable and non-counterveilable if they material injury to a domestic industry producing like products, domestic qualify under criteria which limit their distorting effect. In order to be trade laws enacted in many countries permit the unilateral imposition of non-actionable, they must have been notified in advance to the counterveiling duties on the subsidized imports so as to offset or Committee. This notification precludes any resort to the DSB. A neutralize these subsidies. Only works when country A subsidizes its member may request review of a subsidy to the WTO Secretariat exports into country B’s market. who then report their findings to the committee. If a member is unsatisfied with the committee review, they may request binding Where arbitration. a) country A subsidizes its exports into county C’s market, and in so doing displaces country B’s exports from C’s market, or In order to be counterveilable, the subsidy must be specific (i.e. b) country A is subsidizing its domestic producers to service primarily available only to a particular enterprise or certain enterprises, or limited its own domestic market, and in so doing displaces county B’s to certain enterprises located within a designated geographical region). exports from country A’s market It is not specific where the application criteria is objective and applied in the subsidized goods are not moving from country A to county B, so a non-preferential, non-exclusive manner. The following subsidies are Country B cannot counterveil them and is remitted to a complaint under non-actionable even if specific (provided the assistance does not the Subsidies Agreement for resolution under the Panel Dispute exceed 75% of the costs of industrial research or 50% of the costs of Resolution Process. pre-competitive development activity):

Uruguay Round Subsidies Agreement attempts to provide more precise  industrial research assistance definitions of prohibited, actionable and non-actionable subsidies. It  assistance to disadvantaged regions integrates the subsidies disputes into the uniform WTO dispute  assistance for adaptation of facilities to new environmental settlement. standards There are 3 kinds of subsidies:  assistance for research conducted by higher education institutions a) prohibited subsidies which are specific and actionable even if no Determinations of whether a subsidy is actionable are made by the adverse effect is attached to them. They include subsidies Deputy Minister. contingent upon export performance or upon use of domestic over imported goods. Where a member has reason to believe another Counterveiling duties may only be imposed pursuant to investigations member is granting such a subsidy, it may request consultations initiated in accordance with Art VI GATT and the Subsidies Code. A with the subsidizing country. If no agreement is reached within 30 member can invoke a duty after a written application containing

20 Law & the Practice of International Trade ‘98 evidence of a subsidy causing injury. If the subsidy is less than 1% of Said that the Subsidies Code provides for mechanisms other than the value of imports, or where actual or potential volume of standardized countervailing measures. The panel found that the subsidies granted imports is negligible, the investigation must be dropped. to swine producers could be considered bestowed on the production of pork only if they had led to a decrease in the level of prices for Art 19.4 of the Subsidies Code states that “no counterveiling duty shall Canadian swine paid by Canadian pork producer below what they be lebied on any imported product in excess of the amount of subsidy would have paid throug other available sources in supply. Note that found to exist, calculated in terms of subsidization per unit of the subsidies do not have to have a price effect to be countervailable, but subsidized product and exported product.” The duty is to be terminated here, because the industries were separate, a price effect must be no later than 5 years after its imposition, unless continuing injury is shown. The panel also found that the factors listed in 771(b) alone deemed to exist. could not justify the US conclusion. The panel found for Canada, but did not order countervailing duties United States: Countervailing duties on fresh, chilled and frozen pork that had already been paid be reimbursed, since it did not find that the from Canada (1991) duty should not have been levelled at all, only questioned the Facts: in 1984, USDC intiated a countervailing duty investigation reasoning. based on a petition filed by council of US producers. USDC determined that Canada used subsidization. The CITT found that the Canadian Countervailing Duties on Grain Corn from the US (1992) US industry was not materially injured or threatened with material Facts: The CITT found that the US Food Security Act of 1985 injury by reason of the subsidized imports. US producers filed another subsidised grain corn produced in US and lowered the floor price of petition, and ITC issued an affirmative final threat finding. USDC found grain corn in that country. Concluded that this was the reason for a that 771(b) of the Tariff Act (1930) was fulfilled and deemed that dramatic decline in the international price for grain corn. Canadian subsidies provided to live swine were provided to manufacture, producers therefore had to accept lower grain corn prices to maintain production or exportation of fresh, chilled and frozen pork, because in domestic sales in the face of US cheaper corn. 771(b), where an agricultural product processed from a raw Issue: Interpretation of subsidised imports. Canada argued that the agricultural meterial in which the demand for the prior stage product is definition included actual and potential or likely imports for the substantially dependent on the demand for the lattter stage product purpose of establishing the causal link between subsidised imports and processing adds only limited value the subsidy is deemed to be and material injury - based on the argument that these imports would provided with respect to manufacture, production or exportation of the have occurred had the Canadian producers not lowered their prices. product. So the USDC found that the requirements for the levying of Panel Decision: Any quantification of the notion of potential imports countervailing duties were met - said that the subsidy granted to the was speculative and had broad implications for the countervailing duty producers of one industry has been bestowed on the production of remedy. Found that the CITT did not consider positive evidence of another industry. the level or trend of US subsidised corn into Canada as required by Issue: Whether the US acted consistently with Article VI(3) when it VI(2). Further, the CITT did not consider the indicia of injury normally determined that the subsidy bestowed on the production of pork considered as listed in VI(3) but focused on the impact of the decline equalled the full amount of the subsidy granted to producers of swine. in world market price in terms of declining price for corn in Canada. Holding: The panel said that VI(3) was an exception to basic GATT Should have looked at volume and price effects of subsidised imports. principles, namely that importation of products must not be subject to CITT determination therefore inconsistent with Article VI of the chares other than ordinary customs duties. VI(3) must be read Subsidies Agreement. narrowly because of this. The panel rejected the US argument that SCC upheld the CITT decision farmers would be defenceless in all cases where subsidies on raw agricultural meterials affected trade in products processed therefrom.

21 Law & the Practice of International Trade ‘98 Non-violation Nullification and which guaranteed the producers a certain price per tonne of oilseeds regardless of quality. The Panel considered two issues: Impairment 1. Whether the subsidies provided to oilseed producers amounted to production subsidies. 2. Whether the tariff concessions continued to be impaired under the See Art. XXVIII(1)(b) new support system. (1) “If any CP should consider that any benefit accruing to it directly Re: 1: The new support system retained the featueres that had been or indirectly under this agreement is being nullified or impaired or that problematic for tariff concessions because the subsidies were still the attainment of any objective of the Agreement is being impeded as a production subsidies specific to the product. Changes were of form result of… (b) the application by another party of any measure, whether and not substance. or not it conflicts with the provisions of the Agreement… the CP may, Re: 2: The subsidies were designed to maintain producers' income with a view to the satisfactory adjustment of the matter, make written ystematically in a way that protected their dependence on market representations or proposals to the other CP which it considers to be prices and eliminated competitive forces whtat were the main benefit concerned. of the tariff concessions. Thus, still impaired the benefit that the US (2) “if no satisfactory adjustment… the matter may be referred to was to receive under II. the CP (see XXV) and the GATT shall promptly investigate and make Recommendation: Changes to EEC system still necessary to bring it appropriate recommendations… or give a ruling on the matter… If the into conformity with III(4). GATT considers the circumstances are serious enough to justify such action, they may authorize the suspension of concessions or other obligations. Export Controls & Extraterritoriality Payments and Subsidies paid to processors and producers of oilseeds and related animal-feed proteins Export and Import Permits Act (EIPA) – a mark of the Cold War - Context: 1989 GATT panel found that EEC regulations which authorizes the creation of lists of goods that could not be exported provided payments to seed processors conditional on the purchase of without specific authorization. The fundamental concept of the EIPA is oilseeds originating in the EEC were inconsistent with ZIII(4) NT that the Minister for International Trade (i.e. Governor in Council) may standard. The panel also found that as a result of this subsidization set up export controls over specified goods (the export control list) and scheme, benefits accruing the US under II had been impaired - action against specific countries (county control list). The grounds for effectively prevented the reduction in tariffs, a concession previously including items include protecting the military security of Canada and agreed to, from having any impact on the competitive relationship ensuring secondary processing and short-supply controls of resources between domestic and imported product. This is a nonviolation of Canada. Anyone seeking to export a good on the export control list, nullification and impairment case because although the EEC was or goods to a country on the country control list, must get a license. The meeting its requirements by reducing tariffs, it had otherwise authority to place a country on the list depends entirely on the decision eliminated the benefit that the US should have received. The EEC of the minister. Export controls should not have extraterritorial amended its subsidy scheme, and the US asked that the panel be application. Failure to get a permit or to respect the conditions of a reconvened to assess whether the changes were sufficient to bring permit can attract substantial criminal penalties (up to 5 years in jail). EEC's regulations into conformity with III(4). The EIPA is basically territorial. Reconvened Panel Report: The new EEC regulations meant that producers of oilseeds were eligible for direct per hectare payments for The U.S. has the strongest export and re-export laws. US law follows the land devoted to oilseed production instead of the previous system the goods wherever they go and levies penalties against the U.S.

22 Law & the Practice of International Trade ‘98 exporter, persons doing business with him, and even against persons Art 104 – where NAFTA conflicts with other environmental treaties, the using the goods in another country. latter prevails (The Montreal protocol and Basel convention) Art 1004 – it is impermissible to attract investors by offering lower Foreign Extraterritorial Measures Act (FEMA): the Canadian response to environment standards. Extraterritorial Application of Export Control laws of other States. This Art. 6 – private access to remedies for environmental breaches, and the blocking statute authorizes the Government of Canada to order “any setting of high standards (art. 3) are not yet enforceable. Standards are person in Canada” not to comply with the extra-territorial measures of a enforceable is when a member fails to enforce its own environmental foreign government “involving business carried on in whole or in part in laws, but it must be a “persistent failure to enforce” [Art. 22]. This still Canada”. Such measures can include export controls. goes much further than GATT since there is an enforcement mechanism. It is also noteworthy that private parties can complain to their own government about failure of other countries to enforcement their own laws. The results of such inquires are published which may NAFTA Labor and Environmental Side lead to embarrassment. Agreements

Labor side accord (NAALC) has 2 components: Less Developed Countries a) A hard legal obligation to adequately enforce their own domestic See GATT Art. I (grandfathering preferences), Art. XII (exception to XI labor laws, particularly regarding occupational safety and health, for balance of payment reasons) and Art. XVIII. child labor and minimum wage standards (Arts. 3 & 27) b) An obligation to ensure that labor laws provide for ‘high labor Generalized System of preferences and the Lorné Convention standards’ consistent with high quality and productivity workforces Part VI of the GATT set the scene for granting non-reciprocal trade Objective: to avoid race to the bottom. Large differentials in labor costs preferences to developing countries through mechanisms outside the between trading partners will exert downward pressure on wages and GATT. The Generalized System of preferences built on existing colonial standards in developed industrial countries. preferences. Each developed country would be free to grant such Again, a lot of talk, but may lead to embarrassing reports against Mexico preferences as it chose. A ‘waiver’ pursuant to Art. XXV was granted to and US. deMestral thinks that things are “going in the right direction”. permit the derogation from Art. 1 MFN obligations that would be needed How broad is the cultural exemptions 2005.1 FTA? to introduce new preferences. However, GSP excludes product groups NAALC provides an institutional framework for the evolution of of principle interest to developing countries such as steel and textiles. adjustment policies: Commission for Labor Co-operation with a Council and a Secretariat to promote the collection and dissemination of info on The Multi-Fiber Arrangement (MFA) labor issues, to produce reports and studies, and to facilitate An agreement between developed country signatories, including the EU consultation on Labor matters. and 31 exporting developing counties. It provides a framework for Defect in NAALC: no formal channels for stakeholder participation Voluntary Export Restraints, primarily quotas, limiting developing (industries, trade unions, ets. country exports of textiles and clothing to the 9 developed country signatories. It is estimated that if all import restrictions were removed, Environment (North American Agreement on Environmental developing country exports in textiles would increase by about 50% and Cooperation – NAAEC) clothing exports by 129%. Very weak standard. There must be “persistent failure” for adjudication. It is limited by art. 24 to a narrow range of issues.

Uruguay Round G) Decision on Measures in Favor of Least-Developed Countries Many developing countries have been resistant to American demands provides, in Art. 1, that LDCs ‘only be required to undertake that U.S. policies with respect to regulation of service industries, foreign commitments and concessions to the extent consistent with their investment and intellectual property become subjects of negotiation in individual development, financial and trade needs, or of their the GATT. Uruguay Round results reflect a rejection of the view that administrative and institutional capabilities’. Thus MFN concessions developing countries should not be required to make reciprocal on products of export interest to LDCs may be implemented commitments to trade liberalization. The prospect of substantial autonomously, without being tied to reciprocal concessions from reduction in agricultural protection and the phasing out of a significant these countries. part of textiles and clothing protection offers the prospect of real gains to Developing Countries. A) Agreement on Agriculture allows Developing Countries the flexibility to implement their commitments to reduction of protection and domestic support over a 10 year period. B) Agreement on Textiles and Clothing calls for liberalization of MFA protection. All restrictions provided for in bilateral agreements and under the MFA are to be removed according to a graduated schedule. C) Agreement on Technical Barriers to Trade stipulates that Developing Countries shall be provided with technical assistance from other Developed members in order to facilitate the process of standardizing technical requirements, and participation in international standardization exercises. Special and Differential Treatment does not exempt developing countries from obligations with respect to harmonization, standardization or mutual recognition of technical requirements. D) Agreement on Implementation of Art. VI GATT (Dumping) states, at Art. 15, that ‘special regard’ is to be given by developed members to the ‘special situation’ of developing countries when considering the imposition of anti-dumping duties. E) Agreement on Subsidies and Counterveiling Measures states that the ban on export subsidies in Art 3(1)(a) does not apply to least- developed country Members and will apply to other developing country Members only after a transitional period of 8 years. F) Understanding on Rules and Procedures Governing the Settlement of Disputes includes a ‘sufficiently diverse background’ as one of the criteria for composition of dispute panels, and Art. 8(10) stipulates that “when a dispute is between a developing country Member and a developed country Member the panel shall, if the developing country member so requests, include at least one panelist from a developing country Member.