Governmental Assistance to Economic Development: Article XVIII

In one line

A developing member may take back a tariff concession or restrict imports in order to build a particular industry, on stated conditions and with compensation, and almost nobody uses the provision.

In exam wording: Article XVIII of GATT 1994 recognises that members whose economies can support only low standards of living and are in the early stages of development may need to take protective measures affecting imports, and Sections A and C permit the modification or withdrawal of concessions and the imposition of restrictions to promote the establishment of a particular industry.

The structure of Article XVIII

Sections A and C are the infant industry provisions, and the phrase is worth using because it names a whole tradition of development economics that GATT accommodated in 1955 when the article was rewritten.

The conditions, and why they matter more than the permission

The industry must be one whose establishment the member is promoting with a view to raising the general standard of living. The measure must be necessary, in the sense that no measure consistent with the other provisions of the Agreement would be practicable to achieve the objective.

And the affected members must be compensated or must be free to retaliate. Under Section A, a member may proceed if agreement is not reached after negotiation, and affected members may then withdraw substantially equivalent concessions. That is the same symmetry Article XXVIII uses, and it is what keeps the provision from being a unilateral escape.

Part IV, Articles XXXVI to XXXVIII

Added in 1965, in force 1966, and it is the article of promises.

Article XXXVI states the principles and objectives: the need for a rapid and sustained expansion of the export earnings of less developed contracting parties, for improved conditions of access to world markets for primary products, for diversification, and for the relationship between trade and development. Article XXXVI:8 contains the non-reciprocity rule: the developed contracting parties do not expect reciprocity for commitments made by them in trade negotiations to reduce or remove tariffs and other barriers to the trade of less developed contracting parties.