LLM Group 2 Business Law Global Trade Under World Trade Organisation 2018 Question Paper with Solutions

The evolution, round by round

Before the rounds: an accident. The Bretton Woods Conference of 1 to 22 July 1944 created the International Monetary Fund and the International Bank for Reconstruction and Development and recommended a third institution for trade. That work produced the Havana Charter for an International Trade Organization on 24 March 1948, signed by fifty three states, which President Truman never submitted to the Senate once ratification became hopeless in 1950. Its commercial policy chapter had been detached and signed at Geneva on 30 October 1947 by twenty three countries, entering into force on 1 January 1948 under a Protocol of Provisional Application. GATT was therefore a fragment of a stillborn treaty, operating provisionally, without legal personality, for forty seven years.

Rounds one to four: tariffs, product by product. Geneva 1947, twenty three participants, about forty five thousand tariff concessions. Annecy 1949, thirteen participants. Torquay 1951, thirty eight. Geneva 1956, twenty six. Each proceeded by request and offer, item by item, between principal suppliers, with the results multilateralised by Article I. Progress was steady and slow.

Round seven, the Tokyo Round, 1973 to 1979, one hundred and two participants. It cut tariffs by about a third again and produced nine codes: on subsidies and countervailing measures, technical barriers, government procurement, customs valuation, import licensing, anti-dumping, bovine meat, dairy and civil aircraft. Each bound only its signatories. This is the origin of "GATT à la carte", the position in which identical conduct could be lawful against one trading partner and unlawful against another, and it is the defect the single undertaking was written to cure. The Round also produced the Enabling Clause of 28 November 1979, legitimising preferences for developing countries.

Between the rounds, the patches. A waiver to the United States in 1955 permitting agricultural quotas contrary to Article XI, never withdrawn. The Multi Fibre Arrangement of 1974, licensing bilateral quotas on textiles. A Council of Representatives created by decision in 1960 to act between sessions. Voluntary export restraints growing up beside Article XI because they were formally imposed by the exporter. Each patch is evidence that the instrument could not carry the load.

Why the eighth round, unlike the seven before it, produced an institution. Three of its innovations were legally impossible without one. The single undertaking needed a legal person to which Annexes 1 to 3 could be annexed and a single membership. GATS and TRIPS could not be amendments to GATT and needed a common roof, which Article II:2 of the Marrakesh Agreement supplies. And negative consensus needed a standing body capable of being deemed to have decided, which Article IV:3 supplies by making the General Council sit as the Dispute Settlement Body. The organisation was therefore the necessary consequence of the Round's own content, and in building it the members completed the design abandoned at Havana in 1948.

The key areas of difference

The legal relationship

GATT 1947 was terminated and re-enacted. Members withdrew from it, completing by the end of 1995, and what binds WTO members is GATT 1994: GATT 1947 as amended, plus the protocols and certifications on concessions, the protocols of accession, the surviving Article XXV waivers, six Understandings and the Marrakesh Protocol. In Brazil: Measures Affecting Desiccated Coconut, WT/DS22/AB/R, adopted 20 March 1997, the Appellate Body held GATT 1994 to be a legally distinct instrument from GATT 1947, so a countervailing duty investigation begun before 1 January 1995 could not be judged under the new agreements; the Philippines lost.

The two rows of the table that carry the most weight, and one that is not a difference at all

The decisive row is dispute settlement, because every other difference is only worth what can be enforced. Under GATT a panel was established by consensus and its report adopted by consensus, so the respondent could veto either step. Under the DSU each step occurs unless the DSB decides by consensus not to act, which makes it automatic, and the numbers follow: roughly three hundred complaints in GATT's forty seven years, several significant reports never adopted, against more than six hundred and thirty disputes in the WTO's thirty with a high compliance rate. The two unadopted Tuna Dolphin reports of 1991 and 1994 are the proof of the old defect, and India: Quantitative Restrictions, decided in 1999 on Article XVIII:B, a provision in force since 1948, is the proof of the new capacity.

The second decisive row is the form of obligation. The Tokyo Round's nine codes bound only their signatories, so identical conduct could be lawful against one partner and unlawful against another. The single undertaking of Annexes 1 to 3 ended that, and it is what made GATS and TRIPS possible at all: neither could have been imposed as an optional code on a membership that had spent the 1980s resisting them.

The differences from GATT are institutional, in coverage, in the form of obligations, in the treatment of domestic law, in agriculture, textiles and grey area measures, in transparency, and above all in enforcement. The similarity is that the substantive law is still the law of 1947, re-enacted as GATT 1994, a legally distinct instrument as Brazil: Desiccated Coconut holds.