Chapter 7 – Trade in goods: GATT
What is the WTO and its role?
World Trade Organization is best described as an umbrella organization under which the
agreements that came out of Uruguay Round of MTN are gathered.
It is an intergovernmental organization responsible for:
1. Implementing, administering and carrying out the WTO agreement and its annexes.
2. Acting as a forum for ongoing MTN
3. Serving as a tribunal for resolving disputes
4. Reviewing the trade policies and practices of WTO member states.
What is GATT and what are its main principles?
General Agreement on Tariffs and Trade is annex to the agreement establishing the world
trade organization that sets out the rules under which the member states of that sets out the
rules under which the member states of that organization are committed to negotiate
reductions in customs tariffs and other impediments to international trade in goods.
Main principles:
Most favored nation rule (MFN) requires each member to apply its tariff rules equally to all
other members.
National treatment rule requires a county to treat products equally with its own domestic
products one they are inside borders.
What are tariffs?
Governmental charges imposed on goods at the time they are imported into a state.
Bound tarrif rates are the highest tariff rates a WTO member state may set on imports from
another member states.
Transparency
Principle that governments must make their rules, regulations and practices open and
accessible to the public and other governments.
What is direct effect?
The principle whereby a treaty may be invoked by a private person to challenge the actions of
a state that is a party to the treaty.
What is customs union?
A group of state that have reduced or eliminated tariffs among themselves and have also
established a common external tariff
What are free trade area’s?
A group of states that have reduced or eliminated tariffs among themselves but maintain their
own individual tariffs in dealing with other states.
What is harmonized system (HS)?
A system of classifying goods for customs purpose established by the convention on
nomenclature for the classification of goods in custom tariffs.
,Where is the escape clause for?
Allows a WTO member state to escape temporarily from its GATT obligations when there is
a surge in the number of imports coming from other member states.
What are safeguards?
Emergency trade measures imposed to protect domestic industry from a surge of imports
What is preshipment Inspection?
Developing states frequently engage private companies to verify price, quantity, quality,
customs classifications and other characteristics of goods before the goods are shipped from
other states.
Agreement on technical barriers to trade (TBT)
Establish rules governing the way WTO member states draft, adopt and apply technical
regulations and standards.
Subsidies and countervailing measures
- Nonactionable subsidy
A subsidy that is permissible and nonchallenge able, such as government funding to
underwrite research activities, to aid disadvantaged regions, or to help existing
facilities adapt to new environmental requirements.
- Prohibited subsidy
A subsidy that is presumed to be trade distorting because it requires export
performance or is contingent upon the use of domestic instead of imported goods.
- Actionable subsidy
A subsidy that may be challenged as trade distorting if it injures the domestic industry
of another WTO member state, nullifies or impairs the benefits due another member
state, or causes or threatens to cause serious prejudice to the interest of another
member state
What are the rules of origin?
Laws, regulations and administrative procedures used by states for determining the country of
origin of goods.
Agreement on rules of origin
Established a three-year program aimed at bringing about an international system of
harmonized rules of origin.
- Nondiscrimination rules:
o May be discriminatory
o May constitute exceptions to GATT N-DP
What are General exceptions?
Situations that excuse a WTO member state from complying with its GATT obligations in
order for the state to protect certain essential public objectives.
1. Necessary to protect public morals
2. Necessary to protect human, animal, or plant life or health
3. Relate to the importation or expectation of gold or silver
4. Are necessary to secure compliance with laws or regulations that are not inconsistent
with GATT
5. Relate to products of prison labor
, 6. Protect national treasures of artistic, historic or archaeological value
7. Relate to the conservation of exhaustible natural resources
8. Are undertaken in accordance with an intergovernmental commodity agreement
9. Involve restrictions on exports of domestic materials needed by a domestic processing
industry during periods when the domestic price of those materials is held below
world prices as part of a governmental stabilization plan
10. Essential to acquiring products in short supply.
What are Security exceptions?
Situations that excuse WTO member state from complying with its GATT obligations when
those are in conflict with its essential security interest or its duties under the united nations
charter.
Export controls?
Member states commonly employ GATT exceptions to limit certain kinds of exports.
Sanitary and phytosanitary measures
The agreement on the application of sanitary and phytosanitary measures (SPS agreement) is
meant to complement the agreement on technical barriers to trade by defining the measures
that may be taken by the WTO member states to protect human, animal, and plant life and
health
Anti -dumping
The anti dumpinf code, replaces codes negotiated during the Tokyo and kennedy rounds. The
current code defines dumping in de following way.
- Dumping -> Selling exported goods at prices below their normal value.
When is something considered dumping?
A product is to be considered dumped, i.e. introduced the commerce of another country at
less than its normal value, if the export price of the product exported from one country to
another is less than the comparable price, in the ordinary course of trade, for the like products
when destined for consumption in the exporting country.
BELANGRIJK
1. What does Preshipment inspection mean?
Developing states are obligated to frequently engage private companies to verify
price, quantity, quality, customs classifications and other characteristics of goods
before the goods are shipped from other states.
2. What does transparency principle mean?
The WTO member states must make their rules, regulations, practices and that they
are obligated to disclose to public and other governments these rules, regulations and
practices they follow in their domestic trade systems.
3. The most fundamental principle of GATT is that international trade should be
conducted without discrimination, This principle is given concrete form in:
The most-favoured-nation (MFN) and the international treatment rules.
What is the WTO and its role?
World Trade Organization is best described as an umbrella organization under which the
agreements that came out of Uruguay Round of MTN are gathered.
It is an intergovernmental organization responsible for:
1. Implementing, administering and carrying out the WTO agreement and its annexes.
2. Acting as a forum for ongoing MTN
3. Serving as a tribunal for resolving disputes
4. Reviewing the trade policies and practices of WTO member states.
What is GATT and what are its main principles?
General Agreement on Tariffs and Trade is annex to the agreement establishing the world
trade organization that sets out the rules under which the member states of that sets out the
rules under which the member states of that organization are committed to negotiate
reductions in customs tariffs and other impediments to international trade in goods.
Main principles:
Most favored nation rule (MFN) requires each member to apply its tariff rules equally to all
other members.
National treatment rule requires a county to treat products equally with its own domestic
products one they are inside borders.
What are tariffs?
Governmental charges imposed on goods at the time they are imported into a state.
Bound tarrif rates are the highest tariff rates a WTO member state may set on imports from
another member states.
Transparency
Principle that governments must make their rules, regulations and practices open and
accessible to the public and other governments.
What is direct effect?
The principle whereby a treaty may be invoked by a private person to challenge the actions of
a state that is a party to the treaty.
What is customs union?
A group of state that have reduced or eliminated tariffs among themselves and have also
established a common external tariff
What are free trade area’s?
A group of states that have reduced or eliminated tariffs among themselves but maintain their
own individual tariffs in dealing with other states.
What is harmonized system (HS)?
A system of classifying goods for customs purpose established by the convention on
nomenclature for the classification of goods in custom tariffs.
,Where is the escape clause for?
Allows a WTO member state to escape temporarily from its GATT obligations when there is
a surge in the number of imports coming from other member states.
What are safeguards?
Emergency trade measures imposed to protect domestic industry from a surge of imports
What is preshipment Inspection?
Developing states frequently engage private companies to verify price, quantity, quality,
customs classifications and other characteristics of goods before the goods are shipped from
other states.
Agreement on technical barriers to trade (TBT)
Establish rules governing the way WTO member states draft, adopt and apply technical
regulations and standards.
Subsidies and countervailing measures
- Nonactionable subsidy
A subsidy that is permissible and nonchallenge able, such as government funding to
underwrite research activities, to aid disadvantaged regions, or to help existing
facilities adapt to new environmental requirements.
- Prohibited subsidy
A subsidy that is presumed to be trade distorting because it requires export
performance or is contingent upon the use of domestic instead of imported goods.
- Actionable subsidy
A subsidy that may be challenged as trade distorting if it injures the domestic industry
of another WTO member state, nullifies or impairs the benefits due another member
state, or causes or threatens to cause serious prejudice to the interest of another
member state
What are the rules of origin?
Laws, regulations and administrative procedures used by states for determining the country of
origin of goods.
Agreement on rules of origin
Established a three-year program aimed at bringing about an international system of
harmonized rules of origin.
- Nondiscrimination rules:
o May be discriminatory
o May constitute exceptions to GATT N-DP
What are General exceptions?
Situations that excuse a WTO member state from complying with its GATT obligations in
order for the state to protect certain essential public objectives.
1. Necessary to protect public morals
2. Necessary to protect human, animal, or plant life or health
3. Relate to the importation or expectation of gold or silver
4. Are necessary to secure compliance with laws or regulations that are not inconsistent
with GATT
5. Relate to products of prison labor
, 6. Protect national treasures of artistic, historic or archaeological value
7. Relate to the conservation of exhaustible natural resources
8. Are undertaken in accordance with an intergovernmental commodity agreement
9. Involve restrictions on exports of domestic materials needed by a domestic processing
industry during periods when the domestic price of those materials is held below
world prices as part of a governmental stabilization plan
10. Essential to acquiring products in short supply.
What are Security exceptions?
Situations that excuse WTO member state from complying with its GATT obligations when
those are in conflict with its essential security interest or its duties under the united nations
charter.
Export controls?
Member states commonly employ GATT exceptions to limit certain kinds of exports.
Sanitary and phytosanitary measures
The agreement on the application of sanitary and phytosanitary measures (SPS agreement) is
meant to complement the agreement on technical barriers to trade by defining the measures
that may be taken by the WTO member states to protect human, animal, and plant life and
health
Anti -dumping
The anti dumpinf code, replaces codes negotiated during the Tokyo and kennedy rounds. The
current code defines dumping in de following way.
- Dumping -> Selling exported goods at prices below their normal value.
When is something considered dumping?
A product is to be considered dumped, i.e. introduced the commerce of another country at
less than its normal value, if the export price of the product exported from one country to
another is less than the comparable price, in the ordinary course of trade, for the like products
when destined for consumption in the exporting country.
BELANGRIJK
1. What does Preshipment inspection mean?
Developing states are obligated to frequently engage private companies to verify
price, quantity, quality, customs classifications and other characteristics of goods
before the goods are shipped from other states.
2. What does transparency principle mean?
The WTO member states must make their rules, regulations, practices and that they
are obligated to disclose to public and other governments these rules, regulations and
practices they follow in their domestic trade systems.
3. The most fundamental principle of GATT is that international trade should be
conducted without discrimination, This principle is given concrete form in:
The most-favoured-nation (MFN) and the international treatment rules.
