WTO Members - TRAMONTANA - Essay Example

Question 1. In this question, we are presented the case of TRAMONTANA who grants special treatment to cars which contain at least 90% recyclable parts ("recyclable cars") and has a set of phasing-in measures which will ultimately lead to the refusal of selling cars coming from countries which produce non recyclable cars. PATRIA, XENIA and MOLVANIA are WTO Members producing and exporting of cars to TRAMONTANA and some companies within these countries have no plans to move towards the production of recyclable cars. However the industry in MOLVANIA, produces mainly recyclable cars and plans to phase out production of non-recyclable cars shortly and MOLVANIA is considering introducing legislation modeled on TRAMONTANA's recyclable car programme. As a WTO member, TRAMONTANA has breached the obligation of the national treatment where a member should treat foreigners and local equally: Imported and locally-produced goods should be treated equally - at least after the foreign goods have entered the market. The same should apply to foreign and domestic services, and to foreign and local trademarks, copyrights and patents. This principle of "national treatment" (giving others the same treatment as one's own nationals) is also found in all the three main WTO agreements (Article 3 of GATT, Article 17 of GATS and Article 3 of TRIPS), although once again the principle is handled slightly differently in each of these. National treatment only applies once a product, service or item of intellectual property has entered the market. Therefore, charging customs duty on an import is not a violation of national treatment even if locally-produced products are not charged an equivalent tax. TRAMONTANA will pay $300 per recyclable car produced to any domestic car manufacturer. This first measure of its programme is against the WTO obligation of National treatment. - According to the Agreement on Technical Barriers to Trade (TBT): "This agreement will extend and clarify the Agreement on Technical Barriers to Trade reached in the Tokyo Round. It seeks to ensure that technical negotiations and standards, as well as testing and certification procedures, do not create unnecessary obstacles to trade. However, it recognizes that countries have the right to establish protection, at levels they consider appropriate, for example for human, animal or plant life or health or the environment, and should not be prevented from taking measures necessary to ensure those levels of protection are met. The agreement therefore encourages countries to use international standards where these are appropriate, but it does not require them to change their levels of protection as a result of standardization." As the agreement states, TRAMONTANA does not have to change its level of protection as a result of standardization. In this case, it forbids non recyclable cars and recyclable cars from countries where non recyclable cars are produced to be imported. 2. As a response to these accusations TRAMONTANA could argue that on the opposite, they want to comply with the objectives of the Agreement on Technical Barriers to Trade like the "Protection of Human safety and Health: The largest number of technical regulations and standards are adopted to aim at protecting human safety or health" and the "Protection of the Environment" which let to adopt this measures. TRAMONTANA can also offer a defense in explaining the set of measures is not to be adopted ate the same moment but gradually, leaving other countries the sufficient time to adapt to the new standards. 3. According to the Understanding on Rules and Procedures Governing the Settlement of Disputes article 10: Third parties Any Member having a substantial interest in a matter before a panel and having notified its interest to the DSB (referred to in this Understanding as a "third party") shall have an opportunity to be heard by the panel and to make written submissions to the panel. These submissions shall also be given to the parties to the dispute and shall be reflected in the panel report. In that case, it means that MOLVANIA should be third party and apply TRAMONATANA's position because if MOLDAVIA plans to implement the same programme than it should support TRAMONTANA's defense. Question 2 First of all, the custom when a country adopts an anti dumping practice it is mainly to protect its domestic market. In TACHI's case, this reason is not relevant because TACHI's production of mushrooms is not an important industry. It is described as a very small production where only a few farms grow mushrooms. If TACHI's objective was to protect its market, it should have also adopted a tax on the mushrooms that come from other countries which are sold $13.50. Then, when a country is faced with a possible dumping situation, it must calculate whether a particular product is heavily or lightly being dumped. One of the methods is to compare the price in the domestic market with the price on the exporter's domestic market. Here we can see that there is no dumping of the mushrooms from ALBA and BUNGA. While in TACHI's market, mushrooms from ALBA and BUNGA are sold respectively $10 and $10.50 in their domestic market the prices are $8.70 and $10.20. When this method cannot be used, two alternatives are available - the price charged by the exporter in another country, or a calculation based on the combination of the exporter's production costs, other expenses and normal profit margins. And the agreement also specifies how a fair comparison can be made between the export price and what would be a normal price. In CITOON's case, we do not have the sufficient information to see if there is dumping but according to the domestic prices of mushrooms from ALBA and BUNGA we can suppose, if CITOON practices dumping, that is certainly light. TACHI's anti-dumping practice is also irrelevant because it should prevent the domestic market to suffer from very low prices. But here, the share of imported mushroom by ALBA, BUNGA and CITOON is 2.5%, 2% and 1.8% respectively, while imported canned mushroom from all sources accounts for 80% of mushroom consumption. The market won't certainly be deadly harmed by the lower price of the mushrooms from these three countries. As we stated earlier, an anti dumping practice is meant to protect the domestic market of a product but when we look at the tax rates adopted by TACHI we can see that it is forcing the price in order to be aligned with the mushroom price of the other importers and not with the domestic price of canned mushrooms of $25 Finally, we will also point out the non compliance with the Obligation of the Most Favoured Nation. We have demonstrated that TACHI is not in a dumping situation from ALBA, BUNGA and CITOON so when Tachi adopts a 1.96% tax on ALBA's mushrooms and respectively 12.5% and 20.83% on BUNGA's and COTOON's mushrooms, it obviously favours ALBA from BUNGA and CITOON. Question 3 1. In this question we are faced with a situation where JIMA which is a developed country implemented a rule that requires a special tax on packaging that is not biodegradable. JIMA have exempted NEDATIA, also a developed country, from the tax because of a bilateral agreement between the two countries to jointly invest in biodegradable packaging materials. 95% of the producers of JIMA use a different package that is not so taxed. OLA, QUEE and RUBIA (three developing countries of which RUBIA is applying for WTO membership) are affected because their products exported to JIMA use taxable packaging materials. According to the situation OLA, QUEE and RUBIA could bring the case to the Dispute Settlement Body of the WTO for several reasons. - According to the Agreement on Technical Barriers to Trade (TBT): "This agreement will extend and clarify the Agreement on Technical Barriers to Trade reached in the Tokyo Round. It seeks to ensure that technical negotiations and standards, as well as testing and certification procedures, do not create unnecessary obstacles to trade. However, it recognizes that countries have the right to establish protection, at levels they consider appropriate, for example for human, animal or plant life or health or the environment, and should not be prevented from taking measures necessary to ensure those levels of protection are met. The agreement therefore encourages countries to use international standards where these are appropriate, but it does not require them to change their levels of protection as a result of standardization." If we refer to the TBT Agreement to this case, JIMA is perfectly untitled to require a certain level of biodegradability on packaging but it shall not put a barrier on trade as it occurs with OLA, QUEE and RUBIA. In Decision on Measures in Favour of Least-Developing Countries we can read that: "In the application of import relief measures and other measures referred to in paragraph3(c) of ArticleXXXVII of GATT1947 and the corresponding provision of GATT1994, special consideration shall be given to the export interests of least-developed countries." By implementing this new rule, JIMA did not help the export interest of OLA, QUEE and RUBIA. Regarding the bilateral agreement signed between JIMA and NEDATIA, WTO rules say that the purpose of bilateral or regional trade agreements should be to facilitate trade between the constituent countries and not to raise barriers to the trade of other WTO members who are not parties to the agreement. Having an agreement with NEDATIA which exempt it from the packaging tax because of a joint investment in biodegradable packaging materials could be seen as an obstacle for OLA, QUEE and RUBIA. Because they don't have joint investments with JIMA on biodegradable packaging materials, they will be forced to pay the tax. For these three reasons, OLA, QUEE and RUBIA can bring the case to the DSB of WTO. 2. Before requesting a panel, the complainants should try to find a solution with JIMA. As it is explained in the first stage of dispute settlements: "Consultation: Before taking any other actions the countries in dispute have to talk to each other to see if they can settle their differences by themselves. If that fails, they can also ask the WTO director-general to mediate or try to help in any other way." If they can't find an agreement during the sixty day period allocated to consultation then complainants can ask for a panel. 3. POBUM produces and uses the same packaging materials as OLA does, but POBUM does not export to JIMA at present. However, according to the Understanding on Rules and Procedures Governing the Settlement of Disputes article 10: Third parties: 1. The interests of the parties to a dispute and those of other Members under a covered agreement at issue in the dispute shall be fully taken into account during the panel process. 2. Any Member having a substantial interest in a matter before a panel and having notified its interest to the DSB (referred to in this Understanding as a "third party") shall have an opportunity to be heard by the panel and to make written submissions to the panel. These submissions shall also be given to the parties to the dispute and shall be reflected in the panel report. Even though POBUM is not exporting to JIMA for the moment, as he might suffer from the tax on non-biodegradable packaging, he can be heard as a third party during the dispute. Read More