Does Australia Violate the GATT Articles - Essay Example

? Number: Table of Contents Table of Contents 2 Introduction 2 Article I 3 Article III: 4 4 Article XI: 1 5 The exceptions within article XX of GATT 6 SPS Agreement 9 Why Australia may not determine policies to apply within its borders 12 Recommendations 13 Bibliography 14 Introduction 1. Is the Australian in violation of the GATT articles? Countries may be free to carry make laws and carry out discriminative trade activities within their borders. However, most countries are signatories and members to global agreements that influence their sovereign decisions. The world trade organisation (WTO) is one such body which is a contract enforcing governments to maintain their trade policies within the agreed upon rules. The core objectives are to set and enforce rules for global trade, to offer a forum for negotiating and scrutinizing further trade liberalization and to settle trade disputes. In addition, WTO seeks to enhance transparency in decision making process, assist developing nations gain fully from global trading system and cooperate with other global economic organisations. These objectives are similar to those of GATT, but WTO pursues these goals more comprehensively.1 The new Australian government is taking severe steps in its bid to uphold the Absolute Protection for Wild Whales Act 2013. In addition, the government of Australia seeks to ban entirely the importation, distribution and sale of whale and whale products within its borders. The government gives reasons that Japan and other governments have been weak in upholding the laws stipulated in the international whaling commission. The international whaling commission was set to introduce zero catching limits for profitable whaling as well as keeping whale catch limits under scrutiny. All this was in a bid to enhance and foster the recovery of depleted whale populations. The ban applies to the vending of domestic products and products from foreign countries. This includes goods that Australian travellers bring into the country from abroad. Article I: 1 Article I: 1 of the GATT 1947 prohibits discrimination among like products coming from or destined for different countries. In the Canada-autos case, the measure at issue was Canada’s duty exemption for imports by certain manufacturers in partnership with Canadian value added. Automobile imports and imported automobiles materials were the product at issue. The appellate body/ key panel upheld that duty exemption was inconsistent to the article I:1 on the grounds that the article covers de jure and de facto unfairness. Moreover, the duty exemption at issue in verity was given only to imports from a smaller number of countries in which the exporter was associated with suitable Canadian manufacturers. Canada’s defence was abandoned on grounds that duty exemption was given to certain countries other than all manufacturers from all countries. In relation to Australian current issue, the country has not violated article I: 1 since the ban is not discriminatory in nature. The ban covers all aspects of whale products from foreign countries. Further, Australia is not discriminatory since it also bans whale products that Australian travellers bring into the country. One may argue that products brought by tourists do not constitute trade goods and thus this is discrimination. However, the country seals this loophole as people may exploit it to continue the usage and sale of whale products. Article III: 4 Article III: 4 were set in the case of Korea –various measures on beef; the appellate body established three components that have to be fulfilled for the violation to arise. One, the traded in and national products at issue are “like products” that the determination is the issue at “law, directive, or obligation affecting their domestic sale, offering for sale, purchase, transport, delivery or sale”. The final component is that imported goods are given “less favourable” dealing than that given to like domestic products. In relations to article III: 4, the appellate body established that the Canadian value added obligation imposing the use of domestic materials to be qualified for exemption of tax led to “less favourable” treatment to imports by severely affecting the conditions of competition exports. In the case of Australia, article III: 4 have not been contravened since the country bans the sale of domestic products as well as products from foreign nations.2 This wholesome ban eliminates the condition of “less favourable” treatment that is a requirement for a violation to arise. The reason is that the government prohibits the importation, distribution and sale within Australia borders. The move is not discriminatory since the ban entails all products that contain whale and whale oil such as jewellery and watches. Since the aspect of “less favourable” dealing does not occur, the aspect of violation cannot be claimed, since the all the three conditions must be met; the absence of which does not constitute to violation. Article XI: 1 Article XI: 1 of the GATT holds that there should be no prohibitions except for taxes, duties or other charges, whether made through import or export licenses and effective quotas. Provision further states that no contracting party should maintain restrictions on the importation of any good of the region of any other contract party. The article further maintains that no contract party should restrict exportation and sale of any product predestined for the country of any other contract party. In view of the above clause, Australia is instituting a restriction that is not based either taxes, quotas or other charges stipulated in the provision. As such, Australia has breached and contravened Article XI: 1 that prevents a country from taking such a comprehensive ban for either imports or exports that are not based on taxes and duties. However, Australia may defend its act by referring to the phrase “other measures” besides licenses and quotas.3 The phrase “quantitative restrictions” must be comprehended largely in order to include all measures, which are not covered in the concept of tariff barriers and restrictions to trade. The overt reference to import or export licenses and quotas is hence merely descriptive. The exceptions within article XX of GATT 2. Do the Australian measures satisfy any of the exceptions within article XX of GATT? The following are the general exceptions of article XX of the 1947 general agreement on tariffs and trade. Subject matter to the constraint that certain measures are not applied in a way that would make up a means of indefensible or capricious discrimination between nations where similar circumstances prevail, or a concealed restraint on global trade, nothing of article XX exceptions shall be seen to prevent the implementation or imposition by any contracting party of events: A. Necessary to safeguard public ethics; B. Essential to safeguard human, animal, plant life or health; C. Relating to importation and exportation of silver or gold; D. Fundamental to secure observance with laws or regulations that are inconsistent with the provisions of this Accord, in combination to provisions relating to customs enforcement. In addition, the imposition of monopolies operated under the 4th paragraph of article II and Article XVII, patent, copyrights and trademark protection and prevention of misleading practices measures are necessary;4 E. Concerning the goods of prison labor; F. Enforced for the fortification of countrywide treasures of creative, historic or archaeological value; G. Concerning the preservation of exhaustible natural resources, when such events are made effective in combination to restraints on domestic production or use; H. Taken in pursuance of requirements under any intergovernmental product accord, which conforms to criteria submitted to the contract parties, and not censured by them; I. Concerning restrictions on exports of domestic materials essential for making sure quantities of such materials to a domestic processing industry, in periods when the national price of such materials is held below the below the global price as part of a legislative stabilization plan. Moreover, given that such restraints shall not function to augment the exports of, or the protection afforded to such domestic industry. The measures also shall not depart from the provisions of this Accord concerning non-discrimination. J. Necessary for the attainment or allocation of goods in general or local supply. Given that any such events shall be regular with the rule that every contract party is allowed an equal share of the global supply of such goods. Moreover, such events that are not in agreement with other provisions of this Accord shall be discontinued immediately upon cessation of the conditions giving rise to them. 5 Australian decision to ban the importation, distribution and sale of whale products and whale oil satisfies several of the above exceptions. One of these conditions is the measure to safeguard human, animal, plant life or health. The establishment absolute protection for whale acts 2013 in congruence to the international whaling commission. The commission body is charged with the conservation of whales and management of whaling thereof.6 This is geared towards the protection of animal health. In addition, the Absolute Protection for Wild Whales Act 2013 satisfies the paragraph (f) on fortification of nationwide treasures and that have archaeological value to the country. Australia also satisfies paragraph G relating on exhaustible natural resources that is made in combination with restrictions on domestic production. The adoption of Act 2013 seeks to safeguard natural assets, and whales are some of them. The Absolute Protection for Wild Whales Act 2013 and the ban also satisfy paragraph H that is taken in pursuance to of requirements under any intergovernmental product accord, which conforms to standards submitted to the contract parties. The contract parties that are disputing Australian decision are members of CITES and international whaling commission. CITES (convention on international trade in endangered species) is both a trade accord and a conservation agreement, where both the plaintiff and the defendant in this case are signatories. CITES seeks to ensure that trading in plants and wild animals does not threaten their existence, and further lead to the existing extinction predicament. Australia decision is based on the verity that untenable trade in wildlife is one of the key risks to biodiversity as it concerns numerous animal species, which can push them close to extinction. 7Trade in endangered species affects a wide range of live plants and animals, including an array of products obtained from them, including tourist souvenirs, medicine and perfumes. In the case of Tuna/Dolphin case, it was immensely held that the concerns for conservationists and environmentalists were differing with the goals of the GATT to lessen barriers in trade. It was regularly held that trade makes results in economic growth, increased trade and industry activity results to high pollution levels.8 Thus, trade is detrimental and so are rules discouraging restraints on trade. The Tuna/Dolphin case captured the perceived tension for the environment and the international trade law. In the Tuna/Dolphin case, commercial tuna fishing had been continued by use of purse seine nets. The nets are large enough to capture a school of fish so that the tuna remain in the net, which makes it easy to harvest them. The problem arose in that tuna are often found together with dolphins; in reality tuna boats look for dolphins that come up for air and usually dive out of water, so as to trace tuna whirling below the surface. As a result, dolphins became trapped in the purse seines along with the tuna and many were fatally drowned. Some species of dolphins are threatened with extinction. The United States adopted a marine mammal protection act to prohibit “setting on dolphins” and importation of tuna caught in foreign vessels. United States held that a country from which tuna were to be imported had to meet two conditions. These are; a country ought to have a regulatory program comparable to that of the United States. The state also ought to have an average incidental marine mammal taking rate comparable to that of the United States fleet. The GATT panel on the dolphin case upheld that the US could not embargo tuna products imports on the basis that Mexican way of tuna production did not meet US regulations. Additionally, GATT rules did not permit a country to take a trade action for the sole purpose of enforcing its own domestic laws in another country, even for the purposes of protecting exhaustible natural resources or animal health. SPS Agreement 3. Are the measures covered under the SPS Agreement in articles 2, 3 and 5? SPS agreement is an elaboration of GATT article XX (b). SPS agreement applies to health regulations; the safeguard, animal or plant life and health, which are alike to those set in the TBT Accord. SPS Accord, GATT and TBT fit together in that SPS measures are a subset of the health measures covered by article XX (b). SPS Agreement covers events safeguarding exposure to pest, illness causing organisms and laws constraining additives and toxins in feedstuffs. TBT Agreement applies to complex and technological rules that are both compulsory and non-compulsory, given that the event is not covered by the SPS Accord. On its part, GATT article XX (b) covers all events essential to safeguard human, plant and animal health. The cooperation motives for SPS Accord was for the sole purpose of fleshing out and clarifying the exception for health measures in article XX(b) of the GATT 1944.9 SPS Agreement enforces fresh and inclusive set of rules as a further elaboration of the GATT exception.10 The key doctrines of the SPS Accord, also contained in article 2 reveal the fundamental aim of balancing the need to enhance market access for food and agricultural goods with the acknowledgement of the autonomous right governments to take actions to safeguard human, animal and plant life and health. Article 2.1 of the SPS accord overtly recognises the independent right of WTO signatories to take SPS measures. SPS Accord subjects WTO signatories to several regulations with regards to SPS measures. These disciplines are; A. The duty to take only those measures essential to safeguard human, animal or plant or health; B. The duty to take only SPS actions found on scientific doctrines on adequate scientific proof; and C. The duty not to assume SPS measures that arbitrarily or unduly discriminate a concealed constraint on trade. 4. May Australia refuse to participate in consultations with the complainant member countries under the Dispute Settlement Understanding? The dispute settlement understanding (DSU) was set to enforce multilateral disciplines as a positive upshot from the Uruguay round. The DSU states that the dispute settlement body should reach a decision through consensus, though the rule does not apply to the establishment of a panel of experts. The Dispute Settlement Body (DSB) comprises all WTO signatories and has the mandate to set up panels, adopt panel and appellate body reports. The DSB also has the mandate to order for suspension of concession and other WTO agreement duties. Australia may refuse to participate in consultations with complainant member countries.11 Article 4 (2) of the Dispute Settlement Understanding holds that every WTO member agrees to offer compassionate consideration to and accord sufficient opportunity for consultation with regards to any representations made by another member. Article 4(3) states that if a member does not reply to a request to enter into consultations within ten days, then the member who requested for consultations may proceed to apply for for the setting up of a panel. In this case, Australia may refuse to engage in consultations and wait for the complainant to request for the formation of a panel that will resolve the dispute. 12A panel comprises of three panellists, and its discussions are confidential while opinions expressed in the panel report by individuals are anonymous. Citizens of countries that are parties to the disagreement may not sit in the panel, unless there is a mutual agreement by the parties. The appellate body is the standing tribunal to consider any appeals. Appeals are constrained to matters of law contained in the panel report and to lawful explanations advanced by the panel.13 Appellate body proceedings are not to exceed sixty days and are confidential. The reports are written in the absence of parties to the dispute. Why Australia may not determine policies to apply within its borders 5. Explain and discuss the policy behind the WTO agreements’ insistence that measures restricting trade be justified before an international tribunal against objective standards. Why Australia may not determine autonomously the animal and environmental welfare policy that is to apply within its border? The WTO insistence that events restricting trade be justified before an international tribunal against objective standards to ensure fairness to all, as well as, ensuring that a country does not use her national laws to discriminate others. Australia may not autonomously determine the animal and environmental welfare policy within its borders, due to its membership at WTO. In the Mexico et al, v. United States in the Tuna/Dolphin case, United States restricted imports of yellow tuna. However, the 1991 panel report asserted that the united states could not embargo importation of tuna products on the basis that Mexican mode of tuna production did not match that of the united states. 14It was agreed that United States was disputing a product on the foundation of the “process”. The WTO insistence on justification before an international tribunal seeks to prevent member countries from enforcing their own national laws on others. In the case of Dominican republic-import and sale of cigarettes, it was held that no country should accord “less favourable treatment” to imported goods than that given to domestic products. Similarly, Australia may be compelled by the facts in EC — IT Products case on grounds that its total ban on import, distribution and sale of whale products has the potential to affect traders and indeed does affect trade and traders. Recommendations Following the above elaboration on case laws and legal positions, it is clear that Australian government is right in its decision to uphold the international whaling commission and absolute protection for wild whales. This is in line with the CITES objectives of conserving endangered species. In addition, its efforts to ban the use of whale products within its borders do not contravene article I: 1 and III: 4 of GATT 1947. Further, the ban also fulfils some of the exceptions of article XX, that is, XX (b, f, g and h) that promote discriminatory measures in global trade. However, Australia government ought to be flexible enough to accommodate the effects that such ban brings along. For instance, the ban on whale meat that is a favourite delicacy in many restaurants will adversely affect the restaurant industry. Probably, the restaurant industry is a significant contributor of Australian economy. Both customers and restaurant owners will be disadvantaged by the move. In addition, traders of products containing whale components like jewellery and perfumes will be severely affected by the ban. This has a negative impact on the economy. Citizens who wish to travel abroad and bring along whale products from their trips are also disadvantaged by the ban. The whale ban policy is subject to approval by other WTO members, who already want to file a complaint against the Australian action. There are reasonable grounds for complainants to succeed in their petition, following the above explanation. Therefore, the government of Australia should reconsider its decision and soften its move, or do away with the ban altogether depending on the outcome of the complainant. Bibliography Bossche, P. (2006). The Law And Policy Of The World Trade Organization: Text, Cases And Materials. UK: Cambridge University Press Button, C. (2004). The Power To Protect: Trade, Health And Uncertainty In The WTO. Oxford: Hart Publishing. Hoekman, B.M., Mattoo, A., & English, E.D. (2002). Development, Trade, and the WTO: A Handbook, Part 1. New York: World Bank Publications. International Whaling Commission. (2013). International Whaling Commission. Accessed on 29 March 2013 from: http://iwc.int/home. IUCN. (2013). Convention on international trade in endangered species (CITES). Accessed on 29 March 2013 from: http://www.iucn.org/news_homepage/events/cities/. Lowenfeld, A.F. (2008). International Economic Law. UK: Oxford University Press. Nader, R. (1993). The Case Against Free Trade: GATT, NAFTA and the Globalization of Corporate Power An Earth Island Press Book. California: North Atlantic Books. Wolfrum, R., Stoll, P.T., & Fohr, A.S. (2007). WTO: Technical Barriers And Sps Measures. Boston: Martinus Nijhoff Publishers. World Trade Organisation. (2013). General Agreement On Tariffs And Trade 1994. Accessed on 29 March 2013 from: http://www.wto.org/english/res_e/booksp_e/analytic_index_e/gatt1994_e.htm. World Trade Organization. (2006). WTO dispute settlement: one-page case summaries. Accessed on 29 March 2013 from: http://www.wto.org/english/res_e/booksp_e/dispu_summary06_e.pdf. Yearwood, R.F. (2012).The Interaction Between World Trade Organisation (WTO) Law and External International Law: The Constrained Openness of WTO Law (A Prologue to a Theory). London: Routledge. Read More