Wto India-Ec Gsp Dispute

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The overall purpose of this case note is to highlight the
relevance for international environmental law of the
recent World Trade Organization (WTO) decision on
the use of ‘positive' conditionality in the Generalized
System of Preferences (GSP) of the European Community
Although the
India-EC GSP
dispute was not
directly concerned with environmental conditionality
per se
, this WTO ruling has, nevertheless, broader
implications for the EC's capacity to use unilateral trade
preferences as an incentive to promote developing
countries' compliance with international environmental
regimes. This was recognized in the subsequent
GSP reform proposed by the European Commission.
More generally, this note will argue that the jurisprudential approach of the Appellate Body opens the way
for WTO-consistent use of unilateral trade
linked to international environmental norms, in addition
to the environment-related unilateral trade
already permitted under the General Agreement on Tariffs
and Trade (GATT), Article XX, general exceptions.
The first part of this case note provides an introduction
to the current structure of the Community's GSP,
paying particular attention to the so-called ‘GSP Environment'. The second part presents the main conclusions
of the Appellate Body's decision in the
GSP Case
, underscoring its relevance for the provision
of additional trade preferences to developing countries
complying with international environmental agreements.
The third part concentrates on the environmental
component of the new ‘GSP-plus' proposed by the
Commission following this WTO ruling. The case note
will conclude with a critical analysis of the potential
improvements and drawbacks of this new incentive
arrangement, not only in terms of WTO compatibility,
but also in providing a meaningful mechanism for
encouraging ratification and compliance with international
environmental regimes.
The GSP is a unilateral trade policy instrument
through which major industrialized countries grant
preferential tariff treatment
to products originating in
developing countries on a non-reciprocal and voluntary
basis, and without extending the same treatment
to the ‘like products' from other industrialized countries. The EC was the first industrialized GATT party to
put in place a GSP scheme in 1971, which is currently
governed by Council Regulation (EC) No 2501/2001.
Under the current GSP scheme, five different arrangements
are in operation, offering different trade
preferences in terms of product coverage and tariff
WTO DS 1 December 2003,
European Communities – Conditions
for the Granting of Tariff Preferences to Developing Countries , WT/
DS246/R; and WTO AB 7 April 2004,
European Communities –
Conditions for the Granting of Tariff Preferences to Developing Countries
WT/DS246/AB/R (AB-2004-1) (hereinafter ‘Panel Report'
and ‘AB Report' respectively).
Communication of 7 July 2004 from the Commission to the Council, the European Parliament and the Economic and Social Committee, Developing Countries, International Trade and Sustainable Development: The Function of the Community's System of Preferences

(GSP) for the Ten-Year Period from 2006–2015, COM (2004) 461 final (hereinafter ‘Commission's Communication'). European Commission, Proposal for a Council Regulation applying a Scheme of
Generalized Tariff Preferences, COM (2004) 699 final (Brussels, 20 October 2004) (hereinafter ‘Commission's Proposal').
Marrakesh Agreement Establishing the World Trade Organization (Marrakesh, 14 April 1994), Annex 1A (GATT), Article XX allows, under certain conditions, WTO members to impose unilateral trade restrictions that are necessary to ‘protect human and animal life and health' (Article XX (b)) or that are ‘in relation to the conservation of exhaustible natural resources if...
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