Course on WTO Law and Jurisprudence Part II: WTO Law on Services, Intellectual Property, Trade Remedies, and Other Disciplines

Transcription

1 Course on WTO Law and Jurisprudence Part II: WTO Law on Services, Intellectual Property, Trade Remedies, and Other Disciplines IMPORT LICENSING AND TRIMS Session March 2017

2 AGENDA I. Import licensing II. What is "import licensing"? Distinction between import licensing rules and procedures Import licensing procedures under the Agreement on Import Licensing Procedures (ILA) TRIMS o Definition of import licensing procedures o Obligations: automatic/ non-automatic import licensing procedures o Other obligations under the ILA Introduction to the TRIMS Agreement Disciplines on national investment measures under the GATT 1947 Uruguay round negotiations Overview of the obligations of the TRIMS Agreement

3 I. Import Licensing

4 WHAT IS "IMPORT LICENSING"? What is "import licensing" and how is it regulated under WTO law? o The term can be found in several WTO agreements. o Art. XI:1 of the GATT 1994 provides: "No prohibitions or restrictions other than duties, taxes or other charges, whether made effective through quotas, import or export licences or other measures, shall be instituted or maintained by any contracting party on the importation or on the exportation [of goods]". o Art. XIII of the GATT 1994 recognises that Members can use import licenses to operate tariff-rate quotas (TRQs).

5 IMPORT LICENSING Art. VIII of the GATT 1994 refers to fees, charges, formalities and requirements relating to licensing. Art. 4.2 of the AoA prohibits Members from "maintain[ing], resort[ing] to, or revert[ing] to any measures of the kind which have been required to be converted into ordinary customs duties". Footnote 1 of the AoA clarifies that "discretionary import licensing" is one of these measures. Finally, the ILA regulates "import licensing procedures", used to administer import licensing rules.

6 IMPORT LICENSING But what is "import licens(e)(ing)"? o No general definition of the concept of "import license" for the purposes of the GATT 1994 or the AoA (PR, Turkey Rice, para ). o In Turkey Rice, the panel defined the term license as a "[f]ormal, usu[ally] printed or written, permission from an authority to do something... or to own something...; a document giving such permission; a permit" (para ). Would any permission to import qualify as an import "license"?

7 IMPORT LICENSING The importation process is often complex, consisting of a number of steps, and requiring the submission of many documents to different bodies: Member A: which measures to notify as import licensing? Registration as importer with Customs Authorities SPS approval by the Ministry of Agriculture Import permit from the Ministry of Economy Quarantine procedures Importation

8 IMPORT LICENSING RULES VS PROCEDURES DISTINCTION BETWEEN IMPORT LICENSING RULES AND PROCEDURES

9 IMPORT LICENSING RULES VS PROCEDURES Import licensing measures are divided into: Import licensing measures are divided into: Import Licensing Rules/Regime Member A's TRQ for Peanuts Member B Member C Others Import Licensing Procedures To obtain a license to import peanuts, importers must submit documents X, Y and Z; The application for a license must be filed on the first Monday of each month; and Applications, when submitted in complete form, will be approved within a maximum of 14 working days.

10 IMPORT LICENSING RULES VS PROCEDURES Why is the distinction between rules and procedures important? o First, there is a difference between the scope of obligations under WTO agreements relating to import licensing. o The GATT 1994 and the AoA apply to both substantive rules and procedures. However, the ILA regulates only import licensing procedures (see the title "Agreement on Import Licensing Procedures"). o Communication from the USA, MTN.GNG/NG8/W/16, 16 Nov. 1987:

11 IMPORT LICENSING RULES VS PROCEDURES In Korea Beef, the USA alleged that Korea's import regime was trade-restrictive and thus inconsistent with Article 3.2 of the ILA. The panel, however, noted: " that many of the US claims regarding alleged violations of the Licensing Agreement are concerned with the substantive provisions of Korea's import [ ] regime. It has been repeatedly said that such substantive matters are of no relevance to the Licensing Agreement which is concerned with the administrative rules of import licensing systems" (paras ).

12 IMPORT LICENSING RULES VS PROCEDURES Why is the distinction between rules and procedures important (cont.)? o Second, the complainant challenging an import licensing system should understand clearly whether it takes issue with the substantive or procedural aspects of this system: Import Licensing Rule/Regime Limiting effects on imports? BOP measure? Consistent with GATT Art. XI:1? Consistent with AoA Art. 4.2? Impartial, reasonable? Justified under GATT JJ XII, XVIII, XX? Import Licensing Procedures Administratively burdensome? Consistent with GATT Art. X (administration of trade reguls.)? Consistent with JJ the ILA?

13 IMPORT LICENSING PROCEDURES IMPORT LICENSING PROCEDURES UNDER THE ILA: DEFINITION OF IMPORT LICENSING

14 IMPORT LICENSING PROCEDURES Art. 1.1 of the ILA contains a particular definition of "import licensing" for the purposes of this agreement: o "administrative procedures"; o "[u]sed for the operation of import licensing regimes"; and o "requiring the submission of an application or other documentation (other than that required for customs purposes) to the relevant administrative body as a prior condition for importation into the customs territory of the importing Member".

15 IMPORT LICENSING PROCEDURES Would any administrative procedure relating to importation qualify as an "import licensing" procedure? o Footnote 1 of the ILA defines "administrative [import licensing] procedures" broadly as "'licensing' as well as other similar administrative procedures". o "Similar procedures are understood to include technical visas, surveillance systems, minimum price arrangements, and other administrative reviews effected as a prior condition for entry of imports" (Procedures for Notification and Review under the ILA, G/LIC/3).

16 IMPORT LICENSING PROCEDURES Definition of import licensing procedures in Art. 1.1 of the ILA: o They must be used for the operation of an import licensing regime (have a purpose similar to licensing); o They must require the submission of an application or other documentation as a prior condition for importation; o Note that documents required for customs purposes are excluded from the scope of Art. 1.1 of the ILA. See Panel Report, EC Bananas III (Guatemala and Honduras), paras

17 Import Licensing IMPORT LICENSING PROCEDURES UNDER THE ILA: OBLIGATIONS

18 IMPORT LICENSING PROCEDURES UNDER THE ILA The ILA recognises "that import licensing may be employed to administer measures such as those adopted pursuant to the relevant provisions of GATT 1994", as long as it does not restrict trade (see preamble, Art. 2(b)). Selected general obligations: Import licensing procedures shall be neutral in application and administered in a fair and equitable manner (Art. 1.3). Application forms and application procedures "shall be as simple as possible" (Arts. 1.5, 1.6). "No application shall be refused for minor documentation errors which do not alter basic data contained therein" (Art. 1.7).

19 AUTOMATIC IMPORT LICENSING PROCEDURES The ILA divides import licensing procedures into "automatic" and "nonautomatic" procedures, regulated in Arts. 2 and 3 respectively. The automatic import licensing is defined in Art. 2 as import licensing that satisfies the following two requirements: o approval of the application must be granted in all cases; and o these procedures must not be administered in such a manner as to have restricting effects on imports. The restrictive effects are deemed to exist, unless: o any person that fulfils the legal requirements is equally eligible to apply for and to obtain import licences; o applications for licences may be submitted on any working day prior to the customs clearance of the goods; and o applications when submitted in complete form are approved within a maximum of 10 working days.

20 AUTOMATIC IMPORT LICENSING PROCEDURES Members may in principle apply automatic import licencing procedures. The only obligation in Art. 2 pertaining to automatic import licensing is as follows: "Automatic import licensing may be maintained as long as the circumstances which gave rise to its introduction prevail and as long as its underlying administrative purposes cannot be achieved in a more appropriate way". In addition, these measures will likely be consistent with the provisions of other covered agreements, in particular Art. XI:1 of the GATT 1994, as they do not have a limiting effect on imports (PR, China Raw Materials, paras ).

21 AUTOMATIC IMPORT LICENSING PROCEDURES Does the fact that an importer must fulfil certain requirements to obtain a license mean that the licensing procedure is nonautomatic? o Note that Art. 2.2 contemplates a situation in which the application for a license can be rejected. o According to Art. 2.2, the restrictive effects on imports are deemed to exist, unless: (i) "any person, firm or institution which fulfils the legal requirements of the importing Member for engaging in import operations is equally eligible to apply for and to obtain import licences"; (iii) "applications for licences when submitted in appropriate and complete form are approved within a maximum of 10 working days".

22 NON-AUTOMATIC IMPORT LICENSING PROCEDURES Are "non-automatic import licensing" and "discretionary import licensing" the same concepts? o Probably not. The "non-automatic import licensing procedures" is the term of art. o It is defined in Art. 3.1 of the ILA as "import licensing not falling within the definition contained in paragraph 1 of Article 2". o These procedures are in principle permitted if they do not violate Art. 3.

23 NON-AUTOMATIC IMPORT LICENSING PROCEDURES Are "non-automatic import licensing" and "discretionary import licensing" the same concepts? o In contrast, panels have interpreted the term "discretionary import licensing" in the context of Art. XI of the GATT 1994 and Art. 4.2 of the AoA as a licensing system where: "licences are not granted in all cases, but rather on unspecified merits" (PR, China Raw Materials, para ); and "Members could decide, at their discretion, whether or not to grant permission for the importation of a good" (PR, Turkey Rice, paras ).

24 NON-AUTOMATIC IMPORT LICENSING PROCEDURES Selected obligations: o Art. 3.2 of the ILA: "Non-automatic licensing shall not have traderestrictive or -distortive effects on imports additional to those caused by the imposition of the restriction". o In EC Poultry, Brazil claimed that, inter alia, frequent changes to the licensing rules under the EC's licensing regime for poultry meat had led to Brazil's falling share of the EC poultry market, inconsistent with the first sentence of Article 3.2. o Particular circumstances: the EC Regulation gave Brazil a 45% share of the TRQ, which was the same as Brazil's share of exports before the TRQ, Brazil's volume of exports had risen since the TRQ, and Brazil fully utilized the import licences. o The AB found that Brazil did not demonstrate a causal link between the claimed trade distortion and the EC licensing procedure (ABR, para. 126).

25 NON-AUTOMATIC IMPORT LICENSING PROCEDURES Selected obligations (2): o Art. 3.2 of the ILA (2 nd sentence): "Non-automatic licensing procedures shall correspond in scope and duration to the measure they are used to implement", and They "shall be no more administratively burdensome than absolutely necessary to administer the measure". o Art. 3.5(b): Members administering quotas by means of licensing shall publish the overall amount of quotas, as well as the opening and closing dates of quotas. o Art. 3.5(f): Period for processing applications shall be: No longer than 30 days if applications are processed on a first-come first-served basis; and No longer than 60 days if all applications are considered simultaneously.

26 IMPORT LICENSING PROCEDURES UNDER THE ILA Other important obligations: o Art. 5.1: "Members which institute licensing procedures or changes in these procedures shall notify the Committee of such within 60 days of publication". See the required content of these notifications in Art o Art. 5.5: if a Member fails to comply with its notification obligations, any interested Member may "may bring the matter to the attention of [that] other Member", or "itself notify the licensing procedure or changes therein, including all relevant and available information". o Art. 7.3: "Members undertake to complete the annual questionnaire on import licensing procedures promptly and in full".

27 II. TRIMS Agreement

28 THE AGREEMENT ON TRADE-RELATED INVESTMENT MEASURES Negotiated during the Uruguay Round The TRIMS Agreement disciplines investment measures that can have traderestrictive and trade-distorting effects o Investment is a monetary asset purchased with the idea that the asset will provide income in the future or will be sold at a higher price for a profit Investment protection in international law usually revolves around things such as: o Protection against expropriation o MFN treatment o National treatment o Fair and equitable treatment The TRIMS Agreement contains only a subset of these protections and does not establish any new independent disciplines beyond those already contained in WTO law.

29 DISCIPLINES ON NATIONAL INVESTMENT MEASURES UNDER THE GATT 1947 Havana Charter had a chapter on the treatment of foreign investment as part of a chapter on economic development. This Charter was of course never ratified (other than the commercial part as the GATT 1947) GATT Panel Canada Foreign Investment Regulation Act (FIRA): o Panel rules that voluntary undertakings required by the Canadian government as a condition for investment violate Article III:4, in as far as they require the purchase of domestic over imported products o Not inconsistent with XI in as far as they impose export performance requirements

30 URUGUAY ROUND NEGOTIATIONS Negotiating mandate: "Following an examination of the operation of GATT Articles related to the trade-restrictive and trade-distorting effects of investment measures, negotiations should elaborate, as appropriate, further provisions that may be necessary to avoid such adverse effects on trade." The emphasis placed in this mandate on trade effects made it clear that the negotiations were not intended to deal with the regulation of investment as such (But these were indirect rules on investment through mode 3 provision of services).

31 URUGUAY ROUND NEGOTIATIONS Strong disagreement among participants over the coverage and nature of possible new disciplines. Some developed countries proposed provisions that would prohibit a wide range of measures in addition to the local content requirements found to be inconsistent with Article III in the FIRA panel case. Many developing countries opposed this. Compromise: o interpretation and clarification of the application to trade-related investment measures of GATT provisions on national treatment for imported goods (Article III); and o on quantitative restrictions on imports or exports (Article XI). The TRIMs Agreement does not cover many of the measures that were discussed in the Uruguay Round negotiations, such as export performance and transfer of technology requirements.

32 THE TRIMS AGREEMENT (1) Coverage: Article 1 states that the Agreement applies to investment measures related to trade in goods only. o Thus, the TRIMs Agreement does not apply to services. No definition of what a trade-related investment measure is: o But the Annex contains an Illustrative List of measures that are inconsistent with GATT Article III:4 or Article XI:1 of GATT o Panel in India Solar Panels: The measures at issue were TRIMs, because their aim was to regulate investments; participation in governmental scheme required use of domestic over imported goods, therefore "trade-related".

33 THE TRIMS AGREEMENT (2) Article 2.1 prohibits TRIMS inconsistent with Articles III and XI of the GATT 1994: o "Without prejudice to other rights and obligations under GATT 1994, no Member shall apply any TRIM that is inconsistent with the provisions of Article III or Article XI of GATT 1994". o Annex with Illustrative list of measures that are deemed inconsistent with Article III:4 and XI:1 of the GATT 1994.

34 THE TRIMS AGREEMENT (3) Annex "TRIMs that are inconsistent with the obligation of national treatment provided for in paragraph 4 of Article III of GATT 1994 include those which are mandatory or enforceable under domestic law or under administrative rulings, or compliance with which is necessary to obtain an advantage, and which require: "

35 THE TRIMS AGREEMENT (4) and which require: (a) the purchase or use by an enterprise of products of domestic origin or from any domestic source, whether specified in terms of particular products, in terms of volume or value of products, or in terms of a proportion of volume or value of its local production; or (b) that an enterprise's purchases or use of imported products be limited to an amount related to the volume or value of local products that it exports.

36 THE TRIMS AGREEMENT (4) and which require: (a) the purchase or use by an enterprise of products of domestic origin or from any domestic source, whether specified in terms of particular products, in terms of volume or value of products, or in terms of a proportion of volume or value of its local production; or (b) that an enterprise s purchases or use of imported products be limited to an amount related to the volume or value of local products that it exports.

37 THE TRIMS AGREEMENT (5) TRIMs that are inconsistent with the obligation of general elimination of quantitative restrictions provided for in paragraph 1 of Article XI of GATT 1994 include those which are mandatory or enforceable under domestic law or under administrative rulings, or compliance with which is necessary to obtain an advantage, and which restrict: (a) the importation by an enterprise of products used in or related to its local production, generally or to an amount related to the volume or value of local production that it exports;

38 THE TRIMS AGREEMENT (5) TRIMs that are inconsistent with the obligation of general elimination of quantitative restrictions provided for in paragraph 1 of Article XI of GATT 1994 include those which are mandatory or enforceable under domestic law or under administrative rulings, or compliance with which is necessary to obtain an advantage, and which restrict: (a) the importation by an enterprise of products used in or related to its local production, generally or to an amount related to the volume or value of local production that it exports;

39 THE TRIMS AGREEMENT (5) and which restrict: (b) the importation by an enterprise of products used in or related to its local production by restricting its access to foreign exchange to an amount related to the foreign exchange inflows attributable to the enterprise; or (c) the exportation or sale for export by an enterprise of products, whether specified in terms of particular products, in terms of volume or value of products, or in terms of a proportion of volume or value of its local production.

40 THE TRIMS AGREEMENT (5) and which restrict: (b) the importation by an enterprise of products used in or related to its local production by restricting its access to foreign exchange to an amount related to the foreign exchange inflows attributable to the enterprise; or (c) the exportation or sale for export by an enterprise of products, whether specified in terms of particular products, in terms of volume or value of products, or in terms of a proportion of volume or value of its local production. Would a mere export requirement violate the TRIMS Agreement?

41 THE TRIMS AGREEMENT (6) Other provisions: o Transitional periods (longer for developing countries and LDCs), but now expired o Stand-still during the transitional periods (no longer relevant, either)

42 TRIMS AND THE CASE LAW Issues that have arisen in the case law relating to the TRIMS Agreement: o If there are claims under both GATT 1994 and TRIMS; which agreement to be analyzed first? EC Bananas III; Indonesia Autos.

43 TRIMS AND THE CASE LAW India Solar Panels: Is it necessary to demonstrate the constitutive elements of III:4 (e.g. "likeness" of products) for a claim under Article 2.1 of the TRIMS Agreement? o Panel: measures falling under paragraph 1(a) of the Illustrative List are necessarily inconsistent with Article III:4 of the GATT. No need for a separate and additional analysis under III:4. o Also of interest: Relationship of Article III:8(a) of the GATT 1994 and the TRIMS Agreement.