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The GATS: a legal perspective on crossroads of conflicting interests

Published online by Cambridge University Press:  09 June 2011

NELLIE MUNIN
NELLIE MUNIN*
Affiliation:
LLD, Advocate, Senior Lecturer, Law School, Zefat Academic College Former Minister of Economic Affairs in the Israeli Mission to the EU Former Chief Legal Advisor – State Revenue Administration, the Israeli Ministry of Finance
*
*Email: [email protected]; internet website: www.nelmun.com
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Abstract

The GATS was concluded among countries with conflicting interests. Although all its parties were interested in this agreement as an instrument for the enhancement of global trade in services, due balance between this interest and other interests, such as the special status of developing countries and of the sovereign right of Members for domestic regulation, formed a pre-condition for countries' adherence to it. Consequently, these interests were explicitly recognized in the agreement. Nevertheless, analyzing two recent GATS/GATT cases, US–Gambling and China–Publications and AV Products, the article suggests that the WTO adjudicating bodies might be keener to legally assist a complaining developing Member than respondents which are developing Members. It further suggests that in these cases the interests of international trade liberalization seem to prevail over domestic policy goals. The article further analyzes the current and future possible adverse implications of this approach on GATS development as the only multilateral instrument for the enhancement of international trade in services.

Type
Review Article
Information
World Trade Review , Volume 10 , Issue 3 , July 2011 , pp. 325 - 342
Copyright
Copyright © Nellie Munin 2011

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References

1 United States – Measures Affecting the Cross-Border Supply of Gambling and Betting Services, Panel Report WT/DS285/R, Appellate Body Report WT/DS285/AB/R, adopted on 22 May 2007.

2 China – Measures Affecting Trading Rights and Distribution Services for Certain Publications and Audiovisual Entertainment Products, Panel Report WT/DS363/R, Appellate Body Report WT/DS363/AB/R, adopted on 19 January 2010.

3 Appellate Body Report, US–Gambling.

4 Appellate Body Report, China–Audiovisual Services.

5 Ibid., para. 417.

6 For detailed analysis of the unique status of developing and least developed countries in the GATS, see: N. Munin, Legal Guide to GATS, Kluwer Law International (2010), pp. 319–336.

7 Panel Report, US–Gambling, para. 6.139.

8 Ibid, paras. 6.166–6.176.

9 Ibid, paras. 6.177–6.179.

10 Ibid, paras. 6.180–6.185. This analysis was upheld by the Appellate Body Report, US–Gambling, para. 126. In the appeal, Antigua continued to argue that a ‘total prohibition’ may be considered a ‘measure’, developing additional arguments on this basis. All of them were dismissed by the Appellate Body due to its upholding of the Panel analysis, Appellate Body Report, US–Gambling, paras. 127–128.

11 Panel Report, US–Gambling, para. 6.187.

12 Ibid, paras. 6.186–6.249.

13 See, for example, ibid, paras. 6.383, 6.398, 6.402, 6.406 (Article XVI); para. 6.437 (Article VI); para. 6.441 (Article XI).

14 Ibid, para. 6.442.

15 Ibid., paras. 6.83–6.138.

16 See, for example, ibid, paras. 6.395, 6.412, 6.418.

17 Appellate Body Report, US–Gambling, para. 137.

18 Ibid, para. 141, citing the Appellate Body Report, United States – Sunset review of Anti Dumping Measures on Oil Country Tubular Goods from Argentina, WT/DS286/AB/R, adopted on 17.12.04, para. 162.

19 Ibid, para. 154.

20 Ibid, para. 156.

21 See, for example, Panel Report, China–Audiovisual Services, paras. 7.941, 7.1032, 7.1270, 7.1390 (GATS), but also paras. 7.1477, 7.1480, 7.1485, 7.1511, 7.1556, 7.1559, 7.1591 (GATT).

22 Ibid., paras. 7.727–7.734.

23 The Panel admitted openly the importance of the GATS as a new multilateral trade agreement, claims under which ‘deserve close attention and serious analysis’, as well as of the fact that this is only the fourth case where the GATS has been an issue: Panel Report, US–Gambling, paras. 6.205–6.206.

24 Additional exceptions are recognized, inter alia, in Articles XIVbis (Security), XI(2) (Payments and Transfers), XII (BOP safeguard).

25 It also provides for the development of further disciplines to ensure that measures relating to qualification requirements and procedures, technical standards, and licensing requirements do not constitute unnecessary barriers to trade in services. Other provisions referring to domestic regulation include, inter alia, Article VII (Recognition). For detailed analysis of these provisions see: Munin, Legal Guide to GATS, pp. 269–302, supra footnote 6.

26 Panel Report, US–Gambling, para. 6.134; Appellate Body Report, US–Gambling, para. 213. The Appellate Body upheld the Panel's decision, albeit for other reasons.

27 Panel Report, China–Audiovisual Services, para. 7.1220; Appellate Body Report, China–Audiovisual Services, para. 412. The adjudicating bodies rejected this Chinese argument (Panel Report, para. 7.1164) on factual grounds, contending that the disputed technology had become a commercial reality in many markets before China's accession to the WTO, and China was aware of this fact: Panel Report, China–Audiovisual Services, para. 7.1246–7.1247; Appellate Body Report, China–Audiovisual Services, paras. 407–409.

28 This GATT provision was invoked by China to rebut a claim of violation of China's Accession Protocol.

29 Appellate Body Report, Brazil – Measures Affecting Imports of Retreaded Tyres, WT/DS332/R, AB/R, adopted on 17.12.07.

30 In R. Worfrum, P. T. Stoll, and C. Feinäugle (eds.), WTO – Trade in Services, Max Planck Commentaries on World Trade Law, Martinus Mijnhoff Publishers, Leiden, Boston (2008), p. 316, it is noted that this list is meant to be illustrative, but ‘the WTO judiciary appears to be satisfied when a measure at stake is tested against these three factors’.

31 Panel Report, US–Gambling, para. 6.316.

32 Panel Report, US–Gambling, para. 6.461. See also para. 6.492; Appellate Body report, US–Gambling, para. 327.

33 Panel Report, US–Gambling, para. 6.608; Appellate Body report, US–Gambling, para. 373 (D).

34 See, for example, Wunch-Vincent, S., ‘The Internet, Cross-Border Trade in Services, and the GATS: Lessons from US–Gambling’, 5 World Trade Review, 319CrossRefGoogle Scholar, 348.

35 Panel Report, US–Gambling, para. 6.479.

36 Ibid, para. 6.493.

37 Ibid, para. 6.495.

38 Ibid, para. 6.520.

39 Ibid, paras. 6.522–6.531. This conclusion was later dismissed by the Appellate Body – see below.

40 Ibid, para. 6.608.

41 Appellate Body Report, US–Gambling, paras. 342–345.

42 Article XX of the GATT and the jurisprudence interpreting it were recognized by the WTO adjudicating bodies in Panel Report, US–Gambling, as relevant and potentially useful for the interpretation of Article XIV of the GATS, due to the textual and conceptual similarities between them: see the Panel Report, para. 6.448.

43 Panel Report, China–Audiovisual Services, paras. 7.759, 7.763.

44 Ibid, para. 7.817.

45 Ibid, paras. 7.708–7.917.

46 Appellate Body Report, China–Audiovisual Services, paras. 234–311.

47 Panel Report, US–Gambling, paras. 6.529–6.531.

48 Appellate Body Report, US–Gambling, para. 321.

49 Ibid, paras. 372, 373 (D)(vi)(a).

50 The Panel viewed government conduct of content review as one of the ways to prevent the entities involved in the content review from monopolizing the importation process: Panel Report, China–Audiovisual Services, paras. 7.869–7.909.

51 Ibid., para. 7.908; Appellate Body Report, China–Audiovisual Services, para. 332.

52 Appellate Body Report, China–Audiovisual Services, para. 325.

53 Ibid, para. 335.

54 In this case, it was determined that Brazil violated GATT Article XI, which is not subject to specific commitments. Thus, unlike the two GATS cases examined, the determination whether this provision was violated did not necessitate any interpretation of Brazil's specific commitments. Brazil – Measures Affecting Imports of Retreaded Tyres, Panel Report WT/DS332/R, Appellate Body Report WT/DS332/AB/R, adopted on 17.12.07, paras. 7.10–7.15

55 In that case, two groups of measures were challenged: the import ban and the high fines on retreaded tyres, which were regarded as violating GATT Articles XI:1 and III:4, recognized as a violation by the Panel, and the MERCOSUR exemption, recognized as a violation by the Appellate Body. The resemblance to US–Gambling is reflected in the former group of measures, although the GATT Article XX was rejected for both groups.

56 Panel Report, Brazil–Retreaded Tyres, para. 7.148, Appellate Body Report, Brazil–Retreaded Tyres, para. 155.

57 Korea – Measures Affecting the Imports of Fresh, Chilled and Frozen Beef, Panel Report WT/DS161,169/R, Appellate Body Report WT/DS161,169/AB/R adopted on 10.1.01.

58 Appellate Body Report, Korea–Beef, paras. 180–182.

59 R. Worfrum et al., WTO – Trade in Services, supra footnote 30, p. 316. Appellate Body Report, European Communities – Measures Affecting Asbestos and Asbestos-Containing Products, WT/DS135/AB/R, adopted on 5.4.01, para. 172.

60 Appellate Body Report, Korea–Beef, para. 162.

61 See, for example, Irwin, D. and Weiler, J., ‘Measures Affecting the Cross-Border Supply of Gambling and Betting Services’, 7 World Trade Review (2008), pp. 71CrossRefGoogle Scholar, 107.

62 Providing:

‘The increasing participation of developing country Members in world trade shall be facilitated through negotiated specific commitments, by different Members pursuant to Parts III and IV of this Agreement, relating to …’

63 Panel Report, Mexico – Measures Affecting Telecommunication Services, WT/DS204/R, adopted on 1.6.04, para. 7.214.