European Imports of Manufactures Under Trade Preferences for Developing Countries

The WTO case brought by India in 2002 to challenge aspects of the European Communities’ Generalized System of Preferences (GSP) brings fresh scrutiny to a policy area that has received little attention in recent years – trade preferences for developing countries. The idea for such preferences emerged from the first United Nations Conference on Trade and Development (UNCTAD) in 1964. The ensuing negotiations led to Resolution 21(ii) at the second session of UNCTAD in 1968, acknowledging “unanimous agreement” in favor of the establishment of preferential arrangements. Tariff discrimination violates the most-favored nation (MFN) obligation of General Agreement on Tariffs and Trade (GATT) Art. I, however, and thus the legal authority for preferential tariff schemes had to await a GATT waiver of this obligation, which came in 1971. The waiver was to expire after 10 years, but the authority for preferences was extended by the GATT Contracting Parties Decision of November 28, 1979 on Differential and More Favorable Treatment, Reciprocity and Fuller Participation of Developing Countries, popularly known as the “Enabling Clause,” and now incorporated into the law of the WTO along with the GATT itself.

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Trade Preferences for Developing Countries: Options for Ordering International Economic and Political Relations

Stanford Law Review ◽

10.2307/1227495 ◽

1968 ◽

Vol 20 (6) ◽

pp. 1150

Author(s):

John I. Huhs

Keyword(s):

International Economic ◽

Developing Countries ◽

Political Relations ◽

Trade Preferences

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EU and U.S. Non-Reciprocal Preferences: Maintaining the Acquis

The Law and Development Review ◽

10.2202/1943-3867.1056 ◽

2010 ◽

Vol 3 (1) ◽

pp. 1-39

Author(s):

Ruth Kelly

Keyword(s):

Developing Countries ◽

Market Access ◽

Status Quo ◽

Trade Preference ◽

The Status ◽

Trade Preferences ◽

Legal Mechanism ◽

Enabling Clause ◽

The U.S ◽

The Eu

In the light of the disparity of bargaining leverage in FTA negotiations between the EU or the U.S. and developing countries, this article presents a legal mechanism to maintain the status quo, that is, the acquis of current trade arrangements. On the basis of the test established in the EC-Tariff Preferences case, it is argued that the Enabling Clause allows for differentiation between developing countries on the basis of their levels of intra-regional trade. A scheme is then constructed which allows the EU and the U.S. to differentiate in favor of current beneficiaries of non-reciprocal trade preference schemes in this way. This allows the EU and the U.S. to maintain the acquis without making radical changes to their trade and development policy. Where the status quo is an option, developing countries involved in FTA negotiations would have a feasible best alternative to a negotiated agreement (BATNA) to replace the current alternative of a significant reduction of market access to the EU or the U.S. While the maintenance of the status quo is up to the industrialized country in question, given that the trade preferences are unilateral in nature, the scheme constructed debunks the myth that there is a legal requirement to replace the current arrangements by reciprocal trade agreements in the absence of a waiver.

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