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Non-application of Multilateral Trade Agreements between Particular Members
The possibility of “non-application” is given directly by Article XIII of the Marrakesh Agreement constituting the WTO. It states759:
This provision represents another opportunity to exercise overt influence in the international economic affairs. It relates to the qualification of the non-discrimination principle with regard to newly acceded Members of the WTO. The already established WTO Members are entitled to withhold the application of the non-discrimination in relations with new WTO Members if they notify this intention to the Ministerial Conference before the approval of the agreement on the terms of accession760. Similar non-application clause was added already to GATT 1947 as Article XXXV. It is not commonly used nowadays; however, in the past for example Japan suffered more under this provision than any other country761. Careful reader might consider this provision as a legal curiosum. However, the rationale behind this provision explains the intention of the GATT 1947 authors. The agreement was concluded immediately after the Second World War when many states, former enemies from the war, were not yet prepared to enter into contractual arrangements with the others. Nowadays, the non-application of the WTO agreements by and among WTO Members is also regulated by Article XIII of the Marrakesh Agreement762.
This chapter familiarized the reader with the history and formation of the non-discrimination principle due to the economic, political, social and legal influences. It brought an analysis of a long journey, which the non-discrimination principle had to experience to come to the stage, when the given rationale was legally anchored in documents of international economic law. An exploration of its development was unavoidable to fully understand how and in what manner the non-discrimination principle operates nowadays and why its role is of great significance in current multilateral commercial order. Its early roots can be firstly traced already in 11 century and since then until the Second World War it experienced unstable evolution rather on bilateral basis in the “Era of swings”. As a positive milestone towards strengthening the non-discrimination principle can be surely designated conclusion of “Cobden-Chevalier Treaty” in 1860. As a spread of protectionist policies undermining the non-discrimination principle can be on the other hand named “Smoot-Hawley Tariff Act” in 1930. The research connected with the bilateral era brought me also to the finding, that the notion of non-discrimination has its roots in partial international law, more precisely bilateral and multilateral international treaties and they were destined to constitute the essence of treaty-based international trade regulations under the GATT/WTOth.
The liberalistic development afterwards represented great leap towards multilateralism and sustainable stability under the auspices of GATT/WTO system and its multilateral trade rounds. This progress was however interrupted by the era of last financial and economic crisis and its recovery. The research about the last-mentioned period brought to this thesis significant insight from the practitioner perspective. The analysis of selected trade and trade-related possible de facto and de jure discriminatory measures and policies enacted by EU and Member States confirmed the fundamental role of the non-discrimination principle for the current and future trading system, because it has shown that no significant discrimination causing tremendous harm was evidenced. The existence of the non-discrimination principle was without a question one of the cause why was the multilateral trading system preserved from spill-over effect of trade protective measures. The non-discrimination principle and its various expressions has evolved during centuries in a notion with broad scope and it has not always covered the same policy space. Its particular elements are nowadays embodied in various provisions of WTO law. However the attention of many scholars is primarily focused on the two fundamental elements – most favoured nation and national treatment obligation.
In the history, the commitment to non-discrimination weakened by various exceptions has been utilized as a means of international trade regulation under the WTO framework. It is a rule, that the ability to discriminate owes much to the way in which the most favoured nation and national treatment principle have been codified throughout the evolution of international trade regulation. Trade liberalization and its constitution principles such as the principle of non-discrimination might conflict with other important societal values and national interests such as protection of public health, consumer safety, environment, economic development, national safety or employment. Therefore WTO law provides with various exceptions to its constitutional principles to seek for balance between trade liberalization and these societal values and national interests. These empower the WTO Members to qualify their commitments of non-discrimination to other WTO Members under certain circumstances. At first sight, the WTO regulates international trade in accordance with an adherence to the non-discrimination principle. However, at the second sight, the WTO permits a number of exceptions to this principle and they have significant impact on the way in which the international trade regime is governed763. The exceptions to non-discriminatory provisions as well as other similar tools represent the legitimate (authorized) protection of national economies and they should be understand as a balance between equal treatment, trade liberalization and the pursuit of legitimate policy goals by WTO Members. Here I want to make an allegation that the exceptions are necessary to make the multilateral system function. Rigid principle of non-discrimination would be not sustainable. It is true that the exceptions weaken the application of the non-discrimination principle however they make the non-discrimination principle still alive and adjusted to the constantly developing world trade system.
As explained in this subchapter, the occasional case-by-case use of this principle starting in 11 century became practice in the early 17thth century, where most European countries insisted on mutual most favoured nation status. In the 20th century, the most favoured nation and national treatment principles have come into prominence when embodied firstly in the GATT 1947, later in the WTO law and therefore formed an inseparable basis for multilateral trading system764. Through the principle of non-discrimination, the international economic law reduced classical sovereignty of states to promote mutual interests and common benefits.
DISCRIMINATION – THE CENTRAL REALITY OF THE WTO
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