ALEXIS I.P.

DELA CRUZ 2005-41158

Intl Econ Law 6 July 2011

Ch. 4, Lowenfeld Evolution of the GATT and GATT Law

New Concepts for Old Ones Consequences of conceptual evolution The year 1995 marked the culmination of decades of trade negotiations among various countries with the establishment of the World Trade Organization. When these countries sat down together to come up with a General Agreement on Trade and Tariffs in 1947, they had at the back of their minds the horrors of the war that damaged many of the worlds vital economic resources. And while the first few rounds focused on the now cherished and fundamental concepts of non-discrimination, reciprocity and mutual exchange of benefits in trade among nations, by the start of the Uruguay Round in 1987, states were already negotiating beyond the basics, such as safeguards and trade policy in agriculture. On the other hand, Lowenfeld observes, it is surprising that the GATT rules and institution did not change more than it did, given the many circumstances that dramatically transformed the affairs of the planet in the second half of the twentieth century. And while the twin concepts of non-discrimination and reciprocity remain just as important to this day, the question that needs to be asked is that if they still fit the needs of more complex and diversified international trade. As the notion of similarity or similarly situated is central to non-discrimination, it is largely critical that the question of how the determination of similarity in situation remains unanswered. This determination is essential as to what tariff rates to apply on a particular product, and history provides us with jurisprudence demonstrating how misclassifying imports have resulted into many trade wars. As it turns out, the negotiating parties found the system wanting. Lowenfeld readily concedes that Overall reciprocity and a well-balanced package suggested that not every agreement must favor the interest of all the negotiating parties equally, as long as the overall settlement is satisfactory to all the participants. By itself, the GATT had to reconsider the principle of non-discrimination and reciprocity if only not to bring the Contracting Parties to standstill. Lowenfeld illustrates this in his discussion of separate codes that had to be negotiated initially by the industrial states. In effect, while substantively discrediting the principle of non-discrimination, the implementation of separate codes proved helpful in maintaining the integrity of the GATT as a universal organization. On the other hand, while the imposition of conditions on MFN through separate codes seemed to make things more relatively unequal in theory, in reality the departure from MFN is just imagined. For one, by theoretically allowing discriminatory treatment, imports from developing countries can now compete from those coming in from developed countries. In addition, the implementation of separate codes actually helped protect against the practice of dumping. In the long run, it may be safe to say that non-discrimination is here to stay. In the realm of international law it might even well be viewed as a grundnorm in the Kelsenian sense. But clearly, the principle of non-discrimination had to be considerably overhauled to conform to the changing realities of international trade, and most importantly, as had been the case, to maintain the survival of the GATT and the WTO. In the future, we will definitely see conceptual evolutions of the fundamental principles of the GATT as a natural consequence of forcing the organization to adapt to change.