The WTO legality of the EU's GSP+ arrangement Dr Lorand Bartels ...

… the response of a preference-granting country must be taken with a view toimproving the development, financial or trade situation of a beneficiary country,based on the particular need at issue. As such, in our view, the expectation thatdeveloped countries will ‘respond positively’ to the ‘needs of developing countries’suggests that a sufficient nexus should exist between, on the one hand, thepreferential treatment … and, on the other hand, the likelihood of alleviating therelevant ‘development, financial [or] trade need’. 57Thus, even if the ‘development needs’ are broad and (according to the suggestion madealready) non-economic in nature, but this does not mean that all forms of preferentialtreatment will necessarily be protected by the Enabling Clause.One situation in which preferential treatment would clearly not be permitted is when abeneficiary country does not, in fact, have the need at issue. There can be no ‘positiveresponse’ to a non-existent need. This has some clear implications for the EU’s existing GSP+arrangement, which grants preferences at least partly to compensate beneficiaries for needsthat they do not necessarily have. This applies in particular to the ratification andimplementation of the Genocide and Apartheid Conventions. In a general sense, alldeveloping countries have an interest in preventing genocide and apartheid; indeed, they havean immediate and unconditional erga omnes obligation to do so. But this does not mean thatthey also have a ‘need’ to prevent genocide or apartheid, in the sense of the Enabling Clause.The Appellate Body’s references to ‘improving … the situation’ and to ‘alleviating the …need’ are clearly linked to material situations, most likely with resource implications.Arguably, there would be some flexibility in the degree of risk that a situation will be presentin any given country. Some countries clearly have a ‘need’ to prevent damage fromforeseeable natural disasters. But this does not mean that every possible risk, no matter howremote, can be considered a ‘development need’ of any given country. Bolivia is at no risk ofsustaining direct damage from a tsunami; nor, fortunately, does it appear to be at any risk ofsuffering apartheid or genocide. This is not to say, of course, that no countries have a relevant‘need’ to prevent genocide or apartheid, nor that tariff preferences would necessarily be aninappropriate means of meeting such a need. 58 But in the concrete case, it does appear that theEU is granting GSP+ preferences to compensate countries for ‘development needs’ that theydo not have. Consequently, these preferences are, at least in this respect, not authorized by theEnabling Clause.The situation is different where a country does have a legitimate development need. In thiscase, the question is one of causation: is the preferential treatment likely to alleviate this‘need’? Conceivably, there are two different ways in which this might occur. First, one mightimagine a specific tariff preference targeted at products related to the ‘need’ at issue. A goodexample of such a preference (ignoring its actual effects) would be the EU’s former drugsarrangement, which was designed to create incentives for non-drug substitute crops. A secondpossibility is that identified in Recital 7 of the GSP Regulation, which is to increase revenueand possibly general welfare, which can then be used to contribute to the alleviation of therelevant ‘need’. 59 In both cases, evidence that the preferences are not in fact alleviating theidentified ‘need’, and are not likely to do so, would break the necessary causal link. Thiscould be either because the preferences are not generating any benefits, or because the ‘needs’are not being addressed. In the first case, it is difficult to imagine why there would be acomplaint, so in this sense the argument resolves itself. Most likely, argument would bedirected to whether the identified ‘needs’ are being improved. Such an argument would be57 WTO Appellate Body Report, EC – Tariff Preferences, para 164.58 Bosnia-Herzegovina is an obvious example. I am grateful to Nathalie Bernasconi for this comment.59 This assumes that the additional preferences do generate increased economic growth. On this, seePersson, above at n 30.10