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

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(a) Objective standardAccording to the Appellate Body, legitimate ‘development, financial or trade needs’ must alsoconform to an objective standard. As mentioned, the Appellate Body considered that ‘broadbasedrecognition [as] set out in the WTO Agreement or in multilateral instruments adoptedby international organizations, could serve as such a standard’. 43 In saying this, the AppellateBody is likely to have been referring to such instruments as evidence of a standard. This iswholly different from giving any importance to the formal act of ratifying such conventions(this being an independent condition for receiving the preferences). 44 In fact, a country thathas not ratified a convention may have precisely the same development needs as one thathas. 45 Furthermore, at least one developing country WTO Member (Macao), which receivesgeneral EU GSP preferences, 46 lacks the international legal personality required to ratify theconventions, and is therefore ipso facto ineligible for GSP+ preferences For these reasons, theEU’s GSP+ arrangement must be considered to be in clear violation of the condition set outby the Appellate Body that all would-be beneficiaries in a similar situation be granted thesame preferences. 47(b) Selective ‘needs’It is perhaps also appropriate at this point to make some remarks on the EU’s choice ofconventions, and in particular on the ‘core’ human rights conventions in Part A. Somewhatsurprisingly, this list includes the Apartheid Convention, which two-thirds of EU MemberStates have not ratified, 48 and the Genocide Convention, which one EU Member State (Malta)has not ratified. On the other hand, it does not include the UN Migration Convention, whichthe UN considers a ‘core’ human rights convention, 49 perhaps because it has not been ratifiedby any EU Member State.This selectivity in the choice of conventions designed to serve as evidence of ‘developmentneeds’ is not in itself legally problematic. The Appellate Body never required that all possible‘development, financial or trade needs’ be identified in a differential tariff. It alsoacknowledged that ‘certain development needs may be common to only a certain number of43 See above at n 27.44 As the GSP Regulation requires ratification and implementation it is not necessary to consider theactual results of ratification alone. On this question see Oona Hathaway, ‘Do Human Rights TreatiesMake a Difference?’ 111 Yale Law Journal 1935 (2002).45 Indeed, logically speaking, it is tempting to suggest that a country that has ratified and properlyimplemented a convention is less likely to have the relevant development need than one that has not.46 Macao also receives GSP preferences from Canada, New Zealand, Norway, Turkey and Switzerland.Hong Kong, another non-State WTO Member, does not receive GSP benefits from the EU, but doesfrom Canada and Norway (and the non-WTO Member Russia): see UNCTAD, Generalized System ofPreferences – List of Beneficiaries, UNCTAD/ITCD/TSB/Misc.62/Rev.1, 2005, at 5.47 Ironically, this very same point has been made by the EC Trade Commissioner, Peter Mandelson,when criticizing a proposal of an eco-tax on products produced by countries not party to the KyotoProtocol. He pointed out that ‘China has ratified Kyoto but has no Kyoto targets because of itsdeveloping country status. The US has not, but states like California have ambitious climate changepolicies’. See Larry Elliott, ‘Mandelson Calls for Open Markets in Green Products’, The Guardian, 18December 2006.48 Among EU Member States the Apartheid Convention has only been ratified by Bulgaria, CzechRepublic, Estonia, Hungary, Latvia, Poland, Romania, Slovakia and Slovenia: see www.unhchr.ch/html/menu3/b/treaty8_asp.htm (visited 25 July 2007).49See www.ohchr.org/english/law/ (visited 25 July 2007). Some of the previously capturedbeneficiaries (Costa Rica, Georgia, Moldova, Mongolia, and Venezuela) have also not ratified thisconvention.8
developing countries’. 50 However, this example also underlines how ineffective the AppellateBody’s test is in preventing ‘development needs’ from being selected illegitimately. TheAppellate Body sought to protect against such a result in two ways. First, it stated that alegitimate ‘need’ could not simply be ‘based merely on an assertion to that effect by, forinstance, a preference-granting country or a beneficiary country’ but ‘must be assessedaccording to an objective standard’. 51 But ‘objectivity’ means little in a case of de factodiscrimination. After all, the classic example of such discrimination, the 1904 German tariffpreferences in favour of Switzerland to cows grazing at 800m above sea level, was equally‘objective’. 52 The Appellate Body’s second condition was that a legitimate ‘need’ must be‘widely-recognized’. 53 The problem with this condition is that, as the EU’s GSP+arrangement shows, it can be manipulated by a requirement that beneficiaries have more thanone ‘widely-recognized’ needs. In the EU’s GSP+ arrangement, beneficiaries must have nofewer than twenty-seven ‘widely-recognized’ needs – and these all simultaneously. It istempting to speculate whether this is in any way connected with the almost perfect identity ofbeneficiaries under the EU’s old and new arrangements.The failure of the Appellate Body to prevent a GSP+ arrangement being targeted at selectedbeneficiaries is also somewhat ironic from a historical perspective, given its similarity to theill-fated ‘Brasseur Plan’ of the early 1960s, according to which developed countries wouldgrant selective GSP preferences on the basis of individual negotiations with each beneficiarycountry. The author of the proposal offered this explanation: ‘[i]n this way, true nondiscriminationwould be brought about, for each developing country would be free to ask forthe negotiations it thought useful’. 54 Aside from doubts as to this understanding of theprinciple of non-discrimination, it was also obvious that such a system would enable the EECto protect existing preferences to European ex-colonies under the Yaoundé Convention. 55 Inthe event, the Brasseur Plan was soundly rejected on the grounds that it would be open topolitical manipulation, would fragment the bargaining power of developing countries, wouldbe impossible to negotiate, and would complicate the world trading system, and the presentsystem of non-discriminatory preferences was established in its place. 56 The resurrection ofselective preferences, even if limited to GSP+ preferences, is therefore not just dubious from anormative perspective, but seems to contradict the very purposes of the original system.(c) Positive responseA further problem with the EU’s GSP+ arrangement is presented by the Appellate Body’srequirement that there must be a causal link between the additional tariff preferences grantedin a GSP+ type program and the improvement of a legitimate ‘development, financial or tradeneed’. The Appellate Body said that:50 WTO Appellate Body Report, EC – Tariff Preferences, para 160.51 Ibid, para 163.52 Report of the International Law Commission on the Work of its Thirtieth Session, 8 May-28 July1978, Doc A/33/10, II(2) YBILC 1 (1978), at 31-2. This document contains an interesting gloss on thestory from an (unreferenced) Food and Agriculture Organization document stating that ‘the specializedtariff may have been technically justified because of the genetic improvement programme which wascarried out in Southern Germany at that time’.53 WTO Appellate Body Report, EC – Tariff Preferences, paras 164 and 179.54 Statement by Mr Maurice Brasseur, in Proceedings of the United Nations Conference on Trade andDevelopment, Policy Statements, Vol II (New York: United Nations, 1964), 108 at 111.55 For more on this, see Lorand Bartels, ‘The Trade and Development Policy of the European Union’18 European Journal of International Law (2007) forthcoming.56 John Huhs, ‘Trade Preferences for Developing Countries: Options for Ordering InternationalEconomic and Political Relations’ 20 Stanford Law Review 1150 (1968), 1175. See also GardnerPatterson, Discrimination in International Trade: The Policy Issues 1945-1965 (Princeton: PrincetonUniversity Press, 1966), 360-64.9
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