An analysis of Export Restriction Rules and Proposals under the WTO

An analysis of Export Restriction Rules and Proposals under the WTO

This memorandum is a redacted version of a confidential research paper on export restriction negotiations under the auspices of World Trade Organization (WTO). The complete version of this paper has two components: the first is a sketch of the existing legal framework and negotiation proposals on export restriction; the second is the provision of negotiation proposals. Due to confidentiality considerations, only the first component of analysis is publicly available and presented here. This memorandum is organized in three parts. The first part elaborates on the most relevant WTO treaties, namely the General Agreement on Tariffs and Trade 1994 (GATT) and the Agreement on Agriculture (AoA). We discuss how the ambiguity of terms in these provisions poses challenges to effective disciplines on export restriction. Second, we analyze proposals from several WTO Members that seek to clarify the ambiguities or fill the void in the existing discipline. Third, we discuss regional trade treaties, including TTIP, CETA, and TTP, along with other less prominent WTO agreements. Authors: Bashayer Hassan Al Ahbabi, Maha Abdulaziz Al Shaikh, Maryam Abdulrahman Al Kaabi, Hanadi Abdulrahamn Al Habshi, and Sharouq Saeed Bawazir


Executive Summary

This memorandum is a redacted version of a confidential research paper on export restriction negotiations under the auspices of World Trade Organization (WTO). The complete version of this paper has two components: the first is a sketch of the existing legal framework and negotiation proposals on export restriction; the second is the provision of negotiation proposals. Due to confidentiality considerations, only the first component of analysis is publicly available and presented here.

This memorandum is organized in three parts. The first part elaborates on the most relevant WTO treaties, namely the General Agreement on Tariffs and Trade 1994 (GATT) and the Agreement on Agriculture (AoA). We discuss how the ambiguity of terms in these provisions poses challenges to effective disciplines on export restriction. Second, we analyze proposals from several WTO Members that seek to clarify the ambiguities or fill the void in the existing discipline. Third, we discuss regional trade treaties, including TTIP, CETA, and TTP, along with other less prominent WTO agreements.

 The WTO Framework:

In this section, we discuss the most relevant WTO Covered Agreements in relation to food security: GATT and AoA.

GATT Article XI

Article XI of GATT 1994 prohibits the application of quantitative restrictions except when they are applied temporally to prevent or relieve the critical shortage.

“1. No prohibitions or restrictions other than duties, taxes or other charges, whether made effective through quotas, import or export licenses or other measures, shall be instituted or maintained by any contracting party on the importation of any product of the territory of any other contracting party or on the exportation or sale for export of any product destined for the territory of any other contracting party.

  1. the provisions of paragraph 1 of this Article shall not extend to the following:

(a) Export prohibitions or restrictions temporarily applied to prevent or relieve critical shortages of foodstuffs or other products essential to the exporting contracting party;”

With respect to paragraph 1, the term “prohibitions or restrictions” is used in a very broad manner, and it is understood to mean as a "legal ban on the trade or importation of a specified commodity." In Colombia – Ports of Entry, the panel concluded that "restrictions" refers to "measures that create uncertainties and affect investment plans, restrict market access for imports, or make importation prohibitively costly”[1]. While the panel in India – Quantitative Restrictions concluded that the term "restrictions" is "broad", and in terms of its ordinary meaning, is "a limitation on action, a limiting condition or regulation."[2]

Paragraph 2 of GATT Article XI is an exception that allows for the use of any export restrictions under limited circumstances for a limited time. Paragraph 2 also contains many undefined and ambiguous terms. Therefore, it may lead exporting countries to use different interpretations of the same word that best suit the interpreters. We will point out some ambiguous terms below.

“Temporarily”;

The treaty does delineate the period that can be counted as “temporarily.” Subsequently, In China-Raw Materials, China claims that the term “temporarily” should be counted in relation to the duration required to relieve critical shortage: “China submits that the time period will be defined in relation to the time required to prevent or relieve the critical shortage”[3]. On the other hand, both of complainants (the United States and the European Union) and third parties (Brazil and Canada) argue that a temporary measure must have an expiry date. To support their argument, Brazil defined the term "temporarily applied" as "lasting or meant to last for a limited time only; not permanent; made or arranged to supply a passing need.”[4] Furthermore, in this case, the panel defined "temporarily" as "for a time (only)" and "during a limited time". The term "limited time" means "appointed, fixed" and "circumscribed within definite limits, bounded, restricted."[5]

“Critical shortage”;

In addition, the article states that "the restriction is applied temporarily to prevent or relieve critical shortage" without specifying the amount or percentage of the shortage of the food that could be considered as a critical shortage. Moreover, the article does not differentiate between actual and potential critical shortage, an area of ambiguity that has manifested in a prior dispute. The critical issue is whether the restriction is a preventive action should occur before the critical shortage and what the signs that will allow this preventive measures. On the other hand, “relieve critical shortage” indicated that the shortage already occurred so that the restrictions will follow. In the China-Raw Material case, both parties defined the mentioned terms and when it supposed to be applied in accordance with their interest but the panel settle the conflict by defining it as “the term "critical" indicates that a shortage must be of "decisive importance" or “grave", or even rising to the level of a "crisis" or catastrophe. Article XI: 2(a) states that measures in the form of restrictions or bans may be used on a temporary basis to either outright "prevent" or otherwise "relieve" such a shortage”[6] [China-Raw Materials, Panel Report P94].

“Essential”;

Likewise, “essential” is not well-defined. China, in China-Raw Materials dispute, considered that for a product to be essential, it must be "material, important or requisite for the exporting Member."[7] In addition, China submits that Article XI:2(a) does not limit the types of "other products" that may be subject to restrictions, except that the products must be "essential"[8] To the exporting Member [China-Raw Materials, Panel Report P86]. The complainants argue that China's reliance on a broad definition of the term "product" as covering a raw material ignores the fact that the term "essential" serves to limit the scope of "products."[9] However, the panel interpretation was broad and did not resolve the disagreement, which further demonstrates that the article is not well-defined.

In conclusion, thus far, the guidance on the terms of the provision has only been interpreted in one dispute, which leaves inadequate guidance as to how these terms should be applied to a food security situation.

GATT Article XX

GATT Article XX allows WTO Members to derogate from their obligations under the GATT under a list of justifications, including public moral grounds; health; prison labor; and national historic/cultural treasures. Such measures cannot constitute a means of arbitrary or unjustifiable discrimination between countries where the same conditions prevail, or a disguised restriction on international trade.[10]

“Subject to the requirement that such measures are not applied in a manner which would constitute a means of arbitrary or unjustifiable discrimination between countries where the same conditions prevail, or a disguised restriction on international trade, nothing in this Agreement shall be construed to prevent the adoption or enforcement by any contracting party of measures:

“(i) involving restrictions on exports of domestic materials necessary to ensure essential quantities of such materials to a domestic processing industry during periods when the domestic price of such materials is held below the world price as part of a governmental stabilization plan; Provided that such restrictions shall not operate to increase the exports of or the protection afforded to such domestic industry, and shall not depart from the provisions of this Agreement relating to non-discrimination;

(j) Essential to the acquisition or distribution of products in general or local short supply; Provided that any such measures shall be consistent with the principle that all contracting parties are entitled to an equitable share of the international supply of such products, and that any such measures, which are inconsistent with the other provisions of the Agreement shall be discontinued as soon as the conditions giving rise to them have ceased to exist. The contracting parties shall review the need for this subparagraph not later than 30 June 1960."

What if the country wanted to export their internal materials and increase the price for the benefit of their country's income even though it is mentioned at the end of the paragraph that it should not depart from the provisions relating to non-discrimination? The meaning of equitable refers to any given circumstance in which the WTO Member diverts an excessive share of its supply to individual countries and will be contrary to the principle of equitable distribution However, a number of question could be a raised according the application of the article. For instance, what if the contracting parties had a dispute about the shares of the international supply for such product? Is there a limit that the WTO states in order to limit the share of each country so that they have this obligation not to exceed? In addition, the general or local short supply was applied to cases where a product although in the international short supply was not necessarily in short supply in all markets throughout the world. Also, it was not used in the sense that every country that is importing a commodity was in short supply. This requires the contracting parties to have some flexibility to take trade restrictive action when a certain product becomes temporarily scared. Even those who have the flexibility to take restrictive action won't it affect the other? Further due, the flexibility in this situation is constrained by the requirement imposed to respect the principle of equitable shares for the members.

GATT Article XXI

Article XXI includes Security Exceptions that allows a contracting party to take measures to protect it security interest.

"Nothing in this Agreement shall be construed

(a) to require any contracting party to furnish any information the disclosure of which it considers contrary to its essential security interests; or

(b) to prevent any contracting party from taking any action which it considers necessary for the protection of its essential security interests

taken in time of war or other emergency in international relations; or”

Importantly, “essential security interests” is not defined. When the “US notified the contracting parties of an Executive Order 12513 of May 1, 1985, that is prohibiting all imports of goods and services of Nicaraguan origin and all exports from the US of goods to or destined for Nicaragua. Nicaragua stated that the text of Article XXI made it clear that the contracting parties were competent to judge whether a situation of "war or other emergency in international relations" existed and requested that a Panel is set up under Article XXIII:2 to examine the issue. The United States stated that its actions had been taken for national security reasons and were covered by Article XXI:(b)(iii) of the GATT and that this provision left it to each contracting party to judge what action it considered necessary for the protection of its essential security interest. The Panel stated that, the dispute agreed upon both parties in the United States had acted contrary to certain trade-facilitating provisions of the General Agreement but was disagreed on the question of whether the non-observance of these provisions was justified by Article XXI(b)(iii). Therefore, the panel did not consider the question of whether the terms of Article XXI precluded it from examining the validity of the United States' invocation of that Article. It concluded that as it was not authorized to examine the justification, it could find that the United States neither to be complying with its obligations under the General Agreement nor to be failing to carry out its obligations under that Agreement. The Panel further noted that, in the view of Nicaragua, this provision should be interpreted in the light of the basic principles of international law and in harmony with the decisions of the United Nations and of the International Court of Justice and should, therefore, be regarded as merely providing contracting parties subjected to an aggression with the right of self-defense. The Panel also noted that, in the view of the United States, Article XXI applied to any action which the contracting party taking it considered necessary for the protection of its essential security interests and that the Panel, both by the terms of Article XXI and by its mandate, was precluded from examining the validity of the United States’ invocation of Article XXI.” [11]

Furthermore, the self-judging nature of the provision of section (b) could lead to an arbitrary decision. The United States embargo on trade with Cuba, which was imposed by means of Proclamation 3447 by the President of the United States, dated 3 February 1962, was not formally raised by the contracting parties but notified by Cuba in the inventory of non-tariff measures.[12] The United States invoked GATT Article XXI as justification for its action. Also, section b:(i), mentioned “relating to 'fissionable materials' or the materials from which they are derived.” Criteria are needed to clarify the meaning.

Agreement on Agriculture Article 12

This article lists the procedures that should be applied when a country intends to apply the exception in GATT Article XI: 2(a) which allow applying restrictions on exportation. In principle, all WTO agreements and understandings on trade in goods apply to agriculture, including the GATT 1994 and WTO agreements on such matters as customs valuation, import licensing procedures, pre-shipment inspection, emergency safeguard measures, subsidies and technical barriers to trade. However, where there is any conflict between these agreements and the Agreement on Agriculture, the provisions of the Agreement on Agriculture prevail.

“1. Where any Member institutes any new export prohibition or restriction on foodstuffs in accordance with paragraph 2(a) of Article XI of GATT 1994, the Member shall observe the following provisions:

(a) The Member instituting the export prohibition or restriction shall give due consideration to the effects of such prohibition or restriction on importing member food security.

(b) Before any Member institutes an export prohibition or restriction, it shall give notice in writing, as far in advance as practicable, to the Committee on Agriculture comprising such information as the nature and the duration of such measure, and shall consult, upon request, with any other Member having a substantial interest as an importer with respect to any matter related to the measure in question. The Member instituting such export prohibition or restriction shall provide, upon request, such a Member with necessary information.

  1. The provisions of this Article shall not apply to any developing country Member unless the measure is taken by a developing country Member which is a net-food exporter of the specific foodstuff concerned."

Paragraph 1 of this article does not clarify the relevant consideration. In addition, the article states that "it shall give notice in writing," which obligates on the Member instituting export restriction to produce "writing notice." Nevertheless, the article does not specify detailed period for such a notice, necessary information to be included in the notice, or actions that could be taken if the importing Member disapproves the request.

The group of “net-food importing developing countries” is well defined in the WTO legal context, but no such definition exists for the “net-food exporting developing countries” mentioned in Paragraph 2 of AoA Article 12.

In conclusion, both the GATT and AoA, the most relevant agreements in relation to export restrictions contain ambiguous terms and incomplete description of obligations that constrains the effectiveness of the existing WTO framework.

Proposals

In this part of our memorandum, we will examine a number of proposals that suggest amendment or revision to some of the provision of WTO agreements. They were proposed by Switzerland, Cairns Group, Jordan, the Democratic Republic of the Congo, the Republic of Korea, the United States, and Japan.

Switzerland

Switzerland submitted its opening ideas concerning the directions governed by Article 20 of the Agreement on Agriculture. Switzerland offered a number of dicta relating to this agreement. In the export restrictions, "Switzerland proposes that only the elimination of all export restrictions on the products should be binding at zero, for all export tariffs." Additionally, Switzerland suggests "that tariffs should be negotiated by an individual product or case-by-case basis in the framework of an application/offer procedure which may be supplemented, where appropriate, by a tariff reduction formula."

The Republic of Korea

The proposal submitted by Korea was a result of its concern on the food security of the country as a net food importing country. The proposal advocates “that the Uruguay Round was not successful in ascertaining a balanced manner of interest for both countries, including the exporting and importing partnered countries. Suggesting that the food security situation of the developed countries is unstable.” Moreover, Korea proposed to strengthen the disciplines in the following areas: “to prohibit exporting countries from imposing export restrictions and prohibitions arbitrarily; to prohibit the use of export tax for the purpose of export restriction; to secure transparency in the operation of state trading enterprises and to prevent their circumventing of reduction commitment in export subsidy.”

The Democratic Republic of the Congo

The proposal of the Democratic Republic of the Congo only stated the issues that they thought needed to be considered. In the export subsidies, Congo emphasized the need for the elimination of the forms of export subsidy and a reduction by 60 per cent of the conclusion of the Uruguay Round commitments, as well as the need for food aid to be granted to support importing developing countries and the abolition of export taxes.

Jordan

In the Jordanian proposal of the negotiation process that began in March 2000, it mentions that Jordan follows a strict economic adjustment leading to internal and external trade liberalization within the country’s bound tariff to an average of 30 percent. In comparison to the other trading partner countries, Jordan proposed that the WTO countries should eliminate all forms of export subsidies and that they should be bound to a zero rate.

Cairns Group

With a view toward providing increased certainty of supply for food importing countries and a particular focus on the least developed and developing net-food importing countries, the Cairns Group proposed that the agriculture negotiations should provide opportunities for developing countries to grow. Cairns requested that the negotiations should develop both improved disciplines on export restrictions and taxes and eliminate tariff escalation, preserve Article 12.2 of the Agreement on Agriculture, and provide additional special and differential treatment provisions to address the legitimate needs of developing countries, including the least developed and net-food importing developing countries.

The United States

In accordance with the long-term objective of establishing a fairer, more market-oriented agricultural trading system and procedures agreed at the March meeting of the Committee on Agriculture, the United States submitted a comprehensive agricultural reform proposal for correcting and preventing restrictions and distortions in world agricultural markets.

The proposal summarized a two-phase process for trade reform. The first phase eliminates export subsidies and reduces worldwide tariffs and trade-distorting domestic support over a 5-year period. This would be accomplished by harmonizing tariffs and trade-distorting domestic support at substantially lower levels than what is currently allowed. The second phase is the eventual elimination of all tariffs and trade-distorting support by a specific date to be established in these negotiations. The United States proposed "to strengthen substantially WTO disciplines on export restrictions to increase the reliability of global food supply" and "to prohibit the use of export taxes, including differential export taxes, for competitive advantage or supply management purpose."

Japan

Japan's negotiating proposal is based upon the fundamental philosophy of coexistence of agriculture. Japan is actively engaged in the agricultural negotiations in accordance with Article 20 of the AoA. This negotiating proposal has incorporated some views and comments from a wide-range of the society, including not only agricultural producers but also the consumers themselves. More specifically, Japan proposed the following:

Export prohibitions/restrictions, export taxes

"(a) Ensuring food security for its population is an important responsibility of each government. Export prohibitions and restrictions, which an exporting country will take temporarily, can severely affect the food security of an importing country, even if it can be considered a necessary measure for the exporting country in view of ensuring its own food security.

(b) With regard to imports, all border measures, other than tariffs, have been replaced by tariffs in principle. On the other hand, Members can freely take export prohibitions and restriction measures under the current Agreement. Japan thus proposes that all export prohibitions and restrictions be tariffed (i.e. replaced by the export taxes).

(c) All import tariffs are bound and commitment has been made to reduce them under the current Agreement, even though there exists no provision concerning export taxes. It is necessary, therefore, to bind the level of all export taxes, including those possibly introduced in the future. With regard to products subject to the export tax, it is also necessary to establish quotas in which exports equivalent to a certain proportion of domestic production will be exempt from the export tax. Disciplines in this regard should be defined.

(d)       Furthermore, clarification of the disciplines on export restrictions is necessary in order to prepare for a situation where an exporting country, if export taxes have not been introduced, faces an urgent need to restrict exports."

Section 4.2 of Japan's proposal concerned export prohibitions/restrictions and export taxes. Japan proposed that all export prohibitions and restrictions should be tariffed (i.e. replaced by the export taxes). Also, Export rules and disciplines should be strengthened, since it is necessary to ensure the stability and predictability of exports in order to ensure food security in importing countries. Export state trading could affect the entire international market of a specific agricultural product, as well as the food security of importing countries. Therefore, disciplines on export state trading should be clarified in order to improve its transparency and predictability.

Treaties

(i)   Regional Trade Agreements

we will discuss three regional trade agreements, the Transatlantic Trade and Investment Partnership (TTIP), the Comprehensive Economic and Trade Agreement (CETA), the Trans-Pacific Partnership (TPP), the North American Free Trade Agreement (NAFTA), Canada-Chile free trade agreement and Canada- Costa Rica Free Trade Agreement.

TTIP

The Transatlantic Trade and Investment Partnership (TTIP) agreement is being negotiated between the United States and the European Union. TTIP negotiations began in July 2013 and currently taking place behind closed doors. In relation to food security, the European Union's proposal for legal text on "Agriculture" in TTIP which made public on 21 March 2016 stated that [13]

“1.       The Parties recognize the efforts undertaken in international fora to enhance global food security and nutrition and sustainable agriculture and commit to actively engage in cooperation in those fora. To this end, the Parties shall:

refrain from undertaking export restrictions as well as the use of export taxes, which might exacerbate volatility, increase prices and have a detrimental effect on critical supplies of agricultural goods to the Parties and to other trading partners, and seek a coordinated approach in the relevant fora" [14]

CETA

CETA, between the European Union and Canada, seeks to boost trade, strengthen economic relations and create jobs. In relation to food security,

CETA Article 2.6 Duties, taxes or other fees and charges on exports

“A Party may not adopt or maintain any duties, taxes or other fees and charges imposed on, or in connection with, the export of a good to the other Party, or any internal taxes or fees and charges on a good exported to the other Party, that is in excess of those that would be imposed on those goods when destined for internal sale.” [Art,2.6, CETA]

CETA Article 2.11 Import and Export Restrictions

"1. Except as otherwise provided in this Agreement, a Party shall not adopt or maintain any prohibition or restriction on the importation of any goods of the other Party or on the exportation or sale for export of any goods destined for the territory of the other Party. Except in accordance with Article XI of the GATT 1994. To this end Article, XI of the GATT 1994 is incorporated into and made a part of this Agreement.

  1. If a Party adopts or maintains a prohibition or restriction on the importation from or exportation to a third country of a good, that Party may:

(a) Limit or prohibit the importation from the territory of the other Party of a good of that third country; or

(b) Limit or prohibit the exportation of a good to that third country through the territory of the other Party.

  1. If a Party adopts or maintains a prohibition or restriction on the importation of a good from a third country, the Parties, at the request of the other Party, shall enter into discussions with a view to avoiding undue interference with or distortion of pricing, marketing or distribution arrangements in the other Party.
  2. This Article does not apply to a measure, including that measure’s continuation, prompt renewal or amendment, in respect of the following:

(a) The export of logs of all species. If a Party ceases to require export permits for logs destined for a third country, that Party will permanently cease requiring export permits for logs destined for the other Party;

(b) for a period of three years following the entry into force of this Agreement, the export of unprocessed fish pursuant to Newfoundland and Labrador’s applicable legislation;

(c) Canadian excise duties on absolute alcohol, as listed under tariff item 2207.10.90 in Canada’s Schedule of Concessions annexed to the Marrakesh Protocol (Schedule V), used in manufacturing under the provisions of the Excise Act, 2001, S.C. 2002, c. 22; and

(d) The importation of used vehicles into Canada that does not conform to Canada's safety and environmental requirements." [Art,2.11, CETA]

Under the rules of CETA, all export duties and other export restrictions will prohibited in accordance with Art. XI of the GATT. Nevertheless, a Member might request consultations in occasions where they feel that their interests are or could be harmfully affected by such a measure by the other Party.

TPP

The TPP is a trade agreement among twelve of the Pacific Rim countries, not including China. Several articles of this agreement are relevant to our topic,

Article 29.2; Security Exceptions

"Nothing in this Agreement shall be construed to

(a) require a Party to furnish or allow access to any information the disclosure of which it determines to be contrary to its essential security interests; or

(b) Preclude a Party from applying measures that it considers necessary for the fulfilment of its obligations with respect to the maintenance or restoration of international peace or security, or the protection of its own essential security interests" [Art,29,2, TPP draft]

This article echoes GATT Article XXI with the term "essential security interests" which allows other member to self-judge the scope of the exception.

Article 2.4; Elimination of Customs Duties

"1. Unless otherwise provided in this Agreement, no Party shall increase any existing customs duty, or adopt any new customs duty, on an originating good." [Art.2.4, TTP draft]

TPP parties agree to eliminate and reduce tariffs and non-tariff barriers on industrial goods and to eliminate or reduce tariffs and other restrictive policies on agricultural goods which will enhance food security. In addition, they agree not to impose WTO-inconsistent import and export restrictions and duties. Furthermore, if TPP Parties maintain import or export license requirements, they will notify each other about the procedures so as to increase transparency and facilitate trade flows.[15]

Article 2.10; Import and Export Restrictions

"1. Unless otherwise provided in this Agreement, no Party shall adopt or maintain any prohibition or restriction on the importation of any good of another Party or on the exportation or sale for export of any good destined for the territory of another Party, except in accordance with Article XI of GATT 1994 and its interpretative notes, and to this end Article XI of GATT 1994 and its interpretative notes are incorporated into and made part of this Agreement, mutatis mutandis." [Art,2.10, TPP draft]

To ensure that countries do not maintain or expand other discriminatory trade barriers at the same time that they are eliminating tariffs or invent new barriers to circumvent TPP’s obligations; the ‘Goods Chapter’ incorporates the broad World Trade Organization (WTO) obligations regarding import and export restrictions into TPP as the fundamental framework for trade in goods between the Parties. In addition, the Goods Chapter prohibits import licensing based on performance requirements, as well as prohibiting requirements that exporters establish contractual relationships with domestic distributors as a condition of importation. For example, an exporter of U.S. made farm equipment cannot be required by law in a TPP party to use a local distributor to import its product into a TPP country.[16]

Article 2.24; Export Restrictions – Food Security

“1. Parties recognize that under Article XI:2(a) of GATT 1994, a Party may temporarily apply an export prohibition or restriction that is otherwise prohibited under Article XI:1 of GATT 1994 on preventing or relieve a critical shortage of foodstuffs, subject to meeting the conditions set out in Article 12.1 of the Agreement on Agriculture.

  1. In addition to the conditions set out in Article 12.1 of the Agreement on Agriculture under which a Party may apply an export prohibition or restriction, other than a duty, tax or other charge, on foodstuffs:

(a) a Party that:

(i) imposes such a prohibition or restriction on the exportation or sale for export of foodstuffs to another Party to prevent or relieve a critical shortage of foodstuffs, shall in all cases notify the measure to the other Parties prior to the date it takes effect and, except when the critical shortage is caused by an event constituting force majeure, shall notify the measure to the other Parties at least 30 days prior to the date it takes effect; or

(ii) as of the date of entry into force of this Agreement for that Party, maintains such a prohibition or restriction, shall, within 30 days of that date, notify the measure to the other Parties.

(b)  A notification under this paragraph shall include the reasons for imposing or maintaining the prohibition or restriction, as well as an explanation of how the measure is consistent with Article XI:2(a) of GATT 1994, and shall note alternative measures, if any, that the Party considered before imposing the prohibition or restriction.

(c)  A measure shall not be subject to notification under this paragraph or paragraph 4 if it prohibits or restricts the exportation or sale for export only of a foodstuff or foodstuffs of which the Party imposing the measure has been a net importer during each of the three calendar years preceding the imposition of the measure, excluding the year in which the Party imposes the measure.

(d)  If a Party that adopts or maintains a measure referred to in subparagraph (a) has been a net importer of each foodstuff subject to that measure during each of the three calendar years preceding imposition of the measure, excluding the year in which the Party imposes the measure, and that Party does not provide the other Parties with a notification under subparagraph (a), the Party shall, within a reasonable period of time, provide to the other Parties trade data demonstrating that it was a net importer of the foodstuff or foodstuffs during these three calendar years.

  1. A Party that is required to notify a measure under paragraph 2(a) shall:

(a)  consult, on request, with any other Party having a substantial interest as an importer of the foodstuffs subject to the measure, with respect to any matter relating to the measure;

(b)  on the request of any Party having a substantial interest as an importer of the foodstuffs subject to the measure, provide that Party with relevant economic indicators bearing on whether a critical shortage within the meaning of Article XI:2(a) of GATT 1994 exists or is likely to occur in the absence of the measure, and on how the measure will prevent or relieve the critical shortage; and

(c) respond in writing to any question posed by any other Party regarding the measure within 14 days of receipt of the question.

  1. A Party which considers that another Party should have notified a measure under paragraph 2(a) may bring the matter to the attention of that other Party. If the matter is not satisfactorily resolved promptly thereafter, the Party which considers that the measure should have been notified may itself bring the measure to the attention of the other Parties.
  2. A Party should ordinarily terminate a measure subject to notification under paragraph 2(a) or 4 within six months of the date it is imposed. A Party contemplating continuation of a measure beyond six months from the date it is imposed shall notify the other Parties no later than five months after the date the measure is imposed and provide the information specified in paragraph 2(b). Unless the Party has consulted with the other Parties that are net importers of any foodstuff the exportation of which is prohibited or restricted under the measure, the Party shall not continue the measure beyond 12 months from the date it is imposed. The Party shall immediately discontinue the measure when the critical shortage, or threat thereof, ceases to exist.
  3. No Party shall apply any measure that is subject to notification under paragraph 2(a) or 4 to food purchased for non-commercial humanitarian purposes”. [Art,2.24, TPP draft]

The previous article adopted many obligations from GATT Article XI 2(a), with additional clarification. Paragraph 5 of the mentioned article limits export restrictions on foodstuffs to six months and requires notification of other TPP members in advance. Where a country imposes such restrictions and mandates consultation with interested TPP importing countries when the restriction remains in place for more than 12 months.[17]

As this provision is intended to discourage countries from imposing export restrictions on food and agricultural products. Its implementation is a means of protecting domestic markets from changes in the world market. When countries do so with respect to staple food products like rice and wheat, poorer countries relying on the international market to import food can suffer damaging restrictive access to food. TPP's commitment in this area will help improve the stability of regional farm markets in general and stipulate additional food security to lower-income countries in the region such as Cambodia, Papua New Guinea, Bangladesh. [18]

NAFTA,

NAFTA, is a three-country accord negotiated by the governments of Canada, Mexico, and the United States that entered into force in January 1994. It provides for the elimination of most tariffs on products traded among the three countries and liberalization of trade in agriculture.[19]

Canada-Chile free trade agreement

The Canada-Chile Free Trade Agreement (CCFTA) is the cornerstone of Canada’s strong and growing trade and investment relationship with Chile since it came into force in 1997.[20]

Canada- Costa Rica free trade agreement.

The Canada-Costa Rica Free Trade Agreement (CCRFTA) is a first-generation agreement that focuses mainly on trade in goods, In force since November 2002.[21]

These three agreements have the same provision regarding export restrictions. [Art. 309 NAFTA], [Art. C-08 CCFTA], and [ Art. III.7 CCRFTA] provide that;

"Except as otherwise provided in this Agreement, neither Party may adopt or maintain any prohibition or restriction on the importation of any good of the other Party or on the exportation or sale for export of any good destined for the territory of the other Party, except in accordance with Article XI of the GATT 1994, including its interpretative notes, and to this end Article XI of the GATT 1994 and its interpretative notes, or any equivalent provision of a successor agreement to which both Parties are party, are incorporated into and made a part of this Agreement.

  1. The Parties understand that the GATT 1994 rights and obligations incorporated by paragraph 1 prohibit, in any circumstances in which any other form of restriction is prohibited, export price requirements and, except as permitted in enforcement of countervailing and antidumping orders and undertakings, import price requirements.
  2. In the event that a Party adopts or maintains a prohibition or restriction on the importation from or exportation to a non-Party of a good, nothing in this Agreement shall be construed to prevent the Party from:
  3. limiting or prohibiting the importation from the territory of the other Party of such good of that non-Party; or
  4. requiring as a condition of export of such good of the Party to the territory of the other Party, that the good not be re-exported to the non-Party, directly or indirectly, without being consumed in the territory of the other Party.
  5. In the event that a Party adopts or maintains a prohibition or restriction on the importation of a good from a non-Party, the Parties, on request of the other Party, shall consult with a view to avoiding undue interference with or distortion of pricing, marketing and distribution arrangements in the other Party”.

All three agreements incorporate GATT Articles XI and XX and impose additional obligations. In order for a party to impose a quantitative export restriction justified under GATT XI:2(a), XX(g), XX(i), or XX(j), it must meet two conditions. First, the restriction must not reduce the proportion of total export shipments available to the other RTA parties relative to the total supply of the good from the party using the export restriction, as compared to the last 36 months. Thus, if a country wants to apply an export restriction, it must ensure that it can continue to supply the same share of exports to the other parties in the RTA. Second, the restriction cannot disrupt normal channels of supply or normal shares of other specific goods supplied to other RTA parties. In Canada-Chile, however, copper, Chile’s main export, is exempt from this Article.[22]

These provisions aim to protect importers from negative impacts of export restrictions, rather than eliminating export restrictions. They ensure that export restrictions do not negatively affect the imports of RTA members since members are obliged to continue to supply the same proportion of the product in question to RTA members if they impose an export restriction.[23] Thus, the approach taken by these agreements represents a stronger discipline on the application of export restriction.

(ii) WTO Covered Agreements;

Apart from GATT and AoA, TRIPS is also relevant for food security.

TRIPS

Article 27

“Subject to the provisions of paragraphs 2 and 3, patents shall be available for any inventions, whether products or processes, in all fields of technology, provided that they are new, involve an inventive step and are capable of industrial application. (5) Subject to paragraph 4 of Article 65, paragraph 8 of Article 70 and paragraph 3 of this Article, patents shall be available and patent rights enjoyable without discrimination as to the place of invention, the field of technology and whether products are imported or locally produced.

  1. Members may also exclude from patentability:

(b)   Plants and animals other than micro-organisms, and essentially biological processes for the production of plants or animals other than non-biological and microbiological processes. However, Members shall provide for the protection of plant varieties either by patents or by an effective sui generis system or by any combination thereof. The provisions of this subparagraph shall be reviewed four years after the date of entry into force of the WTO Agreement.”

The Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) mandates the protection of plant varieties, allowing several options: "patents, an effective sui generis regime or a combination of both." The patentability requirements (particularly the inventive step) seem not only unsuited to plant varieties but also, given the scope of rights generally granted under patents, may deter further research and breeding on protected materials and erode the rights of farmers to save and reuse seeds.[24] TRIPS could affect the food security of the importing countries, as the monopoly enshrined in patents relating to plant and particularly seeds could cause a rise in the international markets prices.

In conclusion, we looked into some of the proposals that have been submitted by different countries in order to suggest clarification on the GATT and AOA ambiguous terms. Furthermore, we discussed a numbers of treaties within and outside the WTO framework. We focused on the articles that are related to the export restrictions and examined it and compared the similarities and differences between the agreements.

 

                  Bibliography

Articles:

  • [Art. XI General Elimination of Quantitative Restrictions, GATT,1994]
  • [Art. XI: 2(a), GATT, 1994]
  • [Art. XX General expectations, GATT,1994]
  • [Art. XXI Security expectations, GATT,1994]
  • [Art. 12 disciplines on export prohibition and restrictions, AOA]
  • [Art,2.6, CETA]
  • [Art,2.11, CETA]
  • [Art,2.10, TPP draft]
  • [Art,2.24, TPP draft]
  • [Art,29.2, TPP draft]
  • [Art,2.4, TPP draft]
  • [Art.27, TRIPS]
  • [Art,2C TRIMs]
  • [Art.XIV,2, GATS]
  • [ 309 NAFTA]
  • [Art. C-08 CCFTA]
  • [ Art. III.7 CCRFTA]

Cases:

  • [EC-Bananas lll, Panel Report page 161-163, paragraph 7.]
  • [Indonesia-Autos, Panel Report page73, paragraph 14].
  • [China-Raw Materials, Panel Report]

Proposals:

  • Switzerland proposal to WTO [G/AG/NG/W/94]
  • Japan proposal to WTO [G/AG/NG/W/91]
  • Jordan proposal to WTO [G/AG/NG/W/140]
  • The democratic republic of Congo proposal to WTO [G/AG/NG/W/135]
  • United states proposal to WTO [G/AG/NG/W/15]
  • The republic of Korea proposal to WTO [G/AG/NG/W/98]
  • The Cairns Group Proposal to WTO [G/AG/NG/W/93]
  • The European Union's proposal for legal text on "Agriculture" in TTIP

 Other references:

 https://www.wto.org/english/tratop_e/agric_e/negs_bkgrnd09_taxes_e.htm 

  • EU’s textual proposal for legal text on agriculture in TTIP,

http://trade.ec.europa.eu/doclib/docs/2016/march/tradoc_154371.pdf

  • The effect of TTIP on developing countries, by Joakim Reiter,

https://www.cato.org/publications/cato-online-forum/effects-ttip-developing-countries 

  • Wiiw’s scientific directors outline about similarities and differences between CETA and TTIP,

http://wiiw.ac.at/ceta-and-ttip-same-same-but-different--n-167.html

  • CETA summary of the final negotiating results,

http://trade.ec.europa.eu/doclib/docs/2014/december/tradoc_152982.pdf

  • EU’s summary about the benefits of CETA,

http://trade.ec.europa.eu/doclib/docs/2016/july/tradoc_154775.pdf  

  • WTO analytical index on TRIMs,

https://www.wto.org/english/res_e/booksp_e/analytic_index_e/trims_01_e.htm#article2B 

http://www.international.gc.ca/trade-agreements-accords-commerciaux/agr-acc/chile-chili/index.aspx?lang=eng

  • Government of Canada official website, Canada-Costa Rica Free Trade Agreement.

http://www.international.gc.ca/trade-agreements-accords-commerciaux/agr-acc/costarica/index.aspx?lang=en

  • NAFTA’s economic impacts by James Mcbride and Mohammed Aly Sergie.

http://www.cfr.org/trade/naftas-economic-impact/p15790

  • MULTILATERALISING REGIONALISM: DISCIPLINES ON EXPORT RESTRICTIONS IN REGIONAL TRADE AGREEMENTS by Jane Korinek and Jessica Bartos chapter 5 page 11-12.

https://www.oecd.org/tad/events/Chapter%205_Final.pdf

[1] China-Raw Materials, Panel Report page71, paragraph 7.206

[2] China-Raw Materials, Panel Report page71, paragraph 7.206

[3] China-Raw Materials, Panel Report page83, section(i) paragraph 7.251

[4] China-Raw Materials, Panel Report page84, section(i) paragraph 7.254

[5] China-Raw Materials, Panel Report page84, section (i) paragraph 7.255

[6] China-Raw Materials, Panel Report page94, section (iii) paragraph 7.296

[7] China-Raw Materials, Panel Report page86, section (ii) paragraph 7.262

[8] China-Raw Materials, Panel Report page86, section (ii) paragraph 7.262

[9] China-Raw Materials, Panel Report page86, section (ii) paragraph 7.267

[10] Exceptions to WTO Rules: General Exceptions, Security Exceptions, Regional Trade Agreements (RTAs), Balance‐of‐Payments (BOPs) & Waivers. Introduction page.

[11] https://www.wto.org/english/res_e/booksp_e/gatt_ai_e/art21_e.pdf

[12] John F. Kennedy: "Proclamation 3447—Embargo on All Trade with Cuba," February 3, 1962. Online by Gerhard Peters and John T. Woolley, The American Presidency Project. http://www.presidency.ucsb.edu/ws/?pid=58824.

[13] http://trade.ec.europa.eu/doclib/press/index.cfm?id=918&title=Member-States-endorse-EU-US-trade-and-investment-negotiations

[14] http://trade.ec.europa.eu/doclib/docs/2016/march/tradoc_154371.pdf

[15] https://ustr.gov/about-us/policy-offices/press-office/press-releases/2015/october/summary-trans-pacific-partnership

[16] National treatment and market access for goods, page3.

[17] National treatment and market access for goods, page4

[18] National treatment and market access for goods, page5

[19] http://www.cfr.org/trade/naftas-economic-impact/p15790

[20] http://www.international.gc.ca/trade-agreements-accords-commerciaux/agr-acc/chile-chili/index.aspx?lang=eng

[21] http://www.international.gc.ca/trade-agreements-accords-commerciaux/agr-acc/costarica/index.aspx?lang=en

[22] https://www.oecd.org/tad/events/Chapter 5_Final.pdf

[23] https://www.oecd.org/tad/events/Chapter 5_Final.pdf

[24] http://www.ictsd.org/bridges-news/bridges-africa/news/trips-flexibility-for-patents-and-food-security-options-for