3 Law & Dev. Rev. 1 (2010)

handle is hein.journals/ldevr3 and id is 1 raw text is: 




Kelly: EU and U.S. Non-Reciprocal Preferences


I.   INTRODUCTION

Non-discrimination is a foundational concept of the World  Trade Organisation
(WTO)   covered agreements. In the context of trade in goods, this concept finds its
first and most obvious expression in Article 1.1 GATT,  which  requires WTO
members  to provide the same tariff conditions to all other WTO members, that is,
to accord them  the Most  Favoured  Nation (MFN)   status. However, there are
numerous  exceptions to the MFN  principle, notably the Enabling Clause, which
allows developed  WTO   members  to extend non-reciprocal trade preferences to
developing countries. Under this clause, developed countries, including the EU
and  US,  have   established unilateral trade preference schemes,  known   as
Generalised System  of Preferences (GSP)  schemes,  granting better than MFN
tariff rates to certain developing countries.
      In addition to their GSP schemes, the EU and the US  have granted more
advantageous   non-reciprocal preferences  to  certain developing   countries,
henceforth special preferences, which require a waiver of Article 1:1 GATT in
order to be  compatible  with WTO rules.   The  EU   scheme  provides  special
preferences to African, Caribbean and Pacific group (ACP) countries.' The most
recent incarnation of these preferences was under the Cotonou Agreement2, which
expired in 2008, along with the WTO waiver. The US  has four special preference
schemes: the African Growth  and Opportunity  Act (AGOA);   the Andean  Trade
Promotion  and  Drug  Eradication  Act (ATPDEA); the US Caribbean Basin
Economic  Recovery  Act (CBERA);   and Title Two Article IV of the US Compact
of Free Associated States (FAS) with the Marshall Islands, the Federated States of
Micronesia  and  Palau.3 While  CBERA,   AGOA, FAS or ATPDEA are now
covered by waivers,  the US had considerable difficulty obtaining the latter three
waivers due  to Paraguayan  opposition. Waivers are becoming  more  and more
difficult to obtain and it is increasingly unlikely that new waivers will be granted
for special preferences. Without a waiver, these preferences are open to legal
challenge.6

1 Excluding Cuba.
2 For a history of the EU-ACP relationship see L. Bartels, The Trade and Development Policy of
the  European Union, 18 European Journal of International Law 4 (2007), 715-756; and J.
Ravenhill, Back to the Nest? Europe's Relations with the African, Caribbean and Pacific Group
of  Countries, in VK. Aggarwal and E.A. Fogarty (eds.), EU Trade Strategies Between
Regionalism and Globalism (Basingstoke, Palgrave Macmillan, 2004), pp. 118-147.
  For information on the beneficiaries of these schemes, see Appendix.
  CARICOM  trade gets five year WTO Waiver for US Market, The Barbados Advocate, 14
  April 2009, WT/L/754, WT/L/753 and WT/L/755.
5 See further A. Bassilekin, New ACP-EC Waiver at the WTO, Discussion Paper No. 71
  (Maastricht: ECDPM, 2008), available at:
  <http://spidenan.ecdpm.org/WebECDPMIWeb/Content/Download.nsf/0/584D23CA8A3330D


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