Standardization and regional integration under article xxiv of gatt article pdf available in journal of international economic law 62. Understanding may be invoked with respect to any matters arising from the application of those provisions of article xxiv relating to customs unions, free trade areas or interim agreements leading to the formation of a. A summary of the gatt articles lancaster university. Free trade areas and customs unions under article xxiv number noti. Does wto article 24 allow us to have tarifffree trade. Under the article xxiv of the gatt, the member countries could organise themselves into free trade areas or customs unions. Understanding on the interpretation of article xxiv of the general agreement on tariffs and trade 1994 members, having regard to the provisions of article xxiv of the gatt 1994. General agreement on tariffs and trade article xxiv territorial application frontier traffic. This matters because wto rules, namely gatt article xxiv, require a certain coverage of trade to allow for parties to preferential agreements to actually grant each other these preferences, i. General agreement on tariffs and trade 1994 gatt 1994. Jun 24, 2019 that is how international trade works, and the wtos own database shows that 311 free trade agreements have been notified under article 24. Hilpold, regional integration according to article xxiv gatt 221 eration then the number of rtas in force rises to 243. The original gatt article xxiv, complemented by an ad art xxiv, has been updated in 1994 with an understanding. This is why i have chosen to analyze article xxiv gatt 1994 in this thesis, since it has such extensive and hard to grasp, effects on the world community.
Having regard to the provisions of article xxiv of gatt 1994 recognizing that customs unions and free trade areas have greatly increased in number. But majority of gatt member states at this time had the opinion that whether or not to allow free riding of nongattmember states was a matter to be decided exclusively by the gatt member reaching the bilateral agreement with the nongattmember country. This is a principle of law that has been the subject of various international conferences and conventions. Article xxiv of the general agreement on tariffs and trade gatt only permits preferential trading agreements ptas to be formed by gatt members if goods traded within the pta are subject to no substantial tariff restrictions and if. Recognizing that customs unions and free trade areas have greatly increased in number and importance since the establishment of gatt 1947 and today cover a significant. Regional integration according to article xxiv gatt. Distinctions between free trade areas and interim agreements under the gatt.
A simple explainer about article xxiv of the gatt lawyers. Freetrade areas for goods article xxiv of the gatt defines a freetrade area as a group of two or more customs territories in which the duties. Us tariff arrangements with cuba and the philippines gatt article i. Why claims about a wto article 24 interim agreement are. One of the most fundamental principles of gatt as laid down in article i is the socalled most favoured nation mfn principle, under. This refers to article 24 of the wtos general agreement on tariffs and trade. There seems to be a lot of misunderstanding flying around about article xxiv of the general agreement on tariffs and trade 1994 gatt. Notification of the intent of the united states not to withdraw substantially equivalent concessions under article xxviii. Xxiv 1994 gats article v 1994 transparency mechanism 2006 wto jargon on trade agreements specific.
Article xxiv of the general agreement on tariffs and trade gatt provides an important exception to article i most favored nation clause by permitting countries to enter into preferential free trade agreements ptas. Bagwell and staiger 1998, 1999 discuss the problems that can be created by. Jun 19, 2019 there seems to be a lot of misunderstanding flying around about article xxiv of the general agreement on tariffs and trade 1994 gatt. The opening paragraph, or chapeau, of article xxiv. Mathis and others published regional trade agreements in the gatt wto. Safeguard measures in rtas under article xxiv and the. Economic regionalism, however, is different, as it. Understanding on the interpretation of article xxiv gatt. Trade block formation can be separated into two parts. It allows countries who are negotiating a free trade area or customs union to have an interim agreement on trade tariffs for a period of in most cases up to ten years provided they have a plan and schedule agreed for concluding a final deal.
The strong regional trading block such as european union eu, north american free trade association nafta, association of south east asian nations asean and asian pacific economic cooperation apec have emerged. If so, within which period of time is the free trade area to be created. Article xxiv territorial application frontier trafficcustoms unions and free trade areas 29 article xxv. By way of analogy with this last example, discriminatory trade preferences that have negative effects on the exports of third countries are not considered to raise barriers to the trade of those third countries within the meaning of article xxiv. Answer the convention and the provisions of the treaty to which it refers fix a plan and schedule for the establishment of free trade areas between the.
Hilpold, regional integration according to article xxiv gatt 223 before we enter into a detailed discussion about the various con cepts that come into consideration here, we should perhaps set the fo cus right. The gatt treatys loophole for free trade areas in article xxiv has. The article ii of the gatt specified that all concessions granted by contracting parties, as a consequence of negotiations under the gatt, must be entered in a schedule of concessions. Mathis and others published regional trade agreements in the gattwto. This note looks at the wto rules and procedures applicable to the implementation period of regional trade agreements on trade in goods. Gatt article v reiterates the principle of freedom of transit. Restrictions, as much as liberalisation, apply both ways. Part ii chapter 1 mostfavourednation treatment principle 218 regional integration gatt article xxiv regional integration through customs unions or free trade areas liberalizes trade among countries within the regions, while maintaining trade barriers with countries outside the region or regions. Israel free trade association usifta was an interesting rta, as during its initial period of transition it was an interim agreement, and hence should have been subject to the special rules for interim agreements though it was not. A legal and political view on regional trade agreements in. The general agreement on tariffs and trade gatt economics. Article 24 allows members of gatt now the wto to negotiate free trade agreements with each other that go further than the trade liberalisation and tariff reduction offered to all other members by the states concerned. With respect to customs duties and charges of any kind imposed on or in connection with importation or exportation or imposed on the international transfer of payments for imports or.
A concession might assume the form of a reduction in the rate of import tariff or an agreement to bind, i. Article xxiv and the understanding on the interpretation of article. We will begin by introducing the substantive law in gatt article xxiv and the enabling clause and then continue to the procedure of notifying rtas. This is outlined in an explainer from the probrexit. The provisions of this agreement shall apply to the metropolitan customs territories of the contracting parties and to any other customs territories in respect of which this agreement has been accepted under. A free trade area shall be understood to mean a group of two or more customs territories in which the duties and other restrictive regulations of commerce except, where necessary, those permitted under articles xi, xii, xiii, xiv, xv and xx are. The conventional view is that article xxiv ensures that trade block formation facilitates free trade. Article xxiv of the general agreement on tariffs and trade gatt 1947 territorial application frontier traffic customs unions and freetrade areas. Article xxiv of the general agreement on tariffs and trade gatt 1947. Article xxiv and the internal trade requirement find, read and cite all the research you need. As a first step we will summarize the theoretical argument for. As the first worldwide multilateral free trade agreement, gatt governed a significant portion of international trade between january 1, 1948 and january 1, 1995. The gatt inconsistencies of a crosscumulation clause cannot be justified by the gatt article xxiv exception, because a crosscumulation clause of a bilateral freetrade area derogates from the freetrade areas aim by facilitating trade in intermediate products between the freetrade area parties and nonparties to the freetrade area that. Free trade areas for goods article xxiv of the gatt defines a free trade area as a group of two or more customs territories in which the duties.
In addition, it highlights some differences between law and practice and explores the implications of these. Bhagwati 1993, goto and hamada 1998, and mcmillan 1993 argue this, with reference specifically to article xxiv. Specifically, article xxiv 8b of the gatt states that. Gatt is one of the main wto agreements, and relates to trade in goods. But majority of gatt member states at this time had the opinion that whether or not to allow free riding of non gatt member states was a matter to be decided exclusively by the gatt member reaching the bilateral agreement with the non gatt member country. Furthermore, to those who believe that multilateral trade liberalization is the solution to many of the problems the world are facing today, article xxiv is of paramount importance. Nafta, the north american free trade agreement, gatt, the general agreement of tariffs and trade, and the wto, the world trade organization are the spearheads of this free trade policy. The general agreement on tariffs and trade gatt was a free trade agreement between 23 countries that eliminated tariffs and increased international trade.
The article allows pairs or groups of countries to break the nondiscrimination principle by trading duty free with each. Xxivgatt sets out wto rules for bilateral agreements. Wto analytical index gatt 1994 article xxiv jurisprudence 3 b with respect to a free trade area, or an interim agreement leading to the formation of a free trade area, the duties and other regulations of commerce maintained in each of the constituent territories and applicable. Territorial application frontier traffic customs unions and freetrade areas. Article xxiv of the general agreement on tari s and trade gatt, as incorporated into the world trade organization wto, allows wtomember governments to form customs unions cus or free trade agreements ftas under two conditions.
Provisions of the gatt international trade economics. Wto analytical index gatt 1994 article xxiv jurisprudence 3 b with respect to a freetrade area, or an interim agreement leading to the formation of a freetrade area, the duties and other regulations of commerce maintained in each of the constituent territories and applicable. Why claims about a wto article 24 interim agreement are a. Recognizing that customs unions and free trade areas have greatly increased in number and importance since the establishment of the gatt 1947 and today cover a. The legal boundary of article xxiv has been scrutinized by many scholarly studies, but most analyses of article xxiv have specifically addressed the implications for duties or import tariffs, which are not directly applicable to trade remedy rules. Trade remedy provisions in regional trade agreements. Article xxiv of the general agreement on tariffs and trade gatt 1947 territorial application frontier traffic customs unions and free trade areas. Hijazi gatt article xxiv and asymmetric rules of origin for epas. Recognizing that customs unions and free trade areas have greatly increased in number and importance since the establishment of gatt 1947 and today cover a significant proportion. The general agreement on tariffs and trade gatt 1994 the following legal text of gatt 1994 is that of gatt 1947 as rectified, amended or modified by the terms of legal instruments that entered into force before the date of entry into force of the wto agreement and without amendment to take into account the explanatory notes in paragraph. Application to states and provinces nafta article 105 is virtually identical to article 103 of the united states canada free trade agreement cfta and builds on language in gatt article xxiv. Article xxiv of gatt 1947 and the understanding on the implementation of article xxiv of gatt 1947. Territorial application frontier traffic customs unions and free trade areas 6 why laims about a wto article 24 interim agreement are a red herring, peter ungphakorn, january 2019. Jun 22, 2019 gatt is a treaty designed to promote ever freer trade.
Page 33 understanding on the interpretation of article xxiv of the general agreement on tariffs and trade 1994 members, having regard to the provisions of article xxiv of gatt 1994. The contracting parties recognize the desirability of increasing freedom of trade by the development, through voluntary agreements, of closer integration between the economies of the countries parties to such agreements. They may indeed must maintain tarifffree trade with each other for substantially all their mutual trade, without offering the same access to their markets to all other wto. They also recognize that the purpose of a customs union or of a. Wto analytical index gatt 1994 article xxiv world trade. Aug 19, 2019 article xxiv 5 of gatt permits countries to form trade blocs in the form of a customs union or a free trade area and thereby makes an exception to the mfn rule. The substantially all the trade requirement of gatt. Thus, there exists an important legal lacuna in terms of the availability of. Text of article xxiv, interpretative note ad article xxiv and understanding on the interpretation of article xxiv of the gatt 1994 article xxiv territorial application frontier traffic customs unions and free trade areas 1.
The general agreement on tariffs and trade gatt 1994 the following legal text of gatt 1994 is that of gatt 1947 as rectified, amended or modified. Usually we associate regionalism with issues that happen at the subnationallevel. Gatt article xxiv 1947 the enabling clause 1979 understanding of the gatt art. Protectionism and compliance with the gatt article xxiv in. The general agreement on tariffs and trade article iii. This matters because wto rules, namely gatt article xxiv, require a certain coverage of trade to allow.
The provisions of this agreement shall apply to the metropolitan customs territories of the contracting. The general agreement on tariffs and trade article. Having regard to the provisions of article xxiv of gatt 1994 recognizing that customs unions and free trade areas have greatly increased in number and. Crosscumulation arrangement as fta under gatt article xxiv. Having regard to the provisions of article xxiv of gatt 1994. The chapeau of the general exceptions in the wto gatt and. This rule in question is article 24 lawyers will insist on article xxiv of the wtos general agreement on tariffs and trade gatt, which has been around since 1948. Regional integration according to article xxiv gatt between. As several gatt panel reports confirmed, article i. Regional trade arrangements such as customs unions and free trade areas have been allowed by the gatt as they are deemed to promote trade liberalisation through the removal of substantially all trade. Free trade agreement between hong kong, china and georgia wtreg397n1.
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