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FTAs as Applicable Law in WTO Dispute Settlement: Was the Appellate Body Wrong in Peru-Additional Duty (DS457)?

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  • Gregory Shaffer
  • L. Alan Winters

Abstract

There is a serious imbalance between the sclerosis of the political system of the World Trade Organization (WTO) and the automatic adoption of WTO Appellate Body judicial reports. The question is whether the WTO Appellate Body will recognize bilateral political agreements (such as under Free Trade Agreements, FTAs) that modify WTO obligations between two parties. In addressing this question, the Appellate Body decision in Peru-Additional Duty on Imports of Certain Agricultural Products is important. The decision addressed the availability of defenses under FTAs in WTO disputes, as well as under public international law generally. After critically assessing the decision, we set forth a series of judicial and political choices for addressing the interaction of WTO and FTA rules going forward. In particular, we contend that clear modifications of WTO commitments under an FTA should be recognized by WTO panels as a defense, but subject to the FTA itself complying with WTO requirements under GATT Article XXIV. The case is important not only for trade specialists, but generally for policymakers and scholars of global governance in a world of fragmented international treaties.

Suggested Citation

  • Gregory Shaffer & L. Alan Winters, 2016. "FTAs as Applicable Law in WTO Dispute Settlement: Was the Appellate Body Wrong in Peru-Additional Duty (DS457)?," RSCAS Working Papers 2016/65, European University Institute.
  • Handle: RePEc:rsc:rsceui:2016/65
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    References listed on IDEAS

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    1. repec:wsi:wschap:9789813233058_0020 is not listed on IDEAS
    2. Bagwell, Kyle & Sykes, Alan O., 2005. "Chile – Price Band System and Safeguard Measures Relating to Certain Agricultural Products," World Trade Review, Cambridge University Press, vol. 4(S1), pages 133-157, January.
    3. Timothy E. Josling & Stefan Tangermann, 2015. "Transatlantic Food and Agricultural Trade Policy," Books, Edward Elgar Publishing, number 15889.
    4. Sampson, Gary P & Snape, Richard H, 1980. "Effects of the EEC's Variable Import Levies," Journal of Political Economy, University of Chicago Press, vol. 88(5), pages 1026-1040, October.
    5. Kamal Saggi & Mark Wu, 2018. "Understanding Agricultural Price Range Systems as Trade Restraints: Peru–Agricultural Products," World Scientific Book Chapters,in: Economic Analysis of the Rules and Regulations of the World Trade Organization, chapter 20, pages 455-482 World Scientific Publishing Co. Pte. Ltd..
    6. Merlinda D. Ingco, 1996. "Tariffication in the Uruguay Round: How Much Liberalisation?," The World Economy, Wiley Blackwell, vol. 19(4), pages 425-446, July.
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    Keywords

    WTO; FTAs; variable levies; fragmentation;

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