INTERNATIONAL TRADE

AND COVID 19
PANEL 6

CAMANNONG, MA.THERESA A.
CIELO, MARK JASPER G.
DIRON, MABANDES S.
TAMALA, CHIQUI P.
MACAGAAN, ABDULLAH D.

12/14/2020
 TABLE OF CONTENTS

PART I: INTRODUCTION ………………….. 3

INTERNATIONAL TRADE ………………….. 3

WHAT IS THE WORLD TRADE ORGANIZATION? ………………….. 3

AS AN INTERNATIONAL AGREEMENT ………………….. 4

AS AN INTERGOVERNMENTAL BODY ………………….. 4

AS AN INTERNATIONAL FORUM AND COURT ………………….. 5

HOW COUNTRIES PROTECT THEMSELVES FROM ………………….. 5

STRONGER COUNTRIES IN TERMS OF TRADE?

STATUS OF COUNTRIES IN INTERNATIONAL TRADE ………………….. 6

COVID-19 INITIAL EFFECTS ON TRADE ………………….. 7

PART II: EXPORT RESTRICTIONS AND PROHIBITIONS ………………….. 9

WTO RULES ON EXPORT PROHIBITIONS AND ………………….. 12

RESTRICTIONS

THE CONCEPT OF RESTRICTIONS AND ………………….. 13

PROHIBITIONS

EFFECTS OF EXPORT RESTRICTIONS AND ………………….. 14

PROHIBITIONS

TRADE MEASURES UNDERTAKEN BY THE ………………….. 15

PHILIPPINES IN RESPONSE TO THE PANDEMIC

PART III: STATE RESPONSIBILITY AS TO ………………….. 17

INTERNATIONAL TRADE OBLIGATIONS

ARSIWA APPLICATION NOTWITHSTANDING WTO ………………….. 20

RULES

PART IV: HOW WTO MEMBERS HAVE USED TRADE ………………….. 26

MEASURES TO EXPEDITE

ACCESS TO COVID-19 CRITICAL MEDICAL GOODS ………………….. 26

AND SERVICES

KEEPING THE MARKETS OPEN ………………….. 26

Page 1 of 34
TRANSPARENCY ABOUT TRADE MEASURES ………………….. 26

DUTIES, TAXES AND CHARGES ON COVID-19 ………………….. 26

CRITICAL MEDICAL GOODS AND
OTHER ESSENTIAL SUPPLIES WERE ELIMINATED OR ………………….. 26
DEFERRED

BORDER CLEARANCE FOR CRITICAL GOODS HAS ………………….. 27

BEEN EXPEDITED BY

CUTTING RED TAPE ………………….. 28

PART V: BEST PRACTICES OF STATES IN THE MIDST ………………….. 28

OF COVID-19 GLOBAL PANDEMIC

BEST APPROACHES IN TRADE ………………….. 29

Page 2 of 34
 INTERNATIONAL TRADE AND COVID-19

PART I

Introduction

Since the start of civilization, trade has been a part of daily activities. Trade was not

limited to exchange of goods and services but from a wide range of things. From ideas, to

slave trade, to exchange of faith, to security and protection, for health and medicine, from

precious stones and metals to worthless things, and among others. History shows that trade is

so vital to the existence of a state, that no country would want to isolate itself from the rest of

the world. From B.C. to A.D., trade was so apparent and important that it brought peace and

sometimes created war. In times of war, neutral countries enter into trade with countries at

war. Even when there is an embargo, the country subject of embargo will always find

friendly states that could lend a hand or two. After the end of World War II, countries saw the

far reaching positive effects of trade that the United Nations decided to create the WTO.

International Trade.

International trade refers to the exchange of goods and services between countries. In

simple words, it means the export and import of goods and services. Export means selling

goods and services out of the country, while import means goods and services flowing into

the country.1

What is the World Trade Organization?

The World Trade Organization (WTO) is the only global international organization

dealing with the rules of trade between nations. At its heart are the WTO agreements,

negotiated and signed by the bulk of the world’s trading nations and ratified in their

1
efinancemanagement.com

Page 3 of 34
parliaments. The goal is to help producers of goods and services, exporters, and importers

conduct their business.2

For many in the trading community, the concept of the WTO remains something of a

mystery, most would agree though that the effects of WTO policies on local industries,

whether positive or negative, have been widely felt. So what is really is the WTO? The WTO

has many faces. It is an international agreement, an international forum, an intergovernmental

body as well as an international court.3

As an International Agreement

As an international agreement, states are bound by the rules and regulations laid down

by WTO in the conduct of trade in goods and services. Under the WTO, member states must

not discriminate against any of its trading partners. This is in consonance with the principle of

“Most Favoured Nation” and “National Treatment”.4

However, the WTO agreements allow countries to create regional blocs such as

AFTA, NAFTA, ATA and EU. These trade blocs in some way or another discriminates

countries that are not member of the bloc. In these regional blocs, countries extend special

privileges among member countries, such as giving zero tariff among member countries. The

WTO also allows trade remedies for countries to protect their domestic industries, such as

Anti-Dumping, Countervailing Duties and Emergency measures to limit imports.

As an Intergovernmental Body

The WTO is headed by the Director General, it has its own structure and set of

official similar to the United Nations and other international bodies. The structure has four

levels. The first is the Ministerial Conference, composed of all members of the WTO. The
2
www.wto.org
3
Understanding International Trade, Tariff and Customs by Agaton Teodor O. Uvero
4
Most Favored Nation – If a country grants special rates to another, it must extend the same rates to all other
countries; National Treatment – A member country must treat local and imported goods equally.

Page 4 of 34
second is the General Council composed of three bodies: The General Council, the Dispute

Settlement Body, and the Trade Policy Review Body. The third has three councils and six

committees, which report directly to the General Council. The councils, each handling a

broad area of trade, are as follows: 1) Council for Trade of Goods, 2) Council for Trade in

Services, 3) Council for Trade-Related Aspects of Intellectual Property Rights. The fourth

level of the WTO refers to various other committees and bodies under the three main

councils.5

As an International Forum and Court

The WTO serves as a forum that thresh out and negotiate further agreements on trade

of goods and services. The WTO acts as a court but in a limited capacity. It tries to resolve

international trade dispute between member states.

It is a venue where trading states may question trade agreements involving conflicting

interest, disputes in the interpretation and the application of various agreements normally

arise.6

This dispute settlement is the central pillar why states joined the WTO. With the

dispute settlement, countries are confident that international trade and agreements are justly

and fairly imposed and respected.

How countries protect themselves from stronger countries in terms of trade?

Countries abide by the principle that countries can protect their domestic products and

goods by way of Protection Only Through Tariffs. Under this principle, a country can impose

custom tariffs on import products that would put domestic products at a disadvantage

domestically and internationally.

5
Understanding International Trade, Tariff and Customs by Agaton Teodor O. Uvero
6
ibid

Page 5 of 34
 Also, under a multilateral trading system, a trading partner as required to, among

others, provide stable, predictable and transparent rules on trade in goods and services, under

the principle of Predictability and Fair Competition 7. Hence, a country agrees to a ceiling for

tariff rates on imported articles, it cannot unilaterally increase rates beyond the ceiling

without attracting reciprocal action from other countries.8

Status of Countries in International Trade

Country members in the WTO adhere to the principle of globalization. Globalization

refers to interdependence between countries arising from the integration of different aspects

of the economy, such as trade. International trade can stimulate economic growth of countries

that are now so interconnected.9

Thus, we have the concept called comparative advantage and specialization.

Comparative advantage is an economy's ability to produce a particular good or service at a

lower opportunity cost than its trading partners. A comparative advantage gives a company

the ability to sell goods and services at a lower price than its competitors and realize stronger

sales margin. Comparative advantage is the driving force of specialization. 10 Where countries

focus on export products or goods that they are good at and import the rest, they can have

room to innovate and create an entirely new product.11 But prior to specialization, there was

the so called theory of Mercantilism.

Mercantilism was an economic system of trade that spanned from the 16th century

to the 18th century. Mercantilism is based on the principle that the world's wealth was static,

and consequently, many European nations attempted to accumulate the largest possible share

7
ibid
8
ibid
9
Procedia Economics and Finance 32 (2015)
10
Investopedia.com
11
ibid

Page 6 of 34
of that wealth by maximizing their exports and by limiting their imports via tariffs.12 This

theory has been abandoned by most countries as it will do no good for their economy.

Covid-19 Initial Effects on Trade

On November 17, 2019, the first case of Covid-19 was recorded in Wuhan China. The

Chinese Government did not at first divulge this new disease to the World Health

Organization. They were thinking and optimistic that they could confine the virus with their

hi-tech technology and experiences on outbreaks. However, most countries were clueless that

this virus would change the way how we live. When the virus could not be contained,

countries scrambled to get hold of any information to combat said virus. But as history has

taught us, we looked into the past on how to survive an outbreak. Countries then went

looking at how countries dealt with the Ebola virus, SARS, Spanish Flu and the Black plague.

Only four common answers sprouted from history, these are Facemask, Distancing,

Sanitation and the creation of a Vaccine.

There are greater advantages in specialization. However, during this time of Covid 19

pandemic, the countries saw the disadvantage caused by specialization. An example of

specialization which has greatly affected todays situation are the medical goods, supplies and

equipment. In a report by the WTO, only China and Malaysia mass produce and exports PPE,

facemask and other protective medical gear. While Europe and USA are producers of medical

equipment such as ventilators necessary to combat a deadly strain of the Corona Virus.13

At the early onslaught of the pandemic, countries saw shortage in medical goods,

supplies and equipment. Countries with these basic tools used to combat the said virus

restricted exports. While countries lacking these tools relaxed imports of these goods.

Countries in an attempt to preserve the false notion of security and to protect the health of its

12
ibid
13
IEUniversity, Covid 19: Challenges to International Trade and Globalization Webinar/Youtube.com

Page 7 of 34
citizens went into hoarding. Lockdowns, cancelled flights, closed sea and air ports, and

government scrambling for answers were the daily feed of information. Countries restricted

trade, they closed boundaries and limit transportation of goods. There were shortages in

almost all basic commodities. International Trade between countries were placed into a

screeching halt. Countries will shift into localize production or at least bring production

closer. Thus, countries around the world were forced to create and innovate tools in

combating the virus.

PART II

Export Restrictions and Prohibitions

Page 8 of 34
 The unprecedented nature of the Covid-19 pandemic brought about various reactions

from States, particularly in trade. On April 15, 2020, Singapore and New Zealand have

declared the elimination of all customs duties and all other duties and charges of any kind,

within the meaning of Article II:1(b) of the General Agreement on Tariffs and Trade 1994

("GATT 1994"), with respect to all products listed in Annex I; that they will not apply export

prohibitions or restrictions, within the meaning of Article XI:1 of the GATT 1994, with

respect to all products listed in Annex I; that they will intensify consultations with a view to

removing non-tariff barriers on all products listed in Annex I and Annex II; that they will be

consistent with their obligations under the World Trade Organization Trade Facilitation

Agreement, expedite and facilitate the flow and transit of all products listed in Annex I and

Annex II through their respective sea and air ports; and that they will endeavor to expedite

the release of such products upon arrival including adopting or maintaining procedures

allowing for submission of import documentation and other required information, including

manifests, in order to begin processing prior to the arrival of products14.

However, unlike Singapore and New Zealand, some countries have resorted to trade

restrictions to address critical shortages, particularly in medical and food supplies, in order to

address the pandemic. Since most states are not prepared to tackle this new pandemic, large

amounts of medical staff and civilians are scrambling for medical supplies, i.e., COVID-19

test kits, personal protective equipment (PPE) and medicines. With the consideration of

domestic priority, quite a few states temporarily restrict exports of medical supplies and

liberalize imports of such products to relieve critical shortages15.

14
“Declaration on Trade in Essential Goods for Combating the Covid-19 Pandemic”. World Trade
Organization, April 15, 2020, file:///Users/cpt/Downloads/W777.pdf.

15
Trade Regulations for Export Restrictions on Medical Supplies During the Pandemic: Shortcomings and
Suggestions (https://www.unescap.org/sites/default/files/80%20Final-Team%20Xiuyan%20Fei-China.pdf)

Page 9 of 34
 As of 21 March 2020, a total of 54 governments have implemented some type of

export curb on medical supplies and medicines associated with the COVID-19 pandemic.

Bulgaria, France, India, Indonesia, Saudi Arabia, the Republic of Korea, Taiwan, Thailand,

Turkey and the United Kingdom have reportedly implemented multiple export curbs, often

widening the scope or hardening the provisions of pre-existing export limits.16

As of April 22, 2020, the WTO recorded 80 countries and separate customs territories

that have introduced export prohibitions or restrictions as a result of the COVID-19

pandemic.

Number of Countries and Separate Customs Territory Introducing Export

17
Prohibitions and Restrictions as a Result of COVID-19

(by categories of products)

16
Simon J. Evenett, 2020. "Sicken thy neighbour: The initial trade policy response to COVID ‐19," The World
Economy, Wiley Blackwell, vol. 43(4), pages 828-839, April.
<https://ideas.repec.org/a/bla/worlde/v43y2020i4p828-839.html>

17
WTO Secretariat.“Export Prohibitions and Restrictions”. World Trade Organization, April 23, 2020,
https://www.wto.org/english/tratop_e/covid19_e/export_prohibitions_report_e.pdf

Page 10 of 34
 Most of the export restrictions and prohibitions employed affect the exportation of

products that the joint WHO/WCO indicative list of products designates as essential in

combatting COVID-19. As shown in this chart, face and eye protection devices (e.g.

facemasks and shields) are the most heavily affected category, followed by protective

garments, and sanitizers and disinfectants.

Later, on May 12, 2020, the International Trade Center noted the rise of export-

restrictive measures: 92 countries have imposed such measures, with only two countries –

Jamaica and Zambia – adopting export-liberalization measures.

Page 11 of 34
Source Article: Legal and Policy Implications of COVID-19-related Export Restrictions18

I. WTO Rules on Export Prohibitions and Restrictions

Article XI of the General Agreement on Tariffs and Trade (1994) states that:

“No prohibitions or restrictions other than duties, taxes or other charges,

whether made effective through quotas, import or export licences 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. “

18
Quiles, Pablo. “Legal and Policy Implications of COVID-19-related Export Restrictions”. Internationa
Economics, May 12, 2020, https://www.tradeeconomics.com/legal-and-policy-implications-of-covid-19-
related-export-restrictions/#_ftn1

Page 12 of 34
 One reason for this prohibition is that quantitative restrictions are considered to have a

greater protective effect than do tariff measures, and are more likely to distort the free flow of

trade. When a trading partner uses tariffs to restrict imports, it is still possible to increase

exports as long as foreign products become price-competitive enough to overcome the

barriers created by the tariff. When a trading partner uses quantitative restrictions, however, it

is impossible to export in excess of the quota no matter how price competitive foreign

products may be. Thus, quantitative restrictions are considered to have such a distortional

effect on trade that their prohibition is one of the fundamental principles of the GATT .

II. The Concept of Restrictions and Prohibitions

The GATT Panel Report in India – Quantitative Restrictions, sets out the scope of the

concept of "restriction" as follows:

"[T]he text of Article XI:1 is very broad in scope, providing for a general ban on

import or export restrictions or prohibitions 'other than duties, taxes or other charges'. As

was noted by the panel in Japan – Trade in Semi-conductors, the wording of Article XI:1 is

comprehensive: it applies 'to all measures instituted or maintained by a [Member]

prohibiting or restricting the importation, exportation, or sale for export of products other

than measures that take the form of duties, taxes or other charges.' The scope of the term

'restriction' is also broad, as seen in its ordinary meaning, which is 'a limitation on action,

a limiting condition or regulation'.19

In China – Raw Materials, the Appellate Body examined the concepts of

"prohibition" and "restriction" and concluded that Article XI of the GATT 1994 covers those

prohibitions and restrictions that have a limiting effect on the quantity or amount of a product

19
WTO Analytical Index, GATT 1994 – Article XI (Jurisprudence),
https://www.wto.org/english/res_e/publications_e/ai17_e/gatt1994_art11_jur.pdf

Page 13 of 34
being imported or exported: "Both Article XI:1 and Article XI:2(a) of the GATT 1994 refer

to 'prohibitions or restrictions'. The term 'prohibition' is defined as a 'legal ban on the trade

or importation of a specified commodity'. The second component of the phrase '[e]xport

prohibitions or restrictions' is the noun 'restriction', which is defined as '[a] thing which

restricts someone or something, a limitation on action, a limiting condition or

regulation', and thus refers generally to something that has a limiting effect.20

III. Effects of Export Restrictions and Prohibitions

Unusually large quantities of certain medical products are required by domestic

healthcare providers in order to ensure the appropriate care for and protection of national

populations. While the introduction of export-restrictive measures is understandable, the lack

of international cooperation in these areas risks cutting off import-reliant countries from

desperately needed medical products and triggering a supply shock. And by interfering with

established medical supply chains, such measures also risk hampering the urgently required

supply response.21

Export prohibitions and restrictions applied by large exporters may in the short run

lower domestic prices for the goods in question and increase domestic availability. But

the strategy is not costless: the measures reduce the world's supply of the products

concerned and importing countries without the capacity to manufacture these products

suffer. And exporters also risk losing out in the long run. On the one hand, lower

domestic prices will reduce the incentive to produce the good domestically, and the

higher foreign price creates an incentive to smuggle it out of the country, both of which

may reduce domestic availability of the product. On the other hand, restrictions initiated
20
WTO Analytical Index, GATT 1994 – Article XI (Jurisprudence),
https://www.wto.org/english/res_e/publications_e/ai17_e/gatt1994_art11_jur.pdf
21
“Export Prohibitions and Restrictions”. World Trade Organization, April 23, 2020,
https://www.wto.org/english/tratop_e/covid19_e/export_prohibitions_report_e.pdf .

Page 14 of 34
 by one country may end-up triggering a domino effect. If trade does not provide secure,

predictable access to essential goods, countries may feel they have to close themselves

from imports and pursue domestic production instead, even at much higher prices. Such a

scenario would likely result in lower supply and higher prices for much-needed

merchandise. The long-term effects could be significant.22

IV. Trade Measures Undertaken by the Philippines in Response to the Pandemic

As of November 18, 2020 the WTO has logged approximately 264 trade measures

employed by member countries in response to the pandemic. The Philippines, as a country

highly dependent on imports of medical goods to supply approximately 1,800 of its

licensed hospitals throughout the country, has, naturally, not imposed export

restrictions/prohibitions on medical goods and supplies. The data below indicates the

measures employed by the Philippines based on the WTO compiled list of trade related

measures in response to the pandemic:

MEMBER MEASURE DATE

Philippines Temporary elimination of import tariffs on Amended on 11

qualified manufacturers and suppliers of September 2020

medicines, medical equipment and devices, (Republic Act No.

personal protective equipment (PPEs), surgical 11469). The

equipment and supplies, laboratory equipment and Department of

re-agents and their packaging, medical supplies, Trade and

tools and consumables (alcohol, sanitizers, Industry through

thermometers),raw materials, COVID-19 testing the Board of

kits, or any other articles needed in the supply Investments shall

22
“Export Prohibitions and Restrictions”. World Trade Organization, April 23, 2020,
https://www.wto.org/english/tratop_e/covid19_e/export_prohibitions_report_e.pdf.

Page 15 of 34
 chain such as capital equipment, spare parts, and certify that the

accessories (HS Chapters 22; 28; 29; 30; 33; 34; equipment and

35; 37; 38; 39; 40; 44; 48; 52; 54; 55; 59; 62; 63; supplies being

65 70; 84; 90; 94; 96), due to the COVID-19 imported are not

pandemic. Imports also exempted from other locally available

taxes and fees (originally effective from 24 March or insufficient in

2020 to 23 May 2020) quality and

preference

Philippines Temporary increase of import tariffs (from zero to Terminated on 25

10%) on crude petroleum oil and refined June 2020

petroleum products (HS 2709; 2710; 2711), due to

the COVID-19 pandemic (originally implemented

on 2 May 2020)

Page 16 of 34
 PART III

State Responsibility as to International Trade Obligations

After about four decades of international discussions on the matter of State

Responsibility, the International Law Commission of the United Nations resolved to publish

the articles which are now known as the ARSIWA, in 2001. This is now a codifications of

customary international law on matters of State Responsibility.23

Every internationally wrongful act of a State entails the international responsibility of

that State. 24 Not only is this the very first Article of the ARSIWA, it is also quite instructive

as to the nature of this instrument of International law. 25

Article 2 of the ARSIWA defines an internationally wrongful act to be one which is

consisting of an action or omission: (a) is attributable to the State under international law; and

(b) constitutes a breach of an international obligation of the State.26

Breach of International Trade Agreements is indeed an internationally wrongful act

not only because it satisfies Art. 2 of the ARSIWA but also because it falls squarely within

the definition set forth in Art. 1227 and 1328.

The ARSIWA however, provides for circumstances that preclude liability even when

there is an Internationally Wrongful Act. These “Defenses” 29 are enumerated under the

ARSIWA and explained therein as “Preclusions to Wrongfulness” – the question of their

applicability however is put into question considering specific provisions of the ARSIWA.

23
Center for Devices and Radiological Health. (n.d.). FAQs on Shortages of Surgical Masks and Gowns During COVID-19.
Retrieved November 26, 2020, from https://www.fda.gov/medical-devices/personal-protective-equipment-infection-
control/faqs-shortages-surgical-masks-and-gowns-during-covid-19-pandemic
24
Art. 1. Responsibility of States for Internationally Wrongful Acts. (2001). United Nations
25
legal.un.org. N.p., n.d. Web. 27 Nov. 2020.
<https://legal.un.org/ilc/texts/instruments/english/commentaries/9_6_2001.pdf>.
26
Art. 2. Supra Note 2
27
Art. 12. Supra Note 2
28
Art. 13. Supra Note 2
29
Chapter 5. Supra Note2

Page 17 of 34
 As previously discussed, a state-sanctioned breach of international obligation is

indeed an Internationally Wrongful Act, and if the general definition abovementioned is

applied, then it would seem that the ARSIWA is indeed applicable. However, trade

obligations and the international instruments they are embraced in, are subject to the auspices

of the World Trade Organization (WTO) and its rules.30

Of important note is the fact that the ARSIWA came into effect in 2001, while the

WTO, which was formed in 1995, and its foundational instruments – the General Agreement

of Tariffs on Trade of 199431 and the later General Agreement of Trade in Services of 1995 32

– all preceded the ARSIWA for more than half a decade.

If this plain and simple timeline is considered, and the linear and general principle of

Lex Posteriori, or in full, lex posterior derogat priori, that a later law expressly repeals an

earlier one33 is made the applicable principle, the ARSIWA should be given full effect, at

least in so far as the exclusionary provisions and the requirements thereon are concerned.

It would seem, however, that there no longer needs to be any confusion in the

discussion on fragmentation of this corner of international law since the concept of Lex

Specialis is specifically and expressly adopted by the ARSIWA in its Article 55, Part Four34.

This express adoption of Lex Specialis into the instrument itself only means to

strengthen the notion that when there exists any other international law instrument that has

specific application as to the allegedly wrongful act, the ARSIWA is devolved of its

applicability.

30
WTO Agreement: Marrakesh Agreement Establishing the World Trade Organization, Apr. 15, 1994, 1867 U.N.T.S. 154,
33 I.L.M. 1144 (1994)
31
General Agreement on Tariffs and Trade 1994, Apr. 15, 1994, Marrakesh Agreement Establishing the World Trade
Organization, Annex 1A, 1867 U.N.T.S. 187, 33 I.L.M. 1153 (1994)
32
General Agreement on Trade in Services, Apr. 15, 1994, Marrakesh Agreement Establishing the World Trade
Organization, Annex 1B, 1869 U.N.T.S. 183, 33 I.L.M. 1167 (1994)
33
From OpenJurist.org. (https://openjurist.org/law-dictionary/lex-posterior-derogat-priori#:~:text=Definition%3A,law
%20repeals%20an%20earlier%20one.&text=But%20the%20later%20statute%20must,repugnant%20to%2C%20the
%20earlier%20one.) Quoting Ballentine’s Law Dictionary.
34
Art. 55. Supra Note 2

Page 18 of 34
 An analysis of special and specific laws that govern international trade is necessary to

understand the repercussions and defenses that may be made available to states that commit

internationally wrongful acts vis-à-vis international trade.

In an article in the WTO Website, in its Frequently Asked Questions page, the WTO

laid out its general commentary as to the incidence of Trade Restrictions and Bans by

member nations.

For example, the General Agreement on Tariffs and Trade of 1994 & 1947 which is a

cornerstone instrument in the creation of the World Trade Organization itself 35 outlines the

basis for exception to the general rules and principles therein in its Article XX “General

Exception”36.

In terms of export of food stocks and medical supplies which are the two main

subjects of export and import bans and impositions, paragraphs (b) 37 and (j)38 are of best

application as a means to justify non-application of the GATT.

Short supply had been evident39 with common medical goods such as Disinfectants,

Masks and even life-saving medication, especially on the outset of the international

quarantines in late March of 202040. The World Health Organization (WHO) itself

acknowledges that for the monthly need as an effect of the COVID-19 pandemic, about 89

million medical masks have to produced. WHO models saying that 76 million is necessary

35
Marrakesh Agreement Establishing the World Trade Organization, Annex 1A, 1867 U.N.T.S. 187, 33 I.L.M. 1153 (1994)
36
Article XX. Supra Note 9
37
Ibid. par. b
38
Ibid. par. j
39
Center for Devices and Radiological Health. (n.d.). FAQs on Shortages of Surgical Masks and Gowns During COVID-19.
Retrieved November 26, 2020, from https://www.fda.gov/medical-devices/personal-protective-equipment-infection-
control/faqs-shortages-surgical-masks-and-gowns-during-covid-19-pandemic
40
Jacobs, A., Richtel, M., &amp; Baker, M. (2020, March 19). 'At War With No Ammo': Doctors Say Shortage of Protective
Gear Is Dire. Retrieved November 26, 2020, from https://www.nytimes.com/2020/03/19/health/coronavirus-masks-
shortage.html

Page 19 of 34
for examination gloves and 1.6 million is required in terms of goggles and these are figures

per month. 41

ARSIWA Application Notwithstanding WTO Rules

Questioning whether or not the ARSIWA still finds any application in WTO disputes,

in light of herein discussion on the concept of Lex Specialis, is actually begging a well

debated question in international law: Is the WTO a Closed Legal System?

Accordingly, Lindroos and Mehling 42 while citing several core writings that are well

established in International Law studies such as McNair’s 1961 “The Law on Treaties”, they

argue that International Law is read into even the WTO Rules and Instruments, not only

because it is the general law, but because it is the law existing at the time the WTO Rules

were at its very conception. To argue that the intention was otherwise would be a total

disregard of obvious circumstance.

The Dispute Resolving Bodies of the WTO, using the framework of the Settlement

Mechanisms, have consistently adopted Internaotional laws in its disposition.43

A cursory survey of the Rules and Procedures Governing the Settlement of Disputes

or Dispute Settlement Understanding (DSU, as it is commonly abbreviated) 44 – the main

system of policies and rules in the Disputes Settlement under the World Trade Organization

is very restrictive as to the instruments from which its Jurisdiction and Procedure shall be

taken from.45

41
Shortage of personal protective equipment endangering health workers worldwide. (n.d.). Retrieved Nov. 26, 2020, from
https://www.who.int/news/item/03-03-2020-shortage-of-personal-protective-equipment-endangering-health-workers-worldwide/
42
Anja Lindroos, Michael Mehling, Dispelling the Chimera of ‘Self-Contained Regimes’ International Law and the WTO,
European Journal of International Law, Volume 16, Issue 5, November 2005, Pages 857–877,
https://doi.org/10.1093/ejil/chi148
43
Ibid. Citing as its Footnote No.42
44
Dispute Settlement Rules: Understanding on Rules and Procedures Governing the Settlement of Disputes. Supra Note 8
45
Supra Note 20

Page 20 of 34
 However, Jurisdiction and Applicable Law are two different issues. While Jurisdiction

may be strictly provided for by the DSU, the question on applicable law is silent.

Not a single provision as to what laws and policies are deemed applicable in the

course of Dispute Settlement under the DSU and the WTO Rules exist.46

Instruments of International Law which are of general application are applicable in

connection with the WTO Rules not only because the WTO’s Judicial Bodies under the DSU

adopt at certain instances international law (See 4.2), but also because there is no express

prohibition under the rules that prohibit one from invoking such laws. The DSU itself has

several provisions that do point to International Law, though impliedly.47

Going back to the issue on fragmentation of International law, to bring harmony to

these different bodies, Lex Specialis should be applied, but when the WTO Rules cannot

adequately provide for a legal framework to address the issue at bar, then resorting to the

ARSIWA is not at all prohibited and may be done so.

There is no such thing as a Closed Legal System – this much is observed that even for

the most specialized sets of rules, not all the community that has adopted such rules, goals are

met. The complexity of human relations elevated to that of the internationally community

assures this. To harmonize these differing concepts of specialization and the general law (the

ARSIWA in this case), it can be concluded that state actors are bound by and may invoke the

ARSIWA when the special rules themselves – the WTO instruments – cannot specifically

address an issue arising from its provisions. Hence Special Laws, whether it expresses so, or

not, becomes its own arbiter as to the exclusion of the ARSIWA – its lack of an adequate

provision to address an issue determines that application of the general international law.48
46
Ibid.
47
Ibid.
48
The ILC's Articles on Responsibility of States for Internationally Wrongful Acts: A Retrospect James Crawford. The
American Journal of International Law, Vol. 96, No. 4 (Oct., 2002), pp. 874-890 Published by: American Society of
International Law Stable URL: http://www.jstor.org/stable/3070683 Accessed: 05/04/2010 14:06

Page 21 of 34
 In the case of WTO, as evidenced by the many circumstance that International Law

was made applicable, the ARSIWA does in a way form a secondary catch-net, when its own

rules cannot apply.

As discussed earlier, a state may invoke provisions of the ARSIWA even though there

are WTO rules in place, especially when the acts do not find specific relevance within the

latter.

If that is indeed the case, then a state may also invoke those preclusions of

wrongfulness as discussed in this chapter.

In a March 2020 Article titles COVID-19 and Defenses in the Law of State

Responsibility by Federica Paddeu et al published in ejitalks.org, of the defenses in the

ARSIWA for breach of International Obligations, three are most likely to be invoked: Force

Majeure, Necessity and Distress. The latter of the three being the most likely to succeed,

according to the authors.

As to Force Majeure, the article summarizes the requisites under the provisions of the

ARISWA49. Given the conditions required, right from the beginning, a distinction has to be

first made as to whether or not the “triggering event” is unforeseen or irresistible.

Hence, if a state had ample time before the spread of the pandemic into its borders,

clearly the concept of unforseeability could not apply.

Precisely why China, through its Council for the Promotion of International Trade

sometime in March started issuing Force Majeur Certifications to its business for its business

in the event disputes with international companies arise.50

49
Paddeu et. al. (March 2020). “COVID-19 and Defenses in the Law of State Responsibility” from ejitalks.org
50
Frankel, A. (2020, March 16). Chinese force majeure certificates presage complexity of resolving post-crisis disputes.
Retrieved November 27, 2020, from https://www.reuters.com/article/us-otc-covid19-idUSKBN2133MQ

Page 22 of 34
 China, may very well claim not foreseeing the pandemic being what seems to be

ground zero of the pandemic. Indeed, it had done so when it issued the aforementioned Force

Majeure Certifications.

Does this apply to the Philippines, when even as early as December 2019, the

existence of the virus had been globally recognized, months before the 1 st case of the virus

was recorded in the country.

Furthermore, the acts of the state being voluntary and not necessarily brought about

by the lack of choice in policy, deviates from the condition of it being “beyond the control of

the state” much like in the Philippines were critics have pointed out that policy choices have

greatly impacted the peril in which the population had been put it.

Necessity as a preclusive defense fails if there is any legal way, that does not breach

the international trade obligation, even if it is costlier, or tends to require most effort and is

inconvenient – this particular element that requires that the state act “is the only way”, makes

for a more difficult invocation of the defense. 51

Finally, in stating that the defense of Distress is the most likely to succeed in a legal

application the article states the Covid-19 pandemic has clearly shown a threat to life 52. In

terms of international trade, it can be argued that a special relationship exists since the

government is the sole representative of the citizenry to membership to the WTO53. The

government, therefore, has such sufficient control of the fiscal and economic wellbeing and

ultimately the fate of the business sector that is conducting trade internationally.54

51
Supra Note 27
52
Supra Note 27
53
WORLD TRADE ORGANIZATION. (n.d.). Retrieved November 27, 2020, from
https://www.wto.org/english/thewto_e/acc_e/cbt_course_e/c1s1p1_e.htm
54
Understanding the WTO - Whose WTO is it anyway? (n.d.). Retrieved November 27, 2020, from
https://www.wto.org/english/thewto_e/whatis_e/tif_e/org1_e.htm

Page 23 of 34
 We see it as evidenced by several countries – other than China, such as Lithuania 55

France, Italy and the United Kingdom56– issuing documents and certifications of the

economic predicament of the home state to its business doing foreign trade; a clear

concurrence of the state, owning up to its role as Pilot or Captain of the Ship in terms of

trade.

What is important to talk about is the analysis of the article 57 as to the “Non-

Contribution Requirement” which is the same standard in that of Force Majeure. Good faith

policies do not exclude the reliance on the plea, hence, even if they may be found to be

inadequate. This is in stark contrast to the requirement set forth in the plea of necessity.

The Commentary on the Arsiwa58 however, points out that the case for herein

application to such a loose definition is that it ought to be as to life saving measures, because

then it would have been illogical for the state to refuse such action, just because it had some

contribution to the triggering event.

In the Philippines, Bayanihan 159 and 260, undertake limitations as to international

trade based off on the general principles it set forth in its justification – the Covid-19

Pandemic. Unlike countries who can suffer the pandemic’s economic blows without as grave

a consequence as in the Philippines – the government’s hand is forced to make all necessary

acts to preserve the nation’s economic and literal existence. One might argue that it would not

be a stretch to say that measures, even when concerning economics and trade, are life-saving

measures with respect to developing nations.

55
Force Majeure Certificates. (n.d.). Retrieved November 27, 2020, from https://www.kcci.lt/en/force-majeure-certificates/
56
Carter, J., Douglas-Henry, J., Curle, J., Sean&nbsp;McGuiness, Cheng, L., Chen, X., . . . Lallemand, M. (2020, April 30).
Force Majeure Certificates in a global context: What are they and what is their effect? Retrieved November 27, 2020, from
https://www.lexology.com/library/detail.aspx?g=ae600a87-0907-4080-ba35-e0996dc87c67
57
Supra Note 27
58
Commentaries, Draft Article of Responsibility of States for Internationally Wrongful Acts (2001). International Law
Commission. Retrieved from: https://legal.un.org/ilc/texts/instruments/english/commentaries/9_6_2001.pdf
59
Republic Act 11494 (2020). Republic of the Philippines
60
Republic Act 11469 (2020). Republic of the Philippines

Page 24 of 34
 At the end of the day, the ultimate goal is common survival of the community of

nations – not only is this one important tenet of International Law, but it is foundational in the

creation of the World Trade Organization.

A shared future is possible notwithstanding the persistent Covid-19 Pandemic, if, and

only if, we cooperate as sovereign nations and that includes the acceptance that not all nations

are created and are existing under the same circumstances.

Concession to those developing nations, whose existence, even prior to the pandemic,

are troubled, in their breaches of obligations which they cannot fulfill due to the exigencies of

the pandemic, and those that may jeopardize its own people, should not be looked at with too

dismissive an eye.

PART IV

How WTO Members Have Used Trade Measures to Expedite Access to Covid-19

Critical Medical Goods and Services

Keeping the Markets Open

Page 25 of 34
 During the March 26, 2020 summit, the G20 leaders issued a statement addressing the

international trade disruptions and to keep the markets open. The G20 trade ministers

subsequently stated that they are actively working to ensure the continued flow of vital

medical supplies and equipment, among others.

On May 14, 2020, G20 trade ministers reaffirmed their determination to cooperate to

mitigate the impact of Covid-19 on trade, and endorsed the “G20 Actions to Support World

Trade and Investment in Response to Covid 19.

A group of 46 members also issued a joint statement in which they committed to refrain

from raising new unjustified barriers to investment or to trade in goods and services.

Transparency About Trade Measures

A key building block of the commitment to keeping markets open is transparency. In

addition to the transparency disciplines found throughout the WTO Agreements, the Trade

Policy Review Mechanism provides for enhanced multilateral transparency through the

consideration of trade monitoring reports submitted by the Director General

Duties, Taxes and Charges on Covid-19 Critical Medical Goods and Other Essential

Supplies were eliminated or deferred

Tariff reductions or elimination made up around two-thirds of the import trade facilitating

measures reported to the Trade Policy Review Body. The remainder included policies such as

simplification of customs procedures, and reduction of/exemption from other import duties

and charges. Certain members and observers reduced their tariffs on a variety of goods such

as PPE, sanitizers, disinfectant, medical equipment and medicine/drugs.

Border Clearance for Critical Goods has been Expedited by Cutting Red tape

Under this, the Measures taken were in the form of: Prioritization of customs clearance for

Covid -19 goods; Establishing special procedures to further expedite consignments of

Page 26 of 34
medical equipment/pharmaceuticals to authorized operators; Temporary suspension or

simplification of import licensing procedures; Accepting the electronic submission of

documents for pre-arrival processing; Temporary suspension or simplification of origin

requirement; Simplification of import and export forms; and Implementation of green lanes

under the guidelines for border management measures to protect health and ensure the

availability of goods and essential services.61

PART V

Best Practices of States In the Midst of Covid-19 Global Pandemic

In an unprecedented global health crisis, trade is essential to save lives and

livelihoods; and international co-operation is needed to keep trade flowing. In the midst of

significant uncertainty, the OECD Policy Responses to Coronavirus (COVID-19) categorized

four things that can be done. These are: 1) boost confidence in trade and global markets by
61

: www.wto.org

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improving transparency about trade-related policy actions and intentions; 2) keep supply

chains flowing, especially for essentials such as health supplies and food; 3) avoid making

things worse, through unnecessary export restrictions and other trade barriers; and 4) even in

the midst of the crisis, think beyond the immediate. 62 However, behavior of some states at the

early phase of the pandemic demonstrated different approach. As observed by Brown 63, the

early 2020 has seen a chaos of export restrictions, policy flipflops, price spikes, and quality

concerns surrounding trade in vital medical supplies.

Best practices in trade is best seen in the actions taken by states following the

onslaught of Covid-19 in its effort to combat the uncertainty of supply chains and

international market. To measure this, the OTTAWA GROUP 64 issued a Statement on June

2020 providing Action Items, which epitomize best approaches in the midst of the pandemic.

These are: Action Item 1: Transparency and Withdrawal of Trade-Restrictive Measures;

Action Item 2: Keeping Open and Predictable Trade in Agricultural and Agri-Food Products;

Action Item 3: E-commerce; Action Item 4: Trade Facilitation – Use of Information

Technology and Streamlined Procedures; Action Item 5: Initiative on Medical Supplies; and

Action Item 6: Deepen Engagement with Stakeholders.

Best Approaches in Trade

a. States

62
OECD Policy Responses to Coronavirus (COVID-19), “COVID-19 and International Trade: Issues and Actions”
(Updated 12 June 2020). Accessed at http://www.oecd.org/coronavirus/policy-responses/covid-19-and-
international-trade-issues-and-actions-494da2fa/.
63
Brown, O. Chad, “COVID-19: Demand spikes, export restrictions, and quality concerns imperil poor country
access to medical supplies”, cited in Richard E. Baldwin and Simon J. Evenett, eds. (COVID-19 and Trade Policy:
Why Turning Inward Won’t Work, A VoxEU.org Book, 2020). P. 31. Accessed at
https://voxeu.org/content/covid-19-and-trade-policy-why-turning-inward-won-t-work on October 9 2020.
64
JUNE 2020 STATEMENT OF THE OTTAWA GROUP: FOCUSING ACTION ON COVID-19 Accessed at
https://www.wto.org/english/tratop_e/tradfa_e/comm_tradfa_e.htm#sep20Meet on October 11, 2020.

Page 28 of 34
Since COVID-19 was declared a pandemic on 12 March 2020, 77 nations have to date (19

April 2020) reduced import barriers on medicines and medical supplies. 65 Although this

liberalisation so far includes mostly tariff measures, some non-tariff measures have also been

implemented.66

Examples of governments that have removed tariffs include: • China, which (naturally) was

among the first to reduce import tariffs on certain medical supplies, but also on some raw

materials and agricultural products; • the EU, which has waived customs duties and VAT on

imports of medical and protective equipment from non-EU countries retroactively as of 30

January 2020; and • Bangladesh, which has exempted medical equipment from import duties

and taxes.67

In addition, one of the earliest initiatives taken was in the form of a joint declaration

by Australia, Brunei, Canada, Chile, Laos, Myanmar, Singapore and Uruguay that guaranteed

continuous commitment to preserve supply chain connectivity by refraining from application

of new tariff or non-tariff barriers and supporting the transportation network.68

The Brazilian government introduced new legislation that simplifies the customs

clearance processes for articles used to combat the spread of COVID-19. The legislation

allows articles such as disinfectants, antiseptic gels, protective masks and other key articles

65
Anna Stellinger, Ingrid Berglund and Henrik Isakson, “How trade can fight the pandemic and contribute to
global health cited in Richard E. Baldwin and Simon J. Evenett, eds. (COVID-19 and Trade Policy: Why Turning
Inward Won’t Work, A VoxEU.org Book, 2020). P. 25. Accessed at https://voxeu.org/content/covid-19-and-
trade-policy-why-turning-inward-won-t-work on October 9 2020.
66
Ibid.
67
Ibid.
68
New Zealand: Foreign Affairs and Trade, “Joint Ministerial Statement affirming commitment to ensuring
supply chain connectivity amidst the COVID-19 situation”, 14 April 2020, https://www.mfat.govt.nz/en/media-
and-. resources/ministrystatements-and-speeches/joint-ministerial-statement-affirming-commitment-to-
ensuring-supply-chain-connectivity-amidstthe-covid-19-situation/. For detail see,
https://www.mfat.govt.nz/en/media-and-resources/ministry-statements-and-speeches/joint-ministerial-
statement-affirming-commitment-to-ensuring-supply-chain-connectivity-amidst-the-covid-19-situation/
(Accessed on October 10, 2020)

Page 29 of 34
needed by hospitals, pharmacies, etc. to move to the importer under expedited clearance. It

also allows for the authorization of importers to receive goods under expedited release.69

In the Philippines, pursuant to Bayanihan To Heal as One Act, the Secretary of Finance, is

tasked to facilitate in the most expeditious manner possible: (a) the grant of exemption of

importation of critical or needed equipment or supplies from import duties, taxes and other

fees; and (b) the simplified release of said imported goods.70 Furthermore, the Secretary of

Trade and Industry in coordination with the DOF Secreatry should act to liberalize the grant

of of incentives for the manufacture or importation of critical or needed equipment supplies.

b. States Organizations

Apart from unilateral actions of states, international organizations comprised of

member states, have also taken positive steps to ensure that there is no disruption of supply

chain on agricultural products and medical equipments.

In a joint Statement71 submitted before the WTO General Council’s Committee on

Agriculture by a group of countries which account for 67% of global exports of agriculture

and agri-food products and 60% of global imports of agriculture and agri-food products, they

underscore the importance of maintaining agriculture supply chains and preserving the ability

of Members to import agriculture and agri-food products to meet their domestic needs. In

contrast to the initial reactions

69
Trade and COVID-19 Guidance Note, “Managing Risk and Facilitating Trade in the COVID-19 Pandemic”
(World Bank Group, 2020). Accessed at
http://documents1.worldbank.org/curated/en/751981585606039541/pdf/Trade-and-COVID-19-Guidance-
Note-Managing-Risk-and-Facilitating-Trade-in-the-COVID-19-Pandemic.pdf.
70
For more see https://drive.google.com/file/d/1eYAL2qIOVk8pg6k-yyrWRI3vu55DIt1f/view (accessed on
October 10, 2020).
71
“RESPONDING TO THE COVID-19 PANDEMIC WITH OPEN AND PREDICTABLE TRADE IN AGRICULTURAL AND
FOOD PRODUCTS,” statement from: australia; brazil; canada; chile; colombia; costa rica; ecuador; european
union; georgia; hong kong, china; japan; republic of korea; malawi; malaysia; mexico; new zealand; nicaragua;
paraguay; peru; qatar; kingdom of saudi arabia; singapore; switzerland; the separate customs territory of
taiwan, penghu, kinmen and matsu; ukraine; united arab emirates; united kingdom; united states; and
Uruguay. Accessed at https://docs.wto.org/dol2fe/Pages/FE_Search/FE_S_S009DP.aspx?
language=E&CatalogueIdList=264012,263736,263337&CurrentCatalogueIdIndex=0&FullTextHash=371857150
&HasEnglishRecord=True&HasFrenchRecord=True&HasSpanishRecord=True on October 8, 2020.

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 On 16 March 2020, the European Commission approved the ‘Guidelines for border

management measures to protect health and ensure the availability of goods and essential

services.’ The provisions state that:

“Member States should preserve the free circulation of all goods. In particular, they

should guarantee the supply chain of essential products such as medicines, medical

equipment, essential and perishable food products and livestock. No restriction should be

imposed on the circulation of goods in the single market, especially (but not limited to)

essential, health-related and perishable goods, notably foodstuffs, unless duly justified.

Member States should designate priority lanes for freight transport (e.g. via ‘green lanes’)

and consider waiving existing weekend bans. No additional certifications should be imposed

on goods legally circulating within the EU single market. It should be noted that, according to

the European Food Safety Authority, there is no evidence that food is a source or a

transmission source of Covid-19.”72

Heads of State/Government of the Member States of the Association of Southeast

Asian Nations (ASEAN) held the Special ASEAN Summit and declare that “Remain

committed to keeping ASEAN's markets open for trade and investment, and enhance

cooperation among ASEAN Member States and also with ASEAN's external partners with a

view to ensuring food security, such as the utilisation of the ASEAN Plus Three Emergency

Rice Reserve (APTERR), and strengthening the resiliency and sustainability of regional

supply chains, especially for food, commodities, medicines, medical and essential supplies.” 73

Furthermore, they agreed and resolved to refrain from actions that can create unnecessary

inflationary pressures or adversely impact on food security in the region, and endeavour to

ensure the availability of basic goods and commodities and continue addressing non-tariff

72
Ibid.
73
ASEAN DECLARATION AND STATEMENTS ON COVID-19. Accessed at
https://docs.wto.org/dol2fe/Pages/SS/directdoc.aspx?filename=q:/WT/GC/210.pdf&Open=True

Page 31 of 34
barriers, particularly those that impede the smooth flow of goods and services in supply

chains, and refrain from imposing new and unnecessary non-tariff measures.74

74
Id. P. 5.

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