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Countries A, B and C are members of the WTO.

They have all negotiated and committed to a tariff of


10% when importing cars from each other. Countries B and C have now concluded a bilateral trade
agreement and eliminated tariffs on the bilateral trade of cars. This means that cars exported from B
to C as well as from C to B will not pay any tariffs, while cars exported from A to B, as well as from A
to C, will continue to pay a 10% tariff. Country A feels that this arrangement violates an important
WTO principle. Please explain: (i) whether a private company in Country A could initiate a dispute
directly at the WTO; (ii) which WTO/GATT principle is being violated and (iii) whether country B and
C could make use of an exception under WTO law to justify this measure.

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