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ASSIGNMENT COVER
2023 ACADEMIC YEAR
Student Name THANDOLWENKOSI MALINGA
Student number 219379040
Email Address @students.unam.na
Cell/Tel no 0816096952
Campus Windhoek Campus

Course/Module Name Course/Module

Code
INTERNATIONAL ECONOMIC LAW CIE3871

Assignment no
(e.g. 1, 2 or 3, etc.).
1
Article XXIV recognizes that, subject to certain conditions, customs unions and free-
trade areas between WTO Members are desirable. To this end Article XXIV provides
for the possibility that Members forming a customs union may depart, as to the trade
between themselves, from the most-favoured nation principle, in conformity with the
conditions of Article XXIV. There are a number of indications of the broad desirability
of Article XXIV agreements as a means of increasing freedom of trade.

The GATT 1994 Understanding on Article XXIV which provides that:

Reaffirming that the purpose of such agreements should be to facilitate trade between
the constituent territories and not to raise barriers to the trade of other Members with
such territories; and that in their formation or enlargement the parties to them should
to the greatest possible extent avoid creating adverse effects on the trade of other
Members;

The terms of Article XXIV thus confirm that WTO Members have a right, albeit
conditional, to conclude regional trade agreements.In this regard, Article XXIV:5
provides that

"Accordingly, the provisions of this Agreement [GATT 1994] shall not prevent, as
between the territories of Members, the formation of a customs union or of a free-trade
area or the adoption of an interim agreement necessary for the formation of a customs
union or of a free-trade area; Provided that … :"

The reference to GATT 1994 Article XXIV is relevant in this case because Indonesia
argued that the measure at issue, the imposition of certain safeguard measures by the
US on imported tires from China, suspended the GATT exception under Article XXIV.

Question B

Article 1 establishes that the SG Agreement is the vehicle through which measures
may be applied pursuant to Article XIX of GATT 1994. That is, any measure for which
the coverage of Article XIX (which allows suspension of GATT concessions and
obligations under the defined “emergency” circumstances) is invoked, must be taken
in accordance with the provisions of the SG Agreement.
Safeguard measures may only be applied to the extent necessary to remedy or
prevent serious injury and to facilitate adjustment, within certain limits. If the measure
takes the form of a quantitative restriction, the level must not be below the actual import
level of the most recent three representative years, unless there is clear justification
for doing otherwise. Rules also apply as to how quota shares are to be allocated
among supplier countries, as to compensation to Members whose trade is affected,
and as to consultations with affected Members.

Safeguards add flexibility to trade agreements. Theoretically, this flexibility can

improve welfare by making the trade agreement more responsive to a constantly
changing economic environment. Alternatively, it can reduce welfare by undermining
the credibility of the agreement. Both arguments have been made in the economics
literature. As an empirical question, the issue is unresolved.

Perhaps the most widely cited argument in favor of safeguards is that they can
facilitate greater tariff liberalizations by governments during trade negotiations.
Because a government has an escape valve if a tariff reduction causes pain to its
producers, it has more freedom to make larger and potentially more risky tariff
reductions. Because there are large gains from permanent tariff reductions and
relatively small costs from imposing temporary safeguards in a few sectors, the world
gains by having safeguards in a trade agreement, even if they are not used.

Another economic argument in favor of the inclusion of safeguards in a trade

agreement is that they act as a form of insurance against adverse economic shocks.
When an unexpected change in the economy occurs (e.g. a price falls, the volume of
imports rises, etc.), imposing a safeguard can partially mitigate the effect of the change
(by stemming the price fall, restricting imports, etc.) and, thus, acts as something
similar to an insurance payout

QUESTION C:

A panel's terms of reference are important for two reasons. First, terms of reference
fulfill an important due process objective-they give the parties and third parties
sufficient information concerning the claims at issue in the dispute in order to allow
them an opportunity to respond to the complainant's case. Second, they establish the
jurisdiction of the panel by defining the precise claims at issue in the dispute.
Article 7.1 of the DSU states that unless the parties otherwise agree, a panel's terms
of reference are:

to examine, in light of the relevant provisions in (name of covered agreement(s) cited

by the parties to the dispute), the matter referred to the DSB by (name of party) in
document... and to make such findings as will assist the DSB in making the
recommendations or giving the rulings provided for in that/those agreement(s).'1

The panel's terms of reference are restricted to the "matter" referred to the DSB by the
complaining Member, it is possible that a panel will be precluded from considering a
particular claim because it has not been stated specifically in the complaining
Member's request for a panel. Indeed, DSU Article 6.2 expressly requires that a
request for a panel "identify the specific measures at issue and provide a brief
summary of the legal basis of the complaint sufficient to present the problem clearly."
This provision also serves an important due process function of informing the other
Member, as well as third parties who may wish to participate in the panel proceedings,
regarding the nature of the precise claims at issue.

The complainants in this dispute claimed that Indonesia's specific duty on imports of
galvalume was inconsistent with Article XIX of the GATT 1994 and certain substantive
provisions of the Agreement on Safeguards. Therefore, the Appellate Body considered
that it was the Panel's duty, pursuant to Article 11 of the DSU, to assess objectively
whether the measure at issue constituted a safeguard measure in order to determine
the applicability of the substantive provisions relied upon by the It, therefore, found
that the Panel did not err under Article 6.2, 7.1, or 11 of the DSU in carrying out its
own assessment of whether the measure at issue constituted a safeguard measure
within the meaning of Article 1 of the Agreement on Safeguards. complainants as the
basis for their claims.

The interpretation and application of Article 6.2 of the DSU, including: (i) A claim, for
the purposes of Article 6.2, refers to an allegation that the respondent party has
violated, or nullified or impaired the benefits arising from, an identified provision of a
particular agreement. The identification of the treaty provisions claimed to have been

1
DSU, supra note 5, art. 7.1
violated by the respondent is necessary if the legal basis of the complaint is to be
presented.

By contrast, Article 6.2 does not contain a requirement that a panel request expressly
indicate the provisions governing the legal characterization of a measure for purposes
of the applicability of a given covered agreement. These provisions are not directly
part of the legal basis of the complaint, for they are not claimed to have been violated
by the respondent. Instead, the fact that a panel request contains claims of violation
under the substantive provisions of a covered agreement logically presupposes that
the complainant considers that such provisions are applicable and relevant to the case
at hand.

In determining whether the Panel exceeded its terms of reference or failed to carry out
an objective assessment of the matter, the Appellate Body examined the extent to
which the Panel had a duty to carry out an independent assessment of the applicability
of the Agreement on Safeguards in order to subsequently rule on the claims raised by
the complainants.

The Appellate Body recalled its previous guidance that a claim, for the purposes of
Article 6.2, refers to an allegation that the respondent party has violated, or nullified or
impaired the benefits arising from, an identified provision of a particular agreement.
The identification of the treaty provisions claimed to have been violated by the
respondent is necessary if the legal basis of the complaint is to be presented. By
contrast, Article 6.2 does not contain a requirement that a panel request expressly
indicate the provisions governing the legal characterization of a measure for purposes
of the applicability of a given covered agreement. These provisions are not directly
part of the "legal basis of the complaint", for they are not claimed to have been violated
by the respondent.

QUESTION D: