THE WTO AGREEMENTS GATT 1994 Prinsip-Prinsip Perdangangan International

GATT 1994:
Prinsip-prinsip dalam
Persetujuan Organisasi
Perdagangan
Internasional
15 September 2022
Yu Un Oppusunggu
Fakultas Hukum Universitas Indonesia
The Ultimate Objectives of WTO: the What
Marrakesh Agreement Establishing the WTO
1. To raise standards of living

2. To ensure full
employment
3. To grow real income and
effective demand
4. To expand production of,
and trade in, goods and
services
© Yu Un Oppusunggu 2
GATT 1947
• Reduction of tariffs and other barriers to trade
The How
Marrakesh Agreement Establishing • Elimination of discriminator treatment
the WTO
GATT 1947
International production and trade is determined in the marketplace where
supply and demand rule.
Gap between statement of possibilities and real world
Trade between two countries can benefit both countries if each country exports
the goods in which it has a comparative advantage.
A country has a comparative advantage in producing a

good if the opportunity cost of producing that good in
terms of other goods is lower in that country than it is in
other countries.
The opportunity cost of good X in terms of good Y is the number of Y that could
have been produced with the resources used to produce a given number of X.
Paul R. Krugman & Maurice Obstfeld, International Economics: Theory and Policy, 5th ed, p. 13.
Reduction of trade barriers
Elimination of discrimination
The Main Instrument to Achieve WTO’s
Objectives
the substantial the elimination of

reduction of tariffs and discriminatory
other barriers to trade treatment
• The Market Access Principle • The Principles of Non-
discriminatory
World Trade Organization (WTO)
nWTO tidak berurusan dengan sikap-tindak pelaku usaha swasta

nWTO berurusan dengan
nsikap-tindak pemerintah, dan
nmenetapkan aturan main terhadap instrumen kebijakan
perdagangan, seperti:
¡Tarif, kuota, subsidi dan perdagangan oleh negara (state-
trading)
n164 negara Anggota (Member), dan 23 negara sebagai Pengamat
(observer).
The Basic Structure of the WTO Agreements
Umbrella Agreement Establishing WTO
Goods Services Intellectual Property
Basic principles GATT GATS TRIPS
Additional details Other goods Services annexes

agreement & annexes
Market access Countries’ schedules Countries’ schedules

commitments of commitments of commitments (and
MFN exemptions)
Dispute settlement DISPUTE SETTLEMENT

Transparency
Transparency TRADE POLICY REVIEWS
GATT 1994
n GATT 1994 consists of:

1. GATT 1947;
2. the provisions that have entered into force under GATT 1947
before the date of entry into force of the WTO Agreement;
3. the Understandings;
4. Marrakesh Protocol to the GATT 1994
WTOʼs 6 Basic Rules & Principles
1. The Principles of Non-Discrimination

2. The rules on market access, including rules on transparency
3. The rules on unfair trade
4. The rules on conflicts between trade liberalization and other societal values
and interests
5. The rules on special and differential treatment for developing countries
6. A number of key institutional and procedural rules relating to decision making
and dispute settlement
Principles of Non-
discriminatory: The Most-
Favored Nation Treatment
Obligation
1815-1860: Corn Laws:
Kebijakan-
A series of mercantilist
kebijakan
proteksionisme trade regulations in order kebijakan
to control the price of
grain (in the form of tariffs Perdagangan
on imports)
(Trade
Traktat 23 Januari 1860, Richard Cobden and
Michel Chevalier
Policies)
Perdagangan
Inggris-Prancis
(Anglo-France “perdagangan bebas”
Trade Treaty)
pembebasan tarif di Eropa Kontinental
sebagai akibat dari klausula most-favored-
nations.
Kebijakan-
kebijakan
Perdagangan 1861–1866
the network of Cobden treaties
1879
Kanselir Bismark
(Trade di Eropa mengembalikan kebijakan

proteksionis di Jerman dengan
Policies) menerapkan tarif baru sesuai

dengan Realpolitik-nya.
n This is a formula by which each
of the two signatories to a treaty
Most- agrees to
favoured- 1. grant the other any advantage, favor
or privilege with regard to trade or
navigation that it granted at the time
nations 2.
of signing, or
that it would grant in the future to any
Clause other nation.
Types of MFN
Conditional MFN Unconditional
• Reciprocity MFN
requirement • No reciprocity
requirement
Code-
conditionality MFN
• Application of MFN to
Code-members only
Pillar of Arguments for MFN
MFN
“economic argument” “not-so-economic
argument”
Minimal The multiplier Minimal Minimal aversion of discriminatory
distortions effect of the costs of transaction international groupings
of the MFN Clause rule costs
“market” (more trade formation
principles liberalization)
MFN: Art. II.1 GATS
TRIPS
• any advantage, favor, privilege or immunity Equal treatment
granted
• […] to any product originating in or destined for Importation or exportation

any other country
What constitutes
• shall be accorded immediately and Equal treatment to like “like products”
unconditionally to the like products products GATT 1994 does
not define ʻlike
productsʼ
• originating in or destined for the territories of Importation or exportation

all other [Members].”
• The MFN Treatment is to ensure equality of opportunity to import from,
or to export to, all WTO Members.
• MFN is an obligation of importing countries to treat other countries
equally.
• MFN is a privilege of exporting countries to be treated equally.
• Art I.1 covers not only ʻin lawʼ, or de jure, discrimination but also ʻin factʼ
or de facto, discrimination.
• The MFN treatment obligation also covers advantages granted to other
non-WTO Members.
Three-tier Test of Consistency for MFN Treatment
Obligation
Whether the measure at Whether the products

issue confers a trade
concerned are ʻlike
ʻadvantageʼ of the kind
productsʼ.
covered by Article I.1.
Whether the advantage at

issue is granted ʻimmediately
and unconditionallyʼ to all
like products concerned.
n Any advantage, favor, privilege or
immunity granted by any Member to any
product with respect to:
1. Customs duties, other charges on
imports and exports and other
“Advantage” customs matters
2. Internal taxes
3. Internal regulation affecting the
sale, distribution and use of
products
• GATT 1994 does not define “like products”
• “produits similaire” (Fr), “productos
similares” (Sp)
• Three questions of interpretations:
1. which characteristics or qualities are
important in assessing “likeness”;
“Like 2. to what degree or extent must products

share qualities or characteristics in order to
be “like products”; and
Products” 3. from whose perspective should ʻlikenessʼ be
judged.
• Appellate Body Report, EC – Asbestos, para. 92
• The concept of ʻlike productsʼ has different meanings
in the different contexts in which it is used.
• The process or production method (PPM) is deemed
irrelevant in determining “likeness”.
• The granting of an advantage may not be
conditional on whether a Member has certain
characteristics, has certain legislation or
Advantages undertakes certain action.
• Keppres No. 42 Tahun 1996 tentang
granted PEMBUATAN MOBIL NASIONAL
ʻimmediately • Pasal 1:
“Mobil nasional yang dibuat di luar
and negeri oleh tenaga kerja Indonesia
dan memenuhi kandungan lokal yang
unconditionallyʼ ditetapkan oleh Menteri
Perindustrian dan Perdagangan diberi
perlakuan yang sama dengan mobil
nasional yang dibuat di Indonesia.”
• Panel Report, Indonesia – Autos, para. 14.146:
• “under the [Febʼ96] car programme the granting
of customs duty benefits to parts and
components is conditional to their being used in
Advantages the assembly in Indonesia of a National Car. … is
conditional and limited to the only Pioneer
granted company producing National Cars. … a third
condition for these benefits: the meeting of
ʻimmediately certain local content targets. […] the existence of
these conditions is inconsistent with the
and provisions of [Art. I.1] which provides that tax
and customs duty advantages accorded to
unconditionallyʼ products of one Member (here on Korean
products) be accorded to imported like products
from other Members “immediately and
unconditionally”.
• MFN is essentially “preferences”.
Contradiction • Preferences within the GATT world system
in inhibit the economic development of societies

with weaker international economic status.
Implementing • Preferences to compensation for these weaker

economies to assist them to developing faster.
MFN • MFN used by developed countries as
“bargaining chips” of diplomacy.
30
National Treatment Obligation

© Yu Un Oppusunggu
National Treatment Obligation: Article III GATT
1. The [Members] recognize that internal taxes and other

internal charges, and laws, regulations and
requirements affecting the internal sale, offering for
sale, purchase, transportation, distribution or use of
products, and internal quantitative regulations
requiring the mixture, processing or use of products in
specified amount or proportions, should not be applied
to imported or domestic products so as to afford
protection to domestic production.
33
National • “ … internal taxes and other internal

charges, and laws, regulations and
Treatment requirements … should not be applied
to imported or domestic products so as
Obligation: Article to afford protection to domestic
production.
III:1 GATT
© Yu Un Oppusunggu
34
2. The products of the territory of any
[Member] imported into the territory of
any other [Member] shall not be
National subject, directly or indirectly, to internal
taxes or other internal charges of any
Treatment kind in excess of those applied, directly
or indirectly, to like domestic products.
Obligation: Article Moreover, no [Member] shall otherwise
apply internal taxes or other internal
III GATT charges to imported or domestic
products in a manner contrary to the
principles set forth in paragraph 1.
© Yu Un Oppusunggu
35 • The products of the territory of any [Member] imported into
the territory of any other [Member] shall not be subject,
directly or indirectly, to internal taxes or other internal
charges of any kind in excess of those applied, directly or
indirectly, to like domestic products.
National • Whether the imported and domestic products are

like products
Treatment
• Whether the imported products are taxed in
excess of the domestic products.
• “Internal taxes”
Obligation: Article • e.g. VAT/PPN, sales tax/pajak penjualan, excise

duties/cukai.
III:2 GATT • “applied, directly or indirectly”

• Directly means “applied on or in connection with
products.”
• Indirectly means a tax applied, not on a product
as such, but on the processing of the product.
© Yu Un Oppusunggu
36
• Two non-discrimination obligations:

National 1. Relating to internal taxation of ʻlike
productsʼ
Treatment 2. Relating to internal taxation of
ʻdirectly competitive or
Obligation: Article substitutive productsʼ
III:2 GATT
© Yu Un Oppusunggu
37
4. The products of the territory of any
[Member] imported into the territory of
any other [Member] shall be accorded
treatment no less favourable than that
National accorded to like products of national
origin in respect of all laws, regulations
Treatment and requirements affecting their internal
sale, offering for sale, purchase,
Obligation: Article transportation, distribution or use. The
provisions of this paragraph shall not
III GATT prevent the application of differential
internal transportation charges which are
based exclusively on the economic
operation of the means of transport and
© Yu Un Oppusunggu
not on the nationality of the product.

38
n National Treatment Obligation is to ensure equality

of competitive conditions between imported and
like domestic products.
n Art. III only applies to internal measures, not to
border measures.
n Art. III is a general prohibition on the use of
internal taxes and other regulatory measures so as
to afford protection to domestic production.
© Yu Un Oppusunggu
NT: Article III GATT
1. The contracting parties recognize that internal taxes and other internal charges, and laws,
regulations and requirements affecting the internal sale, offering for sale, purchase, transportation,
distribution or use of products, and internal quantitative regulations requiring the mixture,
processing or use of products in specified amount or proportions, should not be applied to imported
or domestic products so as to afford protection to domestic production.
2. The products of the territory of any contracting party imported into the territory of any other
contracting party shall not be subject, directly or indirectly, to internal taxes or other internal
charges of any kind in excess of those applied, directly or indirectly, to like domestic products.
Moreover, no contracting party shall otherwise apply internal taxes or other internal charges to
imported or domestic products in a manner contrary to the principles set forth in paragraph 1.
NT: Article III GATT
4. The products of the territory of any contracting party imported into the territory of
any other contracting party shall be accorded treatment no less favourable than that
accorded to like products of national origin in respect of all laws, regulations and
requirements affecting their internal sale, offering for sale, purchase, transportation,
distribution or use. The provisions of this paragraph shall not prevent the application
of differential internal transportation charges which are based exclusively on the
economic operation of the means of transport and not on the nationality of the
product.
The Market Access Principle
Two main categories of barriers to market
access
1. Tariff barriers
• Custom duties, i.e. tariffs
• Relevant for trade in goods
2. Non-tariff barriers
• quantitative restrictions (quotas) & ʻother NBT” (such as lack of
transparency of trade regulation, unfair and arbitrary
application of trade regulation, customs formalities, technical
barriers to trade and government procurement practices)
Market Access Barriers
nConditions for products to have access to other
countries
nBarriers to Market Access
¡Tariffs (or customs duties) border
¡Quantitative restrictions (incl. quotas) measures

¡Other duties and financial charges
¡Other non-tariff measures à internal measures
n Customs procedures
n Technical regulations
n Sanitary and phytosanitary measures
Tariff or Custom Duties
• Financial charges imposed on goods at the time of and/or because of their

importation.
• Market access is conditional upon the payment of these customs duties.
• Customs duties are either:
1. specific (amount based on weight, volume, etc.), or
2. ad valorem (an amount based on value).
• Tariffs or customs duties are not prohibited under the GATT 1994. This is in
sharp contrast with the general prohibition on quantitative restrictions in
Article XI of the GATT 1994. Tariffs represent the only instrument of
protection generally allowed by the GATT 1994.
Quantitative Restrictions or Quotas
Measures which prohibit or restrict the A typical example of quantitative

quantity of a product that may be restrictions would be a measure allowing
imported. the importation of 10,000 widgets only.
A tariff quota
•a quantity which can be imported at a certain duty
•not a quota and is not considered to be a quantitative
restriction since it does not prohibit or restrict
importation
•e.g. a Member may allow the importation of 5,000
widgets at 10 per cent ad valorem and any widgets
imported above this quantity at 20 per cent ad
valorem.
• Article II:1(b) GATT 1994
Other Duties • .... Such products shall also be exempt
from all other duties or charges of any
and Financial kind imposed on or in connection with the
importation in excess of those imposed on
Charges the date of this Agreement or those
directly and mandatorily required to be
imposed thereafter by legislation in force
in the importing territory on that date.
• This provision stipulates that with regard to products on which there
Other Duties
is a tariff concession, no other duties and financial charges may be
imposed in excess of those imposed in 1948 or at any moment of
accession to the GATT or WTO or provided for in mandatory
and Financial
legislation in force at either date. The Understanding on the
Interpretation of Article II:1(b) provides for an obligation to record
all other duties and charges in the WTO Memberʼs Schedule. Only
Charges
when properly recorded can ”other duties and charges” be imposed.
• Article VIII:1(a) of the GATT 1994 provides that all fees and charges
(other than tariffs) imposed on or in connection with import or
export shall be limited to the approximate cost of services rendered,
and shall not constitute indirect protection of domestic products or
taxation for fiscal purposes. The Members also recognize the need
for reducing the number and diversity of fees and charges
• Many non-tariff barriers apply to domestic and imported
products.
• i.e. customs procedures, technical regulations, sanitary and
phytosanitary measures, charges equivalent to an internal
Other Non- tax, anti-dumping and countervailing duties and fees and
charges for services actually rendered.
tariffs Barriers • There are no general rules in WTO law on other non-tariff
barriers but there are rules on specific barriers. For
example, as regards customs formalities Article VIII: (c) of
the GATT 1994 stipulates that Members recognize the need
to minimize the incidence and complexity of import and
export formalities and, for decreasing and simplifying
import and export documentation requirements.
Many non-tariff measures fall under
provisions in Part II of the GATT 1994 (Articles
III-XXIII GATT 1994).
Other Non-
Many other WTO Agreements address non-
tariffs
tariff barriers, i.e. the TRIMS Agreement, the
Agreement on Preshipment Inspection, the
Barriers
Agreement on Government Procurement, and
the TRIPS Agreement.
50
n Article X GATT 1994 enunciates two
general principles:
1. non-enforceability of trade laws
Publication and and regulations prior to official
publication; and
Administration of 2. trade laws and regulations shall
Trade Regulations be administered in a uniform,
impartial and reasonable
manner.
© Yu Un Oppusunggu
General Security Safeguard EXCEPTIONS
Exceptions Exceptions Measures TO THE
DISCIPLINES
Balance of IN THE GATT
Regional
Payments
Integration
Restrictions 1994
General Exceptions
• Article XX GATT 1994 allows WTO Members to derogate from the GATT
disciplines in order to protect societal values under some specific conditions.
• “Consistency” with the GATT provision as “basis” for deviation.
• The general approach to determine whether the measure at issue constitutes a
valid exception under Article XX is captured in the following two-tier test:
1)Does the measure at issue come under one of the specific exceptions?
2)Does the measure at issue satisfy the requirements of the chapeau of
Article XX?
• The “security exceptions” allow Members to
Security take measures which depart from GATT
disciplines to achieve “security” objectives,
Exceptions within the meaning of Article XXI.
Safeguard Measures
• It is possible for Members to derogate from the GATT disciplines if, as a result
of unforeseen developments and of the effect of GATT obligations, including
tariff concessions, any product is being imported in such increased quantities
and under such conditions as to cause or threaten serious injury to domestic
producers of like or directly competitive products.
• Under strict conditions, the Member may then suspend the GATT obligation in
whole or in part or withdraw or modify the concession, to the extent and for
such time as may be necessary to prevent or remedy such injury.
• Article XIX of the GATT 1994 and the Agreement on Safeguards regulate the
use of this exception.
The GATT 1994 allows some derogations
under certain strict conditions in order for
Regional groups of WTO Members to achieve closer
integration of their economies through In essence, Regional Integration is an
Integration voluntary agreements known as “regional

trade agreements” establishing “customs
exception to MFN Treatment.
unions” or “free trade areas”.
Regional Integration
• Article XXIV of the GATT 1994, to be read in conjunction with the Understanding on the
Interpretation of Article XXIV of the GATT 1994, which both provide rules for customs
unions and free trade areas as regards trade in goods;
Conformity requirements: • the 1979 GATT Decision of Differential and More Favourable Treatment, Reciprocity
and Fuller Participation of Developing Countries (the so-called “Enabling Clause”)
which concerns preferences in trade in goods granted between developing countries.
The basic principle in Article XXIV:4 of

the GATT 1994 is that the purpose of
free trade areas or customs unions
should be to facilitate trade between
the constituent territories and not to
raise barriers to the trade of non-
constituent territories.
Balance of Payments Restrictions
nWTO Members are entitled to restrict the quantity or value of

merchandise permitted to be imported, by imposing quantitative
restrictions, in order to safeguard their external financial positions and
their balance-of-payments.
nThe relevant provisions of the GATT 1994 are contained in Articles XII
and XVIII. Article XII of the GATT 1994 is applicable to all WTO Members.
nA separate provision, Article XVIII, deals with restrictions for balance-of-
payments purposes in relation to developing countries (vid Section 5.1).
Course Summary
• MFN:
• the principle of not discriminating between oneʼs trading partners.
• Equality of opportunity
• National Treatment:
• The principle of giving others the same treatment as oneʼs own
nationals. GATT Article 3 requires that imports be treated no less
favourably than the same or similar domestically-produced goods
once they have passed customs. GATS Article 17 and TRIPS Article
3 also deal with national treatment for services and intellectual
property protection.
• equality of competitive conditions
59
Referensi
1. John H. Jackson. "The World Trading System: Law and Policy of International Economic
Relations". Cambridge, Mass.: The MIT Press, 2002. Hal. 157-173 & 213-228.
2. Bernard Hoekman, Aaditya Mattoo, dan Philip English. "Development, Trade and the
WTO: A Handbook". Washington D.C.: The World Bank, 2002. Hal. 41-49.
3. John H. Jackson, William J. Davey, dan Allan O. Sykes. "Legal Problems of International
Economic Relations: Cases, Materials and Text". St. Paul, Minn.: West Group, 2002. Hal
415-446 & 479-533.
4. Peter van den Bossche. "The Law and Policy of the World Trade Organization: Text,
© Yu Un Oppusunggu
Cases and Materials." Cambridge: Cambridge University Press. Hal. 308-372.

© Yu Un Oppusunggu
60
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GATT 1994:

1. To raise standards of living

A country has a comparative advantage in producing a

the substantial the elimination of

nWTO tidak berurusan dengan sikap-tindak pelaku usaha swasta

Goods Services Intellectual Property

Basic principles GATT GATS TRIPS

Additional details Other goods Services annexes

Market access Countries’ schedules Countries’ schedules

Dispute settlement DISPUTE SETTLEMENT

Transparency TRADE POLICY REVIEWS

n GATT 1994 consists of:

1. The Principles of Non-Discrimination

(Trade di Eropa mengembalikan kebijakan

Policies) menerapkan tarif baru sesuai

• […] to any product originating in or destined for Importation or exportation

• originating in or destined for the territories of Importation or exportation

Whether the measure at Whether the products

Whether the advantage at

“Like 2. to what degree or extent must products

in inhibit the economic development of societies

Implementing • Preferences to compensation for these weaker

National Treatment Obligation

1. The [Members] recognize that internal taxes and other

National • “ … internal taxes and other internal

National • Whether the imported and domestic products are

Obligation: Article • e.g. VAT/PPN, sales tax/pajak penjualan, excise

III:2 GATT • “applied, directly or indirectly”

• Two non-discrimination obligations:

not on the nationality of the product.

n National Treatment Obligation is to ensure equality

¡Quantitative restrictions (incl. quotas) measures

• Financial charges imposed on goods at the time of and/or because of their

Measures which prohibit or restrict the A typical example of quantitative

Integration voluntary agreements known as “regional

unions” or “free trade areas”.

The basic principle in Article XXIV:4 of

nWTO Members are entitled to restrict the quantity or value of

Cases and Materials." Cambridge: Cambridge University Press. Hal. 308-372.

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