Free WTO and GATT Provisions Essay Sample
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World Trade Organization (WTO) was formed to encourage international trade and it is the only organization that had provided the legal framework to safeguard the rights of both the importers and exporters in the context of international trade laws. The WTO agreements have been signed by the most countries of the world. It provides a series of laws and legal framework that specifies the rights of importers and exporters and makes sure that that those laws that are against the international trade or discourage it in any way should be removed so that international competitiveness is encourage in order to move the world's economy towards efficiency.
Xenia is an independent country; however it is bound by certain WTO restrictions on law pertaining to the treatment of imported goods. Xenia has recently introduced a legal framework citing the social and legal problems of the country and has laid certain conditions according to which imported products containing different alcohol content are to be sold in a different way. Beer containing high alcohol contents has to be sold through state-run liquor store in recyclable containers. However, Beer containing low alcohol content can be sold through private retail stores, but they also have to be sold in recyclable containers. Pollonia being the stakeholder of these new injunctions have immediately voiced its concerns over the new law citing them as derogatory and discriminatory to the imported goods, particularly the beer.
However, Pollonia cannot just voice its concerns by looking at the law along. It needs to first look at the prevailing conditions in the Xenia markets. It should study and try to find out the laws and conditions that surround the local producers of Beer. If it sees that selling Beer for foreign companies is more difficult in the market and is pervaded by more laws and injunctions than the local goods and Beer, then under WTO GATT Article 3 it can file a lawsuit against Xenia. Article III of GATT talks about the differential or discriminatory conditions for the imported goods. It further talks about that the foreign or imported goods should be given likeable treatment as being given to the local goods. However, Pollonia also needs to find out the likeable goods in the Xenia markets for their products. They must remember that two different types of Beers might not be the likeable goods. There are a lot of differences in the contents, ingredient and production methods of the two different types of Beers and hence in order for the two goods to be likeable they must contain the same ingredients and must be produced in the same way. Therefore, the first task for Pollonia is to find out about the likeable goods being sold in the Xenia markets and then to study the laws and injections pertaining to these products.
If they find out any incompatibility in the treatment of Xenia's local likeable good and Pollonia's Beer, then it has a right to voice its concerns and can take matter to the court of law. Similarly, Pollonia can also look at the treatment given to substitutes of Beer in the market and can take the matter to WTO's dispute resolution system if it finds any discrimination for its goods then local substitutes. The logic behind this law is to promote international competitiveness that will lead to long-term economic gains and will improve conditions of the world economy. The legal example of can likeable products can be taken from the case of the USA and Indonesia. According to the legal jurisdiction, both clove and methanol cigarettes were declared as likeable products as they were similar in their use and the production was similarly. Hence, the USA under WTO article III was bound to treat them as likeable products. This can be used by Pollonia and it can elevate the case to WTO. The logic behind this is that Beer with high and lower alcohol contents is used for almost the same purpose. The use of the product is same. However, Xenia may argue that there are different uses of the product. Therefore, research needs to be done on the social patterns of drinking in Xenia and whether or not it is really facing the problem of binge drinking or it is just taken as an excuse to keep the expensive products of Pollonia out from the wide private retail network of Xenia. (Clifford & Pantichpakdi, 2002)
It is also mentioned in the GATT Article III that goods exported from a WTO member and imported into a WTO member should not be levied any extra internal taxes other those paid by the local goods only. This gives opportunity to Pollonia to investigate whether local goods have to be produced in recyclable containers and if there are also restrictions on the channel of retail through which Beer containing different alcohol level can be sold. If not, they can elevate the matter to WTO dispute resolution courts. This is also explicitly mentioned in GATT Article III part 4. This part states that any goods imported from the WTO members should not be bound by any extra laws that are not present for the local production. In other words, imported goods should be treated the very same way as the local production. This is done to encourage exports of goods and to increase the international competitiveness, so that local manufacturers do not rely on government taxes to keep them competitive in the market without relying on their own efficiency and cost cutting strategies. (WTO, 2010)
However, even if Pollonia finds any incompatibility between the treatment given by Xenia to its goods and other countries goods it cannot directly elevate the matter to the WTO dispute resolution courts. There is a condition in WTO that allows countries to give preferential treatments to some countries than others, by declaring them as "most favored nations". This title conferred by a nation to its allies can enable these countries to legally give preferential treatment to goods of one country than other countries. In this case, even if Pollonia's goods are receiving differential treatment than the goods of most favored nation, then also these is nothing much that WTO can do about this according to GATT Article I. This can be studied from the case study of India and Pakistan. In the recent year, India has pushed and forced Pakistan to declare itself as the most favored nation. The logic behind this was the fact that it will open up opportunities for India to pervade and rule Pakistani market.
By becoming a most favored nation, India will be able to command the preferential treatment from Pakistan which will enable India to sell its goods at cheaper costs than other countries exporting their goods to Pakistan. For example, China recently is selling goods at the lowest cost in Pakistan. However, if India gets the title of most favored nation it will be free from a lot of duties and enjoy the advantage of being the most favored nation. This will enable India to sell goods at cheaper rate than China. China on the other hand won't be able do anything about it as it cannot elevate the case to WTO dispute resolution as preferential or discriminatory treatment is legally allowed under WTO article I to most favored nations. This will apply to Pollonia too. It won't be able fight its case against other imported good of favored nations even if the differential or discriminatory treatment is given to the goods of Pollonia. The solution to this problem is more political than legal. Pollonia can lobby and try to persuade the government of Xenia to declare it as the most favored nation.
In the light of above discussion we can safely concluded that lawmakers have provided enough provisions for WTO member to safeguard their rights and to speak or voice their concerns over any discriminatory treatments that are given to their goods. The purpose of these provisions is purely economics. This is done to make sure that world economy is kept at the most efficient levels possible to prevent any wastage of scarce resources of production and to make sure that the opportunity cost is kept at the minimum possible level so as to foster efficiency and effectiveness in the world economy. There are several WTO frameworks that Pollonia can use to safeguard its rights against discriminatory tariffs and with the combination of lobbying they can achieve their targets and objectives.