Binding Tariff Preferences for Developing Countries Under Article II Gatt

Abstract

Tariff preferences, which are authorized under the WTO Enabling Clause and autonomous waivers, are often withdrawn on dubious grounds and without due process. This reduces much of their potential value, because traders and investors lack the predictability and security necessary to make long-term business decisions based on the market access opportunities that these preferences provide. Some developing countries have responded to this by concluding regional trade agreements (RTAs) under Article XXIV of the GATT, despite the sometimes heavy price of reciprocity. In this article, we offer an alternative. We make two practical proposals to provide the maximum possible security and predictability for both preference beneficiaries and donors. First, we argue that, contrary to what is often assumed, it is perfectly possible to bind tariff preferences under existing WTO rules. Second, based upon an examination of the current state of the law, we propose that any withdrawals of products and countries from tariff preference programs, whether by way of temporary safeguards or definitive ‘graduation’, should be based on objective and legally secure criteria. These criteria should also be scheduled as qualifications to bound preferences under Article II of the GATT. These reforms are possible without any change to existing WTO rules.