National Treatment Obligation Research Articles

Determining Likeness Under the GATS: Squaring the Circle?

The concept of like services and service suppliers used in the General Agreement on Trade in Services (GATS) is still very much uncharted territory. The few dispute cases involving national treatment and most-favoured-nation treatment claims under the GATS are vague concerning the criteria which should be used to establish likeness. Discussions among WTO Members on this subject have remained limited and inconclusive. Perhaps the only point on which everybody agrees is that a determination of likeness under the GATS gives rise to a wider range of questions - and uncertainties - than under the GATT. The intangibility of services, the difficulty to draw a line between product and production, the existence of four modes of supply, the combined reference to like services and like service suppliers, and the lack of a detailed nomenclature are some of the factors which complicate the task of establishing likeness in services trade. This contribution focuses on the concept of likeness in the context of the national treatment obligation (Article XVII of the GATS). It discusses the possible implications of the combined reference to like services and service suppliers, as well as the relevance and role of the modes of supply in determining likeness. It also examines whether the criteria developed by GATT case-law (physical properties, classification, end-use and consumer tastes) can be mechanically transposed to services trade and how far they may contribute to establishing likeness under the GATS. It then discusses whether other parameters, such as the regulatory context or an aim and effect type approach could be relevant.

Still Hazy after All These Years: The Interpretation of National Treatment in the GATT/WTO Case-law on Tax Discrimination

This article discusses the National Treatment (NT) obligation as applied in the GATT tax discrimination cases. The central thesis of the paper is that case-law has not clarified the interpretation of the terms in Article III. It appears that the reason for this failure is the lack of a conceptually coherent view of the role of the NT obligation. After summarizing the case-law on discriminatory taxation, this article lays out a theory of the role of NT in trade agreements, in order to shed light on appropriate interpretations of the terms appearing in Article III. We start from the notion that the GATT is an obligationally incomplete contract. This incompleteness invites beggar-thy-neighbour type behaviour, and the NT obligation is an imperfect remedy for such problems. We suggest that likeness/directly competitive or substitutable (DCS) should be determined 'in the market place', whereas the 'so as to afford protection' criterion is ultimately about the protection of expectations concerning the intent behind domestic regulations. But since intent usually cannot be determined directly, adjudicating bodies have to seek recourse to indirect evidence, as is frequently done in legal practice.

National Treatment in the NAFTA Trucking Case

The NAFTA Trucking decision is the first major case decided under NAFTA's Chapter Twelve (on services). Cross-border trucking is not just any service - it is perhaps the essential service in functionally establishing the North American market NAFTA seeks to create. The Trucking panel found itself in rather untested waters as it confronted NAFTA's National Treatment principle in the context of services. It succeeded, more or less well, in transporting notions established in GATT and NAFTA trade-in-goods jurisprudence to the relatively unexplored service regime. That said - it is not clear how well some of these principles transfer. The concept of National Treatment is well developed in the treatment of goods. Applying National Treatment principles to services, such as cross-border trucking, is problematic, at least on first impression. The NAFTA treaty language tests whether the treatment accorded to foreign service providers is no less favorable than the treatment accorded national service providers in like circumstances. This language is meant to be a functional analog to the well-worn GATT test used to analyze whether imported and domestic goods are being treated alike under national regulation. The express commitments made by the United States to phase-out the restrictions on access for Mexican trucking firms were difficult for the Trucking panel to ignore. The challenged U.S. measure (a categorical denial of access to all Mexican trucks) was so beyond the pale that the panel did not have to reach in finding the United States to be in noncompliance with its NAFTA obligations. But the panel used the occasion of the Trucking decision to provide some useful guidance as to the nature of NAFTA's service obligations. This essay makes three observations about the operation of the National Treatment principle as it is developed in the Trucking decision: 1. A NAFTA Party's National Treatment obligation with respect to services may be harder than is the case with respect to goods. Pacta sunt servanda applies with more force where the operation of the National Treatment principle is precisely negotiated with respect to a specific service sector. 2. In testing host country regulation of a foreign service provider for National Treatment, the design and efficacy of the regulatory scheme of the home country of the service provider is relevant. 3. A perception of protectionist intent will doom arguments seeking to justify departures from National Treatment. Nothing is new under the sun here.

National Treatment in the GATS – Corner-Stone or Pandora’s Box?

This paper is concerned with three problems in the interpretation of the national treatment obligation in GATS. First, the precise domain of Article XVII on national treatment has not been clearly delineated, particularly in relation to Article XVI dealing with market access. Secondly, there is a conflict between the text of Article XVII and the structure of the schedules of commitments, which makes it difficult to interpret the scope of the national treatment obligation even for identical services supplied through different modes. The final, and most complex, problem arises in establishing the definition of like services and like service suppliers. Uncertainty about the precise meaning of the national treatment commitment may undermine the key GATS objective of creating a secure, predictable trading environment. Moreover, the extent of liberalization implied by the commitments under GATS depends on the precise choice of interpretation.

Taxation of Automobiles GAAT National Treatment Obligations—Where to Draw the Line?

Taxation of Automobiles GAAT National Treatment Obligations—<i>Where to Draw the Line?</i>