WTO Dispute Settlement and Trade Regulations

This article discusses the WTO dispute settlement process and trade regulations. It explains the principles of non-discrimination and national treatment, as well as the exemptions for environmental measures. It also provides information on taking action in the International Court for climate change issues.

(1)
In his question the issue is that State A had unilaterally levied a tax of $50 on the Dolphins that
are being imported from States B and C and which weighs less than 500 g. All the three nations
are members of WTO. Under these circumstances, State B wants to know regarding its claims
made in the WTO dispute settlement body regarding the invalidity of these measures.
Sometimes WTO is also labeled as 'free trade' institution. But this is not completely right. This
system permits tariffs and in some cases other type of protection. Therefore, more accurately, it
can be described as a system that is related with fair, open and accurate rivalry. The roles related
with non-discrimination, MFN and national treatment, they have been intended with a view to
ensure fair trade conditions. Similarly, the rules related to the dumping (exporting goods below
the cost for gaining market share) and subsidies are also introduced for the same purpose.1
However these are very complex issues and an attempt is made by the rules to establish what is
fair or unfair and how the government are required to respond, particularly by levying extra
import duties that are calculated for the purpose of compensating the damage that is the result of
unfair trade.2
In this regard, it needs to be noted that trade without discrimination is the basic principle of the
WTO. In this regard, the principle of most-favored-nation is followed. This principle requires
that other people (states) should be treated equally. According to the WTO agreements, the
States have repeatedly allowed to discriminate between their trading partners. Such
discrimination, may take place when a special privileges granted to someone. Therefore the
1 K. Holzer, Current Legislative Proposals on Border Adjustment Measures for Climate Policy: Are There Potential
Conflicts with WTO Law? NCCR-Climate (subproject CITEL) research paper 2010/01
2 T. Cottier, D. Baracol, WTO Negotiations on Environmental Goods and Services: A Potential Contribution to the
Millennium Development Goals, UNCTAD, UNCTAD/DITC/TED/2008/4, 2009

WTO requires that the same measures and should be adopted for all the WTO members. Another
important objective of WTO is to promote free trade. Therefore lowering the trade barriers is
considered as the most obvious measures that can be adopted for encouraging trade. In this
context, the barriers may include custom duties (tariffs) or the measures like imposing a ban on
imports and introducing quotas that restrict the quantity selectively.3 Therefore, the issues like
red tape and the exchange rate rules are also required to be deliberated from time to time. From
the formation of GATT in 1947, 8 rounds of negotiations took place. In the 9th round, under the
Doha Development Agenda, negotiations are going on. In research focuses on lowering the
tariffs (custom duties) on imported goods. Because of these negotiations, by mid-1990s, the tariff
rates in the industrial countries that have been imposed on industrial goods steadily fall down to
less than 4%. However by the 1980s, the scope of the negotiations was expended for covering
the northern barriers present regarding the goods and also to include new areas like services and
also the issues related with intellectual property.4
Therefore it can be stated in this regard that it may prove to be beneficial if markets are opened
up, but for this purpose the adjustment is also required. The WTO allows the member states to
introduce changes gradually, by adopting the process of "progressive liberalization". Generally
developing nations are given more time for fulfilling their obligations. In some cases, it is
equally important not to raise trade barrier assay and his promise to lower a trade barrier. The
reason is that such promise provides a clearer view regarding their future opportunities. As a
result of predictability and stability, investment by business is encouraged and at the same time,
more jobs are created and that consumers are also in a position to fully enjoy the benefits
3 K. Holzer, Current Legislative Proposals on Border Adjustment Measures for Climate Policy: Are There Potential
Conflicts with WTO Law? NCCR-Climate (subproject CITEL) research paper 2010/01
4 Christiane R. Conrad, Processes and Production Methods (PPMs) in WTO Law: Interfacing Trade and Social
Goals, Cambridge: Cambridge University Press 2011.

provided by competition, which are lower prices and more choice. The multilateral trading
system can be described as an attempt made by the governments for bringing stability and
predictability in the business environment.5
In the present case, decision has been made by state A to unilaterally impose a tax of $50 on the
Dolphins that have been imported from state B and C. However, state B wants to know if it can
take action under the WTO dispute settlement body's and introduce a claim of invalidity of the
measure introduced by state A. different view of the above mentioned provisions if state B
decides to take action, the likely outcome of the action is going to be successful.
(2) In this case, the issue is related with international trade regulation by the WTO and the
measures that have been introduced for climate change mitigation. The team principal in this
regard is non-discrimination. Four, national treatment principle can be described as the key
discipline of WTO and Article III, GATT which provides that a member nation is not allowed to
differentiate between its own and similar foreign products (by giving national treatment to these
products). The principle of national treatment becomes particularly relevant when regulation
related with climate change is going to be applied differently in case of domestic and foreign
producers. It has been provided by the most-favored-nation clause that a member state of the
WTO is not allowed to discriminate between the like products coming from various trading
partners (and providing the status of 'most-favored-nation' equally). In the same way it has been
5 T. Cottier, M. Oesch, International Trade Regulation. Law And Policy In The WTO, The European Union And
Switzerland, Cases Materials And Comments, Cameron May Ltd. London, 2005, p. 606

provided by article I.1, GATT that any advantage, immunity, privilege or favorite that has been
granted by a member state to any product that originates in or is intended for any other nation
needs to be given unconditionally and directly, to the like product that has originated in or is
intended for the territory of all the other member states.
Exemptions: However, there are certain exceptions present in this regard. Therefore, if a climate
change measure related with trade is considered to be inconsistent with major provisions of
GATT and still justification can be solved under article XX. . In this regard, GATT Article XX
as it number of specific instances where the member states of WTO can be exempted from the
application of GATT rules. Potentially, the exemption is applicable in case of all the provisions
of the agreement, including the provisions related with tariffs in Article II and GATT Article
XXVIII, beyond the disciplines related with tariff deconsolidation that are also going to be
discussed. The two motives that are mainly pertinent regarding the protection of the environment
have been mentioned in paragraphs (b) and (g), Article XX it has been provided in these
provisions that the member states of the WTO are allowed to adopt policy measures that are
inconsistent with GATT disciplines but if such measures are essential for protecting human,
animal or plant life or if they are related with the preservation of reserves.
Therefore in this regard, it has been argued by some authors that the policies that have been
introduced for decreasing CO2 emissions can fall under the scope of Article XX (b) as these
measures and are introduced with intention to protect the individuals from the negative results of
climate change or under article XX (g) because the intention of these measures is to conserve not
only the climate on planet earth, but also to conserve certain animal and plant species that may
otherwise disappear on account of global warming.

In order to justify an environmental measure under article XX that is inconsistent with GATT,
the member state of the WTO is required to perform a two-pronged analysis. Therefore all it
needs to be established that the measure is below as a minimum one of the exemptions. The next
step is that the measure gratifies the necessities mentioned in introductory paragraph, or in other
words, the measure is not going to be applied in the manner that may be considered as 'arbitrary
or unjustified discrimination between the states where same conditions are present' and it is not a
constraint in disguised imposed on international trade.
In view of these requirements, if state C was to establish a cause for foreign aviation companies,
landing in or taking off from its territory by establishing a greenhouse gas emissions allowance,
State C is required to fulfill the conditions mentioned above. Only if these conditions are
fulfilled, the measures taken by State C. To protect the environment and reduce greenhouse gas
emissions may fall under the exemptions of the application of provisions which prohibit
restrictions on trade.
It has been highlighted by the WTO jurisprudence that the cooperation and coordination
activities that have been accepted by the respondent internationally in the field of environment
and trade may help in revealing that the measure is applicable in accordance with the chapeau. It
becomes particularly significant if the international negotiations related with the new binding
agreement have failed and the concerned member of the WTO has introduced a unilateral trade
measure like tariff deconsolidation for mitigating the effect of climate change.

(3) In this question, State D wants to take action against state B for excessive greenhouse gas
emissions in the International Court. Therefore is needs to be given to state D regarding the
substantial cause of action and also the procedures available. It is worth mentioning in this regard
that only the states (the countries that are members of the UN or the nations that are party to the
Statute of the Court or the states that have acknowledged jurisdiction of ICJ) can be the party is
too contentious issues.6 The Court is available to deal with a dispute. Only if the state's and has
accepted the jurisdiction of the court and one or more following manners:
 By entering a special agreement for submitting the dispute before the Court.
 By virtue of a jurisdictional clause, when the states are the parties to a treaty, which
contains a provision according to which in case of a dispute of a particular nature of our
disagreement regarding the application or the interpretation of the treaty, one state can
refer the dispute before the International Court.
Even if the mutual consequence of the declarations made by the state under the Statute by each
state accepting the Court’s jurisdiction as being compulsory in case of a disagreement with
another nation, which has made the same declaration. However, in case of several declarations,
that are required to be placed with the UN Sec. Gen, there are reservations which exclude
particular classes of disputes.7
6 Kee, H.L., A. Nicita & M. Olarreaga , 'Import Demand Elasticities and Trade Distortions,' The Review of
Economics & Statistics, November 2008, Vol. 90, No. 4, Pages 666-682.
7 Knutti R., F. Joos, S.A. Müller, G.-K. Plattner and T.F. Stocker. (2007). ‘Probabilistic climate change projections
for CO2 stabilization profiles,’ Geophys. Res. Lett. 32 (2005), L20707

There are no permanent agents ascribed to the Court by the States. Therefore, generally the
States connect with the Registrar of the Court through foreign ministers or through their
ambassador appointed in the Netherlands. In cases the parties to the dispute are represented by an
agent. A similar role is played by such agent and the agent has the same rights and obligations
that are available in case of a solicitor. However, as in this case, international relations are at
risk, the agent is also considered to be the head of a special diplomatic mission, which has the
power of committing a sovereign nation The agent obtains communication from the Registrar to
the case and he forwards all the readings and correspondence, that are duly signed and the
certified. In case of public trials, the agent brings the arguments for the state it is representing.
Therefore, generally when a former that needs to be done by the state that is being represented by
the agent, such act is done by the agent.8 Similarly, in some cases, the agent can be assisted by
co-agents, assistant agents or deputy agents. They also have the counsel or the advocates of this
work is coordinated by them and also to assist them in preparing the pleadings and delivering
oral arguments.9 Due to the reason that there is no particular International Court of Justice Bar,
no conditions are present that need to be fulfilled by the advocates or the counsel for enjoying
the right to before the international Court. The only exception present in this regard is that they
should have been appointed by the state concerned for this purpose.
Proceedings can be initiated in ICJ in the following two ways:
(i) By giving the notice regarding a special arrangement: this bidirectional document, can be
made with the International Court of Justice by one or both the nations that are the parties to the
proceedings. Such special arrangement is required to specify the subject matter of the
8 Nartova O. (2009). ‘Assessment of GATS’ impact on climate change mitigation’ in T. Cottier et al (eds),
International Trade Regulation and the Mitigation of Climate Change, Cambridge University Press.
9 Solomon, S., D. Qin, M. Manning, Z. Chen, M. Marquis, K.B. Averyt, M. Tignor and H.L. Miller (2007). Climate
Change 2007: The Physical Science Basis. Contribution of Working Group I to the Fourth Assessment Report of the
Intergovernmental Panel on Climate Change,Cambridge University Press

disagreement and also the parties to the dispute. As in this case, there is no appellant or
respondent nation, in the publications of the court, the names of the states are separated by an
oblique stroke made after the official title of the case, for example Benin/Niger.
(ii) Through an application: this application is one-sided in character and has to be submitted by
the applicant State. You submitted it is the respondent State. This application is envisioned for
statement to the respondent State and Court Rules provide severer necessities regarding its
subjects. Apart from the name of the party against which the claim has been initiated and also the
subject matter of the dispute, the applicant nation is also required to, as far as practical, briefly
indicate the basis of the treaty or a declaration of acceptance of the compulsory jurisdiction of
the Court.10 It is claimed that the Court has the jurisdiction and is required to briefly mention the
facts and the basis of the claim. After the end of the official title, the names of the parties are
detached by the abbreviation v. (For example, Nicaragua v Columbia).
(4) There is a basic principle of the contemporary global legal system according to which all the
states have to be considered as equal sovereigns. However the states cannot be treated as equal
sovereigns, if one state was allowed to hamper in the inside matters of the other nation in any
way that is going to have a serious impact on the latter. In the same way, the states will also not
be sincerely equal sovereigns, if one nation was allowed to reduce the territory of the other state
dilapidated or else to expressively impact the circumstances under which such ground can be
used, for example by triggering grave ecological harm across the international border. The no
10 Stern N. (2007). ‘The economics of climate change: the Stern review,’ Cambridge University Press

harm principle also acts as a corollary to be norm of equal sovereignty. This was recognized for
the first time in the article award in 1941 given in trail Smelter case. In this case, there was a
disagreement amid US and Canada over air contamination that was caused by a smelter in
Canada and brought towards Washington by the dominant winds, resulting in serious damage to
the environment. Therefore in this case, it was announced by the tribunal that "in view of the
norms of transnational law, no state has the right of using or allowing the use of its territory in
such a way that it causes injury by fumes. In order to the territory of the other state or to the
properties of the people therein, when the incident is of grave concerns and the harm can be
clearly recognized with the help of convincing evidence.
This principle has been further reaffirmed in the decisions of international courts and tribunals,
for example Corfu Channel, 22; Case concerning the Gabcikovo-Nagymaros Project, para. 53. It
was also acknowledged by ICJ that publication present on part of the states to make sure that the
actions within their territory and control are capable of respecting the environment of the other
states or the areas that are beyond the national control, is a part of the body of international law
dealing with the atmosphere.
It is required by the no harm principle that the states should not be involved in activities that may
result in significant cross-border damage and to avert the people or any entity that is present
within their jurisdiction from carrying out such activities. As is the case with any customary
non-, it is not very easy to establish the exact scope of this duty, which requires the states to
prevent significant cross-border harm. In the earlier cases, little clarification has been given by
the ICJ regarding the content of this duty. Generally it is considered to be the duty of due
diligence. This means that it is necessary that a state should act in the manner that can be

anticipated from a "good government" and to make all-out efforts for reducing the risk of any
cross-border harm to the environment.
The state practices or the cases where no harm rule has been invoked by the parties, generally
deals with the activities that take place at or around a common border. For example, these
activities may include the omission of toxic fumes that result in damage to the woods in the
neighboring state, dredging and the common river and altering the course of its waters or
polluting the river through mills or the construction activities that take place very close to the
border. However, this situation results and the question is did no harm principle may apply to
climate change also.
However it needs to be mentioned that even if there is an obligation present on part of the nations
that they should not cause cross-border damage to the environs through greenhouse gas
emissions, the modalities of this requirement are still ill-defined. Particularly the scope of no
harm principle has not been decided clearly. Generally the duty which requires the states to avert
noteworthy damage is present whenever a nation could predict the presence of the risk related
with such harm.

Bibliography
K. Holzer, Current Legislative Proposals on Border Adjustment Measures for Climate Policy:
Are There Potential Conflicts with WTO Law? NCCR-Climate (subproject CITEL) research
paper 2010/01
T. Cottier, D. Baracol, WTO Negotiations on Environmental Goods and Services: A Potential
Contribution to the Millennium Development Goals, UNCTAD, UNCTAD/DITC/TED/2008/4,
2009
K. Holzer, Current Legislative Proposals on Border Adjustment Measures for Climate Policy:
Are There Potential Conflicts with WTO Law? NCCR-Climate (subproject CITEL) research
paper 2010/01
Christiane R. Conrad, Processes and Production Methods (PPMs) in WTO Law: Interfacing
Trade and Social Goals, Cambridge: Cambridge University Press 2011.
T. Cottier, M. Oesch, International Trade Regulation. Law And Policy In The WTO, The
European Union And Switzerland, Cases Materials And Comments, Cameron May Ltd. London,
2005, p. 606
Kee, H.L., A. Nicita & M. Olarreaga , 'Import Demand Elasticities and Trade Distortions,' The
Review of Economics & Statistics, November 2008, Vol. 90, No. 4, Pages 666-682.
Knutti R., F. Joos, S.A. Müller, G.-K. Plattner and T.F. Stocker. (2007). ‘Probabilistic climate
change projections for CO2 stabilization profiles,’ Geophys. Res. Lett. 32 (2005), L20707
Nartova O. (2009). ‘Assessment of GATS’ impact on climate change mitigation’ in T. Cottier et
al (eds), International Trade Regulation and the Mitigation of Climate Change, Cambridge
University Press.

Solomon, S., D. Qin, M. Manning, Z. Chen, M. Marquis, K.B. Averyt, M. Tignor and H.L.
Miller (2007). Climate Change 2007: The Physical Science Basis. Contribution of Working
Group I to the Fourth Assessment Report of the Intergovernmental Panel on Climate Change,
Cambridge University Press
Stern N. (2007). ‘The economics of climate change: the Stern review,’ Cambridge University
Press