The WTO Appellate Body Report in EC - Conditions for the Granting of Tariff Preferences to Developing Countries (Wt/Ds246/Ab/R) and its Implications for Conditionality in GSP Programs

Abstract

All developed countries and a number of developing countries operate a so-called GSP programs under which they grant tariff preferences lower than the WTO most-favoured-nation rate to goods from developing countries. The EC and the US are unique in that they have for many years subjected such preferences to a variety of political and other non-trade criteria, including implementation of international labour rights. In EC-GSP the WTO Appellate Body made a significant ruling on the legitimacy of such conditions, but the full implications of this ruling are yet to be worked out. This article interprets the ruling, with a view to determining the legality under WTO law of the US and EC practice of granting GSP trade benefits on a conditional basis.

Keywords: WTO law, Enabling Clause, Generalized System of Preferences, GSP, political conditionality

JEL Classification: K33