The Propriety of Preferences: An Evaluation of EC and Us GSP Schemes in the Wake of Ec-Preferences

Abstract

India's recent challenge of special incentives in the European Community GSP system resulted in an influential decision by the WTO's Appellate Body. The EC-Preferences decision is not necessarily influential because it convinced trade scholars, but because it has already resulted in a proposal by the EC to alter significantly its GSP scheme. While the EC seems to have realized the potential impact of the decision, the United States retains essentially the same GSP system which has been in place for years. Although the future looks calm in Europe, legal storms are brewing across the Atlantic.

Not only does the EC-Preferences decision suggest that vast changes must be made in the US system, but it also raises a host of legal and policy questions which were not before the court. Doubts still linger about whether GSP systems must contain some economic link when creating special incentives for developing countries. Broader questions concerning the role of human rights in the WTO, and the role of unilateralism in trade law, still call us forth to explore, analyze and interpret. The EC-Preferences decision may act as a springboard which launches us to greater depths and forces us to explore the underlying theoretical currents of international law.

Keywords: preference, preferences, gsp, trade, wto, gatt, appellate body, panel decision, special incentive, trade incentive, human rights, sustainable development, labor rights, environmental rights, drug trade

JEL Classification: A13, F00, F01, F02, F15, K31, K32, K33, O21, P45