{"id":455300,"date":"2010-03-21T17:39:21","date_gmt":"2010-03-21T21:39:21","guid":{"rendered":"http:\/\/worldtradelaw.typepad.com\/ielpblog\/2010\/03\/more-on-gatt-article-xv4.html"},"modified":"2010-03-21T17:39:21","modified_gmt":"2010-03-21T21:39:21","slug":"more-on-gatt-article-xv4","status":"publish","type":"post","link":"https:\/\/mereja.media\/index\/455300","title":{"rendered":"More on GATT Article XV:4"},"content":{"rendered":"

<\/p>\n

A few months ago, I tried to do<\/a> a quick analysis of one aspect of GATT Article XV:4, in the context of a possible WTO claim related to China\u2019s currency peg. The issue I raised was whether, when arguing that an \u201cexchange action\u201d \u201cfrustrates the intent\u201d of GATT Article II, and thus leads to a violation of XV:4, the \u201cintent\u201d of Article II should be characterized as (1) preventing duties\/charges from exceeding the concessions or (2) the broader notion of providing market access. When writing the post, I knew there was an Ad Note to Article XV:4, but I just crossed by fingers and hoped my analysis of XV:4 would work without trying to sort through the Note. Unfortunately for me, commenter anon99, who always has good insights, made a persuasive case that the Note is very important here and cannot just be ignored. So, I\u2019m now going to take another shot at this, taking into account the Note this time, although to be honest my focus is now less on \u201cintent\u201d and more on the relationship between Article XV:4 and the Note, which is a quite perplexing one.<\/p>\n

Let\u2019s start with Article XV:4<\/a>, which states:<\/p>\n

<\/p>\n

[WTO Members] shall not, by exchange action, frustrate* the intent of the provisions of this Agreement …<\/p>\n

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It seems to me that on its face, Article XV:4 provides a fairly straightforward obligation: WTO Members can\u2019t use \u201cexchange actions\u201d to \u201cfrustrate the intent\u201d of other GATT provisions. anon99 analogizes this language (by itself, without the Note) to the \u201cnon-violation\u201d obligation, and that seems like a fair characterization to me. Basically, you can\u2019t undermine, through exchange actions, the obligations you have taken on in other provisions.<\/p>\n

Now we turn to the Note, which is indicated by the asterisk after \u201cfrustrate.\u201d The Note says:<\/p>\n

<\/p>\n

The word "frustrate" is intended to indicate, for example, that infringements of the letter of any Article of this Agreement by exchange action shall not be regarded as a violation of that Article if, in practice, there is no appreciable departure from the intent of the Article. Thus, a [WTO Member] which, as part of its exchange control operated in accordance with the Articles of Agreement of the International Monetary Fund, requires payment to be received for its exports in its own currency or in the currency of one or more members of the International Monetary Fund will not thereby be deemed to contravene Article XI or Article XIII. Another example would be that of a [WTO Member] which specifies on an import licence the country from which the goods may be imported, for the purpose not of introducing any additional element of discrimination in its import licensing system but of enforcing permissible exchange controls.<\/font><\/p>\n

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As anon99 explains, this Note seems to say that alleged violations of other provisions are subject to an "additional condition\/hurdle" where they involve an exchange action: A violation of the other provision will only be found if the measure leads to an \u201cappreciable departure from the intent\u201d of that provision. Thus, rather than Article XV:4 being an obligation, the Note means that Article XV:4 instead mitigates violations of other provisions!  In essence, through the Note, Article XV:4 gives special protection to \u201cexchange actions,\u201d making it harder to prove violations for them than for other measures.<\/p>\n

My first reaction here is that this all seems very odd. There is a provision in the GATT which appears to set out an obligation (it even uses the word \u201cshall\u201c). But then there is an interpretative note, attached to a particular word in the provision, which suggests that the provision is not, in fact, an independent obligation. Rather, it reduces the impact of other GATT obligations. I\u2019m not sure I have ever run into something quite like this before and I don\u2019t see a good way to resolve this apparent conflict between the text of the provision and the interpretative Note.<\/p>\n

I do have one thought, but it seems odd as well, and a bit of a stretch. Here goes anyway. In the beginning of the Note, the lead in to the substantive part uses the phrase \u201cfor example\u201d and it later refers to \u201c[a]nother example.\u201d Based on the references to \u201cexamples,\u201c it could be argued that in clarifying the term \u201cfrustrate,\u201d the drafters of the Note have not been setting out a comprehensive definition, but rather just giving us some illustrations. Is it possible, then, that the Note provides these \u201cadditional conditions\/hurdles\u201d as examples of what \u201cfrustrate\u201c can mean, but still leaves open the possibility of other \u201cexamples\u201d in which Article XV:4 establishes an independent obligation? (And thus my earlier questions about \u201cintent\u201c in the context of Article II would take on greater importance?) Perhaps the rules governing \u201cexchange actions\u201d would differ based on the type of claim being brought. If the main claim were under a provision other than XV:4, the \u201cadditional hurdle\u201d mitigating factor approach would apply. By contrast, if it were a pure XV:4 claim, the \u201cnon-violation\u201d-type claim approach would be used.<\/p>\n

There\u2019s no question that it would be strange to have the explicit examples be so different from other, unspecified, examples. One set of examples (the unspecified ones) constitutes an obligation, while the other set (the explicit, additional hurdle ones) mitigates other obligations. <\/p>\n

On the other hand, I\u2019m not sure how else to deal with the \u201cexamples\u201d here. If these are two examples, what are some other examples? Are all other examples supposed to be like these? If so, in what ways are they supposed to be comparable?  Do they all relate to Articles XI and XIII?  How would exchange actions relate to a provision such as Article II?<\/p>\n

I don\u2019t have any good answers to all of this, so I\u2019m going to leaves this where I left the earlier post, with an \u201cAny thoughts?\u201c, and see if anon99 or others want to jump in here. <\/p>\n

<\/span><\/p>\n

\n<\/img><\/a> <\/img><\/a> <\/img><\/a> <\/img><\/a> <\/img><\/a>\n<\/div>\n

<\/p>\n","protected":false},"excerpt":{"rendered":"

A few months ago, I tried to do a quick analysis of one aspect of GATT Article XV:4, in the context of a possible WTO claim related to China\u2019s currency peg. The issue I raised was whether, when arguing that an \u201cexchange action\u201d \u201cfrustrates the intent\u201d of GATT Article II, and thus leads to a […]<\/p>\n","protected":false},"author":4125,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[7],"tags":[],"class_list":["post-455300","post","type-post","status-publish","format-standard","hentry","category-news"],"_links":{"self":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/455300","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/users\/4125"}],"replies":[{"embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/comments?post=455300"}],"version-history":[{"count":0,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/455300\/revisions"}],"wp:attachment":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/media?parent=455300"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/categories?post=455300"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/tags?post=455300"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}