of International Economic Law

MJIEL

Manchester Journal of

International Economic Law

Volume 16 September 2019 Issue 2

Articles:

1. Special Symposium – UK-India post-Brexit: Trade and Power Democracy

Brexit as Differentiated Integration:

The Diverging Imaginaries of Future Trade Relationships

Lisa Mardikian & Clair Gammage

Brexit and India-UK Free Trade Agreement:

Context, Prospects and Challenges

Amitendu Palit

Brexit and the UK’s Commitments at the World Trade Organization:

The Challenges in Effecting a Legal Divorce from the European Union

James J. Nedumpara & Sandeep Thomas Chandy

International Arbitration and Public Policy Issues in the Indian Subcontinent:

A Look through the English Common Law and International Lenses

AFM Maniruzzaman & Ijaz Ali Chishti

Interrogating Third Party Funding in Investment Arbitration:

The Need for Regulation in the UK and India

Sai Ramani Garimella

UK-India – Beyond Trade: Power Democracy

Leïla Choukroune

2. General Articles

Once upon a Time:

The Origins of the Public Morals Defence in World Trade Law

Regis Y. Simo

The Implications of the New US Trade Policy for the World Trade Organization

Ismaelline Eba Nguema

ISSN 1742-3945

Electronic copy available at: https://ssrn.com/abstract=3467381

Manchester Journal of International Economic Law

The Manchester Journal of International Economic Law is first and foremost an International

Economic law Journal. Its geographical origins breathe a nomenclature to it to distinguish it from

other Journals in the field. Manchester also as a city is a good symbol of globalisation;

international in its racial and cultural diversity; and occupies an important place in the history of

international economic relations – being the city from where came one of the original calls for free

trade. Appropriately therefore the matches in international economic scholarship should result in

goals from Manchester too!

– – Asif H Qureshi, Editorial, MJIEL, 2004, Volume 1, Issue 1

Aims of the Journal:

The journal covers all aspects of international economic law including in particular world

trade law, international investment law, international monetary and financial law,

international taxation, international labour law, international corporate responsibility and

international development law. The journal's focus is mainly from a Public International Law

perspective and includes comparative analysis within the context of a discourse in Public

International Law. The aims of MJIEL are to promote:

Independent, original and alternative perspectives to international economic relations;

Fuller coverage of international economic relations in all its spheres;

A holistic focus on international economic issues; and

Awareness of a development dimension in international economic relations.

Cover image:

Free Trade Hall, Manchester: Built on land offered by Richard Cobden in St Peter’s Fields, by the Anti-Corn Law League, the fine

permanent stone building replaced a simple brick building of 1843 which itself replaced a timber pavilion of 1840. Its name derives

from the pivotal role played by Manchester in the repeal of the Corn Laws in 1846 and the promotion of Free Trade and Liberalism in

the history of England.

Image courtesy of 19th era/Alamy

Printed and bound by Antony Rowe Ltd. Eastbourne UK

ElectronicPublications.Org


i


Volume 16 2019 Issue 2 ISSN 1742-3945

Editor-in-Chief:

Professor Asif H Qureshi

School of Law, Korea University

Deputy Editor-in-Chief:

Dr Xuan Gao

Office of the General Counsel, Asian Infrastructure Investment Bank

Guest Editors of the Special Symposium

Professor Leïla Choukroune, University of Portsmouth

Dr Amitendu Palit, National University of Singapore

Associate Editors:

Professor Leïla Choukroune, Faculty of Business and Law, University of Portsmouth, UK

Professor Ming Du, School of Law, University of Surrey, UK

Dr Jennifer E Farrell, Faculty of Law, Western University, Ontario, Canada

Dr Ioannis Glinavos, Law School, University of Westminster, UK

Dr Aniruddha Rajput, Member, United Nations International Law Commission

Dr Bruce Wardhaugh, School of Law, Queen’s University Belfast, UK

Dr Han-Wei Liu, Department of Business Law and Taxation, Monash University, Australia

Assistant Editor:

Jing Dong, MA, University of Manchester, UK

Current Development Editors:

International Investment Disputes: Dr Aniruddha Rajput, Member, International Law Commission

International Trade Disputes: Dr Cecilia Juliana Flores Elizondo, University of Manchester

Book Review Editors:

Professor Raj Bhala, University of Kansas, USA

Ms Elena Blanco, University of the West of England, UK

Dr Mohammed El Said (Co-ordinator), University of Central Lancashire, UK

Dr Clair Gammage, University of Bristol, UK

Dr Lin Zhang, Korea University, Korea


http://legal.un.org/ilc/guide/annex2.shtml

ii


Editorial Board:

Professor Mads Andenas, School of Law, University of Leicester, UK

Professor Emilios Avgouleas, School of Law, University of Edinburgh, UK

Professor Indira Carr, School of Law, University of Surrey, UK

Professor David Collins, Law School, City University London, UK

Dr Gail Evans, Centre for Commercial Law Studies, Queen Mary, London, UK

Ms Janelle M. Diller, Deputy Legal Adviser, International Labour Organization, Geneva,

Switzerland

Professor Mary Footer, School of Law, University of Nottingham, UK

Professor Duncan French, School of Law, University of Sheffield, UK

Professor Fiona Macmillan, Birkbeck College, School of Law, London, UK

Professor A. F. M. Maniruzzaman, University of Portsmouth, UK

Dr Rutsel S. J. Martha, former General Counsel, INTERPOL and IFAD

Professor Dan Sarooshi, Faculty of Law, University of Oxford, UK

Professor Surya P. Subedi, OBE, School of Law, University of Leeds, UK

Professor Guiguo Wang, School of Law, City University of Hong Kong, China

Professor Friedl Weiss, Faculty of Law, University of Vienna, Austria

Advisory Board:

Professor Jagdish Bhagwati, Columbia University, USA

Former Judge Luiz Olavo Baptista, Appellate Body, World Trade Organization

Professor Raj Bhala, School of Law, University of Kansas, USA

Mr Willie Chatsika, Technical Cooperation Division, WTO

Professor Seong-Phil Hong, College of Law, Yonsei University, Korea

Judge Abdul G. Koroma, International Court of Justice

Professor Peter Muchlinski, University of London, SOAS, UK

Professor Nohyoung Park, School of Law, Korea University, Korea

Dr A. Rohan Perera, P.C., Legal Advisor, Ministry of Foreign Affairs, Sri Lanka; and

Member of International Law Commission

Mr Gerard Sanders, General Counsel, Asian Infrastructure Investment Bank

Professor M. Sornarajah, National University of Singapore, Singapore

Professor Naigen Zhang, School of Law, Fudan University, China

Professor Andreas R. Ziegler, University of Lausanne, Switzerland


iii

Manchester Journal

of

International Economic Law

Volume 16 2019 Issue 2

Contents

Editorial:

Communication Flows in International Economic Law and US Extreme Vetting

in Visa Processing for Visiting Professors

Asif H Qureshi 123

Articles:

Part 1. Special Symposium – UK-India post-Brexit: Trade and Power Democracy

Introduction

Leïla Choukroune & Amitendu Palit 126

Brexit as Differentiated Integration:

The Diverging Imaginaries of Future Trade Relationships

Lisa Mardikian & Clair Gammage 130

Brexit and India-UK Free Trade Agreement:

Context, Prospects and Challenges

Amitendu Palit 151



James J. Nedumpara & Sandeep Thomas Chandy 166

International Arbitration and Public Policy Issues in the Indian Subcontinent:

A Look through the English Common Law and International Lenses

AFM Maniruzzaman & Ijaz Ali Chishti 183

Interrogating Third Party Funding in Investment Arbitration:

The Need for Regulation in the UK and India

Sai Ramani Garimella 213

UK-India – Beyond Trade:

Power Democracy

Leïla Choukroune 234


iv

Part 2. General Articles:

Once upon a Time:

The Origins of the Public Morals Defence in World Trade Law

Regis Y. Simo 254

The Implications of the New US Trade Policy for the World Trade Organization

Ismaelline Eba Nguema 274

Book Reviews:

Foreign Investment Under the Comprehensive Economic and Trade Agreement

Edited by Makane Moïse Mbengue & Stefanie Schacherer

Reviewed by Ondřej Svoboda 291

Guidance for Contributors 295


166


Volume 16, Issue 2: 166-182, 2019



James J. Nedumpara and Sandeep Thomas Chandy

ABSTRACT: In a referendum held on June 23, 2016 the people of the United Kingdom (UK) decided

to leave the European Union (EU) – an event more popularly known as ‘Brexit’. Apart from the

political turmoil and the economic uncertainty the Brexit decision created, it triggered discussions

in Geneva on the changes within the World Trade Organization (WTO) legal system for

implementing this political decision. For the first time since the signing of the General Agreement

on Tariffs and Trade (GATT) and the creation of the WTO, a Member was exiting a customs union

setting in motion a series of novel and unprecedented legal issues. One of the key issues was the

modification of the schedule of commitments and concessions of both the UK and the EU, under the

GATT, General Agreement on Trade in Services (GATS), and the Agreement on Agriculture (AoA).

Under the WTO Agreement, a Member has to seek certification of the changes effected to the

Schedules of Concessions. Considering the fact that certification processes can be delayed by years

on account of Member objections, the article explores the options available to the UK and the EU

to conduct trade with its partners in the interim without facing legal challenges. Among other issues,

this article aims to highlight the potential hurdles that the UK and the EU trade negotiators may

face in the near future while implementing Brexit.

1. INTRODUCTION

In a referendum held on June 23, 2016 the people of the United Kingdom (UK) decided to leave

the European Union (EU), referred to as ‘Brexit’ in popular parlance.1 Based on this decision,

the UK on March 29, 2017 formally invoked Article 50 of the Lisbon Treaty, setting in motion

the procedure to exit the European Union.2 While the debate is currently focused around the

question whether the UK would leave the EU with or without a deal by 31 October 2019, it is

Professor and Head, Centre for Trade and Investment Law, Indian Institute of Foreign Trade, email:

[email protected]. Research Fellow, Centre for Trade and Investment Law, Indian Institute of Foreign Trade, email:

[email protected]. The views and opinions expressed in this article are those of the authors. 1 Nigel Walker, ‘Brexit Timeline: Events Leading to the UK’s Exit from the European Union’, House of Commons

Library, Briefing Paper, No.7960, 13 August 2019, available at: https://researchbriefings.parliament.uk/ResearchBri

efing/Summary/CBP-7960 (accessed 30 August 2019). 2 Ibid.


Brexit and the UK’s Commitments at the WTO

167

also timely to examine the legal implications of the UK becoming an independent Member at

the WTO. In other words, how the UK will independently enforce its WTO obligations

originally assumed as part of the European Communities in 1994 can have implications for

other WTO Members.

The UK was a founding Contracting Party of the General Agreement on Tariffs and

Trade (GATT) in 1948. Later, in 1973 the UK became part of the European Economic

Communities (EEC).3 When the WTO was formed, the EC (the then European Communities)

had notified the European Communities Treaty as a Customs Union under Article XXIV of the

GATT, and also as an Economic Integration Agreement under Article V of the General

Agreement on Trade in Services (GATS). Being part of a Customs Union under Article XXIV of

the GATT (and Article V Economic Integration under the GATS), the UK and the rest of the EU

had functioned under the WTO through an integrated set of GATT Schedule of Concessions

and GATS Schedule of Commitments (hereinafter collectively referred to as ‘Schedules’).

These Schedules contained the concessions and commitments of the entire EU membership.

Brexit would entail a legal severance of UK’s relationship with the EU under GATT Article

XXIV and GATS Article V. Under the WTO law, this would require the UK to submit a separate

set of Schedules, independent of the EU’s integrated Schedules. The EU would also be required

to modify its Schedules to remove commitments taken on behalf of the UK.

On July 24, 2018 the UK submitted its independent GATT schedule for certification.4

The independent GATT schedule was submitted under paragraph 3 of the 1980 Decision on

Procedures for Modification and Rectification of Schedules of Tariff Concessions. Under this

procedure, the WTO membership had a three-month time to review the schedules. Similarly,

on December 3, 2018 the UK submitted its independent GATS schedule for certification under

the Procedures for the Certification of Rectifications or Improvements to Schedules of Specific

Commitments. 5 This procedure gives the WTO membership 45 days for reviewing the

submitted schedules. Countries including India had certain concerns especially in relation to

the quota allocation on agriculture products and to an extent in services. As on date, Russia has

objected to certification of UK’s GATS schedule6 and a number of Members including India

have objected to the certification of UK’s GATT schedules.7 Similarly, the EU’s certification

of schedule too has been objected by many WTO Members.8

3 See, e.g., Ernst-Ulrich Petersmann, The EEC as a GATT Member – Legal Conflicts between GATT Law and

European Community Law’, in Meinhard Hilf, Francis G. Jacobs and Ernst-Ulrich Petersmann (eds.), The European

Community and GATT (Kluwer, 1986). 4 World Trade Organization (WTO), ‘United Kingdom Submits Draft Schedule to the WTO Outlining post-Brexit

Goods Commitments’, 24 July 2018, available at: www.wto.org/english/news_e/news18_e/mark_24jul18_e.htm

(accessed 20 August 2019). 5 WTO, ‘United Kingdom Submits Draft post-Brexit Services Commitments to WTO’, 3 December 2018, available

at: www.wto.org/english/news_e/news18_e/mark_03dec18_e.htm (accessed 20 August 2019). 6 Trade in Services, ‘Communication from the Russian Federation – Notification of Objection to the United

Kingdom’s request for certification of its Schedule of Specific Commitments’, WTO Doc. S/L/423; Costa Rica

(WTO Doc. S/L/425) and Taiwan (WTO Doc. S/L/421) had also filed objections, but later withdrew their objections

(WTO Docs. S/L/426 and S/L/428). 7 About 20 Members had objected to certification of UK’s GATT schedules. See www.explaintrade.com/blogs/201

8/8/11/why-there-are-objections-to-the-uks-wto-schedule-and-why-you-shouldnt-care (accessed 20 August 2019). 8 Jim Brunsden, ‘Trade Partners Attack EU Plan for post-Brexit Import Quotas’, Financial Times, 12 November

2018, available at: www.ft.com/content/d2af748e-e690-11e8-8a85-04b8afea6ea3 (accessed 20 August 2019).


https://www.wto.org/english/news_e/news18_e/mark_03dec18_e.htm

https://www.ft.com/content/d2af748e-e690-11e8-8a85-04b8afea6ea3

MJIEL Vol. 16 Iss. 2 2019 James J. Nedumpara & Sandeep Thomas Chandy

168

The continued objection to the certification of UK’s schedules and the distinct possibility

of Brexit raise an interesting question of whether a WTO Member can continue to trade using

uncertified schedules without violating WTO commitments. Least of all, the UK would like to

be embroiled in disputes with its trading partners on an issue which could be termed as

‘technical’. Although the certification is a formal requirement, it could take years to complete

the process. The certification of EU’s own schedule upon its expansion from EU-15 to EU-25

in 2005 took more than a decade. To answer the legal conformity of the UK engaging in trade

based on uncertified schedules, this article explores in detail the procedure for modification of

schedules under the various WTO agreements. Although other scholars have examined the

impact on uncertified schedules for the goods sectors,9 a comprehensive examination of the

role of certification for goods, services and agriculture has been by and large missing. This

article seeks to bridge this gap. The next section of this article explains the concept of schedules

under the WTO Agreement and under each of the relevant agreements. Section 3 explores the

procedure to modify the schedules under the GATT and analyse the legal status of uncertified

schedules under the GATT. Section 4 of this article examines the procedure to modify the

schedules under the GATS and analyses the legal status of uncertified schedules under the GATS.

Section 5 explores the same matters under the Agreement on Agriculture (AoA). Findings are

concluded in the last section.

2. SCHEDULES IN THE WTO AGREEMENT

One of the goals of the multilateral trading regime is to minimise the tariff and regulatory

barriers imposed by various countries to trade across the borders. The schedules in the context

of the WTO are the commitments undertaken by WTO Members to provide market access

through elimination of barriers.10 Where tariff barriers remain, the schedules also serve to

ensure transparency and provide opportunity to negotiate further reduction of these trade

barriers.11 Recognising the role of schedules in the WTO framework, the Appellate Body in

Argentina – Textiles stated that the ‘basic object and purpose of the GATT 1994, as reflected in

Article II, is to preserve the value of tariff concessions negotiated by a Member with its trading

partners, and bind in that Member’s Schedule’.12

The schedule of the EU is different from those of other WTO Members, consistent with

the unique position of the EU in WTO. The EU submits an integrated schedule on behalf of its

Members which means that the members of the EU do not submit independent schedules for

goods or services. This is similar to the manner in which integrated schedules were submitted

by the EU’s predecessor, namely, the European Economic Community during the GATT era.

9 Jin Woo Kim, ‘Lack of Certification of the WTO Goods Schedules of the United Kingdom: A Way for Frictionless

Trade Under No-Deal Brexit?’ Global Trade and Customs Journal, 2019, 14(6): 287-96. 10 WTO Secretariat, A Handbook on Reading WTO Goods and Services Schedules, 2009, available at: www.wto.org/

english/res_e/booksp_e/handbook_sched_e.pdf (accessed 20 August 2019), at 2. 11 Ibid. 12 Appellate Body Report, Argentina – Textiles and Apparel, para. 47, WTO Doc. WT/DS56/ABR (adopted 22

April 1998).



169

However, the schedule of specific commitments under GATS is a common schedule for

the EU, but each Member of the EU has country specific commitments. Therefore, at the time

of WTO formation, in accordance with the GATT practice,13 the EEC submitted an integrated

GATT schedule on behalf of its Members14 and for the GATS, the EU and its members jointly

submitted the schedule.15

Among the various multilateral WTO agreements, three specific agreements require

Members to maintain a schedule, namely: GATT, GATS and the AoA. Under Article II of the

GATT each Member is required to ‘accord to the commerce of the other contracting parties

treatment no less favourable than that provided for in the appropriate Part of the appropriate

Schedule annexed to this Agreement’. Similarly, Article XX of the GATS requires each

Member to ‘set out in a schedule the specific commitments it undertakes under Part III of this

Agreement’. And, under Article 3 of the AoA, each Member is required to inscribe its domestic

support and export subsidy commitments in Part IV of its GATT Schedule of Concessions. The

WTO Agreement also imposes an overarching obligation on Members to maintain schedules

under the GATT and GATS.16

The EU maintains an integrated schedule for all its Members.17 Upon UK’s exit from

the EU, the EU can no longer exercise UK’s rights and obligations on its behalf. 18 This

situation requires both the UK and the EU to separate their commitments from the integrated

schedule and present a fresh schedule for certification as required under each of the

agreements.19

3. GATT SCHEDULE OF CONCESSIONS

Article II, one of the core provisions of the GATT, requires each Member to maintain a Schedule

of Concessions. This schedule, by virtue of Article II:7, forms an integral part of Part I of the

GATT. Consequently, the concessions and commitment provided in the schedules form part of

the WTO ‘covered agreements’.20 Under Article II:1, Members are obligated to ‘accord to the

commerce of the other [Members] treatment no less favourable than that provided for in the

appropriate Part’ of the annexed schedule.

13 The UK’s schedule for its metropolitan territory had been Schedule XIX, Section A, Parts I and II. The EEC

withdrew the schedules of the EEC-6 and the UK (and Denmark and Ireland) as of 1 August 1974, and a new EEC-

9 Schedule LXXII was circulated on 6 August 1974. See GATT, Article XXIV:6 Renegotiations – Entry into Force

of Schedules LXXII and LXXIIbis, L/4067, 6 August 1974. 14 The EEC-12 schedule attached to the Marrakesh Protocol was Schedule LXXX. The current certified EU-15

Schedule CXL dates from 27 October 2012 (WT/Let/868, 30 October 2012). An EU-25 schedule was submitted for

certification on 25 April 2014 (G/MA/TAR/RS/357, 25 April 2014). An EU-25 certified schedule is entering into

force on 15 March 2019 (WTO Doc. S/L/429). 15 ‘European Communities and their Member States – Schedule of Specific Commitments’, GATS/SC/31, 15 April

1994. 16 Article XI:1, Marrakesh Agreement Establishing the World Trade Organization, 5 April 1994, 867 U.N.T.S. 54. 17 Lorand Bartels, ‘The UK’s Status in the WTO after Brexit’, 22 September 2016, available at: www.peacepalace

library.nl/ebooks/files/407396411.pdf (accessed 20 August 2019), at 7. 18 Ibid. 19 Ibid. 20 Hunter Nottage and Thomas Sebastian, ‘Giving Legal Effect to the Results of WTO Trade Negotiations: An

Analysis of the Methods of Changing WTO Law’, Journal of International Economic Law, 2006, 9(4): 989-1016,

at 994.



170

The GATT schedules contain specific commitments made by each Member. These are

the concessions that a Member has given to its trading partners during the multilateral trade

rounds. Changes in tariff bindings contained in the schedules need to be negotiated by each

Member with its trading partners for their loss in trade as a result of the change. The principles

that govern negotiations of schedules stipulate that negotiations need to be pursued on a

reciprocal and mutually advantageous basis, concessions are to be bound, and generally need

to be applied on an MFN basis.21

Through the schedules, Members can provide concessions to the extent of yielding rights

under the agreement, but Members are prohibited from diminishing their obligations contained

in the GATT, through their schedules.22

3.1. Structure of GATT Schedule of Concessions

Part I of the schedule contains MFN tariffs. This part is further divided into three sections:

Section I contains MFN tariffs on agriculture products; Section II contains MFN tariff quotas

on agriculture products; and Section III contains MFN tariffs on other products.23 Part II of the

schedule contains preferential tariffs provided under various trade agreements listed in Article

I of the GATT.24 Part III of the schedule contains concessions on non-tariff measures.25 And,

lastly Part IV of the schedule contains specific commitments on domestic support and export

subsidies on agricultural products.26

This section of the article will deal with modifying Part I of the Schedule of Concessions.

Part IV of the schedule will be discussed under the AoA.

3.2. Modifying GATT Schedule of Concessions

During the GATT-era, changes to schedules were implemented through ‘protocols’. In the

context of the GATT, a protocol to this effect typically provided that the schedules annexed to

it would enter into force on a specified date for the Contracting Parties that had accepted it by

that date and for the Contracting Parties that accepts it by a subsequent date, on the date of their

acceptance.27 Unlike amendments under Article X of the WTO Agreement, protocols offer the

21 See Bernard M. Hoekman and Petros C. Mavroidis, ‘MFN Clubs and Scheduling Additional Commitments in the

GATT: Learning from the GATS’, European University Institute, Working Paper RSCAS 2016/06, 2016, available

at: http://cadmus.eui.eu/bitstream/handle/1814/38665/RSCAS_2016_06.pdf?sequence=1&isAllowed=y (accessed

20 August 2019). 22 United States – Restrictions on Importation of Sugar (adopted 22 June 1989) BISD 36S/331, para. 5.2; Appellate

Body Report, EC – Bananas III, para. 154; Appellate Body, EC – Poultry, para. 98; Appellate Body, Chile – Price

Band System, para. 272. 23 Article II:1(b), GATT. 24 Article II:1(c), GATT. 25 Most of the Non-Tariff Measures were converted into disciplines during the Tokyo Rounds. The converted ones

are the SCM Agreement, Anti-dumping Agreement, Technical Barriers to Trade, SPS Agreement, Government

Procurement, Customs Valuation and Rules of Origin. See Roy Santana and Lee Ann Jackson, ‘Identifying non-

Tariff Barriers: Evolution of Multilateral Instruments and Evidence from the Disputes (1948–2011)’, World Trade

Review, 2012, 11(3): 462-78, at 466. 26 WTO, ‘Goods Schedule – Members Commitments’, available at: www.wto.org/english/tratop_e/schedules_e/go

ods_schedules_e.htm (accessed 20 August 2019). 27 For example, the Marrakesh Protocol, para. 4; the Geneva Protocol (1979), para. 3; the Geneva Protocol (1969),

para. 3.



171

advantage that they may take legal effect even if less than two-thirds of Members have accepted

them.28

The GATT currently provides two avenues for Members to modify their Schedule of

Concessions. Article XXVIII of the GATT is the primary provision for modification of the

schedules. This provision is used when a Member intends to withdraw existing commitments

from its certified schedule.29 Article XXVIII:1 provides that a Member ‘may, by negotiation

and agreement … modify or withdraw a concession included in the appropriate schedule

annexed to this Agreement’. If a Member intends to withdraw a tariff concession, Article

XXVIII provides for the possibility to do so according to the procedure that is considerably

lighter than the amendment procedure under Article X of the WTO Agreement. 30 This

provision requires the particular Member withdrawing the concession to reach an agreement

with the other Members primarily concerned (principal supplier(s) and Members holding an

initial negotiation right) and with those having a substantial interest in the particular

concession.31 In other words, a Member is required to negotiate with other Members who may

have a significant trade interest in the product subject to withdrawal or reduction in tariff

concessions.

The other avenue for modification of the GATT schedule is through the 1980 GATT

Decision on ‘Procedures for Modification and Rectification of Schedules of Tariff Concessions’

(hereinafter ‘the 1980 Decision’).32 Despite being a Decision under the erstwhile GATT regime,

such decisions have been considered as ‘decisions’, ‘procedures’ or ‘customary practices’

within the meaning of Article XVI:1 of the WTO Agreement.33 Therefore, the 1980 Decision

continues to hold legal force under the WTO regime.

Both the EU and the UK have submitted their post-Brexit revised schedules under the

1980 Decision.34 One key difference between modifications under the 1980 Decision and

Article XXVIII is that the former is to be used only for ‘amendments or rearrangements which

do not alter the scope of a concession’ 35 whereas the latter is generally used when the

amendment results in reduction of existing concessions (in other words withdrawal of

28 See Nottage and Sebastian (2006), supra note 20, at 997. 29 Ibid., at 998. 30 Article XXVIII, GATT; Claus-Dieter Ehlermann and Lothar Ehring, ‘Decision-Making in the World Trade

Organization’, Journal of International Economic Law, 2005, 8(1): 51-75, at 58. 31 Ibid. 32 Procedures for Modification and Rectification of Schedules and Tariff Concessions, GATT Doc. L/4962, 26

March 1980 [hereinafter 1980 Decision]. 33 See Panel Report, European Union – Measures Affecting Tariff Concessions on Certain Poultry Meat Products,

para. 7.22-7.28, WTO Doc. WT/DS492/R (adopted 19 April 2017) [hereinafter EU – Poultry (China)]; Panel Report,

Russia – Tariff Treatment of Certain Agricultural and Manufacturing Products, para. 7.52, WTO Doc. WT/DS485/R

(adopted 26 September 2016); Panel Report, European Communities – Regime for the Importation, Sale and

Distribution of Bananas (Article 21.5 – Ecuador II), para. 7.452; Appellate Body Reports, EC – Bananas III (Article

21.5 – Ecuador II) / EC – Bananas III (Article 21.5 – US), para. 451, WTO Doc. WT/DS27/R [hereinafter (Article

21.5 – Ecuador II) /EC – Bananas III (Article 21.5 – US)]. 34 Schedule XIX - United Kingdom, Rectifications and Modifications of Schedules, https://assets.publishing.servic

e.gov.uk/government/uploads/system/uploads/attachment_data/file/762823/RS570-01_-_Schedule_XIX_cover_no

te.pdf 35 1980 Decision, para. 2; see Nottage and Sebastian (2006), supra note 20, at 998.



172

concessions). 36 To avoid the lengthy Article XXVIII modification procedure involving

negotiations with WTO Members having an interest in a particular modification and

additionally to quicken the certification of schedules, the UK and the EU decided to adjust their

schedules without triggering Article XXVIII.37 Therefore, both the UK and the EU submitted

their revised schedules as rectifications under the 1980 Decision instead of modifications under

Article XXVIII.38 However, various WTO Members have opposed this move stating that the

revised schedules, especially the apportionment of Tariff Rate Quotas (TRQs) between the EU

and UK are substantial modifications under Article XXVIII and not rectifications of a formal

character under the 1980 Decision.39 Due to the opposition, it has been reported that the EU

proposed for a renegotiations of its post-Brexit schedule under Article XXVIII instead of

passing the revised schedule as a rectification under the 1980 Decision. 40 Due to the

confidential nature of tariff renegotiations at the WTO, it is unknown whether the UK too has

opted for renegotiations under Article XXVIII.

Procedures under Article XXVIII and 1980 Decision are special procedures developed

by the GATT/WTO membership to modify the schedules.41 Absent these special procedures,

schedules being a treaty, the Members will have to resort to either Article X of the WTO

Agreement or customary international law for modifying the schedules.42

Certification and its Legal Sanctity: Is it a Prerequisite?

Certification is a process of attesting changes to the authentic text of schedules.43 In the context

of the GATT, certification is specifically relevant to reflect the modification arising from

renegotiations under Articles II, XVIII:7, XXIV, XXVII:6, XXVIII of the GATT, as well as

rectification of schedules of a ‘purely formal character’. 44 If any Member objects to the

proposed changes to the schedules, then the schedules are not certified until the objections are

resolved bilaterally. In general, certification also ensures that the schedules annexed to the

GATT and GATS are up-to-date and serves as a source of predictable and enforceable legal

obligations of WTO Members.45

36 See Hoekman and Mavroidis (2016), supra note 21; this gives May 2019 status of Goods schedule for EU and

UK among others. [WTO Doc. G/MA/W/23/Rev.15] 37 European Parliament, ‘Proposal for a Regulation on the Apportionment of Tariff Rate Quotas in the WTO

Schedule of the Union following the Withdrawal of the United Kingdom from the Union amending Council

Regulation (EC) No. 32/2000’, Legislative Train 07. 2019, 20 June 2019, available at: www.europarl.europa.eu/legis

lative-train/theme-a-balanced-and-progressive-trade-policy-to-harness-globalisation/file-brexit-tariff-rate-quotas-in

-the-wto (accessed 20 August 2019). 38 Ibid. 39 Joint Letter from Permanent Representatives of Argentina, Brazil, Canada, New Zealand, Thailand, United States

and Uruguay to the Permanent Representatives of the UK and EU, 26 September 2017, available at:

https://iegpolicy.agribusinessintelligence.informa.com/-/media/agri-article-media/ieg-policy/2017/10/uk-eu-wto-

letter.pdf?la=en&hash=0FEFFE942594C160253D6815049A819C09FE2C6E (accessed 20 August 2019). 40 Daniel Boffey, ‘Resistance to joint proposal to WTO leaves UK and EU divided’, Guardian, 25 April 2018,

available at: www.theguardian.com/politics/2018/apr/25/resistance-to-joint-proposal-to-wto-leaves-uk-and-eu-divi

ded-us-australi-reject-brexit-trade-plans (accessed 20 August 2019). 41 Appellate Body Reports, Article 21.5 – Ecuador II) /EC – Bananas III (Article 21.5 – US), paras. 384-85. 42 Panel Report, EU – Poultry (China), para. 7.515 43 Jin Woo Kim, supra note 9, at 288. 44 Ibid. 45 WTO Secretariat, supra note 10, at 17.



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3.3. Trading on the Basis of Uncertified GATT Schedules

Some commentators have argued that Members can implement changes in their domestic

schedules prior to the conclusion of Article XXVIII negotiations; however, the legal status of

a Member’s uncertified schedules had not been well analysed. In this regard, the EU – Poultry

dispute initiated by China offers certain clarity on the legal status of a Member’s uncertified

schedules. By legal status, the authors refer to whether a Member having such uncertified

schedules can trade using the uncertified schedule. This includes certification of an entire

schedule and also certification of changes brought at the micro level, for example, the tariff

lines.

The EU is a major importer of poultry products, The EU modified its tariff concessions

on poultry through two modifications. Brazil and Thailand were the only Members with

‘principal supplying interest’ or ‘substantial interest’; China too had export interest, but had

negligible exports during the reference period. As a matter of practice, Article XXVIII

negotiations had in the past been based on the most recent three-year period for which trade

statistics were available. The first modification package in this regard was concluded in 2006,

and the second modification package was concluded in 2011. The EU had negotiated with

Brazil and Thailand and subsequently made changes to tariff concessions on certain poultry

products in its domestic tariff schedule prior to implementing the changes in its GATT schedule

through certification.46 The EU accordingly modified its schedules to replace its previous tariff

concessions on the poultry products with tariff rate quotas (TRQs).47

China argued that the EU’s measure was inconsistent with Article II:1 of the GATT

because EU had applied the modifications agreed under Article XXVIII negotiations with

Brazil and Thailand before the changes were incorporated in its authentic text of its schedules

through certification, thereby applying rates in excess of the bound rates under Article II.48 To

state differently, China’s argument was that any tariff treatment not provided for in the certified

schedule was inconsistent with Article II of the GATT. The EU argued there was no violation

of Article II, because certification of schedules was not a ‘prerequisite’ for giving effect to

modification agreed under Article XXVIII negotiations.49 The primary issue before the Panel

was therefore whether certification is a legal prerequisite for implementing changes agreed

under Article XXVIII negotiations. The Panel answered this question in the affirmative based

on three reasons, which are addressed below.

3.3.1. Balancing rights and obligations under Articles II and XXVIII

The focus of the WTO Panel was first on balancing the rights and obligations of the Members

under Article II and Article XXVIII of the GATT. According to the Panel, Article II is a key

provision of the GATT that acknowledges the importance of schedules as sources of predictable

and enforceable legal obligations.50 At the same time, the Panel noted that the right to modify

or withdraw concessions under Article XXVIII exists in parallel with Article II. In the Panel’s

46 Ibid. 47 Ibid. 48 Panel Report, EU – Poultry (China), paras. 7.496, 7.498 49 Ibid., para. 7.497 50 Ibid., paras. 7.510-7.511



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view Article XXVII exits to support the overarching object and purpose of enabling the

Members to enter ‘into reciprocal and mutually advantageous arrangements directed to the

substantial reduction of tariffs and other barriers to trade’.51 The Panel drew inspiration from

the second paragraph of Article XXVIII to highlight this objective. It is instructive to refer to

the observation of Judith Bello that:

the only sacred, inviolable aspect of the GATT [is] the overall balance of rights and

obligations of benefits and burdens, achieved among members through negotiations ...

[so that] a government could renege on its negotiated commitment not to exceed a

specified tariff on an Item, provided it restored the overall balance of GATT

concessions through compensatory reductions in tariffs in other products.52

In other words, the Parties have the freedom and the flexibility to modify their

commitments provided the general level of commitments are preserved or otherwise

compensated for.

The Panel then examined the procedures under Article XXVIII. The relevant part of

Article XXVIII reads as follows:

3. (a) If agreement between the contracting parties primarily concerned cannot be

reached before 1 January 1958 or before the expiration of a period envisaged in

paragraph 1 of this Article, the contracting party which proposes to modify or withdraw

the concession shall, nevertheless, be free to do so and if such action is taken any

contracting party with which such concession was initially negotiated, any contracting

party determined under paragraph 1 to have a principal supplying interest and any

contracting party determined under paragraph 1 to have a substantial interest shall then

be free not later than six months after such action is taken, to withdraw, upon the

expiration of thirty days from the day on which written notice of such withdrawal is

received by the CONTRACTING PARTIES, substantially equivalent concessions

initially negotiated with the applicant contracting party.

(b) If agreement between the contracting parties primarily concerned is reached but

any other contracting party determined under paragraph 1 of this Article to have a

substantial interest is not satisfied, such other contracting party shall be free, not later

than six months after action under such agreement is taken, to withdraw, upon the

expiration of thirty days from the day on which written notice of such withdrawal is

received by the CONTRACTING PARTIES, substantially equivalent concessions

initially negotiated with the applicant contracting party.

According to the Panel, Article XXVIII:3 addresses two stalemate situations that can

arise during the re-negotiations. Paragraph (a) deals with a situation where agreement cannot

be reached with the Members engaged in the negotiations. 53 Paragraph (b) deals with a

situation where the agreement reached is not satisfactory to Members with a substantial

supplying interest. 54 The Panel emphasised that the specification of a timeframe for the

51 Ibid., para. 7.512 52 Judith Bello, ‘The WTO Dispute Settlement Understanding: Less Is More’, American Journal of International

Law, 1996, 90(3): 416-8, at 417. 53 Panel Report, EU – Poultry (China), para. 7.517 54 Ibid.



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modification or withdrawal of concessions under paragraph 3 – when ‘such action is taken’ by

the applicant Member or when ‘action under such agreement is taken’ – implies that this may

be undertaken prior to the changes being introduced into the schedule through the certification

process. In light of this implication under paragraph 3 that Members concerned are ‘free’ to

withdraw or modify concessions prior to certification of the changes to the schedule in those

situations, the Panel considered that such a right must exist a fortiori where the modification

has been agreed by the Members holding the initial negotiating rights, a principal supplying

interest, and a substantial interest.55

The Interpretative Note (Ad Note) to Article XXVIII as a whole provides for ‘the greatest

possible secrecy’ in negotiations and consultations under the Article. This interpretative note

was examined carefully by the Panel. It was also noted by the Panel that the chapeau of the

Interpretative Note to Article XXVIII distinguishes the ‘prospective changes’ that are the

subject of negotiations from the subsequent ‘changes in national tariffs resulting from’ those

negotiations.56 The Panel found that, by distinguishing the ‘prospective changes’ from the

‘changes in national tariffs resulting from’, the wording of the chapeau implies that Members

may be informed of those changes in national tariffs after they have already been made.57

3.3.2. 1980 decision on Procedures for Negotiations under Article XXVIII

The EC – Poultry Panel deliberated on the meaning of paragraphs 7 and 8 of the 1980 Decision.

Article XVI:1 of the Marrakesh Agreement states that ‘the WTO shall be guided by the

decisions, procedures and customary practices followed by the CONTRACTING PARTIES to

GATT 1947…’ In that context, the Procedures for Negotiations58 under Article XXVIII is

relevant. The Procedure for Negotiations specify the procedural arrangements to be followed

when a Member seeks to modify or withdraw a concession in its schedule. The key

extracts/paragraphs of the procedures are as under:

7. Contracting parties will be free to give effect to the changes agreed upon in the

negotiations as from the first day of the period referred to in Article XXVIII:1, or, in

the case of negotiations under para. 4 or 5 of Art. XXVIII, as from the date on which

the conclusion of all the negotiations have been notified as set out in para. 6 above. A

notification shall be submitted to the secretariat, for circulation to contracting parties,

of the date on which these changes will come into force.

8. Formal effect will be given to the changes in the schedules by means of Certifications

in accordance with the Decision of the CONTRACTING PARTIES of 26 March 1980.

According to the Panel, paragraph 7 states that Members are ‘free to give effect to the

changes … as from the date on which the conclusion of all of the negotiations have been

notified’. In the Panel’s view, had the GATT Contracting Parties intended to make certification

the legal prerequisite, paragraph 7 would have ‘used different words to that effect’.59 In this

55 Ibid. 56 Panel Report, EU – Poultry (China), para. 7.520 57 Ibid. 58 Procedures for Negotiations under Art. XXVIII, adopted by the Council on 10 November 1980, C/113 and Corr.

1, BISD 27S/26–29. 59 Panel Report, EU – Poultry (China), para. 7.524



176

regard, the Panel disagreed with China’s restrictive interpretation of the terms ‘free to give

effect to the changes’ and held that China’s approach was at odds with the ordinary meaning of

these terms.60 China further submitted that the terms ‘free to give effect to the changes’ allow

only the adoption by the WTO Member of the legal provisions providing for the tariff rate

quotas, but not the actual implementation until certification has occurred.61 However, the Panel

pointed out that China’s approach renders paragraph 7 legally redundant and inutile. In other

words, a WTO Member does not need to be ‘allowed’ by the WTO to begin to put in place

domestic legal provisions if they are not actually implemented.62

In addition, the Panel noted that the relevant provisions of the Procedures for

Negotiations under Article XXVIII must be read in a way that gives meaning to all of the text.

In other words, the Panel provided a harmonious reading of all the provisions. In the Panel’s

view, such an approach is required to give full weight to the terms of paragraph 8.63 The panel

underscored that the ordinary meaning of the terms ‘formal effect’ in paragraph 8 does not

suggest a narrow and constricted reading of the concept of certification.64 The Panel then found

that the interpretation of paragraph 7 arising from the ordinary meaning of the terms ‘free to

give effect to changes’ is reinforced by the ordinary meaning of the terms of paragraph 8 that

‘formal effect’ is given to the changes ‘in the schedules’ by means of certification.65 According

to the Panel, the terms of paragraphs 7 and 8, and the fact that these two provisions were

juxtaposed side-by-side in the Procedures, make it clear that each provision is addressing a

different issue.66 The Panel explained that these provisions, when read together, clarify that the

question of when a Member is ‘free to give effect to the changes agreed’ in Article XXVIII

negotiations is different from the question of when ‘formal effect’ will be given to the changes

‘in the schedules’.67 According to the Panel, if paragraph 8 served the answer to both questions,

there would be no need for paragraph 7 and vice versa.68

3.3.3. Procedures for modification and rectification of schedules

The Panel took recourse to the preamble and paragraphs 1, 3, and 4 of the 1980 Decision. This

examination was part of the harmonious interpretation which the Panel was alluding to.

Drawing context from the preamble of the Procedures, the Panel noted that the objective

of certification is to keep the authentic texts of the Schedules ‘up to date’ and also to ensure

‘that they tally with the texts of corresponding items in national customs tariffs’.69 In other

words, the obligation that the Schedules are ‘kept up to date’ and ‘tally with’ the texts of the

60 Ibid. 61 Ibid. 62 Ibid. 63 Panel Report, EU – Poultry (China), para. 7.528 (referring to Appellate Body Report, Korea – Definitive

Safeguard Measure on Imports of Certain Dairy Products, para. 81, WTO Doc. WT/DS98/R (adopted 12 January

2000). 63 Panel Report, EU – Poultry (China), para. 7.529. 64 Ibid., para. 7.529. 65 Ibid., para. 7.530. 66 Ibid. 67 Ibid. 68 Ibid. 69 Ibid., para. 7.539.



177

corresponding items in national customs tariffs infer that the Members are free to implement

the tariff changes agreed in Article XXVIII negotiations without waiting for certification.70

According to the EU – Poultry Panel, Paragraph 1 of the 1980 Decision refers to

‘[c]hanges in the authentic texts of Schedules’ being certified to ‘reflect’ modifications

‘resulting from action under’ Article XXVIII. According to the Panel, if certification were a

legal prerequisite for being able to give effect to those modifications, the introduction of the

changes to the authentic texts of Schedules through certification would ‘give effect to’, and not

‘reflect’, the modifications.71 In other words, the 1980 Decision can Article XXVIII permit

Members to first make changes in their domestic schedules and then modify their GATT

schedules to ensure that it reflects the same.

In addition, the Panel underscored that paragraph 3 provides that Members’ objections

to a certification are limited to the ground that ‘the draft does not correctly reflect the

modifications’ resulting from the renegotiations under Article XXVIII.72 The Panel observed

that this limitation on Members’ objections to a certification suggests two important points.

First, the certification process does not confer a ‘veto right’ to Members who did not participate

in the negotiations and who may not be satisfied with the compensation agreed, or upon those

Members who did participate in the negotiations but failed to reach an agreement in

negotiations.73 Second, the absence of an objection from another Member cannot be construed

as a Member ‘acquiescing’ or ‘accepting’ that the changes introduced into the authentic text of

the Member’s Schedule are consistent with the Member’s obligations under the GATT. 74

Therefore, the Panel disagreed with China’s argument that the ‘object and purpose’ of the

certification procedure is to ensure that all Members have the opportunity to ‘acquiesce in’ and

‘review and accept the modifications that a WTO member proposes to make’ in the context of

Article XXVIII negotiations.75

Finally, referring to paragraph 4 of the Procedures which states that ‘[w]herever

practicable, Certifications shall record the date of entry into force of each modification and the

effective date of each rectification’, the Panel held that this paragraph clarifies that the ‘entry

into force’ of a modification is distinct from the point in time when the corresponding change

in the authentic text of the Schedule is certified.76

On the basis of a lengthy analysis, the Panel found that certification is not a legal

prerequisite for implementing the results of negotiations under Article XXVIII at the national

customs level.77 Accordingly, the Panel concluded that China had not demonstrated that the

EU acted inconsistently with Article II:1 of the GATT by giving effect to the modifications

70 Ibid., para. 7.539 71 Ibid., para. 7.541 72 Ibid. 73 Ibid. 74 Ibid. 75 Ibid. 76 Panel Report, EU – Poultry (China), para. 7.542. The panel further examined the history of certification

procedures and concluded that there is ‘no subsequent practice in the application of Article XXVIII establishing the

agreement of Members on whether certification is a legal prerequisite that must be completed before a Member

modifying its concessions can proceed to apply the changes agreed upon in Article XXVIII negotiations’. 77 Panel Report, EU – Poultry (China), para. 7.551.



178

resulting from the Article XXVIII negotiations prior to the changes being reflected in the

authentic text of its Schedule through certification.78

The above analysis of EU – Poultry, would indicate that the UK would be able to trade

on the basis its uncertified post-Brexit Schedule of Concessions, pending conclusion of Article

XXVIII negotiations. This would hold true for any WTO Member modifying its GATT schedule

under Article XXVIII of the GATT or under the 1980 Decision. Objections to certification from

other WTO Members are to an extent unavoidable and that the applicable WTO jurisprudence

seems to allow the UK the much needed latitude.

4. GATS SCHEDULE OF CONCESSIONS

GATS is another area where non-EU WTO Members can have potential issues with the UK.

This is especially true given the importance of the ‘passporting issues’.79 Article XX:1 of the

GATS provides that ‘[e]ach Member shall set out in a schedule the specific commitments it

undertakes under Part III of this Agreement’. This provision indicates the country-specific

nature of the Schedule of Commitments, which entails that the commitments undertaken therein

bind only the Member concerned.80

The GATS is divided into six parts, of which only Part II and Part III contain substantive

obligations. Part II entitled ‘General Obligations and Disciplines’ sets out, inter alia, the core

disciplines governing services, such as the Most-Favoured-Nation Treatment (Article II),

Domestic Regulations and Transparency (Article III and Article IV), Economic Integration

Agreement (Article V), provision on transfer of funds (Article XI) and Balance of Payments

(Article XII). Disciplines enshrined in Part II of the agreement are general in scope and apply

to all services covered by the GATS. By contrast, the provisions found in Part III on ‘Specific

Commitments’: Market Access (Article XVI), National Treatment (Article XVII) and

Additional Commitments (Article XVIII) are not universal and enshrine obligations only with

regard to services and modes of supply in which each Member has undertaken commitments.

It is the Schedule of Commitments therefore that determines to what services, modes of supply,

and under what conditions, the market access, national treatment and additional commitments

obligations apply to each Member.81 The dependency of these obligations on the schedule is

evident from the provision itself. For example, under the Market Access obligation, each

Member is required to ‘accord services and service suppliers of any other Member treatment

78 Ibid. 79 For understanding the implications of UK’s WTO Commitments on passporting rights, see Rudolf Adlung,

‘Brexit from a WTO/GATS Perspective: Towards an Easy Divorce?’, Journal of World Trade, 2018, 52(5): 721-44. 80 In the case of the European Union, both the European Community and its Member States share competences in

the ambit of trade in services. In light of this fact, a single GATS Schedule of commitments – the EC’s Schedule-

features the specific commitments of the Union and each of its members. The fact that EU Member States share

certain competences in services is reflected, in practical matters, in commitments and restrictions undertaken by only

some of the EU Members and not others, albeit that all of them are included in the same Schedule, in the same

fashion as the Schedules of some federal countries. On the shared competences between the EU and its Members

States, see ECJ, Opinion 1/94, Competence of the Community to Conclude International Agreements Concerning

Services and the Protection of Intellectual Property – Article 228 (6) of the EC Treaty, [1994] E.C.R.-I. 5276. 81 Some provisions in Part II are still dependent on the commitments undertaken by the Member in its Schedules of

Commitments. One such provision is Domestic Regulation.



179

no less favourable than that provided for under the terms, limitations and conditions agreed

and specified in its Schedule’.82 The National Treatment obligation also contains a similar

phrase highlighting the dependency on the Schedule of Commitments.

4.1. Structure of GATS Schedule of Commitments

Like the GATT, the GATS also prescribe the structure of the schedule, albeit in a more detailed

manner. Article XX:1 requires each schedule to specify the

(a) terms, limitations and conditions on market access;

(b) conditions and qualifications on national treatment;

(c) undertakings relating to additional commitments;

(d) where appropriate the time-frame for implementation of such commitments; and

(e) the date of entry into force of such commitments.

In Mexico – Telecom, a WTO Panel stated that ‘specifying’ in Article XX requires that

an entry describes each measure concisely, indicating the elements that make it inconsistent

with the market access and national treatment disciplines.83

4.2. Modifying GATS Schedule of Commitments

Once a Member’s schedule is accepted by the membership, the schedule becomes an integral

part of the GATS. Thus, the schedule becomes binding on the Member concerned. If the

Member fails to provide the treatment committed in the schedule, any of the Members can

challenge the particular Member for breach of Article XVI or Article XVII.

However, Article XXI of the GATS permits Members to modify or withdraw their

respective schedules. It can be done at any time after three years have lapsed from the date of

entry into force of a commitment, with at least three months’ notice of the proposed change.

Furthermore, at the request of affected trading partners, the modifying Member is required to

negotiate any necessary compensatory adjustment and, if unsuccessful, to accept arbitration the

results of which are binding. Pursuant to Art. XXI:5, in 1999 the Council for Trade in Services

(CTS) enacted detailed procedures for the modification of Schedules. 84 Improvements to

Schedules, i.e. the inscription of new sectors or the removal of existing limitations, are subject

to more streamlined procedures.85

4.3. Legal Status of Uncertified GATS Schedules

The EC – Poultry dispute was on the legal status of EU’s uncertified schedules under the GATT.

However, the Panel analysed the status of uncertified schedules under the GATS from the

perspective of a contextual discussion. The Panel concluded that unlike certification under the

GATT, the GATS require Members to implement the changes domestically only after the

82 Emphasis added. 83 Panel Report, Mexico – Measures Affecting Telecommunications Services, WTO Doc. WT/DS204/R, para. 7.76. 84 Council for Trade in Services, Procedures for the Implementation of Article XXI of the General Agreement on

Trade in Services (GATS) (Modification of Schedules), Adopted by the Council for Trade in Services on 19 July

1999, S/L/80, 29 October 1999. 85 Council for Trade in Services, Procedures for the Certification of Rectifications or Improvements to Schedules

of Specific Commitments, Adopted by the Council for Trade in Services on 14 April 2000, S/L/84, 18 April 2000.



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certification of the schedules. This view was derived from a reading of paragraph 6 of the

Procedures for the Implementation of Article XXI, adopted by the Council for Trade in Services

in 1999 under Article XXI:5 of the GATS, which states:

A modifying Member which has reached agreement with all Members that had

identified themselves under paragraph 3 above shall, no later than fifteen days after the

conclusion of the negotiations, send to the Secretariat a final report on negotiations

under Article XXI, which will be distributed to all Members in a secret document. After

completing the certification procedure under paragraphs 20 to 22, such a modifying

Member will be free to implement the changes agreed upon in the negotiations and

specified in the report, and it shall notify the date of implementation to the Secretariat,

for circulation to the Members of the WTO. Such changes shall not exceed the

modification or withdrawal initially notified and shall include any compensatory

adjustment agreed upon in the negotiations. [emphasis added]

In short, the GATS prohibits Members from implementing the proposed changes prior to

certification. Although the Panel could not find any reason for this difference between the

certification process under the GATT and GATS, according to the Panel, the unique distinction

might have arisen from the disparate nature of the subject-matter under both the agreements.86

5. AGREEMENT ON AGRICULTURE (AOA)

The EU is a major provider of agriculture subsidies. During the Uruguay Round, the EU (EC

15 at that time) had undertaken reduction commitments on domestic support and export subsidy.

Among the agriculture support, the Amber Box (trade distorting domestic support which is

subject to reduction commitments and capping) is perhaps the most relevant. Export subsidies

are also subject to reduction commitments and by virtue of the 2015 Nairobi WTO Ministerial

decision87 are being phased out.

The AoA requires Members to inscribe their ‘domestic support and export subsidy

commitments in Part IV of each Member’s Schedule’.88 The schedule referred to here is the

Member’s GATT schedule. Under Article 3 of the AoA, like commitments under Article II of

the GATT and Article XX of the GATS, these schedules are ‘made an integral part of GATT

1994’.

5.1. Modifying Domestic Support and Export Subsidies Commitments

Article 3 of the AoA requires Members to inscribe their domestic support and export subsidy

commitments in Part IV of their GATT schedules. The provision also states that Part IV of the

schedule is an integral part of the GATT. Furthermore, Article 21 of the AoA states that the

‘provisions of GATT 1994 and of other Multilateral Trade Agreements in Annex 1A to the

WTO Agreement shall apply subject to the provisions of this Agreement’. Article 21 would

mean that the provisions of the AoA would prevail in the event of a conflict between this

86 Para. 7.533. 87 WTO, Ministerial Decision of 19 December 2015 WTO Doc. WT/MIN(15)/45. 88 Article 3, AoA.



181

agreement and the GATT or any other Annex 1A agreements.89 The corollary being provisions

of the GATT, especially Article XXVIII would apply to the AoA unless there is a conflict

between the agreements.90 In this case, a conflict does not arise since the AoA does not contain

an equivalent of Article XXVIII.

Since the AoA does not contain a provision on the modification of schedules (like GATT

Article XXVIII and GATS Article XXI) and by virtue of commitments under the AoA being

part of the GATT Schedules, Article XXVIII would ideally be the provision governing

modification of a Member’s domestic support and export subsidies commitments. However,

the Panel in EC – Sugar held a contrary view. The Panel stated that ‘contrary to tariff

concessions, export subsidy commitments are not renegotiable under Article XXVIII of the

GATT 1994’.91 The Panel did not provide a reason for this holding. But it is possible that the

Panel drew a distinction between ‘tariff concessions’ under Article II of the GATT and

‘commitments’ under Article 3 of the AoA. Another possibility is that the Panel viewed

‘renegotiation’ as only enhancement of the existing subsidy commitments. This view might

have been taken considering that the dispute concerned EU’s enhancement of subsidies beyond

the levels committed in its schedules.

The distinction by the Panel in EC – Sugar between ‘tariff concessions’ and

‘commitments’ is critical because Article XXVIII can deal only with modification or

withdrawal of a tariff concession.92 This is also evident from the creation of a specific provision

in the Marrakesh Protocol (which annexes Uruguay Round Schedules to the GATT 1994) to

the effect that Article XXVIII is made applicable to non-tariff concessions contained in Part III

of the GATT schedule.93

Had the Panel in EC – Sugar not differentiated domestic support and export subsidy

commitments from tariff concessions, it is possible that the holding in EU – Poultry would

apply to Part IV of the GATT schedule. This would mean that Members can re-negotiate these

commitments under GATT Article XXVIII and the 1980 Decision. It would also mean that

Members can implement the proposed changes without having to reach an agreement with the

concerned Members.

A complication arises as to how commitment on agricultural export subsidies and

domestic support in a Member’s GATT schedule could be modified or withdrawn. Without

clarity on this aspect any re-negotiations on account of the Brexit would be steeped in legal

uncertainty. However, recently as part of the commitment under Nairobi Package94 to reduce

agricultural export subsidies and domestic support, Australia and the EU have submitted

89 Appellate Body Report, Indonesia – Importation of Horticultural Products, Animals and Animal Products, para.

5.12, WTO Doc. WT/DS477/R (adopted 22 November 2017). 90 Ibid; Panel Report, EC – Bananas III, para. 7.127. 91 Panel Report, European Communities – Export Subsidies on Sugar, para. 7.158, WTO Doc. WT/DS265/R

(adopted 19 May 2005). 92 Article XXVIII:1, GATT. 93 Marrakesh Protocol to the GATT 1994, para. 6. See also Paul Shanahan, ‘Commitments Limiting Subsidisation:

Domestic Support Commitments, Agriculture Domestic Support’, in Benoit Blarel, Garry Pursell and Alberto Valdés

(eds.), Implications of the Uruguay Round Agreement for South Asia: The Case of Agriculture (1996). 94 Export Competition (Ministerial Decision WT/MIN(15)/45, WT/L/980), para. 6.



182

modified schedules eliminating their existing subsidies.95 Australia submitted the modification

pursuant to the 1980 Decision.96 Since the 1980 Decision covers modifications pursuant to

Article XXVIII, it appears that the membership has come to a tacit understanding on using

Article XXVIII and the 1980 Decision for implementing the reduction of existing agricultural

export subsidies and domestic support commitments.

6. CONCLUSIONS

This article has analysed the modification and certification mechanism of the three schedules

maintained by the Members under the WTO Agreements. The schedules and their respective

agreements provide for a unique modification and certification mechanism for each of its

schedules. Under the GATT, Members can modify their schedules under Article XXVIII or the

1980 Decision. In any case, the Members are free to implement the proposed changes prior to

certification without violating the substantial commitments under the GATT. This view was

supported for the first time by the Panel in the EU – Poultry dispute between the European

Union and China. Unlike the GATT, the modification and certification mechanism of the GATS

prohibits Members from implementing the proposed changes prior to certification. This is a

bewildering situation, but unfortunately, there seems to be inconsistency between the GATT

and the GATS in relation to the legal status of uncertified schedules. Unlike the GATT and GATS,

the AoA does not seem to have a mechanism to modify the schedule maintained under Article

3.1 of the agreement. However, recent practice seems to suggest that Members can resort to the

1980 Decision for increasing their domestic support and export subsidy commitments

maintained under their schedule.

In the context of Brexit, the UK faces a unique challenge of getting its schedules certified

prior to its exit from the EU. The GATT will permit the UK to trade on uncertified schedule,

but the GATS requires UK to certify its post-Brexit schedule prior to the exit. In the case of the

schedule under the AoA, although the agreement seems to prohibit any kind of modification to

Part IV of the GATT schedule, it seems that recent practice will permit the UK to resort to the

1980 Decision to modify its schedules. These are unique challenges and trading on the basis of

its own schedules, and legally separate from the EU schedules, will require the UK negotiators

obtain wholesome cooperation and goodwill from other WTO Members.

95 Rodrigo Bardoneschi, ‘Accelerating the Elimination of Export Subsidies in Agriculture’, 30 October 2017, ICTSD

Opinion, available at: www.ictsd.org/opinion/accelerating-the-elimination-of-export-subsidies-in-agriculture

(accessed 20 August 2019); Committee on Market Access, Rectification and Modification of Schedules, Schedule I

– Australia, WTO Doc. G/MA/TAR/RS/454 96 ‘In accordance with the Decision of 26 March 1980 (BISD 27S/25), the government of Australia hereby submits

the draft containing modifications1 to Part IV of Schedule I - Australia to eliminate its export subsidy entitlements

pursuant to the Nairobi Ministerial Decision on Export Competition’ (footnote omitted).


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