(ii)Relationship between Arts. XXIII:1(a) and XXIII:1(b)
In EC –Asbestos (DS135), it is the first occasion for the Appellate Body to examine Art. XXIII:1(b) of the GATT 1994. For this reason, the Appellate Body think there it necessary for them to make certain preliminary observations about the relationship between Arts. XXIII:1(a) and XXIII:1(b) of the GATT 1994.
In this respect, the Appellate Body rules that, “Article XXIII:1(a) sets forth a cause of action for a claim that a Member has failed to carry out one or more of its obligations under the GATT 1994. A claim under Article XXIII:1(a), therefore, lies when a Member is alleged to have acted inconsistently with a provision of the GATT 1994. Article XXIII:1(b) sets forth a separate cause of action for a claim that, through the application of a measure, a Member has ‘nullified or impaired’ ‘benefits’ accruing to another Member, ‘whether or not that measure conflicts with the provisions’ of the GATT 1994. Thus, it is not necessary, under Article XXIII:1(b), to establish that the measure involved is inconsistent with, or violates, a provision of the GATT 1994. Cases under Article XXIII:1(b) are, for this reason, sometimes described as ‘non-violation’ cases, though, the word ‘Non-violation’ does not appear in this provision.”7
(iii)Underlying Purpose of Art. XXIII:1(b)
Non-violation complaints are rooted in the GATT''s origins as an agreement intended to protect the reciprocal tariff concessions negotiated among the contracting parties under Art. II of the GATT 1947. In the absence of substantive legal rules in many areas relating to international trade, the non-violation provision of Art. XXIII:1(b) was aimed at preventing contracting parties from using non-tariff barriers or other policy measures to negate the benefits of negotiated tariff concessions.
The Panel in Japan-Film (DS44) 8 observes that the underlying purpose of Art. XXIII:1(b) was cogently explained by the panel on EEC-Oilseeds, which stated: “The idea underlying
is that the improved competitive opportunities that can legitimately be expected from a tariff concession can be frustrated not only by measures proscribed by the General Agreement but also by measures consistent with that Agreement. In order to encourage contracting parties to make tariff concessions they must therefore be given a right of redress when a reciprocal concession is impaired by another contracting party as a result of the application of any measure, whether or not it conflicts with the General Agreement.
The Panel
considered that the main value of a tariff concession is that it provides an assurance of better market access through improved price competition. Contracting parties negotiate tariff concessions primarily to obtain that advantage. They must therefore be assumed to base their tariff negotiations on the expectation that the price effect of the tariff concessions will not be systematically offset. If no right of redress were given to them in such a case they would be reluctant to make tariff concessions and the General Agreement would no longer be useful as a legal framework for incorporating the results of trade negotiations.”
Clearly, the safeguarding of the process and the results of negotiating reciprocal tariff concessions under Article II of the GATT is fundamental to the balance of rights and obligations to which all WTO Members subscribed. The availability of calling for a dispute settlement procedure for non-violations is a device meant to ensure the integrity of the GATT/WTO system in the face of ever more complex methods of circumventing explicit tariff bindings and the prohibitions on non-tariff trade restraint instruments. A peaceful society, domestic or international, relies on cooperation, fairness and mutual trust. Thus, such reliance must not be jeopardized by an isolated application of strict law. As is confirmed by a review below on the context of non-violation remedy.
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