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National treatment under GATT article III: 2 and its applicability in the context of Korea’s FTAs

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  • National treatment under GATT article III: 2 and its applicability in the context of Korea’s FTAs
  • Shadikhodjaev, Sherzod
  • Korea Institute for International Economy Policy


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Title National treatment under GATT article III: 2 and its applicability in the context of Korea’s FTAs
Similar Titles
Material Type Articles
Author(English)

Shadikhodjaev, Sherzod

Publisher

[Seoul]:Korea Institute for International Economy Policy

Date 2008-06
Journal Title; Vol./Issue Journal of East Asian Economic Integration:vol. 12(no. 1)(June 2008)
Pages 46
Subject Country South Korea(Asia and Pacific)
Language English
File Type Link
Subject Economy < Trade
Holding Korea Institute for International Economy Policy

Abstract

GATT Article III: 2 on national treatment on internal taxation is an integral part of Korea’s FTAs. Therefore, GATT/WTO case law provides useful guidance on proper application of this provision in the FTA context. Article III:2 involves a multi-tiered test of several issues including likeness, discriminatory threshold, and protective application of a tax measure. When the FTA parties enter into a dispute over national treatment, the problem of applicable law may arise. First, FTA panels are not obliged to rely on GATT/WTO jurisprudence. Nevertheless, given the incorporation of GATT Article III into the FTA, it is suggested that FTA panels follow WTO case law to secure consistent and predictable applGATT Article III: 2 on national treatment on internal taxation is an integral part of Korea’s FTAs. Therefore, GATT/WTO case law provides useful guidance on proper application of this provision in the FTA context. Article III:2 involves a multi-tiered test of several issues including likeness, discriminatory threshold, and protective application of a tax measure. When the FTA parties enter into a dispute over national treatment, the problem of applicable law may arise. First, FTA panels are not obliged to rely on GATT/WTO jurisprudence. Nevertheless, given the incorporation of GATT Article III into the FTA, it is suggested that FTA panels follow WTO case law to secure consistent and predictable application of the national treatment rule. Second, it is questionable whether WTO panels can examine claims under the GATT-plus provisions on national treatment contained in the FTA. In order to avoid possible jurisprudential difficulties, disputing parties may choose to refer the matter to an FTA panel, instead of launching a WTO dispute settlement procedure. Alternatively, the parties may agree, pursuant to DSU Article 7.3, on non-standard terms of reference of the panel where a GATT-plus provision is explicitly listed. In both scenarios, the GATT-plus provisions, as a lex posterior, should prevail over the corresponding GATT provisions.