Appunti International and European Trade law

D → LIKE SERVICES AND LIKE SERVICES SUPPLIERS

Determined according to a case by case basis – you cannot decide in advance which services are like or not, you cannot foreseen each different possible scenario.

Overall definition of like services and suppliers – Art. II of GATS did not mention only services, but also services suppliers. This is important because when we talk about services we cannot just compare the activity as such, but we have also to compare the people performing such activity. So the concept of like services and services supplier is an overall concept that have to be analyse together.

Criteria for assessing likeness – There are some criteria in order to define this similarity between two services. (similar but not treat in the same way to the ones of goods. Ex: for characteristics: the difference between two services that are similar are more numerous than the difference between two products that are similar.)

▪ Characteristics

• of service and services suppliers
• Consumers' preferences - more difficult than for products: sometimes consumers preferences may depend on different reasons, for instance when the role of the supplier is very important (es: services supplied by a lawyer).
• Tariff Classification - most "objective" criteria, in order to define a like services. If two services belong to the same tariff category within the WTO system, they can be considered like services.
• Presumption of likeness when the Measure is Based exclusively on the origin - principle that highlights another difference between goods and services as to the application of the MFN principle, which is the presumption of likeness: it is the possibility of recognizing that a service is like another if the measure of a state, that is favouring a services with respect to another, expressively establish that that measure is applicable only to the service coming from a specific country (so when

the origin of the service is specified).C → NO LESS FAVOURABLE TREATMENT – when two services are like services, they deserve the same treatment(established in Art. II of the GATS).

• Modification of the conditions of competition – what is important in order to ensure that a treatment is no lessfavourable, is the ensure that this treatment complies with the main objective of the GATT: the maintenance of theconditions of competitions between services deriving from different countries.
• So what a State must do is to avoid that services deriving from a country may loose their competitive position withrespect to like services.
• De Jure and De Facto discrimination – It is not relevant whether or not the measure of a State that provides for thetreatment of the services for a specific trade, make an express discrimination of other services.
• So actually it is not relevant to have “De jure” discrimination (that is express, patent), what is the important

is the final effect.

• No need to demonstrate in order to demonstrate that two like services are treated in a different manner, it is not necessary to demonstrate that measure providing for the different treatment is unlawful.

Illegitimate purpose - when a discriminatory behaviour is performed and a discriminatory treatment affects two similar service, in that case there is a breach of MFN and there is no justification. (no possible to justify with domestic policies)

Discriminatory intent - it is not possible to use as a justification the fact that a discriminatory measure did not mean to produce a discrimination, so affirming that the discrimination occurs involuntarily → the intent of states adopting a measure that produce discriminatory effects it's not relevant, what is relevant is the actual effects that it produces.

• Treatment defined out of the exemptions - As we saw, state has wider power that allow them to exclude WTO norms with regard to

Il trattamento preferenziale è consentito per i servizi forniti dai paesi in via di sviluppo rispetto a quelli forniti dai paesi industrializzati.

▪ Decisione di Ginevra del 2011 - questa nuova eccezione è stata introdotta durante la Conferenza ministeriale del 2011 a Ginevra

▪ Servizi dei paesi meno sviluppati - questa decisione si applica ai servizi forniti da tutti i paesi in via di sviluppo all'interno dell'OMC.

▪ Natura temporanea

• Riconoscimento art. VII GATS - ulteriore eccezione, riguarda i "riconoscimenti":

▪ Riconoscimento dei certificati di istruzione o esperienza - riguarda il riconoscimento dei certificati di istruzione o esperienza pratica, che possono essere necessari per l'esercizio di un servizio. (ad esempio, nel campo dell'istruzione, gli Stati sono liberi di avere preferenze, ma non nei confronti dello Stato, bensì verso il certificato, è necessario avere degli obiettivi)

▪ Accordi o decisioni autonome - questa preferenza può essere riconosciuta in modi diversi:

it's possible to have domestic measure, or it's possible to conclude a treaty (an agreement) between states in which they mutually recognize their certificate.

Affording Access to the Treatment if Requirements are met - Since WTO doesn't want states to use these exceptions in order to avoid the obligations of GATS, there is a general limit: this preferential recognition must be justified by objective reasons.

Prohibition of Discrimination - a State cannot be excluded as such. It must be excluded from a recognition only because it doesn't comply with the requirements.

So if we look at the application of the MFN principle to services, we can see that services are regulated in a more flexible manner, so this principle can be sometimes not applied in order to favour the free choices of states with regard to regulation of services (because this subject matter is left in the hand of the states more than the trade in goods). National Treatment Principle in

Remember: WTO substantive rules:

Non-discrimination principles: states cannot make difference between products of different countries. Enforced by:

• Most Favoured Nation Principle (MFN) – a State cannot differentiate between two foreign countries. It applies at the borders of a State.
• National Treatment Principe (NT) – prohibition of discrimination between domestic and foreign products. (Envisaged in Art. 3 (1) GATT in a very general manner). It applies within the territory of a State.

National Treatment in 1994 GATT – ART. III para 1 GATT

"The contracting parties recognize that internal taxes and other internal charges, and laws, regulations and requirements affecting the internal sale, offering for sale, purchase, transportation, distribution or use of products, and internal quantitative regulations requiring the mixture, processing or use of products in specified amounts or proportions, should not be applied to imported or domestic products so as to afford"

protection to domestic production.

• Taxation or Regulation of ALL Products (including those covered by concessions) - no distinction of products.
• Internal Measures - The measures affected by the NT principle are "Internal measures". Internal must be interpreted in 2 different manners:
  1. This measures must be adopted by a State (Public measures)
  2. This measures must affect foreign products when this product is within the territory of a State.
• No Protection of Domestic Production - When a State differentiate between domestic and foreign products, it doesn't mean that this State is breaching Art. III para 1. Nevertheless there is a purpose that clearly identify the case in which an internal measure cannot differentiate: a measure cannot afford protection to domestic production (no protectionism effect).

National Treatment in 1994 GATT - ART. III para 2 GATT - divided in two sentences: "The products of the territory

of any contracting party imported into the territory of any other contracting party shall not be subject, directly or indirectly, to internal taxes or other internal charges of any kind in excess of those applied, directly or indirectly, to like domestic products. Moreover, no contracting party shall otherwise apply internal taxes or other internal charges to imported or domestic products in a manner contrary to the principles set forth in paragraph 1.

Note ad ART. III (2): "A tax (is) inconsistent with the second sentence only in cases where competition was involved between the taxed product and a directly competitive or substitutable product which was not similarly taxed."

Internal Taxation of Like Products: 3 main features that must be identified to ascertain whether or not a discrimination has occurred:

• Internal Taxes or Charges - Internal tax is the payment of any tax affecting the product, not the person that is selling the product (ex: income taxes not

covered by ART.III). Charges means all the payments that are required inorder to allowed the commercialization of a product within a territory, also affecting the procedures in which apayment must be performed (only those applied within the territory, not the ones for crossing-borders).

⮚ Directly / Indirectly – Direct taxation/charges = the taxation affects the final products, Indirecttaxation/charges = concern the raw materials in order to achieve the final products.

⮚ Types of payment – There are some payments that are lawful (ex: financial penalties, payments dueto costume duties), so not covered by ART III.

• Like Products – different from the definition in MFN principle. It is a quite narrow definition:

⮚ Narrow interpretation: perfectly substitutable – some criteria must be taken into account:

⮚ Criteria:- Properties (including price)- End Use – some products that are apparently similar can have different use.- Consumers’ Tastes

• The preferences of consumers to qualify products as like.
• Tariff Classification - Two products must be included in the same tariff categories.