What happens when a country violates the General Agreement on Trade in Services (GATS)?

October 6, 2006 5:12 AM

What happens when a country violates the General Agreement on Trade in Services (GATS)? In particular, what does another country's "suspending concessions" involve?

In 2003, the tiny country of Antigua disputed US attempts to deny Antiguan businesses access to the US online gambling market. [WTO summary]

As far as I can tell, a 2005 WTO ruling found that the US was at least to some extent in violation of GATS. In May 2006, the US claimed to have remedied this, but Antigua disagreed, and stated that it would "suspend concessions" if a WTO panel agreed that the US hadn't fixed the problem. It looks like a panel for this purpose has been named as of August 2006, but has not yet published a decision.

I want to know what suspending concessions means. I've seen several references to DSU 22, which authorizes such suspension and gives some guidelines about what it involves, but it's still unclear. Does it only mean that the protesting country can rightfully refuse to do business with the offender? (In this case, I doubt an Antiguan embargo would even be felt by the US.) Does it mean the protesting country can disregard copyright and other intellectual property claims by the offender? (This might give Antigua significant power if negotiations fail.)

My question was inspired by the Antigua-US case, but I'm just as interested in the general question of what suspending concessions can involve.

posted by gorillawarfare to law & government (3 comments total)

I'm not an expert, but I believe the WTO (and the GATS) has members agree to accept each others trade without extra tariffs (if only it were that simple).
For example, I know there have been recent disagreement over steel imports to the US. Parochial Republicans imposed a tariff on imported steel to shore up votes in US steel towns, the Eurpeans (and Australia) got cranky, and the EU threatened to put tariffs on goods they import from the US.
There was a similar case about bananas a couple of years ago. Both should be readily googleable.
I think the 'suspending concessions' talk is their way of saying the natural order of things is for imported (i.e. US produced) goods to have a tariff applied to make local Antiguan goods more competitive, and the GATS concessions will be removed to restore this if the US won't play ball.
I don't believe intellectual property law is in any way involved (and is subject to a different agreement, the Berne convention).
posted by bystander at 6:04 AM on October 6, 2006

On re-reading I see you are being specific about services, while I mostly waffled on about goods. Apologies if I derailed.
posted by bystander at 6:06 AM on October 6, 2006

Suspending concessions apparently means "limited trade sanctions". Effectively it means you can slap tariffs on imports from the country you haev the dispute with. The rules say that you should try to target the sector related to the area of the dispute, but that is more often honoured in the breach. During the steel tariffs row mentioned above, the EU specifically targetted other industries in the steel states which led to odd product choices. Apart from tariffs you can suspend any other trade advantage that country's imports have e.g. reduced documentation or expediated customs clearance.
posted by patricio at 6:54 AM on October 6, 2006