PREPARATION WEEK 2

1.What is market access? What kind of measures can prevent or limit market
access?
1.1. What is market access?
Market access is an activity that helps businesses find potential customers, thereby
promoting sales and increasing sales. It can be understood as a measure of the ability
to understand the market and sell goods/services of an enterprise, even a country, to
foreign markets. The rules on market access (‘MA’) are at the core of WTO law.
1.2. What kind of measures can prevent or limit market access?
There are two kinds of measures that can prevent or limit market access such as:
- Tariff barriers. Tariff barriers are not only related to trade in goods but it also
affects trade in services. In addition, tariff is also known as customs duty that is
a financial charge, in the form of tax, imposed on products at the time of,
and/or because of, their importation1.
- Non-tariff barriers. There are two parts in the non-tariff barriers such as
quantitative restrictions (such as quotas) and ‘other non-tariff barriers’ (such as
lack of transparency of trade regulation, unfair and arbitrary application of
trade regulation, customs formalities, technical barriers to trade and
government procurement practices)2.
2. How does the GATT 1994 regulate tariffs? Illustrate the WTO principles
regarding tariffs reduction?
The GATT 1994 regulated tariffs through two basic principles and rules:

First, the principle of reciprocity and mutual advantage. According to this principle, a
country will reserve a certain legal regime, which may be a national remuneration
regime or some rights for natural persons and legal entities of a foreign country in the
same way as the legal regime, rights or preferences that natural persons and legal
persons of that country also enjoy in that foreign country.

Article XXVIIIbis of the GATT 1994, reciprocal and mutually beneficial negotiations
make it possible for the parties to reduce general tariffs and other fees on imports and
exports, especially the reduction of high tariffs that impede imports even in minimal

1 Peter Van den Bossche & Werner Zdouc (2017), The Law and the Policy of the World Trade Organization,
Cambridge University Press, page 419
2 Peter Van den Bossche & Werner Zdouc (2017), The Law and the Policy of the World Trade Organization,
Cambridge University Press, page 419
quantities. Moreover, such negotiations will help the parties meet each other's goals
and needs, which has an important influence on the expansion of international trade.
However, at Article XXXVI:8 of the GATT 1994, this principle does not apply to the
negotiation between developed and developing country members.

For instance, The Vietnam-Philippines Tax Agreement stipulates that Vietnamese

shipping enterprises in the Philippines will be subject to an income tax rate of 1.5% of
total revenue and vice versa, Philippine shipping enterprises will also be subject to a
corporate income tax rate of 1.5% of total revenue.

Secondly, the Most Favoured Nation (MFN) treatment obligation. Accordingly, a

country is committed to giving the partner country the most beneficial and best
incentives. This rule is set out in Article I:1 of the GATT 1994 in the field of trade in
goods. According to this article, if a member state applies a tax reduction to any
country, after negotiations with that country, the member state must apply that tax
reduction to other member states immediately.

In the import of rice from Vietnam, Canada has more favorable treatment for Vietnam
that reduces Vietnam's rice import tax to 3%. Therefore, Canada also has to apply this
treatment for other Members in WTO immediately and unconditionally.

3. What is a Schedule of Concessions? What is the relationship between a

Schedule of Concessions and GATT 1994? What was Viet Nam’s market access
commitment regarding smartphones?

3.1. What is a Schedule of Concessions?

Schedules of Concessions, often referred to as “good schedules”, are legal instruments
that form an integral part of the General Agreement on Tariffs and Trade (GATT) and
the WTO Agreement.3 The content of Schedules of Concessions is the concessions or
tariff constraints of one Member, the results of tariff negotiations, describing the
treatment that a WTO member must give to the goods traded by other WTO members.
Each member has a schedule, except when the Member is part of a custom union in
which the Member has a common schedule with other members of the custom union.

3 World Trade Organization, ‘Schedules of concessions’

<https://www.wto.org/english/tratop_e/schedules_e/goods_schedules_e.htm> accessed 23:32 PM, 17/09/2024.
3.2. What is the relationship between a Schedule of Concessions and GATT 1994?
The relationship between Schedule of Concessions and GATT 1994 is that the
Schedules of Concessions are the results of the Uruguay Round Negotiations, thus,
these instruments are annexed to the GATT 1994. In other words, these schedules are
an integral part of GATT 1994. This relation is also stated in Article II:7 of the GATT
1994.

3.3. What was Viet Nam’s market access commitment regarding smartphones?
Viet Nam’s market access commitment regarding smartphones is one of the subjects
covered by the EVFTA - EU-Vietnam Free Trade Agreement. This agreement, in
essence, aims to liberalize both tariff and non-tariff barriers for key imports on both
parties over a period of 10 years. Thanks to this, the EU offers access to some
Vietnamese sensitive agricultural products via tariff rate quotas (TRQs). In addition,
from Vietnam perspective, the tariff elimination also benefits several main
Vietnamese exports such as mobile phones, computer accessories, and sports shoes.
These industries are also very labor-intensive. Increasing Vietnam’s export turnover to
the EU, EVFTA will facilitate the expansion of these industries, both in terms of
capital and increasing employment for Vietnam workers.

4. What are the elements to determine specific tariffs’ obligations (the amount of
money submittable to the government) of an imported good?
Product classification is a specific nomenclature or classification of a product under
the Harmonized System (HS) code, which helps determine the applicable tariff rate.
The country where the product is produced or manufactured. Trade regulations or
policies, different countries may have different tariff rates based on those trade
policies.
The tariff rate may also be affected by the materials used in the product and where the
product is assembled.
The tariff rate stated is a fixed total for each unit of weight or volume of the product.
The country's tariff schedule includes the base tariff rate, which also affects the
determination of the product's tariff and the country's tariff obligations.

5. What is tariffs’ classification and how does WTO regulate this matter? What is
an HS Code, what organization published it and how was it published? Can
WTO members use HS Code to classify their tariffs? Why?
5.1 What is tariffs’ classification
Tariffs are classified based on a number of variables, including the type of goods,
national products, and trade activities of the Association. The main types of tariffs
include:
+ Ad valorem tariffs: Calculated by deducting a certain amount from the value of the
product.
+ Specific tariffs: A fixed amount is applied to each unit of goods.
+ Rational tariffs: These taxes combine ad valorem tariffs and regulatory tariffs.
5.2 How does WTO regulate this matter
WTO members must apply the same tariff rates to all other WTO members unless
there is a preferential trade agreement through most-favoured-nation (MFN)
treatment.
A bound tariff is the maximum tariff rate that a country can apply, agreed upon during
trade negotiations
5.3 What is an HS Code
The Harmonized System (HS) Code4 is an internationally accepted system of names
and numbers for classifying traded goods. This code is used to provide uniformity in
the classification of goods between different countries. The HS Code is a six-digit
number assigned to each product category in the HS
5.4 What organization published it and how was it published
HS codes are created, updated and maintained by the WCO (World Customs
Organization), an independent international organization. HS codes are provided by
the WCO to customs administrations worldwide, published in many different
languages.
5.5 Can WTO members use HS Code to classify their tariffs? Why?
The HS code is the basis for national tariff schedules for WTO members. The HS code
is changed regularly to reflect changes in global trade, economic growth, and
technological advances. WTO members are also required to publish their national
tariff schedules to provide clarity and transparency to their trading partners. If a
member feels that another member is incorrectly classifying goods under the
agreements and rules based on the HS code, the WTO has a dispute settlement
procedure for such disputes over tariff classification.
6. Why do customs officers have to determine the value of imported goods?
What is the most relevant and common method to determine customs value of
imported goods?
4 World Trade Organization, “Glossary - HS 6-digit - WTO”
https://www.wto.org/english/thewto_e/glossary_e/hs6_e.htm#:~:text=The%20World%20Customs
%20Organization's%20Harmonized,that%20are%20used%20as%20standard.
 6.1 Why do customs officers have to determine the value of imported goods?

Customs officers determine the value of imported goods for several reasons: Tariff
Calculation, Anti-Dumping Measures, Countervailing Duties, Statistical Purposes,
Quotas

6.2 What is the most relevant and common method to determine customs
value of imported goods?
The Transaction Value Method is the primary and most commonly used method. It
involves the actual price paid or payable for the goods when sold for export to the
country of importation. This method requires a valid sale and genuine transaction
between the buyer and seller.

7. What is the Rule of Origin? How does the WTO regulate this Rule?
Distinguish between wholly-obtained Rule of Origin and not wholly-obtained
Rule of Origin.
7.1 What is the Rule of Origin?
The rules of origin is a set of criteria used by national governments and international
trade agreements and treaties to determine the national origin of a product or good.
7.2 How does the WTO regulate this Rule?
The form is the way in which you draft the rule of origin and there are techniques
which have been evolving during the decades which are basically three techniques,
one is based on a percentage criterion, second one is based on a change of testing
change of tally classification criterion and the third one is a specific working or
processing requirement
7.3 Distinguish between wholly-obtained Rule of Origin and not wholly-
obtained Rule of Origin.
- Wholly-obtained Rule of Origin:
The wholly obtained standard is the rule to determine whether the goods are wholly
obtained or produced in a country or region. Under a wholly-obtained rule of origin, a
product is considered to originate in a particular country if it is entirely produced,
manufactured, or processed within that country, using only domestic materials. This
means that no foreign inputs are allowed in the production process.
- Not-wholly Rule of Origin:
It refers to the laws guiding the process of determining the ultimate origin of goods
when production and processing of those goods include more than two countries or
regions. More flexibility can be obtained with a partially obtained rule of origin. It
allows the use of foreign components or materials in specific industrial processes.
These specifications often call for a low level of local processing or value-added.
8. What are Quotas? How does WTO regulate these measures?
8.1 What are Quotas?
Quota is the quantity, volume, or value of a certain commodity fixed by the State,
which clearly states that enterprises are allowed to export or import within a certain
period of time.
Quotas are different from tariff quotas. Quotas will have a limit on the quantity or
value of goods, whereas tariff rate quotas have no limit on quantity. There are
quantities, which can be imported at certain duty.
8.2 How does WTO regulate these measures?
The quotas are regulated by WTO under its General Agreement on Tariffs and Trade
(GATT 1994) to promote free and fair trade by restricting the use of quotas and other
non-tariff barriers. Key elements include:
- import quotas
- export quotas
- tariff-rate quotas

9. Summary the case law EC - Chicken Cut (2005), Appellate Body Report at the
issues concerning “Salted” in Heading 02.10 of the EC Schedule.

FACTS:
Brazil and Thailand have asked for the formation of a panel to find out whether the
term "Salted" in the concession contained in heading 02.10 includes the products in
dispute, which would require determining whether the concession includes the
requirement that salting is for preservation and more specifically to long-term storage.
Brazil and Thailand claimed that the products at issue were covered by heading 02.10,
so they based on the meaning of the term “salted” in heading 02.10 and gave the
concept of “long-term preservation”. While the European Communities alleged the
reverse that those products were covered by heading 02.07 and claimed that products
at issue were not “salted”..
The Panel concluded that the products at issue are covered by heading 02.10 in which
the term “salted” with its “typical meaning” and its context in the considered
agreements.
Prior to the Panel's conclusions, The European Communities decided to appeal to the
Appellate Body some of the legal issues referred to in the Panel's Reports and some of
the legal interpretations given by the Panel in these reports in relation to the above
conclusions.
The Appellate Body essentially upheld the procedural and substantive conclusions of
the Panel.
ISSUES:
The main question is how does the term “salted” should be interpreted in heading
02.10 of the EC Schedule?
To solve this, there are two factors should be considered:
(i) The original meaning and the context of 'salted' covered by the concession
contained in heading 02.10 of the EC Schedule.
(ii) The interpretation of the term “salted” in its context.

RULES:
Based on the terms:
1. Articles II of the GATT 1994:
(a) Each contracting party shall 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.
(b) The products described in Part I of the Schedule relating to any contracting party,
which are the products of territories of other contracting parties, shall, on their
importation into the territory to which the Schedule relates, and subject to the terms,
conditions or qualifications set forth in that Schedule, be exempt from ordinary
customs duties in excess of those set forth and provided therein. Such products shall
also be exempt from all other duties or charges of any kind imposed on or in
connection with the importation in excess of those imposed on the date of this
Agreement or those directly and mandatorily required to be imposed thereafter by
legislation in force in the importing territory on that date.
2. Article 31. General rule of interpretation of the Vienna Convention on the Law
of Treaties
3. Article 32. Supplementary means of interpretation of the Vienna Convention
on the Law of Treaties
ANALYSIS
1. The original meaning and the context of 'salted' covered by the concession
contained in heading 02.10 of the EC Schedule.
First, the Panel and the Appellate Body both relied on Article 31(1) of the Vienna
Convention to analyze the Ordinary Meaning and “Factual Context” of the term
“Salted”. The ordinary meaning of the term “salted” is “the ordinary meaning of the
term ‘salted’ including seasoning, salting, salting, curing, curing or preserving”, in
addition to the “Practical Context for considering the ordinary meaning”, i.e., the
products referred to in heading 02.10 include the flavour, texture and other physical
characteristics of the product and preservation. Therefore, the Interpretation of the rule
in Article 31 of the Vienna Convention is an overall interpretation that should not be
divided. The ordinary meaning of the term 'salt' when considered in its actual context
indicates that the character of the product has been altered through the addition of salt
but the scope of the meaning includes the ordinary meaning of the term 'salt'
indicating that the chicken meat has been salted which is not covered by the
concession contained in heading 02.10 of the EC Schedule.
Secondly, The Panel proved that they were not in violation of Article 11 of the DSU
by the following reason. The Appellate Body based on the conclusions of the
European Communities’ expert about the same type of meat as described that is “raw
and chilled”meat to conclusion that “it appears that even small quantities of salt may
have a preservative effect” and “3% salt, without chilling, would prevent spoilage for
a period of a few days” is “raw and chilled” meat. The issue concerning variable salt
content and additional means of preservation contain some inconsequential
inaccuracies, which do not, in the Appellate Body view, undermine the remainder of
the Panel's analysis of what the Panel referred to as the “factual context”. Therefore do
not find that the Panel acted inconsistently with its obligations under Article 11 of the
DSU.
2. The interpretation of the term “salted” in its context.
According to Article 31 (2) of Vienna Convention, to interpret the term “salted” in
this case, Appellate Body considered “the terms of relevant aspects of the EC
Schedule” namely the “other terms” contained in heading 02.10 of the EC Schedule,
the structure of Chapter 2 of the EC Schedule, as well as “other parts of the EC
Schedule”. In addition, a review of the Harmonized System as well as the Tariffs of
WTO Members outside the European Community was also conducted to find out the
"context" in which the term "salt" is interpreted.
Appellate Body defined what constitutes “context” by addressing the question of
whether the Harmonized System constituted “context” for interpreting the term
“salted” or not. Appellate Body noted the close link between Harmonized System and
the WTO agreements. The Appellate Body therefore declares that this consensus
constitutes an "agreement" between WTO Members "in connection with" the WTO
Agreement to be "made in connection with" the conclusion of" that Agreement, within
the meaning of Article 31(2)(a) of the Vienna Convention.As such, this agreement is
“context” under Article 31(2)(a) for the purpose of interpreting the WTO agreements,
of which the EC Schedule is an integral part. In this light, the Appellate Body
considered that the Harmonized System is relevant for purposes of interpreting tariff
commitments in the WTO Members' Schedules. Hence, the Harmonized System is a
relevant document to form the context to examine the interpretation of the term
“salted” in addition to the others mentioned above.
In the next section, Appellate Body considered the term “Salted” in Heading 02.10 of
the EC Schedule in its context:
The first question in this part is whether a product must have been “preserved” by one
of the processes referred to in heading 02.10 in order to fall within the scope of
heading. For this question, Appellate Body analysed the terms other than “salted”
relevant to the distinction between “preservation” and “preparation”, namely “in
brine”, “dried”, and “smoked”. The Appellate Body analysed that the ordinary
meanings of these terms “brine”, “smoke” and “dry” are the relevant processes can be
applied to meat in various ways and degrees of intensity, thereby producing different
effects on the meat, effects that may or may not place the meat in a state of
“preservation”. It is clear from the evidence on the record that, while the processes
mentioned in heading 02.10 - “salted, dried, in brine and smoked” - may include the
notion of “preservation”, these processes are also used extensively to confer special
characteristics on meat products. Similar reasoning may also be valid with respect to
the term “smoked”. The Appellate, therefore, do not agree with the European
Communities that the terms of heading 02.10 of the EC Schedule other than “salted”,
considered alone or together, suggest that the term “salted” must be read as referring
exclusively to products that have a level of salt content sufficient to ensure
“preservation” by salting.
The second sub-issue is whether the structure of Chapter 2 of the EC Tariff and the
Harmonized System supports the interpretation of heading 02.10 which refers only to
"preservation" procedures. The Appellate Body noted that heading 02.10 does not
mention refrigeration but the absence of this refrigeration process does not lead to the
conclusion that meat falls under heading 02.10 – a type in which meat has been
"preserved" by the processes referred to in that title. According to the Appellate Body,
whether a product has been frozen or not will not affect whether it falls under Title
02.10 or not.
CLUSION
In summary, the EC – Chicken Cuts case clarified the interpretation of "salted" under
the EC Schedule, emphasizing the importance of salt in meat preservation for tariff
classification purposes. The ruling favored Brazil, ensuring that certain salted chicken
cuts would be subject to lower tariffs.