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GENERALGENERALAGREEMENT ONAGREEMENT ON

TARIFFS ANDTARIFFS AND

TRADETRADETHE WTO

AGREEMENTS

SERIES22

2THE WTO AGREEMENTS SERIES

This series offers a set of handy reference booklets on selected WTO agreements, the legal foundation for

the international trading system used by the bulk of the world's trading nations. Each volume in the series

contains the text of one agreement, an explanation designed to help the user understand the text, and in

some cases supplementary material. The agreements were the outcome of the 1986-1994 Uruguay Round of world trade negotiations held

under the auspices of what was then the GATT (the General Agreement on Tariffs and Trade). The full set

is available in The Results of the Uruguay Round of Multilateral Trade Negotiations: The Legal Texts. It

includes about 60 agreements, annexes, decisions and understandings, but not the commitments individual

countries made on tariffs and services. A full package of agreements that includes the over-20,000 pages of

commitments is available from WTO Publications in a 34-volume set, and also a CD-ROM, The Results of the Uruguay Round.

This series of smaller volumes includes introductions explaining the accompanying legal texts. They are

intended to be an authoritative aid for understanding the agreements, but because of the legal complexity

and the fact that a number of issues have not been tested - for example in the WTO's dispute settlement

procedures - the introductions cannot be taken as legal interpretations of the agreements.

Another WTO publication, Guide to the Uruguay Round Agreements (shortly to be published jointly by the

WTO and Kluwer Law International), is a comprehensive explanation of all the agreements. A simpler

guide to the agreements is in Trading into the Future, a booklet and electronic guide introducing all

aspects of the WTO's work that can also be found on the WTO website: http://www.wto.org. The volumes in this series (the sequence follows that of the WTO Agreement): 1.

Agreement Establishing the WTO

2.

GATT 1994 and 1947

3.

Agriculture

4.

Sanitary and Phytosanitary Measures

5.

Textiles and Clothing

6.

Technical Barriers to Trade

7.

Trade-Related Investment Measures

8.

Anti-dumping

9.

Customs Valuation

10.

Preshipment Inspection11.

Rules of Origin

12.

Import Licensing Procedures

13.

Subsidies and Countervailing Measures

14.

Safeguards

15.

Services

16.

Trade-Related Intellectual Property Rights

17.

Dispute Settlement

18.

Trade Policy Reviews

19.

Trade in Civil Aircraft

20.

Government Procurement

Contacting the WTO:

For publications, write to:

WTO Publications, World Trade Organization, Centre William Rappard, rue de Lausanne 154,

CH-1211 Genève 21, Switzerland

Tel: (41 22) 739 52 08 / 739 53 08Fax: (41 22) 739 57 92e-mail: publications@wto.org On-line bookshop: http://www.wto.org/wto/publicat/publicat.htm

For general information, write to:

Information and Media Relations Division, World Trade Organization, Centre William Rappard, rue de Lausanne 154,

CH-1211 Genève 21, Switzerland

Tel: (41 22) 739 50 07Fax: (41 22) 739 54 58e-mail: enquiries@wto.org

Website: http://www.wto.org

i

CONTENTS: AT A GLANCE

ABBREVIATIONSv

PREFACEvi

THE BASIC STRUCTURE OF WTO AGREEMENTSvii

INTRODUCTION The General Agreement on Tariffs and Trade 1994 & 19471

Overview1

GATT 1994 and GATT 19471

Core principles of the GATT2

Definition of GATT 19944

Regional trading arrangements5

Balance-of-Payments Provisions7

Other Uruguay Round agreements on GATT Articles8

The Marrakesh Protocol11

TEXT: GENERAL AGREEMENT ON TARIFFS AND TRADE 199413 UNDERSTANDING ON THE INTERPRETATION OF ARTICLE II:1(B) OF THE GENERAL AGREEMENT

ON TARIFFS AND TRADE 199416

UNDERSTANDING ON THE INTERPRETATION OF ARTICLE XVII OF THE GENERAL AGREEMENT

ON TARIFFS AND TRADE 199417

UNDERSTANDING ON THE BALANCE-OF-PAYMENTS PROVISIONS OF THE GENERAL

AGREEMENT ON TARIFFS AND TRADE 199419

UNDERSTANDING ON THE INTERPRETATION OF ARTICLE XXIV OF THE GENERAL AGREEMENT

ON TARIFFS AND TRADE 199422

UNDERSTANDING IN RESPECT OF WAIVERS OF OBLIGATIONS UNDER THE GENERAL

AGREEMENT ON TARIFFS AND TRADE 199425

UNDERSTANDING ON THE INTERPRETATION OF ARTICLE XXVIII OF THE GENERAL AGREEMENT

ON TARIFFS AND TRADE 199426

MARRAKESH PROTOCOL TO THE GENERAL AGREEMENT ON TARIFFS AND TRADE 199428 TEXT: GENERAL AGREEMENT ON TARIFFS AND TRADE 194731

ANNEX I NOTES AND SUPPLEMENTARY PROVISIONS75

ii

CONTENTS: IN DETAIL

ABBREVIATIONSv

PREFACEvi

THE BASIC STRUCTURE OF WTO AGREEMENTSvii

INTRODUCTION The General Agreement on Tariffs and Trade 1994 & 19471

Overview1

GATT 1994 and GATT 19471

Core principles of the GATT2

Most-favoured nation2

Tariff reductions and bindings3

National treatment3

Tariffs preferred3

Transparency4

Definition of GATT 19944

Regional trading arrangements5

Understanding on regional trading agreements6

'General incidence' of duties6

Reasonable time for forming a regional group6

Procedures for examination in the WTO7

Rules of origin, actions by lower-level governments7

Balance-of-Payments Provisions7

Commitment to 'price-based' measures8

Announced timetables, and avoiding protection for particular sectors8

Consultations in the WTO committee8

Other Uruguay Round agreements on GATT Articles8

Extra duties and charges9

State trading enterprises9

Waivers9

Changing a binding10

The Marrakesh Protocol11

TEXT: GENERAL AGREEMENT ON TARIFFS AND TRADE 199413 UNDERSTANDING ON THE INTERPRETATION OF ARTICLE II:1(B) OF THE GENERAL AGREEMENT

ON TARIFFS AND TRADE 199416

UNDERSTANDING ON THE INTERPRETATION OF ARTICLE XVII OF THE GENERAL AGREEMENT

ON TARIFFS AND TRADE 199417

UNDERSTANDING ON THE BALANCE-OF-PAYMENTS PROVISIONS OF THE GENERAL

AGREEMENT ON TARIFFS AND TRADE 199419

UNDERSTANDING ON THE INTERPRETATION OF ARTICLE XXIV OF THE GENERAL AGREEMENT

ON TARIFFS AND TRADE 199422

iii

Article XXIV:522

Article XXIV:623

Article XXIV:1224

UNDERSTANDING IN RESPECT OF WAIVERS OF OBLIGATIONS UNDER THE GENERAL

AGREEMENT ON TARIFFS AND TRADE 199425

UNDERSTANDING ON THE INTERPRETATION OF ARTICLE XXVIII OF THE GENERAL

AGREEMENT ON TARIFFS AND TRADE 199426

MARRAKESH PROTOCOL TO THE GENERAL AGREEMENT ON TARIFFS AND TRADE 199428 TEXT: GENERAL AGREEMENT ON TARIFFS AND TRADE 194731

PART I31

Article I General Most-Favoured-Nation Treatment31

Article II Schedules of Concessions32

PART II34

Article III* National Treatment on Internal Taxation and Regulation34 Article IV Special Provisions relating to Cinematograph Films35

Article V Freedom of Transit35

Article VI Anti-dumping and Countervailing Duties36

Article VII Valuation for Customs Purposes38

Article VIII Fees and Formalities connected with Importation and Exportation*39

Article IX Marks of Origin40

Article X Publication and Administration of Trade Regulations40 Article XI* General Elimination of Quantitative Restrictions41 Article XII* Restrictions to Safeguard the Balance of Payments42 Article XIII* Non-discriminatory Administration of Quantitative Restrictions44 Article XIV* Exceptions to the Rule of Non-discrimination45

Article XV Exchange Arrangements46

Article XVI* Subsidies47

Article XVII State Trading Enterprises48

Article XVIII* Governmental Assistance to Economic Development49 Article XIX Emergency Action on Imports of Particular Products54

Article XX General Exceptions55

Article XXI Security Exceptions56

Article XXII Consultation56

Article XXIII Nullification or Impairment56

PART III57

Article XXIV Territorial Application - Frontier Traffic - Customs Unions and Free-trade Areas57 Article XXV Joint Action by the Contracting Parties60 Article XXVI Acceptance, Entry into Force and Registration60 Article XXVII Withholding or Withdrawal of Concessions61

Article XXVIII* Modification of Schedules61

Article XXVIII bis Tariff Negotiations63

Article XXIX The Relation of this Agreement to the Havana Charter64

Article XXX Amendments64

Article XXXI Withdrawal65

Article XXXII Contracting Parties65

Article XXXIII Accession65

Article XXXIV Annexes65

iv Article XXXV Non-application of the Agreement between Particular Contracting Parties65

PART IV* TRADE AND DEVELOPMENT66

Article XXXVI Principles and Objectives66

Article XXXVII Commitments67

Article XXXVIII Joint Action68

ANNEX A LIST OF TERRITORIES REFERRED TO IN PARAGRAPH 2 (A) OF ARTICLE I70 ANNEX B LIST OF TERRITORIES OF THE FRENCH UNION REFERRED TO IN PARAGRAPH 2 (B) OF

ARTICLE I71

ANNEX C LIST OF TERRITORIES REFERRED TO IN PARAGRAPH 2 (B) OF ARTICLE I AS RESPECTS THE CUSTOMS UNION OF BELGIUM, LUXEMBURG AND THE NETHERLANDS71 ANNEX D LIST OF TERRITORIES REFERRED TO IN PARAGRAPH 2 (B) OF ARTICLE I AS

RESPECTS THE UNITED STATES OF AMERICA72

ANNEX E LIST OF TERRITORIES COVERED BY PREFERENTIAL ARRANGEMENTS BETWEEN CHILE AND NEIGHBOURING COUNTRIES REFERRED TO IN PARAGRAPH 2 (D) OF ARTICLE I72 ANNEX F LIST OF TERRITORIES COVERED BY PREFERENTIAL ARRANGEMENTS BETWEEN LEBANON AND SYRIA AND NEIGHBOURING COUNTRIES REFERRED TO IN PARAGRAPH 2 (D)

OF ARTICLE I72

ANNEX G DATES ESTABLISHING MAXIMUM MARGINS OF PREFERENCE REFERRED TO IN

PARAGRAPH 4 OF ARTICLE I72

ANNEX H PERCENTAGE SHARES OF TOTAL EXTERNAL TRADE TO BE USED FOR THE PURPOSE OF MAKING THE DETERMINATION REFERRED TO IN ARTICLE XXVI (BASED ON THE AVERAGE

OF 1949-1953)74

ANNEX I NOTES AND SUPPLEMENTARY PROVISIONS75

Ad Article I75

Ad Article II76

Ad Article III76

Ad Article V77

Ad Article VI77

Ad Article VII78

Ad Article VIII78

Ad Articles XI, XII, XIII, XIV and XVIII78

Ad Article XI78

Ad Article XII79

Ad Article XIII79

Ad Article XIV80

Ad Article XV80

Ad Article XVI80

Ad Article XVII81

Ad Article XVIII82

Ad Article XX84

Ad Article XXIV84

Ad Article XXVIII84

Ad Article XXVIII bis86

Ad Article XXIX86

Ad Part IV87

Ad Article XXXVI87

Ad Article XXXVII87

vABBREVIATIONS AMSAMSAggregate Measure of Support, the calculation of agricultural domestic support used for reduction commitments

BoPBoPBalance of payments

GATSGATSThe General Agreement on Trade in Services GATTGATTThe General Agreement on Tariffs and Trade, established in 1947. The abbreviation is used for both the legal text and the institution GATTGATT 1947 1947The text of GATT as used until amended by the WTO Agreements which came into force in 1995

GATTGATT 1994 1994The General Agreement on Tariffs and Trade, as revised in 1994, which is part of the

WTO Agreements. GATT 1994 includes GATT 1947 together with amendments MFNMFNMost-favoured nation, in the WTO, the principle of treating trading partners equally PPAPPAProtocol of Provisional Application ("Grandfather clause")

STESTEState-trading enterprise

TRIPSTRIPSTrade-Related Aspects of Intellectual Property Rights WTOWTOThe World Trade Organization, established as the successor to the GATT on

1 January 1995

viPREFACE

THE GENERAL AGREEMENT ON TARIFFS AND TRADE

1994 & 1947

The General Agreement on Tariffs and Trade (GATT) General Agreement on Tariffs and Trade (GATT) was negotiated in 1947 and first

entered into force in 1948. Over the years, it was modified and amended, but the first major overhaul was

the result of the 1986-94 Uruguay Round of trade negotiations.

Once reforms had been agreed, the task of rewriting a single new text for the whole General Agreement

proved too difficult. So, there are now two legally separate but linked documents: "GATTs the original GATT as it stood at the beginning of the Uruguay Round, and "GATT and incorporates the original agreement. The Uruguay Round also changed GATT's status. Before the round, it was the only multilateral trade

agreement; and it only covered trade in goods. The Uruguay Round expanded the coverage of the multilat-

eral rules to include services and intellectual property. GATT now stands alongside the General Agreement

on Trade in Services (GATS) and the Agreement on Trade-Related Aspects of Intellectual Property Rights

(the TRIPS Agreement) as one of the agreements of the World Trade Organization (WTO) which was established on 1 January 1995.

From 1947 to 1994, GATT also served another role - it was a de facto international organization for

negotiating and administering the multilateral trade rules. That role has now formally been taken over by

the WTO.

The WTO Secretariat has prepared this book to assist public understanding of GATT. The first section is

an explanatory introduction. The second section contains the legal text of the agreement and related documents. The book is not intended to provide legal interpretation of the agreement.

May 1998

viiTHE BASIC STRUCTURE

OF WTO AGREEMENTS

The conceptual frameworkBroadly speaking, the WTO agreements for the two largest areas of trade - goods and services - share a

common three-part outline, even though the detail is sometimes quite different.

In a nutshell

The basic structure of the WTO agreements

GoodsServicesIntellectual

propertyDisputesTrade policy reviews

Basic principlesGATTGATSTRIPSDispute

settlement TPRM

Additional detailsOther goods

agreements and annexes

Services annexes

Market access

commitmentsCountries' schedules of commitments

Countries'

schedules of commitments (and MFN exemptions)¨ They start with broad principles: the General Agreement on Tariffs and Trade (GATT) (for goods), and the General Agreement on Trade in Services (GATS). (The agreement on Trade-Related Aspects of

Intellectual Property Rights (TRIPS) also falls into this category although at present it has no additional

parts.)

¨ Then come

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